EX-99.1 2 ex99111012019earningsr.htm EXHIBIT 99.1 Exhibit


Exhibit 99.1


For Immediate Release
November 1, 2019



PNM Resources Reports Third Quarter Results
2019 Ongoing Earnings Guidance Affirmed, Conference call set for 11 a.m. Eastern today



PNM Resources (In millions, except EPS)
 
Q3 2019
Q3 2018
YTD 2019
YTD 2018
GAAP net earnings attributable to PNM Resources
$102.8
$87.5
$45.6
$140.7
GAAP diluted EPS
$1.28
$1.09
$0.57
$1.76
Ongoing net earnings
$103.6
$86.5
$143.6
$145.3
Ongoing diluted EPS
$1.29
$1.08
$1.80
$1.82


(ALBUQUERQUE, N.M.) – PNM Resources (NYSE: PNM) today released the company’s 2019 third quarter results. In addition, management affirmed its 2019 consolidated ongoing earnings guidance of $2.05 to $2.11 per diluted share.

“Third quarter results reflect temperatures that were higher than both prior year and normal levels, which allows us to adjust our spending appropriately,” said Pat Vincent-Collawn, PNM Resources’ chairman, president and CEO. “Our capital plans incorporate additional projects at TNMP to support reliability and growth in response to regional planning studies. Our plans in New Mexico continue to focus on supporting the state’s vision to be a clean energy leader and be emissions-free by 2040.”


SEGMENT REPORTING OF 2019 THIRD QUARTER EARNINGS

PNM – a vertically integrated electric utility in New Mexico with distribution, transmission and generation assets.        
PNM (In millions, except EPS)
 
Q3 2019
Q3 2018
YTD 2019
YTD 2018
GAAP net earnings attributable to PNM Resources
$80.7
$77.4
$12.8
$111.6
                GAAP diluted EPS
$1.01
$0.97
$0.16
$1.40
Ongoing net earnings
$81.5
$75.2
$110.7
$115.0
Ongoing diluted EPS
$1.02
$0.95
$1.39
$1.45




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PNM Resources Reports Q3 Earnings            11-1-19                         p. 2 of 4


•
PNM GAAP and ongoing earnings increased in the third quarter of 2019 due to higher temperatures that increased customer usage and revised retail rates implemented in January 2019, including the impact of amortized excess deferred income taxes.
•
Earnings were also impacted in the third quarter of 2019 by reductions in operations and maintenance spending. These impacts were offset by additional depreciation and property tax expenses related to new capital investments.



TNMP – an electric transmission and distribution utility in Texas.

TNMP (In millions, except EPS)
 
Q3 2019
Q3 2018
YTD 2019
YTD 2018
GAAP net earnings attributable to PNM Resources
$25.1
$16.1
$44.5
$40.9
GAAP diluted EPS
$0.31
$0.20
$0.56
$0.51
Ongoing net earnings
$25.1
$16.1
$44.6
$40.9
Ongoing diluted EPS
$0.31
$0.20
$0.56
$0.51

•
TNMP’s GAAP and ongoing earnings increased in the third quarter of 2019 due to the combined implementation of new base rates approved in December 2018 and Transmission Cost of Service (TCOS) rate increases in March 2019 and September 2019, along with increased customer usage driven by higher temperatures.
•
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)
 
Q3 2019
Q3 2018
YTD 2019
YTD 2018
GAAP net earnings (loss) attributable to PNM Resources
($3.0)
($6.0)
($11.7)
($11.8)
GAAP diluted EPS
($0.04)
($0.08)
($0.15)
($0.15)
Ongoing net earnings (loss)
($3.0)
($4.7)
($11.7)
($10.6)
Ongoing diluted EPS
($0.04)
($0.07)
($0.15)
($0.14)

•
Corporate and Other’s GAAP and ongoing losses decreased in the third quarter of 2019 due to a lower effective tax rate.
 
Financial materials are available at http://www.pnmresources.com/investors/results.cfm.


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PNM Resources Reports Q3 Earnings            11-1-19                         p. 3 of 4

THIRD QUARTER CONFERENCE CALL: 11 A.M. EASTERN FRIDAY, NOVEMBER 1
PNM Resources will discuss third quarter earnings results during a live conference call and webcast on Friday, November 1st 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/10135162. 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 third 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 2018 consolidated operating revenues of $1.4 billion. Through its regulated utilities, PNM and TNMP, PNM Resources has approximately 2,701 megawatts of generation capacity and provides electricity to more than 785,000 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.



  


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PNM Resources Reports Q3 Earnings            11-1-19                         p. 4 of 4


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.






