Financial Performance & Guidance - Q2 2025 diluted EPS was $1.85[9], compared to $2.07 in Q2 2024, representing a decrease of approximately 10%[11] - Year-to-date diluted EPS decreased by approximately 10% from $3.84 in 2024 to $3.46 in 2025[11] - The company increased its 2025 EPS guidance to a range of $6.06 to $6.46, up from the previous guidance of $5.68 to $6.08, representing an increase of approximately 6% at the midpoint[9, 12] - The company reaffirmed a 7% EPS growth for the Electric segment[9] - The company's Return on Equity (ROE) is 17%[9] Capital Investments & Rate Base - The company anticipates a $1.4 billion capital investment spending plan to remain intact[19] - Significant rate base growth is expected, with a Compound Annual Growth Rate (CAGR) of 9%[26] - The company expects to convert rate base growth into electric EPS growth near a 1:1 ratio[29] Projects & Regulatory Updates - Regulatory approval was obtained for the direct assignment of Abercrombie Solar and Solway Solar projects, totaling 345 MW[9] - A South Dakota rate case was filed, seeking a $5.7 million net revenue increase, representing a 12.5% increase, with a proposed ROE of 10.8%[9, 23] - The company is investing an estimated $230 million in wind repowering projects, with completion dates in 2024 and 2025[30] - The company is investing an estimated $80 million in Solway Solar, with completion dates in 2026-2027[30] - The company is investing an estimated $450 million in Abercrombie Solar, with completion dates in 2028[30] Manufacturing Platform - PVC pipe sales prices have declined since late 2022[48] - Year-over-year trends show sales prices down 15% QTD and 13% YTD, while sales volumes are up 11% QTD and 12% YTD[48]

[Executive Summary](index=1&type=section&id=Executive%20Summary) This section provides an overview of the company's Q2 2025 financial performance, key highlights, and dividend declaration [CEO's Overview](index=1&type=section&id=CEO's%20Overview) President and CEO Chuck MacFarlane expressed satisfaction with Q2 2025 financial results, highlighting team commitment amidst dynamic market conditions and segment-specific achievements - The Electric segment successfully restored power after severe weather, secured approval for two solar development projects (**345 MW**), and filed for a **$5.7 million** electric rate increase in South Dakota[3](index=3&type=chunk)[4](index=4&type=chunk) - The Manufacturing segment continues to navigate soft end market demand, but its new BTD Georgia facility is ramping up to full production[5](index=5&type=chunk) - The Plastics segment's results outpaced expectations due to strong product demand and higher sales volumes, despite receding PVC pipe sales prices[6](index=6&type=chunk) - The company increased its 2025 diluted earnings per share guidance for the Plastics segment, leading to an increase in consolidated guidance[6](index=6&type=chunk) [Key Financial Highlights](index=1&type=section&id=Key%20Financial%20Highlights) The corporation reported diluted earnings per share of $1.85 for Q2 2025 and increased its 2025 EPS guidance midpoint to $6.26, with a trailing twelve months' return on equity of 17% Key Financial Highlights | Metric | Value | | :--------------------------------- | :------ | | Diluted Earnings Per Share (Q2 2025) | $1.85 | | 2025 EPS Guidance Midpoint Increase | $0.38 | | New 2025 EPS Guidance Midpoint | $6.26 | | Return on Equity (Trailing 12 Months) | 17% | [Quarterly Dividend](index=1&type=section&id=Quarterly%20Dividend) The Board of Directors declared a quarterly common stock dividend of $0.525 per share, payable on September 10, 2025, to shareholders of record on August 15, 2025 Quarterly Dividend | Metric | Value | | :----------------- | :------ | | Dividend Per Share | $0.525 | | Payable Date | Sep 10, 2025 | | Record Date | Aug 15, 2025 | [Financial Performance Overview](index=1&type=section&id=Financial%20Performance%20Overview) This section details the corporation's cash flows, liquidity position, and capital allocation for the period [Cash Flows and Liquidity](index=1&type=section&id=Cash%20Flows%20and%20Liquidity) Consolidated cash provided by operating activities decreased for the six months ended June 30, 2025, primarily due to timing differences and decreased earnings, while liquidity remained strong Cash Flow Summary (Six Months Ended June 30) | Metric | Six Months Ended June 30, 2025 (Millions USD) | Six Months Ended June 30, 2024 (Millions USD) | Change (Millions USD) | | :-------------------------------- | :-------------------------------------------- | :-------------------------------------------- | :-------------------- | | Cash Provided by Operating Activities | $159.4 | $223.5 | $(64.1) | | Capital Expenditures | $124.2 | N/A | N/A | | Long-Term Debt Issued | $100.0 | N/A | N/A | | Net Repayments of Short-Term Borrowings | $69.6 | N/A | N/A | | Dividend Payments | $44.0 | N/A | N/A | - Total available liquidity as of June 30, 2025, was **$688.2 million**, comprising **$170.0 million** from Otter Tail Corporation credit facilities, **$211.0 million** from Otter Tail Power credit facilities, and **$307.2 million** in cash and cash equivalents[12](index=12&type=chunk) [Segment Performance Analysis](index=2&type=section&id=Segment%20Performance%20Analysis) This section analyzes the financial performance of the Electric, Manufacturing, Plastics, and Corporate segments for the quarter [Electric Segment](index=2&type=section&id=Electric%20Segment) The Electric segment reported increased operating revenues and net income for Q2 2025, driven by higher fuel recovery and rider revenues, and favorable weather conditions Electric Segment Performance (Three Months Ended June 30) | Metric | Three Months Ended June 30, 2025 (Millions USD) | Three Months Ended June 30, 2024 (Millions USD) | Change (Millions USD) | % Change | | :----------------- | :-------------------------------------------- | :-------------------------------------------- | :-------------------- | :--------- | | Operating Revenues | $128.731 | $112.828 | $15.903 | 14.1% | | Net Income | $19.195 | $18.485 | $0.710 | 3.8% | | Retail MWh