10-Q · May 4, 2026
Pinnacle West Capital Corporation (PNW) reported a notable recovery in Q1 2026, achieving a net income of $33 million compared to a net loss of $5 million in the same period last year. Revenues surged to $1.15 billion,…
Earnings analysis · 10-Q
PNW earnings analysis
Filed August 4, 2026 · Our reading of the company's report
The latest report
Pinnacle West delivered Q2 revenue of $1.456 billion, up 7.1% year over year, as weather, customer growth and large-load demand lifted sales; however, diluted EPS fell 9.5% to $1.43 as higher fuel costs, depreciation…
Read full summary
Pinnacle West delivered Q2 revenue of $1.456 billion, up 7.1% year over year, as weather, customer growth and large-load demand lifted sales; however, diluted EPS fell 9.5% to $1.43 as higher fuel costs, depreciation and interest expense outweighed the revenue gain. Operating margin compressed to approximately 22.9% from 24.6% a year earlier, though it improved substantially from Q1's 11.4% seasonal level. Management's demand outlook remains constructive, but regulatory recovery, substantial $2.600 billion 2026 capex, and rising financing costs are central offsets.
Gross and operating margin
How much of each revenue dollar the business keeps.
One point per quarterly or annual filing. Both margins are shares of that report's revenue.
From revenue to operating profit
Where each $100 of revenue went in this report.
Cost of sales, operating expenses, and what remained. Figures are rounded to whole dollars.
How we read each report
Our analysis across the last few reports.
Our model's reading of each filing, not the share price or the market's reaction. Annual and quarterly reports each occupy one position.
Reported figures
- Earnings per share
- $1.43
- Segment
- Regulated electricity segment (APS): $1.456 billion of operating revenue; all other operating activities were insignificant.
What stood out
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Revenue growth accelerated in Q2
Q2 operating revenue rose $97 million, or 7.1%, year over year to $1.456 billion and increased $306 million, or 26.6%, from Q1 2026 revenue of $1.150 billion. Weather added $19 million and higher usage/customer growth added $18 million to revenue less fuel and purchased power versus Q2 2025.
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Seasonal margin and year-to-date earnings improved
Operating margin was approximately 22.9%, up from 11.4% in Q1 2026 as seasonal revenue improved. Six-month net income attributable to common shareholders increased $23 million to $211 million, supported by $41 million of weather benefit and $38 million from usage/customer growth net of fuel.
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Large-load demand remains strong
Retail customers increased 2.1% year over year, while weather-normalized retail kWh sales rose 9.5%. Commercial and industrial weather-normalized sales grew 13.6%, driven by ramping data-center and large-manufacturing customers.
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O&M declined despite grid investment
Q2 operations and maintenance expense declined $4 million to $283 million, including an $18 million reduction in renewable-energy and similar regulatory-program costs. For the six months, O&M declined $27 million to $560 million.
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Large multi-year investment program
Management forecasts APS capital expenditures of $2.600 billion in 2026, $2.650 billion in 2027, and $2.700 billion in 2028, excluding the Cholla gas-conversion project expected to cost up to $440 million.
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Rate case could support future recovery
APS's 2025 rate-case rejoinder seeks a $608.7 million net revenue-requirement increase after adjustor transfers. The hearing concluded July 7, 2026, and the proceeding is anticipated to be resolved before year-end.
What to watch
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Quarterly EPS and net income declined
Diluted EPS was $1.43, down $0.15, or 9.5%, from $1.58 in Q2 2025 and below the $1.46 consensus estimate. Q2 net income attributable to common shareholders fell $14 million to $179 million despite the $97 million revenue increase.
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Higher debt costs offset operating growth
Interest charges rose $20 million year over year to $122 million in Q2, principally due to higher debt balances. For the first six months, interest charges increased $41 million to $238 million.
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Fuel costs compressed year-over-year margins
Gross margin declined to 61.7% from 64.9% in Q2 2025 as fuel and purchased-power expense increased $81 million, or 17.0%, to $558 million, faster than the 7.1% increase in revenue. Operating margin declined about 170 basis points year over year from approximately 24.6% to 22.9%.
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Rate-case outcome remains uncertain
The pending rate case has material regulatory outcome risk: APS seeks a $608.7 million net increase, while ACC Staff recommended a $506.5 million total base-revenue increase and RUCO recommended $200.2 million to $278.1 million. APS cannot predict the decision or timing.
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Capital program requires external financing
Operating cash flow declined $34 million year over year to $629 million for the first six months, while investing cash outflow was $1.200 billion. The resulting funding gap was supported by $574 million of financing cash flow.
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New ozone litigation creates permitting uncertainty
No new or revised risk factors were identified in Item 1A versus the 2025 Form 10-K. However, environmental litigation was added to Other Information: a coalition filed a Ninth Circuit petition on May 22, 2026 challenging the Phoenix-Mesa ozone determination; APS cannot predict the outcome.
Management's outlook
The 10-Q does not provide numeric EPS or revenue guidance. Management projects 2026 customer growth of 1.5%-2.5%, weather-normalized retail kWh sales growth of 4.0%-6.0%, and large data-center/manufacturing load contribution of 3.0%-5.0%; it projects 2030 average annual retail-sales growth of 5.0%-7.0%.
Earlier filings 4
10-K · February 25, 2026
Pinnacle West (Pinnacle West/APS) remains a vertically integrated, regulated electric utility focused on serving ~1.4 million Arizona customers through its principal subsidiary, Arizona Public Service (APS), with…
10-Q · November 3, 2025
Pinnacle West reported Q3 2025 revenue of $1,820,741,000, up $51,940,000 versus Q3 2024, with operating income of $581,846,000 (32.0% operating margin) and diluted EPS of $3.39. Operating performance improved (gross…
10-Q · May 1, 2025
Pinnacle West (consolidated with APS) reported Q1 revenue of $1,032,280 (thousands), up $80,568 (8.5%) versus Q1 2024 but down versus the prior quarter; operating margin compressed to 5.5% and Pinnacle West reported a…
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.