Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil Hydroworld Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries HEI Reports 2023 Results By: Hawaiian Electric Industries, Inc. via Business Wire February 13, 2024 at 16:00 PM EST Full Year Net Income of $199.2 million and Diluted Earnings Per Share (EPS) of $1.81 2023 Results Include $14.1 Million of After-tax Maui Wildfire-Related Expenses and an $11.0 Million After-tax Loss Resulting from ASB’s Fourth Quarter Balance Sheet Repositioning Core Businesses Continue to Perform Well Utility Continuing to Progress Resilience Work in West Maui ASB’s Balance Sheet Repositioning Strengthens Balance Sheet and Positions Bank for Improved Net Interest Margin and Profitability Strong Credit Quality and Capital Position at ASB Hawaiian Electric Industries, Inc. (NYSE: HE) (HEI) today reported full year 2023 consolidated net income for common stock of $199.2 million and EPS of $1.81 compared to $241.1 million and EPS of $2.20 for 2022. Net income for the year included $14.1 million of after-tax wildfire-related expenses, and an $11.0 million after-tax loss on the sale of investment securities executed by American Savings Bank (ASB) in the fourth quarter. The loss resulted from selling low-yielding securities in order to reduce high cost deposits, strengthening the bank’s balance sheet while positioning the bank for improved profitability. Core net income and EPS1 for the year were $224.3 million and $2.04, respectively, compared to $235.0 million and $2.14 for 2022. For the fourth quarter of 2023, consolidated net income for common stock was $48.8 million and EPS was $0.44 compared to $57.3 million and EPS of $0.52 for the fourth quarter of 2022. Core net income and EPS1 for the fourth quarter were $53.4 million and $0.48, respectively. There were no core net income adjustments for the fourth quarter of 2022. “Although 2023 was one of the most challenging years ever for our company and the communities we serve, I am encouraged by the collaborative efforts of so many in our state to prioritize Maui’s recovery following the devastating August wildfires. Our hearts continue to be with the people of Maui, and we remain committed to supporting the recovery and rebuild effort,” said Scott Seu, HEI president and CEO. “Our core businesses delivered solid results under challenging circumstances, and both the utility and bank remain focused on supporting our communities and customers. The utility is continuing to execute on its plans to modernize its generation system and make our electric grids more resilient. “The bank continues to be well-positioned with strong capital, excellent credit quality, lending capacity and ample liquidity. In addition, the sale of investment securities executed in the fourth quarter further positions ASB for improved profitability and net interest margin while strengthening the balance sheet.” HAWAIIAN ELECTRIC COMPANY (HAWAIIAN ELECTRIC) EARNINGS2 Full Year Results: Hawaiian Electric’s full-year net income was $194.0 million compared to $188.9 million in 2022, with the increase primarily driven by the following after-tax items: $34 million higher revenues, including $27 million from the annual revenue adjustment (ARA) mechanism, $5 million from the fossil fuel cost risk-sharing mechanism and $4 million from the major project interim recovery (MPIR) mechanism, partially offset by lower performance incentive mechanism revenue; $6 million higher allowance for funds used during construction (AFUDC) related to increased capital expenditures; $4 million in higher interest income; and $2 million in research and development tax credits. These items were offset by the following after-tax items: $28 million in higher operations and maintenance (O&M) expenses, including $8 million of labor and associated costs for the Maui windstorm and wildfire response. The remaining increase in O&M included higher transmission and distribution maintenance, and higher outside services costs; $7 million higher interest expense due to increased borrowings; and $6 million higher depreciation expense due to increasing investments to integrate more renewable energy and improve customer reliability and system efficiency. Excluding incremental after-tax Maui windstorm and wildfire-related expenses, Hawaiian Electric’s core net income3 for 2023 was $195.1 million. The incremental after-tax Maui windstorm and wildfire-related expenses (excluding the One ‘Ohana Initiative contribution) of $1.1 million were comprised of $29.6 million of expenses, net of $17.5 million of insurance-related recoveries and $10.9 million of deferral treatment of costs pursuant to the Public Utilities Commission’s decision allowing Hawaiian Electric to defer these costs. Fourth Quarter Results: Hawaiian Electric’s net income for the fourth quarter of 2023 was $58.2 million, compared to $48.6 million in the fourth quarter of 2022, with the variance primarily driven by the following after-tax items: $9 million of combined deferral treatment and insurance recoveries, net of expenses, related to the Maui windstorm and wildfires, $8 million higher revenues, including $7 million from the ARA mechanism and $1 million from the MPIR mechanism; $2 million in research and development tax credits and $1 million higher AFUDC; partially offset by $8 million of higher operation and maintenance expenses primarily related to transmission and distribution, bad debt and other outside services. Normalizing for the deferral treatment and insurance recoveries, and excluding incremental after-tax Maui windstorm and wildfire-related expenses, Hawaiian Electric’s core net income3 for the fourth quarter of 2023 was $48.9 million. Utility Dividend Declaration On February 9, 2024 Hawaiian Electric’s Board of Directors declared a $13 million quarterly cash dividend to its sole common stockholder, HEI. This is down from approximately $30 million declared in each of the previous three consecutive quarters. With the suspension of HEI’s dividend to its common stockholders, cash needs at the HEI parent company are limited relative to cash needs prior to the dividend suspension, and reducing the utility’s dividend to HEI allows more cash to be kept at the utility, supporting its ability to perform needed restoration work in West Maui, make critical capital investments supporting wildfire mitigation and in other electrical infrastructure while capital markets access remains limited. AMERICAN SAVINGS BANK EARNINGS Full Year Results: ASB’s full year 2023 net income was $53.4 million, compared to $80.0 million in 2022. Net income for the year included $8.3 million of Maui wildfire-related expenses after tax, and an $11.0 million after-tax loss on the sale of investment securities recorded in the fourth quarter. The loss resulted from selling low-yielding securities in order to reduce high cost deposits, strengthening the bank’s balance sheet while positioning the bank for improved profitability. Core net income4 for the year was $72.6 million. Net interest income was $252.0 million in 2023 compared to $252.6 million in 2022, with higher interest and dividend income approximately offset by the impacts of higher funding costs. Noninterest income for 2023 was $45.4 million compared to $57.0 million in 2022. The decrease in noninterest income was primarily due to a $15.0 million pre-tax ($11.0 million after-tax) loss on sale of investment securities recorded in the fourth quarter. The sale of investment securities was executed in order to reposition the balance sheet by divesting securities with below-market yields to pay down higher cost funding, positioning ASB for improved net interest margin and profitability. As of December 31, 2023 and compared to December 31, 2022: Total earning assets were $9.2 billion, up 0.50%; Total loans were $6.2 billion, up 3.4%; and Total deposits were $8.1 billion, approximately flat. The average cost of funds was 0.93% for the full year 2023, 77 basis points higher than the prior year as higher interest rates and a shift in funding mix increased funding costs. ASB’s return on average equity for the full year 2023 was 11.0% compared to 14.1% in 2022. Return on average assets for the full year was 0.55% in 2023 compared to 0.86% in 2022. Core return on average equity and core return on average assets4 were 14.9% and 0.75%, respectively. Fourth Quarter Results: Net income for the fourth quarter of 2023 was $3.2 million, and included $2.0 million of after-tax Maui wildfire-related expenses as well as the aforementioned loss on sale of securities. This compared to $17.9 million in the fourth quarter of 2022. Core net income4 for the fourth quarter was $16.2 million. For the fourth quarter 2023, return on average equity was 2.7%, compared to 15.7% in the fourth quarter of 2022. Core return on average equity5 for the quarter was 13.7%. Return on average assets was 0.13% for the fourth quarter of 2023, compared to 0.76% in the same quarter last year. Core return on average assets5 was 0.67%. Please refer to ASB’s news release issued on January 30, 2024 for additional information on ASB. HOLDING AND OTHER COMPANIES The holding and other companies’ net loss was $48.1 million in 2023 compared to $27.8 million in 2022. The higher net loss for the year was primarily due to the after-tax $6.2 million gain on sale of an equity method investment recorded in 2022 at Pacific Current, higher interest expense, lower Pacific Current net income and wildfire-related expenses. Core net loss for the year was $43.4 million compared to $34.0 million in 20225. The fourth quarter net loss was $12.6 million compared to $9.2 million in the fourth quarter of 2022. The higher net loss compared to the prior year quarter was primarily due to lower Pacific Current net income, higher interest expense and wildfire-related expenses. Core net loss for the fourth quarter of 2023 was $11.7 million5. There were no core adjustments to net income for the fourth quarter of 2022. EARNINGS RELEASE, WEBCAST AND CONFERENCE CALL TO DISCUSS EARNINGS HEI will conduct a webcast and conference call to review its fourth quarter and full year 2023 consolidated financial results today at 11:30 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 February 27, 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 Core net income, core EPS, core return on average equity and core return on average assets are non-GAAP measures which, for 2023, exclude Maui wildfire-related after-tax costs and, except for the utility, the after-tax loss on sale of securities resulting from the bank’s balance sheet repositioning executed in the fourth quarter; and for 2022, exclude the gain on sale of an equity method investment recorded in the first quarter at Pacific Current. See “Explanation of HEI’s Use of Certain Unaudited Non-GAAP Measures” and the related GAAP reconciliations. 