Raises and Narrows its 2020 Earnings Per Share Guidance Range to $2.26-$2.36
Board of Directors Declares Quarterly Dividend of $0.37 Per Share
FERGUS FALLS, Minn.--(BUSINESS WIRE)-- Otter Tail Corporation (Nasdaq: OTTR) today announced financial results for the quarter ended September 30, 2020.
Summary:
CEO Overview
“Our third quarter earnings per share increased 40 percent over the third quarter of 2019 driven by increased earnings in our Electric and Plastics segments. We are extremely pleased with our third quarter financial results given the challenging economic times,” said President and CEO Chuck MacFarlane.
“Employees across the organization continue to do an outstanding job of being responsive, flexible and determined while addressing COVID-19 challenges.
“We continue to focus on the health and safety of our employees, customers and communities, while providing reliable electric service and on-time product delivery and taking counter measures to limit the operational and financial impacts related to the COVID-19 pandemic.
“Our Electric segment third quarter earnings increased $7.1 million due to increasing investments in our Merricourt Wind Energy Center and Astoria Station projects, a favorable decision regarding the state jurisdictional treatment of federally approved transmission rate incentives, effective cost management actions targeted at offsetting the impacts of COVID-19, and reductions in operating expenses.
“We continued to experience reduced overall electric sales to industrial and commercial customers during the third quarter. Our sales to residential customers were strong. The reduction in industrial and commercial sales is primarily due to demand reduction related to COVID-19.
“Our Plastics segment third quarter earnings increased $4.9 million compared with 2019 third quarter results, driven by higher quarter over quarter sales volume and increased pipe prices. Demand in the residential construction market remained strong while several factors led to supply constraints and rising prices. We also want to thank Steve Laskey, the President of our Plastics Segment who retired at the end of September. We are extremely grateful for his leadership. Terry Mitzel, who has been with the Northern Pipe Products for twelve years, most recently as President, now leads the Plastics segment, providing great experience and continuity.
Our Manufacturing segment third quarter earnings increased $0.2 million compared with third quarter 2019 results, driven by improved margins on lower sales. Despite a drop in overall sales, BTD started to experience recovery in sales in the third quarter driven by strong recreational vehicle and lawn and garden end-market sales.
“Despite the pandemic, the electric utility continues to execute on its record capital spending year. We continue to make good progress on our generation construction projects. The Merricourt Wind Energy Center continues to be on budget. All 75 turbines have been erected and the first turbine was energized on October 14, 2020. A defective blade was identified during the testing and commissioning of the turbines. We are investigating the defect along with 17 additional blades manufactured in the same facility. Depending on the extent of the defect and repair and replacement alternatives, the date of commercial operation of the project, or a portion thereof, may be delayed beyond December 2020. The risk of loss on assets of the project only transfers to Otter Tail Power Company at commercial operation. Commercial and contractual provisions are in place such that we don’t believe this blade defect issue will materially impact the project. The remaining blades on the project were manufactured in a different plant and we are not aware of any defects in those blades. We are earning returns on project costs incurred to date in each of our state jurisdictions. We estimate direct generation and transmission capital costs for this project will be approximately $260 million. Additional transmission system upgrades for the project amounting to approximately $6.4 million will be made by a neighboring MISO transmission owner. The project is expected to generate enough energy to power more than 65,000 homes.
“Construction of Astoria Station, our 245-megawatt natural gas-fired combustion turbine generation project, remains on budget with commercial operation expected to begin in the first quarter of 2021. Major construction milestones were reached in the third quarter, with all major equipment on site and in place, the gas interconnection complete and the generator tie line complete. The project is moving into testing and commissioning phase. Astoria Station complements our wind generation by providing a reliable resource during low wind periods, and it will have flexible operating options, including fast start capability and low CO2 emissions. We estimate direct generation and transmission capital costs for Astoria Station will be approximately $152.5 million.
“Otter Tail Power Company announced in September the $60 million Hoot Lake Solar project. This is a 49‑megawatt (MW) project we plan to build on land around Hoot Lake Plant in Fergus Falls, Minnesota. The project will include up to 170,000 solar panels and generate enough energy to power approximately 10,000 homes each year. This project offers us a unique opportunity to re-use our existing Hoot Lake transmission rights, substation and land after retiring Hoot Lake Plant in 2021. The substation will connect electricity produced by Hoot Lake Solar to the energy grid for customers throughout our service area.
“Solar generation has several advantages for us to implement at this time and at this location. Over the past few years, the cost of solar energy has significantly decreased while efficiency has increased. A diverse mix of energy resources helps us maintain affordable and reliable service for years to come.
