Pinnacle West Reports 2024 Full-Year and Fourth-Quarter Results

Rhea-AI Summary

Pinnacle West Capital Corp. (NYSE: PNW) reported consolidated net income of $608.8 million, or $5.24 per diluted share, for full-year 2024, compared to $501.6 million ($4.41 per share) in 2023. The company reported a Q4 2024 net loss of $6.8 million (-$0.06 per share).

The improved annual results were driven by new customer rates, increased customer usage (5.7% retail sales growth), robust customer growth (2.1%), and exceptionally hot summer weather. These positive factors were partially offset by higher operations and maintenance expenses, increased depreciation, higher interest charges, and higher income taxes.

To meet growing demand, especially from commercial and industrial customers including semiconductor plants and data centers, APS plans to add 9,805 megawatts of renewable power, battery storage and natural gas between 2025-2028. For 2025, Pinnacle West estimates consolidated earnings of $4.40 to $4.60 per diluted share on a weather-normalized basis.

Positive

• Net income increased to $608.8 million ($5.24 per share) in 2024 from $501.6 million ($4.41 per share) in 2023
• Retail sales grew 5.7% year-over-year in 2024
• Customer base expanded by 2.1% in 2024
• Future sales expected to increase 4-6% annually over next three years
• Plans to add 9,805 MW of mostly carbon-free energy capacity between 2025-2028
• Palo Verde Generating Station achieved 93.7% capacity factor
• Customer satisfaction reached highest rank since 2016

Negative

• Q4 2024 net loss of $6.8 million (-$0.06 per share) compared to break-even in Q4 2023
• Higher operations and maintenance expenses impacted earnings
• Increased depreciation and amortization expenses due to plant and intangible assets
• Higher interest charges affected bottom line
• Lower transmission revenues reported

Insights

Financial Analyst

Pinnacle West's 2024 results showcase remarkable financial strength with net income reaching $608.8 million ($5.24 per share), marking a 21.4% increase from 2023's $501.6 million ($4.41 per share). This growth substantially outpaces the average utility sector earnings growth of 4-6%, signaling exceptional performance in a typically stable industry.

The company's transformational customer profile shift represents perhaps the most significant development for long-term investors. PNW's service territory is evolving from predominantly residential to a more balanced mix with substantial commercial and industrial load growth from semiconductor manufacturing and data centers. This diversification creates a more stable revenue base while driving an impressive 5.7% weather-normalized sales growth—roughly triple the industry average.

To support this growth, PNW has outlined an ambitious 9,805 MW capacity expansion plan through 2028, with over 90% being carbon-free resources. This represents one of the most aggressive capacity addition programs in the utility sector relative to company size. While supporting the 4-6% projected annual sales growth, this expansion will significantly grow the rate base, potentially driving earnings growth well above utility sector averages for years to come.

The financial implications extend beyond immediate earnings. The substantial capital deployment will likely drive rate base growth of 6-8% annually, supporting earnings growth even if regulatory lag occurs. However, investors should monitor how PNW finances this expansion, as maintaining credit metrics will be crucial. The current balance sheet appears well-positioned with investment-grade ratings, but debt-to-EBITDA ratios will require careful management.

From a competitive positioning perspective, PNW is executing a balanced approach to the energy transition that differentiates it from peers who have either moved too aggressively toward renewables (creating reliability challenges) or remained too dependent on legacy generation. The strategic addition of both renewable and natural gas resources demonstrates pragmatic planning that should resonate with Arizona regulators concerned about both clean energy and reliability.

The improved customer satisfaction metrics reaching multi-year highs also shouldn't be overlooked. Higher satisfaction scores typically correlate with more favorable regulatory outcomes, potentially reducing regulatory lag as PNW seeks recovery for its substantial investments.

Looking ahead, the $4.40-$4.60 EPS guidance for 2025 appears conservative given the growth trajectory and rate recovery mechanisms in place. The exceptional customer growth combined with improving operational metrics positions PNW to potentially exceed these projections if favorable weather patterns continue or if large customer additions accelerate beyond current projections.

• New customer rates, retail sales growth of 5.7% and an exceptionally hot summer contribute to an increase in retail revenue and full-year financial results
• Annual retail customer growth increases a robust 2.1%
• Customer satisfaction continues improvement, reaches new highs

PHOENIX--(BUSINESS WIRE)-- Pinnacle West Capital Corp. (NYSE: PNW) today reported consolidated net income attributable to common shareholders of $608.8 million, or $5.24 per diluted share, for full-year 2024. This result compares with net income of $501.6 million, or $4.41 per diluted share, in 2023.

For the quarter ended Dec. 31, 2024, Pinnacle West reported a consolidated net loss attributable to common shareholders of $6.8 million, or a loss of $0.06 per diluted share, compared with a net loss of $23,000, or $0.00 per diluted share, for the same period in 2023.

