Good morning, everyone, and welcome to our 2022 earnings conference call. My name is Tyler Nelson. Last night, we announced our 2022 fourth quarter and annual financial 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 made 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 the course of this call. As noted on Slide 2, 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 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, Tyler. Good morning, and welcome to our 2022 year-end earnings call. Please refer to Slide 4, as I begin my comments on our annual results. Otter Tail Corporation achieved record financial results in 2022. We generated diluted earnings per share of $6.78, a 60% increase from 2021. All segments produced double-digit earnings growth led by our Plastics segment, which capitalized on extraordinary industry conditions to achieve another record level of earnings. Looking forward, we expect Plastics segment earnings to recede in 2023 from our record level this past year, but remain elevated relative to our expected normalized earnings beginning in 2024. In a moment, Kevin will provide a more detailed discussion of our financial performance. Slide 5 illustrates our five-year compounded annual growth rate in earnings per share with and without the impact of our Plastics segment. Through dependable earnings and steady growth at Otter Tail Power, BTD, T.O. Plastics and changes in corporate costs, we have produced a historic 10.8% earnings per share CAGR, excluding our Plastics segment businesses. The additional earnings and cash flow generated by our Plastics segment in 2021 and 2022, provide additional strength to our already strong credit metrics, liquidity and capital structure and allow for capital investments in our operating companies. Turning to Slide 7. We illustrate Otter Tail Power's efforts in working toward a cleaner energy future. We are targeting to reduce carbon emissions from our owned generation resources approximately 50% from 2005 levels by 2025 and 97% by 2050, assuming targeted dispatch occurs. Additionally, our owned and contracted energy generation is forecast to be more than 50% renewable by 2025. Last week, Governor Walz signed the clean energy bill into law in Minnesota. The bill requires Minnesota utilities to provide carbon-free electricity to Minnesota retail customers by 2040. It also requires utilities to provide 80% carbon-free energy by 2030 and 90% by 2035. The legislation allows utilities to use renewable energy credits to offset carbon emissions to achieve these requirements. We expect to meet these requirements with our existing renewable fleet and available renewable energy credits. The bill also updates the state's existing renewable energy standard now requiring utilities to provide energy from renewable resources equal to at least 55% of the total energy by 2035. Based on our current projected energy resource mix, we anticipate we will meet the renewable requirement in 2035. This will require some additional renewable additions between 2024 and 2035. Slide 11 includes an overview of Otter Tail Power's 49 megawatt Hoot Lake Solar project. Project construction began in May of 2022 and is expected to be completed in mid-2023. All the costs and benefits of the project are assigned to Minnesota customers; recovery of the $60 million investment has been approved through the renewable rider. Passage of the Inflation Reduction Act has increased the investment tax credit on this project from 26% to 40%. Turning to Slide 12. Otter Tail Power completed the purchase of the Ashtabula III wind farm on January 3, 2023. Since 2013, we have had a purchase power agreement in place to purchase the offtake of this facility. Acquiring the facility provides a lower cost alternative than maintaining the purchase power agreement. All regulatory approvals have been received to provide recovery of this rate base investment. Slide 13 provides additional information on Tranche 1 of MISO's Long Range Transmission Plan. Otter Tail will be a co-owner in two Tranche 1 projects, the Jamestown to Ellendale and Big Stone South to Alexandria 345 kV transmission projects. Otter Tail's total capital investment in these projects is estimated to be approximately $390 million, with 40% of the capital investment expected to occur in the next five years. Slide 14 provides an update on Otter Tail Power's Integrated Resource Plan. In November, the Minnesota PUC supported our request to amend the resource plan procedural schedule. The amended schedule allows us to incorporate the effects of changes to MISO's seasonal capacity construct, increased MISO reserve margin requirements, recent load additions and the passage of the Inflation Reduction Act. These items could have an impact on the 2021 initial preferred five-year plan, which requested authority to add dual fuel capability to Astoria Station, to add 150 megawatts of solar at a yet-to-be-determined site, and to commence the process of withdrawing from our 35% ownership interest in the coal-fired Coyote generating station. We plan to file an updated resource plan in March of this year. The amended schedule does not modify the timeline for reviewing our proposal to add dual fuel capability at Astoria Station. Slide 15 provides an overview of Otter Tail Power's capital spending plan. The plan includes $1.1 billion of capital investment over the next five-year period, producing a 6.4% annual compounded growth rate in rate base over this timeframe. Approximately 80% of this capital plan will be recovered through existing rates or riders. This rate base growth plan is a key driver in our ability to produce earnings per share growth at our targeted level of 5% to 7%. Turning to our Manufacturing segment on Slide 21, we highlight the financial performance for the year. Strong customer demand across most end markets drove our earnings growth in 2022. BTD, our metal fabrication business, produced double-digit volume growth and experienced volatile steel prices during the year with steel prices declining sharply in the second half of the year. Lower steel prices have negatively impacted our scrap metal revenues. We continue to monitor the impact of supply chains, which are improving, and economic conditions that may impact customer demand and our shipping volumes. T.O. Plastics benefited from robust customer demand in 2022 along with product price increases offsetting inflationary cost pressures. Looking forward, Slide 23 highlights our 2023 market outlook for end markets served by our Manufacturing segment. We expect recreational vehicle and lawn & garden end markets to soften in 2023, especially in the back half of the year as inflation and the interest rate environment impact customers' discretionary spending. In contrast, we expect the ag, power generation, and horticulture markets to remain strong throughout 2023. Slide 24 highlights our financial results from our Plastics segment in 2022. Our team effectively capitalized on extraordinary industry conditions to produce record financial results. Demand for PVC pipe declined sharply in the fourth quarter of the year as market conditions, including a softening housing market and lower resin prices, led distributors and contractors to reduce purchase volumes to manage their inventory levels. To this point, we have seen only modest pressure on our sales prices. We expect margins to compress in 2023 after distributor and contractor inventories are rightsized. At our Vinyltech location, our rail expansion project is underway, and we are in the permitting and design phase of our plant expansion. Finally, I would like to thank all employees for execution and persistence in 2022. Our team effectively managed a number of challenges during the year while maintaining our focus on achieving operational and commercial excellence. Now I'll turn it over to Kevin to provide additional commentary on our financial performance in 2022 and our expectations for 2023.

