Txnm Energy, Inc. · NYSE:TXNM
Txnm Energy — PNM Resources — Q3 2018 Earnings Presentation
25 slides from Txnm Energy's earnings presentation, Nov 6, 2018
Slide 1: Q3 2018 Earnings Review
Q3 2018 Earnings Review November 6, 2018
Slide 2: Safe Harbor Statement
Safe Harbor Statement Statements made in this presentation that relate to future events or PNM Resources, Inc.’s (“PNMR”), Public Service Company of New Mexico’s (“PNM”), or Texas‐New Mexico Power Company’s (“TNMP”) (collectively, the “Company”) expectations, projections, estimates, intentions, goal
Slide 3: Q3 2018 Overview
Q3 2018 Overview
Slide 4: Q3 2018 Financial Results and Key Highlights
Q3 2018 Financial Results and Key Highlights Financial Results: Q3 2018 Q3 2017 YTD 2018 YTD 2017 GAAP EPS $1.09 $0.92 $1.76 $1.67 Ongoing EPS $1.08 $0.93 $1.82 $1.70 • 2018 Ongoing EPS Guidance narrowed to $1.95 ‐ $1.98 • 2019 Ongoing EPS Guidance of $2.08 ‐ $2.18 affirmed Key Highlights: • New Mex
Slide 5: Consolidated Earnings and Quarterly Earnings Distribution Guidance (Ongoing)
Consolidated Earnings and Quarterly Earnings Distribution Guidance (Ongoing) Consolidated Earnings Guidance 2018 Previous Narrowed Consolidated EPS $1.91 ‐ $1.98 $1.95 ‐ $1.98 PNM $1.48 ‐ $1.52 $1.51 ‐ $1.52 TNMP $0.60 ‐ $0.62 $0.62 ‐ $0.63 Corporate/Other ($0.17) – ($0.16) ($0.18) – ($0.17) Segment
Slide 6: Q3 2018 Financial Summary
Q3 2018 Financial Summary Ongoing EPS $0.18 $0.02 ($0.05) $1.08 TNMP $0.93 Corporate PNM Q3 2017 Q3 2018 6 Note: Segment drivers included in appendix
Slide 7: Load and Economic Conditions
Load and Economic Conditions Regulated Retail Energy Sales and Customers (weather‐normalized) Q3 2018 YTD 2018 PNM / TNMP vs. vs. 2018E 2019E Q3 2017 YTD 2017 PNM Residential & Commercial 0.8% 0.5% ~0.3% 0.3% ‐ 0.5% Total PNM Retail Load 1.1% 0.4% 0% – 0.5% 0.3% – 1.0% PNM Avg. Customers 0.9% 0.8% 0
Slide 8: Current 2018 – 2022 Investment Plan
Current 2018 – 2022 Investment Plan Five‐year investment plan with opportunities for incremental growth Opportunities for Incremental Growth $607 $32 $580 $29 $517 $2 $61 $10 $79 $38 $49 $20 $27 $25 $444 $20 $413 $109 $97 $20 $98 $79 $82 (in millions) $122 $125 $130 $125 $91 $216 $215 $220 $220 $220
Slide 9: Potential Earnings Power
Potential Earnings Power • Incorporates updates to investment plan and filed TNMP general rate review settlement 2018 Ongoing Earnings 2019 Ongoing Earnings 2020 Earnings 2021 Earnings Allowed Guidance Midpoint Guidance Midpoint Potential Potential Return / Equity Avg Rate Return EPS Avg Rate Return
Slide 10: Positioned for Growth 2018 – 2022
Positioned for Growth 2018 – 2022
Slide 11: Opportunities for Incremental Growth
Opportunities for Incremental Growth New Customer Load and Infrastructure Investments • Increasing capital in Texas to support continued strong economic growth while New Mexico growth prospects are driven by load from new data center interest and existing customer expansions • In order to support th
Slide 12: Incremental 2018 – 2022 Investment Opportunities
Incremental 2018 – 2022 Investment Opportunities Up to $950M of incremental investment opportunities Growth Opportunities provides additional rate base growth through 2022 New Customer Load up to up to $300M and Infrastructure up to $894 Investments $780 $100 up to $100 $150 $713 Transmission and $1
