• Quarterly financial results benefit from higher retail sales and warmer weather
• Disciplined cost management and strong operational performance also contribute to bottom line
• Company affirms 2015 guidance, introduces 2016 guidance

PHOENIX--(BUSINESS WIRE)-- Pinnacle West Capital Corp. (NYSE: PNW) today reported consolidated net income attributable to common shareholders for the 2015 third quarter of $257.1 million, or $2.30 per diluted share. This result compares with net income of $244.0 million, or $2.20 per share, for the same period a year ago.

“It was a solid quarter for us. An increase in retail sales, ongoing cost management and superior operational performance all contributed to sound financial results,” said Pinnacle West Chairman, President and Chief Executive Officer Don Brandt, adding that quarter-over-quarter weather-normalized sales growth has been positive four out of the past seven quarters.

“Operationally, our employees stepped up during what proved to be one of the most challenging storm seasons in years,” he said. “Our crews performed well under tough conditions, and employees across all departments responded with the high-quality service our customers have come to expect from APS.”

The 2015 third-quarter results comparison was positively impacted by the following major factors:

• Adjustment mechanisms improved earnings by $0.17 per share compared to the 2014 third quarter. These adjustors included a Jan. 1, 2015, rate change reflecting acquisition of Southern California Edison’s interest in Units 4 and 5 of the Four Corners Power Plant; increased transmission revenues; revenue from the Company’s AZ Sun Program; and higher lost fixed cost recovery (LFCR) revenue.
• Higher retail electricity sales – excluding the effects of weather variations, but including the effects of customer conservation, energy efficiency programs and distributed renewable generation – improved earnings $0.08 per share. Compared to the same quarter a year ago, weather-normalized retail sales improved 2.1 percent, while total customer growth increased 1.3 percent quarter-over-quarter.
• The effects of weather variations improved results by $0.04 per share compared to the year-ago period. Highlighted by the second hottest August in 20 years, this year’s third quarter was warmer than the same period last year (104.3 degrees average high temperatures versus 102.9 degrees) and slightly more favorable (0.5 percent) than normal based on a rolling 10-year average. As a result, residential cooling degree-days (a measure of the effects of weather) were 10.5 percent greater than last year’s third quarter and 3.3 percent better than normal 10-year averages.

These positive factors were partially offset by the following items:

• Higher depreciation and amortization expenses, largely associated with the Four Corners transaction and additional plant in service, reduced earnings by $0.12 per share.
• Expiration of a long-term wholesale contract at the end of 2014 decreased earnings by $0.02 per share.
• The net effect of miscellaneous items decreased earnings $0.05 per share.

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, on a weather-normalized basis.

Looking ahead to 2016, the Company estimates its on-going consolidated earnings will be within a range of $3.90 to $4.10 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 both the 2015 and 2016 outlook can be found in the third-quarter 2015 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 2015 third-quarter results, as well as recent developments, at 12 noon ET (9 a.m. AZ time) today, October 30. 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, November 6, 2015, by calling (877) 660-6853 in the U.S. and Canada or (201) 612-7415 internationally and entering conference ID number 13621086.

Pinnacle West Capital Corp., an energy holding company based in Phoenix, has consolidated assets of about $15 billion, about 6,200 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.

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 high 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 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 Arizona Corporation Commission 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, and in Part II, Item 1A of the Pinnacle West/APS Quarterly Report on Form 10-Q for the quarter ended September 30, 2015, 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												NINE MONTHS ENDED
				SEPTEMBER 30,												SEPTEMBER 30,
				2015					2014							2015					2014
Operating Revenues				$	1,199,146				$	1,172,667						$	2,761,013				$	2,765,182
Operating Expenses
	Fuel and purchased power				363,847					382,361							868,561					923,001
	Operations and maintenance				220,449					223,418							646,358					647,522
	Depreciation and amortization				125,625					103,660							369,313					310,582
	Taxes other than income taxes				43,241					40,850							129,489					130,699
	Other expenses				873					603							2,524					2,320
	Total				754,035					750,892							2,016,245					2,014,124
Operating Income					445,111					421,775							744,768					751,058
Other Income (Deductions)
	Allowance for equity funds used during construction				7,645					7,038							26,214					21,979
	Other income				139					2,366							549					7,514
	Other expense				(5,538	)				(4,193	)						(12,433	)				(9,385	)
	Total				2,246					5,211							14,330					20,108
Interest Expense
	Interest charges				49,342					47,626							146,069					152,346
	Allowance for borrowed funds used during construction				(3,518	)				(3,479	)						(12,056	)				(11,039	)
	Total				45,824					44,147							134,013					141,307
Income Before Income Taxes					401,533					382,839							625,085					629,859
Income Taxes					139,555					134,753							214,873					215,698
Net Income					261,978					248,086							410,212					414,161
Less: Net income attributable to noncontrolling interests					4,862					4,125							14,072					21,976
Net Income Attributable To Common Shareholders				$	257,116				$	243,961						$	396,140				$	392,185
Weighted-Average Common Shares Outstanding - Basic					111,036					110,686							110,984					110,579
Weighted-Average Common Shares Outstanding - Diluted					111,616					111,103							111,490					110,962
Earnings Per Weighted-Average Common Share Outstanding
	Net income attributable to common shareholders - basic			$	2.32				$	2.20						$	3.57				$	3.55
	Net income attributable to common shareholders - diluted			$	2.30				$	2.20						$	3.55				$	3.53

View source version on businesswire.com: http://www.businesswire.com/news/home/20151030005365/en/

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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Pinnacle West Capital (PNW) Q3 Results Nearly Flat with ExpectationsOctober 30, 2015 8:35 AM