Otter Tail Corporation · NASDAQ:OTTR
Otter Tail — Investor Presentation (March 2025)
51 slides from Otter Tail's investor presentation, Mar 31, 2025
Slide 1: Q1 2025 Investor Deck
Q1 2025 INVESTOR DECK SOTTERTAIL CORPORATION
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: Otter Tail Corporation Investment Thesis
Otter Tail Corporation Diversified, growing and delivering value Investment Thesis ELECTRIC MANUFACTURING Strategic Uninterrupted diversification for dividend for 86 01 growth over long- 04 years, part of Founded in 1907 Owned and operated term cycles 9-11% TSR target for over 20 years Serve approxi
Slide 4: Vision & Mission
Vision & Mission Executing Our Vision Build top performing companies in a diversified organization with an electric utility as the foundation Mission Deliver value by building strong electric utility and manufacturing platforms 1 For our shareholders we deliver above average returns through commerci
Slide 5: Balanced Growth and Income Model
Balanced Growth and Income Model Strategic Diversification Electric platform has significant rate base growth plan, and our manufacturing platform generates incremental cash to help fund the plan To navigate long-term cycles and consistently achieve targeted 9-11% TSR ELECTRIC MANUFACTURING Delivers
Slide 6: Balanced Growth Driving Returns over Long-Term Cycles
Balanced Growth Driving Returns over Long-Term Cycles Our diversification has enabled us to produce a higher ROE than our utility peers over the long-term Since 1994, Otter Tail’s strategic diversification and capital efficiency has resulted in an ROE of 12.1%, greater than the broader Utility 19.3%
Slide 7: Track Record of Consistent Results
Track Record of Consistent Results Attractive ROE with defensive balance sheet EPS Growth Consolidated Capital Structure and ROE 27.0% Consolidated EPS 30.0% 120.0% (5YR CAGR) 25.6% $7.00 $7.17 25.0% 100.0% $6.78 22.1% 46.3% 38.6% 37.8% 20.0% 40.6% 80.0% 47.1% 49.3% 19.2% 19.3% 15.0% 60.0% $4.23 7.7
Slide 8: Attractive Long-Term TSR Algorithm
Attractive Long-Term TSR Algorithm Earnings drivers in Electric 6-8% long-term EPS growth and Manufacturing Sales growth ELECTRIC Incremental cash flow to fund growth without the need for raising equity Rate base growth Load growth Efficiency Operational, commercial and talent excellence 9-11% MANUF
Slide 9: Otter Tail Power Company: Delivering Consistent Earnings Growth
Otter Tail Power Company: Delivering Consistent Earnings Growth 9
Slide 10: Otter Tail Power Company
Otter Tail Power Company CANADA Regulated and vertically integrated electric utility Langdon Wind Energy Center MN Luverne Wind Farm Solway Constructive regulatory jurisdictions Coyote Station Ashtabula Wind Energy Center Combustion Turbine Low-cost generation resources Blue Jay Solar Blue Heron Sol
Slide 11: Rate Base Growth
Rate Base Growth: Long history of delivering… … and a clear path forward 9.0% Planned CAGR 2024-2029 $2.9B $2.8B $2.5B $2.3B $2.1B $1.9B $1.7B $1.6B $1.6B $1.4B $1.2B 2019 2020 2021 2022 2023 2024 2025(F) 2026(F) 2027(F) 2028(F) 2029(F) Otter Tail Power has proven track record of converting rate bas
Slide 12: Investing in Renewable Generation & Storage
Investing in Renewable Generation & Storage to Support a Clean Energy Future Levers to support affordability as we transition: Wind Repowering Solar Development Integrated Resource Plan Investments Tax credits $230M capital investment Est. $550M capital investment Up to 500 MW of new renewable gener
Slide 13: Changing Energy Mix Supports Reliability, Affordability and Lower Emissions
Changing Energy Mix Supports Reliability, Affordability and Significantly Lower Emissions Otter Tail Power Energy Resource Mix As a result of our changing energy mix, we are targeting reduced emissions 4% By 2030, We are Targeting 8% 3% 8% 23% 2% Of owned and contracted Reduction in carbon 9% 43% 55
Slide 14: Transmission Investment Priorities
Transmission Investment Priorities Projects intended to MISO1 LRTP2 MISO1 LRTP2 JTIQ3 help support grid Tranche 1 Tranche 2.1 reliability Est. $475M capital Est. $700M capital Est. $450M capital investment investment investment Expect projects to have very limited impact on Otter Tail Power customer
Slide 15: 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 16: Constructive Regulatory Environment
Constructive Regulatory Environment Investment to support safe & reliable electric service Otter Tail’s jurisdictions are rated as Constructive or Neutral 1 MN Average/2 Track record Constructive ND Average/1 of timely regulatory SD Average/2 recovery jurisdictions We anticipate to recover ~ 95% of
Slide 17: Focus on Affordability during Growth
Focus on Affordability during Growth Investing to ensure: Ensuring affordability: Safe; Through • IRA tax credits Reliable; Some of + • MISO system wide recovery Rate base the lowest • Reduced energy costs Efficient; and growth rates in the • Technology enabled savings Increasingly clean electric na
