OTTR Otter Tail Corporation

Board of Directors Declares Quarterly Dividend of $0.4125 per Share

Otter Tail Corporation (Nasdaq: OTTR) today announced financial results for the quarter ended September 30, 2022.

SUMMARY

Compared to the quarter ended September 30, 2021:

• Consolidated operating revenues increased 21% to $384 million.
• Consolidated net income increased 60% to $84 million.
• Diluted earnings per share increased 60% to $2.01 per share.

CEO OVERVIEW

“Our diversified business model produced exceptional financial results for the quarter ended September 30, 2022,” said President and CEO Chuck MacFarlane. “Each operating segment contributed double digit earnings growth compared to the same period last year. Our Plastics segment completed another outstanding quarter, producing $56.0 million of earnings in the third quarter of 2022, compared to $28.4 million in the same period last year, as operating margins continue to benefit from elevated spreads of PVC pipe sale prices over resin input costs. However, demand for PVC pipe began to decline in the quarter due to multiple, larger than anticipated, resin price reductions which caused pipe distributors and contractors to reduce PVC pipe purchases in an effort to reduce inventory levels.

“Electric segment earnings increased 10.3% compared to the third quarter of 2021, primarily driven by increased commercial and industrial sales volumes. Our Manufacturing segment produced earnings growth of 48.1% compared to the third quarter of 2021 driven by increased sales volumes, improved manufacturing cost absorption and lower operating and maintenance costs.

“MISO recently approved several projects within the first tranche of its long-range transmission plan, which includes two new 345 kV transmission projects and a project to upgrade an existing transmission line. Otter Tail Power will have a varying level of ownership interest in these investments. We are beginning the early development phases of these projects and will be working with the co-owners and various industry partners to complete these projects over several years. Our total capital investment is anticipated to be $330 million, with approximately $122 million of the investment expected to occur before 2028. We have updated our five year capital expenditure plan to reflect this investment opportunity along with other updates.

“We are adjusting our 2022 diluted earnings per share guidance to a range of $6.42 to $6.72 from our most recent guidance of $6.83 to $7.13 per share. This change is primarily driven by announced resin price reductions throughout the third quarter, which negatively impacts sales volumes within our Plastics segment as distributors and contractors reduce their own inventory levels before purchasing additional PVC pipe.

“Our long-term focus remains on executing our strategy to grow our business and achieving operational, commercial and talent excellence to strengthen our position in the markets we serve. We remain confident in our ability to achieve a compounded annual growth rate in earnings per share in the range of 5% to 7% using 2024 as the base year. We currently expect to see elevated earnings from our manufacturing platform into 2023 with our earnings mix expected to move to approximately 65% from our Electric segment and 35% from our manufacturing platform beginning in 2024.”

THIRD QUARTER HIGHLIGHTS AND UPDATES

• Our Minnesota Rate Case concluded with final rates becoming effective on July 1, 2022, and interim rate refunds being completed during the third quarter. The rate case included the approval of a return on equity of 9.48% on a 52.5% equity layer, a revenue decoupling mechanism and numerous other items.

• Otter Tail Power has received regulatory approval to purchase the Ashtabula III wind farm, which will add 62.4 megawatts of capacity to our owned generation assets. The transaction is expected to close, subject to customary closing conditions, in January 2023.

• Otter Tail Power recently submitted a supplemental filing to update its 2022 Integrated Resource Plan (2022 IRP), requesting the procedural schedule in Minnesota be amended. The amended procedural schedule will provide additional time to update our modeling given significant changes in the energy industry since the original 2022 IRP filing. Specifically, our request was prompted by developments including FERC’s approval of MISO’s new seasonal resource adequacy construct, MISO’s proposal to significantly increase winter and spring planning reserve margins requirements, and enactment of the Inflation Reduction Act. If granted permission, we plan to file an updated resource plan in March 2023. Our supplemental filing requests maintaining the original procedural schedule for adding dual fuel capability at Astoria Station. Additionally, our initial filing proposed fuel oil as the secondary on-site fuel at Astoria Station, and our supplemental filing reflects revised cost estimates and liquified natural gas as the most cost-effective secondary fuel source.

