PNM RESOURCES, INC. ALBUQUERQUE, N.M., July 28, 2017 /PRNewswire/ --
PNM Resources (In millions, except EPS)
Q2 2017 Q2 2016 YTD 2017 YTD 2016
GAAP net earnings $37.6 $27.1 $60.4 $37.6
----------------- ----- ----- ----- -----
GAAP diluted EPS $0.47 $0.34 $0.75 $0.47
Ongoing net earnings $39.6 $32.1 $61.6 $42.9
-------------------- ----- ----- ----- -----
Ongoing diluted EPS $0.49 $0.40 $0.77 $0.53
PNM Resources (NYSE: PNM) today released the company's 2017 second quarter earnings results. In addition, management affirmed its 2017 consolidated ongoing earnings guidance of $1.77 to $1.87 per diluted share.
"Positive second quarter financial results keep us on track with annual earnings guidance," said Pat Vincent-Collawn, PNM Resources' chairman, president and CEO. "The settlement filed in PNM's general rate case, which includes the retirement of two coal-fired units at the San Juan Generating Station at the end of this year, is scheduled for hearings in August. Additionally, PNM's 2017 Integrated Resource Plan was filed on July 3, providing a roadmap for the transformation to a coal-free generation portfolio in 2031 while continuing to provide customers with reliable, affordable and environmentally sustainable power."
SEGMENT REPORTING OF 2017 SECOND QUARTER EARNINGS
PNM - a vertically integrated electric utility in New Mexico with distribution, transmission and generation assets.
PNM (In millions, except EPS)
Q2 2017 Q2 2016 YTD 2017 YTD 2016
GAAP net earnings $26.8 $15.9 $43.3 $20.1
----------------- ----- ----- ----- -----
GAAP diluted EPS $0.34 $0.20 $0.54 $0.25
Ongoing net earnings $28.8 $20.9 $44.5 $25.0
-------------------- ----- ----- ----- -----
Ongoing diluted EPS $0.36 $0.26 $0.56 $0.31
-- In the second quarter of 2017, PNM's GAAP and ongoing earnings included
the effect of the October 2016 implementation of new retail rates,
revenues from a new third-party transmission contract and lower outage
costs, which were partially offset by depreciation expense from new
capital investments and a reduction in the FERC generation Navopache
contract. Increased operations and maintenance costs were mitigated by
the implementation of cost savings to align the business with the
allowed recovery included in the last general rate case.
-- PNM's GAAP and ongoing earnings in the second quarter of 2016 also
included interest income received from the IRS, net of fees.
TNMP - an electric transmission and distribution utility in Texas.
TNMP (In millions, except EPS)
Q2 2017 Q2 2016 YTD 2017 YTD 2016
GAAP net earnings $12.2 $10.5 $19.8 $18.0
----------------- ----- ----- ----- -----
GAAP diluted EPS $0.15 $0.13 $0.24 $0.22
Ongoing net earnings $12.2 $10.5 $19.8 $18.0
-------------------- ----- ----- ----- -----
Ongoing diluted EPS $0.15 $0.13 $0.24 $0.22
-- In the second quarter of 2017, TNMP's GAAP and ongoing earnings
benefited from load growth and transmission rate relief, partially
offset by higher depreciation and property tax expenses resulting from
additional capital investments.
Corporate and Other - includes PNMR holding company activities, primarily related to corporate level debt and PNMR Services Company, in addition to the activities of PNMR Development and NM Capital.
Corporate and Other (In millions, except EPS)
Q2 2017 Q2 2016 YTD 2017 YTD 2016
--------
GAAP net earnings (loss) ($1.4) $0.7 ($2.7) ($0.4)
----------------------- ----- ---- ----- -----
GAAP diluted EPS ($0.02) $0.01 ($0.03) $0.00
Ongoing net earnings (loss) ($1.4) $0.7 ($2.6) ($0.1)
-------------------------- ----- ---- ----- -----
Ongoing diluted EPS ($0.02) $0.01 ($0.03) $0.00
-- In the second quarter of 2017, Corporate and Other's GAAP and ongoing
earnings were reduced by additional interest expense related to rising
interest rates and higher debt levels. During the first half of the
year, the company entered into interest rate swaps to effectively fix
the rates for an additional $150 million of its variable rate debt.
