オター・テール（OTTR）2026年第3四半期決算説明会：EPS低下、ガイダンスレンジを縮小

オター・テール（NASDAQ: OTTR）が発表した2026年第3四半期の希薄化後1株当たり利益（EPS）は1.41ドルとなり、前年同期の1.86ドルから減少した。PVCパイプ価格の下落、プラスチック部門の販売量減少、および原材料コストの上昇がこの減少の主な要因となった。

主要なポイント

• 2026年第3四半期の希薄化後EPSは、主にプラスチック部門の業績低迷により、2025年第3四半期の1.86ドルから1.41ドルに減少した。
• オター・テールは2026年通期の調整後希薄化後EPS予想レンジを従来の5.68〜6.08ドルから5.73〜6.03ドルに絞り込んだが、中間値の5.88ドルは維持した。
• プラスチック部門の平均販売価格は前年同期比で9%下落し、販売量は5%減少、PVC樹脂およびその他の原材料コストは10%増加した。
• 電力部門の当四半期利益は前年同期比で横ばいとなったが、2026年最初の9ヶ月間では14%増加した。経営陣は5年間のレートベースCAGR目標10%を再確認した。
• 同社はオター・テール・パワーの19億ドル規模の5カ年設備投資計画を再確認し、特定された追加の投資機会を従来の7億5,000万ドルから8億5,000万ドルに引き上げた。
• 経営陣は、価格設定、季節性、その他の要因に左右されるものの、プラスチック部門の利益が2027年末まで減少を続け、2028年に4,500万〜5,000万ドルに達すると引き続き見込んでいる。

主要財務実績

事業および営業業績

電力

オター・テール・パワーは、レートベース投資の回収、ミネソタ州およびサウスダコタ州での電気料金値上げ、恵まれた天候の恩恵を受けた。これらのプラス効果は、人件費、植生管理費用、発電所の停止コストの増加により大幅に相殺された。

ミネソタ州における料金改定申請において、同社は主に管轄区分に伴う配分調整により、純収益の増額要求額を従来の4,230万ドルから3,870万ドルに引き下げた。経営陣は建設的な結果を目指して協議を継続していると述べた。

同社は予想される5年間のレートベースCAGR 10%を再確認し、計画期間中にオター・テール・パワーの利益も同様のペースで成長すると見込んでいると述べた。この計画は大口の新規需要の獲得に依存していない。

ソルウェイ太陽光発電所は2027年前半に稼働開始予定であり、アバクロンビー太陽光発電所は2028年後半に稼働開始が見込まれている。また、蓄電池設備も2028年を目標としている。

製造

複数の最終市場で環境が改善し、製造部門が既存顧客から追加案件を獲得したため、販売量は増加した。建設需要が改善し、産業需要は引き続き堅調で、レジャー用車両（RV）、芝生・園芸、園芸市場は安定していた。

しかし、新入社員のオンボーディングに関連する製造コストの上昇と生産性の低下が利益率を圧迫した。当四半期の製造部門の利益は1株当たり0.03ドル減少したものの、年初からの累計利益は28%増加した。

プラスチック

PVCパイプの平均販売価格は前年同期比で9%下落し、販売量は5%減少した。経営陣は販売量減少の要因として、樹脂価格の値上げ発表を受けた2026年前半の顧客による購入の前倒しと、住宅市場の軟化を挙げている。

PVC樹脂およびその他の原材料コストは10%上昇し、利益率を圧迫した。業績にはまた、見積もり仕入先リベートおよびその認識時期に関連する一律の一時調整が含まれている。

フェニックス工場の大型口径パイプ対応能力の拡張が、販売量の減少を一部相殺した。また経営陣は、データセンターやその他の大型製造施設に関連する水インフラ需要も確認している。

経営陣の見通し

オター・テールは2026年通期の調整後希薄化後EPS予想レンジを従来の5.68〜6.08ドルから5.73〜6.03ドルに絞り込んだ。中間値は5.88ドルで据え置かれた。この見通しには、2026年第2四半期に計上された和解費用に関する税引後の影響は含まれていない。

需要の軟化、高水準の住宅ローン金利、宅地在庫の増加、新築住宅建設の圧迫を受け、経営陣はプラスチック部門の見通しの中間値を引き下げた。一方、第3四半期の社内実績が予想を上回ったことから、本社全社費用センターの見通しの中間値を引き上げた。

