UNITED STATES |
SECURITIES AND EXCHANGE COMMISSION |
Washington, D.C. 20549 |
FORM 8-K |
CURRENT REPORT |
PURSUANT TO SECTION 13 OR 15(d) OF THE |
SECURITIES EXCHANGE ACT OF 1934 |
Date of Report (Date of earliest event reported) | February 27, 2018 | |
(February 27, 2018) |
Commission | Name of Registrants, State of Incorporation, | I.R.S. Employer | ||
File Number | Address and Telephone Number | Identification No. | ||
001-32462 | PNM Resources, Inc. | 85-0468296 | ||
(A New Mexico Corporation) | ||||
414 Silver Ave. SW | ||||
Albuquerque, New Mexico 87102-3289 | ||||
(505) 241-2700 | ||||
001-06986 | Public Service Company of New Mexico | 85-0019030 | ||
(A New Mexico Corporation) | ||||
414 Silver Ave. SW | ||||
Albuquerque, New Mexico 87102-3289 | ||||
(505) 241-2700 | ||||
002-97230 | Texas-New Mexico Power Company | 75-0204070 | ||
(A Texas Corporation) | ||||
577 N. Garden Ridge Blvd. | ||||
Lewisville, Texas 75067 | ||||
(972) 420-4189 | ||||
______________________________ |
PNM RESOURCES, INC. | |
PUBLIC SERVICE COMPANY OF NEW MEXICO | |
TEXAS-NEW MEXICO POWER COMPANY | |
(Registrants) | |
Date: February 27, 2018 | /s/ Joseph D. Tarry |
Joseph D. Tarry | |
Vice President, Finance and Controller | |
(Officer duly authorized to sign this report) |
Q4 2017 | Q4 2016 | YE 2017 | YE 2016 | ||
GAAP net earnings (loss) attributable to PNM Resources | ($54.3) | $24.8 | $79.9 | $116.8 | |
GAAP diluted EPS | ($0.68) | $0.31 | $1.00 | $1.46 | |
Ongoing net earnings | $19.4 | $27.4 | $155.3 | $132.4 | |
Ongoing diluted EPS | $0.24 | $0.34 | $1.94 | $1.65 |
Q4 2017 | Q4 2016 | YE 2017 | YE 2016 | ||
GAAP net earnings (loss) attributable to PNM Resources | ($32.2) | $16.0 | $71.9 | $76.9 | |
GAAP diluted EPS | ($0.40) | $0.20 | $0.90 | $0.96 | |
Ongoing net earnings | $12.8 | $18.4 | $118.4 | $91.4 | |
Ongoing diluted EPS | $0.16 | $0.23 | $1.48 | $1.14 |
• | In the fourth quarter of 2017, PNM’s GAAP and ongoing earnings were reduced by higher planned outage costs at the Four Corners Power Plant and Afton Generating Station, lower load, higher expected operations and maintenance costs to support business operations and depreciation expense from new capital investments. These reductions were partially offset by new third-party transmission contracts and increased AFUDC. |
• | GAAP earnings in the fourth quarter of 2017 also include a $29.6 million net charge for the impacts of the reduction in the federal corporate income tax rate on net deferred income tax assets primarily related to items not in regulated rates, in addition to a $27.0 million pre-tax regulatory disallowance primarily resulting from the general rate case final order granting a debt-only return on certain investments in the Four Corners Power Plant. |
Q4 2017 | Q4 2016 | YE 2017 | YE 2016 | ||
GAAP net earnings attributable to PNM Resources | $1.0 | $9.9 | $35.6 | $41.7 | |
GAAP diluted EPS | $0.01 | $0.12 | $0.44 | $0.52 | |
Ongoing net earnings | $8.9 | $10.0 | $43.4 | $42.5 | |
Ongoing diluted EPS | $0.11 | $0.12 | $0.54 | $0.53 |
• | In the fourth quarter of 2017, TNMP’s GAAP and ongoing earnings were reduced by higher expected operations and maintenance costs to support business operations, and increased depreciation and property tax expenses resulting from additional capital investments. This was partially offset by increased transmission rate relief. |
• | GAAP earnings in the fourth quarter of 2017 also reflect a $7.9 million net charge for the impacts of the reduction in the federal corporate income tax rate on net deferred income tax assets primarily related to items not in regulated rates. |
Q4 2017 | Q4 2016 | YE 2017 | YE 2016 | |
GAAP net earnings (loss) attributable to PNM Resources | ($23.2) | ($1.0) | ($27.6) | ($1.7) |
