Executive Summary

Q2 2025 EPS of $1.85 beat S&P Global consensus of $1.72* and revenue of $333.0M beat $325.8M*, while headline results declined year over year on tough Plastics comps (EPS down from $2.07; revenue down 2.7% YoY) . Results were above plan and management raised the FY25 EPS range to $6.06–$6.46 from $5.68–$6.08, with the midpoint up $0.38 .
Guidance uplift was driven by Plastics outperformance and lower resin costs; management cited stronger-than-expected Plastics margins/volume and reiterated robust utility growth with timely rider recovery and a 9% rate base CAGR through 2029 .
Electric segment delivered modest earnings growth on higher rider revenues and favorable weather (offset by a planned Coyote Station outage); Manufacturing remained soft across end markets; Plastics volumes rose 11% but pricing fell 15% YoY; resin costs fell ~15% YoY .
Liquidity remained strong at $688.2M and a $0.525 dividend was declared; severe storms caused temporary interruptions for ~30% of utility customers but restoration was rapid; approvals were secured to directly assign/recover 345 MW of solar project costs and a $5.7M South Dakota base rate case was filed .

What Went Well and What Went Wrong

What Went Well

Beat on both EPS and revenue vs S&P Global consensus; diluted EPS $1.85 vs $1.72* and revenue $333.0M vs $325.8M*, even as headline YoY comps were tough .
Guidance raised: “We are uplifting our 2025 diluted earnings per share guidance… increasing our consolidated guidance to a range of $6.06 to $6.46 from our previous range of $5.68 to $6.08.” — CEO Chuck MacFarlane .
Regulatory and project execution: approvals to directly assign/recover solar investment for two projects (345 MW) in MN/SD; supports utility growth and affordability narrative .
Plastics outperformed expectations and benefited from lower input costs; management tied guidance increase to Plastics strength and margin outlook .
Strong balance sheet and liquidity ($688.2M total availability), supporting capex and no equity needs; quarterly dividend maintained at $0.525 .

What Went Wrong

Manufacturing remained a drag: revenue down 18.6% and net income down 49% YoY on lower volumes and prior-year pass-through pricing benefits; end markets including RV, ag, lawn & garden, and construction remained soft .
Plastics pricing headwinds persisted: sales prices down 15% YoY; net income down 12% YoY despite 11% volume growth; normalization from 2022 peaks continues .
Electric segment faced higher O&M from a planned Coyote Station outage and higher D&A/interest from rate base growth, tempering earnings uplift .
Operating cash flow for 1H 2025 fell to $159.4M from $223.5M YoY on timing of fuel/rider recoveries and operating payments, plus lower earnings .

Financial Results

Consolidated Results (YoY and QoQ)

Metric	Q2 2024	Q1 2025	Q2 2025
Revenue ($M)	$342.3	$337.4	$333.0
Operating Income ($M)	$110.9	$84.0	$97.5
Net Income ($M)	$87.0	$68.1	$77.7
Diluted EPS ($)	$2.07	$1.62	$1.85
Net Income Margin (%)	25.4% (calc. $87.0M/$342.3M)	20.2% (calc. $68.1M/$337.4M)	23.3% (calc. $77.7M/$333.0M)

Notes: Margins are calculations based on reported revenue and net income in cited exhibits.

Segment Breakdown

Segment	Metric	Q2 2024	Q1 2025	Q2 2025
Electric	Operating Revenue ($M)	$112.8	$149.7	$128.7
	Net Income ($M)	$18.5	$24.7	$19.2
Manufacturing	Operating Revenue ($M)	$96.7	$81.7	$78.7
	Net Income ($M)	$6.8	$1.5	$3.5
Plastics	Operating Revenue ($M)	$132.8	$105.9	$125.6
	Net Income ($M)	$60.6	$43.4	$53.1
Corporate	Net Income ($M)	$1.1	$(1.6)	$1.9

KPIs and Operating Drivers

KPI	Q2 2024	Q2 2025
Retail MWh Sales (Electric)	1,315,504	1,337,696
Heating Degree Days	372	460
Cooling Degree Days	61	145
Heating DD as % of Normal	68.8%	86.5%
Cooling DD as % of Normal	48.8%	114.2%
Weather EPS Impact (vs Normal)	$(0.03)	$—

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Consolidated Diluted EPS	FY 2025	$5.68–$6.08 (2/17/25)	$6.06–$6.46 (8/4/25)	Raised
Electric Segment EPS	FY 2025	$2.29–$2.35 (2/17)	$2.29–$2.35 (8/4)	Maintained
Manufacturing Segment EPS	FY 2025	$0.21–$0.27 (2/17)	$0.21–$0.27 (8/4)	Maintained
Plastics Segment EPS	FY 2025	$3.26–$3.50 (2/17)	$3.64–$3.88 (8/4)	Raised
Corporate EPS	FY 2025	$(0.08)–$(0.04) (2/17)	$(0.08)–$(0.04) (8/4)	Maintained
Quarterly Dividend	Q3 2025	$0.525/share	$0.525/share (payable Sept 10; record Aug 15)	Maintained