Well, thank you, Chuck, and good morning, everyone. 2022 was an outstanding year. Consolidated revenues increased approximately 22% to $1.46 billion and consolidated earnings were $284 million. All of our segments produced double-digit earnings growth over 2021. Electric segment earnings improved 10%, Manufacturing was up 22%, and Plastics earnings increased 99%. Our return on equity in 2022 was 25.6% compared with a 19.2% return in 2021. These returns were generated on a rolling 13-month equity layer of approximately 57% and 51%, respectively. 2022 represented the 84th consecutive year of dividend payments. We also announced an indicated annual dividend of $1.75 a share for 2023, which represents a 6.1% increase over the 2022 annual dividend. Please refer to Slide 30, as I provide an overview of 2022 segment earnings. The Electric segment net earnings increased $7.5 million over 2021. The increase in earnings was primarily driven by increased revenues due to higher demand from commercial and industrial customers, including a new commercial load in North Dakota. Revenues also benefited from the impact of favorable weather conditions in 2022 compared to 2021, an increase in fuel recovery revenues resulting from higher purchase power and production fuel costs related to increased natural gas and market energy costs. Also driving this increase were planned outages at Coyote Station and Big Stone Plant. These items were partially offset by higher operating and maintenance costs related to increases in maintenance and other costs associated with the outages at both the Coyote Station and Big Stone Plant, increases in labor and employee benefit costs, higher transmission tariffs, and increases in travel and other expenses. This segment has been a consistent performer over the 2017 through 2022 timeframe. It has converted a 9% rate base growth into 9% earnings per share growth over the same time. Net earnings for the Manufacturing segment increased $3.8 million over 2021, driven by an 18% increase in revenues driven by higher sales volumes and an increase in steel material costs at BTD. Sales volumes improved 12% due to strong end market demand. Steel material costs were up 8% over the previous year. These items were partly offset by a decline in scrap revenues due to lower scrap metal prices and lower scrap volumes. T.O. Plastics also experienced higher sales prices and volumes. Segment net earnings were positively impacted by increased sales volumes, increased sales pricing, and favorable cost absorption. Net earnings from the Plastics segment increased $97.6 million compared to 2021. Driving this change was an increase in revenues of approximately 35% due to significant increases in the sales price per pound of PVC pipe related to a continuation of unique market conditions that started in 2021 and continued into 2022. This uplift was partially offset by lower sales volumes. The lower sales volumes were caused by raw material constraints during the first half of the year and softening customer demand during the latter half of the year due to contractors delaying projects because of supply chain issues, a softening housing market, and customers reducing purchases of PVC pipe in order to use up more of their finished goods inventory instead of buying additional PVC pipe. Our corporate costs were impacted by increased employee healthcare costs, increased professional service expenses, and losses on our corporate-owned life insurance policies and investments at our captive insurance company. These higher costs were partially offset by lower interest expense due to smaller amounts outstanding on the corporate credit facility and the impact of debt benefit proceeds from our corporate-owned life insurance. Moving to Slide 32. This reflects our business outlook for 2023 of an earnings per share range of $3.76 to $4.06 a share. Our earnings mix for 2023 is expected to be approximately 51% from the Electric segment and 49% from our Manufacturing and Plastics segment net of corporate costs. This is consistent with our previous discussions that there will be elevated earnings from our manufacturing platform in 2023. Changes in segment and corporate cost guidance are as follows: 2023 Electric segment earnings guidance is increasing due to returns generated from the increase in our rate base as our average rate base in 2022 increased 3.1% to $1.6 billion and increasing sales volumes from commercial and industrial customers. 