Pinnacle West Capital Corp. (PNW) reported adjusted earnings per share of $2.20, outpacing the Zacks Consensus Estimate by 1.4%. Earnings were 7.8% higher than the year-ago earnings of $2.04 per share.
The improvement was primarily due to cost management and strong operational performance despite a cooler summer lowering demand.
Total Revenue
Quarterly revenues were $1.17 billion, up 1.8% from the year-earlier period.
However, revenues fell short of the Zacks Consensus Estimate by 1.4%.
Operational Highlights
Total regulated electricity delivered in the quarter increased by 3.8% to 10,637 Gigawatt-hours (GWh) from 10,245 GWh in the year-ago quarter. The company registered 1.4% growth in the customer count in the reported quarter.
Retail electricity sales decreased marginally by 1% to 8,899 GWh from 8,991 GWh a year ago. The decline was due to lower electricity consumption by business as well as residential customers.
Of the total generation in the reported quarter, coal-based units contributed nearly 42%, followed by nuclear and gas, and oil and other, with 30.7% and 27.3% share respectively.
Operating income decreased 1.5% year over year to $421.8 million in the reported quarter.
Financial Condition
As of Sep 30, 2014, Pinnacle West’s cash and cash equivalents were $10.7 million compared with $9.5 million as of Dec 31, 2013.
Long-term debt as of Sep 30, 2014, was $3.0 billion compared with $2.8 billion as of Dec 31, 2013.
Pinnacle West generated $866.9 million in cash from operations during the first nine months of 2014, up 0.5% year over year.
Capital expenditure in the first nine months was up 6.4% year over year to $ 618.7 million.
Guidance
Pinnacle West reaffirmed its earnings expectation for 2014 in the band $3.60–$3.75 per share. The company expects 2015 earnings in the range of $3.75 to $3.95 per share.
Other Utility Company Releases
American Electric Power Co., Inc.’s (AEP) earnings per share of $1.01 in the third quarter 2014 lagged the Zacks Consensus Estimate of $1.03 by nearly 1.9%.
CMS Energy Corporation (CMS) reported third-quarter earnings of 37 cents per share, missing the Zacks Consensus Estimate of 41 cents by 9.8%
DTE Energy Company (DTE) reported third-quarter 2014 operating earnings per share of $1.02, lagging the Zacks Consensus Estimate of $1.11 by 8.1%.
Our View
When most of the utilities have been hit by a cool U.S. summer, effective management of its resources and costs allowed the company to offset the impact of an unfavorable weather. The improving economy and expanding customer base are also helping the company.
We believe effective cost control, contribution from its AZ Sun Program and consistent investment in infrastructure will enable Pinnacle West to meet its 2015 earnings guidance.
Pinnacle West presently carries a Zacks Rank #3 (Hold).
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