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PNM PNM Resources

Participants
Lisa Goodman Director of Investor Relations
Pat Vincent-Collawn Chairman, President & Chief Executive Officer
Don Tarry Senior Vice President & Chief Financial Officer
Chuck Eldred Executive Vice President, Corporate Development & Finance
Paul Fremont Mizuho
Alex Morgan Bank of America Merrill Lynch
Jonathan Reeder Wells Fargo
Call transcript
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Operator

Good day and welcome to the PNM Resources Fourth Quarter 2019 Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Lisa Goodman, Director of Investor Relations. ahead. go Please

Lisa Goodman

conference and morning Jason, Earnings everyone joining website for for Call. are supporting Thank on available the thank PNM this our this presentation the for note pnmresources.com. XXXX and Resources us other Please documents you, at that you call Fourth Conference Quarter

of our team. Resources' well and President Chief Officer; as are Joining and Pat Vice me PNM today management Vincent-Collawn Senior CEO, several our other members as President Chairman, and executive Don Tarry, Financial

Before call some need the pursuant PNM update expectations obligation current should statements the caution Securities I remind information to and that Resources estimates We forward-looking assumes and no XXXX. Private considered you morning forward-looking I are turn Litigation all Pat, based to over of this to the that Reform this you upon information. statements of that the be Act to provided of

affecting our quarterly annual results, discussion Form For Resources' please the PNM X-K detailed Form filed on reports on to refer as reports as with XX-Q, of reports a well on future and Form factors SEC. current XX-K,

With that to call the I turn Pat. will over

Pat Vincent-Collawn

quarter everyone. year-end you, our and for joining XXXX fourth Thank us Lisa, earnings today for Thanks morning, good call. and

you Sleeping but Public National call is today Importantly observe I'd please ask it it really Day, hurt that would don't because our during our feelings.

last the $X.XX earnings of per going fourth With in per of slide a the to $X.XX in share year. compared earnings of quarter of begin XXXX. fourth fourth that, to XXXX $X.XX GAAP share quarter Ongoing to earnings compared I'm X. in quarter loss of reflect on $X.XX are the

experienced with $X.XX significant team $X.XX XXXX. $X are XXXX. the conditions. results compared $X.XX we weather in business in are the ongoing the For And the second year, to these full earnings changing well demonstrate Mexico that quarter our Considering in how in adapts impacts to operations earnings New XXXX GAAP compared

will Don on financials to XXXX of the minutes. our guidance affirming provide are in further a $X.XX $X.XX. We few details

allows pretty As overall the In we governor our March, the and review future results Energy some It Mexico then and signed passed law. to the a final of XXXX, a New Transition requirements Act RPS key the we've XXXX received securitization national accolades. significant was aid and highlights. as the the in had it into a transition. bill it bill established for tool governor legislature and mandate partnerships The collaborations and and attention carbon-free and result

the up team This what achieve by mandate. take Day Earth and with energy went our than emissions earlier goal by to new to emissions reach a on have evaluated XXXX. would utility it announcement to we And the first state these U.S. zero five investor-owned back the of followed goal Our requirements. PNM, years XXXX made free

the plan was made of of We retirement step in The file this remaining first for filing that units, Juan to two the San the Station. Generating July.

in NMRD. We in XX our and also through of approved megawatts that previously was XXX XX another megawatts added rider purchases megawatts solar renewable from XXXX,

in received after. entered a that the line clean XXXX, agreement also energy leader. facilitating in announced development is We the New Xst wind energy renewable state. May growth to to become transmission the Transmission enable Spirit into of new key acquire We and Western eastern soon we increasing necessary of on Mexico to part the power an the approval

will transmission deliver wind help also low-cost megawatts approval the of customers. to PNM for line, We which XXX received BBX energy

of In Texas, strong we had another continued growth. load year

see an EPS of our but talk Don higher important in in an business to years, TNMP's part We've this of the will XXXX. meet Over to to in is the detail, been TNMP economy last accelerated Texas. of has invest continued more our story. demands this pace than area about growth growth. two XX% of we expanding in continue the

as successful our a taking of XXXX and guidance Finally, ongoing $X.XX. that was we're at mentioned in earlier, All-in-all, end into came year XXXX. top EPS the momentum at I with us

weighed January month an the $XXX Mexico in then Transition the filing of slide. end about new confirming offering a I'll the Act, that our to kicked on the New the of the with off start. Court the And San million. securitization. off We talk equity to and was allowing more month, next at law busy Supreme Juan filing Energy that applies for on

legislative bit which a up Mexico wrapped I February about the also want XX. on session, to talk New

XX-day of few were bills this a session, During interest passed.

