Hawaiian Electric Industries (HE) 9 Nov 232023 Q3 Earnings call transcript

Good day, everyone, and welcome to the Hawaiian Electric Industries Third Quarter 2023 Earnings Call. Today's call is being recorded. [Operator Instructions] I would now like to turn the conference over to Mateo Garcia, Director of Investor Relations. Please go ahead, sir.

Thank you. Third Earnings HEI's to everyone, Quarter Call. XXXX Welcome,

CEO; Seu, and President, President CEO; me President and today management. Deghetto, and President Scott are and Electric members Hawaiian Vice Joining CEO; Scott and Savings of HEI HEI Shelee Kimura, Teranishi, other Ann American Treasurer; senior Bank CFO Executive

Our earnings Investor for section our of presentation Relations are call release this and website. our the available on

differ cause materially made be expectations As our a Relations actual today's Factors in results that statements section to SEC in found reminder, be on could our filings from call. can will of presentation, the forward-looking our website. and Investor

Today's financial measures. presentation non-GAAP references also to includes

You today's to non-GAAP should the measures in definitional the closest of slides contained GAAP financial historical presentation the refer measure. accompanying information to information for and reconciliations

begin will his with remarks. Seu Scott Now

[Foreign Language] Welcome, everyone.

you October the an that will term. Given our our to earnings overview the discussion our doing and today our communities, communities I'll across be customers of start on our started from our usual to will different on serving with Kimura our HEI's then update Shelee an guidance. the through who and and financials commitment provide provide Deghetto, an from CFO rebuilding we're the response calls. utility walk wildfires efforts. will for impacted what reinforce August long then quarter's our Scott as on Xst, update companies,

the the for forever us, minds August X for tragedy and wildfires scale still the The of difficult been our to of the the of Xth is tragedy and is and so Maui's residents. It's process. of Hawaii's months since hearts lives altered many loss fresh

on loss that on have experienced and a should. one friends, Maui, ever have and family, neighbors employees scale We no who pain

One of our is strengths to ability Hawaii's together. work greatest

it position strength. and which get laulima, in call a our take that together. working And here, many of is emerge a to through have meaning this hands will concept what for We we state

Josh protect future. ensure Governor capital support future on sustainable and to Green Maui's recovery, we events, Yesterday, initiative as our to needed and can safe the multiphase communities that state, against to path communities the weather our state our a a announced keep a extreme attract

basis. legal is providing lengthy participate one first claims. those Providing severely process again to the associated families to injured it. to who an an expedited a who a ability get associated The the through Payment their offered on support lost Those who waive costs and financial focused have will on for and in phase Maui related with to compensated fire. loved be choose alternative will litigation are

to followed fire, who property and XXXX communities to impacted early proposed the be regulatory Maui county wildfires. forward in the Maui, from part contribution state initiative. million Over $XX The be and of the of address constructive others insurance, up with this will raised schools governor, working impacts Kamehameha of to process. tragic We of schools to to of climate $XXX funded Hawaiian Maui, many County and to risks. the been as total. Electric the our date Hawaii, and been look contribute have the Hawaii in help support to Kamehameha protect and Electric's start customers. intended not by the agreed businesses and One statutory Hawaiian The see by severely Electric is has of by will Ohana a the phase of owners Hawaiian consumers next million and This collaborative fund businesses have changes is to

provided be Additional ahead. the months details will in

August next As Xth, the remain this XX-Q our a strong. development, events will of our we breaking filing fundamentals early from week. on result be the late businesses of the of delaying Separate to

necessary the continue our both lost utility they branch damage have when us. had Maui utility need time equipment the ASB Lahaina, made people in of serving most to we and adjustments a at the West and While bank

collaboration and efforts community, required and restoration have recovery close this with crucial coordination Our the going will forward. remain

empower you quarter took reinforce to We We many decision our dividend was for a our strength. suspend financial Electric is to many Toward work rely is support risks mitigate priority was those be of the that further the source it weather us, ability for actions Hawaii. quarterly who end, long-term our an and a the to impacts the capital dividend strong to and expenditure reexamining updating not events. decision know, income. feature to took a on you. partner to near- that recognize during plan prudent right our believe the As extreme of and ongoing. lightly. and communities Hawaiian cash is important thriving its decision we Especially This as This a of of the we

