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PNM Resources Reports Second Quarter Results

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PNM Resources Reports Second Quarter Results

2018 and 2019 Ongoing Earnings Guidance Raised; Improving Load Growth a Contributing Factor

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ALBUQUERQUE, N.M., July 31, 2018 /PRNewswire/ --  

PNM Resources (In millions, except EPS)



Q2 2018

Q2 2017


YTD 2018

YTD 2017

GAAP net earnings attributable to PNM Resources

$38.2

$37.6


$53.2

$60.4

GAAP diluted EPS

$0.48

$0.47


$0.67

$0.75

Ongoing net earnings

$42.3

$39.6


$58.8

$61.6

Ongoing diluted EPS

$0.53

$0.49


$0.73

$0.77

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

PNM Resources (NYSE:PNM) today released the company's 2018 second quarter results. In addition, management raised its consolidated ongoing earnings guidance to $1.91 to $1.98 per diluted share for 2018 and $2.08 to $2.18 per diluted share for 2019.

"We have raised 2018 and 2019 guidance based on higher load growth trends at PNM and continued strong demand at TNMP. In addition, hotter temperatures increased second quarter earnings," said Pat Vincent-Collawn, PNM Resources' chairman, president and CEO. "At TNMP, we have increased capital spending in 2018 to serve their growing needs. Plans for capital spending beyond 2018 will be further evaluated as we progress through the year."

SEGMENT REPORTING OF 2018 SECOND QUARTER EARNINGS

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

PNM (In millions, except EPS)



Q2 2018

Q2 2017


YTD 2018

YTD 2017

GAAP net earnings attributable to PNM Resources

$26.5

$26.8


$34.2

$43.3

GAAP diluted EPS

$0.33

$0.34


$0.43

$0.54

Ongoing net earnings

$30.8

$28.8


$39.9

$44.5

Ongoing diluted EPS

$0.38

$0.36


$0.49

$0.56

 

  • In the second quarter of 2018, PNM's GAAP and ongoing earnings reflect the retail generation portfolio changes approved in the BART settlement and lower tax expense as a result of the Tax Cuts and Jobs Act of 2017 (TCJA), both of which were incorporated into the revised retail rates phased-in beginning February 2018.
  • Earnings were also impacted in the second quarter of 2018 due to the addition of new third-party transmission contracts, increased customer usage caused by higher temperatures and load growth. These increases were offset by higher costs associated with the planned outage to install SCR equipment at the Four Corners Power Plant and moving a planned outage at the San Juan Generating Station from the fourth quarter to the second quarter, depreciation and property tax expenses from new capital investments and lower gains from the decommissioning and reclamation trusts.

TNMPan electric transmission and distribution utility in Texas.

TNMP (In millions, except EPS)



Q2 2018

Q2 2017


YTD 2018

YTD 2017

GAAP net earnings attributable to PNM Resources

$15.4

$12.2


$24.8

$19.8

GAAP diluted EPS

$0.19

$0.15


$0.31

$0.24

Ongoing net earnings

$15.4

$12.2


$24.8

$19.8

Ongoing diluted EPS

$0.19

$0.15


$0.31

$0.24

 

  • Earnings were increased by transmission rate relief, load growth and higher temperatures. This was partially offset by increased 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)



Q2 2018

Q2 2017


YTD 2018

YTD 2017

GAAP net earnings (loss) attributable to PNM Resources

($3.7)

($1.4)


($5.8)

($2.7)

GAAP diluted EPS

($0.04)

($0.02)


($0.07)

($0.03)

Ongoing net earnings (loss)

($3.9)

($1.4)


($5.9)

($2.6)

Ongoing diluted EPS

($0.04)

($0.02)


($0.07)

($0.03)

 

  • Corporate and Other's GAAP and ongoing earnings were lower in the second quarter of 2018 due to higher interest rates and the issuance of $300.0 million of 3.25% senior unsecured notes in March 2018 that reduced variable rate debt exposure. Earnings were also lower due to the early repayment of loan agreements associated with Westmoreland Coal Company, resulting in lower net interest income.

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

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

PNM Resources will discuss second quarter earnings results during a live conference call and webcast on Tuesday, July 31st 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/10121668. Telephone participants who are unable to pre-register may participate in the live conference call by dialing (877) 276-8648 or (412) 317-5474 fifteen minutes prior to the event and referencing "the PNM Resources second quarter conference call".

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

Background:
PNM Resources (NYSE:PNM) is an energy holding company based in Albuquerque, N.M., with 2017 consolidated operating revenues of $1.4 billion. Through its regulated utilities, PNM and TNMP, PNM Resources has approximately 2,580 megawatts of generation capacity and provides electricity to more than 773,000 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


Pahl Shipley


(505) 241-2160


(505) 259-8063

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
Statements made in this news release that relate to future events or PNM Resources, Inc.'s ("PNMR"), Public Service Company of New Mexico's ("PNM"), or Texas-New Mexico Power Company's ("TNMP") (collectively, the "Company") 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 1-4.

