# Otter Tail Corp: Form 10-Q for the period ended Sep 30, 2023

- Company: [Otter Tail Corp](/companies/ottr.md) (CIK 1466593)
- Form: 10-Q
- Filed: 2023-11-03
- Accepted by EDGAR: Nov 3, 2023, 13:13 ET
- Period: 2023-09-30
- Accession: 0001466593-23-000161
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1466593/000146659323000161/ottr-20230930.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1466593/000146659323000161/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Operating income | 3 months, 2023-07-01 to 2023-09-30 | $121.1m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2023-01-01 to 2023-09-30 | $307.8m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2023-07-01 to 2023-09-30 | $24.7m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2023-01-01 to 2023-09-30 | $58.1m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-07-01 to 2023-09-30 | $92.0m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2023-01-01 to 2023-09-30 | $236.4m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2023-07-01 to 2023-09-30 | $2.19 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2023-01-01 to 2023-09-30 | $5.63 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-07-01 to 2023-09-30 | $2.21 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2023-01-01 to 2023-09-30 | $5.67 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-07-01 to 2023-09-30 | 42,058,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2023-01-01 to 2023-09-30 | 42,028,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2023-01-01 to 2023-09-30 | $318.5m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2023-01-01 to 2023-09-30 | $229.8m | us-gaap:PaymentsToAcquireProductiveAssets |
| Dividends paid | 9 months, 2023-01-01 to 2023-09-30 | $54.8m | us-gaap:PaymentsOfDividends |
| Cash and equivalents | at 2023-09-30 | $189.2m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2023-09-30 | $556.8m | us-gaap:AssetsCurrent |
| Total assets | at 2023-09-30 | $3.19bn | us-gaap:Assets |
| Current liabilities | at 2023-09-30 | $310.0m | us-gaap:LiabilitiesCurrent |
| Long-term debt | at 2023-09-30 | $824.0m | us-gaap:LongTermDebtNoncurrent |
| Short-term borrowings | at 2023-09-30 | $51.5m | us-gaap:ShortTermBorrowings |
| Shareholders' equity | at 2023-09-30 | $1.40bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 51,305 characters.

*You should read the following discussion and analysis of our financial condition and results of operations together with our interim financial statements and the related notes appearing under Item 1 of this Quarterly Report on Form 10-Q, and our annual financial statements and the related notes along with the discussion and analysis of our financial condition and results of operations contained in our Annual Report on Form 10-K for the year ended December 31, 2022.*

Otter Tail Corporation and its subsidiaries form a diverse group of businesses with operations classified into three segments: Electric, Manufacturing and Plastics. Our Electric segment business is a vertically integrated, regulated utility with generation, transmission and distribution facilities to serve our customers in western Minnesota, eastern North Dakota and northeastern South Dakota. Our Manufacturing segment provides metal fabrication for custom machine parts and metal components and manufactures extruded and thermoformed plastic products. Our Plastics segment manufactures PVC pipe for use in, among other applications, municipal and rural water, wastewater and water reclamation projects.

### PVC PIPE SUPPLY AND DEMAND CONDITIONS

Extraordinary supply and demand conditions in the PVC industry beginning in 2021 have led to a significant expansion in operating margins and elevated earnings in our Plastics segment. Periodic disruptions in the supply of resin, the primary material input used in the manufacturing of PVC pipe, coupled with robust demand for resin, led to a significant increase in the cost of resin during the 2021-2022 timeframe. Low industry volumes of PVC pipe and robust end market demand for the product led to a rapid and significant increase in sales prices for PVC pipe, significantly outpacing the increase in resin input costs, leading to increased operating margins within our Plastics segment.

Demand for PVC pipe began to soften in the second half of 2022, as distributors and contractors reduced purchase volumes in response to uncertain and competitive market conditions. Softening demand continued into 2023 but began to stabilize in the third quarter. Resin prices have declined from the previous year and although sales prices for PVC pipe have also declined, they have declined at a slower pace than resin prices, continuing to produce expanded operating margins from those experienced in years prior to 2021.

The unique market dynamics impacting our Plastics segment resulted in a significant increase in earnings in the last two years compared to historical levels. We currently expect earnings of our Plastics segment to remain elevated for the remainder of 2023 and into 2024 compared to pre-2021 levels. The marketplace dynamics impacting our Plastics segments are fluid and subject to change and may impact our operating results prospectively.

### RESULTS OF OPERATIONS – QUARTER TO DATE

Provided below is a summary and discussion of our operating results on a consolidated basis followed by a discussion of the operating results of each of our segments: Electric, Manufacturing and Plastics. In addition to the segment results, we provide an overview of our Corporate costs. Our Corporate costs do not constitute a reportable segment, but rather consist of unallocated general corporate expenses, such as corporate staff and overhead costs, the results of our captive insurance company and other items excluded from the measurement of segment performance. Corporate costs are added to operating segment totals to reconcile to totals on our consolidated statements of income.

### CONSOLIDATED RESULTS

The following table summarizes consolidated operating results for the three months ended September 30, 2023 and 2022:

*(in thousands)*

|  | 2023 | 2022 | $ change | % change |
| --- | ---: | ---: | ---: | ---: |
| Operating Revenues | **$358,056** | $383,856 | $(25,800) | (6.7)% |
| Operating Expenses | **236,940** | 267,723 | (30,783) | (11.5) |
| **Operating Income** | **121,116** | 116,133 | 4,983 | 4.3 |
| Interest Expense | **(9,175)** | (9,259) | 84 | (0.9) |
| Nonservice Components of Postretirement Benefits | **2,289** | 52 | 2,237 | n/m |
| Other Income (Expense), net | **2,471** | (174) | 2,645 | n/m |
| **Income Before Income Taxes** | **116,701** | 106,752 | 9,949 | 9.3 |
| Income Tax Expense | **24,727** | 22,513 | 2,214 | 9.8 |
| **Net Income** | **$91,974** | $84,239 | $7,735 | 9.2% |

**Operating Revenues** decreased $25.8 million primarily due to decreased sales prices in our Plastics segment, decreased fuel recovery revenues in our Electric segment, and decreased steel prices in our Manufacturing segment. In our Plastics segment, sales prices declined as competitive pressures began to erode pricing from historic highs. In our Electric segment, decreased fuel recovery revenues were driven by lower purchased power and fuel costs arising from decreased market energy costs and natural gas prices. These decreases were partially offset by increased renewable rider revenue and higher commercial and industrial sales volumes in our Electric segment and increased sales volumes in our Manufacturing segment. See our segment disclosures below for additional discussion of items impacting operating revenues.