GAAP diluted EPS | ($0.29) | ($0.01) | ($0.34) | ($0.02) |
Ongoing net earnings (loss) | ($2.2) | ($1.0) | ($6.5) | ($1.4) |
Ongoing diluted EPS | ($0.03) | ($0.01) | ($0.08) | ($0.02) |
• | In the fourth quarter of 2017, Corporate and Other’s GAAP and ongoing earnings were reduced by additional interest expense primarily related to higher short-term interest rates and borrowings. |
• | GAAP earnings in the fourth quarter of 2017 also reflect a $20.0 million net charge for the impacts of the reduction in the federal corporate income tax rate on net deferred income tax assets. |
PNM | TNMP | Corporate and Other | Consolidated | |||||||||||||
(in thousands) | ||||||||||||||||
Quarter Ended December 31, 2017 | ||||||||||||||||
GAAP Net Earnings (Loss) Attributable to PNMR: | $ | (32,154 | ) | $ | 1,024 | $ | (23,152 | ) | $ | (54,282 | ) | |||||
Adjusting items before income tax effects | ||||||||||||||||
Mark-to-market impact of economic hedges4a | 2,017 | — | — | 2,017 | ||||||||||||
Net change in unrealized impairments of available-for-sale securities4b | (2,124 | ) | — | — | (2,124 | ) | ||||||||||
Regulatory disallowances and restructuring costs3, 4c | 27,036 | — | — | 27,036 | ||||||||||||
Pension expense related to previously disposed of gas distribution business4d | 961 | — | — | 961 | ||||||||||||
Total adjustments before income tax effects | 27,890 | — | — | 27,890 | ||||||||||||
Income (taxes) on above adjustments1 | (10,822 | ) | — | — | (10,822 | ) | ||||||||||
Change in federal corporate income tax rate2 | 29,606 | 7,865 | 19,990 | 57,461 | ||||||||||||
Other income tax impairments and valuation allowances | 2,732 | — | 1,100 | 3,832 | ||||||||||||
New Mexico corporate income tax rate change | (1,201 | ) | — | (163 | ) | (1,364 | ) | |||||||||
Recovery of prior tax impairments in New Mexico general rate review | (3,297 | ) | — | — | (3,297 | ) | ||||||||||
Total income tax impacts4e | 17,018 | 7,865 | 20,927 | 45,810 | ||||||||||||
Adjusting items, net of income taxes | 44,908 | 7,865 | 20,927 | 73,700 | ||||||||||||
Ongoing Earnings (Loss) | $ | 12,754 | $ | 8,889 | $ | (2,225 | ) | $ | 19,418 | |||||||
Year Ended December 31, 2017 | ||||||||||||||||
GAAP Net Earnings (Loss) Attributable to PNMR: | $ | 71,868 | $ | 35,559 | $ | (27,553 | ) | $ | 79,874 | |||||||
Adjusting items before income tax effects | ||||||||||||||||
Mark-to-market impact of economic hedges4a | 2,875 | — | — | 2,875 | ||||||||||||
Net change in unrealized impairments of available-for-sale securities4b | (3,258 | ) | — | — | (3,258 | ) | ||||||||||
Regulatory disallowances and restructuring costs3, 4c | 27,036 | — | — | 27,036 | ||||||||||||
Pension expense related to previously disposed of gas distribution business4d | 3,846 | — | — | 3,846 | ||||||||||||
Total adjustments before income tax effects | 30,499 | — | — | 30,499 | ||||||||||||
Income (taxes) on above adjustments1 | (11,833 | ) | — | — | (11,833 | ) | ||||||||||
Change in federal corporate income tax rate2 | 29,606 | 7,865 | 19,990 | 57,461 | ||||||||||||
Other income tax impairments and valuation allowances | 2,732 | — | 1,100 | 3,832 | ||||||||||||
New Mexico corporate income tax rate change | (1,179 | ) | — | (80 | ) | (1,259 | ) | |||||||||
Recovery of prior tax impairments in New Mexico general rate review | (3,297 | ) | — | — | (3,297 | ) | ||||||||||
Total income tax impacts4e | 16,029 | 7,865 | 21,010 | 44,904 | ||||||||||||
Adjusting items, net of income taxes | 46,528 | 7,865 | 21,010 | 75,403 | ||||||||||||
Ongoing Earnings (Loss) | $ | 118,396 | $ | 43,424 | $ | (6,543 | ) | $ | 155,277 | |||||||
1 2017 income taxes calculated using a tax rate of 38.80% | ||||||||||||||||
