Financial Performance - Electric operating revenues for the three months ended September 30, 2024, were $647.162 million, an increase from $569.256 million in the same period of 2025, representing a growth of approximately 13.7%[18] - Net earnings attributable to TXNM for the three months ended September 30, 2024, were $130.710 million, slightly down from $131.202 million in 2025, indicating a decrease of approximately 0.4%[18] - The diluted earnings per share for the three months ended September 30, 2024, was $1.22, compared to $1.45 in the same period of 2025, showing a decline of about 15.9%[18] - Net earnings for the three months ended September 30, 2025, were $136,304, compared to $136,398 for the same period in 2024, reflecting a slight decrease of 0.07%[21] - For the nine months ended September 30, 2025, net earnings were $175,114, down 26.6% from $238,728 in 2024[21] - Comprehensive income attributable to TXNM for the three months ended September 30, 2025, was $132,349, an increase of 3.9% from $127,703 in 2024[21] Operating Expenses - Total operating expenses for the nine months ended September 30, 2024, were $1.284914 billion, compared to $1.116882 billion in 2025, reflecting an increase of about 15.1%[18] - Total operating expenses for Q3 2025 were $328,319,000, up 20.5% from $272,510,000 in Q3 2024[36] - Total operating expenses for the three months ended September 30, 2025, amounted to $444,292 thousand, with significant costs in administrative and general expenses totaling $59,900 thousand[88] Dividends - The company declared dividends of $0.4075 per common share for the three months ended September 30, 2024, up from $0.3875 in 2025, marking an increase of approximately 5.5%[18] - The company declared dividends of $0.4075 per share for the third quarter of 2025, an increase from $0.3875 per share in the same quarter of 2024[75] Interest Charges - Interest charges for the nine months ended September 30, 2024, totaled $205.713 million, compared to $169.254 million in 2025, representing an increase of about 21.5%[18] - Interest Charges for Q3 2025 were $33,805,000, an increase from $27,852,000 in Q3 2024, representing a rise of 21.9%[36] - Interest charges for the nine months ended September 30, 2025, were $66,018,000, up from $43,711,000 in 2024, representing an increase of 51.1%[57] Cash Flow and Assets - Cash flows from operating activities for the nine months ended September 30, 2025, were $426,790, an increase of 22.1% compared to $349,521 in 2024[23] - Total current assets as of September 30, 2025, were $595,436, up 19.4% from $498,836 at the end of 2024[29] - Cash, cash equivalents, and restricted cash at the end of the period were $39,984, up from $16,436 at the end of 2024, representing a growth of 143.5%[26] - Total current assets rose to $454,383,000 as of September 30, 2025, up from $410,908,000 at the end of 2024, reflecting an increase of approximately 10.6%[48] Debt and Liabilities - Long-term borrowings increased significantly to $3,153,600 for the nine months ended September 30, 2025, compared to $1,233,000 in 2024, reflecting a growth of 156.5%[26] - Total liabilities decreased to $8,498,660 as of September 30, 2025, from $8,616,919 at the end of 2024, a reduction of 1.4%[31] - Total liabilities as of September 30, 2025, were $5,468,335,000, compared to $5,211,552,000 at the end of 2024, representing an increase of approximately 4.9%[50] Investments and Modernization - The company is pursuing a grid modernization plan with investments of approximately $344 million over the first six years of an 11-year strategy[14] - TXNM's $1.0 billion unsecured delayed-draw term loan matures on May 18, 2025, indicating a significant financing strategy for future operations[15] Mergers and Agreements - The merger agreement with TXNM and Blackstone Infrastructure Partners is expected to enhance operational efficiencies and market reach[14] - A merger agreement was entered into on May 18, 2025, for TXNM to merge with Merger Sub, a direct, wholly-owned subsidiary of Parent[68] Regulatory and Environmental Compliance - The New Mexico Energy Transition Act mandates that investor-owned electric utilities achieve a renewable portfolio of 40% by 2025, 50% by 2030, 80% by 2040, and 100% zero-carbon energy by 2045[203] - The Clean Air Act requires states to establish goals for improving visibility in national parks and develop long-term strategies for reducing emissions of air pollutants[208] Miscellaneous - The company expects to adopt new accounting standards related to income tax disclosures by the end of 2025[78] - TXNM is currently facing merger-related litigation alleging misrepresentation in its preliminary proxy statement regarding a merger[194]

Financial Performance - Q3 2025 GAAP net earnings attributable to TXNM Energy were $130.7 million, a decrease of 0.4% from $131.2 million in Q3 2024[1] - Q3 2025 ongoing net earnings were $142.8 million, up 10.8% from $129.3 million in Q3 2024[1] - Q3 2025 GAAP diluted EPS was $1.22, down from $1.45 in Q3 2024, while ongoing diluted EPS was $1.33, compared to $1.43 in Q3 2024[1] - TXNM Energy's ongoing earnings for YTD 2025 were $185.5 million, down from $220.6 million in YTD 2024[1] - GAAP Net Earnings attributable to TXNM for the three months ended September 30, 2025, were $131.202 million, with ongoing earnings of $129.343 million[23] - For the nine months ended September 30, 2025, GAAP Net Earnings attributable to TXNM were $226.441 million, with ongoing earnings of $220.634 million[23] - Net Earnings attributable to TXNM for Q3 2025 were $130,710, slightly down from $131,202 in Q3 2024[29] - Net Earnings for the nine months ended September 30, 2025, were $175,114, down from $238,728 in the same period of 2024[29] Revenue and Expenses - Electric Operating Revenues for Q3 2025 reached $647,162, an increase of 13.7% from $569,256 in Q3 2024[29] - Total Operating Expenses for Q3 2025 were $444,292, up 17.5% from $378,176 in Q3 2024[29] - Operating Income for Q3 2025 was $202,870, representing a 6.9% increase compared to $191,080 in Q3 2024[29] - Total Operating Expenses for the nine months ended September 30, 2025, were $1,284,914, an increase of 15.1% from $1,116,882 in 2024[29] Shareholder Information - Basic and Diluted Earnings per Common Share for Q3 2025 were both $1.22, compared to $1.45 in Q3 2024, reflecting a decrease of 15.9%[29] - Dividends Declared per Common Share increased to $0.4075 in Q3 2025 from $0.3875 in Q3 2024, marking a rise of 5.2%[29] Regulatory and Acquisition Updates - TXNM Energy's transaction with Blackstone Infrastructure is set at $61.25 per share, approved by shareholders on August 28, 2025[5] - The company anticipates closing the acquisition in the second half of 2026, pending regulatory approvals[7] - TXNM Energy's regulatory update includes a $87 million recovery from the Transmission Cost of Service filing and a $28 million recovery sought through the Distribution Cost Recovery Factor[9] - The company filed for regulatory approval to construct 30 megawatts of energy storage at an estimated cost of $78 million[10] - The company incurred $14 million in costs related to the planned acquisition in Q3 2025[13] Other Financial Metrics - PNM's Q3 2025 GAAP diluted EPS was $0.95, down from $1.20 in Q3 2024, while TNMP's GAAP diluted EPS was $0.38, slightly down from $0.39 in Q3 2024[11] - Interest charges at TNMP increased by $9.6 million and $16.2 million for the three and nine months ended September 30, 2025, respectively[21] - Interest Charges for Q3 2025 were $70,149, up from $59,664 in Q3 2024, indicating an increase of 17.5%[29] - Increases in "Administrative and general" expenses at PNM were $0.9 million for both the three and nine months ended September 30, 2025[21] - Earnings before Income Taxes for Q3 2025 were $155,253, slightly down from $159,820 in Q3 2024, reflecting a decrease of 2.9%[29] Share Statistics - The average diluted shares outstanding for the three months ended September 30, 2025, were 107,416,661[25]

Core Insights - TXNM Energy reported its Q3 2025 results, showing a slight decline in GAAP net earnings and diluted EPS compared to Q3 2024, with GAAP net earnings at $130.7 million and diluted EPS at $1.22 [1][8] - The company has not affirmed its previously issued earnings guidance for 2025 due to a pending transaction with Blackstone Infrastructure, which is expected to close in the second half of 2026 [1][4] Financial Performance - Q3 2025 GAAP net earnings attributable to TXNM Energy were $130.7 million, down from $131.2 million in Q3 2024 - Q3 2025 ongoing net earnings were $142.8 million, compared to $129.3 million in Q3 2024 - Year-to-date (YTD) 2025 GAAP net earnings were $161.2 million, down from $226.4 million in YTD 2024, while ongoing net earnings for YTD 2025 were $185.5 million, down from $220.6 million in YTD 2024 [1][8] Segment Reporting - PNM's Q3 2025 EPS was $0.95, down from $1.20 in Q3 2024 - TNMP's Q3 2025 EPS was $0.38, slightly down from $0.39 in Q3 2024 - Corporate and Other segment reported a loss of $0.11 in Q3 2025, unchanged from Q3 2024 [10][14] Regulatory and Transaction Updates - TXNM Energy is in the process of obtaining regulatory approvals for its acquisition by Blackstone Infrastructure, with applications filed with NMPRC, PUCT, and FERC [3][4] - The acquisition agreement was approved by shareholders on August 28, 2025, at a price of $61.25 per share [2][8] Cost Recovery and Investments - TNMP's second Transmission Cost of Service (TCOS) filing for 2025 was approved, allowing recovery for $87 million of rate base [5] - PNM filed an application for a Certificate of Convenience and Necessity (CCN) to construct 30 megawatts of energy storage at an estimated cost of $78 million [6]

Core Insights - Blackstone Infrastructure is acquiring TXNM Energy, the parent company of Public Service Company of New Mexico (PNM), to capitalize on rising U.S. energy demands [1][2] - The acquisition, valued at $11.5 billion, is expected to yield significant short and long-term profits due to anticipated record energy demand and rising wholesale prices [2][3] Acquisition Details - TXNM shareholders approved the acquisition on August 25, with investors set to receive $61.25 per share [3] - The deal is pending approval from New Mexico's Public Regulation Commission [3] Customer Benefits - If approved, Blackstone will provide $105 million in rate credits over four years, resulting in average annual savings of $168 for PNM customers [4] - Blackstone plans to increase funding for PNM's Good Neighbor Program Fund by 300% and allocate $35 million for economic development programs [5] - An additional $25 million is pledged to support New Mexico's sustainable energy transition goals [5]

Core Points - TXNM Energy shareholders approved the acquisition agreement with Blackstone Infrastructure, with 99.6% of votes in favor, representing 88.2% of issued shares [1][2] - Each TXNM Energy shareholder will receive $61.25 in cash per share upon closing of the acquisition [1] - The acquisition is expected to close in the second half of 2026, pending regulatory approvals and customary closing conditions [4] Regulatory Approvals - TXNM Energy is pursuing necessary regulatory approvals from multiple agencies, including the New Mexico Public Regulation Commission and the Federal Energy Regulatory Commission [3] Company Overview - TXNM Energy is an energy holding company based in Albuquerque, New Mexico, serving over 800,000 homes and businesses in Texas and New Mexico through its regulated utilities [5]

Core Viewpoint - TXNM Energy has filed applications for approval of its proposed acquisition by Blackstone Infrastructure with multiple regulatory bodies, highlighting significant benefits for customers and communities in New Mexico and Texas [1][3][6]. TXNM Energy Overview - TXNM Energy is an energy utility holding company based in Albuquerque, New Mexico, serving over 800,000 homes and businesses across Texas and New Mexico through its regulated utilities, TNMP and PNM [9]. NMPRC Application - The NMPRC regulates PNM, TXNM Energy's utility in New Mexico, which serves approximately 550,000 customers [2]. - The application includes benefits such as a $105 million rate credit over four years, a $10 million contribution to the PNM Good Neighbor Fund over 10 years, $35 million in economic development funding, and $25 million for innovative technologies to support carbon-free energy transition [3]. PUCT Application - The PUCT regulates TNMP, TXNM Energy's utility in Texas, serving around 280,000 customers [5]. - The application proposes a $35 million rate credit over four years, $10 million in economic development funding for workforce development over 10 years, and $5 million in additional community support over 10 years [6]. FERC Application - FERC oversees PNM's wholesale electricity and transmission services, and the filing asserts that the acquisition aligns with public interest without adverse effects on competition or rates [8]. - The FERC has a 180-day statutory timeframe for consideration of the application [8]. Regulatory Timelines - The NMPRC review process is expected to take up to a year [4]. - The PUCT has a 180-day statutory timeframe for its review [7]. - FERC also has a 180-day statutory timeframe for its consideration [8].

