Stephanie Hoff, Director of Corporate Communications, (218) 739-8535
Investor contact:
Tyler Akerman, Manager of Investor Relations, (800) 664-1259
For release:
August 1, 2022
Financial Media
Otter Tail Corporation Announces Record Second Quarter Earnings, Increases 2022 Earnings Guidance, Board of Directors Declares Quarterly Dividend of $0.4125 per Share
FERGUS FALLS, Minnesota - Otter Tail Corporation (Nasdaq: OTTR) today announced financial results for the quarter ended June 30, 2022.
SUMMARY
Compared to the quarter ended June 30, 2021:
•Consolidated operating revenues increased 40% to $400 million.
•Consolidated net income increased 104% to $86 million.
•Diluted earnings per share increased 103% to $2.05 per share.
The corporation is increasing its 2022 diluted earnings per share guidance range to $6.83 to $7.13 from its previous range of $5.15 to $5.45.
CEO OVERVIEW
“Otter Tail Corporation, through the efforts of our employees, achieved record financial results for the quarter ended June 30, 2022,” said President and CEO Chuck MacFarlane. “Our Plastics segment completed another outstanding quarter as demand continued to outpace supply. This along with an increase in resin prices continued to drive an increase in the sales price of PVC products resulting in a further strengthening of spreads.
“Electric segment earnings increased 22.2 percent compared to the second quarter of 2021, driven by increased commercial and industrial sales and finalization of interim rate refunds in connection with the conclusion of our Minnesota Rate Case. Manufacturing segment earnings increased 32.4 percent compared to the second quarter of 2021 primarily at BTD Manufacturing, Inc. (BTD) due to increases in sales prices, volumes and favorable cost absorption.
“In June 2022, Otter Tail Power exercised its option to purchase the Ashtabula III wind farm, located in eastern North Dakota, for $49.7 million, subject to certain closing adjustments. We have purchased the wind-generated electricity from the Ashtabula III wind farm since 2013, pursuant to a purchase power agreement, and that agreement granted us the option to purchase the wind farm. The purchase is subject to certain customary closing conditions and regulatory approval, and will add 62.4 megawatts of capacity to our owned generation assets. We anticipate the transaction will close in January 2023.
“Otter Tail Power filed its Integrated Resource Plan in September of 2021. The requests in the five-year action plan include the addition of dual fuel capability at our Astoria Station natural gas plant, the addition of 150 MW of solar generation in 2025 and the commencement of the process to withdraw from our 35 percent ownership in Coyote Station by December 31, 2028. After incorporating the requests included in the Integrated Resource Plan, we now anticipate capital expenditures in our Electric segment of nearly $1 billion over the next five years, which will result in a compounded annual growth rate in average rate base of approximately 6.0 percent from the end of 2021 to the end of 2026.
“We continue to make progress on the development of Otter Tail Power’s 49.9 MW Hoot Lake Solar project, which is being constructed on and near the retired Hoot Lake Plant property in Fergus Falls, Minnesota. The project is expected to be completed in 2023 and has received renewable rider eligibility approval in Minnesota. The location of Hoot Lake Solar offers us a unique opportunity to utilize our existing Hoot Lake transmission rights, substation and land. We have contracts in place for thin-film panels which reduces supply chain risks related to the United States ban on goods from the Xinjiang region of China and the U.S Department of Commerce investigation.
“Our investments in Hoot Lake Solar, those requested in our Integrated Resource Plan, and other capital expenditure plans allow us to improve our customers’ experience, reduce operating and maintenance expenses, reduce emissions and improve reliability. We are targeting to reduce carbon emissions from our owned generation resources approximately 50 percent from 2005 levels by 2025 and 97 percent from 2005 levels by 2050.
“Otter Tail Power’s new load with a customer that is a builder and operator of next-generation data centers, which provide substantial computing power to blockchain infrastructure and support Bitcoin mining, came online during the first quarter.
“The Minnesota Public Utility Commission (MPUC) issued its written order on our Minnesota Rate Case on February 1, 2022. The written order included approval of a return on equity of 9.48 percent on a 52.5 percent equity layer, a revenue decoupling mechanism and numerous other items. Final rates took effect on July 1, 2022. Interim rate refunds will be applied as a credit to customer accounts beginning in August 2022.
