TXNM Energy (TXNM) risk factors, FY2024 10-K

Regulatory Risks

1. 01TXNM, PNM, and TNMP are subject to complex government regulation unrelated to the environment, which may have a negative impact on their businesses, financial position and results of operations

Operational Risks

1. 02Advances in technology could make electric generating facilities less competitive
2. 03Costs of decommissioning, remediation, and restoration of nuclear and fossil-fueled power plants, as well as reclamation of related coal mines, could exceed the estimates of TXNM and PNM as well as the amounts PNM recovers from its ratepayers, which could negatively impact results of operations and liquidity
3. 04The financial performance of TXNM, PNM, and TNMP may be adversely affected if power plants, other generation resources, and transmission and distribution systems do not operate reliably and efficiently
4. 05TXNM, PNM, and TNMP are subject to information security breaches and risks of unauthorized access to their information and operational technology systems as well as physical threats to assets
5. 06There are inherent risks in the ownership and operation of nuclear facilities
6. 07Peak demand for power could exceed forecasted supply capacity, resulting in increased costs for purchasing capacity in the market or building additional generation facilities and/or energy storage facilities
7. 08Difficulties in obtaining permits and rights-of-way could negatively impact PNM’s results of operations

General Economic and Weather Risks

1. 09Changes in interest rates could adversely affect our business
2. 10General economic conditions of the nation and/or specific areas can affect the Company’s customers and suppliers. Economic recession or downturn may result in decreased consumption by customers and increased bad debt expense, and could also negatively impact suppliers, all of which could negatively affect the Company
3. 11The operating results of TXNM and its operating subsidiaries are seasonal and are affected by weather conditions
4. 12The impact of wildfires could negatively affect PNM’s and TNMP’s results of operations

Financial Risks

1. 13TXNM has counterparty credit risk in connection with financial support that was provided to facilitate the coal supply arrangement for SJGS. Adverse developments from these factors could have a negative impact on the business, financial condition, results of operations, and cash flows of PNM and TXNM
2. 14TXNM and its subsidiaries’ substantial indebtedness could adversely affect its financial condition
3. 15Servicing TXNM and its subsidiaries’ debt requires a significant amount of cash, and it may not have sufficient cash flow from its business to pay its substantial debt
4. 16Despite TXNM’s current consolidated debt levels, TXNM and its subsidiaries may still incur substantially more debt or take other actions which would intensify the risks discussed above
5. 17The conditional conversion feature of the Convertible Notes, if triggered, may adversely affect TXNM’s financial condition and operating results
6. 18The accounting method for the Convertible Notes could have a material effect on TXNM’s reported financial results
7. 19The fundamental change repurchase features of the Convertible Notes and the TNMP first mortgage bonds may delay or prevent an otherwise beneficial attempt to acquire TXNM
8. 20TXNM may be unable to meet its ongoing and future financial obligations and to pay dividends on its common stock if its subsidiaries are unable to pay dividends or distributions to TXNM
9. 21Disruption in the credit and capital markets may impact the Company’s strategy and ability to raise capital
10. 22Reduction in credit ratings or changing rating agency requirements could materially and adversely affect the Company’s growth, strategy, business, financial position, results of operations, and liquidity
11. 23Impairments of goodwill and long-lived assets of TXNM, PNM, and TNMP could adversely affect the Company’s business, financial position, liquidity, and results of operations
12. 24The impacts and implementation of U.S. tax reform legislation may negatively impact TXNM’s, PNM’s, and TNMP’s businesses, financial position, results of operations, and cash flows
13. 25Provisions of TXNM’s organizational documents, as well as several other statutory and regulatory factors, will limit another party’s ability to acquire TXNM and could deprive TXNM’s shareholders of the opportunity to receive a takeover premium for shares of TXNM’s common stock