Q2 2024 Tail Corp Earnings Call

Speaker Change: Good morning and welcome to the Otter Tail Corporation's second 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.

Operator: Quarter 2024 earnings conference call. Today's call is being recorded.

Operator: 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 its opening comments.

Operator: We will hold a question-and-answer session after the prepared remarks.

Beth Eiken: I will now turn the call over to the company for their opening comments. 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 Invest Relations.

Beth Eiken: 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.

Beth Eiken: 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.

Beth Eiken: Last night we announced our second quarter financial results. Our complete earnings release implies the company in this call are available on our website at ottertail.com. Our recording of this call will be available on our website later today.

Beth Eiken: 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. 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.

Beth Eiken: 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.

Beth Eiken: With me on the call today are Chuck McFarlane, 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. As noted on slide two, these statements represent our current views and expectations of future events. They are subject to risk and uncertainties, which may cause actual results to differ from those presented here. So please be advised against placing under reliance on any of these statements. Our four looking statements are describing more detail in our filings of the Security and Exchange Commission, which we encourage you to review.

Speaker Change: 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.

Beth Eiken: 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 two, 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. Therefore, 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.

Speaker Change: 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.

Speaker Change: Our forward-looking statements are described in more detail in our filings at the Securities and Exchange Commission, which we encourage you to review.

Beth Eiken: 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.

Beth Eiken: Otter Tail Corporation disclaims any duty to update or revise or forward-looking statements due to new information, future events, developments or otherwise.

Chuck MacFarlane: 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.

Chuck McFarlane: I will now turn the call over to Otter Tail Corporation's president and CEO, Mr. Chuck McFarlane. Thank you, Beth, and good morning and welcome to our second quarter 2024 earnings call. Please refer to slide four as I begin my comments on our quarterly performance. We are pleased with our second quarter financial results. Deluted earnings per share increased 6% to $2.7 per share compared to the same time last year, driven by strong financial performance within our plastics and manufacturing segments. Plastic 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.

Chuck MacFarlane: Thank you, Beth, and good morning, and welcome to our second quarter 2024 earnings. Please refer to slide four 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 segment. Plastic 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. Manufacturing segment earnings increased 15 percent, primarily driven by higher margins at BTD.

Chuck MacFarlane: Thank you, Beth, and good morning, and welcome to our second quarter 2024 earnings call.

Chuck MacFarlane: Please refer to slide 4 as I begin my comments on our quarterly performance.

Speaker Change: 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.

Speaker Change: Plastic 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.

Chuck McFarlane: This is partially offset by lower pipe prices. 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. We are increasing our 2024 earnings guidance to the range of $6.77 to $7.77 from our previous range of $6.23 to $6.50, primarily due to the strength of our plastic segment. In a moment, Todd will provide a more detailed discussion of our second quarter financial results and our updated earnings expectations for 2024.

Speaker Change: Manufacturing segment earnings increased 15%, primarily driven by higher margins at BTD.

Chuck MacFarlane: Electric savings 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... 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. In a moment, Todd will provide a more detailed discussion of our second quarter financial results and our updated earnings expectations for 2024.

Speaker Change: Electric savings 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.

Speaker Change: 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 plastic segment.

Speaker Change: In a moment, Todd will provide a more detailed discussion of our second quarter financial results and our updated earnings expectations for 2024.

Chuck McFarlane: Slide five 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. 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 and earnings per share from 2019 through 2024 of 8.3%. Turning to our electric segment, slide 7 provides an overview of our electric operations. Our regulated electric utility announced a sizeable five-year capital spending plan earlier this year, with significant amounts being allocated to renewable resources, transmission investment, and technology.

Chuck MacFarlane: Slide five shows our expected five-year compounded annual growth rate in 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, 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 in earnings per share from 2019 through 2024 of 8.3%. Turning to our electric segment, slide 7 provides an overview of our electric operation.

