Good day, ladies and gentlemen and welcome to the Otter Tail Corporation’s Second Quarter 2013 Earnings Conference Call. Today’s call is being recorded and there will be a question-and-answer session after the prepared remarks. I would like to introduce your host for today’s conference, Mr. Loren Hanson. Please go ahead, sir.

Good morning, everyone and welcome to our call. My name is Loren Hanson I manage the Investor Relations area at Otter Tail. Last night, we announced our second quarter results. Please note that our complete earnings release and slides accompanying this earnings call are available on our website at www.ottertail.com. A replay of the call will be available on our website later today. With me on the call today is Jim McIntyre, Otter Tail Corporation’s President and CEO; Kevin Moug, Otter Tail Corporation’s Senior Vice President and Chief Financial Officer. Before we begin, I’d like to remind you that during the course of this call, we will be making forward-looking statements. These forward-looking statements are covered under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995 and includes statements regarding Otter Tail Corporation’s future financial and operating results, or other statements that are not historical facts. Please be advised that actual results could differ materially from those stated or implied by our forward-looking statements, due to certain risks and uncertainties, including those described in our most recent Form 10-K and subsequent quarterly reports on Form 10-Q. Otter Tail Corporation disclaims any duty to update or revise our forward-looking statements, as a result of new information, future events, developments or otherwise. For opening remarks, I would now like to turn the call over to Otter Tail Corporation’s President and CEO, Mr. Jim McIntyre. Jim?

Good morning and thanks for joining our call today. Overall, our 2013 second quarter results met our expectations. A successful realignment of our portfolio continues to have a positive effect on earnings, better positioning us for stronger execution within our remaining companies. The 33% year-to-date improvement in net income from continuing operations further indicates progress towards a successful 2013. The transformation of our company has also been recognized by Standard & Poor’s, who recently updated Otter Tail Corporation and Otter Tail Power’s senior unsecured credit ratings. And, also by Fitch, who recently announced the favorable outlook change for Otter Tail Corporation and Otter Tail Power. I would now like to update you on the substantial investment opportunities over the next few years at Otter Tail Power in the areas of transmission, generation and environmental upgrades. Generally speaking, all of the projects under construction have regulatory approval and are subject to some form of current recovery. Slide four, shows the treatment by each of our jurisdictions. Our transmission projects referred to as CapX2020 and Multi Value or MVP projects are on time, on budget and on pace to make their expected contributions to earnings. CapX2020 which we have investment in three projects, is currently about half complete. The investments in all of the transmission projects including the MVP project, is expected to be approximately $400 million. Big Stone air quality control system AQCS, is also moving forward on schedule, in its early stages and the project is benefiting from lower cost as mentioned last quarter. When completed in 2016, we expect 80% to 90% reduction in sulfur dioxide, nitrogen oxide and mercury emissions. Also Otter Tail Power Company recently entered into a 25 year contract, to purchase wind energy from the 62.4-megawatt Ashtabula III wind farm, northeast of Valley City North…

Thank you, Jim and good morning. I’d like you to refer to slide five of the presentation as I walk through the quarter’s results. Net income from continuing operations was $0.21 per share, compared with $0.19 per share for the same quarter last year. These results were consistent with our forecast for the second quarter and included $0.02 of charges we consider infrequent but not unusual, to our operations. These include, a charge we incurred to discount the Minnesota jurisdictional share of abandoned Big Stone II project transmission assets that were transferred from construction work in process to a regulatory asset for future recovery, as the initial investment was deemed prudent but potential future uses for the assets did not occur. And also, accounting rules require a company to chew up its deferred assets and deferred tax liabilities in the period of change and tax rates occur. So accordingly, we had a reduction in our deferred tax assets related to a decrease in the North Dakota corporate income tax rates in 2013 that went from 5.15% to 4.35%. And now I’d like to discuss highlights from our electric segment. Significant items contributing to the $3.5 million increase in electric retail revenues are as follows; first, we experienced a $1.7 million increase in transmission cost, recovery rider revenues, due to the build out of our transmission projects. Secondly, there was a $1.1 million increase in revenue related to colder spring weather this year compared to 2012. Our electric operating and maintenance expenses increased $3.7 million mainly due to $1 million increase in MISO transmission tariff charges related to our increasing investments in CapX2020 and MVP transmission projects; $1.2 million increase in labor and benefit expenses mainly due to increases in cost resulting from reductions and the discount rates related to projected…

[Operator Instructions]. Our first question comes from Matt Tucker from KeyBanc. Your line is open. Matt Tucker – KeyBanc Capital Markets: Hi Good morning. My first question is on the construction side, could you give us a little more color on or may be quantify the impact of weather in the second quarter would the segment have been – Would Aevenia have been profitable if not for those delays? And could you comment a bit on the performance so far in the third quarter?

