Hawaiian Electric Industries (HE) 9 Aug 242024 Q2 Earnings call transcript

Good afternoon. My name is Audra, and I will be your conference operator today. At this time, I would like to welcome everyone to the Q2 2024 Hawaiian Electric Industries, Inc. Earnings Conference Call. Today's conference is being recorded. [Operator Instructions]

would Director, turn Investor I to conference time, Garcia, Mateo Relations. this like the to over At Please go ahead.

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

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

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

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

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

his begin remarks. will Seu Scott with Now

Aloha kakou. Welcome, everyone.

it it the as Hawaii's for lives year of review I'll and over before to strategic with the operational I'll Maui open We residents. in know results today's fresh And progress since and was pain so For discuss on enhance HEI's discuss in will Maui for regarding I'll Savings at we options implications ago. announced the we've a loss for touch proposed many, our X the financial recent and made our more wildfires the many start of the week. altered then detail efforts settlement and over utility call, last walk results I'll announcements quarter to it ongoing key Scott risk and on DeGhetto, briefly is then second on through finally, of the turn Bank's financial questions. Yesterday ASB. today comment as mitigate forever American wildfires reliability. that of year of up marked who Mauis updates

in Hawaii see forward. much come a support neighbors last Upcountry chart wildfires. and to the our all in has friends, ways It's the year's so many employees, for Our been we of to pathway suffered with families, the our help and to people Maui here heartening and Lahaina wake hearts together remain community of us of

milestone saw important efforts. week, Last in we those an

HEI, X of settlement offer focused do to keeping to other expedite what Electric is and us for best and months and Following an who all mediation accelerated of agreement in efforts, leadership Maui reached I'm the path Hawaiian together recovery. suffered principle agreement a Hawaii. to parties loss those for working to governor's in thankful the on helping

HEI, X the year's the of of line $X over initiative. $XX For tort would the claims. wildfire-related $X.XX those Electric's and contributed installments. sight resolution proposed last defendants The previously paid contribution to ahead. to harmed of pay Under the settlement, on the the we is certainty settlement litigation of our have in collectively provides agreed million clearer includes Hawaiian and to who in fires for to HEI be a increased toward equal total pretax were and One Maui path settle billion amount billion company's the all annually settlement 'Ohana a tort terms

judicial will to paid upon an the payments claims companies also is this The of quarter, representing such other proposed are XXX begin the with Scott property and for settlement settlement have approval. of Hawaiian on the defendants agreed earlier scheduled no no it Electric final that court to individual class Maui. resolve to DeGhetto after billion the lawsuits, take would agreement point, amounts. Once filed resolution as claims August which agreement defendants. among financing damages the Subrogation to review of signed, effect from HEI loss the The settlement, would hearing At between insurer's of A with plaintiffs already settlement and in more recorded XX loss recovery and underway would both develop the which implications than a limiting the insurance in the defendants. The claims on insurers all named is resolve for plan. XXX following and and a discuss pretax expected over conditioned and we detail. the proposed agreement is the discuss have settlement attorneys for payments the mid-XXXX. will result DeGhetto a exposure a claims defendants. commence about approval $X.XX additional the obtain from different and will is principle order As financial Scott and been settlement work the

advancing ensure last practices, certainty a reliability Public Following enterprise will currently to all no trial a wildfire forward, grid. the Safety On dates the of wildfire a wildfire path and and as in the related Circuit be defense. resilience That for trial program agreement strengthening with court, safety for last our Second the of of the lawsuits. With settlement are our vacated, was principle Power related the utility including dates Shutoff tort implementing enhanced strategy our operational sustainable the PSPS, noted were for filing of in strategies call, all a in better the Hawaii's or and includes and meaning Hawaii. Maui greater that earnings future of line utilities resilient and invest claims we infrastructure Maui there positioned tort any to pending

shut certain The community winds the effective coordinating new to customers periods this public of organizations more utility PSPS continue during high and and as be identified in refine closely and targeted enhance The utility on risk July agencies, high to officially intends and to it this power conditions. going first with that program launched areas make dry means program forward. responders, preemptively and now X, can off

