PNW - Earnings call transcript Q2 2024 | Pinnacle West Capital Corporation

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Operator

Good morning, everyone, and welcome to the Pinnacle West Capital Corporation 2024 Second Quarter Earnings Conference Call. [Operator Instructions] It is now my pleasure to turn the floor over to your host, Amanda Ho. Ma'am, the floor is yours.

Amanda Ho

Thank you, Matthew. I would like to thank everyone for participating in this conference call and webcast to review our second quarter 2024 earnings, recent developments and operating performance.

be Andrew and Cooper. will and Jeff today CFO, our speakers our CEO, Chairman Guldner; Our President, also Ted Vice and Vice President APS of Policy, Geisler, President; Operations; Jose Jacob Esparza with us. here Tetlow, Executive Public are Senior

on comments details forward-looking our to we expectations, slides materially related earnings current using available release few be statements Relations Investor Today's you. on The and First, I our results a and website, actual with contain may need expectations. are cover from based our that slides will along and information. with differ

this in also A Our forward-looking the Please second cause quarter well those telephone available and of XXXX Form language on risks cautionary to which replay to XX-Q call as for available could will from filed for and through our document sections, X, will website results differ It risk be that materially factors morning. our MD&A actual days. disclosures. that be shortly as XXXX. the by refer August statements, XX contained identify next this uncertainties

the over I turn call now to Jeff. will

Jeffrey Guldner

Great. Thanks, joining all you today. Amanda, and us thank for

sales of impacted quarter to implementation Second number and new growth. increased of customers positively a the weather things financials by were

second discusses regulatory on provide recent Andrew developments. quarter operational details Before of a the our and I'll results, few updates

with Starting our operations.

excel continues As reliable we progress through service the proud to in delivering to our summer our team season, say really to customers.

Weather which of year over second average during quarter on temperature the hottest high same National average in above over average was is the fact, with XX-year According June and XX degrees temperature record XXX degrees. to of average. we overnight the experienced X.X% just Phoenix an the last In of historical Service, high Fahrenheit, Phoenix X% XX degrees the period and in increase an an the temperature

quarter increased -- in number XX-year than of XX% year historical measure and a higher degree second residential same averages. the of this the that's weather effects cooling to residential degree cooling the period The a year's of ago sorry, XX% days days, utility was compared

efforts Our to our unrelenting an our customers persistent resource have team our our I allowed for want customers field service do operators exceptional sure procurement this reliable robust dedicated teams summer this planning, and exceptional job and through us season. really service recognize provide to And to to during heat. our continue making have doing

systems organizations state's weather support heat to With experienced continue through support each as most it as communities partnered assist the collaboration we summer, programs. populations, remains relief important ever and a vulnerable the that to our aid local community this We extreme with we with includes cooling of Senior months and the emergency emergency the repair, and the we of summer AC foundation in protection Dosedel addiction partnership with and shelter for program across Salvation offer St. [ Living, an hydration during replacement Army's stations where hot ]. Arizona network

$X,XXX offer bill. a assistance their with of program, also with programs who include provides customers for variety those XX% struggling a up Sport Energy monthly bill Project to in annually to These income experienced hardships bill annually is financial to unexpected Share, emergency up customers crisis provides assistance. and up $XXX qualified Army bill Salvation assistance We resources which income to on the that providing service, a discount limited are limited administer their which who

and energy. We affordable advance serve with plan in reliable years customers to

and over meet resource extreme APS's comes keep strength and increase, flexible Talavera like Station heat. ] the demand of long and like gas the when and Our resilience demand like on share of diverse from temperatures energy natural using provided homes resources to secure and cool energy a to caused to storage businesses stretches Nuclear rely by wind things planners solar [ Generating our energy mix

us of and RFP megawatts part projects between over suppose. affordable XXXX those We've We're on sacrificing and we've to all-source customers reflected and the plan. still the clean in need of and from agreements provide be resulting on are XXXX capital to future. always vigorous additional approach and towards our continuing those reliable projects, when customers multiple already negotiations above are And includes resources, all and of most energy as and to while XXX that our reliably to in forward the our online announcing resources, of our the recently our future, taken we planning, service executed our we APS-owned combination best build XXXX, in seeking look not serve affordability

