Full Year Net Income of $199.2 million
and Diluted Earnings Per Share (EPS) of $1.81
2023 Results Include $14.1 Million of After-tax
Maui Wildfire-Related Expenses and an $11.0 Million After-tax Loss
Resulting from ASB’s Fourth Quarter Balance Sheet Repositioning
- Core Businesses Continue to Perform Well
- Utility Continuing to Progress Resilience Work in West
Maui
- ASB’s Balance Sheet Repositioning Strengthens Balance Sheet and
Positions Bank for Improved Net Interest Margin and
Profitability
- Strong Credit Quality and Capital Position at ASB
Hawaiian Electric Industries, Inc. (NYSE: HE) (HEI) today
reported full year 2023 consolidated net income for common stock of
$199.2 million and EPS of $1.81 compared to $241.1 million and EPS
of $2.20 for 2022. Net income for the year included $14.1 million
of after-tax wildfire-related expenses, and an $11.0 million
after-tax loss on the sale of investment securities executed by
American Savings Bank (ASB) in the fourth quarter. The loss
resulted from selling low-yielding securities in order to reduce
high cost deposits, strengthening the bank’s balance sheet while
positioning the bank for improved profitability. Core net income
and EPS1 for the year were $224.3 million and $2.04, respectively,
compared to $235.0 million and $2.14 for 2022. For the fourth
quarter of 2023, consolidated net income for common stock was $48.8
million and EPS was $0.44 compared to $57.3 million and EPS of
$0.52 for the fourth quarter of 2022. Core net income and EPS1 for
the fourth quarter were $53.4 million and $0.48, respectively.
There were no core net income adjustments for the fourth quarter of
2022.
“Although 2023 was one of the most challenging years ever for
our company and the communities we serve, I am encouraged by the
collaborative efforts of so many in our state to prioritize Maui’s
recovery following the devastating August wildfires. Our hearts
continue to be with the people of Maui, and we remain committed to
supporting the recovery and rebuild effort,” said Scott Seu, HEI
president and CEO.
“Our core businesses delivered solid results under challenging
circumstances, and both the utility and bank remain focused on
supporting our communities and customers. The utility is continuing
to execute on its plans to modernize its generation system and make
our electric grids more resilient.
“The bank continues to be well-positioned with strong capital,
excellent credit quality, lending capacity and ample liquidity. In
addition, the sale of investment securities executed in the fourth
quarter further positions ASB for improved profitability and net
interest margin while strengthening the balance sheet.”
HAWAIIAN ELECTRIC COMPANY (HAWAIIAN ELECTRIC)
EARNINGS2
Full Year Results:
Hawaiian Electric’s full-year net income was $194.0 million
compared to $188.9 million in 2022, with the increase primarily
driven by the following after-tax items:
- $34 million higher revenues, including $27 million from the
annual revenue adjustment (ARA) mechanism, $5 million from the
fossil fuel cost risk-sharing mechanism and $4 million from the
major project interim recovery (MPIR) mechanism, partially offset
by lower performance incentive mechanism revenue;
- $6 million higher allowance for funds used during construction
(AFUDC) related to increased capital expenditures;
- $4 million in higher interest income; and
- $2 million in research and development tax credits.
These items were offset by the following after-tax items:
- $28 million in higher operations and maintenance (O&M)
expenses, including $8 million of labor and associated costs for
the Maui windstorm and wildfire response. The remaining increase in
O&M included higher transmission and distribution maintenance,
and higher outside services costs;
- $7 million higher interest expense due to increased borrowings;
and
- $6 million higher depreciation expense due to increasing
investments to integrate more renewable energy and improve customer
reliability and system efficiency.
Excluding incremental after-tax Maui windstorm and
wildfire-related expenses, Hawaiian Electric’s core net income3 for
2023 was $195.1 million. The incremental after-tax Maui windstorm
and wildfire-related expenses (excluding the One ‘Ohana Initiative
contribution) of $1.1 million were comprised of $29.6 million of
expenses, net of $17.5 million of insurance-related recoveries and
$10.9 million of deferral treatment of costs pursuant to the Public
Utilities Commission’s decision allowing Hawaiian Electric to defer
these costs.
