Txnm Energy, Inc. · NYSE:TXNM
Txnm Energy — PNM Resources — FY2016 Earnings Presentation
23 slides from Txnm Energy's earnings presentation, Dec 18, 2015
Slide 1: 2016 Earnings Guidance
2016 Earnings Guidance December 18, 2015
Slide 2: Safe Harbor Statement
Safe Harbor Statement Statements made in this presentation that relate to future events or PNM Resources’ (“PNMR”), Public Service Company of New Mexico’s (“PNM”), or Texas‐New Mexico Power Company’s (“TNMP”) (collectively, the “Company”) expectations, projections, estimates, intentions, goals, targ
Slide 3: Opening Remarks & Overview
Opening Remarks & Overview Pat Vincent‐Collawn Chairman, President and CEO
Slide 4: BART Update: NMPRC Approval Received Dec. 16, 2015
BART Update NMPRC Approval Received Dec. 16, 2015 FERC Approval • Targeted by year‐end Coal Contract and Ownership Restructuring Agreement • Targeted by year‐end SNCR Equipment • Targeted to be in service Jan. 2016 Timing of Recovery • 2016 Rate Case: SNCR equipment, including balanced draft • 2018
Slide 5: Above Industry Average Earnings Growth Through 2019
Above Industry Average Earnings Growth Through 2019 Strategic Goals Earn Authorized Return on Regulated Businesses 7% ‐ 9% Earnings Growth Maintain Solid Investment 2015 ‐ 2019 Grade Credit Ratings Above Industry Average $1.76 Earnings and Dividend $1.61 Growth $1.56 $1.55 $1.41 $1.49 $1.31 2012 201
Slide 6: Above Industry Average Dividend Growth
Above Industry Average Dividend Growth The annual common stock dividend raised by 10% in December Dividend rate: 2015 to $0.88 per share $0.88 (1) Expect above industry average dividend growth while targeting Payout ratio: the 50% ‐ 60% payout ratio range 50‐57% (2) Dividend yield: The Board w
Slide 7: 2016 Guidance
2016 Guidance Chuck Eldred Executive Vice President and CFO
Slide 8: 2016 Guidance
2016 Guidance 2015 Guidance Mid Point 2016 Earnings Potential 2016 Guidance Avg Rate Avg Rate Return EPS EPS EPS Base Base PNM Retail $2.0 B 7.5% $0.97 $2.4 B $1.11 ‐ $1.27 (1) $1.08 ‐ $1.24 PNM Renewables (2) $135 M 10.0% $0.08 $100 M $0.06 $0.06 PNM FERC Transmission (3) $230 M 5.5% $0.08 $180 M $
Slide 9: New Mexico Economic Conditions
New Mexico Economic Conditions PNM Customer Counts and Retail Energy Sales(1) 600,000 10,000 NM and Albuquerque Metro Employment growth trends upwards 500,000 9,000 Employment Growth Rates Energy Sales (GWh) 400,000 8,000 Total Customers (12 Month Rolling Average) 3% 300,000 7,000 1% 200,000 6,000 1
Slide 10: PNM Rate Case Assumptions
PNM Rate Case Assumptions 2016 PNM Rate Case Assumptions Rate case filed with 10.5% ROE Each 25 bps difference in ROE (annually) +/‐ $0.04 Rate implementation could occur anytime between July 1 and Oct. 1 (assumes 10.5% ROE and $123.5M Up to $0.40 increase in revenue requirement) July 1 implementati
Slide 11: PNM Guidance (Ongoing)
PNM Guidance (Ongoing) PNM EPS $1.13 ‐ $1.16 $1.12 ‐ $1.30 $1.10 2014 2015E 2016E Year‐over‐Year 2015E – 2016E Other Key Performance Drivers ∆ EPS Elimination of Palo Verde Unit 2 lease costs $0.12 2015 Weather $0.03 Outage costs $0.00 ‐ $0.02 Palo Verde Unit 3 ($0.12) Load ($0.10) ‐ $0.00 AFUDC ($0
Slide 12: Texas Economic Conditions
