ALLETE Inc

NYSE:ALE

Earnings Call Analysis

ALLETE Adjusts Guidance, Sees Healthy Growth

In a robust quarter, ALLETE's financial landscape showed a sturdy balance sheet with liquidity heightened by favorable arbitration awards, despite reserves impacting earnings. Net income soared to $85.9 million, a significant jump from $33.7 million in the previous year. Key factors such as increased industrial sales partially offset reserve-related earnings dips in regulated operations, while ALLETE Clean Energy rebounded with $34.8 million in net income following a prior loss. The company revised its full-year 2023 earnings guidance to a range of $4.30 to $4.50 per share. This aligns with their longer-term aspirations, advocating a continued 5% to 7% EPS growth rate, notably steered by regulated ventures with supportive complements from non-regulated segments, illustrating the firm's optimistic and robust growth strategy.

Positive Earnings and Cash Position Underpin Steady Guidance Amidst Operational Challenges

The latest earnings report for ALLETE offers investors a mostly positive outlook, with both strong results and guidance for strategic growth. The company recorded an impressive increase in earnings to $85.9 million, which translates to $1.48 per share, in stark contrast to the previous year's third quarter earnings of $33.7 million or $0.59 per share. This significant boost includes a $40.5 million gain due to a favorable arbitration award. Moreover, ALLETE Clean Energy's net income rose to $34.8 million, rebounding from a net loss, thanks to this arbitration award and other operational improvements. The company's financial footing appears robust with a sturdy balance sheet, featuring $126 million in cash and a conservative debt-to-capital ratio of 35%, leaving ALLETE with limited equity needs in 2024.

Regulatory Dynamics and Future Oriented Investments

Looking at regulatory and growth elements, Minnesota Power's request for an approximately $89 million rate increase points to strategic adjustments aiming to solidify revenues, even as final rates aren't expected to take effect until late 2025. The projected earnings growth rate of 5% to 7% heavily leans towards regulated operations, with complementary contributions from non-regulated segments like ALLETE Clean Energy and New Energy envisaged to align with this growth trajectory. Repower and redevelopment of legacy assets are also in focus, signaling a proactive approach towards asset optimization and an optimistic stance on growth despite potential headwinds.

Revised Earnings Guidance Reflecting Market Realities

ALLETE's management has set the full-year earnings guidance for 2023 to $4.30 to $4.40 per share, indicative of a measured yet optimistic view of the business environment—with considerations for arbitration awards, wind energy facility performance affected by low wind conditions, and an impending third-party network outage at their Caddo wind energy facility.

Commitment to Stakeholder Collaboration and Sustainable Business Practices

The company emphasizes its devotion to collaborating with diverse stakeholders and its sustainable strategy. With several links to detailed sustainability information expected to be updated soon, there's a clear focus on transparent progress in terms of energy transformation.

Earnings Call Transcript 2023-Q3

[Operator]

Good day, and welcome to the ALLETE Third Quarter 2023 Financial Results Call. Today's call is being recorded.Certain statements contained in this conference call that are not descriptions of historical facts are forward-looking statements, such as terms defined in the Private Securities Litigation Reform Act of 1995. Because such statements can include risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause results to differ materially from those expressed or implied by such forward-looking statements include, but are not limited to, those discussed in filings made by the company with the Securities and Exchange Commission. Many of these factors that will determine the company's future results are beyond the ability of management to control or predict. Listeners should not put undue reliance on forward-looking statements, which reflect management's reviews only as of the date hereof. The company undertakes no obligation to revise or update any forward-looking statements or to make any other forward-looking statements, whether as a result of new information, future events, or otherwise.Welcome to ALLETE's conference call announcing third quarter 2023 financial results. And at this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. [Operator instructions] I would now like to turn the call over to Bethany Owen, Chair, President, and CEO. You may begin.