同社はオター・テール・パワーの19億ドル規模の5カ年設備投資計画を再確認した。潜在的な追加投資額は、主に風力発電プロジェクトの構想が200メガワットから300メガワットに拡大したことにより、8億5,000万ドルに増加した。

経営陣は株式資本市場で資金調達することなく本計画の資金を賄う予定であり、親会社レベルで唯一残存する債務を年末までに償還する見込みである。

2028年にプラスチック部門の利益が正常化した後は、長期的なEPS成長率7%〜9%、株主総利回り10%〜12%を目指す。

リスクと注目点

• 送電網の開発および建設は、特に立地選定や地域社会の懸念を巡り、より複雑化している。経営陣は、これにより5カ年計画に含まれる一部の地域プロジェクトが遅延する可能性があると述べた。
• 住宅需要の軟化、高水準の住宅ローン金利、および宅地在庫の増加が、PVCパイプの販売量を圧迫している。
• プラスチック部門の利益率は、販売価格の下落やPVC樹脂およびその他の原材料コストの上昇リスクに引き続き晒されている。
• 製造部門の収益性は、製造コストの上昇および新入社員のオンボーディングに伴う生産性の圧迫に直面している。
• 経営陣は、プラスチック部門の価格設定および利益が、季節性やその他の要因によって大幅に変動する可能性があると警告した。

アナリスト質疑応答のハイライト

経営陣は、送電プロジェクトの必要性に変わりはないものの、立地選定の複雑化や地域社会の懸念によりプロジェクトの期間が延長される可能性があると述べた。同社は通期決算の発表とともに、改定版の5カ年設備投資計画を提示する予定である。

PVCパイプ価格に関して、経営陣は前年同期比9%の下落は直近数四半期よりも緩やかであったと指摘した。樹脂コストの上昇と第2四半期における高い顧客需要が価格を下支えした。大口径パイプへの移行は、樹脂コストと販売価格の関係に重要な影響を与えなかった。

決算説明会全文文字起こし

決算説明会の完全なトランスクリプト

経営陣による説明

Operator

Hello, everyone. Thank you for joining us and welcome to the Otter Tail Corporation Third Quarter 2026 Earnings Conference Call. [Operator Instructions] I will now hand the conference call over to Beth Eiken. Please go ahead.

Beth Eiken

Good morning, and welcome to our third quarter 2026 earnings conference call. My name is Beth Eikin, and I'm Otter Tail Corporation's Manager of Investor Relations. Last night, we announced our Q3 financial results. Our complete earnings release and slides accompanying this call are available on our website at ottertail.com. A recording of this call will be available on our website later today. With me on the call today are Chuck MacFarlane, Otter Tail Corporation's CEO; Tim Rogelstad, Otter to Corporation's President and Tyler Nelson, Otter Tail Corporation's Vice President and CFO.

Before we begin, I want to remind you that we will be making forward-looking statements during the course of this call. As noted on Slide 2, these statements represent our current views and expectations of future events. They are subject to risks and uncertainties, which may cause actual results to differ from those presented here. So please be advised against placing undue reliance on any of these statements. Our forward-looking statements are described in more detail in our filings with the Securities and Exchange Commission, which we encourage you to review. Otter Tail Cell Corporation disclaims any duty to update or revise our forward-looking statements due to new information, future events, developments or otherwise.

We'll be referencing certain adjusted financial measures or non-GAAP measures throughout this call, including adjusted net income, adjusted earnings per share and adjusted return on equity. For more information, please refer to our quarterly earnings release and the non-GAAP reconciliations included in the appendix of our presentation. I will now turn the call over to Otter Tail Corporation's CEO, Mr. Chuck MacFarlane.

Chuck MacFarlane

Thanks, Beth. Good morning, and welcome to our third quarter earnings call. Please refer to Slide 4 as I begin my remarks with a summary of our quarterly highlights. Our team delivered on our strategic growth plan and near-term priorities during the third quarter despite navigating a challenging operating environment. Otter Tail Power continues to perform well, executing on our regulatory priorities and robust rate base growth plan, all while navigating a heavy workload. Our ongoing Minnesota rate case is progressing, and our team is working toward reaching a constructive outcome. We also advanced our renewable generation and transmission capital investments during the quarter despite facing an increasingly complex environment to develop and construct large infrastructure projects. .

