Otter Tail Corporation

Hello, everyone. Thank you for joining us and welcome to the Otter Tail Corporation third quarter 2026 earnings conference call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. To withdraw your question, press star one again. I will now hand the conference call over to Beth Eiken. Please go ahead.

Good morning and welcome to our third quarter 2026 earnings conference call. My name is Beth Eiken and I'm Otter Tail Corporation's Manager of Investor Relations. Last night we announced our Q3 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 CEO, Tim Rogelstad, Otter Tail Corporation's President, and Tyler Nelson, 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 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. Otter Tail Corporation disclaims any duty to update or revise our forward-looking statements due to new information, future events, developments, or otherwise. We will be referencing certain adjusted financial measures or non-GAAP measures throughout this call, including adjusted net income, adjusted earnings per share, and adjusted return on equity. For more information, please refer to our quarterly earnings release and the non-GAAP reconciliations included in the appendix of our presentation. I will now turn the call over to Otter Tail Corporation CEO, Mr. Chuck MacFarlane.

Thanks, Beth. Good morning and welcome to our third quarter earnings call. Please refer to slide four as I began my remarks with a summary of our quarterly highlights. Our team delivered on our strategic growth plan and near-term priorities during the third quarter. despite navigating a challenging operating environment. Otter Tail Power continues to perform well, executing on our regulatory priorities and robust rate-based growth plan, all while navigating a heavy workload. Our ongoing Minnesota rate case is progressing, and our team is working toward reaching a constructive outcome. We also advanced our renewable generation and transmission capital investments during the quarter despite facing an increasingly complex environment to develop and construct large infrastructure projects. Our team remains focused on continuing our long history of strong project execution for the benefit of our customers and shareholders. Our manufacturing and plastic segment team members faced a dynamic market conditions during the quarter, including higher production costs and a softening new housing market. Despite this, our team continued to execute on their customer first strategy and effectively leveraged the added manufacturing capacity in Arizona and Georgia, helping to offset the negative impact of the headwinds faced. Slide five provides a summary of our financial results. We produced diluted earnings per share of $1.41 in the third quarter compared to $1.86 last year. This expected decrease was primarily driven by plastics segment performance as the average sale price of our PVC pipe continued to recede. We are affirming our midpoint of our adjusted diluted earnings per share guidance range of $5.88 and are narrowing the range. Following my operational update, Tyler will provide a detailed discussion of our quarterly financial results and the outlook for the remainder of the year. Transitioning now to my operational update for Otter Tail Power, beginning on slide 7. During the third quarter, we submitted our surrebuttal testimony, and the ALJ hearing was conducted on our ongoing Minnesota rate case. In the filing, we modified our requested net revenue increase to $38.7 million from $42.3 million. The modification was largely driven by a jurisdictional allocation adjustment. Our team continues to work towards reaching a constructive outcome in the case. Separately, we continue to evaluate if a rate case filing is warranted in any of our other jurisdictions. Turning to slide 8, our 15-year integrated resource plan filed with the Minnesota Commission is also progressing. We responded to information requests throughout the third quarter. and initial comments from our interveners were filed in mid-October. In the Minnesota Department of Commerce's initial comments, they recommended additional renewable generation beyond what we had included in our request and suggested battery storage as an alternative to natural gas. Our reply comments are due in December. Turning to slide nine, we are reaffirming our five-year rate-based compounded annual growth rate of 10% and continue to expect Otter Tail Power's earnings to grow at a similar rate over the planning period. We remain confident in our ability to deliver on our growth plan and are focused on strong project execution. As a reminder, our plan is not dependent on securing any large loads. and any such load remains an incremental opportunity for us. Slides 10 and 11 provide an overview of our ongoing and future capital projects. Our two solar projects are under construction and remain on schedule and on budget. We anticipate Solway Solar becoming operational in the first half of 2027 and Abercrombie Solar in the last half of 2028. Our battery storage project is under development and we expect to bring this facility online in 2028. Development work is also continuing on our large regional transmission projects. We are facing increased challenges developing and constructing certain transmission projects. These challenges could pose a risk to our original timelines for some of the large regional transmission projects included in our five-year capital spending plan. Our team continues to proactively engage with landowners, community members, local units of government, and others to articulate the reliability related benefits these projects would bring to the region. Turning to slide 12, Otter Tail Power remains well positioned to attract and support large loads. We are engaging with a diverse set of companies interested in adding new loads to our system. We view the diversity of our pipeline as a strength as each load has different needs. For example, the clean fuel and thermal storage opportunities are interruptible, giving us flexibility while still providing an opportunity for significant growth. Providing low cost electric service to our customers has been and always will be a priority of ours. As slide 13 illustrates, Otter Tail Power's electric rates have remained well below the national and regional average for many years, and we remain committed to managing customer bill increases and helping our customers identify ways to save. Transitioning to our manufacturing platform, slide 15 provides an overview of the industry conditions impacting manufacturing segment volumes. Industry conditions are improving in many of the end markets we serve and we are encouraged by the increased demand. Our team members remain focused on delivering on our strategy of providing value-added service to our customers and being our customers' partner of choice. The recreational vehicle, lawn and garden, and horticulture end markets remain stable The construction end market continues to improve as our world-class OEM customers are seeing an increase in demand for their products. The industrial end market remains strong as the products manufactured are used to support the growing energy demand. Agriculture industries continue to remain challenging. However, we are starting to see a slight improvement looking out to next year from current levels. Slide 16 provides an overview of our plastic segment pricing and volume trends. The average sale price of our PVC pipe continues to decline during the third quarter, decreasing 9% from the same time last year. Sales volumes decreased 5%. This decline was largely due to our customers advancing their purchases of our PVC pipe in response to announced resin price increases earlier this year, and the impact of a softening housing market. However, our team continues to effectively leverage the large diameter capability added at our Phoenix facility, which has helped to partially offset the year-over-year decrease in volumes. Despite the more subdued housing market, we are seeing an opportunity from increased demand for water infrastructure including PVC pipes stemming from data centers and the construction of other large manufacturing facilities. PVC resin and other input material costs have increased 10% from the same time last year, primarily due to global PVC resin supply and demand dynamics. With that, I will turn it over to Tyler to provide his financial update.