Otter Tail CorpOTTR
Otter Tail Corp Segments Disclosure
Segment Information
Corporate assets consist primarily of cash and cash equivalents, investments, fixed assets, and prepaid expenses.
Our business is comprised of three reportable segments, Electric, Manufacturing and Plastics, consistent with our business strategy, organizational structure and our internal reporting and review processes. Our chief operating decision maker (CODM) is our Chief Executive Officer. Segment net income is the sole measure of segment profit or loss used by our CODM in assessing segment performance and allocating resources to our segments. Our CODM uses segment net income in assessing financial performance on a monthly basis, reviewing and approving annual operating budgets and periodic forecasts, allocating capital or financial resources to our segments, making strategic decisions and measuring returns on equity in comparison to internal thresholds or peer entities.
The operations of our three reportable segments are further described below. We have aggregated two operating segments within our Manufacturing reportable segment based on the similarity between these businesses and their economic characteristics.
Electric includes our vertically integrated regulated utility engaged in the production, transmission, distribution and sale of electric energy in western Minnesota, eastern North Dakota and northeastern South Dakota.
Manufacturing consists of businesses which provide metal fabrication services for custom machine parts and metal components and manufacture thermoformed plastic products for use in the agriculture, construction, horticulture, industrial, lawn and garden, recreational vehicle (powersports) and other end markets. These businesses have manufacturing facilities in Georgia, Illinois and Minnesota and sell products primarily in the United States.
Plastics consists of businesses producing PVC pipe at plants in North Dakota and Arizona. Our PVC pipe is sold primarily in the western half of the United States and Canada and is generally used in municipal water infrastructure, which encompasses potable water distribution, wastewater collection and distribution and water reclamation systems. Our PVC pipe is also used within residential and commercial structures and rural water systems.
Segment Profit or Loss
Information about each segment, including significant expenses and net income of each segment, for the years ended December 31, 2025, 2024 and 2023 are as follows:
Electric Segment
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Operating Revenue | $ | 566,756 | $ | 524,515 | $ | 528,359 | |||||||||||
| Production Fuel and Purchased Power | 153,706 | 122,506 | 138,631 | ||||||||||||||
| Operating and Maintenance Expenses | 184,310 | 190,422 | 191,263 | ||||||||||||||
| Depreciation and Amortization | 90,168 | 82,136 | 75,330 | ||||||||||||||
| Property Taxes | 17,023 | 15,662 | 16,614 | ||||||||||||||
| Interest Expense | 43,633 | 38,216 | 33,864 | ||||||||||||||
Income Tax Expense (Benefit) | (11,799) | (1,544) | 1,648 | ||||||||||||||
Other Segment Items(1) | (7,871) | (13,846) | (13,415) | ||||||||||||||
| Net Income | $ | 97,586 | $ | 90,963 | $ | 84,424 | |||||||||||
(1) Other segment items includes nonservice components of postretirement benefits, allowance for funds used during construction, and other expenses (income). | |||||||||||||||||
Manufacturing Segment
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Operating Revenue | $ | 314,547 | $ | 342,592 | $ | 402,781 | |||||||||||
| Cost of Goods Sold | 255,275 | 283,390 | 324,245 | ||||||||||||||
| Selling, General, and Administrative Expenses | 42,372 | 40,110 | 49,396 | ||||||||||||||
| Interest Expense | 2,506 | 2,516 | 2,295 | ||||||||||||||
| Income Tax Expense | 2,877 | 2,895 | 5,390 | ||||||||||||||
| Other Segment Items | — | — | 1 | ||||||||||||||
| Net Income | $ | 11,517 | $ | 13,681 | $ | 21,454 | |||||||||||
Plastics Segment
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Operating Revenue | $ | 422,755 | $ | 463,441 | $ | 418,026 | |||||||||||
| Cost of Goods Sold | 163,874 | 166,628 | 143,521 | ||||||||||||||
| Selling, General, and Administrative Expenses | 27,802 | 24,908 | 20,103 | ||||||||||||||
| Interest Expense | 685 | 590 | 602 | ||||||||||||||
| Income Tax Expense | 59,999 | 70,644 | 66,066 | ||||||||||||||
| Other Segment Items | (5) | (76) | (14) | ||||||||||||||
| Net Income | $ | 170,400 | $ | 200,747 | $ | 187,748 | |||||||||||
Capital Expenditures and Identifiable Assets
The following provides capital expenditures for each reportable segment and our corporate cost center for the years ended December 31, 2025, 2024 and 2023:
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Capital Expenditures | |||||||||||||||||
| Electric | $ | 270,593 | $ | 301,454 | $ | 240,695 | |||||||||||
| Manufacturing | 8,903 | 32,159 | 23,284 | ||||||||||||||
| Plastics | 7,938 | 24,749 | 23,029 | ||||||||||||||
| Corporate | 634 | 288 | 126 | ||||||||||||||
| Total Capital Expenditures | $ | 288,068 | $ | 358,650 | $ | 287,134 | |||||||||||
The following provides the identifiable assets by segment and corporate assets as of December 31, 2025 and 2024:
| (in thousands) | 2025 | 2024 | |||||||||
| Identifiable Assets | |||||||||||
| Electric | $ | 3,006,695 | $ | 2,785,522 | |||||||
| Manufacturing | 243,737 | 254,445 | |||||||||
| Plastics | 185,936 | 186,043 | |||||||||
| Corporate | 527,911 | 426,072 | |||||||||
| Total Identifiable Assets | $ | 3,964,279 | $ | 3,652,082 | |||||||
Reconciliation to Consolidated Amounts
Certain costs are not allocated to our operating segments. Corporate operating costs include items such as corporate staff and overhead costs, the results of our captive insurance company and other items excluded from the measurement of operating segment performance. Corporate is not an operating segment, rather it is added to operating segment totals to reconcile to consolidated amounts.
