Txnm Energy, Inc. · NYSE:TXNM
Txnm Energy — PNM Resources — FY2014 Earnings Presentation
33 slides from Txnm Energy's earnings presentation, Feb 27, 2015
Slide 1: 2014 Earnings Presentation
2014 Earnings Presentation February 27, 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: Q4 2014 Financial Results and Company Updates
Q4 2014 Financial Results and Company Updates Q4 2014 Q4 2013 YE 2014 YE 2013 Ongoing EPS $0.24 $0.21 $1.49 $1.41 GAAP EPS $0.24 $0.10 $1.45 $1.25 Customer Experience highlights: • PNM reliability best in 7 years • TNMP reliability best in 10 years • PNM Customer Satisfaction metrics reflect signi
Slide 5: BART Settlement Update
BART Settlement Update RSIP and BART Settlement Principal Components NMPRC Review of BART Filing Retirement of San Juan Units 2 and 3 and recovery of half of the December 20, 2013: 12/31/17 undepreciated PNM submitted filing to NMPRC investments (expected to be 2014 ‐ 2015: ~$115M) NMPRC revie
Slide 6: PNM 2016 Future Test Year General Rate Case
PNM 2016 Future Test Year General Rate Case Requested revenue increase of $107 million • Based on 2016 future test year and 10.5% ROE • Reflects $585 million increase in rate base from 2010 filing • Includes structural rate design changes, DG Interconnection fee, decoupling mechanism 2016 General
Slide 7: Regulatory Update
Regulatory Update Filing Action Timing Docket No. PNM: BART Filing Filed December 20, 2013 Proposed settlement filed October 1, 2014 13‐00390‐UT Final approval expected Q2 2015 2015 Renewable Plan Filed June 2, 2014 Final approval received November 26, 2014 14‐00158‐UT 2016 Future Test Year Filed De
Slide 8: Financial Overview
Financial Overview Chuck Eldred Executive Vice President and CFO
Slide 9: 2014 Ongoing EPS: Guidance vs Actual
2014 Ongoing EPS Consolidated Guidance: $1.44 ‐ $1.51 Actual: $1.49 PNM Guidance: $1.11 ‐ $1.15 Actual: $1.10 TNMP Guidance: $0.43 ‐ $0.45 Actual: $0.47 Corporate/Other Guidance: ($0.10) – ($0.09) Actual: ($0.08) 9
Slide 10: Load and Economic Conditions
Load and Economic Conditions Regulated Retail Energy Sales (weather‐normalized) PNM % of FY Q4 2014 vs. YE 2014 vs. TNMP 2014 Sales Q4 2013 YE 2013 % of FY Q4 2014 vs. YE 2014 vs. Residential 39% (1.0%) (0.7%) 2014 Sales Q4 2013 YE 2013 Commercial 47% (1.7%) (1.3%) Residential 50% (1.1%) 1.0% Indust
Slide 11: Q4 2014 Financial Summary
Q4 2014 Financial Summary TS Ongoing EPS $0.02 ($0.01) $0.24 $0.21 Cor — porate TNMP Q4 2013 Q4 2014 PNMOResources 11
Slide 12: PNM and TNMP: Q4 2014 vs Q4 2013 EPS (Ongoing)
PNM and TNMP: Q4 2014 vs Q4 2013 EPS (Ongoing) PNM Q4 2014 Key Performance Drivers ∆ EPS $0.16 Rate Relief $0.02 $0.14 PNM Resources Foundation Contribution in 2013 $0.02 AFUDC $0.01 PV3 Market Prices $0.01 Gallup Contract ($0.01) Load ($0.01) Outage Costs ($0.01) Weather ($0.02) Q4 2013 Q4 2014 Oth
Slide 13: 2015 Guidance (Ongoing)
2015 Guidance (Ongoing) 2015 Guidance Range: $1.50 Consolidated EPS $1.62 PNM TNMP Corp/Other $1.14 ‐ $1.21 $0.45 ‐ $0.48 ($0.09) – ($0.07) 13
Slide 14: PNM Resources: Earnings and Dividend Growth
PNM Resources: Earnings and Dividend Growth 7%‐9% Earnings Growth Expect above industry 2015‐2019 average dividend growth while targeting the 50%‐60% payout ratio range $1.62 $1.49 $1.50 $1.31 $1.41 $0.74 $0.80 $0.66 Dec ‘14 $0.58 Dec ‘13 Feb ‘12 Feb ‘13 2012 2013 2014 2015E 2016E 2017E 2018E 2019E
Slide 15: Questions & Answers
Questions & Answers
Slide 16: Appendix
Appendix
Slide 17: 2014 Financial Summary
2014 Financial Summary TS Ongoing EPS 1.49 EEE PNM TNMP Corporate 2013 2014 PNI/O)Resources 17
Slide 18: PNM and TNMP: YE 2014 vs YE 2013 EPS (Ongoing)
PNM and TNMP: YE 2014 vs YE 2013 EPS (Ongoing) YE 2014 Key Performance Drivers ∆ EPS PNM Rate Relief and Off System Sales Sharing $0.05 PV3 Market Prices $0.03 $1.16 $1.10 Nuclear Decommissioning Trust $0.02 PNM Resources Foundation Contribution in 2013 $0.02 Rio Bravo (Formerly Delta) Purchase $0.0
Slide 19: 5-Year Capital Forecast
5‐Year Capital Forecast 2015 – 2019 Total Capital Plan: $2.2B PNM 2014‐2019 Rate Base CAGR: 5 ‐ 7%(1) TNMP 2014‐2019 Rate Base CAGR: 5 ‐ 7% $569 (In millions) $24 $514 $19 $121 $444 Palo Verde $93 $15 Unit 3 added to rate base $380 $79 $93 $165 $15 $95 $300 $105 $63 $14 $122 $106 $43 $308 $65 $121 $