Todd: Slide 5 shows our expected 5-year compounded annual growth rate in 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.

Todd: 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 in earnings per share from 2019 through 2024 of 8.3 percent.

Todd: Turning to our electric segment, slide 7 provides an overview of our electric operations.

Chuck MacFarlane: A 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. In addition to Otter Tail Power's rate-based 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 yet, but we continue to engage with companies showing an interest in entering our service.

Speaker Change: A regulated electric utility announced a sizable five-year capital spending plan earlier this year.

Speaker Change: with significant amounts being allocated to renewable resources, transmission investment, and technology.

Chuck McFarlane: In addition to Otter Tail Power's rate-based 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. 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.

Speaker Change: In addition to Otter Tail Power's rate-based growth, we continue to explore opportunities for new large loads.

Speaker Change: This potential load growth is primarily driven by data centers, crypto mining, and clean fuel related opportunities.

Speaker Change: 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.

Chuck MacFarlane: When engaging with these various companies, we typically take a prudent approach, ensuring adequate financial security and protection from the loss of large loads or a slowdown in demand or energy cost changes that could impact our other customers. 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 will continue to balance this with the needs of our other customers.

Speaker Change: 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.

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

Speaker Change: We are certainly interested in bringing large loads online in our service territory.

Speaker Change: 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 will continue to balance this with the needs of our other customers.

Chuck MacFarlane: Slide 8 summarizes Otter Tail Power's 5-year capital spending. This plan includes $1.3 billion of capital investment over the next five-year period and is expected to produce rate-based growth of 7.7%. Otter Tail Power has a strong track record of translating rate-based growth into earnings, a sign of a high-performing regulated utility. Over the long term, we expect to continue to convert our rate-based growth into earnings growth near a one-to-one ratio given our constructive regulatory environments and available rights.

Speaker Change: Slide 8 summarizes Otter Tail Power's 5-year capital spending plan.

Speaker Change: The plan includes $1.3 billion of capital investment over the next five-year period and is expected to produce rate-based growth of 7.7 percent.

Speaker Change: Otter Tail Power has a strong track record of translating rate-based growth into earnings growth.

Speaker Change: In the previous five-year period, we converted average rate-based growth into earnings growth at a one-to-one ratio, a sign of a high-performing regulated utility.

Chuck McFarlane: Over the long term, we expect to continue to convert our rate-based growth into earnings growth near a one-to-one ratio, given our constructive regulatory environments and available riders. 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. We are targeting to upgrade more than 174,000 meters across our service territory and are about halfway through at this point.

Speaker Change: Over the long term, we expect to continue to convert our rate-based growth into earnings growth near a one-to-one ratio, given our constructive regulatory environments and available riders.

Chuck MacFarlane: 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. The 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. 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. Additionally, we expect this project will reduce operating expenses through lower meter reading costs and technology-enabled savings.

Speaker Change: I will now provide a few details on several projects within the existing five-year planning period and beyond.

Speaker Change: Slide 9 summarizes Otter Tail Power's advanced metering infrastructure project with a total investment of approximately $60 million.

Speaker Change: 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.

Speaker Change: We are targeting to upgrade more than 174,000 meters across our service territory and are about halfway through at this point.

Chuck McFarlane: We anticipate completing the project in 2025 and expect this project will reduce operating expense through lower meter-reading costs and technology-enabled savings. Turning to Slide 10, we have commenced repowering our four legacy wind farms within 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 percent capacity. factor. In March, we received approval for rider recovery of the project costs 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.

Speaker Change: We anticipate completing the project in 2025 and expect this project will reduce operating expense through lower meter reading costs and technology-enabled savings.

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

Speaker Change: Turning to slide 10, we have commenced repowering our four legacy wind farms with an investment of approximately $230 million.

Speaker Change: Once complete, this project is expected to be equivalent to adding 40 megawatts of new wind generation with a 50% capacity factor.

