Otter Tail Corp (OTTR) 2024 Q2 法說會逐字稿

Good morning, and welcome to the Otter Tail Corporation's second-quarter 2024 earnings conference call. Today's call is being recorded.

早安，歡迎參加 Otter Tail Corporation 2024 年第二季財報電話會議。今天的通話正在錄音。

We will hold a question-and-answer session after the prepared remarks. I will now turn the call over to the company for their opening comments.

在準備好的發言後，我們將舉行問答環節。我現在將把電話轉給該公司，徵求他們的開場評論。

Good morning, everyone, and welcome to our second-quarter 2024 earnings conference call. My name is Beth Eiken, and I'm Otter Tail Corporation's Manager of Investor Relations. Last night, we announced our second-quarter financial results. Our complete earnings release and slides accompanying this call are available on our website at ottertail.com. A recording of this call will be available on our website later today.

大家早安，歡迎參加我們的 2024 年第二季財報電話會議。我叫 Beth Eiken，是 Otter Tail Corporation 的投資人關係經理。昨晚，我們公佈了第二季財務業績。我們完整的收益發布和本次電話會議附帶的幻燈片可在我們的網站 ottertail.com 上取得。今天晚些時候，我們的網站上將提供這次通話的錄音。

With me on the call today are Chuck MacFarlane, Otter Tail Corporation's President and CEO; and Todd Wahlund, Otter Tail Corporation's Vice President and CFO. Before we begin, I want to remind you that we will be making forward-looking statements during the course of this call.

今天與我一起參加電話會議的是 Otter Tail Corporation 總裁兼執行長 Chuck MacFarlane；以及 Otter Tail Corporation 副總裁兼財務長 Todd Wahlund。在開始之前，我想提醒您，我們將在本次電話會議期間做出前瞻性陳述。

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 against placing undue reliance on any of these statements.

如幻燈片 2 所示，這些陳述代表了我們當前的觀點和對未來事件的期望。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提供的結果不同。因此，請注意不要過度依賴這些陳述。

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.

我們向美國證券交易委員會提交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 不承擔因新資訊、未來事件、發展或其他原因而更新或修改我們的前瞻性聲明的義務。

I will now turn the call over to Otter to Corporation's President and CEO, Mr. Chuck McFarland.

我現在將把電話轉給 Otter 公司總裁兼執行長 Chuck McFarland 先生。

Thank you, Beth, and good morning, and welcome to our second-quarter 2024 earnings call. Please refer to slide 4 as I begin my comments on our quarterly performance. We are pleased with our second-quarter financial results. Diluted earnings per share increased 6% to $2.07 per share, compared to the same time last year, driven by strong financial performance within our plastics and manufacturing segments.

謝謝貝絲，早安，歡迎參加我們的 2024 年第二季財報電話會議。請參閱投影片 4，我將開始對我們的季度業績發表評論。我們對第二季的財務表現感到滿意。受塑膠和製造部門強勁財務業績的推動，稀釋後每股收益較去年同期成長 6%，達到每股 2.07 美元。

Plastics segment earnings increased 9% from the second quarter of 2023 due to higher sales volumes driven by customer sales volume growth and distributor and end market demand. This was partially offset by lower pipe prices.

由於客戶銷售成長以及經銷商和終端市場需求推動銷量增加，塑膠部門收益較 2023 年第二季成長 9%。這被較低的管材價格部分抵消。

Manufacturing segment earnings increased 15%, primarily driven by higher margins at BTD. Electric segment earnings increased 6% from the same time last year -- or decreased 6% from the same time last year, primarily due to the impact of unfavorable weather.

製造部門獲利成長 15%，主要是由於 BTD 利潤率提高。電力部門獲利較去年同期成長6%，較去年同期下降6%，主要是受到不利天氣的影響。

We are increasing our 2024 earnings guidance to the range of $6.77 to $7.07, from our previous range of $6.23 to $6.53, primarily due to the strength of our plastics segment. In a moment, Todd will provide a more detailed discussion of our second-quarter financial results and our updated earnings expectations for 2024.

我們將 2024 年獲利指引從先前的 6.23 美元至 6.53 美元上調至 6.77 美元至 7.07 美元，這主要是由於我們塑膠部門的實力。稍後，托德將更詳細地討論我們第二季的財務業績以及我們更新的 2024 年獲利預期。

Slide 5 shows our expected five-year compounded annual growth rate and earnings per share with and without the impact of our plastics segment, through the end of 2024 based on the midpoint of our updated earnings guidance.

