Otter Tail Corporation Reports Decrease in Revenue and Net Income for Q1 2025

Otter Tail Corporation reported a decrease in financial performance for the first quarter of 2025, with total operating revenues of $337.4 million, down 2.8% from $347.1 million in the same period last year. The company's net income also fell by 8.4%, from $74.3 million to $68.1 million, resulting in diluted earnings per share of $1.62 compared to $1.77 in the prior year. The decline in revenues was primarily attributed to decreased sales volumes in the Manufacturing segment, which were partially offset by increased revenues in the Electric segment due to favorable weather conditions and higher fuel recovery revenues.

In terms of operational changes, Otter Tail's Electric segment saw a revenue increase of 5.8%, reaching $149.7 million, driven by a 7.1% rise in retail revenues. This was supported by a 5.8% increase in retail kilowatt-hour sales, attributed to favorable weather conditions that increased demand. Conversely, the Manufacturing segment experienced a significant revenue drop of 17.8%, totaling $81.7 million, largely due to a 13% decrease in sales volumes across key markets such as recreational vehicles and agriculture. The Plastics segment remained relatively stable, with revenues of $105.9 million, a slight decrease of 0.2%.

The company’s operational metrics reflected a mixed performance. The Electric segment's operating income remained stable at $29.0 million, while the Manufacturing segment's operating income plummeted by 67.3% to $2.4 million. The Plastics segment reported a decrease in operating income to $58.9 million, down 7.0%. Overall, Otter Tail's total operating expenses increased marginally by 0.5% to $253.4 million, driven by higher purchased power costs and depreciation expenses in the Electric segment.

Strategically, Otter Tail is focused on expanding its renewable energy capabilities, as evidenced by its ongoing investments in wind repowering projects and a planned acquisition of a solar facility for $23.6 million, expected to close in late 2025 or early 2026. The company is also navigating regulatory changes, including a recent settlement in North Dakota that established new base rates and an earnings-sharing mechanism. Looking ahead, Otter Tail anticipates continued challenges from macroeconomic factors, including inflation and potential impacts from U.S. trade policies, which could affect its operational costs and customer demand. The company remains committed to maintaining its financial flexibility and compliance with financial covenants, with total available liquidity of approximately $607.2 million as of March 31, 2025.