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TXNM Energy reports 2024 earnings, increases investment plan and earnings growth targets

1. 2024 GAAP EPS $2.67 and ongoing EPS $2.74 meet guidance. Strong earnings performance. 2. 2025 guidance set between $2.74 and $2.84 per share. Texas growth drives outlook. 3. Long-term EPS growth target raised to 7%-9%. Confidence in future earnings evident. 4. 5-year capital plan increased to $7.8B, up 26%, with rate base growing 12%. Strategic infrastructure investments.

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$51.4302/21 06:35 AM EDTEvent Start
$53.2202/24 06:35 AM EDTLatest Updated
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Why Bullish?

The earnings beat and raised growth targets signal improved fundamentals. Historically, robust utility reports have driven bullish market reactions.

How important is it?

The detailed earnings update and capital expenditure strategy significantly influence investor sentiment and future valuation.

Why Long Term?

The expanded investment plan and long-term EPS growth target suggest benefits over several years. Infrastructure enhancements have a lasting impact, similar to other utilities' experiences.

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2024 GAAP earnings of $2.67 per diluted share, ongoing earnings of $2.74 per diluted share achieves guidance expectation 2025 ongoing earnings guidance range introduced at $2.74 - $2.84 per diluted share reflects strong Texas growth, mid-year implementation of PNM customer rate phase-in Increased long-term earnings per share growth target of 7% to 9% , /PRNewswire/ -- TXNM Energy (NYSE: TXNM) today reported 2024 earnings results and refreshed its growth outlook, increasing its long-term earnings growth target to 7% to 9%. In addition, management announced 2025 consolidated ongoing earnings guidance of $2.74 to $2.84 per diluted share. "Our financial expectations are driven by the continued expansion of grid infrastructure supporting growth and reliability in our Texas service territory. In New Mexico, the proposed settlement in our rate review is phased-in to assist our customers in managing the impact," said Pat Vincent-Collawn, TXNM Energy Chairman and CEO. "As we look forward, we will continue to prioritize investments for a more reliable, resilient grid that will provide direct benefits to our customers in New Mexico and Texas for years to come."   GROWTH OUTLOOKAs part of its update, TXNM Energy rolled forward its 5-year capital investment plan to encompass the years 2025-2029 and incorporate additional investments, including Texas transmission projects resulting from the ERCOT Permian Basin Reliability Study. As a result, TXNM Energy's 5-year capital investment plan increased to $7.8 billion, a 26% increase over the prior 5-year plan. Regulated rate base grows 12% under the plan compared to 2025 levels, and earnings per share over this period are targeted to grow between 7% and 9%. 2025 EARNINGS GUIDANCE2025 ongoing earnings guidance was introduced at a range of $2.74 to $2.84 per share, reflecting continued strong growth at TNMP and a mid-year implementation of the first phase of PNM's stipulated rate increase. CONSOLIDATED 2024 EARNINGSTXNM Energy reported 2024 GAAP earnings of $2.67 per diluted share. Ongoing earnings of $2.74 per diluted share achieved Company's narrowed expectation for the high end of original guidance. TXNM Energy (In millions, except EPS) 2024 2023 GAAP net earnings attributable to TXNM Energy $242.2 $87.8 GAAP diluted EPS $2.67 $1.02 Ongoing net earnings $247.8 $243.5 Ongoing diluted EPS $2.74 $2.82 PNM GAAP earnings in 2023 included $242.0 million in regulatory disallowances resulting from a settlement associated with the retirement of the San Juan Generating Station and disallowances related to legacy generation assets in PNM's prior rate case outcome. These costs were offset by $33.3 million of net unrealized gains on investment securities in 2023 compared to $2.7 million of net unrealized gains in 2024. SEGMENT REPORTING OF 2024 EARNINGS PNM – a vertically integrated electric utility in New Mexico with distribution, transmission and generation assets. TNMP – an electric transmission and distribution utility in Texas. Corporate and Other – reflects the TXNM Energy holding company and other subsidiaries.               