TXNM Energy, Inc.

What they do

TXNM Energy operates two regulated electric utilities: PNM, a vertically integrated utility in New Mexico with generation, transmission, and distribution assets; and TNMP, a transmission and distribution utility in Texas serving retail electric providers. The company serves approximately 842,000 residential, commercial, and industrial customers across the two states. Its profitability depends on regulatory recovery of costs and earning a fair return on invested capital.

Revenue drivers

• PNM (New Mexico) — Vertically integrated utility earning revenue through regulated rates for generation, transmission, and distribution; recent rate relief from the 2025 Rate Request has improved earnings.
• TNMP (Texas) — Transmission and distribution utility earning revenue through regulated rates; recent base rate review approved recovery of $2.8 billion rate base with a 9.65% ROE.
• Retail Load Growth — Higher retail load at both PNM and TNMP, including new all-time system peaks, supports revenue growth.

Recent performance

In Q2 2026, TXNM reported GAAP net earnings of $71.3 million ($0.64 per diluted share), up from $21.6 million ($0.22) in Q2 2025. Ongoing earnings were $64.1 million ($0.58) versus $24.5 million ($0.25) a year ago. For the first half of 2026, GAAP EPS was $0.67 and ongoing EPS was $0.79. Annual 2025 revenue was $2.14 billion, net income $169.8 million, and operating cash flow $584.5 million. As of March 31, 2026, total assets were $12.14 billion and long-term debt was $5.11 billion.

Strategy

TXNM is pursuing the pending merger with Blackstone Infrastructure, expected to close in the first half of 2027, with the termination date extended to May 31, 2027. The company is investing heavily in grid infrastructure, projecting $10.2 billion in construction expenditures from 2026-2030 to support load growth and reliability. PNM filed a resource portfolio application for 2029-2032 including wind, solar, battery storage, and natural gas, while planning to exit Four Corners in 2031. Management focuses on earning authorized returns, achieving industry-average earnings growth with a 50-60% dividend payout ratio, and maintaining investment-grade credit.

Risks

• Regulatory recovery risk — Profitability depends on timely cost recovery and fair returns from NMPRC, PUCT, and FERC; disallowances could hurt results.
• Capital expenditure pressure — Projected $10.2 billion in construction (2026-2030) increases rate pressure and financing needs, with interest costs rising.
• Merger completion risk — The acquisition by Blackstone Infrastructure is subject to remaining approvals (NMPRC, NRC) and could fail to close, causing uncertainty.
• Demand and environmental pressures — Energy efficiency, alternative power, and climate change regulations could reduce customer usage and increase compliance costs.

Outlook

Management expects the merger with Blackstone Infrastructure to close in the first half of 2027, subject to remaining regulatory approvals. PNM projects resource shortfalls from 2029, driven by load growth and Four Corners exit, and has filed for a balanced resource portfolio. TNMP's rate case settlement, approved on July 30, 2026, provides interim rates retroactive to May 22, 2026, with final rates effective September 13, 2026.