Electric XX working process we the I XX. after the in of community claiming and in are before, HEI communities interest you there has and X of many know a has can mind of is litigation happened I that what you. fire, plaintiffs of to efforts need named storm know to is as been deserves August a as what of full wildfires. a figure November and losses during we lawsuits named to safe. tell of for by to do Electric defendant collectively gain to top wind Xth, causes lot that been our And understanding others as We particularly the related the answers. Hawaiian Hawaiian and in out the fire our advance keep

the private state Many of companies. developers, and of other those telecommunications and defendants, also Hawaii, lawsuits name county landowners including the of Maui,

and the Most defend are County. for and the negligence. to the litigation, lawsuits in Maui causation we Circuit State intend Court both contest of vigorously will We

or that's by have extension change counterclaims to to need of XXth then we is Each with file by XX, will other lawsuits court, We the defendants currently. first the our by responses January but of need file next we dates and to will our to against the November those year. subject court what

scheduled price the its that filed XXXX. also from XX, and trial HEI have been cases insurance D&O paths [ losses Board October Lawsuits fiduciary first of carriers. behalf claiming date different in for separate on ]. our has duties been shareholders, have Directors breached and of The on the tendered Those are alleging decline to a is stock

the slides. to Turning

Our per core quarter about while wildfire-related have of remained for operations strong, consolidated we the rebuilding others were alongside and third a work earnings On $X.XX of net efforts. $X.XX costs. recovery quarter in basis, share

$X.XX earned share in we the the quarter. will Scott speak costs, financials for these Excluding detail shortly. quarter's to Deghetto per more

operations utility few updates A the during quarter. on bank and the brief

will our despite We've requested next PUC Maui wildfires. January and announcement of for for expenses. restoring treatment following under to you asked events the little Maui's performed Our this which issue delayed the [ by the utility of over Group and of well been the Hawaii of Maui the of utility customers Proposals December decision. year. group the working the RFP updated generation portion, the the by Maui. on to through selection and each of a award reached deferral wildfire-related stipulated generation has firm decision windstorm The challenges we've portion final ] power week, an settlement Stage RFP, a a award basis And Xst. a the we've due the on variable a Island year. [ with year, the final consumer PUC on for we announce are way month expedited Last Oahu, selection the ] X advocate end quarter given on paving in And the

as strong with insured and XX% are quarter support Turning were to customer a deposit end. customers fully Customer there a position and continues strong is XX% capital deposit remains legal to capacity position, quality, liquidity. retail result and the lending claims ASB's deposits related at bank. collateralized safe, deposits as to wildfires. to the and no our and ASB remained base The insured base be community risk of XX%. credit stable a majority was excellent in ample to of

have seen events deposit result We on the as meaningful outflows Maui. not a of

customers recover. $XXX,XXX to commercial personal release of and Customers and up ASB and contributed for committed and Maui serve focused donated remain Maui fees to proud In community donation affected through I'm cleanups apply to strong have events and August members customers and be able for say bank helping activities. as consumer volunteer operations the summary, has nearly $X,XXX. XX-day of loans. and emergency by teammates supporting well that also waived to teammates, to remains drives, support fundraising enterprise across ATM the our efforts we as an are offering forbearance and ASB support The to Maui well Xth, positioned community line to community. credit is numerous is continue core deferment to the our hours on

on detail and over to response call I'll of to now and Shelee turn utilities Hawaiian CEO President provide Electric, Kimura, efforts. recovery the the

takes. entire and hearts horrible tragedy community echoing who seen on when I I for help Aloha, start it Maui. the this Lahaina our Scott. I'll Electric everyone. the time have with months Maui to last the stand people you, firsthand. the Hawaiian will have ache rebuild many for for that I recover devastation by speak Thank team over that much by been the long know spent several say affected Scott in of have however my I we and on Maui

county assist August federal, XXX first in recovery employees alongside to other on efforts. responders, and ground [ the been assisting the Since have ] Xth, over and FEMA state agencies

Management dedication and helping our critical up-country us. and forward been on Maui has West on restored for electricity of and with the the Maui. priority Maui unwavering Our now Maui state, path Emergency in customers communities team county shown is to Collaborating lost who has officials for Power XX% Maui Lahaina County, a other and Maui.