Sales | 1,337,696 | 1,315,504 | 22,192 | 1.7% | - Operating revenues increased primarily due to higher fuel recovery and rider revenues, and favorable weather conditions compared to the prior year[15](index=15&type=chunk) - Net income growth was partially offset by increased operating and maintenance expenses, depreciation, and interest[16](index=16&type=chunk) [Manufacturing Segment](index=2&type=section&id=Manufacturing%20Segment) The Manufacturing segment experienced a decline in both operating revenues and net income in Q2 2025, mainly attributed to decreased sales volumes and lower steel costs Manufacturing Segment Performance (Three Months Ended June 30) | Metric | Three Months Ended June 30, 2025 (Millions USD) | Three Months Ended June 30, 2024 (Millions USD) | Change (Millions USD) | % Change | | :----------------- | :-------------------------------------------- | :-------------------------------------------- | :-------------------- | :--------- | | Operating Revenues | $78.726 | $96.684 | $(17.958) | (18.6)% | | Net Income | $3.481 | $6.835 | $(3.354) | (49.1)% | - Operating revenues decreased due to a **9% decrease in sales volumes** across various end markets (agriculture, RVs, lawn and garden, construction) and a **7% decrease in steel costs** passed through to customers[17](index=17&type=chunk) - Net income declined primarily due to lower sales volumes and the absence of enhanced profit margins seen in Q2 2024 from steel cost fluctuations and selling lower-cost inventory[18](index=18&type=chunk) [Plastics Segment](index=3&type=section&id=Plastics%20Segment) The Plastics segment saw a decrease in operating revenues and net income in Q2 2025, primarily due to a significant drop in sales prices, partially offset by increased sales volumes and lower PVC resin costs Plastics Segment Performance (Three Months Ended June 30) | Metric | Three Months Ended June 30, 2025 (Millions USD) | Three Months Ended June 30, 2024 (Millions USD) | Change (Millions USD) | % Change | | :----------------- | :-------------------------------------------- | :-------------------------------------------- | :-------------------- | :--------- | | Operating Revenues | $125.586 | $132.824 | $(7.238) | (5.4)% | | Net Income | $53.104 | $60.612 | $(7.508) | (12.4)% | - Operating revenues decreased primarily due to a **15% decrease in sales prices**, partially offset by an **11% increase in sales volumes** driven by strong distributor and end-market demand and increased production capacity[19](index=19&type=chunk) - Net income decreased due to lower sales prices, but benefited from increased sales volumes and a **15% decrease in PVC resin costs**[20](index=20&type=chunk) [Corporate Segment](index=3&type=section&id=Corporate%20Segment) The Corporate segment reported an increase in net income for Q2 2025, primarily due to higher market-based gains on corporate-owned life insurance policy investments Corporate Segment Performance (Three Months Ended June 30) | Metric | Three Months Ended June 30, 2025 (Millions USD) | Three Months Ended June 30, 2024 (Millions USD) | Change (Millions USD) | % Change | | :--------- | :-------------------------------------------- | :-------------------------------------------- | :-------------------- | :--------- | | Net Income | $1.948 | $1.063 | $0.885 | 83.3% | - The increase in net income was primarily driven by increased market-based gains on corporate-owned life insurance policy investments[21](index=21&type=chunk) [2025 Outlook and Guidance](index=3&type=section&id=2025%20Outlook%20and%20Guidance) Otter Tail Corporation increased its 2025 diluted earnings per share guidance to a range of $6.06 to $6.46, primarily due to better-than-expected Plastics segment results and revised pricing expectations 2025 Diluted EPS Guidance Update | Metric | Previous Guidance (Feb 17, 2025) | Updated Guidance (Aug 4, 2025) | | :-------------------------------- | :------------------------------- | :----------------------------- | | Low EPS | $5.68 | $6.06 | | High EPS | $6.08 | $6.46 | | Midpoint Increase | N/A | $0.38 | 2025 EPS Guidance by Segment (August 4, 2025) | Segment | 2024 Actual EPS | 2025 EPS Guidance (Low) | 2025 EPS Guidance (High) | | :------------ | :-------------- | :---------------------- | :----------------------- | | Electric | $2.16 | $2.29 | $2.35 | | Manufacturing | $0.33 | $0.21 | $0.27 | | Plastics | $4.77 | $3.64 | $3.88 | | Corporate | $(0.09) | $(0.08) | $(0.04) | | **Total** | **$7.17** | **$6.06** | **$6.46** | | Return on Equity | 19.3% | 14.5% | 15.3% | - The increase in Plastics segment earnings guidance is based on better-than-expected Q2 2025 financial results, anticipated lower material costs (PVC resin), and revised expectations for PVC pipe pricing for the second half of the year[23](index=23&type=chunk)[26](index=26&type=chunk) - The anticipated 2025 earnings mix is approximately **37% from the Electric segment** and **63% from the Manufacturing and Plastics segments**, deviating from the long-term expected mix of 65% Electric / 35% Non-Electric due to elevated Plastics segment earnings[22](index=22&type=chunk) [Additional Information](index=3&type=section&id=Additional%20Information) This section provides details on the upcoming conference call, forward-looking statements, company overview, and contact information [Conference Call and Webcast](index=3&type=section&id=Conference%20Call%20and%20Webcast) Otter Tail Corporation will host a live webcast on Tuesday, August 5, 2025, at 10:00 a.m. CT to discuss its financial and operating performance - A live webcast will be held on August 5, 2025, at 10:00 a.m. CT to discuss financial and operating performance, with the presentation available on www.ottertail.com/presentations[24](index=24&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) The press release contains forward-looking statements, identified by specific terminology, which are subject to known and unknown risks and uncertainties that may cause actual results to differ materially - Forward-looking statements are identified by words such as "anticipate," "believe," "expect," "plan," "projected," and similar