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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒ Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 2022 or
☐ Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Commission File Number 0-53713
OTTER TAIL CORPORATION
(Exact name of registrant as specified in its charter)
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Minnesota (State or other jurisdiction of incorporation or organization) | 27-0383995 (I.R.S. Employer Identification No.) |
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215 South Cascade Street, Box 496, Fergus Falls, Minnesota (Address of principal executive offices) | 56538-0496 (Zip Code) |
Registrant's telephone number, including area code: 866-410-8780
Securities registered pursuant to Section 12(b) of the Act:
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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 |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
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| Large Accelerated Filer ☑ | | Accelerated Filer ☐ | | |
| Non-Accelerated Filer ☐ | | Smaller Reporting Company ☐ | | 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 ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑
Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date:
41,630,952 Common Shares ($5 par value) as of October 25, 2022.
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| Description | Page |
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ITEM 1. | | |
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ITEM 2. | | |
ITEM 3. | | |
ITEM 4. | | |
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ITEM 1. | | |
ITEM 1A. | | |
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ITEM 6. | | |
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The following abbreviations or acronyms are used in the text. | | | | | | | | | | | | | | |
AGI | Advanced Grid Infrastructure Rider | | OTC | Otter Tail Corporation |
ARP | Alternative Revenue Program | | OTP | Otter Tail Power Company |
BTD | BTD Manufacturing, Inc. | | NDDEQ | North Dakota Department of Environmental Quality |
CIP | Conservation Improvement Program | | PIR | Phase-In Rider |
EAR | Energy Adjustment Rider | | PSLRA | Private Securities Litigation Reform Act of 1995 |
EPA | Environmental Protection Agency | | PTC | Production Tax Credits |
ESSRP | Executive Survivor and Supplemental Retirement Plan | | PVC | Polyvinyl chloride |
FERC | Federal Energy Regulatory Commission | | RHR | Regional Haze Rule |
GCR | Generation Cost Recovery Rider | | ROE | Return on equity |
ISO | Independent System Operator | | RRR | Renewable Resource Rider |
IRP | Integrated Resource Plan | | SEC | Securities and Exchange Commission |
kwh | kilowatt-hour | | SOFR | Secured Overnight Funds Rate |
Merricourt | Merricourt Wind Energy Center | | T.O. Plastics | T.O. Plastics, Inc. |
MISO | Midcontinent Independent System Operator, Inc. | | TCR | Transmission Cost Recovery Rider |
MPUC | Minnesota Public Utilities Commission | | | |
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FORWARD-LOOKING INFORMATION |
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the "PSLRA"). When used in this Form 10-Q and in future filings by Otter Tail Corporation (the "Company") with the Securities and Exchange Commission (SEC), in the Company’s press releases and in oral statements, words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” "future," "goal," “intend,” "likely," “may,” “outlook,” “plan,” “possible,” “potential,” "probable," "projected," “should,” "target," “will,” “would” or similar expressions are intended to identify forward-looking statements within the meaning of the PSLRA. Such statements are based on current expectations and assumptions and entail various risks and uncertainties that could cause actual results to differ materially from those expressed in such forward-looking statements. The Company’s risks and uncertainties include, among other things, uncertainty of the impact and duration of the COVID-19 pandemic, uncertainty of future investments and capital