[Bethany Owen, executive]

Thank you, and good morning, everyone, and thanks for joining us. With me today are ALLETE's Senior Vice President and Chief Financial Officer, Steve Morris; Jeff Scissons, ALLETE's Corporate Development and ALLETE's Clean Energy Strategy Officer; and Frank Frederickson, Minnesota Power's Vice President of Customer Experience and Engineering Services.Corresponding slides for this morning's call are available on our website at allete.com in the Investors section, and we'll call out each page number as we go through today's presentation.This morning, we are pleased to report ALLETE's third quarter 2023 earnings of $1.49 per share on net income of $85.9 million. Last year's third quarter results were $0.59 per share on net income of $33.7 million. Steve will be providing additional details on our financial performance during the quarter and our revised full year 2023 guidance in a moment. I'll begin with brief updates on just a few of our key strategic projects. Starting with our largest business, our Minnesota Power team continues to make significant progress on projects that are foundational to ALLETE's Sustainability in action strategy, including the more than $3 billion capital expenditure plan to advance our carbon-free energy vision.Slide 3 shows an important part of that plan, our HVDC modernization project. This project will replace aging infrastructure and modernize the terminal stations for our 465-mile DC transmission line running from Center North Dakota to Duluth, Minnesota. It provides Minnesota Power's customers direct access to some of the best wind resources in the country and will also enhance the reliability and resiliency of the grid across the Upper Midwest.Our team has worked hard to advance this important project and to secure government grants to help reduce the project's cost for customers. In May, Minnesota Power was awarded a $15 million grant towards the project as part of the energy bill passed by the Minnesota Legislature. And just a couple of weeks ago, we were very pleased to learn that the U.S. Department of Energy awarded Minnesota Power a $50 million grant for the project, following a competitive process among hundreds of applicants nationwide. We're grateful for this meaningful support from the state of Minnesota and the Department of Energy, helping to make this important project even more affordable for our customers. Construction could begin on this $800 million to $900 million project as early as next year, pending regulatory approvals in North Dakota and Minnesota with an in-service date expected later this decade.Our team is also making great progress on the Northland Reliability Project, a 345 kV transmission line from the Iron Range in Northern Minnesota to Central Minnesota, which we'll jointly own with great River Energy. This project was approved by MISO in the first tranche of its long-range transmission plan and is estimated to cost a combined total of $970 million to $1.3 billion, representing another important investment in the reliability and resiliency of the transmission system. In August, we filed a combined certificate of need and route permit application with the Minnesota Public Utilities Commission, and we look forward to working through the regulatory approval process.Another project approved by MISO in the first tranche of its LRTP is the Big Stone South transmission project, a 150-mile 345 kV transmission line jointly owned by 5 utilities, including Minnesota Power.A certificate of need was filed with the MPUC in September, and the commission will determine the final route for the Minnesota portion of the project as well as cost recovery for our approximately $20 million share.In addition to this exciting progress on the transmission front, we're making progress on our renewable RFPs. On October 2, Minnesota Power filed a notice with the MPUC of our plan to issue an RFP for up to 300 megawatts of solar later this month. We also plan to issue an RFP for up to 400 megawatts of wind by the end of the year. The solar RFP will emphasize important attributes such as investment in our host communities, the use of local labor, and a focus on increasing supplier and workforce diversity. All of this will help ensure these solar projects deliver the best overall value to customers while strengthening the communities we're privileged to serve.Please see Slides 4 and 5. As planned, yesterday, Minnesota Power filed a rate proposal with the Minnesota Public Utilities Commission. This proposal will help ensure Minnesota Power can continue making the Energy Forward investments needed to meet the goals of this year's Minnesota legislation requiring 100% carbon-free energy by 2040. Minnesota Power became the first utility in the state to deliver 50% renewable energy in 2020 and reached an all-time high of nearly 60% renewable energy for customers in 2022. And I'm so proud of our Minnesota Power team and all that our company has done to lead our state's clean energy transformation, all while safeguarding reliable, drive meaningful programs to support our low-income customers as well as state-leading energy conservation programs and time of day rates that provide options for customers to save energy and control their monthly bills. These are just a few examples. While we advance our vision of providing carbon-free energy, we will continue to make affordability for all of our customers a priority.There is more work ahead to ensure that we have the resources and tools needed to accomplish the state's clean energy goals, and that's the reason for the rate proposal Minnesota Power filed yesterday.We're confident that our regulators understand the importance of a constructive outcome to help ensure Minnesota Power's ability to continue our clean energy transformation while delivering the safe, resilient, and reliable service that powers people's lives and businesses throughout Northeastern Minnesota. Steve will share more details on the rate case filing in a moment.One other note on the regulated operations front, I'm pleased to report that Superior Water, Light, and Power began generating renewable energy from its first community solar garden last month. Superior Solar is a 470-kilowatt project built by local labor and with regionally sourced materials. The solar garden is fully subscribed generating enough energy to power approximately 115 homes and it's the first energy generated locally by Superior Water, Light, and Power in more than 40 years.Turning briefly to our nonregulated businesses. It was great to receive the very positive arbitration outcome in favor of ALLETE Clean Energy recently. The ALLETE Clean Energy team has endured the historically low wind conditions that affected much of the nation this quarter and have worked hard to mitigate the effects, including increasing efficiencies and unit availability, implementing O&M reductions, and many other initiatives. They're a strong team, and I couldn't be more proud of their resilience and innovation throughout the year.And finally, as we close in on the first full calendar year with New Energy equity as part of the ALLETE family of businesses, we're excited about the team's positive momentum. New Energy equity continues to grow its already strong pipeline of more than 2 gigawatts, all while executing on current projects and delivering solid financial results. As mentioned previously, we expect New Energy to close out the year on track or slightly above original expectations.We've made strong progress throughout this year, and I'm grateful to our entire team across our family of businesses for their dedication, expertise, resiliency, innovation, and always, their integrity. Our team is committed to serving our customers with excellence every single day.Now I'll turn it to Steve for additional details on our third quarter financial results, full year earnings guidance and Minnesota Power's rate case filing. Steve?

