Otter Tail Corp (OTTR) 2024 Q3 法說會逐字稿

Good morning and welcome to Otter Tail Corporation's third quarter, 2024 earnings conference call.

早安，歡迎參加 Otter Tail Corporation 2024 年第三季財報電話會議。

(Operator Instructions)

（操作員指令）

I would now like to turn the call over to the company for their opening comments.

現在，我想將電話轉給公司，請他們發表開場評論。

Good morning, everyone and welcome to our third 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 third quarter financial results.

大家早安，歡迎參加我們 2024 年第三季財報電話會議。我叫 Beth Eiken，是 Otter Tail Corporation 的投資人關係經理。昨晚，我們公佈了第三季的財務表現。

Our complete earnings release and slides accompanying this call are available on our website at ottertail.com. Our recording of this call will be available on our website later today 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.

您可以在我們的網站 ottertail.com 上查閱我們的完整收益報告和本次電話會議的幻燈片。本次電話會議的錄音將於今天稍晚在我們的網站上發布，今天參加電話會議的還有 Otter Tail Corporation 的總裁兼執行長 Chuck MacFarlane 以及 Otter Tail Corporation 的副總裁兼財務長 Todd Wahlund。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。

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對未來事件的當前觀點和期望。它們受風險和不確定性的影響，可能導致實際結果與此處所述的結果不同。因此，請注意不要過度依賴這些聲明。

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

我們向美國證券交易委員會提交的文件中對前瞻性陳述進行了更詳細的描述，我們鼓勵您閱讀。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任何義務，我現在將電話轉給 Otter Tail Corporation 總裁兼首席執行官 Chuck Macfarlane 先生。

Thank you, Beth. Good morning and welcome to our third quarter, 2024 earnings call.

謝謝你，貝絲。早安，歡迎參加我們 2024 年第三季財報電話會議。

Please refer to slide 4. As I begin my comments on our quarterly performance. Our team members continue to perform well as they navigate changing market conditions. We are generally pleased with our consolidated financial results despite diluted earnings per share decreasing 7% to $2.03 per share compared to the third quarter of 2023 the results exceeded expectations and year-to-date earnings are ahead of last year by 4%.

請參閱投影片 4。我開始對我們的季度業績發表評論。我們的團隊成員在應對不斷變化的市場條件時繼續表現出色。儘管與 2023 年第三季相比，每股攤薄收益下降 7% 至每股 2.03 美元，但我們對合併財務業績總體上感到滿意，但業績超出預期，年初至今的收益比去年同期增長了 4%。

Additionally, we are guiding to what could potentially be our best year yet, in terms of annual earnings. Electric segment earnings increased 16% or $4 million primarily due to the impact of interim rates in North Dakota as well as the financial impact of a recent [ferc] ruling on transmission return on equity.

此外，從年度收益來看，我們預計今年可能是我們迄今為止最好的一年。電力部門收益增加 16% 或 400 萬美元，主要原因是北達科他州臨時費率的影響以及最近 [ferc] 對輸電股本回報率的裁決產生的財務影響。

Plastic segment earnings decreased 8% or approximately $5 million as the sales price of PVC pipe continues to decline. The manufacturing segment is experiencing demand related headwinds across several of its end markets resulting in a decrease in earnings of 71% or approximately 5 million due to lower sales volumes.

由於 PVC 管銷售價格持續下降，塑膠部門收益下降 8%，約 500 萬美元。製造部門在其多個終端市場中遭遇了與需求相關的阻力，由於銷售量下降導致收益減少 71% 或約 500 萬美元。

While plastic segment earnings were lower than the same time last year. Its financial results exceeded what we had anticipated for the third quarter due to the strong financial performance within our plastic segment. We are increasing and narrowing our 2024 earnings guidance to a range of $6.97 to $7.17 from our previous range of $6.77 to $7.07. In a moment, Todd will provide more detailed discussion of our third quarter financial results and our updated earnings expectations for 2024.

而塑膠部門的獲利低於去年同期。由於塑膠部門的強勁財務表現，其財務表現超出了我們對第三季的預期。我們將 2024 年獲利預期從先前的 6.77 美元至 7.07 美元上調並縮小至 6.97 美元至 7.17 美元。稍後，托德將更詳細地討論我們的第三季財務業績以及我們對 2024 年的最新獲利預期。

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

幻燈片 5 顯示了到 2024 年底，我們預計的五年複合年增長率和每股收益（包括和不包括塑膠部門的影響）。根據我們更新的獲利預測的中點。

Even without the impact of the extraordinary results generated by our plastic segment over the last few years, we expect to produce a compounded annual growth rate above our long-term earnings per share growth target of 5% to 7%.

即使沒有過去幾年塑膠部門取得的非凡業績的影響，我們預計年複合成長率也將高於長期每股收益成長目標 5% 至 7%。

Turning to our electric segment. Slide 7, provides an overview of our electric operations. Earlier this year, our regulated electric utility announced a sizable five-year capital spending plan with significant amounts being allocated to renewable generation, transmission investment and technology. In addition to Otter tail power's rate-based growth, we continue to explore opportunities to bring new large loads online.