**Operating Expenses** decreased $30.8 million primarily due to lower PVC resin costs in our Plastics segment, lower purchased power and fuel costs in our Electric segment and lower material costs in our Manufacturing segment, as discussed above. See our segment disclosures below for additional discussion of items impacting operating expenses.

**Nonservice Components of Postretirement Benefits** improved by $2.2 million, having a positive impact on net income, primarily due to a change in actuarial assumptions used to measure our pension benefit and postretirement benefit obligations, including an increase in the discount rate applied and an increase in the expected return on assets assumption.

**Other Income (Expense)** increased $2.6 million, having a positive impact on net income, primarily due to additional investment income earned on our short-term cash equivalent investments.

**Income Tax Expense** increased $2.2 million primarily due to increased income before income taxes. Our effective tax rate was 21.2% in the third quarter of 2023 and 21.1% in the third quarter of 2022. See Note 8 to our consolidated financial statements included in this Quarterly Report on Form 10-Q for additional information regarding factors impacting our effective tax rate in 2023 and 2022.

### ELECTRIC SEGMENT RESULTS

The following table summarizes Electric segment operating results for the three months ended September 30, 2023 and 2022:

*(in thousands)*

|  | 2023 | 2022 | $ change | % change |
| --- | ---: | ---: | ---: | ---: |
| Retail Revenues | **$110,499** | $120,177 | $(9,678) | (8.1)% |
| Transmission Services Revenues | **13,670** | 13,156 | 514 | 3.9 |
| Wholesale Revenues | **4,752** | 7,196 | (2,444) | (34.0) |
| Other Electric Revenues | **1,405** | 2,218 | (813) | (36.7) |
| Total Operating Revenues | **130,326** | 142,747 | (12,421) | (8.7) |
| Production Fuel | **19,603** | 24,972 | (5,369) | (21.5) |
| Purchased Power | **10,895** | 19,913 | (9,018) | (45.3) |
| Operating and Maintenance Expenses | **43,534** | 39,799 | 3,735 | 9.4 |
| Depreciation and Amortization | **18,958** | 17,669 | 1,289 | 7.3 |
| Property Taxes | **4,194** | 4,438 | (244) | (5.5) |
| Operating Income | **$33,142** | $35,956 | $(2,814) | (7.8)% |
|  | **2023** | **2022** | **change** | **% change** |
| Electric kilowatt-hour (kwh) Sales (in thousands) |  |  |  |  |
| Retail kwh Sales | **1,300,324** | 1,275,051 | 25,273 | 2.0% |
| Wholesale kwh Sales – Company Generation | **119,515** | 99,890 | 19,625 | 19.6 |
| **Heating Degree Days** | **3** | 22 | (19) | (86.4) |
| **Cooling Degree Days** | **317** | 376 | (59) | (15.7) |

The operating results of our Electric segment are impacted by fluctuations in weather conditions and the resulting demand for electricity for heating and cooling. The following table shows heating degree days and cooling degree days as a percent of normal for the three months ended September 30, 2023 and 2022.

|  | 2023 | 2022 |
| --- | ---: | ---: |
| Heating Degree Days | **6.3%** | 43.1% |
| Cooling Degree Days | **92.2%** | 108.4% |

The following table summarizes the estimated effect on diluted earnings per share of the difference in retail kwh sales under actual weather conditions and expected retail kwh sales under normal weather conditions in 2023 and 2022, and between years.

|  | 2023 vs Normal | 2023 vs 2022 | 2022 vs Normal |
| --- | ---: | ---: | ---: |
| Effect on Diluted Earnings Per Share | $(0.01) | $(0.02) | $0.01 |

**Retail Revenues** decreased $9.7 million primarily due to the following:

- A $13.2 million decrease in fuel recovery revenues, primarily due to lower purchased power and fuel costs arising from decreased market energy costs and natural gas prices.
- A $1.1 million decrease in revenues from the unfavorable impact of weather compared to last year.

These decreases were partially offset by a $2.7 million increase in rider revenues, including recovery of costs related to our Hoot Lake Solar project and the Ashtabula III wind farm, and a $0.8 million increase in revenue due to increased sales volumes to commercial and industrial customers.

**Wholesale Revenues** decreased $2.4 million primarily due to a 45% decrease in wholesale electric prices driven by decreased fuel costs.

**Production Fuel** costs decreased $5.4 million primarily due to a 23% decrease in fuel cost per kwh resulting from decreases in natural gas prices.

**Purchased Power** costs to serve retail customers decreased $9.0 million due to a 46% decrease in the price of purchased power per kwh, primarily due to decreased market energy costs, as well as the acquisition of the Ashtabula III wind farm in the current year. Prior to the acquisition of Ashtabula III, OTP purchased the wind-generated electricity from the facility under the terms of a power purchase agreement.

**Operating and Maintenance Expenses** increased $3.7 million driven by strategic spending initiatives and higher labor costs, partially driven by additional employees and wage inflation, as well as an increase in insurance expenses.

### MANUFACTURING SEGMENT RESULTS

The following table summarizes Manufacturing segment operating results for the three months ended September 30, 2023 and 2022:

*(in thousands)*

|  | 2023 | 2022 | $ change | % change |
| --- | ---: | ---: | ---: | ---: |
| Operating Revenues | **$100,678** | $98,767 | $1,911 | 1.9% |
| Cost of Products Sold (excluding depreciation) | **76,288** | 77,764 | (1,476) | (1.9) |
| Other Operating Expenses | **11,010** | 8,627 | 2,383 | 27.6 |
| Depreciation and Amortization | **4,551** | 3,996 | 555 | 13.9 |
| Operating Income | **$8,829** | $8,380 | $449 | 5.4% |

**Operating Revenues** increased $1.9 million primarily due to an 8% increase in sales volumes at BTD Manufacturing driven by end market demand in the construction, recreational vehicle and power generation segments and incremental volumes from additional work with existing customers. Operating revenues also benefited from sales price increases implemented in response to labor and non-steel material cost inflation. Sales price increases and sales volume growth were partially offset by decreased steel prices, resulting in a 4% decrease in material costs, which are passed through to customers. Operating revenues at T.O. Plastics decreased primarily due to decreased sales volumes of horticulture products, as order and delivery lead times have normalized, and customers are working to reduce their inventory levels and return to more normal seasonal fluctuations.

