Otter Tail Corp (OTTR) 2022 Q4 法說會逐字稿

Good morning, and welcome to Otter Tail Corporation's 2022 Earnings Conference Call. Today's call is being recorded. I will now turn the call over to the company for their opening comments.

早上好，歡迎來到 Otter Tail Corporation 的 2022 年收益電話會議。今天的通話正在錄音中。我現在將把電話轉給公司，徵求他們的開場白。

Good morning, everyone, and welcome to our 2022 earnings conference call. My name is Tyler Nelson. Last night, we announced our 2022 fourth quarter and annual financial results. Our complete earnings release and slides accompanying this call are available on our website at ottertail.com. A recording of the call will be made available on our website later today. With me on the call today are Chuck MacFarlane, Otter Tail Corporation's President and CEO; and Kevin Moug, Otter Tail Corporation's Senior Vice President and Chief Financial Officer.

大家早上好，歡迎來到我們的 2022 年收益電話會議。我的名字是泰勒尼爾森。昨晚，我們公佈了 2022 年第四季度和年度財務業績。在我們的網站 ottertail.com 上提供了我們完整的收益發布和本次電話會議的幻燈片。通話錄音將於今天晚些時候在我們的網站上公佈。今天和我一起打電話的有 Otter Tail Corporation 的總裁兼首席執行官 Chuck MacFarlane；以及 Otter Tail Corporation 的高級副總裁兼首席財務官 Kevin Moug。

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

在我們開始之前，我想提醒您，我們將在本次電話會議期間做出前瞻性陳述。如幻燈片 2 所述，這些陳述代表了我們當前的觀點和對未來事件的預期。它們受到風險和不確定性的影響，可能導致實際結果與此處呈現的結果不同。因此，請注意不要過分依賴這些陳述中的任何一個。我們在提交給美國證券交易委員會的文件中更詳細地描述了我們的前瞻性陳述，我們鼓勵您查看這些文件。 Otter Tail Corporation 不承擔因新信息、未來事件、發展或其他原因而更新或修改我們的前瞻性陳述的任何義務。

For opening remarks, I will now turn the call over to Otter Tail Corporation's President and CEO, Mr. Chuck MacFarlane.

對於開場白，我現在將電話轉交給 Otter Tail Corporation 的總裁兼首席執行官 Chuck MacFarlane 先生。

Thank you, Tyler. Good morning, and welcome to our 2022 year-end earnings call. Please refer to Slide 4 as I begin my comments on our annual results. Otter Tail Corporation achieved record financial results in 2022. We generated diluted earnings per share of $6.78, a 60% increase from 2021. All segments produced double-digit earnings growth led by our Plastics segment, which capitalized on extraordinary industry conditions to achieve another record level of earnings. Looking forward, we expect Plastics segment earnings to recede in 2023 from our record level this past year, but remain elevated relative to our expected normalized earnings beginning in 2024. In a moment, Kevin will provide a more detailed discussion of our financial performance.

謝謝你，泰勒。早上好，歡迎來到我們的 2022 年年終財報電話會議。在我開始對我們的年度業績發表評論時，請參閱幻燈片 4。 Otter Tail Corporation 在 2022 年取得了創紀錄的財務業績。我們的每股攤薄收益為 6.78 美元，比 2021 年增長了 60%。在我們的塑料部門的帶動下，所有部門都實現了兩位數的收益增長，該部門利用非凡的行業條件再創紀錄收入水平。展望未來，我們預計塑料部門的收益將在 2023 年從去年的創紀錄水平回落，但相對於我們從 2024 年開始的預期正常化收益而言仍處於高位。稍後，凱文將對我們的財務業績進行更詳細的討論。

Slide 5 illustrates our 5-year compounded annual growth rate and earnings per share with and without the impact of our Plastics segment. Through dependable earnings and steady growth at Otter Tail Power, BTD, T.O. Plastics and changes and in corporate costs, we have produced a historic 10.8% earnings per share CAGR, excluding our Plastics segment businesses. The additional earnings and cash flow generated by our Plastics segment in 2021 and 2022, provide additional strength to our already strong credit metrics, liquidity and capital structure and allow for capital investments in our operating companies.

幻燈片 5 說明了我們 5 年的複合年增長率和每股收益，包括和不包括我們的塑料部門的影響。通過 Otter Tail Power、BTD、T.O. 的可靠收益和穩步增長。塑料和變化以及公司成本，我們創造了歷史性的每股複合年增長率 10.8%，不包括我們的塑料業務。我們的塑料部門在 2021 年和 2022 年產生的額外收益和現金流為我們本已強大的信用指標、流動性和資本結構提供了額外的力量，並允許對我們的運營公司進行資本投資。

Turning to Slide 7. We illustrate Otter Tail Power's efforts in working toward a cleaner energy future. We are targeting to reduce carbon emissions from our owned generation resources approximately 50% from 2005 levels by 2025 and 97% by 2050, assuming targeted dispatch occurs. Additionally, our owned and contracted energy generation is forecast to be more than 50% renewable by 2025. Last week, Governor, Walz signed the clean energy bill into law in Minnesota. The bill requires Minnesota utilities to provide carbon-free electricity to Minnesota retail customers by 2040. It also requires utilities to provide 80% carbon-free energy by 2030 and 90% by 2035. The legislation allows utilities to use renewable energy credits to offset carbon emissions to achieve these requirements.

