Hawaiian Electric Industries (HE) 10 May 242024 Q1 Earnings call transcript

Good day. My name is Briana, and I will be your conference operator. At this time, I would like to welcome everyone to the Hawaiian Electric Industries, Inc.

First Quarter 2024 Earnings Conference Call.

Please note that this call is being recorded. Instructions] [Operator

turn Please to go now of Garcia, call Relations. Investor ahead. today's will Mateo over Director I

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

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

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

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

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

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

Now Scott with begin remarks. his Seu will

Aloha kakou. everyone. Welcome,

by up first the results with call, through our we key quarter today's and start will you questions. regarding DeGhetto it open updates Scott operational before updates I'll walk For followed for financial wildfires, Maui then

the One to to wildfires. discussed intended with our work in of to quarter, help and families the stakeholders our Last to recover 'Ohana state most Green's initiative. continue the from Which devastating Governor heel help impacts key Josh community we the move by fires We help earnest Maui is forward. impacted

injured to governor completed said registration far, that deadline X XX that launched XX, the from April March will have 'Ohana has May of and seen July [indiscernible] thus claims now first The total One of and from uptick. including be on forms registrations announced a On for have phase X. survivors. been extended received has families been XX deadline steady Green The XX XX. the Governor

the ongoing May funding annual 'Ohana XXX, Maui contribution fund. Bill the state's One governor address week, Including efforts. aside to which into critical sets in recovery session concluded the last the Hawaii's law help legislative to and million early signed Senate $XXX wildfire

disappointed legislative session to our ran out are of call. we we the time laid that out on Although we pass supporting priorities key last legislation in earnings this

to that to engaged sense to Our state's in attract for ensure that how can Hawaii, and makes remain wildfire of and which our Legislation the legislation leadership our cost highly Hawaii determining risk creates wildfire to ultimately lowers needed framework design critical is customers lawmakers investments. low-cost capital, company. reduce customers a

that a critical drafting this. resilience last Governor advisory climate recognizes team play leadership new formation state's And will role week, a of policy. Our announced in Green the climate comprehensive

first to and As fund necessity structure state. The will resolve in advisory recommend stabilizing one develop from impacts increased a market to governor to climate our of the create the steps future and claims of its expressed impacts mitigate to a the burdens to team disasters arising climate addressing fair projects, and insurance related change. for the comprehensive the fund's has the of change financial

keep Hawaii face We'll in our Governor stabilize severe and solutions parties feature help weather safe other advance Green, to and continue the to with that will increasingly constructively events. energy our regulators work of

that later this have morning lines contained fell events was understanding X. by responded extinguished. that fire, it in and Safety the were the Fire saw and consistent Comprehensive Lahaina Both key after-action Fire been General. declared Department from the other appears County Fire XXX% our winds. that that power of caused Namely to Timeline Fire X one month, General's Attorney Maui's and August State of and high Department fire on County Last the of Report The Attorney Hawaii place of publication we to reports, took reported from Public a department's the with it report the Maui

Maui the the A had day. than Hawaiian last been hours. Neither fire area for de-energized the Electric West of cause focuses in second released more that Maui X began same power devastated has of determined the the afternoon conducted in been reports a not lines The Firearms. Tobacco After that afternoon month later investigation and by separate on Lahaina the of of is and fire the still wildfires. of being focus cause Alcohol, Bureau

update Turning an to litigation. on

Company windstorm Subrogation plaintiffs May and X, of named claiming claims lawsuits the approximately by losses HEI as X a been related As Electric XXX and Hawaiian wildfires. have in defendant to each August X fires X, XXX for The with different been Maui. Circuit in exposure trial concerning set have insurers about filed. XXXX upcountry September the in Maui also from has a cases date Maui Court

were those occurred and fires from from fires over Olinda Maui, occurred fires Kula of areas in Lahaina. As a upcountry the miles the in that reminder, XX separate The Lahaina.

