HEI(US:HE)2024-05-10 18:03Financial Performance - HEI's revenues for Q1 2024 were $897.158 million, a decrease of 3% compared to $928.237 million in Q1 2023, primarily due to declines in the electric utility and other segments, partially offset by an increase in the bank segment [251]. - Operating income for Q1 2024 was $76.419 million, down 18% from $93.518 million in Q1 2023, driven by lower performance in the electric utility segment and higher operating losses in the other segment [251]. - Net income for common stock in Q1 2024 was $42.122 million, a 23% decrease from $54.721 million in Q1 2023, attributed to lower net income in the electric utility segment and higher losses in the other segment [251]. - Revenues for the three months ended March 31, 2024, were $789 million, a decrease of $41 million (approximately 4.9%) compared to $830 million in the same period of 2023 [304]. - Net income for common stock decreased to $39 million, down $8 million (approximately 17.0%) from $47 million in the prior year [304]. Expenses and Losses - The Company incurred approximately $169 million in expenses related to the Maui windstorm and wildfires from August 8, 2023, to March 31, 2024, with $58 million and $135 million of insurance coverage remaining under excess liability and directors and officers liability policies, respectively [255]. - Operating and maintenance expenses increased by approximately $16 million, or 12%, in Q1 2024 compared to the same period in 2023 [292]. - ASB incurred additional expenses of $1.8 million related to the Maui wildfires, primarily for professional services [390]. - Total expenses increased by $10 million to $80 million for the three months ended March 31, 2024, primarily due to higher interest and noninterest expenses [398]. Sales and Revenue Segments - kWh sales for the Utility in Q1 2024 decreased by 1.5% compared to Q1 2023, primarily due to the impact of the Maui windstorm and wildfires and ongoing energy efficiency measures [244]. - The "Other" segment reported revenues of $3,436,000 in Q1 2024, down from $4,019,000 in Q1 2023, with an operating loss of $12,468,000 compared to $5,877,000 in the prior year [266]. - kWh sales volume decreased by 1.5% in Q1 2024 compared to Q1 2023, with Maui consumption down 6.3% [293]. Economic Indicators - The inflation rate as of March 31, 2024, was 3.5%, with ongoing inflationary pressures expected to affect operational and capital project costs [247]. - Hawaii's unemployment rate in March 2024 was 3.1%, up from 2.9% in March 2023, while the national rate was 3.8% [259]. - The consumer price index in Hawaii increased by 4.8% over the last 12 months as of March 2024 [295]. Banking and Financial Metrics - The net interest margin for the Bank in Q1 2024 was 2.75%, an increase from 2.63% in the previous quarter but lower than 2.85% in Q1 2023, influenced by higher interest rates and funding costs [245]. - ASB's average core deposits decreased by approximately 1.8% from year-end 2023, leading to increased overall funding costs, with expectations of a flat to declining deposit base due to the higher interest rate environment [246]. - ASB's loan portfolio decreased by $65 million compared to the end of 2023, primarily due to payoffs and reduced demand for home equity lines of credit and consumer loan products [393]. - ASB's deposits decreased by $141 million in 2024, with a weighted average cost of interest-bearing deposits rising to 1.27% from 0.51% in 2023 [405]. Capital Structure and Cash Flow - As of March 31, 2024, HEI's cash and cash equivalents were $127 million, down from $137 million at the end of 2023 [274]. - HEI's consolidated capital structure as of March 31, 2024, included long-term debt of $2,838 million (54%), common stock equity of $2,377 million (45%), and total capital of $5,249 million [281]. - Net cash provided by operating activities for the first three months of 2024 was $125 million, primarily driven by $127 million from Utilities customer cash receipts [283]. - Net cash used in financing activities during the same period was $311 million, mainly due to net decreases in ASB's other bank borrowings and deposit liabilities [283]. Renewable Energy and Environmental Goals - The Utilities aim to achieve net zero carbon emissions from power generation by 2045 or sooner, with significant progress already made towards this goal [314]. - The Utilities have committed to a 70% reduction in carbon emissions from power generation by 2030, although this target may be delayed due to various challenges [313]. - The Utilities achieved a renewable portfolio standard (RPS) of 33.3% in 2023, earning a reward of $444,116 for exceeding the 33.0% target [319]. - The Integrated Grid Plan, accepted by the PUC on March 7, 2024, outlines actionable steps to achieve a decarbonized electric grid in Hawaii, forecasting future energy needs with 100% renewable resources [324]. Infrastructure and Development - Hamakua Energy plans to install a new combustion turbine in May 2024 at a total capital cost of approximately $8.3 million [267]. - The rebuilding of Lahaina's electric utility infrastructure is expected to incur significant costs, with new strategies to mitigate wildfire risks being considered [373]. - The Utilities received notification of a $95 million federal funding application under the Infrastructure Investment and Jobs Act, selected for negotiations [300]. Credit and Loan Performance - The allowance for credit losses at the end of Q1 2024 was $71.057 million, down from $74.372 million at the beginning of the period [412]. - ASB recorded a negative provision for credit losses of $1.2 million for the first three months of 2024, primarily due to the release of $1.5 million of credit loss reserves [411]. - The ratio of net charge-offs during the period to average loans outstanding was 0.14% for Q1 2024, consistent with the previous quarter [412].