Q2 2020 Earnings Review - pnmresources.com/media/Files/P/PNM... · Q2. Q3. Q4. Previous. Updated. 2020 Annual EPS Distribution by Quarter. $2.16 - $2.26. guidance affirmed, targeting

Q2 2020 Earnings ReviewJuly 31, 2020

November 1, 2019

Safe Harbor Statement

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995Statements made in this presentation for PNM Resources, Inc. (“PNMR”), Public Service Company of New Mexico (“PNM”) and Texas-New Mexico Power Company (“TNMP”) (collectively, the “Company”) that relate to future events or expectations, projections, estimates, intentions, goals, targets, and strategies are made pursuant to the Private Securities Litigation Reform Act of 1995. Readers are cautioned that all forward-looking statements are based upon current expectations and estimates. The Company assumes no obligation to update this information. Because actual results may differ materially from those expressed or implied by these forward-looking statements, the Company cautions readers not to place undue reliance on these statements. The Company’s business, financial condition, cash flow, and operating results are influenced by many factors, which are often beyond its control, that can cause actual results to differ from those expressed or implied by the forward-looking statements. For a discussion of risk factors and other important factors affecting forward-looking statements, please see the Company’s Form 10-K and Form 10-Q filings and the information filed on the Company’s Forms 8-K with the Securities and Exchange Commission, which factors are specifically incorporated by reference herein.

Non-GAAP Financial MeasuresFor an explanation of the non-GAAP financial measures that appear on certain slides in this presentation (ongoing earnings, ongoing earnings per diluted share and ongoing earnings guidance measures), as well as a reconciliation to GAAP measures, please refer to the Company’s website as follows: http://www.pnmresources.com/investors/results.cfm.

2

http://www.pnmresources.com/investors/results.cfm

OverviewPat Vincent-Collawn

Chairman, President and CEO

Q2 2020 Financial Results and Regulatory Highlights

4

Clean Energy Focus

Strong Financial Profile

Q2 2020: COVID-19 load decline offset by warmer than normal temperatures across

New Mexico and Texas

Financial Results

• 2020 Ongoing EPS Guidance affirmed $2.16 - $2.26

Regulatory HighlightsPNM• San Juan replacement power decision provides clear path

to clean energy goals• Decoupling: procedural schedule supports 2020 decision

with hearings planned for October• Approval of regulatory asset treatment for COVID-19

related expensesTNMP• DCOS settlement of $14.3M, reflects 97% of filed request• TCOS filing (second filing of 2020) of $2.0M

Note: 2020 EPS presented on diluted basis, 2019 EPS presented on non-diluted basis due to GAAP net loss; for a reconciliation of GAAP to Ongoing EPS, including a description of adjustments, see earnings release issued July 31, 2020

Q2 2020 Q2 2019 YTD 2020 YTD 2019GAAP EPS $0.72 ($0.95) $0.53 ($0.72)Ongoing EPS $0.55 $0.38 $0.73 $0.49

Regulatory dockets move forward

COVID-19 Update

5

Restrictions continue in New Mexico and Texas in response to rising case numbers during phased re-openings, continue to prioritize the safety of our team, caring for

our customers and communities

Phased re-opening began in May and expanded in June; plans suspended in July with some restrictions re-instated

Customer disconnects and late fee suspensions continue, regulatory treatment for COVID-19 expenses supports expanded customer payment plans

Phased re-opening began May 1st and expanded throughout May and early June; plans suspended and restrictions re-instated in late June following continued growth in case numbers

COVID-19 Electricity Relief Program remains in place

Environmental, Social, Governance Strategy

Commitment to ESG Strategy

7

Investment plans aligned with ESG strategy

Business priorities demonstrate ESG principles

Renewed focus on sharing achievements and providing data

Environmental leadership- 100% emissions-free

energy by 2040- Additional CO2, NOX, SO2,

water reduction goals

Exit from coal incorporates a Just Transition

Diversity and Inclusion, Fostering Tribal Relationships and COVID-19 response demonstrates core values of Safety, Caring, Personal Integrity and Honest Communication

