Otter Tail Corporation Announces Fourth Quarter Earnings, Record Annual Earnings, Increases Quarterly Dividend and Announces 2023 Earnings Guidance

FERGUS FALLS, Minn.--()--Otter Tail Corporation (Nasdaq: OTTR) today announced financial results for the quarter and year ended December 31, 2022.

2022 SUMMARY

(in millions, except per share amounts)

Q4 2022

 

Q4 2021

 

 

2022

 

 

2021

Operating Revenues

$

301.4

 

$

333.2

 

$

1,460.2

 

$

1,196.8

Net Income

$

42.0

 

$

51.6

 

$

284.2

 

$

176.8

Diluted Earnings Per Share

$

1.00

 

$

1.23

 

$

6.78

 

$

4.23

Compared to the year ended December 31, 2021:

  • Consolidated operating revenues increased 22% to $1.5 billion.
  • Consolidated net income increased 61% to $284.2 million.
  • Diluted earnings per share increased 60% to $6.78 per share.
  • The corporation achieved a consolidated return on equity of 25.6% on an equity ratio of 59.4%.

The corporation’s board of directors increased the quarterly common stock dividend to $0.4375 per share, an indicated annual dividend rate of $1.75 per share in 2023, a 6.1% increase from $1.65 per share in 2022.

CEO OVERVIEW

Otter Tail Corporation, through the collective efforts of our employees and the strength of our diversified business model, achieved record annual financial results in 2022,” said President and CEO Chuck MacFarlane. “Each operating segment produced double digit annual earnings growth in 2022. Our Plastics segment completed another extraordinary year, producing $195 million of earnings in 2022, as operating margins benefited from elevated spreads of PVC pipe sale prices over resin input costs. Although our Plastics segment had an extraordinary year, demand for PVC pipe sharply declined in the second half of 2022 as contractors delayed projects due to supply chain issues, the housing market outlook continued to soften, and resin price reductions contributed to pipe distributors and contractors reducing PVC pipe purchases in an effort to manage their inventory levels.

Electric segment earnings increased 10% compared to 2021, driven by increased commercial and industrial sales volumes, increasing rate base and favorable weather conditions. Otter Tail Power accomplished its key regulatory objectives in 2022, including a successful general rate case outcome in Minnesota and all regulatory approvals necessary to complete the Ashtabula III wind farm acquisition in early 2023. Our Manufacturing segment produced earnings growth of 22% compared to 2021, driven by increased sales volumes from strong customer demand across most end markets.

Looking forward, 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. Our Electric segment anticipates approximately $1 billion in capital expenditures over the next 5 years, which results in a compounded annual growth rate in rate base of 6.4% from the end of 2022 to the end of 2027. 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 are initiating our 2023 earnings per share guidance range of $3.76 to $4.06. We anticipate Plastics segment earnings to recede from its record level in 2022 as we expect industry conditions will normalize throughout the year. We continue to expect an earnings mix of approximately 65% from our Electric segment and 35% from our manufacturing platform beginning in 2024.”

FOURTH QUARTER HIGHLIGHTS AND UPDATES

  • Otter Tail Power completed the purchase of the Ashtabula III wind farm, located in eastern North Dakota, on January 3, 2023. We have purchased wind-generated electricity from Ashtabula III since 2013 through a power purchase agreement, but owning the facility is part of our least-cost plan to meet our customers’ energy needs. The purchase added 62.4 megawatts of nameplate capacity to our owned generation assets.
  • The Minnesota Public Utility Commission approved Otter Tail Power’s requested changes to the procedural schedule of our previously filed Integrated Resource Plan. This will allow us to update our plan in consideration of several recent developments, including 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. We plan to file an updated resource plan in March 2023.

CASH FLOWS AND LIQUIDITY

Our consolidated cash provided by operating activities was $389.3 million in 2022 compared to $231.2 million in 2021, with the increase primarily due to a $95.9 million increase in net income and a lower level of working capital needs compared to the previous year. Investing activities included capital expenditures of $171.1 million in 2022, primarily related to capital investments within our Electric segment, including our Hoot Lake Solar project. Financing activities in 2022 included the issuance of $90.0 million of long-term debt and the maturity and repayment of $30.0 million of debt at Otter Tail Power, net repayments of short-term borrowings of $83.0 million and dividend payments of $68.8 million.

