0001466593
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0001466593
2024-02-12
2024-02-12
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported):
February 12, 2024
OTTER TAIL CORPORATION
(Exact name of registrant as specified in its charter)
Minnesota 0-53713 27-0383995
(State or other jurisdiction of incorporation or organization) (Commission File Number) (I.R.S. Employer Identification No.)
215 South Cascade Street
,
P.O. Box 496
,
Fergus Falls
,
MN
56538-0496
(Address of principal executive offices, including zip code)
(
866
)
410-8780
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of
the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Securities Exchange Act
of 1934:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Shares, par value $5.00 per share OTTR The Nasdaq Stock Market LLC
Indicate by check mark whether the registrant is an emerging growth company as
defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the
Securities Exchange Act of 1934.
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has
elected not to use the extended transition period for complying with any new
or revised financial accounting standards provided pursuant to Section 13(a)
of the Exchange Act.
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Item 2.02 Results of Operations and Financial Condition
On February 12, 2024 Otter Tail Corporation issued a press release announcing
its consolidated financial results for 2023 and its earnings guidance for
2024. A copy of the press release is furnished herewith as Exhibit 99.1.
The information in this Item 2.02 (including Exhibit 99.1 attached hereto)
shall not be deemed "filed" for purposes of Section 18 of the Securities
Exchange Act of 1934, nor shall it be deemed incorporated by reference in any
filing under the Securities Act of 1933 or the Securities Exchange Act of
1934, except as shall be expressly set forth by specific reference in such
filing.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
99.1 Press Release
issued February 12, 2024.
104 Cover Page Interactive Data File (embedded within the Inline XBRL document).
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
OTTER TAIL CORPORATION
Date: February 13, 2024 By: /s/ Todd R. Wahlund
Todd R. Wahlund
Chief Financial Officer
Press Release
February 12, 2024
Otter Tail Corporation Announces Record Annual Earnings, Increases Quarterly
Dividend, and Announces 2024 Earnings Guidance
FERGUS FALLS, Minnesota
- Otter Tail Corporation (Nasdaq: OTTR) today announced financial results for
the quarter and year ended December 31, 2023.
2023 SUMMARY
(in millions, except per share amounts) Q4 2023 Q4 2022 2023 2022
Operating Revenues $ 314.3 $ 301.4 $ 1,349.2 $ 1,460.2
Net Income $ 57.8 $ 42.0 $ 294.2 $ 284.2
Diluted Earnings Per Share $ 1.37 $ 1.00 $ 7.00 $ 6.78
Compared to the year ended December 31, 2022:
.
Consolidated operating revenues decreased 8% to $1.3 billion.
.
Consolidated net income increased 4% to $294.2 million.
.
Diluted earnings per share increased 3% to $7.00 per share.
.
The corporation achieved a consolidated return on equity of 22.1% on an equity
ratio of 61.4%.
The corporation's board of directors increased the quarterly common stock
dividend to $0.4675 per share, an indicated annual dividend rate of $1.87 per
share in 2024, a 7% increase from $1.75 per share in 2023.
CEO OVERVIEW
"Otter Tail Corporation, through the efforts of our employees and the strength
of our diversified business model, produced record earnings in 2023, beating
the record set last year," said President and CEO Chuck MacFarlane. "Electric
segment earnings grew 6 percent compared to 2022, driven by the recovery of
rate base investments and increased commercial and industrial sales.
Manufacturing segment earnings increased modestly from 2022. Plastics segment
earnings fell 4 percent from 2022 primarily due to a decrease in sales
volumes. While Plastics segment earnings declined slightly from the
extraordinary results produced in 2022, this segment continues to capitalize
on favorable industry conditions and produce strong financial results compared
to pre-2021 levels. A significant reduction in our corporate costs also drove
2023 earnings as we benefited from returns on our short-term investments
funded by the significant cash flows our businesses have generated over the
last three years.
"We continue to identify opportunities to reinvest in our businesses. In 2023,
Otter Tail Power completed the purchase of Ashtabula III, a 62 MW wind
facility, and placed Hoot Lake Solar, a 49 MW solar facility, into service.
Expansion projects are underway for both BTD Manufacturing and Vinyltech as we
add capacity to support our customers and future growth opportunities.
"We updated our Electric segment's 5 year capital expenditure plan to $1.3
billion, an increase of approximately $200 million from our previous plan. Our
updated plan is expected to produce rate base growth at a compounded annual
rate of 7.7 percent.
