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PUBLIC SERVICE CO OF NEW MEXICO (PNMXO)·Q4 2024 Earnings Summary

Executive Summary

  • PNM’s parent, TXNM Energy, delivered Q4 ongoing EPS of $0.30 (PNM contribution $0.19), capping FY24 ongoing EPS at $2.74, the high end of guidance; GAAP EPS was $0.17 in Q4 and $2.67 for FY24 .
  • 2025 ongoing EPS guidance was introduced at $2.74–$2.84, and the long-term EPS CAGR target was raised to 7%–9% (from 6%–7%), underpinned by a $7.8B five‑year capex plan (+26% vs prior plan) and a mid‑2025 phase‑in of PNM’s stipulated rate increase .
  • Q4 consolidated revenue was $476.964M (implied), up 15.8% YoY; net income margin was 3.3% (vs -12.2% in Q4’23) but down from Q3’s seasonally strong 23.1% on weather/transmission mix and higher D&A/taxes/interest tied to new investments .
  • Stock catalysts: NMPRC decision on PNM’s unopposed rate stipulation (expected Q2 2025), ERCOT decision on Permian import path voltage (May) affecting Texas capex optionality, and 2025 holdco refinancing/equity‑linked financing to fund the $7.8B plan .

What Went Well and What Went Wrong

  • What Went Well

    • Achieved high end of FY24 ongoing EPS guidance ($2.74) with Q4 ongoing EPS of $0.30 despite headwinds; management raised long‑term EPS CAGR to 7%–9% .
    • Regulatory momentum: unopposed PNM rate stipulation (phased in starting July 2025), grid modernization approval, 2026 resource approval; path to join CAISO day‑ahead market .
    • Texas growth: TNMP system peak +18% YoY; data center demand reached 600 MW (+200 MW added in Q4), supporting capex acceleration .

  • What Went Wrong

    • Q4 consolidated net income margin fell to 3.3% from 23.1% in Q3 due to seasonal/weather normalization, lower transmission margins, and higher D&A, taxes, and interest tied to new investments .
    • Corporate drag persisted (Q4 Corporate ongoing EPS $(0.16)) on higher variable‑rate interest cost and absence of NMRD income post sale .
    • Consensus benchmarking unavailable this quarter due to S&P Global access limits (see Estimates Context).

Financial Results

Consolidated quarterly snapshot (oldest → newest)

MetricQ4 2023Q3 2024Q4 2024
Revenue ($M)$412.114 (calc: FY23 $1,939.198 − YTD Q3’23 $1,527.084) $569.256 $476.964 (calc: FY24 $1,971.199 − YTD Q3’24 $1,494.235)
GAAP Diluted EPS$(0.58) $1.45 $0.17
Ongoing Diluted EPS$0.18 $1.43 $0.30
Net Income ($M)$(50.226) $131.202 $15.714
Net Income Margin %-12.18% (calc: -50.226/412.114) 23.06% (calc: 131.202/569.256) 3.29% (calc: 15.714/476.964)

Segment EPS contribution (per diluted share)

Segment EPSQ4 2023 GAAPQ4 2023 OngoingQ3 2024 GAAPQ3 2024 OngoingQ4 2024 GAAPQ4 2024 Ongoing
PNM$(0.67) $0.10 $1.20 $1.18 $0.11 $0.19
TNMP$0.24 $0.25 $0.39 $0.39 $0.26 $0.27
Corporate & Other$(0.15) $(0.17) $(0.14) $(0.14) $(0.20) $(0.16)
Consolidated$(0.58) $0.18 $1.45 $1.43 $0.17 $0.30

Q4 2024 vs consensus (S&P Global)

  • EPS: N/A – S&P Global consensus was unavailable this cycle due to access limits.
  • Revenue: N/A – S&P Global consensus was unavailable this cycle due to access limits.

Additional context and drivers

  • FY24 Electric Operating Revenues rose to $1.971B from $1.939B; cost of energy declined materially YoY, while D&A and taxes rose with new investments; operating income more than doubled to $453.5M from $231.3M .
  • Q4 Ongoing earnings by segment ($M): PNM $17.2; TNMP $24.3; Corporate $(14.3) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Ongoing EPSFY2025N/A$2.74–$2.84Introduced
Ongoing EPSFY2024$2.70–$2.75 (narrowed) Actual $2.74Met high end
Long‑term EPS CAGR5‑yr target6%–7% (prior) 7%–9%Raised
5‑yr Capex Plan2025–2029Prior plan (not specified)$7.8B+26% vs prior plan
PNM Retail ROE / Equity Layer (stipulated)Pending approvalN/A9.45% ROE; 51% equity layerParameters set in stipulation
PNM Rate Implementation2025–2026N/APhase‑in starting July 2025; full amount April 2026Phased rate path
Dividend2025$0.3875/qtr ($1.55/yr)$0.4075/qtr ($1.63/yr)+5.2%