Core Viewpoint - TXNM Energy reported disappointing financial results for Q2 2025, with significant earnings misses and margin compression, primarily due to increased costs and ongoing acquisition processes [1][5][14] Financial Performance - Ongoing (non-GAAP) earnings per share for Q2 2025 were $0.25, missing analyst expectations of $0.41 by 39% [1][2] - GAAP net earnings fell to $21.6 million, down from $48.0 million a year earlier, representing a 55% decline [1][2] - Revenue increased by 2.9% year-over-year to $502.4 million, but operating income (GAAP) dropped by 31% due to rising operating expenses [1][5] - Key cost drivers included an 8.3% increase in energy costs to $167.6 million and a 27.6% rise in administrative expenses to $76.0 million [5][6] Business Overview - TXNM Energy operates as a regulated utility through its subsidiaries PNM and TNMP, serving over 800,000 customers in New Mexico and Texas [3] - The company focuses on modernizing grid infrastructure, expanding renewable energy, and managing customer demand growth [4] Strategic Developments - The company secured a $105 million rate increase for PNM and a $176 million rate base increase for TNMP, crucial for cost recovery and future investments [9][10] - TXNM Energy received regulatory approval to add 450 megawatts of solar and battery storage capacity, supporting its goal for a carbon-free generation portfolio by 2040 [10][11] Acquisition and Future Outlook - TXNM Energy is in the process of being acquired by Blackstone Infrastructure for $61.25 per share, with the transaction expected to close in the second half of 2026 [13][14] - Financial guidance remains uncertain due to the pending acquisition, with management focusing on regulatory approvals and infrastructure investments [14]

[FORM 10-Q Filing Information](index=1&type=section&id=FORM%2010-Q%20Filing%20Information) [Registrant Information](index=1&type=section&id=Registrant%20Information) This section identifies TXNM, PNM, and TNMP as Form 10-Q registrants, detailing their incorporation, offices, and filing statuses | Registrant | State of Incorporation | | :--- | :--- | | TXNM Energy, Inc. | New Mexico | | Public Service Company of New Mexico | New Mexico | | Texas-New Mexico Power Company | Texas | | Registrant | Filing Status | | :--- | :--- | | TXNM Energy, Inc. | Large accelerated filer | | Public Service Company of New Mexico | Non-accelerated filer | | Texas-New Mexico Power Company | Non-accelerated filer | - As of July 25, 2025, TXNM had **105,378,979 shares** of common stock outstanding. PNM had **39,117,799 shares**, all held by TXNM. TNMP had **6,358 shares**, all held indirectly by TXNM[6](index=6&type=chunk)[7](index=7&type=chunk) [Filing Compliance](index=1&type=section&id=Filing%20Compliance) All registrants have filed required reports and Interactive Data Files, with PNM and TNMP utilizing a reduced disclosure format | Registrant | Filed all reports (12 months) | Subject to filing requirements (90 days) | | :--- | :--- | :--- | | TXNM Energy, Inc. | Yes | Yes | | Public Service Company of New Mexico | Yes | Yes | | Texas-New Mexico Power Company | Yes | No (voluntary filer) | | Registrant | Submitted Interactive Data File (12 months) | | :--- | :--- | | TXNM Energy, Inc. | Yes | | Public Service Company of New Mexico | Yes | | Texas-New Mexico Power Company | Yes | - PNM and TNMP are filing this Form 10-Q with a reduced disclosure format pursuant to General Instruction (H)(2)[8](index=8&type=chunk) [Index](index=3&type=section&id=INDEX) [Glossary](index=4&type=section&id=GLOSSARY) [PART I. FINANCIAL INFORMATION](index=8&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)](index=8&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS%20(UNAUDITED)) This section presents unaudited condensed consolidated financial statements for TXNM, PNM, and TNMP, including earnings, cash flows, balance sheets, and detailed notes [TXNM Energy, Inc. and Subsidiaries](index=8&type=section&id=TXNM%20ENERGY%2C%20INC.%20AND%20SUBSIDIARIES) TXNM's consolidated net earnings decreased significantly for both periods, driven by higher operating expenses and interest charges TXNM Condensed Consolidated Statements of Earnings (Unaudited) | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Electric Operating Revenues | $502,420 | $488,102 | $985,212 | $924,979 | | Total Operating Expenses | $429,719 | $382,419 | $840,622 | $738,706 | | Operating Income | $72,701 | $105,683 | $144,590 | $186,273 | | Net Earnings Attributable to TXNM | $21,576 | $48,049 | $30,499 | $95,239 | | Basic EPS | $0.22 | $0.53 | $0.32 | $1.05 | | Diluted EPS | $0.22 | $0.53 | $0.32 | $1.05 | | Dividends Declared per Common Share | $0.4075 | $0.3875 | $0.8150 | $0.7750 | TXNM Condensed Consolidated Statements of Cash Flows (Unaudited) | Cash Flow Activity | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :--- | :--- | :--- | | Net cash flows from operating activities | $144,795 | $169,524 | | Net cash flows used in investing activities | $(611,299) | $(479,498) | | Net cash flows from financing activities | $481,943 | $326,351 | | Change in Cash, Cash Equivalents, and Restricted Cash | $15,439 | $16,377 | | Cash, Cash Equivalents, and Restricted Cash at End of Period | $37,524 | $20,320 | TXNM Condensed Consolidated Balance Sheets (Unaudited) | Asset/Liability/Equity | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Total current assets | $573,727 | $498,836 | | Net utility plant | $8,815,504 | $8,437,008 | | Total assets | $11,675,264 | $11,211,733 | | Total current liabilities | $1,120,398 | $1,775,098 | | Long-term Debt, net | $4,782,536 | $4,311,765 | | Total liabilities | $8,446,941 | $8,616,919 | | Total TXNM common stockholders' equity | $3,170,765 | $2,536,385 | | Total equity | $3,216,794 | $2,583,285 | [Public Service Company of New Mexico and Subsidiaries](index=15&type=section&id=PUBLIC%20SERVICE%20COMPANY%20OF%20NEW%20MEXICO%20AND%20SUBSIDIARIES) PNM's net earnings decreased for both periods, despite revenue growth, due to higher operating expenses and interest charges PNM Condensed Consolidated Statements of Earnings (Unaudited) | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Electric Operating Revenues | $338,372 | $333,671 | $671,752 | $641,786 | | Total Operating Expenses | $301,733 | $275,580 | $603,775 | $532,745 | | Operating Income | $36,639 | $58,091 | $67,977 | $109,041 | | Net Earnings Attributable to PNM | $24,494 | $30,919 | $25,571 | $72,971 | PNM Condensed Consolidated Statements of Cash Flows (Unaudited) | Cash Flow Activity | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :--- | :--- | :--- | | Net cash flows from operating activities | $100,524 | $117,660 | | Net cash flows used in investing activities | $(275,177) | $(313,541) | | Net cash flows from financing activities | $174,695 | $210,399 | | Change in Cash, Cash Equivalents, and Restricted Cash | $42 | $14,518 | | Cash, Cash Equivalents, and Restricted Cash at End of Period | $20,327 | $17,104 | PNM Condensed Consolidated Balance Sheets (Unaudited) | Asset/Liability/Equity | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Total current assets | $443,735 | $410,908 | | Net utility plant | $5,267,188 | $5,119,087 | | Total assets | $7,593,440 | $7,407,279 | | Total current liabilities | $719,205 | $1,282,900 | | Long-term Debt, net | $2,639,407 | $1,898,955 | | Total liabilities | $5,371,102 | $5,211,552 | | Total PNM common stockholder's equity | $2,164,780 | $2,137,298 | | Total equity | $2,210,809 | $2,184,198 | [Texas-New Mexico Power Company and Subsidiaries](index=22&type=section&id=TEXAS-NEW%20MEXICO%20POWER%20COMPANY%20AND%20SUBSIDIARIES) TNMP's revenues increased, but net earnings decreased due to significantly higher interest charges for both periods TNMP Condensed Consolidated Statements of Earnings (Unaudited) | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Electric Operating Revenues | $164,048 | $154,431 | $313,460 | $283,193 | | Total Operating Expenses | $115,361 | $105,116 | $222,026 | $203,140 | | Operating Income | $48,687 | $49,315 | $91,434 | $80,053 | | Net Earnings | $20,968 | $29,925 | $43,251 | $44,508 | TNMP Condensed Consolidated Statements of Cash Flows (Unaudited) | Cash Flow Activity | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :--- | :--- | :--- | | Net cash flows from operating activities | $102,263 | $92,735 | | Net cash flows used in investing activities | $(317,739) | $(253,537) | | Net cash flows from financing activities | $231,243 | $162,076 | | Change in Cash and Cash Equivalents | $15,767 | $1,274 | | Cash and Cash Equivalents at End of Period | $16,000 | $1,274 | TNMP Condensed Consolidated Balance Sheets (Unaudited) | Asset/Liability/Equity | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Total current assets | $141,873 | $100,516 | | Net utility plant | $3,413,405 | $3,184,336 | | Total assets | $3,923,342 | $3,649,125 | | Total current liabilities | $91,605 | $291,074 | | Long-term Debt, net | $1,604,722 | $1,464,079 | | Total liabilities | $2,264,902 | $2,283,936 | | Total common stockholder's equity | $1,658,440 | $1,365,189 | [Notes to Condensed Consolidated Financial Statements](index=27&type=section&id=NOTES%20TO%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) These notes provide detailed disclosures on accounting policies, segment reporting, financial instruments, financing, regulatory matters, and the pending merger [(1) Significant Accounting Policies and Responsibility for Financial Statements](index=27&type=section&id=(1)%20Significant%20Accounting%20Policies%20and%20Responsibility%20for%20Financial%20Statements) This note details financial statement preparation, the company name change, the pending merger, consolidation principles, and new accounting pronouncements - PNM Resources, Inc. changed its name to **TXNM Energy, Inc.