Loading...
•
Sep 30, 2020
Otter Tail Q3 2020 Earnings Report
Announced a 40% increase in third quarter earnings per share and raised and narrowed its 2020 earnings per share guidance range.
Key Takeaways
Otter Tail Corporation announced a 40% increase in third quarter earnings per share, driven by increased earnings in the Electric and Plastics segments. The company raised and narrowed its 2020 earnings per share guidance range to $2.26-$2.36.
Consolidated net income and diluted earnings per share for the third quarter of 2020 were $35.9 million and $0.87 per share, respectively, compared with $24.7 million and $0.62 per share for the same period last year.
Consolidated operating revenues for the third quarter of 2020 increased 3.1% to $235.8 million compared with $228.7 million for the third quarter of 2019.
Electric segment third quarter earnings increased $7.1 million due to increasing investments in Merricourt Wind Energy Center and Astoria Station projects.
Plastics segment third quarter earnings increased $4.9 million compared with 2019 third quarter results, driven by higher quarter over quarter sales volume and increased pipe prices.
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 company is raising and narrowing its 2020 diluted earnings per share guidance range to $2.26 to $2.36.
Positive Outlook
- Capital spending on the Merricourt and Astoria Station rate base projects of $177 million and $81 million, respectively, in 2020.
- Increased revenues related to $25 million in anticipated capital spending for self-funded generator interconnection agreements.
- No major planned generation plant maintenance outages for 2020.
- The April 2020 Minnesota Supreme Court decision in Otter Tail Power Company’s favor related to the higher return earned on Federal Energy Regulatory Commission jurisdiction transmission lines.
- A favorable impact of weather on 2020 earnings compared to the forecasted earnings under normal weather conditions of $0.02 per share through September 30, 2020.
Challenges Ahead
- Reductions in commercial and industrial demand related to the negative impacts of COVID-19.
- Increased costs for bad debts, personal protective equipment and the loss of late fee revenue.
- 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.
- A planned contribution to the Otter Tail Power Company Foundation of $0.02 per share.
- Higher depreciation and property tax expense due to large capital projects being put into service.
Revenue & Expenses
Visualization of income flow from segment revenue to net income