Otter Tail Corp (Form: 10-K/A, Received: 02/23/2026 16:04:50)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

Amendment No. 1

(Mark One)

☒ Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended December 31, 2025 or

☐ Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number 0-53713

OTTER TAIL CORPORATION

(Exact name of registrant as specified in its charter)


Minnesota (State or other jurisdiction of incorporation or organization)			27-0383995 (I.R.S. Employer Identification No.)

215 South Cascade Street, P.O. Box 496, Fergus Falls, Minnesota (Address of principal executive offices)			56538-0496 (Zip Code)

Registrant's telephone number, including area code: 866-410-8780

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares, par value $5.00 per share	OTTR	The Nasdaq Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☑ No ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer ☑

Accelerated Filer ☐

Non-Accelerated Filer ☐

Smaller Reporting Company ☐

Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☑

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of June 30, 2025, the aggregate market value of common stock held by non-affiliates was $3,126,792,910.

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date: 41,953,525 Common Shares ($5 par value) as of February 12, 2026.

DOCUMENTS INCORPORATED BY REFERENCE

No documents are incorporated by reference into this Amendment No. 1 on Form 10-K/A. Certain information required by Part III of the Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission on February 18, 2026, has been incorporated by reference from the Proxy Statement for the 2026 Annual Meeting.

EXPLANATORY NOTE

This Amendment No. 1 on Form 10-K/A (this “Amendment”) amends Otter Tail Corporation’s Annual Report on Form 10-K for the year ended December 31, 2025, which was originally filed with the Securities and Exchange Commission on February 18, 2026 (the “Original Filing”). Otter Tail Corporation is filing this Amendment for the sole purpose of correcting the date of the Report of Independent Registered Public Accounting Firm with respect to the audited financial statements included in the Original Filing, from February 19, 2025 to February 18, 2026. Accordingly, Item 8 of Part II of the Original Filing is being amended and restated hereby solely to reflect the corrected report date. In addition, as required by Rule 12b-15 of the Securities Exchange Act of 1934, as amended, new certifications by our principal executive officer and principal financial officer are included herein as exhibits to this Amendment. Accordingly, Item 15 of Part IV of the Original Filing is being amended and restated hereby solely to reflect the filing of these new exhibits.

This Amendment does not make any other changes to the Original Filing and does not reflect events occurring after the Original Filing or modify or update any of the information contained therein in any way other than as expressly described in this Amendment.

PCAOB ID No. 34


ITEM 8.			FINANCIAL STATEMENTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of Otter Tail Corporation

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Otter Tail Corporation and subsidiaries (the "Company") as of December 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, shareholders' equity, and cash flows, for each of the three years in the period ended December 31, 2025, and the related notes and the schedules listed in the Index at Item 15 (collectively referred to as the "financial statements"). We also have audited the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

Basis for Opinions

The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report Regarding Internal Control Over Financial Reporting. Our responsibility is to express an opinion on these financial statements and an opinion on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we

are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Regulatory Matters—Impact of Rate Regulation on the Financial Statements—Refer to Notes 1 and 6 to the financial statements

Critical Audit Matter Description

The Company’s regulated Electric segment accounts for the financial effects of regulation in accordance with ASC 980, Regulated Operations. This guidance allows for the recording of a regulatory asset or liability for certain costs or credits which otherwise would be recognized in the statement of income or comprehensive income based on an expectation that the cost will be recovered or returned in future rates. This guidance also provides for adjustments to rates outside of a general rate case proceeding to encourage or incentivize investments in certain areas such as conservation, renewable energy, pollution reduction or control, improved infrastructure of the transmission grid or other programs that provide benefits to the general public under public policy, laws or regulations.

The Company is subject to regulation of rates and other matters by state and federal regulatory agencies (collectively, the “Commissions”), which have jurisdiction with respect to the rates of electric distribution companies in Minnesota, North Dakota and South Dakota. The Company assesses the probability of recovery of regulatory assets and the obligations arising from regulatory liabilities on a quarterly basis. Probability estimates incorporate numerous factors, including recent rate making decisions, historical precedents for similar matters, the regulatory environments in which the Company operates, and the impact that incurred costs may have on customers.

There is a risk that the Commissions will not approve full recovery of the costs of providing utility service or full recovery of all amounts invested in the utility business and a reasonable return on that investment. As a result, we identified the impact of rate regulation as a critical audit matter due to the significant judgments made by management to support its assertions about impacted account balances and disclosures and the high degree of subjectivity involved in assessing the impact of future regulatory orders on the financial statements. Management judgments include the recording of regulatory assets for certain costs which otherwise would be recognized in the statement of income or comprehensive income based on an expectation that the costs will be recovered in future rates and the recording of regulatory liabilities for certain credits which would otherwise be recognized in the statement of income or comprehensive income based on an expectation that the amount will be returned to customers in future rates. Given that management’s accounting judgements are based on assumptions about the outcome of future decisions by the Commissions, auditing these judgments required specialized knowledge of accounting for rate regulation and the rate setting process due to its inherent complexities.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the uncertainty of future decisions by the Commissions included the following, among others:

•We tested the effectiveness of management’s controls over the evaluation of the likelihood of (1) the recovery in future rates of costs incurred as regulatory assets, and (2) a refund or a future reduction in rates that should be reported as regulatory liabilities. We also tested the effectiveness of management’s controls over the initial recognition of amounts as regulatory assets or liabilities, the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates or of a future reduction in rates, and the related disclosures in the notes to the financial statements.

•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.

•We read relevant regulatory orders issued by the Commissions for the Company, regulatory statutes, interpretations, procedural memorandums, filings made by interveners, and other publicly available information to assess the likelihood of recovery in future rates or of a future reduction in rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances. We evaluated the external information and compared to management’s recorded regulatory asset and liability balances for completeness.

•We obtained an analysis from management regarding probability of recovery for regulatory assets or refund or future reduction in rates for regulatory liabilities not yet addressed in a regulatory order to assess management’s assertion that amounts are probable of recovery or a future reduction in rates.

/s/ Deloitte & Touche LLP

Minneapolis, Minnesota

February 18, 2026

We have served as the Company's auditor since 1944.

OTTER TAIL CORPORATION

CONSOLIDATED BALANCE SHEETS


	December 31,
(in thousands, except share data)	2025		2024

Assets
Current Assets
Cash and Cash Equivalents	$	386,193	$	294,651
Receivables, net of allowance for credit losses	145,496		145,964
Inventories	158,598		148,885
Investments	54,311		753
Regulatory Assets	20,437		9,962
Other Current Assets	34,690		29,826
Total Current Assets	799,725		630,041
Noncurrent Assets
Investments	78,823		121,177
Property, Plant and Equipment, net of accumulated depreciation	2,876,685		2,692,460
Regulatory Assets	86,062		98,673
Intangible Assets, net of accumulated amortization	4,642		5,743
Goodwill	37,572		37,572
Other Noncurrent Assets	80,770		66,416
Total Noncurrent Assets	3,164,554		3,022,041
Total Assets	$	3,964,279	$	3,652,082

Liabilities and Shareholders' Equity
Current Liabilities
Short-Term Debt	$	60,242	$	69,615
Current Maturities of Long-Term Debt	79,951		—
Accounts Payable	93,606		113,574
Accrued Salaries and Wages	35,666		34,398
Accrued Taxes	18,460		17,314
Regulatory Liabilities	16,600		29,307
Other Current Liabilities	46,433		45,582
Total Current Liabilities	350,958		309,790
Noncurrent Liabilities and Deferred Credits
Pension Benefit Liability	32,376		32,614
Other Postretirement Benefits Liability	31,813		27,385
Regulatory Liabilities	297,398		288,928
Deferred Income Taxes	305,931		267,745
Deferred Tax Credits	14,321		14,990
Other Noncurrent Liabilities	106,156		98,397
Total Noncurrent Liabilities and Deferred Credits	787,995		730,059
Commitments and Contingencies (Note 14)
Capitalization
Long-Term Debt	963,566		943,734
Shareholders' Equity
Common Stock: 50,000,000 shares authorized of $5 par value; 41,905,520 and 41,827,967 outstanding at December 31, 2025 and 2024	209,528		209,140
Additional Paid-In Capital	434,195		429,089
Retained Earnings	1,217,567		1,029,738
Accumulated Other Comprehensive Income	470		532
Total Shareholders' Equity	1,861,760		1,668,499
Total Capitalization	2,825,326		2,612,233
Total Liabilities and Shareholders' Equity	$	3,964,279	$	3,652,082

See accompanying notes to consolidated financial statements.

OTTER TAIL CORPORATION

CONSOLIDATED STATEMENTS OF INCOME


	Years Ended December 31,
(in thousands, except per-share amounts)	2025		2024		2023

Operating Revenues
Electric	$	566,756	$	524,515	$	528,359
Product Sales	737,302		806,033		820,807
Total Operating Revenues	1,304,058		1,330,548		1,349,166
Operating Expenses
Electric Production Fuel	75,048		60,945		60,339
Electric Purchased Power	78,658		61,561		78,292
Electric Operating and Maintenance Expenses	184,310		190,422		191,263
Cost of Products Sold (excluding depreciation)	402,664		434,522		454,122
Nonelectric Selling, General, and Administrative Expenses	82,566		80,065		72,663
Depreciation and Amortization	118,107		107,121		97,954
Electric Property Taxes	17,023		15,662		16,614
Total Operating Expenses	958,376		950,298		971,247
Operating Income	345,682		380,250		377,919
Other Income and (Expense)
Interest Expense	(47,226)		(41,815)		(37,677)
Nonservice Cost Components of Postretirement Benefits	3,334		9,609		10,597
Other Income (Expense), net	20,487		18,848		12,650
Income Before Income Taxes	322,277		366,892		363,489
Income Tax Expense	46,384		65,230		69,298
Net Income	$	275,893	$	301,662	$	294,191

Weighted-Average Common Shares Outstanding:
Basic	41,864		41,778		41,668
Diluted	42,117		42,072		42,039
Earnings Per Share:
Basic	$	6.59	$	7.22	$	7.06
Diluted	$	6.55	$	7.17	$	7.00

See accompanying notes to consolidated financial statements.

OTTER TAIL CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


	Years Ended December 31,
(in thousands)	2025		2024		2023

Net Income	$	275,893	$	301,662	$	294,191
Other Comprehensive Income (Loss):
Unrealized Gain on Available-for-Sale Securities, net of tax expense of $68, $128 and $51	241		386		192
Unrealized Gain (Loss) on Pension and Other Postretirement Benefit Plans, net of tax benefit (expense) of $107, $352 and $(14)	(303)		(1,002)		41
Total Other Comprehensive Income (Loss)	(62)		(616)		233
Total Comprehensive Income	$	275,831	$	301,046	$	294,424

See accompanying notes to consolidated financial statements.

OTTER TAIL CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY


(in thousands, except common stock outstanding)	Common Stock Outstanding	Par Value, Common Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total Shareholders' Equity

Balance, December 31, 2022	41,631,113	$	208,156	$	423,034	$	585,212	$	915	$	1,217,317

Employee Stock Purchase Plan Expenses	—	—		(339)		—		—		(339)
Stock Issued Under Share-Based Compensation Plans, Net of Shares Withheld for Employee Taxes	79,408	397		(3,485)		—		—		(3,088)
Stock Compensation Expense	—	—		7,753		—		—		7,753
Net Income	—	—		—		294,191		—		294,191
Other Comprehensive Income	—	—		—		—		233		233
Common Dividends ($1.75 per share)	—	—		—		(73,061)		—		(73,061)
Balance, December 31, 2023	41,710,521	$	208,553	$	426,963	$	806,342	$	1,148	$	1,443,006

Employee Stock Purchase Plan Expenses	—	—		(359)		—		—		(359)
Stock Issued Under Share-Based Compensation Plans, Net of Shares Withheld for Employee Taxes	117,446	587		(7,044)		—		—		(6,457)
Stock Compensation Expense	—	—		9,529		—		—		9,529
Net Income	—	—		—		301,662		—		301,662
Other Comprehensive Loss	—	—		—		—		(616)		(616)
Common Dividends ($1.87 per share)	—	—		—		(78,266)		—		(78,266)
Balance, December 31, 2024	41,827,967	$	209,140	$	429,089	$	1,029,738	$	532	$	1,668,499

Employee Stock Purchase Plan Expenses	—	—		(491)		—		—		(491)
Stock Issued Under Share-Based Compensation Plans, Net of Shares Withheld for Employee Taxes	77,553	388		(3,522)		—		—		(3,134)
Stock Compensation Expense	—	—		9,119		—		—		9,119
Net Income	—	—		—		275,893		—		275,893
Other Comprehensive Loss	—	—		—		—		(62)		(62)
Common Dividends ($2.10 per share)	—	—		—		(88,064)		—		(88,064)
Balance, December 31, 2025	41,905,520	$	209,528	$	434,195	$	1,217,567	$	470	$	1,861,760

See accompanying notes to consolidated financial statements.

OTTER TAIL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Years Ended December 31,
(in thousands)	2025		2024		2023

Operating Activities
Net Income	$	275,893	$	301,662	$	294,191
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation and Amortization	118,107		107,121		97,954
Deferred Tax Credits	(669)		(182)		(744)
Deferred Income Taxes	33,187		23,057		13,508

Investment Gains	(6,701)		(5,482)		(7,222)
Stock Compensation Expense	9,119		9,529		7,753
Other, net	(4,040)		(3,111)		(423)
Changes in Operating Assets and Liabilities:
Receivables	468		11,179		(12,750)
Inventories	(4,751)		3,691		(2,450)
Regulatory Assets	(10,779)		5,194		12,479
Other Assets	(3,721)		(11,640)		2,817
Accounts Payable	(24,120)		14,826		(9,988)
Accrued and Other Liabilities	7,257		(10,371)		6
Regulatory Liabilities	2,190		16,821		20,973
Pension and Other Postretirement Benefits	(5,455)		(9,563)		(11,605)
Net Cash Provided by Operating Activities	385,985		452,731		404,499
Investing Activities
Capital Expenditures	(288,068)		(358,650)		(287,134)
Proceeds from Disposal of Investments and Other Assets	6,925		8,849		6,225
Purchases of Investments and Other Assets	(9,581)		(61,573)		(8,378)
Net Cash Used in Investing Activities	(290,724)		(411,374)		(289,287)
Financing Activities
Net (Repayments) Borrowings on Short-Term Debt	(9,373)		(11,807)		73,218

Proceeds from Issuance of Long-Term Debt	100,000		120,000		—

Dividends Paid	(88,064)		(78,266)		(73,061)
Payments for Shares Withheld for Employee Tax Obligations	(3,134)		(6,457)		(3,088)
Other, net	(3,148)		(549)		(904)
Net Cash Provided by (Used in) Financing Activities	(3,719)		22,921		(3,835)
Net Change in Cash and Cash Equivalents	91,542		64,278		111,377
Cash and Cash Equivalents at Beginning of Period	294,651		230,373		118,996
Cash and Cash Equivalents at End of Period	$	386,193	$	294,651	$	230,373

Supplemental Disclosures of Cash Flow Information
Cash Paid During the Year for:
Interest, net of amount capitalized	$	45,701	$	39,484	$	36,956
Income Taxes	$	11,093	$	57,614	$	46,284
Supplemental Disclosure of Noncash Investing Activities
Accrued Property, Plant and Equipment Additions	$	26,129	$	20,281	$	13,001

See accompanying notes to consolidated financial statements

OTTER TAIL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies

Overview

Otter Tail Corporation (OTC) and its subsidiaries (collectively, the "Company," "us," "our" or "we") form a diverse, multi-platform business consisting of a vertically integrated, regulated utility with generation, transmission and distribution facilities complemented by manufacturing businesses providing metal fabrication for custom machine parts and metal components, manufacturing of extruded and thermoformed plastic products, and manufacturing of PVC pipe products. We classify our business into three segments: Electric, Manufacturing and Plastics. Note 2 includes an additional description of the segments and financial information regarding each segment.

Principles of Consolidation

These consolidated financial statements are presented in accordance with U.S. generally accepted accounting principles and include the accounts of OTC and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation except, as applicable, profits on sales to our regulated electric utility company from our nonregulated businesses, which is in accordance with the accounting requirements of regulated operations.

