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) | November 6, 2018 | |
(November 6, 2018) |
Commission | Name of Registrants, State of Incorporation, | I.R.S. Employer | ||
File Number | Address Of Principal Executive Offices 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 | ||||
£ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
£ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
£ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
£ | Pre-commencement communications pursuant to Rule 13e-4 (c) under the Exchange Act (17 CFR 240.13e-4(c)) |
PNM RESOURCES, INC. | |
PUBLIC SERVICE COMPANY OF NEW MEXICO | |
TEXAS-NEW MEXICO POWER COMPANY | |
(Registrants) | |
Date: November 6, 2018 | /s/ Joseph D. Tarry |
Joseph D. Tarry | |
Vice President, Controller and Treasurer | |
(Officer duly authorized to sign this report) |
Q3 2018 | Q3 2017 | YTD 2018 | YTD 2017 | |
GAAP net earnings attributable to PNM Resources | $87.5 | $73.7 | $140.7 | $134.2 |
GAAP diluted EPS | $1.09 | $0.92 | $1.76 | $1.67 |
Ongoing net earnings | $86.5 | $74.2 | $145.3 | $135.9 |
Ongoing diluted EPS | $1.08 | $0.93 | $1.82 | $1.70 |
Q3 2018 | Q3 2017 | YTD 2018 | YTD 2017 | |
GAAP net earnings attributable to PNM Resources | $77.4 | $60.7 | $111.6 | $104.0 |
GAAP diluted EPS | $0.97 | $0.76 | $1.40 | $1.30 |
Ongoing net earnings | $75.2 | $61.2 | $115.0 | $105.6 |
Ongoing diluted EPS | $0.95 | $0.77 | $1.45 | $1.33 |
• | In the third quarter of 2018, PNM GAAP and ongoing earnings reflect the retail generation portfolio changes approved in the BART settlement and lower tax expense as a result of the Tax Cuts and Jobs Act of 2017 (TCJA), both of which were incorporated into the revised retail rates phased-in beginning February 2018. |
• | Earnings were also impacted in the third quarter of 2018 due to the addition of new third-party transmission contracts, the refinancing of debt at lower interest rates, load growth and increased customer usage caused by higher temperatures. These increases were offset by increased operational and maintenance spending, depreciation and property tax expenses from new capital investments, lower AFUDC and lower gains from the decommissioning and reclamation trusts. |
Q3 2018 | Q3 2017 | YTD 2018 | YTD 2017 | |
GAAP net earnings attributable to PNM Resources | $16.1 | $14.7 | $40.9 | $34.5 |
GAAP diluted EPS | $0.20 | $0.18 | $0.51 | $0.43 |
Ongoing net earnings | $16.1 | $14.7 | $40.9 | $34.5 |
Ongoing diluted EPS | $0.20 | $0.18 | $0.51 | $0.43 |
• | Earnings were increased by load growth, transmission rate relief and AFUDC. |
• | This was partially offset by increased depreciation and property tax expenses resulting from incremental capital investments supporting growth in the service territory. |
Q3 2018 | Q3 2017 | YTD 2018 | YTD 2017 | |
GAAP net earnings (loss) attributable to PNM Resources | ($6.0) | ($1.7) | ($11.8) | ($4.4) |
GAAP diluted EPS | ($0.08) | ($0.02) | ($0.15) | ($0.06) |
Ongoing net earnings (loss) | ($4.7) | ($1.7) | ($10.6) | ($4.3) |
Ongoing diluted EPS | ($0.07) | ($0.02) | ($0.14) | ($0.06) |
• | Corporate and Other GAAP and ongoing earnings were lower in the third quarter of 2018 due to higher interest rates and the issuance of $300.0 million of 3.25% senior unsecured notes in March 2018 that reduced variable rate debt exposure. Lower net interest income due to the May 2018 repayment of loan agreements associated with Westmoreland Coal Company also reduced earnings. |
