ALBUQUERQUE, N.M.--(BUSINESS WIRE)--
PNM Resources (NYSE: PNM)
2007 THIRD QUARTER SUMMARY
-- GAAP (generally accepted accounting principles) earnings per
diluted share of $0.11, down from $0.62 per diluted share in
2006
-- Afton Generating Station impairment write-down impacts GAAP
earnings
-- Ongoing diluted EPS of $0.41, compared with $0.62 diluted EPS
in 2006
-- Lower First Choice Power earnings impact financial results
-- Strong regulated load growth largely offset by reduced coal
plant operations and higher purchase power costs
-- Work force to be reduced 15 percent by 2009
PNM Resources (NYSE: PNM) today reported unaudited third quarter
2007 consolidated ongoing earnings of $31.8 million, or $0.41 per
diluted share, compared with $43.8 million, or $0.62 per diluted share
in 2006. GAAP earnings were $8.4 million, or $0.11 per diluted share,
compared with $43.5 million, or $0.62 per diluted share in 2006.
Earnings per share were impacted by a 9.6 percent increase in average
diluted shares outstanding.
Ongoing earnings are adjusted to exclude the impact of
non-recurring items and net unrealized mark-to-market gains and losses
on economic hedges. For the quarter, ongoing earnings exclude
mark-to-market losses of $5.8 million in 2007 after-tax, or $0.07 per
diluted share. Reconciliations of quarterly and year-to-date GAAP
earnings to ongoing earnings are provided on accompanying Schedules 1
and 2.
"Our third quarter earnings reflect reduced contributions from
First Choice Power and our Wholesale segment," said Jeff Sterba, PNM
Resources chairman, president and CEO. "Despite strong customer growth
of more than 7 percent, tighter per megawatt-hour margins and weather
impacted First Choice Power's earnings.
"Our Wholesale business performance was down compared with last
year because of weaker market conditions in 2007 and the contribution
of the Twin Oaks Power facility to the EnergyCo joint venture, which
was the first step in restructuring our long-term unregulated business
strategy."
"Regarding the performance of our regulated utilities, we
committed last quarter to implement plans that will improve our
operations and further streamline our cost structure," Sterba said.
"Today, we are taking the first steps that will improve the utilities'
and corporation's financial strength. Key subsequent steps will be our
success in coal and nuclear plant performance, receiving fair and
reasonable regulatory treatment from state regulators and other
corporate business enhancements."
2007 THIRD QUARTER CONSOLIDATED PERFORMANCE SUMMARY
Texas experienced the wettest summer on record and, despite a
significantly hotter September, finished the quarter with a slight
decrease in cooling-degree days, compared with 2006. First Choice
Power per-customer usage decreased 7.3 percent, compared with 2006.
For PNM Electric, New Mexico's second-hottest August in 60 years,
combined with higher September temperatures and load growth of 3.7
percent, resulted in a 9.7 percent increase in sales volumes. The
impact of load growth and warmer temperatures, however, was more than
offset by higher coal costs and outages at the San Juan Generating
Station, which had an equivalent availability factor of 85.8 percent,
compared with 95.7 percent in 2006.
Reflected in lower GAAP earnings is a non-recurring charge of
$11.8 million, or $0.15 per diluted share, related to the conversion
and expansion of the Afton Generating Station. In 2006, state
regulators approved a stipulation allowing PNM to convert Afton to a
combined-cycle plant and bring the facility into retail rates, capping
the allowable recovery amount at $187.6 million. Total Afton costs
will exceed the stipulated cap and will not be recoverable in rates,
resulting in the approximate $11.8 million after-tax write-down.
Overall construction and expansion costs increased due to start-up
problems and issues with the new turbine and generator, as well as
higher labor and commodity costs. Afton was declared commercial on
Oct. 12 and will operate as a merchant plant until it is allowed into
PNM's retail rates on approximately May 7, 2008.
YEAR-TO-DATE CONSOLIDATED PERFORMANCE SUMMARY
For the nine months ended Sept. 30, 2007, ongoing earnings totaled
$75.4 million, or $0.96 per diluted share, compared with $88.7
million, or $1.27 per diluted share in 2006. Ongoing earnings exclude
mark-to-market losses of $8.7 million after-tax, or $0.11 per diluted
share. GAAP earnings for the first nine months of 2007 totaled $58.3
million, or $0.75 per diluted share, compared with $85.5 million, or
$1.23 per diluted share in 2006. Year-to-date, the average number of
diluted shares outstanding increased 12.0 percent.
Operations at Palo Verde improved with an EAF of 84.6 percent,
compared with 68.6 percent during the same period in 2006. Coal unit
availability declined due to planned and forced outages. San Juan had
an EAF of 86.9 percent, compared with 90.2 percent in 2006, and the
Four Corners Plant finished the first nine months of the year with an
EAF of 74.8 percent, compared with 91.9 percent last year. Overall,
plant performance improved consolidated earnings per diluted share by
$0.07 in 2007 compared with 2006.
The main drivers of the decrease in consolidated ongoing earnings
per diluted share comparing 2007 with 2006 include:
EnergyCo $0.09
Plant performance $0.07
TNMP stranded costs and carrying charges $0.05
PNM Gas growth and weather $0.05
TNMP growth $0.03
Other $0.02PNM Electric/Wholesale growth and weather ($0.04)
Financing ($0.05)
Coal costs ($0.08)
Twin Oaks ($0.13)
Dilution ($0.14)First Choice Power, excluding dilution ($0.18) In addition to the above year-to-date drivers, the company also
incurred an additional $13.9 million, or $0.17 per diluted share, of
non-recurring items and net unrealized mark-to-market losses on
economic hedges in 2007 compared with 2006, as listed on Schedule 2.
THIRD QUARTER SEGMENT REPORTING OF EARNINGS
Regulated Operations
PNM - a vertically integrated electric and natural gas utility in
New Mexico with distribution, transmission and generation assets.
Electric: Beginning in 2007, the PNM Electric segment includes the
territory in southern New Mexico formerly served by TNMP.