Use of Estimates

We use estimates based on the best information available in recording transactions and balances resulting from business operations. As better information becomes available or actual amounts are known, the recorded estimates are revised. Consequently, operating results can be affected by revisions to prior accounting estimates.

Reclassifications

Short-term investments in the amount of $0.8 million were previously included in other current assets on our consolidated balance sheets as of December 31, 2024. This amount has been reclassified to maintain consistency and comparability between the periods presented and is now presented separately on the consolidated balance sheets. The reclassification had no impact on previously reported current or total assets, current or total liabilities, or total shareholders' equity.

Regulatory Accounting

Our regulated electric utility company, Otter Tail Power Company (OTP), is subject to regulation of rates and other matters by state utility commissions in Minnesota, North Dakota and South Dakota and by the FERC for certain interstate operations. OTP accounts for the financial effects of regulation in accordance with accounting guidance for regulated operations. This guidance allows for the recording of a regulatory asset for certain costs which otherwise would be recognized in the statements of income or comprehensive income based on an expectation that the cost will be recovered in future rates. This guidance also requires the recording of a regulatory liability for certain credits which would otherwise be recognized in the statements of income or comprehensive income based on an expectation that the amount will be returned to customers in future rates. Amounts recorded as regulatory assets and regulatory liabilities are generally recognized in the statements of income at the time they are reflected in customer rates. In the event OTP ceases to meet the criteria to apply the guidance for regulated operations, the regulatory assets and liabilities that no longer meet such criteria would be removed from the consolidated balance sheets and included in the consolidated statements of income as an expense or income item, or in the consolidated statements of comprehensive income as a loss or gain item, in the period in which the application of this guidance ceases.

Cash Equivalents

We consider all highly liquid investments purchased with maturity dates of 90 days or less to be cash equivalents.

Concentration of Deposits

We hold deposits with financial institutions which potentially subject us to a concentration risk. These deposits are guaranteed by the Federal Deposit Insurance Corporation up to an insurance limit of $250,000. Currently, our cash deposits exceed federally insured levels.

Revenue from Contracts with Customers

Due to our diverse business operations, the recognition of revenue from contracts with customers depends on the product produced and sold or service performed. We recognize revenue from contracts with customers at prices that are fixed or determinable as evidenced by an agreement with the customer, when we have met our performance obligation under the contract and it is probable that we will collect the amount to which we are entitled in exchange for the goods or services transferred or to be transferred to the customer. Depending on the product produced and sold or service performed and the terms of the agreement with the customer, we recognize revenue either over time, in the case of delivery or transmission of electricity or related services or the production and storage of certain custom-made products, or at a point in time for the delivery of standardized products and other products made to

customer specifications where the terms of the contract require transfer of the completed product. Provisions for sales returns, early payment discounts and volume-based variable pricing incentives are recorded as reductions to revenue at the time revenue is recognized based on customer history, historical information and current trends. We include revenues received for shipping and handling in operating revenues. Expenses paid for shipping and handling are recorded as part of cost of products sold. Sales or other taxes collected from customers are excluded from operating revenues.

Electric Segment Revenues. Most Electric segment revenues are earned from the generation, transmission and sale of electricity to retail customers at rates approved by state regulatory commissions. OTP also earns revenue from the transmission of electricity for others over the transmission assets it owns separately or jointly with other transmission service providers, under rate tariffs established by the independent transmission system operator and approved by FERC. A third source of revenue for OTP comes from the generation and sale of electricity to wholesale customers at contract or market rates. Revenues from all these sources meet the criteria to be classified as revenue from contracts with customers and are recognized over time as energy is delivered or transmitted. Revenue is recognized based on the metered quantity of electricity delivered or transmitted at the applicable rates. For electricity delivered and consumed after a meter is read but not yet billed to a customer, OTP records revenue and an unbilled receivable based on estimates of the amount of energy delivered and a composite rate per kwh consumed.

Manufacturing Segment Revenues. Our Manufacturing segment businesses earn revenue predominantly from the production and delivery of custom-made or standardized parts and products to customers across several industries and from the production and sale of tools and dies to other manufacturers. For the production and delivery of standardized products and other products made to customer specifications where the terms of the contract require transfer of the completed product, we have met our performance obligation and recognize revenue at the point in time when the product is shipped. At this point we have no further obligation to provide services related to such products. The shipping terms used in these transactions are free on board (FOB) shipping point.

Plastics Segment Revenues. Our Plastics segment businesses earn revenue predominantly from the sale and delivery of standardized PVC pipe products produced at their manufacturing facilities. Revenue from the sale of these products is recognized at the point in time when the product is shipped as there is no further obligation to provide services related to such products and the shipping terms are FOB shipping point. We have one customer within our Plastics segment for which we produce and store a product made to the customer’s specifications and design under a build and hold agreement. For sales to this customer, we recognize revenue as the custom-made product is produced, adjusting the amount of revenue for volume rebate variable-pricing considerations we expect the customer will earn and applicable early payment discounts we expect the customer will take. Ownership of the pipe transfers to the customer prior to delivery and we are paid a negotiated fee for storage of the pipe. Revenue for storage of the pipe is recognized over time as the pipe is stored.

Alternative Revenue

In addition to recognizing revenue from contracts with customers, our Electric segment business also records revenue under alternative revenue program (ARP) requirements. Certain rate rider mechanisms qualify as ARP revenues as they provide for adjustments to rates outside of a general rate case proceeding to encourage or incentivize investments in certain areas such as conservation, renewable energy, pollution reduction or control, improved infrastructure of the transmission grid or other programs that provide benefits to the general public under public policy, laws or regulations. ARP riders generally provide for the recovery of specified costs and investments and include an incentive component to provide the regulated utility with a return on amounts invested.

We accrue ARP revenue on the basis of costs incurred, investments made and returns on those investments that qualify for recovery through established riders. ARP revenue is disclosed separately from revenue from contracts with customers and we have elected to report ARP revenue on a net basis, whereby amounts initially recorded as ARP revenue in a period are presented net of the reversal of amounts previously recognized as ARP revenue that are reclassified and recorded as revenue from contracts with customers when such amounts are included in the price of electricity to customers.

Receivables and Allowance for Credit Losses

We grant credit to our customers in the normal course of business with repayment terms generally ranging from 30 to 90 days after the invoice date. Late fees are assessed on certain receivables once they are 30 days past due. Unbilled receivables represent estimates of energy delivered to customers but not yet billed.

Receivables are stated at the billed or estimated unbilled amount less an allowance for estimated credit losses. An allowance for credit losses is established based on losses expected to occur over the contractual life of the receivable. We estimate an allowance for credit losses on our trade and unbilled receivables by evaluating historical aging and write-off history, adjusted for current and forecasted economic conditions, for groups of receivables that share similar economic characteristics. Other receivables are evaluated by reviewing individual accounts, considering aging, financial condition of the debtor, recent payment history and other relevant factors. Account balances are written off in the period they are deemed to be uncollectible.

Inventories

Inventories are valued at the lower of cost or net realizable value. Costs for fuel, material and supply inventories of our Electric segment are determined on an average-cost basis. Costs for raw material, work in process and finished goods inventories of our Manufacturing and Plastics segments are determined on a first-in, first-out (FIFO) basis.

Inventories consist of the following as of December 31, 2025 and 2024:


(in thousands)	2025		2024

Raw Material, Fuel and Supplies	$	90,720	$	82,903
Work in Process	25,381		22,637
Finished Goods	42,497		43,345
Total Inventories	$	158,598	$	148,885

Investments

We invest in and hold, through rabbi trusts, corporate-owned life insurance policies to provide future funding for obligations under our supplemental pension plan and a nonqualified deferred compensation plan. The policies are recorded at cash surrender value and there are no restrictions on our ability to surrender the policies. Changes in the cash surrender value are recognized in earnings.

We hold debt, mutual fund and money market fund investments either as investments within our captive insurance entity, to provide future funding for obligations under nonqualified deferred compensation plans or provide a return on our available cash and liquidity. These investments are recorded at fair value.

Debt securities are deemed to be available-for-sale securities. We evaluate these securities for impairment at each reporting date. If the fair value of a security declines below its amortized cost, management assesses whether the decline is attributable to credit-related factors. Credit-related impairments are recognized as an allowance for expected credit losses with a corresponding charge to earnings. Non-credit related unrealized losses are recorded in accumulated other comprehensive income.

Unrealized gains and losses on mutual and money market funds are recognized in earnings.

Property, Plant and Equipment

Electric plant is stated at original cost less accumulated depreciation. The cost of additions includes purchased assets, contracted work, direct labor and materials, allocable overheads and allowance for funds used during construction (AFUDC). The amount of interest capitalized to electric plant was $1.5 million in 2025, $1.9 million in 2024 and $1.9 million in 2023. Significant additions or improvements that extend an asset's useful life are capitalized, while repairs and maintenance costs are expensed as incurred.

Depreciation is recognized on a straight-line basis over the asset's estimated useful life. Estimated useful lives generally range from five years to 80 years depending on the asset type. For certain asset classes, we employ a group or composite method of depreciation in which certain assets are combined and depreciated over the average life of the combined asset group. Actuarial studies are periodically performed to assess the remaining useful lives and salvage values of our assets, with any changes in these estimates incorporated into depreciation on a prospective basis. Gains or losses on group or composite asset dispositions are recorded to accumulated depreciation and impact current and future depreciation rates.

Amounts recovered in rates for future removal costs are recorded as regulatory liabilities. Removal costs, when incurred, are charged against the regulatory liability.

Property, plant and equipment of our nonelectric operations are carried at historical cost less accumulated depreciation. Depreciation is recognized on a straight-line basis over the asset's estimated useful life. Estimated useful lives generally range from two years to 40 years depending on the asset type. The cost of additions includes purchased assets, contracted work, direct labor and materials, allocable overheads and capitalized interest, as applicable. No interest was capitalized in 2025, 2024 or 2023. Maintenance and repairs are expensed as incurred. Gains or losses on asset dispositions are included in the determination of operating income.

Jointly Owned Facilities

OTP is a joint owner in two coal-fired steam-powered electric generation plants: Big Stone Plant near Big Stone City, South Dakota and Coyote Station near Beulah, North Dakota. OTP is also a joint owner, with other regional utilities, in several major transmission lines. OTP's interest in each jointly owned facility is reflected in the consolidated balance sheets on a pro-rata basis and OTP's share of direct revenue and expenses are included in operating revenues and expenses in the consolidated statements of income. Each participant in the jointly owned facilities finances their own investments.

Goodwill and Other Intangible Assets

Goodwill is recognized and initially measured as any excess of the acquisition-date consideration transferred in a business combination over amounts recognized for the net identifiable assets acquired. Goodwill is not amortized, but is tested for impairment annually, or more frequently if an event occurs or circumstances change that would more likely than not result in an impairment of goodwill. Impairment testing is performed at the reporting unit level, which is defined as an operating segment or one level below an operating segment. We perform our impairment testing in the fourth quarter of each year and have identified three reporting units that carry a goodwill balance.

We perform a quantitative impairment assessment, electing to forgo the optional qualitative assessment. The quantitative assessment is a single-step test that identifies both the existence of impairment and the amount of impairment loss by comparing the estimated fair value of a reporting unit to its carrying value, with any excess carrying value over the fair value being recognized as an impairment loss.

Intangible assets with finite lives, which primarily consist of customer relationships, are carried at estimated fair value at the time of acquisition less accumulated amortization. The costs of the intangible assets are amortized over their estimated useful lives, which generally range from 15 to 20 years.

Cloud Computing Costs

We capitalize implementation costs incurred in cloud computing arrangements that are service contracts consistent with capitalized implementation costs incurred to develop or obtain internal-use software. Costs are amortized on a straight-line basis over the life of the associated contract. Capitalized implementation costs are amortized over periods up to ten years. Capitalized costs and related accumulated amortization are included in other noncurrent assets on the consolidated balance sheets. Below are the amounts of capitalized cost and related accumulated amortization as of December 31, 2025 and 2024:


(in thousands)	2025		2024

Cloud Computing Costs	$	20,203	$	15,741
Accumulated Amortization	(6,993)		(3,796)
Total Cloud Computing Costs, net	$	13,210	$	11,945

Amortization expense of capitalized implementation costs for each of the years ended December 31, 2025, 2024 and 2023 totaled $4.3 million, $3.0 million, and $1.3 million.

Leases

We recognize a right-of-use lease asset and a corresponding lease liability at the lease commencement date for all long-term leases. The length of our lease agreements varies from less than one year to approximately ten years. We have elected to not record lease assets and liabilities for leases with a lease term at commencement of 12 months or less; such leases are expensed on a straight-line basis over the lease term. Certain of our leases contain options to renew or extend the lease term at our discretion if certain conditions are met. If a lease contains an option to extend the lease term and there is reasonable certainty the option will be exercised, the option is considered in the lease term at inception, or at such time when an event occurs which triggers the remeasurement of the lease, as applicable. In the determination of the lease term for one of our leased manufacturing facilities, we have incorporated the future lease renewals which we believe are reasonably certain to be exercised in the associated right-of-use asset and liability values.

We have elected to not separate non-lease components (e.g., common area maintenance) from lease components on real estate leases, accordingly the recognized lease asset and lease liability incorporate in their measurement payments for non-lease components. Certain leases include variable lease payments as the amounts are subject to change over the lease term; such amounts are not incorporated into the measurement of the right-of-use lease asset or lease liability. We are unable to determine the interest rate implicit in our leases, thus we apply our incremental borrowing rate to capitalize the right-of-use asset and lease liability. We estimate our incremental borrowing rate by reference to market interest rates on long-term debt, incorporating considerations of the credit quality of the lessee and the term of lease.

Recoverability of Long-Lived Assets

We review our long-lived assets including, among other assets, property, plant and equipment, amortizing intangible assets and right-of-use lease assets whenever events or changes in circumstances indicate the carrying amount of the assets may not be recoverable. We determine potential impairment by comparing the carrying amount of the assets with the net cash flows expected to be provided by operating activities of the business or related assets. If the sum of the expected future net cash flows is less than the carrying amount of the assets, an impairment loss would be recognized. Such an impairment loss would be measured as the amount by which the carrying amount exceeds the fair value of the asset.

Pension Plans and Other Postretirement Benefits

We maintain pension and postretirement benefit plans for eligible employees. Recognizing the cost of providing benefits and measuring the projected benefit obligations of these plans requires management to make various assumptions and estimates. Certain unrecognized actuarial gains and losses and unrecognized prior service costs or credits are deferred as regulatory assets and liabilities, rather than recorded as other comprehensive income, based on regulatory recovery mechanisms.

We have elected to apply a minimum amortization method for determining the amount of amortization of net cumulative gains or losses to be included as a component of net periodic benefit cost for any annual period. Cumulative gains and losses recognized in accumulated other comprehensive income or as a deferred regulatory asset or liability that are in excess of 10% of the projected benefit obligation or, where applicable, the market value of pension plan assets are amortized over the expected remaining future service period of active plan participants. In periods in which the cumulative gains and losses do not exceed 10%, no amortization to net periodic benefit cost is recognized.

Asset Retirement Obligations

Legal obligations related to the future retirement of long-lived assets are recognized as asset retirement obligations (ARO). An ARO is recognized in the period in which the legal obligation is incurred and the amount of the obligation can be reasonably estimated, with an offsetting increase to the associated long-lived asset. AROs are initially recognized at fair value and increased with the passage of time (accretion). ARO estimates are revised periodically with any adjustments reflected in the ARO and associated long-lived asset.

Income Taxes

We use the asset and liability method to account for income taxes. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences of all temporary differences between the carrying amounts of assets and liabilities and their respective tax bases. Deferred taxes are recorded using the tax rates scheduled by tax law to be in effect in the periods when the temporary differences reverse. Deferred tax assets are reduced by a valuation allowance when it is more likely than not that a portion or all of the deferred tax assets will not be realized. The realizability of deferred tax assets is determined by taking into consideration forecasts of future taxable income, the reversal of other existing temporary differences, available net operating loss carryforwards and available tax planning strategies. Changes in valuation allowances are included in the provision for income taxes in the period of the changes.

We recognize the tax effects of all tax positions that are more-likely-than-not to be sustained on audit based solely on the technical merits of those positions as of the balance sheet date. Changes in the recognition or measurement of such positions are recognized in the provision for income taxes in the period of the changes. We classify interest and penalties on tax uncertainties as components of the provision for income taxes within the consolidated statements of income.

We have elected to account for transferable tax credits as a component of our income tax provision. We recognize the benefit of PTCs as a reduction of income tax expense in the period the credit is generated, which corresponds to the period the energy production occurs. We apply the deferral method of accounting for ITCs and state wind energy credits. Under this method, ITCs and state wind energy credits are amortized as a reduction to income tax expense over the estimated useful lives of the underlying property that gave rise to the credit.

Deferred Compensation Plans

The Company sponsors two nonqualified deferred compensation plans for the benefit of executive officers and other select employees. Each plan allows participants to defer a specified amount or percentage of base wages or incentive compensation into the plan, subject to certain limitations. The Company, at its discretion, may make employer contributions to either plan during any annual period. Participant and employer deferred amounts are segregated into one or more accounts chosen by the participant. Participants earn a return on deferred amounts based on notional investments in the segregated accounts. Participants can elect lump sum distributions or annual installments of deferred balances during the participant's employment or upon retirement. As of December 31, 2025 and 2024, our liability to participants under these deferred compensation plans was $35.0 million and $29.1 million. Company contributions to these plans were $1.0 million, $1.3 million and $1.2 million for the years ended December 31, 2025, 2024 and 2023. Expenses recognized due to changes in our payment obligations in connection with these plans amounted to $3.9 million, $3.3 million and $3.3 million for the years ended December 31, 2025, 2024 and 2023.

Stock-Based Compensation

Stock-based compensation awards are measured at the grant-date fair value of the award and compensation expense is recognized on a straight-line basis over the applicable service or performance period. The service period may be limited to the period until such time that a recipient is retirement eligible as determined under the award agreement. Awards granted to employees eligible for retirement on the date of grant are expensed in the period of grant. We recognize the effects of award forfeitures as they occur.

Fair Value Measurements

Fair value is defined as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. Three levels of inputs may be used to measure fair value:

Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reported date. The types of assets and liabilities included in Level 1 are highly liquid and actively traded instruments with quoted prices, such as equities listed on the New York Stock Exchange and commodity derivative contracts listed on the New York Mercantile Exchange.

Level 2 – Pricing inputs are other than quoted prices in active markets but are either directly or indirectly observable as of the reported date. The types of assets and liabilities included in Level 2 are typically either comparable to actively traded securities or contracts, such as treasury securities with pricing interpolated from recent trades of similar securities, or priced with models using highly observable inputs, such as commodity options priced using observable forward prices and volatilities.

Level 3 – Significant inputs to pricing have little or no observability as of the reporting date. The types of assets and liabilities included in Level 3 are those with inputs requiring significant management judgment or estimation and may include complex and subjective models and forecasts.

In instances where the determination of the fair value measurement is based on inputs from different levels within the hierarchy, the level in the hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety.

Related Parties

The Otter Tail Corporation Foundation and Otter Tail Power Company Foundation are independent not-for-profit charitable entities affiliated with the Company and are not included in OTC's consolidated financial statements. Contribution obligations to the two foundations totaling $4.5 million and $5.5 million were recognized as of December 31, 2025 and 2024. Cash contributions paid to the two foundations during the years ended December 31, 2025, 2024 and 2023 were $5.5 million, $5.5 million, and $4.3 million.

Variable Interest Entity

The co-owners of Coyote Station, including OTP, are party to a Lignite Sales Agreement (LSA) with Coyote Creek Mining Company, LLC (CCMC), a subsidiary of The North American Coal Corporation. The agreement provides for the purchase of lignite coal to meet the coal supply requirements of Coyote Station through December 2040. The price per ton paid by the Coyote Station owners under the LSA reflects the cost of production, along with an agreed-upon profit and capital charge. CCMC was formed for the purpose of mining coal to meet the coal fuel supply requirements of Coyote Station and, based on the terms of the LSA, is considered a variable interest entity (VIE) due to the transfer of all operating and economic risk to the Coyote Station owners, as the agreement is structured so that the price of the coal would cover all costs of operations as well as future reclamation costs. The Coyote Station owners are required to buy certain assets of CCMC at book value should they terminate the contract prior to the end of the contract term and are providing a guarantee of the value of the equity of CCMC because the Coyote Station owners are required to buy the membership interests of CCMC at the end of the contract term at equity value. Under current accounting standards, the primary beneficiary of a VIE is required to include the assets, liabilities, results of operations and cash flows of the VIE in its consolidated financial statements. No single owner of Coyote Station owns a majority interest in Coyote Station and none, individually, has the power to direct the activities that most significantly impact CCMC. Therefore, none of the owners individually, including OTP, is considered the primary beneficiary of the VIE and the Company is not required to include CCMC in its consolidated financial statements.

If the LSA terminates prior to the expiration of its term or the production period terminates prior to December 31, 2040 and the Coyote Station owners purchase all of the outstanding membership interests of CCMC, the owners will satisfy or, if permitted by CCMC’s applicable lenders, assume all of CCMC’s obligations owed to CCMC’s lenders under its loans and leases. The Coyote Station owners have limited rights to assign their rights and obligations under the LSA without the consent of CCMC’s lenders during any period in which CCMC’s obligations to its lenders remain outstanding. In the event the contract is terminated prior to the end of the term due to certain events, OTP’s maximum loss exposure, as a result of its involvement with CCMC, could be as high as $35 million, or OTP’s 35% share of CCMC’s unrecovered costs as of December 31, 2025.

Recently Adopted Accounting Pronouncements

Income Taxes. In December 2023, the FASB issued amended authoritative guidance codified in Accounting Standards Codification (ASC) 740, Income Taxes. The amended guidance requires additional disaggregated information in effective tax rate reconciliation disclosures and additional disaggregated information about income taxes paid. We adopted this updated standard for the year ended December 31, 2025, on a retrospective basis and applied the new disclosure requirements. Accordingly, prior periods in our effective tax rate reconciliation disclosures in Note 13 have been reclassified to conform to the current year presentation. The adoption of this updated standard resulted in additional and modified disclosures related to our income tax expenses and income taxes paid. The adoption of this updated standard did not have an impact on our consolidated financial position or operating results.

Recent Accounting Pronouncements

Disaggregated Income Statement Expenses. In November 2024, the FASB issued authoritative guidance codified in ASC 220, Income Statement—Reporting Comprehensive Income, which will require additional disclosure of certain costs and expenses within the notes to the financial statements. The new standard is effective for our annual periods beginning in 2027 and interim periods beginning in the first quarter of fiscal 2028 and can be applied on either a prospective or retrospective basis. Early adoption of the new standard is permitted. We anticipate adopting the updated standard in our Form 10-K for the year ending December 31, 2027.

Software Costs. In September 2025, the FASB issued amended authoritative guidance codified in ASC 350, Intangibles – Goodwill and Other. The amended guidance updates the cost capitalization threshold for internal-use software development costs by removing all references to software project development stages and providing new guidance on how to evaluate whether the probable-to-complete recognition threshold has been met. The updated standard is effective for our annual and interim periods beginning in 2028. Early adoption of the amended guidance is permitted. The amended guidance can be applied on a prospective, modified, or retrospective basis. We are currently evaluating the impact that the updated standard will have on our consolidated financial statements, but we do not anticipate it will have a material effect on our future financial position or operating results.

Government Grants. In December 2025, the FASB issued authoritative guidance codified in ASC 832, Government Grants, which adds guidance on the recognition, measurement and presentation of government grants. The new guidance is effective for our annual periods beginning in 2029, including interim periods within that fiscal year, and can be applied on a modified prospective, modified retrospective, or full retrospective basis. We are currently evaluating the impact of this guidance on our consolidated financial statements and related disclosures.

2. Segment Information

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

Corporate assets consist primarily of cash and cash equivalents, investments, fixed assets, and prepaid expenses.

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.

3. Revenue

Presented below are our operating revenues from external customers, in total and by amounts arising from contracts with customers and ARP arrangements, disaggregated by revenue source and segment for the years ended December 31, 2025, 2024 and 2023:


(in thousands)	2025		2024		2023

Operating Revenues
Electric Segment
Retail: Residential	$	140,784	$	133,408	$	135,570
Retail: Commercial and Industrial	335,138		311,968		312,551
Retail: Other	8,094		7,838		7,719
Total Retail	484,016		453,214		455,840
Transmission	54,656		53,517		52,555
Wholesale	21,121		11,077		12,459
Other	6,963		6,707		7,505
Total Electric Segment	566,756		524,515		528,359
Manufacturing Segment
Metal Parts	274,272		303,077		351,267
Plastic Products	33,458		32,210		41,395
Scrap Metal	6,817		7,305		10,119
Total Manufacturing Segment	314,547		342,592		402,781
Plastics Segment
PVC Pipe	422,755		463,441		418,026
Total Operating Revenue	1,304,058		1,330,548		1,349,166
Less: Noncontract Revenues Included Above
Electric Segment - ARP Revenues	4,418		575		(4,310)
Total Operating Revenues from Contracts with Customers	$	1,299,640	$	1,329,973	$	1,353,476

4. Receivables

Receivables as of December 31, 2025 and 2024 are as follows:


(in thousands)	2025		2024

Receivables
Trade	$	110,180	$	112,169
Other	12,094		13,799
Unbilled Receivables	24,868		21,916
Total Receivables	147,142		147,884
Less Allowance for Credit Losses	1,646		1,920
Total Receivables, net of allowance for credit losses	$	145,496	$	145,964

The following is a summary of activity in the allowance for credit losses for the years ended December 31, 2025 and 2024:


(in thousands)	2025		2024

Beginning Balance	$	1,920	$	2,522
Additions Charged to Expense	1,448		1,242
Reductions for Amounts Written Off, Net of Recoveries	(1,722)		(1,844)
Ending Balance	$	1,646	$	1,920

5. Investments

The following is a summary of our investments as of December 31, 2025 and 2024:


(in thousands)	2025		2024

Short-term Investments
Government Debt Securities	$	53,915	$	753
Corporate Debt Securities	396		—
Total Short-term Investments	54,311		753
Long-term Investments
Corporate-Owned Life Insurance Policies	49,258		47,895
Government Debt Securities	9,221		60,378
Corporate Debt Securities	924		1,628
Mutual Funds	16,727		10,653
Money Market Funds	2,666		596
Other Investments	27		27
Total Long-term Investments	78,823		121,177
Total Investments	$	133,134	$	121,930

As of December 31, 2025, our government and corporate debt securities had maturity dates ranging from June 2026 to July 2035.

During the years ended December 31, 2025, 2024 and 2023, our investment income, which consisted primarily of interest on our cash equivalent and debt security investments, and gains on our corporate-owned life insurance policy investments, totaled $22.2 million, $19.8 million, and $15.2 million, which is included in other income in our consolidated statements of income.

Debt Securities

The following table summarizes the amortized cost and fair value of debt securities available for sale and the corresponding amounts of gross unrealized gains and losses as of December 31, 2025 and 2024:


	December 31, 2025

(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)		Fair Value

Government Debt Securities	$	62,617	$	527	$	(8)	$	63,136
Corporate Debt Securities	1,309		12		(1)		1,320
Total Debt Securities	$	63,926	$	539	$	(9)	$	64,456

	December 31, 2024

(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)		Fair Value

Government Debt Securities	$	60,891	$	424	$	(184)	61,131
Corporate Debt Securities	1,629		9		(10)		1,628
Total Debt Securities	$	62,520	$	433	$	(194)	$	62,759

As of December 31, 2025 and 2024, no unrealized losses on debt securities were deemed to be credit-related.

The following table summarizes the fair value of debt securities available for sale by contractual maturity date as of December 31, 2025:


(in thousands)	2025

Within 1 year	$	54,311
After 1 year through 5 years	9,621
After 5 years through 10 years	524
Total Debt Securities	$	64,456

Equity Securities

The amount of net unrealized gains and losses during the years ended December 31, 2025 and 2024 on marketable equity securities still held as of December 31, 2025 and 2024 was not material.

6. Regulatory Matters

Regulatory Assets and Liabilities

The following presents our current and long-term regulatory assets and liabilities as of December 31, 2025 and 2024 and the period we expect to recover or refund such amounts:


	Period of	2025				2024
(in thousands)	Recovery/Refund	Current		Long-Term		Current		Long-Term

Regulatory Assets
Pension and Other Postretirement Benefit Plans1	See below	$	2,765	$	72,762	$	—	$	88,161
Alternative Revenue Program Riders2	Up to 2 years	7,834		1,036		4,257		195

Deferred Income Taxes	Asset lives	—		9,007		—		8,944
Fuel Clause Adjustments1	Up to 1 year	6,558		—		2,218		—
Derivative Instruments1	Up to 1 year	2,717		—		1,989		—
Other1	Various	563		3,257		1,498		1,373
Total Regulatory Assets		20,437		86,062		9,962		98,673
Regulatory Liabilities
Deferred Income Taxes	Asset lives	—		125,413		—		130,387
Plant Removal Obligations	Asset lives	—		130,686		—		126,263
Fuel Clause Adjustments	Up to 1 year	1,231		—		11,432		—
Alternative Revenue Program Riders	Up to 1 year	9,961		—		14,255		—
North Dakota PTC Refunds	Asset lives	—		29,169		—		20,099
Pension and Other Postretirement Benefit Plans	See below	3,174		9,187		2,547		10,758



Other	Various	2,234		2,943		1,073		1,421
Total Regulatory Liabilities		$	16,600	$	297,398	$	29,307	$	288,928

1Costs subject to recovery without a rate of return.
2Amount eligible for recovery includes an incentive or rate of return.

Pension and Other Postretirement Benefit Plans represent benefit costs and actuarial losses and gains subject to recovery or refund through rates as they are expensed or amortized. These unrecognized benefit costs and actuarial losses and gains are eligible for treatment as regulatory assets or liabilities based on their probable inclusion in future electric rates.

Alternative Revenue Program Riders regulatory assets and liabilities are revenues not yet collected from customers or amounts collected from customers that are subject to refund, respectively, primarily due to investments in qualifying transmission, conservation, renewable resource, environmental and other generation assets, and the impact of decoupling.

Deferred Income Taxes primarily represent the revaluation of accumulated deferred income taxes arising from the change in the federal income tax rate in 2017. This amount is being refunded to customers over the estimated lives of the property assets from which the deferred income taxes originated.

Fuel Clause Adjustments represent the under- or over-collection of fuel costs relative to the estimated cost of fuel included in customer rates, which will be collected from or returned to customers in future periods.

Derivative Instruments represent unrealized losses recognized on derivative instruments. On final settlement of such instruments, any realized losses are recovered from customers.

Plant Removal Obligations represent amounts collected from customers to be used to cover actual removal costs as incurred.

North Dakota PTC Refunds represent PTCs earned from our wind energy facilities. These amounts are being allocated to customers over the lives of the assets generating the credits.

Other regulatory assets and liabilities include other amounts that we expect to recover from or return to customers in future periods, such as the cost of abandoned projects, costs incurred in connection with recent rate cases and other items.

North Dakota Rate Case

On December 30, 2024, the NDPSC approved a settlement agreement between OTP and certain interested parties in their general rate case and issued its written order on final rates. The key provisions of the order include a revenue requirement of $225.6 million, based on a return on rate base of 7.53%, and an allowed ROE of 10.10% on an equity ratio of 53.50%. The net annual revenue

requirement includes a net increase of $13.1 million or 6.18%. Through the settlement of the case, the parties also agreed to establish an earnings-sharing mechanism, whereby 70% of actual earnings in excess of a 10.20% ROE would be returned to customers, with OTP retaining the remaining 30%. New base rates in North Dakota went into effect on March 15, 2025.

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% and an allowed ROE of 10.80% on an equity ratio of 53.54% of total capital. Through this proceeding, OTP has proposed changes to the mechanism of certain cost and investment recovery, with recovery moving from riders into base rates. Interim rates went into effect on December 1, 2025 and are subject to potential refund until the finalization of the rate case.

