Txnm Energy, Inc. · NYSE:TXNM
Txnm Energy — PNM Resources — FY2021 Earnings Presentation
31 slides from Txnm Energy's earnings presentation, Feb 3, 2022
Slide 1: 2021 Preliminary Earnings and Earnings Guidance Review
2021 Preliminary Earnings and Earnings Guidance Review February 3, 2022
Slide 2: Contact Information and Safe Harbor Statement
Contact Information and Safe Harbor Statement Investor Relations Contact Information Lisa Goodman Director, Investor Relations and Shareholder Services 1-505-241-2160 Lisa.Goodman@pnmresources.com Preliminary Unaudited Financial Results The preliminary unaudited financial results for the fiscal year
Slide 3: Overview and Highlights
Overview and Highlights
Slide 4: Financial Results and Company Updates
Financial Results and Company Updates 2021 Preliminary Financial Results 2021 2020 2021 earnings results Clean Energy GAAP EPS $2.27 $2.15Strong Financial Ongoing EPSFocus $2.45 $2.28 Profile Company Focus Pending Merger Appeal Guidance 2022 and 2023 earnings • 2022 Guidance of $2.50 - $2.60 per dil
Slide 5: Pending Merger Agreement with Avangrid
Pending Merger Agreement with Avangrid Merger agreement extended to April 2023 • Retains benefits of $300 million negotiated in New Mexico • Broad community and intervenor support remain in place for merger approval Clean Energy Strong Financial Focus Profile Strategic Rationale • Benefits of scale,
Slide 6: 2021 ESG Highlights
2021 ESG Highlights PNM Names First Community Environmental Chief Environmental Leadership Support Officer • PNM resource portfolio • Maureen Gannon, 25-years • TNMP recognized grows to over 30% of experience and related by EEI with both renewables and over 40% the Emergency achievements carbon-free
Slide 7: Financial Updates
a oe a eA Financial Updates
Slide 8: Highlights of Preliminary 2021 Ongoing Earnings Results
Highlights of Preliminary 2021 Ongoing Earnings Results $0.27 $0.06 ($0.16) $2.45 $2.28 Clean Energy Strong Financial Corporate Dilutive Impact Utility Focus of Additional Profile Interest Growth Savings Shares 2020 2021 EPS 2020 2021 Change PNM Resources $2.28 $2.45 $0.17 PNM $1.76 $1.85 $0.09 TNMP
Slide 9: Financial Outlook
Financial Outlook Ongoing Earnings Guidance Through 2023 • 2022 ongoing guidance midpoint of $2.55 per diluted share • 2023 ongoing guidance midpoint of $2.68 per diluted share Clean Energy Strong Financial Executing our financial plans $2.60 - $2.75 Focus $2.45 $2.50 - $2.60 Profile • Earnings guid
Slide 10: Load and Economic Conditions
Load and Economic Conditions PNM Growth driven by economic expansion Retail load growth driven by expansion of existing PNM 2021 2022E 2023E Industrial customers in 2022 and 2023 Residential and Commercial load largely returns to Total Retail Load(1) 0.3% 2% - 3% 2% - 3% pre-COVID levels in 2022
Slide 11: Updated Investment Plan 2022 – 2025
Updated Investment Plan 2022 – 2025 Investment plan of $3.5b focused on T&D infrastructure, $0.5b added to support economic expansion and clean energy transition $948 $896 $33 $36 $835 $32 $779 $31 $426 $425 $381 $299 $55 $50 (in millions) $80 $65 $355 $433 $358 $399 2022 2023 2024 2025 PNM T&D PNM
Slide 12: Rate Base Growth
Rate Base Growth Rate base growth reflects T&D infrastructure investments Average Rate Base Base (in billions) 2020 2021 2022 2023 2024 2025 PNM transition out of coal PNM Retail Investments(1) $2.7 $2.7 $2.9 $3.1 $3.2 $3.3 generation maintains stable, Coal Plant Retirements(2,3) ($0.1) ($0.3) ($0.3
Slide 13: 2022 Earnings Guidance (Ongoing)
2022 Earnings Guidance (Ongoing) Utility growth driven by: 2022 Earnings Guidance • PNM: Addition of Western Spirit transmission line, FERC formula rate recovery and load growth $2.50 Consolidated EPS $2.60 are offset by costs associated with new capital investments (depreciation, property tax and i
Slide 14: 2023 Earnings Guidance (Ongoing)
2023 Earnings Guidance (Ongoing) Utility Growth: • ~75% of all rate base growth 2023 Earnings Guidance recovered through existing FERC formula rates or TNMP rate riders $2.60 Consolidated EPS $2.75 • Increased depreciation, property tax and interest expense from new capital Segment guidance to be pr
Slide 15: 2022 Dividend Increase and Payout Ratio
2022 Dividend Increase and Payout Ratio Annual dividend targets middle of • Board of Directors a 50% - 60% payout ratio range increased the common dividend by $0.08 to $2.55 $2.45 $0.3475 per quarter $2.28 $2.16 • Indicated annual rate $2.00 of $1.39 per share represents 6.1% $1.39 increase $1.31 $1