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 adjustments1,2g | 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 impacts2g | (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" in the three and nine months ended September 30, 2018 | ||||||||||||||||
cIncreases (decreases) in "Regulatory disallowances and restructuring costs" in the three and nine months ended September 30, 2018 | ||||||||||||||||
dIncreases in "Other (deductions)" | ||||||||||||||||
e(Increases) decreases in "Other income" in the three and nine months ended September 30, 2018 | ||||||||||||||||
fIncreases in "Administrative and general" | ||||||||||||||||
gIncome tax impacts reflected in "Income Taxes" |
PNM | TNMP | Corporate and Other | PNMR Consolidated | |||||||||||||
(in thousands) | ||||||||||||||||
Three Months Ended September 30, 2017 | ||||||||||||||||
GAAP Net Earnings (Loss) Attributable to PNMR | $ | 60,695 | $ | 14,727 | $ | (1,683 | ) | $ | 73,739 | |||||||
Adjusting items before income tax effects: | ||||||||||||||||
Mark-to-market impact of economic hedges2a | (80 | ) | — | — | (80 | ) | ||||||||||
Net change in unrealized impairments of available-for-sale securities2b | (107 | ) | — | — | (107 | ) | ||||||||||
Pension expense related to previously disposed of gas distribution business2c | 961 | — | — | 961 | ||||||||||||
Total adjustments before income tax effects | 774 | — | — | 774 | ||||||||||||
Income tax impact of above adjustments1,2d | (300 | ) | — | — | (300 | ) | ||||||||||
Adjusting items, net of income taxes | 474 | — | — | 474 | ||||||||||||
Ongoing Earnings (Loss) | $ | 61,169 | $ | 14,727 | $ | (1,683 | ) | $ | 74,213 | |||||||
Nine Months Ended September 30, 2017 | ||||||||||||||||
GAAP Net Earnings (Loss) Attributable to PNMR | $ | 104,021 | $ | 34,535 | $ | (4,400 | ) | $ | 134,156 | |||||||
Adjusting items before income tax effects: | ||||||||||||||||
Mark-to-market impact of economic hedges2a | 858 | — | — | 858 | ||||||||||||
Net change in unrealized impairments of available-for-sale securities2b | (1,135 | ) | — | — | (1,135 | ) | ||||||||||
Pension expense related to previously disposed of gas distribution business2c | 2,884 | — | — | 2,884 | ||||||||||||
Total adjustments before income tax effects | 2,607 | — | — | 2,607 | ||||||||||||
Income tax impact of above adjustments1 | (1,011 | ) | — | — | (1,011 | ) | ||||||||||
New Mexico corporate income tax rate change | 22 | — | 83 | 105 | ||||||||||||
Total income tax impacts2d | (989 | ) | — | 83 | (906 | ) | ||||||||||
Adjusting items, net of income taxes | 1,618 | — | 83 | 1,701 | ||||||||||||
Ongoing Earnings (Loss) | $ | 105,639 | $ | 34,535 | $ | (4,317 | ) | $ | 135,857 | |||||||
12017 income tax effects calculated using a tax rate of 38.80% | ||||||||||||||||
2The 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 $208 and $288 in the three months ended September 30, 2017 and increases in "Electric Operating Revenues" and "Cost of energy" of $8,818 and $9,676 in the nine months ended September 30, 2017 | ||||||||||||||||
b(Increases) in "Gains on investment securities" | ||||||||||||||||
cIncreases in "Other (deductions)" | ||||||||||||||||
dIncome tax impacts reflected in "Income Taxes" |
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 | TNMP | Corporate and Other | PNMR Consolidated | |||||||||||||
(per diluted share) | ||||||||||||||||
Three Months Ended September 30, 2017 | ||||||||||||||||
GAAP Net Earnings (Loss) Attributable to PNMR | $ | 0.76 | $ | 0.18 | $ | (0.02 | ) | $ | 0.92 | |||||||
Adjusting items, net of income tax effects: | ||||||||||||||||
Mark-to-market impact of economic hedges | — | — | — | — | ||||||||||||
