• Diluted Earnings Per Share (EPS): $7.17 for 2024, compared to $7 in 2023.
• Return on Equity: 19% on an equity layer of 62%.
• Electric Segment Earnings Growth: Nearly 8% year-over-year, with an increase of $0.15 per share.
• Plastics Segment Earnings Per Share: $4.77, with a $0.30 increase from 2023.
• Manufacturing Segment Sales Volume Decrease: 15% from 2023 levels.
• Plastics Segment Sales Volume Increase: 27% in 2024.
• Dividend Increase: 12% increase, resulting in an annual indicated dividend for 2025 of $2.10 per share.
• 2025 EPS Guidance Range: $5.68 to $6.08.
• Capital Spending Plan: $1.4 billion for Otter Tail Power, a 9% increase over the previous plan.
• Rate Base Growth: Compounded annual growth rate of 9% expected.
• Net Annual Revenue Requirement Increase: $13.1 million from North Dakota general rate case.
• Available Liquidity: $606 million as of December 31, 2024.

• Warning! GuruFocus has detected 4 Warning Signs with MED.

Release Date: February 18, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Otter Tail Corp (NASDAQ:OTTR) achieved record earnings in 2024 with a diluted earnings per share of $7.17.
• The company updated its 5-year capital spending plan, increasing Otter Tail Power's portion to $1.4 billion, a 9% increase over the previous plan.
• Otter Tail Power continues to maintain some of the lowest electric rates in the nation, with 2024 rates 30% below the national average.
• The company announced plans to add up to 345 megawatts of solar generation, representing a significant investment opportunity.
• Otter Tail Corp (NASDAQ:OTTR) increased its long-term earnings per share growth rate target to 6% to 8%, up from the previous 5% to 7%.

Negative Points

• The manufacturing and plastics segments faced dynamic market conditions in 2024, with challenges expected to continue into 2025.
• Sales prices of PVC pipe have steadily declined since mid-2022, decreasing 12% in 2024 compared to 2023 levels.
• Manufacturing segment earnings decreased due to lower sales volumes, higher production costs, and less scrap revenue.
• The company anticipates a decline in plastics segment earnings through 2027, with normalization expected by 2028.
• End market conditions for the manufacturing segment remain challenging, impacted by higher dealer and used inventory levels, inflationary pressures, and increased interest rates.

Q & A Highlights

Q: Have you agreed to large load agreements with one or two customers, and is this reflected in the current CapEx guidance for the next five years? A: We do not have any signed agreements yet, but we have term sheets out for 150 megawatts and are in discussions with others. These are not included in our current capital spending plan but are considered in our incremental capital investment opportunities. - Charles Macfarlane, President, CEO

Q: Does the 970-megawatt letter of intent exclude customers you haven't entered agreements with, and are you turning away interested customers? A: We are not turning away customers; the 970-megawatt figure represents those we have had discussions with. - Charles Macfarlane, President, CEO

Q: Can you comment on the current weakness in manufacturing demand, particularly in steel working outsourced manufacturing? A: The weakness is broad-based, affecting sectors like recreational vehicles due to inventory corrections, agriculture due to lower commodity prices, and construction, though less so. Lawn and garden were the first to decline post-COVID. - Charles Macfarlane, President, CEO

Q: Is the expansion of BTD Georgia related to specific end markets? A: The BTD Georgia expansion is more focused on construction, but all sectors are represented there. - Charles Macfarlane, President, CEO

Q: In manufacturing, is the focus still on metal fabrication versus plastic thermal forming? A: Yes, the mix is still heavily towards metal fabrication. - Todd Wahlund, CFO

For the complete transcript of the earnings call, please refer to the full earnings call transcript.