HEI Reports Fourth Quarter and Full Year 2024 Results

Business Wire 21-Feb-2025 4:05 PM

• Favorable Hawaii Supreme Court Decision Provides Clarity Needed to Help Finalize Maui Tort Litigation Settlement
• Strong Execution on Strategic Priorities in a Pivotal Year
  • Definitive Settlement Agreements Reached in Maui Wildfire Tort Litigation
  • Sale of 90.1% of American Savings Bank Simplified HEI's Strategy and Regulatory Position While Allowing Enhanced Focus on Utility Business; Proceeds Will Be Used to Reduce Debt
  • Rapid Implementation of Utility Wildfire Mitigation Efforts: Grid Hardening and Redesign, Improved Situational Awareness and Operational Practices, and Enhanced Stakeholder Engagement Efforts Implemented to Reduce Risk
  • Utility Achieved a 36% Renewable Portfolio Standard in 2024, Accelerating Progress Toward the 2030 Milestone of 40%
  • Typical Residential Bill Decreased 7% in 2024; Utility Returned $18 Million in Bill Credits to Customers

Hawaiian Electric Industries, Inc. (NYSE - HE) (HEI) today reported a net loss for the full year 2024 of $1,426 million, or $11.23 per share, compared to net income of $199 million, or $1.81 per share in 2023. Excluding the impacts of discontinued operations, Maui wildfire-related expenses and the Pacific Current asset impairment recorded in the third quarter, Core¹ income from continuing operations was $124 million, or $0.98 per share, compared to $152 million, or $1.38 per share in 2023.

The fourth quarter 2024 net loss was $68 million, or $0.40 per share, compared to net income of $49 million, or $0.44 per share, in the fourth quarter of 2023. Core income from continuing operations was $35 million for the fourth quarter of 2024 compared to $37 million in the fourth quarter of 2023.

"The past year was pivotal in our company's history, and I am proud of the significant progress we've made to address the challenges before us and build a foundation for long-term success," said Scott Seu, HEI president and CEO.

"Over the course of the year, we achieved numerous milestones in our efforts to regain HEI's financial strength and emerge a stronger, more resilient company best positioned to serve our communities for the long term. The settlement agreements signed in November, along with the favorable Hawaii Supreme Court decision issued earlier this month, allow us to move forward with a clearer line of sight toward resolution of the Maui wildfire tort litigation. The sale of over 90% of American Savings Bank in December simplifies our strategy and regulatory position while allowing us to reduce holding company debt and focus more on our core utility business. The utility continued to rapidly progress its wildfire mitigation efforts throughout the year, and operational changes, new technology and the Public Safety Power Shutoff program implemented in 2024 have led to substantial strides in reducing risk of ignition from utility equipment. We also saw significant progress on another key strategic initiative, with the utility reaching a 36% renewable portfolio standard in 2024. This puts us on track to meet the 40% by 2030 milestone significantly ahead of schedule. These collective actions position our company well as we continue our commitment to a stronger, more resilient and more financially healthy future."

As previously disclosed, on February 10, 2025 the Hawaii Supreme Court issued a decision regarding the reserved questions posed to them by the Second Circuit Court. The Hawaii Supreme Court's decision clarifies that, once the settlement becomes final, insurers seeking to recover amounts paid to settling plaintiffs cannot separately sue defendants, including for amounts beyond the settlement agreed to by the plaintiffs and defendants. The Court's decision aligns with the Company's and plaintiffs' positions on key questions that arose from insurers' challenges to the settlement agreements reached in the Maui wildfire tort litigation.

HAWAIIAN ELECTRIC COMPANY (HAWAIIAN ELECTRIC) EARNINGS²

Full Year Results:

Hawaiian Electric's full-year net loss was $1,226 million, compared to net income of $194 million in 2023, with the decrease primarily driven by the following items:

• $1,875 million ($1,392 million after-tax) loss due to the accrual of estimated wildfire liabilities from tort-related legal claims and cross claims as of December 31, 2024 (net of insurance recoveries);
• $76 million ($56 million after taxes) in higher operations and maintenance (O&M) expenses, driven principally by the settlement of indemnification claims asserted by the state, higher wildfire mitigation program expenses and higher property and general liability insurance costs; and
• $7 million ($6 million after taxes) of higher depreciation expense.

These items were partially offset by the following:

• $43 million ($29 million after taxes) higher revenues, including $25 million from the annual revenue adjustment mechanism, $7 million from the major project interim recovery mechanism, $6 million of demand response program revenues (offset by expenses included in O&M) and $5 million from performance incentive mechanisms;
• $4 million ($3 million after taxes) of lower interest expense; and
• $3 million ($2 million after taxes) from a gain on sale of property.

