Otter Tail 2025 Q1 Earnings Misses Targets as Net Income Declines 8.4%
Thursday, May 8, 2025 7:15 am ET
15min read OTTR Trend
Revenue
The total revenue of otter tail decreased by 2.8% to $337.35 million in 2025 Q1, down from $347.07 million in 2024 Q1, with the Electric segment generating $149.72 million, the Manufacturing segment contributing $81.69 million, and the Plastics segment adding $105.95 million to the total revenue.
Earnings/Net Income
Otter Tail's EPS declined 8.4% to $1.63 in 2025 Q1 from $1.78 in 2024 Q1. Meanwhile, the company's net income fell to $68.10 million in 2025 Q1, an 8.4% decrease from $74.34 million reported in 2024 Q1. This indicates a challenging quarter for Otter Tail.
Price Action
The stock price of Otter Tail has edged up 0.58% during the latest trading day, dropped 3.80% during the most recent full trading week, and edged down 0.53% month-to-date.
Post-Earnings Price Action Review
Investors employing the strategy of buying Otter Tail shares after a revenue increase quarter-over-quarter and holding for 30 days have seen favorable outcomes over the past five years. This approach has consistently outperformed the buy-and-hold tactic, delivering higher cumulative returns and lower drawdowns. The strategy capitalizes on short-term market optimism linked to improved business performance or operational efficiency, often resulting in a brief price surge. The 30-day holding period appears optimal, allowing investors to benefit from initial enthusiasm while avoiding the subsequent consolidation phase. The backtest results underscore the strategy's effectiveness, with superior cumulative returns and enhanced risk management. It is essential to recognize that the strategy's success is influenced by company fundamentals and prevailing market conditions, as revenue increases often precede positive earnings reports or guidance updates, potentially boosting stock prices in the short term.
CEO Commentary
“Overall, we are pleased with our first quarter financial results,” said Chuck MacFarlane, President and CEO. The company achieved earnings of $68.1 million, or $1.62 per diluted share, aligning with expectations. The CEO highlighted the proactive management of dynamic market conditions and emphasized the strength of the balance sheet and liquidity, positioning the company well amid economic uncertainties. He mentioned the successful finalization of the North Dakota general rate case and ongoing investments in renewable generation and transmission projects. The CEO expressed cautious optimism regarding the manufacturing segment's softening demand and the plastics segment's strong performance driven by increased sales volumes.
Guidance
Otter Tail Corporation maintains its consolidated 2025 earnings guidance range of $5.68 to $6.08 per diluted share, anticipating an earnings mix of approximately 39% from the Electric segment and 61% from the Manufacturing and Plastics segments. The company expects a compounded annual growth rate in rate base of 9% from 2025 to 2029, with projected earnings growth of 6% to 8% and a total shareholder return of 9% to 11%. Capital expenditures for the first quarter totaled $58.0 million, focusing primarily on the Electric segment.
Additional News
Otter Tail Corporation announced a 12% increase in its quarterly dividend to $0.525 per share, payable on June 10, 2025, to shareholders of record on May 15, 2025. The company showcased its available liquidity of $607 million as of March 31, 2025, which underscores its strong balance sheet. In recent investment activities, Otter Tail invested in expanding its BTD manufacturing facility in Georgia, completed on time and within budget. This expansion aims to enhance production capabilities, supporting the company's strategic growth objectives amid evolving market conditions.
