PNM Resources Reports First Quarter Results

ALBUQUERQUE, N.M., May 7, 2019 /PRNewswire/ --


        
         
              PNM Resources (In millions, except EPS)


                                                                 Q1 2019 Q1 2018


        
         
              GAAP net earnings                         $18.7    $15.0
             attributable to PNM Resources

                                       ---

         
         
              GAAP diluted EPS                         $0.23    $0.19


     
         
              Ongoing net earnings                         $10.8    $16.5

                                       ---

      
         
              Ongoing diluted EPS                         $0.13    $0.21

PNM Resources (NYSE: PNM) today released the company's 2019 first quarter results. In addition, management raised the upper end of its consolidated ongoing earnings guidance to a range of $2.10 to $2.20 per diluted share for 2019.

"First quarter financial results reflect continued growth in New Mexico that has increased our expectations for 2019 earnings," said Pat Vincent-Collawn, PNM Resources' chairman, president and CEO. "More importantly, the Energy Transition Act was passed in the 2019 New Mexico legislative session and signed into law, supporting our plan to transform the PNM generation portfolio and provide customers with increasingly clean energy that continues to be safe, reliable and affordable."

SEGMENT REPORTING OF 2019 FIRST QUARTER EARNINGS

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


             
              
                PNM (In millions, except EPS)


                                                                   Q1 2019 Q1 2018


        
         
                GAAP net earnings                         $19.0     $7.7
               attributable to PNM Resources

                                         ---

         
         
                GAAP diluted EPS                         $0.24    $0.10


     
         
                Ongoing net earnings                         $11.1     $9.1

                                         ---

      
         
                Ongoing diluted EPS                         $0.14    $0.12

    --  GAAP earnings were $14.0 million higher in the first quarter of 2019 due
        to net changes in unrealized gains and losses on investment securities.
    --  An increase in weather-normalized load reflects continued growth in the
        PNM service territory and has resulted in an increase to the upper end
        of earnings guidance for 2019.
    --  Earnings were also impacted in the first quarter of 2019 by increased
        usage from colder temperatures, the refinancing of debt in 2018 at lower
        interest rates, the second phase of revised retail rates that were
        phased-in beginning February 2018 and lower outage costs, as planned
        outages in the first quarter of 2019 were delayed until the second
        quarter. These increases were partially offset by a planned increase in
        operational and maintenance spending, additional depreciation and
        property tax expenses related to new capital investments and lower
        earnings related to AFUDC.

TNMP - an electric transmission and distribution utility in Texas.


             
              
                TNMP (In millions, except EPS)


                                                                    Q1 2019 Q1 2018


        
         
                GAAP net earnings                           $4.1     $9.4
               attributable to PNM Resources

                                         ---

         
         
                GAAP diluted EPS                          $0.05    $0.12


     
         
                Ongoing net earnings                           $4.1     $9.4

                                         ---

      
         
                Ongoing diluted EPS                          $0.05    $0.12

    --  TNMP's GAAP and ongoing earnings were lower in the first quarter of 2019
        as the implementation of new base rates approved in December 2018
        reflects an increase to rate base recovery that is more than offset by a
        reduction in the allowed return on equity to 9.65% from 10.125%, higher
        depreciation rates and the return of excess deferred income taxes to
        customers.
    --  Earnings were also lower due to increased depreciation and property tax
        expenses resulting from additional capital investments and lower
        customer usage from milder temperatures.

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


             
          
                Corporate and Other (In millions, except EPS)


                                                                           Q1 2019 Q1 2018


       
          
            GAAP net earnings (loss)                             ($4.4)  ($2.1)
                  attributable to PNM Resources

                                            ---

           
          
                GAAP diluted EPS                            ($0.06) ($0.03)


     
         
            Ongoing net earnings (loss)                             ($4.4)  ($2.0)

                                            ---

         
          
               Ongoing diluted EPS                            ($0.06) ($0.03)

    --  Corporate and Other's GAAP and ongoing earnings were lower in the first
        quarter of 2019 due to higher fixed interest rates under the $300.0
        million of 3.25% senior unsecured notes issued in March 2018. Lower net
        interest income due to the May 2018 repayment of loan agreements
        associated with Westmoreland Coal Company also reduced earnings.

