Core Viewpoint - The article emphasizes the importance of value investing and highlights Hawaiian Electric Industries (HE) as a strong value stock opportunity based on its financial metrics and Zacks Rank [2][4][6]. Company Summary - Hawaiian Electric Industries (HE) currently holds a Zacks Rank of 2 (Buy) and a Value grade of A, indicating strong potential for value investors [4]. - The stock is trading with a P/E ratio of 11.15, significantly lower than its industry's average of 15.12, suggesting it may be undervalued [4]. - Over the past 52 weeks, HE's Forward P/E has fluctuated between a high of 11.93 and a low of 5.53, with a median of 10.68 [4]. - HE has a P/B ratio of 1.23, which is favorable compared to the industry's average P/B of 2.41, indicating solid valuation metrics [5]. - The P/B ratio for HE has ranged from a high of 1.78 to a low of 0.42 over the past year, with a median of 1.14 [5]. - Overall, the financial metrics suggest that Hawaiian Electric Industries is likely undervalued, making it one of the strongest value stocks in the market [6].

Financial Data and Key Metrics Changes - In Q1 2025, the company generated net income of $26.7 million or $0.15 per share, which includes a $13.2 million pre-tax loss on the sale of Pacific Current and $4.5 million in pre-tax Maui wildfire-related expenses [19][20] - Consolidated core net income was $39.8 million or $0.23 per share, compared to $28.4 million or $0.26 per share in Q1 2024 [20] - Utility core net income increased to $49.7 million from $44.2 million in Q1 2024, driven by better heat rate performance and higher revenues [20] Business Line Data and Key Metrics Changes - The utility segment showed improved performance with higher revenues from the annual revenue adjustment mechanism and lower bad debt expenses, despite increased wildfire mitigation program expenses [20] - The holding company reported a core net loss of $9.9 million, reduced from $15.8 million in Q1 2024, due to higher interest income from cash reserves [21] Market Data and Key Metrics Changes - As of the end of Q1 2025, the holding company had approximately $492 million in unrestricted cash, while the utility had $130 million [22] - The holding company cash balance included about $384 million from the sale of American Savings Bank, which was used to retire debt [22] Company Strategy and Development Direction - The company is focused on regaining financial strength and simplifying its business model to concentrate solely on regulated utility operations [6][9] - Significant investments are planned in the utility's generation system and electric grid to enhance safety and reliability [10] - The company aims to advance Hawaii's clean energy goals, targeting 100% renewable portfolio standard (RPS) and net zero emissions by 2045 [11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's future, citing improved financial strength and a clearer path to resolving the Maui wildfire tort litigation [66] - The company is well-positioned to finance remaining settlement payments amidst a robust capital expenditure cycle [10] Other Important Information - The Hawaii State Legislature passed several bills, including one that directs the Public Utilities Commission (PUC) to establish a liability cap on economic damages from future wildfires [12][13] - The utility dividend has been reinstated, with a quarterly dividend of $10 million approved for Q1 2025 [24] Q&A Session Summary Question: Anticipated feedback from rating agencies if SB 897 is signed into law - Management indicated that they expect positive feedback from rating agencies once the bill is signed, as it represents credit positives [27] Question: How SB 897 will shift discussions towards future wildfire fund implementation - Management explained that the PUC will study the viability of a wildfire fund and report back to the legislature with recommendations [28] Question: Details on the liability cap and its establishment - Management clarified that SB 897 mandates the PUC to establish an aggregate liability cap, considering various factors [32][34] Question: Financing strategy for remaining settlement payments - Management stated that financing will be a combination of debt and equity, with no immediate plans to finance until closer to the payment dates [36][47] Question: Planned rate case filing and its components - Management confirmed that the utility will file for rebasing target revenues later this year, with a focus on a 2026 test year [50][53]

Financial Data and Key Metrics Changes - In Q1 2025, the company generated net income of $26.7 million or $0.15 per share, which includes a $13.2 million pre-tax loss on the sale of Pacific Current and $4.5 million in Maui wildfire-related expenses [18][19] - Consolidated core net income was $39.8 million or $0.23 per share, compared to $28.4 million or $0.26 per share in Q1 2024 [19] - Utility core net income increased to $49.7 million from $44.2 million in Q1 2024, driven by better heat rate performance and higher revenues [19] Business Line Data and Key Metrics Changes - The utility segment showed improved performance with higher revenues from the annual revenue adjustment mechanism and lower bad debt expenses, despite increased wildfire mitigation program expenses [19] - The holding company reported a core net loss of $9.9 million, reduced from $15.8 million in Q1 2024, due to