Fourth Quarter Results:
Hawaiian Electric’s net income for the fourth quarter of 2023
was $58.2 million, compared to $48.6 million in the fourth quarter
of 2022, with the variance primarily driven by the following
after-tax items: $9 million of combined deferral treatment and
insurance recoveries, net of expenses, related to the Maui
windstorm and wildfires, $8 million higher revenues, including $7
million from the ARA mechanism and $1 million from the MPIR
mechanism; $2 million in research and development tax credits and
$1 million higher AFUDC; partially offset by $8 million of higher
operation and maintenance expenses primarily related to
transmission and distribution, bad debt and other outside services.
Normalizing for the deferral treatment and insurance recoveries,
and excluding incremental after-tax Maui windstorm and
wildfire-related expenses, Hawaiian Electric’s core net income3 for
the fourth quarter of 2023 was $48.9 million.
Utility Dividend Declaration
On February 9, 2024 Hawaiian Electric’s Board of Directors
declared a $13 million quarterly cash dividend to its sole common
stockholder, HEI. This is down from approximately $30 million
declared in each of the previous three consecutive quarters. With
the suspension of HEI’s dividend to its common stockholders, cash
needs at the HEI parent company are limited relative to cash needs
prior to the dividend suspension, and reducing the utility’s
dividend to HEI allows more cash to be kept at the utility,
supporting its ability to perform needed restoration work in West
Maui, make critical capital investments supporting wildfire
mitigation and in other electrical infrastructure while capital
markets access remains limited.
AMERICAN SAVINGS BANK EARNINGS
Full Year Results:
ASB’s full year 2023 net income was $53.4 million, compared to
$80.0 million in 2022. Net income for the year included $8.3
million of Maui wildfire-related expenses after tax, and an $11.0
million after-tax loss on the sale of investment securities
recorded in the fourth quarter. The loss resulted from selling
low-yielding securities in order to reduce high cost deposits,
strengthening the bank’s balance sheet while positioning the bank
for improved profitability. Core net income4 for the year was $72.6
million.
Net interest income was $252.0 million in 2023 compared to
$252.6 million in 2022, with higher interest and dividend income
approximately offset by the impacts of higher funding costs.
Noninterest income for 2023 was $45.4 million compared to $57.0
million in 2022. The decrease in noninterest income was primarily
due to a $15.0 million pre-tax ($11.0 million after-tax) loss on
sale of investment securities recorded in the fourth quarter. The
sale of investment securities was executed in order to reposition
the balance sheet by divesting securities with below-market yields
to pay down higher cost funding, positioning ASB for improved net
interest margin and profitability.
As of December 31, 2023 and compared to December 31, 2022:
- Total earning assets were $9.2 billion, up 0.50%;
- Total loans were $6.2 billion, up 3.4%; and
- Total deposits were $8.1 billion, approximately flat.
The average cost of funds was 0.93% for the full year 2023, 77
basis points higher than the prior year as higher interest rates
and a shift in funding mix increased funding costs.
ASB’s return on average equity for the full year 2023 was 11.0%
compared to 14.1% in 2022. Return on average assets for the full
year was 0.55% in 2023 compared to 0.86% in 2022. Core return on
average equity and core return on average assets4 were 14.9% and
0.75%, respectively.
Fourth Quarter Results:
Net income for the fourth quarter of 2023 was $3.2 million, and
included $2.0 million of after-tax Maui wildfire-related expenses
as well as the aforementioned loss on sale of securities. This
compared to $17.9 million in the fourth quarter of 2022. Core net
income4 for the fourth quarter was $16.2 million.
For the fourth quarter 2023, return on average equity was 2.7%,
compared to 15.7% in the fourth quarter of 2022. Core return on
average equity5 for the quarter was 13.7%. Return on average assets
was 0.13% for the fourth quarter of 2023, compared to 0.76% in the
same quarter last year. Core return on average assets5 was 0.67%.
