Pinnacle West Capital Corporation · NYSE:PNW
Pinnacle West Capital — FY2015 Earnings Presentation
23 slides from Pinnacle West Capital's earnings presentation, Feb 19, 2016
Slide 1: Fourth Quarter and Full-Year 2015 Results
Fourth Quarter and Full-Year 2015 FOURTH QUARTER AND FULL-YEAR 2015 RESULTS February 19, 2016
Slide 2: Forward Looking Statements and Non-GAAP Financial Measures
Fourth Quarter and Full-Year 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 ar
Slide 3: Consolidated EPS Comparison 2015 vs. 2014
Fourth Quarter and Full-Year 20153 CONSOLIDATED EPS COMPARISON 2015 VS. 2014 $0.37 $0.05 2015 2014 4th Quarter GAAP Net Income $0.37 $0.05 4th Quarter On-Going Earnings $3.92 $3.58 2015 2014 Full-Year GAAP Net Income $3.92 $3.58 Full-Year On-Going Earnings
Slide 4: On-Going EPS Variances 4th Quarter 2015 vs. 4th Quarter 2014
Fourth Quarter and Full-Year 20154 Gross Margin(1) $0.18 ON-GOING EPS VARIANCES 4TH QUARTER 2015 VS. 4TH QUARTER 2014 Other, net $0.03 D&A $(0.10) (1) Excludes costs, and offsetting operating revenues, associated with renewable energy (excluding AZ Sun), demand side management and similar regulatory
Slide 5: On-Going EPS Variances Full Year 2015 vs. 2014
Fourth Quarter and Full-Year 20155 Gross Margin(1) $0.48 ON-GOING EPS VARIANCES FULL YEAR 2015 VS. 2014 (1) Excludes costs, and offsetting operating revenues, associated with renewable energy (excluding AZ Sun), demand side management and similar regulatory programs. (2) Adjusted for the impacts of
Slide 6: Economic Indicators
Fourth Quarter and Full-Year 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
Slide 7: On-Going EPS Guidance as of February 19, 2016
Fourth Quarter and Full-Year 20157 ON-GOING EPS GUIDANCE AS OF FEBRUARY 19, 2016 2015 2016 Guidance * Assumes normal weather See key factor and assumptions in appendix. $3.92 $3.90 - $4.10* + Adjustment mechanisms, primarily Transmission and LFCR + Modest sales growth – Higher O&M, primarily planned
Slide 8: Appendix
Fourth Quarter and Full-Year 2015 APPENDIX
Slide 9: 2016 Key Dates
Fourth Quarter and Full-Year 20159 2016 KEY DATES ACC Key Dates Docket # Q1 Q2 Q3 Q4 Key Recurring Regulatory Filings Lost Fixed Cost Recovery E-01345A-11-0224 Jan 15 Transmission Cost Adjustor E-01345A-11-0224 May 15 Renewable Energy Surcharge TBD Jul 1 APS Rate Case Filing E-01345A-16-0036 Jun 1 R
Slide 10: Arizona Electric Utilities General Rate Cases
Fourth Quarter and Full-Year 201510 ARIZONA ELECTRIC UTILITIES GENERAL RATE CASES UNS Electric Docket # E-04204A-15-0142 Application filed May 5, 2015 Direct testimony - ex rate design, cost of service (Nov 6, 2015) Direct testimony - rate design, cost of service (Dec 9, 2015) Rebuttal testimony (Ja
Slide 11: 2016 On-Going EPS Guidance Key Factors & Assumptions
Fourth Quarter and Full-Year 201511 2016 ON-GOING EPS GUIDANCE Key Factors & Assumptions as of February 19, 2016 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 ele
Slide 12: Financial Outlook Key Factors & Assumptions
Fourth Quarter and Full-Year 201512 FINANCIAL OUTLOOK Key Factors & Assumptions as of February 19, 2016 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 grow
Slide 13: Rate Base
Fourth Quarter and Full-Year 201513 RATE BASE APS’s revenues come from a regulated retail rate base and meaningful transmission business $6.0 $6.2 $7.4 $1.3 $1.5 $1.8 2014 2015 2016 2017 2018 APS Rate Base Growth Year-End ACC FERC Total Approved Rate Base Projected Most Recent Rate Decisions ACC FER
