Txnm Energy, Inc. · NYSE:TXNM
Txnm Energy — PNM Resources — Investor Presentation (December 2013)
25 slides from Txnm Energy's investor presentation, Dec 6, 2013
Slide 1: 2014 Earnings Guidance Presentation
2014 Earnings Guidance Presentation December 6, 2013
Slide 2: Safe Harbor Statement
Safe Harbor Statement Statements made in this presentation that relate to future events of 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: 2014 Ongoing Guidance and Dividend Increase
2014 Ongoing Guidance and Dividend Increase Remain on track for 10 – 13% total return by 2016 Guidance Midpoint Guidance $1.47 Midpoint $1.31 $1.38 2012 2013E 2014E 2014 Ongoing Guidance $1.42 - $1.52 o 6% growth over 2013(1) Dividend increased 12% to $0.74 o Achieves a 50% payout ratio(2) (1) A
Slide 5: Texas Economic Conditions
Texas Economic Conditions TNMP Consumers and Retail Energy Sales(1) Energy Sales Consumers Employment growth continues in Texas 300,000 7,000 250,000 6,000 Employment Growth Rates 5,000 Energy Sales, GWh Total Consumers (12 month moving average) 200,000 4.0% 4,000 150,000 3,000 2.0% 100,000 2,000 50
Slide 6: New Mexico Economic Conditions
New Mexico Economic Conditions PNM Customers and Retail Energy Sales(1) Energy Sales Customers Albuquerque Metro rolling 12 month 600,000 employment growth in positive territory 10,000 500,000 Total Customers Energy Sales, GWh 8,000 Employment Growth Rates (12 month moving average) 400,000 2.0% 6,00
Slide 7: NMPRC BART Filing
NMPRC BART Filing PNM’s BART Filing will be submitted to the NMPRC in December and will address: • Retirement of San Juan Units 2 and 3 and recovery of undepreciated investments ($205M) • Installation of SNCR technology on San Juan Units 1 and 4 ($82M) • CCNs for Palo Verde Unit 3 and at least 78
Slide 8: 2014 Guidance
2014 Guidance Chuck Eldred Executive Vice President and CFO
Slide 9: Consolidated Guidance (Ongoing)
Consolidated Guidance (Ongoing) 2013 Guidance Range(1) $1.35 Consolidated EPS $1.41 2014 Guidance Range $1.42 Consolidated EPS $1.52 PNM TNMP Corp/Other $1.15 - $1.21 $0.38 - $0.40 ($0.11) – ($0.09) (1) Guidance range originally $1.32 - $1.42. Narrowed to $1.35 - $1.41 on November 1, 2013. 9
Slide 10: PNM Guidance (Ongoing)
PNM Guidance (Ongoing) PNM EPS $1.15 - $1.18 $1.15 - $1.21 $1.14 2012 2013E 2014E Year-over-Year 2013E – 2014E Key Performance Drivers ∆ EPS Renewable rider $0.03 Palo Verde Unit 3 $0.03 Delta Person Generation Station $0.02 AFUDC $0.01 - $0.02 FERC Generation Gallup contract $0.01 - $0.02 FERC Tran
Slide 11: TNMP Guidance (Ongoing)
TNMP Guidance (Ongoing) TNMP EPS $0.38 - $0.40 $0.33 - $0.35 $0.33 2012 2013E 2014E Year-over-Year 2013E – 2014E Key Performance Drivers ∆ EPS TCOS rate relief $0.04 Load $0.01 - $0.03 2013 Weather $0.01 Depreciation and property tax ($0.03) - ($0.02) 11
Slide 12: Future Earnings Growth Drivers
Future Earnings Growth Drivers 2015 2016 PNM Renewable rider rate increase January PV1 half-priced lease payments, $16.5M annual January lease reduction (until next general rate case) Rate increase—would include potential purchase January of PV2 leases, renewables and SNCR equipment TNMP TCOS rate i
Slide 13: Total Capital Spending and Rate Base Growth
Rate Base Growth 2014 – 2018 Total Capital Plan: $2.1B PNM Rate Base CAGR: 5 - 7% TNMP Rate Base CAGR: 5 - 7% Total Capital Spending $511 $524 (In millions) $14 $18 $76 $443 $14 $130 $86 $94 $330 $49 $14 $302 $72 $14 $136 $88 $154 $106 $71 $65 $263 $213 $189 $195 $201 $159 $166 $180 $157 $117 2014 2