2 Utility amounts indicated as after-tax in this earnings release are based upon adjusting items using a current year composite statutory tax rate of 25.75%. 3 Refer to footnote 1. 4 Refer to footnote 1. 5 Refer to footnote 1. ABOUT HEI The HEI family of companies provides the energy and financial services that empower much of the economic and community activity of 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. 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 Core net income is a non-GAAP measure which, for 2023, excludes Maui wildfire-related after-tax costs and, except for the utility, the after-tax loss on sale of investment securities resulting from the balance sheet repositioning transaction executed in the fourth quarter; and for 2022, excludes the gain on sale of an equity method investment recorded in the first quarter at Pacific Current. See “Explanation of HEI’s Use of Certain Unaudited Non-GAAP Measures” and related GAAP reconciliations at the end of this release. FORWARD-LOOKING STATEMENTS This release may contain “forward-looking statements,” which include statements that are predictive in nature, depend upon or refer to future events or conditions, and usually include words such as “will,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “predicts,” “estimates” or similar expressions. In addition, any statements concerning future financial performance, ongoing business strategies or prospects or possible future actions are also forward-looking statements. Forward-looking statements are based on current expectations and projections about future events and are subject to risks, uncertainties and the accuracy of assumptions concerning HEI and its subsidiaries, the performance of the industries in which they do business and economic, political and market factors, among other things. These forward-looking statements are not guarantees of future performance. Forward-looking statements in this release should be read in conjunction with the “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” discussions (which are incorporated by reference herein) set forth in HEI’s Annual Report on Form 10-K for the year ended December 31, 2022, HEI’s Quarterly Report on Form 10-Q for the quarter ended September 30, 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 and (i) extreme weather events, including windstorms and other natural disasters, particularly those driven or exacerbated by climate change, which could increase the risk of the Utilities’ equipment being damaged, becoming inoperable or contributing to a wildfire; (ii) the impact of the Maui windstorm and wildfires including the potential liabilities from the many lawsuits filed against the Company and potential regulatory penalties which may result in significant costs that may be unrecoverable through insurance and/or rates; (iii) an increase in insurance premiums and the inability to fully recover premiums through rates or the potential inability to obtain wildfire and general liability insurance coverage at reasonable rates, if available at all; (iv) the uncertainties surrounding the Company’s access to capital and credit markets due to the uncertainties associated with the costs related to the Maui windstorm and wildfires; (v) the material reduction or extended delay in dividends or other distributions from one or more operating subsidiaries to HEI; (vi) further downgrades by securities rating agencies in their ratings of the securities of HEI and Hawaiian Electric and their impact on results of financing efforts; (vii) the risks of suffering losses and incurring liabilities that are uninsured (e.g., damages to the Utilities’ transmission and distribution system and losses from business interruption) or underinsured (e.g., losses not covered as a result of insurance deductibles or other exclusions or exceeding policy limits), and the risks associated with the operation of transmission and distribution assets and power generation facilities, including public and employee safety issues, and assets causing or contributing to wildfires. 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 December 31 Years ended December 31 (in thousands, except per share amounts) 2023 2022 2023 2022 Revenues Electric utility $ 854,106 $ 924,951 $ 3,269,521 $ 3,408,587 Bank 102,947 89,218 394,663 321,068 Other 4,298 4,944 17,982 12,330 Total revenues 961,351 1,019,113 3,682,166 3,741,985 Expenses Electric utility 768,682 849,558 2,967,363 3,109,396 Bank 86,282 66,753 317,051 219,550 Other 10,411 9,788 45,148 31,966 Total expenses 865,375 926,099 3,329,562 3,360,912 Operating income (loss) Electric utility 85,424 75,393 302,158 299,191 Bank 16,665 22,465 77,612 101,518 Other (6,113 ) (4,844 ) (27,166 ) (19,636 ) Total operating income 95,976 93,014 352,604 381,073 Retirement defined benefits credit—other than service costs 1,207 883 4,768 4,411 Interest expense, net—other than on deposit liabilities and other bank borrowings (34,273 ) (27,462 ) (125,532 ) (103,402 ) Allowance for borrowed funds used during construction 1,403 1,015 5,201 3,416 Allowance for equity funds used during construction 4,091 3,143 15,164 10,574 Interest income 4,125 — 9,105 — Loss on sales of investment securities and gain (loss) on sales of equity-method investment (15,609 ) — (15,609 ) 8,123 Income before income taxes 56,920 70,593 245,701 304,195 Income taxes 7,658 12,772 44,573 61,167 Net income 49,262 57,821 201,128 243,028 Preferred stock dividends of subsidiaries 473 473 1,890 1,890 Net income for common stock $ 48,789 $ 57,348 $ 199,238 $ 241,138 Basic earnings per common share $ 0.44 $ 0.52 $ 1.82 $ 2.20 Diluted earnings per common share $ 0.44 $ 0.52 $ 1.81 $ 2.20 Dividends declared per common share $ — $ 0.35 $ 1.08 $ 1.40 Weighted-average number of common shares outstanding 110,134 109,471 109,739 109,434 Weighted-average shares assuming dilution 110,301 109,774 110,038 109,778 Net income (loss) for common stock by segment Electric utility $ 58,183 $ 48,621 $ 193,952 $ 188,929 Bank 3,231 17,897 53,362 79,989 Other (12,625 ) (9,170 ) (48,076 ) (27,780 ) Net income for common stock $ 48,789 $ 57,348 $ 199,238 $ 241,138 Comprehensive income (loss) attributable to HEI $ 117,463 $ 74,864 $ 245,916 $ (42,357 ) Return on average common equity (%) (twelve months ended) 8.8 10.5 This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI filings with the SEC. Hawaiian Electric Company, Inc. (Hawaiian Electric) and Subsidiaries CONSOLIDATED STATEMENTS OF INCOME DATA (Unaudited) Three months ended December 31 Years ended December 31 ($ in thousands, except per barrel amounts) 2023 2022 2023 2022 Revenues $ 854,106 $ 924,951 $ 3,269,521 $ 3,408,587 Expenses Fuel oil 329,728 391,071 1,211,420 1,265,614 Purchased power 172,779 186,757 671,769 793,584 Other operation and maintenance 126,373 126,342 533,557 497,601 Depreciation 60,924 59,503 243,705 235,424 Taxes, other than income taxes 78,878 85,885 306,912 317,173 Total expenses 768,682 849,558 2,967,363 3,109,396 Operating income 85,424 75,393 302,158 299,191 Allowance for equity funds used during construction 4,091 3,143 15,164 10,574 Retirement defined benefits credit—other than service costs 1,076 959 4,303 3,835 Interest expense and other charges, net (22,575 ) (19,681 ) (86,140 ) (76,416 ) Allowance for borrowed funds used during construction 1,403 1,015 5,201 3,416 Interest income 2,330 — 6,454 — Income before income taxes 71,749 60,829 247,140 240,600 Income taxes 13,067 11,709 51,193 49,676 Net income 58,682 49,120 195,947 190,924 Preferred stock dividends of subsidiaries 229 229 915 915 Net income attributable to Hawaiian Electric 58,453 48,891 195,032 190,009 Preferred stock dividends of Hawaiian Electric 270 270 1,080 1,080 Net income for common stock $ 58,183 $ 48,621 $ 193,952 $ 188,929 Comprehensive income attributable to Hawaiian Electric $ 58,337 $ 54,552 $ 193,940 $ 195,070 OTHER ELECTRIC UTILITY INFORMATION Kilowatthour sales (millions) Hawaiian Electric 1,604 1,603 6,138 6,212 Hawaii Electric Light 272 269 1,043 1,053 Maui Electric 264 282 1,046 1,089 2,140 2,154 8,227 8,354 Average fuel oil cost per barrel $ 132.47 $ 152.05 $ 126.73 $ 141.49 Return on average common equity (%) (twelve months ended)1 8.2 8.2 1 Simple average. This information should be read in conjunction with the consolidated financial statements and the notes thereto in Hawaiian Electric filings with the SEC. American Savings Bank, F.S.B. STATEMENTS OF INCOME DATA (Unaudited) Three months ended Years ended December 31 (in thousands) December 31, 2023 September 30, 2023 December 31, 2022 2023 2022 Interest and dividend income Interest and fees on loans $ 72,340 $ 71,540 $ 60,331 $ 276,688 $ 207,830 Interest and dividends on investment securities 15,587 14,096 14,315 58,095 58,044 Total interest and dividend income 87,927 85,636 74,646 334,783 265,874 Interest expense Interest on deposit liabilities 17,961 14,446 3,755 48,905 7,327 Interest on other borrowings 8,721 8,598 4,775 33,892 5,974 Total interest expense 26,682 23,044 8,530 82,797 13,301 Net interest income 61,245 62,592 66,116 251,986 252,573 Provision for credit losses 304 8,835 2,729 10,357 2,037 Net interest income after provision for credit losses 60,941 53,757 63,387 241,629 250,536 Noninterest income Fees from other financial services 4,643 4,703 4,764 19,034 19,830 Fee income on deposit liabilities 5,104 4,924 4,640 19,131 18,762 Fee income on other financial products 2,664 2,440 2,628 10,616 10,291 Bank-owned life insurance 1,707 2,303 1,872 7,390 2,533 Mortgage banking income 209 341 62 910 1,692 Gain on sale of real estate — — 776 495 1,778 Loss on sale of investment securities, net (14,965 ) — — (14,965 ) — Other income, net 693 627 606 2,799 2,086 Total noninterest income 55 15,338 15,348 45,410 56,972 Noninterest expense Compensation and employee benefits 28,797 29,902 30,361 118,297 113,839 Occupancy 5,422 5,154 7,030 21,703 24,026 Data processing 5,305 5,133 4,537 20,545 17,681 Services 5,032 3,627 2,967 13,943 10,679 Equipment 3,114 3,125 2,937 11,842 10,100 Office supplies, printing and postage 1,019 1,022 1,142 4,315 4,398 Marketing 1,167 984 1,091 4,001 3,968 Other expense 9,250 7,399 6,034 28,992 20,576 Total noninterest expense 59,106 56,346 56,099 223,638 205,267 Income before income taxes 1,890 12,749 22,636 63,401 102,241 Income taxes (1,341 ) 1,384 4,739 10,039 22,252 Net income $ 3,231 $ 11,365 $ 17,897 $ 53,362 $ 79,989 Comprehensive income (loss) $ 70,585 $ (22,866 ) $ 29,282 $ 97,705 $ (218,844 ) OTHER BANK INFORMATION (annualized %, except as of period end) Return on average assets 0.13 0.47 0.76 0.55 0.86 Return on average equity 2.74 9.19 15.73 10.98 14.08 Return on average tangible common equity 3.32 11.02 19.20 13.22 16.46 Net interest margin 