Otter Tail Corp (OTTR) 2014 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to your Otter Tail Corporation third-quarter 2014 earnings conference call. (Operator Instructions.) As a reminder, this conference is being recorded. I would like to now introduce your host for today's conference, Mr. Loren Hanson. Sir, you may begin.

Good morning, everyone, and welcome to our call. My name is Loren Hanson, and I manage the Investor Relations area at Otter Tail. Last night we announced our third-quarter 2014 results. Our complete earnings release and slides accompanying this earnings call are available on our website at www.ottertail.com. A replay of the call will be available on our website later today.

With me on the call today is Jim McIntyre, Otter Tail Corporation's CEO; Chuck MacFarlane, Otter Tail Corporation's President and Chief Operating Officer; Kevin Moug, Otter Tail Corporation's Senior Vice President and Chief Financial Officer.

Before we begin, I'd like to remind you that during the course of this call we will be making forward-looking statements. These forward-looking statements are covered under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995 and include statements regarding Otter Tail Corporation's future financial and operating results or other statements that are not historical facts.

Please be advised that actual results could differ materially from those stated or implied by our forward-looking statements due to certain risks and uncertainties, including those described in our most recent Form 10-K and subsequent quarterly reports on Form 10-Q. Otter Tail Corporation disclaims any duty to update or revise our forward-looking statements as a result of new information, future events, developments or otherwise.

For opening remarks, I would now like to turn the call over to Otter Tail Corporation's CEO, Mr. Jim McIntyre. Jim?

Good morning, and thanks for joining our call today. This quarter we anticipated continued strong performance of our electric manufacturing and infrastructure businesses, and that was our overall experience. You've read the news release, which is posted on our website. In a moment, Chuck will speak to some of the Company-specific actions that took place this quarter, and Kevin will speak to the financials.

I'll use my time to address a comment I made in the earnings release that we are considering strategic alternatives for our construction companies. Clearly, they are doing well. Together they posted their eighth consecutive quarter-over-quarter improvement in earnings.

I've explained on previous calls that we continually assess each company's fit with our portfolio criteria and strategic plan. Through that assessment, we believe we may best strengthen our overall portfolio by investing primarily in electric and manufacturing-based companies. If a review of alternatives for the construction company led us to divest them, our remaining diversified companies, in addition to our electric utility, would all be manufacturing companies -- BTD Manufacturing, our metal fabricating company; T.O. Plastics, our plastic thermoforming company; and Northern Pipe Products and Vinyltech, our PVC pipe manufacturing companies.

By focusing our diversification efforts primarily on manufacturing, we believe we'd be better able to strategically and operationally support and grow these and other similar businesses. Within and among these businesses, there's sufficient diversity to retain our original goal of providing some measure of protection from a downturn in any one market, but also the similarity among manufacturing businesses provides a greater opportunity to use operational excellence to drive performance and create or expand a competitive advantage.

To further underscore this point, and as reflected in our earnings release, the Otter Tail Corporation's Board of Directors, upon recommendation from management, supported about $33 million in future capital investments and leases at BTD, which serves some of the world's top recreational, agricultural, and industrial brands, such as Polaris, John Deere, and Caterpillar. Our investment will accommodate growth in stamping and tooling at BTD's Detroit Lakes, Minnesota, plant, and it will double the square footage of the Lakeville, Minnesota, plant to accommodate the addition of paint and assembly services.

BTD has been studying the internalization of painting capabilities and equipment for some time because they've outsourced painting and powder coating on an increasing basis to meet customer requirements. By investing in these facilities, BTD will bring most painting in-house, significantly reduce logistics, bring better control to scheduling, add value to their customers' products, and provide profitable future growth for the company. This investment demonstrates our confidence and current commitment to BTD and in manufacturing in general.

Remember that we operate all of our manufacturing and infrastructure companies under Varistar, as shown on Slide 4. This enables us to dedicate management and subject matter experts to support these businesses. We expect these companies to provide approximately 25% of Otter Tail Corporation's earnings while earning a return on invested capital in excess of our weighted average cost of capital. We challenge each platform to create sustainable earnings growth and thereby deliver value to shareholders.

The core elements of our strategic plan are operational excellence, talent development, and managed growth. These elements support a compound average growth rate of approximately 4% to 7% from 2013 non-GAAP earnings of $1.54 per share. The Board of Directors, executive team, and each operating company are aligned on this plan.