“The MPUC approved our new Electric Utility Infrastructure Cost Recovery Rider. This approval allows Otter Tail Power Company to recover costs related the Advanced Metering Infrastructure and Outage Management System projects.
“Our Manufacturing segment continues to experience a volatile steel market. Steel prices peaked in the fourth quarter of 2021 at historically high levels with prices now declining to below $1,000 per ton. We successfully managed through the high priced finished goods inventory during the first six months of 2022. Steel lead times continue to improve. We remain focused on managing our steel supply to ensure we continue to receive material on time.
“Demand for PVC pipe continues to outpace supply causing sales prices to continue to increase at a rate above raw material price increases which led to record second quarter earnings. We continue to experience some supply chain issues that are limiting production and the ability to build finished goods inventory.
“The headline for the quarter is certainly the continued excellent financial performance of our Plastics Segment. However, it is important to note our business model is performing well. Our electric segment is expected to deliver an 8.4% compounded annual growth rate in earnings per share from 2017 through the year ending 2022 based on the current midpoint of our guidance. The combined compounded annual growth rate for the electric and manufacturing segment, inclusive of corporate costs, for the same time frame is 8.8%.
“Our long-term focus remains on executing our growth strategies. For our electric utility, our strategy is to continue to invest in rate base growth opportunities and drive efficiency, create a more predictable earnings stream, maintain our credit quality and preserve our ability to pay dividends.
“Our 2021 earnings mix was 59% from our manufacturing platform and is now expected to be 73% for 2022. This change from our long term goal of 70% electric and 30% manufacturing platform has been driven by the plastics pipe business and the unique market conditions in 2021 and 2022. We currently expect to see elevated earnings from our manufacturing platform into 2023 with our earnings mix returning to 65% from our electric segment and 35% from our manufacturing platform beginning in 2024.
“Our strategic initiatives to grow our business and achieve operational, commercial and talent excellence continue to strengthen our position in the markets we serve. We remain confident in our long-term ability to grow earnings per share in the range of 5 to 7 percent compounded annual growth rate off a base of $2.34 in 2020. We are increasing our 2022 diluted earnings per share guidance to a range of $6.83 to $7.13 from our updated annual guidance of $5.15 to $5.45 primarily due to continued strong performance from our Plastics Segment in the second quarter of 2022 and expected performance for the remainder of the year.”
QUARTERLY DIVIDEND
On August 1, 2022 the corporation’s Board of Directors declared a quarterly common stock dividend of $0.4125 per share. This dividend is payable September 9, 2022 to shareholders of record on August 15, 2022.
CASH FLOWS AND LIQUIDITY
Our consolidated cash provided by operating activities for the six months ended June 30, 2022 was $175.6 million compared to $68.6 million for the six months ended June 30, 2021. The increase in cash provided by operating activities was primarily due to a $85.5 million increase in net income.
Investing activities for the six months ended June 30, 2022 included capital expenditures of $70.8 million compared to $76.9 million for the six months ended June 30, 2021. The decrease in capital expenditures was primarily due to a lower amount of capital investment activity at Otter Tail Power in the second quarter of 2022 compared to the previous year.
Financing activities for the six months ended June 30, 2022 included the issuance of $90.0 million of long-term debt at Otter Tail Power through a private placement offering, as described below. The proceeds from the debt offering were used, in part, to repay short-term borrowings, fund capital expenditures, and for other general corporate purposes. Financing activities for the six months ended June 30, 2022 also included net repayments of short-term borrowings of $91.2 million and dividend payments of $34.4 million. Financing activities for the six months ended June 30, 2021 included net proceeds from short-term borrowings of $47.0 million, primarily incurred to fund construction projects at Otter Tail Power, and dividend payments of $32.4 million.
The following table presents the amount of available borrowing capacity under our lines of credit at June 30, 2022 and December 31, 2021:
2022
2021
(in thousands)
Line Limit
Amount Outstanding
Letters of Credit
Amount Available
Amount Available
Otter Tail Corporation Credit Agreement
$
170,000
$
—
$
—
$
170,000
$
147,363
Otter Tail Power Credit Agreement
170,000
—
7,844
162,156
88,315
Total
$
340,000
$
—
$
7,844
$
332,156
$
235,678
In June 2021, Otter Tail Power entered into a Note Purchase Agreement to issue a total of $230.0 million of new long-term debt in the form of senior unsecured notes. The notes were issued in three separate tranches. In November 2021, the 2.74% Series 2021A notes and the 3.69% Series 2021B notes were issued for proceeds of $40.0 million and $100.0 million, respectively. The 3.77% Series 2022A notes were issued in May 2022 for proceeds of $90.0 million. We intend to use a portion of the proceeds from the Series 2022A notes to repay $30.0 million of long-term debt maturing in August 2022.
