Financial Performance - In 2025, Otter Tail Corporation generated net income of $275.9 million, or $6.55 per diluted share, a decline from $301.7 million, or $7.17 per diluted share in 2024, primarily due to decreasing product prices in the Plastics segment [236][249]. - The Electric segment achieved a 7% earnings growth in 2025, producing earnings of $97.6 million, driven by increased sales volumes and recovery of rate base investments [238]. - The Manufacturing segment's earnings decreased by 16% to $11.5 million in 2025, impacted by soft end-market demand and customer inventory management efforts [239]. - The Plastics segment's earnings fell by 15% to $170.4 million, with average sales prices for PVC pipe products declining by 15% compared to the previous year [240]. - Operating revenues decreased by $26.5 million in 2025 to $1.304 billion, primarily due to lower sales prices in the Plastics segment and decreased sales volumes in the Manufacturing segment [249]. Operating Expenses and Income - Operating expenses increased by $8.1 million in 2025, mainly due to higher purchased power costs and depreciation expenses in the Electric segment [250]. - Net cash provided by operating activities decreased by $66.7 million to $385.985 million in 2025, primarily due to higher working capital requirements and a decrease in earnings [283]. - Corporate selling, general, and administrative expenses decreased by $0.8 million, or 3.4% [270]. - Other income in the Corporate segment increased by $1.5 million, driven by higher investment income from short-term investments [270]. Dividends and Liquidity - The company paid dividends totaling $2.10 per share, amounting to $88.1 million, marking the 87th consecutive year of dividend payments [237]. - As of December 31, 2025, the company had total available liquidity of $705.5 million, an increase from $606.3 million as of December 31, 2024 [282]. Capital Expenditures and Investments - Total capital expenditures for 2025 were $288 million, with anticipated total capital expenditures from 2026 to 2030 projected at $2.050 billion [292]. - Net cash used in investing activities decreased by $120.7 million to $290.724 million in 2025, mainly due to a $70.6 million decrease in capital expenditures [286]. - The company had $372.4 million invested in cash equivalent investments as of December 31, 2025, compared to $282.0 million in 2024 [332]. Debt and Interest Rates - As of December 31, 2025, the company had $1.0 billion of principal outstanding under long-term debt arrangements, with maturities ranging from 2026 to 2055 [302]. - The weighted-average interest rate on all outstanding borrowings as of December 31, 2025, was 5.08% [299]. - The company has $1.107 billion in total debt obligations, with $140 million due within one year [294]. - A 100-basis point change in interest rates during 2025 would have approximately $0.3 million impact on interest expense based on average outstanding short-term debt [332]. - All outstanding long-term debt obligations as of December 31, 2025 had fixed interest rates, mitigating material interest rate risk [333]. - The company manages interest rate risk by issuing fixed-rate debt with varying maturities and limiting variable interest rate debt [333]. Regulatory and Market Outlook - The company expects normalization in the PVC pipe market by 2027, anticipating a shift in earnings mix back toward long-term targets of 70% Electric and 30% Manufacturing [242]. - OTP requested a net increase in annual revenue of $5.7 million, or 12.5%, in the South Dakota rate case [274]. - OTP filed for a net increase in annual revenue of $44.8 million, or 17.7%, in the Minnesota rate case [275]. Pension and Goodwill - The discount rate for the pension plan was 5.71% in 2025, a slight increase from 5.70% in 2024 [318]. - A 25-basis point increase in the discount rate would decrease pension costs by approximately $807, while a decrease would increase costs by $840 [319]. - BTD Manufacturing and the Plastics segment carried goodwill balances of $18.1 million and $19.3 million, respectively, as of December 31, 2025 [321]. Credit Ratings - The current credit ratings for OTC are Baa2 (Moody's), BBB (Fitch), and BBB (S&P), while OTP has ratings of Baa1 (Moody's), BBB+ (Fitch), and BBB+ (S&P) [306].

Core Viewpoint - Otter Tail Corporation (OTTR) operates primarily in two sectors, with a significant focus on electric utility services, which are often overlooked by investors [1]. Group 1: Company Overview - Otter Tail Corporation is categorized as an Upper Midwest company, indicating its geographical focus and market presence [1]. - The company has two main types of businesses, with electric utility being a key segment [1]. Group 2: Investment Focus - The analysis emphasizes the importance of small- to mid-cap companies, suggesting that they present unique investment opportunities that may not be fully recognized by the market [1].

