Txnm Energy, Inc. · NYSE:TXNM
Txnm Energy — PNM Resources — Q3 2013 Earnings Presentation
31 slides from Txnm Energy's earnings presentation, Nov 1, 2013
Slide 1: Q3 2013 Earnings Presentation
Q3 2013 Earnings Presentation November 1, 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: 2013 ongoing earnings guidance range narrowed to $1.35 - $1.41
Q3 2013 Financial Results and Company Updates Ongoing EPS GAAP EPS $1.20 $1.00 $1.20 $1.18 $1.15 $1.20 $0.80 $0.60 $0.40 $0.64 $0.69 $0.68 $0.72 $0.20 $0.00 2013 2012 2013 2012 YTD Q3 2013 ongoing earnings guidance range narrowed to $1.35 - $1.41 EPS shown on a diluted basis 4
Slide 5: Load and Economic Conditions
Load and Economic Conditions Regulated Retail Energy Sales (weather-normalized and leap-year adjusted) PNM(1) TNMP(2) % of Q3 2013 vs. YTD 2013 vs. % of Q3 2013 vs. YTD 2013 vs. Sales Q3 2012 YTD 2012 Sales Q3 2012 YTD 2012 Residential ~35% 2.0% (0.4%) Residential ~50% 4.6% 0.3% Commercial ~45% (1.3
Slide 6: Regulatory Update
Regulatory Update Filing Action Timing Docket No. NMPRC Energy Efficiency Plan Filed October 5, 2012 November 2013 12-00317-UT NMPRC Delta Person CCN (peaking capacity) Filed January 3, 2013 Approved June 26, 2013 13-00004-UT Close expected Q1 2014 NMPRC La Luz CCN (peaking capacity) Filed May 17, 2
Slide 7: 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
Slide 8: Expected NMPRC BART Filing Process
Expected NMPRC BART Filing Process Timeline Components December 2013: Retirement San Juan Units 2 and 3 PNM submits filing to NMPRC and recovery of undepreciated December 2013 – September 2014: amounts NMPRC review period CCNs for Palo Verde Unit 3 and October 2014 – March 2015: proposed o
Slide 9: Financial Overview
Financial Overview Chuck Eldred Executive Vice President and CFO
Slide 10: Q3 2013 Financial Summary
Q3 2013 Financial Summary Ongoing EPS $0.02 ($0.07) $0.69 $0.64 TNMP PNM Q3 2012 Q3 2013 10
Slide 11: PNM and TNMP: Q3 2013 vs Q3 2012 EPS (Ongoing)
PNM and TNMP: Q3 2013 vs Q3 2012 EPS (Ongoing) PNM Q3 2013 Key Performance Drivers ∆ EPS $0.61 $0.54 PV3 Pricing $0.01 Navajo Workforce Training Initiative ($0.01) Transmission ($0.01) Load ($0.02) Weather ($0.04) Q3 2012 Q3 2013 TNMP Q3 2013 Key Performance Drivers ∆ EPS $0.11 $0.13 Rate Relief $0.
Slide 12: 2013 Guidance (Ongoing)
2013 Guidance (Ongoing) Narrowed 2013 Guidance Range: $1.35 Consolidated EPS $1.41 PNM TNMP Corp/Other $1.15 - $1.18 $0.33 - $0.35 ($0.13) – ($0.12) 12
Slide 13: Delivering Top Quartile Returns
Delivering Top Quartile Returns Long-term goal: Provide top quartile total return to shareholders Total return is 5-year ongoing EPS growth + 5-year average dividend yield Top quartile total return currently equal (1) to an average annual rate of 10% - 13% over a 5 year period Earnings Growth •S
Slide 14: 2013 Checklist
2013 Checklist Continue progress toward: Improving FERC earnings Optimizing the timing of TX TCOS filings Implementing San Juan BART agreement Maintain strong electric reliability and power plant availability Control O&M and capital costs Continue execution of plan to achieve top quartile tot
Slide 15: Questions & Answers
Questions & Answers
Slide 16: Appendix
Appendix
Slide 17: PNM Plant EAF and Outages
PNM Plant EAF and Outages 87.3% 89.9% 91.3% 80.9% 2013 - 2014 Outage Schedule 75.2% 77.4% Duration Time Unit in Days Period San Juan 1 12 Q1 2014 2 28 Q1 2014 Four Corners 5 13 Q2 2014 4 13 Q4 2014 Palo Verde San Juan Four Corners Palo Verde 3 49 Q4 2013 12 months ended 9/30/12 2 34 Q2 2014 12 month
Slide 18: Core Capital Spending