Slide 16: Focusing on Managing our Business During the Pending Merger
Focusing on Managing our Business During the Pending Merger Clean Energy Critical Electricity Strong Corporate Portfolio Infrastructure Profile PNM progress towards T&D investments industry-leading goal of reliably support growth Delivering financial 100% emissions-free and integration of clean resu
Slide 17: Appendix
Appendix
Slide 18: PNM and TNMP Regulatory Agenda
PNM and TNMP Regulatory Agenda Filing Action Timing Docket No. NMPRC issued order denying stipulation on Dec. 8, 2021; PNM filed appeal with NM No statutory timeframe for appeal, Merger transaction approval S-1-SC-39152 Supreme Court, Statement of Issues filed on expect a ~12- to 18-month process Fe
Slide 19: Q4 and FY 2021 vs 2020 EPS (Ongoing): PNM
Q4 and FY 2021 vs 2020 EPS (Ongoing): PNM • Higher FERC transmission margins due to increased network demand PNM $1.76 $1.85 and the addition of new customers • Refinancing of debt at lower interest rates in 2020 • Increased decommissioning / $0.09 $0.15 reclamation trust gains • Lower coal mine rec
Slide 20: Q4 and FY 2021 vs 2020 EPS (Ongoing): TNMP
Q4 and FY 2021 vs 2020 EPS (Ongoing): TNMP TNMP $0.74 $0.75 • Implementation of semi-annual TCOS filings and the annual DCOS filings $0.15 $0.13 • Increased demand-based load was partially offset by lower volumetric Q4 2020 Q4 2021 FY 2020 FY 2021 load and milder temperatures • Higher depreciation a
Slide 21: Q4 and FY 2021 vs 2020 EPS (Ongoing): Corporate
Q4 and FY 2021 vs 2020 EPS (Ongoing): Corporate Corporate ($0.09) ($0.07) ($0.22) ($0.15) • Interest expense savings from the paydown of debt with proceeds from the December Q4 2020 Q4 2021 FY 2020 FY 2021 2020 issuance of additional shares and lower interest rates 2021 Key Performance Drivers Q4 FY
Slide 22: Weather Impacts
Weather Impacts Q4 Q4 Q4 FY FY FY PNM: PNM 2021 2020 Normal(1) 2021 2020 Normal(1) • Milder temperatures in Cooling Degree Days 11 23 14 1,505 1,691 1,484 Q4 2021 Heating Degree Days 599 915 872 1,866 2,067 2,061 • 2021 cooling degree-days near normal, above-normal Net EPS Impact compared to Normal
Slide 23: Quarterly Earnings Distribution Guidance (Ongoing)
Quarterly Earnings Distribution Guidance (Ongoing) 2022 Earnings Guidance $2.50 Consolidated EPS $2.60 PNM TNMP Corp/Other $1.80 – $1.86 $0.86 – $0.88 ($0.16) – ($0.14) 2022 Quarterly Ongoing Earnings Distribution 51% 16% 21% 12% Q1 Q2 Q3 Q4 23
Slide 24: PNM EPS Guidance (Ongoing)
PNM EPS Guidance (Ongoing) PNM $1.85 $1.80 - $1.86 2021 2022E 2021 vs 2022E Key Year-over-Year EPS Performance Drivers Changes Western Spirit (net of costs/financing) $0.17 - $0.18 FERC transmission margin $0.01 - $0.03 Retail load / weather (return to normal) $0.00 - $0.02 Interest expense ($0.02)
Slide 25: TNMP EPS Guidance (Ongoing)
TNMP EPS Guidance (Ongoing) TNMP $0.75 $0.86 - $0.88 2021 2022E 2021 vs 2022E Key Year-over-Year EPS Performance Drivers Changes Transmission rate relief (TCOS) $0.16 - $0.17 Distribution rate relief (DCOS) $0.10 - $0.11 Retail load / weather (return to normal) $0.02 - $0.03 O&M increases ($0.02) –
Slide 26: Corporate and Other EPS Guidance (Ongoing)
Corporate and Other EPS Guidance (Ongoing) Corporate and Other ($0.15) ($0.16) – ($0.14) 2021 2022E 2021 vs 2022E Key Year-over-Year EPS Performance Drivers Changes Higher effective tax rate $0.01 - $0.02 Interest expense ($0.03) – $0.00 26
Slide 27: 2022 Assumptions
2022 Assumptions Amounts shown are before tax, unless otherwise noted 2022E(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: Liquidity as of January 21, 2022
Liquidity as of January 21, 2022 Corporate/ PNM Resources PNM TNMP Other Consolidated Financing Capacity(1): (In millions) Revolving credit facilities $440.0 $75.0 $300.0 $815.0 As of 1/21/22: Short-term debt and LOC - 12.0 75.1 87.1 balances Remaining availability 440.0 63.0 224.9 727.9 Invested ca
Slide 30: Selected Balance Sheet Information
Selected Balance Sheet Information (In millions) Dec. 31, 2020 Dec. 31, 2021 Long-Term Debt (incl. current portion) (1) PNM $1,696.6 $1,881.1 TNMP 853.7 918.1 Corporate/Other 744.9 899.7 Consolidated $3,295.2 $3,698.9 Total Debt (incl. short-term) (1,2) PNM $1,706.6 $1,888.5 TNMP 853.7 918.5 Corpora
Slide 31: Credit Ratings
Credit Ratings PNMR Consolidated S&P Moody’s Issuer rating BBB Baa3 Outlook Positive Stable Senior unsecured rating BBB- Baa3 PNM S&P Moody’s Issuer rating BBB Baa2 Outlook Positive Stable Senior unsecured rating BBB Baa2 TNMP S&P Moody’s Issuer rating BBB+ A3 Outlook Positive Negative Senior secure