Otter Tail Corporation · NASDAQ:OTTR
Otter Tail — Q4 2024 Earnings Presentation
34 slides from Otter Tail's earnings presentation, Feb 18, 2025
Slide 1: Q4 2024 Earnings Conference Call
Q4 2024 Earnings Conference Call
Slide 2: Forward Looking Statement
Forward Looking Statement 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,” “could,” “estimate,” “expe
Slide 3: Company Overview and Investment Thesis
Company Overview Investment Thesis Strategic Uninterrupted ELECTRIC MANUFACTURING diversification for dividend for 86 1 growth over long- 4 years, part of Founded in 1907 Owned and operated term cycles 9-11% TSR target for over 20 years Serve approximately 134,000 customers in Diverse end-markets In
Slide 4: Key Highlights
Key Highlights Financial Results • Record YTD diluted EPS: $7.17 • ROE: 19.3% • Converted rate base growth to electric segment earnings growth at approximately 1:1 Positioned for Future Growth • Fully settled North Dakota rate case • Completed Phase 1 of Vinyltech expansion project • Rate base CAGR
Slide 5: Financial Summary
Financial Summary $ in millions, except per share data Quarter-to-Date Year-to-Date Net Income Diluted EPS Net Income Diluted EPS -5% +2% $57.8 $1.37 $294.2 $301.7 $7.00 $7.17 $54.8 $1.30 Q4 2023 Q4 2024 Q4 2023 Q4 2024 YTD 2023 YTD 2024 YTD 2023 YTD 2024 2025 EPS Guidance Midpoint: $5.88 5
Slide 6: Electric Platform
OTTERTAIL CORPORATION . Electric Platform OrrEnian POWER COMPANY
Slide 7: North Dakota Rate Case
North Dakota Rate Case Amended request (July 2024) ND Public Service Commission Approval • Net revenue increase: $23M of Settlement Agreement December 2024 • ROE: 10.6% • Equity layer: 53.5% Net revenue ROE: Equity layer: increase: 1 $13.1M 10.1% 53.5% (previous 9.77%) (previous 52.5%) Interim rates
Slide 8: Project Updates
Project Updates Advanced Metering Wind Solway Abercrombie Infrastructure Repowering Solar Solar Est. investment: Est. investment: Est. investment: Est. investment: $60M $230M $100M $450M Est. completion date: Est. completion date: Est. completion date: Est. completion date: 2025 2024 and 2025 2026 2
Slide 9: Project Updates Continued
Project Updates Continued MISO LRTP1 MISO LRTP Tranche 1 Tranche 2.1 JTIQ2 Est. investment: Est. investment: Est. investment: $475M $700M $450M Est. completion date: Est. completion date: Est. completion date: 2032 2034 2034 Recovery mechanism: Recovery mechanism: Recovery mechanism: MISO tariff wit
Slide 10: Rate Base Growth
Rate Base Growth Significant Rate Base Growth Plan Expected Recovery Mechanisms $ in billions New Rate Case Existing Rates, 33% 9.0% Requests, 3% CAGR $2.91 $2.76 $2.52 $2.30 Rider Requests, $2.12 64% $1.89 Expect to convert rate base growth into electric earnings 2024(A) 2025 (F) 2026 (F) 2027 (F)
Slide 11: Load Growth Opportunities
Load Growth Opportunities Phases to Secure Large Load Well positioned to attract large loads Existing Opportunity • Approved tariffs in place • Locations identified with minimal delivery costs to Letter of site 1 970 MW Intent • Attractive service territory - low energy prices and high renewable pro
Slide 12: Customer Affordability