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Core Viewpoint - Otter Tail Corporation is a diversified company in the electric utility and manufacturing sectors, primarily operating in the Midwest, with financial performance and future guidance being critical for investors [1] Financial Performance - The company reported an earnings per share (EPS) of $1.23, exceeding the expected $1.16, indicating profitability and efficient cost management [2][6] - Revenue was reported at $308.1 million, which fell short of the $311.1 million estimate, suggesting potential challenges in sales or market conditions [2][6] Stock Performance - The current stock price of OTTR is $86.16, reflecting a decrease of 2.27%, with a drop of $1.99 today due to market reactions to the earnings report and future guidance [3][6] - The stock's price range today was between $84.81 and $89.02, indicating some volatility in investor sentiment [3] Historical Stock Data - Over the past year, OTTR's stock has seen a high of $90.11 and a low of $71.79, reflecting its performance and market perception over time [4] - The company's market capitalization is approximately $3.61 billion, indicating its size and value in the market [4] Trading Activity - Today's trading volume for OTTR is 158,149 shares, showing active investor interest [5] - Stakeholders will closely watch the company's guidance for 2026, which will be key in assessing future performance and market position [5]

Group 1 - The article does not provide any relevant content regarding company or industry insights [1]

Core Insights - Otter Tail Corporation reported a diluted earnings per share (EPS) of $6.55 for 2025, a decline of 9% from 2024, primarily due to a decrease in the plastics segment performance [4][5][8] - The company announced a 10% increase in its dividend to $2.31 per share, marking the 88th consecutive year of uninterrupted dividend payments [3][8] - Management provided guidance for 2026 with an expected EPS range of $5.22 to $5.62, forecasting a 14% growth in electric earnings but a significant decline of approximately 36% in plastics earnings [6][16][19] Rate Cases and Regulatory Updates - In South Dakota, interim rate revenues of $5.7 million became effective on December 1, 2025, and are subject to refund, with a settlement in principle reached with the South Dakota Public Utilities Commission [1] - The Minnesota Public Utilities Commission approved $28.6 million in interim rate revenues effective January 1, 2026, with final rates expected to be implemented by mid-2027 [2][7] Capital Expenditure and Growth Plans - Otter Tail refreshed its five-year capital expenditure plan totaling $1.9 billion, focusing on renewable energy projects and a battery storage facility with a capacity of 75 MW [7][10][18] - The company is advancing key regulatory and capital initiatives, including a wind repowering project expected to increase output by 20% and extend renewable energy tax credits [9][10] Segment Performance and Future Guidance - For 2026, electric segment earnings are expected to increase by over 7%, driven by rate base recovery and higher volumes, while manufacturing earnings are projected to rise by 7% due to improved sales outlook [16][17] - The plastics segment is anticipated to see a 36% decline in earnings as PVC prices are expected to be about 20% lower than in 2025, with normalization not expected until around 2028 [6][19] Financial Health and Balance Sheet - Otter Tail ended 2025 with $386 million in cash and produced a 16% return on equity, indicating a strong balance sheet capable of funding growth plans without external equity through at least 2030 [15] - The company plans to retire $80 million of parent-level debt maturing in 2026 without replacement, leaving no outstanding parent-level debt [18]

Financial Data and Key Metrics Changes - For the year 2025, the company reported diluted earnings per share of $6.55, a decrease of 9% from the previous year [5][18] - The company ended 2025 with $386 million in cash, maintaining a strong balance sheet and ample liquidity [20] - The company is initiating its 2026 diluted earnings per share guidance range with a midpoint of $5.42 [6][23] Business Line Data and Key Metrics Changes - Electric segment earnings increased over 7% year-over-year, driven by recovery of increased rate base investments and higher sales volumes [18] - Manufacturing segment earnings decreased by 16% year-over-year, primarily due to lower sales volumes and higher SG&A expenses [19] - Plastic segment earnings decreased by 15% year-over-year, largely driven by lower average sales prices [21] Market Data and Key Metrics Changes - The company’s electric rates remained well below the national and regional average, with 2025 residential electric rates being 34% below the national average [13] - The end market demand for the manufacturing segment faced headwinds, particularly in lawn and garden and agriculture sectors [14][15] Company Strategy and Development Direction - The company is committed to a customer-focused growth plan, with a reaffirmed five-year capital spending plan totaling $1.9 billion [24] - The company is increasing investments in renewable generation and battery storage, including a new battery storage project expected to be operational in 2028 [10][24] - The company targets a long-term earnings per share growth rate of 7%-9%, aiming for a total shareholder return of 10%-12% [28] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the electric segment's growth, expecting a 14% increase in earnings in 2026 due to higher returns from increased average rate base [21] - The company acknowledged challenges in the manufacturing segment but noted improvements in certain end markets [19][23] - Management highlighted the importance of strategic diversification to provide long-term benefits to customers and investors [29] Other Important Information - The company has a history of uninterrupted dividend payments for 88 consecutive years, with a recent 10% increase in dividends [5] - The company is facing competition from low-cost importers in the plastics segment, impacting pricing and sales [15][27] Q&A Session Summary - There were no questions during the Q&A session, and the call concluded without any inquiries from participants [31][32]

