Please click here to pre-register for the conference call and obtain your dial in number and passcode. Contact Beth Eiken at 701-451-3571 or beiken@ottertail.com with any questions on how to participate. About Otter Tail Corporation: Otter Tail Corporation, a member of the S&P SmallCap 600 Index, has interests in diversified operations that include an electric utility and manufacturing businesses. Otter Tail Corporation stock trades on the NASDAQ Global Select Market under the symbol OTTR. The latest invest ...

Core Viewpoint - Otter Tail Corporation has announced an increase in its quarterly common stock dividend, reflecting its financial strength and commitment to returning value to shareholders [1] Dividend Announcement - The quarterly common stock dividend has been raised to $0.5775 per share [1] - This increase results in an annual indicated dividend rate of $2.31 per share, which represents a $0.21 increase, or 10 percent, over the 2025 rate [1] - This marks the second consecutive year that the company has announced a double-digit increase in its dividend [1]

Core Viewpoint - Otter Tail Corporation has announced the appointment of two new members to its Board of Directors, effective January 1, 2026, while an outgoing member will conclude his service in April 2026 [1] Group 1 - Mr. Chris Clark from Minnetonka, Minnesota, and Mr. Steve Rasche from St. Louis, Missouri, have been appointed to the Board of Directors [1] - Outgoing Board Member Steve Fritze has been an independent Board member since 2013 and will serve his last day at the upcoming Annual Meeting of Shareholders in April 2026 [1] - Nathan Partain, Chairman of the Board of Directors, expressed gratitude for the contributions of the outgoing member [1]

Core Insights - Otter Tail (OTTR) operates in the Upper Midwest, managing both an electric utility and various industrial businesses, providing power to homes and businesses in multiple states [1] Company Overview - The utility division of Otter Tail is responsible for supplying electricity, indicating a dual focus on energy and industrial sectors [1] Investment Focus - The analysis emphasizes a focus on small- to mid-cap companies, which are often overlooked by investors, while also occasionally reviewing large-cap companies for a broader market perspective [1]

