ALLETE First Quarter Net Income Climbs 19 Percent over 2003
DULUTH, Minn.--April 22, 2004--ALLETE, Inc. today reported first quarter 2004 earnings of 62 cents per share, compared with 54 cents per share in the first quarter of 2003. Net income for the quarter rose 19% to $52.5 million on revenue of $458.5 million, compared with $44.3 million on revenue of $422.9 million during the same time period last year."Our energy and automotive businesses both benefited from increased sales during the quarter," said Dave Gartzke, ALLETE Chairman. "We are also experiencing high demand for our real estate in Florida."
Energy Services net income was $14.3 million for the quarter compared with $12.2 million during the first quarter of 2003. At Minnesota Power, higher demand for energy by industrial customers contributed to the increase.
Net income at Automotive Services was $33.3 million in the first quarter of 2004, compared with $26.7 million in 2003, due primarily to increased vehicle sales and higher conversion rates at ADESA auctions. AFC arranged 263,000 loan transactions during the first quarter, an increase of 13% compared with the first quarter of 2003.
A strong quarter of real estate sales boosted results at Investments and Corporate Charges. ALLETE Properties recorded net income of $11 million for the quarter versus $4.2 million last year.
2004 Earnings Guidance
After the separation of Automotive Services is completed, ALLETE will be comprised of what is now classified as Energy Services and Investments and Corporate Charges. In 2003, net income from these operations totaled $28.3 million. ALLETE now estimates 2004 net income from these operations will increase by 10% to 15% over 2003, due primarily to stronger than originally anticipated sales at both Minnesota Power and ALLETE Properties.
ALLETE expects to reduce its debt by an additional $150 million to $200 million after the ADESA initial public offering and recapitalization, which is expected to occur in the second quarter. The 2004 net income estimate does not include the financial implications of this debt reduction or transaction fees and debt retirement premiums related to the separation of Automotive Services.
ALLETE's corporate headquarters are located in Duluth, Minnesota. ALLETE's holdings include ADESA, a leading integrated wholesale auction and dealer floorplan financing provider throughout North America; Minnesota Power, a low-cost electric utility that serves some of the largest industrial customers in the United States; and significant real estate holdings in Florida.
The statements contained in this release and statements that ALLETE may make orally in connection with this release that are not historical facts, are forward-looking statements. Actual results may differ materially from those projected in the forward-looking statements. These forward-looking statements involve risks and uncertainties and investors are directed to the risks discussed in documents filed by ALLETE with the Securities and Exchange Commission.
ALLETE, Inc.
Consolidated Statement of Income
For the Periods Ended March 31, 2004 and 2003
Millions Except Per Share Amounts
Quarter Ended
2004 2003
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Operating Revenue
Energy Services $182.3 $179.1
Automotive Services 247.7 232.9
Investments 28.5 10.9
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Total Operating Revenue 458.5 422.9
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Operating Expenses
Fuel and Purchased Power 68.9 67.4
Operations 289.3 276.2
Interest 13.1 16.9
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Total Operating Expenses 371.3 360.5
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Operating Income from Continuing Operations 87.2 62.4
Income Tax Expense 34.1 24.4
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Income from Continuing Operations 53.1 38.0
Income (Loss) from Discontinued Operations - Net of
Tax (0.6) 6.3
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Net Income $52.5 $44.3
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Average Shares of Common Stock
Basic 84.3 82.2
Diluted 84.8 82.3
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Basic and Diluted
Earnings (Loss) Per Share of Common Stock
Continuing Operations $0.63 $0.46
Discontinued Operations (0.01) 0.08
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$0.62 $0.54
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Dividends Per Share of Common Stock $0.2825 $0.2825
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ALLETE, Inc.
Consolidated Balance Sheet
Millions
Mar. 31, Dec. 31,
2004 2003
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Assets
Current Assets $961.1 $695.4
Property, Plant and Equipment 1,493.4 1,499.0
Investments 189.4 204.6
Goodwill 510.5 511.0
Discontinued Operations 89.7 87.9
Other 109.3 103.4
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Total Assets $3,353.4 $3,101.3
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Mar. 31, Dec. 31,
2004 2003
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Liabilities and Shareholders' Equity
Notes Payable $53.0 $53.0
Long-Term Debt Due Within One Year 36.0 37.5
Other Current Liabilities 633.0 435.7
Long-Term Debt 747.9 747.7
Other Liabilities 329.8 322.2
Discontinued Operations 41.9 45.0
Shareholders' Equity 1,511.8 1,460.2
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Total Liabilities and Shareholders' Equity $3,353.4 $3,101.3
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Quarter Ended
March 31,
ALLETE, Inc. 2004 2003
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Net Income
Millions
Energy Services $14.3 $12.2
Automotive Services 33.3 26.7
Investments and Corporate Charges 5.5 (0.9)
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Income from Continuing Operations 53.1 38.0
Income (Loss) from Discontinued Operations (0.6) 6.3
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Net Income $52.5 $44.3
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Diluted Earnings (Loss) Per Share
Continuing Operations $0.63 $0.46
Discontinued Operations (0.01) 0.08
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$0.62 $0.54
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Statistical Data
Corporate
Common Stock
High $35.52 $24.05
Low $30.00 $18.75
Close $35.09 $20.76
Book Value $17.13 $14.86
Energy Services
Millions of Kilowatthours Sold
Regulated Utility
Retail
Residential 310.3 312.9
Commercial 331.9 326.4
Industrial 1,766.8 1,718.5
Other 20.2 20.5
Resale
Municipals 214.1 208.7
Other Power Suppliers 216.9 199.2
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2,860.2 2,786.2
Nonregulated 434.0 419.1
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3,294.2 3,205.3
Automotive Services
Vehicles Sold
Used 481,000 462,000
Salvage 58,000 49,000
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539,000 511,000
Conversion Rate - Used Vehicles 68.4% 62.4%
Loan Transactions 263,000 233,000