- Full-year results benefit from superior operational performance and
cost management, despite adverse weather
- Fourth-quarter results impacted by planned fossil outages,
partially offset by higher retail energy sales
- Company affirms 2015 guidance
Company Website:
http://www.pinnaclewest.com
PHOENIX -- (Business Wire)
Pinnacle West Capital Corporation (NYSE: PNW) today reported
consolidated net income attributable to common shareholders of $5.4
million, or $0.05 per diluted share, for the quarter ended December 31,
2014. This result compares with net income of $24.3 million, or $0.22
per share, for the same period a year ago.
For full-year 2014, Pinnacle West reported consolidated net income
attributable to common shareholders of $397.6 million, or $3.58 per
diluted share, compared to $406.1 million, or $3.66 per share, in 2013.
“Robust operational performance, combined with disciplined cost
management, helped us achieve solid full-year financial results, despite
weather contributions that were below historical averages and well below
last year,” said Pinnacle West Chairman, President and Chief Executive
Officer Don
Brandt. “And, while our employees had no control over Mother Nature,
they remained acutely focused on creating value for customers and
shareholders, as evidenced in our top-tier reliability and customer
satisfaction metrics, as well as strong performance at the Palo Verde
Nuclear Generating Station.”
Palo
Verde achieved its 23rd consecutive year as the nation’s
largest power producer and, for the tenth time, exceeded its own record
for power generation – producing 32.3 million megawatt-hours (MWh). The
previous best was 31.9 million MWh in 2012. In addition, Unit 3 produced
the second-highest electricity output of any nuclear unit in the world,
and all three Palo Verde units individually ranked among the top six
producers in the U.S., according to industry data.
Brandt cited additional examples of the Company’s recent achievements:
-
APS’s reliability numbers for 2014 remained in the top quartile among
all electric utilities nationally despite one of the most severe
monsoon seasons in Arizona history. For the year, the typical APS
customer experienced less than one outage (0.79 power outages compared
to a national industry median of 1.14 interruptions). Also, the
typical APS customer experienced 79 minutes of interrupted service in
2014, compared with an industry median of 130 minutes. (Industry
averages are based on the most currently available data from year-end
2013.)
-
APS launched the Solar Partners residential rooftop solar program, the
nation’s first utility-owned research and development program that
will make up to 10 megawatts of rooftop solar available to customers,
including those with limited income.
-
APS again was named an industry leader in customer satisfaction by the
2014 J.D. Power Electric Utility Residential Customer Satisfaction
Study, maintaining APS’s 5th place ranking out of 54 large
investor-owned utilities.
-
For the third straight year, Pinnacle West increased its common
dividend, raising it by 4.85 percent after two previous increases of
4.0 percent;
-
Pinnacle West’s total return to shareholders was 34.5 percent, and
total shareholder value increased $2.0 billion in 2014.
The 2014 fourth-quarter results comparison to the 2013 period was
adversely affected by the following major factors (a non-GAAP
reconciliation table is provided at the end of this release):
- Higher operating expenses impacted earnings by $0.17 per share
compared with the prior-year quarter. The increase was largely due to
more fossil generation planned outages being completed in the
current-year quarter than in the same period a year ago.
The
operating expense variance excludes costs associated with renewable
energy, energy efficiency and similar regulatory programs, which are
largely offset by comparable amounts of operating revenues.
- Tax-related items, comprised ofa tax benefit recorded
in 2013 and the extension of bonus depreciation in the 2014 fourth
quarter, negatively impacted earnings by $0.06 per share versus a year
ago.
- The net effect of other items decreased earnings $0.02 per
share.
The above items were offset in part by the following positive influences:
- Decreased interest expense, net of AFUDC, contributed $0.04 per
share.
- The effects of weather variations improved the Company’s
earnings by $0.03 per share. Although weather in the 2014 and 2013
fourth quarters were less favorable than normal conditions, this
year’s quarter benefitted largely from a warmer October than the same
month in 2013, thus spurring an increase in customers’ air
conditioning use.
- Higherretail electricity sales –excluding the
effects of weather variations, but including the effects of customer
conservation, energy efficiency programs and distributed renewable
generation – improved earnings $0.01 per share. This result marks the
second time in 2014 that retail consumption outpaced the impacts of
energy efficiency and distributed generation initiatives. Compared to
the same quarter a year ago, weather-normalized sales increased 1.9
percent, while total customer growth was 1.4 percent
quarter-over-quarter.
Financial Outlook
For 2015, the Company continues to expect its on-going consolidated
earnings will be within a range of $3.75 to $3.95 per diluted share.
Longer-term, the Company’s goal is to achieve a consolidated earned
return on average common equity of more than 9.5 percent annually
through 2016.
Key factors and assumptions underlying the 2015 outlook can be found in
the fourth-quarter 2014 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 2014
fourth-quarter and full-year results, as well as recent developments, at
11 a.m. (ET) today, February 20. 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, Feb. 27, 2015, by calling (877)
660-6853 in the U.S. and Canada or (201) 612-7415 internationally and
entering conference ID number 13598634.
