Pinnacle West Capital Corp. (NYSE: PNW) today reported consolidated net income for the quarter ended September 30, 2008, of $151.6 million, or $1.50 per diluted share of common stock. This result compares with $208.7 million, or $2.07 per diluted share, for the same period in 2007.
Rising costs incurred by Arizona Public Service (APS) to operate, maintain and expand its electric system and summertime temperatures that were closer to historical averages (versus last year’s record temperatures) drove the lower results. Higher fuel costs; the absence of tax credits recorded in 2007 and not repeated in the 2008 quarter; and decreased earnings from Pinnacle West’s real estate operations also contributed to the quarterly decline.
Pinnacle West Chairman Bill Post said the lower results were in line with expectations given the milder weather compared with last year’s third quarter; and the fact that APS’ current retail prices do not cover the utility’s true costs of doing business.
“Despite the current economic slowdown, we still are experiencing customer growth in our service territory,” he said. “To meet Arizona’s current and future electricity demand, we must continue working with our regulators to establish a comprehensive plan for Arizona’s energy future.”
Post said that plan should include significant additional investments in new infrastructure, new technology, energy efficiency and more sustainable resources. “To accomplish this plan, however, we need a financially strong utility that can finance needed infrastructure at the lowest possible cost while providing high customer service and reliability. This will require timely and supportive regulatory treatment.”
For the third quarter of 2008, APS reported lower net income of $159.8 million, compared with net income of $204.3 million for the same period a year ago. The Company and its customers benefited from strong performance at the Palo Verde Nuclear Generating Station, which operated at 97 percent capacity and generated its highest-ever summer production. Palo Verde’s three units also operated for 100 consecutive days this summer. Additionally, the plant’s solid operation helped minimize the need for more expensive natural gas generation and purchased power.
SunCor Development Co, Pinnacle West’s real estate subsidiary, reported a net loss of $6.1 million for the current-year third quarter, compared with net income of $6.0 million in the 2007 quarter. The decrease reflects the distressed national real estate markets.
For more information on Pinnacle West’s operating statistics and earnings, please visit www.pinnaclewest.com/financials.
Pinnacle West invites interested parties to listen to the live web cast of management’s conference call to discuss the Company’s 2008 third-quarter earnings and recent developments at noon (ET) today, November 4. The web cast can be accessed at www.pinnaclewest.com/presentations and will be available for replay on the web site for 30 days. To access the live conference call by telephone, dial (877) 356-3961 and enter Conference ID 68083352. A replay of the call also will be available until 11:55 p.m. (ET), Tuesday, November 11, 2008, by calling (800) 642-1687 in the U.S. and Canada or (706) 645-9291 internationally and entering the same Conference ID number as above.
Pinnacle West is a Phoenix-based company with consolidated assets of about $11.5 billion. Through its subsidiaries, the Company generates, sells and delivers electricity and sells energy-related products and services to retail and wholesale customers in the western United States. It also develops residential, commercial, and industrial real estate projects.
|PINNACLE WEST CAPITAL CORPORATION|
|CONDENSED CONSOLIDATED STATEMENTS OF INCOME|
(in thousands, except per share amounts)
|THREE MONTHS ENDED||NINE MONTHS ENDED|
|SEPTEMBER 30,||SEPTEMBER 30,|
|Regulated electricity segment||$||1,040,348||$||1,043,723||$||2,492,627||$||2,291,067|
|Real estate segment||18,965||46,711||103,587||171,662|
|Marketing and trading||11,737||99,203||119,868||264,311|
|Regulated electricity segment fuel and purchased power||419,979||407,242||1,016,918||880,932|
|Real estate segment operations||28,941||46,075||118,906||153,328|
|Marketing and trading fuel and purchased power||9,503||93,860||106,270||226,337|
|Operations and maintenance||212,327||178,419||601,360||527,307|
|Depreciation and amortization||98,568||94,730||291,959||276,584|
|Taxes other than income taxes||28,423||34,940||94,826||104,416|
|Allowance for equity funds used during construction||4,673||5,235||16,211||14,874|
|Income From Continuing Operations Before Income Taxes||226,473||293,773||352,757||439,228|
|Income From Continuing Operations||150,503||201,718||260,268||297,419|
|Income From Discontinued Operations|
|Net of Income Taxes||1,083||6,990||20,707||6,813|
|Weighted-Average Common Shares Outstanding - Basic||100,750||100,324||100,642||100,200|
|Weighted-Average Common Shares Outstanding - Diluted||101,018||100,829||100,911||100,767|
|Earnings Per Weighted-Average Common Share Outstanding|
|Income from continuing operations - basic||$||1.49||$||2.01||$||2.59||$||2.97|
|Net income - basic||$||1.50||$||2.08||$||2.79||$||3.04|
|Income from continuing operations - diluted||$||1.49||$||2.00||$||2.58||$||2.95|
|Net income - diluted||$||1.50||$||2.07||$||2.78||$||3.02|
Alan Bunnell, 602-250-3376
Rebecca Hickman, 602-250-5668
Lisa Malagon, 602-250-5671