Please refer to ASB’s news release issued on January 30, 2024 for
additional information on ASB.
HOLDING AND OTHER COMPANIES
The holding and other companies’ net loss was $48.1 million in
2023 compared to $27.8 million in 2022. The higher net loss for the
year was primarily due to the after-tax $6.2 million gain on sale
of an equity method investment recorded in 2022 at Pacific Current,
higher interest expense, lower Pacific Current net income and
wildfire-related expenses. Core net loss for the year was $43.4
million compared to $34.0 million in 20225. The fourth quarter net
loss was $12.6 million compared to $9.2 million in the fourth
quarter of 2022. The higher net loss compared to the prior year
quarter was primarily due to lower Pacific Current net income,
higher interest expense and wildfire-related expenses. Core net
loss for the fourth quarter of 2023 was $11.7 million5. There were
no core adjustments to net income for the fourth quarter of
2022.
EARNINGS RELEASE, WEBCAST AND CONFERENCE CALL TO DISCUSS
EARNINGS
HEI will conduct a webcast and conference call to review its
fourth quarter and full year 2023 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 February 27, 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.
_________________________
1 Core net income, core EPS, core return on average equity and
core return on average assets are non-GAAP measures which, for
2023, exclude Maui wildfire-related after-tax costs and, except for
the utility, the after-tax loss on sale of securities resulting
from the bank’s balance sheet repositioning executed in the fourth
quarter; and for 2022, exclude the gain on sale of an equity method
investment recorded in the first quarter at Pacific Current. See
“Explanation of HEI’s Use of Certain Unaudited Non-GAAP Measures”
and the related GAAP reconciliations. 2 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%.
3 Refer to footnote 1. 4 Refer to footnote 1. 5 Refer to footnote
1.
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. 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
Core net income is a non-GAAP measure which, for 2023, excludes
Maui wildfire-related after-tax costs and, except for the utility,
the after-tax loss on sale of investment securities resulting from
the balance sheet repositioning transaction executed in the fourth
quarter; and for 2022, excludes the gain on sale of an equity
method investment recorded in the first quarter at Pacific Current.
See “Explanation of HEI’s Use of Certain Unaudited Non-GAAP
Measures” and related GAAP reconciliations at the end of this
release.
FORWARD-LOOKING STATEMENTS
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, 2022, HEI’s Quarterly Report on
Form 10-Q for the quarter ended September 30, 2023, and HEI’s other
periodic reports that discuss important factors that could cause
HEI’s results to differ materially from those anticipated in such
statements and (i) extreme weather events, including windstorms and
other natural disasters, particularly those driven or exacerbated
by climate change, which could increase the risk of the Utilities’
equipment being damaged, becoming inoperable or contributing to a
wildfire; (ii) the impact of the Maui windstorm and wildfires
including the potential liabilities from the many lawsuits filed
against the Company and potential regulatory penalties which may
result in significant costs that may be unrecoverable through
insurance and/or rates; (iii) an increase in insurance premiums and
the inability to fully recover premiums through rates or the
potential inability to obtain wildfire and general liability
insurance coverage at reasonable rates, if available at all; (iv)
the uncertainties surrounding the Company’s access to capital and
credit markets due to the uncertainties associated with the costs
related to the Maui windstorm and wildfires; (v) the material
reduction or extended delay in dividends or other distributions
from one or more operating subsidiaries to HEI; (vi) further
downgrades by securities rating agencies in their ratings of the
securities of HEI and Hawaiian Electric and their impact on results
of financing efforts; (vii) the risks of suffering losses and
incurring liabilities that are uninsured (e.g., damages to the
Utilities’ transmission and distribution system and losses from
business interruption) or underinsured (e.g., losses not covered as
a result of insurance deductibles or other exclusions or exceeding
