TXNM Earnings Dip 28.8% YTD Amid Rising Costs, Increased Borrowing

TL;DR

**TXNM's earnings are getting crushed by rising costs and debt, making it a risky bet despite revenue growth.**

AI Summary

TXNM Energy Inc. reported a slight decrease in net earnings attributable to TXNM for the three months ended September 30, 2025, at $130.71 million, down from $131.20 million in the prior year. However, for the nine months ended September 30, 2025, net earnings attributable to TXNM significantly declined to $161.21 million from $226.44 million in the same period of 2024, representing a 28.8% drop. Basic and diluted earnings per common share also fell to $1.63 for the nine-month period in 2025, compared to $2.50 in 2024. Electric operating revenues increased to $647.16 million for the quarter and $1.63 billion for the nine months, up from $569.26 million and $1.49 billion respectively. Operating expenses rose, with cost of energy increasing to $531.85 million for the nine months from $425.92 million. The company saw a substantial increase in long-term borrowings, reaching $3.15 billion for the nine months ended September 30, 2025, up from $1.23 billion in 2024, and issued $842.89 million in common stock. Cash and cash equivalents significantly increased to $32.07 million as of September 30, 2025, from $4.50 million at December 31, 2024.

Why It Matters

TXNM's significant 28.8% year-over-year decline in net earnings for the nine months ended September 30, 2025, despite increased revenues, signals potential margin pressures and operational challenges for investors. The substantial increase in long-term borrowings to $3.15 billion and common stock issuance of $842.89 million indicates a strategic shift towards financing growth or managing liquidity, which could impact future shareholder dilution and debt servicing capacity. This performance contrasts with the broader utility sector's typical stability, potentially making TXNM less attractive compared to peers with stronger earnings growth and lower leverage. Employees and customers might see implications in future rate adjustments or investment in infrastructure, while the competitive landscape could intensify if TXNM's financial health lags.

Risk Assessment

Risk Level: high — The company's net earnings attributable to TXNM plummeted by 28.8% for the nine months ended September 30, 2025, to $161.21 million from $226.44 million in 2024. This significant decline, coupled with a substantial increase in long-term borrowings to $3.15 billion from $1.23 billion, indicates heightened financial risk and potential strain on profitability and debt servicing capabilities.

Analyst Insight

Investors should consider a 'hold' or 'sell' position on TXNM given the significant 28.8% drop in nine-month net earnings and the substantial increase in long-term debt. Monitor future filings for signs of improved cost control and successful integration of new financing, as these factors will dictate the company's ability to stabilize profitability and manage its increased leverage.

Financial Highlights

revenue

$1.63B

total Debt

$3.15B

net Income

$161.21M

eps

$1.63

cash Position

$32.07M

revenue Growth

+9.2%

Revenue Breakdown

Key Numbers

• $130.71M — Net Earnings Attributable to TXNM (Q3 2025) (Slight decrease from $131.20M in Q3 2024)
• $161.21M — Net Earnings Attributable to TXNM (YTD 2025) (28.8% decrease from $226.44M in YTD 2024)
• $1.63 — Diluted EPS (YTD 2025) (Decrease from $2.50 in YTD 2024)
• $647.16M — Electric Operating Revenues (Q3 2025) (Increase from $569.26M in Q3 2024)
• $1.63B — Electric Operating Revenues (YTD 2025) (Increase from $1.49B in YTD 2024)
• $531.85M — Cost of Energy (YTD 2025) (Increase from $425.92M in YTD 2024)
• $3.15B — Long-term borrowings (YTD 2025) (Significant increase from $1.23B in YTD 2024)
• $842.89M — Issuance of common stock (YTD 2025) (New issuance, no comparable figure in 2024)
• $32.07M — Cash and cash equivalents (Sept 30, 2025) (Significant increase from $4.50M at Dec 31, 2024)

Key Players & Entities

• TXNM Energy, Inc. (company) — Registrant and parent company
• Public Service Company of New Mexico (company) — Subsidiary of TXNM Energy, Inc.
• Texas-New Mexico Power Company (company) — Subsidiary of TXNM Energy, Inc.
• Blackstone Infrastructure Partners L.P. (company) — Affiliate of Parent in the Merger Agreement
• New York Stock Exchange (regulator) — Exchange where TXNM Common Stock is registered
• United States Securities and Exchange Commission (regulator) — Regulatory body for filing
• $130.71 million (dollar_amount) — Net Earnings Attributable to TXNM for Q3 2025
• $161.21 million (dollar_amount) — Net Earnings Attributable to TXNM for nine months ended Sept 30, 2025
• $3.15 billion (dollar_amount) — Long-term borrowings for nine months ended Sept 30, 2025
• $842.89 million (dollar_amount) — Issuance of common stock for nine months ended Sept 30, 2025