Committed to a clean energy future that supports evolving federal and state policies and integrates emerging technologies

Focused on delivering clean energy through grid investments

Increase grid reliability, resilience and security to meet the growing needs of existing and new customers affordably

Launched redesigned website for ESG Commitment

Published 2019 Sustainability Report

Planned for 2020: • SASB and TCFD

disclosure mapping reports

• EEI ESG template

Demonstrating ESG Principles

8

SOCIAL

ENVIRONMENTAL

GOVERNANCE

Significant progress achieved in emissions and freshwater usage

Emissions-free by 2040: industry-leading goal for the full elimination of carbon emissions from generation

Rapid growth in owned and purchased renewable resources delivered to customers

Focus on safety and company cultureFostering tribal relationships through meaningful partnerships

Diverse (40% women / 20% minorities), engaged Board with extensive experience

Hiring, training, retaining and engaging a diverse workforce (50% minority), promoting diversity and inclusion within our teams and communities

Robust top-down ethics program with organization-wide commitment

Additional environmental goals

ESG Highlight: Environmental Goals

9

Significant emission and freshwater reductions achieved

Our goal: 100% emissions-free energy by 2040

• Continues to lead industry goals with the FULL ELIMINATION of carbon emissions from generation by 2040

• More aggressive than reductions included in the Paris Climate Agreement

• Five years earlier than New Mexico Energy Transition Act mandate

• 2020 on track to report reductions achieved through investments and coal unit retirements:

CO2: 20%NOX: 50%SO2: 75%Freshwater: 30%

Emission Reduction Goals:

Freshwater Reduction Goals:

Note: Reductions measured from 2005 levels, reflect owned generation resources

2025 2035 2040

CO2 60% 80% 100%

NOX 70% 90% 100%

SO2 90% 90% 100%

2025 2035 2040Freshwater 70% 80% 90%

A Just Transition

ESG Highlight: A Just Transition for San Juan Generating Station

10

Customersavings

Replacing coal with cleaner energy resources

• Retirement of 562 MW of coal-fired generation

• Replacement includes 650 MW of solar and 300 MW of battery storage

• New Mexico Renewable Portfolio Standards:• 20% by 2020• 50% by 2030• 80% by 2040

• Securitization of undepreciated investment at lower interest rates results in savings passed on to customers

New Mexico Energy Transition Act includes:

• Job training and severance costs for utility and coal mine employees

• Economic development funds to support impacted community

• Replacement power re-investment in affected school district, provides property tax base

ESG Highlight: Diversity and Inclusion, Tribal Relationships

11

Diversity and Inclusion in our Communities

Hiring, Training, Retaining and Engaging a Diverse Workforce

Overall Workforce:

2019 New Hires:

• Diversity and unconscious bias training, succession planning, veteran hiring partnerships, pay equity

• Total benefit packages designed to appeal to a broad base of employees

• Engagement efforts focused on maximizing inclusiveness

• PNM first to support local fund launched to support, promote and advance Diversity, Equity and Inclusion practices

• Matching donation program expanded to offer 2-to-1 matching to social justice nonprofits and increase annual per-employee matches

Fostering Tribal Relationships

Financial Support• Native American engineering

internships• Navajo Nation Workforce

Training Scholarships Program• Founding partner of Light up

Navajo, energizing homes

COVID-19: Tribal Community Disproportionately Impacted

• Company donations of available protective equipment and other supplies

• Collaboration to set up wireless hotspots to aid first responders and support remote education

Minority Women Veterans50% 26% 8%

Minority Women Veterans57% 37% 8%

Renewed Focus on Sustainability Reporting and ESG Disclosure

12

• 2019 Sustainability Report published• Dedicated portion of website focused on additional reporting and disclosures

at www.pnmresouces.com/ESG-commitment:

New 2020 Reporting to include:• Annual sustainability report• Mapping reports to TCFD and SASB frameworks• EEI ESG template

Financial Updates

Q2 2020 Ongoing EPS Financial Summary

14

Clean Energy Focus


Year-over-year increase expected largely due to the prior year impacts of mild weather and lower planned outage costs

