Otter Tail Corporation (NASDAQ:OTTR) today announced financial
results for the quarter ended March 31, 2017.
Summary:
- Consolidated operating revenues were $214.1 million compared
with $206.2 million for the first quarter of 2016.
- Consolidated net income and diluted earnings from continuing
operations totaled $19.5 million and $0.49 per share, respectively,
compared with $14.5 million and $0.38 per share for the first
quarter of 2016.
- The corporation reaffirms its 2017 earnings guidance range of
$1.60 to $1.75 per diluted share.
CEO Overview“Our team delivered a solid first
quarter with earnings per share $0.11 better than first quarter
last year,” said Otter Tail Corporation President and CEO Chuck
MacFarlane. “All operating segments improved net income quarter
over quarter. The overall improvement was largely driven by
Minnesota interim rate revenues that Otter Tail Power Company began
collecting in mid-April 2016. Weather was also slightly more
favorable for the utility in the first quarter of 2017 compared
with the first quarter of 2016, and interest costs were lower for
our manufacturing companies due to refinancing long-term debt at a
lower rate in December 2016. Our engaged employees enhanced these
outcomes with their dedication to cost management and operational
excellence.
“The utility completed two major regulatory proceedings in
March. The Minnesota Public Utilities Commission granted Otter Tail
Power Company a revenue increase of $12.3 million annually, or
approximately 6.3% compared to an adjusted request of 7.4%, in the
rate case we filed in February 2016. The Minnesota Public Utilities
Commission set return on equity at 9.41% on a capital structure of
52.5% equity to total capitalization. Otter Tail Power Company’s
rates continue to be among the lowest in the nation and region.
“The Minnesota Public Utilities Commission also approved Otter
Tail Power Company’s 2017-2031 resource plan, which supports adding
more wind, natural gas, and solar generation to prepare for closing
the coal-fired Hoot Lake Plant in 2021 and to replace expiring
purchased power agreements. Otter Tail Power Company has filed for
advance determinations of prudence for construction of a
250-megawatt simple-cycle natural gas combustion turbine in
Astoria, South Dakota, for an estimated $165 million and for
the previously announced 150-megawatt wind project to be built in
southeastern North Dakota in 2019 for an estimated
$250 million. These investments will deliver value to
customers and shareholders. The wind and solar investments along
with Otter Tail Power Company’s current renewable sources will
supply a projected 30% of its energy from cost-effective renewables
by 2021.
“Overall, Otter Tail Power Company expects to invest $862
million from 2017 through 2021, including major investments in
regional transmission projects already underway. This will produce
a projected compounded annual growth rate of 7.5% in utility rate
base from 2015 through 2021.
“The two 345-kilovolt transmission projects under construction
that the Midcontinent Independent System Operator designated as
Multi-Value Projects remain on schedule and on budget. We are a 50
percent owner in both the Big Stone South-Brookings line, scheduled
for completion later this year, and the Big Stone South-Ellendale
line, scheduled for completion in 2019. Otter Tail Power Company
manages the Big Stone South-Ellendale project. Our combined
investment in these projects is expected to be approximately $250
million.
“In our Plastics segment, an increase in pounds of PVC pipe sold
at prices similar to last year’s first quarter prices more than
offset lower profit margins per pound of pipe sold related to
increased material costs which, along with lower operating expenses
and interest costs, resulted in a $0.3 million increase in segment
net income.
“Our Manufacturing segment showed a slight improvement in net
income quarter over quarter. Thanks to higher scrap metal prices
combined with lower operating expenses and interest costs, BTD, our
custom metal fabricator, increased net income quarter over quarter
despite lower sales. BTD’s expanded facilities and service
offerings should put it in good position to enhance earnings when
markets improve. Improved operations also drove
quarter-over-quarter net income growth for T.O. Plastics, our
thermoforming manufacturer, which experienced increased sales in
all its major end markets.
“These results provide a foundation for reaffirming our 2017
diluted earnings per share guidance range of $1.60 to $1.75.”
Cash Flow from Operations, Liquidity and
Financing Our consolidated cash provided by continuing
operations for the quarter ended March 31, 2017 was
$21.2 million compared with $22.6 million for the quarter
ended March 31, 2016. Contributing to the $1.4 million
decrease in cash provided by continuing operations between the
quarters was a $15.9 million increase in cash used for working
capital items and a $0.4 million decrease in depreciation expense,
offset by a $10.0 million reduction in discretionary contributions
to the corporation’s funded pension plan and a $5.0 million
increase in net income from continuing operations. The $15.9
million increase in cash used for working capital items between the
quarters includes the following major items:
- A $4.3 million increase in cash used for receivables in the
Plastics segment related to an increase in polyvinyl-chloride (PVC)
pipe sales in March of 2017 compared with March 2016 and an
increase in outstanding receivables on March 31, 2017 from sales
with extended payment terms as compared with March 31, 2016.
