TXNM Energy (TXNM) Q3 2026 earnings review
TXNM Energy profit rises 29%, while New Mexico sets buyout hearings
TXNM Energy, the parent of electric utilities in Texas and New Mexico, earned much higher profits as summer heat and rate increases lifted power sales. Revenue rose 13% from a year ago, while profit excluding one-offs grew 29% because power purchase costs barely budged. Chief executive Don Tarry credited record peak demand across both states, though new shares issued earlier in the year held per-share profit growth to 22%.
| Electric operating revenue | $733.3M +13.3% from a year ago |
|---|---|
| Profit per share, excluding one-offs | $1.62 +21.8% from a year ago |
| Operating margin | 37.0% +5.6 percentage points from a year ago |
| Buyout closing plan | Unchanged First half of 2027 |
⚖️ Verdict: 🟢 Bullish
The story got better because the utility group cleared its final federal hurdle for the Blackstone Infrastructure buyout and set a firm hearing schedule in New Mexico. In addition, the Texas utility requested $105 million in new yearly rate recovery to fund grid upgrades. One caution: getting New Mexico's attention required sweetening the deal with extra customer rate credits, and hearings will not finish until February 2027.
The question now is whether New Mexico regulators will approve the amended buyout terms without demanding concessions that threaten the deal. Either the added rate credits satisfy the commission, or opponents push for deeper cuts to customer bills. The evidentiary hearings scheduled for late January 2027 will show where the commission stands.
🐂 Bull Case
Summer Heat and Rate Increases Lifted Margin
TXNM Energy runs two regulated electric utilities: PNM in New Mexico and TNMP in Texas. “During a prolonged summer of record-breaking heat, both PNM and TNMP reached new system peaks, demonstrating the critical role our infrastructure plays during periods of extreme demand,” chief executive Don Tarry said. Hot weather and new customer rates pushed electric sales up 13.3% from a year ago to $733.3 million.
- Operating margin: 37.0%, up 5.6 percentage points from a year ago by our math
- Cost of energy: 27.1% of revenue, down 3.1 percentage points by our math
- PNM profit excluding one-offs: $141.5 million, up 34.6% from a year ago by our math
- TNMP profit excluding one-offs: $57.7 million, up 17.0% from a year ago by our math
The company kept more of each sales dollar because its cost of buying and generating power barely grew, while administrative and general overhead fell 1.2 percentage points of revenue by our math. Approved rate increases in both states flowed straight to operating profit, which rose 33.6% to $271.1 million.
What to watch: fourth-quarter customer usage at PNM and TNMP. A strong reading in a cooler season would show that underlying customer growth, rather than summer heat alone, is carrying revenue.
Texas and New Mexico Filings Build Revenue
Regulated utilities grow profit by building power lines and substations, then asking state regulators to raise customer bills to pay for them. In September, TNMP filed its first Unified Tracker Mechanism (UTM), a single application in Texas that combines distribution and transmission cost recovery. That filing asks for $104.9 million in extra yearly revenue by our math, covering $77.9 million for distribution lines and $27.0 million for transmission.
Meanwhile, PNM filed twenty-year resource and distribution plans in New Mexico and prepared a request for a new 345-kilovolt transmission line “at an estimated cost of $595 million”. These projects matter because approved capital spending enters the rate base, which is the asset value regulators use to calculate allowed profit.
What to watch: the Texas commission's ruling on the $104.9 million tracker request. Approval would lock in higher Texas revenue for 2027 without waiting for a full rate review.
🐻 Bear Case
New Mexico Regulators Hold the Merger Key
Blackstone Infrastructure agreed in May 2025 to buy TXNM Energy for $61.25 per share in cash. Federal energy, nuclear, and communications regulators have now cleared the buyout, and Texas approved a settlement in February. Only the New Mexico Public Regulation Commission (NMPRC) still needs to approve the deal.