-- PNM Electric reported GAAP and ongoing earnings of $18.5
million, or $0.24 per diluted share, compared with $16.8
million, or $0.24 per diluted share, in 2006. A 9.6 percent
increase in the number of average diluted shares outstanding
resulted in flat earnings per diluted share.
-- Reduced plant performance at base load coal plants, increased
purchase power costs and increased coal costs more than offset
the benefits of the transfer of TNMP-New Mexico operations to
PNM, strong load growth of 3.7 percent and hotter weather.
Gas:
-- PNM Gas reported GAAP losses of $4.7 million, or $0.06 per
diluted share, compared with losses of $5.2 million, or $0.07
per diluted share, in 2006. Ongoing losses were $4.5 million,
or $0.06 per diluted share, compared with losses of $5.2
million, or $0.07 per diluted share, in 2006.
-- The implementation of new rates was offset by reduced
per-customer usage.
TNMP - a transmission and distribution company in Texas.
Beginning in 2007, the TNMP Electric segment consists only of
transmission and distribution operations located in Texas.
-- TNMP reported GAAP and ongoing earnings of $10.4 million, or
$0.13 per diluted share, compared with $6.0 million, or $0.08
per diluted share in 2006.
-- The collection of the competitive transition charge, which
began in December 2006, and strong load growth of 4.1 percent
more than offset the transfer of New Mexico operations to PNM.
Unregulated Operations
PNM Wholesale - a business segment consisting of the generation
and sale of electricity into wholesale markets in the West.
-- Wholesale reported GAAP losses of $1.2 million, or $0.02 per
diluted share, compared with earnings of $17.4 million, or
$0.25 per diluted share, in 2006. Ongoing earnings were $4.0
million, or $0.05 per diluted share, compared with earnings of
$17.2 million, or $0.24 per diluted share, in 2006.
-- The decrease in earnings was largely associated with plant
performance, less power available to sell into the wholesale
market due to jurisdictional load growth and the transfer of
the Twin Oaks Power facility to EnergyCo.
First Choice Power - a competitive retail electric provider in
Texas.
-- First Choice Power reported GAAP earnings of $2.7 million, or
$0.04 per diluted share, compared with $15.1 million, or $0.21
per diluted share, in 2006. Ongoing earnings were $3.2
million, or $0.04 per diluted share, compared with $15.1
million, or $0.21 per diluted share in 2006.
-- Higher purchase power costs and market-trading positions
lowered retail margins and impacted results. Customer growth
of 7.3 percent was offset by lower per-customer usage.
-- Average retail margin per megawatt-hour decreased from about
$29 in 2006 to about $18 in 2007.
-- Trading margins decreased from a $1.4 million gain in 2006 to
a $5.7 million loss in 2007, mainly driven by a decrease in
value of market positions caused by lower market heat rates
and lower natural gas prices.
Corporate/Other - a business segment that reflects costs at the
holding company, PNM Resources. The segment includes Avistar and PNMR
Services Company, which provides corporate services to PNM Resources,
its subsidiaries and EnergyCo.
-- Corporate/Other reported GAAP losses of $23.8 million, or
$0.30 per diluted share, compared with losses of $6.7 million,
or $0.09 per diluted share, in 2006. Ongoing losses were $6.1
million, or $0.07 per diluted share, compared with losses of
$6.1 million, or $0.09 per diluted share, in 2006.
-- The increase in GAAP losses is a result of increased
non-recurring items in 2007 compared with 2006, as listed in
Schedule 1.
EnergyCo - a business segment that is comprised of the joint
venture between PNM Resources and a subsidiary of Cascade Investment,
L.L.C.
-- EnergyCo contributed $6.4 million, or $0.08 per diluted share,
to consolidated earnings.
-- The Twin Oaks Power facility finished the quarter with an EAF
of 97.1 percent and the Altura Cogen facility had an EAF of
96.3 percent since its acquisition on Aug. 1 through Sept. 30.
COST-CUTTING INITIATIVES TO HELP STRENGTHEN REGULATED BUSINESSES
PNM Resources today also announced the company will implement a
series of initiatives designed to manage future operational costs,
improve efficiencies in the company's regulated utilities and maintain
financial strength.
Sterba said the first step in addressing rising utility costs is
executing a multi-phase business improvement plan that will streamline
internal processes and reduce the company's work force by 15 percent
during the next year. The first phase of the plan will eliminate about
5 percent of the company's 3,300 positions on Nov. 2.
The improvement plan is expected to save the company approximately
$35 million on a pre-tax, annualized basis, not including costs to
achieve. A portion of the savings will be realized in 2008. Sterba
said the company incurred an after-tax $7.6 million non-recurring
charge in the third quarter, primarily related to severance-related
costs.
"The decision to reduce our work force was made after a
comprehensive cost structure and process analysis," Sterba said. "The
results showed that we excel in certain areas but there are other
areas in which we can do a better job managing future costs for our
customers."
Sterba said planned utility-related process enhancements are
designed to streamline business functions in such areas as credit and
collections, billing and meter reading. He said the company plans to
expand and promote its existing customer self-service options and
other automated processes.
ONGOING EARNINGS GUIDANCE RANGE AFFIRMED
PNM Resources today also affirmed its 2007 ongoing earnings
guidance range of $1.30 to $1.40 per diluted share. Management expects
results to be in the lower end of the range. However, the risk of
falling below the range exists if performance of base load coal plants
and Palo Verde is reduced. The lack of a fuel adjustment mechanism to
recover fuel and purchase power costs further illustrates the
difficulty in stabilizing the company's earnings.
The annual ongoing earnings guidance range excludes net unrealized
mark-to-market gains and losses on economic hedges and does not
predict changes in market prices for these types of transactions that
will settle in future fiscal years.
"Beginning this quarter, PNM Resources will exclude from ongoing
earnings economic hedging activity unless it is realized, or settled,
in that reporting period," said Chuck Eldred, PNM Resources executive
vice president and CFO. "A large portion of our economic hedging
activity - about 65 percent - will settle during 2008 and beyond and
isn't reflective of our current operations."
