HEI(HE) - 2023 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Consolidated net income for the third quarter was $41.1 million, with earnings per share (EPS) of $0.37, which included $20.4 million or $0.19 per share of wildfire-related expenses. Excluding these expenses, core net income was $61.5 million and EPS was $0.56, compared to $62.1 million and EPS of $0.57 for the same quarter last year [66][87] - The utility's core return on equity (ROE) was up 20 basis points to 8.3% excluding wildfire impacts, while the bank's core ROE on a last twelve months (LTM) basis was up 220 basis points to 16.4% excluding wildfire impacts [14] Business Line Data and Key Metrics Changes - The utility experienced higher ARA and MPIR revenues, higher fossil fuel cost risk-sharing revenues, and increased AFUDC from higher capital expenditures, offset by $17 million in higher O&M costs, with $10 million related to the Maui wildfires [77] - The bank's net income included $6.3 million in wildfire-related impacts, while the holding company and other segments reported a net income impact of $3.8 million [76] Market Data and Key Metrics Changes - The bank's deposit base remained stable, with 77% insured and 87% insured or fully collateralized as of the quarter end. The majority of the deposit base was retail at 84%, with no significant deposit outflows due to the events on Maui [7][8] Company Strategy and Development Direction - The company is reexamining and updating its near and long-term capital expenditure plan to mitigate risks from extreme weather events, with a focus on resilience and wildfire defense strategies [6][57] - The One 'Ohana Initiative aims to support recovery efforts and is expected to lead to statutory and regulatory changes to protect Hawaii consumers and businesses from climate risks [53][57] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by the August 8 wildfires and emphasized the importance of collaboration with state and local authorities to support recovery efforts [52][71] - The company is not providing full-year 2023 EPS guidance due to uncertainties stemming from the wildfires, but it remains committed to maintaining financial health and supporting community needs [89][90] Other Important Information - The company has been named as a defendant in 64 lawsuits related to the wildfires, with a focus on contesting causation and negligence [54][55] - The company suspended its quarterly cash dividend, which represents about $40 million of cash quarterly, to support financial strength during recovery efforts [12][65] Q&A Session Summary Question: What is the total amount in the lawsuits being sought? - The company indicated that there are no specified monetary amounts in the lawsuits at this time [38] Question: When do you expect wildfire reports and what is the statute of limitations for liabilities? - Management stated that they plan to file a report with the PUC regarding the August 8 incident, but no specific timing was provided [25][26] Question: What is the level of insurance coverage for the damages? - The company has $165 million of liability insurance, with $75 million being funded by insurance companies, leaving $90 million of additional coverage [29]