TXNM Energy, Inc. (TXNM) | The Buildout — AI Infrastructure
The Verdict
TXNM Energy is a holding company for two regulated electric utilities. PNM generates, transmits and distributes electricity in New Mexico. TNMP is a Texas wires utility — transmission and distribution only, no generation — serving a territory that includes North and West Texas, where data centers and the commercial businesses around them have located. TXNM does not sell compute or data-center capacity; it delivers power and builds the grid that large loads need. Revenue comes from cost-of-service regulation, so capital has to be approved, built, and recovered through customer rates and rate riders. That makes the AI connection indirect: a large load that arrives lifts demand, which supports transmission and distribution investment, which grows rate base.
| Market Cap | — |
| Revenue (TTM) | $2.2B |
| Revenue Growth | +10.0% |
| EBITDA Margin (TTM) | 42.1% |
| Net Debt | $738M |
| Earnings Beats | 2 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- The consolidated capital plan was updated to $10.2 billion through 2030, with total rate base projected to rise from $7.6 billion in 2026 to $13.6 billion in 2030, about +79%.
- TNMP's rate base nearly doubles in the plan, from $3.3 billion in 2026 to $6.2 billion in 2030, and becomes the largest portion of total rate base.
- TNMP's Q1 2026 utility margin was $131.5 million, up $20.3 million year over year, driven by transmission and distribution rate relief and $8.4 million of HB 5247 revenue rather than by load.
- PNM's rate change was approved May 15, 2025 and phased in, with the second phase implemented April 1, 2026; the 2025 rate change contributed $12.8 million of PNM utility margin in Q1 2026.
- The ERCOT Permian Basin Reliability Study approved in April 2025 gives TNMP roughly $750 million of investment by 2030, and management said equipment ordering was already under way before CCN applications.
What We’re Watching
- New Mexico merger approval: the NMPRC issued a final order on March 17, 2026 staying its procedural schedule, including an evidentiary hearing set for May 4–15, 2026, and issued a show-cause order on March 11, 2026 over a $400.0 million purchase of TXNM common stock.
- TNMP demand-based load fell 3.9% year over year in Q1 2026 and volumetric load fell 7.7%, which the filing attributes to milder weather; the filing does not update the data-center megawatt pipeline from the Q1 2025 call.
- TNMP revenue concentration: the two largest retail electric providers were 24% and 19% of TNMP operating revenues in 2025, and their identities are not disclosed.
- The acquisition agreement extension: the July 31, 2026 release headline says it was extended, but the source material provides no counterparty, deadline, or revised terms.
The regulated-utility engine looks stronger than it did a year ago. Approved rate relief is showing up in utility margin, the capital plan was updated upward to $10.2 billion through 2030, and rate base is projected to grow about 79% by 2030. What has weakened is the standalone equity story: TXNM stopped issuing 2026 EPS guidance when the Blackstone transaction was announced, and the New Mexico approval path has stalled procedurally with a stayed schedule and an open show-cause order. The open question is whether the NMPRC lifts its stay and resolves the show-cause order so the transaction can close in the second half of 2026, and what the extension of the acquisition agreement changed.
Earnings
TXNM reported second-quarter 2026 revenue of $548.6 million, up from $502.4 million a year earlier, with gross margin of 39.9% and EBITDA of $250.9 million, or 45.7% of revenue, on reported figures. The July 31, 2026 release reported Q2 2026 GAAP earnings of $0.64 per diluted share and ongoing earnings of $0.58 per diluted share, versus $0.22 and $0.25 in Q2 2025. The release's headline items were an extension of the acquisition agreement and approval of a TNMP rate increase. Full segment detail and the earnings call were not included in the source material.