expenditures, rate base levels and rate base growth, long-term investment risk, seasonal weather patterns and extreme weather events, counterparty credit risk, future business volumes with key customers, reductions in our credit ratings, our ability to access capital markets on favorable terms, assumptions and costs relating to funding our employee benefit plans, our subsidiaries’ ability to make dividend payments, cyber security threats or data breaches, the impact of government legislation and regulation including foreign trade policy and environmental laws and regulations, the impact of climate change including compliance with legislative and regulatory changes to address climate change, operational and economic risks associated with our electric generating and manufacturing facilities, risks associated with energy markets, the availability and pricing of resource materials, inflation rates, attracting and maintaining a qualified and stable workforce, expectations regarding regulatory proceedings, and changing macroeconomic and industry conditions. These and other risks and uncertainties are more fully described in our filings with the SEC, including our most recently filed Annual Report on Form 10-K. Forward-looking statements speak only as of the date they are made, and we expressly disclaim any obligation to update any forward-looking information. PART I. FINANCIAL INFORMATION
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ITEM 1. | FINANCIAL STATEMENTS |
OTTER TAIL CORPORATION
CONSOLIDATED BALANCE SHEETS (unaudited) | | | | | | | | | | | |
(in thousands, except share data) | September 30, 2022 | | December 31, 2021 |
| | | |
Assets | | | |
Current Assets | | | |
Cash and Cash Equivalents | $ | 72,987 | | | $ | 1,537 | |
Receivables, net of allowance for credit losses | 193,797 | | | 174,953 | |
Inventories | 146,376 | | | 148,490 | |
Regulatory Assets | 29,921 | | | 27,342 | |
Other Current Assets | 17,412 | | | 17,032 | |
Total Current Assets | 460,493 | | | 369,354 | |
Noncurrent Assets | | | |
Investments | 52,966 | | | 56,690 | |
Property, Plant and Equipment, net of accumulated depreciation | 2,186,643 | | | 2,124,605 | |
Regulatory Assets | 116,593 | | | 125,508 | |
Intangible Assets, net of accumulated amortization | 8,218 | | | 9,044 | |
Goodwill | 37,572 | | | 37,572 | |
Other Noncurrent Assets | 35,419 | | | 32,057 | |
Total Noncurrent Assets | 2,437,411 | | | 2,385,476 | |
Total Assets | $ | 2,897,904 | | | $ | 2,754,830 | |
| | | |
Liabilities and Shareholders' Equity | | | |
Current Liabilities | | | |
Short-Term Debt | $ | — | | | $ | 91,163 | |
Current Maturities of Long-Term Debt | — | | | 29,983 | |
Accounts Payable | 121,995 | | | 135,089 | |
Accrued Salaries and Wages | 27,454 | | | 31,704 | |
Accrued Taxes | 25,635 | | | 19,245 | |
Regulatory Liabilities | 21,114 | | | 24,844 | |
Other Current Liabilities | 45,655 | | | 55,671 | |
Total Current Liabilities | 241,853 | | | 387,699 | |
Noncurrent Liabilities | | | |
Pension Benefit Liability | 50,489 | | | 73,973 | |
Other Postretirement Benefits Liability | 67,352 | | | 66,481 | |
Regulatory Liabilities | 240,545 | | | 234,430 | |
Deferred Income Taxes | 212,838 | | | 188,268 | |
Deferred Tax Credits | 16,102 | | | 16,661 | |
Other Noncurrent Liabilities | 60,942 | | | 62,527 | |
Total Noncurrent Liabilities | 648,268 | | | 642,340 | |
Commitments and Contingencies (Note 9) | | | |
Capitalization | | | |
Long-Term Debt, net of current maturities | 823,760 | | | 734,014 | |
Shareholders' Equity | | | |
Common Shares: 50,000,000 shares authorized, $5 par value; 41,630,952 and 41,551,524 outstanding at September 30, 2022 and December 31, 2021 | 208,155 | | | 207,758 | |
Additional Paid-In Capital | 422,448 | | | 419,760 | |
Retained Earnings | 560,398 | | | 369,783 | |
Accumulated Other Comprehensive Loss | (6,978) | | | (6,524) | |
Total Shareholders' Equity | 1,184,023 | | | 990,777 | |
Total Capitalization | 2,007,783 | | | 1,724,791 | |
Total Liabilities and Shareholders' Equity | $ | 2,897,904 | | | $ | 2,754,830 | |
See accompanying notes to consolidated financial statements.
