Loren Hanson - Investor Relations Chuck MacFarlane - President and Chief Executive Officer Kevin Moug - Senior Vice President and Chief Financial Officer

Grier Buchanan - KeyBanc Capital Markets

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 third 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 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 would 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 will now turn the call over to Otter Tail Corporation’s President and CEO, Mr. Chuck MacFarlane.

Chuck?

Good morning and thanks for joining our call. Our overall strategy is designed to support long-term stability in organic growth through rate base expansion and manufacturing investments.

Slide 5 shows our rate base expansion in a compound annual growth rate of 8.6%. Slide 6 shows our regulatory framework, which continues to be constructive.

Manufacturing platform leaders are guiding improvement on each of our businesses, including BTD’s Minnesota facilities expansion and the integration of our recent acquisition, both of which I will discuss shortly. I would like to begin with an update on the utility.

Otter Tail Corporation’s earnings per share from continuing operations were $0.42 this quarter largely driven by strong performance of Otter Tail Power. The electric segment reported a $4 million quarter-over-quarter improvement in net income.

More than half of this improvement came from increased rider recovery on rate base investments and increased weather normalized sales. The impact of warmer weather in the third quarter led to a 51% increase in cooling degree days quarter-over-quarter.

This is comparatively better than last year with close to normal for the quarter. I will now provide updates on three of the capital investments shown on Slide 7.

The Big Stone South to Brookings 345 Kv transmission project has the total value of $212 million and our share is $106 million. This project held a groundbreaking ceremony and construction kickoff on September 14 in Clear Lake, South Dakota.

Local and state government officials, including Governor Daugaard attended. We are a 50-50 owner with Xcel Energy in this project and Xcel is the project manager.

Big Stone South to Ellendale is another large regional transmission project valued at $370 million. Our share is $185 million.

This project is scheduled to begin construction in 2016 and we are a 50-50 owner of MBU. Otter Tail Power serves as the construction manager.

We continue to make positive progress on preparation for the start of construction. The environmental upgrade at Big Stone plant is nearing completion.

The total value of this project is $384 million and our share is $207 million. We have been recovering costs through riders during the construction phase of this project.

Equipment is in the testing phase with commercial operation, expected well ahead of our April 2016 compliance deadline. While I am discussing power plants, I should mention that Coyote Station is expected to return to full service by early December.

You recall the plant has been running at reduced loads since it incurred a significant damage with boiler feed pump late last year. Also of note, Enbridge Energy increased its energy usage on the Otter Tail Power System.

This was due to recent pumping station additions in our area and elimination of downstream constraints on the Enbridge pipeline system. Next, I will take a couple of minutes to expand upon the Clean Power Plan and the impact of other recent environmental awards on Otter Tail Power.

On August 3, EPA released the final Clean Power Plan to reduce carbon dioxide in machines from power plants. The plan regulates greenhouse gas emissions from existing fossil fuel based power plants under Section 111 of the Clean Air Act.

Under this plan, states choose between rate based goals, measured in pounds of CO2 emitted per megawatt-hour generated and mass based goals measured in tons of CO2. Emission reductions are phased in over the 2022 to 2029 interim period with final targets achieved by the 2030.

When the plan is fully implemented, the EPA projects that power sector will have reduced CO2 emissions by approximately one-third of 2005 levels. The final 111(d) Rule is a major change from the proposed rule.

In the final rule, states with a higher percentage of coal fired generation receive more stringent targets and those with the lower percentage of coal fired generation generally received less stringent targets. In South Dakota we are encouraged by the mass based target increase.

South Dakota was credited for 2012 natural gas combined cycle plant that was under construction and was also one of the seven states receiving an adjustment for significant hydro resources. This was a positive for Big Stone plant which was our primary concern with the proposed rule.

In North Dakota we are concerned about the significant reduction in both rate and mass based limits and the potential impact on Coyote Station. State compliance will require adding a substantial amount of renewable energy, reducing coal generation by 40% or a combination of both.

