Good day, and welcome to the PNM Resources Quarter One 2024 Conference Call. All participants will be in listen-only mode. Please note, this event is being recorded. Thank you, Megan, and thank you everyone for joining us this morning for the PNM Resources first quarter, 2024 earnings call. Please note that the presentation for this conference call and other supporting documents are available on our website at pnmresources.com. Joining me today are PNM Resources' Chairman and CEO, Pat Vincent-Collawn; President and Chief Operating Officer, Don Tarry; and Senior Vice President, Chief Financial Officer and Treasurer, Lisa Eden. Before I turn the call over to Pat, I need to remind you that some of the information provided this morning should be considered forward-looking statements pursuant to the Private Securities Litigation Reform Act of 1995. We caution you that all of the forward-looking statements are based upon current expectations and estimates and that PNM Resources assumes no obligation to update this information. For a detailed discussion of factors affecting PNM Resources' results, please refer to our current and future Annual Reports on Form 10-K, quarterly reports on Form 10-Q as well as reports on Form 8-K filed with the SEC. With that, I will turn the call over to Pat.

Thank you, Lisa. Good morning, everyone, and thank you for joining us today on National Bugs Bunny Day, which is a fan favorite here in Albuquerque, not because of his WhatsApp doc, but for admitting he should have made a left turn in Albuquerque. I'll get started on slide four. With our financial results and company updates, the beat goes on. Our ongoing earnings for the first quarter are $0.41, exceeding expectations. We are affirming our guidance for 2024 at a range of $2.65 to $2.75. We're also affirming our long-term rate-based growth and earnings growth targets. Lisa will cover the financials in more detail. Sean will cover a number of operational updates at TNMP and PNM where we are making progress on our goals, and it has already been shaping up to be a busy year. Before I hand things off, I have one quick update. We closed the sale of NMRD in February and received the expected proceeds of $117 million. With that, I'll turn it over to Don.