higher interest income from cash reserves [20] Market Data and Key Metrics Changes - The company had approximately $492 million in unrestricted cash at the holding company level and $130 million at the utility level as of the end of Q1 2025 [20] - The holding company cash balance included $384 million from the sale of American Savings Bank, which was used to retire debt [21] Company Strategy and Development Direction - The company is moving towards a simpler business model focused solely on regulated utility operations following the sale of American Savings Bank and the divestiture of Pacific Current assets [8][12] - The company aims to enhance safety, reliability, and resilience through significant investments in the utility's generation system and electric grid [9] - The company remains committed to advancing Hawaii's clean energy goals, targeting 100% renewable portfolio standard (RPS) and net zero by 2045 [11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's future, citing improved financial strength and a clearer path to resolving the Maui wildfire tort litigation [11][64] - The company anticipates that the legislative measures passed will positively impact credit ratings and reduce wildfire liability risk exposure [12][25] Other Important Information - The company reinstated a quarterly dividend of $10 million for Q1 2025 after a temporary suspension [23] - The Hawaii State Legislature passed several bills aimed at supporting the utility's operations and mitigating wildfire risks, including establishing a liability cap and a potential wildfire fund [12][15] Q&A Session Summary Question: Anticipated feedback from rating agencies if SB 897 is signed into law - Management expects positive feedback from rating agencies, indicating that key milestones will be credit positives [25] Question: How will SB 897 impact the wildfire fund? - The bill requires the Public Utilities Commission (PUC) to study the viability of a wildfire fund and provide recommendations [27] Question: What is the nature of the liability cap in SB 897? - The bill directs the PUC to establish an aggregate liability cap, considering various factors such as market cap and rate base [31][33] Question: Financing strategy for remaining settlement payments - Management indicated that financing will be a combination of debt and equity, with no immediate plans for financing the payments [35][45] Question: Planned rate case filing and test year - The utility will file for rebasing target revenues ahead of the second multiyear rate period starting in 2027, with a 2026 test year expected [46][51] Question: Why did the legislature defer decisions on the liability cap to the PUC? - The legislature believed the PUC could conduct a more thorough and technical review of the issues involved [56] Question: Governor's position on the liability cap - Management noted that the governor's office was actively involved in the legislative process and will have input once the PUC completes its rulemaking [59]

PART I. FINANCIAL INFORMATION [Financial Statements](index=8&type=section&id=Item%201.%20Financial%20Statements) Unaudited consolidated financial statements for HEI and Hawaiian Electric detail HEI's net income decline from ASB sale and wildfire liability, contrasting with Hawaiian Electric's increased net income [Hawaiian Electric Industries, Inc. and Subsidiaries Financial Statements](index=8&type=section&id=Hawaiian%20Electric%20Industries%2C%20Inc.%20and%20Subsidiaries%20Financial%20Statements) HEI's Q1 2025 consolidated financial statements show decreased revenues and net income, primarily due to the ASB sale, with a significant $1.915 billion wildfire tort liability on the balance sheet HEI Condensed Consolidated Statements of Income (unaudited) | (in thousands, except per share amounts) | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | **Total revenues** | $744,070 | $792,014 | | **Total operating income** | $62,420 | $50,887 | | **Income from continuing operations** | $27,144 | $21,661 | | **Income from discontinued operations** | $— | $20,934 | | **Net income for common stock** | $26,671 | $42,122 | | **Diluted earnings per common share** | $0.15 | $0.38 | HEI Condensed Consolidated Balance Sheets (unaudited) | (dollars in thousands) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total assets** | $8,766,181 | $8,931,416 | | **Total current liabilities** | $1,559,019 | $1,324,591 | | **Wildfire tort-related claims (Current)** | $478,750 | $478,750 | | **Wildfire tort-related claims (Noncurrent)** | $1,436,250 | $1,436,250 | | **Total liabilities** | $7,226,012 | $7,418,034 | | **Total shareholders' equity** | $1,505,876 | $1,479,089 | - Net cash provided by operating activities **decreased to $49.7 million** in Q1 2025 from **$124.6 million** in Q1 2024, with net cash used in financing activities totaling **$102.2 million** primarily for long-term debt repayment[24](index=24&type=chunk)[26](index=26&type=chunk) [Hawaiian Electric Company, Inc. and Subsidiaries Financial Statements](index=14&type=section&id=Hawaiian%20Electric%20Company%2C%20Inc.