HEI(US:HE)2022-08-08 20:18Financial Performance - Revenues for the second quarter of 2022 increased by 32% to $895.6 million compared to $680.3 million in the same period of 2021, primarily driven by the electric utility segment [225]. - Net income for common stock decreased by 18% to $52.5 million in Q2 2022 from $63.9 million in Q2 2021, attributed to lower net income at the bank segment and higher net loss in the "other" segment [225]. - Revenues for the three months ended June 30, 2022, increased to $819 million, up from $602 million in 2021, representing a $217 million increase [261]. - Revenues for the six months ended June 30, 2022, reached $1.528 billion, a $361 million increase from $1.167 billion in 2021 [262]. - For the six months ended June 30, 2022, net cash provided by operating activities was $53 million, while net cash used in investing activities was $371 million [378]. Economic Indicators - Inflation reached a 41-year high of 9.1% in June 2022, with fuel costs rising 90% year-over-year, impacting operational and capital project costs [222]. - The unemployment rate in Hawaii improved to 4.3% in June 2022, down from 5.9% in June 2021, indicating a recovering labor market [230]. - The consumer price index in Hawaii rose by 7.0% year-over-year as of May 2022, with fuel costs increasing by 90% compared to the prior year's quarter [257]. - Domestic passenger counts in June 2022 were up 7.6% compared to pre-COVID-19 levels in 2019, while international passenger counts were down approximately 72% [218]. Utility Operations - The utility's kWh sales improved by 0.3% in Q2 2022 compared to Q2 2021, reflecting increased economic activity as the tourism industry recovers [220]. - kWh sales volume increased by 0.3% in Q2 2022 and 1.4% for the first six months compared to the same periods in 2021, attributed to economic recovery and tourism [253]. - The Utilities aim to achieve 100% renewable energy by 2045, with a commitment to cut carbon emissions from power generation by 70% by 2030 [268][269]. - The last coal-fired IPP plant in the state ceased operations on September 1, 2022, which previously contributed approximately 10% of Oahu's generation [270]. Financial Position and Liquidity - As of June 30, 2022, HEI had approximately $69 million and $55 million of commercial paper outstanding, with available committed capacities under credit facilities of $175 million and $200 million respectively [239]. - The total available borrowing capacity under the Company's committed lines of credit was approximately $251 million as of June 30, 2022, down from $321 million at the end of 2021 [240]. - HEI's liquidity remains satisfactory, with cash and cash equivalents at $141 million as of June 30, 2022, down from $251 million at the end of 2021 [242]. - The Company expects to maintain sufficient liquidity to meet cash requirements despite uncertainties from inflation and higher fuel prices [244]. Credit Quality and Provisions - ASB recorded a provision for credit losses of $2.8 million in Q2 2022, a shift from a negative provision of $12.2 million in Q2 2021, due to growth in the commercial real estate loan portfolio [221]. - Delinquency rates decreased from 0.43% at June 30, 2021, to 0.27% at June 30, 2022, indicating improved credit quality [356]. - The provision for credit losses for the six months ended June 30, 2022, was a negative $1 million, reflecting good credit trends, compared to a negative $21 million in 2021 [358]. Renewable Energy Initiatives - The Utilities achieved a Renewable Portfolio Standard (RPS) of 34.5% in 2020 and 38.4% in 2021, exceeding the statutory goals, and expect to meet or exceed the next goal of 40% by 2030 [273]. - The Utilities have incurred approximately $46 million in capital and deferred software costs under Phase 1 of the Grid Modernization Strategy, with a total estimated cost of $143 million over five years [284]. - The Emergency Demand Response Program (EDRP) was approved for 50 MW on Oahu with an incentive budget not to exceed $34 million, to be recovered over a 10-year period [282]. - The Utilities are currently developing seven additional PPAs with a total projected annual payment of $75.1 million, which includes a total photovoltaic capacity of 154 MW [307]. Banking Operations - ASB's net interest income for the quarter ended June 30, 2022, was $61.8 million, compared to $60.8 million for the same quarter in 2021, reflecting a year-over-year increase [349]. - The net interest margin for ASB for the quarter ended June 30, 2022, was 2.85%, slightly higher than the previous quarter but lower than 2.98% in the same quarter of 2021 [348]. - ASB's total loans amounted to $5.280 billion for Q2 2022, down from $5.291 billion in Q2 2021 [359]. - The average yield on total loans was 3.65% for the six months ended June 30, 2022, down from 3.86% in the same period of 2021 [360].