Speaker Change: In March, we received approval for rider recovery of the project costs from the North Dakota Commission, and recently received approval from the Minnesota Commission as well.

Speaker Change: We requested rider recovery in South Dakota and anticipate a decision in Q3.

Chuck McFarlane: 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. Slide 11 summarizes Otter Tail Power's investments under Tronch 1 of Myself's Long-Range Transmission Plan. Otter Tail Power will co-own two Tronch 1 projects: the Jamestown Ellendale and the Big Stone, South Alexandria Big Oaks 345KV transmission projects. Both projects have FERC approval for construction work in progress, ensuring the timely recovery of our capital investment. In total, we estimate our capital investment in these projects to be approximately 420 million.

Chuck MacFarlane: 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.

Speaker Change: This wind repowering project qualifies for production tax credits under the Inflation Reduction Act.

Speaker Change: 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.

Chuck MacFarlane: Slide 11 summarizes Otter Tail Power's investments under Tronch 1 of MISO's Long-Range Transmission. Otter Tail Power will co-own two Tronch One projects, the Jamestown Allendale and the Big Stone South Alexandria Big Oaks 345KV transmission. Both projects have FERC approval for construction work in progress, ensuring the timely recovery of our capital investors. 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.

Speaker Change: Slide 11 summarizes Otter Tail Power's investments under Tranch 1 of MISO's Long Range Transmission Plan.

Speaker Change: Otter Tail Power will co-own two Tronch One projects, the Jamestown-Ellendale and the Big Stone South Alexandria Big Oaks 345KV transmission projects.

Speaker Change: Both projects have FERC approval for construction work in progress.

Speaker Change: ensuring the timely recovery of our capital investment.

Speaker Change: In total, we estimate our capital investment in these projects to be approximately $420 million.

Chuck McFarlane: These investments are expected to have very little impact on our retail customer rates as they are allocated across the entire Myself North footprint. In March of 2024, Myself released their initial draft proposal for Tronch 2 portfolio projects and recognized additional transmission investment would be required to meet the needs Tronch 2 was intended to resolve. In June, myself revised their proposal for Tronch 2 and released their near-final Tronch 2 portfolio projects, which included additional transmission investment for Otter Tail Power. We expect the Myself Board of Directors to approve the portfolio later this year. In addition to transmission investment opportunities available through Myself's long-range plan, Myself 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 Myself SPPC.

Speaker Change: These investments are expected to have very little impact on our retail customer rates as they are allocated across the entire MISO-North footprint.

Chuck MacFarlane: In March of 2024, MISO released their initial, draft proposal for TRANCH 2 portfolio projects and recognized additional transmission investment would be required to meet the needs TRANCH 2 was intended to resolve. In June, MISA revised their 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.

Speaker Change: In March of 2024, MISO released their initial draft proposal for TRANCH 2 portfolio projects and recognized additional transmission investment would be required to meet the needs TRANCH 2 was intended to resolve.

Speaker Change: In June , MISA revised their proposal for Tronch 2 and released their near-final Tronch 2 portfolio projects, which included additional transmission investment for Otter Tail Power.

Speaker Change: We expect the MISO Board of Directors to approve the portfolio later this year.

Chuck MacFarlane: 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 project, focused on improving the interconnection queue backlog along the MISO-SBP scene. 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 opportunities, which we estimate to range from approximately 350 to 400 million.

Speaker Change: In addition to transmission investment opportunities available through MISO's long-range plan,

Speaker Change: 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-SPP seam.

Chuck McFarlane: Myself 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 to 400 million. Both Tronch 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. 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.

Speaker Change: MISO and SPP are currently planning to file their cost allocation tariff with FERC in Q3.

Speaker Change: 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 to $400 million.

Chuck MacFarlane: Both TRONCH2 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. 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 average.

Speaker Change: Both TRONCH2 and JTEIQ represent incremental transmission investment opportunities for us, but most of the spend is likely to fall outside of our current five-year planning period.