** on August 2, 2024, and increased authorized common stock shares from **120 million to 200 million**[68](index=68&type=chunk) - On May 18, 2025, TXNM entered into a Merger Agreement with Parent and Merger Sub (affiliates of Blackstone Infrastructure), where TXNM will survive as a wholly-owned subsidiary of Parent[69](index=69&type=chunk) Dividends Declared on Common Stock | Period | Dividend per Share | | :--- | :--- | | Q2 2025 | $0.4075 | | Q2 2024 | $0.3875 | - TXNM made **$250.0 million** in cash equity contributions to TNMP in the three and six months ended June 30, 2025. TXNM made a **$55.0 million** cash equity contribution to PNM in the three and six months ended June 30, 2024[77](index=77&type=chunk) - The FASB issued ASU 2023-09 (Income Taxes) effective for annual periods after December 15, 2024, enhancing income tax disclosures. ASU 2024-03 (Expense Disaggregation) requires disclosure of certain costs and expenses, effective for public business entities for annual periods beginning after December 15, 2026[79](index=79&type=chunk)[80](index=80&type=chunk) [(2) Segment Information](index=28&type=section&id=(2)%20Segment%20Information) This note details TXNM's three reportable segments (PNM, TNMP, Corporate and Other) and presents their summarized financial performance - TXNM operates with three reportable segments: **PNM** (retail electric utility in New Mexico), **TNMP** (electric utility in Texas), and **Corporate and Other** (holding company activities and intercompany eliminations)[81](index=81&type=chunk)[83](index=83&type=chunk)[84](index=84&type=chunk)[85](index=85&type=chunk) TXNM Segment Earnings (Loss) Attributable to TXNM (Three Months Ended June 30, 2025) | Segment | Electric Operating Revenues (in thousands) | Total Operating Expenses (in thousands) | Segment Earnings (Loss) Attributable to TXNM (in thousands) | | :--- | :--- | :--- | :--- | | PNM | $338,372 | $301,733 | $24,362 | | TNMP | $164,048 | $115,361 | $20,968 | | Corporate and Other | $— | $12,625 | $(23,754) | | TXNM Consolidated | $502,420 | $429,719 | $21,576 | TXNM Segment Earnings (Loss) Attributable to TXNM (Six Months Ended June 30, 2025) | Segment | Electric Operating Revenues (in thousands) | Total Operating Expenses (in thousands) | Segment Earnings (Loss) Attributable to TXNM (in thousands) | | :--- | :--- | :--- | :--- | | PNM | $671,752 | $603,775 | $25,307 | | TNMP | $313,460 | $222,026 | $43,251 | | Corporate and Other | $— | $14,821 | $(38,059) | | TXNM Consolidated | $985,212 | $840,622 | $30,499 | TXNM Total Assets by Segment (June 30, 2025) | Segment | Total Assets (in thousands) | | :--- | :--- | | PNM | $7,593,440 | | TNMP | $3,923,342 | | Corporate and Other | $158,482 | | TXNM Consolidated | $11,675,264 | [(3) Accumulated Other Comprehensive Income (Loss)](index=32&type=section&id=(3)%20Accumulated%20Other%20Comprehensive%20Income%20(Loss)) This note breaks down accumulated other comprehensive income (loss) for TXNM, PNM, and Corporate and Other, detailing changes from various financial adjustments Accumulated Other Comprehensive Income (Loss) - TXNM Consolidated (Six Months Ended June 30, 2025) | Component | Balance at Dec 31, 2024 (in thousands) | Net After-Tax Change (in thousands) | Balance at June 30, 2025 (in thousands) | | :--- | :--- | :--- | :--- | | Unrealized Gains on Available-for-Sale Debt Securities | $214 | $124 | $338 | | Pension Liability Adjustment | $(75,922) | $2,051 | $(73,871) | | Fair Value Adjustment for Cash Flow Hedges | $— | $(1,860) | $(1,860) | | Total TXNM | $(75,708) | $315 | $(75,393) | Accumulated Other Comprehensive Income (Loss) - TXNM Consolidated (Six Months Ended June 30, 2024) | Component | Balance at Dec 31, 2023 (in thousands) | Net After-Tax Change (in thousands) | Balance at June 30, 2024 (in thousands) | | :--- | :--- | :--- | :--- | | Unrealized Gains on Available-for-Sale Debt Securities | $10,652 | $(9,812) | $840 | | Pension Liability Adjustment | $(77,157) | $1,815 | $(75,342) | | Fair Value Adjustment for Cash Flow Hedges | $3,665 | $937 | $4,602 | | Total TXNM | $(62,840) | $(7,060) | $(69,900) | [(4) Earnings Per Share](index=32&type=section&id=(4)%20Earnings%20Per%20Share) This note details TXNM's basic and diluted earnings per share computation, including the impact of stock issuances and settlements TXNM Earnings Per Share Computation | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Earnings Attributable to TXNM (in thousands) | $21,576 | $48,049 | $30,499 | $95,239 | | Average Shares – Basic (in thousands) | 96,132 | 90,504 | 94,583 | 90,499 | | Average Shares – Diluted (in thousands) | 96,197 | 90,552 | 94,637 | 90,539 | | Basic EPS | $0.22 | $0.53 | $0.32 | $1.05 | | Diluted EPS | $0.22 | $0.53 | $0.32 | $1.05 | - TXNM's weighted average common shares outstanding for the three and six months ended June 30, 2025, were impacted by the settlement of **1.1 million shares** under the TXNM 2024 ATM Program and the issuance of **11.6 million shares** in private placement transactions[94](index=94&type=chunk) [(5) Electric Operating Revenues](index=33&type=section&id=(5)%20Electric%20Operating%20Revenues) This note describes TXNM's electric operating revenues from PNM and TNMP, detailing accounts receivable, contract balances, and revenue disaggregation by customer type - TXNM's electric operating revenues are primarily derived from its investor-owned regulated utilities, **PNM** and **TNMP**, which provide electricity and electric services in New Mexico and Texas[95](index=95&type=chunk) - PNM's accounts receivable, net of allowance for credit losses, includes **$106.7 million** at June 30, 2025, and **$94.3 million** at December 31, 2024, from contracts with customers. All of TNMP's accounts receivable result from contracts with customers[97](index=97&type=chunk) - PNM recognized a contract asset of **$36.8 million** at June 30, 2025, and **$32.0 million** at December 31, 2024, related to a Transmission Service Agreement (TSA) with Pattern Wind, due to a financing component where revenue recognized exceeds consideration received at the start of service[98](index=98&type=chunk) Disaggregation of Electric Operating Revenues by Customer Type (Six Months Ended June 30, 2025) | Customer Type | PNM (in thousands) | TNMP (in thousands) | TXNM (in thousands) | | :--- | :--- | :--- | :--- | | Residential | $244,563 | $102,957 | $347,520 | | Commercial | $213,999 | $91,421 | $305,420 | | Industrial | $68,291 | $25,851 | $94,142 | | Public authority | $10,712 | $3,982 | $14,694 | | Economy energy service | $17,998 | $— | $17,998 | | Transmission | $71,369 | $81,498 | $152,867 | | Wholesale energy sales | $36,824 | $— | $36,824 | | Miscellaneous | $2,860 | $1,906 | $4,766 | | Alternative revenue programs | $2,391 | $5,845 | $8,236 | | Other electric operating revenues | $2,745 | $— | $2,745 | | **Total Electric Operating Revenues** | **$671,752** | **$313,460** | **$985,212** | [(6) Variable Interest Entities](index=35&type=section&id=(6)%20Variable%20Interest%20Entities) This note discusses PNM's consolidated VIEs (Valencia, ETBC I) and TXNM's non-consolidated variable interest in WSJ LLC - PNM consolidates Valencia, a **155 MW** natural gas-fired power plant, as a VIE because PNM is the sole purchaser of electricity, controls dispatch, and absorbs the majority of cash flow variability. A new PPA for **167 MW** through 2039 was approved in May 2025[104](index=104&type=chunk)[107](index=107&type=chunk) Valencia Summarized Financial Information (Six Months Ended June 30, 2025) | Metric | Amount (in thousands) | | :--- | :--- | | Operating revenues | $11,348 | | Operating expenses | $3,301 | | Earnings attributable to non-controlling interest | $8,047 | | Total assets | $46,582 | | Owners' Equity – Non-controlling Interest | $46,029 | - TXNM has a variable interest in WSJ LLC due to **$30.3 million** in letters of credit supporting reclamation bonds for SJGS. However, WSJ LLC is not consolidated as it retains control over reclamation activities, making it the primary beneficiary[109](index=109&type=chunk)[110](index=110&type=chunk)[112](index=112&type=chunk) - ETBC I, a wholly-owned special purpose subsidiary of PNM, is consolidated as a VIE. It issued **$343.2 million** in securitized bonds in November 2023, secured by energy transition property and repaid by a non-bypassable charge to PNM retail customers[113](index=113&type=chunk)[114](index=114&type=chunk) ETBC I Impact on PNM's Financial Statements (Six Months Ended June 30, 2025) | Metric | Amount (in thousands) | | :--- | :--- | | Electric Operating Revenues | $13,408 | | Depreciation and amortization | $3,424 | | Interest Charges | $9,918 | | Net Earnings | $— | | Securitized Cost (Regulatory assets - Deferred) | $332,655 | | Long-term Debt | $328,179 | [(7) Fair Value of Derivative and Other Financial Instruments](index=38&type=section&id=(7)%20Fair%20Value%20of%20Derivative%20and%20Other%20Financial%20Instruments) This note details fair value measurements for TXNM's derivatives and financial instruments, covering commodity risk management and valuation hierarchy - PNM uses commodity derivative instruments (forward contracts, options, swaps) to manage price and volume risk for power commitments and fuel requirements, primarily on a short-term basis. TNMP does not use energy-related derivative contracts[119](index=119&type=chunk)[122](index=122&type=chunk) - PNM's commodity derivative instruments are accounted for as economic hedges and are considered Level 2 fair value measurements. Changes in fair value are reflected in Operating income or as Regulatory assets/liabilities if covered by the FPPAC[123](index=123&type=chunk) PNM Commodity Derivative Instruments (Economic Hedges) | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Other current assets | $— | $— | | Other current liabilities | $(8,940) | $(5,737) | | Net | $(8,940) | $(5,737) | PNM Net Buy (Sell) Volume Positions for Economic Hedges | Date | MMBTU | MWh | | :--- | :--- | :--- | | June 30, 2025 | — | 179,800 | | December 31, 2024 | — | 89,900 | - Investment securities primarily consist of assets held in Nuclear Decommissioning Trusts (NDT), SJGS decommissioning trust, and coal mine reclamation trusts. Fair values are determined using Level 2 inputs from pricing services or NAV for mutual funds[133](index=133&type=chunk)[140](index=140&type=chunk) Net Gains on Investment Securities (Six Months Ended June 30, 2025) | Security Type | Amount (in thousands) | | :--- | :--- | | Equity securities (net gains) | $22,305 | | Available-for-sale debt securities (net gains) | $10 | | **Total net gains on investment securities** | **$22,315** | Carrying Amounts and Fair Values of Long-Term Debt (June 30, 2025) | Entity | Carrying Amount (in thousands) | Fair Value (in thousands) | | :--- | :--- | :--- | | TXNM | $5,199,237 | $5,231,061 | | PNM | $2,846,402 | $2,719,072 | | TNMP | $1,604,722 | $1,586,972 | [(8) Stock-Based Compensation](index=43&type=section&id=(8)%20Stock-Based%20Compensation) This note describes TXNM's stock-based compensation programs, including restricted stock awards, vesting, expense recognition, and fair value assumptions - TXNM offers restricted stock awards (performance-based and time-based) under its PEP. Awards generally vest over three years, or immediately upon retirement for eligible participants[145](index=145&type=chunk)[146](index=146&type=chunk) - Compensation expense for restricted stock without performance/market conditions is recognized immediately if retirement-eligible, or amortized over the vesting period. Performance-based shares are recognized ratably over the performance period, adjusted for expected achievement. Market-based shares are recognized ratably over the measurement period regardless of achievement[147](index=147&type=chunk) Weighted-Average Assumptions for Grant Date Fair Value (Six Months Ended June 30, 2025) | Metric | Restricted Shares and Performance Based Shares | Market-Based Shares | | :--- | :--- | :--- | | Expected quarterly dividends per share | $0.4075 | N/A | | Risk-free interest rate | 4.00% | 4.12% | | Dividend yield | N/A | 3.12% | | Expected volatility | N/A | 15.67% | Restricted Stock Activity (Six Months Ended June 30, 2025) | Activity | Shares | Weighted Average Grant Date Fair Value | | :--- | :--- | :--- | | Outstanding at December 31, 2024 | 241,237 | $37.05 | | Granted | 170,560 | $47.61 | | Released | (156,284) | $40.79 | | Forfeited | (4,343) | $34.92 | | Outstanding at June 30, 2025 | 251,170 | $41.93 | - As of June 30, 2025, TXNM had **$9.4 million** in unrecognized stock award expense, expected to be recognized over an average of **1.9 years**[147](index=147&type=chunk) [(9) Financing](index=45&type=section&id=(9)%20Financing) This note details TXNM's financing strategy, including short-term and long-term borrowings, recent debt and equity issuances, and covenant compliance - TXNM's financing strategy involves short-term and long-term borrowings, utilizing revolving credit facilities and cash flows from operations for construction and operating expenditures. The Company periodically sells long-term debt or equity to reduce revolving credit borrowings or refinance debt[154](index=154&type=chunk) - On July 31, 2025, PNM issued **$350.0 million** in Senior Unsecured Notes (SUNs) in a private