%20and%20Subsidiaries%20Financial%20Statements) Hawaiian Electric's Q1 2025 financial statements report decreased revenues but increased operating and net income, despite significant wildfire tort-related claims liability Hawaiian Electric Condensed Consolidated Statements of Income (unaudited) | (in thousands) | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | **Revenues** | $738,366 | $788,578 | | **Total expenses** | $662,429 | $725,223 | | **Operating income** | $75,937 | $63,355 | | **Net income for common stock** | $47,816 | $39,221 | Hawaiian Electric Condensed Consolidated Balance Sheets (unaudited) | (dollars in thousands) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total assets** | $7,864,144 | $7,613,604 | | **Wildfire tort-related claims (Current)** | $478,750 | $478,750 | | **Wildfire tort-related claims (Noncurrent)** | $1,436,250 | $1,436,250 | | **Total capitalization and liabilities** | $7,864,144 | $7,613,604 | [Notes to Condensed Consolidated Financial Statements (unaudited)](index=19&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20%28unaudited%29) Notes detail accounting policies and significant events, including the $1.99 billion Maui wildfire settlement, ASB sale, regulatory environment, and debt compliance - HEI and Hawaiian Electric entered into settlement agreements to resolve tort-related legal claims from the Maui wildfires for a total contribution of **$1.99 billion**, including a **$75 million** contribution to the One 'Ohana Initiative, payable in four equal annual installments of approximately **$479 million** starting in early 2026[49](index=49&type=chunk)[50](index=50&type=chunk) - As of March 31, 2025, the company accrued a liability of **$1.915 billion** for wildfire tort-related claims (**$478.75 million** current, **$1.436 billion** non-current), with an additional **$40 million** recorded as an insurance receivable related to the settlement[55](index=55&type=chunk)[21](index=21&type=chunk) - The company is defending against a putative securities class action and several shareholder derivative lawsuits related to the Maui wildfires, with the ultimate outcome and potential loss not reasonably estimable at this time[60](index=60&type=chunk)[61](index=61&type=chunk)[62](index=62&type=chunk) - On December 31, 2024, the company sold **90.1%** of American Savings Bank (ASB), resulting in ASB's results being presented as discontinued operations for all periods shown[69](index=69&type=chunk)[71](index=71&type=chunk)[72](index=72&type=chunk) - The Public Utilities Commission (PUC) temporarily suspended the Earnings Sharing Mechanism (ESM) to prevent customers from potentially bearing costs associated with the Maui wildfires without prior PUC review[110](index=110&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=58&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the financial impact of the Maui wildfire settlement, HEI's net income decline from the bank segment sale, and the electric utility's increased net income, outlining liquidity and strategic priorities [HEI Consolidated](index=58&type=section&id=HEI%20consolidated) HEI's consolidated results were dominated by the Maui wildfire settlement and the bank segment sale, leading to a net income drop despite significant capital raising for settlement funding HEI Consolidated Results of Operations | (in thousands) | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | **Revenues** | $744,070 | $792,014 | | **Operating income** | $62,420 | $50,887 | | **Income from continuing operations for common stock** | $26,671 | $21,188 | | **Income from discontinued operations** | $— | $20,934 | | **Net income for common stock** | $26,671 | $42,122 | - HEI and Hawaiian Electric are obligated to contribute **$1.99 billion** towards a settlement for tort-related legal claims from the Maui wildfires, with the first of four equal annual installments of **$479 million** classified as a current liability[197](index=197&type=chunk)[200](index=200&type=chunk) - To finance the first settlement payment, HEI completed a sale of **62.2 million** shares of common stock, raising net proceeds of approximately **$557.7 million**[201](index=201&type=chunk) - Total available liquidity as of March 31, 2025, was **$1.232 billion**, consisting of **$299 million** in undrawn utility credit, **$304 million** in undrawn 'All Other' credit, and **$629 million** in cash and cash equivalents[227](index=227&type=chunk)[228](index=228&type=chunk) [Electric Utility](index=65&type=section&id=Electric%20Utility) The electric utility segment's net income increased due to higher Annual Revenue Adjustment (ARA) revenue and lower O&M expenses, despite decreased revenues, while focusing on wildfire safety and facing decarbonization delays Electric Utility Results of Operations | (in millions) | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | **Revenues** | $738 | $789 | | **Operating income** | $76 | $63 | | **Net income for common stock** | $48 | $39 | - Kilowatt-hour (kWh) sales increased by **3.1%** in Q1 2025 compared to Q1 2024, reflecting warmer weather and economic recovery on Maui[247](index=247&type=chunk) - The utility developed a 2025-2027 Wildfire Safety Strategy estimated to cost **$450 million**, focusing on grid hardening, enhanced inspections, and operational changes, and launched a Public Safety Power Shutoff (PSPS) program on July 1, 2024[265](index=265&type=chunk)[266](index=266&type=chunk) - Due to project delays and financing challenges, the utility expects its goal of a **70%** reduction in carbon emissions will be achieved later than the original 2030 target date[269](index=269&type=chunk) - As of March 31, 2025, the utility's total available liquidity was approximately **$504 million**, including **$374 million** in undrawn credit and **$130 million** in cash[322](index=322&type=chunk)[323](index=323&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=79&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reports no significant changes in its exposure to market risk during the first quarter of 2025, referring to its 2024 Form 10-K for full discussion - There have been no significant changes in HEI's and Hawaiian Electric's exposure to market risk during the quarter ended March 31, 2025[343](index=343&type=chunk) [Controls and Procedures](index=79&type=section&id=Item%204.