Well thanks, Matt for the question, this is Kevin. In terms of impact on weather in the second quarter is the primary driver for the disappointing performance at Aevenia. The weather also impacted the productivity on the jobs where they were working in terms of efficiencies but really the weather and the slowdowns resulted from that are the primary reasons. And for that we certainly would have seen better performance at Aevenia this second quarter as it compared to where it actually shook out. In terms of July, we’re just in the process of our closed procedures things are early and it’s pretty difficult for us to comment on where the results will be for July or how things are going on for Aevenia. Matt Tucker – KeyBanc Capital Markets: Okay. Could you comment a little bit on the trends in bidding activity things have been picking up at all or slowing down kind of the same? And I guess also if you could comment on pricing – the pricing environment on the bids you’re seeing any changes there?

This is Jim McIntyre, first with regard to Aevenia just to follow on with the comment that Kevin responded to. There is plenty of work for us in Aevenia. The weather has not only slowed us down but it also has impacted the third party that does the engineering job but as that engineering is done and as the weather is better we’ll have substantial work there. The margins that Aevenia was able to extract from its distribution and transmission business is our solid margins. So as I made a comment in my previous comments, we expect improvement in third and fourth quarter as Aevenia looks more like it did last year when it had really strong second half performance. So, we’ve got ample business opportunities, we believe we’ll be able to take opportunities of it through the last half of the year. With regard to Foley, I would just say this that the number of projects that we’re bidding on, are numerous but we’re very, very disciplined in our approach. And we’ve had some success in getting some bids but there is a lot of contractors chasing still a relatively few number of projects. We’re still seeing I think across the whole segment, a fair amount of impact on the economy as far as just how much activity is going on and there are just lots of competitors there. We – As Kevin has mentioned, Foley did turn profitable. I think we’ve had four, five months in a row now where Foley’s had profitable results. So we’re optimistic and feel that they’ve made a pretty significant stride from where they’ve been and we do expect them to have a profitable year end for us. Matt Tucker – KeyBanc Capital Markets: Okay, thanks. And just one on the manufacturing side, it sounded like you expect sales to ramp up a bit in the second half. Is that primarily based on what you had in backlog at the end of the second quarter or could you just give us a little more color on the outlook there?

This is Jim McIntyre again. It is based on the backlog that we see when we compare the backlog to the same backlog from the end of the second quarter last year. We do see somewhat stronger backlog. And also I commented earlier, we do a quite a bit of tooling in order to prepare for other customer requirements for both the balance of this year and then positioning us for customer sales in 2014. So, we’re pleased as what we see with regard to opportunity for sales both this year – the second half of this year and going into ‘14. Matt Tucker – KeyBanc Capital Markets: And just as a follow up to that, is this based on discussions you’re having with customers or what’s giving you the confidence to prepare for higher volumes going forward?

Well the discussions at (inaudible) the fact that the backlog is there and they are often lead times I mean they are tooling and they are is the preparatory steps in order to actually manufacture the components that our customers request of us. So we got to get that done first and then we end up with the business and then go from there. So the tooling is kind of an early indicator the backlog of business that we see. Matt Tucker – KeyBanc Capital Markets: Very helpful. Thanks, guys.

Thank you. Our next question comes from Michael Bates from D.A. Davidson. Your line is open. Michael Bates – D.A. Davidson: Hey good morning.

Good morning Michael Bates – D.A. Davidson: The $1.3 million increase in G&A expense at the electric utilities that was tied to a reallocation of corporate expenses. Do you feel like the 1.3 million is a good quarterly run rate as we look forward?

It would be yes, it would be reflective Michael of the new allocation method or the trough up in the allocation method based on the changes of mix in the companies between the electric and the non-electric side. So as we sit here today in 2013, this is an indicative rate as we go forward. Michael Bates – D.A. Davidson: Alright. Thank you. And Otter Tail Power has a lot of opportunity to build out transmission that will be a significant driver for your rate base over the next five years. I was wondering if you could you give us a little bit as far as how you’re thinking about opportunities beyond what’s been announced so far both within the next five years and even looking a further out? How much room for expansion is there compared to the current backlog and projects?