expressions, and are subject to safe harbor provisions of the Private Securities Litigation Reform Act of 1995[25](index=25&type=chunk)[27](index=27&type=chunk) - Known and unknown risks and uncertainties, including energy market risks, raw material availability and pricing, inflationary pressures, changing macroeconomic conditions, and regulatory impacts, may cause actual results to differ materially from forecasted assumptions[27](index=27&type=chunk) [About the Corporation](index=4&type=section&id=About%20the%20Corporation) Otter Tail Corporation is a diversified company with interests in an electric utility and manufacturing businesses, listed on the Nasdaq Global Select Market under the symbol OTTR - Otter Tail Corporation is a diversified company with an electric utility and manufacturing businesses, trading on Nasdaq (**OTTR**) and a member of the S&P SmallCap 600 Index[28](index=28&type=chunk) [Investor and Media Contacts](index=4&type=section&id=Investor%20and%20Media%20Contacts) Contact information for investor relations and corporate communications is provided for inquiries - Investor inquiries can be directed to Beth Eiken, Manager of Investor Relations, at (701) 451-3571[29](index=29&type=chunk) - Media inquiries can be directed to Stephanie Hoff, Director of Corporate Communications, at (218) 739-8535[29](index=29&type=chunk) [Consolidated Financial Statements](index=5&type=section&id=Consolidated%20Financial%20Statements) This section presents the unaudited consolidated statements of income, balance sheet, cash flows, and segment results [Consolidated Statements of Income](index=5&type=section&id=Consolidated%20Statements%20of%20Income) The unaudited Consolidated Statements of Income present the company's revenues, expenses, and net income for the three and six months ended June 30, 2025, and 2024 Consolidated Statements of Income (Unaudited) | (in millions USD, except per-share amounts) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Operating Revenues | $333.043 | $342.336 | $670.396 | $689.404 | | Operating Income | $97.458 | $110.911 | $181.457 | $205.886 | | Net Income | $77.728 | $86.995 | $145.827 | $161.333 | | Diluted Earnings Per Share | $1.85 | $2.07 | $3.46 | $3.84 | [Consolidated Balance Sheet](index=6&type=section&id=Consolidated%20Balance%20Sheet) The unaudited Consolidated Balance Sheet provides a snapshot of the company's assets, liabilities, and shareholders' equity as of June 30, 2025, compared to December 31, 2024 Consolidated Balance Sheet (Unaudited) | (in billions USD) | June 30, 2025 | December 31, 2024 | | :------------- | :------------ | :---------------- | | Total Assets | $3.765 | $3.652 | | Total Current Liabilities | $0.203 | $0.310 | | Total Liabilities and Shareholders' Equity | $3.765 | $3.652 | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) The unaudited Consolidated Statements of Cash Flows detail the cash generated from or used in operating, investing, and financing activities for the six months ended June 30, 2025, and 2024 Consolidated Statements of Cash Flows (Unaudited) | (in millions USD) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :----------------------------- | :----------------------------- | | Net Cash Provided by Operating Activities | $159.379 | $223.461 | | Net Cash Used in Investing Activities | $(127.026) | $(228.065) | | Net Cash (Used in) Provided by Financing Activities | $(19.763) | $4.903 | | Net Change in Cash and Cash Equivalents | $12.590 | $0.299 | | Cash and Cash Equivalents at End of Period | $307.241 | $230.672 | [Segment Results](index=8&type=section&id=Segment%20Results) The unaudited Segment Results provide a breakdown of operating revenues, operating income, and net income for the Electric, Manufacturing, Plastics, and Corporate segments for the three and six months ended June 30, 2025, and 2024 Segment Results (Unaudited) - Three Months Ended June 30 (Millions USD) | Segment | 2025 Operating Revenues | 2024 Operating Revenues | 2025 Operating Income | 2024 Operating Income | 2025 Net Income | 2024 Net Income | | :------------ | :---------------------- | :---------------------- | :-------------------- | :-------------------- | :-------------- | :-------------- | | Electric | $128.731 | $112.828 | $23.633 | $22.597 | $19.195 | $18.485 | | Manufacturing | $78.726 | $96.684 | $5.065 | $9.600 | $3.481 | $6.835 | | Plastics | $125.586 | $132.824 | $72.034 | $82.089 | $53.104 | $60.612 | | Corporate | N/A | N/A | $(3.274) | $(3.375) | $1.948 | $1.063 | | **Total** | **$333.043** | **$342.336** | **$97.458** | **$110.911** | **$77.728** | **$86.995** | Segment Results (Unaudited) - Six Months Ended June 30 (Millions USD) | Segment | 2025 Operating Revenues | 2024 Operating Revenues | 2025 Operating Income | 2024 Operating Income | 2025 Net Income | 2024 Net Income | | :------------ | :---------------------- | :---------------------- | :-------------------- | :-------------------- | :-------------- | :-------------- | | Electric | $278.451 | $254.317 | $52.676 | $51.639 | $43.903 | $40.956 | | Manufacturing | $160.412 | $196.065 | $7.492 | $17.014 | $5.013 | $12.096 | | Plastics | $231.533 | $239.022 | $130.909 | $145.392 | $96.543 | $107.350 | | Corporate | N/A | N/A | $(9.620) | $(8.159) | $0.368 | $0.931 | | **Total** | **$670.396** | **$689.404** | **$181.457** | **$205.886** | **$145.827** | **$161.333** |