support, that First, funding. the the for projects necessary electric recognizes facilities grid certain Industrial to move energy Revenue bipartisan transmission as to renewable can it the provide an transmission state as Act benefits portfolio include that is into agreements bond to This received eligible modified are was through development bill Bond XXXX. encourages investment for leasing more by in financial The landowners. a and carbon-free

an including general start-up Several capital rural tax job trading the economic support passed for programs for initiatives investment bills in grow economic appropriations flexibility more extension increase New investment to to support and in and businesses, credit, communities, Mexico's state's the in economy, of of development.

approve slide to commission to including scheduled rule before item for regulatory and an X on update the the San on the securitization. February examiners Juan The recommended X. decisions On agenda, issued this turn let's hearing abandonment XX, is April to filing. Now

and side schedule. by due of in up are X. October power in parties case the the order filings, The On January is hearings through wrapped working this replacement briefing the

our recommendation decided up Regulation other items final Program, Renewable to March. the Direct end Public by New including January, wrapped the A the approval couple of of approve should and XXXX Mexico in of be our Solar Commission with which Plan a

transmission for TCOS $XX filed we TNMP, investments. of for our the this recovery At of million filing year first

in in seen request to million. for we've rates As new expect years, we of prior annualized the $X.X revenue would be March implemented

to We the DCOS file side planning April. distribution are for in still a

plan part Mexico initiative annual the and move our are you towards general to of of year. rate. the New to we commission information the our review in on At throughout rate appointed be keep FERC all we election file updating along of an will renewable PNM, filing to November quarter, to middle more second about ballot formula expect these year. the with the planning We'll seeing would a general in and start items this updated The

our like new Financial I'd to Tarry. now And Don Officer, congratulate Chief

We and are thrilled new Don to have talented such a welcome here to position. we at bench PNM his

that, at I'm Don, look turn you with to for detailed So going numbers. it over to the a

Don Tarry

thanks Thank results recap on you us. and for get I'll our X. a started morning XXXX good of Pat, joining with and everyone slide

EPS And $X.XX TNMP over to capital $X.XX. at TNMP and the benefited both additional added investments. offset in $X.XX. increased XXXX and in Pat earlier, of PNM partially the tax new from efforts weather second higher PNM an were mild mitigate and interest impacts As property expense these after mentioned by XXXX our relief depreciation ongoing savings. quarter, from and rate came

Westmoreland are from lower that and and XXXX segment its drivers balances Other of from decommissioning agreement increased in loan year income quarter $X.XX, the was saw the trusts. the decreased in May PNM higher segment maintenance off also paid costs for full included appendix. debt Corporate XXXX. and fourth available net of both The income detailed The saw reclamation and $X.XX and plant as we

Now turning to slide X.

programs. we to to to In impacts quarter New the assumption which take In growth customer with offset an brought XXXX. normalized Let's line Mexico, our was growth look fourth see in at of a for XXXX continue the energy weather in our annual partially by flat being load XXXX increase X.X%, efficiency X%. customers'

was second The fourth are quarter the to impact quarters. XXXX X.X% in increased X.X%. growth We weather in expecting in above-normal by the largely and the impacts in of range offset third

and dates inquiries for announcements. new expansions and Keith told in of a see that later couple to announcements we center Mexico, year hotels along E. you distribution ground broke of on a we with broke and openings and calls mentioned this with -- year. previous XXXX food in ground New in continue We in-service about business district that previous groundbreakings their dates Ben ago, opening

of the At growth delays the continues saw TNMP, end demonstrate Texas Project momentum X.X% in by of the XXXX. providing economy. year caught demand-based XXXX the we were that XXXX early into strength up good our to of

transmission being interconnections have We we load demand-based to X% completed grow for to XXXX. and X% in requests XXXX and more XXXX currently this nine interconnection We expect XX evaluated year. another in

Longer a expansions number identified study that load Basin on an growth Delaware in The be a area. that reliability associated released demand. economic with completed projected term the projects study integration forecasted of along would and increase in this support ERCOT the in this to its needed

of TNMP territory last service these were capital part $XXX to within and we made Some investments million projects that year. increase the the of fall

permits. Also, and home February, data Dallas manufacturing sales January Federal continued expansion from and increases both in shows construction Reserve the and in

of So things we in down Texas. don't any slowing signs see

driven of in fourth within due our in In the X both consolidated exceeded by came PNM, slide Let's guidance which projected costs. our the end and move on their maintenance were at temperatures high colder to guidance. corporate in guidance. XXXX, TNMP plant and earnings lower results guidance quarter to

recent We are incorporates offering. guidance $X.XX our $X.XX equity affirming to which XXXX our of

of in to our $XXX call, investments Power Mexico December our bringing New XXXX. On slide from investment guidance presentation. million was to XXXX our slightly Kairos plan XX, XXXX capital On we changed that shared