As of December 31, 2022, we had $322.2 million of available liquidity under our credit facilities and $119.0 million of available cash and cash equivalents, for total available liquidity of $441.2 million.

ANNUAL SEGMENT OPERATING RESULTS

Electric Segment

($ in thousands)

 

2022

 

 

2021

 

$ Change

 

% Change

 

 

 

 

 

 

 

 

Operating Revenues

$

549,699

 

$

480,321

 

$

69,378

 

 

14.4

%

Net Income

 

79,974

 

 

72,458

 

 

7,516

 

 

10.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail MWh Sales

 

5,592,368

 

 

4,789,879

 

 

802,489

 

 

16.8

%

Heating Degree Days

 

7,122

 

 

5,794

 

 

1,328

 

 

22.9

 

Cooling Degree Days

 

531

 

 

704

 

 

(173

)

 

(24.6

)

 

 

 

 

 

 

 

 

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

 

2022

 

 

2021

 

 

 

 

 

Heating Degree Days

112.5

%

 

91.3

%

Cooling Degree Days

113.5

%

 

151.7

%

 

 

 

 

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

$

0.11

 

$

0.10

 

$

0.01

 

 

 

 

 

 

Operating Revenues increased $69.4 million primarily due to increased fuel recovery revenues and higher sales volumes. The increase in fuel recovery revenues was the result of higher purchased power and production fuel costs arising from increased natural gas and market energy costs, as well as higher purchased power volumes arising from plant outages at both Coyote Station and Big Stone Plant during the year. Sales volumes increased compared to the previous year as a result of increased demand from commercial and industrial customers, including a new commercial customer load in North Dakota. Operating revenues also benefited from the impact of favorable weather conditions.

Net Income increased $7.5 million primarily due to the increased operating revenues driven by higher sales volumes and impacts of favorable weather described above, partially offset by increased operating and maintenance expenses. Increased operating and maintenance expenses included increases in maintenance and other costs related to the outages at Coyote Station and Big Stone Plant, increases in labor and employee benefit costs, higher transmission tariff expenses, and increased travel and other expenses.

Manufacturing Segment

(in thousands)

 

2022

 

 

2021

 

$ Change

 

% Change

 

 

 

 

 

 

 

 

Operating Revenues

$

397,983

 

$

336,294

 

$

61,689

 

18.3

%

Net Income

 

20,950

 

 

17,186

 

 

3,764

 

21.9

 

 

 

 

 

 

 

 

 

Operating Revenues increased $61.7 million primarily due to a combination of increased sales volumes and increased material costs at BTD Manufacturing, our contract metal fabricator. Sales volumes increased 12% compared to the previous year due to strong customer and end market demand. Material costs, which are passed through to customers, increased 8%, as steel prices increased from the previous year. Steel prices increased drastically in 2021, peaking in the fourth quarter, and remained elevated compared to historical levels throughout most of 2022. Increases in sales volumes and prices were partially offset by a $2.5 million decrease in scrap revenues due to a decrease in both scrap metal prices and scrap volumes. Increases in sales prices and volumes at T.O. Plastics, our plastics thermoforming manufacturer, due to continued strong customer demand, also contributed to the segment increase in operating revenues.

Net Income increased $3.8 million due to increased operating revenues, as described above, and favorable cost absorption at T.O. Plastics, partially offset by higher labor, material, and overhead costs.

Plastics Segment

(in thousands)

 

2022

 

 

2021

 

$ Change

 

% Change

 

 

 

 

 

 

 

 

Operating Revenues

$

512,527

 

$

380,229

 

$

132,298

 

34.8

%

Net Income

 

195,374

 

 

97,823

 

 

97,551

 

99.7

 

 

 

 

 

 

 

 

 

Operating Revenues increased $132.3 million primarily due to a 66% increase in the price per pound of PVC pipe sold, as sales prices remained high and continued to increase in 2022, due to a continuation of extraordinary market conditions first experienced in the previous year. Sales volumes decreased 19% due to raw material constraints in the first half of 2022 and softening customer demand during the second half of 2022 driven by contractors delaying projects due to supply chain issues, softening housing market outlook, and customers reducing purchases of PVC pipe in order to use up existing on hand inventory.

Net Income increased $97.6 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 cost of PVC resin and other input materials.

