TXNM Energy, Inc. (TXNM) | The Buildout — AI Infrastructure
The Verdict
TXNM Energy is a holding company for two regulated utilities: PNM provides generation, transmission, and distribution service in New Mexico; TNMP provides electric transmission and distribution in Texas. Its role in the AI infrastructure buildout is downstream: it delivers electricity, builds grid capacity, and provides reliability for large commercial and data-center load growth, primarily in Texas. TXNM is not selling compute or data center capacity; it is the regulated electric service that connects new large loads to the grid.
| Market Cap | — |
| Revenue (TTM) | $1.7B |
| Revenue Growth | −17.0% |
| EBITDA Margin (TTM) | 55.0% |
| Net Debt | $753M |
| Earnings Beats | 2 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- The $10.2B capital plan through 2030 projects total rate base rising from $7.6B in 2026 to $13.6B in 2030, about +79%.
- TNMP utility margin reached $131.5M in Q1 2026, up $20.3M year over year, with $8.4M of HB 5247 revenue contributing.
- PNM's 2025 rate change contributed $12.8M of utility margin in Q1 2026, with the second phase implemented April 1, 2026.
- Meta is a named data-center customer under a PNM renewable energy rider, with annual revenue collection of $54.3M effective January 1, 2026.
- Q2 2026 ongoing EPS was $0.58 versus $0.25 a year earlier, with a TNMP rate increase approved.
What We’re Watching
- The NMPRC stayed the merger procedural schedule on March 17, 2026 and issued a show-cause order over a $400M TXNM common-stock purchase.
- The acquisition agreement was extended per the Q2 2026 release headline, but revised terms were not disclosed.
- Q1 2026 TNMP demand-based load fell 3.9% and volumetric load fell 7.7% year over year on milder weather; data-center MW additions were not refreshed.
- The PNM 2029–2032 RFP range of 900–2,900 MW is not yet in the capital plan, and the owned-versus-contracted outcome remains open.
The underlying regulated-utility thesis is strengthening: approved rates and recovery mechanisms are now flowing into margin, and the capital plan has expanded. The take-private path is the dominant overhang and has weakened procedurally: the NMPRC stayed the merger schedule, issued a show-cause order, and the acquisition agreement was extended without disclosed terms. The open question is whether the New Mexico approval can be resolved to allow the announced second-half 2026 close to proceed.
Earnings
Q1 2026 revenue was $505.0 million, up 4.6% from $482.8 million; gross margin was 34.8%. Consolidated GAAP net earnings attributable to TXNM fell to $3.7 million from $8.9 million, dragged by $16.9 million of net unrealized losses on investment securities. TNMP utility margin rose $20.3 million to $131.5 million, driven by rate relief and HB 5247 revenue rather than load.
| Metric | Q2 FY2026 | Q1 FY2026 | Q2 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $0M | $505M | $502M | −100.0% |
| Gross margin | — | 34.8% | 35.2% | — |
| EBITDA | $238M | $202M | $194M | +22.9% |
| EPS | $0.77 | $0.04 | $0.23 | +228.6% |
| TNMP utility margin | $131.5M | n/a | $111.2M | +18.3% YoY |
As previously announced, TXNM Energy does not plan to issue 2026 earnings guidance during pendency of the proposed transaction with Blackstone Infrastructure.— , 2026-05-01
Management tone: No earnings call on record for the latest period.
Management Guidance
TXNM does not plan to issue 2026 earnings guidance while the Blackstone Infrastructure transaction is pending. On the Q1 2025 call, management affirmed 2025 ongoing EPS guidance of $2.74 to $2.84 and a long-term EPS growth target of 7% to 9% from 2025 through 2029; that target has not been repeated in later source material.
Trajectory
Revenue has been stable rather than accelerating: Q1 2026 revenue of $505.0M was up 4.6% year over year but down 5.3% sequentially from Q4 2025. Gross margin held roughly flat on a trailing basis, while EBITDA margin expanded—Q1 2026 EBITDA was $202.4M, or 40.1%, up from $186.2M, or 38.6%, a year earlier. The mix is shifting from volume-dependent to mechanism-dependent margins: TNMP's Q1 2026 utility-margin growth came from rate relief and HB 5247 revenue, not load.
The Model
The model's locked projections are FY+1 revenue of $2,323M with EBITDA of $952M (41.0% margin) and FY+2 revenue of $2,620M with EBITDA of $1,100M (42.0% margin). The FY+1 level reflects the capital plan converting into rate base and the recently approved rate mechanisms, while FY+2 assumes continued TNMP rate-base growth and PNM rate relief phasing through the year.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $2.2B | $2.3B | $2.6B |
| YoY Growth | — | +7.3% | +12.8% |
| EBITDA | $866M | $952M | $1.1B |
| EBITDA Margin | 40.0% | 41.0% | 42.0% |
Projections are the median of 5 independent model runs. The model’s revenue sits 7.0% above analyst consensus.