SEGMENT PERFORMANCE
Electric Segment
Three Months Ended June 30,
($ in thousands)
2022
2021
$ Change
% Change
Retail Revenues
$
113,603
$
88,987
$
24,616
27.7
%
Transmission Services Revenues
11,697
11,840
(143)
(1.2)
Wholesale Revenues
3,537
3,260
277
8.5
Other Electric Revenues
2,112
2,068
44
2.1
Total Electric Revenues
130,949
106,155
24,794
23.4
Net Income
$
18,858
$
15,433
$
3,425
22.2
%
Retail MWh Sales
1,286,419
1,086,631
199,788
18.4
%
Heating Degree Days (HDDs)
716
533
183
34.3
Cooling Degree Days (CDDs)
154
237
(83)
(35.0)
The following table shows heating and cooling degree days as a percent of normal.
Three Months Ended June 30,
2022
2021
HDDs
135.1
%
101.1
%
CDDs
129.4
%
206.1
%
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
$
0.03
$
—
$
0.03
Retail Revenues increased $24.6 million primarily due to the following:
•A $15.8 million increase in fuel recovery revenues primarily due to increased purchased power costs resulting from increased natural gas and market energy prices, increased purchased power volumes due to a planned outage at Coyote Station during the second quarter of 2022, and increased customer demand.
•A $5.2 million increase in retail sales volumes from commercial and industrial customers, primarily due to a new commercial customer load in North Dakota.
•A $4.1 million increase in interim rate revenue due to the finalization of the interim rate refund, as approved by the MPUC in the second quarter of 2022.
These increases were partially offset by a $0.9 million decrease in conservation improvement program (CIP) revenue as CIP spending, and related cost recovery, decreased compared to the previous year.
Production Fuel costs increased $2.6 million as a result of increased fuel cost per kwh, which was partially offset by a 21% decrease in kwhs generated from our fuel-burning plants due to our planned outage at Coyote Station and the retirement of Hoot Lake Plant in May 2021.
Purchased Power costs to serve retail customers increased $13.0 million due to a 64% increase in the price of purchased power per kwh, a 32% increase in the volume of purchased power resulting from the planned outage at Coyote Station, the retirement of Hoot Lake Plant and increased customer demand.
Operating and Maintenance Expense increased $5.7 million primarily due to a $3.0 million increase in maintenance costs from the planned outage at Coyote Station, higher labor costs arising from storm restoration work, and increased travel costs driven by higher fuel costs for our vehicle fleet and increased travel activities. These increased costs were partially offset by decreases in expenses related to our Minnesota rate case and lower CIP expenses compared to the previous year.
Income Tax Expense increased $1.9 million primarily due to increased income before income taxes.
Manufacturing Segment
Three Months Ended June 30,
(in thousands)
2022
2021
$ Change
% Change
Operating Revenues
$
103,196
$
84,284
$
18,912
22.4
%
Net Income
7,555
5,705
1,850
32.4
Manufacturing segment operating revenues increased primarily due to a $11.6 million increase in material costs at BTD, which are passed through to customers in the form of higher sales prices, as a result of increased steel prices. Operating revenues also benefited from an 8% increase in sales volumes as end market demand remains strong and our customers’ supply chains have begun to improve, resulting in more predictable shipping volumes for our products. Gross profit margins during the second quarter of 2022 were positively impacted by increased sales volumes and favorable cost absorption.
Increases in sales prices at T.O. Plastics due to strong customer demand in the horticulture sector and increases related to inflationary costs being experienced across the business also contributed to the segment increase in operating revenues. Despite increases in material costs, gross profit margins increased due to increased sale prices, favorable cost absorption, and decreased net freight costs due to passing through freight surcharges to customers. Increases in operating revenues and gross profit margins contributed to the increase in earnings in the second quarter of 2022.