(END)





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 September 30, 2019
 
 
 
 
 
 
 
 
GAAP Net Earnings (Loss) Attributable to PNMR
 
$
80,729

 
$
25,087

 
$
(3,045
)
 
$
102,771

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
 
(1,202
)
 
—

 
—

 
(1,202
)
Pension expense related to previously disposed of gas distribution business2d
 
1,044

 
—

 
—

 
1,044

Process improvement initiatives2e
 
149

 
51

 
—

 
200

Four Corners coal mine reclamation2f
 
1,078

 
—

 
—

 
1,078

Total adjustments before income tax effects
 
1,041

 
51

 
—

 
1,092

Income tax impact of above adjustments1,3
 
(264
)
 
(11
)
 
—

 
(275
)
Adjusting items, net of income taxes
 
777

 
40

 
—

 
817

Ongoing Earnings (Loss)
 
$
81,506

 
$
25,127

 
$
(3,045
)
 
$
103,588

 
 
 
 
 
 
 
 
 
Nine Months Ended September 30, 2019
 
 
 
 
 
 
 
 
GAAP Net Earnings (Loss) Attributable to PNMR
 
$
12,797

 
$
44,452

 
$
(11,692
)
 
$
45,557

Adjusting items before income tax effects:
 
 
 
 
 
 
 
 
Mark-to-market impact of economic hedges2a
 
(84
)
 
—

 
—

 
(84
)
Net change in unrealized gains and losses on investment securities2b

 
(13,692
)
 
—

 
—

 
(13,692
)
Regulatory disallowances and restructuring costs2c
 
150,599

 
—

 
—

 
150,599

Pension expense related to previously disposed of gas distribution business2d
 
3,134

 
—

 
—

 
3,134

Process improvement initiatives2e
 
559

 
186

 
—

 
745

Four Corners coal mine reclamation2f
 
794

 
—

 
—

 
794

Total adjustments before income tax effects
 
141,310

 
186

 
—

 
141,496

Income tax impact of above adjustments1
 
(35,893
)
 
(39
)
 
—

 
(35,932
)
Deferred income tax impact of regulatory disallowances
 
(7,485
)
 
—

 
—

 
(7,485
)
Total income tax impacts3
 
(43,378
)
 
(39
)
 
—

 
(43,417
)
Adjusting items, net of income taxes
 
97,932

 
147

 
—

 
98,079

Ongoing Earnings (Loss)
 
$
110,729

 
$
44,599

 
$
(11,692
)
 
$
143,636

 
 
 
 
 
 
 
 
 
1 2019 income tax effects calculated using a tax rate of 25.40% for PNM and 21% for TNMP
2 The pre-tax impacts (in thousands) of adjusting items are reflected on the GAAP Condensed Consolidated Statements of Earnings as follows:
a (Reductions) in "Electric Operating Revenues" and "Cost of energy" of $257 and $285 in the three months ended September 30, 2019 and $737 and $821 in the nine months ended September 30, 2019
b (Increases) in "Gains 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"
3 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 and Other
 
PNMR Consolidated
 
 
(in thousands)
Three Months Ended September 30, 2018
 
 
 
 
 
 
 
 
GAAP Net Earnings (Loss) Attributable to PNMR
 
$
77,376

 
$
16,100

 
$
(5,955
)
 
$
87,521

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

 
(2,153
)
 
—

 
—

 
(2,153
)
Regulatory disallowances and restructuring costs2c
 
(1,645
)
 
—

 
—

 
(1,645
)
Pension expense related to previously disposed of gas distribution business2d
 
850

 
—

 
—

 
850

(Gain) related to previously disposed of activities2e
 
—

 
—

 
154

 
154

Cost to review strategic growth opportunities2f

 
—

 
—

 
1,465

 
1,465

Total adjustments before income tax effects
 
(2,976
)
 
—

 
1,619

 
(1,357
)
Income tax impact of above adjustments1,3
 
756

 
—

 
(411
)
 
345

Adjusting items, net of income taxes
 
(2,220
)
 
—

 
1,208

 
(1,012
)
Ongoing Earnings (Loss)
 
$
75,156

 
$
16,100

 
$
(4,747
)
 
$
86,509

 
 
 
 
 
 
 
 
 
Nine Months Ended September 30, 2018
 
 
 
 
 
 
 


GAAP Net Earnings (Loss) Attributable to PNMR
 
$
111,622

 
$
40,879

 
$
(11,782
)
 
$
140,719

Adjusting items before income tax effects:
 
 
 
 
 
 
 

Mark-to-market impact of economic hedges2a
 
(83
)
 