Speaker Change: 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.

Speaker Change: Affordability remains one of our top priorities.

Chuck McFarlane: Otter Tail Power's electric rates have consistently remained well below the national and regional assets. like 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 cell fund dockets. I will now give a more detailed update on our Integrated Resource Plan and North Dakota rate case. Turning to slide 14 in May, Otter Tail Power received approval from the Minnesota Public Utilities Commission on its Integrated Resource Plan.

Speaker Change: Otter Tail Power's electric rates have consistently remained well below the national and regional averages.

Chuck MacFarlane: Slide 13 summarizes Otter Tail Power's key regulatory matters for 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.

Speaker Change: Slide 13 summarizes Otter Tail Power's key regulatory matters in 2024.

Speaker Change: 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.

Speaker Change: 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.

Chuck MacFarlane: I will now give a more detailed update on our integrated resource plan and North Dakota rates. Turning to slide 14, in May, Otter Tail Power received a favorable ruling from the Minnesota Public Utilities Commission on its integrated resource plan. The decision authorizes adding 200 to 300 megawatts of solar generation by 2027, 150 to 200 megawatts of wind generation, and 20 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.

Speaker Change: I will now give a more detailed update on our Integrated Resource Plan and North Dakota Rate Case.

Speaker Change: Turning to slide 14, in May, Otter Tail Power received approval from the Minnesota Public Utilities Commission on its integrated resource plan.

Chuck McFarlane: The decision authorizes adding 200 to 300 megawatts of solar generation by 2027, 150 to 200 megawatts of wind generation, and 20 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. 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 a story of station by 2027. 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.

Speaker Change: The decision authorizes adding 200 to 300 megawatts of solar generation by 2027.

Speaker Change: 150 to 200 megawatts of wind generation and 20 to 75 megawatts of battery storage by 2029.

Speaker Change: Designating the Minnesota portion of Coyote Station as an emergency only resource starting as early as 2026.

Chuck MacFarlane: 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. 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 storage station from the Minnesota Commission, the North Dakota Public Service Commission denied our advanced determination of prudence requesting a request relating to this project.

Speaker Change: 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.

Speaker Change: 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.

Chuck McFarlane: Despite the approval of adding on-site fuel storage at a story of station from the Minnesota Commission, the North Dakota Public Service Commission denied our advance determination of prudence requesting, request relating to this project. As such, there's uncertainty about the future prospects of this project. Turning this 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 percent.

Speaker Change: Despite the approval of adding onsite fuel storage at a storage station from the Minnesota Commission,

Speaker Change: The North Dakota Public Service Commission denied our advanced determination of prudence request relating to this project. As such, there is uncertainty about the future prospects of this project.

Chuck MacFarlane: As such, there is uncertainty about the future prospects of this. 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 Program to a modified request to increase net revenues by approximately $23 million. 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.

Speaker Change: 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.

Speaker Change: 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%.

Chuck McFarlane: Based on a requested ROE of 10.6 percent, and an equity layer of 53.5 percent. We anticipate the final outcome of the case will occur in late 2024. Separately, in July, the EPA published its proposed rule for North Dakota's Regional Hays State Implementation Plan, in 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 Hays rule. We cannot predict, but certainly, the final resolution and timing of the Regional Hays compliance in North Dakota, and specifically, the impact of Coyote Station and its operations.

Speaker Change: We anticipate the final outcome of the case will occur in late 2024.

Chuck MacFarlane: In July, the EPA published its proposed rule for North Dakota's Regional Haze State Implementation Plan, in 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 Hays Rule.

Speaker Change: Separately, in July , the EPA published its proposed rule for North Dakota's Regional Haze State Implementation Plan.

Speaker Change: in 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.

Chuck MacFarlane: We cannot predict with certainty the final resolution and timing of the regional haze compliance in North Dakota and specifically the impact on Coyote Station and its operations, if any. 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 KIOS stations, which would also be subject to regulatory approval.