**Cost of Products Sold** decreased $1.5 million primarily due to decreased steel prices and decreased sales volumes at T.O. Plastics, as described above. These decreases were partially offset by increased sales volumes at BTD.

**Other Operating Expenses** increased $2.4 million due to variable costs associated with increased business activity and financial performance during the period.

### PLASTICS SEGMENT RESULTS

The following table summarizes Plastics segment operating results for the three months ended September 30, 2023 and 2022:

*(in thousands)*

|  | 2023 | 2022 | $ change | % change |
| --- | ---: | ---: | ---: | ---: |
| Operating Revenues | **$127,052** | $142,342 | $(15,290) | (10.7)% |
| Cost of Products Sold (excluding depreciation) | **42,015** | 61,597 | (19,582) | (31.8) |
| Other Operating Expenses | **3,906** | 3,921 | (15) | (0.4) |
| Depreciation and Amortization | **1,012** | 1,023 | (11) | (1.1) |
| Operating Income | **$80,119** | $75,801 | $4,318 | 5.7% |

**Operating Revenues** decreased $15.3 million primarily due to an 11% decrease in sales prices compared to the same period last year. Sales prices have continued to decrease in the current year; however, they continue to remain elevated compared to pre-2021 levels. Sales volumes in the third quarter of 2023 were consistent with sales volumes during the same period last year.

**Cost of Products Sold** decreased $19.6 million primarily due to decreased PVC resin costs. PVC resin and other input material costs decreased 39% compared to the same period in the previous year as the unique supply and demand conditions, which caused significant increases in resin costs, have subsided and resin costs have stabilized.

### CORPORATE COSTS

The following table summarizes Corporate operating results for the three months ended September 30, 2023 and 2022:

*(in thousands)*

|  | 2023 | 2022 | $ change | % change |
| --- | ---: | ---: | ---: | ---: |
| Other Operating Expenses | **$947** | $3,976 | $(3,029) | (76.2)% |
| Depreciation and Amortization | **27** | 28 | (1) | (3.6) |
| Operating Loss | **$974** | $4,004 | $(3,030) | (75.7)% |

**Other Operating Expenses** decreased $3.0 million primarily due to decreased employee benefit expenses, including decreases in our employee health insurance claims costs.

### RESULTS OF OPERATIONS – YEAR TO DATE

### CONSOLIDATED RESULTS

The following table summarizes consolidated operating results for the nine months ended September 30, 2023 and 2022:

*(in thousands)*

|  | 2023 | 2022 | $ change | % change |
| --- | ---: | ---: | ---: | ---: |
| Operating Revenues | **$1,034,853** | $1,158,800 | $(123,947) | (10.7)% |
| Operating Expenses | **727,014** | 823,302 | (96,288) | (11.7) |
| **Operating Income** | **307,839** | 335,498 | (27,659) | (8.2) |
| Interest Expense | **(28,285)** | (27,198) | (1,087) | 4.0 |
| Nonservice Components of Postretirement Benefits | **7,122** | 824 | 6,298 | n/m |
| Other Income (Expense), net | **7,841** | (802) | 8,643 | n/m |
| **Income Before Income Taxes** | **294,517** | 308,322 | (13,805) | (4.5) |
| Income Tax Expense | **58,093** | 66,143 | (8,050) | (12.2) |
| **Net Income** | **$236,424** | $242,179 | $(5,755) | (2.4)% |

**Operating Revenues** decreased $123.9 million primarily due to lower sales volumes within our Plastics segment, decreased steel prices in our Manufacturing segment, and decreased fuel recovery revenues in our Electric segment. In our Plastics segment, the decline in sales volumes is attributable to distributor customer inventory management as distributors have closely managed their inventory levels during the year and made strategic purchasing decisions amid uncertain and competitive market conditions. In our Electric segment, decreased fuel recovery revenues were driven by lower purchased power and fuel costs arising from decreased market energy costs and natural gas prices. These decreases were partially offset by increased sales volumes in our Manufacturing segment and increased renewable rider revenue and higher commercial and industrial sales volumes in our Electric segment. See our segment disclosures below for additional discussion of items impacting operating revenues.

**Operating Expenses** decreased $96.3 million primarily due to lower sales volumes within our Plastics segment, as discussed above. In addition to lower sales volumes, operating expenses in our Plastics segment also decreased due to decreased PVC resin and other input costs. Decreased operating expenses in our Manufacturing segment primarily due to lower material costs at BTD, driven by lower steel prices, were largely offset by higher sales volumes and increases in other operating expenses. Operating expenses in our Electric segment increased primarily due to higher labor costs, maintenance expenses related to an outage at Big Stone Plant, increased maintenance expenses associated with our wind generation assets, increased vegetative management expenses, and increased insurance expenses. See our segment disclosures below for additional discussion of items impacting operating expenses.

**Interest Expense** increased $1.1 million primarily due to increased interest rates on our short-term variable rate debt outstanding at OTP.

**Nonservice Components of Postretirement Benefits** improved by $6.3 million, having a positive impact on net income, primarily due to a change in actuarial assumptions used to measure our pension benefit and postretirement benefit obligations, including an increase in the discount rate applied and an increase in the expected return on assets assumption.

**Other Income (Expense)** increased $8.6 million, having a positive impact on net income, primarily due to gains on our corporate-owned life insurance policies during 2023 compared to investment losses in the previous year, and an increase in investment income earned on our short-term cash equivalent investments.

**Income Tax Expense** decreased $8.1 million primarily due to decreased income before income taxes. Our effective tax rate was 19.7% for the nine months ended September 30, 2023 and 21.5% for the same period in the previous year. The decrease in our effective tax rate was driven by non-taxable gains on our corporate-owned life insurance policy investments and an increase in production tax credits from our wind generation assets in the current period. See Note 8 to our consolidated financial statements included in the report on Form 10-Q for additional information regarding factors impacting our effective tax rate.