With that, I'll turn it over to Chuck for some detail on the quarter. Chuck?

Thanks, Jim. As Jim said, we continued to see good results from our capital investments at the utility and a focus on operational excellence at the manufacturing and infrastructure companies. As pointed out in the earnings release, net income at Otter Tail Power Company was slightly lower this quarter due to cooler summer weather and increased maintenance and repair expenses. The increased expenses were largely due to an extended maintenance outage at our Hoot Lake plant in Fergus Falls, Minnesota.

Hot Lake is an older 140-megawatt coal plant with two active units. One of the units was brought online in 1959, the other in 1964. It's not unusual to open a turbine generator set in older plants for maintenance and find more potential problems than anticipated. We've addressed those issues. Unit 3 returned to service in July, and Unit 2 in August.

This is the last planned major overhaul for Hoot Lake Plant prior to its projected retirement in the 2020 timeframe. In late October, the Minnesota Public Utilities Commission approved our integrated resource plan to replace Hoot Lake with a natural gas resource.

Earnings from non-asset-based energy sales were also less than forecast this quarter. Trading margins have been declining for some time now. Reduced natural gas prices, lower wholesale market prices, and mature centralized markets have produced price transparency that has eliminated most of the trading opportunities we've capitalized since forming the trading function in 1997.

The efficiency of the centralized market has narrowed market margins to the point where we cannot sustain a non-asset-based trading group within our relatively small utility unless we engage in more speculative positions. So Otter Tail Power Company will exit the non-asset-based energy trading function by year end. This function is projected to be breakeven in 2014.

As shown on Slides 5, 6, and 7, earnings from our investments in five large regional transmission projects and the environmental upgrades at the Big Stone plant remain solid. These projects are performing well. They are on schedule, on or under budget, and have cost recovery mechanisms in place, as noted on Slide 6. A summary of all of our rate base projects are on Slide 7.

Specifically, the environmental control project at the Big Stone plant is nearly 75% complete, and we'll be tied into the plant in 2015. We remain particularly pleased with its strong safety record, with more than 1 million hours worked without a lost workday.

Before I turn to the manufacturing infrastructure companies, I thought I'd mention two utility-related items that have been in the news lately. You might appreciate an update on how they affect Otter Tail.

The first is rail service in the Upper Midwest, which affects our coal delivery at two of our power plants. Coyote Station near Beulah, North Dakota, is a mine mouth plant, so we have no rail issues associated with this facility. But Big Stone plant near Milbank, South Dakota, has been in a coal conservation mode all summer, continuing into this fall. This means that the plant is back down to minimum load, approximately 50% of nameplate, during off-peak times when the cost impact to our customers is less. Big Stone plant's coal stockpile is about 20% lower than we'd like it to be before going into the winter season.

Hoot Lake plant is also experiencing slow deliveries. The coal stockpile is near normal fall levels because the plant was down for maintenance for several months and also because electric load has been low. But like Big Stone, we haven't been able to build a stockpile in preparation for the winter.

The second item that has been in the news is the potential effect of the EPA's proposed rule in the carbon dioxide emissions from existing power plants. A summary of the rule's impact on Otter Tail Power Company is on Slide 8.

As we discussed in our second-quarter call, EPA published the proposed rules in June, is accepting comments now, and intends to issue the final rule in June or July of next year. Our primary concern with the proposed rule is Building Block 2's impact in South Dakota. Under the proposed Building Block 2, a new South Dakota natural gas plant, which began operating in the second half of the EPA's 2012 baseline year, would increase its capacity factor from 1% to 70% by 2030. This would result in a corresponding decrease in output at the state's only coal-fired plant, Big Stone.

This is a problem because the units are owned by different companies, serve different loads, and are dispatched by different regional transmission organizations. Otter Tail Power Company representatives highlighted this concern at an EPA listening session in July, met with EPA staff in Washington in September, and will file formal comments in December. We continue to work with the support of South Dakota state agencies, other stakeholders, and EPA to seek a revised final rule.

Now I will turn to the manufacturing infrastructure companies under Varistar. Since April when I became the President and Chief Operating Office, I've spent time getting better acquainted with each of the operating companies and their leadership teams. I believe that operational excellence is a competitive advantage throughout the organization.

