Otter Tail (OT4) Q2 2026 Earnings Report

The call presented a mixed but balanced picture: management delivered notable operational and regulatory milestones (transmission permits, IRP filing, solar/battery progress), raised adjusted EPS guidance, demonstrated manufacturing momentum and strong liquidity, and reaffirmed a long-term growth plan. Offsetting these positives are meaningful near-term headwinds — a $103.5M legal settlement (after-tax impact $1.84/share), Plastics segment pricing pressure (PVC price down ~14% YoY, 2026 price guidance down ~15%), higher corporate and O&M costs, and expected Plastics earnings declines through 2027. Given the combination of strong strategic progress and clear short-term financial impacts, the call is balanced between encouraging long-term execution and tangible near-term challenges.

Otter Tail initiated 2026 adjusted diluted EPS guidance of $5.68–$6.08 (excluding the after‑tax impact of the $103.5M PVC litigation settlement), up from its prior $5.22–$5.62 range; Q2 adjusted EPS was $1.66 (-10% YoY from $1.85) with the settlement representing a $1.84 per‑share after‑tax charge. The company reaffirmed a 5‑year rate‑base CAGR of 10% and a $1.9B Otter Tail Power capital plan, expects Electric segment earnings to grow ~14% year‑over‑year, raised Manufacturing and Plastics guidance, and now expects Plastics 2026 average PVC sales prices to fall ~15% (with annual volumes largely unchanged despite Q2 volumes being +15% YoY); Plastics earnings are expected to decline through 2027 with 2028 earnings targeted at $45–$50M. Financial posture/financing metrics include ~ $600M available liquidity (including $278M cash), a 60% equity layer, $80M parent debt maturing in Q4 to be retired, and no planned equity raises; the company reiterated long‑term EPS growth of 7–9% (10–12% total shareholder return) and projected customer bills to rise 3–4% CAGR over the 5‑year plan. Operational timing and pipeline metrics highlighted Solway Solar in service 1H2027, Abercrombie 2028, storage 2028, two MISO 345 kV lines (nearly 200 miles) permitted, and a large‑load pipeline of ~1,400 MW (up ~350 MW, ~35% data center).