8-K: Hawaiian Electric Industries Reports Net Loss for 2024, Cites Maui Wildfire Costs

Hawaiian Electric Industries (HEI) reported a significant net loss for 2024, primarily due to costs associated with the Maui wildfires, but highlighted progress in strategic priorities and renewable energy adoption.

Summary

• Hawaiian Electric Industries (HEI) reported a net loss of $1,426 million, or $11.23 per share, for the full year 2024, compared to a net income of $199 million, or $1.81 per share in 2023.
• Excluding certain impacts, core income from continuing operations was $124 million, or $0.98 per share, compared to $152 million, or $1.38 per share in 2023.
• The fourth quarter 2024 net loss was $68 million, or $0.40 per share, compared to net income of $49 million, or $0.44 per share, in the fourth quarter of 2023.
• Core income from continuing operations was $35 million for the fourth quarter of 2024 compared to $37 million in the fourth quarter of 2023.
• Hawaiian Electric's full-year net loss was $1,226 million, compared to net income of $194 million in 2023.
• The decrease was primarily driven by a $1,875 million loss due to the accrual of estimated wildfire liabilities, $76 million in higher operations and maintenance expenses, and $7 million of higher depreciation expense.
• These were partially offset by $43 million higher revenues, $4 million lower interest expense, and $3 million from a gain on sale of property.
• Hawaiian Electric's Core net income for 2024 was $181 million.
• For the full year 2024, the loss from discontinued operations totaled $103 million, compared to net income of $53 million in 2023, due to the sale of 90.1% of the common stock of ASB to various investors.
• Excluding wildfire expenses, the goodwill impairment recorded in the second quarter, and the net loss recorded in accordance with the December 2024 sale transaction, Core income for 2024 was $79 million.
• The holding and other companies net loss was $96 million in 2024 compared to $48 million in 2023, primarily due to the Pacific Current asset impairment recorded in the third quarter, higher wildfire-related expenses and higher expenses at Pacific Current.

Sentiment

Score: 4

Explanation: The sentiment is moderately negative due to the significant net loss reported, primarily driven by wildfire-related liabilities. However, there are some positive aspects, such as progress in renewable energy and the sale of American Savings Bank, which mitigate the negative sentiment to some extent.

Positives

• The utility achieved a 36% Renewable Portfolio Standard in 2024, accelerating progress toward the 2030 milestone of 40%.
• Typical residential bill decreased 7% in 2024, and the utility returned $18 million in bill credits to customers.
• HEI completed the sale of 90.1% of American Savings Bank, simplifying its strategy and regulatory position.
• A favorable Hawaii Supreme Court decision provides clarity needed to help finalize Maui Tort Litigation Settlement.

Negatives

• HEI reported a net loss of $1,426 million for 2024, primarily due to Maui wildfire-related expenses.
• Hawaiian Electric's full-year net loss was $1,226 million.
• The holding and other companies net loss was $96 million in 2024 compared to $48 million in 2023.
• The utility dividend to HEI continues to be suspended.

Risks

• The company faces significant financial risks related to the Maui wildfire tort litigation.
• Higher operations and maintenance expenses, driven by wildfire mitigation program expenses and insurance costs, pose a challenge.
• The Pacific Current asset impairment recorded in the third quarter negatively impacted the holding company's net loss.

Future Outlook

The company is committed to a stronger, more resilient, and more financially healthy future, focusing on wildfire mitigation, renewable energy adoption, and debt reduction.

Management Comments

• The past year was pivotal in our company's history, and I am proud of the significant progress we've made to address the challenges before us and build a foundation for long-term success, said Scott Seu, HEI president and CEO.
• Over the course of the year, we achieved numerous milestones in our efforts to regain HEI's financial strength and emerge a stronger, more resilient company best positioned to serve our communities for the long term.

Industry Context

The announcement reflects the challenges faced by utilities in Hawaii, particularly in the context of wildfire risks and the transition to renewable energy sources.

Comparison to Industry Standards

• It is difficult to compare HEI's performance directly to other utilities without knowing their specific wildfire-related liabilities and renewable energy targets.
• However, companies like PG&E in California, which have also faced significant wildfire liabilities, could provide some context for assessing HEI's situation.
• Comparing HEI's renewable portfolio standard to other utilities with similar goals, such as those in California and New York, could also be informative.

Stakeholder Impact

• Shareholders are negatively impacted by the net loss and suspension of dividends.
• Customers benefit from lower residential bills and bill credits.
• The community is impacted by the company's efforts to mitigate wildfire risks and transition to renewable energy.

Next Steps

• HEI will conduct a webcast and conference call to review its fourth quarter and full year 2024 consolidated financial results today at 11:30 a.m. Hawaii time (4:30 p.m. Eastern).

Key Dates