Hawaiian Electric Industries · NYSE:HE
Hawaiian Electric Industries — Q4 2023 Earnings Presentation
33 slides from Hawaiian Electric Industries's earnings presentation, Feb 13, 2024
Slide 1: Fourth Quarter and Full Year 2023 Financial Results
HEI Fourth Quarter and Full Year 2023 Financial Results February 13, 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: Maui Update—Collaborative Path Forward
Maui Update—Collaborative Path Forward One ‘Ohana Provides Constructive Framework for Resolution and Long-term Solutions • Maui Recovery Fund now $175 million, targeting March 1 launch Significant • Utility contributing up to $75 million; State of Hawaii, Maui County, progress since Kamehameha Schoo
Slide 4: Utility Advancing Key Strategic Initiatives
Utility Advancing Key Strategic Initiatives Constructive Regulatory Decisions Decarbonization Goals Progressing ✓ $190 million Grid Resilience plan approved, ✓ Stage 3 RFP negotiations in process for 16 supported by $95 million of Department of renewable energy projects Energy funding ✓ ~517 MW of v
Slide 5: Core Operations Resilient
Core1 Operations Resilient Businesses Performing In Line with Expectations Diluted EPS Utility ‒ Continuing to progress reconstruction work in West Maui $2.20 $2.14 $2.04 while advancing key strategic initiatives (grid resiliency, $1.81 renewables transition) $0.73 $0.73 $0.66 $0.48 ‒ EPS of $1.76 i
Slide 6: Bank Well-positioned to Serve Customers and Community
Bank Well-positioned to Serve Customers and Community • Loyal, long-tenured deposit base remains stable, 86% of deposits F.D.I.C.- insured or fully collateralized Business remains • No risk to customer deposits resulting from legal claims related to the wildfires resilient • Bank continues to be wel
Slide 7: 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 Full year 2023: 9.6M Dec. 2023: 2.9% $19,699 10,000 12 $20,000 $17,658 10 8,000 $15,000 $13,127 8 6,000 6 $10,000 4,0
Slide 8: 2023 Financial Performance
2023 Financial Performance GAAP Net Income and EPS Core1 Net Income and EPS LTM ROE (GAAP) 10.5% $241.1 $235.0 $224.3 $199.2 $80.0 $80.0 $72.6 8.8% $53.4 $188.9 $194.0 $188.9 $195.1 2022 2023 ($27.8) ($34.0) ($43.4) ($48.1) LTM ROE (Core1) $2.20 $2.14 $2.04 $1.81 $0.73 $0.73 $0.66 10.2% $0.48 9.9% $
Slide 9: 2023 Financial Highlights
2023 Financial Highlights FY 2022 vs. FY 2023 EPS Variances1 $0.04 $0.05 $0.24 $0.06 $0.28 $0.03 $0.01 $0.03 $0.09 $0.02 $0.04 $0.04 $0.10 $0.04 $0.05 $0.06 $0.04 Total: ~$0.04 Total: ~($0.25) Total: ~($0.19) $2.20 HoldCo & $1.81 Other 1. Columns may not foot due to rounding. 2. Fuel cost risk shari
Slide 10: Liquidity Update
Liquidity Update Sufficient runway as we work through timing, impacts of litigation ▪ As of the end of Q4, the HoldCo and Utility had $137 and $106 million of cash on hand, respectively ▪ Securing additional financing through utility accounts receivable facility that could provide ~$200 – $250 milli
Slide 11: Q&A
Q&A
Slide 12: Appendix
Appendix —_—e
Slide 13: Full Year Adjusted O&M Excluding Pension (non-GAAP)
Full Year Adjusted O&M Excluding Pension (non-GAAP)1 $ in millions $463.8 $427.8 GAAP to non-GAAP reconciliation of O&M, net of exclusions 2022 2023 GAAP O&M $497.6 $533.6 (less): Pension1 48.9 46.1 Covered by surcharges 8.4 10.6 Covered by third parties 12.6 13.1 Adjusted O&M $427.8 $463.8 2022 202
Slide 14: Q4 Adjusted O&M Excluding Pension (non-GAAP)
Q4 Adjusted O&M Excluding Pension (non-GAAP)1 $ in millions $109.2 GAAP to non-GAAP reconciliation of O&M, net of exclusions $107.9 Q42022 Q42023 GAAP O&M $126.3 $126.4 (less): Pension1 12.3 11.0 Covered by surcharges 2.6 3.7 Covered by third parties 2.2 3.7 Adjusted O&M $109.2 $107.9 2022 2023 1. I
Slide 15: Utility LTM ROE
Utility LTM ROE ROE (%) 9.5% 0.3% 9.2% 0.8% 0.2% 8.2% Allowed Non-recoverable ROE less Actual O&M, Fuel Risk Actual Q4 2023 ROE items (i.e. Incentive Structural Depreciation and Sharing and Core ROE compensation, Items Return on Higher Fuel advertising, charitable Inventory Rate Base contributions,
Slide 16: 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 PBR Working Group subgroup meetings on Proceeding to evolve regulatory framework to better align wi
Slide 17: Status of Key Open Dockets, Continued
Status of Key Open Dockets, Continued Subject and Description Docket # Latest Development Next Milestone Community Based Renewable Energy 2015-0389 Molokai contracts approved by PUC on January 8, 2024. LMI and Tranche 1 RFP contract negotiations are Phase 2 program capacity expanded to 235 MW ongoin
Slide 18: Status of Key Open Dockets, Continued