2023 Electric segment guidance is based on normal weather for the year. We also expect lower operating and maintenance expenses to favorably impact 2023 earnings guidance as well. This reduction is primarily driven by lower pension costs due to an increase in the discount rate and the assumed long-term rate of return. These lower pension costs are partially offset by increased operating and maintenance expenses related to the Ashtabula III wind farm and the Hoot Lake Solar farm, increased employee compensation and benefits costs, and inflationary impacts on other operating and maintenance expenses. We expect our Manufacturing segment earnings to decline 10% from last year, given overall concerns about a slowing manufacturing sector, given the continued decline in overall industrial production as our customers continue to experience slower demand for products. Key assumptions driving this guidance include that sales volumes are expected to decline in 2023, driven by year-over-year steel price declines. Partially offsetting this decline is expected volume growth in agriculture and power generation end markets. Decreased scrap metal revenues at BTD from anticipated lower scrap metal prices, inflationary cost pressures, and unfavorable cost absorption are putting downward pressure on operating margins. Earnings at T.O. Plastics are expected to be flat year-over-year as increased revenue driven by customer demand and product price increases are offset by increased costs in the business. Backlog for the Manufacturing segment as of December 31, 2022, was approximately $388 million compared with $391 million a year ago. As we've been previously communicating, our Plastics segment earnings are expected to be lower than the record 2022 earnings due to the following: lower sales volumes, especially in the first half of 2023, as distributors and contractors continue to manage purchase volumes and consume current inventories given the current industry dynamics of a slowdown in overall demand and rising interest rates impacting housing starts as developers are pulling back on the number of lots being developed. We also expect margins to decline over the year as industry supply and demand factors begin to normalize, leading to reduced product sales prices. Contractors have started to see some projects being canceled or delayed. This is being driven by long lead times for some project materials as well as speculation that material costs will be lower by the middle of 2023. Distributors are shedding inventories. This has taken longer than expected to get back to the normal level of inventories they want to carry. Our corporate costs are expected to be lower in 2023, resulting from an increase in earnings generated on our cash and cash equivalents, lower expected losses on corporate investments, lower expected contributions to our foundation, lower expected claims on our self-insured health plan, and lower incentive compensation costs. These items are partially offset by inflationary increases in salary and benefit costs, other operating expense categories, as well as no expectation of receiving any death benefit proceeds on corporate-owned life insurance. We continue to monitor various economic indicators, such as single and multifamily housing starts, mortgage rates, and consumer confidence levels to ensure we are well-positioned when changes occur. Additionally, we are actively managing the impacts of inflation across all of our operating companies. There continue to be concerns related to the rising interest rate environment and what impact that will have on earnings in 2023, especially related to variable rate debt and the need to refinance or issue new debt during the year. We assess our exposure to rising borrowing costs as low risk. Our variable rate debt consists of two credit facilities. We don't expect to have any outstanding borrowings on our parent company facility, and minimum amounts are going to be drawn on the utility facility. The increased cost of these borrowings is considered in our 2023 guidance. Due to higher levels of earnings and cash flows over the last two years, we are in the enviable position of being able to earn a return on our excess cash. We don't have any new debt issuances scheduled until 2024, and our next scheduled bond maturity is in December of 2026. While we recognize the additional risk of having non-electric businesses in our portfolio, these businesses have the ability to generate high levels of earnings and cash flows during strong economic times. This has been demonstrated over the last two years. The uplift in earnings, especially driven by the Plastics segment performance, has further strengthened our equity layer. Our consolidated equity has increased by approximately $345 million from December 31, 2020, through December 31, 2022. We now stand with a 59.4% consolidated equity layer at the end of 2022, and we expect that to increase further in 2023. This offers us a distinct advantage as compared to the utility sector, as we have no equity needs in our five-year financing plan. As previously mentioned, our 2023 guidance reflects elevated earnings from our Manufacturing platform. We currently expect our earnings mix to move to 65% from our Electric segment and 35% from our Manufacturing platform beginning in 2024. As part of this shift in earnings mix, we currently expect the normalized earnings from our Plastics segment to be in a range of $36 million to $41 million. Slide 38 reflects the collective strategies of our platforms and financial performance targets. This business model serves us well, and we remain well-positioned to fund our rate base growth opportunities at the utility with our strong balance sheet, ample liquidity to support our businesses, and strong investment-grade corporate credit ratings.

