HEI Reports Second Quarter 2024 Results

Rhea-AI Summary

Hawaiian Electric Industries (NYSE: HE) reported a net loss of $1.30 billion, or $11.74 per share, for Q2 2024. This includes a $1.71 billion loss from estimated wildfire liabilities, an $82.2 million loss from American Savings Bank's goodwill impairment, and $9.8 million in other Maui wildfire-related expenses. Excluding these items, core net income was $49.1 million.

The company announced an agreement to settle all tort claims related to the Maui wildfires. Hawaiian Electric's net loss was $1,229.4 million, while American Savings Bank reported a net loss of $45.8 million. The utility dividend to HEI has been suspended due to going concern assessments.

Positive

• Agreement reached to settle all Maui wildfire-related tort claims, providing clarity for the company's future
• Core operations remain strong across the enterprise
• Bank's net interest margin expanded to 2.79%, up 4 basis points compared to Q1
• Strong bank credit quality and release of reserves reflect healthy Hawaii economy
• Utility continues to advance wildfire mitigation and resilience efforts

Negative

• Consolidated net loss of $1.30 billion, or $11.74 per share
• $1.71 billion loss from accrual of estimated wildfire liabilities
• $82.2 million loss from goodwill impairment at American Savings Bank
• Utility dividend to HEI suspended due to going concern assessment
• No definitive financing plan in place to address future payment of $1.71 billion Maui wildfire settlement

Insights

Financial Analyst

HEI's Q2 2024 results are significantly impacted by two major events: a $1.71 billion accrual for wildfire liabilities and an $82.2 million goodwill impairment at American Savings Bank (ASB). The reported net loss of $1.30 billion, or $11.74 per share, is primarily due to these non-recurring items. Excluding these, core net income was $49.1 million, down from $54.6 million in Q2 2023.

Key points:

• Hawaiian Electric's net loss of $1,229.4 million vs. net income of $45.3 million in Q2 2023
• ASB's net loss of $45.8 million vs. net income of $20.2 million in Q2 2023
• ASB's core deposits declined 1.3% from December 31, 2023
• Utility dividend to HEI suspended due to going concern assessment

While core operations remain strong, the wildfire settlement and strategic review of ASB create significant uncertainty for HEI's financial outlook.

Legal Expert

The agreement in principle to settle all tort claims related to the Maui wildfires is a pivotal development for HEI. This settlement, while costly at $1.71 billion, provides a clearer path forward and potentially limits further legal exposure. However, the lack of a definitive financing plan for this settlement has led to a 'going concern' risk disclosure, which is a serious matter for investors to consider.

Key legal implications:

• Settlement expedites resolution of wildfire-related litigation
• Ongoing strategic review of ASB could have regulatory implications
• Suspension of utility dividend may impact regulatory relationships

The settlement agreement, once finalized, should help stabilize HEI's legal position, but the financing challenges and potential restructuring of ASB present ongoing legal and regulatory hurdles.

Market Research Analyst

HEI's Q2 results reflect the significant impact of the Maui wildfires on its financial position. The market will likely focus on several key factors:

• Core operations remain strong, with utility and bank well-positioned for long-term service
• Wildfire mitigation and resilience efforts are advancing rapidly
• ASB's net interest margin expanded to 2.79%, up 4 basis points from Q1
• Strong bank credit quality and reserve release indicate a healthy Hawaii economy

However, the suspension of the utility dividend and the ongoing strategic review of ASB create uncertainty. The market will closely watch HEI's efforts to develop a financing plan for the wildfire settlement and any potential restructuring of ASB. These factors could significantly influence investor sentiment and the company's valuation in the near to medium term.