2 Federal tax reform, which was enacted in December 2017, reduced the federal corporate income tax rate from 35% to 21%; GAAP required that accumulated deferred income tax assets and liabilities be re-measured to reflect the new rate; the re-measurement reductions in net deferred income tax liabilities related to regulated activities were recorded as increases in regulatory liabilities; the re-measurement reductions in net deferred income tax assets related to non-regulated activities were recorded as increases in income tax expense and are reflected as adjustments above | ||||||||||||||||
3 Regulatory disallowances and restructuring costs are primarily related to the January 2018 order in PNM's general rate review granting a debt-only return on $148.1 million of investments in the Four Corners Power Plant | ||||||||||||||||
4 The pre-tax impacts (in thousands) of adjusting items are reflected on the GAAP Consolidated Statement of Earnings as follows: | ||||||||||||||||
a Reductions in "Electric Operating Revenues" and "Cost of energy" of $2,224 and $207 in the three months ended December 31, 2017 and increases in "Electric Operating Revenues and "Cost of energy" of $6,594 and $9,469 in the year ended December 31, 2017 | ||||||||||||||||
b Increases in "Gains on available-for-sale securities" | ||||||||||||||||
c Increases in "Regulatory disallowances and restructuring costs" | ||||||||||||||||
d Increases in "Administrative and general" | ||||||||||||||||
e Income tax impacts reflected in "Income Taxes" |
PNM | TNMP | Corporate and Other | Consolidated | |||||||||||||
(in thousands) | ||||||||||||||||
Quarter Ended December 31, 2016 | ||||||||||||||||
GAAP Net Earnings (Loss) Attributable to PNMR: | $ | 15,982 | $ | 9,855 | $ | (1,028 | ) | $ | 24,809 | |||||||
Adjusting items before income tax effects | ||||||||||||||||
Mark-to-market impact of economic hedges3a | (616 | ) | — | — | (616 | ) | ||||||||||
Net change in unrealized impairments of available-for-sale securities3b | 2,190 | — | — | 2,190 | ||||||||||||
Regulatory disallowances and restructuring costs3c | (2,214 | ) | — | — | (2,214 | ) | ||||||||||
Pension expense related to previously disposed of gas distribution business3d | 925 | — | — | 925 | ||||||||||||
Process improvement initiatives3e | 3,743 | 237 | — | 3,980 | ||||||||||||
Total adjustments before income tax effects | 4,028 | 237 | — | 4,265 | ||||||||||||
Income (taxes) on above adjustments1, 3f | (1,572 | ) | (82 | ) | — | (1,654 | ) | |||||||||
Adjusting items, net of income taxes | 2,456 | 155 | — | 2,611 | ||||||||||||
Ongoing Earnings (Loss) | $ | 18,438 | $ | 10,010 | $ | (1,028 | ) | $ | 27,420 | |||||||
Year Ended December 31, 2016 | ||||||||||||||||
GAAP Net Earnings (Loss) Attributable to PNMR: | $ | 76,891 | $ | 41,672 | $ | (1,714 | ) | $ | 116,849 | |||||||
Adjusting items before income tax effects | ||||||||||||||||
Mark-to-market impact of economic hedges3a | 1,577 | — | — | 1,577 | ||||||||||||
Net change in unrealized impairments of available-for-sale securities3b | 1,169 | — | — | 1,169 | ||||||||||||
Regulatory disallowances and restructuring costs2, 3c | 15,010 | — | 586 | 15,596 | ||||||||||||
Pension expense related to previously disposed of gas distribution business3d | 3,702 | — | — | 3,702 | ||||||||||||
Process improvement initiatives3e | 3,743 | 237 | — | 3,980 | ||||||||||||
Building consolidation3d | 737 | 996 | — | 1,733 | ||||||||||||
Total adjustments before income tax effects | 25,938 | 1,233 | 586 | 27,757 | ||||||||||||
Income (taxes) on above adjustments1 | (10,122 | ) | (431 | ) | (229 | ) | (10,782 | ) | ||||||||
New Mexico corporate income tax rate change | 804 | — | (92 | ) | 712 | |||||||||||
Recovery of prior tax impairments in New Mexico general rate review | (2,145 | ) | — | — | (2,145 | ) | ||||||||||