• As required under the EPA’s Regional Haze Rule, the North Dakota Department of Environmental Quality (NDDEQ) submitted its state implementation plan to the EPA for approval in August. In its plan, the NDDEQ concluded it is not reasonable to require additional emission controls at Coyote Station, OTP's jointly owned coal-fired power plant in North Dakota, during this planning period.

• We continued to experience a volatile steel market, with prices rapidly decreasing during the third quarter. Steel prices peaked in the fourth quarter of 2021 at historically high levels with prices recently declining to below $800 per ton, impacting both our cost of materials and scrap revenues. Steel costs are a pass-through to customers. We continue to monitor customer demand and the impact that unpredictable supply chains have on their demand and the predictability of our shipping volumes.

• Sales prices for PVC pipe remain high, producing increased margins and earnings during the third quarter. However, demand for PVC pipe began to decline in the quarter primarily driven by improved resin and additive availability and announced resin price reductions throughout the third quarter, which led pipe distributors and contractors to lower purchase volumes in an effort to reduce their inventory levels.

QUARTERLY DIVIDEND

On October 31, 2022, the corporation’s Board of Directors declared a quarterly common stock dividend of $0.4125 per share. This dividend is payable December 9, 2022 to shareholders of record on November 15, 2022.

CASH FLOWS AND LIQUIDITY

Our consolidated cash provided by operating activities for the nine months ended September 30, 2022 was $288.0 million compared to $154.8 million for the nine months ended September 30, 2021, with the increase primarily due to a $117.0 million increase in net income and a lower level of working capital needs compared to last year. Investing activities for the nine months ended September 30, 2022 included capital expenditures of $123.2 million, primarily related to capital investments within our Electric segment. Financing activities for the nine months ended September 30, 2022 included the issuance of $90.0 million of long-term debt at Otter Tail Power and the maturity and repayment of $30.0 million of debt at Otter Tail Power. Financing activities for the nine months ended September 30, 2022 also included net repayments of short-term borrowings of $91.2 million and dividend payments of $51.6 million.

As of September 30, 2022, we had $170.0 million and $160.1 million of available liquidity under our Otter Tail Corporation Credit Agreement and Otter Tail Power Credit Agreement, respectively, along with $73.0 million of available cash and cash equivalents, for total available liquidity of $403.1 million.

SEGMENT PERFORMANCE

Electric Segment

 

 

Three Months Ended September 30,

 

 

 

 

($ in thousands)

 

2022

 

 

2021

 

Change

 

% Change

 

 

 

 

 

 

 

 

Operating Revenues

$

142,747

 

$

118,775

 

$

23,972

 

 

20.2

%

Net Income

 

24,847

 

 

22,528

 

 

2,319

 

 

10.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail MWh Sales

 

1,275,051

 

 

1,076,580

 

 

198,471

 

 

18.4

%

Heating Degree Days (HDDs)

 

22

 

 

3

 

 

19

 

 

633.3

 

Cooling Degree Days (CDDs)

 

376

 

 

463

 

 

(87

)

 

(18.8

)

 

 

 

 

 

 

 

 

The following table shows heating and cooling degree days as a percent of normal.

 

Three Months Ended September 30,

 

2022

 

 

2021

 

 

 

 

 

HDDs

43.1

%

 

5.8

%

CDDs

108.4

%

 

132.7

%

 

 

 

 

The following table summarizes the estimated effect on diluted earnings per share of the difference in retail kilowatt-hour (kwh) sales under actual weather conditions and expected retail kwh sales under normal weather conditions in 2022 and 2021.

 

2022 vs Normal

 

2022 vs 2021

 

2021 vs Normal

 

 

 

 

 

 

Effect on Diluted Earnings Per Share

$

0.01

 

$

(0.02

)

 

$

0.03

 

 

 

 

 

 

Operating Revenues increased $24.0 million primarily due to increased fuel recovery revenues and higher sales volumes. The increase in fuel recovery revenues is the result of higher purchased power and production fuel costs arising from increased natural gas and market energy costs. Sales volumes benefited from demand from commercial and industrial customers, including a new commercial customer load in North Dakota added in the current year, partially offset by the impact of unfavorable weather. Operating revenues in the third quarter of 2021 were impacted by additional adjustments to our estimated interim rate refund.