Continued Strength of Utility and Bank Operations

Quarter’s Results Include Accrual for Previously-Announced Tort Litigation Settlement and Bank’s Goodwill Impairment

Settlement Will Help Communities to Move Forward and Aid Rebuilding

• 2Q24 Net Loss of $1.30 billion, or $11.74 per share, Includes Accrual of Estimated Wildfire Liabilities From Tort-related Legal Claims
• Quarter’s Results Also Include Bank’s Goodwill Impairment Related to HEI’s Ongoing Review of Strategic Options for ASB
• Excluding Accrual of Estimated Wildfire Liabilities, ASB’s Goodwill Impairment, and Other Maui Wildfire-Related Expenses, Results Were Solid for the Quarter, with Core Net Income and Core EPS¹ of $49.1 million and $0.44
• Utility Continues to Advance Wildfire Mitigation and Resilience Efforts
• Bank Net Interest Margin Expanded to 2.79%, Up 4 Basis Points Compared to 1Q
• Strong Bank Credit Quality and Another Release of Reserves Reflect Healthy Hawaii Economy

HONOLULU--(BUSINESS WIRE)-- Hawaiian Electric Industries, Inc. (NYSE - HE) (HEI) today reported a consolidated net loss for the second quarter of 2024 of $1.30 billion, or $11.74 per share. The results included a $1.71 billion ($1.27 billion after taxes) loss from the accrual of estimated wildfire liabilities from tort-related legal claims, an $82.2 million ($66.1 million after taxes) loss from a goodwill impairment at American Savings Bank (ASB) and $9.8 million ($7.2 million after taxes) of other Maui wildfire-related expenses, net of insurance recoveries and deferrals. Excluding these items, core net income² was $49.1 million for the second quarter of 2024 compared to $54.6 million in the second quarter of 2023.

“Our core operations remain strong across the enterprise, and both our utility and bank remain very well-positioned to continue serving our customers and communities for the long term. The utility continues to rapidly advance wildfire mitigation and resilience efforts, and excluding the goodwill impairment taken during the quarter, our bank is improving profitability while maintaining a strong capital and liquidity position,” said Scott Seu, HEI president and CEO.

“Last week we announced that HEI, Hawaiian Electric and other defendants had entered into an agreement in principle to settle all tort claims related to the Maui wildfires. The settlement would allow all parties to come together on a path forward. Our Board and management team are pleased to have reached this agreement in principle on an expedited basis. We are confident that this settlement represents the best outcome for HEI, as it provides a clear line of sight toward resolution of the wildfire-related tort litigation and increased certainty for our company’s path ahead. In the coming months, we will be focused on finalizing the agreement and regaining the strength of our enterprise.

“Since last August, we have been advancing a strategy designed to support a strong, financially healthy enterprise that will empower a thriving future for Hawaii. Consistent with this approach, HEI has been undertaking a comprehensive review of strategic options for ASB, which is what led us to report a non-cash goodwill impairment for the bank last month. We will continue to take prudent and measured actions to ensure our companies are well positioned to serve our customers and community for the long term,” said Seu.

There is no set timetable for HEI’s comprehensive review of strategic options for ASB, and there can be no assurances that any actions regarding ASB will result from this evaluation. Neither HEI nor ASB expect to disclose or provide an update concerning developments related to this process unless or until HEI’s Board of Directors has approved a definitive course of action or otherwise determined that further disclosure is appropriate or necessary.

HAWAIIAN ELECTRIC COMPANY (HAWAIIAN ELECTRIC) EARNINGS³

Hawaiian Electric’s net loss for the second quarter of 2024 was $1,229.4 million compared to net income of $45.3 million in the second quarter of 2023, with the decrease primarily driven by the following after-tax items:

• $1,271 million after-tax loss due to the accrual of estimated wildfire liabilities related to tort-related legal claims and cross claims as of June 30, 2024;
• $7 million in higher operations and maintenance (O&M) expenses, including $4 million of costs associated with the Maui windstorm and wildfire event. These costs include wildfire mitigation expenses and the settlement of indemnification claims asserted by the state. The remaining increase in O&M included higher insurance costs, and higher substation and meter operations corrective and preventative maintenance costs;
• $2 million from higher depreciation; and
• $1 million impact from worse heat rate performance.