OTTER TAIL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (unaudited) | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
(in thousands, except per-share amounts) | 2022 | | 2021 | | 2022 | | 2021 |
| | | | | | | |
Operating Revenues | | | | | | | |
Electric | $ | 142,747 | | | $ | 118,775 | | | $ | 404,112 | | | $ | 348,629 | |
Product Sales | 241,109 | | | 197,519 | | | 754,688 | | | 514,983 | |
Total Operating Revenues | 383,856 | | | 316,294 | | | 1,158,800 | | | 863,612 | |
Operating Expenses | | | | | | | |
Electric Production Fuel | 24,972 | | | 17,698 | | | 54,538 | | | 44,576 | |
Electric Purchased Power | 19,913 | | | 9,878 | | | 64,604 | | | 40,273 | |
Electric Operating and Maintenance Expenses | 39,799 | | | 36,465 | | | 126,460 | | | 114,615 | |
Cost of Products Sold (excluding depreciation) | 139,361 | | | 134,212 | | | 443,586 | | | 358,767 | |
Other Nonelectric Expenses | 16,524 | | | 16,224 | | | 50,981 | | | 45,587 | |
Depreciation and Amortization | 22,716 | | | 22,815 | | | 69,829 | | | 68,109 | |
Electric Property Taxes | 4,438 | | | 4,474 | | | 13,304 | | | 13,136 | |
Total Operating Expenses | 267,723 | | | 241,766 | | | 823,302 | | | 685,063 | |
Operating Income | 116,133 | | | 74,528 | | | 335,498 | | | 178,549 | |
Other Income and Expense | | | | | | | |
Interest Charges | 9,259 | | | 9,648 | | | 27,198 | | | 28,601 | |
Nonservice Cost Components of Postretirement Benefits | (52) | | | 505 | | | (824) | | | 1,511 | |
Other Income (Expense), net | (174) | | | 203 | | | (802) | | | 2,095 | |
Income Before Income Taxes | 106,752 | | | 64,578 | | | 308,322 | | | 150,532 | |
Income Tax Expense | 22,513 | | | 11,824 | | | 66,143 | | | 25,380 | |
Net Income | $ | 84,239 | | | $ | 52,754 | | | $ | 242,179 | | | $ | 125,152 | |
| | | | | | | |
Weighted-Average Common Shares Outstanding: | | | | | | | |
Basic | 41,600 | | | 41,504 | | | 41,582 | | | 41,487 | |
Diluted | 41,974 | | | 41,869 | | | 41,930 | | | 41,795 | |
Earnings Per Share: | | | | | | | |
Basic | $ | 2.02 | | | $ | 1.27 | | | $ | 5.82 | | | $ | 3.02 | |
Diluted | $ | 2.01 | | | $ | 1.26 | | | $ | 5.78 | | | $ | 2.99 | |
See accompanying notes to consolidated financial statements.
OTTER TAIL CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited) | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
(in thousands) | 2022 | | 2021 | | 2022 | | 2021 |
| | | | | | | |
Net Income | $ | 84,239 | | | $ | 52,754 | | | $ | 242,179 | | | $ | 125,152 | |
Other Comprehensive Income (Loss): | | | | | | | |
Unrealized Loss on Available-for-Sale Securities, net of tax benefit of $46, $7, $127, and $27 | (171) | | | (26) | | | (476) | | | (101) | |
Pension and Other Postretirement Benefits, net of tax expense of $(37), $(51), $(8), and $(154) | 106 | | | 146 | | | 22 | | | 437 | |
Total Other Comprehensive Income (Loss) | (65) | | | 120 | | | (454) | | | 336 | |
Total Comprehensive Income | $ | 84,174 | | | $ | 52,874 | | | $ | 241,725 | | | $ | 125,488 | |
See accompanying notes to consolidated financial statements.