2.63 2.70 2.91 2.74 2.89 Efficiency ratio 96.42 72.30 68.86 75.20 66.31 Net charge-offs to average loans outstanding 0.15 0.07 0.06 0.12 0.03 As of period end Nonaccrual loans to loans receivable held for investment 0.46 0.16 0.28 Allowance for credit losses to loans outstanding 1.20 1.23 1.21 Tangible common equity to tangible assets 4.7 3.9 4.1 Tier-1 leverage ratio 7.7 7.7 7.8 Dividend paid to HEI (via ASB Hawaii, Inc.) ($ in millions) $ — $ 14.0 $ 10.0 $ 39.0 $ 42.0 This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI filings with the SEC. Explanation of HEI’s Use of Certain Unaudited Non-GAAP Measures HEI, Hawaiian Electric and ASB management use certain non-GAAP measures to evaluate the performance of HEI, the utility and 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 for adjusted diluted EPS (for HEI consolidated); return on average common equity (for HEI consolidated and Hawaiian Electric); and returns on average equity, average tangible equity and average assets (for ASB). The reconciling adjustments from GAAP1 earnings to core earnings for 2023 are limited to the costs related to the recent Maui wildfires and, except for the utility, the loss on sale of investment securities from the balance sheet repositioning transaction executed in the fourth quarter. The reconciling adjustments from GAAP1 earnings to core earnings for 2022 are limited to the gain on sale of an equity method investment recorded in the first quarter at Pacific Current. Management does not consider these items to be representative of the company’s fundamental core earnings. Reconciliation of GAAP1 to non-GAAP Measures Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries Unaudited (in thousands) Three months ended December 31, 2023 Year ended December 31, 2023 Year ended December 31, 2022 Maui wildfire-related costs Pretax expenses: Legal expenses $ 24,125 $ 34,876 $ — Outside services expenses 8,688 14,822 — Provision for credit losses — 5,900 — One `Ohana Initiative Contribution — 75,000 — Other expenses 1,343 5,185 — Interest expenses 1,645 2,600 — Pretax expenses 35,801 138,383 — Insurance recovery (29,580 ) (104,580 ) — Deferral of cost (14,692 ) (14,692 ) — Wildfire-related expenses, excluding insurance recovery and deferral (8,471 ) 19,111 — Pretax loss on sale of investment securities 14,965 14,965 — Gain on sale of equity method investment at Pacific Current — — (8,123 ) Income tax benefits2 (1,858 ) (9,050 ) 1,947 After-tax adjustments $ 4,636 $ 25,026 $ (6,176 ) HEI consolidated net income GAAP net income (as reported) $ 48,789 $ 199,238 $ 241,138 Excluding special items related to the Maui wildfire (after tax): Legal expenses 17,909 25,886 — Outside services expenses 6,430 10,976 — Provision for credit losses — 4,319 — One `Ohana Initiative Contribution — 55,688 — Other expenses 993 3,832 — Interest expenses 1,222 1,931 — After tax expenses 26,554 102,632 — Insurance recovery (21,963 ) (77,651 ) — Deferral of cost (10,909 ) (10,909 ) — Maui wildfire-related expenses, net of insurance recoveries and approved deferral treatment (after tax) (6,318 ) 14,072 — Gain on sale of equity method investment (after tax) — — (6,176 ) Loss on sale of investment securities (after tax) 10,954 10,954 — Total core net income adjustments (after tax) 4,636 25,026 (6,176 ) Non-GAAP (core) net income $ 53,425 $ 224,264 $ 234,962 GAAP Diluted earnings per share (as reported) $ 0.44 $ 1.81 $ 2.20 Non-GAAP (core) Diluted earnings per share $ 0.48 $ 2.04 $ 2.14 Years ended December 31, 2023 2022 Ratios (%) Based on GAAP1 Return on average equity 8.8 10.5 Based on Non-GAAP (core) Return on average equity 9.9 10.2 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 GAAP1 to non-GAAP Measures Hawaiian Electric Company, Inc. and Subsidiaries Unaudited (in thousands) Three months ended December 31, 2023 Year ended December 31, 2023 Maui windstorm and wildfire-related costs Pretax expenses: Legal expenses2 $ 18,486 $ 24,737 Outside services expenses2 5,826 10,532 One `Ohana Initiative Contribution — 75,000 Other expenses2 834 3,316 Interest expenses3 720 1,223 Pretax expenses 25,866 114,808 Insurance recovery (23,613 ) (98,613 ) Deferral of cost (14,692 ) (14,692 ) Total Maui windstorm and wildfire-related expenses, net of insurance recoveries and approved deferral treatment (12,439 ) 1,503 Income tax benefits4 3,203 (387 ) After-tax expenses $ (9,236 ) $ 1,116 Hawaiian Electric consolidated net income GAAP net income (as reported) $ 58,183 $ 193,952 Excluding special items related to the Maui windstorm and wildfires (after tax): Legal expenses 13,726 18,367 Outside services expenses 4,326 7,820 One `Ohana Initiative Contribution — 55,688 Other expenses 619 2,462 Interest expenses 534 908 Maui windstorm and wildfire-related cost (after tax) 19,205 85,245 Insurance recovery (after tax) (17,532 ) (73,220 ) Deferral of cost (after tax) (10,909 ) (10,909 ) Total Maui windstorm and wildfire- related expenses, net of insurance recoveries and approved deferral treatment (after tax) (9,236 ) 1,116 Non-GAAP (core) net income $ 48,947 $ 195,068 Years ended December 31, 2023 2022 Ratios (%) Based on GAAP1 Return on average equity 8.2 8.2 Based on Non-GAAP (core) Return on average equity 8.2 8.2 1 Accounting principles generally accepted in the United States of America. 2 Legal, outside services and other are included in “Other operation and maintenance” on the Hawaiian Electric and subsidiaries Consolidated Statements of Income Data. 3 Interest expense is included in “Interest expense and other charges, net” on the Hawaiian Electric and subsidiaries Consolidated Statements of Income Data. 4 Current year composite statutory tax rate of 25.75% is used for Utility amounts. Reconciliation of GAAP1 to non-GAAP Measures American Savings Bank F.S.B. Unaudited (in thousands) Three months ended December 31, 2023 Year ended December 31, 2023 Maui wildfire-related costs and loss on sale of securities Pretax expenses: Provision for credit losses $ — $ 5,900 Professional services expense 2,405 3,705 Other expenses 309 1,666 Pretax Maui wildfire-related costs 2,714 11,271 Pretax loss on sale of investment securities 14,965 14,965 Income tax benefits (4,738 ) (7,031 ) After-tax expenses $ 12,941 $ 19,205 ASB net income GAAP (as reported) $ 3,231 $ 53,362 Excluding expense related to Maui wildfire and securities loss (after tax): Provision for credit losses — 4,319 Professional services expense 1,760 2,712 Other expenses 227 1,220 Loss on sale of investment securities 10,954 10,954 Maui wildfire-related cost and securities loss (after tax) 12,941 19,205 Non-GAAP (core) net income $ 16,172 $ 72,567 Three months ended December 31, 2023 Year ended December 31, 2023 Ratios (annualized %) Based on GAAP1 Return on average assets 0.13 0.55 Return on average equity 2.74 10.98 Return on average tangible common equity 3.32 13.22 Efficiency ratio 96.42 75.20 Based on Non-GAAP (core) Return on average assets 0.67 0.75 Return on average equity 13.73 14.94 Return on average tangible common equity 16.63 17.98 Efficiency ratio 73.94 69.88 1 Accounting principles generally accepted in the United States of America View source version on businesswire.com: https://www.businesswire.com/news/home/20240213153280/en/Contacts Mateo Garcia Director, Investor Relations Telephone: (808) 543-7300 E-mail: ir@hei.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
HEI Reports 2023 Results By: Hawaiian Electric Industries, Inc. via Business Wire February 13, 2024 at 16:00 PM EST Full Year Net Income of $199.2 million and Diluted Earnings Per Share (EPS) of $1.81 2023 Results Include $14.1 Million of After-tax Maui Wildfire-Related Expenses and an $11.0 Million After-tax Loss Resulting from ASB’s Fourth Quarter Balance Sheet Repositioning Core Businesses Continue to Perform Well Utility Continuing to Progress Resilience Work in West Maui ASB’s Balance Sheet Repositioning Strengthens Balance Sheet and Positions Bank for Improved Net Interest Margin and Profitability Strong Credit Quality and Capital Position at ASB Hawaiian Electric Industries, Inc. (NYSE: HE) (HEI) today reported full year 2023 consolidated net income for common stock of $199.2 million and EPS of $1.81 compared to $241.1 million and EPS of $2.20 for 2022. Net income for the year included $14.1 million of after-tax wildfire-related expenses, and an $11.0 million after-tax loss on the sale of investment securities executed by American Savings Bank (ASB) in the fourth quarter. The loss resulted from selling low-yielding securities in order to reduce high cost deposits, strengthening the bank’s balance sheet while positioning the bank for improved profitability. Core net income and EPS1 for the year were $224.3 million and $2.04, respectively, compared to $235.0 million and $2.14 for 2022. For the fourth quarter of 2023, consolidated net income for common stock was $48.8 million and EPS was $0.44 compared to $57.3 million and EPS of $0.52 for the fourth quarter of 2022. Core net income and EPS1 for the fourth quarter were $53.4 million and $0.48, respectively. There were no core net income adjustments for the fourth quarter of 2022. “Although 2023 was one of the most challenging years ever for our company and the communities we serve, I am encouraged by the collaborative efforts of so many in our state to prioritize Maui’s recovery following the devastating August wildfires. Our hearts continue to be with the people of Maui, and we remain committed to supporting the recovery and rebuild effort,” said Scott Seu, HEI president and CEO. “Our core businesses delivered solid results under challenging circumstances, and both the utility and bank remain focused on supporting our communities and customers. The utility is continuing to execute on its plans to modernize its generation system and make our electric grids more resilient. “The bank continues to be well-positioned with strong capital, excellent credit quality, lending capacity and ample liquidity. In addition, the sale of investment securities executed in the fourth quarter further positions ASB for improved profitability and net interest margin while strengthening the balance sheet.” HAWAIIAN ELECTRIC COMPANY (HAWAIIAN ELECTRIC) EARNINGS2 Full Year Results: Hawaiian Electric’s full-year net income was $194.0 million compared to $188.9 million in 2022, with the increase primarily driven by the following after-tax items: $34 million higher revenues, including $27 million from the annual revenue adjustment (ARA) mechanism, $5 million from the fossil fuel cost risk-sharing mechanism and $4 million from the major project interim recovery (MPIR) mechanism, partially offset by lower performance incentive mechanism revenue; $6 million higher allowance for funds used during construction (AFUDC) related to increased capital