Good morning, and welcome to Otter Tail Corporation’s Third Quarter 2019 Earnings Conference Call. Today’s call is being recorded and 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.

Good morning, everyone, and welcome to our call. My name is Loren Hanson, and I manage Otter Tail’s Investor Relations area.Last night, we announced our third quarter 2019 earnings results. Our complete earnings release and slides accompanying this call are available on our website at ottertail.com. A replay of the 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 Kevin Moug, Otter Tail Corporation’s Senior Vice President and Chief Financial Officer.Before we begin, I want to remind you that we will be making forward-looking statements during this call. As noted on Slide 2, these statements represent our current judgment or opinion of what the future holds. They are subject to risks and uncertainties that may cause actual results to differ materially. So please be advised about 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.For opening remarks, I will now turn the call over to Otter Tail Corporation’s President and CEO, Mr. Chuck MacFarlane.

Thank you, Loren. Good morning, everyone. Last night, we released our third quarter results. Please refer to Slide 5 as I begin my comments.Operating revenues, net income and diluted earnings per share increased compared with third quarter 2018. Because we anticipate softness in the energy and agricultural end markets and low scrap metal prices will negatively impact fourth quarter results, we are narrowing our 2019 guidance range to $2.10 to $2.20 per share from the previously announced $2.10 to $2.25.Our Electric segment quarter-over-quarter earnings increased due to interim and final rate increases, increased kilowatt-hour sales to commercial customers and increased revenue from investments in transmission projects.Manufacturing segment third quarter earnings were up slightly quarter-over-quarter, driven by improved performance at BTD’s Minnesota and Georgia facilities.Plastics segment earnings were lower quarter-over-quarter due to lower sales volume in combination with lower pipe prices. We anticipated 2019 earnings from this segment, or lower 2019 earnings from this segment in our outlook.As mentioned last quarter, our fourth quarter 2018 results included a planned outage at our Big Stone Plant, costs associated with the establishment of foundations at Otter Tail Corporation and Otter Tail Power Company and increased tax expense at corporate. We do not expect these costs to reoccur in the fourth quarter of 2019.Let’s take a closer look at Otter Tail Power. The forecast $1 billion of CapEx on Slide 11 will produce an annual rate base growth of 8.6% between 2018 and 2023 in a constructive regulatory environment. Merricourt Wind Energy Center, Astoria Station, South Dakota Transmission Reliability, and Self-fund transmission projects are all under construction. Our projected investment in those projects totals over $500 million.To put this in context, this represents approximately 45% of our 2018 $1.1 billion rate base. I’ll touch briefly on a few of these projects.On Slide 14, the…

Thanks, Chuck, and good morning. Our consolidated diluted earnings per share were up approximately 7% for the quarter, driven mostly by increased earnings in our Electric segment.Please refer to Slide 22 and 23 as I discuss our third quarter results. Our Electric segment net earnings increased $3.1 million quarter-over-quarter. The press release describes all the items impacting our quarterly results, but key items worth discussing are the $2.8 million increase in retail revenues mainly from higher average electric rates due to interim and final rates in effect from our South Dakota rate case and increased sales to customers in higher rate classifications.Interim rates were implemented on October 18 of 2018 and final rates were implemented on August 1 of 2019. Increased transmission cost recovery revenues and Minnesota renewable resource rider revenues and increased kilowatt-hour sales to commercial customers. These items were offset in part by lower retail kilowatt-hour sales related to milder weather.While most regions of the United States experienced warmer than normal weather during the quarter, our region experienced a 17% decrease in cooling degree days compared to normal. This resulted in a negative impact of $0.02 a share. Less favorable weather also negatively impacted earnings by $0.02 a share between the quarters. And it is important to remember that, we are a winter-peaking utility in a summer-peaking pool. Lower transmission revenues due to decrease in MISO tariff revenues and our O&M expenses increased by $2 million.Net earnings for the Manufacturing segment increased $133,000. Key items impacting the change were, at BTD, net revenues increased $3.7 million, primarily from increased product sales to recreational vehicle end markets, offset in part by decreased sales to its energy and agricultural end markets.BTD also had a $700,000 increase in its tooling revenues. The increased revenues were more than offset by a $3.8…

[Operator Instructions] And our first question comes from Tate Sullivan with Maxim. Your line is now open.

All right, thank you. Sorry, if I missed a couple more comments on the manufacturing exposure earlier. But are you comfortable with the current capacity of your manufacturing business, excluding the – T.O. Plastics part and how quickly can you see demand come back from some of your customers, if there was a pause at the end of the year in that business usually, please?

Yes. Good morning, Tate. This is Kevin. Our capacity for the – both the companies in the manufacturing business, BTD and T.O. plastics are, we have plenty of capacity in the business to take on additional organic growth opportunities. The slowing that we started to see in the third quarter came in energy and ag markets, which is – looks to be impacted because of this concerns in those end market industries relating to a slowing economy and some of the challenges occurring in the ag market as well.In terms of – we’ll give guidance in – for 2020 in February. But certainly, as we sit here today and the slowing in ag and energy and the revision of guidance for manufacturing to now be in line with last year’s earnings per share, I don’t think we’re going to expect to see any kind of turnaround in those end markets here as we finish up the year. And certainly, if there were changes, we would look to discuss that in 2020. But I think, as we sit here today, we wouldn’t expect to see any immediate changes into 2020.

Okay, thank you. And then for the Plastics guidance, yes, excuse me, for Plastics. Any – and we – you consistently mentioned the different resin prices and the pricing. Any change in the distribution for your PVC pipes in general? I think there were some change in distributors in the last couple of months. But any fundamental changes in that market, please?

Yes, Tate, there’s been no changes in terms of who our key distributors are over the last number of years, we continue to sell into our distributor base and then they in turn are selling to the end users of the pipe, but we’ve not seen any changes there.

Okay, thank you very much. Thanks for that detail. Have a good rest of the day.

You too.

[Operator Instructions] I’m not showing any further questions at this time. I would now like to turn the call back to Chuck MacFarlane for any further remarks.

Our financial performance continues to demonstrate the value of employees’ actions to grow our business, achieve operational and commercial excellence and develop talent. We are pleased with the continued progress of our Astoria and Merricourt projects, and we are narrowing our 2019 earnings per share guidance range to $2.10 to $2.20.Thank you for your continued interest in Otter Tail Corporation. We appreciate your joining the call, and look forward to speaking with you next quarter.

Ladies and gentlemen, this concludes today’s conference call. Thank you for participating. You may now disconnect.