Financial Performance - Consolidated operating revenues for Q3 2025 were $325.6 million, a decrease of $12.5 million or 3.7% compared to Q3 2024[97] - Net income for Q3 2025 was $78.3 million, down $7.2 million or 8.4% from $85.5 million in Q3 2024[97] - Consolidated operating revenues for the nine months ended September 30, 2025, decreased by $31.5 million to $995.9 million, a 3.1% decline, primarily due to decreased sales prices in the Plastics segment[118] - Net Income decreased by $21.8 million, or 13.5%, to $140.0 million, reflecting a decrease in income before income taxes[133] Segment Performance - Electric segment operating revenues increased by $8.2 million or 6.3% to $138.6 million in Q3 2025, driven by a 124% increase in wholesale sales volumes[101] - Manufacturing segment operating revenues decreased by $2.9 million or 3.7% to $76.9 million, primarily due to an 8% decrease in sales volumes across several end markets[110] - Plastics segment operating revenues decreased by $17.7 million to $110.0 million, a 13.9% decline, primarily due to a 17% decrease in sales prices, partially offset by a 4% increase in sales volumes[114] - Electric segment total operating revenues increased by $32.4 million to $417.0 million, an 8.4% increase, driven by a $23.5 million increase in retail revenues[122] - Manufacturing segment operating revenues decreased by $38.6 million to $237.4 million, a 14.0% decline, primarily due to a 12% decrease in sales volumes in the metal fabrication business[130] - Net income for the Plastics segment decreased by $10.98 million to $43.5 million, a 20.2% decline[114] - Net income for the Manufacturing segment decreased by $5.3 million to $8.9 million, a 37.4% decline[130] Costs and Expenses - Production fuel costs in the Electric segment rose by $10.5 million or 69.7% due to increased natural gas prices and generation[106] - Cost of products sold in the Plastics segment decreased by $2.9 million, driven by a 16% decrease in input material costs, including PVC resin[115] - Cost of Products Sold increased by $1.3 million, driven by increased sales volumes, while input material costs, including PVC resin, decreased by 13% compared to the prior year[134] - Selling, General, and Administrative Expenses rose by $1.3 million, mainly due to ongoing litigation costs related to PVC pipe pricing[135] - Depreciation and Amortization Expense increased by $1.5 million due to capital investments in new equipment and facilities at Vinyltech[136] Tax and Income - Income tax expense decreased by $5.9 million in Q3 2025, resulting in an effective tax rate of 14.1%, down from 17.9% in the same period last year[100] - Income tax expense for the nine months ended September 30, 2025, decreased by $20.5 million to $36.6 million, a 36.0% decline, primarily due to a decrease in income before income taxes[121] Liquidity and Capital Structure - The company maintains strong liquidity, with compliance in all financial covenants as of September 30, 2025[151] - As of September 30, 2025, the company had $379.5 million of available liquidity under credit facilities and $325.8 million in cash and cash equivalents, totaling $705.3 million in available liquidity[153] - Net cash provided by operating activities decreased by $33.8 million to $288.9 million for the nine months ended September 30, 2025, compared to $322.8 million in 2024[154] - Net cash used in investing activities decreased by $96.2 million to $216.0 million for the nine months ended September 30, 2025, primarily due to a $46.4 million decrease in capital expenditures[155] - The company issued $100.0 million of long-term debt at OTP, which was used to repay short-term borrowings and fund construction expenditures[157] - Total capital expenditures for 2025 are anticipated to be $321 million, with the electric segment accounting for $300 million[160] - As of September 30, 2025, the company had $1.0 billion of principal outstanding under long-term debt arrangements, with maturities ranging from 2026 to 2055[168] Debt and Ratings - OTC's interest-bearing debt to total capitalization was 0.37 to 1.00, with an interest and dividend coverage ratio of 8.3 to 1.00 as of September 30, 2025[169] - OTP's interest-bearing debt to total capitalization was 0.45 to 1.00, with an interest and dividend coverage ratio of 2.93 to 1.00 as of September 30, 2025[170] - The company paid dividends totaling $66.0 million, or $1.58 per share, in the first nine months of 2025[163] - Moody's revised OTP's long-term issuer default rating from A3 to Baa1, with a stable outlook as of September 30, 2025[172] Regulatory Matters - The North Dakota Rate Case resulted in a revenue requirement of $225.6 million, with a net increase of $13.1 million, or 6.18%, effective March 15, 2025[139] - OTP requested a net increase in annual revenue of $5.7 million, or 12.50%, in the South Dakota Rate Case, based on an allowed rate of return of 8.29%[140] - In the Minnesota Rate Case, OTP requested a net increase in annual revenue of $44.8 million, or 17.7%, with an interim rate request for $31.8 million, or 12.6%[141][142] Market Risks - The company is facing potential impacts from U.S. trade and tariff policies, which could disrupt supply chains and increase costs[93] - There have been no material changes in market risk compared to the disclosures in the Annual Report on Form 10-K for the year ended December 31, 2024[174]

Financial Data and Key Metrics Changes - The company generated $1.86 of diluted earnings per share in Q3, an 8% decrease from the same time last year, primarily due to declining sales prices in the plastics segment [5][18] - The midpoint of the 2025 earnings guidance was increased to $6.47 from $6.26 per share, driven by better-than-expected financial results in the plastics segment [6][22] Business Line Data and Key Metrics Changes - Electric segment earnings decreased by $0.03 per share in Q3, impacted by unfavorable weather and seasonal rate differences [18] - Manufacturing segment earnings increased by $0.04 per share, attributed to a lower cost structure and enhanced production efficiencies [19] - Plastic segment earnings decreased by $0.26 per share, driven by a 17% decline in average sales prices, partially offset by lower input material costs and a 4% increase in sales volumes [20] Market Data and Key Metrics Changes - The lawn and garden and agricultural end markets continue to face demand-related headwinds, while recreational vehicle and construction markets showed signs of improvement [14] - The cost of PVC resin decreased due to global supply and demand dynamics, benefiting the company's cost structure [16] Company Strategy and Development Direction - The updated five-year capital spending plan totals $1.9 billion, with a targeted long-term earnings per share growth rate increased to 7% to 9% [5][27] - The company aims to convert its rate-based growth into earnings per share growth at an approximate one-to-one ratio [28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to manage costs and maintain low electric rates despite ongoing economic challenges [12][13] - The company anticipates the current low-demand environment in the manufacturing segment to persist through most of 2026 [15] Other Important Information - The company filed a request for a net revenue increase of $44.8 million with the Minnesota Public Utilities Commission, driven by infrastructure investments and inflation impacts [7][8] - The company is closely monitoring developments related to a complaint filed at FERC against MISO's Tranche 2.1 projects, which may cause potential delays [11] Q&A Session Summary Question: Inquiry about the updated EPS long-term growth rate - Management expects utility earnings to grow in line with the rate base, with year-to-year fluctuations anticipated [31] Question: Update on the antitrust case and DOJ involvement - Management provided an update on ongoing civil litigation and the DOJ's intervention, indicating no specific deadline for court decisions but anticipating developments in 2026 [33] Question: Discussion on cash usage and long-term strategy - Management emphasized prioritizing investments in utility growth and potential opportunistic M&A, while maintaining a focus on shareholder returns through dividends [38][39]