Net Income increased $2.3 million primarily due to the increased operating revenues described above, partially offset by increased operating and maintenance expenses driven by a number of maintenance activities, including our planned outage at Coyote Station, maintenance at our wind farm facilities, and vegetation management, as well as higher transmission tariff expenses.

Manufacturing Segment

 

Three Months Ended September 30,

 

 

 

 

(in thousands)

2022

 

2021

 

$ Change

 

% Change

 

 

 

 

 

 

 

 

Operating Revenues

$

98,767

 

$

89,977

 

$

8,790

 

9.8

%

Net Income

 

6,219

 

 

4,200

 

 

2,019

 

48.1

 

 

 

 

 

 

 

 

 

Operating Revenues increased $8.8 million primarily due to a 17% increase in sales volumes at BTD, partially offset by lower steel prices, which resulted in a $5.4 million decrease in material costs that are passed through to customers. Declines in scrap metal prices resulted in a $1.3 million decrease in scrap revenue. End market demand remains strong, however, supply chain disruptions experienced by our customers have continued to cause unpredictable shipments of our products to our customers. Increases in sales prices and volumes at T.O. Plastics, due to continued strong customer demand, also contributed to the segment increase in operating revenues.

Net Income increased $2.0 million due to increased operating revenues described above, as well as lower operating expenses.

Plastics Segment

 

Three Months Ended September 30,

 

 

 

 

(in thousands)

 

2022

 

 

2021

 

$ Change

 

% Change

 

 

 

 

 

 

 

 

Operating Revenues

$

142,342

 

$

107,542

 

$

34,800

 

32.4

%

Net Income

 

55,982

 

 

28,410

 

 

27,572

 

97.1

 

 

 

 

 

 

 

 

 

Operating Revenues increased $34.8 million due to a 57% increase in the price per pound of PVC pipe sold, as sales prices remain high due to extraordinary market conditions. Demand for PVC pipe began to soften during the third quarter as customers started to consume high priced inventory instead of buying additional PVC pipe. Sales volumes for the quarter decreased 15% due to softening customer demand.

Net Income increased $27.6 million due to the increased operating revenues described above, and an increase in gross profit margins, as the increase in sales prices exceeded the increased costs of PVC resin and other input materials. Resin prices in the third quarter of 2022 increased compared to the same period in the previous year, but decreased compared to the second quarter of 2022.

Corporate Costs

 

Three Months Ended September 30,

 

 

 

 

(in thousands)

 

2022

 

 

 

2021

 

 

$ Change

 

% Change

 

 

 

 

 

 

 

 

Losses Before Income Taxes

$

4,727

 

 

$

3,346

 

 

$

1,381

 

 

41.3

%

Income Tax Benefit

 

(1,918

)

 

 

(962

)

 

 

(956

)

 

99.4

 

Net Loss

$

2,809

 

 

$

2,384

 

 

$

425

 

 

17.8

%

Net Loss at our corporate cost center was impacted by increased employee health care costs, increased professional service costs and losses on our corporate-owned life insurance policy investments, partially offset by a decrease in interest expense due to lower average borrowings on our corporate credit facility and a favorable effective tax rate based on our estimated consolidated effective tax rate for 2022.

2022 BUSINESS OUTLOOK

We are lowering our 2022 diluted earnings per share guidance to a range of $6.42 to $6.72 primarily driven by expected sales volume reductions in our Plastics segment due to declining PVC resin prices. The midpoint of our revised 2022 diluted earnings per share guidance of $6.57 per share reflects a 55% growth rate from our 2021 diluted earnings per share of $4.23.

