Market Overview - U.S. equities ended modestly higher, with the S&P 500 up 0.10% to 6,843.22, Nasdaq Composite up 0.14% to 22,578.38, and Dow Jones Industrial Average gaining 0.07% to 49,533.19, indicating a recovery from early-session weakness [1][2] Shift in Investor Focus - There is a notable shift in investor focus towards value stocks, which are often trading below their intrinsic value and offer a safety margin [2] Value Stock Evaluation - The Price to Cash Flow (P/CF) ratio is highlighted as an effective valuation metric for assessing value stocks, with companies like Harmony Biosciences Holdings, Tripadvisor, AES Corporation, and Concentrix Corporation showing low P/CF ratios [3][4] Financial Health Indicators - Positive cash flow is crucial as it indicates an increase in a company's liquid assets, allowing for debt settlement, expense management, reinvestment, and shareholder-friendly actions [6] Value Investing Strategy - A comprehensive investment strategy should include multiple metrics such as price-to-book ratio, price-to-earnings ratio, and price-to-sales ratio, along with a favorable Zacks Rank and Value Score to avoid value traps [7][11] Parameters for True-Value Stocks - Key parameters for selecting true-value stocks include P/CF less than or equal to industry median, price greater than or equal to $5, and average 20-day volume greater than 100,000 [8][10] Highlighted Value Stocks - Harmony Biosciences shows strong growth estimates with 21.4% sales and 25.9% EPS growth, while AES and Concentrix have posted earnings surprises and maintain strong Value Scores [9][14][16] Company Performance - Harmony Biosciences has a trailing four-quarter earnings surprise of 7.2% and a Value Score of A, with shares rising 4.6% in the past year [13][14] - Tripadvisor has a trailing four-quarter earnings surprise of 32.1%, with sales and EPS growth estimates of 2.6% and 44.1%, respectively, but shares have fallen 40.4% in the past year [15] - AES Corporation has a trailing four-quarter earnings surprise of 14.7%, with sales and EPS growth estimates of 3% and 0.9%, respectively, and shares have advanced 57.6% in the past year [16] - Concentrix Corporation has a trailing four-quarter earnings surprise of 1%, with sales and EPS growth estimates of 2.9% and 4.8%, respectively, but shares have declined 33.5% in the past year [17]

Core Insights - FirstEnergy Corp. reported fourth-quarter 2025 operating earnings of 53 cents per share, exceeding the Zacks Consensus Estimate of 52 cents by 1.92%, but down from 67 cents in the same quarter last year [1][7] - The company achieved adjusted earnings of $2.55 per share for 2025, reflecting a year-over-year increase of 7.60% from $2.37 in 2024 [1][2] Revenue Performance - Operating revenues for Q4 2025 reached $3.78 billion, surpassing the Zacks Consensus Estimate of $3.25 billion by 16.9%, and increased by 19.6% from $3.18 billion in the prior year [3][7] - Total revenues for 2025 were $15.09 billion, a 12.01% increase from $13.47 billion in 2024 [3] Segmental Performance - Distribution segment revenues totaled $7.55 billion in 2025, up 9.97% from $6.86 billion in the previous year [4] - Integrated segment revenues amounted to $5.68 billion, rising 16.6% from $4.88 billion [4] - Stand-Alone Transmission segment revenues reached $1.91 billion, up 6.60% from $1.79 billion [4] Operating Expenses and Income - Total operating expenses were $12.88 billion in 2025, an increase of 16.10% from $11.01 billion due to higher operating expenses, depreciation provisions, and general taxes [4] - Operating income was $2.21 billion, down 7.03% from $2.38 billion in the previous year [5] Interest Expense - The company reported an interest expense of $1.22 billion in 2025, which is a 6.38% increase from $1.14 billion in the prior year [5] Future Guidance - FirstEnergy expects 2026 core earnings per share to be in the range of $2.62 to $2.82, with a Zacks Consensus Estimate of $2.71, which is lower than the midpoint of the company's guidance [6][7] - The company anticipates a long-term EPS growth rate of 6-8% and has a capital investment plan of $36 billion for the 2026-2030 period, reflecting a nearly 30% increase compared to the previous five-year investment [6][8]

