1Q24 Net Income of $42.1 million and Diluted
Earnings Per Share (EPS) of $0.38
- Utility Continues to Operate Efficiently While Advancing
Wildfire Mitigation and Resilience Efforts
- One ‘Ohana Initiative Progressing, With 43 Decedent and 15
Physical Injury Registrants to Date
- Bank’s Strategic Balance Sheet Repositioning Executed in the
Previous Quarter Contributed to Improved Profitability and Net
Interest Margin
- Bank’s Release of Maui Wildfire-Related Reserves Reflects
Better Outlook for Maui Economy
Hawaiian Electric Industries, Inc. (NYSE:
HE) (HEI) today reported consolidated net income for common
stock for the first quarter of 2024 of $42.1 million and EPS of
$0.38 compared to $54.7 million and EPS of $0.50 for the first
quarter of 2023. Core net income and EPS1 for the first quarter
were $49.3 million and $0.45, respectively.
“We continue to work in earnest with key stakeholders to help
our community recover from the devastating impacts of the Maui
wildfires. The State’s One ‘Ohana fund has seen steady uptake and
the Governor recently extended the registration deadline, and
mediation discussions are underway with those impacted by the
fires. Hawaii’s legislative session recently concluded, and
although we are disappointed that we ran out of time to pass
legislation this session, our governor and legislature are highly
engaged in determining how to design legislation that best makes
sense for Hawaii, our customers and our company. Our utility is
committed to making the investments needed to mitigate wildfire
risk and advance important safety and resilience work,” said Scott
Seu, HEI president and CEO.
“American Savings Bank executed well in the first quarter,
generating higher net income as net interest margin and
profitability benefited from the strategic balance sheet
repositioning executed last quarter. The bank also released
reserves initially taken following the wildfires on Maui,
reflecting Maui’s resilient economy and stronger-than-expected
outlook.”
HAWAIIAN ELECTRIC COMPANY (HAWAIIAN ELECTRIC)
EARNINGS2
Hawaiian Electric’s net income for the first quarter of 2024 was
$39.2 million compared to $47.0 million in the first quarter of
2023, with the decrease primarily driven by the following after-tax
items:
- $12 million in higher operations and maintenance (O&M)
expenses, including $7 million of costs associated with the Maui
windstorm and wildfire event. These costs include the settlement of
indemnification claims asserted by the state and wildfire
mitigation expenses. The remaining increase in O&M included
higher insurance costs and higher vegetation management costs;
and
- $3 million impact from worse heat rate performance.
These items were partially offset by the following after-tax
items:
- $5 million higher revenues, including $4 million from the
annual revenue adjustment mechanism and $1 million from the major
project interim recovery mechanism;
- $1 million in higher interest income; and
- $1 million higher allowance for funds used during construction
related to increased capital expenditures.
Excluding incremental after-tax Maui windstorm and
wildfire-related expenses net of insurance recoveries, Hawaiian
Electric’s core net income3 for the quarter was $44.2 million. The
incremental after-tax Maui windstorm and wildfire-related expenses
of $5 million were composed of $18 million of expenses, net of $7
million of insurance-related recoveries and $6 million of costs
deferred pursuant to the Public Utilities Commission’s decision
allowing Hawaiian Electric to defer these costs.
Utility Dividend Declaration
On May 8, 2024 Hawaiian Electric’s Board of Directors declared a
$13 million quarterly cash dividend to its sole common stockholder,
HEI.
AMERICAN SAVINGS BANK EARNINGS
ASB’s first quarter 2024 net income was $20.9 million, compared
to $3.2 million in the fourth quarter of 2023 and $18.6 million in
the first quarter of 2023. Net income for the quarter reflected the
release of $1.5 million of Maui wildfire-related reserves and the
recovery of $0.4 million in cash lost or damaged during the
wildfires, partially offset by Maui wildfire-related expenses of
$1.8 million. Excluding the after-tax impacts of these items, core
net income for the first quarter was also $20.9 million.4
Total earning assets as of March 31, 2024 were $8.9 billion,
down approximately 2.7% from December 31, 2023.
