Otter Tail Corporation Reports $301.7 Million Net Income for Fiscal Year 2024

Otter Tail Corporation (OTC) reported a net income of $301.7 million, or $7.17 per diluted share, for the fiscal year ending December 31, 2024, marking a 3% increase from the previous year's net income of $294.2 million, or $7.00 per diluted share. The company's total operating revenues decreased slightly by 1.4% to $1.33 billion, down from $1.35 billion in 2023. The Electric segment contributed $524.5 million in operating revenue, a decrease of 0.7% from the prior year, while the Manufacturing segment saw a more significant decline of 14.9%, generating $342.6 million. In contrast, the Plastics segment experienced an increase of 10.9%, with revenues reaching $463.4 million, driven by strong customer demand.

The financial performance of Otter Tail Corporation reflects significant changes compared to the previous fiscal period. The Electric segment's earnings grew by 8% to $91 million, primarily due to increased retail revenue from an interim rate increase in North Dakota and higher rider revenue. However, the Manufacturing segment's earnings fell by 36% to $13.7 million, attributed to soft end-market demand and reduced sales volumes. The Plastics segment's earnings rose by 7% to $200.7 million, benefiting from increased sales volumes despite a decrease in gross profit margins.

Strategically, Otter Tail Corporation has focused on expanding its electric utility operations while also investing in its manufacturing and plastics segments. The company completed a significant expansion project in Georgia, adding approximately 162,000 square feet of manufacturing space to meet growing customer demand. Additionally, the company is developing new solar facilities, including the Solway Solar project, which is expected to add 50 MW of capacity by the end of 2026, and the Abercrombie Solar project, anticipated to provide 295 MW by 2028.

Operationally, Otter Tail Power Company (OTP) serves approximately 134,000 customers across a service area of about 70,000 square miles. The company reported a decrease in retail kWh sales of 1.6% due to unfavorable weather conditions, with heating degree days down by 15.1% compared to the previous year. The company also noted a significant reliance on two customers, which accounted for 19% of Electric segment revenues, highlighting the concentration risk within its customer base.

Looking ahead, Otter Tail Corporation anticipates a gradual normalization of market conditions in the PVC pipe industry, which has significantly influenced its earnings mix since 2021. The company expects to return to its long-term target of 65% earnings from the Electric segment and 35% from the Manufacturing Platform as market conditions stabilize. The company remains committed to its investment strategy, focusing on capital expenditures in electric generation and infrastructure, with a projected total capital expenditure of $1.55 billion over the next five years.