Financial Data and Key Metrics Changes - Consolidated earnings for 2025 were reported at $2.32 per share, an increase from $2.19 per share in 2024, reflecting a strong year [11][12] - Net income at the electric company rose to approximately $500 million, or $2.47 per share, up from $470 million, or $2.33 per share in the previous year [12] - The holding company reported a loss of $29 million, or $0.15 per share, slightly higher year-over-year due to increased interest expense [12] Business Line Data and Key Metrics Changes - The electric company experienced strong load growth, with weather-normalized load increasing approximately 7% [12] - Customer growth was just under 1%, indicating a stable service area performance [12] Market Data and Key Metrics Changes - The service area continues to attract investment, supported by low rates and reliable service [12] - The company expects customer count to increase about 1% and weather-normalized load to grow 4%-6% in 2026 [14] Company Strategy and Development Direction - The company is focused on long-term growth through generation and transmission opportunities, with plans to advance its transmission strategy and secure approvals for new projects [4][5] - A draft Integrated Resource Plan (IRP) was issued, outlining a long-term resource strategy and identifying approximately 1.9 GW of capacity needs by 2031 [17] - The company aims to maintain affordability while investing in reliability and growth, with a commitment to keeping rates among the lowest in the nation [8][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the financial plan, anticipating continued earnings growth in the top half of the 5%-7% EPS growth range through 2028 [18] - The company highlighted the importance of balancing affordability and execution in its investment strategy [18] Other Important Information - The company executed a well-subscribed equity offering and filed for generation pre-approval for the 300 MW Frontier Energy Storage Project [4][5] - A rate review is planned for mid-year in Oklahoma, with potential evaluations in Arkansas later in the year [14] Q&A Session Summary Question: Rate base growth versus investment plan - Management indicated that the current plan suggests a rate-based growth of about 9%, with opportunities for incremental growth [22][23] Question: Large load customer updates - Management confirmed ongoing negotiations with six to seven large load customers, with a significant agreement nearing conclusion [24] Question: Weather-normalized load growth moderation - Management explained that the moderation in load growth is typical and reflects broader trends, with expectations of continued growth [30][31] Question: Black Kettle Energy Storage capacity purchase agreement - Management affirmed a preference for owning and operating generation assets, which supports their strategy for low-cost, reliable service [34] Question: Capital prioritization and generation capacity - Management emphasized flexibility in capital allocation, focusing on affordability while planning for additional generation [35][36] Question: 765 kV transmission line project - Management provided preliminary estimates indicating that the company's portion of the project could be around 20% of the current capital plan [40][41] Question: Data center contract and customer protections - Management confirmed that the contract with Customer X is included in the IRP and highlighted customer protections being built into the tariff framework [43][44]

Financial Data and Key Metrics Changes - In 2025, the company reported GAAP earnings of $1.77 per share, an increase from $1.70 per share in 2024 [6] - Core earnings were $2.55 per share, representing a 7.6% increase compared to 2024 and at the top end of the revised guidance range [6][17] - The return on equity for 2025 was 9.8% on a rate base of $27.8 billion, compared to 9.4% on $25.6 billion in 2024 [17] Business Line Data and Key Metrics Changes - The company deployed $5.6 billion in customer-focused capital investments in 2025, a nearly 25% increase from the previous year [6][18] - Distribution reliability metrics improved by 10% across the system compared to 2024, with notable improvements in New Jersey and Pennsylvania [7] Market Data and Key Metrics Changes - The company anticipates a compounded annual growth rate (CAGR) of core earnings near the top end of 6%-8% from 2026 to 2030 [5][22] - The updated capital investment plan includes $19 billion in total transmission investments, a 35% increase from the previous plan [8][22] Company Strategy and Development Direction - The company announced a $36 billion, 5-year capital investment program aimed at improving customer reliability and grid resiliency [5][8] - The strategy focuses on prioritizing investments for customers while maintaining affordability and meeting regulatory requirements [8][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver on its commitments and maintain affordability for customers [14][27] - The company is actively addressing affordability concerns, with customer bills expected to remain below the current rates of in-state peers by 2030 [12][14] Other Important Information - The company has a financing plan that includes $16 billion in new long-term debt issuances and up to $2 billion in equity needs over the next five years [26] - The company is exploring various options to fund its equity needs, including hybrid instruments [26] Q&A Session Summary Question: Incremental financing associated with West Virginia investment - Management indicated that cash recovery will help significantly, targeting 15% of the total investment, with 50% funded by a Department of Energy loan and the remainder likely being new equity [32] Question: Impact of increased CapEx on earned returns in Pennsylvania - Management noted that the focus in Pennsylvania has been on incremental investment in the distribution system to drive reliability improvements, with plans to file for rate increases as needed [35] Question: Approval process for West Virginia project - Management clarified that the approval needed includes a certificate of need and public necessity, with expectations for a procedural schedule within the next month [73] Question: Execution capabilities for the $36 billion CapEx plan - Management expressed confidence in their ability to deliver on the plan, citing strong relationships with contractors and suppliers [61][62] Question: Affordability-driven legislation impacts - Management is actively engaging with jurisdictions to address affordability concerns and is well-positioned relative to peers [66][67]

