Otter Tail Corporation (NASDAQ: OTTR) today announced financial results for the year ended December 31, 2019.
2019 Summary:
|
4Q19 |
4Q18 |
2019 |
2018 |
||||||||
Operating Revenues (in millions) |
$ |
215.7 |
$ |
221.2 |
$ |
919.5 |
$ |
916.4 |
||||
Net Income (in millions) |
$ |
20.4 |
$ |
14.2 |
$ |
86.8 |
$ |
82.3 |
||||
Diluted Earnings Per Share |
$ |
0.51 |
$ |
0.35 |
$ |
2.17 |
$ |
2.06 |
2019 Highlights
CEO Overview
"Our team of employees once again achieved strong financial results in 2019, increasing diluted earnings per share to $2.17," said President and CEO Chuck MacFarlane. "Our Electric segment led our increase in net income, which improved year-over-year earnings by $4.6 million. Manufacturing segment earnings were flat year over year and our Plastics segment experienced a $3.2 million decline in earnings due to lower volumes and lower operating margins. Corporate costs improved by $3.1 million.
"Construction of Otter Tail Power Company's $258 million, 150-megawatt Merricourt Wind Energy Center in southeastern North Dakota began in August with completion anticipated in October 2020. The project is on budget and continues to have excellent safety performance with no recordable incidents. We project our customers will receive approximately 30 percent of their energy from renewable resources we own or secure through power-purchase agreements by 2021. Construction of our $158 million 245-megawatt Astoria Station natural gas-fired combustion turbine generation project continues to be on schedule and on budget with a commercial operation date expected in late 2020 or early 2021.
"Rate riders are in place or expected to be in place in 2020, providing returns on amounts invested in the Merricourt Wind Energy Center and Astoria Station projects while under construction. The exception is the Minnesota portion of the Astoria Station costs and we will continue to capitalize an allowance for funds used during construction (AFUDC) on the Minnesota share of Astoria Station costs until recovery under interim or general rates commences.
"Otter Tail Power Company has approximately $45 million in planned MISO self-fund transmission investments for generator interconnections in the 2019 through 2021 time period. 'Self-fund' is a transmission investment election made by transmission owners in MISO to fund the initial investment of transmission network upgrades required for generator interconnection and to recover and earn a return on the investment from the interconnection customer over 20 years. As of December 31, 2019, Otter Tail Power Company had Federal Energy Regulatory Commission (FERC) approval of several agreements providing for recovery on approximately $12 million in self-fund investments.
"Otter Tail Power Company continues to benefit from strong rate base growth investments and expects to invest $897 million in capital projects from 2020 through 2024, including investments in renewable generation and Astoria Station. This results in a projected compounded annual growth rate of 8.2 percent in utility rate base from year-end 2019 through 2024 and is expected to deliver value to customers and shareholders. We continue to make system investments to meet our customers' expectations and enable us to work smarter, reduce emissions and improve reliability and safety.
"Our strategic initiatives to grow our businesses, achieve operational and commercial excellence, and develop our talent are strengthening our position in the markets we serve. We remain confident in our ability to grow earnings per share in the range of 5 to 7 percent compounded annually from a base of $2.17 in 2019. And we are announcing our 2020 earnings per share guidance to be in the range of $2.22-$2.37."
Cash Flows and Liquidity
Our consolidated cash provided by operating activities for the year ended December 31, 2019 was $185.0 million compared with $143.4 million for the year ended December 31, 2018. Primary reasons for the $41.6 million increase in net cash provided by operating activities between the periods were:
These items were partially offset by:
The following table presents the status of the corporation's lines of credit:
|
|
In Use On |
|
Restricted due to |
|
Available on |
|
Available on |
|||||||
|
|
December 31, |
|
Outstanding Letters |
|
December 31, |
|
December 31, |
|||||||
(in thousands) |
Line Limit |
|
2019 |
|
of Credit |
|
2019 |
|
2018 |
||||||
Otter Tail Corporation Credit Agreement |
$ |
170,000 |
$ |
6,000 |
$ |
-- |
$ |
164,000 |
$ |
120,785 |
|||||
Otter Tail Power Company Credit Agreement |
|
170,000 |
|
-- |
|
15,476 |
|
154,524 |
|
160,316 |
|||||
Total |
$ |
340,000 |
$ |
6,000 |
$ |
15,476 |
$ |
318,524 |
$ |
281,101 |
Both credit agreements are currently in place until October 31, 2024.
