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Section 1: 8-K (FORM 8-K)

ottr20200217_8k.htm
false 0001466593 0001466593 2020-02-17 2020-02-17

 


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of report (Date of earliest event reported): February 17, 2020

 

OTTER TAIL CORPORATION

(Exact name of registrant as specified in its charter)

 

Minnesota

0-53713

27-0383995

(State or other jurisdiction

of incorporation)

(Commission

File Number)

(I.R.S. Employer

Identification No.)

 

215 South Cascade Street, P.O. Box 496, Fergus Falls, MN 56538-0496

(Address of principal executive offices, including zip code)

 

(866) 410-8780

(Registrant’s telephone number, including area code)

 

Not Applicable

(Former name or former address, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

 

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

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.

 

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. ☐

 

 


 

 

 

 

Item 2.02

Results of Operations and Financial Condition

 

On February 17, 2020 Otter Tail Corporation issued a press release announcing 2019 earnings and 2020 earnings guidance. A copy of the press release is furnished herewith as Exhibit 99.1.

 

 

Item 9.01

Financial Statements and Exhibits

 

 

(d)

Exhibits

 

 

99.1

Press Release issued February 17, 2020.

 

 

104

Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

 

 

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

   

OTTER TAIL CORPORATION

   

 

Date: February 18, 2020

 

By:

/s/ Kevin G. Moug

 
     

Kevin G. Moug

     

Chief Financial Officer

 

(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

ex_172947.htm
 
Exhibit 99.1
     
  NEWS RELEASE  

 

Media contact:

Stephanie Hoff, Director of Corporate Communications, (218) 739-8535 or (218) 205-6179

Investor contact:

Loren Hanson, Manager of Investor Relations, (218) 739-8481 or (800) 664-1259

 

For release: February 17, 2020 Financial Media

 

Otter Tail Corporation Reports a 5.3 Percent Increase in 2019 Diluted Earnings per Share to $2.17, Increases Quarterly Dividend 5.7 Percent, Announces 2020 Earnings Guidance of $2.22 to $2.37 per Share

 

FERGUS FALLS, Minnesota - Otter Tail Corporation (NASDAQ: OTTR) today announced financial results for the year ended December 31, 2019.

 

2019 Summary:

 

   

4Q19

   

4Q18

   

2019

   

2018

 

 Operating Revenues (in millions)

  $ 215.7     $ 221.2     $ 919.5     $ 916.4  

 Net Income (in millions)

  $ 20.4     $ 14.2     $ 86.8     $ 82.3  

 Diluted Earnings Per Share

  $ 0.51     $ 0.35     $ 2.17     $ 2.06  

 

2019 Highlights

 

 

Consolidated operating revenues increased to $919.5 million in 2019 compared to $916.4 million in 2018.

 

 

Consolidated net income increased 5.5% to $86.8 million.

 

 

Diluted earnings per share increased $0.11 or 5.3%.

 

 

The corporation’s board of directors increased the quarterly common stock dividend to $0.37 per share, an indicated annual dividend rate of $1.48 per share and a 5.7% increase from $1.40 per share in 2019. The dividend is payable on March 10, 2020 to shareholders of record on February 14, 2020.

 

 

The corporation expects 2020 diluted earnings per share to be in a range of $2.22 to $2.37.

 

CEO Overview

“Our team of employees once again achieved strong financial results in 2019, increasing diluted earnings per share to $2.17,” said President and CEO Chuck MacFarlane. “Our Electric segment led our increase in net income, which improved year-over-year earnings by $4.6 million. Manufacturing segment earnings were flat year over year and our Plastics segment experienced a $3.2 million decline in earnings due to lower volumes and lower operating margins. Corporate costs improved by $3.1 million.

 

1

 

 

“Construction of Otter Tail Power Company’s $258 million, 150-megawatt Merricourt Wind Energy Center in southeastern North Dakota began in August with completion anticipated in October 2020. The project is on budget and continues to have excellent safety performance with no recordable incidents. We project our customers will receive approximately 30 percent of their energy from renewable resources we own or secure through power-purchase agreements by 2021. Construction of our $158 million 245-megawatt Astoria Station natural gas-fired combustion turbine generation project continues to be on schedule and on budget with a commercial operation date expected in late 2020 or early 2021.

 

“Rate riders are in place or expected to be in place in 2020, providing returns on amounts invested in the Merricourt Wind Energy Center and Astoria Station projects while under construction. The exception is the Minnesota portion of the Astoria Station costs and we will continue to capitalize an allowance for funds used during construction (AFUDC) on the Minnesota share of Astoria Station costs until recovery under interim or general rates commences.

 

“Otter Tail Power Company has approximately $45 million in planned MISO self-fund transmission investments for generator interconnections in the 2019 through 2021 time period. “Self-fund” is a transmission investment election made by transmission owners in MISO to fund the initial investment of transmission network upgrades required for generator interconnection and to recover and earn a return on the investment from the interconnection customer over 20 years. As of December 31, 2019, Otter Tail Power Company had Federal Energy Regulatory Commission (FERC) approval of several agreements providing for recovery on approximately $12 million in self-fund investments.

 

“Otter Tail Power Company continues to benefit from strong rate base growth investments and expects to invest $897 million in capital projects from 2020 through 2024, including investments in renewable generation and Astoria Station. This results in a projected compounded annual growth rate of 8.2 percent in utility rate base from year-end 2019 through 2024 and is expected to deliver value to customers and shareholders. We continue to make system investments to meet our customers’ expectations and enable us to work smarter, reduce emissions and improve reliability and safety.

 

“Our strategic initiatives to grow our businesses, achieve operational and commercial excellence, and develop our talent are strengthening our position in the markets we serve. We remain confident in our ability to grow earnings per share in the range of 5 to 7 percent compounded annually from a base of $2.17 in 2019. And we are announcing our 2020 earnings per share guidance to be in the range of $2.22-$2.37.”

 

Cash Flows and Liquidity

Our consolidated cash provided by operating activities for the year ended December 31, 2019 was $185.0 million compared with $143.4 million for the year ended December 31, 2018. Primary reasons for the $41.6 million increase in net cash provided by operating activities between the periods were:

 

 

A $23.1 million decrease in cash used for working capital items mainly due to significant changes in inventories, accounts payable and accounts receivable between the periods.

