HE Hawaiian Electric Industries

2Q23 Net Income of $54.6M and Diluted Earnings Per Share (EPS) of $0.50 Utility Progressing Clean Energy Transition and Executing Well on Capital Plan Bank Results Reflect Solid Credit Quality, Strong Capital Position and Ample Liquidity

Hawaiian Electric Industries, Inc. (NYSE: HE) (HEI) today reported consolidated net income for common stock for the second quarter of 2023 of $54.6 million and EPS of $0.50, compared to $52.5 million and EPS of $0.48 for the second quarter of 2022.

“We executed well across the enterprise at both our utility and bank this quarter despite a challenging operating environment,” said Scott Seu, HEI president and CEO.

“Our utility grew net income to $45.3 million, and although operations and maintenance expenses were elevated during the quarter, we expect some of those expenses to moderate in the second half of the year, with full year expenses still expected to be within annual revenue adjustment (ARA) allowed levels. The utility is executing well on its capital plan, ensuring the reliability and resilience of our system as we progress our clean energy transition.

“American Savings Bank (ASB) delivered solid results for the quarter and grew net income to $20.2 million despite macro headwinds impacting the banking sector. Credit quality remains strong, indicative of the continued strength and resilience of Hawaii’s economy, consumers, and businesses. ASB’s capital position remains healthy, with liquidity of approximately three times uninsured or uncollateralized deposits. The bank’s loyal and long-tenured deposit base demonstrates the value of ASB’s customer relationships,” said Seu.

HAWAIIAN ELECTRIC COMPANY EARNINGS1

Hawaiian Electric Company’s (Hawaiian Electric) net income for the second quarter of 2023 was $45.3 million, compared to $44.1 million in the second quarter of 2022, with the increase primarily driven by the following after-tax items:

• $11 million higher revenues, consisting of $7 million from the ARA mechanism, $2 million from the fossil fuel cost risk-sharing mechanism, $1 million from the major project interim recovery (MPIR) mechanism, and $1 million from a one-time true-up of billable costs; and
• $2 million higher allowance for funds used during construction (AFUDC) related to increased capital expenditures.

These items were partially offset by the following after-tax items:

• $9 million in higher operations and maintenance expenses, including $4 million from higher transmission and distribution expenses, $2 million in higher outside services costs, and $3 million in other expenses, including increased labor and employee benefits costs and higher facilities expenses;
• $2 million higher interest expense due to increased borrowings; and
• $1 million higher depreciation expense due to increasing investments to integrate more renewable energy and improve customer reliability and system efficiency.

AMERICAN SAVINGS BANK EARNINGS

ASB’s second quarter 2023 net income was $20.2 million, compared to $18.6 million in the first quarter of 2023 and $17.5 million in the second quarter of 2022. The increase in net income compared to the linked quarter was primarily due to higher noninterest income, a lower provision for credit losses and lower noninterest expense, partially offset by lower net interest income. The increase in net income compared to the prior year quarter was primarily due to higher noninterest income, a lower provision for credit losses and higher net interest income, partially offset by higher noninterest expense.

Total earning assets as of June 30, 2023 were $9.2 billion, up approximately 0.6% from December 31, 2022.

Total loans were $6.1 billion as of June 30, 2023, up 2.7% from December 31, 2022, reflecting growth across most of the portfolio.

Total deposits were $8.2 billion as of June 30, 2023, a decrease of 0.08% from December 31, 2022. Core deposits declined 2.8%, while certificates of deposits increased 33.3%. As of June 30, 2023, 86% of our deposits were F.D.I.C. insured or fully collateralized, up slightly from 85% as of March 31, 2023, with approximately 79% of deposits F.D.I.C. insured. For the second quarter of 2023, the average cost of funds was 0.83%, up 17 basis points versus the linked quarter and up 78 basis points versus the prior year quarter.

ASB’s return on average equity was 16.2%, compared to 15.5% in the linked quarter and 12.2% in the second quarter of 2022. Return on average assets was 0.84% for the second quarter of 2023, compared to 0.78% in the linked quarter and 0.76% in the prior year quarter.