FAQ

Risk Factors

• Increased Interest Expenses [high — financial]: Interest charges rose significantly to $205.71 million for the nine months ended September 30, 2025, up from $169.25 million in the prior year. This increase is directly linked to the substantial rise in long-term borrowings.
• Substantial Increase in Long-Term Debt [high — financial]: Long-term borrowings surged to $3.15 billion for the nine months ended September 30, 2025, from $1.23 billion in the same period of 2024. This nearly tripled debt level increases financial risk and interest burden.
• Rising Cost of Energy [medium — operational]: The cost of energy increased by 24.9% to $531.85 million for the nine months ended September 30, 2025, compared to $425.92 million in the prior year. This directly impacts profitability and operating margins.
• Decline in Net Earnings and EPS [high — financial]: Net earnings attributable to TXNM for the nine months ended September 30, 2025, fell 28.8% to $161.21 million from $226.44 million in 2024. Diluted EPS decreased to $1.63 from $2.50, indicating reduced profitability.
• Stock Issuance [medium — financial]: The company issued $842.89 million in common stock during the nine months ended September 30, 2025. While this can bolster cash, it dilutes existing shareholders' equity.
• Regulatory Disallowances [low — regulatory]: The company experienced regulatory disallowances of $731,000 in the nine months of 2025, compared to $10.60 million in the same period of 2024. While reduced, these can still impact revenue recognition and profitability.

Industry Context

The electric utility sector is characterized by significant capital investment, regulatory oversight, and a transition towards cleaner energy sources. TXNM operates in a competitive landscape where maintaining reliable service, managing fuel costs, and adapting to evolving environmental regulations are critical for success. Industry trends include increasing demand for electricity driven by electrification and the integration of renewable energy sources.

Regulatory Implications

TXNM is subject to extensive regulation by state and federal agencies, which can impact its rates, operations, and financial performance. Regulatory disallowances, as seen in the filing, highlight the risk of not recovering all incurred costs. Changes in environmental regulations or energy policies could also necessitate significant capital expenditures or operational adjustments.

What Investors Should Do

1. Monitor the impact of increased debt on interest expenses and financial flexibility. The substantial rise in long-term borrowings to $3.15B requires close attention to the company's ability to service this debt.
2. Analyze the drivers behind the significant increase in the cost of energy. Understanding whether this is a temporary market fluctuation or a structural shift is crucial for assessing future profitability.
3. Evaluate the strategy behind the large common stock issuance of $842.89M. Investors should assess the use of proceeds and the impact on shareholder dilution.
4. Assess the sustainability of revenue growth against rising operating costs. While electric revenues are up, the significant increase in cost of energy and other operating expenses is pressuring net income.
5. Observe the company's cash flow generation and its ability to manage its increased debt load, especially given the decline in year-to-date net earnings.

Key Dates

• 2025-09-30: End of Nine Months Reporting Period — Significant increase in long-term borrowings to $3.15B and issuance of $842.89M in common stock reported. Cash and cash equivalents increased to $32.07M.
• 2025-09-30: Q3 2025 Earnings Release — Net earnings attributable to TXNM slightly decreased to $130.71M from $131.20M in Q3 2024, while electric operating revenues increased to $647.16M.
• 2024-09-30: End of Nine Months Reporting Period (Prior Year) — Long-term borrowings were $1.23B, and net earnings attributable to TXNM were $226.44M.

Glossary

Net Earnings Attributable to TXNM

The portion of the company's net earnings that belongs to the common shareholders of TXNM Energy Inc. after accounting for non-controlling interests and preferred dividends. (Key indicator of profitability for TXNM shareholders, showing a significant decline year-over-year.)

Electric Operating Revenues

Revenue generated from the sale of electricity to customers. (Shows top-line growth for the company, indicating increased sales volume or pricing.)

Cost of Energy

The direct costs associated with generating or purchasing the energy that the company sells to its customers. (A major operating expense that has increased significantly, impacting profitability.)

Long-term borrowings

Debt obligations that are due more than one year from the balance sheet date. (Indicates a substantial increase in the company's leverage and future interest payment obligations.)

Cash and cash equivalents

Highly liquid investments with maturities of three months or less at the time of purchase, including currency, bank deposits, and short-term government securities. (Shows the company's immediate liquidity, which has significantly improved.)