THIRD QUARTER EARNINGS CALL
PNM Resources will announce third quarter earnings results and
other company information during a conference call and Web cast at 9
a.m. EST Friday, Nov. 2. Earnings will be announced after market
closes on Nov. 1.
Speaking on the call will be Jeff Sterba, PNM Resources chairman,
president and CEO, Chuck Eldred, executive vice president and CFO, and
Pat Vincent, president of utilities.
Investors, analysts and other participants can access a live
broadcast of the conference call on the company's website at
www.PNMResources.com or by calling (888) 256-9128 in the United States
or (913) 905-3164 outside the United States. Participants should ask
to be connected to the PNM Resources earnings call. The call and
presentation will be archived for one year on the company's Web site.
A transcript of the call also will be posted as soon as possible.
The telephone replay will be available through Nov. 9, 2007, by
calling (888) 203-1112 for U.S. callers and 719-457-0820 for
international callers. Please use confirmation code 9824090 to access
the replay.
Background:
PNM Resources (NYSE: PNM) is an energy holding company based in
Albuquerque, N.M., with 2006 consolidated operating revenues of $2.5
billion. Through its utility and energy subsidiaries, PNM Resources
serves electricity to approximately 835,000 homes and businesses in
New Mexico and Texas and natural gas to nearly 490,000 customers in
New Mexico. Its utility subsidiaries are PNM and Texas-New Mexico
Power. Other subsidiaries include First Choice Power, a deregulated
competitive retail electric provider in Texas, and Avistar, an
unregulated energy technology company. With generation resources of
more than 2,465 megawatts, PNM Resources and its subsidiaries market
power throughout the Southwest, Texas and the West. In addition, the
joint venture in which the company has a 50-percent ownership owns
approximately 920 megawatts of generation. For more information, visit
www.PNMResources.com.
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995
Statements made in this news release that relate to future events
or the Company's expectations, projections, estimates, intentions,
goals, targets and strategies are made pursuant to the Private
Securities Litigation Reform Act of 1995. You are cautioned that all
forward-looking statements are based upon current expectations and
estimates and 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 you 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. These factors include
the risk that EnergyCo is unable to identify and implement profitable
acquisitions, including development of the Cedar Bayou Generating
Station and implementation of the acquisition of the Lyondell
facility, or that the Company and ECJV will not agree to make
additional capital contributions to EnergyCo, the potential
unavailability of cash from the Company's subsidiaries or EnergyCo due
to regulatory, statutory or contractual restrictions, the outcome of
any appeals of the PUCT order in the stranded cost true-up proceeding,
the ability of First Choice Power to attract and retain customers,
changes in Electric Reliability Council of Texas protocols, changes in
the cost of power acquired by First Choice Power, collections
experience, insurance coverage available for claims made in
litigation, fluctuations in interest rates, conditions affecting the
Company's ability to access the financial markets, or EnergyCo's
access to additional debt financing following the utilization of its
existing credit facility, weather, water supply, changes in fuel
costs, availability of fuel supplies, the effectiveness of risk
management and commodity risk transactions, seasonality and other
changes in supply and demand in the market for electric power,
variability of wholesale power prices and natural gas prices,
volatility and liquidity in the wholesale power markets and the
natural gas markets, changes in the competitive environment in the
electric and natural gas industries, the performance of generating
units, including the Palo Verde Nuclear Generating Station, the San
Juan Generating Station, the Four Corners Plant, and EnergyCo
generating units, and transmission systems, the ability to secure
long-term power sales, the risk that the Company and its subsidiaries
and EnergyCo may have to commit to substantial capital investments and
additional operating costs to comply with new environmental control
requirements including possible future requirements to address
concerns about global climate change, the risks associated with
completion of generation, including pollution control equipment at the
San Juan Generating Station, the expansion of the Afton Generating
Station, and the EnergyCo Cedar Bayou Generating Station,
transmission, distribution and other projects, including construction
delays and unanticipated cost overruns, state and federal regulatory
and legislative decisions and actions, the outcome of legal
proceedings, changes in applicable accounting principles and the
performance of state, regional and national economies. For a detailed
discussion of the important factors that affect the Company and that
could cause actual results to differ from those expressed or implied
by the Company's forward-looking statements, please see "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" in the Company's current and future Annual Reports on Form
10-K and Quarterly Reports on Form 10-Q and the Company's current and
future Current Reports on Form 8-K, filed with the SEC.