Total income tax impacts3f | (11,463 | ) | (431 | ) | (321 | ) | (12,215 | ) | ||||||||
Adjusting items, net of income tax | 14,475 | 802 | 265 | 15,542 | ||||||||||||
Ongoing Earnings (Loss) | $ | 91,366 | $ | 42,474 | $ | (1,449 | ) | $ | 132,391 | |||||||
1 2016 income taxes calculated using rates of 35.00% for TNMP and 39.02% for other segments. | ||||||||||||||||
2 Regulatory disallowances and restructuring costs are primarily related to the September 2016 order in PNM's general rate review | ||||||||||||||||
3 The pre-tax impacts (in thousands) of adjusting items are reflected on the GAAP Consolidated Statement of Earnings as follows: | ||||||||||||||||
a Increases in "Electric Operating Revenues" and "Cost of energy" of $5,247 and $4,631 in the three months ended December 31, 2016 and $3,182 and $4,759 in the year ended December 31, 2016 | ||||||||||||||||
b Reductions in "Gains on available-for-sale securities" | ||||||||||||||||
c Reduction in "Regulatory disallowances and restructuring costs" (PNM) in the three months ended December 31, 2016 and increases in "Regulatory disallowances and restructuring costs" (PNM) and "Other (deductions)" (Corporate and Other) in the year ended December 31, 2016 | ||||||||||||||||
d Increases in "Administrative and general" | ||||||||||||||||
e Increases in "Administrative and general" and "Taxes other than income taxes" of $3,960 ($3,723 PNM and $237 TNMP) and $20 (PNM) in the three months and year ended December 31, 2016 | ||||||||||||||||
f Income tax impacts reflected in "Income Taxes" |
PNM | TNMP | Corporate and Other | Consolidated | |||||||||||||
(per diluted share) | ||||||||||||||||
Quarter Ended December 31, 2017 | ||||||||||||||||
GAAP Net Earnings (Loss) Attributable to PNMR: | $ | (0.40 | ) | $ | 0.01 | $ | (0.29 | ) | $ | (0.68 | ) | |||||
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 | (0.02 | ) | — | — | (0.02 | ) | ||||||||||
Regulatory disallowances and restructuring costs | 0.21 | — | — | 0.21 | ||||||||||||
Pension expense related to previously disposed of gas distribution business | 0.01 | — | — | 0.01 | ||||||||||||
Change in federal corporate income tax rate | 0.37 | 0.10 | 0.25 | 0.72 | ||||||||||||
Other income tax impairments and valuation allowances | 0.03 | — | 0.01 | 0.04 | ||||||||||||
New Mexico corporate income tax rate change | (0.02 | ) | — | — | (0.02 | ) | ||||||||||
Recovery of prior year impairments in New Mexico general rate review | (0.04 | ) | — | — | (0.04 | ) | ||||||||||
Total Adjustments | 0.56 | 0.10 | 0.26 | 0.92 | ||||||||||||
Ongoing Earnings (Loss) | $ | 0.16 | $ | 0.11 | $ | (0.03 | ) | $ | 0.24 | |||||||
Average Diluted Shares Outstanding: 80,169,385 | ||||||||||||||||
Year Ended December 31, 2017 | ||||||||||||||||
GAAP Net Earnings (Loss) Attributable to PNMR: | $ | 0.90 | $ | 0.44 | $ | (0.34 | ) | $ | 1.00 | |||||||
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 | (0.02 | ) | — | — | (0.02 | ) | ||||||||||
Regulatory disallowances and restructuring costs | 0.21 | — | — | 0.21 | ||||||||||||
Pension expense related to previously disposed of gas distribution business | 0.03 | — | — | 0.03 | ||||||||||||
Change in federal corporate income tax rate | 0.37 | 0.10 | 0.25 | 0.72 | ||||||||||||
Other income tax impairments and valuation allowances | 0.03 | — | 0.01 | 0.04 | ||||||||||||
New Mexico corporate income tax rate change | (0.02 | ) | — | — | (0.02 | ) | ||||||||||
Recovery of prior year impairments in New Mexico general rate review | (0.04 | ) | — | — | (0.04 | ) | ||||||||||
Total Adjustments | 0.58 | 0.10 | 0.26 | 0.94 | ||||||||||||
Ongoing Earnings (Loss) | $ | 1.48 | $ | 0.54 | $ | (0.08 | ) | $ | 1.94 | |||||||
