Monday, Otter Tail Corporation (OTTR), a diversified electric utility and health services company, reported a decline in earnings for the first quarter as revenues declined hurt by reduced orders from industrial customers, and lower demand and prices for power sold in the wholesale market. The company also lowered its outlook for fiscal 2009.
Net income for the quarter declined to was $4.4 million from $8.2 million in the corresponding period last year. Earnings per share decreased to $0.12 from $0.27 per share in the same period last year and came below the estimate of $0.33 per share projected by three analysts polled by Thomson Reuters. Analysts' estimates typically exclude special items.
Revenues were $277.2 million compared with $300.2 million in the same period last year. Two Street analysts expected the company report revenues of $310.58 million for the quarter.
Cash flow from operations rose to $21.9 million for the quarter ended March 31, 2009 compared with $7.4 million for the quarter ended March 31, 2008, primarily driven by an improvement in working capital of about $10.6 million.
On May 1, the Board declared a quarterly common stock dividend of 29.75 cents per share payable June 10 to shareholders of record on May 15.
Otter Tail said that a Special Committee of the Board has agreed to waive certain provisions of Minnesota law which impose limitations on business transactions between a publicly held Minnesota corporation and a shareholder that owns more than 10% of its common stock
The corporation has entered into a standstill agreement with Cascade Investment, L.L.C., the corporation's largest shareholder with nearly 10% of the company's outstanding common stock. Under the terms of the deal, Cascade has agreed to limit its ownership of the corporation's common stock to less than 20% of the outstanding common stock for a period of four years, except in certain circumstances.
John Erickson, president and chief executive officer of Otter Tail Corporation said, "Earnings from our food ingredient processing segment improved in the first quarter of 2009 and we expect this to continue for the remainder of the year. Additionally, several of our operating companies have significant involvement in the wind-energy industry. Despite the slow economy and currently tight capital markets delaying wind-energy projects in 2009, we believe the prospects for wind-energy activity beyond 2009 are very positive."
Looking ahead, for 2009 the company lowered it earnings per share guidance to a range of $0.80 to $1.20 from its previously announced range of $1.10 to $1.50. Currently, three Street analysts expect the company to earn $1.31 per share for 2009.
OTTR rose $0.24 or 1.06% and closed Monday's regular trading at $22.83. After hours, OTTR declined $1.68% or 7.36% and traded at $21.15.
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