Txnm Energy, Inc. · NYSE:TXNM
Txnm Energy — PNM Resources — Investor Presentation (December 2017)
28 slides from Txnm Energy's investor presentation, Dec 8, 2017
Slide 1: 2017 Financial Update
2017 Financial Update December 8, 2017
Slide 2: Safe Harbor Statement
Safe Harbor Statement Statements made in this presentation that relate to future events or PNM Resources, Inc.’s (“PNMR”), Public Service Company of New Mexico’s (“PNM”), or Texas‐New Mexico Power Company’s (“TNMP”) (collectively, the “Company”) expectations, projections, estimates, intentions, goal
Slide 3: Opening Remarks and Overview
Opening Remarks and Overview Pat Vincent‐Collawn Chairman, President and CEO
Slide 4: Earnings Guidance and Dividend Increase
Earnings Guidance and Dividend Increase Ongoing Earnings Guidance: • 2018 Ongoing EPS Guidance of $1.70 ‐ $1.80 • Transition year reflects phase‐in of PNM retail rate relief • 2019 Ongoing EPS Guidance of $2.00 ‐ $2.16 Dividend Increase: • Board increased common dividend by $0.09 to indicated annual
Slide 5: Regulatory Update
Regulatory Update Filing Action Timing Docket No. Suspension period currently ends Recommended decision PNM 2018 General Rate Case January 6, 2018; NMPRC has ability to 16‐00276‐UT issued October 31, 2017 extend to March 6, 2018 Approved November 15, PNM 2018 Renewable Plan 2017; motion for rehearin
Slide 6: 2018 and 2019 Guidance
2018 and 2019 Guidance Chuck Eldred Executive Vice President and CFO
Slide 7: Consolidated Earnings Guidance (Ongoing)
Consolidated Earnings Guidance (Ongoing) 2017 PNM Resources Ongoing Earnings Guidance increased to $1.85 to $1.90 PNM: $1.41‐$1.44 TNMP: $0.52‐$0.53 Corp/Other: ($0.08)‐($0.07) 2018 Earnings Guidance $1.70 Consolidated EPS $1.80 PNM TNMP Corp/Other $1.25‐ $1.32 $0.53 ‐ $0.55 ($0.08) – ($0.07) 2019 E
Slide 8: Load and Economic Conditions
Load and Economic Conditions Regulated Retail Energy Load and Customer Growth Forecast (weather‐normalized) PNM Forecast 2017E 2018E 2019E TNMP Forecast 2017E 2018E 2019E Residential & Commercial Load ~(0.7%) ~(0.3%) ~(0.3%) Total Volumetric Load(1) ~2.0% 2% – 3% per year Total Retail Load with Dema
Slide 9: PNM Guidance (Ongoing)
PNM Guidance (Ongoing) PNM Ongoing EPS $1.50 ‐ $1.59 $1.41 ‐ $1.44 $1.25 ‐ $1.32 $1.14 2016 2017E 2018E 2019E • The phased‐in rate settlement results in 2018 being a transitional year with the first phase of rates assumed to be effective in March. The entire rate increase is reflected in 2019 with t
Slide 10: TNMP Guidance (Ongoing)
TNMP Guidance (Ongoing) TNMP Ongoing EPS $0.60 ‐ $0.65 $0.53 $0.52 ‐ $0.53 $0.53 ‐ $0.55 2016 2017E 2018E 2019E • Continued growth across service territory • General rate case to be filed in May 2018 based on historical 2017 test year, with rates implemented January 2019 • Continued TCOS filings to
Slide 11: Capital Forecast
Capital Forecast Targeted Consolidated 2017‐2021 Rate Base CAGR(1): 4.5% ‐ 5.5% 2018–2022 Total Capital Plan: $2.7B $681 Palo Verde $17 Unit 3 added to (In millions) rate base $170 $527 $515 $527 $58 $17 $500 $504 $34 $17 $17 $170 $116 $158 $186 $170 $170 $192 $146 $297 $173 $164 $238 $20 $53 $96 $1
Slide 12: 2019 - 2021 Potential Earnings Power
2019 ‐ 2021 Potential Earnings Power Targeted earnings growth of 6% for 2017 ‐ 2021(1) • PNM growth results from the full implementation of retail rates in 2019, the additional investments to add 50 MW of solar to meet the 20% by 2020 RPS requirement and increased FERC Transmission business to suppo
Slide 13: Liquidity and Debt Maturity Outlook
Liquidity and Debt Maturity Outlook Long‐term Debt Maturities(1) (in millions) $293 Maintain appropriate $1,060 credit metrics $172 $250 $306 Remain a solid $200 $100 investment grade 2018 2019 2020 2021 2022 and Beyond rated company PNM TNMP Corporate • Extended TNMP’s $75M revolving credit facilit
Slide 14: Tax Reform Considerations
Tax Reform Considerations PNM Resources well‐positioned for tax reform, customers benefit Provision House Senate Effect on PNM & TNMP Effect on Holding Bill Bill Company Tax Rate 20% 20% Reduced tax expense Reduced tax benefit from beginning 2018 beginning 2019 • PNM rate settlement retains any ho
Slide 15: Deliver Above Industry Average Earnings and Dividend Growth
Deliver Above Industry Average Earnings and Dividend Growth $2.16 $1.90 $1.80 $2.00 $1.65 $1.85 $1.70 $1.49 $1.64 $1.06 $0.88 $0.97 $0.74 $0.80 Dec ‘17 Dec ‘15 Dec ‘16 Dec ‘13 Dec ‘14 2014 2015 2016 2017E 2018E 2019E 2020E 2021E Ongoing EPS Indicated Annual Dividends • Annual common stock dividend r
Slide 16: Questions & Answers
Questions & Answers
Slide 17: Appendix
Appendix
Slide 18: PNM Guidance (Ongoing)
PNM Guidance (Ongoing) PNM Ongoing EPS $1.41 ‐ $1.44 $1.50 ‐ $1.59 $1.25 ‐ $1.32 $1.14 2016 2017E 2018E 2019E 2017 vs 2018 2018 vs 2019 Cumulative 2017 Key Year‐over‐Year EPS Performance Drivers Changes Changes vs 2019 Changes Retail rate settlement (includes accelerated state tax amortization)(1) $
Slide 19: PNM Guidance (Ongoing) Additional Details
PNM Guidance (Ongoing) Additional Details Proposed Settlement Agreement Retail rate settlement (includes accelerated state tax amortization) Phase I – Phase II – March 6, 2018 January 1, 2019 (in millions, except EPS) Settlement increase (net revenue increase) $26.9 $62.3 (1) Accelerated amortizatio
Slide 20: TNMP Guidance (Ongoing)
TNMP Guidance (Ongoing) TNMP Ongoing EPS $0.60 ‐ $0.65 $0.53 $0.52 ‐ $0.53 $0.53 ‐ $0.55 2016 2017E 2018E 2019E 2017 vs 2018 2018 vs 2019 Cumulative 2017 Key Year‐over‐Year EPS Performance Drivers Changes Changes vs 2019 Changes Base rate increase – TBD TBD TCOS rate relief $0.05 – $0.06 $0.02 – $0.
Slide 21: Corporate and Other Guidance (Ongoing)
Corporate and Other Guidance (Ongoing) Corporate and Other Ongoing EPS ($0.02) ($0.08) – ($0.07) ($0.08) – ($0.07) ($0.10) – ($0.08) 2016 2017E 2018E 2019E 2017 vs 2018 2018 vs 2019 Cumulative 2017 Key Year‐over‐Year EPS Performance Drivers Changes Changes vs 2019 Changes Paydown of Westmoreland loa
Slide 22: 2018 and 2019 Assumptions
2018 and 2019 Assumptions amounts shown are before tax 2018E 2019E PNM Weather $0 (normal) $0 (normal) Residential and Commercial Load 1% = $0.04 1% = $0.04 Outage costs $18M ‐ $20M $21M ‐ $23M Decommissioning/reclamation trust income, net of fees $11M ‐ $14M $11M ‐ $15M Anticipated effective tax ra
Slide 23: PNM Scheduled Plant Outages and Retirements
PNM Scheduled Plant Outages and Retirements 2018‐2019 Planned Outage Schedule San Juan Four Corners Palo Verde Duration Time Duration Time Duration Time Unit Unit Unit in Days Period in Days Period in Days Period 1 45 Q4 2018 4 95 Q1‐Q2 2018 3 30 Q2 2018 4 43 Q1‐Q2 2019 5 9 Q2 2019 2 44 Q4 2018 1 30
Slide 24: EBITDA and Quarterly Earnings Distribution Guidance (Ongoing)
EBITDA and Quarterly Earnings Distribution Guidance (Ongoing) Ongoing EBITDA (In millions) 2017E Midpoint 2018E Midpoint 2019E Midpoint Consolidated PNM Resources $589 $578 $639 PNM $404 $382 $419 TNMP $159 $166 $190 2018‐2019 Quarterly Ongoing Earnings Distribution 48% 46% 27% 25% 14% 19% 11% 10% 2
Slide 25: 2018 - 2019 Ongoing Earnings Guidance
2018 ‐ 2019 Ongoing Earnings Guidance 2018 Ongoing Earnings 2019 Ongoing Earnings Allowed Guidance Midpoint Guidance Midpoint Return / Equity Ratio Avg Rate Base Return EPS Avg Rate Base Return EPS PNM Retail (1) 9.575% / 50% $2.3 B 7.5% $1.09 $2.3 B 9.4% $1.36 Supreme Court Appeal (2) $0 ‐ $150 M $
Slide 26: 2019 - 2021 Potential Earnings Power
2019 ‐ 2021 Potential Earnings Power 2019 Ongoing Earnings 2020 Earnings 2021 Earnings Allowed Guidance Midpoint Potential Potential Return / Avg Rate Avg Rate Avg Rate Equity Ratio Return EPS EPS EPS Base Base Base PNM Retail (1) 9.575% / 50% $2.3 B 9.4% $1.36 $2.4 B $1.42 $2.5 B $1.45 Supreme Cour
Slide 27: NMPRC Commissioners and Districts
NMPRC Commissioners and Districts NMPRC Districts and PNM Service Areas District Name Term Ends Party Cynthia Hall, District 1 2020(1) Democrat Vice Chairman District 2 Patrick Lyons 2018 Republican District 3 Valerie Espinoza 2020 Democrat District 4 Lynda Lovejoy 2018(1) Democrat Sandy Jones, Dist
Slide 28: PUCT Commissioners
PUCT Commissioners Term Name Term Began Party Ends DeAnn Walker (Chair) Sept. 2017 Aug. 2021 Republican Brandy Marty Marquez Aug. 2013 Aug. 2019 Republican Arthur D’Andrea Nov. 2017 Aug. 2023 Republican Commissioners are appointed by the Governor of Texas and confirmed by the Senate. Length of term
PNM Resources — Investor Presentation (December 2017) on 6ix