Slide 1: 2022 Earnings Review
2022 Earnings Review February 24, 2023
Slide 2: Contact Information and Safe Harbor Statement
Contact Information and Safe Harbor Statement Investor Relations Contact Information Lisa Goodman Executive Director, Investor Relations and Shareholder Services 1-505-241-2160 Lisa.Goodman@pnmresources.com Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 Statements m
Slide 3: Overview and Highlights
Overview and Highlights
Slide 4: Financial Results and Company Updates
Financial Results and Company Updates Financial Results 2022 2021 GAAP EPS $1.97 Clean Energy $2.27 $2.45Strong Financial Strong 2022 earnings results Ongoing EPS $2.69 2023 guidance narrowed Focus • 2022 earnings above expectations Profile • 2023 guidance narrowed to $2.65 - $2.75 Dividend increase
Slide 5: 2022 ESG Highlights
2022 ESG Highlights Surpassing 50% Supporting Prioritizing carbon-free Education and People electricity Economy • Continued evolving our DEI • Retired the San Juan • Partnered with local strategy to foster and further Generating Station, bringing institutions of higher our diverse workforce: 53% PNM
Slide 6: Operational and Regulatory Updates
Operational and Regulatory Updates
Slide 7: Load and Economic Conditions
Load and Economic Conditions PNM Growth returns to expectations ▪ Higher Q4 2022 results reflect growth from PNM Q4 2022 FY 2022 2023E expansion of existing Industrial customers, Residential / Commercial growth above expectations Total Retail Load(1) 2.9% 1.5% 2% - 3% ▪ 2023 growth driven by custome
Slide 8: PNM Operational Highlights
PNM Operational Highlights 2021 Capacity Projected 2023 Capacity Transformation of PNM Generation Portfolio • Exit from Coal and Carbon-Free by 2040 Renewables Coal 45% • Retirement of San Juan in 2022 24% Renewables Nuclear Coal 7% • Proposed exit from Four Corners at end of 2024 13% 31% Battery 6%
Slide 9: PNM Key Regulatory Proceedings
PNM Key Regulatory Proceedings 2024 Rate Change • Customer Affordability top of mind • Energy Transition Act is achieving the clean energy Avg Residential Bill(1) transition with benefits to customers $125.58 $135.04 • T&D investments partially offset by generation portfolio changes reduced bill imp
Slide 10: TNMP Operational Highlights and Key Regulatory Proceedings
TNMP Operational Highlights and Key Regulatory Proceedings Investing in T&D Infrastructure to Support Customer Growth, Reliability and New Resources TNMP Rate Base • New all-time system peak in September 2022 ($ billions) $1.8 • Growing system demand continues to require strong capital $1.5 investme
Slide 11: Financial Updates
nae Financial Updates
Slide 12: Highlights of 2022 Ongoing Earnings Results
Highlights of 2022 Ongoing Earnings Results Key changes in year-over-year 2022 Earnings Summary earnings: $0.32 ($0.13) $2.69 • Higher load and weather $2.45 Clean$0.05 Energy Strong Financial impacts at both PNM and TNMP Corporate Focus PNM TNMP Profile • TNMP TCOS and DCOS rate relief • Higher reg
Slide 13: Updated 2023 Earnings Guidance (Ongoing)
Updated 2023 Earnings Guidance (Ongoing) Changes in earnings driven by: • Return to normal weather, 2023 Earnings Guidance partially offset by load growth, at PNM and TNMP • PNM retirement and replacement $2.65 Consolidated EPS $2.75 of the San Juan Generating Station and return of Palo Verde leased
Slide 14: Investment Plan and Rate Base Growth
Investment Plan and Rate Base Growth $1,027 $42 $907 $866 $40 $38 $424 Investment plan through $381 $325 2025 focused on T&D $59 $51 (in millions) $68 infrastructure, includes PNM grid modernization $503 $419 $362 $452 $391 $320 2023 2024 2025 PNM T&D PNM Generation TNMP IT Depreciation Note: Amount
Slide 15: Beyond 2023: Targeted EPS Growth
Beyond 2023: Targeted EPS Growth Continued Target of 5% Ongoing EPS CAGR 2013 - 2023: 6.7% Ongoing EPS CAGR(1) EPS CAGR Track Record Target Results 2018-2023 5-6% 6.2%(1) 2019-2023 5-6% 5.7%(1) 2020-2025 5% On track $2.69 $2.70 $2.45 $2.28 $2.16 $1.94 $2.00 $1.64 $1.65 $1.49 $1.41 2013 2014 2015 201
Slide 16: Dividend Increase and Payout Ratio
Dividend Increase and Payout Ratio Annual dividend targets middle of a 50% - 60% payout ratio range • Board of Directors increased the common $2.69 $2.70 dividend by $0.08 to $2.45 $0.3675 per quarter $2.28 $2.16 • Indicated annual rate of $1.47 per share represents 5.8% $1.39 $1.47 $1.16 $1.23 $1.3
