- Record-setting summer heat drives increase in customer sales
and usage
- Operating performance, reliability remain strong for
customers
- Creative approach used to address monsoon outages, restore
power
Pinnacle West Capital Corp. (NYSE: PNW) today reported
consolidated net income attributable to common shareholders for the
2024 third quarter of $395.0 million, or $3.37 per diluted share of
common stock. This result compares with consolidated net income of
$398.2 million, or $3.50 per diluted share of common stock, for the
same period a year ago.
The results reflect a decrease of about $3 million, primarily as
a result of higher operations and maintenance expense; increased
depreciation and amortization expense mostly due to increased plant
and intangible assets; higher interest charges; higher income taxes
and the timing of recognition for permanent items, partially offset
by higher tax credits. These negative factors were partially offset
by the favorable impacts of new customer rates and the effects of
weather.
“For a second consecutive quarter, we experienced a historic run
of record heat that led to summer 2024 being the hottest on
record,” said Pinnacle West Chairman, President and Chief Executive
Officer Jeff Guldner. “Consequently, our customers used more energy
to cool their homes and businesses than under normal weather
conditions. And, while this quarter’s net income was down slightly
from the same period a year ago, the collective increase in energy
consumption and the growing number of customers we serve led to
strong financial results.”
Providing Reliable Power, Customer Assistance During Record
Summer Heat
In addition to robust customer growth of 2.3% and
weather-normalized sales growth of 5.9% during the quarter, weather
variations also spurred an increase in customers’ energy
consumption. The average high and low temperatures were slightly
higher during the 2024 third-quarter than last year’s comparable
period – and both were well over historical averages.
This summer’s stretch of 113 consecutive days above 100 degrees
in Phoenix was the longest streak in Arizona history. Additionally,
Phoenix exceeded the record for most 110-plus degree days in a year
with 70, surpassing the prior record of 55 days in 2023. APS
customers, in turn, set a record peak energy demand of 8,210
megawatts (MW) on Sunday, Aug. 4, breaking the previous record of
8,162 MW set on Saturday, July 15, 2023.
The warmer temperatures meant air conditioners were running
around the clock to keep homes and businesses cool. As a result,
the number of residential cooling degree-days (a utility’s measure
of the effects of weather) in this year’s third quarter were 32%
higher than historical 10-year averages.
“Our employees take to heart the importance of keeping our 1.4
million customers cool and safe,” Guldner shared. “They deliver
reliable power year-round, but especially on the hottest summer
days when customers need it most. As more people and businesses
move to Arizona, I am proud to say we continue to be one of the
most reliable energy providers in the nation – and with rates below
the national average.
“Even so, sustained excessive heat can deeply affect people’s
pocketbooks as they use more power to stay cool and safe. If
someone is struggling to pay their bill, the first step is to reach
out to us. We have the largest energy support program in the state,
and we can connect customers with other assistance programs.”
APS increased energy support and crisis bill assistance;
maintained a summer moratorium on disconnects for past-due bills;
assisted customers with payment arrangements; and partnered with
more than 100 local non-profit and community agencies to connect
the state’s most vulnerable populations with helpful resources.
Responding to Storm-Caused Outages with Innovation
Despite one of the driest monsoon seasons on record, APS
customers experienced powerful storms that produced extreme
weather, including hurricane-force winds.
In the sweltering heat of July, APS employees responded to one
of the area’s strongest storms. Severe winds of up to 75 mph,
fueled by multiple downbursts, caused extensive statewide damage,
especially impacting one southwest Phoenix neighborhood. With
dozens of downed transmission poles and broken electrical
equipment, APS crews first had to rebuild the grid serving that
area to effectively restore power.