placement to repay existing SUNs and for general corporate purposes. On July 21, 2025, TNMP issued **$1,084.3 million** in First Mortgage Bonds (FMBs) to repay the TNMP Merger Backstop Term Loan[156](index=156&type=chunk)[157](index=157&type=chunk)[158](index=158&type=chunk) - On June 24, 2025, TXNM sold **3,615,003 shares** of common stock for approximately **$200 million** in a private placement, using proceeds to repay the TXNM 2023 Term Loan[160](index=160&type=chunk) - The Merger Agreement triggered 'Change of Control' provisions in certain TXNM and TNMP debt agreements. Lender Consents were obtained to amend the definition and waive the Event of Default, but the Merger closing will re-trigger these provisions[164](index=164&type=chunk)[165](index=165&type=chunk) - TXNM physically settled all shares under the TXNM 2024 ATM Program on May 27, 2025, issuing **1,104,641 shares** for **$49.6 million** net proceeds, used to repay the TXNM Revolving Credit Facility[163](index=163&type=chunk) Short-term Debt Outstanding (in thousands) | Entity | June 30, 2025 Balance | June 30, 2025 Weighted Average Interest Rate | December 31, 2024 Balance | December 31, 2024 Weighted Average Interest Rate | | :--- | :--- | :--- | :--- | :--- | | PNM Revolving Credit Facility | $194,600 | 5.66% | $323,800 | 5.73% | | PNM New Mexico Credit Facility | $40,000 | 5.67% | $40,000 | 5.81% | | TNMP Revolving Credit Facility | $— | — | $151,600 | 5.37% | | TXNM Revolving Credit Facility | $111,100 | 5.92% | $93,900 | 5.96% | | **Total** | **$345,700** | | **$609,300** | | [(10) Pension and Other Postretirement Benefit Plans](index=49&type=section&id=(10)%20Pension%20and%20Other%20Postretirement%20Benefit%20Plans) This note outlines TXNM's defined benefit pension and OPEB plans for PNM and TNMP, detailing net periodic benefit costs and anticipated contributions - TXNM maintains qualified defined benefit pension plans, postretirement benefit plans (OPEB), and executive retirement programs for its subsidiaries. Costs are included in regulated rates for regulated operations[183](index=183&type=chunk) PNM Plans' Net Periodic Benefit Cost (Six Months Ended June 30, 2025) | Component | Pension Plan (in thousands) | OPEB Plan (in thousands) | Executive Retirement Program (in thousands) | | :--- | :--- | :--- | :--- | | Interest cost | $10,770 | $1,133 | $244 | | Expected return on plan assets | $(14,917) | $(2,768) | $— | | Amortization of net loss | $6,247 | $— | $94 | | **Net Periodic Benefit Cost (Income)** | **$2,100** | **$(1,635)** | **$338** | - PNM anticipates contributing **$7.9 million** to its pension plan in 2029 and **$2.0 million** to OPEB in 2025, with **$11.1 million** for 2026-2029. Executive retirement program disbursements are expected to total **$1.2 million** in 2025 and **$4.2 million** for 2026-2029[187](index=187&type=chunk) TNMP Plans' Net Periodic Benefit Cost (Six Months Ended June 30, 2025) | Component | Pension Plan (in thousands) | OPEB Plan (in thousands) | | :--- | :--- | :--- | | Interest cost | $1,072 | $186 | | Expected return on plan assets | $(1,466) | $(240) | | Amortization of net (gain) loss | $336 | $(248) | | **Net Periodic Benefit Cost (Income)** | **$(58)** | **$(294)** | - TNMP does not anticipate making contributions to its pension plan trust in 2025-2029, nor to the OPEB trust during the same period[188](index=188&type=chunk) [(11) Commitments and Contingencies](index=51&type=section&id=(11)%20Commitments%20and%20Contingencies) This note details TXNM's, PNM's, and TNMP's commitments and contingencies, including merger litigation, environmental liabilities, and operational obligations - TXNM has received demand letters and draft complaints from purported shareholders alleging omissions/misrepresentations in the Merger proxy statement and seeking injunctive relief. TXNM believes these allegations are without merit and will defend vigorously[189](index=189&type=chunk) - PNM estimates **$55.6 million** (2023 dollars) for its share of on-site interim storage costs for spent nuclear fuel at PVNGS through operating license terms, accruing these costs as fuel expense. A liability of **$14.6 million** was recorded at June 30, 2025[196](index=196&type=chunk) - The New Mexico Energy Transition Act (ETA) mandates renewable portfolios for utilities (**40% by 2025, 100% zero-carbon by 2045**) and allows recovery of undepreciated investments and decommissioning costs for retired qualifying EGUs via energy transition bonds[198](index=198&type=chunk) - EPA's 2024 final rule lowered the primary annual PM 2.5 NAAQS to **9 ug/m3**, effective May 6, 2024, requiring states to attain compliance by March 2032. This may impact future air permitting activities at Rio Bravo and Reeves Generating Stations if Bernalillo County is designated as nonattainment[216](index=216&type=chunk) - PNM's share of SJGS coal mine reclamation costs increased by **$20.9 million** due to higher inflationary factors. **$17.0 million** was recorded as a regulatory asset for the underground mine, and **$4.5 million** was recorded as a regulatory disallowance for the surface mine due to an NMPRC cap[250](index=250&type=chunk) - PNM's maximum retrospective premium per incident for PVNGS nuclear liability is **$36.3 million**, with a maximum annual payment of **$5.4 million**, under the Price-Anderson Nuclear Industries Indemnity Act[260](index=260&type=chunk) [(12) Regulatory and Rate Matters](index=62&type=section&id=(12)%20Regulatory%20and%20Rate%20Matters) This note details PNM's and TNMP's ongoing regulatory and rate matters, including rate requests, appeals, renewable energy compliance, and infrastructure plans - PNM's 2025 Rate Request, filed in June 2024, proposed a **$174.3 million** increase in retail revenues. An unopposed comprehensive stipulation was filed in November 2024, agreeing to a **$105.0 million** increase with phases effective July 1, 2025, and April 1, 2026, and an ROE of **9.45%**. The NMPRC approved this stipulation on May 15, 2025[263](index=263&type=chunk)[265](index=265&type=chunk) - PNM's 2024 Rate Change, approved in January 2024, included a **$15.3 million** increase in non-fuel base rates, an ROE of **9.26%**, and a regulatory disallowance of **$55.5 million** related to Four Corners. Appeals were filed with the NM Supreme Court by NEE and PNM, but PNM filed an uncontested motion to dismiss its appeal on June 20, 2025[266](index=266&type=chunk)[267](index=267&type=chunk) - PNM's approved renewable energy resources include **158 MW** of PNM-owned solar-PV, PPAs for **200 MW** New Mexico Wind, **102 MW** Red Mesa Wind, **140 MW** La Joya Wind II, and **11 MW** Lightning Dock Geothermal, plus **320.5 MW** of customer distributed solar generation[275](index=275&type=chunk) - PNM's Grid Modernization Plan, approved in October 2024, includes **$367 million** in investments over the first six years of an 11-year strategy, with projected operations and maintenance costs decreased by **18%**[280](index=280&type=chunk)[281](index=281&type=chunk) - Texas HB 5247, effective June 20, 2025, allows eligible electric utilities like TNMP to defer depreciation expenses for qualifying investments to a regulatory asset and file a single annual proceeding to adjust nonfuel rates. TNMP expects to make its first filing in 2026[287](index=287&type=chunk) TNMP Interim Transmission Cost Rate Increases | Effective Date | Approved Increase in Rate Base (in millions) | Annual Increase in Revenue (in millions) | | :--- | :--- | :--- | | September 6, 2023 | $21.4 | $4.2 | | March 15, 2024 | $97.4 | $13.1 | | September 20, 2024 | $20.6 | $3.9 | | March 25, 2025 | $83.5 | $11.5 | TNMP Interim Distribution Rate Increases | Effective Date | Approved Increase in Rate Base (in millions) | Annual Increase in Revenue (in millions) | | :--- | :--- | :--- | | September 1, 2023 | $157.0 | $14.5 | | July 28, 2024 | $205.9 | $15.6 | | November 17, 2024 | $43.7 | $7.7 | | June 29, 2025 | $176.6 | $25.0 | - TNMP incurred **$53.8 million** in costs due to Hurricane Beryl as of June 30, 2025, with **$33.4 million** recorded in Utility Plant and **$20.4 million** as a Regulatory Asset. TNMP will seek recovery in a future regulatory proceeding[297](index=297&type=chunk) - TNMP's System Resiliency Plan (SRP) was approved by the PUCT on March 26, 2025, with **$545.8 million** in capital investments and **$86.1 million** in O&M costs over 2025-2027, focused on enhancing distribution system resiliency[298](index=298&type=chunk)[300](index=300&type=chunk) [(13) Lease Commitments](index=68&type=section&id=(13)%20Lease%20Commitments) This note details the Company's lease commitments, distinguishing operating and financing leases, and providing key metrics like liabilities, assets, and terms - The Company leases office buildings, vehicles, energy storage facilities, and rights-of-way. Leases over one year are recorded on the balance sheet as lease liabilities and right-of-use assets[301](index=301&type=chunk) - PNM has no further lease payments related to PVNGS Unit 1 or 2, as leases expired in January 2023 and January 2024, respectively[302](index=302&type=chunk) - PNM is obligated to pay the Navajo Nation annual payments of **$6.0 million** (subject to CPI adjustment) through 2029 for rights-of-way. The April 2025 payment was **$8.8 million**[304](index=304&type=chunk) Operating Lease Information (June 30, 2025) | Entity | Operating Lease Assets, net (in thousands) | Current Portion of Operating Lease Liabilities (in thousands) | Long-term Portion of Operating Lease Liabilities (in thousands) | | :--- | :--- | :--- | :--- | | PNM | $265,016 | $13,253 | $245,330 | | TNMP | $388 | $348 | $31 | | TXNM Consolidated | $265,919 | $13,640 | $245,847 | Weighted Average Lease Terms and Discount Rates (June 30, 2025) | Metric | PNM | TNMP | TXNM Consolidated | | :--- | :--- | :--- | :--- | | Weighted average remaining lease term (Operating leases, years) | 17.30 | 0.67 | 17.26 | | Weighted average remaining lease term (Financing leases, years) | 3.31 | 3.16 | 3.23 | | Weighted average discount rate (Operating leases) | 5.70% | 4.46% | 5.70% | | Weighted average discount rate (Financing leases) | 5.26% | 5.43% | 5.33% | Total Lease Expense (Six Months Ended June 30, 2025) | Entity | Total Lease Expense (in thousands) | | :--- | :--- | | PNM | $28,392 | | TNMP | $611 | | TXNM Consolidated | $29,289 | [(14) Income Taxes](index=71&type=section&id=(14)%20Income%20Taxes) This note details income tax accounting, effective tax rates for TXNM, PNM, and TNMP, and the impact of stock awards, merger costs, and EDFIT amortization - TXNM, PNM, and TNMP estimated their effective income tax rates for the year ended December 31, 2025, to be **13.37%**, **9.35%**, and **20.52%**, respectively. The primary difference from statutory rates is the amortization of excess deferred federal income taxes (EDFIT)[315](index=315&type=chunk) - For the six months ended June 30, 2025, income tax expense was further decreased by **$0.4 million** in excess tax benefits from stock awards for TXNM (with allocations to PNM and TNMP) and **$3.6 million** in tax benefits on Merger-related costs for TXNM[316](index=316&type=chunk) - PNM is returning **$62.7 million** of unprotected EDFIT over a four-year period, while TNMP's rates reflect TCJA impacts since January 1, 2019. TXNM, PNM, and TNMP will amortize **$25.6 million**, **$22.9 million**, and **$2.7 million**, respectively, in federal EDFIT in 2025[317](index=317&type=chunk) - The One Big Beautiful Bill Act of 2025 (OBBBA), enacted July 4, 2025, extends TCJA changes (**21% corporate tax rate**, interest deductibility for regulated utilities) and accelerates the phase-out of certain IRA energy tax credits. TXNM does not expect a material impact on its financial statements[318](index=318&type=chunk) [(15) Related Party Transactions](index=72&type=section&id=(15)%20Related%20Party%20Transactions) This note summarizes related party transactions, including service and interest billings, among TXNM, PNM, TNMP, and PNMR Services Company - TXNM, PNM, TNMP, and PNMR Services Company (a wholly-owned subsidiary of TXNM providing corporate services) are considered related parties[319](index=319&type=chunk) Related Party Service Billings (Six Months Ended June 30, 2025) | Transaction | Amount (in thousands) | | :--- | :--- | | TXNM to PNM | $67,404 | | TXNM to TNMP | $27,485 | | PNM to TNMP | $165 | | TNMP to TXNM | $56 | Related Party Interest Billings (Six Months Ended June 30, 2025) | Transaction | Amount (in thousands) | | :--- | :--- | | TXNM to PNM | $84 | | PNM to TXNM | $265 | | TXNM to TNMP | $186 | [(16) Goodwill](index=73&type=section&id=(16)%20Goodwill) This note explains TXNM's goodwill accounting, impairment testing for PNM and TNMP, and conclusions from recent evaluations - Goodwill originated from TXNM's 2005 acquisition of TNP Enterprises, Inc. and Subsidiaries, with reporting units currently being PNM (**$51.6 million** goodwill) and TNMP (**$226.7 million** goodwill)[320](index=320&type=chunk)[328](index=328&type=chunk) - The Company evaluates goodwill for impairment annually, or more frequently if circumstances indicate impairment, using qualitative or quantitative analyses. This involves significant judgments on fair value estimation, future cash flows, growth rates, and WACC[321](index=321&type=chunk)[322](index=322&type=chunk)[325](index=325&type=chunk) - For the April 1, 2025 annual evaluation, TXNM performed a qualitative analysis for both PNM and TNMP, concluding it was not more likely than not that their carrying values exceeded fair value, considering the Merger and regulatory matters[327](index=327&type=chunk) - For the April 1, 2024 evaluation, a quantitative analysis for PNM indicated its fair value exceeded carrying value by approximately **54%**. A qualitative analysis for TNMP (whose 2020 quantitative analysis showed fair value exceeded carrying value by **38%**) also concluded no impairment[328](index=328&type=chunk) [(17) Merger](index=74&type=section&id=(17)%20Merger) This note details the Merger Agreement between TXNM and Blackstone Infrastructure affiliates, outlining terms, cash consideration, approval conditions, and financing - On May 18, 2025, TXNM entered into a Merger Agreement with Parent and Merger Sub (affiliates of Blackstone Infrastructure). TXNM will survive as a direct, wholly-owned subsidiary of Parent[329](index=329&type=chunk) - Each outstanding share of TXNM common stock (with certain exceptions) will be converted into the right to receive **$61.25** in cash, without interest[330](index=330&type=chunk) - The merger is subject to TXNM shareholder approval, absence of legal restraints, and regulatory approvals (PUCT, NMPRC, FERC, NRC, HSR). It is expected to close in the second half of 2026 and has no financing condition[331](index=331&type=chunk)[342](index=342&type=chunk) - The Merger Agreement includes termination fees: TXNM pays Parent **$210.0 million** plus costs if TXNM terminates for a superior proposal or Board changes recommendation. Parent pays TXNM **$350.0 million** plus costs if Parent breaches or fails to close under certain conditions[333](index=333&type=chunk)[334](index=334&type=chunk) - Blackstone Infrastructure has committed equity and debt financing sufficient to fund the merger consideration, debt repayment, and related fees. Blackstone Infrastructure also provides a limited guarantee capped at **$375.0 million** for Parent's termination fee obligations[335](index=335&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=76&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section analyzes TXNM's financial condition and results, covering strategy, objectives, segment performance, liquidity, capital resources, and key issues like climate change [MD&A for TXNM](index=76&type=section&id=MD%26A%20FOR%20TXNM) This section provides a comprehensive overview of TXNM's financial performance, strategic direction, operational highlights, and critical issues TXNM Net Earnings Attributable to TXNM (Six Months Ended June 30) | Metric | 2025 (in millions) | 2024 (in millions) | Change (in millions) | | :--- | :--- | :--- | :--- | | Net earnings attributable to TXNM | $30.5 | $95.2 | $(64.7) | | Net earnings attributable to TXNM per diluted share | $0.32 | $1.05 | $(0.73) | - The decrease in TXNM's net earnings for the six months ended June 30, 2025, was primarily driven by PNM (down **$47.4 million**) and Corporate and Other (down **$16.1 million**), with a slight decrease in TNMP (down **$1.2 million**)[401](index=401&type=chunk)[408](index=408&type=chunk) [Executive Summary](index=76&type=section&id=EXECUTIVE%20SUMMARY) This summary outlines TXNM's structure, strategy for a clean energy future, recent merger and rate request developments, and core business objectives - TXNM is a holding company with two regulated electric utilities, PNM and TNMP, serving approximately **839,000** residential, commercial, and industrial customers in New Mexico and Texas[340](index=340&type=chunk) - The proposed Merger with Blackstone Infrastructure, unanimously approved by the Board, is expected to close in the second half of 2026, subject to shareholder and regulatory approvals[341](index=341&type=chunk)[342](index=342&type=chunk) - PNM's 2025 Rate Request, proposing a **$174.3 million** increase in retail revenues, was approved by the NMPRC on May 15, 2025, with an agreed-upon increase of **$105.0 million** in retail revenues and an ROE of **9.45%**[343](index=343&type=chunk)[344](index=344&type=chunk) - TXNM's business objectives include safety excellence, customer satisfaction, earning authorized returns, achieving industry-average long-term earnings growth (**50-60% dividend payout ratio**), and maintaining investment-grade credit ratings[345](index=345&type=chunk)[346](index=346&type=chunk) - PNM joined the Western Resource Adequacy Program (WRAP) in April 2023 to enhance regional coordination for resource adequacy and plans to join the Extended Day Ahead Market (EDAM) in fall 2027[349](index=349&type=chunk)[350](index=350&type=chunk) - TXNM's utilities invested **$2.3 billion** in utility plant during 2023-2024, focusing on transmission and distribution infrastructure to support growth, reliability, and clean energy delivery[351](index=351&type=chunk)[352](index=352&type=chunk) - PNM's Grid Modernization Plan and TNMP's System Resiliency Plan are key investment initiatives to improve grid resilience and customer experience[354](index=354&type=chunk) - PNM aims for a **100% carbon-free** generating portfolio by 2040, supported by its Grid Modernization Plan, clean energy incentives from the IRA, and transportation electrification programs[358](index=358&type=chunk)[360](index=360&type=chunk)[361](index=361&type=chunk)[362](index=362&type=chunk)[363](index=363&type=chunk) - TNMP experienced a **5.1% increase** in weather-normalized retail load and an **86.8% increase** in data center load for the six months ended June 30, 2025, compared to 2024[397](index=397&type=chunk)[398](index=398&type=chunk) - PNM saw a **20.4% increase** in industrial load and a **2.3% increase** in commercial load, but a **0.6% decrease** in residential load for the six months ended June 30, 2025, compared to 2024[399](index=399&type=chunk) [Results of Operations](index=84&type=section&id=RESULTS%20OF%20OPERATIONS) This section analyzes TXNM's consolidated and segment operating results, detailing changes in net earnings, utility margin, expenses, and other financial metrics [TNMP Segment Results](index=85&type=section&id=TNMP%20Segment%20Results) TNMP's revenues and utility margin increased, but net earnings decreased due to higher interest charges and depreciation - TNMP defines utility margin as electric operating revenues less cost of energy, which consists of costs charged by third-party transmission providers. This non-GAAP measure provides a more meaningful basis for evaluating operations[410](index=410&type=chunk) TNMP Utility Margin (Six Months Ended June 30) | Metric | 2025 (in millions) | 2024 (in millions) | Change (in millions) | | :--- | :--- | :--- | :--- | | Electric operating revenues | $313.5 | $283.2 | $30.3 | | Cost of energy | $81.5 | $74.8 | $6.7 | | **Utility margin** | **$231.9** | **$208.4** | **$23.5** | - For the six months ended June 30, 2025, TNMP's utility margin increased by **$23.5 million**, primarily due to distribution rate relief (**$12.6 million**), transmission rate relief/load (**$3.6 million**), and increased demand-based consumer usage/load (**$3.9 million**)[417](index=417&type=chunk) - TNMP's net earnings decreased by **$1.2 million** for the six months ended June 30, 2025, primarily due to higher interest charges (**$13.5 million** increase) and increased depreciation and amortization (**$8.7 million** increase), partially offset by higher utility margin[412](index=412&type=chunk)[419](index=419&type=chunk)[421](index=421&type=chunk) TNMP Key Operating Results (Six Months Ended June 30) | Metric | 2025 (in millions) | 2024 (in millions) | Change (in millions) | | :--- | :--- | :--- | :--- | | Electric operating revenues | $313.5 | $283.2 | $30.3 | | Operating income | $91.4 | $80.1 | $11.3 | | Interest charges | $(41.3) | $(27.8) | $(13.5) | | Segment earnings | $43.3 | $44.5 | $(1.2) | [PNM Segment Results](index=90&type=section&id=PNM%20Segment%20Results) PNM's revenues increased, but utility margin and net earnings decreased due to higher energy costs, operating expenses, depreciation, and interest charges - PNM defines utility margin as electric operating revenues less cost of energy, which primarily consists of fuel and purchase power costs. This non-GAAP measure is used to evaluate operations as these costs are largely passed through to customers[422](index=422&type=chunk) PNM Utility Margin (Six Months Ended June 30) | Metric | 2025 (in millions) | 2024 (in millions) | Change (in millions) | | :--- | :--- | :--- | :--- | | Electric operating revenues | $671.8 | $641.8 | $30.0 | | Cost of energy | $255.3 | $212.2 | $43.1 | | **Utility margin** | **$416.5** | **$429.6** | **$(13.1)** | - For the six months ended June 30, 2025, PNM's utility margin decreased by **$13.1 million**, primarily due to additional energy storage agreements (**$20.1 million** decrease) and lower transmission revenues (**$1.7 million** decrease), partially offset by retail customer usage/load increases (**$5.4 million**) and rate riders (**$6.3 million**)[431](index=431&type=chunk) - PNM's net earnings decreased by **$47.4 million** for the six months ended June 30, 2025, primarily due to lower utility margin, higher operating expenses (**$14.9 million** increase), increased depreciation and amortization (**$13.1 million** increase), and higher interest charges (**$10.8 million** increase), partially offset by increased performance on investment securities (**$3.7 million** increase)[424](index=424&type=chunk)[430](index=430&type=chunk)[432](index=432&type=chunk)[433](index=433&type=chunk)[434](index=434&type=chunk) PNM Key Operating Results (Six Months Ended June 30) | Metric | 2025 (in millions) | 2024 (in millions) | Change (in