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HAWAIIAN ELECTRIC INDUSTRIES INC (HE)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue was $799.2M and diluted EPS from continuing operations was $0.17; consolidated diluted EPS was $(0.40) given discontinued operations from ASB and wildfire-related effects .
  • Hawaiian Electric utility core net income was ~$49.0M, flat year over year, with higher O&M offset by revenue growth and operational gains; consolidated core EPS from continuing operations was $0.20 .
  • A unanimous Hawaii Supreme Court decision clarified insurer subrogation limits, providing key momentum to finalize the Maui wildfire settlement, with preliminary approval expected Q2 and final approval targeted Q4 2025 (subject to court timing) .
  • Strategic actions: sale of 90.1% of American Savings Bank (ASB) in Dec-2024 to reduce holding company debt, and prefunding ~$479M for the first settlement installment, supporting liquidity and a focus on the utility; management stated no additional equity raise or ATM drawdowns are contemplated near term .
  • Potential stock catalysts: legislative progress on securitization/wildfire recovery fund and final judicial approval of settlement; risks include elevated wildfire/O&M costs and regulatory outcomes .

What Went Well and What Went Wrong

What Went Well

  • “The past year was pivotal… significant progress… foundation for long-term success,” including definitive settlement agreements and favorable Supreme Court ruling that insurers cannot separately sue defendants beyond agreed settlement amounts .
  • Utility execution on wildfire mitigation: ~$120M invested in 2024 for grid hardening, PSPS, situational awareness tools (weather stations, AI cameras), vegetation management, reducing ignition risk .
  • Renewables and customer affordability: utility achieved a 36% RPS in 2024 (up from 33%), typical residential bill decreased 7%, and $18M bill credits returned .

What Went Wrong

  • GAAP results materially impacted by wildfire accruals: FY 2024 net loss $(1,426)M; utility FY net loss $(1,226)M driven by $1,875M pretax wildfire tort-related claims; Q4 consolidated diluted EPS was $(0.40) .
  • Higher O&M pressure in Q4 (+$30M; +$25M after-tax) from indemnification settlements, wildfire mitigation, and higher insurance costs; utility Q4 GAAP net income fell to $46M from $58M YoY .
  • “Holding and Other” losses increased YoY due to Pacific Current impairment and higher wildfire-related expenses; Q4 “Holding and Other” net loss of $(17)M vs $(13)M YoY .

Financial Results

MetricQ4 2023Q4 2024YoY Change
Total Revenues ($M)$853.4 $799.2 -6.4% (calc; sources )
Electric Utility Revenues ($M)$850.0 $796.2 -6.3% (calc; sources )
Diluted EPS – Continuing Ops ($)$0.41 $0.17 -58.5% (calc; sources )
Diluted EPS – Total ($)$0.44 $(0.40) NM
Operating Income (EBIT) ($M)$74.3 $53.7 -27.8% (calc; sources )
EBIT Margin (%)8.7% (74.3/853.4; sources )6.7% (53.7/799.2; sources )-200 bps (calc; sources )
Net Income – Continuing Ops ($M)$29.6 $29.6 0.0% (calc; sources )
Net Income Margin – Continuing Ops (%)3.5% (29.6/853.4; sources )3.7% (29.6/799.2; sources )+20 bps (calc; sources )
Consensus (S&P Global)N/A (unavailable)N/A (unavailable)—

Note: S&P Global consensus estimates were unavailable due to data request limit; comparisons vs estimates not provided.

Segment breakdown (continuing operations):

Segment MetricQ4 2023Q4 2024
Electric Utility Net Income ($M)$58.2 $46.4
Other (Holding/Pacific Current) Net Loss ($M)$(12.6) $(17.2)
Electric Utility Revenues ($M)$850.0 $796.2
Other Revenues ($M)$3.4 $3.0

Key operating KPIs:

KPIQ4 2023Q4 2024
Kilowatthour Sales – Hawaiian Electric (MWh, millions)1,604 1,608
Kilowatthour Sales – Hawaii Electric Light (MWh, millions)272 267
Kilowatthour Sales – Maui Electric (MWh, millions)264 276
Total Kilowatthours (MWh, millions)2,140 2,151
Avg Fuel Oil Cost per Barrel ($)$132.47 $104.38
Weighted-Average Diluted Shares (000s)110,301 172,466
Core Diluted EPS – Continuing Ops ($)$0.34 $0.20
Utility Core Net Income ($M)$48.9 $49.0

Non-GAAP adjustments (wildfire-related, net of insurance/deferrals; after tax):

MetricQ4 2023Q4 2024
Wildfire-related after-tax adjustment ($M)$(8.3) $5.6

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Utility CapEx ($M)FY 2025Baseline ~$300 $350–$375 Raised
Wildfire Safety Strategy Spend ($M)2025–2027N/A~$450 total; ~$400 capex New
Additional CapEx – EPRM/Resilience ($M)FY 2026N/A+$150–$175 (incremental) New
Additional CapEx – EPRM/Resilience ($M)FY 2027N/A+$200–$250 (incremental) New
Equity IssuanceNear termATM in placeNo equity raise or ATM drawdowns contemplated Maintained (no issuance)
Dividend – Utility to HEINear termSuspendedContinues to be suspended Maintained
Target Credit MetricsMedium termN/ATarget investment-grade; manage FFO/debt within rating agency ranges New/Clarified
Settlement Timing2025First installment late 2025/early 2026Preliminary approval Q2 2025; final approval targeted Q4 2025 (timing may shift) Clarified milestones