Total loans were $6.1 billion as of March 31, 2024, down 1.1%
from December 31, 2023, primarily reflecting the payoff and sale of
loans in the commercial markets portfolio and a decrease in the
HELOC portfolio.
Total deposits were $8.0 billion as of March 31, 2024, down 1.7%
from December 31, 2023. Core deposits declined 1.2% from December
31, 2023, while certificates of deposit decreased 5.3% primarily
due to the paydown of $166 million in public time deposits. As of
March 31, 2024, 86% of deposits were F.D.I.C. insured or fully
collateralized, consistent with December 31, 2023. Approximately
82% of deposits were F.D.I.C. insured, up slightly from 80% as of
December 31, 2023. For the first quarter of 2024, the average cost
of funds was 117 basis points, down slightly from 118 basis points
in the linked quarter and up from 66 basis points in the prior year
quarter.
ASB’s return on average equity was 15.6%, compared to 2.7% in
the linked quarter and 15.5% in the first quarter of 2023. Return
on average assets was 0.88% for the first quarter of 2024, compared
to 0.13% in the linked quarter and 0.78% in the prior year
quarter.
In the first 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 8.0% as of March 31, 2024.
Please refer to ASB’s news release issued on April 30, 2024 for
additional information on ASB.
HOLDING AND OTHER COMPANIES
The holding and other companies’ net loss was $18.0 million in
the first quarter of 2024 compared to $10.9 million in the first
quarter of 2023. The higher net loss compared to the prior year
quarter was primarily due to wildfire-related expenses and lower
Pacific Current net income. Core net loss for the first quarter of
2024 was $15.8 million5.
EARNINGS RELEASE, WEBCAST AND CONFERENCE CALL TO DISCUSS
EARNINGS
HEI will conduct a webcast and conference call to review its
first quarter 2024 consolidated financial results today at 10:30
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 May 24, 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 See “Explanation of HEI’s Use of Certain Unaudited Non-GAAP
Measures” and the related GAAP reconciliations at the end of this
release. 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 excludes Maui
wildfire-related after-tax costs. See “Explanation of HEI’s Use of
Certain Unaudited Non-GAAP Measures” and the 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, 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. 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 March
31
(in thousands, except per share
amounts)
2024
2023
Revenues
Electric utility
$
788,578
$
830,361
Bank
105,144
93,857
Other
3,436
4,019
Total revenues
897,158
928,237
Expenses
Electric utility
725,223
754,486
Bank
79,612
70,337
Other
15,904
9,896
Total expenses
820,739
834,719
Operating income (loss)
Electric utility
63,355
75,875
Bank
25,532
23,520
Other
(12,468
)
(5,877
)
Total operating income
76,419
93,518
Retirement defined benefits credit—other
than service costs
1,282
1,152
Interest expense, net—other than on
deposit liabilities and other bank borrowings
(31,591
)
(28,798
)
Allowance for borrowed funds used during
construction
1,386
1,131
Allowance for equity funds used during
construction
3,640
3,301
Interest income
3,133
—
Income before income taxes
54,269
70,304
Income taxes
11,674
15,110
Net income
42,595
55,194
Preferred stock dividends of
subsidiaries
473
473
Net income for common stock
$
42,122
$
54,721
Basic earnings per common share
$
0.38
$
0.50
Diluted earnings per common
share
$
0.38
$
0.50
Dividends declared per common
share
$
—
$
0.36
Weighted-average number of common
shares outstanding
110,218
109,514
Weighted-average shares assuming
dilution
110,476
109,825
Net income (loss) for common stock by
segment
Electric utility
$
39,221
$
47,009
Bank
20,934
18,562
Other
(18,033
)
(10,850
)
Net income for common stock
$
42,122
$
54,721
Comprehensive income attributable to
HEI
$
32,321
$
75,209
Return on average common equity (%)
(twelve months ended)
8.1
10.0
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.