Slide 14: Strong Dividend Growth
Strong Dividend Growth Dividend rate: The annual common stock dividend raised by 12% in December 2013 to $0.74 per $0.74 (1) share Payout ratio: Long-term target: 50% - 60% payout ratio 50% (2) Dividend yield: • Expect above industry average dividend growth while staying in the target payout rat
Slide 15: 2014 Strategic Goals and Objectives
2014 Strategic Goals and Objectives Earn authorized returns Regulatory Success Operational Excellence Customer Satisfaction Cost Control Deliver top Strengthen quartile total credit ratings returns 15
Slide 16: Questions & Answers
Questions & Answers
Slide 17: Appendix
Appendix
Slide 18: PNM Assumptions
PNM Assumptions 2014 amounts shown are before tax Assumptions 2014 Weather - (1%) to 0% Load 1% = $0.05 Palo Verde Unit 3 sales price ($/MWh) ~$37 O&M increase - Outage costs $15M PV3 NDT gains $6M - $9M Tax rate 36.5% Average PNM Resources diluted shares outstanding 80.4M 18
Slide 19: TNMP Assumptions
TNMP Assumptions 2014 amounts shown are before tax Assumptions 2014 Weather - 1.0% - 3.0% Load 1% = $0.01 O&M increase - Tax rate 36.3% Average PNM Resources diluted shares outstanding 80.4M 19
Slide 20: Corporate and Other Guidance (Ongoing)
Corporate and Other Guidance (Ongoing) Corporate and Other EPS ($0.16) ($0.13) – ($0.12) ($0.11) – ($0.09) 2012 2013E 2014E Year-over-Year 2013E – 2014E Key Performance Drivers and Assumptions ∆ EPS Interest $0.02 - $0.03 Tax rate 36.5% Average PNM Resources diluted shares outstanding 80.4M 20
Slide 21: Rate Base
Rate Base Allowed Return Equity Ratio 2014 Average Rate Base PNM Retail and renewables 10% 50% $2B FERC Transmission 10% 50% $170M FERC Generation 9%–10% 50% $70M TNMP 10.125% 45% $620M Total $2.8B PNM Avg. Rate Base TNMP Avg. Rate Base (In billions) (In millions) $2.5 $2.2 $2.2 $2.1 $620 $690 $720
Slide 22: EBITDA and Quarterly Earnings Distribution Guidance (Ongoing)
EBITDA and Quarterly Earnings Distribution Guidance (Ongoing) Ongoing EBITDA (In millions) 2013E 2014E Consolidated PNMR $469 - $477 $468 - $486 PNM $345 - $349 $329 - $338 TNMP $121 - $123 $127 - $131 2014 Quarterly Earnings Distribution 45% 26% 13% 16% Q1 2014E Q2 2014E Q3 2014E Q4 2014E 22
Slide 23: Liquidity and Capital Structure
Liquidity and Capital Structure No equity issuance planned with current capital expenditure schedule In 2013, PNM, TNMP, and PNM Resources revolving credit facilities were extended to 2018 Targeting cap structure of: 50/50 at PNM and 55/45 at TNMP PNM and TNMP have access to intercompany loans
Slide 24: PNM Plant EAF and Outages
PNM Plant EAF and Outages 2014 - 2015 Outage Schedule 87.3% 89.9% 91.3% Duration Time Unit 80.9% in Days Period 75.2% 77.4% San Juan 1 13 Q1 2014 2 29 Q1 2014 1 46 Q1 2015 4 46 Q4 2015 Four Corners 5 38 Q2 2014 4 13 Q4 2014 5 73 Q1 – Q2 2015 San Juan Four Corners Palo Verde Palo Verde 12 months ende
Slide 25: San Juan BART Timeline and Update
San Juan BART Timeline and Update Currently Next Step Submit NMPRC filing for retirement and potential Awaiting EPA review and approval replacement power Expected Expected Actual Action Item Start Completion Completion NMED develops new SIP and submits to EIB May 21, 2013 EIB approval of new SIP sub
PNM Resources — Investor Presentation (December 2013) on 6ix