"We ended 2023 in a position of financial strength, with a strong balance
sheet and ample liquidity. We expect to fund our capital expenditures and fuel
our earnings growth over the next five years without the need for additional
equity financing.
"Our long-term focus remains unchanged - executing our strategy to grow our
business and achieve operational, commercial and talent excellence to
strengthen our position in the markets we serve. We believe our businesses are
well-positioned to achieve our objectives and to deliver on our financial
targets, including producing a compounded annual growth rate in consolidated
earnings per share of 5 to 7 percent over the long-term based on an earnings
mix of approximately 65 percent from our Electric segment and 35 percent from
our Manufacturing and Plastics segments.
"We are initiating our 2024 diluted earnings per share guidance range of $5.13
to $5.43. Our 2024 guidance reflects Electric segment earnings growth of
approximately 7 percent and a decline in our Plastics segment earnings, driven
by a continuing downward trend in sales prices and resin spreads, but
partially offset by increased sales volumes. We expect declines in sales
prices and resin spreads will occur throughout 2024 and into 2025.
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CASH FLOWS AND LIQUIDITY
Our consolidated cash provided by operating activities was a record $404.5
million in 2023, compared to $389.3 million in 2022, with the increase
primarily due to a $10.0 million increase in net income and a decrease in
pension plan contributions due to the plan's funded status, partially offset
by an increase in working capital. Investing activities included capital
expenditures of $287.1 million in 2023, primarily related to capital
investments within our Electric segment, including the purchase of the
Ashtabula III wind farm and investments in our Hoot Lake Solar and wind
repowering projects. Financing activities in 2023 included net short-term
borrowings of $73.2 million and dividend payments of $73.1 million.
As of December 31, 2023, we had $249.4 million of available liquidity under
our credit facilities and $230.4 million of available cash and cash
equivalents, for total available liquidity of $479.8 million.
ANNUAL SEGMENT OPERATING RESULTS
Electric Segment
($ in thousands) 2023 2022 $ Change % Change
Operating Revenues $ 528,359 $ 549,699 $ (21,340) (3.9) %
Net Income 84,424 79,974 4,450 5.6
Retail MWh Sales 5,772,215 5,592,368 179,847 3.2 %
Heating Degree Days 6,259 7,122 (863) (12.1)
Cooling Degree Days 590 531 59 11.1
The following table shows heating and cooling degree days as a percent of
normal.
2023 2022
Heating Degree Days 98.4 % 112.5 %
Cooling Degree Days 127.2 % 113.5 %
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 2023 and 2022.
2023 vs Normal 2023 vs 2022 2022 vs Normal
Effect on Diluted Earnings Per Share $ 0.02 $ (0.09) $ 0.11
Operating Revenues
decreased $21.3 million primarily due to decreased fuel recovery and wholesale
revenues, and the impact of unfavorable weather, partially offset by increased
commercial and industrial sales volumes and rider revenue. The decrease in
fuel recovery revenues was primarily due to lower purchased power and fuel
costs arising from decreased market energy costs and natural gas prices.
Wholesale revenues decreased due to a decrease in wholesale electric prices,
largely driven by decreased fuel costs. Commercial and industrial sales
volumes increased compared to the previous year as a result of increased
demand, including a new commercial customer load in North Dakota added during
2022. The increase in rider revenue was driven by the recovery of costs from
the acquisition of the Ashtabula III wind farm and our Hoot Lake Solar
project, which were completed during the year.
Net Income
increased $4.5 million primarily due to increased rider revenue, increased
commercial and industrial sales, and lower pension and other postretirement
benefit costs, partially offset by increased operating and maintenance
expenses, increased depreciation expense, and the impact of unfavorable
weather. Increased operating and maintenance expenses included strategic
spending on customer reliability initiatives, increased labor and employee
benefit costs, and increased insurance expenses.
Manufacturing Segment
(in thousands) 2023 2022 $ Change % Change
Operating Revenues $ 402,781 $ 397,983 $ 4,798 1.2 %
Net Income 21,454 20,950 504 2.4
Operating Revenues
increased $4.8 million primarily due to a 12% increase in sales volumes at BTD
Manufacturing (BTD), our contract metal fabricator, driven by strong end
market demand in the construction, industrial, and agricultural segments.