The higher 2024 full-year results reflect an increase of about $107 million, primarily as a result of the impacts of new customer rates, increased customer usage and growth, the effects of weather, and higher revenue resulting from Arizona Public Service Co.’s (APS) Lost Fixed Cost Recovery (LFCR) adjustor mechanism and a surcharge resulting from the outcome of the utility’s 2019 Rate Case appeal. These positive factors were partially offset by higher operations and maintenance expense, higher depreciation and amortization expense mostly due to increased plant and intangible assets, higher interest charges, net of AFUDC, higher income taxes and lower transmission revenues.

“Our employees once again did an excellent job running and maintaining the electric grid and ensuring that our 1.4 million customers received the reliable electrical service they expect from us,” said Pinnacle West Chairman, President and CEO Jeff Guldner. “Our strong year-end earnings not only reflect this outstanding operational performance, but the results are consistent with a fast-growing service territory and us making the substantial infrastructure investments needed to meet the energy requirements of all our customers, now and in the future.”

Reliability for a Growing State

Reliability remains at the core of the company’s customer service and drives plans to continue providing a balanced energy portfolio delivering power at reasonable rates.

“Our customer base, which for decades leaned heavily residential, is now more diversified than ever before,” APS President Ted Geisler said. “A dramatic increase in commercial and industrial customers in our service territory – including new semiconductor manufacturing plants and expanding data center operations – is leading to incredible economic growth and triggering a historic wave of demand for electricity in our state.”

APS, the company’s principal subsidiary, experienced customer growth of 2.1% in 2024 and anticipates projected average annual growth in the range of 1.5% to 2.5% through 2027. Not surprisingly, these changes are driving a significant increase in energy consumption. APS also experienced weather-normalized, year-over-year retail electricity sales growth of 5.7% in 2024. Future sales are expected to increase between 4% and 6% annually over the next three years due in large part to the expected additions of several large data centers and new large manufacturing facilities.

To prioritize reliability and meet requirements of this substantial growth, APS expects to add 9,805 megawatts (MW) of renewable power, battery storage and natural gas to the grid between 2025 and 2028 – more than 90% of which will be carbon-free. Some expansion highlights include:

• Power purchase agreements that are expected to add 3,321 MW of solar power along with 168 MW from the APS-owned Ironwood Solar Plant, currently under construction in Yuma County.
• At the Agave Solar Plant in Maricopa County, construction is under way on 150 MW of battery storage that will deliver solar energy to customers after sunset.
• Power purchase agreements for an anticipated 5,087 MW of battery energy storage that grid operators can release during evening hours when customer demand is greatest.
• 500 MW of additional wind power in northern Arizona’s Navajo County; and
• Expansion of the company’s existing Sundance and Redhawk natural gas-fired power plants. These additions are expected to deliver a combined 487 MW, providing much-needed energy during peak consumption hours. Just as important, they provide a critical complement to the large quantities of solar and battery energy storage we’re adding to our system.

Additionally, excellent performance at the company’s generating facilities continues to benefit customers and the company’s bottom line. For the 16th consecutive year – and 20th overall – Palo Verde Generating Station's three nuclear units exceeded 30 million MWh of net generation and achieved a capacity factor of 93.7%. Importantly, the plant remains a cornerstone of APS’s aspirational goal to deliver 100% clean, carbon-free energy by 2050 and a nearer-term target to achieve a resource mix that is 65% clean by 2030.

“Our employees remain focused on creating value for customers and shareholders, including consistently working to minimize our costs, while maintaining reliable electric service and improving customer satisfaction. As a result, we are well-positioned to have a solid 2025,” Geisler concluded.

Staying Focused on Customer Satisfaction

In furtherance of a customer-centric culture, APS’s focus remains on its customers and the communities it serves. This past year, the company rolled out a newly designed customer bill with the aim of increasing personalization and helping customers better understand their energy use and find ways to save. The bill was developed with direct input from customers.

APS also increased its energy support and crisis bill assistance; maintained a summer moratorium on disconnects for past-due bills; assisted customers with payment arrangements; and partnered with more than 100 local non-profit and community agencies to connect the state’s most vulnerable populations with helpful resources.

These and other company-wide efforts helped provide a more frictionless customer experience that was recognized by APS customers, as measured by J.D. Power. For 2024, APS ranked at the top of the second quartile for large investor-owned utilities for both business and residential customers, with the residential results being APS’s highest rank and placement since 2016. In fact, this past year, residential customers ranked APS at or near the top of its peer set for Phone Customer Care, Power Quality & Reliability, Billing & Payment and Corporate Citizenship.

