PNM Resources (NYSE: PNM):

         

PNM Resources (In millions, except EPS)

       
    Q2 2015   Q2 2014   YTD 2015   YTD 2014
GAAP net earnings $31.7 $29.1 $46.0 $41.6
GAAP diluted EPS   $0.40   $0.36   $0.57   $0.52
Ongoing net earnings $35.4 $31.5 $51.8 $45.7
Ongoing diluted EPS $0.44 $0.39 $0.65 $0.57
 

PNM Resources (NYSE: PNM) today released the company’s 2015 second quarter earnings results. In addition, management affirmed its 2015 consolidated ongoing earnings guidance range of $1.50 to $1.62 per diluted share.

“PNM Resources is focused on serving our customers and improving our system,” said Pat Vincent-Collawn, PNM Resources chairman, president and CEO. “In the second quarter, the company continued to perform as expected and remains on track. Strong numbers in Texas helped maintain our momentum, while in New Mexico we are successfully meeting the challenges of a still soft economy. In the regulatory proceeding on the plan for San Juan Generating Station, PNM expects to deliver the remaining signatures on the restructuring agreement and testimony later today.”

SEGMENT REPORTING OF 2015 SECOND QUARTER AND YEAR TO DATE EARNINGS

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

         

PNM (In millions, except EPS)

       
    Q2 2015   Q2 2014   YTD 2015   YTD 2014
GAAP net earnings $21.4 $20.2 $31.4 $27.8
GAAP diluted EPS   $0.27   $0.25   $0.39   $0.35
Ongoing net earnings $25.1 $22.5 $36.2 $31.5
Ongoing diluted EPS $0.31 $0.28 $0.46 $0.39
 
  • In the second quarter, PNM’s ongoing earnings benefited from the half-priced Palo Verde Unit 1 leases, an El Paso Natural Gas FERC tariff refund, income from refined coal, gains from the Palo Verde Nuclear Decommissioning Trust, the purchase of the Rio Bravo Generating Station, AFUDC, and the 2014 impacts of an IRS settlement. These were partially offset by load, the termination of the Gallup wholesale generation contract, off system sales sharing, depreciation and property tax expenses and milder weather.

TNMP – an electric transmission and distribution utility in Texas.

         

TNMP (In millions, except EPS)

 
    Q2 2015   Q2 2014   YTD 2015   YTD 2014
GAAP net earnings   $11.9   $9.5   $19.6   $16.3
GAAP diluted EPS   $0.15   $0.12   $0.24   $0.20
Ongoing net earnings $11.9 $9.6 $19.6 $16.4
Ongoing diluted EPS $0.15 $0.12 $0.24 $0.20
 
  • In the second quarter, TNMP’s ongoing earnings benefited from rate relief and increased load which were partially offset by higher depreciation and property tax expenses.

Corporate and Other– a segment that reflects costs at the PNM Resources holding company, mainly comprised of interest expense related to debt.

         

Corporate and Other (In millions, except EPS)

       
    Q2 2015   Q2 2014   YTD 2015   YTD 2014
GAAP net earnings (loss) ($1.6) ($0.6) ($4.9) ($2.5)
GAAP diluted EPS   ($0.02)   ($0.01)   ($0.06)   ($0.03)
Ongoing net earnings (loss) ($1.6) ($0.6) ($3.9) ($2.2)
Ongoing diluted EPS ($0.02) ($0.01) ($0.05) ($0.02)
 
  • Corporate and Other benefited from a net improvement in interest expense related to the retirement of long-term debt in May 2015. This was more than offset by the impact of the 2014 IRS settlement, which is offset in the PNM segment.

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

SECOND QUARTER CONFERENCE CALL: 11 AM EASTERN TODAY

PNM Resources will discuss second quarter earnings results during a live conference call and webcast today 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/10069228. Telephone participants who are unable to pre-register may participate in the live conference call by dialing (866) 807-9684 or (412) 317-5415 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 2014 consolidated operating revenues of $1.4 billion. Through its regulated utilities, PNM and TNMP, PNM Resources has approximately 2,707 megawatts of generation capacity and provides electricity to more than 753,000 homes and businesses in New Mexico and Texas. For more information, visit the company's website at www.PNMResources.com.

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’ (“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

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 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 generally accepted accounting principles in the U.S. (“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. Management is generally not able to estimate the impact of the reconciling items between ongoing earnings guidance and forecasted GAAP net earnings, nor their probable impact on GAAP net earnings; therefore, management is generally not able to provide a corresponding GAAP equivalent for earnings guidance.

