2023 Ongoing Earnings Guidance Affirmed

  • 2023 second quarter GAAP earnings of $0.53 per diluted share
  • 2023 second quarter ongoing earnings of $0.55 per diluted share
  • Affirmed ongoing earnings guidance range of $2.65 - $2.75 for 2023

ALBUQUERQUE, N.M., Aug. 4, 2023 /PRNewswire/ --                                                                 

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

PNM Resources (In millions, except EPS)







Q2 2023

Q2 2022

YTD 2023

YTD 2022

GAAP net earnings attributable

 to PNM Resources

$45.3

$15.4

$100.3

$31.4

GAAP diluted EPS

$0.53

$0.18

$1.16

$0.36

Ongoing net earnings

$47.4

$49.4

$95.1

$92.7

Ongoing diluted EPS

$0.55

$0.57

$1.10

$1.08

PNM Resources (NYSE: PNM) today released its 2023 second quarter results. In addition, management affirmed its 2023 consolidated ongoing earnings guidance of $2.65 to $2.75 per diluted share.

"This first half of the year has laid the groundwork for future growth, particularly in Texas where a constructive legislative session called for investments in grid reliability and resilience," said Pat Vincent-Collawn, PNM Resources Chairman and CEO. "New system peaks at both TNMP and PNM continue to demonstrate the need to invest in our infrastructure to ensure safe, reliable service to our customers at affordable rates."

UPDATE ON MERGER

On June 20, 2023, PNM Resources and Avangrid announced an amendment and extension of their merger agreement through December 31, 2023, with an option for three months further extension upon mutual agreement by the companies. The companies' appeal of the New Mexico Public Regulation Commission's (NMPRC) December 2021 merger stipulation denial remains pending with the New Mexico Supreme Court (Court) with oral arguments scheduled for September 15, 2023. There is no statutory deadline for the Court to respond to the appeal.

SEGMENT REPORTING OF 2023 SECOND QUARTER EARNINGS

  • PNMa vertically integrated electric utility in New Mexico with distribution, transmission and generation assets.
  • TNMPan electric transmission and distribution utility in Texas.
  • Corporate and Other – reflects the PNM Resources holding company and other subsidiaries.

EPS Results by Segment



GAAP Diluted EPS


Ongoing Diluted EPS


Q2 2023

Q2 2022


Q2 2023

Q2 2022

PNM

$0.36

($0.07)


$0.38

$0.32

TNMP

$0.29

$0.30


$0.29

$0.31

Corporate and Other

($0.12)

($0.05)


($0.12)

($0.06)

Consolidated PNM Resources

$0.53

$0.18


$0.55

$0.57

Net changes to GAAP and ongoing earnings in the second quarter of 2023 compared to the second quarter of 2022 include:

  • PNM: Increased transmission margins due to higher system demand, lower costs associated with generation portfolio changes and reduced gas plant outages, and improved market performance of decommissioning and reclamation trusts were partially offset by lower customer usage due in part to milder temperatures, depreciation, property tax and interest expense associated with new capital investments and higher planned O&M expenses.
  • TNMP: Rate recovery through Transmission Cost of Service (TCOS) and Distribution Cost Recovery Factor (DCRF) increases and weather-normalized load growth was more than offset by depreciation, property tax and interest expense associated with new capital investments, milder temperatures and higher planned O&M expenses.
  • Corporate and Other: Higher interest rates on variable rate debt, net of hedges, increased losses.

In addition, GAAP earnings increased in the second quarter of 2023 from net unrealized gains on investment securities for decommissioning and reclamation trusts compared to net unrealized losses in the second quarter of 2022.

Additional materials with information on quarterly results are available at
http://www.pnmresources.com/investors/results.cfm.

SECOND QUARTER CONFERENCE CALL: 11 A.M. EASTERN FRIDAY, AUGUST 4

PNM Resources will discuss these items during a live conference call and webcast on Friday, August 4th at 11 a.m. Eastern. Speaking on the call will be Pat Vincent-Collawn, PNM Resources Chairman and Chief Executive Officer, Don Tarry, PNM Resources President and Chief Operating Officer, and Lisa Eden, PNM Resources Senior Vice President, Chief Financial Officer and Treasurer.