Winning over New Mexico is proving expensive and slow. On October 16, the commission accepted an amended application that “includes increased benefits to customers including rate credits, additional contributions to the PNM Good Neighbor Fund and workforce development programs across local communities”. Hearing examiners set evidentiary hearings for January 19 through February 1, 2027, pushing the expected close into the first half of 2027. The company also spent another $9.3 million on merger costs this quarter.
What to watch: the January 2027 hearings in New Mexico. Demands for larger customer rate credits or stricter conditions could delay the closing again or reduce the deal's value to the buyer.
New Stock and Debt Trim Per-Share Gains
Tarry emphasized managing costs responsibly, but financing expenses and share sales took a noticeable bite out of shareholder returns. While third-quarter profit excluding one-offs rose 29.4% from a year ago by our math to $184.8 million, profit per share excluding one-offs grew 21.8% to $1.62. The gap happened because TXNM Energy issued common stock in August 2025, March 2026, and May 2026 to fund its construction budget.
- Ongoing diluted share count: 114.1 million, up 6.2% from a year ago by our math
- Consolidated interest charges: $76.1 million, up 8.4% from a year ago by our math
- Corporate and Other ongoing loss: $14.4 million, wider by 24.2% from a year ago by our math
Higher debt balances at the holding company pushed corporate losses to $0.12 per share, while stock cancellation and reissuance adjustments trimmed another $0.08 per share from ongoing earnings.
What to watch: holding-company interest charges in the fourth quarter. Continued increases in debt costs before the buyout closes would drain more of the cash generated by the two utilities.
👓 Other Themes
Blackstone Buyout Keeps Targets Off the Table
TXNM Energy again declined to provide an earnings outlook for 2026 because of the pending sale to Blackstone Infrastructure. The utility group has not issued annual profit targets since announcing the $61.25-per-share buyout in May 2025. Instead, management points investors to its regulatory filings in Texas and New Mexico and its target of closing the transaction in the first half of 2027.
💲 Other KPIs
Depreciation and amortization — the quarterly charge for wear and tear on power plants and grid equipment — rose 7.0% from a year ago by our math. That was slower than the 8.9% increase in the second quarter. As a share of revenue, the expense fell 0.9 percentage points to 15.3% as summer electricity sales grew faster.
The utility group declared a quarterly dividend of $0.4225 per common share, unchanged from the first and second quarters of 2026 and up 3.7% from $0.4075 a year ago by our math. Through the first nine months of 2026, declared dividends totaled $1.2675 per share while the company awaits the closing of the Blackstone buyout.
Paper losses on investment securities held at PNM reached $14.7 million before taxes in the third quarter, reversing a $16.1 million paper gain in the second quarter and up from a $2.1 million loss a year ago. TXNM Energy removes these non-cash market swings when calculating ongoing profit, reducing GAAP earnings by $0.10 per share.
🔮 Guidance
Unchanged. Management still expects to close the $61.25-per-share sale to Blackstone Infrastructure in the first half of 2027. Earlier in 2026, the company moved the target back from the second half of 2026 because New Mexico approval remained pending. After the Nuclear Regulatory Commission cleared the deal in August, New Mexico set hearings for January 2027.
❓ Key Questions
How much will the new customer concessions cost in New Mexico?
TXNM Energy and Blackstone amended their New Mexico merger application in October to add rate credits and community fund contributions. Management did not disclose the dollar size of those credits or how they compare to earlier settlement proposals.
Why did TXNM Energy cancel and reissue common stock?
Footnote disclosures show the company cancelled 8.0 million shares worth $400 million and later issued 7.1 million shares for the same amount, trimming $0.08 from ongoing earnings per share. Management did not explain the reason for this refinancing.
Will the company issue more stock before the buyout closes?
Ongoing diluted shares rose 6.2% from a year ago after stock sales in March and May 2026, and PNM just proposed a $595 million transmission line. Investors need to know if debt alone will fund construction through early 2027.
How much did weather add to third-quarter earnings?
Chief executive Don Tarry noted record-breaking summer heat and new system peaks at both utilities, but the release did not separate weather-driven electricity usage from underlying customer growth and rate increases.