[PART I - FINANCIAL INFORMATION](index=3&type=section&id=PART%20I) [Financial Statements](index=3&type=section&id=ITEM%201.%20Financial%20Statements) This section presents Otter Tail Corporation's unaudited consolidated financial statements for Q1 2025, including balance sheets, income, equity, and cash flow statements with detailed notes [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Total assets increased to **$3.70 billion** as of March 31, 2025, from **$3.65 billion** at year-end 2024, with shareholders' equity growing to **$1.72 billion** Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | $651,274 | $630,041 | | **Property, Plant and Equipment, net** | $2,709,311 | $2,692,460 | | **Total Assets** | **$3,696,794** | **$3,652,082** | | **Total Current Liabilities** | $248,420 | $309,790 | | **Long-Term Debt** | $993,513 | $943,734 | | **Total Shareholders' Equity** | **$1,717,361** | **$1,668,499** | | **Total Liabilities and Shareholders' Equity** | **$3,696,794** | **$3,652,082** | [Consolidated Statements of Income](index=6&type=section&id=Consolidated%20Statements%20of%20Income) Net income for Q1 2025 decreased to **$68.1 million** from **$74.3 million** in Q1 2024, primarily due to lower operating income Q1 2025 vs Q1 2024 Income Statement (in thousands, except per-share amounts) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total Operating Revenues | $337,353 | $347,068 | | Total Operating Expenses | $253,354 | $252,093 | | Operating Income | $83,999 | $94,975 | | Net Income | $68,099 | $74,338 | | Diluted Earnings Per Share | $1.62 | $1.77 | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities significantly decreased to **$39.5 million** in Q1 2025, resulting in a **$9.8 million** net decrease in cash Q1 2025 vs Q1 2024 Cash Flows (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $39,469 | $71,913 | | Net Cash Used in Investing Activities | ($60,911) | ($75,876) | | Net Cash Provided by Financing Activities | $11,605 | $11,748 | | **Net Change in Cash and Cash Equivalents** | **($9,837)** | **$7,785** | [Condensed Notes to Consolidated Financial Statements](index=10&type=section&id=Condensed%20Notes%20to%20Consolidated%20Financial%20Statements) Notes detail segment performance, debt, regulatory matters, and contingencies, highlighting Plastics strength and ongoing PVC pipe litigation - The company operates in three segments: Electric, Manufacturing, and Plastics[14](index=14&type=chunk) Segment Net Income (in thousands) | Segment | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Electric | $24,708 | $22,470 | | Manufacturing | $1,532 | $5,261 | | Plastics | $43,439 | $46,740 | - In March 2025, Otter Tail Power Company (OTP) issued **$50.0 million** of 5.49% Series 2025A Senior Unsecured Notes due 2035 and has an agreement to issue an additional **$50.0 million** of 5.98% Series 2025B notes in June 2025[37](index=37&type=chunk) - The company faces class action lawsuits and a DOJ investigation regarding alleged PVC pipe antitrust violations, with potential material impact if found liable[48](index=48&type=chunk)[49](index=49&type=chunk)[50](index=50&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=ITEM%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2025 financial performance, noting an **8.4%** consolidated net income decrease, segment-specific results, and strong liquidity [Results of Operations](index=33&type=section&id=Results%20of%20Operations) Consolidated net income decreased **8.4%** to **$68.1 million** in Q1 2025, driven by lower operating revenues and higher interest expense Consolidated Results Summary (in thousands) | Metric | Q1 2025 | Q1 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Operating Revenues | $337,353 | $347,068 | ($9,715) | (2.8)% | | Operating Income | $83,999 | $94,975 | ($10,976) | (11.6)% | | Net Income | $68,099 | $74,338 | ($6,239) | (8.4)% | - The effective tax rate decreased to **12.9%** in Q1 2025 from **19.3%** in Q1 2024, primarily due to an increase in Production Tax Credits (PTCs) from wind generation[83](index=83&type=chunk) [Segment Results](index=35&type=section&id=Segment%20Results) Electric segment net income rose **10.0%**, while Manufacturing plummeted **70.9%**, and Plastics declined **7.1%** due to price and litigation impacts - **Electric Segment:** Net income increased by **$2.2 million (10.0%)** YoY, driven by a **7.1%** increase in retail revenues due to colder weather (**18.5%** more heating degree days) compared to an unseasonably warm Q1 2024[84](index=84&type=chunk) - **Manufacturing Segment:** Net income decreased by **$3.7 million (70.9%)** YoY, caused by a **13%** drop in sales volumes, particularly in the recreational vehicle, agriculture, and construction markets[91](index=91&type=chunk) - **Plastics Segment:** Net income decreased by **$3.3 million (7.1%)** YoY. A **13%** increase in sales volumes was offset by an **11%** decrease in sales prices and a **$1.4 million** increase in SG&A expenses, primarily due to ongoing litigation costs[95](index=95&type=chunk)[97](index=97&type=chunk) [Regulatory Matters](index=39&type=section&id=Regulatory%20Matters) North Dakota regulators approved a rate case settlement, increasing annual revenue by **$13.1 million** with a **10.10%** allowed ROE, alongside other pending rate riders - The North Dakota Public Service Commission approved a settlement for new rates effective March 15, 2025, resulting in a net annual revenue increase of **$13.1 million** and an allowed ROE of **10.10%**[100](index=100&type=chunk)[101](index=101&type=chunk) [Liquidity and Capital Resources](index=41&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with **$607.2 million** available, despite a decrease in operating cash flow, and issued **$50.0 million** in new long-term debt - As of March 31, 2025, the company had total available liquidity of **$607.2 million**, consisting of **$284.8 million** in cash and **$322.4 million** available under its credit facilities[106](index=106&type=chunk) - Net cash provided by operating activities decreased by **$32.4 million** YoY, primarily due to the timing of fuel cost recoveries and operating cost payments in the Electric segment[107](index=107&type=chunk) - OTP issued **$50.0 million** of 5.49% senior unsecured notes due 2035 and expects to issue an additional **$50.0 million** of 5.98% notes due 2055 in June 2025[118](index=118&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=46&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company states that there have been no material changes in its market risk from the disclosures provided in its Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes in market risk were reported since the last Annual Report on Form 10-K[123](index=123&type=chunk) [Controls and Procedures](index=46&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of March 31, 2025 - The company's disclosure controls and procedures were deemed effective as of March 31, 2025[124](index=124&type=chunk) - No material changes to internal control over financial reporting occurred during the quarter[125](index=125&type=chunk) [PART II - OTHER INFORMATION](index=46&type=section&id=PART%20II) [Legal Proceedings](index=48&type=section&id=ITEM%201.