Hawaiian Electric Industries · NYSE:HE
Hawaiian Electric Industries — Q2 2024 Earnings Presentation
32 slides from Hawaiian Electric Industries's earnings presentation, Aug 9, 2024
Slide 1: 2Q24 Financial Results
HEI 2Q24 Financial Results August 9, 2024
Slide 2: Non-GAAP Financial Information
Non-GAAP Financial Information This presentation refers to certain financial measures that were not prepared in accordance with U.S. generally accepted accounting principles. Reconciliations of those non-GAAP financial measures to the most directly comparable GAAP financial measures can be found in
Slide 3: Settlement Agreement in Principle Reached on Expedited Basis
Settlement Agreement in Principle Reached on Expedited Basis Summary Next Steps • Seven defendants collectively agree to pay • Agreement conditioned on a resolution of over $4 billion to settle all tort claims, with claims of the insurance companies, with no Company’s contribution totaling $1.99 Bil
Slide 4: Utility Advancing Key Strategic Initiatives
Utility Advancing Key Strategic Initiatives • Public Safety Power Shutoff program launched July 1 to help prevent wildfires when certain conditions exist in high-risk areas (e.g., hot, windy weather in areas PSPS Program where dry vegetation surrounds utility equipment) Launched • Close coordination
Slide 5: ASB Performing Well, Maintaining Strong Financial Position
ASB Performing Well, Maintaining Strong Financial Position Strong Financial Partner to Customers Across Hawai‘i • Solid core operations and earnings for the quarter • Profitability and core earnings improved excluding goodwill impairment and Maui wildfire expenses • Loyal, long tenured deposit base
Slide 6: 2Q 2024 Financial Performance & Highlights
2Q 2024 Financial Performance & Highlights GAAP Results Include Wildfire Expenses and Goodwill Impairment Core Net Income $54.6 $49.1 2Q 2024 Net Income EPS $20.2 $20.7 GAAP Net Inc. and EPS -$1,295.5M -$11.74 $45.3 $43.9 less: tort-related loss -$1,271.2M -$11.52 less: goodwill Impairment -$66.1M -
Slide 7: Maintaining Solid Liquidity as Financing Plan Progresses
Maintaining Solid Liquidity as Financing Plan Progresses ▪ As of the end of 2Q, the HoldCo and Utility had $124 million and $89 million of cash on hand, respectively Liquidity Update ▪ Cash being carefully managed across the enterprise ▪ $250 million Utility accounts receivable facility approved by
Slide 8: Q&A
Q&A
Slide 9: Appendix
Appendix —_—e
Slide 10: Hawaii Economy Remains Resilient
Hawaii Economy Remains Resilient Unemployment Rate & Visitor Arrivals Visitor Expenditures (In millions) (In thousands) Visitor Arrivals Unemployment Rate $25,000 12,000 14 % $20,777 June. 2024 YTD: 4.8M June. 2024: 2.9% $19,699 10,000 12 $20,000 $17,716 10 8,000 $15,000 $13,127 8 6,000 6 $10,000 4,
Slide 11: Adjusted O&M Excluding Pension (non-GAAP)
Adjusted O&M Excluding Pension (non-GAAP)1 $ in millions $126.7 GAAP to non-GAAP reconciliation of O&M, net of exclusions $118.6 2Q 2023 2Q 2024 GAAP O&M $136.4 $147.6 (less): Pension1 12.0 12.3 Covered by surcharges 2.4 4.2 Covered by third parties 3.4 4.3 Adjusted O&M $118.6 $126.7 2Q23 2Q24 1. In
Slide 12: Status of Key Open Dockets
Status of Key Open Dockets Subject and Description Docket # Latest Development Next Milestone Performance-based regulation 2018-0088 On August 31, 2023, the PUC issued order temporarily suspending the Review of the Long-Term Grid Services PIM will Proceeding to evolve regulatory framework to better
Slide 13: Status of Key Open Dockets, Continued
Status of Key Open Dockets, Continued Subject and Description Docket # Latest Development Next Milestone Stage 3 RFP 2017-0352 Stage 3 RFP Stage 3 RFP Hawaii Island seeks up to 325 GWh of energy annually and up to 65 MW of Final Award group for Oahu Stage 3, Hawaii Stage 3 and Maui Variable Contract
Slide 14: Status of Key Open Dockets, Continued
Status of Key Open Dockets, Continued Subject and Description Docket # Latest Development Next Milestone DER Policies 2019-0323 On November 9, 2023, the PUC approved the expansion of the Advanced Commission to decide on the Objectives and Scope of Investigates Distributed Energy Resources (DER) as t
Slide 15: Status of Key Open Dockets, Continued
Status of Key Open Dockets, Continued Subject and Description Docket # Latest Development Next Milestone Climate Adaptation Transmission and Distribution Resilience Program 2022-0135 On November 27, 2023, the Utility filed a letter to notify the PUC that the Pending Department of Energy Contract Exe
Slide 16: Status of Key Open Dockets, Continued
Status of Key Open Dockets, Continued Subject and Description Docket # Latest Development Next Milestone Deferral of Maui Windstorm and Wildfires Response and Restoration Costs 2023-0349 On December 27, 2023, the PUC issued a Decision and Order authorizing Monthly reporting on deferred costs. Separa
Slide 17: Status of Key Open Dockets, Continued