Speaker Change: We cannot predict with certainty the final resolution and timing of the regional haze compliance in North Dakota and specifically the impact at Coyote Station and its operations, if any.

Chuck McFarlane: If any. 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 Coyotes Station, which would also be subject to regulatory approval. Turning to our manufacturing segment on slide 80, despite strong quarterly financial results, BTD and Teal 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.

Speaker Change: However, significant emission control investments could be required, and recovery of such costs from customers would require regulatory approval.

Speaker Change: Alternatively, investments in emission control equipment may prove to be uneconomic and could result in the early retirement or sale of our interest in CIO Station, which would also be subject to regulatory approval.

Chuck MacFarlane: Turning to our manufacturing segment on slide 18, despite strong quarterly financial results, BTD and Teal Plastics continue to face end-market demand-related challenges. We anticipate conditions to soften further in the second half of 2024.

Speaker Change: Turning to our manufacturing segment on slide 18.

Speaker Change: Despite strong quarterly financial results, BTD and T.O. Plastics continue to face end-market demand-related headwinds.

Speaker Change: We anticipate conditions to soften further in the second half of 2024.

Chuck MacFarlane: In response, we have and will continue to take actions to manage costs and mitigate the impact of lower sales. Turning to our end market outlook on slide 20, many of the end markets that BTD serves are softening. We continue to see customers insourcing work to put their excess capacity to use. While the outlook for teoplastics primary and 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. Slide 21 provides an overview of our plastics segment.

Speaker Change: In response, we have and will continue to take actions to manage costs and mitigate the impact of lower sales volumes.

Chuck McFarlane: 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 teal plastics primary end-market quarter culture 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. Slide 21 provides an overview of our plastic 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.

Speaker Change: Turning to our end market outlook on slide 20, many of the end markets that BTD serves are softening.

Speaker Change: We continue to see customers insourcing work to put their excess capacity to use.

Speaker Change: While the outlook for teoplastics primary and 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.

Speaker Change: We remain optimistic about demand improving in the second half of 2024, but expect sales volumes to be down significantly from 2023 levels.

Speaker Change: Slide 21 provides an overview of our plastic segment.

Chuck MacFarlane: 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. However, 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, highlighting historical sales prices of PVC pipe. Sales prices continue to decline, but at a slower rate than we anticipated.

Speaker Change: 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.

Chuck McFarlane: 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. 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. Our vinyl tech site improvement and expansion project continues to progress well.

Speaker Change: It's important to note that while sales volumes were higher quarter-over-quarter,

Speaker Change: Sales volumes during Q2 of 2023 were below normal levels as distributors were largely focused on destocking efforts.

Speaker Change: Slide 22 highlights historical sales prices of PVC pipe and the cost of resin.

Speaker Change: Sales prices continue to decline, but at a slower rate than we anticipated.

Chuck MacFarlane: Improved demand has provided support for product pricing and moderated the rate of price decline. However, we continue to see variability in the rate of price decline across product categories and geographies. Our Vinyl Tech site improvement and expansion project continues to progress well. We look forward to bringing large diameter pipe production capabilities to Vinyl Tech later this year so that we can better serve our customers located in the South and Southwest. 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.

Speaker Change: Improved demand has provided support for product pricing and moderated the rate of pricing declines.

Speaker Change: We continue to see variability in the rate of price decline across product categories and geographies.

Speaker Change: Our Vinyl Tech site improvement and expansion project continues to progress well.

Chuck McFarlane: We look forward to bringing large diameter pipe production capabilities to Vinyl Tech later this year so that we can better serve our customers located in the South and Southwest.

Speaker Change: We look forward to bringing large diameter pipe production capabilities to Vinyl Tech later this year so that we can better serve our customers located in the South and Southwest.