轉到幻燈片 7。我們展示了 Otter Tail Power 為實現清潔能源未來所做的努力。我們的目標是到 2025 年將我們自有發電資源的碳排放量從 2005 年的水平減少約 50%，到 2050 年減少 97%，前提是進行有針對性的調度。此外，預計到 2025 年，我們擁有的和承包的能源發電量將超過 50% 是可再生能源。上週，州長沃爾茲在明尼蘇達州簽署了清潔能源法案，使其成為法律。該法案要求明尼蘇達州公用事業公司到 2040 年向明尼蘇達州的零售客戶提供無碳電力。它還要求公用事業公司到 2030 年提供 80% 的無碳能源，到 2035 年提供 90%。該立法允許公用事業公司使用可再生能源信用來抵消碳排放以達到這些要求。

We expect to meet these requirements with our existing renewable fleet and available renewable energy credits. The bill also updates the state's existing renewable energy standard now requiring utilities to provide energy from renewable resources equal to at least 55% of the total energy by 2035. Based on our current projected energy resource mix, we anticipate we will meet the renewable requirement in 2035, this will require some additional -- renewable additions between 2024 and 2035.

我們希望通過現有的可再生能源車隊和可用的可再生能源信用來滿足這些要求。該法案還更新了該州現有的可再生能源標準，現在要求公用事業公司從可再生資源中提供的能源到 2035 年至少佔總能源的 55%。根據我們目前預計的能源資源組合，我們預計我們將在 2018 年滿足可再生能源要求2035 年，這將需要在 2024 年至 2035 年之間增加一些額外的可再生能源。

Slide 11 includes an overview of Otter Tail Power's 49-megawatt Hoot Lake Solar project. Project construction began in May of 2022 and is expected to be completed in mid-2023. All the costs and benefits of the project are assigned to Minnesota customers, Recovery of the $60 million investment has been approved through the renewable rider. Passage of the Inflation Reduction Act has increased the investment tax credit on this project from 26% to 40%.

幻燈片 11 概述了 Otter Tail Power 的 49 兆瓦 Hoot Lake 太陽能項目。項目建設於2022年5月開工，預計2023年年中竣工。該項目的所有成本和收益均分配給明尼蘇達州客戶，6000 萬美元投資的回收已通過可再生附加條款獲得批准。通貨膨脹減少法案的通過使該項目的投資稅收抵免從 26% 增加到 40%。

Turning to Slide 12. Otter Tail Power completed the purchase of the Ashtabula III wind farm on January 3, 2023. Since 2013, we have had a purchase power agreement in place to purchase the offtake of this facility. Acquiring the facility provides a lower cost alternative than maintaining the purchase power agreement. All regulatory approvals have been received to provide recovery of this rate base investment.

轉到幻燈片 12。Otter Tail Power 於 2023 年 1 月 3 日完成了對 Ashtabula III 風電場的收購。自 2013 年以來，我們簽訂了購買電力協議以購買該設施的承購權。與維護購買力協議相比，獲得該設施提供了一種成本更低的選擇。已收到所有監管批准，以恢復此利率基礎投資。

Slide 13 provides additional information on Tranche 1 of MISO's Long Range Transmission Plan. Otter Tail will be a co-owner in 2 Tranche 1 projects, the Jamestown to Ellendale and Big Stone South to Alexandria 345 kV transmission projects. Otter Tail's total and capital investment in these projects is estimated to be approximately $390 million. 40% of the capital investment is expected to occur in the next 5 years.

幻燈片 13 提供了有關 MISO 遠程傳輸計劃第 1 部分的更多信息。 Otter Tail 將成為 2 個 Tranche 1 項目的共同所有人，即 Jamestown 至 Ellendale 和 Big Stone South 至 Alexandria 345 kV 輸電項目。 Otter Tail 在這些項目中的總投資和資本投資估計約為 3.9 億美元。預計 40% 的資本投資將發生在未來 5 年內。

Slide 14 provides an update on Otter Tail Power's Integrated Resource Plan. In November, the Minnesota PUC supported our request to amend the resource plan procedural schedule. The amended schedule allows us to incorporate the effects of changes of -- to MISO's seasonal capacity construct increased MISO reserve margin requirements, recent load additions and the passage of the Inflation Reduction Act. These items could have an impact on the 2021 initial preferred 5-year plan, which requested authority to add dual fuel capability to Astoria Station to add 150 megawatts of solar at a yet-to-be-determined site and to commence the process of withdrawing from our 35% ownership interest in the coal-fired Coyote generating station. We plan to file an updated resource plan in March of this year. The amended schedule does not modify the time line for reviewing our proposal to add dual fuel capability at Astoria Station.

幻燈片 14 提供了 Otter Tail Power 的綜合資源計劃的更新。 11 月，明尼蘇達 PUC 支持我們修改資源計劃程序時間表的請求。修改後的時間表使我們能夠將以下變化的影響納入 MISO 的季節性產能結構、增加的 MISO 儲備保證金要求、最近的負荷增加和通貨膨脹減少法案的通過。這些項目可能會對 2021 年最初的首選 5 年計劃產生影響，該計劃要求當局為阿斯托里亞站增加雙燃料能力，在一個尚未確定的地點增加 150 兆瓦的太陽能，並開始撤回過程來自我們在燃煤 Coyote 發電站 35% 的所有權權益。我們計劃在今年 3 月提交更新後的資源計劃。修訂後的時間表不會修改審查我們在阿斯托里亞站增加雙燃料能力的提議的時間表。

Slide 15 provides an overview of Otter Tail Power's capital spending plan. The plan includes $1.1 billion of capital investment over the next 5-year period, producing a 6.4% annual compounded growth rate in rate base over this time frame. Approximately 80% of this capital plan will be recovered through existing rates or riders. This rate base growth plan is a key driver in our ability to produce earnings per share growth at our targeted level of 5% to 7%.

幻燈片 15 概述了 Otter Tail Power 的資本支出計劃。該計劃包括在接下來的 5 年期間進行 11 億美元的資本投資，在此期間的利率基礎上實現 6.4% 的年復合增長率。該資本計劃的大約 80% 將通過現有費率或附加條款收回。這一利率基礎增長計劃是我們實現每股收益增長 5% 至 7% 目標水平的關鍵驅動因素。

Turning to our Manufacturing segment on Slide 21 highlights the financial performance for the year. Strong customer demand across most end markets drove our earnings growth in 2022. BTD, our metal fabrication business produced double-digit volume growth and experienced volatile steel prices during the year with steel prices declining sharply in the second half of the year. Lower steel prices have negatively impacted our scrap metal revenues, we continue to monitor the impact of supply chains, which are improving and economic conditions that may impact customer demand and our shipping volumes. T.O. Plastics benefited from robust customer demand in 2022 along with product price increases offsetting inflationary cost pressures.