### ELECTRIC SEGMENT RESULTS

The following table summarizes Electric segment operating results for the nine months ended September 30, 2023 and 2022:

*(in thousands)*

|  | 2023 | 2022 | $ change | % change |
| --- | ---: | ---: | ---: | ---: |
| Retail Revenues | **$340,667** | $347,419 | $(6,752) | (1.9)% |
| Transmission Services Revenues | **40,606** | 37,409 | 3,197 | 8.5 |
| Wholesale Revenues | **9,260** | 13,196 | (3,936) | (29.8) |
| Other Electric Revenues | **5,464** | 6,088 | (624) | (10.2) |
| Total Operating Revenues | **395,997** | 404,112 | (8,115) | (2.0) |
| Production Fuel | **45,928** | 54,538 | (8,610) | (15.8) |
| Purchased Power | **57,932** | 64,604 | (6,672) | (10.3) |
| Operating and Maintenance Expenses | **134,604** | 126,460 | 8,144 | 6.4 |
| Depreciation and Amortization | **55,955** | 54,441 | 1,514 | 2.8 |
| Property Taxes | **13,151** | 13,304 | (153) | (1.2) |
| Operating Income | **$88,427** | $90,765 | $(2,338) | (2.6)% |
|  | **2023** | **2022** | **change** | **% change** |
| Electric kilowatt-hour (kwh) Sales (in thousands) |  |  |  |  |
| Retail kwh Sales | **4,281,400** | 4,076,769 | 204,631 | 5.0% |
| Wholesale kwh Sales – Company Generation | **268,401** | 222,591 | 45,810 | 20.6 |
| **Heating Degree Days** | **4,374** | 4,559 | (185) | (4.1) |
| **Cooling Degree Days** | **571** | 530 | 41 | 7.7 |

The operating results of our Electric segment are impacted by fluctuations in weather conditions and the resulting demand for electricity for heating and cooling. The following table shows heating and cooling degree days as a percent of normal for the nine months ended September 30, 2023 and 2022.

|  | 2023 | 2022 |
| --- | ---: | ---: |
| Heating Degree Days | **108.6%** | 114.0% |
| Cooling Degree Days | **123.6%** | 113.7% |

The following table summarizes the estimated effect on diluted earnings per share of the difference in retail kwh sales under actual weather conditions and expected retail kwh sales under normal weather conditions in 2023 and 2022, and between years.

|  | 2023 vs Normal | 2023 vs 2022 | 2022 vs Normal |
| --- | ---: | ---: | ---: |
| Effect on Diluted Earnings Per Share | $0.06 | $(0.02) | $0.08 |

**Retail Revenues** decreased $6.8 million primarily due to the following:

- A $15.9 million decrease in fuel recovery revenues, primarily due to lower purchased power and fuel costs arising from decreased market energy costs and natural gas prices.
- A $4.1 million decrease in revenues related to the impact of final interim rate refunds in the prior year. Our Minnesota rate case was finalized in May 2022, which included a determination of the final interim rate refund and resulted in additional retail revenue in 2022.
- A $0.8 million decrease in revenues from the unfavorable impact of weather compared to last year.

These decreases were partially offset by a $6.6 million increase in rider revenues, including recovery of costs related to our Hoot Lake Solar project and the Ashtabula III wind farm, a $5.2 million increase in revenue due to increased sales volumes to commercial and industrial customers, and the impact of decoupling and other factors.

**Transmission Services Revenues** increased $3.2 million primarily due to increased recovery of higher transmission costs and increased transmission investments.

**Wholesale Revenues** decreased $3.9 million primarily due to a 42% decrease in wholesale electric prices driven by decreased fuel costs.

**Production Fuel** costs decreased $8.6 million primarily due to a 16% decrease in fuel cost per kwh resulting from decreases in natural gas prices.

**Purchased Power** costs to serve retail customers decreased $6.7 million due to a 19% decrease in the price of purchased power per kwh, primarily due to decreased market energy costs, as well as the acquisition of the Ashtabula III wind farm in the current year. Prior to the acquisition of

Ashtabula III, OTP purchased the wind generated electricity from the facility under the terms of a power purchase agreement. These decreases were partially offset by an 11% increase in the volume of purchased power due to increased customer demand and favorable market energy prices.

**Operating and Maintenance Expense** increased $8.1 million, primarily due to increased labor costs, maintenance expenses related to an outage at Big Stone Plant, increased maintenance and transmission service expenses, including the incremental costs associated with the Ashtabula III facility that was purchased during the year, increased vegetative management expenses, higher insurance expenses, and increased MISO tariff expenses. These increases were partially offset by decreased maintenance and other expenses related to Coyote Station, as the comparable period in the prior year included costs associated with a planned outage at the facility.

### MANUFACTURING SEGMENT RESULTS

The following table summarizes Manufacturing segment operating results for the nine months ended September 30, 2023 and 2022:

*(in thousands)*

|  | 2023 | 2022 | $ change | % change |
| --- | ---: | ---: | ---: | ---: |
| Operating Revenues | **$309,936** | $306,921 | $3,015 | 1.0% |
| Cost of Products Sold (excluding depreciation) | **237,670** | 242,440 | (4,770) | (2.0) |
| Other Operating Expenses | **32,058** | 27,363 | 4,695 | 17.2 |
| Depreciation and Amortization | **13,551** | 12,101 | 1,450 | 12.0 |
| Operating Income | **$26,657** | $25,017 | $1,640 | 6.6% |

**Operating Revenues** increased $3.0 million primarily due to a 14% increase in sales volumes at BTD Manufacturing driven by end market demand in the construction, agriculture, recreational vehicle, and power generation segments and incremental volumes from additional work with existing customers. Operating revenues also benefited from sales price increases implemented in response to labor and non-steel material cost inflation. Sales price increases and sales volume growth were partially offset by decreased steel prices, resulting in a 13% decrease in material costs, which are passed through to customers. Operating revenues at T.O. Plastics decreased primarily due to decreased sales volumes of horticulture products, as order and delivery lead times have normalized and customers are working to reduce their inventory levels.