millions) | | :--- | :--- | :--- | :--- | | Electric operating revenues | $671.8 | $641.8 | $30.0 | | Operating income | $68.0 | $109.0 | $(41.0) | | Interest charges | $(61.8) | $(51.0) | $(10.8) | | Segment earnings | $25.3 | $72.7 | $(47.4) | [Corporate and Other Segment Results](index=97&type=section&id=Corporate%20and%20Other%20Segment%20Results) The Corporate and Other segment reported increased operating and segment losses due to higher merger-related costs and changes in other income - Corporate and Other operating expenses for the six months ended June 30, 2025, include increases of **$12.7 million** in costs related to the Merger[435](index=435&type=chunk) - The segment loss for Corporate and Other increased by **$16.1 million** for the six months ended June 30, 2025, primarily due to the sale of NMRD equity method investment in 2024 (resulting in a **$15.1 million** decrease in other income) and higher interest charges (**$1.7 million** increase)[435](index=435&type=chunk)[437](index=437&type=chunk)[438](index=438&type=chunk) Corporate and Other Key Operating Results (Six Months Ended June 30) | Metric | 2025 (in millions) | 2024 (in millions) | Change (in millions) | | :--- | :--- | :--- | :--- | | Operating (loss) | $(14.8) | $(2.8) | $(12.0) | | Other income (deductions) | $(1.8) | $(15.2) | $13.4 | | Interest charges | $(32.5) | $(30.8) | $(1.7) | | Segment (loss) | $(38.1) | $(22.0) | $(16.1) | [Liquidity and Capital Resources](index=99&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) This section analyzes TXNM's liquidity and capital resources, covering cash flows, financing, projected capital needs, credit ratings, and capital structure TXNM Consolidated Cash Flows (Six Months Ended June 30) | Cash Flow Activity | 2025 (in millions) | 2024 (in millions) | Change (in millions) | | :--- | :--- | :--- | :--- | | Operating activities | $144.8 | $169.5 | $(24.7) | | Investing activities | $(611.3) | $(479.5) | $(131.8) | | Financing activities | $481.9 | $326.4 | $155.5 | | Net change in cash, cash equivalents, and restricted cash | $15.4 | $16.4 | $(1.0) | - TXNM's cash flows from operating activities decreased by **$24.7 million**, while cash flows used in investing activities increased by **$131.8 million**, primarily due to higher utility plant additions. Cash flows from financing activities increased by **$155.5 million**[441](index=441&type=chunk)[442](index=442&type=chunk)[443](index=443&type=chunk) TXNM Consolidated Utility Plant Additions (Six Months Ended June 30) | Entity | 2025 (in millions) | 2024 (in millions) | Change (in millions) | | :--- | :--- | :--- | :--- | | PNM | $(272.7) | $(311.5) | $38.8 | | TNMP | $(317.7) | $(253.5) | $(64.2) | | Corporate and Other | $(18.4) | $(16.8) | $(1.6) | | **Total** | **$(608.8)** | **$(581.8)** | **$(27.0)** | - TXNM projects total capital requirements of **$8.6 billion** for 2025-2029, including **$7.8 billion** for construction expenditures and **$762.3 million** for TXNM common stock dividends. These expenditures focus on transmission, distribution, clean energy, and grid modernization[465](index=465&type=chunk) - As of July 25, 2025, TXNM, PNM, and TNMP had revolving credit facilities with capacities of **$300.0 million**, **$440.0 million**, and **$200.0 million**, respectively, totaling **$940.0 million**. Total consolidated availability was **$565.3 million**[470](index=470&type=chunk)[474](index=474&type=chunk) - The Company maintains investment-grade issuer credit ratings from S&P (TXNM: **BBB**, PNM: **BBB**, TNMP: **BBB+**) and Moody's (TXNM: **Baa3**, PNM: **Baa2**, TNMP: **Baa1**)[473](index=473&type=chunk) Capitalization Ratios (June 30, 2025) | Entity | Common Equity | Preferred Stock | Long-term Debt | | :--- | :--- | :--- | :--- | | TXNM | 37.9% | 0.1% | 62.0% | | PNM | 43.1% | 0.2% | 56.7% | | TNMP | 50.8% | — | 49.2% | [Other Issues Facing the Company](index=105&type=section&id=OTHER%20ISSUES%20FACING%20THE%20COMPANY) This section addresses significant issues impacting TXNM, including climate change risks, EPA regulations, legislative activities, and transmission issues - TXNM identifies climate change risks (severe weather, environmental regulation, technological innovation, fuel/water availability) as significant, with Board oversight for integrated risk and strategy planning[482](index=482&type=chunk) - In 2024, GHG emissions from PNM's fossil-fueled plants were approximately **1.5 million metric tons of CO2**. As of June 30, 2025, **28%** of PNM's generating capacity was coal or gas-fired[487](index=487&type=chunk) - PNM aims for a **100% carbon-free** generating portfolio by 2040, aligning with the New Mexico ETA's requirement for **100% carbon-free by 2045**. This pathway tracks within global warming limits of less than **2 degrees Celsius**[507](index=507&type=chunk) - EPA's 2024 regulatory actions under CAA Sections 111(b) and (d) for GHG emissions from power plants are being reconsidered by the Trump Administration. A proposed rule on June 17, 2025, suggests repealing all GHG standards for the power sector[499](index=499&type=chunk)[501](index=501&type=chunk) - The OBBBA, signed in July 2025, significantly alters climate action by revising and phasing out certain IRA tax credits and restricting credits for 'foreign entities of concern'[502](index=502&type=chunk) - New Mexico's ETA requires utilities to factor a standardized cost of carbon emissions (**$8-$40 per metric ton of CO2**, escalating **2.5% annually**) into their IRPs. PNM's 2023 IRP focuses on a carbon-free energy system by 2040[503](index=503&type=chunk) - President Trump signed an executive order on January 20, 2025, directing the U.S. withdrawal from the Paris Agreement and other UN climate commitments[506](index=506&type=chunk) [Critical Accounting Policies and Estimates](index=110&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES%20AND%20ESTIMATES) No significant changes occurred in TXNM's, PNM's, and TNMP's critical accounting policies and estimates as of June 30, 2025 - No significant changes to critical accounting policies and estimates (regulatory accounting, impairments, decommissioning/reclamation costs, pension/OPEB, contingencies, income taxes) as of June 30, 2025[515](index=515&type=chunk) [MD&A for TNMP](index=110&type=section&id=MD%26A%20FOR%20TNMP) TNMP operates as a single reportable segment, with its results discussed within the TXNM MD&A - TNMP operates in only one reportable segment, with its results of operations discussed within the TXNM MD&A[517](index=517&type=chunk) [MD&A for PNM](index=110&type=section&id=MD%26A%20FOR%20PNM) PNM operates as a single reportable segment, with its results discussed within the TXNM MD&A - PNM operates in only one reportable segment, with its results of operations discussed within the TXNM MD&A[519](index=519&type=chunk) [Disclosure Regarding Forward Looking Statements](index=110&type=section&id=DISCLOSURE%20REGARDING%20FORWARD%20LOOKING%20STATEMENTS) This section cautions that forward-looking statements are subject to material risks, including those related to the pending Merger and regulatory approvals - Forward-looking statements are based on current expectations and estimates, and actual results may differ materially due to factors often beyond the Company's control[521](index=521&type=chunk)[522](index=522&type=chunk) - Key factors influencing results include the timing and completion of the Merger, regulatory approvals, legal proceedings, disruption of management time, costs incurred for the Merger, and potential stock price fluctuations if the Merger is not completed[523](index=523&type=chunk) - Other factors include the ability to recover costs in regulated jurisdictions, uncertainty in generation projects, decommissioning costs, customer usage trends, access to financial markets, operational issues, environmental regulations, and climate change risks[523](index=523&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=112&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This section describes TXNM's management of market risks, including commodity, credit, interest rate, and equity risks, with quantitative exposure disclosures - The Company manages market risk through policies and procedures overseen by the Risk Management Committee (RMC) and the Board's Finance Committee, covering commodity prices, interest rates, equity prices, and economic conditions[533](index=533&type=chunk)[536](index=536&type=chunk)[537](index=537&type=chunk) - PNM uses commodity derivative instruments as economic hedges, with fair values recorded on the balance sheet. For the six months ended June 30, 2025, mark-to-market commodity derivatives had no impact on PNM's net earnings, with **$3.2 million** in fair value losses recorded as a regulatory asset[538](index=538&type=chunk)[539](index=539&type=chunk) Wholesale Counterparty Credit Risk Exposure (June 30, 2025) | Credit Rating | Credit Risk Exposure (in thousands) | Number of Counterparties >10% | Net Exposure of Counter-parties >10% (in thousands) | | :--- | :--- | :--- | :--- | | Investment grade (External) | $1,837 | 2 | $1,519 | | Investment grade (Internal) | $230 | — | — | | **Total** | **$2,067** | | **$1,519** | - The majority of PNM's and TNMP's long-term debt is fixed-rate. TXNM's debt and the revolving credit facilities of PNM and TNMP are exposed to variable interest rate risk (based on SOFR)[545](index=545&type=chunk) Variable Rate Debt Balances (July 25, 2025) | Debt Type | Weighted Average Interest Rate | Balance Outstanding (in thousands) | | :--- | :--- | :--- | | Short-term Debt (Total) | N/A | $371,600 | | Long-term Debt (Total) | N/A | $605,000 | - PNM's investment trusts for decommissioning and reclamation had an estimated fair value of **$487.0 million** at June 30, 2025. Equity securities comprised **82.7%** of these trusts, exposing PNM to losses if market values decline. A hypothetical **10% decrease** in equity prices would reduce fair values by **$40.3 million**[546](index=546&type=chunk)[548](index=548&type=chunk) [ITEM 4. CONTROLS AND AND PROCEDURES](index=114&type=section&id=ITEM%204.%20CONTROLS%20AND%20AND%20PROCEDURES) TXNM, PNM, and TNMP management confirmed effective disclosure controls and procedures, with no material changes in internal controls during the quarter - As of June 30, 2025, the CEOs and CFOs of TXNM, PNM, and TNMP concluded that their disclosure controls and procedures are effective[549](index=549&type=chunk) - There have been no material changes in internal control over financial reporting for TXNM, PNM, or TNMP during the quarter ended June 30, 2025[550](index=550&type=chunk)[551](index=551&type=chunk) [PART II. OTHER INFORMATION](index=115&type=section&id=PART%20II.