In Minnesota we don’t have an immediate compliance concerns because we intend to retire Hoot Lake plant by May of 2021, prior to the first compliance period starting in 2022. Under a mass based approach, we would anticipate receiving an allocation of future allowances after the Hoot Lake Plant retirement that could likely be used for compliance as Big Stone or Coyote.

We anticipate that our customers will experience cost increases due to this rule, but the extent and timing are uncertain at this early stage. We won’t be able to make a meaningful estimate until the states we serve have determined the framework of their individual state implementation plans.

This will likely take over two years. Otter Tail Power continues to work closely with stakeholders as states begin to develop their implementation plans.

Another environmental rule which the EPA announced on September 30 is the final rule for the stream effluent limit guidelines or ELGs. This was a national regulatory standard for waste water discharge to surplus waters and is the first significant revision of a Clean Water Act ELGs in more than 30 years.

Generally, the final rule establishes new requirements for waste water streams from scrubbers and ash transports. We are optimistic that Otter Tail Power’s units are well positioned for compliance because they currently do not discharge any ash handing water.

The third environmental rule I have mentioned today is the EPA’s October 1 announcement and it has tightened the National Ambient Air Quality Standards for ozone from 75 parts per billion to 70 parts per billion. It appears that the states we serve will not have any new non-obtainment counties at the 70 parts per billion level but our states still could be impacted by the rule of the EPA modeling determines that they are contributed to non-attainment of any downwind area.

Non-attainment areas are required to meet the standard in 2020 to 2037 timeframe with deadlines depending on the severity of an area’s ozone level. If not for the clean power plan, the ash handling in ozone rules would have been the top environmental rules for the year.

One more utility item before turning to the manufacturing platform is to let you know we expect to file a rate case in Minnesota by year end, but the amount of our request has not yet been finalized. Turning to the manufacturing platform, the big news this quarter is the recent BTD acquisition of Impulse Manufacturing located 30 miles north of Atlanta, now called BTD Georgia, the 200 plus employee plant offers a range of metal fabrication services such as sheet and tube laser cutting, complex enrollments, assembly and a state-of-the-art paint line.

The strong customer base aligns closely with BTD’s existing business and markets served include agriculture, construction and transportation. This acquisition allows BTD to accelerate its plan to expand into Southeast to serve its growing customer base.

Integration is well underway with an experienced integration team. Key risks, opportunities and synergies identified in due diligence were incorporated into the integration plans.

In early October, Kevin and I toured the Georgia plant, met with employee groups to celebrate and thank them for a smooth transition, and visited BTD Georgia’s largest customer, Caterpillar. Another news at BTD is related to the Minnesota facilities expansion.

Construction is complete in Detroit Lakes. The warehouse is fully operational.

BTD has implemented a more efficient process layout. BTD Lakeville’s office and lowering DOC [ph] project is complete.

The first customer production jobs have run through the new paint line. The warehouse addition is complete.

And finished goods are moving into this location allowing us to – calling us to close an existing offsite warehouse. BTD is continuing to see lower sales volumes in the agriculture end markets as well as the oil gas end markets.

We are also learning about extended holiday plant closures of some of our customers’ plants. That said BTD picked up a significant order from an agriculture equipment manufacturer that is outsourcing some existing internal work.

And we expect that the Southeast expansion and investment in Minnesota facilities will enable the company to improve sales by expanding its geographic reach and services to customers. T.O.

Plastics, Northern Pipe and Vinyltech, each met performance expectations. In fact, the plastic segment’s earnings are up quarter-over-quarter, which is impressive given that the sales prices are declining.

Now, I will turn it over to Kevin for the financial perspective.

Hello, good morning. Slide 8 shows quarter-over-quarter earnings per share from continuing operations increased 16.7% from $0.36 to $0.42.

We continue to deliver growing earnings from the electric segment driven by our rate base investments and we are also excited to have completed the acquisition of Impulse Manufacturing. Please move on to Slide 9 as I discuss our quarterly results.

