TXNM Energy: Strong Earnings, Increased Investments, and Optimistic Growth Outlook

TXNM Energy, a leading energy holding company, reported robust 2024 financial results and refreshed its growth outlook, reflecting the company's strategic focus on grid modernization and high-growth regions. The company's strong performance, coupled with increased investments and earnings growth targets, positions it well for future success.

TXNM Energy reported GAAP earnings of $2.67 per diluted share and ongoing earnings of $2.74 per diluted share, meeting guidance expectations. The company introduced 2025 ongoing earnings guidance of $2.74-$2.84 per diluted share and increased its long-term earnings growth target to 7-9%. This optimistic outlook is supported by a projected 12% increase in regulated rate base, indicating substantial revenue potential from regulated operations.



The company's strategic pivot toward grid modernization is evident in its expanded 5-year capital investment plan, which increased to $7.8 billion, representing a 26% increase over the previous plan. This expansion includes additional Texas transmission projects resulting from the ERCOT Permian Basin Reliability Study, providing a clear path for regulated returns in the high-growth Texas region. The regulated rate base is projected to grow 12% compared to 2025 levels, further supporting the company's growth trajectory.

TXNM Energy's strong performance across segments showcases the effectiveness of its strategic positioning. PNM benefited from higher realized gains and increased customer usage, while TNMP saw improved rate recovery through various mechanisms. However, both segments faced challenges from milder summer temperatures and increased expenses related to new capital investments.

Several key factors underscore TXNM Energy's strategic positioning and support its long-term growth prospects:

1. Texas Transmission Projects: The company's focus on Texas transmission projects, particularly those stemming from the ERCOT Permian Basin Reliability Study, provides a clear path for regulated returns in a high-growth region.
2. Regulatory Pragmatism: The phased implementation of PNM's rate increase demonstrates regulatory pragmatism, balancing customer impact with necessary infrastructure investments.
3. Constructive Regulatory Environment: TNMP's performance through TCOS and DCRF mechanisms showcases the effectiveness of Texas's regulatory framework in supporting utility investments.
4. Grid Reliability and Resilience: The 26% increase in the 5-year capital plan focuses on grid reliability and resilience, positioning TXNM advantageously in both its service territories with clear regulatory support for necessary infrastructure investments.

In conclusion, TXNM Energy's strong 2024 financial results and refreshed growth outlook reflect the company's strategic focus on grid modernization and high-growth regions. With increased investments and earnings growth targets, TXNM Energy is well-positioned for future success, driven by its strategic positioning and the support of a constructive regulatory environment.