first remarkable made We've without to moving progress few hard-working commitment from first, would Additionally, to year, we business say of the placed to can XXXX that results quartile happened past proud first remain of focused progress survey Power I share through and providing fourth the I'm the compared company. J.D. have and the us service. the quarters years customer have over quartile the across and X in our exceptional on residential peers. absolutely that the dedication employees not

each Turning continued July to The update. And progress unanimously of and workshops the the future to and staff stated issue Commission we'll with additional for meeting, in this Commission lag hold the at Arizona. and with workshops workshop work lag regulatory stakeholders X. experience regulatory to October formula regulatory focused reducing commission next and docket that has on of in scheduled voted to the important years on these will the regulatory experts the be sharing Commission continue test rates open with is their structures

provide to the our the half relationships through for first continuing service of the And balance progress customer priorities. executing solid and enhancing made improving of year. experience, to customers look on regulatory stakeholder our through year, exceptional this We've our we forward

the I'll to call that, turn Andrew. with over And

Andrew Cooper

compared we I everyone results share per this quarter, released second again of details $X.XX joining us to to additional earned Thank last quarter financial morning, those our some year. and drivers you, quarter This today. for the provide and Jeff, increase on quarter. review thanks for per results. key second XXXX We an $X.XX will share

main increase. quarter-over-quarter the New customer drivers were rates, for sales weather growth and continued the robust

case depreciation were expense and rate year. tax income timing the the drivers interest other primary were appeal negative positive amortization last XXXX for outcome, drivers and O&M savings compared expense to quarter. Higher The and

As benefit Jeff contributed $X.XX from on June year. time this last the hottest experienced weather versus record, which mentioned, to we a

the XXXX. As we a saw June reminder, last since mildest year,

to service sales during Our data primarily large to continued $X.XX its ramping growth for quarter, manufacturing last X.X% be the This XX% compared quarter the quarter. year. second at second weather-normalized growth is increasing due the territory. of in our center strong total robust sales providing with customers C&I and continued a to benefit

to sales growth extra guidance which this closely factor growth to of changing sales our X% aligned growth not are at sales our has guidance to long-term X% to X% customers. we more and load be Although XXXX X% with year-to-date our expected high time, weather-normalized is attributable of

National conditions customer Turning economic Arizona. strong. growth as fundamental of remains below a experienced with factors Metro inflation the data, is of economic to of experiencing the X.X% We customer average June the year-over-year in and particular, and Phoenix area supporting X.X% in declining quarter growth second inflation rate X%. the in national

for June, unemployment service rate of economic rate underscore the positive X.X% in X.X%. national which of hit our below strong Additionally, territory. is indicators continued an These support record the unemployment all-time low in growth Arizona's

quarter. benefits delivered have this initiatives O&M Our

including in core generation our and efforts both costs. to across successful have nonnuclear areas We been lower nuclear O&M expense our operations, multiple of

planned and in season. and O&M while generation [indiscernible] our progress are to goal of be outages our meet reliable an ensuring summer to per critical reliability continues We keep hour, demands we resilient our declining making the the

proactively. higher due quarter rose While to this in are to we rates, interest year financing compared interest costs debt our last and increased expenses balances managing

and our additional expense are drag they our amortization yield and throughout in IT investments. other planned benefits to even long-term investment strategic the projects year. create grid increased, Additionally, depreciation projects reflecting has as These expected

of We investment financing have execution and strategies well debt this maturities. program managing our as continued related the successful as our quarter capital

a rate Labs. issued June, bond in floating million $XXX in at million on notes Pinnacle in and successfully This notes And we quarter, $XXX early in million $XXX May. early both closed convertible APS

plan. advantageous committed We to seeking strategically capital to are most finance the our opportunities

including XXXX EPS. Finally, all of remain unchanged guidance other aspects and

and sales quarter we of the we end weather the trends if during to expect experienced the growth higher our However, range. be towards continue, second EPS

weather sales and We for are the of remainder monitoring year. the closely growth

half have and our of continue rest the XXXX. strategy of strong first year executing are throughout had excited to the a We

the focused are on customers heat. We navigate ensuring summer our and to reliable have power safe

concludes our I back turn remarks. call prepared questions. now This over will the operator for to the

