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TXNM ENERGY INC (TXNM)·Q2 2024 Earnings Summary

Executive Summary

  • Q2 2024 delivered GAAP diluted EPS of $0.53 (flat YoY) and ongoing diluted EPS of $0.60 (+9% YoY), on electric operating revenues of $488.1M (+2.3% YoY); consolidated operating income rose 14.5% YoY to $105.7M .
  • Segment performance was solid: TNMP operating income +27% YoY on TCOS/DCRF recovery; PNM operating income +6.7% YoY aided by new retail rates, load growth and hotter weather .
  • Management affirmed FY2024 consolidated ongoing EPS guidance at $2.65–$2.75 (maintained), signaling confidence in rate recovery and grid investments under the new TXNM Energy name/ticker .
  • Non-GAAP adjustments and higher variable-rate interest at Corporate weighed on GAAP EPS; GAAP earnings included $5.6M net unrealized losses on investment securities vs $2.5M gains in Q2 2023 .
  • Consensus estimates from S&P Global were unavailable at time of retrieval (tool limit) — estimate comparison is not included; this limits near-term “beat/miss” assessment (Values retrieved from S&P Global were unavailable).

What Went Well and What Went Wrong

What Went Well

  • TNMP rate recovery (TCOS/DCRF) and disciplined execution drove operating income up to $49.3M (+27% YoY), and segment earnings to $29.9M (+21% YoY) .
  • PNM benefited from implementation of new retail rates, load growth, hotter weather, and improved trust performance, supporting operating income of $58.1M (+6.7% YoY) and ongoing EPS of $0.41 at the segment level .
  • “Results for the second quarter and first half of the year are ahead of expectations,” highlighting momentum and confidence; management emphasized investment opportunities including TNMP’s System Resiliency Plan and PNM Grid Modernization .

What Went Wrong

  • PNM transmission margins were pressured by market prices, and higher demand charges from battery storage contracts; new depreciation rates and capex-related depreciation also weighed on results .
  • Corporate & Other saw higher losses driven by increased rates on variable-rate debt, reducing consolidated EPS contribution .
  • GAAP EPS was impacted by a $5.6M net unrealized loss on investment securities (vs $2.5M gain YoY) and higher share count after December 2023 issuance, diluting per-share metrics .

Financial Results

MetricQ2 2023Q1 2024Q2 2024
Electric Operating Revenues ($USD Millions)$477.2 $436.9 (derived from $924.979 YTD − $488.102 Q2) $488.1
GAAP Diluted EPS ($)$0.53 $0.52 (derived from $1.05 YTD − $0.53 Q2) $0.53
Ongoing Diluted EPS ($)$0.55 $0.41 (derived from $1.01 YTD − $0.60 Q2) $0.60
Operating Income / EBIT ($USD Millions)$92.3 $80.6 (derived from $186.273 YTD − $105.683 Q2) $105.7
EBIT Margin (%)19.3% (92.330/477.156) 18.5% (80.590/436.877) 21.7% (105.683/488.102)
Net Income Margin (%)9.5% (45.304/477.156) 10.8% (47.190/436.877) 9.8% (48.049/488.102)

Segment breakdown:

Segment MetricQ2 2023Q2 2024
PNM Electric Operating Revenues ($USD Millions)$338.2 $333.7
PNM Operating Income ($USD Millions)$54.4 $58.1
PNM Segment Earnings ($USD Millions)$35.3 $34.7
TNMP Electric Operating Revenues ($USD Millions)$138.9 $154.4
TNMP Operating Income ($USD Millions)$38.7 $49.3
TNMP Segment Earnings ($USD Millions)$24.6 $29.9

KPIs:

KPIQ2 2023Q2 2024
Utility Margin – PNM ($USD Millions)$204.6 $218.9
Utility Margin – TNMP ($USD Millions)$100.1 $114.5
Average Diluted Shares Outstanding (Millions)86.129 90.552
Dividends Declared per Common Share ($)$0.3675 $0.3875

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Consolidated Ongoing EPS GuidanceFY 2024$2.65–$2.75$2.65–$2.75Maintained
Common Dividend Per ShareQ2 2024$0.3675 (Q2 2023) $0.3875 Increased
Corporate Action: Name/Ticker ChangeEffective Aug 5, 2024PNM (PNM)TXNM Energy (TXNM)Implemented

Earnings Call Themes & Trends

Note: A Q2 2024 earnings call was held at 11:00 a.m. ET on July 31, but a transcript was not available in the document set reviewed; call access details were provided in the 8-K .

TopicPrevious Mentions (Q-2 and Q-1)Current PeriodTrend
Rate Recovery and PricingNot assessed (transcripts not available)PNM: new retail rates; TNMP: TCOS/DCRF increases supporting earnings Positive momentum at both utilities
Grid Investments/ResiliencyNot assessedPlans to file TNMP System Resiliency Plan; PNM Grid Modernization emphasized Increasing focus on system hardening
Demand/WeatherNot assessedHotter weather and load growth contributed to PNM Supportive macro/weather tailwinds
Corporate FinancingNot assessedHigher variable-rate debt costs at Corporate reduced earnings Headwind persisting
Non-GAAP AdjustmentsNot assessedNet unrealized losses on securities weighed on GAAP EPS Volatile mark-to-market

Management Commentary

  • “Results for the second quarter and first half of the year are ahead of expectations.” — Pat Vincent-Collawn, Chairman & CEO .
  • “Our long-term plans incorporate opportunities to invest and advance our grid infrastructure, including the System Resiliency Plan we will file at TNMP and Grid Modernization at PNM.” — Pat Vincent-Collawn .
  • Conference call speakers: Pat Vincent-Collawn (CEO), Don Tarry (President & COO), and Lisa Eden (SVP & CFO); webcast and dial-in details provided .

Q&A Highlights

  • The company held its Q2 2024 conference call on July 31; however, a transcript was not available in the documents reviewed. As a result, specific Q&A themes and guidance clarifications cannot be summarized here .

Estimates Context

  • Wall Street consensus for Q2 2024 EPS and revenue from S&P Global could not be retrieved due to request limits; comparison to estimates is therefore unavailable at this time (Values retrieved from S&P Global were unavailable).

Key Takeaways for Investors

  • Ongoing EPS strength and affirmed FY2024 guidance ($2.65–$2.75) reflect constructive regulatory outcomes and execution at both utilities; ongoing diluted EPS was $0.60 in Q2 (+9% YoY) .
  • TNMP’s earnings acceleration (+27% YoY operating income) indicates effective rate recovery (TCOS/DCRF) and growing T&D investment base, a key driver of consolidated results .
  • PNM’s new retail rates, load growth and hotter weather supported utility margin expansion, while transmission margin pressure and battery demand charges are watch items for near‑term profitability mix .
  • Corporate financing costs (variable-rate debt) are a headwind to consolidated GAAP EPS; consider sensitivity to rate moves and potential optimization opportunities .
  • Non-GAAP adjustments (mark‑to‑market on securities) created GAAP volatility; ongoing EPS remains the better operating signal given business model and regulatory mechanics .
  • Dividend per share rose to $0.3875 in Q2 from $0.3675 a year ago, reinforcing capital return consistency amid rebranding to TXNM Energy .
  • With estimates unavailable, monitor subsequent disclosures for consensus alignment and potential revisions as TNMP’s System Resiliency Plan advances in Texas (PUCT process) and PNM Grid Modernization continues .