In the second quarter of 2023, ASB paid dividends of $11.0 million to HEI. ASB had a Tier 1 leverage ratio of 7.8% as of June 30, 2023.

Please refer to ASB’s news release issued on July 28, 2023 for additional information on ASB.

HOLDING AND OTHER COMPANIES

The holding and other companies’ net loss was $10.9 million in the second quarter of 2023, compared to $9.1 million in the second quarter of 2022. The higher net loss compared to the prior year quarter was primarily due to higher interest expense.

BOARD DECLARES QUARTERLY DIVIDEND

On August 3, 2023, HEI announced that the Board of Directors declared a quarterly cash dividend of $0.36 per share, payable on September 8, 2023 to shareholders of record at the close of business on August 18, 2023 (ex-dividend date is August 17, 2023). This quarterly dividend is equivalent to an annual rate of $1.44 per share. Dividends have been paid on an uninterrupted basis since 1901. At the indicated annual dividend rate and based on the closing price per share on August 3, 2023 of $37.72, HEI’s dividend yield is 3.8%.

WEBCAST AND CONFERENCE CALL TO DISCUSS EARNINGS AND 2023 GUIDANCE

HEI will conduct a webcast and conference call to review its consolidated results and 2023 earnings guidance and outlook today at 10:15 a.m. Hawaii time (4:15 p.m. Eastern).

To listen to the conference call, dial 1-833-470-1428 (U.S.) or +1-929-526-1599 (international) and enter passcode 910697. Parties may also access presentation materials and/or listen to the conference call by visiting the conference call link on HEI’s website at www.hei.com under “Investor Relations,” sub-heading “News and Events — Events and Presentations.”

A replay will be available online and via phone. The online replay will be available on HEI’s website about two hours after the event. An audio replay will also be available about two hours after the event through August 21, 2023. To access the audio replay, dial 1-929-458-6194 (U.S.) or +44-204-525-0658 (international) and enter passcode 380478.

HEI and Hawaiian Electric Company, Inc. (Hawaiian Electric) intend to continue to use HEI’s website, www.hei.com, as a means of disclosing additional information; such disclosures will be included in the Investor Relations section of the website. Accordingly, investors should routinely monitor the Investor Relations section of HEI’s website, in addition to following HEI’s, Hawaiian Electric’s and ASB’s press releases, HEI’s and Hawaiian Electric’s Securities and Exchange Commission (SEC) filings and HEI’s public conference calls and webcasts. Investors may sign up to receive e-mail alerts via the “Investor Relations” section of the website. The information on HEI’s website is not incorporated by reference into this document or into HEI’s and Hawaiian Electric’s SEC filings unless, and except to the extent, specifically incorporated by reference.

Investors may also wish to refer to the Public Utilities Commission of the State of Hawaii (PUC) website at dms.puc.hawaii.gov/dms to review documents filed with, and issued by, the PUC. No information on the PUC website is incorporated by reference into this document or into HEI’s and Hawaiian Electric’s SEC filings.

ABOUT HEI

The HEI family of companies provides the energy and financial services that empower much of the economic and community activity of Hawaii. HEI’s electric utility, Hawaiian Electric, supplies power to approximately 95% of Hawaii’s population and is undertaking an ambitious effort to decarbonize its operations and the broader state economy. Its banking subsidiary, ASB, is one of Hawaii’s largest financial institutions, providing a wide array of banking and other financial services and working to advance economic growth, affordability and financial fitness. HEI also helps advance Hawaii’s sustainability goals through investments by its non-regulated subsidiary, Pacific Current. For more information, visit www.hei.com.

____________________

1 Note: Utility amounts indicated as after-tax in this earnings release are based upon adjusting items using a current year composite statutory tax rate of 25.75%.

FORWARD-LOOKING STATEMENTS

This release may contain “forward-looking statements,” which include statements that are predictive in nature, depend upon or refer to future events or conditions, and usually include words such as “will,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “predicts,” “estimates” or similar expressions. In addition, any statements concerning future financial performance, ongoing business strategies or prospects or possible future actions are also forward-looking statements. Forward-looking statements are based on current expectations and projections about future events and are subject to risks, uncertainties and the accuracy of assumptions concerning HEI and its subsidiaries, the performance of the industries in which they do business and economic, political and market factors, among other things. These forward-looking statements are not guarantees of future performance.