Hawaiian Electric Company, Inc. (Hawaiian
Electric) and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME DATA
(Unaudited)
Three months ended March
31
($ in thousands, except per barrel
amounts)
2024
2023
Revenues
$
788,578
$
830,361
Expenses
Fuel oil
284,296
334,097
Purchased power
159,817
152,761
Other operation and maintenance
143,890
128,316
Depreciation
62,812
60,927
Taxes, other than income taxes
74,408
78,385
Total expenses
725,223
754,486
Operating income
63,355
75,875
Allowance for equity funds used during
construction
3,640
3,301
Retirement defined benefits credit—other
than service costs
1,072
1,047
Interest expense and other charges,
net
(19,985
)
(20,246
)
Allowance for borrowed funds used during
construction
1,386
1,131
Interest income
1,432
—
Income before income taxes
50,900
61,108
Income taxes
11,180
13,600
Net income
39,720
47,508
Preferred stock dividends of
subsidiaries
229
229
Net income attributable to Hawaiian
Electric
39,491
47,279
Preferred stock dividends of Hawaiian
Electric
270
270
Net income for common stock
$
39,221
$
47,009
Comprehensive income attributable to
Hawaiian Electric
$
39,172
$
46,964
OTHER ELECTRIC UTILITY INFORMATION
Kilowatthour sales (millions)
Hawaiian Electric
1,412
1,430
Hawaii Electric Light
254
251
Maui Electric
240
255
1,906
1,936
Average fuel oil cost per barrel
$
121.84
$
139.88
Return on average common equity (%)
(twelve months ended)1
7.8
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. 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
(in thousands)
March 31, 2024
December 31, 2023
March 31, 2023
Interest and dividend income
Interest and fees on loans
$
72,971
$
72,340
$
64,842
Interest and dividends on investment
securities
14,964
15,587
14,637
Total interest and dividend income
87,935
87,927
79,479
Interest expense
Interest on deposit liabilities
17,432
17,961
6,837
Interest on other borrowings
8,154
8,721
7,721
Total interest expense
25,586
26,682
14,558
Net interest income
62,349
61,245
64,921
Provision for credit losses
(2,159
)
304
1,175
Net interest income after provision for
credit losses
64,508
60,941
63,746
Noninterest income
Fees from other financial services
4,874
4,643
4,679
Fee income on deposit liabilities
4,898
5,104
4,599
Fee income on other financial products
2,743
2,664
2,744
Bank-owned life insurance
3,584
1,707
1,425
Mortgage banking income
424
209
130
Loss on sale of investment securities
—
(14,965
)
—
Other income, net
686
693
801
Total noninterest income
17,209
55
14,378
Noninterest expense
Compensation and employee benefits
32,459
28,797
30,204
Occupancy
5,063
5,422
5,588
Data processing
4,846
5,305
5,012
Services
4,151
5,032
2,595
Equipment
2,649
3,114
2,646
Office supplies, printing and postage
1,018
1,019
1,165
Marketing
776
1,167
1,016
Other expense
4,942
9,250
6,191
Total noninterest expense
55,904
59,106
54,417
Income before income taxes
25,813
1,890
23,707
Income taxes
4,879
(1,341
)
5,145
Net income
$
20,934
$
3,231
$
18,562
Comprehensive income (loss)
$
11,166
$
70,585
$
36,992
OTHER BANK INFORMATION (annualized %,
except as of period end)
Return on average assets
0.88
0.13
0.78
Return on average equity
15.64
2.74
15.51
Return on average tangible common
equity
18.48
3.32
18.73
Net interest margin
2.75
2.63
2.85
Efficiency ratio
70.27
96.42
68.62
Net charge-offs to average loans
outstanding
0.14
0.15
0.14
As of period end
Nonaccrual loans to loans receivable held
for investment
0.53
0.46
0.24
Allowance for credit losses to loans
outstanding
1.16
1.20
1.18
Tangible common equity to tangible
assets
5.0
4.7
4.3
Tier-1 leverage ratio
8.0
7.7
7.7
Dividend paid to HEI (via ASB Hawaii,
Inc.) ($ in millions)
$
—
$
—
$
14.0
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, 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 regarding 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, and
efficiency ratio (for ASB).