The utility net earnings increased $4.3 million quarter-over-quarter. The main drivers of this change were increased rider revenues from environmental cost recovery riders related to our AQCS project at Big Stone, our other base electric revenues grew primarily due to more sales to pipeline customers, and more revenues recoverable under the conservation incentive program riders.

Warmer weather contributed $0.02 a share quarter-over-quarter. Year-over-year, weather is a drag on earnings per share of $0.05 and the impact of weather for the third quarter and year-to-date too is close to normal.

And it is important to remember that Otter Tail Power Company is a winter peaking utility and a summer peaking pool. Lower plant maintenance costs related to our Hoot Lake plant which had major maintenance done in the third quarter of 2014 also contributed to improved quarter-over-quarter earnings.

The lower maintenance costs were offset in part by higher employee benefit costs. Our manufacturing segment revenue decreased $3 million quarter-over-quarter mainly due to continued softness in sales to customers served by BTD in agricultural as well as oil and gas end markets.

These soft end markets have impacted earnings per share by $0.04 quarter-over-quarter. Also negatively impacting BTD’s earnings is lower scrap sales due to a reduction in scrap metal prices quarter-over-quarter.

Slide 11 illustrates the trend of the scrap prices since 2009. This softness in scrap metal prices continues to be plagued with extra steel capacity in the U.S.

market and low priced steel imports. The reduced sales at BTD were mitigated in part by additional revenues from their new Georgia facility acquired September 1, 2015.

And as disclosed in our press release announcing this acquisition, we don’t expect the acquisition to be profitable during four months ending December 31, 2015. Offsetting the lower revenues at BTD were increased sales to end markets served the T.O.

Plastics. And net earnings for this segment were lower by $1.2 million primarily due to the continued challenges in softening end markets of BTD offset slightly by increased earnings at T.O.

Plastics. Our plastics segment’s net earnings improved $400,000 quarter-over-quarter, volume of pipes sold was flat between the quarters while sales prices declined 9.4% due to declining PVC resin prices.

We were able to improve operating margins in light of the declining sales prices as the cost of PVC resin experienced a greater decline quarter-over-quarter. And our corporate expenses were higher by $1 million quarter-over-quarter primarily due to an upturn employee benefit costs and casualty insurance expense.

Let me now talk about our updated business outlook by talking off on Slide 12, which highlights our earnings from continuing operations guidance for 2015. We are reaffirming our overall guidance range for consolidated earnings per share from continuing operations to be in the middle to upper half of $1.50 to $1.65 per share.

We are also revising our segment guidance. We are raising the electric segment guidance to $1.26 to $1.29 per share based on our strong year-to-date results.

The manufacturing segment guidance was decreased to $0.15 to $0.19 a share given the following conditions. BTD continues to experience additional softness in agriculture, energy, mining and oil and gas equipment end markets.

And these market conditions are now causing certain customers to announce longer than normal holiday plant shutdowns. Prices for scrap metal continue to decline and are now approaching early 2009 levels.

These prices have dropped even lower than we previously forecasted. T.O.

Plastics is also contributing to the downward revision in the manufacturing segment guidance, given a pullback in volume in the custom products end markets. Certain customers have also experienced unsuccessful or delayed new product launches, which is now causing lower sales levels than previously expected.

And in addition, T.O. has been notified that another customer is going to serve manufacturing more of a certain product in-house and not rely as much on its supplier base.

Our backlog for the manufacturing segment is $45 million for the remainder of 2015 and this compares to $50 million for the same time a year ago. We are raising the guidance of the plastics segment given the strong year-to-date performance and our corporate costs continue to be in line with our expectations.

The current earnings guidance from continuing operations is based on current enacted tax law. Should the federal government change the tax law before the end of 2015, our guidance could be negatively impacted in the range of $0.02 to $0.04 per share.

And our guidance – current guidance reflects an expected return on equity in the range of 9.5% to 10.4%. We are pleased with our third quarter results.

They reflect a balanced mix of earnings from our electric and manufacturing platforms. Our electric and plastic segments are performing well, executing our growth initiatives and delivering strong earnings.