Well this is Jim McIntyre again. It’s hard to see beyond what we currently identified, lot of projects CapX2020 and the MVP projects are linked to really building the whole huge infrastructure transmission grid and that’s really, really important. But it’s also linked to where does wind go? Is there lot of wind development here or elsewhere? And where does solar go in terms of getting it from wherever the generation might be to the actual load centers? I think what we have and I repeat for us it’s 400 million between the CapX2020 and the MVP projects and we’re comfortable that we should be able to deliver those projects on time and they do have good returns related to them. But we do have a lot of knowledge about the transmission system and how it works – interacts together in this regional area. We don’t have any projects that we are currently in negotiation for projects beyond those which we’ve identified and talked about in our various Qs and other documents today.

Michael this is Kevin, as it relates to this isn’t transmission but out further beyond the spectrum we do have the Hoot Lake switch over of the – having to switch that over from coal to natural gas. Now that’s been agreed on with the Minnesota Commission and that’s a timeframe in that 2020 2021 period. So we know that there is a project out there as we have to switch that over, but that’s a generation not a transmission type project. Michael Bates – D.A. Davidson: And is Hoot Lake likely to be the next large capital project at the utility once you get these transmission projects and Big Stone out of the way?

That’s correct. Given the timetable of 2020 and the fact that it would be a natural gas plant, it will be a fairly significant capital expenditure. The natural gas is not as difficult to build out as is the coal takes less time and has proven technology. So it won’t be a complex project but it will be a nice add on that further reduce our emissions and be even a better steward of the environment. Michael Bates – D.A. Davidson: Great. One other question if I could, with the revised guidance range after the strong quarter in the plastics segment and really just a strong first half of the year, guidance implies a pretty significant downtick in that segment’s earnings in the second half compared to what you’ve had so far. Second half in 2012, did show a slightly lower earnings in that segment but not to the degree that’s being implied in guidance. Can you give us a little bit of color as to what you’re seeing there and what’s driving you that potential decline?

Michael this is Kevin. As we sit here today with the forecast, the thing we have to take in account that we don’t necessarily have great visibility on what will the weather be like in the fourth quarter of ‘13 particularly here in the North Central region part of the country. And so last year we had a pretty mild winter fall in early winter and saw the benefits of continued shipping of product between both companies. And when we’re looking at our forecast right now for last half, we have good visibility on where we think third quarter is going to be fourth quarter we have visibility we know that in the past we can be swung by weather. And so we’re trying to take that into account right now and as we get closer, we’ll have better visibility at the end of the year on that, by the end of the fourth quarter we’ll certainly have some better visibility. Michael Bates – D.A. Davidson: Thank you very much.

[Operator Instructions]. And we have a follow up from Matt Tucker from KeyBanc. Your line is open. Matt Tucker – KeyBanc Capital Markets: Hey gentlemen I just had a follow up on the last question on plastics. I appreciate that you’d want to bake in from cushion the second half something like unpredictable like weather. But outside of the unpredictable, uncontrollable factors like that, is there anything that you’re seeing that would suggest demand would slow on a fundamental basis in the second half?

This is Jim McIntyre. I think we’re fairly optimistic about the second half. I mean one of the things that can change rather rapidly is the price of resins. And if that happens, then we could see some diminished sales of profitability but as we indicated right now, we’re pretty comfortable that we should have a good second half within our plastics business. Matt Tucker – KeyBanc Capital Markets: Thank you. That’s all I had.

Thank you. [Operator Instructions]. I show no further questions at the time and would like to turn the conference back to, Mr. Jim McIntyre for closing remark.

Thank you. As we assess where we’re at mid-year, the successful realignment of the company has definitely better positioned us to deliver increased earnings for both 2013 and the future. Our current success could be linked directly to the proper execution of the right strategies. Sharper focus and execution among all our businesses, has enabled us to increase profitability and (inaudible) our financial results in a more consistent manner. Thank you for joining our call and for your interest in Otter Tail Corporation. We look forward to speaking with you next quarter.

Ladies and gentlemen, thank you for your participation in today’s conference. This does conclude the program, and you may all disconnect at this time. Speakers please standby.