%20Legal%20Proceedings) The company is involved in multiple legal complaints alleging antitrust violations related to PVC pipe price fixing - The company is a defendant in legal proceedings alleging antitrust violations related to the pricing of PVC pipe[127](index=127&type=chunk) [Risk Factors](index=48&type=section&id=ITEM%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024 - No material changes to risk factors were reported since the last Annual Report on Form 10-K[128](index=128&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=48&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the first quarter of 2025, the company purchased its common shares on the open market to satisfy obligations under its Employee Stock Purchase Plan and Employee Stock Ownership Plan Share Purchases in Q1 2025 | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | January 2025 | 16,433 | $73.56 | | February 2025 | 3,370 | $78.70 | | March 2025 | — | — | | **Total** | **19,803** | **$74.43** | - Share purchases were made on the open market to fulfill obligations for employee stock plans; the company does not have a publicly announced repurchase plan[129](index=129&type=chunk) [Exhibits](index=48&type=section&id=ITEM%206.%20Exhibits) This section lists the exhibits filed with the report, including the Note Purchase Agreement from March 27, 2025, CEO and CFO certifications, and Inline XBRL data files - Key exhibits filed include a Note Purchase Agreement, CEO/CFO certifications (Sections 302 and 906), and XBRL data files[132](index=132&type=chunk)

Financial Data and Key Metrics Changes - The company reported diluted earnings per share of $1.62 in Q1, an 8% decline from the same period last year, but in line with expectations [31][6][7] - The Electric segment saw a 10% increase in earnings due to favorable weather conditions and increased sales volumes, while the Manufacturing segment earnings decreased due to lower sales volumes and increased production costs [31][32] - The Plastics segment produced diluted earnings per share of $1.03, a 7% decrease compared to the previous year, driven by an 11% decline in PVC pipe prices [33][27] Business Line Data and Key Metrics Changes - The Electric segment's earnings growth was attributed to increased rider revenues from capital investments and favorable weather, while the Manufacturing segment faced challenges from soft end market demand, particularly in recreational vehicles and agriculture [31][32][23] - The Plastics segment experienced a 13% increase in sales volumes, benefiting from strong distributor demand and the new large diameter line's output [33][27] Market Data and Key Metrics Changes - The company noted stabilization in the construction and lawn and garden markets, but challenges remain in the recreational vehicle and agriculture markets due to high inventory levels and softening commodity prices [23][25] - The horticulture market served by T.O. Plastics has stabilized, but the timing of sales volume recovery remains uncertain [24] Company Strategy and Development Direction - The company is focused on a customer-centric capital investment plan, projecting a compounded annual growth rate of 9% in rate base through 2029, aiming to convert this into earnings per share growth at a one-to-one ratio [15][37] - The company is actively monitoring trade and tax policy changes, particularly regarding the Inflation Reduction Act, to mitigate risks and seize opportunities [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate economic uncertainty, affirming the 2025 earnings guidance with a midpoint of $5.88 per share [7][35] - The company anticipates potential challenges in the second half of the year due to housing starts and builder sentiment, but expects to remain within the guidance range [47] Other Important Information - The company completed the expansion of its BTD Georgia facility, which is expected to increase production capacity and annual sales significantly [29][30] - The company maintains a strong balance sheet with a consolidated equity layer of 62% and over $600 million in available liquidity [34][35] Q&A Session Summary Question: Inquiry about Plastics segment volumes and pricing dynamics - Management indicated a lower single-digit increase in volume for the year, with strong Q1 performance but potential downturn in the second half due to housing market risks [46][47] - The expectation of continued product price declines despite inflationary input cost increases was explained as a return to pre-2021 gross margin percentages [48] Question: Impact of competitors expanding capacity in core regions - Management noted that while they do not have complete visibility, they anticipate competitors are likely adding capacity similar to their own efforts [50]

Financial Data and Key Metrics Changes - The company reported diluted earnings per share of $1.62 in Q1, an 8% decline from the same period last year, but in line with expectations [31][6][7] - The Electric segment saw a 10% increase in earnings due to favorable weather conditions and increased sales volumes, while the Manufacturing segment's earnings decreased due to lower sales volumes and increased production costs [31][32] - The Plastics segment produced diluted earnings per share of $1.03, a 7% decrease compared to the previous year, driven by an 11% decline in PVC pipe prices [33][27] Business Line Data and Key Metrics Changes - The Electric segment's earnings growth was attributed to increased rider revenues from capital investments and favorable weather, while the Manufacturing segment faced challenges from soft end market demand, particularly in recreational vehicles and agriculture [31][32][23] - The Plastics segment experienced a 13% increase in sales volumes, benefiting from strong distributor demand and the