Customer Base and Service Area - TXNM serves approximately 842,000 customers across New Mexico and Texas through its regulated utilities, PNM and TNMP[22]. - As of December 31, 2025, TXNM had a total of 1,755 employees, with PNM having 870 employees and TNMP having 445 employees[92]. - TXNM serves approximately 842,000 residential, commercial, and industrial customers in New Mexico and Texas[200]. Financial Performance and Investments - TXNM is projecting total construction expenditures of $10.2 billion for the years 2026-2030, which includes costs for generation, transmission, and distribution systems[100]. - TXNM invested $2.4 billion in utility plants during 2024 and 2025, focusing on transmission and distribution systems to support growing demand and enhance grid reliability[214]. - PNM's general increase in retail electric rates approved by NMPRC includes a $105.0 million increase in retail revenues, effective in two phases starting July 1, 2025[51]. - PNM's largest retail electric customer accounted for 5.4% of its retail electric revenues for the year ended December 31, 2025[47]. - TXNM's proposed merger with Blackstone Infrastructure will convert each share of TXNM common stock into $61.25 in cash, with expected closure in the second half of 2026[27][28]. Rate Adjustments and Regulatory Filings - TNMP experienced a 2.8% increase in weather-normalized retail load and a 5.3% increase in weather-normalized demand-based load in 2025 compared to 2024[42]. - TNMP filed a Base Rate Review requesting recovery of $2.8 billion of rate base and a return on equity of 10.4%[46]. - TNMP filed its Base Rate Review in November 2025, requesting recovery of $2.8 billion of rate base as of June 30, 2025, with a requested ROE of 10.4% and a 47.54% equity ratio[102]. Renewable Energy and Environmental Initiatives - PNM's renewable energy capacity includes 2,412 MW from renewable resources, accounting for 51.0% of total generation capacity as of December 31, 2025[59]. - PNM's generation from wind and solar resources (including PPAs) constituted 57% of total generation in 2025, with no fuel costs associated[73]. - The New Mexico Public Regulation Commission (NMPRC) has approved plans for PNM to procure additional energy resources, which are expected to increase renewable generation capacity to 49.8% and energy storage to 26.0% by 2028[62]. - PNM aims to achieve a carbon-free generating portfolio by 2040 and plans to be coal-free by 2031, balancing reliability and cost considerations[219]. Cybersecurity and Compliance - The Company views cybersecurity as a "tier 1" risk and has implemented a robust Cybersecurity Program to manage material risks[174]. - The Cybersecurity Program includes regular assessments through third-party audits and penetration tests to enhance data privacy controls[176]. - The Company has a significant focus on compliance with federal reliability standards and critical infrastructure protection[175]. Operational Challenges and Risks - The Company is subject to regulatory risks that could negatively impact liquidity and results of operations if timely cost recovery is not authorized[99]. - The company faces risks from cybersecurity threats that could disrupt operations and compromise sensitive data, potentially affecting service delivery[122]. - Environmental compliance costs and liabilities may be underestimated, leading to financial strain due to regulatory uncertainties[109]. - The company faces potential lawsuits challenging the proposed Merger, which could delay or prevent its completion[150]. Customer Satisfaction and Community Support - In 2025, PNM provided emergency assistance to 6,509 families through the PNM Good Neighbor Fund, addressing energy affordability for low-income households[218]. - TNMP improved customer satisfaction related to power outages by enhancing its outage map information system and introducing multi-channel outage alerts[217]. - PNM's Grid Modernization Plan includes installing smart meters in low-income areas to promote energy equity and improve affordability[220]. Mergers and Acquisitions - The proposed merger with Blackstone Infrastructure is subject to regulatory approvals, and there is no assurance of completion[144]. - TXNM expects to incur substantial transaction fees and costs related to the proposed merger, regardless of its completion[147]. - TXNM has filed applications for regulatory approval of the Merger with the NMPRC, with the expected closing in the second half of 2026[202].