%20Controls%20and%20Procedures) Management for both HEI and Hawaiian Electric concluded their disclosure controls and procedures were effective, with no material changes in internal control over financial reporting during the quarter - Management of both HEI and Hawaiian Electric concluded that their respective disclosure controls and procedures were effective as of the end of the reporting period[345](index=345&type=chunk)[349](index=349&type=chunk) - No changes in internal control over financial reporting occurred during the first quarter of 2025 that materially affected, or are reasonably likely to materially affect, internal controls[346](index=346&type=chunk)[350](index=350&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=80&type=section&id=Item%201.%20Legal%20Proceedings) This section incorporates by reference detailed descriptions of legal proceedings from other parts of the report, including the 2024 Form 10-K and financial statement notes - The report incorporates by reference detailed discussions of legal proceedings from its 2024 Form 10-K and Notes 2 and 4 of this Form 10-Q, which cover the Maui wildfire litigation and regulatory matters[352](index=352&type=chunk) [Risk Factors](index=80&type=section&id=Item%201A.%20Risk%20Factors) This section directs readers to the risk factors detailed in the company's 2024 Form 10-K, the MD&A, and other sections of this quarterly report for information regarding risks and uncertainties - For information on risk factors, the report refers to the 2024 Form 10-K, the MD&A, and the Cautionary Note Regarding Forward-Looking Statements within this document[353](index=353&type=chunk) [Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities](index=80&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20Use%20of%20Proceeds%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) During Q1 2025, HEI purchased common shares on the open market to satisfy plan requirements, not under a publicly announced repurchase program Issuer Purchases of Equity Securities (Q1 2025) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | January 2025 | 30,376 | $9.01 | | February 2025 | 23,836 | $9.91 | | March 2025 | 18,728 | $10.73 | - Share purchases were made to satisfy the requirements of the HEI Dividend Reinvestment and Stock Purchase Plan and the Hawaiian Electric Industries Retirement Savings Plan, not as part of a publicly announced buyback program[357](index=357&type=chunk) [Exhibits](index=81&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL data files - The exhibits filed with this report include certifications from the CEOs and CFOs of both HEI and Hawaiian Electric, as well as XBRL interactive data files[358](index=358&type=chunk)

[Q1 2025 Financial Highlights and Corporate Update](index=1&type=section&id=HEI%20REPORTS%20FIRST%20QUARTER%202025%20RESULTS) [Overall Performance and CEO Remarks](index=1&type=section&id=Overall%20Performance%20and%20CEO%20Remarks) HEI reported Q1 2025 GAAP net income of **$27 million**, with core income from continuing operations at **$40 million**, reflecting financial recovery and legislative progress Q1 2025 vs Q1 2024 Performance Summary | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **GAAP Net Income** | $27 million | - | | **GAAP EPS** | $0.15 | - | | **Core Income (Continuing Ops)** | $40 million | $28 million | | **Core EPS (Continuing Ops)** | $0.23 | $0.26 | - Key strategic and legislative achievements during the quarter include: - **Debt Reduction**: Completed a **$384 million** debt reduction at the holding company using proceeds from the American Savings Bank sale[4](index=4&type=chunk) - **Asset Sale**: Pacific Current completed the sale of its largest asset, Hamakua Energy, resulting in a **$13 million** pre-tax loss[5](index=5&type=chunk) - **Critical Legislation**: The Hawaii State Legislature passed bills to fund the state's contribution to the Maui wildfire settlement, establish a liability cap for future wildfires, and protect clean energy procurement[6](index=6&type=chunk) [Segment Performance](index=2&type=section&id=Segment%20Performance) [Hawaiian Electric Company (Utility)](index=2&type=section&id=HAWAIIAN%20ELECTRIC%20COMPANY%20%28HAWAIIAN%20ELECTRIC%29%20EARNINGS) The utility segment's Q1 2025 net income increased to **$48 million**, with core net income rising to **$50 million**, driven by higher revenues and improved performance Utility Net Income (Q1 2025 vs Q1 2024) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **GAAP Net Income** | $48 million | $39 million | | **Core Net Income** | $50 million | $44 million | - Key drivers for the increase in utility net income include: - **$7 million** in higher revenues, primarily from the