Thank you, Pat, and good morning, everyone. Yes, it's shaping up to be a busy year for both Texas and New Mexico. I'll start with TMP on Slide 6. Growth in Texas continues to drive our business. Last week, ERCOT announced a new planning effort at its board of directors meeting. In response to the electric demand growth expected in the next five to seven years, ERCOT recognized that the forecast pace of load growth exceeds the pace of transmission capacity to support it. This reflects what we've been seeing in our service territory, particularly in West Texas in the premium basin where transmission has been working to catch up to demand for several years. Now, at the end of February, the ERCOT board approved a $100 million reliability project in our West Texas service territory. The project involves new construction and rebuilding of higher rated transmission lines along with a new substation. This is one of the larger individual projects in our capital investment plan. Construction of the new line requires a CCN approval from the commission. We expect to receive this approval in early 2025 and plan to put the project in service for customers in 2027. Looking ahead, our expectations for increased expansion in West Texas have been part of the ERCOT planning process. Last year's legislation for West Texas Transmission Planning called for updated assumptions, and these new projections are showing substantial growth beyond the level seen in previous studies, particularly for load that is not tied to oil and gas. ERCOT's final assessments are expected to be considered by the PUCT this summer and could result in additional projects needed in this part of our service territory. We do not have any incremental spending for this in our current investment plans, and we'll await the final ERCOT and PUCT assessments. Also, this summer, we expect to file our system resiliency plan during the third quarter. This plan will be based on an independent evaluator's assessment and will initially look forward three years to determine what is needed to ensure the reliability and resiliency of our grid with the potential for large system-wide investments. As a reminder, we have already included $450 million in our capital investment plans. When the assessment is complete and we make our filing, we'll adjust our capital plans to include any incremental amounts approved in the filing. Under the rules for these filings, depreciation for projects included in the plan may be deferred until recovery begins, eliminating the regulatory lag on these investments. Wildfire mitigation will also be a key piece of these plans. We have been increasing our spending for vegetation management as part of our mitigation plans over the last several years. Under the legislation, these increased expenses as well as other wildfire mitigation expenses can be recovered outside of a general rate case as part of an approved resiliency plan. Turning to slide seven, I'll cover updates for PNM. We've been working for some time on formalizing a public safety power shutoff plan for the higher wildfire risk areas in New Mexico. As we've neared completion on our plan, we've been holding community meetings in different parts of our service territory to discuss the mitigation plans and what we are already doing. We are working to create awareness and preparedness for this circumstance that would cause us to consider proactively turning off power and to build coordination with emergency management personnel, first responders, and tribal and community leaders in these areas. This is a topic that has been at the forefront of our industry, and we are participating in discussions at the statewide and regional levels along with national levels through EEI. We are focused on doing the right thing for the safety of our customers and taking steps to mitigate the risk associated with our infrastructure. We will file our plan with the New Mexico Public Regulatory Commission tomorrow. Another highlight at PNM is the integration of an additional 300 megawatt solar PPA in the first quarter, bringing our portfolio to 60% carbon-free as we integrate the solar and storage resources that have already been approved, including the 12 megawatts of distribution battery storage planned for this summer. We'll continue to move closer to our goal of carbon-free generation by 2040. As it relates to our participation in the Four Corners Coal Plant, we are not seeing a cost benefit to our customers by exiting the plant earlier than when our agreement expires in 2031. As a result, 6% of our current capacity is related to this plant, and we will retain those 200 megawatts until 2031. I also wanted to highlight some of the activities taking place at the New Mexico Commission. Over the last year with the new commission, we have increased the number of workshops and outside presentations on various topics tied to potential rulemaking and other important issues. Workshops are a helpful tool for the commission, utilities, and other stakeholders to engage on various topics. They help us understand how commissioners are seeing various issues, where they might have concerns, or how they want to address change. The topics have varied from items such as resource adequacy, reliability, metrics, grid modernization, distribution planning, and regional transmission planning. We appreciate the commission's leadership and direction on these workshops and the opportunity to engage with all stakeholders. Turning to Slide 8, I'll cover some regulatory updates at both utilities in Texas. Our first TCOS filing for the year has already been approved and was implemented in March, a $13 million increase recovery, nearly a hundred million of incremental transmission rate base. We plan to follow our typical schedule and make our second filing early in the third quarter. On the distribution side, our first DCRF for the year was filed at the beginning of April for an incremental $200 million of rate base. The amendment passed last year calls for a 60-day clock, although we've seen some other dockets running a little longer. We plan to make our second filing in the third quarter for rates effective before the end of the year. As I previously mentioned, we also plan to make our resiliency plan filing in the third quarter. At PNM, we have a couple of key proceedings already in progress with the commission that should reach decisions in the coming months. First, is our proposal for additional solar and battery resources. In 2026, we proposed a hundred megawatts of solar or PPAs, 250 megawatts of storage agreements, and 60 megawatts of utility-owned battery storage. We expect the decision on this case in the second quarter. Grid modernization is our other ongoing proceeding with the New Mexico Commission. Carried over from an initial filing in 2022, we were asked to provide a supplemental cost-benefit analysis, and hearings are wrapping up today. We expect a decision on this docket by the third quarter. Looking forward, we still plan to make our next retail rate filing in early June. Our filing will be based on a 13-month regulatory process for rates that would become effective in July of 2025, and reflect costs for a future test year running from July, 2025 through June of 2026. We are looking forward to working with parties on this filing, with some of the other more challenging legacy issues that have been part of the prior cases behind us. With that, Lisa, I'm going to turn it over to you to discuss the numbers.

