Pinnacle West Capital Corporation (NYSE:PNW) Q1 2023 Results Conference Call May 4, 2023 12:00 PM ET Company Participants Amanda Ho - Director of Investor Relations Jeffrey Guldner - President and Chief Executive Officer Andrew Cooper - Senior Vice President and Chief Financial Officer Ted Geisler - President, Arizona Public Service Company Jacob Tetlow - Executive Vice President of Operations Jose Esparza - Senior Vice President of Public Policy Conference Call Participants Dariusz Lozny - Bank of America ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | Commission File Number | Exact Name of Each Registrant as specified in its charter; State of Incorporation; Address; and Telephone Number | IRS Employer Identification No. | | --- | --- | ...

Financial Data and Key Metrics Changes - For Q4 2022, the company reported a loss of $0.21 per share, down $0.45 compared to Q4 2021 [11] - Full-year 2022 earnings were $4.26 per share, down from $5.47 per share in 2021, primarily due to the negative rate case outcome [12][14] - The company experienced a $17.1 million impairment charge related to a Bright Canyon energy equity investment in Q4 2022 [36] Business Line Data and Key Metrics Changes - Customer growth for Q4 2022 was 2.1%, consistent with the full-year growth rate [13] - Weather-normalized sales growth for 2022 was 2.4%, with a 1.2% increase in Q4 compared to the prior year [38] - Strong commercial and industrial (C&I) growth of 4.6% over 2021 was noted, driven by Arizona's economic diversification [38] Market Data and Key Metrics Changes - Arizona had the fifth highest population growth in 2022, contributing to customer growth [13] - The Phoenix Metro area was recognized as a top three industrial market to watch in 2023, indicating strong economic activity [38] Company Strategy and Development Direction - The company aims to achieve a constructive outcome in its pending rate case and improve customer communication and engagement in 2023 [9] - A commitment to reach 100% clean carbon-free energy by 2050 was reiterated, with over 2,100 megawatts of clean energy resources procured [8] - The capital plan was updated to $5.3 billion from 2023 to 2025, with an average annual growth rate of 5% to 7% for rate base growth [40] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by the unfavorable outcome of the previous rate case but expressed confidence in long-term value creation for customers and shareholders [9][11] - The company expects headwinds in 2023 from higher benefit expenses, interest expenses, and plant depreciation and amortization [14][15] - Management emphasized a focus on cost management and operational efficiencies to navigate inflationary pressures [14] Other Important Information - The pension plan is 106% funded, with no expected contributions needed in the near term, although higher benefit expenses are anticipated in 2023 [15] - The company is deferring any equity issuance until after the current rate case resolution [16] Q&A Session Summary Question: What is the outlook for future equity needs beyond the current rate case? - The company anticipates an equity need of $400 million to $500 million in 2024, dependent on the capital plan developed post-rate case [43] Question: How does the company plan to mitigate pension expense volatility? - Management is exploring regulatory recovery options and other cost levers to manage pension expenses effectively [57] Question: What is the impact of the Court of Appeals ruling on the Four Corners SCR and Ocotillo projects? - A favorable ruling would not be retroactive but could lead to recovery of disallowed capital costs, impacting EPS positively [50][52] Question: What is the company's strategy regarding clean generation spending? - The company is focused on optimizing the mix of utility-owned generation and power purchase agreements (PPAs) to maximize benefits from tax credits [58][72] Question: What is the feedback from rating agencies regarding credit outlook? - The company is committed to maintaining a 16% to 18% FFO-to-debt ratio to support its current ratings, with future adjustments dependent on the rate case outcome [66][80]

Financial Performance & Guidance - Full Year 2022 EPS was $426, primarily impacted by results of prior rate case, compared to $547 in 2021[13] - The company provides 2023 EPS guidance of $395-$415[21] - Adjusted gross margin for 2023 is projected to be $267 - $272 billion[21] - Adjusted operating and maintenance expense for 2023 is expected to be $885 - $905 million[21] Growth & Investment - Retail customer growth is projected at 15%-25%[21] - Weather-normalized retail electricity sales growth is forecasted at 35%-55%, including a 20%-40% contribution from new large manufacturing facilities and data centers[21] - The company plans a capital investment of $532 billion from 2023-2025[28] - The company projects steady rate base growth with 5-7% annual growth for FERC and ACC[32] Regulatory & Operations - A new rate case was filed on October 28, 2022, requesting a total revenue increase of $460 million and a customer net bill impact of 136% on day 1[93] - The company is targeting declining O&M per MWh, with total adjusted O&M expected to be $885M-$905M in 2023[42] - The company has contracted over 2,100 MW of clean energy and storage to be in service for APS customers by the end of 2025[62]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number charter; State of Incorporation; Address; and Telephone Number IRS Employer Identification No. 1-8962 PINNACLE WEST CAPITAL CORPORATION 8 ...