轉向我們的電氣部分。幻燈片 7 概述了我們的電力運作。今年早些時候，我們監管的電力公司宣布了一項規模龐大的五年資本支出計劃，其中大部分資金將用於再生能源發電、輸電投資和技術。除了 Otter tail power 的基於費率的成長之外，我們還在繼續探索將新的大負載上線的機會。

Which is summarized in more detail on slide 8, Otter's power is well positioned to address the needs of new large loads. We have approved tariffs already in place and have several sites available that could support these loads with minimal delivery infrastructure investment needed, increasing the speed to market as well as reducing the cost to do so. We will continue to evaluate and pursue these opportunities while balancing the needs of our current customers.

在第 8 頁投影片中更詳細地總結了這一點，Otter 的動力完全可以滿足新型大負載的需求。我們已經批准了關稅，並且有多個可用站點可以支援這些貨物，只需極少的運輸基礎設施投資，從而加快了產品上市速度並降低了成本。我們將繼續評估和尋求這些機會，同時平衡現有客戶的需求。

Slide 9, summarizes Otter Tail Power's five-year capital spending plan which is expected to produce rate-based growth of 7.7% as discussed in our last earnings call with the approval of our integrated resource plan in Minnesota. Earlier this year, we anticipate upside to our five-year capital spending plan, and we'll provide an update during our year-end earnings call in February of 2025. I will now provide a few details on several projects within the existing five-year planning period and beyond.

投影片 9 總結了 Otter Tail Power 的五年資本支出計劃，該計劃預計將產生 7.7% 的基於利率的增長率，正如我們在上次收益電話會議上討論的那樣，隨著我們在明尼蘇達州的綜合資源計劃獲得批准。今年早些時候，我們預計我們的五年資本支出計劃將上調，並將在 2025 年 2 月的年終收益電話會議上提供最新資訊。現在，我將介紹現有五年規劃期內及以後的幾個項目的一些細節。

Otter Tail power's Advanced Metering Infrastructure or AMI project is progressing well as summarized on slide 10. Approximately 90% of the 173,000 m have been upgraded and we look forward to leveraging the additional data these meters will provide to better serve our customers and enhance their experience. We expect this project will reduce operating expenses through lower meter reading costs and technology enabled savings.

Otter Tail power 的高階計量基礎設施或 AMI 計畫進展順利，如投影片 10 所示。173,000 平方米中約 90% 已升級，我們期待利用這些儀表提供的額外數據來更好地服務我們的客戶並增強他們的體驗。我們預計該項目將透過降低抄表成本和技術支援的節約來減少營運費用。

Turning to slide 11, our wind repowering project with an investment of approximately $230 million remains on budget and on schedule, we expect to finish the equipment upgrades at the first of our four owned wind energy centers later this year with the other three, by the end of next year. This project continues to be an excellent example of capital investment that serves both customers and investors. Even with this significant amount of capital investment, we expect the project to lower customer bills through the use of available tax credits and the incremental energy output produced from these upgrades.

轉到第 11 張投影片，我們的風力發電項目投資約 2.3 億美元，仍在預算和進度之內，我們預計將於今年晚些時候在我們擁有的四個風能中心中的第一個完成設備升級，其餘三個將於明年年底完成。該項目繼續成為服務於客戶和投資者的資本投資的卓越典範。即使需要如此大量的資本投入，我們預計該專案仍能透過使用可用的稅收抵免和這些升級產生的增量能源產出來降低客戶帳單。

Slide 12, summarizes Otter tail power's investments under tranche 1 of MISO's long-range plan which we are expected to total approximately $420 million. We continue to be in the development phase of these projects and are working to secure the various required regulatory approvals separately in June of 2024 MISO revised their proposal for tranche 2 of their long-range plan and released their near final tranche 2 portfolio projects.

投影片 12 總結了 Otter tail power 在 MISO 長期計畫第一部分下的投資，預計總額約為 4.2 億美元。我們繼續處於這些專案的開發階段，並正在努力分別獲得各種所需的監管批准，2024 年 6 月，MISO 修改了其長期計劃第 2 部分的提案，並發布了接近最終的第 2 部分投資組合專案。

We currently anticipate Otter tail power will co-own three projects included in the portfolio and anticipate the board MISO board of directors to approve the portfolio later this year. These long-range transmission investments which help to support overall grid reliability are expected to have a limited impact on our retail customer rates as they are allocated across the entire MISO footprint of which our customer base only comprises a small percentage.

我們目前預計 Otter tail power 將共同擁有該投資組合中的三個項目，並預計 MISO 董事會將在今年稍後批准該投資組合。這些有助於支援整體電網可靠性的長距離輸電投資預計對我們的零售客戶費率影響有限，因為它們分配在整個 MISO 覆蓋範圍內，而我們的客戶群僅佔一小部分。

In addition, to the transmission investments available through MISO's long range transmission plan. MISO and the Southwest Power Pool or SPP partnered to develop the joint targeted interconnection Q or JTIQ portfolio projects focused on improving the interconnection Q backlog along the [MISO SPP's]. MISO and SPP have filed their cost allocation tariff with [Ferc] and requested them to act on or before mid-November.