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024, Q3 2024)Current Period (Q4 2024)Trend
PNM regulatory cadence (rate case, grid mod)Q2: Grid modernization in process; retail rate changes implemented in Jan’24 . Q3: Grid mod approved; unopposed 2025 rate stipulation in process .Rate stipulation hearings completed; phase‑in from Jul’25; day‑ahead market path highlighted .Improving visibility; phased implementation reduces customer impact.
Texas load/data centersQ2: Growth supported by TCOS/DCRF recovery . Q3: Weather headwinds but ongoing TCOS/DCRF; demand growth continuing .System peak +18% YoY; data centers 600 MW with +200 MW in Q4; interconnections +10% YoY .Accelerating demand/peaks; capex plan increased.
Capex and rate base outlookQ2: Capex tied to resiliency/grid modernizations . Q3: Narrowed FY24 EPS; framework for investments .Five‑year plan to $7.8B; TNMP rate base +17% over period; consolidated +12%; Permian projects underway .Upward revision; more TX transmission optionality.
FinancingQ2: Share issuance in Dec’23 impacted per‑share metrics . Q3: Ongoing .2024: $100M ATM settled; $50M forward sold (settle Dec’25); $550M junior sub convertible; 2025 plan: refinance $450M term loans with equity‑credit instruments; ~$1.3B equity content assumed over 5 years .Manageable but equity overhang persists.
Resource transition (PNM)Q2: Clean energy trajectory . Q3: Continued approvals .2029–2032 all‑source RFP for ≥900 MW; 72% carbon‑free in 2024; exit Four Corners by 2031; 2026 additions approved .On track; incremental transmission builds to ease constraints.
Weather/transmission marginQ2: Lower transmission margins; hotter weather aided H1 . Q3: Lower weather impacts reduced TNMP/PNM YoY .FY commentary reiterates lower transmission margins and milder weather impacting YoY .Ongoing variability; mitigated by mechanisms and rate design.

Management Commentary

  • “Ongoing earnings for 2024 are $2.74 per share at the high end of our guidance… We are introducing guidance for 2025 at a range of $2.74 to $2.84 per share.” — Patricia Collawn, CEO .
  • “TNMP continues to set new system peak records… data center demand… totaled over 600 megawatts at the end of the year, which reflects 200 megawatts added during the fourth quarter.” — Don Tarry, President & COO .
  • “Under the unopposed [PNM] stipulation, we will phase in our rates beginning July 2025 with the full amount in April of 2026.” — Don Tarry .
  • “We have rolled forward our capital plans to 2029… increasing our five year forecast to $7.8 billion… supporting our increased EPS growth target of 7% to 9%.” — Elisabeth Eden, CFO .
  • “At PNM Retail, we have incorporated the 9.45% ROE and 51% equity layer from our pending stipulation.” — CFO .

Q&A Highlights

  • Capex optionality/upside: ERCOT’s decision on Permian import path (345 kV vs 765 kV) could add up to ~$900M if 345 kV chosen; TX capex includes ~$350M through 2029, with remaining ~$400M in 2030; interconnection requests up 10% YoY across geographies with broad data center interest .
  • Financing mix: 2025 holdco term loan ($450M) to be refinanced with instruments that provide equity credit; ~$1.3B equity content assumed over five years for the $7.8B plan; growth financing timing will match capex/rate base cadence .
  • Texas rate case (late 2025): Aware of proposed legislation around capital structure; expect a balance between distribution and transmission; mechanisms (TCOS/DCRF) keep earnings near authorized ROE .
  • PNM resource procurement: All‑source RFP issued earlier than usual to mitigate long‑lead times; PNM expects internal RFP results by mid‑year; exit Four Corners by 2031 per plan .

Estimates Context

  • S&P Global consensus EPS and revenue estimates for Q4 2024 were not available due to access limits this cycle. As such, beat/miss vs. consensus cannot be assessed for this quarter. If you want, we can refresh this when S&P Global access is restored.

Key Takeaways for Investors

  • PNM de‑risking: Unopposed rate stipulation with phased implementation (Jul’25/Apr’26) and stipulated ROE/equity layer drives higher forward earnings power; NMPRC decision expected in Q2 2025 .
  • Texas growth remains the core upside: TNMP’s record peaks and 600 MW data center load underpin capex acceleration and support the 7%–9% EPS CAGR target; ERCOT’s voltage decision in May is a key swing factor for incremental capex .
  • Financing overhang manageable but present: ~$1.3B equity content over five years and 2025 holdco refinancing with equity‑credit instruments should preserve credit metrics while funding growth .
  • FY24 execution solid: Ongoing EPS hit the high end; mix headwinds (weather/transmission margins) and higher D&A/taxes/interest largely offset by rate recovery and load growth .
  • Clean energy and capacity additions: PNM at 72% carbon‑free and running a 2029–2032 RFP for ≥900 MW to meet growth/replace Four Corners by 2031; transmission projects planned to relieve constraints .
  • Dividend growth signals confidence: 5.2% dividend increase to $1.63 annualized aligns with the 50%–60% payout framework amid robust capex runway .
  • Near‑term catalysts: NMPRC rate decision (Q2’25), ERCOT import path decision (May’25), TNMP base rate filing late 2025, and periodic updates on 2029–2032 RFP awards and grid modernization execution .

Supporting Sources

  • Q4 2024 8‑K 2.02 press release and schedules (PNM/TXNM): consolidated FY24 results, Q4 segment EPS and earnings, 2025 guidance, capex plan, non‑GAAP reconciliations .
  • Q3 2024 8‑K 2.02: quarterly P&L, segment EPS, narrowed FY24 guidance .
  • Q2 2024 8‑K 2.02: quarterly P&L, segment EPS .
  • Q4 2024 earnings call transcript: guidance rationale, regulatory milestones, capex/financing detail, operational KPIs .
  • Related press releases (Q4 2024–Q1 2025): PNM rate case settlement in principle (Nov 15), TNMP resiliency plan settlement in principle (Nov 19), dividend increase (Dec 3), PNM all‑source RFP (Dec 31) .