These items were partially offset by the following after-tax items:

• $6 million higher revenues, including $4 million from the annual revenue adjustment mechanism, $1 million from the major project interim recovery mechanism and $1 million in other revenues.

Excluding incremental after-tax Maui windstorm and wildfire-related expenses net of insurance recoveries, Hawaiian Electric’s core net income⁴ for the quarter was $43.9 million. Incremental after-tax Maui windstorm and wildfire-related expenses of $1,273 million were composed of the $1,271 million loss contingency accrued for estimated tort-related wildfire liabilities, and $20.0 million of other Maui wildfire-related expenses, net of $12.2 million of insurance-related recoveries and $5.7 million of costs deferred pursuant to the Public Utilities Commission’s decision allowing Hawaiian Electric to defer these costs.

Going Concern Assessment

HEI and Hawaiian Electric do not yet have a financing plan in place to address the future payment of the $1.71 billion Maui windstorm and wildfire settlement accrued in the second quarter of 2024. Until a definitive financing plan is developed and is probable of being implemented, HEI and Hawaiian Electric will disclose a “going concern” risk in their financial statements. After definitive financing plans are in place and likely to be implemented, such a going concern risk is expected to be resolved. This risk is the result of estimated payments under the settlement agreement. HEI and Hawaiian Electric are working closely with their financial advisors to develop a financing plan for their settlement contribution, and intend to finance the settlement payments through a mix of debt, common equity, equity-linked securities, or other potential options, although there can be no assurance at this time as to the availability or terms of any such financing.

Utility Dividend Update

In connection with the going concern assessment, the utility dividend to HEI has been suspended. HEI and Hawaiian Electric continue to believe that the companies have sufficient liquidity runway as parties work toward finalizing the agreement in principle to settle tort claims related to the Maui wildfires.

AMERICAN SAVINGS BANK EARNINGS

ASB’s second quarter 2024 net loss of $45.8 million compared to net income of $20.9 million in the first quarter of 2024 and $20.2 million in the second quarter of 2023. Results for the quarter reflect the impact of a goodwill impairment of $82.2 million ($66.1 million after taxes) in connection with HEI’s ongoing review of strategic options for ASB. The goodwill is related to acquisitions that took place in the 1980s and 1990s. The impairment is non-cash and has no impact on ASB’s liquidity. Net income for the quarter also reflected the release of $0.8 million of Maui wildfire-related reserves, partially offset by Maui wildfire-related expenses of $1.3 million. Excluding the after-tax impacts of these items, core net income for the second quarter was $20.7 million.⁵

Total earning assets as of June 30, 2024 were $8.9 billion, down approximately 3.0% from December 31, 2023.

Total loans were $6.1 billion as of June 30, 2024, down 2.5% from December 31, 2023.

Total deposits were $8.0 billion as of June 30, 2024, down 1.3% from December 31, 2023. Core deposits declined 1.3% from December 31, 2023, while certificates of deposit decreased 1.4% primarily due to the paydown of $166 million in public time deposits. As of June 30, 2024, 83% of deposits were F.D.I.C. insured or fully collateralized, with approximately 79% of deposits F.D.I.C. insured. For the second quarter of 2024, the average cost of funds was 115 basis points, down slightly from 117 basis points in the linked quarter and up 32 basis points from the prior year quarter.

In the second 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 8.4% as of June 30, 2024.

Please refer to ASB’s news release issued on July 30, 2024 for additional information on ASB.

HOLDING AND OTHER COMPANIES

The holding and other companies’ net loss was $20.3 million in the second quarter of 2024 compared to $10.9 million in the second quarter of 2023. The higher net loss compared to the prior year quarter was primarily due to Maui wildfire-related expenses, higher Pacific Current net loss and higher corporate legal expenses. Core net loss for the second quarter of 2024 was $15.5 million⁶.

