Otter Tail Corporation Announces Annual Earnings and Initiates 2026 Earnings Guidance

Company Release - 2/16/2026 6:00 PM ET 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 Total 2026 - 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. 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. 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 Investor Contacts: Beth Eiken, Manager of Investor Relations, (701) 451-3571 Media Contact: Stephanie Hoff, Director of Corporate Communications, (218) 739-8535 Source: Otter Tail Corporation