- A $4.2 million increase in cash used for receivables in the
Electric segment in the first quarter of 2017 compared with the
first quarter of 2016 as a result of increased kilowatt-hour (kwh)
sales due to colder weather in March 2017 compared with March 2016
in combination with higher interim rates in place in March
2017.
- A $3.9 million increase in cash used for trade accounts payable
in the Plastics segment, mainly related to a change in the timing
of resin purchases and payments between the periods.
- A $3.6 million increase in cash used for accounts payable in
the Electric segment due to a reduction in trade accounts payable
in March 2017 compared with March 2016 related to the timing of
payments.
The following table presents the status of the corporation’s
lines of credit:
(in
thousands) |
Line Limit |
In Use On March 31, 2017 |
Restricted due to Outstanding Letters of
Credit |
Available on March 31, 2017 |
Available onDecember 31, 2016 |
Otter Tail Corporation
Credit Agreement |
$ |
130,000 |
|
$ |
12,825 |
$ |
-- |
|
$ |
117,175 |
$ |
130,000 |
Otter
Tail Power Company Credit Agreement |
|
170,000 |
|
|
46,351 |
|
50 |
|
|
123,599 |
|
127,067 |
Total |
$ |
300,000 |
|
$ |
59,176 |
$ |
50 |
|
$ |
240,774 |
$ |
257,067 |
Board of Directors Declared Quarterly Dividend
On May 1, 2017 the corporation’s Board of Directors declared a
quarterly common stock dividend of $0.32 per share. This dividend
is payable June 10, 2017 to shareholders of record on May 15,
2017.
Segment Performance
Summary
Electric
|
Three Months ended March 31, |
($s in
thousands) |
|
2017 |
|
|
2016 |
|
|
Change |
|
% Change |
|
Retail Electric
Revenues |
$ |
105,215 |
|
$ |
100,655 |
|
$ |
4,560 |
|
4.5 |
|
Wholesale Electric
Revenues |
|
867 |
|
|
911 |
|
|
(44) |
|
(4.8) |
|
Other
Electric Revenues |
|
12,469 |
|
|
11,428 |
|
|
1,041 |
|
9.1 |
|
Total Electric Revenues |
$ |
118,551 |
|
$ |
112,994 |
|
$ |
5,557 |
|
4.9 |
|
Net Income |
$ |
15,560 |
|
$ |
12,538 |
|
$ |
3,022 |
|
24.1 |
|
Heating Degree
Days |
|
3,082 |
|
|
2,799 |
|
|
283 |
|
10.1 |
|
The following table shows heating degree days as a percent of
normal:
|
Three Months ended March 31, |
|
2017 |
2016 |
Heating Degree
Days |
90.1 |
% |
81.8 |
% |
The following table summarizes the estimated effect on diluted
earnings per share of the difference in retail kwh sales under
actual weather conditions and expected retail kwh sales under
normal weather conditions in the first quarters of 2017 and 2016
and between the quarters:
|
|
2017 vs Normal |
|
|
2016 vs Normal |
|
|
2017 vs 2016 |
Effect on Diluted
Earnings Per Share |
$(0.02) |
|
$(0.04) |
|
$0.02 |
Retail electric revenues increased $4.6 million as a result
of:
- A $3.0 million increase in retail revenue related to the
recovery of increased fuel and purchased power costs due to a 10.1%
increase in the price per kwh purchased and a 3.7% increase in fuel
costs per kwh generated to serve retail customers.
- A $2.8 million increase in retail revenue, net of an estimated
refund, related to an interim rate increase implemented in
mid-April 2016 in conjunction with Otter Tail Power Company's 2016
general rate increase request in Minnesota.
- A $1.2 million increase in revenues related to increased
consumption due to colder weather in the first quarter of 2017,
evidenced by a 10.1% increase in heating-degree days between the
quarters.
offset by:
- A $1.1 million reduction in revenues related to lower prices on
industrial kwh sales due to a pipeline customer opting for
market-based pricing in July 2016 in combination with a 7.7%
decrease in kwh sales to all industrial customers.
- A $0.6 million decrease in Environmental Cost Recovery rider
revenue mainly due to a reduction in the investment balance of
environmental upgrades due to depreciation.