annual revenue adjustment mechanism[8](index=8&type=chunk) - **$5 million** positive impact from better heat rate performance[8](index=8&type=chunk) - **$1 million** in lower O&M expenses[8](index=8&type=chunk) - The Hawaiian Electric Board of Directors declared a **$10 million** cash dividend payable to HEI for the first quarter of 2025[10](index=10&type=chunk) [Holding and Other Companies](index=3&type=section&id=HOLDING%20AND%20OTHER%20COMPANIES) The Holding and Other Companies segment reported a Q1 2025 GAAP net loss of **$21 million**, primarily due to an asset sale, while core net loss improved to **$10 million** Holding and Other Companies Net Loss (Q1 2025 vs Q1 2024) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **GAAP Net Loss** | ($21 million) | ($18 million) | | **Core Net Loss** | ($10 million) | ($16 million) | - The higher net loss was primarily due to a **$13 million** pre-tax loss from Pacific Current's sale of Hamakua Energy[11](index=11&type=chunk) [Financial Statements](index=6&type=section&id=Financial%20Statements) [HEI Consolidated Statements of Income](index=6&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20INCOME%20DATA) HEI's consolidated revenues decreased to **$744.1 million** in Q1 2025, with net income for common stock falling to **$26.7 million** due to the absence of discontinued operations income present in Q1 2024 HEI Consolidated Income Statement Highlights (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Total Revenues** | $744,070 | $792,014 | | **Total Operating Income** | $62,420 | $50,887 | | **Income from Continuing Ops** | $27,144 | $21,661 | | **Net Income for Common Stock** | $26,671 | $42,122 | | **Diluted EPS** | $0.15 | $0.38 | [Hawaiian Electric Company Statements of Income](index=7&type=section&id=Hawaiian%20Electric%20Company%2C%20Inc.%20%28Hawaiian%20Electric%29%20and%20Subsidiaries%20CONSOLIDATED%20STATEMENTS%20OF%20INCOME%20DATA) The electric utility's revenues decreased to **$738.4 million** in Q1 2025, primarily due to lower fuel costs, while operating income increased to **$75.9 million** and net income rose to **$47.8 million** Hawaiian Electric Income Statement Highlights (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Revenues** | $738,366 | $788,578 | | **Total Expenses** | $662,429 | $725,223 | | **Operating Income** | $75,937 | $63,355 | | **Net Income for Common Stock** | $47,816 | $39,221 | Utility Operational Data | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Kilowatthour sales (millions)** | 1,965 | 1,906 | | **Average fuel oil cost per barrel** | $104.55 | $121.84 | [Reconciliation of GAAP to Non-GAAP Measures](index=8&type=section&id=Explanation%20of%20HEI%27s%20Use%20of%20Certain%20Unaudited%20Non-GAAP%20Measures) [Explanation of Non-GAAP Measures](index=8&type=section&id=Explanation%20of%20Non-GAAP%20Measures) HEI uses non-GAAP 'Core' financial measures to assess fundamental operating performance by excluding non-representative items like Maui wildfire costs and asset sale losses - Non-GAAP "Core" measures are used to evaluate performance by excluding certain items to provide a better indicator of core operating activities[27](index=27&type=chunk) - The primary reconciling adjustments are costs related to the Maui wildfires and the loss on sale from the strategic review of Pacific Current[27](index=27&type=chunk) [HEI Consolidated Reconciliation](index=9&type=section&id=Reconciliation%20of%20GAAP%20to%20non-GAAP%20Measures%20%28continued%29%20-%20HEI%20Consolidated) HEI's Q1 2025 GAAP income from continuing operations of **$26.7 million** was adjusted to a Non-GAAP (Core) income of **$39.8 million** by excluding wildfire expenses and a subsidiary sale loss HEI Consolidated GAAP to Non-GAAP (Core) Reconciliation - Q1 2025 (in thousands) | Description | Amount | | :--- | :--- | | **GAAP income - continuing operations** | **$26,671** | | After-tax Maui wildfire expenses | $3,362 | | After-tax loss on sale of a subsidiary | $9,809 | | **Non-GAAP (Core) income - continuing operations** | **$39,842** | HEI Consolidated Diluted EPS Reconciliation - Q1 2025 | Description | Amount | | :--- | :--- | | **GAAP Diluted EPS - continuing operations** | **$0.15** | | **Non-GAAP (Core) Diluted EPS - continuing operations** | **$0.23** | [Hawaiian Electric (Utility) Reconciliation](index=10&type=section&id=Reconciliation%20of%20GAAP%20to%20non-GAAP%20Measures%20%28continued%29%20-%20Hawaiian%20Electric) The utility's Q1 2025 GAAP net income of **$47.8 million** was adjusted for **$1.9 million** in wildfire-related expenses, resulting in a Non-GAAP (Core) net income of **$49.7 million** Hawaiian Electric GAAP to Non-GAAP (Core) Reconciliation - Q1 2025 (in thousands) | Description | Amount | | :--- | :--- | | **GAAP net income** | **$47,816** | | Total after-tax Maui wildfire related expenses | $1,893 | | **Non-GAAP (Core) net income** | **$49,709** | [Holding and Other Companies Reconciliation](index=11&type=section&id=Reconciliation%20of%20GAAP%20to%20non-GAAP%20Measures%20%28continued%29%20-%20Holding%20and%20Other%20Companies) The Holding and Other Companies' Q1 2025 GAAP net loss of **$21.1 million** was adjusted to a Non-GAAP (Core) net loss of **$9.9 million** after accounting for wildfire expenses and a subsidiary sale loss Holding and Other Co. GAAP to Non-GAAP (Core) Reconciliation - Q1 2025 (in thousands) | Description | Amount | | :--- | :--- | | **GAAP net loss** | **($21,145)** | | After-tax Maui wildfire related expenses | $1,469 | | After-tax loss on sale of a subsidiary | $9,809 | | **Non-GAAP (Core) net loss** | **($9,867)** |

