Note 2 - Segment Information

3 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

2. Segment Information

The accounting policies of the segments are described under note 1 – Summary of Significant Accounting Policies. The Company's businesses have been classified into three segments to be consistent with its business strategy and the reporting and review process used by the Company’s chief operating decision maker. These businesses sell products and provide services to customers primarily in the United States. The Company’s business structure currently includes the following three segments: Electric, Manufacturing and Plastics. The chart below indicates the companies included in each segment.

Electric includes the production, transmission, distribution and sale of electric energy in Minnesota, North Dakota and South Dakota by OTP. In addition, OTP is a participant in the Midcontinent Independent System Operator, Inc. (MISO) markets. OTP’s operations have been the Company’s primary business since 1907.

Manufacturing consists of businesses in the following manufacturing activities: contract machining, metal parts stamping, fabrication and painting, and production of plastic thermoformed horticultural containers, life science and industrial packaging, and material handling components. These businesses have manufacturing facilities in Georgia, Illinois and Minnesota and sell products primarily in the United States.

Plastics consists of businesses producing PVC pipe at plants in North Dakota and Arizona. The PVC pipe is sold primarily in the upper Midwest and Southwest regions of the United States.

OTP is a wholly owned subsidiary of the Company. All of the Company’s other businesses are owned by its wholly owned subsidiary, Varistar Corporation. The Company’s Corporate operating costs include items such as corporate staff and overhead costs, the results of the Company’s captive insurance company and other items excluded from the measurement of operating segment performance. Corporate assets consist primarily of cash, prepaid expenses, investments and fixed assets. Corporate is not an operating segment. Rather, it is added to operating segment totals to reconcile to totals on the Company’s consolidated financial statements.

While no single customer accounted for over 10% of consolidated revenue in 2019, certain customers provided a significant portion of each business segment’s 2019 revenue. The Electric segment has one customer that provided 11.9% of 2019 segment revenues. The Manufacturing segment has one customer that manufactures and sells recreational vehicles that provided 23.8% of 2019 segment revenues and one customer that manufactures and sells lawn and garden equipment that provided 11.1% of 2019 segment revenues. The Manufacturing segment’s top five revenue-generating customers provided over 54% of 2019 segment revenues. The Plastics segment has two customers that individually provided 25.3% and 20.4% of 2019 segment revenues. The loss of any one of these customers would have a significant negative impact on the financial position and results of operations of the respective business segment and the Company.

All of the Company’s long-lived assets are within the United States and 99.1% and 99.0% of its operating revenues for the respective three-month periods ended March 31, 2020 and 2019 came from sales within the United States.

The Company evaluates the performance of its business segments and allocates resources to them based on earnings contribution and return on total invested capital. Information for the business segments for the three months ended March 31, 2020 and 2019 and total assets by business segment as of March 31, 2020 and December 31, 2019 are presented in the following tables:

Operating Revenue

	Three Months Ended
	March 31,
(in thousands)	2020			2019
Electric Segment:
Retail Sales Revenue from Contracts with Customers	$	106,690		$	114,955
Changes in Accrued ARP Revenues		(87	)		(1,049	)
Total Retail Sales Revenue		106,603			113,906
Transmission Services Revenue		10,841			10,862
Wholesale Revenues – Company Generation		876			1,527
Other Revenues		1,556			1,814
Total Electric Segment Revenues		119,876			128,109
Manufacturing Segment:
Metal Parts and Tooling		57,211			66,724
Plastic Products and Tooling		9,883			9,045
Other		1,385			2,053
Total Manufacturing Segment Revenues		68,479			77,822
Plastics Segment – Sale of PVC Pipe Products		46,397			40,058
Intersegment Eliminations		(5	)		(17	)
Total	$	234,747		$	245,972

Interest Charges

	Three Months Ended
	March 31,
(in thousands)	2020		2019
Electric	$	7,384	$	6,641
Manufacturing		554		584
Plastics		148		149
Corporate and Intersegment Eliminations		37		452
Total	$	8,123	$	7,826

Income Taxes

	Three Months Ended
	March 31,
(in thousands)	2020			2019
Electric	$	3,620		$	4,771
Manufacturing		1,461			1,454
Plastics		1,917			1,329
Corporate		(1,360	)		(1,926	)
Total	$	5,638		$	5,628

Net Income (Loss)

	Three Months Ended
	March 31,
(in thousands)	2020			2019
Electric	$	16,182		$	18,700
Manufacturing		4,927			4,842
Plastics		5,449			3,729
Corporate		(2,290	)		(947	)
Total	$	24,268		$	26,324

Identifiable Assets

	March 31,		December 31,
(in thousands)	2020		2019
Electric	$	1,955,465	$	1,931,525
Manufacturing		201,892		195,742
Plastics		102,654		92,049
Corporate		45,991		54,279
Total	$	2,306,002	$	2,273,595