投影片 5 顯示了我們預期的五年複合年增長率和每股收益，無論是否受到塑膠部門的影響，直至 2024 年底，基於我們更新的獲利指引的中點。

Even without the impact of extraordinary results generated by our plastics segment over the last few years, we expect to produce a compounded annual growth rate in earnings per share from 2019 through 2024 of 8.3%.

即使沒有過去幾年我們塑膠部門取得的非凡業績的影響，我們預計 2019 年至 2024 年每股收益的複合年增長率將達到 8.3%。

Turning to our electric segment, slide 7 provides an overview of our electric operations. Our regulated electric utility announced a sizable five-year capital spending plan earlier this year, with significant amounts being allocated to renewable resources, transmission investment, and technology.

談到我們的電力部門，幻燈片 7 概述了我們的電力運作。我們受監管的電力公司今年稍早宣布了一項規模龐大的五年資本支出計劃，其中大量資金分配給再生資源、輸電投資和技術。

In addition to Otter Tail Power's rate base growth, we continue to explore opportunities for new large loads. This potential load growth is primarily driven by data centers, crypto mining, and clean fuel-related opportunities. We have not made any adjustments to our load forecast for these opportunities currently, but continue to engage with companies showing an interest in entering our service territory.

除了 Otter Tail Power 的費率基礎增長之外，我們還繼續探索新的大型負載的機會。這種潛在的負載成長主要是由資料中心、加密貨幣挖礦和清潔燃料相關機會所推動的。目前，我們尚未針對這些機會對負載預測進行任何調整，但將繼續與有興趣進入我們服務領域的公司進行接觸。

When engaging with these various companies, we typically take a prudent approach, ensuring adequate financial security and protection from the loss of the large load, or a slowdown in demand, or energy cost changes that could impact our other customers.

在與這些不同的公司合作時，我們通常採取謹慎的態度，確保足夠的財務安全並防止大負荷損失、需求放緩或可能影響我們其他客戶的能源成本變化。

We are certainly interested in bringing large loads online in our service territory and feel well positioned to do so as we have several sites available that could support these large loads with minimal delivery infrastructure investment needed, but we'll continue to balance this with the needs of our other customers.

我們當然有興趣在我們的服務區域內在線提供大量負載，並且感覺自己有能力這樣做，因為我們有多個可用站點可以以最少的交付基礎設施投資來支持這些大量負載，但我們將繼續平衡這一點與需求我們的其他客戶。

Slide 8 summarizes Otter Tail Power's five-year capital spending plan. The plan includes $1.3 billion of capital investment over the next five-year period and is expected to produce rate base growth of 7.7%. Otter Tail Power has a strong track record of translating rate base growth into earnings growth. In the previous five-year period, we converted average rate base growth into earnings growth at a 1:1 ratio, a sign of a high-performing regulated utility.

投影片 8 總結了 Otter Tail Power 的五年資本支出計畫。該計劃包括未來五年內 13 億美元的資本投資，預計將產生 7.7% 的利率基數成長率。Otter Tail Power 在將利率基礎成長轉化為獲利成長方面擁有良好的記錄。在上一個五年期間，我們以 1:1 的比率將平均利率基數成長轉化為收益成長，這是受監管公用事業公司表現良好的標誌。

Over the long term, we expect to continue to convert our rate base growth into earnings growth near 1:1 ratio, given our constructive regulatory environments and available riders.

從長遠來看，鑑於我們建設性的監管環境和可用的附加條款，我們預計將繼續將利率基礎成長轉化為接近 1:1 的獲利成長。

I will now provide a few details on several projects within the existing five-year planning period and beyond. Slide 9 summarizes Otter Tail Power's Advanced Metering Infrastructure project with a total investment of approximately $60 million. Advanced Metering Infrastructure, or AMI, will allow us to better understand peak energy use so that we can offer energy and cost saving options to our customers and improve our customers' experience.

我現在將提供現有五年規劃期內及以後的幾個項目的一些細節。投影片 9 總結了 Otter Tail Power 的高級計量基礎設施項目，總投資約為 6000 萬美元。高級計量基礎設施 (AMI) 將使我們能夠更好地了解峰值能源使用情況，以便我們能夠為客戶提供能源和成本節約選項並改善客戶體驗。

We are targeting to upgrade more than 174,000 meters across our service territory and are about halfway through at this point. We anticipate completing the project in 2025 and expect this project will reduce operating expense through lower meter reading costs and technology-enabled savings.