此外，還可透過 MISO 的遠端輸電計畫進行輸電投資。MISO 和西南電力聯盟 (SPP) 合作開發聯合目標互連 Q 或 JTIQ 組合項目，重點是改善互連 Q 積壓[MISO SPP]。 MISO 和 SPP 已向 [Ferc] 提交了成本分攤關稅，並要求他們在 11 月中旬或之前採取行動。

If [Ferc] approves the filing, we expect the MISO board to approve the portfolio at its December meeting. We remain optimistic about the potential investment opportunity which we estimate to range from approximately $350million to $400 million. While tranche 2 and JTIQ represent incremental transmission investment opportunities for us. Most of the spend is likely to fall outside of our current five-year planning period.

如果 [Ferc] 批准該文件，我們預計 MISO 董事會將在 12 月的會議上批准該投資組合。我們對潛在的投資機會仍然持樂觀態度，我們估計其價值約為 3.5 億美元至 4 億美元。而第二部分和 JTIQ 對我們來說代表了增量輸電投資機會。大部分支出可能超出我們目前的五年規劃期。

Turning to slide 13, ensuring affordable electric service for our customer remains a top priority of ours and we are proud of Otter tail power at some of the lowest electric rates in the country compared to other investor-owned utilities. We continue to seek ways to keep customer bills low while making significant capital investments to support safe, reliable and increasingly clean electric service

轉到第 13 張投影片，確保為我們的客戶提供負擔得起的電力服務仍然是我們的首要任務，與其他投資者擁有的公用事業公司相比，Otter tail 電力的電價是全國最低的，我們對此感到自豪。我們繼續尋求降低客戶帳單的方法，同時進行大量資本投資以支援安全、可靠和日益清潔的電力服務

slide 14, summarizes Otter Tail Power's key regulatory matters for the remainder of 2024 North Dakota staff and intervenor testimony relating to our rate case was received in October. And as expected, there are differences between our request and their position.

投影片 14 總結了 Otter Tail Power 在 2024 年剩餘時間內的主要監管事項，北達科他州工作人員和介入者有關我們的費率案件的證詞已於 10 月收到。正如所料，我們的要求和他們的立場存在差異。

Despite these differences, we continue to expect being able to work towards a constructive outcome. An evidentiary hearing is scheduled before the North Dakota Commission in December and we anticipate the final outcome of the rate case will occur in early 2025.

儘管存在這些差異，我們仍然期待能夠努力取得建設性的成果。北達科他州委員會計劃於 12 月舉行一次證據聽證會，我們預計該費率案件的最終結果將在 2025 年初揭曉。

For more information regarding the case, please refer to slide 15. We do not expect to file a rate case this year in Minnesota or South Dakota. Separately. We had an informal hearing before the North Dakota Commission in October to discuss our integrated resource plan. We are waiting on a decision from the commission to obtain further clarity on what renewable resources additions if any would be jurisdictionally allocated to North Dakota.

有關該案的更多信息，請參閱幻燈片15。我們預計今年不會在明尼蘇達州或南達科他州提起費率訴訟。分別地。我們十月在北達科他州委員會舉行了一次非正式聽證會，討論我們的綜合資源計劃。我們正在等待委員會的決定，以進一步明確將哪些可再生資源增加分配給北達科他州（如果有的話）。

Turning to our manufacturing segment on slide 18, BTD and T.O. Plastics continue to face end market demand related headwinds. We continue to take actions to tightly manage costs to mitigate the impact of lower sales volumes on earnings.

轉向幻燈片 18 上的製造部門，BTD 和 T.O.塑膠持續面臨終端市場需求相關的阻力。我們將繼續採取措施嚴格管理成本，以減輕銷售量下降對收益的影響。

Despite this near-term softness, we remain confident in the longer-term fundamentals of the segment. Our BTD expansion project in Georgia is progressing well and we anticipate occupying the new space later this year, we look forward to bringing this additional capacity online in early 2025 to better serve our customers in the Southeast, which is a growing market for us.

儘管短期內表現疲軟，但我們仍然對該領域的長期基本面充滿信心。我們在喬治亞州的 BTD 擴建項目進展順利，我們預計將於今年稍後投入使用新空間，我們期待在 2025 年初將這一額外產能投入使用，以更好地服務於東南部的客戶，這對我們來說是一個不斷增長的市場。

We anticipate the additional capacity at our Georgia location can support up to $35 million, in additional annual revenue according to our end market outlook on slide 20, many of the end markets BTD serves as soften primarily within recreational vehicle, agriculture, construction and lawn and garden, T.O. Plastics. Primary end market, horticulture has softened as well.

根據第 20 頁的終端市場展望，我們預計喬治亞州工廠的額外產能可支持高達 3500 萬美元的額外年收入，BTD 服務的許多終端市場主要在休閒車、農業、建築和草坪和花園、T.O. 領域。塑膠.主要終端市場園藝業也已疲軟。

Distributor and grower inventory levels have largely normalized after working through elevated inventory levels during the latter part of 2023 and most of 2024. But we are facing increased competition from import markets. Additionally, end user demand is expected to be flat to down as the market adjusts to consumers, post pandemic behaviors and buying patterns.

