- Earnings call transcript Q3 2022

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Operator

Good day and welcome to the PNM Resources Third Quarter 2022 Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Lisa Goodman, Executive Director of Investor Relations. Lisa, please go ahead.

Lisa Goodman

Thank you, Melys and thank you, everyone, for joining us this morning for the PNM Resources third quarter 2022 earnings call. presentation available conference pnmresources.com. on the supporting and that are documents our note for call this other Please website at

me Operating Resources' Vincent-Collawn; PNM Chief Financial Senior today CEO, Eden. and Joining Patricia Lisa Pat Vice Chairman President President Don Officer; and Chief Officer, Terry; and and are

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

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

Pat Vincent-Collawn

Thank day. you, National National morning, and for you Friday Jersey on thank Candy us and today joining both Lisa. everyone Good

let results. prior to We year, year-to-date candy start are also the and day, slide. of out all of bringing the $X.XX. I'll that today, quarter since financial going the over exception with, On earnings ongoing our But in General with X, Slide third our Counsel. course, a left earnings over lobby our eating increased ongoing it's jerseys our decked lawyer Halloween we're to in

our XXXX $X.XX. range guidance $X.XX ongoing for earnings As a a of result, are to to raising we

scheduled the by walk more of talk Don these interest $X.XX bring guidance July range our our been to rates. Lisa more plan the hearings and its October, utilities, in application. modernization for offset asked for a maintaining higher of We at to approval numbers have for In March. upgrades filed will customers. other big system meters smart on $X.XX based plan strength a for by at our PNM continued to our and detail. will through We application are next XXXX about

to generation step Generating brings our PNM's operated emissions-free This a our to at Juan last retirement the us the San of amount This thank San XX% the coal who reduces teams I'd less carbon like our by quarter portfolio than last unit significantly the efficiently of in free. also and as and plant customers summer. the to XX% brought one continue Station. plan through our safely we XXXX serving Juan, to be of to forward with execute

New begin years. but awaiting will commissioners present terms January committee governor November who of Senate credit These staggered X the stopping emergency On the Juan. us the while on The credits be earlier appealed appeal. roles confirm commissioner week, of of the will In Mexico confirmation. the in will in XXXX the and with by for San to this New with remain stay, rate for change to to names the We begin Regulation will September, by regulatory terms the the will front, during Public appointees, appointment and up acting X their governor be stay X, nominating appointed responded The serve is X to an will and requested commission. preparing confirmed at retirement duration in new to with appeal. their Commission a ordered a select The stay begin appointments Mexico to order Commission of rate need January place court able then credit the associated the had providing the least XX.

with Lastly, Avangrid. in our merger

the court if since or our their [ph] process hardest time to Tom part. arguments hear waiting the requirement no oral updates have oral We've in January. XX There no the is and to initial hear court the our procedural for truly As is to been requested filing request. XX-month that arguments Petty consideration. the weighting sung, frame from to There last so are beautifully see We any for rents court call. estimate a

it Don, quick Before I some will on I ESG cover highlights turn Slide over X. to on

As elimination I've in portfolio the the shift Juan of out our significantly of the carbon in already marked reduces mentioned, emissions coal progress full amount and generation San significant from of PNM's generation.

water of we important reduction significant This community event this the customer-assisted customers this XX% here annual valued venue. is the the a company-wide with reached Mexico, schedule, for in of was coordinate community the our and largest also community closure hosting dozens some is ahead also single for resources in SOX social person to the PNM some as target activities to for in highlights of to one a throughout held that We we gas year. Mexico day also New interim this our And were and and New Albuquerque time. from as volunteered service in fare. of we return assistance statewide utilities particularly and target quarter, of together organizations consumption. other had this by able bring particularly have our in by We've the and freshwater return first happened to along in Our XXXX our reduction majority of reduces significantly hasn't NOx a number finally

recognition about by sovereignty of each In and for 'XX We've and we independence families Day learn grow Peoples other. our struggle from to the at Mexico's part in Pueblos coordinated a and over within documentary organization the assistance. in Our [ph]. recognition New activities received in October, view event and Pueblo Indigenous nearly and own of gathered employees the also customers $XXX,XXX taken to volunteered XXX

week and opportunities our are of an mindset this RFP of types our well. diversity learning into of new just issued as business opportunities to these utilizing encourage a help evaluation of will bid lands Americans partners specifically business proposals. Don to it thrive. more for culture located mindset look relationships resources tribal this a for shortlist I operations the value have voice to We our and best-in-class and over continue We regularly this are on inclusion. integrate looking We in community turn community. We important with and an these decisions Native regulatory update. developing an With that, for and to selection our for proposals Navajo