“Otter Tail Power Company continues to enhance its generation mix as it transitions to a cleaner energy future while maintaining low rates in the region for its customers. By 2023, carbon dioxide emissions from its generation resources are expected to be approximately 30 percent lower than 2005 levels and up to 35 percent of our energy is projected to come from renewable resources, all while keeping average residential rates among the lowest in the nation.
“Otter Tail Power Company filed a request with the Minnesota Public Utilities Commission on November 2, 2020 for an increase in general rates in Minnesota. Investment in cleaner energy generation primarily is driving this request. The Merricourt Wind Energy Center and Astoria Station are part of our plan to meet customers’ future energy needs. Continued focus on enhancing customer experience also is part of the request. A recently implemented customer information system allows customers more access and options related to their energy use and the company’s services. Otter Tail Power Company proposed to increase net revenues from Minnesota non-fuel base rates by $14.5 million, or 6.77 percent. Even with this increase Otter Tail Power Company will continue to have some of the lowest rates in the country.
“Otter Tail Power Company continues to benefit from strong rate base growth investments and expects to invest $898 million in capital projects from 2020 through 2024. These investments represent over 90 percent of our total capital spending over the next five years and include regulated investments in renewable and natural gas‑fired generation, technology and infrastructure and transmission projects. We expect this to result in a projected compounded annual growth rate of approximately 8.6 percent in utility rate base from year-end 2019 through 2024 and to deliver value to customers and shareholders. We continue to make system investments to meet our customers’ expectations, reduce operating and maintenance costs, reduce emissions and improve reliability and safety.
“Our long-term focus remains on executing our growth strategies, which are expected to increase shareholder value. For the utility, our strategy is to continue to invest in rate base growth opportunities and drive cost efficiency with operating and maintenance expenses, which will lower our overall risk, create a more predictable earnings stream, maintain our credit quality and preserve our ability to pay dividends. Over time, we expect the electric utility business will provide approximately 75 percent of our overall earnings.
“The utility is complemented by well-run, strategic manufacturing and plastic pipe businesses, which provide organic growth opportunities from new products and services, market expansion and increased efficiencies. We expect these companies will provide approximately 25 percent of our earnings over the long term.
“We are raising and narrowing our 2020 diluted earnings per share guidance range to $2.26 to $2.36 from our August 3, 2020 guidance range of $2.10 to $2.30, based on our financial results through the first nine months of 2020 and updated view of current business conditions in our Plastics and Manufacturing segments. We maintain our long-term earnings per share growth rate target of 5 to 7 percent off a 2019 base.”
Board of Directors Declares Quarterly Dividend
On November 2, 2020 the corporation’s Board of Directors declared a quarterly common stock dividend of $0.37 per share. This dividend is payable December 10, 2020 to shareholders of record on November 13, 2020.
Cash Flows and Liquidity
Our consolidated cash provided by operating activities for the nine months ended September 30, 2020 was $141.3 million compared with $105.1 million for the nine months ended September 30, 2019.
Investing activities for the nine months ended September 30, 2020 included capital expenditures of $220.6 million compared with $149.7 million for the nine months ended September 30, 2019. The increase in capital expenditures was primarily for construction of Astoria Station and the Merricourt Wind Energy Center (Merricourt).
Financing activities in the first nine months of 2020 included the issuance of $75.0 million in long-term debt at Otter Tail Power Company, $42.6 million borrowed under the Otter Tail Corporation Credit Agreement and net proceeds of $32.7 million raised from the issuance of common stock. Proceeds from the debt and equity issuances were used to fund Otter Tail Power Company’s construction program expenditures. We also paid $45.1 million in common dividends in the first nine months of 2020. Financing activities in the first nine months of 2019 included proceeds of $90.4 million from borrowings under the Otter Tail Power Company credit agreement to fund Otter Tail Power Company capital expenditures. We paid $41.8 million in common dividends in the first nine months of 2019.
The following table presents the status of the corporation’s lines of credit:
(in thousands) | Line Limit | In Use on September 30, 2020 | Restricted due to Outstanding Letters of Credit | Available on September 30, 2020 | Available on December 31, 2019 | ||||||||||
Otter Tail Corporation Credit Agreement | $ | 170,000 | $ | 48,600 | $ | -- | $ | 121,400 | $ | 164,000 | |||||
Otter Tail Power Company Credit Agreement |
| 170,000 |
| -- |
| 7,670 |
| 162,330 |
| 154,524 | |||||
Total | $ | 340,000 | $ | 48,600 | $ | 7,670 | $ | 283,730 | $ | 318,524 |
Both credit agreements are in place until October 31, 2024.
We have issued $55 million of common equity under our At-the-Market Offering Program, and Dividend Reinvestment and Employee Stock Purchase plans. This started in the fourth quarter of 2019 and we expect to issue up to an additional $20 million in common equity under these programs into 2021 depending on conditions in the equity capital markets caused by the COVID‑19 pandemic or other factors.