Financial Data and Key Metrics Changes - For the year 2025, the company reported diluted earnings per share of $6.55, a decrease of 9% from the previous year [5] - The company ended 2025 with a strong balance sheet, holding $386 million in cash, and a return on equity of 16% [20] - The 2026 diluted earnings per share guidance range is set at $5.22 to $5.62, with a midpoint indicating a continued above-average return on equity of 12% [23][24] Business Line Data and Key Metrics Changes - Electric segment earnings increased over 7% year-over-year, driven by recovery of increased rate base investments and higher sales volumes [18] - Manufacturing segment earnings decreased by 16% year-over-year, primarily due to lower sales volumes and higher SG&A expenses [19] - Plastic segment earnings decreased by 15% year-over-year, largely due to lower average sales prices [21] Market Data and Key Metrics Changes - The residential electric rates for 2025 were reported to be 34% below the national average and 19% below regional peers [13] - The company anticipates a 3% to 4% compounded annual growth rate in customer bills over the current five-year planning period [13] Company Strategy and Development Direction - The company is committed to a customer-focused growth plan, with a reaffirmed five-year capital spending plan totaling $1.9 billion, expected to produce a rate-based compound annual growth rate of 10% [24][25] - The company is pursuing additional investments in renewable generation and battery storage, including a battery storage project with a capacity of 75 megawatts [10][24] - The company aims to maintain low-cost electric service while exploring opportunities to add new large loads to its system [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, highlighting the strong performance of Otter Tail Power and the ability to convert rate-based growth into earnings per share growth [28] - The company acknowledged challenges in the manufacturing segment due to end market demand and inventory management but noted improvements in certain areas [14][15] Other Important Information - The company increased its dividend by 10%, marking the second consecutive year of double-digit increases [5] - The company expects to retire $80 million in parent-level debt later this year, resulting in no outstanding parent-level debt [26] Q&A Session Summary - There were no questions during the Q&A session, and the call concluded without any inquiries from participants [30][31]

Financial Data and Key Metrics Changes - For the year 2025, the company reported diluted earnings per share of $6.55, a decrease of 9% from the previous year [5][18] - The company ended 2025 with $386 million in cash and a return on equity of 16% [20][22] - The 2026 diluted earnings per share guidance range is set at $5.22-$5.62, with a midpoint indicating a continued above-average return on equity of 12% [23][24] Business Line Data and Key Metrics Changes - Electric segment earnings increased over 7% year-over-year, driven by recovery of increased rate base investments and higher sales volumes [18][19] - Manufacturing segment earnings decreased by 16% year-over-year, primarily due to lower sales volumes and higher SG&A expenses [19] - Plastic segment earnings decreased by 15% year-over-year, largely due to lower average sales prices [20] Market Data and Key Metrics Changes - The company’s electric rates remained 34% below the national average and 19% below regional peers [13] - The residential electric rates are projected to increase between 3% and 4% on a compounded annual growth rate over the current five-year planning period [14] Company Strategy and Development Direction - The company is committed to a customer-focused growth plan, with a five-year capital spending plan totaling $1.9 billion and a projected rate-based compound annual growth rate of 10% [24][25] - The company is pursuing additional investments in renewable generation and battery storage, including a 75 MW battery storage project expected to be operational by 2028 [11][24] - The company aims to maintain its strategic diversification to provide benefits to customers and investors over the long term [29] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the electric segment's growth, expecting a 14% increase in earnings in 2026 due to higher returns from increased average rate base [21] - The manufacturing segment is anticipated to see a 7% increase in earnings, driven by improved sales outlook [22] - The plastic segment is expected to face challenges, with earnings projected to decrease by 36% in 2026 due to declining average PVC pipe prices [23][27] Other Important Information - The company has a strong balance sheet capable of funding its growth plan without external equity through at least 2030 [20][29] - The company has received approval in Minnesota to add up to 200 megawatts of additional wind generation [25] Q&A Session Summary - There were no questions during the Q&A session, and the call concluded without any inquiries from participants [31][33]

Except for historical information contained here, the statements in this release are forward-looking and made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The words "anticipate," "believe," "can," "confident," "could," "estimate," "expect," "future," "goal," "intend," "likely," "may," "optimistic," "opportunity," "outlook," "plan," "possible," "position," "potential," "predict," "probable," "projected," "should," "target," "will," "would" and similar words ...