Otter Tail stock on upswingPublished 10:48am Wednesday, February 13, 2013
Otter Tail Corporation’s recent sale of Shoremaster and sales in 2012 of two other companies is already having a positive effect on its bottom line.
Last week, Otter Tail corporation reported increases in revenues from its continuing operations, and a reduction in net losses from $13.2 million in 2011 to $5.3 million in 2012, for the year ending Dec. 31, 2012.
Otter Tail Corporation was trading this morning at a price of $27.30 per share, which is its highest level since falling from a high of $43.39 in October of 2008. Otter Tail’s stock had dipped to as low as $18.40 per share in September 2011, and was at $21.82 in February of 2012.
“We are pleased to have ended the year with a good quarter,” said Otter Tail Corporation President and CEO Jim McIntyre. “2012 was a year of transformation. We made significant progress and our company is stronger with enhanced financial stability, more predictable growth, and a lower risk profile.”
Otter Tail Corporation, whose main subsidiary is Otter Tail Power, diversified its utilities holdings in the 1990s into a variety of companies.
Otter Tail Corporation stock prices hit an all-time low in 2011, and the company started selling its non-energy companies involved in food processing, trucking, sports equipment, and most recently ShoreMaster, producer of commercial and residential waterfront equipment in Fergus Falls.
The strategy is beginning to work.
“In 2012, we completed the sales of DMS, our health services company, and DMI, our wind tower manufacturer,” said McIntyre. “We took steps to further strengthen our capital structure and lower our borrowing expense by retiring our $50 million, 8.89 percent Senior Unsecured Note, in connection with the sale of DMI.”
According to McIntyre, the sale of DMI will help the company fund growth prospects in electric segments.
“We continued to invest in key electric utility opportunities, such as the CapX2020 transmission projects currently under way, the environmental upgrades at Big Stone Plant, and planned Midwest Independent Transmission System Operator (MISO) transmission projects,” said McIntyre. “These projects, which have already received certain regulatory approvals, will generate significant growth for our Electric segment over the next several years.”
The company relates that a more focused, disciplined approach coupled with improving consumer markets, is benefitting financial and operating results.
“Our goal is to deliver annual growth in earnings per share between four to seven percent over the next several years,” said McIntyre.
The corporation is targeting approximately 75-85 percent of earnings to come from core electric business and 15-25 percent to come from our remaining portfolio of companies, and expects 2013 earnings per share from continuing operations to be in a range of $1.30 to $1.55.