- A $0.4 million decrease in Conservation Improvement Program
(CIP) cost recovery and incentive revenues as a result of program
changes made by the Minnesota Department of Commerce (MNDOC).
- A $0.3 million decrease in North Dakota Renewable Resource
Adjustment rider revenues due to a lower allowed return on
investment combined with a reduction in the investment balance of
renewable generation assets due to depreciation.
Other electric revenues increased $1.0 million as a result of an
increase in Midcontinent Independent System Operator, Inc. (MISO)
transmission tariff revenues related to increased investment in
regional transmission lines and an increase in interconnection
revenues related to another generator's new wind project that began
generating electricity in November 2016.
Production fuel costs increased $0.7 million as a result of a
7.3% increase in the cost of fuel per kwh generated from our
steam-powered and combustion turbine generators mainly due to an
increase in fuel costs at Coyote Station which began taking coal
under a new supply agreement in May 2016. The increase in fuel
costs per kwh of generation was partially offset by a 2.7%
reduction in kwhs generated from our fuel burning plants. Hoot Lake
Plant generated fewer kwhs in the first quarter of 2017 compared to
the first quarter of 2016 due to lower dispatch prices from other
generators.
The cost of purchased power to serve retail customers increased
$2.3 million due to a 10.1% increase in the cost per kwh purchased
combined with a 3.2% increase in kwhs purchased to serve retail
customers. The increased cost per kwh purchased was driven by
higher market demand resulting from colder weather in March 2017
compared to March 2016.
Electric operating and maintenance expenses decreased $1.6
million as a result of:
- A $1.0 million decrease in MISO transmission service charges,
mainly due to a refund received in February 2017 related to a
reduction in the return on equity component of the MISO tariff
imposed from November 2013 through January 2015. The benefits of
this refund will be passed back to retail ratepayers through state
transmission cost recovery rider adjustments.
- A $0.8 million reduction in transmission and distribution line
maintenance expenses, mainly for tree-trimming.
- A $0.3 million reduction in power plant maintenance expenses
related to costs incurred in conjunction with a planned maintenance
outage at Coyote Station in March 2016.
offset by:
- A $0.5 million increase in postemployment benefit costs.
Depreciation expense decreased $0.2 million as a result of
extending the depreciable lives of certain assets and $0.2 million
as a result of other assets reaching the end of their depreciable
lives in 2016.
Income tax expense in the Electric segment increased $1.4
million as a result of a $4.5 million increase in income before
income taxes partially offset by an increase in federal Production
Tax Credits (PTCs) related to an increase in kwhs generated by
Otter Tail Power Company’s wind turbines eligible for PTCs.
Manufacturing
|
Three Months ended March 31, |
(in
thousands) |
|
2017 |
|
2016 |
Change |
% Change |
Operating Revenues |
$ |
58,417 |
$ |
59,820 |
$ |
(1,403 |
) |
(2.3 |
) |
Net Income |
|
2,172 |
|
1,853 |
|
319 |
|
17.2 |
|
At BTD, revenues decreased $2.2 million as a result of a $2.3
million reduction in sales of transportation fixtures for wind
turbine blades and a $0.7 million decrease in tooling and other
parts sales, offset by a $0.8 million increase in revenue from
scrap metal sales mainly due to higher scrap metal prices. Cost of
products sold at BTD decreased $1.7 million in relationship to the
decreases in sales. The $0.5 million decrease in gross margins
on sales was offset by a $0.3 million decrease in operating
expenses, primarily due to decreases in contracted services and
employee benefit expenses, and a $0.4 million decrease in
interest expense as a result of the December 2016 refinancing of
long-term debt at lower interest rates, resulting in a $0.1 million
increase in quarter-over-quarter net income at BTD.
At T.O. Plastics, revenues increased $0.8 million, including a
$0.5 million increase in sales of horticultural containers and a
$0.2 million increase in sales of life sciences products. The
increase in revenue from horticultural sales was driven by unit
volume growth of 30% offset by lower product selling prices.
Realized pricing for horticulture products was impacted by
increased competition in the marketplace. Lower average selling
prices in horticulture markets without a corresponding reduction in
product cost resulted in reduced margins on sales of these
products. A $0.6 million increase in cost of products sold related
to the increase in sales resulted in a quarter over quarter
increase in gross profits of $0.1 million. This, along with
lower operating expenses and interest costs provided T.O Plastics
with a $0.2 million increase in net income.