OTTER TAIL CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (unaudited) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(in thousands, except common shares outstanding) | Common Shares Outstanding | | Par Value, Common Shares | | Additional Paid-In Capital | | Retained Earnings | | Accumulated Other Comprehensive Income (Loss) | | Total Shareholders' Equity |
| | | | | | | | | | | |
Balance, June 30, 2022 | 41,630,799 | | | $ | 208,154 | | | $ | 421,951 | | | $ | 493,351 | | | $ | (6,913) | | | $ | 1,116,543 | |
| | | | | | | | | | | |
Stock Issued Under Share-Based Compensation Plans, net of shares withheld for employee taxes | 153 | | | 1 | | | (1) | | | — | | | — | | | — | |
Stock Issued Under Dividend Reinvestment and Stock Purchase Plans, net of expenses and repurchased shares | — | | | — | | | (132) | | | — | | | — | | | (132) | |
Net Income | — | | | — | | | — | | | 84,239 | | | — | | | 84,239 | |
Other Comprehensive Loss | — | | | — | | | — | | | — | | | (65) | | | (65) | |
Stock Compensation Expense | — | | | — | | | 630 | | | — | | | — | | | 630 | |
Common Dividends ($0.4125 per share) | — | | | — | | | — | | | (17,192) | | | — | | | (17,192) | |
Balance, September 30, 2022 | 41,630,952 | | | $ | 208,155 | | | $ | 422,448 | | | $ | 560,398 | | | $ | (6,978) | | | $ | 1,184,023 | |
| | | | | | | | | | | |
Balance, June 30, 2021 | 41,538,709 | | | $ | 207,694 | | | $ | 417,870 | | | $ | 297,850 | | | $ | (8,291) | | | $ | 915,123 | |
| | | | | | | | | | | |
Stock Issued Under Share-Based Compensation Plans, net of shares withheld for employee taxes | 1,275 | | | 6 | | | (132) | | | — | | | — | | | (126) | |
| | | | | | | | | | | |
Net Income | — | | | — | | | — | | | 52,754 | | | — | | | 52,754 | |
Other Comprehensive Income | — | | | — | | | — | | | — | | | 120 | | | 120 | |
Stock Compensation Expense | — | | | — | | | 830 | | | — | | | — | | | 830 | |
Common Dividends ($0.39 per share) | — | | | — | | | — | | | (16,219) | | | — | | | (16,219) | |
Balance, September 30, 2021 | 41,539,984 | | | $ | 207,700 | | | $ | 418,568 | | | $ | 334,385 | | | $ | (8,171) | | | $ | 952,482 | |
| | | | | | | | | | | |
Balance, December 31, 2021 | 41,551,524 | | | $ | 207,758 | | | $ | 419,760 | | | $ | 369,783 | | | $ | (6,524) | | | $ | 990,777 | |
| | | | | | | | | | | |
Stock Issued Under Share-Based Compensation Plans, net of shares withheld for employee taxes | 79,428 | | | 397 | | | (3,321) | | | — | | | — | | | (2,924) | |
Stock Issued Under Dividend Reinvestment and Stock Purchase Plans, net of expenses and repurchased shares | — | | | — | | | (132) | | | — | | | — | | | (132) | |
Net Income | — | | | — | | | — | | | 242,179 | | | — | | | 242,179 | |
Other Comprehensive Loss | — | | | — | | | — | | | — | | | (454) | | | (454) | |
Stock Compensation Expense | — | | | — | | | 6,141 | | | — | | | — | | | 6,141 | |
Common Dividends ($1.2375 per share) | — | | | — | | | — | | | (51,564) | | | — | | | (51,564) | |
Balance, September 30, 2022 | 41,630,952 | | | $ | 208,155 | | | $ | 422,448 | | | $ | 560,398 | | | $ | (6,978) | | | $ | 1,184,023 | |
| | | | | | | | | | | |
Balance, December 31, 2020 | 41,469,879 | | | $ | 207,349 | | | $ | 414,246 | | | $ | 257,878 | | | $ | (8,507) | | | $ | 870,966 | |
| | | | | | | | | | | |
Stock Issued Under Share-Based Compensation Plans, net of shares withheld for employee taxes | 70,105 | | | 351 | | | (1,965) | | | — | | | — | | | (1,614) | |
Stock Issued Under Dividend Reinvestment and Stock Purchase Plans, net of expenses and repurchased shares | — | | | — | | | (67) | | | — | | | — | | | (67) | |
Net Income | — | | | — | | | — | | | 125,152 | | | — | | | 125,152 | |
Other Comprehensive Income | — | | | — | | | — | | | — | | | 336 | | | 336 | |
Stock Compensation Expense | — | | | — | | | 6,354 | | | — | | | — | | | 6,354 | |
Common Dividends ($1.17 per share) | — | | | — | | | — | | | (48,645) | | | — | | | (48,645) | |
Balance, September 30, 2021 | 41,539,984 | | | $ | 207,700 | | | $ | 418,568 | | | $ | 334,385 | | | $ | (8,171) | | | $ | 952,482 | |
See accompanying notes to consolidated financial statements.
