Otter Tail Corporation Q4 FY2025 earnings call

• 2025 financial results exceeded original expectations. - Otter Tail Power delivered on rate base growth plan, with interim rates implemented in Minnesota and South Dakota, and phase two of tech expansion project progressing. - Completed wind repowering project, solar projects underway, battery storage project in development. - Updated five-year capital spending plan for Otter Tail Power, with changes in renewable generation, solar investment, and transmission investment. - Manufacturing segment facing end-market demand headwinds but with new facility and expansion projects in progress.

Electric segment: 2025 earnings increased over 7% year over year, with an increase of $0.16 per share. Driven by recovery of increased rate base investments, higher residential and commercial sales volumes, favorable weather impact, and lower operating and maintenance expenses, partially offset by higher depreciation and interest expense. Manufacturing segment: Earnings decreased $0.06 per share, or 16% year over year, primarily due to lower sales volumes, product mix impact on average pricing, and higher SG&A expenses, but saw higher year-over-year sales volumes in Q4 2025. Plastics segment: Earnings decreased $0.72 per share, or 15% year over year, largely driven by lower average sales prices, partially offset by higher sales volumes and lower input material costs.

• 2026 diluted earnings per share guidance range $5.22 to $5.62, midpoint $5.42. - Electric segment expected to increase 14% in 2026 due to higher average rate base and interim revenues, partially offset by higher operating and maintenance and depreciation/interest expenses. - Manufacturing segment expected to increase 7% due to improved sales outlook. - Plastics segment expected to decrease 36% due to receding PVC prices, partially offset by Vinyltech phase two capacity-driven higher sales volumes. - Otter Tail Power's five-year capital spending plan remains $1,900,000,000 with 10% rate base CAGR, with adjustments in renewable and battery storage investment and transmission investment timing.

• Transmission projects face landowner and local government resistance and FERC complaint risk of delays. - Plastics segment faces uncertainty of continuing PVC price decline. - Prudent approach in large load project advancement to mitigate implications to existing customer base.