HE Hawaiian Electric Industries

Signed Settlement Agreements a Key Milestone in Efforts to Regain HEI’s Financial Strength

2Q Going Concern Matter Resolved

Utility and Bank Operations Remain Solid

• On November 4, HEI and Other Parties Finalized the Settlement Agreements to Resolve the Maui Wildfire Tort Litigation
• 3Q24 Net Loss of $104.4 million, or $0.91 Per Share, Includes an Additional $203.0 million ($150.7 million after tax) Accrual for Estimated Wildfire Liabilities From Tort-Related Legal Claims1, and a $35.2 million ($26.1 million after tax) Asset Impairment at Pacific Current
• Excluding the Additional Accrual of Estimated Wildfire Liabilities, Pacific Current Asset Impairment and Other Maui Wildfire-Related Expenses, Results Were Solid for the Quarter, with Core Net Income2 and Core EPS2 of $52.2 million and $0.46
• Utility Continues to Advance Wildfire Mitigation and Resilience Efforts
• Bank Net Interest Margin Expanded to 2.82%, Up 3 Basis Points Compared to 2Q
• Continued Strength of Bank Credit Quality and Capital Position

Hawaiian Electric Industries, Inc. (NYSE - HE) (HEI) today reported a consolidated net loss for the third quarter of 2024 of $104.4 million, or $0.91 per share. The quarter’s results include an additional $203.0 million loss accrued for estimated wildfire liabilities from tort-related legal claims ($150.7 million after tax)1, and a $35.2 million asset impairment recorded at Pacific Current ($26.1 million after tax). Total insurance recoveries and deferrals, net of other wildfire-related expenses, provided a benefit of $27.4 million ($20.3 million after tax). Excluding these items, core net income3 was $52.2 million for the third quarter of 2024 compared to $61.5 million in the third quarter of 2023.

“On Monday, HEI, Hawaiian Electric and other defendants signed definitive settlement agreements with individual and class plaintiffs in the Maui wildfire tort litigation. Our Board and management team are pleased to sign these final settlement agreements just three months after agreeing in principle to key terms. The signed agreements are an important milestone in our efforts to offer those who suffered loss an accelerated path to recovery, and to regain the financial strength of our enterprise. We remain confident that this settlement represents the best outcome for HEI and our community, and we are moving forward with a clearer line of sight toward resolution of the wildfire-related tort litigation,” said Scott Seu, HEI president and CEO.

“In the third quarter we took an additional accrual for estimated wildfire liabilities from tort-related legal claims, while also reclassifying a portion of the estimated liabilities as long term. The additional accrual and reclassification, along with the recent capital raise to fund the first settlement payment, allowed us to resolve the going concern matter disclosed in the previous quarter’s financials, and take another step toward regaining HEI’s financial strength.

“Our core operations performed well in the third quarter. The utility continued making important advancements on key strategic initiatives, such as wildfire mitigation and resilience efforts, and American Savings Bank generated strong net income and profitability, expanding net interest margin for a third consecutive quarter.

“In accordance with our strategy to support a strong, financially healthy enterprise that will empower a thriving future for Hawaii, HEI has been undertaking a comprehensive review of strategic options for Pacific Current, which is what led us to report a non-cash asset impairment for the quarter. We will continue to take prudent and measured actions to ensure our companies are well positioned to serve our customers and community for the long term,” said Seu.

There is no set timetable for HEI’s comprehensive review of strategic options for Pacific Current, and there can be no assurances that any actions regarding Pacific Current will result from this evaluation. Neither HEI nor Pacific Current expect to disclose or provide an update concerning developments related to this process unless or until HEI’s Board of Directors has approved a definitive course of action or otherwise determined that further disclosure is appropriate or necessary.

GOING CONCERN ASSESSMENT UPDATE

On September 25, 2024 HEI announced the successful closing on an offering of newly issued shares of common stock, resulting in $557.7 million in net proceeds. As noted in the prospectus supplement filed with the SEC on September 24, 2024, HEI intends to use the net proceeds to fund its contribution to the expected Maui wildfire tort litigation settlement and for general corporate purposes. HEI expects to pay the total $1.92 billion payment obligation in four equal annual installments of approximately $478.8 million, and the company is now positioned to fund HEI’s first settlement payment, which is expected to be required in late 2025. As a result, management has determined that the conditions that led to the substantial doubt regarding HEI’s ability to continue as a going concern have been mitigated.

HAWAIIAN ELECTRIC COMPANY (HAWAIIAN ELECTRIC) EARNINGS4

Hawaiian Electric’s net loss for the third quarter of 2024 was $82.6 million, compared to net income of $43.5 million in the third quarter of 2023, with the decrease primarily driven by the following after-tax items:

• $121 million after-tax loss due to the accrual of additional estimated wildfire liabilities related to tort-related legal claims and cross claims as of September 30, 2024 (net of insurance recovery);
• $15 million in higher operations and maintenance (O&M) expenses, including $25 million of higher costs partially offset by $10 million of higher Maui windstorm and wildfire related expenses incurred in 2023. The $25 million in higher costs included higher property and general liability insurance costs, higher costs related to the settlement of indemnification claims asserted by the state, higher wildfire mitigation program expenses, settlement administration fees, the write-off of preliminary engineering costs related to federal grant applications that were not awarded, timing of maintenance outage work and increased station maintenance, among other items.