Customer Affordability Average Summer Residential Rate in Cents per kWh1 Otter Tail Power's 2024 rates 16.5 16% below regional average 15.7 30% below national average 14.6 Balanced approach: Investing to 13.6 ensure safe, reliable, efficient 13.2 13.1 13.8 and increasingly clean electric 13.1 servic
Slide 13: Manufacturing Platform
Manufacturing Platform © @ vil BTD TO. PLASTICS rorthernipe products vil
Slide 14: Industry Outlook: Manufacturing
Industry Outlook: Manufacturing BTD Manufacturing and T.O. Plastics Recreational Vehicle Lawn & Garden Increased dealer inventory levels, higher levels of used inventory available, inflationary pressures and higher interest rates negatively impacting end-market demand Construction Agriculture Intern
Slide 15: Plastics Pricing and Volume Trends
Plastics Pricing and Volume Trends Northern Pipe Products and Vinyltech Corporation Historical Sales Price of PVC Pipe1 2024 Trends1 Q4 YTD Sales Prices ↓ 11% ↓ 12% PVC pipe prices have steadily declined since late 2022 Sales Volumes ↑ 23% ↑ 27% Material Input Costs ↑ 2% ↓ 13% 8 8 9 9 0 0 1 1 2 2 3
Slide 16: Normalized Plastics Earnings
Normalized Plastics Earnings Northern Pipe Products and Vinyltech Corporation $ in millions $195 $201 $188 $143 $98 $45 - $50 $24 2018 - 2020 2021 2022 2023 2024 2025 (F) 2028 (F) Continued Sales Inflationary Average product volume increase price increase in input declines; from costs generally on a
Slide 17: Expansion Projects
Expansion Projects Vinyltech Corporation • Estimated completion dates: • Phase 1 - Q4 2024 (completed) • Phase 2 - early 2026 • Multi-phase expansion project, increasing production capacity (including large- diameter pipe) and resin and pipe storage • Production capacity impact: +15% (Phase 1 and 2)
Slide 18: Financial Results
OTTERTAIL CORPORATION Financial Results
Slide 19: Annual Diluted EPS
Annual Diluted EPS $0.15 $0.30 $7.17 $7.00 $(0.18) $(0.10) 2023 Electric Manufacturing Plastics Corporate 2024 19
Slide 20: Annual Diluted EPS: Electric and Manufacturing Detail
Annual Diluted EPS Segment Level Detail $0.34 $0.08 $0.03 $0.03 $2.16 $2.01 $(0.12) $(0.07) $(0.14) Electric 2023 Sales Weather Electric Rates Depreciation Interest AFUDC Other 2024 Volume & Rider Expense Expense Revenue $0.51 $0.10 $0.16 $0.33 Manufacturing $(0.24) $(0.05) $(0.04) $(0.11) 2023 Sale
Slide 21: Annual Diluted EPS: Plastics and Corporate Detail
Annual Diluted EPS Segment Level Detail $1.30 $0.26 $4.77 $4.47 $(1.19) $(0.07) Plastics 2023 Sales Product Production SG&A 2024 Volume Pricing Cost Expense $0.01 $0.11 $0.05 Corporate $(0.09) $(0.04) $(0.22) 2023 SG&A Investment COLI 1 Income Tax 2024 Expense Income Investments Benefit & Other 1 Ma
Slide 22: Balance Sheet
Balance Sheet $ in millions Consolidated Capital Structure Line of Credit Availability Available Liquidity and Return on Equity $606.3 40.6% 38.6% 37.8% $294.7 $141.6 Cash & Cash Equivalents 22.1% Available 25.6% Borrowing Capacity 19.3% $170.0 59.4% 61.4% 62.2% Available $311.6 $78.4 Outstanding 20
Slide 23: 2025 Outlook
2025 Outlook Actual 2025 Guidance Diluted EPS 2023 2024 Low High Electric $ 2.01 $ 2.16 $ 2.29 $ 2.35 Manufacturing 0.51 0.33 0.21 0.27 Plastics 4.47 4.77 3.26 3.50 Corporate 0.01 (0.09) (0.08) (0.04) Total $ 7.00 $ 7.17 $ 5.68 $ 6.08 Return on Equity 22.1 % 19.3 % 13.8 % 14.6 % 23