Average Diluted Shares Outstanding: 80,141,447 | ||||||||||||||||
PNM | TNMP | Corporate and Other | Consolidated | |||||||||||||
(per diluted share) | ||||||||||||||||
Quarter Ended December 31, 2016 | ||||||||||||||||
GAAP Net Earnings (Loss) Attributable to PNMR: | $ | 0.20 | $ | 0.12 | $ | (0.01 | ) | $ | 0.31 | |||||||
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 | 0.02 | — | — | 0.02 | ||||||||||||
Regulatory disallowances and restructuring costs | (0.02 | ) | — | — | (0.02 | ) | ||||||||||
Pension expense related to previously disposed of gas distribution business | 0.01 | — | — | 0.01 | ||||||||||||
Process improvement initiatives | 0.03 | — | — | 0.03 | ||||||||||||
Total Adjustments | 0.03 | — | — | 0.03 | ||||||||||||
Ongoing Earnings (Loss) | $ | 0.23 | $ | 0.12 | $ | (0.01 | ) | $ | 0.34 | |||||||
Average Basic and Diluted Shares Outstanding: 80,137,352 | ||||||||||||||||
Year Ended December 31, 2016 | ||||||||||||||||
GAAP Net Earnings (Loss) Attributable to PNMR: | $ | 0.96 | $ | 0.52 | $ | (0.02 | ) | $ | 1.46 | |||||||
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 | ||||||||||||
Regulatory disallowances and restructuring costs1 | 0.09 | — | — | 0.09 | ||||||||||||
Pension expense related to previously disposed of gas distribution business | 0.03 | — | — | 0.03 | ||||||||||||
Process improvement initiatives | 0.03 | — | — | 0.03 | ||||||||||||
Building consolidation | — | 0.01 | — | 0.01 | ||||||||||||
New Mexico corporate income tax rate change | 0.01 | — | — | 0.01 | ||||||||||||
Total Adjustments | 0.18 | 0.01 | — | 0.19 | ||||||||||||
Ongoing Earnings (Loss) | $ | 1.14 | $ | 0.53 | $ | (0.02 | ) | $ | 1.65 | |||||||
Average Diluted Shares Outstanding: 80,131,541 | ||||||||||||||||
1 Includes earnings per share impact of "Recovery of prior tax impairments in New Mexico general rate review" |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
(In thousands, except per share amounts) | |||||||||||
Electric Operating Revenues | $ | 1,445,003 | $ | 1,362,951 | $ | 1,439,082 | |||||
Operating Expenses: | |||||||||||
Cost of energy | 407,479 | 380,596 | 464,649 | ||||||||
Administrative and general | 186,345 | 191,514 | 179,100 | ||||||||
Energy production costs | 137,450 | 146,187 | 176,752 | ||||||||
Regulatory disallowances and restructuring costs | 27,036 | 15,011 | 167,471 | ||||||||
Depreciation and amortization | 231,942 | 209,110 | 185,919 | ||||||||
Transmission and distribution costs | 71,576 | 66,227 | 69,157 | ||||||||
Taxes other than income taxes | 76,690 | 76,321 | 71,684 | ||||||||
Total operating expenses | 1,138,518 | 1,084,966 | 1,314,732 | ||||||||
Operating income | 306,485 | 277,985 | 124,350 | ||||||||
Other Income and Deductions: | |||||||||||
Interest income | 15,916 | 22,293 | 6,498 | ||||||||
Gains on available-for-sale securities | 27,161 | 19,517 | 16,060 | ||||||||
Other income | 19,515 | 17,796 | 26,833 | ||||||||
Other (deductions) | (15,693 | ) | (13,784 | ) | (12,728 | ) | |||||
Net other income and deductions | 46,899 | 45,822 | 36,663 | ||||||||
Interest Charges | 127,625 | 128,633 | 114,860 | ||||||||
Earnings before Income Taxes | 225,759 | 195,174 | 46,153 | ||||||||
Income Taxes | 130,340 | 63,278 | 15,075 | ||||||||
Net Earnings | 95,419 | 131,896 | 31,078 | ||||||||
(Earnings) Attributable to Valencia Non-controlling Interest | (15,017 | ) | (14,519 | ) | (14,910 | ) | |||||
Preferred Stock Dividend Requirements of Subsidiary | (528 | ) | (528 | ) | (528 | ) | |||||
Net Earnings Attributable to PNMR | $ | 79,874 | $ | 116,849 | $ | 15,640 | |||||
Net Earnings Attributable to PNMR per Common Share: | |||||||||||
Basic | $ | 1.00 | $ | 1.47 | $ | 0.20 | |||||
Diluted | $ | 1.00 | $ | 1.46 | $ | 0.20 |