Don Tarry

Pat everyone. X, I'll start first. Thank good growth you, PNM loan and our morning, on by area with with service Slide

early The original is highest been lower slightly growth July, XXXX, coming typically And soared in The has system our set load, terms third our PNM as first our quarter peak, our overall and in temperatures new from a pressures industrial issues of in expectations our demand. related have than Delays expectations. was than load to our done better growth till of year. timing customer supply in original this customers. next driver for chain the has Residential commercial moved guidance out year. since primary and other

in impacts With to not retail this customers have our reduced our on lowest growth these XXXX rate to load, shifts X.X% have so Industrial X.X%. overall load we does EPS. significant expectations have the

X% role inquiries X% to get XXXX, our expectation coming Economic are for Volumetric we is from demand-based board. consistent to those for usage growth industrial mining has back at the companies to increased state has growth of our the result, exceeded particularly of a to load to continuing in goals, with the year-to-date has we their in ahead crypto their year our grown looking X%. who from development delays energy the a number own through in years from X.X% TNMP efforts with plan have of original Looking achieve expectations range companies pushed relocate to working looking demand-based for for forecast expand as usage, to our New anticipate On Mexico growth up expectations And and in a needs. to have we and of across energy load, the our system growth move X%. customers mining customers Without levels. clean these to the or expectations year to in double-digit X.X% to crypto to their come. X.X%. increased key has Load play been

started summer nearly end XX% grown a come pattern some for The summer around to factor for until hottest TNMP and Texas rain. should the has set belongs in a also record Weather was hottest load would quarter new demand-based XXXX in XX% in of still the Texas looking it our to however, its in shift year, in The out brought at in XX%. record since most weather this for quarter. the the demand, peak peak third hit For a TNMP's like XXXX. recent September.

Now turning highlights operational to some cover for PNM. Slide I'll X.

its needs today to PNM with As modernization Legislation utility meet customers filed investments October. grid in evolving encourages Pat the passed in and into future. commission the of plan in infrastructure grid XXXX, the mentioned,

is data usage monthly when readers. communication one-way by provides only infrastructure current Our collected meter

and priority is So for plan our smart first in meters communication. the multidirectional

customers decisions to investments, able be quickly. service real-time respond will more into to their impact PNM be by bills. to insight to will also using outages customers make to their own the With improve able usage to our data real-time identify gain and and these energy

Our of goals. in scale renewable proposed clean investment also critical and and will resources energy utility the storage meeting distributed supports PNM addition the both generation which be

programs, is growth contract which lines new implementation began summer line, is are Newer to with the of FERC-regulated demand approval March slide year. of filed and We $XXX plan break for plan in by December in earnings and also our requested The more million $X.XX business we strong scheduled upon facilitate commission. after of year how Mexico October New as are transmission in a down a seeing the Year begin shows approval been plan to Sphere customer this and in last rate investment been table that contract for one providing rider $X.XX is begins lower. wanted calendar rates plan our response This to also by area. I million investments X, hearings constructed something on only year. X new our increased technology early have is the in $XXX has us September to by Western decades. and bills in beginning was under the can XX. highlight requested of this The earnings for July transmission expected the

our In the grid. contract, have move as energy driven West demand, across seen higher to resource addition transmission across to for market up system well demand as constraints also this overall prices we've

frequency, increase, interest higher cost. As see in to the at power specific prices meet transmission purchases needs we lowest short-term greater

X, the expect transmission a see Mexico already demand Slide covered to week's from regulatory updates activity. On of We've this corresponding on ruling remains Court. As level across Supreme elevated proceedings. we I key will cover West, the New our

filing in rate be PNM will review a December. We general

with based and XXXX over the review in phased was Our last rate XXXX. on rates test XXXX year

infrastructure The to our the lower benefits investments steady of base substations, service to review will transition our power of to online. customers' to improve We base so the because and in to there test and our this XXXX of were by file significantly merger original renewable support enhance the with resilience, proceedings. XXXX coal plans be recover in future red case to investments investments lines cases The rate meters will carbon-free and XXXX will out and year, these show mitigated cost resources, coming years enhance and X rate resources this T&D rate the new COVID directly in the rates reliability will customers. file impact deferred additions our of be of transition

customers fuel participation provides September. $XX benefited offsets In market imbalance to year the addition, in Western has through million costs energy and this PNM's

implemented I'm and investments. commission rate over of guidance the quarter with new turn customer and We'll the general rate average peers to our going we for have PNM's At our going bill in timely once Through below over $XXX. new have earnings July $XX for $XXX things TNMP, share more PNM to application impacts transmission result, and at forward. XXXX, our rates review a to million Lisa was our December. regional residential of remained As about of details to recovery we the distribution averages. annual through walk submitted for regional bills the have base national considerations compared well

