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PNM Resources (PNM)

Participants
Lisa Goodman Director of Investor Relations
Pat Vincent-Collawn Chairman, President and Chief Executive Officer
Chuck Eldred Executive Vice President, Corporate Development and Finance
Don Tarry Senior Vice President and Chief Financial Officer
Ryan Greenwald Bank of America Merrill Lynch
Anthony Crowdell Mizuho Securities USA LLC
Jonathan Reeder Wells Fargo Securities
Call transcript
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Operator

Good day, and welcome to the PNM Resources Second Quarter 2020 Earnings Conference Call. [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. Please go ahead.

Lisa Goodman

Thank you, Cal, and thank you, everyone, for joining us this morning for the PNM Resources second quarter 2020 conference call. presentation available conference pnmresources.com. on the supporting and that are documents our note for call this other Please website at

me Vice our Resources Vincent-Collawn; PNM with a Chief today and Chuck along Corporate Joining Pat Eldred, Development guest, CEO, Finance. Executive Financial Chairman, Officer, and of Vice Senior President Tarry, special President President and Don are and

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

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

Pat Vincent-Collawn

thanks hope Lisa. Pope? to as since call Day, that's up nail him each you what It's National blessed the anniversary are. favorite morning, an you for two-year healthy Avocado which not and given time it seen it's first today, we've the this been safe and line. we've means, and you. the the at quite only few time, us to been avocado Chuck, by set He continue you, Thank success joining is actually didn't of you do of Chuck's punch so months joke. miss we as we all that today. It's you Good We for a and be July XX him

Chuck Eldred

decision Pat, I guacamole. when answer question to make had this similar heard San is a I holy comment And Commission Juan. on the the a

Pat Vincent-Collawn

done. Well Great. Chuck. you, Thank

part face to Texas continued all Before want across of New to I am going updates, and teams of efforts our after continuing to families support earnings our are highlight how while occasion, and the call, today's their COVID-XX, also and ESG to through I am of key key I our and supporting our In Mexico they and for own a some commitments be their get of environmental, team. of to priorities. to part the other started, I these principles I examples rise and governance proud extremely On customers, their social business are walk thank describe communities.

begin So, let's on Slide X.

to Ongoing second resulting us GAAP helped per from the quarter Our share earnings the summer Higher $X.XX. are COVID-related in changes quarter offset to are of last $X.XX, the per share second have earnings XXXX temperatures in of compared $X.XX year. closures. loads, in

will to The Don We PNM realize provide energy TNMP. storage for the needed PPAs. integrate are Juan to San fits these to of well affirmed on our and There combination investing midpoint financial key New are The targeting of goals Mexico This from our replace with and battery infrastructure resources Commission decided the and potential. New the to in San in full emissions-free power enable with renewable committed been renewable $X.XX update to has Juan guidance recent $X.XX. details. Commission on Wednesday's the range Mexico decision dockets progress and at is from most on replacement more power. the of regulatory we its

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indoor In levels. to In May and businesses. both on across as it risen, based at COVID-XX New for New Slide number reopening provide reinstated dining restrictions Texas, was have restrictions impacts X, greater restaurants. the status began Texas, have and were and a was a reinstated at on numbers. faster In Mexico, a of Mexico our pace case reopenings in Turning I'll been different at gradual cases

programs PNM relief and TNMP. at both place in Our remain and customer assistance

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of these this the students continue cure who and participating the that we to and things to teams We but to times had you for the are be that is hotspots pnmresources.com responders social are will details. flipped for information switch this are participated locations, new homeowners access collaborated to take recognize truly take supplies, financial for make we deliver were to up gathered calls programs, and other. we With project but over this the trying in time, help There by On virus, they when business. their year. proud provide something this our of all each hit granted of this difference to COVID-XX first to other help truly will will we hope can education. wrap been project. value we committing to ESG pointing we the with when struggling. state. to joy these governance at We our in our you of publishing us Don? of doing the you reports ways and been XX, same that when our knew areas of first Our finding None significantly Slide food where to find areas on are environmental, We have we've Unfortunately, Commitment. locating you keep in I'll that most that wasn't hope I'll the inspired able our live that in our by on emergency masks These and are enough. the page the policies these values turn harder redesigned an care up tribal than in for the communities areas, by inherent and a presentation continue are details are setup other We've done to that, the some find Don the website area. that also donating in to or the Internet can available multiple things

Don Tarry

Thanks, morning, good Pat, and everyone.

