Pinnacle West — Second Quarter 2026 Earnings Summary

Financial Performance

• Consolidated net income attributable to common shareholders was $178.6 million ($1.43 per diluted share) for the quarter ended June 30, 2026, compared to $192.6 million ($1.58 per diluted share) in the same period in 2025.
• Operating revenues for the quarter were $1,455.7 million, up from $1,358.8 million in the prior year period.
• Operating expenses totaled $1,150.1 million for the quarter, compared to $1,051.2 million in 2025, driven by higher fuel and purchased power costs ($558.5 million vs. $477.0 million) and higher depreciation and amortization ($243.2 million vs. $228.9 million).
• Interest charges increased to $133.6 million for the quarter from $113.5 million in the prior year.
• For the six months ended June 30, 2026, consolidated net income attributable to common shareholders was $211.5 million ($1.70 per diluted share), compared to $187.9 million ($1.54 per diluted share) in 2025.
• Operating revenues for the six-month period were $2,605.3 million, up from $2,391.0 million in 2025.
• Operations and maintenance expenses decreased to $283.4 million for the quarter from $286.6 million in the prior year.
• Income taxes for the quarter were $31.3 million, down from $35.0 million in the prior year.

Guidance and Future Outlook

• The Company maintains its 2026 consolidated earnings guidance range of $4.55 to $4.75 per diluted share on a weather-normalized basis.
• Key factors and assumptions underlying the outlook are available in the second-quarter 2026 earnings presentation slides.

Business Segments and Product Lines

• Arizona Public Service (APS) achieved robust residential customer growth of 2.1% and weather-normalized sales growth of 5.6% in the second quarter.
• Overall customer growth was 2.1%, while total sales increased 9.6% for the quarter.
• APS announced plans to convert two retired coal-fired units at the Cholla Power Plant to natural gas, expected to bring approximately 380 MW of reliable, dispatchable energy online by 2029.
• The Cholla Power Plant conversion project is expected to begin construction in 2028 and is subject to regulatory approvals.
• APS expanded its Safety Net program to provide earlier notifications regarding past-due bills, potential disconnection notices, and outages.
• Financial assistance programs include discounts of up to 25% or 60% for eligible vulnerable customers, emergency utility bill assistance of up to $1,000 annually, and APS CARE providing up to $500 annually.

Market and Competitive Landscape

• Customer growth and usage were driven by early summer heat, with temperatures reaching 105°F in March and a 7% increase in residential cooling degree days compared to the prior year.
• Sustained load growth and higher energy demand contributed to financial results within company expectations.
• The company serves approximately 1.5 million Arizona homes and businesses through its principal subsidiary, APS.

Risks and Challenges

• The 2026 quarterly results were negatively impacted by higher interest charges, higher depreciation and amortization, and lower transmission service revenues.
• Forward-looking statements highlight risks including the ability to achieve timely rate recovery, regulatory changes, environmental laws, climate change impacts on the electric system, and volatility in fuel costs.
• Risks also include cybersecurity threats, physical attacks, generation and transmission facility outages, and the ability to meet future generation and transmission needs.
• The company notes that its debt securities are structurally subordinated to the debt securities and obligations of its subsidiaries.

Management Commentary and Tone

• Chairman, President and CEO Ted Geisler stated that operating performance and reliability remained strong despite lower financial results, which aligned with company expectations.
• Geisler noted that APS employees delivered strong performance maintaining reliable service during extreme summer heat and increased energy demand.
• Management highlighted a commitment to customer support, citing an example where a planned outage in Prescott Valley was delayed to provide additional support to a vulnerable elderly and disabled housing community.
• The tone emphasized resilience, with management attributing the lower earnings to specific cost factors while maintaining confidence in the long-term outlook and customer growth.

Other Key Points

• Pinnacle West Capital Corp. has consolidated assets of approximately $32.6 billion and approximately 6,600 employees in Arizona and New Mexico.
• The company operates about 6,200 megawatts of generating capacity.
• APS's call center answers 75% of customer calls within 30 seconds.
• The company partners with more than one hundred community action agencies to train representatives serving shared customers.
• A conference call and webcast were scheduled for August 4, 2026, to discuss financial results and the longer-term outlook.