Corporate Costs

(in thousands)

 

2022

 

 

2021

 

$ Change

 

% Change

 

 

 

 

 

 

 

 

Net Loss

$

12,114

 

$

10,698

 

$

1,416

 

13.2

%

Net Loss at our corporate cost center increased $1.4 million due to increased operating expenses including external service provider costs and employee compensation costs. Investment losses related to our corporate-owned life insurance policies and the investments of our captive insurance entity also contributed to our increased net loss. The increased expenses and investment losses were partially offset by a decrease in interest expense due to lower average borrowings on our corporate credit facility.

FOURTH QUARTER OPERATING RESULTS

Consolidated Results

(in thousands, except per share amounts)

 

2022

 

 

2021

 

$ Change

 

% Change

Operating Revenues

$

301,409

 

$

333,233

 

$

(31,824

)

 

(9.6

)%

Operating Expenses

 

246,468

 

 

262,074

 

 

(15,606

)

 

(6.0

)

Operating Income

 

54,941

 

 

71,159

 

 

(16,218

)

 

(22.8

)

Other Expense

 

5,728

 

 

8,871

 

 

(3,143

)

 

(35.4

)

Income Before Income Taxes

 

49,213

 

 

62,288

 

 

(13,075

)

 

(21.0

)

Income Tax Expense

 

7,208

 

 

10,671

 

 

(3,463

)

 

(32.5

)

Net Income

$

42,005

 

$

51,617

 

$

(9,612

)

 

(18.6

)

Diluted Earnings Per Share

$

1.00

 

$

1.23

 

$

(0.23

)

 

(18.7

)%

Electric Segment

Electric segment net income was $17.0 million, a $0.1 million increase from the fourth quarter of 2021, due to an 11% increase in operating revenues, which was largely offset by an increase in operating and maintenance expenses and the impacts of non-operating income and expense. The increase in operating revenues was due to increased retail, transmission, and wholesale revenues. Retail revenues increased due to increased fuel recovery revenues, higher sales volumes, and the impacts of favorable weather. The increase in fuel recovery revenues was the result of higher market energy costs and higher purchased power volumes arising from an outage at Big Stone Plant. Sales volumes increased compared to the previous year as a result of increased demand from commercial and industrial customers, as discussed above. Transmission revenues increased primarily due to increased transmission volumes and formula rate adjustments. Wholesale revenues increased due to higher energy market prices compared to the same period last year.

Increased operating and maintenance expenses included increases in maintenance and other costs related to an outage at Big Stone Plant, increased labor and employee benefit costs, and higher transmission tariff expenses.

Manufacturing Segment

Manufacturing segment net income was $3.1 million, a $1.2 million increase from the fourth quarter of 2021. Sales volumes at BTD in the fourth quarter of 2022 increased 24% over the same period last year due to strong customer demand. This increase was partially offset by a $1.6 million decrease in scrap revenues, driven by lower scrap metal prices and lower scrap volumes. Increased sales volumes and sales prices resulted in increased profit margins at T.O. Plastics, contributing to increased segment earnings.

Plastics Segment

Plastics segment net income was $24.6 million, a $13.1 million decrease from the fourth quarter of 2021, primarily due to a 57% decrease in sales volumes as customer demand for PVC pipe was lower as customers continued to work through high priced inventories during the quarter to better manage their inventory levels. The decrease in sales volumes was partially offset by increased sales prices and profit margins, as the average PVC pipe sales prices increased 29% from the fourth quarter of 2021.

Corporate Costs

Corporate net loss was $2.7 million, a $2.2 million decrease from the fourth quarter of 2021, primarily due to lower health care costs related to our self-funded health insurance program, as well as gains on our corporate-owned life insurance policy investments and the favorable impact of death benefit proceeds from our corporate-owned life insurance.

2023 BUSINESS OUTLOOK

We anticipate 2023 diluted earnings per share to be in the range of $3.76 to $4.06. We expect our earnings mix in 2023 to be approximately 51% from our Electric segment and 49% from our Manufacturing and Plastics segments, net of corporate costs. This anticipated mix deviates from our long-term expected earnings mix of approximately 65%/35% as we expect Plastics segment earnings in 2023 to remain elevated relative to our expectations of ongoing, normalized earnings of this segment.