EARNINGS RELEASE, WEBCAST AND CONFERENCE CALL TO DISCUSS EARNINGS

HEI will conduct a webcast and conference call to review its second 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 August 23, 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 the “Explanation of HEI’s Use of Certain Unaudited Non-GAAP Measures” and the related GAAP reconciliation at the end of this release.
2		Refer to footnote 1.
3		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%.
4		Refer to footnote 1.
5		Refer to footnote 1.
6		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, and modernize and harden the grid to ensure resilience and public safety. 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

Measures described as “core” are non-GAAP measures which exclude after-tax Maui wildfire-related costs and the goodwill impairment taken in connection with HEI’s ongoing review of strategic options for ASB. See “Explanation of HEI’s Use of Certain Unaudited Non-GAAP Measures” and the related GAAP reconciliations at the end of this release.

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 June 30								Six months ended June 30
(in thousands, except per share amounts)		2024				2023				2024				2023
Revenues
Electric utility		$	792,331			$	794,191			$	1,580,909			$	1,624,552
Bank			101,943				96,885				207,087				190,742
Other			3,086				4,609				6,522				8,628
Total revenues			897,360				895,685				1,794,518				1,823,922
Expenses
Electric utility (includes $1,712 million of Wildfire tort-related claims in 2024)			2,436,771				720,566				3,161,994				1,475,052
Bank (includes $82 million of goodwill impairment in 2024)			159,329				72,017				238,941				142,354
Other			20,235				10,123				36,139				20,019
Total expenses			2,616,335				802,706				3,437,074				1,637,425
Operating income (loss)
Electric utility			(1,644,440	)			73,625				(1,581,085	)			149,500
Bank			(57,386	)			24,868				(31,854	)			48,388
Other			(17,149	)			(5,514	)			(29,617	)			(11,391	)
Total operating income (loss)			(1,718,975	)			92,979				(1,642,556	)			186,497
Retirement defined benefits credit—other than service costs			1,281				1,153				2,563				2,305
Interest expense, net—other than on deposit liabilities and other bank borrowings			(32,400	)			(29,832	)			(63,991	)			(58,630	)
Allowance for borrowed funds used during construction			1,344				1,295				2,730				2,426
Allowance for equity funds used during construction			3,336				3,772				6,976				7,073
Interest income			3,134				—				6,267				—
Income (loss) before income taxes			(1,742,280	)			69,367				(1,688,011	)			139,671
Income tax expense (benefit)			(447,269	)			14,284				(435,595	)			29,394
Net income (loss)			(1,295,011	)			55,083				(1,252,416	)			110,277
Preferred stock dividends of subsidiaries			473				473				946				946
Net income (loss) for common stock		$	(1,295,484	)		$	54,610			$	(1,253,362	)		$	109,331
Basic earnings (loss) per common share		$	(11.74	)		$	0.50			$	(11.37	)		$	1.00
Diluted earnings (loss) per common share		$	(11.74	)		$	0.50			$	(11.37	)		$	1.00
Dividends declared per common share		$	—			$	0.36			$	—			$	0.72
Weighted-average number of common shares outstanding			110,303				109,573				110,260				109,544
Weighted-average shares assuming dilution			110,303				109,780				110,260				109,870
Net income (loss) for common stock by segment
Electric utility		$	(1,229,394	)		$	45,299			$	(1,190,173	)		$	92,308
Bank			(45,787	)			20,204				(24,853	)			38,766
Other			(20,303	)			(10,893	)			(38,336	)			(21,743	)
Net income (loss) for common stock		$	(1,295,484	)		$	54,610			$	(1,253,362	)		$	109,331
Comprehensive income (loss) attributable to HEI		$	(1,293,890	)		$	47,001			$	(1,261,569	)		$	122,210
Return on average common equity (%) (twelve months ended)											NM				10.2