Forward-looking statements in this release should be read in conjunction with the “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” discussions (which are incorporated by reference herein) set forth in HEI’s Annual Report on Form 10-K for the year ended December 31, 2022 and HEI’s other periodic reports that discuss important factors that could cause HEI’s results to differ materially from those anticipated in such statements. These forward-looking statements speak only as of the date of the report, presentation or filing in which they are made. Except to the extent required by the federal securities laws, HEI, Hawaiian Electric, ASB and their subsidiaries undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries

CONSOLIDATED STATEMENTS OF INCOME DATA

(Unaudited)

 

 

 

Three months ended June 30

 

Six months ended June 30

(in thousands, except per share amounts)

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Revenues

 

 

 

 

 

 

 

 

Electric utility

 

$

794,191

 

 

$

818,873

 

 

$

1,624,552

 

 

$

1,527,665

 

Bank

 

 

96,885

 

 

 

75,324

 

 

 

190,742

 

 

 

150,439

 

Other

 

 

4,609

 

 

 

1,410

 

 

 

8,628

 

 

 

2,571

 

Total revenues

 

 

895,685

 

 

 

895,607

 

 

 

1,823,922

 

 

 

1,680,675

 

Expenses

 

 

 

 

 

 

 

 

Electric utility

 

 

720,566

 

 

 

747,719

 

 

 

1,475,052

 

 

 

1,382,916

 

Bank

 

 

72,017

 

 

 

53,401

 

 

 

142,354

 

 

 

98,486

 

Other

 

 

10,123

 

 

 

7,819

 

 

 

20,019

 

 

 

13,329

 

Total expenses

 

 

802,706

 

 

 

808,939

 

 

 

1,637,425

 

 

 

1,494,731

 

Operating income (loss)

 

 

 

 

 

 

 

 

Electric utility

 

 

73,625

 

 

 

71,154

 

 

 

149,500

 

 

 

144,749

 

Bank

 

 

24,868

 

 

 

21,923

 

 

 

48,388

 

 

 

51,953

 

Other

 

 

(5,514

)

 

 

(6,409

)

 

 

(11,391

)

 

 

(10,758

)

Total operating income

 

 

92,979

 

 

 

86,668

 

 

 

186,497

 

 

 

185,944

 

Retirement defined benefits credit—other than service costs

 

 

1,153

 

 

 

1,246

 

 

 

2,305

 

 

 

2,489

 

Interest expense, net—other than on deposit liabilities and other bank borrowings

 

 

(29,832

)

 

 

(24,965

)

 

 

(58,630

)

 

 

(49,314

)

Allowance for borrowed funds used during construction

 

 

1,295

 

 

 

798

 

 

 

2,426

 

 

 

1,576

 

Allowance for equity funds used during construction

 

 

3,772

 

 

 

2,470

 

 

 

7,073

 

 

 

4,879

 

Gain on sales of equity-method investment

 

 

—

 

 

 

—

 

 

 

—

 

 

 

8,123

 

Income before income taxes

 

 

69,367

 

 

 

66,217

 

 

 

139,671

 

 

 

153,697

 

Income taxes

 

 

14,284

 

 

 

13,203

 

 

 

29,394

 

 

 

31,043

 

Net income

 

 

55,083

 

 

 

53,014

 

 

 

110,277

 

 

 

122,654

 

Preferred stock dividends of subsidiaries

 

 

473

 

 

 

473

 

 

 

946

 

 

 

946

 

Net income for common stock

 

$

54,610

 

 

$

52,541

 

 

$

109,331

 

 

$

121,708

 

Basic earnings per common share

 

$

0.50

 

 

$

0.48

 

 

$

1.00

 

 

$

1.11

 

Diluted earnings per common share

 

$

0.50

 

 

$

0.48

 

 

$

1.00

 

 

$

1.11

 

Dividends declared per common share

 

