Pinnacle West Capital Corporation · NYSE:PNW
Pinnacle West Capital — Q2 2010 Earnings Presentation
20 slides from Pinnacle West Capital's earnings presentation, Aug 3, 2010
Slide 1: 2nd Quarter 2010 Results
oe PINNACLE \WEST CAPITAL CORPORATION 24 Quarter 2010 Results
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains forward-looking statements based on our current expectations, and neither Pinnacle West nor APS assumes any obligation to update these statements, even if our internal estimates change, except as required by applicable law. These forward-looking
Slide 3: Amounts Attributable to Common Shareholders and Non-GAAP Financial Measures
Amounts Attributable to Common Shareholders and Non-GAAP Financial Measures In this presentation, references to net income and earnings per share refer to amounts attributable to common shareholders. We present “regulated electricity segment gross margin” per diluted share of common stock. Regulated
Slide 4: CFO Agenda
CFO Agenda 2nd Quarter Results Arizona Economic Outlook Earnings Guidance Liquidity and Financing Update Second Quarter 2010 4
Slide 5: Consolidated EPS Comparisons
Consolidated EPS Comparisons 2nd Quarter 2010 vs. 2nd Quarter 2009 Net Income On-Going Earnings Per Share Per Share $1.25 $1.00 $1.07 $0.83 $1.00 $0.75 $0.75 $0.75 $0.68 $0.50 $0.50 $0.25 $0.25 $0.00 $0.00 2010 2009 2010 2009 Second Quarter 2010 5
Slide 6: Non-GAAP EPS Reconciliation
Non-GAAP EPS Reconciliation 2nd Quarter 2010 vs. 2nd Quarter 2009 2nd Qtr 2nd Qtr 2010 2009 Change EPS as reported $ 1.07 $ 0.68 $ 0.39 Adjustments: Real Estate Segment 0.01 0.08 (0.07) District Cooling Business (0.25) (0.01) (0.24) Total (0.24) 0.07 (0.31) On-Going EPS $ 0.83 $ 0.75 $ 0.08 Second Q
Slide 7: Discontinued Operations Overview
Discontinued Operations Overview SunCor Property sales closed in July; debt reduced to $6 million All now classified as discontinued operations District Cooling Business Sold June 22, 2010 Gain on sale: $25 million after-tax Second Quarter 2010 7
Slide 8: On-Going EPS Variances
On-Going EPS Variances 2nd Quarter 2010 vs. 2nd Quarter 2009 Other income, net of other O&M* expense $0.04 $(0.04) Regulated electricity gross Share margin* issuance $0.10 $(0.04) Net Other items, Increase net $0.02 $0.08 = * Excluding renewable energy and demand-side management revenue increases an
Slide 9: Regulated Electricity Gross Margin Drivers
Regulated Electricity Gross Margin Drivers* 2nd Quarter 2010 vs. 2nd Quarter 2009 Lower hedge Higher mark-to- kWh sales market Transmission $0.02 $(0.03) rate increase Weather Line $0.03 effects Retail base extension $(0.15) rate increase, revenues net of PSA $0.02 effects $0.21 Net Increase $0.10 =
Slide 10: Arizona Economic Indicators
Arizona Economic Indicators Metro Phoenix Housing & Commercial Real Estate Home Prices Commercial Building Occupancy Value Relative Office Sq. Ft. Retail Sq .Ft. to Jan ‘05 Millions Millions 200 130 190 185 125 150 Office 180 120 175 Retail 100 170 115 165 50 110 160 0 105 155 ‘05 ‘06 ‘07 ‘08 ‘09 ‘1
Slide 11: Arizona Economic Indicators
Arizona Economic Indicators Employment & Payroll Taxes Non-Farm Job Growth Personal Income Tax Withholdings Month-to- Year-over- Month Change Year Change 2.0% 25% 20% 1.5% 15% 1.0% 10% 0.5% 5% 0% 0.0% (5)% (0.5)% (10)% (1.0)% (15)% (1.5)% (20)% (25)% (2.0)% ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘05 ‘06 ‘07 ‘08 ‘0
Slide 12: Consolidated On-Going EPS Outlook
Consolidated On-Going EPS Outlook 2009 Actual: $2.33 per share $3.10 $2.95 Guidance as of August 3, 2010 $2.33 2010 $2.95 - $3.10 per share 2011 Estimated to be within guidance range provided for 2010, with some opportunity for modestly exceeding the range Projected Second Quarter 2010 12
Slide 13: CEO Discussion
CEO Discussion Arizona Regulatory Update Renewable Resources Operations Update Looking Ahead Second Quarter 2010 13
Slide 14: APS AZ Sun Program
APS AZ Sun Program 100 MW photovoltaic solar plants owned by APS Up to $500 million capital investment In service 2011 through 2014 Rate recovery First 50 MW: Renewable Energy Surcharge adjustor Second 50 MW: Adjustor to be determined in 2012 rate case decision Second Quarter 2010 14
Slide 15: CEO Discussion
CEO Discussion Arizona Regulatory Update Renewable Resources Operations Update Looking Ahead Second Quarter 2010 15
Slide 16: Appendix
oe PINNACLE WEST CAPITAL CORPORATION Appendix — 2Q ‘10 Appendix 16
Slide 17: 2010 On-Going EPS Guidance
2010 On-Going EPS Guidance Key Factors and Assumptions APS earnings to comprise nearly all of consolidated on-going earnings; Actual weather for the first half of the year and normal weather patterns for remainder of year; Retail customer growth of about 1%; Weather-normalized retail electri
Slide 18: Renewable Energy and Demand-Side Management Surcharges
Renewable Energy and Demand-Side Management Surcharges* Pretax Millions $35 $30 $25 19 $20 $15 19 18 18 18 $10 18 $5 12 7 8 7 6 7 5 4 $0 2 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2008 2009 2010 Demand-Side Management Renewable Energy * Revenues associated with these surcharges were offset substantially by com
Slide 19: Quarterly Mark-to-Market on Hedge Contracts
Quarterly Mark-to-Market on Hedge Contracts* Pretax Millions $20 14 14 $10 8 5 0 $0 (2) (1) $(10) (5) (9) $(20) $(30) (29) $(40) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2008 2009 2010 * APS 10% share under Power Supply Adjustor (PSA), net of related deferrals. Appendix – 2Q ‘10 19
Slide 20: Non-GAAP Measure Reconciliation
Non-GAAP Measure Reconciliation Regulated Electricity Segment Gross Margin Three Months Ended June 30, EPS $ millions, except per share amounts 2010 2009 Change Reconciliation of Regulated Electricity Segment Gross Margin Regulated electricity segment revenue* $ 800 $ 813 Regulated electricity segme
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