 

2

 

 

 

Inventory balances decreased by $8.4 million during 2019 compared to an increase of $18.2 million in 2018. This change is due to decreases in raw material costs, primarily steel, from 2018 to 2019 and lower sales volumes in the Plastics segment during 2019 compared to sales levels in 2018.

 

 

The level of increases in accounts receivable declined by $6.7 million from 2018 to 2019, primarily due to higher raw material costs reflected in customer billings in 2018 when compared with 2019. Our average collection period on a consolidated basis remained steady at approximately 31 days.

 

 

The reductions in cash used for inventories and accounts receivable between the years were partially offset by a $15.2 million reduction in cash from an increase in accounts payable and other current liabilities in 2018 compared with essentially no change in these items in 2019. The primary reason for the increase in accounts payable and other current liabilities in 2018 was due to the recording of refunds for the TCJA and interim rate refunds in North Dakota and South Dakota.

 

 

An $11.2 million increase from changes in regulatory asset and liability balances related to fuel cost and Minnesota environmental cost recovery riders included in changes in deferred debits and other assets and changes in noncurrent liabilities and deferred credits.

 

 

A $4.5 million increase in net income.

 

 

A $3.4 million increase in depreciation and amortization expense.

 

 

A $1.5 million increase in non-cash stock-based compensation expense in 2019.

 

These items were partially offset by:

 

 

A $2.5 million increase in discretionary contributions to the corporation’s funded pension plan in 2019.

 

The following table presents the status of the corporation’s lines of credit:

 

(in thousands)

 

Line Limit

   

In Use On

December 31, 2019

   

Restricted due to

Outstanding

Letters of Credit

   

Available on

December 31, 2019

   

Available on

December 31, 2018

 

Otter Tail Corporation Credit Agreement

  $ 170,000     $ 6,000     $ --     $ 164,000     $ 120,785  

Otter Tail Power Company Credit Agreement

    170,000       --       15,476       154,524       160,316  

Total

  $ 340,000     $ 6,000     $ 15,476     $ 318,524     $ 281,101  

 

Both credit agreements are currently in place until October 31, 2024.

 

3

 

 

2019 Segment Performance Summary

 

Electric

 

($s in thousands)

 

2019

   

2018

   

Change

   

% Change

Retail Electric Revenues

  $ 406,478     $ 388,251     $ 18,227       4.7  

Transmission Services Revenues

    40,542       46,947       (6,405 )     (13.6 )

Wholesale Electric Revenues

    5,007       7,735       (2,728 )     (35.3 )

Other Electric Revenues

    7,070       7,322       (252 )     (3.4 )

Total Electric Revenues

  $ 459,097     $ 450,255     $ 8,842       2.0  

Net Income

  $ 59,046     $ 54,431     $ 4,615       8.5  

Retail Megawatt-hour Sales

    4,969,089       4,976,960       (7,871 )     (0.2 )

Heating Degree Days

    7,240       6,904       336       4.9  

Cooling Degree Days

    392       567       (175 )     (30.9 )

 

Results of operations for the Electric segment are impacted by fluctuations in weather conditions and the resulting demand for electricity for heating and cooling. The following table shows heating and cooling degree days as a percent of normal.

 

 

2019

2018

Heating Degree Days

115.6%

111.0%

Cooling Degree Days

85.0%

123.5%

 

The following table summarizes the estimated effect on diluted earnings per share of the difference in retail kilowatt-hour (kwh) sales under actual weather conditions and expected retail kwh sales under normal weather conditions in 2019 and 2018 and between the years.

 

 

2019 vs Normal

2018 vs Normal

2019 vs 2018

Effect on Diluted Earnings Per Share

$ 0.078

$ 0.073

$ 0.005

 

Electric Revenue

 

The $18.2 million increase in retail electric revenue includes:

 

 

A $10.4 million increase in transmission cost recovery revenues due to recent investments in transmission infrastructure and transmission costs not currently recovered in base rates.

 

 

A $2.4 million increase in Minnesota Renewable Resource Adjustment (RRA) rider revenues due to increased cost recovery requirements resulting from the expiration of federal production tax credits (PTCs) in November 2018 on a company-owned wind farm.

 

 

A $2.3 million increase in retail revenue related to the recovery of fuel and purchased power costs incurred to serve retail customers.

 

 

A $1.9 million increase in retail revenue in South Dakota due to the reversal of a tax refund provision in connection with OTP's 2018 South Dakota rate case settlement agreement.

 

 

A $1.4 million increase in average electric prices mainly related to interim and final rate increases in South Dakota.

 

 

4

 

 

 

A $0.9 million increase in revenue related to the establishment of a generation cost recovery rider in North Dakota in 2019 to provide for a return on funds invested in Astoria Station during its construction phase.

 

 

A $0.3 million increase in revenue related to the recovery of increased conservation improvement program expenditures in 2019.

 

 

A $0.3 million increase in revenue mainly driven by a 4.9% increase in heating degree days in 2019 partially offset by a 30.9% decrease in cooling degree days between the years.

 

These items were partially offset by a $1.8 million decrease in retail revenue due to a decrease in kwh sales to residential customers.

 

Transmission services revenues decreased $6.4 million mainly due to a $5.0 million decrease associated with reductions in capital spending and collections through the Midcontinent Independent System Operator, Inc. (MISO) tariff. Otter Tail Power Company also recorded an additional $1.4 million estimated refund obligation due to a November 21, 2019 FERC ruling related to the methodology used to determine the Return on Equity (ROE) component of the transmission rate under the MISO tariff. This is mainly based on a reduced ROE from 10.82% to 10.38% for the period from September 28, 2016 through December 31, 2019. The reduced ROE is based on a newly established 9.88% ROE plus the 50-point Regional Transmission Organization adder granted by the FERC on January 5, 2015. The FERC ruling is subject to rehearing requests.