EPS Results by Segment GAAP Diluted EPS Ongoing Diluted EPS 2024 2023 2024 2023 PNM $2.12 $0.41 $2.16 $2.22 TNMP $1.14 $1.10 $1.15 $1.11 Corporate and Other ($0.59) ($0.49) ($0.57) ($0.51) Consolidated TXNM Energy Energy $2.67 $1.02 $2.74 $2.82 Net changes to earnings in 2024 compared to 2023 include: PNM: Higher realized gains reflecting improved market performance of decommissioning and reclamation trusts, increased customer usage despite milder summer temperatures and new rates implemented at PNM Retail and FERC were partially offset by lower transmission margins, increased planned maintenance at gas plants, higher depreciation rates and increased depreciation and property tax expense associated with new capital investments. As discussed above, GAAP earnings are also improved due to the 2023 regulatory disallowances, partially offset by lower net unrealized gains on investment securities. TNMP: Increased rate recovery through the Transmission Cost of Service (TCOS) and Distribution Cost Recovery Factor (DCRF) mechanisms and lower O&M expenses were partially offset by milder summer temperatures and depreciation, property tax and interest expense associated with new capital investments. Corporate and Other: Higher interest rates on variable rate debt, net of hedges, and the absence of NMRD income following its sale in early 2024 increased losses. Additional materials with information on quarterly results are available at https://www.txnmenergy.com/investors/financial-information/quarterly-reports/2024.aspx. CONFERENCE CALL: 11 A.M. EASTERN FRIDAY, FEBRUARY 21 TXNM Energy will discuss these items during a live conference call and webcast on Friday, February 21st at 11 a.m. Eastern. Speaking on the call will be Pat Vincent-Collawn, TXNM Energy Chairman and Chief Executive Officer, Don Tarry, TXNM Energy President and Chief Operating Officer, and Lisa Eden, TXNM Energy Senior Vice President and Chief Financial Officer. The conference call will be simultaneously broadcast and archived on our website at https://www.txnmenergy.com/investors/events-and-presentations. Listeners are encouraged to visit the website at least 30 minutes before the event to register, download and install any necessary audio software.  Investors and analysts can participate in the live conference call by pre-registering using the following link: https://dpregister.com/sreg/10193346/fda929e300. Telephone participants who are unable to pre-register may participate in the live conference call by dialing (877) 276-8648 or (412) 317-5474 fifteen minutes prior to the event and asking to join the TXNM Energy call. Background:TXNM Energy (NYSE: TXNM), an energy holding company based in Albuquerque, New Mexico, delivers energy to more than 800,000 homes and businesses across Texas and New Mexico through its regulated utilities, TNMP and PNM. For more information, visit the company's website at www.TXNMEnergy.com. CONTACTS: Analysts Media Lisa Goodman Corporate Communications (505) 241-2160     (505) 241-2743 Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995Statements made in this news release for TXNM Energy, Inc. ("TXNM"), Public Service Company of New Mexico ("PNM"), or Texas-New Mexico Power Company ("TNMP") (collectively, the "Company") that relate to future events or expectations, projections, estimates, intentions, goals, targets, and strategies, including the unaudited financial results and earnings guidance, are made pursuant to the Private Securities Litigation Reform Act of 1995. Readers are cautioned that all forward-looking statements are based upon current expectations and estimates and apply only as of the date of this report. TXNM, PNM, and TNMP assume no obligation to update this information. Because actual results may differ materially from those expressed or implied by these forward-looking statements, TXNM, PNM, and TNMP caution readers not to place undue reliance on these statements. TXNM's, PNM's, and TNMP's business, financial condition, cash flow, and operating results are influenced by many factors, which are often beyond their control, that can cause actual results to differ from those expressed or implied by the forward-looking statements. For a discussion of risk factors and other important factors affecting forward-looking statements, please see the Company's Form 10-K, Form 10-Q filings and the information included in the Company's Forms 8-K with the Securities and Exchange Commission, which factors are specifically incorporated by reference herein. Non-GAAP Financial MeasuresGAAP refers to generally accepted accounting principles in the U.S. Ongoing earnings is a non-GAAP financial measure that excludes the impact of net unrealized mark-to-market gains and losses