Lisa Goodman

Don you, everyone. morning, good and Thank

with to year. last summary quarter changes Turning compared a third earnings to of Slide XX in the

in As appendix. each per Earnings share $X.XX usual, in for to the from in detailed segment are $X.XX for XXXX. drivers the available third the grew XXXX quarter

Texas DCOS mechanisms load capital TCOS at increased investments particularly the earnings As our in increased Don year, earnings mentioned, TNMP. and and weather rate on this and

through to in long-term Continued reduced funded increased on new current we challenging FERC investments to interest expense and a utilities. along demand offset despite our conditions more Higher trust to anticipate last across in market talk reclamation at I in earnings lower and Slide earnings new earnings XX growing XXXX across in increases of continues compared expense plan addition line. to decommissioning trust on any and PNM, plans year. plan trust prices capital and transmission meeting market remain XXXX about These Mexico Western revised our well by our both with contributions were At West, resource market cash T&D the our don't these Texas. performance and reduced $X.X customers pension, our has the partially depreciation This These plan. in of needs be constraints our billion. will transmission the few making from the infrastructure and also focused PNM minutes. on Spirit financing investment New

reliability million in across mod and of plan business We as T&D part with support $XXX an along resiliency. to have for added our investments additional the PNM $XXX million grid

And to business. continue has impacts to integrated our partnership supplier supply our inflation. We with and our chain mitigated monitor

also equipment our improve equipment orders long standardization we critical possible, put time and identify in lead for taken have earlier steps where have [ph], to We equipment.

investments we base We this impact -- investments XX continue rate transition of the mechanisms with and and recovery At remains these deferred with expand. timely base portions X% over plant grows for shows XXXX majority to operations associated rate plan the monitor our and PNM TNMP our of in of investment plan. of look at as any the stable Retail, manage our The investment over transmission the plan rates TCOS period. The these formula FERC comes PNM's recovery more within capital out allow and Slide will and from mechanisms business for our levels. DCOS to to attributed coal base these TNMP. rate growth recovery our through trends continue

grid rate filings or recovered rate program In through our with are around riders. base X% addition, expected Slide growth to provides annual XX being a of mod associated plans. resulting to financing our through investments in approximately made PNM's formula X% rider, details recovered be rates,

be existing refinancing limited capital each be the have new have rate the year the future to will hedged, been holding bonds we market that merger associated facilities. have with of to million company XXXX. interest these year investments. At we have We of rate the term At loan rates. ample Avangrid through X.X% In needs will the the fund to at under rising our Most mitigate the closing. accessing our in debt variable short-term and agreement need the of rate the our impact to We capital and rate debt TNMP, under now included portion have is of at the variable reduce term terms for debt average planned transferred near meantime, filings. fixing taken our issuances of an is near $XXX in PNM, from securitization steps liquidity next proceeds at

across investment-grade market focused have needs are of we credit the XXXX, investing maintaining we on mindful financing Beyond conditions metrics a and longer-term optimize horizon, in impacts based would business to the we business. on our our past. current as look while customer in done being Over

year-end indicated before we ATM I've will tool As across have that that you available intend an before, so future program to needs. and filing meet implement equity to come we see shortly the another

wrap to guidance. Turning our will I forward-looking up Slide with XX,

are to And based share We year-to-date. $X.XX. projecting XXXX of earnings of on are strength our raising for in the guidance the range $X.XX per earnings

For XXXX, $X.XX of a we $X.XX. are maintaining range to our

plan see our and We rate year-end continue by February. typical call higher and and with driven as level interest growth FERC driver part EPS rates. some offset segment growth drivers in strong TNMP details provide at our utilities of to expect load We to by the transmission we'll and

delivering a remaining We strong of adaptable record and changing to results market track conditions. and flexible have

that continuing XXXX track are We target. XXXX the to are from this to and target X% shows our rate growth guidance to on annual achieve we

our that, over customers to impacts our With look will to monitor Pat. offset I'll for objectives. turn back continue and to We and in maintain to it changes ways environment long-term

Pat Vincent-Collawn

Thank you, Lisa.

crews to our the questions This Hurricane our open I'd their Texas save partners thank sure it Florida efforts in to for of and to help assist EEI. who I please us for Before best you like at questions. in exemplifies up the restoration way and questions make to some of of our let's Melys, up get together assisted company after for Ian. our industry type the open as best customers. it made

Operator

Instructions] [Operator comes from question from Our first Levine Ryan Citi.