$

0.36

 

 

$

0.35

 

 

$

0.72

 

 

$

0.70

 

Weighted-average number of common shares outstanding

 

 

109,573

 

 

 

109,432

 

 

 

109,544

 

 

 

109,397

 

Weighted-average shares assuming dilution

 

 

109,780

 

 

 

109,662

 

 

 

109,870

 

 

 

109,714

 

Net income (loss) for common stock by segment

 

 

 

 

 

 

 

 

Electric utility

 

$

45,299

 

 

$

44,135

 

 

$

92,308

 

 

$

90,544

 

Bank

 

 

20,204

 

 

 

17,466

 

 

 

38,766

 

 

 

41,336

 

Other

 

 

(10,893

)

 

 

(9,060

)

 

 

(21,743

)

 

 

(10,172

)

Net income for common stock

 

$

54,610

 

 

$

52,541

 

 

$

109,331

 

 

$

121,708

 

Comprehensive income (loss) attributable to HEI

 

$

47,001

 

 

$

(35,299

)

 

$

122,210

 

 

$

(83,291

)

Return on average common equity (%) (twelve months ended)

 

 

 

 

 

 

10.2

 

 

 

10.4

 

This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI filings with the SEC. Results of operations for interim periods are not necessarily indicative of results to be expected for future interim periods or the full year.

Hawaiian Electric Company, Inc. (Hawaiian Electric) and Subsidiaries

CONSOLIDATED STATEMENTS OF INCOME DATA

(Unaudited)

 

 

 

Three months ended June 30

 

Six months ended June 30

($ in thousands, except per barrel amounts)

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Revenues

 

$

794,191

 

 

$

818,873

 

 

$

1,624,552

 

 

$

1,527,665

 

Expenses

 

 

 

 

 

 

 

 

Fuel oil

 

 

280,157

 

 

 

269,655

 

 

 

614,254

 

 

 

490,941

 

Purchased power

 

 

168,434

 

 

 

218,085

 

 

 

321,195

 

 

 

381,618

 

Other operation and maintenance

 

 

136,360

 

 

 

124,892

 

 

 

264,676

 

 

 

250,149

 

Depreciation

 

 

60,689

 

 

 

58,739

 

 

 

121,616

 

 

 

117,210

 

Taxes, other than income taxes

 

 

74,926

 

 

 

76,348

 

 

 

153,311

 

 

 

142,998

 

Total expenses

 

 

720,566

 

 

 

747,719

 

 

 

1,475,052

 

 

 

1,382,916

 

Operating income

 

 

73,625

 

 

 

71,154

 

 

 

149,500

 

 

 

144,749

 

Allowance for equity funds used during construction

 

 

3,772

 

 

 

2,470

 

 

 

7,073

 

 

 

4,879

 

Retirement defined benefits credit—other than service costs

 

 

1,048

 

 

 

991

 

 

 

2,095

 

 

 

1,981

 

Interest expense and other charges, net

 

 

(20,872

)

 

 

(18,800

)

 

 

(41,118

)

 

 

(37,126

)

Allowance for borrowed funds used during construction

 

 

1,295

 

 

 

798

 

 

 

2,426

 

 

 

1,576

 

Income before income taxes

 

 

58,868

 

 

 

56,613

 

 

 

119,976

 

 

 

116,059

 

Income taxes

 

 

13,070

 

 

 

11,979

 

 

 

26,670

 

 

 

24,517

 

Net income

 

 

45,798

 

 

 

44,634

 

 

 

93,306

 

 

 

91,542

 

Preferred stock dividends of subsidiaries

 

 

229

 

 

 

229

 

 

 

458

 

 

 

458

 

Net income attributable to Hawaiian Electric

 

 

45,569

 

 

 

44,405

 

 

 

92,848

 

 

 

91,084

 

Preferred stock dividends of Hawaiian Electric

 

 

270

 

 

 

270

 

 

 

540

 

 

 

540

 

Net income for common stock

 

$

45,299

 

 

$

44,135

 

 

$

92,308

 

 

$

90,544

 

Comprehensive income attributable to Hawaiian Electric

 