轉向我們在幻燈片 21 上的製造部門，重點介紹了今年的財務業績。大多數終端市場的強勁客戶需求推動了我們 2022 年的盈利增長。BTD，我們的金屬加工業務實現了兩位數的銷量增長，並且在這一年經歷了鋼材價格的波動，下半年鋼材價格大幅下跌。較低的鋼鐵價格對我們的廢金屬收入產生了負面影響，我們繼續監測供應鏈的影響，供應鏈正在改善，經濟狀況可能會影響客戶需求和我們的運輸量。到。塑料受益於 2022 年強勁的客戶需求以及產品價格上漲抵消了通脹成本壓力。

Looking forward, Slide 23 highlights our 23 market outlook for end markets served by our Manufacturing segment. We expect recreational vehicle and the lawn & garden end market to soften in 2023, especially in the back half of the year as inflation and the interest rate environment impact customers' discretionary spending. In contrast, we expect the ag, power generation and horticulture markets to remain strong throughout 2023.

展望未來，幻燈片 23 強調了我們對製造部門服務的終端市場的 23 市場展望。我們預計休閒車和草坪和花園終端市場將在 2023 年走軟，尤其是在下半年，因為通貨膨脹和利率環境會影響客戶的可自由支配支出。相比之下，我們預計整個 2023 年農業、發電和園藝市場將保持強勁。

Slide 24 highlights our financial results from our Plastics segment in 2022. Our team effectively capitalized on extraordinary industry conditions to produce record financial results. Demand for PVC pipe declined sharply in the fourth quarter of the year as market conditions, including a softening housing market and lower resin prices led to distributors and contractors to reduce purchase volumes to manage their inventory levels. To this point, we have seen only modest pressure on our sales prices. We expect margins will compress in 2023 after distributor and contractor inventories are rightsized. At our Vinyltech location, our rail expansion project is underway and we are in permitting and design phase of our plant expansion.

幻燈片 24 重點介紹了我們塑料部門 2022 年的財務業績。我們的團隊有效地利用了非凡的行業條件，創造了創紀錄的財務業績。由於房地產市場疲軟和樹脂價格下跌等市場狀況，導致分銷商和承包商減少採購量以管理庫存水平，因此今年第四季度 PVC 管道的需求急劇下降。到目前為止，我們只看到銷售價格受到適度壓力。我們預計在分銷商和承包商庫存調整後，利潤率將在 2023 年壓縮。在我們的 Vinyltech 工廠，我們的鐵路擴建項目正在進行中，我們正處於工廠擴建的許可和設計階段。

Finally, I would like to thank all employees for execution and persistence in 2022. Our team effectively managed a number of challenges during the year while maintaining our focus on achieving operational and commercial excellence.

最後，我要感謝所有員工在 2022 年的執行力和堅持不懈。我們的團隊在這一年有效地應對了許多挑戰，同時繼續專注於實現卓越的運營和商業。

Now I'll turn it over to Kevin to provide additional commentary on our financial performance in 2022 and our expectations for 2023.

現在我將把它交給凱文，就我們 2022 年的財務業績和我們對 2023 年的預期提供更多評論。

Well, thank you, Chuck, and good morning, everyone. 2022 was an outstanding year. Consolidated revenues increased approximately 22% to $1.46 billion and consolidated earnings were $284 million. All of our segments produced double-digit earnings growth over 2021. Electric segment earnings improved 10%, Manufacturing was up 22% and Plastics earnings increased 99%. Our return on equity in 2022 was 25.6% compared with a 19.2% return in 2021. These returns were generated on a rolling 13-month equity layer of approximately 57% and 51%, respectively.

好吧，謝謝你，查克，大家早上好。 2022 年是非凡的一年。合併收入增長約 22% 至 14.6 億美元，合併收益為 2.84 億美元。我們所有的部門在 2021 年都實現了兩位數的收入增長。電氣部門的收入增長了 10%，製造業增長了 22%，塑料部門的收入增長了 99%。我們 2022 年的股本回報率為 25.6%，而 2021 年為 19.2%。這些回報是在 13 個月的滾動股本層中產生的，分別約為 57% 和 51%。

2022 represented the 84th consecutive year of dividend payments. And we also announced an indicated annual dividend of $1.75 a share for 2023 which represents a 6.1% increase over the 2022 annual dividend.

2022 年是連續第 84 年派息。我們還宣布了 2023 年每股 1.75 美元的年度股息，比 2022 年的年度股息增加 6.1%。

Please refer to Slide 30 as I provide an overview of 2022 segment earnings. The Electric segment net earnings increased $7.5 million over 2021. The increase in earnings was primarily driven by increased revenues due to higher demand from commercial and industrial customers, including a new commercial load in North Dakota. Revenues also benefited from the impact of favorable weather conditions in 2022 compared to 2021. An increase in fuel recovery revenues resulting from higher purchase power and production fuel costs related to increased natural gas and market energy costs.

請參閱幻燈片 30，因為我提供了 2022 年分部收益的概述。電氣部門的淨收益比 2021 年增加了 750 萬美元。收益的增加主要是由於商業和工業客戶需求增加導致的收入增加，包括北達科他州的新商業負荷。與 2021 年相比，2022 年的收入也受益於有利天氣條件的影響。與天然氣和市場能源成本增加相關的購買力和生產燃料成本增加導致燃料回收收入增加。

Also driving this increase were planned outages at Coyote Station and Big Stone plant. These items were partially offset by higher operating and maintenance costs related to increases in maintenance and other costs related to the outages at both Coyote Station and Big Stone Plant, increases in labor and employee benefit costs, higher transmission tariffs and increases in travel and other expenses. This segment has been a consistent performer over the 2017 through 2022 time frame. It has converted a 9% rate base growth into 9% earnings per share growth over the same time.

