Otter Tail Corp (OTTR) 2024 Q4 法說會逐字稿

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

早安，歡迎參加 Otter Tail Corporation 2024 年第四季財報電話會議。今天的通話正在錄音。我們將在準備好的演講後舉行問答環節。我現在將電話轉給公司，徵求他們的開場評論。

Good morning, everyone, and welcome to our fourth 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 fourth quarter and annual financial results. Our complete earnings release and slides can call are available on our website at ottertail.com. A recording of this call will be available on our website later today. With me on the call are Chuck MacFarlane, Otter Tail Corporation's President and CEO; and Todd Wahlund, Otter Tail Corporation's Vice President and CFO.

大家早安，歡迎參加我們 2024 年第四季財報電話會議。我叫 Beth Eiken，是 Otter Tail Corporation 的投資人關係經理。昨晚，我們公佈了第四季度和年度財務業績。我們的完整收益報告和幻燈片可在我們的網站 ottertail.com 上找到。此次通話的錄音將於今天稍晚在我們的網站上發布。與我一起參加電話會議的還有 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。

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 against 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.

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。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，我們鼓勵您閱讀這些文件。

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 to Corporation's President and CEO, Mr. Chuck MacFarlane.

Otter Tail Corporation 不承擔因新資訊、未來事件、發展或其他原因更新或修改我們的前瞻性陳述的責任。現在我將把電話轉給 Otter 公司總裁兼執行長查克·麥克法蘭先生。

Thank you, Beth. Good morning, and welcome to our fourth quarter 2024 earnings call. Please refer to slide 4 as I begin my remarks with an overview of recent highlights. 2024 was a successful year for Otter Tail Corporation. We produced record earnings, generated diluted earnings per share of $7.17, and we continue to produce one of the highest return on equity in the utility industry. We updated our 5-year capital spending plan with Otter Tail Power's portion totaling $1.4 billion, which is a 9% increase over our previous plan. .

謝謝你，貝絲。早安，歡迎參加我們 2024 年第四季財報電話會議。請參閱投影片 4，我將以最近亮點的概述開始我的演講。 2024 年對 Otter Tail Corporation 來說是成功的一年。我們的收益創下了歷史新高，每股攤薄收益達到 7.17 美元，並且繼續保持公用事業行業最高的股本回報率之一。我們更新了我們的五年資本支出計劃，其中 Otter Tail Power 的份額總計 14 億美元，比我們之前的計劃增加了 9%。。

The revised plan is expected to produce rate base compounded annual growth rate of 9%, and we continue to expect Otter Tail Power's earnings to increase at a similar rate. With our recent and projected strong financial performance, we are excited to announce increases to our long-term financial targets. Our updated long-term earnings per share growth rate is now 6% to 8% and an increase from our previous 5% to 7%. Slide 5 provides a summary of our quarter and year-to-date financial results.

修訂後的計劃預計將產生 9% 的基準複合年增長率，我們繼續預計 Otter Tail Power 的利潤將以類似的速度增長。憑藉我們近期和預期的強勁財務業績，我們很高興地宣布提高我們的長期財務目標。我們更新後的長期每股盈餘成長率為 6% 至 8%，高於先前的 5% 至 7%。幻燈片 5 概述了我們本季和年初至今的財務表現。

We are pleased with the record earnings generated during the year on the back of solid performance from our electric and plastics segments. Following my operational update, Todd will provide a more detailed discussion of our 2024 financial results as well as our outlook for 2025. Turning to our electric platform. Otter Tail Power continues to perform well, converting our 2024 rate base growth into earnings growth at approximately a 1:1 ratio.

我們很高興看到，憑藉電氣和塑膠部門的穩健表現，我們在今年創造了創紀錄的收益。在我的營運更新之後，托德將更詳細地討論我們的 2024 年財務表現以及我們對 2025 年的展望。轉向我們的電動平台。Otter Tail Power 繼續表現良好，將我們 2024 年的利率基礎增長以大約 1:1 的比例轉化為盈利增長。

We executed on our key regulatory priorities and delivered on our significant rate base growth plan, all while maintaining some of the lowest electric rates in the nation. Turning to slide 7. We obtained approval for our fully settled North Dakota general rate case in the fourth quarter. The outcome of the case provided for net annual revenue requirement increase of $13.1 million premised on a return of equity of 10.1% and an equity layer of 53.5%.

