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Jun 30, 2022
Otter Tail Q2 2022 Earnings Report
Otter Tail Corporation announced record financial results for the quarter, driven by outstanding performance in the Plastics segment and increased earnings in the Electric and Manufacturing segments. The company increased its 2022 earnings guidance.
Key Takeaways
Otter Tail Corporation reported a 40% increase in consolidated operating revenues, a 104% increase in consolidated net income, and a 103% increase in diluted earnings per share compared to the quarter ended June 30, 2021. The corporation is increasing its 2022 diluted earnings per share guidance range to $6.83 to $7.13 from its previous range of $5.15 to $5.45.
Consolidated operating revenues increased 40% to $400 million.
Consolidated net income increased 104% to $86 million.
Diluted earnings per share increased 103% to $2.05 per share.
The corporation is increasing its 2022 diluted earnings per share guidance range to $6.83 to $7.13 from its previous range of $5.15 to $5.45.
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 is increasing its 2022 diluted earnings per share guidance to $6.83 to $7.13 in light of our results for the first half of 2022 and our forecast for the remainder of the year, primarily driven by currently expected performance in our Plastics segment.
Positive Outlook
- Favorable weather for the first six months of 2022 and normal weather for the remainder of 2022.
- Increased interim rate revenue due to the finalization of the interim rate refund, as approved by the MPUC in the second quarter of 2022.
- Year over year increase in rate base along with increased load growth from new and existing commercial and industrial customers. Our ending rate base in 2021 grew by 13.7% to $1.6 billion.
- Lower expected plant outage costs in 2022. The Big Stone Plant outage costs in 2021 were higher than the Coyote Plant outage costs in 2022.
- Lower interest expense as the $140 million notes issued in November 2021 have a lower interest rate compared to the $140 million of notes that were refinanced.
Challenges Ahead
- Higher depreciation and property tax expense driven by increasing rate base.
- Labor costs are expected to be higher in 2022 as open positions were filled during the last half of 2021 and are expected to be employed for all of 2022.
- Increasing insurance costs related to an increase in insurable values and an increase in insurance rates due to competitive market conditions as well as increasing operating and maintenance expenses due to inflationary pressures resulting from our current economic environment.
- Steel costs are expected to remain historically high through the year. These costs could put additional pressure on our profitability if we are unable to pass cost increases on to our customers on a timely basis.
- Levels of finished goods inventory continue to be low as PVC pipe manufacturers have not been able to build inventory levels given supply constraints related to additives and other ingredients used to make PVC pipe.
Revenue & Expenses
Visualization of income flow from segment revenue to net income