The conference call will be simultaneously broadcast and archived on our website at http://www.pnmresources.com/investors/events-and-presentations. 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: https://dpregister.com/sreg/10180845/f9e7ceca57. 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 earnings 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 2022 consolidated operating revenues of $2.2 billion. Through its regulated utilities, PNM and TNMP, PNM Resources provides electricity to more than 800,000 homes and businesses in New Mexico and Texas. PNM serves its customers with a diverse mix of generation and purchased power resources totaling 2.7 gigawatts of capacity, with a goal to achieve 100% emissions-free generation by 2040. 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, including the unaudited financial results and earnings guidance, 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 and apply only as of the date of this report. 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. Additionally, there are risks and uncertainties in connection with the proposed acquisition of us by AVANGRID which may adversely affect our business, future opportunities, employees and common stock, including without limitation, (i) the expected timing and likelihood of completion of the pending Merger, including the timing, receipt and terms and conditions of any remaining required governmental and regulatory approvals of the pending Merger that could reduce anticipated benefits or cause the parties to abandon the transaction, (ii) the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement, (iii) the risk that the parties may not be able to satisfy the conditions to the proposed Merger in a timely manner or at all, and (iv) the risk that the proposed transaction could have an adverse effect on the ability of PNMR to retain and hire key personnel and maintain relationships with its customers and suppliers, and on its operating results and businesses generally. 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 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 1-4.

 

PNM Resources, Inc. and Subsidiaries

Schedule 1

Reconciliation of GAAP to Ongoing Earnings

(Unaudited)




PNM


TNMP


Corporate
and Other


PNMR
Consolidated



(in thousands)

Three Months Ended June 30, 2023









GAAP Net Earnings (Loss) Attributable to PNMR


$     31,184


$     24,632


$   (10,512)


$          45,304

Adjusting items before income tax effects:









Net change in unrealized (gains) and losses on investment securities2a


(2,504)




(2,504)

Regulatory disallowances and restructuring costs2b


3,731




3,731

Pension expense related to previously disposed of gas distribution business2c


679




679

Merger related costs2d


15


2


233


250

Total adjustments before income tax effects


1,921


2


233


2,156

Income tax impact of above adjustments1


(488)



(59)


(547)

Income tax impact of non-deductible merger related costs3


4



31


35

Timing of statutory and effective tax rates on non-recurring items4


275


221


(2)


494

Total income tax impacts5


(209)


221


(30)


(18)

Adjusting items, net of income taxes


1,712


223


203


2,138

Ongoing Earnings (Loss)


$     32,896


$     24,855


$   (10,309)


$          47,442










Six Months Ended June 30, 2023









GAAP Net Earnings (Loss) Attributable to PNMR


$     85,760


$     34,665


$   (20,107)


$        100,318

Adjusting items before income tax effects:









Net change in unrealized (gains) and losses on investment securities2a


(11,989)




(11,989)

Regulatory disallowances and restructuring costs2b


3,731




3,731

Pension expense related to previously disposed of gas distribution business2c


1,358




1,358

Merger related costs2d


27


2


519


548

Total adjustments before income tax effects


(6,873)


2


519


(6,352)

Income tax impact of above adjustments1


1,746



(132)


1,614

Income tax impact of non-deductible merger related costs3


5



85


90

Timing of statutory and effective tax rates on non-recurring items4


(452)


157


(285)


(580)

Total income tax impacts5


1,299


157


(332)


1,124

Adjusting items, net of income taxes


(5,574)


159


187


(5,228)

Ongoing Earnings (Loss)


$     80,186


$     34,824


$   (19,920)


$          95,090


1 Tax effects calculated using a tax rate of 21.0% for TNMP and 25.4% for other segments

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

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

b Increase in "Regulatory disallowances and restructuring costs"

c Increases in "Other (deductions)" 

d Increases in "Administrative and general"









3 Increases in "Income Taxes"

4 Income tax timing impacts resulting from differences between the statutory rates of 25.4% for PNM, 21.0% for TNMP and the average expected statutory tax rate of 23.8% for PNMR, and the GAAP anticipated effective tax rates of 18.7% for PNM, 14.7% for TNMP, and 15.7% for PNMR, which will reverse by year end

5 Income tax impacts reflected in "Income Taxes"









 

