Pinnacle West Capital Corporation · NYSE:PNW
Pinnacle West Capital — Q1 2024 Earnings Presentation
25 slides from Pinnacle West Capital's earnings presentation, May 2, 2024
Slide 1: Renewed, Reliable and Resilient: First-Quarter 2024 Financial Results
Renewed, Reliable and Resilient First-Quarter 2024 Financial Results May 2, 2024
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 such as “estimate,” “predict,” “may,” “
Slide 3: First-Quarter results impacted by customer growth and new rates
First-Quarter results impacted by customer growth and new rates O&M1 Income & other D&A taxes Operating Other, net2 Pension & 1Q 2024 Revenue less Fuel Interest, net OPEB non- 1Q 2023 and Purchased AFUDC service Power1 credits, net Operating Revenue less Fuel and Purchased Power 2022 GRC base rate i
Slide 4: 2024 EPS guidance
2024 EPS guidance Key Factors and Assumptions (as of May 2, 2024) 2024 Adjusted gross margin (operating revenues, net of fuel and $2.93 – $3.00 billion purchased power expenses, x/RES,DSM,CCT)1 • Retail customer growth of 1.5%-2.5% • Weather-normalized retail electricity sales growth of 2.0%-4.0% •
Slide 5: Key drivers for 2024 EPS guidance
Key drivers for 2024 EPS guidance 2024 EPS guidance of $4.60-$4.80 key drivers1 Long-term guidance and key drivers • Long-term EPS growth target of 5%-7% off New rates in effect March 8, Depreciation, amortization and 2024 property taxes due to higher 2024 midpoint plant in service • Retail cust
Slide 6: Capital plan to support reliability and continued growth within our service territory
Capital plan to support reliability and continued growth within our service territory APS Total 2024-2026 $6.0B CapEx Profile $2.00B $2.05B $1.95B Today $1.80B $655 $755 $760 $634 Generation One year ago $420 Transmission $340 $415 Distribution $361 Other $7.80B $590 $572 $565 $550 $6.85B $385 $233
Slide 7: Rate Base growing within our service territory
Rate Base growing within our service territory Current Approved Rate Base and Test Year Detail End-of-Year Rate Base and Growth Guidance ACC FERC ACC FERC Rate Effective Date 03/08/2024 6/1/2023 $2.6 Test Year Ended 6/30/20221 12/31/2022 $2.01 Equity Layer 51.93% 50.3% Allowed ROE 9.55% 10.75% $13.5
Slide 8: We are focused on cost control and customer affordability
We are focused on cost control and customer affordability Operations & Maintenance Guidance O&M Guidance (millions) • Reduced year-over-year core O&M excluding planned outages • Final planned major outage in Q4 2024 at Four Corners Unit 5 Planned $75-$85 $46 • Unit 4 final planned major outage in 20
Slide 9: Optimized financing plan to support balanced capital structure
Optimized financing plan to support balanced capital structure 2024-2026 Financing Plan Funding Strategy ✓ Successfully raised ~$750 million of Approx. $400M external equity on a forward sale to Future PNW Approx. support balanced APS capital structure ✓ Capital $6B and expanded, accretive investmen
Slide 10: We are focused on maintaining healthy credit ratings to support affordable growth
We are focused on maintaining healthy credit ratings to support affordable growth1 Balance Sheet Senior Targets Corporate Unsecured Short-Term • Solid investment-grade Ratings Ratings Ratings Outlook credit ratings APS • APS equity layer >50% • PNW FFO/Debt range Moody’s Baa1 Baa1 P-2 Stable of 14%-
Slide 11: Debt maturity profile shows well managed and stable financing plan
Debt maturity profile shows well managed and stable financing plan ($millions) APS Fixed APS Floating PNW Fixed PNW Floating $1,200 $1,000 $800 $600 $400 $200 $0 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050 As of March 31, 2024 11
Slide 12: Appendix
PINNACLE WEST CAPITAL CORPORATION
Slide 13: 2024 EPS Guidance of $4.60 - $4.80
2024 EPS Guidance of $4.60 - $4.80 2024 vs 2023 $(0.14) O&M1 $(0.47) $(0.08) $4.70 D&A $4.41 Other taxes $(0.32) $0.03 $0.48 $1.27 All other Interest, net Weather Operating AFUDC Revenue less Fuel and Purchased Power1 Operating Revenue less Fuel and Purchased Power Net Effect of 2022 GRC $ 1.33 All
