Otter Tail Sees FY25 EPS $5.68-$6.08 Vs $5.63 Est.

Author: Benzinga Newsdesk | February 17, 2025 07:44pm

2025 OUTLOOK

We anticipate 2025 diluted earnings per share to be in the range of $5.68 to $6.08. We expect our earnings mix in 2025 to be approximately 39% from our Electric segment and 61% from our Manufacturing and Plastics segments, net of corporate costs. Our anticipated earnings mix in 2025 deviates from our long-term expected earnings mix of 65% Electric / 35% Non-Electric as we expect Plastics segment earnings to remain elevated in 2025 compared to our long-term view of normal earnings for this segment.

The segment components of our 2025 diluted earnings per share guidance compared with actual earnings for 2024 are as follows:

			2024 EPS by Segment				2025 EPS Guidance
							Low				High
Electric			$	2.16			$	2.29			$	2.35
Manufacturing				0.33				0.21				0.27
Plastics				4.77				3.26				3.50
Corporate				(0.09	)			(0.08	)			(0.04	)
Total			$	7.17			$	5.68			$	6.08
Return on Equity				19.3	%			13.8	%			14.6	%

The following items contribute to our 2025 earnings guidance:

Electric Segment - We expect segment earnings to increase 7% in 2025 based on the following assumptions:

• Normal weather conditions in 2025.
• Returns generated from an increase in average rate base of 12% in 2025 compared to 2024.
• A planned maintenance outage at Coyote Station in 2025 (there were no planned outages in 2024).
• Increased depreciation and interest expense from capital expenditures and associated financing.

Manufacturing Segment - We expect segment earnings to decline 27% in 2025 based on the following assumptions:

• Lower sales volumes in our contract metal fabrication business as soft end market demand continues, partially offset by some volume recovery in our horticulture plastic products business.
• Sales mix and product pricing pressure in the current sales volume environment, and lower scrap revenues within our metal fabrication business from lower production volumes.
• Compressed operating margins from the deleveraging of manufacturing costs due to lower production and sales volumes.

Plastics Segment - We expect segment earnings to decline 29% in 2025 based on the following assumptions:

• Continued decline in product sales prices throughout 2025 as pricing continues to retreat from the 2022 high point.
• Modest increase in sales volumes driven by new capacity at our Phoenix facility, partially offset by macroeconomic uncertainty.

Corporate Costs - We expect our corporate costs to decrease primarily from lower incentive compensation costs compared to 2024.

Posted In: OTTR