Sign in

You're signed outSign in or to get full access.

HE

HAWAIIAN ELECTRIC CO INC (HAWEL)·Q3 2024 Earnings Summary

Executive Summary

  • Q3 2024 was dominated by wildfire-related accounting items, but operational performance at the utility and bank remained solid; Hawaiian Electric (utility) posted core net income of $43.7M while HEI consolidated reported a GAAP net loss of $104.4M driven by a $203.0M additional accrual for tort liabilities and a $35.2M Pacific Current impairment .
  • Definitive settlement agreements for Maui wildfire tort litigation were signed Nov 4, moving the process toward judicial approval; management emphasized the resolution path and noted the prior “going concern” matter has been mitigated following a September equity raise (~$557.7M net) .
  • Utility wildfire risk mitigation advanced materially (PSPS program, 55+ weather stations, 39 AI cameras, >2,200 poles replaced); bank NIM expanded to 2.82% with continued strong capital/credit quality .
  • No explicit quantitative guidance was issued; key updates include settlement payment schedule (four annual installments, first expected late 2025) and continued suspension of the utility dividend to HEI .

What Went Well and What Went Wrong

What Went Well

  • “Signed Settlement Agreements a Key Milestone” enabling clearer resolution path; CEO: “The signed agreements are an important milestone… moving forward with a clearer line of sight toward resolution” .
  • Core operations strong: utility core net income of $43.7M; bank core net income of $19.4M; consolidated core EPS $0.46 despite extraordinary items .
  • Wildfire mitigation progress: PSPS program launched, 55+ weather stations and 39 AI cameras deployed, crews inspected ~37,000 poles and replaced ~2,200; grid hardening accelerating .

What Went Wrong

  • GAAP results materially impacted by nonrecurring items: additional $203.0M (pre-tax) wildfire accrual and $35.2M Pacific Current impairment; consolidated diluted EPS was -$0.91 .
  • Utility O&M elevated (insurance costs, settlement admin fees, state indemnification claims, wildfire program expenses) pressuring core utility net income versus prior year .
  • Continued dividend suspension from utility to HEI and ongoing uncertainty pending judicial approval and insurer subrogation outcomes .

Financial Results

Utility (HAWEL) – Income Statement and Key Items

MetricQ3 2023Q2 2024Q3 2024
Revenues ($USD Thousands)$794,987 $792,331 $829,617
Operating Income (Loss) ($USD Thousands)$71,358 $(1,644,440) $(104,564)
Net Income (Loss) for Common Stock ($USD Thousands)$43,461 $(1,229,394) $(82,585)
Wildfire Tort-Related Claims (Expense) ($USD Thousands)$0 $1,712,000 $163,000
Average Fuel Oil Cost per Barrel ($USD)$111.51 $120.12 $114.61

Consolidated (HEI) Context – Revenue, EPS, Net Income

MetricQ3 2023Q2 2024Q3 2024
Total Revenues ($USD Thousands)$901,873 $897,360 $938,383
Diluted EPS ($USD)$0.37 $(11.74) $(0.91)
Net Income (Loss) for Common Stock ($USD Thousands)$41,118 $(1,295,484) $(104,402)

Segment Net Income (Loss) – Mix

Segment Net Income for Common Stock ($USD Thousands)Q3 2023Q2 2024Q3 2024
Utility (Hawaiian Electric)$43,461 $(1,229,394) $(82,585)
Bank (ASB)$11,365 $(45,787) $18,778
Other (Holding & Pacific Current)$(13,708) $(10,893) $(40,595)

KPIs (Utility and Bank)

KPIQ3 2023Q2 2024Q3 2024
Total kWh Sales (millions, Utility)2,157 1,971 2,191
Bank Net Interest Margin (%)2.70 2.79 2.82
Bank Tier-1 Leverage Ratio (%)7.7 8.4 8.6

Notes: Core (non-GAAP) metrics reconciled in press release and 8‑K; Q3 2024 consolidated core EPS $0.46 and core net income $52.2M .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Settlement Payment Schedule2025–2028Payments begin no earlier than mid-2025; 4 equal installments contemplated Four annual installments of ~$478.8M; first expected late 2025 Clarified timing/amounts (maintained structure)
Going Concern DisclosureQ2 2024 → Q3 2024“Substantial doubt” due to settlement financing not yet in place Mitigated following equity raise; current liability funded; resolved Raised to mitigated/resolved
Utility Dividend to HEIOngoingSuspended per Q2 disclosure Continues to be suspended Maintained
Financing Flexibility (ATM Program)Q3 2024Not previously disclosedATM program up to $250M; none issued to date Added flexibility

