PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Presents unaudited condensed consolidated financial statements for TXNM, PNM, and TNMP, including earnings, balance sheets, and cash flows, with comprehensive notes TXNM Energy, Inc. and Subsidiaries Financial Statements TXNM's Q1 2025 net earnings fell to $8.9 million ($0.10 per diluted share) from $47.2 million, total assets increased to $11.39 billion TXNM Condensed Consolidated Statement of Earnings (Q1 2025 vs Q1 2024) | Metric | Q1 2025 (In thousands) | Q1 2024 (In thousands) | | :--- | :--- | :--- | | Electric Operating Revenues | $482,792 | $436,877 | | Operating Income | $71,889 | $80,590 | | Net Earnings Attributable to TXNM | $8,923 | $47,190 | | Diluted EPS | $0.10 | $0.52 | TXNM Condensed Consolidated Balance Sheet Highlights | Metric | March 31, 2025 (In thousands) | December 31, 2024 (In thousands) | | :--- | :--- | :--- | | Total Current Assets | $489,406 | $498,836 | | Net Utility Plant | $8,622,927 | $8,437,008 | | Total Assets | $11,390,620 | $11,211,733 | | Total Current Liabilities | $1,694,175 | $1,775,098 | | Long-term Debt, net | $4,582,713 | $4,311,765 | | Total Liabilities | $8,828,384 | $8,616,919 | | Total TXNM Common Stockholders' Equity | $2,504,335 | $2,536,385 | TXNM Condensed Consolidated Statement of Cash Flows (Q1 2025 vs Q1 2024) | Metric | Q1 2025 (In thousands) | Q1 2024 (In thousands) | | :--- | :--- | :--- | | Net cash flows from operating activities | $141,257 | $92,816 | | Net cash flows used in investing activities | ($345,009) | ($184,358) | | Net cash flows from financing activities | $197,560 | $99,509 | Public Service Company of New Mexico (PNM) and Subsidiaries Financial Statements PNM's Q1 2025 net earnings fell sharply to $0.9 million from $41.9 million, driven by higher costs, total assets at $7.47 billion PNM Condensed Consolidated Statement of Earnings (Q1 2025 vs Q1 2024) | Metric | Q1 2025 (In thousands) | Q1 2024 (In thousands) | | :--- | :--- | :--- | | Electric Operating Revenues | $333,380 | $308,115 | | Operating Income | $31,338 | $50,950 | | Net Earnings Available for PNM Common Stock | $945 | $41,920 | PNM Condensed Consolidated Balance Sheet Highlights | Metric | March 31, 2025 (In thousands) | December 31, 2024 (In thousands) | | :--- | :--- | :--- | | Total Assets | $7,471,816 | $7,407,279 | | Total Liabilities | $5,274,550 | $5,211,552 | | Total Equity | $2,185,737 | $2,184,198 | Texas-New Mexico Power Company (TNMP) and Subsidiaries Financial Statements TNMP's Q1 2025 net earnings increased to $22.3 million from $14.6 million, driven by higher revenues, total assets grew to $3.76 billion TNMP Condensed Consolidated Statement of Earnings (Q1 2025 vs Q1 2024) | Metric | Q1 2025 (In thousands) | Q1 2024 (In thousands) | | :--- | :--- | :--- | | Electric Operating Revenues | $149,412 | $128,762 | | Operating Income | $42,747 | $30,738 | | Net Earnings | $22,283 | $14,583 | TNMP Condensed Consolidated Balance Sheet Highlights | Metric | March 31, 2025 (In thousands) | December 31, 2024 (In thousands) | | :--- | :--- | :--- | | Total Assets | $3,760,714 | $3,649,125 | | Total Liabilities | $2,373,242 | $2,283,936 | | Total Common Stockholder's Equity | $1,387,472 | $1,365,189 | Notes to Condensed Consolidated Financial Statements Detailed notes explain accounting policies, financing, environmental commitments, regulatory updates for PNM and TNMP, leases, and pension plans - PNM filed a new general rate case in June 2024 (2025 Rate Request) seeking a $174.3 million revenue increase; an unopposed stipulation was filed in November 2024 proposing a $105.0 million increase, with a hearing examiner recommending approval in April 2025233234236 - TNMP received final PUCT approval in March 2025 for its System Resiliency Plan (SRP), authorizing $545.8 million in capital investments and $86.1 million in O&M costs over three years to enhance grid resiliency258259 - Recent financing activities in Q1 2025 include PNM's $195.0 million term loan and TNMP's issuance of $140.0 million in first mortgage bonds; subsequent to the quarter, in April 2025, PNM issued an additional $300.0 million in Senior Unsecured Notes149150151 - The company is actively managing environmental regulations, including the ETA which mandates a 100% zero-carbon portfolio by 2045 for PNM, and new EPA rules on Coal Combustion Residuals (CCRs), which identified one CCRMU at SJGS requiring evaluation172210211 Disaggregation of Revenues from Contracts with Customers (Three Months Ended March 31, 2025) | Customer Type | PNM (In thousands) | TNMP (In thousands) | TXNM Consolidated (In thousands) | | :--- | :--- | :--- | :--- | | Residential | $124,554 | $48,781 | $173,335 | | Commercial | $102,159 | $46,962 | $149,121 | | Industrial | $33,632 | $11,546 | $45,178 | | Transmission | $35,017 | $40,220 | $75,237 | | Wholesale energy sales | $16,928 | $— | $16,928 | | Total revenues from contracts | $329,958 | $150,455 | $480,413 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses TXNM's financial condition and operations, including business objectives, segment results, liquidity, capital, and regulatory matters Executive Summary TXNM's Q1 2025 net earnings fell to $8.9 million ($0.10 per diluted share) due to investment losses and higher costs, strategic focus on carbon-free goals - Net earnings attributable to TXNM for Q1 2025 were $8.9 million ($0.10 per diluted share), a significant decrease from $47.2 million ($0.52 per diluted share) in Q1 2024338 - Key drivers for the earnings decrease include poor performance of PNM's NDT and other investment securities, higher operating expenses, increased depreciation, and higher interest charges, which more than offset benefits from rate relief and load growth at TNMP338 - TNMP received