PNM Resources Reports Fourth Quarter and Year-End Results

ALBUQUERQUE, N.M., Feb. 28, 2020 /PRNewswire/ --

PNM Resources (PRNewsFoto/PNM Resources, Inc.) (PRNewsfoto/PNM Resources, Inc.)

PNM Resources (In millions, except EPS)


Q4 2019

Q4 2018


YE 2019

YE 2018

GAAP net earnings (loss) attributable to PNM Resources

$31.8

($55.1)


$77.4

$85.6

GAAP diluted EPS

$0.40

($0.69)


$0.97

$1.07

Ongoing net earnings

$28.9

$14.7


$172.5

$160.0

Ongoing diluted EPS

$0.36

$0.18


$2.16

$2.00

PNM Resources (NYSE: PNM) today released the company's 2019 fourth quarter and year-end results. In addition, management affirmed its 2020 consolidated ongoing earnings guidance of $2.16 to $2.26 per diluted share.

"Financial results for 2019 met our expectations, despite extremely mild temperatures in the second quarter, demonstrating our ability to respond and adapt business operations to changing conditions," said Pat Vincent-Collawn, PNM Resources' chairman, president and CEO. "As we look forward, we continue to prioritize investments in our grid for safe, reliable infrastructure that supports growth in Texas and paves the way for integrating more renewable resources and transitioning to emissions-free generation in New Mexico."

SEGMENT REPORTING OF 2019 FOURTH QUARTER AND YEAR-END EARNINGS

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

PNM (In millions, except EPS)


Q4 2019

Q4 2018


YE 2019

YE 2018

GAAP net earnings (loss) attributable to PNM Resources

$27.9

($56.9)


$40.7

$54.7

GAAP diluted EPS

$0.35

($0.71)


$0.51

$0.68

Ongoing net earnings

$23.0

$7.7


$133.7

$122.7

Ongoing diluted EPS

$0.28

$0.10


$1.67

$1.54

 

  • PNM's GAAP earnings in the fourth quarter of 2018 includes $62.3 million of pre-tax losses primarily resulting from the impairment of the 132 MW and 65 MW interests in SJGS Unit 4 and for adjustments to the coal mine reclamation obligation for the mine that serves SJGS.
  • GAAP earnings increased in the fourth quarter of 2019 driven by $25.6 million in non-recurring net changes in unrealized gains and losses on investment securities.
  • GAAP and ongoing earnings also increased in the fourth quarter of 2019 due to lower plant maintenance costs, revised retail rates implemented in January 2019, including the impact of amortized excess deferred income taxes, decommissioning and reclamation trust gains and increased customer usage.

TNMP – an electric transmission and distribution utility in Texas.

TNMP (In millions, except EPS)


Q4 2019

Q4 2018


YE 2019

YE 2018

GAAP net earnings attributable to PNM Resources

$11.3

$10.7


$55.8

$51.6

GAAP diluted EPS

$0.14

$0.13


$0.70

$0.64

Ongoing net earnings

$11.7

$11.8


$56.3

$52.7

Ongoing diluted EPS

$0.14

$0.14


$0.70

$0.65

 

  • TNMP's GAAP and ongoing earnings increased in the fourth quarter of 2019 due to increased demand-based load, earnings related to AFUDC and the refinancing of debt at lower interest rates. 
  • These increases were offset by higher depreciation and property tax expenses resulting from additional capital investments.

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

Corporate and Other (In millions, except EPS)


Q4 2019

Q4 2018


YE 2019

YE 2018

GAAP net earnings (loss) attributable to PNM Resources

($7.4)

($8.9)


($19.1)

($20.6)

GAAP diluted EPS

($0.09)

($0.11)


($0.24)

($0.25)

Ongoing net earnings (loss)

($5.8)

($4.7)


($17.5)

($15.3)

Ongoing diluted EPS

($0.06)

($0.06)


($0.21)

($0.19)

 

  • Corporate and Other's GAAP net loss in the fourth quarter of 2018 includes an increase to income tax expense for adjustments resulting from the reduction in the federal corporate income tax rate.

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

FOURTH QUARTER CONFERENCE CALL: 11 A.M. EASTERN FRIDAY, FEB. 28

PNM Resources will discuss fourth quarter and year-end earnings results during a live conference call and webcast on Friday, Feb. 28th 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/10139073. 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 fourth 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 2,761 megawatts of generation capacity and provides electricity to approximately 789,000 homes and businesses in New Mexico and Texas. For more information, visit the company's website at www.PNMResources.com.

