Pinnacle West Capital Corp.'s
(
PNW
) adjusted loss of 7 cents per share in the first quarter of 2012
was in line with the Zacks Consensus Estimate. However, loss
narrowed down considerably from the year-ago loss of 15 cents.
Adjusted loss was $7.5 million compared with $15.1 million in the
first quarter of 2011.
Solid operational performance coupled with lower expenses more
than offset the milder weather and little lower customer usage,
thereby aiding the company to narrow loss.
Adjusting for loss from discontinued real estate and energy
services businesses of $0.8 million or 1 cent a share, the company
reported net loss of $8.3 million or 8 cents per share, compared
with a loss of $15.1 million or 14 cents per share reported in year
ago quarter.
Revenue
Pinnacle West's revenue was $620.6 million in the quarter, down
4.3% from the year-ago revenue of $648.8 million. Revenues missed
the Zacks Consensus Estimate of $673 million. A decrease in
Regulated Electricity segment revenue was largely responsible for
the overall decline.
Operational Results
Total regulated electricity delivered in the quarter inched up
0.8% to 6,802 Gwh compared with 6,747 Gwh last year.
During the quarter, retail electricity sales declined 3.1% to
5,743 Gwh compared with 5,926 Gwh last year. The decrease was due
to lower electricity consumption by business as well as residential
customers.
Also, average electric customer growth in the quarter was 0.8%
compared with 0.4% in the year-ago comparable period.
On the cost side, fuel and purchased power costs at the
Regulated Electricity segment increased 2% in the quarter, while
the company's operations and maintenance (O&M) expenses were
down 17%. The O&M expense decline was primarily due to lower
power plant maintenance costs.
Depreciation & amortization expenses decreased 6% in the
quarter. These factors were largely responsible for a 6.6% year
over year decline in operating expense.
The magnitude of decrease in expense more than offset the
magnitude of revenue decline, thereby driving operating income to
grow 34% in the quarter.
Financial Condition
As of March 31, 2012, Pinnacle West's cash and cash equivalents
slumped to $20.7 million from 2011 end level of $33.5 million.
Long-term debt of $3.3 billion increased 11% from the 2011 end
level.
The company generated $115.3 billion in cash from operations
during the quarter, plummeting 53% year over year.
Capital expenditure escalated 26% year over year to $241
million.
Zacks Rank
We retain our Neutral recommendation on Pinnacle West Capital.
The quantitative Zacks #3 Rank (short-term Hold rating) for the
company indicates no clear directional pressure on the stock over
the near term.
Phoenix, Arizona-based Pinnacle West Capital Corporation
provides electricity services in the state of Arizona, through its
subsidiaries. The company is involved in the generation,
transmission, and distribution of electricity from coal, nuclear,
gas and oil, and renewable resources. The company primarily
competes with
UniSource Energy Corporation
(
UNS
) and
Southwest Gas Corporation
(
SWX
).
PINNACLE WEST (PNW): Free Stock Analysis Report
SOUTHWEST GAS (SWX): Free Stock Analysis Report
UNISOURCE ENRGY (UNS): Free Stock Analysis
Report
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