2019 Segment Performance Summary
Electric
($s in thousands) |
2019 |
2018 |
Change |
% Change |
|||||||||
Retail Electric Revenues |
$ |
406,478 |
$ |
388,251 |
$ |
18,227 |
|
4.7 |
|
||||
Transmission Services Revenues |
|
40,542 |
|
46,947 |
|
(6,405 |
) |
(13.6 |
) |
||||
Wholesale Electric Revenues |
|
5,007 |
|
7,735 |
|
(2,728 |
) |
(35.3 |
) |
||||
Other Electric Revenues |
|
7,070 |
|
7,322 |
|
(252 |
) |
(3.4 |
) |
||||
Total Electric Revenues |
$ |
459,097 |
$ |
450,255 |
$ |
8,842 |
|
2.0 |
|
||||
Net Income |
$ |
59,046 |
$ |
54,431 |
$ |
4,615 |
|
8.5 |
|
||||
Retail Megawatt-hour Sales |
|
4,969,089 |
|
4,976,960 |
|
(7,871 |
) |
(0.2 |
) |
||||
Heating Degree Days |
|
7,240 |
|
6,904 |
|
336 |
|
4.9 |
|
||||
Cooling Degree Days |
|
392 |
|
567 |
|
(175 |
) |
(30.9 |
) |
Results of operations for the Electric segment are impacted by fluctuations in weather conditions and the resulting demand for electricity for heating and cooling. The following table shows heating and cooling degree days as a percent of normal.
|
2019 |
|
2018 |
|
Heating Degree Days |
115.6% |
|
111.0% |
|
Cooling Degree Days |
85.0% |
|
123.5% |
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 2019 and 2018 and between the years.
|
2019 vs Normal |
2018 vs Normal |
2019 vs 2018 |
||||||
Effect on Diluted Earnings Per Share |
$ |
0.078 |
$ |
0.073 |
$ |
0.005 |
Electric Revenue
The $18.2 million increase in retail electric revenue includes:
These items were partially offset by a $1.8 million decrease in retail revenue due to a decrease in kwh sales to residential customers.
Transmission services revenues decreased $6.4 million mainly due to a $5.0 million decrease associated with reductions in capital spending and collections through the Midcontinent Independent System Operator, Inc. (MISO) tariff. Otter Tail Power Company also recorded an additional $1.4 million estimated refund obligation due to a November 21, 2019 FERC ruling related to the methodology used to determine the Return on Equity (ROE) component of the transmission rate under the MISO tariff. This is mainly based on a reduced ROE from 10.82% to 10.38% for the period from September 28, 2016 through December 31, 2019. The reduced ROE is based on a newly established 9.88% ROE plus the 50-point Regional Transmission Organization adder granted by the FERC on January 5, 2015. The FERC ruling is subject to rehearing requests.
Wholesale electric revenues decreased $2.7 million resulting from a 27.0% decrease in wholesale kwh sales due to fewer opportunities for wholesale sales as Coyote Station was offline during the second quarter of 2019 due to an extended maintenance outage and Hoot Lake Plant Unit 2 was offline for maintenance and repairs in June and July 2019. The decrease in revenues also resulted from decreased regional market demand in the third quarter of 2019 due to cooler summer weather, which drove down wholesale electricity prices.
Electric Costs and Expenses
Production fuel costs decreased $7.6 million mainly as a result of a 16.4% decrease in kwhs generated from our fuel-burning plants due to the maintenance outage at Coyote Station and due to maintenance and repairs at Hoot Lake Plant as noted above. The decrease in fuel costs related to the decrease in generation was partially offset by a 6.1% increase in the cost of fuel per kwh generated at Otter Tail Power Company's fuel-burning plants. The increased cost-per-kwh generated is mostly due to higher absorption of Coyote Creek Mining Company's fixed coal mining costs on less delivered fuel to Coyote Station during its planned spring 2019 maintenance outage.
The cost of purchased power to serve retail customers increased $3.7 million due to a 23.1% increase in kwhs purchased as a result of purchasing replacement power during the maintenance outages at Coyote Station and Hoot Lake Plant. The increase in kwh purchases was partially offset by a 5.1% decrease in kwh purchases in the fourth quarter of 2019 related to Big Stone Plant's availability during the fourth quarter of 2019 compared to the same period last year when the plant was down for scheduled maintenance. The increased costs due to the increase in kwhs purchased were partially mitigated by a 14.4% decrease in the cost per kwh purchased resulting from lower wholesale energy prices in 2019.