PNM Resources
Schedule 1:
Reconciliation of GAAP to Ongoing Earnings
Third Quarter 2007
------------------ ------------------
PNM Resources PNM Electric
Earnings EPS Earnings EPS
(in '000s) Diluted (in '000s) Diluted
----------------------------------------------------------------------
Net Earnings Available to Common
Shareholders $8,372 $0.11 $18,539 $0.24
----------------------------------------------------------------------
Adjustments to reconcile net
earnings to net ongoing earnings
(net of income tax effects):
------------------------------------------------------------------
Business Improvement Plan $7,591 $0.10
------------------------------------------------------------------
Sale of Turbine ($1,678) ($0.02)
------------------------------------------------------------------
Afton Write-Down $11,780 $0.15
------------------------------------------------------------------
Economic Mark-to-Market $5,770 $0.07 $0 $0.00
------------------------------------------------------------------
Total Adjustments $23,463 $0.30 $0 $0.00
---------------------------------================== ==================
Net Ongoing Earnings Available to
Common Shareholders $31,835 $0.41 $18,539 $0.24
--------------------------------------------------- ------------------
Average Diluted Shares 77,561
------------------ ------------------
PNM Gas TNMP Electric
Earnings EPS Earnings EPS
(in '000s) Diluted (in '000s) Diluted
----------------------------------------------------------------------
Net Earnings Available to Common
Shareholders ($4,708) ($0.06) $10,412 $0.13
----------------------------------------------------------------------
Adjustments to reconcile net
earnings to net ongoing
earnings (net of income tax
effects):
------------------------------------------------------------------
Business Improvement Plan
------------------------------------------------------------------
Sale of Turbine
------------------------------------------------------------------
Afton Write-Down
------------------------------------------------------------------
Economic Mark-to-Market $162 $0.00 $0 $0.00
------------------------------------------------------------------
Total Adjustments $162 $0.00 $0 $0.00
-------------------------------- ================== ==================
Net Ongoing Earnings Available
to Common Shareholders ($4,546) ($0.06) $10,412 $0.13
-------------------------------- ------------------ ------------------
Average Diluted Shares
------------------ ------------------
Wholesale First Choice Power
Earnings EPS Earnings EPS
(in '000s) Diluted (in '000s) Diluted
----------------------------------------------------------------------
Net Earnings Available to Common
Shareholders ($1,232) ($0.02) $2,745 $0.04
----------------------------------------------------------------------
Adjustments to reconcile net
earnings to net ongoing
earnings (net of income tax
effects):
------------------------------------------------------------------
Business Improvement Plan
------------------------------------------------------------------
Sale of Turbine
------------------------------------------------------------------
Afton Write-Down
------------------------------------------------------------------
Economic Mark-to-Market $5,187 $0.07 $421 $0.00
------------------------------------------------------------------
Total Adjustments $5,187 $0.07 $421 $0.00
-------------------------------- ================== ==================
Net Ongoing Earnings Available
to Common Shareholders $3,955 $0.05 $3,166 $0.04
-------------------------------- ------------------ ------------------
Average Diluted Shares
------------------ ------------------
EnergyCo Corp./Other
Earnings EPS Earnings EPS
(in '000s) Diluted (in '000s) Diluted
----------------------------------------------------------------------
Net Earnings Available to Common
Shareholders $6,377 $0.08 ($23,761) $(0.30)
----------------------------------------------------------------------
Adjustments to reconcile net
earnings to net ongoing
earnings (net of income tax
effects):
------------------------------------------------------------------
Business Improvement Plan $7,591 $0.10
------------------------------------------------------------------
Sale of Turbine ($1,678) ($0.02)
------------------------------------------------------------------
Afton Write-Down $11,780 $0.15
------------------------------------------------------------------
Economic Mark-to-Market $0 $0.00 $0 $0.00
------------------------------------------------------------------
Total Adjustments $0 $0.00 $17,693 $0.23
-------------------------------- ================== ==================
Net Ongoing Earnings Available
to Common Shareholders $6,377 $0.08 ($6,068) ($0.07)
-------------------------------- ------------------ ------------------
Average Diluted Shares
Reconciliation of GAAP to Ongoing Earnings
Third Quarter 2006
------------------ ------------------
PNM Resources PNM Electric
Earnings EPS Earnings EPS
(in '000s) Diluted (in '000s) Diluted
----------------------------------------------------------------------
Net Earnings Available to Common
Shareholders $43,520 $0.62 $16,808 $0.24
----------------------------------------------------------------------
Adjustments to reconcile net
earnings to net ongoing
earnings (net of income tax
effects):
Acquisition Integration
Costs $568 $0.00 $0 $0.00
------------------------------------------------------------------
Economic Mark-to-Market ($272) $0.00 $0 $0.00
------------------------------------------------------------------
Total Adjustments $296 $0.00 $0 $0.00
-------------------------------- ================== ==================
Net Ongoing Earnings Available
to Common Shareholders $43,816 $0.62 $16,808 $0.24
--------------------------------------------------- ------------------
Average Diluted Shares 70,761
------------------ ------------------
PNM Gas TNMP Electric
Earnings EPS Earnings EPS
(in '000s) Diluted (in '000s) Diluted
----------------------------------------------------------------------
Net Earnings Available to Common
Shareholders ($5,173) ($0.07) $5,990 $0.08
----------------------------------------------------------------------
Adjustments to reconcile net
earnings to net ongoing
earnings (net of income tax
effects):
Acquisition Integration
Costs $0 $0.00 $0 $0.00
------------------------------------------------------------------
Economic Mark-to-Market $0 $0.00 $0 $0.00
------------------------------------------------------------------
Total Adjustments $0 $0.00 $0 $0.00
-------------------------------- ================== ==================
Net Ongoing Earnings Available
to Common Shareholders ($5,173) ($0.07) $5,990 $0.08
-------------------------------- ------------------ ------------------