**Cost of Products Sold** decreased $4.8 million primarily due to decreased steel prices and decreased sales volumes at T.O. Plastics, as described above. These decreases were partially offset by increased sales volumes at BTD.

**Other Operating Expenses** increased $4.7 million due to variable costs associated with increased business activity and financial performance during the period.

### PLASTICS SEGMENT RESULTS

The following table summarizes Plastics segment operating results for the nine months ended September 30, 2023 and 2022:

*(in thousands)*

|  | 2023 | 2022 | $ change | % change |
| --- | ---: | ---: | ---: | ---: |
| Operating Revenues | **$328,920** | $447,767 | $(118,847) | (26.5)% |
| Cost of Products Sold (excluding depreciation) | **113,660** | 201,146 | (87,486) | (43.5) |
| Other Operating Expenses | **11,372** | 12,225 | (853) | (7.0) |
| Depreciation and Amortization | **3,052** | 3,173 | (121) | (3.8) |
| Operating Income | **$200,836** | $231,223 | $(30,387) | (13.1)% |

**Operating Revenues** decreased $118.8 million, primarily due to a 24% decrease in sales volumes compared to the same period last year, and a 3% decrease in sales price per pound of PVC pipe sold. The decrease in sales volumes in the first nine months of the year was the result of customer inventory management as these distributors closely managed their inventory levels and made strategic purchasing decisions amid uncertain and competitive market conditions. However, previous extraordinary market conditions continue to normalize, and the demand volatility experienced early in the year began to stabilize in the third quarter.

**Cost of Products Sold** decreased $87.5 million due to decreased sales volumes, as discussed above, as well as a 32% decrease in PVC resin and other input costs as the unique supply and demand conditions, which caused significant increases in resin costs, have subsided and resin costs have stabilized.

### CORPORATE COSTS

The following table summarizes Corporate operating results for the nine months ended September 30, 2023 and 2022:

*(in thousands)*

|  | 2023 | 2022 | $ change | % change |
| --- | ---: | ---: | ---: | ---: |
| Other Operating Expenses | **$8,003** | $11,393 | $(3,390) | (29.8)% |
| Depreciation and Amortization | **78** | 114 | (36) | (31.6) |
| Operating Loss | **$8,081** | $11,507 | $(3,426) | (29.8)% |

**Other Operating Expenses** decreased $3.4 million primarily due to decreased employee benefit expenses, including decreases in our employee health insurance claim costs.

### REGULATORY MATTERS

The following provides a summary of rate rider filings and other regulatory filings that have or are expected to have a material impact on our operating results, financial position or cash flows.

### GENERAL RATES

**North Dakota Rate Case:** On November 2, 2023, OTP filed a request with the North Dakota Public Service Commission (NDPSC) for an increase in revenue recoverable under general rates in North Dakota. In its filing, OTP requested a net increase in annual revenue of $17.4 million, or 8.4%, based on an allowed rate of return on rate base of 7.85% and an allowed rate of return on equity of 10.6% on an equity ratio of 53.5% of total capital. Through this proceeding, OTP has proposed changes to the mechanism of cost and investment recovery, with recovery moving from riders into base rates. The filing also includes a proposal to implement a sales adjustment mechanism to address potential significant load additions or losses. The filing included an interim rate request of a net increase in annual revenue of $12.4 million, or 6.0%. We anticipate interim rates will commence and rider rates will be adjusted to reflect the movement to interim rates on January 1, 2024.

### RATE RIDERS

The following table includes a summary of pending and recently concluded rate rider proceedings:

*(in millions)*

| Recovery Mechanism | Jurisdiction | Status | Filing Date | Amount | Effective Date | Description |
| --- | --- | --- | --- | ---: | --- | --- |
| RRR - 2022 | MN | Approved | 11/01/22 | $17.5 | 07/01/23 | Recovery of Hoot Lake Solar costs, Ashtabula III costs, and true up for PTCs from Merricourt. |
| CIP - 2022 | MN | Approved | 04/01/22 | 10.8 | 10/01/22 | Recovery of energy conservation improvement costs as well as a demand side management financial incentive. |
| CIP - 2023 | MN | Approved | 04/03/23 | 9.7 | 10/01/23 | Recovery of energy conservation improvement costs as well as a demand side management financial incentive. |
| TCR - 2021 | MN | Approved | 11/23/21 | 7.2 | 08/01/22 | Recovery of transmission project costs. |
| RRR - 2021 | MN | Approved | 12/06/21 | 7.0 | 08/01/22 | Recovery of Hoot Lake Solar and Ashtabula III costs. |
| EITE - 2023 | MN | Approved | 04/14/23 | 2.2 | 01/01/24 | Biennial update to Energy-Intensive, Trade-Exposed rider. |
| EUIC - 2023 | MN | Requested | 03/20/23 | 2.7 | 01/01/24 | Recovery of advanced metering infrastructure, outage management and demand response system projects. |
| RRR - 2023 | ND | Approved | 12/30/22 | 12.2 | 05/01/23 | Recovery of Merricourt, Ashtabula III and other costs. |
| RRR - 2022 | ND | Approved | 01/05/22 | 7.8 | 04/01/22 | Recovery of Merricourt costs, Ashtabula III costs, and deferred taxes and production tax credits. |
| TCR - 2022 | ND | Approved | 09/15/22 | 7.5 | 01/01/23 | Recovery of transmission project costs. |
| TCR - 2021 | ND | Approved | 09/15/21 | 6.1 | 01/01/22 | Recovery of transmission project costs. |
| TCR - 2024 | ND | Requested | 11/02/23 | 4.5 | 01/01/24 | Recovery of transmission project costs. |
| GCR - 2022 | ND | Approved | 03/01/22 | 3.3 | 07/01/22 | Annual update to generation cost recovery rider. |
| MDT - 2022 | ND | Approved | 07/08/22 | 3.1 | 01/01/23 | Recovery of advanced metering infrastructure, outage management system and demand response projects. |
| GCR - 2023 | ND | Approved | 03/03/23 | 2.2 | 07/01/23 | Recovery of Astoria Station, net of anticipated savings associated with the retirement of Hoot Lake Plant. |
| RRR - 2024 | ND | Requested | 11/02/23 | 1.9 | 04/01/24 | Recovery of wind repowering projects and production tax credits. |
| MDT - 2024 | ND | Requested | 11/02/23 | 1.3 | 01/01/24 | Recovery of advanced metering infrastructure and demand response projects. |
| PIR - 2022 | SD | Approved | 06/01/22 | 3.0 | 09/01/22 | Recovery of Ashtabula III, Merricourt, Astoria Station, Advanced Grid Infrastructure project costs, and impact of load growth credits. |
| TCR - 2022 | SD | Approved | 11/01/22 | 3.0 | 03/01/23 | Recovery of transmission project costs. |
| TCR - 2023 | SD | Requested | 11/01/23 | 2.5 | 03/01/24 | Recovery of transmission projects. |
| TCR - 2021 | SD | Approved | 10/29/21 | 2.2 | 03/01/22 | Recovery of transmission project costs. |
| PIR - 2023 | SD | Approved | 06/01/23 | 1.8 | 09/01/23 | Recovery of Ashtabula III, Merricourt, Astoria Station, Advanced Grid Infrastructure project costs, and impact of load growth credits. |

