Otter Tail Corporation Announces Third Quarter Results and Affirms the Midpoint of Annual Earnings Guidance

Otter Tail Corporation Announces Third Quarter Results and Affirms the Midpoint of Annual Earnings Guidance FERGUS FALLS, Minn.--( BUSINESS WIRE)--Otter Tail Corporation (Nasdaq: OTTR) today announced financial results for the quarter ended September 30, 2026.

SUMMARY

CEO OVERVIEW

“Our team members continue to deliver on our strategic growth plan and near-term priorities amidst a challenging operating environment,” said CEO Chuck MacFarlane.

“Otter Tail Power continues to perform well, as our team is executing on our regulatory priorities and robust rate base growth plan. We are making progress on our ongoing Minnesota rate case and our integrated resource plan filed with the Minnesota Public Utilities Commission earlier this year. Our team is advancing our ongoing renewable generation and transmission capital investment projects despite increasing challenges in transmission development. We are focused on strong project execution for the benefit of our customers and shareholders.

“We are encouraged by increasing sales volumes within our Manufacturing segment. End market demand continues to improve and our team is effectively executing on our strategy of providing value-added service to our customers. Our businesses are being impacted by inflationary cost pressures and the challenge of responding to increasing customer demand.

“As expected, Plastics segment financial results for the quarter were negatively impacted by lower sales volumes and a continued decline in the average sales price of our PVC pipe. Sales volumes decreased as our customers advanced their purchases of our PVC pipe earlier this year in response to announced resin price increases. In addition, a softening housing market also contributed to the decline in volumes for the period. Despite the quarterly decrease, our team continues to effectively leverage the large diameter capacity added at our PVC pipe facility in Arizona, helping to offset the decrease.

“We remain well positioned to deliver on our financial objectives for the year. We are maintaining the midpoint and narrowing the range of our 2026 annual earnings guidance.

“The fundamentals of our diversified portfolio remain strong, and we are confident in our ability to deliver on our strategic growth plan over the long-term. We continue to target a long-term earnings per share growth rate of 7 to 9 percent and a total shareholder return of 10 to 12 percent.”

QUARTERLY DIVIDEND

On November 2, 2026, the corporation’s Board of Directors declared a quarterly common stock dividend of $0.5775 per share. This dividend is payable on December 10, 2026 to shareholders of record on November 13, 2026.

CASH FLOWS AND LIQUIDITY

Consolidated cash provided by operating activities was $307.9 million for the nine months ended September 30, 2026, compared with $288.9 million for the same period in 2025. The increase was primarily driven by lower working capital requirements, largely reflecting the timing of the recovery of fuel costs and rider revenues from our utility customers.

Investing activities for the nine months ended September 30, 2026 included $451.6 million of capital expenditures. Our capital investments were largely within our Electric segment and primarily related to our Abercrombie and Solway solar projects, wind repowering initiative, and transmission and distribution system investments.

Financing activities for the nine months ended September 30, 2026 included the issuance of $170.0 million of long-term debt by Otter Tail Power, the proceeds of which were used to repay short-term borrowings, fund capital investments, and support operating activities. Financing activities for the period also included $72.8 million of dividend payments and $31.5 million of net repayments of short-terms borrowings.

As of September 30, 2026 available liquidity totaled $601.8 million, consisting of $170.0 million and $178.5 million available under our Otter Tail Corporation and Otter Tail Power credit facilities, respectively, and $253.3 million of cash, cash equivalents and marketable securities.

SEGMENT PERFORMANCE

Electric Segment

Three Months Ended September 30,

($ in thousands)

2026

2025

Change

% Change

Operating Revenues

134,979

138,597

(3,618

)

(2.6

Net Income

27,418

27,308

110

0.4

Retail MWh Sales

1,385,582

1,373,054

12,528

0.9

Heating Degree Days

(18

)

(72.0

)

Cooling Degree Days

460

326

134

41.1

The following table shows heating degree days and cooling degree days as a percent of normal.

Three Months Ended September 30,

2026

2025

Heating Degree Days

17.1

61.0

Cooling Degree Days

131.4

93.1

The following table summarizes the estimated effect on diluted earnings per share of the difference in retail kilowatt-hour (kwh) sales under actual weather conditions and expected retail kwh sales under normal weather conditions for the three months ended September 30, 2026 and 2025.

