Otter Tail Corporation

05/06/2026 | Press release | Distributed by Public on 05/06/2026 11:18

Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis of our financial condition and results of operations together with our interim financial statements and the related notes appearing under Item 1 of this Quarterly Report on Form 10-Q, and our annual financial statements and the related notes along with the discussion and analysis of our financial condition and results of operations contained in our Annual Report on Form 10-K for the year ended December 31, 2025.
Otter Tail Corporation and its subsidiaries form a diverse group of businesses with operations classified into three segments: Electric, Manufacturing and Plastics. Our Electric segment business is a vertically integrated, regulated utility with generation, transmission and distribution facilities to serve our customers in western Minnesota, eastern North Dakota and northeastern South Dakota. Our Manufacturing segment provides metal fabrication for custom machine parts and metal components and manufactures extruded and thermoformed plastic products. Our Plastics segment manufactures PVC pipe for use in, among other applications, municipal and rural water, wastewater and water reclamation projects.
RESULTS OF OPERATIONS
Provided below are a summary and discussion of our operating results on a consolidated basis followed by a discussion of the operating results of each of our segments: Electric, Manufacturing and Plastics. In addition to the segment results, we provide an overview of our Corporate costs. Our Corporate costs do not constitute a reportable segment, but rather consist of unallocated general corporate expenses, such as corporate staff and overhead costs, the results of our captive insurance company and other items excluded from the measurement of segment performance. Corporate costs are added to operating segment totals to reconcile to totals on our consolidated statements of income.
CONSOLIDATED RESULTS
The following table summarizes consolidated operating results for the three months ended March 31, 2026 and 2025:
(in thousands) 2026 2025 $ change % change
Operating Revenues $ 347,026 $ 337,353 $ 9,673 2.9 %
Operating Expenses 261,789 253,354 8,435 3.3
Operating Income 85,237 83,999 1,238 1.5
Interest Expense (12,636) (11,553) (1,083) 9.4
Nonservice Components of Postretirement Benefits 443 1,282 (839) (65.4)
Other Income (Expense), net 4,442 4,456 (14) (0.3)
Income Before Income Taxes 77,486 78,184 (698) (0.9)
Income Tax Expense 4,876 10,085 (5,209) (51.7)
Net Income $ 72,610 $ 68,099 $ 4,511 6.6 %
Operating Revenues increased $9.7 million primarily due to increased revenues from our Electric segment driven by recent rate increases and higher sales volumes in our Manufacturing and Plastics segments, partially offset by lower sales prices in our Plastics segment. See our segment disclosures below for additional discussion of items impacting operating revenues.
Operating Expenses increased $8.4 million primarily due to an increase in production fuel costs in our Electric segment, increased material costs and sales volumes in our Manufacturing segment, and increased sales volumes in our Plastics segment, partially offset by a decrease in material costs in our Plastics segment. See our segment disclosures below for additional discussion of items impacting operating expenses.
Nonservice Components of Postretirement Benefits decreased by $0.8 million, having a negative impact on net income, primarily due to a decrease in the amortization of plan amendment-related gains and an increase in the amortization of actuarial losses.
Income Tax Expense decreased $5.2 million primarily due to an increase in PTCs at OTP driven by increased wind generation which qualified for credits. Our effective tax rate was 6.3% for the three months ended March 31, 2026 and 12.9% for the same period last year.
ELECTRIC SEGMENT RESULTS
The following table summarizes Electric segment operating results for the three months ended March 31, 2026 and 2025:
(in thousands) 2026 2025 $ change % change
Operating Revenues
$ 165,870 $ 149,720 $ 16,150 10.8
Production Fuel 20,773 14,321 6,452 45.1
Purchased Power 27,013 30,870 (3,857) (12.5)
Operating and Maintenance Expenses 50,255 48,881 1,374 2.8
Depreciation and Amortization 23,445 22,377 1,068 4.8
Property Taxes 4,462 4,228 234 5.5
Operating Income 39,922 29,043 10,879 37.5
Interest Expense
(11,736) (10,657) (1,079) 10.1
Nonservice Components of Postretirement Benefits
725 1,555 (830) (53.4)
Other Income (Expense), net
1,157 759 398 52.4
Income Before Income Taxes 30,068 20,700 9,368 45.3
Income Tax Benefit
(5,182) (4,008) (1,174) 29.3
Net Income $ 35,250 $ 24,708 $ 10,542 42.7 %
2026 2025 change % change
Electric kilowatt-hour (kwh) Sales (in thousands)
Retail kwh Sales 1,715,724 1,673,004 42,720 2.6 %
Wholesale kwh Sales - Company Generation 21,314 56,175 (34,861) (62.1)
Heating Degree Days 3,155 3,451 (296) (8.6)
The operating results of our Electric segment are impacted by fluctuations in weather conditions and the resulting demand for electricity for heating. The following table shows heating degree days as a percent of normal for the three months ended March 31, 2026 and 2025.