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.

7. Property, Plant and Equipment

Major classes of property, plant and equipment as of December 31, 2025 and 2024 include:


(in thousands)	2025		2024

Electric Plant in Service
Production	$	1,564,397	$	1,469,008
Transmission	849,780		820,415
Distribution	828,008		726,159
General	128,492		165,361
Electric Plant in Service	3,370,677		3,180,943
Construction Work in Progress	233,978		231,890
Total Gross Electric Plant	3,604,655		3,412,833
Less Accumulated Depreciation	899,401		899,049
Net Electric Plant	2,705,254		2,513,784
Nonelectric Property, Plant and Equipment
Equipment	276,966		260,307
Buildings and Leasehold Improvements	114,377		88,680
Land	13,579		13,578
Nonelectric Property, Plant and Equipment	404,922		362,565
Construction Work in Progress	12,389		40,536
Total Gross Nonelectric Property, Plant and Equipment	417,311		403,101
Less Accumulated Depreciation	245,880		224,425
Net Nonelectric Property, Plant and Equipment	171,431		178,676
Net Property, Plant and Equipment	$	2,876,685	$	2,692,460

Depreciation expense for the years ended December 31, 2025, 2024 and 2023 totaled $116.0 million, $99.4 million and $90.8 million.

The following table provides OTP’s ownership percentages and amounts included in the December 31, 2025 and 2024 consolidated balance sheets for OTP’s share of each of these jointly owned facilities:


(dollars in thousands)	Ownership Percentage		Electric Plant in Service		Construction Work in Progress		Accumulated Depreciation		Net Plant

December 31, 2025
Big Stone Plant	53.9	%	$	344,723	$	4,792	$	(143,920)	$	205,595
Coyote Station	35.0	%	188,074		3,579		(121,134)		70,519
Big Stone South–Ellendale 345 kV line	50.0	%	106,185		—		(9,862)		96,323
Fargo–Monticello 345 kV line	14.2	%	78,208		248		(13,160)		65,296
Big Stone South–Brookings 345 kV line	50.0	%	53,167		—		(6,462)		46,705
Brookings–Southeast Twin Cities 345 kV line	4.8	%	31,270		2		(4,277)		26,995
Bemidji–Grand Rapids 230 kV line	14.8	%	16,331		—		(3,837)		12,494
Jamestown– Ellendale 345 kV line	50.0	%	—		11,951		—		11,951
Alexandria–Big Oaks 345 kV line	15.8	%	—		6,754		—		6,754
Big Stone South–Alexandria 345 kV line	40.0	%	—		4,004		—		4,004
Oslo - Lake Ardoch 115 kV line	72.0	%	2,693		—		(21)		2,672
Bison to Alexandria 345 kV	14.2	%	—		14		—		14
Total			$	820,651	$	31,344	$	(302,673)	$	549,322
December 31, 2024
Big Stone Plant	53.9	%	$	345,990	$	459	$	(135,065)	$	211,384
Coyote Station	35.0	%	188,066		813		(118,268)		70,611
Big Stone South–Ellendale 345 kV line	50.0	%	106,185		—		(8,445)		97,740
Fargo–Monticello 345 kV line	14.2	%	78,184		—		(12,247)		65,937
Big Stone South–Brookings 345 kV line	50.0	%	53,167		—		(5,822)		47,345
Brookings–Southeast Twin Cities 345 kV line	4.8	%	28,013		1,131		(3,941)		25,203
Bemidji–Grand Rapids 230 kV line	14.8	%	16,331		—		(3,693)		12,638
Jamestown–Ellendale 345 kV line	50.0	%	—		5,509		—		5,509
Alexandria–Big Oaks 345 kV line	14.2	%	—		417		—		417
Big Stone South–Alexandria 345 kV line	40.0	%	—		2,418		—		2,418
Oslo - Lake Ardoch 115 kV line	72.0	%	—		2,646		—		2,646
Total			$	815,936	$	13,393	$	(287,481)	$	541,848

8. Intangible Assets

The following table summarizes our goodwill by segment as of December 31, 2025 and 2024:


(in thousands)	2025		2024

Manufacturing	$	18,270	$	18,270
Plastics	19,302		19,302
Total Goodwill	$	37,572	$	37,572

Our annual goodwill impairment testing, performed in the fourth quarter of 2025 and 2024, indicated no impairment existed as of the test date.

The following table summarizes the components of our intangible assets as of December 31, 2025 and 2024:


(in thousands)	Gross Amount		Accumulated Amortization		Net Carrying Amount

December 31, 2025
Customer Relationships	$	22,491	$	17,865	$	4,626
Other	26		10		16
Total Intangible Assets	$	22,517	$	17,875	$	4,642
December 31, 2024
Customer Relationships	$	22,491	$	16,766	$	5,725
Other	26		8		18
Total Intangible Assets	$	22,517	$	16,774	$	5,743

Amortization expense for these intangible assets for each of the years ended December 31, 2025, 2024 and 2023 was $1.1 million each year.

Annual amortization expense for these intangible assets for the next five years is:


(in thousands)	2026		2027		2028		2029		2030

Amortization Expense	$	1,092	$	1,090	$	554	$	285	$	285

9. Leases

We lease rail cars, warehouse and office space, land, and certain office, manufacturing, material handling and other equipment under varying terms and conditions. All leases are classified as operating leases.

The components of lease cost and lease cash flows for the years ended December 31, 2025, 2024, and 2023 are as follows:


(in thousands)	2025		2024		2023

Lease Cost
Operating Lease Cost	$	6,722	$	6,688	$	6,309
Variable Lease Cost	1,315		1,460		1,433
Short-Term Lease Cost	2,532		2,746		2,525
Total Lease Cost	$	10,569	$	10,894	$	10,267

Lease Cash Flows
Operating Cash Flows from Operating Leases	$	6,499	$	6,762	$	6,424

A summary of operating lease right-of-use lease assets and lease liabilities as of December 31, 2025 and 2024 is as follows:


(in thousands)	2025		2024

Right of Use Lease Assets1	$	26,612	$	28,179
Lease Liabilities
Current2	5,042		4,776
Long-Term3	21,849		23,567
Total Lease Liabilities	$	26,891	$	28,343

1Included in Other Noncurrent Assets in the consolidated balance sheets.
2Included in Other Current Liabilities in the consolidated balance sheets.
3Included in Other Noncurrent Liabilities in the consolidated balance sheets.

Operating lease assets obtained in exchange for new operating lease liabilities amounted to $3.6 million and $17.6 million for the years ended December 31, 2025 and 2024.

Maturities of lease liabilities as of December 31, 2025 for each of the next five years and in the aggregate thereafter are as follows:


(in thousands)	Operating Leases

2026	$	6,557
2027	5,732
2028	4,479
2029	3,248
2030	2,579
Thereafter	10,877
Total Lease Payments	33,472
Less: Interest	6,581
Present Value of Lease Liabilities	$	26,891

The weighted-average remaining lease term and the weighted-average discount rate as of December 31, 2025 and 2024 are as follows:


	2025		2024

Weighted-Average Remaining Lease Term (in years)	7.2		7.9
Weighted-Average Discount Rate	6.47	%	6.37	%

10. Short-Term and Long-Term Borrowings

The following is a summary of our outstanding short- and long-term borrowings by borrower, OTC or OTP, as of December 31, 2025 and 2024:


	2025						2024
(in thousands)	OTC		OTP		Total		OTC		OTP		Total

Short-Term Debt	$	—	$	60,242	$	60,242	$	—	$	69,615	$	69,615
Current Maturities of Long-Term Debt	79,951		—		79,951		—		—		—
Long-Term Debt	—		963,566		963,566		79,900		863,834		943,734
Total Debt	$	79,951	$	1,023,808	$	1,103,759	$	79,900	$	933,449	$	1,013,349

Short-Term Debt

The following is a summary of our lines of credit as of December 31, 2025 and 2024:


			2025						2024
(in thousands)	Line Limit		Amount Outstanding		Letters of Credit		Amount Available		Amount Available

OTC Credit Agreement	$	170,000	$	—	$	—	$	170,000	$	170,000
OTP Credit Agreement	220,000		60,242		10,461		149,297		141,613
Total	$	390,000	$	60,242	$	10,461	$	319,297	$	311,613

OTC and OTP are each party to separate credit agreements (the OTC Credit Agreement and OTP Credit Agreement, respectively). The OTC Credit Agreement provides for a $170.0 million unsecured revolving line of credit, and the OTP Credit Agreement provides for a $220.0 million unsecured revolving line of credit. Both credit facilities are to support operations, fund capital expenditures, refinance certain indebtedness and provide for the issuance of letters of credit in an aggregate amount not to exceed $40.0 million under the OTC Credit Agreement and $50.0 million under the OTP Credit Agreement. Each credit facility includes an accordion provision allowing the borrower to increase the borrowing capacity under the facility, subject to certain conditions, up to $290.0 million and $300.0 million under the OTC Credit Agreement and OTP Credit Agreement, respectively.

Borrowings under each credit facility are subject to a variable rate of interest on outstanding balances and a commitment fee is charged based on the average unused amount available to be drawn under the respective facility. The variable rate of interest to be charged is based on a benchmark interest rate, either SOFR or a Base Rate, as defined in the credit agreements, selected by the borrower at the time of an advance, subject to the conditions of each agreement, plus an applicable credit spread. The credit spread ranges from zero to 2.00%, depending on the benchmark interest rate selected, and is subject to adjustment based on the credit

ratings of the relevant borrower. The weighted-average interest rate on all outstanding borrowings as of December 31, 2025 and 2024 was 5.08% and 5.61%.

Each credit facility contains a number of restrictions on the borrower, including restrictions on the ability to merge, sell assets, make investments, create or incur liens on assets, guarantee the obligations of any other party and engage in transactions with related parties. The agreements also require the borrower to maintain various financial covenants, as further described below. Each credit facility includes a cross-default provision whereby an event of default of other outstanding indebtedness will trigger an event of default under the agreement.

The terms of each credit facility include a provision for the borrower to request, and the lenders to grant an extension of the maturity date of the facility by one year, subject to certain terms and conditions. In 2025, a one-year extension was granted, and the current maturity date of each facility is December 11, 2030.

Long-Term Debt

The following is a summary of outstanding long-term debt by borrower as of December 31, 2025 and 2024:


					(in thousands)
Entity		Debt Instrument	Rate	Maturity	2025		2024

OTC		Guaranteed Senior Notes	3.55%	12/15/26	$	80,000	$	80,000
OTP		Series 2007C Senior Unsecured Notes	6.37%	08/02/27	42,000		42,000
OTP		Series 2013A Senior Unsecured Notes	4.68%	02/27/29	60,000		60,000
OTP		Series 2019A Senior Unsecured Notes	3.07%	10/10/29	10,000		10,000
OTP		Series 2020A Senior Unsecured Notes	3.22%	02/25/30	10,000		10,000
OTP		Series 2020B Senior Unsecured Notes	3.22%	08/20/30	40,000		40,000
OTP		Series 2021A Senior Unsecured Notes	2.74%	11/29/31	40,000		40,000
OTP		Series 2024A Senior Unsecured Notes	5.48%	04/01/34	60,000		60,000
OTP		Series 2025A Senior Unsecured Notes	5.49%	03/27/35	50,000		—
OTP		Series 2007D Senior Unsecured Notes	6.47%	08/20/37	50,000		50,000
OTP		Series 2019B Senior Unsecured Notes	3.52%	10/10/39	26,000		26,000
OTP		Series 2020C Senior Unsecured Notes	3.62%	02/25/40	10,000		10,000
OTP		Series 2013B Senior Unsecured Notes	5.47%	02/27/44	90,000		90,000
OTP		Series 2018A Senior Unsecured Notes	4.07%	02/07/48	100,000		100,000
OTP		Series 2019C Senior Unsecured Notes	3.82%	10/10/49	64,000		64,000
OTP		Series 2020D Senior Unsecured Notes	3.92%	02/25/50	15,000		15,000
OTP		Series 2021B Senior Unsecured Notes	3.69%	11/29/51	100,000		100,000
OTP		Series 2022A Senior Unsecured Notes	3.77%	05/20/52	90,000		90,000
OTP		Series 2024B Senior Unsecured Notes	5.77%	04/01/54	60,000		60,000
OTP		Series 2025B Senior Unsecured Notes	5.98%	06/05/55	50,000		—
Total Long-Term Debt					1,047,000		947,000
Less:	Current Maturities Net of Unamortized Debt Issuance Costs				79,951		—
Less:	Unamortized Long-Term Debt Issuance Costs				3,483		3,266
Total Long-Term Debt Net of Unamortized Debt Issuance Costs					$	963,566	$	943,734

On March 27, 2025, OTP entered into a Note Purchase Agreement pursuant to which OTP issued, in a private placement transaction, $100.0 million of senior unsecured notes consisting of (a) $50.0 million of 5.49% Series 2025A Senior Unsecured Notes due March 27, 2035, and (b) $50.0 million of 5.98% Series 2025B Senior Unsecured Notes due June 5, 2055. The Series 2025A Notes were issued on March 27, 2025, upon entering into the agreement. The Series 2025B Notes were issued on June 5, 2025.

Per the terms of the agreement, OTP may prepay all or any part of the notes (in an amount not less than 10% of the aggregate principal amount of the notes then outstanding in the case of a partial prepayment) at 100% of the principal amount so prepaid, together with unpaid accrued interest and a make-whole amount, as defined in the agreement; provided that no default or event of default exists under the agreement. Any prepayment of the Series 2025A Notes then outstanding on or after December 27, 2034, or the Series 2025B Notes then outstanding on or after December 5, 2054, will be made without any make-whole amount. Consistent with other of our borrowings, the agreement contains a number of restrictions on the business of OTP, including restrictions on OTP’s ability to merge, sell substantially all assets, create or incur liens on assets, guarantee the obligations of any other party, and engage in certain transactions with affiliates.

Our guaranteed and unsecured notes require the borrower to maintain various financial covenants, as further described below. These notes provide for prepayment options allowing for a full or partial prepayment at 100% of the principal amount so prepaid, together with unpaid accrued interest and a make-whole amount, as defined. These notes also include restrictions on the borrower, including its ability to merge, sell assets, create or incur liens on assets, guarantee the obligations of any other party and engage in transactions with related parties. The notes include a cross-default provision whereby an event of default of other outstanding indebtedness will trigger an event of default under the note.

Aggregate maturities of long-term debt obligations on December 31, 2025 for each of the next five years are as follows:


(in thousands)	2026		2027		2028		2029		2030

Debt Maturities	$	80,000	$	42,000	$	—	$	70,000	$	50,000

Financial Covenants

Certain of OTC's and OTP's short-term and long-term debt agreements require the borrower, whether OTC or OTP, to maintain certain financial covenants, including a maximum debt to total capitalization of either 0.60 to 1.00 or 0.65 to 1.00, depending on the debt agreement, a minimum interest and dividend coverage ratio of 1.50 to 1.00, and a maximum level of priority indebtedness. As of December 31, 2025, OTC and OTP were in compliance with these financial covenants.

Guaranties

OTC's obligations under the terms of its Guaranteed Senior Notes are unconditionally and irrevocably guaranteed by its subsidiaries, Varistar Corporation, BTD Manufacturing, Inc., Northern Pipe Products, Inc. and Vinyltech Corporation.

11. Employee Postretirement Benefits

Pension Plan and Other Postretirement Benefits

The Company sponsors a noncontributory funded pension plan (the Pension Plan), an unfunded, nonqualified Executive Survivor and Supplemental Retirement Plan (ESSRP), both accounted for as defined benefit pension plans, and a postretirement healthcare plan accounted for as an other postretirement benefit plan.

The Pension Plan, which previously covered substantially all corporate and OTP employees, was closed to new employees in 2013. The plan provides retirement compensation to all covered employees at age 65, with reduced compensation in cases of retirement prior to age 62. Participants are fully vested after completing five years of vesting service. The plan assets consist of equity funds, fixed income funds, cash and cash equivalents and alternative investments. None of the plan assets are invested in common stock or debt securities of the Company.

