Txnm Energy, Inc. · NYSE:TXNM
Txnm Energy — PNM Resources — Q3 2011 Earnings Presentation
29 slides from Txnm Energy's earnings presentation, Nov 3, 2011
Slide 1: Third Quarter 2011 Earnings Presentation
Third Quarter 2011 Earnings Presentation November 3, 2011
Slide 2: Safe Harbor Statement
Safe Harbor Statement Statements made in this presentation that relate to future events or PNM Resources’, Public Service Company of New Mexico’s (“PNM”), or Texas-New Mexico Power Company’s (“TNMP”) (collectively, the “Company”) expectations, projections, estimates, intentions, goals, targets, and
Slide 3: Opening Remarks & Overview
Opening Remarks & Overview Pat Vincent-Collawn President and CEO
Slide 4: Third Quarter Financial Highlights
Third Quarter Financial Highlights Q3 2011 Q3 2010 YTD 2011 YTD 2010 Ongoing EPS (1) $0.61 $0.63 $0.85 $0.90 GAAP EPS (1) $0.48 $0.53 $0.70 $0.69 Closed the sale of First Choice Power on Nov. 1 • Exit from competitive businesses and return to regulated utility model Aligning utility costs with r
Slide 5: Load Growth Continues Positive Trend
Load Growth Continues Positive Trend Regulated Retail Energy Sales Growth (weather-normalized KWh) Q3 2011 vs Q3 2010 YTD 2011 vs YTD 2010 PNM ∆ (1) TNMP ∆ (2) PNM ∆ (1) TNMP ∆ (2) Residential 0.2% -0.1% 0.9% 2.1% Commercial -2.0% 0.1% -0.1% 0.2% Industrial 8.8% 8.1% 5.4% 0.5% Total Retail 0.3% 0.3%
Slide 6: San Juan - BART Update
San Juan - BART Update EPA BART determination: SCR technology • Total estimated costs: $750M or more • PNM’s share of estimated costs (46%): minimum of $345M PNM appealed EPA mandate, requesting stay Petitioned EPA for reconsideration of state plan calling for SNCR technology N.M. Gov. Marti
Slide 7: Financial Overview
Financial Overview Chuck Eldred Executive Vice President and CFO
Slide 8: Q3 2011 Financial Summary
Q3 2011 Financial Summary Ongoing EPS $0.02 $0.01 ($0.11) $0.03 $0.03 $0.63 TNMP Other Optim $0.61 PNM First Choice Energy (1) Power Q3 2010 Q3 2011 (1) Includes PNM Resources’ share of Optim Energy’s ongoing EPS through August 2011 8
Slide 9: Regulated Businesses: Q3 2011 EPS (Ongoing)
Regulated Businesses: Q3 2011 EPS (Ongoing) PNM $0.42 $0.45 Q3 Key Performance Drivers ∆ EPS Rate relief $0.07 Weather $0.03 Lower outage costs $0.01 PV3 toll expiration ($0.07) Other ($0.01) Q3 2010 Q3 2011 TNMP Q3 Key Performance Drivers ∆ EPS $0.10 Rate relief $0.01 $0.08 Weather $0.01 Q3 2010 Q3
Slide 10: First Choice Power Sale Update
First Choice Power Sale Update First Choice Power Sale • Received $329M in cash which includes $59M working capital Repurchased Series A convertible Preferred Stock • Finalized on Oct. 5 • Purchased from Cascade for $73.5M, share price $15.38 • Reduces EPS share count by 4.8 million shares begin
Slide 11: Credit Rating Agency Actions
Credit Rating Agency Actions Moody’s Upgraded PNMR and TNMP credit ratings one notch on Nov. 1, 2011 and affirmed PNM rating on Sept. 23, 2011 PNMR PNM TNMP Debt rating Ba1(1) Baa3(1) A3(2) Outlook Stable Stable Stable S&P Upgraded ratings one notch on Sept. 26, 2011 and placed all entities on p
Slide 12: Recent Financing Transactions
Recent Financing Transactions TNMP • Refinanced $50 million term loan • Reduced interest rate by approximately 1.5% PNM • Issued $160 million 10-year notes • 5.35% interest rate PNM and PNM Resources • Renewed credit facilities • Total capacity of $700 million 12
Slide 13: 2011 Guidance (Ongoing) Consolidated EPS
2011 Guidance (Ongoing) $1.00 Consolidated EPS(1) $1.05 Corp/Other Regulated Competitive ($0.17 - $0.15) $1.00 - $1.05 $0.16 - $0.18 PNM TNMP $0.72 - $0.75 $0.28 - $0.30 (1) Segments are not additive 13
Slide 14: Key Strategic Goals and Checklist
Key Strategic Goals and Checklist Earn Authorized Return on Our Maximize the Value of Our Regulated Businesses Competitive Businesses Achieve successful outcomes in: Maintain profitability of First Choice Power by PNM retail rate case achieving customer growth and increasing Achieved by mone