我們執行了我們的關鍵監管重點，並實現了我們顯著的電價基礎增長計劃，同時保持了全國最低的電價。翻到幻燈片 7。我們在第四季度獲得了完全解決的北達科他州一般稅率案件的批准。該案的結果是，以 10.1% 的股本回報率和 53.5% 的股本層為前提，淨年收入要求增加 1,310 萬美元。

The final outcome of the rate case achieved 57% of our amended request. However, if you -- if neutral -- income neutral adjustments are included, this percentage increases to 70%. We appreciate the effort from all parties in our rate case for reaching a constructive outcome that balances various stakeholder interests. Slide 8 and 9 provide an overview of ongoing and future projects. Touching on a few key updates. Our wind repowering project continues to progress well. We completed the equipment upgrades at the first of four owned wind energy centers in the fourth quarter and expect to complete the other three by the end of 2025.

該費率案的最終結果實現了我們修改請求的57%。然而，如果你——如果是中性的——包括收入中性調整，這個百分比就會增加到 70%。我們感謝各方在利率案中所做的努力，以達成平衡各利害關係人利益的建設性成果。幻燈片 8 和 9 概述了正在進行的項目和未來的項目。談一些關鍵的更新。我們的風力發電專案持續進展順利。我們在第四季完成了四個自有風能中心中第一個中心的設備升級，預計在 2025 年底完成另外三個中心的設備升級。

This project continues to be an excellent example of investing capital that serves both our customers and investors as we continue to anticipate this project will lower customer bills through available tax credits and increased energy output. We announced plans in December to add up to 345 megawatts of solar generation, subject to certain regulatory approvals. Our estimated capital investment opportunity for Solway Solar and Abercrombie Solar is $100 million and $400 million, respectively.

該項目繼續成為投資資本為我們的客戶和投資者服務的絕佳範例，因為我們繼續預期該項目將透過可用的稅收抵免和增加能源產出來降低客戶的帳單。我們在 12 月宣布了增加 345 兆瓦太陽能發電量的計劃，但需獲得某些監管部門的批准。我們估計 Solway Solar 和 Abercrombie Solar 的資本投資機會分別為 1 億美元和 4 億美元。

We believe these solar facilities will fit the requirements of our approved Minnesota integrated resource plan and represent an opportunity to provide increasingly clean electric service that is also cost effective to our customers. Turning to slide 9. In December, MISO approved several projects within the tranche 2.1 of its long-range transmission plan. We anticipate that Otter Tail Power will co-own three projects included in this portfolio.

我們相信這些太陽能設施將符合我們已批准的明尼蘇達州綜合資源計劃的要求，並為我們的客戶提供更清潔且經濟高效的電力服務的機會。翻到第 9 張投影片。12月，MISO 批准了其遠端輸電計畫2.1階段中的幾個項目。我們預計 Otter Tail Power 將共同擁有該投資組合中的三個項目。

These projects will be developed and constructed over several years and we estimate our capital investment opportunity to be $700 million. MISO and SPP's Board also approved the joint targeted interconnection queue or portfolio projects in December. These projects are intended to improve reliability and reduce constraints along the MISO SPPC. We estimate our capital investment opportunity to be $450 million. The majority of the capital investment associated with MISO tranche 2.1 and JTIQ projects fall outside the current 2025 to 2029 planning period but demonstrate the health of our rate-based growth pipeline.

這些項目將在數年內開發和建設，我們估計我們的資本投資機會為 7 億美元。味噌和SPP董事會也於12月批准了聯合目標互連隊列或組合項目。這些項目旨在提高可靠性並減少 MISO SPPC 沿線的限制。我們估計我們的資本投資機會為 4.5 億美元。與 MISO 第 2.1 期和 JTIQ 項目相關的大部分資本投資不在當前 2025 年至 2029 年的規劃期之內，但表明了我們基於利率的增長渠道的健康狀況。

Looking forward, Otter Tail Power updated its five year rate base CAGR to 9% from 7.7% and as summarized on slide 10. Otter Tail Power is expected to convert its rate base growth into earnings growth and a 1:1 ratio over the long term. which is made possible by identifying high-quality projects, effective project execution and minimizing the impact of regulatory lag. As noted on the slide, we expect over 95% of our updated five year capital spending plan to be recovered through existing rates or riders, allowing for timely recovery of our capital investments.

展望未來，Otter Tail Power 將其五年利率基準複合年增長率從 7.7% 更新為 9%，如投影片 10 所述。預計 Otter Tail Power 將把其費率基礎成長轉化為獲利成長，長期來看比例為 1:1。這是透過識別高品質項目、有效執行項目和最大限度地減少監管滯後的影響來實現的。如幻燈片所示，我們預計更新後的五年資本支出計劃的 95% 以上將透過現有費率或附加條款收回，從而能夠及時收回我們的資本投資。

Additionally, Otter Tail Power remains well positioned to attract and support large loads. As summarized on slide 11, Otter Tail Power has approximately 970 megawatts of potential new large loads in our pipeline. While we have a significant amount of opportunity relative to our existing 1,000 megawatt system size, it is unlikely that we will add this much new load. Instead, we aim to bring on one to two large customers in the next one to three years and hope to grow with them to support their electric service needs.

