Business context and reporting period
This is the joint Form 10-K of PNM Resources, Inc. (PNMR), Public Service Company of New Mexico (PNM), and Texas-New Mexico Power Company (TNMP), for the fiscal year ended December 31, 2022. PNMR is a holding company whose regulated utilities serve about 815,000 customers and end-users in New Mexico and Texas. The filing reports full-year results, not a standalone fourth quarter. The request metadata names TXNM Energy Inc.; the filing itself uses PNM Resources, Inc., so investors should confirm the intended issuer and any subsequent corporate name or ticker changes.
Key financial metrics
Amounts below are for PNMR consolidated unless otherwise stated; dollars are U.S. dollars.
| Metric | 2022 | 2021 | Change / context |
|---|---|---|---|
| Electric operating revenue | $2,249.6 million | $1,779.9 million | Up $469.7 million, or 26.4% |
| Operating income | $393.8 million | $308.2 million | Up $85.6 million |
| Net earnings attributable to PNMR | $169.5 million | $195.8 million | Down $26.3 million, or 13.4% |
| Diluted earnings per share | $1.97 | $2.27 | Down $0.30 |
| Utility margin | $1,261.6 million | $1,135.0 million | Up $126.6 million; company-defined non-GAAP measure |
| Cash from operating activities | $567.3 million | $547.9 million | Up $19.4 million |
| Utility and non-utility plant additions | $912.6 million | $935.0 million | Cash outflow; investing cash flow totaled $950.3 million used |
| Cash from financing activities | $386.0 million | $357.6 million | Net increase in short-term borrowings contributed |
| Cash and cash equivalents at year-end | $4.1 million | $1.1 million | Net cash increased $3.0 million during 2022 |
At December 31, 2022, consolidated debt was approximately $4.08 billion, including $232.0 million of short-term debt and $3.89 billion of long-term debt net of issuance costs and current maturities. Long-term debt represented 64.9% of PNMR capitalization, compared with 62.9% in 2021. Consolidated current liabilities were $890.4 million and current assets were $411.0 million; the filing does not present a current ratio as a headline liquidity measure.
As of February 17, 2023, the utilities and parent reported $522.4 million of remaining availability under revolving credit facilities, after outstanding borrowings and letters of credit. Management said cash generation, credit arrangements, and capital-market access were expected to cover requirements for at least the next 12 months. The filing identifies $499.5 million of consolidated long- and short-term debt maturities from January 2023 through February 2024.
Segment earnings attributable to PNMR were $103.4 million for PNM, $92.3 million for TNMP, and a $26.1 million loss for Corporate and Other. PNM’s utility margin rose $72.6 million to $902.8 million; TNMP’s rose $54.0 million to $358.8 million.
Material changes versus 2021
- Revenue increased substantially, partly reflecting higher wholesale energy and transmission activity. PNM’s EIM participation and related energy sales increased reported revenues, but associated amounts are passed through to customers and did not materially benefit earnings.
- PNMR earnings declined despite higher operating income. PNM recorded a $78.4 million loss on investment securities in 2022 versus a $16.9 million gain in 2021; the filing attributes a $95.2 million year-over-year deterioration in PNM trust investment performance. Higher interest charges, operating and maintenance expense, depreciation, and FERC-ordered time-value refunds also weighed on results.
- TNMP segment earnings increased $28.4 million, supported by transmission and distribution rate adjustments, load growth, and weather. PNM segment earnings decreased $52.1 million, chiefly reflecting investment losses and increased costs.
- PNM retired San Juan Generating Station (SJGS) Unit 1 in June 2022 and Unit 4 in September 2022. The retirement advanced the company’s decarbonization plans but increased focus on replacement-resource timing and peak-period reliability.
- PNMR consolidated construction spending was $912.6 million, while financing included new borrowing. Year-end short-term debt rose to $232.0 million from $62.7 million.
Outlook, management commentary, risks and contingencies
- Rates and investment: PNM’s December 2022 rate application seeks a $63.8 million increase in annual base non-fuel revenue, based on a 2024 future test year and a requested 10.25% return on equity. The request is pending and includes infrastructure investment, generation-transition effects, and updated depreciation assumptions. PNM also requested approval for approximately $344 million of grid-modernization investment during the first six years of an 11-year strategy.
- Capital needs: PNMR projected $4.60 billion of construction expenditures for 2023–2027 and total capital requirements of $5.24 billion including dividends. Management expects additional long-term financing, potentially debt and/or equity. PNMR’s ATM program permits up to $200 million of common-stock sales; the filing does not report sales under the program at initiation.
- Generation and reliability: Delays to approved replacement resources created summer-peak adequacy concerns. PNM reported a 2023 projected reserve margin of 6.0%–10.3% after arranging 270 MW of firm summer purchases and 40 MW of year-round firm capacity, while continuing to evaluate additional options. Project delays, outages, weather, and higher market power prices remain risks.
- Regulatory and asset recovery: The NMPRC denied PNM’s proposed Four Corners exit and related securitization; PNM appealed. The requested exit by December 31, 2024 and approximately $300 million of transition bonds therefore remained uncertain. The NMPRC also ordered PNM to track costs associated with retired SJGS in a regulatory liability; the treatment of those costs and related rate credits remained subject to proceedings. Recovery of undepreciated plant, decommissioning, and replacement-resource costs is a material uncertainty.
- Merger: The proposed cash acquisition by Avangrid at $50.30 per PNMR share remained pending, with NMPRC approval unresolved after the commission rejected the parties’ stipulation. The agreement’s end date was extended to April 20, 2023. Closing, required approvals, termination rights, and potential transaction costs remain significant uncertainties.
- Debt and financing: All reported debt ratings remained investment grade, but Moody’s downgraded TNMP from A3 to Baa1 in February 2022. Higher rates, variable-rate debt, refinancing needs, covenant requirements, and capital-market access may affect financing costs and liquidity.
- Other risks and contingencies: The filing highlights environmental and climate regulation, nuclear fuel and spent-fuel disposal, coal-mine reclamation, wildfire and severe-weather exposure, cybersecurity, supply-chain pressures, and potential litigation. TNMP was named in two lawsuits related to the 2021 Texas winter storm; management did not expect significant financial impacts but could not predict outcomes. PNM’s 2022 results included $8.1 million of FERC-ordered customer refunds, which it paid during the year.
- Audit and controls: KPMG issued unqualified opinions on PNMR’s, PNM’s, and TNMP’s financial statements. PNMR’s internal control over financial reporting was assessed and audited as effective; PNM and TNMP management also reported effective controls.
Most important facts for investors to verify
- Confirm the issuer and security identity: this filing is for PNM Resources, Inc. (ticker PNM in the filing), not an entity named TXNM Energy Inc.
- Track the outcome and timing of the Avangrid merger, especially NMPRC approval, the extended end date, and any termination or transaction-fee consequences.
- Review the 2024 Rate Change, SJGS cost-tracking and rate-credit proceedings, and the Four Corners appeal for potential effects on allowed returns and cost recovery.
- Monitor replacement-resource project status and PNM’s actual summer resource adequacy, including the availability and cost of contracted power.
- Assess funding for the $4.60 billion projected construction program, 2023–2024 maturities, short-term borrowing, interest-rate exposure, and any ATM equity issuance.
- Separate revenue growth from earnings growth: EIM and other pass-through activity lifted reported revenue, while PNMR’s attributable earnings and diluted EPS fell in 2022.