我們的目標是在我們的服務區域升級超過 174,000 米，目前已完成一半左右。我們預計該專案將於 2025 年完成，並預計該專案將透過降低抄表成本和技術節省來減少營運費用。

Turning to slide 10, we have commenced repowering our four legacy wind farms with an investment of approximately $230 million. Once complete, this project is expected to be equivalent to adding 40 megawatts of new wind generation with a 50% capacity factor.

轉向投影片 10，我們已開始投資約 2.3 億美元對四個遺留風電場進行改造。一旦完成，該專案預計將相當於新增40兆瓦風力發電，容量係數為50%。

In March, we received approval for rider recovery of the project cost from the North Dakota Commission and recently received approval from the Minnesota Commission as well. We requested rider recovery in South Dakota and anticipate a decision in Q3.

今年三月，我們獲得了北達科他州委員會對騎手回收計畫成本的批准，最近也獲得了明尼蘇達州委員會的批准。我們要求南達科他州的車手康復，並預計在第三季做出決定。

This wind repowering project qualifies for production tax credits under the Inflation Reduction Act. These tax credits, along with the incremental energy produced at these repowered wind farms are anticipated to lower customer bills, demonstrating our continued focus and commitment to customer affordability.

此風力發電項目符合《通貨膨脹減少法案》規定的生產稅抵免資格。這些稅收抵免以及這些重新供電的風電場產生的增量能源預計將降低客戶的帳單，這表明我們對客戶負擔能力的持續關注和承諾。

Slide 11 summarizes Otter Tail Power's investments under Tranche 1 of MISO's long-range transmission plan. Otter Tail Power will co-own two Tranche 1 projects, the Jamestown Ellendale, and the Big Stone South Alexandria Big Oaks 345 kV transmission projects. Both projects have FERC approval for construction work in progress, ensuring the timely recovery of our capital investment.

投影片 11 總結了 Otter Tail Power 在 MISO 遠端輸電計畫第一階段的投資。Otter Tail Power 將共同擁有兩個 Tranche 1 項目：Jamestown Ellendale 和 Big Stone South Alexandria Big Oaks 345 kV 輸電項目。這兩個項目都獲得了 FERC 批准在建工程，確保了我們的資本投資及時回收。

In total, we estimate our capital investment in these projects to be approximately $420 million. These investments are expected to have very little impact on our retail customer rates as they are allocated across the entire MISO North footprint.

總的來說，我們估計這些項目的資本投資約為 4.2 億美元。這些投資預計對我們的零售客戶費率影響很小，因為它們分佈在整個 MISO North 足跡中。

In March of 2024, MISO released their initial draft proposal for Tranche 2 portfolio projects and recognized additional transmission investment would be required to meet the needs Tranche 2 was intended to resolve. In June, MISO revised the proposal for Tranche 2 and released their near-final Tranche 2 portfolio projects, which included additional transmission investment for Otter Tail Power. We expect the MISO Board of Directors to approve the portfolio later this year.

2024 年 3 月，MISO 發布了第 2 階段投資組合項目的初步提案草案，並認識到需要額外的輸電投資才能滿足第 2 階段旨在解決的需求。6 月，MISO 修訂了第 2 階段的提案，並發布了接近最終版本的第 2 階段投資組合項目，其中包括對 Otter Tail Power 的額外輸電投資。我們預計 MISO 董事會將在今年稍後批准該產品組合。

In addition to transmission investment opportunities available through MISO's long-range plan, MISO and the Southwest Power Pool, or SPP, partnered to develop the Joint Targeted Interconnection Queue, or JTIQ portfolio projects focused on improving the interconnection queue backlog along the MISO SPPC.

除了透過 MISO 的長期計畫提供的輸電投資機會外，MISO 和西南電力聯盟 (SPP) 還合作開發了聯合目標互連隊列 (JTIQ) 組合項目，重點是改善 MISO SPPC 沿線的互連隊列積壓。

MISO and SPP are currently planning to file their cost allocation tariff with FERC in Q3. While the recovery method of these projects is still in process, we are optimistic about the potential investment opportunity, which we estimate to range from approximately $350 million to $400 million. Both Tranche 2 and JTIQ represent incremental transmission investment opportunities for us, but most of the spend is likely to fall outside of our current five-year planning period.

MISO 和 SPP 目前計劃在第三季向 FERC 提交其成本分配關稅。雖然這些項目的回收方法仍在進行中，但我們對潛在的投資機會持樂觀態度，我們估計其範圍約為 3.5 億至 4 億美元。第 2 期和 JTIQ 都為我們帶來了增量輸電投資機會，但大部分支出可能超出了我們目前的五年規劃期。

Turning to slide 12, while we continue to focus on identifying opportunities for capital investment to support safe, reliable, and increasingly clean electric service to our customers, affordability remains one of our top priorities. Otter Tail Power's electric rates have consistently remained well below the national and regional averages.

