PINNACLE WEST CAPITAL CORP Q1 FY2025 earnings call

• Recent operational and regulatory developments: Arizona's economy thrives with semiconductor and advanced manufacturing investments, including TSMC's expanded $165 billion investment and Mayo Clinic's $2 billion healthcare investment. - Operations: Focused on grid reliability, with investments in transmission, fire mitigation, and generation unit maintenance (e.g., Four Corners, Red Hawk, Sundance, Palo Verde). - Long-term resource procurement: Progress on annual All-Source Request for Proposals seeking 2,000 MW of new resources by 2028-2030. - Customer-centric culture: APS ranks in top 10 nationally in J.D. Power Utility Digital Experience Survey and is recognized as one of the Most Trustworthy Companies in America for 2024. - Regulatory front: On track to file midyear rate case to recover costs, modernize rate structure, and reduce regulatory lag.

For the first quarter of 2025, Pinnacle West Capital Corporation lost $0.04 per share, compared to earnings of $0.15 per share in the first quarter of 2024. The primary driver of the decrease was the sale of Bright Canyon Energy in 2024. Weather-normalized sales growth was 2.1% for the quarter, driven by strong C&I growth of 5.3%, caused by the continued ramp-up of both manufacturing and data center customers. Customer growth for the quarter was 2.3%, near the high end of annual customer growth guidance.

• Reaffirmed 2025 guidance, including weather-normalized sales growth expected to meet 4% to 6% for the year. - O&M guidance unchanged as anticipated items were considered and expected to be offset over the year. - Financing guidance unchanged, featuring a mix of debt and equity sources to maintain a balanced capital structure. - Reaffirmed all other guidance provided on the fourth quarter call.

Q: Nicholas Campanella from Barclays asked about TSMC customer additions and QIP balance.

A: Andrew Cooper responded on TSMC's fab progress and Ted Geisler discussed the QIP disclosure related to strategic projects.

Q: Michael Lonegan from Evercore asked about rate case and high load factor customers.

A: Ted Geisler talked about rate case intent to minimize regulatory lag and Andrew Cooper discussed the 4 gigawatts of high load factor customers and the queue of over 10 gigawatts.

Q: Julien Dumoulin-Smith from Jefferies asked about longer-term view and RFP.

A: Andrew Cooper discussed evaluating longer-term views and Ted Geisler talked about current RFP for 2028-2030 and potential expansion.

Q: Travis Miller from Morningstar asked about rate case filing.

A: Ted Geisler explained the filing includes a traditional rate case and formula rate plan proposal.

Q: Sophie Karp from KeyBanc Capital Markets asked about transmission lines and rooftop solar.

A: Ted Geisler discussed transmission voltage evaluation and Andrew Cooper talked about rooftop solar impact.

Q: Paul Patterson from Glenrock Associates asked about El Dorado item.

A: Andrew Cooper explained the gain from El Dorado's electric switchgear company.

Q: Ryan Levine from Citi asked about coal plant closure.

A: Ted Geisler discussed Cholla coal plant retirement and repurposing potential.

Q: Stephen D'Ambrisi from Ladenburg Thalmann asked about sales growth and rate case timing.

A: Andrew Cooper explained sales growth trends and Ted Geisler talked about rate case timing and formula rate plan adjustment intent.