[Steven Morris, executive]

Thanks, Bethany, and good morning, everyone. I would like to remind you that we filed our 10-Q this morning and encourage you to refer to it for more details. Please refer to Slide 6 through 8 for significant variances and other items for comparison consideration.Today, ALLETE reported third quarter 2023 earnings of $1.49 per share on net income of $85.9 million. Earnings in 2022 were $0.59 per share on net income of $33.7 million. Net income this quarter included a $40.5 million or $0.71 per share after-tax gain recognized for a favorable arbitration award involving a subsidiary of ALLETE Clean Energy. Also impacting this quarter was the timing of reserves for interim rates resulting from Minnesota Power's February rate case order.A few details from our business segments. ALLETE's Regulated Operations segment recorded third quarter 2023 net income of $34 million compared to $38.3 million in 2022. Earnings were lower in the third quarter of 2023, reflecting the timing of interim rate reserves at Minnesota Power compared to 2022. As you may recall, the entire 2022 interim rate reserve was recorded in the fourth quarter of 2022, which has resulted in timing differences each quarter throughout 2023. The timing difference of these reserves will fully reverse in the fourth quarter of this year.Partially offsetting this impact was increased sales to industrial customers during the quarter. ALLETE Clean Energy recorded third quarter 2023 net income of $34.8 million compared to a net loss of $7.3 million in 2022. Net income this quarter reflected the gain in interest income for the favorable arbitration award at one of ALLETE Clean Energy subsidiaries. 2022 included a reserve of $2.9 million after tax, the anticipated loss on the sale of the Northern Wind project.Our corporate and other businesses, which includes New Energy, BNI Energy, and our investments in renewable energy facilities recorded a net loss of $2.9 million compared to net income of $2.7 million in 2022. Net income this quarter reflects higher consolidated income tax expense, partially offset by earnings from Minnesota Solar projects, which were placed into service late last year and in the second quarter this year. New Energy's earnings in this quarter were slightly below 2022, primarily due to the timing of project closings now expected in the fourth quarter and higher operating and maintenance expense as compared to last year.ALLETE's financial position is supported by a strong balance sheet that includes cash and cash equivalents of approximately $126 million, $370 million in available consolidated lines of credit, and a debt-to-capital ratio of 35% at the end of the quarter. The arbitration award had a positive impact on our liquidity position with approximately $60 million reflected in cash and cash equivalents at the end of the third quarter.Next, a few comments on our outlook and full year 2023 guidance. Please refer to Slide 9 for additional details.Considering a number of factors occurring during the year as well as our anticipated results for the fourth quarter, we have revised the lease 2023 full year earnings guidance to be in a range of $4.30 to $4.40 per share. Specific items affecting ALLETE's updated guidance includes the third quarter arbitration award, a third-party network outage expected to negatively impact the Caddo wind energy facility in the fourth quarter and historically low winds across much of the nation affecting earnings at ALLETE Clean Energy's wind energy facilities throughout the year. These items in total had a positive impact of approximately $0.30 per share included in our guidance update.Next, a few comments on the recently filed Minnesota Power rate case. Please refer back to Slides 4 and 5 for several highlights on the filing. Yesterday, when Minnesota Power filed a retail rate increase request with the Minnesota Public Utilities Commission, seeking an increase of approximately $89 million in total additional annual revenue, net of rider revenue moving to base rates. The filing seeks a return on equity of 10.3% and a 53% equity ratio. Our request includes net interim rates of approximately $64 million, which is expected to begin in January 2024, with approval by the Commission. Interim rates are subject to refund. We anticipate final rates would be implemented sometime in late 2025.Our rate case request supports Energy Forward goals by transitioning to new supplies of renewable energy, building more resiliency into the electric grid to ensure reliability, employing the workforce necessary to achieve a clean energy transition, addressing inflation and supply chain issues, and by providing a fair return on investment to attract capital for continued investment in the clean energy future. The rate case assumes taconite production of approximately 35 million tons, which is in alignment with the long-term average production levels for taconite.In addition, Minnesota Power has proposed a rate stabilization mechanism to address and mitigate the financial impacts related to operational volatility of its large power customers. This proposal offers a simple and balanced method to align risk and benefit of large power load volatility that can be applied between rate cases. The filing also accounts for approximately $39 million previously approved for recovery through transmission and renewable riders by the Minnesota Public Utilities Commission for capital costs of the great Northern Transmission Line and production tax credits by moving rider billings into base electric rates. This change from rider billings to base rates will not alter the total amount we recover from customers. We will share procedural updates on material developments as the filing progresses.I'll now turn it back to Bethany for additional comments. Bethany?