NM Not meaningful.
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 June 30								Six months ended June 30
($ in thousands, except per barrel amounts)		2024				2023				2024				2023
Revenues		$	792,331			$	794,191			$	1,580,909			$	1,624,552
Expenses
Fuel oil			258,652				280,157				542,948				614,254
Purchased power			181,328				168,434				341,145				321,195
Other operation and maintenance			147,561				136,360				291,451				264,676
Wildfire tort-related claims			1,712,000				—				1,712,000				—
Depreciation			62,812				60,689				125,624				121,616
Taxes, other than income taxes			74,418				74,926				148,826				153,311
Total expenses			2,436,771				720,566				3,161,994				1,475,052
Operating income (loss)			(1,644,440	)			73,625				(1,581,085	)			149,500
Allowance for equity funds used during construction			3,336				3,772				6,976				7,073
Retirement defined benefits credit—other than service costs			1,072				1,048				2,144				2,095
Interest expense and other charges, net			(21,417	)			(20,872	)			(41,402	)			(41,118	)
Allowance for borrowed funds used during construction			1,344				1,295				2,730				2,426
Interest income			1,452				—				2,884				—
Income (loss) before income taxes			(1,658,653	)			58,868				(1,607,753	)			119,976
Income tax expense (benefit)			(429,758	)			13,070				(418,578	)			26,670
Net income (loss)			(1,228,895	)			45,798				(1,189,175	)			93,306
Preferred stock dividends of subsidiaries			229				229				458				458
Net income (loss) attributable to Hawaiian Electric			(1,229,124	)			45,569				(1,189,633	)			92,848
Preferred stock dividends of Hawaiian Electric			270				270				540				540
Net income (loss) for common stock		$	(1,229,394	)		$	45,299			$	(1,190,173	)		$	92,308
Comprehensive income (loss) attributable to Hawaiian Electric		$	(1,229,440	)		$	45,255			$	(1,190,268	)		$	92,219
OTHER ELECTRIC UTILITY INFORMATION
Kilowatthour sales (millions)
Hawaiian Electric			1,470				1,480				2,882				2,910
Hawaii Electric Light			254				252				508				503
Maui Electric			247				262				487				517
			1,971				1,994				3,877				3,930
Average fuel oil cost per barrel		$	120.12			$	122.69			$	121.01			$	131.48
Return on average common equity (%) (twelve months ended)1											NM				8.2

1 Simple average.
NM Not meaningful.
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												Six months ended June 30
(in thousands)		June 30, 2024				March 31, 2024				June 30, 2023				2024				2023
Interest and dividend income
Interest and fees on loans		$	72,960			$	72,971			$	67,966			$	145,931			$	132,808
Interest and dividends on investment securities			13,218				14,964				13,775				28,182				28,412
Total interest and dividend income			86,178				87,935				81,741				174,113				161,220
Interest expense
Interest on deposit liabilities			18,015				17,432				9,661				35,447				16,498
Interest on other borrowings			6,479				8,154				8,852				14,633				16,573
Total interest expense			24,494				25,586				18,513				50,080				33,071
Net interest income			61,684				62,349				63,228				124,033				128,149
Provision for credit losses			(1,910	)			(2,159	)			43				(4,069	)			1,218
Net interest income after provision for credit losses			63,594				64,508				63,185				128,102				126,931
Noninterest income
Fees from other financial services			5,133				4,874				5,009				10,007				9,688
Fee income on deposit liabilities			4,630				4,898				4,504				9,528				9,103
Fee income on other financial products			2,960				2,743				2,768				5,703				5,512
Bank-owned life insurance			2,255				3,584				1,955				5,839				3,380
Mortgage banking income			364				424				230				788				360
Gain on sale of real estate			—				—				495				—				495
Other income, net			423				686				678				1,109				1,479
Total noninterest income			15,765				17,209				15,639				32,974				30,017
Noninterest expense
Compensation and employee benefits			29,802				32,459				29,394				62,261				59,598
Occupancy			5,220				5,063				5,539				10,283				11,127
Data processing			4,960				4,846				5,095				9,806				10,107
Services			4,250				4,151				2,689				8,401				5,284
Equipment			2,477				2,649				2,957				5,126				5,603
Office supplies, printing and postage			1,006				1,018				1,109				2,024				2,274
Marketing			747				776				834				1,523				1,850
Goodwill impairment			82,190				—				—				82,190				—
Other expense			5,813				4,942				6,152				10,755				12,343
Total noninterest expense			136,465				55,904				53,769				192,369				108,186
Income (loss) before income taxes			(57,106	)			25,813				25,055				(31,293	)			48,762
Income tax expense (benefit)			(11,319	)			4,879				4,851				(6,440	)			9,996
Net income (loss)		$	(45,787	)		$	20,934			$	20,204			$	(24,853	)		$	38,766
Comprehensive income (loss)		$	(44,154	)		$	11,166			$	12,994			$	(32,988	)		$	49,986
OTHER BANK INFORMATION (annualized %, except as of period end)
Return on average assets			(1.97	)			0.88				0.84				(0.53	)			0.81
Return on average equity			(33.97	)			15.64				16.20				(9.25	)			15.87
Return on average tangible common equity			(39.84	)			18.48				19.40				(10.89	)			19.07
Net interest margin			2.79				2.75				2.75				2.77				2.80
Efficiency ratio			176.20				70.27				68.18				122.52				68.40
Net charge-offs to average loans outstanding			0.15				0.14				0.14				0.14				0.14
As of period end
Nonaccrual loans to loans receivable held for investment			0.53				0.53				0.22
Allowance for credit losses to loans outstanding			1.11				1.16				1.13
Tangible common equity to tangible assets			5.4				5.0				4.3
Tier-1 leverage ratio			8.4				8.0				7.8
Dividend paid to HEI (via ASB Hawaii, Inc.) ($ in millions)		$	—			$	—			$	11.0			$	—			$	25.0