Stronger than expected increase:• Strong weather in Q2

2020 offset COVID-19 reductions

• Shifting of plant maintenance costs

$0.15 $0.01 $0.01

$0.38

$0.55

Q2 2019 Q2 2020

PNM

TNMP Corporate

Q2 Earnings Summary

COVID-19 Update

15

COVID Scenario Analysis

Movement through Stages 1 and 2 of original planning

analysis with expected load impacts, no significant

workforce or supply chain disruptions

Current expectations reflect continued load impacts and no significant workforce or supply

chain disruptions

Stages 1 and 2 CurrentExpectations

Duration / Economic Conditions

(Margin Impact)

Increased residential load, reduced commercial/ industrial load due to

restrictions

Continued load impacts resulting from local

restrictions across New Mexico and Texas during

phased re-openings

Workforce Disruption

(Capital Impact)

No significant workforce disruptions

No significant workforce disruptions

Supply Chain Disruption

(Capital Impact)

No significant supply chain disruption

No significant supply chain disruption

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec2020 Actuals 2020 Original Guidance 2019 Actuals

Continued COVID-19 Load Impacts

16

Q2 results in line with planning assumptionsJuly trends reflect improvement in PNM Commercial load

PNM COVID load trends• Residential: +5% increase• UPDATED: Commercial -10% reduction• PREVIOUS: Commercial -15% reduction

TNMPDemand-Based

TNMPVolumetric

PNM Volumes

TNMP COVID load trends• Volumetric: +5% increase• Demand-based: -5% reduction

Note: Refer to Slide 29 for EPS sensitivities of load impacts under planning assumptions

Weather-normalized load:

2020 Consolidated Ongoing Earnings Guidance

17

Clean Energy Focus


$2.16 Consolidated EPS $2.26

PNM$1.67 – $1.73

TNMP$0.72 – $0.74

Corp/Other($0.23) – ($0.21)

2020 Earnings Guidance

8%22%

55%

15%8%

25%

54%

13%

Q1 Q2 Q3 Q4Previous Updated

2020 Annual EPS Distribution by Quarter

$2.16 - $2.26guidance affirmed, targeting midpoint

Stronger contribution in Q2 to be offset by lower

contributions in Q3 and Q4, as discretionary plant

maintenance was delayed for COVID-19 considerations

Financial Profile Continues to Target 5% - 6% Earnings Growth

18

Rate Base Investments

Earnings Growth

Dividend Growth

Liquidity

• $3.3B investment plan 2020 - 2023• Emphasis on grid infrastructure investments• Reflects investment opportunities balanced with

long-term customer value

• 5%-6% earnings growth target through 2023• Dilution of rate base growth resulting from equity is

partially offset by savings from debt refinancings

• Dividend growth to mirror earnings growth• Quarterly declarations by Board of Directors• Annual dividend evaluated in December

• Maintain investment grade credit ratings• Immediate equity needs met through January

2020 forward offering• Adequate liquidity remains available to

finance business needs

PNM Investment: Wired for the Future

19

Clean Energy Focus

Strong Financial ProfileDelivering Clean Energy

• Infrastructure expansions to accommodate clean energy resources• Grid reconfigurations that provide enhanced flexibility• Sustainable platforms for distributed resources and electric vehicles

Enhancing Customer Satisfaction• Customer reliability improvements and quality of service enhancement• Customer products and communication that match expectations• Infrastructure expansion for emerging new customer growth

Increasing Grid Resilience• Stabilization of aging asset base through consistent investment• Grid modernization and enterprise-wide technology improvements• Enhanced infrastructure and controls to address security, wildfire risks

New Mexico’s clean energy future depends on a reliable, resilient, secure grid to deliver an evolving mix of energy resources to customers

PNM Investment: Wired for the Future

20

30%

17%53%

Total Investment by Category

Delivering Clean EnergyEnhancing Customer SatisfactionIncreasing Grid Resilience

Investments in grid resilience provide the foundation for a system that can respond and adapt to integrate evolving

technology and provide long-term customer value

Delivering Clean Energy• Reconfiguring substations and lines

beyond the original architecture to accommodate growing amounts of intermittent and distributed generation resources