28

### INTEGRATED RESOURCE PLAN

On March 31, 2023, OTP submitted a supplemental resource plan filing to the MPUC, the NDPSC, and the South Dakota Public Utilities Commission. The supplemental filing updated OTP’s original 2022 Integrated Resource Plan (2022 IRP), which was filed on September 1, 2021. In the supplemental filing, OTP outlined its updated plan for meeting customers’ anticipated capacity and energy needs while maintaining system reliability and low electric service rates, in light of several changes that have occurred since the original filing, including significant winter and spring reserve planning margins adopted by MISO, tax credits made available for renewable energy projects under the Inflation Reduction Act, the enactment of the Clean Energy Bill in Minnesota, and recent volatility in energy and capacity markets.

The major requests in OTP's supplemental filing include:

- the addition of on-site liquefied natural gas fuel storage at our Astoria Station natural gas plant in 2026;
- the addition of approximately 200 megawatts of solar generation in 2027-2028;
- undertaking the initial steps necessary to add approximately 200 megawatts of wind generation in 2029; and
- a withdrawal from our 35 percent ownership interest in Coyote Station, a jointly owned coal-fired generation plant, in the event we are required to make a major, non-routine capital investment in the plant.

Consistent with the original 2022 IRP, the supplemental filing proposes to, subject to regulatory approval, create a regulatory asset to recover costs related to any future withdrawal from Coyote Station. Should such a withdrawal occur, we anticipate the regulatory asset would include the net book value of the plant on the withdrawal date, anticipated decommissioning costs, and any costs incurred if the existing lignite sales agreement, under which Coyote Station acquires all of its lignite coal, must be terminated. As part of an economic analysis included in the filing, OTP developed an estimate of the reasonably foreseeable costs of withdrawing from Coyote Station, which was determined to be $68.5 million, assuming a withdrawal at the end of 2028. These costs may differ from actual results due to the uncertainty and timing of future events which could result in a withdrawal from Coyote Station.

An informal hearing on the IRP before the NDPSC is scheduled to occur in November 2023, and a formal hearing on the IRP before the MPUC is expected to occur in early 2024.

### ENVIRONMENTAL REGULATION

**Climate Change and Greenhouse Gas Regulation:** In May 2023, the EPA proposed new regulations under Section 111 of the Clean Air Act to regulate greenhouse gas (GHG) emissions from existing and new fossil fuel-based electric generating units (EGU). The proposal provides requirements for different types of fossil fuel-based EGUs with various compliance dates.

For existing coal-fired steam generating units that were in operation before January 8, 2014 and that plan to operate past December 31, 2039, the proposal would (subject to certain exceptions) set emissions standards that reflect the use of carbon capture and sequestration (CCS) with 90% capture of carbon dioxide emissions beginning in 2030.

For existing coal-fired steam generating units that are scheduled to be retired between January 1, 2032 and December 31, 2039, the proposed rule would, in general, set emissions standards that reflect the use of co-firing 40% natural gas with coal beginning in 2030.

For existing coal-fired steam generating units that will either (a) retire by January 1, 2032, or (b) retire between 2032 and December 21, 2034 and will operate at a 20% annual capacity factor limit in the meantime, the proposed rule would simply require routine maintenance and no increase in emission rate.

The proposal also includes emission standards for existing large (greater than 300 mega-watt), frequently used (those that operate at a capacity factor over 50%) natural gas combustion turbines, including the use of CCS or co-firing with low-GHG hydrogen. Under the proposed rule, each state must submit a plan to the EPA to implement standards that are at least as stringent as the EPA’s emission guidelines. The EPA is proposing to require states to submit their plans within 24 months of the effective date of the regulation.

We continue to review and evaluate the proposal and its impact, if adopted as proposed, on our EGUs and the potential impact to our operating results, financial condition and liquidity. Coyote Station and Big Stone Plant, our two co-owned coal-fired power plants, would be within the scope of the proposed regulations. We do not believe our combustion turbines would be within the scope of the regulation given their size and operating frequency.

### LIQUIDITY

### LIQUIDITY OVERVIEW

We believe our financial condition is strong and our cash and cash equivalents, other liquid assets, operating cash flows, existing lines of credit, access to capital markets and borrowing ability, because of investment-grade credit ratings, when taken together, provide us ample liquidity to conduct our business operations, fund our short-term and long-term capital expenditure plans and satisfy our obligations as they become due. Our liquidity, including our operating cash flows and access to capital markets, could be impacted by macroeconomic factors outside of our control, including higher interest rates and debt capital costs and diminished credit availability. In addition, our liquidity could be impacted by non- compliance with certain financial covenants under our various debt instruments. As of September 30, 2023, we were in compliance with all financial covenants (see the Financial Covenants section under Capital Resources below).