The ESSRP, an unfunded plan, provides for defined benefit payments to executive officers and certain key management employees on their retirement for life, or to their beneficiaries on their death. The ESSRP was amended and restated in 2019 to i) freeze the participation in the restoration retirement benefit component of the plan and ii) freeze benefit accruals under the restoration retirement benefit component of the plan for all participants of the plan except any participants deemed to be grandfathered participants.

The postretirement healthcare plan, closed to new participants in 2010, provides a portion of health insurance benefits for retired and covered corporate and OTP employees. To be eligible for retiree health insurance benefits, the employee must be 55 years of age with a minimum of 10 years of service. The plan is an unfunded plan and accordingly holds no plan assets.

Pension Plan Assets. We have established an investment committee, comprised of members of management of the Company, to develop and monitor our investment strategy for our Pension Plan assets. Our investment strategy includes the following objectives:

•The assets of the plan will be invested in accordance with all applicable laws in a manner consistent with fiduciary standards including Employee Retirement Income Security Act standards of 1974 (ERISA) (if applicable). Specifically:

◦The safeguards and diversity that a prudent investor would adhere to must be present in the investment program.

◦All transactions undertaken on behalf of the Pension Plan must be in the best interest of plan participants and their beneficiaries.

•The primary objective is to provide a source of retirement income for its participants and beneficiaries.

•The near-term primary financial objective is to improve and protect the funded status of the plan.

•A secondary financial objective is to minimize pension funding and expense volatility where possible.

We have developed an asset allocation target, measured at investment market value, to provide guideline percentages of investment mix. This investment mix is intended to achieve the financial objectives of the plan. The permitted range is a guide and

will at times not reflect the actual asset allocation due to market conditions, actions of our investment managers and required cash flows to and from the Pension Plan.

The following table presents our target asset allocation permitted range along with the actual asset allocation as of December 31, 2025 and 2024:


	Permitted			Actual Allocation
Asset Class	Range			2025		2024

Return Enhancement	35	–	60%	40	%	41	%
Risk Management	40	–	80%	60		59
Alternatives	0	–	20%	—		—
Total				100	%	100	%

Return Enhancement investments are those that seek to provide equity-like, long-term capital appreciation. Examples include equity securities, including dynamic asset allocation funds, and higher yielding fixed income securities, such as high yield bonds and emerging market debt.

Risk Management investments seek to decrease downside risk or act as a hedge against plan liabilities. Examples are cash and fixed income instruments.

Alternative investments seek to either provide return enhancement through long-term appreciation or risk management through decreased downside risk. The defining characteristics of these asset types are uncorrelated sources of returns, less liquidity and private market access. Examples include investments in the SEI Energy Debt Collective Fund.

The following presents the fair value inputs classified within the fair value hierarchy used to measure Pension Plan assets at December 31, 2025 and 2024 and assets measured using the net asset value (NAV) practical expedient:


(in thousands)	Level 1		Level 2		Level 3		NAV		Total

December 31, 2025

Equity Funds	$	119,208	$	—	$	—	$	—	$	119,208
Fixed Income Funds	190,747		—		—		—		190,747
Hybrid Funds	10,181		—		—		—		10,181
U.S. Treasury Securities	21,138		—		—		—		21,138
SEI Energy Debt Collective Fund	—		—		—		903		903
Total	$	341,274	$	—	$	—	$	903	$	342,177
December 31, 2024

Equity Funds	$	116,889	$	—	$	—	$	—	$	116,889
Fixed Income Funds	175,310		—		—		—		175,310
Hybrid Funds	10,106		—		—		—		10,106
U.S. Treasury Securities	23,909		—		—		—		23,909
SEI Energy Debt Collective Fund	—		—		—		1,061		1,061
Total	$	326,214	$	—	$	—	$	1,061	$	327,275

The investments held by the SEI Energy Debt Collective Fund on December 31, 2025 and 2024 consist mainly of below investment grade high yield bonds and loans of U.S. energy companies.

Funded Status. The following table provides a reconciliation of the changes in the fair value of plan assets and the actuarially computed benefit obligation for the years ended December 31, 2025 and 2024 and the funded status of the plans as of December 31, 2025 and 2024:


	Pension Benefits (Pension Plan)				Pension Benefits (ESSRP)				Postretirement Benefits
(in thousands)	2025		2024		2025		2024		2025		2024

Change in Fair Value of Plan Assets:
Fair Value of Plan Assets at January 1	$	327,275	$	330,479	$	—	$	—	$	—	$	—
Actual Return on Plan Assets	33,614		14,976		—		—		—		—
Company Contributions	—		—		2,689		2,694		2,874		1,568
Benefit Payments	(18,712)		(18,180)		(2,689)		(2,694)		(4,741)		(3,734)
Participant Premium Payments	—		—		—		—		1,867		2,166
Fair Value of Plan Assets at December 31	$	342,177	$	327,275	$	—	$	—	$	—	$	—
Change in Benefit Obligation:
Benefit Obligation at January 1	$	314,010	$	318,801	$	35,314	$	35,780	$	30,003	$	30,145
Service Cost	3,502		3,886		—		—		490		490
Interest Cost	17,303		17,189		1,893		1,897		1,610		1,600

Benefit Payments	(18,712)		(18,180)		(2,690)		(2,694)		(4,741)		(3,734)
Participant Premium Payments	—		—		—		—		1,867		2,166

Actuarial (Gain) Loss	(3,782)		(7,686)		550		331		5,809		(664)
Benefit Obligation at December 31	312,321		314,010		35,067		35,314		35,038		30,003
Funded Status	$	29,856	$	13,265	$	(35,067)	$	(35,314)	$	(35,038)	$	(30,003)

Amounts Recognized in Consolidated Balance Sheets at December 31:
Noncurrent Assets	$	29,856	$	13,265	$	—	$	—	$	—	$	—
Current Liabilities	—		—		(2,691)		(2,700)		(3,225)		(2,618)
Noncurrent Liabilities	—		—		(32,376)		(32,614)		(31,813)		(27,385)
Net Asset (Liability)	$	29,856	$	13,265	$	(35,067)	$	(35,314)	$	(35,038)	$	(30,003)

The accumulated benefit obligation of our Pension Plan was $289.5 million and $288.5 million as of December 31, 2025 and 2024. The accumulated benefit obligation of our ESSRP was $35.1 million and $35.3 million as of December 31, 2025 and 2024.

The following assumptions were used to determine benefit obligations as of December 31, 2025 and 2024:


	Pension Benefits (Pension Plan)				Pension Benefits (ESSRP)				Postretirement Benefits
	2025		2024		2025		2024		2025		2024

Discount Rate	5.71	%	5.70	%	5.46	%	5.60	%	5.47	%	5.61	%
Long-Term Rate of Compensation Increase					3.00	%	3.00	%	n/a		n/a
Participants up to Age 39(1)	4.50	%	4.50	%
Participants Ages 40 to 49(2)	4.50	%	4.50	%
Participants Age 50 and Older(3)	3.75	%	3.75	%
Healthcare Cost Immediate Trend Rate	n/a		n/a		n/a		n/a		9.00	%	6.44	%
Healthcare Cost Ultimate Trend Rate	n/a		n/a		n/a		n/a		4.00	%	4.00	%
Year the Rate Reaches the Ultimate Trend Rate	n/a		n/a		n/a		n/a		2051		2048

(1) Amount reflects rate of compensation increases for both union and non-union employees.
(2) Amount reflects rate of compensation increases for union employees. The rate of compensation increases for non-union employees is 3.50%.
(3) Amount reflects rate of compensation increases for union employees. The rate of compensation increases for non-union employees is 3.00%.

The measurement of the plan asset or benefit obligation recognized for our Pension Plan, ESSRP and postretirement healthcare benefit plan included the following significant actuarial adjustments:

•For the Pension Plan, an increase in the discount rate in 2025 and 2024 reduced our obligation by $0.4 million and $4.7 million. Changes in plan participant census data decreased our benefit obligation by $3.1 million in 2025. Actual

returns on Pension Plan assets in 2025 were $33.6 million, compared to an expected return of $24.8 million, impacting our net obligation by $8.8 million.

•For the ESSRP, a decrease in the discount rate in 2025 increased our obligation by $0.5 million, and an increase in the discount rate in 2024 reduced our obligation by $0.2 million.

•For the postretirement healthcare plan, a decrease in the discount rate in 2025 increased our benefit obligation by $0.4 million and an increase in our discount rate in 2024 reduced our obligation by $0.2 million. Revised estimates of healthcare cost trends, participant contribution assumptions, and other trend assumptions increased the benefit obligation by $4.5 million in 2025. Changes in plan participant census data increased our benefit obligation by $0.9 million in 2025.

Net Periodic Benefit Cost. A portion of service cost may be capitalized as a cost of self-constructed property, plant and equipment. When recognized in the consolidated statements of income, service cost is recognized within one of the components of operating expenses. Nonservice cost components of net periodic benefit cost may be deferred and recognized as a regulatory asset under the accounting guidance for regulated operations. When recognized in the consolidated statements of income, nonservice cost components are recognized as nonservice cost components of postretirement benefits.

The following table lists the components of net periodic benefit cost of our defined benefit pension plans and other postretirement benefits for the years ended December 31, 2025, 2024 and 2023:


	Pension Benefits (Pension Plan)						Pension Benefits (ESSRP)						Postretirement Benefits
(in thousands)	2025		2024		2023		2025		2024		2023		2025		2024		2023

Service Cost	$	3,502	$	3,886	$	3,698	$	—	$	—	$	72	$	490	$	490	$	565
Interest Cost	17,303		17,189		16,436		1,893		1,897		1,889		1,610		1,600		2,416
Expected Return on Assets	(24,764)		(25,518)		(25,914)		—		—		—		—		—		—
Amortization of Prior Service Cost	—		—		—		—		—		—		(3,795)		(6,302)		(6,649)
Amortization of Net Actuarial Loss	1,341		158		—		—		—		—		—		—		—
Net Periodic Benefit Cost	$	(2,618)	$	(4,285)	$	(5,780)	$	1,893	$	1,897	$	1,961	$	(1,695)	$	(4,212)	$	(3,668)

The following table includes the impact of regulation on the recognition of periodic benefit cost arising from pension and other postretirement benefits for the years ended December 31, 2025, 2024 and 2023:


(in thousands)	2025		2024		2023

Net Periodic Benefit Cost	$	(2,420)	$	(6,600)	$	(7,487)
Net Amount Amortized Due to the Effect of Regulation	3,078		1,367		1,225
Net Periodic Benefit Cost Recognized	$	658	$	(5,233)	$	(6,262)

The following assumptions were used to determine net periodic benefit cost for the years ended December 31, 2025, 2024 and 2023:


	Pension Benefits (Pension Plan)						Pension Benefits (ESSRP)						Postretirement Benefits
	2025		2024		2023		2025		2024		2023		2025		2024		2023

Discount Rate	5.70	%	5.57	%	5.51	%	5.60	%	5.53	%	5.51	%	5.61	%	5.53	%	5.52	%
Long-Term Rate of Return on Plan Assets	7.00	%	7.00	%	7.00	%	n/a		n/a		n/a		n/a		n/a		n/a
Long-Term Rate of Compensation Increase							3.00	%	3.00	%	3.00	%	n/a		n/a		n/a
Participants to Age 39	4.50	%	4.50	%	4.50	%
Participants Ages 40 to 49	4.00	%	4.00	%	3.50	%
Participants Age 50 and Older	3.38	%	3.38	%	2.75	%

We develop our estimated discount rate through the use of a hypothetical bond portfolio method. This method derives the discount rate from the average yield of a collection of high credit quality bonds which produce cash flows similar to our anticipated future benefit payments. We estimate the assumed long-term rate of return on plan assets based primarily on asset category studies using historical market return and volatility data with forward-looking estimates based on existing financial market conditions and forecasts of capital markets. Modest excess return expectations versus some market indices are incorporated into the return projections based on the actively managed structure of the investment programs and their records of achieving such returns historically.

The following table presents the amounts not yet recognized as components of net periodic benefit cost as of December 31, 2025 and 2024:


	Pension Benefits (Pension Plan)				Pension Benefits (ESSRP)				Postretirement Benefits
(in thousands)	2025		2024		2025		2024		2025		2024

Regulatory Assets (Liabilities):
Unrecognized Prior Service Cost	$	—	$	—	$	—	$	—	$	(9,007)	$	(12,703)
Unrecognized Actuarial Loss	74,332		87,868		293		292		6,735		1,121
Total	$	74,332	$	87,868	$	293	$	292	$	(2,272)	$	(11,582)
Accumulated Other Comprehensive Income (Loss):
Unrecognized Prior Service Cost	$	—	$	—	$	—	$	—	$	240	$	339
Unrecognized Actuarial Gain (Loss)	2,374		1,937		(3,052)		(2,502)		537		732
Total	$	2,374	$	1,937	$	(3,052)	$	(2,502)	$	777	$	1,071

Cash Flows. We did not make any contributions to our Pension Plan in 2025, 2024 or 2023. As of December 31, 2025, we had no minimum funding requirements for our Pension Plan. Contributions to our ESSRP and postretirement healthcare plan are equal to the benefits paid to plan participants.

The following reflects anticipated benefit payments to be paid in each of the next five years and in the aggregate for the five-year period thereafter under our pension plans and postretirement healthcare plan:


(in thousands)	2026		2027		2028		2029		2030		2031-2035

Projected Pension Plan Benefit Payments	$	19,685	$	20,143	$	20,696	$	21,277	$	21,635	$	111,562
Projected ESSRP Benefit Payments	2,759		2,712		2,927		3,010		2,945		13,857
Projected Postretirement Benefit Payments	3,224		3,145		3,038		3,061		3,056		14,409
Total	$	25,668	$	26,000	$	26,661	$	27,348	$	27,636	$	139,828

401K Plan

We sponsor a 401K plan for the benefit of all corporate and subsidiary company employees. Contributions made to these plans totaled $9.7 million for 2025, $9.3 million for 2024 and $7.8 million for 2023.

12. Asset Retirement Obligations

We have recognized AROs related to our coal-fired generation plants, natural gas combustion turbines, solar facility and wind turbines. The cost of AROs includes items such as site restoration, closure or removal of ash pits and removal of certain structures, generators, asbestos and storage tanks. We have other legal obligations associated with the retirement of a variety of other long-lived tangible assets used in electric operations where the estimated settlement costs are individually and collectively immaterial. We have no assets legally restricted for the settlement of any AROs. As of December 31, 2025 and 2024, $0.1 million and $0.1 million respectively, was included in other current liabilities and $43.9 million and $42.1 million, respectively, was included in other noncurrent liabilities in the consolidated balance sheets related to AROs.

A reconciliation of the carrying amounts of AROs for the years ended December 31, 2025 and 2024 is as follows:


(in thousands)	2025		2024

Beginning Balance	$	42,163	$	36,477
New Obligations Recognized	—		2,991
Adjustments Due to Revisions in Cash Flow Estimates	—		1,098
Accrued Accretion	1,916		1,676
Settlements	(92)		(79)
Ending Balance	$	43,987	$	42,163

13. Income Taxes

Income before income taxes for the years ended December 31, 2025, 2024 and 2023 consists entirely of domestic earnings.

The provision for income taxes charged to income for the years ended December 31, 2025, 2024 and 2023 consisted of the following:


(in thousands)	2025		2024		2023

Current
Federal Income Taxes	$	9,107	$	36,238	$	41,253
State Income Taxes	4,702		6,533		15,126
Deferred
Federal Income Taxes	20,802		13,078		9,832
State Income Taxes	12,385		9,979		3,676
Tax Credits
North Dakota Wind Tax Credit Amortization, Net of Federal Tax	(586)		(586)		(586)
Investment Tax Credit Amortization	(26)		(12)		(3)
Total Income Tax Expense	$	46,384	$	65,230	$	69,298

The reconciliation of the statutory federal income tax rate to our effective tax rate for each of the years ended December 31, 2025, 2024 and 2023 is as follows:


	2025				2024				2023

Income Taxes at Federal Statutory Rate	$	67,678	21.0	%	$	77,047	21.0	%	$	76,332	21.0	%
Increases (Decreases) in Tax from:
State and Local Taxes on Income, Net of Federal Tax1	12,696		3.9		13,081		3.6		12,933		3.6
Tax Credits:
Energy Related Tax Credits	(29,773)		(9.2)		(20,118)		(5.5)		(17,397)		(4.8)
Other	(646)		(0.2)		(1,116)		(0.3)		(1,290)		(0.4)
Nontaxable or Nondeductible Items	(125)		—		276		0.1		(587)		(0.2)
Changes in Unrecognized Tax Benefits	(26)		—		(364)		(0.1)		566		0.2
Impact of Regulation	(3,420)		(1.1)		(3,576)		(1.0)		(1,259)		(0.3)
Income Taxes at Effective Tax Rate	$	46,384	14.4	%	$	65,230	17.8	%	$	69,298	19.1	%

1 State taxes in Minnesota made up the majority (greater than 50%) of the tax effect in this category for each year presented.

