PNW · Q3 2025 Earnings

Bullish

Pinnacle West Capital

Reported November 3, 2025

30-second summary

Pinnacle West reported Q3 GAAP EPS of $3.39 on revenue of $1.82B (+2.9% YoY), then raised FY2025 GAAP EPS guidance to $4.90–$5.10 from $4.40–$4.60 — a ~9% midpoint lift driven by record peak demand (8,631 MW), +5.4% weather-normalized sales growth, and cooling degree-days running +9.1% above the 10-year average. Management also opened FY2026 at $4.55–$4.75 weather-normalized (below the new 2025 base, reflecting weather give-back and regulatory lag), raised long-term rate-base growth to 7–9% through 2028 (from 6–8% through 2027), and extended long-term sales growth to 5–7% through 2030. The story this quarter is the conversion of the Arizona load thesis into hard multi-year guidance figures, not the headline beat.

Headline numbers

EPS

Q3 FY2025

$3.39

Revenue

Q3 FY2025

$1.82B

+2.9% YoY

Operating margin

Q3 FY2025

31.9%

Key financials

Q3 FY2025

Metric	Q3 FY2025	YoY	Q2 FY2025	QoQ
Revenue	$1.82B	+2.9%	$1.36B	+33.9%
EPS	$3.39	—	$1.58	+114.6%
Operating margin	31.9%	—	22.6%	+929bps

Guidance

Company raised FY2025 full-year EPS guidance by ~9% (to $4.90–$5.10) and extended long-term growth targets, signaling stronger operational momentum and increased confidence in multi-year strategy.

Guidance is issued for the full year only, refreshed each quarter. Prior and new below are the same FY updated this quarter.

New guidance

Metric	Period	Guide	YoY
EPS (2026 full-year, weather-normalized)	FY 2026	$4.55 to $4.75	—
Weather-Normalized Sales Growth (2026)	FY 2026	4% to 6%	—
Customer Growth (2026)	FY 2026	1.5% to 2.5%	—

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
EPS (2025 full-year)	FY 2025	$4.40 to $4.60	$4.90 to $5.10	+$0.30 to +$0.50 (midpoint +$0.40, ~9% raise)	Raised
Rate-Based Growth (through 2028)	FY 2028	6% to 8% (through 2027)	7% to 9% (through 2028)	+1 percentage point on both low and high end; extended horizon by one year	Raised
Long-Term Weather-Normalized Sales Growth (through 2030)	FY 2030	4% to 6% (period unspecified in prior)	5% to 7% (through 2030)	+1 percentage point on both low and high end; extended through 2030	Raised

Other KPIs

Q3 FY2025

Segment	Q3 FY2025
Retail Customers	1.4 million
Peak Demand Record	8,631 MW
Residential Cooling Degree-Days vs 10-Year Avg	+9.1%
Operating Income	$581.8 million
Operating Margin	31.94%
Generating Capacity	6,500 MW
Total Consolidated Assets	$30 billion

Management tone

Q1 (not covered) → Q2 Arizona growth thesis hardens → Q3 Multi-year guidance crystallizes around evergreen 5–7%

The Desert Sun project has been promoted from "one option in the portfolio" to anchor asset with subscription commercialization embedded. Phase One is targeted for late-2030 in-service to support committed customers; Phase Two carries the 1.2 GW subscription tranche earmarked for extra-large energy users under the "growth pays for growth" construct. Management is using the subscription model to synchronize generation delivery with customer ramp — a structural answer to the stranded-asset risk question that hung over Q2's load-pipeline discussion.

Long-term horizon extension is the structural tell. Rate-based growth was extended one year (to 2028); long-term sales growth was extended two years (to 2030). Both were raised at the same time. Utilities do not extend horizons unless management has visibility on the underlying capex slate — this is the clearest signal that the previously cited ~4.5GW committed / ~20GW uncommitted load queue is converting into board-approved capital plans.

Rate case posture. Management remains on track for a Q2 2026 hearing and continues to frame the case as the mechanism for reducing regulatory lag and improving recovery timing. The 2026 guide was issued without baking in rate-case resolution assumptions, leaving the post-resolution step-up as upside to the algorithm rather than a contingency.