Plastics
|
Three Months ended March 31, |
(in
thousands) |
2017 |
2016 |
|
|
Change |
|
% Change |
Operating Revenues |
$ |
37,157 |
$ |
33,437 |
|
$ |
3,720 |
|
11.1 |
Net Income |
|
2,437 |
|
2,152 |
|
|
285 |
|
13.2 |
Plastics segment revenues increased $3.7 million as a result of
an 11.2% increase in pounds of PVC pipe sold. Sales prices per
pound were flat between the quarters. The increase in revenue was
almost entirely offset by a $3.7 million increase in cost of
products sold due to the increase in sales and to higher resin
prices, which resulted in a 9.4% decrease in gross margin per pound
of pipe sold. The Plastics segment reported increased sales in
several states, but most significantly in Texas, Minnesota, Iowa
and Michigan. Plastics segment operating and depreciation expenses
decreased by $0.2 million and segment interest expense decrease by
$0.1 million resulting in the $0.3 million increase in net income
between the quarters. The PVC pipe industry is highly sensitive to
commodity raw material pricing volatility. Historically, when resin
prices are rising or stable, margins and sales volume have been
higher and when resin prices are falling, sales volumes and margins
have been lower.
Corporate
Corporate costs net-of-tax decreased $1.4 million between the
quarters due to:
- A $0.9 million reduction in income tax expense primarily due to
an excess tax benefit related to the accounting treatment of stock
performance awards.
- A $0.2 million net-of-tax increase in corporate costs allocated
to the Electric segment related to an increase in the segment’s
proportional share of consolidated revenues and net income.
- A $0.2 million net-of-tax decrease in contracted services and
labor and benefit costs. The reduction in labor and benefit costs
is related to a reduction in the number of corporate
employees.
2017 Business Outlook
We are reaffirming our consolidated diluted earnings per share
guidance for 2017 to be in the range of $1.60 to $1.75. This
guidance reflects the current mix of businesses we own, considers
the cyclical nature of some of our businesses, and reflects current
regulatory factors and economic challenges facing our Electric,
Manufacturing and Plastics segments and strategies for improving
future operating results. We expect capital expenditures for 2017
to be $149 million compared with actual cash used for capital
expenditures of $161 million in 2016. Major projects in our planned
expenditures for 2017 include investments in two large transmission
line projects for the Electric segment, which positively impact
earnings by providing an immediate return on invested funds through
rider recovery mechanisms.
Segment components of our 2017 earnings per share guidance range
compared with 2016 actual earnings are as follows:
Diluted Earnings Per Share |
2016 EPS by Segment |
2017 GuidanceFebruary 6, 2017 |
2017 GuidanceMay 1, 2017 |
Low |
High |
Low |
High |
Electric |
$ |
1.29 |
|
$ |
1.31 |
|
$ |
1.34 |
|
$ |
1.31 |
|
$ |
1.34 |
|
Manufacturing |
$ |
0.15 |
|
$ |
0.17 |
|
$ |
0.21 |
|
$ |
0.17 |
|
$ |
0.21 |
|
Plastics |
$ |
0.27 |
|
$ |
0.26 |
|
$ |
0.30 |
|
$ |
0.26 |
|
$ |
0.30 |
|
Corporate |
($ |
0.11 |
) |
($ |
0.14 |
) |
($ |
0.10 |
) |
($ |
0.14 |
) |
($ |
0.10 |
) |
Total – Continuing Operations |
$ |
1.60 |
|
$ |
1.60 |
|
$ |
1.75 |
|
$ |
1.60 |
|
$ |
1.75 |
|
Return on Equity |
|
9.8 |
% |
|
9.3 |
% |
|
10.2 |
% |
|
9.3 |
% |
|
10.2 |
% |
Contributing to our earnings guidance for 2017 are the following
items:
• We expect 2017 Electric segment net income to be higher
than 2016 segment net income based on:
- Normal weather for the remainder of 2017. Milder than normal
weather in 2016 negatively impacted diluted earnings per share by
$0.07 compared to normal.
- A full year of increased rates compared with 8.5 months in
2016. In March 2017, the MPUC granted Otter Tail Power Company a
revenue increase of approximately 6.3% with a 9.41% return on
equity.
- Rider recovery increases, including transmission riders related
to the Electric segment’s continuing investments in its share of
the Multi-Value Transmission Projects in South Dakota.
- Expected increases in sales to industrial and commercial
customers.
offset by:
- Increased operating and maintenance expenses of $0.06 per share
due to inflationary increases and increasing costs of medical,
workers compensation and retiree medical benefits. Included is an
increase in pension costs as a result of a decrease in the discount
rate from 4.76% to 4.60% and a decrease in the assumed long-term
rate of return on plan assets from 7.75% to 7.50%.
- Higher depreciation and property tax expense due to large
capital projects being put into service.