With to infrastructure. these new an energy added part Albuquerque, XXXX $XX capital needs build of as new to million this as growth in in have well additional we electric

the reflect dilution the power January XX. in impact the We've Rate slide did business Now incorporate forward slide equity base turning to not earnings and updated change. segments. offering to our

levels. PNM are At our used proceeds debt new issuance corporate shares for to these and the impacts So only are the the TNMP. at reduce of

of forward convertibles for line investment-grade range now issued equity plan, previously needs. part latter This some issuance million to additional reflects strengthen mandatory of a The we have reflects as and assuming we of ratings XXXX. to timing million size equity remaining facilitate fund By resources. $XXX the transition equity bringing in plans flexibility Western of item transaction and in had for our we been will credit January financing line of our Spirit convertibles mandatory our the mid-XXXX. million emission-free $XXX in equity our $XXX the This the

to through target Our X% growth X% remains earnings XXXX.

goals, work strategic that manage future authorized healthy plans of a we continue potential the capital our and deliver our financial reliably energy serve business earnings utility to maximize can towards our As needs. to earn returns, our we invested

Pat, back turn you to I'll and call you. thank the

Pat Vincent-Collawn

Transition to exit to be passage Act accomplishments to becomes The the The have confirmed for emissions-free our the San path Thanks, especially Energy the more applicability to Don. our by XXXX, and groundwork generation laid of XXXX. critical Juan coal XXXX transition filing in plans certain.

Our only coal in Four exposure. be remaining Power Corners Plant the ownership our will XXX-megawatt

more will and transmission our this We distribution well to power changing for current integrate look with opportunities flexible must same baseload grid resources. as replace to time, review the as future our resources portfolio. At evolve

in dedicated our resilience but goals without would the have XXXX shown tremendous We through proud the you. say reach our keep members. work together. I recognize and Thank I not teams not enough, realized can't It to year saying it in members achieve was but to trying am you, to and I easy challenges value show team, of are commitment it. ways, our and team many of success accomplishments how appreciate an I'll have the working we alongside much to

up open questions. Jason, it for with that let's

Operator

Thank you.

session. We now question-and-answer the from ahead. question Please [Operator Instructions] is will Mizuho. from The Paul first go Fremont begin

Paul Fremont

I line for just directly putting for Other business looks as you've slide, the the the TNMP. characterization? earnings which you're just also into a and I is to to Yeah. wanted share dilution segments opposed that retail as put dilution PNM it on Corporate why fair showing clarify power degradation the Is the and guess into if

Don Tarry

Good morning, Pau. Yes, that is.

balance you'll it'll that we the each have as it record accounting Other through see will the as we the when pay to fund And So of segments. that up down and our firm in just debt offset and both Corporate dilute capital actually roll it we sheet.

Paul Fremont

convert, on terms had – come convert amount a been that that same? little has the the what down And of in previously? bit of the is it the then that's Or

Don Tarry

equity million mentioned I forward, early the our previously with issuance pulling equity $XXX have Paul. and think We

the We to down. have have bring to flexibility that

$XXX the that to later up The would million, timing of $XXX XXXX. in at million. looking we're So be

Paul Fremont

last terms update when in then me, you would And for any question file the likely a timing Great. on case? general of of rate

Pat Vincent-Collawn

the at looking Paul, still timing. we're same

Paul Fremont

the early quarter? So second in

Pat Vincent-Collawn

Correct.

Paul Fremont

Okay. you. Great. Thank

Pat Vincent-Collawn

you, Paul. Thank

Operator

America ahead. Instructions] Please question [Operator Lynch. next of Dumoulin-Smith from The Bank of go Julien is Merrill

Alex Morgan

Hi, is calling for Alex good This morning. Morgan Julien. in

Pat Vincent-Collawn

Hi Alex.

Alex Morgan

mentioned the I just of slide. our drag the on double-check know the new on are taking you earnings questions. for should proceeds corporate deck shares wanted of to or to power reduce be that Thanks the to going I wanted that, debt. else accounting check slide thing I this only that's if just that's anything to for? the we December there's line the changing compared issuance

Don Tarry

morning, correct. Yes. is Good Alex. That

be corporate would pay to proceeds debt. used down those So

would -- that's moved mandatory the item line issued be so, equity we've into in previous change be convertibles. that other left that up The would it, financing would equity we've slide, the from because financing would that now as be all the

Alex Morgan

longer-term past, you, future RPS maybe wind Thank your and maybe much. for but opportunity just any it been you wind, looking I ownership very know any solar And whether in you. the maybe be mandates is at potential on haven't about thinking opportunities. Thank there

Pat Vincent-Collawn

for that in we Yes. Alex, some batteries it out we you've lowest-cost they when at emission-free to continue I commission us sense because go out for some makes look go they times the resources. we are out and do the the our to think, plans our own Obviously, But there there an want proposals as think make to opportunities portfolio. in plan, towards requests of ownership are further there. get will and sure to solar will seen the as replacement

Alex Morgan

Okay. from me. a Thank That’s so much. you, have great all day.

