HEI Reports First Quarter 2024 Results
1Q24 Net Income of
- 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
“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
“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’s net income for the first quarter of 2024 was
-
$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
Utility Dividend Declaration
On
AMERICAN SAVINGS BANK EARNINGS
ASB’s first quarter 2024 net income was
Total earning assets as of
Total loans were
Total deposits were
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
Please refer to ASB’s news release issued on
HOLDING AND OTHER COMPANIES
The holding and other companies’ net loss was
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
To listen to the conference call, dial 1-888-660-6377 (
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
Investors may also wish to refer to the
________________________
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
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
CONSOLIDATED STATEMENTS OF INCOME DATA (Unaudited) |
||||||||
|
|
Three months ended |
||||||
(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
CONSOLIDATED STATEMENTS OF INCOME DATA (Unaudited) |
||||||||
|
|
Three months ended |
||||||
($ 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 |
|
|
39,491 |
|
|
|
47,279 |
|
Preferred stock dividends of |
|
|
270 |
|
|
|
270 |
|
Net income for common stock |
|
$ |
39,221 |
|
|
$ |
47,009 |
|
Comprehensive income attributable to |
|
$ |
39,172 |
|
|
$ |
46,964 |
|
OTHER ELECTRIC UTILITY INFORMATION |
|
|
|
|
||||
Kilowatthour sales (millions) |
|
|
|
|
||||
|
|
|
1,412 |
|
|
|
1,430 |
|
|
|
|
254 |
|
|
|
251 |
|
|
|
|
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
STATEMENTS OF INCOME DATA (Unaudited) |
|||||||||||
|
|
Three months ended |
|||||||||
(in thousands) |
|
|
|
|
|
|
|||||
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 |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
14.0 |
This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI filings with the
Explanation of HEI’s Use of Certain Unaudited Non-GAAP Measures
HEI,
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
Unaudited |
||||
(in thousands) |
|
Three months ended
|
||
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
|
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 |
|
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.
Reconciliation of GAAP to non-GAAP Measures
Unaudited |
||||
(in thousands) |
|
Three months ended
|
||
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 |
|
|
|
|
||
|
|
|
||
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
|
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 |
|
2 |
Interest expense is included in “Interest expense and other charges, net” on the |
|
3 |
Current year composite statutory tax rate of 25.75% is used for Utility amounts. |
Reconciliation of GAAP to non-GAAP Measures
Unaudited |
||||
(in thousands) |
|
Three months ended
|
||
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
|
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/
Director, Investor Relations
Telephone: (808) 543-7300
E-mail: ir@hei.com
Source: