Otter Tail : Q1 2024 Investor Meetings Presentation
OTTR
Q1 2024 Investor Meetings
Forward-Looking Statement
Except for historical information contained here, the statements in this release are forward-looking and made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The words "anticipate," "believe," "could," "estimate," "expect," "future," "goal," "intend," "likely," "may," "outlook," "plan," "possible," "potential," "predict," "probable," "projected," "should," "target," "will," "would" and similar words and expressions are intended to identify forward-looking statements. Such statements are based upon the current beliefs and expectations of management. Forward-looking statements made herein, which may include statements regarding 2024 earnings and earnings per share, long-term earnings, earnings per share growth and earnings mix, anticipated levels of energy generation from renewable resources, anticipated reductions in carbon dioxide emissions, future investments and capital expenditures, rate base levels and rate base growth, future raw materials costs, future raw materials availability and supply constraints, future operating revenues and operating results, and expectations regarding regulatory proceedings, as well as other assumptions and statements, involve known and unknown risks and uncertainties that may cause our actual results in current or future periods to differ materially from the forecasted assumptions and expected results.
The Company's risks and uncertainties include, among other things, uncertainty of future investments and capital expenditures, rate base levels and rate base growth, risks associated with energy markets, the availability and pricing of resource materials, inflationary cost pressures, attracting and maintaining a qualified and stable workforce, changing macroeconomic and industry conditions, long-term investment risk, seasonal weather patterns and extreme weather events, counterparty credit risk, future business volumes with key customers, reductions in our credit ratings, our ability to access capital markets on favorable terms, assumptions and costs relating to funding our employee benefit plans, our subsidiaries' ability to make dividend payments, cybersecurity threats or data breaches, the impact of government legislation and regulation including foreign trade policy and environmental, health and safety laws and regulations, changes in tax laws and regulations, the impact of climate change including compliance with legislative and regulatory changes to address climate change, expectations regarding regulatory proceedings, and operational and economic risks associated with our electric generating and manufacturing facilities. These and other risks are more fully described in our filings with the Securities and Exchange Commission, including our most recently filed Annual Report on Form
10-K, as updated in subsequently filed Quarterly Reports on Form 10-Q, as applicable. Forward-looking statements speak only as of the date they are made, and we expressly disclaim any obligation to update any forward-looking information.
Company Overview
ELECTRIC
MANUFACTURING PLATFORM
PLATFORM
PLASTICS SEGMENT
MANUFACTURING SEGMENT
PLATFORM HIGHLIGHTS
Electric Platform
Manufacturing Platform
• Attractive rate base growth
•
Enhanced consolidated ROE
•
Constructive regulatory environments
•
Organic growth opportunities
•
Affordable customer rates
•
Diversified end markets
3
2023 Financial Summary and Highlights
Financial Results
($ in millions, except per share data)
2023
2022
Operating Revenues
$
1,349.2
$
1,460.2
Net Income
$
294.2
$
284.2
Diluted EPS
$
7.00
$
6.78
Return on Equity
22.1 %
25.6 %
Cash From Operating Activities
$
404.5
$
389.3
Record Financial Results
Up 4%
85th Consecutive Year of Dividend Payments
Electric segment earnings
Up 6%
Diluted EPS By Segment
2023
2022
Electric
$
2.01
$
1.91
Manufacturing
0.51
0.50
Plastics
4.47
4.66
Corporate
0.01
(0.29)
Total
$
7.00
$
6.78
Manufacturing segment earnings
Up 2%
Plastics segment earnings
Down 4%
Corporate cost center earnings
4
Earnings Per Share Growth
$6.78
$7.00
27.7%
Plastics segment earnings decline
Consolidated EPS
(CAGR)
offset by strong performance within the other segments, including corporate cost savings
$4.23
11.6%
$2.17
$2.34
$2.06
Consolidated EPS
$2.53
w/o Plastics*
$1.89
$2.12
(CAGR)
$1.66
$1.67
$1.46
2018
2019
2020
2021
2022
2023
*Consolidated EPS w/o Plastics is a non-GAAP financial measure management uses to assess the financial results of the business exclusive of the impact of the earnings generated by our Plastics segment which have benefited from favorable industry conditions
5
Cleaner Energy Future
By 2030, We are Targeting:
Otter Tail Power Scope 1 CO2 Emissions
(in million short tons)
55%
Our owned and contracted energy generation will be 55% renewable
(Does not include MISO market purchases)
50%
Our carbon emissions from
owned generation
resources will be 50%
below 2005 levels
4.3
3.7
3.9
2.9
2.6
2.1
0.13
Carbon emission targeted to be 97% below 2005 levels by 2050 on our owned generation
Otter Tail Power Energy Resource Mix
Coal
Renewable
Purchased
Natural Gas
7%
3%
8%
23%
18%
35%
9%
43%
68%
23%
42%
74%
27%
20%
2005
2023
2030 Target
2050 Target
2005
2009
2013
2017
2023
2030
2050
Target
Target
2023 Consolidated Revenues from Coal Assets
7.1%
92.9%
Revenue from Coal Assets
Revenue from Non-Coal Assets
Note: Consolidated revenues include estimated returns on coal generation facility rate base investment, fuel expenses, O&M's, depreciation, property taxes, and coal conversion costs
6
Values in Action
Safety - We provide safe workplaces and require safe work practices
People - We build respectful relationships and create inclusive environments, where all people can thrive
Community - We improve the communities where we work and live
7
Electric Platform
8
Electric Operations
Highlights
Operating Revenue (in millions)
$549.7$528.4
$480.3
202120222023
Net Income (in millions)
$80.0
$84.4
$72.5
2021
2022
2023
9
Rate Base Growth
Rate Base
$1.3B of Capital Spending from 2024 to 2028
$ in billions
Renewables, 37%
Depreciation*, 33%
$2.52
Rate Case, 9%
$2.35
Capital
Recovery
$2.20
Spending
Mechanism
$2.08
Other, 14%
$1.89
$1.74
Distribution, 15%
Transmission, 34%
Riders, 58%
* Rate base replacement
2018 to 2023
9%
9%
Rate Base
Earnings
Growth
Translated To
Growth
(CAGR)
(CAGR)
2023(A)
2024(F)
2025(F)
2026(F)
2027(F)
2028(F)
10
Disclaimer
Otter Tail Corporation published this content on 13 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 13 March 2024 11:43:24 UTC.