PINNACLE WEST CAPITAL CORP Q1 FY2026 earnings call

• Arizona's economy expanding strongly, supporting TSMC's expansion and semiconductor supply chain activity. - Focus on delivering top-tier reliability, using automation and advanced analytics. - Progress on generation and transmission investment plans, including Red Hawk expansion and Desert Sun project. - Palo Verde Unit 2 near returning to service. - Strengthening customer-centric culture, APS ranking well in customer relationship model and J.D. Power. - Rate case on track, hearing scheduled for May 18th.

For the first quarter of 2026, earnings were 27 cents per share compared to a loss of $0.04 per share in the first quarter of 2025. Transmission revenues contributed $0.16 this quarter. Weather provided a benefit of 13 cents attributable to weather in the first quarter due to increased residential and commercial cooling degree days. Customer growth for the quarter was 2.2%, near the high end of annual customer growth guidance. Weather normalized sales growth was 9.4% for the quarter, with CNI growth of 14.6% and residential growth of 1.8%. O&M saw a significant decrease, mostly due to lower planned outage expenses and reduced commission required energy efficiency programs. Interest expense was higher due to higher debt balances. Depreciation and amortization expense increased slightly. Balance sheet had positive conversations with credit rating agencies, maintaining current ratings and stable outlooks. All equity funding needs for 2026 completed, with nearly $850 million of priced equity available for future issuance.

• Annual sales growth guidance of 4% to 6% reaffirmed. - Financing guidance unchanged. - All equity funding needs for 2026 completed. - Will continue to revisit sales growth guidance based on customer and investment trends. - Goal to narrow regulatory lag through rate case and bilateral contracting opportunities.

Q: On long-term sales growth, how to think about the outlook and if it could be revisited?

A: Andrew said sales growth this quarter was near the top end of long-term range, driven by diverse customers and sustained additions, will continue to revisit based on customer backlog and investment ability.

Q: On EPS and rate-based CAGR, updated views?

A: Will revisit at conclusion of rate case, capital investment opportunity influenced by narrowing regulatory lag and bilateral contracting, expecting to fund more from retained earnings.

Q: On August 3rd IRP filing and subscription model timing?

A: IRP will be meaningful update on long-term sales growth and resource needs, subscription model negotiations ongoing, early to tell but on track to file agreements this year.

Q: On subscription model interest and shift from expectations?

A: Interest remains robust, queue size elevated, contracts complex but making progress.

Q: On Governor's Energy Task Force report, thoughts?

A: Report identified need for gas infrastructure, diverse resources, and openness to new nuclear with large customers' support.

Q: On equity opportunities and thinking?

A: Continued to de-risk equity plan, accumulated nearly $850 million of equity, will revisit financing plan after rate case.

Q: On converting retired coal to gas and federal permitting reform?

A: Analysis ongoing for Cholla site conversion, support federal permitting reform but too early to tell specific benefits.

Q: On committed and uncommitted load and subscription model?

A: Subscription model process underway, goal to submit contracts to commission this year, IRP will analyze organic load growth.

Q: On Phase 2 subscription offering sizing?

A: Initial sizing driven by available infrastructure, continuous evaluation, subscription model is continuous process.

Q: On transmission revenue and weather sensitivity?

A: Transmission revenue more reflective of growing capital investments, not highly weather-sensitive.

Q: On renewable energy standard repeal, thoughts?

A: No impact expected, market driven, demand side management updated to focus on valuable programs.