expenditures; $4 million in higher interest income; and $2 million in research and development tax credits. These items were offset by the following after-tax items: $28 million in higher operations and maintenance (O&M) expenses, including $8 million of labor and associated costs for the Maui windstorm and wildfire response. The remaining increase in O&M included higher transmission and distribution maintenance, and higher outside services costs; $7 million higher interest expense due to increased borrowings; and $6 million higher depreciation expense due to increasing investments to integrate more renewable energy and improve customer reliability and system efficiency. Excluding incremental after-tax Maui windstorm and wildfire-related expenses, Hawaiian Electric’s core net income3 for 2023 was $195.1 million. The incremental after-tax Maui windstorm and wildfire-related expenses (excluding the One ‘Ohana Initiative contribution) of $1.1 million were comprised of $29.6 million of expenses, net of $17.5 million of insurance-related recoveries and $10.9 million of deferral treatment of costs pursuant to the Public Utilities Commission’s decision allowing Hawaiian Electric to defer these costs. Fourth Quarter Results: Hawaiian Electric’s net income for the fourth quarter of 2023 was $58.2 million, compared to $48.6 million in the fourth quarter of 2022, with the variance primarily driven by the following after-tax items: $9 million of combined deferral treatment and insurance recoveries, net of expenses, related to the Maui windstorm and wildfires, $8 million higher revenues, including $7 million from the ARA mechanism and $1 million from the MPIR mechanism; $2 million in research and development tax credits and $1 million higher AFUDC; partially offset by $8 million of higher operation and maintenance expenses primarily related to transmission and distribution, bad debt and other outside services. Normalizing for the deferral treatment and insurance recoveries, and excluding incremental after-tax Maui windstorm and wildfire-related expenses, Hawaiian Electric’s core net income3 for the fourth quarter of 2023 was $48.9 million. Utility Dividend Declaration On February 9, 2024 Hawaiian Electric’s Board of Directors declared a $13 million quarterly cash dividend to its sole common stockholder, HEI. This is down from approximately $30 million declared in each of the previous three consecutive quarters. With the suspension of HEI’s dividend to its common stockholders, cash needs at the HEI parent company are limited relative to cash needs prior to the dividend suspension, and reducing the utility’s dividend to HEI allows more cash to be kept at the utility, supporting its ability to perform needed restoration work in West Maui, make critical capital investments supporting wildfire mitigation and in other electrical infrastructure while capital markets access remains limited. AMERICAN SAVINGS BANK EARNINGS Full Year Results: ASB’s full year 2023 net income was $53.4 million, compared to $80.0 million in 2022. Net income for the year included $8.3 million of Maui wildfire-related expenses after tax, and an $11.0 million after-tax loss on the sale of investment securities recorded in the fourth quarter. The loss resulted from selling low-yielding securities in order to reduce high cost deposits, strengthening the bank’s balance sheet while positioning the bank for improved profitability. Core net income4 for the year was $72.6 million. Net interest income was $252.0 million in 2023 compared to $252.6 million in 2022, with higher interest and dividend income approximately offset by the impacts of higher funding costs. Noninterest income for 2023 was $45.4 million compared to $57.0 million in 2022. The decrease in noninterest income was primarily due to a $15.0 million pre-tax ($11.0 million after-tax) loss on sale of investment securities recorded in the fourth quarter. The sale of investment securities was executed in order to reposition the balance sheet by divesting securities with below-market yields to pay down higher cost funding, positioning ASB for improved net interest margin and profitability. As of December 31, 2023 and compared to December 31, 2022: Total earning assets were $9.2 billion, up 0.50%; Total loans were $6.2 billion, up 3.4%; and Total deposits were $8.1 billion, approximately flat. The average cost of funds was 0.93% for the full year 2023, 77 basis points higher than the prior year as higher interest rates and a shift in funding mix increased funding costs. ASB’s return on average equity for the full year 2023 was 11.0% compared to 14.1% in 2022. Return on average assets for the full year was 0.55% in 2023 compared to 0.86% in 2022. Core return on average equity and core return on average assets4 were 14.9% and 0.75%, respectively. Fourth Quarter Results: Net income for the fourth quarter of 2023 was $3.2 million, and included $2.0 million of after-tax Maui wildfire-related expenses as well as the aforementioned loss on sale of securities. This compared to $17.9 million in the fourth quarter of 2022. Core net income4 for the fourth quarter was $16.2 million. For the fourth quarter 2023, return on average equity was 2.7%, compared to 15.7% in the fourth quarter of 2022. Core return on average equity5 for the quarter was 13.7%. Return on average assets was 0.13% for the fourth quarter of 2023, compared to 0.76% in the same quarter last year. Core return on average assets5 was 0.67%. Please refer to ASB’s news release issued on January 30, 2024 for additional information on ASB. HOLDING AND OTHER COMPANIES The holding and other companies’ net loss was $48.1 million in 2023 compared to $27.8 million in 2022. The higher net loss for the year was primarily due to the after-tax $6.2 million gain on sale of an equity method investment recorded in 2022 at Pacific Current, higher interest expense, lower Pacific Current net income and wildfire-related expenses. Core net loss for the year was $43.4 million compared to $34.0 million in 20225. The fourth quarter net loss was $12.6 million compared to $9.2 million in the fourth quarter of 2022. The higher net loss compared to the prior year quarter was primarily due to lower Pacific Current net income, higher interest expense and wildfire-related expenses. Core net loss for the fourth quarter of 2023 was $11.7 million5. There were no core adjustments to net income for the fourth quarter of 2022. EARNINGS RELEASE, WEBCAST AND CONFERENCE CALL TO DISCUSS EARNINGS HEI will conduct a webcast and conference call to review its fourth quarter and full year 2023 consolidated financial results today at 11:30 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 February 27, 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 Core net income, core EPS, core return on average equity and core return on average assets are non-GAAP measures which, for 2023, exclude Maui wildfire-related after-tax costs and, except for the utility, the after-tax loss on sale of securities resulting from the bank’s balance sheet repositioning executed in the fourth quarter; and for 2022, exclude the gain on sale of an equity method investment recorded in the first quarter at Pacific Current. See “Explanation of HEI’s Use of Certain Unaudited Non-GAAP Measures” and the related GAAP reconciliations. 2 Utility amounts indicated as after-tax in this earnings release are based upon adjusting items using a current year composite statutory tax rate of 25.75%. 3 Refer to footnote 1. 4 Refer to footnote 1. 5 Refer to footnote 1. ABOUT HEI The HEI family of companies provides the energy and financial services that empower much of the economic and community activity of 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. 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 Core net income is a non-GAAP measure which, for 2023, excludes Maui wildfire-related after-tax costs and, except for the utility, the after-tax loss on sale of investment securities resulting from the balance sheet repositioning transaction executed in the fourth quarter; and for 2022, excludes the gain on sale of an equity method investment recorded in the first quarter at Pacific Current. See “Explanation of HEI’s Use of Certain Unaudited Non-GAAP Measures” and related GAAP reconciliations at the end of this release. FORWARD-LOOKING STATEMENTS This release may contain “forward-looking statements,” which include statements that are predictive in nature, depend upon or refer to future events or conditions, and usually include words such as “will,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “predicts,” “estimates” or similar expressions. In addition, any statements concerning future financial performance, ongoing business strategies or prospects or possible future actions are also forward-looking statements. Forward-looking statements are based on current expectations and projections about future events and are subject to risks, uncertainties and the accuracy of assumptions concerning HEI and its subsidiaries, the performance of the industries in which they do business and economic, political and market factors, among other things. These forward-looking statements are not guarantees of future performance. Forward-looking statements in this release should be read in conjunction with the “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” discussions (which are incorporated by reference herein) set forth in HEI’s Annual Report on Form 10-K for the year ended December 31, 2022, HEI’s Quarterly Report on Form 10-Q for the quarter ended September 30, 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 and (i) extreme weather events, including windstorms and other natural disasters, particularly those driven or exacerbated by climate change, which could increase the risk of the Utilities’ equipment being damaged, becoming inoperable or contributing to a wildfire; (ii) the impact of the Maui windstorm and wildfires including the potential liabilities from the many lawsuits filed against the Company and potential regulatory penalties which may result in significant costs that may be unrecoverable through insurance and/or rates; (iii) an increase in insurance premiums and the inability to fully recover premiums through rates or the potential inability to obtain wildfire and general liability insurance coverage at reasonable rates, if available at all; (iv) the uncertainties surrounding the Company’s access to capital and credit markets due to the uncertainties associated with the costs related to the Maui windstorm and wildfires; (v) the material reduction or extended delay in dividends or other distributions from one or more operating subsidiaries to HEI; (vi) further downgrades by securities rating agencies in their ratings of the securities of HEI and Hawaiian Electric and their impact on results of financing efforts; (vii) the risks of suffering losses and incurring liabilities that are uninsured (e.g., damages to the Utilities’ transmission and distribution system and losses from business interruption) or underinsured (e.g., losses not covered as a result of insurance deductibles or other exclusions or exceeding policy limits), and the risks associated with the operation of transmission and distribution assets and power generation facilities, including public and employee safety issues, and assets causing or contributing to wildfires. 