[Bethany Owen, executive]

Thanks for that update, Steve. As you can hear, we're very pleased with our progress advancing ALLETE's sustainability and action strategy, and we expect even more in the coming years. ALLETE is a strong, growing, and vibrant company with a talented team and a family of businesses that are well positioned to thrive now and long into the future.Together, these businesses provide sustainable long-term earnings growth and many opportunities for significant additional clean energy investment. I'm equally proud that how we do business is always a differentiator of Elite and our team. We're committed to working closely with our many diverse stakeholders as we continue to execute our sustainability and action strategy because we know we are stronger when we work together. Slide 10 contains links to detailed information on this important work, including our corporate sustainability report, which we plan to update in the coming weeks with full year 2022 data, and we'll continue to update the CSR regularly as we execute our strategy.We look forward to sharing more energy transforming progress in future quarters. We've set the stage for strategic significant and sustainable growth at ALLETE with real projects that build on the strategic assets we already have and leverage the strength and experience of our amazing team. We're proud of ALLETE's track record and excited about the future as we provide cleaner energy to our customers, meaningful jobs and significant investment in our communities, exciting opportunities for our employees and attractive value for our investors. That is putting sustainability into action.Thank you for your interest and your investment in ALLETE. At this time, I'll ask the operator to open the line for your questions.

[Operator]

Thank you. [Operator Instructions] Our first question comes from the line of Richard Sunderland of JPMorgan.

[Richard Sunderland, analyst]

Starting on the capital side. With these 2 RFPs, the 300 megawatts of solar and the 400 megawatts of wind, when do you anticipate having line of sight to those outcomes? And would that line of sight also drive a capital plan revision as well? How are you thinking about the capital plan overall in light of the moving pieces on the transmission side as well? I guess just curious about the cases of updates you might give into '24 here.

[Steven Morris, executive]

It's Steve Morris. So I can take that. As Bethany mentioned, we do plan to issue the solar RFP later this month and of the wind as well later this year. We would expect the RFP award selection midway through 2024 with the commission approval process later in 2024 so, if successful, we could have capital costs later in this year certainly could slide into 2025 as well. We'll have a little bit more clarity, we think, by year-end conference call in February, which will update our capital schedule at that point in time. Overall, though, we do not expect much success on these our capital to decrease.

[Richard Sunderland, analyst]

Certainly. Thanks for working through the time line there. I guess the other side of the coin, there's been questions over the past year since you raised the capital plan around financing, how are you thinking about financing at this point is certainly topical in light of interest rates, move in sector valuations. I'm also curious if you go out financing plan with the arbitration award. Is this something that gives you even incremental flexibility on a sort of financing capital rotation, what have you standpoint? Any thoughts there would be helpful.