Jim has already addressed our continuing improvement and profitability of our construction companies -- Aevenia, which is our electric construction company, and Foley, which is our industrial construction company. Aevenia continues to be awarded significant work building out the electrical infrastructure in western North Dakota, and Foley continues to execute on projects under construction at better-than-bid margins. Foley is also exceeding their expected percentage of bids awarded. The company's focus on selective bidding is paying off.

Jim also mentioned the Board of Directors' action to approve $33 million for expansion projects at BTD's two Minnesota locations, Lakeville and Detroit Lakes. This clearly shows our intent to continue to invest in the manufacturing platform. BTD serves many well-known brands, as shown on Slide 9. BTD has begun a $12.1 million expansion at its production facility in Lakeville to accommodate the addition of paint and assembly services to serve these customers. It also will invest $7 million at the Detroit Lakes facility to provide for growth in its stamping and tooling business.

The construction process will extend over the next 2 years. BTD's goal is to have its painting capabilities operational in the first quarter of 2015. Moving tubing operations to Lakeville, consolidating warehouses, and expanding the Lakeville plant will take place throughout 2015 and should be operational in the first quarter of 2016. Both customers and shareholders will see value from this investment.

BTD has a 15% compounded annual growth rate in sales from 2010 to 2014. That's impressive, and it should be no surprise that growth like that requires a facilities expansion at our Minnesota locations.

BTD's overall sales are up, but the wind energy and mining work at our Washington, Illinois, plant has dampened, requiring a reduction in force of approximately 50 employees.

Slide 10 gives you a better feel of the percentage of sales of various end markets at both of our manufacturing companies -- BTD, which we just discussed, and T.O. Plastics. T.O. Plastics is our plastic thermoforming company, and it is on track. It continues to increase revenues in the horticultural segment of the business and develop a strong pipeline of new customer projects.

Although our PVC company's net income is down slightly compared with last year's third quarter, I'm pleased that they are doing better than budget for 2014. Both companies continue to operate well. They haven't been able to fully pass on higher resin costs to customers due to competitive market conditions, but they continue to have high sales volumes.

One particularly good market for Northern Pipe products is western North Dakota, where there's a strong demand for rural water infrastructure to serve the growing population in the oil business. With Northern Pipe and Vinyltech, we have a very capable individual leading two companies whose strategy has been, and continues to be, to maximize plant capacity, produce quality pipe, be responsive to customers, and keep fixed costs low. They've done that, and I have every confidence that they will continue to do so.

Overall, I'm pleased with the operations and look forward to supporting BTD as it moves ahead with its Minnesota expansion.

Now I'll turn it over to Kevin for a financial perspective. Kevin?

Good morning. Please refer to Slide 11 as I discuss our third-quarter results. We delivered strong results in the third quarter. Consolidated revenues increased 5.5% across all of our operating segments. We reported $0.43 a share from continuing operations, which is approximately a 5% increase in quarter-over-quarter earnings per share. This is in spite of milder-than-normal weather and increased maintenance costs associated with the Hoot Lake plant extended outage. This strong performance is reflective of our strategy to maintain a diversified portfolio of operating companies.

We continue to see the benefit of our rate base expansion. Our electric retail revenues increased $6.2 million quarter over quarter, driven largely by a $4.9 million increase in environmental and transmission rider revenues.

We continue to see the volume growth in revenues from increased sales to pipeline customers. Over the past 3 years, the utility has experienced a growth rate in retail electric sales of about 1.3% and is projected to grow around 1.7% over the next 3 to 4 years. This volume growth of $1.6 million in revenues was offset by an equivalent dollar amount due to milder-than-normal third-quarter weather.

Our manufacturing segment's revenues increased nearly 13% quarter over quarter as a result of volume increases at BTD. This growth is from higher sales to energy-related, recreational, and lawn-and-garden end markets. The slight decrease in earnings from the third quarter a year ago is mainly a result of increased material costs along with increased operating expenses to support sales growth in 2014.

T.O. Plastics revenues declined $1.3 million quarter over quarter as a result of no longer producing low-margin packaging products for one of our customers. While revenues declined related to this, our product mix improved, resulting in improved gross margins quarter over quarter. This allowed T.O. to generate earnings equal to the same quarter last year.