policy limits), and the risks associated with the operation of
transmission and distribution assets and power generation
facilities, including public and employee safety issues, and assets
causing or contributing to wildfires. 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
December 31
Years ended
December 31
(in thousands, except per share
amounts)
2023
2022
2023
2022
Revenues
Electric utility
$
854,106
$
924,951
$
3,269,521
$
3,408,587
Bank
102,947
89,218
394,663
321,068
Other
4,298
4,944
17,982
12,330
Total revenues
961,351
1,019,113
3,682,166
3,741,985
Expenses
Electric utility
768,682
849,558
2,967,363
3,109,396
Bank
86,282
66,753
317,051
219,550
Other
10,411
9,788
45,148
31,966
Total expenses
865,375
926,099
3,329,562
3,360,912
Operating income (loss)
Electric utility
85,424
75,393
302,158
299,191
Bank
16,665
22,465
77,612
101,518
Other
(6,113
)
(4,844
)
(27,166
)
(19,636
)
Total operating income
95,976
93,014
352,604
381,073
Retirement defined benefits credit—other
than service costs
1,207
883
4,768
4,411
Interest expense, net—other than on
deposit liabilities and other bank borrowings
(34,273
)
(27,462
)
(125,532
)
(103,402
)
Allowance for borrowed funds used during
construction
1,403
1,015
5,201
3,416
Allowance for equity funds used during
construction
4,091
3,143
15,164
10,574
Interest income
4,125
—
9,105
—
Loss on sales of investment securities and
gain (loss) on sales of equity-method investment
(15,609
)
—
(15,609
)
8,123
Income before income taxes
56,920
70,593
245,701
304,195
Income taxes
7,658
12,772
44,573
61,167
Net income
49,262
57,821
201,128
243,028
Preferred stock dividends of
subsidiaries
473
473
1,890
1,890
Net income for common stock
$
48,789
$
57,348
$
199,238
$
241,138
Basic earnings per common share
$
0.44
$
0.52
$
1.82
$
2.20
Diluted earnings per common
share
$
0.44
$
0.52
$
1.81
$
2.20
Dividends declared per common
share
$
—
$
0.35
$
1.08
$
1.40
Weighted-average number of common
shares outstanding
110,134
109,471
109,739
109,434
Weighted-average shares assuming
dilution
110,301
109,774
110,038
109,778
Net income (loss) for common stock by
segment
Electric utility
$
58,183
$
48,621
$
193,952
$
188,929
Bank
3,231
17,897
53,362
79,989
Other
(12,625
)
(9,170
)
(48,076
)
(27,780
)
Net income for common stock
$
48,789
$
57,348
$
199,238
$
241,138
Comprehensive income (loss) attributable
to HEI
$
117,463
$
74,864
$
245,916
$
(42,357
)
Return on average common equity (%)
(twelve months ended)
8.8
10.5
This information should be read in conjunction with the
consolidated financial statements and the notes thereto in HEI
filings with the SEC.
Hawaiian Electric Company, Inc. (Hawaiian
Electric) and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME DATA
(Unaudited)
Three months ended
December 31
Years ended
December 31
($ in thousands, except per barrel
amounts)
2023
2022
2023
2022
Revenues
$
854,106
$
924,951
$
3,269,521
$
3,408,587
Expenses
Fuel oil
329,728
391,071
1,211,420
1,265,614
Purchased power
172,779
186,757
671,769
793,584
Other operation and maintenance
126,373
126,342
533,557
497,601
Depreciation
60,924
59,503
243,705
235,424
Taxes, other than income taxes
78,878
85,885
306,912
317,173
Total expenses
768,682
849,558
2,967,363
3,109,396
Operating income
85,424
75,393
302,158
299,191
Allowance for equity funds used during
construction
4,091
3,143
15,164
10,574
Retirement defined benefits credit—other
than service costs
1,076
959
4,303
3,835
Interest expense and other charges,
net
(22,575
)
(19,681
)
(86,140
)
(76,416
)
Allowance for borrowed funds used during
construction
1,403
1,015
5,201
3,416
Interest income
2,330
—
6,454
—
Income before income taxes
71,749
60,829
247,140
240,600
Income taxes
13,067
11,709
51,193
49,676
Net income
58,682
49,120
195,947
190,924
Preferred stock dividends of
subsidiaries
229
229
915
915
Net income attributable to Hawaiian
Electric
58,453
48,891
195,032
190,009
Preferred stock dividends of Hawaiian
Electric
270
270
1,080
1,080
Net income for common stock
$
58,183
$
48,621
$
193,952
$
188,929
Comprehensive income attributable to
Hawaiian Electric
$
58,337
$
54,552
$
193,940
$
195,070
OTHER ELECTRIC UTILITY INFORMATION
Kilowatthour sales (millions)
Hawaiian Electric
1,604
1,603
6,138
6,212
Hawaii Electric Light
272
269
1,043
1,053
Maui Electric
264
282
1,046
1,089
2,140
2,154
8,227
8,354
Average fuel oil cost per barrel
$
132.47
$
152.05
$
126.73
$
141.49
Return on average common equity (%)
(twelve months ended)1
8.2
8.2
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.