Financial Performance - The company's GAAP income from continuing operations was $267 million, or $015 per share[15] - Core earnings from continuing operations reached $398 million, or $023 per share[15] - Maui wildfire expenses reduced earnings by $34 million, or $002 per share[15] - Loss on sale at Pacific further decreased earnings by $98 million, or $006 per share[15] - Adjusted O&M excluding pension decreased from $1246 million in 1Q24 to $1220 million in 1Q25[30] Liquidity and Capital Allocation - The HoldCo and Utility had $492 million and $130 million of unrestricted cash on hand, respectively, as of the end of 1Q[17] - $479 million has been set aside in a special purpose entity for the first settlement payment[17] - Additional ~$600 million in liquidity is available from the ATM program, Utility accounts receivable backed credit facility, and corporate credit facility capacity[17] - $384 million in holding company long term debt was retired on April 9[17] - The Utility declared a $10 million dividend to HEI for the quarter[17] Wildfire Safety and Litigation - The company plans to invest nearly $400 million in capital from 2025 to 2027, with approximately $120 million invested in 2025, to enhance wildfire safety[22] - The Hawaii State Legislature passed House Bill 1001, appropriating funds to address the State of Hawaii's settlement of claims related to the Maui wildfire tort litigation settlement[13]

Financial Impact and Challenges - The company reported significant financial impacts due to the Maui windstorm and wildfires, with potential liabilities from lawsuits and regulatory penalties that may result in unrecoverable costs[26] - The company anticipates an increase in insurance premiums and challenges in obtaining wildfire and general liability insurance coverage at reasonable rates[26] - The company is facing uncertainties regarding access to capital and credit markets due to costs related to the Maui windstorm and wildfires[26] - The company is experiencing high and volatile fuel prices, which are increasing working capital requirements and customer bills[27] - The company is assessing the ability to recover costs associated with tariffs and other factors impacting prices while ensuring reasonable returns on capital investments[27] Environmental and Regulatory Commitments - The company is committed to addressing environmental, social, and governance priorities, including safety, reliability, and resilience in response to extreme weather events[27] - The company is focused on executing its Integrated Grid Plan, which was accepted by the Public Utilities Commission in 2024, to transition towards 100% renewable energy[27] - The company is subject to various regulatory actions that may alter costs to produce electricity and accelerate the move to renewable generation[1] - Hawaiian Electric aims to cut carbon emissions from power generation by 70% by 2030 compared to 2005 levels, with a commitment to achieve net zero carbon emissions by 2045 or sooner[63] - The Utilities expect to meet or exceed the State of Hawaii's Renewable Portfolio Standards (RPS) goals despite challenges in achieving the 2030 carbon reduction target[64] Workforce and Employee Development - The total number of employees decreased from 3,706 in 2022 to 2,602 in 2024, with Hawaiian Electric and its subsidiaries employing 2,533 full-time employees in 2024[45] - A new three-year collective bargaining agreement was ratified, providing for a 3% general wage increase each year from November 1, 2024, through October 31, 2027[46] - The company is focused on fostering an inclusive culture to enhance collaboration and innovation, recognizing the importance of a diverse workforce[47] - The company has invested in employee development programs, including leadership training and technical skills enhancement[50] - The company is expanding its strategic workforce planning initiative to support future transformation plans[55] Operational Performance and Sales - In 2024, Hawaiian Electric's customer accounts reached 310,336, generating electric sales revenues of $2,246,646,000, a decrease from $2,324,044,000 in 2023[66] - The electric utilities' revenues accounted for approximately 100% of HEI's consolidated revenues in 2024, with a net loss of 93% of HEI's loss from continuing operations[60] - Total MWh sales for 2024 reached 8,218.9 thousand, slightly down from 8,226.7 thousand in 2023, marking a decrease of 0.1%[73] - Net generated MWh for 2024 was 5,251.6 thousand, a decrease of 1.7% from 5,343.0 thousand in 2023[73] - Customer-sited solar MWh increased to 1,691.2 thousand in 2024, up 6.7% from 1,585.5 thousand in 2023[73] Infrastructure and Capacity - The firm capacity from Hawaiian Electric's major PPAs accounted for 19% of total net generating and firm purchased capacity on Oahu as of December 31, 2024[80] - The reserve margin across the islands served was 41.4% as of December 31, 2024, indicating a healthy buffer for peak demand[76] - The total fuel storage capacity for Hawaiian Electric is 1,025,000 barrels of LSFO at Barbers Point Tank Farm and 771,000 barrels of LSFO across various generation sites[123] - Hawaiian