Txnm Energy, Inc. · NYSE:TXNM
Txnm Energy — PNM Resources — Q2 2019 Earnings Presentation
24 slides from Txnm Energy's earnings presentation, Aug 2, 2019
Slide 1: Q2 2019 Earnings Review
Q2 2019 Earnings Review August 2, 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 and Key Highlights
Financial Results and Key Highlights Financial Results Q2 2019 Q2 2018 YTD 2019 YTD 2018 GAAP EPS ($0.95) $0.48 ($0.72) $0.67 Ongoing EPS $0.37 $0.53 $0.50 $0.73 • Significantly milder temperatures impacted Q2 2019 earnings • GAAP earnings include $104 million after tax write-off from items previous
Slide 5: San Juan Abandonment, Securitization and Replacement Power
San Juan Abandonment, Securitization and Replacement Power ● Requests ● $283M undepreciated ● Recommended Abandonment Replacement Power Securitization abandonment of San investment in San Juan, scenario balances Juan coal plant after proceeds available to environment, cost and participation fund rep
Slide 6: PNM and TNMP Regulatory Agenda
PNM and TNMP Regulatory Agenda Filing Action Timing Docket No. PNM: Consolidated Application for NMPRC decision on abandonment/ San Juan (Abandonment, PNM filed July 1, 2019; NMPRC bifurcated application on securitization expected by April 2020, 19-00018-UT Securitization and July 10, 2019 decision
Slide 7: Financial Overview
Financial Overview Chuck Eldred Executive Vice President and CFO
Slide 8: Q2 2019 Ongoing EPS Financial Summary and 2019 Guidance
Q2 2019 Ongoing EPS Financial Summary and 2019 Consolidated Ongoing Earnings Guidance Q2 EPS Summary Q2 2019 Q2 2018 Change PNM Resources $0.37 $0.53 ($0.16) PNM $0.23 $0.38 ($0.15) TNMP $0.19 $0.19 $- Corporate/Other ($0.05) ($0.04) ($0.01) Note: Segment drivers included in appendix $2.05 2019 Earn
Slide 9: Load and Economic Conditions
Load and Economic Conditions • Weather was the most significant driver to sales volumes in Q2 2019 Q2 2019 Q2 2019 Weather Impacts Q2 2019 Q2 2018 Normal(1) vs. vs. Q2 2018 Normal(1) PNM Cooling Degree-Days 318 674 507 (52.8%) (37.3%) PNM EPS Impact ($0.07) $0.07 TNMP Cooling Degree-Days 1,015 1,097
Slide 10: 2019 – 2023 Investment Plan
2019 – 2023 Investment Plan $3.6B investment plan reflects $298M replacement power; $278M generation investment and $20M transmission investment $1,013 $26 $208 $699 $635 $27 $665 $34 $20 $22 $30 $47 $285 $571 $71 $44 $20 $59 $88 $43 $128 $88 $79 $82 (in millions) $98 $171 $169 $181 $201 $137 $366 $
Slide 11: 2019 - 2023 Potential Earnings Power
2019 - 2023 Potential Earnings Power Earnings Growth Target 5-6% Reflects recommended replacement power scenario, adds 2023 • Partial year of San Juan rate base in 2022, no remaining rate base in 2023 • Interim financing supports replacement power until securitization proceeds received mid-2022 2019
Slide 12: Questions and Answers
Questions and Answers
Slide 13: Appendix
Appendix
Slide 14: Replacement Power Scenarios Considered
Replacement Power Scenarios Considered Recommended Scenario 2 Scenario 3 Scenario 4 Scenario 1 - Hybrid San Juan Location No Fossil Fuel All Renewable • 280 MW gas(1) • 476 MW gas(1) • 40 MW battery(1) PNM Owned Resources - • 70 MW battery • 110 MW battery PNM Capex $298M $331M $243M $37M • 350 MW s
Slide 15: Q2 2019 vs Q2 2018 EPS (Ongoing): PNM
Q2 2019 vs Q2 2018 EPS (Ongoing): PNM PNM $0.38 Q2 2019 Key Performance Drivers ∆ EPS Decommissioning/reclamation trust income, net of fees $0.05 Interest expense savings $0.02 $0.23 Retail rate phase-in, including excess deferred income taxes $0.01 (before impacts resulting from lower sales volumes
Slide 16: Q2 2019 vs Q2 2018 EPS (Ongoing): TNMP and Corporate
Q2 2019 vs Q2 2018 EPS (Ongoing): TNMP and Corporate TNMP $0.19 $0.19 Q2 2019 Key Performance Drivers ∆ EPS Rate relief, including TCOS $0.02 Depreciation and property tax ($0.01) Weather ($0.01) Q2 2018 Q2 2019 Corporate Q2 2019 Key Performance Drivers ∆ EPS ($0.04) ($0.05) Lower effective tax rate
Slide 17: 2019 - 2023 Potential Earnings Power
2019 - 2023 Potential Earnings Power 2019 Ongoing Earnings 2020 Earnings 2021 Earnings 2022 Earnings 2023 Earnings Allowed Guidance Midpoint Potential Potential Potential Potential Return / Equity Avg Avg Avg Avg Avg Rate Ratio Return EPS Rate EPS Rate EPS Rate EPS Rate EPS Base Base Base Base Base
Slide 18: EBITDA Guidance (Ongoing)
EBITDA Guidance (Ongoing) Ongoing EBITDA (In millions) 2019E Midpoint Consolidated PNM Resources $566 PNM $373 TNMP $172 18
Slide 19: Weather Impact
Weather Impact PNM Q2 2019 Q2 2018 2019 Normal(1) Heating Degree Days 71 22 70 Cooling Degree Days 318 674 507 Net EPS Impact ($0.07) $0.07 compared to normal TNMP Q2 2019 Q2 2018 2019 Normal(1) Heating Degree Days 60 85 50 Cooling Degree Days 1,015 1,097 1,012 Net EPS Impact $0.00 $0.01 compared to
Slide 20: 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 2019 planned outages completed 2019 planned outages completed 3 44 Q4 2019 20
Slide 21: Balance Sheet and Credit Metrics
Balance Sheet and Credit Metrics
Slide 22: Liquidity as of July 26, 2019
Liquidity as of July 26, 2019 PNMR PNMR PNM Develop- Corporate Resources PNM TNMP ment /Other Consolidated Financing Capacity(1): (In millions) Revolving credit facilities $440.0 $75.0 $40.0 $300.0 $855.0 As of 7/26/19: Short-term debt and LOC balances $56.9 $0.1 $32.9 $72.4 $162.3 Remaining availab
Slide 23: Selected Balance Sheet Information
Selected Balance Sheet Information (In millions) Dec 31, 2018 June 30, 2019 Long-Term Debt (incl. current portion) (1) PNM $1,656.5 $1,707.3 TNMP 575.4 626.4 Corporate/Other 438.2 438.6 Consolidated $2,670.1 $2,772.3 Total Debt (incl. short-term) (1,2) PNM $1,698.9 $1,749.5 TNMP 592.9 681.4 Corporat
Slide 24: 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