due over mild Turning at EPS overview Slide XXXX. PNM the of our is year to the $X.XX of that QX with ongoing weather quarter, last XX of increase experienced for largely an second to we in

the planning San saw a $X.XX considered move Juan we considerations. the summer in spring weather reduction expectations plan. also as maintenance impacts of from provides exceeded toward through moved to original fall our are impacts as strong the also to costs currently to that this period COVID-XX in Slide summary COVID Generating time X progress XX about in a how continue Station in our We've we its for we plant at We outage due the through was scenarios. thinking and Stage for discretionary retirement The of quarter XXXX. our shifting

we current to update today in class based our information. on continue which you impacts load customer trends, on will see We

have to any not from from workforce We impacts disruptions our forward. we significant areas as seen in We supply or these any chain significant investment plans move do impacts issues. expect not

around some Turning to while second Slide PNM, residential we in continues improvements saw seen has as New to the trends July. be I'll cover that X% in Mexico. usage low what quarter, usage XX, commercial well have At we as the shown higher, in

in in changed load. of moving Texas. to offset TNMP, On volumetric of year. trends continue with throughout and loads, monitoring range. our for across Slide are overall we affirming PNM impact in and with target to both results our XX, for XX% different the phases At Our load compared decline increases a for have to to $X.XX TNMP. forward of the range date comfortable and We'll decreases business The hasn't impacts these feel a XX% earlier load demand-based these updated $X.XX the this projection guidance midpoint projected restrictions is decline commercial this

our updated the midpoint. expectation We an QX have slide QX on of this this and at based provided expectations to bottom quarterly for reflect

plan necessary XX, a infrastructure our XXXX. to storage investments Future clean additions PNM and secure target solar reliable, that Slide to to our billion These a Wired $X.X these the XXXX and energy turning for through delivers earnings grid of our maintain transmission resilient planned XXXX X% through The this customers. to Now, program. distribution support for investment energy are of to and sooner for need our accelerates continues incorporates to to mix. facilitate growth battery transition X% Overall, of happen faster plan investments

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program. cover been of Now, identified resources. faster the investments million system to of to have turning originally transition I'll XX, details the $XXX the accelerated a around financial reflect The Slide

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to into Future to plan Wired XX Now, at look let's the investment for Slide growth earnings turn target. how our overall our that fits supports

focus energy generation our have deliver PNM As our future, to from we clean investments. plan removed a transition and coal at new we

We $XXX Future to have the in added for of Wired investments million XXXX XXXX.

distribution added that improvement additional projects additional million identified. also an $XX for XXXX have We TNMP in at have reliability been

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added to power rate plan. our turning increases Overall, changes base incorporates through to in outside Slide XX, timing shifts base. that Now, of to when earnings of we'll the investments to walk earnings offset are have updates rate in investment you

base in average incorporate plan the lines XXXX in that Palo XXXX. remove returns for these lease point what Future generation the of new new Juan for XXXX. and investment the presentation that that up I but in seen Verde in and replacement Wired not wanted Generating base the $X.X the them lower some also XXXX. these The you've XXXX our in retail in slightly FERC our timing change, plans previous until San retirement out replacement to investment total Our of Station growth FERC changes to not to means rate is did will billion of of reflect rate but PNM investments show

Line to Our therefore, The the purchase rates the updated now our taking reduce megawatts of in we San into plans of issue of capital items Juan. Western markets the optimize long-term at of not mandatory year, reflect due is online generation general the the XX for has unregulated in XXXX last additional approved TNMP XXXX end PNM's adjusted, savings compared Line, customers in interest line By been toward the rate cost also to taking financing increased our XXXX account in amount savings, not has Spirit Spirit advantage PNM in the Transmission financing and rate end of decommissioning estimated come Verde, case. savings equity shorter-term this in the to our is off delay and of secure able XXXX. been the the interest has to costs rates. pushing of purchase convertibles the related Western Palo to and until XXXX. at to interest financing included need to that the lower capital retirement of were to of

As see, Pat. growth turn to all X% for of I'll after you to can XXXX. the target deliver With unchanged XXXX have and confidence power largely these our earnings on to earnings through back our remains changes, incorporating X% time in ability that, we

Pat Vincent-Collawn

Don. Thanks,

these times. unique take thank me at questions, Resources up more brilliantly it Before through for I the here PNM open opportunity team to to continuing let for perform one

here the forward, a to it look energy us potential we And by we growth realize Business Champion to Resources our are forward sponsored of Corporate the place We sharing economy. first about the take will First. updates you week, quarter. for just excited and deliver example, that move Foundation PNM of infrastructure won clean energy with the the As category each clean PNM Albuquerque to Awards in Philanthropy this plans in full and

let's for please it questions. open Cal, up So,

Operator

go today And from of Please Bank come our Ryan with Greenwald Certainly. ahead. first Instructions] [Operator question America. will

Ryan Greenwald

Thanks morning, taking questions. team. Good for our

your follow earlier this about you So, to thinking options. the guys weighing curious on week, order are how just

it it of causing hand, but like kind seems the the it On alliance issues. with may one goals, some ESG resiliency be

thinking potential appeal timing about So, developments? around then how are for you here options any and

Pat Vincent-Collawn

him any some step you. in about appeal the fully and decision some system our job but statements, move to supportive laid various energy. of to clean technical have I'll a disagreements thank investments sense and minute, thing forward to doesn't it the Ryan, out, Yeah. excited now, this as we're in to on Don here. We our to the plans to It may side And lot make for work. big of to over here. solve make a turn it's We've exit really got, coal transmission the

Don? So,

Don Tarry

Yeah.