Average Diluted Shares
------------------ ------------------
Wholesale First Choice Power
Earnings EPS Earnings EPS
(in '000s) Diluted (in '000s) Diluted
----------------------------------------------------------------------
Net Earnings Available to Common
Shareholders $17,449 $0.25 $15,114 $0.21
----------------------------------------------------------------------
Adjustments to reconcile net
earnings to net ongoing
earnings (net of income tax
effects):
Acquisition Integration
Costs $0 $0.00 $0 $0.00
------------------------------------------------------------------
Economic Mark-to-Market ($272) $0.00 $0 $0.00
------------------------------------------------------------------
Total Adjustments ($272) $0.00 $0 $0.00
-------------------------------- ================== ==================
Net Ongoing Earnings Available
to Common Shareholders $17,177 $0.25 $15,114 $0.21
-------------------------------- ------------------ ------------------
Average Diluted Shares
------------------ ------------------
EnergyCo Corp./Other
Earnings EPS Earnings EPS
(in '000s) Diluted (in '000s) Diluted
----------------------------------------------------------------------
Net Earnings Available to Common
Shareholders $0 $0.00 ($6,668) ($0.09)
----------------------------------------------------------------------
Adjustments to reconcile net
earnings to net ongoing
earnings (net of income tax
effects):
Acquisition Integration
Costs $0 $0.00 $568 $0.00
------------------------------------------------------------------
Economic Mark-to-Market $0 $0.00 $0 $0.00
------------------------------------------------------------------
Total Adjustments $0 $0.00 $568 $0.00
-------------------------------- ================== ==================
Net Ongoing Earnings Available
to Common Shareholders $0 $0.00 ($6,100) $(0.09)
-------------------------------- ------------------ ------------------
Average Diluted Shares
PNM Resources
Schedule 2:
Reconciliation of GAAP to Ongoing Earnings
Year-to-Date September 2007
------------------ ------------------
PNM Resources PNM Electric
Earnings EPS Earnings EPS
(in '000s) Diluted (in '000s) Diluted
----------------------------------------------------------------------
Net Earnings Available to Common
Shareholders $58,277 $0.75 $34,053 $0.44
----------------------------------------------------------------------
Adjustments to reconcile net
earnings to net ongoing
earnings (net of income tax
effects):
Favorable Tax Decision ($16,037) ($0.21)
------------------------------------------------------------------
Twin Oaks III Impairment $2,042 $0.02
------------------------------------------------------------------
Business Improvement Plan $7,592 $0.10
------------------------------------------------------------------
Loss on Altura Contribution $2,197 $0.03
------------------------------------------------------------------
Sale of Turbine ($1,678) ($0.02)
------------------------------------------------------------------
Afton Write-Down $11,780 $0.15
------------------------------------------------------------------
JV Formation Costs $2,543 $0.03
------------------------------------------------------------------
Economic Mark-to-Market $8,662 $0.11 $0 $0.00
------------------------------------------------------------------
Total Adjustments $17,101 $0.21 $0 $0.00
---------------------------------================== ==================
Net Ongoing Earnings Available
to Common Shareholders $75,378 $0.96 $34,053 $0.44
--------------------------------------------------- ------------------
Average Diluted Shares 78,151
------------------ ------------------
PNM Gas TNMP Electric
Earnings EPS Earnings EPS
(in '000s) Diluted (in '000s) Diluted
----------------------------------------------------------------------
Net Earnings Available to Common
Shareholders $4,839 $0.06 $15,584 $0.20
----------------------------------------------------------------------
Adjustments to reconcile net
earnings to net ongoing
earnings (net of income tax
effects):
Favorable Tax Decision
------------------------------------------------------------------
Twin Oaks III Impairment
------------------------------------------------------------------
Business Improvement Plan
------------------------------------------------------------------
Loss on Altura Contribution
------------------------------------------------------------------
Sale of Turbine
------------------------------------------------------------------
Afton Write-Down
------------------------------------------------------------------
JV Formation Costs
------------------------------------------------------------------
Economic Mark-to-Market ($160) $0.00 $0 $0.00
------------------------------------------------------------------
Total Adjustments ($160) $0.00 $0 $0.00
-------------------------------- ================== ==================
Net Ongoing Earnings Available
to Common Shareholders $4,679 $0.06 $15,584 $0.20
-------------------------------- ------------------ ------------------
Average Diluted Shares
------------------ ------------------
Wholesale First Choice Power
Earnings EPS Earnings EPS
(in '000s) Diluted (in '000s) Diluted
----------------------------------------------------------------------
Net Earnings Available to Common
Shareholders $7,249 $0.09 $14,994 $0.19
----------------------------------------------------------------------
Adjustments to reconcile net
earnings to net ongoing
earnings (net of income tax
effects):
Favorable Tax Decision
------------------------------------------------------------------
Twin Oaks III Impairment
------------------------------------------------------------------
Business Improvement Plan
------------------------------------------------------------------
Loss on Altura Contribution
------------------------------------------------------------------
Sale of Turbine
------------------------------------------------------------------
Afton Write-Down
------------------------------------------------------------------
JV Formation Costs
------------------------------------------------------------------
Economic Mark-to-Market $9,311 $0.12 ($489) $0.00
------------------------------------------------------------------
Total Adjustments $9,311 $0.12 ($489) $0.00
-------------------------------- ================== ==================
Net Ongoing Earnings Available
to Common Shareholders $16,560 $0.21 $14,505 $0.19
-------------------------------- ------------------ ------------------
Average Diluted Shares
------------------ ------------------
EnergyCo Corp./Other
Earnings EPS Earnings EPS
(in '000s) Diluted (in '000s) Diluted
----------------------------------------------------------------------
Net Earnings Available to Common
Shareholders $7,349 $0.09 ($25,791) $(0.32)