Operator

question first is coming Your from Instructions] [Operator Pourreza Partners. Guggenheim from Shahr

Shahriar Pourreza

line X%. in is obviously, mean all as program guidance? sets growth, that So well it's to the think just for Can from on longer-term all C&I 'XX, maybe longer-term weather-normalized your And 'XX? it's we sticky this just elaborate with of X.X%, on if been sticky, And backdrop? 'XX does do you and for your but what this obviously, -- how we bridge that's sort the how thematic, sales earnings capital about for you

Andrew Cooper

Andrew. Yes. it's Shahr,

So sales up. largely as C&I you by to growth mentioned, for the ramp X.X% those driven continuing customers large quarter,

as And TSMC the so data the as coming ] saw you well both ecosystem that manufacturing [ from from centers. customers,

lower And still XXXX, as of have and year out do in starts don't this -- provided X% And and to [ not so we today to so we're a that guiding range either. up ramp a ]. to past range that X% longer-term intend guidance

that's think a term, beyond there extends customers you these substantial if the about is But of long XXXX. backlog and

of phases TSMC third and second the have committed. You

that are requests well. X,XXX the committed over than beyond have We center backlog of customers that And doesn't as include center more even data gotten XX,XXX we've data megawatts that of that.

on seeing and territory. in of growth stickiness we trend, sales pretty the critical the C&I large so based we're to is what the service expect it And continue a

The I from saw quarter contribution small sales the we to from this nice would business. growth sales CI about that only just growth other is a thing add

as XX% But I large was C&I what the did to larger to from X/X and having lot and small is that we that businesses talking the time a effect C&I continue And So to of which some to the see about, well. spend of segment of of starting the customers. flourish Jeff speaks the growth effects a think base, of rebuild a see I that. economy strong manufacturing here and we're amplification in

Shahriar Pourreza

with to tailwinds for closer could update pretty the Yes. we to I Or see get sort revisit you update? something I of are what's the guess, evident. year-end and the we podium mean Is EEI? obviously as investors? it Andrew, this

Andrew Cooper

rate know forward growth you updates capital providing year in guidance, around as it. on when the That's quarter about in perspective goes the of We EEI as the third first question, provide we're -- the sales that your a I we long-term at certainly the well. with well do outlook from as asked as suggest. not our typically rolling capital

would continuing as ensuring trends. the these well as quarter intent that to we're be So ramp would that the see there be third -- look to

factor load high As the be we've large variable. customers, seen over with last few years bit little ramps the can these a

ensure sales any saw And that the we first growth year the want change so that half we guidance. to continues to XX% of we make in before the

Shahriar Pourreza

lag kind And of the then details traction, to but a I the out mean, meeting workshop. Perfect. that's obviously, incremental just provide seems stands you anything lastly, thoughts little the because there. add level bit milestones on coming reg gaining there's out it of docket just just there, recent Maybe higher kind I wanted if Okay. Any just good just like can today? it's see incremental provide and another to additional where timeline of fairly

Jeffrey Guldner

else start I'll in. Shahr. Yes, then chime anybody can and

growth the what the done are I around I jurisdictions, does -- real other bringing encouraging other and understand or particularly things of -- the this the really it to to going does that's what the go context that leverage. mean to we're systemic in a thing are that really is the seeing so being into there places and in that important to are in Arizona have how serving think show me, the the into amount experts I that's moving work, that to think means a is, dialogue are that in capital you desire what having in

and TSMC state. environment, to strengths of one regulatory which growth them like with attracted into the Bull That's customers and that's has of been the Arizona ability so broad the our Like key many others Red has pair these got to coming. to meet serve the and of

context has for And so it's these broader helpful really, workshops. understanding I that been think,

seeing So up that it's coming good we're X October. in another

the here what areas now script some of the the dialogue years, we I both but in focus approach forward to rates, or are formulaic around the continued lot is the be to think there'll said different that test a right which similar is on FERC. exploration also

And so in it's process. early still the

here least at try through direction and think the I throughout alignment to articulated are or they move working year. get rest this some the to of

sort can progress looking make options. sure of definitely we for So in provide support I something to some we're trying as that and they think good the that policy they're engaged these through

Shahriar Pourreza

on Congrats execution. It's the pretty notable.

