Otter Tail Corp.: Q4 FY2025 earnings call

What management said about Q4 FY2025, from the documents filed with the SEC on 17 February 2026: press release. Guidance figures: 4 raised, 7 new, 3 kept. The quarter’s numbers.

Key takeaways

Full-year diluted EPS was $6.55: The company reported 2025 diluted EPS of $6.55, against $7.17 in 2024, and net income of $275.9 million against $301.7 million. Source
Electric earnings to rise 14% in 2026: Electric segment earnings are expected to rise 14% in 2026, drawing on rate base returns, interim rates, higher costs and higher depreciation and interest. Source
Manufacturing volumes fell 6%: Manufacturing revenue fell $28.0 million, or 8.2%, to $314.5 million, on a 6% drop in sales volumes across agriculture, lawn and garden and recreational vehicles. Source
Plastics prices fell 15%: Plastics revenue fell $40.7 million, or 8.8%, to $422.8 million, as average sales prices dropped 15% and sales volumes rose 8%. Source
Plastics earnings to decline 36% in 2026: Plastics segment earnings are expected to fall 36% in 2026, on continued lower average product prices. Source
Five-year capital plan totals $2.05 billion: Capital expenditures for 2026 to 2030 total $2,050 million, with $467 million planned for 2026 against $385 million in the prior plan. Source
Rate cases filed in two states: The company filed rate cases in South Dakota and Minnesota, the first South Dakota filing since 2018 and the first Minnesota filing since 2020. Source

“We are pleased with our 2025 financial results as they exceeded our expectations for the year”
President and CEO Chuck MacFarlane

Guidance

Area	Period	Figure	Against last quarter
Diluted EPS Source	2026	$5.22 to $5.62	New
Return on equity Source	2026	12% at the midpoint	New
EPS by segment Source	2026	Electric $2.61 to $2.69; Manufacturing $0.26 to $0.32; Plastics $2.49 to $2.71; Corporate $(0.14) to $(0.10)	New
Electric segment earnings Source	2026	increase 14%	New
Manufacturing segment earnings Source	2026	increase 7%	New
Plastics segment earnings Source	2026	decline 36%	New
Earnings mix Source	2026	approximately 49% Electric; 51% Manufacturing and Plastics, net of corporate costs	New
Electric average rate base growth Source	2026	14.0% (average rate base $2,403 million)	Raised from 11.6% growth; average rate base $2,360 million in the prior plan
Five-year electric rate base growth Source	2025 to 2030	10% compounded annual growth	Kept
Long-term EPS growth target Source	long term	7% to 9%	Kept
Total shareholder return target Source	long term	10% to 12%	Kept
Capital expenditures Source	2026	$467 million	Raised from $385 million
Capital expenditures Source	2026 to 2030	$2,050 million total	Raised from $2,047 million
Electric segment capital expenditures Source	2026 to 2030	$1,921 million total	Raised from $1,918 million

What changed from last quarter

New guidance: 2026 diluted EPS guidance of $5.22 to $5.62 initiated, with a 12% return on equity projected at the midpoint. Source
Ended: The prior 2025 EPS guidance range of $6.32 to $6.62 closed with reported 2025 diluted EPS of $6.55. Source
Guidance raised: 2026 capital expenditure plan raised to $467 million from $385 million in the prior plan. Source
Guidance raised: 2026 average electric rate base raised to $2,403 million from $2,360 million in the prior plan. Source
Guidance kept: Five-year electric rate base growth of 10% reaffirmed; the prior release had raised it from 9%. Source
Guidance kept: Long-term EPS growth target of 7% to 9% and total shareholder return target of 10% to 12% kept. Source
New: South Dakota general rate case filed, the first South Dakota rate filing since 2018. Source
New: Interim revenues from the Minnesota general rate case begin January 1, 2026. Source

Full-year and fourth-quarter results

Full-year diluted EPS was $6.55: The company reported 2025 diluted EPS of $6.55, against $7.17 in 2024, and net income of $275.9 million against $301.7 million. Source
Return on equity was 16%: Consolidated return on equity for 2025 was 16%, on an equity ratio of 63%. Source
Fourth-quarter EPS was $1.23: Fourth-quarter diluted EPS was $1.23, down 5.4% from $1.30, with operating income of $67.6 million against $66.8 million. Source

Electric segment and weather

Electric revenue rose on fuel and rates: Electric operating revenues rose $42.2 million to $566.8 million, mainly from fuel recovery, rate base recovery, higher sales volumes and favorable weather. Source
Electric net income rose $6.6 million: Electric segment net income was $97.6 million, helped by higher retail revenues and lower operating and maintenance expenses, partly offset by depreciation and interest. Source
Weather added to 2025 earnings: Weather added $0.10 to diluted EPS against 2024 and reduced it $0.03 against normal. Heating degree days were 97.1% of normal in 2025, against 83.7% in 2024. Source
Electric earnings to rise 14% in 2026: Electric segment earnings are expected to rise 14% in 2026, drawing on rate base returns, interim rates, higher costs and higher depreciation and interest. Source

“This positioning became important towards the end of 2025 as customer order activity picked up, enabling us to end the year with momentum.”
President and CEO Chuck MacFarlane

Manufacturing demand and volumes

Manufacturing volumes fell 6%: Manufacturing revenue fell $28.0 million, or 8.2%, to $314.5 million, on a 6% drop in sales volumes across agriculture, lawn and garden and recreational vehicles. Source
Manufacturing net income down $2.2 million: Manufacturing net income was $11.5 million, down $2.2 million, reflecting lower volumes and higher general and administrative expenses, partly offset by production efficiencies. Source
Demand softness through much of year: Management said soft end market demand continued through much of 2025 and followed a sharp volume decline beginning in the third quarter of 2024. Source
Fourth-quarter volumes rose 11%: Fourth-quarter Manufacturing net income was $2.6 million, against a $0.6 million loss a year earlier, as customers began replenishing inventories. Source
Contract fabrication flat to modest in 2026: For 2026 the company expects flat to modest volume growth in contract metal fabrication, with horticulture volumes rising as end markets improve. Source

Plastics pricing and volumes

Plastics prices fell 15%: Plastics revenue fell $40.7 million, or 8.8%, to $422.8 million, as average sales prices dropped 15% and sales volumes rose 8%. Source
Plastics net income down $30.3 million: Plastics net income was $170.4 million, down $30.3 million, as lower prices outweighed a 14% fall in PVC resin and other input costs and an 8% rise in volumes. Source
Fourth-quarter prices down 20%: Fourth-quarter Plastics net income was $30.4 million, down $8.6 million, with prices 20% lower and input material costs down 22%. Source
Vinyltech capacity supported volumes: Added Vinyltech capacity from late 2024 supported volumes and partly offset lower PVC pipe prices. Source
Plastics earnings to decline 36% in 2026: Plastics segment earnings are expected to fall 36% in 2026, on continued lower average product prices. Source

“we are confident in our ability to deliver on our growth plan for the benefit of our customers and shareholders.”
President and CEO Chuck MacFarlane

Costs and corporate items

Electric costs lower in fourth quarter: Fourth-quarter Electric net income rose $4.9 million to $26.4 million, with lower operating and maintenance expense and higher sales volumes. Source
Corporate loss widened on state taxes: The fourth-quarter corporate net loss was $7.6 million, $2.6 million more than a year earlier, due to higher state income taxes. Source
Electric operating costs to rise 2026: Electric operating and maintenance expense is expected to rise in 2026 on labor costs, planned outage costs at Big Stone Plant and reliability investments. Source
Corporate costs to increase in 2026: Corporate costs are expected to rise in 2026, driven by lower investment income and higher labor costs. Source
Depreciation and interest to rise: Depreciation and interest expense are rising with rate base investments and the financing that funds them. Source
PVC resin costs flat in 2026: Raw material costs are expected flat in 2026 against 2025, with PVC resin supply and demand supporting current pricing. Source

