Pinnacle West Capital Corporation (PNW) has announced the issuance of \(800 million in senior notes, divided equally between 4.90% Senior Notes due 2028 and 5.15% Senior Notes due 2030, under their Registration Statement on Form S-3 dated May 12, 2025. The company anticipates issuance-related expenses totaling approximately \)1.13 million, covering regulatory fees, legal, accounting, rating agency services, and other ancillary costs.
This capital raise is strategically vital for Pinnacle West as it supports an increased capital expenditure plan estimated at \(5.3 billion for 2023 through 2025. This plan aims to meet the demands from Arizona's robust economic growth, particularly from significant industrial investments such as the expanded facilities of Taiwan Semiconductor Manufacturing Company (TSMC), which alone is increasing its regional investment to \)65 billion, projected to employ over 6,000 workers.
Recent quarterly earnings reports illustrate the company’s strong financial position. As of fiscal year ending December 31, 2024, Pinnacle West reported total assets of approximately \(27.25 billion and total liabilities of approximately \)19.25 billion. Long-term debt stood at around \(8.06 billion, indicating that the new \)800 million senior notes represent a roughly 10% addition to existing long-term debt, a manageable increase aligned with ongoing infrastructure investment.
In the second quarter of 2024, Pinnacle West’s earnings per share (EPS) improved significantly, reaching \(1.76 per share, up by \)0.82 compared to the same quarter the prior year. This growth was driven by new customer rates, weather benefits, and continued robust sales growth, particularly a 10% increase within the commercial and industrial (C&I) segment. Weather-normalized sales growth for the quarter was 5.5%, aligning closely with longer-term guidance.
The company faces manageable headwinds including rising interest expense due to higher debt balances and increased interest rates, alongside higher depreciation and amortization expenses. However, operational and maintenance efficiencies continue to progress, helping to offset inflationary pressures amidst an expanding customer base and the broader economic landscape in Arizona.
This debt issuance plays a critical role in fortifying Pinnacle West’s financial framework to sustain its ambitious capital projects, supporting continued service reliability and capacity enhancements required by Arizona’s accelerating population and industrial growth. The firm maintains a disciplined focus on managing operational costs and optimizing financing strategies, with attention to credit metric feedback from rating agencies post the rate case.
Overall, Pinnacle West Capital’s latest senior notes offering demonstrates a proactive approach to financing its growth trajectory, underscored by strong financial performance and strategic investments in infrastructure aligned with regional economic expansion. Investors and stakeholders can observe a robust outlook supported by solid fundamentals and fair debt scaling relative to assets and liabilities.
For further details, access the original SEC filing here: https://sec.gov/Archives/edgar/data/764622/000110465925049467/tm2513558d4_ex99-1.htm
Tags: Pinnacle West Capital, Senior Notes Offering, Arizona Economic Growth, Infrastructure Investment, Energy Sector Debt Financing