| Metric | Q2 FY2026 | Q1 FY2026 | Q2 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $549M | $505M | $502M | +9.2% |
| Gross margin | 39.9% | 34.8% | 35.2% | +470bps |
| EBITDA | $251M | $202M | $194M | +29.6% |
| EPS | $0.64 | $0.03 | $0.23 | +184.6% |
| Ongoing EPS | $0.58 | $0.21 | $0.25 | +132.0% |
TNMP has already set a new system peak in the first quarter, coming in 22% higher than last year's first quarter system peak. Demand based load increased 9.7%, largely driven by growth in our North and West Texas regions, where commercial businesses have grown in the areas where data centers have been located. Data center load picked up another 70 megawatts in the first quarter. We have a couple of existing customers that are expected to increase their demand up to another 150 megawatts before the end of the year. Interconnection requests were also up 6% compared to the first quarter of last year, with a noticeable uptick in the Gulf Coast area.— Don Tarry, COO, May 9, 2025
Management tone: No earnings call transcript is on record for the latest period; the Q1 2026 and Q2 2026 events are available in the source material only as press releases and headlines. The only full transcript in the set is the May 9, 2025 Q1 2025 call, where management was positive and regulatory-execution focused, emphasizing the unopposed stipulation in the PNM rate review, Texas load growth, and an unchanged capital plan. On that call management was direct on regulatory and capital questions and process-guarded on the PNM RFP ownership question and CFO timing. The later shift in posture is the move to withholding 2026 EPS guidance while the Blackstone transaction is pending.
Management Guidance
On the Q1 2025 call, management affirmed FY2025 ongoing EPS guidance of $2.74 to $2.84, affirmed a long-term EPS growth target of 7% to 9% from 2025 through 2029 with the earnings power supporting the upper half of that range, held the five-year capital plan unchanged from the February 2025 update, quantified tariff impact at about 2%, and said the third quarter accounts for more than half of full-year EPS. The Q1 2026 press release states that TXNM does not plan to issue 2026 earnings guidance during pendency of the proposed Blackstone transaction. The consolidated capital plan was updated to $10.2 billion through 2030 at the Q1 2026 event.
Trajectory
Revenue is steady rather than surging at the top line; the code-computed trajectory flags STABLE, with TTM revenue of $2,234.0 million and trailing growth of 10.0% year over year. The margin story is coming from rate mechanisms rather than volume: TNMP's Q1 2026 utility margin rose $20.3 million to $131.5 million on transmission and distribution rate relief plus $8.4 million of HB 5247 revenue, while milder weather was a $1.3 million headwind. PNM's utility margin rose $4.5 million to $206.9 million, held back by milder weather, lower weather-normalized residential and commercial usage, and $6.4 million of new storage capacity arrangements, with $12.8 million of rate relief as the offset. The code reads gross margin as stable, EBITDA margin as expanding (+160 basis points) and operating margin as compressing (-1,600 basis points), while TTM free cash flow was -$501.9 million against net income of $196.4 million — the shape of a utility funding a large capital plan.
The Model
The model projects FY+1 revenue of $2,328.9 million and EBITDA of $1,015 million, a 43.6% margin, then FY+2 revenue of $2,528 million and EBITDA of $1,122 million, a 44.4% margin. The near-term anchor is rate relief already approved — the phased PNM rate increase and the TNMP mechanisms — plus the early years of the $10.2 billion capital plan. FY+2 depends on how fast that capital converts into rate base: the plan projects total rate base reaching $13.6 billion by 2030, with TNMP's share nearly doubling. Discrete large-load additions in Texas are the other swing factor, and the Q1 2026 filing did not update the data-center megawatt pipeline.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $2.2B | $2.3B | $2.5B |
| YoY Growth | — | +7.5% | +8.5% |
| EBITDA | $866M | $1.0B | $1.1B |
| EBITDA Margin | 40.0% | 43.6% | 44.4% |
Projections are the median of 5 independent model runs. The model’s revenue sits 7.0% above analyst consensus.
On the Q1 2025 call, management affirmed FY2025 ongoing EPS guidance of $2.74 to $2.84, affirmed a long-term EPS growth target of 7% to 9% from 2025 through 2029 with the earnings power supporting the upper half of that range, held the five-year capital plan unchanged from the February 2025 update, quantified tariff impact at about 2%, and said the third quarter accounts for more than half of full-year EPS. The Q1 2026 press release states that TXNM does not plan to issue 2026 earnings guidance during pendency of the proposed Blackstone transaction. The consolidated capital plan was updated to $10.2 billion through 2030 at the Q1 2026 event.
What Could Go Right — and Wrong
- New Mexico approves the Blackstone transaction, closing occurs, and the $10.2 billion capital plan proceeds under the committed financing described in the merger filings.
- The TNMP comprehensive rate settlement filed May 29, 2026 converts into a final approved rate increase, speeding the conversion of capital into margin.
- TNMP data-center load resumes visible growth, converting the 70 MW added in Q1 2025 and the up-to-150 MW then expected from existing customers into billed demand.
- PNM selects owned resources from the 2029–2032 RFP range of 900 MW to 2,900 MW, adding capital that is not yet in the plan.