American Savings Bank, F.S.B.
STATEMENTS OF INCOME DATA
(Unaudited)
Three months ended
Years ended December 31
(in thousands)
December 31, 2023
September 30, 2023
December 31, 2022
2023
2022
Interest and dividend income
Interest and fees on loans
$
72,340
$
71,540
$
60,331
$
276,688
$
207,830
Interest and dividends on investment
securities
15,587
14,096
14,315
58,095
58,044
Total interest and dividend income
87,927
85,636
74,646
334,783
265,874
Interest expense
Interest on deposit liabilities
17,961
14,446
3,755
48,905
7,327
Interest on other borrowings
8,721
8,598
4,775
33,892
5,974
Total interest expense
26,682
23,044
8,530
82,797
13,301
Net interest income
61,245
62,592
66,116
251,986
252,573
Provision for credit losses
304
8,835
2,729
10,357
2,037
Net interest income after provision for
credit losses
60,941
53,757
63,387
241,629
250,536
Noninterest income
Fees from other financial services
4,643
4,703
4,764
19,034
19,830
Fee income on deposit liabilities
5,104
4,924
4,640
19,131
18,762
Fee income on other financial products
2,664
2,440
2,628
10,616
10,291
Bank-owned life insurance
1,707
2,303
1,872
7,390
2,533
Mortgage banking income
209
341
62
910
1,692
Gain on sale of real estate
—
—
776
495
1,778
Loss on sale of investment securities,
net
(14,965
)
—
—
(14,965
)
—
Other income, net
693
627
606
2,799
2,086
Total noninterest income
55
15,338
15,348
45,410
56,972
Noninterest expense
Compensation and employee benefits
28,797
29,902
30,361
118,297
113,839
Occupancy
5,422
5,154
7,030
21,703
24,026
Data processing
5,305
5,133
4,537
20,545
17,681
Services
5,032
3,627
2,967
13,943
10,679
Equipment
3,114
3,125
2,937
11,842
10,100
Office supplies, printing and postage
1,019
1,022
1,142
4,315
4,398
Marketing
1,167
984
1,091
4,001
3,968
Other expense
9,250
7,399
6,034
28,992
20,576
Total noninterest expense
59,106
56,346
56,099
223,638
205,267
Income before income taxes
1,890
12,749
22,636
63,401
102,241
Income taxes
(1,341
)
1,384
4,739
10,039
22,252
Net income
$
3,231
$
11,365
$
17,897
$
53,362
$
79,989
Comprehensive income (loss)
$
70,585
$
(22,866
)
$
29,282
$
97,705
$
(218,844
)
OTHER BANK INFORMATION (annualized %,
except as of period end)
Return on average assets
0.13
0.47
0.76
0.55
0.86
Return on average equity
2.74
9.19
15.73
10.98
14.08
Return on average tangible common
equity
3.32
11.02
19.20
13.22
16.46
Net interest margin
2.63
2.70
2.91
2.74
2.89
Efficiency ratio
96.42
72.30
68.86
75.20
66.31
Net charge-offs to average loans
outstanding
0.15
0.07
0.06
0.12
0.03
As of period end
Nonaccrual loans to loans receivable held
for investment
0.46
0.16
0.28
Allowance for credit losses to loans
outstanding
1.20
1.23
1.21
Tangible common equity to tangible
assets
4.7
3.9
4.1
Tier-1 leverage ratio
7.7
7.7
7.8
Dividend paid to HEI (via ASB Hawaii,
Inc.) ($ in millions)
$
—
$
14.0
$
10.0
$
39.0
$
42.0
This information should be read in conjunction with the
consolidated financial statements and the notes thereto in HEI
filings with the SEC.