Our team remains focused on continuing our long history of strong project execution for the benefit of our customers and shareholders. Our Manufacturing and Plastics segment team members faced a dynamic market conditions during the quarter, including higher production costs and a softening new housing market. Despite this, our team continued to execute on their customer-first strategy and effectively leverage the added manufacturing capacity in Arizona and Georgia helping to offset the negative impact of the headwinds faced.

Slide 5 provides a summary of our financial results. We produced diluted earnings per share of $1.41 in the third quarter compared to $1.86 last year. This expected decrease was primarily driven by Plastics segment performance as the average sale price of our PVC pipe continue to recede. We are affirming our midpoint of our adjusted diluted earnings per share guidance range of $5.88 and are narrowing the range. Following my operational update, Tyler will provide a detailed discussion of our quarterly financial results and the outlook for the remainder of the year.

Transitioning now to my operational update for Otter Tail Power, beginning on Slide 7. During the third quarter, we submitted our server bundle testimony and the ALJ hearing was conducted on our ongoing Minnesota rate case. In the filing, we modified our requested net revenue increase to $38.7 million from $42.3 million. The modification was largely driven by a jurisdictional allocation adjustment. Our team continues to work towards reaching a constructive outcome in the case. Separately, we continue to evaluate if a rate case filing is warranted in any of our other jurisdictions.

Turning to Slide 8. Our 15-year Integrated Resource Plan filed with the Minnesota Commission is also progressing. We responded to information request throughout the third quarter and initial comments from our intervenors were filed in mid-October. In the Minsala Department of Commerce's initial comments, they recommended additional renewable generation beyond what we had included in our request and suggest that battery storage is an alternative to natural gas. Our reply comments are due in December.

Turning to Slide 9. We are reaffirming our 5-year rate base compounded annual growth rate of 10% and continue to expect Otter Tail Power's earnings to grow at a similar rate over the planning period. We remain confident in our ability to deliver on our growth plan and are focused on strong project execution. As a reminder, our plan is not dependent on securing any large loads and any such load remains an incremental opportunity for us. Slides 10 and 11 provide an overview of our ongoing and future capital projects. Our 2 solar projects are under construction and remain on schedule and on budget. We anticipate Solway Solar becoming operational in the first half of 2027, and Abercrombie solar in the last half of 2028.

Our battery storage project is under development, and we expect to bring this facility online in 2028. Development work is also continuing on our large regional transmission projects. We are facing increased challenges developing and constructing certain transmission projects. These challenges could pose a risk to our original time lines for some of the large regional transmission projects included in our 5-year capital spending plan. Our team continues to proactively engage with landowners, community members, local units of government and others to articulate the liability-related benefits these projects would bring to the region.

Turning to Slide 12. Otter Tail Power remains well positioned to attract and support large loads. We are engaging with a diverse set of companies interested in adding new loads to our system. We view the diversity of our pipeline as a strength as each load has different needs. For example, the clean fuel and thermal storage opportunities are interruptible, giving us flexibility while still providing an opportunity for significant growth. providing low-cost electric service to our customers has been and always will be a priority of ours.

As Slide 13 illustrates Otter Tail Power's electric rates have remained well below the national and regional average for many years, and we remain committed to managing customer bill increases and helping our customers identify ways to save. Transitioning to our manufacturing platform, Slide 15 provides an overview of the industry conditions impacting manufacturing segment volumes. Industry conditions are improving in many of the end markets we serve, and we are encouraged by the increased demand. Our team members remain focused on delivering on our strategy of providing value-added service to our customers and being our customers' partner of choice. The recreational vehicle lawn and garden and horticulture end markets remained stable.

The construction end market continues to improve as our world-class OEM customers are seeing an increase in demand for their products. The industrial end market remains strong as the product facture are used to support the growing energy demand. Agriculture industries continue to remain challenging. However, we are starting to see a slight improvement looking out to next year from current levels. Slide 16 provides an overview of our Plastics segment pricing and volume trends. The average sale price of our PVC pipe continues to decline during the third quarter, decreasing 9% from the same time last year. Sales volumes decreased 5%. This decline was largely due to our customers advancing the purchases of our PVC pipe in response to announced resin price increases earlier this year and the impact of a softening housing market.

However, our team continues to effectively leverage the large diameter capability added at our Phoenix facility, which has helped to partially offset the year-over-year decrease in volumes. Despite the more subdued housing market, we are seeing an opportunity from increased demand for water infrastructure including PVC pipes stemming from data centers and the construction of other large manufacturing facilities. PVC resin and other input material costs have increased 10% from the same time last year, primarily due to global PVC resin supply and demand dynamics. With that, I will turn it over to Tyler to provide his financial update.

Tyler Nelson

Thanks, Chuck, and good morning, everyone. Turning to Slide 18. We produced diluted earnings per share of $1.41 during the third quarter compared to $1.86 last year. This expected decline in earnings was primarily from our Plastics segment as we continue on the glide path for earnings levels more in line with our long-term expectations. Please follow along on Slides 19 and 20 as I provide an overview of our third quarter results by segment. Electric segment earnings were flat year-over-year. Our financial results were positively impacted by the timely recovery of our rate base investments, net of the incremental depreciation and financing costs. We also benefited from higher electric rates in both Minnesota and South Dakota as well as the favorable impact of weather. As expected, these items were largely offset by higher operating and maintenance costs, driven by increased labor, vegetation management and plant outage-related costs.

As we anticipated, our operating costs were higher in the third quarter of 2026 than the same period last year, primarily due to timing differences in spend between periods. Through the first 9 months of 2026, Electric segment earnings were up 14% compared to the same time last year. Manufacturing segment earnings decreased $0.03 per share this quarter. The decrease was primarily due to lower gross profit margins, driven by higher production costs and lower productivity from the onboarding of new employees. General and administrative expenses was also higher than in the quarter compared to the same time last year. Partially offsetting these items were higher sales volumes as industry conditions and many end markets we serve are improving and our team has been successful in capturing new business with our existing customer base.

Overall, we are not satisfied with our quarterly segment financial results as the growth in the business was offset by cost and productivity related pressures, but our management team is focused on improving productivity and managing costs in the business. Despite the challenges in the third quarter, segment earnings are up 28% on a year-to-date basis compared to last year.

Turning to Slide 20. Plastics segment earnings decreased $0.34 per share. The expected decline in earnings was primarily driven by lower PVC pipe pricing as the average sales price of our PVC pipe continues to recede. As expected, sales volumes decreased during the quarter, driven by our customers advancing their purchases earlier this year in response to announced PVC resin price increases. In addition, a softening housing market also contributed to lower sales volumes in the quarter. Material costs were higher during the quarter due to global supply and demand dynamics leading to compressed margins.

Lastly, segment financial results were negatively impacted by a onetime adjustment for estimated vendor rebates and the timing of recognizing such rebates as a cost of inventory or is a benefit to earnings. Corporate costs increased $0.08 per share, primarily due to lower income tax benefits recognized during the quarter and lower investment income resulting from a decrease in short-term investment balances. While our corporate costs increased compared to the same time last year, our quarterly results were better than we expected.

Turning to Slide 21. We continue to be in a position of financial strength. Our equity layer as a percentage of total capital was 61% as of the end of September, and we had over $600 million of available liquidity and including over $250 million of cash, cash equivalents and marketable securities. Our balance sheet continues to position us well to efficiently fund our current rate base growth plan, providing benefits for our customers and shareholders through support for customer affordability and avoided shareholder dilution.

On Slide 22, we are affirming the midpoint of our adjusted diluted earnings per share guidance and narrowing the range to $5.73 to $6.03 from $5.68 to $6.08. As a reminder, this range excludes the after-tax impact of the legal settlement expense recognized in the second quarter. While maintaining the midpoint of our adjusted diluted earnings per share guidance we did modestly adjust the midpoint of our plastics and corporate guidance ranges. The revised midpoint of our adjusted plastics guidance reflects a softening demand environment, as mortgage rates remain elevated and develop lot inventory increases, putting downward pressure on new home construction.

In addition, the onetime adjustment for vendor rebates, I previously discussed, also impacts our annual earnings expectations. We increased the midpoint of our corporate cost center largely due to better-than-expected third quarter results. As we look to close out the year, we remain confident in our ability to deliver on our 2026 financial objectives.