Financial Performance - TXNM Energy reported GAAP net earnings of $151.4 million for 2025, down from $242.2 million in 2024, representing a decrease of 37.5%[2] - The GAAP diluted EPS for 2025 was $1.48, compared to $2.67 in 2024, reflecting a decline of 44.7%[2] - Ongoing net earnings for 2025 were $238.9 million, slightly down from $247.8 million in 2024, a decrease of 3.6%[2] - Ongoing diluted EPS for 2025 was $2.33, down from $2.74 in 2024, a decline of 15%[2] - GAAP Net Earnings attributable to TXNM for the year ended December 31, 2025, was $151.36 million, compared to $242.15 million in 2024, reflecting a decrease of 37.5%[35] - Electric Operating Revenues for the year ended December 31, 2025, increased to $2.17 billion, up 9.8% from $1.97 billion in 2024[35] - Total Operating Expenses for 2025 were $1.72 billion, an increase of 13.6% from $1.52 billion in 2024[35] - Operating income for the year ended December 31, 2025, was $441.18 million, a decrease of 2.9% from $453.49 million in 2024[35] - Interest Charges for 2025 were $271.52 million, compared to $228.07 million in 2024, indicating an increase of 19.1%[35] Regulatory and Project Developments - TXNM Energy's proposed transaction with Blackstone Infrastructure is progressing through regulatory approvals, with a share price of $61.25 per share agreed upon[6][7] - TNMP filed a general rate proceeding requesting recovery of $2.8 billion of rate base, with a proposed return on equity of 10.4%[10] - PNM filed for approval of two economic development projects at an estimated cost of $165.5 million, related to New Mexico Senate Bill 170[11] - PNM also filed for a new 345 kV transmission line project estimated at $247 million to enhance reliability and support renewable energy integration[12] - TXNM Energy anticipates the acquisition closing in the second half of 2026, pending regulatory approvals[8] Earnings Adjustments and Costs - GAAP Net Earnings attributable to TXNM for Q4 2025 were $(9,847) thousand, while ongoing earnings were $53,472 thousand[26] - Total adjustments before income tax effects for Q4 2025 amounted to $81,182 thousand, with a net income tax impact of $(17,863) thousand[26] - The ongoing earnings for Q4 2024 were $27,184 thousand, compared to GAAP Net Earnings of $15,714 thousand[29] - For the year ended December 31, 2024, GAAP Net Earnings attributable to TXNM were $242,154 thousand, with ongoing earnings of $247,819 thousand[29] - Adjusting items before income tax effects for the year ended December 31, 2024 totaled $26,160 thousand, with a total income tax impact of $(20,495) thousand[29] - Merger-related costs for Q4 2025 were $8,009 thousand, contributing to total adjustments[26] - Regulatory settlements contributed $3,500 thousand to adjustments in Q4 2025[26] - The company reported a pension expense and settlement charge related to previously disposed of gas distribution business, impacting ongoing earnings[29] Investment and Securities - The net change in unrealized gains/losses on investment securities for Q4 2025 was $9,757 thousand[26] - The company reported a net change in unrealized gains on investment securities of $0.07 per diluted share for Q4 2025[31] - Regulatory settlements contributed $0.02 per diluted share to earnings in Q4 2025[31] Energy Costs - The cost of energy for 2025 was $716.01 million, up from $583.98 million in 2024, reflecting a 22.6% increase[35] - Average Diluted Shares Outstanding for the year ended December 31, 2025, was 102,392,046, compared to 90,590,573 in 2024, representing an increase of 12.9%[33]

Financial Performance - TXNM Energy reported GAAP net earnings of $151.4 million for 2025, a decrease from $242.2 million in 2024, resulting in a GAAP diluted EPS of $1.48 compared to $2.67 in the previous year [1][9] - Ongoing net earnings for 2025 were $238.9 million, down from $247.8 million in 2024, with ongoing diluted EPS at $2.33, down from $2.74 [1][9] - The decrease in earnings was attributed to shares issued as part of forward sales agreements and other costs related to the planned transaction with Blackstone Infrastructure [11][12] Transaction with Blackstone Infrastructure - TXNM Energy announced an agreement on May 19, 2025, for Blackstone Infrastructure to acquire its outstanding common stock at $61.25 per share [3] - Shareholders approved the transaction on August 28, 2025, and regulatory approvals have been received from the Federal Energy Regulatory Commission and the Public Utility Commission of Texas [4] - The acquisition is expected to close in the second half of 2026, pending additional regulatory approvals [5] Regulatory Updates - Texas New Mexico Power (TNMP) filed a general rate proceeding with the PUCT, requesting recovery of $2.8 billion of rate base and a return on equity of 10.4% [6] - Public Service Company of New Mexico (PNM) filed applications for two economic development projects and a new transmission line, with estimated costs of $165.5 million and $247 million, respectively [7][8] Segment Reporting - In 2025, PNM's GAAP diluted EPS was $0.85, down from $2.12 in 2024, while TNMP's GAAP diluted EPS increased to $1.21 from $1.14 [11] - Corporate and Other segment reported a GAAP loss of $0.58 per share, slightly improved from a loss of $0.59 in 2024 [11] Future Outlook - TXNM Energy's CEO emphasized the importance of the proposed transaction with Blackstone Infrastructure for supporting growth and transitioning to clean energy in New Mexico [2] - PNM initiated its 2026 Integrated Resource Plan process, which will cover a 20-year planning period from 2026 to 2046 [10]