Pat Vincent-Collawn

Thank you.

You Alex. too,

Operator

The from next question Jonathan Reeder Please go Wells ahead. Fargo. from comes

Jonathan Reeder

didn't I fall sleep. Well

Pat Vincent-Collawn

Well thank, Good you morning. Jonathan.

Jonathan Reeder

Good are all you morning. How doing?

Pat Vincent-Collawn

Jonathan. now sleeping here in Chuck's Good.

Jonathan Reeder

doesn't surprise man? doing How That one me. That bit. surprise are doesn't me Chuck,

Chuck Eldred

Thanks. I'm doing Jonathan. good

Jonathan Reeder

hear The a just you transmission more Good around I'm the quick your can of explain are little voice. funding familiar that how not PNM? maybe for with session. Two eligibility legislative wasn't questions, I both does to bill. the like impact -- that projects, kind bond

Pat Vincent-Collawn

projects to but qualify by those Well, for it it doesn't potentially than built IRB. utility transmission other public us, a allows impact for

obviously that not going these help the developers projects So, obviously, necessarily the of but energy. renewable to down. costs would We be it's takes facilitate

to So, transmission of easier if we build it's it, would own to it any lines. going make

-- of kind in Jonathan. potential renewable helping just put unlock piece its it New it's of as the So, Mexico I'd another energy puzzle

Jonathan Reeder

like Bill that And looked transpired that was it did sense. with give on squeeze XX XX. you dealt it like House an the makes of What mean, kind seemed update there That us House PRC momentum I behind Okay. reorganizing can just then, -- it the by and February there?

Pat Vincent-Collawn

I the wait the -- the Well, for one who of may voted has what that and amendment putting see constitutional words the the cart think horse we of passed. one wanted I -- legislators before was is and be -- in of constitutional happened actually is think, that if to the the and amendment

that the which very last So was what happened instead another though was bill Jonathan Bill on day that XXX. was positive House passed -- there

forth be what it And by does process is set nominated. the which will the commissioners

Committee. So seven will Nominating governor make will the set a recommendations. person up They

up talk So passed get then we what let's the back see really can helps can't it legislature if amendment passed can get and questions, how have says to appointed? appointed are are one really that is come So have going we constitutional amendment if to set because get going constitutional commission first. other this the an we the about obviously, voters stuff. is, of If okay the this they we

on was thought PRC a they it it soon reorganization. think little I too that was So more

Jonathan Reeder

Okay, okay.

helps. that Now

Pat Vincent-Collawn

requirement that take at it Bill out of business have, how professional. it energy if years Yes. accounting the they to the kind as experience degree public sector the administration of lays because a a XXX what -- what in to a House have look want fact And many kind you is

look would like. help So appointed you the will what that commission think bill see I

Jonathan Reeder

Yes.

XX of Some had I those aspects House kind been right? in guess Bill incorporated of

Pat Vincent-Collawn

yes, XXX. House XX House staff. the that qualifications focus put it this of was part XX commission Most part Bill out there moving most of of the really and into -- was on took either yes, – Bill the of But

is of the the title Transfer have to Public is think Health Welfare the Peace, of office bill and PRC. missed it marshal's fire people the Safety out might reason I

title it's I So a catchy know.

Jonathan Reeder

Yes.

Just rolls tongue off the so...

Pat Vincent-Collawn

It does.

Jonathan Reeder

and Well congrats was appreciate questions Court my the surprise for Supreme taking That in on that. there. weighing getting you a good

Pat Vincent-Collawn

you. one. No great a problem. Thank Have

Don Tarry

Thanks, Jonathan.

Operator

conference like There turn to queue. This closing are I would back concludes Pat questions more remarks. to no in Vincent-Collawn over for session. the our question-and-answer any the

Pat Vincent-Collawn

we to we and And you, yourself. be Please thank this you of make that very all forward and protect soon. look please coronavirus Jason you you Thank go sure Thanks. safe many everyone. seeing through as

Operator

now concluded. attending presentation. Thank conference you The for today's has

may now You disconnect.