These items were partially offset by the following after-tax items:

• $5 million in higher revenues, including $4 million from the annual revenue adjustment mechanism and $1 million from the major project interim recovery mechanism;
• $2 million lower interest expense; and
• $2 million impact primarily from favorable tax rate adjustments.

Excluding incremental after-tax Maui windstorm and wildfire-related expenses net of insurance recoveries, Hawaiian Electric’s core net income5 for the quarter was $43.7 million. Incremental after-tax Maui windstorm and wildfire-related expenses of $126.3 million were composed of $169.5 million of Maui wildfire-related expenses, net of $36.8 million of insurance-related recoveries and $6.4 million of costs deferred pursuant to the Public Utilities Commission’s decision allowing Hawaiian Electric to defer these costs.

Utility Dividend Update

The utility dividend to HEI continues to be suspended, as holding company cash needs are limited following HEI’s recent equity issuance and last year’s suspension of the dividend to HEI’s common equity shareholders.

AMERICAN SAVINGS BANK EARNINGS

ASB’s third quarter 2024 net income of $18.8 million compared to a net loss of $45.8 million in the second quarter of 2024 and net income of $11.4 million in the third quarter of 2023. Core net income for the third quarter was $19.4 million.6

Total earning assets as of September 30, 2024 were $8.8 billion, down approximately 3.8% from December 31, 2023.

Total loans were $6.1 billion as of September 30, 2024, down 2.3% from December 31, 2023.

Total deposits were $8.0 billion as of September 30, 2024, down 1.8% from December 31, 2023. Core deposits declined 2.1% from December 31, 2023, while certificates of deposit were approximately flat. As of September 30, 2024, 83% of deposits were F.D.I.C. insured or fully collateralized, with approximately 79% of deposits F.D.I.C. insured. For the third quarter of 2024, the average cost of funds was 118 basis points, up from 115 basis points in the linked quarter and 102 basis points in the prior year quarter.

In the third quarter of 2024, ASB did not pay a dividend to HEI, supporting ASB’s healthy capital levels. ASB had a Tier 1 leverage ratio of 8.6% as of September 30, 2024.

Please refer to ASB’s news release issued on October 30, 2024 for additional information on ASB.

HOLDING AND OTHER COMPANIES

The holding and other companies’ net loss was $40.6 million in the third quarter of 2024 compared to $13.7 million in the third quarter of 2023. The quarter’s results include a $35.2 million ($26.1 million after tax) asset impairment recorded at Pacific Current in connection with the strategic review process underway, and $4.7 million ($3.5 million after tax) of Maui wildfire related expenses, net of insurance recoveries. Excluding the asset impairment and Maui wildfire-related expenses, core net loss7 for the third quarter of 2024 was $10.9 million.

EARNINGS RELEASE, WEBCAST AND CONFERENCE CALL TO DISCUSS EARNINGS

HEI will conduct a webcast and conference call to review its third quarter 2024 consolidated financial results today at 11:30 a.m. Hawaii time (4:30 p.m. Eastern).

To listen to the conference call, dial 1-888-660-6377 (U.S.) or 1-929-203-0797 (international) and enter passcode 2393042. Parties may also access presentation materials (which include reconciliation of non-GAAP measures) and/or listen to the conference call by visiting the conference call link on HEI’s website at www.hei.com under “Investor Relations,” sub-heading “News and Events — Events and Presentations.”

A replay will be available online and via phone. The online replay will be available on HEI’s website about two hours after the event. The audio replay will also be available about two hours after the event through November 22, 2024. To access the audio replay, dial 1-800-770-2030 (U.S.) or 1-647-362-9199 (international) and enter passcode 2393042.

HEI and Hawaiian Electric Company, Inc. (Hawaiian Electric) intend to continue to use HEI’s website, www.hei.com, as a means of disclosing additional information; such disclosures will be included in the Investor Relations section of the website. Accordingly, investors should routinely monitor the Investor Relations section of HEI’s website, in addition to following HEI’s, Hawaiian Electric’s and ASB’s press releases, HEI’s and Hawaiian Electric’s Securities and Exchange Commission (SEC) filings and HEI’s public conference calls and webcasts. Investors may sign up to receive e-mail alerts via the “Investor Relations” section of the website. The information on HEI’s website is not incorporated by reference into this document or into HEI’s and Hawaiian Electric’s SEC filings unless, and except to the extent, specifically incorporated by reference.

Investors may also wish to refer to the Public Utilities Commission of the State of Hawaii (PUC) website at https://hpuc.my.site.com/cdms/s/ to review documents filed with, and issued by, the PUC. No information on the PUC website is incorporated by reference into this document or into HEI’s and Hawaiian Electric’s SEC filings.