此外，Otter Tail Power 仍能很好地吸引和支撐大負載。正如投影片 11 中總結的那樣，Otter Tail Power 的管道中大約有 970 兆瓦的潛在新大負載。儘管相對於我們現有的 1,000 兆瓦系統規模，我們擁有大量機會，但我們不太可能增加這麼多的新負載。相反，我們的目標是在未來一到三年內引入一到兩個大客戶，並希望與他們共同成長，以滿足他們的電力服務需求。

Adding a new large load would not only benefit us, but also our current customers as it would enable us to spread out our existing fixed costs. We have and we'll continue to be thoughtful in our negotiations to ensure that we are appropriately mitigating any potential adverse implications of adding new large loads to our existing customers. Additionally, no adjustments have been made to our load growth forecast or five year capital spending plan at this time for these potential new large loads.

增加新的大負載不僅對我們有利，對我們現有的客戶也有利，因為它可以讓我們分攤現有的固定成本。我們已經並將繼續在談判中深思熟慮，以確保我們能夠適當減輕為現有客戶增加新的大負荷所帶來的任何潛在不利影響。此外，針對這些潛在的新大型負荷，我們目前尚未對負載成長預測或五年資本支出計畫做出任何調整。

Even with the significant capital investment opportunity ahead, we are well positioned to execute our capital spending plan while maintaining affordable electric rates for our customers. We anticipate being able to maintain affordable rates by continuing to leverage our existing low-cost asset base, available tax credits, technology-driven gains, and efficient financing as we have no near-term equity needs.

即使面臨巨大的資本投資機會，我們仍有能力執行我們的資本支出計劃，同時為客戶維持可負擔的電價。由於我們短期內沒有股權需求，我們預計能夠透過繼續利用我們現有的低成本資產基礎、可用的稅收抵免、技術驅動的收益和高效的融資來維持可承受的利率。

Additionally, transmission investment comprises a significant portion of our updated five year capital spending plan. These investments have limited impact on our retail customer rates as the costs are allocated across the entire MISO system. Our customer base is comprised of a small percentage of MISO and only pays their pro rata share of the MISO portfolio projects.

此外，輸電投資占我們更新的五年資本支出計畫的很大一部分。由於成本分攤到整個 MISO 系統中，這些投資對我們的零售客戶費率的影響有限。我們的客戶群只由一小部分 MISO 組成，並且僅按其比例支付 MISO 投資組合專案的份額。

Turning to slide 12. Otter Tail Power has some of the lowest electric rates in the nation. With our 2024 rates 30% below the national average and 16% below our regional peers. We remain committed to maintaining affordable electric service rates for all of our customers and have demonstrated the ability to do so for many years.

翻到第 12 張投影片。Otter Tail Power 的電價是全國最低的價格之一。我們的 2024 年利率比全國平均低 30%，比地區同業低 16%。我們始終致力於為所有客戶維持可負擔的電力服務價格，並且多年來已證明我們有能力做到這一點。

Transitioning to our manufacturing platform, our manufacturing and plastics segment faced dynamic market conditions in 2024 and I am proud of how our team members responded. Starting with our manufacturing segment. BTD and T.O. Plastics experienced end market demand related headwinds in 2024 especially in the second half of the year.

在轉向我們的製造平台時，我們的製造和塑膠部門在 2024 年面臨動態的市場條件，我為我們的團隊成員的反應感到自豪。從我們的製造部門開始。BTD 和 T.O. 2024 年，尤其是下半年，塑膠將遭遇與終端市場需求相關的阻力。

As summarized on slide 14, nearly all of the end markets we serve are being negatively impacted by higher dealer and used inventory levels, inflationary pressures and increased interest rates, and we expect end market conditions to remain challenged in 2025. In response to the challenging market conditions, we took actions in 2024 to tightly manage costs to mitigate the impact of lower sales volumes on earnings and we will continue to evaluate if any further action is needed in 2025.

正如投影片 14 所總結的那樣，我們所服務的幾乎所有終端市場都受到經銷商和二手庫存水準上升、通膨壓力和利率上升的負面影響，我們預計 2025 年終端市場狀況仍將面臨挑戰。為了因應嚴峻的市場情勢，我們在 2024 年採取行動嚴格管理成本，以減輕銷售量下降對收益的影響，並將繼續評估 2025 年是否需要採取進一步行動。

Despite this downturn, we remain confident in the segment's long-term fundamentals. We expect to focus on reshoring manufacturing operations to the US as well as the existing housing shortage and power demand growth to support volumes over the long term.

