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- **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

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

Deferred Income Tax

Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

Total Comprehensive Income

Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

Basic EPS from Continuing Operations

Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

OTTR

OTTR fundamentals

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