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 December 31 Years ended December 31 (in thousands, except per share amounts) 2023 2022 2023 2022 Revenues Electric utility $ 854,106 $ 924,951 $ 3,269,521 $ 3,408,587 Bank 102,947 89,218 394,663 321,068 Other 4,298 4,944 17,982 12,330 Total revenues 961,351 1,019,113 3,682,166 3,741,985 Expenses Electric utility 768,682 849,558 2,967,363 3,109,396 Bank 86,282 66,753 317,051 219,550 Other 10,411 9,788 45,148 31,966 Total expenses 865,375 926,099 3,329,562 3,360,912 Operating income (loss) Electric utility 85,424 75,393 302,158 299,191 Bank 16,665 22,465 77,612 101,518 Other (6,113 ) (4,844 ) (27,166 ) (19,636 ) Total operating income 95,976 93,014 352,604 381,073 Retirement defined benefits credit—other than service costs 1,207 883 4,768 4,411 Interest expense, net—other than on deposit liabilities and other bank borrowings (34,273 ) (27,462 ) (125,532 ) (103,402 ) Allowance for borrowed funds used during construction 1,403 1,015 5,201 3,416 Allowance for equity funds used during construction 4,091 3,143 15,164 10,574 Interest income 4,125 — 9,105 — Loss on sales of investment securities and gain (loss) on sales of equity-method investment (15,609 ) — (15,609 ) 8,123 Income before income taxes 56,920 70,593 245,701 304,195 Income taxes 7,658 12,772 44,573 61,167 Net income 49,262 57,821 201,128 243,028 Preferred stock dividends of subsidiaries 473 473 1,890 1,890 Net income for common stock $ 48,789 $ 57,348 $ 199,238 $ 241,138 Basic earnings per common share $ 0.44 $ 0.52 $ 1.82 $ 2.20 Diluted earnings per common share $ 0.44 $ 0.52 $ 1.81 $ 2.20 Dividends declared per common share $ — $ 0.35 $ 1.08 $ 1.40 Weighted-average number of common shares outstanding 110,134 109,471 109,739 109,434 Weighted-average shares assuming dilution 110,301 109,774 110,038 109,778 Net income (loss) for common stock by segment Electric utility $ 58,183 $ 48,621 $ 193,952 $ 188,929 Bank 3,231 17,897 53,362 79,989 Other (12,625 ) (9,170 ) (48,076 ) (27,780 ) Net income for common stock $ 48,789 $ 57,348 $ 199,238 $ 241,138 Comprehensive income (loss) attributable to HEI $ 117,463 $ 74,864 $ 245,916 $ (42,357 ) Return on average common equity (%) (twelve months ended) 8.8 10.5 This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI filings with the SEC. Hawaiian Electric Company, Inc. (Hawaiian Electric) and Subsidiaries CONSOLIDATED STATEMENTS OF INCOME DATA (Unaudited) Three months ended December 31 Years ended December 31 ($ in thousands, except per barrel amounts) 2023 2022 2023 2022 Revenues $ 854,106 $ 924,951 $ 3,269,521 $ 3,408,587 Expenses Fuel oil 329,728 391,071 1,211,420 1,265,614 Purchased power 172,779 186,757 671,769 793,584 Other operation and maintenance 126,373 126,342 533,557 497,601 Depreciation 60,924 59,503 243,705 235,424 Taxes, other than income taxes 78,878 85,885 306,912 317,173 Total expenses 768,682 849,558 2,967,363 3,109,396 Operating income 85,424 75,393 302,158 299,191 Allowance for equity funds used during construction 4,091 3,143 15,164 10,574 Retirement defined benefits credit—other than service costs 1,076 959 4,303 3,835 Interest expense and other charges, net (22,575 ) (19,681 ) (86,140 ) (76,416 ) Allowance for borrowed funds used during construction 1,403 1,015 5,201 3,416 Interest income 2,330 — 6,454 — Income before income taxes 71,749 60,829 247,140 240,600 Income taxes 13,067 11,709 51,193 49,676 Net income 58,682 49,120 195,947 190,924 Preferred stock dividends of subsidiaries 229 229 915 915 Net income attributable to Hawaiian Electric 58,453 48,891 195,032 190,009 Preferred stock dividends of Hawaiian Electric 270 270 1,080 1,080 Net income for common stock $ 58,183 $ 48,621 $ 193,952 $ 188,929 Comprehensive income attributable to Hawaiian Electric $ 58,337 $ 54,552 $ 193,940 $ 195,070 OTHER ELECTRIC UTILITY INFORMATION Kilowatthour sales (millions) Hawaiian Electric 1,604 1,603 6,138 6,212 Hawaii Electric Light 272 269 1,043 1,053 Maui Electric 264 282 1,046 1,089 2,140 2,154 8,227 8,354 Average fuel oil cost per barrel $ 132.47 $ 152.05 $ 126.73 $ 141.49 Return on average common equity (%) (twelve months ended)1 8.2 8.2 1 Simple average. This information should be read in conjunction with the consolidated financial statements and the notes thereto in Hawaiian Electric filings with the SEC. American Savings Bank, F.S.B. STATEMENTS OF INCOME DATA (Unaudited) Three months ended Years ended December 31 (in thousands) December 31, 2023 September 30, 2023 December 31, 2022 2023 2022 Interest and dividend income Interest and fees on loans $ 72,340 $ 71,540 $ 60,331 $ 276,688 $ 207,830 Interest and dividends on investment securities 15,587 14,096 14,315 58,095 58,044 Total interest and dividend income 87,927 85,636 74,646 334,783 265,874 Interest expense Interest on deposit liabilities 17,961 14,446 3,755 48,905 7,327 Interest on other borrowings 8,721 8,598 4,775 33,892 5,974 Total interest expense 26,682 23,044 8,530 82,797 13,301 Net interest income 61,245 62,592 66,116 251,986 252,573 Provision for credit losses 304 8,835 2,729 10,357 2,037 Net interest income after provision for credit losses 60,941 53,757 63,387 241,629 250,536 Noninterest income Fees from other financial services 4,643 4,703 4,764 19,034 19,830 Fee income on deposit liabilities 5,104 4,924 4,640 19,131 18,762 Fee income on other financial products 2,664 2,440 2,628 10,616 10,291 Bank-owned life insurance 1,707 2,303 1,872 7,390 2,533 Mortgage banking income 209 341 62 910 1,692 Gain on sale of real estate — — 776 495 1,778 Loss on sale of investment securities, net (14,965 ) — — (14,965 ) — Other income, net 693 627 606 2,799 2,086 Total noninterest income 55 15,338 15,348 45,410 56,972 Noninterest expense Compensation and employee benefits 28,797 29,902 30,361 118,297 113,839 Occupancy 5,422 5,154 7,030 21,703 24,026 Data processing 5,305 5,133 4,537 20,545 17,681 Services 5,032 3,627 2,967 13,943 10,679 Equipment 3,114 3,125 2,937 11,842 10,100 Office supplies, printing and postage 1,019 1,022 1,142 4,315 4,398 Marketing 1,167 984 1,091 4,001 3,968 Other expense 9,250 7,399 6,034 28,992 20,576 Total noninterest expense 59,106 56,346 56,099 223,638 205,267 Income before income taxes 1,890 12,749 22,636 63,401 102,241 Income taxes (1,341 ) 1,384 4,739 10,039 22,252 Net income $ 3,231 $ 11,365 $ 17,897 $ 53,362 $ 79,989 Comprehensive income (loss) $ 70,585 $ (22,866 ) $ 29,282 $ 97,705 $ (218,844 ) OTHER BANK INFORMATION (annualized %, except as of period end) Return on average assets 0.13 0.47 0.76 0.55 0.86 Return on average equity 2.74 9.19 15.73 10.98 14.08 Return on average tangible common equity 3.32 11.02 19.20 13.22 16.46 Net interest margin 2.63 2.70 2.91 2.74 2.89 Efficiency ratio 96.42 72.30 68.86 75.20 66.31 Net charge-offs to average loans outstanding 0.15 0.07 0.06 0.12 0.03 As of period end Nonaccrual loans to loans receivable held for investment 0.46 0.16 0.28 Allowance for credit losses to loans outstanding 1.20 1.23 1.21 Tangible common equity to tangible assets 4.7 3.9 4.1 Tier-1 leverage ratio 7.7 7.7 7.8 Dividend paid to HEI (via ASB Hawaii, Inc.) ($ in millions) $ — $ 14.0 $ 10.0 $ 39.0 $ 42.0 This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI filings with the SEC. Explanation of HEI’s Use of Certain Unaudited Non-GAAP Measures HEI, Hawaiian Electric and ASB management use certain non-GAAP measures to evaluate the performance of HEI, the utility and 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 for adjusted diluted EPS (for HEI consolidated); return on average common equity (for HEI consolidated and Hawaiian Electric); and returns on average equity, average tangible equity and average assets (for ASB). The reconciling adjustments from GAAP1 earnings to core earnings for 2023 are limited to the costs related to the recent Maui wildfires and, except for the utility, the loss on sale of investment securities from the balance sheet repositioning transaction executed in the fourth quarter. The reconciling adjustments from GAAP1 earnings to core earnings for 2022 are limited to the gain on sale of an equity method investment recorded in the first quarter at Pacific Current. Management does not consider these items to be representative of the company’s fundamental core earnings. Reconciliation of GAAP1 to non-GAAP Measures Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries Unaudited (in thousands) Three months ended December 31, 2023 Year ended December 31, 2023 Year ended December 31, 2022 Maui wildfire-related costs Pretax expenses: Legal expenses $ 24,125 $ 34,876 $ — Outside services expenses 8,688 14,822 — Provision for credit losses — 5,900 — One `Ohana Initiative Contribution — 75,000 — Other expenses 1,343 5,185 — Interest expenses 1,645 2,600 — Pretax expenses 35,801 138,383 — Insurance recovery (29,580 ) (104,580 ) — Deferral of cost (14,692 ) (14,692 ) — Wildfire-related expenses, excluding insurance recovery and deferral (8,471 ) 19,111 — Pretax loss on sale of investment securities 14,965 14,965 — Gain on sale of equity method investment at Pacific Current — — (8,123 ) Income tax benefits2 (1,858 ) (9,050 ) 1,947 After-tax adjustments $ 4,636 $ 25,026 $ (6,176 ) HEI consolidated net income GAAP net income (as reported) $ 48,789 $ 199,238 $ 241,138 Excluding special items related to the Maui wildfire (after tax): Legal expenses 17,909 25,886 — Outside services expenses 6,430 10,976 — Provision for credit losses — 4,319 — One `Ohana Initiative Contribution — 55,688 — Other expenses 993 3,832 — Interest expenses 1,222 1,931 — After tax expenses 26,554 102,632 — Insurance recovery (21,963 ) (77,651 ) — Deferral of cost (10,909 ) (10,909 ) — Maui wildfire-related expenses, net of insurance recoveries and approved deferral treatment (after tax) (6,318 ) 14,072 — Gain on sale of equity method investment (after tax) — — (6,176 ) Loss on sale of investment securities (after tax) 10,954 10,954 — Total core net income adjustments (after tax) 4,636 25,026 (6,176 ) Non-GAAP (core) net income $ 53,425 $ 224,264 $ 234,962 GAAP Diluted earnings per share (as reported) $ 0.44 $ 1.81 $ 2.20 Non-GAAP (core) Diluted earnings per share $ 0.48 $ 2.04 $ 2.14 Years ended December 31, 2023 2022 Ratios (%) Based