Txnm Energy, Inc. · NYSE:TXNM
Txnm Energy — PNM Resources — Q2 2020 Earnings Presentation
35 slides from Txnm Energy's earnings presentation, Jul 31, 2020
Slide 1: Q2 2020 Earnings Review
November 1, 2019 Q2 2020 Earnings Review July 31, 2020
Slide 2: Safe Harbor Statement
Safe Harbor Statement Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 Statements made in this presentation for PNM Resources, Inc. (“PNMR”), Public Service Company of New Mexico (“PNM”) and Texas-New Mexico Power Company (“TNMP”) (collectively, the “Company”) that re
Slide 3: Overview
Overview Pat Vincent-Collawn Chairman, President and CEO
Slide 4: Q2 2020 Financial Results and Regulatory Highlights
Q2 2020 Financial Results and Regulatory Highlights Financial Results Q2 2020: COVID-19 Q2 2020 Q2 2019 YTD 2020 YTD 2019 load decline offset by GAAP EPSClean$0.72 Energy ($0.95) Strong$0.53 ($0.72) Financial warmer than normal Ongoing EPS Focus $0.55 $0.38 $0.73 $0.49 temperatures across Profile •
Slide 5: COVID-19 Update
COVID-19 Update Restrictions continue in New Mexico and Texas in response to rising case numbers during phased re-openings, continue to prioritize the safety of our team, caring for our customers and communities Phased re-opening began in May and expanded in June; plans suspended in July with some r
Slide 6: Environmental, Social, Governance Strategy
Environmental, Social, Governance Strategy
Slide 7: Commitment to ESG Strategy
Commitment to ESG Strategy Business priorities Investment plans Renewed focus on demonstrate ESG aligned with ESG sharing achievements principles strategy and providing data Environmental leadership Committed to a clean Launched redesigned - 100% emissions-free energy future that supports website fo
Slide 8: Demonstrating ESG Principles
Demonstrating ESG Principles ENVIRONMENTAL Emissions-free by 2040: industry-leading goal for the full elimination of carbon emissions from generation Significant progress achieved in emissions and freshwater usage Rapid growth in owned and purchased renewable resources delivered to customers SOCIAL
Slide 9: ESG Highlight: Environmental Goals
ESG Highlight: Environmental Goals Our goal: 100% Significant emission emissions-free Additional and freshwater energy by 2040 environmental reductions achieved goals • Continues to lead • 2020 on track to industry goals with the Emission Reduction Goals: report reductions FULL ELIMINATION of achiev
Slide 10: ESG Highlight: A Just Transition for San Juan Generating Station
ESG Highlight: A Just Transition for San Juan Generating Station Replacing coal Customer with cleaner A Just savings energy resources Transition • Retirement of 562 MW New Mexico Energy • Securitization of of coal-fired generation undepreciated Transition Act includes: • Replacement includes investm
Slide 11: ESG Highlight: Diversity and Inclusion, Tribal Relationships
ESG Highlight: Diversity and Inclusion, Tribal Relationships Hiring, Training, Fostering Tribal Diversity and Retaining and Relationships Inclusion in our Engaging a Diverse Financial Support Communities Workforce Overall Workforce: • Native American engineering • PNM first to support Minority Women
Slide 12: Renewed Focus on Sustainability Reporting and ESG Disclosure
Renewed Focus on Sustainability Reporting and ESG Disclosure • 2019 Sustainability Report published • Dedicated portion of website focused on additional reporting and disclosures at www.pnmresouces.com/ESG-commitment: New 2020 Reporting to include: • Annual sustainability report • Mapping reports to
Slide 13: Financial Updates
Financial Updates
Slide 14: Q2 2020 Ongoing EPS Financial Summary
Q2 2020 Ongoing EPS Financial Summary Year-over-year increase expected largely due to the prior year impacts of Clean Energy Strong Financial mild weather and lower Focus Q2 Earnings Summary planned outage costs Profile $0.15 $0.01 $0.01 $0.55 Stronger than expected increase: TNMP Corporate $0.38 •
Slide 15: COVID-19 Update
COVID-19 Update COVID Scenario Analysis Current Stages 1 and 2 Movement through Stages 1 Expectations and 2 of original planning analysis with expected load Continued load impacts Duration / Increased residential load, impacts, no significant Economic reduced commercial/ resulting from local workfor
Slide 16: Continued COVID-19 Load Impacts
Continued COVID-19 Load Impacts Q2 results in line with planning assumptions July trends reflect improvement in PNM Commercial load PNM COVID load trends TNMP COVID load trends • Residential: +5% increase • Volumetric: +5% increase • UPDATED: Commercial -10% reduction • Demand-based: -5% reduction •
Slide 17: 2020 Consolidated Ongoing Earnings Guidance
2020 Consolidated Ongoing Earnings Guidance 2020 Earnings Guidance Clean Energy $2.16 Strong Consolidated EPS Financial $2.26 $2.16 - $2.26 Focus guidance affirmed, Profile PNM TNMP Corp/Other targeting midpoint $1.67 – $1.73 $0.72 – $0.74 ($0.23) – ($0.21) 2020 Annual EPS Distribution by Quarter St
Slide 18: Financial Profile Continues to Target 5% - 6% Earnings Growth