Coyote Station 和 Big Stone 工廠的計劃停電也推動了這一增長。這些項目被與 Coyote Station 和 Big Stone Plant 停電相關的維護和其他成本增加相關的更高運營和維護成本、勞動力和員工福利成本的增加、更高的輸電關稅以及差旅和其他費用的增加所部分抵消.該細分市場在 2017 年至 2022 年的時間框架內一直表現穩定。同時，它已將 9% 的基本增長率轉化為 9% 的每股收益增長。

Net earnings for the Manufacturing segment increased $3.8 million over 2021, driven by an 18% increase in revenues driven by higher sales volumes and increase in steel material costs at BTD. Sales volumes improved 12% due to strong end market demand. Steel material costs were up 8% over the previous year. These items were partly offset by a decline in scrap revenues due to lower scrap metal prices and lower scrap volumes. T.O. Plastics also experienced higher sales prices and volumes. Segment net earnings were positively impacted by increased sales volumes, increased sales pricing and favorable cost absorption.

製造部門的淨利潤比 2021 年增加了 380 萬美元，這是由於銷量增加和 BTD 鋼材成本增加導致收入增長 18%。由於強勁的終端市場需求，銷量增長了 12%。鋼材成本較上年上漲8%。這些項目部分被廢金屬價格下降和廢料量減少導致的廢料收入下降所抵消。到。塑料也經歷了更高的銷售價格和數量。銷量增加、銷售定價提高和有利的成本吸收對部門淨收益產生了積極影響。

Net earnings from the Plastics segment increased $97.6 million compared to 2021. Driving this change was an increase in revenues of approximately 35% due to significant increases in the sales price per pound of PVC pipe related to a continuation of unique market conditions that started in 2021 and continued into 2022.

與 2021 年相比，塑料部門的淨收益增加了 9760 萬美元。推動這一變化的是收入增長了約 35%，這是由於 PVC 管道每磅銷售價格的大幅上漲與 2021 年開始的獨特市場條件的持續相關並持續到 2022 年。

This uplift was partially offset by lower sales volumes. The lower sales volumes were caused by raw material constraints during the first half of the year and softening customer demand during the last half of the year due to contractors delaying projects because of supply chain issues, a softening housing market and customers reducing purchases of PVC pipe in order to use up more of their finished goods inventory instead of buying additional PVC pipe.

這一增長被較低的銷量部分抵消了。銷量下降的原因是上半年原材料受限，下半年客戶需求疲軟，承包商因供應鏈問題推遲項目、房地產市場疲軟以及客戶減少 PVC 管道採購為了用完更多的成品庫存而不是購買額外的 PVC 管。

Our corporate costs were impacted by increased employee health care costs, increased professional service expenses and losses on our corporate-owned life insurance policies and investments at our captive insurance company. These higher costs were partially offset by lower interest expense due to smaller amounts outstanding on the corporate credit facility and the impact of debt benefit proceeds from our corporate-owned life insurance.

我們的公司成本受到員工醫療保健成本增加、專業服務費用增加以及我們公司擁有的人壽保險單和我們專屬保險公司投資的損失的影響。這些較高的成本被較低的利息支出部分抵消，這是由於公司信貸額度的未償還金額減少以及我們公司擁有的人壽保險的債務收益收益的影響。

Moving to Slide 32. This reflects our business outlook for 2023 of an earnings per share range of $3.76 to $4.06 a share. Our earnings mix for 2023 is expected to be approximately 51% from the Electric segment and 49% from our Manufacturing and Plastics segment net of corporate costs. This is consistent with our previous discussions that there will be elevated earnings from our manufacturing platform in 2023. Changes in segment and corporate cost guidance are as follows: 2023 Electric segment earnings guidance is increasing due to returns generated from the increase in our rate base as our average rate base in 2022 increased 3.1% to $1.6 billion and increasing sales volumes from commercial and industrial customers.

轉到幻燈片 32。這反映了我們對 2023 年每股收益 3.76 美元至 4.06 美元的業務前景。我們預計 2023 年的收益組合約為 51% 來自電氣部門，49% 來自我們的製造和塑料部門（扣除公司成本）。這與我們之前的討論是一致的，即 2023 年我們的製造平台的收益將會增加。細分市場和公司成本指引的變化如下：我們 2022 年的平均費率基數增長 3.1% 至 16 億美元，商業和工業客戶的銷量也有所增加。

2023 Electric segment guidance is based on normal weather for the year. We also expect lower operating and maintenance expenses to favorably impact 2023 earnings guidance as well. This reduction is primarily driven by lower pension costs due to an increase in the discount rate and the assumed long-term rate of return. These lower pension costs are partially offset by increased operating and maintenance expenses related to the Ashtabula III wind farm and the Hoot Lake Solar farm, increased employee compensation and benefit costs and the inflationary impacts on other operating and maintenance expenses.

2023 年電力部門指導基於當年的正常天氣。我們還預計較低的運營和維護費用也會對 2023 年的盈利指引產生有利影響。這一減少主要是由於貼現率和假定長期回報率的增加導致養老金成本降低。這些較低的養老金成本被與 Ashtabula III 風電場和 Hoot Lake 太陽能發電場相關的運營和維護費用增加、員工薪酬和福利成本增加以及通貨膨脹對其他運營和維護費用的影響所部分抵消。

We expect our Manufacturing segment earnings to decline 10% from last year, given overall concerns about a slowing manufacturing sector, given the continued decline in overall industrial production as our customers continue to experience slower demand for products. Key assumptions driving this guidance, part sales volumes are expected to decline in 2023, driven by year-over-year steel price declines. Partially offsetting this decline is expected volume growth in agriculture and power generation end markets. Decreased scrap metal revenues at BTD from anticipated lower scrap metal prices, and inflationary cost pressures and unfavorable cost absorption, putting downward pressure on operating margins. Earnings at T.O. Plastics are expected to be flat year-over-year as increased revenue is driven by customer demand and product price increases are offset by increased costs in the business.

