Q1 2023 Earnings Conference Call May 2, 2023 Company Overview ACCENT 5 140, 41, 32 Electric Platform Electric 65% 3 | --- | --- | --- | --- | --- | --- | --- | |-------|-------|-------|-------|-------|-------|-------| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ACCENT 1 | | | | | | | | | | | | | | | | | | | | | | | | Default Color 0, 123, 195 | | | | | | | | | | | | | | | | | | | | | ACCENT 4 245, 122, 30 ACCENT 6 48, 138, 35 | --- | ...

Financial Performance - Total operating revenues for 2022 reached $1,460,209,000, a 22% increase from $1,196,844,000 in 2021[306]. - Net income for 2022 was $284,184,000, representing a 61% increase compared to $176,769,000 in 2021[307]. - Basic earnings per share increased to $6.83 in 2022, up from $4.26 in 2021, reflecting a 60% growth[306]. - Operating income for 2022 was $390,439,000, a 56.4% increase from $249,708,000 in 2021[306]. - The company reported a total comprehensive income of $291,623,000 for 2022, compared to $178,752,000 in 2021, marking a 63.1% increase[307]. - Total assets as of December 31, 2022, were $2,901,661,000, an increase of 5.3% from $2,754,830,000 in 2021[305]. - Total current liabilities decreased significantly to $237,636,000 in 2022, down 38.6% from $387,699,000 in 2021[305]. - Shareholders' equity increased to $1,217,317,000 in 2022, a 22.9% rise from $990,777,000 in 2021[305]. - Net cash provided by operating activities increased to $389,309,000 in 2022 from $231,243,000 in 2021, representing a 68.4% growth[309]. Segment Performance - The Electric segment generated $549,699,000 in revenue for 2022, up 14% from $480,321,000 in 2021[357]. - The Plastics segment saw a revenue increase of 35% in 2022, reaching $512,527,000 compared to $380,229,000 in 2021[357]. - The Manufacturing segment earns revenue from the production and delivery of custom-made or standardized parts, recognizing revenue at the point of shipment[317]. - The Electric segment generates revenue primarily from the sale of electricity to retail customers at rates approved by state regulatory commissions[316]. - The Plastics segment generates revenue predominantly from the sale of standardized PVC pipe products, with revenue recognized at the point of shipment[319]. Debt and Financing - As of December 31, 2022, the company had $8.2 million and $91.2 million of short-term debt outstanding, with a one percentage point change in interest rates potentially impacting interest charges by approximately $0.3 million[290]. - Long-term debt, net of current maturities, rose to $823,821,000 in 2022, up from $734,014,000 in 2021[305]. - The company issued $90.0 million of Series 2022A Senior Unsecured Notes in 2022, which were used to repay short-term borrowings and fund capital expenditures[383]. - OTP's total outstanding short- and long-term borrowings amounted to $832.0 million as of December 31, 2022, compared to $855.2 million in 2021[379]. - The weighted-average interest rate on all outstanding borrowings as of December 31, 2022, was 5.61%, compared to 1.42% in 2021[381]. Asset Management - Total inventories decreased to $145,952,000 in 2022 from $148,490,000 in 2021, a decline of 1.0%[324]. - Receivables decreased to $146,041,000 in 2022 from $176,789,000 in 2021, reflecting a reduction in trade receivables[358]. - Identifiable assets increased to $2,901,661,000 in 2022 from $2,754,830,000 in 2021, showing growth in asset base[354]. - Cash and cash equivalents at the end of 2022 were $118,996,000, up from $1,537,000 at the end of 2021[309]. Risk Management - The Electric segment's exposure to commodity price risk is largely mitigated by the ratemaking process, allowing recovery of purchased power and fuel costs from electric customers[285]. - The Manufacturing segment is exposed to commodity price risk from raw materials like steel and aluminum, with potential impacts on operating revenues if cost management efforts are unsuccessful[287]. - The Plastics segment is sensitive to PVC resin price volatility, affecting sales volumes and gross profit margins significantly[288]. - The company does not engage in hedging activities for commodity price risk within its Manufacturing and Plastics segments[289]. - The company has not used hedging instruments to manage interest rate risk, maintaining a ratio of fixed-rate debt to total debt within a specified range[292]. Pension and Employee Benefits - The company’s pension plan assets totaled $313.8 million as of December 31, 2022, down from $387.2 million in 2021[395]. - The actual allocation for Return Enhancement investments was 48% in 2022, within the permitted range of 35% to 60%[393]. - The net periodic benefit cost for the pension plan was $3.1 million in 2022, down from $7.7 million in 2021, representing a decrease of approximately 60%[398]. - The accumulated benefit obligation of the pension plan was $283.2 million in 2022, down from $378.3 million in 2021, a decrease of about 25%[396]. - The company contributed $20 million to the pension plan in 2022, up from $10 million in 2021[396]. Taxation - The total provision for income taxes in 2022 was $73.351 million, with an effective tax rate of 20.5%, compared to $36.052 million and 16.9% in 2021[405]. - The company has deferred tax assets totaling $168.098 million and deferred tax liabilities of $389.400 million as of December 31, 2022, resulting in deferred income taxes of $(221.302) million[406]. Investments and Acquisitions - The company acquired the Ashtabula III wind farm for $50.6 million on January 3, 2023, enhancing its renewable energy portfolio[408]. - OTP's construction work in progress increased to $113.9 million in 2022 from $74.9 million in 2021, reflecting ongoing investments[371]. Compliance and Governance - The company maintains effective internal control over financial reporting, as confirmed by independent auditors[294]. - Financial covenants require a maximum debt to total capitalization ratio of 0.60 to 1.00 and a minimum interest and dividend coverage ratio of 1.50 to 1.00; as of December 31, 2022, the company was in compliance[386].

