Otter Tail Corporation Q2 FY2025 earnings call

• Quarterly highlights: Q2 financial results outpaced expectations; team members performed well. - Storm response: Severe weather in June caused electric service interruptions for nearly 1 in 3 customers, with team working to restore power. - Regulatory: Secured regulatory approval for solar project assignment and filed South Dakota rate case; legislative changes impact utility industry. - Manufacturing: BTD Georgia facility ramping up; Vinyltech benefiting from enhanced facilities and new large diameter pipe line. - Solar projects: Secured approval for direct assignment of solar projects; development ongoing for MISO projects. - Rate cases: Filed South Dakota rate increase request and finalizing Minnesota cost of service analysis. - Load engagement: Reached term sheet for new 430-megawatt load and progressing on 155-megawatt load. - Plastics segment: Sales pricing of PVC pipe declined 15%, volumes increased 11% due to demand, and material costs decreased.

Electric segment earnings increased $0.02 per share in the second quarter. Manufacturing segment earnings decreased $0.08 per share primarily due to product pricing benefits in the prior year and lower sales volumes. Plastics segment earnings decreased $0.18 per share, driven by lower sales prices but partially offset by higher sales volumes and lower material input costs. Corporate costs improved $0.02 per share due to returns on short-term investments and market-based gains on corporate-owned life insurance policy investments.

• Increased 2025 diluted earnings per share guidance to $6.06 to $6.46 midpoint from $5.88 due to stronger Plastics segment performance; maintained guidance for other segments. - Reaffirmed Electric segment capital investment and rate base growth projections through 2029, expecting 9% compound annual growth rate in earnings per share. - Reaffirmed Plastics segment earnings range of $45 million to $50 million beginning in 2028, with earnings expected to decline through 2027 as margins compress.

• Legislative/regulatory: Phaseout of renewable energy credits under Inflation Reduction Act, EPA reconsidering environmental regulations impacting fossil fuel plants. - Manufacturing: Import competition and tariff uncertainty as challenges for the segment.

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