- Full-year results benefit from strong
operational performance and cost management
- Palo Verde Nuclear Generating Station
continues record-breaking performance
- Company makes progress on key
regulatory initiatives
Pinnacle West Capital Corporation (NYSE: PNW) today reported
consolidated net income attributable to common shareholders of
$442.0 million, or $3.95 per diluted share, for full-year 2016.
This result compares with net income of $437.3 million, or $3.92
per share, in 2015.
“Reflecting steady improvement in Arizona’s economic conditions
and our employees’ continued focus on sustainable cost management,
our year-end results were in line with our expectations,” said
Pinnacle West Chairman, President and Chief Executive Officer Don
Brandt. “In addition, our employees contributed to strong
operational performance, including a record-setting performance at
the Palo Verde Nuclear Generating Station.”
Palo Verde achieved its 25th consecutive year as the nation’s
largest power producer – producing 32.3 million megawatt-hours of
carbon-free electricity. The plant’s three units achieved a
capacity factor of 93.2 percent, and Unit 3’s fall 2016 refueling
and maintenance outage was the shortest in plant history at 28
days, 17 hours. By comparison, the average length of a refueling
and maintenance outage at all U.S. reactors in 2015 was 36.3 days,
according to most recent industry data.
Brandt cited additional examples of the Company’s 2016
achievements:
- For the fifth straight year, Pinnacle
West increased its common dividend, raising it by 4.8 percent.
- On October 1, the company commenced
participation in the western regional Energy Imbalance Market
(EIM), resulting in trading efficiencies and customer savings of
about $6 million during the 2016 fourth quarter.
- Arizona Public Service (APS) launched a
suite of new tools that provides customers with an improved and
more customized service experience, including a mobile app, an
online outage map and a new automated phone system.
- APS continued investing in an advanced
energy grid, including new technologies that enable customers to
have greater choice and control over their energy use, while
increasing reliability. These technologies included two separate
“next generation” microgrids installed in Phoenix and at the Marine
Corps Air Station in Yuma, Ariz.
- The Red Rock Solar Plant – APS’s
largest self-owned grid-scale solar power plant at 40 megawatts –
also was completed, helping the company reach one gigawatt of solar
on its system and becoming the only utility outside California to
achieve this milestone. To date, the company’s total investment in
solar energy is about $2 billion.
- APS’s power reliability for 2016
remained among the strongest in the industry and received a
top-quartile score from JD Power for “Power Quality &
Reliability” among residential customers.
Looking forward, Brandt said the company remains committed to
investing in infrastructure that creates value for customers and
shareholders alike, while also building on the positive regulatory
outcome in Arizona’s value and cost of distributed generation
docket, which was decided in late 2016.
“We will continue to work collaboratively with regulators and
other stakeholders on key issues important to Arizona’s energy
future, including achieving a constructive regulatory outcome in
our current rate review,” he said. “In many respects, this case
serves as a transition from the challenges of the present to the
opportunities of the future. “
The 2016 full-year financial results comparison was positively
impacted by the following major factors:
- Higher lost fixed cost recovery
revenue, an increase in transmission proceeds and revenue from the
Company’s AZ Sun program improved earnings by $0.18 per share
compared to 2015.
- Retail electricity sales improved
earnings $0.05 per share due to changes in customer usage patterns
and related pricing. Compared to a year ago, total customer growth
improved 1.4 percent.
- The effects of weather variations
improved the Company’s earnings by $0.02 per share, although
weather was still unfavorable compared to normal. For the year, the
company had a 6 percent decrease in cooling degree-days and a 5
percent decrease in heating degree-days (measures of the effects of
weather) versus 2015. Compared to 10-year historical averages,
cooling and heating degree days were down 2.7 percent and 18.7
percent, respectively.
- Lower interest expense, net of AFUDC,
contributed $0.02 per share.
- The net effect of miscellaneous items
increased earnings $0.06 per share, including the second-quarter
sale of a 50 percent ownership stake in an existing transmission
line, which resulted in a $0.03 contribution to the Company’s
bottom line in the second quarter.
The above positive factors were largely offset by higher
operations and maintenance expenses, which reduced annual earnings
by $0.30 per share. These expenses were largely associated with
major planned outages at the company’s Four Corners Power Plant in
the first half of the year; higher transmission, distribution and
customer service costs associated with implementation of new
systems; and higher employee benefit costs, among other items.
For the quarter ended December 31, 2016, Pinnacle West reported
consolidated net income attributable to common shareholders of
$53.2 million, or $0.47 per diluted share. This result compares
with net income of $41.1 million, or $0.37 per share, for the same
period a year ago.
The 2016 fourth-quarter results comparison versus the same 2015
period was positively impacted by lower operating expenses,
partially offset by lower retail electricity sales. While October
2016 proved to be hotter than average, sales decreased in the last
two months of the year, with December turning out to be the third
mildest December since 1970 – a span of 46 years.
Conference Call and Webcast
Pinnacle West invites interested parties to listen to the live
webcast of management’s conference call to discuss the Company’s
2016 year-end and fourth-quarter results, as well as recent
developments, at 11 a.m. ET (9 a.m. AZ time) today, February 24.
The webcast can be accessed at pinnaclewest.com/presentations and
will be available for replay on the website for 30 days. To access
the live conference call by telephone, dial (877) 407-8035 or (201)
689-8035 for international callers. A replay of the call also will
be available until 11:59 p.m. (ET), Friday, March 3, 2017, by
calling (877) 481-4010 in the U.S. and Canada or (919) 882-2331
internationally and entering conference ID number 10176.