Financial Data and Key Metrics Changes - Consolidated revenues increased approximately 22% to $1.46 billion, and consolidated earnings were $284 million, with diluted earnings per share of $6.78, a 60% increase from 2021 [10][15][40] - Return on equity in 2022 was 25.6%, compared to 19.2% in 2021 [40] - Corporate costs were impacted by increased employee healthcare costs and professional service expenses, but were partially offset by lower interest expenses [26][49] Business Segment Data and Key Metrics Changes - Electric segment earnings improved by 10%, driven by increased revenues from commercial and industrial customers [10][23] - Manufacturing segment net earnings increased by $3.8 million, with an 18% increase in revenues due to higher sales volumes [24] - Plastics segment net earnings increased by $97.6 million, with revenues up approximately 35% due to significant increases in sales price per pound of PVC pipe [25][39] Market Data and Key Metrics Changes - The recreational vehicle and lawn & garden markets are expected to soften in 2023, while agriculture, power generation, and horticulture markets are anticipated to remain strong [21] - The backlog for the Manufacturing segment as of December 31, 2022, was approximately $388 million, compared to $391 million a year ago [28] Company Strategy and Development Direction - The company is targeting to reduce carbon emissions from owned generation resources by approximately 50% from 2005 levels by 2025 and 97% by 2050 [17] - A capital investment plan of $1.1 billion over the next five years is expected to produce a 6.4% annual compounded growth rate in rate base [37] - The company expects to produce compound growth in earnings per share of 5% to 7% off a base of 2024 earnings [69] Management's Comments on Operating Environment and Future Outlook - Management anticipates a transitional year in 2023 as industry conditions within the PVC pipe industry normalize, with expected earnings per share in the range of $3.76 to $4.06 [44][80] - The company is actively managing the impacts of inflation across all operating companies and monitoring various economic indicators [29][50] Other Important Information - The company completed the purchase of the Ashtabula III wind farm, providing a lower-cost alternative than maintaining the purchase power agreement [19] - The Inflation Reduction Act has increased the investment tax credit on the Hoot Lake Solar project from 26% to 40% [6] Q&A Session Summary Question: How is the balance sheet affecting strategic plans for the utility? - Management noted that the strong balance sheet provides additional flexibility for future rate base projects, with an uplift in the capital plan driven by the Inflation Reduction Act [34][35] Question: Can you provide details on the Plastics expansion? - The total costs for the Plastics expansion, including a second line, are expected to be around $50 million, with the expansion timeline set for 2027 [36][73] Question: What is the outlook for the utility and rate cases? - Management does not anticipate any rate cases in 2023, with the possibility of one in North Dakota [63] Question: What are the expectations for earnings in 2023? - Earnings for the Manufacturing segment are expected to decline by 10% due to a slowing manufacturing sector, while earnings at T.O. Plastics are expected to be flat year-over-year [46][47] Question: How is the company managing inflationary pressures? - The company expects lower corporate costs in 2023, but inflationary increases in salary and benefit costs are anticipated [49]