-- Corporate and Other's GAAP and ongoing earnings in the second quarter of
2016 also included interest income related to the amortization of
origination fees for the loan associated with Westmoreland Coal Company.
Financial materials are available at http://www.pnmresources.com/investors/results.cfm.
SECOND QUARTER CONFERENCE CALL: 11 AM EASTERN FRIDAY, JULY 28
PNM Resources will discuss second quarter results during a live conference call and webcast on Friday, July 28(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/10110125. 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 2016 consolidated operating revenues of $1.4 billion. Through its regulated utilities, PNM and TNMP, PNM Resources has approximately 2,791 megawatts of generation capacity and provides electricity to more than 767,000 homes and businesses in New Mexico and Texas. For more information, visit the company's website at www.PNMResources.com.
CONTACTS:
Analysts Media
Jimmie Blotter Pahl Shipley
(505) 241-2227 (505) 241-2782
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 impairments on available-for-sale securities, 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, 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 Consolidated
and Other
---------
(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 hedges(1) 2,284 - - 2,284
Net change in unrealized impairments of available-for-
sale securities(2) 73 - - 73
Pension expense related to previously disposed of gas
distribution business(3) 961 - - 961
Total adjustments before income tax effects 3,318 - - 3,318
----- --- --- -----
Income (taxes) on above adjustments* (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 hedges(1) 939 - - 939
Net change in unrealized impairments of available-for-
sale securities(2) (1,028) - - (1,028)
Pension expense related to previously disposed of gas
distribution business(3) 1,922 - - 1,922
Total adjustments before income tax effects 1,833 - - 1,833
----- --- --- -----
Income (taxes) on above adjustments* (711) - - (711)
New Mexico corporate income tax rate change 22 - 83 105
---
Total income tax impacts (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
======= ======= ======= =======
*2017 income tax effects calculated using a tax rate of 38.80%.
The pre-tax impacts (in thousands) of adjusting items are reflected on the GAAP Condensed Consolidated Statement of Earnings as follows:
(1)Increases 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
(2)(Increase) decrease in "Gains on available-for-sale securities"
(3)Increases in "Administrative and general"
PNM Resources, Inc. and Subsidiaries
Schedule 2
Reconciliation of GAAP to Ongoing Earnings
(Preliminary and Unaudited)
PNM TNMP Corporate Consolidated
and Other
---------
(in thousands)
Three Months Ended June 30, 2016
--------------------------------
GAAP Net Earnings (Loss) Attributable to PNMR $15,917 $10,508 $651 $27,076
------- ------- ---- -------
Adjusting items before income tax effects
Mark-to-market impact of economic hedges(1) 6,598 - - 6,598
Net change in unrealized impairments of available-for-sale
securities(2) 666 - - 666
Pension expense related to previously disposed of gas
distribution business(3) 925 - - 925
Total adjustments before income tax effects 8,189 - - 8,189
----- --- --- -----
Income (taxes) on above adjustments* (3,196) - - (3,196)
------
Adjusting items, net of income taxes 4,993 - - 4,993
----- --- --- -----
Ongoing Earnings (Loss) $20,910 $10,508 $651 $32,069
======= ======= ==== =======
Six Months Ended June 30, 2016
------------------------------
GAAP Net Earnings (Loss) Attributable to PNMR $20,057 $17,965 $(400) $37,622
------- ------- ----- -------
Adjusting items before income tax effects
Mark-to-market impact of economic hedges(1) 5,163 - - 5,163
Net change in unrealized impairments of available for sale
securities(2) (951) - - (951)
Regulatory disallowances and restructuring costs4 774 - 586 1,360
Pension expense related to previously disposed of gas
distribution business(3) 1,851 - - 1,851
Total adjustments before income tax effects 6,837 - 586 7,423
----- --- --- -----
Income (taxes) on above adjustments* (2,668) - (229) (2,897)
New Mexico corporate income tax rate change 804 - (92) 712
---
Total income tax impacts (1,864) - (321) (2,185)
------ --- ---- ------
Adjusting items, net of income taxes 4,973 - 265 5,238
----- --- --- -----
Ongoing Earnings (Loss) $25,030 $17,965 $(135) $42,860
======= ======= ===== =======
*2016 income tax effects calculated using a tax rate of 39.02%.
