Slide 1: Third Quarter 2015 Results
Third Quarter 2015 THIRD QUARTER 2015 RESULTS October 30, 2015
Slide 2: Forward Looking Statements and Non-GAAP Financial Measures
Third Quarter 20152 FORWARD LOOKING STATEMENTS AND NON-GAAP FINANCIAL MEASURES This presentation contains forward-looking statements based on current expectations, including statements regarding our earnings guidance and financial outlook and goals. These forward-looking statements are often identif
Slide 3: Consolidated EPS Comparison 2015 vs. 2014
Third Quarter 20153 CONSOLIDATED EPS COMPARISON 2015 VS. 2014 $2.30 $2.20 2015 2014 3rd Quarter GAAP Net Income $2.30 $2.20 3rd Quarter On-Going Earnings $3.55 $3.53 2015 2014 Year-to-Date GAAP Net Income $3.55 $3.53 Year-to-Date On-Going Earnings
Slide 4: On-Going EPS Variances 3rd Quarter 2015 vs. 3rd Quarter 2014
Third Quarter 20154 Gross Margin(1) $0.28 ON-GOING EPS VARIANCES 3RD QUARTER 2015 VS. 3RD QUARTER 2014 Other, net $(0.05) Other Taxes $(0.01) (1) Excludes costs, and offsetting operating revenues, associated with renewable energy (excluding AZ Sun), demand side management and similar regulatory prog
Slide 5: Gross Margin EPS Drivers 3rd Quarter 2015 vs. 3rd Quarter 2014
Third Quarter 20155 GROSS MARGIN EPS DRIVERS 3RD QUARTER 2015 VS. 3RD QUARTER 2014 Lost Fixed Cost Recovery Mechanism $0.02 = Net Increase $0.28 Transmission Revenue $0.02 See non-GAAP reconciliation for gross margin in appendix. Weather $0.04 Four Corners Rate Change $0.11 Higher kWh Sales $0.08 Wh
Slide 6: Economic Indicators
Third Quarter 20156 ECONOMIC INDICATORS Arizona and Metro Phoenix remain attractive places to live and do business Single Family & Multifamily Housing Permits Maricopa County Job Growth (Total Nonfarm) – Metro Phoenix (10.0)% (5.0)% 0.0% 5.0% 10.0% '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 Metro P
Slide 7: On-Going EPS Guidance as of October 30, 2015
Third Quarter 20157 ON-GOING EPS GUIDANCE AS OF OCTOBER 30, 2015 2015 Guidance 2016 Guidance * Assumes normal weather See key factor and assumptions in appendix. $3.75 - $3.95* $3.90 - $4.10* + Adjustment mechanisms, primarily Transmission Cost Adjustor (TCA) and Lost Fixed Cost Recovery (LFCR) + Mo
Slide 8: Appendix
vss APPENDIX PINNACLE WEST CAPITAL CORPORATION
Slide 9: 2015 On-Going EPS Guidance Key Factors & Assumptions
Third Quarter 20159 2015 ON-GOING EPS GUIDANCE Key Factors & Assumptions as of October 30, 2015 2015 Electricity gross margin* (operating revenues, net of fuel and purchased power expenses) $2.27 – $2.32 billion • Retail customer growth about 1.0-2.0% • Weather-normalized retail electricity sales vo
Slide 10: 2016 On-Going EPS Guidance Key Factors & Assumptions
Third Quarter 201510 2016 ON-GOING EPS GUIDANCE Key Factors & Assumptions as of October 30, 2015 2016 Electricity gross margin* (operating revenues, net of fuel and purchased power expenses) $2.34 – $2.39 billion • Retail customer growth about 1.5-2.5% • Weather-normalized retail electricity sales v
Slide 11: Financial Outlook Key Factors & Assumptions
Third Quarter 201511 FINANCIAL OUTLOOK Key Factors & Assumptions as of October 30, 2015 Assumption Impact Retail customer growth • Expected to average about 2-3% annually • Modestly improving Arizona and U.S. economic conditions Weather-normalized retail electricity sales volume growth • About 0.5-1