new large diameter pipe capacity [33][27] Market Data and Key Metrics Changes - The company noted stabilization in the construction and lawn and garden markets, but challenges remain in the recreational vehicle and agriculture markets due to high inventory levels and softening commodity prices [23][25] - The horticulture market served by T.O. Plastics has stabilized, but the timing of sales volume recovery remains uncertain [23] Company Strategy and Development Direction - The company is focused on a customer-centric capital investment plan, projecting a compounded annual growth rate of 9% in rate base through 2029, aiming to convert this growth into earnings per share growth at a one-to-one ratio [15][37] - The company is actively monitoring trade and tax policy changes, particularly regarding the Inflation Reduction Act, which could impact renewable energy investments [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate economic uncertainty, affirming the 2025 earnings guidance with a midpoint of $5.88 per share [7][35] - The company anticipates potential challenges in the second half of the year due to housing starts and builder sentiment, but expects to remain within the guidance range [47] Other Important Information - The company completed the expansion of its BTD Georgia facility, which is expected to increase production capacity and annual sales significantly [29][30] - The company maintains a strong balance sheet with a consolidated equity layer of 62% and over $600 million in available liquidity [34][35] Q&A Session Summary Question: Inquiry about Plastics segment volumes and pricing dynamics - Management indicated a lower single-digit increase in volume for the year, with strong Q1 performance but potential downturn in the second half due to housing market risks [47] - The expectation of continued product price declines despite inflationary input costs was explained as a return to pre-2021 gross margin percentages [48] Question: Impact of competitors expanding capacity in core regions - Management noted that while they do not have complete visibility, they anticipate competitors are likely adding capacity similar to their own efforts [50]

Financial Data and Key Metrics Changes - The company reported diluted earnings per share of $1.62 in Q1 2025, an 8% decline from the same period last year, but in line with expectations [31] - The Electric segment saw a 10% increase in earnings due to favorable weather conditions and increased sales volumes, while the Manufacturing segment's earnings decreased due to lower sales volumes and increased production costs [31][32] - The Plastics segment produced diluted earnings per share of $1.03, a decrease of 7% compared to the first quarter last year, driven by an 11% decline in average sales prices of PVC pipe [33] Business Line Data and Key Metrics Changes - The Electric segment's earnings growth was attributed to favorable weather and increased rider revenues from capital investments [31] - The Manufacturing segment faced challenges with soft end market demand, particularly in recreational vehicles and agriculture, leading to decreased earnings [32][23] - The Plastics segment experienced a 13% increase in sales volumes, offsetting some of the decline in pricing [33][26] Market Data and Key Metrics Changes - The company noted heightened uncertainty in the operating environment due to U.S. trade policy and macroeconomic conditions, impacting its businesses [7][8] - Domestic steel prices have increased due to tariffs, which are expected to impact raw material costs in the second half of 2025, but the company anticipates being able to pass these costs onto customers [11] - The company is monitoring end market conditions, particularly in housing starts and builder sentiment, which could affect sales volumes in the second half of the year [49] Company Strategy and Development Direction - The company is affirming its 2025 earnings guidance with a midpoint of $5.88 per share, focusing on capital investments in the Electric segment to drive growth [7][35] - Otter Tail Power aims to attract large loads, with over 1,000 megawatts of potential new loads in the pipeline, which could benefit existing customers by spreading fixed costs [20][22] - The company is committed to maintaining affordable electric service rates, with rates 30% below the national average [22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current economic uncertainty, citing a strong balance sheet and ample liquidity [7][35] - The company is closely monitoring potential changes in tax policy that could impact renewable energy investments, particularly under the Inflation Reduction Act [11][12] - Management remains optimistic about the long-term fundamentals of the Manufacturing segment despite current challenges [25] Other Important Information - The company completed the expansion of its BTD Georgia facility, which is expected to increase production capacity and annual sales [29] - The Electric segment's capital investment plan is projected to produce a compounded annual growth rate of 9% through 2029 [15] - The company has a strong balance sheet with a consolidated equity layer of 62% and over $600 million in available liquidity [34] Q&A Session Summary Question: What kind of volumes are assumed in the guidance for the Plastics segment this year? - The company expects a lower single-digit increase in volume for the year, factoring in potential downturns in the second half due to housing starts and builder sentiment [48] Question: Why expect continued product price declines despite inflationary increases in input costs? - The company anticipates reverting to pre-2021 gross margin percentages, expecting a convergence of costs and prices by the end of 2027 [49] Question: Are there any impacts from competitors expanding capacity in core regions? - The company does not have complete visibility but anticipates competitors are likely adding incremental line capacity similar to its own efforts [51]