CONTACTS:


Analysts

Media


Lisa Goodman

Ray Sandoval


(505) 241-2160

(505) 241-2782

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 and Form 10-Q filings 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.

PNM Resources, Inc. and Subsidiaries

Schedule 1

Reconciliation of GAAP to Ongoing Earnings

(Preliminary and Unaudited)   




PNM


TNMP


Corporate
and Other


Consolidated



(in thousands)

Quarter Ended December 31, 2019









GAAP Net Earnings (Loss) Attributable to PNMR:


$

27,856



$

11,347



$

(7,398)



$

31,805


Adjusting items before income tax effects









Mark-to-market impact of economic hedges3a


(10)







(10)


Net change in unrealized gains and losses on investment securities3b


(7,590)







(7,590)


Regulatory disallowances and restructuring costs2, 3c




496





496


Pension expense related to previously disposed of gas distribution business3d


1,045







1,045


Cost to review strategic growth opportunities3e






1,571



1,571


Total adjustments before income tax effects


(6,555)



496



1,571



(4,488)


Income tax impact of above adjustments1


1,665



(104)



(399)



1,162


Impairment of state tax credits






425



425


Total income tax impacts4


1,665



(104)



26



1,587


Adjusting items, net of income taxes


(4,890)



392



1,597



(2,901)


Ongoing Earnings (Loss)


$

22,966



$

11,739



$

(5,801)



$

28,904











Year Ended December 31, 2019









GAAP Net Earnings (Loss) Attributable to PNMR:


$

40,653



$

55,799



$

(19,090)



$

77,362


Adjusting items before income tax effects









Mark-to-market impact of economic hedges3a


(94)







(94)


Net change in unrealized gains and losses on investment securities3b


(21,282)







(21,282)


Regulatory disallowances and restructuring costs2, 3c


150,599



496





151,095


Pension expense related to previously disposed of gas distribution business3d


4,179







4,179


Process Improvement Initiatives3e


559



186





745


Four Corners coal mine reclamation3f


794







794


Cost to review strategic growth opportunities3e






1,571



1,571


Total adjustments before income tax effects


134,755



682



1,571



137,008


Income tax impact of above adjustments1


(34,228)



(143)



(399)



(34,770)


Deferred income tax impact of regulatory disallowances


(7,485)







(7,485)


Impairment of state tax credits






425



425


Total income tax impacts4


(41,713)



(143)



26



(41,830)


Adjusting items, net of income taxes


93,042



539



1,597



95,178


Ongoing Earnings (Loss)


$

133,695



$

56,338



$

(17,493)



$

172,540




1 2019 income tax effects calculated using tax rates of 21.00% for TNMP and 25.40% for other segments

2 Regulatory disallowances and restructuring costs are primarily related to the NM Supreme Court's decision to affirm the NMPRC's disallowance of certain costs included in PNM's NM 2015 Rate Case and disallowance of certain costs in TNMP's 2018 Rate Case

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

a (Reductions) in "Electric Operating Revenues" and "Cost of energy" of $260 and $270 in the three months ended December 31, 2019 and $997 and $1,091 in the year ended December 31, 2019

b (Increases) in "Gain on investment securities"

c Increases in "Regulatory disallowances and restructuring costs"

d Increases in "Other (deductions)"

e Increases in "Administrative and general"

f Increases in "Cost of Energy"

4 Income tax impacts reflected in "Income Taxes"

 

PNM Resources, Inc. and Subsidiaries

Schedule 2

Reconciliation of GAAP to Ongoing Earnings

(Preliminary and Unaudited)




PNM


TNMP


Corporate
and Other


Consolidated



(in thousands)

Quarter Ended December 31, 2018









GAAP Net Earnings (Loss) Attributable to PNMR:


$

(56,938)



$

10,711



$

(8,850)



$

(55,077)


Adjusting items before income tax effects









Mark-to-market impact of economic hedges4a


83







83


Net change in unrealized gains and losses on investment securities4b


17,980







17,980


Regulatory disallowances and restructuring costs3, 4c


66,191



(741)





65,450


Pension expense related to previously disposed of gas distribution business4d


850







850


Loss related to previously disposed of activities4e






1,354



1,354


Cost to review strategic growth opportunities4d






1,034



1,034


Total adjustments before income tax effects


85,104



(741)