在 2023 年下半年和 2024 年大部分時間庫存水準上升之後，經銷商和種植者的庫存水準已基本恢復正常。但我們面臨來自進口市場日益激烈的競爭。此外，隨著市場適應消費者、疫情後的行為和購買模式，預計最終用戶需求將持平或下降。

Slide 21, provides an overview of our plastic segment. Despite plastic segment earnings decreasing from the same time last year. Due to lower sales prices of PVC pipe, the segment continues to perform better than expected. Capitalizing on customer sales volume growth and improved distributor and end market demand. Our ability to fill orders on an immediate basis is serving us well in the current environment.

幻燈片 21 概述了我們的塑膠部分。儘管塑膠部門的獲利較去年同期有所下降。由於PVC管銷售價格較低，該部門的表現持續優於預期。利用客戶銷售量的成長以及經銷商和終端市場需求的改善。在當前環境下，我們立即完成訂單的能力對我們非常有幫助。

The first phase of our Vinyltech expansion project in Arizona continues to progress well and is nearly complete. We look forward to adding large diameter PVC pipe production capability at this location later this year so that we can better serve our customers in the South and Southwest. While simultaneously freeing up large diameter capacity at Northern pipe products in North Dakota, the PVC pipe prices continue to decline but at a slower rate than we expected, our prices reflect the dynamic nature of the business and the industry including the supply and demand of PVC pipe and the cost of supply and material inputs including PVC resin, improved demand has moderated the rate of pricing declines.

我們在亞利桑那州的 Vinyltech 擴建工程第一階段進展順利並已接近完工。我們期待今年稍後在該地點增加大口徑 PVC 管道生產能力，以便更好地服務南部和西南地區的客戶。在釋放北達科他州北方管道產品大口徑產能的同時，PVC管道價格繼續下跌，但跌幅低於我們的預期，我們的價格反映了業務和行業的動態性質，包括PVC管道的供需以及供應成本和包括PVC樹脂在內的材料投入，需求的增加緩和了價格下跌的速度。

However, we continue to expect the sale price of PVC pipe to decline over time. We continue to closely monitor new home construction, vacant lot development and interest rates. As I conclude, I want to acknowledge the class action lawsuits against many of the pipe manufacturers in the industry.

然而，我們預計 PVC 管的銷售價格仍將隨著時間的推移而下降。我們繼續密切關注新房屋建設、空地開發和利率。最後，我想承認針對該行業許多管道製造商的集體訴訟。

We believe there are factual and legal defences to the allegations in the complaints and we intend to defend ourselves. These are current and active cases. We will not be commenting further today on these allegations and claims against Otter tail and the industry. I will now turn it over to Todd to provide additional commentary on our third quarter financial results and our expectations for the remainder of the year.

我們相信，投訴中的指控有事實和法律依據，我們打算為自己辯護。這些是目前正在發生的案件。我們今天不會對針對 Otter tail 和該行業的這些指控和主張發表進一步評論。現在，我將把時間交給托德，讓他就我們的第三季財務業績以及今年剩餘時間的預期提供進一步的評論。

Thank you, Chuck and good morning everyone diluted earnings per share for the third quarter totalled $2.03. A 7% decrease from the same time last year. Despite the lower quarterly earnings, our year-to-date earnings exceeded last year by 4%. Our plastic segment continues to perform better than expected. Capitalizing on customer sales volume growth, distributor and end market demand and PVC sales prices that have remained stronger than what we had anticipated due to the continued strong financial performance within our plastic segment.

謝謝查克，大家早安，第三季每股攤薄收益總計 2.03 美元。比去年同期下降了7%。儘管季度收益較低，但我們年初至今的收益比去年同期高出 4%。我們的塑膠部門的表現持續優於預期。利用客戶銷售量成長、經銷商和終端市場需求以及 PVC 銷售價格，由於塑膠部門持續強勁的財務表現，這些價格一直高於我們的預期。

We increased the midpoint of our 2024 earnings per share guidance by $0.15 or 2%. Please follow along on slide 25. As I provide an overview of our third quarter, financial results by segment electric segment earnings increased 16% from the third quarter of 2023 due to the impact of the North Dakota rate case. Our rate increase increased transmission and rider revenue and the impact of favorable weather.

我們將 2024 年每股盈餘預期中位數上調了 0.15 美元，即 2%。請繼續看第 25 張投影片。當我概述我們的第三季時，由於北達科他州利率案的影響，按部門劃分的電力部門收益較 2023 年第三季增加了 16%。我們的費率上漲增加了運輸和乘客的收入以及有利天氣的影響。

This was partially offset by higher interest and depreciation expense, transmission revenue for the quarter was higher compared to last year due to a recent decision issued by [Ferc] which supported our lowering the estimated refund on the allowed return on equity dating back to 2013.

