(Source: Business Wire)
Pinnacle West Capital Corp. (NYSE: PNW) today reported consolidated net
income attributable to common shareholders of $186.7 million, or $1.84
per diluted share of common stock, for the quarter ended September 30,
2009. This result compares with $151.6 million, or $1.50 per diluted
share, for the same period in 2008.
The Company's on-going consolidated earnings in the 2009 third quarter
were $199.1 million, or $1.96 per share, compared with $161.1 million,
or $1.59 per share, in the comparable 2008 quarter. On-going earnings
for both quarters exclude results for the Company's real estate segment,
which is being restructured through the sale of a substantial majority
of its properties. A reconciliation of our reported earnings to on-going
earnings is provided at the end of this release.
The 2009 third-quarter on-going results were positively impacted by the
following factors:
Exception caught in main.
These positive factors were offset in part by the following items:
Exception caught in main.
Looking forward, the Company expects customer growth to average about 1
percent annually through 2011. Additionally, weather-normalized sales
are expected to remain relatively flat through 2011 on a year-over-year
comparison, due to the effects of APS' energy efficiency programs, and
cyclical business conditions related to Arizona's housing market and the
national economy.
"I am pleased with the third-quarter results from an operational
perspective," said Pinnacle West Chairman Don Brandt. "In these
challenging economic times, we remain keenly focused on controlling
costs to help keep customer rates as low as possible, while providing
clean, reliable and cost-effective electricity to power the State's
energy needs.
"Additionally, we and our customers benefited from strong performance at
the Palo Verde Nuclear Generating Station, which operated at full
capacity throughout the quarter and generated its highest-ever summer
production of about 11.5 million megawatt-hours of electricity."
Brandt added that Arizona Public Service Co. (APS) continues to develop
programs that ensure clean energy sources and help customers use
electricity more efficiently. "The ability to carry these programs
forward and pay for them depends on positive outcomes in our proposed
retail regulatory settlement," he said. "If approved as proposed, the
settlement will increase our electricity prices by less than 1 percent
over current rates for an average residential customer, and will provide
significant benefits to customers, shareholders and other stakeholders,
alike." The net price increase would reflect an early reset under the
power supply adjustment mechanism, decreasing rates for fuel and
purchased power.
For the third quarter of 2009, APS reported net income of $197.1
million, compared with net income of $159.8 million for the same period
a year ago.
Real Estate Segment
Pinnacle West's real estate segment reported a net loss of $12.4 million
for the third quarter of 2009, compared with a net loss of $6.0 million
in the prior-year period. The loss was related to additional real estate
impairment charges totaling $22.6 million in the 2009 period, partially
offset by the sale of certain real estate assets. The Company's real
estate subsidiary, SunCor Development Co., continues to pursue the sale
of its remaining assets.
2009 and 2010 On-going Earnings Outlooks Unchanged
The Company continues to estimate its on-going consolidated earnings for
2009 will be within a reasonable range around $2.30 per share, excluding
the results of its real estate segment.
For 2010, the Company continues to estimate its on-going consolidated
earnings will be within a reasonable range around $3.00 per share,
excluding the impacts of its real estate segment.
The Company's earnings forecasts are subject to numerous risks,
including those described under "Forward-Looking Statements" below and
under "Risk Factors" in Part I, Item 1A of our Annual Report on Form
10-K for the fiscal year ended December 31, 2008.
Conference Call and Web Cast
Pinnacle West invites interested parties to listen to the live web cast
of management's conference call to discuss the Company's 2009
third-quarter earnings and recent developments at 12 noon (ET) today,
October 29. The web cast can be accessed at www.pinnaclewest.com/presentations
and will be available for replay on the web site for 30 days. To access
the live conference call by telephone, dial (877) 356-3961 and enter
Conference ID 16246283. A replay of the call also will be available
until 11:55 p.m. (ET), Friday, November 6, 2009, by calling (800)
642-1687 in the U.S. and Canada or (706) 645-9291 internationally and
entering the same Conference ID number as above.
General Information
Pinnacle West is a Phoenix-based company with consolidated assets of
about $11.8 billion. Through its subsidiaries, the Company generates,
sells and delivers electricity and sells energy-related products and
services to retail and wholesale customers in the western United States.
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 www.pinnaclewest.com/investors.
PINNACLE WEST CAPITAL CORPORATION
ARIZONA PUBLIC SERVICE COMPANY
NON-GAAP FINANCIAL MEASURE RECONCILIATION
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS
(GAAP MEASURE) TO ON-GOING EARNINGS (NON-GAAP FINANCIAL MEASURE)
Three Months Ended Three Months Ended
September 30, 2009 September 30, 2008
$ inMillions DilutedEPS $ inMillions DilutedEPS
PINNACLE WEST CAPITAL CORPORATION
Net Income attributable to common shareholders $ 186.7 $ 1.84 $ 151.6 $ 1.50
Adjustments:
Real estate segment 12.4 0.12 6.0 0.06
Severance costs -- -- 3.5 0.03
On-going Earnings $ 199.1 $ 1.96 $ 161.1 $ 1.59
ARIZONA PUBLIC SERVICE COMPANY
Net Income $ 197.1 $ 159.8
Adjustment:
Severance costs -- 3.5
On-going Earnings $ 197.1 $ 163.3
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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. 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.