The segment components of our revised 2022 diluted earnings per share guidance range compared to 2021 actual earnings are as follows:

 

 

 

2021 EPS by Segment

 

2022 EPS Guidance August 1, 2022

 

2022 EPS Guidance October 31, 2022

 

 

 

Low

 

High

 

Low

 

High

 

 

 

 

 

 

 

 

 

 

 

 

Electric

 

 

$

1.73

 

 

$

1.84

 

 

$

1.88

 

 

$

1.90

 

 

$

1.94

 

Manufacturing

 

 

 

0.41

 

 

 

0.42

 

 

 

0.46

 

 

 

0.47

 

 

 

0.51

 

Plastics

 

 

 

2.34

 

 

 

4.96

 

 

 

5.15

 

 

 

4.45

 

 

 

4.64

 

Corporate

 

 

 

(0.25

)

 

 

(0.39

)

 

 

(0.36

)

 

 

(0.40

)

 

 

(0.37

)

Total

 

 

$

4.23

 

 

$

6.83

 

 

$

7.13

 

 

$

6.42

 

 

$

6.72

 

Return on Equity

 

 

 

19.2

%

 

 

25.9

%

 

 

26.8

%

 

 

24.4

%

 

 

25.3

%

The following items contributed to our revised 2022 earnings guidance:

Electric Segment - We are increasing our guidance for our Electric Segment based on the following:

• Increased sales volumes from commercial and industrial customers and improved margins from favorable pricing.
• Lower than anticipated labor and non-labor operating and maintenance costs, partially offset by a higher planned contribution to our charitable foundation.
• Our revised guidance assumes normal weather conditions for the remainder of the year.

Manufacturing Segment - We are increasing our guidance for our Manufacturing segment based on the following:

• Increased sales volumes at BTD driven by end market demand as our customers continue to build inventory to fill shortages created by supply chain challenges. Our customers continue to experience supply chain challenges which impact their ability to consistently take our product in line with their production timelines.
• The increase in sales volumes is partially offset by lower scrap income due to declining scrap metal prices.
• Increased earnings from T.O. Plastics driven by customer demand and improved gross profit margins due to the availability of low-cost raw material inputs and improved manufacturing productivity.
• Backlog for the manufacturing companies as of September 30, 2022 was approximately $141 million, compared with $116 million one year ago.

Plastics Segment - We are decreasing our guidance for our Plastics segment based on the following:

• Reduced demand for PVC pipe in the fourth quarter of 2022 due to anticipated further declines in PVC resin prices resulting in reduced purchase volumes from distributors and contractors as they consume their higher priced inventories.
• We anticipate sale prices for PVC pipe will remain elevated for the remainder of 2022, but the potential for continued decline of resin prices and reduced sales volumes could put downward pressure on sales prices for the remainder of 2022 and into 2023.
• Finished goods inventory levels have started to increase as the availability of resin, additives and other ingredients used to manufacture PVC pipe has improved. We anticipate building inventory levels during the remainder of 2022 to position our businesses for the start of 2023 as we anticipate distributors will seek to restock inventory levels at that time.

Corporate Costs - We are increasing our guidance for corporate costs based on the following:

• Investment losses on our corporate-owned life insurance policies and other investments during the third quarter of 2022 and an expected increase in health insurances costs in our self-insured health plan due to higher claims experience.

CAPITAL EXPENDITURES

The following provides a summary of actual capital expenditures for the year ended December 31, 2021, anticipated annual capital expenditures for the current year ending December 31, 2022, and anticipated capital expenditures for the next five years, along with average rate base and annual rate base growth of our Electric segment:

(in millions)

 

2021

 

 

 

2022(1)

 

 

 

2023

 

 

 

2024

 

 

 

2025

 

 

 

2026

 

 

 

2027

 

 

Total 2023 - 2027

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Electric Segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Renewables and Natural Gas Generation

 

 

 

$

33

 

 

 

$

88

 

 

$

119

 

 

$

88

 

 

$

79

 

 

$

10

 

 

$

384

Technology and Infrastructure

 

 

 

 

9

 

 

 

 

33

 

 

 

30

 

 

 

6

 

 

 

5

 

 

 

1

 

 

 

75

Distribution Plant Replacements

 

 

 

 

40

 

 

 

 

33

 

 

 

37

 

 

 

38

 