2026 vs Normal

2026 vs

2025

2025 vs Normal

Effect on Diluted Earnings Per Share

0.03

0.04

(0.01

)

Operating Revenues decreased $3.6 million, primarily due to an $11.9 million aggregate decrease in fuel recovery revenues and the impact of increased production tax credits, neither of which affects net income. These decreases were partially offset by a $5.9 million increase from rate increases in Minnesota and South Dakota, a $2.7 million increase from the recovery of additional rate base investments, and a $2.3 million increase from favorable weather.

Net Income increased $0.1 million as the benefits of interim rate increases, favorable weather, the recovery of additional rate base investments, and higher allowance for funds used during construction associated with continued investments in our large solar projects were largely offset by higher operating and maintenance expenses, including increased labor, vegetation management, and plant outage-related costs, as well as higher depreciation and interest expense associated with rate base growth.

Manufacturing Segment

Three Months Ended September 30,

(in thousands)

2026

2025

$ Change

% Change

Operating Revenues

89,709

76,951

12,758

16.6

Net Income

2,569

3,916

(1,347

)

(34.4

)

Operating Revenues increased $12.8 million primarily due to higher sales volumes and the pass through of increased steel costs. Sales volumes increased 13%, reflecting improved demand in the construction, recreational vehicle, lawn and garden, and industrial markets after experiencing softer market conditions and customer inventory reduction efforts during the same period last year.

Net Income decreased $1.3 million driven by higher selling, general, and administrative expenses and lower gross profit margins. Gross margins were negatively impacted by inflationary cost pressures and lower productivity as we added headcount to meet growing demand. These impacts were partially offset by higher sales volumes and increased scrap sales.

Plastics Segment

Three Months Ended September 30,

(in thousands)

2026

2025

$ Change

% Change

Operating Revenues

95,825

110,015

(14,190

)

(12.9

Net Income

28,970

43,495

(14,525

)

(33.4

)

Operating Revenues decreased $14.2 million compared to the same period last year, reflecting a 9% decrease in average sales prices and a 5% decrease in sales volumes. Average sales prices continued to moderate from the peak level reached in late 2022. Lower sales volumes were primarily driven by the timing of customer purchases, including purchases made earlier in the year ahead of announced PVC resin cost increases, and softer demand for our products in certain regional markets due, in part, to softness in the housing market. Increased production capacity at our Phoenix facility partially offset the volume declines.

Net Income decreased $14.5 million, primarily due to lower sales prices and volumes, as discussed above, and a 10% increase in PVC resin and other input material costs, primarily driven by global PVC resin supply and demand dynamics.

Corporate

Three Months Ended September 30,

(in thousands)

2026

2025

$ Change

% Change

Net Income

506

3,573

(3,067

)

(85.8

Net Income decreased $3.1 million compared to the same period last year, primarily due to lower income tax benefits recognized during the quarter and lower investment income resulting from a decrease in short-term investment balances.

2026 OUTLOOK

We are affirming the midpoint and narrowing our 2026 diluted earnings per share guidance range to $3.89 to $4.19 and our 2026 adjusted diluted earnings per share guidance range to $5.73 to $6.03.

The segment components of our 2026 guidance compared with actual earnings for 2025 are as follows:

August 3, 2026

November 2, 2026

2025 EPS

by Segment

2026 EPS Guidance

2026 Adjusted EPS Guidance (1)

2026 EPS Guidance

2026 Adjusted EPS Guidance (1)

Low

High

Low

High

Low

High

Low

High

Electric

2.32

2.61

2.69

2.61

2.69

2.62

2.68

2.62

2.68

Manufacturing

0.27

0.32

0.38

0.32

0.38

0.32

0.36

0.32

0.36

Plastics

4.05

1.13

1.35

2.97

3.19

1.11

1.27

2.95

3.11

Corporate

(0.09

)

(0.22

)

(0.18

)

(0.22

)

(0.18

)

(0.16

)

(0.12

)

(0.16

)

(0.12

)

Total

6.55

3.84

4.24

5.68

6.08

3.89

4.19

5.73

6.03

Return on Equity

15.6

8.7

9.5

n/a

8.7

9.3

n/a

Adjusted Return on Equity (1)

n/a

12.5

13.3

n/a

12.5

13.1

(1) Adjusted Diluted EPS and Adjusted Return on Equity are non-GAAP financial measures or metrics. Adjusted Diluted EPS Guidance, for both the Plastics segment and on a consolidated basis, can be reconciled to GAAP diluted EPS Guidance by excluding an adjustment of $1.84 which reflects the impact of legal settlement expenses recorded during the nine months ended September 30, 2026. Adjusted Return on Equity can be reconciled to anticipated return on equity calculated using a GAAP basis net income and GAAP basis shareholders’ equity, by excluding the impact of legal settlement expenses recorded during the nine months ended September 30, 2026 from anticipated net income and average shareholders’ equity for the annual period, which increases anticipated return on equity by 380 basis points.