PNM Resources, Inc. and Subsidiaries

Schedule 2

Reconciliation of GAAP to Ongoing Earnings

(Unaudited)




PNM


TNMP


Corporate
and Other


PNMR
Consolidated



(in thousands)

Three Months Ended June 30, 2022









GAAP Net Earnings (Loss) Attributable to PNMR


$     (6,217)


$     26,051


$     (4,473)


$          15,361

Adjusting items before income tax effects:









Net change in unrealized (gains) and losses on investment securities2a


38,979




38,979

Regulatory disallowances and restructuring costs2b


1,399




1,399

Pension expense related to previously disposed of gas distribution business2c


614




614

Merger related costs2d


23


4


288


315

Total adjustments before income tax effects


41,015


4


288


41,307

Income tax impact of above adjustments1


(10,418)


(1)


(73)


(10,492)

Income tax impact of non-deductible merger related costs3


(80)


61


(4)


(23)

Timing of statutory and effective tax rates on non-recurring items4


3,326


379


(440)


3,265

Total income tax impacts5


(7,172)


439


(517)


(7,250)

Adjusting items, net of income taxes


33,843


443


(229)


34,057

Ongoing Earnings (Loss)


$     27,626


$     26,494


$     (4,702)


$          49,418










Six Months Ended June 30, 2022









GAAP Net Earnings (Loss) Attributable to PNMR


$     (1,906)


$     41,111


$     (7,853)


$          31,352

Adjusting items before income tax effects:









Net change in unrealized (gains) and losses on investment securities2a


69,891




69,891

Regulatory disallowances and restructuring costs2b


1,399




1,399

Pension expense related to previously disposed of gas distribution business2c


1,228




1,228

Merger related costs2d


50


4


1,232


1,286

Total adjustments before income tax effects


72,568


4


1,232


73,804

Income tax impact of above adjustments1


(18,432)


(1)


(313)


(18,746)

Income tax impact of non-deductible merger related costs3


(11)


282


34


305

Timing of statutory and effective tax rates on non-recurring items4


5,974


194


(160)


6,008

Total income tax impacts5


(12,469)


475


(439)


(12,433)

Adjusting items, net of income taxes


60,099


479


793


61,371

Ongoing Earnings (Loss)


$     58,193


$     41,590


$     (7,060)


$          92,723










1Tax effects calculated using a tax rate of 21.0% for TNMP and 25.4% for other segments

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

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

b Increases in "Regulatory disallowances and restructuring costs"

c Increases in "Other (deductions)"









Increases in "Administrative and general"









3 Increases (decreases) in "Income Tax Expense"

4 Income tax timing impacts resulting from differences between the statutory tax rates of 25.4% for PNM, 21.0% for TNMP and the average expected statutory tax rate of 23.2% for PNMR, and the GAAP anticipated effective tax rates of 11.9% for PNM, 13.3% for TNMP, and 10.8% for PNMR, which will reverse by year end

5 Income tax impacts reflected in "Income Taxes"









 

PNM Resources, Inc. and Subsidiaries

Schedule 3

Reconciliation of GAAP to Ongoing Earnings Per Diluted Share

(Unaudited)




PNM


TNMP


Corporate
and Other


PNMR
Consolidated



(per diluted share)

Three Months Ended June 30, 2023









GAAP Net Earnings (Loss) Attributable to PNMR


$         0.36


$         0.29


$       (0.12)


$              0.53

Adjusting items, net of income tax effects:









Net change in unrealized (gains) and losses on investment securities


(0.02)




(0.02)

Regulatory disallowances and restructuring costs


0.03




0.03

Pension expense related to previously disposed of gas distribution business


0.01




0.01

Total Adjustments


0.02




0.02

Ongoing Earnings (Loss)


$         0.38


$         0.29


$       (0.12)


$              0.55

Average Diluted Shares Outstanding: 86,129,124


















Six Months Ended June 30, 2023









GAAP Net Earnings (Loss) Attributable to PNMR


$         1.00


$         0.40


$       (0.24)


$              1.16

Adjusting items, net of income tax effects:









Net change in unrealized (gains) and losses on investment securities


(0.10)




(0.10)