Explanation of HEI’s Use of Certain Unaudited Non-GAAP
Measures
HEI, Hawaiian Electric and ASB management use certain non-GAAP
measures to evaluate the performance of HEI, the utility and 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
for adjusted diluted EPS (for HEI consolidated); return on average
common equity (for HEI consolidated and Hawaiian Electric); and
returns on average equity, average tangible equity and average
assets (for ASB).
The reconciling adjustments from GAAP1 earnings to core earnings
for 2023 are limited to the costs related to the recent Maui
wildfires and, except for the utility, the loss on sale of
investment securities from the balance sheet repositioning
transaction executed in the fourth quarter. The reconciling
adjustments from GAAP1 earnings to core earnings for 2022 are
limited to the gain on sale of an equity method investment recorded
in the first quarter at Pacific Current. Management does not
consider these items to be representative of the company’s
fundamental core earnings.
Reconciliation of GAAP1 to non-GAAP
Measures
Hawaiian Electric Industries, Inc. (HEI)
and Subsidiaries
Unaudited
(in thousands)
Three months ended
December 31, 2023
Year ended
December 31, 2023
Year ended
December 31, 2022
Maui
wildfire-related costs
Pretax expenses:
Legal expenses
$
24,125
$
34,876
$
—
Outside services expenses
8,688
14,822
—
Provision for credit losses
—
5,900
—
One `Ohana Initiative Contribution
—
75,000
—
Other expenses
1,343
5,185
—
Interest expenses
1,645
2,600
—
Pretax expenses
35,801
138,383
—
Insurance recovery
(29,580
)
(104,580
)
—
Deferral of cost
(14,692
)
(14,692
)
—
Wildfire-related expenses, excluding
insurance recovery and deferral
(8,471
)
19,111
—
Pretax loss on sale of investment
securities
14,965
14,965
—
Gain on sale of equity method investment
at Pacific Current
—
—
(8,123
)
Income tax benefits2
(1,858
)
(9,050
)
1,947
After-tax adjustments
$
4,636
$
25,026
$
(6,176
)
HEI consolidated
net income
GAAP net income (as reported)
$
48,789
$
199,238
$
241,138
Excluding special items related to the
Maui wildfire (after tax):
Legal expenses
17,909
25,886
—
Outside services expenses
6,430
10,976
—
Provision for credit losses
—
4,319
—
One `Ohana Initiative Contribution
—
55,688
—
Other expenses
993
3,832
—
Interest expenses
1,222
1,931
—
After tax expenses
26,554
102,632
—
Insurance recovery
(21,963
)
(77,651
)
—
Deferral of cost
(10,909
)
(10,909
)
—
Maui wildfire-related expenses, net of
insurance recoveries and approved deferral treatment (after
tax)
(6,318
)
14,072
—
Gain on sale of equity method
investment (after tax)
—
—
(6,176
)
Loss on sale of investment securities
(after tax)
10,954
10,954
—
Total core net income adjustments
(after tax)
4,636
25,026
(6,176
)
Non-GAAP (core) net income
$
53,425
$
224,264
$
234,962
GAAP Diluted earnings per share (as
reported)
$
0.44
$
1.81
$
2.20
Non-GAAP (core) Diluted earnings per
share
$
0.48
$
2.04
$
2.14
Years ended December 31,
2023
2022
Ratios
(%)
Based on GAAP1
Return on average equity
8.8
10.5
Based on Non-GAAP (core)
Return on average equity
9.9
10.2
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 corporate 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.