Operator

coming Campanella from next is Barclays. from Your Nick question

Nicholas Campanella

I be then, taken know sorry October that just really wanted to but missed between but open the just be looking towards is if put you're a this to is that finer date point. I and up. should I'm there October? I now just some it for it, meetings

Jeffrey Guldner

It's October.

Nicholas Campanella

guidance then kind higher are strong some to pull-forward of going at I to with from that be keep we outlook range? be CAGR then help the predicated And here to kind what outcomes, know 'XX I your on that or the guess just just knowing O&M And negatives might within you end? said range? the you there Okay. obviously, linear, otherwise of of start the that not 'XX, not kind it's the within rate is the derisk that contemplating of long-term opportunity any would is you're

Andrew Cooper

Sure. Nick, it's Andrew.

rate elements hot of tailwind we're with of end terms a the for we last a have that want as make side, trends growth customer the watch sales residential in I But end the at at things rest ramp customers. very sure been positive of year. that well, our continues to the sales have some summer that monitoring of and sales date. as some the saw we behavioral to the continue on to of mentioned overall, certainly those So earlier, the I year, summer,

certainly we it there savings. second O&M We've the and first O&M. the year been engage question just very some half lead watch, that judicious The will around to your continue into in of to spot those is of

basically planned year guidance basically our this in the a O&M a large recall, for have we order increase year, outages of X% reduction contemplates the some O&M to that you in lead accommodate which If to in X% overall for O&M. core

outages with in year. of And this the is still half come the so on to of the largest second X corners

all Those And certainly, that our as played That's we we've the every seen work all savings operating from so certainly, a and it as in to done look the But efficiencies plan. have us picture, we look O&M to. we out to range. according certainly year-to-date. year Those story that company. sure and planning the our make that engage that O&M for watch at that the exercising muscle and good outage area we'll keeps we've within the lean

economic There of top of of the the we year all for financing aren't We've that a by other things our other plans lot ones. to headwinds line the rise did. potential top terms -- sales the normal the doing financing list related than and derisked in

rate kind a our we've is based is year what of got picture D&A into So for it assets is service. handle on what good on and going the the the

potential year. certainly, for of the that have the With to we on activated at a we going X the rest I multiyear for think our that is the it. that where the derisk one just [ watch look dialogue in 'XX. So outage the reason your second and we of O&M benefit, continues because to certainly And outage take plan ] internal quarters the can O&M part part picture is that around the weather actually

things side, T&D them. some there's on so initiate we we and in projects, how how And have O&M that terms agility number can when have and to we a flexibility at on some the these of whether side, technology of some our we they're in approach toggle ability look the of

see well. continue yes, weather the pans at we we'll look and how at to outage as that O&M the what's is out schedule, the short look So answer as

Nicholas Campanella

that also at culminates background line. around as ACC the lag one changing appreciate I just see fall And in docket, do But kind reg well, traction, gaining with kind lag of and more, I of all? this that great. of direction if could, of you all if the docket kind That's time that the the of this how election color. you kind have

Jeffrey Guldner

pretty I forward right top out on right docket the attention just election, ticket We're mean the is the races. here, most early. got it's now now, that primaries moving of they've the I the at the think lag the schedule of is there. of

-- not on dialogue commission election yet been you're issues. lot I think so of And don't there's a

the engage We candidates on continue to with both sides.

uncontested an on was both. it primary So

support growth to we've ] in so following want in contact been that what that driving. and seeing is be things the our the of we supportive both continue where back And it state is do predecessor up candidates and in to And sides to again growth Governor [ with dialogue need has been ties growth. the the to on that Republican the scenario to because very that's the consistent. in continued on state Hobbs we're

Operator

Michael ISI. next is Your coming Lonegan from Evercore question from

Michael Lonegan

any plan, deployment. know if alternatives. of an said just the match type financing program were thoughts up timing the I you On that towards well on updated wondering have you you could and capital ATM leaning with equity previously or

