Pinnacle West Capital Corp. (PNW) reported ongoing earnings of 83 cents per share, falling 4 cents short of the Zacks Consensus Estimate of 87 cents. However, earnings in the quarter registered an 11% growth compared to the year-ago earnings of 75 cents. Results in the quarter were helped by higher revenues from retail electricity rate increases, lower operations and maintenance costs and higher retail electricity sales.
On a reported basis, the company has posted a loss of $1.07 per share compared to a loss of 68 cents in the year-ago quarter.
Operational Results
Pinnacle West clocked operating revenues of $820.6 million in the reported quarter, a marginal increase of 0.2% compared to $818.6 million in the year-ago quarter. However, this was below the Zacks Consensus Estimate of $850 million.
During the quarter, revenues at the regulated electricity segment declined 1.6% year-over-year to $799.4 million while Other revenues grew 247% to $21.2 million.
In the reported quarter, revenues were helped by retail base-rate hikes and higher line extension revenue, both implemented in January 2010. Also contributing to the rise was a retail transmission rate increase implemented in the third quarter of 2009. Total retail electricity sales, excluding the effects of weather, increased 0.6% year over year.
Pinnacle West also showed a marginal improvement in operations and maintenance expenses (down 0.2% year over year) in the quarter.
Earnings in the reported quarter were affected by a net decrease in weather-normalized kilowatt-hour sales. The decrease was due to the effect of an unusually mild weather compared to the year-ago quarter. In the quarter, there were 381 residential cooling-degree days, 17% less than the year-ago quarter, which was near normal.
Pinnacle West reported quarterly consolidated net ongoing earnings of $89.8 million compared to $76.4 million for the year-ago quarter.
Financial Condition
Pinnacle West ended the quarter with cash and cash equivalents of $50.5 million and long-term debt of $3.3 billion, compared to $145.4 million of cash and $3.5 billion of long-term debt as of Dec 31, 2010.
In the reported quarter the company generated $201.4 million of cash from operations and deployed $378.5 million towards capital expenditure, $15.2 million towards long-term debt repayments and $106.5 million towards dividends.
Outlook
For fiscal 2010, Pinnacle West reiterated its ongoing earnings per share guidance range of $2.95 to $3.10, in line with the Zacks Consensus Estimate of $3.02. The company also continues to estimate its 2011 consolidated ongoing earnings within the 2010 guidance range with some possibility of modestly exceeding that range.
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