Electric operating and maintenance expenses decreased $2.0 million due to:
These items were partially offset by:
Depreciation expense increased $4.1 million due to capital additions including the Big Stone South?Ellendale 345kV transmission line energized in February 2019, the new customer information system put in service in 2019 and other recent transmission plant upgrades.
Property tax expense increased $0.2 million due to capital additions, mainly transmission assets, in South Dakota and Minnesota.
Income tax expense increased $7.2 million mainly due to an $11.8 million increase in Electric segment income before income taxes and a $3.1 million reduction in federal PTCs related to the expiration of PTCs on Otter Tail Power Company's Ashtabula wind farm in November of 2018.
Manufacturing
(in thousands) |
2019 |
2018 |
Change |
% Change |
|||||||
Operating Revenues |
$ |
277,204 |
$ |
268,409 |
$ |
8,795 |
3.3 |
||||
Net Income |
|
12,899 |
|
12,839 |
|
60 |
0.5 |
BTD Manufacturing
BTD's revenues increased $9.5 million due to growth in parts revenue of $12.3 million from increased sales to customers in recreational vehicle, construction, industrial, agricultural, and lawn and garden end markets, partially offset by reduced sales in energy end markets. Included in the parts revenue increase is the pass through of higher material costs of $0.7 million, with the remaining increase due to $11.6 million in higher sales volume. The increase in parts revenue was partially offset by a $2.8 million (31.9%) decrease in revenue from scrap metal sales due to a 28.2% decrease in scrap metal prices.
Cost of products sold at BTD increased $8.4 million including $11.8 million in increased material costs with $11.1 million due to the increased sales volume and $0.7 million passed through to customers. The increase in material costs combined with a $0.7 million increase in overhead costs was partially offset by a $4.1 million increase in reimbursements of tooling costs from customers.
The $1.1 million increase in gross margins on sales was partially offset by a $0.1 million increase in operating expenses. BTD's depreciation expenses decreased $0.4 million as a result of certain assets reaching the ends of their depreciable lives. BTD's income before income tax increased $1.3 million and its income tax expense decreased by $0.1 million, resulting in a $1.4 million increase in BTD's net income in 2019 compared with 2018.
T.O. Plastics
T.O. Plastics' revenues decreased $0.7 million due to a $0.7 million reduction in extrusion and other industrial sales, a $0.6 million decrease in sales to a customer bringing more production in house and a $0.2 million reduction in sales of horticultural containers, partially offset by a $0.5 million increase in life science product sales and a $0.3 million increase in sales of scrap material.
Cost of products sold at T.O. Plastics increased $1.1 million mainly due to increased labor costs driven in part by increased production hours and in part by wage increases. T.O. Plastics' gross margin percentage decreased from 2018 to 2019 as a result of a customer's decision to bring more production in house. Operating expenses increased $0.1 million.
T.O. Plastics' income before income tax decreased $1.9 million and its income tax expense decreased by $0.5 million, resulting in a $1.4 million decrease in net income in 2019 compared with 2018.
Plastics
(in thousands) |
2019 |
2018 |
Change |
% Change |
|||||||||
Operating Revenues |
$ |
183,257 |
$ |
197,840 |
$ |
(14,583 |
) |
(7.4 |
) |
||||
Net Income |
|
20,572 |
|
23,819 |
|
(3,247 |
) |
(13.6 |
) |
Plastics revenues and net income decreased $14.6 million and $3.2 million, respectively, due to a 4.2% decrease in pounds of polyvinyl chloride (PVC) pipe sold and a 3.3% decrease in PVC pipe prices. Wet weather conditions across our sales territory negatively impacted 2019 sales along with lower demand in the Midwest and West Coast states.
Cost of products sold decreased $8.9 million due to the decrease in sales volume and a 1.9% decrease in the cost per pound of pipe sold. The decrease in pipe prices net of the decrease in costs resulted in a 7.7% decrease in gross margin per pound of PVC pipe sold. Plastics segment operating expenses decreased $0.9 million mainly due to a decrease in incentive compensation related to decreased operating income. Plastics segment depreciation expense decreased $0.3 million.
Segment income tax expense decreased $1.4 million resulting in the $3.2 million decrease in year-over-year net income in the Plastics segment.