Reconciliation of GAAP1 to
non-GAAP Measures
Hawaiian Electric Company, Inc. and
Subsidiaries
Unaudited
(in thousands)
Three months ended
December 31, 2023
Year ended
December 31, 2023
Maui windstorm
and wildfire-related costs
Pretax expenses:
Legal expenses2
$
18,486
$
24,737
Outside services expenses2
5,826
10,532
One `Ohana Initiative Contribution
—
75,000
Other expenses2
834
3,316
Interest expenses3
720
1,223
Pretax expenses
25,866
114,808
Insurance recovery
(23,613
)
(98,613
)
Deferral of cost
(14,692
)
(14,692
)
Total Maui windstorm and
wildfire-related expenses, net of insurance recoveries and approved
deferral treatment
(12,439
)
1,503
Income tax benefits4
3,203
(387
)
After-tax expenses
$
(9,236
)
$
1,116
Hawaiian Electric
consolidated net income
GAAP net income (as reported)
$
58,183
$
193,952
Excluding special items related to the
Maui windstorm and wildfires (after tax):
Legal expenses
13,726
18,367
Outside services expenses
4,326
7,820
One `Ohana Initiative Contribution
—
55,688
Other expenses
619
2,462
Interest expenses
534
908
Maui windstorm and wildfire-related cost
(after tax)
19,205
85,245
Insurance recovery (after tax)
(17,532
)
(73,220
)
Deferral of cost (after tax)
(10,909
)
(10,909
)
Total Maui windstorm and wildfire- related
expenses, net of insurance recoveries and approved deferral
treatment (after tax)
(9,236
)
1,116
Non-GAAP (core) net income
$
48,947
$
195,068
Years ended December 31,
2023
2022
Ratios
(%)
Based on GAAP1
Return on average equity
8.2
8.2
Based on Non-GAAP (core)
Return on average equity
8.2
8.2
1
Accounting principles generally accepted
in the United States of America.
2
Legal, outside services and other are
included in “Other operation and maintenance” on the Hawaiian
Electric and subsidiaries Consolidated Statements of Income
Data.
3
Interest expense is included in “Interest
expense and other charges, net” on the Hawaiian Electric and
subsidiaries Consolidated Statements of Income Data.
4
Current year composite statutory tax rate
of 25.75% is used for Utility amounts.
Reconciliation of GAAP1 to non-GAAP
Measures
American Savings Bank F.S.B.
Unaudited
(in thousands)
Three months ended
December 31, 2023
Year ended
December 31, 2023
Maui
wildfire-related costs and loss on sale of
securities
Pretax expenses:
Provision for credit losses
$
—
$
5,900
Professional services expense
2,405
3,705
Other expenses
309
1,666
Pretax Maui wildfire-related
costs
2,714
11,271
Pretax loss on sale of investment
securities
14,965
14,965
Income tax benefits
(4,738
)
(7,031
)
After-tax expenses
$
12,941
$
19,205
ASB net
income
GAAP (as reported)
$
3,231
$
53,362
Excluding expense related to Maui wildfire
and securities loss (after tax):
Provision for credit losses
—
4,319
Professional services expense
1,760
2,712
Other expenses
227
1,220
Loss on sale of investment securities
10,954
10,954
Maui wildfire-related cost and
securities loss (after tax)
12,941
19,205
Non-GAAP (core) net income
$
16,172
$
72,567
Three months ended
December 31, 2023
Year ended
December 31, 2023
Ratios
(annualized %)
Based on GAAP1
Return on average assets
0.13
0.55
Return on average equity
2.74
10.98
Return on average tangible common
equity
3.32
13.22
Efficiency ratio
96.42
75.20
Based on Non-GAAP (core)
Return on average assets
0.67
0.75
Return on average equity
13.73
14.94
Return on average tangible common
equity
16.63
17.98
Efficiency ratio
73.94
69.88
1
Accounting principles generally accepted
in the United States of America
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240213153280/en/
Mateo Garcia Director, Investor Relations Telephone: (808)
543-7300 E-mail: ir@hei.com
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