HEI(US:HE)2022-02-15 00:29Financial Data and Key Metrics Changes - Consolidated net income and earnings per share each rose 24% to $246 million and $2.25 respectively, exceeding the high end of guidance [8][30] - Utility earnings grew approximately 5% to $177.6 million, while American Savings Bank's earnings were up 76% to a record $101.2 million [30][31] - Consolidated ROE for the last 12 months was 10.4%, an increase of 180 basis points from 2020, with utility ROE at 8.1% and bank ROE at 13.8% [32] Business Line Data and Key Metrics Changes - Hawaiian Electric delivered $8 million in customer savings from cost efficiencies and established a $2 million customer bill credit program [11][30] - American Savings Bank's net interest income grew due to earning asset expansion and PPP fees, despite lower non-interest income [20][42] - Adjusted O&M for the utility declined to $412 million, slightly above guidance due to unexpected costs [35][52] Market Data and Key Metrics Changes - Hawaii's unemployment rate improved to 5.7% in December, down from nearly 24% in April 2020, while the housing market remained strong with single-family home sales up 17.9% [28][29] - Visitor arrivals reached 2019 levels during the summer, indicating a recovery in tourism [27] Company Strategy and Development Direction - The utility's strategic plan focuses on creating customer value, strengthening the foundation, and building a stronger Hawaii, with a commitment to reduce carbon emissions by 70% by 2030 [11][15] - The company plans to eliminate coal in Hawaii by fall 2022 and is working on renewable energy and storage projects [17][18] - The bank aims to continue its digital transformation and maintain solid profitability despite expected provisioning for loan losses in 2022 [25][46] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding Hawaii's economic outlook, anticipating GDP growth of 2.7% in 2022 [29] - The company is committed to its goals despite facing delays due to global supply chain dynamics and inflationary conditions [18][19] - The outlook for Fed rate increases is promising, expected to benefit the bank's margin [25] Other Important Information - The company initiated a consolidated earnings guidance range of $2 to $2.20 per share for 2022, with utility guidance of $1.68 to $1.78 per share [51][54] - The bank's guidance reflects continued solid profitability and a reset of earnings expectations due to the resumption of provisions [54] Q&A Session Summary Question: Can you talk about what drives net interest margin to decline year-over-year? - Management indicated that the margin was 2.79% for Q4, with guidance anticipating four rate hikes that would benefit the margin [60][61] Question: How do you think about the increase in fuel costs potentially leading to an acceleration of generation strategies? - Management noted that fuel cost increases would continue to drive efforts to transition away from fossil fuels, with plans for a renewable RFP [62][64] Question: Can you clarify the PIM outlook for the RPSA rewards? - Management explained that the outlook was adjusted due to supply chain delays and inflationary challenges affecting project timelines [70][71] Question: What does the interconnection experience improvement entail? - Management clarified that it involves reducing the number of days for customers to energize their distributed energy resources through process improvements [74] Question: How do you see depreciation expense related to renewable energy investments going forward? - Management indicated that depreciation would continue to reflect investments in renewable integration and grid reliability [79] Question: What is the anticipated PPP income for this year? - Management confirmed that approximately $3 million in PPP income is expected for the year, which would conclude the program [80]