Slide 20: 2016 Potential Earnings Power
2016 Potential Earnings Power 2015 Guidance Mid Point 2016 Earnings Potential Allowed Return / Equity Ratio Avg Rate Avg Rate Return EPS Growth EPS Base Base PNM Retail (1) 10% / 50% $2.0 B 8.4% $1.02 $2.4 B $0.47 $1.49 PNM Renewables 10% / 50% $105 M 10.0% $0.07 $100 M ($0.01) $0.06 PNM FERC (2) 9‐
Slide 21: 2019 Potential Earnings Power
2019 Potential Earnings Power 2016 Earnings Potential 2019 Earnings Potential Avg Rate Base EPS Avg Rate Base Growth EPS PNM Retail (1) $2.4 B $1.49 $2.6 B $0.11 $1.60 PNM Renewables $100 M $0.06 $85 M ($0.01) $0.05 PNM FERC (2) $235 M $0.07‐$0.09 $270 M $0.01 $0.08‐$0.10 PV3 (3) ($0.05) Included in
Slide 22: Weather Impact
Weather Impact PNM Q4 2014 Q4 2013 2014 Normal(1) Heating Degree Days 1,441 1,743 1,575 Cooling Degree Days 4 2 19 EPS Impact ($0.01) $0.01 compared to normal TNMP Q4 2014 Q4 2013 2014 Normal(1) Heating Degree Days 688 880 640 Cooling Degree Days 255 224 287 EPS Impact $0.00 $0.01 compared to normal
Slide 23: PNM Plant EAF and Outages
PNM Plant EAF and Outages 2015 ‐ 2016 Outage Schedule Duration Time Unit in Days Period San Juan 1 46 Q1 2015 4 44 Q4 2015 3 14 Q4 2015 Four Corners 5 75 Q4 2015 4 21 Q1‐Q2 2016 5 10 Q4 2016 Palo Verde 3 30 Q2 2015 2 30 Q4 2015 1 30 Q2 2016 3 30 Q4 2016 23
Slide 24: Balance Sheet and Credit Metrics
Balance Sheet and Credit Metrics
Slide 25: Liquidity as of February 20, 2015
Liquidity as of February 20, 2015 PNM Corporate/ Resources PNM TNMP Other Consolidated Financing Capacity(1): (In millions) Revolving credit facilities $450.0 $75.0 $300.0 $825.0 As of 2/20/15: Short‐term debt and LOC balances $28.2 $20.1 $8.5 $56.8 Remaining availability 421.8 54.9 291.5 768.2 Inve
Slide 26: Selected Balance Sheet Information
Selected Balance Sheet Information (In millions) Dec 31, 2013 Dec 31, 2014 Long‐Term Debt (incl. current portion) PNM $1,290.6 $1,490.7 TNMP 336.0 365.7 Corporate/Other 118.8 118.8 Consolidated $1,745.4 $1,975.1 Total Debt (incl. short‐term) (1) PNM $1,339.8 $1,490.7 TNMP 336.0 370.7 Corporate/Other
Slide 27: Debt Ratings
Debt Ratings S&P PNMR PNM TNMP Debt rating BBB‐(1) BBB(1) A‐(2) Outlook Positive Positive Positive Moody’s PNMR PNM TNMP Debt rating Baa3(1) Baa2(1) A2(2) Outlook Positive Positive Positive (1) Senior unsecured debt (2) Senior secured debt 27
Slide 28: Environmental Compliance
Environmental Compliance
Slide 29: San Juan BART Timeline
San Juan BART Timeline Expected Actual Action Item Completion Completion EIB approval of RSIP submitted by NMED September 5, 2013 Submitted RSIP to EPA for approval October 18, 2013 EPA review and approval of RSIP Application deemed complete by EPA December 17, 2013 Preliminary approval by EPA A
Slide 30: Environmental Control Equipment at Coal Units
Environmental Control Equipment at Coal Units PNM Share Low NOx Activated Coal Unit Capacity Burners/ Carbon SNCR (2) SCR (2) Baghouse (3) Scrubbers (MW) Overfired Air Injection (1) San Juan Unit 1 170 X X Expected X X 2016 San Juan Unit 2 170 X X X X San Juan Unit 3 248 X X X X Expected San Juan Un
Slide 31: Impact of Proposed Environmental Regulation
Impact of Proposed Environmental Regulation Estimated Compliance Costs Comments (PNM Share) San Juan Generating Station Clean Air Act – Regional Haze(1) (State $81M SNCR technology on 2 units; Retire 2 units. Alternative) – SNCR On November 25, 2014, EPA released a proposed rule that would revise th
Slide 32: Impact of Proposed Environmental Regulation
Impact of Proposed Environmental Regulation Estimated Compliance Costs Comments (PNM Share) Four Corners (Units 4 and 5) Final BART determination filed with EPA on December 30, 2013. Impact to Clean Air Act – Regional Haze ‐ SCR $80M PNM: SCR controls for NOx on Units 4 & 5. On November 25, 2014, EP
Slide 33: EPA's Proposed Clean Power Plan
EPA’s Proposed Clean Power Plan The goal of the plan is an estimated 30% reduction in CO2 emissions from the U.S. electric power sector in 2030, 10 New Mexico Facilities Affected relative to 2005 levels. Coal Plants Requires each state to develop and implement a state plan to reduce its CO2 San Ju