Diluted Earnings Per Common Share (EPS)

A measure of a company's profit allocated to each outstanding share of common stock, assuming all convertible securities and stock options were exercised. (Reflects the profitability on a per-share basis, showing a decline for the nine-month period.)

Year-Over-Year Comparison

Compared to the prior year, TXNM Energy Inc. has seen a notable increase in electric operating revenues for both the quarter and the nine-month period. However, this top-line growth has been outpaced by rising operating expenses, particularly the cost of energy, leading to a significant 28.8% decline in net earnings attributable to TXNM for the nine months ended September 30, 2025. The company's financial structure has also changed dramatically, with long-term borrowings nearly tripling and a substantial issuance of common stock, while cash and cash equivalents have seen a significant improvement.

Key Financial Figures

• $10 — mber of shares of common stock of TNMP, $10 par value per share, outstanding as of
• $550.0 million — ne 18, 2021 Convertible Notes TXNM's $550.0 million junior subordinated convertible notes i
• $343.2 million — ds On November 15, 2023, ETBC I issued $343.2 million aggregate principal amount of its senio
• $344 million — t includes investments of approximately $344 million for the first six years of a broader 11
• $40.0 million — PNM New Mexico Credit Facility PNM's $40.0 million Unsecured Revolving Credit Facility P
• $200.0 million — it Facility PNM 2024 Term Loan PNM's $200.0 million term loan that matures on November 10,
• $195.0 Million — er 10, 2025 PNM 2025 Term Loan PNM's $195.0 Million Unsecured Term Loan issued on January 2
• $300.0 million — 2025 SUNs PNM April 2025 SUNs PNM's $300.0 million Senior Unsecured Notes issued on April
• $400.0 million — 5 PNM Revolving Credit Facility PNM's $400.0 million Unsecured Revolving Credit Facility P
• $285.0 million — Agreement for the sale of an aggregate $285.0 million of TNMP's 2024 Bonds TNMP February 20
• $140.0 Million — Agreement for the sale of an aggregate $140.0 Million of TNMP February 2025 Bonds TNMP Revo
• $1.0 billion — XNM 2021 Delayed-Draw Term Loan TXNM's $1.0 billion Unsecured Delayed-Draw Term Loan that m
• $500.0 million — 18, 2025 TXNM 2023 Term Loan TXNM's $500.0 million term loan that matures on June 30, 2026

Filing Documents

• pnm-20250930.htm (10-Q) — 4307KB
• txnm9302025ex311.htm (EX-31.1) — 11KB
• txnm9302025ex312.htm (EX-31.2) — 11KB
• txnm9302025ex313.htm (EX-31.3) — 11KB
• txnm9302025ex314.htm (EX-31.4) — 11KB
• txnm9302025ex315.htm (EX-31.5) — 11KB
• txnm9302025ex316.htm (EX-31.6) — 11KB
• txnm9302025ex321.htm (EX-32.1) — 8KB
• txnm9302025ex322.htm (EX-32.2) — 7KB
• txnm9302025ex323.htm (EX-32.3) — 7KB
• 0001108426-25-000109.txt ( ) — 21096KB
• pnm-20250930.xsd (EX-101.SCH) — 150KB
• pnm-20250930_cal.xml (EX-101.CAL) — 130KB
• pnm-20250930_def.xml (EX-101.DEF) — 948KB
• pnm-20250930_lab.xml (EX-101.LAB) — 1297KB
• pnm-20250930_pre.xml (EX-101.PRE) — 1183KB
• pnm-20250930_htm.xml (XML) — 3714KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

FINANCIAL STATEMENTS (UNAUDITED)

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED) TXNM ENERGY , INC. AND SUBSIDIARIES Condensed Consolidated Statements of Earnings 8 Condensed Consolidated Statements of Comprehensive Income 9 Condensed Consolidated Statements of Cash Flows 10 Condensed Consolidated Balance Sheets 12 Condensed Consolidated Statements of Changes in Equity 14 PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES Condensed Consolidated Statements of Earnings 15 Condensed Consolidated Statements of Comprehensive Income 16 Condensed Consolidated Statements of Cash Flows 17 Condensed Consolidated Balance Sheets 19 Condensed Consolidated Statements of Changes in Equity 21 TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES Condensed Consolidated Statements of Earnings 22 Condensed Consolidated Statements of Cash Flows 23 Condensed Consolidated Balance Sheets 24 Condensed Consolidated Statements of Changes in Common Stockholder's Equity 26 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 27