Corporate
(in thousands) |
2019 |
2018 |
Change |
% Change |
|||||||||||
Losses before Income Taxes |
$ |
11,189 |
|
$ |
11,961 |
|
$ |
(772 |
) |
(6.5 |
) |
||||
Income Tax Savings |
|
(5,519 |
) |
|
(3,217 |
) |
|
(2,302 |
) |
71.6 |
|
||||
Net Loss |
$ |
5,670 |
|
$ |
8,744 |
|
$ |
(3,074 |
) |
(35.1 |
) |
Corporate costs before taxes decreased $0.8 million in 2019 compared to 2018 due to:
These items were partially offset by:
Corporate income tax savings increased $2.3 million despite the decrease in corporate losses before income tax due to a $1.7 million reduction in uncertain tax positions and state net operating loss carryforwards between the years and an increase of $0.8 million in permanent differences primarily related to corporate-owned life insurance and employee benefits, partially offset by a $0.2 million reduction in tax savings due to lower corporate costs between the years.
Fourth Quarter 2019 Consolidated Results
(in thousands, except per share amounts) |
4th Quarter
|
4th Quarter
|
Change |
%
|
|||||||||
Operating Revenues |
$ |
215,676 |
$ |
221,171 |
$ |
(5,495 |
) |
(2.5 |
) |
||||
Operating Income |
$ |
31,237 |
$ |
23,407 |
$ |
7,830 |
|
33.5 |
|
||||
Income Before Income Taxes |
$ |
23,886 |
$ |
14,542 |
$ |
9,344 |
|
64.3 |
|
||||
Income Tax Expense |
|
3,534 |
|
381 |
|
3,153 |
|
827.6 |
|
||||
Net Income |
$ |
20,352 |
$ |
14,161 |
$ |
6,191 |
|
43.7 |
|
||||
Diluted earnings per share |
$ |
0.51 |
$ |
0.35 |
$ |
0.16 |
|
45.7 |
|
The increase in fourth quarter 2019 net income was driven by increases in Electric and Plastics segment net income and a decrease in Corporate's net loss, partially offset by a decrease in Manufacturing segment net income.
Electric
partially offset by:
partially offset by:
Manufacturing
Net income from the Manufacturing segment decreased $1.2 million between quarters.
BTD's revenues decreased $4.2 million due to a $2.7 million reduction in revenue from parts sales, including decreased sales in energy, agricultural and lawn and garden end markets, partially offset by increased sales in recreational vehicle and industrial end markets. Included in the parts revenue decrease is a $6.2 million decrease in material cost increases passed through to customers partially offset by an increase in revenue of $3.5 million due to higher sales volume. Revenue from scrap metal sales decreased $1.2 million due to a 43.4% decrease in scrap metal prices and a 19.2% decrease in scrap volume. BTD also recorded a net decrease in revenues from tooling and other sources of $0.3 million. Cost of products sold at BTD decreased $3.2 million including a $2.2 million decrease in material costs, a $1.5 million in decreased labor costs and a $0.6 decrease in other overhead costs, partially offset by a $1.1 million decrease in reimbursement of tooling costs from customers. BTD's gross margin and income before income taxes both declined by $1.0 million, resulting in a $0.3 million decrease in income tax expense and $0.7 million decrease in net income between quarters.
T.O. Plastics' revenues decreased $0.2 million mainly due to a reduction in product sales. Cost of products sold at T.O. Plastics increased $0.7 million mainly due to increased labor, material costs and equipment repairs. Operating expenses at T.O. Plastics decreased $0.3 million. T.O. Plastics' net income before income tax decreased $0.6 million, resulting in a $0.5 million decrease in net income in the fourth quarter of 2019 compared with the fourth quarter of 2018.
Plastics
Plastics segment revenues and net income increased $2.6 million and $1.3 million, respectively, quarter-over-quarter due to a 10.4% increase in pounds of PVC pipe sold partially offset by a 3.1% decrease in PVC pipe prices. Cost of products sold increased $1.4 million due to the increase in sales volume partially offset by a 4.8% decrease in the cost per pound of pipe sold. The decrease in pipe prices net of the decrease in costs resulted in a 1.4% increase in gross margin per pound of PVC pipe sold. Plastics segment operating and depreciation expenses decreased $0.4 million and segment income tax expense increased $0.2 million resulting in the $1.3 million increase in quarter-over-quarter net income in the Plastics segment.
Corporate
Corporate costs, net-of-tax, decreased $3.4 million mainly due to a $1.5 million net-of-tax decrease in contributions to the Otter Tail Corporation Foundation and $1.9 million in changes to uncertain tax positions and state net operating loss carryforward and increases in the cash surrender value of corporate-owned life insurance.
