Company sets 2021 guidance of $2.15-$2.35 EPS and adjusted EPS
Sustainable business model drives growth through ESG+F framework
Financial outlook of 6-8% EPS and adjusted EPS compound annual growth rate (CAGR) for 2020-2025 including PNM Resources; merger expected to close in the fourth quarter of 2021
Over $20B capital spending through 2025 in regulated and contracted businesses
AVANGRID, Inc. (NYSE: AGR), a leading sustainable energy company, will hold its first virtual investor day from its Corporate Headquarters in Orange, Connecticut on November 5, 2020 at 1:00 p.m. Eastern Time. The executive team will provide the investment community with its 2021 earnings guidance as well as details on the Company’s long-term strategic platform and financial outlook through 2025, including the previously announced merger with PNM Resources. The company will outline its sustainable business model for building a leading clean energy company based on an ESG+F (Environment, Social, Governance and Financial performance) framework that will drive growth and enable strategic investments and innovation.
"AVANGRID is leading the transition to a prosperous clean energy future. We are focused on developing energy solutions to transform and enhance the economic, social and environmental value we deliver to our customers, employees, partners and shareholders," said AVANGRID CEO Dennis V. Arriola.
Arriola continued, "Enabled by our strong financial position, we will expand both our Networks and Renewables businesses by investing in new, cleaner energy technologies, pioneering the offshore wind industry in the US, and growing our footprint through our recently announced agreement to merge with PNM Resources."
The company will provide details at its Investor Day on its 2021 earnings guidance of $2.15-$2.35 per share and a long-term outlook to deliver 6-8% annual EPS and adjusted EPS growth between 2020 and 2025. In addition, the company plans to invest over $20 billion in regulated and contracted investments, including $4.3 billion associated with the merger of PNM Resources. The company’s 2021 guidance excludes PNM Resources and the impacts of the pending merger and related transaction costs.
Full access to the AVANGRID Investor Day presentations and broadcast will be available in the Investors’ section on the company’s website at avangrid.com.
About AVANGRID: AVANGRID, Inc. (NYSE: AGR) is a leading, sustainable energy company with approximately $36 billion in assets and operations in 24 U.S. states. With headquarters in Orange, Connecticut, AVANGRID has two primary lines of business: Avangrid Networks and Avangrid Renewables. Avangrid Networks owns eight electric and natural gas utilities, serving more than 3.3 million customers in New York and New England. Avangrid Renewables owns and operates a portfolio of renewable energy generation facilities across the United States. AVANGRID employs approximately 6,600 people. AVANGRID supports the U.N.’s Sustainable Development Goals and was named among the World’s Most Ethical Companies in 2019 and 2020 by the Ethisphere Institute. For more information, visit www.avangrid.com.
About PNM Resources: PNM Resources (NYSE: PNM) is an energy holding company based in Albuquerque, NM, with 2019 consolidated operating revenues of $1.5 billion. Through its regulated utilities, PNM and TNMP, PNM Resources has approximately 2,811 megawatts of generation capacity and provides electricity to approximately 790,000 homes and businesses in New Mexico and Texas. For more information, visit the company's website at www.PNMResources.com.
FORWARD LOOKING STATEMENTS
Certain statements in this presentation may relate to our future business and financial performance and future events or developments involving us and our subsidiaries that are not purely historical and may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of forward-looking terms such as "may," "will," "should," "would," "could," "can," "expect(s)," "believe(s)," "anticipate(s)," "intend(s)," "plan(s)," "estimate(s)," "project(s)," "assume(s)," "guide(s)," "target(s)," "forecast(s)," "outlook(s)", "predicts", "are (is) confident that" and "seek(s)" or the negative of such terms or other variations on such terms or comparable terminology. Such forward-looking statements include, but are not limited to, statements about our plans, objectives and intentions, outlooks or expectations for earnings, revenues, expenses or other future financial or business performance, strategies or expectations, or the impact of legal or regulatory matters on business, results of operations or financial condition of the business and other statements that are not historical facts. Such statements are based upon the current reasonable beliefs, expectations, and assumptions of our management and are subject to significant risks and uncertainties that could cause actual outcomes and results to differ materially. Important factors are discussed and should be reviewed in our Form 10-K and other subsequent filings with the SEC. Specifically, forward-looking statements include, without limitation: the future financial performance, anticipated liquidity and capital expenditures, actions or inactions of local, state or federal regulatory agencies, success in retaining or recruiting our officers, key employees or directors, changes in levels or timing of capital expenditures, adverse developments in general market, business, economic, labor, regulatory and political conditions, fluctuations in weather patterns, technological developments, the impact of any cyber breaches or other incidents, grid disturbances, acts of war or terrorism, civil or social unrest, natural disasters, pandemic health events or other similar occurrences, the impact of any change to applicable laws and regulations affecting operations, including those relating to the environment and climate change, taxes, price controls, regulatory approval and permitting, the implementation of changes in accounting standards; and other presently unknown unforeseen factors.
