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PHOENIX--(BUSINESS WIRE)--Nov 3, 2022--
Pinnacle West Capital Corp. (NYSE: PNW) today reported consolidated net income attributable to common shareholders for the 2022 third quarter of $326.3 million, or $2.88 per diluted share. This result compares with net income of $339.8 million, or $3.00 per share, for the same period a year ago.
Like the first two quarters of 2022, the company’s lower third-quarter results reflect the unfavorable outcome of the company’s prior rate case, which was implemented on Dec. 1, 2021. As a result of that rate decision, the Company is no longer deferring costs related to the Four Corners selective catalytic reduction (SCR) and Ocotillo modernization projects to a regulatory asset. These costs are now reflected in the income statement and result in a reduction in net income.
Other factors negatively affecting the 2022 third-quarter results were lower revenue driven by the inability to continue using alternative revenue accounting treatment for the lost fixed cost recovery (LFCR) mechanism; higher depreciation and amortization expense due to increased plant assets and updated depreciation rates; and higher operations and maintenance expense. These negative factors were partially offset by warmer weather than a year ago; customer growth of 2.0 percent; increased retail sales of 1.3 percent; and lower income taxes.
“During the quarter, our employees continued to do what they do best: maintain reliable electric service for our 1.3 million customers despite monsoon storms that created damaging winds, heavy rains and flash flooding,” said Pinnacle West Chairman, President and Chief Executive Officer Jeff Guldner. “Our workforce safely and quickly restored service to customers after multiple volatile summer storms toppled a combined 811 poles – 255 more poles than the prior three summers combined.”
Guldner noted the company’s generation fleet also operated well. In particular, Palo Verde Generating Station – the nation’s largest energy producer, all carbon-free – recorded a summer capacity factor of 100.2% – its highest figure since tracking began in 2010.
“Our careful long-term planning, resource adequacy, flexibility and innovative programs proved beneficial to our customers throughout the summer,” he said, adding that the company also was able to assist neighboring utilities during an early-September heatwave that resulted in 15 energy emergency declarations by others across the West. “Those off-system sales directly benefit APS customers by lowering our overall costs while helping maintain regional grid stability.”
APS Commitment to Customer Satisfaction Reflected in Latest J.D. Power Results
Delivering value to Arizona Public Service (APS) customers went beyond just keeping lights on and air-conditioners running through the summer season. J.D. Power’s (JDP) 2022 third-quarter residential results also reflected APS’s commitment to improving customers’ overall experience.
Compared to 2021, APS has made quartile gains in every single driver of residential customer satisfaction. Consequently, overall satisfaction is now well above industry benchmarks when compared to the company’s large investor-owned peers. This improvement places the company firmly into the second quartile for residential customer satisfaction. APS’s strongest performing drivers through the first three quarters of 2022 were Customer Care (phone and digital), Power Quality and Reliability, Corporate Citizenship, and Billing & Payment. Additionally, JDP’s Business 2022 mid-year results place the company in the first quartile nationally for business customers.
“There’s no doubt in my mind that creating customer value is inseparably linked to increasing shareholder value,” Guldner said. “Our team has embraced this customer-centric focus to achieve an industry-leading customer experience, while demonstrating compassion and advocacy for our customers. As a result, our employees’ commitment and focus has led to APS being among the most improved utilities in the nation for both residential and business customer satisfaction.”
A Look to the Future
Looking forward, Guldner said, “We are creating long-term value for customers and shareholders by executing our strategy of operational excellence and sound capital investment to meet the energy needs of one of the fastest growing regions in the country. Additionally, disciplined cost management remains a central theme at the company and – along with our recent rate case filing – is a key to future earnings improvement.”
Filed last week, the company’s general rate case will focus on a return to balanced ratemaking, which will enable the company to make responsible and necessary investments to meet the needs of its customers – today and in the future. These investments include:
Financial Outlook
Given the positive year-to-date impacts of beneficial weather, strong sales and customer growth, the company increased its 2022 consolidated earnings guidance range to $4.20 to $4.35 per diluted share from a previously disclosed range of $3.90 to $4.10 per share. Key factors and assumptions underlying the 2022 outlook – including inflationary pressures – can be found in the third-quarter 2022 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 financial results and recent developments, and to provide an update on the company’s long-term financial outlook, at noon ET (9 a.m. Arizona time) today, Nov. 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 (888) 506-0062 or (973) 528-0011 for international callers and enter participant access code 947938. A replay of the call also will be available at pinnaclewest.com/presentations or by telephone until 11:59 p.m. ET, Thursday, Nov. 10, 2022, by calling (877) 481-4010 in the U.S. and Canada or (919) 882-2331 internationally and entering replay passcode 46637.
