Pinnacle West Capital Corporation · NYSE:PNW
Pinnacle West Capital — Q1 2011 Earnings Presentation
21 slides from Pinnacle West Capital's earnings presentation, Apr 29, 2011
Slide 1: 1st Quarter 2011 Results
ee PINNACLE \WEST CAPITAL CORPORATION 1st Quarter 2011 Results
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains forward-looking statements based on current expectations, including statements regarding our 2011 earnings outlook. These forward-looking statements are often identified by words such as “estimate,” “predict,” may, “believe,” “may,” believe, “pla
Slide 3: Amounts Attributable to Common Shareholders and Non-GAAP Financial Measures
Amounts Attributable to Common Shareholders and Non Non-GAAP 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.
Slide 4: CFO Agenda
CFO Agenda 1st Q Quarter Results Arizona Economic Outlook 2011 Earnings Guidance First Quarter 2011 4
Slide 5: Consolidated EPS Comparisons
Consolidated EPS Comparisons 1st Quarter 2011 vs vs. 1st Quarter 2010 Net Income (Loss) On-Going On Going Earnings (Loss) Per Share Per Share $0.10 $0.10 $0.07 $0.00 $0.00 $(0 06) $(0.06) ($0.10) ($0.10) $(0.14) $(0.14) ($0.20) ($0.20) ($0.30) ($0.30) 2011 2010 2011 2010 First Quarter 2011 5
Slide 6: Non-GAAP EPS Reconciliation
Non-GAAP EPS Reconciliation 1st Quarter 2011 vs vs. 1st Quarter 2010 1st Qtr 1st Qtr 2011 2010 Change EPS as reported $ (0.14) $ (0.06) $ (0.08) Adjustments: Discontinued operations, primarily real estate - 0.13 (0.13) On-going EPSS $ (0.14) $ 0.07 $ (0.21) First Quarter 2011 6
Slide 7: On-Going EPS Variances
On-Going EPS Variances 1st Quarter Q t 2011 vs. 1st Quarter Q t 2010 Regulated electricity gross margin* O&M* $0.04 $(0.10) Net Decrease Prior-year $(0.21) favorable tax matter resolution $(0.08) Infrastructure- related costs = $(0.06) Other, net $(0.01) * Excludes costs, and offsetting operating re
Slide 8: Regulated Electricity Gross Margin Drivers
Regulated Electricity Gross Margin Drivers 1st Quarter Q t 2011 vs. 1st Quarter Q t 2010 Line extension Transmission revenues rate decrease $0.01 $(0.01) Weather effects Other, net $0.03 $(0.02) Net Increase $0.04 Higher retail usage $0.03 = See non-GAAP reconciliation in Appendix. First Quarter 201
Slide 9: Fossil Generation Planned Outage O&M
Fossil Generation Planned Outage O&M Quarterly Expense as Percent of Annual Total 60% 50% 40% 32% 28% 27% 20% 20% 20% 18% 5% 0% Q1 Q2 Q3 Q4 2010 Actual 2011 Estimate First Quarter 2011 9
Slide 10: Arizona Economic Indicators
Arizona Economic Indicators E l Employment t & Retail R t il Sales S l Non-Farm Job Growth Retail Sales Month-to-Month Year-over-Year Change Change 2.0% 25% 1.5% 20% 15% 1.0% 10% 0 5% 0.5% 5% 0.0% 0% (0.5)% (5)% (10)% (1.0)% (15)% (1.5)% (20)% (2 0)% (2.0)% (25)% ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘05 ‘06
Slide 11: Consolidated On-Going EPS Outlook
Consolidated On-Going EPS Outlook Per Share $3.50 $3.08 $3.00 - $3.15 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $0.00 2010 2011 Guidance See key factors and assumptions in Appendix. First Quarter 2011 11
Slide 12: CEO Discussion Agenda
CEO Discussion Agenda Renewables and Generation Investments Environmental Compliance Rate Regulation Operations Update Looking Ahead First Quarter 2011 12
Slide 13: Appendix
Appendix
Slide 14: APS AZ Sun Program
APS AZ Sun Program 100 MW photovoltaic solar plants to be owned by APS Up to $500 million capital investment In service 2011 through 2014 Constructive rate recovery Commitments to date: 83 MW with $384 million capital investment Project summary: Name Net Capacity Target Operation Date
Slide 15: Four Corners Power Plant Transactions
Four Corners Power Plant Transactions Acquire Southern California Edison’s 739 MW interest in Units 4 & 5 and shut down 560 MW Units 1 – 3 Purchase price: $294 million Acquisition target date: late 2012 Estimated environmental compliance investment: $300 million Finance with mix of debt and
Slide 16: 2011 Retail Rate Case Prefiling Notice
2011 Retail Rate Case Prefiling Notice Notice filed February 1, 2011 Key y rate case p proposals p outlined in notice Revenue-per-customer decoupling mechanism Post test-year plant additions through rate effective date Infrastructure tracking adjustment mechanism G Generation ti plant l t ca
Slide 17: 2011 On-Going EPS Guidance
2011 On-Going EPS Guidance Ke Factors and Assumptions Key Ass mptions as of April 29, 29 2011 Electricity gross margin (operating revenues,* net of fuel and purchased power expenses) about $2.05 billion to $2.10 billion; Retail customer growth about 1 percent; Weather-normalized retail electri
Slide 18: Renewable Energy, Demand-Side Management and Similar Regulatory Expenses
Renewable Energy, Demand-Side Management and Similar Regulatory Expenses* Pretax Millions $ $40 2 $35 2 $30 2 2 15 $25 2 12 13 8 2 7 8 11 $20 2 6 2 $15 2 19 $10 2 2 2 20 19 21 2 2 18 18 17 18 16 $5 2 9 2 7 7 $0 2 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2008 2009 2010 2011 Renewable Energy Demand-Side
Slide 19: Quarterly Mark-to-Market on Hedge Contracts
Quarterly Mark-to-Market on Hedge Contracts* Pretax Millions Milli $20 $10 8 5 0 1 0 $0 (2) (1) (1) $(10) (5) $(20) $(30) $(40) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2009 2010 2011 * Related to APS 10% share under Power Supply Adjustor (PSA), net of related deferrals. First Quarter 2011 19
Slide 20: Gross Margin Effects of Weather Variances Versus Normal
Gross Margin Effects of Weather Variances Versus Normal* Pretax Millions Milli $15 $10 5 4 $5 2 3 0 $0 ($5) (3) (4) ($10) (7) ($15) ($20) ($25) ($30) (26) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2009 2010 2011 *All All periods recalculated to conform to current presentation presentation. First Quarter 2011 20
Slide 21: Non-GAAP Measure Reconciliation
Non-GAAP Measure Reconciliation Regulated Electricity Segment Gross Margin Three Months Ended March 31, EPS S $ millions, except per share amounts 2011 2010 Change Regulated electricity segment revenue* $ 648 $ 612 Regulated electricity segment fuel and purchased power expenses* (212) (216) Regulate
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