on economic hedges, the net change in unrealized gains and losses on investment securities, pension expense related to previously disposed of gas distribution business, and certain non-recurring, infrequent, and other items that are not indicative of fundamental changes in the earnings capacity of the Company's operations. The Company uses ongoing earnings and ongoing earnings per diluted share to evaluate the operations of the Company and to establish goals, including those used for certain aspects of incentive compensation, for management and employees. While the Company believes these financial measures are appropriate and useful for investors, they are not measures presented in accordance with GAAP. The Company does not intend for these measures, or any piece of these measures, to represent any financial measure as defined by GAAP. Furthermore, the Company's calculations of these measures as presented may or may not be comparable to similarly titled measures used by other companies. The Company uses ongoing earnings guidance to provide investors with management's expectations of ongoing financial performance over the period presented. While the Company believes ongoing earnings guidance is an appropriate measure, it is not a measure presented in accordance with GAAP. The Company does not intend for ongoing earnings guidance to represent an expectation of net earnings as defined by GAAP. Since the future differences between GAAP and ongoing earnings are frequently outside the control of the Company, management is generally not able to estimate the impact of the reconciling items between forecasted GAAP net earnings and ongoing earnings guidance, nor their probable impact on GAAP net earnings without unreasonable effort, therefore, management is generally not able to provide a corresponding GAAP equivalent for ongoing earnings guidance. Reconciliations between GAAP and ongoing earnings are contained in schedules 1-4. TXNM Energy, Inc. and SubsidiariesSchedule 1Reconciliation of GAAP to Ongoing Earnings PNM TNMP Corporate and Other Consolidated (in thousands) Quarter Ended December 31, 2024 GAAP Net Earnings (Loss) Attributable to TXNM: $     10,311 $     23,325 $   (17,922) $          15,714 Adjusting items before income tax effects Net change in unrealized (gains) and losses on investment securities2a 13,486 — — 13,486 Regulatory disallowances2b (1,621) — — (1,621) FERC refunds2c (4,037) — — (4,037) Pension expense related to previously disposed of gas distribution business2d 433 — — 433 Process improvement initiatives2e 523 1,046 2,137 3,706 Merger related costs2f 40 13 860 913 Total adjustments before income tax effects 8,824 1,059 2,997 12,880 Income tax impact of above adjustments1 (2,241) (222) (761) (3,224) Income tax valuation allowance3 — — 1,346 1,346 Income tax impact of non-deductible merger related costs3 289 179 — 468 Total income tax impacts5 (1,952) (43) 585 (1,410) Adjusting items, net of income taxes 6,872 1,016 3,582 11,470 Ongoing Earnings (Loss) $     17,183 $     24,341 $   (14,340) $          27,184 Year Ended December 31, 2024 GAAP Net Earnings (Loss) Attributable to TXNM: $   191,684 $   103,528 $   (53,058) $        242,154 Adjusting items before income tax effects Net change in unrealized (gains) and losses on investment securities2a (2,718) — — (2,718) Regulatory disallowances2b 9,226 — — 9,226 FERC refunds2c (4,037) — — (4,037) Pension expense related to previously disposed of gas distribution business2d 1,732 — — 1,732 Process improvement initiatives2e 523 1,046 2,137 3,706 Merger related costs2f 174 (8) 2,988 3,154 Sale of NMRD4 — — 15,097 15,097 Total adjustments before income tax effects 4,900 1,038 20,222 26,160 Income tax impact of above adjustments1 (1,244) (218) (5,135) (6,597) Sale of NMRD4 — — (15,712) (15,712) Income tax valuation allowance3 — — 1,346 1,346 Income tax impact of non-deductible merger related costs3 289 179 — 468 Total income tax impacts5 (955) (39) (19,501) (20,495) Adjusting items, net of income taxes 3,945 999 721 5,665 Ongoing Earnings (Loss) $   195,629 $   104,527 $   (52,337) $        247,819 1 Tax effects calculated using a tax rate of 21.0% for TNMP and 25.4% for other segments 2 The pre-tax impacts (in thousands) of adjusting items are reflected on the GAAP Consolidated Statement of Earnings as follows: a Changes in "Gains (losses) on investment securities" reflecting non-cash performance relative to market, not indicative of funding      requirements b Decreases in "Regulatory disallowances" of $1.6 million for