PNM Resources Reports Second Quarter 2022 Results
PNM Resources reported Q2 2022 GAAP earnings of $0.18 per diluted share and ongoing earnings of $0.57 per diluted share. The company affirmed ongoing earnings guidance of $2.50-$2.60 for 2022 and $2.60-$2.75 for 2023. Notable performance was seen in the TNMP segment, driven by load growth and favorable weather. However, PNM's results were impacted by unrealized losses on investments totaling $39.0 million. The ongoing merger with AVANGRID is awaiting a court decision, with oral arguments requested by August 5, 2022.
- Affirmed ongoing earnings guidance of $2.50-$2.60 for 2022 and $2.60-$2.75 for 2023.
- Strong financial performance driven by robust load growth and favorable weather in TNMP.
- GAAP earnings decreased due to $39.0 million in unrealized losses on investment securities.
- Increased costs in operations and maintenance, and higher depreciation and property tax expenses.
2022 and 2023 Ongoing Earnings Guidance Affirmed
- 2022 Second Quarter GAAP earnings of
$0.18 per diluted share, including unrealized losses on investment securities - 2022 Second Quarter ongoing earnings of
$0.57 per diluted share - Affirmed ongoing earnings guidance ranges of
$2.50 -$2.60 for 2022 and$2.60 -$2.75 for 2023
ALBUQUERQUE, N.M., Aug. 4, 2022 /PRNewswire/ --
PNM Resources (In millions, except EPS) | ||||
Q2 2022 | Q2 2021 | YTD 2022 | YTD 2021 | |
GAAP net earnings attributable | ||||
GAAP diluted EPS | ||||
Ongoing net earnings | ||||
Ongoing diluted EPS | ||||
PNM Resources (NYSE: PNM) today released its 2022 second quarter results. In addition, management affirmed its 2022 consolidated ongoing earnings guidance of
"The end of the second quarter marked an important milestone in PNM's clean energy transition as we retired Unit 1 of the San Juan Generating Station after powering New Mexico for decades," said Pat Vincent-Collawn, PNM Resources chairman and CEO. "We sincerely appreciate the teams involved in the preparation and transition of this key resource during a record-breaking peak season at PNM."
"Our strong second quarter financial performance was driven by robust load growth and weather at TNMP alongside the constructive rate environment in Texas encouraging continued investment to support this increased demand," added Vincent-Collawn. "Our teams across Texas and New Mexico continue to prioritize the safety, reliability and resiliency of our infrastructure to support the growing needs of our customers."
SEGMENT REPORTING OF 2022 SECOND QUARTER EARNINGS
- PNM – a vertically integrated electric utility in New Mexico with distribution, transmission and generation assets.
- TNMP – an 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 2022 | Q2 2021 | Q2 2022 | Q2 2021 | ||
PNM | ( | ||||
TNMP | |||||
Corporate and Other | ( | ( | ( | ( | |
Consolidated PNM Resources | |||||
Net changes to GAAP and ongoing earnings in the second quarter of 2022 compared to the second quarter of 2021 include:
- PNM: Increased transmission margins due to higher system demand and new customers, including the Western Spirit transmission contract, were more than offset by realized losses in decommissioning and reclamation trusts, O&M increases, planned plant outage costs, and higher depreciation and property tax expense associated with new capital investments.
- TNMP: Increased usage due to load growth and higher temperatures and rate recovery through Transmission Cost of Service (TCOS) and Distribution Cost of Service (DCOS) increases were partially offset by higher depreciation and property tax expense associated with new capital investments.
- Corporate and Other: Higher interest rates on variable rate debt increased losses
In addition, GAAP earnings decreased in the second quarter of 2022 resulting from
Additional materials with information on quarterly results are available at
http://www.pnmresources.com/investors/results.cfm.
UPDATE ON MERGER
On January 3, 2022, PNM Resources and AVANGRID announced an amendment and extension of their merger agreement through April 20, 2023, and an appeal of the NMPRC decision with the New Mexico Supreme Court. The Court's briefing schedule will conclude on August 5, 2022 with the companies' response brief. Oral arguments have been requested. There is no statutory deadline for the Court to respond to the request for oral argument nor to act on the appeal.
SECOND QUARTER CONFERENCE CALL: 11 A.M. EASTERN THURSDAY, AUGUST 4
PNM Resources will discuss these items during a live conference call and webcast on Thursday, 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, Senior Vice President and Chief Financial Officer.