Future, forward renewables, of at in we look we as a if And to Wired So, Mexico system. resilient for a lot XXXXs the requires it system move generation our New XXXXs. and back date really the to

ruling clean pace. and Future be to pace move the a kind as the the at Commission the Wired to need and And this past a we updates on that and fits so, we've of system quicker this for our execute forward, into energy profile. this we'll quicker on we'll at And a execute supporting been in works and our made able planning and upgrades to the to year

Ryan Greenwald

it. restrictions? far more color we've kind Got a provide bit on of seen July reinstatement in then, can some of trends so you as And of specifically, the

Don Tarry

Yeah.

New And also So, less mean, July to tell trend little is a that. I than commercially well, had we've in XX%, we've July, Mexico better we've what you as normal laid what was a down New Mexico brought a assumptions in saw we warmer it too. in XX% down seen. than I'll from in We Texas and and out little both

Pat Vincent-Collawn

are oppose dining. having And their It's coal, us spaces, dining. closed, those restriction outdoor Salsa can wear when and now exercise. you think that -- folks that a wear about they all we was Governor it, reinstatement the indoor when most a -- of just in mask only of they're makes still

what is success changed would doing long-term dining. trying to She load. But what in of lot she us set terms impact in indoor that makes else think up sense. for our of really is I So, nothing a the by closing

Operator

Mizuho. with Please next [Operator question Anthony ahead. Instructions] And go will our from Crowdell come

Anthony Crowdell

Hey. Good morning, Good morning, Good morning, Don. Chuck. Pat.

Pat Vincent-Collawn

morning, Good Anthony.

Chuck Eldred

morning. Good

Pat Vincent-Collawn

hear to voice. good It's your

Anthony Crowdell

miss you guys. I

look I Just Boys Pope avocado if avocado and questions so -- went some just trends appreciate any is that is, Future, went School, question I a Chuck, that approvals? wasn't jokes. lot projects or could offline we it -- are or second easy seeing or to I require New it's there sounds at I the approvals -- Pope joke. an big better Catholic just we hopefully, But Mexico? of uncollectibles an debt siting And a in joke. expense joke big a it if joke. on But if bad have a High to the sure do Texas you're when avocado and touch All an Offline Wired in then would for

Don Tarry

Yeah.

the our both in both on is them a provided of good collections, New regulatory and are Texas asset for news treatment. both So, Mexico --

a those. electric Texas retail to collect end-user started or -- Mexico New the went Texas grow. continues already further provider, step to deliver to the Remember, and we we've customer. not

the million asset million, way track the policy it really zero record being Governor's order. past to of which due. our In days XXX of ability we reg or said, to disconnect $X our Texas So, do up. It's protected asset. expect to would off. have to call balance $X the with up we we $X range trends are is $X -- Mexico, this reg delinquents what the uncollectible tied we time as to we to That go million or in in It's New well. the our seen It's have it in million to year, to we turned that about our increased

are Governor the then removes when we to So the collect. able go order,

customers portion once a their standard. that's of pretty these general, toward make disconnection, in will payment, when and Mexico, that's move New we

Pat Vincent-Collawn

inbound comes, not of center Anthony, are the are And setup our obviously, out getting of we're on Don pay calls many now. agents, of a lot now getting will, don't big to people them as want arrangement payment call on but lot bill some arrangements them reaching and payment said, a necessarily getting they because to right when people a

any there approval, question then, in require second second to answer you want correct? projects question? Wired siting are your Anthony? big do for And that first So, answer that Future the question, the your the Did is,

Anthony Crowdell

over large that? a Siting or delays, park or a potential to that like something transmission national project have goes

Don Tarry

Yeah. element. No, that regulatory-type approvals in

lines substations ways some and that of existing local as well, substations that again, But ways of repowering as have with a on restructuring transmission have might with right our distribution that. improving siting system our the replacing and well. we already of and already approvals feeder have expanding Also, we right associated communities. of poles it's which Some lot on

Pat Vincent-Collawn

but it's an informational when a go Anthony, filing, XXX a do a there's called a substation, And process commission, just that we so. you through big

Anthony Crowdell

much PNM Great. my hope the team Thanks and so questions everyone stays taking for on healthy.

Pat Vincent-Collawn

Same to you with you. We hope see soon.