on GAAP1 Return on average equity 8.8 10.5 Based on Non-GAAP (core) Return on average equity 9.9 10.2 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 GAAP1 to non-GAAP Measures Hawaiian Electric Company, Inc. and Subsidiaries Unaudited (in thousands) Three months ended December 31, 2023 Year ended December 31, 2023 Maui windstorm and wildfire-related costs Pretax expenses: Legal expenses2 $ 18,486 $ 24,737 Outside services expenses2 5,826 10,532 One `Ohana Initiative Contribution — 75,000 Other expenses2 834 3,316 Interest expenses3 720 1,223 Pretax expenses 25,866 114,808 Insurance recovery (23,613 ) (98,613 ) Deferral of cost (14,692 ) (14,692 ) Total Maui windstorm and wildfire-related expenses, net of insurance recoveries and approved deferral treatment (12,439 ) 1,503 Income tax benefits4 3,203 (387 ) After-tax expenses $ (9,236 ) $ 1,116 Hawaiian Electric consolidated net income GAAP net income (as reported) $ 58,183 $ 193,952 Excluding special items related to the Maui windstorm and wildfires (after tax): Legal expenses 13,726 18,367 Outside services expenses 4,326 7,820 One `Ohana Initiative Contribution — 55,688 Other expenses 619 2,462 Interest expenses 534 908 Maui windstorm and wildfire-related cost (after tax) 19,205 85,245 Insurance recovery (after tax) (17,532 ) (73,220 ) Deferral of cost (after tax) (10,909 ) (10,909 ) Total Maui windstorm and wildfire- related expenses, net of insurance recoveries and approved deferral treatment (after tax) (9,236 ) 1,116 Non-GAAP (core) net income $ 48,947 $ 195,068 Years ended December 31, 2023 2022 Ratios (%) Based on GAAP1 Return on average equity 8.2 8.2 Based on Non-GAAP (core) Return on average equity 8.2 8.2 1 Accounting principles generally accepted in the United States of America. 2 Legal, outside services and other are included in “Other operation and maintenance” on the Hawaiian Electric and subsidiaries Consolidated Statements of Income Data. 3 Interest expense is included in “Interest expense and other charges, net” on the Hawaiian Electric and subsidiaries Consolidated Statements of Income Data. 4 Current year composite statutory tax rate of 25.75% is used for Utility amounts. Reconciliation of GAAP1 to non-GAAP Measures American Savings Bank F.S.B. Unaudited (in thousands) Three months ended December 31, 2023 Year ended December 31, 2023 Maui wildfire-related costs and loss on sale of securities Pretax expenses: Provision for credit losses $ — $ 5,900 Professional services expense 2,405 3,705 Other expenses 309 1,666 Pretax Maui wildfire-related costs 2,714 11,271 Pretax loss on sale of investment securities 14,965 14,965 Income tax benefits (4,738 ) (7,031 ) After-tax expenses $ 12,941 $ 19,205 ASB net income GAAP (as reported) $ 3,231 $ 53,362 Excluding expense related to Maui wildfire and securities loss (after tax): Provision for credit losses — 4,319 Professional services expense 1,760 2,712 Other expenses 227 1,220 Loss on sale of investment securities 10,954 10,954 Maui wildfire-related cost and securities loss (after tax) 12,941 19,205 Non-GAAP (core) net income $ 16,172 $ 72,567 Three months ended December 31, 2023 Year ended December 31, 2023 Ratios (annualized %) Based on GAAP1 Return on average assets 0.13 0.55 Return on average equity 2.74 10.98 Return on average tangible common equity 3.32 13.22 Efficiency ratio 96.42 75.20 Based on Non-GAAP (core) Return on average assets 0.67 0.75 Return on average equity 13.73 14.94 Return on average tangible common equity 16.63 17.98 Efficiency ratio 73.94 69.88 1 Accounting principles generally accepted in the United States of America View source version on businesswire.com: https://www.businesswire.com/news/home/20240213153280/en/Contacts Mateo Garcia Director, Investor Relations Telephone: (808) 543-7300 E-mail: ir@hei.com
Full Year Net Income of $199.2 million and Diluted Earnings Per Share (EPS) of $1.81 2023 Results Include $14.1 Million of After-tax Maui Wildfire-Related Expenses and an $11.0 Million After-tax Loss Resulting from ASB’s Fourth Quarter Balance Sheet Repositioning Core Businesses Continue to Perform Well Utility Continuing to Progress Resilience Work in West Maui ASB’s Balance Sheet Repositioning Strengthens Balance Sheet and Positions Bank for Improved Net Interest Margin and Profitability Strong Credit Quality and Capital Position at ASB
Hawaiian Electric Industries, Inc. (NYSE: HE) (HEI) today reported full year 2023 consolidated net income for common stock of $199.2 million and EPS of $1.81 compared to $241.1 million and EPS of $2.20 for 2022. Net income for the year included $14.1 million of after-tax wildfire-related expenses, and an $11.0 million after-tax loss on the sale of investment securities executed by American Savings Bank (ASB) in the fourth quarter. The loss resulted from selling low-yielding securities in order to reduce high cost deposits, strengthening the bank’s balance sheet while positioning the bank for improved profitability. Core net income and EPS1 for the year were $224.3 million and $2.04, respectively, compared to $235.0 million and $2.14 for 2022. For the fourth quarter of 2023, consolidated net income for common stock was $48.8 million and EPS was $0.44 compared to $57.3 million and EPS of $0.52 for the fourth quarter of 2022. Core net income and EPS1 for the fourth quarter were $53.4 million and $0.48, respectively. There were no core net income adjustments for the fourth quarter of 2022. “Although 2023 was one of the most challenging years ever for our company and the communities we serve, I am encouraged by the collaborative efforts of so many in our state to prioritize Maui’s recovery following the devastating August wildfires. Our hearts continue to be with the people of Maui, and we remain committed to supporting the recovery and rebuild effort,” said Scott Seu, HEI president and CEO. “Our core businesses delivered solid results under challenging circumstances, and both the utility and bank remain focused on supporting our communities and customers. The utility is continuing to execute on its plans to modernize its generation system and make our electric grids more resilient. “The bank continues to be well-positioned with strong capital, excellent credit quality, lending capacity and ample liquidity. In addition, the sale of investment securities executed in the fourth quarter further positions ASB for improved profitability and net interest margin while strengthening the balance sheet.” HAWAIIAN ELECTRIC COMPANY (HAWAIIAN ELECTRIC) EARNINGS2 Full Year Results: Hawaiian Electric’s full-year net income was $194.0 million compared to $188.9 million in 2022, with the increase primarily driven by the following after-tax items: $34 million higher revenues, including $27 million from the annual revenue adjustment (ARA) mechanism, $5 million from the fossil fuel cost risk-sharing mechanism and $4 million from the major project interim recovery (MPIR) mechanism, partially offset by lower performance incentive mechanism revenue; $6 million higher allowance for funds used during construction (AFUDC) related to increased capital expenditures; $4 million in higher interest income; and $2 million in research and development tax credits. These items were offset by the following after-tax items: $28 million in higher operations and maintenance (O&M) expenses, including $8 million of labor and associated costs for the Maui windstorm and wildfire response. The remaining increase in O&M included higher transmission and distribution maintenance, and higher outside services costs; $7 million higher interest expense due to increased borrowings; and $6 million higher depreciation expense due to increasing investments to integrate more renewable energy and improve customer reliability and system efficiency. Excluding incremental after-tax Maui windstorm and wildfire-related expenses, Hawaiian Electric’s core net income3 for 2023 was $195.1 million. The incremental after-tax Maui windstorm and wildfire-related expenses (excluding the One ‘Ohana Initiative contribution) of $1.1 million were comprised of $29.6 million of expenses, net of $17.5 million of insurance-related recoveries and $10.9 million of deferral treatment of costs pursuant to the Public Utilities Commission’s decision allowing Hawaiian Electric to defer these costs. Fourth Quarter Results: Hawaiian Electric’s net income for the fourth quarter of 2023 was $58.2 million, compared to $48.6 million in the fourth quarter of 2022, with the variance primarily driven by the following after-tax items: $9 million of combined deferral treatment and insurance recoveries, net of expenses, related to the Maui windstorm and wildfires, $8 million higher revenues, including $7 million from the ARA mechanism and $1 million from the MPIR mechanism; $2 million in research and development tax credits and $1 million higher AFUDC; partially offset by $8 million of higher operation and maintenance expenses primarily related to transmission and distribution, bad debt and other outside services. Normalizing for the deferral treatment and insurance recoveries, and excluding incremental after-tax Maui windstorm and wildfire-related expenses, Hawaiian Electric’s core net income3 for the fourth quarter of 2023 was $48.9 million. Utility Dividend Declaration On February 9, 2024 Hawaiian Electric’s Board of Directors declared a $13 million quarterly cash dividend to its sole common stockholder, HEI. This is down from approximately $30 million declared in each of the previous three consecutive quarters. With the suspension of HEI’s dividend to its common stockholders, cash needs at the HEI parent company are limited relative to cash needs prior to the dividend suspension, and reducing the utility’s dividend to HEI allows more cash to be kept at the utility, supporting its ability to perform needed restoration work in West Maui, make critical capital investments supporting wildfire mitigation and in other electrical infrastructure while capital markets access remains limited. AMERICAN SAVINGS BANK EARNINGS Full Year Results: ASB’s full year 2023 net income was $53.4 million, compared to $80.0 million in 2022. Net income for the year included $8.3 million of Maui wildfire-related expenses after tax, and an $11.0 million after-tax loss on the sale of investment securities recorded in the fourth quarter. The loss resulted from selling low-yielding securities in order to reduce high cost deposits, strengthening the bank’s balance sheet while positioning the bank for improved profitability. Core net income4 for the year was $72.6 million. Net interest income was $252.0 million in 2023 compared to $252.6 million in 2022, with higher interest and dividend income approximately offset by the impacts of higher funding costs. Noninterest income for 2023 was $45.4 million