$

45,255

 

 

$

44,186

 

 

$

92,219

 

 

$

90,646

 

OTHER ELECTRIC UTILITY INFORMATION

 

 

 

 

 

 

 

 

Kilowatthour sales (millions)

 

 

 

 

 

 

 

 

Hawaiian Electric

 

 

1,480

 

 

 

1,506

 

 

 

2,910

 

 

 

2,954

 

Hawaii Electric Light

 

 

252

 

 

 

261

 

 

 

503

 

 

 

515

 

Maui Electric

 

 

262

 

 

 

264

 

 

 

517

 

 

 

519

 

 

 

 

1,994

 

 

 

2,031

 

 

 

3,930

 

 

 

3,988

 

Average fuel oil cost per barrel

 

$

122.69

 

 

$

139.51

 

 

$

131.48

 

 

$

120.54

 

Return on average common equity (%) (twelve months ended)1

 

 

 

 

 

 

8.2

 

 

 

8.2

 

1 Simple average.

 

This information should be read in conjunction with the consolidated financial statements and the notes thereto in Hawaiian Electric filings with the SEC. Results of operations for interim periods are not necessarily indicative of results to be expected for future interim periods or the full year.

American Savings Bank, F.S.B.

STATEMENTS OF INCOME DATA

(Unaudited)

 

 

 

Three months ended

 

Six months ended June 30

(in thousands)

 

June 30,

2023

 

March 31,

2023

 

June 30,

2022

 

 

2023

 

 

 

2022

 

Interest and dividend income

 

 

 

 

 

 

 

 

 

 

Interest and fees on loans

 

$

67,966

 

$

64,842

 

$

48,129

 

$

132,808

 

$

94,134

Interest and dividends on investment securities

 

 

13,775

 

 

 

14,637

 

 

 

14,693

 

 

 

28,412

 

 

 

28,677

 

Total interest and dividend income

 

 

81,741

 

 

 

79,479

 

 

 

62,822

 

 

 

161,220

 

 

 

122,811

 

Interest expense

 

 

 

 

 

 

 

 

 

 

Interest on deposit liabilities

 

 

9,661

 

 

 

6,837

 

 

 

921

 

 

 

16,498

 

 

 

1,868

 

Interest on other borrowings

 

 

8,852

 

 

 

7,721

 

 

 

139

 

 

 

16,573

 

 

 

144

 

Total interest expense

 

 

18,513

 

 

 

14,558

 

 

 

1,060

 

 

 

33,071

 

 

 

2,012

 

Net interest income

 

 

63,228

 

 

 

64,921

 

 

 

61,762

 

 

 

128,149

 

 

 

120,799

 

Provision for credit losses

 

 

43

 

 

 

1,175

 

 

 

2,757

 

 

 

1,218

 

 

 

(506

)

Net interest income after provision for credit losses

 

 

63,185

 

 

 

63,746

 

 

 

59,005

 

 

 

126,931

 

 

 

121,305

 

Noninterest income

 

 

 

 

 

 

 

 

 

 

Fees from other financial services

 

 

5,009

 

 

 

4,679

 

 

 

4,716

 

 

 

9,688

 

 

 

10,303

 

Fee income on deposit liabilities

 

 

4,504

 

 

 

4,599

 

 

 

4,552

 

 

 

9,103

 

 

 

9,243

 

Fee income on other financial products

 

 

2,768

 

 

 

2,744

 

 

 

2,529

 

 

 

5,512

 

 

 

5,247

 

Bank-owned life insurance

 

 

1,955

 

 

 

1,425

 

 

 

(142

)

 

 

3,380

 

 

 

539

 

Mortgage banking income

 

 

230

 

 

 

130

 

 

 

372

 

 

 

360

 

 

 

1,449

 

Gain on sale of real estate

 

 

495

 

 

 

—

 

 

 

—

 

 

 

495

 

 

 

1,002

 

Other income, net

 

 

678

 

 

 

801

 

 

 

475

 

 

 

1,479

 

 

 

847

 

Total noninterest income

 

 

15,639

 

 

 