Regulatory disallowances and restructuring costs


0.03




0.03

Pension expense related to previously disposed of gas distribution business


0.01




0.01

Merger related costs




0.01


0.01

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


(0.01)




(0.01)

Total Adjustments


(0.07)



0.01


(0.06)

Ongoing Earnings (Loss)


$         0.93


$         0.40


$       (0.23)


$              1.10

Average Diluted Shares Outstanding: 86,133,091






 

PNM Resources, Inc. and Subsidiaries

Schedule 4

Reconciliation of GAAP to Ongoing Earnings Per Diluted Share

(Unaudited)




PNM


TNMP


Corporate
and Other


PNMR
Consolidated



(per diluted share)

Three Months Ended June 30, 2022









GAAP Net Earnings (Loss) Attributable to PNMR


$       (0.07)


$         0.30


$       (0.05)


$              0.18

Adjusting items, net of income tax effects:









Net change in unrealized (gains) and losses on investment securities


0.34




0.34

Regulatory disallowances and restructuring costs


0.01




0.01

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


0.04


0.01


(0.01)


0.04

Total Adjustments


0.39


0.01


(0.01)


0.39

Ongoing Earnings (Loss)


$         0.32


$         0.31


$       (0.06)


$              0.57

Average Diluted Shares Outstanding: 86,226,318















Six Months Ended June 30, 2022









GAAP Net Earnings (Loss) Attributable to PNMR


$       (0.02)


$         0.47


$       (0.09)


$              0.36

Adjusting items, net of income tax effects:









Net change in unrealized (gains) and losses on investment securities


0.61




0.61

Regulatory disallowances and restructuring costs


0.01




0.01

Pension expense related to previously disposed of gas distribution business


0.01




0.01

Merger related costs



0.01


0.01


0.02

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


0.07




0.07

Total Adjustments


0.70


0.01


0.01


0.72

Ongoing Earnings (Loss)


$         0.68


$         0.48


$       (0.08)


$              1.08

Average Diluted Shares Outstanding: 86,198,407






 

PNM Resources, Inc. and Subsidiaries

Schedule 5

Condensed Consolidated Statements of Earnings

(Unaudited)



Three Months Ended
June 30,


Six Months Ended
June 30,


2023


2022


2023


2022


(In thousands, except per share amounts)









Electric Operating Revenues

$   477,156


$   499,730


$  1,021,233


$  943,848

Operating Expenses:








Cost of energy

172,452


195,596


414,138


364,010

Administrative and general

54,039


51,342


109,149


107,203

Energy production costs

25,599


42,499


47,957


76,065

Regulatory disallowances and restructuring costs

3,731


1,399


3,731


1,399

Depreciation and amortization

79,139


76,769


157,213


152,533

Transmission and distribution costs

25,465


21,156


47,661


39,622

Taxes other than income taxes

24,401


24,577


49,963


48,556

  Total operating expenses

384,826


413,338


829,812


789,388

  Operating income

92,330


86,392


191,421


154,460

Other Income and Deductions:








Interest income

5,359


3,327


10,202


7,619

Gains (losses) on investment securities

3,777


(41,795)


10,219


(68,368)

Other income

5,600


5,151


8,693


9,481

Other (deductions)

(3,515)


(3,641)


(6,008)


(5,882)

  Net other income and deductions

11,221


(36,958)


23,106


(57,150)

Interest Charges

45,899


29,217


86,822


55,437

Earnings before Income Taxes

57,652


20,217


127,705


41,873

Income Taxes

8,229


1,094


18,009


3,532

Net Earnings

49,423


19,123


109,696


38,341

(Earnings) Attributable to Valencia Non-controlling Interest

(3,987)


(3,630)


(9,114)


(6,725)

Preferred Stock Dividend Requirements of Subsidiary

(132)


(132)


(264)


(264)

Net Earnings Attributable to PNMR

$     45,304


$     15,361


$   100,318


$    31,352

Net Earnings Attributable to PNMR per Common Share:








 Basic

$         0.53


$         0.18


$         1.17


$        0.36

 Diluted

$         0.53


$         0.18


$         1.16


$        0.36

Dividends Declared per Common Share

$     0.3675


$     0.3475


$     0.7350


$    0.6950

 

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SOURCE PNM Resources, Inc.

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