PNM Resources Reports Second Quarter Results

  • Jun 30, 2020
  • PR Newswire

GAAP net earnings (loss) attributable to PNM Resources

PNM Resources (NYSE: PNM) today released the company's 2020 second quarter results. In addition, management affirmed its 2020 consolidated ongoing earnings guidance of $2.16 to $2.26 per diluted share, targeting the midpoint of this range.

"Warmer temperatures during the second quarter outweighed the reduced load impacts related to COVID-19 and has strengthened our ability to manage within our ongoing earnings guidance range," said Pat Vincent-Collawn, PNM Resources' chairman, president and CEO. "Our top priority continues to be on the safety of our team and caring for our customers and communities. Our response is guided by our vision and values as we manage the current environment while keeping focused on our strategic objectives and goals designed to integrate and deliver the clean energy resources of the future to PNM and TNMP customers."

During today's earnings conference call, PNM Resources will highlight its commitment to ESG principles and share recent achievements in these areas, including additional environmental goals that frame the company's path to emissions-free energy by 2040 and significant reductions in the usage of freshwater. Management will also highlight investment programs that are aligned with these principles, including the recently announced Wired for the Future program to enhance transmission and distribution infrastructure to provide a reliable, resilient and secure energy grid to deliver clean energy.

"PNM is taking a broad view with investments that focus on strengthening our infrastructure to support the transformation to a 100% clean energy portfolio," Vincent-Collawn continued. "Our future investment plans will not reflect new generation additions and will emphasize grid investments to enhance capabilities to adapt and integrate new resources. If regulators determine that PNM should develop new generation resources, however, these projects would need to be balanced with grid investments to maintain the affordability of customer rates. We remain committed to our earnings growth target of 5 to 6 percent through 2023."

The New Mexico Public Regulation Commission issued an order this week on the replacement power for the San Juan Generating Station, which has been approved for abandonment in 2022. The order supports PNM's clean energy goals with a portfolio of renewable energy resources and battery storage. The revised capital investment plan included in the presentation materials for today's call does not include investments for replacement power resources.

SEGMENT REPORTING OF 2020 SECOND QUARTER EARNINGS

PNM – a vertically integrated electric utility in New Mexico with distribution, transmission and generation assets.

GAAP net earnings (loss) attributable to PNM Resources

TNMP – an electric transmission and distribution utility in Texas.

Corporate and Other – a segment that reflects the PNM Resources holding company and other subsidiaries.

GAAP net earnings (loss) attributable to PNM Resources

Financial materials are available at http://www.pnmresources.com/investors/results.cfm.

SECOND QUARTER CONFERENCE CALL: 11 A.M. EASTERN FRIDAY, JULY 31

PNM Resources will discuss these items during a live conference call and webcast on Friday, July 31st at 11 a.m. Eastern. Speaking on the call will be Pat Vincent-Collawn, PNM Resources chairman, president and CEO, and Don Tarry, PNM Resources senior vice president and CFO.

A live webcast of the call will be archived at http://www.pnmresources.com/investors/events.cfm. Listeners are encouraged to visit the website at least 30 minutes before the event to register, download and install any necessary audio software.

Investors and analysts can participate in the live conference call by pre-registering using the following link to receive a special dial-in number and PIN: http://dpregister.com/10145798. Telephone participants who are unable to pre-register may participate in the live conference call by dialing (877) 276-8648 or (412) 317-5474 fifteen minutes prior to the event and referencing "the PNM Resources second quarter conference call".

Supporting material for PNM Resources' earnings announcements can be viewed and downloaded at http://www.pnmresources.com/investors/results.cfm.

Background:

PNM Resources (NYSE: PNM) is an energy holding company based in Albuquerque, N.M., with 2019 consolidated operating revenues of $1.5 billion. Through its regulated utilities, PNM and TNMP, PNM Resources has approximately 2,811 megawatts of generation capacity and provides electricity to more than 790,000 homes and businesses in New Mexico and Texas. For more information, visit the company's website at www.PNMResources.com.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

Statements made in this news release for PNM Resources, Inc. ("PNMR"), Public Service Company of New Mexico ("PNM"), or Texas-New Mexico Power Company ("TNMP") (collectively, the "Company") that relate to future events or expectations, projections, estimates, intentions, goals, targets, and strategies are made pursuant to the Private Securities Litigation Reform Act of 1995. Readers are cautioned that all forward-looking statements are based upon current expectations and estimates. PNMR, PNM, and TNMP assume no obligation to update this information. Because actual results may differ materially from those expressed or implied by these forward-looking statements, PNMR, PNM, and TNMP caution readers not to place undue reliance on these statements. PNMR's, PNM's, and TNMP's business, financial condition, cash flow, and operating results are influenced by many factors, which are often beyond their control, that can cause actual results to differ from those expressed or implied by the forward-looking statements. For a discussion of risk factors and other important factors affecting forward-looking statements, please see the Company's Form 10-K, Form 10-Q filings and the information included in the Company's Forms 8-K with the Securities and Exchange Commission, which factors are specifically incorporated by reference herein.