PSPS mitigation capital this dedicated technologies. already of to has helping nearly resilience. is element is is wildfires identify One service underground XX PSPS will $XXX of and these another utilities investments whether decisions program of the communities keep cameras the deployed our expects lines. necessary. And Over strategy use weather While which important awareness by installed in to is centers more enhance to the XX strategically of a inform September, million about video new utility potential event component covered to wildfire efforts. upgrade tool operation This work its and important quickly. Hardening utility an includes situational a advancing wildfire year, conductors areas, grid strategy. install AI-enhanced respond the also have budget safety agencies XX% of poles, and The we're early end broader help making help Hawaiian fire to territory, safe, elevated improve is stations Electric of risk across emergency the through the company, to advanced to the

in Importantly, risks the kinds face Hawaiian that customers. different of we also many floods, wildfires. of the Electric including investments will tsunamis making resilience increase enhance to is environmental infrastructure to Strengthening and service for hurricanes, the harden grid Hawaii, reliability will this

plus solar of utility is The Kupono projects Maui continues recently megawatts of island the largest providing Electric generation important new to enhance through and storage utility Hawaiian storage service of make capacity Maui's our The hours in X now placed system, fleet Kuihelani Oahu. to progress on renewable storage XX megawatts XXX-megawatt biggest in capacity the reliability project, project also of Oahu's provide and The XX generation with project, solar The storage. solar over plus the state. plus and in of generation solar and project will storage. first solar hours XXX-megawatt the expansion

bank. the to now Turning

our financially customers As enterprise over set review any we approach, bank's HEI a partner strategic ongoing be healthy a options will strategy operations we've for regarding ASB. discussed the as is thriving that recorded a for goodwill support no year, the empower a shortly. The will earnings Scott Hawaii. a that of discuss for has AEI which from it has There undertaking Hawaii. feature with assurances serve In for a strong, can DeGhetto to with and been last evaluation. remain and to ASB as will advancing the been this there Consistent charge financial across review core trusted actions strong no timetable designed evaluation, to comprehensive impairment connection continues noncash bank, result this

remain stable. wildfire-related the profitability and the strong expenses, forward as long income across to to ASB ASB year. through second last saw base or a operations companies, of tenure and ASB's collateralized. In Maui clarify noninterest prudent expense improved And control, were insured FDIC in June path fully and deposits our significant quarter deposit net our in goodwill our decrease and expansion grew net the expense. summary, for company. compared and impairment, progress Excluding of margin made we've interest loyal remained XX% XX,

actions call to to measured take we that, the and to well long ahead, we'll to our look for our continue over our DeGhetto, prudent serve are discuss and now customers I'll As companies turn financial will the results. who community ensure term. With Scott positioned

you, Slide Thank our results for the start on I'll X. quarter with Scott.

the per loss $XX.XX share. a $X.X or quarter, For second recorded consolidated billion we of net

mentioned, quarter's X Scott the significant As results included losses. onetime

result we utility, week. tort-related utility wildfire as quarter was Including $X.XX announced the billion. liabilities the accrual the proposed of loss estimated a billion the after from of accrual, $X.XX or a billion $X.XX recorded at First, claims taxes net last to for loss due the loss settlement

reasons. agreed billion lower the The the to utility $X.XX settlement than proposed two we billion is have loss accrued at $X.XX for under the

billion First, million the was the in accrued includes $XX that $X.XX contribution 'Ohana One XXXX.

Second, and annual lump loss of X our recorded an sum the the is spread installments amount is equivalent settlement estimate equal over amount. best

ASB impairment with place was and HEI's acquisitions goodwill ASB's recorded that The at liquidity. of also to $XX.X the is and impairment XXXXs in The after million we million options. connection an took ongoing in noncash related no XXXXs. on has for Second, taxes review $XX.X impact goodwill strategic

and pretax at to utility second of the addition were the billion and million. $XXX,XXX were recorded pretax $X.X holding $X.XX $X.X were expenses wildfire-related in there million accrual, recoveries expenses quarter. Bank insurance wildfire-related pretax deferrals net company expenses tort-related In of wildfire-related the

same Lower management holding lower was income. Bank of driven up of loss $XX.X was expense up loss core losses was and $XX.X higher was Pacific by in company net holding $XX.X and million in noninterest compared per core to million net EPS and million Excluding the company consolidated XXXX. Utility net and net share the year. and quarter to share million income year second these $X.XX the $XX.X was offset net Current. wildfire from compared the prudent income mitigation $XX.X million net core driven million by higher million. $XX.X from of O&M $XX.X income quarter The last same to at of core quarter last core partially expenses, slightly net due utility core higher Bank $X.XX and income net income income million up higher $XX.X by interest compared core were expenses. to per was