Slide 14: Balance Sheet Strength
Fourth Quarter and Full-Year 201514 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 unsecured notes issued in January 2015 • $300 million 10-year 3.15% APS senior unsecured notes issued in May 2015 - refinanced $30
Slide 15: Pension & Other Post Retirement Benefits
Fourth Quarter and Full-Year 201515 • Funded status of the pension plan finished at 88%, due to a rise in interest rates offset by a soft equity market. • The pension plan continues to employ a liability driven investment strategy in order to reduce volatility in the plan’s funded status. PENSION &
Slide 16: Operations & Maintenance Outlook
Fourth Quarter and Full-Year 201516 OPERATIONS & MAINTENANCE OUTLOOK Goal is to keep O&M per kWh flat, adjusted for planned outages $754 $761 $788 $805 $772 $150 $124 $137 $103 $96 $94 2011 2012 2013 2014 2015 2016E PNW Consolidated RES/DSM* *Renewable energy and demand side management expenses are
Slide 17: Capital Expenditures
Fourth Quarter and Full-Year 201517 $263 $215 $211 $303 $66 $77 $237 $112 $44 $235 $199 $130 $58 $110 $1 $1 $201 $123 $210 $120 $340 $357 $345 $376 $85 $88 $82 $82 2015 2016 2017 2018 CAPITAL EXPENDITURES Capital expenditures are funded primarily through internally generated cash flow ($ Millions) $
Slide 18: Residential PV Applications
Fourth Quarter and Full-Year 201518 249 357 339 442 610 710 641 785 871 939 523 837 505 706 850 739 1,182 1,209 1,444 1,243 1,132 1,383 1,247 1,311 0 29 40 90 49 72 80 77 102 70 124 56 95 124 118 71 116 119 109 110 142 90 75 69 36 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 RESIDENTIAL PV APPLIC
Slide 19: Gross Margin Effects of Weather Variances vs. Normal
Fourth Quarter and Full-Year 201519 (18) 4 (4) (2) (10) (6) 2 5 $(20) $(15) $(10) $(5) $0 $5 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 GROSS MARGIN EFFECTS OF WEATHER VARIANCES VS. NORMAL Pretax Millions 2014 $(20) Million All periods recalculated to current 10-year rolling average (2004-2013). 2015 $(9) Million
Slide 20: Renewable Energy and Demand Side Management Expenses
Fourth Quarter and Full-Year 201520 10 8 15 11 12 7 11 11 16 14 17 12 11 14 18 12 $0 $10 $20 $30 $40 $50 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Renewable Energy Demand Side Management RENEWABLE ENERGY AND DEMAND SIDE MANAGEMENT EXPENSES* * O&M expenses related to renewable energy, demand side management and simila
Slide 21: Non-GAAP Measure Reconciliation: Gross Margin (Quarter)
Fourth Quarter and Full-Year 201521 NON-GAAP MEASURE RECONCILIATION GROSS MARGIN $ millions pretax, except per share amounts 2015 2014 Operating revenues* 735$ 727$ Fuel and purchased power expenses* (233) (257) Gross margin 502 470 0.18$ Adjustments: Renewable energy (excluding AZ Sun), demand side
Slide 22: Non-GAAP Measure Reconciliation: Gross Margin (Full Year)
Fourth Quarter and Full-Year 201522 NON-GAAP MEASURE RECONCILIATION GROSS MARGIN $ millions pretax, except per share amounts 2015 2014 Operating revenues* 3,495$ 3,492$ Fuel and purchased power expenses* (1,101) (1,180) Gross margin 2,394 2,312 0.45$ Adjustments: Renewable energy (excluding AZ Sun),
Slide 23: Non-GAAP Measure Reconciliation: Other Non-GAAP
Fourth Quarter and Full-Year 201523 NON-GAAP MEASURE RECONCILIATION OTHER NON-GAAP $ millions pretax, except per share amounts 2015 Palo Verde Lease Extensions2 2015 Adjusted 2014 Palo Verde Lease Extensions2 2014 Adjusted Depreciation and amortization1 494 (19) 475 417 (10) 407 (0.37)$ 19 19 38 26