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/10168818/f38f044c3e. 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 2021 consolidated operating revenues of
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 (Preliminary and Unaudited) | ||||||||
PNM | TNMP | Corporate | PNMR | |||||
(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 | ||||
1 Tax effects calculated using a tax rate of | ||||||||
2 The pre-tax impacts (in thousands) of adjusting items are reflected on the GAAP Condensed Consolidated Statements of Earnings as | ||||||||
a Decreases in "Gains (losses) on investment securities" reflecting non-cash performance relative to market, not indicative of funding | ||||||||
b Increases in "Regulatory disallowances and restructuring costs" | ||||||||
c Increases in "Other (deductions)" | ||||||||
d Increases in "Administrative and general" | ||||||||
3 Increases (decreases) in "Income Taxes" | ||||||||
4 Income tax timing impacts resulting from differences between the statutory rates of | ||||||||
5 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 | PNMR | |||||
(in thousands) | ||||||||
Three Months Ended June 30, 2021 | ||||||||
GAAP Net Earnings (Loss) Attributable to PNMR | $ 41,352 | $ 15,650 | $ (3,293) | $ 53,709 | ||||
Adjusting items before income tax effects: | ||||||||
Net change in unrealized gains and losses on investment securities2a | (10,386) | — | — | (10,386) | ||||
Pension expense related to previously disposed of gas distribution business2b | 849 | — | — | 849 | ||||
Merger related costs2c | 154 | 212 | 1,710 | 2,076 | ||||
Total adjustments before income tax effects | (9,383) | 212 | 1,710 | (7,461) | ||||
Income tax impact of above adjustments1 | 2,383 | (45) | (434) | 1,904 | ||||
Income tax impact of non-deductible merger related costs3 | 11 | 13 | 165 | 189 | ||||
Timing of statutory and effective tax rates on non-recurring items4 | (751) | (98) | 54 | (795) | ||||
Total income tax impacts5 | 1,643 | (130) | (215) | 1,298 | ||||
Adjusting items, net of income taxes | (7,740) | 82 | 1,495 | (6,163) | ||||
Ongoing Earnings (Loss) | $ 33,612 | $ 15,732 | $ (1,798) | $ 47,546 | ||||
Six Months Ended June 30, 2021 | ||||||||
GAAP Net Earnings (Loss) Attributable to PNMR | $ 59,888 | $ 24,385 | $ (12,985) | $ 71,288 | ||||
Adjusting items before income tax effects: | ||||||||
Net change in unrealized gains and losses on investment securities2a | (6,105) | — | — | (6,105) | ||||
Pension expense related to previously disposed of gas distribution business2b | 1,698 | — | — | 1,698 | ||||
Merger related costs2c | 358 | 428 | 8,380 | 9,166 | ||||
Total adjustments before income tax effects | (4,049) | 428 | 8,380 | 4,759 | ||||
Income tax impact of above adjustments1 | 1,029 | (90) | (2,128) | (1,189) | ||||
Income tax impact of non-deductible merger related costs3 | 11 | 35 | 705 | 751 | ||||
Timing of statutory and effective tax rates on non-recurring items4 | (317) | (98) | 148 | (267) | ||||
Total income tax impacts5 | 723 | (153) | (1,275) | (705) | ||||
Adjusting items, net of income taxes | (3,326) | 275 | 7,105 | 4,054 | ||||
Ongoing Earnings (Loss) | $ 56,562 | $ 24,660 | $ (5,880) | $ 75,342 | ||||
1Tax effects calculated using a tax rate of | ||||||||
2 The pre-tax impacts (in thousands) of adjusting items are reflected on the GAAP Condensed Consolidated Statement of Earnings as | ||||||||
a (Increases) in "Gains on investment securities" reflecting non-cash performance relative to market, not indicative of funding | ||||||||
b Increases in "Other (deductions)" | ||||||||
c Increases in "Administrative and general" | ||||||||
3 Increase in "Income Tax Expense" | ||||||||
4 Income tax timing impacts resulting from differences between the statutory tax rates of expected statutory tax rate of | ||||||||
5 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 | PNMR | |||||
(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 4 Reconciliation of GAAP to Ongoing Earnings Per Diluted Share (Preliminary and Unaudited) | ||||||||
PNM | TNMP | Corporate | PNMR | |||||
(per diluted share) | ||||||||
Three Months Ended June 30, 2021 | ||||||||
