Pinnacle West Capital Corporation · NYSE:PNW
Pinnacle West Capital — Q4 2012 Earnings Presentation
24 slides from Pinnacle West Capital's earnings presentation, Feb 22, 2013
Slide 1: 4th Quarter and Full-Year 2012 Results
4th Quarter and Full-Year 2012 Results Fourth Quarter 2012
Slide 2: Forward-Looking Statements
Forward-Looking Statements 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 identified by words suchh as “estimate,” “ ti t ” “predict,
Slide 3: Amounts Attributable to Common Shareholders and Non-GAAP Financial Measures
Amounts Attributable to Common Shareholders and Non-GAAP Non GAAP Financial Measures In this presentation, references to net income and earnings per share (EPS) refer to amounts attributable to common shareholders. We present “gross margin” per diluted share of common stock. Gross margin refers to o
Slide 4: CEO Discussion Agenda
CEO Discussion Agenda Regulatory environment Capital investments Operational excellence Looking ahead Fourth Quarter 2012 4
Slide 5: CFO Agenda
CFO Agenda 4th quarter results Full-year 2012 results Arizona economic outlook Credit ratings upgrades and financing plans Earnings guidance and financial outlook Fourth Quarter 2012 5
Slide 6: Consolidated EPS Comparisons
Consolidated EPS Comparisons 4th Quarter 2012 vs vs. 4th Quarter 2011 Net Income On-Going On Going Earnings Per Share Per Share $0.25 $0.25 $0.24 $0 20 $0.20 $0.20 $0.20 $0.15 $0.15 $0.11 $0.11 $0.10 $0.10 $0 05 $0.05 $0 0 $0.05 $0.00 $0.00 2012 2011 2012 2011 Fourth Quarter 2012 6
Slide 7: Non-GAAP EPS Reconciliation
Non-GAAP EPS Reconciliation 4th Quarter 2012 vs vs. 4th Quarter 2011 4th Qtr 4th Qtr 2012 2011 Change EPS as reported $ 0.20 $ 0.11 $ 0.09 Adjustments: Loss (income) from discontinued operations 0.04 - 0.04 On-going EPS $ 0.24 $ 0.11 $ 0.13 Fourth Quarter 2012 7
Slide 8: On-Going EPS Variances
On-Going EPS Variances 4th Quarter 2012 vs vs. 4th Quarter 2011 Lower infrastructure- related costs Higher O&M* $0 06 $0.06 $(0 08) $(0.08) Higher gross margin* $0.22 Other items, net $(0.07) Net Increase $0.13 = * Excludes costs, and offsetting operating revenues, associated with renewable energy (
Slide 9: Gross Margin EPS Drivers
Gross Margin EPS Drivers 4th Quarter 2012 vs vs. 4th Quarter 2011 Other items, Higher fuel net costs,, net* $0.03 $(0.03) Higher retail Weather kWh sales effects $0.06 $(0.03) Net Increase Retail $0.22 transmission revenue increase $0.06 = 2012 regulatory g y settlement $0.13 See non-GAAP reconcilia
Slide 10: Consolidated EPS Comparisons
Consolidated EPS Comparisons Full Year 2012 vs Full-Year vs. Full Full-Year Year 2011 Net Income On-Going g Earnings* g Per Share Per Share $4.00 $4.00 $3.45 $3.50 $3.50 $3 50 $3.50 $3 50 $3.09 $2.99 $3.00 $3.00 $2.50 $2.50 $2.00 $2.00 $1.50 $1.50 $1.00 $1.00 $0.50 $0.50 $0.00 $0.00 2012 2011 2012 2
Slide 11: Arizona Economic Indicators
Arizona Economic Indicators Employment & Excess Housing Non-Farm Job Growth Metro Phoenix Excess Housing Year-Over- Y O APS Service Territory Year Change 10.0% 40,000 8.0% 35,000 , 6.0% 30,000 4.0% 2.0% 25,000 0.0% 20,000 (2.0)% 15,000 ((4.0)% ) 10,000 (6.0)% (8.0)% 5,000 (10 0)% (10.0)% 0 '05 ′05 '
Slide 12: Arizona Economic Indicators
Arizona Economic Indicators M t Phoenix Metro Ph i Housing H i Prices Pi & Nonresidential N id ti l Vacancy V Home Prices Nonresidential Building Vacancy Value V l Relative R l ti to Jan ‘05 Vacancy Rate 175 25% Office 150 20% Industrial 125 15% Retail 100 10% 75 5% 50 0% '05′05'06′06'07′07'08′08'09
Slide 13: Investment-Grade Credit Ratings
Investment-Grade Credit Ratings APS Parent Corporate Credit Ratings Moody’s Baa1 Baa2 S&P BBB+ BBB+ Fitch BBB BBB Senior Unsecured Moody’s Baa1 - S&P BBB+ - Fitch BBB+ - Outlook M d ’ Moody’s St bl Stable St bl Stable S&P Stable Stable Fitch Stable Stable We are disclosing these ratings to enhance u
