Otter Tail (NASDAQ:OTTR) Corporation (NASDAQ:OTTR) reported record-breaking earnings for the third quarter of 2023, with earnings per share (EPS) reaching $2.19. The company attributes this success to improved performance in the Manufacturing and Plastics segments and reduced corporate costs. The company has consequently raised its 2023 EPS guidance, now forecasting a range of $6.76 to $6.96.
Key takeaways from the earnings call:
- Otter Tail's Q3 EPS of $2.19 was driven by improved performance in the Manufacturing and Plastics segments and reduced corporate costs.
- The company has raised its 2023 EPS guidance to a range of $6.76 to $6.96, up by 17% from the previous range.
- The Electric segment's earnings remained flat year-over-year but increased by 7% on a year-to-date basis.
- The company is transitioning to cleaner energy sources, with Hoot Lake Solar becoming operational in August 2023, bringing the owned and contracted renewable energy sources to nearly 40%.
- Otter Tail is investing in capital projects, including transmission projects and wind farm repowering, to support future growth.
- The company's Chief Financial Officer, Kevin Moug, announced his retirement, and Todd Wahlund will be his successor.
- Otter Tail expects a mix of approximately 30% from the Electric segment and 70% from the Manufacturing and Plastics segments for its 2023 earnings.
Otter Tail's Manufacturing and Plastics segments played a significant role in the company's strong Q3 performance. The Manufacturing segment saw increased end-market demand, while the Plastics segment's performance exceeded expectations. The company also reduced corporate costs, contributing to the record-setting EPS.
The Electric segment earnings remained flat compared to last year but showed a 7% increase on a year-to-date basis. Despite this, the company anticipates that 30% of its 2023 earnings will come from this segment, with the remaining 70% expected from the Manufacturing and Plastics segments.
The company is also making strides in its transition to cleaner energy sources. The Hoot Lake Solar project became operational in August 2023, bringing the company's owned and contracted renewable energy sources to nearly 40%. Otter Tail is also investing in capital projects, including transmission projects and wind farm repowering, to support future growth.
Otter Tail's Chief Financial Officer, Kevin Moug, announced his retirement during the earnings call. Todd Wahlund will succeed him, continuing the company's strategic financial direction.
In regards to future pricing, Otter Tail does not foresee any significant drops in 2024. The company plans to provide an update on conditions in their 2024 guidance in February. They also expect a longer path to earnings normalization than previously anticipated, starting in the second half of 2024 and extending into 2025.
The company also discussed its North Dakota rate case during the call, confirming a seven-month statutory review period and a net new revenue request of $17 million. They are considering implementing a sales adjustment mechanism in this filing.
Overall, Otter Tail remains optimistic about its future prospects and aims to maintain affordability and reliability while transitioning to cleaner energy sources. The company's strong Q3 performance and increased 2023 guidance reflect this positive outlook.
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