November 1, 2019 Q2 2020 Earnings Review July 31, 2020
Safe Harbor Statement Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 Statements 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 Measures For 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
Overview Pat Vincent-Collawn Chairman, President and CEO
Q2 2020 Financial Results and Regulatory Highlights Financial Results Q2 2020: COVID-19 Q2 2020 Q2 2019 YTD 2020 YTD 2019 Clean Energy load decline offset by GAAP EPS $0.72 ($0.95) $0.53 ($0.72) Strong Financial warmer than normal Ongoing EPS $0.55 $0.38 $0.73 $0.49 Focus Profile temperatures across • 2020 Ongoing EPS Guidance affirmed $2.16 - $2.26 New Mexico and Texas Regulatory Highlights PNM • San Juan replacement power decision provides clear path Regulatory dockets to clean energy goals • move forward Decoupling: procedural schedule supports 2020 decision with hearings planned for October • Approval of regulatory asset treatment for COVID-19 related expenses TNMP • 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 4 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
COVID-19 Update 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 1 st 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 5
Environmental, Social, Governance Strategy
Commitment to ESG Strategy Business priorities Investment plans Renewed focus on demonstrate ESG aligned with ESG sharing achievements principles strategy and providing data Committed to a clean Launched redesigned Environmental leadership energy future that supports website for ESG - 100% emissions-free evolving federal and state Commitment energy by 2040 policies and integrates - Additional CO 2 , NO X , SO 2 , Published 2019 emerging technologies water reduction goals Sustainability Report Focused on delivering clean Exit from coal incorporates a Planned for 2020: energy through grid Just Transition • SASB and TCFD investments disclosure mapping Diversity and Inclusion, reports Fostering Tribal Relationships Increase grid reliability, • EEI ESG template and COVID-19 response resilience and security to demonstrates core values of meet the growing needs of Safety, Caring, Personal existing and new customers Integrity and Honest affordably Communication 7
Demonstrating ESG Principles E NVIRONMENTAL Emissions-free by 2040: industry-leading goal for the full elimination of carbon emissions from generation Significant progress achieved in emissions and freshwater usage Rapid growth in owned and purchased renewable resources delivered to customers S OCIAL Hiring, training, retaining and engaging a diverse workforce (50% minority), promoting diversity and inclusion within our teams and communities Fostering tribal relationships through meaningful partnerships Focus on safety and company culture G OVERNANCE Diverse (40% women / 20% minorities), engaged Board with extensive experience Robust top-down ethics program with organization-wide commitment 8
ESG Highlight: Environmental Goals Our goal: 100% Significant emission Additional emissions-free and freshwater environmental energy by 2040 reductions achieved goals • • Continues to lead 2020 on track to industry goals with the report reductions Emission Reduction Goals: FULL ELIMINATION of achieved through 2025 2035 2040 investments and coal carbon emissions from unit retirements: generation by 2040 CO 2 60% 80% 100% • CO 2 : 20% More aggressive than NO X 70% 90% 100% NO X : 50% reductions included in SO 2 90% 90% 100% SO 2 : 75% the Paris Climate Freshwater: 30% Agreement • Freshwater Reduction Goals: Five years earlier than New Mexico Energy 2025 2035 2040 Transition Act mandate Freshwater 70% 80% 90% Note: Reductions measured from 2005 levels, 9 reflect owned generation resources
ESG Highlight: A Just Transition for San Juan Generating Station Replacing coal Customer A Just with cleaner savings Transition energy resources • • Retirement of 562 MW Securitization of New Mexico Energy of coal-fired generation undepreciated Transition Act includes: • Replacement includes investment at lower 650 MW of solar and • interest rates results Job training and 300 MW of battery in savings passed on severance costs for utility storage to customers and coal mine employees • New Mexico • Economic development Renewable Portfolio funds to support Standards: • 20% by 2020 impacted community • 50% by 2030 • Replacement power • 80% by 2040 re-investment in affected school district, provides property tax base 10
ESG Highlight: Diversity and Inclusion, Tribal Relationships Fostering Tribal Hiring, Training, Diversity and Retaining and Relationships Inclusion in our Engaging a Diverse Communities Financial Support Workforce • Native American engineering Overall Workforce: • PNM first to support Minority Women Veterans internships local fund launched to 50% 26% 8% • Navajo Nation Workforce support, promote and 2019 New Hires: Training Scholarships Program advance Diversity, Minority Women Veterans Equity and Inclusion • Founding partner of Light up 57% 37% 8% practices Navajo, energizing homes • Diversity and unconscious • Matching donation COVID-19: Tribal Community bias training, succession program expanded to Disproportionately Impacted planning, veteran hiring offer 2-to-1 matching to partnerships, pay equity • Company donations of available social justice nonprofits • Total benefit packages protective equipment and other and increase annual designed to appeal to a supplies per-employee matches broad base of employees • Collaboration to set up wireless • Engagement efforts hotspots to aid first responders focused on maximizing and support remote education 11 inclusiveness
Renewed Focus on Sustainability Reporting and ESG Disclosure • 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 • 12 EEI ESG template
Financial Updates
Q2 2020 Ongoing EPS Financial Summary Year-over-year increase expected largely due to the prior year impacts of Clean Energy Strong Financial mild weather and lower Focus Q2 Earnings Summary Profile planned outage costs $0.01 $0.55 $0.01 $0.15 Stronger than expected Corporate TNMP increase: $0.38 • Strong weather in Q2 PNM 2020 offset COVID-19 reductions • Shifting of plant Q2 2019 Q2 2020 maintenance costs 14
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