compared to $57.0 million in 2022. The decrease in noninterest income was primarily due to a $15.0 million pre-tax ($11.0 million after-tax) loss on sale of investment securities recorded in the fourth quarter. The sale of investment securities was executed in order to reposition the balance sheet by divesting securities with below-market yields to pay down higher cost funding, positioning ASB for improved net interest margin and profitability. As of December 31, 2023 and compared to December 31, 2022: Total earning assets were $9.2 billion, up 0.50%; Total loans were $6.2 billion, up 3.4%; and Total deposits were $8.1 billion, approximately flat. The average cost of funds was 0.93% for the full year 2023, 77 basis points higher than the prior year as higher interest rates and a shift in funding mix increased funding costs. ASB’s return on average equity for the full year 2023 was 11.0% compared to 14.1% in 2022. Return on average assets for the full year was 0.55% in 2023 compared to 0.86% in 2022. Core return on average equity and core return on average assets4 were 14.9% and 0.75%, respectively. Fourth Quarter Results: Net income for the fourth quarter of 2023 was $3.2 million, and included $2.0 million of after-tax Maui wildfire-related expenses as well as the aforementioned loss on sale of securities. This compared to $17.9 million in the fourth quarter of 2022. Core net income4 for the fourth quarter was $16.2 million. For the fourth quarter 2023, return on average equity was 2.7%, compared to 15.7% in the fourth quarter of 2022. Core return on average equity5 for the quarter was 13.7%. Return on average assets was 0.13% for the fourth quarter of 2023, compared to 0.76% in the same quarter last year. Core return on average assets5 was 0.67%. Please refer to ASB’s news release issued on January 30, 2024 for additional information on ASB. HOLDING AND OTHER COMPANIES The holding and other companies’ net loss was $48.1 million in 2023 compared to $27.8 million in 2022. The higher net loss for the year was primarily due to the after-tax $6.2 million gain on sale of an equity method investment recorded in 2022 at Pacific Current, higher interest expense, lower Pacific Current net income and wildfire-related expenses. Core net loss for the year was $43.4 million compared to $34.0 million in 20225. The fourth quarter net loss was $12.6 million compared to $9.2 million in the fourth quarter of 2022. The higher net loss compared to the prior year quarter was primarily due to lower Pacific Current net income, higher interest expense and wildfire-related expenses. Core net loss for the fourth quarter of 2023 was $11.7 million5. There were no core adjustments to net income for the fourth quarter of 2022. EARNINGS RELEASE, WEBCAST AND CONFERENCE CALL TO DISCUSS EARNINGS HEI will conduct a webcast and conference call to review its fourth quarter and full year 2023 consolidated financial results today at 11:30 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 February 27, 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 Core net income, core EPS, core return on average equity and core return on average assets are non-GAAP measures which, for 2023, exclude Maui wildfire-related after-tax costs and, except for the utility, the after-tax loss on sale of securities resulting from the bank’s balance sheet repositioning executed in the fourth quarter; and for 2022, exclude the gain on sale of an equity method investment recorded in the first quarter at Pacific Current. See “Explanation of HEI’s Use of Certain Unaudited Non-GAAP Measures” and the related GAAP reconciliations. 2 Utility amounts indicated as after-tax in this earnings release are based upon adjusting items using a current year composite statutory tax rate of 25.75%. 3 Refer to footnote 1. 4 Refer to footnote 1. 5 Refer to footnote 1. ABOUT HEI The HEI family of companies provides the energy and financial services that empower much of the economic and community activity of 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. 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 Core net income is a non-GAAP measure which, for 2023, excludes Maui wildfire-related after-tax costs and, except for the utility, the after-tax loss on sale of investment securities resulting from the balance sheet repositioning transaction executed in the fourth quarter; and for 2022, excludes the gain on sale of an equity method investment recorded in the first quarter at Pacific Current. See “Explanation of HEI’s Use of Certain Unaudited Non-GAAP Measures” and related GAAP reconciliations at the end of this release. FORWARD-LOOKING STATEMENTS This release may contain “forward-looking statements,” which include statements that are predictive in nature, depend upon or refer to future events or conditions, and usually include words such as “will,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “predicts,” “estimates” or similar expressions. In addition, any statements concerning future financial performance, ongoing business strategies or prospects or possible future actions are also forward-looking statements. Forward-looking statements are based on current expectations and projections about future events and are subject to risks, uncertainties and the accuracy of assumptions concerning HEI and its subsidiaries, the performance of the industries in which they do business and economic, political and market factors, among other things. These forward-looking statements are not guarantees of future performance. Forward-looking statements in this release should be read in conjunction with the “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” discussions (which are incorporated by reference herein) set forth in HEI’s Annual Report on Form 10-K for the year ended December 31, 2022, HEI’s Quarterly Report on Form 10-Q for the quarter ended September 30, 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 and (i) extreme weather events, including windstorms and other natural disasters, particularly those driven or exacerbated by climate change, which could increase the risk of the Utilities’ equipment being damaged, becoming inoperable or contributing to a wildfire; (ii) the impact of the Maui windstorm and wildfires including the potential liabilities from the many lawsuits filed against the Company and potential regulatory penalties which may result in significant costs that may be unrecoverable through insurance and/or rates; (iii) an increase in insurance premiums and the inability to fully recover premiums through rates or the potential inability to obtain wildfire and general liability insurance coverage at reasonable rates, if available at all; (iv) the uncertainties surrounding the Company’s access to capital and credit markets due to the uncertainties associated with the costs related to the Maui windstorm and wildfires; (v) the material reduction or extended delay in dividends or other distributions from one or more operating subsidiaries to HEI; (vi) further downgrades by securities rating agencies in their ratings of the securities of HEI and Hawaiian Electric and their impact on results of financing efforts; (vii) the risks of suffering losses and incurring liabilities that are uninsured (e.g., damages to the Utilities’ transmission and distribution system and losses from business interruption) or underinsured (e.g., losses not covered as a result of insurance deductibles or other exclusions or exceeding policy limits), and the risks associated with the operation of transmission and distribution assets and power generation facilities, including public and employee safety issues, and assets causing or contributing to wildfires. 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 December 31 Years ended December 31 (in thousands, except per share amounts) 2023 2022 2023 2022 Revenues Electric utility $ 854,106 $ 924,951 $ 3,269,521 $ 3,408,587 Bank 102,947 89,218 394,663 321,068 Other 4,298 4,944 17,982 12,330 Total revenues 961,351 1,019,113 3,682,166 3,741,985 Expenses Electric utility 768,682 849,558 2,967,363 3,109,396 Bank 86,282 66,753 317,051 219,550 Other 10,411 9,788 45,148 31,966 Total expenses 865,375 926,099 3,329,562 3,360,912 Operating income (loss) Electric utility 85,424 75,393 302,158 299,191 Bank 16,665 22,465 77,612 101,518 Other (6,113 ) (4,844 ) (27,166 ) (19,636 ) Total operating income 95,976 93,014 352,604 381,073 Retirement defined benefits credit—other than service costs 1,207 883 4,768 4,411 Interest expense, net—other than on deposit liabilities and other bank borrowings (34,273 ) (27,462 ) (125,532 ) (103,402 ) Allowance for borrowed funds used during construction 1,403 1,015 5,201 3,416 Allowance for equity funds used during construction 4,091 3,143 15,164 10,574 Interest income 4,125 — 9,105 — Loss on sales of investment securities and gain (loss) on sales of equity-method investment (15,609 ) — (15,609 ) 8,123 Income before income taxes 56,920 70,593 245,701 304,195 Income taxes 7,658 12,772 44,573 61,167 Net income 49,262 57,821 201,128 243,028 Preferred stock dividends of subsidiaries 473 473 1,890 1,890 Net income for common stock $ 48,789 $ 57,348 $ 199,238 $ 241,138 Basic earnings per common share $ 0.44 $ 0.52 $ 1.82 $ 2.20 Diluted earnings per common share $ 0.44 $ 0.52 $ 1.81 $ 2.20 Dividends declared per common share $ — $ 0.35 $ 1.08 $ 1.40 Weighted-average number of common shares outstanding 110,134 109,471 109,739 109,434 Weighted-average shares assuming dilution 110,301 109,774 110,038 109,778 Net income (loss) for common stock by segment Electric utility $ 58,183 $ 48,621 $ 193,952 $ 188,929 Bank 3,231 17,897 53,362 79,989 Other (12,625 ) (9,170 ) (48,076 ) (27,780 ) Net income for common stock $ 48,789 $ 57,348 $ 199,238 $ 241,138 Comprehensive income (loss) attributable to HEI $ 117,463 $ 74,864 $ 245,916 $ (42,357 ) Return on average common equity (%) (twelve months ended) 8.8 10.5 This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI filings with the SEC. Hawaiian Electric Company, Inc. (Hawaiian Electric) and Subsidiaries CONSOLIDATED STATEMENTS OF INCOME DATA (Unaudited) Three months ended December 31 Years ended December 31 ($ in thousands, except per barrel amounts) 2023 2022 2023 2022 Revenues $ 854,106 $ 924,951 $ 3,269,521 $ 3,408,587 Expenses Fuel oil 329,728 391,071 1,211,420 1,265,614 Purchased power 172,779 186,757 671,769 793,584 Other operation and maintenance 126,373 126,342 533,557 497,601 Depreciation 60,924 59,503 243,705 235,424 Taxes, other than income taxes 78,878 85,885 306,912 317,173 Total expenses 768,682 849,558 2,967,363 3,109,396 Operating income 85,424 75,393 302,158 299,191 Allowance for equity funds used during construction 4,091 3,143 15,164 10,574 Retirement defined benefits credit—other than service costs 1,076 959 4,303 