2026 2025
Heating Degree Days 92.2 % 100.9 %
The following table summarizes the estimated effect on diluted earnings per share of the difference in retail kwh sales under actual weather conditions and expected retail kwh sales under normal weather conditions for the three months ended March 31, 2026 and 2025, and between those periods.
2026 vs
Normal
2026 vs
2025
2025 vs
Normal
Effect on Diluted Earnings Per Share $ (0.05) $ (0.05) $ -
Operating Revenues increased $16.2 million primarily due to:
•A $9.2 million increase from higher rates, reflecting interim rates in Minnesota and South Dakota and updated base rates in North Dakota. Interim rates in Minnesota and South Dakota became effective in January 2026 and December 2025, respectively, and updated base rates in North Dakota went into effect in March 2025.
•A $4.3 million increase in fuel recovery revenues, driven by higher production fuel costs, as described below.
•A $3.5 million increase from the recovery of additional rate base investments.
•A $3.2 million increase from higher commercial and industrial sales volumes.
These increases were partially offset by:
•A $3.3 million increase in PTCs, the benefit of which is provided to customers, as described below.
•A $2.7 million decrease due to the impact of unfavorable weather.
Production Fuel costs increased $6.5 million driven by higher generation from our natural gas facilities and coal-fired facilities, as well as higher natural gas prices.
Purchased Power costs decreased $3.9 million primarily due to a 32% reduction in purchased power volumes, partially offset by a 28% increase in the price of purchased power driven by higher market energy costs.
Operating and Maintenance expenses increased $1.4 million primarily due to higher labor costs, as well as an increase in software costs.
Depreciation and Amortization expense increased $1.1 million as additional assets, including certain wind generation, distribution and transmission assets, were placed in service.
Income Tax Benefit increased $1.2 million primarily due to an increase in PTCs driven by increased wind generation that qualified for PTCs compared to the same period last year. Our wind repowering project was completed in the first quarter of 2026. The completion of these facility repowering projects results in the commencement of PTCs earned from the generation from these facilities as they are placed back into service. PTCs are credited to customers, resulting in a reduction of both operating revenue and income taxes.
MANUFACTURING SEGMENT RESULTS
The following table summarizes Manufacturing segment operating results for the three months ended March 31, 2026 and 2025:
(in thousands) 2026 2025 $ change % change
Operating Revenues $ 89,559 $ 81,685 $ 7,874 9.6 %
Cost of Products Sold (excluding depreciation) 67,521 64,300 3,221 5.0
Selling, General, and Administrative Expenses
11,122 9,535 1,587 16.6
Depreciation and Amortization 4,787 5,424 (637) (11.7)
Operating Income 6,129 2,426 3,703 152.6
Interest Expense (599) (623) 24 (3.9)
Other Income (Expense), net
- 1 (1) (100.0)
Income Before Income Taxes 5,530 1,804 3,726 206.5
Income Tax Expense
1,247 272 975 358.5
Net Income $ 4,283 $ 1,532 $ 2,751 179.6 %
Operating Revenues increased $7.9 million primarily due to a 5% increase in steel costs, which are passed on to customers, and a 4% increase in sales volumes. Demand improved in certain markets we serve, including the construction and recreational vehicle markets, compared to softer demand and tighter inventory management efforts during the same period last year.
Cost of Products Sold increased $3.2 million primarily due to higher steel costs and sales volumes, partially offset by the impact of improved production efficiencies compared to the same period last year, as we have continued to align our cost structure with current demand levels.
Selling, General, and Administrative Expenses increased $1.6 million, driven by variable compensation costs associated with financial results during the period and expectations for full-year performance.
Income Tax Expense increased $1.0 million due to an increase in income before income taxes.
