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Pinnacle West Q4'17 net income down YOY on higher expenses, tax rates

Pinnacle West Capital Corp. on Feb. 23 reported fourth-quarter 2017 net income attributable to shareholders of $21.6 million, or 19 cents per share, down from $53.2 million, or 47 cents per share, in the same quarter of 2016.

The result beat the S&P Capital IQ consensus normalized EPS estimate for the most recent quarter of 12 cents.

The decrease was attributed to higher operating expenses, bad weather and a higher effective tax rate, which more than offset increases in transmission revenue, retail revenue and retail base rate.

Fourth-quarter operating revenues rose to $759.7 million in 2017 from $739.2 million in 2016, while fourth-quarter operating income was down year over year to $90.6 million compared to $122.8 million in the corresponding quarter of 2016. Operating expenses totaled $669.0 million during the most recent quarter, an increase from $616.4 million in the comparable quarter of 2016.

On a full-year basis, Pinnacle West booked $488.5 million, or $4.35 per share, in 2017 net income attributable to shareholders, compared with $442.0 million, or $3.95 per share, in 2016.

The S&P Capital IQ consensus normalized EPS estimate for 2017 was $4.26.

Full-year 2017 operating revenues rose to $3.57 billion from $3.50 billion in 2016, while operating income was up year over year to $934.4 million compared to $856.0 million in 2016. Operating expenses totaled $2.63 billion for the year ending Dec. 31, 2017, down from $2.64 billion in 2016.

"Led by strong operational performance and a regulatory settlement that allows us to continue investing in a smarter and cleaner energy infrastructure, 2017 proved to be another solid year for our company," said Pinnacle West Chairman, President and CEO Don Brandt. "If approved by the Commission, the $119 million tax decrease will offset the $95 million revenue increase that resulted from our rate review this past fall."

2018 guidance

For 2018, Pinnacle West raised its consolidated EPS guidance to the range of $4.35 to $4.55 and expects to achieve a consolidated earned return on average common equity of more than 9.5%.