TXNM Energy Q3 2026 Earnings: Rate Relief and Higher Load Lift EPS

TXNM Energy (NYSE: TXNM) reported Q3 2026 electric operating revenue of $733.3 million, up approximately 13.3% from $647.2 million a year earlier, while GAAP diluted EPS increased to $1.50 from $1.22. Rate relief, higher PNM retail load, and stronger transmission-related revenue lifted both regulated utilities, although depreciation, property taxes, interest costs, and investment-security losses absorbed part of the benefit. Ongoing diluted EPS, a non-GAAP measure, rose to $1.62 from $1.33.

Core Financial Results

For the three months ended September 30, revenue increased by $86.1 million while operating expenses rose by only $17.9 million. That difference helped operating income grow faster than revenue and expanded the operating margin by approximately 5.6 percentage points.

The gap between GAAP and ongoing net earnings was $21.3 million after tax. The reconciliation included $14.7 million of pretax net unrealized losses on investment securities and $9.3 million of merger-related costs, along with other adjustments and related tax effects.

Net earnings grew faster than EPS because shares issued in August 2025 and March and May 2026 reduced the per-share benefit. Ongoing earnings exclude selected items that management does not consider indicative of the underlying earnings capacity, but the measure is not calculated under GAAP.

Business and Segment Performance

PNM generated the largest share of quarterly EPS, while TNMP also improved on both a GAAP and ongoing basis. Corporate and Other remained a drag on consolidated results.

PNM benefited from rate relief under its approved 2025 Rate Request, higher retail load, and increased transmission revenue. Those benefits were partially offset by higher operations and maintenance expense, depreciation, and property taxes associated with new capital investment, as well as lower realized gains on investment securities.

TNMP’s improvement reflected rate relief from its approved base rate review, recovery through the DCRF and TCOS mechanisms, and revenue recorded under Texas House Bill 5247. Higher depreciation, property taxes, and interest expense related to capital investment limited the increase.

Corporate and Other reported a larger GAAP loss because higher debt balances increased interest expense. Management also said prolonged record-breaking summer heat led both PNM and TNMP to reach new system peaks, providing context for PNM’s higher retail load while increasing the focus on reliability and customer energy costs.

Utility Operating Gains Outweighed Investment and Interest Pressure

Revenue grew substantially faster than operating expenses. Cost of energy was $198.5 million, only modestly above $195.0 million a year earlier, while administrative and general expense was nearly unchanged at $68.9 million. This cost behavior helped convert the revenue increase into higher operating income.

Capital-related expenses continued to rise, however. Depreciation and amortization increased to $112.3 million from $105.0 million, and taxes other than income taxes rose to $31.0 million from $28.2 million.

Below operating income, net other income fell to $0.3 million from $22.5 million. The investment-securities line moved from an $11.4 million gain to a $9.9 million loss, while interest charges increased to $76.1 million from $70.1 million. These factors explain why the improvement in GAAP net earnings was smaller than the increase in operating income.

Blackstone Deal Still Hinges on New Mexico Approval

Affiliates of Blackstone Infrastructure agreed to acquire TXNM Energy’s outstanding common stock for $61.25 per share. Shareholders approved the proposed transaction in August 2025, and the company has received approvals or clearance from several federal and Texas authorities.

New Mexico regulatory approval remains a key outstanding condition. The New Mexico Public Regulation Commission accepted an amended application on October 16, 2026, and evidentiary hearings are scheduled for January 19 through February 1, 2027. TXNM Energy anticipates closing the acquisition in the first half of 2027, subject to the remaining conditions. The company does not plan to issue earnings guidance while the transaction is pending.

Regulatory Filings Frame the Next Investment Cycle

TNMP’s Unified Tracker Mechanism application requests incremental increases of $77.9 million in DCRF revenue requirements and $27.0 million in TCOS revenue requirements. The filing consolidates several recovery mechanisms and covers investment from July 1, 2025, through June 30, 2026.

PNM also said it expected to file an application on October 30 for approval of a new 345 kV transmission line, station expansions, a new right-of-way, and reconstruction of portions of an existing 115 kV line. The estimated project cost is $595 million. Because current results already show higher depreciation, property taxes, and interest associated with capital investment, the regulatory and financing treatment of future projects remains important.

Risks Investors Need to Monitor

• New Mexico approval of the Blackstone transaction: The timing and terms of NMPRC approval could affect the anticipated first-half 2027 closing schedule. The pending deal is also generating merger-related expenses and has led the company to suspend earnings guidance.
• Capital-related cost growth: New investment is increasing depreciation, property taxes, and interest expense at both utilities. Earnings depend on rate mechanisms and regulatory outcomes offsetting those costs over time.
• Investment-security volatility: Unrealized investment losses created a meaningful difference between GAAP and ongoing earnings in Q3. Future changes could continue to produce volatility in reported GAAP results.
• Reliability and customer affordability: Record heat pushed PNM and TNMP to new system peaks. Higher load supported earnings, but it also raises infrastructure requirements and increases management’s focus on controlling customer costs.

Summary

TXNM Energy’s Q3 2026 improvement was primarily operational: rate relief, higher load, and transmission-related revenue drove both utility segments, while relatively restrained operating-expense growth expanded the operating margin. Investment losses, higher financing costs, and capital-related expenses limited the flow-through to GAAP earnings. The next major items to monitor are New Mexico’s review of the Blackstone acquisition and the regulatory treatment of TXNM Energy’s continuing grid investments.