Electric has a total of 126.5 acres of land for substations, transformer vaults, and distribution facilities, with additional leased properties for operational purposes[124] - The Utilities own and operate various generation sites across Oahu, Hawaii, and Maui, with a mix of fuel types including LSFO, diesel, and renewable sources[122] Regulatory Compliance and Environmental Management - The Utilities have implemented procedures to monitor compliance with TSCA regulations regarding the handling of PCBs and have a program to replace PCB transformers and capacitors[117] - The Utilities are subject to various environmental regulations, including the Emergency Planning and Community Right-to-Know Act, requiring reporting of hazardous chemicals[116] - Hawaiian Electric's operations are governed by state and federal regulations, including the Endangered Species Act, to protect threatened or endangered species[121] - The Utilities have discovered leaking oil-containing equipment and are addressing these releases in compliance with applicable regulatory requirements[120] Future Plans and Strategic Initiatives - The company is undergoing a comprehensive review of strategic options for certain assets of Pacific Current, including the sale of Hamakua Holdings, LLC, expected to close in March 2025[42] - The company has suspended new investments following the Maui windstorm and wildfires while reviewing strategic options[40] - The Utilities operate 32 public DC fast chargers and have filed for an additional 150 DC fast chargers and 150 level 2 charging stations[100] - The Utilities completed the 18-month Smart Charge Hawaii Telematics pilot in December 2024, focusing on electric vehicle infrastructure[99] - The Amended and Restated Power Purchase Agreement with PGV was approved by the PUC on December 29, 2023, allowing for expanded capacity[86]

Financial Performance - HEI's GAAP income from continuing operations for FY2024 was a loss of $13225 million, or -$1042 EPS[22] - HEI's Core income from continuing operations for FY2024 was $1243 million, or $098 Core EPS[22] - HEI's GAAP loss from discontinued operations (ASB) for FY2024 was $1035 million[18] - HEI's Core income from discontinued operations (ASB) for FY2024 was $794 million[18] - HEI's Adjusted O&M Excluding Pension for 2024 was $5242 million, compared to $4638 million in 2023[35] Wildfire Risk Reduction - HEI plans to invest nearly $400 million in capital from 2025 to 2027 to enhance wildfire safety, with approximately $120 million invested in 2025[11] - Of the $400 million investment, 76% is allocated to grid hardening, 13% to grid modernization, 2% to situational awareness, 8% to operational practices, and 1% to strengthening partnerships[12] - HEI has replaced or upgraded 2124 wood poles and replaced over 20 miles of overhead copper conductor with stronger aluminum conductor[9] Wildfire Tort Litigation - Final settlement agreements were signed in November 2024, consistent with key terms announced in August 2024[17] - The Hawaii Supreme Court issued a decision on February 10, 2025, clarifying the path to final resolution of insurance company claims and finalization of settlement agreements[17] Liquidity - As of the end of 4Q, the HoldCo and Utility had $566 million (including proceeds from ASB sale), and $184 million of unrestricted cash on hand, respectively[28]

Financial Data and Key Metrics Changes - The company generated a loss from continuing operations of $1.3 billion for the full year 2024, which includes wildfire settlement accruals of $1.9 billion pretax and other Maui wildfire-related expenses [28][29] - Consolidated core net income was $124 million in 2024, down from $152 million in 2023, while utility core net income decreased to $181 million from $195 million in 2023 [29] - The average residential bill decreased by 7% in 2024, reflecting the company's efforts to reduce customer rates [14] Business Line Data and Key Metrics Changes - The sale of 90.1% of American Savings Bank (ASB) for $405 million was completed, with net proceeds of approximately $380 million used to pay down holding company debt [25][26] - ASB's 2024 results showed a net loss from discontinued operations of $103 million compared to a net income of $53 million in 2023 [27] Market Data and Key Metrics Changes - The utility achieved a 36% renewable portfolio standard in 2024, up from 33% in 2023, on track to reach an interim goal of 40% by 2030 [14] - The company ended 2024 with the strongest liquidity position in its history, bolstered by a successful equity offering that raised $558 million [10][23] Company Strategy and Development Direction - The company aims to focus on its core utility business following the sale of ASB, which simplifies its strategy and regulatory position [11][12] - A three-year action plan for wildfire safety with an estimated cost of $450 million has been established, with approximately $400 million expected to be capital expenditures [18][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the positive outcome of the Hawaii Supreme Court ruling, which is a significant step towards finalizing the settlement agreement related to the Maui wildfires [21][22] - The company plans to continue pursuing supportive legislation and aims to return to investment grade [24][86] Other Important Information - The company invested approximately $120 million in wildfire