Todd Wahlund: 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. 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 plastic segment continues to perform very well, capitalizing on customer sales volume growth and distributor and market demand, while sales prices continue to remain elevated relative to historical levels. Due to the continued strength within our plastic segment, we have increased the midpoint of our 2024 earnings guidance by 8%.

Speaker Change: 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.

Todd Wahlund: Thank you, Chuck, and good morning, everyone. We delivered record second-quarter earnings, generating diluted earnings per share of $2.07. 6% increase over the same time last year. Our plastic segment continues to perform very well, capitalizing on customer sales volume growth and distributor and market demand, while sales prices continue to remain elevated relative to historical levels. Due to the continued strength within our plastics segment, we have increased the midpoint of our 2024 earnings guidance by 8%. Please follow along on slide 26 as I begin with an overview of our second quarter financial results by segment.

Todd: Thank you, Chuck, and good morning, everyone.

Todd: We delivered record second quarter earnings, generating diluted earnings per share of $2.07.

Todd: a 6% increase over the same time last year.

Todd: Our plastic segment continues to perform very well, capitalizing on customer sales volume growth and distributor and market demand.

Speaker Change: while sales prices continue to remain elevated relative to historical levels.

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

Todd Wahlund: Please follow along on slide 26 as I begin with an overview of our second quarter financial results by segment. Electric segment earnings decrease 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. Manufacturing segment earnings increase 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.

Todd Wahlund: 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. 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 fluctuation and the selling of lower cost inventory, as well as a favorable product mix compared to the same time last year.

Speaker Change: Please follow along on slide 26 as I begin with an overview of our second quarter financial results by segment.

Speaker Change: 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.

Speaker Change: Lower operating and maintenance expenses and higher commercial and industrial sales.

Speaker Change: 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.

Speaker Change: and the selling of lower-cost inventory.

Speaker Change: as well as a favorable product mix compared to the same time last year.

Todd Wahlund: This was partially offset by lower sales volumes at both of our manufacturing businesses. Lower profit margins at Teal Plastics and lower scrap sales at BTD.

Todd Wahlund: This was partially offset by lower sales volumes at both of our manufacturing businesses, lower profit margins at Teal Plastics, and lower scrap sales at BTD. As 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. 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 and market segments.

Speaker Change: This was partially offset by lower sales volumes at both of our manufacturing businesses.

Speaker Change: lower profit margins at Teal Plastics and lower scrap sales at BTD.

Todd Wahlund: 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. 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 and market demand, negatively impacting our forecast of sales volumes for the remainder of the year. Teal 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.

Speaker Change: Like Chuck mentioned, despite the strong quarterly financial performance, our manufacturing segment continues to face end market demand related headwinds.

Chuck MacFarlane: and we anticipate conditions to soften further as the year progresses.

Speaker Change: 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 and markets.

Todd Wahlund: The outlook for the end markets VTD serves is softening, and select customers have reduced their remaining 2024 orders due to weakening end market demand, negatively impacting our forecasted sales volumes for the remainder of the year. Teal 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.

VTD: The outlook for the end markets VTD serves is softening, and select customers have reduced their remaining 2024 orders due to weakening end market demand.

VTD: Negatively impacting our forecasted sales volumes for the remainder of the year.

Speaker Change: Teal Plastics also experienced lower sales volumes in Q2 2024, primarily attributable to decreased sales of horticulture products as distributors and growers continued to work through existing inventory.

Todd Wahlund: Plastic segment earnings increase 9% from the second quarter of 2023 due to higher sales volumes, partially offset by a decrease in sales prices. Sales volumes increased 26% compared to the same period last year due to customer sales volume growth and distributor and improved in market demand. However, it's important to remember sales volumes in the second quarter of 2023 were below average, as distributors, our primary customers, were tightly managing their inventory levels amid uncertain market conditions. 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.

Todd Wahlund: Plastic segment earnings increased 9% from the second quarter of 2023 due to higher sales volumes partially offset by a decrease in sales prices. 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, were tightly managing their inventory levels amid uncertain market conditions.