final PUCT approval for its System Resiliency Plan (SRP) in March 2025, enhancing its distribution system280 - PNM's 2025 Rate Request, filed in June 2024, has progressed with an unopposed stipulation filed in November 2024 and a hearing examiner's recommendation for approval in April 2025281282 Results of Operations TXNM's consolidated net earnings decreased by $38.3 million in Q1 2025, driven by a $41.0 million decline in PNM's earnings, partially offset by TNMP's $7.7 million increase Change in Net Earnings by Segment (Q1 2025 vs Q1 2024) | Segment | Change in Net Earnings (In millions) | | :--- | :--- | | TNMP | $7.7 | | PNM | ($41.0) | | Corporate and Other | ($5.0) | | Net Change | ($38.3) | - TNMP's utility margin increased by $17.3 million, primarily due to transmission rate relief ($4.4M), distribution rate relief ($6.3M), and higher demand-based load ($3.3M)351 - PNM's utility margin decreased by $8.3 million, largely due to costs from new energy storage capacity arrangements ($10.0M) and lower transmission margin ($2.5M), which offset gains from higher retail load ($4.3M)356 - A significant factor in PNM's lower earnings was a $19.2 million decrease in performance on investment securities in its NDT and coal mine reclamation trusts compared to the prior year358 Liquidity and Capital Resources TXNM had $585.5 million in liquidity as of April 25, 2025, projecting $8.6 billion in capital requirements for 2025-2029, primarily for construction and dividends Projected Capital Requirements (2025-2029) | Requirement | 2025 (In millions) | 2026-2029 (In millions) | Total (In millions) | | :--- | :--- | :--- | :--- | | Construction expenditures | $1,321.3 | $6,513.0 | $7,834.3 | | Dividends on TXNM common stock | $151.0 | $611.3 | $762.3 | | Total capital requirements | $1,472.8 | $7,126.4 | $8,599.2 | - Total available liquidity as of April 25, 2025, was $585.5 million across all revolving credit facilities387 - The company has approximately $1.0 billion in consolidated debt maturities through April 2026 and anticipates needing additional long-term financing to fund its capital plan342 - The company is in compliance with all debt covenants, which primarily consist of a debt-to-capitalization ratio limit (70% for TXNM, 65% for PNM/TNMP)372 Other Issues Facing the Company The company addresses climate change risks and opportunities, with PNM committed to a carbon-free portfolio by 2040, navigating complex federal and state regulatory landscapes - PNM is committed to a 100% carbon-free generating portfolio by 2040, which is more aggressive than the New Mexico ETA mandate of 2045395419 - The retirement of the SJGS plant in 2022 resulted in a 67% reduction in PNM's GHG emissions from 2021 levels400 - The company faces uncertainty from federal policy shifts, noting President Trump's January 2025 executive orders directing a review of EPA actions, withdrawal from the Paris Agreement, and reconsideration of the 2009 GHG endangerment finding413418 - PNM's resource planning is heavily influenced by New Mexico's ETA, which sets renewable portfolio standards of 50% by 2030, 80% by 2040, and 100% zero-carbon by 2045415 Item 3. Quantitative and Qualitative Disclosures About Market Risk The company manages commodity, credit, and interest rate risks, with significant variable-rate debt exposure and PNM's investment trusts facing equity and interest rate market risks - The company is exposed to interest rate risk on its variable-rate debt; as of April 25, 2025, total outstanding variable-rate debt was $1.207 billion, comprising $351.4 million in short-term debt and $856.0 million in long-term debt455 - PNM's decommissioning and reclamation trusts held $470.2 million in investments as of March 31, 2025; 66.3% of this was in equity securities, exposing the trusts to equity market risk; a hypothetical 10% decrease in equity prices would reduce the fair value by $31.2 million455457 - Credit risk from wholesale counterparties totaled $0.9 million as of March 31, 2025, with the largest single counterparty exposure being $0.2 million451 Item 4. Controls and Procedures TXNM's CEO and CFO concluded that disclosure controls and procedures are effective as of March 31, 2025, with no material changes to internal control over financial reporting - Management, including the CEO and CFO, concluded that disclosure controls and procedures for TXNM, PNM, and TNMP are effective as of the end of the period covered by the report458 - No changes in internal control over financial reporting occurred during the quarter ended March 31, 2025, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting459460 PART II. OTHER INFORMATION Item 1. Legal Proceedings Information on legal proceedings, including PNM and TNMP rate cases and regulatory filings, is incorporated by reference from Note 12 - Information regarding legal proceedings is incorporated by reference from Note 12, which details ongoing regulatory and rate matters460464 Item 1A. Risk Factors No material changes to the risk factors previously disclosed in the 2024 Annual Report on Form 10-K have occurred - There have been no material changes to the risk factors previously disclosed in the 2024 Annual Report on Form 10-K461 Item 5. Other Information No director or officer adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q1 2025 - No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter462 Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including corporate governance, financing agreements, incentive plans, and CEO/CFO certifications - The report includes several exhibits, such as financing agreements for TNMP and PNM, amendments to long-term incentive plans, and CEO/CFO certifications under the Sarbanes-Oxley Act463465
TXNM Energy, Inc.(TXNM) - 2025 Q1 - Quarterly Report