X trial in no No Circuit relatively to trial there were has been the or set the upcountry fatalities comparison Lahaina port. fires The cases Court Maui Court in in structures few of Fortunately, cases Lahaina set fires. the dates for in Circuit in Federal and filed. pending the a November XXXX damaged date have XX, Oahu also

utility limit updates. investments customers. Slide In resilience cost matching February, applications in efforts. federal of wildfire Investment its million for year, utility $XX first by $XXX Electric rate finalizing enabling plan, And this in operational million to funding of the recovery. forward Jobs The Department resilience On it and and the in the to with for X. $XX Hawaiian few with months progressed move Act mitigation Turning advance million Energy PUC these to X-year received continues to funding of to grid help approval Infrastructure

grid is utility modernization $XXX projects and of projects. for million In focused million addition to innovation resilience, funding $XXX grid wildfire addressing the grid of federal also pursuing matching this,

of public longer-term a more safety include a The While operational strategies immediate as to which implementing XX% XXXX wildfire million Including pursuing Over mitigation $XXX safety the situational action utility improve are The being longer-term is continues we technologies. stakeholders are and safety take the the power utility's nearly and is projects, to which hardening work. advanced in to address risk. implementing developed cameras practices, is to budget made begin other strategy, work. through capital our utility wildfire expect intelligence. which artificial interim continues utilizing wildfire with to communities wildfire enhanced being these part utility XXXX. These also utilities collaboratively program shutoff resort. Investments of progress grid to and measures dedicated last will awareness wildfire also

strategic quarter, bank fourth in Turning the to well. the quarter undertaken of the the perform of actions in XXXX. bank. ASB the And continues to saw the benefits first

as bank funds interest decreased quarter. the from this compared benefits last leading to margin As you'll to cost and the with sold recall, improved low-yielding We last that ASB's saw expanded, of and net proceeds. the sheet high-cost repositioning quarter deposits quarter, reduced securities profitability balance

on the following better-than-expected The bank portion also of economy the and Maui, reserves initially resilient Maui's reflecting released a outlook. taken wildfires

ASB's deposits XX% is long deposit and were of deposits Customer remained And as the loyal and no insured related to there tenure to result of or collateralized. fully are wildfires. of March risk base legal stable. claims FDIC XX, as safe, a deposits

I financial to who Scott will call over the our turn now DeGhetto, results. will discuss

on million net $X.X per earned income $X.XX in This about X. with first Thank insurance $X.XX We expenses EPS million wildfire-related the you, $XX.X included and Scott. deferrals. I'll results for quarter. the Slide of share of of consolidated tax net of the after recoveries start or quarter and

in compared and $X.XX $X.XX per of XXXX. first share were to $XX.X and net $XX.X core income Excluding EPS and million per these share quarter the expenses, million

of expenses, were Utility segment $X wildfire million wildfire bank $X.X wildfire-related million costs impacts, included and net The deferred million income. million $X.X net to and income immaterial recoveries insurance net net of of $X.X of included other Net costs. of million company insurance $X.X in of holding recoveries.

release The higher wildfire-related net the net income was wildfire interest strategic decrease benefited in from sheet Scott that benefited the mentioned. executed by from quarter net due higher increased and O&M margin resulting utility to and mitigation balance income repositioning driven also other last costs. Bank expenses from reserve

X%, was bank wildfire basis healthy offset bank basis core primarily X.X%, first Utility basis, a wildfire core points lower excluding partially earnings, year and down from to utility to X was due This excluding On and ROE impacts. impacts consolidated is in ROE higher XX.X%. segment core XX the XX% at points up by of down last remains ROE other quarter ROE about to earnings.

by management costs. were were recovery EPS the by expenses. The indemnification higher primarily in heat project included vegetation from claims by asserted higher interest increase mechanisms was income. Earnings state. The the contribution primarily was and $X.XX increase approximately and AFUDC higher increased settlement from and well decrease lower revenues, driven O&M of wildfire-related an $X.XX the $X.XX rate penalties O&M increased These major by increase the worse utilities annual remaining driven of in as by adjustment performance. offset costs revenue partially interim insurance as also items the driven

lower EPS and increase by of $X.XX was noninterest of higher approximately income. The in by interest provision, partially ASB's driven of $X.XX contribution income offset $X.XX lower net $X.XX

other by a and expenses $X.XX expenses small segment from company of higher from well income. per share, per wildfire per as of impact rate as And net Pacific lower Holding $X.XX Current share tax primarily adjustments. about were share $X.XX

net facility was on by a The Current a was million Pacific on $X.X fire income Lower mostly Kauai. maintenance biomass after-tax driven the started Current's performing a fire contractor generating by Pacific at write-off from facility.