Slide 12: Operations & Maintenance Outlook
Third Quarter 201512 OPERATIONS & MAINTENANCE OUTLOOK Goal is to keep O&M per kWh flat, adjusted for planned outages $754 $761 $788 $805 $150 $124 $137 $103 $104 $114 2011 2012 2013 2014 2015E 2016E PNW Consolidated RES/DSM* *Renewable energy and demand side management expenses are offset by adjusto
Slide 13: Capital Expenditures
Third Quarter 201513 $289 $259 $230 $250 $66 $77 $258 $24 $47 $234 $198 $63 $66 $13 $1 $192 $193 $125 $180 $242 $336 $347 $317 $73 $89 $85 $81 2014 2015 2016 2017 CAPITAL EXPENDITURES 70% of capital expenditures are recovered through rate adjustors (30%) and depreciation cash flow (40%) ($ Millions)
Slide 14: Dividend Growth
Third Quarter 201514 $2.10 $2.18 $2.27 $2.38 $2.50 2011 2012 2013 2014 2015 2016 2017 Dividend Growth Goal Indicated Annual Dividend Rate at Year-End DIVIDEND GROWTH Pinnacle West’s annual dividend is $2.50 per share; targeting ~5% annual dividend growth Projected Future dividends subject to declara
Slide 15: Rate Base
Third Quarter 201515 RATE BASE APS’s revenues come from a regulated retail rate base and meaningful transmission business $6.0 $6.2 $7.6 $1.3 $1.5 $1.8 2014 2015 2016 2017 2018 APS Rate Base Growth Year-End ACC FERC $7.0 Billion Total Rate Base Projected Most Recent Rate Decisions ACC FERC Rate Effe
Slide 16: Balance Sheet Strength
Third Quarter 201516 BALANCE SHEET STRENGTH $250 $50 $500 $250 $125 $- $100 $200 $300 $400 $500 2016 2017 2018 2019 2020 APS PNW ($Millions) Debt Maturity Schedule Credit Ratings • A- rating or better at S&P, Moody’s and Fitch 2015 Major Financing Activities • $250 million 5-year 2.20% APS senior un
Slide 17: Residential PV Applications
Third Quarter 201517 249 361 343 444 629 720 648 795 872 950 532 851 517 719 859 754 1,203 1,235 1,479 1,272 1,161 0 29 36 86 47 53 70 70 92 69 113 47 81 112 108 65 100 106 94 79 96 38 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 RESIDENTIAL PV APPLICATIONS As of September 30, 2015, nearly 36,000
Slide 18: Gross Margin Effects of Weather Variances vs. Normal
Third Quarter 201518 (17) 5 (5) (7) (10) (6) 2 $(20) $(15) $(10) $(5) $0 $5 Q1 Q2 Q3 Q4 Q1 Q2 Q3 GROSS MARGIN EFFECTS OF WEATHER VARIANCES VS. NORMAL Pretax Millions 2014 $(24) Million All periods recalculated to current 10-year rolling average (2004-2013). 2015 $(14) Million
Slide 19: Renewable Energy and Demand Side Management Expenses
Third Quarter 201519 10 8 15 11 12 7 11 16 14 17 12 11 14 18 $0 $10 $20 $30 $40 $50 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Renewable Energy Demand Side Management RENEWABLE ENERGY AND DEMAND SIDE MANAGEMENT EXPENSES* * O&M expenses related to renewable energy, demand side management and similar regulatory programs ar
Slide 20: Non-GAAP Measure Reconciliation Gross Margin
Third Quarter 201520 NON-GAAP MEASURE RECONCILIATION GROSS MARGIN $ millions pretax, except per share amounts 2015 2014 Operating revenues* 1,199$ 1,173$ Fuel and purchased power expenses* (364) (383) Gross margin 835 790 0.25$ Adjustments: Renewable energy (excluding AZ Sun), demand side management