Capital plan and rate base

Five-year capital plan totals $2.05 billion: Capital expenditures for 2026 to 2030 total $2,050 million, with $467 million planned for 2026 against $385 million in the prior plan. Source
Electric plan totals $1.92 billion: Electric segment capital spending is $1,921 million over 2026 to 2030, against $1,918 million in the prior plan. Source
Plan covers solar, storage and grid: The plan covers solar and battery storage, transmission and distribution, and system reliability and technology investments. Source
Average rate base up 14% in 2026: Average electric rate base is planned at $2,403 million in 2026, up 14.0%, from $2,360 million and 11.6% growth in the prior plan. Source
Rate base growth target reaffirmed: The company reaffirmed a five-year electric rate base compounded annual growth rate of 10 percent. Source

Rate cases and customer rates

Rate cases filed in two states: The company filed rate cases in South Dakota and Minnesota, the first South Dakota filing since 2018 and the first Minnesota filing since 2020. Source
Minnesota request of $44.8 million: The October 2025 Minnesota filing requested about $44.8 million, or 17.7%, in additional rates.
Minnesota increase drivers: The company attributes the Minnesota increase to infrastructure, grid resilience, accelerated Coyote Station recovery and inflation since the last review.
Interim rates begin January 2026: Interim revenues from the Minnesota case begin January 1, 2026, and final South Dakota rates are anticipated. Source
Rates to stay among lowest: Management said Otter Tail Power will continue to have some of the lowest electric rates in the region and country, even with the proposed increases. Source

Cash flow, liquidity and dividends

Operating cash flow fell to $386.0 million: Operating cash flow was $386.0 million in 2025, down from $452.7 million, mainly on working capital, including fuel and rider recovery timing, and lower earnings. Source
Capital spending of $288.1 million: Capital expenditures in 2025 were $288.1 million, mainly in the Electric segment, including wind repowering and solar. Source
$100 million long-term debt issued: Otter Tail Power issued $100.0 million of long-term debt in 2025, with proceeds used to repay short-term borrowings, fund capital investments and support operations. Source
Liquidity of $705.5 million at year-end: Total available liquidity at year-end was $705.5 million, including $386.2 million of cash. Dividends paid in 2025 totaled $88.1 million. Source

Earnings mix and long-term targets

Earnings mix tilts to non-electric: The 2026 earnings mix of about 49% Electric and 51% non-electric differs from the long-term mix of 70% Electric and 30% non-electric. Source
Plastics earnings elevated versus normal: Plastics earnings are expected to stay elevated in 2026 compared with the company's long-term view of normal earnings for that segment. Source
Long-term targets maintained: The company continues to target long-term EPS growth of 7% to 9% and total shareholder return of 10% to 12%. Source

Coming up, as management said on 17 February 2026

Vinyltech second phase due early 2026: Completion of the second phase of the Vinyltech expansion is expected in early 2026. Source

Figures management reported

Figure	Reported
Electric average rate base growth Source	14.0% in 2026
Five-year rate base compounded annual growth rate Source	10%
Capital plan 2026 to 2030 Source	$2,050 million total
Rate case request (Minnesota)	$44.8 million, or 17.7 percent
Load growth (retail MWh sales) Source	5,917,736 MWh in 2025, up 4.2%
EPS growth target Source	7% to 9% long-term

Risks management discussed

Demand: Plastics volume growth from new Phoenix capacity is partly offset by a subdued housing market. Source
External: Management expects Plastics average sales prices to keep declining through 2026, from the 2022 peak. Source

Earlier plans management reported on

Not stated: The company affirmed its long-term financial targets when it initiated 2026 EPS guidance. Source
Not stated: Management says the 2026 to 2030 capital spending plan remains in place. Source

Other quarters

Summarised with AI from the documents the company filed with the SEC. Every point is checked against the filing before it is shown: management’s own words word for word, figures against the line or table row they come from. A point that fails the check is left out. Source opens the filing at that line.

As filed with the SEC

Open the filing on EDGAR

Otter Tail Corporation Announces Annual Earnings and Initiates 2026 Earnings Guidance

FERGUS FALLS, Minnesota - Otter Tail Corporation (Nasdaq: OTTR) today announced financial results for the quarter and year ended December 31, 2025.