ABOUT HEI

The HEI family of companies provides the energy and financial services that empower much of the economic and community activity of Hawaii. HEI’s electric utility, Hawaiian Electric, supplies power to approximately 95% of Hawaii’s population and is undertaking an ambitious effort to decarbonize its operations and the broader state economy, and modernize and harden the grid to ensure resilience and public safety. Its banking subsidiary, ASB, is one of Hawaii’s largest financial institutions, providing a wide array of banking and other financial services and working to advance economic growth, affordability and financial fitness. HEI also helps advance Hawaii’s sustainability goals through investments by its non-regulated subsidiary, Pacific Current. For more information, visit www.hei.com.

NON-GAAP MEASURES

Measures described as “core” are non-GAAP measures which exclude after-tax Maui wildfire-related costs, the goodwill impairment taken in connection with HEI’s ongoing review of strategic options for ASB and the asset impairment taken in connection with HEI’s ongoing review of strategic options for Pacific Current. See “Explanation of HEI’s Use of Certain Unaudited Non-GAAP Measures” and the related GAAP reconciliations at the end of this release.

This release may contain “forward-looking statements,” which include statements that are predictive in nature, depend upon or refer to future events or conditions, and usually include words such as “will,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “predicts,” “estimates” or similar expressions. In addition, any statements concerning future financial performance, ongoing business strategies or prospects or possible future actions are also forward-looking statements. Forward-looking statements are based on current expectations and projections about future events and are subject to risks, uncertainties and the accuracy of assumptions concerning HEI and its subsidiaries, the performance of the industries in which they do business and economic, political and market factors, among other things. These forward-looking statements are not guarantees of future performance.

Forward-looking statements in this release should be read in conjunction with the “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” discussions (which are incorporated by reference herein) set forth in HEI’s Annual Report on Form 10-K for the year ended December 31, 2023 and HEI’s other SEC periodic reports and filings that discuss important factors that could cause HEI’s results to differ materially from those anticipated in such statements. These forward-looking statements speak only as of the date of the report, presentation or filing in which they are made. Except to the extent required by the federal securities laws, HEI, Hawaiian Electric, ASB and their subsidiaries undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries CONSOLIDATED STATEMENTS OF INCOME DATA (Unaudited)

 

 

Three months ended September 30

 

Nine months ended September 30

(in thousands, except per share amounts)

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Revenues

 

 

 

 

 

 

 

 

Electric utility

 

$

829,617

 

 

$

794,987

 

 

$

2,410,526

 

 

$

2,419,539

 

Bank

 

 

105,144

 

 

 

100,974

 

 

 

312,231

 

 

 

291,716

 

Other

 

 

3,622

 

 

 

5,912

 

 

 

10,144

 

 

 

14,540

 

Total revenues

 

 

938,383

 

 

 

901,873

 

 

 

2,732,901

 

 

 

2,725,795

 

Expenses

 

 

 

 

 

 

 

 

Electric utility (includes $163 million and $1,875 million of provision for Wildfire tort-related claims recorded in quarter and nine months ended September 30, 2024)

 

 

934,181

 

 

 

723,629

 

 

 

4,096,175

 

 

 

2,198,681

 

Bank (includes $82 million of goodwill impairment recorded in second quarter of 2024)

 

 

81,972

 

 

 

88,415

 

 

 

320,913

 

 

 

230,769

 

Other (includes $35 million of impairment recorded in third quarter of 2024)

 

 

48,778

 

 

 

14,718

 

 

 

84,917

 

 

 

34,737

 

Total expenses

 

 

1,064,931

 

 

 

826,762

 

 

 

4,502,005

 

 

 

2,464,187

 

Operating income (loss)

 

 

 

 

 

 

 

 

Electric utility

 

 

(104,564

)

 

 

71,358

 

 

 

(1,685,649

)

 

 

220,858

 

Bank

 

 

23,172

 

 

 

12,559

 

 

 

(8,682

)

 

 

60,947

 

Other

 

 

(45,156

)

 

 

(8,806

)

 

 

(74,773

)

 

 

(20,197

)

Total operating income (loss)

 

 

(126,548

)

 

 

75,111

 

 

 

(1,769,104

)

 

 

261,608

 

Retirement defined benefits credit—other than service costs

 

 

1,106

 

 

 

1,256

 

 

 

3,669

 

 

 

3,561

 

Interest expense, net—other than on deposit liabilities and other bank borrowings

 

 

(32,085

)

 

 

(32,629

)

 

 

(96,076

)

 

 

(91,259

)

Allowance for borrowed funds used during construction

 

 

1,331

 

 

 

1,372

 

 

 

4,061

 

 

 

3,798

 

Allowance for equity funds used during construction

 

 

3,300

 

 

 

4,000

 

 

 

10,276

 

 

 

11,073

 

Interest income

 

 

3,662

 

 

 

—

 

 

 

9,929

 

 

 

—

 

Income (loss) before income taxes

 

 

(149,234

)

 

 

49,110

 

 

 

(1,837,245

)

 

 

188,781

 

Income tax expense (benefit)

 

 

(45,303

)

 

 

7,521

 

 

 

(480,898

)

 

 

36,915

 

Net income (loss)

 

 

(103,931

)

 

 

41,589

 

 

 

(1,356,347

)

 

 

151,866

 

Preferred stock dividends of subsidiaries

 

 

471

 

 

 

471

 

 

 

1,417

 

 

 

1,417

 

Net income (loss) for common stock

 

$

(104,402

)

 

$

41,118

 