EEI Investor Meetings November 13-15, 2022 Forward Looking Statements This presentation contains forward-looking statements based on current expectations, including statements regarding our earnings guidance and financial outlook and goals. These forward-looking statements are often identified by words such as "estimate," "predict," "may," "believe," "plan," "expect," "require," "intend," "assume," "project," "anticipate," "goal," "seek," "strategy," "likely," "should," "will," "could," and similar words. B ...

Pinnacle West Capital Corporation (NYSE:PNW) Q3 2022 Earnings Conference Call November 3, 2022 12:00 PM ET Company Participants Amanda Ho - Director, IR Jeffrey Guldner - Chairman, President & CEO Andrew Cooper - SVP & CFO Theodore Geisler - President, Arizona Public Service Company Conference Call Participants Insoo Kim - Goldman Sachs Dariusz Lozny - Bank of America Merrill Lynch Jamieson Ward - Guggenheim Securities Sophie Karp - KeyBanc Capital Markets David Peters - Wolfe Research Paul Patterson - Glen ...

Financial Performance & Guidance - The company's 2022 EPS guidance is between $4.20 and $4.35[10] - Adjusted gross margin (operating revenues, net of fuel and purchased power expenses) is projected to be $2.59 – $2.61 billion[10] - Adjusted operating and maintenance expenses are expected to be $880 – $895 million[10] - Interest expense, net of allowance for borrowed and equity funds used during construction (AFUDC ~$64 million), is projected to be $213 – $215 million[10] Rate Case & Regulatory - A new rate case was filed on October 28, 2022, requesting rates to become effective December 1, 2023, seeking a total revenue increase of $460 million, which would result in a 13.6% customer net bill impact on day 1[19] - The rate case includes a request for $130 million in rate base growth and $140 million for 12 months post test year plant[19] - The company is appealing the prior rate case, with oral arguments set for November 30[45, 78] Growth & Investment - The company forecasts long-term EPS growth target of 5%-7%[14] - Retail customer growth is projected at 1.5%-2.5%[10, 13, 14] - Weather-normalized retail electricity sales volume is expected to be 2.0-3.0% higher compared to prior year, including a 0.5-1.5% contribution from new large manufacturing facilities and data centers[10] - The company plans a total capital investment of $4.7 billion from 2022-2024[25, 38] Clean Energy Transition - The company has contracted for nearly 1,600 MW of clean energy and storage to be in service for APS customers by the end of 2024[53, 56] - An All-Source RFP has been issued, seeking 1,000 – 1,500 MWs of resources, including up to 600 – 800 MWs of renewable resources to be in service from 2025 – 2027[53]

