Hawaiian Electric Industries Earnings Call Signals Fragile Turnaround

Hawaiian Electric Industries, Inc. ((HE)) has held its Q4 earnings call. Read on for the main highlights of the call.

Hawaiian Electric Industries’ latest earnings call struck a cautiously optimistic tone as management detailed a sharp swing back to GAAP profitability and stronger core results, backed by major legal wins and bolstered liquidity. Executives balanced this progress against sizable financing needs, regulatory uncertainty and lingering risks around the timing of Maui wildfire settlements.

Return to Profitability

Hawaiian Electric Industries reported GAAP net income of $123.1 million for 2025, or $0.71 per share, reversing an approximately $1.4 billion loss in 2024. Management attributed the dramatic turnaround primarily to settlement progress and insurance recoveries tied to the Maui wildfires, marking a crucial inflection point for the balance sheet.

Improved Consolidated Core Results

Consolidated core net income rose to $149.3 million in 2025 from $124.3 million a year earlier, a gain of about 20.1 percent. Despite this improvement, core EPS slipped from $0.98 to $0.86, about a 12.2 percent decline, as share count dynamics and other factors diluted per-share performance.

Utility Core Performance Stable

Utility core net income was essentially flat, edging down to $177.5 million in 2025 compared with $180.7 million in 2024, a decline of roughly 1.8 percent. Management framed this as resilient operational performance given elevated capital spending and higher costs, suggesting the core regulated franchise remains fundamentally steady.

Significant Legal and Settlement Progress

The company highlighted several favorable court rulings that materially advance the Maui wildfire class settlement, including a circuit court summary judgment and final class settlement approval. The Hawaii Supreme Court also denied insurers’ efforts to intervene, reducing the risk of derailment and bringing the firm closer to an expected first settlement payment of $479 million once appeals are resolved.

Strong Liquidity and Capital Market Activity

Liquidity remains a central focus, with the utility holding $486 million of unrestricted cash and the parent company holding $16 million, supplemented by sizable credit and ATM capacity at both levels. The utility also executed a $500 million debt offering and expanded its revolver to $600 million, moves designed to support an elevated capital cycle and future settlement obligations.

Progress on Wildfire Risk Reduction and Regulation

Regulators approved the company’s three-year wildfire safety strategy, and management said many operational milestones have been achieved ahead of schedule. The state’s wildfire fund study is complete and rulemaking to set a liability cap is underway, while the company plans to use securitization to fund wildfire safety and resilience projects at the lowest possible cost.

Renewable Energy and Customer Affordability

The utility achieved a 37 percent Renewable Portfolio Standard in 2025 and reiterated that it remains on track to meet the 40 percent target by 2030. Customer bills were generally stable over the year, and the company continued to offer assistance programs, providing about $1 million in payment support to help mitigate affordability concerns.

Corporate Actions and Governance

On the corporate side, the board approved a $10 million quarterly dividend to Hawaiian Electric Industries for the fourth quarter of 2025, signaling confidence in the cash profile. Management also finalized binding settlements resolving shareholder class and derivative suits using insurance proceeds and confirmed plans to divest the remaining roughly 9.9 percent stake in American Savings Bank in 2026.

Settlement Timing Risk and Appeals

Despite legal victories, management cautioned that the timing of final settlement payments still hinges on the resolution of outstanding appeals. The first major payment, expected to be $479 million, is now targeted for the second half of 2026, leaving investors exposed to calendar risk and potential delays in fully closing the wildfire chapter.

Elevated Capital Expenditure Outlook

Capex is set to remain elevated, with guidance of $550 million to $700 million in 2026, rising to $600 million to $800 million in 2027 and $600 million to $850 million in 2028. This sustained investment cycle will require significant external funding and could pressure customer rates unless offset with low-cost tools such as securitizations and supportive regulatory outcomes.

Rising Operating and Financing Costs

Management acknowledged that the slight decline in utility core earnings was driven by higher operating and maintenance costs, including previously deferred consulting and legal fees. Higher interest expense and depreciation also weighed on results, while prior-year tax credit benefits at the holding company created a tougher comparison for 2025.

Reliance on External Financing

The company plans to fund future settlement payments primarily with debt or convertible debt, leaning toward convertible instruments in the near term and a mix of debt and equity later. This strategy implies higher leverage and greater sensitivity to capital markets, particularly since most cash sits at the utility while the holding company has limited cash on hand.

Core EPS Compression

Although consolidated core net income grew meaningfully, investors saw a decline in core EPS from $0.98 to $0.86 as per-share economics compressed. Management cited share count and other mechanical factors behind this disconnect, underscoring that headline earnings growth did not fully translate into shareholder-level gains.

Regulatory and Process Execution Risk

A key regulatory swing factor is a planned non-traditional performance-based regulation rebasing process, with a joint proposal due in early March 2026. If regulators reject this approach, the company would need to revert to a more traditional 2027 test-year rate case, adding timing uncertainty and potentially delaying needed rate and cost recovery mechanisms.

Near-Term Funding and Market Dependence

Management indicated it will use its at-the-market equity program and the sale of its remaining bank stake opportunistically, depending on market conditions. Financing of settlements, particularly through convertible debt, will therefore be highly sensitive to investor appetite and pricing, layering execution risk onto the broader turnaround story.

Forward-Looking Guidance and Capital Plans

Looking ahead, management reiterated that the first major Maui settlement payment is expected in the second half of 2026, contingent on appeal outcomes, and will be financed via debt and convertible structures. They also outlined three years of heightened capex, plans to seek securitization for wildfire investments, and expectations for an extended regulatory process around liability caps and PBR rebasing that will shape the company’s risk and return profile.

Hawaiian Electric Industries’ earnings call portrayed a company moving decisively away from crisis, with restored profitability, stronger core earnings and clearer legal visibility around wildfire liabilities. Yet investors must weigh this progress against heavy capex, rising costs and dependence on capital markets and regulators, making consistent execution the key driver of future shareholder returns.