Enhancing Customer Satisfaction• Strengthening infrastructure that directly

serves customers, focus on reliability and outage restoration

Increasing Grid Resilience• Expanding transmission substations and

lines operating at maximum capacity

Accelerates $450M Investment55% Transmission / 45% Distribution

$275 $303 $319$336

$94 $82 $77 $53

$337 $290 $342 $348

$187 $194

$200 $202

$134 $268 $27 $27 $25

$21 $25

$117

$120 $125

2020 2021 2022 2023

(in m

illio

ns)

PNM Existing Generation TNMP PNM T&DPNM Transmission Expansion 50% NMRD Renewable Additions Business Technology Services/General ServicesPNM Wired for the Future Depreciation

$976

$806$760 $753

$3.3B investment plan supports 5-6% earnings growth targetWired for the Future investments focused on delivering clean energy future

2020 – 2023 Investment Plan

21(1) Western Spirit acquisition of $285M reflects assumed purchase price of $360M, net of $75M customer funding(2) Depreciation does not include amounts associated with NMRD

(2)

(1)

https://www.snl.com/InteractiveX/file.aspx?DoNotRedirectTo3=1&id=389372287&KeyFileFormat=26&reqFrom=SNL3&KeyProductLinkType=2&web=1Chart1

2020

2021

2022

2023

Depreciation

275

303

319

336

Sheet1

20202021202220232024

PNM Generation

PNM T&D

PNM Renewables

TNMP

Other

Total

Depreciation$275$303$319$336$358

Check

2020 - 2023 Potential Earnings Power

22This table is not intended to represent a forward-looking projection of 2021 - 2023 earnings guidance.

Refer to Slide 28 for additional details and disclosures.

Earnings Growth Target 5-6% through 2023Improved earnings outside of rate base offsets the timing of rate base clearings

Note: 5-6% targeted earnings growth CAGR measured from 2019 Ongoing EPS of $2.16. The number of shares outstanding increases from 80M to 86M in December 2020 resulting from the January 2020 forward equity offering(1) Items not in rates has been updated to reflect interest savings, lower decommissioning costs related to Palo Verde and the retirement of 65 MW of unregulated generation at San Juan

Allowed Return / Equity Ratio

2020 Ongoing Earnings

Guidance Midpoint

2021 Earnings Potential



Avg Rate Base Return EPS

Avg Rate Base EPS

Avg Rate Base EPS

Avg Rate Base EPS

PNM Retail 9.575% / 50% $2.5 B 9.5% $1.47 $2.5 B $1.41 $2.5 B $1.43 $2.5 B $1.44

PNM Renewable Rider

9.575% / 50% $150 M 9.575% $0.09 $145 M $0.08 $140 M $0.08 $130 M $0.07

PNM FERC 10% / ~50% $0.3 B 7.5% $0.15 $0.5 B $0.20 - $0.23 $0.7 B $0.35 - $0.39 $0.8 B $0.37 - $0.42

Items not in Rates(1) ($0.01) ($0.01) - $0.02 $0.01 - $0.03 $0.03 - $0.06Total PNM $3.0 B $1.70 $3.1 B $1.68 - $1.74 $3.4 B $1.87 - $1.93 $3.5 B $1.91 - $1.99

TNMP 9.65% / 45% $1.3 B 9.65% $0.73 $1.5 B $0.79 $1.6 B $0.87 $1.9 B $0.97

Corporate/Other ($0.22) ($0.13) - ($0.11) ($0.13)-($0.11) ($0.15) - ($0.13)Equity Financing Plans ($0.03) - ($0.01) ($0.11)-($0.09) ($0.11) - ($0.09)

Total PNM Resources $4.3 B $2.21 $4.6 B $2.31- $2.41 $5.0 B $2.50 - $2.60 $5.4 B $2.62 - $2.742019-2023 Rate Base CAGR (2019 base): Total 7.8% / PNM 4.2% / TNMP 16.1%

