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Mar 31, 2020
Otter Tail Q1 2020 Earnings Report
Announced first quarter earnings, with electric and plastics segments' guidance remaining largely unchanged. Revised 2020 earnings per share guidance range was driven by Coronavirus (COVID-19) impacts on the manufacturing segment.
Key Takeaways
Otter Tail Corporation reported a decrease in consolidated operating revenues by 4.6% to $234.7 million, and a decrease in consolidated net income to $24.3 million, or $0.60 per share, compared to the first quarter of 2019. The corporation revised its 2020 earnings per share guidance range to $2.00-$2.25 from $2.22-$2.37.
Consolidated operating revenues decreased 4.6% to $234.7 million.
Consolidated net income and diluted earnings per share were $24.3 million and $0.60 per share, respectively.
Milder weather during the quarter accounted for a $0.09 reduction in diluted earnings per share.
The corporation revises its 2020 earnings per share guidance range to $2.00-$2.25 from $2.22-$2.37.
Otter Tail
Otter Tail
Otter Tail Revenue by Segment
Revenue by Segment
Electric Revenue
CapyFin.comManufacturing Revenue
CapyFin.comPlastics Revenue
CapyFin.com Forward Guidance
The corporation revised and widened its 2020 diluted earnings per share guidance mainly due to the anticipated effects of the COVID-19 outbreak and the measures put in place to slow its spread. They now expect their 2020 diluted earnings per share to be in the range of $2.00 to $2.25 compared to their previously announced guidance of $2.22 to $2.37.
Positive Outlook
- Capital spending on the Merricourt and Astoria Station rate base projects of $178 million and $81 million, respectively, in 2020.
- The Merricourt project has rider recovery mechanisms in place in all three state jurisdictions.
- The Astoria Station project has rider recovery mechanisms in place in South Dakota and North Dakota.
- Increased revenues related to $22 million in anticipated capital spending for self-funded generator interconnection agreements.
- No planned generation plant outages for 2020.
Challenges Ahead
- The impact of unfavorable weather during the first quarter of 2020 and anticipated normal weather for the remaining months of 2020.
- Increased expenses caused in large part by a decrease in the discount rate used for the pension plan and a lower rate used for our long-term rate of return.
- Higher depreciation and property tax expense due to large capital projects being put into service.
- Increased interest costs associated with a full year’s interest expense on the $100 million of senior unsecured notes issued in October 2019 and interest on the $35 million and $40 million of senior unsecured notes issued in February and expected to be issued in August of 2020, respectively.
- Reductions in commercial and industrial demand related to the negative impacts of COVID-19 as some customers in our jurisdictions have had to either completely shut down operations or curtail operations given reduced demands for their products and services.
Revenue & Expenses
Visualization of income flow from segment revenue to net income