 

$

(1,357,764

)

 

$

150,449

 

Basic earnings (loss) per common share

 

$

(0.91

)

 

$

0.37

 

 

$

(12.16

)

 

$

1.37

 

Diluted earnings (loss) per common share

 

$

(0.91

)

 

$

0.37

 

 

$

(12.16

)

 

$

1.37

 

Dividends declared per common share

 

$

—

 

 

$

0.36

 

 

$

—

 

 

$

1.08

 

Weighted-average number of common shares outstanding

 

 

114,358

 

 

 

109,728

 

 

 

111,636

 

 

 

109,606

 

Weighted-average shares assuming dilution

 

 

114,358

 

 

 

109,917

 

 

 

111,636

 

 

 

109,932

 

Net income (loss) for common stock by segment

 

 

 

 

 

 

 

 

Electric utility

 

$

(82,585

)

 

$

43,461

 

 

$

(1,272,758

)

 

$

135,769

 

Bank

 

 

18,778

 

 

 

11,365

 

 

 

(6,075

)

 

 

50,131

 

Other

 

 

(40,595

)

 

 

(13,708

)

 

 

(78,931

)

 

 

(35,451

)

Net income (loss) for common stock

 

$

(104,402

)

 

$

41,118

 

 

$

(1,357,764

)

 

$

150,449

 

Comprehensive income (loss) attributable to HEI

 

$

(65,042

)

 

$

6,243

 

 

$

(1,326,611

)

 

$

128,453

 

Return on average common equity (%) (twelve months ended)

 

 

 

 

 

 

NM

 

 

 

9.5

 

NM Not meaningful.

This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI filings with the SEC. Results of operations for interim periods are not necessarily indicative of results to be expected for future interim periods or the full year.

Hawaiian Electric Company, Inc. (Hawaiian Electric) and Subsidiaries CONSOLIDATED STATEMENTS OF INCOME DATA (Unaudited)

 

 

Three months ended September 30

 

Nine months ended September 30

($ in thousands, except per barrel amounts)

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Revenues

 

$

829,617

 

 

$

794,987

 

 

$

2,410,526

 

 

$

2,419,539

 

Expenses

 

 

 

 

 

 

 

 

Fuel oil

 

 

279,038

 

 

 

267,438

 

 

 

821,986

 

 

 

881,692

 

Purchased power

 

 

189,165

 

 

 

177,795

 

 

 

530,310

 

 

 

498,990

 

Other operation and maintenance

 

 

162,197

 

 

 

142,508

 

 

 

453,648

 

 

 

407,184

 

Wildfire tort-related claims

 

 

163,000

 

 

 

—

 

 

 

1,875,000

 

 

 

—

 

Depreciation

 

 

62,812

 

 

 

61,165

 

 

 

188,436

 

 

 

182,781

 

Taxes, other than income taxes

 

 

77,969

 

 

 

74,723

 

 

 

226,795

 

 

 

228,034

 

Total expenses

 

 

934,181

 

 

 

723,629

 

 

 

4,096,175

 

 

 

2,198,681

 

Operating income (loss)

 

 

(104,564

)

 

 

71,358

 

 

 

(1,685,649

)

 

 

220,858

 

Allowance for equity funds used during construction

 

 

3,300

 

 

 

4,000

 

 

 

10,276

 

 

 

11,073

 

Retirement defined benefits credit—other than service costs

 

 

959

 

 

 

1,132

 

 

 

3,103

 

 

 

3,227

 

Interest expense and other charges, net

 

 

(20,223

)

 

 

(22,447

)

 

 

(61,625

)

 

 

(63,565

)

Allowance for borrowed funds used during construction

 

 

1,331

 

 

 

1,372

 

 

 

4,061

 

 

 

3,798

 

Interest income

 

 

1,671

 

 

 

—

 

 

 

4,555

 

 

 

—

 

Income (loss) before income taxes

 

 

(117,526

)

 

 

55,415

 

 

 

(1,725,279

)

 

 

175,391

 

Income tax expense (benefit)

 

 

(35,439

)

 

 

11,456

 

 

 

(454,017

)

 

 

38,126

 

Net income (loss)

 

 

(82,087

)

 

 

43,959

 

 

 

(1,271,262

)

 

 

137,265

 

Preferred stock dividends of subsidiaries

 

 

228

 

 

 

228

 

 

 

686

 

 

 

686

 

Net income (loss) attributable to Hawaiian Electric

 

 

(82,315

)

 

 

43,731

 

 

 

(1,271,948

)

 

 

136,579

 

Preferred stock dividends of Hawaiian Electric

 

 

270

 

 

 

270

 

 

 

810

 

 

 

810

 

Net income (loss) for common stock

 

$

(82,585

)

 

$

43,461

 

 

$

(1,272,758

)

 

$

135,769

 

Comprehensive income (loss) attributable to Hawaiian Electric

 

$

(82,583

)

 

$

43,384

 

 

$

(1,272,851

)

 

$

135,603

 

OTHER ELECTRIC UTILITY INFORMATION

 

 

 

 

 

 

 

 

Kilowatthour sales (millions)

 

 

 

 

 

 

 

 

Hawaiian Electric

 

 