Andrew Cooper

it's updates Andrew. no Yes, this Michael, so at point.

instruments We and in APS that's debt the over our we Pinnacle of we'll sure that use used bit maturities under we recall, to second have debt that and a plan. do a quarter little we that did And really so block both with months the forward X-year amount big to that's to you parent at during capital down APS. wanted at structure of West that If our equity so. our up -- time, derisk a XX draw of debt make financing robust -- number the balanced

in the external really we the need the plan. incremental number $XXX the at do financing there that parent, that predominantly we to leaves have So that million

you it's program still best, Certainly, out alternatives look the said ultimately, as really Michael, the it and we'll common financing. an ATM there. are other is at up needs instruments, case, those equity. And ability there match to at an remains And external capital with base the

so that our And case. would base be

think roll through we be forward our tends financing plan, a program. X-year ATM when move we to about and year As the an

with And kind so of we're needs. equity our XX done

through we And remains so but that $XXX any at 'XX, targeting certainly million to the moment. base updates, case. the ATMs the look as the we'll 'XX And number is provide we're

Michael Lonegan

and complete, the that that's to you'll maybe when then out going think you docket what depending docket, a before back to And could complete file filing right when and the case months forms on could comes see and Great. later? lag we of do it, away case rate that it's preparing a that even it's done finalized look Or start in, rate say, lag like? X is what X docket of various in regulatory regulatory

Jeffrey Guldner

Yes.

I still that the inform to that will that's path we're right working our and going where think point. and through directionally from trying now, just docket understand help

posted. workshop what so see next process. looks let's So people we'll keep the they if And the work to through like, obviously, continue

Operator

is Miller next Your Travis Morningstar. coming question from from

Travis Miller

You bill the Is potentially? capital hot hotter talked issue for a if the customer it either regulatory you? working or the the mechanisms flow assistance could chance about Or of at would that stays higher some lot there cash weather bills and get the impact offset beginning stuff. any that and with that

Andrew Cooper

and where last Yes. Certainly, the summer. of we've on moratorium disconnects the been number there's things working a over during years

be of tends the pace receipts to our fairly So predictable. customer year throughout

opportunity that customer too plan the over the normal the direct our short-term well of we course as pressures in so as of term to funds and customers accommodate directly customers. a of course those and of the And programs the of the summer year. certainly, of all season over to we that to come we the financing more we year, provide line kind an the the payments on the ones out particularly of with participate for long our perspective capital pace as availability bottom from both bills from partners some our on begin and mind And reduce front be build of work

Travis Miller

do another equipment-type other planning I'm in planning see type it. even do these for temperatures. unusual Okay. resiliency What Got equipment or as of do places. the if do question, then we taking your thinking terms sense? And of you system of cold you heat What heat? system of with that if some like makes have we've out extreme weather type the seen weather extreme contingencies that, in on

Jeffrey Guldner

back mean was it I temperature or start. through the I'll -- was we've go was -- actually you of so, part that's hottest obviously we've Yes, been ago. and XXXX look if Phoenix the a it and had historically, process, while in

so you have with manage of always And this. there's a And lot to personnel. through around focus

sure make sensitivity. that fair for just air-conditioned you the on the a And manage amount are that we who have that we we work do monitor out how workflow sure Ted crews have year, heat, then your of it there. trucks resiliency to equipment, access the and look in and every equipment some making anything? So does Jake, heat working the

Theodore Geisler

Yes.

think, you to well only large well. our we've plan criteria design saw said interesting that demand well while as we year. last break seen the sales we for. in add The I part our higher QX, didn't to due within temperature as is Jeff, I'd is so still in compared we weather, thing it It peak far what and

indication heat we actually so did as consistent But really more that's temperatures top saw days above. the the much year at night, And see we degrees we end extreme as didn't higher or had XXX and we low prior. around that an

take So we standpoint, from seriously. it equipment an

where informs on study expect and we and along pretty We good have actually way. in continue the But resiliency the be, of summer, criteria. our would equipment terms adapt future plans. monitor fall we're design it each exactly We to impact to sitting that we'll having and

Jeffrey Guldner

Yes.