2020 Business Outlook
We anticipate 2020 diluted earnings per share to be in the range of $2.22 to $2.37. The midpoint of the 2020 earnings per share guidance reflects a 6% growth rate off 2019 diluted earnings per share. Our 2020 diluted earnings per share guidance also includes $0.05 of dilution associated with the planned issuance of common equity under our At-the-Market Offering Program and Dividend Reinvestment and Employee Stock Purchase Plans to help fund our construction projects at Otter Tail Power Company.
We have taken into consideration strategies for improving future operating results, the cyclical nature of some of our businesses, and current regulatory factors facing our Electric segment. We expect capital expenditures for 2020 to be $385 million compared with actual cash used for capital expenditures of $207 million in 2019. Our Electric Segment accounts for 96% of our 2020 planned capital expenditures. The increase in our planned expenditures for 2020 is largely driven by the Merricourt Wind Energy Center (Merricourt) and Astoria Station natural gas-fired electric plant rate base projects.
Segment components of our 2020 diluted earnings per share guidance range compared with 2019 actual earnings are as follows.
|
2019 EPS by Segment |
2020 EPS Guidance |
||||
|
Low |
High |
||||
Electric |
$1.48 |
|
$1.67 |
|
$1.70 |
|
Manufacturing |
$0.32 |
|
$0.31 |
|
$0.35 |
|
Plastics |
$0.51 |
|
$0.43 |
|
$0.47 |
|
Corporate |
($0.14) |
|
($0.19) |
|
($0.15) |
|
Total |
$2.17 |
|
$2.22 |
|
$2.37 |
|
Return on Equity |
11.6% |
|
11.0% |
|
11.7% |
The following items contribute to our earnings guidance for 2020.
Partially offset by:
The following table shows our 2019 capital expenditures and 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 |
|
$ |
260 |
|
$ |
18 |
|
$ |
51 |
|
$ |
30 |
|
$ |
-- |
|
$ |
359 |
|||||||
Technology and Infrastructure |
|
|
7 |
|
|
18 |
|
|
47 |
|
|
54 |
|
|
43 |
|
|
169 |
|||||||
Distribution Plant Replacements |
|
|
22 |
|
|
27 |
|
|
34 |
|
|
25 |
|
|
26 |
|
|
134 |
|||||||
Transmission (includes replacements) |
|
|
61 |
|
|
26 |
|
|
8 |
|
|
13 |
|
|
9 |
|
|
117 |
|||||||
Other |
|
|
19 |
|
|
35 |
|
|
23 |
|
|
18 |
|
|
23 |
|
|
118 |
|||||||
Total Electric Segment |
$ |
187 |
$ |
369 |
|
$ |
124 |
|
$ |
163 |
|
$ |
140 |
|
$ |
101 |
|
$ |
897 |
||||||
Manufacturing and Plastics Segments |
|
20 |
|
16 |
|
|
18 |
|
|
17 |
|
|
19 |
|
|
17 |
|
|
87 |
||||||
Total Capital Expenditures |
$ |
207 |
$ |
385 |
|
$ |
142 |
|
$ |
180 |
|
$ |
159 |
|
$ |
118 |
|
$ |
984 |
||||||
Total Electric Utility Average Rate Base |
$ |
1,170 |
$ |
1,418 |
|
$ |
1,573 |
|
$ |
1,634 |
|
$ |
1,690 |
|
$ |
1,739 |
|
|
|||||||
Rate Base Growth |
|
|
21.2 |
% |
|
10.9 |
% |
|
3.9 |
% |
|
3.4 |
% |
|
2.9 |
% |
|
The capital expenditure plan for the 2020-2024 time period calls for Electric segment capital expenditures of $897 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 8.2% 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, February 18, 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.cfm 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, made under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Although we believe our expectations are based on reasonable assumptions, actual results may differ materially from those expectations. The following factors, among others, could cause our actual results to differ materially from those discussed in the forward-looking statements:
For a further discussion of these risk factors and cautionary statements, refer to reports we file with the Securities and Exchange Commission.