Financial Data and Key Metrics Changes - In 2025, the company reported GAAP earnings of $1.77 per share, an increase from $1.70 per share in 2024. Core earnings were $2.55 per share, reflecting a 7.6% increase compared to 2024 and at the top end of the revised guidance range [6][17] - The return on equity for 2025 was 9.8% on a rate base of $27.8 billion, compared to 9.4% on $25.6 billion in 2024 [17] - The company declared quarterly dividends totaling $1.78 per share, a 5% increase from 2024 [7] Business Line Data and Key Metrics Changes - The company deployed $5.6 billion in customer-focused capital investments in 2025, a nearly 25% increase from the previous year and approximately 12% higher than the original plan [6][18] - Distribution reliability metrics improved by 10% across the system compared to 2024, with significant improvements in New Jersey and Pennsylvania service territories [7] Market Data and Key Metrics Changes - The company expects its updated investment plan to translate into a 10% rate base growth over the planning period [8] - The average customer electric bill controlled by the company is approximately 32% of the total bill in deregulated states, with bills remaining about 20% below the in-state peer average [12] Company Strategy and Development Direction - The company announced a $36 billion, 5-year capital investment program aimed at improving customer reliability and grid resiliency, representing a nearly 30% increase from the previous five-year plan [5][22] - The strategy includes significant investments in transmission and distribution, with $19 billion allocated for transmission investments, a 35% increase from the previous plan [8][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver on its commitments and maintain affordability for customers while making critical investments [14][27] - The company plans to file traditional base rate cases in Maryland and West Virginia to reflect increased rate bases and investments made since 2022 [19][20] Other Important Information - The company has been awarded approximately $5 billion in competitive transmission projects since 2022, positioning it well for future growth [11] - The financing plan includes cash from operations of $3.7 billion, subsidiary debt issuances of $3.4 billion, and a $2.5 billion convertible debt transaction [18] Q&A Session Questions and Answers Question: Incremental financing associated with West Virginia investment - Management indicated that cash recovery will help significantly, targeting 15% of the total investment, with 50% expected from a Department of Energy loan and the remainder likely from new equity [32] Question: Impact of increased CapEx on earned returns in Pennsylvania - Management noted that the focus in Pennsylvania has been on incremental investment in the distribution system to drive reliability improvements, with plans to file for rate increases when necessary [35][36] Question: Approval process for West Virginia project - Management clarified that the approval needed includes a certificate of need and public necessity, with expectations for a procedural schedule within the next month [75] Question: Execution capabilities for the $36 billion CapEx plan - Management expressed confidence in their ability to deliver on the plan, citing strong relationships with contractors and suppliers, and a disciplined project management approach [62] Question: Assessment of potential impacts from Maryland Lower Bills Act - Management is actively engaging with stakeholders to ensure affordability for customers and is supportive of initiatives that could lower costs [67][68]

