- Improved quarterly results impacted by customer growth,
increased sales and new rates
- APS employees focus on summer preparedness, reliability and
resilience
- Company reaffirms full-year 2024 guidance
Pinnacle West Capital Corp. (NYSE: PNW) today reported
consolidated net income attributable to common shareholders of
$16.9 million, or $0.15 per diluted share of common stock, for the
quarter ended March 31, 2024. This result compares with a
consolidated net loss attributable to common shareholders of $3.3
million, or a loss of $0.03 per diluted share, for the same period
in 2023.
The improved first-quarter results reflect the impact of new
retail base rates which took effect March 8, 2024; increased
customer growth and usage; higher revenue resulting from Arizona
Public Service Co.’s (APS) Lost Fixed Cost Recovery (LFCR) adjustor
mechanism and a surcharge resulting from the outcome of the
utility’s 2019 Rate Case appeal; and higher other income largely
due to the sale of a former subsidiary. These positive factors were
partially offset by higher depreciation and amortization expense
primarily due to increased plant in service and intangible assets;
higher interest charges, net of AFUDC; the effects of weather; and
higher operations and maintenance expense.
“The first quarter proved to be a strong start to our year and
continued to build on the momentum of a growing and diverse
customer base,” said Pinnacle West Chairman, President and Chief
Executive Officer Jeff Guldner, citing 1.8% year-over-year customer
growth and weather-normalized sales growth of 5.9%. “With Arizona’s
population expected to continue growing faster than the national
average, it’s clear that people view Arizona as an attractive place
to live and do business.”
A Thriving, Growing Service Territory
According to recent data from the U.S. Census Bureau, Maricopa
County (home to 70 percent of APS’s customers) saw the fourth
highest raw-numbers population increase in the U.S. in 2023, while
Pinal County (south of Phoenix) saw the nation’s seventh-highest
level of net domestic migration.
Metro Phoenix is also among the top markets for manufacturing
growth due to at least 14 major announcements that have been made
in the region since 2020, and the area was ranked No. 1 out of the
15 top growth markets for largest projected job gains by global
real estate firm Newmark Group Inc. in its latest manufacturing
report.
Further, the research team at USA TODAY Homefront looked at the
cost of living by state, and found that, despite inflation
pressures, Arizona is the third most affordable state in terms of
total cost of living, coming behind Utah and Tennessee.
Summer Reliability and Safety Preparations Underway
With Arizona’s temperatures already heating up, Guldner said,
“Employees are focused on critical preparations to deliver safe and
reliable power over our peak summer season – when our nearly 1.4
million customers need it most to cool their homes and
businesses.”
Across a sprawling network of more than 38,000 miles of power
lines, APS crews are on the front lines year-round conducting
patrols – on foot, by vehicle and in the air – to protect and
maintain a strong and resilient energy system. Key elements of the
company’s summer readiness include operational preparedness,
resource planning, sufficient reserve margins, customer
partnerships to manage peak demand and fire mitigation. In
addition, APS employees are nearing completion of a scheduled
maintenance and refueling outage at Palo Verde Generating Station
Unit 3. One of the largest producers of carbon-free energy in the
U.S., the three-unit nuclear plant is critical to meeting summer
demand across the Desert Southwest.
With Arizona’s hot summers, low rainfall and dry vegetation, the
company is taking further action to support wildfire-prone
communities by employing advanced risk modeling tools; installing
innovative fire- and weather-tracking technology on the grid; using
new advanced cameras on electrical equipment to monitor potential
signs of a fire from a command center; and enhancing the company’s
already robust wildfire mitigation program.
“We’ve employed industry-leading best practices over the past
decade to help safeguard the communities we serve and our
infrastructure from Arizona’s changing climate,” said Guldner. “As
a hometown energy provider, we have a responsibility to do what we
can to prevent wildfires, and we are thoughtfully investing in
resources to ensure greater protection for the public,
firefighters, our employees and the electric grid.”
Under extreme weather conditions and in a limited approach, APS
also has implemented a new Public Safety Power Shutoffs (PSPS)
program to maintain the safety of people, communities and
firefighters. During extremely high-fire risk conditions, APS may
shut off power to a specific area to prevent the electric system
from starting or contributing to a wildfire through a downed wire
or inadvertent spark. It’s a tool the company plans to use only
when necessary.
The company’s focus on summer readiness extends to its work to
deliver an industry-leading customer experience. Customer
touchpoints – including an interactive outage map and email and
text alerts – are being enhanced ahead of Arizona’s summer season.
In conjunction with APS’s 24/7 Customer Care Center, these tools
will help customers stay better informed during any outages.