PLASTICS SEGMENT RESULTS
The following table summarizes Plastics segment operating results for the three months ended March 31, 2026 and 2025:
(in thousands) 2026 2025 $ change % change
Operating Revenues $ 91,597 $ 105,948 $ (14,351) (13.5) %
Cost of Products Sold (excluding depreciation) 40,015 40,087 (72) (0.2)
Selling, General, and Administrative Expenses
5,207 5,439 (232) (4.3)
Depreciation and Amortization 1,672 1,546 126 8.2
Operating Income 44,703 58,876 (14,173) (24.1)
Interest Expense
(146) (146) - -
Other Income 2 2 - -
Income Before Income Taxes 44,559 58,732 (14,173) (24.1)
Income Tax Expense
11,619 15,293 (3,674) (24.0)
Net Income $ 32,940 $ 43,439 $ (10,499) (24.2) %
Operating Revenues decreased $14.4 million primarily due to a 19% decrease in average sales prices compared with the same period last year, continuing the multi-year decline in product pricing from peak levels in late 2022. This decrease was partially offset by a 7% increase in sales volumes. Sales volumes benefited from the opportunistic sale of specialty pipe during the period. Late in the quarter, we also benefited from distributor and contractor demand as they sought to secure inventories in advance of potential PVC resin cost increases. Expectations of higher resin costs, driven in part by energy market volatility and geopolitical developments, contributed to the demand during the period and may continue to impact customer purchasing patterns and future results.
Cost of Products Sold decreased $0.1 million primarily due to a 12% decrease in the cost of input materials, including PVC resin, however, the decrease was largely offset by a 7% increase in sales volumes.
Income Tax Expense decreased $3.7 million due to a decrease in income before income taxes.
CORPORATE RESULTS
The following table summarizes Corporate operating results for the three months ended March 31, 2026 and 2025:
(in thousands) 2026 2025 $ change % change
General and Administrative Expenses
$ 5,442 $ 6,318 $ (876) (13.9) %
Depreciation and Amortization 75 28 47 167.9
Operating Loss 5,517 6,346 (829) (13.1)
Interest Expense
(155) (127) (28) 22.0
Nonservice Cost Components of Postretirement Benefits (282) (273) (9) 3.3
Other Income (Expense), net
3,283 3,694 (411) (11.1)
Loss Before Income Taxes
2,671 3,052 (381) (12.5)
Income Tax Benefit (2,808) (1,472) (1,336) 90.8
Net Income (Loss)
$ 137 $ (1,580) $ 1,717 n/m
General and Administrative Expenses decreased $0.9 million primarily driven by lower employee healthcare claims under our self-insured healthcare program and lower external service provider costs.
Income Tax Benefit increased $1.3 million due to the internal allocation of interim tax expense.
REGULATORY MATTERS
The following provides a summary of general rates, rate rider and other regulatory filings that have or are expected to have a material impact on our operating results, financial position or cash flows.
GENERAL RATES
South Dakota Rate Case
On June 4, 2025, OTP filed a request with the SDPUC for an increase in revenue recoverable under general rates in South Dakota. In its filing, OTP requested a net increase in annual revenue of $5.7 million, or 12.50%, based on an allowed rate of return on rate base of 8.29%. Interim rates went into effect on December 1, 2025, and were subject to potential refund until the finalization of the rate case.
On March 10, 2026, the SDPUC approved a settlement agreement between OTP and the commission staff in the general rate case. The key provisions of the order include a net increase in annual revenue of $3.3 million, or 7.7%, based on a return on rate base of 7.09%. Through the settlement of the case, the parties also agreed to a moratorium on increases to base rates until December 1, 2029, with certain exceptions. New base rates in South Dakota went into effect on April 1, 2026, and interim rate refunds totaling $1.3 million will be refunded to customers beginning in May 2026.
Minnesota Rate Case
On October 31, 2025, OTP filed a request with the MPUC for an increase in revenue recoverable under general rates in Minnesota. In its filing, OTP requested a net increase in annual revenue of $44.8 million, or 17.7%, based on an allowed rate of return on rate base of 7.92% and an allowed ROE of 10.65% on an equity ratio of 53.5% of total capital. The request includes, among other items, accelerated recovery of the remaining investment of the jurisdictionally allocated share of Coyote Station, which has a $4.3 million annual impact. The request for accelerated recovery is driven by the MPUC's order in OTP's most recent IRP to discontinue serving Minnesota customers with capacity and energy from Coyote Station by December 2031. If this part of the request is granted, we anticipate the amounts collected would be deferred and recognized over the remaining estimated useful life of the plant, which extends until 2041. The filing also included an interim rate request for a net increase in annual revenue of $31.8 million, or 12.6%.