轉向投影片 12，雖然我們繼續專注於尋找資本投資機會，以支持為客戶提供安全、可靠和日益清潔的電力服務，但負擔能力仍然是我們的首要任務之一。Otter Tail Power 的電費一直遠低於全國和地區平均。

Slide 13 summarizes Otter Tail Power's key regulatory matters in 2024. As we complete our internal cost of service studies this year, we will determine whether a Minnesota general rate case will be filed in late 2024. In addition to Otter Tail Power's specific key regulatory matters, we continue to monitor developments at FERC relating to ROE and self-fund dockets.

投影片 13 總結了 Otter Tail Power 2024 年的關鍵監管事項。當我們今年完成內部服務成本研究時，我們將確定是否在 2024 年底提交明尼蘇達州一般費率案件。除了 Otter Tail Power 的具體關鍵監管事項外，我們還繼續關注 FERC 與 ROE 和自籌資金相關的進展。

I will now give a more detailed update on our Integrated Resource Plan and North Dakota rate case.

我現在將更詳細地介紹我們的綜合資源計劃和北達科他州費率案例。

Turning to slide 14, in May, Otter Tail Power received approval from the Minnesota Public Utilities Commission on its integrated resource plan. The decision authorizes adding 200 megawatts to 300 megawatts of solar generation by 2027, 150 megawatts to 200 megawatts of wind generation and 20 megawatts to 75 megawatts of battery storage by 2029, designating the Minnesota portion of Coyote station as an emergency-only resource starting as early as 2026, and commencing activities to no longer serve Minnesota customers with capacity or energy from Coyote Station as soon as feasible, but no later than December of 2031. And adding on-site fuel storage at Astoria Station by 2027.

轉向幻燈片 14，5 月份，Otter Tail Power 的綜合資源計劃獲得了明尼蘇達州公共事業委員會的批准。該決定授權到2027 年增加200 兆瓦至300 兆瓦的太陽能發電量，到2029 年增加150 兆瓦至200 兆瓦的風力發電量，以及20 兆瓦至75 兆瓦的電池儲存量，並將Coyote 電站的明尼蘇達部分指定為緊急資源，從最早在 2026 年，並儘快開始行動，不再為明尼蘇達州客戶提供 Coyote 電站的容量或能源服務，但不遲於 2031 年 12 月。到 2027 年，在阿斯托里亞站增加現場燃料儲存。

We view the outcome of our integrated resource plan docket in Minnesota as favorable overall and one that helps to preserve reliability as we continue to transition to cleaner energy. Despite the approval of adding on-site fuel storage at a store station from the Minnesota Commission, the North Dakota Public Service Commission denied our advanced determination of prudence request relating to this project. As such, there's uncertainty about the future prospects of this project.

我們認為明尼蘇達州綜合資源計劃的結果總體上是有利的，並且有助於在我們繼續向清潔能源過渡時保持可靠性。儘管明尼蘇達州委員會批准在儲存站增加現場燃料儲存，但北達科他州公共服務委員會拒絕了我們對與該項目有關的審慎請求的預先確定。因此，該項目的未來前景存在不確定性。

Turning to slide 15, we filed a general rate case with the North Dakota Public Service Commission in November of 2023. In July, Otter Tail Power amended its rate case filing for certain items identified through the regulatory review process to a modified request to increase net revenues by approximately $23 million or 10.9%, based on a requested ROE of 10.6% and an equity layer of 53.5%. We anticipate the final outcome of the case will occur in late 2024.

轉向幻燈片 15，我們於 2023 年 11 月向北達科他州公共服務委員會提交了一般費率案件。7 月，Otter Tail Power 修改了透過監管審查流程確定的某些項目的費率案例備案，以修改後的請求，根據10.6% 的ROE 要求和53.5 的股權層，將淨收入增加約2300 萬美元或10.9% %。我們預計該案的最終結果將於 2024 年底出爐。

Separately, in July, the EPA published its proposed rule for North Dakota's Regional Hays State Implementation Plan, which the EPA proposed to disapprove of the state's conclusion that no emissions control additions are necessary at Coyote Station to achieve the objectives of the Regional Haze Rule. We cannot predict the certainty of the final resolution and timing of the Regional Haze compliance in North Dakota and specifically the impact of Coyote Station and its operations if any.