Should one or more of these risks or uncertainties materialize, or should any of the underlying assumptions prove incorrect, actual results may vary in material respects from those expressed or implied by these forward-looking statements. The information in this presentation was prepared as of November 5, 2020. You should not place undue reliance on these forward-looking statements. We do not undertake any obligation to update or revise any forward-looking statements to reflect events or circumstances after the date of this report, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. Other risk factors are detailed from time to time in our reports filed with the SEC, and we encourage you to consult such disclosures.
This presentation shall not constitute an offer to sell or the solicitation of an offer to buy securities. Any offers, solicitations or offers to buy, or any sales of securities will be made in accordance with the requirements of the Securities Act of 1933, as amended. This document is not intended for use in connection with any sale, offer to sell, or solicitation of any offer to buy securities.
USE OF NON-U.S. GAAP FINANCIAL MEASURES
To supplement our consolidated financial statements presented in accordance with GAAP, we consider cash from operations pre-working capital, total debt, adjusted net income and adjusted earnings per share, or adjusted EPS, as non-GAAP financial measures that are not prepared in accordance with GAAP. The non-GAAP financial measures we use are specific to AVANGRID and the non-GAAP financial measures of other companies may not be calculated in the same manner. We use these non-GAAP financial measures, in addition to GAAP measures, to establish operating budgets and operational goals to manage and monitor our business, evaluate our operating and financial performance and to compare such performance to prior periods and to the performance of our competitors. We believe that presenting such non-GAAP financial measures is useful because such measures can be used to analyze and compare profitability between companies and industries by eliminating the impact of certain non-cash charges. In addition, we present non-GAAP financial measures because we believe that they and other similar measures are widely used by certain investors, securities analysts and other interested parties as supplemental measures of performance.
We define adjusted net income as net income adjusted to exclude restructuring charges, mark-to-market earnings from changes in the fair value of derivative instruments used by AVANGRID to economically hedge market price fluctuations in related underlying physical transactions for the purchase and sale of electricity, accelerated depreciation derived from repowering of wind farms, and the impact of the global coronavirus (COVID-19) pandemic. We believe adjusted net income is more useful in understanding and evaluating actual and projected financial performance and contribution of AVANGRID core lines of business and to more fully compare and explain our results. The most directly comparable GAAP measure to adjusted net income is net income. We also define adjusted earnings per share, or adjusted EPS, as adjusted net income converted to an earnings per share amount. Cash from operations pre-working capital is defined as cash flow from operations plus changes in working capital and changes in other current assets and liabilities, plus employer pension costs, net of service costs and depreciation on operating leases, less capitalized interest. The most directly comparable GAAP measure to cash from operations pre- working capital is cash from operations. Total debt is defined as short-term debt plus long term debt adjusted to add pension liabilities, operating leases and unamortized debt. The most directly comparable GAAP measure to total debt is long-term debt.
In addition, we have presented certain financial information that reflects the consummation of the pending merger of AVANGRID with PNM Resources to supplement evaluation of AVANGRID and its ongoing operations. Combined information combines the results of PNM Resources with AVANGRID as if the merger had occurred on the last day of 2021. All combined information included in this presentation is unaudited and not prepared in accordance with GAAP or Article 11 of Regulation S-X.