Questions and Answers

Appendix

PNM and TNMP Regulatory Agenda

25

Upcoming activities:• PNM annual FERC formula rate and PNM annual Renewable plan filings

Filing Action Timing Docket No.PNM:Decoupling Filing (Petition for Approval of Rate Adjustment Mechanism to Remove Regulatory Disincentives)

Filed with the NMPRC on May 28, 2020 Hearings scheduled for October 2020 20-00121-UT

Deferral of Incremental costs related to COVID-19 PNM and other utilities filed joint motion April 27, 2020 Approved June 24, 2020 20-00069-UT

Consolidated Application for San Juan Generating Station(Abandonment, Securitization and Replacement)

PNM filed July 1, 2019; NMPRC bifurcated case; New Mexico Supreme Court ruled January 29, 2020 that Energy Transition Act applies to both dockets.

NMPRC order approving abandonment/securitization issued April 1, 2020

NMPRC replacement power order issued July 29, 2020

19-00018-UT

19-00195-UT

PNM 2020 Renewable Plan Filing Filed June 1, 2020 Hearings scheduled for September 24-25, 2020 20-00124-UT

FERC Transmission Formula Rate Annual Update Filed June 1, 2020

Informational filing submitted; rates effective June 1, 2020 N/A

Solar Direct ProgramFiled May 31, 2019 for approval of voluntary renewable program expected to begin March 31, 2021; Hearings completed January 2020

Approved March 25, 2020 19-00158-UT

TNMP:

DCOS Filing Filed April 6, 2020; settlement filed June 26, 2020 Rates expected to be implemented September 1, 2020 50731

TCOS Filing (second 2020 filing) Filed July 24, 2020 Rates expected to be implemented September 2020 51107

Q2 2020 vs Q2 2019 EPS (Ongoing): PNM

26

Clean Energy Focus


PNM• Weather and retail load: Higher than normal temperatures in Q2 2020 compared to significantly milder weather in Q2 2019 resulted in higher residential load, partially offset by reduced commercial usage resulting from COVID-19 business restrictions

• Lower plant outage costs due to completion of San Juan planned outages in 2019

• Higher transmission margins, recovery of new utility-owned solar resources under the renewable rider

• Refinancing of debt at lower interest rates

• Additional depreciation and property tax expenses on new capital investments

• Lower gains on trusts compared to Q2 2019

$0.24

$0.39

Q2 2019 Q2 2020

Q2 2020 Key Performance Drivers ∆ EPSWeather and retail load $0.06Outage Costs $0.06FERC transmission margin $0.02Renewable rider $0.01Interest expense savings $0.01Other $0.02

Depreciation and property tax ($0.02)Decommissioning/reclamation trust income, net of fees ($0.01)

($0.05) ($0.04)

Q2 2019 Q2 2020

Q2 2020 vs Q2 2019 EPS (Ongoing): TNMP and Corporate

27

Clean Energy Focus


TNMP

Corporate

• TCOS increases implemented in September 2019 and March 2020

• Weather and retail load increased as a result of higher than normal temperatures; COVID-19 impacts offset between customer classes (volumetric increases, demand-based decreases)

• Higher depreciation and property tax expenses resulting from additional capital investments

• Corporate earnings increased due to higher tax benefits resulting from a higher effective tax rate

$0.19 $0.20

Q2 2019 Q2 2020

Q2 2020 Key Performance Drivers ∆ EPSRate relief (TCOS) $0.02Weather and retail load $0.01

Depreciation and property tax ($0.02)

Q2 2020 Key Performance Drivers ∆ EPSEffective tax rate $0.01

2020 - 2023 Potential Earnings Power

28

(1) Average rate base has been reduced by approximately $130M to represent ($0.05) of Earnings Potential for the lost equity return on Four Corners investment determined in the 2018 general rate review. 2022 and 2023 rate base also reflects the removal of $283M undepreciated SJGS investment upon its retirement in mid-2022 to be recovered through securitization.