On December 23, 2025, the MPUC approved the interim rate request with a modification to exclude the impact of the accelerated recovery of the remaining investment of the jurisdictionally allocated share of Coyote Station from interim rates. The resulting interim net increase in annual revenue is $28.6 million, or 11.3%. Interim rates went into effect on January 1, 2026, and are subject to potential refund until the finalization of the rate case.
RATE RIDERS
The following table includes a summary of pending and recently concluded rate rider proceedings with a significant revenue impact:
Recovery Filing Amount Effective
Mechanism Jurisdiction Status Date (in millions) Date Notes
RRR - 2026
MN
Requested
02/25/26 48.0 10/01/26
Recovery of Solway Solar costs, Abercrombie Solar costs, Hoot Lake Solar costs, Ashtabula III costs, wind upgrade project costs at our four owned wind facilities, and true up of PTCs related to Merricourt.
ECO - 2026
MN
Requested
04/01/26 10.6 12/01/26
Recovery of energy conservation improvement costs as well as a demand-side management financial incentive.
ECO - 2025 MN
Approved
04/01/25 9.5 12/01/25
Recovery of energy conservation improvement costs as well as a demand-side management financial incentive.
TCR - 2026
MN
Requested
03/23/26 7.4 01/01/27 Recovery of transmission project costs.
EUIC - 2025 MN Approved 05/03/24 4.1 02/01/25
Recovery of advanced metering infrastructure, outage management system, geographic information system, and demand-response projects.
TCR - 2026 ND
Approved
09/15/25 5.1 02/01/26 Recovery of transmission project costs.
MDT - 2026 ND
Approved
08/01/25 3.7 01/01/26
Recovery of advanced metering infrastructure and demand-response projects.
TCR - 2025 ND Approved 09/16/24 3.1 01/01/25 Recovery of transmission project costs.
PIR - 2025 SD
Approved
12/20/24 3.2 09/01/25
Recovery of Ashtabula III, Merricourt, Astoria Station, wind upgrade projects, advanced grid infrastructure project costs, addition of Solway Solar and Abercrombie Solar, and impact of load growth credits.
LIQUIDITY
LIQUIDITY OVERVIEW
We believe our financial condition is strong and our cash and cash equivalents, other liquid assets, operating cash flows, existing lines of credit, access to capital markets and borrowing ability because of investment-grade credit ratings, when taken together, provide us ample liquidity to conduct our business operations, fund our capital expenditure program and satisfy our obligations as they become due. Our liquidity, including our operating cash flows and access to capital markets, could be impacted by macroeconomic factors outside of our control, including higher interest rates and debt capital costs, and diminished credit availability. In addition, our liquidity could be impacted by non-compliance with certain financial covenants under our various debt instruments. As of March 31, 2026, we were in compliance with all financial covenants (see the Financial Covenants section under Capital Resources below).
The following table presents the status of our lines of credit as of March 31, 2026:
2026
(in thousands) Borrowing Limit Amount Outstanding Letters
of Credit 		Amount Available
OTC Credit Agreement $ 170,000 $ - $ - $ 170,000
OTP Credit Agreement 220,000 67,971 11,514 140,515
Total $ 390,000 $ 67,971 $ 11,514 $ 310,515
OTC and OTP are each party to separate credit agreements (the OTC Credit Agreement and OTP Credit Agreement, respectively) which provide for unsecured revolving lines of credit. Should additional liquidity be needed, the OTC Credit Agreement includes an accordion feature allowing us to increase the amount available to $290.0 million, subject to certain terms and conditions. The OTP Credit Agreement also includes an accordion feature allowing OTP to increase that facility to $300.0 million, subject to certain terms and conditions.
As of March 31, 2026, we had $310.5 million of available liquidity under our credit facilities and $348.4 million of available cash and cash equivalents, resulting in total available liquidity of $658.9 million.
CASH FLOWS
The following is a discussion of our cash flows for the three months ended March 31, 2026 and 2025:
(in thousands) 2026 2025
Net Cash Provided by Operating Activities $ 70,611 $ 39,469
Net Cash Provided by Operating Activities increased $31.1 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025, primarily due to a decrease in working capital requirements, largely driven by the timing of vendor payments and the recovery of fuel cost and rider revenue from our utility customers. Net cash provided by operating activities in our Electric segment is regularly affected by the timing of payments made for operating costs and the various mechanisms used to recover costs from or return amounts to our utility customers. The timing of recoveries and refunds can vary by the recovery or refund mechanism. Due to the numerous factors that impact the timing of our cash receipts and cash payments, our cash provided by operating activities can vary significantly from our net income for the period.
