Otter Tail Corporation

What they do

Otter Tail Power Company (OTP) is a regulated electric utility serving customers in Minnesota, North Dakota and South Dakota, operating under MISO and subject to MPUC, SDPUC and FERC regulation. The company also owns manufacturing businesses and a Plastics segment that produces PVC pipe, with the Phoenix facility having recently added capacity. Corporate headquarters are in Fergus Falls, Minnesota, and the company reported 41,953,525 common shares outstanding as of February 12, 2026.

Revenue drivers

• Electric segment (Otter Tail Power) — Regulated utility revenue from retail and wholesale electric sales, recovered through rates and riders such as the ECO, EUIC, RRR, TCR, PIR and MDT riders; capital investment includes the Abercrombie and Solway solar projects and wind repowering.
• Plastics segment — PVC pipe manufacturing and sales; second quarter 2026 results exceeded expectations on strong volumes as customers secured pipe ahead of announced resin price increases, with the rate of decline in PVC pipe sales price moderating.
• Manufacturing segment — Produced improved second quarter 2026 financial results driven by favorable product mix and margin expansion, with increased volumes in the recreational vehicle, construction and horticulture end markets.

Recent performance

For the second quarter of 2026, Otter Tail reported a diluted loss per share of $0.18 and adjusted diluted earnings per share of $1.66, reflecting $103.5 million of litigation settlement expense. Quarterly revenue was $347.0 million for the three months ended March 31, 2026 and $334.4 million for the three months ended June 30, 2026. Operating cash flow for the six months ended June 30, 2026 was $182.7 million versus $159.4 million a year earlier, helped by lower working capital requirements and recovery of fuel and rider revenues. Capital expenditures for that six-month period were $324.8 million, largely in the Electric segment. The company declared a quarterly dividend of $0.5775 per share on August 3, 2026, payable September 10, 2026.

Strategy

Management said it advanced regulatory and strategic priorities at Otter Tail Power, including securing route permits for two large regional transmission projects, filing a 15-year integrated resource plan with the Minnesota commission and progressing an ongoing Minnesota rate case. In Plastics, the team used recently added capacity at the Phoenix facility to meet customer demand. The company settled the three putative classes in the PVC pipe U.S. antitrust litigation for $103.5 million, without admitting wrongdoing, to reduce uncertainty, distraction and costs. Management continues to target a long-term earnings per share growth rate of 7 to 9 percent and total shareholder return of 10 to 12 percent.

Risks

• Regulatory and rate case outcomes — Results depend on state utility commission and FERC decisions, including the pending Minnesota rate case and the 15-year integrated resource plan, which affect allowed rates and cost recovery.
• Litigation settlement expense — The $103.5 million PVC pipe antitrust class settlement, subject to final court approval, drove the second quarter 2026 GAAP loss and the reduction in full-year GAAP guidance.
• Commodity resin and PVC pipe pricing — Plastics segment margins are sensitive to PVC pipe sales prices and resin costs, as illustrated by customer buying ahead of announced resin price increases.
• Capital program execution and financing — The company is funding large Electric segment investments such as Abercrombie, Solway and wind repowering, and issued $170.0 million of long-term debt at Otter Tail Power during the first half of 2026.

Outlook

Management updated its 2026 diluted earnings per share guidance range to $3.84 to $4.24 from $5.22 to $5.62, primarily due to the litigation settlement and related expense. It initiated an adjusted diluted earnings per share guidance range of $5.68 to $6.08, excluding the after-tax impact of the settlement expense, which reflects an increase from the original guidance range. The company continues to target a long-term earnings per share growth rate of 7 to 9 percent and a total shareholder return of 10 to 12 percent.