(2) PNM Renewables reflect assets collected through the Renewable Rate Rider. (3) PNM FERC in 2021-2023 reflects a return of 8%-9% to account for Western Spirit investment recovered through incremental rates.(4) Consists primarily of decommissioning/reclamation trust costs and income (net of fees/taxes), AFUDC, certain incentive compensation, and the 65MW ownership of San Juan Unit 4 (prior

to retirement).(5) TNMP earnings include additional recovery for Energy Efficiency, along with items excluded from rates (primarily AFUDC) and interest savings from the refinancing of existing debt. (6) Corporate/Other includes the earnings impacts associated with short and intermediate term bank debt and the 50% equity interest in NMRD.(7) Equity Financing Plans to fund capital growth reflects debt costs for assumed $250M-$300M mandatory convertibles issued in Q4 2021 that

convert in 2024

This table is not intended to represent a forward-looking projection of 2021 - 2023 earnings guidance.

Allowed Return / Equity Ratio

2020 Ongoing Earnings

Guidance Midpoint




Avg Rate Base

Return EPSAvgRate Base

EPSAvgRate Base

EPSAvgRate Base

EPS

PNM Retail(1) 9.575% / 50% $2.5 B 9.5% $1.47 $2.5 B $1.41 $2.5 B $1.43 $2.5 B $1.44

PNM Renewables(2) 9.575% / 50% $150 M 9.575% $0.09 $145 M $0.08 $140 M $0.08 $130 M $0.07

PNM FERC(3) 10% / ~50% $0.3 B 7.5% $0.15 $0.5 B $0.20 - $0.23 $0.7 B $0.35 - $0.39 $0.8 B $0.37 - $0.42

Items not in Rates(4) ($0.01) ($0.01) - $0.02 $0.01 - $0.03 $0.03 - $0.06Total PNM $3.0 B $1.70 $3.1 B $1.68 - $1.74 $3.4 B $1.87 - $1.93 $3.5 B $1.91 - $1.99

TNMP(5) 9.65% / 45% $1.3 B 9.65% $0.73 $1.5 B $0.79 $1.6 B $0.87 $1.9 B $0.97

Corporate/Other(6) ($0.22) ($0.13) - ($0.11) ($0.13)-($0.11) ($0.15) - ($0.13)Equity Financing Plans(7) ($0.03) - ($0.01) ($0.11)-($0.09) ($0.11) - ($0.09)Total PNM Resources $4.3 B $2.21 $4.6 B $2.31- $2.41 $5.0 B $2.50 - $2.60 $5.4 B $2.62 - $2.74

COVID-19 Load: Assumptions and EPS Sensitivities

29

Clean Energy Focus


PNM TNMP

COVID-19 Planning Assumptions:Current Expectation

Residential + 5%Commercial -10%

Industrial No significant impacts

10% change in load Monthly EPS Impact

Residential CommercialJuly – September +/- $0.03-$0.04+/- $0.03-$0.04October – December +/- $0.02 +/- $0.02

Monthly rule of thumb:

COVID-19 Planning Assumptions:

Monthly rule of thumb:

10% change in loadMonthly EPS Impact

Volumetric Demand-BasedJuly – September +/- $0.02 +/- $0.01October – December +/- $0.01 +/- $0.01

Current ExpectationVolumetric + 5%

Demand-Based - 5%

Weather Impact

30

PNM Q2 2020Q2

20192020

Normal(1)

Heating Degree Days 38 71 62

Cooling Degree Days 561 318 507

Net EPS Impact compared to normal

$0.01 ($0.07)

TNMP Q2 2020Q2

20192020

Normal(1)

Heating Degree Days 55 53 47

Cooling Degree Days 1,083 1,015 1,023

Net EPS Impact compared to normal

$0.01 $0.00

(1) 2020 normal weather assumption reflects the 20-year average for the period 2000 - 2019

PNM Cooling Degree Days in Q2 2020 were 76%

higher than Q2 2019 and 11% higher than Normal

TNMP Cooling Degree Days in Q2 2020 were 7% higher than Q2 2019 and 6% higher than Normal

