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

FORM 10-Q Filing Information Registrant Information 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][7] Filing Compliance 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 Glossary PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS (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 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 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 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 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 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] - 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] 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] - 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][80] (2) Segment Information 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][83][84][85] 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) 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 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] (5) Electric Operating Revenues 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] - 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] - 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] 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 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][107] 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][110][112] - 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][114] 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 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][122] - 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] 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][140] 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 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][146] - 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] 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] (9) Financing 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] - 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][157][158] - 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] - 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][165] - 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] 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 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] 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] 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] (11) Commitments and Contingencies 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] - 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] - 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] - 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] - 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] - 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] (12) Regulatory and Rate Matters 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][265] - 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][267] - 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] - 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][281] - 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] 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] - 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][300] (13) Lease Commitments 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] - PNM has no further lease payments related to PVNGS Unit 1 or 2, as leases expired in January 2023 and January 2024, respectively[302] - 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] 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 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] - 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] - 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] - 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] (15) Related Party Transactions 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] 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 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][328] - 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][322][325] - 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] - 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] (17) Merger 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] - 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] - 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][342] - 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][334] - 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] ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 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 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][408] Executive Summary 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] - 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][342] - 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][344] - 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][346] - 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][350] - 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][352] - PNM's Grid Modernization Plan and TNMP's System Resiliency Plan are key investment initiatives to improve grid resilience and customer experience[354] - 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][360][361][362][363] - 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][398] - 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] Results of Operations 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 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] 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] - 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][419][421] 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 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] 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] - 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][430][432][433][434] 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 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] - 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][437][438] 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 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][442][443] 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] - 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][474] - 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] 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 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] - 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] - 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] - 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][501] - 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] - 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] - 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] Critical Accounting Policies and Estimates 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] MD&A for TNMP 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] MD&A for PNM 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] Disclosure Regarding Forward Looking Statements 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][522] - 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] - 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] ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 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][536][537] - 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][539] 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] 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][548] ITEM 4. CONTROLS AND AND PROCEDURES 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] - 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][551] PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS 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][553][554] ITEM 1A. RISK FACTORS 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] - 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][556] - 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][559] - 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][561] - 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][563] - Provisions in the Merger Agreement, such as 'no shop' clauses and termination fees, could discourage alternative acquirers[565] ITEM 5. OTHER INFORMATION 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] - 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] - Proceeds from the PNM July 2025 SUNs will be used for repayment of existing indebtedness, funding capital expenditures, and general corporate purposes[568] - 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] ITEM 6. EXHIBITS 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][573] - 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][574] - XBRL Instance Document and Taxonomy Extension Schema, Calculation, Definition, and Label Linkbase Documents are provided (Exhibits 101.INS-101.PRE)[574] Signature