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, while also highlighting progress in renewable energy and wildfire mitigation efforts.

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.
• 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 expenses. However, there are some positive aspects, such as progress in renewable energy and wildfire mitigation, which temper the overall negative outlook.

Positives

• The Hawaii Supreme Court decision provides clarity for finalizing the Maui tort litigation settlement.
• The sale of 90.1% of American Savings Bank simplifies HEI's strategy and allows enhanced focus on the utility business.
• 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.
• The utility returned $18 million in bill credits to customers.

Negatives

• HEI reported a net loss of $1,426 million for the full year 2024.
• Hawaiian Electric's full-year net loss was $1,226 million.
• The holding and other companies net loss was $96 million in 2024.

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, negatively impacted earnings.
• The utility dividend to HEI continues to be suspended.

Future Outlook

The company is committed to a stronger, more resilient, and more financially healthy future, focusing on wildfire mitigation, renewable energy, 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 high-risk wildfire areas, including increased mitigation costs and potential liabilities. The focus on renewable energy aligns with broader industry trends towards decarbonization.

Comparison to Industry Standards

• It is difficult to compare HEI's results directly to industry standards due to the unique circumstances of the Maui wildfires.
• However, other utilities in wildfire-prone areas, such as PG&E and Edison International, have also faced significant financial challenges related to wildfire liabilities.
• HEI's renewable energy progress can be compared to other utilities with similar decarbonization goals, such as NextEra Energy and Xcel Energy.

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 benefits from wildfire mitigation efforts and progress in 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