General Information
Pinnacle West Capital Corp., an energy holding company based in Phoenix, has consolidated assets of approximately $23 billion, about 6,300 megawatts of generating capacity and nearly 5,900 employees in Arizona and New Mexico. Through its principal subsidiary, Arizona Public Service, the company provides retail electricity service to more than 1.3 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. Several 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:
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 Dec. 31, 2021, and in Part II, Item 1A of the Pinnacle West/APS Quarterly Reports on Forms 10-Q for the quarters ended March 31, 2022, and Sept. 30, 2022, 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 | NINE MONTHS ENDED | |||||||||||||||
| SEPTEMBER 30, | SEPTEMBER 30, | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
| Operating Revenues | $ | 1,469,871 |
| $ | 1,308,254 |
| $ | 3,315,071 |
| $ | 3,004,978 |
| ||||
| Operating Expenses | ||||||||||||||||
| Fuel and purchased power |
| 556,571 |
|
| 427,452 |
|
| 1,174,027 |
|
| 895,514 |
| ||||
| Operations and maintenance |
| 251,663 |
|
| 232,386 |
|
| 715,392 |
|
| 692,131 |
| ||||
| Depreciation and amortization |
| 190,389 |
|
| 163,523 |
|
| 563,491 |
|
| 480,093 |
| ||||
| Taxes other than income taxes |
| 53,475 |
|
| 57,608 |
|
| 165,591 |
|
| 176,586 |
| ||||
| Other expenses - net |
| 200 |
|
| (2,088 | ) |
| 1,410 |
|
| 5,361 |
| ||||
| Total |
| 1,052,298 |
|
| 878,881 |
|
| 2,619,911 |
|
| 2,249,685 |
| ||||
| Operating Income |
| 417,573 |
|
| 429,373 |
|
| 695,160 |
|
| 755,293 |
| ||||
| Other Income (Deductions) | ||||||||||||||||
| Allowance for equity funds used during construction |
| 9,133 |
|
| 11,352 |
|
| 30,966 |
|
| 30,549 |
| ||||
| Pension and other postretirement non-service credits - net |
| 24,673 |
|
| 28,135 |
|
| 73,739 |
|
| 84,101 |
| ||||
| Other income |
| 2,219 |
|
| 12,083 |
|
| 5,605 |
|
| 36,719 |
| ||||
| Other expense |
| (6,745 | ) |
| (6,182 | ) |
| (14,751 | ) |
| (15,219 | ) | ||||
| Total |
| 29,280 |
|
| 45,388 |
|
| 95,559 |
|
| 136,150 |
| ||||
| Interest Expense | ||||||||||||||||
| Interest charges |
| 72,185 |
|
| 64,067 |
|
| 205,677 |
|
| 188,782 |
| ||||
| Allowance for borrowed funds used during construction |
| (8,692 | ) |
| (5,273 | ) |
| (19,047 | ) |
| (15,466 | ) | ||||
| Total |
| 63,493 |
|
| 58,794 |
|
| 186,630 |
|
| 173,316 |
| ||||
| Income Before Income Taxes |
| 383,360 |
|
| 415,967 |
|
| 604,089 |
|
| 718,127 |
| ||||
| Income Taxes |
| 52,728 |
|
| 71,863 |
|
| 83,577 |
|
| 114,073 |
| ||||
| Net Income |
| 330,632 |
|
| 344,104 |
|
| 520,512 |
|
| 604,054 |
| ||||
| Less: Net income attributable to noncontrolling interests |
| 4,306 |
|
| 4,306 |
|
| 12,918 |
|
| 12,918 |
| ||||
| Net Income Attributable To Common Shareholders | $ | 326,326 |
| $ | 339,798 |
| $ | 507,594 |
| $ | 591,136 |
| ||||
| Weighted-Average Common Shares Outstanding - Basic |
| 113,211 |
|
| 112,923 |
|
| 113,162 |
|
| 112,878 |
| ||||
| Weighted-Average Common Shares Outstanding - Diluted |
| 113,463 |
|
| 113,217 |
|
| 113,376 |
|
| 113,178 |
| ||||
| Earnings Per Weighted-Average Common Share Outstanding | ||||||||||||||||
| Net income attributable to common shareholders - basic | $ | 2.88 |
| $ | 3.01 |
| $ | 4.49 |
| $ | 5.24 |
| ||||
| Net income attributable to common shareholders - diluted | $ | 2.88 |
| $ | 3.00 |
| $ | 4.48 |
| $ | 5.22 |
|
View source version on businesswire.com:https://www.businesswire.com/news/home/20221103005072/en/
CONTACT: Media Contact:
Alan Bunnell
(602) 250-3376Analyst Contact:
Amanda Ho
(602) 250-3334Website:
pinnaclewest.com
KEYWORD: ARIZONA NEW MEXICO UNITED STATES NORTH AMERICA
INDUSTRY KEYWORD: UTILITIES ENERGY
SOURCE: Pinnacle West Capital Corp.
Copyright Business Wire 2022.
PUB: 11/03/2022 08:40 AM/DISC: 11/03/2022 08:41 AM
http://www.businesswire.com/news/home/20221103005072/en