safety improvements in 2024, including a public safety power shutoff program and upgrades to utility infrastructure [16][17] - The updated wildfire safety strategy was filed with the Public Utilities Commission (PUC) in January, building upon immediate actions taken after the August 2023 wildfires [18] Q&A Session Summary Question: Confidence in the settlement proceeding without interference from insurers - Management expressed confidence in the positive outcome of the Hawaii Supreme Court decision, which is a major step towards finalizing the settlement agreement [36][37] Question: Capital expenditure expectations and financing plans - The company is refining its three-year capital forecast, expecting an increase in capital expenditures, particularly for wildfire safety and other approved projects [42][49] Question: Legislative session and potential impacts on customer bills - Management noted that discussions are ongoing regarding the impacts on customers and the establishment of a wildfire recovery fund, emphasizing the importance of balancing customer and shareholder needs [52][66] Question: Securitization and rating agency expectations - Management indicated that there is a good understanding of the benefits of securitization for securing lower-cost financing, which would ultimately benefit customers [71][73]

Financial Performance - HEI reported a full year 2024 net loss of $1,426 million, or $11.23 per share, compared to a net income of $199 million, or $1.81 per share in 2023[2]. - Core income from continuing operations for 2024 was $124 million, or $0.98 per share, down from $152 million, or $1.38 per share in 2023[2]. - 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 Q4 2023[2]. - Hawaiian Electric's full-year net loss was $1,226 million, compared to net income of $194 million in 2023, primarily due to pre-tax wildfire-related expenses of $2,019 million[6][7]. - The loss from discontinued operations totaled $103 million for 2024, compared to net income of $53 million in 2023[10]. - The holding and other companies reported a net loss of $96 million in 2024, up from $48 million in 2023, primarily due to higher wildfire-related expenses[11]. - The company reported a GAAP net loss of $1,226,362,000 for the year ended December 31, 2024, compared to a profit of $193,952,000 in 2023[32]. - Non-GAAP (core) net income for the year ended December 31, 2024, was $180,739,000, down from $195,068,000 in 2023, a decrease of 7%[32]. - The GAAP net loss reported for the year ended December 31, 2024, was $(96,161,000), significantly higher than the $(48,076,000) loss in 2023[33]. - Non-GAAP (Core) net loss for the year ended December 31, 2024, was $(56,438,000), compared to $(43,371,000) in 2023[33]. Revenue and Expenses - Total revenues for Q4 2024 were $799,180,000, a decrease of 6.4% from $853,424,000 in Q4 2023[23]. - Electric utility revenues decreased to $796,174,000 in Q4 2024 from $849,982,000 in Q4 2023, reflecting a decline of 6.3%[26]. - Total expenses for Q4 2024 were $745,518,000, down 4.3% from $779,093,000 in Q4 2023[23]. - Operating income for Q4 2024 was $53,662,000, compared to $74,331,000 in Q4 2023, representing a decline of 28%[23]. - The average fuel oil cost per barrel decreased to $104.38 in Q4 2024 from $132.47 in Q4 2023[26]. - Total pretax expenses for the year ended December 31, 2024, were $27,203,000, compared to $12,304,000 in 2023, reflecting a substantial increase[33]. Wildfire-Related Expenses - The company recorded a provision of $1,875,000,000 for wildfire tort-related claims in 2024[26]. - Total Maui wildfire-related pretax expenses for 2024 reached $2,046,030,000, significantly higher than $127,112,000 in 2023[31]. - Wildfire tort-related claims amounted to $1,915,000,000 for the year ended December 31, 2024, compared to $75,000,000 in 2023[31]. - Total Maui windstorm and wildfire-related expenses, net of insurance recoveries, for 2024 were $1,895,086,000, compared to $1,503,000 in 2023[32]. - Total Maui windstorm and wildfires related expenses, net of insurance recoveries, were $4,040,000 for Q4 2024, compared to $1,254,000 in Q4 2023[33]. Legal and Interest Expenses - Legal expenses related to Maui wildfire claims totaled $13,449,000 for Q4 2024, compared to $23,768,000 in Q4 2023, a reduction of 43%[31]. - Legal expenses for the three months ended December 31, 2024, amounted to $2,212,000, a decrease from $5,282,000 in the same period of 2023[33]. - The company incurred interest expenses of $14,834,000 for the year ended December 31, 2024, significantly higher than $2,600,000 in 2023[31]. - Interest expenses for the year ended December 31, 2024, were $3,666,000, compared to $1,377,000 in 2023, indicating a significant increase[33]. Dividends and Shareholder Returns - The utility dividend to HEI remains suspended due to limited cash needs following recent equity issuance[9]. - Non-GAAP diluted earnings per share for Q4 2024 was $0.20, down from $0.34 in Q4 2023, a decline of 41%[31]. - Basic earnings per common share for continuing operations were $0.17 in Q4 2024, down from $0.41 in Q4 2023[23]. Strategic Changes - HEI sold 90.1% of American Savings Bank, simplifying its strategy and regulatory position while allowing a focus on the utility business[3][5]. - The utility achieved a 36% renewable portfolio standard in 2024, on track to meet the 40% milestone by 2030[3][5].