8-K: TXNM Energy Q3 Earnings Decline Amid Blackstone Deal Progress

TXNM Energy reported a decrease in third-quarter GAAP diluted EPS to $1.22 from $1.45 year-over-year, while shareholders approved its $61.25 per share acquisition by Blackstone Infrastructure.

Summary

• Q3 2025 GAAP diluted EPS was $1.22, down from $1.45 in Q3 2024.
• Q3 2025 ongoing diluted EPS was $1.33, down from $1.43 in Q3 2024.
• Year-to-date 2025 GAAP diluted EPS was $1.63, down from $2.50 in YTD 2024.
• Year-to-date 2025 ongoing diluted EPS was $1.87, down from $2.44 in YTD 2024.
• GAAP net earnings attributable to TXNM Energy for Q3 2025 were $130.7 million, compared to $131.2 million in Q3 2024.
• Ongoing net earnings for Q3 2025 were $142.8 million, up from $129.3 million in Q3 2024.
• Shareholders approved the acquisition by Blackstone Infrastructure for $61.25 per share on August 28, 2025.
• The transaction is subject to regulatory approvals from the New Mexico Public Regulation Commission (NMPRC), Public Utility Commission of Texas (PUCT), Federal Energy Regulatory Commission (FERC), Department of Justice (Hart Scott-Rodino Clearance), Nuclear Regulatory Commission, and Federal Communications Commission.
• TXNM Energy anticipates the acquisition closing in the second half of 2026.
• TNMP's second Transmission Cost of Service (TCOS) filing for 2025 was approved and implemented in Q3, providing recovery for $87 million of rate base.
• PNM filed an application with the NMPRC for approval to construct, own, and operate 30 megawatts of energy storage at an estimated cost of $78 million.
• Q3 2025 GAAP earnings included $14.0 million of costs related to the planned acquisition.
• Q3 2025 diluted EPS was reduced by shares issued as part of 2024 forward sales agreements of $150 million, as well as shares issued in June and August 2025 for proceeds of $800 million.

Sentiment

Score: 5

Explanation: The filing presents mixed financial results with a decline in GAAP and ongoing EPS year-over-year, but an increase in Q3 ongoing net earnings. The primary focus is on the progress of the Blackstone acquisition, which is a significant event for the company. The tone is factual, acknowledging both positive developments (rate approvals, shareholder approval of acquisition) and challenges (lower weather-related usage, increased expenses, acquisition costs). The pending acquisition introduces both opportunity and regulatory uncertainty.

Positives

• Q3 2025 ongoing net earnings increased to $142.8 million from $129.3 million in Q3 2024.
• Shareholders approved the proposed transaction with Blackstone Infrastructure on August 28, 2025.
• TNMP's second TCOS filing for 2025 was approved and implemented in Q3, providing recovery for $87 million of rate base.
• PNM received rate relief from the implementation of the first phase of the approved 2025 Rate Request.
• Higher retail load and transmission revenues contributed to PNM's results.
• Higher realized gains on investment securities for PNM.
• TNMP saw rate recovery through DCRF and TCOS mechanisms and higher retail load.
• Corporate and Other segment experienced lower interest expense due to lower debt balances, increasing earnings.
• PNM filed an application for a CCN to construct 30 megawatts of energy storage at an estimated cost of $78 million, enhancing grid flexibility and summer peak season service.

Negatives

• Q3 2025 GAAP diluted EPS decreased to $1.22 from $1.45 in Q3 2024.
• Q3 2025 ongoing diluted EPS decreased to $1.33 from $1.43 in Q3 2024.
• Year-to-date 2025 GAAP diluted EPS decreased to $1.63 from $2.50 in YTD 2024.
• Year-to-date 2025 ongoing diluted EPS decreased to $1.87 from $2.44 in YTD 2024.
• Lower weather-related usage impacted both PNM and TNMP segments.
• Increased O&M, higher depreciation, property tax, and interest expense associated with new capital investments for PNM.
• Increased demand charges from energy storage agreements added in late 2024 for PNM.
• Higher depreciation and property tax expense associated with new capital investments for TNMP.
• GAAP earnings in Q3 2025 included $14.0 million of costs related to the planned acquisition.
• GAAP earnings in Q3 2025 included $2.1 million of net unrealized losses on investment securities, compared to $9.5 million of net unrealized gains in Q3 2024.
• Diluted EPS was reduced by shares issued as part of 2024 forward sales agreements ($150 million) and shares issued in June and August 2025 ($800 million).

