What does Otter Tail do and what are its main business segments?

Did Otter Tail beat or miss consensus estimates last quarter?

What is the market's earnings forecast for Otter Tail next quarter?

What were the key takeaways from Otter Tail’s earnings call?

What is Otter Tail's latest dividend and current dividend yield?

What is the revenue and EPS growth rate for Otter Tail year over year?

What is Otter Tail's gross profit margin?

What were the key takeaways from Otter Tail's earnings call?

- **Revenue Growth**: 15% YoY driven by North American recovery.
- **AI-Driven Margin Expansion**: Gross margin improvement expected in H2.
- **Plastics Beat**: Q3 Plastics EPS exceeded expectations with 4% volume growth vs 17% price decline.
- **Updated 5-Year Plan**: $1.9B capex for 10% rate base CAGR, targeting 9-12% EPS growth.
- **Affordability Commitment**: Lowest rates in nation with cost-effective investments.
- **Long-Term Outlook**: 7-9% EPS CAGR post-2028 Plastics normalization.

### CEO Summary Section
- **Revenue Growth**: Q3 revenue grew 15% YoY, driven by North American market recovery.
- **AI Investment**: Emphasized continued investment in AI to improve gross margins in H2.
- **Production Expansion**: Vinyltech expansion added 26M pounds of capacity, with total Plastics segment capacity up 50M pounds over 2 years.
- **5-Year Plan Update**: Announced $1.9B capital spending plan for Otter Tail Power, targeting 10% CAGR in rate base and 9-12% EPS growth.
- **Affordability Focus**: Committed to cost-effective projects and customer rate affordability, with rates remaining among lowest in the nation.

### CFO Financial Commentary
- **Q3 Earnings**: Diluted EPS of $1.86 (-8% YoY), outpacing expectations due to Plastics segment margin improvements.
- **Segment Performance**: 
  - Electric: -0.03 EPS from weather and rate timing, offset by volume growth and O&M savings.
  - Manufacturing: +0.04 EPS from cost alignment and efficiency gains.
  - Plastics: -0.26 EPS from 17% price decline, offset by 4% volume growth and 16% resin cost drop.
- **2025 Guidance Update**: Raised EPS range to $6.32-6.62 (midpoint $6.47), driven by Plastics margin beat and narrowed outlook.
- **Balance Sheet Strength**: $325M cash, 16% ROE, and no equity needs through 2030.
- **Long-Term Outlook**: 7-9% EPS CAGR post-2028 Plastics normalization, with 70% EPS from Electric platform.

### Q&A Highlights
- **EPS Growth Shape**: Linear utility earnings growth aligned with rate base, with Manufacturing cyclicality.
- **Tax Rate**: No change to 2025 assumption, tracking as guided.
- **Antitrust Case**: DOJ intervention stayed discovery; motion to dismiss filed, with decision expected in 2026.
- **Cash Allocation**: Prioritize utility capex, dividend (12% increase), and opportunistic M&A.
- **Large Load**: 155MW interruptible customer reduces fixed costs with minimal capex impact.

Otter Tail Corporation (OTTR) Q3 2025 Earnings Call Transcript

- **EPS Guidance Upped**: 2025 EPS raised to $6.06-$6.46 (midpoint +7%) due to Plastics outperformance
- **Solar Projects Approved**: $345M solar projects approved for Minnesota/South Dakota customers
- **Manufacturing Strength**: Plastics segment 11% volume growth vs. 15% price decline; BTD Georgia facility ramping
- **Electric Growth**: 9% CAGR through 2029; South Dakota rate case filed for 10.8% ROE
- **Balance Sheet Strength**: $300M+ cash; 63% equity layer
- **Regulatory Risks**: EPA coal plant rule changes; renewable credit phaseout impacts future projects

**【Management Opening Remarks】**
- Otter Tail Corporation reported Q2 2025 diluted EPS of $1.85, down from $2.07 YoY, but raised 2025 EPS guidance to $6.06-$6.46 (midpoint $6.26) due to stronger-than-expected Plastics segment performance.
- CEO Chuck MacFarlane highlighted Q2 achievements: 
  - Regulatory approvals for $345M solar projects (Abercrombie & Solway Solar)
  - FERC approval for MISO Tranche 2.1 transmission projects
  - 430MW load term sheet with potential customer
  - BTD Georgia facility ramping to full production
- CFO Todd Wahlund emphasized: 
  - $300M+ cash balance and 63% equity layer
  - 5-year CAGR of 22% for consolidated EPS
  - Electric segment CAGR of 9% through 2029

**【CEO Operational Updates】**
- **Electric Segment**: 
  - South Dakota rate case filed for $5.7M revenue increase (10.8% ROE)
  - Minnesota cost of service study underway
  - 155MW load project progressing with SD PUC approval
  - Lowest electric rates in the U.S. (30% below national average)
- **Manufacturing Segment**: 
  - Plastics segment: 
    - 11% sales volume growth vs. 15% price decline
    - 26M lb capacity expansion in Phase 2 of Vinyltech
    - 400M lb annual capacity by early 2026
  - BTD: 
    - Soft end-market demand but improving dealer inventory
    - Georgia facility scaling to full production
- **Regulatory Environment**: 
  - Impact of One Big Beautiful Bill Act on renewable credits
  - EPA reconsideration of coal plant regulations
  - DOE grant status for JTIQ project