Included below is a reconciliation of certain segment information and our unallocated corporate costs to consolidated amounts for the years ended December 31, 2025, 2024 and 2023:
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Depreciation and Amortization | |||||||||||||||||
| Electric | $ | 90,168 | $ | 82,136 | $ | 75,330 | |||||||||||
| Manufacturing | 21,282 | 20,393 | 18,495 | ||||||||||||||
| Plastics | 6,422 | 4,494 | 4,027 | ||||||||||||||
| Corporate | 235 | 98 | 102 | ||||||||||||||
| Total Depreciation and Amortization | 118,107 | 107,121 | 97,954 | ||||||||||||||
| Interest Expense | |||||||||||||||||
| Total Interest Expense of Reportable Segments | 46,824 | 41,322 | 36,761 | ||||||||||||||
| Corporate Interest Expense | 402 | 493 | 916 | ||||||||||||||
| Total Interest Expense | 47,226 | 41,815 | 37,677 | ||||||||||||||
| Income Tax Expense (Benefit) | |||||||||||||||||
| Total Income Tax Expense of Reportable Segments | 51,077 | 71,995 | 73,104 | ||||||||||||||
| Corporate Income Tax Benefit | (4,693) | (6,765) | (3,806) | ||||||||||||||
Total Income Tax Expense | 46,384 | 65,230 | 69,298 | ||||||||||||||
| Net Income (Loss) | |||||||||||||||||
| Total Net Income of Reportable Segments | 279,503 | 305,391 | 293,626 | ||||||||||||||
| Corporate Net Income (Loss) | (3,610) | (3,729) | 565 | ||||||||||||||
Total Net Income | $ | 275,893 | $ | 301,662 | $ | 294,191 | |||||||||||
Concentrations
Our Plastics segment businesses use PVC resin as a critical component within their PVC pipe manufacturing process. The domestic PVC resin industry is highly consolidated, with only four resin suppliers in the U.S. We rely on these four suppliers to source our PVC resin requirements. Additionally, most U.S. resin production plants are located in the Gulf Coast region. These plants are subject to the risk of damage and production shutdowns because of exposure to hurricanes or other extreme weather events that occur in this region. The loss of a key vendor, or any interruption or delay in the supply of PVC resin could cause production delays, a possible loss of sales or result in increased costs to secure resin, all of which would adversely affect our operating results.
For the year ended December 31, 2025, two customers combined to account for 16% of Electric segment operating revenues, three customers combined to account for 44% of Manufacturing segment operating revenues and two customers combined to account for 47% of Plastics segment operating revenues. However, no individual customer provided 10% or more of our consolidated operating revenues.
Entity-Wide Information
All of our long-lived assets are located within the United States and substantially all of our operating revenues are from customers located within the United States.
About Segments Disclosures
Segment disclosures break a company into its reportable operating units, revealing revenue, profit, and asset allocation that consolidated financial statements obscure. Under ASC 280, segments must match how the chief operating decision maker views the business, providing a window into internal management structure and resource allocation priorities.
Key signals: compare segment margins to identify which units drive profitability and which destroy value. Watch for changes in the number of reportable segments — segment aggregation or disaggregation often coincides with strategic shifts or attempts to obscure declining performance. Intersegment elimination patterns reveal internal pricing practices. The reconciliation between segment totals and consolidated figures exposes corporate overhead allocation and unallocated items. Geographic revenue concentration highlights regulatory and currency exposure. Compare segment-level capital expenditure against segment revenue to assess where management is investing for future growth versus harvesting existing assets.