was emergency and energy installing poles As to This community-driven electrical provide power and needs. that us long-term and poles, future Lahaina replacing for have management plans transformers, damaged enables are temporary power other Lahaina. start officials us and in safe Maui an lines involves equipment and while developed to asked its other that example, equipment reliable around

we have to well defer expenses a related informed Scott keeping We restoration the filed been as utility And mentioned, have efforts. on our wildfires. to request regulators

the restoration we our continue further to work in extreme change We our and grid's resilience weather. and with climate to expect work coordination impacts strengthen as from PUC

the risk risks began resilient planning at wildfires. focusing the The only efforts. address our XXXX for is of of in by it identified Hawaii as elevated unique efforts continues adapt of strategy of safety one to Electric a Hawaii. through state and its wildfires in identified of wildfire mix Electric Hawaii's number developing Hawaiian in its Hawaiian risks was areas risk to first being

on our The area. off if it disturbance X-phase segments is in restore power until or a to that of turn system risk fault circuit stays immediate with starts is detected The immediately the actions, confirm to crews including an power. safety expanding safe a off strategy power elevated visually

the plan with under funding done million be Investment million will that Department Act U.S. work capital in the the and of of federal This the $XX the of that is Energy $XXX the contributes grid some PUC encompasses resilience ] phase which filed Infrastructure for June we in XXXX. to approval. Jobs second The from half subject [

extreme investments withstand to utilities help essential utility the lines [indiscernible] vegetation facilities, The and to critical strengthen and prevent falls enhanced that winds, lines to respond bolster poles, plan to devices under distribution targeted includes transmission [indiscernible] serving management wildfires. community deploy

As are further updating system. program harden our capital mentioned, Scott to we our expenditure

in strategies as evolve. and working our defense evaluate with are We to wildfire partnership others resilience risks

developing that the we one by events now experienced by Hawaii-focused on We like threats are climatological work solutions August X. to posed doing

that Ohana Scott geologies, mix initiative launch are topographies, serve. Solutions a tailored and spoke climate this that step needs unique of regard. the is to we about forward community The that in One the are of the islands to

going and lay days, as collaborative see harden While early protect this work from a improve and and it better for grid process to Hawaii could we weather the we extreme events constructive start need the that to still is the foundation of do forward.

a extreme highlight that conclusions as issued draft state group lines on legislation months. recently reports, recommendations wildfire legislature prevention working the on and take risk own development undergrounding steps and described report in and ignition including I'll analysis during could actions conditions wildfire fire in Electric's prevention strategy areas. of that and prioritizing coming aligned weather shape The also of Hawaiian best with our a and hazard the practices action safety

again. implement and We safe X strategies develop others with closely legislators will communities well our and happens events and as keep to the like communities the of nothing serve our as continue we to ensure work statewide August ever to regulators,

the I'll now turn the call Deghetto, financials. on over will who quarter's Scott detail to provide

included $X.XX on EPS $XX.X Thank EPS the those to holding $XX.X million million quarter. results of included the wildfire-related net income third $X.XX I'll windstorm with you, million net for expenses, earned year. and million Shelee. included million and and income start consolidated per income We and income million core our of last for share $XX.X quarter Slide third quarter $XX.X of wildfire-related of And of or and EPS included Bank the of net This of net X. excluding company expenses. $X.X impacts. other net $X.X compared $XX.X income $X.XX Utility for segment and million. and $X.XX

higher ROE higher excluding XXX points sale reflects which reduces Current [ Our bank earnings. impacts. of third up consolidated at wildfire gain ROE The core to XX.X% year. the impacts rates and X, Utility higher loss XX.X%, ROE holding to is last excluding bank Pacific months to ], at recorded down to healthy we on of X.X%, wildfire year's basis remains core XX.X%, shareholders' Slide year points ROE this year's the major in primarily [indiscernible] XX excluding and due show was variances XX impacts LTM last company enterprise This last slightly across impacts. basis quarter interest lower bank wildfire to equity. On compared on the AOCI up basis was from an last

saw side, from higher cost Maui O&M ] costs $XX ARA AFUDC million and of included These in customer we services These [ due consultant windstorm outside expenses, MPIR On and revenues costs. higher the was fuel million revenues, higher costs. and by which $XX legal, to support CapEx. was wildfires. fossil related offset higher and transmission remaining the were and higher utility O&M, higher expenses $X increased higher distribution to overhaul The million increase and risk-sharing