(in thousands) 2026 2025
Net Cash Used in Investing Activities $ 187,008 $ 60,911
Net Cash Used in Investing Activities increased $126.1 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The increase in cash used in investing activities included a $127.3 million increase in capital expenditures. Capital expenditures in our Electric segment increased $125.0 million primarily due to the timing of investments under our five-year capital spending plan. During the three months ended March 31, 2026, we acquired nearly all of the necessary solar panels for our Abercrombie solar project. The procurement of these panels was accelerated to mitigate the impact of potential tariff-related cost increases in the future. We currently estimate the facility will be operational by the end of 2028.
(in thousands) 2026 2025
Net Cash Provided by Financing Activities
$ 78,558 $ 11,605
Net Cash Provided by Financing Activities for the three months ended March 31, 2026 included the issuance of $100.0 million of long-term debt at OTP, the proceeds of which were used to repay short-term borrowings under the OTP credit agreement, fund Electric segment construction expenditures and support operating activities. We manage the capital structure of OTP independent from our consolidated financial position to ensure compliance with the capital structure approved through regulation; therefore, our decision to issue long-term debt at OTP is not impacted by our consolidated cash and cash equivalent position.
Financing activities for the three months ended March 31, 2026 also included net short-term borrowings of $7.7 million and dividend payments of $24.3 million. Financing activities for the three months ended March 31, 2025 included the issuance of $50.0 million of long-term debt at OTP, net repayments of short-term debt of $10.8 million and dividend payments of $22.0 million.
CAPITAL REQUIREMENTS
CONTRACTUAL OBLIGATIONS
Our contractual obligations primarily include principal and interest payments due under our outstanding debt obligations, commitments to acquire coal, energy and capacity commitments, payments to meet our postretirement benefit obligations, and payment obligations under land easements and leasing arrangements.
In connection with our Abercrombie Solar project currently under development in southeastern North Dakota, we have entered into multiple agreements to lease approximately 2,200 acres of land on which the facility will be constructed. The leases commenced on May 1, 2026, and have an initial term of 35 years, with renewal options to extend the term up to an additional ten years. Total lease payments over the initial 35-year term are expected to be approximately $54 million, which will be recovered from our utility customers over the estimated useful life of the facility.
Our contractual obligations as of December 31, 2025 are included in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for the year ended December 31, 2025. There were no material changes in our contractual obligations outside of the ordinary course of business during the three months ended March 31, 2026, except for the land leases discussed above.
COMMON STOCK DIVIDENDS
We paid dividends to our shareholders totaling $24.3 million, or $0.5775 per share, in the first three months of 2026. The determination of the amount of future cash dividends to be paid will depend on, among other things, our financial condition, our actual or expected level of earnings and cash flows from operations, the level of our capital expenditures and our future business prospects. As a result of certain statutory limitations or regulatory or financing agreements, the amount of dividends we are allowed to pay could be restricted. See Note 11 to our consolidated financial statements included in this Quarterly Report on Form 10-Q for additional information. The decision to declare dividends is reviewed quarterly by our Board of Directors.
CAPITAL RESOURCES
Financial flexibility is provided by operating cash flows, unused lines of credit and access to capital markets, and is aided by strong financial coverages and investment grade credit ratings. Debt financing will be required in the next five years to refinance maturing debt and to finance our capital investments. Our financing plans are subject to change and are impacted by our planned level of capital investments and decisions to reduce borrowings under our lines of credit, to refund or retire early any of our outstanding debt, to complete acquisitions or to use capital for other corporate purposes.
REGISTRATION STATEMENTS
On May 3, 2024, we filed two registration statements with the SEC, replacing two previously filed registration statements upon their expiration. The first statement, a shelf registration, allows us to offer for sale, from time to time, either separately or together in any combination, equity, debt or other securities described in the registration statement. No new debt or equity has been issued pursuant to the registration statement. The second registration statement allows for the issuance of up to 1,500,000 common shares under our Automatic Dividend Reinvestment and Share Purchase Plan, which provides our common shareholders, retail customers of OTP and other interested investors a method of purchasing our common shares by reinvesting their dividends and/or making optional cash investments. Shares purchased under the plan may be newly issued common shares or common shares purchased on the open market. As of March 31, 2026, there were 1,306,321 shares available for purchase or issuance under the plan. Both registration statements expire in May 2027.