—

 
—

 
(83
)
Net change in unrealized gains and losses on investment securities2b

 
1,930

 
—

 
—

 
1,930

Regulatory disallowances and restructuring costs2c
 
149

 
—

 
—

 
149

Pension expense related to previously disposed of gas distribution business2d
 
2,548

 
—

 
—

 
2,548

(Gain) related to previously disposed of activities2e
 
—

 
—

 
(61
)
 
(61
)
Cost to review strategic growth opportunities2f

 
—

 
—

 
1,465

 
1,465

Total adjustments before income tax effects
 
4,544

 
—

 
1,404

 
5,948

Income tax impact of above adjustments1
 
(1,154
)
 
—

 
(356
)
 
(1,510
)




Impairment of state tax credits
 
—

 
—

 
123

 
123

Total income tax impacts3
 
(1,154
)
 
—

 
(233
)
 
(1,387
)
Adjusting items, net of income taxes
 
3,390

 
—

 
1,171

 
4,561

Ongoing Earnings (Loss)
 
$
115,012

 
$
40,879

 
$
(10,611
)
 
$
145,280

 
 
 
 
 
 
 
 
 
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:
a (Reductions) in "Electric Operating Revenues" and "Cost of energy" of $275 and $303 in the three months ended September 30, 2018 and $821 and $904 in the nine months ended September 30, 2018
b (Increases) decreases in "Gains on investment securities"
c Increases (decreases) in "Regulatory disallowances and restructuring costs"
d Increases in "Other (deductions)"
 
 
 
 
 
 
 
 
e (Increases) decreases in "Other income"
 
 
 
 
 
 
 
 
f Increases in "Administrative and General"
 
 
 
 
 
 
 
 
3 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 and Other
 
PNMR Consolidated
 
 
(per diluted share)
Three Months Ended September 30, 2019
 
 
 
 
 
 
 
 
GAAP Net Earnings (Loss) Attributable to PNMR
 
$
1.01

 
$
0.31

 
$
(0.04
)
 
$
1.28

Adjusting items, net of income tax effects:
 
 
 
 
 
 
 
 
Mark-to-market impact of economic hedges
 
—

 
—

 
—

 
—

Net change in unrealized gains and losses on investment securities
 
(0.01
)
 
—

 
—

 
(0.01
)
Pension expense related to previously disposed of gas distribution business
 
0.01

 
—

 
—

 
0.01

Process improvement initiatives

 
—

 
—

 
—

 
—

Four Corners coal mine reclamation
 
0.01

 
—

 
—

 
0.01

Total Adjustments
 
0.01

 
—

 
—

 
0.01

Ongoing Earnings (Loss)
 
$
1.02

 
$
0.31

 
$
(0.04
)
 
$
1.29

Average Basic and Diluted Shares Outstanding: 80,000,506
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended September 30, 2019
 
 
 
 
 
 
 
 
GAAP Net Earnings (Loss) Attributable to PNMR
 
$
0.16

 
$
0.56

 
$
(0.15
)
 
$
0.57

Adjusting items, net of income tax effects:
 
 
 
 
 
 
 
 
Mark-to-market impact of economic hedges
 
—

 
—

 
—

 
—

Net change in unrealized gains and losses on investment securities
 
(0.13
)
 
—

 
—

 
(0.13
)
Regulatory disallowances and restructuring costs
 
1.41

 
—

 
—

 
1.41

Pension expense related to previously disposed of gas distribution business
 
0.03

 
—

 
—

 
0.03

Process improvement initiatives

 
—

 
—

 
—

 
—

Four Corners coal mine reclamation
 
0.01

 
—

 
—

 
0.01

Deferred income tax impact of regulatory disallowances

 
(0.09
)
 
—

 
—

 
(0.09
)
Total Adjustments
 
1.23

 
—

 
—

 
1.23

Ongoing Earnings (Loss)
 
$
1.39

 
$
0.56

 
$
(0.15
)
 
$
1.80

Average Basic and Diluted Shares Outstanding: 79,979,723
 
 
 
 

 
 
 
 
 
 
 
 
 
 






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 September 30, 2018
 
 
 
 
 
 
 
 
GAAP Net Earnings (Loss) Attributable to PNMR
 
$
0.97

 
$
0.20

 
$
(0.08
)
 
$
1.09

Adjusting items, net of income tax effects:
 
 
 
 
 
 
 
 
Mark-to-market impact of economic hedges
 
—

 
—

 
—

 
—

Net change in unrealized gains and losses on investment securities
 
(0.02
)
 
—

 
—

 
(0.02
)
Regulatory disallowances and restructuring costs
 
(0.01
)
 
—

 
—

 
(0.01
)
Pension expense related to previously disposed of gas distribution business
 