Slide 18: Delivering Affordability for Customers
Delivering Affordability for Customers 20 Average Summer Residential Rate in Cents per kWh1 18 16.5 15.7 USA 16 14.6 13.6 13.8 14 13.1 13.1 Regional 12.7 12.4 11.7 12 11.6 11.3 11.2 10 10.5 10.2 8 2020 2021 2022 2023 2024 Otter Tail Power’s 16% below 30% below regional average national average 2024
Slide 19: Driving Operational and Commercial Excellence in Electric
Strong Foundation: Vertical integration of generation, transmission and distribution: Driving Operational • enables efficiency, • cost control, and Commercial • compelling customer offering Excellence in Electric Levers for Excellence: Actions across the organization A strong foundation and • Prepar
Slide 20: Financial and Operational Targets
Financial and Operational Targets Electric platform Convert rate base Deliver attractive Achieved Delivering ROE to contribute growth to earnings rate base growth; customer 65% growth at a target affordability of consolidated 1:1 9.0% to approximate allowed ROE through balanced investment and earnin
Slide 21: Electric Operations: Key takeaways
Electric Operations: Key takeaways Otter Tail Power Company positioned to deliver value to customers AND investors through long-term cycles 3 Proven track record of strong rate base growth (converting to earnings at 1:1 ratio) and clear path to significant future rate base expansion 2 Strategically
Slide 22: Manufacturing Operations: Consistently Accretive Returns
Manufacturing Operations: Consistently Accretive Returns 22
Slide 23: Robust Manufacturing Platform
Robust Manufacturing Platform MANUFACTURING PLATFORM Manufacturing Segment Plastics Segment Providing metal Delivering custom Manufactures PVC pipe for municipal fabrication for custom thermoformed water, rural water, wastewater, storm machine parts and plastic products and drainage systems and othe
Slide 24: Delivering Consistently Accretive Returns
Delivering Consistently Accretive Returns Manufacturing Platform ROE has been consistently Significant growth in sales and net income within accretive to the Otter Tail group’s returns the Manufacturing Platform since 2005 73% Sales Net Income 6.0% 13.7% 58% 61% 58% $806.0M $214.4M CAGR CAGR 3.4% CA
Slide 25: Underpinned By Competitive Advantages Across Manufacturing Platform
Underpinned By Competitive Advantages Across Manufacturing Platform Manufacturing Segment Plastics Segment Serving diversified end markets High-quality customer service in highly-regulated industry With high value, custom products and solutions Responsive and reliable, with inventory management Prov
Slide 26: Serving Diversified Markets: Manufacturing Segment
Serving Diversified Markets: Manufacturing Segment Servicing wide array of customers 4% 7% 10% 13% Other Horticulture 15% Lawn & Garden Industrial 19% Agriculture Construction Rec. Vehicle 32% 2024 Located where our Expanding in Southeast US to Defensive positions growing with well established world
Slide 27: Serving Diversified Markets: Plastics Segment
Serving Diversified Markets: Plastics Segment End markets served1: 85-90% Municipal 5-10% Residential / Commercial 5% Rural Water With over +200 distribution customers including 1 Reflects approximated long-term averages 27
Slide 28: Positive Long-Term Trajectory for Serviced Markets
Positive Long-Term Trajectory for Serviced Markets Manufacturing Segment Plastics Segment Reshoring of manufacturing Housing shortage Outsourcing trends by OEMs Infrastructure upgrade Housing shortage and replacement Power demand growth Water availability and transport Serving end markets with long-
Slide 29: Driving Organic Growth in Manufacturing
Efficiency gains through continuous improvement Driving Organic Growth in Manufacturing Growth with existing customers Expansion projects in AZ and GA 29
Slide 30: Delivering Growth at BTD Georgia
Delivering Growth at BTD Georgia Attractive opportunity within Southeast region unlocking up to $35M incremental sales opportunity and supporting long-term growth outlook FOCUSED ON: Facility expansion + implementing automation Expansion of BTD’s facility in Georgia creates new opportunities for BTD
Slide 31: Driving Growth in Plastics
Driving Growth in Plastics Multi-phased expansion project at Vinyltech in Phoenix, AZ PHASE 1 PHASE 2 Expanded facility Adding additional pipe Added large-diameter pipe production line production capabilities ON TIME ON BUDGET Delivering • Increased plastics segment production capacity by +15% (phas
Slide 32: Understanding the Normalization of Plastic Profits
Understanding the Normalization of Plastic Profits Historical Sales Price of PVC Pipe Sales Price Decline Drives Earnings Normalization Dynamic market conditions contributed to significant $195M $201M $188M increase in PVC pipe prices beginning in 2021 $143M Beginning in Q3 2022, PVC pipe prices hav
