HONOLULU--(BUSINESS WIRE)--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
| Nine months ended
| |||||||||||||||
($ 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.
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,
| June 30,
| September 30,
| 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
| Nine months ended
| ||||||||||||||
(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.
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Three months ended
| Nine months ended
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(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
| Nine months ended
| ||||||||||||||
(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.
| |||||||||||||||
Reconciliation of GAAP to non-GAAP Measures
American Savings Bank F.S.B.
Unaudited
Three months ended
| Nine months ended
| ||||||||||||||
(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
| Nine months ended
| ||||||
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.
Contacts
Mateo Garcia
Director, Investor Relations
Telephone: (808) 543-7300
E-mail: ir@hei.com