The segment components of our 2023 diluted earnings per share compared with actual earnings for 2022 are as follows:

 

 

 

2022 EPS

by Segment

 

2023 EPS Guidance

 

 

 

Low

 

High

 

 

 

 

 

 

 

 

Electric

 

 

$

1.91

 

 

$

2.00

 

 

$

2.04

 

Manufacturing

 

 

 

0.50

 

 

 

0.43

 

 

 

0.47

 

Plastics

 

 

 

4.66

 

 

 

1.57

 

 

 

1.76

 

Corporate

 

 

 

(0.29

)

 

 

(0.24

)

 

 

(0.21

)

Total

 

 

$

6.78

 

 

$

3.76

 

 

$

4.06

 

Return on Equity

 

 

 

25.6

%

 

 

12.7

%

 

 

13.6

%

The following items contribute to our 2023 earnings guidance:

Electric Segment - We expect segment earnings to increase 6% over 2022 based on the following key assumptions:

  • Normal weather conditions for 2023
  • Returns generated from an increase in rate base, as our average rate base in 2022 increased 3.1%, to $1.6 billion, compared to the prior year, and increased sales volumes from commercial and industrial customers.
  • Lower operating and maintenance expenses, primarily from an absence of planned plant outages in 2023 and lower pension costs due to updated actuarial assumptions, including an increase in the discount rate from 3.03% in 2022 to 5.51% in 2023 and an increase in the assumed long-term rate of return on plan assets from 6.30% in 2022 to 7.00% in 2023. These cost reductions are partially offset by increased compensation and benefit costs, operating costs associated with Ashtabula III and Hoot Lake Solar, and other anticipated inflationary cost pressures.
  • Lower expected contribution to the Otter Tail Power Company Foundation in 2023.
  • Increased interest expense from increased borrowings on our credit facility and higher shorter-term borrowing costs.

Manufacturing Segment - We expect segment earnings to decline 10% from 2022 given overall concerns about a slowing manufacturing sector given the continued decline in overall industrial production as our customers continue to experience slower demand for products. Our guidance is also based on the following key assumptions:

  • Parts sales revenues are expected to decline in 2023 driven by year over year steel price declines. Partially offsetting this decline is expected volume growth in Agriculture and Power Generation end markets.
  • Decreased scrap metal revenues at BTD resulting from anticipated lower scrap metal prices in 2023.
  • Inflationary cost pressures and unfavorable manufacturing cost absorption putting downward pressure on operating margins.
  • Earnings at T.O. Plastics are expected to be flat year-over-year as increased operating revenues, driven by customer demand and product price realization, are offset by increased costs in the business.
  • Backlog for the manufacturing companies as of December 31, 2022 was approximately $388.1 million, compared with $390.5 million one year ago.

Plastics Segment - We expect segment earnings to recede from the record level in 2022 based on the following key assumptions:

  • Anticipated margin compression as industry supply and demand dynamics begin to normalize leading to reduced product sales prices.
  • Lower sales volumes, especially in the first half of 2023, as distributors and contractors continue to manage purchase volumes and consume current inventories given the ongoing dynamics within the industry.

Corporate Costs - We anticipate corporate costs will be lower in 2023 primarily based on the following:

  • Increase in earnings generated on our cash and cash equivalents.
  • Lower anticipated investment losses on our corporate investments.
  • Lower expected charitable contribution to our Foundation.
  • Lower expected claims in our self-insured health plan.
  • Lower incentive compensation costs
  • These items are partially offset by inflationary increases in salary and benefit costs, other corporate operating expense items as well as no expectations of receiving any death benefit proceeds on corporate owned life insurance.

CAPITAL EXPENDITURES

The following provides a summary of actual capital expenditures for the year ended 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)

 

 

 

 

2022

 

 

 

 

2023

 

 

 

2024

 

 

 

2025

 

 

 

2026

 

 

 

2027

 

 

Total
2023 - 2027

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Electric Segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Renewables and Natural Gas Generation

 

 

 

 

 

 

$

88

 

 

$

119

 

 

$

88

 

 

$

79

 

 

$

10

 

 

$

384

Technology and Infrastructure

 

 

 

 

 

 

 

33

 

 

 

30

 

 

 

6

 

 

 

5

 

 

 

1

 

 

 

75

Distribution Plant Replacements

 

 

 

 

 

 

 

33

 

 

 

37

 

 

 

38

 

 

 

38

 

 

 

43

 

 

 

189

Transmission (includes replacements)

 

 

 

 

 

 

 

34

 

 

 

36

 

 

 

46

 

 

 

87

 

 

 

78

 

 

 

281

Other

 

 

 

 

 

 

 

26

 

 

