Up Close to the Otter Tail: Fool by Numbers

On Oct. 30, mini-conglomerate Otter Tail (Nasdaq: OTTR  ) released third-quarter 2006 earnings for the period ended Sept. 30, 2006.

  • The lower earnings came mainly from a slow performance from the mainstay electric generation segment. Impressive operating results from plastics, manufacturing, and "other operations" (such as flatbed trucking, natural gas marketing, and electrical construction) couldn't quite overcome weaknesses in the other sectors.
  • The Midwest Independent Transmission System Operator (MISO) power exchange system -- through which Otter Tail Power sells its generated electricity -- has been in operation for nearly two years now, becoming more efficient in the process. That's a major driver of the operating margin drop, because capacity is more efficiently managed across the selling region and Otter Tail has fewer unexpected shortfalls to fill.
  • The company continues to operate off a cash-poor and leverage-rich balance sheet, but at least there's some cash on the books these days. I'd love to see the cash flow statement, but no such luck this time.

(Figures in thousands, except per-share data)

Income Statement Highlights

Avg. Est.

Q3 2006

Q3 2005

Change

Sales

$279,000

$280,542

$261,187

7.4%

Net Profit

--

$13,476

$19,168

(29.7%)

EPS

$0.45

$0.45

$0.65

(30.8%)

Diluted Shares

29804.9

29441.4

1.2%



Get back to basics with a look at the income statement.

Margin Checkup

Q3 2006

Q3 2005

Change*

Gross Margin

33.85%

28.83%

5.02

Operating Margin

8.62%

12.82%

(4.20)

Net Margin

4.80%

7.34%

(2.54)

*Expressed in percentage points.

Margins are the earnings engine. See how they work.

Balance Sheet Highlights

Assets

Q3 2006

Q3 2005

Change

Cash + ST Invest.

$7,999

$0.0

N/A

Accounts Rec.

$140,020

$132,612

5.6%

Inventory

$106,601

$83,361

27.9%


Liabilities

Q3 2006

Q3 2005

Change

Accounts Payable

$115,118

$74,324

54.9%

Long-Term Debt

$256,223

$258,981

(1.1%)



Learn the ways of the balance sheet.

Segment Scrutiny

Otter Tail is so diverse that it's almost impossible to discuss the company without mentioning the various divisions. Here's a close-up look at their individual performances.

Revenues

Q3 2006

Q3 2005

Change

Electrics

71,206

85,770

(17%)

Plastics

45,941

45,462

1.1%

Manufacturing

76,667

59,803

28.2%

Health Services

35,432

30,653

15.6%

Food Ingredient Processing

11,474

9,808

17%

Other Operations

40,739

30,805

32.2%



Operating Income

Q3 2006

Q3 2005

Change

Electrics

11,647

25,788

(54.8%)

Plastics

7,792

5,175

50.6%

Manufacturing

5,944

2,739

117%

Health Services

749

2,087

(64.1%)

Food Ingredient Processing

(1,602)

558

N/A

Other Operations

(360)

(2,868)

87.4%



Cash Flow Highlights

No cash flow statement provided at this time. Bummer, dude.

Find out why Fools always follow the money.

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Related Foolishness:

Otter Tail is a Motley Fool Hidden Gems recommendation. Find more overlooked treasures with a free 30-day trial to Tom Gardner's small-cap newsletter service.

Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so checkFool.comfor more of our in-depth discussion of what the numbers mean.

At the time of publication, Fool contributorAnders Bylundhad no position in any company mentioned. Fool rules arehere.


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