TXNM Energy, Inc. Q4 FY2024 earnings call

Key Points

• Dividend increased by 5% in December, keeping payout ratio within 50%-60% for 2025.
• Regulatory accomplishments: PNM's unopposed stipulation in New Mexico rate request and TNMP's system resiliency plan with unanimous settlement.
• TNMP: Focus on supporting growth with reliable grid, increased capital investments for Permian projects, and 2% - 4% growth expected from distribution volumetric customers and 4% - 6% from demand-based customers.
• PNM: Progress on clean energy transition, grid modernization plan, phase-in of rates in New Mexico, and partnership with state for economic development.

For TNMP: Continued to set new system peak records, with an 18% increase over 2023 peak. Data center demand on the system totaled over 600 megawatts at year-end, including 200 megawatts added in Q4. Interconnection requests in 2024 were 10% higher than 2023. For PNM: Added 1,500 megawatts of solar and storage in 2024, nearly doubling carbon-free resource capacity. Reached an unopposed stipulation in New Mexico rate request and has a grid modernization plan with benefits for customers.

Guidance

• 2024 earnings per share at $2.74, high end of guidance.
• 2025 guidance ranges from $2.74 to $2.84 per share.
• Five-year investment plan in Texas increased by over $1 billion, targeting 7% - 9% earnings growth through 2029.
• Capital spending for Permian Basin reliability projects incorporated into five-year plan, with approximately $350 million through 2029 and $400 million in 2030.

Risks

• Regulatory uncertainties, such as ERCOT's decision on import voltage by May and potential impacts on capital spending.
• Legislative impacts on economic development in New Mexico, which could affect the timeline for bringing new customers online.

Q: Julien Dumoulin-Smith asked about nuances in the plan, including New Mexico's economic development legislation, Texas interconnections, and Permian Basin capital plans.

A: Pat Vincent-Collawn discussed New Mexico's economic development benefits, Texas interconnection growth, and Permian Basin capital scenarios.

Q: Michael Lonegan inquired about Texas rate case, capital structure, and key components.

A: Pat Vincent-Collawn addressed balancing distribution and transmission in the rate case.

Q: Anthony Crowdell asked about earnings power potential and equity financing.

A: Lisa Eden explained the variety of ways to finance the $1.3 billion equity plan.

Q: Andrew Weisel asked about Four Corners timeline and stakeholder engagement.

A: Don Tarry discussed the RFP for Four Corners replacement and early issuance of the RFP.