Our plastics segment revenues increased 10%, mostly on stronger volumes. Earnings decreased $300,000 between the quarters due to lower margins from increased costs of PVC resin. We have not been able to fully pass on increased resin costs in sales prices due to continuing competitive market conditions during the first 9 months of 2014.

Our construction segment had another strong quarter. Aevenia's revenues and earnings improved mainly due to additional transmission and distribution work from increased construction activity in the Bakken area. And Foley's earnings increased despite lower revenues due to improved margins on jobs in progress and from a more selective bidding process and better cost controls.

And our corporate expenses decreased $1 million during the third quarter, as discussed in the press release.

We continue to use our at-the-market equity program in the third quarter of 2014. We sold approximately 168,000 shares of common stock, with net proceeds of $4.8 million year to date under this program. We expect to continue to use this program as equity financing as needed during the 2015 to 2018 timeframe, in part to support our capital expansion plans.

Slide 13 shows we are maintaining our August 2014 earnings guidance of $1.65 to $1.80 of earnings per share. However, we now expect to be at the upper end of that range. We have also made revisions to our 2014 earnings guidance by segment based on year-to-date segment performance and current projections. This guidance reflects the current mix of businesses owned by the Corporation.

We are exploring strategic alternatives related to our construction segment, given our concerns of how this business fits within our portfolio. We would still expect to be within our February 2014 earnings guidance range should we be successful in executing on the strategic alternatives for this segment by year end. Any proceeds would be used to help fund our capital expenditure plan.

We are reducing our 2014 net income expectations back to our February 2014 guidance for the electric segment. This is primarily due to the extended outage at our Hoot Lake plant and milder-than-normal weather during the third quarter, which has diminished the positive earnings impact from colder-than-normal weather experienced in the first quarter. Approximately 40% of our 2014 expected utility earnings come from the rate base investments made associated with rider recovery mechanisms.

We are reducing our August 2014 earnings guidance from our manufacturing segment due to the expected exit in the fourth quarter of 2014 from our Otsego, Minnesota, warehouse lease. This is part of BTD's announced facility expansion project. The cost of exiting this lease is expected to be approximately $0.04 per share.

T.O. Plastics earnings are expected to be in line with the August 2014 earnings expectations. Our backlog for this segment is $50 million as of September 30, 2014, compared to $47 million a year ago.

We are also raising our August 2014 guidance for the plastics segment due to stronger sales volumes experienced during the third quarter of 2014, and we are increasing the August 2014 guidance for the construction segment. We continue to see improvement from better cost controls and more selective bidding on projects, with the potential for higher profit margins along with increased construction activity in western North Dakota. Backlog in place for the construction businesses is $31 million as of September 30, 2014, compared with $34 million as of September 30, 2013. And we are reducing our August 2014 guidance range to reflect lower corporate costs.

The first 9 months of the year continue to show the benefits of our diversified portfolio. Our electric segment is seeing the earnings growth we expected from our rate base investments. Our manufacturing, plastics, and construction segments are performing well, with solid revenue growth. These businesses are providing returns in excess of our weighted average cost of capital.

Our current expectations for 2014 will result in double-digit earnings per share growth for our current mix of businesses. This is based off the non-GAAP $1.54 per share in 2015. We will issue our earnings per share guidance for 2015 in our year-end earnings release, which is currently scheduled for February 9, 2015.

We are now ready to take your questions, and after the Q&A, Jim will return with a few closing remarks.

(Operator Instructions.) Matt Tucker, KeyBanc Capital Markets.

Hey, gentlemen, this is actually Grier Buchanan on for Matt. Congrats on a nice quarter. First question, on construction, you guys did acknowledge the solid performance. But just hoping to get a little more color on what's prompting the decision now, given it seems the segment has outperformed internal expectations year to date as reflected in the upward guidance trend?

Thank you, Grier. This is Jim McIntyre. A few comments here. While our two construction companies are doing well, they are not businesses in which we would expect to make significant further investment. And given the size of the construction businesses and that they're a part of our Company that has several other businesses, we think they might be a better fit as part of a larger company that has construction as either its primary or its only business part of it.

And then construction, by its nature, has volatility in earnings, and that's not totally consistent with our investor base, which values predictable earnings and increasing dividends. So as we look at where we're at, we're exploring whether or not there is a better fit with our construction companies that, I repeat, are doing well, with someone else where we could, as Kevin said in his remarks, redeploy those proceeds elsewhere in our business expansion.