Operating revenues also benefited from sales price increases implemented in
response to labor and non-steel material cost inflation. Sales price increases
and sales volume growth were partially offset by decreased steel prices,
resulting in an 11% decrease in material costs, which are passed through to
customers. Operating revenues at T.O. Plastics, our plastics thermoforming
manufacturer, decreased primarily due to decreased sales volumes of
horticulture products, as order and delivery lead times for these products
have begun to normalize after volatility experienced in the previous year and
customers reduced their order demand and are beginning to return to normal
seasonal buying patterns.
Net Income
increased $0.5 million due to increased operating revenues at BTD, partially
offset by lower sales volumes at T.O. Plastics, increased depreciation
expense, and increased operating expenses due to inflationary cost pressures
and increased variable operating costs.
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Plastics Segment
(in thousands) 2023 2022 $ Change % Change
Operating Revenues $ 418,026 $ 512,527 $ (94,501) (18.4) %
Net Income 187,748 195,374 (7,626) (3.9)
Operating Revenues
decreased $94.5 million primarily due to a 14% decrease in sales volumes.
Sales volume decreases were attributable to softer end market demand coupled
with distributor inventory management, as these customers reduced their
inventory levels during the first half of the year after previously building
higher inventory levels in response to market uncertainty and supply chain
challenges. Operating revenue decreases were also the result of a 5% decrease
in sales prices, as prices in 2023 decreased from record highs in 2022.
Net Income
decreased $7.6 million due to decreased operating revenues, as described
above, partially offset by an increase in gross profit margins, as decreases
in the cost of PVC resin and other input materials outpaced decreases in sales
prices.
Corporate
(in thousands) 2023 2022 $ Change % Change
Net Income (Loss) $ 565 $ (12,114) $ 12,679 104.7 %
Net Income
at our corporate cost center increased $12.7 million, from a $12.1 million
loss in the prior year primarily due to increased investment income earned on
our short-term cash equivalent investments, lower health care costs related to
our self-funded health insurance program, and investment gains from our
corporate-owned life insurance policies.
FOURTH QUARTER OPERATING RESULTS
Consolidated Results
(in thousands, except per share amounts) 2023 2022 $ Change % Change
Operating Revenues $ 314,313 $ 301,409 $ 12,904 4.3 %
Operating Expenses 244,233 246,468 (2,235) (0.9)
Operating Income 70,080 54,941 15,139 27.6
Other Expense 1,109 5,728 (4,619) (80.6)
Income Before Income Taxes 68,971 49,213 19,758 40.1
Income Tax Expense 11,205 7,208 3,997 55.5
Net Income $ 57,766 $ 42,005 $ 15,761 37.5
Diluted Earnings Per Share $ 1.37 $ 1.00 $ 0.37 37.0 %
Electric Segment
Electric segment net income was $17.0 million, which was consistent with the
fourth quarter of 2022. Compared to last year, operating revenues decreased
primarily due to lower fuel recovery revenues driven by lower purchased power
costs, the impact of unfavorable weather, and decreased transmission revenue,
partially offset by an increase in rider revenue. Operating and maintenance
expenses increased compared to last year including increases in labor and
employee benefit cost, vegetative maintenance, and insurance expenses. The
decrease in operating revenues and increase in operating and maintenance
expenses were largely offset by lower pension and other postretirement benefit
costs.
Manufacturing Segment
Manufacturing segment net income was $1.2 million, a $1.9 million decrease
from the fourth quarter of 2022. The decrease was primarily due to decreased
sales volumes of horticulture products at T.O. Plastics and increased
operating expenses, partially offset by increased sales volumes and sales
price increases implemented in response to labor and non-steel material cost
inflation at BTD, as well as a $0.6 million increase in scrap revenues, driven
primarily by higher scrap metal prices.
Plastics Segment
Plastics segment net income was $39.5 million, a $14.9 million increase from
the fourth quarter of 2022, primarily due to a 59% increase in sales volumes.
In the fourth quarter of 2022, demand for PVC pipe was lower as distributor
customers strategically managed their inventory levels and made efforts to
sell through higher-priced inventories. The increase in sales volumes was
partially offset by decreased sales prices, as sales prices decreased 14% from
the fourth quarter of 2022.
Corporate
Corporate net income was $0.1 million, a $2.8 million increase from a $2.7
million loss in the fourth quarter of 2022, primarily due investment income
earned on our short-term cash equivalent investments and lower health care
costs related to our self-funded health insurance program.
