Nov 3, 2026, 9:17 AM ETUtilities

Otter Tail Corporation — Third Quarter 2026 Earnings Summary

OTTROTTER TAIL CORP

Financial Performance

Reported quarterly diluted earnings per share (EPS) of $1.41, down from $1.86 in the same period in 2025.
Consolidated net income for the quarter ended September 30, 2026, was $59.5 million, compared to $78.3 million in 2025.
Consolidated operating revenues for the quarter were $320.5 million, a decrease from $325.6 million in 2025.
For the nine months ended September 30, 2026, consolidated net income was $124.5 million compared to $224.1 million in 2025.
Consolidated operating revenues for the nine months ended September 30, 2026, were $1,001.9 million, up from $996.0 million in 2025.
Consolidated cash provided by operating activities for the nine months ended September 30, 2026, was $307.9 million, an increase from $288.9 million in 2025.
Capital expenditures for the nine months ended September 30, 2026, totaled $451.6 million, compared to $213.3 million in the prior year period.
Available liquidity as of September 30, 2026, was $601.8 million, consisting of $170.0 million and $178.5 million available under Otter Tail Corporation and Otter Tail Power credit facilities, respectively, plus $253.3 million in cash and equivalents.
Long-term debt increased to $1.09 billion as of September 30, 2026, from $963.6 million at the end of 2025.
Total shareholders' equity was $1.91 billion as of September 30, 2026, compared to $1.86 billion at the end of 2025.

Affirmed the midpoint of 2026 diluted EPS guidance and narrowed the range to $3.89 to $4.19.
Affirmed the midpoint of 2026 adjusted diluted EPS guidance and narrowed the range to $5.73 to $6.03.
The company maintains a long-term earnings per share growth rate target of 7 to 9 percent.
The company targets a total shareholder return of 10 to 12 percent over the long term.
2026 adjusted EPS guidance excludes a $1.84 per share impact from legal settlement expenses recorded during the nine months ended September 30, 2026.

Electric Segment: Operating revenues decreased 2.6% to $135.0 million, driven by an $11.9 million decrease in fuel recovery revenues and increased production tax credits, partially offset by $5.9 million in rate increases in Minnesota and South Dakota. Net income increased 0.4% to $27.4 million. Retail MWh sales increased 0.9% to 1,385,582 MWh.
Manufacturing Segment: Operating revenues increased 16.6% to $89.7 million, driven by a 13% increase in sales volumes and the pass-through of higher steel costs. Net income decreased 34.4% to $2.6 million due to higher SG&A expenses and lower gross profit margins from inflationary costs and lower productivity.
Plastics Segment: Operating revenues decreased 12.9% to $95.8 million, driven by a 9% decrease in average sales prices and a 5% decrease in sales volumes. Net income decreased 33.4% to $29.0 million due to lower prices, volumes, and a 10% increase in PVC resin and input material costs.
Corporate: Net income decreased 85.8% to $0.5 million, primarily due to lower income tax benefits and lower investment income.

Manufacturing segment demand is improving in construction, recreational vehicle, lawn and garden, and industrial markets.
Plastics segment sales volumes were impacted by customers advancing purchases earlier in the year in response to announced resin price increases.
The Plastics segment faces a softening housing market contributing to volume declines.
The Electric segment is advancing renewable generation and transmission capital investment projects despite increasing challenges in transmission development.
The company is executing on regulatory priorities and a robust rate base growth plan, including progress on an ongoing Minnesota rate case and an integrated resource plan filed with the Minnesota Public Utilities Commission.

The business is impacted by inflationary cost pressures.
Challenges include responding to increasing customer demand while managing inflationary costs.
The Plastics segment faces continued decline in the average sales price of PVC pipe and global PVC resin supply and demand dynamics.
The Electric segment faces increasing challenges in transmission development.
Forward-looking statements note risks including uncertainty of future investments, rate base growth, energy market risks, resource material pricing, workforce availability, macroeconomic conditions, weather patterns, cybersecurity threats, and regulatory changes.

CEO Chuck MacFarlane stated the team continues to deliver on the strategic growth plan amidst a challenging operating environment.
Management expressed encouragement regarding increasing sales volumes in the Manufacturing segment.
Management noted the Plastics segment results were negatively impacted by lower volumes and declining PVC pipe prices but highlighted the effective leverage of large diameter capacity added at the Arizona facility.
Management affirmed confidence in delivering on financial objectives for the year and the long-term strategic growth plan.

The Board of Directors declared a quarterly common stock dividend of $0.5775 per share, payable on December 10, 2026, to shareholders of record on November 13, 2026.
Otter Tail Power issued $170.0 million of long-term debt during the nine months ended September 30, 2026, to repay short-term borrowings, fund capital investments, and support operating activities.
A legal settlement expense of $103.5 million was recorded for the nine months ended September 30, 2026, which is excluded from adjusted financial measures.
The company hosted a live webcast on November 3, 2026, to discuss financial and operating performance.
Adjusted Return on Equity for 2026 is projected to be between 12.5% and 13.1%, an increase of 380 basis points compared to the GAAP basis due to the exclusion of legal settlement expenses.