third quarter 2026
Filed Nov 3, 2026Otter Tail Corporation Announces Third Quarter Results and Affirms the Midpoint of Annual Earnings Guidance
Third-quarter GAAP diluted earnings per share declined to $1.41 from $1.86 as Plastics net income fell and Manufacturing profitability declined, while the company maintained the midpoint and narrowed both 2026 EPS guidance ranges.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Total Operating Revenues, three months ended September 30, 2026GAAP | $320.5M | – | – |
| Product Sales, three months ended September 30, 2026GAAP | $185.5M | – | – |
| Total Operating Expenses, three months ended September 30, 2026GAAP | 251,616 | – | – |
| Electric Production Fuel, three months ended September 30, 2026GAAP | 21,114 | – | – |
| Electric Purchased Power, three months ended September 30, 2026GAAP | 5,539 | – | – |
| Electric Operating and Maintenance Expense, three months ended September 30, 2026GAAP | 50,174 | – | – |
| Cost of Products Sold (excluding depreciation), three months ended September 30, 2026GAAP | 119,465 | – | – |
| Nonelectric Selling, General, and Administrative Expenses, three months ended September 30, 2026GAAP | 20,067 | – | – |
| Depreciation and Amortization, three months ended September 30, 2026GAAP | 30,608 | – | – |
| Electric Property Taxes, three months ended September 30, 2026GAAP | 4,649 | – | – |
| Operating Income, three months ended September 30, 2026GAAP | 68,897 | – | – |
| Interest Expense, three months ended September 30, 2026GAAP | (13,141) | – | – |
| Nonservice Components of Postretirement Benefits, three months ended September 30, 2026GAAP | 668 | – | – |
| Other Income (Expense), net, three months ended September 30, 2026GAAP | 7,542 | – | – |
| Income Before Taxes, three months ended September 30, 2026GAAP | 63,966 | – | – |
| Income Tax Expense (Benefit), three months ended September 30, 2026GAAP | 4,503 | – | – |
| Net Income, three months ended September 30, 2026GAAP | $59.46M | – | – |
| Weighted-Average Common Shares Outstanding, Basic, three months ended September 30, 2026GAAP | 41,959 | – | – |
| Weighted-Average Common Shares Outstanding, Diluted, three months ended September 30, 2026GAAP | 42,168 | – | – |
| Earnings Per Share, Basic, three months ended September 30, 2026GAAP | $ 1.42 | – | – |
| Earnings Per Share, Diluted, three months ended September 30, 2026GAAP | $ 1.41 | – | – |
| Total Operating Revenues, nine months ended September 30, 2026GAAP | $1.00B | – | – |
| Product Sales, nine months ended September 30, 2026GAAP | 579,755 | – | – |
| Total Operating Expenses, nine months ended September 30, 2026GAAP | 871,991 | – | – |
| Legal Settlement Expenses, nine months ended September 30, 2026GAAP | 103,500 | – | – |
| Operating Income, nine months ended September 30, 2026GAAP | 129,931 | – | – |
| Interest Expense, nine months ended September 30, 2026GAAP | (38,667) | – | – |
| Income Before Taxes, nine months ended September 30, 2026GAAP | 112,687 | – | – |
| Income Tax Expense (Benefit), nine months ended September 30, 2026GAAP | (11,777) | – | – |
| Net Income, nine months ended September 30, 2026GAAP | $124.5M | – | – |
| Earnings Per Share, Diluted, nine months ended September 30, 2026GAAP | $ 2.95 | – | – |
| Adjusted Net Income, nine months ended September 30, 2026non-GAAP | $201.7M | – | – |
| Adjusted Diluted Earnings Per Share, nine months ended September 30, 2026non-GAAP | $ 4.79 | – | – |
| Electric Operating Income, three months ended September 30, 2026GAAP | $29.55M | – | – |
| Manufacturing Operating Income, three months ended September 30, 2026GAAP | $3.81M | – | – |
| Plastics Operating Income, three months ended September 30, 2026GAAP | $39.34M | – | – |
| Corporate Operating Income (Loss), three months ended September 30, 2026GAAP | −$3.80M | – | – |
| Cash and Cash Equivalents as of September 30, 2026GAAP | $205.8M | – | – |
| Restricted Cash as of September 30, 2026GAAP | 103,500 | – | – |
| Short-Term Debt as of September 30, 2026GAAP | $28.73M | – | – |
| Current Maturities of Long-Term Debt as of September 30, 2026GAAP | 121,966 | – | – |
| Long-Term Debt as of September 30, 2026GAAP | 1,090,985 | – | – |
| Total Shareholders' Equity as of September 30, 2026GAAP | 1,912,635 | – | – |