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2)Current Period (Q3)Trend
Wildfire Settlement PathAgreement in principle; payments no earlier than mid-2025 Definitive agreements signed; insurer subrogation under HI Supreme Court review; first payment late 2025 Progressing toward judicial approval
PSPS & Situational AwarenessPSPS launched July 1; target 52 weather stations, 44 AI cameras by Sept PSPS activations monitored; 55+ stations and 39 AI cameras deployed; program refinement ongoing Implementation maturing
Grid HardeningCapital focus on covered conductors, pole upgrades ~37,000 pole inspections; ~2,200 replacements; reclosers, sparkless fuses Accelerating execution
Bank Profitability/NIMNIM expansion post balance sheet repositioning; core NI improved NIM rose to 2.82%; core NI $19.4M; stable insured deposits Improving
Liquidity & CapitalWorking on financing plan; going concern disclosure Going concern resolved; $557.7M equity raised; ATM in place Strengthened
Regulatory (PBR Review)Not detailedComprehensive review underway; next MRP scheduled Jan 1, 2027 Active stakeholder process
PACIFIC CURRENT Strategic ReviewASB goodwill impairment disclosed in Q2 $35.2M impairment at Pacific Current; review ongoing; limited disclosures Under evaluation
Settlement Prepayment OptionNot discussedOption to prepay at 5.5% discount rate Optional flexibility

Management Commentary

  • “The signed agreements are an important milestone… to regain the financial strength of our enterprise… moving forward with a clearer line of sight toward resolution of the wildfire-related tort litigation.” – Scott Seu, President & CEO .
  • “We have resolved the going concern issue… sufficient cash is available to fund the current liability portion.” – Scott DeGhetto, CFO .
  • “The utility continues… wildfire mitigation and resilience efforts… ASB generated strong net income and profitability, expanding net interest margin for a third consecutive quarter.” – Scott Seu .

Q&A Highlights

  • Pacific Current and ASB strategic reviews: Management confirmed ongoing reviews but declined disclosures until board decisions; acknowledged impairment at Pacific Current .
  • Insurer subrogation resolution: Supreme Court briefing underway; management hopeful of outcome favoring individual plaintiffs; noted possible negotiated resolution between plaintiffs and insurers .
  • Settlement prepayment: Option exists with a 5.5% discount rate; current plan assumes 4 annual installments .
  • Regulatory framework: Comprehensive PBR review ongoing with commission and stakeholders; next multiyear rate plan targeted for Jan 2027 .
  • Utility O&M: Higher O&M from wildfire mitigation, insurance premiums, settlement admin fees, and state indemnification costs; some items one-time .

Estimates Context

  • Wall Street consensus (S&P Global) for EPS/revenue was unavailable at the time of this analysis due to data access limits; therefore, no formal beat/miss assessment versus consensus can be provided for Q3 2024. Given the substantial non-GAAP adjustments (wildfire accruals and impairments), GAAP EPS comparisons would be distorted this quarter [GetEstimates attempt unsuccessful].

Key Takeaways for Investors

  • Settlement agreements and the resolved going concern materially de-risk near-term uncertainty; liquidity strengthened via ~$557.7M equity raise and ATM program, creating optionality including potential prepayment at 5.5% discount rate .
  • Utility operations are resilient with continued grid hardening, PSPS readiness, and measurable wildfire risk reduction; execution pace is a positive operational catalyst for regulatory and stakeholder confidence .
  • Bank performance is a stabilizer (NIM 2.82%, strong capital/credit), supporting consolidated core earnings even amid utility extraordinary items .
  • Expect limited dividend visibility from utility to HEI near-term as cash is reserved for settlement; watchboard decisions on Pacific Current and any ASB strategic outcomes for capital structure implications .
  • Regulatory path (PBR comprehensive review, next MRP in 2027) is an important medium-term driver for allowed returns and cost recovery, especially for wildfire mitigation investments; engagement appears active and constructive .
  • Near-term stock narrative hinges on judicial approval timeline and insurer subrogation rulings; positive progress could compress risk premia, while setbacks may re-introduce volatility .
  • Focus on core metrics (utility core NI $43.7M; consolidated core EPS $0.46) to gauge underlying health while extraordinary items flow through GAAP results; monitor O&M normalization as program spending stabilizes .

Additional Relevant Press Releases (Q3 timeframe)

  • Equity offering announcements and successful closing (~$557.7M net proceeds) supporting settlement financing .
  • Wildfire safety strategy update highlighting ~60% reduction in wildfire risk from utility equipment and detailed program investments .

Citations:

  • Q3 results press release and reconciliations:
  • Q3 8-K and Exhibit 99 details:
  • Q3 earnings call transcript:
  • Q2 press release and call (prior quarter baseline):