----------------------------------------------------------------------
Adjustments to reconcile net
earnings to net ongoing
earnings (net of income tax
effects):
Favorable Tax Decision ($16,037) ($0.20)
------------------------------------------------------------------
Twin Oaks III Impairment $2,042 $0.02
------------------------------------------------------------------
Business Improvement Plan $7,592 $0.10
------------------------------------------------------------------
Loss on Altura Contribution $2,197 $0.03
------------------------------------------------------------------
Sale of Turbine ($1,678) ($0.02)
------------------------------------------------------------------
Afton Write-Down $11,780 $0.15
------------------------------------------------------------------
JV Formation Costs $2,543 $0.02
------------------------------------------------------------------
Economic Mark-to-Market $0 $0.00 $0 $0.00
------------------------------------------------------------------
Total Adjustments $0 $0.00 $8,439 $0.09
-------------------------------- ================== ==================
Net Ongoing Earnings Available
to Common Shareholders $7,349 $0.09 ($17,352) $(0.23)
-------------------------------- ------------------ ------------------
Average Diluted Shares
Reconciliation of GAAP to Ongoing Earnings
Year-to-Date September 2006
------------------ ------------------
PNM Resources PNM Electric
Earnings EPS Earnings EPS
(in '000s) Diluted (in '000s) Diluted
----------------------------------------------------------------------
Net Earnings Available to Common
Shareholders $85,504 $1.23 $32,116 $0.46
----------------------------------------------------------------------
Adjustments to reconcile net
earnings to net ongoing
earnings (net of income tax
effects):
Acquisition Integration
Costs $2,277 $0.03 $0 $0.00
------------------------------------------------------------------
Economic Mark-to-Market $915 $0.01 $0 $0.00
------------------------------------------------------------------
Total Adjustments $3,192 $0.04 $0 $0.00
---------------------------------================== ==================
Net Ongoing Earnings Available
to Common Shareholders $88,696 $1.27 $32,116 $0.46
--------------------------------------------------- ------------------
Average Diluted Shares 69,784
------------------ ------------------
PNM Gas TNMP Electric
Earnings EPS Earnings EPS
(in '000s) Diluted (in '000s) Diluted
----------------------------------------------------------------------
Net Earnings Available to Common
Shareholders $552 $0.01 $9,995 $0.14
----------------------------------------------------------------------
Adjustments to reconcile net
earnings to net ongoing
earnings (net of income tax
effects):
Acquisition Integration
Costs $0 $0.00 $0 $0.00
------------------------------------------------------------------
Economic Mark-to-Market $0 $0.00 $0 $0.00
------------------------------------------------------------------
Total Adjustments $0 $0.00 $0 $0.00
-------------------------------- ================== ==================
Net Ongoing Earnings Available
to Common Shareholders $552 $0.01 $9,995 $0.14
-------------------------------- ------------------ ------------------
Average Diluted Shares
------------------ ------------------
Wholesale First Choice Power
Earnings EPS Earnings EPS
(in '000s) Diluted (in '000s) Diluted
----------------------------------------------------------------------
Net Earnings Available to Common
Shareholders $32,182 $0.46 $29,184 $0.42
----------------------------------------------------------------------
Adjustments to reconcile net
earnings to net ongoing
earnings (net of income tax
effects):
Acquisition Integration
Costs $0 $0.00 $0 $0.00
------------------------------------------------------------------
Economic Mark-to-Market $915 $0.01 $0 $0.00
------------------------------------------------------------------
Total Adjustments $915 $0.01 $0 $0.00
-------------------------------- ================== ==================
Net Ongoing Earnings Available
to Common Shareholders $33,097 $0.47 $29,184 $0.42
-------------------------------- ------------------ ------------------
Average Diluted Shares
------------------ ------------------
EnergyCo Corp./Other
Earnings EPS Earnings EPS
(in '000s) Diluted (in '000s) Diluted
----------------------------------------------------------------------
Net Earnings Available to Common
Shareholders $0 $0.00 ($18,525) ($0.26)
----------------------------------------------------------------------
Adjustments to reconcile net
earnings to net ongoing
earnings (net of income tax
effects):
Acquisition Integration
Costs $0 $0.00 $2,277 $0.00
------------------------------------------------------------------
Economic Mark-to-Market $0 $0.00 $0 $0.00
------------------------------------------------------------------
Total Adjustments $0 $0.00 $2,277 $0.03
-------------------------------- ================== ==================
Net Ongoing Earnings Available
to Common Shareholders $0 $0.00 ($16,248) $(0.23)
-------------------------------- ------------------ ------------------
Average Diluted Shares
PNM RESOURCES, INC. AND SUBSIDIARIES
PRELIMINARY CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- -----------------------
2007 2006 2007 2006
--------- ---------- ----------- -----------
(As (As
Restated) Restated)
(In thousands, except per share amounts)
Operating Revenues:
Electric $569,566 $580,967 $1,511,749 $1,506,786
Gas 59,537 69,001 351,162 345,346
Other 334 197 708 503
--------- ---------- ----------- -----------
Total operating
revenues 629,437 650,165 1,863,619 1,852,635
--------- ---------- ----------- -----------
Operating Expenses:
Cost of energy sold 408,981 366,688 1,144,034 1,099,160
Administrative and
general 69,256 69,599 204,803 201,215
Energy production costs 57,669 38,813 157,749 120,762
Depreciation and
amortization 36,714 39,899 116,851 112,182
Transmission and
distribution costs 20,858 19,723 65,619 60,087
Taxes other than income
taxes 14,263 18,382 51,886 53,607
--------- ---------- ----------- -----------
Total operating
expenses 607,741 553,104 1,740,942 1,647,013
--------- ---------- ----------- -----------
Operating income 21,696 97,061 122,677 205,622
--------- ---------- ----------- -----------
Other Income and
Deductions:
Interest income 10,053 9,902 27,882 28,969
Gains (losses) on
investments held by NDT 3,897 (166) 6,898 1,888
Other income 1,686 1,333 5,613 4,368
Equity in net earnings
of EnergyCo 10,556 - 12,166 -
Carrying charges on
regulatory assets - 2,038 - 6,015
Other deductions (2,056) (1,519) (8,572) (5,532)
--------- ---------- ----------- -----------
Net other income and
deductions 24,136 11,588 43,987 35,708
--------- ---------- ----------- -----------
Interest Charges:
Interest on long-term
