Pinnacle West Capital Corporation · NYSE:PNW
Pinnacle West Capital — Q1 2016 Earnings Presentation
17 slides from Pinnacle West Capital's earnings presentation, Apr 29, 2016
Slide 1: First Quarter 2016 Results
FIRST QUARTER 2016 RESULTS April 29, 2016 First Quarter 2016
Slide 2: Forward Looking Statements and Non-GAAP Financial Measures
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 identified by words such as
Slide 3: On-Going EPS Variances: 1st Quarter 2016 vs. 1st Quarter 2015
ON-GOING EPS VARIANCES 1ST QUARTER 2016 VS. 1ST QUARTER 2015 Gross Margin(1) O&M (1) $0.07 $(0.17) $0.14 Gross Margin Weather $0.02 Transmission $0.02 D&A Other, net kWh Sales $0.01 $0.01 $(0.01) $0.04 AZ Sun $0.01 Other, net $0.01 1Q 2015 1Q 2016 (1) Excludes costs, and offsetting operating revenue
Slide 4: Economic Indicators
ECONOMIC Arizona and Metro Phoenix remain attractive places to live and do INDICATORS business Job Growth (Total Nonfarm) – Metro Phoenix YoY Change Construction, business services, 5.0% financial services and healthcare adding jobs at a rate above 4% 2.5% Metro Phoenix growth rate 3rd fastest among
Slide 5: 2016 On-Going EPS Guidance
2016 ON-GOING Key Factors & Assumptions as of EPS GUIDANCE April 29, 2016 2016 Electricity gross margin* (operating revenues, net of fuel and $2.34 – $2.39 billion purchased power expenses) • Retail customer growth about 1.5-2.5% • Weather-normalized retail electricity sales volume about 0-1.0% to p
Slide 6: Appendix
APPENDIX First Quarter 2016
Slide 7: 2016 Key Dates
2016 KEY DATES ACC Key Dates Docket # Q1 Q2 Q3 Q4 Key Recurring Regulatory Filings E-01345A- Lost Fixed Cost Recovery Jan 15 11-0224 E-01345A- Transmission Cost Adjustor May 15 11-0224 Renewable Energy Surcharge TBD Jul 1 E-01345A- APS Rate Case Jun 1: Initial filing TBD TBD 16-0036 Oct 1: File E-00
Slide 8: Arizona Electric Utilities General Rate Cases
ARIZONA ELECTRIC UTILITIES GENERAL RATE CASES UNS Electric Tucson Electric Power Company Docket # E-04204A-15-0142 Docket # E-01933A-15-0322 Application filed May 5, 2015 Application filed Sep 4, 2015 Direct testimony - ex rate design, cost of service (Nov 6, 2015) Direct testimony – ex rate design
Slide 9: Financial Outlook
Key Factors & Assumptions as of FINANCIAL OUTLOOK April 29, 2016 Gross Margin – Customer Growth and Weather (2016-2018) Assumption Impact Retail customer growth • Expected to average about 2-3% annually • Modestly improving Arizona and U.S. economic conditions Weather-normalized retail electricity •
Slide 10: Rate Base
APS’s revenues come from a RATE BASE regulated retail rate base and meaningful transmission business APS Rate Base Growth Total Approved Rate Base Year-End ACC FERC Generation & Distribution Transmission 17% $1.8 83% $1.5 $1.3 Most Recent Rate Decisions ACC FERC $7.4 Rate Effective Date 7/1/2012 6/1
Slide 11: Balance Sheet Strength
BALANCE SHEET STRENGTH Debt Maturity Schedule Credit Ratings ($Millions) • A- rating or better at S&P, Moody’s and Fitch $600 2016 Major Financing Activities $500 • $100 million term loan closed April 2016 • Currently expect up to $550 million of long-term $400 debt, including: – Issuance to refinan
Slide 12: Operations & Maintenance Outlook
OPERATIONS & Goal is to keep O&M per kWh flat, MAINTENANCE adjusted for planned outages OUTLOOK ($ Millions) $97 $137 $103 $150 $124 $96 $825 - $805 $845 $761 $788 $772 $754 2011 2012 2013 2014 2015 2016E PNW Consolidated RES/DSM* *Renewable energy and demand side management expenses are offset by a
Slide 13: Capital Expenditures
CAPITAL Capital expenditures are funded primarily through internally EXPENDITURES generated cash flow $1,285 ($ Millions) $1,205 $84 Other $88 $1,124 $1,057 $88 Distribution $85 $354 $364 Transmission $382 $340 $200 $114 Renewable $1 Generation $110 $150 $201 $194 $1 $90 Environmental1 $58 $232 $44
Slide 14: Residential PV Applications
Residential DG (MW) Annual Additions RESIDENTIAL PV 44 51 57 74 APPLICATIONS* 15 19 23 2009 2011 2013 2015 1466 1433 1500 1309 1306 1261 1207 1219 1188 1250 1179 1097 1000 902 939 845 871 837 785 699 730 710 750 641 610 499 523 442 500 357 339 249 250 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov De
Slide 15: Gross Margin Effects of Weather
GROSS MARGIN EFFECTS OF WEATHER VARIANCES VS. NORMAL Pretax Millions $5 5 2 $0 (6) (5) (8) $(5) $(10) $(15) $(20) Q1 Q2 Q3 Q4 Q1 2015 2016 $(7) Million $(5) Million All periods recalculated to current 10-year rolling average (2005-2014) 15 First Quarter 2016
Slide 16: Renewable Energy and Demand Side Management Expenses
RENEWABLE ENERGY AND DEMAND SIDE MANAGEMENT EXPENSES* Pretax Millions Renewable Energy Demand Side Management $40 $30 $20 18 11 12 14 12 $10 12 11 11 7 8 $0 Q1 Q2 Q3 Q4 Q1 2015 2016 $96 Million $20 Million * O&M expenses related to renewable energy and demand side management programs are partially o
Slide 17: Non-GAAP Measure Reconciliation
NON-GAAP MEASURE RECONCILIATION GROSS MARGIN Three Months Ended March 31, EPS $ millions pretax, except per share amounts 2016 2015 Impact Operating revenues* $ 677 $ 671 Fuel and purchased power expenses* (221) (223) Gross margin 456 448 $ 0.04 Adjustments: Renewable energy (excluding AZ Sun), dema
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