Just temp XXXX, was degrees. a XXX highest Phoenix in correction, recorded the in

is just And hot in so plan a something environment desert summers. for you this

Travis Miller

it. I'll you trade there, thoughts. appreciate the some appreciate degrees to I heat Chicago, want even like. that if you X to Whenever over send you I'd

Operator

is Jefferies. from question Dumoulin-Smith next Your Julien coming from

Unknown Analyst

good is subsequent and progress the too on back 'XX coming on would would in expectations to filter front. So Obviously, expectation be so maybe making how impacts the resolution, of this here in time, its that rate to early to be, could wanted put call on a be then you more And some it it, that of partial bit specific think a having terms if addressing tilt little how to here a just October, of in of like timing mid the maybe long can XX-ish your lag you case a ultimately, the short -- and of if reg is you the further. Just a just front. resolving I now say, period press sounds lag? on that that extent it right that little It going bit year? you wouldn't lag

Jeffrey Guldner

Yes.

the a Just there. so That's I process. next data in the Julien, is on that mean, of there's kind workshop October. schedule point out

they standard. has the to same through then to X months it It put into typically about pretty think filing, So have that think more takes give would or work that, more together moving commission some it's visibility about little Everybody I least I I And how the at see and forward. you it. Once dialogue. process a expect dialogue schedule. on about takes might guidance a see year

the You've got analysis. into possibilities factors and settlement, like that things other come

we're right how see now, how would timing. in And the how We'll October. dialogue schedule at look workshop that to and that and continues so the August then affect go the coming in

we number program to a I program to One think approved this the Arizona got that things case the investing had And tracking a recovery plants. in that in a XXXX from is get capital concurrent of Sun move to goes process. SRB probably that and starting place, you see, solar with of and in that's years more that we allowed mechanism now it time with part remember that back frame, ago, the we are forward of of that to and us you're

is helping already another regulatory that in of to some is one the is the items. us, supply in those last was in And activated that did as The here just lag the case SRB movement some utility state. and so address there us the not but

those work of of just so And get the contemporary investing the there's through things you capital the recovery that we can that continue more to serve where back have kind we're as so the issues to to are commission we the growth that have. addresses to

Unknown Analyst

if right? then still which mean, the just you needs as we would program, on revisions typical participate procurement to that As through be And no in get eligible on right? I negotiation there's alluded extent you long your all evergreen generation it's -- to that, push as Awesome. it to related can goes some there, I in to. of an in the subsequent SRB in of still extent SRB, processes, the to assets you're to the here the your that

Jeffrey Guldner

Yes.

Operator

Instructions] from next Paul Patterson is question Your Associates. Glenrock [Operator coming from

Paul Patterson

understand apologize guys call that Just just expecting sounds I to regulatory regulatory from for make time. slightly the perhaps to to But And unclear. -- just it and I listening me a rapidly proceeding are you somewhat being move from sure this this. I lag want to

sort that of on would after a just wanted to until get So there's some you that. you sense case workshop, be scheduled a rapidly move And safe proceeding? assume rate are guys filing that. mentioned, not you as you in in but get a to it to October, think that might be that things going I determination

Jeffrey Guldner

that. go. ultimately wouldn't don't where say the On is to the latter, know proceeding we I going

again, dialogue some is October. that I feel on think would workshop that of the I there's would and what they timing are kind scheduled have workshop that, for expect commission going in we're a in where they think, they forward. the August, process the

being how everything. But to and you forward. they dates and the your I sit are think give process hard of they're in here point, expected think deliberate kind I pretty workshop moving to

on goes see hearing to get that comfortable they're that the standpoint they expect see see I in at dialogue in we forward. October, what moving from the think they're and that information with how how check we'll process a point get a

Paul Patterson

one. great a Have Stay cool.

Operator

Q&A session. Thank you. Everyone, That completes this event. today's our concludes

this have and time, at your you participation. for day. disconnect may wonderful Thank a You

Pinnacle West Capital (PNW) 1 Aug 242024 Q2 Earnings call transcript