TXNM Energy, Inc.(TXNM) - 2025 Q2 - Quarterly Results

Second Quarter 2025 Earnings Overview 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 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] CEO Commentary 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] - Excited about potential opportunities through partnership with Blackstone Infrastructure and look forward to regulatory processes in New Mexico and Texas[4] Key Highlights Summary 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] - 2025 second quarter ongoing earnings of $0.25 per diluted share[6] - Proposed transaction with Blackstone Infrastructure expected to close in the second half of 2026[6] Strategic and Regulatory Updates 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 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] - 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] Regulatory Developments 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] - 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] - PNM's unopposed stipulation in its 2028 Resource Application was approved, adding 450 megawatts of new solar and battery storage capacity in 2028[8] Segment Performance Analysis 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 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] - 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] Factors Affecting Segment Earnings 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] - 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] Detailed Financial Statements and Reconciliations 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 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] - 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] Non-GAAP Financial Measures Definition 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] - 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] Reconciliation of GAAP to Ongoing Earnings (Thousands) 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 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] Three and Six Months Ended June 30, 2024 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] Reconciliation of GAAP to Ongoing Earnings Per Diluted Share 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 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] Three and Six Months Ended June 30, 2024 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] Additional Information Offers background on TXNM Energy's operations and includes a safe harbor statement regarding forward-looking information and investor contact details Company Background 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] - The company operates through its regulated utilities, TNMP and PNM[14] Safe Harbor Statement and Contacts 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] - 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] - Contact information for analysts: Lisa Goodman (505) 241-2160; Media: Corporate Communications (505) 241-2743[15]