Otter Tail Corp. earnings fall short

By Jeff Hage (Contact) | The Daily Journal

Published Wednesday, May 7, 2008

Otter Tail Corporation didn’t have the first quarter it anticipated.

The corporation revised its 2008 earnings per share guidance to be in the range of $1.75 to $2.00 from its previously announced range of $1.85 to $2.10.

The announcement came after Otter Tail Corporation announced its first quarter earnings.

The company reported consolidated net income of $8.2 million for the first quarter of 2008 compared with $10.4 million for the first quarter of 2007. Those figures are based on first quarter revenues of $300.2 million.

"After two consecutive years of record earnings from our nonelectric businesses, the first quarter of 2008 presented challenges that caused results to fall below our expectations," John Erickson, president and chief executive officer of Otter Tail Corporation, said in a statement.

"Although some of our companies fell short of expectations in the first quarter, we still anticipate solid performance in 2008 for the corporation overall. Given the first quarter results and uncertainty with economic conditions for the balance of the year, we are revising earnings per share guidance to a range of $1.75 to $2.00 from our initial range of $1.85 to $2.10."

Erickson noted that quarterly results in health services and manufacturing were disappointing. "Results in health services were primarily affected by lower than expected asset utilization rates in the imaging business. The lower manufacturing results were primarily due to a significant adjustment in the profitability of a wind tower order at DMI Industries' Ontario plant and from lower margins at ShoreMaster. The remaining manufacturing businesses produced solid results, and we expect DMI — and our manufacturing segment as a whole — will have record earnings in 2008."

Erickson pointed to positive performance within the corporation's food ingredient processing segment and at the electric utility.

"Our diversification strategy allows us to balance risk more effectively and weather economic swings within specific industries, and there were definite achievements this quarter. Earnings from our food ingredient processing segment were higher than the same quarter a year ago, continuing a trend over the last six quarters. Otter Tail Power Company showed improvement over the prior year, due in part to colder weather and an interim rate increase in Minnesota."