Otter Tail Corporation Announces Third Quarter Earnings, Increases Annual Earnings Guidance and Uplifts Long-Term Financial Targets

FERGUS FALLS, Minn.--( BUSINESS WIRE)--Otter Tail Corporation (Nasdaq: OTTR) today announced financial results for the quarter ended September 30, 2025.

SUMMARY

CEO OVERVIEW

“We are pleased with our third quarter financial results,” said President and CEO Chuck MacFarlane. “Our team members continue to execute well on our growth plan despite dynamic market conditions. Due to strong Plastics segment performance, and our revised expectations for the remainder of the year, we are increasing and tightening our 2025 diluted earnings per share guidance to a range of $6.32 to $6.62 from $6.06 to $6.46.

“Otter Tail Power continues to deliver on our significant rate base growth plan and regulatory priorities. In October, we filed a request with the Minnesota Public Utilities Commission to increase our rates by approximately $44.8 million, or 17.7 percent. The increase is largely driven by customer-focused infrastructure investments supporting immediate and long-term reliability, grid resilience efforts, accelerated recovery of Coyote Station and the impact of inflation since our last rate review five years ago. Even with the proposed increase, Otter Tail Power will continue to have some of the lowest electric rates in the region and country. We remain committed to providing safe, reliable and affordable electric service to our customers.

“Our Manufacturing segment businesses continue to face end market demand headwinds. Sales volumes remain below historic levels after sharply declining in the third quarter of 2024. Our cost structure is aligned with current business volumes and we remain well positioned to respond when industry conditions improve. Our quarterly financial results reflect our lower cost structure and improved productivity compared to the same time last year.

“Plastics segment performance exceeded expectations in the third quarter even as our product pricing continues to decline. We continue to benefit from lower input material costs and the new large diameter pipe capacity we added late last year. Additionally, the second phase of our Vinyltech expansion project is progressing well and we look forward to further increasing our capacity in early 2026.

“We are introducing our new five-year capital spending plan and revised long-term financial targets. Otter Tail Power’s new investment plan totals $1.9 billion and is expected to produce a rate base compounded annual growth rate of 10 percent. Driven by our updated capital investment plan, we are updating our targeted long-term earnings per share growth rate to 7 to 9 percent, resulting in a targeted total shareholder return of 10 to 12 percent.

“We remain optimistic about the fundamentals of our business and confident in our ability to deliver on our growth plan. Our customer-focused investments position us to provide high-quality electric service and products to our customers while delivering on our investment targets over the long-term. The combination of a high-performing utility coupled with our strategic diversification continues to serve us and our stakeholders well.”

QUARTERLY DIVIDEND

On November 3, 2025, the corporation’s Board of Directors declared a quarterly common stock dividend of $0.525 per share. This dividend is payable December 10, 2025 to shareholders of record on November 14, 2025.

CASH FLOWS AND LIQUIDITY

Our consolidated cash provided by operating activities for the nine months ended September 30, 2025 was $288.9 million compared to $322.8 million for the nine months ended September 30, 2024. The decrease in cash provided by operating activities was primarily due to the timing of fuel cost and rider recoveries from our utility customers and a decrease in earnings.

Investing activities for the nine months ended September 30, 2025 included capital expenditures of $213.3 million. Capital expenditures during the period were largely within our Electric segment and included investments in our wind repowering and other projects.

Financing activities for the nine months ended September 30, 2025 included the issuance of $100.0 million of long-term debt at 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 nine months ended September 30, 2025 also included net repayments of short-term borrowings totaling $69.6 million and dividend payments of $66.0 million.

As of September 30, 2025, we had $170.0 million and $209.5 million of available liquidity under our Otter Tail Corporation and Otter Tail Power credit facilities, respectively, along with $325.8 million of available cash and cash equivalents, for total available liquidity of $705.3 million.

SEGMENT PERFORMANCE

Electric Segment

Three Months Ended September 30,

($ in thousands)

2025

2024

Change

% Change

Operating Revenues

138,597

130,380

8,217

6.3

Net Income

27,308

28,530

(1,222

)

(4.3

)

Retail MWh Sales

1,373,054

1,304,446

68,608

5.3

Heating Degree Days

n/m

Cooling Degree Days

326

378

(52

)

(13.8

)

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

Three Months Ended September 30,

2025

2024

Heating Degree Days

61.0 %

4.7 %

Cooling Degree Days

93.1 %

111.5 %

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, 2025 and 2024.