 

 

38

 

 

 

43

 

 

 

189

Transmission (includes replacements)

 

 

 

 

38

 

 

 

 

34

 

 

 

36

 

 

 

46

 

 

 

87

 

 

 

78

 

 

 

281

Other

 

 

 

 

30

 

 

 

 

26

 

 

 

25

 

 

 

30

 

 

 

25

 

 

 

22

 

 

 

128

Total Electric Segment

$

140

 

 

$

150

 

 

 

$

214

 

 

$

247

 

 

$

208

 

 

$

234

 

 

$

154

 

 

$

1,057

Manufacturing and Plastics Segments

 

32

 

 

 

34

 

 

 

 

48

 

 

 

53

 

 

 

29

 

 

 

25

 

 

 

24

 

 

 

179

Total Capital Expenditures

$

172

 

 

$

184

 

 

 

$

262

 

 

$

300

 

 

$

237

 

 

$

259

 

 

$

178

 

 

$

1,236

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Electric Utility Average Rate Base

$

1,575

 

 

$

1,620

 

 

 

$

1,750

 

 

$

1,850

 

 

$

1,990

 

 

$

2,110

 

 

$

2,210

 

 

 

Annual Rate Base Growth

 

 

 

 

2.9

%

 

 

 

8.0

%

 

 

5.7

%

 

 

7.6

%

 

 

6.0

%

 

 

4.7

%

 

 

(1) Includes actual results for the nine months ended September 30, 2022, and anticipated capital expenditures for the fourth quarter of 2022.

Our capital expenditure plan for the next five years includes Electric segment investments in wind and solar resources, transmission and distribution assets, and investments in system reliability and technology. Our Electric segment capital plan produces a compounded annual growth rate in average rate base of 6.4% over the next five years and will serve as a key driver in increasing Electric segment earnings over this timeframe. Our capital expenditure plan in our Manufacturing and Plastics segments includes investments to bring additional capacity to our operations, providing an opportunity for organic growth within these segments.

CONFERENCE CALL AND WEBCAST

The corporation will host a live webcast on Tuesday, November 1, 2022, at 10:00 a.m. CDT to discuss its financial and operating performance.

The presentation will be posted on our website before the webcast. To access the live webcast, go to www.ottertail.com/presentations and select “Webcast.” Please allow time prior to the call to visit the site and download any software needed to listen in. An archived copy of the webcast will be available on our website shortly after the call.

If you are interested in asking a question during the live webcast, visit and follow the link provided in the press release announcing the upcoming conference call.

FORWARD-LOOKING STATEMENTS

Except for historical information contained here, the statements in this release are forward-looking and made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The words “anticipate,” “believe,” “could,” “estimate,” “expect,” “goal,” “intend,” “may,” “outlook,” “plan,” “possible,” “potential,” “projected,” “should,” “will,” “would” and similar words and expressions are intended to identify forward-looking statements. Such statements are based upon the current beliefs and expectations of management. Forward-looking statements made herein, which include statements regarding 2022 earnings and earnings per share, long-term earnings, earnings per share growth and earnings mix, anticipated levels of energy generation from renewable resources, anticipated reductions in carbon dioxide emissions, future investments and capital expenditures, rate base levels and rate base growth, future raw materials costs, future raw materials availability and supply constraints, future operating revenues and operating results, and expectations regarding regulatory proceedings, as well as other assumptions and statements, involve known and unknown risks and uncertainties that may cause our actual results in current or future periods to differ materially from the forecasted assumptions and expected results. The Company’s risks and uncertainties include, among other things, uncertainty of the impact and duration of the COVID-19 pandemic, long-term investment risk, seasonal weather patterns and extreme weather events, counterparty credit risk, future business volumes with key customers, reductions in our credit ratings, our ability to access capital markets on favorable terms, assumptions and costs relating to funding our employee benefit plans, our subsidiaries’ ability to make dividend payments, cyber security threats or data breaches, the impact of government legislation and regulation including foreign trade policy and environmental laws and regulations, the impact of climate change including compliance with legislative and regulatory changes to address climate change, operational and economic risks associated with our electric generating and manufacturing facilities, risks associated with energy markets, the availability and pricing of resource materials, attracting and maintaining a qualified and stable workforce, and changing macroeconomic and industry conditions. These and other risks are more fully described in our filings with the Securities and Exchange Commission, including our most recently filed Annual Report on Form 10-K, as updated in subsequently filed Quarterly Reports on Form 10-Q, as applicable. Forward-looking statements speak only as of the date they are made, and we expressly disclaim any obligation to update any forward-looking information.