Ryan Levine

higher walk For was offset was was hedged that us the impact the the through by were impact from guidance maintained, rates XXXX that terms can highlighted the you other you that factors. that in interest of what

Pat Vincent-Collawn

answer I that. can Lisa it's have Pat. to Sure. Ryan,

Lisa Goodman

Yes. to Yes. you. Brian, good talk to

hedged have XXXX our and through debt we So -- X.X% of February. and variable normal we rate at year-end -- guidance in our year-end million $XXX have call will

will so drivers at we EPS drivers, provide detailed that And Brian. and time,

Ryan Levine

then loan very growth for your strong for And 'XX. Okay. was -- the outlook for

you demand. crypto quarter and the into into in year? Are fourth that mentioned any You demand next seeing drop-off

Don Tarry

level. we continue haven't. it we hit see to about that mean No, I Yes.

As into factors at associated XXXX, with we we consideration take in all look that.

think X.X% is continues growth things to and X.X% at that, on of key I our one demand core the top of that so. cryptos the

Ryan Levine

me. question Okay. last And then for

pending Do that merger? In highlighted, terms of decision of an pending issuance any ATM. you of any anticipate of around the the the equity ahead that you utilizing filing

Lisa Goodman

million at we of make an toolbox. sure we to and put sure have before, -- And we and the the program the will ATM that -- just look in want with have that make the ample just we of year tools like we flexibility. next Ryan, equity like the to end identified XXXX. to have Yes. in we said, said we've I needs up ATM $XXX of And place by

Operator

Jonathan Wells Our next question from comes Fargo. Reeder from

Jonathan Reeder

normal the favorable. really is midpoint whereas demand we non-weather-related higher thinking guidance headwind. 'XX Should is $X.XX appendix, increase, interest like been above to what it has weather expense drives the the midpoint be looks that offsetting For weather the year-to-date

Don Tarry

mean a there's I business, core I to a think good think way couple think that's at it. I the things, Jonathan. look I of

clearly, the in yes, utility with benefits have helped of think business the weather. that West we as saw TNMP strong some transmission the And provide constraints benefits and things both saw interest. at to performance, the -- We offset that FERC also I of those are well. then debt our saw corporate in arena PNM

Jonathan Reeder

Okay.

kind then we range original business away, kind the So and words, you're then the that weather then growth of core offset guess, middle able that, again, perhaps point that of normal goes at starting I your in of 'XX, how headwind, at look and kind that is 'XX and you're guidance the other is when to interest of back by 'XX that's range? the maintain strength benefit

Lisa Goodman

Yes.

always prepare XXXX. anticipated right? we that's have when to so what we we So range look guidance a And at in whether normal weather,

have so year. some And very that We XXXX. provided feel on comfortable -- with weather upside we have are did range the we in this

And being as so of the growth lower a see course, between you're a XXXX little going to XXXX result. and

Jonathan Reeder

Right.

And -- for precedent a on [indiscernible]? can about us the like remind in is this request application, that Okay. request, mod Or mod rate a there a rider you rider grid -- then is novel grid the state? the

Don Tarry

file actually legislation included so it's avenue be able to provides Jonathan, that -- an Yes, it to in earring. the

Jonathan Reeder

Okay.

Mexico the the new in or when legislation I be the the guess, assuming a that will New commission. little commission if but upholds -- better hopefully, might So question be

Don Tarry

a in March, hearings the be will next year be the new will Yes, decision frame Jonathan, under position. heard time this and

Jonathan Reeder

the to and of is amendment on group both women's I was women move appointed then the think to maybe any update there appeal the regarding commission? group a the or constitutionality by Supreme And that the Okay. indigenous Court to indigenous an constitutional it like,

Pat Vincent-Collawn

General update that spoken Ryan, they on on out and no, is believe there that anything. any isn't but Attorney filed appeal based the that not has really

that is list on worry that things of So we not the about.

Jonathan Reeder

list Okay. that the What worry is about? on you

Pat Vincent-Collawn

Jonathan. try [indiscernible], butter. I are of here, that candy, have not to Well, my peanut absolutely going now so. my There General all some the worry Counsel to resi’s is Halloween Hopefully no [ph] eat

you want bring be me you nice can So if EEI, at to some.

Jonathan Reeder

bring Or you way. can either

Pat Vincent-Collawn

you I'll some. bring

Okay.