這被更高的利息和折舊費用部分抵消，本季度的傳輸收入與去年相比有所增加，這是由於 [Ferc] 最近發布的一項決定支持我們降低自 2013 年以來允許的股本回報率的預計退款。

This resulted in non-recurring earnings per share increase of $0.4 in the third quarter. Manufacturing segment earnings decreased 71% compared to the third quarter of 2023 due to lower sales volumes and profit margins. Product pricing and sales mix changes and decreased scrap revenue. This was partially offset by lower SG and an expense sales volume in the manufacturing segment decreased 13% in the third quarter of 2024 compared to the same time last year.

這導致第三季每股非經常性收益增加0.4美元。由於銷售量和利潤率下降，製造部門收益與 2023 年第三季相比下降了 71%。產品定價和銷售組合發生變化以及廢品收入減少。這被較低的SG和製造部門的費用銷售量在2024年第三季與去年同期相比下降了13%所部分抵銷。

The end markets that saw the greatest declines in the quarter included recreational vehicle agriculture, construction, and lawn and garden. Sales volumes have softened due to lower end market demand as well as manufacturers and dealers tightly managing their inventory levels amid uncertain market conditions. Lower profit margins were largely driven by the mix of products sold during the quarter as well as reduced leverage of our fixed manufacturing costs due to decreased production and sales volumes.

本季跌幅最大的終端市場包括休閒車、農業、建築以及草坪和花園。由於終端市場需求較低以及製造商和經銷商在市場條件不確定的情況下嚴格管理庫存水平，銷售量有所下降。利潤率下降主要是由於本季銷售的產品組合以及生產和銷售量下降導致的固定製造成本槓桿率降低。

Despite the near-term softness, the fundamentals of the segment remain strong, and we expect the manufacturing segment to produce earnings growth in line with our EPS growth target over the long-term. Plastic segment earnings decreased 8% from the third quarter of 2023, primarily due to lower profit margins which was partially offset by higher sales volumes.

儘管短期內表現疲軟，但該部門的基本面依然強勁，我們預計製造業部門的獲利成長將與我們的長期每股收益成長目標一致。塑膠部門收益較 2023 年第三季下降 8%，主要原因是利潤率下降，但銷售量增加部分抵消了這一影響。

Gross profit margins decreased in the third quarter due to lower sales prices. Pipe sales prices have steadily declined throughout the year and decreased 11% compared to the same time last year, sales volumes increased 13% from the third quarter of 2023 due to incremental customer sales volume growth and improved distributor and end market demand. With the increased earnings and cash generated by our diversified business model. Our balance sheet and credit metrics continue to be very strong

由於銷售價格下降，第三季毛利率下降。管道銷售價格全年穩步下降，與去年同期相比下降了11%，由於客戶銷售量的增量以及分銷商和終端市場需求的改善，銷售量較2023年第三季度增長了13%。隨著我們多元化業務模式所產生的收益和現金不斷增加。我們的資產負債表和信貸指標持續保持強勁

slide 27, shows our total available liquidity on our lines of credit as of September 30, 2024.

第 27 頁的投影片顯示了截至 2024 年 9 月 30 日我們的信用額度上的總可用流動資金。

This combined with our $280 million of cash results in total available liquidity of $544 million. Our consolidated equity layer of nearly 62% continues to be at a very healthy level. And our return on equity over the last 12 months exceeded 20% outpacing our utility peers during the slide 28. Due to the continued strength within our plastic segment, we are increasing and tightening our 2024 diluted earnings per share guidance to a range of $6.97 to $7.17.

加上我們的 2.8 億美元現金，總可用流動資金達到 5.44 億美元。我們的合併股權層接近 62%，繼續處於非常健康的水平。我們過去 12 個月的股本回報率超過 20%，在第 28 季超過了我們的公用事業同行。由於我們的塑膠部門持續強勁成長，我們將 2024 年每股攤薄收益預期上調並收緊至 6.97 美元至 7.17 美元之間。

From our previous guidance range of $6.77 to $7.07. This increases the midpoint of our guidance to $7.07 which is a $0.15 increase over our previous guidance midpoint, we are maintaining our electric segment and corporate cost centre guidance for 2024. Our electric segment earnings are expected to increase 7% over 2023 levels. We are decreasing our 2024 earnings guidance for a manufacturing segment primarily due to lower anticipated sales volumes in the fourth quarter.

從我們之前的指導範圍 6.77 美元到 7.07 美元。這將我們的指導中點提高至 7.07 美元，比我們之前的指導中點增加 0.15 美元，我們將維持 2024 年電力部門和企業成本中心指導。我們的電力部門收益預計將比 2023 年的水準成長 7%。我們下調了製造部門 2024 年的獲利預期，主要原因是預期第四季度銷售量下降。

As mentioned previously, many of our markets are experiencing end user demand related headwinds and we expect manufacturers to continue to tightly manage their production and inventory levels in response throughout the remainder of the year. Additionally, we anticipate product pricing related pressures due to weakened demand.