Financial Profile Continues to Target 5% - 6% Earnings Growth • $3.3B investment plan 2020 - 2023 Rate Base • Emphasis on grid infrastructure investments Investments • Reflects investment opportunities balanced with long-term customer value • 5%-6% earnings growth target through 2023 Earnings • Dilu
Slide 19: PNM Investment: Wired for the Future
PNM Investment: Wired for the Future New Mexico’s clean energy future depends on a reliable, resilient, secure grid to deliver an evolving mix Energy Clean of energy resources to customers Strong Financial Focus Profile Delivering Clean Energy • Infrastructure expansions to accommodate clean energy
Slide 20: PNM Investment: Wired for the Future
PNM Investment: Wired for the Future Investments in grid resilience provide the foundation for a system that can respond and adapt to integrate evolving technology and provide long-term customer value Accelerates $450M Investment 55% Transmission / 45% Distribution Total Investment by Category Deliv
Slide 21: 2020 – 2023 Investment Plan
2020 – 2023 Investment Plan $3.3B investment plan supports 5-6% earnings growth target Wired for the Future investments focused on delivering clean energy future $976 $117 $806 $25 $27 $760 $753 $27 $134 $268 $120 $125 $21 $25 $187 $200 $202 $194 (in millions) $337 $342 $290 $348 $303 $319 $336 $275
Slide 22: 2020 - 2023 Potential Earnings Power
2020 - 2023 Potential Earnings Power Earnings Growth Target 5-6% through 2023 Improved earnings outside of rate base offsets the timing of rate base clearings 2020 Ongoing Allowed 2021 Earnings 2022 Earnings 2023 Earnings Earnings Return / Potential Potential Potential Equity Guidance Midpoint Ratio
Slide 23: Questions and Answers
tl - Questions and Answers
Slide 24: Appendix
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Slide 25: PNM and TNMP Regulatory Agenda
PNM and TNMP Regulatory Agenda Filing Action Timing Docket No. PNM: Decoupling Filing (Petition for Approval of Rate Hearings scheduled for October Filed with the NMPRC on May 28, 2020 20-00121-UT Adjustment Mechanism to 2020 Remove Regulatory Disincentives) Deferral of Incremental costs PNM and oth
Slide 26: Q2 2020 vs Q2 2019 EPS (Ongoing): PNM
Q2 2020 vs Q2 2019 EPS (Ongoing): PNM • Weather and retail load: Higher PNM $0.39 than normal temperatures in Q2 2020 compared to significantly milder weather in Q2 2019 Clean Energy $0.24 Strong Financial resulted in higher residential Focus Profile load, partially offset by reduced commercial usag
Slide 27: Q2 2020 vs Q2 2019 EPS (Ongoing): TNMP and Corporate
Q2 2020 vs Q2 2019 EPS (Ongoing): TNMP and Corporate • TCOS increases implemented in TNMP $0.20 $0.19 September 2019 and March 2020 • Weather and retail load Clean Energy Strong Financial increased as a result of higher than normal temperatures; Focus Profile COVID-19 impacts offset between Q2 2019
Slide 28: 2020 - 2023 Potential Earnings Power
2020 - 2023 Potential Earnings Power 2020 Ongoing 2021 Earnings 2022 Earnings 2023 Earnings Allowed Earnings Potential Potential Potential Return / Guidance Midpoint Equity Avg Avg Avg Avg Ratio Rate Return EPS Rate EPS Rate EPS Rate EPS Base Base Base Base 9.575% / PNM Retail(1) 50% $2.5 B 9.5% $1.
Slide 29: COVID-19 Load: Assumptions and EPS Sensitivities
COVID-19 Load: Assumptions and EPS Sensitivities PNM TNMP COVID-19 Planning Assumptions: CleanCOVID-19 Energy PlanningStrong Assumptions: Financial Current Expectation Focus Current Expectation Profile Residential + 5% Volumetric + 5% Commercial -10% Demand-Based - 5% Industrial No significant impac
Slide 30: Weather Impact
Weather Impact Q2 Q2 2020 PNM 2020 2019 Normal(1) PNM Cooling Degree Days Heating Degree Days 38 71 62 in Q2 2020 were 76% Cooling Degree Days 561 318 507 higher than Q2 2019 and Net EPS Impact $0.01 ($0.07) 11% higher than Normal compared to normal Q2 Q2 2020 TNMP 2020 2019 Normal(1) TNMP Cooling D
Slide 31: PNM Scheduled Plant Outages
PNM Scheduled Plant Outages 2020 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 No planned outages in 2020 5 13 Q4 2020 1 44 Q4 2020 No further major planned outages at San Juan due to pla
Slide 32: Balance Sheet and Credit Metrics
Balance Sheet and Credit Metrics
Slide 33: Liquidity as of July 24, 2020
Liquidity as of July 24, 2020 PNM Corporate/ Resources PNM TNMP Other Consolidated • Available liquidity Financing Capacity(1): (In millions) strengthened by the Revolving credit $440.0 $75.0 $340.0 $855.0 issuance of long-term facilities debt at PNM and TNMP As of 7/24/20: in Q2 2020, freeing up Sh
Slide 34: Selected Balance Sheet Information
Selected Balance Sheet Information (In millions) Dec 31, 2019 Jun 30, 2020 Long-term targets: Long-Term Debt (incl. current portion) (1) • 16% FFO/Debt ratio PNM $1,748.0 $1,846.6 • Corporate/ Other TNMP 670.7 780.6 debt at less than 20% of Consolidated debt Corporate/Other 589.0 589.5 Consolidated
Slide 35: Credit Ratings
Credit Ratings PNMR Consolidated S&P Moody’s Investment grade Issuer rating BBB Baa3 credit ratings at PNM Outlook Stable Stable Resources, PNM and TNMP Senior unsecured rating BBB- Baa3 PNM S&P Moody’s Issuer rating BBB Baa2 Outlook Stable Stable Senior unsecured rating BBB Baa2 Short-term issuer r