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 quarters and years ended December 31, 2019 and 2018 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
|
Year-to-Date
|
|||||||||||||||
2019 |
2018 |
2019 |
2018 |
|||||||||||||
Operating Revenues by Segment |
|
|
|
|
||||||||||||
Electric |
|
|
|
|
||||||||||||
Revenues from Contracts with Customers |
$ |
111,738 |
|
$ |
115,805 |
|
$ |
458,065 |
|
$ |
450,694 |
|
||||
Changes in Accrued Revenues under Alternative Revenue Programs |
|
2,633 |
|
|
2,318 |
|
|
1,032 |
|
|
(439 |
) |
||||
Total Electric Revenues |
|
114,371 |
|
|
118,123 |
|
|
459,097 |
|
|
450,255 |
|
||||
Manufacturing |
|
60,164 |
|
|
64,566 |
|
|
277,204 |
|
|
268,409 |
|
||||
Plastics |
|
41,157 |
|
|
38,508 |
|
|
183,257 |
|
|
197,840 |
|
||||
Intersegment Eliminations |
|
(16 |
) |
|
(26 |
) |
|
(55 |
) |
|
(57 |
) |
||||
Total Operating Revenues |
|
215,676 |
|
|
221,171 |
|
|
919,503 |
|
|
916,447 |
|
||||
Operating Expenses |
|
|
|
|
||||||||||||
Fuel and Purchased Power |
|
31,027 |
|
|
37,788 |
|
|
131,322 |
|
|
135,170 |
|
||||
Nonelectric Cost of Products Sold (depreciation included below) |
|
77,794 |
|
|
78,868 |
|
|
355,119 |
|
|
354,559 |
|
||||
Electric Operating and Maintenance Expense |
|
39,422 |
|
|
44,421 |
|
|
153,529 |
|
|
155,534 |
|
||||
Nonelectric Operating and Maintenance Expense |
|
12,378 |
|
|
13,854 |
|
|
50,782 |
|
|
51,544 |
|
||||
Depreciation and Amortization |
|
19,857 |
|
|
18,450 |
|
|
78,086 |
|
|
74,666 |
|
||||
Property Taxes ? Electric |
|
3,961 |
|
|
4,383 |
|
|
15,785 |
|
|
15,585 |
|
||||
Total Operating Expenses |
|
184,439 |
|
|
197,764 |
|
|
784,623 |
|
|
787,058 |
|
||||
Operating Income (Loss) by Segment |
|
|
|
|
||||||||||||
Electric |
|
24,682 |
|
|
17,520 |
|
|
98,417 |
|
|
88,031 |
|
||||
Manufacturing |
|
1,317 |
|
|
2,935 |
|
|
17,869 |
|
|
18,266 |
|
||||
Plastics |
|
7,790 |
|
|
6,207 |
|
|
28,439 |
|
|
32,917 |
|
||||
Corporate |
|
(2,552 |
) |
|
(3,255 |
) |
|
(9,845 |
) |
|
(9,825 |
) |
||||
Total Operating Income |
|
31,237 |
|
|
23,407 |
|
|
134,880 |
|
|
129,389 |
|
||||
Interest Charges |
|
8,221 |
|
|
7,811 |
|
|
31,411 |
|
|
30,408 |
|
||||
Nonservice Cost Components of Postretirement Benefits |
|
1,128 |
|
|
1,380 |
|
|
4,293 |
|
|
5,509 |
|
||||
Other Income |
|
1,998 |
|
|
326 |
|
|
5,112 |
|
|
3,461 |
|
||||
Income Tax Expense |
|
3,534 |
|
|
381 |
|
|
17,441 |
|
|
14,588 |
|
||||
Net Income (Loss) by Segment |
|
|
|
|
||||||||||||
Electric |
|
15,162 |
|
|
12,596 |
|
|
59,046 |
|
|
54,431 |
|
||||
Manufacturing |
|
912 |
|
|
2,070 |
|
|
12,899 |
|
|
12,839 |
|
||||
Plastics |
|
5,654 |
|
|
4,314 |
|
|
20,572 |
|
|
23,819 |
|
||||
Corporate |
|
(1,376 |
) |
|
(4,819 |
) |
|
(5,670 |
) |
|
(8,744 |
) |
||||
Net Income |
$ |
20,352 |
|
$ |
14,161 |
|
$ |
86,847 |
|
$ |
82,345 |
|
||||
Average Number of Common Shares Outstanding |
|
|
|
|
||||||||||||
Basic |
|
39,799,359 |
|
|
39,621,659 |
|
|
39,720,847 |
|
|
39,599,944 |
|
||||
Diluted |
|
40,047,568 |
|
|
39,922,467 |
|
|
39,953,826 |
|
|
39,892,196 |
|
||||
|
|
|
|
|||||||||||||
Basic Earnings Per Common Share |
