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4-Traders Homepage  >  Equities  >  Nyse  >  Pinnacle West Capital    PNW

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Pinnacle West Capital Corporation : Pinnacle West Reports 2012 First-Quarter Results

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05/03/2012 | 02:05pm CEST

  • Company remains focused on core utility business, operational excellence and constructive regulatory settlement for benefit of customers and shareholders
  • Reduced operating and infrastructure costs more than offset effects of lower retail sales and milder weather

Pinnacle West Capital Corp. (NYSE: PNW) today reported a consolidated on-going loss of $7.5 million, or $0.07 per diluted share of common stock, for the quarter ended March 31, 2012. This result compares with an on-going loss of $15.8 million or $0.15 per share, in the same 2011 period. The Company's net loss attributable to common shareholders for the 2012 first quarter was $8.3 million, or $0.08 per diluted share, compared with a net loss of $15.1 million, or $0.14 per diluted share, for the same quarter a year ago.

On-going earnings exclude results of discontinued operations related to the Company's real estate activities and former energy services business. A reconciliation of reported earnings to on-going earnings is provided at the end of this release.

"Our employees' attention to operational efficiency and costs more than offset the effects of milder weather and slightly lower customer usage and helped produce first-quarter results that were in line with our expectations," said Pinnacle West Chairman, President and Chief Executive Officer Don Brandt.

Looking to the immediate future, Brandt added the Company remains focused on maintaining operational excellence throughout its core utility business and achieving approval of its proposed retail regulatory settlement. "The settlement agreement, which is pending approval by the Arizona Corporation Commission, is a thoughtful solution that balances disparate stakeholder interests and is a good outcome for customers and shareholders, alike," he said. Arizona Public Service Co. (APS) and the other parties have requested the agreement take effect July 1, 2012.

The 2012 first-quarter on-going results were positively impacted by the following factors:

  • Lower operations and maintenance expenses improved earnings by $0.07 per share compared with the prior-year quarter. The expense decrease was due primarily to lower fossil power plant maintenance costs as a result of less work being completed early in the year compared to 2011.

    The O&M variance excludes costs for renewable energy, demand-side management and similar regulatory programs, as well as $0.16 per share of expenses associated with a 2011 first-quarter settlement of transmission right-of-way costs, all of which were essentially offset by comparable amounts of operating revenues.
  • Lower infrastructure-related costs contributed $0.03 per share, primarily related to lower interest, and depreciation and amortization expenses, partially offset by higher property taxes.
  • Higher transmission revenues increased earnings by $0.03 per share, primarily because of a retail transmission rate increase implemented in July 2011.
  • The net effect of miscellaneous items increased earnings $0.02 per share.

These positive factors were partially offset by:

  • Lower retail electricity sales - excluding the effects of weather variations - reduced earnings by $0.04 per share compared to the prior year. Total weather-normalized retail electricity sales decreased 0.9 percent in the 2012 first quarter compared to the same period a year ago. The drop in consumption reflects the effects of APS's energy efficiency programs, partially offset by mildly improving economic conditions. APS's customer base, however, grew 0.8 percent over the same timeframe.
  • The effects of weather variations decreased the Company's earnings by $0.03 per share.

APS, the Company's principal subsidiary, reported a 2012 first-quarter net loss attributable to common shareholder of $4.1 million, compared with a net loss of $12.1 million for the comparable 2011 quarter.

Conference Call and Web Cast

Pinnacle West invites interested parties to listen to the live webcast of management's conference call to discuss the Company's 2012 first-quarter results, as well as recent developments, at 1:30 p.m. ET (10:30 a.m. AZ time) today, May 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), Thursday, May 10, 2012, by calling (877) 660-6853 in the U.S. and Canada or (201) 612-7415 internationally and entering account number 286, followed by conference ID number 392194.

General Information

Pinnacle West Capital, an energy holding company based in Phoenix, has consolidated assets of about $13.2 billion, more than 6,300 megawatts of generating capacity and about 6,700 employees in Arizona and New Mexico. Through its principal subsidiary, Arizona Public Service, the Company provides retail electricity service to more than 1.1 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.









Three Months Ended
March 31, 2012

Three Months Ended
March 31, 2011

Dollars in



Dollars in



Net Loss Attributable to Common Shareholders $ (8.3 ) $ (0.08 ) $ (15.1 ) $ (0.14 )
Discontinued real estate and energy services businesses   0.8     0.01     (0.7 )   (0.01 )
On-going Loss $ (7.5 ) $ (0.07 ) $ (15.8 ) $ (0.15 )


In this press release, we refer to "on-going earnings." On-going earnings is a "non-GAAP financial measure," as defined in accordance with SEC rules. We believe on-going earnings provide investors with a useful indicator of our results that is comparable among periods because it excludes the effects of unusual items that may occur on an irregular basis. Investors should note that these non-GAAP financial measures involve judgments by management, including whether an item is classified as an unusual item. We use on-going earnings, or similar concepts, to measure our performance internally in reports for management.