我們預計我們的製造部門收益將比去年下降 10%，原因是我們對製造業放緩的總體擔憂，因為我們的客戶對產品的需求持續放緩，整體工業生產持續下降。推動該指引的關鍵假設是，受鋼鐵價格同比下降的推動，預計 2023 年零件銷量將下降。預計農業和發電終端市場的銷量增長部分抵消了這一下降。由於預期的廢金屬價格下跌、通脹成本壓力和不利的成本吸收，BTD 的廢金屬收入減少，給營業利潤率帶來下行壓力。 T.O. 的收入塑料業務預計同比持平，因為客戶需求增加了收入，產品價格上漲被業務成本增加所抵消。

Backlog for the Manufacturing segment as of December 31, 2022 was approximately $388 million compared with $391 million a year ago. As we've been previously communicating, our Plastics segment earnings are expected to be lower than the record 2022 earnings due to the following: lower sales volumes, especially in the first half of 2023 as distributors and contractors continue to manage purchase volumes and consume current inventories given the current industry dynamics of a slowdown in overall demand and rising interest rates impacting housing starts as developers are pulling back on the number of lots being developed.

截至 2022 年 12 月 31 日，製造部門的積壓訂單約為 3.88 億美元，而一年前為 3.91 億美元。正如我們之前一直在溝通的那樣，由於以下原因，我們的塑料部門收益預計將低於創紀錄的 2022 年收益：銷量下降，尤其是在 2023 年上半年，因為分銷商和承包商繼續管理採購量並消耗當前考慮到當前整體需求放緩和利率上升影響房屋開工的行業動態，因為開發商正在減少正在開發的地塊數量。

We also expect margins to decline over the year as industry supply and demand factors begin to normalize, leading to reduced product sales prices. Contractors have started to see some projects being canceled or delayed. This is being driven by long lead times for some project materials as well as a speculation that material costs will be lower by middle part of 2023. And distributors are shedding inventories. This has taken longer than expected to get back to the normal level of inventories they want to carry. Our corporate costs are expected to be lower in 2023, resulting from increase in earnings generated on our cash and cash equivalents, lower expected losses on corporate investments, lower expected contributions to our foundation, lower expected claims on self-insured health plan and lower incentive compensation costs. These items are partially offset by inflationary increases in salary and benefit costs, other operating expense categories as well as no expectation of receiving any death benefit proceeds on corporate-owned life insurance.

我們還預計，隨著行業供需因素開始正常化，導致產品銷售價格下降，利潤率將在今年下降。承包商已經開始看到一些項目被取消或延遲。這是由於某些項目材料的交貨時間較長，以及預計到 2023 年中期材料成本將降低的猜測。分銷商正在削減庫存。恢復到他們想要持有的正常庫存水平所花的時間比預期的要長。由於我們的現金和現金等價物產生的收益增加、企業投資的預期損失減少、對我們基金會的預期捐款減少、自我保險健康計劃的預期索賠減少以及激勵措施減少，我們的企業成本預計將在 2023 年降低補償費用。這些項目部分被工資和福利成本、其他運營費用類別的通貨膨脹增加以及預計不會收到公司擁有的人壽保險的任何死亡撫卹金收益所抵消。

We continue to monitor various economic indicators, such as single and multifamily housing starts, mortgage rates and consumer confidence levels to ensure we are well positioned when changes occur. Additionally, we are actively managing the impacts of inflation across all of our operating companies. There continues to be concerns related to the rising interest rate environment and what impact that will have on earnings in 2023, especially related to variable rate debt and the need to refinance or issue new debt during the year.

我們繼續監測各種經濟指標，例如單戶和多戶住宅開工、抵押貸款利率和消費者信心水平，以確保我們在發生變化時處於有利地位。此外，我們正在積極管理通貨膨脹對我們所有運營公司的影響。人們仍然擔心利率上升環境及其對 2023 年收益的影響，尤其是與可變利率債務以及年內再融資或發行新債務的需要有關。

We assess our exposure to rising borrowing costs as low risk. Our variable rate debt consists of 2 credit facilities. We don't expect to have any outstanding borrowings on our parent company facility and minimum amounts are going to be drawn on the utility facility. The increased cost of these borrowings is considered in our 2023 guidance. And due to higher levels of earnings and cash flows over the last 2 years, we are in the enviable position of being able to earn a return on our excess cash.

我們將不斷上升的借貸成本風險評估為低風險。我們的可變利率債務包括 2 個信貸額度。我們預計我們的母公司設施不會有任何未償還的借款，並且將從公用設施設施中提取最低金額。我們的 2023 年指南考慮了這些借款成本的增加。由於過去 2 年收入和現金流量水平較高，我們處於令人羨慕的位置，能夠從我們的超額現金中獲得回報。

We don't have any new debt issuances scheduled until 2024. And our next scheduled bond maturity is in December of 2026. While we recognize the additional risk of having nonelectric businesses in our portfolio, these businesses have the ability to generate high levels of earnings and cash flows during strong economic times. This has been demonstrated over the last 2 years. The uplift in earnings, especially driven by the Plastics segment performance has further strengthened our equity layer. Our consolidated equity has increased by approximately $345 million from December 31, 2020, through December 31, 2022. We now stand with a 59.4% consolidated equity layer at the end of 2022 and we expect that to increase further in 2023. This offers us a distinct advantage as compared to the utility sector as we have no equity needs in our 5-year financing plan.