TXNM does not plan to issue 2026 earnings guidance while the Blackstone Infrastructure transaction is pending. On the Q1 2025 call, management affirmed 2025 ongoing EPS guidance of $2.74 to $2.84 and a long-term EPS growth target of 7% to 9% from 2025 through 2029; that target has not been repeated in later source material.
What Could Go Right — and Wrong
- The NMPRC lifts the merger stay and approves the transaction without material conditions, allowing a second-half 2026 close.
- TNMP demand-based load returns to growth and data-center MW additions are re-disclosed, confirming the large-load pipeline.
- The Permian Basin program's approximately $750M TNMP share stays on schedule through CCN filings and construction milestones.
- PNM RFP selections add owned resources to the capital plan, lifting rate base beyond the projected $13.6B by 2030.
- Texas recovery mechanisms such as HB 5247, TCOS, and DCRF continue converting capex into utility margin with reduced regulatory lag.
- The NMPRC show-cause order escalates, delaying or terminating the merger; a TXNM-side termination would involve a $210M fee exposure in certain circumstances.
- TNMP load weakness persists with another quarter of declining demand-based load or stalled large-load conversions.
- EPC labor, transformer, and long-lead equipment bottlenecks delay execution of the $10.2B plan.
- PNM RFP resources are contracted rather than owned, reducing capital-plan upside and shifting earnings toward purchased-power obligations.
- Customer affordability pressure in Texas or New Mexico leads to less constructive rate design or slower recovery.
Looking Ahead
The next twelve months are dominated by the Blackstone acquisition path: the NMPRC stay and show-cause order must resolve, and the extended agreement's terms need disclosure. On the utility side, the PNM RFP selection is expected to determine ownership of a 900–2,900 MW range, the TNMP comprehensive rate settlement final order will set the allowed return, and Permian Basin CCN filings and construction will test the $750M timeline.
- Second half 2026Blackstone transaction close — NMPRC and NRC approvals pending; agreement extended without disclosed terms.
- 2027TNMP system resiliency plan completion — Management cited $546M / $540M through 2027; discrepancy unresolved.
- 2029–2032PNM RFP selection — 900–2,900 MW range; owned-versus-contracted decision.
- 2030Permian Basin program completion — Approximately $750M TNMP share delivered by 2030.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $2.0B | $2.2B | $1.7B | +9.9% |
| Gross Margin | 40.6% | 37.5% | 39.4% | 312bps |
| EBITDA | $886M | $866M | $3.0B | -2.2% |
| EBITDA Margin | 44.9% | 40.0% | 55.0% | 493bps |
| Net Income | $243M | $152M | $196M | -37.4% |
| Free Cash Flow | −$739M | −$611M | −$2.1B | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)39.4%
- EBITDA Margin (TTM)55.0%
- Net Margin (TTM)11.6%
- ROIC9.1%
- FCF Conversion-27.4%
- SBC / Revenue0.2%
The Company
TXNM Energy is a holding company for two regulated electric utilities. PNM provides generation, transmission, and distribution service in New Mexico; TNMP provides electric transmission and distribution in Texas and does not own generation. The 10-K business summary says TXNM serves approximately 842,000 residential, commercial, and industrial customers across the two states. It is a regulated cost-of-service utility, not a merchant generator or equipment maker: revenue and earnings depend on getting capital approved, built, and recovered in rates. For AI infrastructure, TXNM is the downstream grid layer that connects large commercial and data-center load to the power system, primarily through TNMP's Texas wires and, more recently, through a named Meta data-center customer at PNM.
PNM owns a mixed generation fleet—ownership stakes in Four Corners coal, Palo Verde nuclear, and several gas-fired plants—while TNMP is wires-only. The company operates through regulatory recovery mechanisms including TCOS, DCRF, the TNMP system resiliency plan, and the HB 5247 unified tracker. Its updated capital plan totals $10.2 billion through 2030, with average total rate base projected to rise from $7.6 billion in 2026 to $13.6 billion in 2030.
Business Segments
Competitive Landscape
Within its service territories, TXNM's subsidiaries are incumbent regulated utilities with statutory franchises; the transmission and distribution system is not economically replaceable. The competitive exposure is regulatory risk—whether recovery mechanisms allow invested capital to earn its authorized return timely. The Wiring output lists CenterPoint, ONCOR, Xcel Energy, and EE as inferred competitors, but the source set provides no direct competitive displacement evidence.
- CenterPointInferred competitor from the Wiring supply-chain map; not discussed in the provided filings or transcript.
- ONCORInferred competitor from the Wiring supply-chain map; not discussed in the provided filings or transcript.
- Xcel EnergyInferred competitor from the Wiring supply-chain map; not discussed in the provided filings or transcript.
- EEInferred competitor from the Wiring supply-chain map; not discussed in the provided filings or transcript.
Supply Chain
TXNM sits downstream in the electric-utility layer: it buys fuel and purchased power, builds and maintains regulated grid assets, and sells delivered energy and grid service to retail electric providers and large end users. No neighboring utility called it out by name.