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements regarding our
2009 and 2010 earnings outlook, and neither Pinnacle West nor APS
assumes any obligation to update these statements, even if our internal
estimates change, unless otherwise required by applicable securities
laws. 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. In
addition to the Risk Factors described in Item 1A of the Pinnacle
West/APS Annual Report on Form 10-K for the fiscal year ended December
31, 2008, these factors include, but are not limited to:
regulatory and judicial decisions, developments and proceedings,
including the outcome and timing of APS' pending retail rate case;
our ability to achieve timely and adequate rate recovery of our costs;
our ability to reduce 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;
power plant performance and outages;
volatile fuel and purchased power costs;
fuel and water supply availability;
new federal legislation or regulation relating to greenhouse gas
emissions, renewable energy mandates and energy efficiency standards;
our ability to meet renewable energy requirements 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 credit, financial and real estate market conditions;
the cost of debt and equity capital and the ability to access capital
markets when required;
restrictions on dividends or other burdensome provisions in our credit
agreements and ACC orders;
our ability, or the ability of our subsidiaries, to meet debt service
obligations;
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;
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;
transmission and distribution 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 ability of our counterparties and power plant participants to meet
contractual or other obligations;
technological developments in the electric industry; and
economic and other conditions affecting the real estate and credit
markets in SunCor Development Company's market areas, which include
Arizona, Idaho, New Mexico and Utah.
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,
2009 2008 2009 2008
Operating Revenues
Regulated electricity segment $ 1,083,750 $ 1,040,348 $ 2,498,838 $ 2,492,627
Real estate segment 48,474 16,152 80,333 62,165
Marketing and trading - 4,663 - 57,623
Other revenues 10,853 8,925 30,084 26,824
Total 1,143,077 1,070,088 2,609,255 2,639,239
Operating Expenses
Regulated electricity segment fuel and purchased power 381,543 419,979 920,630 1,016,918
Real estate segment operations 26,863 26,129 76,893 83,822
Real estate impairment charge 36,993 - 247,509 -
Marketing and trading fuel and purchased power - 1,456 - 44,129
Operations and maintenance 208,769 211,332 642,545 598,055
Depreciation and amortization 102,273 98,556 302,255 291,915
Taxes other than income taxes 34,111 28,423 101,126 94,826
Other expenses 8,014 8,321 22,214 21,081
Total 798,566 794,196 2,313,172 2,150,746
Operating Income 344,511 275,892 296,083 488,493
Other
Allowance for equity funds used during construction 2,197 4,673 11,919 16,211
Other income 4,488 1,786 4,452 9,489
Other expense (1,934 ) (7,102 ) (8,887 ) (22,053 )
Total 4,751 (643 ) 7,484 3,647
Interest Expense
Interest charges 60,244 51,165 174,985 157,371
Capitalized interest (1,423 ) (3,976 ) (8,568 ) (14,593 )
Total 58,821 47,189 166,417 142,778
Income From Continuing Operations Before Income Taxes 290,441 228,060 137,150 349,362
Income Taxes 103,061 76,592 45,307 91,154
Income From Continuing Operations 187,380 151,468 91,843 258,208
Income (Loss) From Discontinued Operations
Net of Income Taxes (1,310 ) 118 (8,298 ) 22,767
Net Income 186,070 151,586 83,545 280,975
Less: Net loss attributable to noncontrolling interests (582 ) - (14,944 ) -
Net Income Attributable To Common Shareholders $ 186,652 $ 151,586 $ 98,489 $ 280,975
Weighted-Average Common Shares Outstanding - Basic 101,223 100,750 101,107 100,642
Weighted-Average Common Shares Outstanding - Diluted 101,385 101,018 101,184 100,911
Earnings Per Weighted-Average Common Share Outstanding
Income from continuing operations attributable to common shareholders - basic $ 1.86 $ 1.50 $ 1.06 $ 2.57
Net Income attributable to common shareholders - basic $ 1.84 $ 1.50 $ 0.97 $ 2.79
Income from continuing operations attributable to common shareholders - diluted $ 1.85 $ 1.50 $ 1.06 $ 2.56
Net Income attributable to common shareholders - diluted $ 1.84 $ 1.50 $ 0.97 $ 2.78
Amounts Attributable To Common Shareholders
Income from continuing operations, net of tax $ 187,962 $ 151,468 $ 106,787 $ 258,208
Discontinued operations, net of tax (1,310 ) 118 (8,298 ) 22,767
Net income attributable to common shareholders $ 186,652 $ 151,586 $ 98,489 $ 280,975
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