Thank you, Don, and good morning, everyone. I'll start on Slide 10 with a summary of the key year-over-year changes in the first quarter earnings. Earnings per share in the first quarter of 2024 were $0.41, exceeding our expectations of $0.37 to $0.39. We saw great relief from the TCOS and DCRF mechanisms. Increased year-over-year earnings at TNMP. At TNMP, we implemented new retail rates in the first quarter. These rates were based on a 2024 future test year and incorporate our expected year-over-year cost increases, enabling us to earn our authorized return in 2024. Income from our PNM decommissioning and reclamation trust also increased. Load growth at PNM, primarily from industrial customers, increased year over year. This was offset by a return to normal weather compared to colder temperatures in the first quarter of 2023. PNM's transmission margins were unusually high in the first quarter of 2023 as a result of spikes in market power prices in January and February. A return to more normal pricing was the biggest driver of PNM's expected decrease in the first quarter. Depreciation and interest expense associated with new rate-based investments at both utilities reduced earnings. Turning to slide 11, I'll cover our guidance assumptions for the rest of the year. We are affirming our annual guidance range for 2024 of $2.65 to $2.75. As I mentioned, our first quarter earnings were a few cents ahead of expectations, and we have adjusted the quarterly earnings distribution to reflect these small movements. The third quarter continues to account for about half of our earnings as both utilities peak in the hot summer months. We have not made any changes to our capital investment plans or rate-based growth. On slide 12, we continue to expect 10% rate-based growth overall with TNMP growth leading the utilities at nearly 13%. As we work through regulatory filings at PNM and TNMP this summer, we will give consideration to any shifting between projects or growth in our investment needs. Turning to slide 13, we are also affirming our long-term earnings growth targets supported by our earnings power calculations shown here. The rate-based growth on the previous slide is shown in the PNM retail, FERC, and TNMP rose, and we have calculated EPS for each year using rate-based math, assuming our currently authorized return and our current shares outstanding. We have also included the modeling estimates of our financing plan, which includes the refinancing of current debt at the holding company and the issuance of new equity to support our strong rate-based growth. The $600 million hedges we have in place largely mitigate the potential risk of continued higher interest rates this year on the parent level term loans. We have talked about our plans to refinance the holding company debt with more permanent instruments that also provide equity credit, and we're continuing down this path. In terms of new equity, we continue to assume a total of $500 million or $100 million per year on average through 2028. Based on what we are seeing in the market, we remain confident in our earnings guidance for this year, along with our long-term earnings growth targets of 6% to 7%. With that, I'll turn it back over to Pat.

Thank you, Lisa. Before I open it up for questions, I want to thank our teams for their continued contributions to serving our customers. It takes a steady beat to deliver consistent, reliable power and excellent customer service, and our teams haven't missed a beat. Megan, let's open it up for questions.

Our first question comes from Ryan Levine with Citi.

What's the current amount of wildfire insurance that the company has in Texas and New Mexico? And are you able to share what the cost that you paid to procure that insurance and when it expires?

Ryan, we're actually right in the midst of renegotiating our insurance that will expire this summer. Giving kind of information publicly during that negotiating period probably isn't a good idea. So, we're not talking about that right now.

In the prepared remarks, there was mention of an opportunity to potentially increase vegetation management to the extent that that were to be supported. Any sense around the impact to O&M outlook in your plan as an effort to harden the system or reduce risk?

No, absolutely Ryan. Just a little bit of background. We've continuously increased our vegetation management, both in Texas and New Mexico over the last several years. The resiliency filing in Texas allows you to take any amount over your last rate case, and our last rate case was in the 2018 time period and be able to collect that through a rider along with whatever plans you would look at doing for additional vegetation management. So that will be part of our resiliency filing that we file in the third quarter.

And then any update around the CapEx opportunity for mobile generation or the legislative process or regulatory process to pursue that?

Let me hit a few of those legislative factors. Because I think they're important. DCRF, we've checked that box and we filed our first one and we'll look to file another one in the September timeframe. If you go to the system resiliency, we've talked about that, we plan to file that in the third quarter. As for mobile generation, we expect a proposed rule in June, but that will then take comments from all the different interveners and so forth. We expect a rule by the end of the year. So I'm not going to get in front of where that CapEx would come into, but we would expect that final rule at the end of the year. And then the West Texas planning, I talked a little bit about that, with ERCOT just releasing some pretty strong information about their expectations to file their plan with the PUCT in July. Then we’ll work through the process to see what comes out of that.

And then last question from me, in terms of some of the recent disclosure around new potential load in Texas that came out of ERCOT, are there any implications for your business?

No, absolutely. As we've talked before, one of the areas that we serve in Texas is kind of that West Texas area. And that's, if you look at the ERCOT presentation, I think one of the bullets stated they recommend transmission projects to meet large loads starting in the premium basin. And that's where we operate. I think we have to wait to see what comes out in July and then how the PUCT deals with it. But there are opportunities for incremental investments as you look at the load that's expected in that area.

This concludes our question-and-answer session. I would like to turn the conference back over to CEO, Pat Vincent-Collawn for any closing remarks.

Thank you, Megan. And thank you all for joining us this morning. Remember to take that left turn and come see us when you get to Albuquerque. Stay safe.

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.