Otter Tail (OTTR) - 2024 Q4 - Annual Report

Financial Performance - In 2024, Otter Tail Corporation achieved a net income of $301.7 million, or$ 7.17 per diluted share, representing a 3% increase from $294.2 million, or$ 7.00 per diluted share, in 2023[208]. - Net income for 2024 increased to $301,662, up 2.5% from$ 294,191 in 2023[322]. - Basic earnings per share rose to $7.22 in 2024, compared to$ 7.06 in 2023, reflecting a 2.3% increase[322]. - Total operating revenues for 2024 were $1,330,548, a decrease of 1.3% from$ 1,349,166 in 2023[322]. - Operating income for 2024 was $380,250, a slight increase from$ 377,919 in 2023[322]. - Total shareholders' equity rose to $1,668,499 in 2024, an increase of 15.6% from$ 1,443,006 in 2023[320]. Segment Performance - The Electric segment reported an 8% earnings growth in 2024, increasing from $84.4 million in 2023 to$ 91.0 million, driven by higher retail revenue from an interim rate increase in North Dakota[209]. - The Manufacturing segment experienced a 36% decline in earnings, dropping from $21.5 million in 2023 to$ 13.7 million in 2024, primarily due to lower sales volumes and decreased gross profit margins[210]. - The Plastics segment's earnings grew by 7%, from $187.7 million in 2023 to$ 200.7 million in 2024, attributed to increased sales volumes despite a decrease in gross profit margins[211]. - Net income for the Electric segment in 2024 was $90,963,000, an increase of 7.3% from$ 84,424,000 in 2023[389]. - Net income for the Manufacturing segment in 2024 was $13,681,000, a decrease of 36.5% from$ 21,454,000 in 2023[391]. - Net income for the Plastics segment in 2024 was $200,747,000, an increase of 6.5% from$ 187,748,000 in 2023[392]. Revenue and Expenses - Operating revenues decreased by $18.6 million in 2024, with the Electric segment's revenues down by 1% and the Manufacturing segment's revenues down by 15%[222]. - Operating expenses decreased by$ 20.9 million in 2024, mainly due to lower purchased power costs in the Electric segment[223]. - Selling, General, and Administrative Expenses in Corporate increased by $12.4 million, or 102.9%, primarily due to increased insurance expenses[239]. - Total operating revenue for the company in 2024 was$ 1,330,548,000, a decrease of 8.9% from $1,349,166,000 in 2023[399]. Cash Flow and Liquidity - The company reported a net cash provided by operating activities of$ 452.7 million for 2024, an increase of $48.2 million compared to$ 404.5 million in 2023[252]. - Net cash used in investing activities rose to $411.4 million in 2024, up by$ 122.1 million from $289.3 million in 2023, primarily due to increased capital expenditures[255]. - The total available liquidity as of December 31, 2024, was$ 606.3 million, compared to $479.8 million as of December 31, 2023[251]. - The company has$ 311.6 million of available liquidity under credit agreements as of December 31, 2024[250]. Capital Expenditures and Investments - Capital expenditures for the Electric segment in 2024 were $301 million, with anticipated total capital expenditures of$ 1.426 billion from 2025 to 2029[259]. - Capital expenditures increased to $358,650,000 in 2024, compared to$ 287,134,000 in 2023, reflecting a 25% rise[325]. - The company made a $50.1 million investment in U.S. treasuries in April 2024, maturing in September 2026[401]. Debt and Interest - Interest expense increased by$ 4.1 million in 2024 due to the issuance of an additional $120.0 million of long-term debt[224]. - As of December 31, 2024, OTP had$ 947 million of principal outstanding under long-term debt arrangements[270]. - OTP's interest-bearing debt to total capitalization ratio was 0.47 to 1.00 as of December 31, 2024, with an interest and dividend coverage ratio of 3.34 to 1.00[272]. - The weighted-average interest rate on outstanding borrowings was 5.61% as of December 31, 2024[267]. Regulatory and Taxation - The effective tax rate improved to 17.8% in 2024 from 19.1% in 2023, resulting in a $4.1 million decrease in income tax expense[225]. - OTP requested a net increase in annual revenue of$ 17.4 million, or 8.4%, in its North Dakota rate case filing[242]. - The NDPSC approved a revenue requirement of $225.6 million, with a net increase of$ 13.1 million, or 6.18%, based on the settlement agreement[243]. Goodwill and Impairment - The company changed its annual goodwill impairment test date to October 1st in 2024 to better align with year-end financial reporting[289]. - No goodwill impairment was identified in the fourth quarter of 2024, with estimated fair values substantially exceeding carrying values[294]. Other Financial Metrics - Total assets increased to $3,652,082 in 2024, up 12.6% from$ 3,242,568 in 2023[320]. - Total current liabilities remained stable at $309,790 in 2024, slightly up from$ 309,757 in 2023[320]. - Long-term debt increased to $943,734 in 2024, up 14.5% from$ 824,059 in 2023[320]. - Regulatory assets decreased from $16,127 in 2023 to$ 9,962 in 2024, a decline of 38.5%[320]. - Regulatory liabilities increased from $276,547 in 2023 to$ 288,928 in 2024, reflecting a growth of 4.9%[320].