Slide 14: Consolidated Financial Outlook
Consolidated Financial Outlook A off F As February b 22, 22 2013 On-Going EPS $4.00 $3.50 $3.45 – $3.60 $3.50 $2.99 $3 00 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $0.00 2011 2012 2013 Guidance See key factors and assumptions in appendix. Fourth Quarter 2012 14
Slide 15: Consolidated Financial Outlook
Consolidated Financial Outlook A off F As February b 22, 22 2013 Dividend Growth Goal Consolidated Earned ROE Goal Indicated Annual Dividend Rate at Year Year-End End $4.00 9.9% 10% 8.8% At Least 9.5% $3.50 $3.00 8% $2.50 $2.10 $2.18* 6% $2 00 $2.00 $1.50 4% $1.00 2% $0.50 $0.00 0% 2011 2012 2013 20
Slide 16: Appendix
Appendix Fourth Quarter 2012
Slide 17: 2013 On-Going EPS Guidance
2013 On-Going EPS Guidance K F Key Factors t &A Assumptions ti as off F February b 22, 22 2013 Electricity gross margin* (operating revenues, net of fuel and purchased power expenses) about $2.17 $ billion to $ $2.22 billion Retail customer growth about 1.5% Weather-normalized retail electrici
Slide 18: 2013-2015 Financial Outlook
2013-2015 Financial Outlook K D Key Drivers i &A Assumptions ti as off F February b 22 22, 2013 2012 retail rate settlement effective July 1, 2012 Revenue provisions Retail base rate changes effective July 1, 2012 Adjustment mechanisms Four Corners acquisition AZ Sun additions to flow th
Slide 19: 2013-2015 Financial Outlook (cont.)
2013-2015 Financial Outlook K D Key Drivers i &A Assumptions ti as off F February b 22 22, 2013 (cont.) ( t) Modestly improving Arizona and U.S. economic conditions Retail customer g growth to averageg 2% annuallyy Weather-normalized retail electricity sales volume growth: Relatively flat af
Slide 20: Gross Margin Effects of Weather Variances Versus Normal
Gross Margin Effects of Weather Variances Versus Normal* Normal Pretax Millions Milli $25 22 $20 15 $15 9 8 $10 4 $5 2 2 $0 ($5) (4) (4) ($10) ($15) (10) ($20) ($25) ($30) (26) (27) ($35) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2010 2011 2012 *All periods recalculated to conform to current presentation.
Slide 21: Quarterly Mark-to-Market on Hedge Contracts
Quarterly Mark-to-Market on Hedge Contracts Contracts* Pretax Millions Milli $10 5 $5 1 0 0 0 $0 (1) (1) (2) (2) (2) (2) (2) $(5) $(10) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2010 2011 2012 * Related to APS 10% share under Power Supply Adjustor (PSA), net of related deferrals. Fourth Quarter 2012 21
Slide 22: Renewable Energy, Demand Side Management and Similar Regulatory Expenses
Renewable Energy, Demand Side Management and Similar Regulatory Expenses* Pretax Millions $50 $45 $40 2 $35 23 2 $30 15 2 18 16 $25 12 13 24 8 11 19 $20 17 16 $15 $10 21 23 18 19 16 19 19 19 12 14 12 $5 10 $0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2010 2011 2012 Renewable Energy Demand Side Management
Slide 23: Non-GAAP Measure Reconciliation
Non-GAAP Measure Reconciliation Gross Margin Three Months Ended December 31, EPS $ millions pretax, except per share amounts 2012 2011 Change Operating revenues* $ 693 $ 668 Fuel and purchased power expenses* (211) (216) Gross margin 482 452 $ 0.16 Less Renewable energy (excluding AZ Sun), energy ef
Slide 24: Non-GAAP EPS Reconciliation
Non-GAAP EPS Reconciliation Consolidated On-Going On Going EPS Guidance Year 2011 Year 2012 Year 2013 Actual Actual Guidance* Net income attributable to common shareholders $ 3.09 $ 3.45 Adjustments: Loss (income) from discontinued operations (0.10) 0.05 On-going EPS $ 2.99 $ 3.50 $3.45 - $3.60 * As
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