PNM Resources, Inc. and Subsidiaries

Schedule 1

Reconciliation of GAAP to Ongoing Earnings

(Preliminary and Unaudited)



PNM


TNMP


Corporate
and Other


PNMR
Consolidated


(in thousands)

Three Months Ended June 30, 2018








GAAP Net Earnings (Loss) Attributable to PNMR

$

26,540



$

15,367



$

(3,699)



$

38,208


Adjusting items before income tax effects:








Mark-to-market impact of economic hedges2a

(28)







(28)


Net change in unrealized gains and losses on investment securities2b

3,027







3,027


Regulatory disallowances and restructuring costs2c

1,794







1,794


Pension expense related to previously disposed of gas distribution business2d

869







869


(Gain) related to previously disposed of activities2e





(216)



(216)


Total adjustments before income tax effects

5,662





(216)



5,446


Income tax impact of above adjustments1,2f

(1,438)





55



(1,383)


Adjusting items, net of income taxes

4,224





(161)



4,063


Ongoing Earnings (Loss)

$

30,764



$

15,367



$

(3,860)



$

42,271










Six Months Ended June 30, 2018








GAAP Net Earnings (Loss) Attributable to PNMR

$

34,246



$

24,779



$

(5,827)



$

53,198


Adjusting items before income tax effects:








Mark-to-market impact of economic hedges2a

(56)







(56)


Net change in unrealized gains and losses on investment securities2b

4,083







4,083


Regulatory disallowances and restructuring costs2c

1,794







1,794


Pension expense related to previously disposed of gas distribution business2d

1,701







1,701


(Gain) related to previously disposed of activities2e





(216)



(216)


Total adjustments before income tax effects

7,522





(216)



7,306


Income tax impact of above adjustments1

(1,911)





55



(1,856)


Impairment of state tax credits





123



123


Total income tax impacts2f

(1,911)





178



(1,733)


Adjusting items, net of income taxes

5,611





(38)



5,573


Ongoing Earnings (Loss)

$

39,857



$

24,779



$

(5,865)



$

58,771



1 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 Statement of Earnings as follows:

aReductions in "Electric Operating Revenues" and "Cost of energy" of $264 and $292 in the three months ended June 30, 2018 and $545 and $601 in the six months ended June 30, 2018

bReductions in "Gains on investment securities"

cIncreases in "Regulatory allowances and restructuring costs"

dIncreases in "Other (deductions)"

eIncreases in "Other income"

fIncome 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


PNMR
Consolidated


(in thousands)

Three Months Ended June 30, 2017








GAAP Net Earnings (Loss) Attributable to PNMR

$

26,800



$

12,204



$

(1,449)



$

37,555


Adjusting items before income tax effects:








Mark-to-market impact of economic hedges2a

2,284







2,284


Net change in unrealized impairments of available-for-sale securities2b

73







73


Pension expense related to previously disposed of gas distribution business2c

961







961


Total adjustments before income tax effects

3,318







3,318


Income tax impact of above adjustments1,2d

(1,287)







(1,287)


Adjusting items, net of income taxes

2,031







2,031


Ongoing Earnings (Loss)

$

28,831



$

12,204



$

(1,449)



$

39,586










Six Months Ended June 30, 2017








GAAP Net Earnings (Loss) Attributable to PNMR

$

43,327



$

19,808



$

(2,718)



$

60,417


Adjusting items before income tax effects:








Mark-to-market impact of economic hedges2a

939







939


Net change in unrealized impairments of available-for-sale securities2b

(1,028)







(1,028)


Pension expense related to previously disposed of gas distribution business2c

1,922







1,922


Total adjustments before income tax effects

1,833







1,833


Income tax impact of above adjustments1

(711)







(711)


New Mexico corporate income tax rate change

22





83



105


Total income tax impacts2d

(689)





83



(606)


Adjusting items, net of income taxes

1,144





83



1,227


Ongoing Earnings (Loss)

$

44,471



$

19,808



$

(2,635)



$

61,644



12017 income tax effects calculated using a tax rate of 38.80%

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

aIncreases in "Electric Operating Revenues" and "Cost of energy" of $7,977 and $10,261 in the three months ended June 30, 2017 and $9,026 and $9,965 in the six months ended June 30, 2017

b(Increase) decrease in "Gains on investment securities"

cIncreases in "Other (deductions)"

dIncome 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


PNMR
Consolidated


(per diluted share)

Three Months Ended June 30, 2018








GAAP Net Earnings (Loss) Attributable to PNMR

$

0.33



$

0.19



$

(0.04)



$

0.48


Adjusting items, net of income tax effects:








Mark-to-market impact of economic hedges








Net change in unrealized gains and losses on investment securities

0.03







0.03


Regulatory disallowances and restructuring costs

0.02







0.02


Pension expense related to previously disposed of gas distribution business








(Gain) related to previously disposed of activities








Total Adjustments

0.05







0.05


Ongoing Earnings (Loss)