Core Viewpoint - TXNM Energy has received approval from the U.S. Federal Energy Regulatory Commission (FERC) for its acquisition by Blackstone Infrastructure in an $11.5 billion deal, which includes debt [1]. Group 1: Acquisition Details - The acquisition deal is valued at $11.5 billion, which encompasses both equity and debt components [1]. - FERC determined that the transaction would not impair state or federal regulation and would not adversely affect rates [1]. Group 2: Regulatory Approval - The waiting period under the Hart-Scott-Rodino Antitrust Improvements Act has expired, allowing the transaction to proceed [1].

Core Viewpoint - The Federal Energy Regulatory Commission (FERC) has authorized the acquisition of TXNM Energy by Blackstone Infrastructure, determining that the transaction aligns with public interest and does not negatively impact competition or rates [1]. Regulatory Approvals - FERC's order indicates no evidence that state or federal regulations will be impaired by the acquisition [1] - The acquisition has received approval from the Federal Communications Commission (FCC) and the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act has expired [1] - The Public Utility Commission of Texas (PUCT) approved a settlement for the acquisition earlier this month [1] Shareholder Support - TXNM Energy shareholders overwhelmingly approved the merger in August 2025 [1] Company Background - TXNM Energy, based in Albuquerque, New Mexico, serves over 800,000 homes and businesses in Texas and New Mexico through its regulated utilities, TNMP and PNM [1]

Core Insights - TXNM Energy has a 2.8% dividend yield, but its sustainability is questioned due to negative free cash flow and reliance on debt for dividend payments [1][2] Dividend Profile - TXNM Energy paid $140.3 million in dividends in 2024, with a quarterly payout increase from $0.4075 to $0.4225, marking a 3.7% rise [1] - The company has a 27-year history of uninterrupted dividend payments, with a total growth of 92% in dividends from $0.22 in 2016 to $0.4225 in early 2026, reflecting a compound annual growth rate of approximately 6.8% [1] - The current stock price of $59.39 results in an annualized dividend of $1.63, yielding 2.76%, slightly above the Utilities Select Sector SPDR ETF's yield of 2.75% [1] Cash Flow Issues - TXNM generated $508.2 million in operating cash flow in 2024 but had negative free cash flow of $738.9 million due to $1.25 billion in capital expenditures [1] - The company has consistently reported negative free cash flow from 2019 to 2024, with a free cash flow coverage ratio of only 0.19x for dividends [1] - Capital expenditures have increased significantly, from 122% of operating cash flow in 2019 to 245% in 2024, driven by infrastructure investments [1] Earnings Quality - TXNM reported a net income of $242.7 million in 2024, a 174.6% increase from $88.3 million in 2023, with net margin improving from 4.6% to 12.3% [1] - The payout ratio based on Q4 2025's GAAP EPS of $1.22 exceeds 133%, indicating a troubling reliance on earnings for dividend payments [1] - Interest expenses rose to $228.1 million in 2024, consuming 11.6% of revenue, which competes with dividend payments for available cash [1] Acquisition Context - TXNM is undergoing a $11.5 billion acquisition by Blackstone, pending regulatory approvals, which could impact dividend policies post-acquisition [1][2] - The acquisition has received shareholder and state regulatory approval, but federal approvals are still pending, creating uncertainty for investors [1] Balance Sheet Strength - TXNM's shareholders' equity increased by 28.76% year-over-year to $3.18 billion, with total assets reaching $11.68 billion, up 7.67% [2] - The debt-to-equity ratio stands at approximately 2.66x, which is manageable for regulated utilities given their predictable cash flows [2] Total Return Performance - TXNM shares have appreciated by 22.03% over the past year, with five-year and ten-year returns of 43.19% and 150.11%, respectively, indicating strong capital gains [2] - The price performance reflects optimism about growth prospects in Texas, driven by demographic growth and electricity demand [2] Conclusion - While TXNM has a strong historical dividend payment record, current financial challenges raise concerns about the sustainability of its dividend, particularly given its reliance on external financing and negative free cash flow [2]