如前所述，我們的許多市場正面臨與終端用戶需求相關的阻力，我們預計製造商將在今年剩餘時間內繼續嚴格管理其生產和庫存水準。此外，我們預計由於需求減弱，產品定價將面臨壓力。

We will continue to take action to tightly manage our costs in this down cycle while ensuring our team and operations remain agile to respond quickly. When demand improves, we are increasing our plastic segment 2024 earnings guidance for a couple of reasons. First, our third quarter financial results were better than what we had expected. Second, while we anticipate the sales prices of PVC pipe to continue to decrease, we now expect this decrease to be at a slower rate of decline than what our previous earnings guidance assumed.

我們將繼續採取行動，嚴格管理這一行週期中的成本，同時確保我們的團隊和營運保持敏捷，以便快速做出反應。當需求改善時，我們會因為以下幾個原因上調塑膠部門 2024 年獲利預期。首先，我們第三季的財務表現優於我們的預期。其次，雖然我們預期 PVC 管的銷售價格將繼續下降，但我們目前預計，下降速度將低於我們先前的獲利預測。

Additionally, we expect sales volumes in the fourth quarter to be higher than what we had previously assumed with the changes made to our earnings guidance for the year. We anticipate our earnings mix for 2024 to be 30% electric and 70% non-electric net of corporate costs. While this anticipated mix deviates from our long-term earnings mix target of approximately 65% electric and 35% non-electric.

此外，隨著我們對今年獲利預期的調整，我們預計第四季度的銷售量將高於我們先前的預期。我們預計，2024 年的獲利結構為：扣除企業成本後，電力收入佔 30%，非電力收入佔 70%。雖然這個預期組合偏離了我們長期獲利組合目標（約 65% 為電力，35% 為非電力）。

The incremental earnings and cash generation helps drive shareholder value as we remain in an enviable position to execute on our long-term growth plan with the support of a strong balance sheet and no equity needs in the current five-year planning period.

增量收益和現金創造有助於提高股東價值，因為我們仍處於令人羨慕的地位，可以在強勁的資產負債表的支持下執行我們的長期增長計劃，並且當前五年規劃期內沒有股權需求。

We continue to expect to reach our targeted long-term earnings mix of 65% electric and 35% nonelectric. As plastic segment earnings decline to a range of $45million to $50 million on an annual basis. While our electric segment earnings grow at a rate in line with our projected rate-based growth, compound annual growth rate.

我們繼續期望實現 65% 電力和 35% 非電力的長期獲利組合目標。由於塑膠部門的年獲利下降至 4,500 萬至 5,000 萬美元之間。而我們的電力部門獲利成長率與我們預期的基於成長率的複合年增長率一致。

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 29, no changes have been made to this plan since it was first announced earlier this year. However, as Chuck mentioned, we expect sharing an updated five-year capital spending plan during our year-end earnings call and anticipate incremental capital investment opportunity primarily within our electric segment over the next five-year spending period.

我們的五年資本支出計畫是我們電力部門獲利成長的主要驅動力，該計畫在第 29 頁有更詳細的說明，自今年稍早首次宣布以來，該計畫沒有做出任何改變。然而，正如查克所提到的，我們預計將在年終收益電話會議上分享最新的五年資本支出計劃，並預計在未來五年支出期內主要在我們的電力領域內增加資本投資機會。

Slide 30, provides a summary of our financing plan for 2025 through 2028. We continue to plan for retiring and not replacing our only outstanding parent level debt when it matures in 2026 and continue to forecast no equity needs within the existing five-year planning period and potentially beyond. Despite our significant rate base growth plan, this helps to differentiate us from many of our utility peers that will need to issue additional equity to fund their rate-based growth plan resulting in earnings per share dilution.

投影片 30 摘要概述了我們的 2025 年至 2028 年融資計畫。我們繼續計劃在 2026 年到期時償還而不是替換我們唯一未償還的母公司層面債務，並繼續預測在現有的五年規劃期內及以後可能沒有股權需求。儘管我們制定了重要的費率基礎增長計劃，但這有助於將我們與許多公用事業同行區分開來，這些同行將需要發行額外股權來資助其基於費率的增長計劃，從而導致每股收益稀釋。

We are positioned well to deliver upon our increased 2024 earnings guidance and meet our long term investment targets. As summarized on slide 33, Our diversified business model continues to produce above average returns and long-term value for our shareholders.

我們已做好準備，實現提高的 2024 年獲利預期並達到我們的長期投資目標。正如第 33 頁所總結的，我們多元化的業務模式繼續為我們的股東帶來高於平均水平的回報和長期價值。

We have many growth opportunities across our segments and are positioned well to grow with our customers. We are in an excellent position to support this growth with our strong balance sheet, ample liquidity and investment grade credit ratings. We are now ready to take your questions.

我們在各個領域都擁有眾多成長機會，並且能夠與客戶共同成長。憑藉強大的資產負債表、充足的流動性和投資等級信用評級，我們完全有能力支持這一成長。我們現在準備好回答你們的問題。

(Operator Instructions)

（操作員指令）

And our first question comes from Ida Wozniak of Siebert Williams and Chang. I think your line is open.

我們的第一個問題來自 Siebert Williams and Chang 的 Ida Wozniak。我認為您的線路是暢通的。

It's [Chris], Chuck you have talked about some potential new large loads for a while. Have you got any ability to elaborate or give us any sense of what kind of timeline that might be?