 

Wholesale electric revenues decreased $2.7 million resulting from a 27.0% decrease in wholesale kwh sales due to fewer opportunities for wholesale sales as Coyote Station was offline during the second quarter of 2019 due to an extended maintenance outage and Hoot Lake Plant Unit 2 was offline for maintenance and repairs in June and July 2019. The decrease in revenues also resulted from decreased regional market demand in the third quarter of 2019 due to cooler summer weather, which drove down wholesale electricity prices.

 

Electric Costs and Expenses

 

Production fuel costs decreased $7.6 million mainly as a result of a 16.4% decrease in kwhs generated from our fuel-burning plants due to the maintenance outage at Coyote Station and due to maintenance and repairs at Hoot Lake Plant as noted above. The decrease in fuel costs related to the decrease in generation was partially offset by a 6.1% increase in the cost of fuel per kwh generated at Otter Tail Power Company’s fuel-burning plants. The increased cost-per-kwh generated is mostly due to higher absorption of Coyote Creek Mining Company’s fixed coal mining costs on less delivered fuel to Coyote Station during its planned spring 2019 maintenance outage.

 

The cost of purchased power to serve retail customers increased $3.7 million due to a 23.1% increase in kwhs purchased as a result of purchasing replacement power during the maintenance outages at Coyote Station and Hoot Lake Plant. The increase in kwh purchases was partially offset by a 5.1% decrease in kwh purchases in the fourth quarter of 2019 related to Big Stone Plant’s availability during the fourth quarter of 2019 compared to the same period last year when the plant was down for scheduled maintenance. The increased costs due to the increase in kwhs purchased were partially mitigated by a 14.4% decrease in the cost per kwh purchased resulting from lower wholesale energy prices in 2019.

 

5

 

 

Electric operating and maintenance expenses decreased $2.0 million due to:

 

 

A $3.3 million decrease in external service costs at Big Stone Plant primarily related to its fall 2018 maintenance outage.

 

 

A $1.1 million decrease in expenses for vegetation and transmission line maintenance.

 

 

A $0.8 million decrease in software support costs and regulatory filing fees.

 

 

A $0.7 million reduction in employee benefits mainly related to decreased health insurance costs.

 

 

A $0.5 million decrease in expense related to an increase in overhead cost capitalization due to increased capital spending in 2019.

 

 

A $0.4 million decrease in pollution control expenses resulting from decreases in generation at both Coyote Station and Hoot Lake Plant during their 2019 maintenance outages.

 

These items were partially offset by:

 

 

A $2.4 million increase in external service costs related to Coyote Station's 2019 extended maintenance outage.

 

 

A $1.4 million increase in MISO transmission services expenses due to an increase in third-party multi-value projects in 2019.

 

 

A $0.7 million increase in costs at Hoot Lake Plant due to 2019 turbine repairs.

 

 

A $0.3 million increase in conservation program expenditures in 2019.

 

Depreciation expense increased $4.1 million due to capital additions including the Big Stone South–Ellendale 345kV transmission line energized in February 2019, the new customer information system put in service in 2019 and other recent transmission plant upgrades.

 

Property tax expense increased $0.2 million due to capital additions, mainly transmission assets, in South Dakota and Minnesota.

 

Income tax expense increased $7.2 million mainly due to an $11.8 million increase in Electric segment income before income taxes and a $3.1 million reduction in federal PTCs related to the expiration of PTCs on Otter Tail Power Company’s Ashtabula wind farm in November of 2018.

 

Manufacturing

 

(in thousands)

 

2019

   

2018

   

Change

 

% Change

Operating Revenues

  $ 277,204     $ 268,409     $ 8,795  

3.3

Net Income

    12,899       12,839       60  

0.5

 

6

 

 

BTD Manufacturing

 

BTD’s revenues increased $9.5 million due to growth in parts revenue of $12.3 million from increased sales to customers in recreational vehicle, construction, industrial, agricultural, and lawn and garden end markets, partially offset by reduced sales in energy end markets. Included in the parts revenue increase is the pass through of higher material costs of $0.7 million, with the remaining increase due to $11.6 million in higher sales volume. The increase in parts revenue was partially offset by a $2.8 million (31.9%) decrease in revenue from scrap metal sales due to a 28.2% decrease in scrap metal prices.

 

Cost of products sold at BTD increased $8.4 million including $11.8 million in increased material costs with $11.1 million due to the increased sales volume and $0.7 million passed through to customers. The increase in material costs combined with a $0.7 million increase in overhead costs was partially offset by a $4.1 million increase in reimbursements of tooling costs from customers.

 

The $1.1 million increase in gross margins on sales was partially offset by a $0.1 million increase in operating expenses. BTD’s depreciation expenses decreased $0.4 million as a result of certain assets reaching the ends of their depreciable lives. BTD’s income before income tax increased $1.3 million and its income tax expense decreased by $0.1 million, resulting in a $1.4 million increase in BTD’s net income in 2019 compared with 2018.

 

T.O. Plastics

 

T.O. Plastics’ revenues decreased $0.7 million due to a $0.7 million reduction in extrusion and other industrial sales, a $0.6 million decrease in sales to a customer bringing more production in house and a $0.2 million reduction in sales of horticultural containers, partially offset by a $0.5 million increase in life science product sales and a $0.3 million increase in sales of scrap material.

 

Cost of products sold at T.O. Plastics increased $1.1 million mainly due to increased labor costs driven in part by increased production hours and in part by wage increases. T.O. Plastics’ gross margin percentage decreased from 2018 to 2019 as a result of a customer’s decision to bring more production in house. Operating expenses increased $0.1 million.

 

T.O. Plastics’ income before income tax decreased $1.9 million and its income tax expense decreased by $0.5 million, resulting in a $1.4 million decrease in net income in 2019 compared with 2018.

 

Plastics

 

(in thousands)

 

2019

   

2018

   

Change

   

% Change

Operating Revenues

  $ 183,257     $ 197,840     $ (14,583 )     (7.4 )

Net Income

    20,572       23,819       (3,247 )     (13.6 )

 

7

 

 

Plastics revenues and net income decreased $14.6 million and $3.2 million, respectively, due to a 4.2% decrease in pounds of polyvinyl chloride (PVC) pipe sold and a 3.3% decrease in PVC pipe prices. Wet weather conditions across our sales territory negatively impacted 2019 sales along with lower demand in the Midwest and West Coast states.