| Net Cash Provided by Operating Activities, nine months ended September 30, 2026GAAP | $307.9M | – | – |
| Capital Expenditures, nine months ended September 30, 2026GAAP | $451.6M | – | – |
| Net Cash Used in Investing Activities, nine months ended September 30, 2026GAAP | (446,195) | – | – |
| Net Cash Provided by (Used in) Financing Activities, nine months ended September 30, 2026GAAP | 61,436 | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| ElectricOperating Revenues decreased $3.6 million, primarily due to an $11.9 million aggregate decrease in fuel recovery revenues and the impact of increased production tax credits, partially offset by rate increases in Minnesota and South Dakota, recovery of additional rate base investments, and favorable weather. | $135.0M | – | (2.6) % |
| ManufacturingOperating Revenues increased $12.8 million primarily due to higher sales volumes and the pass through of increased steel costs. Sales volumes increased 13%, reflecting improved demand in construction, recreational vehicle, lawn and garden, and industrial markets. | $89.71M | – | 16.6 % |
| PlasticsOperating Revenues decreased $14.2 million, reflecting a 9% decrease in average sales prices and a 5% decrease in sales volumes. Customer purchases earlier in the year, softer regional demand and housing-market softness reduced volumes, while increased Phoenix capacity partially offset the decline. | $95.83M | – | (12.9) % |
Amounts quoted below without a unit are in thousands, as in the filing’s tables. Per-share figures are as printed.
2026 outlook
- NoteGAAP diluted earnings per share guidance: $3.89 to $4.19
- NoteAdjusted diluted earnings per share guidance: $5.73 to $6.03
- NoteElectric EPS guidance: $2.62 to $2.68
- NoteElectric adjusted EPS guidance: $2.62 to $2.68
- NoteManufacturing EPS guidance: $0.32 to $0.36
- NoteManufacturing adjusted EPS guidance: $0.32 to $0.36
- NotePlastics EPS guidance: $1.11 to $1.27
- NotePlastics adjusted EPS guidance: $2.95 to $3.11
- NoteCorporate EPS guidance: $(0.16) to $(0.12)
- NoteCorporate adjusted EPS guidance: $(0.16) to $(0.12)
- NoteReturn on Equity: 8.7 % to 9.3 %
- NoteAdjusted Return on Equity: 12.5 % to 13.1 %
Capital returns
- On November 2, 2026, the Board of Directors declared a quarterly common stock dividend of $0.5775 per share.
- The dividend is payable on December 10, 2026 to shareholders of record on November 13, 2026.
- Dividend payments were $72.8 million for the nine months ended September 30, 2026, compared with $66.0 million for the same period in 2025.
What drove it
- Electric retail MWh sales were 1,385,582, compared with 1,373,054, an increase of 0.9 %.
- Electric net income increased $0.1 million as interim rate increases, favorable weather, recovery of additional rate base investments, and higher allowance for funds used during construction were largely offset by higher operating and maintenance expenses, depreciation, and interest expense.
- Manufacturing net income decreased $1.3 million due to higher selling, general, and administrative expenses and lower gross profit margins, partly offset by higher sales volumes and increased scrap sales.
- Plastics net income decreased $14.5 million due to lower sales prices and volumes and a 10% increase in PVC resin and other input material costs.
- Corporate net income decreased $3.1 million primarily because of lower income tax benefits and lower investment income from lower short-term investment balances.
Concerns
- Plastics average sales prices decreased 9% and sales volumes decreased 5%.
- Plastics faced a 10% increase in PVC resin and other input material costs.
- Manufacturing gross margins were negatively affected by inflationary cost pressures and lower productivity as headcount was added to meet growing demand.
- Electric operating and maintenance expense increased to 50,174 from 41,144 for the three months ended September 30.
- Nine-month GAAP results included 103,500 of legal settlement expenses.
What to watch
- Progress in the ongoing Minnesota rate case and the integrated resource plan filed with the Minnesota Public Utilities Commission.
- Execution of the Abercrombie and Solway solar projects, wind repowering initiative, and transmission and distribution investments.