       

PNM Resources, Inc. and Subsidiaries

Schedule 1

Reconciliation of GAAP to Ongoing Earnings

(Preliminary and Unaudited)

 
PNM   TNMP  

Corporate
and Other

   Consolidated
(in thousands)

Three Months Ended June 30, 2015

GAAP Net Earnings (Loss) Attributable to PNMR: $ 21,381 $ 11,865 $ (1,573 ) $ 31,673
Adjusting items, net of income tax effects
Mark-to-market impact of economic hedges1 2,680 — — 2,680
Net change in unrealized impairments of available-for-sale securities2 727 — — 727
Regulatory disallowances3 930 — — 930
(Gain) loss related to previously disposed of activities4 (660 ) —   3   (657 )
Total Adjustments 3,677   —   3   3,680  
Ongoing Earnings (Loss) $ 25,058   $ 11,865   $ (1,570 ) $ 35,353  
 

Six Months Ended June 30, 2015

GAAP Net Earnings (Loss) Attributable to PNMR: $ 31,371 $ 19,559 $ (4,917 ) $ 46,013
Adjusting items, net of income tax effects
Mark-to-market impact of economic hedges5 3,726 — — 3,726
Net change in unrealized impairments of available-for-sale securities2 466 — — 466
New Mexico corporate income tax rate change6 (470 ) — (203 ) (673 )
Regulatory disallowances3 1,061 — — 1,061
State tax credit and NOL impairment6 658 — 342 1,000
(Gain) loss related to previously disposed of activities7 (660 ) —   905   245  
Total Adjustments 4,781   —   1,044   5,825  
Ongoing Earnings (Loss) $ 36,152   $ 19,559   $ (3,873 ) $ 51,838  

 

2015 income tax effects calculated using tax rates of 35.00% for TNMP and 39.19% for other segments.
 
The impacts of adjusting items are reflected on the GAAP Condensed Consolidated Statement of Earnings as follows:

1Pre-tax8 impacts reflected as $4,370 thousand reduction in "Electric Operating Revenues" and $38 thousand increase in "Cost of energy"

2Pre-tax8 impact reflected in "Gains on available-for-sale securities"
3Pre-tax8 impact reflected in "Regulatory disallowances"
4Pre-tax8 impacts reflected as $1,086 thousand increase in "Other income" and $5 thousand increase in "Interest charges"
5Pre-tax8 impacts reflected as $6,018 thousand reduction in "Electric Operating Revenues" and $109 thousand increase in "Cost of energy"
6Impact reflected in "Income Taxes"

7 Pre-tax8 impacts reflected as $1,086 thousand increase in "Other income," $291 thousand increase in "Taxes other than income taxes," $74 thousand increase in "Interest charges," and $1,122 thousand increase in "Other deductions"

8 Tax impacts reflected in "Income Taxes"
 
       

PNM Resources, Inc. and Subsidiaries

Schedule 2

Reconciliation of GAAP to Ongoing Earnings

(Preliminary and Unaudited)

 
PNM   TNMP  

Corporate
and Other

   Consolidated

(in thousands)

Three Months Ended June 30, 2014

GAAP Net Earnings (Loss) Attributable to PNMR: $ 20,214 $ 9,534 $ (607 ) $ 29,141
Adjusting items, net of income tax effects
Mark-to-market impact of economic hedges1 258 — — 258
Net change in unrealized impairments of available-for-sale securities2 (55 ) — — (55 )
Process improvement initiatives3 1,115 34 — 1,149
San Juan Coal Company audit arbitration4 1,015   —   —   1,015  
Total Adjustments 2,333   34   —   2,367  
Ongoing Earnings (Loss) $ 22,547   $ 9,568   $ (607 ) $ 31,508  
 

Six Months Ended June 30, 2014

GAAP Net Earnings (Loss) Attributable to PNMR: $ 27,757 $ 16,336 $ (2,484 ) $ 41,609
Adjusting items, net of income tax effects
Mark-to-market impact of economic hedges5 1,931 — — 1,931
Net change in unrealized impairments of available-for-sale securities2 (274 ) — — (274 )
New Mexico corporate income tax rate change6 — — 241 241
Process improvement initiatives3 1,115 34 — 1,149
San Juan Coal Company audit arbitration4 1,015   —   —   1,015  
Total Adjustments 3,787   34   241   4,062  
Ongoing Earnings (Loss) $ 31,544   $ 16,370   $ (2,243 ) $ 45,671  

 

2014 income tax effects calculated using tax rates of 35.00% for TNMP and 39.42% for other segments.
 
The impacts of adjusting items are reflected on the GAAP Condensed Consolidated Statement of Earnings as follows:
1Pre-tax7 impacts reflected as $442 thousand reduction in "Electric Operating Revenues" and $16 thousand reduction in "Cost of energy"
2Pre-tax7 impact reflected in "Gains on available-for-sale securities"
3Pre-tax7 impact reflected in "Administrative and general"
4Pre-tax7 impact reflected in "Cost of energy"
5Pre-tax7 impacts reflected as $3,365 thousand reduction in "Electric Operating Revenues" and $177 thousand reduction in "Cost of energy"
6Impact reflected in "Income Taxes"
7Tax impacts reflected in "Income Taxes"
         

PNM Resources, Inc. and Subsidiaries

Schedule 3

Reconciliation of GAAP to Ongoing Earnings Per Diluted Share

(Preliminary and Unaudited)

 
PNM   TNMP    

Corporate
and Other

     Consolidated
(per diluted share)

Three Months Ended June 30, 2015

 