Non-GAAP Financial Measures

GAAP refers to generally accepted accounting principles in the U.S. Ongoing earnings is a non-GAAP financial measure that excludes the impact of net unrealized mark-to-market gains and losses on economic hedges, the net change in unrealized gains and losses on investment securities, pension expense related to previously disposed of gas distribution business, and certain non-recurring, infrequent, and other items that are not indicative of fundamental changes in the earnings capacity of the Company's operations. The Company uses ongoing earnings and ongoing earnings per diluted share (or ongoing diluted earnings per share) to evaluate the operations of the Company and to establish goals, including those used for certain aspects of incentive compensation, for management and employees. While the Company believes these financial measures are appropriate and useful for investors, they are not measures presented in accordance with GAAP. The Company does not intend for these measures, or any piece of these measures, to represent any financial measure as defined by GAAP. Furthermore, the Company's calculations of these measures as presented may or may not be comparable to similarly titled measures used by other companies. The Company uses ongoing earnings guidance to provide investors with management's expectations of ongoing financial performance over the period presented. While the Company believes ongoing earnings guidance is an appropriate measure, it is not a measure presented in accordance with GAAP. The Company does not intend for ongoing earnings guidance to represent an expectation of net earnings as defined by GAAP. Since the future differences between GAAP and ongoing earnings are frequently outside the control of the Company, management is generally not able to estimate the impact of the reconciling items between forecasted GAAP net earnings and ongoing earnings guidance, nor their probable impact on GAAP net earnings without unreasonable effort, therefore, management is generally not able to provide a corresponding GAAP equivalent for ongoing earnings guidance. Reconciliations between GAAP and ongoing earnings are contained in schedules 1-5.

Net change in unrealized gains and losses on investment securities2a

Pension expense related to previously disposed of gas distribution business2c

Timing of statutory and effective tax rates on non-recurring items3

Net change in unrealized gains and losses on investment securities2a

Pension expense related to previously disposed of gas distribution business2c

Timing of statutory and effective tax rates on non-recurring items3

1 Tax effects calculated using a tax rate of 25.4%

2 The pre-tax impacts (in thousands) of adjusting items are reflected on the GAAP Condensed Consolidated Statements of Earnings as follows:

a (Increases) decreases in "Gains on investment securities" reflecting non-cash performance relative to market, not indicative of funding requirements

b Increases of $1.9 million in "Interest Charges" and less than $0.1 million in "Other income" reflecting disallowances of previously capitalized AFUDC for certain costs included in the AFUDC computation, resulting from a FERC audit.

3 Income tax timing impacts resulting from differences between the statutory tax rate of 25.4% for PNM and the average expected statutory tax rate of 23.9% for PNMR, and the GAAP anticipated effective tax rates of 8.7% for PNM and 6.2% for PNMR, which will reverse by year end

Net change in unrealized gains and losses on investment securities2b

Regulatory disallowances and restructuring costs2c

Pension expense related to previously disposed of gas distribution business2d

Deferred income tax impact of regulatory disallowances

Timing of statutory and effective tax rates on non-recurring items3

Net change in unrealized gains and losses on investment securities2b

Regulatory disallowances and restructuring costs2c

Pension expense related to previously disposed of gas distribution business2d

Deferred income tax impact of regulatory disallowances

Timing of statutory and effective tax rates on non-recurring items3

1 2019 income tax effects calculated using a tax rate of 25.40% for PNM and 21% for TNMP

2 The pre-tax impacts (in thousands) of adjusting items are reflected on the GAAP Condensed Consolidated Statement of Earnings as follows:

a (Reductions) in "Electric Operating Revenues" and "Cost of energy" of $235 and $263 in the three months ended June 30, 2019 and $480 and $536 in the six months ended June 30, 2019

b (Increases) decreases in "Gains and losses on investment securities"

c Increases in "Regulatory disallowances and restructuring costs"

3 Income tax timing impacts resulting from differences between the statutory tax rate of 25.4% for PNM and the average expected statutory tax rate of 24.0% for PNMR, and the GAAP anticipated effective tax rates of 11.9% for PNM and 9.4% for PNMR, which will reverse by year end

Reconciliation of GAAP to Ongoing Earnings Per Diluted Share

Net change in unrealized gains and losses on investment securities

Pension expense related to previously disposed of gas distribution business

Timing of statutory and effective tax rates on non-recurring items

Net change in unrealized gains and losses on investment securities

Pension expense related to previously disposed of gas distribution business

Timing of statutory and effective tax rates on non-recurring items

Reconciliation of GAAP to Ongoing Earnings Per Diluted Share

Net change in unrealized gains and losses on investment securities

Pension expense related to previously disposed of gas distribution business

Deferred income tax impact of regulatory disallowances

Timing of statutory and effective tax rates on non-recurring items

Net change in unrealized gains and losses on investment securities

Pension expense related to previously disposed of gas distribution business

Deferred income tax impact of regulatory disallowances

Timing of statutory and effective tax rates on non-recurring items

1 EPS is presented on a non-diluted basis for the three and six months ended June 30, 2019 due to the consolidated GAAP net loss

(Earnings) Attributable to Valencia Non-controlling Interest

Preferred Stock Dividend Requirements of Subsidiary

Net Earnings (Loss) Attributable to PNMR per Common Share:

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