2025 vs

Normal

2025 vs

2024

2024 vs

Normal

Effect on Diluted Earnings Per Share

(0.01

)

(0.02

)

0.01

Operating Revenues increased $8.2 million primarily due to increased fuel recovery revenue, increased sales volumes excluding the impact of weather, and increased rider revenue, primarily driven by the recovery of our investments in our wind repowering projects. These increases were partially offset by the impact of seasonal rate differences between interim and final rates in North Dakota, which went into effect in March 2025. The impact of unfavorable weather compared to the same period last year also negatively impacted operating revenues.

Net Income decreased $1.2 million primarily due to the impacts of lower pension-related income and unfavorable weather, as well as increased depreciation expense associated with our rate base investments. The impact of these changes was partially offset by a decrease in operating and maintenance expenses.

Manufacturing Segment

Three Months Ended September 30,

(in thousands)

2025

2024

$ Change

% Change

Operating Revenues

76,951

79,896

(2,945

)

(3.7

Net Income

3,916

2,174

1,742

80.1

Operating Revenues decreased $2.9 million primarily due to an 8% decrease in sales volumes, with declines experienced across several end markets, including lawn and garden, agriculture, and horticulture. Sales volumes were down due to continued soft demand and inventory management efforts by manufacturers and dealers amid continued challenging market conditions. The impact of lower sales volumes was partially offset by a 3% increase in steel costs, which are passed through to customers.

Net Income increased $1.7 million primarily due to improved production efficiencies, as our cost structure is aligned with the current demand environment. The timing of pass-through steel cost fluctuations and increased labor productivity resulted in increased margins compared to the same period last year. Lower sales volumes, as described above, and an increase in general and administrative and income tax expenses, partially offset the impact of increased profit margins.

Plastics Segment

Three Months Ended September 30,

(in thousands)

2025

2024

$ Change

% Change

Operating Revenues

110,015

127,757

(17,742

)

(13.9

Net Income

43,495

54,479

(10,984

)

(20.2

)

Operating Revenues decreased $17.7 million primarily due to a 17% decrease in sales prices compared to the same period last year, continuing the decline in product pricing from peak levels in late 2022. The impact of decreased sales prices was partially offset by a 4% increase in sales volumes, primarily driven by increased production capacity following the completion of our expansion project at Vinyltech in late 2024.

Net Income decreased $11.0 million primarily due to decreased sales prices, as described above, partially offset by a 16% decrease in PVC resin and other input material costs and the 4% increase in sales volumes.

Corporate

Three Months Ended September 30,

(in thousands)

2025

2024

$ Change

% Change

Net Income

3,573

296

3,277

n/m

Net Income increased $3.3 million primarily due to decreases in costs associated with workers’ compensation and employee health insurance claims, as well as an increase in income tax benefits compared to the same period last year.

2025 OUTLOOK

We are increasing our 2025 diluted earnings per share guidance to a range of $6.32 to $6.62. We expect our earnings mix in 2025 to be approximately 36% from our Electric segment and 64% from our Manufacturing and Plastics segments, net of corporate costs. Our anticipated earnings mix in 2025 deviates from our long-term expected earnings mix of 70% Electric / 30% Non-Electric as we expect Plastics segment earnings to remain elevated in 2025 compared to our long-term view of normal earnings for this segment.

The segment components of our 2025 diluted earnings per share guidance compared with actual earnings for 2024 are as follows:

2024 EPS

by Segment

2025 EPS Guidance

August 4, 2025

November 3, 2025

Low

High

Low

High

Electric

2.16

2.29

2.35

2.31

2.35

Manufacturing

0.33

0.21

0.27

0.22

0.26

Plastics

4.77

3.64

3.88

3.86

4.05

Corporate

(0.09

)

(0.08

)

(0.04

)

(0.07

)

(0.04

)

Total

7.17

6.06

6.46

6.32

6.62

Return on Equity

19.3

14.5

15.3

15.1

15.7

The following items contribute to our revised 2025 earnings guidance:

Electric Segment - We are increasing the midpoint of our earnings expectation and narrowed our guidance range. Our updated guidance is primarily based on better than expected financial results in the third quarter of 2025, largely driven by higher than anticipated sales volumes.

Manufacturing Segment - We are maintaining the midpoint of our earnings expectation but narrowing the range of our guidance.

Plastics Segment - We are increasing our earnings expectation and narrowing the range of our guidance based on:

Corporate Costs - We are narrowing our guidance range based on year-to-date results and expectations for the remainder of the year.