2024 BUSINESS OUTLOOK
We anticipate 2024 diluted earnings per share to be in the range of $5.13 to
$5.43, with an earnings mix of approximately 41% from our Electric segment and
59% from our Manufacturing and Plastics segments, net of corporate costs. This
anticipated mix deviates from our long-term expected earnings mix of
approximately 65% Electric/35% non-Electric as we expect Plastics segment
earnings to remain elevated in 2024 compared to our long-term view of normal
earnings for this segment.
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The segment components of our 2024 diluted earnings per share guidance
compared with actual earnings for 2023 are as follows:
2023 EPS 2024 EPS Guidance
by Segment
Low High
Electric $ 2.01 $ 2.13 $ 2.17
Manufacturing 0.51 0.51 0.55
Plastics 4.47 2.62 2.81
Corporate 0.01 (0.13) (0.10)
Total $ 7.00 $ 5.13 $ 5.43
Return on Equity 22.1 % 14.3 % 15.1 %
The following items contribute to our 2024 earnings guidance:
Electric Segment
- We expect segment earnings to increase 7% over 2023 based on the following
key assumptions:
.
Normal weather conditions in 2024.
.
Returns generated from an increase in average rate base of 8.5% in 2024,
compared to 2023.
.
Interim revenue increase, which commenced January 1, 2024, resulting from the
general rate case filed in North Dakota.
.
Lower operating and maintenance expenses driven by lower anticipated employee
benefit cost and discretionary spending.
.
Increased depreciation expense resulting from our capital expenditures.
.
Increased interest expense from increased borrowings to fund our capital
investments.
Manufacturing Segment
- We expect segment earnings in 2024 to increase 4% over 2023 based on the
following key assumptions:
.
Higher sales volumes and favorable product mix, improved productivity and
lower incentive costs at BTD, partially offset by continued cost pressures in
the business.
.
Product pricing pressures and increased manufacturing cost at T.O. Plastics
driving a decline in earnings in 2024.
Plastics Segment
- We expect segment earnings to decline in 2024 based on the following key
assumptions:
.
Anticipated margin compression resulting from a continued downward trend in
product prices over the course of 2024.
.
Increased sales volumes as distributor purchasing normalizes in 2024 after
destocking and inventory management in 2023.
Corporate Costs
- We anticipate corporate costs will increase in 2024 primarily due to the
following:
.
Lower anticipated market-based gains on our corporate investments.
.
Expected increase in claims in our self-insured health plan.
.
Lower incentive compensation cost.
.
Higher earnings on cash equivalent investments from an anticipated increase in
our average investment balance.
CAPITAL EXPENDITURES
The following provides a summary of actual capital expenditures for the year
ended December 31, 2023, and anticipated annual capital expenditures for the
next five years, along with average rate base and annual rate base growth of
our Electric segment:
(in 2023 2024 2025 2026 2027 2028 Total
millions) 2024 -
2028
Electric
Segment:
Renewables $ 118 $ 93 $ 33 $ 113 $ 129 $ 486
Transmission 51 85 111 98 100 445
Distribution 38 39 36 38 39 190
Other 67 37 30 27 25 186
Total Electric $ 241 $ 274 $ 254 $ 210 $ 276 $ 293 $ 1,307
Segment
Manufacturing and 46 79 35 27 25 26 192
Plastics Segments
Total Capital $ 287 $ 353 $ 289 $ 237 $ 301 $ 319 $ 1,499
Expenditures
Total Electric Utility $ 1,742 $ 1,890 $ 2,080 $ 2,200 $ 2,350 $ 2,520
Average Rate Base
Annual Rate 7.3 % 8.5 % 10.1 % 5.8 % 6.8 % 7.2 %
Base Growth
Our updated capital expenditure plan for the next five years (2024-2028)
includes Electric segment investments in wind and solar resources,
transmission and distribution assets, and investments in system reliability
and technology. Our Electric segment capital expenditure plan produces a
compounded annual growth rate on average rate base of 7.7% over the next five
years and will serve as a key driver in increasing Electric segment
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earnings over this timeframe. Our previous five year capital expenditure plan
(2023-2027) had a compounded annual growth rate on average rate base of 6.5%.
Our capital expenditure plan in our Manufacturing and Plastics segments
includes investments to bring additional capacity to our operations, which
will provide an opportunity for organic growth within these segments.
CONFERENCE CALL AND WEBCAST
The corporation will host a live webcast on Tuesday, February 13, 2024, at
10:00 a.m. CT to discuss its financial and operating performance.