Category: Earnings

About the Corporation: Otter Tail Corporation has interests in diversified operations that include an electric utility and manufacturing businesses. Otter Tail Corporation stock trades on the Nasdaq Global Select Market under the symbol OTTR. The latest investor and corporate information is available at www.ottertail.com. Corporate offices are in Fergus Falls, Minnesota, and Fargo, North Dakota.

OTTER TAIL CORPORATION

CONSOLIDATED STATEMENTS OF INCOME (unaudited)

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

(in thousands, except per-share amounts)

 

2022

 

 

 

2021

 

 

2022

 

 

 

2021

 

 

 

 

 

 

 

 

Operating Revenues

 

 

 

 

 

 

 

Electric

$

142,747

 

 

$

118,775

 

$

404,112

 

 

$

348,629

Product Sales

 

241,109

 

 

 

197,519

 

 

754,688

 

 

 

514,983

Total Operating Revenues

 

383,856

 

 

 

316,294

 

 

1,158,800

 

 

 

863,612

Operating Expenses

 

 

 

 

 

 

 

Electric Production Fuel

 

24,972

 

 

 

17,698

 

 

54,538

 

 

 

44,576

Electric Purchased Power

 

19,913

 

 

 

9,878

 

 

64,604

 

 

 

40,273

Electric Operating and Maintenance Expense

 

39,799

 

 

 

36,465

 

 

126,460

 

 

 

114,615

Cost of Products Sold (excluding depreciation)

 

139,361

 

 

 

134,212

 

 

443,586

 

 

 

358,767

Other Nonelectric Expenses

 

16,524

 

 

 

16,224

 

 

50,981

 

 

 

45,587

Depreciation and Amortization

 

22,716

 

 

 

22,815

 

 

69,829

 

 

 

68,109

Electric Property Taxes

 

4,438

 

 

 

4,474

 

 

13,304

 

 

 

13,136

Total Operating Expenses

 

267,723

 

 

 

241,766

 

 

823,302

 

 

 

685,063

Operating Income

 

116,133

 

 

 

74,528

 

 

335,498

 

 

 

178,549

Other Income and Expense

 

 

 

 

 

 

 

Interest Charges

 

9,259

 

 

 

9,648

 

 

27,198

 

 

 

28,601

Nonservice Cost Components of Postretirement Benefits

 

(52

)

 

 

505

 

 

(824

)

 

 

1,511

Other Income (Expense), net

 

(174

)

 

 

203

 

 

(802

)

 

 

2,095

Income Before Income Taxes

 

106,752

 

 

 

64,578

 

 

308,322

 

 

 

150,532

Income Tax Expense

 

22,513

 

 

 

11,824

 

 

66,143

 

 

 

25,380

Net Income

$

84,239

 

 

$

52,754

 

$

242,179

 

 

$

125,152

 

 

 

 

 

 

 

 

Weighted-Average Common Shares Outstanding:

 

 

 

 

 

 

 

Basic

 

41,600

 

 

 

41,504

 

 

41,582

 

 

 

41,487

Diluted

 

41,974

 

 

 

41,869

 

 

41,930

 

 

 

41,795

Earnings Per Share:

 

 

 

 

 

 

 

Basic

$

2.02

 

 

$

1.27

 

$

5.82

 

 

$

3.02

Diluted

$

2.01

 

 

$

1.26

 

$

5.78

 

 

$

2.99

OTTER TAIL CORPORATION

CONSOLIDATED BALANCE SHEETS (unaudited)

 

(in thousands)

September 30, 2022

 

December 31, 2021

 

 

 

 

Assets

 

