TXNM Energy Q2 2026 Earnings: Rate Recovery and Load Growth Lift Profit

TXNM Energy (NYSE: TXNM) reported second-quarter 2026 electric operating revenue of $548.6 million, up 9.2% from $502.4 million, while GAAP diluted EPS rose to $0.64 from $0.22. Ongoing diluted EPS increased to $0.58 from $0.25, as rate recovery and higher retail load at both utilities outweighed capital-related expenses and share dilution.

Core results

Revenue growth translated into faster profit growth because total operating expenses edged lower rather than rising with revenue. That operating leverage lifted operating income by nearly 70% and expanded the operating margin by approximately 8 percentage points.

Operating margin is calculated using operating income divided by electric operating revenue. Ongoing earnings and ongoing EPS are non-GAAP measures that exclude unrealized investment gains and losses, merger-related costs, and certain other items.

Business and segment performance

Both regulated utilities increased their ongoing EPS contribution, while the loss at Corporate and Other narrowed. PNM generated the larger year-over-year improvement among the two utility segments.

PNM benefited from rate relief under its approved 2025 rate request, higher retail load, increased transmission revenue, plant-outage timing, and improved investment-security performance. These gains were partly offset by higher depreciation, property taxes, and interest expense associated with capital investments, as well as increased demand charges from energy-storage agreements added in late 2025.

TNMP’s improvement reflected recovery through its Distribution Cost Recovery Factor and Transmission Cost of Service mechanisms, revenue under Texas House Bill 5247, interim rates, and higher retail load. Higher depreciation, property taxes, and interest expense related to new capital investments provided a partial offset.

Corporate and Other benefited from lower interest expense due to lower debt balances.

Profitability and share dilution

Administrative and general expense declined to $64.9 million from $76.0 million, while cost of energy fell to $164.1 million from $167.6 million. Those reductions more than offset depreciation and amortization rising 8.9% to $114.6 million and taxes other than income taxes increasing 9.1% to $30.9 million.

Interest charges declined to $69.3 million from $72.0 million. However, average diluted shares outstanding increased approximately 15.6% to 111.2 million from 96.2 million following shares issued in June and August 2025 and March and May 2026. TXNM said the additional shares reduced both GAAP and ongoing EPS during the quarter.

Lower acquisition costs amplified—but did not create—the earnings increase

Pre-tax costs related to the planned Blackstone acquisition declined to $7.2 million from $19.5 million, helping GAAP earnings improve. Meanwhile, net unrealized gains on investment securities were relatively stable at $16.1 million compared with $16.6 million a year earlier.

The increase was therefore not solely the result of lower transaction costs or investment-market movements. Ongoing net earnings, which exclude these and other adjusting items, still rose from $24.5 million to $64.1 million, reflecting stronger underlying contributions from PNM, TNMP, and Corporate and Other.

Blackstone transaction and regulatory developments

After the quarter ended, TXNM Energy and Blackstone Infrastructure extended the acquisition agreement’s termination date to May 31, 2027. The company expects the $61.25-per-share transaction to close in the first half of 2027, subject to remaining conditions, including approvals from the New Mexico Public Regulation Commission and Nuclear Regulatory Commission. TXNM does not plan to issue earnings guidance while the transaction remains pending.

Also after quarter-end, Texas regulators approved an uncontested TNMP rate settlement covering a $2.8 billion rate base, a 9.65% return on equity, and a 45% equity ratio. Interim rates relate back to May 22, 2026, with final approved rates scheduled for implementation on September 13, 2026.

PNM separately filed a 2029–2032 resource portfolio application seeking approval for 800 MW of wind power purchase agreements, 240 MW of solar agreements, 610 MW of battery storage, and a 40 MW expansion of company-owned natural-gas generation. The plan addresses projected resource shortfalls beginning in 2029 and PNM’s proposed 2031 exit from the Four Corners Power Plant.

Risks investors should watch

• Acquisition approval and timing: The Blackstone transaction still requires key New Mexico and federal approvals. The extended termination date provides more time but also prolongs completion uncertainty.
• Capital-related expense pressure: Higher depreciation, property taxes, interest expense, and storage demand charges offset part of the benefits from rate recovery and load growth during the quarter.
• Per-share dilution: The higher diluted share count reduced EPS and caused per-share growth to lag the increase in net earnings.
• Resource and regulatory execution: PNM’s projected capacity shortfalls and planned Four Corners exit require approval and execution of a sizable replacement-resource portfolio.

Conclusion

TXNM Energy’s second-quarter results showed that rate relief, regulatory recovery, and higher retail demand can produce substantial earnings growth when operating costs remain controlled. The main issues ahead are whether capital-related expenses continue to offset those gains, how quickly new investments receive regulatory recovery, and whether the Blackstone transaction secures its remaining approvals on the revised timetable.