In the above table, the impact of regulation consists of excess deferred income taxes arising from the federal tax rate reduction in the 2017 Tax Cuts and Jobs Act and the impact of allowance for equity funds used during construction at OTP.

Energy-related tax credits, which consist of PTCs and ITCs, North Dakota wind tax credits, which are included with state taxes in the above table, and excess deferred income taxes are returned to customers as a reduction of the rates they are charged and result in a reduction of operating revenues.

Income tax payments by jurisdiction, net of refunds, were composed of the following for the years ended December 31, 2025, 2024 and 2023:


(in thousands)	2025		2024		2023

Federal	$	8,061	$	47,838	$	38,918
State:
Minnesota	2,600		8,500		5,700
All Other	432		1,276		1,666
Total Income Taxes Paid	$	11,093	$	57,614	$	46,284

Deferred tax assets and liabilities were composed of the following on December 31, 2025 and 2024:


(in thousands)	2025		2024

Deferred Tax Assets
Employee Benefits	$	37,731	$	37,456
Regulatory Liabilities	47,121		52,664
Tax Credit Carryforwards	15,884		18,268
Cost of Removal	34,697		35,374
Asset Retirement Obligations	11,375		10,948
Net Operating Loss Carryforward	2,485		2,289
Other	21,591		19,449
Total Deferred Tax Assets	$	170,884	$	176,448
Deferred Tax Liabilities
Differences Related to Property	$	(403,559)	$	(375,120)
Retirement Benefits Regulatory Asset	(19,520)		(22,892)
Pension Expense	(26,720)		(26,034)
Other	(27,016)		(20,147)
Total Deferred Tax Liabilities	(476,815)		(444,193)
Total Deferred Income Taxes	$	(305,931)	$	(267,745)

As of December 31, 2025, we had net operating loss carryforwards for state tax purposes totaling $2.5 million which expire between 2029 and 2047, state tax credits totaling $15.9 million which expire between 2041 and 2043, and federal tax credits totaling $2.0 million which expire in 2047.

The following table summarizes the activity for unrecognized tax benefits for the years ended December 31, 2025, 2024 and 2023:


(in thousands)	2025		2024		2023

Balance on January 1	$	1,125	$	1,489	$	923
Increases (Decreases) for tax positions taken during a prior period	(4)		(189)		596
Increases for tax positions taken during the current period	183		188		163

Decreases as a result of a lapse of applicable statutes of limitations	(214)		(363)		(193)
Balance on December 31	$	1,090	$	1,125	$	1,489

The Company and its subsidiaries file a consolidated U.S. federal income tax return and various state income tax returns. As of December 31, 2025, with limited exceptions, we are no longer subject to examinations by taxing authorities for tax years prior to 2022 for federal and North Dakota income taxes and prior to 2021 for Minnesota state income taxes.

One Big Beautiful Bill Act

On July 4, 2025, broad spending and tax law legislation referred to as the One Big Beautiful Bill Act (OBBBA) was enacted in the U.S. The aspects of the law that impact our financial position and may impact our future investment opportunities include certain changes to corporate income taxes and modifications to existing renewable energy credits.

The OBBBA includes changes to corporate income tax rules and regulations, including reinstating 100% bonus depreciation, immediate expensing of domestic research and development costs, and modifications to the business interest expense limitation.

The effects of changes in tax laws and regulations are required to be recognized in our consolidated financial statements in the period of enactment. Accordingly, in 2025, we recognized a reduction to our current year income tax payable in the amount of $7.0 million, with a corresponding increase to our deferred income tax liability, as a result of electing to deduct previously deferred research and development costs in the current year. We also anticipate electing bonus depreciation for eligible assets in our 2025 corporate income tax return, which resulted in a reduction of our current year income tax payable and an increase to our deferred income tax liability.

The OBBBA also alters the timing and eligibility of certain tax credits for renewable energy projects. Wind and solar projects that begin construction by July 4, 2026 are eligible for technology-neutral tax credits (production tax credits or investment tax credits). Projects that begin construction after July 4, 2026 must be in service by December 31, 2027 to qualify for technology-neutral tax credits. For projects that begin construction after December 31, 2025, new provisions restrict tax credit eligibility for those projects involving material assistance or effective control by a Foreign Entity of Concern, as defined in the legislation, which includes entities linked to China, Russia, Iran or North Korea.

14. Commitments and Contingencies

Commitments

Electric Utility Capacity and Energy Requirements. OTP has commitments for the purchase of capacity and energy requirements under contractual agreements, including wind power purchase agreements extending into 2048. Generally, the terms of OTP's wind power purchase agreements require OTP to purchase all of the electricity generated by a particular wind farm, but do not include fixed or minimum payments. The required payments are variable and the amounts due are determined based upon the amount of capacity available or electricity generated. Capacity and energy requirement costs under these agreements totaled $4.1 million, $6.0 million and $5.6 million for the years ended December 31, 2025, 2024 and 2023.

Coal Purchase Commitments. OTP is party to contracts providing for the purchase and delivery of its coal requirements. OTP’s current coal purchase agreement with CCMC for Coyote Station expires on December 31, 2040. All of Coyote Station’s coal requirements for the period covered must be purchased under this agreement. The agreement is structured so that the price of the coal covers all of CCMC's operating, financing and future mine reclamation costs. In the table below, we have estimated the future payments to be made under the terms of the agreement until its maturity. OTP has an agreement for the purchase of Big Stone Plant’s coal requirements through December 31, 2026. There is no fixed minimum purchase requirement, and no amounts for this agreement have been included in the table below; however, under this agreement all of Big Stone Plant’s coal requirements for the period covered must be purchased under this agreement. Coal purchase costs under these two agreements totaled $50.5 million, $44.7 million and $43.7 million for the years ended December 31, 2025, 2024 and 2023.

Equipment Purchase Commitments. As of December 31, 2025, OTP had commitments with third parties for the procurement, construction, delivery and installation of certain electric grid equipment which extend into 2028 and totaled approximately $53.1 million.

Land Easement Payments. OTP has commitments to make payments for land easements not classified as leases. The contractual terms of these easements are generally 99 years or do not have a stated maturity date; however, per the terms of the agreements, our requirement to make payment ends once we cease use of the land. As such, in the table below, we have included payments under these easements through the estimated useful lives of the facilities associated with the easement. The commitments under these arrangements extend into 2055 and total approximately $56.4 million. Land easement costs under these agreements totaled $1.9 million, $1.8 million and $1.8 million for the years ended December 31, 2025, 2024 and 2023.

Other Commitments. As of December 31, 2025, we had commitments under contracts for maintenance, software subscriptions and other services extending into 2046 which totaled approximately $23.0 million.

Our future commitments as of December 31, 2025 were as follows:


(in thousands)	Coal Purchase Commitments		Equipment Purchase Commitments		Land Easement Payments		Other Commitments

2026	$	24,416	$	12,156	$	1,916	$	4,426
2027	25,127		23,443		1,955		4,066
2028	25,859		17,502		1,995		3,694
2029	27,102		—		2,035		2,918
2030	25,516		—		2,077		2,419
Beyond 2030	289,196		—		46,385		5,500
Total	$	417,216	$	53,101	$	56,363	$	23,023

Solar Development. On October 30, 2024, OTP entered into an agreement to acquire the assets of a solar facility currently under development. The assets to be acquired include real property rights and interests, interconnection agreements, state and local permits, and other development assets. Per the agreement, the purchase price is equal to $23.6 million, plus the reimbursement of certain interconnection costs and costs to purchase and store the main power transformer. On January 9, 2026, OTP completed this acquisition at a total cost of $35.7 million, including reimbursements and fees.

Contingencies

Self-Funding of Transmission Upgrades for Generator Interconnections. FERC has granted transmission owners within MISO and other regional transmission organizations (RTOs) the unilateral authority to determine the funding mechanism for interconnection transmission upgrades that are necessary to accommodate new generation facilities connecting to the electrical grid. Under existing FERC orders, transmission owners can unilaterally determine whether the generator pays the transmission owner in advance for the transmission upgrade or, alternatively, the transmission owner can elect to fund the upgrade and recover over time from the generator the cost of and a return on the upgrade investment (a self-funding). FERC’s orders granting transmission owners this unilateral funding authority have been judicially contested on the basis that transmission owners may be motivated to discriminate among generators in making funding determinations. In the most recent judicial proceedings, the petitioners argued to the U.S. Court of Appeals for the District of Columbia that FERC did not comply with a previous judicial order to fully develop a record regarding the risk of discrimination and the financial risk absorbed by transmission owners for generator-funded upgrades. In December 2022, the Court of Appeals ruled in favor of the petitioners remanding the matter to FERC, instructing the agency to adequately explain the basis of its orders. The Court of Appeals decision did not vacate transmission owners’ unilateral funding authority.

In June 2024, FERC issued an Order to Show Cause proceeding against four RTOs, including MISO. Within its order, FERC indicates that the transmission tariffs of the RTOs appear to be unjust, unreasonable, and unduly discriminatory or preferential because they allow transmission owners to unilaterally elect transmission owner self-funding, which may increase costs, impose barriers to transmission interconnection and result in undue discrimination among interconnection customers.

The order required each RTO to submit filings to either 1) show cause as to why the transmission tariff remains just and reasonable and not duly discriminatory or preferential, or 2) to explain what changes to the tariff it believes would remedy the identified concerns. FERC has received a number of responses to its Order to Show Cause. In September 2024, in separate filings, MISO and transmission owners within MISO, including OTP, filed responses outlining the reasons why the self-funding option remains just and reasonable and not unduly discriminatory or preferential. Other responses have been provided by other RTOs, individual transmission owners, developers of renewable generation facilities and other interested parties.

OTP, as a transmission owner in MISO, has exercised its authority and elected to self-fund transmission upgrades necessary to accommodate new system generation. Under such an election, OTP is recovering the cost of the transmission upgrade and a return on that investment from the generator over a contractual period of time. Should the resolution of this matter eliminate transmission owners’ unilateral funding authority on either a prospective or retrospective basis, our financial results would be impacted. We cannot at this time reasonably predict the outcome of this matter given the uncertainty as to how FERC may ultimately decide on the matter.

Class Action Lawsuits and Related Matters. Beginning in August of 2024, a series of putative federal class action lawsuits consolidated under the caption In re: PVC Pipe Antitrust Litigation (Case No. 1:24-cv-07639) were filed in the United States District Court for the Northern District of Illinois against Northern Pipe Products, Vinyltech Corporation, Otter Tail Corporation and more than twenty other PVC pipe manufacturers, as well as Oil Price Information Systems, LLC (OPIS), a reporting service that provides pricing and market intelligence in various industries, including the PVC pipe industry during the relevant period. The Court has allowed three putative classes to file complaints: a Direct Purchaser Class, a Non-Converter Seller Purchaser Class and an End-User Class.

In July 2025, the Court preliminarily approved a settlement agreement among the Direct Purchaser Class, the Non-Converter Seller Purchaser Class and OPIS. The settlement agreement resolved claims against OPIS and provides for its cooperation with the plaintiffs.

In August of 2025, the three putative classes each filed a first or an amended complaint alleging, among other things, that beginning in January 2017 or January 2020, depending on the class, the defendants and alleged co-conspirators conspired to fix, raise, maintain and stabilize the price of PVC municipal pipe, PVC plumbing pipe, PVC electrical pipe and PVC pipe fittings in violation of U.S. federal and state antitrust laws. The complaints allege that PVC pipe manufacturers improperly exchanged confidential information through OPIS and engaged in other indirect and direct communications with each other. Plaintiffs are seeking treble damages, injunctive relief, pre- and post-judgment interest, costs and attorneys' fees on behalf of the putative classes.

On October 30, 2025, the defendants, including OTC, filed motions to dismiss. Briefings on these motions were completed in early 2026, and at this time no Court decision has been issued on the motions.

In August 2024, the Company received a grand jury subpoena issued by the U.S. District Court for the Northern District of California, from the U.S. Department of Justice (DOJ) Antitrust Division. The subpoena calls for production of documents regarding the manufacturing, selling and pricing of PVC pipe. The Company has responded to the subpoena and intends to comply with its obligations thereunder. On October 7, 2025, the DOJ filed a motion to intervene and for a partial stay of document discovery for a period of six months in In Re: PVC Pipe Antitrust Litigation, which the Court granted on October 10, 2025.

On September 26, 2025, a putative nation-wide class action complaint (Case No. S-257310) was filed in the Supreme Court of British Columbia, Canada against Northern Pipe, Vinyltech Corporation, Otter Tail Corporation and several other PVC pipe manufacturers, as well as OPIS. The complaint alleges that the defendants, beginning in 2021, conspired to fix, raise, maintain, and stabilize the price of PVC pipe through an information exchange, OPIS, breaching Canada's Competition Act, and creating tortious liability. The plaintiffs seek general damages, injunctive relief, pre- and post-judgment interest, punitive damages, cost, and attorneys' fees on behalf of the putative class.

The Company believes there are factual and legal defenses to the allegations in the complaints and is defending itself accordingly. There remains considerable uncertainty regarding the timing or ultimate resolution of these matters. At this time, we are unable to determine the likelihood of an outcome or estimate a range of reasonably possible losses, if any, arising from the class action complaints in the United States and Canada or the DOJ investigation. The resolution of these matters could have a material impact on the Company’s financial position, operating results and liquidity, and it is reasonably possible that our estimate of a loss arising from these matters could change in the near term.

On May 20, 2025, the Otter Tail Corporation Board of Directors received a letter from counsel submitted on behalf of a shareholder, demanding the Board investigate and take legal action against certain current and former directors and officers of the Company. The derivative demand letter includes alleged securities law violations and breach of fiduciary duties and unjust enrichment against certain current and former officers and directors of the company in connection with the matters at issue in the pending civil antitrust cases. At this time, we are unable to determine the likelihood of any outcome related to this matter.

Other Contingencies. We are involved in claims, legal proceedings, investigations and regulatory matters arising in the normal course of business. We regularly analyze relevant information and, as necessary, estimate and record accrued liabilities for legal, regulatory enforcement and other matters in which a loss or range of loss is probable of occurring and can be reasonably estimated. We believe the effect on our consolidated operating results, financial position and cash flows, if any, for the disposition of all matters pending as of December 31, 2025, other than those discussed above, will not be material.

15. Stockholders' Equity

Capital Structure

In addition to authorized and outstanding common stock, the Company has 1,500,000 authorized no par value cumulative preferred shares and 1,000,000 authorized no par value cumulative preference shares. No cumulative preferred or cumulative preference shares were outstanding at December 31, 2025 or 2024.

Registration Statements

On May 3, 2024, we filed a shelf registration statement with the SEC under which we may offer for sale, from time to time, either separately or together in any combination, equity, debt or other securities described in the shelf registration statement. The registration statement expires in May 2027. No shares were issued pursuant to the shelf registration statement in 2025.

On May 3, 2024, we filed a second registration statement with the SEC for the issuance of up to 1,500,000 common shares under an Automatic Dividend Reinvestment and Share Purchase Plan, which provides shareholders, retail customers of OTP and other interested investors methods of purchasing our common shares by reinvesting their dividends or making optional cash investments. Shares purchased under the plan may be new issue common shares or common shares purchased on the open market. In 2025, we issued 98,710 common shares under this program and no proceeds were received, as all shares issued were purchased on the open market. As of December 31, 2025, 1,330,821 shares remained available for purchase or issuance under the plan. The registration statement expires in May 2027.