 

25

 

 

 

30

 

 

 

25

 

 

 

22

 

 

 

128

Total Electric Segment

 

 

 

$

148

 

 

 

$

214

 

 

$

247

 

 

$

208

 

 

$

234

 

 

$

154

 

 

$

1,057

Manufacturing and Plastics Segments

 

 

 

 

23

 

 

 

 

48

 

 

 

53

 

 

 

29

 

 

 

25

 

 

 

24

 

 

 

179

Total Capital Expenditures

 

 

 

$

171

 

 

 

$

262

 

 

$

300

 

 

$

237

 

 

$

259

 

 

$

178

 

 

$

1,236

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Electric Utility Average Rate Base

 

 

 

$

1,624

 

 

 

$

1,750

 

 

$

1,850

 

 

$

1,990

 

 

$

2,110

 

 

$

2,210

 

 

 

Annual Rate Base Growth

 

 

 

 

3.1

%

 

 

 

7.8

%

 

 

5.7

%

 

 

7.6

%

 

 

6.0

%

 

 

4.7

%

 

 

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, February 14, 2023, 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,” “future,” “goal,” “intend,” “likely,” “may,” “outlook,” “plan,” “possible,” “potential,” “predict,” “probable,” “projected,” “should,” “target,” “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 2023 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, risks associated with energy markets, the availability and pricing of resource materials, inflationary cost pressures, attracting and maintaining a qualified and stable workforce, changing macroeconomic and industry conditions, 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, health and safety laws and regulations, the impact of climate change including compliance with legislative and regulatory changes to address climate change, and operational and economic risks associated with our electric generating and manufacturing facilities. 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)

 

 

Quarter Ended December 31,

 

Year Ended December 31,

(in thousands, except per-share amounts)

 

2022

 

 

 

2021

 

 

2022

 

 

 

2021

 

 

 

 

 

 

 

 

Operating Revenues

 

 

 

 

 

 

 

Electric

$

145,587

 

 

$

131,692

 

$

549,699

 

 

$

480,321

Product Sales

 

155,822

 

 

 

201,541

 

 

910,510

 

 

 

716,523

Total Operating Revenues

 

301,409

 

 

 

333,233

 

 

1,460,209

 

 

 

1,196,844

Operating Expenses

 

 

 

 

 

 

 

Electric Production Fuel

 

10,572

 

 

 

14,751

 

 

65,110

 

 

 

59,327

Electric Purchased Power

 

35,677

 

 

 

25,136

 

 

100,281

 

 

 

65,409

Electric Operating and Maintenance Expense

 

54,917

 

 

 

45,054

 

 

181,378

 

 

 

159,669

Cost of Products Sold (excluding depreciation)

 

99,358

 

 

 

129,603

 

 

542,944

 

 

 

488,370

Other Nonelectric Expenses

 

18,738

 

 

 

19,808

 

 

69,718

 

 

 

65,394

Depreciation and Amortization

 

22,768

 

 

 

23,249

 

 

92,597

 

 

 

91,358

Electric Property Taxes

 

4,438

 

 

 

4,473

 

 

17,742

 

 

 

17,609

Total Operating Expenses

 

246,468

 

 

 

262,074

 

 

1,069,770

 

 

 

947,136

Operating Income

 

54,941

 

 

 

71,159

 

 

390,439

 

 

 

249,708

Other Income and Expense

 

 

 

 

 

 

 

Interest Charges

 

8,818

 

 

 

9,169

 

 

36,016

 

 

 

37,771

Nonservice Cost Components of Postretirement Benefits

 

(250

)

 

 

505

 

 

(1,075

)

 

 

2,016

Other Income (Expense), net

 

2,840

 

 

 

803

 

 

2,037

 

 

 

2,900

Income Before Income Taxes

 

49,213

 

 

 

62,288

 

 

357,535

 

 

 

212,821

Income Tax Expense

 

7,208

 

 

 

10,671

 

 

73,351

 

 

 

36,052

Net Income

$

42,005

 

 

$

51,617

 

$

284,184

 

 

$

176,769

 

 

 

 

 

 

 

 

Weighted-Average Common Shares Outstanding:

 

 

 

 

 

 

 

Basic

 

41,600

 

 

 

41,504

 

 

41,586

 

 

 

41,491

Diluted

 

41,932

 

 

 

41,894

 

 

41,931

 

 

 

41,818

Earnings Per Share:

