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) | April 27, 2018 | |
(April 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 | ||||
£ | 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: April 27, 2018 | /s/ Joseph D. Tarry |
Joseph D. Tarry | |
Vice President, Finance and Controller | |
(Officer duly authorized to sign this report) |
Q1 2018 | Q1 2017 | |
GAAP net earnings attributable to PNM Resources | $15.0 | $22.9 |
GAAP diluted EPS | $0.19 | $0.29 |
Ongoing net earnings | $16.5 | $22.1 |
Ongoing diluted EPS | $0.21 | $0.28 |
Q1 2018 | Q1 2017 | |
GAAP net earnings attributable to PNM Resources | $7.7 | $16.5 |
GAAP diluted EPS | $0.10 | $0.21 |
Ongoing net earnings | $9.1 | $15.6 |
Ongoing diluted EPS | $0.12 | $0.20 |
• | In the first quarter of 2018, PNM’s 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 first quarter of 2018 by increased planned outage costs at the Four Corners Power Plant resulting from the installation of SCR equipment, depreciation and property tax expenses from new capital investments and lower decommissioning and reclamation trust gains. These reductions were partially offset by increased usage from temperatures that were closer to normal than during the first quarter of 2017, and new third-party transmission contracts. |
Q1 2018 | Q1 2017 | |
GAAP net earnings attributable to PNM Resources | $9.4 | $7.6 |
GAAP diluted EPS | $0.12 | $0.09 |
Ongoing net earnings | $9.4 | $7.6 |
Ongoing diluted EPS | $0.12 | $0.09 |
• | TNMP’s GAAP and ongoing earnings were higher in the first quarter of 2018 due to increased transmission rate relief, higher load and colder temperatures. Earnings also increased due to lower income tax expense associated with the TCJA for the first twenty-five days of January prior to the Public Utility Commission of Texas order requiring deferral of these savings. This was partially offset by increased depreciation and property tax expenses resulting from additional capital investments. |
Q1 2018 | Q1 2017 | |
GAAP net earnings (loss) attributable to PNM Resources | $(2.1) | $(1.3) |
GAAP diluted EPS | $(0.03) | $(0.01) |
Ongoing net earnings (loss) | $(2.0) | $(1.2) |
Ongoing diluted EPS | $(0.03) | $(0.01) |
• | Corporate and Other’s GAAP and ongoing earnings were lower in the first quarter of 2018 due to higher interest rates and the issuance of $300.0 million of senior unsecured notes at 3.25% in March 2018 to reduce variable rate debt exposure. |
PNM | TNMP | Corporate and Other | Consolidated | |||||||||||||
(in thousands) | ||||||||||||||||
Three Months Ended March 31, 2018 | ||||||||||||||||
GAAP Net Earnings (Loss) Attributable to PNMR | $ | 7,705 | $ | 9,413 | $ | (2,128 | ) | $ | 14,990 | |||||||
Adjusting items before income tax effects | ||||||||||||||||
Mark-to-market impact of economic hedges3a | (28 | ) | — | — | (28 | ) | ||||||||||
Net change in unrealized gains and losses on investment securities3b | 1,056 | — | — | 1,056 | ||||||||||||
Pension expense related to previously disposed of gas distribution business3c | 832 | — | — | 832 | ||||||||||||
Total adjustments before income tax effects | 1,860 | — | — | 1,860 | ||||||||||||
Income tax impact of above adjustments1 | (472 | ) | — | — | (472 | ) | ||||||||||
Impairment of state tax credits | — | — | 123 | 123 | ||||||||||||
Total income tax impacts3d | (472 | ) | — | 123 | (349 | ) | ||||||||||
Adjusting items, net of income taxes | 1,388 | — | 123 | 1,511 | ||||||||||||
Ongoing Earnings (Loss) | $ | 9,093 | $ | 9,413 | $ | (2,005 | ) | $ | 16,501 | |||||||
Three Months Ended March 31, 2017 | ||||||||||||||||
GAAP Net Earnings (Loss) Attributable to PNMR | $ | 16,526 | $ | 7,604 | $ | (1,268 | ) | $ | 22,862 | |||||||
Adjusting items before income tax effects | ||||||||||||||||
Mark-to-market impact of economic hedges3a | (1,345 | ) | — | — | (1,345 | ) | ||||||||||
Net change in unrealized gains and losses on investment securities3b | (1,101 | ) | — | — | (1,101 | ) | ||||||||||
Pension expense related to previously disposed of gas distribution business3c | 961 | — | — | 961 | ||||||||||||
Total adjustments before income tax effects | (1,485 | ) | — | — | (1,485 | ) | ||||||||||
Income tax impact of above adjustments2 | 576 | — | — | 576 | ||||||||||||
New Mexico corporate income tax rate change | 22 | — | 83 | 105 | ||||||||||||