for wildfire-related. is for million income. secured this additional was the provision losses to was expense and losses to income credit related added Maui provision on brought loans in to interest losses, bank ASB's $X.X provision includes credit credit million in of primarily due side, and Maui resulting higher credit the On the noninterest lower with variance The exposure was net provision higher to due The in the net partially expected noninterest disruption offset those credit estate. in income, variances credit wildfires real primarily for reserves by million $X XX% by approximately portfolio the $XXX by risk. wildfires relating reserves economic for of

of our well expense of The million. as wildfire-related compensation The related expenses of higher to services professional million and noninterest wildfire-related of million the Bank $X.X benefits million noninterest branch which $X.X million included location. about costs expense expenses included was of higher $X.X a as destruction of $X.X $X.X Lahaina expenses of million $X other extraordinary lease

million other The wholesale and $X.X primarily expense due due of on Current higher loss deposit lower higher mentioned. to from company was of dividends and The investment and interest securities. interest net wildfire-related income Pacific borrowings the interest was expenses lower holding net certificates increased and segment lower to and performance after-tax primarily

Turning to X. Slide

not EPS guidance this full are Xth we stemming wildfires, year providing uncertainty at time. August the Given the from XXXX

better as this we into to thinking guidance potential we related We will you. revisit ability is as mind are know of provide our for how clarity I we wildfires. many develop the to impacts Maui top near-term about address liquidity of will

had a provided of as previous prefunded revolvers the earlier downgrades of the We rating $XXX [ the result, ] XX. year, the immediately position markets and considerable AGI this had following HEI the drawdown and utility balance available constrained. access as on $XXX maturity ended June capital higher The as million of million all and sheet wildfires ratings cash. the With cash our a utility to cash utility with we credit X quarter from agencies, November is

$XX The which quarterly. prudent measured dividend these about timing believe the were impacts represents cash suspension We draws also work suspended actions. as and million dividend runway and we litigation. We of revolver liquidity of potential have and significant through HEI's created

on million hand, end quarter, of the As holding and utility $XXX cash $XXX third company the of the of the million and respectively. had

in acknowledge of resolved of for the enterprise has the to including a we to this part you to We to right positioned our challenging best In the our taking our Hawaii. been want whom support customers state many communities of Hawaii. that know closing, all to remain wanted of stakeholders, here what I are healthy financially and continue our months of X steps shareholders, are needs a

up call let's that, with And open the questions. to

[Operator from Instructions] We'll take our question first with Mike Evercore. Lonegan

you position. obviously, spoke runway with So about have you the liquidity your

harden grid. You the said updating you're to program your reexamining capital and

in think spending? level? wondering, should would You be the ARA your talked capital just about we maintenance of was that that, top level how approved what planning resiliency. you're spending? I that of terms And on Is about like of

Mike, to comment Paul I'm going or Home ask she if can Shelee actually, can if Electric ask I'm CFO, I'm this he going comment -- it. is on on Scott Seu. and to sorry, Ito,

Yes.

thanks for question. the So Mike,

range So year. is our maintenance spend typical the a of somewhere in $XXX million

we're know, accelerating prioritizing on on you resilience obviously, be some spending that. to we've wildfire, in of going been but we're As -- spend always

have the mentioned currently that [ forward CapEx process also of We're as establishing that the XXXX here. IIJ ] in be of go our funding budget. we part We will we mix

accelerating So it, at and end just think we're process runs Board to our be to to we We've the the type been right this will I time. doing to it's the investments, program. next through that again, year. have then going the we don't and thing anything we But start but prioritizing year, Typically, do. report wildfire-related of report budget

Again, it runway like Great. looks have you some And then one I have follow-up. liquidity. with

then transaction? if closing about sales? any could scale to pursuing such challenges or a you you're the anticipated a asset on that, candidate a are is Pacific doing And there anything say Just whether wondering, Like bank if is smaller Current? you

to potential speculate At Scott we of going Deghetto. just are options. any it's on point, those Mike, not this Yes,