14,378

 

 

 

12,502

 

 

 

30,017

 

 

 

28,630

 

Noninterest expense

 

 

 

 

 

 

 

 

 

 

Compensation and employee benefits

 

 

29,394

 

 

 

30,204

 

 

 

27,666

 

 

 

59,598

 

 

 

54,881

 

Occupancy

 

 

5,539

 

 

 

5,588

 

 

 

5,467

 

 

 

11,127

 

 

 

11,419

 

Data processing

 

 

5,095

 

 

 

5,012

 

 

 

4,484

 

 

 

10,107

 

 

 

8,635

 

Services

 

 

2,689

 

 

 

2,595

 

 

 

2,522

 

 

 

5,284

 

 

 

4,961

 

Equipment

 

 

2,957

 

 

 

2,646

 

 

 

2,402

 

 

 

5,603

 

 

 

4,731

 

Office supplies, printing and postage

 

 

1,109

 

 

 

1,165

 

 

 

1,073

 

 

 

2,274

 

 

 

2,133

 

Marketing

 

 

834

 

 

 

1,016

 

 

 

934

 

 

 

1,850

 

 

 

1,952

 

Other expense

 

 

6,152

 

 

 

6,191

 

 

 

4,850

 

 

 

12,343

 

 

 

8,899

 

Total noninterest expense

 

 

53,769

 

 

 

54,417

 

 

 

49,398

 

 

 

108,186

 

 

 

97,611

 

Income before income taxes

 

 

25,055

 

 

 

23,707

 

 

 

22,109

 

 

 

48,762

 

 

 

52,324

 

Income taxes

 

 

4,851

 

 

 

5,145

 

 

 

4,643

 

 

 

9,996

 

 

 

10,988

 

Net income

 

$

20,204

 

 

$

18,562

 

 

$

17,466

 

 

$

38,766

 

 

$

41,336

 

Comprehensive income (loss)

 

$

12,994

 

 

$

36,992

 

 

$

(71,369

)

 

$

49,986

 

 

$

(169,940

)

OTHER BANK INFORMATION (annualized %, except as of period end)

 

 

 

 

 

 

 

 

Return on average assets

 

 

0.84

 

 

 

0.78

 

 

 

0.76

 

 

 

0.81

 

 

 

0.90

 

Return on average equity

 

 

16.20

 

 

 

15.51

 

 

 

12.17

 

 

 

15.87

 

 

 

13.01

 

Return on average tangible common equity

 

 

19.40

 

 

 

18.73

 

 

 

14.20

 

 

 

19.07

 

 

 

14.95

 

Net interest margin

 

 

2.75

 

 

 

2.85

 

 

 

2.85

 

 

 

2.80

 

 

 

2.82

 

Efficiency ratio

 

 

68.18

 

 

 

68.62

 

 

 

66.52

 

 

 

68.40

 

 

 

65.32

 

Net charge-offs to average loans outstanding

 

 

0.14

 

 

 

0.14

 

 

 

0.00

 

 

 

0.14

 

 

 

0.01

 

As of period end

 

 

 

 

 

 

 

 

 

 

Nonaccrual loans to loans receivable held for investment

 

 

0.22

 

 

 

0.24

 

 

 

0.40

 

 

 

 

 

Allowance for credit losses to loans outstanding

 

 

1.13

 

 

 

1.18

 

 

 

1.28

 

 

 

 

 

Tangible common equity to tangible assets

 

 

4.3

 

 

 

4.3

 

 

 

4.9

 

 

 

 

 

Tier-1 leverage ratio

 

 

7.8

 

 

 

7.7

 

 

 

7.7

 

 

 

 

 

Dividend paid to HEI (via ASB Hawaii, Inc.) ($ in millions)

 

$

11.0

 

 

$

14.0

 

 

$

12.0

 

 

$

25.0

 

 

$

27.0

 

This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI filings with the SEC. Results of operations for interim periods are not necessarily indicative of results to be expected for future interim periods or the full year.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230807998902/en/

Mateo Garcia Director, Investor Relations Telephone: (808) 543-7300 E-mail: ir@hei.com