Good morning, and welcome to Otter Tail Corporation's First Quarter 2015 Earnings Conference Call. Today's call is being recorded. [Operator Instructions] I would now like to introduce Loren Hanson.

Good morning, everyone, and welcome to our call. My name is Loren Hanson, and I manage the Investor Relations area at Otter Tail. Last night, we announced our first quarter 2015 results. 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 Chuck MacFarlane, 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 include 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. Chuck MacFarlane. Chuck?

Thanks, Loren. Good morning, and thank you for joining our call. First, I want to say thanks again to Jim McIntyre who retired as CEO in April. He's been an excellent leader. During his 3 years as CEO, he helped us reduce risk and improve alignment. So Jim, if you're listening, and I'm reasonably sure you are, again, thank you for your many contributions. I also want to say I'm honored to step into the role of Chief Executive for the corporation. As President and Chief Operating Officer this past year, I gained additional perspective on each company unique opportunities and challenges. I look forward to continuing the work with each of the companies, the board and the management team to provide solid returns for our shareholders. Before I turn my attention to first quarter performance, allow me to comment briefly on our sale of our construction companies. At the time of our last call, both sales were pending. We've completed the sale of assets of our former electric construction contractor, Aevenia, to Texas-based, Primoris, recording a gain. And we sold the shares of our former water, wastewater and industrial construction contractor fully last week to Cincinnati-based, Enerfab, Inc. This is the last step toward creating just 2 Otter Tail Corporation platforms, electric and manufacturing. As I said in our earnings release, we intend to focus on operational excellence with this narrowed set of operating companies. We will concentrate on our organic growth and acquisition within both platforms. Now regarding the first quarter results. Clearly, we faced some challenges, but I'm confident in our organizational role and expect improvement and performance during the remaining quarters of this year. Let me discuss the utility first. Utility revenues were down compared with first quarter last year, primarily because of weather. First quarter…

Thanks, Chuck, and good morning, everybody. Please refer to Slide 8 that explains the quarterly variances on an earnings per share basis. The main reasons for decline in the net earnings for the Electric segments on a quarter-over-quarter basis were: one, mild weather in the first quarter of 2015 compared to the first quarter last year, with heating degree days down by 18%; maintenance costs at our Big Stone Plant in conjunction with tying into the new AQCS project; higher property tax expenses and depreciation expenses due to increased rate base investments; and a full quarter of interest costs in the first quarter of 2015 associated with the new debt that we added at the end of February of 2014. These items were offset by an increase in environmental rider revenues related to our AQCS project at the Big Stone Plant and additional increases in revenues from pipeline customers. Our Manufacturing segment revenues were up modestly quarter-over-quarter. Increased demand from recreational and lawn and garden equipment markets at BTD and volume increases with industrial customers at T.O. Plastics were offset by lower tooling revenues and lower scrap metal sales due to declining scrap metal prices. Our earnings were down quarter-over-quarter due to lower gross margins on work performed, higher raw material costs, labor and freight costs at both BTD and T.O. Plastics. Our Plastics segment's revenues and earnings were down between quarters, mainly attributable to a reduction in volume of 12 million pounds. This decline was impacted by weather and market conditions in Texas, along with the uncertainty of resin and pipe prices entering into the year, which led customers to delay purchases of pipe into the spring time frame. Our corporate expenses increased $1.5 million quarter-over-quarter, primarily from higher employee benefit costs. The part of this increase that relates…

[Operator Instructions] Our first question is from Matt Tucker with KeyBanc Capital Markets.

This is Grier Buchanan on for Matt. I wanted to start with a quick question on your electric utility. Could you tell us the weather impact versus normal on our earnings in the first quarter?

Yes, Grier, this is Kevin. Weather, first quarter compared to normal, was 97% of normal.

And so could you -- are you able to quantify roughly the impact on earnings relative to normal weather? Or is that -- is it about 97%?

Yes. I mean, really, so the impact on the guidance year-over-year for weather is $0.01 a share. So it was -- we are slightly below normal compared to normal for the quarter, and then we're seeing, as we look out to the rest of year, about $0.01 a share impact. That's -- we show that on Slide 9 of the revised guidance.

Right. Okay. And then switching over to nonutility, how much of the change in guidance for 2015 is due to 1Q results versus a shift in your rest of year outlook?

Yes, BTD's first quarter results, clearly, were down compared to the same time last year, but when we look out for the rest of the year, we're seeing -- we've shown on Page 9 the impact of the revenue declines and the scrap prices. A lot of that is really coming for the rest of the year impact, especially the scrap were down -- we're showing $0.05 a share. That's about $3 million in volume from what we had originally planned. And most of that is through the rest of this year versus first quarter.

Got it. Kevin, that's great color. And I thought that was a very helpful slide. You guys did a nice job walking us through the change in guidance as well as the change in earnings versus last year. So does this -- looking at that -- the slides you referenced, is this reflecting expectations for continued weakness or sort of a weaker environment that's already reflected sort of stabilizing throughout the rest of the year?

I guess, specifically speaking to BTD, we do not anticipate a return of the oil and gas business and that the ag market will stay approximately where it is, not rebound, if you will.

Got it. And then I think that -- it looks -- inferred from the press release, and please correct me if I'm wrong, that the workforce reductions were not part of the cost controls you had referenced in prior press releases when you had also announced facilities expansions at BTD. And it sounds like -- again, please let me know if this is inaccurate, but it sounds like you are moving forward with the facilities expansions and upgrades as planned. Wanted to know if there's -- if you're still -- if those will have any impact relative -- well, if those will have any impact in 2015.

Well, they continue to be in the forecast. We are continuing with the upgrades as planned. There's no change there. They're well underway. We anticipate they will -- paint and other items will be beneficial in 2015. I mean, at a very high level, the Minnesota production is relatively close or actually above '14 levels, but we anticipated it would be higher. Illinois is impacted more dramatically because they have a higher percentage of oil and gas and ag equipment. So that particular facility has had a majority of the reductions, of force.

[Operator Instructions] I'm showing no further questions at this time. I would like to turn the call back over to Chuck MacFarlane for closing remarks.

Well, thank you. I'll summarize by saying that we believe we're in the right markets for the long term and we have plans in place to work through this year's challenges. We expect the utility will have a strong financial performance in the remaining quarters of 2015 and BTD will achieve workforce targets at each of its locations and will reduce outsourcing costs when it starts operating a new paint line in Lakeville, Minnesota. The other companies are in good positions for the year. 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, this concludes today's conference. Thank you for your participation, and have a wonderful day.