PNM Scheduled Plant Outages

31

San Juan

Unit Duration in DaysTime

PeriodNo planned outages in 2020

Palo Verde


Period1 44 Q4 2020

Four Corners


Period5 13 Q4 2020

No further major planned outages at San

Juan due to planned retirement in mid-2022

2020 Planned Outage Schedule

Balance Sheet and Credit Metrics

Liquidity as of July 24, 2020

33

PNM TNMPCorporate/

Other

PNM Resources

ConsolidatedFinancing Capacity(1): (In millions)

Revolving credit facilities $440.0 $75.0 $340.0 $855.0

As of 7/24/20:Short-term debt and LOC balances 96.1 0.1 149.5 245.7

Remaining availability 343.9 74.9 190.5 609.3

Invested cash - 63.5 0.9 64.4

January 2020 Forward Equity Offering 287.1 287.1

Total Available Liquidity $343.9 $138.4 $478.5 $960.8(1) Excludes intercompany debt and term loans(2) Availability does not reflect $100.3M reserved to provide liquidity support for pollution control revenue

refunding bonds remarketed in weekly mode on July 1, 2020

• Available liquidity strengthened by the issuance of long-term debt at PNM and TNMP in Q2 2020, freeing up capacity on revolving credit facilities

(2)

Selected Balance Sheet Information

34

(1) Net of unamortized debt issuance costs, premiums and discounts(2) Excludes intercompany debt

Amounts may not add due to rounding

(In millions) Dec 31, 2019 Jun 30, 2020

Long-Term Debt (incl. current portion) (1)

PNM $1,748.0 $1,846.6

TNMP 670.7 780.6

Corporate/Other 589.0 589.5

Consolidated $3,007.7 $3,216.6

Total Debt (incl. short-term) (1,2)

PNM $1,806.0 $1,933.7

TNMP 685.7 793.7

Corporate/Other 701.1 741.9

Consolidated $3,192.8 $3,469.2

Long-term targets:• 16% FFO/Debt ratio• Corporate/ Other

debt at less than 20% of Consolidated debt

Credit Ratings

35

PNMR Consolidated S&P Moody’s

Issuer rating BBB Baa3

Outlook Stable Stable

Senior unsecured rating BBB- Baa3

PNM S&P Moody’s

Issuer rating BBB Baa2


Senior unsecured rating BBB Baa2

Short-term issuer rating A-2 P-2

TNMP S&P Moody’s

Issuer rating BBB+ A3


Senior secured rating A A1

Investment grade credit ratings at PNM Resources, PNM and TNMP

Slide Number 1Safe Harbor StatementSlide Number 3Q2 2020 Financial Results and Regulatory HighlightsCOVID-19 UpdateSlide Number 6Commitment to ESG StrategyDemonstrating ESG PrinciplesESG Highlight: Environmental GoalsESG Highlight: A Just Transition for San Juan Generating StationESG Highlight: Diversity and Inclusion, Tribal RelationshipsRenewed Focus on Sustainability Reporting and ESG DisclosureSlide Number 13Q2 2020 Ongoing EPS Financial SummaryCOVID-19 UpdateContinued COVID-19 Load Impacts2020 Consolidated Ongoing Earnings GuidanceFinancial Profile Continues to Target 5% - 6% Earnings GrowthPNM Investment: Wired for the Future PNM Investment: Wired for the Future2020 – 2023 Investment Plan2020 - 2023 Potential Earnings PowerSlide Number 23Slide Number 24PNM and TNMP Regulatory AgendaQ2 2020 vs Q2 2019 EPS (Ongoing): PNMQ2 2020 vs Q2 2019 EPS (Ongoing): TNMP and Corporate2020 - 2023 Potential Earnings PowerCOVID-19 Load: Assumptions and EPS SensitivitiesWeather Impact PNM Scheduled Plant OutagesSlide Number 32Liquidity as of July 24, 2020Selected Balance Sheet InformationCredit Ratings

Documents

Q2 2020 Earnings Review - pnmresources.com/media/Files/P/PNM... · Q2. Q3. Q4. Previous. Updated. 2020 Annual EPS Distribution by Quarter. $2.16 - $2.26. guidance affirmed, targeting