Earnings Call Themes & Trends

TopicQ2 2024 (prior two quarters)Q3 2024 (prior quarter)Q4 2024 (current)Trend
Maui Wildfire SettlementAgreement in principle; $1.99B HE/HECO; accrual $1.71B pretax; process outlined Definitive agreement signed; four $479M installments; additional $203M accrual Supreme Court ruling in favor; timeline to preliminary/final approvals detailed Improving clarity
Liquidity & FinancingPlan under development; substantial doubt disclosure; suspending utility dividend Equity raise $558M; cash on hand $678M (holdco), $148M (utility); resolved going concern Holdco cash $566M; $380M ASB proceeds to debt; ~$479M prefunded restricted cash; confident access, no equity raise planned Strengthened
Legislative (Wildfire Fund/Securitization)Outlining options; not specific Progress; stakeholders engaged Active debate; securitization viewed as customer-beneficial; outcome still early; agencies want backstop fund Positive momentum, uncertain outcome
Wildfire Mitigation ExecutionPSPS launched; ~52 weather stations; 44 AI cameras; ~$120M spend Expanded deployments; pole inspections/replacements Three-year plan filed; ~$450M program (2025–27), ~$400M capex Scaling
Renewables & Customer BillsNew solar+storage projects; supportive trajectory Continued progress RPS 36% (vs 33%); residential bills down 7%; $18M credits Improving
ASB Strategic ActionsGoodwill impairment recorded; review ongoing Review; impairment at Pacific Current Sale of 90.1% of ASB; discontinued ops loss reflects sale; proceeds to reduce debt Executed

Management Commentary

  • “The past year was pivotal in our company’s history… settlement agreements… favorable Hawaii Supreme Court decision… sale of over 90% of American Savings Bank… rapid progress in wildfire mitigation… 36% renewable portfolio standard… typical residential bill decreased 7%… $18M bill credits” – Scott Seu (CEO) .
  • “With these collective actions, we ended 2024 in the strongest liquidity position in our company's history” – Scott Seu .
  • “We don't have any anticipated equity raises, and we don't have any anticipated drawdowns or use on the ATM facility” – Scott DeGhetto (CFO) .
  • “We do expect an increasing level of potential CapEx… $350–$375M in 2025; incremental $150–$175M (2026) and $200–$250M (2027)” – Paul Ito (Utility CFO) .

Q&A Highlights

  • Settlement finalization confidence: management views Supreme Court decision as “very positive” and a “major step” toward final approval; outlined process with preliminary approval expected Q2, objections/opt-outs Q3, final hearing Q4 2025 (timing subject to court) .
  • CapEx trajectory: 2025 targeted $350–$375M; additional EPRM/resilience projects add $150–$175M (2026) and $200–$250M (2027) atop baseline ~$300M .
  • Legislative path and securitization: bills reintroduced with broader stakeholder support; securitization seen as lowering financing costs for customers; rating agencies prefer a backstop fund; outcomes still evolving .
  • Financing: prefunded first payment; confident capital markets access; multiple inbound proposals; explicitly no near-term equity issuance or ATM use .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024 EPS/Revenue/EBITDA was unavailable at the time of this analysis due to data access limits; as a result, explicit beat/miss vs consensus cannot be provided (we attempted S&P Global retrieval but hit request limits).
  • Given the magnitude of wildfire-related GAAP adjustments and discontinued operations, we expect analysts to focus on core earnings, utility core net income trajectory, O&M normalization, and CapEx pacing, with potential upward revisions to CapEx forecasts for 2025–2027 tied to wildfire safety strategy .

Key Takeaways for Investors

  • Settlement visibility improved materially after the Supreme Court decision; judicial approvals are the next milestones and likely stock catalysts as the process advances through 2025 .
  • Liquidity is robust with first installment prefunded and ASB sale proceeds earmarked for debt reduction; management signaled no near-term equity issuance, reducing dilution risk .
  • Utility core earnings held ~flat YoY in Q4 despite higher O&M; watch trajectory of O&M normalization and rate mechanisms as wildfire mitigation spend scales .
  • CapEx outlook is rising: $350–$375M in 2025 and additional project-driven increases in 2026–27; supportive legislative outcomes (securitization/backstop fund) could improve financing costs and credit trajectory .
  • Renewables/affordability: 36% RPS and 7% bill decline demonstrate operational and policy execution; favorable fuel cost tailwinds (lower $/barrel) aided Q4 .
  • Risk factors: regulatory outcomes (PBR review, wildfire fund design), litigation timing, higher property/liability insurance costs, and continued wildfire-related expenses at holding/other .
  • Trading lens: headlines around legislative progress, settlement court approvals, and any change in equity issuance stance are likely to drive near-term moves; medium term, focus on CapEx execution, rate base growth, and FFO/debt path toward investment-grade targets .