2020 Segment Performance Summary
Electric
| Three Months ended September 30, |
|
|
|
| ||||||||
($s in thousands) | 2020 |
| 2019 |
| Change |
| % Change | ||||||
Retail Electric Revenues | $ | 99,605 | $ | 99,424 | $ | 181 |
| 0.2 |
| ||||
Transmission Services Revenues |
| 12,288 |
| 11,692 |
| 596 |
| 5.1 |
| ||||
Wholesale Electric Revenues |
| 1,500 |
| 1,631 |
| (131 | ) | (8.0 | ) | ||||
Other Electric Revenues |
| 1,830 |
| 1,626 |
| 204 |
| 12.5 |
| ||||
Total Electric Revenues | $ | 115,223 | $ | 114,373 | $ | 850 |
| 0.7 |
| ||||
Net Income | $ | 24,737 | $ | 17,682 | $ | 7,055 |
| 39.9 |
| ||||
Retail Megawatt-hour Sales |
| 1,075,336 |
| 1,091,427 |
| (16,091 | ) | (1.5 | ) | ||||
Heating Degree Days (HDDs) |
| 61 |
| 42 |
| 19 |
| 45.2 |
| ||||
Cooling Degree Days (CDDs) |
| 363 |
| 288 |
| 75 |
| 26.0 |
|
The following table shows heating and cooling degree days as a percent of normal.
| Three Months ended September 30, | |||
| 2020 |
| 2019 | |
HDDs | 115.1% |
| 76.4% | |
CDDs | 104.6% |
| 83.0% |
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 the third quarters of 2020 and 2019 and between quarters.
| 2020 vs Normal | 2019 vs Normal | 2020 vs 2019 | |||
Effect on Diluted Earnings Per Share | $0.01 | $(0.02) | $0.03 |
The $0.2 million increase in retail sales revenue includes:
These increases in revenue were mostly offset by:
Transmission services revenue increased $0.6 million mainly due to an increase in facility service agreement revenues related to transmission upgrades made to accommodate independent generator access to the transmission grid.
Production fuel costs decreased $6.8 million due to a 24.0% decrease in kwhs generated from our fuel-burning plants and a 21.7% decrease in fuel-cost per kwh of generation, weighted heavily by higher fuel costs per kwh of generation at Coyote Station in the third quarter of 2019. Coyote Station was down for maintenance in the second quarter of 2019 and all the fixed and variable mine operating costs incurred during the second quarter and absorbed in inventory were expensed as fuel costs when Coyote Station resumed operations in the third quarter of 2019.
The cost of purchased power to serve retail customers increased $0.3 million as a result of an 18.7% increase in kwh purchases, mostly offset by a 14.1% decrease in the cost per kwh purchased. The increase in purchased power volume was a function of reduced generation at Big Stone Plant, which went offline for scheduled maintenance in September 2020, and the availability of low-priced energy in the wholesale market. The decrease in purchased power prices was driven mainly by low prices for natural gas-fired generation.
Electric operating and maintenance expense decreased $3.0 million primarily due to an increase in the proportion of labor costs capitalized resulting from our ongoing construction activity and a decrease in other expenses due to cost management initiatives. These decreases were partially offset by an increase in bad debt expense, mainly due to adoption of COVID-19-related service suspensions and debt collection policies.
Property tax expense increased $0.4 million due to property additions and increased jurisdictional valuations.
Depreciation expense increased $0.4 million mainly due to 2019 capital additions for generation and transmission plant.
Electric segment interest expense increased $1.0 million due to debt issuances of $100 million in October 2019, $35 million in February 2020 and $40 million in August 2020 under Otter Tail Power Company’s 2019 Note Purchase Agreement.
Electric segment other income increased $0.3 million mostly due to a $0.3 million increase in allowance for equity funds used during construction, mainly related to the Minnesota share of construction work in progress on the Astoria Station project.
Income tax expense in the Electric segment increased $2.0 million, mainly as a result of a $9.0 million increase in segment income before income taxes.
Manufacturing
| Three Months ended September 30, |
|
|
|
| ||||||||
(in thousands) | 2020 |
| 2019 |
| Change |
| % Change | ||||||
Operating Revenues | $ | 59,849 | $ | 65,722 | $ | (5,873 | ) | (8.9 | ) | ||||
Net Income |
| 3,311 |
| 3,155 |
| 156 |
| 4.9 |
|
BTD’s revenues decreased $5.4 million between quarters, driven by a $4.1 million decline in prices of materials passed through to customers and $1.3 million in decreased sales volumes. The decrease in sales volumes primarily resulted from lower parts sales to construction and industrial equipment manufacturers, partially offset by increased parts sales to recreational vehicle, agricultural and lawn and garden equipment manufacturers. Increases in parts revenue related to favorable product pricing were offset by lower tooling and scrap revenues.