SUMMARY

Produced annual diluted earnings per share of $6.55.
Achieved a consolidated return on equity of 16% on an equity ratio of 63%.
Initiated 2026 diluted earnings per share guidance range of $5.22 to $5.62, a return on equity projection of 12% at the midpoint.

CEO OVERVIEW

"We are pleased with our 2025 financial results as they exceeded our expectations for the year,” said President and CEO Chuck MacFarlane. “Our results are fueled by our team members’ efforts, and I am proud of the ways they delivered for our customers and shareholders amidst dynamic market conditions.

“Throughout 2025, Otter Tail Power navigated a full agenda and our team members rose to the occasion. We made significant progress on a number of our capital projects, including our wind repowering, solar development and large regional transmission projects, all while executing on our regulatory priorities. We filed rate cases in South Dakota and Minnesota for the first time since 2018 and 2020, respectively. Even with the proposed increases, Otter Tail Power will continue to have some of the lowest electric rates in the region and country.

“Otter Tail Power’s capital spending plan for 2026 through 2030 remains robust. We have identified a pipeline of high-quality projects that provide safe, reliable and increasingly clean electric service for our customers. We are reaffirming our five-year rate base compounded annual growth rate of 10 percent.

“Our Manufacturing segment businesses continued to face soft end market demand following a sharp decline in sales volumes beginning in the third quarter of 2024. Our team members did an excellent job aligning our cost structure with the current demand environment while ensuring we remained well-positioned to respond when conditions improved. This positioning became important towards the end of 2025 as customer order activity picked up, enabling us to end the year with momentum.

“Our Plastics segment businesses continued to provide significant value to our organization even as segment earnings receded from record levels last year, and I am proud of how our team members navigated these changing market conditions. We benefitted from increased sales volumes enabled by the incremental production capacity and large-diameter capability added at Vinyltech in late 2024, partially offsetting the impact of lower PVC pipe sales prices. We expect to complete the second phase of our Vinyltech expansion project in early 2026.

“We are initiating our 2026 diluted earnings per share guidance range of $5.22 to $5.62 and affirming our long-term financial targets. The fundamentals of our business and diversified portfolio remain strong and we are confident in our ability to deliver on our growth plan for the benefit of our customers and shareholders. We continue to target a long-term earnings per share growth rate of 7 to 9 percent, resulting in a total shareholder return of 10 to 12 percent.”

CASH FLOWS AND LIQUIDITY

Our consolidated cash provided by operating activities was $386.0 million in 2025, compared to $452.7 million in 2024. The decrease was primarily driven by higher working capital requirements, including the timing of fuel cost and rider recoveries from our utility customers, and lower earnings.

Investing activities during the year included capital expenditures of $288.1 million. These expenditures were primarily within our Electric segment and included investments in our wind repowering initiatives, solar facilities, and other projects.

Financing activities in 2025 included the issuance of $100.0 million of long-term debt at Otter Tail Power, with the proceeds used to repay short-term borrowings, fund capital investments, and support operating activities. Other financing activities during the year included dividend payments of $88.1 million.

As of December 31, 2025, we had $319.3 million of available liquidity under our credit facilities and $386.2 million of available cash and cash equivalents, for total available liquidity of $705.5 million.

ANNUAL SEGMENT OPERATING RESULTS

Electric Segment

($ in thousands)		2025		2024	$ Change	% Change
Operating Revenues	$566,756		$524,515		$42,241	8.1%
Net Income	97,586		90,963		6,623	7.3
Retail MWh Sales	5,917,736		5,681,268		236,468	4.2%
Heating Degree Days	6,117		5,313		804	15.1
Cooling Degree Days	492		440		52	11.8

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

	2025		2024
Heating Degree Days	97.1%		83.7%
Cooling Degree Days	102.5%		93.8%

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 in 2025 and 2024.