- Lower CIP incentives of $0.04 per diluted share in Minnesota as
a result of program changes made by the MNDOC. We estimate the
implementation of the new CIP financial incentive model will reduce
these incentives by approximately 50% compared to the previous
incentive mechanism.
- Increased costs related to contractual price increases in
certain capacity agreements.
• We expect 2017 net income from our Manufacturing segment
to increase over 2016 due to:
- Flat year-over-year sales at BTD due to lower end market
recreational vehicle sales offset by higher lawn and garden end
market sales, scrap, and tooling sales.
- Improved margins on parts and tooling sales at BTD combined
with lower interest costs as a result of the refinancing of
long-term debt at a lower interest rate in the fourth quarter of
2016.
- An increase in earnings from T.O. Plastics mainly driven by
year-over-year sales growth in our horticulture and custom markets
and lower interest costs as a result of the refinancing of
long-term debt at a lower interest rate in the fourth quarter of
2016.
- Backlog for the manufacturing companies of approximately $105
million for 2017 compared with $102 million one year ago.
• We expect 2017 net income from the Plastics segment to
be similar to 2016 on slightly lower sales volumes. The Plastics
segment also benefits from lower interest costs as a result of the
refinancing of long-term debt completed in the fourth quarter of
2016.
• Corporate costs in 2017 are expected to be in line with
2016 costs.
CONFERENCE CALL AND WEBCAST The corporation
will host a live webcast on Tuesday, May 2, 2017, 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.cfm and select “Webcast.” Please
allow extra time prior to the call to visit the site and download
any necessary software that may be needed to listen to the webcast.
An archived copy of the webcast will be available on our website
shortly following the call.
If you are interested in asking a question during the
live webcast, the Dial-In Number
is: 877-312-8789.
Risk Factors and Forward-Looking Statements that Could
Affect Future ResultsThe information in this release
includes certain forward-looking information, including 2017
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:
- Federal and state environmental regulation could require us to
incur substantial capital expenditures and increased operating
costs.
- Volatile financial markets and changes in our debt ratings
could restrict our ability to access capital and increase borrowing
costs and pension plan and postretirement health care
expenses.
- We rely on access to both short- and long-term capital markets
as a source of liquidity for capital requirements not satisfied by
cash flows from operations. If we are unable to access capital at
competitive rates, our ability to implement our business plans may
be adversely affected.
- Disruptions, uncertainty or volatility in the financial markets
can also adversely impact our results of operations, the ability of
customers to finance purchases of goods and services, and our
financial condition, as well as exert downward pressure on stock
prices and/or limit our ability to sustain our current common stock
dividend level.
- We could be required to contribute additional capital to the
pension plan in the future if the market value of pension plan
assets significantly declines, plan assets do not earn in line with
our long-term rate of return assumptions or relief under the
Pension Protection Act is no longer granted.
- Any significant impairment of our goodwill would cause a
decrease in our asset values and a reduction in our net operating
income.
- Declines in projected operating cash flows at BTD or the
Plastics segment may result in goodwill impairments that could
adversely affect our results of operations and financial position,
as well as financing agreement covenants.
- The inability of our subsidiaries to provide sufficient
earnings and cash flows to allow us to meet our financial
obligations and debt covenants and pay dividends to our
shareholders could have an adverse effect on us.
- We rely on our information systems to conduct our business and
failure to protect these systems against security breaches or
cyber-attacks could adversely affect our business and results of
operations. Additionally, if these systems fail or become
unavailable for any significant period of time, our business could
be harmed.
- Economic conditions could negatively impact our
businesses.
- If we are unable to achieve the organic growth we expect, our
financial performance may be adversely affected.
- Our plans to grow and realign our business mix through capital
projects, acquisitions and dispositions may not be successful,
which could result in poor financial performance.
- We may, from time to time, sell assets to provide capital to
fund investments in our electric utility business or for other
corporate purposes, which could result in the recognition of a loss
on the sale of any assets sold and other potential liabilities. The
sale of any of our businesses could expose us to additional risks
associated with indemnification obligations under the applicable
sales agreements and any related disputes.
- Significant warranty claims and remediation costs in excess of
amounts normally reserved for such items could adversely affect our
results of operations and financial condition.
- We are subject to risks associated with energy markets.
- Changes in tax laws, as well as judgments and estimates used in
the determination of tax-related asset and liability amounts, could
materially adversely affect our business, financial condition,
results of operations and prospects.
- We may experience fluctuations in revenues and expenses related
to our electric operations, which may cause our financial results
to fluctuate and could impair our ability to make distributions to
our shareholders or scheduled payments on our debt obligations, or
to meet covenants under our borrowing agreements.