Cost of products sold at BTD decreased $6.6 million, mainly as a result of the $4.1 million in lower material costs passed through to customers but also due to improved productivity and the decrease in sales volume. A $0.8 million increase in operating income at BTD was mostly offset by a $0.6 million increase in income tax expense, resulting in a $0.2 million increase in net income between quarters.
Revenues at T.O Plastics decreased $0.5 million leading to a $0.1 million decrease in net income. The decreased sales level was mainly due to market softness generated by the uncertainty of how COVID-19 was going to impact these end markets.
Plastics
| Three Months ended September 30, |
|
|
|
| ||||||
(in thousands) | 2020 |
| 2019 |
| Change |
| % Change | ||||
Operating Revenues | $ | 60,693 | $ | 48,566 | $ | 12,127 | 25.0 | ||||
Net Income |
| 10,343 |
| 5,397 |
| 4,946 | 91.6 |
Plastics segment revenues and net income increased $12.1 million and $4.9 million, respectively, primarily due to a 21.2% increase in pounds of polyvinyl chloride (PVC) pipe sold driven by distributors rebuilding inventory in the third quarter after reducing inventory levels in the second quarter due to uncertainty over the impact of COVID-19 on sales. Cost of products sold increased $5.1 million due to the increase in sales volume, partially offset by a 6.3% decrease in the cost per pound of PVC pipe sold. The decrease in the cost per pound of PVC pipe sold is primarily due to lower material input costs. Plastics segment operating expenses increased $0.4 million mainly due to increased employee benefit costs.
Corporate
| Three Months ended September 30, |
|
|
|
| ||||||||||
(in thousands) | 2020 |
| 2019 |
| Change |
| % Change | ||||||||
Operating Losses | $ | (3,555 | ) | $ | (2,040 | ) | $ | (1,515 | ) | (74.3 | ) | ||||
Interest Charges |
| (1,243 | ) |
| (1,299 | ) |
| 56 |
| (4.3 | ) | ||||
Other Income |
| 861 |
|
| 521 |
|
| 340 |
| 65.3 |
| ||||
Losses before Income Taxes | $ | (3,937 | ) | $ | (2,818 | ) | $ | (1,119 | ) | (39.7 | ) | ||||
Income Tax Savings |
| 1,480 |
|
| 1,329 |
|
| 151 |
| 11.4 |
| ||||
Net Loss | $ | (2,457 | ) | $ | (1,489 | ) | $ | (968 | ) | 65.0 |
|
The $1.5 million increase in corporate operating expenses is mainly due to a $1.0 million increase in performance-based incentive accruals driven by improved quarter-over-quarter results. The $0.3 million increase in other income is due to increases in the value of corporate-owned life insurance policies and equity investments held at our captive insurance company related to the third quarter 2020 recovery in equity markets. Corporate income tax savings increased $0.2 million.
2020 Business Outlook
We are raising and narrowing our 2020 diluted earnings per share guidance range based on our financial results through the first nine months of 2020 and updated view of current business conditions in our Plastics and Manufacturing segments. We now expect our 2020 diluted earnings per share to be in the range of $2.26 to $2.36 instead of $2.10 to $2.30. This revision in guidance is primarily driven by strong performance in our Plastics segment along with continued favorable business conditions in this segment expected through the rest of 2020. Also, the impact of COVID-19 on our Electric segment has been less than previously expected. Our 2020 diluted earnings per share guidance includes $0.04 of dilution associated with actual and planned issuances of common shares under our At-the-Market Offering Program and Dividend Reinvestment and Employee Stock Purchase Plans to help fund construction projects at Otter Tail Power Company.
We currently expect capital additions to be $380 million in 2020, with our Electric segment accounting for 96% of those additions, largely driven by the Merricourt and Astoria Station rate base projects. A five-year anticipated capital expenditures table is provided below our 2020 earnings outlook.
Segment components of our revised 2020 earnings per share guidance range compared with 2019 actual earnings and with our previously issued guidance are as follows.
Diluted Earnings Per Share | 2019 EPS by Segment | 2020 Guidance February 20, 2020 | 2020 Guidance May 5, 2020 | 2020 Guidance August 3, 2020 | 2020 Guidance November 2, 2020 | ||||
Low | High | Low | High | Low | High | Low | High | ||
Electric | $1.48 | $1.67 | $1.70 | $1.65 | $1.70 | $1.67 | $1.70 | $1.67 | $1.69 |
Manufacturing | $0.32 | $0.31 | $0.35 | $0.14 | $0.23 | $0.15 | $0.23 | $0.23 | $0.25 |
Plastics | $0.51 | $0.43 | $0.47 | $0.43 | $0.47 | $0.50 | $0.54 | $0.64 | $0.66 |
Corporate | ($0.14) | ($0.19) | ($0.15) | ($0.22) | ($0.15) | ($0.22) | ($0.17) | ($0.28) | ($0.24) |
Total | $2.17 | $2.22 | $2.37 | $2.00 | $2.25 | $2.10 | $2.30 | $2.26 | $2.36 |
Return on Equity | 11.6% | 11.0% | 11.7% | 9.9% | 11.1% | 10.4% | 11.4% | 11.2% | 11.7% |
The estimates and assumptions underlying our latest 2020 guidance as compared to our August 3, 2020 guidance are summarized below.