 

 

 

 

 

 

 

Basic

$

1.01

 

 

$

1.24

 

$

6.83

 

 

$

4.26

Diluted

$

1.00

 

 

$

1.23

 

$

6.78

 

 

$

4.23

OTTER TAIL CORPORATION

CONSOLIDATED BALANCE SHEETS (unaudited)

 

 

December 31,

(in thousands)

 

2022

 

 

2021

 

 

 

 

 

Assets

 

 

 

Current Assets

 

 

 

Cash and Cash Equivalents

$

118,996

 

$

1,537

 

Receivables, net of allowance for credit losses

 

144,393

 

 

174,953

 

Inventories

 

145,952

 

 

148,490

 

Regulatory Assets

 

24,999

 

 

27,342

 

Other Current Assets

 

18,412

 

 

17,032

 

Total Current Assets

 

452,752

 

 

369,354

 

Noncurrent Assets

 

 

 

Investments

 

54,845

 

 

56,690

 

Property, Plant and Equipment, net of accumulated depreciation

 

2,212,717

 

 

2,124,605

 

Regulatory Assets

 

94,655

 

 

125,508

 

Intangible Assets, net of accumulated amortization

 

7,943

 

 

9,044

 

Goodwill

 

37,572

 

 

37,572

 

Other Noncurrent Assets

 

41,177

 

 

32,057

 

Total Noncurrent Assets

 

2,448,909

 

 

2,385,476

 

Total Assets

$

2,901,661

 

$

2,754,830

 

 

 

 

 

Liabilities and Shareholders' Equity

 

 

 

Current Liabilities

 

 

 

Short-Term Debt

$

8,204

 

$

91,163

 

Current Maturities of Long-Term Debt

 

 

 

29,983

 

Accounts Payable

 

104,400

 

 

135,089

 

Accrued Salaries and Wages

 

32,327

 

 

31,704

 

Accrued Taxes

 

19,340

 

 

19,245

 

Regulatory Liabilities

 

17,300

 

 

24,844

 

Other Current Liabilities

 

56,065

 

 

55,671

 

Total Current Liabilities

 

237,636

 

 

387,699

 

Noncurrent Liabilities and Deferred Credits

 

 

 

Pensions Benefit Liability

 

33,210

 

 

73,973

 

Other Postretirement Benefits Liability

 

46,977

 

 

66,481

 

Regulatory Liabilities

 

244,497

 

 

234,430

 

Deferred Income Taxes

 

221,302

 

 

188,268

 

Deferred Tax Credits

 

15,916

 

 

16,661

 

Other Noncurrent Liabilities

 

60,985

 

 

62,527

 

Total Noncurrent Liabilities and Deferred Credits

 

622,887

 

 

642,340

 

Commitments and Contingencies

 

 

 

Capitalization

 

 

 

Long-Term Debt, net of current maturities

 

823,821

 

 

734,014

 

Shareholders’ Equity

 

 

 

Common Shares

 

208,156

 

 

207,758

 

Additional Paid-In Capital

 

423,034

 

 

419,760

 

Retained Earnings

 

585,212

 

 

369,783

 

Accumulated Other Comprehensive Income (Loss)

 

915

 

 

(6,524

)

Total Shareholders' Equity

 

1,217,317

 

 

990,777

 

Total Capitalization

 

2,041,138

 

 

1,724,791

 

Total Liabilities and Shareholders' Equity

$

2,901,661

 

$

2,754,830

 

OTTER TAIL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

 

 

Year Ended December 31,

(in thousands)

 

2022

 

 

 

2021

 

 

 

 

 

Operating Activities

 

 

 

Net Income

$

284,184

 

 

$

176,769

 

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

 

 

 

Depreciation and Amortization

 

92,597

 

 

 

91,358

 

Deferred Tax Credits

 

(745

)

 

 

(744

)

Deferred Income Taxes

 

32,424

 

 

 

28,896

 

Discretionary Contribution to Pension Plan

 

(20,000

)

 

 

(10,000

)

Allowance for Equity Funds Used During Construction

 

(1,690

)

 

 

(822

)

Stock Compensation Expense

 

6,814

 

 

 

6,908

 

Other, net

 

3,513

 

 

 

(3,035

)

Change in Operating Assets and Liabilities:

 

 

 

Receivables

 

30,560

 

 

 

(60,994

)

Inventories

 

5,339

 

