Financial Data and Key Metrics Changes - Otter Tail Corporation achieved record earnings with diluted earnings per share of 7.17in2024,upfrom7 in 2023, reflecting a year-over-year increase of approximately 2.4% [34] - The company updated its long-term earnings per share growth rate to 6% to 8%, an increase from the previous range of 5% to 7% [9][50] - The return on equity was reported at 19% on an equity layer of 62%, outperforming many utility peers [43] Business Line Data and Key Metrics Changes - The electric segment's earnings grew nearly 8% year-over-year, contributing an increase of 0.15pershare,drivenbyaninterimrateincreaseandhigherriderrevenues[37]−Themanufacturingsegment′searningsdecreasedby0.18 per share due to lower sales volumes and higher production costs, with sales volumes down 15% from 2023 [38][39] - The plastics segment generated record earnings per share of 4.77,anincreaseof0.30 per share from 2023, primarily due to a 27% increase in sales volumes [40][41] Market Data and Key Metrics Changes - The company noted that nearly all end markets faced challenges in 2024 due to higher dealer and used inventory levels, inflationary pressures, and increased interest rates [24] - The sales prices of PVC pipe declined by 12% in 2024 compared to 2023 levels, impacting the plastics segment's earnings [26] Company Strategy and Development Direction - Otter Tail Corporation updated its five-year capital spending plan to 1.4billion,a9100 million for Solway Solar and 400millionforAbercrombieSolar[14][46]−Thecompanyaimstomaintainaffordableelectricrateswhileexecutingitscapitalspendingplan,leveragingexistinglow−costassetsandavailabletaxcredits[21][22]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementexpressedconfidenceinthelong−termfundamentalsofthemanufacturingsegmentdespitecurrentmarketchallenges,citingreshoringandhousingdemandassupportivefactors[25]−Thecompanyanticipatesthatplasticssegmentearningswillnormalizein2028,withalong−termearningsmixtargetof652.10 per share for 2025 [35] - Total available liquidity as of December 31, 2024, was reported at $606 million, positioning the company well for growth initiatives [42] Q&A Session Summary Question: Did the company secure large load agreements with customers? - Management clarified that there are no signed agreements yet, but term sheets are out for 150 megawatts, with hopes to finalize agreements in the next one to three years [57][58] Question: What are the reasons for the current weakness in manufacturing demand? - Management attributed the weakness to cyclical factors, high dealer inventory levels, and corrections in agriculture, with construction being less affected [62] Question: Is the expansion of BTD Georgia related to specific end markets? - Management indicated that the expansion supports various end markets, with more construction activity noted in that segment [64]
Otter Tail (OTTR)2025-02-18 19:45