The following table shows our 2019 capital expenditures and June 30, 2020 revised 2020 through 2024 anticipated capital expenditures and electric utility average rate base.
(in millions) | 2019 |
| 2020 |
| 2021 |
| 2022 |
| 2023 |
| 2024 |
| Total | ||||||||
Capital Expenditures: |
|
|
|
|
|
|
| ||||||||||||||
Electric Segment: |
|
|
|
|
|
|
| ||||||||||||||
Renewables and Natural Gas Generation |
| $ | 258 | $ | 65 | $ | 53 | $ | -- | $ | -- | $ | 376 | ||||||||
Technology and Infrastructure |
|
| -- |
| 11 |
| 28 |
| 32 |
| 28 |
| 99 | ||||||||
Distribution Plant Replacements |
|
| 20 |
| 25 |
| 28 |
| 31 |
| 30 |
| 134 | ||||||||
Transmission (includes replacements) |
|
| 62 |
| 14 |
| 30 |
| 30 |
| 30 |
| 166 | ||||||||
Other |
|
| 26 |
| 23 |
| 25 |
| 25 |
| 24 |
| 123 | ||||||||
Total Electric Segment | $ | 187 | $ | 366 | $ | 138 | $ | 164 | $ | 118 | $ | 112 | $ | 898 | |||||||
Manufacturing and Plastics Segments |
| 20 |
| 14 |
| 17 |
| 17 |
| 19 |
| 17 |
| 84 | |||||||
Total Capital Expenditures | $ | 207 | $ | 380 | $ | 155 | $ | 181 | $ | 137 | $ | 129 | $ | 982 | |||||||
Total Electric Utility Average Rate Base | $ | 1,170 | $ | 1,415 | $ | 1,587 | $ | 1,664 | $ | 1,726 | $ | 1,765 |
| ||||||||
Rate Base Growth |
|
| 20.9% |
| 12.2% |
| 4.9% |
| 3.7% |
| 2.3% |
|
The capital expenditure plan for the 2020-2024 time period calls for Electric segment capital expenditures of $898 million based on the need for additional wind and solar in rate base, capital spending for Astoria Station (part of our replacement solution for Hoot Lake Plant when it is retired in 2021), technology-related investments and distribution and transmission investments. Given this capital expenditure plan, our compounded annual growth rate in rate base is projected to be 8.6% over the 2019 to 2024 timeframe.
Execution on the currently anticipated Electric segment capital expenditure plan is expected to grow rate base and be a key driver in increasing utility earnings over the 2020 through 2024 timeframe.
CONFERENCE CALL AND WEBCAST
The corporation will host a live webcast on Tuesday, November 3, 2020, at 10:00 a.m. CT 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, call 877-312-8789. For listen-only mode, call 866-634-1342.
Risk Factors and Forward-Looking Statements that Could Affect Future Results
The information in this release includes certain forward-looking information, including 2020 expectations and impacts from COVID-19, made under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. We believe our expectations are based on reasonable assumptions which entail various risks and uncertainties that could cause actual results to differ materially from those expectations. The following factors as set forth in Item 1A, Risk Factors, in our 2019 report on Form 10-K and in other SEC filings, along with other risks, could cause our actual results to differ materially from those discussed in the forward-looking statements:
The outbreak and global spread of COVID-19, which has been declared a pandemic by the World Health Organization, has adversely impacted economic activity and conditions worldwide and is currently impacting our business operations. The extent to which COVID-19 will continue to impact our business is highly uncertain and will depend on future developments and the extent of federal, state and local government responses affecting the economy. In particular, the COVID-19 pandemic could, among other things:
We continue to monitor developments involving our workforce, customers, construction contractors, suppliers and vendors and take steps to mitigate against additional impacts, but given the unprecedented and dynamic nature of these circumstances, we cannot predict the full extent of the impact that COVID-19 will have on our results of operations, financial condition and liquidity. The situation continues to change, and the magnitude of the impact will depend, in part, on the length and severity of the pandemic. However, the effects could have a material impact on our results of operations, financial condition and liquidity and heighten many of the known risks described below.
For a further discussion of these risk factors and cautionary statements, refer to reports we file with the Securities and Exchange Commission.