Management rationale for guidance increase centered on better Q2 results in Plastics, lower anticipated PVC resin costs, and revised H2 PVC pipe pricing expectations .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024)	Previous Mentions (Q1 2025)	Current Period (Q2 2025)	Trend
Plastics pricing & volume	Prices down 12% YoY; volumes up; long-term normalization to $45–$50M by 2028 discussed	Prices declining; strong demand and new capacity at Vinyltech; segment earnings expected to decline in 2025	“Guidance uplift due to stronger-than-anticipated Plastics performance”; volumes up 11%; resin costs down ~15% YoY; pricing still receding	Improving vs plan despite normalization
Electric growth & recovery mechanisms	9% rate base CAGR; ND rate case outcome; timely rider recovery	Constructive ND resolution; executing renewables/transmission; large load pipeline emerging	Rider recovery and favorable weather drove Q2; approvals to directly assign/recover 345 MW solar costs; SD base rate filing ($5.7M)	Constructive/regulatory momentum
Manufacturing end-market demand	Broad-based softness across RV, ag, construction; cost actions underway	Volumes lower; tariffs and potential steel price increases being monitored; GA plant expansion ramp	Volumes -9%; revenues -18.6%; some G&A relief; end-market softness persists	Still challenging
Weather and system events	N/A	Normal weather assumption; comparisons vs warm 1Q24	Severe storms: ~30% customers experienced interruption; restoration executed quickly; degree days favorable vs 2024	Transitory headwind/operational execution
Regulatory/Legal (EPA/coal, DOE grants)	Discussed coal plant longevity potential, DOE JTIQ grants	Continued development of IRP projects; monitoring tariffs	Call referenced favorable developments and DOE grant re-evaluation; continued project development	Monitoring; no change to plan

Management Commentary

“We are uplifting our 2025 diluted earnings per share guidance for the Plastics segment, increasing our consolidated guidance to a range of $6.06 to $6.46 from our previous range of $5.68 to $6.08.” — Chuck MacFarlane, President & CEO .
“We look forward to adding 345 MW of cost-effective solar generation to our portfolio to better serve our customers.” — CEO on solar projects and regulatory approvals .
On Plastics dynamics: “We continue to benefit from strong product demand and higher sales volumes as the sales prices of PVC pipe continue to recede… [and] a 15% decrease in PVC resin cost driven by global supply and demand dynamics.” .
On Q2 drivers and guidance uplift: “We’re increasing our 2025 diluted earnings per share guidance to a range of $6.06 to $6.46… uplifted due to stronger‑than‑anticipated Plastics segment performance… Our balance sheet remains very strong.” — Q2 call prepared remarks .

Q&A Highlights

Limited Q&A: The Q2 2025 call recorded no questions in the queue; management concluded prepared remarks without extended Q&A .
Prepared remarks clarified Electric segment puts/takes (favorable weather, rider recovery, planned Coyote Station outage) and the guidance uplift drivers (Plastics performance, lower resin costs) .
Regulatory updates underscored approvals for direct assignment of solar capex and the South Dakota base rate filing, with management signaling limited near-term customer bill impacts from broader MISO transmission allocations .

Estimates Context

Metric	Consensus (S&P Global)*	Actual	Surprise
EPS (Primary)	$1.72* (3 est.)	$1.85	+$0.13
Revenue ($M)	$325.8* (2 est.)	$333.0	+$7.2

*Values retrieved from S&P Global.

Implications: The beat on both revenue and EPS, coupled with a guidance raise, likely necessitates upward revisions to Plastics segment assumptions (margins and volumes) and modestly higher consolidated FY25 EPS, while Manufacturing assumptions remain conservative given persistent end-market softness .

Key Takeaways for Investors

Clean beat and guidance raise: EPS and revenue exceeded S&P Global consensus* and FY25 EPS guidance midpoint rose to $6.26, driven by Plastics outperformance and lower resin costs .
Utility growth intact: Rider recovery, regulatory approvals for 345 MW solar, and a South Dakota base rate filing underpin a 9% rate base CAGR and support earnings visibility; Electric EPS guidance maintained .
Plastics normalization slower than feared: Pricing continues to recede but volume strength and 15% lower resin cost supported profitability; management’s FY25 Plastics EPS raised (3.64–3.88) .
Manufacturing remains cyclical headwind: Demand softness persisted across RV, ag, construction and lawn & garden; focus remains on cost control and leveraging new GA capacity as markets recover .
Strong liquidity and capital flexibility: $688.2M available liquidity with $307.2M cash; dividend maintained at $0.525; no external equity needs to fund plan .
Weather and outage effects manageable: Severe storms interrupted ~30% of customers but service restored quickly; planned Coyote Station outage elevated O&M; net favorable weather vs 2024 aided Electric .
Near-term trading lens: Positive skew from a guidance raise plus consensus beat; watch Plastics pricing trend, resin costs, and cadence of utility regulatory milestones as next catalysts .

Citations:

Q2 2025 8-K and Exhibit 99.1 press release:
Q2 2025 press release (Business Wire):
Q1 2025 press release and 8-K:
Q4 2024 press release and call:
South Dakota rate case press release (June 4, 2025):
Q2 2025 earnings call transcript (external):

Estimates source: *Values retrieved from S&P Global.

Otter Tail Corp (OTTR)·Q2 2025 Earnings Summary