3,835 Interest expense and other charges, net (22,575 ) (19,681 ) (86,140 ) (76,416 ) Allowance for borrowed funds used during construction 1,403 1,015 5,201 3,416 Interest income 2,330 — 6,454 — Income before income taxes 71,749 60,829 247,140 240,600 Income taxes 13,067 11,709 51,193 49,676 Net income 58,682 49,120 195,947 190,924 Preferred stock dividends of subsidiaries 229 229 915 915 Net income attributable to Hawaiian Electric 58,453 48,891 195,032 190,009 Preferred stock dividends of Hawaiian Electric 270 270 1,080 1,080 Net income for common stock $ 58,183 $ 48,621 $ 193,952 $ 188,929 Comprehensive income attributable to Hawaiian Electric $ 58,337 $ 54,552 $ 193,940 $ 195,070 OTHER ELECTRIC UTILITY INFORMATION Kilowatthour sales (millions) Hawaiian Electric 1,604 1,603 6,138 6,212 Hawaii Electric Light 272 269 1,043 1,053 Maui Electric 264 282 1,046 1,089 2,140 2,154 8,227 8,354 Average fuel oil cost per barrel $ 132.47 $ 152.05 $ 126.73 $ 141.49 Return on average common equity (%) (twelve months ended)1 8.2 8.2 1 Simple average. This information should be read in conjunction with the consolidated financial statements and the notes thereto in Hawaiian Electric filings with the SEC. American Savings Bank, F.S.B. STATEMENTS OF INCOME DATA (Unaudited) Three months ended Years ended December 31 (in thousands) December 31, 2023 September 30, 2023 December 31, 2022 2023 2022 Interest and dividend income Interest and fees on loans $ 72,340 $ 71,540 $ 60,331 $ 276,688 $ 207,830 Interest and dividends on investment securities 15,587 14,096 14,315 58,095 58,044 Total interest and dividend income 87,927 85,636 74,646 334,783 265,874 Interest expense Interest on deposit liabilities 17,961 14,446 3,755 48,905 7,327 Interest on other borrowings 8,721 8,598 4,775 33,892 5,974 Total interest expense 26,682 23,044 8,530 82,797 13,301 Net interest income 61,245 62,592 66,116 251,986 252,573 Provision for credit losses 304 8,835 2,729 10,357 2,037 Net interest income after provision for credit losses 60,941 53,757 63,387 241,629 250,536 Noninterest income Fees from other financial services 4,643 4,703 4,764 19,034 19,830 Fee income on deposit liabilities 5,104 4,924 4,640 19,131 18,762 Fee income on other financial products 2,664 2,440 2,628 10,616 10,291 Bank-owned life insurance 1,707 2,303 1,872 7,390 2,533 Mortgage banking income 209 341 62 910 1,692 Gain on sale of real estate — — 776 495 1,778 Loss on sale of investment securities, net (14,965 ) — — (14,965 ) — Other income, net 693 627 606 2,799 2,086 Total noninterest income 55 15,338 15,348 45,410 56,972 Noninterest expense Compensation and employee benefits 28,797 29,902 30,361 118,297 113,839 Occupancy 5,422 5,154 7,030 21,703 24,026 Data processing 5,305 5,133 4,537 20,545 17,681 Services 5,032 3,627 2,967 13,943 10,679 Equipment 3,114 3,125 2,937 11,842 10,100 Office supplies, printing and postage 1,019 1,022 1,142 4,315 4,398 Marketing 1,167 984 1,091 4,001 3,968 Other expense 9,250 7,399 6,034 28,992 20,576 Total noninterest expense 59,106 56,346 56,099 223,638 205,267 Income before income taxes 1,890 12,749 22,636 63,401 102,241 Income taxes (1,341 ) 1,384 4,739 10,039 22,252 Net income $ 3,231 $ 11,365 $ 17,897 $ 53,362 $ 79,989 Comprehensive income (loss) $ 70,585 $ (22,866 ) $ 29,282 $ 97,705 $ (218,844 ) OTHER BANK INFORMATION (annualized %, except as of period end) Return on average assets 0.13 0.47 0.76 0.55 0.86 Return on average equity 2.74 9.19 15.73 10.98 14.08 Return on average tangible common equity 3.32 11.02 19.20 13.22 16.46 Net interest margin 2.63 2.70 2.91 2.74 2.89 Efficiency ratio 96.42 72.30 68.86 75.20 66.31 Net charge-offs to average loans outstanding 0.15 0.07 0.06 0.12 0.03 As of period end Nonaccrual loans to loans receivable held for investment 0.46 0.16 0.28 Allowance for credit losses to loans outstanding 1.20 1.23 1.21 Tangible common equity to tangible assets 4.7 3.9 4.1 Tier-1 leverage ratio 7.7 7.7 7.8 Dividend paid to HEI (via ASB Hawaii, Inc.) ($ in millions) $ — $ 14.0 $ 10.0 $ 39.0 $ 42.0 This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI filings with the SEC. Explanation of HEI’s Use of Certain Unaudited Non-GAAP Measures HEI, Hawaiian Electric and ASB management use certain non-GAAP measures to evaluate the performance of HEI, the utility and 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 for adjusted diluted EPS (for HEI consolidated); return on average common equity (for HEI consolidated and Hawaiian Electric); and returns on average equity, average tangible equity and average assets (for ASB). The reconciling adjustments from GAAP1 earnings to core earnings for 2023 are limited to the costs related to the recent Maui wildfires and, except for the utility, the loss on sale of investment securities from the balance sheet repositioning transaction executed in the fourth quarter. The reconciling adjustments from GAAP1 earnings to core earnings for 2022 are limited to the gain on sale of an equity method investment recorded in the first quarter at Pacific Current. Management does not consider these items to be representative of the company’s fundamental core earnings. Reconciliation of GAAP1 to non-GAAP Measures Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries Unaudited (in thousands) Three months ended December 31, 2023 Year ended December 31, 2023 Year ended December 31, 2022 Maui wildfire-related costs Pretax expenses: Legal expenses $ 24,125 $ 34,876 $ — Outside services expenses 8,688 14,822 — Provision for credit losses — 5,900 — One `Ohana Initiative Contribution — 75,000 — Other expenses 1,343 5,185 — Interest expenses 1,645 2,600 — Pretax expenses 35,801 138,383 — Insurance recovery (29,580 ) (104,580 ) — Deferral of cost (14,692 ) (14,692 ) — Wildfire-related expenses, excluding insurance recovery and deferral (8,471 ) 19,111 — Pretax loss on sale of investment securities 14,965 14,965 — Gain on sale of equity method investment at Pacific Current — — (8,123 ) Income tax benefits2 (1,858 ) (9,050 ) 1,947 After-tax adjustments $ 4,636 $ 25,026 $ (6,176 ) HEI consolidated net income GAAP net income (as reported) $ 48,789 $ 199,238 $ 241,138 Excluding special items related to the Maui wildfire (after tax): Legal expenses 17,909 25,886 — Outside services expenses 6,430 10,976 — Provision for credit losses — 4,319 — One `Ohana Initiative Contribution — 55,688 — Other expenses 993 3,832 — Interest expenses 1,222 1,931 — After tax expenses 26,554 102,632 — Insurance recovery (21,963 ) (77,651 ) — Deferral of cost (10,909 ) (10,909 ) — Maui wildfire-related expenses, net of insurance recoveries and approved deferral treatment (after tax) (6,318 ) 14,072 — Gain on sale of equity method investment (after tax) — — (6,176 ) Loss on sale of investment securities (after tax) 10,954 10,954 — Total core net income adjustments (after tax) 4,636 25,026 (6,176 ) Non-GAAP (core) net income $ 53,425 $ 224,264 $ 234,962 GAAP Diluted earnings per share (as reported) $ 0.44 $ 1.81 $ 2.20 Non-GAAP (core) Diluted earnings per share $ 0.48 $ 2.04 $ 2.14 Years ended December 31, 2023 2022 Ratios (%) Based on GAAP1 Return on average equity 8.8 10.5 Based on Non-GAAP (core) Return on average equity 9.9 10.2 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 GAAP1 to non-GAAP Measures Hawaiian Electric Company, Inc. and Subsidiaries Unaudited (in thousands) Three months ended December 31, 2023 Year ended December 31, 2023 Maui windstorm and wildfire-related costs Pretax expenses: Legal expenses2 $ 18,486 $ 24,737 Outside services expenses2 5,826 10,532 One `Ohana Initiative Contribution — 75,000 Other expenses2 834 3,316 Interest expenses3 720 1,223 Pretax expenses 25,866 114,808 Insurance recovery (23,613 ) (98,613 ) Deferral of cost (14,692 ) (14,692 ) Total Maui windstorm and wildfire-related expenses, net of insurance recoveries and approved deferral treatment (12,439 ) 1,503 Income tax benefits4 3,203 (387 ) After-tax expenses $ (9,236 ) $ 1,116 Hawaiian Electric consolidated net income GAAP net income (as reported) $ 58,183 $ 193,952 Excluding special items related to the Maui windstorm and wildfires (after tax): Legal expenses 13,726 18,367 Outside services expenses 4,326 7,820 One `Ohana Initiative Contribution — 55,688 Other expenses 619 2,462 Interest expenses 534 908 Maui windstorm and wildfire-related cost (after tax) 19,205 85,245 Insurance recovery (after tax) (17,532 ) (73,220 ) Deferral of cost (after tax) (10,909 ) (10,909 ) Total Maui windstorm and wildfire- related expenses, net of insurance recoveries and approved deferral treatment (after tax) (9,236 ) 1,116 Non-GAAP (core) net income $ 48,947 $ 195,068 Years ended December 31, 2023 2022 Ratios (%) Based on GAAP1 Return on average equity 8.2 8.2 Based on Non-GAAP (core) Return on average equity 8.2 8.2 1 Accounting principles generally accepted in the United States of America. 2 Legal, outside services and other are included in “Other operation and maintenance” on the Hawaiian Electric and subsidiaries Consolidated Statements of Income Data. 3 Interest expense is included in “Interest expense and other charges, net” on the Hawaiian Electric and subsidiaries Consolidated Statements of Income Data. 4 Current year composite statutory tax rate of 25.75% is used for Utility amounts. Reconciliation of GAAP1 to non-GAAP Measures American Savings Bank F.S.B. Unaudited (in thousands) Three months ended December 31, 2023 Year ended December 31, 2023 Maui wildfire-related costs and loss on sale of securities Pretax expenses: Provision for credit losses $ — $ 5,900 Professional services expense 2,405 3,705 Other expenses 309 1,666 Pretax Maui wildfire-related costs 2,714 11,271 Pretax loss on sale of investment securities 14,965 14,965 Income tax benefits (4,738 ) (7,031 ) After-tax expenses $ 12,941 $ 19,205 ASB net income GAAP (as reported) $ 3,231 $ 53,362 Excluding expense related to Maui wildfire and securities loss (after tax): Provision for credit losses — 4,319 Professional services expense 1,760 2,712 Other expenses 227 1,220 Loss on sale of investment securities 10,954 10,954 Maui wildfire-related cost and securities loss (after tax) 12,941 19,205 Non-GAAP (core) net income $ 16,172 $ 72,567 Three months ended December 31, 2023 Year ended December 31, 2023 Ratios (annualized %) Based on GAAP1 Return on average assets 0.13 0.55 Return on average equity 2.74 10.98 Return on average tangible common equity 3.32 13.22 Efficiency ratio 96.42 75.20 Based on Non-GAAP (core) Return on average assets 0.67 0.75 Return on average equity 13.73 14.94 Return on average tangible common equity 16.63 17.98 Efficiency ratio 73.94 69.88 1 Accounting principles generally accepted in the United States of America View source version on businesswire.com: https://www.businesswire.com/news/home/20240213153280/en/