CONFERENCE CALL AND WEBCAST

The corporation will host a live webcast on Tuesday, November 3, 2026 at 10:00 a.m. CT to discuss its financial and operating performance.

The presentation will be posted on our website before the webcast. To access the live webcast, go to the Events and Presentations section of the www.ottertail.com website and select “Webcast.” Please allow time prior to the call to visit the site and download any software needed to listen in. An archived copy of the webcast will be available on our website shortly after the call.

If you are interested in asking a question during the live webcast, visit and follow the link provided in the press release announcing the upcoming conference call.

NON-GAAP FINANCIAL MEASURES

This press release includes certain adjusted financial measures (non-GAAP financial measures). The Company believes these non-GAAP financial measures, when reviewed in conjunction with GAAP financial measures, can provide more information to assist investors in evaluating current period performance and in assessing future performance. For these reasons, internal management reporting also includes non-GAAP financial measures.

We use Adjusted Net Income, Adjusted Earnings per Share, and Adjusted Return on Equity in evaluating the operating performance and profitability of our business. Management believes that these measures provide useful information to investors by facilitating period-to-period comparisons of operating results excluding the effects of the legal settlement expense and related income tax benefit. We define Adjusted Net Income as net income excluding legal settlement expenses and the related income tax benefit. We define Adjusted Earnings per Share as diluted net income per share excluding the per share impact of legal settlement expenses and the related income tax benefit. We define Adjusted Return on Equity as annual Adjusted Net Income divided by the average of total consolidated shareholders’ equity excluding the impact of legal settlement expenses and the related income tax benefit.

These non-GAAP financial measures should be considered in addition to, and not superior to or as a substitute for, the GAAP financial measures presented in this release and the Company's financial statements and other publicly filed reports. Non-GAAP financial measures presented in this release may not be comparable to similarly titled measures used by other companies. Investors are encouraged to review the reconciliations of adjusted financial measures used in this release to their most directly comparable GAAP financial measures. Adjusted Net Income and Adjusted Diluted Earnings per Share are reconciled to their most directly comparable GAAP measures in the non-GAAP Reconciliations section. Guidance for Adjusted Diluted Earnings per Share and Adjusted Return on Equity are forward-looking non-GAAP financial measures that are reconciled to their respective most directly comparable GAAP financial measures in footnote (1) under 2026 Outlook.

FORWARD-LOOKING STATEMENTS

Except for historical information contained here, the statements in this release are forward-looking and made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The words “anticipate,” “believe,” “can,” “confident,” “could,” “estimate,” “expect,” “future,” “goal,” “intend,” “likely,” “may,” “optimistic,” “opportunity,” “outlook,” “plan,” “possible,” “position,” “potential,” “predict,” “probable,” “projected,” “should,” “target,” “will,” “would,” and similar words and expressions are intended to identify forward-looking statements. Such statements are based upon the current beliefs and expectations of management. Forward-looking statements made herein, which may include statements regarding 2026 earnings and earnings per share, long-term earnings, earnings-per-share growth and earnings mix, anticipated levels of energy generation from renewable resources, anticipated reductions in carbon dioxide emissions, future investments and capital expenditures, rate base levels and rate base growth, future raw materials costs, future raw materials availability and supply constraints, future operating revenues and operating results, and expectations regarding regulatory proceedings, as well as other assumptions and statements, involve known and unknown risks and uncertainties that may cause our actual results in current or future periods to differ materially from the forecasted assumptions and expected results. The Company’s risks and uncertainties include, among other things, uncertainty of future investments and capital expenditures; rate base levels and rate base growth; risks associated with energy markets; the availability and pricing of resource materials; inflationary cost pressures; attracting and maintaining a qualified and stable workforce; changing macroeconomic and industry conditions that impact the demand for our products, pricing, and margin; long-term investment risk; seasonal weather patterns and extreme weather events; future business volumes with key customers; reductions in our credit ratings; our ability to access capital markets on favorable terms; assumptions and costs relating to funding our employee benefit plans; our subsidiaries’ ability to make dividend payments; cybersecurity threats or data breaches; the impact of government executive orders, legislation and regulation including foreign trade policy; environmental, health and safety laws and regulations; changes in tax laws and regulations; the impact of climate change including compliance with legislative and regulatory changes to address climate change; expectations regarding regulatory proceedings, assigned service areas, the construction of major facilities, capital structure, and allowed customer rates; actual and threatened claims or litigation; and operational and economic risks associated with our electric generating and manufacturing facilities. These and other risks are more fully described in our filings with the Securities and Exchange Commission, including our most recently filed Annual Report on Form 10-K, as updated in subsequently filed Quarterly Reports on Form 10-Q, as applicable. Forward-looking statements speak only as of the date they are made, and we expressly disclaim any obligation to update any forward-looking information.