	2025 vs Normal	2025 vs 2024	2024 vs Normal
Effect on Diluted Earnings Per Share	$(0.03)	$0.10	$(0.13)

Operating Revenues increased $42.2 million largely due to increased fuel recovery revenues, recovery of our rate base investments, increased residential and commercial sales volumes, and the impact of favorable weather compared to last year. The increase in fuel recovery revenue was driven by increased customer demand as well as higher market energy and natural gas prices. These factors were partially offset by a net decrease in rider revenues resulting from higher production tax credits during the year following the completion of certain of our wind repowering projects and the commencement of tax credit generation which decreased income tax expense and offset rider revenue. These credits are passed through to customers, reducing operating revenue.

Net Income increased $6.6 million primarily due to higher retail revenues, as discussed above, and lower operating and maintenance expenses. These items were partially offset by higher depreciation and interest expense related to our rate base investments and the associated financing costs. In addition, a decrease in pension and postretirement related gains further offset the increase in operating revenues and decrease in operating and maintenance expenses.

Manufacturing Segment

(in thousands)		2025		2024	$ Change	% Change
Operating Revenues	$314,547		$342,592		$(28,045)	(8.2)%
Net Income	11,517		13,681		(2,164)	(15.8)

Operating Revenues decreased $28.0 million primarily driven by a 6% decline in sales volumes, with reductions across several end markets, including agriculture, lawn and garden and recreational vehicles. Sales volumes were negatively affected by soft demand and inventory management efforts by manufacturers and dealers throughout much of the year, continuing a trend that began in the third quarter of 2024. A 1% decrease in steel costs, which are passed through to customers, also contributed to the decrease in operating revenues.

Net Income decreased $2.2 million primarily driven by lower sales volumes, as described above, and higher general and administrative expenses. These impacts were partially offset by higher profit margins from improved production efficiencies and reduced production costs, as we continue to align our cost structure with current demand levels.

Plastics Segment

(in thousands)		2025		2024	$ Change	% Change
Operating Revenues	$422,755		$463,441		$(40,686)	(8.8)%
Net Income	170,400		200,747		(30,347)	(15.1)

Operating Revenues decreased $40.7 million primarily driven by a 15% decline in average sales prices compared to last year. Prices have been declining for several years after peaking in late 2022. The impact of lower sales prices was partially offset by an 8% increase in sales volumes, largely driven by additional production capacity following the completion of the first phase of our expansion project at Vinyltech in late 2024.

Net Income decreased $30.3 million as a result of decreased sales prices, as described above, partially offset by a 14% decrease in PVC resin and other input material costs and the 8% increase in sales volumes.

Corporate

(in thousands)		2025		2024	$ Change	% Change
Net Loss	$(3,610)		$(3,729)		$119	(3.2)%

FOURTH QUARTER OPERATING RESULTS

Consolidated Results

(in thousands, except per share amounts)		2025		2024	$ Change	% Change
Operating Revenues	$308,099		$303,111		$4,988	1.6%
Operating Expenses	240,480		236,287		4,193	1.8
Operating Income	67,619		66,824		795	1.2
Other Expense	6,014		3,821		2,193	57.4
Income Before Income Taxes	61,605		63,003		(1,398)	(2.2)
Income Tax Expense	9,831		8,153		1,678	20.6
Net Income	51,774		54,850		(3,076)	(5.6)
Diluted Earnings Per Share	$1.23		$1.30		$(0.07)	(5.4)%

Electric Segment

Electric segment net income was $26.4 million, a $4.9 million increase from the fourth quarter of 2024. The increase was primarily driven by lower operating and maintenance expenses, higher residential and commercial sales volumes, and the impact of favorable weather compared to the same period last year. These benefits were partially offset by higher depreciation and interest expense associated with our rate base investments and related financing costs.

Manufacturing Segment

Manufacturing segment net income was $2.6 million, an increase of $3.2 million from a net loss of $0.6 million in the fourth quarter of 2024. The increase was primarily driven by an 11% increase in sales volumes and improved profit margins compared to the same period in the prior year. For much of the year, sales volumes were impacted by soft end market demand and inventory destocking by manufacturers and dealers. In the fourth quarter, however, sales volumes increased as customers began replenishing inventories. These favorable impacts were partially offset by higher general and administrative expenses compared to the prior year.