1,644

 

 

 

1,624

 

 

 

4,526

 

 

 

4,534

 

Hawaii Electric Light

 

 

272

 

 

 

268

 

 

 

780

 

 

 

771

 

Maui Electric

 

 

275

 

 

 

265

 

 

 

762

 

 

 

782

 

 

 

 

2,191

 

 

 

2,157

 

 

 

6,068

 

 

 

6,087

 

Average fuel oil cost per barrel

 

$

114.61

 

 

$

111.51

 

 

$

118.76

 

 

$

124.70

 

Return on average common equity (%) (twelve months ended)1

 

 

 

 

 

 

NM

 

 

 

7.9

 

1 Simple average. NM Not meaningful.

 This information should be read in conjunction with the consolidated financial statements and the notes thereto in Hawaiian Electric filings with the SEC. Results of operations for interim periods are not necessarily indicative of results to be expected for future interim periods or the full year.

American Savings Bank, F.S.B. STATEMENTS OF INCOME DATA (Unaudited)

 

 

Three months ended

 

Nine months ended September 30

(in thousands)

 

September 30, 2024

 

June 30, 2024

 

September 30, 2023

 

 

2024

 

 

 

2023

Interest and dividend income

 

 

 

 

 

 

 

 

 

 

Interest and fees on loans

 

$

73,654

 

$

72,960

 

 

$

71,540

 

 

$

219,585

 

 

$

204,348

Interest and dividends on investment securities

 

 

14,001

 

 

13,218

 

 

 

14,096

 

 

 

42,183

 

 

 

42,508

Total interest and dividend income

 

 

87,655

 

 

86,178

 

 

 

85,636

 

 

 

261,768

 

 

 

246,856

Interest expense

 

 

 

 

 

 

 

 

 

 

Interest on deposit liabilities

 

 

19,018

 

 

18,015

 

 

 

14,446

 

 

 

54,465

 

 

 

30,944

Interest on other borrowings

 

 

6,403

 

 

6,479

 

 

 

8,598

 

 

 

21,036

 

 

 

25,171

Total interest expense

 

 

25,421

 

 

24,494

 

 

 

23,044

 

 

 

75,501

 

 

 

56,115

Net interest income

 

 

62,234

 

 

61,684

 

 

 

62,592

 

 

 

186,267

 

 

 

190,741

Provision for credit losses

 

 

248

 

 

(1,910

)

 

 

8,835

 

 

 

(3,821

)

 

 

10,053

Net interest income after provision for credit losses

 

 

61,986

 

 

63,594

 

 

 

53,757

 

 

 

190,088

 

 

 

180,688

Noninterest income

 

 

 

 

 

 

 

 

 

 

Fees from other financial services

 

 

5,188

 

 

5,133

 

 

 

4,703

 

 

 

15,195

 

 

 

14,391

Fee income on deposit liabilities

 

 

5,156

 

 

4,630

 

 

 

4,924

 

 

 

14,684

 

 

 

14,027

Fee income on other financial products

 

 

3,131

 

 

2,960

 

 

 

2,440

 

 

 

8,834

 

 

 

7,952

Bank-owned life insurance

 

 

2,993

 

 

2,255

 

 

 

2,303

 

 

 

8,832

 

 

 

5,683

Mortgage banking income

 

 

363

 

 

364

 

 

 

341

 

 

 

1,151

 

 

 

701

Gain on sale of real estate

 

 

—

 

 

—

 

 

 

—

 

 

 

—

 

 

 

495

Other income, net

 

 

658

 

 

423

 

 

 

627

 

 

 

1,767

 

 

 

2,106

Total noninterest income

 

 

17,489

 

 

15,765

 

 

 

15,338

 

 

 

50,463

 

 

 

45,355

Noninterest expense

 

 

 

 

 

 

 

 

 

 

Compensation and employee benefits

 

 

31,485

 

 

29,802

 

 

 

29,902

 

 

 

93,746

 

 

 

89,500

Occupancy

 

 

5,630

 

 

5,220

 

 

 

5,154

 

 

 

15,913

 

 

 

16,281

Data processing

 

 

4,974

 

 

4,960

 

 

 

5,133

 

 

 

14,780

 

 

 

15,240

Services

 

 

3,816

 

 

4,250

 

 

 

3,627

 

 

 

12,217

 

 

 

8,911

Equipment

 

 

2,436

 

 

2,477

 

 

 

3,125

 

 

 

7,562

 

 

 

8,728

Office supplies, printing and postage

 

 

1,014

 

 

1,006

 

 

 

1,022

 

 

 

3,038

 

 

 

3,296

Marketing

 

 

885

 

 

747

 

 

 

984

 

 

 

2,408

 

 

 

2,834

Goodwill impairment

 

 

—

 

 

82,190

 

 

 

—

 

 

 

82,190

 

 

 

—

Other expense

 

 

5,806

 

 

5,813

 

 

 

7,399

 

 

 

16,561

 

 

 

19,742

Total noninterest expense

 

 

56,046

 

 

136,465

 

 

 

56,346

 

 

 

248,415

 

 

 

164,532

Income (loss) before income taxes

 

 

23,429

 

 

(57,106

)

 

 

12,749

 

 