儘管出現下滑趨勢，我們仍然對該行業的長期基本面充滿信心。我們預計將重點關注將製造業務轉移回美國以及現有的住房短缺和電力需求成長，以支持長期銷售。

Additionally, we expect large equipment manufacturers to continue to look to outsource a portion of their work once end market conditions improve. Slide 15 provides an overview of our plastics segment pricing and volume trends. Our sales prices of PVC pipe have steadily declined since peaking in mid-2022, decreasing 12% in 2024 compared to 2023 levels.

此外，我們預計，一旦終端市場條件改善，大型設備製造商將繼續尋求外包部分工作。幻燈片 15 概述了我們的塑膠細分市場的價格和銷售趨勢。我們的 PVC 管銷售價格自 2022 年中期達到高峰以來一直穩定下降，2024 年與 2023 年的水準相比下降了 12%。

Sales volumes increased significantly in 2024 due to our customer sales volume growth and end market demand following a period of distributor destocking in 2023. Slide 16 summarizes our long-term earnings expectations of the plastics segment. Our updated projection is that our plastics earnings will decrease through 2027.

由於 2023 年經銷商去庫存期過後客戶銷售量成長和終端市場需求增加，2024 年銷售量大幅增加。投影片 16 總結了我們對塑膠產業的長期獲利預期。我們最新的預測是，到 2027 年，我們的塑膠收益將會下降。

We continue to project a range of $45 million to $50 million in annual earnings as our current best estimate and now anticipate reaching this level in 2028. This estimate of earnings is predicated on the assumption that our sales prices continue to decline at a pace similar to what we've experienced since the latter part of 2022 reverting to a pre-2021 gross margin percentage.

我們繼續預測年收益在 4500 萬至 5000 萬美元之間，這是我們目前的最佳估計，現在預計 2028 年將達到這一水平。這項獲利預估是基於這樣的假設：我們的銷售價格繼續以與我們自 2022 年下半年以來經歷的速度類似的速度下降，並恢復到 2021 年前的毛利率百分比。

However, there are many market dynamics that could materially impact our results and cause them to vary from our projections. Our long-term view of Plastics segment earnings also incorporates the impact of incremental sales volume growth from our recent capacity addition in Phoenix, and the expectation that raw material costs will generally increase with the rate of inflation contributing to the contraction of gross margin during this time. Turning to slide 17, our manufacturing platform remains well positioned to support future growth opportunities.

然而，許多市場動態可能會對我們的結果產生重大影響並導致其與我們的預測有所不同。我們對塑膠部門獲利的長期看法也考慮了近期菲尼克斯產能增加帶來的銷售量成長的影響，以及原物料成本將隨著通貨膨脹率上升而上升的預期，導致這段時間內毛利率的收縮。第 17 頁，我們的製造平台仍處於有利地位，可以支持未來的成長機會。

We completed on time and on budget the first phase of our Vinyltech expansion project in the fourth quarter enhancing our facility and increasing our resin and pipe storage. The first phase also added a line capable of producing large diameter PVC pipe increasing our Plastics segment production capacity by approximately 7%. We look forward to leveraging this new capability at Vinyltech to better serve our customers in the Southwest market while simultaneously freeing up large diameter production capacity at our Northern Pipe products in Fargo.

我們在第四季度按時、按預算完成了 Vinyltech 擴建項目的第一階段，增強了我們的設施並增加了我們的樹脂和管道儲存。第一期還增加了一條生產大口徑 PVC 管的生產線，使我們塑膠部門的生產能力提高約 7%。我們期待利用 Vinyltech 的這項新功能更好地服務西南市場的客戶，同時釋放法戈北方管道產品的大直徑生產能力。

Our BTD Georgia expansion project continues to progress well. Many of our customers are expanding into the Southeast market, and this project positions us well to support this growth over the long term. We are currently occupying the new space and plan to bring the additional manufacturing capacity online in the first quarter of 2025. This project is expected to increase production capacity for up to $35 million in incremental annual sales.

我們的BTD喬治亞州擴建計畫持續進展順利。我們的許多客戶正在向東南市場擴張，這個項目使我們能夠長期支持這一成長。我們目前正在佔用新的空間，並計劃在 2025 年第一季投入額外的製造能力。該項目預計將增加生產能力，年銷售額將增加高達 3,500 萬美元。

Separately, I want to take a moment to address the recent change in presidential administration and its potential impact on Otter Tail. While we remain confident in our ability to effectively navigate changing political environment, we will continue to monitor developments that could pose risks to items such as any IRA-related changes, including tax credits and transferability, DOE grant funding for the JTIQ portfolio projects and the impact of potential tariffs on all of our businesses.