CAPITAL EXPENDITURES

The following provides a summary of actual capital expenditures for the year ended December 31, 2024, as well as anticipated annual capital expenditures for the current year ending December 31, 2025, and the subsequent five years, along with electric utility average rate base and annual rate base growth:

(in millions)

2024

2025

2026

2027

2028

2029

2030

2026 - 2030 Total

Electric Segment:

Renewable Generation

134

108

169

177

154

510

Transmission

183

208

206

309

994

Distribution

263

Other

151

Total Electric Segment

301

300

354

446

439

287

392

1,918

Manufacturing and Plastics Segments

129

Total Capital Expenditures

359

321

385

473

468

310

411

2,047

Total Electric Utility Average Rate Base

1,892

2,115

2,360

2,647

2,998

3,210

3,413

Annual Rate Base Growth

8.6

11.8

11.6

12.2

13.3

7.1

6.3

Our capital expenditure plan for the 2026 to 2030 time period includes Electric segment investments in transmission assets and solar generation resources. This plan produces a compounded annual growth rate in rate base of 10.0% from the end of 2025 to the end of 2030, and will serve as a key driver in Electric segment earnings growth over this timeframe. Our capital expenditure plan in our Manufacturing and Plastics segments includes investments to bring additional capacity to our operations, providing an opportunity for organic growth within these segments.

CONFERENCE CALL AND WEBCAST

The corporation will host a live webcast on Tuesday, November 4, 2025, 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 www.ottertail.com/presentations 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.

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,” “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 2025 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 and 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)

2025

2024

2025

2024

Operating Revenues

Electric

138,597

130,380

417,048

384,696

Product Sales

186,966

207,653

578,911

642,741

Total Operating Revenues

325,563

338,033

995,959

1,027,437

Operating Expenses

Electric Production Fuel

25,442

14,991

56,055

45,009

Electric Purchased Power

9,495

10,735

55,862

42,507

Electric Operating and Maintenance Expense

41,144

43,737

136,830

136,367

Cost of Products Sold (excluding depreciation)

101,198

111,444

311,551

342,962

Nonelectric Selling, General, and Administrative Expenses

17,792

18,829

56,434

55,896

Depreciation and Amortization

29,554

27,051

88,376

79,579

Electric Property Taxes

4,333

3,705

12,788

11,691

Total Operating Expenses

228,958

230,492

717,896

714,011

Operating Income

96,605

107,541

278,063

313,426

Other Income and (Expense)

Interest Expense

(11,790

)

(11,173

)

(35,063

)

(31,225

)

Nonservice Components of Postretirement Benefits

304

2,367

2,441

7,197

Other Income (Expense), net

5,990

5,421

15,231

14,491

Income Before Income Taxes

91,109

104,156

260,672

303,889

Income Tax Expense

12,817

18,677

36,553

57,077

Net Income

78,292

85,479

224,119

246,812

Weighted-Average Common Shares Outstanding:

Basic

41,877

41,800

41,859

41,770

Diluted

42,138

42,081

42,106

42,068

Earnings Per Share:

Basic

1.87

2.04

5.35

5.91

Diluted

1.86

2.03

5.32

5.87

OTTER TAIL CORPORATION

CONSOLIDATED BALANCE SHEETS (unaudited)

September 30,

December 31,

(in thousands)

2025

2024

Assets

Current Assets

Cash and Cash Equivalents

325,786

294,651

Receivables, net of allowance for credit losses

166,694

145,964

Inventories

155,765

148,885

Investments

53,877

753

Regulatory Assets

9,433

9,962

Other Current Assets

25,688

29,826

Total Current Assets

737,243

630,041

Noncurrent Assets

Investments

77,662

121,177

Property, Plant and Equipment, net of accumulated depreciation

2,820,689

2,692,460

Regulatory Assets

97,936

98,673

Intangible Assets, net of accumulated amortization

4,917

5,743

Goodwill

37,572

Other Noncurrent Assets

67,804

66,416

Total Noncurrent Assets

3,106,580

3,022,041

Total Assets

3,843,823

3,652,082

Liabilities and Shareholders' Equity

Current Liabilities

Short-Term Debt

—

69,615

Accounts Payable

95,441

113,574

Accrued Salaries and Wages

32,197

34,398

Accrued Taxes

21,267

17,314

Regulatory Liabilities

21,753

29,307

Other Current Liabilities

35,702

45,582

Total Current Liabilities

206,360

309,790

Noncurrent Liabilities and Deferred Credits

Pension Benefit Liability

32,001

32,614