 

(7,864

)

 

 

61,511

Income tax expense (benefit)

 

 

4,651

 

 

(11,319

)

 

 

1,384

 

 

 

(1,789

)

 

 

11,380

Net income (loss)

 

$

18,778

 

$

(45,787

)

 

$

11,365

 

 

$

(6,075

)

 

$

50,131

Comprehensive income (loss)

 

$

58,982

 

$

(44,154

)

 

$

(22,866

)

 

$

25,994

 

 

$

27,120

OTHER BANK INFORMATION (annualized %, except as of period end)

 

 

 

 

 

 

 

 

Return on average assets

 

 

0.81

 

 

(1.97

)

 

 

0.47

 

 

 

(0.09

)

 

 

0.70

Return on average equity

 

 

14.28

 

 

(33.97

)

 

 

9.19

 

 

 

(1.52

)

 

 

13.62

Return on average tangible common equity

 

 

14.28

 

 

(39.84

)

 

 

11.02

 

 

 

(1.69

)

 

 

16.36

Net interest margin

 

 

2.82

 

 

2.79

 

 

 

2.70

 

 

 

2.78

 

 

 

2.77

Efficiency ratio

 

 

70.30

 

 

176.20

 

 

 

72.30

 

 

 

104.94

 

 

 

69.69

Net charge-offs to average loans outstanding

 

 

0.15

 

 

0.15

 

 

 

0.07

 

 

 

0.15

 

 

 

0.11

As of period end

 

 

 

 

 

 

 

 

 

 

Nonaccrual loans to loans receivable held for investment

 

 

0.42

 

 

0.53

 

 

 

0.16

 

 

 

 

 

Allowance for credit losses to loans outstanding

 

 

1.07

 

 

1.11

 

 

 

1.23

 

 

 

 

 

Tangible common equity to tangible assets

 

 

6.0

 

 

5.4

 

 

 

3.9

 

 

 

 

 

Tier-1 leverage ratio

 

 

8.6

 

 

8.4

 

 

 

7.7

 

 

 

 

 

Dividend paid to HEI (via ASB Hawaii, Inc.) ($ in millions)

 

$

—

 

$

—

 

 

$

14.0

 

 

$

—

 

 

$

39.0

This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI filings with the SEC. Results of operations for interim periods are not necessarily indicative of results to be expected for future interim periods or the full year.

Explanation of HEI’s Use of Certain Unaudited Non-GAAP Measures

HEI and ASB management use certain non-GAAP measures to evaluate the performance of HEI and the bank. Management believes these non-GAAP measures provide useful information and are a better indicator of the companies’ core operating activities. Core earnings and other financial measures as presented here may not be comparable to similarly titled measures used by other companies. The accompanying tables provide a reconciliation of reported GAAP1 earnings to non-GAAP core earnings and returns on average equity and average assets for the bank.

The reconciling adjustments from GAAP earnings to core earnings are limited to the costs related to the Maui wildfires, the goodwill impairment taken in connection with HEI’s ongoing review of strategic options for ASB and the asset impairment taken in connection with HEI’s ongoing review of strategic options for Pacific Current. Management does not consider these items to be representative of the company’s fundamental core earnings.

Reconciliation of GAAP to non-GAAP Measures Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries Unaudited

 

Three months ended September 30

 

Nine months ended September 30

(in thousands)

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Maui wildfire-related costs

 

 

 

 

 

 

 

Pretax expenses:

 

 

 

 

 

 

 

Legal expenses

$

17,963

 

 

$

10,751

 

 

$

57,990

 

 

$

10,751

 

Outside services expenses

 

1,331

 

 

 

6,134

 

 

 

5,856

 

 

 

6,134

 

Provision for credit losses

 

(200

)

 

 

5,900

 

 

 

(2,500

)

 

 

5,900

 

Wildfire tort-related claims

 

203,000

 

 

 

75,000

 

 

 

1,915,000

 

 

 

75,000

 

Other expenses

 

10,864

 

 

 

3,842

 

 

 

26,814

 

 

 

3,842

 

Interest expenses

 

3,438

 

 

 

955

 

 

 

11,649

 

 

 

955

 

Pretax expenses

 

236,396

 

 

 

102,582

 

 

 

2,014,809

 

 

 

102,582

 

Insurance recoveries

 

(52,158

)

 

 

(75,000

)

 

 

(83,610

)

 

 

(75,000

)

Deferral of cost

 

(8,589

)

 

 

—

 

 

 

(24,143

)

 

 

—

 

Wildfire-related expenses, excluding insurance recovery and deferral

 

175,649

 

 

 

27,582

 

 

 

1,907,056

 

 

 

27,582

 

Pretax goodwill impairment

 

—

 

 

 

—

 

 

 

82,190

 

 

 

—

 

Pretax asset impairment

 

35,216

 

 

 

—

 

 

 

35,216

 

 

 

—

 

Income tax benefits2

 

(54,308

)

 

 

(7,192

)

 

 

(516,209

)

 

 

(7,192

)

After-tax adjustments

$

156,557

 

 

$

20,390

 

 

$

1,508,253

 

 

$

20,390

 

1 Accounting principles generally accepted in the United States of America. 2 Current year composite statutory tax rate of 25.75% is used for Utility and Other amounts and current year composite statutory tax rate of 26.80% is used for ASB amounts. Note: Other segment (Holding and Other Companies) wildfire-related expenses (legal, outside services and other) are included in “Expenses-Other” and interest expense is included in “Interest expense, net—other than on deposit liabilities and other bank borrowings” on the HEI and subsidiaries’ Consolidated Statements of Income Data. See Electric Utilities and Bank tables below for more detail.