Speaker Change: However, it's important to remember sales volumes in the second quarter of 2023 were below average as distributors, our primary customers, were tightly managing their inventory levels amid uncertain market conditions.

Todd Wahlund: 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. 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. Turning to slide 28.

Speaker Change: 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.

Todd Wahlund: The 26% increase in sales volumes drove a 37 cent increase in quarter-over-quarter earnings per share, and this was partially offset by a 24 cent earnings per share decrease from lower profit margin. This was driven primarily by a 13% quarter-over-quarter sales price decrease.

Todd Wahlund: We continue to have a very strong balance sheet with a higher level of earnings and cash generated from our diversified business model. Turning to slide 28, our cash and cash equivalence 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. We continue to be in an inviable 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.

Todd Wahlund: 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 our strong financial performance, our return on equity over the last 12 months was 21.5% on this high level of equity. 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. Turning to slide 29.

Todd Wahlund: Turning to slide 29, due to the continued strength within our plastic segment, we are increasing our 2024 diluted earnings pressure guidance to a range of $6.77 to $7.77 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. We are maintaining our electric segment guidance for 2024 despite the 17-cent 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, red case revenue increases in North Dakota, and timely returns on our capital spending.

Todd Wahlund: Due to the continued strength within our plastic 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. We are maintaining our electric segment guidance for 2024, despite the 17-cent 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, and our ability to achieve rate case revenue increases in North Dakota and timely returns on our capital spending.

Speaker Change: Due to the continued strength within our plastic segment, we are increasing our 2024 diluted earnings per share guidance to a range of $6.77 to $7.07.

Todd Wahlund: We are decreasing the 2024 earnings guidance for a manufacturing segment due to anticipated lower sales volumes as and market demands often further. We expect the recreational vehicle, agriculture, construction, and horticulture markets to be impacted the most. 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. 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.

Todd Wahlund: 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 markets to be impacted the most.

Speaker Change: We are decreasing the 2024 earnings guidance for our manufacturing segment due to anticipated lower sales volumes as end market demand softens further.

Speaker Change: We expect the recreational vehicle, agriculture, construction, and horticulture and markets to be impacted the most.

Todd Wahlund: 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. 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. We are increasing our plastic 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 expectation, which is for a slower decline than what we previously expected over the remainder of the year.

Speaker Change: 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.

Speaker Change: We have and continue to take action to tightly manage costs and mitigate the impact of lower forecasted sales volumes on 2024 earnings.

Speaker Change: while balancing that with being positioned to respond quickly when the markets improve.

Todd Wahlund: We are increasing our plastic 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. 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 found. with the changes made to our earnings guidance for the year. We anticipate our earnings mix for 2024 to be 31% electric and 69% non-electric, net of corporate costs.

Speaker Change: We are increasing our plastic 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.

Speaker Change: which are for a slower decline than what we previously expected over the remainder of the year.

Todd Wahlund: 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 changes made to our earnings guidance for the year, we anticipate our earnings mix for 2024 to be 31% electric and 69% non-electric, net of corporate costs.

Speaker Change: 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.

Speaker Change: With the changes made to our earnings guidance for the year, we anticipate our earnings mix for 2024 to be 31% electric and 69% non-electric, net of corporate costs.

Todd Wahlund: While this anticipated mix deviates from our long-term expected earnings mix of approximately 65% electric and 35% non-electric, the incremental earnings and cash flow increase the shareholder value as we continue to execute on our solid growth strategies without the delusion of equity issuances. We expect to reach our targeted long-term earnings mix of 65% electric and 35% non-electric as plastic segment earnings normalized to a range of 45 to 50 million dollars on an annual basis. While our electric segment earnings continue to grow at a rate in line with our projected rate-based growth compound annual growth rate. 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.