另外，我想花點時間談談最近總統政府的變動及其對奧特泰爾的潛在影響。雖然我們對自己有效應對不斷變化的政治環境的能力仍然充滿信心，但我們將繼續監控可能對 IRA 相關變化等項目構成風險的事態發展，包括稅收抵免和可轉讓性、能源部對 JTIQ 投資組合項目的撥款以及潛在關稅對我們所有業務的影響。

While we will watch for any developments impacting tax credit transferability, the impact of this change to Otter Tail would be limited in our five year planning period, as we are able to monetize the tax credits we generate due to earnings produced by our electric and manufacturing platforms. I will now turn it over to Todd to provide his financial update.

雖然我們會關注任何影響稅收抵免可轉移性的事態發展，但這一變化對 Otter Tail 的影響在我們的五年規劃期內將是有限的，因為我們能夠將我們透過電力和製造平台產生的收益所產生的稅收抵免貨幣化。現在我將把話題轉交給托德，讓他提供財務更新。

Thank you, Chuck, and good morning, everyone. 2024 was another remarkable year for Otter Tail. We delivered record earnings with diluted earnings per share totaling $7.7 and compared to $7 in 2023. We ended the year in a position of financial strength with a solid balance sheet and ample liquidity to support our growth initiatives. 2024 also marked the 86th consecutive year in which we've paid dividends. Earlier this month, we announced a 12% increase to our dividend producing an annual indicated dividend for 2025 of $2.10 per share.

謝謝你，查克，大家早安。 2024年對Otter Tail來說又是意義非凡的一年。我們實現了創紀錄的收益，每股攤薄收益總計 7.7 美元，而 2023 年為 7 美元。我們在年底時財務狀況強勁，資產負債表穩健，流動性充足，能夠支持我們的成長計畫。 2024 年也是我們連續第 86 年發放股利。本月初，我們宣布將股息提高 12%，預計 2025 年年度股息為每股 2.10 美元。

This double-digit increase reflects our commitment to delivering shareholder value while maintaining our balanced capital allocation strategy. We remain focused on investing in our electric segment rate base growth while returning capital to our shareholders. Please follow along on slides 19, 20 and 21 as I provide an overview of our 2024 financial results at the consolidated and segment level. Year-to-date, diluted earnings per share increased $0.17 compared to 2023, primarily driven by our plastics and electric segments, partially offset by our manufacturing segment and corporate cost center.

這一兩位數的成長反映了我們致力於實現股東價值，同時保持平衡的資本配置策略。我們將繼續專注於投資電力部門基準利率成長，同時向股東返還資本。請關注投影片 19、20 和 21，我將概述我們 2024 年合併和分部層面的財務表現。年初至今，每股攤薄收益與 2023 年相比增加了 0.17 美元，主要得益於塑膠和電氣部門的成長，但製造部門和企業成本中心的部分抵消了這一增長。

Electric segment earnings grew nearly 8% year-over-year with an increase of $0.15 per share, driven by the impact of the interim rate increase as part of our North Dakota rate case, higher rider revenues from the recovery of our rate base investments and increased commercial and industrial sales volumes. These items were partially offset by the impact of unfavorable weather and the cost of our rate base investments and higher depreciation and interest expense. Our utility team with efficient operating and financing costs was able to offset the significant weather-related headwind during the year.

電力部門獲利較上年同期成長近 8%，每股增加 0.15 美元，這主要得益於北達科他州電價案例中臨時電價上調的影響、電價基礎投資恢復帶來的附加收入增加以及商業和工業銷售量增加。這些項目部分被不利天氣的影響、我們的利率基礎投資成本以及更高的折舊和利息支出所抵銷。我們的公用事業團隊憑藉著高效的營運和融資成本得以抵銷年內與天氣相關的重大不利因素。

Manufacturing segment earnings decreased $0.18 per share, primarily due to lower sales volumes, higher production costs and less scrap revenue. This was partially offset by lower general and administrative expenses and the favorable impact of product pricing and mix. Manufacturing segment sales volumes decreased 15% from 2023 levels.

製造部門每股收益下降 0.18 美元，主要原因是銷售量下降、生產成本上升和廢品收入減少。這被較低的一般及行政開支以及產品定價及組合的有利影響部分抵消。製造業部門的銷售量較 2023 年的水準下降了 15%。

The higher production cost was a result of reduced leverage on our fixed manufacturing costs due to decreased production and sales volumes. Despite the down cycle, the fundamentals of the segment remains strong, and we continue to benefit from the incremental earnings and cash flow generated by these businesses.

