Pinnacle West Reports Improved 2024 Second-Quarter Financial Results
- New customer rates, record heat positively impact quarter-over-quarter earnings
-
Customer and sales growth continue to reflect a strong
Arizona economy - Expanded bill assistance, heat relief and energy efficiency programs provide greater support to customers
New customer rates, which took effect in
“Our second quarter was marked by warmer-than-normal temperatures, including June being the hottest on record in the
Hotter Temperatures Contribute to Increased Customer Energy Consumption
In addition to 5.5% weather-normalized sales growth and strong customer growth of 2.1% during the quarter, weather variations also spurred an increase in energy consumption. The average high and low temperatures were higher during the 2024 second-quarter than last year’s comparable period – and were well over historical averages.
According to the
Operationally, Guldner said company employees continue to execute well, ensuring reliable customer service amidst the extreme summer temperatures and increased customer demand.
“At APS, we have a saying that the summer season is our time; it’s when our year-round preparation comes to light,” he said. “For almost 140 years, our employees and service have helped make it possible for
APS plans years in advance to ensure reliable energy, while not sacrificing affordability and continuing to build toward a clean energy future. Resource planners secure a diverse energy mix to meet demand, including solar and wind power, battery energy storage and nuclear. When extreme temperatures cause demand to increase over long stretches, APS utilizes flexible resources like natural gas to keep homes and businesses cool. As part of the company’s vigorous planning, APS recently executed agreements on multiple projects that are scheduled to come online between 2026 and 2028, including more than 400 megawatts of APS-owned resources.
Additionally, part of delivering on that responsibility to customers means striving for an industry-leading, best-in-class customer experience. Company-wide efforts to provide a more frictionless customer experience continue to pay off as measured by
Resources Available to Help Customers Manage Energy Use & Bills
APS provides a variety of resources and money-saving tips to help customers stay comfortable and manage their electric bills through summer’s scorching temperatures.
The APS mobile app and aps.com let customers check their energy use, access energy-saving tips customized to their service plan, and monitor and report outages.
Additionally, in the face of extreme temperatures and prolonged heat, APS has expanded its heat-relief initiatives, including partnering with local community organizations to aid the state’s most vulnerable populations. This includes support for The Salvation Army’s network of cooling and hydration stationsacross
The company also offers a variety of assistance programs for those who are struggling with their bill. These resources include the Energy Support programs, which provide limited-income customers with up to a 60% discount on their monthly bill; Crisis Bill Assistance, providing up to
APS customers needing aid are encouraged to visit aps.com/support for a full list of assistance programs, including up-to-date details on year-round financial resources and support. Solutions range from short-term guest access and safety nets to long-term crisis and housing support.
Financial Outlook
For 2024, the company continues to estimate its consolidated earnings guidance will be in the range of
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 second-quarter results, as well as recent developments, at
General Information
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 facility 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
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||
(unaudited) | ||||||||||||||||
(dollars and shares in thousands, except per share amounts) | ||||||||||||||||
THREE MONTHS ENDED |
|
SIX MONTHS ENDED |
||||||||||||||
|
|
|
||||||||||||||
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
||
Operating Revenues |
$ |
1,308,994 |
|
$ |
1,121,703 |
|
$ |
2,260,706 |
|
$ |
2,066,658 |
|
||||
Operating Expenses | ||||||||||||||||
Fuel and purchased power |
|
437,172 |
|
|
407,754 |
|
|
795,036 |
|
|
802,258 |
|
||||
Operations and maintenance |
|
272,266 |
|
|
277,238 |
|
|
529,844 |
|
|
527,318 |
|
||||
Depreciation and amortization |
|
225,017 |
|
|
195,101 |
|
|
435,311 |
|
|
387,007 |
|
||||
Taxes other than income taxes |
|
58,651 |
|
|
57,642 |
|
|
117,815 |
|
|
114,780 |
|
||||
Other expenses |
|
2,141 |
|
|
688 |
|
|
2,161 |
|
|
1,298 |
|
||||
Total |
|
995,247 |
|
|
938,423 |
|
|
1,880,167 |
|
|
1,832,661 |
|
||||
Operating Income |
|
313,747 |
|
|
183,280 |
|
|
380,539 |
|
|
233,997 |
|
||||
Other Income (Deductions) | ||||||||||||||||
Allowance for equity funds used during construction |
|
8,910 |
|
|
13,034 |
|
|
19,202 |
|
|
28,095 |
|
||||
Pension and other postretirement non-service credits - net |
|
12,877 |
|
|
10,474 |
|
|
24,445 |
|
|
20,339 |
|
||||
Other income |
|
5,885 |
|
|
6,406 |
|
|
36,492 |
|
|
12,483 |
|
||||
Other expense |
|
(3,032 |
) |
|
(4,813 |
) |
|
(10,599 |
) |
|
(8,944 |
) |
||||
Total |
|
24,640 |
|
|
25,101 |
|
|
69,540 |
|
|
51,973 |
|
||||
Interest Expense | ||||||||||||||||
Interest charges |
|
108,891 |
|
|
93,832 |
|
|
208,665 |
|
|
181,951 |
|
||||
Allowance for borrowed funds used during construction |
|
(11,036 |
) |
|
(12,317 |
) |
|
(24,177 |
) |
|
(25,039 |
) |
||||
Total |
|
97,855 |
|
|
81,515 |
|
|
184,488 |
|
|
156,912 |
|
||||
Income Before Income Taxes |
|
240,532 |
|
|
126,866 |
|
|
265,591 |
|
|
129,058 |
|
||||
Income Taxes |
|
32,421 |
|
|
15,897 |
|
|
36,312 |
|
|
17,080 |
|
||||
Net Income |
|
208,111 |
|
|
110,969 |
|
|
229,279 |
|
|
111,978 |
|
||||
Less: Net income attributable to noncontrolling interests |
|
4,306 |
|
|
4,306 |
|
|
8,612 |
|
|
8,612 |
|
||||
Net Income Attributable To Common Shareholders |
$ |
203,805 |
|
$ |
106,663 |
|
$ |
220,667 |
|
$ |
103,366 |
|
||||
Weighted-Average Common Shares Outstanding - Basic |
|
113,695 |
|
|
113,411 |
|
|
113,658 |
|
|
113,385 |
|
||||
Weighted-Average Common Shares Outstanding - Diluted |
|
115,803 |
|
|
113,717 |
|
|
115,015 |
|
|
113,657 |
|
||||
Earnings Per Weighted-Average Common Share Outstanding | ||||||||||||||||
Net income attributable to common shareholders - basic |
$ |
1.79 |
|
$ |
0.94 |
|
$ |
1.94 |
|
$ |
0.91 |
|
||||
Net income attributable to common shareholders - diluted |
$ |
1.76 |
|
$ |
0.94 |
|
$ |
1.92 |
|
$ |
0.91 |
|
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Analyst Contact:
Website: pinnaclewest.com
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