TXNM Energy, Inc. (TXNM) Cash Flow Statement

The wide quarterly swings in OCF, from a low of $3.5M to a high of $282.0M, suggest that working capital timing and regulatory recovery mechanisms, rather than operational deterioration, drive the variability. Despite this, the cumulative OCF over the ten quarters totals approximately $1.3B, which appears adequate to cover interest and dividend obligations, though the 2025Q2 dip to near zero warrants monitoring for potential liquidity stress.

With CapEx/OCF ratios often exceeding 100% (e.g., 196.5% in 2025Q4), TXNM is funding a significant portion of its capital program through external sources, which is typical for a utility in a growth phase. The sustained investment in grid modernization and renewable transition, as evidenced by rising D&A from $103.0M in 2024Q1 to $127.6M in 2026Q2, suggests that rate base is expanding, but the payoff depends on timely regulatory approval of new rates.

The persistent FCF deficit, averaging around $190M per quarter, is a normal feature of a regulated utility's growth strategy, but the ability to access capital on reasonable terms is critical. The data shows intermittent equity issuance, such as $643.4M in 2025Q2, which helped fund the gap, while long-term debt issuance appears modest, suggesting a balanced approach. However, the anomalous 0% debt/equity ratio in the snapshot warrants verification, as it could distort leverage assessments.

The extreme swings in OCF, from $3.5M to $282.0M, are characteristic of a utility with significant regulatory assets and liabilities, where the timing of cost recovery can create large working capital movements. Investors should monitor the recovery of deferred fuel and other regulatory assets, as delays could strain liquidity, though the pass-through mechanisms in New Mexico and Texas are designed to eventually normalize cash flows.

Despite the occasional low coverage quarter, the cumulative OCF of approximately $1.3B against total dividends of about $400M provides a comfortable cushion, suggesting that the dividend is sustainable through the current capital cycle. However, the 2025Q2 dip to 0.1x coverage highlights the potential for temporary shortfalls, which could pressure liquidity if external financing becomes constrained.

The disconnect between net income and OCF, particularly in 2025Q4 when the company reported a loss but generated $157.7M in OCF, suggests that earnings are not a reliable indicator of cash generation. AFUDC and other non-cash regulatory credits likely inflate reported earnings in some periods, while write-offs or timing adjustments depress them in others, making cash flow a more stable measure of financial health.