SHORT-TERM DEBT
OTC and OTP are each party to a credit agreement (the OTC Credit Agreement and the OTP Credit Agreement, respectively) which each provides for unsecured revolving lines of credit. The following is a summary of key provisions and borrowing information as of and for the three months ended, March 31, 2026:
(in thousands, except interest rates) OTC Credit Agreement OTP Credit Agreement
Borrowing Limit $ 170,000 $ 220,000
Borrowing Limit if Accordion Exercised1
290,000 300,000
Amount Restricted Due to Outstanding Letters of Credit as of March 31, 2026
- 11,514
Amount Outstanding as of March 31, 2026
- 67,971
Average Amount Outstanding During the Three Months Ended March 31, 2026
- 87,907
Maximum Amount Outstanding During the Three Months Ended March 31, 2026
$ - $ 127,338
Interest Rate as of March 31, 2026
5.16 % 5.53 %
Maturity Date December 11, 2030 December 11, 2030
1Each facility includes an accordion featuring allowing the borrower to increase the borrowing limit if certain terms and conditions are met.
LONG-TERM DEBT
On March 19, 2026, OTP entered into a Note Purchase Agreement pursuant to which OTP issued, in a private placement transaction, $170.0 million of senior unsecured notes consisting of (a) $100.0 million of 5.33% Series 2026A Senior Unsecured Notes due March 19, 2036, and (b) $70.0 million of 6.04% Series 2026B Senior Unsecured Notes due June 4, 2056. The Series 2026A Notes were issued on March 19, 2026, upon entering into the agreement. The Series 2026B Notes are expected to be issued on June 4, 2026, subject to the satisfaction of certain customary conditions to closing.
As of March 31, 2026, we had $1.1 billion of principal outstanding under long-term debt arrangements. These instruments generally provide for unsecured borrowings at fixed rates of interest with maturities ranging from 2026 to 2055. Note 7 to our consolidated financial statements included in this Quarterly Report on Form 10-Q includes additional information regarding these long-term debt instruments.
Financial Covenants
Certain of our short- and long-term debt agreements require OTC and OTP to maintain certain financial covenants. As of March 31, 2026, we were in compliance with these financial covenants as further described below:
OTC, under its financial covenants, may not permit its ratio of interest-bearing debt to total capitalization to exceed 0.60 to 1.00 or 0.65 to 1.00, depending on the debt agreement, may not permit its interest and dividend coverage ratio to be less than 1.50 to 1.00 and may not permit its priority indebtedness to exceed 10 percent of its total capitalization. As of March 31, 2026, OTC's interest-bearing debt to total capitalization was 0.40 to 1.00, OTC's interest and dividend coverage ratio was 7.76 to 1.00 and OTC had no priority indebtedness outstanding.
OTP, under its financial covenants, may not permit its ratio of interest-bearing debt to total capitalization to exceed 0.60 to 1.00 or 0.65 to 1.00, depending on the debt agreement, may not permit its interest and dividend coverage ratio to be less than 1.50 to 1.00 and may not permit its priority indebtedness to exceed 20 percent of its total capitalization. As of March 31, 2026, OTP's interest-bearing debt to total capitalization was 0.50 to 1.00 or 0.48 to 1.00, depending on the debt agreement, OTP's interest and dividend coverage ratio was 3.13 to 1.00 and OTP had no priority indebtedness outstanding.
None of our debt agreements include any provisions that would trigger an acceleration of the related debt as a result of changes in the credit rating levels assigned to the related obligor by rating agencies.
Credit Ratings
The current credit ratings of OTC and OTP are summarized below:
Otter Tail Corporation Otter Tail Power Company
Moody's Fitch S&P Moody's Fitch S&P
Long-Term Issuer Default Rating Baa2 BBB BBB Baa1 BBB+ BBB+
Senior Unsecured Debt n/a BBB n/a n/a A- n/a
Outlook Stable Stable
Positive
Stable Stable Stable
CRITICAL ACCOUNTING POLICIES INVOLVING SIGNIFICANT ESTIMATES
The discussion and analysis of our results of operations are based on financial statements prepared in accordance with generally accepted accounting principles in the United States of America. Certain of our accounting policies require management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities in the preparation of our consolidated financial statements. We have disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025 the critical accounting policies that affect our most significant estimates and assumptions used in preparing our consolidated financial statements. There have been no material changes to our critical accounting policies and estimates from those disclosed in the most recent Annual Report on Form 10-K.
Otter Tail Corporation published this content on May 06, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on May 06, 2026 at 17:18 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]