另外，7 月，美國環保署公佈了北達科他州地區海斯州實施計畫的擬議規則，環保署提議不同意該州的結論，即郊狼站無需添加排放控制措施即可實現地區霧霾規則的目標。我們無法預測最終解決方案的確定性和北達科他州區域霧霾合規的時間安排，特別是郊狼站及其營運的影響（如果有）。

However, significant emission control investments could be required and recovery of such costs from customers would require regulatory approval. Alternatively, investments in emission control equipment may prove to be uneconomic and could result in the early retirement or sale of our interest in Coyote Station, which would also be subject to regulatory approval.

然而，可能需要大量的排放控制投資，並且從客戶那裡收回此類成本需要監管部門的批准。另外，對排放控制設備的投資可能被證明是不經濟的，並可能導致我們提前退休或出售我們在 Coyote Station 的權益，這也需要獲得監管部門的批准。

Turning to our manufacturing segment on slide 18, despite strong quarterly financial results, BTD and T.O. Plastics continue to face end-market demand related headwinds. We anticipate conditions to soften further in the second half of 2024. In response, we have and will continue to take actions to manage costs and mitigate the impact of lower sales volumes.

轉向幻燈片 18 上的製造部門，儘管季度財務業績強勁，但 BTD 和 T.O.塑膠持續面臨與終端市場需求相關的阻力。我們預計 2024 年下半年情況將進一步疲軟。作為回應，我們已經並將繼續採取行動來管理成本並減輕銷售下降的影響。

Turning to our end market outlook on slide 20, many of the end markets that BTD serves are softening. We continue to see customers in-sourcing work to put their excess capacity to use. While the outlook for T.O. Plastics primary end-market horticulture remains relatively stable, distributors continue to reduce and more tightly manage their inventory levels as lead times have shortened and interest rates have increased. We remain optimistic about demand improving in the second half of 2024 but expect sales volumes to be down significantly from 2023 levels.

轉向我們在幻燈片 20 上的終端​​市場前景，BTD 服務的許多終端市場正在疲軟。我們繼續看到客戶透過內包工作來利用他們的過剩產能。雖然 T.O. 的前景塑膠初級終端市場園藝保持相對穩定，隨著交貨時間縮短和利率上升，經銷商繼續減少並更嚴格地管理庫存水準。我們對 2024 年下半年需求改善仍持樂觀態度，但預期銷售量將較 2023 年水準大幅下降。

Slide 21 provides an overview of our plastics segment. Sales volumes increased in the second quarter of 2024 compared to the same time last year, due to sales volume growth with existing customers and improved distributor and end market demand. It's important to note that while sales volumes were higher quarter over quarter, sales volumes during Q2 of 2023 were below normal levels as distributors were largely focused on destocking efforts.

幻燈片 21 概述了我們的塑膠細分市場。由於現有客戶的銷售成長以及經銷商和終端市場需求的改善，2024 年第二季的銷售量較去年同期增加。值得注意的是，雖然銷售量環比增長，但 2023 年第二季的銷售量低於正常水平，因為分銷商主要專注於去庫存工作。

Slide 22 highlights historical sales prices of PVC pipe and the cost of resin. Sales prices continue to decline but at a slower rate than we anticipated. Improved demand has provided support for product pricing and moderated the rate of pricing declines. We continue to see variability in the rate of price decline across product categories and geographies.

幻燈片 22 重點介紹了 PVC 管材的歷史銷售價格和樹脂成本。銷售價格持續下降，但下降速度低於我們的預期。需求的改善為產品定價提供了支持，並減緩了定價下降的速度。我們繼續看到不同產品類別和地區的價格下降率有差異。

Our Vinyltech site improvement and expansion project continues to progress well. We look forward to bringing large diameter pipe production capabilities to Vinyltech later this year, so that we can better serve our customers located in the South and Southwest.

我們的 Vinyltech 站點改善和擴建項目繼續進展順利。我們期待今年稍後為 Vinyltech 帶來大直徑管道生產能力，以便我們能夠更好地服務南部和西南部的客戶。

I will now turn it over to Todd to provide additional commentary on our second-quarter financial results, and our expectations for the remainder of the year.

我現在將把它交給托德，對我們第二季度的財務業績以及我們對今年剩餘時間的預期提供更多評論。

Thank you, Chuck, and good morning, everyone. We delivered record second-quarter earnings generating diluted earnings per share of $2.07, a 6% increase over the same time last year. Our plastics segment continues to perform very well, capitalizing on customer sales volume growth, and distributor and end market demand, while sales prices continue to remain elevated relative to historical levels.