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 are available at www.ottertail.com. Corporate offices are in Fergus Falls, Minnesota, and Fargo, North Dakota.
See Otter Tail Corporation’s results of operations for the three- and nine-month periods ended September 30, 2020 and 2019 in the following financial statements: Consolidated Statements of Income, Consolidated Balance Sheets – Assets, Consolidated Balance Sheets – Liabilities and Equity, and Consolidated Statements of Cash Flows.
Otter Tail Corporation | ||||||||||||||||
Consolidated Statements of Income | ||||||||||||||||
In thousands, except share and per share amounts | ||||||||||||||||
(not audited) | ||||||||||||||||
| ||||||||||||||||
Quarter Ended September 30, |
| Year-to-Date September 30, | ||||||||||||||
2020 |
| 2019 |
| 2020 |
| 2019 | ||||||||||
Operating Revenues by Segment |
|
|
|
| ||||||||||||
Electric |
|
|
|
| ||||||||||||
Revenues from Contracts with Customers | $ | 112,445 |
| $ | 115,294 |
| $ | 330,352 |
| $ | 346,327 |
| ||||
Changes in Accrued Revenues under Alternative Revenue Programs |
| 2,778 |
|
| (921 | ) |
| 2,900 |
|
| (1,601 | ) | ||||
Total Electric Revenues |
| 115,223 |
|
| 114,373 |
|
| 333,252 |
|
| 344,726 |
| ||||
Manufacturing |
| 59,849 |
|
| 65,722 |
|
| 174,276 |
|
| 217,040 |
| ||||
Plastics |
| 60,693 |
|
| 48,566 |
|
| 155,769 |
|
| 142,100 |
| ||||
Intersegment Eliminations |
| (10 | ) |
| (9 | ) |
| (39 | ) |
| (39 | ) | ||||
Total Operating Revenues |
| 235,755 |
|
| 228,652 |
|
| 663,258 |
|
| 703,827 |
| ||||
Operating Expenses |
|
|
|
| ||||||||||||
Fuel and Purchased Power |
| 24,982 |
|
| 31,494 |
|
| 80,017 |
|
| 100,295 |
| ||||
Nonelectric Cost of Products Sold (depreciation included below) |
| 86,856 |
|
| 88,747 |
|
| 246,567 |
|
| 277,325 |
| ||||
Electric Operating and Maintenance Expense |
| 32,845 |
|
| 35,869 |
|
| 106,639 |
|
| 114,107 |
| ||||
Nonelectric Operating and Maintenance Expense |
| 13,615 |
|
| 11,665 |
|
| 36,277 |
|
| 38,404 |
| ||||
Depreciation and Amortization |
| 20,395 |
|
| 19,657 |
|
| 61,230 |
|
| 58,229 |
| ||||
Property Taxes — Electric |
| 4,333 |
|
| 3,965 |
|
| 12,601 |
|
| 11,824 |
| ||||
Total Operating Expenses |
| 183,026 |
|
| 191,397 |
|
| 543,331 |
|
| 600,184 |
| ||||
Operating Income (Loss) by Segment |
|
|
|
| ||||||||||||
Electric |
| 37,416 |
|
| 27,847 |
|
| 86,932 |
|
| 73,735 |
| ||||
Manufacturing |
| 4,745 |
|
| 3,972 |
|
| 12,209 |
|
| 16,552 |
| ||||
Plastics |
| 14,123 |
|
| 7,476 |
|
| 28,680 |
|
| 20,649 |
| ||||
Corporate |
| (3,555 | ) |
| (2,040 | ) |
| (7,894 | ) |
| (7,293 | ) | ||||
Total Operating Income |
| 52,729 |
|
| 37,255 |
|
| 119,927 |
|
| 103,643 |
| ||||
Interest Charges |
| 8,568 |
|
| 7,539 |
|
| 25,353 |
|
| 23,190 |
| ||||
Nonservice Cost Components of Postretirement Benefits |
| 842 |
|
| 1,055 |
|
| 2,581 |
|
| 3,165 |
| ||||
Other Income |
| 1,712 |
|
| 1,020 |
|
| 3,733 |
|
| 3,114 |
| ||||
Income Tax Expense |
| 9,097 |
|
| 4,936 |
|
| 18,543 |
|
| 13,907 |
| ||||
Net Income (Loss) by Segment |
|
|
|
| ||||||||||||
Electric |
| 24,737 |
|
| 17,682 |
|
| 54,225 |
|
| 43,884 |
| ||||
Manufacturing |
| 3,311 |
|
| 3,155 |
|
| 8,476 |
|
| 11,987 |
| ||||
Plastics |
| 10,343 |
|
| 5,397 |
|
| 20,922 |
|
| 14,918 |
| ||||
Corporate |
| (2,457 | ) |
| (1,489 | ) |
| (6,440 | ) |
| (4,294 | ) | ||||