Status of Key Open Dockets, Continued Subject and Description Docket # Latest Development Next Milestone Land Sale Application: Cooke Street Property 2024-0144 On May 10, 2024, Hawaiian Electric filed an application to request Company responses to Consumer Advocate information An application to requ
Slide 18: Fossil Fuel Cost Risk Sharing
Fossil Fuel Cost Risk Sharing • Symmetrical mechanism • Variations in fossil fuel price above or below baseline shared 98% customers / 2% utility • Applies to utility fossil fuel generation (not IPP generation or non-fossil fuels), includes fuel efficiency impacts • Baseline price: January fuel pric
Slide 19: Continued Low Cost of Funds and NIM Expansion in the Second Quarter
Continued Low Cost of Funds and NIM Expansion in the Second Quarter 1 Yield on Earning Assets (%) Cost of Funds (%) Net Interest Margin (%) 3.88 3.89 3.56 1.17 1.15 2.79 2.75 2.75 0.83 2Q23 1Q24 2Q24 2Q23 1Q24 2Q24 2Q23 1Q24 2Q24 Funding sources Q1 2024 average Q2 2024 average Actual 1Q24 Reported N
Slide 20: Allowance for Credit Losses Reflects Improving Credit Trends
Allowance for Credit Losses Reflects Improving Credit Trends, Including Lower Maui Wildfire-Related Credit Risks ALLOWANCE FOR CREDIT LOSSES (ACL)1 ($ in millions) ACL: 1.16% ACL: 1.11% $80 $2.3 $2.0 $71.1 $66.8 $70 $60 $50 $40 $30 $20 $10 $- ACL - 03/31/24 2024 NCOs 2024 Provision for Credit Losses
Slide 21: Maui Loan Exposure
Maui $ in millions Loan Exposure Detail Fire Impact Zone Total Loan Type Balance Exposure1 Resi 1-4 $7.9 $7.9 HELOC 1st Lien $1.0 $2.7 HELOC 2nd Lien $1.1 $2.5 Cons. Unsec., Credit Scored $1.7 $2.3 Commercial & Industrial $6.6 $6.6 CRE $17.1 $17.1 Construction - - $10.6 Total $35.4 $39.0 Maui Total
Slide 22: Average Core Deposits
Average $ in millions Core Deposits Remain Higher than Pre-pandemic Levels 7,937 8,081 8,180 8,294 8,289 8,227 8,157 8,077 8,186 8,169 8,006 7,997 7,795 7,446 466 433 411 387 472 608 740 817 908 1,064 7,184 495 1,055 1,030 6,820 7,029 540 553 6,217 6,278 740 597 776 770 4,571 4,693 4,795 4,882 4,850
Slide 23: Bank Liquidity and Capital Remain Strong
Bank Liquidity and Capital Remain Strong Secured Funding Available ($M) ASB has more than $259M of excess equity above the “well capitalized” level Capital Ratio Tier 1 leverage $3,150 $3,049 $2,910 As of 06/30/24 8.36% $1,053 $594 $1,028 “Well capitalized” 5.00% $1,839 $1,930 $1,495 Minimum require
Slide 24: Bank Loan Portfolio: Conservative Profile, Concentrated in Real Estate-Secured Loans
Bank Loan Portfolio: Conservative Profile, Concentrated in Real Estate-Secured Loans Commercial & National Loan portfolio characteristics Industrial Syndications Commercial 8.5% 2.2% Personal ✓ ~85% of portfolio secured by real estate * Residential Wtd Avg LTV ~51%; CRE Wtd Avg LTV ~ 54% Constructio
Slide 25: Quality Bank Balance Sheet and Loan Portfolio
Quality Bank Balance Sheet and Loan Portfolio ASB1 Investment Portfolio Investment Portfolio Average yield on earning assets 3.89% Sectors Ratings Average cost of funds 1.15% Return on average equity (core) 15.34% Corporates Mortgage A- or higher Non-rated 1% Revenue Bonds 1% 1% 1% Loans 64% Core De
Slide 26: Cautionary Note Regarding Forward Looking Statements
Cautionary Note Regarding Forward Looking Statements • This presentation made by Hawaiian Electric Industries, Inc. (HEI) and Hawaiian Electric Company, Inc. (Hawaiian Electric) and their subsidiaries contain “forward-looking statements,” which include statements that are predictive in nature, depen
Slide 27: Cautionary Note Regarding Forward Looking Statements
Cautionary Note Regarding Forward Looking Statements • changes in interest rates and market liquidity, as well as the magnitude of such changes, which may reduce interest margins, impact funding sources, alter valuations and affect the ability to originate and distribute financial products in the pr
Slide 28: Cautionary Note Regarding Forward Looking Statements
Cautionary Note Regarding Forward Looking Statements • the ability of IPPs to deliver the firm capacity anticipated in their power purchase agreements (PPAs); • the potential that, as IPP contracts near the end of their terms, there may be less economic incentive for the IPPs to make investments in
Slide 29: Explanation of HEI's Use of Certain Unaudited Non-GAAP Measures
Explanation of HEI’s Use of Certain Unaudited Non-GAAP Measures HEI and ASB management use certain non-GAAP measures to evaluate the performance of HEI and the bank. Management believes these non-GAAP measures provide useful information and are a better indicator of the companies’ core operating act
Slide 30: Reconciliation of GAAP to Non-GAAP Measures—Hawaiian Electric Industries
Reconciliation of GAAP to Non-GAAP Measures—Hawaiian Electric Industries 30
Slide 31: Reconciliation of GAAP to Non-GAAP Measures—Hawaiian Electric Company
Reconciliation of GAAP to Non-GAAP Measures—Hawaiian Electric Company 31
Slide 32: Reconciliation of GAAP to Non-GAAP Measures—American Savings Bank
Reconciliation of GAAP to Non-GAAP Measures—American Savings Bank 32
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