PNM Resources Reports Fourth Quarter and Year-End Results
ALBUQUERQUE, N.M., Feb. 28, 2020 /PRNewswire/ --
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. 28(th) 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 Consolidated
and Other
(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 adjustments(1) 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 adjustments(1) (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 Consolidated
and Other
(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 adjustments(1) (21,617) 156 (607) (22,068)
Impairment of state tax credits (123) (123)
Change in federal tax rate and other income tax adjustments(2) 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 adjustments(1) (22,771) 156 (963) (23,578)
Impairment of state tax credits
Change in federal tax rate and other income tax adjustments(2) 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 Consolidated
and Other
(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 Consolidated
and Other
(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.
