Otter Tail Corporation · NASDAQ:OTTR
Otter Tail — Investor Presentation (June 2003)
36 slides from Otter Tail's investor presentation, June 2003
Slide 1: Capable Growing Connected
CAPABLE S OTTERTAIL W CORPORATION GROWING CONNECTEDO
Slide 2: Topics
Topics Who We Are Vision, Mission and Values Strategy and Business Model How We Operate Financial and Stock Performance 2
Slide 3: Forward-Looking Information
Forward-Looking Information Except for historical information, all other information provided in this presentation consists of “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These “forward- looking statements” are subject to risks and uncerta
Slide 4: Otter Tail Corporation business segments
OTTERTAIL CORPORATION MANUFACTURING Better Through Design VINYLTECH Vil PVC ePIPE OTHER BUSINESSES MIDWEST CONSTRUCTION SERVICES, INC.
Slide 5: Otter Tail Corporation Vision
Otter Tail Corporation Vision Creating value and growth through acquisition, long-term ownership and decentralized operation of diverse businesses. 5
Slide 6: Mission
Mission To create value for: Customers Shareholders Employees 6
Slide 7: Values
Values z We will be fair, honest and ethical. z We will attract and retain talented people. z We will expect decentralized decision making. z We will be respectful of others. z We will be resourceful and entrepreneurial. z We will build relationships. z We will be fiscally responsible. z We will cel
Slide 8: Strategy and Business Model
Strategy and Business Model 8
Slide 9: Strategy
Strategy z Electric Segment – Stable Base z Other Segments – Growth z Financial Goals z Stock Positioning z Dividend Policy z Remain Independent 9
Slide 10: Otter Tail Corporation business segments
OTTERTAIL CORPORATION MANUFACTURING Better Through Design VINYLTECH Vil PVC ePIPE OTHER BUSINESSES MIDWEST CONSTRUCTION SERVICES, INC.
Slide 11: Revenue Growth (in millions)
Revenue Growth (in millions) $800 $700 $600 $500 347 403 $400 324 206 231 $300 172 189 122 $200 262 307 307 $100 204 199 205 228 234 $- 1995 1996 1997 1998 1999 2000 2001 2002 Electric Non-electric 11
Slide 12: Earnings Per Share Growth
Earnings Per Share Growth $2.00 0.34 $1.50 0.43 0.56 0.50 0.27 0.32 0.30 0.43 $1.00 0.18 1.09 1.25 1.23 $0.50 0.99 0.96 0.97 1.06 0.98 $- 1995 1996 1997 1998 1999 2000 2001 2002 Electric Non-electric Radio station Gain 12
Slide 13: Dividend Payout Ratio vs Dividends Per Share
Dividend Payout Ratio vs Dividends Per Share 90% 1.2 80% Dividend payout ratio 1 Dividends per share 70% 60% 0.8 50% 0.6 40% 30% 0.4 20% 0.2 10% 0% 0 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 Dividend Payout ratio Dividends Per share 13
Slide 14: Bright Future
Bright Future z Established/Scalable Strategy z Track Record of Execution z Proven Management Team 14
Slide 15: How We Operate
S OTTERTAIL W CORPORATION How We Operate
Slide 16: Business Model - Diversification
Business Model - Diversification z Diversification Benefits – Promotes More Predictable Growth – Reduces Effects of Segment Downturns and Individual Company Performance Issues – Increases Investment Opportunities z Managing Diversification – Decentralized with Discipline – Decentralized – z Operatin
Slide 17: Business Model - Diversification
Business Model - Diversification z Corporate Role in Diversification – Capital Allocation – Provide Value – the 4 C’s z Commodities (Finance) – Centralize and Use Consolidated Buying Power z Compliance (Legal, Regulatory, Safety) – Setting the Standards z Consulting – (HR, IT, Risk Management, Legal
Slide 18: Acquisition
Acquisition z Criteria – Proven Management Team Remains After the Acquisition – Otter Tail Corporation Becomes the Sole Owner – Small or Middle-market Sized Company ($20 - $200 Million in Revenues) – Immediate Earnings and Future Growth Potential – Products and Services Primarily Not Consumer/Retail
Slide 19: Financial Performance
S OTTERTAIL W CORPORATION Financial Performance
Slide 20: Operating Revenues