the three months ended December 31, 2024, increases in "Regulatory      disallowances" of $9.0 million for the twelve months ended December 31, 2024, and decreases in "Electric Operating Revenues" of     $0.2 million for the twelve months ended December 31, 2024 c Decreases in "Cost of energy" of $3.8 million and increases in "Interest income" of $0.2 million for the three and twelve months ended      December 31, 2024 d Increases in "Other (deductions)" e Increases in "Administrative and general" of $5.0 million for the three and twelve months ended December 31, 2024 and decreases in      "Energy production costs" of $1.3 million for the three and twelve months ended December 31, 2024 f Increases in "Administrative and general" 3 Increases (decreases) in "Income Taxes" 4 Net gain of $4.4 million on the sale of NMRD: Increase in "Other (deductions)" of $15.1 million, decrease in "Income Taxes (Benefits)"      of $3.8 million for federal income tax and a decrease in "Income Taxes (Benefits)" of $15.7 million for investment tax credits 5 Income tax impacts reflected in "Income Taxes" TXNM Energy, Inc. and SubsidiariesSchedule 2Reconciliation of GAAP to Ongoing Earnings PNM TNMP Corporate and Other Consolidated (in thousands) Quarter Ended December 31, 2023 GAAP Net Earnings (Loss) Attributable to TXNM: $   (58,179) $     20,768 $   (12,815) $        (50,226) Adjusting items before income tax effects Net change in unrealized (gains) and losses on investment securities2a (26,840) — — (26,840) Regulatory disallowances2b 117,238 1,173 — 118,411 Pension expense related to previously disposed of gas distribution business2c 678 — — 678 Merger related costs2d 671 301 302 1,274 Total adjustments before income tax effects 91,747 1,474 302 93,523 Income tax impact of above adjustments1 (23,304) (310) (76) (23,690) SJGS retirement income tax adjustments3 (1,199) — — (1,199) Income tax impact of non-deductible merger related costs3 (46) 3 (2,428) (2,471) Timing of statutory and effective tax rates on non-recurring items4 (240) (51) (144) (435) Total income tax impacts5 (24,789) (358) (2,648) (27,795) Adjusting items, net of income taxes 66,958 1,116 (2,346) 65,728 Ongoing Earnings (Loss) $       8,779 $     21,884 $   (15,161) $          15,502 Year Ended December 31, 2023 GAAP Net Earnings (Loss) Attributable to TXNM: $     35,657 $     94,937 $   (42,776) $          87,818 Adjusting items before income tax effects Net change in unrealized (gains) and losses on investment securities2a (33,278) — — (33,278) Regulatory disallowances2b 240,840 1,173 — 242,013 Pension expense related to previously disposed of gas distribution business2c 2,716 — — 2,716 Merger related costs2d 730 303 953 1,986 Total adjustments before income tax effects 211,008 1,476 953 213,437 Income tax impacts of above adjustments1 (53,596) (310) (242) (54,148) SJGS retirement income tax adjustments3 (1,199) — — (1,199) Income tax impact of non-deductible merger related costs3 (40) 3 (2,334) (2,371) Total income tax impacts5 (54,835) (307) (2,576) (57,718) Adjusting items, net of income taxes 156,173 1,169 (1,623) 155,719 Ongoing Earnings (Loss) $   191,830 $     96,106 $   (44,399) $        243,537 1 Tax effects calculated using a tax rate of 21.0% for TNMP and 25.4% for other segments 2 The pre-tax impacts (in thousands) of adjusting items are reflected on the GAAP Consolidated Statement of Earnings as follows: a Changes in "Gains (losses) on investment securities" reflecting non-cash performance relative to market, not indicative of funding      requirements b Decreases in "Electric Operating Revenues" of $52.2 million and $169.8 million for the three and twelve months ended December 31,      2023, increases in "Regulatory disallowances" of $65.9 million and $71.9 million for the three and twelve months ended December      31, 2023, and increases in "Interest charges" of $0.3 million for the three and twelve months ended December 31, 2023 c Increases in "Other (deductions)" d Increases in "Administrative and general" 3 Increases (decreases) in "Income Taxes" 4 Income tax timing impacts resulting from differences between the statutory rates of 25.4% for PNM, 21.0% for TNMP and the average      expected statutory tax rate of 23.7% for TXNM, and the GAAP anticipated effective tax rates of 18.6% for PNM, 15.0% for TNMP, and      15.6% for TXNM, which reversed by year end 5 Income tax impacts reflected in "Income Taxes" TXNM Energy, Inc. and SubsidiariesSchedule 3Reconciliation of GAAP to Ongoing Earnings Per Diluted Share PNM TNMP