Plastics Segment
Three Months Ended June 30,
(in thousands)
2022
2021
$ Change
% Change
Operating Revenues
$
165,895
$
95,169
$
70,726
74.3
%
Net Income
63,959
22,544
41,415
183.7
Plastics segment operating revenues and net income increased in the second quarter of 2022 primarily due to an 86% increase in the price per pound of PVC pipe sold. Sales prices continued to increase during the quarter due to increases in the cost of resin, strong demand for PVC pipe products and limited PVC pipe inventories. The increase in sales price well exceeded the 30% increase in the cost of PVC resin and other input materials. The supply and demand market conditions in the second quarter of 2022 were a continuation of the unique market dynamics experienced throughout 2021. Throughout 2021 and the first half of 2022, we, along with other PVC pipe manufacturers, experienced various supply constraints, affecting the availability of PVC resin, additives or other ingredients used to make PVC pipe, which prevented us and others from being able to build inventory levels. Sales volumes decreased 6% in the second quarter of 2022, despite strong customer demand for PVC pipe, due to these supply constraints and low inventory levels.
Corporate Costs
Three Months Ended June 30,
(in thousands)
2022
2021
$ Change
% Change
Losses Before Income Taxes
$
4,773
$
2,459
$
2,314
94.1
%
Income Tax Benefit
(338)
(846)
508
(60.0)
Net Loss
$
4,435
$
1,613
$
2,822
175.0
%
The increase in our corporate net loss was primarily the result of investment losses on our corporate-owned life insurance policies and other investments during the second quarter of 2022 compared to investment gains in the second quarter of the previous year. Increased employee benefit expenses related to increases in our estimated health insurance claim costs also contributed to the increase in our corporate net loss compared to the previous year. The gains and losses related to our corporate-owned life insurance policies are non-taxable. Exclusive of these gains and losses, we experienced a decrease in our taxable net loss compared to the previous year, which resulted in a decrease in our income tax benefit.
2022 BUSINESS OUTLOOK
We are increasing our 2022 diluted earnings per share guidance to $6.83 to $7.13 in light of our results for the first half of 2022 and our forecast for the remainder of the year, primarily driven by currently expected performance in our Plastics segment. The midpoint of our revised 2022 diluted earnings per share guidance of $6.98 per share reflects a 65% 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 with 2020 and 2021 actual earnings are as follows:
2020 EPS by Segment
2021 EPS by Segment
2022 EPS Guidance February 14, 2022
2022 EPS Guidance May 2, 2022
2022 EPS Guidance August 1, 2022
Low
High
Low
High
Low
High
Electric
$
1.63
$
1.73
$
1.81
$
1.85
$
1.81
$
1.85
$
1.84
$
1.88
Manufacturing
0.27
0.41
0.42
0.46
0.42
0.46
0.42
0.46
Plastics
0.67
2.34
1.81
2.00
3.26
3.45
4.96
5.15
Corporate
(0.23)
(0.25)
(0.26)
(0.23)
(0.34)
(0.31)
(0.39)
(0.36)
Total
$
2.34
$
4.23
$
3.78
$
4.08
$
5.15
$
5.45
$
6.83
$
7.13
Return on Equity
11.6
%
19.2
%
15.3
%
16.3
%
19.9
%
20.9
%
25.9
%
26.8
%
The following items contributed to our revised 2022 earnings guidance:
•We are increasing our previous guidance for our Electric Segment based on the following:
◦Favorable weather for the first six months of 2022 and normal weather for the remainder of 2022.
◦Increased interim rate revenue due to the finalization of the interim rate refund, as approved by the MPUC in the second quarter of 2022.
The above reasons along with the following items support the expected net income growth of 7.5% over 2021:
◦Year over year increase in rate base along with increased load growth from new and existing commercial and industrial customers. Our ending rate base in 2021 grew by 13.7% to $1.6 billion.
◦Lower expected plant outage costs in 2022. The Big Stone Plant outage costs in 2021 were higher than the Coyote Plant outage costs in 2022.
◦The discount rate for our pension plan for 2022 is 3.03% compared with 2.78% in 2021. For each 25 basis point increase in the discount rate, pension expense decreases approximately $1.3 million. The assumed long-term rate of return for 2022 is 6.30% compared with 6.51% in 2021. For each 25 basis point decrease in this rate, pension expense increases approximately $0.9 million. These changes result in a net decrease in pension expense for 2022.