Risks

• The expected timing and likelihood of completion of the pending transaction with Blackstone Infrastructure.
• The ability to complete the potential transaction, including the timing, receipt, and terms and conditions of any required governmental and regulatory approvals.
• Regulatory approvals could reduce anticipated benefits or cause the parties to abandon the transaction.
• The occurrence of any event, change, or other circumstances that could give rise to the termination of the transaction agreement, including circumstances requiring the Company to pay a termination fee.
• The risk that the parties may not be able to satisfy the conditions to the proposed transaction in a timely manner or at all.
• The outcome of legal proceedings that may be instituted against TXNM Energy, its directors, and others related to the proposed transaction.
• Risks related to disruption of management time from ongoing business operations due to the proposed transaction.
• The risk that the proposed transaction and its announcement could have an adverse effect on the ability of TXNM Energy to retain and hire key personnel and maintain relationships with its customers and suppliers, and on its operating results and businesses generally.
• The amount of costs, fees, charges, or expenses resulting from the proposed transaction.
• The risk that the price of TXNM Energy's common stock may fluctuate during the pendency of the proposed transaction and may decline significantly if the proposed transaction is not completed.
• Other unpredictable or unknown factors not discussed could have material adverse effects on forward-looking statements.

Future Outlook

The company is not affirming previously issued earnings guidance for 2025 and does not plan to issue revised guidance during the pending transaction. The acquisition by Blackstone Infrastructure is anticipated to close in the second half of 2026, subject to customary closing conditions and required state and federal regulatory approvals.

Management Comments

• "Third quarter results incorporate the implementation of the first phase of approved rates in New Mexico and newly approved transmission recovery in Texas, along with additional equity issued during the quarter."
• "We have initiated the regulatory approval process for our transaction with Blackstone Infrastructure with filings that address the key issues raised during our conversations with local stakeholders and community groups."
• "We look forward to continued conversations through the regulatory process and achieving the best path forward to invest in positive outcomes for our customers and communities across New Mexico and Texas."

Industry Context

This announcement reflects ongoing trends in the utility sector, including the need for infrastructure investment (rate base recovery, energy storage projects) and the consolidation driven by private equity interest in stable, regulated assets. The focus on regulatory approvals for the Blackstone acquisition highlights the significant oversight in the utility industry, particularly concerning large-scale ownership changes and their potential impact on customers and service. The investment in energy storage aligns with broader industry efforts towards grid modernization and integration of renewable energy.

Corporate Governance

Legal Proceedings

• The outcome of legal proceedings that may be instituted against TXNM Energy, its directors, and others related to the proposed transaction is mentioned as a risk factor.

Stakeholder Impact

• Shareholders: Approved the acquisition, will receive $61.25 per share upon closing, but face risks of stock price fluctuation and transaction non-completion.
• Customers: Expected to benefit from investments in infrastructure and grid flexibility, with regulatory filings addressing stakeholder concerns.
• Employees: Risk of adverse effects on the ability to retain and hire key personnel due to the proposed transaction.
• Suppliers: Risk of adverse effects on maintaining relationships with suppliers due to the proposed transaction.
• Regulators: Actively involved in reviewing and approving the acquisition and rate/infrastructure applications.

Next Steps

• Continue the regulatory approval process for the Blackstone Infrastructure acquisition with NMPRC, PUCT, FERC, Department of Justice, Nuclear Regulatory Commission, and Federal Communications Commission.
• Engage in continued conversations with local stakeholders and community groups through the regulatory process for the acquisition.
• Seek recovery for an additional $28 million of rate base through TNMP's second Distribution Cost Recovery Factor (DCRF) application.
• Pursue NMPRC approval for a Certificate of Convenience and Necessity (CCN) to construct, own, and operate 30 megawatts of energy storage.
• Work towards the anticipated closing of the Blackstone acquisition in the second half of 2026.

Key Dates

Recommendation

The company is in the midst of a pending acquisition by Blackstone Infrastructure at a fixed price of $61.25 per share. While Q3 GAAP EPS declined, the primary driver for the stock price will be the likelihood and timing of the acquisition's completion. For existing shareholders, holding the stock until the acquisition closes is generally advisable to realize the agreed-upon value, assuming the regulatory risks are deemed manageable. For new investors, the upside is capped at the acquisition price, making it less attractive unless there's a significant discount to the offer price, which would imply higher perceived regulatory risk.

Keywords

TXNM Energy, Blackstone Infrastructure, Acquisition, Utility, Earnings, EPS, GAAP, Non-GAAP, Regulatory approval, New Mexico Public Regulation Commission (NMPRC), Public Utility Commission of Texas (PUCT), Federal Energy Regulatory Commission (FERC), Energy storage, Rate base, Transmission Cost of Service (TCOS), Distribution Cost Recovery Factor (DCRF), PNM, TNMP, Electric utility, Infrastructure, Shareholder approval