Our Business Strategy

Our strategy is to continue to grow our largest business, the regulated electric utility, which will lower our overall risk, create a more predictable earnings stream, improve our credit quality, and preserve our ability to fund the dividend. Over time, we expect the electric utility business will provide approximately 65% of our overall earnings. We expect our manufacturing and plastic pipe businesses will provide 35% of our earnings and will continue to be a fundamental part of our strategy. Reliable utility performance along with rate base investment opportunities over the next five years will provide us with a strong base of revenues, earnings, and cash flows.

We also look to our manufacturing and plastic pipe companies to provide organic growth. Organic, internal growth comes from new products and services, market expansion, and increased efficiencies. We expect much of our growth in these businesses in the next few years will come from utilizing existing plant capacity from capital investments made in previous years.

We will also evaluate opportunities to allocate capital to potential acquisitions in our Manufacturing and Plastics segments. We are a committed long-term owner and therefore we do not acquire companies in pursuit of short-term gains. However, we will divest operating companies that no longer fit into our strategy and risk profile over the long term. In evaluating our portfolio of operating companies, we look for the following characteristics:

• A threshold level of net earnings and a return on invested capital in excess of our weighted average cost of capital.
• A strategic differentiation from competitors and sustainable cost advantage.
• Operates within a stable and growing industry and is able to quickly adapt to changing economic cycles.
• A strong management team committed to operational excellence.