◦Lower interest expense as the $140 million notes issued in November 2021 have a lower interest rate compared to the $140 million of notes that were refinanced.
These items are expected to be partially offset by:
◦Higher depreciation and property tax expense driven by increasing rate base.
◦Labor costs are expected to be higher in 2022 as open positions were filled during the last half of 2021 and are expected to be employed for all of 2022.
◦Increasing insurance costs related to an increase in insurable values and an increase in insurance rates due to competitive market conditions as well as increasing operating and maintenance expenses due to inflationary pressures resulting from our current economic environment.
•We are maintaining our guidance for our Manufacturing segment and continue to expect net income from this segment to increase 7.3% compared with 2021 based on the following:
◦An increase in sales at BTD driven by end market demand as our customers continue to build inventory to fill shortages created by supply chain challenges. While we have been generally able to meet our customers’ on time delivery requirements, our customers have other supply chain challenges which impact their ability to consistently take our product in line with their production timelines. Steel lead times have improved back to pre-pandemic timeframes. While mill prices have moderated during the first half of 2022, steel costs are expected to remain historically high through the year. These costs could put additional pressure on our profitability if we are unable to pass cost increases on to our customers on a timely basis. While scrap metal prices are expected to remain at current levels through the last half of 2022, we expect annual scrap metal revenues will be lower in 2022. We continue to work on improving labor efficiencies in order to enhance our gross margins.
◦An increase in earnings from T.O. Plastics driven in large part by a full year of increases in product prices that occurred throughout 2021, increased volume of product sold and improved manufacturing productivity.
◦Backlog for the manufacturing companies of approximately $245 million for 2022 compared with $181 million one year ago.
•We are increasing our previous guidance for our Plastics segment based on the following:
•Demand for PVC pipe for the last half of 2022 is now expected to be much stronger than our previous expectations. This has resulted in expectations of higher sales volumes, sales prices and related operating margins for the last half of 2022 as compared to our May 2, 2022 guidance. Resin prices are expected to decline for the last half of 2022 based on recent announcements from resin suppliers. This is expected to put downward pressure on sales prices during the last half of the year resulting in lower operating margins as compared to the first half of 2022.
•Levels of finished goods inventory continue to be low as PVC pipe manufacturers have not been able to build inventory levels given supply constraints related to additives and other ingredients used to make PVC pipe.
•The updated guidance still reflects lower volumes of pounds of pipe sold in 2022 driven by the extremely low levels of finished goods inventory at the beginning of the year.
•There could be additional upside to our current year earnings guidance should sales volumes, sales prices and related operating margins remain stronger than the assumptions used in our updated earnings guidance.
•We are revising our corporate cost guidance for 2022. This is due to investment losses on our corporate-owned life insurance policies and other investments during the second quarter of 2022 and an expected increase in health insurances costs in our self-insured health plan due to higher claims experience.
CONFERENCE CALL AND WEBCAST
The corporation will host a live webcast on Tuesday, August 2, 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 June 30,
Six Months Ended June 30,
(in thousands, except per-share amounts)
2022
2021
2022
2021
Operating Revenues
Electric
$
130,949
$
106,155
$
261,365
$
229,855
Product Sales
269,091
179,453
513,579
317,463
Total Operating Revenues
400,040
285,608
774,944
547,318
Operating Expenses
Electric Production Fuel
14,714
12,164
29,567
26,878
Electric Purchased Power
24,162
11,135
44,691
30,395