General Information
Pinnacle
West Capital Corp., an energy holding company based in Phoenix, has
consolidated assets of about $14 billion, more than 6,400 megawatts of
generating capacity and about 6,400 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.
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.
|
|
| |
|
| | |
PINNACLE WEST CAPITAL CORPORATION |
NON-GAAP FINANCIAL MEASURE RECONCILIATION |
| | | | | | |
|
| | | Three Months Ended December 31, | | |
|
|
$ millions pretax, except per share amounts | | |
| 2014 |
|
|
| Four Corners Deferral |
|
| Palo Verde Lease Extensions2 |
|
| 2014 Adjusted |
|
|
| 2013 |
|
|
| Four Corners Deferral |
|
| 2013 Adjusted | | |
| EPS Impact |
| | | | |
| | |
| | |
| | | | | | |
| | |
| | | | | | |
Operations and maintenance1 | | | $ | 261 | | | $ | (5 | ) | | $ | - | | | $ | 256 | | | | $ | 239 | | | $ | (9 | ) | | $ | 230 | | | | | |
Renewable energy (excluding AZ Sun), demand side management and
similar regulatory programs
| | |
|
23
|
|
|
|
-
|
|
|
|
-
|
|
|
|
23
|
| | |
|
31
|
|
|
|
-
|
|
|
|
31
|
| | |
|
|
Net O&M | | | | 238 | | | | (5 | ) | | | - | | | | 233 | | | | | 208 | | | | (9 | ) | | | 199 | | | | $ | (0.18 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Depreciation and amortization1 | | | | 107 | | | | 7 | | | | (5 | ) | | | 109 | | | | | 98 | | | | 9 | | | | 107 | | | | $ | 0.01 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Taxes other than income taxes1 | | | | 42 | | | | (2 | ) | | | - | | | | 40 | | | | | 40 | | | | - | | | | 40 | | | | $ | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Allowance for equity funds used during construction1, 2 | | | |
(9
|
)
| | |
-
| | | |
-
| | | |
(9
|
)
| | | |
(7
|
)
| | |
-
| | | |
(7
|
)
| | | | |
Interest charges1 | | | |
49
| | | |
(2
|
)
| | |
-
| | | |
47
| | | | |
51
| | | |
-
| | | |
51
| | | | | |
Allowance for borrowed funds used during construction1 | | |
|
(4
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(4
|
)
| | |
|
(4
|
)
|
|
|
-
|
|
|
|
(4
|
)
| | |
|
|
Interest expense, net AFUDC | | | | 36 | | | | (2 | ) | | | - | | | | 34 | | | | | 40 | | | | - | | | | 40 | | | | $ | 0.04 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Other expenses (operating)1 | | | |
1
| | | |
-
| | | |
-
| | | |
1
| | | | |
2
| | | |
-
| | | |
2
| | | | | |
Other income1 | | | |
(2
|
)
| | |
2
| | | |
-
| | | |
-
| | | | |
-
| | | |
-
| | | |
-
| | | | | |
Other expense1 | | |
|
12
|
|
|
|
-
|
|
|
|
-
|
|
|
|
12
|
| | |
|
3
|
|
|
|
-
|
|
|
|
3
|
| | |
|
|
Other | | | | 11 | | | | 2 | | | | - | | | | 13 | | | | | 5 | | | | - | | | | 5 | | | | $ | (0.05 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Net income attributable to noncontrolling interests1 | | | | 4 | | | | - | | | | 5 | | | | 9 | | | | | 9 | | | | - | | | | 9 | | | | | N/A | |
1 Line items from Consolidated Statements of
Income 2 Not tax effected Totals may not sum due to rounding |
|
NON-GAAP FINANCIAL INFORMATION
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. In this release we also provide a reconciliation to show
various deferral impacts of our Four Corners transaction and impacts to
our non-controlling interests for the Palo Verde lease extensions. We
believe on-going earnings and the information provided in the
reconciliation provide investors with useful indicators of our results
that are comparable among periods because they exclude 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.
