Pinnacle West Capital (PNW) Q2 2024 earnings summary

Executive summary

• Q2 2024 results benefited from new customer rates, record June heat, and robust sales growth, especially in the commercial and industrial segment, with net income attributable to common shareholders rising to $203.8 million ($1.76 per diluted share), up from $106.7 million ($0.94 per share) in Q2 2023.

• Customer and sales growth reflect a strong Arizona economy, with 5.5% weather-normalized sales growth and 2.1% customer growth in the quarter, driven by large manufacturing and data center demand.

• Operational excellence was demonstrated during the hottest June on record in Phoenix, with reliable service maintained and expanded customer assistance and community partnerships to support vulnerable populations.

• Continued progress on clean energy initiatives, with over 5,000 MW of contracted clean energy and storage expected in service by end of 2025.

• Regulatory progress continues, with workshops scheduled to address regulatory lag and rate structures, and new rates effective March 8, 2024.

Financial highlights

• Q2 2024 EPS (diluted) was $1.76, up from $0.94 in Q2 2023, and net income attributable to common shareholders was $203.8 million, up $97 million year-over-year.

• Operating revenues increased to $1.31 billion in Q2 2024 from $1.12 billion in Q2 2023, with weather-normalized retail sales up 5.5% year-over-year.

• Weather contributed a $0.29 benefit to earnings versus last year, with last year having the mildest June since 2009.

• O&M savings, the 2019 rate case appeal, and income tax timing were positive drivers, while higher interest and depreciation expenses were negatives.

• Operating cash flow for the first half of 2024 was $537 million, a $99 million increase from 2023.

Outlook and guidance

• 2024 consolidated earnings guidance remains at $4.60 to $4.80 per diluted share, with long-term EPS growth targeted at 5–7% off the 2024 midpoint.

• 2024 retail customer growth expected at 1.5–2.5%, with weather-normalized retail electricity sales growth forecast at 2–4%.

• If current sales and weather trends persist, EPS is expected toward the higher end of the guidance range.

• Capital expenditures forecasted at $1.95 billion for 2024, rising to $2.05 billion by 2026, focused on clean energy, grid upgrades, and customer growth.

• APS targets 65% clean energy by 2030 and 100% carbon-free electricity by 2050.