我們在 2024 年之前沒有任何新的債券發行計劃。我們的下一個預定債券到期日是 2026 年 12 月。雖然我們認識到在我們的投資組合中擁有非電力業務的額外風險，但這些業務有能力產生高水平的收益以及經濟強勁時期的現金流。這在過去 2 年中得到了證明。收益的提升，尤其是在塑料部門業績的推動下，進一步加強了我們的股權層。從 2020 年 12 月 31 日到 2022 年 12 月 31 日，我們的合併股權增加了約 3.45 億美元。到 2022 年底，我們的合併股權層數達到 59.4%，我們預計該比例將在 2023 年進一步增加。這為我們提供了與公用事業部門相比具有明顯優勢，因為我們的 5 年融資計劃沒有股權需求。

As previously mentioned, our 2023 guidance reflects elevated earnings from our Manufacturing platform. We currently expect our earnings mix to move to 65% from our Electric segment and 35% from our Manufacturing platform beginning in 2024. As part of this shift in earnings mix, we currently expect the normalized earnings from our Plastics segment to be in a range of $36 million to $41 million.

如前所述，我們的 2023 年指引反映了我們製造平台的收益增加。我們目前預計，從 2024 年開始，我們的電氣部門的收益組合將增加到 65%，製造平台的收益組合將增加到 35%。作為收益組合轉變的一部分，我們目前預計塑料部門的正常收益將在一定範圍內3600 萬至 4100 萬美元。

Slide 38 reflects the collective strategies of our platforms and financial performance targets. This business model serves us well, and we remain well positioned to fund our rate base growth opportunities at the utility with our strong balance sheet, ample liquidity to support our businesses and strong investment-grade corporate credit ratings.

幻燈片 38 反映了我們平台的集體戰略和財務業績目標。這種商業模式對我們很有幫助，我們仍然處於有利地位，可以通過我們強大的資產負債表、充足的流動性來支持我們的業務和強大的投資級企業信用評級，為公用事業的利率基礎增長機會提供資金。

We are now ready to take your questions.

我們現在準備好回答您的問題。

(Operator Instructions)

（操作員說明）

Our first question will come from the line of Chris Ellinghaus from Siebert Williams.

我們的第一個問題將來自 Siebert Williams 的 Chris Ellinghaus。

One of the things that was striking that I was looking at was the balance sheet that you were talking about. Can you just talk about how the good fortune of the balance sheet in the last couple of years is changing sort of your strategic plans for the utility?

我正在查看的其中一件引人注目的事情是您正在談論的資產負債表。你能談談過去幾年資產負債表的好運是如何改變你對公用事業的戰略計劃的嗎？

I think that it clearly gives us additional flexibility as we look to further look at additional rate base projects going forward. We have our current 5-year plan out there. I think we had about a not quite -- a 8.5% uplift in the capital plan from the second quarter of Q2 -- I'm sorry, Q2 of '22 compared to our third quarter release. And we -- that was driven in part by -- as we looked at the Inflation Reduction Act, we saw both impact of the Inflation Reduction Act, for example, wind powering opportunities there of about $200 million. And then of course, the MISO Tranche 1 projects that came on.

我認為這顯然為我們提供了額外的靈活性，因為我們希望進一步研究未來的其他費率基礎項目。我們有當前的 5 年計劃。我認為我們的資本計劃比第二季度第二季度提高了 8.5%——對不起，與我們第三季度發布的相比，22 年第二季度。我們——部分原因是——當我們研究《減少通貨膨脹法》時，我們看到了《減少通貨膨脹法》的影響，例如，那裡的風力發電機會約為 2 億美元。然後當然是出現的 MISO Tranche 1 項目。

We're in the midst of still putting together our amended integrated resource plan that we'll be filing with the commission at the end of March. We would expect once that's filed, we would have an additional update on our CapEx spend, Chris, in the first quarter earnings call. And then we continue to just evaluate additional inventories of rate-based projects. And so that uplift in equity and the cash that we have just gives us further flexibility to help support that rate base growth. I mean, I should also add and we've talked about this before as well, gives us additional flexibility with the Plastics expansion project in Phoenix and then we continue to evaluate an expansion project in Georgia for BTD.

我們仍在製定修訂後的綜合資源計劃，我們將在 3 月底向委員會提交該計劃。我們希望一旦提交，我們將在第一季度財報電話會議上對我們的資本支出支出進行額外更新，克里斯。然後我們繼續評估基於費率的項目的額外庫存。因此，我們剛剛擁有的股權和現金的增加為我們提供了更大的靈活性，以幫助支持利率基礎增長。我的意思是，我還應該補充一點，我們之前也討論過這個問題，為我們在鳳凰城的塑料擴建項目提供了額外的靈活性，然後我們繼續評估佐治亞州的 BTD 擴建項目。

So in addition to what might be in the IRP, do you have any thoughts about the clean energy bill and how that might accelerate anything?

那麼除了 IRP 中可能包含的內容之外，您是否對清潔能源法案以及它可能如何加速任何事情有任何想法？

Minnesota Clean Energy Bill?

明尼蘇達清潔能源法案？

Yes.

是的。

Yes. As we look through it, there's 2 components to it. The carbon-free component, which we anticipate we will use RECs for and we will use RECs generated from our existing wind facilities that are allocated to the Dakotas, most likely to meet those at a market price transferred to Minnesota. The second component is the need to hit a 55% renewable amount by 2035. We currently think that, that will drive some additional renewables, but that may be outside of the 5-year capital budget forecast.

是的。當我們瀏覽它時，它有兩個組成部分。我們預計我們將使用 REC 的無碳組件，我們將使用分配給達科他州的現有風力設施產生的 REC，最有可能以市場價格轉移到明尼蘇達州。第二個組成部分是到 2035 年需要達到 55% 的可再生能源數量。我們目前認為，這將推動一些額外的可再生能源，但這可能超出了 5 年資本預算預測。

Okay. Can you give us some more details on the Plastics expansion, time frame, costs, those sort of things?

