Pinnacle West Capital Corporation · NYSE:PNW
Pinnacle West Capital — Q2 2013 Earnings Presentation
22 slides from Pinnacle West Capital's earnings presentation, Aug 2, 2013
Slide 1: Pinnacle West Capital Corporation 2nd Quarter 2013 Results
PINNACLE WEST CAPITAL CORPORATION 2ND QUARTER 2013 RESULTS August 2, 2013
Slide 2: Forward-Looking Statements
2 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: Amounts Attributable to Common Shareholders and Non-GAAP Financial Measures
3 Amounts Attributable to Common Shareholders and 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 operatin
Slide 4: CEO Agenda
4 CEO Agenda • Regulatory Update • Four Corners Transaction • Operational Performance Second Quarter 2013
Slide 5: CFO Agenda
5 CFO Agenda • 2nd Quarter Results • Arizona Economic Outlook • Credit Ratings and Financing • Earnings Guidance and Financial Outlook Second Quarter 2013
Slide 6: Consolidated EPS Comparisons
6 Consolidated EPS Comparisons 2013 vs. 2012 2nd Quarter YTD Per Share On-Going Earnings Per Share On-Going Earnings $1.50 $1.50 $1.40 $1.25 $1.18 $1.25 $1.12 $1.05 $1.00 $1.00 $0.75 $0.75 $0.50 $0.50 $0.25 $0.25 $0.00 $0.00 2013 2012 2013 2012 2nd Quarter YTD GAAP Net Income GAAP Net Income $1.18 $
Slide 7: On-Going EPS Variances
7 On-Going EPS Variances 2nd Quarter 2013 vs. 2nd Quarter 2012 Higher Gross Margin* Higher O&M* $0.12 $(0.04) Other Items $(0.02) Net Increase $0.06 = * Excludes costs, and offsetting operating revenues, associated with renewable energy (excluding AZ Sun), energy efficiency and similar regulatory pr
Slide 8: Gross Margin EPS Drivers
8 Gross Margin EPS Drivers 2nd Quarter 2013 vs. 2nd Quarter 2012 Retail Transmission Higher Fuel Revenue Increase Costs, Net* $0.06 $(0.07) 2012 Regulatory Settlement Weather $0.18 Effects $(0.05) Net Increase $0.12 = See non-GAAP reconciliation in appendix. * Lower fuel and purchased power costs in
Slide 9: Arizona Economic Indicators
9 Arizona Economic Indicators Employment & Excess Housing Year-Over- Non-Farm Job Growth Metro Phoenix Vacant Housing Year Change APS Service Territory 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)% 0 '05 '06 '07 '08 '09 '10
Slide 10: Arizona Economic Indicators
10 Arizona Economic Indicators Metro Phoenix Housing Prices & Nonresidential Vacancy Value Relative Home Prices Nonresidential Building Vacancy to Jan ‘05 Vacancy Rate 175 25% Office 150 20% Industrial 125 15% Retail 100 10% 75 5% 50 0% '05 '06 '07 '08 '09 '10 '11 '12 '13 '05 '06 '07 '08 '09 '10 '11
Slide 11: Investment-Grade Credit Ratings
11 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* A- - Outlook Moody’s Stable Stable S&P Stable Stable Fitch* Stable Stable *On May 17, 2013, Fitch Ratings upgraded APS’s and Pinna
Slide 12: 2013 On-Going EPS Guidance
12 2013 On-Going EPS Guidance As of August 2, 2013 YTD Weather $0.14 $3.55 - $3.70 $3.45 - $3.60 Prior 2013 Guidance Revised 2013 Guidance See key factors and assumptions in appendix. Second Quarter 2013
Slide 13: Consolidated Financial Outlook
13 Consolidated Financial Outlook As of August 2, 2013 Dividend Growth Goal Consolidated Earned ROE Goal APS Rate Base Growth Indicated Annual Dividend Rate at Year-End $ Billions Year-End 9.9% $10 ACC FERC $4.00 10% 8.8% $3.50 At Least 9.5% 8% $8 $3.00 $2.50 $6 6% $2.10 $2.18* $2.00 4% $4 $1.50 $1.
Slide 14: Appendix
APPENDIX ere PINNACLE WEST CAPITAL CORPORATION
Slide 15: 2013 On-Going EPS Guidance: Key Factors & Assumptions
15 2013 On-Going EPS Guidance Key Factors & Assumptions as of August 2, 2013 Prior Revised Electricity gross margin* (operating revenues, net of fuel $ 2.17 - $2.22 billion $2.21 - $2.26 billion and purchase power expenses) • Retail customer growth about 1.5% • Weather-normalized retail electricity
Slide 16: 2013 – 2015 Financial Outlook
16 2013 – 2015 Financial Outlook Key Factors & Assumptions as of August 2, 2013 Gross Margin – Customer Growth and Weather Assumption Impact Retail customer growth • Expected to average 2% annually (2013-2015) • Modestly improving Arizona and U.S. economic conditions Weather-normalized retail • Less
Slide 17: Regulatory Calendar
17 Regulatory Calendar List of Selected Dockets Docket # 2012 Retail Rate Settlement (including Four Corners rate recovery) E-01345A-11-0224 Retail Electric Competition* E-00000W-13-0135 Energy Efficiency and Integrated Resource Planning* E-00000XX-13-0214 2014 Renewable Energy Standard Implementati
Slide 18: Gross Margin Effects of Weather Variances vs. Normal
18 Gross Margin Effects of Weather Variances vs. Normal Pretax Millions 25 $25 21 16 $15 10 6 $5 3 $(5) (1) (3) $(15) (11) $(25) (22) $(35) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2011 2012 2013 $8 Million $10 Million $26 Million All periods recalculated to conform to current 10-year rolling average. Second Q
Slide 19: Quarterly Mark-to-Market on Hedge Contracts
19 Quarterly Mark-to-Market on Hedge Contracts* Pretax Millions $10 5 $5 0 0 0 0 0 $0 (2) (2) (2) (2) $(5) $(10) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2011 2012 2013 * Related to APS 10% share under Power Supply Adjustor (PSA), net of related deferrals, effective through June 30, 2012. Second Quarter 2013
Slide 20: Renewable Energy, Demand Side Management and Similar Regulatory Expenses
20 Renewable Energy, Demand Side Management and Similar Regulatory Expenses* Pretax Millions Renewable Energy Demand Side Management $50 $45 $40 $35 23 $30 18 16 $25 13 24 20 $20 19 17 16 15 $15 $10 23 19 19 19 16 12 14 12 $5 10 10 $0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2011 2012 2013 $150 Million $124 Mi
Slide 21: Non-GAAP EPS Reconciliation
21 Non-GAAP EPS Reconciliation 2nd Quarter 2013 vs. 2nd Quarter 2012 2nd Qtr 2nd Qtr Change 2013 2012 EPS as reported $ 1.18 $ 1.11 $ 0.07 Adjustments: Loss from discontinued operations - 0.01 (0.01) On-going EPS $ 1.18 $ 1.12 $ 0.06 Second Quarter 2013
Slide 22: Non-GAAP Measure Reconciliation
22 Non-GAAP Measure Reconciliation Gross Margin Three Months Ended June 30, EPS $ millions pretax, except per share amounts 2013 2012 Change Operating revenues* $ 916 $ 879 Fuel and purchased power expenses* (278) (265) Gross margin 638 614 $ 0.13 Adjustments: Renewable energy (excluding AZ Sun), en
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