Hawaiian Electric's Core net income for 2024 was $181 million. Pre-tax wildfire-related expenses of $2,019 million were partially offset by $86 million in insurance recoveries and $38 million of costs deferred 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 2024 was $46 million, compared to $58 million in the fourth quarter of 2023, with the variance driven by the following items: $30 million ($25 million after taxes) of higher O&M, $13 million ($9 million after taxes) in higher revenues, $3 million ($2 million after taxes) from a gain on sale of property and a $3 million ($2 million after taxes) impact from better heat rate performance. Hawaiian Electric's Core net income was approximately $49 million for both the fourth quarters of 2024 and 2023.

Utility Dividend Update

The utility dividend to HEI continues to be suspended, as holding company cash needs are limited following HEI's recent equity issuance and the continued suspension of the dividend to HEI's common equity shareholders.

DISCONTINUED OPERATIONS - AMERICAN SAVINGS BANK (ASB)

As previously announced, on December 31, 2024 HEI, ASB and ASB Hawaii (ASB's parent holding company) closed on the sale of 90.1% of the common stock of ASB to various investors. Accordingly, the results of ASB are presented as discontinued operations in the consolidated financial statements. For the full year 2024, the loss from discontinued operations totaled $103 million, compared to net income of $53 million in 2023. Excluding wildfire expenses, the goodwill impairment recorded in the second quarter, and the net loss recorded in accordance with the December 2024 sale transaction, Core income for 2024 was $79 million.

HOLDING AND OTHER COMPANIES

The holding and other companies' net loss was $96 million in 2024 compared to $48 million in 2023. The higher net loss for the year was primarily due to the Pacific Current asset impairment recorded in the third quarter, higher wildfire-related expenses and higher expenses at Pacific Current. Core net loss for the year was $56 million compared to $43 million in 2023. The fourth quarter 2024 net loss was $17 million compared to $13 million in the fourth quarter of 2023. The higher net loss compared to the prior year quarter was primarily due to lower Pacific Current net income. Core net loss for the fourth quarter of 2024 was $14 million compared to $12 million in the fourth quarter of 2023.

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 2024 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 March 7, 2025. 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 and Hawaiian Electric'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.

ABOUT HEI

The HEI family of companies provides the energy 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, and modernize and harden the grid to ensure resilience and public safety. 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

Measures described as "Core" are non-GAAP measures which exclude Maui wildfire-related costs, the asset impairment taken in connection with HEI's ongoing review of strategic options for Pacific Current and expenses recorded in connection with the review of strategic options for ASB. See "Explanation of HEI's Use of Certain Unaudited Non-GAAP Measures" and the related GAAP reconciliations at the end of this release.

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, 2023 and HEI's other SEC periodic reports and filings that discuss important factors that could cause HEI's results to differ materially from those anticipated in such statements. 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, 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.

Note: Throughout this release, per share values are calculated based on diluted shares.

¹Measures described as "Core" for the periods in this news release are non-GAAP measures which exclude Maui wildfire-related costs, and expenses taken in connection with strategic reviews for Pacific Current and American Savings Bank. See the "Explanation of HEI's Use of Certain Unaudited Non-GAAP Measures" and the related GAAP reconciliation at the end of this release.

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%.

Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries CONSOLIDATED STATEMENTS OF INCOME DATA (Unaudited)

Hawaiian Electric Company, Inc. (Hawaiian Electric) and Subsidiaries CONSOLIDATED STATEMENTS OF INCOME DATA (Unaudited)

Explanation of HEI's Use of Certain Unaudited Non-GAAP Measures

HEI management uses certain non-GAAP measures to evaluate the performance of HEI. 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.

The reconciling adjustments from GAAP earnings to Core earnings are limited to the costs related to the Maui wildfires, costs related to the strategic review and majority sale of ASB, and the asset impairment taken in connection with HEI's ongoing review of strategic options for Pacific Current. Management does not consider these items to be representative of the company's fundamental core earnings.

Reconciliation of GAAP to non-GAAP Measures Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries Unaudited

Reconciliation of GAAP to non-GAAP Measures (continued) Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries Unaudited

Reconciliation of GAAP to non-GAAP Measures (continued) Hawaiian Electric Company, Inc. and Subsidiaries Unaudited

Reconciliation of GAAP to non-GAAP Measures (continued) Holding and Other Companies Unaudited

View source version on businesswire.com: https://www.businesswire.com/news/home/20250221176474/en/

Mateo Garcia Telephone: (808) 543-7300 Director, Investor Relations E-mail: ir@hei.com