Financial Performance & Outlook - The company affirmed its 2025 earnings guidance of $5.68 to $6.08 per share[9] - Q1 2025 earnings reached $68.1 million, with a diluted EPS of $1.62[10] compared to $74.3 million and $1.77 diluted EPS in Q1 2024[12] representing an 8% decrease in net income[12] - The company projects a 14.2% Return on Equity (ROE) for 2025[13] - The electric segment is expected to have 7% earnings growth in 2025[13] Electric Segment & Rate Base - A net revenue increase of $13.1 million (6.18% increase) was achieved in the North Dakota rate case, implemented in March 2025[10, 19] - The North Dakota rate case resulted in an increased ROE to 10.1% (from 9.77%) and an equity layer of 53.5% (from 52.5%)[19] - The company anticipates significant rate base growth with a Compound Annual Growth Rate (CAGR) of 9.0%[22] Manufacturing & Plastics Segments - Sales prices in the plastics segment decreased by 11% in Q1 2025, while sales volumes increased by 13%[41] - Material input costs for the plastics segment decreased by 89%[41] - The BTD Georgia facility expansion was completed in Q1 2025, with the potential to generate up to $35 million in incremental annual revenue[10, 47] Capital Investments & Financing - The company plans total capital expenditures of $278 million in 2025[63] - Long-term debt issuances for Otter Tail Power Company are projected at $100 million for 2025[65] - The company anticipates normalized plastics earnings of $45-$50 million in 2028[70]

Financial Performance - Otter Tail Corporation reported earnings of $68.1 million, or $1.62 per diluted share, for Q1 2025, aligning with expectations [2]. - The company maintains its 2025 diluted earnings per share guidance range of $5.68 to $6.08, expecting a return on equity between 13.8% and 14.6% [7][25]. - Net Income for Q1 2025 was $68,099,000, down 8.4% compared to $74,338,000 in Q1 2024 [31]. - Basic Earnings Per Share (EPS) decreased to $1.63 in Q1 2025 from $1.78 in Q1 2024, reflecting a decline of 8.4% [31]. - Operating Income for Q1 2025 was $83,999,000, a decrease of 11.5% from $94,975,000 in Q1 2024 [31]. - Total Operating Revenues for Q1 2025 were $337,353,000, a decrease of 2.1% from $347,068,000 in Q1 2024 [31]. Segment Performance - Operating revenues for the Electric segment increased by $8.2 million, or 5.8%, driven by higher fuel recovery revenues and favorable weather conditions [15][17]. - The Manufacturing segment experienced a revenue decline of $17.7 million, or 17.8%, primarily due to a 13% decrease in sales volumes [19]. - The Plastics segment's operating revenues decreased slightly by $0.3 million, or 0.2%, despite a 13% increase in sales volumes [21]. - Total operating revenues for the electric segment reached $149,720 thousand, an increase from $141,488 thousand in the prior year, reflecting a growth of about 5% [34]. - The manufacturing segment reported operating revenues of $81,685 thousand, compared to $99,380 thousand in the previous year, indicating a decrease of approximately 18% [34]. - Net income for the electric segment was $24,708 thousand, up from $22,470 thousand year-over-year, marking an increase of about 10% [34]. Cash Flow and Liquidity - Consolidated cash provided by operating activities was $39.5 million for Q1 2025, down from $71.9 million in Q1 2024 [10]. - For the three months ended March 31, 2025, net cash provided by operating activities was $39,469 thousand, a decrease from $71,913 thousand in the same period of 2024, representing a decline of approximately 45% [33]. - Available liquidity as of March 31, 2025, was $607 million, including cash and credit facilities [12][14]. - Cash and cash equivalents decreased to $284,814,000 from $294,651,000, a decline of about 3.5% [32]. - The cash and cash equivalents at the end of the period were $284,814 thousand, compared to $238,158 thousand at the end of the previous year, representing an increase of approximately 19.6% [33]. - The company experienced a net change in cash and cash equivalents of $(9,837) thousand, contrasting with a positive change of $7,785 thousand in the same period last year [33]. Expenses and Costs - Total Operating Expenses increased slightly to $253,354,000 in Q1 2025 from $252,093,000 in Q1 2024, representing a 0.5% increase [31]. - Electric Production Fuel costs decreased to $14,321,000 in Q1 2025, down 19.5% from $17,694,000 in Q1 2024 [31]. - Electric Purchased Power costs increased significantly to $30,870,000 in Q1 2025, up 37.1% from $22,521,000 in Q1 2024 [31]. - Interest Expense rose to $11,553,000 in Q1 2025, an increase of 17.3% compared to $9,850,000 in Q1 2024 [31]. Assets and Liabilities - Total current assets increased to $651,274,000 from $630,041,000, representing a growth of approximately 3.9% year-over-year [32]. - Total noncurrent assets rose to $3,045,520,000 from $3,022,041,000, reflecting an increase of approximately 0.8% [32]. - Total assets reached $3,696,794,000, up from $3,652,082,000, indicating a growth of about 1.2% [32]. - Current liabilities totaled $248,420,000, compared to $230,990,000, marking an increase of approximately 7.5% [32]. - Short-term debt decreased to $58,853,000 from $69,615,000, a reduction of about 15.5% [32]. - Total noncurrent liabilities and deferred credits amounted to $737,500,073, showing a slight increase from the previous period [32]. - Shareholders' equity increased to $209,370,209 from $194,040,000, representing an increase of approximately 7.9% [32]. - Regulatory assets rose to $11,539,000 from $9,962,000, an increase of about 15.8% [32]. - Goodwill remained stable at $37,572,000 with no change from the previous year [32]. Capital Expenditures - Capital expenditures for Q1 2025 totaled $58.0 million, primarily focused on the Electric segment's projects [11]. - Capital expenditures for the three months ended March 31, 2025, were $58,012 thousand, down from $74,044 thousand in the same period of 2024, a reduction of approximately 22% [33]. Future Outlook - Otter Tail Power expects a compounded annual growth rate in rate base of 9% from 2025 to 2029, aiming for long-term earnings-per-share growth of 6% to 8% [8]. - The company plans to focus on expanding its electric segment and enhancing operational efficiencies to improve future performance [34].

