8-K: PNM Resources Reports Mixed 2023 Results, Issues 2024 Earnings Guidance

PNM Resources announced its 2023 financial results, including GAAP earnings of $1.02 per diluted share and ongoing earnings of $2.82 per diluted share, along with 2024 earnings guidance of $2.65 to $2.75 per diluted share.

Summary

• PNM Resources reported 2023 GAAP earnings of $1.02 per diluted share, a decrease from $1.97 in 2022.
• The company's 2023 ongoing earnings were $2.82 per diluted share, up from $2.69 in the previous year.
• The 2023 GAAP results were impacted by $242 million in regulatory disallowances and restructuring costs, including a settlement related to the San Juan Generating Station.
• PNM Resources has issued 2024 ongoing earnings guidance of $2.65 to $2.75 per diluted share.
• The company has set a long-term earnings growth target of 6% to 7% through 2028, based on the midpoint of the 2024 guidance.
• Consolidated operating revenues for 2023 were $1.9 billion.
• PNM serves over 800,000 customers in New Mexico and Texas with a total generation capacity of 3.1 gigawatts.

Sentiment

Score: 5

Explanation: The sentiment is neutral to slightly negative due to the decrease in GAAP earnings and the impact of regulatory disallowances, although the company is showing growth in ongoing earnings and has a positive long-term outlook.

Positives

• Ongoing earnings per diluted share increased from $2.69 in 2022 to $2.82 in 2023.
• The company has set a long-term earnings growth target of 6% to 7% through 2028.
• PNM Resources is focused on investments supported by legislative and regulatory initiatives for a reliable and resilient grid.
• The company is aiming for 100% emissions-free generation by 2040.

Negatives

• GAAP earnings per diluted share decreased from $1.97 in 2022 to $1.02 in 2023.
• The company incurred $242 million in regulatory disallowances and restructuring costs in 2023.
• Corporate and Other segment experienced increased losses due to higher interest rates on variable rate debt.

Risks

• The company's financial results are subject to regulatory disallowances and restructuring costs.
• Changes in interest rates can impact the company's profitability.
• The company's actual results may differ from preliminary unaudited results due to year-end financial closing procedures and audit completion.
• The company's business is influenced by factors beyond their control that can cause actual results to differ from forward-looking statements.

Future Outlook

PNM Resources has provided 2024 ongoing earnings guidance of $2.65 to $2.75 per diluted share and a long-term earnings growth target of 6% to 7% through 2028.

Management Comments

• Pat Vincent-Collawn, PNM Resources chairman and CEO, stated that the company's financial results demonstrate their ability to navigate the environment and deliver an attractive return on investments.
• Management is prioritizing investments supported by legislative and regulatory initiatives for a reliable and resilient grid to meet growing customer demands and enable the clean energy transition.

Industry Context

This announcement reflects the ongoing challenges and opportunities in the utility sector, including the transition to clean energy, regulatory pressures, and the need for grid modernization. The company's focus on renewable energy and grid reliability aligns with broader industry trends.

Comparison to Industry Standards

• PNM Resources' performance is being impacted by regulatory disallowances, similar to other utilities facing challenges with legacy assets.
• The company's long-term growth target of 6-7% is comparable to other regulated utilities aiming for steady growth.
• The focus on grid modernization and renewable energy is consistent with industry-wide efforts to transition to cleaner energy sources.
• Companies like NextEra Energy and Duke Energy are also investing heavily in renewable energy and grid infrastructure, making PNM's strategy consistent with industry leaders.

Stakeholder Impact

• Shareholders may be concerned about the decrease in GAAP earnings but encouraged by the long-term growth targets.
• Customers will benefit from the company's investments in grid reliability and clean energy.
• Employees may be impacted by the company's restructuring efforts.

Next Steps

• PNM Resources will hold a conference call on February 6th to discuss the results.
• The company will continue to execute its strategy focused on grid modernization and clean energy transition.

Key Dates

Keywords

Earnings, Guidance, Utilities, PNM Resources, Financial Results, Regulatory Disallowances, Ongoing Earnings, GAAP Earnings, Energy, Electric Utility