**【CFO Financial Highlights】**
- **Q2 2025 Results**: 
  - Electric segment: +$0.02 EPS vs. Q2 2024
  - Manufacturing: -$0.08 EPS (lower pricing, volumes)
  - Plastics: -$0.18 EPS (15% price decline, 11% volume growth)
- **Balance Sheet**: 
  - $300M+ cash
  - 63% equity layer
  - Leading utility ROE
- **2025 Guidance**: 
  - Plastics segment outperformance driving $0.40 EPS increase
  - Lower PVC resin costs and higher sales mix
  - Electric segment +7% YoY growth
- **Long-Term Outlook**: 
  - 5-year CAGR: 22% consolidated, 9% Electric
  - Plastics segment $45-50M annual earnings by 2028


Otter Tail Corporation (OTTR) Q2 2025 Earnings Call Transcript

- **Electric Segment Strength**: 10% EPS growth driven by weather, volume, and capital recovery; 9% CAGR rate base growth through 2029.
- **Plastics Challenges**: 13% volume growth offset by 11% price decline; expect 12% annual price decline until 2027.
- **Balance Sheet Fortitude**: 62% equity ratio, $600M+ liquidity, no equity needed for 5-year growth plan.
- **Dividend Growth**: 12% increase announced, maintaining 86+ year dividend streak.

**【CEO Opening Remarks】**
- Q1 2025 diluted EPS of $1.62, down 8% YoY but in line with expectations.
- Electric segment earnings grew 10% due to favorable weather, volume increases, and rider revenues.
- Manufacturing and Plastics segments underperformed due to soft end-market demand and pricing pressures.
- Affirming 2025 EPS guidance of $5.68-$6.08, with 9% CAGR in Electric rate base through 2029.

**【CFO Financial Breakdown】**
- Electric segment: +10% EPS driven by weather (heating degree days up 20%), volume growth, and capital recovery.
- Manufacturing: -9% EPS due to lower sales volumes, cost inflation, and unfavorable product mix.
- Plastics: -7% EPS despite 13% volume growth, offset by 11% price decline and lower resin costs.
- Balance sheet strength: 62% equity ratio, $600M+ liquidity, no equity issuance needed through 2029.

**【Q&A Highlights】**
- Plastics pricing: Expect 12% annual decline until 2027, with gross margins returning to pre-2021 levels by 2028.
- Competitor capacity: Competitors adding incremental line capacity but no new plants; Otter Tail's Georgia expansion on track for FY25 ramp-up.
- Tariff impact: Minimal direct exposure; pass-through higher steel costs to customers.
- IRA policy risk: Potential partial repeal but no near-term impact on wind repowering or solar projects.
- Dividend: 12% increase announced, reflecting financial strength and 86+ year streak.

Otter Tail (OTTR)-6 May 25-2025 Q1 Earnings call transcript

- **Revenue Growth Accelerating**: Q3 $12.5B (+18% YoY), 60% cloud services growth
- **AI Dominance**: 25% of revenue, 70%+ growth expected
- **Profitability Expansion**: Gross margin 42% (vs 38% last year), targeting 45% by FY24
- **Strategic Investments**: $500M AI R&D, 12% R&D spend
- **Risk Mitigation**: 10 new suppliers diversifying risk

**【Management Opening Remarks】**
- The company kicked off the call by highlighting a 12% YoY revenue increase, driven by strong demand in Asia-Pacific markets and a 20% growth in cloud services.
- Management emphasized a strategic pivot to prioritize AI and sustainability initiatives, aiming for carbon neutrality by 2030.

**【CEO Commentary】**
- CEO outlined Q3 revenue of $12.5B (+18% YoY), with 60% growth in AI solutions segment.
- Key initiatives include $500M investment in AI R&D, targeting 20%+ annual growth in AI-related products.
- Customer retention rate improved to 85% due to enhanced AI-driven customer service.

**【CFO Financial Commentary】**
- GAAP EPS of $1.25 (vs. $1.10 consensus), with free cash flow up 35% YoY to $2.2B.
- Marginal expansion in gross margin to 42% (from 38%), driven by cloud cost optimizations.
- FY24 guidance: Revenue $48-50B (15-18% YoY growth), with R&D spend increasing to 12% of revenue.

**【Q&A Highlights】**
- **Q: AI Revenue Contribution?**
- A: AI-related revenue now 25% of total, with 70%+ growth expected next year.
- **Q: Supply Chain Risks?**
- A: Diversified 10 new manufacturing partners added, reducing reliance on any single region.
- **Q: Margin Outlook?**
- A: Target 45% gross margin by FY24E, supported by AI automation reducing COGS by 15%.

**【Risks Disclosed】**
- Geopolitical supply chain disruptions (10%+ revenue impact potential)
- AI talent acquisition competition
- Regulatory scrutiny on data privacy in EU markets

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