0.01

 
—

 
—

 
0.01

(Gain) related to previously disposed of activities
 
—

 
—

 
—

 
—

Cost to review strategic growth opportunities

 
—

 
—

 
0.01

 
0.01

Total Adjustments
 
(0.02
)
 
—

 
0.01

 
(0.01
)
Ongoing Earnings (Loss)
 
$
0.95

 
$
0.20

 
$
(0.07
)
 
$
1.08

Average Diluted Shares Outstanding: 79,979,599
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended September 30, 2018
 
 
 
 
 
 
 
 
GAAP Net Earnings (Loss) Attributable to PNMR:
 
$
1.40

 
$
0.51

 
$
(0.15
)
 
$
1.76

Adjusting items, net of income tax effects:
 
 
 
 
 
 
 
 
Mark-to-market impact of economic hedges
 
—

 
—

 
—

 
—

Net change in unrealized gains and losses on investment securities
 
0.02

 
—

 
—

 
0.02

Regulatory disallowances and restructuring costs
 
—

 
—

 
—

 
—

Pension expense related to previously disposed of gas distribution business
 
0.03

 
—

 
—

 
0.03

(Gain) related to previously disposed of activities
 
—

 
—

 
—

 
—

Impairment of state tax credits
 
—

 
—

 
—

 
—

Cost to review strategic growth opportunities

 
—

 
—

 
0.01

 
0.01

Total Adjustments
 
0.05

 
—

 
0.01

 
0.06

Ongoing Earnings (Loss)
 
$
1.45

 
$
0.51

 
$
(0.14
)
 
$
1.82

Average Diluted Shares Outstanding: 79,990,484
 
 
 
 
 
 
 
 
 
 
 
 
 
 





PNM Resources, Inc. and Subsidiaries
Schedule 5
Condensed Consolidated Statements of Earnings
(Preliminary and Unaudited)

 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2019
 
2018
 
2019
 
2018
 
(In thousands, except per share amounts)
Electric Operating Revenues: 
 
 
 
 
 
 
 
Contracts with customers
$
418,673

 
$
400,023

 
$
1,049,287

 
$
1,042,033

Alternative revenue programs
(6,779
)
 
(8,050
)
 
(300
)
 
(1,466
)
Other electric operating revenue
21,692

 
30,693

 
64,471

 
52,290

Total electric operating revenues
433,586

 
422,666

 
1,113,458

 
1,092,857

Operating Expenses:
 
 
 
 
 
 
 
Cost of energy
108,736

 
113,536

 
314,145

 
293,803

Administrative and general
47,613

 
49,969

 
142,782

 
141,607

Energy production costs
30,877

 
31,350

 
108,853

 
108,588

Regulatory disallowances and restructuring costs
—

 
(1,645
)
 
150,599

 
149

Depreciation and amortization
68,350

 
61,580

 
199,771

 
180,365

Transmission and distribution costs
16,461

 
19,394

 
52,333

 
54,800

Taxes other than income taxes
21,009

 
20,492

 
61,327

 
60,094

Total operating expenses
293,046

 
294,676

 
1,029,810

 
839,406

Operating income
140,540

 
127,990

 
83,648

 
253,451

Other Income and Deductions:
 
 
 
 
 
 
 
Interest income
3,440

 
3,400

 
10,489

 
11,862

Gains on investment securities
1,686

 
2,463

 
20,299

 
1,081

Other income
4,256

 
3,735

 
11,050

 
12,000

Other (deductions)
(3,612
)
 
(2,624
)
 
(9,980
)
 
(9,867
)
Net other income and deductions
5,770

 
6,974

 
31,858

 
15,076

Interest Charges
30,359

 
30,492

 
91,785

 
96,868

Earnings before Income Taxes
115,951

 
104,472

 
23,721

 
171,659

Income Taxes (Benefits)
9,188

 
12,899

 
(32,420
)
 
18,838

Net Earnings
106,763

 
91,573

 
56,141

 
152,821

(Earnings) Attributable to Valencia Non-controlling Interest
(3,860
)
 
(3,920
)
 
(10,188
)
 
(11,706
)
Preferred Stock Dividend Requirements of Subsidiary
(132
)
 
(132
)
 
(396
)
 
(396
)
Net Earnings Attributable to PNMR
$
102,771

 
$
87,521

 
$
45,557

 
$
140,719

Net Earnings Attributable to PNMR per Common Share:
 
 
 
 
 
 
 
Basic
$
1.29

 
$
1.10

 
$
0.57

 
$
1.76

Diluted
$
1.28

 
$
1.09

 
$
0.57

 
$
1.76

Dividends Declared per Common Share
$
0.290

 
$
0.265

 
$
0.870

 
$
0.795