2022 Earnings Conference Call February 14, 2023 Forward-Looking Statement Except for historical information contained here, the statements in this presentation are forward-looking and made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The words "anticipate," "believe," "could," "estimate," "expect," "future," "goal," "intend," "likely," "may," "outlook," "plan," "possible," "potential," "predict," "probable," "projected," "should," "target," "will," "would" ...

Financial Data and Key Metrics Changes - Otter Tail Corporation achieved diluted earnings per share of $2.01, a 60% increase over Q3 2021 [8] - Consolidated revenues increased by 21% and net earnings rose by 60% compared to Q3 2021 [24] - The company experienced a historic 9.8% earnings per share CAGR, excluding the plastics companies [9] Business Segment Data and Key Metrics Changes - The Electric segment net earnings increased by $2.3 million or approximately 10.3% over Q3 2021, driven by an 18.4% increase in retail megawatt hour sales [25] - The Manufacturing segment's net earnings increased by $2 million, supported by a 17% increase in sales volumes at BTD [27] - The Plastics segment's net earnings increased by $27.6 million compared to Q3 2021, although sales volume decreased by 15% due to softening demand [29][22] Market Data and Key Metrics Changes - Demand for PVC pipe began to soften in Q3 as distributors and contractors used up high-priced inventory [21] - Rising interest rates are impacting housing starts, leading to project cancellations or delays into 2023 [36] Company Strategy and Development Direction - The company is targeting a 50% reduction in carbon emissions from owned generation resources by 2025 and 97% by 2050 [11] - Otter Tail Power is actively participating in MISO's long-range transmission planning projects, with an estimated capital investment of $330 million [15] - The company anticipates a shift in earnings mix to approximately 65% from the Electric segment and 35% from the Manufacturing platform by 2024 [40] Management's Comments on Operating Environment and Future Outlook - Management noted a slowdown in overall demand and rising interest rates affecting housing starts [36] - The company expects elevated earnings from the manufacturing platform into 2023, with a normalized earnings range for the Plastics segment projected between $36 million to $41 million [40] - The revised diluted earnings per share guidance for 2022 is now $6.42 to $6.72, down from the previous range of $6.83 to $7.13 [60] Other Important Information - The company is monitoring various economic indicators to ensure preparedness for changes in the market [37] - Corporate costs are expected to increase in 2022 due to investment losses and higher healthcare costs [37] Q&A Session Summary Question: Plastics segment guidance and demand outlook - The revised guidance for the Plastics segment reflects a midpoint of $0.48 for Q4 2022, down from $0.90 in Q4 2021, due to volumetric risks and margin compression from resin price declines [44] Answer: - Management acknowledged the fall-off in demand and resin price reductions impacting performance, with expectations of elevated earnings but lower than current levels moving into 2023 [49][50] Question: Regulated utility earnings growth - Inquiry about whether the step-up in guidance for the utility reflects a new level of earnings power due to ongoing customer demand [51] Answer: - Management confirmed that favorable pricing from a commercial customer contributed to the uplift, but caution was advised regarding the sustainability of margins [51] Question: BTD operational efficiency - Question regarding whether BTD's widening margins are sustainable due to improved operations [53] Answer: - Management indicated that improved customer take rates are leading to better efficiencies and productivity, which should support margins moving forward [55]

Q3 2022 EARNINGS CONFERENCE CALL November 1, 2022 FORWARD-LOOKING STATEMENT Except for historical information contained here, the statements in this presentation are forward-looking and made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The words "anticipate," "believe," "could," "estimate," "expect," "goal," "intend," "may," "outlook," "plan," "possible," "potential," "projected," "should," "will," "would" and similar words and expressions are intended to i ...

