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Tuesday, electric utility Pinnacle West Capital Corp. (PNW) reported that its profit for the second quarter nearly halved from last year, primarily reflecting rising costs incurred by its principal subsidiary Arizona Public Service, lower revenues, as well as the absence of prior-year gains. Excluding items, on-going consolidated earnings dropped 13% from the previous year.
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| | | {loadposition contentad} | | | | | The Phoenix, Arizona-based company's second quarter consolidated net income attributable to common shareholders was $68.35 million or $0.68 per share, down from $133.86 million or $1.33 per share last year. On a continuing operations basis, income declined to $70.99 million or $0.70 per share from prior year's $112.81 million or $1.12 per share. The latest quarter net income included one-time costs related to real estate segment of $9 million or $0.09 per share, while last year's results included gain of $14.7 million or $0.15 per share and income tax credits related to prior years of $30 million or $0.30 per share. Excluding items, on-going consolidated earnings for the quarter were $77.3 million or $0.77 per share, compared to $89.2 million or $0.88 per share in the year ago quarter. On average, seven analysts polled by Thomson Reuters expected the company to report earnings of $0.87 per share for the quarter. Analysts' estimates typically exclude special items. Among peers, UniSource Energy Corp. (UNS) Monday reported second quarter net income of $31.3 million or $0.80 per share, compared to $4.7 million or $0.13 per share for the year-ago quarter. Total operating revenue fell 6.3% to $337.78 million from $360.332 million in the prior year. Natural gas transport and distribution company Southwest Gas Corp. (SWX) is slated to release second-quarter results on Tuesday. Analysts estimate loss of $0.02 per share for the quarter. Arizona Public Service Co., or APS, recorded net income of $78.5 million in the quarter, compared to last year's net income of $125.4 million and on-going earnings of $96.1 million. The company noted that the lower results primarily reflected rising costs incurred by APS to maintain reliability and expand its electric service. Total operating revenues for the quarter declined to $840.06 million from $884.51 million a year earlier. Analysts expected the company to report revenue of $833.83 million for the quarter. Regulated electricity segment revenues were $812.51 million, down from $829.48 million a year ago, and revenues from Real estate segment fell to $16.76 million from $23.37 million last year. In the preceding first quarter, Pinnacle West reported a wider loss of $170.72 million, mainly reflecting real estate charges, higher costs incurred by APS, and the effects of milder weather. Net loss attributable to common shareholders was $156.51 million or $1.55 per share, and consolidated on-going loss was $29.1 million or $0.29 per share. Total operating revenues declined to $629.39 million. For the first six months of fiscal 2009, Pinnacle West's net loss attributable to common shareholders were $88.16 million or $0.87 per share, compared to net income of $129.39 million or $1.28 per share last year. Loss from continuing operations was $96.80 million or $0.82 per share, compared to prior year's income of $106.62 million or $1.06 per share. Total operating revenues declined to $1.47 billion from $1.57 billion a year ago. Pinnacle West Chairman Don Brandt stated, "The bottom line is our current electricity prices do not reflect our real cost of doing business. We must continue working with our regulators to better match our prices and costs while continuing to control costs. Cost management alone will not provide the financial strength necessary for APS to reliably serve our customers and provide a fair return for our investors." Regarding APS' proposed retail rate settlement pending before the Arizona Corporation Commission, Brandt noted, "If approved as proposed, the settlement will provide a measure of price stability for APS customers, and enable APS to attract the capital that is critical to support a sustainable energy future for the state of Arizona." PNW declined $0.35 or 1.09% to $31.63 in the pre-market activity.
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