 

Cost of products sold decreased $8.9 million due to the decrease in sales volume and a 1.9% decrease in the cost per pound of pipe sold. The decrease in pipe prices net of the decrease in costs resulted in a 7.7% decrease in gross margin per pound of PVC pipe sold. Plastics segment operating expenses decreased $0.9 million mainly due to a decrease in incentive compensation related to decreased operating income. Plastics segment depreciation expense decreased $0.3 million.

 

Segment income tax expense decreased $1.4 million resulting in the $3.2 million decrease in year-over-year net income in the Plastics segment.

 

Corporate

 

(in thousands)

 

2019

   

2018

   

Change

   

% Change

Losses before Income Taxes

  $ 11,189     $ 11,961     $ (772 )     (6.5 )

Income Tax Savings

    (5,519 )     (3,217 )     (2,302 )     71.6  

Net Loss

  $ 5,670     $ 8,744     $ (3,074 )     (35.1 )

 

Corporate costs before taxes decreased $0.8 million in 2019 compared to 2018 due to:

 

 

No contribution being made to the Otter Tail Corporation Foundation in 2019 as compared to a $2.0 million contribution commitment made at the end of 2018.

 

 

A $1.1 million non-taxable increase in corporate-owned life insurance cash surrender value.

 

 

A $1.2 million reduction in costs from an increase in corporate costs allocated to our operating companies, increased earnings from our captive insurance company, a decrease in post-retirement benefit non-service costs and other expense items.

 

These items were partially offset by:

 

 

A $2.7 million increase in employee benefit and incentive compensation costs largely due to increased health insurance costs.

 

 

A $0.8 million increase in interest expense reflecting higher average corporate short-term debt outstanding between the years.

 

Corporate income tax savings increased $2.3 million despite the decrease in corporate losses before income tax due to a $1.7 million reduction in uncertain tax positions and state net operating loss carryforwards between the years and an increase of $0.8 million in permanent differences primarily related to corporate-owned life insurance and employee benefits, partially offset by a $0.2 million reduction in tax savings due to lower corporate costs between the years.

 

8

 

 

Fourth Quarter 2019 Consolidated Results

 

(in thousands, except per share amounts)

 

4th Quarter

2019

   

4th Quarter

2018

   

Change

   

%

Change

Operating Revenues

  $ 215,676     $ 221,171     $ (5,495 )     (2.5 )

Operating Income

  $ 31,237     $ 23,407     $ 7,830       33.5  

Income Before Income Taxes

  $ 23,886     $ 14,542     $ 9,344       64.3  

Income Tax Expense

    3,534       381       3,153       827.6  

Net Income

  $ 20,352     $ 14,161     $ 6,191       43.7  

Diluted earnings per share

  $ 0.51     $ 0.35     $ 0.16       45.7  

 

The increase in fourth quarter 2019 net income was driven by increases in Electric and Plastics segment net income and a decrease in Corporate’s net loss, partially offset by a decrease in Manufacturing segment net income.

 

Electric

 

 

Electric segment net income increased $2.6 million between quarters.

 

 

Retail revenues increased $1.1 million due to:

 

 

A $2.6 million increase in Minnesota Transmission Cost Recovery rider revenues due to recent investments in transmission infrastructure and transmission costs not currently recovered in base rates.

 

 

A $0.6 million increase in revenue related to the recovery of increased CIP expenditures and increased CIP incentive revenues in the fourth quarter of 2019 compared with the fourth quarter of 2018.

 

 

A $0.5 million increase in Minnesota RRA rider revenues due to increased cost recovery requirements resulting from the expiration of federal PTCs in November 2018 on a company-owned wind farm.

 

 

A $0.3 million increase in revenue mainly driven by a 0.7% increase in heating degree days quarter over quarter.

 

 

A $0.3 million increase in revenue related to the establishment of a generation cost recovery rider in North Dakota in 2019 to provide for a return on funds invested in Astoria Station during its construction phase.

 

partially offset by:

 

 

A $3.2 million decrease in revenue related to the recovery of decreased fuel and purchased power costs driven by an increase in purchased power in the fourth quarter of 2018 to provide replacement power during a 9-week scheduled fall maintenance outage at Big Stone Plant.

 

 

Transmission services revenues decreased $4.6 million mainly due to a $3.2 million decrease associated with reductions in capital spending and collections through the MISO tariff. Otter Tail Power Company also recorded an additional $1.4 million estimated refund obligation due to a November 21, 2019 FERC ruling related to the methodology used to determine the ROE component of transmission rates under the MISO Tariff. This amount is based mainly on a reduced ROE from 10.82% to 10.38% for the period from September 28, 2016 through December 31, 2019. The reduced ROE is based on a newly established 9.88% ROE plus the 50-point Regional Transmission Organization adder granted by FERC on January 5, 2015. The FERC ruling is subject to rehearing requests.

 

9

 

 

 

Wholesale electric revenues decreased $0.4 million despite a 4.1% increase in wholesale kwh sales due to a 35.6% decrease in wholesale electric prices.

 

 

Other miscellaneous electric revenues increased by $0.3 million.

 

 

Production fuel costs decreased $1.4 million as a result of a 4.1% decrease in kwhs generated at our fuel-burning plants and a 5.3% decrease in the cost-per-kwh generated. The decreased cost-per-kwh generated is a function of increased generation at Big Stone Plant, our lowest fuel-cost plant, combined with decreased generation from our higher fuel-cost plants, on a cost-per-kwh basis.

 

 

The cost of purchased power to serve retail customers decreased $5.4 million due to a 5.1% decrease in kwhs purchased and a 19.6% decrease in the cost-per-kwh purchased. The decrease in kwhs purchased is related to the increased availability of Big Stone Plant for the entire fourth quarter of 2019 compared to being down for scheduled maintenance for the first five weeks of fourth quarter 2018.

 

 

Electric operating and maintenance expense decreased $5.0 million including:

 

 

The reversal of a $2.7 million regulatory asset in the fourth quarter of 2018 related to deferred recovery of a tax-reform-related income tax adjustment due to updates of various state regulatory proceedings.