 

 

Three months ended September 30

 

Nine months ended September 30

(in thousands)

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

HEI consolidated net income (loss)

 

 

 

 

 

 

 

GAAP net income (loss) (as reported)

$

(104,402

)

 

$

41,118

 

 

$

(1,357,764

)

 

$

150,449

 

Excluding special items related to the Maui wildfire (after tax):

 

 

 

 

 

 

 

Legal expenses

 

13,329

 

 

 

7,977

 

 

 

43,040

 

 

 

7,977

 

Outside services expenses

 

985

 

 

 

4,546

 

 

 

4,323

 

 

 

4,546

 

Provision for credit losses

 

(146

)

 

 

4,319

 

 

 

(1,830

)

 

 

4,319

 

Wildfire tort-related claims

 

150,727

 

 

 

55,688

 

 

 

1,421,887

 

 

 

55,688

 

Other expenses

 

8,067

 

 

 

2,839

 

 

 

19,913

 

 

 

2,839

 

Interest expenses

 

2,552

 

 

 

709

 

 

 

8,649

 

 

 

709

 

After tax expenses

 

175,514

 

 

 

76,078

 

 

 

1,495,982

 

 

 

76,078

 

Insurance recoveries

 

(38,727

)

 

 

(55,688

)

 

 

(62,080

)

 

 

(55,688

)

Deferral of cost

 

(6,377

)

 

 

—

 

 

 

(17,926

)

 

 

—

 

Maui wildfire-related expenses, net of insurance recoveries and approved deferral treatment (after tax)

 

130,410

 

 

 

20,390

 

 

 

1,415,976

 

 

 

20,390

 

Goodwill impairment (after-tax)

 

—

 

 

 

—

 

 

 

66,130

 

 

 

—

 

Asset impairment (after-tax)

 

26,147

 

 

 

—

 

 

 

26,147

 

 

 

—

 

Non-GAAP (core) net income

$

52,155

 

 

$

61,508

 

 

$

150,489

 

 

$

170,839

 

GAAP Diluted earnings (loss) per share (as reported)

$

(0.91

)

 

$

0.37

 

 

$

(12.16

)

 

$

1.37

 

Non-GAAP (core) Diluted earnings per share

$

0.46

 

 

$

0.56

 

 

$

1.35

 

 

$

1.55

 

Reconciliation of GAAP to non-GAAP Measures Hawaiian Electric Company, Inc. and Subsidiaries Unaudited

 

Three months ended September 30

 

Nine months ended September 30

(in thousands)

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Maui windstorm and wildfires related costs

 

 

 

 

 

 

 

Pretax expenses:

 

 

 

 

 

 

 

Legal expenses1

$

11,821

 

 

$

6,251

 

 

$

40,169

 

 

$

6,251

 

Outside services expenses1

 

639

 

 

 

4,706

 

 

 

2,420

 

 

 

4,706

 

Wildfire tort-related claims

 

203,000

 

 

 

75,000

 

 

 

1,915,000

 

 

 

75,000

 

Other expenses1

 

10,257

 

 

 

2,482

 

 

 

25,139

 

 

 

2,482

 

Interest expenses2

 

2,533

 

 

 

503

 

 

 

8,964

 

 

 

503

 

Pretax expenses

 

228,250

 

 

 

88,942

 

 

 

1,991,692

 

 

 

88,942

 

Insurance recoveries

 

(49,625

)

 

 

(75,000

)

 

 

(75,973

)

 

 

(75,000

)

Deferral of cost

 

(8,589

)

 

 

—

 

 

 

(24,143

)

 

 

—

 

Total Maui windstorm and wildfires related expenses, net of insurance recoveries and approved deferral treatment

 

170,036

 

 

 

13,942

 

 

 

1,891,576

 

 

 

13,942

 

Income tax benefits3

 

(43,784

)

 

 

(3,590

)

 

 

(487,081

)

 

 

(3,590

)

After-tax expenses

$

126,252

 

 

$

10,352

 

 

$

1,404,495

 

 

$

10,352

 

 

 

 

 

 

 

 

 

Hawaiian Electric consolidated net income (loss)

 

 

 

 

 

 

 

GAAP net income (loss) (as reported)

$

(82,585

)

 

$

43,461

 

 

$

(1,272,758

)

 

$

135,769

 

Excluding special items related to the Maui windstorm and wildfires (after tax):

 

 

 

 

 

 

 

Legal expenses

 

8,776

 

 

 

4,641

 

 

 

29,825

 

 

 

4,641

 

Outside services expenses

 

475

 

 

 

3,495

 

 

 

1,797

 

 

 

3,495

 

Wildfire tort-related claims

 

150,727

 

 

 

55,688

 

 

 

1,421,887

 