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

FIRST QUARTER CONFERENCE CALL: 11 A.M. EASTERN TUESDAY, MAY 7

PNM Resources will discuss first quarter earnings results during a live conference call and webcast on Tuesday, May 7(th) at 11 a.m. Eastern. Speaking on the call will be Pat Vincent-Collawn, PNM Resources chairman, president and CEO, and Chuck Eldred, PNM Resources executive 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/10130015. 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 first 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 2018 consolidated operating revenues of $1.4 billion. Through its regulated utilities, PNM and TNMP, PNM Resources has approximately 2,671 megawatts of generation capacity and provides electricity to more than 781,000 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 1-2.


                                                                                                                                               
              
                PNM Resources, Inc. and Subsidiaries


                                                                                                                                                            
              
                Schedule 1


                                                                                                                                            
              
                Reconciliation of GAAP to Ongoing Earnings


                                                                                                                                                    
              
                (Preliminary and Unaudited)




                                                                                               PNM                                                             TNMP                                     Corporate                                                PNMR
                                                                                                                                                                                            and Other                                               Consolidated



                                                                                                                                                   
              (in thousands)


                                  Three Months Ended March 31, 2019

                              ---

                   GAAP Net Earnings (Loss)
                    Attributable to PNMR                                                             $
              
                19,012                                                                                 $
              
                4,098                   $
     
        (4,410) $
     
     18,700



      Adjusting items before income tax
       effects:


      Mark-to-market impact of economic
       hedges2a                                                                               (28)                                                                                                                                                                             (28)


      Net change in unrealized gains on
       investment securities2b                                                            (12,994)                                                                                                                                                                         (12,994)


      Regulatory disallowances and
       restructuring costs2c                                                                 1,345                                                                                                                                                                             1,345


      Pension expense related to
       previously disposed of gas
       distribution business2d                                                               1,045                                                                                                                                                                             1,045



      Total adjustments before income tax
       effects                                                                            (10,632)                                                                                                                                                                         (10,632)



      Income tax impact of above
       adjustments1,2e                                                                       2,701                                                                                                                                                                             2,701


      Adjusting items, net of income taxes                                                 (7,931)                                                                                                                                                                          (7,931)



                   Ongoing Earnings (Loss)                                                           $
              
                11,081                                                                                 $
              
                4,098                   $
     
        (4,410) $
     
     10,769





                                  Three Months Ended March 31, 2018

                              ---

                   GAAP Net Earnings (Loss)
                    Attributable to PNMR                                                              $
              
                7,705                                                                                 $
              
                9,413                   $
     
        (2,128) $
     
     14,990



      Adjusting items before income tax
       effects:


      Mark-to-market impact of economic
       hedges2a                                                                               (28)                                                                                                                                                                             (28)


      Net change in unrealized gains on
       investment securities2b                                                               1,056                                                                                                                                                                             1,056


      Pension expense related to
       previously disposed of gas
       distribution business2d                                                                 832                                                                                                                                                                               832


      Total adjustments before income tax
       effects                                                                               1,860                                                                                                                                                                             1,860



      Income tax impact of above
       adjustments(1)                                                                        (472)                                                                                                                                                                            (472)


      Impairment of state tax credits                                                                                                                                                                                                                  123                       123



      Total income tax impacts2e                                                             (472)                                                                                                                                                     123                     (349)



      Adjusting items, net of income taxes                                                   1,388                                                                                                                                                      123                     1,511



                   Ongoing Earnings (Loss)                                                            $
              
                9,093                                                                                 $
              
                9,413                   $
     
        (2,005) $
     
     16,501





         (1) 2019 and 2018 income tax effects calculated using a tax rate of 25.40%



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


                   a(Reductions) in "Electric Operating Revenues" and "Cost of energy" of $245 and $273 in the three months ended March 31, 2019 and (reductions) in "Electric Operating Revenues" and "Cost of energy" of $281 and $309 in the
                    three months ended March 31, 2018



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



     
                cIncreases in "Regulatory disallowances and restructuring costs"



     
                dIncreases in "Other (deductions)"



     
                eIncome tax impacts reflected in "Income Taxes"


                                                                                        
             
                PNM Resources, Inc. and Subsidiaries


                                                                                                    
              
                Schedule 2


                                                                                     
     
               Reconciliation of GAAP to Ongoing Earnings Per Diluted Share


                                                                                           
              
                (Preliminary and Unaudited)