 

 

A $2.5 million decrease in Big Stone Plant contracted maintenance and material expenses primarily related to its 2018 fall maintenance outage.

 

 

A $1.0 million decrease in other plant materials and operating supplies and other various expense categories.

 

partially offset by:

 

 

A $0.7 million increase in MISO transmission service costs.

 

 

A $0.5 million increase in conservation program spending.

 

 

Depreciation and amortization expense increased $1.3 million due to recent capital additions including the Big Stone South–Ellendale 345kV transmission line energized in February 2019, the new customer information system put in service in 2019 and other recent transmission plant upgrades. Also, recent decreases in estimated salvage values for electrical transformers has resulted in increased depreciation rates and expense for those assets.

 

 

Electric segment property taxes decreased $0.4 million.

 

 

Income tax expense in the Electric segment increased $5.2 million due to a $7.8 million increase in Electric segment income before income taxes and the 2018 reduction in income tax expense due to the reversal of a $2.7 million charge to income tax expense recorded in the third quarter of 2018 related to deferred recovery of an income tax adjustment under tax reform due to various state regulatory proceedings.

 

10

 

 

Manufacturing

 

Net income from the Manufacturing segment decreased $1.2 million between quarters.

 

BTD’s revenues decreased $4.2 million due to a $2.7 million reduction in revenue from parts sales, including decreased sales in energy, agricultural and lawn and garden end markets, partially offset by increased sales in recreational vehicle and industrial end markets. Included in the parts revenue decrease is a $6.2 million decrease in material cost increases passed through to customers partially offset by an increase in revenue of $3.5 million due to higher sales volume. Revenue from scrap metal sales decreased $1.2 million due to a 43.4% decrease in scrap metal prices and a 19.2% decrease in scrap volume. BTD also recorded a net decrease in revenues from tooling and other sources of $0.3 million. Cost of products sold at BTD decreased $3.2 million including a $2.2 million decrease in material costs, a $1.5 million in decreased labor costs and a $0.6 decrease in other overhead costs, partially offset by a $1.1 million decrease in reimbursement of tooling costs from customers. BTD’s gross margin and income before income taxes both declined by $1.0 million, resulting in a $0.3 million decrease in income tax expense and $0.7 million decrease in net income between quarters.

 

T.O. Plastics’ revenues decreased $0.2 million mainly due to a reduction in product sales. Cost of products sold at T.O. Plastics increased $0.7 million mainly due to increased labor, material costs and equipment repairs. Operating expenses at T.O. Plastics decreased $0.3 million. T.O. Plastics’ net income before income tax decreased $0.6 million, resulting in a $0.5 million decrease in net income in the fourth quarter of 2019 compared with the fourth quarter of 2018.

 

Plastics

Plastics segment revenues and net income increased $2.6 million and $1.3 million, respectively, quarter-over-quarter due to a 10.4% increase in pounds of PVC pipe sold partially offset by a 3.1% decrease in PVC pipe prices. Cost of products sold increased $1.4 million due to the increase in sales volume partially offset by a 4.8% decrease in the cost per pound of pipe sold. The decrease in pipe prices net of the decrease in costs resulted in a 1.4% increase in gross margin per pound of PVC pipe sold. Plastics segment operating and depreciation expenses decreased $0.4 million and segment income tax expense increased $0.2 million resulting in the $1.3 million increase in quarter-over-quarter net income in the Plastics segment.

 

Corporate

Corporate costs, net-of-tax, decreased $3.4 million mainly due to a $1.5 million net-of-tax decrease in contributions to the Otter Tail Corporation Foundation and $1.9 million in changes to uncertain tax positions and state net operating loss carryforward and increases in the cash surrender value of corporate-owned life insurance.

 

11

 

 

2020 Business Outlook

 

We anticipate 2020 diluted earnings per share to be in the range of $2.22 to $2.37. The midpoint of the 2020 earnings per share guidance reflects a 6% growth rate off 2019 diluted earnings per share. Our 2020 diluted earnings per share guidance also includes $0.05 of dilution associated with the planned issuance of common equity under our At-the-Market Offering Program and Dividend Reinvestment and Employee Stock Purchase Plans to help fund our construction projects at Otter Tail Power Company.

 

We have taken into consideration strategies for improving future operating results, the cyclical nature of some of our businesses, and current regulatory factors facing our Electric segment. We expect capital expenditures for 2020 to be $385 million compared with actual cash used for capital expenditures of $207 million in 2019. Our Electric Segment accounts for 96% of our 2020 planned capital expenditures. The increase in our planned expenditures for 2020 is largely driven by the Merricourt Wind Energy Center (Merricourt) and Astoria Station natural gas-fired electric plant rate base projects.

 

Segment components of our 2020 diluted earnings per share guidance range compared with 2019 actual earnings are as follows.

 

 

2019 EPS by

2020 EPS Guidance

  Segment

Low

High

 Electric

$1.48

$1.67

$1.70

 Manufacturing

$0.32

$0.31

$0.35

 Plastics

$0.51

$0.43

$0.47

 Corporate

($0.14)

($0.19)

($0.15)

Total

$2.17

$2.22

$2.37

 Return on Equity

11.6%

11.0%

11.7%

 

The following items contribute to our earnings guidance for 2020.

 

 

We expect our Electric segment to provide approximately 75% of our consolidated earnings in 2020 with an increase over 2019 segment net income based on:

 

 

Capital spending on the Merricourt and Astoria Station rate base projects of $178 million and $81 million, respectively, in 2020. The Merricourt project has rider recovery mechanisms in place in Minnesota and South Dakota and in process for approval in North Dakota. The Astoria Station project has rider recovery mechanisms in place in South Dakota and North Dakota. This project earns AFUDC in Minnesota, is expected to be recovered through a rate case in Minnesota and has already been approved in our integrated resource plan.

 

 

Increased revenues related to $22 million in anticipated capital spending for self-funded generator interconnection agreements.

 

 

No planned generation plant outages for 2020. Plant outage costs totaled $3.1 million in 2019.

 

 

12

 

 

Partially offset by:

 

 

Normal weather in 2020. Weather favorably impacted 2019 earnings by $0.08 per share compared to normal.