Okay, that's helpful. Thanks. And along the lines of your investor base, what gives you the confidence that the expansion in manufacturing would meet your return hurdles? And then maybe just a little context of what's driving the need to expand that facility for investors who may not be as familiar with your manufacturing business and the space in which those companies operate?

Okay, this is Jim again. I'll start, and then Chuck will probably add some more to this. One, BTD has been one of the success stories of our diversification efforts for a long time. Chuck referenced in his comments the percentage growth of the revenue base. We also shared, as we have in the past, the customers they have and hallmark names among the manufacturing industry. And we are well regarded by those customers, given our winning business with them.

So we're confident in our ability to continue, particularly as we realign our processes around the revised facilities, add paint to the mix, and then continue to use operational excellence to drive both the operational and the financial performance. This is a company that we have substantial confidence in. And as we make these changes, we see a bright future for them, and hence we believe they will be able to deliver on the value proposition and earn at or above the cost of capital for the incremental capital. Chuck?

Just to add onto that, as I mentioned in my comments, over the last 5 years, BTD has had a 15% annual compound growth rate in sales, and actually going back to 1995, has also had very strong sales. We know, just from the business, that tooling tends to be a leading indicator of the amount of business that will be coming, and our tooling area has been very busy over the last three quarters or so. So we continue to believe that we will see growing revenue, growing earnings in this company and in this segment.

Okay, that's helpful. Thanks. And you mentioned tooling. When you're discussing the BTD story with investors, is there one or more particular end markets that you can point to as really driving the growth? I know you had that one slide, which was helpful.

Rec -- recreational vehicles -- have been very strong. Lawn and garden has been very strong. Ag is a little bit more challenged now. The energy market, outside of wind, has been very strong. So those would be the -- that chart has not moved significantly, the percentages of end markets, over the last couple of years.

Okay. And then just one more and I'll jump back in the queue. Manufacturing, is that anticipated $0.04 charge per share, is that the only thing driving lower guidance?

Yes, Grier, this is Kevin. That's the driver of that. When you see that $0.04 reduction in the guidance table from August to now, that's the reason for the change.

Okay, great. Thanks, gentlemen. I'll jump back in the queue.

David Arcaro, Sidoti and Company.

A quick question on the plastics business. Wondering if you could talk to whether resin prices have continued to rise so far this quarter.

David, this is Kevin. In terms of the third quarter, resin prices held relatively flat, so there wasn't -- we saw collectively, from the beginning of the year through the 6-month timeframe, there was about a $0.09 per-pound increase from end of December through June, and then they've held relatively flat in the third quarter.

And was that unexpected? I think I remember in the last earnings call, you had mentioned a $0.02 increase that you had seen thus far in the third quarter. And then have they stabilized since then?

We did -- you're correct -- we did talk about an expected or potential $0.02 increase that had been announced as a part of the third quarter. And then we did see it stabilizing during the third quarter and didn't materialize to the extent we thought.

Got it, thanks. A couple of quick questions on the utility. Will you be able to recover the maintenance charges at Hoot Lake that were above expectations? Would that be something that you would look for in a future rate case?

This is Chuck. The majority of those costs were expensed and would not be in a future rate case. We did, of course, with every overhaul, there is a split of capital improvements and operating expense, and the overruns here were primarily operating.

Okay, thanks. What's the status of coal shipments right now? Are they back on track or still facing delays? And I guess if Big Stone doesn't produce as much power in the fourth quarter heading into the winter, I guess what's the risk there? Would that mean you have to purchase more, basically purchase more power, but then also maybe see lower wholesale revenues?

Well, I'll start with are the coal shipments back on track. They are not. We have three train sets that serve the Big Stone plant. As with a lot of utilities, they have taken one set out of circulation, and this is occurring across a lot of industries in the railroad area. As far as cost to customers, if we have to continue to curtail, there will be potentially, depending on market prices, some costs, additional costs that will be run through the fuel clause in that situation.

I see. Thanks.

And the wholesale sales, our wholesale sales off of systems -- I spoke today about our non-asset-based sales. So these are energy trading we have participated in not associated with our own assets. If we have asset-based sales coming off our Company-owned units, any sales for those flow through the fuel clause if there is a profit on those. So that could be, again, down, based on market prices.