Corporate and Other Consolidated (per diluted share) Quarter Ended December 31, 2024 GAAP Net Earnings (Loss) Attributable to TXNM: $         0.11 $         0.26 $       (0.20) $              0.17 Adjusting items, net of income tax effects Net change in unrealized (gains) and losses on investment securities 0.12 — — 0.12 Regulatory disallowances (0.01) — — (0.01) FERC refunds (0.03) — — (0.03) Process improvement initiatives — 0.01 0.02 0.03 Income tax valuation allowance — — 0.01 0.01 Merger related costs — — 0.01 0.01 Total Adjustments 0.08 0.01 0.04 0.13 Ongoing Earnings (Loss) $         0.19 $         0.27 $       (0.16) $              0.30 Average Diluted Shares Outstanding:  90,998,879 Year Ended December 31, 2024 GAAP Net Earnings (Loss) Attributable to TXNM: $         2.12 $         1.14 $       (0.59) $              2.67 Adjusting items, net of income tax effects Net change in unrealized (gains) and losses on investment securities (0.02) — — (0.02) Regulatory disallowances 0.08 — — 0.08 FERC refunds (0.03) — — (0.03) Pension expense related to previously disposed of gas distribution business 0.01 — — 0.01 Process improvement initiatives — 0.01 0.02 0.03 Income tax valuation allowance — — 0.02 0.02 Merger related costs — — 0.03 0.03 Sale of NMRD — — (0.05) (0.05) Total Adjustments 0.04 0.01 0.02 0.07 Ongoing Earnings (Loss) $         2.16 $         1.15 $       (0.57) $              2.74 Average Diluted Shares Outstanding: 90,590,573 TXNM Energy, Inc. and SubsidiariesSchedule 4Reconciliation of GAAP to Ongoing Earnings Per Diluted Share PNM TNMP Corporate and Other Consolidated (per diluted share) Quarter Ended December 31, 2023 GAAP Net Earnings (Loss) Attributable to TXNM: $       (0.67) $         0.24 $       (0.15) $            (0.58) Adjusting items, net of income tax effects Net change in unrealized (gains) and losses on investment securities (0.23) — — (0.23) Regulatory disallowances 1.01 0.01 — 1.02 Merger related costs — — (0.02) (0.02) SJGS retirement income tax adjustments (0.01) — — (0.01) Total Adjustments 0.77 0.01 (0.02) 0.76 Ongoing Earnings (Loss) $         0.10 $         0.25 $       (0.17) $              0.18 Average Diluted Shares Outstanding:  86,932,542 Year Ended December 31, 2023 GAAP Net Earnings (Loss) Attributable to TXNM: $         0.41 $         1.10 $       (0.49) $              1.02 Adjusting items, net of income tax effects Net change in unrealized (gains) and losses on investment securities (0.29) — — (0.29) Regulatory disallowances 2.08 0.01 — 2.09 Pension expense related to previously disposed of gas distribution business 0.02 — — 0.02 Merger related costs 0.01 — (0.02) (0.01) SJGS retirement income tax adjustments (0.01) — — (0.01) Total Adjustments 1.81 0.01 (0.02) 1.80 Ongoing Earnings (Loss) $         2.22 $         1.11 $       (0.51) $              2.82 Average Diluted Shares Outstanding:  86,368,999 TXNM Energy, Inc. and SubsidiariesSchedule 5Consolidated Statements of Earnings Year Ended December 31, 2024 2023 2022 (In thousands, except per share amounts) Electric Operating Revenues $      1,971,199 $      1,939,198 $      2,249,555 Operating Expenses: Cost of energy 583,984 802,261 987,941 Administrative and general 247,116 227,900 227,149 Energy production costs 93,748 91,610 147,347 Regulatory disallowances 8,980 71,923 832 Depreciation and amortization 384,925 319,503 304,853 Transmission and distribution costs 98,380 98,721 94,684 Taxes other than income taxes 100,580 95,940 92,989 Total operating expenses 1,517,713 1,707,858 1,855,795 Operating income 453,486 231,340 393,760 Other Income and Deductions: Interest income 23,537 21,963 16,095 Gains (losses) on investment securities 26,851 19,246 (78,357) Other income 28,621 24,204 21,601 Other (deductions) (24,189) (15,869) (13,881) Net other income and (deductions) 54,820 49,544 (54,542) Interest Charges 228,066 190,355 127,908 Earnings before Income Taxes 280,240 90,529 211,310 Income Taxes (Benefits) 21,518 (16,350) 26,130 Net Earnings 258,722 106,879 185,180 (Earnings) Attributable to Valencia Non-controlling Interest (16,040) (18,533) (15,122) Preferred Stock Dividend Requirements of Subsidiary (528) (528) (528) Net Earnings Attributable to TXNM $         242,154 $           87,818 $         169,530 Net Earnings Attributable to TXNM per Common Share: Basic $                2.67 $                1.02 $                1.97 Diluted $                2.67 $                1.02 $                1.97 SOURCE TXNM Energy, Inc. 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