[Steven Morris, executive]

Yes. Thanks. Good question, Rich. So yes, we have, as I mentioned on the call, an additional $60 million in cash for the arbitration award that can be used for future CapEx projects to reduce equity needs as well as we've talked about this before, renewable tax credit sales. So we're working on that. That could generate potentially $40 million of sales for the '23 credits could be the same number for '24 as well. So that will help.I also mentioned on the call, debt to equity at 35% at the end of the quarter, which we expect to continue, which gives us some headroom on additional leverage. We've also talked before about forming a Holdco, which gives us financial optionality. And as we've discussed before and as we always do, we consider maximizing the value of all our assets with opportunistic redeployment of capital in our regulated CapEx program. With that said, and utilizing the cash on hand with our debt-to-equity ratio, we have very limited equity needs in 2024.

[Richard Sunderland, analyst]

Very helpful. And one final one for me. Thanks for letting out all the details around the rate case. Curious if you could speak a little bit to the stakeholder engagement side in advance of this filing and around the filing itself. Obviously, a lot of telegraphs that you've done out of the last rate case around the needs for this case in particular. Anything you could speak to on that side?

[Bethany Owen, executive]

Yes. I'll start and maybe Frank can speak to more specifically on the customer side. This is Bethany. Certainly, we view our engagement with all of our many stakeholders as incredibly important precursors to any of our regulatory processes and certainly engaged in that in advance of our 2019 IRP and have developed a really robust network and communication strategy around ensuring that everyone understands kind of our strategy to move clean energy forward while we continue to preserve reliability and affordability providing value to all of our customers. And I mentioned some of the really key strategic initiatives that we've put into place to help support lower-income customers. But all of our customers, that's a key priority. So certainly, many conversations happening, making sure that people understand the reason for the rate case and what we're planning to do -- needing to do with those dollars.And so Frank, do you want to speak to customers overall?

[Frank Frederickson, executive]

Certainly. Thanks, Bethany, and thanks for the question, Richard. So yes, I mean, we work closely with our customers and trying with our largest customers working on helping them with the estimates. And they too have inflation in their operations like us. So, I mean, there is a level of understanding in that, and we also pace with all of our customers and stakeholders on the clean energy legislation in Minnesota. Minnesota Power's renewable energy leadership finishing off at nearly 60% renewables in 2022 for our retail customers and sharing the progress that is continuing on that as some of the key drivers for this case.

[Richard Sunderland, analyst]

Understood. But just to be clear, though, have you had conversations around the rate stabilization mechanism in advance of the case itself. I know it's a little bit of a different proposal this time than with what you saw in the past. Just curious about the backdrop for that specifically.

[Bethany Owen, executive]

We have. Frank, do you want to speak to that?

[Frank Frederickson, executive]

Yes. Thank you. So yes, I mean, we have had some of those conversations with that around the stabilization mechanism to do some more listening, but also sharing in terms of the sales volatility that Minnesota Power has that's larger than some of the other peer utilities in the state. And some of that's built out in our case and also built out in our taconite forecast where we've been reaching out with all the different stakeholders that will be involved in this case and explaining it and explaining how this can be good for all as we've seen just over the last couple of years with sales both above and below the level that we filed in the 2024 test year.

[Operator]

Our next question comes from the line of Alex Mortimer of Mizuho Securities.

[Alexander Mortimer, analyst]

So, within your stated 5% to 7% EPS growth rate, I'm just curious on the consolidated business, you touched on where you expect the different businesses to be within that range, i.e., the utility may be below, but the unregulated above or vice versa? Obviously, understanding it can fluctuate year-over-year given rate relief and other drivers.

[Bethany Owen, executive]

So, that's not the case, but Steve do you want to speak to that?

[Steven Morris, executive]

Yes. Good morning, Alex, Steve Morris here. So if you look at our CapEx table, you can see it's really heavily regulated, in fact, with the projects that we have and the renewable efforts going underway at Minnesota Power. So the 5% to 7% is more heavily weighted towards the regulated business and what we say is complementary earnings from our nonregulated business, primarily ALLETE Clean Energy and New Energy.

[Alexander Mortimer, analyst]

Okay. Understood. And then turning back to the rate case. Can you touch on any items in the recent filing that you think might require more work or more education with policymakers and interveners given that -- I know you just touched on some stakeholder engagement, but sort of any ongoing efforts as you work through the case?

[Bethany Owen, executive]

Yes. I think I would just say, Alex, that we've worked hard over the last few years to help our regulators and other stakeholders understand the differentiated aspects of our company, our customers, the region that we serve. And I think they have a really strong appreciation and understanding for all of that and certainly why we're in for this rate proposal at this time.