- Actions by the regulators of our electric operations could
result in rate reductions, lower revenues and earnings or delays in
recovering capital expenditures.
- Otter Tail Power Company’s operations are subject to an
extensive legal and regulatory framework under federal and state
laws as well as regulations imposed by other organizations that may
have a negative impact on our business and results of
operations.
- Otter Tail Power Company’s electric transmission and generation
facilities could be vulnerable to cyber and physical attack that
could impair its ability to provide electrical service to its
customers or disrupt the U.S. bulk power system.
- Otter Tail Power Company’s electric generating facilities are
subject to operational risks that could result in unscheduled plant
outages, unanticipated operation and maintenance expenses and
increased power purchase costs.
- Changes to regulation of generating plant emissions, including
but not limited to carbon dioxide emissions, could affect our
operating costs and the costs of supplying electricity to our
customers.
- Competition from foreign and domestic manufacturers, the price
and availability of raw materials, prices and supply of scrap or
recyclable material and general economic conditions could affect
the revenues and earnings of our manufacturing businesses.
- Our plastics operations are highly dependent on a limited
number of vendors for PVC resin and a limited supply of resin. The
loss of a key vendor, or any interruption or delay in the supply of
PVC resin, could result in reduced sales or increased costs for
this segment.
- We compete against a large number of other manufacturers of PVC
pipe and manufacturers of alternative products. Customers may not
distinguish the pipe companies’ products from those of our
competitors.
- Changes in PVC resin prices can negatively affect our plastics
business.
For a further discussion of other 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 is available at
www.ottertail.com. Corporate offices are located in Fergus Falls,
Minnesota, and Fargo, North Dakota.
See Otter Tail Corporation’s results of
operations for the three months ended March 31, 2017 and 2016 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 March
31, |
|
|
2017 |
|
|
2016 |
|
Operating
Revenues by Segment |
|
|
Electric |
$ |
118,551 |
|
$ |
112,994 |
|
Manufacturing |
|
58,417 |
|
|
59,820 |
|
Plastics |
|
37,157 |
|
|
33,437 |
|
Intersegment Eliminations |
|
(8) |
|
|
(9) |
|
Total Operating Revenues |
|
214,117 |
|
|
206,242 |
|
Operating
Expenses |
|
|
Fuel and
Purchased Power |
|
35,570 |
|
|
32,586 |
|
Nonelectric Cost of Products Sold (depreciation included
below) |
|
75,277 |
|
|
72,639 |
|
Electric
Operating and Maintenance Expense |
|
38,379 |
|
|
40,018 |
|
Nonelectric Operating and Maintenance Expense |
|
10,438 |
|
|
11,455 |
|
Depreciation and Amortization |
|
17,854 |
|
|
18,289 |
|
Property Taxes - Electric |
|
3,798 |
|
|
3,679 |
|
Total Operating Expenses |
|
181,316 |
|
|
178,666 |
|
Operating
Income (Loss) by Segment |
|
|
Electric |
|
27,738 |
|
|
23,228 |
|
Manufacturing |
|
3,756 |
|
|
3,855 |
|
Plastics |
|
3,956 |
|
|
3,747 |
|
Corporate |
|
(2,649) |
|
|
(3,254) |
|
Total Operating Income |
|
32,801 |
|
|
27,576 |
|
Interest
Charges |
|
7,462 |
|
|
7,994 |
|
Other
Income |
|
553 |
|
|
400 |
|
Income Tax
Expense – Continuing Operations |
|
6,363 |
|
|
5,492 |
|
Net Income