Electric Operating and Maintenance Expense
42,379
36,729
86,659
78,150
Cost of Products Sold (excluding depreciation)
152,466
122,578
304,225
224,555
Other Nonelectric Expenses
17,252
15,669
34,457
29,362
Depreciation and Amortization
23,566
23,169
47,113
45,295
Electric Property Taxes
4,435
4,342
8,866
8,662
Total Operating Expenses
278,974
225,786
555,578
443,297
Operating Income
121,066
59,822
219,366
104,021
Other Income and Expense
Interest Charges
8,991
9,555
17,939
18,953
Nonservice Cost Components of Postretirement Benefits
(751)
624
(772)
1,006
Other Income (Expense), net
(889)
734
(629)
1,892
Income Before Income Taxes
111,937
50,377
201,570
85,954
Income Tax Expense
26,000
8,308
43,630
13,556
Net Income
$
85,937
$
42,069
$
157,940
$
72,398
Weighted-Average Common Shares Outstanding:
Basic
41,597
41,500
41,573
41,478
Diluted
41,944
41,818
41,907
41,759
Earnings Per Share:
Basic
$
2.07
$
1.01
$
3.80
$
1.75
Diluted
$
2.05
$
1.01
$
3.77
$
1.73
OTTER TAIL CORPORATION
CONSOLIDATED BALANCE SHEETS (unaudited)
(in thousands)
June 30, 2022
December 31, 2021
Assets
Current Assets
Cash and Cash Equivalents
$
61,989
$
1,537
Receivables, net of allowance for credit losses
225,838
174,953
Inventories
146,964
148,490
Regulatory Assets
20,675
27,342
Other Current Assets
15,923
17,032
Total Current Assets
471,389
369,354
Noncurrent Assets
Investments
53,555
56,690
Property, Plant and Equipment, net of accumulated depreciation
2,149,919
2,124,605
Regulatory Assets
121,954
125,508
Intangible Assets, net of accumulated amortization
8,493
9,044
Goodwill
37,572
37,572
Other Noncurrent Assets
32,618
32,057
Total Noncurrent Assets
2,404,111
2,385,476
Total Assets
$
2,875,500
$
2,754,830
Liabilities and Shareholders' Equity
Current Liabilities
Short-Term Debt
$
—
$
91,163
Current Maturities of Long-Term Debt
29,996
29,983
Accounts Payable
133,287
135,089
Accrued Salaries and Wages
24,803
31,704
Accrued Taxes
22,037
19,245
Regulatory Liabilities
19,458
24,844
Other Current Liabilities
58,572
55,671
Total Current Liabilities
288,153
387,699
Noncurrent Liabilities and Deferred Credits
Pensions Benefit Liability
51,783
73,973
Other Postretirement Benefits Liability
66,665
66,481
Regulatory Liabilities
235,456
234,430
Deferred Income Taxes
213,919
188,268
Deferred Tax Credits
16,288
16,661
Other Noncurrent Liabilities
62,994
62,527
Total Noncurrent Liabilities and Deferred Credits
647,105
642,340
Commitments and Contingencies
Capitalization
Long-Term Debt, net of current maturities
823,699
734,014
Shareholders’ Equity
Common Shares
208,154
207,758
Additional Paid-In Capital
421,951
419,760
Retained Earnings
493,351
369,783
Accumulated Other Comprehensive Loss
(6,913)
(6,524)
Total Shareholders' Equity
1,116,543
990,777
Total Capitalization
1,940,242
1,724,791
Total Liabilities and Shareholders' Equity
$
2,875,500
$
2,754,830
OTTER TAIL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
Six Months Ended June 30,
(in thousands)
2022
2021
Operating Activities
Net Income
$
157,940
$
72,398
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation and Amortization
47,113
45,295
Deferred Tax Credits
(373)
(372)
Deferred Income Taxes
25,160
11,327
Discretionary Contribution to Pension Plan
(20,000)
(10,000)
Allowance for Equity Funds Used During Construction
(617)
(172)
Stock Compensation Expense
5,511
5,524
Other, net
4,893
(2,864)
Change in Operating Assets and Liabilities:
Receivables
(50,885)
(49,465)
Inventories
2,889
(10,859)
Regulatory Assets
5,604
5,753
Other Assets
3,240
(12,920)
Accounts Payable
1,933
16,905
Accrued and Other Liabilities
(3,394)
(468)
Regulatory Liabilities
(3,859)
(4,811)
Pension and Other Postretirement Benefits
475
3,303
Net Cash Provided by Operating Activities
175,630
68,574
Investing Activities
Capital Expenditures
(70,791)
(76,891)
Proceeds from Disposal of Noncurrent Assets
2,840
4,562
Purchases of Investments and Other Assets
(5,944)
(4,074)
Net Cash Used in Investing Activities
(73,895)
(76,403)
Financing Activities
Net Borrowings (Repayments) on Short-Term Debt
(91,163)
46,960
Proceeds from Issuance of Long-Term Debt
90,000
—
Payments for Retirement of Long-Term Debt
—
(169)
Dividends Paid
(34,372)
(32,426)
Payments for Shares Withheld for Employee Tax Obligations
(2,942)
(1,507)
Other, net
(2,806)
(4,712)
Net Cash (Used in) Provided by Financing Activities