Net Income | $ | 35,934 |
| $ | 24,745 |
| $ | 77,183 |
| $ | 66,495 |
| ||||
Average Number of Common Shares Outstanding |
|
|
|
| ||||||||||||
Basic |
| 40,913,972 |
|
| 39,714,672 |
|
| 40,548,133 |
|
| 39,694,677 |
| ||||
Diluted |
| 41,077,689 |
|
| 39,946,739 |
|
| 40,732,928 |
|
| 39,922,580 |
| ||||
|
|
|
| |||||||||||||
Basic Earnings Per Common Share | $ | 0.88 |
| $ | 0.62 |
| $ | 1.90 |
| $ | 1.68 |
| ||||
Diluted Earnings Per Common Share | $ | 0.87 |
| $ | 0.62 |
| $ | 1.89 |
| $ | 1.67 |
| ||||
|
|
|
|
Otter Tail Corporation | ||||||
Consolidated Balance Sheets | ||||||
ASSETS | ||||||
in thousands | ||||||
(not audited) | ||||||
September 30, |
| December 31, | ||||
2020 |
| 2019 | ||||
Current Assets | ||||||
Cash and Cash Equivalents | $ | 44,904 | $ | 21,199 | ||
Accounts Receivable: | ||||||
Trade—Net |
| 100,423 |
| 77,947 | ||
Other |
| 6,322 |
| 8,773 | ||
Inventories |
| 81,871 |
| 97,851 | ||
Unbilled Receivables |
| 16,409 |
| 20,911 | ||
Income Taxes Receivable |
| -- |
| 1,487 | ||
Regulatory Assets |
| 17,435 |
| 21,650 | ||
Other |
| 7,552 |
| 5,042 | ||
Total Current Assets |
| 274,916 |
| 254,860 | ||
Investments |
| 10,791 |
| 9,894 | ||
Other Assets |
| 42,316 |
| 40,196 | ||
Goodwill |
| 37,572 |
| 37,572 | ||
Other Intangibles—Net |
| 10,419 |
| 11,290 | ||
Regulatory Assets |
| 145,977 |
| 144,138 | ||
|
|
| ||||
Right of Use Assets – Operating Leases |
| 19,713 |
| 21,851 | ||
Plant | ||||||
Electric Plant in Service |
| 2,221,785 |
| 2,212,884 | ||
Nonelectric Operations |
| 256,480 |
| 247,356 | ||
Construction Work in Progress |
| 454,128 |
| 185,238 | ||
Total Gross Plant |
| 2,932,393 |
| 2,645,478 | ||
Less Accumulated Depreciation and Amortization |
| 939,590 |
| 891,684 | ||
Net Plant |
| 1,992,803 |
| 1,753,794 | ||
Total | $ | 2,534,507 | $ | 2,273,595 |
Otter Tail Corporation | ||||||||
Consolidated Balance Sheets | ||||||||
LIABILITIES AND EQUITY | ||||||||
in thousands | ||||||||
(not audited) | ||||||||
September 30, |
| December 31, | ||||||
2020 |
| 2019 | ||||||
Current Liabilities | ||||||||
Short-Term Debt | $ | 48,600 |
| $ | 6,000 |
| ||
Current Maturities of Long-Term Debt |
| 215 |
|
| 183 |
| ||
Accounts Payable |
| 189,327 |
|
| 120,775 |
| ||
Accrued Salaries and Wages |
| 20,933 |
|
| 22,730 |
| ||
Accrued Taxes |
| 14,283 |
|
| 17,525 |
| ||
Regulatory Liabilities |
| 12,870 |
|
| 7,480 |
| ||
Current Operating Lease Liabilities |
| 4,581 |
|
| 4,136 |
| ||
Other Accrued Liabilities |
| 8,927 |
|
| 10,912 |
| ||
Total Current Liabilities |
| 299,736 |
|
| 189,741 |
| ||
Pensions Benefit Liability |
| 86,101 |
|
| 98,970 |
| ||
Other Postretirement Benefits Liability |
| 72,508 |
|
| 71,437 |
| ||
Long-Term Operating Lease Liabilities |
| 15,778 |
|
| 18,193 |
| ||
Other Noncurrent Liabilities |
| 35,146 |
|
| 30,833 |
| ||
Deferred Credits | ||||||||
Deferred Income Taxes |
| 152,448 |
|
| 131,941 |
| ||
Deferred Tax Credits |
| 17,640 |
|
| 18,626 |
| ||
Regulatory Liabilities |
| 236,892 |
|
| 239,906 |
| ||
Other |
| 1,914 |
|
| 2,885 |
| ||
Total Deferred Credits |
| 408,894 |
|
| 393,358 |
| ||
Capitalization | ||||||||
Long-Term Debt—Net |
| 764,274 |
|
| 689,581 |
| ||
Cumulative Preferred Shares |
| -- |
|
| -- |
| ||
Cumulative Preference Shares |
| -- |
|
| -- |
| ||
Common Equity | ||||||||
Common Shares, Par Value $5 Per Share |
| 205,261 |