GAAP Net Earnings (Loss) Attributable to PNMR: $ 0.27 $ 0.15 $ (0.02 ) $ 0.40
Adjusting items
Mark-to-market impact of economic hedges 0.03

—

— 0.03
Net change in unrealized impairments of available-for-sale securities 0.01

—

— 0.01
Regulatory disallowances 0.01

—

— 0.01
(Gain) loss related to previously disposed of activities (0.01 ) —   —   (0.01 )
Total Adjustments 0.04   —   —   0.04  
Ongoing Earnings (Loss) $ 0.31   $ 0.15   $ (0.02 ) $ 0.44  
Average Diluted Shares Outstanding: 80,133,154
 

Six Months Ended June 30, 2015

GAAP Net Earnings (Loss) Attributable to PNMR: $ 0.39 $ 0.24 $ (0.06 ) $ 0.57
Adjusting items
Mark-to-market impact of economic hedges 0.05 — — 0.05
Net change in unrealized impairments of available-for-sale securities 0.01 — — 0.01
New Mexico corporate income tax rate change — — — —
Regulatory disallowances 0.01 — — 0.01
State tax credit and NOL impairment 0.01 — — 0.01
(Gain) loss related to previously disposed of activities (0.01 ) —   0.01   —  
Total Adjustments 0.07   —   0.01   0.08  
Ongoing Earnings (Loss) $ 0.46   $ 0.24   $ (0.05 ) $ 0.65  
Average Diluted Shares Outstanding: 80,143,056
 
       

PNM Resources, Inc. and Subsidiaries

Schedule 4

Reconciliation of GAAP to Ongoing Earnings Per Diluted Share

(Preliminary and Unaudited)

 
PNM   TNMP  

Corporate
and Other

   Consolidated
(per diluted share)

Three Months Ended June 30, 2014

GAAP Net Earnings (Loss) Attributable to PNMR: $ 0.25 $ 0.12 $ (0.01 ) $ 0.36
Adjusting items
Mark-to-market impact of economic hedges — — — —
Net change in unrealized impairments of available-for-sale securities — — — —
Process improvement initiatives 0.01 — — 0.01
San Juan Coal Company audit arbitration 0.01   —   —   0.01
Total Adjustments 0.02   —   —   0.02
Ongoing Earnings (Loss) $ 0.28   $ 0.12   $ (0.01 ) $ 0.39
Average Diluted Shares Outstanding: 80,227,063
 

Six Months Ended June 30, 2014

GAAP Net Earnings (Loss) Attributable to PNMR: $ 0.35 $ 0.20 $ (0.03 ) $ 0.52
Adjusting items
Mark-to-market impact of economic hedges 0.02 — — 0.02
Net change in unrealized impairments of available-for-sale securities — — — —
New Mexico corporate income tax rate change — — — —
Process improvement initiatives 0.01 — — 0.01
San Juan Coal Company audit arbitration 0.01   —   —   0.01
Total Adjustments 0.04   —   —   0.04
Ongoing Earnings (Loss) $ 0.39   $ 0.20   $ (0.02 ) $ 0.57
Average Diluted Shares Outstanding: 80,307,180
 
Tables may not appear visually accurate due to rounding.
 
   

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,

2015   2014 2015   2014
(In thousands, except per share amounts)
Electric Operating Revenues $ 352,887   $ 346,160   $ 685,755   $ 675,057  
Operating Expenses:
Cost of energy 114,038 109,419 229,683 222,033
Administrative and general 39,928 45,235 83,787 89,093
Energy production costs 44,790 45,846 87,459 93,134
Regulatory disallowances 1,529 — 1,744 —
Depreciation and amortization 46,049 42,163 91,510 84,130
Transmission and distribution costs 16,868 16,068 33,354 32,974
Taxes other than income taxes 17,271   16,133   36,234   33,644  
Total operating expenses 280,473   274,864   563,771   555,008  
Operating income 72,414   71,296   121,984   120,049  
Other Income and Deductions:
Interest income 1,941 2,040 3,691 4,158
Gains on available-for-sale securities 5,556 4,699 9,580 7,272
Other income 5,717 3,180 10,679 4,754
Other (deductions) (3,707 ) (2,169 ) (7,370 ) (5,102 )
Net other income and deductions 9,507   7,750   16,580   11,082  
Interest Charges 28,913   29,972   59,186   59,506  
Earnings before Income Taxes 53,008 49,074 79,378 71,625
Income Taxes 17,353   15,893   25,870   22,313  
Net Earnings 35,655 33,181 53,508 49,312
(Earnings) Attributable to Valencia Non-controlling Interest (3,850 ) (3,908 ) (7,231 ) (7,439 )
Preferred Stock Dividend Requirements of Subsidiary (132 ) (132 ) (264 ) (264 )
Net Earnings Attributable to PNMR $ 31,673   $ 29,141   $ 46,013   $ 41,609  
Net Earnings Attributable to PNMR per Common Share:
Basic $ 0.40 $ 0.37 $ 0.58 $ 0.52
Diluted $ 0.40 $ 0.36 $ 0.57 $ 0.52
Dividends Declared per Common Share $ 0.200 $ 0.185 $ 0.400 $ 0.370