                                                                       PNM                   TNMP                                     Corporate                                    PNMR
                                                                                                                          and Other                                   Consolidated



                                                                                          
              (per diluted share)


                                  Three Months Ended March 31, 2019

                              ---

                   GAAP Net Earnings (Loss)
                    Attributable to PNMR                                   $
     
     0.24                                                               $
              
     0.05                   $
     
       (0.06) $
     
     0.23



      Adjusting items, net of income
       tax effects:


      Mark-to-market impact of
       economic hedges


      Net change in unrealized gains on
       investment securities                                        (0.12)                                                                                                                   (0.12)


      Regulatory disallowances and
       restructuring costs                                            0.01                                                                                                                      0.01


      Pension expense related to
       previously disposed of gas
       distribution business                                          0.01                                                                                                                      0.01



     Total Adjustments                                             (0.10)                                                                                                                   (0.10)



                   Ongoing Earnings (Loss)                                 $
     
     0.14                                                               $
              
     0.05                   $
     
       (0.06) $
     
     0.13



      Average Diluted Shares
       Outstanding: 79,970,966




                                  Three Months Ended March 31, 2018

                              ---

                   GAAP Net Earnings (Loss)
                    Attributable to PNMR                                   $
     
     0.10                                                               $
              
     0.12                   $
     
       (0.03) $
     
     0.19



      Adjusting items, net of income
       tax effects:


      Mark-to-market impact of
       economic hedges


      Net change in unrealized gains on
       investment securities                                          0.01                                                                                                                      0.01


      Pension expense related to
       previously disposed of gas
       distribution business                                          0.01                                                                                                                      0.01


      Impairment of state tax credits



     Total Adjustments                                               0.02                                                                                                                      0.02



                   Ongoing Earnings (Loss)                                 $
     
     0.12                                                               $
              
     0.12                   $
     
       (0.03) $
     
     0.21




     Average Diluted Shares Outstanding: 80,013,247


                                 
              
                PNM Resources, Inc. and Subsidiaries


                                       
              
                Schedule
                 3


                            
              
                Condensed Consolidated Statements of Earnings


                                     
              
                (Preliminary and Unaudited)




                                                                     Three Months Ended March 31,


                                                   2019                                       2018

                                                                                              ---

                                                           (In thousands, except per share
                                                                        amounts)


                   Electric Operating Revenues:


      Contracts with
       customers                                          $
              315,698                                     $
        303,351


      Alternative revenue
       programs                                     636                                                 $
        924


      Other electric
       operating revenue                         33,311                                              $
        13,603



      Total electric
       operating revenues                                 $
              349,645                                     $
        317,878



                   Operating Expenses:


      Cost of energy                            121,626                                       92,556


      Administrative and
       general                                   52,336                                       48,283


      Energy production
       costs                                     35,072                                       35,350


      Regulatory
       disallowances and
       restructuring costs                        1,345


      Depreciation and
       amortization                              65,356                                       58,722


      Transmission and
       distribution costs                        16,678                                       16,955


      Taxes other than
       income taxes                              20,509                                       19,880



      Total operating
       expenses                                 312,922                                      271,746



      Operating income                           36,723                                       46,132



                   Other Income and Deductions:


      Interest income                             3,619                                        4,124


      Gains on investment
       securities                                14,014                                          288


      Other income                                3,415                                        3,469


      Other (deductions)                        (3,252)                                     (1,376)



      Net other income and
       deductions                                17,796                                        6,505



                   Interest Charges              31,634                                       33,055



                   Earnings before Income
                    Taxes                        22,885                                       19,582


                   Income Taxes                   1,223                                          783



                   Net Earnings                  21,662                                       18,799


                   (Earnings)
                    Attributable to
                    Valencia Non-
                    controlling Interest        (2,830)                                     (3,677)


                   Preferred Stock
                    Dividend Requirements
                    of Subsidiary                 (132)                                       (132)



                   Net Earnings
                    Attributable to PNMR                   $
              18,700                                      $
        14,990



                   Net Earnings Attributable to PNMR per
                    Common Share:



     Basic                                                  $
              0.23                                        $
        0.19



     Diluted                                                $
              0.23                                        $
        0.19


                   Dividends Declared per
                    Common Share                            $
              0.290                                       $
        0.265

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SOURCE PNM Resources, Inc.