Otter Tail Corporation — Third Quarter 2026 Earnings Summary

Financial Performance:

• Reported quarterly diluted earnings per share (EPS) of $1.41.
• Consolidated operating revenues for the quarter were $320.5 million, down from $325.6 million in the prior year period.
• Consolidated net income for the quarter was $59.5 million, compared to $78.3 million in the prior year.
• Consolidated operating income for the nine months ended September 30, 2026, was $129.9 million, down from $278.1 million in the same period of 2025, primarily due to $103.5 million in legal settlement expenses recorded in 2026.
• Consolidated net income for the nine months ended September 30, 2026, was $124.5 million, compared to $224.1 million in the prior year.
• Adjusted diluted EPS for the nine months ended September 30, 2026, was $4.79, excluding the impact of legal settlement expenses.
• Consolidated cash provided by operating activities was $307.9 million for the nine months ended September 30, 2026, an increase from $288.9 million in the prior year.
• Capital expenditures for the nine months ended September 30, 2026, totaled $451.6 million.
• 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, cash equivalents, and marketable securities.
• Long-term debt increased to $1,091.0 million as of September 30, 2026, from $963.6 million at December 31, 2025.

Guidance and Future Outlook:

• 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.
• Maintained a long-term earnings per share growth rate target of 7 to 9 percent.
• Maintained a long-term total shareholder return target of 10 to 12 percent.
• Segment guidance for 2026 diluted EPS: Electric ($2.62–$2.68), Manufacturing ($0.32–$0.36), Plastics ($1.11–$1.27), and Corporate ($0.16–$0.12 loss).
• Segment guidance for 2026 adjusted diluted EPS: Electric ($2.62–$2.68), Manufacturing ($0.32–$0.36), Plastics ($2.95–$3.11), and Corporate ($0.16–$0.12 loss).

Business Segments and Product Lines:

• Electric Segment: Operating revenues decreased 2.6% to $135.0 million; net income increased 0.4% to $27.4 million. Retail MWh sales increased 0.9% to 1,385,582. Revenue decline was driven by $11.9 million lower fuel recovery revenues and increased production tax credits, partially offset by $5.9 million in rate increases and $2.3 million from favorable weather. Net income growth was driven by interim rate increases and favorable weather, offset by higher operating expenses and depreciation.
• Manufacturing Segment: Operating revenues increased 16.6% to $89.7 million; net income decreased 34.4% to $2.6 million. Sales volumes increased 13% due to improved demand in construction, recreational vehicle, lawn and garden, and industrial markets. Revenue growth was driven by higher volumes and pass-through of increased steel costs. Net income decline was driven by higher selling, general, and administrative expenses and lower gross profit margins due to inflationary costs and lower productivity.
• Plastics Segment: Operating revenues decreased 12.9% to $95.8 million; net income decreased 33.4% to $29.0 million. Sales volumes decreased 5% and average sales prices decreased 9%. Volume declines were driven by customers advancing purchases ahead of resin price increases and a softening housing market. Net income decline was driven by lower prices and volumes, plus 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.

Market and Competitive Landscape:

• Manufacturing end market demand continues to improve, though the segment faces inflationary cost pressures and challenges responding to increasing customer demand.
• Plastics segment faces a softening housing market and global PVC resin supply and demand dynamics affecting input costs.
• 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.

Risks and Challenges:

• Inflationary cost pressures impacting manufacturing margins.
• Challenges in transmission development affecting capital investment projects.
• Softening housing market impacting plastics sales volumes.
• Global PVC resin supply and demand dynamics driving up input material costs.
• Increased operating and maintenance expenses, including labor, vegetation management, and plant outage-related costs.
• Higher depreciation and interest expense associated with rate base growth.
• Lower income tax benefits and investment income affecting corporate results.

Management Commentary and Tone:

• CEO Chuck MacFarlane stated the team is delivering on the strategic growth plan amidst a challenging operating environment.
• Management expressed confidence in the ability to deliver on financial objectives for the year, noting the fundamentals of the diversified portfolio remain strong.
• Management noted the Plastics segment team continues to effectively leverage large diameter capacity added at the Arizona PVC pipe facility to offset volume decreases.
• Management emphasized a focus on strong project execution for the benefit of customers and shareholders.

Other Key Points:

• The Board of Directors declared a quarterly common stock dividend of $0.5775 per share on November 2, 2026, 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, used to repay short-term borrowings, fund capital investments, and support operating activities.
• A $103.5 million legal settlement expense was recorded in the nine months ended September 30, 2026, impacting consolidated net income and adjusted EPS calculations.
• Financing activities included $72.8 million of dividend payments and $31.5 million of net repayments of short-term borrowings for the nine months ended September 30, 2026.
• The company hosted a live webcast on November 3, 2026, to discuss financial and operating performance.