TXNM Energy Inc. 10-Q Summary: Period Ended June 30, 2026
Business Context and Reporting Period
This Form 10-Q covers the quarterly and six-month periods ended June 30, 2026, for TXNM Energy, Inc. (TXNM) and its subsidiaries: Public Service Company of New Mexico (PNM) and Texas-New Mexico Power Company (TNMP). TXNM is a holding company for two regulated electric utilities serving approximately 846,000 customers in New Mexico and Texas. The filing highlights a pending merger with an affiliate of Blackstone Infrastructure, expected to close in the first half of 2027, subject to regulatory approvals.
Key Financial Metrics (Six Months Ended June 30, 2026)
| Metric | 2026 (YTD) | 2025 (YTD) | Change |
|---|---|---|---|
| Electric Operating Revenues | $1,053.5 million | $985.2 million | +6.9% |
| Operating Income | $200.3 million | $144.6 million | +38.5% |
| Net Earnings Attributable to TXNM | $75.0 million | $30.5 million | +145.9% |
| Diluted EPS | $0.67 | $0.32 | +109.4% |
| Operating Cash Flow | $223.0 million | $144.8 million | +54.0% |
| Investing Cash Flow | ($581.0 million) | ($611.3 million) | -4.9% |
| Financing Cash Flow | $353.0 million | $481.9 million | -26.8% |
| Total Debt (Long-term + Current) | $5.9 billion | $5.6 billion | +5.4% |
| Capitalization (Debt/Equity) | 60.3% / 39.6% | 61.3% / 38.5% | - |
Material Changes vs. Prior Period
- Revenue Growth: Driven by higher transmission and distribution rates at TNMP, revenue impacts from Texas House Bill 5247, and rate increases approved in PNM's 2025 Rate Request.
- Earnings Surge: Net earnings attributable to TXNM more than doubled, primarily due to increased utility margins at both PNM and TNMP, offset partially by higher depreciation, property taxes, and interest expenses.
- Investment Performance: Gains on investment securities decreased compared to the prior year due to lower performance in the Nuclear Decommissioning Trust (NDT) and coal mine reclamation trusts.
- Capital Expenditures: Utility plant additions totaled $577.6 million, reflecting continued investment in grid modernization, transmission, and distribution infrastructure.
Guidance, Outlook, and Material Events
- Merger Status: TXNM is in the process of merging with a Blackstone Infrastructure affiliate. While FERC and PUCT approvals have been secured, the New Mexico Public Regulation Commission (NMPRC) issued a Final Order in July 2026 finding that a $400 million stock purchase made in May 2025 violated the Public Utility Act. TXNM has filed a compliance plan to unwind this transaction, which may delay the merger closing.
- Regulatory Matters:
- TNMP: Settled its Base Rate Review with the PUCT, recovering $2.8 billion of rate base with a 9.65% Return on Equity (ROE).
- PNM: Filed its 2029-2032 Resource Portfolio Application seeking approval for 1,650 MW of new resources and the exit from Four Corners in 2031.
- Capital Requirements: Projected total capital requirements (construction and dividends) for 2026-2030 are $11.1 billion. The company maintains investment-grade credit ratings (S&P BBB, Moody's Baa3) and expects to meet liquidity needs through operations and existing credit facilities.
- Climate & Environment: PNM remains committed to a 100% carbon-free portfolio by 2040. The company is navigating evolving federal regulations regarding greenhouse gas emissions and the New Mexico Energy Transition Act (ETA).
Investor Verification Checklist
- Merger Unwinding: Verify the NMPRC's acceptance of the compliance plan to unwind the May 2025 stock purchase and the potential impact on the merger closing timeline.
- Rate Case Outcomes: Monitor the final approval of PNM's 2029-2032 Resource Portfolio Application and the implementation of TNMP's new base rates.
- Investment Trust Performance: Review the volatility and performance of the NDT and coal mine reclamation trusts, which significantly impact "Other Income" and net earnings.
- Debt Maturities: Confirm the refinancing strategy for debt maturing in late 2026 and 2027, including the $100.3 million PCRBs and term loans.
- Regulatory Compliance: Assess the financial impact of the NMPRC penalty and the costs associated with unwinding the voided stock transaction.