Total income tax impacts3d | 598 | — | 83 | 681 | ||||||||||||
Adjusting items, net of income taxes | (887 | ) | — | 83 | (804 | ) | ||||||||||
Ongoing Earnings (Loss) | $ | 15,639 | $ | 7,604 | $ | (1,185 | ) | $ | 22,058 | |||||||
1 2018 income tax effects calculated using a tax rate of 25.40% | ||||||||||||||||
2 2017 income tax effects calculated using a tax rate of 38.80% | ||||||||||||||||
3 The pre-tax impacts (in thousands) of adjusting items are reflected on the GAAP Condensed Consolidated Statement of Earnings as follows: | ||||||||||||||||
aReductions in "Electric Operating Revenues" and "Cost of energy" of $281 and $309 in the three months ended March 31, 2018 and increases in "Electric Operating Revenues" and "Cost of energy" of $1,462 and $117 in the three months ended March 31, 2017 | ||||||||||||||||
bReductions (increases) in "Gains on investment securities" | ||||||||||||||||
cIncreases in "Other (deductions)" | ||||||||||||||||
dIncome tax impacts reflected in "Income Taxes" |
PNM | TNMP | Corporate and Other | Consolidated | |||||||||||||
(per diluted share) | ||||||||||||||||
Three Months Ended March 31, 2018 | ||||||||||||||||
GAAP Net Earnings (Loss) Attributable to PNMR | $ | 0.10 | $ | 0.12 | $ | (0.03 | ) | $ | 0.19 | |||||||
Adjusting items, net of income tax effects | ||||||||||||||||
Mark-to-market impact of economic hedges | — | — | — | — | ||||||||||||
Net change in unrealized gains and losses on investment securities | 0.01 | — | — | 0.01 | ||||||||||||
Pension expense related to previously disposed of gas distribution business | 0.01 | — | — | 0.01 | ||||||||||||
Impairment of state tax credits | — | — | — | — | ||||||||||||
Total Adjustments | 0.02 | — | — | 0.02 | ||||||||||||
Ongoing Earnings (Loss) | $ | 0.12 | $ | 0.12 | $ | (0.03 | ) | $ | 0.21 | |||||||
Average Diluted Shares Outstanding: 80,013,247 | ||||||||||||||||
Three Months Ended March 31, 2017 | ||||||||||||||||
GAAP Net Earnings (Loss) Attributable to PNMR: | $ | 0.21 | $ | 0.09 | $ | (0.01 | ) | $ | 0.29 | |||||||
Adjusting items, net of income tax effects | ||||||||||||||||
Mark-to-market impact of economic hedges | (0.01 | ) | — | — | (0.01 | ) | ||||||||||
Net change in unrealized gains and losses on investment securities | (0.01 | ) | — | — | (0.01 | ) | ||||||||||
Pension expense related to previously disposed of gas distribution business | 0.01 | — | — | 0.01 | ||||||||||||
New Mexico corporate income tax rate change | — | — | — | — | ||||||||||||
Total Adjustments | (0.01 | ) | — | — | (0.01 | ) | ||||||||||
Ongoing Earnings (Loss) | $ | 0.20 | $ | 0.09 | $ | (0.01 | ) | $ | 0.28 | |||||||
Average Diluted Shares Outstanding: 80,111,994 |
Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
(In thousands, except per share amounts) | |||||||
Electric Operating Revenues | |||||||
Contracts with customers | $ | 303,351 | $ | 297,191 | |||
Alternative revenue programs | 924 | 4,579 | |||||
Other electric operating revenue | 13,603 | 28,408 | |||||
Total electric operating revenues | 317,878 | 330,178 | |||||
Operating Expenses: | |||||||
Cost of energy | 92,556 | 102,804 | |||||
Administrative and general | 48,283 | 45,394 | |||||
Energy production costs | 35,350 | 31,787 | |||||
Depreciation and amortization | 58,722 | 56,383 | |||||
Transmission and distribution costs | 16,955 | 16,477 | |||||
Taxes other than income taxes | 19,880 | 19,235 | |||||
Total operating expenses | 271,746 | 272,080 | |||||
Operating income | 46,132 | 58,098 | |||||
Other Income and Deductions: | |||||||
Interest income | 4,124 | 4,881 | |||||
Gains on investment securities | 288 | 6,661 | |||||
Other income | 3,469 | 4,902 | |||||
Other (deductions) | (1,376 | ) | (5,621 | ) | |||
Net other income and deductions | 6,505 | 10,823 | |||||
Interest Charges | 33,055 | 31,700 | |||||
Earnings before Income Taxes | 19,582 | 37,221 | |||||
Income Taxes | 783 | 10,775 | |||||
Net Earnings | 18,799 | 26,446 | |||||
(Earnings) Attributable to Valencia Non-controlling Interest | (3,677 | ) | (3,452 | ) | |||
Preferred Stock Dividend Requirements of Subsidiary | (132 | ) | (132 | ) | |||
Net Earnings Attributable to PNMR | $ | 14,990 | $ | 22,862 | |||
Net Earnings Attributable to PNMR per Common Share: | |||||||
Basic | $ | 0.19 | $ | 0.29 | |||
Diluted | $ | 0.19 | $ | 0.29 | |||
Dividends Declared per Common Share | $ | 0.2650 | $ | 0.2425 |