Net change in unrealized impairments of available-for-sale securities | — | — | — | — | ||||||||||||
Pension expense related to previously disposed of gas distribution business | 0.01 | — | — | 0.01 | ||||||||||||
Total Adjustments | 0.01 | — | — | 0.01 | ||||||||||||
Ongoing Earnings (Loss) | $ | 0.77 | $ | 0.18 | $ | (0.02 | ) | $ | 0.93 | |||||||
Average Diluted Shares Outstanding: 80,153,623 | ||||||||||||||||
Nine Months Ended September 30, 2017 | ||||||||||||||||
GAAP Net Earnings (Loss) Attributable to PNMR: | $ | 1.30 | $ | 0.43 | $ | (0.06 | ) | $ | 1.67 | |||||||
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 | ) | ||||||||||
Pension expense related to previously disposed of gas distribution business | 0.03 | — | — | 0.03 | ||||||||||||
New Mexico corporate income tax rate change | — | — | — | — | ||||||||||||
Total Adjustments | 0.03 | — | — | 0.03 | ||||||||||||
Ongoing Earnings (Loss) | $ | 1.33 | $ | 0.43 | $ | (0.06 | ) | $ | 1.70 | |||||||
Average Diluted Shares Outstanding: 80,132,174 | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(In thousands, except per share amounts) | |||||||||||||||
Electric Operating Revenues: | |||||||||||||||
Contracts with customers | $ | 400,023 | $ | 392,607 | $ | 1,042,033 | $ | 1,016,384 | |||||||
Alternative revenue programs | (8,050 | ) | $ | (1,908 | ) | (1,466 | ) | 11,591 | |||||||
Other electric operating revenue | 30,693 | $ | 29,201 | 52,290 | 84,423 | ||||||||||
Total electric operating revenues | $ | 422,666 | $ | 419,900 | 1,092,857 | 1,112,398 | |||||||||
Operating Expenses: | |||||||||||||||
Cost of energy | 113,536 | 103,748 | 293,803 | 310,818 | |||||||||||
Administrative and general | 49,969 | 44,130 | 141,607 | 132,509 | |||||||||||
Energy production costs | 31,350 | 31,970 | 108,588 | 98,150 | |||||||||||
Regulatory disallowances and restructuring costs | (1,645 | ) | — | 149 | — | ||||||||||
Depreciation and amortization | 61,580 | 58,821 | 180,365 | 172,829 | |||||||||||
Transmission and distribution costs | 19,394 | 16,801 | 54,800 | 50,309 | |||||||||||
Taxes other than income taxes | 20,492 | 19,808 | 60,094 | 57,820 | |||||||||||
Total operating expenses | 294,676 | 275,278 | 839,406 | 822,435 | |||||||||||
Operating income | 127,990 | 144,622 | 253,451 | 289,963 | |||||||||||
Other Income and Deductions: | |||||||||||||||
Interest income | 3,400 | 3,582 | 11,862 | 12,348 | |||||||||||
Gains on investment securities | 2,463 | 5,406 | 1,081 | 17,730 | |||||||||||
Other income | 3,735 | 6,275 | 12,000 | 14,626 | |||||||||||
Other (deductions) | (2,624 | ) | (6,709 | ) | (9,867 | ) | (17,372 | ) | |||||||
Net other income and deductions | 6,974 | 8,554 | 15,076 | 27,332 | |||||||||||
Interest Charges | 30,492 | 32,106 | 96,868 | 96,137 | |||||||||||
Earnings before Income Taxes | 104,472 | 121,070 | 171,659 | 221,158 | |||||||||||
Income Taxes | 12,899 | 42,743 | 18,838 | 75,154 | |||||||||||
Net Earnings | 91,573 | 78,327 | 152,821 | 146,004 | |||||||||||
(Earnings) Attributable to Valencia Non-controlling Interest | (3,920 | ) | (4,456 | ) | (11,706 | ) | (11,452 | ) | |||||||
Preferred Stock Dividend Requirements of Subsidiary | (132 | ) | (132 | ) | (396 | ) | (396 | ) | |||||||
Net Earnings Attributable to PNMR | $ | 87,521 | $ | 73,739 | $ | 140,719 | $ | 134,156 | |||||||
Net Earnings Attributable to PNMR per Common Share: | |||||||||||||||
Basic | $ | 1.10 | $ | 0.92 | $ | 1.76 | $ | 1.68 | |||||||
Diluted | $ | 1.09 | $ | 0.92 | $ | 1.76 | $ | 1.67 | |||||||
Dividends Declared per Common Share | $ | 0.2650 | $ | 0.2425 | $ | 0.7950 | $ | 0.7275 |