生產成本上升是由於生產和銷售量下降導致固定製造成本槓桿率降低。儘管處於下行週期，但該部門的基本面依然強勁，我們繼續受益於這些業務創造的增量收益和現金流。

Our Plastics segment produced strong financial results in 2024, generating record earnings per share of $4.77. Segment earnings increased $0.30 per share from 2023 levels. This increase was primarily due to the impact of higher sales volumes, partially offset by the impact of lower sales prices. Sales volumes increased 27% in 2024. This sales growth was a function of low sales volumes in 2023, driven by customer destocking and competitive conditions for PVC pipe.

我們的塑膠部門在 2024 年取得了強勁的財務業績，每股收益達到創紀錄的 4.77 美元。分部收益較 2023 年的水準每股增加 0.30 美元。這一增長主要歸因於銷售量增加的影響，但部分抵消了銷售價格下降的影響。2024 年銷售量將成長 27%。這項銷售成長是由於 2023 年銷售量較低，受到顧客去庫存和 PVC 管的競爭條件所致。

Sales volumes in 2024 benefited from customer sales volume growth, especially with our large distribution customers and improved end market demand. Our corporate costs were higher in 2024, primarily due to an increase in employee medical claim levels following a lower-than-expected amount in 2023 and higher variable compensation.

2024 年的銷售量受惠於客戶銷售量的成長，尤其是我們的大型分銷客戶和終端市場需求的改善。2024 年我們的公司成本較高，主要是由於 2023 年員工醫療索賠水準低於預期以及可變薪酬增加所導致的。

These items were partially offset by higher investment income from an increase in the amount of invested funds arising from the significant amount of cash generated during the year. Turning to slide 22. Our balance sheet remains strong. Our total available liquidity as of December 31, 2024, was $606 million.

這些項目由本年度產生大量現金而導致的投資資金增加而產生的更高投資收益部分抵銷。翻到第 22 張投影片。我們的資產負債表依然強勁。截至 2024 年 12 月 31 日，我們的總可用流動資金為 6.06 億美元。

We achieved a return on equity of 19% on an equity layer of 62%, outpacing many of our utility peers. We are positioned well to deliver on our growth strategy and consistently deliver shareholder value over the long term. Given the strength of our balance sheet, cash position and no equity needs for at least the next 5 years.

我們在 62% 的股權層上實現了 19% 的股本回報率，超過了許多公用事業同行。我們已做好準備，實現我們的成長策略，並長期持續地為股東創造價值。鑑於我們的資產負債表強勁、現金狀況良好且至少未來五年內無需股權。

Turning to slide 23. We are initiating our 2025 diluted earnings per share guidance range of $5.68 and to $6.08, which is expected to result in an estimated return on equity near 14%. Our guidance reflects electric segment earnings growth of approximately 7% and as expected, a decline in plastics segment earnings. In addition, manufacturing segment earnings are anticipated to decline as end market conditions remain challenging. Plastic segment earnings are forecasted to be $143 million in 2025 driven by a projected decline in our PVC pipe pricing Partially offsetting the projected decline in product pricing is a modest increase in anticipated sales volumes in 2025 from our new capacity at our Phoenix location.

翻到第 23 張投影片。我們預計 2025 年每股攤薄收益將達到 5.68 美元至 6.08 美元，預計股本回報率將達到 14% 左右。我們的預期是，電氣部門獲利將成長約 7%，而塑膠部門獲利則將下降，符合預期。此外，由於終端市場條件仍嚴峻，製造部門獲利預計將下降。預計到 2025 年，塑膠部門的收益將達到 1.43 億美元，這主要得益於 PVC 管道價格的預期下降。

As Chuck discussed earlier in the call, we continue to believe plastic segment earnings will normalize at a range of $45 million to $50 million. However, we no longer expect our first full year of normal earnings to be in 2026 and but rather 2028. Based on the midpoint of our 2025 guidance range, we are forecasting our consolidated five year compounded annual growth rate in earnings per share to be over 20%, as shown on slide 24. Even without the impact of Plastics segment earnings, we expect this rate to be 8%.

正如查克早些時候在電話會議中討論的那樣，我們仍然相信塑膠部門的收益將正常化在 4500 萬美元至 5000 萬美元的範圍內。然而，我們不再預期第一個正常獲利年份是 2026 年，而是 2028 年。根據我們 2025 年指引範圍的中點，我們預測每股盈餘的綜合五年複合年增長率將超過 20%，如投影片 24 所示。即使沒有塑膠部門收益的影響，我們預計該成長率也將達到 8%。

Our updated five year capital spending plan, which is a key driver of earnings growth for our electric segment is included in more detail on slide 25. Compared to our latest plan, our updated capital spending plan includes additional investments in solar generation and transmission. Beyond our updated base five year capital spending plan we project up to $650 million of incremental capital investment opportunity at Otter Tail Power.