On Slide 23, we are reaffirming our 5-year capital investment plan, with Otter Tail Power's portion totaling $1.9 billion. While maintaining the base plan, we did increase our incremental investment opportunity for the current planning period from $750 million to $850 million. This increase is largely driven by the upsizing of a potential wind project investment opportunity from 200 megawatts to 300 megawatts. We anticipate providing a revised 5-year capital spending plan during our year-end earnings call in February of next year.

Slide 24 summarizes our financing plan, which remains unchanged. We continue to anticipate retiring and not replacing our only outstanding parent-level debt by the end of the year and given our strong balance sheet and cash generation of our manufacturing platform businesses, we continue to expect to fund our customer-focused growth plan without needing to access the equity capital markets.

On Slide 25, we are reaffirming our expected long-term plastics earnings profile. We believe segment earnings will continue to decline through the end of 2027 and expect earnings in 2028 to be within a range of $45 million to $50 million. Due to seasonality and other factors, the rate of pricing decline can vary from period to period and the timing or level of earnings could vary materially from our projection. Our Plastics segment continues to be an important component to our overall strategy. Even as earnings continue to recede, we expect the segment to continue to produce an accretive return and incremental cash that we can use to reinvest into our utility first model.

Slide 26 summarizes our financial objectives. Our long-term earnings per share growth rate target is 7% to 9%, which results in a total shareholder return target of 10% to 12%. We anticipate delivering on these targets once Plastic segment earnings normalize in 2028. As we continue to execute on our customer-focused growth plan, we are well positioned to deliver on our financial objectives over the long term. Otter Tail Power continues to be a best-in-class utility, producing attractive returns for our shareholders while providing some of the lowest-cost electric service in the nation and region. Our manufacturing and plastic pipe businesses continuously produce accretive returns and incremental cash, enabling us to efficiently fund our 5-year capital spending plan. It is this intentional strategic diversification that has and will continue to provide benefits to our customers and investors over the long term. We are now ready to take your questions.

Operator

[Operator Instructions] Your first question comes from the line of Tate Sullivan with Maxim Group.

質疑応答

Tate Sullivan

Chuck, you mentioned some risk to the transmission projects in the 5-year plan. First, can you talk about what some of those some of the time line -- longer time line might be due to for those projects? .

Timothy Rogelstad

Sure. This is Tim, and I'll take that question. And maybe just a little bit of background. We've had a long history over the last 15 to 20 years of developing transmission and executing transmission projects. And we're just seeing more complexity and more difficulty in siding. And while we're very confident in the projects that we have, the need for them and things along those lines, it's just fundamentally as we're addressing local concerns and things like that, there could be some delays. Now we aren't in a position at this point to say that we're going to adjust our 5-year plan or anything like that. But we anticipate that when we report our year-end earnings that we'll have an update at that point in time. But -- but overall, we still remain confident, but it's just -- we're just in a more difficult environment right now.

Tate Sullivan

And that was -- you answered my second question on that topic about the transmission CapEx plan, I mean, going up, meaning -- currently planning to go up double in 2027. But I'll follow-up on the year-end. On shifting to PVC and the slide where you traditionally point out the price and sales prices, volumes and material input costs. I mean can you comment -- I mean usually, and going back to historical presentations, when the input costs will increase, that will sometimes usually translate to higher sales prices as well. Was there a different dynamic this quarter or going into the future quarters that we should consider, please? .

Tyler Nelson

Tate, this is Tyler. I can answer your question. So we did see some pricing strength during the quarter. You can see on the slide that you referenced, our average price was down about 9% compared to the same quarter last year. That's a slower rate of decline than we've seen over the last number of quarters. Certainly, that could be driven by an increase in the resin cost plus, as we talked about in our prior quarter call, we did see elevated demand in the second quarter from our customers. and that provided support for pricing strength on our part.

Tate Sullivan

Is it a different consideration with selling more larger diameter pipe from the expanded facility -- or is that not just a consideration for that?

Chuck MacFarlane

No, that wouldn't -- that doesn't have a material impact, I would say as we think about resin costs and how that impacts our pricing profile. .

Operator

We have reached the end of the Q&A session. I will now turn the call back over to Chuck McFarlane for closing remarks.

Chuck MacFarlane

Thank you for joining our call and your interest in Otter Till Corporation. If you have any questions, please reach out to our Investor Relations team. We look forward to speaking with you next quarter and seeing many of you at the EEI Financial Conference. .

Operator

This concludes today's call. Thank you for attending. You may now disconnect.