Got it. And then just one question on BTD. Wondering what you -- I guess, what are the goals with the investment? Are you aiming for higher margins with the addition of paint and assembly capabilities? Is this a way to drive higher revenue growth, I guess, and when would you expect that benefit to start to hit the financials?

I guess we would expect increased revenues. We would expect increased margin. Effectively, what's happening is we have a number -- we have a warehousing facility that is not associated with each of the plants. We're taking the Detroit Lakes and Lakeville facilities and effectively making them a facility that's large enough to take raw materials in at one part of the plant and produce painted parts come out the other, all under one roof.

Currently, we have, as Kevin mentioned, the Otsego warehouse is not located near either of the other -- relatively, not very close to either of the other production facilities. And we expect that we will have reduced logistics costs and just a better flow of materials through the plants, which should improve the efficiency and the turnaround time to customers for things that we outsource now. We hope to take that timeframe, or cut that down while we do that internally, all under one roof, so to speak.

And in terms of timing, is this a CapEx and OpEx outlay in 2015, and then with the benefits being realized in 2016?

No, I think we'll start to see benefits as soon as the paint line goes in. That space is already constructed. The paint line is not in there. But additional space is under construction now, so we should start to see improvements by mid-2015.

Excellent. Thanks so much. That's all I had.

(Operator Instructions.) Matt Tucker, KeyBanc Capital Markets.

Hey, just a quick one on the lower corporate expense versus 3Q 2013. Can we think about this like a new run rate, and is it mainly due to, in what was referenced in the press release, the reallocation of certain expenses to the operating companies?

Yes, Grier, this is Kevin. The reallocation of certain costs to the operating companies, that's new for 2014. We had previously not been allocating any costs to our manufacturing and infrastructure businesses. We look at the costs that we have at corporate as a part of the Varistar entity that we have, and we do send a charge down now, starting in 2014.

So it's a savings at corporate, but it's increased cost at the other segments. And so this is the first year of doing that. As we move forward into 2015, you'll see similar results. And so it's first this year, and then we'll continue it in years forward.

Okay, great. Thanks, Kevin.

Brendan Nave, Livian Capital.

Congratulations on a great quarter, guys. I just wanted to understand, I guess, from a value perspective, the sale process on the construction business, just from the shareholder side of Otter Tail, people involved with the equity. I guess utilities, let's say, on average trade 16 times earnings on a PE basis. Do you guys think you can monetize the construction business at a similar multiple so it's a value-neutral perspective, and then reinvest that into the utility, or how are you guys just thinking about that from that perspective?

Yes, from a value perspective, the market comps for these businesses is probably at a 4 times EBITDA level. And so that's what, in terms of some of the benchmarking and information we're seeing, then, in terms of where these prospective businesses have been trading at. And so that's where we've been looking at it, and we do believe that we can, if successful with this, redeploy those into the continued growth of the utility and the returns we're getting there and then help support the other expansion that we talked about with BTD.

Got it. Thanks so much.

Brendan, this is Jim McIntyre. I'll just add a little bit to that, and that is this, that we believe if we would end up ultimately divesting, we then end up with our utility platform and our manufacturing platform. And that allows us, then, to have synergies within manufacturing, where we can focus our resources on manufacturing, better understand and really drive the performance of those sets of businesses.

The talent development that we think is a critical part of our strategic plan, we can move people across those different companies within manufacturing. And then it further increases the transparency of the businesses, both internally and externally, as far as what is Otter Tail Corporation and makes us easier to understand, and hopefully for our investors as well.

Thanks, Jim, makes sense.

(Operator Instructions.) I'm showing no more questions in the queue at this time. I'd like to now hand it over to Mr. Jim McIntyre for closing remarks.

Thank you, Roland. As we enter into the final quarter of the year, we believe we're well positioned to deliver earnings on the upper range of our 2014 guidance. It's gratifying to see the positive results from delivering on our strategy of rate base growth at the utility and improved operational and financial performance of our manufacturing and infrastructure companies. We're also excited about the growth potential from our investment at BTD as they expand their services to a solid customer base.

Thank you for joining our call and for your interest in Otter Tail Corporation. We look forward to speaking with you next quarter.

Ladies and gentlemen, thank you very much for your participation. This concludes the presentation. You may now disconnect.