- Permian Basin projects stay on schedule, keeping roughly $750 million of TNMP investment on track for 2030 and lifting rate base as planned.
- The NMPRC does not lift its March 17, 2026 stay, the show-cause order over the $400.0 million stock purchase escalates, and the transaction slips past the second half of 2026 or terminates.
- A termination on the TXNM side would require a $210.0 million fee plus certain costs and expenses under the merger agreement's terms.
- TNMP load stays soft — demand-based load fell 3.9% year over year in Q1 2026 — while the two largest retail electric providers remain a combined 43% of TNMP operating revenues.
- EPC labor and long-lead equipment constraints across the sector delay the transmission, grid modernization, and storage projects the rate-base forecast depends on.
- Customer affordability pressure grows as capital spending and rates rise, limiting the rate relief needed to earn on the plan.
Looking Ahead
The next twelve months turn on the New Mexico merger proceeding and on project execution. Closing was still expected in the second half of 2026 as of the Q1 2026 filing, but the NMPRC stayed its schedule in March 2026 and the acquisition agreement was later extended on terms the source material does not describe. On the operating side, the TNMP rate increase has been approved, PNM's second rate phase took effect April 1, 2026, and the $10.2 billion capital plan runs through 2030. The company has not said when, or whether, 2026 earnings guidance returns.
- Second half of 2026Blackstone merger closing — Closing targeted as of the Q1 2026 filing; agreement later extended.
- By 2030Permian Basin transmission — TNMP share of about $750 million; equipment ordering under way.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $2.0B | $2.2B | $2.2B | +9.9% |
| Gross Margin | 40.6% | 37.5% | 39.5% | 312bps |
| EBITDA | $886M | $866M | $940M | -2.2% |
| EBITDA Margin | 44.9% | 40.0% | 42.1% | 493bps |
| Net Income | $243M | $152M | $196M | -37.4% |
| Free Cash Flow | −$739M | −$611M | −$502M | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)39.5%
- EBITDA Margin (TTM)42.1%
- Net Margin (TTM)8.8%
- ROIC9.1%
- FCF Conversion-53.4%
- SBC / Revenue0.4%
The Company
TXNM Energy is the holding company for two regulated electric utilities. PNM provides electric generation, transmission, and distribution service in New Mexico, and owns interests in the Four Corners coal units (13%), the Palo Verde nuclear station (2.3% of Unit 1, 9.4% of Unit 2, 10.2% of Unit 3), and gas-fired plants including Afton at 235 MW and Luna at 190 MW. TNMP is a Texas transmission and distribution utility that owns no generation and operates under the Texas Public Utility Regulatory Act. Together the two utilities serve approximately 842,000 residential, commercial, and industrial customers.
The economics run through cost-of-service regulation: capital is approved, built, and recovered through customer rates and rate mechanisms. Data centers and the commercial businesses around them have located in TNMP's North and West Texas territory, and PNM serves Meta as a data-center customer through a renewable energy rider. Texas mechanisms — TCOS, DCRF, the system resiliency plan, and the HB 5247 tracker — recover investment with less regulatory lag, and New Mexico's site-readiness law lets utilities pre-build infrastructure for large customers and defer cost recovery until a rate case. Consolidation matters less here than timing: the earnings path depends on getting capital approved and recovered on schedule.
Business Segments
Competitive Landscape
TXNM's subsidiaries are incumbent regulated utilities with statutory franchises in their service territories, and the source material describes the transmission and distribution system as not economically replaceable by a competitor. The competitive exposure is therefore not ordinary retail churn; it is regulatory — whether recovery mechanisms let invested capital earn its authorized return in a timely way. Competition for large loads is regional, and the source's criticality assessment says data-center buildout in TXNM's territory could stall and be relocated to other ERCOT or Southwest utilities within one to three years if TXNM cannot deliver.
- Listed as a competitor in the Wiring relationship map; not discussed in the filings or transcript.
- ONCORListed as a competitor in the Wiring relationship map; not discussed in the filings or transcript.
- Listed as a competitor in the Wiring relationship map; not discussed in the filings or transcript.
- EEListed as a competitor in the Wiring relationship map; not discussed in the filings or transcript.
Supply Chain
TXNM sits downstream: it buys fuel, equipment, and services, then sells regulated electric service. No neighboring company call in the source set mentions TXNM, PNM, or TNMP by name, so neighbor signals are inferred, not confirmed.