UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2024 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number Exact Name of Each Registrant as specified in its charter; State of Incorporation; Address; and Telephone Number 1-8962 PINNACLE WEST CAP ...

Financial Performance - Pinnacle West reported consolidated net income of $608.8 million, or $5.24 per diluted share, for full-year 2024, an increase from $501.6 million, or $4.41 per diluted share, in 2023[2]. - For Q4 2024, the company experienced a consolidated net loss of $6.8 million, or a loss of $0.06 per diluted share, compared to a net loss of $23,000 for the same period in 2023[3]. - The full-year 2024 results reflect an increase of approximately $107 million, driven by new customer rates, increased customer usage, and higher revenue from the Lost Fixed Cost Recovery adjustor mechanism[4]. - Net income attributable to common shareholders for the twelve months ended December 31, 2024, was $608,806, compared to $501,557 in 2023, marking a growth of 21.4%[24]. - Earnings per share (diluted) for the twelve months ended December 31, 2024, increased to $5.24 from $4.41 in 2023, an increase of 18.8%[24]. Revenue and Sales Growth - Operating revenues for the three months ended December 31, 2024, increased to $1,095,408 from $991,574 in 2023, representing a growth of 10.5%[24]. - Retail sales growth was 5.7% in 2024, with annual retail customer growth at 2.1%[7][8]. - APS anticipates average annual customer growth of 1.5% to 2.5% through 2027, contributing to expected retail electricity sales growth of 4% to 6% annually over the next three years[8]. Operating Income and Expenses - Operating income for the twelve months ended December 31, 2024, rose to $1,012,063, up from $824,640 in 2023, reflecting a year-over-year increase of 22.8%[24]. - Total operating expenses for the three months ended December 31, 2024, were $1,010,870, compared to $917,194 in 2023, indicating an increase of 10.2%[24]. - Interest charges for the twelve months ended December 31, 2024, were $425,742, up from $374,887 in 2023, reflecting a rise of 13.5%[24]. - Fuel and purchased power expenses for the twelve months ended December 31, 2024, increased to $1,822,566 from $1,792,657 in 2023, a rise of 1.7%[24]. Future Projections and Plans - For 2025, the company estimates consolidated earnings will be in the range of $4.40 to $4.60 per diluted share on a weather-normalized basis[15]. - APS plans to add 9,805 megawatts of renewable power, battery storage, and natural gas to the grid between 2025 and 2028, with over 90% being carbon-free[9]. Operational Metrics - The Palo Verde Generating Station achieved a capacity factor of 93.7% and exceeded 30 million MWh of net generation for the 16th consecutive year[9]. - The weighted-average common shares outstanding (diluted) for the twelve months ended December 31, 2024, were 116,232, compared to 113,804 in 2023, an increase of 2.1%[24]. - The company reported a net loss attributable to common shareholders of $6,827 for the three months ended December 31, 2024, compared to a loss of $23 in 2023[24]. - The company’s income (loss) before income taxes for the three months ended December 31, 2024, was $(2,531), compared to $7,070 in 2023, indicating a decline[24].

Core Viewpoint - Pinnacle West Capital Corporation (PNW) is expected to report its fourth-quarter 2024 results on February 25, with a consensus estimate indicating a loss of 15 cents per share and revenues of $1.06 billion, reflecting a year-over-year increase of 6.6% [1][6]. Group 1: Factors Influencing Q4 Performance - The company's top-line performance is anticipated to benefit from retail customer growth and an increase in retail electricity sales, alongside robust commercial load growth driven by data centers [3]. - Arizona Public Service's (APS) Energy Management System is expected to enhance the integration of renewable and energy storage assets, positively impacting the company's quarterly performance [4]. - However, a planned outage in the fourth quarter may have led to higher operations and maintenance expenses, with increased depreciation, amortization, and property taxes potentially offsetting some positive factors [5]. Group 2: Earnings and Revenue Estimates - The Zacks Consensus Estimate for total electric sales is projected at 7,617.83 gigawatt-hours, which is a 0.9% increase from the previous year [6]. - The company's Earnings ESP is currently at 0.00%, indicating no prediction of an earnings beat for this quarter [7]. - Pinnacle West Capital holds a Zacks Rank of 3, suggesting a neutral outlook [8].