$

0.38



$

0.19



$

(0.04)



$

0.53


Average Diluted Shares Outstanding: 79,978,605













Six Months Ended June 30, 2018








GAAP Net Earnings (Loss) Attributable to PNMR

$

0.43



$

0.31



$

(0.07)



$

0.67


Adjusting items, net of income tax effects:








Mark-to-market impact of economic hedges








Net change in unrealized gains and losses on investment securities

0.03







0.03


Regulatory disallowances and restructuring costs

0.02







0.02


Pension expense related to previously disposed of gas distribution business

0.01







0.01


(Gain) related to previously disposed of activities








Impairment of state tax credits








Total Adjustments

0.06







0.06


Ongoing Earnings (Loss)

$

0.49



$

0.31



$

(0.07)



$

0.73


Average Diluted Shares Outstanding: 79,995,926





 

PNM Resources, Inc. and Subsidiaries

Schedule 4

Reconciliation of GAAP to Ongoing Earnings Per Diluted Share

(Preliminary and Unaudited)



PNM


TNMP


Corporate
and Other


PNMR
Consolidated


(per diluted share)

Three Months Ended June 30, 2017








GAAP Net Earnings (Loss) Attributable to PNMR

$

0.34



$

0.15



$

(0.02)



$

0.47


Adjusting items, net of income tax effects:








Mark-to-market impact of economic hedges

0.02







0.02


Net change in unrealized impairments of available-for-sale securities








Pension expense related to previously disposed of gas distribution business








Total Adjustments

0.02







0.02


Ongoing Earnings (Loss)

$

0.36



$

0.15



$

(0.02)



$

0.49


Average Diluted Shares Outstanding: 80,130,904













Six Months Ended June 30, 2017








GAAP Net Earnings (Loss) Attributable to PNMR:

$

0.54



$

0.24



$

(0.03)



$

0.75


Adjusting items, net of income tax effects:








Mark-to-market impact of economic hedges

0.01







0.01


Net change in unrealized impairments of available-for-sale securities

(0.01)







(0.01)


Pension expense related to previously disposed of gas distribution business

0.02







0.02


New Mexico corporate income tax rate change








Total Adjustments

0.02







0.02


Ongoing Earnings (Loss)

$

0.56



$

0.24



$

(0.03)



$

0.77


Average Diluted Shares Outstanding: 80,121,449





 

PNM Resources, Inc. and Subsidiaries

Schedule 5

Condensed Consolidated Statement of Earnings

(Preliminary and Unaudited)



Three Months Ended June 30,


Six Months Ended June 30,


2018


2017


2018


2017


(In thousands, except per share amounts)

Electric Operating Revenues:








Contracts with customers

$

338,659



$

326,586



$

642,010



$

623,777


Alternative revenue programs

5,660



$

8,920



6,584



13,499


Other electric operating revenue

7,994



$

26,814



21,597



55,222


Total electric operating revenues

$

352,313



$

362,320



670,191



692,498


Operating Expenses:








Cost of energy

87,711



104,267



180,267



207,070


Administrative and general

43,355



42,984



91,638



88,379


Energy production costs

41,888



34,393



77,238



66,180


Regulatory disallowances and restructuring costs

1,794





1,794




Depreciation and amortization

60,063



57,625



118,785



114,008


Transmission and distribution costs

18,450



17,031



35,406



33,508


Taxes other than income taxes

19,723



18,777



39,602



38,012


Total operating expenses

272,984



275,077



544,730



547,157


Operating income

79,329



87,243



125,461



145,341


Other Income and Deductions:








Interest income

4,339



3,885



8,462



8,766


Gains (losses) on investment securities

(1,670)



5,663



(1,382)



12,324


Other income

4,796



3,450



8,265



8,351


Other (deductions)

(5,868)



(5,042)



(7,243)



(10,663)


Net other income and deductions

1,597



7,956



8,102



18,778


Interest Charges

33,321



32,332



66,376



64,031


Earnings before Income Taxes

47,605



62,867



67,187



100,088


Income Taxes

5,156



21,636



5,939



32,411


Net Earnings

42,449



41,231



61,248



67,677


(Earnings) Attributable to Valencia Non-controlling Interest

(4,109)



(3,544)



(7,786)



(6,996)


Preferred Stock Dividend Requirements of Subsidiary

(132)



(132)



(264)



(264)


Net Earnings Attributable to PNMR

$

38,208



$

37,555



$

53,198



$

60,417


Net Earnings Attributable to PNMR per Common Share:








Basic

$

0.48



$

0.47



$

0.67



$

0.76


Diluted

$

0.48



$

0.47



$

0.67



$

0.75


Dividends Declared per Common Share

$

0.2650



$

0.2425



$

0.5300



$

0.4850


 

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SOURCE PNM Resources, Inc.

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