Financial Performance - In 2024, Otter Tail Corporation achieved a net income of $301.7 million, or $7.17 per diluted share, representing a 3% increase from $294.2 million, or $7.00 per diluted share, in 2023[208]. - Net income for 2024 increased to $301,662, up 2.5% from $294,191 in 2023[322]. - Basic earnings per share rose to $7.22 in 2024, compared to $7.06 in 2023, reflecting a 2.3% increase[322]. - Total operating revenues for 2024 were $1,330,548, a decrease of 1.3% from $1,349,166 in 2023[322]. - Operating income for 2024 was $380,250, a slight increase from $377,919 in 2023[322]. - Total shareholders' equity rose to $1,668,499 in 2024, an increase of 15.6% from $1,443,006 in 2023[320]. Segment Performance - The Electric segment reported an 8% earnings growth in 2024, increasing from $84.4 million in 2023 to $91.0 million, driven by higher retail revenue from an interim rate increase in North Dakota[209]. - The Manufacturing segment experienced a 36% decline in earnings, dropping from $21.5 million in 2023 to $13.7 million in 2024, primarily due to lower sales volumes and decreased gross profit margins[210]. - The Plastics segment's earnings grew by 7%, from $187.7 million in 2023 to $200.7 million in 2024, attributed to increased sales volumes despite a decrease in gross profit margins[211]. - Net income for the Electric segment in 2024 was $90,963,000, an increase of 7.3% from $84,424,000 in 2023[389]. - Net income for the Manufacturing segment in 2024 was $13,681,000, a decrease of 36.5% from $21,454,000 in 2023[391]. - Net income for the Plastics segment in 2024 was $200,747,000, an increase of 6.5% from $187,748,000 in 2023[392]. Revenue and Expenses - Operating revenues decreased by $18.6 million in 2024, with the Electric segment's revenues down by 1% and the Manufacturing segment's revenues down by 15%[222]. - Operating expenses decreased by $20.9 million in 2024, mainly due to lower purchased power costs in the Electric segment[223]. - Selling, General, and Administrative Expenses in Corporate increased by $12.4 million, or 102.9%, primarily due to increased insurance expenses[239]. - Total operating revenue for the company in 2024 was $1,330,548,000, a decrease of 8.9% from $1,349,166,000 in 2023[399]. Cash Flow and Liquidity - The company reported a net cash provided by operating activities of $452.7 million for 2024, an increase of $48.2 million compared to $404.5 million in 2023[252]. - Net cash used in investing activities rose to $411.4 million in 2024, up by $122.1 million from $289.3 million in 2023, primarily due to increased capital expenditures[255]. - The total available liquidity as of December 31, 2024, was $606.3 million, compared to $479.8 million as of December 31, 2023[251]. - The company has $311.6 million of available liquidity under credit agreements as of December 31, 2024[250]. Capital Expenditures and Investments - Capital expenditures for the Electric segment in 2024 were $301 million, with anticipated total capital expenditures of $1.426 billion from 2025 to 2029[259]. - Capital expenditures increased to $358,650,000 in 2024, compared to $287,134,000 in 2023, reflecting a 25% rise[325]. - The company made a $50.1 million investment in U.S. treasuries in April 2024, maturing in September 2026[401]. Debt and Interest - Interest expense increased by $4.1 million in 2024 due to the issuance of an additional $120.0 million of long-term debt[224]. - As of December 31, 2024, OTP had $947 million of principal outstanding under long-term debt arrangements[270]. - OTP's interest-bearing debt to total capitalization ratio was 0.47 to 1.00 as of December 31, 2024, with an interest and dividend coverage ratio of 3.34 to 1.00[272]. - The weighted-average interest rate on outstanding borrowings was 5.61% as of December 31, 2024[267]. Regulatory and Taxation - The effective tax rate improved to 17.8% in 2024 from 19.1% in 2023, resulting in a $4.1 million decrease in income tax expense[225]. - OTP requested a net increase in annual revenue of $17.4 million, or 8.4%, in its North Dakota rate case filing[242]. - The NDPSC approved a revenue requirement of $225.6 million, with a net increase of $13.1 million, or 6.18%, based on the settlement agreement[243]. Goodwill and Impairment - The company changed its annual goodwill impairment test date to October 1st in 2024 to better align with year-end financial reporting[289]. - No goodwill impairment was identified in the fourth quarter of 2024, with estimated fair values substantially exceeding carrying values[294]. Other Financial Metrics - Total assets increased to $3,652,082 in 2024, up 12.6% from $3,242,568 in 2023[320]. - Total current liabilities remained stable at $309,790 in 2024, slightly up from $309,757 in 2023[320]. - Long-term debt increased to $943,734 in 2024, up 14.5% from $824,059 in 2023[320]. - Regulatory assets decreased from $16,127 in 2023 to $9,962 in 2024, a decline of 38.5%[320]. - Regulatory liabilities increased from $276,547 in 2023 to $288,928 in 2024, reflecting a growth of 4.9%[320].

Earnings Conference Call Q4 2024 Forward Looking Statement 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," "could," "estimate," "expect," "future," "goal," "intend," "likely," "may," "opportunity," "outlook," "plan," "possible," "potential," "predict," "probable," "projected," "should," "target," "will," "would ...