 

 

Increased expenses caused in large part by a decrease in the discount rate used for the pension plan and a lower rate used for our long-term rate of return. The discount rate for 2020 is 3.47% compared with 4.50% for 2019. For each 25-basis-point decline in the discount rate, pension expense increases approximately $1,041,000. The assumed long-term rate of return for 2020 is 6.88% compared with 7.25% in 2019. Each 25-basis-point decline in this rate equates to approximately $734,000 in increased pension expense.

 

 

Higher depreciation and property tax expense due to large capital projects being put into service.

 

 

Increased interest costs associated with a full year’s interest expense on the $100 million of senior unsecured notes that were issued in October 2019 and interest on the $35 million and $40 million of senior unsecured notes expected to be issued in February and August of 2020, respectively.

 

 

We expect net income from our Manufacturing segment to be flat compared with 2019 based on:

 

 

Slightly lower earnings at BTD due to an expected decline in sales driven mostly by lower sales volumes in the recreational vehicle markets. Scrap revenues are expected to decline slightly as well based on lower sales volumes with scrap prices staying flat between the years.

 

 

An increase in earnings from T.O. Plastics mainly driven by year-over-year sales growth in horticulture, life science and industrial markets.

 

 

Backlog for the manufacturing companies of approximately $179 million for 2020 compared with $211 million one year ago. Raw material price deflation is driving backlog down by $19 million and the remaining $13 million decrease in backlog is volume driven.

 

 

We expect 2020 net income from our Plastics segment to be lower than 2019 based on lower expected operating margins in 2020. This is due to an expected decline in sale prices of pipe and flat year-over-year resin prices, partially offset by slightly higher sales volumes in 2020 compared to 2019.

 

 

Corporate costs, net of tax, are expected to be higher in 2020 compared with 2019 primarily driven by higher short-term borrowing costs at the corporate level and higher income tax expense, partially offset by lower employee benefit and health care costs.

 

13

 

 

 

The following table shows our 2019 capital expenditures and 2020 through 2024 anticipated capital expenditures and electric utility average rate base.

 

(in millions)

 

2019

   

2020

   

2021

   

2022

   

2023

   

2024

   

Total

 

 Capital Expenditures:

                                                       

  Electric Segment:

                                                       

  Renewables and Natural Gas Generation

          $ 260     $ 18     $ 51     $ 30     $ --     $ 359  

  Technology and Infrastructure

            7       18       47       54       43       169  

  Distribution Plant Replacements

            22       27       34       25       26       134  

  Transmission (includes replacements)

            61       26       8       13       9       117  

  Other

            19       35       23       18       23       118  

 Total Electric Segment

  $ 187     $ 369     $ 124     $ 163     $ 140     $ 101     $ 897  

 Manufacturing and Plastics Segments

    20       16       18       17       19       17       87  

  Total Capital Expenditures

  $ 207     $ 385     $ 142     $ 180     $ 159     $ 118     $ 984  

 Total Electric Utility Average Rate Base

  $ 1,170     $ 1,418     $ 1,573     $ 1,634     $ 1,690     $ 1,739          

 Rate Base Growth

            21.2 %     10.9 %     3.9 %     3.4 %     2.9 %        

 

The capital expenditure plan for the 2020-2024 time period calls for Electric segment capital expenditures of $897 million based on the need for additional wind and solar in rate base, capital spending for Astoria Station (part of our replacement solution for Hoot Lake Plant when it is retired in 2021), technology-related investments and distribution and transmission investments. Given this capital expenditure plan, our compounded annual growth rate in rate base is projected to be 8.2% over the 2019 to 2024 timeframe.

 

Execution on the currently anticipated Electric segment capital expenditure plan is expected to grow rate base and be a key driver in increasing utility earnings over the 2020 through 2024 timeframe.

 

CONFERENCE CALL AND WEBCAST 

The corporation will host a live webcast on Tuesday, February 18, 2020, at 10:00 a.m. CT to discuss its financial and operating performance.

 

The presentation will be posted on our website before the webcast. To access the live webcast, go to www.ottertail.com/presentations.cfm and select “Webcast.” Please allow time prior to the call to visit the site and download any software needed to listen in. An archived copy of the webcast will be available on our website shortly after the call.

 

If you are interested in asking a question during the live webcast, call 877-312-8789. For listen-only mode, call 866-634-1342.

 

Risk Factors and Forward-Looking Statements that Could Affect Future Results

The information in this release includes certain forward-looking information, including 2020 expectations, made under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Although we believe our expectations are based on reasonable assumptions, actual results may differ materially from those expectations. The following factors, among others, could cause our actual results to differ materially from those discussed in the forward-looking statements:

 

 

Federal and state environmental regulation could require us to incur substantial capital expenditures and increased operating costs.

 

Weather impacts, including normal seasonal fluctuation of weather, as well as extreme weather events that could be associated with climate change, could adversely affect our results of operations.

 

14

 

 

 

Volatile financial markets and changes in our debt ratings could restrict our ability to access capital and increase borrowing costs and pension plan and postretirement health care expenses.

 

Any significant impairment of our goodwill would cause a decrease in our asset values and a reduction in our net operating income.

 

The inability of our subsidiaries to provide sufficient earnings and cash flows to allow us to meet our financial obligations and debt covenants and pay dividends to our shareholders could have an adverse effect on the Company.

 

We rely on our information systems to conduct our business, and failure to protect these systems against security breaches or cyber-attacks could adversely affect our business and results of operations. Additionally, if these systems fail or become unavailable for any significant period, our business could be harmed.

 

Economic conditions could negatively impact our businesses.

 

If we are unable to achieve the organic growth we expect, our financial performance may be adversely affected.

 

Our plans to grow our businesses through capital projects, including infrastructure and new technology additions, or to grow or realign our businesses through acquisitions or dispositions may not be successful, which could result in poor financial performance.

 

We may, from time to time, sell assets to provide capital to fund investments in our electric utility business or for other corporate purposes, which could result in the recognition of a loss on the sale of any assets sold and other potential liabilities. The sale of any of our businesses also exposes us to additional risks associated with indemnification obligations under the applicable sales agreements and any related disputes.