好的。你能給我們更多關於塑料擴張、時間框架、成本等的細節嗎？

Yes, Chris, the collective costs, including a second line that would be sometime in the 2027 time frame, we would be right around $50 million. And so in terms of timing, as a reminder, we completed the land acquisition in the fourth quarter of 2021. And as Chuck mentioned in his comments, we're now doing the rail spur expansion. And then we now, in 2023, we'll also start to spend dollars related to the rest of the plant expansion, which is due to the -- driven by the property, the land acquisition that we did in 2021 and the rail expansion that we've been working on.

是的，克里斯，包括 2027 年某個時候的第二條線在內的集體成本，我們將在 5000 萬美元左右。因此，就時間而言，提醒一下，我們在 2021 年第四季度完成了土地收購。正如查克在評論中提到的那樣，我們現在正在進行鐵路支線擴張。然後我們現在，在 2023 年，我們還將開始花費與其餘工廠擴建相關的資金，這是由於 - 由房地產驅動，我們在 2021 年進行的土地收購以及鐵路擴建我們一直在努力。

There's an office expansion as a part of that, and then there's a capacity expansion as well to add a new 24-inch line that would add an additional -- expected to add an additional 26 million pounds of pipe capacity. So it's about an 8% uplift in our overall capacity between the 2 plants. And then we would expect that the -- in that 2024 time frame is when that line would come on and then once that expansion is kind of completed, then the facility is sized to support a second line that right now is currently being considered in that 2026, 2027 time frame -- '27 time frame, excuse me.

作為其中的一部分，辦公室擴建，然後還有產能擴張，以增加一條新的 24 英寸生產線，這將增加額外的——預計將增加額外的 2600 萬磅管道容量。因此，這兩個工廠之間的總產能提高了約 8%。然後我們預計 - 在 2024 年的時間框架內，這條線路將開通，然後一旦擴展完成，那麼該設施的規模將支持目前正在考慮的第二條線路2026、2027 時間框架 -- '27 時間框架，不好意思。

Okay. Great. That's helpful. Kevin, what was the foundation contribution from corporate in '22?

好的。偉大的。這很有幫助。凱文，22 年企業對基金會的貢獻是多少？

$3 million.

300萬美元。

Okay. And lastly, you talked about how there was a drawdown of PVC pipe inventories in the second half of the year, and you're kind of expecting that to continue in the first half of the year. Was there that much incremental inventory? Or was the slowdown just that dramatic?

好的。最後，您談到了下半年 PVC 管材庫存的減少情況，並且您希望這種情況在上半年繼續。有那麼多增量庫存嗎？還是經濟放緩只是那麼戲劇性？

Chris, I would say, it was a combination of both where we first saw it was in Q3 when there was 2 announced resin price decreases that occurred. There was one that we were aware of as we released second quarter earnings and then there was a second kind of a large one in the latter part of August, early September, and that's where there was recognition that there was a fair amount of inventory that was sitting in the channel at distributors and contractors. And they recognized that they just needed to use up that higher-priced inventory in the projects that they had instead of buying additional higher-priced inventory, certainly anticipating that probably sales prices would start to come down.

克里斯，我想說的是，這是我們第一次看到它是在第三季度，當時有 2 次宣布樹脂價格下降。我們在發布第二季度收益時就知道有一個，然後在 8 月下旬、9 月初出現了第二種大型收益，那就是我們認識到有相當數量的庫存坐在分銷商和承包商的渠道中。他們認識到，他們只需要用完他們擁有的項目中的高價庫存，而不是購買額外的高價庫存，當然他們預計銷售價格可能會開始下降。

As we moved into Q4, we started to get additional information about projects being either canceled or delayed, we learned of additional supply chain issues, not necessarily with PVC pipe, but other types of construction materials that go into these projects where that was causing a slowdown as well. And then, of course, just the overall slowdown of the housing market continued into the fourth quarter and then certainly is expected to continue into 2023.

當我們進入第四季度時，我們開始獲得有關項目被取消或延遲的更多信息，我們了解到其他供應鏈問題，不一定是 PVC 管道，而是進入這些項目的其他類型的建築材料，這導致了放緩也是如此。然後，當然，房地產市場的整體放緩持續到第四季度，然後肯定會持續到 2023 年。

The other thought is that -- we're seeing is that contractors, distributors are expecting that by the middle of '23, that materials, PVC pipe and such will start to come down and that they have -- their view is, in general, they have sufficient inventories to probably work through most of that.

另一個想法是——我們看到的是，承包商、分銷商預計到 23 世紀中期，材料、PVC 管等將開始下降，而且他們已經——他們的觀點是，總的來說，他們有足夠的庫存來解決大部分問題。

(Operator Instructions)

（操作員說明）

Our next question will come from the line of Brian Russo from Sidoti.

我們的下一個問題將來自 Sidoti 的 Brian Russo。

So just first on the utility. It seems as if you have the interest -- market interest rate pressure on interest expense under control and just looking at '23 earnings relative to where your rate base, it looks like you're earning very close to your ROE. Are those trends, we can expect that to continue despite inflation pressures?

所以首先是實用程序。似乎你有興趣 - 利息支出的市場利率壓力得到控制，並且只是看看'23 相對於你的利率基礎的收益，看起來你的收入非常接近你的 ROE。儘管存在通脹壓力，我們是否可以預期這些趨勢會繼續下去？

Yes, Brian. This is Chuck. I think we can, at least through 2023. We had significant O&M expense in our plant operations that we don't think will repeat year-over-year, and we are seeing a decrease in pension expense. We do have other items going up, but we do think that those 2 tailwinds help.

是的，布萊恩。這是查克。我認為我們可以，至少到 2023 年。我們的工廠運營中有大量的 O&M 費用，我們認為這些費用不會逐年重複，而且我們看到養老金費用有所減少。我們確實有其他項目在上升，但我們確實認為這兩個有利因素會有所幫助。

Right. So outside of maybe the IRP process, you have no rate cases planned in any of the 3 jurisdictions?

