Good morning and welcome to the Otter Tail Corporation's Third Quarter 2020 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 2020 earnings results. Our complete earnings release and slides accompanying this call are available on our website at ottertail.com. A recording 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. Welcome to our third quarter 2020 earnings call. Otter Tail Corporation continues to support all the locations we serve, with collective efforts to mitigate the spread of COVID-19. Our business continuity plans put the health and safety of our employees and our communities at the forefront and we are designed to help ensure continued electric reliability and operational excellence across our companies. With a majority of our employees now living in areas where there's been a spike in new COVID-19 cases, we remain diligent in our precautionary health and safety efforts based on the recommendations from the CDC, regional health organizations, and state and local government mandates. Currently, 17% of our employees are working remotely. Since March, we have had 93 confirmed COVID-19 cases across the corporation, of which, 20 remain active. We continue to monitor this dynamic event and how it is impacting the economy and our electric and manufacturing platforms. Please refer to Slide 6 as I begin my comments on Q3. We're [into] $0.87 per share this quarter compared with $0.62 per share in the third quarter of 2019. The increase was primarily driven by our Plastics and Electric segments. Kevin, will provide more detailed discussion of our financial performance in his comments. But a brief overview of Q3 results are Electric segment earnings per share increased $0.16, primarily due to increasing investments in our Merricourt Wind Energy Center and Astoria Station, a favorable decision regarding the state jurisdictional treatment of federally approved transmission rates, effective cost management targeted at offsetting the impacts of COVID-19 and lower operating expense. Our Manufacturing segment earnings were flat quarter-over-quarter, but experienced higher margins due to productivity improvements. Sales continue to be negatively impacted by COVID-19. However, BTD has seen a rebound in sales to…

Well, thanks, Chuck, and good morning, everyone. Our third quarter financial results were outstanding given the ongoing business and economic challenges we face. Revenues were up 3% with earnings increasing over 45% driven by a strong performance in our Plastics and Electric businesses. Please refer to Slides 26 and 27 as I discuss the quarter. The Electric segment net earnings increased $7.1 million quarter-over-quarter. This increase was driven by increased Minnesota and North Dakota renewable resource rider revenues related to the Merricourt Wind Energy Center and from the generation cost recovery rider in North Dakota in conjunction with the construction of the Astoria Station. There were increased Minnesota transmission cost recovery revenues due to a favorable decision regarding the state jurisdictional treatment of federally approved transmission rate incentives, increased retail revenues related to increased residential kilowatt hour sales due to favorable weather impacts and offset in part by lower kilowatt hour sales to commercial and industrial customers, mainly due to COVID-19 related impacts. And favorable weather positively impacted earnings by $0.03 a share compared to the third quarter of 2019. Other items favorably impacting electric segment earnings during the quarter were decreased O&M expenses due to an increase in the proportion of labor costs, capitalized from ongoing construction activity and a decrease in other expenses due to cost management initiatives to address the impacts of COVID-19. These decreases were offset in part by an increase in bad debt expense mainly due to the adoption of COVID related service suspensions and debt collection policies. Other positive impacts include transmission service revenues due to an increase in facility service agreement revenues related to transmission upgrades to accommodate independent generator access to the transmission grid and AFUDC revenues on the Astoria Station project related to the Minnesota share of the construction work in…

[Operator Instructions] Our first question comes from Chris Ellinghaus with Siebert Williams. You line is open.

Hey, guys, how are you?

Fine. Good morning, Chris.

Good morning, Chris.

Have you got a – the $0.03 donation that you talked about, is that a fourth quarter event?

Yes.

Okay. And the other thing you were talking about the accrual catch-up in the quarter on the transmission, have you got a dollar amount for that?

Are you referring to that Minnesota Supreme Court?

Yes.

The dollar amount, Chris, for the quarter, I think, it was right around $2.5 million.

Okay. And can we – is there any reason that we should be expecting that the Minnesota interim would be effective at the end of the year?

Chris, the interim, we filed in November 2. And if the filings deemed complete, interim would go in at the first of the year of 2021. And the final rate request is $14.5 million. The interim rate request is $13.6 million.