Operator

from Dumoulin-Smith America. comes [Operator Bank Julien next Instructions] of from question Our

Julien Dumoulin-Smith

here. update Thank you guys for the opportunity. Good

top like for So a against material kind here. through 'XX I seems But reflected to from in the the fair tick the see Again, it up it's couple guidance the through. the and grid there's here, range, have didn't to not earlier? can't just take or taking change about a especially mod of dynamic 'XX you change rate a why average that? just the take that I'm not seems to the things EEI questions the hence, spoke all enough interest way through base rate maybe been Is promise to characterize of to no

Pat Vincent-Collawn

That's Julien. it, a fair way to characterize

Julien Dumoulin-Smith

Just to here, are this Got alluded you it. -- talk about Excellent. can up ATM. I know you you financing? again, guys to And with the then come later. related going But

plan, the You had some call it equity needs or that. plan legacy the in I'll

about AMT flow X.X% You've kind explicit, this 'XX there updated Or in it a as just obviously, to that rate CapEx earlier. incremental make equity Is into earlier more you and same? through Again, [ph] needs. of cash it do X% think other embedded ballpark here, equity right? how your well, the is factors of the may that base question versus that? fund CAGR play still to and Again, versus is it

Lisa Goodman

Yes.

same needs before, equity Julien. And defined we the keeping are we had that still so

have we market based we And conditions. financing that optimize XXXX. we're focused up to X%. target will So beyond that, on $XXX our plans million really growth earnings And reaching of on through

Julien Dumoulin-Smith

Excellent.

terms And rate filing case the of then ultimately grid I if can the of in of bite if you you parallel then the Okay, the apple backdrop will, maybe at timing, the deal, talk can, process each I all sort mod fruition just you as X mean both here in filing another come the time of about about and ongoing great. that line, how the deal? efforts think of or 'XX, prosecution here, some to and especially just rate the case between the here they do them. of and both

Pat Vincent-Collawn

Yes, already schedule Julien, is the set. mod grid

the normal commission. will filed the administrative in proceed expended it be year in said, we in rate there et December, ones case normal et So gets The proceedings go and along cetera, cetera. the that where as set, this schedule on will will it for that hearing

So merger the that as settlement And interveners, will the agreement we file or go wouldn't the terms year. excuse commission in December of doesn't -- grid we after in with said a the rate filing of hears when in case it. that mod -- me, until this the

case. So to a need we file

We haven't filed long one time. a for

those decides goes back Supreme if So X kind path. the on they'd their the commission a it normal that's the If a then the And court it to of go hear like -- merger on process, it again timetable. to and to little bring the Court, longer. it's

So be case. herd the either way year, grid know will as And of the that of merger the so. rate grid early or in we but merger not rate or mod that think in the the exactly a when the the get case one would conversely, that the wouldn't schedule mod having way I get don't yet the -- the

Julien Dumoulin-Smith

here and/or down? lot at Again, moving to formally all scenes at needs All it. far, from And presume more as a being, and behind least that but the a is I there's here No right? perhaps button coming least the cost at the the time Resource updates then across Got subject Adequacy right. reflect IRA Western here hot Juxtapose well, that I states. Excellent. know obviously, thus

Pat Vincent-Collawn

call. have We'll team when of update resource our good more The to year-end do and we Yes. continues work an making advocacy progress. is on

issue the IRA, In you rules haven't devil's help -- been And will details. as the written with is yes, the it know, terms Treasury, the the yet. in of

so. But game have that a bill see the final what So we people plug think in to until rules, going we changer I aren't be, underestimated will yet. that

Julien Dumoulin-Smith

be service when territory your Right. the customers, will affords opportunities and that. And specifically underestimate your saying that what a are for gain you

Pat Vincent-Collawn

that -- Climate about a in statement I'm general us, particular so. wasn't sorry,

Julien Dumoulin-Smith

is, got a Totally, deal see it a We'll All you then. I go. That's we right. right? There Absolutely. check. [indiscernible] always

Pat Vincent-Collawn

Julien. Thanks,

Operator

closing Pat concludes this turn PNM's conference question-and-answer would to for Vincent-Collawn like back CEO, remarks. session. And the I over to our

Pat Vincent-Collawn

at and safe haven't you please if Melys look then, you, and us all Financial voted of already, you, this thank of Until many love joining meeting stay the Thank morning. again, always so, you Conference. forward for you EEI with to do your lawyer. We

Operator

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

now Have a day. You may disconnect. good

TXNM Energy (TXNM) 4 Nov 222022 Q3 Earnings call transcript