Financial Outlook

For 2025, the Company continues to estimate its consolidated earnings will be within a range of $4.40 to $4.60 per diluted share on a weather-normalized basis. Key factors and assumptions underlying this outlook can be found in the year-end/fourth-quarter 2024 earnings presentation slides at pinnaclewest.com/investors.

Conference Call and Webcast

Pinnacle West invites interested parties to listen to the live webcast of management’s conference call to discuss the Company’s financial results and recent developments, and to provide an update on the company’s longer-term financial outlook, at 11 a.m. ET (9 a.m. Arizona time) today, Feb. 25. The webcast can be accessed at pinnaclewest.com/presentations and will be available for replay on the website for 30 days. To access the live conference call by telephone, dial (888) 506-0062 or (973) 528-0011 for international callers and enter participant access code 685021. A replay of the call also will be available at pinnaclewest.com/presentations or by telephone until 11:59 p.m. ET, Tuesday, March 4, 2025, by calling (877) 481-4010 in the U.S. and Canada or (919) 882-2331 internationally and entering replay passcode 51904.

General Information

Pinnacle West Capital Corp., an energy holding company based in Phoenix, has consolidated assets of more than $26 billion, about 6,500 megawatts of generating capacity and approximately 6,400 employees in Arizona and New Mexico. Through its principal subsidiary, Arizona Public Service, the company provides retail electricity service to about 1.4 million Arizona homes and businesses. For more information about Pinnacle West, visit the company’s website at pinnaclewest.com.

Dollar amounts in this news release are after income taxes. Earnings per share amounts are based on average diluted common shares outstanding. For more information on Pinnacle West’s operating statistics and earnings, please visit pinnaclewest.com/investors.

FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements based on current expectations. These forward-looking statements are often identified by words such as "estimate," "predict," "may," "believe," "plan," "expect," "require," "intend," "assume," "project," "anticipate," "goal," "seek," "strategy," "likely," "should," "will," "could," and similar words. Because actual results may differ materially from expectations, we caution readers not to place undue reliance on these statements. A number of factors could cause future results to differ materially from historical results, or from outcomes currently expected or sought by Pinnacle West or APS. These factors include, but are not limited to:

• uncertainties associated with the current and future economic environment, including economic growth rates, labor market conditions, inflation, supply chain delays, increased expenses, volatile capital markets, or other unpredictable effects;
• current and future economic conditions in Arizona, such as the housing market and overall business and regulatory environment;
• our ability to manage capital expenditures and operations and maintenance costs while maintaining reliability and customer service levels;
• the direct or indirect effect on our facilities or business from cybersecurity threats or intrusions, data security breaches, terrorist attack, physical attack, severe storms, or other catastrophic events, such as fires, explosions, pandemic health events or similar occurrences;
• variations in demand for electricity, including those due to weather, seasonality (including large increases in ambient temperatures), the general economy or social conditions, customer, and sales growth (or decline), the effects of energy conservation measures and distributed generation, and technological advancements;
• the potential effects of climate change on our electric system, including as a result of weather extremes such as prolonged drought and high temperature variations in the area where APS conducts its business;
• power plant and transmission system performance and outages;
• competition in retail and wholesale power markets;
• regulatory and judicial decisions, developments, and proceedings;
• new legislation, ballot initiatives and regulation or interpretations of existing legislation or regulations, including those relating to environmental requirements, regulatory and energy policy, nuclear plant operations and potential deregulation of retail electric markets;
• fuel and water supply availability;
• our ability to achieve timely and adequate rate recovery of our costs through our rates and adjustor recovery mechanisms, including returns on and of debt and equity capital investment;
• the ability of APS to meet renewable energy and energy efficiency mandates and recover related costs;
• the ability of APS to achieve its clean energy goals (including a goal by 2050 of 100% clean, carbon-free electricity) and, if these goals are achieved, the impact of such achievement on APS, its customers, and its business, financial condition, and results of operations;
• risks inherent in the operation of nuclear facilities, including spent fuel disposal uncertainty;
• the development of new technologies which may affect electric sales or delivery, including as a result of delays in the development and application of new technologies;
• the cost of debt, including increased cost as a result of rising interest rates, and equity capital and our ability to access capital markets when required;
• environmental, economic, and other concerns surrounding coal-fired generation, including regulation of greenhouse gas emissions;
• volatile fuel and purchased power costs;
• the investment performance of the assets of our nuclear decommissioning trust, captive insurance cell, pension, and other postretirement benefit plans and the resulting impact on future funding requirements;
• the liquidity of wholesale power markets and the use of derivative contracts in our business;
• potential shortfalls in insurance coverage;
• new accounting requirements or new interpretations of existing requirements;
• generation, transmission and distribution facilities and system conditions and operating costs;
• our ability to meet the anticipated future need for additional generation and associated transmission facilities in our region;
• the willingness or ability of our counterparties, power plant participants and power plant landowners to meet contractual or other obligations or extend the rights for continued power plant operations; and
• restrictions on dividends or other provisions in our credit agreements and Arizona Corporation Commission orders.

