ottr-20240331

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2024 or

☐ Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number 0-53713

OTTER TAIL CORPORATION

(Exact name of registrant as specified in its charter)


Minnesota (State or other jurisdiction of incorporation or organization)			27-0383995 (I.R.S. Employer Identification No.)

215 South Cascade Street, Box 496, Fergus Falls, Minnesota (Address of principal executive offices)			56538-0496 (Zip Code)

Registrant's telephone number, including area code: 866-410-8780

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares, par value $5.00 per share	OTTR	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer ☑

Accelerated Filer ☐

Non-Accelerated Filer ☐

Smaller Reporting Company ☐

Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date:

41,814,425 Common Shares ($5 par value) as of April 30, 2024.

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TABLE OF CONTENTS


	Description	Page

	Definitions	2
	Forward Looking Information	2
PART I
ITEM 1.	Financial Statements:
	Consolidated Balance Sheets	3
	Consolidated Statements of Income	4
	Consolidated Statements of Comprehensive Income	5
	Consolidated Statements of Shareholders’ Equity	6
	Consolidated Statements of Cash Flows	7
	Condensed Notes to Consolidated Financial Statements	8
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	28
ITEM 4.	Controls and Procedures	28
PART II
ITEM 1.	Legal Proceedings	28
ITEM 1A.	Risk Factors	29

ITEM 5.	Other Information	29
ITEM 6.	Exhibits	30
Signatures		31

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DEFINITIONS

The following abbreviations or acronyms are used in the text.

AME

Available Maximum Emergency

MISO

Midcontinent Independent System Operator, Inc.

ARP

Alternative Revenue Program

MPUC

Minnesota Public Utilities Commission

BTD

BTD Manufacturing, Inc.

NDDEQ

North Dakota Department of Environmental Quality

CCS

Carbon Capture and Sequestration

NDPSC

North Dakota Public Service Commission

ECO

Energy Conservation and Optimization Rider

OTC

Otter Tail Corporation

EGU

Electric Generating Units

OTP

Otter Tail Power Company

EPA

Environmental Protection Agency

PIR

Phase-In Rider

ESSRP

Executive Survivor and Supplemental Retirement Plan

PSLRA

Private Securities Litigation Reform Act of 1995

EUIC

Electric Utility Infrastructure Costs Rider

PTC

Production Tax Credits

FERC

Federal Energy Regulatory Commission

PVC

Polyvinyl chloride

GCR

Generation Cost Recovery Rider

RHR

Regional Haze Rule

GHG

Greenhouse Gas

ROE

Return on equity

IRP

Integrated Resource Plan

RRR

Renewable Resource Rider

ISO

Independent System Operator

SEC

Securities and Exchange Commission

kwh

kilowatt-hour

T.O. Plastics

T.O. Plastics, Inc.

MDT

Meter and Distribution Technology

TCR

Transmission Cost Recovery Rider

Merricourt

Merricourt Wind Energy Center


FORWARD-LOOKING INFORMATION

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the "PSLRA"). When used in this Form 10-Q and in future filings by Otter Tail Corporation (the "Company") with the Securities and Exchange Commission ("SEC"), in the Company’s press releases and in oral statements, words such as “anticipate,” “believe,” “can," "could,” “estimate,” “expect,” "future," "goal," “intend,” "likely," “may,” “outlook,” “plan,” “possible,” “potential,” "predict," "probable," "projected," “should,” "target," “will,” “would” or similar expressions are intended to identify forward-looking statements within the meaning of the PSLRA. Such statements are based on current expectations and assumptions and entail various risks and uncertainties that could cause actual results to differ materially from those expressed in such forward-looking statements. The Company’s risks and uncertainties include, among other things, uncertainty of future investments and capital expenditures, rate base levels and rate base growth, 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, cyber security threats or data breaches, the impact of government legislation and regulation including foreign trade policy and environmental, health and safety laws and regulations, the impact of climate change including compliance with legislative and regulatory changes to address climate change, operational and economic risks associated with our electric generating and manufacturing facilities, risks associated with energy markets, the availability and pricing of resource materials, inflation cost pressures, attracting and maintaining a qualified and stable workforce, expectations regarding regulatory proceedings, including state utility commission approval of resource plans, assigned service areas, the siting and construction of major facilities, capital structure, and allowed customer rates, and changing macroeconomic and industry conditions that impact demand for our products, pricing and margins. These and other risks and uncertainties are more fully described in our filings with the SEC, including our most recently filed Annual Report on Form 10-K. Forward-looking statements speak only as of the date they are made, and we expressly disclaim any obligation to update any forward-looking information.

PART I. FINANCIAL INFORMATION


ITEM 1.			FINANCIAL STATEMENTS

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OTTER TAIL CORPORATION

CONSOLIDATED BALANCE SHEETS (unaudited)


(in thousands, except share data)	March 31, 2024		December 31, 2023

Assets
Current Assets
Cash and Cash Equivalents	$	238,158	$	230,373
Receivables, net of allowance for credit losses	195,674		157,143
Inventories	148,194		149,701
Regulatory Assets	9,175		16,127
Other Current Assets	16,742		16,826
Total Current Assets	607,943		570,170
Noncurrent Assets
Investments	66,110		62,516
Property, Plant and Equipment, net of accumulated depreciation	2,459,189		2,418,375
Regulatory Assets	96,682		95,715
Intangible Assets, net of accumulated amortization	6,568		6,843
Goodwill	37,572		37,572
Other Noncurrent Assets	51,968		51,377
Total Noncurrent Assets	2,718,089		2,672,398
Total Assets	$	3,326,032	$	3,242,568

Liabilities and Shareholders' Equity
Current Liabilities
Short-Term Debt	$	—	$	81,422

Accounts Payable	92,170		94,428
Accrued Salaries and Wages	21,922		38,134
Accrued Taxes	26,486		26,590
Regulatory Liabilities	33,513		25,408
Other Current Liabilities	34,383		43,775
Total Current Liabilities	208,474		309,757
Noncurrent Liabilities
Pension Benefit Liability	32,945		33,101
Other Postretirement Benefits Liability	27,501		27,676
Regulatory Liabilities	277,056		276,547
Deferred Income Taxes	246,560		237,273
Deferred Tax Credits	14,985		15,172
Other Noncurrent Liabilities	77,511		75,977
Total Noncurrent Liabilities	676,558		665,746
Commitments and Contingencies (Note 9)
Capitalization
Long-Term Debt	943,536		824,059
Shareholders' Equity
Common Shares:

SEC Form 10-Q filed by Otter Tail Corporation