Financial Outlook
For 2024, the company continues to estimate its consolidated
earnings guidance will be in the range of $4.60 to $4.80 per
diluted share on a weather-normalized basis. Key factors and
assumptions underlying this outlook can be found in the
first-quarter 2024 earnings presentation slides 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
2024 first-quarter results, as well as recent developments, at 10
a.m. ET (7 a.m. Arizona time) today, May 2. Join the live webcast
at www.pinnaclewest.com/presentations for audio of the call and
slides, or dial (888) 506-0062 or (973) 528-0011 for international
callers and enter participant access code 612288. A replay of the
webcast can be accessed for 30 days at
pinnaclewest.com/presentations. A replay of the call also will be
available until 11:59 p.m. ET, Thursday, May 9, 2024, by calling
(877) 481-4010 in the U.S. and Canada or (919) 882-2331
internationally and entering replay passcode 50305.
General Information
Pinnacle West Capital Corp., an energy holding company based in
Phoenix, has consolidated assets of nearly $25 billion, about 6,500
megawatts of generating capacity and approximately 6,100 employees
in Arizona and New Mexico. Through its principal subsidiary,
Arizona Public Service, the company provides retail electricity
service to approximately 1.4 million Arizona homes and businesses.
For more information about Pinnacle West, visit the company’s
website at pinnaclewest.com.
Dollar amounts in this news release are after income taxes.
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
current expectations. These forward-looking statements are often
identified by words such as "estimate," "predict," "may,"
"believe," "plan," "expect," "require," "intend," "assume,"
"project," "anticipate," "goal," "seek," "strategy," "likely,"
"should," "will," "could," 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:
- uncertainties associated with the current and future economic
environment, including economic growth, labor market conditions,
inflation, supply chain delays, increased expenses, volatile
capital markets, or other unpredictable effects;
- our ability to manage capital expenditures and operations and
maintenance costs while maintaining reliability and customer
service levels;
- variations in demand for electricity, including those due to
weather, seasonality (including large increases in ambient
temperatures), the general economy or social conditions, customer,
and sales growth (or decline), the effects of energy conservation
measures and distributed generation, and technological
advancements;
- the potential effects of climate change on our electric system,
including as a result of weather extremes such as prolonged drought
and high temperature variations in the area where APS conducts its
business;
- 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 or
interpretations of existing legislation or regulations, including
those relating to environmental requirements, regulatory and energy
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 through our rates and adjustor recovery mechanisms, including
returns on and of debt and equity capital investment;
- our ability to meet renewable energy and energy efficiency
mandates and recover related costs;
- the ability of APS to achieve its clean energy goals (including
a goal by 2050 of 100% clean, carbon-free electricity) and, if
these goals are achieved, the impact of such achievement on APS,
its customers, and its business, financial condition, and results
of operations;
- risks inherent in the operation of nuclear facilities,
including spent fuel disposal uncertainty;
- current and future economic conditions in Arizona;
- the direct or indirect effect on our facilities or business
from cybersecurity threats or intrusions, data security breaches,
terrorist attack, physical attack, severe storms, or other
catastrophic events, such as fires, explosions, pandemic health
events or similar occurrences;
- the development of new technologies which may affect electric
sales or delivery, including as a result of delays in the
development and application of new technologies;
- the cost of debt, including increased cost as a result of
rising interest rates, and equity capital and the ability to access
capital markets when required;
- environmental, economic, and other concerns surrounding
coal-fired generation, including regulation of GHG 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 landowners 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 the most recent
Pinnacle West/APS Form 10-K and 10-Q along with other public
filings with the Securities and Exchange Commission, 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 CONDENSED CONSOLIDATED
STATEMENTS OF INCOME (unaudited) (dollars and shares in
thousands, except per share amounts) THREE MONTHS
ENDED MARCH 31,
2024
2023
Operating Revenues
$
951,712
$
944,955
Operating Expenses Fuel and purchased power
357,864
394,504
Operations and maintenance
257,578
250,080
Depreciation and amortization
210,294
191,906
Taxes other than income taxes
59,164
57,138
Other expense
20
610
Total
884,920
894,238
Operating Income
66,792
50,717
Other Income (Deductions) Allowance for equity funds
used during construction
10,292
15,061
Pension and other postretirement non-service credits - net
11,568
9,865
Other income
30,607
6,077
Other expense
(7,567
)
(4,131
)
Total
44,900
26,872
Interest Expense Interest charges
99,774
88,119
Allowance for borrowed funds used during construction
(13,141
)
(12,722
)
Total
86,633
75,397
Income Before Income Taxes
25,059
2,192
Income Taxes
3,891
1,183
Net Income
21,168
1,009
Less: Net income attributable to noncontrolling interests
4,306
4,306
Net Income (Loss) Attributable To Common Shareholders
$
16,862
$
(3,297
)
Weighted-Average Common Shares Outstanding -
Basic
113,621
113,358
Weighted-Average Common Shares Outstanding - Diluted
114,227
113,358
Earnings Per Weighted-Average Common Share
Outstanding Net income (loss) attributable to common
shareholders - basic
$
0.15
$
(0.03
)
Net income (loss) attributable to common shareholders - diluted
$
0.15
$
(0.03
)
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version on businesswire.com: https://www.businesswire.com/news/home/20240502257063/en/
Media Contact: Alan Bunnell (602) 250-3376 Analyst Contact:
Amanda Ho (602) 250-3334 Website: pinnaclewest.com
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