Sidoti Fall 2022 Virtual Conference September 21-22, 2022 FORWARD-LOOKING STATEMENT Except for historical information contained here, the statements in this presentation are forward-looking and made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The words "anticipate," "believe," "could," "estimate," "expect," "goal," "intend," "may," "outlook," "plan," "possible," "potential," "projected," "should," "will," "would" and similar words and expressions are inten ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended June 30, 2022 or ☐ Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission File Number 0-53713 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchang ...

Q2 2022 EARNINGS CONFERENCE CALL August 2, 2022 FORWARD-LOOKING STATEMENT Except for historical information contained here, the statements in this presentation are forward-looking and made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The words "anticipate," "believe," "could," "estimate," "expect," "goal," "intend," "may," "outlook," "plan," "possible," "potential," "projected," "should," "will," "would" and similar words and expressions are intended to ide ...

Financial Data and Key Metrics Changes - Otter Tail Corporation achieved diluted earnings per share of $2.05, an increase of 103% over Q2 2021 [8] - Consolidated revenues increased by 40% and net earnings rose by 104% compared to the second quarter of 2021 [25] - The electric segment's net earnings increased by $3.4 million or approximately 22% over Q2 2021 [26] Business Line Data and Key Metrics Changes - The plastics segment's quarterly earnings increased by $41.4 million over Q2 2021, primarily due to an 86% increase in the price per pound of PVC pipe sold [10][32] - The manufacturing segment's net earnings increased by $1.85 million, driven by an 8% increase in sales volumes at BTD [28] - The electric segment's earnings growth was driven by increased commercial and industrial sales and the finalization of the Minnesota Rate Case interim rate refunds [9] Market Data and Key Metrics Changes - Sales prices for PVC pipe continued to increase at a rate higher than raw material price increases, driven by strong demand and limited inventories [23][33] - Supply constraints impacted the availability of PVC resin additives, leading to a 6% decrease in sales volumes compared to the same quarter a year ago [34] Company Strategy and Development Direction - Otter Tail Power is targeting a 50% reduction in carbon emissions from its generation resources by 2025 and 97% by 2050, with over 50% of energy generation expected to be renewable by 2025 [13] - The company plans to invest nearly $1 billion in capital expenditures from 2022 to 2026, with a projected annual rate base growth of approximately 6% [21] - The strategic planning process has led to an expectation of normalized earnings for the plastics segment to be in the range of $36 million to $41 million beginning in 2024 [43] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding consumer demand and economic conditions, noting potential softness in consumer balance sheets as the economy transitions [58] - The company remains confident in its ability to grow earnings per share at a compound annual growth rate of 5% to 7% starting in 2024 [44][109] - Management highlighted the importance of monitoring economic indicators such as housing starts and consumer confidence to remain well-positioned for future changes [41] Other Important Information - The company has no immediate equity needs to support its $1 billion capital expenditure plan due to strong earnings and cash flows from the plastics segment [75] - The purchase of the Ashtabula III wind farm is anticipated to close in January 2023, subject to regulatory approvals [15] Q&A Session Summary Question: Can you repeat the normalized level of net income for the manufacturing businesses? - Management clarified that normalized earnings for the plastics segment are now expected to be in the range of $36 million to $41 million beginning in 2024 [50] Question: What are your thoughts on the economy for manufacturing and consumer demand? - Management noted that demand remains strong, particularly in the recreational vehicle and lawn and garden sectors, but expressed caution regarding potential economic downturns [58] Question: Can you quantify the cash flow windfall from the plastics segment? - Management indicated that the strong earnings from the plastics segment have further strengthened cash flows and liquidity, allowing for continued investment without equity needs [75] Question: What is the timeline for the new transmission spend? - Management anticipates construction completion for the new transmission lines between 2028 and 2030 [68] Question: Are there plans to adjust the business mix back to long-term targets? - Management conducted a review and determined that the current earnings mix aligns with their long-term strategy, despite the challenges in forecasting plastics earnings [101]