GAAP Net Earnings (Loss) Attributable to PNMR | $ 0.48 | $ 0.18 | $ (0.04) | $ 0.62 | ||||
Adjusting items, net of income tax effects: | ||||||||
Net change in unrealized gains and losses on investment securities | (0.09) | — | — | (0.09) | ||||
Pension expense related to previously disposed of gas distribution business | 0.01 | — | — | 0.01 | ||||
Merger related costs | — | — | 0.02 | 0.02 | ||||
Timing of statutory and effective tax rates on non-recurring items | (0.01) | — | — | (0.01) | ||||
Total Adjustments | (0.09) | — | 0.02 | (0.07) | ||||
Ongoing Earnings (Loss) | $ 0.39 | $ 0.18 | $ (0.02) | $ 0.55 | ||||
Average Diluted Shares Outstanding: 86,106,810 | ||||||||
Six Months Ended June 30, 2021 | ||||||||
GAAP Net Earnings (Loss) Attributable to PNMR | $ 0.70 | $ 0.28 | $ (0.15) | $ 0.83 | ||||
Adjusting items, net of income tax effects: | ||||||||
Net change in unrealized gains and losses on investment securities | (0.05) | — | — | (0.05) | ||||
Pension expense related to previously disposed of gas distribution business | 0.01 | — | — | 0.01 | ||||
Merger related costs | — | 0.01 | 0.08 | 0.09 | ||||
Total Adjustments | (0.04) | 0.01 | 0.08 | 0.05 | ||||
Ongoing Earnings (Loss) | $ 0.66 | $ 0.29 | $ (0.07) | $ 0.88 | ||||
Average Diluted Shares Outstanding: 86,102,436 | ||||||||
PNM Resources, Inc. and Subsidiaries Schedule 5 Condensed Consolidated Statements of Earnings (Preliminary and Unaudited) | |||||||
Three Months Ended | Six Months Ended | ||||||
2022 | 2021 | 2022 | 2021 | ||||
(In thousands, except per share amounts) | |||||||
Electric Operating Revenues: | |||||||
Contracts with customers | $ 404,320 | $ 368,893 | $ 788,813 | $ 715,478 | |||
Alternative revenue programs | 2,579 | 7,236 | (2,926) | 6,327 | |||
Other electric operating revenue | 92,831 | 50,411 | 157,961 | 69,442 | |||
Total electric operating revenues | 499,730 | 426,540 | 943,848 | 791,247 | |||
Operating Expenses: | |||||||
Cost of energy | 195,596 | 152,676 | 364,010 | 268,072 | |||
Administrative and general | 51,342 | 52,473 | 107,203 | 111,938 | |||
Energy production costs | 42,499 | 37,439 | 76,065 | 74,335 | |||
Regulatory disallowances and restructuring costs | 1,399 | — | 1,399 | — | |||
Depreciation and amortization | 76,769 | 70,727 | 152,533 | 140,601 | |||
Transmission and distribution costs | 21,156 | 18,853 | 39,622 | 36,170 | |||
Taxes other than income taxes | 24,577 | 20,169 | 48,556 | 42,762 | |||
Total operating expenses | 413,338 | 352,337 | 789,388 | 673,878 | |||
Operating income | 86,392 | 74,203 | 154,460 | 117,369 | |||
Other Income and Deductions: | |||||||
Interest income | 3,327 | 3,578 | 7,619 | 7,137 | |||
Gains (losses) on investment securities | (41,795) | 13,192 | (68,368) | 14,160 | |||
Other income | 5,151 | 4,654 | 9,481 | 8,906 | |||
Other (deductions) | (3,641) | (5,448) | (5,882) | (8,738) | |||
Net other income and deductions | (36,958) | 15,976 | (57,150) | 21,465 | |||
Interest Charges | 29,217 | 24,119 | 55,437 | 50,003 | |||
Earnings before Income Taxes | 20,217 | 66,060 | 41,873 | 88,831 | |||
Income Taxes | 1,094 | 8,299 | 3,532 | 9,865 | |||
Net Earnings | 19,123 | 57,761 | 38,341 | 78,966 | |||
(Earnings) Attributable to Valencia Non-controlling Interest | (3,630) | (3,920) | (6,725) | (7,414) | |||
Preferred Stock Dividend Requirements of Subsidiary | (132) | (132) | (264) | (264) | |||
Net Earnings Attributable to PNMR | $ 15,361 | $ 53,709 | $ 31,352 | $ 71,288 | |||
Net Earnings Attributable to PNMR per Common Share: | |||||||
Basic | $ 0.18 | $ 0.62 | $ 0.36 | $ 0.83 | |||
Diluted | $ 0.18 | $ 0.62 | $ 0.36 | $ 0.83 | |||
Dividends Declared per Common Share | $ 0.3475 | $ 0.3275 | $ 0.6950 | $ 0.6550 | |||
View original content to download multimedia:https://www.prnewswire.com/news-releases/pnm-resources-reports-second-quarter-2022-results-301599635.html
SOURCE PNM Resources, Inc.
FAQ
What were PNM's Q2 2022 earnings per share?
What is PNM's earnings guidance for 2022 and 2023?
What factors impacted PNM's earnings in Q2 2022?
What update is there on PNM's merger with AVANGRID?
What were the key drivers of TNMP's performance in Q2 2022?
