Txnm Energy, Inc. · NYSE:TXNM
Txnm Energy — PNM Resources — Q4 2018 Earnings Presentation
31 slides from Txnm Energy's earnings presentation, Feb 27, 2019
Slide 1: Q4 2018 Earnings Review
Q4 2018 Earnings Review February 27, 2019
Slide 2: Safe Harbor Statement
Safe Harbor Statement Statements made in this presentation for PNM Resources, Inc. (“PNMR”), Public Service Company of New Mexico (“PNM”), or Texas‐New Mexico Power Company (“TNMP”) (collectively, the “Company”) that relate to future events or expectations, projections, estimates, intentions, goals,
Slide 3: Opening Remarks and Overview
Opening Remarks and Overview Pat Vincent‐Collawn Chairman, President and CEO
Slide 4: Financial Results, Key Highlights and Company Updates
Financial Results, Key Highlights and Company Updates Financial Results Q4 2018 Q4 2017 2018 2017 GAAP EPS ($0.69) ($0.68) $1.07 $1.00 Ongoing EPS $0.18 $0.24 $2.00 $1.94 • 2019 Ongoing EPS Guidance narrowed to $2.10 ‐ $2.18 Key Highlights and Company Updates 2018 Key Highlights • TNMP continued gro
Slide 5: PNM and TNMP Regulatory Agenda
PNM and TNMP Regulatory Agenda Filing Action Timing Docket No. PNM Appeal of 2015 General Rate Case to New Mexico Supreme Oral arguments held October 30, 2017 No statutory timeline S‐1‐SC‐36115 Court Filed December 31, 2018, docket closed; Order issued PNM request for reconsideration of 13‐00390‐UT
Slide 6: Financial Overview
Financial Overview Chuck Eldred Executive Vice President and CFO
Slide 7: FY 2018 Ongoing EPS Financial Summary
FY 2018 Ongoing EPS Financial Summary $0.11 ($0.11) $0.06 $2.00 $1.94 TNMP Corporate PNM FY 2017 FY 2018 7 Note: Segment drivers included in appendix
Slide 8: Load and Economic Conditions
Load and Economic Conditions Regulated Retail Energy Sales and Customers (weather‐normalized) Q4 2018 2018 PNM / TNMP vs. vs. 2018E 2019E Q4 2017 2017 PNM Residential & Commercial 1.3% 0.7% ~0.3% 0.3% ‐ 0.5% Total PNM Retail Load 1.3% 0.6% 0% – 0.5% 0.3% – 1.0% PNM Avg. Customers 0.9% 0.8% 0.8% ‐ 1.
Slide 9: Consolidated Earnings Guidance (Ongoing)
Consolidated Earnings Guidance (Ongoing) 2019 Earnings Guidance $2.10 Consolidated EPS $2.18 PNM TNMP Corp/Other $1.61 – $1.65 $0.67 – $0.69 ($0.18) – ($0.16) 2019 Previous Current Consolidated EPS $2.08 ‐ $2.18 $2.10 ‐ $2.18 PNM $1.59 ‐ $1.65 $1.61 ‐ $1.65 TNMP $0.67 ‐ $0.69 $0.67 ‐ $0.69 Corporate
Slide 10: 2019 – 2022 Investment Plan
2019 – 2022 Investment Plan $2.3B investment plan plus incremental growth opportunities Incremental growth opportunities (previously $950M) • $255M moved into T&D capital at PNM and TNMP • $450M supports new transmission and replacement power • $245M awaiting future capital prioritization Total: $86
Slide 11: 2019 - 2022 Potential Earnings Power
2019 ‐ 2022 Potential Earnings Power Earnings Growth Target: 5 ‐ 6% • Base plan increases as capital opportunities are realized to support growth at PNM and TNMP • Planned San Juan retirement reduces 2022 PNM Retail average rate base • $450M of incremental growth opportunities to be financed with $3
Slide 12: Questions and Answers
Questions and Answers
Slide 13: Appendix: Q4 and FY 2018 Earnings
Appendix Q4 and FY 2018 Earnings
Slide 14: Q4 2018 vs Q4 2017 EPS (Ongoing): PNM
Q4 2018 vs Q4 2017 EPS (Ongoing): PNM PNM Q4 2018 Key Performance Drivers ∆ EPS $0.16 Outage Costs $0.05 Weather $0.04 $0.10 Interest expense savings $0.03 Retail load $0.01 Transmission margin $0.01 O&M increases ($0.05) Decommissioning/reclamation trust income, net of fees ($0.05) Depreciation and
Slide 15: Q4 2018 vs Q4 2017 EPS (Ongoing): TNMP and Corporate
Q4 2018 vs Q4 2017 EPS (Ongoing): TNMP and Corporate TNMP Q4 2018 Key Performance Drivers ∆ EPS $0.11 $0.14 Load $0.02 O&M decreases $0.01 Other (TCOS rate relief, AFUDC) $0.01 Other (weather, depreciation and property tax) ($0.01) Q4 2017 Q4 2018 Corporate Q4 2018 Key Performance Drivers ∆ EPS Inte
Slide 16: 2018 vs 2017 EPS (Ongoing): PNM
2018 vs 2017 EPS (Ongoing): PNM PNM 2018 Key Performance Drivers ∆ EPS $1.48 $1.54 Retail rate phase‐in, including changes in tax rates and retail $0.31 generation portfolio changes approved in BART settlement Transmission margin $0.11 Weather $0.10 Interest expense savings $0.06 Retail load $0.02 D
Slide 17: 2018 vs 2017 EPS (Ongoing): TNMP and Corporate