OTTER TAIL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) | | | | | | | | | | | |
| Nine Months Ended September 30, |
(in thousands) | 2022 | | 2021 |
| | | |
Operating Activities | | | |
Net Income | $ | 242,179 | | | $ | 125,152 | |
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: | | | |
Depreciation and Amortization | 69,829 | | | 68,109 | |
Deferred Tax Credits | (558) | | | (558) | |
Deferred Income Taxes | 23,648 | | | 18,835 | |
Discretionary Contribution to Pension Plan | (20,000) | | | (10,000) | |
Allowance for Equity Funds Used During Construction | (938) | | | (427) | |
Stock Compensation Expense | 6,141 | | | 6,354 | |
Other, Net | 5,477 | | | (2,747) | |
Changes in Operating Assets and Liabilities: | | | |
Receivables | (18,845) | | | (64,800) | |
Inventories | 3,632 | | | (22,450) | |
Regulatory Assets | 170 | | | 5,301 | |
Other Assets | 1,789 | | | (18,708) | |
Accounts Payable | (10,681) | | | 30,921 | |
Accrued and Other Liabilities | (13,970) | | | 12,027 | |
Regulatory Liabilities | (1,208) | | | 2,350 | |
Pension and Other Postretirement Benefits | 1,308 | | | 5,393 | |
Net Cash Provided by Operating Activities | 287,973 | | | 154,752 | |
Investing Activities | | | |
Capital Expenditures | (123,227) | | | (117,312) | |
Proceeds from Disposal of Noncurrent Assets | 3,803 | | | 5,819 | |
Cash Used for Investments and Other Assets | (8,132) | | | (5,591) | |
Net Cash Used in Investing Activities | (127,556) | | | (117,084) | |
Financing Activities | | | |
Net Borrowings (Repayments) on Short-Term Debt | (91,163) | | | 16,860 | |
| | | |
Proceeds from Issuance of Long-Term Debt | 90,000 | | | — | |
Payments for Retirement of Long-Term Debt | (30,000) | | | (169) | |
Dividends Paid | (51,564) | | | (48,645) | |
Payments for Shares Withheld for Employee Tax Obligations | (2,942) | | | (1,633) | |
Other, net | (3,298) | | | (3,972) | |
Net Cash Used in Financing Activities | (88,967) | | | (37,559) | |
Net Change in Cash and Cash Equivalents | 71,450 | | | 109 | |
Cash and Cash Equivalents at Beginning of Period | 1,537 | | | 1,163 | |
Cash and Cash Equivalents at End of Period | $ | 72,987 | | | $ | 1,272 | |
| | | |
| | | |
| | | |
| | | |
| | | |
Supplemental Disclosure of Noncash Investing Activities | | | |
Accrued Property, Plant and Equipment Additions | $ | 12,438 | | | $ | 14,358 | |
See accompanying notes to consolidated financial statements
OTTER TAIL CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
1. Summary of Significant Accounting Policies
Overview
Otter Tail Corporation (OTC) and its subsidiaries (collectively, the "Company", "us", "our" or "we") form a diverse, multi-platform business consisting of a vertically integrated, regulated utility with generation, transmission and distribution facilities complemented by manufacturing businesses providing metal fabrication for custom machine parts and metal components, manufacturing of extruded and thermoformed plastic products, and manufacturing of polyvinyl chloride (PVC) pipe products. We classify our business into three segments: Electric, Manufacturing and Plastics.