Financial Performance - Operating revenues for Q3 2022 were $1,469,871, an increase of 12.3% from $1,308,254 in Q3 2021[23] - Net income attributable to common shareholders for Q3 2022 was $326,326, a decrease of 3.4% compared to $339,798 in Q3 2021[23] - The company reported a total comprehensive income of $332,146 for Q3 2022, compared to $345,016 in Q3 2021, reflecting a decrease of 3.8%[24] - Net income for the nine months ended September 30, 2022, was $520,512 thousand, a decrease of 13.8% compared to $604,054 thousand for the same period in 2021[32] - For the nine months ended September 30, 2022, operating revenues increased to $3,315,071,000, up from $3,004,978,000 in the same period of 2021, representing a growth of approximately 10.3%[42] - The net income for the nine months ended September 30, 2022, was $538.8 million, a decrease of 7.5% from $611.6 million in the same period of 2021[64] Expenses and Liabilities - Total operating expenses for the nine months ended September 30, 2022, were $2,619,911, up 16.4% from $2,249,685 in the same period of 2021[23] - Interest expense for the nine months ended September 30, 2022, was $186,630, up from $173,316 in the same period of 2021[23] - Total current liabilities increased to $2,060,904 thousand as of September 30, 2022, up from $1,756,869 thousand in 2021, representing a growth of approximately 17.3%[30] - Total operating expenses for the nine months ended September 30, 2022, were $2,610,056,000, compared to $2,239,959,000 in the same period of 2021, an increase of about 16.5%[42] - Interest expense for the nine months ended September 30, 2022, totaled $174,447,000, compared to $165,214,000 in the same period of 2021, an increase of approximately 5.4%[42] Assets and Equity - Total assets as of September 30, 2022, were $22,844,598, an increase from $22,003,222 as of December 31, 2021[27] - Total shareholders' equity rose to $6,362,113 thousand as of September 30, 2022, up from $6,021,460 thousand in 2021, indicating a growth of 5.7%[30] - The company’s total assets as of September 30, 2022, were reported at $6,362,113,000, compared to $6,186,464,000 as of September 30, 2021, an increase of approximately 2.8%[42] - Total assets increased to $22,711,504 thousand as of September 30, 2022, compared to $21,909,656 thousand as of December 31, 2021, reflecting a growth of approximately 3.66%[48] - Total liabilities and equity reached $22,844,598 thousand as of September 30, 2022, compared to $22,003,222 thousand in 2021, reflecting an increase of 3.8%[30] Cash Flow and Investments - Cash flows from operating activities provided $1,031,914 thousand, significantly higher than $660,513 thousand in the previous year, marking a 56.2% increase[32] - The company reported a net cash used for investing activities of $1,221,895 thousand, higher than $962,312 thousand in the previous year, indicating a 27% increase in investment outflows[32] - Cash and cash equivalents decreased to $7,032 from $9,969 as of December 31, 2021[27] - Cash and cash equivalents at the end of the period were $7,032 thousand, down from $25,688 thousand in 2021, representing a decrease of 72.6%[32] - Net cash provided by operating activities was $1,040,356 thousand, an increase of 59.7% compared to $650,697 thousand in the prior year[52] Capital Expenditures - Capital expenditures for the nine months ended September 30, 2022, were $1,276,861 thousand, compared to $1,006,431 thousand in 2021, reflecting a 27% increase[32] - Capital expenditures for the nine months ended September 30, 2022, were $1,254,693 thousand, compared to $1,006,431 thousand in the same period of 2021, reflecting a rise of 24.6%[52] Customer Revenue - Retail electric revenue from residential customers reached $1,648.0 million for the nine months ended September 30, 2022, up 6.0% from $1,554.5 million in 2021[66] - Pinnacle West's retail electric revenue from non-residential customers increased to $1,370.2 million for the nine months ended September 30, 2022, up 12.7% from $1,216.4 million in 2021[66] - Wholesale energy sales for the nine months ended September 30, 2022, amounted to $198.5 million, a significant increase from $144.1 million in 2021, reflecting a growth of 37.8%[66] Regulatory and Compliance - APS filed a 2022 Rate Case on October 28, 2022, seeking a net increase of $460 million in annual retail base rates, which would result in a 13.6% average annual customer bill increase[85] - The original cost rate base for APS's 2022 Rate Case is $10.5 billion, with a proposed weighted-average cost of capital of 7.17%[87] - The ACC Staff recommended a rate increase of $59.8 million, translating to an average annual customer bill increase of 1.82%, while RUCO suggested a revenue decrease of $50.1 million, or a 1.52% average annual customer bill decrease[97] - The ACC approved a total annual revenue decrease for APS of $4.8 million, excluding temporary CCT payments and expenditures, following amendments to the 2019 Rate Case ROO[99] Environmental and Energy Initiatives - APS's 2022 DSM Implementation Plan requested a budget of $78.4 million, representing an increase of approximately $14 million from 2021[125] - The ACC adopted clean energy rules requiring APS to meet certain clean energy standards and technology procurement mandates, with a new docket opened for all-source RFP requirements[114] - APS's community solar proposal includes a pilot-scale program of up to 140MW, pending approval from the ACC[115] - The ACC approved a final clean energy rule requiring 100% of retail kWh sales from clean energy resources by 2070, with interim carbon reduction targets[159] Debt and Financing - The company issued long-term debt amounting to $455,628 thousand during the nine months ended September 30, 2022, compared to $596,999 thousand in the same period of 2021[32] - Pinnacle West entered into a $450 million term loan facility on December 21, 2021, with $150 million received initially and the remaining $300 million on January 6, 2022, recognized as long-term debt[75] - As of September 30, 2022, Pinnacle West had a $200 million revolving credit facility maturing on May 28, 2026, with no outstanding borrowings and $24 million in commercial paper borrowings[77] Pension and Benefits - The company reported a net periodic benefit cost for pension benefits of $(1,323,000) for the three months ended September 30, 2022, compared to $(6,720,000) for the same period in 2021[182] - The company has not made any voluntary contributions to its pension plan year-to-date in 2022 and does not expect to make contributions in 2022, 2023, or 2024[183] - The company reported a service cost for pension benefits earned during the three months ended September 30, 2022, of $13,868,000, down from $15,309,000 in 2021[182] Miscellaneous - The company has committed to end the use of coal at its remaining Cholla units by 2025, with a decommissioning cost of $38.4 million as of September 30, 2022[174] - APS provided refunds to approximately 13,000 customers due to an error in its rate plan comparison tool, which did not have a material impact on financial statements[169] - APS is contesting a $215.5 million disallowance related to SCR investments and deferrals in an ongoing legal appeal[172]

Pinnacle West Capital Corporation (NYSE:PNW) Q2 2022 Earnings Conference Call August 3, 2022 12:00 PM ET Company Participants Amanda Ho - Director-Investor Relations Jeff Guldner - Chairman & Chief Executive Officer Andrew Cooper - Chief Financial Officer Conference Call Participants Insoo Kim - Goldman Sachs Julien Dumoulin-Smith - Bank of America Nick Campanella - Credit Suisse David Peters - Wolfe Research Shar Pourreza - Guggenheim Partners Operator Good afternoon, ladies and gentlemen. Thank you for st ...