2018 vs 2017 EPS (Ongoing): TNMP and Corporate TNMP 2018 Key Performance Drivers ∆ EPS Load $0.06 $0.54 $0.65 TCOS rate relief $0.04 AFUDC $0.03 Weather $0.01 Tax reform $0.01 Other $0.01 2017 2018 Depreciation and property tax ($0.05) Corporate ($0.08) ($0.19) 2018 Key Performance Drivers ∆ EPS Int
Slide 18: Weather Impact
Weather Impact PNM Q4 2018 Q4 2017 2018 Normal(1) Heating Degree Days 1,005 608 861 Cooling Degree Days 18 16 13 Net EPS Impact $0.02 ($0.02) compared to normal TNMP Q4 2018 Q4 2017 2018 Normal(1) Heating Degree Days 719 596 617 Cooling Degree Days 246 376 283 Net EPS Impact $0.00 $0.00 compared to
Slide 19: Ongoing Earnings Guidance
Ongoing Earnings Guidance
Slide 20: Potential Earnings Power
Potential Earnings Power Allowed 2019 Ongoing Earnings 2020 Earnings 2021 Earnings 2022 Earnings Return / Guidance Midpoint Potential Potential Potential Equity Ratio Avg Rate Return EPS Avg Rate EPS Avg Rate EPS Avg Rate EPS Base Base Base Base PNM Retail(1) 9.575% / 50% $2.4 B 9.3% $1.41 $2.4 B $1
Slide 21: PNM Guidance (Ongoing)
PNM Guidance (Ongoing) PNM Ongoing EPS $1.48 $1.54 $1.61 ‐ $1.65 2017 2018 2019E 2018 vs 2019 Key Year‐over‐Year EPS Performance Drivers Changes Retail rate phase‐in (includes federal and accelerated state tax amortization)(1) $0.07 Retail load $0.03 – $0.05 Weather ($0.07 in 2018, $0.02 estimated i
Slide 22: PNM Guidance (Ongoing) Additional Details
PNM Guidance (Ongoing) Additional Details Financial impact under retail rate phase‐in Phase I – Phase II – (includes federal and accelerated state tax amortization) February 1, 2018 January 1, 2019 (in millions, except EPS) Revenue increase (net of tax reform give‐back) $4.7 $10.3 (1) Accelerated am
Slide 23: TNMP Guidance (Ongoing)
TNMP Guidance (Ongoing) TNMP Ongoing EPS $0.65 $0.67 – $0.69 $0.54 2017 2018 2019E 2018 vs 2019 Key Year‐over‐Year EPS Performance Drivers Changes Rate relief, including TCOS $0.07 Load $0.05 – $0.06 2018 weather (0.01) O&M increases ($0.02) – $0.01 Interest expense savings $0.02 – $0.03 Depreciatio
Slide 24: Corporate and Other Guidance (Ongoing)
Corporate and Other Guidance (Ongoing) Corporate and Other Ongoing EPS ($0.08) ($0.19) ($0.18) – ($0.16) 2017 2018 2019E 2018 vs 2019 Key Year‐over‐Year EPS Performance Drivers Changes Westmoreland loan agreement paydown ($0.01) Interest expense ($0.01) – $0.00 O&M and Income tax expense decreases $
Slide 25: EBITDA and Quarterly Earnings Distribution Guidance (Ongoing)
EBITDA and Quarterly Earnings Distribution Guidance (Ongoing) Ongoing EBITDA (In millions) 2019E Midpoint Consolidated PNM Resources $577 PNM $376 TNMP $180 2019 Quarterly Ongoing Earnings Distribution 56% 30% 4% 10% Q1 Q2 Q3 Q4 25
Slide 26: 2019 Assumptions
2019 Assumptions amounts shown are before tax 2019E PNM Weather $2M Residential and Commercial Load 1% = $0.04 Outage costs $19M – $21M Decommissioning/reclamation trust income, net of fees $11M – $15M Anticipated effective tax rate 24.6% before amortization of excess deferred income taxes Amortizat
Slide 27: PNM Scheduled Plant Outages
PNM Scheduled Plant Outages San Juan Four Corners Palo Verde Duration Time Duration Time Duration Time Unit Unit Unit in Days Period in Days Period in Days Period 4 44 Q1‐Q2 2019 4 21 Q1 2019 1 30 Q2 2019 5 21 Q1 2019 3 44 Q4 2019 27
Slide 28: Balance Sheet and Credit Metrics
Balance Sheet and Credit Metrics
Slide 29: Liquidity as of February 22, 2019
Liquidity as of February 22, 2019 PNMR PNMR PNM Develop‐ Corporate Resources PNM TNMP ment /Other Consolidated Financing Capacity(1): (In millions) Revolving credit facilities $440.0 $75.0 $25.0 $300.0 $840.0 As of 2/22/19: Short‐term debt and LOC balances $12.5 $37.6 $10.9 $50.0 $111.0 Remaining av
Slide 30: Selected Balance Sheet Information
Selected Balance Sheet Information (In millions) Dec 31, 2017 Dec 31, 2018 Long‐Term Debt (incl. current portion) (1) PNM $1,657.9 $1,656.5 TNMP 480.6 575.4 Corporate/Other 299.1 438.2 Consolidated $2,437.6 $2,670.1 Total Debt (incl. short‐term) (2) PNM $1,697.7 $1,698.9 TNMP 480.6 592.9 Corporate/O
Slide 31: Credit Ratings
Credit Ratings PNMR Consolidated S&P Moody’s Issuer rating BBB+ Baa3 Outlook Negative Stable Senior unsecured rating BBB Baa3 PNM S&P Moody’s Issuer rating BBB+ Baa2 Outlook Negative Stable Senior unsecured rating BBB+ Baa2 TNMP S&P Moody’s Issuer rating BBB+ A3 Issuer outlook Negative Stable Senior