The following table presents the status of our lines of credit as of September 30, 2023 and December 31, 2022:

*(in thousands)*

|  | Borrowing Limit | 2023 Amount Outstanding | Letters of Credit | Amount Available | 2022 Amount Available |
| --- | ---: | ---: | ---: | ---: | ---: |
| OTC Credit Agreement | **$170,000** | **$—** | **$—** | **$170,000** | $170,000 |
| OTP Credit Agreement | **170,000** | **51,495** | **9,573** | **108,932** | 152,223 |
| Total | **$340,000** | **$51,495** | **$9,573** | **$278,932** | $322,223 |

We have an internal risk tolerance metric to maintain a minimum of $50 million of liquidity under the OTC Credit Agreement. Should additional liquidity be needed, this agreement includes an accordion feature allowing us to increase the amount available to $290 million, subject to certain terms and conditions. The OTP Credit Agreement also includes an accordion feature allowing OTP to increase that facility to $250 million, subject to certain terms and conditions.

### CASH FLOWS

The following is a discussion of our cash flows for the nine months ended September 30, 2023 and 2022:

*(in thousands)*

|  | 2023 | 2022 |
| --- | ---: | ---: |
| Net Cash Provided by Operating Activities | **$318,495** | $287,973 |

**Net Cash Provided by Operating Activities** increased $30.5 million for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022, primarily due to the absence of a pension plan contribution in 2023 due to the plan's funded status, whereas a $20.0 million discretionary contribution was made in February 2022, and the timing of customer collections of forecasted fuel costs that will be adjusted in future periods. These increases to operating cash flows were partially offset by lower earnings and higher working capital.

*(in thousands)*

|  | 2023 | 2022 |
| --- | ---: | ---: |
| Net Cash Used in Investing Activities | **$232,018** | $127,556 |

**Net Cash Used in Investing Activities** increased $104.5 million for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022. The increase in cash used in investing activities was primarily due to a higher amount of Electric segment capital investment compared to last year, including the purchase of the Ashtabula III wind farm for $50.6 million in January 2023, and investments in our Hoot Lake Solar facility and several wind repowering projects. Capital expenditures in our Manufacturing and Plastics segments increased $20.0 million as a result of investments in additional equipment and a facility expansion project at our Plastics segment facility in Phoenix, Arizona.

*(in thousands)*

|  | 2023 | 2022 |
| --- | ---: | ---: |
| Net Cash Used in Financing Activities | **$16,259** | $88,967 |

**Net Cash Used in Financing Activities** decreased $72.7 million for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022. Financing activities for the nine months ended September 30, 2023 included net proceeds from short-term borrowings of $43.3 million under the OTP credit agreement, which were primarily used to fund Electric segment capital investments. Financing activities for the nine months ended September 30, 2023 also included dividend payments of $54.8 million. Financing activities for the nine months ended September 30, 2022 included net repayments of short-term borrowings of $91.2 million, the repayment of $30.0 million of long-term debt, the issuance of $90.0 million of long-term debt, and dividend payments of $51.6 million.

### CAPITAL REQUIREMENTS

### CAPITAL EXPENDITURES

We have a capital expenditure program for expanding, upgrading and improving our plants and operating equipment. Typical uses of cash for capital expenditures are investments in electric generation facilities and environmental upgrades, transmission and distribution lines, manufacturing facilities and upgrades, equipment used in the manufacturing process, and computer hardware and information systems. Our capital expenditure program is subject to review and regulatory approval and is revised in light of changes in demands for energy, technology, environmental laws, tax laws, regulatory changes, business expansion opportunities, the costs of labor, materials and equipment, and our financial condition.

The following provides a summary of actual capital expenditures for the year ended December 31, 2022, anticipated annual capital expenditures for the current year ending December 31, 2023, and the subsequent four years, along with electric utility average rate base and annual rate base growth:

*(in millions)*

| Electric Segment | 2022 | 2023(1) | 2024 | 2025 | 2026 | 2027 | Total 2023 - 2027 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Renewables and Natural Gas Generation |  | $106 | $119 | $88 | $85 | $49 | $447 |
| Technology and Infrastructure |  | 21 | 30 | 6 | 5 | 1 | 63 |
| Distribution Plant Replacements |  | 42 | 37 | 38 | 38 | 43 | 198 |
| Transmission (includes replacements) |  | 52 | 36 | 46 | 87 | 78 | 299 |
| Other |  | 29 | 25 | 30 | 24 | 23 | 131 |
| **Total Electric Segment** | **$148** | **$250** | **$247** | **$208** | **$239** | **$194** | **$1,138** |
| **Manufacturing and Plastics Segments** | 23 | 50 | 53 | 29 | 25 | 24 | 181 |
| **Total Capital Expenditures** | **$171** | **$300** | **$300** | **$237** | **$264** | **$218** | **$1,319** |
| Total Electric Utility Average Rate Base | $1,624 | $1,746 | $1,851 | $1,990 | $2,111 | $2,230 |  |
| Annual Rate Base Growth | 3.1% | 7.5% | 6.0% | 7.5% | 6.1% | 5.6% |  |
| (1) Includes actual results for the nine months ended September 30, 2023, and anticipated capital expenditures for the remaining three months of 2023. |  |  |  |  |  |  |  |

### CONTRACTUAL OBLIGATIONS

Our contractual obligations primarily include principal and interest payments due under our outstanding debt obligations, commitments to acquire coal, energy and capacity commitments, payments to meet our postretirement benefit obligations, and payment obligations under land easements and leasing arrangements.

Our contractual obligations as of December 31, 2022 are included in Item 7, *Management's Discussion and Analysis of Financial Condition and Results of Operations,* of our Annual Report on Form 10-K for the year ended December 31, 2022. Except for the obligations arising from new land easements assumed in connection with the purchase of Ashtabula III, there were no material changes in our contractual obligations outside of the ordinary course of business during the nine months ended September 30, 2023.

In connection with the purchase of the Ashtabula III wind farm in January 2023, we assumed 51 land easements not classified as leases, which require annual payments. As of September 30, 2023, the remaining payments to be made under the easements were $4.0 million and the remaining terms of the agreements extend into 2034.

### COMMON STOCK DIVIDENDS

We paid dividends to our common stockholders totaling $54.8 million, or $1.313 per share, in the first nine months of 2023. The determination of the amount of future cash dividends to be paid will depend on, among other things, our financial condition, our actual or expected level of earnings and cash flows from operations, the level of our capital expenditures and our future business prospects. As a result of certain statutory limitations or regulatory or financing agreements, the amount of dividends we are allowed to pay could be restricted. See Note 10 to our consolidated financial statements included in this Quarterly Report on Form 10-Q for additional information. The decision to declare dividends is reviewed quarterly by our Board of Directors.