 

 

Current Assets

 

 

 

Cash and Cash Equivalents

$

72,987

 

 

$

1,537

 

Receivables, net of allowance for credit losses

 

193,797

 

 

 

174,953

 

Inventories

 

146,376

 

 

 

148,490

 

Regulatory Assets

 

29,921

 

 

 

27,342

 

Other Current Assets

 

17,412

 

 

 

17,032

 

Total Current Assets

 

460,493

 

 

 

369,354

 

Noncurrent Assets

 

 

 

Investments

 

52,966

 

 

 

56,690

 

Property, Plant and Equipment, net of accumulated depreciation

 

2,186,643

 

 

 

2,124,605

 

Regulatory Assets

 

116,593

 

 

 

125,508

 

Intangible Assets, net of accumulated amortization

 

8,218

 

 

 

9,044

 

Goodwill

 

37,572

 

 

 

37,572

 

Other Noncurrent Assets

 

35,419

 

 

 

32,057

 

Total Noncurrent Assets

 

2,437,411

 

 

 

2,385,476

 

Total Assets

$

2,897,904

 

 

$

2,754,830

 

 

 

 

 

Liabilities and Shareholders' Equity

 

 

 

Current Liabilities

 

 

 

Short-Term Debt

$

—

 

 

$

91,163

 

Current Maturities of Long-Term Debt

 

—

 

 

 

29,983

 

Accounts Payable

 

121,995

 

 

 

135,089

 

Accrued Salaries and Wages

 

27,454

 

 

 

31,704

 

Accrued Taxes

 

25,635

 

 

 

19,245

 

Regulatory Liabilities

 

21,114

 

 

 

24,844

 

Other Current Liabilities

 

45,655

 

 

 

55,671

 

Total Current Liabilities

 

241,853

 

 

 

387,699

 

Noncurrent Liabilities and Deferred Credits

 

 

 

Pensions Benefit Liability

 

50,489

 

 

 

73,973

 

Other Postretirement Benefits Liability

 

67,352

 

 

 

66,481

 

Regulatory Liabilities

 

240,545

 

 

 

234,430

 

Deferred Income Taxes

 

212,838

 

 

 

188,268

 

Deferred Tax Credits

 

16,102

 

 

 

16,661

 

Other Noncurrent Liabilities

 

60,942

 

 

 

62,527

 

Total Noncurrent Liabilities and Deferred Credits

 

648,268

 

 

 

642,340

 

Commitments and Contingencies

 

 

 

Capitalization

 

 

 

Long-Term Debt, net of current maturities

 

823,760

 

 

 

734,014

 

Shareholders’ Equity

 

 

 

Common Shares

 

208,155

 

 

 

207,758

 

Additional Paid-In Capital

 

422,448

 

 

 

419,760

 

Retained Earnings

 

560,398

 

 

 

369,783

 

Accumulated Other Comprehensive Loss

 

(6,978

)

 

 

(6,524

)

Total Shareholders' Equity

 

1,184,023

 

 

 

990,777

 

Total Capitalization

 

2,007,783

 

 

 

1,724,791

 

Total Liabilities and Shareholders' Equity

$

2,897,904

 

 

$

2,754,830

 

OTTER TAIL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

 

 

Nine Months Ended September 30,

(in thousands)

 

2022

 

 

 

2021

 

 

 

 

 

Operating Activities

 

 

 

Net Income

$

242,179

 

 

$

125,152

 

Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:

 

 

 

Depreciation and Amortization

 

69,829

 

 

 

68,109

 

Deferred Tax Credits

 

(558

)

 

 

(558

)

Deferred Income Taxes

 

23,648

 

 

 

18,835

 

Discretionary Contribution to Pension Plan

 

(20,000

)

 

 

(10,000

)

Allowance for Equity Funds Used During Construction

 

(938

)

 

 

(427

)

Stock Compensation Expense

 

6,141

 

 

 

6,354

 

Other, net

 

5,477

 

 

 

(2,747

)

Change in Operating Assets and Liabilities:

 

 

 

Receivables

 

(18,845

)

 

 