Status of Key Open Dockets, Continued Subject and Description Docket # Latest Development Next Milestone COVID-19 Deferred Cost Recovery 2022-0118 On December 29, 2023, the PUC issued a Decision and Order Pending Order by PUC. Request to recover deferred costs associated with COVID-19 pandemic appro
Slide 19: Status of Key Open Dockets, Continued
Status of Key Open Dockets, Continued Subject and Description Docket # Latest Development Next Milestone Energy Equity Investigation 2022-0250 On October 31, 2023, the Commission held the first of five technical Meetings 4 and 5 and final guidance from the PUC A proceeding to investigate how to bett
Slide 20: Stable NIM Despite Industry-wide Impacts from Higher Funding Costs
Stable NIM Despite Industry-wide Impacts from Higher Funding Costs 1 Yield on Earning Assets (%) Cost of Funds (%) Net Interest Margin (%) 3.68 3.77 1.18 3.28 1.02 2.91 2.85 2.75 2.70 2.74 2.63 0.38 4Q22 3Q23 4Q23 4Q22 3Q23 4Q23 4Q22 1Q23 2Q23 3Q23 4Q23 Full Year Funding sources Q3 2023 average Q4 2
Slide 21: Allowance for Credit Losses Reflects Loan Growth and Maui Wildfire-Related Credit Risks
Allowance for Credit Losses Reflects Loan Growth and Maui Wildfire-Related Credit Risks ALLOWANCE FOR CREDIT LOSSES (ACL)1 ($ in millions) ACL: 1.21% ACL: 1.20% $80 $9.7 $74.4 $72.2 $7.5 $70 $60 $50 $40 $30 $20 $10 $- ACL - 12/31/22 2023 NCOs 2023 Provision for Credit Losses ACL - 12/31/23 2022 2023
Slide 22: Maui Loan Exposure
Maui $ in millions Loan Exposure Detail Fire Impact Zone Total Loan Type Balance Exposure1 Resi 1-4 $10.7 $10.7 HELOC 1st Lien $1.4 $3.1 HELOC 2nd Lien $1.2 $2.8 Cons. Unsec., Credit Scored $2.2 $2.8 Commercial & Industrial $7.1 $7.1 $14.0 CRE $17.9 $17.9 Construction - - Total $40.6 $44.6 Maui Tota
Slide 23: 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 7,795 411 387 472 7,446 466 433 608 740 908 1,064 7,029 7,184 495 817 6,820 540 597 553 6,217 6,278 740 776 770 4,795 4,882 4,850 4,788 4,469 4,571 4,693 4,672 4,574
Slide 24: Bank Liquidity and Capital Remain Strong
Bank Liquidity and Capital Remain Strong Secured Funding Available ($M) ASB has more than $210M of excess equity above the “well capitalized” level Capital Ratio Tier 1 leverage $3,299 $2,910 As of 12/31/23 7.68% $1,640 $594 “Well capitalized” 5.00% $1,930 $1,633 Minimum requirements 4.00% 12/31/202
Slide 25: 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 8.8% 3.2% Personal ✓ ~84% of portfolio secured by real estate * Residential Wtd Avg LTV ~51%; CRE Wtd Avg LTV ~ 54% Constructio
Slide 26: Quality Bank Balance Sheet and Loan Portfolio
Quality Bank Balance Sheet and Loan Portfolio ASB1 Investment Portfolio Investment Portfolio Average yield on earning assets 3.77% Sectors Ratings Average cost of funds 1.18% Return on average equity 2.74% Corporates Mortgage A- or higher Non-rated 1% Revenue Bonds 1% 1% 1% Loans Core 63% Deposits 7
Slide 27: 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 28: Cautionary Note Regarding Forward Looking Statements
Cautionary Note Regarding Forward Looking Statements • the risks inherent in changes in the value of the Company’s pension and other retirement plan assets and ASB’s securities available for sale, and the risks inherent in changes in the value of the Company’s pension liabilities, including changes
Slide 29: Cautionary Note Regarding Forward Looking Statements
Cautionary Note Regarding Forward Looking Statements • the ability of the Utilities to negotiate, periodically, favorable agreements for significant resources such as fuel supply contracts and collective bargaining agreements and avoid or mitigate labor disputes and work stoppages; • new technologic
Slide 30: Explanation of HEI's Use of Certain Unaudited Non-GAAP Measures
Explanation of HEI’s Use of Certain Unaudited Non-GAAP Measures HEI, Hawaiian Electric and ASB management use certain non-GAAP measures to evaluate the performance of HEI, the utility and bank. Management believes these non-GAAP measures provide useful information and are a better indicator of the c
Slide 31: Reconciliation of GAAP to Non-GAAP Measures—Hawaiian Electric Industries
Reconciliation of GAAP1 to Non-GAAP Measures—Hawaiian Electric Industries 31
Slide 32: Reconciliation of GAAP to Non-GAAP Measures—Hawaiian Electric Company
Reconciliation of GAAP1 to Non-GAAP Measures—Hawaiian Electric Company 32
Slide 33: Reconciliation of GAAP to Non-GAAP Measures—American Savings Bank
Reconciliation of GAAP1 to Non-GAAP Measures—American Savings Bank 33
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