Financial Data and Key Metrics Changes - Consolidated earnings for 2025 were reported at $2.32 per share, an increase from $2.19 per share in 2024, reflecting a strong year [11] - Consolidated net income for 2025 was approximately $471 million, compared to $442 million in 2024 [11] - At the electric company, net income rose to approximately $500 million, or $2.47 per share, up from $470 million, or $2.33 per share in the previous year [12] - The holding company reported a loss of $29 million, or $0.15 per share, slightly higher year-over-year due to increased interest expense [12] Business Line Data and Key Metrics Changes - Customer growth was just under 1%, while weather-normalized load grew approximately 7%, indicating strong local economies [12] - The company expects customer count to increase about 1% and weather-normalized load to grow 4%-6% in 2026 [14] Market Data and Key Metrics Changes - The service area continues to perform well, with weather-normalized load up more than 24% since 2021 [14] - The company is targeting a 60%-70% dividend payout ratio with a stable and growing dividend [16] Company Strategy and Development Direction - The company is focused on reliable electricity at some of the lowest costs in the nation, with a commitment to affordability and efficiency [4][8] - Plans include advancing the transmission strategy and finalizing opportunities from the Southwest Power Pool (SPP) [4][5] - The company aims to secure approval for the Frontier Energy Storage Project and file for generation pre-approval in both Oklahoma and Arkansas [5][17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the financial plan, with a clear investment roadmap and a target of 5%-7% EPS growth through 2028 [18] - The company highlighted the importance of balancing affordability and execution in its growth strategy [18] - Management noted that they are actively negotiating with several large load customers and expect to finalize agreements soon [25][36] Other Important Information - The company executed a well-subscribed equity offering and filed for recovery of generation needs to meet growing demand [4] - A draft Integrated Resource Plan (IRP) was issued, outlining long-term resource strategy and identifying approximately 1.9 gigawatts of capacity needs by 2031 [17][58] Q&A Session Summary Question: Rate base growth versus investment plan - The company indicated a rate-based growth of about 9% under the current investment plan [24] Question: Changes in large load opportunities - Management confirmed ongoing negotiations with 6-7 large load customers, with progress on agreements for Customer X [25] Question: Weather-normalized load growth moderation - Management explained that the moderation is part of a broader trend, with an average of about 5% since 2021 [32] Question: Black Kettle Energy Storage capacity purchase agreement - Management affirmed their preference for owning and operating generation assets, which supports their strategy [36] Question: Capital prioritization and generation capacity - Management stated they have flexibility in capital allocation and are focused on affordability metrics [38] Question: 765 kV transmission line project - Initial estimates suggest the company's portion of the project could be around 20% of the current capital plan [42] Question: Data center contract and customer protections - The contract for Customer X is integrated into the IRP, with customer protections ensuring fair share and minimum terms [46]

Financial Data and Key Metrics Changes - Consolidated earnings for 2025 were reported at $2.32 per share, an increase from $2.19 per share in 2024, reflecting a solid year of performance [10][11] - Net income at the electric company rose to approximately $500 million, or $2.47 per share, up from $470 million, or $2.33 per share in the previous year [11] - The holding company reported a loss of $29 million, or $0.15 per share, slightly higher year-over-year due to increased interest expenses [11] Business Line Data and Key Metrics Changes - The electric company experienced strong load growth, with weather-normalized load increasing approximately 7% [11] - Customer growth was just under 1%, indicating a stable service area performance [11] Market Data and Key Metrics Changes - The service area continues to attract investment, supported by low rates and reliable service, contributing to the overall growth in customer base and load [11] - The company expects customer count to increase about 1% and weather-normalized load to grow 4%-6% in 2026 [12] Company Strategy and Development Direction - The company is focused on long-term growth through generation and transmission opportunities, with plans to advance its transmission strategy and secure approvals for new projects [4][5] - A significant portion of the capital plan is allocated to new generation capacity, with a target of adding 1.3 gigawatts of generation by the end of the decade [6][10] - The company aims to maintain affordability while investing in reliability and growth, with a commitment to keeping rates among the lowest in the nation [7][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the financial plan, projecting earnings per share growth of 5%-7% through 2028, with a solid foundation for future growth [16] - The company highlighted the importance of balancing affordability and execution in its investment strategy, ensuring that customer needs are met while pursuing growth opportunities [16] Other Important Information - The company plans to file a rate review in Oklahoma mid-year and evaluate a potential filing in Arkansas later in the year [12] - A draft Integrated Resource Plan (IRP) was issued, outlining long-term resource strategies and identifying approximately 1.9 gigawatts of capacity needs by 2031 [15][54] Q&A Session Summary Question: How to think about rate base growth versus the investment plan? - Management indicated that the current plan equates to a rate-based growth of about 9%, with opportunities for incremental growth [20][21] Question: What has changed within the large load panel since the last update? - Management confirmed active negotiations with 6-7 large load customers, with progress on agreements for Customer X [21][22] Question: Insights on moderating weather-normalized load growth in 2026? - Management noted that load growth can fluctuate, but overall trends remain positive, with a strong average since 2021 [28][30] Question: Clarification on the Black Kettle Energy Storage capacity purchase agreement? - Management affirmed their commitment to owning and operating generation assets, validating their strategy for future projects [32] Question: Details on the $7.3 billion base capital plan and potential capital prioritization? - Management emphasized flexibility in capital allocation, focusing on affordability while planning for additional generation capacity [34][35] Question: Update on the 765 kV transmission line and OGE's portion of the project? - Management indicated that OGE's portion of the project is estimated to be around 20% of the current capital plan, with further details to be refined [39][40] Question: Timeline for updating on potential other customers beyond Customer X? - Management stated that they are actively engaging with various potential customers and will announce developments as they materialize [72][75]