Dividend Restrictions

OTC is a holding company with no significant operations of its own. The primary source of funds for payments of dividends to our shareholders is from intercompany distributions made by OTC's subsidiaries to OTC.

As a result of potential restrictions under our financing agreements, certain statutory limitations or regulatory requirements, our ability to pay dividends, or our subsidiaries' ability to provide funding to OTC for the payment of dividends may be limited, as further described below:

Both the OTC Credit Agreement and OTP Credit Agreement contain restrictions on the payment of cash dividends upon a default or event of default, including failure to maintain certain financial covenants. As of December 31, 2025, we were in compliance with these financial covenants.

Under the Federal Power Act, a public utility may not pay dividends from any funds properly included in a capital account. What constitutes “funds properly included in a capital account” is undefined in the Federal Power Act and the related regulations;

however, the FERC has consistently interpreted the provision to allow dividends to be paid as long as i) the source of the dividends is clearly disclosed, ii) the dividend is not excessive and iii) there is no self-dealing on the part of corporate officials.

The MPUC indirectly limits the amount of dividends OTP can pay to OTC by requiring an equity-to-total-capitalization ratio between 46.7% and 57.1%, with total capitalization not to exceed $2.4 billion based on OTP’s capital structure requirements as of December 31, 2025. As of December 31, 2025, OTP’s equity-to-total-capitalization ratio including short-term debt was 53.8% and its net assets restricted from distribution totaled approximately $896.9 million.

16. Accumulated Other Comprehensive Income (Loss)

The Company's accumulated other comprehensive income (loss) consists of unamortized actuarial gains and losses and prior service costs related to pension and other postretirement benefits and unrealized gains and losses on marketable securities classified as available-for-sale. The income tax expense or benefit associated with amounts reclassified from accumulated other comprehensive income (loss) and reflected in the consolidated statements of income are recognized in the same period as the amounts are reclassified.

The following table shows the changes in accumulated other comprehensive income (loss) for the years ended December 31, 2025, 2024 and 2023:


(in thousands)	Pension and Other Postretirement Benefits			Net Unrealized Gain (Losses) on Available-for-Sale Securities			Total Accumulated Other Comprehensive Income (Loss)

Balance, December 31, 2022	$	1,334		$	(419)		$	915
Other Comprehensive Income Before Reclassifications, net of tax	59			180			239
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss), net of tax	(18)		(1)	12		(2)	(6)
Total Other Comprehensive Income	41			192			233
Balance, December 31, 2023	1,375			(227)			1,148
Other Comprehensive Income Before Reclassifications, net of tax	501			407			908
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss), net of tax	(1,503)		(1)	(21)		(2)	(1,524)
Total Other Comprehensive Income (Loss)	(1,002)			386			(616)
Balance, December 31, 2024	373			159			532
Other Comprehensive Income Before Reclassifications, net of tax	256			246			502
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss), net of tax	(559)		(1)	(5)		(2)	(564)
Total Other Comprehensive Income (Loss)	(303)			241			(62)
Balance, December 31, 2025	$	70		$	400		$	470

(1) Included in the computation of net periodic pension and other postretirement benefit costs. See Note 11 for further information.
(2) Included in other income (expense), net on the accompanying consolidated statements of income.

17. Share-Based Payments

Employee Stock Purchase Plan

The 1999 Employee Stock Purchase Plan, as amended, authorizes the issuance of 1,400,000 common shares, allowing eligible employees to purchase our common shares through payroll withholding at a discount of up to 15% off the market price at the end of each six-month purchase period. Employee withholding amounts may not be less than $10 or more than $2,000 per month, subject to certain limitations, as described in the plan. A plan participant may cease making payroll deductions at any time. A participant may not purchase more than 2,000 shares in a given six-month purchase period under the plan and may not purchase more than $25,000 (fair market value) of common shares under the plan and all other purchase plans (if any) in a calendar year. A participant may withdraw from the plan at any time and elect to receive the balance of their contributions to the plan that have not yet been used to purchase shares. Shares purchased under the plan are automatically enrolled in the Company's dividend reinvestment plan. Shares purchased under the plan may not be assigned, transferred, pledged, or otherwise disposed, except for certain situations allowed by the plan, such as upon death, for a period of 18 months after purchase. At our discretion, shares purchased under the

plan can be either new issue shares or shares purchased in the open market. The plan shall automatically terminate when all of the shares authorized under the plan have been issued.

We recognize the 15% discount to the fair market value of the purchased shares as stock-based compensation expense, which amounted to $0.4 million, $0.4 million and $0.3 million for the years ended December 31, 2025, 2024 and 2023. For the years ended December 31, 2025, 2024 and 2023, the number of shares issued under the plan was 34,955, 31,252 and 26,348 shares. As of December 31, 2025, there were 171,160 shares available for purchase under the plan.

Share-Based Compensation Plan

The 2023 Stock Incentive Plan, which was approved by our shareholders in April 2023, authorizes the issuance of 979,891 common shares for the granting of stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalents, performance awards and other stock-based awards. In addition, common shares subject to any outstanding awards under our prior stock incentive plans that are forfeited, canceled or reacquired by the Company will become available for re-issuance under the 2023 Stock Incentive Plan. As of December 31, 2025, 695,826 shares were available for issuance under the plan. The plan terminates on April 17, 2033.

We grant restricted stock awards to our employees and members of our Board of Directors and stock performance awards to our executive officers and certain other key employees as part of our long-term compensation and retention program. Stock-based compensation cost, recognized within operating expenses in the consolidated statements of income, amounted to $8.7 million, $9.1 million and $7.4 million for the years ended December 31, 2025, 2024 and 2023. The related income tax benefit recognized for these periods amounted to $2.0 million, $2.7 million and $1.6 million.

Restricted Stock Awards. Restricted stock awards are granted to executive officers and other key employees and members of the Company's Board of Directors. The awards vest, depending on award recipient, either ratably over a period of three to four years or cliff vest after four years. Vesting is accelerated in certain circumstances, including upon retirement. Awards granted to members of the Board of Directors are issued and outstanding upon grant and carry the same voting and dividend rights of unrestricted outstanding common stock. Awards granted to executive officers are eligible to receive dividend equivalent payments during the vesting period, subject to forfeiture under the terms of the agreement, but such awards are not issued or outstanding upon grant and do not provide for voting rights.

The grant-date fair value of each restricted stock award is determined based on the market price of the Company's common stock on the date of grant adjusted to exclude the value of dividends for those awards that do not receive dividend or dividend equivalent payments during the vesting period.

The following is a summary of restricted stock award activity for the year ended December 31, 2025:


	Shares	Weighted-Average Grant-Date Fair Value

Nonvested, Beginning of Year	143,417	$	68.47
Granted	58,185	74.20
Vested	(47,593)	59.74
Forfeited	(8,120)	68.56
Nonvested, End of Year	145,889	$	73.60

The weighted-average grant-date fair value of granted awards was $74.20, $85.25 and $68.03 during the years ended December 31, 2025, 2024 and 2023. The fair value of vested awards was $3.6 million, $5.1 million and $3.1 million during the years ended December 31, 2025, 2024 and 2023. As of December 31, 2025, there was $3.7 million of unrecognized compensation cost for unvested restricted stock awards to be recognized over a weighted-average period of 1.86 years.

Stock Performance Awards. Stock performance awards are granted to executive officers and certain other key employees. The awards vest at the end of a three-year performance period. The number of common shares awarded, if any, at the end of the performance period ranges from zero to 150% of the target amount based on two performance measures i) total shareholder return relative to a peer group (TSR component) and ii) return on equity (ROE component). The awards have no voting or dividend rights during the vesting period. Vesting of the awards is accelerated in certain circumstances, including upon retirement. The number of common shares awarded on an accelerated vesting is based on actual performance at the end of the performance period.

The grant-date fair value of the ROE component of the stock performance awards granted during the years ended December 31, 2025, 2024 and 2023 was determined using the grant-date stock price and a discounted cash flow analysis to adjust for expected unearned dividends during the vesting period. The grant-date fair value of the TSR component of the stock performance awards granted during the years ended December 31, 2025, 2024 and 2023 was determined using a Monte Carlo fair value simulation model

incorporating the following assumptions:


	2025		2024		2023

Risk-free interest rate	4.28	%	4.16	%	4.15	%
Expected term (in years)	3.00		3.00		3.00
Expected volatility	30.30	%	35.10	%	34.00	%
Dividend yield	2.50	%	2.40	%	2.50	%

The risk-free interest rate was derived from yields on U.S. government bonds of a similar term. The expected term of the award is equal to the three-year performance period. Expected volatility was estimated based on actual historical volatility of our common stock over a three-year period. Dividend yield was estimated based on historic and future yield estimates.

The following is a summary of stock performance award activity for the year ended December 31, 2025 (share amounts reflect awards at target):


	Shares	Weighted-Average Grant-Date Fair Value

Nonvested, Beginning of Year	144,800	$	68.85
Granted	57,000	73.90
Vested	(49,000)	53.93
Forfeited	—	—
Nonvested, End of Year	152,800	$	75.52

The weighted-average grant-date fair value of granted awards was $73.90, $94.45 and $61.97 during the years ended December 31, 2025, 2024 and 2023. The fair value of vested awards was $5.5 million, $12.3 million and $5.3 million during the years ended December 31, 2025, 2024 and 2023. As of December 31, 2025, there was $0.2 million of unrecognized compensation cost of unvested stock performance awards to be recognized over a weighted-average period of 0.96 years.

18. Earnings Per Share

The numerator used in the calculation of both basic and diluted earnings per share is net income. The denominator used in the calculation of basic earnings per share is the weighted-average number of shares outstanding during the period. The denominator used in the calculation of diluted earnings per share is derived by adjusting basic shares outstanding for the dilutive effect of potential shares outstanding, which consist of shares associated with time- and performance-based stock awards and our employee stock purchase plan.

The following includes the computation of the denominator for basic and diluted weighted-average shares outstanding for the years ended December 31, 2025, 2024 and 2023:


(in thousands)	2025	2024	2023

Weighted Average Common Shares Outstanding – Basic	41,864	41,778	41,668
Effect of Dilutive Securities:
Stock Performance Awards	155	196	269
Restricted Stock Awards	96	96	100
Employee Stock Purchase Plan Shares	2	2	2
Dilutive Effect of Potential Common Shares	253	294	371
Weighted Average Common Shares Outstanding – Diluted	42,117	42,072	42,039

The number of shares excluded from diluted weighted-average common shares outstanding because such shares were anti-dilutive was not material for the years ended December 31, 2025, 2024 and 2023.

19. Derivative Instruments

OTP enters into derivative instruments to manage its exposure to future commodity price variability, specifically future wholesale energy and natural gas prices, and reduce volatility in prices for our retail electric customers. These derivative instruments are not designated as qualifying hedging transactions but provide for an economic hedge against future price variability. The instruments are recorded at fair value on the consolidated balance sheets on a gross basis with assets and liabilities presented separately. In

accordance with rate-making and cost recovery processes, we recognize a regulatory asset or liability to defer losses or gains from derivative activity until settlement of the associated derivative instrument.

As of December 31, 2025 and 2024, OTP had multiple outstanding pay-fixed, receive-variable swap agreements. The contracts outstanding as of December 31, 2025 had various settlement dates throughout 2026. The following presents the notional amounts and fair value of our derivative instruments as of December 31, 2025 and 2024:


(in thousands)	2025		2024

Megawatt hours of electricity	311		167

Derivative Assets:
Other Current Assets	$	124	$	—
Other Noncurrent Assets	—		—
Total Derivative Assets	124		—

Derivative Liabilities:
Other Current Liabilities	$	2,717	$	1,989
Other Noncurrent Liabilities	—		—
Total Derivative Liabilities	$	2,717	$	1,989

During the years ended December 31, 2025 and 2024, contracts matured and were settled in an aggregate amount of a $2.1 million loss and a $3.5 million loss, respectively. Gains and losses recognized on the settlement of derivative instruments are returned to, or recovered from, our electric customers through fuel recovery mechanisms in each state. When recognized in the consolidated statements of income, these gains or losses are included in electric purchased power. Gains or losses related to the settlement of derivative instruments are included in cash flows from operations in the consolidated statements of cash flows.

20. Fair Value Measurements

The following tables present our assets and liabilities measured at fair value on a recurring basis as of December 31, 2025 and 2024 classified by the input method used to measure fair value:


(in thousands)	Level 1		Level 2		Level 3

December 31, 2025
Assets
Investments:
Money Market Funds	$	2,666	$	—	$	—
Mutual Funds	16,727		—		—
Corporate Debt Securities	—		1,320		—
Government Debt Securities	—		63,136		—
Derivative Instruments	—		124		—
Total Assets	19,393		64,580		—
Liabilities
Derivative Instruments	—		2,717		—
Total Liabilities	$	—	$	2,717	$	—

December 31, 2024
Assets
Investments:
Money Market Funds	$	596	$	—	$	—
Mutual Funds	10,653		—		—
Corporate Debt Securities	—		1,628		—
Government Debt Securities	—		61,131		—
Total Assets	11,249		62,759		—
Liabilities
Derivative Instruments	—		1,989		—
Total Liabilities	$	—	$	1,989	$	—

Level 1 fair value measurements are based on quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access at the measurement date.

The level 2 fair value measurements for government and corporate debt securities are determined based on valuations provided by third parties which utilize industry accepted valuation models and observable market inputs to determine valuation. Some valuations or model inputs used by the pricing services may be based on broker quotes.

The level 2 fair value measurements for derivative instruments are determined by using inputs such as forward electric commodity prices, adjusted for location differences. These inputs are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace.

In addition to assets recorded at fair value on a recurring basis, we also hold financial instruments that are not recorded at fair value in the consolidated balance sheets but for which disclosure of the fair value of these financial instruments is provided. The following reflects the carrying value and estimated fair value of these assets and liabilities as of December 31, 2025 and 2024:


	December 31, 2025				December 31, 2024
(in thousands)	Carrying Amount		Fair Value		Carrying Amount		Fair Value

Assets:
Cash and Cash Equivalents	$	386,193	$	386,193	$	294,651	$	294,651
Total	386,193		386,193		294,651		294,651
Liabilities:
Short-Term Debt	60,242		60,242		69,615		69,615
Long-Term Debt	1,043,517		923,639		943,734		806,826
Total	$	1,103,759	$	983,881	$	1,013,349	$	876,441

The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that fair value:

Cash Equivalents: The carrying amount approximates fair value because of the short-term maturity of these instruments. Fair value is determined based on quoted prices in active markets, a Level 1 fair value input.

Short-Term Debt: The carrying amount approximates fair value because the debt obligations are short-term in nature and balances outstanding are subject to variable rates of interest which reset frequently, a Level 2 fair value input.

Long-Term Debt: The fair value of long-term debt is estimated based on current market indications for borrowings of similar maturities with similar terms, a Level 2 fair value input.


ITEM 15.			EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

1. Financial Statements


			Page
Report of Independent Registered Public Accounting Firm			2
Consolidated Balance Sheets			4
Consolidated Statements of Income			5
Consolidated Statements of Comprehensive Income			6
Consolidated Statements of Shareholders’ Equity			7
Consolidated Statements of Cash Flows			8
Notes to Consolidated Financial Statements			9

2. Financial Statement Schedules

Schedule I - Condensed Financial Information of Registrant

Schedule II - Valuation and Qualifying Accounts and Reserves

SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT

OTTER TAIL CORPORATION (PARENT COMPANY)

CONDENSED BALANCE SHEETS


	December 31,
(in thousands)	2025		2024

Assets
Current Assets
Cash and Cash Equivalents	$	384,479	$	291,575

Accounts Receivable from Subsidiaries	2,585		5,642
Interest Receivable from Subsidiaries	117		117
Notes Receivable from Subsidiaries	3,037		4,706
Investments	53,915		—
Other Current Assets	8,741		3,538
Total Current Assets	452,874		305,578
Noncurrent Assets
Investments in Subsidiaries	2,302,613		2,006,239
Notes Receivable from Subsidiaries	78,900		78,900
Investments	62,529		106,677
Deferred Income Taxes	31,264		69,781
Other Noncurrent Assets	3,386		2,380
Total Assets	$	2,931,566	$	2,569,555

Liabilities and Stockholders' Equity
Current Liabilities

Current Maturities of Long-Term Debt	$	79,951	$	—
Accounts Payable to Subsidiaries	8		7
Notes Payable to Subsidiaries	915,775		752,625
Other	18,762		19,100
Total Current Liabilities	1,014,496		771,732
Other Noncurrent Liabilities	55,310		49,424
Commitments and Contingencies
Capitalization
Long-Term Debt	—		79,900
Common Stockholders' Equity	1,861,760		1,668,499
Total Capitalization	1,861,760		1,748,399
Total Liabilities and Stockholders' Equity	$	2,931,566	$	2,569,555

See accompanying notes to condensed financial statements.