(64,800

)

Inventories

 

3,632

 

 

 

(22,450

)

Regulatory Assets

 

170

 

 

 

5,301

 

Other Assets

 

1,789

 

 

 

(18,708

)

Accounts Payable

 

(10,681

)

 

 

30,921

 

Accrued and Other Liabilities

 

(13,970

)

 

 

12,027

 

Regulatory Liabilities

 

(1,208

)

 

 

2,350

 

Pension and Other Postretirement Benefits

 

1,308

 

 

 

5,393

 

Net Cash Provided by Operating Activities

 

287,973

 

 

 

154,752

 

Investing Activities

 

 

 

Capital Expenditures

 

(123,227

)

 

 

(117,312

)

Proceeds from Disposal of Noncurrent Assets

 

3,803

 

 

 

5,819

 

Purchases of Investments and Other Assets

 

(8,132

)

 

 

(5,591

)

Net Cash Used in Investing Activities

 

(127,556

)

 

 

(117,084

)

Financing Activities

 

 

 

Net Borrowings (Repayments) on Short-Term Debt

 

(91,163

)

 

 

16,860

 

Proceeds from Issuance of Long-Term Debt

 

90,000

 

 

 

—

 

Payments for Retirement of Long-Term Debt

 

(30,000

)

 

 

(169

)

Dividends Paid

 

(51,564

)

 

 

(48,645

)

Payments for Shares Withheld for Employee Tax Obligations

 

(2,942

)

 

 

(1,633

)

Other, net

 

(3,298

)

 

 

(3,972

)

Net Cash Used in Financing Activities

 

(88,967

)

 

 

(37,559

)

Net Change in Cash and Cash Equivalents

 

71,450

 

 

 

109

 

Cash and Cash Equivalents at Beginning of Period

 

1,537

 

 

 

1,163

 

Cash and Cash Equivalents at End of Period

$

72,987

 

 

$

1,272

 

OTTER TAIL CORPORATION

SEGMENT RESULTS (unaudited)

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

(in thousands)

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

 

 

 

 

 

 

 

 

Operating Revenues

 

 

 

 

 

 

 

Electric

$

142,747

 

 

$

118,775

 

 

$

404,112

 

 

$

348,629

 

Manufacturing

 

98,767

 

 

 

89,977

 

 

 

306,921

 

 

 

250,085

 

Plastics

 

142,342

 

 

 

107,542

 

 

 

447,767

 

 

 

264,898

 

Total Operating Revenues

$

383,856

 

 

$

316,294

 

 

$

1,158,800

 

 

$

863,612

 

 

 

 

 

 

 

 

 

Operating Income (Loss)

 

 

 

 

 

 

 

Electric

$

35,956

 

 

$

32,386

 

 

$

90,765

 

 

$

82,694

 

Manufacturing

 

8,380

 

 

 

5,874

 

 

 

25,017

 

 

 

21,398

 

Plastics

 

75,801

 

 

 

38,547

 

 

 

231,223

 

 

 

81,664

 

Corporate

 

(4,004

)

 

 

(2,279

)

 

 

(11,507

)

 

 

(7,207

)

Total Operating Income

$

116,133

 

 

$

74,528

 

 

$

335,498

 

 

$

178,549

 

 

 

 

 

 

 

 

 

Net Income (Loss)

 

 

 

 

 

 

 

Electric

$

24,847

 

 

$

22,528

 

 

$

62,938

 

 

$

55,547

 

Manufacturing

 

6,219

 

 

 

4,200

 

 

 

17,858

 

 

 

15,290

 

Plastics

 

55,982

 

 

 

28,410

 

 

 

170,788

 

 

 

60,102

 

Corporate

 

(2,809

)

 

 

(2,384

)

 

 

(9,405

)

 

 

(5,787

)

Total Net Income

$

84,239

 

 

$

52,754

 

 

$

242,179

 

 

$

125,152

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20221031005750/en/

Media Contact: Stephanie Hoff, Director of Corporate Communications, (218) 739-8535 Investor Contact: Tyler Akerman, Manager of Investor Relations, (800) 664-1259