|
| 200,788 |
| ||
Premium on Common Shares |
| 398,301 |
|
| 364,790 |
| ||
Retained Earnings |
| 254,468 |
|
| 222,341 |
| ||
Accumulated Other Comprehensive Loss |
| (5,960 | ) |
| (6,437 | ) | ||
Total Common Equity |
| 852,070 |
|
| 781,482 |
| ||
Total Capitalization |
| 1,616,344 |
|
| 1,471,063 |
| ||
Total | $ | 2,534,507 |
| $ | 2,273,595 |
|
Otter Tail Corporation | ||||||||
Consolidated Statements of Cash Flows | ||||||||
In thousands | ||||||||
(not audited) | ||||||||
| ||||||||
For the Nine Months Ended September 30, | ||||||||
In thousands | 2020 |
| 2019 | |||||
Operating Activities | ||||||||
Net Income | $ | 77,183 |
| $ | 66,495 |
| ||
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: | ||||||||
Depreciation and Amortization |
| 61,230 |
|
| 58,229 |
| ||
Deferred Tax Credits |
| (986 | ) |
| (1,011 | ) | ||
Deferred Income Taxes |
| 20,353 |
|
| 3,487 |
| ||
Change in Deferred Debits and Other Assets |
| 3,439 |
|
| 7,142 |
| ||
Discretionary Contribution to Pension Plan |
| (11,200 | ) |
| (22,500 | ) | ||
Change in Noncurrent Liabilities and Deferred Credits |
| 3,237 |
|
| 10,344 |
| ||
Allowance for Equity/Other Funds Used During Construction |
| (3,104 | ) |
| (1,602 | ) | ||
Stock Compensation Expense |
| 5,282 |
|
| 5,245 |
| ||
Other—Net |
| (176 | ) |
| 312 |
| ||
Cash (Used for) Provided by Current Assets and Current Liabilities: | ||||||||
Change in Receivables |
| (20,025 | ) |
| (16,213 | ) | ||
Change in Inventories |
| 15,980 |
|
| 9,218 |
| ||
Change in Other Current Assets |
| 2,023 |
|
| 2,974 |
| ||
Change in Payables and Other Current Liabilities |
| (12,063 | ) |
| (20,744 | ) | ||
Change in Interest and Income Taxes Receivable/Payable |
| 103 |
|
| 3,773 |
| ||
Net Cash Provided by Operating Activities |
| 141,276 |
|
| 105,149 |
| ||
Investing Activities | ||||||||
Capital Expenditures |
| (220,630 | ) |
| (149,695 | ) | ||
Proceeds from Disposal of Noncurrent Assets |
| 4,617 |
|
| 4,111 |
| ||
Cash Used for Investments and Other Assets |
| (6,372 | ) |
| (5,546 | ) | ||
Net Cash Used in Investing Activities |
| (222,385 | ) |
| (151,130 | ) | ||
Financing Activities | ||||||||
Changes in Checks Written in Excess of Cash |
| 90 |
|
| 383 |
| ||
Net Short-Term Borrowings |
| 42,600 |
|
| 90,398 |
| ||
Proceeds from Issuance of Common Stock |
| 35,219 |
|
| -- |
| ||
Common Stock Issuance Expenses |
| (465 | ) |
| (35 | ) | ||
Payments for Shares Withheld for Employee Tax Obligations |
| (2,069 | ) |
| (2,730 | ) | ||
Proceeds from Issuance of Long-Term Debt |
| 75,000 |
|
| -- |
| ||
Short-Term and Long-Term Debt Issuance Expenses |
| (369 | ) |
| (66 | ) | ||
Payments for Retirement of Long-Term Debt |
| (136 | ) |
| (128 | ) | ||
Dividends Paid |
| (45,056 | ) |
| (41,781 | ) | ||
Net Cash Provided by Financing Activities |
| 104,814 |
|
| 46,041 |
| ||
Net Change in Cash and Cash Equivalents |
| 23,705 |
|
| 60 |
| ||
Cash and Cash Equivalents at Beginning of Period |
| 21,199 |
|
| 861 |
| ||
Cash and Cash Equivalents at End of Period | $ | 44,904 |
| $ | 921 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20201102006037/en/
Media contact: Stephanie Hoff, Director of Corporate Communications, (218) 739-8535 or (218) 205-6179 Investor contact: Loren Hanson, Manager of Investor Relations, (218) 739-8481 or (800) 664-1259
Source: Otter Tail Corporation