$ |
0.51 |
|
$ |
0.36 |
|
$ |
2.19 |
|
$ |
2.08 |
|
||||
Diluted Earnings Per Common Share |
$ |
0.51 |
|
$ |
0.35 |
|
$ |
2.17 |
|
$ |
2.06 |
|
||||
|
|
|
|
|
Otter Tail Corporation |
||||||
Consolidated Balance Sheets |
||||||
ASSETS |
||||||
in thousands |
||||||
(not audited) |
||||||
December 31, |
December 31, |
|||||
2019 |
2018 |
|||||
Current Assets |
||||||
Cash and Cash Equivalents |
$ |
21,199 |
$ |
861 |
||
Accounts Receivable: |
||||||
Trade?Net |
|
77,947 |
|
75,144 |
||
Other |
|
8,773 |
|
9,741 |
||
Inventories |
|
97,851 |
|
106,270 |
||
Unbilled Receivables |
|
20,911 |
|
23,626 |
||
Income Taxes Receivable |
|
1,487 |
|
2,439 |
||
Regulatory Assets |
|
21,650 |
|
17,225 |
||
Other |
|
5,042 |
|
6,114 |
||
Total Current Assets |
|
254,860 |
|
241,420 |
||
Investments |
|
9,894 |
|
8,961 |
||
Other Assets |
|
40,196 |
|
35,759 |
||
Goodwill |
|
37,572 |
|
37,572 |
||
Other Intangibles?Net |
|
11,290 |
|
12,450 |
||
Regulatory Assets |
|
144,138 |
|
135,257 |
||
|
|
|
||||
Right of Use Assets?Operating Leases |
|
21,851 |
|
-- |
||
Plant |
||||||
Electric Plant in Service |
|
2,212,884 |
|
2,019,721 |
||
Nonelectric Operations |
|
247,356 |
|
228,120 |
||
Construction Work in Progress |
|
185,238 |
|
181,626 |
||
Total Gross Plant |
|
2,645,478 |
|
2,429,467 |
||
Less Accumulated Depreciation and Amortization |
|
891,684 |
|
848,369 |
||
Net Plant |
|
1,753,794 |
|
1,581,098 |
||
Total |
$ |
2,273,595 |
$ |
2,052,517 |
Otter Tail Corporation |
||||||||
Consolidated Balance Sheets |
||||||||
LIABILITIES AND EQUITY |
||||||||
in thousands |
||||||||
(not audited) |
||||||||
December 31, |
December 31, |
|||||||
2019 |
2018 |
|||||||
Current Liabilities |
||||||||
Short-Term Debt |
$ |
6,000 |
|
$ |
18,599 |
|
||
Current Maturities of Long-Term Debt |
|
183 |
|
|
172 |
|
||
Accounts Payable |
|
120,775 |
|
|
96,291 |
|
||
Accrued Salaries and Wages |
|
22,730 |
|
|
24,857 |
|
||
Accrued Taxes |
|
17,525 |
|
|
17,287 |
|
||
Regulatory Liabilities |
|
7,480 |
|
|
738 |
|
||
Current Operating Lease Liabilities |
|
4,136 |
|
|
-- |
|
||
Other Accrued Liabilities |
|
10,912 |
|
|
12,149 |
|
||
Total Current Liabilities |
|
189,741 |
|
|
170,093 |
|
||
Pensions Benefit Liability |
|
98,970 |
|
|
98,358 |
|
||
Other Postretirement Benefits Liability |
|
71,437 |
|
|
71,561 |
|
||
Long-Term Operating Lease Liabilities |
|
18,193 |
|
|
-- |
|
||
Other Noncurrent Liabilities |
|
30,833 |
|
|
24,326 |
|
||
Deferred Credits |
||||||||
Deferred Income Taxes |
|
131,941 |
|
|
120,976 |
|
||
Deferred Tax Credits |
|
18,626 |
|
|
19,974 |
|
||
Regulatory Liabilities |
|
239,906 |
|
|
226,469 |
|
||
Other |
|
2,885 |
|
|
1,895 |
|
||
Total Deferred Credits |
|
393,358 |
|
|
369,314 |
|
||
Capitalization |
||||||||
Long-Term Debt?Net |
|
689,581 |
|
|
590,002 |
|
||
Cumulative Preferred Shares |
|
-- |
|
|
-- |
|
||
Cumulative Preference Shares |
|
-- |
|
|
-- |
|
||
Common Equity |
||||||||
Common Shares, Par Value $5 Per Share |
|
200,788 |
|
|
198,324 |
|
||
Premium on Common Shares |
|
364,790 |
|
|
344,250 |
|
||
Retained Earnings |
|
222,341 |