我們最新的五年資本支出計畫在第 25 頁有更詳細的介紹，這是我們電力部門獲利成長的主要驅動力。與我們的最新計劃相比，我們更新的資本支出計劃包括對太陽能發電和輸電的額外投資。除了我們更新的五年資本支出計劃之外，我們預計 Otter Tail Power 的增量資本投資機會將高達 6.5 億美元。

Our base capital plan for 2025 through 2029 does not currently include any additional capital investment for wind generation as approved in our Minnesota integrated resource plan as we continue to evaluate, which is more economic for our customers. building and owning a new facility or contracting the energy through a purchase power agreement.

我們 2025 年至 2029 年的基本資本計劃目前不包括明尼蘇達州綜合資源計劃中批准的任何額外風力發電資本投資，我們正在繼續評估，這對我們的客戶來說更經濟。建設和擁有新設施或透過購電協議簽訂能源合約。

Further, it does not include any capital investment relating to battery storage approved in our IRP or any dual field related projects to address potential changes to -- capacity requirements. Additionally, it does not include any delivery investment relating to potential new large loads, we estimate that for every $100 million of incremental capital investment, our rate base compound annual growth rate would increase by approximately 75 basis points.

此外，它不包括任何與我們 IRP 中批准的電池儲存相關的資本投資或任何雙場相關項目，以應對容量需求的潛在變化。此外，它不包括與潛在新大負荷有關的任何交付投資，我們估計，每增加 1 億美元的增量資本投資，我們的費率基準複合年增長率將增加約 75 個基點。

Slide 26 summarizes our updated five year financing plan. Even with our upsized capital spending plan, we expect to finance our growth without any equity issuances. We plan to issue debt at Otter Tail Power on an annual basis to help fund its rate base growth plan and maintain its authorized capital structure.

投影片 26 總結了我們更新的五年融資計畫。即使我們增加了資本支出計劃，我們仍希望在不發行任何股票的情況下為我們的成長提供資金。我們計劃每年在 Otter Tail Power 發行債務，以幫助資助其費率基礎增長計劃並維持其授權資本結構。

We have $3 million in parent level debt that matures in late 2026 that we plan to retire with existing cash and not replace. The value of our portfolio of companies is evident in our financing plan. We are able to invest the cash flow generated by our manufacturing platform into our utilities rate base growth plan eliminating the need for equity issuance for at least the next five years.

我們有 300 萬美元的母公司層面債務將於 2026 年底到期，我們計劃用現有現金償還，而不是替換。我們的公司投資組合的價值在我們的融資計劃中顯而易見。我們能夠將製造平台產生的現金流投資到我們的公用事業費率基礎成長計畫中，從而無需在至少未來五年內發行股票。

With the strength of our balance sheet, growth opportunities and the talent excellence we have cultivated we have increased our long-term financial targets as summarized on slide 28. We increased our long-term earnings per share growth rate to 6% to 8%, increasing our targeted total shareholder return to 9% to 11%. We anticipate delivering on these targets once Plastics segment earnings have normalized, which is expected to occur in 2028. We continue to target a long-term earnings mix of 65% electric and 35% manufacturing.

憑藉我們強勁的資產負債表、成長機會和我們培養的優秀人才，我們提高了長期財務目標，如第 28 頁所總結的那樣。我們將長期每股盈餘成長率提高至 6% 至 8%，將股東總回報率目標提高至 9% 至 11%。我們預計，一旦塑膠部門的獲利恢復正常，我們就能實現這些目標，預計這一目標將於 2028 年實現。我們繼續將長期獲利結構定為 65% 電力和 35% 製造業。

We anticipate reaching this earnings mix in 2028 as electric segment earnings continue to grow in line with its rate base growth rate of 9% and Plastics segment earnings have normalized. We are pleased with our results in 2024 and are well positioned going into 2025 to continue to deliver value for our shareholders, customers and employees. We are now ready to take your questions.

我們預計到 2028 年將實現這一盈利組合，因為電力部門盈利將繼續按照其 9% 的基準增長率增長，且塑料部門盈利已經正常化。我們對 2024 年的業績感到滿意，並已準備好在 2025 年繼續為我們的股東、客戶和員工創造價值。我們現在準備好回答你們的問題。

(Operator Instructions)

（操作員指令）

Our first question comes from the line of Tate Sullivan with Maxim Group.

我們的第一個問題來自 Maxim Group 的 Tate Sullivan。

I think you are just looking at slide 11 in terms of your phases to secure larger loads. And Chuck, did you say earlier that you have agreed to large load agreements with one or two customers or potentially will? And then is that reflected, if so, in the current CapEx guidance for the next five years to start, please?