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 and ASB management use certain non-GAAP measures to evaluate the performance of HEI and the 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 and returns on average equity and average assets for the bank.

The reconciling adjustments from GAAP earnings to core earnings are limited to the costs related to the Maui wildfires and the goodwill impairment taken in connection with HEI’s ongoing review of strategic options for ASB. 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 June 30, 2024				Six months ended June 30, 2024
Maui wildfire-related costs
Pretax expenses:
Legal expenses		$	25,000			$	40,027
Outside services expenses			1,778				4,525
Provision for credit losses			(800	)			(2,300	)
Wildfire tort-related claims			1,712,000				1,712,000
Other expenses			6,931				15,950
Interest expenses			3,386				8,211
Pretax expenses			1,748,295				1,778,413
Insurance recoveries			(18,875	)			(31,452	)
Deferral of cost			(7,656	)			(15,554	)
Wildfire-related expenses, excluding insurance recovery and deferral			1,721,764				1,731,407
Pretax goodwill impairment			82,190				82,190
Income tax benefits2			(459,419	)			(461,901	)
After-tax adjustments		$	1,344,535			$	1,351,696
HEI consolidated net income
GAAP net income (as reported)		$	(1,295,484	)		$	(1,253,362	)
Excluding special items related to the Maui wildfire (after tax):
Legal expenses			18,554				29,711
Outside services expenses			1,316				3,338
Provision for credit losses			(585	)			(1,683	)
Wildfire tort-related claims			1,271,160				1,271,160
Other expenses			5,145				11,845
Interest expenses			2,515				6,097
After tax expenses			1,298,105				1,320,468
Insurance recoveries			(14,015	)			(23,353	)
Deferral of cost			(5,685	)			(11,549	)
Maui wildfire-related expenses, net of insurance recoveries and approved deferral treatment (after tax)			1,278,405				1,285,566
Goodwill impairment (after-tax)			66,130				66,130
Non-GAAP (core) net income		$	49,051			$	98,334
GAAP Diluted earnings (loss) per share (as reported)		$	(11.74	)		$	(11.37	)
Non-GAAP (core) Diluted earnings per share		$	0.44			$	0.89