our liquidity to X. Turning on Slide

We related on million quarter, utility respectively. prudently of our the end and manage liquidity. the In of continue of the had the our And connection hand, company financing on $XXX contribution. settlement cash proposed Electric and as to and holding plan settlement with develop $XX with second the closely Hawaiian to to Maui, financial million for advisers global working are a wildfires HEI

to and we've continue that the as securities of the is any at this as equity-linked still being the a of expect a than each be Electric a a implemented earlier although no require As substantial and to assurance intend concern to probable the Scott to options, issue final giving are there disclosure. Once plan Hawaiian or equity, going being availability settlement, regarding financing after the rules settlement such begin the finance financing. Because in noted, of plan are sufficiently HEI payments to agreed resolved. developed to common approval payments no conditions mix going other judicial the can potential the a of ability progressed to is be begin company's of plan mid-XXXX. through that finance doubt concern. rise required doubt has order there payments resolve financing a the terms to we time debt, We would settlement to be disclose under expected to substantial Accounting

As the up call open utility that, HEI suspended. At of going concern assessment, let's has been the dividend a result questions. to to the

[Operator Instructions] Michael question from at We'll Evercore first ISI. Lonegan take our

cases without companies So a the plaintiffs who wildfire insurance and settle are amount. looking defendants agreed the significant the for to

court under settlement of or plaintiffs be need the still Just you them ultimately finalized from the with settlement? the order confidence terms the outside an wondering agreement the reach where to deal what gives the borrowing the obtain insurers will recovering

claims. to total by very the significant money It's Mike, have recognized the lawyers this an that the terms Seu. the amount to does settlement for really Scott settle be provided allows or not to in But subrogation actually very allocation alternative days represent the most the is that that this forward issue. agreed importantly, would The resolve lay XX individual issue does to of stage, between those work out of plaintiffs, important the in the order, claims, a plaintiffs that the defendants. the tort yes, it plaintiffs move still discussions to helps subrogation the which out the for it court and at

think I us again, So clarity pretty and to issue. very then of everybody, it's provides a that well-defined it for resolve important it that, brings process pretty, ahead

to over options Do FFO could X-year to And of then you target mix Great. me, for capital that in frame? and a you of mind for period that you financing have level debt an laid time secondly out settlement. the over a this use pay spending

this Paul. is Mike, So

our access lot the feel depends obviously, for increased what or things future, the wildfire a project plans. So settlement. of currently like settlement we a working of mitigation we're generation happens a to our the getting on markets foresee and that timing agreement. And growth broadly good course, And more investments we Clearly, having type of about that long-term based on the on spend. the in our lot to Waiau capital capital

the investment-grade bills. We translates us metrics credit long over important into lower That's critical targeting and because are also it term. for customer

we're that. focused on So very

Mike, Yes. DeGhetto. is Scott this

develop our week at settlement financing is mid-XXXX, plan until kind we expect broader a earliest. advisers agreed I to our financing contribution. say with the closely payments just of in to what working And the the On a was settlement that financial the for Keep of to settlement, would mind begin we're don't ago.

So gives us plan. that we and to time that believe sufficient develop finalize

just as is with the to terms I where time. debt of would FFO the in goes, communication say we'd far And like agencies we in are be as to over constant what we're where discussing then rating and

Great. And me. then lastly for

you your financing and of a on securities about equity-linked plan, other options. mix potential mentioned you speaking, common broadly talked So equity, debt, then

can any So other options it to about for or a wondering, is table, you selling the utility including Bank. in you've more on like Pacific say all sale potentially options provide you there I'm just the already smaller disclosed alternatives a color fair Savings are Current? American Or in is maybe just strategic stake scale potential the general, mentioned?

going my as perspective, mentioned. not take want you about marketplace regular available the different that From sure to keep to as mechanisms to I wanted Yes. other options. into We're a a other way that specifics we at. the But debt it the lot get possible. potential in we of broad equity-linked there's we make look mean financing there's

next Jonathan Wells to We'll Reeder move at Fargo.