%20OTHER%20INFORMATION) [ITEM 1. LEGAL PROCEEDINGS](index=115&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) This section refers to Notes 11 and 12 for details on legal proceedings, including merger-related litigation and regulatory matters - Legal proceedings information for TXNM, PNM, and TNMP is incorporated by reference from Note 11 (Merger Related Litigation) and Note 12 (Regulatory and Rate Matters)[552](index=552&type=chunk)[553](index=553&type=chunk)[554](index=554&type=chunk) [ITEM 1A. RISK FACTORS](index=115&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section updates risk factors, focusing on uncertainties related to the proposed Merger, including completion, regulatory approvals, and potential business impacts - No material changes to risk factors since the 2024 Annual Reports on Form 10-K, except for those related to the proposed Merger with Blackstone Infrastructure[554](index=554&type=chunk) - Risks include uncertainty of merger completion due to conditions (shareholder/regulatory approvals), potential for delays or failure to close, and the possibility of unilateral termination by either party[555](index=555&type=chunk)[556](index=556&type=chunk) - The merger's announcement and pendency could disrupt TXNM's business, divert management attention, affect employee retention, and restrict business opportunities due to operating restrictions[557](index=557&type=chunk)[559](index=559&type=chunk) - TXNM will incur substantial transaction fees and costs, even if the merger is not completed. Termination of the merger could lead to negative market reactions, customer/employee reactions, and a **$210.0 million** termination fee payable to Blackstone Infrastructure under certain circumstances[560](index=560&type=chunk)[561](index=561&type=chunk) - Litigation challenging the merger has been initiated, seeking injunctive relief and other remedies. Adverse judgments could delay or prevent the merger and incur defense costs[562](index=562&type=chunk)[563](index=563&type=chunk) - Provisions in the Merger Agreement, such as 'no shop' clauses and termination fees, could discourage alternative acquirers[565](index=565&type=chunk) [ITEM 5. OTHER INFORMATION](index=117&type=section&id=ITEM%205.%20OTHER%20INFORMATION) This section reports no Rule 10b5-1 trading arrangement changes and details PNM's July 2025 Senior Unsecured Notes issuance - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[566](index=566&type=chunk) - On July 31, 2025, PNM issued **$350.0 million** aggregate principal amount of PNM July 2025 SUNs in a private placement, consisting of **$200.0 million** at **5.47%** due July 31, 2031, and **$150.0 million** at **6.03%** due July 31, 2036[567](index=567&type=chunk) - Proceeds from the PNM July 2025 SUNs will be used for repayment of existing indebtedness, funding capital expenditures, and general corporate purposes[568](index=568&type=chunk) - The PNM July 2025 Note Purchase Agreement includes customary covenants, including a debt-to-capitalization ratio of less than or equal to **65%**. A change of control (as defined) would require PNM to offer to prepay the SUNs at par, but the TXNM-Blackstone Merger is not considered a change of control under these terms[569](index=569&type=chunk) [ITEM 6. EXHIBITS](index=117&type=section&id=ITEM%206.%20EXHIBITS) This section lists all Form 10-Q exhibits, including the Merger Agreement, organizational documents, debt agreements, and officer certifications - Key exhibits include the Agreement and Plan of Merger (Exhibit 2.1), Restated Articles of Incorporation and Bylaws for TXNM, PNM, and TNMP (Exhibits 3.1-3.6), and various debt and stock purchase agreements (Exhibits 10.1-10.15)[572](index=572&type=chunk)[573](index=573&type=chunk) - Officer certifications under Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 are included for TXNM, PNM, and TNMP (Exhibits 31.1-32.3)[573](index=573&type=chunk)[574](index=574&type=chunk) - XBRL Instance Document and Taxonomy Extension Schema, Calculation, Definition, and Label Linkbase Documents are provided (Exhibits 101.INS-101.PRE)[574](index=574&type=chunk) [Signature](index=120&type=section&id=SIGNATURE)

[Second Quarter 2025 Earnings Overview](index=1&type=section&id=Second%20Quarter%202025%20Earnings%20Overview) Provides a comprehensive summary of TXNM Energy's financial performance for Q2 and YTD 2025, including GAAP and ongoing earnings, and key strategic updates [Consolidated Financial Highlights](index=1&type=section&id=1.1%20Consolidated%20Financial%20Highlights) TXNM Energy reported a significant decrease in GAAP net earnings and diluted EPS for Q2 2025 and YTD 2025 compared to the previous year, primarily influenced by equity issuance and debt refinancing related to the proposed Blackstone transaction. Ongoing earnings also saw a decline Consolidated Financial Highlights (Millions of Dollars, except EPS) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | GAAP net earnings attributable to TXNM Energy (millions) | $21.6 | $48.0 | $30.5 | $95.2 | | GAAP diluted EPS | $0.22 | $0.53 | $0.32 | $1.05 | | Ongoing net earnings (millions) | $24.5 | $54.3 | $42.6 | $91.3 | | Ongoing diluted EPS | $0.25 | $0.60 | $0.45 | $1.01 | - Earnings results in Q2 2025 reflect the issuance of **$600 million of equity**, including **$400 million to Blackstone Infrastructure affiliates**, and debt refinancing resulting from the proposed transaction with Blackstone Infrastructure[3](index=3&type=chunk) [CEO Commentary](index=1&type=section&id=1.2%20CEO%20Commentary) Don Tarry, President and CEO, highlighted constructive regulatory outcomes, including an unopposed rate stipulation at PNM, and expressed enthusiasm for the potential opportunities arising from the partnership with Blackstone Infrastructure - Achieved constructive regulatory outcomes with significant benefits for customers, including an unopposed rate stipulation at PNM[4](index=4&type=chunk) - Excited about potential opportunities through partnership with Blackstone Infrastructure and look forward to regulatory processes in New Mexico and Texas[4](index=4&type=chunk) [Key Highlights Summary](index=1&type=section&id=1.3%20Key%20Highlights%20Summary) TXNM Energy's second quarter 2025 results included GAAP diluted EPS of $0.22 and ongoing diluted EPS of $0.25. The proposed transaction with Blackstone Infrastructure is anticipated to close in the second half of 2026 - 2025 second quarter GAAP earnings of **$0.22 per diluted share**[6](index=6&type=chunk) - 2025 second quarter ongoing earnings of **$0.25 per diluted share**[6](index=6&type=chunk) - Proposed transaction with Blackstone Infrastructure expected to close in the **second half of 2026**[6](index=6&type=chunk) [Strategic and Regulatory Updates](index=1&type=section&id=Strategic%20and%20Regulatory%20Updates) Details the proposed Blackstone Infrastructure transaction, including acquisition terms and expected closing, alongside significant regulatory approvals and rate adjustments for TNMP and PNM [Blackstone Infrastructure Transaction Update](index=1&type=section&id=2.1%20Blackstone%20Infrastructure%20Transaction%20Update) TXNM Energy announced an agreement for affiliates of Blackstone Infrastructure to acquire the company's outstanding common stock for $61.25 per share in cash, reflecting a total enterprise value of $11.5 billion. The transaction is subject to shareholder and regulatory approvals and is expected to close in the second half of 2026 - On May 19, 2025, TXNM announced an agreement for affiliates of Blackstone Infrastructure to acquire outstanding common stock for **$61.25 per share in cash**, reflecting a total enterprise value of **$11.5 billion**, including net debt and preferred stock[5](index=5&type=chunk) - The transaction is subject to shareholder approval, along with federal and state-level approvals, and is expected to close in the **second half of 2026**[5](index=5&type=chunk) [Regulatory Developments](index=2&type=section&id=2.2%20Regulatory%20Developments) TNMP's first 2025 Distribution Cost Recovery Factor (DCRF) filing was approved, recovering $176 million in rate base, with a second filing seeking an additional $115 million. PNM implemented the first phase of a $105 million rate increase and secured approval for 450 megawatts of new solar and battery storage capacity - TNMP's first Distribution Cost Recovery Factor ("DCRF") filing for 2025 was approved and implemented in Q2, providing recovery for **$176 million of rate base**. Second DCRF and Transmission Cost of Service filings in July 2025 seek recovery for an additional **$115 million**[7](index=7&type=chunk) - At PNM, the first phase of a previously approved **$105 million rate increase** was implemented July 1, 2025, with the second phase due April 1, 2026[8](index=8&type=chunk) - PNM's unopposed stipulation in its 2028 Resource Application was approved, adding **450 megawatts of new solar and battery storage capacity** in 2028[8](index=8&type=chunk) [Segment Performance Analysis](index=2&type=section&id=Segment%20Performance%20Analysis) Analyzes the diluted EPS results for PNM, TNMP, and Corporate and Other segments, identifying key factors influencing their respective earnings performance [EPS Results by Segment](index=2&type=section&id=3.1%20EPS%20Results%20by%20Segment) Consolidated GAAP diluted EPS decreased from $0.53 in Q2 2024 to $0.22 in Q2 2025, and ongoing diluted EPS decreased from $0.60 to $0.25. PNM and TNMP both saw declines in GAAP EPS, while TNMP's ongoing EPS slightly decreased. Corporate and Other's GAAP loss per share widened EPS Results by Segment (Per Diluted Share) | Segment | Q2 2025 GAAP Diluted EPS | Q2 2024 GAAP Diluted EPS | Q2 2025 Ongoing Diluted EPS | Q2 2024 Ongoing Diluted EPS | | :--- | :--- | :--- | :--- | :--- | | PNM | $0.25 | $0.34 | $0.12 | $0.41 | | TNMP | $0.22 | $0.33 | $0.27 | $0.33 | | Corporate and Other | ($0.25) | ($0.14) | ($0.14) | ($0.14) | | Consolidated TXNM Energy | $0.22 | $0.53 | $0.25 | $0.60 | - GAAP and ongoing earnings per share were reduced in Q2 2025 by additional shares issued in December 2024 and Q2 2025[10](index=10&type=chunk) - GAAP earnings in Q2 2025 included **$16.6 million of net unrealized gains on investment securities** (vs. **$5.6 million net unrealized losses in Q2 2024**) and **$19.5 million of costs related to the planned acquisition**[11](index=11&type=chunk) [Factors Affecting Segment Earnings](index=2&type=section&id=3.2%20Factors%20Affecting%20Segment%20Earnings) PNM's earnings were impacted by lower weather-related usage, increased insurance premiums, higher depreciation, property tax, and interest expense, partially offset by higher retail load and timing of plant outages. TNMP's earnings benefited from DCRF rate recovery and higher retail load, offset by lower weather-related usage and increased depreciation and interest expense - PNM: Higher retail load and timing of plant outages were more than offset by lower weather-related usage, increased insurance premiums, timing of excess deferred income taxes, higher depreciation, property tax, interest expense from new capital investments, and increased demand charges from energy storage agreements[13](index=13&type=chunk) - TNMP: Rate recovery through DCRF and higher retail load were partially offset by lower weather-related usage and depreciation and interest expense associated with new capital investments[13](index=13&type=chunk) [Detailed Financial Statements and Reconciliations](index=3&type=section&id=Detailed%20Financial%20Statements%20and%20Reconciliations) Presents condensed consolidated statements of earnings and provides comprehensive reconciliations from GAAP to ongoing earnings for both consolidated and segment-level results [Condensed Consolidated Statements of Earnings](index=8&type=section&id=4.1%20Condensed%20Consolidated%20Statements%20of%20Earnings) Consolidated electric operating revenues increased for both Q2 and YTD 2025 compared to 2024. However, operating income and net earnings attributable to TXNM significantly decreased due to higher operating expenses (especially administrative and general, cost of energy, depreciation) and substantially higher interest charges Condensed Consolidated Statements of Earnings (Thousands of Dollars, except EPS) | Metric (In thousands) | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Electric Operating Revenues | $502,420 | $488,102 | $985,212 | $924,979 | | Total operating expenses | $429,719 | $382,419 | $840,622 | $738,706 | | Operating income | $72,701 | $105,683 | $144,590 | $186,273 | | Interest Charges | $72,013 | $55,828 | $135,564 | $109,590 | | Net Earnings Attributable to TXNM | $21,576 | $48,049 | $30,499 | $95,239 | | Diluted EPS | $0.22 | $0.53 | $0.32 | $1.05 | | Dividends Declared per Common Share | $0.4075 | $0.3875 | $0.8150 | $0.7750 | - Operating expenses increased significantly, with Administrative and general rising from **$59.6 million in Q2 2024 to $76.0 million in Q2 2025**, and Cost of energy increasing from **$154.7 million to $167.6 million** over the same period[26](index=26&type=chunk) - Interest Charges increased substantially from **$55.8 million in Q2 2024 to $72.0 million in Q2 2025**, contributing to the decline in net earnings[26](index=26&type=chunk) [Non-GAAP Financial Measures Definition](index=3&type=section&id=4.2%20Non-GAAP%20Financial%20Measures%20Definition) Defines 'Ongoing earnings' as a non-GAAP financial measure that excludes specific non-recurring or non-indicative items, such as unrealized mark-to-market gains/losses, pension expense from disposed businesses, and certain non-recurring costs, used by the company for internal evaluation and goal setting - Ongoing earnings is a non-GAAP financial measure that excludes the impact of net unrealized mark-to-market gains and losses on economic hedges, the net change in unrealized gains and losses on investment securities, pension expense related to previously disposed of gas distribution business, and certain non-recurring, infrequent, and other items[16](index=16&type=chunk) - The Company uses ongoing earnings and ongoing earnings per diluted share to evaluate operations and to establish goals, including those for incentive compensation, for management and employees[16](index=16&type=chunk) [Reconciliation of GAAP to Ongoing Earnings (Thousands)](index=4&type=section&id=4.3%20Reconciliation%20of%20GAAP%20to%20Ongoing%20Earnings%20%28Thousands%29) Provides detailed reconciliations between GAAP net earnings and ongoing earnings for TXNM Consolidated and its segments (PNM, TNMP, Corporate and Other) for Q2 and YTD 2025 and 2024. Key adjustments include unrealized gains/losses on investment securities, rate request settlements, pension expense, process improvement initiatives, and merger-related costs, along with their income tax impacts [Three and Six Months Ended June 30, 2025](index=4&type=section&id=4.3.1%20Three%20and%20Six%20Months%20Ended%20June%2030,%202025) Presents the reconciliation of GAAP to ongoing earnings for TXNM Consolidated and its segments for the three and six months ended June 30, 2025 Reconciliation of GAAP to Ongoing Earnings (Thousands of Dollars) | Metric (in thousands) | PNM | TNMP | Corporate and Other | TXNM Consolidated | | :--- | :--- | :--- | :--- | :--- | | **Three Months Ended June 30, 2025** | | | | | | GAAP Net Earnings (Loss) Attributable to TXNM | $24,362 | $20,968 | ($23,754) | $21,576 | | Adjusting items, net of income taxes | ($13,264) | $5,433 | $10,757 | $2,926 | | Ongoing Earnings (Loss) | $11,098 | $26,401 | ($12,997) | $24,502 | | **Six Months Ended June 30, 2025** | | | | | | GAAP Net Earnings (Loss) Attributable to TXNM | $25,307 | $43,251 | ($38,059) | $30,499 | | Adjusting items, net of income taxes | ($5,290) | $5,374 | $12,045 | $12,129 | | Ongoing Earnings (Loss) | $20,017 | $48,625 | ($26,014) | $42,628 | - For Q2 2025, significant pre-tax adjustments included net unrealized gains on investment securities of (**$16,617 thousand**) and merger related costs of **$19,539 thousand** for TXNM Consolidated[18](index=18&type=chunk) [Three and Six Months Ended June 30, 2024](index=5&type=section&id=4.3.2%20Three%20and%20Six%20Months%20Ended%20June%2030,%202024) Presents the reconciliation of GAAP to ongoing earnings for TXNM Consolidated and its segments for the three and six months ended June 30, 2024 Reconciliation of GAAP to Ongoing Earnings (Thousands of Dollars) | Metric (in thousands) | PNM | TNMP | Corporate and Other | TXNM Consolidated | | :--- | :--- | :--- | :--- | :--- | | **Three Months Ended June 30, 2024** | | | | | | GAAP Net Earnings (Loss) Attributable to TXNM | $30,787 | $29,925 | ($12,663) | $48,049 | | Adjusting items, net of income taxes | $6,388 | ($104) | $4 | $6,288 | | Ongoing Earnings (Loss) | $37,175 | $29,821 | ($12,659) | $54,337 | | **Six Months Ended June 30, 2024** | | | | | | GAAP Net Earnings (Loss) Attributable to TXNM | $72,707 | $44,508 | ($21,976) | $95,239 | | Adjusting items, net of income taxes | ($710) | ($18) | ($3,219) | ($3,947) | | Ongoing Earnings (Loss) | $71,997 | $44,490 | ($25,195) | $91,292 | - For Q2 2024, significant pre-tax adjustments included net unrealized losses on investment securities of **$5,573 thousand** and merger related costs of **$905 thousand** for TXNM Consolidated[20](index=20&type=chunk) [Reconciliation of GAAP to Ongoing Earnings Per Diluted Share](index=6&type=section&id=4.4%20Reconciliation%20of%20GAAP%20to%20Ongoing%20Earnings%20Per%20Diluted%20Share) Presents the per-share impact of the adjustments made to reconcile GAAP diluted EPS to ongoing diluted EPS for TXNM Consolidated and its segments for Q2 and YTD 2025 and 2024 [Three and Six Months Ended June 30, 2025](index=6&type=section&id=4.4.1%20Three%20and%20Six%20Months%20Ended%20June%2030,%202025) Presents the per-share reconciliation of GAAP to ongoing earnings for TXNM Consolidated and its segments for the three and six months ended June 30, 2025 Reconciliation of GAAP to Ongoing Earnings Per Diluted Share | Metric (per diluted share) | PNM | TNMP | Corporate and Other | TXNM Consolidated | | :--- | :--- | :--- | :--- | :--- | | **Three Months Ended June 30, 2025** | | | | | | GAAP Net Earnings (Loss) Attributable to TXNM | $0.25 | $0.22 | ($0.25) | $0.22 | | Total Adjustments | ($0.13) | $0.05 | $0.11 | $0.03 | | Ongoing Earnings (Loss) | $0.12 | $0.27 | ($0.14) | $0.25 | | **Six Months Ended June 30, 2025** | | | | | | GAAP Net Earnings (Loss) Attributable to TXNM | $0.27 | $0.46 | ($0.41) | $0.32 | | Total Adjustments | ($0.06) | $0.05 | $0.14 | $0.13 | | Ongoing Earnings (Loss) | $0.21 | $0.51 | ($0.27) | $0.45 | - Average Diluted Shares Outstanding for Q2 2025 was **96,196,269** and for YTD 2025 was **94,637,324**[22](index=22&type=chunk) [Three and Six Months Ended June 30, 2024](index=7&type=section&id=4.4.2%20Three%20and%20Six%20Months%20Ended%20June%2030,%202024) Presents the per-share reconciliation of GAAP to ongoing earnings for TXNM Consolidated and its segments for the three and six months ended June 30, 2024 Reconciliation of GAAP to Ongoing Earnings Per Diluted Share | Metric (per diluted share) | PNM | TNMP | Corporate and Other | TXNM Consolidated | | :--- | :--- | :--- | :--- | :--- | | **Three Months Ended June 30, 2024** | | | | | | GAAP Net Earnings (Loss) Attributable to TXNM | $0.34 | $0.33 | ($0.14) | $0.53 | | Total Adjustments | $0.07 | — | — | $0.07 | | Ongoing Earnings (Loss) | $0.41 | $0.33 | ($0.14) | $0.60 | | **Six Months Ended June 30, 2024** | | | | | | GAAP Net Earnings (Loss) Attributable to TXNM | $0.80 | $0.49 | ($0.24) | $1.05 | | Total Adjustments | — | — | ($0.04) | ($0.04) | | Ongoing Earnings (Loss) | $0.80 | $0.49 | ($0.28) | $1.01 | - Average Diluted Shares Outstanding for Q2 2024 was **90,552,082** and for YTD 2024 was **90,532,986**[24](index=24&type=chunk) [Additional Information](index=3&type=section&id=Additional%20Information) Offers background on TXNM Energy's operations and includes a safe harbor statement regarding forward-looking information and investor contact details [Company Background](index=3&type=section&id=5.1%20Company%20Background) TXNM Energy is an energy holding company based in Albuquerque, New Mexico, serving over 800,000 homes and businesses in Texas and New Mexico through its regulated utilities, TNMP and PNM - TXNM Energy (NYSE: TXNM), an energy holding company based in Albuquerque, New Mexico, delivers energy to more than **800,000 homes and businesses** across Texas and New Mexico[14](index=14&type=chunk) - The company operates through its regulated utilities, TNMP and PNM[14](index=14&type=chunk) [Safe Harbor Statement and Contacts](index=3&type=section&id=5.2%20Safe%20Harbor%20Statement%20and%20Contacts) Includes a standard safe harbor statement regarding forward-looking statements, cautioning readers about risks and uncertainties, particularly concerning the Blackstone transaction. Provides contact information for analysts and media - Statements made in this press release that relate to future events or expectations, projections, estimates, intentions, goals, targets, and strategies are made pursuant to the Private Securities Litigation Reform Act of 1995[15](index=15&type=chunk) - Readers are cautioned that all forward-looking statements are based upon current expectations and estimates, and actual results may differ materially due to various factors, including risks related to the proposed transaction with Blackstone Infrastructure[15](index=15&type=chunk) - Contact information for analysts: Lisa Goodman (**505) 241-2160**; Media: Corporate Communications (**505) 241-2743**[15](index=15&type=chunk)

Core Insights - TXNM Energy reported a significant decline in earnings for Q2 2025 compared to Q2 2024, with GAAP net earnings attributable to TXNM Energy at $21.6 million, down from $48.0 million, and ongoing net earnings at $24.5 million, down from $54.3 million [1][21] - The company issued $600 million in equity, including $400 million to affiliates of Blackstone Infrastructure Partners, and is undergoing debt refinancing related to the proposed acquisition by Blackstone [1][3] - TXNM Energy is not affirming its previously issued earnings guidance for 2025 due to the pending transaction with Blackstone Infrastructure [1] Financial Performance - Q2 2025 GAAP diluted EPS was $0.22, a decrease from $0.53 in Q2 2024, while ongoing diluted EPS was $0.25, down from $0.60 [1][21] - Year-to-date (YTD) 2025 results show GAAP net earnings of $30.5 million compared to $95.2 million in YTD 2024, and ongoing net earnings of $42.6 million compared to $91.3 million [1] - Electric operating revenues for Q2 2025 were $502.4 million, up from $488.1 million in Q2 2024 [21] Transaction and Regulatory Updates - TXNM Energy announced an agreement for Blackstone Infrastructure to acquire its outstanding common stock at $61.25 per share, reflecting a total enterprise value of $11.5 billion [3] - The transaction is subject to shareholder and regulatory approvals and is expected to close in the second half of 2026 [3] - TXNM's regulatory outcomes include the approval of a $176 million Distribution Cost Recovery Factor (DCRF) filing and a $105 million rate increase at PNM, with further rate recovery filings planned [4][5] Segment Reporting - In Q2 2025, PNM's GAAP diluted EPS was $0.25, down from $0.34 in Q2 2024, while TNMP's GAAP diluted EPS was $0.22, down from $0.33 [6] - Corporate and Other segment reported a loss of $0.25 per share in Q2 2025, compared to a loss of $0.14 in Q2 2024 [6] - The decline in earnings per share was attributed to the issuance of additional shares and costs related to the planned acquisition [6][7] Operational Insights - The company faced increased operating expenses, with total operating expenses for Q2 2025 at $429.7 million, compared to $382.4 million in Q2 2024 [21] - Key factors affecting PNM included higher retail load and increased costs from new capital investments, while TNMP's performance was impacted by lower weather-related usage [10]