Core Viewpoint - The Public Utility Commission of Texas has approved the acquisition of TXNM Energy by Blackstone Infrastructure, confirming that the acquisition is in the public interest [2][4]. Group 1: Acquisition Details - The settlement includes $45 million in rate credits to customers, strong governance and local oversight, dividend restrictions, financial protections, and commitments to Texas communities [2][3]. - TXNM Energy shareholders overwhelmingly approved the merger in August 2025, and the acquisition has received federal regulatory approval from the FCC [4][5]. Group 2: Regulatory Approvals - The merger requires additional federal approval from the FERC and the Nuclear Regulatory Commission, as well as state approval from the New Mexico Public Regulation Commission [5]. - The waiting period under the Hart-Scott-Rodino Antitrust Improvements Act has expired, allowing the acquisition process to move forward [4]. Group 3: Company Background - TXNM Energy, based in Albuquerque, New Mexico, delivers energy to over 800,000 homes and businesses across Texas and New Mexico through its regulated utilities, TNMP and PNM [6].

Company Overview - TXNM Energy has a market capitalization of $6.42 billion, with a revenue of $2.11 billion and a net income of $176.92 million for the trailing twelve months [5] - The company operates a regulated utility business model, providing electricity generation, transmission, and distribution services primarily in New Mexico and Texas [8] - TXNM Energy serves a diversified customer base, including residential, commercial, and industrial users, and leverages a diverse energy mix, including renewables, to ensure reliable service and stable cash flows [9] Recent Developments - Athos Capital disclosed a new position in TXNM Energy, acquiring 142,842 shares valued at $8.08 million, which represents approximately 5.06% of the fund's reportable U.S. equity assets [2][3][6] - As of the latest filing, TXNM Energy shares were priced at $58.92, reflecting a 23% increase over the past year, outperforming the S&P 500, which rose by 16% in the same period [4] Financial Performance - TXNM Energy reported third-quarter GAAP earnings of $1.22 per share, with ongoing earnings of $1.33, supported by approved rate increases in New Mexico and transmission recovery in Texas [11] - The company is investing heavily in grid infrastructure and energy storage, including a $78 million battery project linked to existing solar assets [11] Market Position and Outlook - TXNM Energy is undergoing a pending acquisition by Blackstone Infrastructure at a price of $61.25 per share, which may cap the upside potential for investors [10] - The company is not reaffirming its 2025 guidance while the acquisition transaction is pending, and regulatory approvals could extend into late 2026 [11]

Core Viewpoint - Texas-New Mexico Power Company (TNMP) and Blackstone Infrastructure have reached a unanimous settlement for Blackstone to acquire TXNM Energy, pending approval from the Public Utility Commission of Texas (PUCT) [1][3] Settlement Details - The settlement includes a $45.5 million rate credit to customers over 48 months following the transaction's closing, demonstrating TNMP's commitment to delivering value [6] - The Board of Directors will consist of seven members, including three disinterested directors, ensuring governance aligns with the interests of TNMP and its customers [6] - TNMP will maintain financial protections, including no acquisition-related debt and restrictions on dividend payments [6] - TNMP's headquarters will remain in Texas, and there will be no involuntary workforce reductions or wage cuts for at least three years post-closing [6] - TNMP will not seek recovery of transaction-related costs in customer rates and will continue to operate under PUCT jurisdiction [6] Background Information - TXNM Energy is an energy holding company serving over 800,000 homes and businesses in Texas and New Mexico through its regulated utilities, TNMP and PNM [4]

Core Points - TXNM Energy, Inc. has announced a 3.7% increase in its annual dividend payment, raising it by $0.06 to an indicated annual rate of $1.69 per share [1][2] - The increase reflects the company's ongoing dividend growth strategy, supported by underlying earnings growth and increased capital investment plans [2] - The board declared a quarterly stock dividend of $0.4225 per share, payable on February 13, 2026, to shareholders of record by January 30, 2026 [3] Company Background - TXNM Energy is an energy holding company based in Albuquerque, New Mexico, providing energy to over 800,000 homes and businesses across Texas and New Mexico through its regulated utilities, TNMP and PNM [3]