Pinnacle West Capital (PNW) Q3 2024 earnings summary

Executive summary

• Q3 2024 EPS was $3.37, down $0.13 year-over-year, with net income of $395 million, reflecting higher O&M, depreciation, financing costs, and income tax timing, partially offset by new rates, record heat-driven sales growth, and customer expansion.

• Weather-normalized sales growth reached 5.9% in Q3, with C&I growth at 10.3% and retail customer growth at 2.3%, driven by new large manufacturing and data center customers.

• Customer satisfaction remains high, with the Customer Care Phone center ranked first nationally and overall utility satisfaction in the top 10 among peers.

• APS, the principal subsidiary, serves 1.4 million customers and drives nearly all revenues and earnings.

• Progressed on clean energy goals, contracting over 8,500 MW of clean energy and storage since 2020.

Financial highlights

• Q3 2024 operating revenues were $1.77 billion, up $131 million year-over-year; nine-month revenues were $4.03 billion, up $326 million.

• Diluted EPS for Q3 2024 was $3.37, compared to $3.50 in Q3 2023; nine-month diluted EPS was $5.32, up from $4.41.

• Updated 2024 EPS guidance to $5.00–$5.20, with sales growth expectations of 4%–6%.

• 2025 EPS guidance set at $4.40–$4.60, reflecting higher costs from regulatory lag, financing, D&A, and share dilution.

• Capital expenditure plan for 2024 increased to $2.05B; long-term plan through 2027 totals $9.65B, focused on generation, transmission, and distribution.

Outlook and guidance

• Projected annual customer growth for APS is 1.5%–2.5% through 2027, with retail electricity sales growth expected at 4%–6% annually, mainly from large data centers and manufacturing.

• Weather-normalized sales growth forecasted at 4%–6% through 2027, with 3%–5% from high load factor C&I sector.

• APS targets a 65% clean energy mix by 2030 and 100% carbon-free electricity by 2050, with plans to exit coal-fired generation by 2031.

• Rate base growth expected at 6%–8%, with over 40% of future capital investments qualifying for timely cost recovery mechanisms.

• Long-term EPS growth guidance reaffirmed at 5%–7% based on the midpoint of original 2024 guidance.