Basis of Presentation
The unaudited consolidated financial statements included herein have been prepared pursuant to the rules and regulations of the SEC for interim reporting. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles. In the opinion of management, we have included all adjustments, including normal recurring accruals, necessary for a fair presentation of the consolidated financial statements for the periods presented. The consolidated financial statements and condensed notes thereto should be read in conjunction with the consolidated financial statements and notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021. Because of the seasonality of our businesses and other factors, the earnings for the three and nine months ended September 30, 2022 should not be taken as an indication of earnings for all or any part of the balance of the current year or as an indication of earnings for future years.
Use of Estimates
We use estimates based on the best information available in recording transactions and balances resulting from business operations. As better information becomes available or actual amounts are known, the recorded estimates are revised. Consequently, operating results can be affected by revisions to prior accounting estimates.
Reclassifications
Certain reclassifications of amounts previously reported have been made to the accompanying consolidated statements of shareholders' equity and consolidated statements of cash flows to maintain consistency and comparability between periods presented. The reclassifications had no impact on previously reported shareholders' equity, net cash provided by operating activities, net cash used in investing activities, net cash used in financing activities, or cash and cash equivalents.
2. Segment Information
We classify our business into three segments, Electric, Manufacturing and Plastics, consistent with our business strategy, organizational structure and our internal reporting and review processes used by our chief operating decision maker to make decisions regarding allocation of resources, to assess operating performance and to make strategic decisions.
Certain assets and costs are not allocated to our operating segments. Corporate operating costs include items such as corporate staff and overhead costs, the results of our captive insurance company and other items excluded from the measurement of operating segment performance. Corporate assets consist primarily of cash and cash equivalents, prepaid expenses, investments and fixed assets. Corporate is not an operating segment, rather it is added to operating segment totals to reconcile to consolidated amounts.
Information for each segment and our unallocated corporate costs for the three and nine months ended September 30, 2022 and 2021 are as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended September 30, | | Nine Months Ended September 30, |
(in thousands) | | 2022 | | 2021 | | 2022 | | 2021 |
| | | | | | | | |
Operating Revenue | | | | | | | | |
Electric | | $ | 142,747 | | | $ | 118,775 | | | $ | 404,112 | | | $ | 348,629 | |
Manufacturing | | 98,767 | | | 89,977 | | | 306,921 | | | 250,085 | |
Plastics | | 142,342 | | | 107,542 | | | 447,767 | | | 264,898 | |
Total | | $ | 383,856 | | | $ | 316,294 | | | $ | 1,158,800 | | | $ | 863,612 | |
Net Income (Loss) | | | | | | | | |
Electric | | $ | 24,847 | | | $ | 22,528 | | | $ | 62,938 | | | $ | 55,547 | |
Manufacturing | | 6,219 | | | 4,200 | | | 17,858 | | | 15,290 | |
Plastics | | 55,982 | | | 28,410 | | | 170,788 | | | 60,102 | |
Corporate | | (2,809) | | | (2,384) | | | (9,405) | | | (5,787) | |
Total | | $ | 84,239 | | | $ | 52,754 | | | $ | 242,179 | | | $ | 125,152 | |
The following provides the identifiable assets by segment and corporate assets as of September 30, 2022 and December 31, 2021:
| | | | | | | | | | | |
(in thousands) | September 30, 2022 | | December 31, 2021 |
| | | |
Identifiable Assets | | | |
Electric | $ | 2,347,461 | | | $ | 2,283,776 | |
Manufacturing | 253,819 | | | 251,044 | |
Plastics | 179,925 | | | 162,565 | |
Corporate | 116,699 | | | 57,445 | |
