Aug 4, 2026, 8:29 AM ETUtilities

Otter Tail Corporation — Second Quarter 2026 Earnings Summary

OTTROTTER TAIL CORP

Financial Performance

Reported quarterly diluted loss per share of $0.18 compared to $1.85 in the prior year period; adjusted diluted earnings per share were $1.66.
Consolidated operating revenues for the quarter were $334.4 million, a 0.4% increase from $333.0 million in the prior year.
Consolidated net income for the quarter was a loss of $7.6 million compared to net income of $77.7 million in the prior year.
Consolidated operating income for the quarter was a loss of $24.2 million compared to operating income of $97.5 million in the prior year.
Operating expenses included a $103.5 million legal settlement expense, which was not present in the prior year.
Cash provided by operating activities for the six months ended June 30, 2026, was $182.7 million, an increase from $159.4 million in the prior year period.
Capital expenditures for the six months ended June 30, 2026, totaled $324.8 million, compared to $124.2 million in the prior year.
Financing activities included the issuance of $170.0 million in long-term debt and dividend payments of $48.5 million for the six-month period.
Total available liquidity as of June 30, 2026, was $601.4 million, comprising $278.4 million in cash and cash equivalents and $323.0 million in available credit facilities.
Long-term debt increased to $1,132.9 million as of June 30, 2026, from $963.6 million as of December 31, 2025.

Updated 2026 diluted earnings per share guidance range to $3.84 to $4.24, down from the previous range of $5.22 to $5.62, primarily due to the legal settlement expense.
Initiated 2026 adjusted diluted earnings per share guidance range of $5.68 to $6.08, an increase from the original guidance range.
Targeting a long-term earnings per share growth rate of 7% to 9% and a total shareholder return of 10% to 12%.
Electric segment 2026 EPS guidance remains unchanged at $2.61 to $2.69.
Manufacturing segment 2026 EPS guidance increased to $0.32 to $0.38, driven by expected higher sales volumes and improved margins in the second half of the year.
Plastics segment 2026 EPS guidance increased to $1.13 to $1.35, based on better-than-expected Q2 results and revised PVC pipe pricing expectations.
Corporate costs are expected to increase due to less investment income and a lower tax benefit.

Electric Segment: Operating revenues decreased 5.8% to $121.3 million; net income decreased 2.6% to $18.7 million. Revenue decline was driven by increased production tax credits passed to customers and lower fuel recovery revenues. Net income decline was due to higher operating and maintenance expenses, including plant outage costs, and increased depreciation and interest. Retail MWh sales increased 4.7% to 1,400,638.
Manufacturing Segment: Operating revenues increased 12.4% to $88.5 million; net income increased 31.3% to $4.6 million. Revenue growth was driven by a 9% increase from steel cost pass-throughs and a 3% increase in sales volumes. Net income growth was driven by higher margins from product mix and sales volumes.
Plastics Segment: Operating revenues decreased 0.8% to $124.6 million; reported net loss was $30.1 million compared to net income of $53.1 million in the prior year. Revenue decline was due to a 14% decrease in average sales prices, partially offset by a 15% increase in sales volumes. Adjusted net income was $47.1 million, a decrease of $6.0 million from the prior year.
Corporate: Reported a net loss of $0.8 million compared to net income of $1.9 million in the prior year, driven by internal tax expense allocation and increased employee compensation costs.

Manufacturing demand improved in recreational vehicle, construction, and horticulture end markets compared to softer demand and tighter inventory management in the prior year.
Plastics sales volumes increased as customers secured PVC pipe in advance of announced resin price increases.
The rate of decline in PVC pipe sales prices moderated in a strong demand environment.
Otter Tail Power secured route permits for two large regional transmission projects and filed a 15-year integrated resource plan with the Minnesota commission.

The company recognized a $103.5 million pre-tax loss related to settlement agreements resolving three putative class actions in U.S. antitrust litigation regarding PVC pipe.
Forward-looking statements involve risks including uncertainty of future investments, rate base growth, energy market risks, raw material availability and pricing, inflationary cost pressures, and workforce challenges.
Risks include changing macroeconomic conditions, seasonal weather patterns, cybersecurity threats, and regulatory proceedings.

CEO Chuck MacFarlane stated the team advanced strategic initiatives and delivered on near-term priorities.
Management expressed confidence that the fundamentals of the diversified business model remain strong and the company is well-positioned to deliver on investment targets over the long term.
Management concluded that resolving the antitrust litigation through settlement was in the company's best interest to reduce uncertainty, distraction, and costs.

The Board of Directors declared a quarterly common stock dividend of $0.5775 per share, payable on September 10, 2026.
The company entered into settlement agreements with three putative classes in the PVC pipe antitrust litigation, agreeing to pay $103.5 million to resolve all claims without admitting wrongdoing.
The Electric segment completed wind repowering projects earlier in the year, allowing facilities to begin generating production tax credits.
The Plastics segment leveraged additional capacity at its Phoenix facility to fulfill customer demand.
A live webcast was scheduled for August 4, 2026, to discuss financial and operating performance.