Financial Data and Key Metrics Changes - The company generated $1.86 of diluted earnings per share in Q3, an 8% decrease from the same time last year, primarily due to declining sales prices in the plastics segment [5][18] - The midpoint of the 2025 earnings guidance was increased to $6.47 from $6.26 per share, driven by better-than-expected financial results in the plastics segment [6][23] - The balance sheet remains strong with $325 million in cash on hand and a leading return on equity of 16% [21][22] Business Line Data and Key Metrics Changes - Electric segment earnings decreased by $0.03 per share due to unfavorable weather and seasonal rate differences, although higher sales volumes partially offset this [18] - Manufacturing segment earnings increased by $0.04 per share, driven by a lower cost structure and enhanced production efficiencies [19] - Plastic segment earnings decreased by $0.26 per share, with a 17% decline in average sales prices of PVC pipe, partially offset by lower input material costs and a 4% increase in sales volumes [20] Market Data and Key Metrics Changes - The lawn and garden and agricultural end markets continue to face demand-related headwinds, while recreational vehicle and construction markets show signs of improvement [14] - The company expects the current low-demand environment to persist through most of 2026 [15] Company Strategy and Development Direction - The updated five-year capital spending plan totals $1.9 billion, with a targeted long-term earnings per share growth rate increased to 7%-9% [5][27] - The company aims to convert rate-based growth into earnings per share growth at an approximate one-to-one ratio [28] - The long-term earnings mix target has been updated to expect 70% of earnings from the electric platform and 30% from the manufacturing platform by 2028 [27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth plan despite dynamic market conditions and emphasized the importance of affordability for customers [4][12] - The company is focused on identifying cost-effective investment projects and managing costs prudently [13] - Management anticipates that plastic segment earnings will normalize by 2028, contributing positively to the overall strategy [26] Other Important Information - The company filed a request for a net revenue increase of $44.8 million with the Minnesota Public Utilities Commission, driven by infrastructure investments and inflation impacts [7][8] - The South Dakota rate case is progressing, with interim rates expected to commence on December 1, 2025 [9] Q&A Session Summary Question: Inquiry about the updated EPS long-term growth rate - Management expects utility earnings to grow in line with the rate base, with year-to-year fluctuations anticipated [31] Question: Update on the antitrust case - Management provided an update on ongoing civil litigation and the involvement of the Department of Justice, indicating a timeline for potential decisions in 2026 [33] Question: Discussion on cash usage and M&A opportunities - Management indicated that cash will primarily be used for utility growth and dividends, with potential for opportunistic M&A in the future [38][39]