The use of non-GAAP financial measures is not intended to be considered in isolation or as a substitute for, or superior to, AVANGRID’s GAAP financial information, and investors are cautioned that the non-GAAP financial measures are limited in their usefulness, may be unique to AVANGRID, and should be considered only as a supplement to AVANGRID’s GAAP financial measures. The non-GAAP financial measures may not be comparable to other similarly titled measures of other companies and have limitations as analytical tools.
Non-GAAP financial measures are not primary measurements of our performance under GAAP and should not be considered as alternatives to operating income, net income or any other performance measures determined in accordance with GAAP.
We use the following non-GAAP metrics for completed periods in our presentation, which are reconciled to their closest GAAP financial measure in the Appendix: cash from operations pre-working capital, total debt, adjusted net income and adjusted EPS. For projection purposes, there is no difference between net income and adjusted net income and EPS and adjusted EPS.
Investors and others should note that AVANGRID routinely posts important information on its website and considers the Investor Relations section, www.avangrid.com/wps/portal/avangrid/Investors, a channel of distribution.
GUIDANCE AND FINANCIAL OUTLOOK
The guidance and financial outlook information included in this presentation includes forward-looking non-GAAP financial measures, which management uses in measuring performance. However, we are not able to reconcile non-GAAP information for incomplete or future periods to the corresponding GAAP measure without unreasonable efforts, due to the unavailability of, and our inability to reliably forecast, certain of the underlying amounts and because it is not possible to predict with a reasonable degree of certainty the actual impact of various items through those periods, including: the exact timing and amount of acquisitions, divestitures, capital expenditures and/or structural changes; and the exact timing and amount of comparability items throughout 2020 or future periods. The unavailable information and variability of any underlying items could have a significant impact on GAAP financial results for 2020 and future periods.
This presentation includes certain information relating to our pending merger with PNM Resources, including forward-looking information. In addition, certain of the guidance and other projections included herein include, among other matters, projected results for Avangrid after giving effect to its merger with PMN Resources, anticipated investments and capital expenditures, as well as other potential unidentified acquisitions and transactions. The merger with PNM Resources is subject to PNM Resources shareholder approval, regulatory approvals from the New Mexico Public Regulation Commission, Public Utility Commission of Texas, Federal Energy Regulatory Commission, Department of Justice (Hart Scott-Rodino Clearance), Nuclear Regulatory Commission, Federal Communications Commission and Committee on Foreign Investment in the United States, and other customary closing conditions. The transaction is expected to close between October and December 2021. As noted herein, we have included herein certain guidance and other projections for PNM Resources based on their prior presentations and their inclusion herein does not constitute the reaffirmation of such guidance and other projections as of the date of this presentation. In addition, as noted herein we have created and included herein certain guidance and other projections for PNM Resources for certain future periods, and for Avangrid after giving effect to the merger with PNM Resources, that have not been created or confirmed by PNM Resources or its representatives.
The proposed business combination transaction between PNMR and Avangrid will be submitted to the shareholders of PNMR for their consideration. PNMR will file a proxy statement and other documents with the SEC regarding the proposed business combination transaction. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE PROXY STATEMENT AND ANY OTHER RELEVANT DOCUMENTS THAT WILL BE FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. You may obtain copies of all documents filed with the SEC regarding this transaction, free of charge, at the SEC’s website (www.sec.gov).
Avangrid, Inc., PNM and certain of their respective directors, executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies from PNM’s shareholders in connection with the transactions presented in this presentation. Information regarding the persons who may, under the rules of the SEC, be deemed participants in the solicitation of PNM’s shareholders in connection with the transactions presented in this presentation will be set forth in the Proxy Statement when it is filed with the SEC. Additional information about Avangrid Inc.’s executive officers and directors and PNM’s executive officers and directors can be found in the Proxy Statement when it becomes available.
This press release is not, and shall not be deemed to be, an offer to sell or a solicitation of an offer to buy any interest or securities of any person, or an offer to enter into any transaction. Accordingly, neither Avangrid nor any other member of the Avangrid group will be under any legal or other obligation of any kind whatsoever to negotiate or consummate any transaction, and neither the recipient hereof nor any of its affiliates or other persons shall have any claim whatsoever against the Avangrid group (or any of its directors, officers, owners or affiliates) arising out of or relating to \the information contained herein.
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