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” 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 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;
-
competition in retail and wholesale power markets;
-
regulatory and judicial decisions, developments and proceedings;
-
new legislation or regulation including those relating to
environmental requirements, 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 debt and equity capital;
-
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, particularly 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 and other concerns surrounding coal-fired generation;
-
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
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;
and
-
restrictions on dividends or other provisions in our credit agreements
and ACC 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, 2014, 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
| | |
TWELVE MONTHS ENDED
|
| | | |
DECEMBER 31,
| | | |
DECEMBER 31,
|
| | | |
|
2014
|
|
|
|
|
2013
|
| | | |
|
2014
|
|
|
|
|
2013
|
|
| | | | | | | | | | | | | |
|
Operating Revenues | | |
$
|
726,450
| | | |
$
|
699,762
| | | | |
$
|
3,491,632
| | | |
$
|
3,454,628
| |
| | | | | | | | | | | | | |
|
Operating Expenses | | | | | | | | | | | | | |
Fuel and purchased power
| | | |
256,828
| | | | |
236,493
| | | | | |
1,179,829
| | | | |
1,095,709
| |
Operations and maintenance
| | | |
260,503
| | | | |
238,854
| | | | | |
908,025
| | | | |
924,727
| |
Depreciation and amortization
| | | |
106,776
| | | | |
98,298
| | | | | |
417,358
| | | | |
415,708
| |
Taxes other than income taxes
| | | |
41,596
| | | | |
40,076
| | | | | |
172,295
| | | | |
164,167
| |
Other expenses
| | |
|
563
|
| | |
|
2,141
|
| | | |
|
2,883
|
| | |
|
7,994
|
|
Total
| | |
|
666,266
|
| | |
|
615,862
|
| | | |
|
2,680,390
|
| | |
|
2,608,305
|
|
| | | | | | | | | | | | | |
|
Operating Income | | |
|
60,184
|
| | |
|
83,900
|
| | | |
|
811,242
|
| | |
|
846,323
|
|
| | | | | | | | | | | | | |
|
Other Income (Deductions) | | | | | | | | | | | | | |
Allowance for equity funds used during construction
| | | |
8,811
| | | | |
6,883
| | | | | |
30,790
| | | | |
25,581
| |
Other income
| | | |
2,094
| | | | |
317
| | | | | |
9,608
| | | | |
1,704
| |
Other expense
| | |
|
(12,361
|
)
| | |
|
(2,603
|
)
| | | |
|
(21,746
|
)
| | |
|
(16,024
|
)
|
Total
| | |
|
(1,456
|
)
| | |
|
4,597
|
| | | |
|
18,652
|
| | |
|
11,261
|
|
| | | | | | | | | | | | | |
|
Interest Expense | | | | | | | | | | | | | |
Interest charges
| | | |
48,604
| | | | |
50,516
| | | | | |
200,950
| | | | |
201,888
| |
Allowance for borrowed funds used during construction
| | |
|
(4,418
|
)
| | |
|
(4,000
|
)
| | | |
|
(15,457
|
)
| | |
|
(14,861
|
)
|
Total
| | |
|
44,186
|
| | |
|
46,516
|
| | | |
|
185,493
|
| | |
|
187,027
|
|
| | | | | | | | | | | | | |
|
Income Before Income Taxes | | | |
14,542
| | | | |
41,981
| | | | | |
644,401
| | | | |
670,557
| |
| | | | | | | | | | | | | |
|
Income Taxes | | |
|
5,007
|
| | |
|
9,167
|
| | | |
|
220,705
|
| | |
|
230,591
|
|
| | | | | | | | | | | | | |
|
Net Income | | | |
9,535
| | | | |
32,814
| | | | | |
423,696
| | | | |
439,966
| |
| | | | | | | | | | | | | |
|
Less: Net income attributable to noncontrolling interests
| | | |
4,125
| | | | |
8,554
| | | | | |
26,101
| | | | |
33,892
| |
| | | |
| | |
| | | |
| | |
|
Net Income Attributable To Common Shareholders | | |
$
|
5,410
|
| | |
$
|
24,260
|
| | | |
$
|
397,595
|
| | |
$
|
406,074
|
|
| | | | | | | | | | | | | |
|
| | | | | | | | | | | | | |
|
Weighted-Average Common Shares Outstanding - Basic | | | |
110,765
| | | | |
110,130
| | | | | |
110,626
| | | | |
109,984
| |
| | | | | | | | | | | | | |
|
Weighted-Average Common Shares Outstanding - Diluted | | | |
111,284
| | | | |
110,936
| | | | | |
111,178
| | | | |
110,806
| |
| | | | | | | | | | | | | |
|
Earnings Per Weighted-Average Common Share Outstanding | | | | | | | | | | | | | |
Income from continuing operations attributable to common
shareholders - basic
| | |
$
|
0.05
| | | |
$
|
0.22
| | | | |
$
|
3.59
| | | |
$
|
3.69
| |
Net income attributable to common shareholders - basic
| | |
$
|
0.05
| | | |
$
|
0.22
| | | | |
$
|
3.59
| | | |
$
|
3.69
| |
Income from continuing operations attributable to common
shareholders - diluted
| | |
$
|
0.05
| | | |
$
|
0.22
| | | | |
$
|
3.58
| | | |
$
|
3.66
| |
Net income attributable to common shareholders - diluted
| | |
$
|
0.05
| | | |
$
|
0.22
| | | | |
$
|
3.58
| | | |
$
|
3.66
| |
| | | | | | | | | | | | | | | | | | | | |
|
Contacts:
Pinnacle West Capital Corp.
Media Contact:
Alan Bunnell,
602-250-3376
Analyst Contact:
Paul Mountain, 602-250-4952
Website:
pinnaclewest.com
Source: Pinnacle West Capital Corp.
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