HEI(US:HE)2025-11-07 21:13Financial Performance - HEI's revenues for the three months ended September 30, 2025, decreased by 5% to $790.6 million compared to $833.2 million in the same period of 2024[240] - Operating income for the three months ended September 30, 2025, was $52.0 million, a significant improvement from a loss of $149.7 million in the prior year, primarily due to a $163 million adjustment to tort-related claims[240] - Net income for the three months ended September 30, 2025, was $30.7 million, compared to a loss of $104.4 million in the same period of 2024, reflecting improved performance in the electric utility segment[240] - For the nine months ended September 30, 2025, revenues decreased by 6% to $2.28 billion from $2.42 billion in 2024, driven by a decline in the electric utility segment[241] - The company recorded an operating income of $168.2 million for the nine months ended September 30, 2025, compared to a loss of $1.76 billion in the prior year, largely due to the prior year's $1.87 billion tort-related claims[241] - Revenues for the three months ended September 30, 2025, were $787 million, a decrease of $43 million compared to $830 million in 2024, primarily due to lower fuel oil prices and lower kWh generated[302] - Operating income for the three months ended September 30, 2025, was $63 million, an increase largely due to wildfire tort-related claims in 2024 and higher ARA revenues[302] - Net income for common stock for the three months ended September 30, 2025, was $37 million, an increase due to higher income before income taxes[302] - Revenues for the nine months ended September 30, 2025, were $2,268 million, a decrease of $143 million compared to $2,411 million in 2024, mainly due to lower fuel oil prices[303] - Operating income for the nine months ended September 30, 2025, was $203 million, an increase largely due to higher ARA revenue and better heat rate performance[303] - Net income for common stock for the nine months ended September 30, 2025, was $124 million, an increase due to higher income before income taxes[303] Expenses and Liabilities - Incremental expenses related to the Maui windstorm and wildfires for the three months ended September 30, 2025, totaled $59.8 million, with net expenses after insurance recoveries amounting to $4.5 million[243] - Total Maui windstorm and wildfires related expenses incurred by the company from August 8, 2023, through September 30, 2025, amount to approximately $2.3 billion, including $203 million for wildfire tort-related claims[245] - As of September 30, 2025, HEI and Hawaiian Electric had accrued estimated wildfire liabilities of approximately $1.92 billion, with the first installment of $479 million classified as a current liability[266] - The Utilities are expected to incur costs related to the Maui windstorm and wildfires amounting to $1.9 billion, which will not impact customer payments[349] Financing and Liquidity - On September 18, 2025, Hawaiian Electric issued $500 million in unsecured senior notes with a 6.00% interest rate, maturing on October 1, 2033, to finance capital expenditures and repay debt[232] - HEI increased its revolving credit facility to $300 million, extending the termination date to September 5, 2030, enhancing liquidity for future operations[231] - As of September 30, 2025, HEI consolidated had $2.5 billion in long-term and short-term debt, with $144 million due within 12 months[269] - The total available liquidity from cash and credit facilities as of September 30, 2025, was $1.611 billion, including $548 million in cash and cash equivalents[268] - HEI raised approximately $557.7 million from the sale of 62.2 million shares of common stock to fund contributions to the Maui wildfire tort litigation settlement[277] - The Utilities received PUC approval to issue up to $900 million in unsecured obligations during 2025-2027 to finance capital expenditures and repay debt[386] - The Utilities' liquidity has improved, but credit rating downgrades have resulted in higher credit spreads compared to investment-grade spreads[381] - The Utilities' capital structure as of September 30, 2025, included 58% long-term debt and 41% common stock equity[393] Market and Economic Conditions - The average daily passenger count in Hawaii was 3.7% lower in Q3 2025 compared to the same period in 2024, with international visitor arrivals (excluding Japan) remaining 22.1% below 2019 levels[248] - Hawaii's unemployment rate in August 2025 was 2.7%, slightly lower than the 3.0% rate in August 2024[249] - The median sales price for single-family homes in Hawaii was $1,145,000 in September 2025, slightly lower than the all-time high of $1,185,000 set earlier in February 2025[250] - The Federal Open Market Committee lowered the federal funds rate target range to 3.75% to 4% on October 29, 2025, citing moderated economic growth and elevated uncertainty[252] - UHERO forecasts a 1.7% real GDP growth for Hawaii in 2025, with a projected unemployment rate of 3.0%[253] Renewable Energy and Environmental Initiatives - The Utilities aim to cut carbon emissions from power generation by 70% by 2030, but progress has been slowed due to supply chain disruptions and federal policy changes[313] - Hawaiian Electric is committed to achieving net zero carbon emissions from power generation by 2045, with significant milestones already completed, including the closure of the last coal-fired plant and a 50% increase in rooftop solar over 2021 levels[314] - The Hawaii PUC's 2024 Inclinations set a goal to limit fossil fuel generation to no more than 40% on each island by 2030, alongside a push for 100% renewable electricity production in Hawaii and Maui by 2035[315] - The Utilities achieved a renewable portfolio standard (RPS) of 34.5% for 2020, exceeding the 30% target, and a revised RPS of 31.8% for 2022 under new calculation methods[319] - A penalty of $20 per megawatt-hour (MWh) could be imposed for failing to meet RPS targets, with a 1% shortfall in 2024 potentially resulting in a $2.1 million penalty[320] - The Utilities received a reward of $1.9 million for exceeding the RPS target in 2024, achieving a 35.8% RPS[320] - The Integrated Grid Planning process aims to modernize the grid and achieve high levels of renewable energy through stakeholder engagement and actionable steps[324] - The Utilities are exploring community-based renewable energy projects, with 12.5 MW of dedicated low-to-moderate income projects expected to become operational in 2026, though delays have occurred[332] - Contracts for solar plus storage facilities totaling 2.45 MW of photovoltaic capacity paired with 11.1 MWh of battery storage were approved for Molokai[334] - The PUC approved the Microgrid Service Tariff, creating a regulatory pathway for microgrid development in Hawaii[336] Operational Challenges and Developments - Hamakua Energy experienced a plant shutdown due to damages from contaminated fuel, leading to the purchase of a new combustion turbine for $X million, restoring full capacity by September 2024[258] - Mahipapa facility's cooling tower was destroyed by fire, resulting in a shutdown; repairs were completed by December 2024, and the facility returned to full capacity in Q1 2025, receiving $1.4 million in insurance proceeds[260] - The Utilities have faced delays in renewable energy projects due to supply chain disruptions and other unforeseen conditions, impacting their renewable portfolio standards goals[353] - Hawaiian Electric terminated a Grid Services Purchase Agreement due to financial difficulties faced by one of the aggregators[359] - The rebuilding of Lahaina's electric utility infrastructure is expected to incur significant costs due to new grid hardening strategies[383]