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 June 30, 2024				Six months ended June 30, 2024
Maui windstorm and wildfires related costs
Pretax expenses:
Legal expenses1		$	17,613			$	28,348
Outside services expenses1			997				1,781
Wildfire tort-related claims			1,712,000				1,712,000
Other expenses1			5,741				14,882
Interest expenses2			2,524				6,431
Pretax expenses			1,738,875				1,763,442
Insurance recoveries			(16,379	)			(26,348	)
Deferral of cost			(7,656	)			(15,554	)
Total Maui windstorm and wildfires related expenses, net of insurance recoveries and approved deferral treatment			1,714,840				1,721,540
Income tax benefits3			(441,572	)			(443,297	)
After-tax expenses		$	1,273,268			$	1,278,243
Hawaiian Electric consolidated net income
GAAP net income (as reported)		$	(1,229,394	)		$	(1,190,173	)
Excluding special items related to the Maui windstorm and wildfires (after tax):
Legal expenses			13,078				21,049
Outside services expenses			740				1,322
Wildfire tort-related claims			1,271,160				1,271,160
Other expenses			4,263				11,050
Interest expenses			1,874				4,775
Maui windstorm and wildfires related expenses (after tax)			1,291,115				1,309,356
Insurance recoveries (after tax)			(12,162	)			(19,564	)
Deferral of cost (after tax)			(5,685	)			(11,549	)
Total Maui windstorm and wildfires related expenses, net of insurance recoveries and approved deferral treatment (after tax)			1,273,268				1,278,243
Non-GAAP (core) net income		$	43,874			$	88,070

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 June 30, 2024				Six months ended June 30, 2024
Maui wildfire related costs and goodwill impairment
Pretax expenses:
Provision for credit losses		$	(800	)		$	(2,300	)
Professional services expense			1,201				2,909
Other expenses, net			51				(266	)
Pretax Maui wildfire related costs, net			452				343
Pretax goodwill impairment			82,190				82,190
Income tax benefit1			(16,181	)			(16,152	)
After-tax expenses		$	66,461			$	66,381
ASB net income (loss)
GAAP (as reported)		$	(45,787	)		$	(24,853	)
Excluding expense relating to Maui wildfire costs and goodwill impairment (after tax):
Provision for credit losses			(586	)			(1,684	)
Professional services expense			880				2,130
Other expenses, net			37				(195	)
Goodwill impairment			66,130				66,130
Maui wildfire related cost, net and goodwill impairment (after tax)			66,461				66,381
Non-GAAP (core) net income		$	20,674			$	41,528

		Three months ended June 30, 2024			Six months ended June 30, 2024
Ratios (annualized %)
Based on GAAP
Return on average assets		(1.97	)		(0.53	)
Return on average equity		(33.97	)		(9.25	)
Return on average tangible common equity		(39.84	)		(10.89	)
Efficiency ratio		176.20			122.52
Based on Non-GAAP (core)
Return on average assets		0.89			0.88
Return on average equity		15.34			15.46
Return on average tangible common equity		17.99			18.20
Efficiency ratio		68.46			68.49

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/20240809332009/en/

Mateo Garcia

Director, Investor Relations

Telephone: (808) 543-7300

E-mail: ir@hei.com

Source: Hawaiian Electric Industries, Inc.

FAQ

What was Hawaiian Electric Industries' (HE) net loss for Q2 2024?

Hawaiian Electric Industries (HE) reported a consolidated net loss of $1.30 billion, or $11.74 per share, for the second quarter of 2024.

How much did HE accrue for estimated wildfire liabilities in Q2 2024?

HE accrued $1.71 billion ($1.27 billion after taxes) for estimated wildfire liabilities from tort-related legal claims in Q2 2024.

What was HE's core net income for Q2 2024, excluding wildfire-related expenses?

Excluding wildfire-related expenses and other one-time items, HE's core net income was $49.1 million for Q2 2024.

Has HE reached a settlement agreement for the Maui wildfire claims?

Yes, HE announced an agreement in principle to settle all tort claims related to the Maui wildfires, which is expected to provide a clear path forward for the company.

Why has HE suspended its utility dividend?

HE has suspended its utility dividend due to going concern assessments related to the lack of a definitive financing plan for the $1.71 billion Maui wildfire settlement payment.