(Loss) by Segment – Continuing Operations |
|
|
Electric |
|
15,560 |
|
|
12,538 |
|
Manufacturing |
|
2,172 |
|
|
1,853 |
|
Plastics |
|
2,437 |
|
|
2,152 |
|
Corporate |
|
(640) |
|
|
(2,053) |
|
Net Income from
Continuing Operations |
|
19,529 |
|
|
14,490 |
|
Income from
Discontinued Operations- net of Income Tax Expense
of $38 in 2017 and $20 in 2016 |
|
56 |
|
|
30 |
|
Net Income |
$ |
19,585 |
|
$ |
14,520 |
|
Average Number
of Common Shares Outstanding |
|
|
Basic |
|
39,350,802 |
|
|
37,936,943 |
|
Diluted |
|
39,640,725 |
|
|
38,045,208 |
|
|
|
|
Basic Earnings
Per Common Share: |
|
|
Continuing Operations |
$ |
0.50 |
|
$ |
0.38 |
|
Discontinued Operations |
|
-- |
|
|
-- |
|
|
$ |
0.50 |
|
$ |
0.38 |
|
Diluted
Earnings Per Common Share: |
|
|
Continuing Operations |
$ |
0.49 |
|
$ |
0.38 |
|
Discontinued Operations |
|
-- |
|
|
-- |
|
|
$ |
0.49 |
|
$ |
0.38 |
|
|
Otter Tail Corporation |
Consolidated Balance Sheets |
ASSETS |
in thousands |
(not audited) |
|
March 31, |
December 31, |
|
2017 |
2016 |
|
|
|
Current
Assets |
|
|
Cash and
Cash Equivalents |
$ |
-- |
$ |
-- |
Accounts
Receivable: |
|
|
Trade—Net |
|
82,369 |
|
68,242 |
Other |
|
7,244 |
|
5,850 |
Inventories |
|
81,473 |
|
83,740 |
Unbilled
Revenues |
|
18,016 |
|
20,080 |
Income
Taxes Receivable |
|
-- |
|
662 |
Regulatory Assets |
|
17,973 |
|
21,297 |
Other |
|
11,837 |
|
8,144 |
Total Current Assets |
|
218,912 |
|
208,015 |
|
|
|
Investments |
|
8,125 |
|
8,417 |
Other
Assets |
|
35,416 |
|
34,104 |
Goodwill |
|
37,572 |
|
37,572 |
Other
Intangibles—Net |
|
14,626 |
|
14,958 |
Regulatory
Assets |
|
128,968 |
|
132,094 |
|
|
|
Plant |
|
|
Electric
Plant in Service |
|
1,868,689 |
|
1,860,357 |
Nonelectric Operations |
|
212,976 |
|
211,826 |
Construction Work in Progress |
|
166,866 |
|
153,261 |
Total Gross Plant |
|
2,248,531 |
|
2,225,444 |
Less Accumulated Depreciation and Amortization |
|
761,444 |
|
748,219 |
Net Plant |
|
1,487,087 |
|
1,477,225 |
Total |
$ |
1,930,706 |
$ |
1,912,385 |
|
Otter Tail Corporation |
Consolidated Balance Sheets |
LIABILITIES AND EQUITY |
in thousands |
(not audited) |
|
March 31, |
December 31, |
|
|
2017 |
|
|
2016 |
|
|
|
|
Current
Liabilities |
|
|
Short-Term Debt |
$ |
59,176 |
|
$ |
42,883 |
|
Current
Maturities of Long-Term Debt |
|
45,192 |
|
|
33,201 |
|
Accounts
Payable |
|
83,622 |
|
|
89,350 |
|
Accrued
Salaries and Wages |
|
12,957 |
|
|
17,497 |
|
Accrued
Federal and State Income Taxes |
|
1,107 |
|
|
-- |
|
Other
Accrued Taxes |
|
17,068 |
|
|
16,000 |
|
Other
Accrued Liabilities |
|
15,584 |
|
|
15,377 |
|
Liabilities of Discontinued Operations |
|
1,268 |
|
|
1,363 |
|
Total Current Liabilities |
|
235,974 |
|
|
215,671 |
|
|
|
|
Pensions
Benefit Liability |
|
97,962 |
|
|
97,627 |
|
Other
Postretirement Benefits Liability |
|
62,796 |
|
|
62,571 |
|
Other
Noncurrent Liabilities |
|
22,168 |
|
|
21,706 |
|
|
|
|
Deferred
Credits |
|
|
Deferred
Income Taxes |
|
231,210 |
|
|
226,591 |
|
Deferred
Tax Credits |
|
22,483 |
|
|
22,849 |
|
Regulatory Liabilities |
|
82,316 |
|
|
82,433 |
|
Other |
|
6,302 |
|
|
7,492 |
|
Total Deferred Credits |
|
342,311 |
|
|
339,365 |
|
|
|
|
Capitalization |
|
|
Long-Term
Debt—Net |
|
490,372 |
|
|
505,341 |
|
|
|
|
Cumulative Preferred Shares |
|
-- |
|
|
-- |
|
|
|
|
Cumulative Preference Shares |
|
-- |
|
|
-- |
|
|
|
|
Common Equity |
|
|
Common
Shares, Par Value $5 Per Share |
|
197,344 |
|
|
196,741 |
|
Premium