Operating Revenues 2002 Revenues 2001 Revenues Electric Other Other Electric 43% 12% 12% 47% Manuf Manuf 20% 19% Health Plastics Health Plastics 13% 12% 12% 10% 20
Slide 21: Net Earnings
Net Earnings 2002 Net Earnings 2001 Net Earnings Other Other Health Manuf 4% Manuf (1%) 10% Health 15% 10% 10% Plastics Plastics (4%) Electric Electric 12% 69% 75% 21
Slide 22: Operating Revenues
Operating Revenues Three Months March 2003 Three Months March 2002 Other Electric Electric 47% Other 47% 12% 10% Manuf Manuf 18% 20% Health Plastics Health Plastics 11% 12% 13% 10% 22
Slide 23: Net Earnings
Net Earnings Three Months March 2003 Three Months March 2002 Other Other (19%) (17%) Manuf Health Manuf 4% 10% 0% Health 14% Plastics 15% Plastics Electric Electric 10% 85% 99% 23
Slide 24: Electric Segment
Electric Segment z Do Business in Minnesota, North Dakota and South Dakota z Performance Based Regulation in North Dakota z Last Rate Case in 1986 z Constructed 146-mile Transmission Line in North Central North Dakota Net Revenue ($ millions) Net Income ($ millions) 307.0 307.0 $300 262.3 $60 $250 $
Slide 25: Plastics Segment
Plastics Segment z 2001: Departure from Historical Cycles z Extremely Sensitive to Economic Conditions z 2002: Record Production and Sales z Consolidation and Efficiencies Realized z Completed Construction of a New Plant Located in Hampton, IA for PE Corrugated Pipe Net Revenue ($ millions) Net Inco
Slide 26: Health Services
Health Services z Two Parts – DMS Health Technologies and DMS Imaging. z DMS Health Technologies – A Record Year z DMS Imaging - Continued Growth – Now Operates Nationally with over 450 Healthcare Providers z 1st Quarter 2003 Results Net Revenue ($ millions) Net Income ($ millions) 93.4 79.1 $7 66.8
Slide 27: Manufacturing Operations
Manufacturing Operations z Tough Economic Environment z Continued Growth Initiatives – Plant Expansions at BTD Manufacturing and DMI z Consolidation and Efficiencies Realized z Added New Manufacturing Platform – Waterfront Equipment Net Revenue ($ millions) Net Income ($ millions) 142.4 123.4 $14 $1
Slide 28: Other Business Operations
Other Business Operations z Steady Performance from Midwest Information Systems z EW Wylie Struggles with the Economy z Consolidation and Efficiencies Realized with Midwest Construction Services z Energy Services Downsized to be Consistent with Current Needs Net Revenue ($ millions) Net income ($ mi
Slide 29: Capital Expenditures (in millions)
Capital Expenditures (in millions) 80 75.5 70 60 52 50 46 40 30 20.9 20 13.6 10 0 2000 2001 2002 3 mnths 3 mnths 03 02 29
Slide 30: Long-term Interest Bearing Debt To Total Capitalization
Long-term Interest Bearing Debt To Total Capitalization 50.00% 46.5% 45.9% 41.4% 44.7% 44.5% 40.00% 30.00% 20.00% 10.00% 0.00% 2000 2001 2002 3 mnths 03 3 mnths 02 30
Slide 31: Stock Performance
S OTTERTAIL W CORPORATION Stock Performance
Slide 32: Stock Return and Performance
Stock Return and Performance Growth of $1,000 investment in OTTR Common Stock made Dec. 31, 1992 $3,000 $2,614 $2,500 $2,000 $1,616 $1,477 $1,500 $1,066 $1,000 $500 $- 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 32
Slide 33: OTTR vs Stock Market Indices 2002 Performance
OTTR vs Stock Market Indices 2002 Performance 0% -5% -10% -7.70% -15% -15.40% -16.20% -20% -25% -21.90% -26.80% -30% -31.50% -35% DJU S&P Util. OTTR PHLX NASDAQ EEI 33
Slide 34: Dividend History
Dividend History Increased Dividends since 1975 Paid Dividends since 1938 1938 1950 1960 1970 1980 1990 2000 2002 34
Slide 35: Company Stock Data
Company Stock Data z Dividend Yield – 3.8% z Current Annual Dividend Rate - $1.08 z Market/Book – 2.3x z P/E Ratio – 15.6x z Closing Price on May 29, 2003 - $28 z Market Capitalization – $ 721 million z Average Daily Trading Volume – 30,044 z High-Low Price Range (52 weeks) - $22.82 – $32.00 z Debt
Slide 36: Capable Growing Connected
CAPABLE S OTTERTAIL W CORPORATION GROWING CONNECTEDO