Hawaiian Electric Industries Earnings Call: Progress Amid Challenges

Hawaiian Electric Industries, Inc. ((HE)) has held its Q1 earnings call. Read on for the main highlights of the call.

Hawaiian Electric Industries, Inc. (HEI) recently held an earnings call that conveyed a cautiously optimistic sentiment. The company highlighted its significant progress in resolving the Maui wildfire litigation and strengthening its financial flexibility through strategic asset sales and debt reduction. Positive legislative support for wildfire mitigation and the reinstatement of the utility dividend were also noted as favorable developments. However, the company acknowledged the challenges posed by ongoing wildfire-related expenses and losses from asset sales.

Financial Progress and Settlement Resolution

HEI has made substantial strides in resolving the Maui wildfire tort litigation, with a supportive decision from the Hawaii State Supreme Court. The company anticipates completing the remaining administrative steps early next year, which will lead to the first $479 million payment.

Stronger Financial Position

The company’s financial position has been bolstered by the sale of American Savings Bank and the divestiture of Pacific Current assets. These moves allowed HEI to retire approximately $384 million of debt, thereby enhancing its financial flexibility.

Legislative Support for Wildfire Mitigation

The Hawaii state legislature’s passage of Senate Bill 897 marks a significant step forward. This bill directs the Public Utilities Commission to establish a liability cap on economic damages from future wildfires and authorizes securitization for wildfire safety improvements.

Utility Dividend Reinstatement

In a positive development for shareholders, Hawaiian Electric’s Board of Directors has reinstated a $10 million quarterly dividend after a temporary suspension.

Core Net Income Growth

HEI reported a growth in utility core net income for the quarter, reaching $49.7 million, up from $44.2 million in the first quarter of 2024. This increase was driven by improved heat rate performance and lower bad debt expense.

Maui Wildfire Related Expenses

The quarter’s financial performance was impacted by $4.5 million of pretax Maui wildfire-related expenses, with $2.5 million recorded at the utility.

Loss on Asset Sale

HEI recorded a $13.2 million pretax loss on the sale of Pacific Current’s largest asset, the Hamakua power plant.

Higher Insurance Costs

The utility faced increased insurance costs, which partially offset the financial gains from improved heat rate performance and other benefits.

Forward-Looking Guidance

Looking ahead, HEI is focused on strengthening its financial position and operational focus. The company reported a first-quarter net income of $26.7 million or $0.15 per share, with a core net income of $39.8 million or $0.23 per share, excluding certain losses and wildfire expenses. HEI plans to make its first $479 million settlement payment in early 2026 and has contributed $75 million to the $1.99 billion One ‘Ohana initiative for wildfire relief. The company aims to finance future settlement payments with a combination of debt and equity while investing in utility infrastructure to support clean energy goals and improve safety and reliability.

In summary, Hawaiian Electric Industries, Inc. has demonstrated resilience and strategic foresight in its recent earnings call. The company is making notable progress in resolving litigation issues and strengthening its financial standing. Despite challenges from wildfire-related expenses and asset sale losses, HEI’s proactive measures and legislative support position it well for future growth and stability.