on our to liquidity Turning Slide X.

to to work litigation the our impacts through related prudently we continue manage timing wildfires. and as the liquidity We of Maui

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

order schedule up XX. We facility awaiting additional approved, and a a facility The liquidity $XXX the procedural last continue receivable liquidity. million of decision we expect sources accounts the accounts to for PUC quarter receivable utility we financing is PUC explore week in provide the approval. discussed June of and is to facility issued earlier this scheduled docket for to Once additional

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

from Our Evercore. Michael with first Instructions] question [Operator comes Lonegan

investigation So morning report saying, the with you've and an fire. mentioned, consistent as distinction a report, between been Department Fire making the are HE's you fire afternoon and what the

if are that have event the the to in fire about were afternoon you how report just approach you your that company, are the thinking your wondering, how options situation? Just -- to to or your ATF's link you

it now. is going we make to report Yes, Scott. that the what obviously determination, then right ATF's of and Once but review this be. speculate the will not carefully very speculate on report we're out, Mike, can't that we'll comes findings

you that American press of Great. indicated may me, Bank. be have reports And secondly Savings sale a then pursuing for

Just share wondering could that? you on if there's anything

with in the Scott my comments it's said -- DeGhetto. we've are Mike, It's consistent past. what

alternatives. We on speculate or transactions to any not continue strategic

Okay. for Great. And then first the Obviously me. quickly, 'Ohana fund. with One just lastly making progress

have you're that might property making a on be to if owners funded sense a well? planning contribution and for second how if when could and businesses be wondering the you launched fund Just it for and as

general, really can't any We can Mike, the we those involve reach in parties provides discussions for we it's different discussions say Those just then it alternative are to can progress. when many opposed thing to it attractive or the closure as and we to an litigation, that feel say provide only of is in extent support. worthy absolutely, our details. that provide folks

Jonathan Wells with Our Fargo. next from Reeder comes question

all you I and so regular cat the session. the you you kind could little that to then assistance And and late was legislation ] pieces would be bit the session being would the the too why either you did legislation [ pass key on of to by hoping potential legislatures are of expand do clarity special would of say the of just of deferring of like then that convened think a the to not eliminated prospects the XXXX provide kind a establishment passage need? the during team

Jonathan, this is Scott.

and promoting. initiatives to was What a in there feel we engagement fund. to of was with able to we the make really and yes, a so time of that really across obviously establishment that we passed high that all ran really disappointed discussion the then we degree of in key was that and actually terms So the legislature committee. we again, wildfire issues, the And terms it way all disaster pretty the of were progress bills significant recovery were get making securitization indicated out that a going-forward work, of legislators X good are while fronts conference mitigation that of lot of importance the

what was interim understanding we lot is that there very of those cost discussions all session customers heard some the to by way mitigation more importance with our team impact so over a climate though, there will of of of details. course up information advisory desire specific up request built further on. The the the to that in measures. going What respect was very these was be, And a year's the in would the the and securitization for and next would discussions was plans before wildfire What the think it governor still a the reported end be broadly that I to there was those keep the be legislators was and plans, stood on about for session. helpful what happened,

position the whether a a even will critical it continue have up or decision in going better the to I we're be But to themselves. the to forward make think the everybody, legislature makers I is able session -- with legislature these the move special to decisions that before key and we engage to then not it's including very interim. positive think

expect participation you compared 'Ohana it the you. move initiative, pushed your at phase, deadline the materially was does least And given of that higher will expectations? how Got recently That guess do back? level to the sense. first makes One I

the Well, that for that that go think about have has way that the litigation not family everybody one through and we more registered unpredictable I process. is it to who will think is lengthy

it's a good So number.

are number the point, determine May will where that of if see or hopeful we happy will families. are. that least it there whether it the extended we at But And at I -- will steady get overall, course, governor we're interest the XX, stops. uptake. continue and gets a where that's from are that others we to coming And degree fair a it think further Of

it, being or mind? the like think have And I forms, is when for their like in July like me remind currently like to committed terms which Okay. people X of in it forms, they end them date you is then still firmly the like that July, like is submitted you're change can that definitely completed

voluntary a participation. It's Yes.