question of Dumoulin-Smith our from next We'll with Julien America. take Bank

Excellent. employees as at Best given to here, you you welcome without or and and next obviously, long could customers question, can further? talked wishes and to back core just the to well. the Look, capital impacted the wanted plan clarity that Scott coming debt kind just difficult prioritizing any here, about CapEx. spend that's looks spend, forma but and I of given pro you cash some cash the you Can the your flow outside balances, talk profile here stand the about like given cash of where markets that accelerating further course quo today you offer. just on what markets status us sort get capital spend? of accelerated outset. I last how Can tapping it that Whatever just with of give Again, ask year a you the through

point end $XXX And the I cash said, runway million us provides and hand, the as good of believe third that, time. We on in previously that holding $XXX we this had company respectively. particular think, million Julien, quarter, in level with at utility the at of a of

think potential and Excellent. could you then things And state's other being when that backstop backstop elements will? by of about here, a any your there's moving you actions, state to or you and comment already help ability all the number obviously, bolster wildfire-related at your if about invest the pursued Can avenues here. liquidity

state. Yes, Julien, is had, to discussions stage, a early. be more with There's the it still lot at this including

resilience Hawaii, various make that and also of here at what business Hawaii mentioned One financially the to looking of of coverage, are for or in provide can the was but protected we in -- to by mentioned provide remain strong. the which would the see working in sure governor customers only done announcement options, the the together was yesterday, things be greater Hawaii that have not

detail -- a worked. lot still be So being there's more to

what's When if And more reports right, to of bit of wildfire you of limitations here? here. in well, get statute as a I little And the can some it. expect liabilities? in do those Got terms be specific the

are clarify, you to mitigation filing wildfire about just utility Julien, asking plans?

context when you Well, in fire -- Lahaina for of statute the on in limitations fire that statute the separately, just and right, will? that the I the documentation the we'll of -- -- terms status see and liabilities was around the those specifically, reports thinking actual more if then expire, of of wildfire

Julien, the don't about say is file have But I still X to plan So work with right Shelee can We about is this PUC Kimura. ongoing. now. That that. report incident. that's I on August a the timing all

by? that be statute need And to there's no be still? when of U.S. specific [indiscernible] looking in terms you'd to filed claims

will as that's to I'm legal I we'll question. that's I until be it's mentioned, trial that forward like have earlier, -- next first on about court get play pathway There using back the one. to Julien, now. discussions can about year. I think October will system but not -- sorry. that between -- in of continuing right is the But out. for Yes, have you again, a all say scheduled sure I parties, And the talked We'll general,

We'll take Patterson from [Operator our Associates. Paul next Glenrock Instructions] with question

asking what wanted or damages Julien's total I follow they're are sought filed, being And up amount the in is for? have to the on the so if suits what I apologize Just from that questions. that that's this, suits missed XX the been

Paul, amounts this monetary the this no is are time, At lawsuits. specified there in Scott.

for then million, And leave for the companies the which guys million are your including what damages? coverage of insurance could respect that, filing where -- liability funding -- coverage put potentially that with Okay. the or insurance the this have way, $XX program, let does that be -- it that you level $XX remaining applied is insurance me does are how guys to the you

Yes.

of insurance. we have liability million So $XXX

$XX the of it the subtract additional that if $XX and million million take you just million, would So simply $XXX leave from coverage.

to -- Okay. methodology? program program, this under is what the cutoff people the respect alternative And to people period for that would to where when apply litigation with

Paul. participants quarter that to could The details start next the their through you program design get more statement of that, perhaps once the that year. and are second compensation worked Yes. governor being The details still on of receive indicated launch

guess, it's I XX-Q? timing, XX-Q the delayed. if mention ETA on then the that, When the And you Okay. apologize guys I does did

And yesterday. the reason governor's really due early the week. next to We expect announcement Yes. would that was

further at over the questions closing I'd And this Seu no Scott back time. like turn to remarks. to call for any there additional are

Thank you.

is other our strong, a our to Electric, on working before, American communities Bank said they customers, and here objective very continue the and and Hawaii. The roles strong people Hawaii to important to Savings enterprise. governor is focused service Lahaina parties do uplift Savings to Maui and critical of the of played we've and it's events. ability remain to to and Hawaiian all in resilient that serve what's As Hawaii, weather more well. their and to with secure against stronger needed overarching is financially continues and American healthy Bank make extreme its customers as

I us So want Mahalo thank you all you, today. to joining with to just of for that, all [ of ],

Thank for Thank that conclude you now disconnect. and you. presentation. today's And may participation, does your you