debt 25,167 24,108 67,910 70,906
Other interest charges 10,088 16,063 35,084 34,326
--------- ---------- ----------- -----------
Total interest charges 35,255 40,171 102,994 105,232
--------- ---------- ----------- -----------
Earnings before Income
Taxes 10,577 68,478 63,670 136,098
Income Taxes 2,073 24,826 4,997 50,198
Preferred Stock Dividend
Requirements of
Subsidiary 132 132 396 396
--------- ---------- ----------- -----------
Net Earnings $ 8,372 $ 43,520 $ 58,277 $ 85,504
========= ========== =========== ===========
Net Earnings per Common
Share:
Basic $ 0.11 $ 0.62 $ 0.76 $ 1.24
========= ========== =========== ===========
Diluted $ 0.11 $ 0.62 $ 0.75 $ 1.23
========= ========== =========== ===========
Dividends Declared per
Common Share $ 0.23 $ 0.22 $ 0.69 $ 0.66
========= ========== =========== ===========
PNM RESOURCES, INC. AND SUBSIDIARIES
PRELIMINARY COMPARATIVE OPERATING STATISTICS
The following table shows PNM Electric operating revenues by customer
class, including intersegment revenues that are eliminated within the
presentation of the preliminary condensed consolidated statements of
earnings, and average number of customers:
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------- ------------------------
2007 2006 Change % 2007 2006 Change %
------ ------ ----------- ------ ------ ----------
(In millions, except (In millions, except
customers) customers)
Residential $ 78.0 $ 60.8 $17.2 28.3 $204.2 $168.1 $ 36.121.5
Commercial 85.7 70.9 14.8 20.9 223.6 193.6 30.015.5
Industrial 25.7 16.7 9.0 53.9 74.9 47.1 27.859.0
Transmission 10.1 7.7 2.4 31.2 27.0 21.9 5.123.3
Other 6.5 5.6 0.9 16.1 17.6 16.1 1.5 9.3
------ ------ ------ ------ ------ ------
$206.0 $161.7 $44.3 27.4 $547.3 $446.8 $100.522.5
====== ====== ====== ====== ====== ======
Average customers
(thousands) 490.0 431.5 58.5 13.6 488.3 428.6 59.713.9
====== ====== ====== ====== ====== ======
The following table shows PNM Electric GWh sales by customer class:
Three Months Ended Nine Months Ended September
September 30, 30,
--------------------------- ---------------------------
2007 2006 Change % 2007 2006 Change %
------- ------- ----------- ------- ------- -----------
(Gigawatt hours) (Gigawatt hours)
Residential 945.9 756.4 189.5 25.1 2,471.5 2,092.3 379.218.1
Commercial 1,181.3 1,008.9 172.4 17.1 3,050.9 2,741.8 309.111.3
Industrial 488.6 353.4 135.2 38.3 1,453.1 1,000.0 453.145.3
Other 79.9 71.8 8.1 11.3 199.7 198.2 1.5 0.8
------- ------- ------ ------- ------- -------
2,695.7 2,190.5 505.2 23.1 7,175.2 6,032.3 1,142.918.9
======= ======= ====== ======= ======= =======
PNM RESOURCES, INC. AND SUBSIDIARIES
PRELIMINARY COMPARATIVE OPERATING STATISTICS
The following table shows TNMP Electric operating revenues by customer
class, including intersegment revenues that are eliminated within the
presentation of the preliminary condensed consolidated statements of
earnings, and average number of customers:
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------- ----------------------------
2007 2006(1) Change % 2007 2006(1) Change %
----- ------- -------------- ------ ------- -------------
(In millions, except (In millions, except
customers) customers)
Residential $23.4 $28.8 $(5.4) (18.8) $53.8 $68.8 $(15.0)(21.8)
Commercial 19.2 24.2 (5.0) (20.7) 52.9 66.7 (13.8)(20.7)
Industrial 2.1 7.5 (5.4) (72.0) 5.6 30.1 (24.5)(81.4)
Other 8.0 9.7 (1.7) (17.5) 24.8 28.8 (4.0)(13.9)
----- ------- ------- ------ ------- -------
$52.7 $70.2 $(17.5) (24.9) $137.1 $194.4 $(57.3)(29.5)
===== ======= ======= ====== ======= =======
Average
customers
(thousands)
(2) 226.8 273.5 (46.7) (17.1) 225.8 272.3 (46.5)(17.1)
===== ======= ======= ====== ======= =======
(1) The customer class revenues and the average customer count have
been reclassified.
(2) Under TECA, customers of TNMP Electric in Texas have the ability
to choose First Choice or any other REP to provide energy. The
average customers reported above include 135,325 and 152,327
customers of TNMP Electric for the three months ended September 30,
2007 and 2006 and 139,388 and 155,374 customers for the nine months
ended September 30, 2007 and 2006 who have chosen First Choice as
their REP. These customers are also included in the First Choice
segment.
PNM RESOURCES, INC. AND SUBSIDIARIES
PRELIMINARY COMPARATIVE OPERATING STATISTICS
The following table shows TNMP Electric GWh sales by customer class:
Three Months Ended
September 30,
-------------------------------
2007 2006(2) Change %
------- -------- --------------
(Gigawatt hours(1))
Residential 860.4 919.7 (59.3) (6.4)
Commercial 664.8 757.2 (92.4) (12.2)
Industrial 543.7 528.5 15.2 2.9
Other 26.4 32.6 (6.2) (19.0)
------- -------- -------
2,095.3 2,238.0 (142.7) (6.4)
======= ======== =======
Nine Months Ended
September 30,
------------------------------
2007 2006(2) Change %
------- -------- -------------
(Gigawatt hours(1))
Residential 1,978.7 2,158.0 (179.3) (8.3)
Commercial 1,687.6 2,012.1 (324.5)(16.1)
Industrial 1,424.9 1,546.6 (121.7) (7.9)
Other 74.5 93.3 (18.8)(20.2)
------- -------- -------
5,165.7 5,810.0 (644.3)(11.1)
======= ======== =======
(1) The GWh sales reported above include 651.4 and 726.0 GWhs for the
three months ended September 30, 2007 and 2006 and 1,611.7 and
1,836.0 GWhs for the nine months ended September 30, 2007 and 2006
used by customers of TNMP Electric respectively, who have chosen
First Choice as their REP. These GWhs are also included below in the
First Choice segment.
(2) The customer class sales have been reclassified.
PNM RESOURCES, INC. AND SUBSIDIARIES
PRELIMINARY COMPARATIVE OPERATING STATISTICS
The following table shows PNM Gas operating revenues by customer
class, including intersegment revenues that are eliminated within the
presentation of the preliminary condensed consolidated statements of
earnings, and average number of customers:
Three Months Ended
September 30,
---------------------------
2007 2006 Change %
------ ------ -------------
(In millions, except
customers)
Residential $ 31.4 $ 34.6 $(3.2) (9.2)
Commercial 10.4 12.3 (1.9) (15.4)
Industrial 0.5 1.0 (0.5) (50.0)
Transportation(1) 2.5 2.7 (0.2) (7.4)
Other 14.7 18.6 (3.9) (21.0)
------ ------ ------
$ 59.5 $ 69.2 $(9.7) (14.0)
====== ====== ======
Average customers (thousands) 490.0 481.1 8.9 1.8
====== ====== ======
Nine Months Ended September
30,
---------------------------
2007 2006 Change %
------ ------ -------------
(In millions, except
customers)
Residential $232.1 $214.7 $ 17.4 8.1
Commercial 71.1 69.7 1.4 2.0
Industrial 1.5 3.2 (1.7)(53.1)
Transportation(1) 10.9 10.1 0.8 7.9
Other 35.7 48.0 (12.3)(25.6)
------ ------ -------
$351.3 $345.7 5.6 1.6
====== ====== =======
Average customers (thousands) 490.8 481.1 9.7 2.0
====== ====== =======
(1) Customer-owned gas.