Category: Earnings

About the Corporation: Otter Tail Corporation, a member of the S&P SmallCap 600 Index, has interests in diversified operations that include an electric utility and manufacturing businesses. Otter Tail Corporation stock trades on the Nasdaq Global Select Market under the symbol OTTR. The latest investor and corporate information is available at www.ottertail.com. Corporate offices are in Fergus Falls, Minnesota, and Fargo, North Dakota.

OTTER TAIL CORPORATION

CONSOLIDATED STATEMENTS OF INCOME (unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands, except per-share amounts)

2026

2025

2026

2025

Operating Revenues

Electric

134,979

138,597

422,167

417,048

Product Sales

185,534

186,966

579,755

578,911

Total Operating Revenues

320,513

325,563

1,001,922

995,959

Operating Expenses

Electric Production Fuel

21,114

25,442

52,499

56,055

Electric Purchased Power

5,539

9,495

45,821

55,862

Electric Operating and Maintenance Expense

50,174

41,144

155,123

136,830

Cost of Products Sold (excluding depreciation)

119,465

101,198

345,411

311,551

Nonelectric Selling, General, and Administrative Expenses

20,067

17,792

64,007

56,434

Depreciation and Amortization

30,608

29,554

91,398

88,376

Electric Property Taxes

4,649

4,333

14,232

12,788

Legal Settlement Expenses

—

103,500

—

Total Operating Expenses

251,616

228,958

871,991

717,896

Operating Income

68,897

96,605

129,931

278,063

Other Income and (Expense)

Interest Expense

(13,141

)

(11,790

)

(38,667

)

(35,063

)

Nonservice Components of Postretirement Benefits

668

304

2,161

2,441

Other Income (Expense), net

7,542

5,990

19,262

15,231

Income Before Taxes

63,966

91,109

112,687

260,672

Income Tax Expense (Benefit)

4,503

12,817

(11,777

)

36,553

Net Income

59,463

78,292

124,464

224,119

Weighted-Average Common Shares Outstanding:

Basic

41,959

41,877

41,939

41,859

Diluted

42,168

42,138

42,123

42,106

Earnings Per Share:

Basic

1.42

1.87

2.97

5.35

Diluted

1.41

1.86

2.95

5.32

OTTER TAIL CORPORATION

CONSOLIDATED BALANCE SHEETS (unaudited)

September 30,

December 31,

(in thousands)

2026

2025

Assets

Current Assets

Cash and Cash Equivalents

205,829

386,193

Restricted Cash

103,500

—

Receivables, net of allowance for credit losses

172,566

145,496

Inventories

178,145

158,598

Investments

1,205

54,311

Regulatory Assets

21,244

20,437

Other Current Assets

69,178

34,690

Total Current Assets

751,667

799,725

Noncurrent Assets

Investments

130,303

78,823

Property, Plant and Equipment, net of accumulated depreciation

3,243,986

2,876,685

Regulatory Assets

91,225

86,062

Intangible Assets, net of accumulated amortization

3,836

4,642

Goodwill

37,572

Other Noncurrent Assets

103,547

80,770

Total Noncurrent Assets

3,610,469

3,164,554

Total Assets

4,362,136

3,964,279

Liabilities and Shareholders' Equity

Current Liabilities

Short-Term Debt

28,727

60,242

Current Maturities of Long-Term Debt

121,966

79,951

Accounts Payable

127,118

93,606

Accrued Salaries and Wages

40,549

35,666

Accrued Taxes

16,320

18,460

Regulatory Liabilities

62,510

16,600

Other Current Liabilities

150,239

46,433

Total Current Liabilities

547,429

350,958

Noncurrent Liabilities and Deferred Credits

Pension Benefit Liability

31,802

32,376