8-K: TXNM Energy Reports First Quarter 2025 Results: Earnings Decline, Guidance Affirmed

TXNM Energy's first quarter 2025 earnings decreased compared to the previous year, but the company affirmed its full-year ongoing earnings guidance.

Summary

• TXNM Energy reported first quarter 2025 GAAP earnings of $0.10 per diluted share, down from $0.52 in Q1 2024.
• Ongoing earnings for Q1 2025 were $0.19 per diluted share, compared to $0.41 in the same period last year.
• The company affirmed its 2025 ongoing earnings guidance range of $2.74 to $2.84 per diluted share.
• TXNM Energy maintained its long-term earnings per share growth target of 7% to 9%.
• PNM's Q1 2025 GAAP diluted EPS was $0.01, while TNMP's was $0.24.
• Corporate and Other segment reported a GAAP diluted EPS loss of $0.15.
• The decrease in PNM's earnings was attributed to lower transmission margins, the timing of excess deferred income taxes, increased insurance premiums, plant outages, higher depreciation, property tax, and interest expense.
• TNMP's earnings increased due to rate recovery mechanisms and higher retail load, offset by increased depreciation, property tax, and interest expense.
• Corporate and Other segment's earnings were impacted by increased interest expense from holding company debt.
• GAAP earnings were also affected by net unrealized losses on investment securities in Q1 2025 compared to gains in Q1 2024.

Sentiment

Score: 5

Explanation: The sentiment is neutral. While earnings are down, the company reaffirmed its guidance and long-term growth targets, suggesting stability and confidence in future performance.

Positives

• TXNM Energy affirmed its 2025 ongoing earnings guidance range of $2.74 to $2.84 per diluted share.
• The company maintained its long-term earnings growth target of 7% to 9%.
• TNMP reflects another quarter of strong growth and capital recovery.
• TNMP's earnings increased due to rate recovery mechanisms and higher retail load.

Negatives

• TXNM Energy's Q1 2025 GAAP earnings decreased to $0.10 per diluted share from $0.52 in Q1 2024.
• Ongoing earnings for Q1 2025 decreased to $0.19 per diluted share from $0.41 in Q1 2024.
• PNM's earnings decreased due to lower transmission margins, the timing of excess deferred income taxes, increased insurance premiums, plant outages, higher depreciation, property tax, and interest expense.
• GAAP earnings were affected by net unrealized losses on investment securities in Q1 2025 compared to gains in Q1 2024.
• GAAP and ongoing earnings per share were reduced in the first quarter of 2025 by additional shares issued in December 2024.

Risks

• The company's business, financial condition, cash flow, and operating results are influenced by many factors, which are often beyond their control.
• Lower transmission margins due to market prices could negatively impact PNM's earnings.
• The timing of excess deferred income taxes can create volatility in earnings.
• Increased insurance premiums, plant outages, higher depreciation, property tax, and interest expense can negatively impact earnings.
• Net unrealized losses on investment securities can negatively impact GAAP earnings.

Future Outlook

Management affirmed its 2025 consolidated ongoing earnings guidance range of $2.74 to $2.84 per diluted share and maintained its long-term earnings growth target of 7% to 9%.

Management Comments

• 'Earnings results in the first quarter are on track with full year expectations,' said Pat Collawn, TXNM Energy Chair and CEO.
• 'TNMP reflects another quarter of strong growth and capital recovery, and PNM's unopposed rate case stipulation continues to move through the regulatory approval process.'
• 'We will continue to prioritize our customers' needs across Texas and New Mexico as we focus on executing our long-term investment plans.'

Industry Context

The results reflect the challenges and opportunities facing regulated utilities, including managing capital investments, regulatory processes, and market fluctuations. The focus on long-term investment plans aligns with the industry's need to modernize infrastructure and meet growing energy demands.

Comparison to Industry Standards

• Comparing TXNM Energy's performance to peers like Xcel Energy or Edison International, it's important to consider their respective geographic footprints and regulatory environments.
• TXNM Energy's long-term earnings growth target of 7% to 9% is a key metric to benchmark against industry averages.
• Capital recovery through rate mechanisms, as highlighted for TNMP, is a common practice in the utility sector, but the specific terms and effectiveness can vary significantly.
• The impact of weather-related usage on retail load is a typical factor for utilities, and the extent of this impact can be compared to other utilities in similar climates.

Stakeholder Impact

• Shareholders will be concerned about the decrease in earnings but may be reassured by the reaffirmed guidance and long-term growth targets.
• Customers in Texas and New Mexico will be impacted by the company's investment plans and rate recovery mechanisms.
• Employees may be affected by the company's focus on executing long-term investment plans.

Next Steps

• TXNM Energy will discuss these items during a live conference call and webcast on Friday, May 9th at 11 a.m. Eastern.
• The company will continue to prioritize customers' needs and execute long-term investment plans.
• PNM's unopposed rate case stipulation continues to move through the regulatory approval process.

Key Dates

Keywords

TXNM Energy, Earnings, First Quarter 2025, PNM, TNMP, Guidance, EPS, Utilities, Financial Results