But given the COVID, is there any reason or is it even statutorily possible for them to delay the interim rate?

You know, it is possible. We look at this rate – you know, in Minnesota, it's a formulaic interim rate. So, you know, if the filing is deemed not complete for some reason that would be the issue.

And would COVID be considered an exigent circumstance that they could bring up?

You know, it's possible, but we don't feel that that's likely.

Got it. Alright, thanks, guys. It was a wonderful quarter. Appreciate it.

Thanks.

Thank you, Chris.

Thank you. Our next question comes from Sophie Karp with KeyBanc. Your line is open.

Hi, good morning, guys. Congrats on the quarter.

Thanks, Sophie.

Thank you.

A couple of questions from me if I may. So with the – your new guidance, correct me if I'm wrong, but you're actually above the initial 2020 guidance that you had pre-COVID a little bit. It was pretty impressive. Could you maybe give us some sense of what kind of trajectory you’re envisioning going into 2021? You know, and some of the – which of the moving parts here that are propelling this guidance now above the original expectations despite what we’re having? You know, as far as the macro backdrop could be sustained maybe on a go-forward basis as opposed to just being [indiscernible]. Thank you.

Yes, Sophie, this is Kevin. You know, we'll come out with our 2021 guidance in February with our connection with our year-end earnings release. I mean, one of the things to point to would be, you know, our long-term stated EPS growth goals of 5% to 7% of the 2019 base earnings of $2.17 a share, sorry. You know, I think, if you look at just the businesses high level, the utility, we continue to see rate base growth, investments and earnings, you know, from the electric utility as a result of those investments that we're making. You know, and then, as we look at the assumptions around the Manufacturing and Plastics, you know, certainly plastics has probably not been impacted by COVID as we perhaps thought. But on Manufacturing, you know, we still would be under this view of it’s, you know, slow or some referred to it as a swoosh type recovery. You know, in Manufacturing, we – you know, the assumptions in the third – that we had for the third quarter, they were – you know, actual results were a little stronger than where we were, but we aren't seeing any significant change in that slow recovery in our Manufacturing segment. You know I think we have to recognize that the Plastics earnings this year are going to be a record earnings year for us. There are certainly some conditions that we see here in the business today that, you know, we're trying to work through to see just what we think looks like and how they move into 2021. So, you know, I think we have to be, you know, cautious there with Plastics as we head into 2021, but, you know, those are some high level thoughts that hopefully help you.

Yes. No, this is very helpful. Thank you. Another question I had was on the Minnesota rate case, I guess, besides from the [indiscernible] which is always debated, do you see any points there that you expect to be contentious with other stakeholders? Or is it a fairly straightforward rate case for you?

Sophie, this is Chuck. It's largely a capital driven rate case, which is the Minnesota portion of the Astoria gas plant, which has been approved in there, our IRP. We have built it in the time described and under the cost described, so that accounts for more than half of the increase request. The customer service information system is another probably 10% to 15% of the request with some O&M growth and ROE levels rounding out the case. So, you know, we're viewing it as largely a capital recovery case on – majority of which have been through regulatory prudence review.

So, nothing is controversial about this, you expect?

We don't believe so.

Thank you. That's all from me.

Thank you. [Operator Instructions] And I'm currently showing no further questions at this time. I’d like to turn the call back over to Chuck MacFarlane for closing remarks.

Thank you for your questions and interest in Otter Tail Corporation. With continued execution on our rate base growth opportunities at the utility and emphasis on operational and commercial performance at our manufacturing platform, we remain confident in our ability to deliver long-term shareholder value. And although many challenges and uncertainties related to COVID-19 remain, our employees remain diligent and determined to address those challenges. Based on our strong third quarter and year-to-date performance and our updated view of potential impacts from COVID-19, we are raising and narrowing our 2020 diluted earnings per share guidance to be in the range $2.26 to $2.36 from our previous guidance of $2.10 to $2.30. Thank you for joining our call. We appreciate your interest in Otter Tail Corporation and we 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.