Total | $ | 2,897,904 | | | $ | 2,754,830 | |
3. Revenue
Presented below are our operating revenues to external customers, in total and by amounts arising from contracts with customers and alternative revenue program (ARP) arrangements, disaggregated by revenue source and segment for the three and nine months ended September 30, 2022 and 2021:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
(in thousands) | 2022 | | 2021 | | 2022 | | 2021 |
| | | | | | | |
Operating Revenues | | | | | | | |
Electric Segment | | | | | | | |
Retail: Residential | $ | 35,122 | | | $ | 33,902 | | | $ | 108,883 | | | $ | 100,067 | |
Retail: Commercial and Industrial | 83,022 | | | 60,557 | | | 232,532 | | | 185,376 | |
Retail: Other | 2,033 | | | 1,979 | | | 6,004 | | | 5,687 | |
Total Retail | 120,177 | | | 96,438 | | | 347,419 | | | 291,130 | |
Transmission | 13,156 | | | 13,300 | | | 37,409 | | | 37,085 | |
Wholesale | 7,196 | | | 6,944 | | | 13,196 | | | 14,711 | |
Other | 2,218 | | | 2,093 | | | 6,088 | | | 5,703 | |
Total Electric Segment | 142,747 | | | 118,775 | | | 404,112 | | | 348,629 | |
Manufacturing Segment | | | | | | | |
Metal Parts and Tooling | 84,054 | | | 76,455 | | | 261,923 | | | 210,141 | |
Plastic Products and Tooling | 12,723 | | | 10,198 | | | 36,584 | | | 30,624 | |
Scrap Metal Sales | 1,990 | | | 3,324 | | | 8,414 | | | 9,320 | |
Total Manufacturing Segment | 98,767 | | | 89,977 | | | 306,921 | | | 250,085 | |
Plastics Segment | | | | | | | |
PVC Pipe | 142,342 | | | 107,542 | | | 447,767 | | | 264,898 | |
Total Operating Revenue | 383,856 | | | 316,294 | | | 1,158,800 | | | 863,612 | |
Less: Non-contract Revenues Included Above | | | | | | | |
Electric Segment - ARP Revenues | (548) | | | (33) | | | (7,937) | | | (2,790) | |
Total Operating Revenues from Contracts with Customers | $ | 384,404 | | | $ | 316,327 | | | $ | 1,166,737 | | | $ | 866,402 | |
4. Select Balance Sheet Information
Receivables and Allowance for Credit Losses
Receivables as of September 30, 2022 and December 31, 2021 are as follows:
| | | | | | | | | | | |
(in thousands) | September 30, 2022 | | December 31, 2021 |
| | | |
Receivables | | | |
Trade | $ | 167,480 | | | $ | 142,297 | |
Other | 9,052 | | | 10,591 | |
Unbilled Receivables | 18,813 | | | 23,901 | |
Total Receivables | 195,345 | | | 176,789 | |
Less: Allowance for Credit Losses | (1,548) | | | (1,836) | |
Receivables, net of allowance for credit losses | $ | 193,797 | | | $ | 174,953 | |
The following is a summary of activity in the allowance for credit losses for the nine months ended September 30, 2022 and 2021:
| | | | | | | | | | | |
(in thousands) | 2022 | | 2021 |
| | | |
Beginning Balance, January 1 | $ | 1,836 | | | $ | 3,215 | |
Additions Charged to Expense | 518 | | | 177 | |
Reductions for Amounts Written Off, Net of Recoveries | (806) | | | (1,060) | |
Ending Balance, September 30 | $ | 1,548 | | | $ | 2,332 | |
Inventories
Inventories consist of the following as of September 30, 2022 and December 31, 2021:
| | | | | | | | | | | |
(in thousands) | September 30, 2022 | | December 31, 2021 |
| | | |
Raw Material, Fuel and Supplies | $ | 74,249 | | | $ | 72,882 | |
Work in Process | 33,765 | | | 35,705 | |
Finished Goods | 38,362 | | | 39,903 | |
Total Inventories | $ | 146,376 | | | $ | 148,490 | |
Investments
The following is a summary of our investments as of September 30, 2022 and December 31, 2021:
| | | | | | | | | | | |
(in thousands) | September 30, 2022 | | December 31, 2021 |
| | | |
Corporate-Owned Life Insurance Policies | $ | 37,288 | | | $ | 41,078 | |
Debt Securities | 8,710 | | | 9,202 | |
Money Market Funds | 1,854 | | | 949 | |
Mutual Funds | 5,084 | | | 5,432 | |
Other Investments | 30 | | | 29 | |
Total Investments | $ | 52,966 | | | $ | 56,690 | |
The amount of unrealized gains and losses on debt securities as of September 30, 2022 and December 31, 2021 was not material and no unrealized losses were deemed to be other-than-temporary. In addition, the amount of unrealized gains and losses on marketable equity securities still held as of September 30, 2022 and December 31, 2021 was not material.