正確的。因此，除了 IRP 流程之外，您沒有計劃在 3 個司法管轄區中的任何一個審理案件？

We do not. We go through an exercise every year. And by June, we will complete cost of service studies by jurisdiction. I would say, at this point, we don't anticipate any rate cases. If there would be one, it is most likely in North Dakota. But overall, I would anticipate that we are not filing a rate case this year.

我們不。我們每年都會進行一次演習。到 6 月，我們將按轄區完成服務成本研究。我想說，在這一點上，我們預計不會出現任何利率情況。如果有的話，它很可能在北達科他州。但總的來說，我預計我們今年不會提交費率案。

Okay. Got it. And then just on the Plastics side, just to clarify, the $36 million to $41 million of normalized earnings, does that exclude this 8% capacity expansion you have planned?

好的。知道了。然後就塑料方面而言，澄清一下，3600 萬至 4100 萬美元的標準化收益是否不包括您計劃的 8% 的產能擴張？

No, it doesn't, Brian. So that is baked into the longer-term view. And again, probably we won't start to see any real benefits from it in that kind of '24, '25 time frame.

不，它沒有，布賴恩。所以這被納入了長期的觀點。再說一遍，在那種 24、25 年的時間框架內，我們可能不會開始看到它帶來的任何真正好處。

Okay. Great. And then just lastly BTD...

好的。偉大的。然後最後是 BTD...

Just a reminder that, that range is from a 2024 forward time frame.

提醒一下，該範圍是從 2024 年開始的。

Yes. Right. And then just lastly on BTD. It seems like while you might be seeing a slowdown in some of your end markets just due to the macro environment. Are you still growing top line, and it's just -- or is top line like organic growth slowing which is eating -- which is impacting your margins? Just trying to get a sense of what's structural and what might just be. Is it your cost structure? Or is it just what we see the obvious headwinds in 2023?

是的。正確的。最後是 BTD。似乎由於宏觀環境，您可能會看到某些終端市場放緩。你還在增長收入嗎，它只是 - 或者像有機增長放緩這樣正在吃的收入 - 這正在影響你的利潤率？只是想了解什麼是結構性的，什麼可能只是結構性的。是你的成本結構嗎？或者這只是我們在 2023 年看到的明顯逆風？

Yes, Brian, it's -- we're not seeing top line growth in 2023, and it's -- a large part of that is the decline in steel prices from '22 to where they're currently at in '23. We -- as we mentioned, we're seeing the ag market, the power generation market are favorable, but then as Chuck mentioned, rec vehicle, lawn and garden are expected to slow. And so overall, we're seeing a drop in top -- expecting to see a drop in top line revenue in 2023.

是的，布賴恩，這是——我們沒有看到 2023 年的收入增長，而且——其中很大一部分是鋼鐵價格從 22 年下降到目前 23 年的水平。我們——正如我們提到的，我們看到農業市場、發電市場是有利的，但正如查克提到的那樣，rec 車輛、草坪和花園預計會放緩。因此，總體而言，我們看到收入下降——預計 2023 年收入將下降。

And another key factor is the scrap revenue. Scrap prices in 2022 will probably average around $550 a tonne. And we're seeing that now in the $400 tonne range in '23. And so that's having a pretty significant impact on our year-over-year earnings as well. And then we are continuing to see inflationary pressures on the cost side of the business in terms of -- we do have inflationary costs or increases built into our guidance in terms of wage and benefit pressures. We certainly are seeing increasing health care costs in the business and other types of inflationary pressures as well.

另一個關鍵因素是廢品收入。 2022 年廢鋼價格可能平均在每噸 550 美元左右。我們現在看到的是 23 年 400 美元一噸的價格。因此，這也對我們的同比收入產生了相當大的影響。然後我們繼續看到業務成本方面的通脹壓力——我們確實有通脹成本或增加工資和福利壓力方面的指導。我們當然看到企業中的醫療保健成本增加以及其他類型的通貨膨脹壓力。

I'm not showing any further questions in the queue. I'd like to turn the call back over to Chuck for any closing marks.

我不會在隊列中顯示任何其他問題。我想將電話轉回給 Chuck 以獲取任何結束標記。

Well, thank you for joining our call and your interest in Otter Tail Corporation. I would again like to thank our employees for their efforts in making 2022 an extraordinary year. Looking forward, we expect 2023 to be a transitional year as industry conditions within the PVC pipe industry normalize. In total, we expect to generate earnings per share in the range of $3.76 to $4.06. Over the long term, we are well positioned with our utility growth strategy and predictable earnings stream, complemented by our strategic Manufacturing and Plastics businesses to achieve our financial targets. We expect to produce compound growth in earnings per share of 5% to 7% off a base of 2024 earnings and to increase our dividend in the range of 5% to 7% annually. Again, thank you for joining our call, and we look forward to speaking with you next quarter.

好吧，感謝您加入我們的電話會議以及您對 Otter Tail Corporation 的興趣。我要再次感謝我們的員工為使 2022 年成為不平凡的一年所做的努力。展望未來，我們預計 2023 年將是過渡年，因為 PVC 管道行業的行業狀況將趨於正常化。總體而言，我們預計每股收益將在 3.76 美元至 4.06 美元之間。從長遠來看，我們在公用事業增長戰略和可預測的收益流方面處於有利地位，輔以我們的戰略製造和塑料業務來實現我們的財務目標。我們預計每股收益將在 2024 年收益基礎上實現 5% 至 7% 的複合增長，並將我們的股息每年增加 5% 至 7%。再次感謝您加入我們的電話會議，我們期待下個季度與您交談。

This concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a great day.

今天的電話會議到此結束。感謝您的參與。您現在可以斷開連接。大家，祝你有美好的一天。