Slide 17: Appendix
Appendix
Slide 18: PNM and TNMP Key Regulatory Proceedings
PNM and TNMP Key Regulatory Proceedings Filing Action Timing Docket No. PNM/AVANGRID filed NM Supreme Court appeal of No statutory timeframe for appeal or addressing Merger transaction 20-00222-UT NMPRC denial on Jan. 3, 2022, briefing scheduled request for oral argument; appeal noticed on approval
Slide 19: Q4 and FY 2022 vs 2021 EPS (Ongoing): PNM
Q4 and FY 2022 vs 2021 EPS (Ongoing): PNM PNM $1.85 $1.90 • Higher transmission margins due to higher system demand and the addition of new customers, including the Western Spirit transmission contract $0.15 $0.05 • Increased retail load, driven by hotter summer and colder winter Q4 2021 Q4 2022 FY
Slide 20: Q4 and FY 2022 vs 2021 EPS (Ongoing): TNMP
Q4 and FY 2022 vs 2021 EPS (Ongoing): TNMP TNMP $1.07 • Weather-normalized load growth, $0.75 largely driven by new customers including cryptomining customers, $0.13 $0.23 and hotter temperatures • Rate relief from approved TCOS and Q4 2021 Q4 2022 FY 2021 FY 2022 DCOS increases implemented in 2021
Slide 21: Q4 and FY 2022 vs 2021 EPS (Ongoing): Corporate
Q4 and FY 2022 vs 2021 EPS (Ongoing): Corporate Corporate ($0.07) ($0.13) ($0.15) ($0.28) • Higher effective tax rate on pre-tax losses Q4 2021 Q4 2022 FY 2021 FY 2022 • Higher interest rates on variable debt Q4 2022 FY 2022 2022 Key Performance Drivers vs vs Q4 2021 FY 2021 Higher effective tax rat
Slide 22: Weather Impacts
Weather Impacts Q4 Q4 Q4 FY FY FY PNM: PNM 2022 2021 Normal(1) 2022 2021 Normal(1) • Colder temperatures in Cooling Degree Days 4 11 14 1,555 1,505 1,486 Q4 2022 Heating Degree Days 962 599 860 2,247 1,866 2,047 • 2022 heating and cooling degree-days above both prior Net EPS Impact compared to Norma
Slide 23: PNM EPS Guidance (Ongoing)
PNM EPS Guidance (Ongoing) PNM $2.14 - $2.19 $1.90 2022 2023E 2023E 2023 Key Performance Drivers vs 2022 Generation portfolio changes $0.37 - $0.42 Decommissioning / reclamation trust performance $0.15 - $0.19 Plant outages (primarily gas plants) $0.06 - $0.08 AFUDC $0.03 - $0.05 Transmission margin
Slide 24: TNMP EPS Guidance (Ongoing)
TNMP EPS Guidance (Ongoing) TNMP $1.07 $0.98 - $1.01 2022 2023E 2023E 2023 Key Performance Drivers vs 2022 Transmission rate relief (TCOS) $0.16 - $0.19 Distribution rate relief (DCOS) $0.05 - $0.07 Retail load $0.03 – $0.05 Dilution ($0.03) - ($0.00) O&M increases ($0.06) – ($0.04) Weather (return
Slide 25: Corporate and Other EPS Guidance (Ongoing)
Corporate and Other EPS Guidance (Ongoing) Corporate and Other ($0.28) ($0.47) – ($0.45) 2022 2023E 2023E 2023 Key Performance Drivers vs 2022 Dilution $0.00 - $0.01 Interest expense ($0.20) – ($0.18) 25
Slide 26: 2023 Quarterly EPS Distribution
2023 Quarterly EPS Distribution Estimated Quarterly Ongoing EPS Distribution 49% 21% 14% 16% Q1 Q2 Q3 Q4 26
Slide 27: 2023 Assumptions
2023 Assumptions Amounts shown are before tax, unless otherwise noted 2023E(1) PNM PNM Retail Allowed Equity Ratio / ROE 50% / 9.575% FERC Equity Ratio / Allowed ROE 50% / 10% Weather $0 (normal) Residential/Commercial Load Growth 1% = $0.06 EPS Industrial Load Growth 1% = $0.01 EPS Depreciation and
Slide 28: Balance Sheet and Credit Metrics
Balance Sheet and Credit Metrics
Slide 29: Financing Plans
Financing Plans Regulated utility financing costs recovered Long-term Debt Maturities through customer rates in millions(1) • PNM 2024 Rate Change incorporates assumed financings through 2024 • TNMP cost of debt in customer rates align with $988 current market conditions $1,000 $80 $1,047 $850 milli
Slide 30: Liquidity as of February 17, 2023
Liquidity as of February 17, 2023 Corporate/ PNM Resources PNM TNMP Other Consolidated Financing Capacity(1): (In millions) Revolving credit facilities $440.0 $100.0 $300.0 $840.0 As of 2/17/23: Short-term debt and LOC 167.3 97.1 53.2 317.6 balances Remaining availability 272.7 2.9 246.8 522.4 Inves
Slide 31: Selected Balance Sheet Information
Selected Balance Sheet Information (In millions) Dec. 31, 2021 Dec. 31, 2022 Long-Term Debt (incl. current portion) (1) PNM $1,881.1 $2,000.9 TNMP 918.1 1,076.9 Corporate/Other 899.7 999.6 Consolidated $3,698.9 $4,077.4 Total Debt (incl. short-term) (1,2) PNM $1,888.5 $2,186.8 TNMP 918.5 1,113.6 Cor