[Operator]

Our next question comes from the line of Brian Russo of Sidoti.

[Brian Russo, analyst]

Just a follow-up on the RFP process. I assume ALLETE or Minnesota Power has submitted their own self-build options within these RFPs. And I was just wondering if you can remind us of the competitive advantages that you have and have those advantages been even more enhanced given kind of the macro environment issues facing a lot of third-party developers.

[Steven Morris, executive]

Brian, it's Steve Morris. So a couple of comments. So the RFPs have not been issued yet. So that is the solar, one, mid-November wind in the fourth quarter as well. So Minnesota Power does, in fact, tend to bid for both of these RFPs. We've talked about this on previous conference calls where the solar is regional solar. So, we really think that in and around the Basel area where the Minnesota Power has the infrastructure in place. So we feel good about that. Other than that, I'm not going to get into too much details on the call.

[Brian Russo, analyst]

Okay. Understood. I suppose that most of these potential RFP investments would be rider eligible and not really have to go through full general rate cases to get time to recovery?

[Steven Morris, executive]

Yes, that's right. These would be rider projects, Brian.

[Brian Russo, analyst]

Okay. Great. And then also, any insight into taconite demand, given what we've seen with the union strikes, the steel prices, I know you guys are or the demands are set through year-end, but I just thought maybe you could comment on that.

[Frank Frederickson, executive]

Thanks, Brian. Frank Frederickson in here. So we have seen, as you mentioned, the strong nominations this year, since the restart in Northshore Mining and at a partial operation level in April. And we have seen our steel customers have made some commentary recently on terms of the impacts of the United autoworkers strike. And we're really, as we look to 2024, we were projecting and filed in our rate case that average level of production right around 35 million tons as just balancing out what we've seen for actuals in 2022 and near final year projections here in 2023.

[Brian Russo, analyst]

Okay. Great. And then on ALLETE Clean Energy, could you just discuss any asset optimization opportunities you might have that could enhance your cash or liquidity position? I think maybe Whitetail and maybe Russell were 2 kinds of ranking higher on the list for maybe build on transfer or sale, et cetera.

[Jeffrey Scissons, executive]

Brian, this is Jeff. Yes, and thank you did highlight 2 of the projects in our development pipeline with Whitetail being much further along working on permitting and finding the right offtake. I also highlight that we call our legacy assets, and we do believe that they are prime for repower and redevelopment, so working on those as well.

[Brian Russo, analyst]

Okay. Great. And just on New Energy, given what we've seen in the renewable sector due to the macroeconomic headwinds inflation, higher cost of capital. What are you seeing in what seems to be a rather unique distributed solar market for New Energy? What are you seeing in the competitive landscape or just the operating environment?

[Jeffrey Scissons, executive]

Yes. Brian, this is Jeff again. And you touched on some of the factors. There's certainly been some headwinds, but there's been some tailwinds as well in that sector, including the IRS and the benefits that came from the IRS. So we continue to be excited about the team. They're performing well. They're a talented group and excited to have them a part of ALLETE, and as you heard from Bethany earlier, they've executed on their plans and slightly ahead. So they continue to be bullish and optimistic in navigating and that's been their history. That sector has had some ups and downs, and they have managed well, and expectations are still that they can continue.

[Operator]

Our final question comes from the line of Tanner James of Bank of America.

[Tanner James, analyst]

All my other questions were asked and answered but I did want to check in on New Energy. You previously stated you were on track for about 100 megawatts of project closings for the year. There were some timing impacts here in the third quarter. Looking into the current quarter, is there a potential for some of these projects perhaps to slip into 2024?

[Jeffrey Scissons, executive]

Good morning, Tanner, this is Jeff. And there's certainly fluid. The market is fluid and timing and close of projects can be fluid. But the team does believe that they're on track and certainly feels like, as we mentioned earlier, that they would meet or slightly exceed targets for this year.

[Operator]

Thank you. At this point, I would now like to turn the conference back to CEO, Bethany Owen, for closing remarks.

[Bethany Owen, executive]

Thank you again for being with us this morning and for your investment and interest in ALLETE. We are looking forward to speaking with many of you in just over a week during the EEI financial conference and at other investor venues throughout the remainder of the year. We hope you enjoy the rest of your day.

[Operator]

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.