Slide 14: The 2022 rate case outcome was reasonable and constructive
The 2022 rate case outcome was reasonable and constructive Key Components of Final Decision Return on Equity 9.55% Fair Value Increment 0.25% Equity Ratio 51.93% 12 months + Four Corners Post Test-Year Plant ELG New Capital Tracking System Reliability Benefit Mechanism surcharge approved • Partial t
Slide 15: We are making progress towards our Clean Energy Commitment
We are making progress towards our Clean Energy Commitment Progress Since 2020, have contracted over 5,000 MW of clean energy and storage to be in service for APS customers by end of 2025 Issued 2023 All-Source RFP for approximately 1,000 MW of reliable capacity, including at least 700 MW of renewab
Slide 16: Arizona continues to be an attractive service territory with strong customer growth
Arizona continues to be an attractive service territory with strong customer growth Arizona economy continues to be robust Residential Customer Growth1 and attractive 3% • In 2023, Maricopa County was the fourth fastest-growing county in the nation 2.4% 1.5%-2.5% 2.3% 2.2% • Phoenix housing is affor
Slide 17: Arizona's commercial and industrial growth is diverse
Arizona’s commercial and industrial growth is diverse Source: Arizona Commerce Authority 17
Slide 18: Residential PV Applications
Residential PV Applications 5,000 Residential DG (MWdc) Annual Additions 4,500 216 169 200 4,000 34 3,500 2021 2022 2023 2024 3,000 2,500 2,000 1,500 1,000 500 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2021 Applications 2022 Applications 2023 Applications 2024 Applications 1 Monthly data equ
Slide 19: Renewable Energy & Demand Side Management expenses
Renewable Energy & Demand Side Management expenses1 ($ in millions pretax) Renewable Energy Demand Side Management $40 $35 $30 $25 $20 $16 $18 $20 $12 $21 $15 $10 $16 $17 $15 $15 $5 $9 $0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 1Renewable Energy and Demand Side Management expenses are substantially offset by adjust
Slide 20: 2024 gross margin effects of weather
2024 gross margin effects of weather Variances vs. Normal ($ in millions pretax) ($1) Q1 Q2 Q3 Q4 2024 Total Weather Impact: $(1) Million All periods recalculated to current 10-year rolling average (2013 – 2022). Numbers may not foot due to rounding. 20
Slide 21: 2024 Planned Outage Schedule
2024 Planned Outage Schedule Coal, Nuclear and Large Gas Planned Outages Q1 Q2 Q4 Actual Duration in Estimated Duration Estimated Duration Plant Unit Plant Unit Plant Unit Days in Days in Days Redhawk CC1 66 West Phoenix CC5 55 Palo Verde 2 36 West Phoenix CC5 71 Palo Verde 3 36 Four Corners 5 66 21
Slide 22: Non-GAAP Measure Reconciliation
Non-GAAP Measure Reconciliation 2023 Actuals4 2024 Guidance4 Operating revenues1 $4.70 billion $4.92 - $5.02 billion Fuel and purchased power expenses1 $1.79 billion $1.85 - $1.89 billion Gross Margin $2.90 billion $3.06 - $3.13 billion Adjustments: Renewable energy and demand side management progra
Slide 23: 2024 Key Regulatory Dates
2024 Key Regulatory Dates Case/Docket # Q1 Q2 Q3 Q4 Procedural conference re: 2022 Rate Case: E-01345A-22-0144 Rates effective March 8 rehearing request April 26 Power Supply Adjustor (PSA) E-01345A-22-0014: PSA application to be 2024 PSA rate (no change from 2023) filed Nov. 27 Transmission Cost Ad
Slide 24: Consolidated Statistics
Consolidated Statistics 3 Months Ended March 31, 3 Months Ended March 31, 2024 2023 Incr (Decr) 2024 2023 Incr (Decr) TOTAL OPERATING REVENUES (Dollars in Millions) AVERAGE ELECTRIC CUSTOMERS Retail Retail Customers Residential $ 433 $ 410 23 Residential 1,246,840 1,222,905 23,935 Business 461 406 5
Slide 25: Consolidated Statistics
Consolidated Statistics 3 Months Ended March 31, 3 Months Ended March 31, 2024 2023 Incr (Decr) 2024 2023 Incr (Decr) ENERGY SOURCES (GWH) WEATHER INDICATORS - RESIDENTIAL Generation Production Actual Nuclear 2,549 2,507 42 Cooling Degree-Days - - - Coal 1,990 2,068 (79) Heating Degree-Days 476 683
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