 

 

(54,313

)

Regulatory Assets

 

(2,464

)

 

 

(4,803

)

Other Assets

 

(368

)

 

 

(14,146

)

Accounts Payable

 

(29,763

)

 

 

38,734

 

Accrued and Other Liabilities

 

(5,490

)

 

 

28,386

 

Regulatory Liabilities

 

(6,846

)

 

 

1,948

 

Pension and Other Postretirement Benefits

 

1,244

 

 

 

7,101

 

Net Cash Provided by Operating Activities

 

389,309

 

 

 

231,243

 

Investing Activities

 

 

 

Capital Expenditures

 

(171,134

)

 

 

(171,829

)

Proceeds from Disposal of Noncurrent Assets

 

4,346

 

 

 

9,702

 

Purchases of Investments and Other Assets

 

(8,283

)

 

 

(9,383

)

Net Cash Used in Investing Activities

 

(175,071

)

 

 

(171,510

)

Financing Activities

 

 

 

Net Borrowings (Repayments) on Short-Term Debt

 

(82,959

)

 

 

10,166

 

Proceeds from Issuance of Common Stock

 

 

 

 

696

 

Proceeds from Issuance of Long-Term Debt

 

90,000

 

 

 

140,000

 

Payments for Retirement of Long-Term Debt

 

(30,000

)

 

 

(140,169

)

Dividends Paid

 

(68,755

)

 

 

(64,864

)

Payments for Shares Withheld for Employee Tax Obligations

 

(2,942

)

 

 

(1,507

)

Other, net

 

(2,123

)

 

 

(3,681

)

Net Cash Used in Financing Activities

 

(96,779

)

 

 

(59,359

)

Net Change in Cash and Cash Equivalents

 

117,459

 

 

 

374

 

Cash and Cash Equivalents at Beginning of Period

 

1,537

 

 

 

1,163

 

Cash and Cash Equivalents at End of Period

$

118,996

 

 

$

1,537

 

OTTER TAIL CORPORATION

SEGMENT RESULTS (unaudited)

 

 

Quarter Ended December 31,

 

Year Ended December 31,

(in thousands)

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

 

 

 

 

 

 

 

 

Operating Revenues

 

 

 

 

 

 

 

Electric

$

145,587

 

 

$

131,692

 

 

$

549,699

 

 

$

480,321

 

Manufacturing

 

91,062

 

 

 

86,209

 

 

 

397,983

 

 

 

336,294

 

Plastics

 

64,760

 

 

 

115,332

 

 

 

512,527

 

 

 

380,229

 

Total Operating Revenues

$

301,409

 

 

$

333,233

 

 

$

1,460,209

 

 

$

1,196,844

 

 

 

 

 

 

 

 

 

Operating Income (Loss)

 

 

 

 

 

 

 

Electric

$

22,374

 

 

$

24,270

 

 

$

113,138

 

 

$

106,964

 

Manufacturing

 

4,047

 

 

 

2,716

 

 

 

29,065

 

 

 

24,114

 

Plastics

 

33,355

 

 

 

51,097

 

 

 

264,578

 

 

 

132,760

 

Corporate

 

(4,835

)

 

 

(6,924

)

 

 

(16,342

)

 

 

(14,130

)

Total Operating Income

$

54,941

 

 

$

71,159

 

 

$

390,439

 

 

$

249,708

 

 

 

 

 

 

 

 

 

Net Income (Loss)

 

 

 

 

 

 

 

Electric

$

17,036

 

 

$

16,911

 

 

$

79,974

 

 

$

72,458

 

Manufacturing

 

3,092

 

 

 

1,896

 

 

 

20,950

 

 

 

17,186

 

Plastics

 

24,586

 

 

 

37,721

 

 

 

195,374

 

 

 

97,823

 

Corporate

 

(2,709

)

 

 

(4,911

)

 

 

(12,114

)

 

 

(10,698

)

Total Net Income

$

42,005

 

 

$

51,617

 

 

$

284,184

 

 

$

176,769

 

 

Contacts

Media Contact: Stephanie Hoff, Director of Corporate Communications, (218) 739-8535
Investor Contact: Tyler Nelson, Vice President of Accounting, (701) 451-3576

Contacts

Media Contact: Stephanie Hoff, Director of Corporate Communications, (218) 739-8535
Investor Contact: Tyler Nelson, Vice President of Accounting, (701) 451-3576