Slide 15: Questions & Answers
Questions & Answers 15
Slide 16: Appendix
Appendix
Slide 17: PNM Plant EAF and Outages
PNM Plant EAF and Outages 98.1% Time 94.6% Unit Duration 91.3% Period 86.8% 85.0% San Juan 77.9% 2 47 Q1 – Q2 2012 3 54 Q3 – Q4 2012 Four Corners 4 10 Q4 2011 5 13 Q1 2012 Palo Verde 1 45 Q4 2011 3 44 Q1 - Q2 2012 2 44 Q4 2012 San Juan Four Corners Palo Verde Q3 2010 Q3 2011 Annual Top Quartile Numb
Slide 18: PNM Resources 5-Year Capital Plan as of Q3 2011
PNM Resources 5-Year Capital Plan(1) as of Q3 2011 (In millions) $362 $16 $88 $261 $250 $248 $252 $14 $16 $15 $16 $73 $59 $57 $63 $62 $74 $77 $71 $68 $67 $111 $111 $107 $101 $106 2011 2012 2013 2014 2015 PNM Generation PNM T&D TNMP T&D PNM Renewables Other (Primarily IT) (1) Excludes BART capital ex
Slide 19: Guidance (ongoing): First Choice Power & Optim Energy
Guidance (ongoing): First Choice Power & Optim Energy First Choice Power Optim Energy Prior Guidance (Jan – Dec 2011) (Jan – Dec 2011) Earnings (Loss) per Share $0.28 – $0.35 $(0.22)-$(0.19) EBITDA $43M-$53M $20M-$30M (1) First Choice Power Optim Energy Current Guidance (Jan – Oct 2011) (Jan – Aug 2
Slide 20: Regulatory Information
Regulatory Information
Slide 21: NMPRC Commissioners and Districts
NMPRC Commissioners and Districts NMPRC Districts and Term PNM Services Areas Name District Party Ends Jason Marks District 1 2012 Democrat Patrick Lyons District 2 2014 Republican Chairman Vacant (1) District 3 2012 N/A Theresa Becenti-Aguilar District 4 2014 Democrat Vice Chair Ben Hall District 5
Slide 22: Utility Rate Base and Return
Utility Rate Base and Return % of Rate Allowed Equity Test Period (1) Rate Base ROE Increase Base Ratio PNM Retail Current Rates June 30, 2010 $1.8B 89% 51.28% 10.00% $72.1M PNM FERC Transmission Current Rates (2) Dec. 31, 2011 $156.2M 8% 49.40% 12.25% $11.1M PNM FERC Generation (3) Current Rates De
Slide 23: Balance Sheet and Credit Metrics
Balance Sheet and Credit Metrics
Slide 24: Selected Balance Sheet Information
Selected Balance Sheet Information Dec 31, 2010 Sep 30, 2011 Long-Term Debt (incl. current portion) PNM $1,055.7 $1,055.8 TNMP 310.3 $310.8 PNMR 199.8 $199.8 Consolidated $1,565.8 $1,566.3 Total Debt (incl. short-term) (1) PNM $1,245.7 $1,312.8 TNMP 310.3 310.8 PNMR 231.8 231.8 Consolidated $1,787.8
Slide 25: Liquidity as of Nov. 1, 2011
Liquidity as of Nov. 1, 2011 PNM PNM Resources Resources PNM TNMP Consolidated Financing Capacity: (in millions) Revolving Credit Facility $300.0 $400.0 $75.0 $775.0 Local lines of credit (LOC) 5.0 - - 5.0 Total Capacity $305.0 $400.0 $75.0 $780.0 As of 11/1/11: LOC balances (1) 69.6 (2) 5.2 0.3 75.
Slide 26: Environmental Compliance
Environmental Compliance
Slide 27: San Juan – BART Timeline
San Juan – BART Timeline Proposed Federal Implementation Plan issued in January Called for SCR technology PNM estimated costs @ between $750M - $1B (total plant costs) on all four units within three years Proposed State Implementation Plan revisions filed with EPA in July Called for SNCR t
Slide 28: Environmental Control Equipment at Coal Units
Environmental Control Equipment at Coal Units Activated PNM Share Scrubbers Coal Unit Carbon SNCR (2) SCR (2) Baghouse (3) Capacity (MW) Injection (1) San Juan Unit 1 170 X X X San Juan Unit 2 170 X X X San Juan Unit 3 249 X X X San Juan Unit 4 194 X X X Four Corners Unit 4 97.5 X X Four Corners Uni
Slide 29: Impact of Proposed Environmental Regulation
Impact of Proposed Environmental Regulation Estimated Compliance Costs Comments (PNM Share) San Juan Generating Station EPA approved plan on Aug. 5, Filed petition for review with 10th Circuit and filed request for stay with EPA Clean Air Act – Regional Haze (FIP) – SCR ~$340M - $460M on Sep 16., Fi