Pinnacle West Capital Corp. (PNW) reported a fourth-quarter net loss of 16 cents per share compared to the Zacks Consensus Estimate of a net loss of 11 cents and net loss of 8 cents posted last year. For the full year 2009, the company reported earnings of $2.33 per share, modestly above the Zacks Consensus Estimate of $2.31 and below the year ago earnings of $2.36.
Earnings for both the periods were impacted by higher operations and maintenance costs, lower marketing and trading contributions and declines in kilowatt-hour sales. These were offset partially by increased revenues from retail rate increases and favorable commodity prices.
Arizona Public Service Co. (APS), the company’s principal subsidiary, reported net loss of $8.9 million in the fourth quarter compared to loss of $11.9 million in the year-ago quarter. For the full year, APS reported on-going earnings of $251.2 million compared with $241.0 million in 2008.
Pinnacle West’s real estate segment reported a net loss of $14.3 million in the fourth quarter compared with a net loss of $33.9 million in the prior-year period. The company decided in early 2009 to restructure its real estate subsidiary, SunCor Development Co., by selling the substantial majority of its assets. This effort is well underway and additional sales are expected.
Outlook
For 2010, Pinnacle West projected on-going earnings in the range of $2.95 – $3.10 a share. Furthermore, the company expects the retail customer growth of about 1% in 2010. It expects total electricity gross margin in the $2.04 – $2.09 billion range and operating expenses of about $1.30 – $1.33 billion. For 2010, the company expects interest expense in the range of $210 – $220 million, with effective tax rate of about 38%.
Pinnacle West estimates its 2011 earnings to be within the guidance range provided for 2010 earnings, with some opportunity for modestly exceeding that range.
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