是 [Chris]，查克，你已經談論了一些潛在的新大負荷。您能詳細說明一下或告訴我們這個時間表是什麼樣的嗎？

Yeah Chris? Thanks for the question. We as many in the industry are working with a number of entities that are interested in this, both the end use customer and people that would make the facilities in a data centre mode but also crypto mining and then particularly to our geographic area. We have a lot of interest in clean fuels, whether it's sustainable aviation fuel or low carbon ethanol type facilities. In each of those I would indicate we're in discussions with a number of people. We have not moved to signing any electric service agreements, but we have several projects that are in discussions or letter of intent situations on that. So, from a timeframe I would expect we will have to have something here within the next two quarters.

是的，克里斯？謝謝你的提問。我們和許多業內人士一樣，正在與許多對此感興趣的實體合作，既包括最終用戶，也包括以資料中心模式建造設施的人員，以及加密挖掘人員，特別是我們的地理區域。我們對清潔燃料非常感興趣，無論是永續航空燃料還是低碳乙醇型設施。在每一個問題上，我都會表明我們正在與許多人進行討論。我們尚未簽署任何電力服務協議，但我們有幾個項目正在進行討論或簽署意向書。因此，從時間範圍來看，我預計我們將在接下來的兩個季度內取得一些進展。

Okay. That helps as far as the plastic segment goes, you now have rising volumes which has its own pressures on price. And that's beginning to sort of offset the declining price. Have you got any new insights into what you think the glide path towards normal is and has your thoughts on what the new normal will ultimately be changed at all?

好的。這對塑膠產業是有幫助的，現在塑膠產量不斷增加，這給價格帶來了壓力。這開始在一定程度上抵消價格下跌的影響。您對於走向正常的滑行路徑有什麼新的見解嗎？

Chris, I don't think that our idea where the new normal would be, has changed. We have been fairly consistent in that $45million to $50 million. We anticipate that in the 2026 timeframe, and we anticipate the prices will continue to recede between where they are now and that level over that time period. Okay, great.

克里斯，我不認為我們對新常態的看法改變了。我們的金額一直保持在 4500 萬美元到 5000 萬美元之間。我們預計，到 2026 年，價格將繼續在當前水準和該時間段內回落。好的，太好了。

You alluded to some import pressures on manufacturing end markets. Can you elaborate on that and how much of it do you think is some consumer pressures from interest rates and maybe postponing some purchases hoping for a better 2025.

您提到製造業終端市場面臨一些進口壓力。您能否詳細說明一下這一點？

Chris, our reference on this is primarily to T.O. Plastics and I think there's a review of just what you mentioned, spending patterns of the end use customer in the horticulture market.

克里斯，我們對此主要參考的是 T.O.塑料，我認為對您所提到的園藝市場最終用戶消費模式進行了回顧。

But also the import market we think has changed just because of the price of overseas freight has declined significantly. And while it was their pre-pandemic during the high freight periods, a lot of that pressure from imports dropped off that we feel that's now come back.

但我們也認為進口市場已經發生了變化，只是因為海外運費的價格大幅下降。雖然這是疫情爆發前的貨運高峰期，但來自進口的很大壓力已經下降，我們覺得現在這種壓力又回來了。

Okay. So lastly, with the new capacity in Arizona, can you just sort of talk about the dynamics between the large diameter pipe market in Arizona, the absence of having to ship the pipe? So, what does that do to Arizona margins? And also, if North Dakota isn't selling into the Arizona market do they have a void there that they can fill with their large capacity pipes? So, are you expecting improved margins overall and volumes?

好的。最後，隨著亞利桑那州的新產能，您能否談談亞利桑那州大口徑管道市場的動態，以及無需運輸管道的情況？那麼，這對亞利桑那州的利潤有何影響？而且，如果北達科他州不向亞利桑那州市場銷售產品，那麼他們是否可以透過大容量管道來填補那裡的空白？那麼，您是否預期整體利潤率和銷售量會有所提高？

So, I think on volumes, we would expect increased volumes and by way of background, when we get an order for a development or what not, it may include some amount of large diameter pipe which in the southwest, we have been unable to provide from the vinyltech facility because it didn't have equipment able to make that.

因此，我認為就產量而言，我們預計產量會增加，從背景來看，當我們接到開發訂單或其他訂單時，它可能包括一定數量的大直徑管道，在西南地區，我們無法從乙烯基技術工廠提供這種管道，因為它沒有能夠生產這種管道的設備。

And so, you would only get a partial order or not get an order because you couldn't fulfil the whole thing or we had to ship it at a very high cost from North Dakota. We think that will be alleviated and should improve our sales volumes in the South and southeast.

因此，您只能收到部分訂單或無法收到訂單，因為您無法完成全部訂單，或者我們必須以非常高的成本從北達科他州發貨。我們認為這種情況將得到緩解，並將提高我們在南部和東南部的銷售量。

And, what ends up happening to the volumes that North Dakota was providing? Will they be able to sell that locally?

那麼北達科他州提供的產量最終怎麼樣了呢？他們能在當地販售嗎？

We believe so, it was not a lot of volume. It is a long way to ship by so.