Property, Plant and Equipment
Major classes of property, plant and equipment as of September 30, 2022 and December 31, 2021 include:
| | | | | | | | | | | |
(in thousands) | September 30, 2022 | | December 31, 2021 |
| | | |
Electric Plant | | | |
Electric Plant in Service | $ | 2,795,649 | | | $ | 2,758,445 | |
Construction Work in Progress | 130,486 | | | 74,926 | |
Total Gross Electric Plant | 2,926,135 | | | 2,833,371 | |
Less Accumulated Depreciation and Amortization | 850,741 | | | 817,302 | |
Net Electric Plant | 2,075,394 | | | 2,016,069 | |
Nonelectric Property, Plant and Equipment | | | |
Nonelectric Property, Plant and Equipment in Service | 281,584 | | | 273,950 | |
Construction Work in Progress | 20,746 | | | 16,611 | |
Total Gross Nonelectric Property, Plant and Equipment | 302,330 | | | 290,561 | |
Less Accumulated Depreciation and Amortization | 191,081 | | | 182,025 | |
Net Nonelectric Property, Plant and Equipment | 111,249 | | | 108,536 | |
Net Property, Plant and Equipment | $ | 2,186,643 | | | $ | 2,124,605 | |
5. Regulatory Matters
Regulatory Assets and Liabilities
The following presents our current and long-term regulatory assets and liabilities as of September 30, 2022 and December 31, 2021 and the period we expect to recover or refund such amounts:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Period of | | September 30, 2022 | | December 31, 2021 |
(in thousands) | Recovery/Refund | | Current | | Long-Term | | Current | | Long Term |
| | | | | | | | | |
Regulatory Assets | | | | | | | | | |
Pension and Other Postretirement Benefit Plans1 | Various | | $ | 7,791 | | | $ | 110,183 | | | $ | 7,791 | | | $ | 114,961 | |
Alternative Revenue Program Riders2 | Up to 2 years | | 7,528 | | | 1,988 | | | 11,889 | | | 5,564 | |
Asset Retirement Obligations1 | Asset lives | | — | | | 1,323 | | | — | | | 742 | |
| | | | | | | | | |
ISO Cost Recovery Trackers1 | Up to 2 years | | 660 | | | 740 | | | — | | | 1,342 | |
Unrecovered Project Costs1 | Up to 5 years | | 320 | | | 1,063 | | | 2,136 | | | 1,455 | |
Deferred Rate Case Expenses1 | Various | | 412 | | | 848 | | | 607 | | | 1,131 | |
Debt Reacquisition Premiums1 | 10 years | | 25 | | | 222 | | | 100 | | | 240 | |
Fuel Clause Adjustments1 | Up to 1 year | | 13,185 | | | — | | | 4,819 | | | — | |
Other1 | Various | | — | | | 226 | | | — | |