Recurring themes management leaned on this quarter:

Transmission as strategic earnings pillar with formula rate recovery mechanismSubscription model as financing and growth-pays-for-growth construct for large load customersDiversified customer growth across semiconductors, data centers, residential, and small businessArizona region as high-growth anchor with semiconductor/advanced manufacturing cluster accelerationRate-based growth of 7-9% through 2028 driven by Desert Sun and transmission projectsFormula rate as path to evergreen earnings stability vs. cyclical rate case lumpiness

Risks management surfaced:

Regulatory lag continuing to pressure 2026 earnings despite long-term confidenceWeather normalization in 2026 guidance vs. above-normal weather contribution to 2025Higher financing and D&A costs through rate case processYear-over-year variability in large load customer ramp timing and sequencingLong project development timelines for transmission assets creating execution risk

Answers to last quarter's watch list

2GW RFP results — Not addressed in the press release.

Continue monitoring

Rate-case filing details (formula rate, large-customer rate design) — Management remains on track for a hearing in Q2 2026 and continues to frame the formula rate as central to reducing regulatory lag. No specific filing details disclosed on this print.

Continue monitoring

Conversion of ~20GW uncommitted queue — Indirectly resolved positively: rate-based growth raised to 7–9% through 2028, long-term sales growth extended to 5–7% through 2030, and Desert Sun Phase Two 1.2 GW subscription tranche called out. The forward capex slate now embeds material queue conversion.

Resolved positively

O&M trajectory in H2 — The ~9% FY EPS raise to $4.90–$5.10 (well above the previously guided "top half" of $4.40–$4.60) implies O&M is not running hot enough to crimp upside; updated 2025 O&M range $1.025–$1.045B.

Resolved positively

Palo Verde license extension and 94MW sale-leaseback buyout — Not called out in the press release. Palo Verde noted as running at 100% capacity factor through the summer.

Continue monitoring

Q3 weather normalization — CDDs ran +9.1% above the 10-year average, so Q3 was weather-aided rather than weather-normalized. The 2026 weather-normalized guide of $4.55–$4.75 (below the raised 2025 base) makes the weather contribution explicit. Status: Resolved negatively for the weather-normalized upside thesis specifically — the 2025 raise is partly weather, not pure operational beat

2026 EPS guidance timing — Delivered on schedule: $4.55–$4.75 weather-normalized, alongside 2026 sales growth 4–6% and customer growth 1.5–2.5%.

Resolved positively

What to watch into next quarter

FY2025 landing inside $4.90–$5.10 — YTD nine-month diluted EPS is $4.93, so the FY range implies Q4 of roughly -$0.03 to +$0.17. Q4 is essentially a non-event for the FY landing mechanically; the real risk is downside surprise (Q4 loss or charge) rather than upside, given how much of the year is already in the bank.

Quantification of the 2026 lag bridge — the 2026 weather-normalized guide of $4.55–$4.75 sits below the 2025 base. Watch on the Q4 call for the explicit bridge between weather normalization and regulatory lag drag, and whether management isolates how much is recoverable in the 2026 rate case.

Rate-case formula-rate mechanism — ACC procedural milestones. Watch for staff testimony, intervenor positioning, and any indication of formula-rate scope (full earnings vs. specific cost categories). Hearing is on track for Q2 2026.

Transmission CapEx trajectory. Management has framed $300–400M as the new "blocking and tackling" baseline above the prior sub-$200M run rate; watch whether the next CapEx plan update embeds a glidepath higher as strategic transmission projects mature.

Desert Sun Phase Two subscription conversions — the 1.2 GW tranche is being actively worked with counterparties. Watch for any signed subscription commitments and disclosure of counterparty type (data center vs. semiconductor).

Customer growth in 2026 holding the 1.5–2.5% band — the 2026 guide implies a deceleration from the 2025 "high end of 2.0–2.5%." Watch whether housing-permit data and Arizona in-migration support the lower bound or threaten downside.

Sources

Pinnacle West Capital Q3 FY2025 earnings press release (8-K Exhibit 99.1): https://www.sec.gov/Archives/edgar/data/764622/000076462225000086/a8-kpnw093025exhibit991.htm

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