Slide 13: Potential Earnings Power of Growth Opportunities by 2022
Potential Earnings Power of Growth Opportunities by 2022 2018 ‐ 2022 Earnings Growth Target: 5 ‐ 6% Growth Opportunities: Avg Rate Base EPS New Customer Load and Infrastructure up to $300M up to $0.18 Investments Transmission and Renewable up to $250M up to $0.15 Energy Expansion in New Mexico Gener
Slide 14: Questions and Answers
Questions and Answers
Slide 15: Appendix
Appendix
Slide 16: PNM and TNMP Regulatory Update
PNM and TNMP Regulatory Update Filing Action Timing Docket No. PNM Appeal of 2015 General Oral arguments held October 30, Rate Case to New Mexico No statutory timeline S‐1‐SC‐36115 2017 Supreme Court Hearing Examiner Recommended PNM 2017 Integrated Decision expected in Q4 2018 or Decision to accept
Slide 17: TNMP General Rate Review Settlement
TNMP General Rate Review Settlement TNMP Filing Settlement ROE 10.5% 9.65% (currently authorized 10.125%) Capital structure 50% Equity 45% Equity (currently authorized 45% equity) Cost of debt 7.2% 6.4% Increase to rate base(1) $90M $73M Return of excess deferred federal $7.8M $11.0M income taxes (1
Slide 18: Q3 2018 vs Q3 2017 EPS (Ongoing): PNM
Q3 2018 vs Q3 2017 EPS (Ongoing): PNM PNM $0.95 Q3 2018 Key Performance Drivers ∆ EPS $0.77 Retail rate phase‐in, including changes in tax rates and retail $0.22 generation portfolio changes approved in BART settlement Transmission margin $0.03 Interest expense savings $0.03 Retail load $0.02 Weathe
Slide 19: Q3 2018 vs Q3 2017 EPS (Ongoing): TNMP and Corporate
Q3 2018 vs Q3 2017 EPS (Ongoing): TNMP and Corporate TNMP $0.18 $0.20 Q3 2018 Key Performance Drivers ∆ EPS Load $0.02 TCOS rate relief $0.01 AFUDC $0.01 Depreciation and property tax ($0.02) Q3 2017 Q3 2018 Corporate Q3 2018 Key Performance Drivers ∆ EPS Interest expense ($0.02) ($0.02) ($0.07) Wes
Slide 20: Weather Impact
Weather Impact PNM Q3 2018 Q3 2017 2018 Normal(1) Heating Degree Days 0 0 0 Cooling Degree Days 988 967 940 Net EPS Impact $0.02 $0.01 compared to normal TNMP Q3 2018 Q3 2017 2018 Normal(1) Heating Degree Days 0 0 0 Cooling Degree Days 1,663 1,678 1,641 Net EPS Impact $0.00 $0.01 compared to normal
Slide 21: 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 12 Q1 2019 2 44 Q4 2018 5 12 Q1 2019 1 30 Q2 2019 3 44 Q4 2019 21
Slide 22: Potential Earnings Power
Potential Earnings Power Allowed 2018 Ongoing Earnings 2019 Ongoing Earnings 2020 Earnings 2021 Earnings Return / Guidance Midpoint Guidance Midpoint Potential Potential Equity Avg Rate Return EPS Avg Rate Return EPS Avg Rate EPS Avg Rate EPS Ratio Base Base Base Base 9.575% / PNM Retail(1) $2.3 B 9
Slide 23: Liquidity as of October 30, 2018
Liquidity as of October 30, 2018 PNMR PNMR PNM Develop‐ Corporate Resources PNM TNMP ment /Other Consolidated Financing Capacity(1): (In millions) Revolving credit facilities $440.0 $75.0 $24.5 $300.0 $839.5 As of 10/30/18: Short‐term debt and LOC balances $2.5 $27.6 $24.5 $131.2 $185.8 Remaining av
Slide 24: Selected Balance Sheet Information
Selected Balance Sheet Information (In millions) Dec 31, 2017 Sept 30, 2018 Long‐Term Debt (incl. current portion) (1) PNM $1,657.9 $1,656.1 TNMP 480.6 560.3 Corporate/Other 299.1 398.1 Consolidated $2,437.6 $2,614.5 Total Debt (incl. short‐term) (2) PNM $1,697.7 $1,656.1 TNMP 480.6 577.8 Corporate/
Slide 25: 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