Financial Data and Key Metrics Changes - The company generated $1.86 of diluted earnings per share in Q3 2025, an 8% decrease from the same time last year, primarily due to declining plastics segment sales prices and earnings [5][19] - The midpoint of the 2025 earnings guidance was increased to $6.47 from $6.26 per share, driven by better-than-expected plastics segment financial results [6][20] - The balance sheet remains strong with $325 million in cash on hand and a leading return on equity of 16% [20] Business Line Data and Key Metrics Changes - Electric segment earnings decreased by $0.03 per share in Q3, primarily due to unfavorable weather and seasonal rate differences [17] - Manufacturing segment earnings increased by $0.04 per share, driven by a lower cost structure and enhanced production efficiencies [18] - Plastics segment earnings decreased by $0.26 per share, with average sales prices of PVC pipe declining 17% compared to the previous year [19] Market Data and Key Metrics Changes - The lawn and garden and agricultural end markets continue to face demand-related headwinds, while recreational vehicle and construction markets show signs of improvement [13][14] - The plastics segment's sales prices have steadily declined, but sales volumes increased by 4% due to capacity added to VinylTech [16] Company Strategy and Development Direction - The updated five-year capital spending plan totals $1.9 billion, targeting a rate base compounded annual growth rate of 10% [5][23] - The company aims to increase its long-term earnings per share growth rate to 7% to 9% from 6% to 8% [5][26] - The company is focused on customer-oriented growth, with plans to attract large loads to its electric utility [12][34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to manage costs and maintain low electric rates despite economic challenges [13][12] - The company anticipates that the current low-demand environment will continue through most of 2026, with expectations for a rebound in the manufacturing segment thereafter [14][25] - Management noted that the plastics segment remains crucial for overall strategy, providing enhanced returns and cash flow to support utility growth [25][27] Other Important Information - The company filed a request for a net revenue increase of $44.8 million with the Minnesota Public Utilities Commission [6][7] - The South Dakota rate case is progressing, with interim rates expected to commence on December 1, 2025 [9] Q&A Session Summary Question: Long-term EPS growth rate expectations - Management expects utility earnings to grow in line with the rate base, with fluctuations year-to-year but a long-term target of 7%-9% growth post-2028 [28][30] Question: Update on antitrust case - There are ongoing civil litigation and investigations, with no specific deadline for court decisions anticipated until 2026 [31] Question: Long-term cash usage strategy - The primary focus is on investing in utility growth and returning capital to shareholders through dividends, with no external equity needs [32][33] Question: Structure of the large load customer agreement - The 155-megawatt customer is an interruptible load with minimal capacity needs, expected to reduce fixed costs without significant investment [35]

Core Insights - The article emphasizes the importance of enabling Javascript and cookies in browsers to prevent access issues [1] Group 1 - The article suggests that users may face blocks if ad-blockers are enabled, indicating a need for users to disable them for proper access [1]

Financial Performance - Q3 2025 diluted EPS was $1.86[10], compared to $2.03 in Q3 2024[12], a decrease of 8%[12] - Year-to-date 2025 diluted EPS was $5.32[12], compared to $5.87 in the same period of 2024[12], a decrease of 9%[12] - The company increased the 2025 EPS guidance midpoint to $6.47[10], a 3% increase[13] - The company's ROE (trailing twelve months) was 16% on an equity layer of 64%[10] Electric Platform - The company filed a Minnesota rate case requesting a net revenue increase of $44.8 million, a 17.7% increase, with a proposed ROE of 10.65% and an equity layer of 53.5%[16] - The company filed a South Dakota rate case requesting a net revenue increase of $5.7 million, a 12.5% increase, with a proposed ROE of 10.8% and an equity layer of 53.54%[19] - The company updated the rate base growth CAGR to 10%[10], with significant rate base growth from $1.89 billion in 2024 to $3.41 billion in 2030[22] Manufacturing Platform - Sales prices in the plastics segment decreased by 17% quarter-to-date and 14% year-to-date, while sales volumes increased by 4% quarter-to-date and 9% year-to-date[41] - The company is undertaking a multi-phase expansion project at Vinyltech Corporation, which is expected to increase plastics segment production capacity by 15% upon completion of Phase 1 and 2[46] - BTD Georgia expansion is expected to generate up to $35 million in incremental annual revenue[46] Investment and Growth - The company increased the long-term EPS growth rate target to 7-9% (2028 base year)[10] - The company's capital expenditure plan includes $1.918 billion for the electric segment and $129 million for manufacturing & plastics from 2026 to 2030[63] - The company targets a total shareholder return of 10-12%, a dividend yield of ~3%, and a dividend growth rate of 6-8%[69]