2,388



86,751


Income tax impacts of above adjustments1


(21,617)



156



(607)



(22,068)


Impairment of state tax credits






(123)



(123)


Change in federal tax rate and other income tax adjustments2


1,119



1,673



2,473



5,265


Total income tax impacts5


(20,498)



1,829



1,743



(16,926)


Adjusting items, net of income taxes


64,606



1,088



4,131



69,825


Ongoing Earnings (Loss)


$

7,668



$

11,799



$

(4,719)



$

14,748











Year Ended December 31, 2018









GAAP Net Earnings (Loss) Attributable to PNMR:


$

54,683



$

51,591



$

(20,632)



$

85,642


Adjusting items before income tax effects









Mark-to-market impact of economic hedges4a









Net change in unrealized gains and losses on investment securities4b


19,910







19,910


Regulatory disallowances and restructuring costs3, 4c


66,339



(741)





65,598


Pension expense related to previously disposed of gas distribution business4d


3,401







3,401


Loss related to previously disposed of activities4e






1,293



1,293


Cost to review strategic growth opportunities4d






2,499



2,499


Total adjustments before income tax effects


89,650



(741)



3,792



92,701


Income tax impacts of above adjustments1


(22,771)



156



(963)



(23,578)


Impairment of state tax credits









Change in federal tax rate and other income tax adjustments2


1,119



1,673



2,473



5,265


Total income tax impacts5


(21,652)



1,829



1,510



(18,313)


Adjusting items, net of income taxes


67,998



1,088



5,302



74,388


Ongoing Earnings (Loss)


$

122,681



$

52,679



$

(15,330)



$

160,030




1 2018 income tax effects calculated using tax rates of 21.00% for TNMP and 25.40% for other segments

2 The Company completed its analysis and recorded related adjustments in the quarter ended December 31, 2018 to reflect the impacts of the reduction in the federal corporate income tax rate (as provided under Staff Accounting Bulletin No. 118)

3 Regulatory disallowances and restructuring costs are primarily related to impairment of PNM's 132 MW and 65 MW interests in SJGS Unit 4, adjustments to PNM's coal mine reclamation obligation that will not be recovered in the event of an early retirement of SJGS, and recovery of certain costs in TNMP's 2018 Rate Case

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

a Reductions in "Electric Operating Revenues" and "Cost of energy" of $230 and $147 in the three months ended December 31, 2018 and $1,051 and $1,051 in the year ended December 31, 2018

b Losses included in "Gains (losses) on investment securities"

c Increases (decreases) in "Regulatory disallowances and restructuring costs"

d Increases in "Administrative and general"

e Increases in "Taxes other than income taxes" of $1,354 in the three months and year ended December 31, 2018 and (increases) in "Other income" of $61 in the year ended December 31, 2018

5 Income tax impacts reflected in "Income Taxes"

 

PNM Resources, Inc. and Subsidiaries

Schedule 3

Reconciliation of GAAP to Ongoing Earnings Per Diluted Share

(Preliminary and Unaudited)




PNM


TNMP


Corporate
and Other


Consolidated



(per diluted share)

Quarter Ended December 31, 2019









GAAP Net Earnings (Loss) Attributable to PNMR:


$

0.35



$

0.14



$

(0.09)



$

0.40


Adjusting items, net of income tax effects









Mark-to-market impact of economic hedges









Net change in unrealized gains and losses on investment securities


(0.07)







(0.07)


Regulatory disallowances and restructuring costs









Pension expense related to previously disposed of gas distribution business









Cost to review strategic growth opportunities






0.02



0.02


Impairment of state tax credits






0.01



0.01


Total Adjustments


(0.07)





0.03



(0.04)


Ongoing Earnings (Loss)


$

0.28



$

0.14



$

(0.06)



$

0.36


Average Diluted Shares Outstanding:  80,022,823















Year Ended December 31, 2019









GAAP Net Earnings (Loss) Attributable to PNMR:


$

0.51



$

0.70



$

(0.24)



$

0.97


Adjusting items, net of income tax effects









Mark-to-market impact of economic hedges









Net change in unrealized gains and losses on investment securities


(0.20)







(0.20)


