Otter Tail (OTTR) - 2025 Q3 - Quarterly Results

Financial Performance - Otter Tail Corporation reported diluted earnings per share of $1.86 for Q3 2025, with an increase in the midpoint of 2025 earnings guidance to $6.47, up by $0.21[10] - The Electric segment's operating revenues increased by $8.2 million, or 6.3%, to $138.6 million, while net income decreased by $1.2 million, or 4.3%, to $27.3 million[13] - The Manufacturing segment's operating revenues decreased by $2.9 million, or 3.7%, to $76.9 million, but net income increased by $1.7 million, or 80.1%, to $3.9 million[17] - The Plastics segment's operating revenues decreased by $17.7 million, or 13.9%, to $110.0 million, with net income down by $11.0 million, or 20.2%, to $43.5 million[19] - Operating revenues for the third quarter of 2025 were $325.6 million, compared to $338.0 million in the same period of 2024[31] - Net income for the nine months ended September 30, 2025, was $224.1 million, down from $246.8 million in 2024[31] - Basic earnings per share for the third quarter of 2025 were $1.87, compared to $2.04 in the same quarter of 2024[31] - Total operating revenues for the nine months ended September 30, 2025, were $995,959 thousand, a decrease of 3.1% from $1,027,437 thousand in 2024[34] - Net income for the nine months ended September 30, 2025, was $224,119 thousand, down 9.2% from $246,812 thousand in 2024[34] Capital Expenditures and Investments - The company introduced a new five-year capital spending plan totaling $1.9 billion, targeting a compounded annual growth rate of 10% for the rate base[6] - Total capital expenditures for 2024 amounted to $359 million, with a projected decrease to $321 million in 2025[25] - The Electric segment's total capital expenditures for 2024 were $301 million, expected to rise to $300 million in 2025[25] - The company anticipates a total capital expenditure of $1,918 million for the Electric segment from 2026 to 2030[25] - The Manufacturing and Plastics segments' capital expenditures totaled $129 million for 2024, with plans for additional capacity investments[25] - Capital expenditures for the nine months ended September 30, 2025, were $213,329 thousand, a decrease from $259,750 thousand in 2024[33] Liquidity and Assets - Total available liquidity as of September 30, 2025, was $705.3 million, including $325.8 million in cash and cash equivalents[12] - Total current assets increased to $737,243,000 from $630,041,000, representing a growth of approximately 17% year-over-year[32] - Cash and cash equivalents rose to $325,786,000 compared to $294,651,000, marking an increase of about 10.6%[32] - Total noncurrent assets reached $3,106,580,000, up from $3,022,041,000, indicating a growth of approximately 2.8%[32] - Total assets amounted to $3,843,823,000, compared to $3,652,082,000, reflecting an increase of around 5.2%[32] - Total current liabilities were $206,360,000, a rise from $199,790,000, which is an increase of about 3%[32] - Total liabilities and shareholders' equity stood at $3,843,823,000, consistent with total assets, indicating a balanced financial position[32] - Shareholders' equity totaled $1,831,451,000, compared to $1,668,499,000, representing an increase of approximately 9.8%[32] Regulatory and Rate Changes - Otter Tail Power filed a request for a rate increase of approximately $44.8 million, or 17.7%, driven by infrastructure investments and inflation[3] Earnings Growth and Projections - The anticipated earnings mix for 2025 is approximately 36% from the Electric segment and 64% from Manufacturing and Plastics segments[22] - The updated long-term earnings per share growth rate target is set at 7% to 9%, with a targeted total shareholder return of 10% to 12%[6] - The company expects annual rate base growth of 11.8% in 2025 and 11.6% in 2026[25] Operational Performance - The Electric production fuel expense increased to $25.4 million in Q3 2025 from $15.0 million in Q3 2024[31] - Operating income for the electric segment for the three months ended September 30, 2025, was $35,750 thousand, slightly down from $36,471 thousand in 2024[34] - The plastics segment reported operating revenues of $110,015 thousand for the three months ended September 30, 2025, a decrease of 13.9% from $127,757 thousand in 2024[34] - The corporate segment reported an operating loss of $3,792 thousand for the three months ended September 30, 2025, compared to a loss of $5,358 thousand in 2024[34] - The manufacturing segment's operating income increased to $5,690 thousand for the three months ended September 30, 2025, from $2,683 thousand in 2024[34] Inventory and Goodwill - The company reported a net increase in inventories to $155,765,000 from $148,885,000, which is an increase of about 4.5%[32] - Regulatory assets decreased slightly to $9,433,000 from $9,962,000, a decline of approximately 5.3%[32] - Goodwill remained stable at $37,572,000, unchanged from the previous period[32] Debt and Financing - Proceeds from the issuance of long-term debt amounted to $100,000 thousand for the nine months ended September 30, 2025[33]