To protect nearby neighborhoods, APS partnered with customers
enrolled in the company’s Cool Rewards smart thermostat program in
a unique and historic way. APS technology experts targeted a
specific portion of customer-owned smart thermostats to voluntarily
help conserve power. The creative approach – along with operational
back-ups including rerouting electricity – helped relieve strain on
the storm-ravaged electric system. This resourcefulness marked the
first time the company’s Cool Rewards program was utilized in such
a targeted manner.
A collaboration with customers, APS Cool Rewards is a network of
95,000-plus smart thermostats that acts like a virtual power plant
capable of conserving nearly 160 MW of energy, similar to that
produced by a small power plant.
Financial Outlook
Given the positive impact of weather and customer and sales
growth through the first three quarters of the year – partially
offset by higher than previously forecasted operations and
maintenance expenses – the company is adjusting its 2024
consolidated earnings guidance upward to a range of $5.00 to $5.20
per diluted share.
Looking forward, the Company estimates its 2025 consolidated
earnings will be within a range of $4.40 to $4.60 per diluted share
on a weather-normalized basis.
Key factors and assumptions underlying the 2024 and 2025 outlook
can be found in the third-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
financial results and recent developments, and to provide an update
on the company’s long-term financial outlook, at 11 a.m. ET (9 a.m.
Arizona time) today, Nov. 6. 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 952382. A replay
of the call also will be available at
pinnaclewest.com/presentations or by telephone until 11:59 p.m. ET,
Wednesday, Nov. 13, 2024, by calling (877) 481-4010 in the U.S. and
Canada or (919) 882-2331 internationally and entering replay
passcode 51357.
General Information
Pinnacle West Capital Corp., an energy holding company based in
Phoenix, has consolidated assets of more than $26 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 about 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 rates, 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;
- the ability of APS 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 our 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 facilities and system
conditions and operating costs;
- our 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 NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30,
2024
2023
2024
2023
Operating Revenues
$
1,768,801
$
1,637,759
$
4,029,507
$
3,704,417
Operating Expenses Fuel and purchased power
631,382
614,520
1,426,418
1,416,778
Operations and maintenance
308,061
250,019
837,905
777,337
Depreciation and amortization
229,450
203,438
664,761
590,445
Taxes other than income taxes
52,777
53,169
170,592
167,949
Other expenses
145
350
2,306
1,648
Total
1,221,815
1,121,496
3,101,982
2,954,157
Operating Income
546,986
516,263
927,525
750,260
Other Income (Deductions) Allowance for equity funds
used during construction
9,588
11,976
28,790
40,071
Pension and other postretirement non-service credits - net
12,188
10,174
36,633
30,513
Other income
6,774
15,941
43,234
28,424
Other expense
(4,013
)
(6,972
)
(14,580
)
(15,916
)
Total
24,537
31,119
94,077
83,092
Interest Expense Interest charges
109,925
96,909
318,590
278,860
Allowance for borrowed funds used during construction
(11,901
)
(9,092
)
(36,078
)
(34,131
)
Total
98,024
87,817
282,512
244,729
Income Before Income Taxes
473,499
459,565
739,090
588,623
Income Taxes
74,227
57,045
110,539
74,125
Net Income
399,272
402,520
628,551
514,498
Less: Net income attributable to noncontrolling interests
4,306
4,306
12,918
12,918
Net Income Attributable To Common Shareholders
$
394,966
$
398,214
$
615,633
$
501,580
Weighted-Average Common Shares Outstanding -
Basic
113,729
113,464
113,682
113,411
Weighted-Average Common Shares Outstanding - Diluted
117,119
113,838
115,717
113,718
Earnings Per Weighted-Average Common Share
Outstanding Net income attributable to common shareholders -
basic
$
3.47
$
3.51
$
5.42
$
4.42
Net income attributable to common shareholders - diluted
$
3.37
$
3.50
$
5.32
$
4.41
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241106868645/en/
Media Contact: Alan Bunnell (602) 250-3376 Analyst Contact:
Amanda Ho (602) 250-3334 Website: pinnaclewest.com
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