Otter Tail Corporation Q3 FY2025 earnings call

• Q3 financial results outpaced expectations despite dynamic market conditions. - Otter Tail Power's South Dakota rate case progresses with interim rates starting Dec 1, 2025, and Minnesota rate case filed in Oct. - Vinyltech's expansion phase 2 progressing, targeting early 2026 for adding 26 million lbs of capacity. - Updated 5-year capital spending plan for Electric segment totals $1.9B, rate base CAGR 10%, TSR 10-12%. - Wind repowering near complete, solar projects progressing; MISO projects face delays due to FERC complaint and permitting issues. - Engaging with companies for large loads, 155MW load to come online next year.

Electric segment: Earnings decreased $0.03 per share in Q3, driven by unfavorable weather and seasonal rate differences in North Dakota, partially offset by higher sales volumes and lower operating/maint expenses. Manufacturing segment: Earnings increased $0.04 per share due to a lower cost structure, enhanced production efficiencies, but offset by lower sales volumes and higher SG&A. Plastics segment: Earnings decreased $0.26 per share, primarily due to lower average sales prices, partially offset by lower input material costs and higher sales volumes. Corporate costs: Improved $0.08 per share in Q3, driven by higher income tax benefits, lower workers' compensation expenses, and lower employee health insurance claims.

• Increased 2025 diluted EPS guidance to $6.32-$6.62, midpoint $6.47, primarily due to better-than-expected Plastics segment results. - Electric segment's 5-year capital spending increased to $1.9B, rate base CAGR 10%. - Long-term earnings per share growth rate revised to 7%-9%, 5-year consolidated CAGR projected at ~23%.

• South Dakota rate case decision delayed unless settled, MISO projects face FERC complaint and landowner/local govt resistance. - Plastics segment earnings expected to decline through 2027. - Antitrust litigation with DOJ intervention, class action lawsuits in US and Canada, and motion to dismiss in civil litigation.

Q: On updated EPS long-term growth rate and tax rate A: Todd Wahlund mentions year-to-year fluctuations in utility earnings depending on recovery timing, and tax rate info not specific.

Q: On antitrust case A: Chuck MacFarlane discusses amended complaints, DOJ intervention staying discovery, class action in Canada, and motion to dismiss in civil litigation with no set deadline but anticipating 2026 decision.

Q: On cash use and M&A A: Todd Wahlund and Chuck MacFarlane talk about capital allocation focusing on funding utility growth and dividends, with M&A focusing on small bolt-ons.

Q: On large load customer A: Chuck MacFarlane explains it's an interruptible load with minimal capacity needs and limited interconnection costs, not driving significant 2026 earnings but reducing fixed costs.