### CAPITAL RESOURCES

Financial flexibility is provided by operating cash flows, unused lines of credit and access to capital markets, and is aided by strong financial coverages and investment grade credit ratings. Debt financing will be required in the five-year period from 2023 through 2028 to refinance maturing debt and to finance our capital investments. Our financing plans are subject to change and are impacted by our planned level of capital investments, and decisions to reduce borrowings under our lines of credit, to refund or retire early any of our outstanding debt, to complete acquisitions, or to use capital for other corporate purposes.

### REGISTRATION STATEMENTS

On May 3, 2021, we filed a shelf registration statement with the SEC under which we may offer for sale, from time to time, either separately or together in any combination, equity, debt or other securities described in the shelf registration statement. No new debt or equity has been issued pursuant to the registration statement. The registration statement expires in May 2024.

On May 3, 2021, we filed a second registration statement with the SEC for the issuance of up to 1,500,000 common shares under an Automatic Dividend Reinvestment and Share Purchase Plan, which provides shareholders, retail customers of OTP and other interested investors methods of purchasing our common shares by reinvesting their dividends or making optional cash investments. Shares purchased under the plan may be newly issued common shares or common shares purchased on the open market. As of September 30, 2023, there were 1,169,619 shares available for purchase or issuance under the plan. The registration statement expires in May 2024.

### SHORT-TERM DEBT

OTC and OTP are each party to a credit agreement (the OTC Credit Agreement and the OTP Credit Agreement, respectively) which each provides for unsecured revolving lines of credit. The following is a summary of key provisions and borrowing information as of, and for the nine months ended, September 30, 2023:

*(in thousands, except interest rates)*

|  | OTC Credit Agreement | OTP Credit Agreement |
| --- | ---: | ---: |
| Borrowing Limit | $170,000 | $170,000 |
| Borrowing Limit if Accordion Exercised1 | 290,000 | 250,000 |
| Amount Restricted Due to Outstanding Letters of Credit as of September 30, 2023 | — | 9,573 |
| Amount Outstanding as of September 30, 2023 | — | 51,495 |
| Average Amount Outstanding During the Nine Months Ended September 30, 2023 | — | 47,704 |
| Maximum Amount Outstanding During the Nine Months Ended September 30, 2023 | — | 61,006 |
| Interest Rate as of September 30, 2023 | 6.82% | 6.53% |
| Maturity Date | October 29, 2027 | October 29, 2027 |
| 1Each facility includes an accordion featuring allowing the borrower to increase the borrowing limit if certain terms and conditions are met. |  |  |

### LONG-TERM DEBT

As of September 30, 2023, we had $827.0 million of principal outstanding under long-term debt arrangements. These instruments generally provide for unsecured borrowings at fixed rates of interest with maturities ranging from 2026 to 2052. Note 6 to our consolidated financial statements included in this Quarterly Report on Form 10-Q includes additional information regarding these short-term and long-term debt instruments.

### Financial Covenants

Certain of our short- and long-term debt agreements require OTC and OTP to maintain certain financial covenants. As of September 30, 2023, we were in compliance with these financial covenants as further described below:

**OTC,** under its financial covenants, may not permit its ratio of interest-bearing debt to total capitalization to exceed 0.60 to 1.00, may not permit its interest and dividend coverage ratio to be less than 1.50 to 1.00, and may not permit its priority indebtedness to exceed 10 percent of its total capitalization. As of September 30, 2023, OTC's interest-bearing debt to total capitalization was 0.38 to 1.00, OTC's interest and dividend coverage ratio was 10.47 to 1.00, and OTC had no priority indebtedness outstanding.

**OTP,** under its financial covenants, may not permit its ratio of interest-bearing debt to total capitalization to exceed 0.60 to 1.00, may not permit its interest and dividend coverage ratio to be less than 1.50 to 1.00, and may not permit its priority indebtedness to exceed 20 percent of its total capitalization. As of September 30, 2023, OTP's interest-bearing debt to total capitalization was 0.45 to 1.00, OTP's interest and dividend coverage ratio was 3.65 to 1.00, and OTP had no priority indebtedness outstanding.

### Credit Ratings

The credit ratings of OTC and OTP as of September 30, 2023 are summarized below:

|  | Otter Tail Corporation |  |  | Otter Tail Power Company |  |  |
| --- | --- | --- | --- | --- | --- | --- |
|  | **Moody's** | **Fitch** | **S&P** | **Moody's** | **Fitch** | **S&P** |
| Corporate Credit/Long-Term Issuer Default Rating | Baa2 | BBB | BBB | A3 | BBB+ | BBB+ |
| Senior Unsecured Debt | n/a | BBB | n/a | n/a | A- | n/a |
| Outlook | Stable | Stable | Stable | Stable | Stable | Stable |

### CRITICAL ACCOUNTING POLICIES INVOLVING SIGNIFICANT ESTIMATES

The discussion and analysis of our results of operations are based on financial statements prepared in accordance with generally accepted accounting principles in the United States of America. Certain of our accounting policies require management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities in the preparation of our consolidated financial statements. We have disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022 the critical accounting policies that affect our most significant estimates and assumptions used in preparing our consolidated financial statements. There have been no material changes to our critical accounting policies and estimates from those disclosed in the most recent Annual Report on Form 10-K.

## Market risk

As filed, 221 characters.

There have been no material changes in our market risk from those disclosed in Item 7A, *Quantitative and Qualitative Disclosures About Market Risk,* in our Annual Report on Form 10-K for the year ended December 31, 2022.

## Controls and procedures

As filed, 1,002 characters.

***Evaluation of Disclosure Controls and Procedures.*** Under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the Exchange Act)) as of September 30, 2023, the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of September 30, 2023.

***Changes in Internal Control over Financial Reporting.*** There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) under the Exchange Act) during the quarter ended September 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 167 characters.

There have been no material changes from the risk factors disclosed in Item 1A, *Risk Factors,* of our Annual Report on Form 10-K for the year ended December 31, 2022.

Filed Nov 3, 2023.
Source: SEC EDGAR, the filing index for accession 0001466593-23-000161. Last ingested by Listed: Nov 4, 2026, 12:58 ET. No prices; not investment advice.