Plastics Segment

Plastics segment net income was $30.4 million, an $8.6 million decrease from the fourth quarter of 2024. The decrease was primarily driven by lower sales prices, which continued to decline throughout the year and were 20% lower in the fourth quarter compared to the same period last year. The impact of lower sales prices was partially offset by decreases in PVC resin and other input material costs and by higher sales volumes. The cost of input materials, including PVC resin, decreased 22% largely due to global supply and demand dynamics. Sales volumes increased 4% compared to the same period last year, largely driven by our increased production capacity.

Corporate

Corporate net loss was $7.6 million, an increase of $2.6 million from the net loss of $5.0 million in the fourth quarter of 2024. This increase was primarily the result of higher income tax expense, driven by higher state income taxes compared to last year.

2026 OUTLOOK

We anticipate 2026 diluted earnings per share to be in the range of $5.22 to $5.62. We expect our earnings mix in 2026 to be approximately 49% from our Electric segment and 51% from our Manufacturing and Plastics segments, net of corporate costs. Our anticipated earnings mix in 2026 deviates from our long-term expected earnings mix of 70% Electric and 30% Non-Electric as we expect Plastics segment earnings to remain elevated in 2026 compared to our long-term view of normal earnings for this segment.

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

	2025 EPS by Segment	2026 EPS Guidance
		Low	High
Electric	$2.32		$2.61	$2.69
Manufacturing	0.27		0.26	0.32
Plastics	4.05		2.49	2.71
Corporate	(0.09)		(0.14)	(0.10)
Total	$6.55		$5.22	$5.62
Return on Equity	15.6%		11.5%	12.3%

The following items contribute to our 2026 earnings guidance:

Electric Segment - We expect segment earnings to increase 14% in 2026 based on the following:

Returns generated from an increase in average rate base of 14% in 2026.
Interim revenues commencing January 1, 2026 from our general rate case filed in Minnesota and anticipated final rates from our South Dakota general rate case.
Increased operating and maintenance expenses from higher labor costs, planned outage costs at Big Stone Plant, and investments to promote system reliability.
Increased depreciation and interest expense from our capital investments and associated financing.

Manufacturing Segment - We expect segment earnings to increase 7% in 2026 based on the following assumptions:

Flat to modest increase in sales volumes in our contract metal fabrication business as conditions in certain end markets remain challenged.
Increased sales volumes of horticulture products from improved end market conditions.
Improved productivity partially offset by inflationary cost increases.

Plastics Segment - We expect segment earnings to decline 36% in 2026 based on the following assumptions:

Continued decline in average product sales prices throughout 2026, as pricing continues to recede from the high point in 2022.
Increased sales volumes from the new capacity added at our Phoenix facility, partially offset by a subdued housing market.
Flat raw material costs in 2026 compared to 2025 as global supply and demand factors for PVC resin appear supportive of current pricing.

Corporate Costs - We expect our corporate costs to increase primarily from lower investment income and higher labor costs.

CAPITAL EXPENDITURES

The following provides a summary of actual capital expenditures for the year ended December 31, 2025, and anticipated annual capital expenditures for the next five years, along with average rate base and annual rate base growth of our Electric segment:

(in millions)		2025		2026		2027		2028		2029		2030	Total2026 - 2030
Electric Segment:
Renewable Generation and Storage	$91		$251		$295		$89		$4		$6		$645
Transmission	50		80		167		167		186		255		855
Distribution	88		55		49		53		54		57		268
Other	42		50		36		24		23		20		153
Total Electric Segment	271		436		547		333		267		338		1,921
Manufacturing and Plastics Segments	17		31		27		29		23		19		129
Total Capital Expenditures	$288		$467		$574		$362		$290		$357		$2,050
Total Electric Utility Average Rate Base	$2,108		$2,403		$2,773		$3,108		$3,260		$3,423
Annual Rate Base Growth	11.4%		14.0%		15.4%		12.1%		4.9%		5.0%

Our updated five-year capital expenditure plan includes Electric segment investments in solar and battery storage resources, transmission and distribution assets, and investments in system reliability and technology. Our Electric segment capital expenditure plan produces a compounded annual growth rate on average rate base of 10% over the next five years and will serve as a key driver in increasing Electric segment earnings over this timeframe. Our capital expenditure plan in our Manufacturing and Plastics segments includes a mix of investments to replace and upgrade existing equipment and investments to add additional capacity or productivity to our operations.