|
|
190,433 |
|
||
Accumulated Other Comprehensive Loss |
|
(6,437 |
) |
|
(4,144 |
) |
||
Total Common Equity |
|
781,482 |
|
|
728,863 |
|
||
Total Capitalization |
|
1,471,063 |
|
|
1,318,865 |
|
||
Total |
$ |
2,273,595 |
|
$ |
2,052,517 |
|
Otter Tail Corporation |
||||||||
Consolidated Statements of Cash Flows |
||||||||
in thousands |
||||||||
(not audited) |
||||||||
For the Year Ended December 31, |
||||||||
2019 |
2018 |
|||||||
Cash Flows from Operating Activities |
||||||||
Net Income |
$ |
86,847 |
|
$ |
82,345 |
|
||
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: |
||||||||
Depreciation and Amortization |
|
78,086 |
|
|
74,666 |
|
||
Deferred Tax Credits |
|
(1,348 |
) |
|
(1,405 |
) |
||
Deferred Income Taxes |
|
11,507 |
|
|
19,224 |
|
||
Change in Deferred Debits and Other Assets |
|
(15,502 |
) |
|
941 |
|
||
Discretionary Contribution to Pension Plan |
|
(22,500 |
) |
|
(20,000 |
) |
||
Change in Noncurrent Liabilities and Deferred Credits |
|
33,534 |
|
|
(2,414 |
) |
||
Allowance for Equity/Other Funds Used During Construction |
|
(2,553 |
) |
|
(2,194 |
) |
||
Stock Compensation Expense ? Equity Awards |
|
5,958 |
|
|
4,441 |
|
||
Other?Net |
|
76 |
|
|
-- |
|
||
Cash (Used for) Provided by Current Assets and Current Liabilities: |
|
|
||||||
Change in Receivables |
|
(1,860 |
) |
|
(8,559 |
) |
||
Change in Inventories |
|
8,419 |
|
|
(18,236 |
) |
||
Change in Other Current Assets |
|
2,919 |
|
|
(754 |
) |
||
Change in Payables and Other Current Liabilities |
|
(171 |
) |
|
14,997 |
|
||
Change in Interest Payable and Income Taxes Receivable |
|
1,625 |
|
|
396 |
|
||
Net Cash Provided by Operating Activities |
|
185,037 |
|
|
143,448 |
|
||
|
|
|
||||||
Cash Flows from Investing Activities |
||||||||
Capital Expenditures |
|
(207,365 |
) |
|
(105,425 |
) |
||
Proceeds from Disposal of Noncurrent Assets |
|
8,519 |
|
|
2,378 |
|
||
Cash Used for Investments and Other Assets |
|
(10,626 |
) |
|
(4,372 |
) |
||
Net Cash Used in Investing Activities |
|
(209,472 |
) |
|
(107,419 |
) |
||
|
|
|
||||||
Cash Flows from Financing Activities |
||||||||
Change in Checks Written in Excess of Cash |
|
(2,814 |
) |
|
(345 |
) |
||
Net Short-Term Debt Repayments |
|
(12,599 |
) |
|
(93,772 |
) |
||
Proceeds from Issuance of Common Stock |
|
20,338 |
|
|
-- |
|
||
Common Stock Issuance Expenses |
|
(577 |
) |
|
(108 |
) |
||
Payments for Retirement of Capital Stock |
|
(2,730 |
) |
|
(3,011 |
) |
||
Proceeds from Issuance of Long-Term Debt |
|
100,000 |
|
|
100,000 |
|
||
Short-Term and Long-Term Debt Issuance Expenses |
|
(950 |
) |
|
(761 |
) |
||
Payments for Retirement of Long-Term Debt |
|
(172 |
) |
|
(189 |
) |
||
Dividends Paid |
|
(55,723 |
) |
|
(53,198 |
) |
||
Net Cash Provided by (Used in) Financing Activities |
|
44,773 |
|
|
(51,384 |
) |
||
Net Change in Cash and Cash Equivalents |
|
20,338 |
|
|
(15,355 |
) |
||
Cash and Cash Equivalents at Beginning of Period |
|
861 |
|
|
16,216 |
|
||
Cash and Cash Equivalents at End of Period |
$ |
21,199 |
|
$ |
861 |
|
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