Net Income: $26.7 million or $0.15 per share for the first quarter. Core Net Income: $39.8 million or $0.23 per share, excluding specific items. Utility Core Net Income: $49.7 million, up from $44.2 million in Q1 2024. Holding Company Core Net Loss: $9.9 million, improved from $15.8 million in Q1 2024. Unrestricted Cash: $492 million at the holding company and $130 million at the utility as of the end of Q1. First Settlement Payment: $479 million held in a subsidiary for the Maui wildfire settlement. Debt Reduction: $384 million of debt retired following the sale of American Savings Bank. Quarterly Dividend: $10 million approved by Hawaiian Electric's Board for Q1 2025.

Warning! GuruFocus has detected 5 Warning Signs with HE.

Release Date: May 09, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Hawaiian Electric Industries Inc (NYSE:HE) has made significant progress in resolving the Maui wildfire tort litigation, with a supportive Supreme Court decision and expected finalization of the settlement by early 2026. The company is transitioning to a simpler business model focused solely on regulated utility operations, enhancing financial strength and resilience. HE has reinstated the utility dividend after a temporary suspension, reflecting improved financial stability. The company is committed to advancing Hawaii's clean energy goals, with legislation supporting reliable, affordable clean energy procurement. HE has a strong liquidity position, with substantial cash on hand and available credit facilities to support future financial obligations.

Negative Points

HE incurred a $13.2 million pretax loss on the sale of Pacific Current's largest asset, the Hamakua power plant. The company faced $4.5 million in pretax Maui wildfire-related expenses, impacting financial results. Higher wildfire mitigation program expenses and increased insurance costs have affected utility core net income. The legislative process for establishing a liability cap and wildfire fund is still in early stages, creating uncertainty. HE's financing strategy for the remaining settlement payments is not yet finalized, with potential reliance on both debt and equity.

Q & A Highlights

Q: Do you anticipate a positive feedback from the rating agencies if SB 897 is signed into law? How do you think that they will view that? A: Yes, we anticipate positive feedback. While we can't speculate on the exact response, rating agencies have indicated that the signing of SB 897, along with other key milestones like the final court approval of the settlement agreement, are credit positives. - Scott Seu, President, Chief Executive Officer, Director

Story Continues

Q: How will Senate Bill 897 shift the discussion towards the future wildfire fund implementation? A: Senate Bill 897 requires the Public Utilities Commission (PUC) to study the viability of a wildfire fund and provide recommendations to the legislature before the next session. This study will determine if a fund should be created, its size, structure, and other considerations. - Scott DeGhetto, Executive Vice President, Chief Financial Officer, Treasurer

Q: What is the concept of the liability cap under SB 897, and how will it be established? A: SB 897 mandates an aggregate liability cap, directing the PUC to consider various factors like time period, event basis, flat dollar amount, or percentage of market cap or rate base. The PUC will follow a rule-making process to establish the cap's best form. - Scott Seu, President, Chief Executive Officer, Director

Q: Can you elaborate on your financing strategy for the remaining settlement payments? A: We are continuously assessing capital markets to determine the best financing strategy, which will likely involve a combination of debt and equity. The first payment is due in early 2026, so it's premature to finalize plans for subsequent payments. - Scott Seu, President, Chief Executive Officer, Director

Q: Will the planned rate case filing include a 12-month forward test year, and what are your expectations for the PBR framework revisions? A: The rate case filing will use a 2026 test year. The PUC ordered a rate case-like proceeding to rebase target revenues for the second multiyear rate period starting in 2027. The process will also consider modifications to the PBR framework. - Scott DeGhetto, Executive Vice President, Chief Financial Officer, Treasurer

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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