These segments are providing the needed support to the sluggish earnings in our manufacturing segment. We are especially excited about BTD’s new facility in Georgia, which will allow us to better serve our growing customer base in the Southeast and we remain confident we are in a position to meet our long-term stated growth goals of 4% to 7% compounded annual growth rate of earnings per share.

We are now ready to take your questions. And after the Q&A, Chuck will return with a few closing remarks.

Actually, Grier Buchanan on for Matt. Thanks for taking my questions.

First wanted to just touch on the clean power plan, appreciate that commentary. The question is how involved do you expect that your utility and peers will be in Minnesota and particularly in the Dakota’s as states formulate their compliance plans.

Will this be a pretty collaborative process? I am just mainly trying to get a sense of roughly when the generation needs outside of Hoot Lake might come into focus, Chuck, I think you mentioned around two years?

Thanks, Grier. I expect a collaborative process in all the states served.

In South Dakota, it’s going to be a smaller group more like that there is less fossil generating sources. There is only two companies that have facilities in South Dakota.

In Minnesota, I think that the MPCA has already had outreach in North Dakota. The Department of Health has also have that.

And I think people are digesting it trying to figure it out and then we will be in each of those states meeting as groups to discuss a basic framework for these state implementation plans with either the Department of Health, or MPCA need to give us states we will start to layout.

Okay, thanks. And then shifting over to manufacturing, could you – sorry if I missed this, but could you remind me when you expect to complete the planned expansions and if possible maybe speak qualitatively about which market segments you expect that might open up the most to you as a result of these facilities expansions?

I will figure back at the expansions. In Detroit Lakes, we are within a month of being complete there with all the construction activities.

In Lakeville, it will go on through June where we are transitioning out of another building, if you will to get all of our facilities under one growth with raw material coming in one end, fabrication, cutting, warehousing, paint and assembly and then final finished goods stories will all be under one continuous flow, one roof, but that will take until June of 2016 to get everything moved out of the other facility.

Okay.

And Matt – sorry, Grier, Kevin. In terms of your second question, I think that the expectation particularly with the addition of paint isn’t so much new markets it’s a full expansion of being able to serve also existing customers.

We have been seeing where a number of our customers are looking to have a one-stop shop from their supplier base inclusive of paint and we haven’t been able to provide that. We have had to outsource the paint here.

We felt addition of the paint line in Lakeville. And so, we really expect to see our existing customers also of growth opportunities open up with them as they start to move paint opportunities to us that we haven’t previously experienced.

Yes. Hey, thanks Kevin.

Yes, that was my recollection as well and I wasn’t trying to suggest that this will open up new markets for you just trying to get a sense of whether there were any specific market segments that like based on your conversations with existing customers who are for certain jobs looking for that one stop shop might open up to a bigger source of business as a result of these expansions?

Yes, Matt….

And if it’s broad based, that’s fine, like if it’s just across kind of broad-based, if the opportunities would be spread out across the business, that’s fine, I was just curious?

Yes, I would say that it’s a pretty broad-based type expectation. I mean, clearly there is probably more opportunities within some of the end markets to paint more than others just depending on type of product that we are providing for the customers and what their actual paint needs are, but there is certainly opportunities across all of our kind of existing end markets to provide that service.

Okay, thanks. Last one for me, is there anything in backlog associated with the agriculture and energy markets?

There is dollars in backlog. But as you can see, we are experienced somewhat of a downturn in the backlog when you compare it to the same time a year ago, but our backlog is reflective of the collective end markets we serve and there is backlog in there from ag.

How significant if you are able to say?

Yes, I want to be able to say that Matt or I am sorry Grier.

No problem. Okay, fair enough.

That’s it for me guys. Appreciate it.

Thank you. I will summarize by saying that the electric segment performance led to a solid earnings in the third quarter.

Continued rate base, cost recovery of the utility, solid performance at our plastic segment and good cost management throughout the corporation reaffirm our guidance. We want to thank all of our employees for their hard work and we want to thank you for joining the call for your interest in Otter Tail Corporation.

We look forward to speaking with you next quarter.