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Mar 31, 2023
Otter Tail Q1 2023 Earnings Report
Otter Tail's financial performance decreased due to lower revenues in the Plastics segment, while the Electric and Manufacturing segments showed growth.
Key Takeaways
Otter Tail Corporation reported a decrease in consolidated operating revenues and net income for the quarter ended March 31, 2023, compared to the same period in 2022. However, the Electric and Manufacturing segments delivered double-digit earnings growth. The company increased its 2023 earnings per share guidance due to expected earnings improvements in the Plastics and Manufacturing segments.
Consolidated operating revenues decreased by 10% to $339 million.
Consolidated net income decreased by 13% to $62 million.
Diluted earnings per share decreased by 13% to $1.49 per share.
Increased 2023 earnings per share guidance to a range of $4.55 to $4.85.
Otter Tail
Otter Tail
Otter Tail Revenue by Segment
Revenue by Segment
Electric Revenue
CapyFin.comManufacturing Revenue
CapyFin.comPlastics Revenue
CapyFin.com Forward Guidance
Otter Tail Corporation increased its 2023 diluted earnings per share range to $4.55 to $4.85. The company anticipates margin compression to begin the second half of 2023 as industry supply and demand dynamics begin to normalize and are expected to result in reduced product sales prices.
Positive Outlook
- Increased sales volumes at BTD compared to original guidance, supported by increased demand in the Energy, Agriculture, Power Generation and Construction end markets.
- Improved product mix and sales pricing largely offset inflationary cost pressures.
- Increased scrap metal revenues at BTD driven by higher scrap metal prices and increased volumes; expect 2023 scrap metal revenues to be in line with 2022.
- Elevated sales prices leading to stronger margins in the first quarter and expected stronger margins in the second quarter as sales prices remain high.
- Increased earnings expected to be earned on higher levels of cash and cash equivalents as compared to original guidance and gains recognized on corporate investments in the first quarter of 2023.
Challenges Ahead
- Lower sales volumes, especially in the first half of 2023, as distributors and contractors continue to manage purchase volumes and consume current inventories given the ongoing dynamics within the industry.
- Anticipate margin compression to begin the second half of 2023 as industry supply and demand dynamics begin to normalize and are expected to result in reduced product sales prices.
- We expect to see a decline in profitability in the last half of 2023 as compared to the first half of 2023.
- The company's earnings mix in 2023 is expected to deviate from its long-term expected earnings mix.
- Backlog for the manufacturing companies as of March 31, 2023 was approximately $289 million, compared with $339 million one year ago.
Revenue & Expenses
Visualization of income flow from segment revenue to net income