Core Insights - Pinnacle West (PNW) is currently viewed as a more attractive investment option compared to Centuri Holdings (CTRI) for those seeking undervalued stocks [1][7] Valuation Metrics - PNW has a forward P/E ratio of 18.07, significantly lower than CTRI's forward P/E of 39.01, indicating that PNW may be undervalued [5] - The PEG ratio for PNW is 3.24, while CTRI's PEG ratio stands at 10.93, suggesting PNW has a better earnings growth outlook relative to its price [5] - PNW's P/B ratio is 1.38, compared to CTRI's P/B of 3.31, further supporting the notion that PNW is a more favorable value investment [6] Earnings Outlook - PNW is experiencing an improving earnings outlook, which is a positive indicator in the Zacks Rank model, enhancing its attractiveness as a value stock [3][7]

Core Insights - Zacks Premium offers various tools for investors to enhance their stock market strategies, including daily updates on Zacks Rank and Industry Rank, access to the Zacks 1 Rank List, Equity Research reports, and Premium stock screens [1] Zacks Style Scores - Zacks Style Scores are indicators designed to help investors select stocks with the highest potential to outperform the market within 30 days, rated from A to F based on value, growth, and momentum characteristics [2] - The Style Scores consist of four categories: Value Score, Growth Score, Momentum Score, and VGM Score, each focusing on different investment strategies [3][4][5][6] Value Score - The Value Score identifies attractive and discounted stocks using ratios such as P/E, PEG, Price/Sales, and Price/Cash Flow, appealing to value investors [3] Growth Score - The Growth Score emphasizes a company's financial strength and future outlook, analyzing projected and historical earnings, sales, and cash flow to find stocks with sustainable growth [4] Momentum Score - The Momentum Score focuses on trends in stock prices and earnings outlooks, using factors like one-week price change and monthly earnings estimate changes to identify high-momentum stocks [5] VGM Score - The VGM Score combines the three Style Scores to rate stocks based on their overall attractiveness in value, growth, and momentum, serving as a strong indicator alongside the Zacks Rank [6] Zacks Rank - The Zacks Rank is a proprietary stock-rating model that leverages earnings estimate revisions to assist investors in building successful portfolios, with 1 (Strong Buy) stocks achieving an average annual return of +25.41% since 1988, significantly outperforming the S&P 500 [7][8] Stock to Watch: Pinnacle West Capital Corporation - Pinnacle West Capital Corporation, based in Phoenix, AZ, provides electricity services in Arizona and is involved in electricity generation, transmission, and distribution [11] - The company holds a 2 (Buy) rating on the Zacks Rank and has a VGM Score of B, indicating strong potential [11] - Pinnacle West has a Value Style Score of B, supported by a forward P/E ratio of 18.47, making it attractive to value investors [12] - The Zacks Consensus Estimate for Pinnacle West's fiscal 2024 earnings has increased by $0.23 to $5.13 per share, with five analysts revising their estimates upwards in the last 60 days, and the company has an average earnings surprise of 246.2% [12]

Core Viewpoint - Pinnacle West (PNW) has received an upgrade to a Zacks Rank 2 (Buy), indicating a positive outlook based on rising earnings estimates, which significantly influence stock prices [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system emphasizes the correlation between changes in earnings estimates and stock price movements, suggesting that revisions in earnings estimates are a powerful indicator of future stock performance [4][6]. - For Pinnacle West, the recent increase in earnings estimates reflects an improvement in the company's underlying business, which is expected to drive the stock price higher [5][8]. Earnings Estimate Revisions - Pinnacle West is projected to earn $5.14 per share for the fiscal year ending December 2024, marking a year-over-year increase of 16.6% [8]. - Over the past three months, the Zacks Consensus Estimate for Pinnacle West has risen by 7.6%, indicating a positive trend in earnings expectations [8]. Zacks Rank System - The Zacks Rank system categorizes stocks based on earnings estimate revisions, with only the top 20% of stocks receiving a 'Strong Buy' or 'Buy' rating, highlighting their potential for superior returns [9][10]. - Pinnacle West's upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, suggesting a favorable outlook for near-term price movement [11].

Core Viewpoint - Pinnacle West Capital (PNW) is currently considered an attractive investment opportunity due to its strong value metrics and favorable Zacks Rank of 2 (Buy) with a Value grade of A [3][4]. Valuation Metrics - PNW has a Price to Cash Flow (P/CF) ratio of 4.98, significantly lower than the industry average of 11.47, indicating potential undervaluation [2][4]. - The stock's P/S ratio stands at 1.93, compared to the industry's average of 2.1, suggesting it is reasonably priced relative to its sales [6]. - PNW's Price to Book (P/B) ratio is 1.45, which is attractive when compared to the industry's average P/B of 2.41 [8]. Performance Trends - Over the past 52 weeks, PNW's P/CF has fluctuated between a high of 5.50 and a low of 3.98, with a median of 4.50, indicating stable cash flow performance [2]. - The P/B ratio has varied from a high of 1.64 to a low of 1.20, with a median of 1.39, reflecting consistent valuation metrics over the year [8]. Investment Strategy - Value investing remains a preferred strategy for identifying strong stocks, with investors focusing on key valuation metrics to find undervalued opportunities [5]. - The Zacks Rank system emphasizes earnings estimates and revisions, aiding in the identification of winning stocks [7].