Operator

ahead. And our from Jonathan Reeder come Wells will with go Fargo. Please next question

Jonathan Reeder

at humor of end the for Thanks the front of end [indiscernible]. the it at the call, need was

Pat Vincent-Collawn

Jonathan. Any time,

Jonathan Reeder

as EPS thinking times generation should balance of mentioned to power relation needing the of couple T&D expansion. Company-owned it's new being otherwise displacing that be additive capex opportunities you Hey, to future about that those not needs in rather we potential or but planned needs, like spend? mean simply to in Does whether

Don Tarry

good about of period one all, of things a Future the the Wired for one -- is it our over of little time. the First spread of balancing

the From see significant additional impact, adding a a impact. don't customer renewables So we in.

at we there the If build this we system goes of carbon-free on additional have our of focused rate in the toward time. because the VP program as for a kind we that we'll of look But necessary And by you progress resilient over XXXX. program Wired actually is of earnings we'll period we've for that's is that do very longer Transmission out Future. capital the that as our look are power, spread XXXX rollout -- laid initial see at when kind up we base additional our these

Pat Vincent-Collawn

opportunities have even to Jonathan, Yeah. impact. plenty we investment Future, said, as Don But, above the Wired tried beyond with of customer always for balance the that. we've and

we don't impacts. So, forward if be to able will own have PNM bring we those capital generation,

a on We huge had impact are customer bills. didn't because want PNM back those own holding would if we have we generation

side the near move need have a this and system And not to renewable lot a more those to to resources. distribution the resilient, investments robust for renewable and load So, of are going make sources because is on transmission centers. only the integrate energy we

transmission. to having up end you So build

be on happens state so. with especially aligned what national of policy state depending So, the will opportunity, stage on renewables and senators, our plenty transmission with and there November, the in

Jonathan Reeder

it -- could guess, kind pressure that, potentially out. we rates buy creates upside I keep maybe, increase an O&M earnings pace something Is see I Right. to, that can back it if growth rating you on still fair? I you of because mean, reasonable, if to your rate opportunity. you And requests this cuts that of guess, lever I have that like and spend guess, or

Pat Vincent-Collawn

That's fair.

Jonathan Reeder

said is get set. the you schedule about I then, thinking you procedural have mean, initial on any the know you received request? how I to approval? If ability And are the not, feedback for Okay. decoupling

Pat Vincent-Collawn

and initial the we've I -- of feedback some but are passed, the gotten the groups it. is very favorable comfortable with the single that always we still of was think there. that about there legislation about it. concerned of because folks There's some back here making, wants the tweak to the issue because everybody very And legislation, rate in feel up feel I think

Jonathan Reeder

Okay.

So, the around it. it actual might be versus getting more design just

Pat Vincent-Collawn

Yeah. going over I They time do people cases. I always in lot so. that arguing are a I of mean, decoupling spend think think design, to --

Jonathan Reeder

include lastly, And around? the Okay. resources XXXX any it Company-owned renewable time filing, plan then, this does

Pat Vincent-Collawn

No.

Jonathan Reeder

so Thanks Okay. much.

Chuck Eldred

Jonathan, question got is I Hey, this a Chuck. you. for

Jonathan Reeder

Don't turn [indiscernible]. the table

Chuck Eldred

conference? Notre want No, the Dame ACC you playing feel know about to in I -- just how playing

Jonathan Reeder

get interesting, I of conference us Yeah. a [indiscernible]. -- takes mean, it a join That's to to kind pandemic right? guess, I finally

Chuck Eldred

be should interesting. it Well,

Now you have guys to may right? Clemson, play

Jonathan Reeder

Probably, yeah.

Chuck Eldred

Yeah, got at yeah. least football. we some Anyway,

Jonathan Reeder

key, be that's right? to needs the hope Hey, played,

Chuck Eldred

that's Yeah, right.

Jonathan Reeder

at game, play can so. we the least If

Chuck Eldred

I all I That's wanted. right. just was All curious.

Pat Vincent-Collawn

Jonathan. Thanks,

Chuck Eldred

see We'll you.

Operator

back over I'd our any conference And the to for closing question-and-answer Vincent-Collawn to this remarks. Pat concludes session. like turn

Pat Vincent-Collawn

Cal. years Cal, Thank ago joke. recognize two you, our just I operator to was avocado told And that, want that us actually and

to Chuck. tequila as I just going enjoy So, margarita this avocado all we Please Thank Thank Thank you. look to your to with and and soon you, evening We you're can guacamole again, seeing or this make safe. for Joke. as healthy forward that give safely. a stay us and everybody, toast Cal for have Cal. we the hope you to you Cal your have morning. you, to joining credit

Operator

thank conference presentation. today’s attending for you is concluded, now the And

may great disconnect a lines and You Avocado now time, your this have Day. at National