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 76

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 110

CONTROLS AND PROCEDURES

ITEM 4. CONTROLS AND PROCEDURES 112

OTHER INFORMATION

PART II. OTHER INFORMATION

LEGAL PROCEEDINGS

ITEM 1. LEGAL PROCEEDINGS 113

RISK FACTORS

ITEM 1A. RISK FACTORS 113

OTHER INFORMATION

ITEM 5. OTHER INFORMATION 115

EXHIBITS

ITEM 6. EXHIBITS 115 SIGNATURE 116 3 Table of Contents GLOSSARY Definitions: 2024 Rate Change PNM's request for a general increase in electric rates filed with the NMPRC on December 5, 2022 using a calendar year 2024 FTY 2025 Rate Request PNM's request for a general increase in electric rates filed with the NMPRC on June 14, 2024 using a FTY beginning July 1, 2025 2028 Resource Application PNM's November 22, 2024 application with the NMPRC for approval of resources to be available for the 2028 summer peak ACE Rule Affordable Clean Energy Rule AEP OnSite Partners AEP OnSite Partners, LLC, a subsidiary of American Electric Power, Inc. until the completion of its sale on September 30, 2024 to Basalt Infrastructure Partners LLC AFUDC Allowance for Funds Used During Construction AOCI Accumulated Other Comprehensive Income APS Arizona Public Service Company, the operator and a co-owner of PVNGS and Four Corners ARO Asset Retirement Obligation ASU Accounting Standards Update Blackstone Infrastructure Blackstone Infrastructure Partners L.P. Board Board of Directors of TXNM CAA Clean Air Act CAISO California Independent System Operator Carbon Pollution Standards Carbon Pollution Standards established by the EPA on August 3, 2015 CCN Certificate of Convenience and Necessity CCR Coal Combustion Residuals CCS Carbon Capture and Storage/Sequestration CIAC Contributions in Aid of Construction CO 2 Carbon Dioxide CODM Chief Operating Decision Maker Community Solar Act Senate Bill 84 effective June 18, 2021 Convertible Notes TXNM's $550.0 million junior subordinated convertible notes issued on June 10, 2024 and June 21, 2024 DC Circuit United States Court of Appeals for the District of Columbia Circuit DCRF TNMP's applications for a distribution cost recovery factor DOE United States Department of Energy EDAM Extended Day Ahead Market EEI Edison Electric Institute, an association representing all U.S. investor-owned e

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS TXNM ENERGY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 (In thousands, except per share amounts) Electric Operating Revenues $ 647,162 $ 569,256 $ 1,632,374 $ 1,494,235 Operating Expenses: Cost of energy 195,042 138,909 531,846 425,919 Administrative and general 68,445 64,840 205,205 179,848 Energy production costs 21,172 21,259 71,799 68,055 Regulatory disallowances ( 731 ) 6,142 ( 731 ) 10,601 Depreciation and amortization 105,012 97,400 314,798 285,000 Transmission and distribution costs 27,167 23,660 79,133 71,475 Taxes other than income taxes 28,185 25,966 82,864 75,984 Total operating expenses 444,292 378,176 1,284,914 1,116,882 Operating income 202,870 191,080 347,460 377,353 Other Income and Deductions: Interest income 6,496 8,669 14,615 17,719 Gains on investment securities 11,376 13,770 33,691 32,326 Other income 7,688 7,953 18,121 20,552 Other (deductions) ( 3,028 ) ( 1,988 ) ( 11,767 ) ( 20,146 ) Net other income and deductions 22,532 28,404 54,660 50,451 Interest Charges 70,149 59,664 205,713 169,254 Earnings before Income Taxes 155,253 159,820 196,407 258,550 Income Taxes 18,949 23,422 21,293 19,822 Net Earnings 136,304 136,398 175,114 238,728 (Earnings) Attributable to Valencia Non-controlling Interest ( 5,462 ) ( 5,064 ) ( 13,509 ) ( 11,891 ) Preferred Stock Dividend Requirements of Subsidiary ( 132 ) ( 132 ) ( 396 ) ( 396 ) Net Earnings Attributable to TXNM $ 130,710 $ 131,202 $ 161,209 $ 226,441 Net Earnings Attributable to TXNM per Common Share: Basic $ 1.22 $ 1.45 $ 1.63 $ 2.50 Diluted $ 1.22 $ 1.45 $ 1.63 $ 2.50 Dividends Declared per Common Share $ 0.4075 $ 0.3875 $ 1.2225 $ 1.1625 The accompanying notes, as they relate to TXNM, are an integral part of these condensed consolidated financial statements. 8 Table of Contents TXNM ENERGY, INC. AND SUB

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