Hey, guys. How are you? So one of the things that was striking that I was looking at was the balance sheet that you were talking about. Can you just talk about how the good fortune of the balance sheet in the last couple of years is changing sort of your strategic plans for the utility?

I believe this provides us with additional flexibility as we seek to explore more rate base projects in the future. Our current five-year plan is in place, and there was approximately an 8.5% increase in the capital plan from the second quarter of 2022 to our third quarter release. This increase was partly influenced by the Inflation Reduction Act, which highlighted wind power opportunities of about $200 million. Additionally, we have the MISO Tranche 1 projects that are now underway. We are currently finalizing our amended integrated resource plan, which we will submit to the commission at the end of March. We anticipate providing an update on our capital expenditures during the first quarter earnings call following the submission. We also continue to assess additional inventory of rate-based projects. This increase in equity and the cash available to us offers enhanced flexibility to support our rate base growth. I should mention that this also gives us greater flexibility regarding the Plastics expansion project in Phoenix, and we are still evaluating an expansion project in Georgia for BTD.

So in addition to what might be in the IRP, do you have any thoughts about the clean energy bill and how that might accelerate anything?

Minnesota Clean Energy Bill? Yeah. As we look through it, there's two components to it. The carbon-free component, which we anticipate we will use renewable energy credits for, and we will use RECs generated from our existing wind facilities that are allocated to the Dakotas, most likely to meet those at a market price transferred to Minnesota. The second component is the need to hit a 55% renewable amount by 2035. We currently think that will drive some additional renewables, but that may be outside of the five-year capital budget forecast.

Okay. Can you give us some more details on the Plastics expansion, time frame, costs, those sorts of things?

The total costs, including a second line, are projected to be around $50 million. This figure accounts for some timing considerations. We completed the land acquisition in the fourth quarter of 2021. As Chuck mentioned, we are now working on the rail spur expansion. In 2023, we will also begin spending on other aspects of the plant expansion, which are linked to the property acquisition from 2021 and the rail expansion. Additionally, there will be an office expansion, and we are planning to increase our capacity by adding a new 24-inch line, which is expected to enhance our pipe capacity by an additional 26 million pounds. Overall, this will result in approximately an 8% increase in capacity across both plants.

Okay. Great.

And then we would expect that the new line would come on in the 2024 timeframe, and then once that expansion is completed, the facility is sized to support a second line that is currently being considered in the 2026-2027 timeframe.

Okay. Great. That's helpful. Kevin, what was the foundation contribution from corporate in '22?

$3 million.