OTTER TAIL CORPORATION (PARENT COMPANY)

CONDENSED STATEMENTS OF INCOME


	Years Ended December 31,
(in thousands)	2025		2024		2023

Income
Equity Income in Earnings of Subsidiaries	$	280,159	$	304,525	$	294,467
Interest Income from Subsidiaries	3,191		3,107		2,898
Other Income	16,437		15,085		10,496
Total Income	299,787		322,717		307,861
Expense
Nonelectric Selling, General, and Administrative Expenses	24,072		23,016		12,816
Interest Expense	3,593		3,599		3,813
Interest Expense from Subsidiaries	5		5		6
Nonservice Cost Components of Postretirement Benefits	1,091		970		1,063
Total Expense	28,761		27,590		17,698
Income Before Income Taxes	271,026		295,127		290,163
Income Tax Benefit	4,867		6,535		4,028
Net Income	$	275,893	$	301,662	$	294,191

See accompanying notes to condensed financial statements.

OTTER TAIL CORPORATION (PARENT COMPANY)

CONDENSED STATEMENTS OF CASH FLOWS


	Years Ended December 31,
(in thousands)	2025		2024		2023

Cash Flows from Operating Activities
Net Cash Provided by Operating Activities	$	127,484	$	76,333	$	77,139
Cash Flows from Investing Activities
Investment in Subsidiaries	(105,000)		(55,000)		(40,000)

Purchases of Investments and Other Assets	(3,311)		(53,085)		(1,754)
Other, net	782		1,394		1,686
Net Cash Used in Investing Activities	(107,529)		(106,691)		(40,068)
Cash Flows from Financing Activities

Borrowings from Subsidiaries	164,819		179,247		148,308

Payments for Shares Withheld for Employee Tax Obligations	(3,134)		(6,457)		(3,088)

Dividends Paid	(88,064)		(78,265)		(73,061)
Other, net	(672)		(729)		(339)
Net Cash Provided by Financing Activities	72,949		93,796		71,820
Net Change in Cash and Cash Equivalents	92,904		63,438		108,891
Cash and Cash Equivalents at Beginning of Period	291,575		228,137		119,246
Cash and Cash Equivalents at End of Period	$	384,479	$	291,575	$	228,137

See accompanying notes to condensed financial statements.

OTTER TAIL CORPORATION (PARENT COMPANY)

NOTES TO CONDENSED FINANCIAL STATEMENTS

Incorporated by Reference

OTC’s consolidated statements of comprehensive income and common shareholders’ equity in Part II, Item 8 are incorporated by reference.

Basis of Presentation

The condensed financial information of OTC is presented to comply with Rule 12-04 of Regulation S-X. The unconsolidated condensed financial statements do not reflect all of the information and notes normally included with financial statements prepared in accordance with generally accepted accounting principles. Therefore, these condensed financial statements should be read with the consolidated financial statements and related notes included in this report on Form 10-K.

OTC’s investments in subsidiaries are presented under the equity method of accounting. Under this method, the assets and liabilities of the subsidiaries are not consolidated. The investments in net assets of the subsidiaries are recorded in the balance sheets. The income from operations of the subsidiaries is reported on a net basis as equity income in earnings of subsidiaries.

Related Party Transactions

Outstanding receivables from and payables to OTC's subsidiaries as of December 31, 2025 and 2024 are as follows:


(in thousands)	Accounts Receivable		Interest Receivable		Current Notes Receivable		Long-Term Notes Receivable		Accounts Payable		Current Notes Payable

December 31, 2025
Otter Tail Power Company	$	2,434	$	—	$	—	$	—	$	8	$	—
Northern Pipe Products, Inc.	—		7		—		5,000		—		51,025
Vinyltech Corporation	—		17		—		11,500		—		70,353
BTD Manufacturing, Inc.	—		78		—		52,000		—		29,382
T.O. Plastics, Inc.	38		15		3,037		10,400		—		—
Varistar Corporation	—		—		—		—		—		765,015
Otter Tail Assurance Limited	113		—		—		—		—		—
Total	$	2,585	$	117	$	3,037	$	78,900	$	8	$	915,775

December 31, 2024
Otter Tail Power Company	$	5,223	$	—	$	—	$	—	$	7	$	—
Northern Pipe Products, Inc.	36		7		—		5,000		—		66,170
Vinyltech Corporation	—		17		—		11,500		—		90,764
BTD Manufacturing, Inc.	—		78		—		52,000		—		5,662
T.O. Plastics, Inc.	42		15		4,706		10,400		—		—
Varistar Corporation	—		—		—		—		—		590,029
Otter Tail Assurance Limited	341		—		—		—		—		—
Total	$	5,642	$	117	$	4,706	$	78,900	$	7	$	752,625

Dividends

Dividends paid to OTC (the Parent) from its subsidiaries were as follows:


(in thousands)	2025		2024		2023

Cash Dividends Paid to Parent by Subsidiaries	$	88,984	$	78,191	$	72,982

See OTC’s notes to consolidated financial statements in Part II, Item 8 for other disclosures.

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

OTTER TAIL CORPORATION

Below is a summary of activity within valuation and qualifying accounts for the years ended December 31, 2025, 2024 and 2023:


(in thousands)	Balance, January 1		Charged to Cost and Expenses		Deductions(1)		Balance, December 31

Allowance for Credit Losses
2025	$	1,920	$	1,448	$	(1,722)	$	1,646
2024	2,522		1,242		(1,844)		1,920
2023	1,648		2,014		(1,140)		2,522





(1)Amounts reflect deductions to the allowance for amounts written-off, net of recoveries.

3. Exhibits

The following Exhibits are filed as part of, or incorporated by reference into, this report.



No.									Description
3.1									Third Restated Articles of Incorporation, dated April 12, 2021
3.2									Restated Bylaws, dated April 12, 2021
4.1									Description of Securities
10.1.0									Note Purchase Agreement, dated as of August 20, 2007, between Otter Tail Power Company and the Purchasers named therein
10.1.1									First Amendment, dated as of December 14, 2007, to Note Purchase Agreement, dated as of August 20, 2007, between Otter Tail Power Company and the Purchasers named therein
10.1.2									Second Amendment, dated as of September 11, 2008, to Note Purchase Agreement, dated as of August 20, 2007, between Otter Tail Power Company and the Purchasers named therein
10.1.3									Third Amendment, dated as of June 26, 2009, to Note Purchase Agreement dated as of August 20, 2007, between Otter Tail Power Company and the Purchasers named therein
10.2									Note Purchase Agreement dated as of August 14, 2013 between Otter Tail Power Company and the Purchasers named therein
10.3									Note Purchase Agreement dated as of September 23, 2016 between Otter Tail Corporation and the Purchasers named therein
10.4									Note Purchase Agreement dated as of November 14, 2017 between Otter Tail Power Company and the Purchasers named therein
10.5									Note Purchase Agreement dated as of September 12, 2019 between Otter Tail Power Company and the Purchasers named therein
10.6									Note Purchase Agreement dated as of June 10, 2021 between Otter Tail Power Company and the Purchasers named therein
10.7									Note Purchase Agreement dated as of March 28, 2024 between Otter Tail Power Company and the Purchasers named therein
10.8									Note Purchase Agreement dated as of March 27, 2025 between Otter Tail Power Company and the Purchasers named therein
10.9									Sixth Amended and Restated Credit Agreement, dated as of December 11, 2024, by and between Otter Tail Corporation, as Borrower, and the banks named therein, with U.S. Bank National Association, as Administrative Agent
10.10									Fifth Amended and Restated Credit Agreement, dated as of December 11, 2024, by and between Otter Tail Power Company, as Borrower, and the banks named therein, with U.S. Bank Nation Association, as Administration Agent
10.11.0									Agreement for Sharing Ownership of Generating Plant by and between the Company, Montana-Dakota Utilities Co., and Northwestern Public Service Company (dated as of January 7, 1970). Previously filed as Exhibit 10-F in Form 10-K for the year ended December 31, 1989
10.11.1									Letter of Intent for purchase of share of Big Stone Plant from Northwestern Public Service Company (dated as of May 8, 1984). Previously filed as Exhibit 10-F-1 in Form 10-K for the year ended December 31, 1989
10.11.2									Supplemental Agreement No. 1 to Agreement for Sharing Ownership of Big Stone Plant (dated as of July 1, 1983). Previously filed as Exhibit 10-F-2 in Form 10-K for the year ended December 31, 1991
10.11.3									Supplemental Agreement No. 2 to Agreement for Sharing Ownership of Big Stone Plant (dated as of March 1, 1985). Previously filed as Exhibit 10-F-3 in Form 10-K for the year ended December 31, 1991
10.11.4									Supplemental Agreement No. 3 to Agreement for Sharing Ownership of Big Stone Plant (dated as of March 31, 1986). Previously filed as Exhibit 10-F-4 in Form 10-K for the year ended December 31, 1991
10.11.5									Supplemental Agreement No. 4 to Agreement for Sharing Ownership of Big Stone Plant (dated as of April 24, 2003)
10.11.6									Amendment I to Letter of Intent dated May 8, 1984, for purchase of share of Big Stone Plant. Previously filed as Exhibit 10-F-5 in Form 10-K for the year ended December 31, 1992
10.12									Big Stone South–Ellendale Project Ownership Agreement dated as of June 12, 2015 between Otter Tail Power Company, a wholly owned subsidiary of Otter Tail Corporation, and Montana-Dakota Utilities Co., a division of MDU Resources Group, Inc.**
10.13.0									Agreement for Sharing Ownership of Coyote Station Generating Unit No. 1 by and between the Company, Minnkota Power Cooperative, Inc., Montana-Dakota Utilities Co., Northwestern Public Service Company and Minnesota Power & Light Company (dated as of July 1, 1977). Previously filed as Exhibit 5-H in filing 2-61043
10.13.1									Supplemental Agreement No. One, dated as of November 30, 1978, to Agreement for Sharing Ownership of Coyote Generating Unit No. 1. Previously filed as Exhibit 10-H-1 in Form 10-K for the year ended December 31, 1989
10.13.2									Supplemental Agreement No. Two, dated as of March 1, 1981, to Agreement for Sharing Ownership of Coyote Generating Unit No. 1 and Amendment No. 2 dated March 1, 1981, to Coyote Plant Coal Agreement. Previously filed as Exhibit 10-H-2 in Form 10-K for the year ended December 31, 1989
10.13.3									Amendment, dated as of July 29, 1983, to Agreement for Sharing Ownership of Coyote Generating Unit No. 1. Previously filed as Exhibit 10-H-3 in Form 10-K for the year ended December 31, 1989
10.13.4									Agreement, dated as of September 5, 1985, containing Amendment No. 3 to Agreement for Sharing Ownership of Coyote Generating Unit No. 1, dated as of July 1, 1977, and Amendment No. 5 to Coyote Plant Coal Agreement, dated as of January 1, 1978. Previously filed as Exhibit 10-H-4 in Form 10-K for the year ended December 31, 1992
10.13.5									Amendment, dated as of June 14, 2001, to Agreement for Sharing Ownership of Coyote Generating Unit No. 1
10.13.6									Amendment, dated as of April 24, 2003, to Agreement for Sharing Ownership of Coyote Generating Unit No. 1



No.									Description
10.14.0									Lignite Sales Agreement between Coyote Creek Mining Company, L.L.C. and Otter Tail Power Company, Northern Municipal Power Agency, Montana-Dakota Utilities Co., Northwestern Corporation, dated as of October 10, 2012**
10.14.1									First Amendment to Lignite Sales Agreement dated as of January 30, 2014 among Otter Tail Power Company, Northern Municipal Power Agency, Montana-Dakota Utilities Co., a division of MDU Resources Group, Inc., NorthWestern Corporation and Coyote Creek Mining Company, L.L.C.
10.14.2									Second Amendment to Lignite Sales Agreement dated as of March 16, 2015 among Otter Tail Power Company, Northern Municipal Power Agency, Montana-Dakota Utilities Co., a division of MDU Resources Group, Inc., NorthWestern Corporation and Coyote Creek Mining Company, L.L.C.
10.15									Executive Survivor and Supplemental Retirement Plan (2020 Restatement)*
10.16									Nonqualified Retirement Plan (2021 Restatement)*
10.17									Otter Tail Corporation Executive Restoration Plus Plan, 2020 Restatement*
10.18									1999 Employee Stock Purchase Plan, As Amended (2025)
10.19									2014 Stock Incentive Plan*
10.20									2023 Stock Incentive Plan*
10.21									2026 Executive Annual Incentive Plan*
10.22									Form of Executive Performance Share Award Agreement (Executives)*
10.23									Form of Executive Performance Share Award Agreement - Stock Settlement (Executives)*
10.24									Form of Executive Performance Share Award Agreement - Cash Settlement (Executives)*
10.25									Form of Restricted Stock Unit Award Agreement (Executives)*
10.26									Form of Restricted Stock Unit Award Agreement - Stock Settlement (Executives)*
10.27									Form of Restricted Stock Unit Award Agreement - Cash Settlement (Executives)*
10.28									Form of Restricted Stock Award Agreement (Directors)*
10.29									Summary of Non-Employee Director Compensation (2025)*
10.30									Change in Control Severance Agreement, Chuck MacFarlane, dated February 24, 2012*
10.31									Change in Control Severance Agreement, Timothy Rogelstad, dated April 14, 2014*
10.32									Change in Control Severance Agreement, Paul Knutson, dated December 17, 2012*
10.33									Change in Control Severance Agreement, John Abbott, dated April 13, 2015*
10.34									Change in Control Severance Agreement, Todd Wahlund, dated January 1, 2024*
10.35									Change in Control Severance Agreement, Jennifer Smestad, dated January 1, 2018*
10.36									Form of Change in Control Severance Agreement (2023)*
10.37									Otter Tail Corporation Executive Severance Plan (2024)*
19									Insider Trading and Pre-Clearance Policy
21									Subsidiaries of Registrant
23									Consent of Deloitte & Touche LLP
24									Power of Attorney
31.1									Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2									Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1									Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2									Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
97									Incentive Compensation Recovery Policy
101.SCH									Inline XBRL Taxonomy Extension Schema Document
101.CAL									Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB									Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE									Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF									Inline XBRL Taxonomy Extension Definition Linkbase Document
104									Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

*Management contract, compensatory plan or arrangement required to be filed pursuant to Item 601(b)(10)(iii)(A) of Regulation S-K.

**Confidential information has been omitted from this Exhibit and filed separately with the Securities and Exchange Commission pursuant to a confidential treatment request under Rule 24b-2.

The Company hereby undertakes to furnish copies of any of the omitted schedules and exhibits to the Securities and Exchange Commission upon request.

Pursuant to Item 601(b)(4)(iii) of Regulation S-K, copies of certain instruments defining the rights of holders of certain long-term debt of the Company are not filed, and in lieu thereof, the Company agrees to furnish copies thereof to the Securities and Exchange Commission upon request.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


			OTTER TAIL CORPORATION

			By:			/s/ Todd R. Wahlund
						Todd R. Wahlund Vice President and Chief Financial Officer (authorized officer and principal financial officer)

						Dated: February 23, 2026


Date: February 23, 2026

/s/ Charles S. MacFarlane
Charles S. MacFarlane President and Chief Executive Officer


Date: February 23, 2026

/s/ Todd R. Wahlund
Todd R. Wahlund Chief Financial Officer and Vice President


/s/ Charles S. MacFarlane
Charles S. MacFarlane President and Chief Executive Officer
February 23, 2026