out, started time, even or at the family they've registered to a decide opt So any can if process.

that important wanted an to component. I make We really that's the think sure had families optionality.

little missed issues higher Scott can that the gears a -- Okay. impact completely service to impact bit, Hamakua and apologize, since like like CapEx the including that? have Pacific mentioned, like generators Got earnings, I or financial Current's the may of but the the power potentially earnings one from about from talk you. replace or on Shifting on I utility late it the out February costs stuff the as you being Energy like of the ramifications

we cause X believe that that. fuel. revenues, issue. would in we're of CT-X, a of keep terms fuel also posted a continues CT-X next they're but to CT-X, on Hamakua, generating of there's yes, a is of We what you units there. burning There couple XX obviously, But of happened And Hamakua, tied running, doing both is there. through. to were you component, O&M So plant process get root in We're in the not we'll I There's a currently analysis run What terms hoping to not megs. they're to is when and looking we're tell the the get back weeks. not in it's

I you $XXX budget. wildfire-related that's say year of that heard implies million Is right? think utility for XXXX like the for at I this spent million being the Okay. $XXX And That utility CapEx. is stuff that, that then XX%

So roughly as mentioned -- of towards end CapEx the that yes, for our XXXX, essentially, we're historically forecast lower range. forecasting previously, we've

the right ballpark. in that's So

$XXX last to range out million that put or... million Okay. lower end of The $XXX that was

right. That's

of that's I hands? like completely update timing think the ATF their report terms the any just in still in or of

year fires, to prior Yes. be the anniversary X. understanding to that they so August of that intend prior the It's still release report the to our X would

from Associates. Patterson Paul next with question comes Glenrock Our

on have What's -- you the you value that what respect the Savings, do Do is With tax available? basis? have guys the that tax American a book? to

ask Paul, can our that. if Yes, let respond me Dane to Teruya, bank CFO

On basis, roughly the it's tax million. around $XXX

claims of with they respect apologize I all associated then an losses, missed the just -- have do And what Okay. if what liabilities estimate stand this, now? we these and they're claims, the out with but to obviously, these -- I

that No, including in be, have claims resolution not determining complications of that liability. a might what of terms there the Paul, is of of we to or -- continue lot determination the

complainants damages. degree and cause negligently Hawaiian So of prove that Electric to the the have would proximate acted the was

So and estimable. process. through that not we're a is again, not that loss concluded probable We've reasonably

have taken why continued not have we So that's any have to we -- not reserve.

the up that sort lawsuits, these I what understand, what thanks is I'm what with just clarification. necessarily reflective wondering for of guess I all just it And an I not that's actually wondering be sort is what about. come there of was amount. some realize if would I -- that aggregate would that But I'm filed I roughly to them going but sort far? to you it as is have amount on, that all aggregate lawsuits -- just obviously, added XXX, of speaking, it's been what not I add curious -- correct and be mean of am they're where so

claims. said we XXX claims. there's as of Well, about earlier, And been or terms subro so the in XXX tort

a try for just up a hard very math simple us amount. and with it's to really aggregate do So and come total

enough. have Fair questions guess pretty been much I I Then my other think guess answered. Okay. I

me but one, who there like In special have mitigation Is legislation? terms to that -- they're forget asked wildfire -- of it -- of sounds but the I looking I going the you -- we securitization going whether year sense just not be for guess. may about or on it that were it, to towards follow-up a sounds a be session, maybe also a next don't

Yes.

the are if answer makers. to that, session. determining in going have ledge We're I a think Paul, best way terms the the they're of we to special decision that is not

session. for up gearing next are We the

before happen we if to then And statement. true a special absolutely have session yet. that's better think then, I a

remarks. to now call our question-and-answer will conclude closing Seu back for turn I the Scott will This session.

our HEI your appreciate in you, interest of We to hearts continue our Maui. call. for communities your go our and, joining Thank support especially greatly to here, on everybody, and course, out

all. you thank So

This your you participation. call. will conclude all for Thank today's conference

may disconnect. now You