PNM Resources(US:PNM)2024-02-07 03:51Financial Data and Key Metrics Changes - The consolidated EPS for 2023 is reported at $2.82, reflecting a $0.13 increase from 2022, with a target of 6% to 7% growth through 2028 based on a 10% rate base growth over the same period [70][82][96] - The company anticipates an equity need of $100 million per year on average through 2028, totaling $500 million to support the planned growth [2] Business Line Data and Key Metrics Changes - TNMP is identified as the fastest-growing area with a projected rate base growth of 13% by 2028, surpassing PNM Retail [1] - Continued rate recovery of transmission and distribution investments at TNMP through TCOS and DCRF filings has increased earnings, although these increases were partially offset by higher expenses for depreciation, property tax, and interest [33][98] Market Data and Key Metrics Changes - The company has seen load growth and weather positively impacting combined earnings at PNM and TNMP, with lower operating costs contributing to increased earnings year-over-year [82] - The average residential bill at PNM is reported to be significantly lower than both regional and national averages, indicating effective cost management and customer benefits from the Energy Transition Act [94] Company Strategy and Development Direction - The company is focused on investing in infrastructure to meet customer needs and enable the clean energy transition, with plans to double the rate base from 2020 to 2028 [57] - The regulatory framework in Texas encourages investments into the grid, providing timely recovery through rate mechanisms, which supports the company's capital investment strategy [74] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the plans following the resolution of PNM's rate case, which has provided clarity for future growth and financing [3][70] - The company is in a "deep breath phase" post-merger deal break, emphasizing the importance of size and access to cheaper capital in the current market environment [46] Other Important Information - The company plans to make its next retail rate filing in the summer for rates effective in Q3 2025, utilizing a future test year [32] - S&P recently moved the company's outlook from positive to stable, reflecting a return to the rating held prior to the merger announcement [43] Q&A Session Summary Question: What is the outlook for rate cases and earnings power through 2027? - Management indicated that rate cases will likely occur every couple of years, allowing for timely cost recovery and smaller rate increases, which supports earnings power through 2027 [105] Question: What are the drivers for the expected jump in earnings from 2026 to 2027? - The increase is attributed to a combination of conservative planning and the expected outcomes from ongoing regulatory processes and potential new investments [108] Question: How does the company plan to finance incremental investments? - The company is considering a balanced approach to financing, targeting 40% to 50% equity for any additional capital needs [139]