The following table shows PNM Gas throughput by customer class:
Three Months Ended September
30,
------------------------------
2007 2006 Change %
------ ------ ----------------
(Thousands of
Decatherms)
Residential 2,244 2,450 (206) (8.4)
Commercial 1,138 1,320 (182) (13.8)
Industrial 65 129 (64)(64)(49.6)
Transportation(1) 9,784 8,769 1,015 11.6
Other 1,774 2,327 (553) (23.8)
------ ------ ------
15,005 14,995 10 0.1
====== ====== ======
Nine Months Ended September
30,
---------------------------
2007 2006 Change %
------ ------ -------------
(Thousands of
Decatherms)
Residential 20,015 17,471 2,544 14.6
Commercial 7,288 6,877 411 6.0
Industrial 178 395 (217)(54.9)
Transportation(1) 30,733 29,171 1,562 5.4
Other 3,599 5,394 (1,795)(33.3)
------ ------ -------
61,813 59,308 2,505 4.2
====== ====== =======
(1) Customer-owned gas.
PNM RESOURCES, INC. AND SUBSIDIARIES
PRELIMINARY COMPARATIVE OPERATING STATISTICS
The following table shows Wholesale operating revenues by type of
sale, including intersegment revenues that are eliminated within the
presentation of the preliminary condensed consolidated statements of
earnings:
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------- -------------------------
2007 2006 Change % 2007 2006 Change %
------ ------ -------------- ------ ------ -----------
(In millions) (In millions)
Long-term sales $48.1 $91.4 $(43.3) (47.4) $201.1 $196.6 $4.5 2.3
Short-term
sales 156.0 113.3 42.7 37.7 331.6 342.1 (10.5)(3.1)
------ ------ ------- ------ ------ ------
$204.1 $204.7 $(0.6) (0.3) $532.7 $538.7 $(6.0)(1.1)
====== ====== ======= ====== ====== ======
The following table shows Wholesale GWh sales by type:
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------ ---------------------------
2007 2006 Change % 2007 2006 Change %
------- ------- -------------- ------- ------- -----------
(Gigawatt hours) (Gigawatt hours)
Long-term
sales 867.8 1,319.0 (451.2) (34.2) 3,214.4 2,999.9 214.5 7.2
Short-term
sales 2,270.5 1,719.1 551.4 32.1 5,411.3 5,509.0 (97.7)(1.8)
------- ------- ------- ------- ------- ------
3,138.3 3,038.1 100.2 3.3 8,625.7 8,508.9 116.8 1.4
======= ======= ======= ======= ======= ======
PNM RESOURCES, INC. AND SUBSIDIARIES
PRELIMINARY COMPARATIVE OPERATING STATISTICS
The following table shows First Choice operating revenues by customer
class, including intersegment revenues that are eliminated within the
presentation of the preliminary condensed consolidated statements of
earnings, and average number of customers:
Three Months Ended
September 30,
-------------------------------
2007 2006(1) Change %
------- -------- --------------
(In millions, except
customers)
Residential $124.1 $ 119.1 $ 5.0 4.2
Mass-market 16.2 23.2 (7.0) (30.2)
Mid-market 40.5 37.7 2.8 7.4
Trading gains (losses) (5.7) 1.4 (7.1) (507.1)
Other 2.6 5.6 (3.0) (53.6)
------- -------- ------
$177.7 $ 187.0 $(9.3) (5.0)
======= ======== ======
Actual customers (thousands) (2,3) 258.6 243.4 15.2 6.2
======= ======== ======
Nine Months Ended
September 30,
-------------------------------
2007 2006(1) Change %
------- -------- --------------
(In millions, except
customers)
Residential $298.1 $ 267.9 $ 30.2 11.3
Mass-market 50.5 65.9 (15.4) (23.4)
Mid-market 109.5 93.3 16.2 17.4
Trading gains (losses) (7.3) 7.1 (14.4)(202.8)
Other 12.5 12.8 (0.3) (2.3)
------- -------- -------
$463.3 $ 447.0 $ 16.3 3.6
======= ======== =======
Actual customers (thousands) (2,3) 258.6 243.4 15.2 6.2
======= ======== =======
(1) The customer class revenues and the customer counts have been
reclassified to be consistent with the current year presentation.
(2) See note above in the TNMP Electric segment discussion about the
impact of TECA.
(3) Due to the competitive nature of First Choice's business, actual
customer count at September 30 is presented in the table above as a
more representative business indicator than the average customers
that are shown in the table for TNMP customers.
PNM RESOURCES, INC. AND SUBSIDIARIES
PRELIMINARY COMPARATIVE OPERATING STATISTICS
The following table shows First Choice GWh electric sales by customer
class:
Three Months Ended September
30,
------------------------------
2007 2006(2) Change %
------- -------- -------------
(Gigawatt hours (1))
Residential 886.5 847.3 39.2 4.6
Mass-market 101.3 157.6 (56.3) (35.7)
Mid-market 348.9 345.3 3.6 1.0
Other 11.3 5.2 6.1 117.3
------- -------- ------
1,348.0 1,355.4 (7.4) (0.5)
======= ======== ======
Nine Months Ended September
30,
------------------------------
2007 2006(2) Change %
------- -------- -------------
(Gigawatt hours (1))
Residential 2,139.5 1,911.5 228.0 11.9
Mass-market 312.7 440.4 (127.7)(29.0)
Mid-market 944.5 846.5 98.0 11.6
Other 21.6 15.5 6.1 39.4
------- -------- -------
3,418.3 3,213.9 204.4 6.4
======= ======== =======
(1) See note above in the TNMP Electric segment discussion about the
impact of TECA.
(2) The customer class sales have been reclassified to be consistent
with current year presentation.
Source: PNM Resources