Otter Tail Corporation · NASDAQ:OTTR
Otter Tail — Q1 2025 Earnings Presentation
32 slides from Otter Tail's earnings presentation, May 6, 2025
Slide 1: Q1 2025 Earnings Conference Call
Q1 2025 Earnings Conference Call
Slide 2: Safe Harbor: Forward Looking Statement
Safe Harbor 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,” “esti
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 • Q1 Results On Target - Earnings of $68.1M; Diluted EPS of $1.62 • ROE (trailing twelve months): 18.3% • Available liquidity of $607M Positioned for Future Growth • Robust Electric segment capital investment plan • Final rates in North Dakota rate case implemented i
Slide 5: Financial Summary
Financial Summary $ in millions, except per share data Quarter-to-Date Net Income Diluted EPS -8% $74.3 $68.1 $1.77 $1.62 Affirming 2025 EPS Guidance Guidance Midpoint: $5.88 Projected ROE: 14.2% Electric segment earnings growth: 7% Q1 2024 Q1 2025 Q1 2024 Q1 2025 5
Slide 6: Operating Environment: Segment Risks & Mitigations
Operating Environment Segment Risks & Mitigations Electric Tariffs • Risk of increased CapEx cost, which may alter investment recovery timing or requested amount • Many major materials can be sourced domestically, from different countries or qualify under USMCA • No bi-lateral power purchase agreeme
Slide 7: Electric Platform
OTTERTAIL CORPORATION . Electric Platform OrrEnian POWER COMPANY
Slide 8: North Dakota Rate Case
North Dakota Rate Case Constructive Outcome Achieved ND Public Service Commission Approval Final Rates of Settlement Agreement • Implemented March 2025 December 2024 Net revenue Interim rates ROE: Equity layer: increase: • Effective January 1, 2024 $13.1M 10.1%1 53.5% (previous 9.77%) (previous 52.5
Slide 9: Rate Base Investment Plan
Rate Base Investment Plan Customer-Focused Plan with Limited Rate Case Recovery Needed Significant Rate Base Growth Expected Capital Investment $ in billions Recovery Mechanisms New Rate 9.0% Case Existing Rates, 33% CAGR Requests, 3% $2.91 $2.76 $2.52 $2.30 $2.12 Rider Requests, $1.89 64% Expect to
Slide 10: 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 11: 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 12: 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 13: Customer Rates and Affordability
Customer Rates and Affordability A Proven Record of Providing Affordable Service Average Summer Residential Rate in Cents per kWh1 Otter Tail Power's 2024 rates 16.5 16% below regional average 15.7 United States 30% below national average 14.6 Balanced approach: Investing to 13.6 13.8 13.2 13.1 13.1
Slide 14: Manufacturing Platform
Manufacturing Platform © @ vil BTD TO. PLASTICS rorthernipe products vil
Slide 15: Industry Outlook: Manufacturing
Industry Outlook: Manufacturing BTD Manufacturing and T.O. Plastics Recreational Vehicle Lawn & Garden Increased dealer inventory levels, higher levels of available used inventory available, inflationary pressures, higher interest rates, and potential tariffs negatively impacting end-market demand C
Slide 16: Plastics Pricing and Volume Trends
Plastics Pricing and Volume Trends Northern Pipe Products and Vinyltech Corporation Historical Sales Price of PVC Pipe1 2025 Trends1 Q1 Sales Prices ↓ 11% PVC pipe prices have steadily declined since late 2022 Sales Volumes ↑ 13% Material Input Costs ↓ 89% 2018 2019 2020 2021 2022 2023 2024 2025 18
Slide 17: Expansion Projects
Expansion Projects Positioned for Long-Term Growth Vinyltech Corporation • Completion dates: • Phase 1 - Q4 2024 • Phase 2 - early 2026 (estimated) • Multi-phase expansion project, increasing production capacity (including large- diameter pipe) and resin and pipe storage • Production capacity impact
Slide 18: Financial Results
OTTERTAIL CORPORATION Financial Results
Slide 19: QTD Diluted EPS
QTD Diluted EPS $1.77 $0.06 $1.62 $(0.09) $(0.08) $(0.04) Q1 2024 Electric Manufacturing Plastics Corporate Q1 2025 19
Slide 20: QTD Diluted EPS: Electric and Manufacturing Detail
QTD Diluted EPS Segment Level Detail $0.06 $0.03 $0.04 $0.02 $0.59 $0.53 $(0.04) $(0.03) $(0.02) Electric Q1 Sales Weather Electric Rates Depreciation Interest Nonservice Other Q1 2024 Volume & Rider Expense Expense Cost of 2025 Revenue Postretirement Benefits $0.13 Manufacturing $(0.04) $(0.02) $(0
Slide 21: QTD Diluted EPS: Plastics and Corporate Detail
QTD Diluted EPS Segment Level Detail $0.15 $1.11 $0.04 $1.03 Plastics $(0.24) $(0.03) Q1 Sales Product Material SG&A Q1 2024 Volume Pricing Cost Expense 2025 Corporate $0.00 $0.01 $(0.03) $(0.02) $(0.04) Q1 SG&A Investment COLI Q1 1 2024 Expense Income Investments 2025 1 Market-based returns on corp
Slide 22: Balance Sheet
Balance Sheet $ in millions Consolidated Capital Structure Line of Credit Availability Available Liquidity and Return on Equity $607.2 38.6% 37.8% 38.0% $284.8 $152.4 Cash & Cash Equivalents 22.1% Available Borrowing Capacity 19.3% 18.3% $170.0 61.4% 62.2% 62.0% Available $322.4 $67.6 Outstanding 20
Slide 23: 2025 Outlook
2025 Outlook Affirming Guidance 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 % 2
Slide 24: EPS Growth
EPS Growth Robust Growth Across Our Business $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
Slide 25: Capital Expenditures
Capital Expenditures Customer-Focused Capital Investment Plan 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 5
Slide 26: Financing Plan
Financing Plan Supportive of Electric Segment Capital Plan with No Equity Needs 2025 2026 - 2029 (F) 5YR Total in millions Long-Term Debt Otter Tail Power Company Disciplined Issuances capital $ 100 $ 515 $ 615 Retirements deployment (112) (112) focused on:Corporation Otter Tail Issuances Retirement
Slide 27: 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) Continued Sales Inflationary 2028 (F) Average product volume increase price increase in input declines; costs generally on trend
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: 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
Slide 31: Debt Maturity Schedule
Debt Maturity Schedule Weighted average interest rate: 4.46% $100 $100 $90 $90 $80 $70 $64 $60 $60 $50 $50 $50 $42 $40 $26 $15 $10 2026 2027 // 2029 2030 2031 // 2034 2035 // 2037 // 2039 2040 // 2044 // 2048 2049 2050 2051 2052 // 2054 Otter Tail Corporation Otter Tail Power 31
Slide 32: 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