謝謝你，查克，大家早安。我們第二季的獲利創歷史新高，稀釋後每股收益為 2.07 美元，比去年同期成長 6%。我們的塑膠業務持續表現良好，得益於客戶銷售的成長以及經銷商和終端市場的需求，而銷售價格相對於歷史水準繼續保持較高水準。

Due to the continued strength within our plastics segment, we have increased the midpoint of our 2024 earnings guidance by 8%.

由於塑膠領域的持續強勁，我們將 2024 年獲利指導中位數上調了 8%。

Please follow along on slide 26, as I begin with an overview of our second quarter financial results by segment. Electric segment earnings decreased 6% from the second quarter of 2023, driven by the impact of unfavorable weather and lower transmission revenue, partially offset by the interim rate increase in North Dakota stemming from our general rate case filing, lower operating and maintenance expenses, and higher commercial and industrial sales.

請繼續觀看投影片 26，我首先按部門概述了我們第二季的財務表現。由於不利天氣和輸電收入下降的影響，電力部門的收益較 2023 年第二季度下降了 6%，但部分被北達科他州由於我們的一般費率案件備案、運營和維護費用降低以及更高的商業和工業銷售額。

Manufacturing segment earnings increased 15% compared to the second quarter of 2023, primarily due to higher margins at BTD Manufacturing, driven by the positive impact from the timing of pass-through steel cost fluctuations, and the selling of lower cost inventory, as well as a favorable product mix compared to the same time last year.

與 2023 年第二季相比，製造部門的收益成長了 15%，這主要是由於 BTD 製造公司的利潤率提高，而這受到鋼鐵成本波動傳導時機、低成本庫存銷售以及與去年同期相比，產品組合更有利。

This was partially offset by lower sales volumes at both of our manufacturing businesses, lower profit margins at T.O. Plastics, and lower scrap sales at BTD. Like Chuck mentioned, despite the strong quarterly financial performance, our manufacturing segment continues to face end market demand related headwinds, and we anticipate conditions to soften further as the year progresses.

這被我們兩個製造業務的銷量下降、T.O. 的利潤率下降所部分抵消。塑料，以及 BTD 廢鋼銷售量下降。正如查克所提到的，儘管季度財務表現強勁，但我們的製造部門仍面臨終端市場需求相關的不利因素，我們預計隨著時間的推移，情況將進一步疲軟。

Sales volumes decreased at BTD in the second quarter of 2024 compared to the same time last year, primarily in the lawn and garden, and agriculture end markets. The outlook for the end markets BTD serves is softening and select customers have reduced their remaining 2024 orders due to weakening end market demand, negatively impacting our forecast of sales volumes for the remainder of the year.

與去年同期相比，2024 年第二季的 BTD 銷售量有所下降，主要是在草坪和花園以及農業終端市場。BTD 服務的終端市場前景正在疲軟，由於終端市場需求疲軟，部分客戶減少了 2024 年剩餘訂單，這對我們對今年剩餘時間的銷售預測產生了負面影響。

T.O. Plastics also experienced lower sales volumes in Q2 2024, primarily attributable to decreased sales of horticulture products as distributors and growers continue to work through existing inventory. Plastics segment earnings increased 9% from the second quarter of 2023 due to higher sales volumes, partially offset by a decrease in sales prices.

到。 2024 年第二季塑膠銷售也有所下降，主要原因是經銷商和種植者繼續處理現有庫存，導致園藝產品銷售下降。由於銷量增加，塑膠業務收入較 2023 年第二季成長 9%，但部分被銷售價格下降所抵銷。

Sales volumes increased 26% compared to the same period last year due to customer sales volume growth, and distributor and improved end-market demand. However, it's important to remember, sales volumes in the second quarter of 2023 were below average as distributors, our primary customers, we're tightly managing their inventory levels amid uncertain market conditions.

由於客戶銷售成長、經銷商和終端市場需求改善，銷售量較去年同期成長 26%。然而，重要的是要記住，2023 年第二季的銷售量低於平均水平，因為我們的主要客戶經銷商在不確定的市場條件下嚴格管理他們的庫存水平。

Gross profit margins declined in the second quarter of 2024 compared to the same time last year, primarily due to the impact of lower PVC sales pipe prices. The 26% increase in sales volumes drove a $0.37 increase in quarter-over-quarter earnings per share and this was partially offset by a $0.24 earnings per share decrease from lower profit margins.

2024年第二季毛利率較去年同期下降，主要是受PVC銷售管材價格下降的影響。銷量成長 26%，帶動每股收益環比增長 0.37 美元，但利潤率下降導致每股收益下降 0.24 美元，部分抵消了這一增長。

This was driven primarily by a 13% quarter-over-quarter sales price decrease. We continue to have a very strong balance sheet with a higher level of earnings and cash generated from our diversified business model.