Core Capital Spending 2013 – 2017 Core Capital Plan: $1.8B PNM Rate Base CAGR: 3% - 5% 2013 Expected Depreciation: $153M TNMP Rate Base CAGR: 7% - 9% $483 (In millions) $14 $130 $383 $352 $14 $22 $76 $47 $292 $91 $13 $280 $13 $136 $88 $49 $140 $93 $62 $104 $65 $153 $158 $129 $109 $86 2013 2014 2015
Slide 19: Capital Spending Under Revised State Plan
Capital Spending Under Revised State Plan Estimated incremental RSIP(1) capital: $362M(2) PNM rate base CAGR with RSIP(2): 4% - 6% Revised State Plan (In millions) • Shut down units 2 and 3 $517 By year-end 2017 $33 $491 $1 $20 • Install SNCRs on units 1 and 4 $428 $87 By early 2016 $362 $355
Slide 20: Potential Earnings Power
Potential Earnings Power Minimizing regulatory lag, improving market prices, and reducing Corporate debt could improve current EPS by $0.15 to $0.24 without rate base growth Mid Point Potential Earnings Power 2013 Guidance Range(1) Growth Rate Potential Allowed Potential Base Allowed Resulting Achie
Slide 21: Weather Impact
Weather Impact PNM Q3 2013 Q3 2012 2013 Normal(1) Heating Degree Days 23 8 14 Cooling Degree Days 997 1,109 1,039 EPS Impact ($0.01) $0.03 compared to normal TNMP Q3 2013 Q3 2012 2013 Normal(1) Heating Degree Days 1 0 0 Cooling Degree Days 1,761 1,722 1,741 EPS Impact $0.00 $0.00 compared to normal
Slide 22: Liquidity as of October 25, 2013
Liquidity as of October 25, 2013 PNM Corporate/ Resources PNM TNMP Other Consolidated Financing Capacity(1): (In millions) Revolving credit facility $400.0 $75.0 $300.0 $775.0 As of 10/25/13: Short-term debt and LOC balances $3.2 $7.3 $8.6 $19.1 Remaining availability 396.8 67.7 291.4 755.9 Invested
Slide 23: Regulatory Information
Regulatory Information
Slide 24: NMPRC Commissioners and Districts
NMPRC Commissioners and Districts NMPRC Districts and Term PNM Service Areas Name District Party Ends Karen Montoya District 1 2016 Democrat Patrick Lyons District 2 2014 Republican Valerie Espinoza District 3 2016 Democrat Vice Chair Theresa Becenti-Aguilar District 4 2014 Democrat Ben Hall Distric
Slide 25: Public Utility Commission of Texas Commissioners
Public Utility Commission of Texas Commissioners Term Term Name Party Began Ends Donna Nelson Aug. 2008 Aug. 2015 Republican Chairman Kenneth Anderson Sept. 2008 Aug. 2017 Republican Brandy Marty Aug. 2013 Aug. 2019(1) Republican Commissioners are appointed by Governor of Texas. Length of term is de
Slide 26: Balance Sheet and Credit Metrics
Balance Sheet and Credit Metrics
Slide 27: Selected Balance Sheet Information
Selected Balance Sheet Information (In millions) Dec 31, 2012 Sep 30, 2013 Long-Term Debt (incl. current portion) PNM $1,215.6 $1,290.6 TNMP 311.6 336.1 Corporate/Other 145.1 122.1 Consolidated $1,672.3 $1,748.8 Total Debt (incl. short-term) (1) PNM $1,236.7 $1,290.6 TNMP 311.6 348.1 Corporate/Other
Slide 28: Credit Ratings
Credit Ratings S&P PNMR PNM TNMP Issuer debt rating BBB-(1) BBB(1) A-(2) Outlook Stable Stable Stable Moody’s PNMR PNM TNMP Debt rating Ba1(1) Baa3(1) A3(2) Outlook Positive Positive Positive (1) Senior unsecured debt (2) Senior secured debt A-13
Slide 29: Environmental Compliance
Environmental Compliance
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 X X San Juan Unit 2 170 X X X X San Juan Unit 3 248 X X X X San Juan Unit 4 195 X X X X Four C
Slide 31: Impact of Proposed Environmental Regulation
Impact of Proposed Environmental Regulation Estimated Compliance Costs Comments (PNM Share) San Juan Generating Station SNCR technology on 2 units; Retire 2 units Clean Air Act – Regional Haze(1) (State Alternative) – SNCR ~$63M See “Capital Spending Under Revised State Plan” slide Included in SNCR