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Pinnacle West Capital Corp - $PNW - Earnings Analysis: Continued customer and sales growth.

By sagebytes in Energy —

Business Model

Pinnacle West Capital Corp. (PNW) generates revenue primarily through its subsidiary, Arizona Public Service (APS), by providing retail electricity service to approximately 1.4 million Arizona homes and businesses.

Revenue Sources

  • Retail Residential: Revenue from electricity sales to residential customers.
  • Retail Business: Revenue from electricity sales to commercial and industrial customers.
  • Sales for Resale (Wholesale): Revenue from selling electricity to other utilities or entities.
  • Transmission for Others: Revenue from providing transmission services to other entities.

Income Statement Analysis

  • Operating Revenues increased by 10.47% in Q4 2024 compared to Q4 2023, driven by increased customer rates, increased customer usage and growth, and the effects of weather.
  • Operating Expenses also increased, particularly in Operations and Maintenance (up 16.30%) and Depreciation and Amortization (up 13.26%).
  • Net Income Attributable to Common Shareholders was a loss of $6.8 million in Q4 2024, compared to a loss of $23 thousand in Q4 2023.

Capital Allocation

The company plans to invest $9.66B from 2024-2027 in Generation, Transmission and Distribution. Company strategy includes a mix of both debt and equity and is focused on maintaining a solid balance sheet and stable credit ratings.

Management Commentary

We met or exceeded nearly every target we set for ourselves, including delivering strong service reliability to our customers.

We're truly grateful for your years of service to Pinnacle West and APS, and I'm personally grateful for the trust and confidence you've placed in me during these years.

The constructive rate case outcome as well as strong sales and usage growth throughout the year were the largest positive drivers of this increase.

Overall Sentiment: Overall sentiment is positive, with a focus on growth, reliability, and customer satisfaction.

Disclaimer: This report is for informational purposes only and not investment advice. The analysis is based on limited information and subject to change. Investing in securities involves risks, including potential loss of principal. Past performance doesn't guarantee future results. Always conduct your own research, understand the risks, and consult a financial professional before making investment decisions.