Texas Economic Conditions TNMP Customer Counts and Retail Energy Sales(1) Strong Employment Growth 250,000 6,500 Continues in Texas 225,000 Employment Growth Rates 5,500 (12 Month Rolling Average) 200,000 Energy Sales (GWh) Total Customers 175,000 4,500 4% 150,000 2% 3,500 125,000 0% 100,000 2,500 2
Slide 13: TNMP Guidance (Ongoing)
TNMP Guidance (Ongoing) TNMP EPS $0.47 $0.51 ‐ $0.52 $0.49 ‐ $0.51 2014 2015E 2016E Year‐over‐Year 2015E – 2016E Key Performance Drivers ∆ EPS TCOS rate relief $0.03 ‐ $0.04 Load $0.02 ‐ $0.03 O&M increases ($0.02) ‐ $0.00 Depreciation and property tax ($0.03) ‐ ($0.02) Interest expense ($0.02) 13
Slide 14: Corporate and Other Guidance (Ongoing)
Corporate and Other Guidance (Ongoing) Corporate and Other EPS ($0.08) ($0.08) – ($0.07) ($0.06) – ($0.05) 2014 2015E 2016E Year‐over‐Year 2015E – 2016E Key Performance Drivers and Assumptions ∆ EPS Interest savings on retired 9.25% debt $0.03 Interest expense on higher short‐term debt levels ($0.02
Slide 15: 2017 - 2019 Potential Earnings Power
2017 ‐ 2019 Potential Earnings Power Allowed 2017 Earnings Potential 2018 Earnings Potential 2019 Earnings Potential Return / Equity Ratio Avg Rate EPS Avg Rate EPS Avg Rate EPS Base Base Base PNM Retail (1) 10% / 50% $2.4 B $1.49 $2.5 B $1.55 $2.5 B $1.59 PNM Renewables (2) 10% / 50% $95 M $0.06 $9
Slide 16: Questions & Answers
Questions & Answers
Slide 17: Appendix
Appendix
Slide 18: EBITDA and Quarterly Earnings Distribution Guidance (Ongoing)
EBITDA and Quarterly Earnings Distribution Guidance (Ongoing) Ongoing EBITDA (In millions) 2015E 2016E Consolidated PNMR $494 ‐ $501 $528 ‐ $565 PNM $332 ‐ $336 $354 ‐ $394 TNMP $149 ‐ $151 $152 ‐ $156 2016 Quarterly Earnings Distribution 45% ‐ 49% 20% ‐ 22% 22% ‐ 24% 8% ‐ 9% Q1 2016E Q2 2016E Q3 20
Slide 19: 2016 Assumptions
2016 Assumptions Corporate/ PNM TNMP amounts shown are before tax Other 2016 Weather ‐ ‐ N/A (2.0%) to 0.0% 2.0% to 3.0% Load N/A 1% = $0.05 1% = $0.01 Palo Verde Unit 3 sales price ($/MWh) ~$26 N/A N/A Palo Verde Unit 2 lease expense reduction (partially offset by depreciation, property $16M N/A N/
Slide 20: Capital Forecast
Capital Forecast 2016 – 2019 Total Capital Plan: $1.7B PNM 2015‐2019 Rate Base CAGR: 5 ‐ 7%(1) TNMP 2015‐2019 Rate Base CAGR: 7 ‐ 9% (In millions) $547 $35 Palo Verde Unit 3 added to rate base $115 $415 $398 $19 $14 $352 $99 $101 $15 $114 $117 $132 $102 $298 $127 $163 $168 $93 2016 (2) 2017 2018 (2)
Slide 21: PNM Plant EAF and Outages
PNM Plant EAF and Outages 2016 ‐ 2017 Outage Schedule Duration Time Unit in Days Period 89.5% 92.1% San Juan 77.0% 3 11 Q1 2016 69.1% 72.2% 67.3% 1 28 Q1‐Q2 2017 Four Corners 81 Q1 2016 5 94 Q4 2017 4 20 Q1‐Q2 2016 Palo Verde 2 33 Q2 2017 33 Q2 2016 1 33 Q4 2017 San Juan Four Corners Palo Verde 3 33
Slide 22: BART Regulatory Process Update
BART Regulatory Process Update Regulatory Schedule Hearings Concluded October 20 Approval of an unconditional Additional 132 MW CCN with an initial book value of San Juan Unit 4 of zero plus SNCR and other Hearing Examiner Recommended November 16 capital investments Decision Final Order Received Dec
Slide 23: PNM Regulatory Update
PNM Regulatory Update Filing Action Timing Docket No. NMPRC: BART Filing Filed December 20, 2013 Approved December 16, 2015 13‐00390‐UT Future Test Year Order modified Modified order allows future test year to 14‐00332‐UT November 30, 2015 begin no later than 13 months following a rate application G