Regulatory disallowances and restructuring costs


1.40







1.40


Pension expense related to previously disposed of gas distribution business


0.04







0.04


Process improvement initiatives









Four Corners coal mine reclamation


0.01







0.01


Cost to review strategic growth opportunities






0.02



0.02


Deferred income tax impact of regulatory disallowances


(0.09)







(0.09)


Impairment of state tax credits






0.01



0.01


Total Adjustments


1.16





0.03



1.19


Ongoing Earnings (Loss)


$

1.67



$

0.70



$

(0.21)



$

2.16


Average Diluted Shares Outstanding: 79,990,498






 

PNM Resources, Inc. and Subsidiaries

Schedule 4

Reconciliation of GAAP to Ongoing Earnings Per Diluted Share

(Preliminary and Unaudited)




PNM


TNMP


Corporate
and Other


Consolidated



(per diluted share)

Quarter Ended December 31, 2018









GAAP Net Earnings (Loss) Attributable to PNMR:


$

(0.71)



$

0.13



$

(0.11)



$

(0.69)


Adjusting items, net of income tax effects









Mark-to-market impact of economic hedges









Net change in unrealized gains and losses on investment securities


0.17







0.17


Regulatory disallowances and restructuring costs


0.62



(0.01)





0.61


Pension expense related to previously disposed of gas distribution business


0.01







0.01


Loss related to previously disposed of activities






0.01



0.01


Cost to review strategic growth opportunities






0.01



0.01


Change in federal tax rate and other income tax adjustments


0.01



0.02



0.03



0.06


Total Adjustments


0.81



0.01



0.05



0.87


Ongoing Earnings (Loss)


$

0.10



$

0.14



$

(0.06)



$

0.18


Average Diluted Shares Outstanding:  80,078,310















Year Ended December 31, 2018









GAAP Net Earnings (Loss) Attributable to PNMR:


$

0.68



$

0.64



$

(0.25)



$

1.07


Adjusting items, net of income tax effects









Mark-to-market impact of economic hedges









Net change in unrealized gains and losses on investment securities


0.20







0.20


Regulatory disallowances and restructuring costs


0.62



(0.01)





0.61


Pension expense related to previously disposed of gas distribution business


0.03







0.03


Loss related to previously disposed of activities






0.01



0.01


Cost to review strategic growth opportunities






0.02



0.02


Impairment of state tax credits









Change in federal tax rate and other income tax adjustments


0.01



0.02



0.03



0.06


Total Adjustments


0.86



0.01



0.06



0.93


Ongoing Earnings (Loss)


$

1.54



$

0.65



$

(0.19)



$

2.00


Average Diluted Shares Outstanding:  80,012,440






 

PNM Resources, Inc. and Subsidiaries

Schedule 5

Consolidated Statements of Earnings

(Preliminary and Unaudited)



Year Ended December 31,


2019


2018


2017


(In thousands, except per share amounts)

Electric Operating Revenues

$

1,457,603



$

1,436,613



$

1,445,003


Operating Expenses:






Cost of energy

412,812



399,726



407,479


Administrative and general

189,227



188,470



177,791


Energy production costs

142,545



149,477



137,450


Regulatory disallowances and restructuring costs

151,095



65,598



27,036


Depreciation and amortization

267,808



241,188



231,942


Transmission and distribution costs

69,862



76,434



71,576


Taxes other than income taxes

80,054



79,673



76,690


Total operating expenses

1,313,403



1,200,566



1,129,964


Operating income

144,200



236,047



315,039


Other Income and Deductions:






Interest income

14,022



15,540



15,916


Gains (losses) on investment securities

29,589



(17,176)



27,161


Other income

15,382



17,586



19,515


Other (deductions)

(15,328)



(15,696)



(24,247)


Net other income and deductions

43,665



254



38,345


Interest Charges

121,016



127,244



127,625


Earnings before Income Taxes

66,849



109,057



225,759


Income Taxes (Benefits)

(25,282)



7,775



130,340


Net Earnings

92,131



101,282



95,419


(Earnings) Attributable to Valencia Non-controlling Interest

(14,241)



(15,112)



(15,017)


Preferred Stock Dividend Requirements of Subsidiary

(528)



(528)



(528)


Net Earnings Attributable to PNMR

$

77,362



$

85,642



$

79,874


Net Earnings Attributable to PNMR per Common Share:






Basic

$

0.97



$

1.07



$

1.00


Diluted

$

0.97



$

1.07



$

1.00


 

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SOURCE PNM Resources, Inc.

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