- Regulatory settlement positions APS
well for future, offers customers greater choice and
flexibility
- Customer growth, superior operational
performance deliver bottom-line results
- Full-year 2017 earnings guidance
maintained; 2018 guidance initiated
Pinnacle West Capital Corp. (NYSE: PNW) today reported
consolidated net income attributable to common shareholders for the
2017 third quarter of $276.1 million, or $2.46 per diluted share.
This result compares with net income of $263.0 million, or $2.35
per share, for the same period a year ago.
“It was a strong quarter on many fronts,” said Pinnacle West
Chairman, President and Chief Executive Officer Don Brandt. “Our
service territory experienced solid customer growth of 1.9 percent
as new customers moved to Arizona for job opportunities and an
improved quality of life, our employees continued to demonstrate
superior customer service and operational performance, and we
successfully settled our rate review.”
Approved in August, the regulatory settlement enables the
company to invest in a smarter, cleaner energy infrastructure, and
provides Arizona Public Service Co.’s 1.2 million customers more
choice through new rate options, all while maintaining safe,
reliable service.
Brandt added that the company is placing significant emphasis on
communicating the benefits of the settlement and its updated rate
plans to customers. “Our new rate options offer customers greater
flexibility and control over their energy use and bills,” he
said.
Operationally, the company’s employees remained focused on
delivering safe and dependable energy to its customers throughout
the hot Arizona summer season. During the quarter, Palo Verde
Generating Station’s three units continued to perform well,
operating at a combined capacity factor of 99.4 percent. APS also
achieved its best summer reliability performance in the past five
years, providing customers with dependable service despite
large-scale wildfires and seasonal storms.
In addition to solid operational performance, the 2017
third-quarter financial results were positively impacted by the
following factors compared to the same period a year ago:
- The company’s 2017 regulatory
settlement, which included a retail base rate increase, improved
earnings $0.13 per share. Effective Aug. 19, the comprehensive and
broadly supported agreement was APS’s first base rate increase in
five years.
- Adjustment mechanisms improved earnings
by $0.03 per share compared to the 2016 third quarter.
- Retail electricity sales – excluding
the effects of weather variations – increased results $0.02 per
share due to customer growth partly offset by energy efficiency and
distributed generation. Weather-normalized sales were 0.2 percent
higher in the third quarter compared to 2016’s third quarter, while
year-to-date sales were 0.1 percent higher than the first nine
months in 2016.
- The effects of weather variations
improved results by $0.02 per share compared to the year-ago period
despite slightly milder-than-normal overall temperatures.
Third-quarter 2017 residential cooling degree-days (a measure of
the effects of weather) were 0.6 percent greater than in the 2016
third quarter, albeit 5 percent below 10-year historical
averages.
These positive factors were offset in part by the following
items:
- Higher operations and maintenance
expenses reduced results by $0.02 per share compared with the
prior-year period. The increased costs were largely the result of
higher employee benefit costs. As previously indicated, the company
expects additional planned outage costs at the Four Corners Power
Plant later this year to install added emission controls.
- Higher depreciation and amortization
expenses reduced earnings $0.07 per share.
Financial Outlook
For 2017, the Company continues to expect its ongoing
consolidated earnings will be within a range of $4.15 to $4.30 per
diluted share on a weather-normalized basis.
Looking ahead to 2018, the Company estimates its ongoing
consolidated earnings will be within a range of $4.25 to $4.45 per
diluted share, and expects to achieve a consolidated earned return
on average common equity of more than 9.5 percent.
2017 and 2018 ongoing consolidated earnings per diluted share
are currently projected to be the same as 2017 and 2018
consolidated net income per diluted share, respectively. Key
factors and assumptions underlying both the 2017 and 2018 outlook
can be found in the third-quarter 2017 earnings presentation slides
on the Company’s website at pinnaclewest.com/investors.
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
2017 third-quarter results, as well as recent developments, at 12
noon ET (9 a.m. Arizona time) today, November 3. 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, Nov. 10, 2017, by calling
(877) 481-4010 in the U.S. and Canada or (919) 882-2331
internationally and entering conference ID number 20278.
General Information
Pinnacle West Capital Corp., an energy holding company based in
Phoenix, has consolidated assets of nearly $17 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
post-retirement 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, and in Part II,
Item 1A in of the Pinnacle West/APS Quarterly Report on Form 10-Q
for the quarter ended June 30, 2017, 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 NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30, 2017 2016 2017
2016
Operating Revenues $ 1,183,322 $
1,166,922 $ 2,805,637 $ 2,759,483
Operating Expenses
Fuel and purchased power 310,469 336,120 777,475 832,253 Operations
and maintenance 224,305 217,568 658,294 703,042 Depreciation and
amortization 133,912 120,428 387,278 362,977 Taxes other than
income taxes 45,169 41,284 133,294 125,902 Other expenses
3,385 264 5,479 2,141
Total 717,240 715,664
1,961,820 2,026,315
Operating
Income 466,082 451,258
843,817 733,168
Other Income
(Deductions) Allowance for equity funds used during
construction 12,728 10,194 32,666 31,079 Other income 1,091 71
2,055 385 Other expense (4,993 ) (5,205 )
(12,495 ) (12,085 ) Total 8,826 5,060
22,226 19,379
Interest
Expense Interest charges 55,644 51,293 162,477 154,886
Allowance for borrowed funds used during construction (6,000
) (4,321 ) (15,378 ) (14,849 ) Total
49,644 46,972 147,099
140,037
Income Before Income Taxes 425,264
409,346 718,944 612,510
Income Taxes 144,319
141,446 237,497 209,102
Net Income 280,945 267,900 481,447 403,408
Less: Net income attributable to noncontrolling interests
4,873 4,873 14,620 14,620
Net Income
Attributable To Common Shareholders $ 276,072 $ 263,027
$ 466,827 $ 388,788
Weighted-Average Common Shares Outstanding - Basic 111,835
111,416 111,787 111,363
Weighted-Average Common Shares
Outstanding - Diluted 112,401 112,100 112,314 111,987
Earnings Per Weighted-Average Common Share Outstanding Net
income attributable to common shareholders - basic $ 2.47 $ 2.36 $
4.18 $ 3.49 Net income attributable to common shareholders -
diluted $ 2.46 $ 2.35 $ 4.16 $ 3.47
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version on businesswire.com: http://www.businesswire.com/news/home/20171103005101/en/
Pinnacle West Capital Corp.Media Contact:Alan Bunnell,
602-250-3376Analyst Contacts:Stefanie Layton, 602-250-4541Chalese
Haraldsen, 602-250-5643Website: pinnaclewest.com
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