Slide 33: Driving Operational and Commercial Excellence in Manufacturing
Driving Operational and Commercial Excellence in Manufacturing Engineering Agile Continuous & production operations improvement competency Excellence in Action Safety Reliability Project execution Efficiency 2024 total recordable incident rate Heavy focus placed on on-time Expansion projects are pro
Slide 34: Manufacturing Financial and Operational Targets
Manufacturing Financial and Operational Targets Drive organic Manufacturing Free Consistently achieve Ongoing platform to cash flow accretive growth with efficiency contribute 35% positive of consolidated returns existing customers gains and production reliability earnings Maintain historical track
Slide 35: Manufacturing Operations: Key takeaways
Manufacturing Operations: Key takeaways Manufacturing set to continue driving ongoing accretive returns and incremental cash flow 3 Attractive growth opportunities across all business areas of Manufacturing 2 Defensive market positions – growing with well-established customers 1 Core competency in e
Slide 36: Financial Section
OTTERTAIL CORPORATION Financial Section
Slide 37: Attractive Long-Term TSR Algorithm
Attractive Long-Term TSR Algorithm Earnings drivers in Electric 6-8% long-term EPS growth and Manufacturing Sales growth ELECTRIC Incremental cash flow to fund growth without the need for raising equity Rate base growth Load growth Efficiency Operational, commercial and talent excellence 9-11% MANUF
Slide 38: 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% 38
Slide 39: Capital Allocation Priorities
Capital Allocation Priorities Focused on driving organic growth and consistent shareholder returns 01 02 03 04 Investment in Cash returns to Opportunistic Opportunistic returns the business shareholders M&A to shareholders $1.6B capex planned Target 50-60% long- Electric: focused on Via share repurc
Slide 40: Capital Expenditures
Capital Expenditures Capital Investments Total $650M In millions 2025 (F) 2026 (F) 2026 (F) 2028 (F) 2029 (F) 2025 -2029(F) Incremental investment Electric opportunity for Electric segment in later part of 5-year period Renewable Generation $ 101 $ 127 $ 118 $ 179 $ 4 $ 529 Transmission 59 93 162 11
Slide 41: Dividend – A Key Part of Our TSR
Dividend – A Key Part of Our TSR Dividend Growth & Payout Ratio 7% CAGR $2.10 $1.87 $1.75 $1.65 $1.48 $1.56 86 consecutive years of $1.34 $1.40 dividend payments $1.25 $1.28 Indicated dividend for 2025: $2.10 (12.3% increase) Dividend payout ratio impacted by exceptional Plastics segment financial r
Slide 42: Strong Balance Sheet Supports Long-Term Strategy
Strong Balance Sheet Supports Long-Term Strategy Five-Year Financing Plan Equity ratio 62% 2025 2026-29 5 Year (Planned) (Planned) Total Strong $347 million of cash and $ in millions marketable securities LONG-TERM DEBT balance Otter Tail Power Company Unused capacity on lines of sheet: credit Issua
Slide 43: Well Balanced Debt Maturity Schedule
Well Balanced Debt Maturity Schedule Weighted average interest rate: 4.40% $100M $100M $90M $90M $80M $70M $64M $60M $60M $50M $50M $42M $40M $26M $15M $10M 2026 2027 2029 2030 2031 2034 2037 2039 2040 2044 2048 2049 2050 2051 2052 2054 Otter Tail Corporation Otter Tail Power 43
Slide 44: Investment Thesis
Investment Thesis 1 Strategically diversified portfolio positions Otter Tail to deliver long- term value to shareholders. Target 65% of earnings from Electric 2 Electric has visibility on converting rate base growth into earnings 1:1 over the long-term through strong execution of attractive investme
Slide 45: Investor Relations Contacts
Investor Relations Contacts Beth Eiken Tyler Nelson Manager of Investor Relations Vice President of Finance and Treasurer beiken@ottertail.com tnelson@ottertail.com 45
Slide 46: Appendix
SOTTERTAIL CORPORATION Appendix
Slide 47: Financial Performance
Financial Performance Diluted EPS: 2023 vs 2024 $0.15 $0.30 $7.17 $7.00 $(0.18) $(0.10) 2023 Electric Manufacturing Plastic Corporate 2024 47
Slide 48: 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 Rider Recovery for: Renewable Gener
Slide 49: Manufacturing & Plastics Products
Manufacturing & Plastics Products Components for world class customers Horticulture Medical Device Containers Packaging PVC Pipe 49
Slide 50: Senior Management Team
Senior Management Team Chuck MacFarlane Todd Wahlund Tim Rogelstad John Abbott Jennifer Smestad President and CEO Vice President and CFO Senior Vice President, Senior Vice President, Vice President, Years in Role: 10 Years in Role: 1 Electric Platform Manufacturing Platform General Counsel and Years
Slide 51: Board of Directors
Board of Directors Jeanne Crain John Erickson Steven Fritze Dr. Kathryn Johnson Dr. Michael LeBeau Audit Committee; Chair of Audit Committee; Compensation and Human Compensation and Human Capital Compensation and Human Corporate Capital Management Management Committee; Capital Management Governance