Core Viewpoint - Pinnacle West (PNW) is currently rated as a 2 (Buy) by Zacks Rank, indicating a positive outlook for the stock in the near term [1] Industry Overview - Pinnacle West is part of the Utility - Electric Power industry, which consists of 59 companies and ranks 77 in the Zacks Industry Rank [2] - The Utilities group has seen an average gain of approximately 15% year-to-date, with Pinnacle West outperforming this average [2] Company Performance - Pinnacle West has achieved a year-to-date gain of about 18.9%, surpassing the average gain of 11.2% for Utilities stocks [3] - Over the past 90 days, the Zacks Consensus Estimate for Pinnacle West's full-year earnings has increased by 7.6%, indicating improved analyst sentiment and a stronger earnings outlook [5] Peer Comparison - Southern Co. is another notable stock in the Utilities sector, with a year-to-date return of 18.1% and a consensus EPS estimate increase of 0.6% over the past three months, also holding a Zacks Rank of 2 (Buy) [8]

Utility - Electric Power Sector Analysis - Investors may consider Pinnacle West (PNW) or PSEG (PEG) in the Utility - Electric Power sector [1] - Value investors analyze traditional metrics to determine if a company is undervalued at its current share price [2] Company Rankings and Earnings Outlook - Pinnacle West has a Zacks Rank of 2 (Buy) while PSEG has a Zacks Rank of 3 (Hold) [3] - PNW has an improving earnings outlook due to positive revisions in earnings estimates [3] Valuation Metrics - Key metrics for value investors include P/E ratio, P/S ratio, earnings yield, and cash flow per share [4] - PNW has a Value grade of B while PEG has a Value grade of D [5] - PNW's forward P/E ratio is 16.67 compared to PEG's 23.39 [7] - PNW's PEG ratio is 2.03 while PEG's is 3.15 [7] - PNW's P/B ratio is 1.45 compared to PEG's 2.66 [8] Investment Strategy - Pairing a strong Zacks Rank with an impressive Value grade can produce the best returns [6] - PNW has stronger estimate revision activity and more attractive valuation metrics than PEG [9]

Financial Data and Key Metrics Changes - The company reported earnings of $3.37 per share for Q3 2024, a decrease of $0.13 compared to the same quarter last year, attributed to higher O&M and depreciation expenses, financing costs, and income tax timing [21] - The updated 2024 earnings guidance is now in the range of $5 to $5.20 per share, with sales growth expectations adjusted to 4% to 6% for the year [23][24] - The forecasted O&M for the year has been increased to a range of $1.01 billion to $1.03 billion, and capital expenditure plans have been raised from $1.95 billion to $2.05 billion [24] Business Line Data and Key Metrics Changes - Weather-normalized sales growth for Q3 was 5.9%, with contributions from residential and both small and large commercial and industrial (C&I) customer groups [22] - C&I customer growth was particularly strong at 10.3% for the quarter, marking the third consecutive quarter with over 10% growth in this sector [22] - Retail customer growth was reported at 2.3% for the quarter, contributing to overall sales growth [22] Market Data and Key Metrics Changes - The company experienced a record-breaking summer with 70 days of temperatures exceeding 110 degrees, leading to an all-time peak energy demand of 8,210 megawatts on August 4 [9][10] - The demand from data centers and manufacturing sectors is expected to continue driving growth, with over 4,000 megawatts of extra high load factor customers currently committed [65][66] Company Strategy and Development Direction - The company is focused on long-term planning for resource adequacy, with a successful contract for the Redhawk power plant expansion expected to be in service by 2028, adding over 800 megawatts of generation and battery storage [13] - The capital plan through 2027 includes $9.65 billion of investments aimed at strengthening infrastructure and improving reliability [31] - The company aims to balance investment, cost recovery, and customer affordability while maintaining a strong financial position [30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term trajectory, reaffirming a 5% to 7% EPS growth guidance based on the midpoint of the original 2024 guidance range [30] - The regulatory environment is expected to improve, with ongoing efforts to reduce regulatory lag and enhance cost recovery mechanisms [18][37] - The company anticipates robust customer growth in the range of 1.5% to 2.5% for 2025, driven by Arizona's attractiveness for residents and businesses [27] Other Important Information - The company has been actively involved in community support programs during extreme weather, increasing energy support and crisis bill assistance [15] - The customer care phone center has been ranked first nationally among peers in customer satisfaction [16] Q&A Session Summary Question: Impact of Elections on Regulatory Environment - Management indicated that the election results could lead to continued alignment with current regulatory efforts, particularly regarding the regulatory lag docket [41][43] Question: Load Growth and Large Customers - Management confirmed that load growth is expected to remain sticky, with ongoing interest from large customers, including data centers [45][46] Question: CapEx and Regulatory Lag - Management discussed the intentional increase in CapEx and the focus on reducing regulatory lag to improve returns on equity [53][56] Question: Data Center Demand Pipeline - The company reported over 4,000 megawatts of committed data center demand and an additional 10,000 megawatts in the planning process [65][66] Question: EPS Growth and Regulatory Lag - Management clarified that the 5% to 7% EPS growth guidance assumes improvements in regulatory lag, leading to smoother and more predictable earnings [72][74] Question: Inflation and O&M Costs - Management acknowledged inflationary pressures but emphasized disciplined O&M management to mitigate impacts in future rate cases [104][106]