這主要是由於銷售價格環比下降 13%。我們持續擁有非常強勁的資產負債表，多元化業務模式產生的收益和現金水準更高。

Turning to slide 28. Our cash and cash equivalents position was over $230 million, and our consolidated equity layer as of June 30, 2024, was 62.1%. Based on the strong financial performance, our return on equity over the last 12 months was 21.5% on this high level of equity.

轉到投影片 28。我們的現金和現金等價物部位超過 2.3 億美元，截至 2024 年 6 月 30 日，我們的合併股權層為 62.1%。基於強勁的財務業績，我們過去 12 個月的股本回報率達到了 21.5%（在如此高的股本水平上）。

We continue to be in an enviable position with a strong balance sheet and ample liquidity to fund growth opportunities without having to issue additional equity for at least the next five years, based on our current projected capital spend and financial performance.

根據我們目前預期的資本支出和財務業績，我們繼續處於令人羨慕的地位，擁有強勁的資產負債表和充足的流動性，可以為成長機會提供資金，至少在未來五年內無需發行額外的股權。

Turning to slide 29. Due to the continued strength within our plastics segment, we are increasing our 2024 diluted earnings per share guidance to a range of $6.77 to $7.07, from our previous guidance range of $6.23 to $6.53. This increases the midpoint of our guidance to $6.92, which is an 8% increase over the previous guidance midpoint.

轉到投影片 29。由於我們塑膠業務的持續強勁，我們將 2024 年攤薄每股收益指引從先前的 6.23 美元至 6.53 美元提高至 6.77 美元至 7.07 美元。這將我們的指導中點提高到 6.92 美元，比之前的指導中點增加了 8%。

We are maintaining our electric segment guidance for 2024 despite the $0.17 year-to-date impact of unfavorable weather. Our electric segment is positioned well to overcome these headwinds through prudent cost management, the impact of our sales decoupling mechanism in Minnesota, rate case revenue increases in North Dakota, and timely returns on our capital spending.

儘管不利天氣對今年迄今的影響為 0.17 美元，但我們仍維持 2024 年電力部門指引。我們的電力部門已做好充分準備，透過審慎的成本管理、明尼蘇達州銷售脫鉤機制的影響、北達科他州的費率案例收入增加以及資本支出的及時回報，克服這些不利因素。

We are decreasing the 2024 earnings guidance for our manufacturing segment due to anticipated lower sales volumes as end market demand softens further. We expect the recreational vehicle, agriculture, construction, and horticulture end markets to be impacted the most.

由於終端市場需求進一步疲軟，預計銷售量將會下降，因此我們正在降低製造部門 2024 年的獲利指引。我們預計休閒車、農業、建築和園藝終端市場受到的影響最大。

Additionally, we anticipate operating margins to be lower in the second half of 2024, as lower production and sales volumes negatively impact the leverage of our fixed manufacturing costs.

此外，我們預計 2024 年下半年的營業利潤率將較低，因為產量和銷售量的下降會對我們固定製造成本的槓桿產生負面影響。

We have and continue to take action to tightly manage costs and mitigate the impact of lower forecasted sales volumes on 2024 earnings, while balancing that with being positioned to respond quickly when the markets improve.

我們已經並將繼續採取行動，嚴格管理成本，減輕預測銷售下降對 2024 年收益的影響，同時在市場好轉時迅速做出反應，從而實現平衡。

We are increasing our plastics segment earnings guidance due to the better-than-expected financial results in the second quarter of 2024, as well as our updated PVC pipe pricing expectations, which are for a slower decline than what we previously expected over the remainder of the year.

由於 2024 年第二季的財務業績優於預期，以及我們更新的 PVC 管材定價預期，我們正在上調塑膠部門的獲利指引，該預期的下降速度比我們之前預期的要慢。

We are also reducing our corporate cost estimate primarily due to an increase in forecasted investment income, which is driven by a higher projected yield, and a higher investment balance. With the changes made to our earnings guidance for the year, we anticipate our earnings mix for 2024 to be 31% electric and 69% nonelectric, net of corporate costs.

我們也降低了企業成本估算，主要是由於預期投資收益增加，這是由更高的預期收益率和更高的投資餘額所推動的。隨著我們今年獲利指引的變化，我們預計 2024 年扣除企業成本後，我們的獲利結構將是 31% 電力和 69% 非電力。

While this anticipated mix deviates from our long-term expected earnings mix of approximately 65% electric and 35% nonelectric, the incremental earnings and cash flow increase a shareholder value as we continue to execute on our solid growth strategies without the dilution of equity issuances.

