ALLETE Misses on Q4 Earnings

Zacks

Energy company ALLETE, Inc.’s (ALE) fourth quarter 2013 earnings of 82 cents per share were 2 cents lower than the Zacks Consensus Estimate of 84 cents.  However, the bottom line was 9.3% ahead of the year-ago earnings.

In 2013, operating earnings were $2.66 per share, up 3.1% from $2.58 per share in 2012. Earnings were also a penny ahead of the Zacks Consensus Estimate.

Total Revenue

Total revenues in the final quarter of 2013 were $268 million, up 4.7% from the prior-year quarter and ahead of the. Zacks Consensus Estimate by 2.7%.

In 2013, total revenues of $1.02 billion were up 2% from $0.96 billion in 2012. Revenue for the year also surpassed the Zacks Consensus Estimate of $1.01 billion by 0.6%.

Highlights of the Release

ALLETE reported a marginal decline in total kilowatt-hours sold in the fourth quarter. The 0.6% year-over-year decline was due to lower demand from Municipal and Industrial customers. However, for 2013, total kilowatt-hours sold increased 1.2% year over year to 13,360 kilowatt-hours.

Total operating expenses in the reported quarter were $221.1 million,  up 6.2% year over year, primarily due to higher fuel and purchased power expenses.

Interest expenses in the reported quarter increased 3.3% year over year to $12.5 million.

Financial Update

ALLETE’s cash & cash equivalents as of Dec 31, 2013, were $97.3 million, up from $80.8 million as of Dec 31, 2012.

Long-term debt as of Dec 31, 2013, was $1.08 billion, higher than $0.9 billion as of Dec 31, 2012.

Total capital expenditure in 2013 was $339.5 million, down from $432.2 million in 2012.

Guidance

ALLETE expects 2014 earnings in the range of $2.75 to $2.95 per share. The earnings guidance takes into account 25 cents to 35 cents of dilution from common share issuances in 2013 and 2014.

Other Releases

Exelon Corp. (EXC) reported earnings of 50 cents per share in the fourth quarter, lagging the Zacks Consensus Estimate by 5.7%.

CMS Energy Corp. (CMS) announced fourth quarter operating earnings of 37 per share, in line with the Zacks Consensus Estimate.

Calpine Corp. (CPN) reported earnings of 1 cent per share in the fourth quarter, widely beating the Zacks Consensus Estimate of a  loss of 7 cents by 114.3%.

Our View

ALLETE’s regulated operations are doing well which helped in boosting earnings year over year. In 2013, the company issued some new shares to fund strategic investments in renewable energy, environmental upgrades and energy transmission infrastructure.

We expect the company to issue more shares in 2014 to fund its “EnergyForward” initiative, which will definitely yield synergies in the long run.

ALLETE currently has a Zacks Rank #3 (Hold).

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