 

 

55,688

 

Other expenses

 

7,616

 

 

 

1,843

 

 

 

18,666

 

 

 

1,843

 

Interest expenses

 

1,881

 

 

 

373

 

 

 

6,656

 

 

 

373

 

Maui windstorm and wildfires related expenses (after tax)

 

169,475

 

 

 

66,040

 

 

 

1,478,831

 

 

 

66,040

 

Insurance recoveries (after tax)

 

(36,846

)

 

 

(55,688

)

 

 

(56,410

)

 

 

(55,688

)

Deferral of cost (after tax)

 

(6,377

)

 

 

—

 

 

 

(17,926

)

 

 

—

 

Total Maui windstorm and wildfires related expenses, net of insurance recoveries and approved deferral treatment (after tax)

 

126,252

 

 

 

10,352

 

 

 

1,404,495

 

 

 

10,352

 

Non-GAAP (core) net income

$

43,667

 

 

$

53,813

 

 

$

131,737

 

 

$

146,121

 

1 Legal, outside services and other are included in “Other operation and maintenance” on the Hawaiian Electric and subsidiaries Consolidated Statements of Income Data. 2 Interest expense is included in “Interest expense and other charges, net” on the Hawaiian Electric and subsidiaries Consolidated Statements of Income Data. 3 Current year composite statutory tax rate of 25.75% is used for Utility amounts.

Reconciliation of GAAP to non-GAAP Measures American Savings Bank F.S.B. Unaudited

 

Three months ended September 30

 

Nine months ended September 30

(in thousands)

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Maui wildfire related costs and goodwill impairment

 

 

 

 

 

 

 

Pretax expenses:

 

 

 

 

 

 

 

Provision for credit losses

$

(200

)

 

$

5,900

 

 

$

(2,500

)

 

$

5,900

 

Professional services expense

 

1,134

 

 

 

1,300

 

 

 

4,043

 

 

 

1,300

 

Other expenses, net

 

(42

)

 

 

1,357

 

 

 

(308

)

 

 

1,357

 

Pretax Maui wildfire related costs, net

 

892

 

 

 

8,557

 

 

 

1,235

 

 

 

8,557

 

Pretax goodwill impairment

 

—

 

 

 

—

 

 

 

82,190

 

 

 

—

 

Income tax benefit1

 

(239

)

 

 

(2,293

)

 

 

(16,391

)

 

 

(2,293

)

After-tax expenses

$

653

 

 

$

6,264

 

 

$

67,034

 

 

$

6,264

 

 

 

 

 

 

 

 

 

ASB net income (loss)

 

 

 

 

 

 

 

GAAP (as reported)

$

18,778

 

 

$

11,365

 

 

$

(6,075

)

 

$

50,131

 

Excluding expense relating to Maui wildfire costs and goodwill impairment (after tax):

 

 

 

 

 

 

 

Provision for credit losses

 

(146

)

 

 

4,319

 

 

 

(1,830

)

 

 

4,319

 

Professional services expense

 

830

 

 

 

952

 

 

 

2,960

 

 

 

952

 

Other expenses, net

 

(31

)

 

 

993

 

 

 

(226

)

 

 

993

 

Goodwill impairment

 

—

 

 

 

—

 

 

 

66,130

 

 

 

—

 

Maui wildfire related cost, net and goodwill impairment (after tax)

 

653

 

 

 

6,264

 

 

 

67,034

 

 

 

6,264

 

Non-GAAP (core) net income

$

19,431

 

 

$

17,629

 

 

$

60,959

 

 

$

56,395

 

 

Three months ended September 30

 

Nine months ended September 30

 

2024

 

2023

 

2024

 

2023

Ratios (annualized %)

 

 

 

 

 

 

 

Based on GAAP

 

 

 

 

 

 

 

Return on average assets

0.81

 

0.47

 

(0.09)

 

0.70

Return on average equity

14.28

 

9.19

 

(1.52)

 

13.62

Return on average tangible common equity

14.28

 

11.02

 

(1.69)

 

16.36

Efficiency ratio

70.30

 

72.30

 

104.94

 

69.69

Based on Non-GAAP (core)

 

 

 

 

 

 

 

Return on average assets

0.84

 

0.73

 

0.87

 

0.78

Return on average equity

14.78

 

14.25

 

15.24

 

15.32

Return on average tangible common equity

14.78

 

17.09

 

16.94

 

18.40

Efficiency ratio

68.93

 

68.89

 

68.64

 

68.56

1 Current year composite statutory tax rate of 26.80% is used for ASB amounts.

 

1 The $203.0 million accrual was partially offset by a $40.0 million insurance receivable ($29.7 million after tax). 2 See the “Explanation of HEI’s Use of Certain Unaudited Non-GAAP Measures” and the related GAAP reconciliation at the end of this release. 3 Refer to footnote 2. 4 Utility amounts indicated as after-tax in this earnings release are based upon adjusting items using a current year composite statutory tax rate of 25.75%. 5 Refer to footnote 2. 6 Refer to footnote 2. 7 Refer to footnote 2.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241108072507/en/

Mateo Garcia         Director, Investor Relations         Telephone: (808) 543-7300 E-mail: ir@hei.com