雖然這個預期組合偏離了我們約 65% 電力和 35% 非電力的長期預期收益組合，但隨著我們繼續執行穩健的成長策略而不稀釋股票發行，增量收益和現金流增加了股東價值。

We expect to reach our targeted long-term earnings mix of 65% electric and 35% nonelectric, as plastics segment earnings normalized to a range of $45 million to $50 million on an annual basis, while our electric segment earnings continued to grow at a rate in line with our projected rate base growth -- compound annual growth rate.

我們預計將實現 65% 電力和 35% 非電力的長期盈利組合目標，因為塑料部門的盈利正常化到每年 4500 萬至 5000 萬美元的範圍，而我們的電力部門的盈利繼續以一定速度增長符合我們預期的基礎成長率—複合年增長率。

Our five-year capital spending plan, which is a key driver of earnings growth for our electric segment is included in more detail on slide 30. No changes have been made to this plan since it was first announced earlier this year during our year-end earnings call.

我們的五年資本支出計畫是我們電力部門獲利成長的關鍵驅動力，幻燈片 30 中有更多詳細資訊。自今年稍早在我們的年終財報電話會議上首次宣布以來，該計劃沒有發生任何變化。

However, with the approval of our integrated resource plan in Minnesota in May, we anticipate there being incremental opportunities to our five-year spending plan. We are currently gathering and evaluating information on potential projects to determine the best ones for our customers, whether ownership or contracting the energy, and anticipate providing an updated capital spending plan during our year-end earnings call.

然而，隨著五月份明尼蘇達州綜合資源計劃的批准，我們預計我們的五年支出計劃將出現增量機會。我們目前正在收集和評估有關潛在項目的信息，以確定最適合我們客戶的項目，無論是所有權還是承包能源，並預計在年終財報電話會議期間提供更新的資本支出計劃。

In order to finance our rate base growth at Otter Tail Power, we project issuing debt on an annual basis for the next four years. Slide 31 provides a summary of our financing plan for 2025 through 2028. We continue to expect retiring and not replacing our only outstanding parent level debt when the $80 million note matures in 2026.

為了為 Otter Tail Power 的利率基礎增長提供資金，我們計劃在未來四年內每年發行債券。投影片 31 總結了我們 2025 年至 2028 年的融資計畫。我們仍然預計，當這張 8000 萬美元的票據於 2026 年到期時，我們將退休，而不是取代我們唯一的未償還母公司級債務。

Additionally, with the significant amount of cash and earnings generated over the past few years, we have no external equity needs for at least the next five-year period. This will enhance the value to our shareholders and differentiate us from many of our utility sector peers that will need to access the equity markets to fund their rate base growth.

此外，由於過去幾年產生了大量現金和收益，我們至少在未來五年內沒有外部股權需求。這將提高我們股東的價值，並使我們與許多需要進入股票市場為其利率基礎成長提供資金的公用事業行業同行區分開來。

We are positioned well to deliver upon our increased 2024 earnings guidance as well as meet our long-term investment targets as summarized on slide 34. Our diversified business model continues to produce above-average returns and long-term value for our shareholders.

我們處於有利位置，可以實現我們上調的 2024 年獲利指引，並實現投影片 34 中總結的長期投資目標。我們多元化的業務模式持續為股東創造高於平均的回報和長期價值。

We have many organic growth opportunities across our segments and are positioned to grow with our customers. We are in an excellent position to support this growth with our strong balance sheet, ample access to liquidity, and investment-grade credit ratings.

我們在各個細分領域擁有許多有機成長機會，並致力於與客戶一起成長。憑藉強大的資產負債表、充足的流動性和投資級信用評級，我們處於支持這一成長的絕佳位置。

We are now ready to take your questions.

我們現在準備好回答您的問題。

(Operator Instructions) As there are no questions in the queue, I'll turn the call back to Chuck for closing remarks.

（操作員說明）由於佇列中沒有問題，我會將電話轉回給 Chuck 進行結束語。

Thank you for joining our call and your interest in Otter Tail Corporation. If any questions, please reach out to our Investor Relations team. We look forward to speaking with you next quarter.

感謝您參加我們的電話會議以及您對 Otter Tail Corporation 的興趣。如有任何疑問，請聯絡我們的投資者關係團隊。我們期待下個季度與您交談。

This concludes today's conference call. Thank you for putting your participation. You may now disconnect.

今天的電話會議到此結束。感謝您的參與。您現在可以斷開連線。