CONFERENCE CALL AND WEBCAST

The corporation will host a live webcast on Tuesday, February 17, 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 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,” “position,” “potential,” “predict,” “probable,” “projected,” “should,” “target,” “will,” “would” and similar words and expressions are intended to identify forward-looking statements.

Forward-looking statements notice

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.

Investor Contacts: Beth Eiken, Manager of Investor Relations, (701) 451-3571

Media Contact: Stephanie Hoff, Director of Corporate Communications, (218) 739-8535

OTTER TAIL CORPORATION

CONSOLIDATED STATEMENTS OF INCOME (unaudited)

	Three Months Ended December 31,				Twelve Months Ended December 31,
(in thousands, except per-share amounts)		2025		2024		2025		2024
Operating Revenues
Electric	$149,708		$139,818		$566,756		$524,515
Product Sales	158,391		163,293		737,302		806,033
Total Operating Revenues	308,099		303,111		1,304,058		1,330,548
Operating Expenses
Electric Production Fuel	18,993		15,936		75,048		60,945
Electric Purchased Power	22,796		19,055		78,658		61,561
Electric Operating and Maintenance Expense	47,479		54,055		184,310		190,422
Cost of Products Sold (excluding depreciation)	91,113		91,560		402,664		434,522
Nonelectric Selling, General, and Administrative Expenses	26,132		24,169		82,566		80,065
Depreciation and Amortization	29,731		27,541		118,107		107,121
Electric Property Taxes	4,236		3,971		17,023		15,662
Total Operating Expenses	240,480		236,287		958,376		950,298
Operating Income	67,619		66,824		345,682		380,250
Other Income and (Expense)
Interest Expense	(12,163)		(10,591)		(47,226)		(41,815)
Nonservice Components of Postretirement Benefits	894		2,412		3,334		9,609
Other Income (Expense), net	5,255		4,358		20,487		18,848
Income Before Income Taxes	61,605		63,003		322,277		366,892
Income Tax Expense	9,831		8,153		46,384		65,230
Net Income	$51,774		$54,850		$275,893		$301,662
Weighted-Average Common Shares Outstanding:
Basic	41,877		41,801		41,864		41,778
Diluted	42,149		42,088		42,117		42,072
Earnings Per Share:
Basic	$1.24		$1.31		$6.59		$7.22
Diluted	$1.23		$1.30		$6.55		$7.17

OTTER TAIL CORPORATION

CONSOLIDATED BALANCE SHEETS (unaudited)

	December 31,
(in thousands)		2025		2024
Assets
Current Assets
Cash and Cash Equivalents	$386,193		$294,651
Receivables, net of allowance for credit losses	145,496		145,964
Inventories	158,598		148,885
Investments	54,311		753
Regulatory Assets	20,437		9,962
Other Current Assets	34,690		29,826
Total Current Assets	799,725		630,041
Noncurrent Assets
Investments	78,823		121,177
Property, Plant and Equipment, net of accumulated depreciation	2,876,685		2,692,460
Regulatory Assets	86,062		98,673
Intangible Assets, net of accumulated amortization	4,642		5,743
Goodwill	37,572		37,572
Other Noncurrent Assets	80,770		66,416
Total Noncurrent Assets	3,164,554		3,022,041
Total Assets	$3,964,279		$3,652,082
Liabilities and Shareholders' Equity
Current Liabilities
Short-Term Debt	$60,242		$69,615
Current Maturities of Long-Term Debt	79,951		-
Accounts Payable	93,606		113,574
Accrued Salaries and Wages	35,666		34,398
Accrued Taxes	18,460		17,314
Regulatory Liabilities	16,600		29,307
Other Current Liabilities	46,433		45,582
Total Current Liabilities	350,958		309,790
Noncurrent Liabilities and Deferred Credits
Pension Benefit Liability	32,376		32,614
Other Postretirement Benefits Liability	31,813		27,385
Regulatory Liabilities	297,398		288,928
Deferred Income Taxes	305,931		267,745
Deferred Tax Credits	14,321		14,990
Other Noncurrent Liabilities	106,156		98,397
Total Noncurrent Liabilities and Deferred Credits	787,995		730,059
Commitments and Contingencies
Capitalization
Long-Term Debt	963,566		943,734
Shareholders’ Equity
Common Shares	209,528		209,140
Additional Paid-In Capital	434,195		429,089
Retained Earnings	1,217,567		1,029,738
Accumulated Other Comprehensive Income	470		532
Total Shareholders' Equity	1,861,760		1,668,499
Total Capitalization	2,825,326		2,612,233
Total Liabilities and Shareholders' Equity	$3,964,279		$3,652,082