- Whether Manufacturing demand and sales-volume improvement continue amid inflationary cost pressures.
- PVC pipe sales volumes, average sales prices, PVC resin costs, and housing-market demand.
- Delivery against narrowed 2026 GAAP diluted EPS guidance of $3.89 to $4.19 and adjusted diluted EPS guidance of $5.73 to $6.03.
Balance sheet and cash flow
- Available liquidity totaled $601.8 million as of September 30, 2026, consisting of $170.0 million and $178.5 million available under Otter Tail Corporation and Otter Tail Power credit facilities, respectively, and $253.3 million of cash, cash equivalents and marketable securities.
- Consolidated cash provided by operating activities was $307.9 million for the nine months ended September 30, 2026, compared with $288.9 million for the same period in 2025.
- Investing activities included $451.6 million of capital expenditures, largely within the Electric segment for the Abercrombie and Solway solar projects, wind repowering initiative, and transmission and distribution system investments.
- Financing activities included issuance of $170.0 million of long-term debt by Otter Tail Power, $31.5 million of net repayments of short-term borrowings, and $72.8 million of dividend payments.
Analysis
Otter Tail reported third-quarter total operating revenues of $ 320,513, compared with $ 325,563 in the prior-year period, while GAAP net income was $ 59,463 versus $ 78,292. GAAP diluted EPS was $ 1.41, compared with $ 1.86. Operating income declined to 68,897 from 96,605. The quarter reflects sharply lower Plastics earnings and lower Manufacturing profitability, partially countered by modest improvement in Electric segment net income.
Plastics was the principal negative factor. Segment operating revenues were $ 95,825, down (12.9) %, and net income was 28,970 versus 43,495. Management cited a 9% decline in average sales prices, a 5% volume decline, and a 10% increase in PVC resin and other input material costs. Customer purchases made earlier in the year ahead of announced resin cost increases and softer housing demand weighed on volumes, although Phoenix capacity partly mitigated that pressure.
Manufacturing operating revenues rose 16.6 % to $ 89,709 on a 13% sales-volume increase and pass-through of higher steel costs. However, net income fell to 2,569 from 3,916 as higher selling, general, and administrative expense and lower gross margins outweighed the volume improvement. Electric operating revenues declined (2.6) % to $ 134,979, but segment net income increased slightly to 27,418, supported by rate actions, weather, rate-base recovery, and allowance for funds used during construction.
For the first nine months, GAAP net income was $ 124,464 and GAAP diluted EPS was $ 2.95, including 103,500 of legal settlement expenses. Adjusted net income was $ 201,675 and adjusted diluted EPS was $ 4.79. Cash provided by operating activities increased to $307.9 million, but capital expenditures were $451.6 million, principally for Electric capital projects. Otter Tail issued $170.0 million of long-term debt, paid $72.8 million of dividends, and reported $601.8 million of available liquidity.
The company affirmed the midpoint and narrowed its 2026 GAAP diluted EPS range to $3.89 to $4.19 and its adjusted diluted EPS range to $5.73 to $6.03. The narrower outlook incorporates an Electric EPS range of $2.62 to $2.68, Manufacturing EPS of $0.32 to $0.36, Plastics EPS of $1.11 to $1.27, and Corporate EPS of $(0.16) to $(0.12). The principal reported operating issues remain Plastics pricing, volumes and resin costs, alongside Manufacturing margin pressure, while the Electric business continues to execute its rate-base investment program.
Management, verbatim
Our team members continue to deliver on our strategic growth plan and near-term priorities amidst a challenging operating environment.
Chuck MacFarlane, CEO
We are encouraged by increasing sales volumes within our Manufacturing segment. End market demand continues to improve and our team is effectively executing on our strategy of providing value-added service to our customers.
Chuck MacFarlane, CEO
We remain well positioned to deliver on our financial objectives for the year. We are maintaining the midpoint and narrowing the range of our 2026 annual earnings guidance.
Chuck MacFarlane, CEO
Not in the filing
stated, not guessed- Quarterly non-GAAP adjusted net income and adjusted diluted earnings per share
- Gross margin or gross-profit margin figures
- Quarterly operating cash flow
- Quarterly capital expenditures
- Free cash flow
- Share repurchases
- Effective income tax rate
- Prior-quarter comparisons for reported metrics
- A separate previous-release outlook for comparison against reported results
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was checked against the filing text, and a metric whose value, prior period and change do not add up is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.