我們相信如此，但數量並不多。搭乘這樣的船來運輸路途很遙遠。

Okay, thanks a lot. Appreciate the details. Thanks, Chris.

好的，非常感謝。欣賞細節。謝謝，克里斯。

Thank you very much. One moment for our next call, please.

非常感謝。請稍等片刻，接聽我們的下一通電話。

Our next call comes from the line of Tate Sullivan of Maxim Group. Tate, your line is open.

我們的下一個電話來自 Maxim Group 的 Tate Sullivan。泰特，你的線路暢通了。

Great. Thank you. Hi, Chuck and Todd. And I mean, first going back to PVC I mean, can you talk about why distributors that buy the PVC such as [Corn Maine and Fergusons] are willing to pay prices above the historical spread to resin? Are your customers the distributors waiting for extra supply? Do they still want extra inventory? Can you go into some background on that dynamic, please?

偉大的。謝謝。你好，查克和托德。首先回到 PVC 話題，您能談談為什麼購買 PVC 的經銷商（例如 [Corn Maine 和 Fergusons]）願意支付高於樹脂歷史價差的價格嗎？您的客戶是等待額外供應的經銷商嗎？他們還想要額外的庫存嗎？您能否介紹一下這動態的背景？

Thanks for the question. Well, we believe that there's a lot of supply and dynamics in PVC pipe and pipe pricing. There are a number of issues that go into to how that's set. Like I can't really ascertain what speak for the distributors and beyond that we just we're not really going into any of the stuff that's going into the litigation since it's in ongoing litigation. I'm not in a position to comment particularly on that.

謝謝你的提問。嗯，我們相信 PVC 管道和管道定價的供應和動態都很大。關於如何設定這一點，有許多問題需要考慮。就像我真的無法確定分銷商的發言權，除此之外，我們並沒有真正參與訴訟中的任何內容，因為它仍在進行訴訟。我無法對此發表特別評論。

And then when you comment on, I mean the margins going down, the pricing going down in the PVC eventually are you really basing that on what you're seeing for the resin prices? And can you come, what is resin prices done since September? Since you probably have more visibility than many?

然後當您評論時，我的意思是利潤率會下降，PVC 的價格最終會下降，您真的是根據您所看到的樹脂價格來判斷的嗎？您能告訴我九月以來樹脂價格如何嗎？因為你可能比很多人都更引人注目？

There's a lot of things that go into the pricing, not just resin. And I really not able to go into that anymore at this time due to the litigation.

影響定價的因素很多，不只是樹脂。但由於訴訟，我現在真的無法再討論這個問題了。

Oh, okay. I understand that. And then Todd, the manufacturing, you mentioned on the weakness in BTD covered it in the comments and the questions, what is the relative manufacturing revenue mix between BTD and T.O. Plastics? Is it's still well a majority of BTD or is T.O. Plastics? I mean, have you given the percent breakdown before?

哦好的。我明白。然後 Todd，您提到了製造業，BTD 的弱點已經在評論和問題中提到過，BTD 和 T.O. 之間的相對製造業收入組合是怎樣的？塑膠?它仍然是 BTD 的大多數嗎，還是 T.O.塑膠?我的意思是，您之前有給過百分比細目嗎？

You're, you're absolutely right, Tate BTD is the much larger entity of the two.

你，你完全正確，Tate BTD 是兩者中規模更大的一個。

So, most of our financial results would be driven by BTD and this year top has been very challenged all year long with sales volume. So, it's a little higher this year than normal.

因此，我們的大部分財務表現都由 BTD 推動，而今年的銷售量一直是我們的一大挑戰。因此，今年的水平比正常水平略高。

And then just sorry, just on the PVC as well and you mentioned the $45million to $50 million. Is it normal? What is that we referring to the pound? I mean, because you have GBP350 of capacity growing that by about 7% of what was that? What were you referring to with that number?

然後很抱歉，同樣關於 PVC，您提到了 4500 萬美元到 5000 萬美元。這樣正常嗎？我們指的是什麼英鎊？我的意思是，因為您有 350 英鎊的產能，所以增長了約 7% 是多少？您指的是什麼數字？

I was referring to our forecast net income from that segment in 2026 or beyond.

我指的是我們預測 2026 年或以後該部門的淨收入。

$45million to $50million. Perfect. Okay. Thank you very much.

4500萬美元到5000萬美元。完美的。好的。非常感謝。

Thank you very much. As there are no remaining questions in the queue. I would now like to turn the call back over to Chuck for his closing remarks.

非常感謝。因為隊列中沒有剩餘的問題。現在我想將電話轉回給查克，請他作最後發言。

Thank you for joining our call and your interest in Otter tail corporation.

感謝您加入我們的電話會議並關注 Otter tail 公司。

If you have any questions, please reach out to our investor relations team. We look forward to speaking with you next quarter.

如果您有任何疑問，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。

Thank you for your participation in today's conference. This does conclude the program and you may now disconnect.

感謝大家參加今天的會議。這確實結束了程序並且您現在可以斷開連接。