OTTER TAIL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

	Twelve Months Ended December 31,
(in thousands)		2025		2024
Operating Activities
Net Income	$275,893		$301,662
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation and Amortization	118,107		107,121
Deferred Tax Credits	(669)		(182)
Deferred Income Taxes	33,187		23,057
Investment Gains	(6,701)		(5,482)
Stock Compensation Expense	9,119		9,529
Other, net	(4,040)		(3,111)
Change in Operating Assets and Liabilities:
Receivables	468		11,179
Inventories	(4,751)		3,691
Regulatory Assets	(10,779)		5,194
Other Assets	(3,721)		(11,640)
Accounts Payable	(24,120)		14,826
Accrued and Other Liabilities	7,257		(10,371)
Regulatory Liabilities	2,190		16,821
Pension and Other Postretirement Benefits	(5,455)		(9,563)
Net Cash Provided by Operating Activities	385,985		452,731
Investing Activities
Capital Expenditures	(288,068)		(358,650)
Proceeds from Disposal of Noncurrent Assets	6,925		8,849
Purchases of Investments and Other Assets	(9,581)		(61,573)
Net Cash Used in Investing Activities	(290,724)		(411,374)
Financing Activities
Net Repayments of Short-Term Debt	(9,373)		(11,807)
Proceeds from Issuance of Long-Term Debt	100,000		120,000
Dividends Paid	(88,064)		(78,266)
Payments for Shares Withheld for Employee Tax Obligations	(3,134)		(6,457)
Other, net	(3,148)		(549)
Net Cash Provided by (Used in) Financing Activities	(3,719)		22,921
Net Change in Cash and Cash Equivalents	91,542		64,278
Cash and Cash Equivalents at Beginning of Period	294,651		230,373
Cash and Cash Equivalents at End of Period	$386,193		$294,651

OTTER TAIL CORPORATION

SEGMENT RESULTS (unaudited)

	Three Months Ended December 31,				Twelve Months Ended December 31,
(in thousands)		2025		2024		2025		2024
Operating Revenues
Electric	$149,708		$139,818		$566,756		$524,515
Manufacturing	77,183		66,632		314,547		342,592
Plastics	81,208		96,661		422,755		463,441
Total Operating Revenues	$308,099		$303,111		$1,304,058		$1,330,548
Operating Income (Loss)
Electric	$33,122		$25,680		$121,549		$113,789
Manufacturing	3,717		(606)		16,900		19,092
Plastics	41,212		52,769		231,079		271,905
Corporate	(10,432)		(11,019)		(23,846)		(24,536)
Total Net Income	$67,619		$66,824		$345,682		$380,250
Net Income (Loss)
Electric	$26,376		$21,478		$97,586		$90,963
Manufacturing	2,587		(590)		11,517		13,681
Plastics	30,362		38,919		170,400		200,747
Corporate	(7,551)		(4,957)		(3,610)		(3,729)
Total Net Income	$51,774		$54,850		$275,893		$301,662