ability Cahill's defendants? just a First you please settlement waiving off, I court, the as expert, accepting into could explain Judge their against guess, and how nonlegal the force insurers the claims to can subrogation the pursue

also a I in mind, Sure, non-lawyer. Jonathan. am again, Keep And

is So date. was plaintiffs have -- who what you the what's in individual actual play let's right see now

few plaintiff's it a anyway, filed which court an think actually -- was to claims. independently ago, challenges weeks I ability Cahill's see the they motion, a Judge subrogation just

through I'm that is sorry, coming plaintiffs look issue the the Judge agreed he or to So amounts in against August are by of to individual hearing will in work defendants. a efforts which -- of Cahill individual the parallel as really to not settlement on individual ongoing plaintiffs one whether plaintiffs. the required hold themselves at opposed XX, has subrogation plaintiffs'

it judge to the be on allow any would a We're hearing. just is XX August to don't of quickly, it fairly this hearing long to for have issue. will particular brought rule will which hopeful resolved sense more that. the be We agreement. how clarity the that So overall take It's settlement

Okay.

back the again, billion my this financial agreements, settlement legal nonlegal to and go through that and move that mean, these requires settlement if whatever they to but insurance this a the or burden the so forward companies on the I individual after and essentially the allowing is try companies of work individual substantial understanding, not So he plaintiffs far? $X.X paid if victims them isn't reaching plaintiffs kind recoup can to to really out after insurance putting

Yes. individual the result it what arguing between lawyers in I individual the is to between in mean, effect, the insurance issues that effect, are plaintiffs' having and the resolve does plaintiffs companies.

So you're correct.

Okay. seem Yes. like either. doesn't just No, an outcome it ideal

kind -- So dispute, agreement that and like and would cases or resume insurers what not happens it suspended? the happens assuming days, are kind exactly the victims court those victims of after after then just haven't this resolved if sorry, their the XX settlement the and have doesn't come court what of days? the to Is XX currently dissolves if

so issue. there sheet of say the require or If fair and But Well, assess/reassess resolves at XX the does a can't point. speculate XX that's between term to are within parties all what you reached the then would days, the days either forward these what it's plaintiffs that, a be. plaintiffs occurring, again, and an this agreement the without I steps goes on court that either the is precedent comes decision would as condition subrogation that individual that receive the right

And don't you I mind. me, for guess, if just one Okay. then, another

seemingly insurers the $X.XX How and the size billion to not of you the on hopefully With describe the to at are to way the increase expense the defendants it above It the of would willingness prospects victims. settlement, highly the seems to would of get total reach the the but settlement be this? it's the board, getting mean, I within really one there and like global motivated like reach get defendants seem finalized. settlement might to

issue that that what's fair defendants, reflected can optimistic be is but I term the current I speak it and Jonathan, sheet the to We believe in cautiously think between will outcome plaintiffs. that, and say we worked plaintiffs can't hopeful, feel -- I is out. that again, the the able really, are Well, individual subrogation the I am the we other for a be

in know I of all said true mediators' could Like is the like parties the also amount liability? on, Okay. it Or for guess I or the I that Is of them? that handle. of based that the term kind kind sheet the responsibility guess, kind of amount represents assigned maximum

capacity amounts is on any mediation amount defendants. on. the Again, mediators again, of the the an developed through were I can't what allocated process. different the The speculate Yes. can't of really all This and overall which, comment factors, number was considered I

luck Good situation. difficult with the

that closing our for back concludes And to now Q&A I conference remarks. turn over session. will Seu Scott the

So calling all thank in today. you for

we And be path certainty do the accomplishment to the service acknowledge closing, our in for to and successful events. we and here, our raise meeting service acknowledge strength the for made us. that rates to remembrance in shareholders, customers. ultimately our really of and yesterday's intend of of resilience this So I also the to our agreement significant perseverance We communities forward in a recognize of of first feel a -- anniversary through Lahaina towards of X-year large of significance people, It's a togetherness and continued our all will that want company do and progress. wildfires. your great the progress the settlement the whom truly and rebuilding Maui settlement the represents of significant I brings are people it want Kula that pay The amounts. creates very again neighbors shown the believe investment Hawaii. We our not we've many communities as for We needs. HEI, to

future. help to we our you. support again, sustainable appreciate move and we'll greatly your Thank to a So forward communities continue

Thank This your today's you for conference participation. concludes call.

You may now disconnect.