Business Context and Reporting Period
This Form 8-K, dated February 26, 2021, is filed by PNM Resources, Inc., Public Service Company of New Mexico, and Texas-New Mexico Power Company (collectively, the "Company"). The filing serves to announce the results of operations for the three months and the full year ended December 31, 2020. The detailed financial results are contained in a press release furnished as Exhibit 99.1 and incorporated by reference.
Key Financial Metrics
The filing text does not provide specific numerical values for revenue, profit, cash flow, margins, debt, or liquidity. These metrics are referenced as being detailed in the attached press release (Exhibit 99.1) but are not explicitly stated within the body of this 8-K document.
Material Changes and Non-GAAP Measures
The Company utilizes specific non-GAAP financial measures to evaluate operations and establish management goals. These measures exclude:
- Net unrealized mark-to-market gains and losses on economic hedges.
- Net change in unrealized gains and losses on investment securities.
- Pension expense related to previously disposed of gas distribution business.
- Certain non-recurring, infrequent, and other items.
Management asserts that these non-GAAP measures remove variances not indicative of fundamental changes in earnings capacity, allowing for better comparison with prior periods and industry practices.
Guidance, Outlook, and Risks
The Company provides "ongoing earnings guidance" to reflect management's expectations of financial performance. However, the filing explicitly states that:
- Ongoing earnings guidance is not a GAAP measure and does not represent an expectation of net earnings as defined by GAAP.
- Management is generally unable to estimate the impact of reconciling items between forecasted GAAP earnings and ongoing earnings guidance without unreasonable effort.
- Consequently, the Company does not provide a corresponding GAAP equivalent for its forecasted ongoing earnings guidance.
Reconciling items may include revenues and expenses from transactions outside normal business operations, as well as the mark-to-market and pension items listed above.
Investor Verification Checklist
- Review Exhibit 99.1 (Press Release dated February 26, 2021) for specific GAAP and non-GAAP financial figures for the periods ended December 31, 2020.
- Verify the reconciliation between GAAP net earnings and the Company's "ongoing earnings" to understand the magnitude of excluded items.
- Assess the impact of unrealized mark-to-market gains/losses on economic hedges on reported volatility.
- Confirm the specific components of pension expense related to the previously disposed gas distribution business.