The reconciling adjustments from GAAP earnings to core earnings
are limited to the costs related to the Maui wildfires. 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
(in thousands)
Three months ended March 31,
2024
Maui
wildfire-related costs
Pretax expenses:
Legal expenses
$
15,027
Outside services expenses
2,747
Provision for credit losses
(1,500
)
Other expenses
9,019
Interest expenses
4,825
Pretax expenses
30,118
Insurance recoveries
(12,577
)
Deferral of cost
(7,898
)
Wildfire-related expenses, excluding
insurance recovery and deferral
9,643
Income tax benefits2
(2,482
)
After-tax adjustments
$
7,161
HEI consolidated
net income
GAAP net income (as reported)
$
42,122
Excluding special items related to the
Maui wildfire (after tax):
Legal expenses
11,157
Outside services expenses
2,022
Provision for credit losses
(1,098
)
Other expenses
6,700
Interest expenses
3,582
After tax expenses
22,363
Insurance recoveries
(9,338
)
Deferral of cost
(5,864
)
Maui wildfire-related expenses, net of
insurance recoveries and approved deferral treatment (after
tax)
7,161
Non-GAAP (core) net income
$
49,283
GAAP Diluted earnings per share (as
reported)
$
0.38
Non-GAAP (core) Diluted earnings per
share
$
0.45
Three months ended March 31,
2024
Ratios
(%)
Based on GAAP1
Return on average equity
8.1
Based on Non-GAAP (core)
Return on average equity
9.5
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 GAAP to non-GAAP
Measures
Hawaiian Electric Company, Inc. and
Subsidiaries
Unaudited
(in thousands)
Three months ended March 31,
2024
Maui windstorm
and wildfire-related costs
Pretax expenses:
Legal expenses1
$
10,735
Outside services expenses1
784
Other expenses1
9,141
Interest expenses2
3,907
Pretax expenses
24,567
Insurance recoveries
(9,969
)
Deferral of cost
(7,898
)
Total Maui windstorm and
wildfire-related expenses, net of insurance recoveries and approved
deferral treatment
6,700
Income tax benefits3
(1,725
)
After-tax expenses
$
4,975
Hawaiian Electric
consolidated net income
GAAP net income (as reported)
$
39,221
Excluding special items related to the
Maui windstorm and wildfires (after tax):
Legal expenses
7,971
Outside services expenses
582
Other expenses
6,787
Interest expenses
2,901
Maui windstorm and wildfire-related cost
(after tax)
18,241
Insurance recovery (after tax)
(7,402
)
Deferral of cost (after tax)
(5,864
)
Total Maui windstorm and wildfire- related
expenses, net of insurance recoveries and approved deferral
treatment (after tax)
4,975
Non-GAAP (core) net income
$
44,196
Three months ended March 31,
2024
Ratios
(%)
Based on GAAP
Return on average equity
7.8
Based on Non-GAAP (core)
Return on average equity
8.0
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
(in thousands)
Three months ended March 31,
2024
Maui wildfire
related costs
Pretax expenses:
Provision for credit losses
$
(1,500
)
Professional services expense
1,708
Other expenses, net
(317
)
Pretax Maui wildfire related costs,
net
(109
)
Income tax1
29
After-tax expenses, net
$
(80
)
ASB net
income
GAAP (as reported)
$
20,934
Maui wildfire costs (after tax):
Provision for credit losses
(1,098
)
Professional services expense
1,250
Other expenses, net
(232
)
Maui wildfire related cost, net (after
tax)
(80
)
Non-GAAP (core) net income
$
20,854
Three months ended March 31,
2024
Ratios
(annualized %)
Based on GAAP
Return on average assets
0.88
Return on average equity
15.64
Return on average tangible common
equity
18.48
Efficiency ratio
70.27
Based on Non-GAAP (core)
Return on average assets
0.88
Return on average equity
15.58
Return on average tangible common
equity
18.41
Efficiency ratio
68.52
1
Current year composite statutory tax rate
of 26.8% is used for ASB amounts.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240510915101/en/
Mateo Garcia Director, Investor Relations Telephone: (808)
543-7300 E-mail: ir@hei.com
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