This press release contains forward-looking statements based on our current expectations. These forward-looking statements are often identified by words such as "estimate," "predict," "may," "believe," "plan," "expect," "require," "intend," "assume" 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 achieve timely and adequate rate recovery of our costs, including returns on debt and equity capital;
  • our ability to manage capital expenditures and other costs while maintaining reliability and customer service levels;
  • variations in demand for electricity, including those due to weather, 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;
  • volatile fuel and purchased power costs;
  • fuel and water supply availability;
  • regulatory and judicial decisions, developments and proceedings;
  • new legislation or regulation including those relating to environmental requirements and nuclear plant operations;
  • 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;
  • competition in retail and wholesale power markets;
  • the duration and severity of the economic decline in Arizona and current real estate market conditions;
  • the cost of debt and equity capital and the ability to access capital markets when required;
  • changes to our credit ratings;
  • 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 baseload 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;
  • technological developments affecting the electric industry; 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 Item 1A of the Pinnacle West/APS Annual Report on Form 10-K for the fiscal year ended December 31, 2011, 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.

(dollars and shares in thousands, except per share amounts)
2012     2011
Operating Revenues $ 620,631 $ 648,847
Operating Expenses
Fuel and purchased power 216,309 212,007
Operations and maintenance 210,663 255,029
Depreciation and amortization 100,109 106,583
Taxes other than income taxes 42,475 37,624
Other expenses   3,068     1,820  
Total   572,624     613,063  
Operating Income   48,007     35,784  
Allowance for equity funds used during construction 4,756 5,395
Other income 760 1,690
Other expense   (4,068 )   (1,741 )
Total   1,448     5,344  
Interest Expense
Interest charges 56,967 61,077
Allowance for borrowed funds used during construction   (3,151 )   (3,576 )
Total   53,816     57,501  
Loss From Continuing Operations Before Income Taxes (4,361 ) (16,373 )
Income Taxes   (4,645 )   (6,005 )
Income (Loss) From Continuing Operations 284 (10,368 )
Income (Loss) From Discontinued Operations
Net of Income Taxes   (765 )   694  
Net Loss (481 ) (9,674 )
Less: Net income attributable to noncontrolling interests 7,776 5,461
Net Loss Attributable To Common Shareholders $ (8,257 ) $ (15,135 )
Weighted-Average Common Shares Outstanding - Basic 109,299 108,832
Weighted-Average Common Shares Outstanding - Diluted 109,299 108,832
Earnings Per Weighted-Average Common Share Outstanding
Loss from continuing operations attributable to common shareholders - basic $ (0.07 ) $ (0.15 )
Net loss attributable to common shareholders - basic $ (0.08 ) $ (0.14 )
Loss from continuing operations attributable to common shareholders - diluted $ (0.07 ) $ (0.15 )
Net loss attributable to common shareholders - diluted $ (0.08 ) $ (0.14 )
Amounts Attributable To Common Shareholders
Loss from continuing operations, net of tax $ (7,483 ) $ (15,838 )
Discontinued operations, net of tax   (774 )   703  
Net loss attributable to common shareholders $ (8,257 ) $ (15,135 )

Pinnacle West Capital Corp.
Media Contact:
Alan Bunnell, 602-250-3376
Analyst Contacts:
Rebecca Hickman, 602-250-5668
Geoffrey Wendt, 602-250-5643
Website: pinnaclewest.com

© Business Wire 2012
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Financials ($)
Sales 2018 3 635 M
EBIT 2018 847 M
Net income 2018 317 M
Debt 2018 5 238 M
Yield 2018 3,60%
P/E ratio 2018 17,54
P/E ratio 2019 16,62
EV / Sales 2018 3,85x
EV / Sales 2019 3,80x
Capitalization 8 763 M
Duration : Period :
Pinnacle West Capital Technical Analysis Chart | PNW | US7234841010 | 4-Traders
Technical analysis trends PINNACLE WEST CAPITAL
Short TermMid-TermLong Term
Income Statement Evolution
Mean consensus HOLD
Number of Analysts 14
Average target price 83,1 $
Spread / Average Target 6,1%
EPS Revisions
Donald E. Brandt Chairman, President & Chief Executive Officer
James R. Hatfield Chief Financial Officer & Executive Vice President
Humberto S. Lopez Independent Director
Michael L. Gallagher Independent Director
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