About Pinnacle West Capital
Pinnacle West Capital Corp., an energy holding company based in
Phoenix, has consolidated assets of about $16 billion, about 6,200
megawatts of generating capacity and 6,300 employees in Arizona and
New Mexico. Through its principal subsidiary, Arizona Public
Service, the Company provides retail electricity service to nearly
1.2 million Arizona homes and businesses. For more information
about Pinnacle West, visit the Company’s website at
pinnaclewest.com.
Earnings per share amounts are based on average diluted common
shares outstanding. For more information on Pinnacle West’s
operating statistics and earnings, please visit
pinnaclewest.com/investors.
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements based on
our current expectations, including statements regarding our
earnings guidance and financial outlook and goals. These
forward-looking statements are often identified by words such as
“estimate,” “predict,” “may,” “believe,” “plan,” “expect,”
“require,” “intend,” “assume,” “project” and similar words. Because
actual results may differ materially from expectations, we caution
readers not to place undue reliance on these statements. A number
of factors could cause future results to differ materially from
historical results, or from outcomes currently expected or sought
by Pinnacle West or APS. These factors include, but are not limited
to:
- our ability to manage capital
expenditures and operations and maintenance costs while maintaining
high reliability and customer service levels;
- variations in demand for electricity,
including those due to weather, seasonality, the general economy,
customer and sales growth (or decline), and the effects of energy
conservation measures and distributed generation;
- power plant and transmission system
performance and outages;
- competition in retail and wholesale
power markets;
- regulatory and judicial decisions,
developments and proceedings;
- new legislation, ballot initiatives and
regulation, including those relating to environmental requirements,
regulatory policy, nuclear plant operations and potential
deregulation of retail electric markets;
- fuel and water supply
availability;
- our ability to achieve timely and
adequate rate recovery of our costs, including returns on and of
debt and equity capital investment;
- our ability to meet renewable energy
and energy efficiency mandates and recover related costs;
- risks inherent in the operation of
nuclear facilities, including spent fuel disposal uncertainty;
- current and future economic conditions
in Arizona, including in real estate markets;
- the development of new technologies
which may affect electric sales or delivery;
- the cost of debt and equity capital and
the ability to access capital markets when required;
- environmental, economic and other
concerns surrounding coal-fired generation, including regulation of
greenhouse gas emissions;
- volatile fuel and purchased power
costs;
- the investment performance of the
assets of our nuclear decommissioning trust, pension, and other
postretirement benefit plans and the resulting impact on future
funding requirements;
- the liquidity of wholesale power
markets and the use of derivative contracts in our business;
- potential shortfalls in insurance
coverage;
- new accounting requirements or new
interpretations of existing requirements;
- generation, transmission and
distribution facility and system conditions and operating
costs;
- the ability to meet the anticipated
future need for additional generation and associated transmission
facilities in our region;
- the willingness or ability of our
counterparties, power plant participants and power plant land
owners to meet contractual or other obligations or extend the
rights for continued power plant operations; and
- restrictions on dividends or other
provisions in our credit agreements and Arizona Corporation
Commission orders.
These and other factors are discussed in Risk Factors described
in Part 1, Item 1A of the Pinnacle West/APS Annual Report on Form
10-K for the fiscal year ended December 31, 2016, which readers
should review carefully before placing any reliance on our
financial statements or disclosures. Neither Pinnacle West nor APS
assumes any obligation to update these statements, even if our
internal estimates change, except as required by law.
PINNACLE WEST CAPITAL CORPORATION CONSOLIDATED
STATEMENTS OF INCOME (unaudited) (dollars and shares in
thousands, except per share amounts)
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31, DECEMBER 31, 2016 2015
2016 2015
Operating Revenues $ 739,199 $ 734,430 $ 3,498,682 $
3,495,443
Operating Expenses Fuel and purchased power
243,257 232,737 1,075,510 1,101,298 Operations and maintenance
208,277 222,019 911,319 868,377 Depreciation and amortization
122,852 125,109 485,829 494,422 Taxes other than income taxes
40,597 42,323 166,499 171,812 Other expenses 1,400
2,408 3,541 4,932 Total
616,383 624,596 2,642,698
2,640,841
Operating Income
122,816 109,834 855,984
854,602
Other Income (Deductions) Allowance
for equity funds used during construction 11,061 9,001 42,140
35,215 Other income 516 72 901 621 Other expense (3,252 )
(5,390 ) (15,337 ) (17,823 ) Total
8,325 3,683 27,704 18,013
Interest Expense Interest charges 50,834
48,895 205,720 194,964 Allowance for borrowed funds used during
construction (5,121 ) (4,203 ) (19,970 )
(16,259 ) Total 45,713 44,692
185,750 178,705
Income Before
Income Taxes 85,428 68,825 697,938 693,910
Income
Taxes 27,309 22,847 236,411
237,720
Net Income 58,119 45,978
461,527 456,190 Less: Net income attributable to
noncontrolling interests 4,873 4,861 19,493 18,933
Net Income Attributable To Common Shareholders
$ 53,246 $ 41,117 $ 442,034 $ 437,257
Weighted-Average Common Shares Outstanding -
Basic 111,545 111,149 111,409 111,026
Weighted-Average Common Shares Outstanding - Diluted 112,223
111,738 112,046 111,552
Earnings Per Weighted-Average
Common Share Outstanding Net income attributable to common
shareholders - basic $ 0.48 $ 0.37 $ 3.97 $ 3.94 Net income
attributable to common shareholders - diluted $ 0.47 $ 0.37 $ 3.95
$ 3.92
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version on businesswire.com: http://www.businesswire.com/news/home/20170224005102/en/
Pinnacle West Capital CorporationMedia Contact: Alan Bunnell,
602-250-3376Analyst Contacts: Ted Geisler, 602-250-3200; Chalese
Haraldsen 602-250-5643Website: pinnaclewest.com
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