我認為您只是在看投影片 11 中有關確保更大負載的階段。查克，你之前是否說過，你已經與一兩個客戶達成了大額負荷協議，或者可能會這樣做？那麼，如果是的話，這是否反映在未來五年的當前資本支出指引中？

Thanks for the question. Yes, if you're looking at that slide, we have -- what we consider an electric service agreement would be the point at which we have a signed agreement with the new large loads, and we do not have any of those. We have term sheets out to a group that have 150 megawatts worth and then we are working with others, but just in an entry level of letter of intent discussions. So we have no signed items, but we would hope to do that in the one to three years.

謝謝你的提問。是的，如果你看那張投影片，我們有──我們所認為的電力服務協議就是我們與新的大負載簽署的協議，而我們還沒有這些協議。我們已向擁有價值 150 兆瓦的集團發出了條款清單，然後我們正在與其他集團合作，但目前還處於意向書討論的入門階段。因此我們還沒有簽署任何協議，但我們希望在一到三年內完成這一目標。

And just to add to what those are not in our capital spending plan. If you look on slide 25, where we've got the incremental capital investment opportunity that's where we would include some of that capital spending.

補充一下，這些不在我們的資本支出計畫中。如果你看第 25 張投影片，你會發現我們有增量資本投資機會，其中包括部分資本支出。

Yeah, that's an impressive number. And then does this -- and if you can comment, I mean, does the 970-megawatt letter of intent exclude customers that you haven't entered agreements with? In other words, are you turning away customers expressing interest to have new loads in your service territory?

是的，這是一個令人印象深刻的數字。然後這是——如果您可以評論的話，我的意思是，970兆瓦的意向書是否排除了那些您尚未與之簽訂協議的客戶？換句話說，您是否會拒絕那些有興趣在您的服務區域內增加新負載的客戶？

I would not say that we're turning away, but that's just the ones that we have had discussions with.

我不會說我們正在拒絕，但這只是我們討論過的對象。

Okay. Understood. And then turning to manufacturing. I mean it's broad-based. You caught the current weakness in the manufacturing and demand, I guess, it's mostly on the steel working outsourced manufacturing side. Is it -- if you would categorize it across the different end markets? Is it the higher interest rates? Is it just cyclical related to the higher demand you had during COVID? Can you comment on that?

好的。明白了。然後轉向製造業。我的意思是它具有廣泛的基礎。您抓住了當前製造業和需求的疲軟，我猜，這主要體現在鋼鐵外包製造方面。是的——您可以根據不同的終端市場對其進行分類嗎？是更高的利率嗎？這是否只是與疫情期間更高的需求有關的周期性現象？您能對此發表評論嗎？

Just a few things, Tate. So some of it is in the recreational vehicle. We think there's a large used inventory and dealer inventory, channel inventory corrections. On agriculture, we do think that's also reflective of commodity prices that have come down in farmer income. Construction is down, but not as much as the others. And lawn and garden has been sort of weak -- that was the first sector to go lower after COVID.

只有幾件事，泰特。其中一些是在休閒車裡。我們認為存在大量二手庫存、經銷商庫存和通路庫存調整。在農業方面，我們確實認為這也反映了農產品價格下降導致農民收入下降。建築業雖然有所下滑，但是下滑幅度不如其他產業那麼多。草坪和花園產業一直比較疲軟——這是疫情之後第一個下滑的產業。

Chuck. And is the expansion of BTD Georgia related to one of those specific end markets or all of it?

查克。BTD Georgia 的擴張是否與其中一個特定的終端市場有關，還是與全部有關？

We would say that the current area of BTD, Georgia, we have more construction in that segment than others, but they are all represented at BTD in Georgia.

我們可以說，目前在喬治亞州 BTD 地區的建設中，我們在這個領域的建設比其他領域要多，但它們都在喬治亞州 BTD 有代表。

And the last for me, is most of in the manufacturing, not the plastics part of manufacturing for the manufacturing line on a metal fabrication work versus plastic thermal forming still or has the next change -- last couple of years.

對我來說，最後一個是製造業的大部分，而不是生產線上的塑膠製造業，在金屬製造工作中，與塑膠熱成型相比，在過去幾年中仍然有變化。

No, the mix is still heavily towards metal fabrication.

不，混合物料主要還是金屬製造。

Okay, alright, thank you very much.

好的，好的，非常感謝。

Thank you. As there are no remaining questions in the queue, I will turn the call back over to Chuck for his closing remarks.

謝謝。由於隊列中沒有剩餘問題，我將把電話轉回給查克，請他作結語。

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

感謝您加入我們的電話會議並關注 Otter Tail Corporation。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。

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

女士們、先生們，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。