Slide 24: EPS Growth
EPS Growth $7.17 $7.00 $6.78 $5.88 Consolidated EPS (5YR CAGR): 20.2% $4.23 Consolidated EPS w/o Disciplined Plastics1 (5YR CAGR): 8.4% capital deployment $2.34 Proven track record of delivering focused on: $2.53 $2.50 EPS growth in line or above $2.40 $2.12 target with and without the $1.89 $1.67 i
Slide 25: Capital Expenditures
Capital Expenditures $ in millions 2025 (F) 2026 (F) 2027 (F) 2028 (F) 2029 (F) Total $650M Incremental investment Electric opportunity for Electric in later part of 5-year period Renewable Generation $ 101 $ 127 $ 118 $ 179 $ 4 $ 529 Disciplined Transmission 59 93 162 114 100 528 Driven by: capital
Slide 26: Financing Plan
Financing Plan $ in millions 2025 (F) 2026 - 2029 (F) 5YR Total Long-Term Debt Financing plan Otter Tail Power Company supports utility Issuances $ 100 $ 515 $ 615 Disciplined investments Retirements capital — (112) (112) without Otter Tail Corporation deployment external equity focused on: Issuance
Slide 27: Dividend and Payout Ratio
Dividend and Payout Ratio 7% CAGR $2.10 $1.87 $1.65 $1.75 86 consecutive years of $1.56 $1.48 dividend payments $1.40 $1.34 $1.25 $1.28 Indicated dividend for 2025: $2.10 (12.3% increase) Dividend payout ratio impacted by exceptional Plastics segment financial results driving a lower ratio 78% Targe
Slide 28: Investment Targets
Investment Targets Total Shareholder Return: 9-11% Key underlying assumptions Consolidated: Long-term EPS growth • Long-term earnings mix target reached in Dividend yield: ~ 3% 2028 rate: 6-8%1 Electric: • Rate base CAGR: 9.0% Dividend Growth Rate: 6-8% • Long-term EPS growth rate: approximates Targ
Slide 29: Appendix
SOTTERTAIL CORPORATION am m= Appendix
Slide 30: QTD Diluted EPS
QTD Diluted EPS $0.11 $1.37 $(0.04) $1.30 $(0.02) $(0.12) Q4 2023 Electric Manufacturing Plastics Corporate Q4 2024 30
Slide 31: QTD Diluted EPS: Electric and Manufacturing Detail
QTD Diluted EPS Segment Level Detail $0.05 $0.11 $0.03 $0.51 $0.40 $(0.03) $(0.02) $(0.03) Electric Q4 2023 Sales Electric Rates Transmission O&M Depreciation Interest Q4 2024 Volume & Rider Revenue Expense Expense Expense Revenue $0.03 $0.10 $(0.05) $(0.01) Manufacturing $(0.02) $(0.07) Q4 2023 Sal
Slide 32: QTD Diluted EPS: Plastics and Corporate Detail
QTD Diluted EPS Segment Level Detail $0.24 $0.94 $0.92 $(0.23) $(0.03) Plastics Q4 2023 Sales Product SG&A Q4 2024 Volume Pricing Expense $0.00 Corporate $0.01 $0.03 $(0.12) $(0.12) $(0.04) Q4 2023 SG&A Investment COLI 1 Income Tax Q4 2024 Expense Income Investments Benefit 1 Market-based returns on
Slide 33: Debt Maturity Schedule
Debt Maturity Schedule Weighted average interest rate: 4.40% $100 $100 $90 $90 $80 $70 $64 $60 $60 $50 $50 $42 $40 $26 $15 $10 2026 2027 2029 2030 2031 2034 2037 2039 2040 2044 2048 2049 2050 2051 2052 2054 Otter Tail Corporation Otter Tail Power 33
Slide 34: Otter Tail Power Regulatory Framework
Otter Tail Power Regulatory Framework Jurisdiction Minnesota North Dakota South Dakota Utility Commissioners Appointed Elected Elected Rate Case Test Year Future Future Historical1 Allowed Return on Equity 9.48% 10.10% 8.75% Earnings Sharing Mechanism No Yes2 Yes3 Disciplined Rider Recovery for: cap