The presentation will be posted on our website before the webcast. To access
the live webcast, go to
www.ottertail.com/presentations
and select "Webcast." Please allow time prior to the call to visit the site
and download any software needed to listen in. An archived copy of the webcast
will be available on our website shortly after the call.
If you are interested in asking a question during the live webcast, 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 may include statements regarding
2024 earnings and earnings per share, long-term earnings, earnings per share
growth and earnings mix, anticipated levels of energy generation from
renewable resources, anticipated reductions in carbon dioxide emissions,
future investments and capital expenditures, rate base levels and rate base
growth, future raw materials costs, future raw materials availability and
supply constraints, future operating revenues and operating results, and
expectations regarding regulatory proceedings, as well as other assumptions
and statements, involve known and unknown risks and uncertainties that may
cause our actual results in current or future periods to differ materially
from the forecasted assumptions and expected results. The Company's risks and
uncertainties include, among other things, uncertainty of future investments
and capital expenditures, rate base levels and rate base growth, 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,
cybersecurity threats or data breaches, the impact of government legislation
and regulation including foreign trade policy and environmental, health and
safety laws and regulations, changes in tax laws and regulations, the impact
of climate change including compliance with legislative and regulatory changes
to address climate change, expectations regarding regulatory proceedings, 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, a member of the S&P SmallCap 600 Index, 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.
Media Contact:
Stephanie Hoff, Director of Corporate Communications, (218) 739-8535
Investor Contact:
Beth Eiken, Manager of Investor Relations, (701) 451-3571
# # #
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OTTER TAIL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
Three Months Ended December 31, Twelve Months Ended December 31,
(in thousands, except 2023 2022 2023 2022
per-share amounts)
Operating
Revenues
Electric $ 132,362 $ 145,587 $ 528,359 $ 549,699
Product 181,951 155,822 820,807 910,510
Sales
Total Operating 314,313 301,409 1,349,166 1,460,209
Revenues
Operating
Expenses
Electric 14,410 10,572 60,339 65,110
Production Fuel
Electric 20,360 35,677 78,292 100,281
Purchased Power
Electric Operating and 56,659 54,917 191,263 181,378
Maintenance Expense
Cost of Products Sold 102,793 99,358 454,122 542,944
(excluding depreciation)
Nonelectric Selling, General, 21,230 18,738 72,663 69,718
and Administrative Expenses
Depreciation and 25,319 22,768 97,954 92,597
Amortization
Electric 3,462 4,438 16,614 17,742
Property Taxes
Total Operating 244,233 246,468 971,247 1,069,770
Expenses
Operating 70,080 54,941 377,919 390,439
Income
Other Income
and (Expense)
Interest (9,392) (8,818) (37,677) (36,016)
Expense
Nonservice Components of 3,475 250 10,597 1,075
Postretirement Benefits
Other Income 4,808 2,840 12,650 2,037
(Expense), net
Income Before 68,971 49,213 363,489 357,535
Income Taxes
Income Tax 11,205 7,208 69,298 73,351
Expense
Net $ 57,766 $ 42,005 $ 294,191 $ 284,184
Income
Weighted-Average Common
Shares Outstanding:
Basic 41,680 41,600 41,668 41,586
Diluted 42,065 41,932 42,039 41,931
Earnings
Per Share:
Basic $ 1.39 $ 1.01 $ 7.06 $ 6.83
Diluted $ 1.37 $ 1.00 $ 7.00 $ 6.78
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OTTER TAIL CORPORATION
CONSOLIDATED BALANCE SHEETS (unaudited)
December 31,
(in thousands) 2023 2022
Assets
Current Assets
Cash and Cash Equivalents $ 230,373 $ 118,996
Receivables, net of allowance for credit losses 157,143 144,393
Inventories 149,701 145,952
Regulatory Assets 16,127 24,999
Other Current Assets 16,826 18,412
Total Current Assets 570,170 452,752