 

Significant warranty claims and remediation costs in excess of amounts normally reserved for such items could adversely affect our results of operations and financial condition.

 

We are subject to risks associated with energy markets.

 

Changes in tax laws, as well as judgments and estimates used in the determination of tax-related asset and liability amounts, could materially adversely affect our business, financial condition, results of operations and prospects.

 

Four of our operating companies have single customers that provide a significant portion of the individual operating company’s and the business segment’s revenue. The loss of, or significant reduction in revenue from, any one of these customers would have a significant negative financial impact on the operating company and its business segment and could have a significant negative financial impact on the Company.

 

The inability to attract and retain a qualified workforce including, but not limited to, executive officers, key employees and employees with specialized skills could have an adverse effect on our operations.

 

We may experience fluctuations in revenues and expenses related to our electric operations, which may cause our financial results to fluctuate and could impair our ability to make distributions to shareholders or scheduled payments on our debt obligations, or to meet covenants under our borrowing agreements.

 

Actions by the regulators of our electric operations could result in rate reductions, lower revenues and earnings or delays in recovering capital expenditures.

 

Our electric operations are subject to an extensive legal and regulatory framework under federal and state laws as well as regulations imposed by other organizations that may have a negative impact on our business and results of operations.

 

Our electric transmission and generation facilities could be vulnerable to cyber and physical attack that could impair our ability to provide electrical service to our customers or disrupt the U.S. bulk power system.

 

15

 

 

 

Our electric generating facilities are subject to operational risks that could result in early closure, unscheduled plant outages, unanticipated operation and maintenance expenses and increased power purchase costs.

 

Regulation of generating plant emissions could affect our operating costs and the costs of supplying electricity to our customers and the economic viability of continued operation of certain of our steam-powered electric plants.

 

The long-range planning required for transmission and generation projects creates risks of increased costs and lower returns on investment when the project is finally completed.

 

Competition from foreign and domestic manufacturers, the price and availability of raw materials, trade policy and tariffs affecting prices and markets for raw material and manufactured products, prices and supply of scrap or recyclable material and general economic conditions could affect the revenues and earnings of our manufacturing businesses.

 

Economic conditions in the industries in which our customers operate can have an adverse impact on our results of operations and cash flows.

 

Our business and operating results may be adversely affected if we are not able to maintain our manufacturing, engineering and technological expertise.

 

Our manufacturing, painting and coating operations are subject to environmental, health and safety laws and regulations that could result in liabilities to us.

 

Our plastics operations are highly dependent on a limited number of vendors for PVC resin and a limited supply of PVC resin. The loss of a key vendor, or any interruption or delay in the supply of PVC resin, could result in reduced sales or increased costs for our plastics business.

 

We compete against many other manufacturers of PVC pipe and manufacturers of alternative products. Customers may not distinguish our products from those of our competitors.

 

Changes in PVC resin prices can negatively affect our plastics business.

 

For a further discussion of these risk factors and cautionary statements, refer to reports we file with the Securities and Exchange Commission.

 

About the Corporation: Otter Tail Corporation has interests in diversified operations that include an electric utility and manufacturing businesses. Otter Tail Corporation stock trades on the Nasdaq Global Select Market under the symbol OTTR. The latest investor and corporate information are available at www.ottertail.com. Corporate offices are in Fergus Falls, Minnesota, and Fargo, North Dakota.

 

See Otter Tail Corporation’s results of operations for the quarters and years ended December 31, 2019 and 2018 in the following financial statements: Consolidated Statements of Income, Consolidated Balance Sheets – Assets, Consolidated Balance Sheets – Liabilities and Equity, and Consolidated Statements of Cash Flows.

 

# # #

 

16

 

 

Otter Tail Corporation

Consolidated Statements of Income

in thousands, except share and per share amounts

(not audited)

 

   

Quarter Ended

December 31,

   

Year-to-Date

December 31,

 
   

2019

   

2018

   

2019

   

2018

 

Operating Revenues by Segment

                               

Electric

                               

Revenues from Contracts with Customers

  $ 111,738     $ 115,805     $ 458,065     $ 450,694  

Changes in Accrued Revenues under Alternative Revenue Programs

    2,633       2,318       1,032       (439 )

Total Electric Revenues

    114,371       118,123       459,097       450,255  

Manufacturing

    60,164       64,566       277,204       268,409  

Plastics

    41,157       38,508       183,257       197,840  

Intersegment Eliminations

    (16 )     (26 )     (55 )     (57 )

Total Operating Revenues

    215,676       221,171       919,503       916,447  

Operating Expenses

                               

Fuel and Purchased Power

    31,027       37,788       131,322       135,170  

Nonelectric Cost of Products Sold (depreciation included below)

    77,794       78,868       355,119       354,559  

Electric Operating and Maintenance Expense

    39,422       44,421       153,529       155,534  

Nonelectric Operating and Maintenance Expense

    12,378       13,854       50,782       51,544  

Depreciation and Amortization

    19,857       18,450       78,086       74,666  

Property Taxes – Electric

    3,961       4,383       15,785       15,585  

Total Operating Expenses

    184,439       197,764       784,623       787,058  

Operating Income (Loss) by Segment

                               

Electric

    24,682       17,520       98,417       88,031  

Manufacturing

    1,317       2,935       17,869       18,266  

Plastics

    7,790       6,207       28,439       32,917  

Corporate

    (2,552 )     (3,255 )     (9,845 )     (9,825 )

Total Operating Income

    31,237       23,407       134,880       129,389  

Interest Charges

    8,221       7,811       31,411       30,408  

Nonservice Cost Components of Postretirement Benefits

    1,128       1,380       4,293       5,509  

Other Income

    1,998       326       5,112       3,461  

Income Tax Expense

    3,534       381       17,441       14,588  

Net Income (Loss) by Segment

                               

Electric

    15,162       12,596       59,046       54,431  

Manufacturing

    912       2,070       12,899       12,839  

Plastics

    5,654       4,314       20,572       23,819  

Corporate

    (1,376 )     (4,819 )     (5,670 )     (8,744 )

Net Income

  $ 20,352     $ 14,161     $ 86,847     $ 82,345  

Average Number of Common Shares Outstanding

                               

