Pinnacle West Capital Corporation (PNW) reported ongoing earnings of 7 cents per share, soundly beating the break-even Zacks Consensus Estimate and year-ago loss of 25 cents. On a reported basis, the company has reported a loss of 6 cents per share compared to a loss of $1.55 per share in the year-ago quarter.

Operational Results

Pinnacle West clocked operating revenues of $633.6 million in the reported quarter, up 1.2%, compared to $625.9 million in the year-ago quarter. Of this Regulated electricity segment grew 1.5% year-over-year to $611.4 million while Other revenues grew 50.9% to $12.8 million. The upside was partially offset by the Real Estate segment, which decreased 36.5% to $9.4 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, decreased 1.7% year-over-year.

Pinnacle West, however, had to digest increased operations and maintenance expenses. This increase was primarily related to higher labor expenses, offset in part by lower generation costs on account of the timing of fossil-plant planned maintenance.

Earnings in the reported quarter were also affected by a net decrease in weather-normalized kilowatt-hour sales. However, this decrease was offset by the effects of more favorable weather compared to the year-ago quarter. The sales decrease primarily related to the impacts of energy efficiency programs and lower electricity consumption by commercial and industrial customers due to the current economic slowdown.

Pinnacle West registered a quarterly consolidated net loss of $6 million compared to a net loss of $156.5 million for the year-ago quarter.

Financial Condition

Pinnacle West ended the quarter with cash and cash equivalents of $1.6 million and long-term debt of $3.2 billion, compared to $18.5 million of cash and $3.2 billion of long-term debt in the year-ago period. In the reported quarter the company used $13.7 million of cash for operating activities and deployed $202.6 million towards capital expenditure, $4.2 million towards long-term debt repayments and $51.4 million towards dividends.


For fiscal 2010, Pinnacle West projected ongoing earnings per share in the range of $2.95 – $3.10. This is in line with the Zacks Consensus Estimate of $2.98 for fiscal 2010.
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