Noncurrent Assets
Investments 62,516 54,845
Property, Plant and Equipment, net of accumulated depreciation 2,418,375 2,212,717
Regulatory Assets 95,715 94,655
Intangible Assets, net of accumulated amortization 6,843 7,943
Goodwill 37,572 37,572
Other Noncurrent Assets 51,377 41,177
Total Noncurrent Assets 2,672,398 2,448,909
Total Assets $ 3,242,568 $ 2,901,661
Liabilities and Shareholders' Equity
Current Liabilities
Short-Term Debt $ 81,422 $ 8,204
Accounts Payable 94,428 104,400
Accrued Salaries and Wages 38,134 32,327
Accrued Taxes 26,590 19,340
Regulatory Liabilities 25,408 17,300
Other Current Liabilities 43,775 56,065
Total Current Liabilities 309,757 237,636
Noncurrent Liabilities and Deferred Credits
Pensions Benefit Liability 33,101 33,210
Other Postretirement Benefits Liability 27,676 46,977
Regulatory Liabilities 276,547 244,497
Deferred Income Taxes 237,273 221,302
Deferred Tax Credits 15,172 15,916
Other Noncurrent Liabilities 75,977 60,985
Total Noncurrent Liabilities and Deferred Credits 665,746 622,887
Commitments and Contingencies
Capitalization
Long-Term Debt 824,059 823,821
Shareholders' Equity
Common Shares 208,553 208,156
Additional Paid-In Capital 426,963 423,034
Retained Earnings 806,342 585,212
Accumulated Other Comprehensive Income 1,148 915
Total Shareholders' Equity 1,443,006 1,217,317
Total Capitalization 2,267,065 2,041,138
Total Liabilities and Shareholders' Equity $ 3,242,568 $ 2,901,661
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OTTER TAIL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
Twelve Months Ended December 31,
(in thousands) 2023 2022
Operating Activities
Net Income $ 294,191 $ 284,184
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation and Amortization 97,954 92,597
Deferred Tax Credits (744) (745)
Deferred Income Taxes 13,508 32,424
Discretionary Contribution to Pension Plan - (20,000)
Investment (Gains) Losses (7,222) 3,296
Stock Compensation Expense 7,753 6,814
Other, net (423) (1,473)
Change in Operating Assets and Liabilities:
Receivables (12,750) 30,560
Inventories (2,450) 5,339
Regulatory Assets 12,479 (2,464)
Other Assets 2,817 (368)
Accounts Payable (9,988) (29,763)
Accrued and Other Liabilities 6 (5,490)
Regulatory Liabilities 20,973 (6,846)
Pension and Other Postretirement Benefits (11,605) 1,244
Net Cash Provided by Operating Activities 404,499 389,309
Investing Activities
Capital Expenditures (287,134) (171,134)
Proceeds from Disposal of Noncurrent Assets 6,225 4,346
Purchases of Investments and Other Assets (8,378) (8,283)
Net Cash Used in Investing Activities (289,287) (175,071)
Financing Activities
Net Borrowings (Repayments) on Short-Term Debt 73,218 (82,959)
Proceeds from Issuance of Long-Term Debt - 90,000
Payments for Retirement of Long-Term Debt - (30,000)
Dividends Paid (73,061) (68,755)
Payments for Shares Withheld for Employee Tax Obligations (3,088) (2,942)
Other, net (904) (2,123)
Net Cash Used in Financing Activities (3,835) (96,779)
Net Change in Cash and Cash Equivalents 111,377 117,459
Cash and Cash Equivalents at Beginning of Period 118,996 1,537
Cash and Cash Equivalents at End of Period $ 230,373 $ 118,996
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OTTER TAIL CORPORATION
SEGMENT RESULTS (unaudited)
Three Months Ended December 31, Twelve Months Ended December 31,
(in thousands) 2023 2022 2023 2022
Operating Revenues
Electric $ 132,362 $ 145,587 $ 528,359 $ 549,699
Manufacturing 92,846 91,062 402,781 397,983
Plastics 89,105 64,760 418,026 512,527
Total Operating Revenues $ 314,313 $ 301,409 $ 1,349,166 $ 1,460,209
Operating Income (Loss)
Electric $ 18,096 $ 22,374 $ 106,521 $ 113,138
Manufacturing 2,484 4,047 29,140 29,065
Plastics 53,565 33,355 254,402 264,578
Corporate (4,065) (4,835) (12,144) (16,342)
Total Operating Income $ 70,080 $ 54,941 $ 377,919 $ 390,439
Net Income (Loss)
Electric $ 17,005 $ 17,036 $ 84,424 $ 79,974
Manufacturing 1,177 3,092 21,454 20,950
Plastics 39,508 24,586 187,748 195,374
Corporate 76 (2,709) 565 (12,114)
Total Net Income $ 57,766 $ 42,005 $ 294,191 $ 284,184
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