on Common Shares |
|
339,036 |
|
|
337,684 |
|
Retained
Earnings |
|
146,438 |
|
|
139,479 |
|
Accumulated Other Comprehensive Loss |
|
(3,695) |
|
|
(3,800) |
|
Total Common Equity |
|
679,123 |
|
|
670,104 |
|
Total Capitalization |
|
1,169,495 |
|
|
1,175,445 |
|
Total |
$ |
1,930,706 |
|
$ |
1,912,385 |
|
Otter Tail Corporation |
Consolidated Statements of Cash
Flows |
In thousands |
(not audited) |
|
|
For the Three Months Ended March
31, |
In
thousands |
|
2017 |
|
|
2016 |
|
Cash Flows from
Operating Activities |
|
|
Net Income |
$ |
19,585 |
|
$ |
14,520 |
|
Adjustments to
Reconcile Net Income to Net Cash Provided by Operating
Activities: |
|
|
Net Income from Discontinued Operations |
|
(56 |
) |
|
(30 |
) |
Depreciation and Amortization |
|
17,854 |
|
|
18,289 |
|
Deferred Tax Credits |
|
(366 |
) |
|
(414 |
) |
Deferred Income Taxes |
|
4,512 |
|
|
5,330 |
|
Change in Deferred Debits and Other Assets |
|
5,005 |
|
|
2,825 |
|
Discretionary Contribution to Pension Plan |
|
-- |
|
|
(10,000 |
) |
Change in Noncurrent Liabilities and Deferred Credits |
|
1,314 |
|
|
3,363 |
|
Allowance for Equity/Other Funds Used During Construction |
|
(170 |
) |
|
(95 |
) |
Stock Compensation Expense – Equity Awards |
|
1,150 |
|
|
489 |
|
Other—Net |
|
(5 |
) |
|
15 |
|
Cash (Used for)
Provided by Current Assets and Current Liabilities: |
|
|
Change in Receivables |
|
(15,521 |
) |
|
(7,478 |
) |
Change in Inventories |
|
2,267 |
|
|
6 |
|
Change in Other Current Assets |
|
(22 |
) |
|
(773 |
) |
Change in Payables and Other Current Liabilities |
|
(13,986 |
) |
|
(5,840 |
) |
Change in Interest and Income Taxes Receivable/Payable |
|
(321 |
) |
|
2,400 |
|
Net Cash Provided by Continuing Operations |
|
21,240 |
|
|
22,607 |
|
Net Cash (Used in) Provided by Discontinued Operations |
|
(39 |
) |
|
30 |
|
Net Cash Provided by Operating
Activities |
|
21,201 |
|
|
22,637 |
|
Cash Flows from
Investing Activities |
|
|
Capital
Expenditures |
|
(30,113 |
) |
|
(24,855 |
) |
Proceeds from
Disposal of Noncurrent Assets |
|
612 |
|
|
682 |
|
Cash Used for Investments and Other Assets |
|
(508 |
) |
|
(1,425 |
) |
Net Cash Used in Investing
Activities |
|
(30,009 |
) |
|
(25,598 |
) |
Cash Flows from
Financing Activities |
|
|
Changes in
Checks Written in Excess of Cash |
|
7,999 |
|
|
(666 |
) |
Net Short-Term
Borrowings (Repayments) |
|
16,293 |
|
|
(37,736 |
) |
Proceeds from
Issuance of Common Stock – net of Issuance Expenses |
|
1,958 |
|
|
3,415 |
|
Payments for
Retirement of Capital Stock |
|
(1,759 |
) |
|
(53 |
) |
Proceeds from
Issuance of Long-Term Debt |
|
-- |
|
|
50,000 |
|
Short-Term and
Long-Term Debt Issuance Expenses |
|
-- |
|
|
(58 |
) |
Payments for
Retirement of Long-Term Debt |
|
(3,057 |
) |
|
(52 |
) |
Dividends Paid |
|
(12,626 |
) |
|
(11,889 |
) |
Net Cash Provided by Financing
Activities |
|
8,808 |
|
|
2,961 |
|
Net Change in
Cash and Cash Equivalents |
|
-- |
|
|
-- |
|
Cash and Cash Equivalents at Beginning of
Period |
|
-- |
|
|
-- |
|
Cash and Cash Equivalents at End of Period |
$ |
-- |
|
$ |
-- |
|
|
|
|
|
|
|
|
Media contact: Cris Oehler, Vice President of Corporate Communications, (218) 531-0099 or (866) 410-8780
Investor contact: Loren Hanson, Manager of Investor Relations, (218) 739-8481 or (800) 664-1259
Otter Tail (NASDAQ:OTTR)
Historical Stock Chart
From Aug 2024 to Sep 2024
Otter Tail (NASDAQ:OTTR)
Historical Stock Chart
From Sep 2023 to Sep 2024