Okay. And lastly, you talked about how there was a drawdown of PVC pipe inventories in the second half of the year, and you're expecting that to continue in the first half of the year. Was there that much incremental inventory? Or was the slowdown just that dramatic?

Chris, I would say it was a combination of both, where we first saw it in Q3 when there were two announced resin price decreases that occurred. There was one that we were aware of as we released second-quarter earnings and then there was a second kind of a large one in the latter part of August, early September. That's where there was recognition that there was a fair amount of inventory that was sitting in the channel at distributors and contractors. They recognized that they just needed to use up that higher-priced inventory in the projects they had instead of buying additional higher-priced inventory, certainly anticipating that sales prices would start to come down. As we moved into Q4, we started to get additional information about projects being either canceled or delayed, we learned of additional supply chain issues, not necessarily with PVC pipe, but other types of construction materials that go into these projects, which were causing a slowdown as well. The overall slowdown of the housing market continued into the fourth quarter and is expected to continue into 2023. Another thought we're seeing is that contractors and distributors expect that by the middle of '23, materials like PVC pipe will start to come down, and they believe they have sufficient inventories to work through most of that.

Okay. Great. Thanks for the color, guys, and congrats on a tremendous year.

Thanks, Chris.

Hi. Good morning.

Hi, Brian.

So just first on the utility. It seems that you have the market interest rate pressure on interest expense under control, and when looking at the 2023 earnings relative to your rate base, it appears that you're earning very close to your return on equity. Can we expect those trends to continue despite inflation pressures?

Yeah, Brian. This is Chuck. I think we can, at least through 2023. We had significant O&M expense in our plant operations that we don't think will repeat year-over-year, and we are seeing a decrease in pension expense. We do have other items going up, but we think that those two tailwinds help.

Right. So outside of maybe the IRP process, you have no rate cases planned in any of the three jurisdictions?

We do not. We go through an exercise every year, and by June, we will complete cost of service studies by jurisdiction. At this point, we don't anticipate any rate cases. If there would be one, it is most likely in North Dakota. Overall, I would anticipate that we are not filing a rate case this year.

Okay. Got it. And then just on the Plastics side, just to clarify, the $36 million to $41 million of normalized earnings, does that exclude this 8% capacity expansion you have planned?

No, it doesn't, Brian. So that is baked into the longer-term view. Again, we probably won't start to see any real benefits from it in that '24, '25 timeframe.

Okay. Great. And then just lastly on BTD...

Just a reminder that that range is from a 2024 forward time frame.

Yeah. Right. And then just lastly on BTD. It seems like while you might be seeing a slowdown in some of your end markets just due to the macro environment, are you still growing top line, or is top line like organic growth slowing which is impacting your margins? Just trying to get a sense of what's structural and what might just be. Is it your cost structure or is it just what we see the obvious headwinds in 2023?

We are not experiencing top line growth in 2023, largely due to the decline in steel prices from 2022 to the current levels in 2023. Although we see favorable conditions in the agricultural and power generation markets, the recreational vehicle and lawn and garden markets are expected to slow down. Overall, we anticipate a drop in top line revenue for 2023. Additionally, scrap prices have fallen from an average of around $550 a tonne in 2022 to roughly $400 a tonne in 2023, significantly impacting our year-over-year earnings. We are also facing inflationary pressures on the cost side, including increases in wages and benefits, as well as rising healthcare costs and other inflationary factors.

Okay. Great. Thank you very much.

Thank you. I'm not showing any further questions in the queue. I'd like to turn the call back over to Chuck for any closing marks.

Well, thank you for joining our call and your interest in Otter Tail Corporation. I would again like to thank our employees for their efforts in making 2022 an extraordinary year. Looking forward, we expect 2023 to be a transitional year as industry conditions within the PVC pipe industry normalize. In total, we expect to generate earnings per share in the range of $3.76 to $4.06. Over the long term, we are well positioned with our utility growth strategy and predictable earnings stream, complemented by our strategic Manufacturing and Plastics businesses to achieve our financial targets. We expect to produce compound growth in earnings per share of 5% to 7% off a base of 2024 earnings and to increase our dividend in the range of 5% to 7% annually. Again, thank you for joining our call, and we look forward to speaking with you next quarter.

This concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a great day.