The pre-tax impacts (in thousands) of adjusting items are reflected on the GAAP Condensed Consolidated Statement of Earnings as follows:
(1)Decreases in "Electric Operating Revenues" and increases in "Cost of energy" of $6,079 and $519 in the three months ended June 30, 2016 and $4,715 and $448 in the six months ended June 30, 2016
(2)(Increase) decrease in "Gains on available-for-sale securities"
(3)Increases in "Administrative and general"
5Increases in "Regulatory disallowances and restructuring costs" (PNM) and "Other (deductions)" (Corporate and Other)
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)
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 4
Reconciliation of GAAP to Ongoing Earnings Per Diluted Share
(Preliminary and Unaudited)
PNM TNMP Corporate Consolidated
and Other
---------
(per diluted share)
Three Months Ended June 30, 2016
--------------------------------
GAAP Net Earnings (Loss)
Attributable to PNMR: $0.20 $0.13 $0.01 $0.34
Adjusting items
Mark-to-market impact of economic
hedges 0.05 - - 0.05
Net change in unrealized
impairments of available-for-
sale securities - - - -
Pension expense related to
previously disposed of gas
distribution business 0.01 - - 0.01
---- --- ---
Total Adjustments 0.06 - - 0.06
---- --- --- ----
Ongoing Earnings (Loss) $0.26 $0.13 $0.01 $0.40
===== ===== ===== =====
Average Diluted Shares Outstanding:
80,107,844
Six Months Ended June 30, 2016
------------------------------
GAAP Net Earnings (Loss)
Attributable to PNMR: $0.25 $0.22 $ - $0.47
Adjusting items
Mark-to-market impact of economic
hedges 0.04 - - 0.04
Net change in unrealized
impairments of available-for-
sale securities (0.01) - - (0.01)
New Mexico corporate income tax
rate change 0.01 - - 0.01
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 0.06 - - 0.06
---- --- --- ----
Ongoing Earnings (Loss) $0.31 $0.22 $ - $0.53
===== ===== === === =====
Average Diluted Shares Outstanding:
80,135,790
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,
2017 2016 2017 2016
---- ---- ---- ----
(In thousands, except per share amounts)
Electric Operating
Revenues $362,320 $315,391 $692,498 $626,352
-------- -------- -------- --------
Operating Expenses:
Cost of energy 104,267 81,363 207,070 173,732
Administrative and
general 45,122 45,160 92,655 92,270
Energy production costs 34,393 37,881 66,180 80,567
Regulatory disallowances
and restructuring costs - - - 774
Depreciation and
amortization 57,625 50,955 114,008 100,784
Transmission and
distribution costs 17,031 17,315 33,508 33,909
Taxes other than income
taxes 18,777 17,895 38,012 37,987
------
Total operating expenses 277,215 250,569 551,433 520,023
------- ------- ------- -------
Operating income 85,105 64,822 141,065 106,329
------ ------ ------- -------
Other Income and Deductions:
Interest income 3,885 10,194 8,766 13,815
Gains on available-for-
sale securities 5,663 4,631 12,324 10,849
Other income 3,450 4,265 8,351 8,530
Other (deductions) (2,904) (4,105) (6,387) (7,104)
------ ------ ------ ------
Net other income and
deductions 10,094 14,985 23,054 26,090
------ ------ ------ ------
Interest Charges 32,332 33,221 64,031 64,712
------ ------ ------ ------
Earnings before Income
Taxes 62,867 46,586 100,088 67,707
Income Taxes 21,636 15,634 32,411 22,790
------ ------ ------ ------
Net Earnings 41,231 30,952 67,677 44,917
(Earnings) Attributable
to Valencia Non-
controlling Interest (3,544) (3,744) (6,996) (7,031)
Preferred Stock Dividend
Requirements of
Subsidiary (132) (132) (264) (264)
---- ---- ---- ----
Net Earnings
Attributable to PNMR $37,555 $27,076 $60,417 $37,622
======= ======= ======= =======
Net Earnings Attributable to PNMR per
Common Share:
Basic $0.47 $0.34 $0.76 $0.47
Diluted $0.47 $0.34 $0.75 $0.47
Dividends Declared per
Common Share $0.2425 $0.2200 $0.4850 $0.4400
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SOURCE PNM Resources, Inc.