These and other factors are discussed in the most recent Pinnacle West/APS Form 10-K and 10-Q along with other public filings with the Securities and Exchange Commission, which readers should review carefully before placing any reliance on our financial statements or disclosures. Neither Pinnacle West nor APS assumes any obligation to update these statements, even if our internal estimates change, except as required by law.

PINNACLE WEST CAPITAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(dollars and shares in thousands, except per share amounts)
	THREE MONTHS ENDED								TWELVE MONTHS ENDED
	DECEMBER 31,								DECEMBER 31,
		2024				2023				2024				2023
Operating Revenues	$	1,095,408			$	991,574			$	5,124,915			$	4,695,991
Operating Expenses
Fuel and purchased power		396,148				375,879				1,822,566				1,792,657
Operations and maintenance		327,251				281,388				1,165,156				1,058,725
Depreciation and amortization		230,585				203,598				895,346				794,043
Taxes other than income taxes		56,803				56,064				227,395				224,013
Other expenses		83				265				2,389				1,913
Total		1,010,870				917,194				4,112,852				3,871,351
Operating Income		84,538				74,380				1,012,063				824,640
Other Income (Deductions)
Allowance for equity funds used during construction		9,830				13,047				38,620				53,118
Pension and other postretirement non-service credits - net		12,237				10,135				48,870				40,648
Other income		5,380				5,242				48,614				33,666
Other expense		(19,556	)			(9,140	)			(34,136	)			(25,056	)
Total		7,891				19,284				101,968				102,376
Interest Expense
Interest charges		107,152				96,027				425,742				374,887
Allowance for borrowed funds used during construction		(12,192	)			(9,433	)			(48,270	)			(43,564	)
Total		94,960				86,594				377,472				331,323
Income (Loss) Before Income Taxes		(2,531	)			7,070				736,559				595,693
Income Taxes		(10	)			2,787				110,529				76,912
Net Income (Loss)		(2,521	)			4,283				626,030				518,781
Less: Net income attributable to noncontrolling interests		4,306				4,306				17,224				17,224
Net Income (Loss) Attributable To Common Shareholders	$	(6,827	)		$	(23	)		$	608,806			$	501,557
Weighted-Average Common Shares Outstanding - Basic		114,337				113,534				113,846				113,442
Weighted-Average Common Shares Outstanding - Diluted		114,337				113,534				116,232				113,804
Earnings Per Weighted-Average Common Share Outstanding
Net income (loss) attributable to common shareholders - basic	$	(0.06	)		$	-			$	5.35			$	4.42
Net income (loss) attributable to common shareholders - diluted	$	(0.06	)		$	-			$	5.24			$	4.41

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20250225561594/en/

Media Contact: Alan Bunnell (602) 250-3376

Analyst Contact: Amanda Ho (602) 250-3334

Website: pinnaclewest.com

Source: Pinnacle West Capital Corp.

FAQ

What was Pinnacle West's (PNW) earnings per share for full-year 2024?

Pinnacle West reported earnings of $5.24 per diluted share for full-year 2024, up from $4.41 per share in 2023.

How much did Pinnacle West's (PNW) retail sales grow in 2024?

PNW reported weather-normalized, year-over-year retail electricity sales growth of 5.7% in 2024.

What is Pinnacle West's (PNW) earnings guidance for 2025?

PNW estimates 2025 consolidated earnings will be within a range of $4.40 to $4.60 per diluted share on a weather-normalized basis.

How many megawatts of new capacity is Pinnacle West (PNW) planning to add between 2025-2028?

PNW plans to add 9,805 megawatts of renewable power, battery storage and natural gas to the grid between 2025 and 2028, with more than 90% being carbon-free.

What was Pinnacle West's (PNW) customer growth rate in 2024?

PNW reported customer growth of 2.1% in 2024 and anticipates projected average annual growth of 1.5% to 2.5% through 2027.

What factors contributed to Pinnacle West's (PNW) improved financial results in 2024?

PNW's improved results were driven by new customer rates, increased customer usage and growth, hot summer weather, and higher revenue from the LFCR adjustor mechanism and a surcharge from the 2019 Rate Case appeal.

What were the main factors that negatively affected Pinnacle West's (PNW) 2024 earnings?

Higher operations and maintenance expenses, increased depreciation and amortization, higher interest charges, higher income taxes, and lower transmission revenues partially offset PNW's positive earnings factors.