Todd Wahlund: While this anticipated mix deviates from our long-term expected earnings mix of approximately 65% electric and 35% non-electric, the incremental earnings and cash flow increase shareholder value as we continue to execute on our solid growth strategies without the dilution of equity issuance. We expect to reach our targeted long-term earnings mix of 65% electric and 35% non-electric as plastic segment earnings normalize to a range of $45 to $50 million on an annual basis, while our electric segment earnings continue to grow at a rate in line with our projected rate-based compound annual growth rate.

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

Speaker Change: We expect to reach our targeted long-term earnings mix of 65% electric and 35% non-electric as plastic segment earnings normalize to a range of $45 to $50 million on an annual basis.

Speaker Change: while our electric segment earnings continue to grow at a rate in line with our projected rate base growth compound annual growth rate.

Todd Wahlund: 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.

Speaker Change: 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.

Todd Wahlund: No changes have been made to this plan since it was first announced earlier this year during our year-end earnings call. 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. In order to finance our rate-based growth at Auditor Power, we project issuing debt on an annual basis for the next four years.

Todd Wahlund: 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 through ownership or contracting the energy, and anticipate providing an updated capital spending plan during our year-end earnings call. In order to finance our rate-based 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 to retire and not replace our only outstanding parent level debt when the $80 million note matures in 2026.

Speaker Change: 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.

Speaker Change: We are currently gathering and evaluating information on potential projects to determine the best ones for our customers.

Speaker Change: whether ownership or contracting the energy.

Speaker Change: and anticipate providing an updated capital spending plan during our year-end earnings call.

Speaker Change: In order to finance our rate-based growth at Otter Tail Power, we project issuing debt on an annual basis for the next four years.

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

Speaker Change: Slide 31 provides a summary of our financing plan for 2025 through 2028.

Speaker Change: We continue to expect retiring and not replacing our only outstanding parent level debt when the $80 million note matures in 2026.

Todd Wahlund: 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 years. This will enhance the value to our shareholders and differentiate us from any of our utility sector peers that will need to access the equity markets to fund their rate-based growth. 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.

Speaker Change: 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.

Speaker Change: 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-based growth.

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

Speaker Change: 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.

Todd Wahlund: Our diversified business model continues to produce above-average returns and long-term value for our shareholders. 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 rating. We are now ready to take your questions.

Speaker Change: Our diversified business model continues to produce above-average returns and long-term value for our shareholders.

Speaker Change: We have many organic growth opportunities across our segments and are positioned to grow with our customers.

Speaker Change: We are in an excellent position to support this growth with our strong balance sheet, ample access to liquidity, and investment grade credit ratings.

Operator: We are now ready to take your questions. As a reminder, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by what we compiled the Q&A roster.

Speaker Change: We are now ready to take your questions.

Operator: As a reminder, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand by while we compile the Q&A list.

Speaker Change: As a reminder, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again.

Speaker Change: Please stand by while we compile the Q&A roster.

Operator: There are currently no questions in the queue, but I'll wait a moment to take for experiencing technical difficulties.

Operator: There are currently no questions in the queue, but I'll wait a moment, just in case we're experiencing technical difficulties. As there are no questions in the queue, I'll turn the call back to Chuck for closing remarks.

Speaker Change: There are currently no questions in the queue, but I'll wait a moment just in case we're experiencing technical difficulties.

Chuck McFarlane: As there are no questions in the queue, I'll turn the call back to Chuck. for Closing Remark. Thank you for joining our call and your interest in Otter Tail Corporation.

Speaker Change: As there are no questions in the queue, I'll turn the call back to Chuck for closing remark.

Chuck MacFarlane: Thank you for joining our call and for your interest in Otter Tail Corporation. If you have any questions, please reach out to our investor relations team. We look forward to speaking with you next quarter.

Chuck MacFarlane: Thank you for joining our call and your interest in Otter Tail Corporation.

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

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

Operator: This concludes today's conference call. Thank you for pretty good participation.

Operator: Thank you for your participation. You may now disconnect.

Operator: You may now disconnect.

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