Basic

    39,799,359       39,621,659       39,720,847       39,599,944  

Diluted

    40,047,568       39,922,467       39,953,826       39,892,196  

Basic Earnings Per Common Share

  $ 0.51     $ 0.36     $ 2.19     $ 2.08  

Diluted Earnings Per Common Share

  $ 0.51     $ 0.35     $ 2.17     $ 2.06  

 

17

 

 

Otter Tail Corporation

Consolidated Balance Sheets

Assets

in thousands

(not audited)

 

   

December 31,

   

December 31,

 
   

2019

   

2018

 

Current Assets

               

Cash and Cash Equivalents

  $ 21,199     $ 861  

Accounts Receivable:

               

Trade—Net

    77,947       75,144  

Other

    8,773       9,741  

Inventories

    97,851       106,270  

Unbilled Receivables

    20,911       23,626  

Income Taxes Receivable

    1,487       2,439  

Regulatory Assets

    21,650       17,225  

Other

    5,042       6,114  

Total Current Assets

    254,860       241,420  

Investments

    9,894       8,961  

Other Assets

    40,196       35,759  

Goodwill

    37,572       37,572  

Other Intangibles—Net

    11,290       12,450  

Regulatory Assets

    144,138       135,257  

Right of Use AssetsOperating Leases

    21,851       --  

Plant

               

Electric Plant in Service

    2,212,884       2,019,721  

Nonelectric Operations

    247,356       228,120  

Construction Work in Progress

    185,238       181,626  

Total Gross Plant

    2,645,478       2,429,467  

Less Accumulated Depreciation and Amortization

    891,684       848,369  

Net Plant

    1,753,794       1,581,098  

Total

  $ 2,273,595     $ 2,052,517  

 

18

 

 

Otter Tail Corporation

Consolidated Balance Sheets

Liabilities and Equity

in thousands

(not audited)

 

   

December 31,

   

December 31,

 
   

2019

   

2018

 

Current Liabilities

               

Short-Term Debt

  $ 6,000     $ 18,599  

Current Maturities of Long-Term Debt

    183       172  

Accounts Payable

    120,775       96,291  

Accrued Salaries and Wages

    22,730       24,857  

Accrued Taxes

    17,525       17,287  

Regulatory Liabilities

    7,480       738  

Current Operating Lease Liabilities

    4,136       --  

Other Accrued Liabilities

    10,912       12,149  

Total Current Liabilities

    189,741       170,093  

Pensions Benefit Liability

    98,970       98,358  

Other Postretirement Benefits Liability

    71,437       71,561  

Long-Term Operating Lease Liabilities

    18,193       --  

Other Noncurrent Liabilities

    30,833       24,326  

Deferred Credits

               

Deferred Income Taxes

    131,941       120,976  

Deferred Tax Credits

    18,626       19,974  

Regulatory Liabilities

    239,906       226,469  

Other

    2,885       1,895  

Total Deferred Credits

    393,358       369,314  

Capitalization

               

Long-Term Debt—Net

    689,581       590,002  

Cumulative Preferred Shares

    --       --  

Cumulative Preference Shares

    --       --  

Common Equity

               

Common Shares, Par Value $5 Per Share

    200,788       198,324  

Premium on Common Shares

    364,790       344,250  

Retained Earnings

    222,341       190,433  

Accumulated Other Comprehensive Loss

    (6,437 )     (4,144 )

Total Common Equity

    781,482       728,863  

Total Capitalization

    1,471,063       1,318,865  

Total

  $ 2,273,595     $ 2,052,517  

 

19

 

 

Otter Tail Corporation

Consolidated Statements of Cash Flows

in thousands

(not audited)

 

   

For the Year Ended December 31,

 
   

2019

   

2018

 

Cash Flows from Operating Activities

               

Net Income

  $ 86,847     $ 82,345  

Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:

               

Depreciation and Amortization

    78,086       74,666  

Deferred Tax Credits

    (1,348 )     (1,405 )

Deferred Income Taxes

    11,507       19,224  

Change in Deferred Debits and Other Assets

    (15,502 )     941  

Discretionary Contribution to Pension Plan

    (22,500 )     (20,000 )

Change in Noncurrent Liabilities and Deferred Credits

    33,534       (2,414 )

Allowance for Equity/Other Funds Used During Construction

    (2,553 )     (2,194 )

Stock Compensation Expense – Equity Awards

    5,958       4,441  

Other—Net

    76       --  

Cash (Used for) Provided by Current Assets and Current Liabilities:

               

Change in Receivables

    (1,860 )     (8,559 )

Change in Inventories

    8,419       (18,236 )

Change in Other Current Assets

    2,919       (754 )

Change in Payables and Other Current Liabilities

    (171 )     14,997  

Change in Interest Payable and Income Taxes Receivable

    1,625       396  

Net Cash Provided by Operating Activities

    185,037       143,448  
                 

Cash Flows from Investing Activities

               

Capital Expenditures

    (207,365 )     (105,425 )

Proceeds from Disposal of Noncurrent Assets

    8,519       2,378  

Cash Used for Investments and Other Assets

    (10,626 )     (4,372 )

Net Cash Used in Investing Activities

    (209,472 )     (107,419 )
                 

Cash Flows from Financing Activities

               

Change in Checks Written in Excess of Cash

    (2,814 )     (345 )

Net Short-Term Debt Repayments

    (12,599 )     (93,772 )

Proceeds from Issuance of Common Stock

    20,338       --  

Common Stock Issuance Expenses

    (577 )     (108 )

Payments for Retirement of Capital Stock

    (2,730 )     (3,011 )

Proceeds from Issuance of Long-Term Debt

    100,000       100,000  

Short-Term and Long-Term Debt Issuance Expenses

    (950 )     (761 )

Payments for Retirement of Long-Term Debt

    (172 )     (189 )

Dividends Paid

    (55,723 )     (53,198 )

Net Cash Provided by (Used in) Financing Activities

    44,773       (51,384 )

Net Change in Cash and Cash Equivalents

    20,338       (15,355 )

Cash and Cash Equivalents at Beginning of Period

    861       16,216  

Cash and Cash Equivalents at End of Period

  $ 21,199     $ 861  

 

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