Financial Data and Key Metrics Changes - The company reported 2025 GAAP earnings of $1.77 per share, an increase from $1.70 per share in 2024 [5] - Core earnings were $2.55 per share, a 7.6% increase compared to 2024, and at the top end of the revised guidance range [5][17] - Return on equity in 2025 was 9.8% on a rate base of $27.8 billion, compared to 9.4% on $25.6 billion in 2024 [17] Business Line Data and Key Metrics Changes - The company deployed $5.6 billion in customer-focused capital investments in 2025, a nearly 25% increase from the previous year [5][18] - Distribution reliability metrics improved by 10% across the system compared to 2024, with notable improvements in New Jersey and Pennsylvania [6] Market Data and Key Metrics Changes - The company anticipates a compounded annual growth rate (CAGR) of core earnings near the top end of 6%-8% from 2026 to 2030 [4][24] - The updated capital investment plan includes $19 billion in total transmission investments, a 35% increase from the previous plan [7][22] Company Strategy and Development Direction - The company announced a $36 billion, 5-year capital investment program aimed at improving customer reliability and grid resiliency [4][6] - The strategy focuses on prioritizing investments for customers while maintaining affordability and meeting regulatory requirements [7][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver on its commitments and maintain affordability for customers [13][28] - The company is actively addressing affordability concerns, with customer bills expected to remain below in-state peer averages [12][84] Other Important Information - The company plans to file traditional base rate cases in Maryland and West Virginia later in the year to reflect increased rate bases [19][20] - The financing plan includes $16 billion in new long-term debt issuances and up to $2 billion in equity needs over the next five years [27][75] Q&A Session Questions and Answers Question: Incremental financing associated with West Virginia investment - Management indicated that cash recovery will help significantly, targeting 15% of the total investment, with 50% funded by a Department of Energy loan and the remainder likely from new equity [32][33] Question: Impact of increased CapEx on earned returns in Pennsylvania - Management noted that the focus in Pennsylvania has been on incremental investment in the distribution system to drive reliability improvements, with plans to file for rate adjustments as needed [35][36] Question: Timing and approval process for West Virginia generation project - Management stated that the approval process includes a certificate of need and public necessity, with expectations for a procedural schedule within the next month [73][74] Question: Execution capabilities for the $36 billion CapEx plan - Management expressed confidence in their ability to deliver on the plan, citing strong relationships with contractors and suppliers [62][63] Question: Affordability impacts from Maryland legislation - Management highlighted ongoing engagement with jurisdictions to address affordability, emphasizing their competitive position relative to peers [66][67]

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].

Q4 2025 Earnings & Business Update Conference Call February 18, 2026 Safe Harbor Some of the matters discussed in this presentation may contain forward looking statements that are subject to certain risks, uncertainties and assumptions. Such forward-looking statements are intended to be identified in this document by the words "anticipate," "believe," "estimate," "expect," "forecast," "intend," "objective," "plan," "possible," "potential," "project," "target" and similar expressions. Actual results may vary ...