Hawaiian Electric Industries · NYSE:HE
Hawaiian Electric Industries — Q3 2024 Earnings Presentation
34 slides from Hawaiian Electric Industries's earnings presentation, Nov 8, 2024
Slide 1: HEI 3Q24 Financial Results
HEI 3Q24 Financial Results November 8, 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: Positive Momentum Toward Resolution of Wildfire Tort Litigation
Positive Momentum Toward Resolution of Wildfire Tort Litigation SUMMARY NEXT STEPS • Final settlement agreements signed, consistent with key terms announced • Hawaii Supreme Court reviewing Second Circuit Court’s Order requiring on August 2 insurers to seek recovery according to Hawaii law. This wou
Slide 4: Continuing to Deliver on Wildfire Mitigation Priorities
Continuing to Deliver on Wildfire Mitigation Priorities Utility executing on previously-communicated priorities REFINING AND ENHANCING IMPLEMENTING TECHNOLOGICAL PROGRESSING GRID HARDENING PUBLIC SAFETY POWER SHUTOFF (PSPS) AND OPERATIONAL CHANGES EFFORTS PROGRAM • PSPS program launched July 1, 2024
Slide 5: ASB Maintaining Strong Financial Position
ASB Maintaining Strong Financial Position Trusted Financial Partner to Customers Across Hawai‘i Solid core operations Balance sheet Loyal, long-tenured Continued high year-to-date well-positioned for deposit base liquidity, strong potential declining remains stable credit quality and Strong net inco
Slide 6: 3Q24 Financial Performance
3Q24 Financial Performance 3Q 2024 NET INCOME EPS GAAP Net Inc. and EPS -$104.4M -$0.91 GAAP less: wildfire-related expenses1 -$130.4M -$1.12 less: asset Impairment -$26.1M -$0.23 Core net inc. & EPS $52.2M $0.46 $61.5 $52.2 $0.56 $17.6 $0.46 $19.4 $0.16 $0.17 Core2 $53.8 $0.49 $43.7 $0.38 ($9.9) ($
Slide 7: Maintaining Solid Liquidity as Financing Plan Progresses
Maintaining Solid Liquidity as Financing Plan Progresses LIQUIDITY UPDATE RESOLUTION OF GOING CONCERN ASSESSMENT • As of the end of 3Q, the HoldCo and Utility had $678 • Following September common stock offering and million and $148 million of cash on hand, respectively other actions taken to addres
Slide 8: Q&A
Q&A
Slide 9: Appendix
Appendix —_—e
Slide 10: Hawaii Economic Indicators Healthy
Hawaii Economic Indicators Healthy Unemployment Rate & Visitor Arrivals Visitor Expenditures (In millions) (In thousands) Visitor Arrivals Unemployment Rate $25,000 12,000 14 % $20,777 September 2024 YTD: 7.2M September 2024: 2.9% $19,699 10,000 12 $20,000 $17,716 10 8,000 $15,000 $13,127 8 6,000 6
Slide 11: Adjusted O&M Excluding Pension (non-GAAP)
Adjusted O&M Excluding Pension (non-GAAP)1 $ in millions $136.7 GAAP TO NON-GAAP RECONCILIATION OF O&M, NET OF EXCLUSIONS $125.9 3Q 2023 3Q 2024 GAAP O&M $142.5 $158.7 (less): Pension1 11.2 12.0 Covered by surcharges 2.3 5.3 Covered by third parties 3.1 4.8 Adjusted O&M $125.9 $136.7 3Q23 3Q24 1. In
Slide 12: Utility LTM ROE
Utility LTM ROE ROE (%) 9.5% 0.3% 0.1% 9.2% 1.5% 7.8% Allowed Non-recoverable ROE less Actual O&M, Others, Net Actual Q3 ROE items (i.e. Incentive Structural Depreciation and 2024 compensation, Items Return on Core ROE advertising, charitable Rate Base contributions, etc.) over Recovery 12
Slide 13: 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 14: 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 15: Status of Key Open Dockets, Continued
Status of Key Open Dockets, Continued Subject and Description Docket # Latest Development Next Milestone Electrification of Transportation 2021-0173 On December 14, 2023, the Utility filed its Supplemental Reply Statement Suspended until further order by the PUC. Public EV Charger Expansion Project
Slide 16: 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 August 20, 2024, Utility filed a copy of its executed agreement with the In December 2024, Hawaiian Electric shall
Slide 17: 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 18: 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 October 8, 2024, the PUC issued a decision and order which approves The Utility will file a final report relating to the sale of the An a
Slide 19: Status of Key Open Dockets, Continued
Status of Key Open Dockets, Continued Subject and Description Docket # Latest Development Next Milestone Integrated Grid Planning (IGP) Request for Proposals (RFP) 2024-0258 On August 19, 2024, the PUC opened this docket to receive filings, review After review of the draft RFP and comments, the PUC
Slide 20: 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 21: Continued Low Cost of Funds and NIM Expansion in the Third Quarter
Continued Low Cost of Funds and NIM Expansion in the Third Quarter 1 Yield on Earning Assets (%) Cost of Funds (%) Net Interest Margin (%) 3.68 3.89 3.95 1.15 1.18 2.82 1.02 2.70 2.79 3Q23 2Q24 3Q24 3Q23 2Q24 3Q24 3Q23 2Q24 3Q24 Funding sources Q2 2024 average Q3 2024 average Actual 2Q24 Reported NI
Slide 22: 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: 1.11% ACL: 1.07% $80 $66.8 $2.2 $0.2 $64.8 $70 $60 $50 $40 $30 $20 $10 $- ACL - 06/30/24 2024 NCOs 2024 Provision for Credit Losses
Slide 23: Maui Loan Exposure
Maui $ in millions Loan Exposure Detail Fire Impact Zone Total Loan Type Balance Exposure1 Resi 1-4 $7.1 $7.1 HELOC 1st Lien $0.9 $2.6 HELOC 2nd Lien $1.1 $2.5 Cons. Unsec., Credit Scored $1.6 $2.1 Commercial & Industrial $6.3 $6.3 CRE $17.0 $17.0 Construction - - Total $33.9 $37.7 $10.3 Maui Total
Slide 24: Core Deposits Remain Higher than Pre-pandemic Levels
Average $ in millions Core Deposits Remain Higher than Pre-pandemic Levels 8,081 8,180 8,294 8,289 8,227 8,157 8,077 8,186 8,169 8,006 7,997 7,970 7,795 7,937 411 387 472 7,446 433 608 740 908 1,064 7,184 495 466 817 1,055 1,030 1,059 6,820 7,029 540 597 553 6,217 6,278 740 776 770 4,693 4,795 4,882
Slide 25: Bank Liquidity and Capital Remain Strong
Bank Liquidity and Capital Remain Strong Secured Funding Available ($M) ASB has more than $275M of excess equity above the “well capitalized” level Capital Ratio Tier 1 leverage $3,083 $2,910 $2,768 As of 09/30/24 8.65% $465 $594 $1,052 “Well capitalized” 5.00% $1,905 $1,930 $1,491 Minimum requireme
Slide 26: 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 8.0% 2.6% Personal ✓ ~85% of portfolio secured by real estate * Residential Wtd Avg LTV ~51%; CRE Wtd Avg LTV ~ 54% Constructio
Slide 27: Quality Bank Balance Sheet and Loan Portfolio
Quality Bank Balance Sheet and Loan Portfolio ASB1 Investment Portfolio Investment Portfolio Average yield on earning assets 3.95% Sectors Ratings Average cost of funds 1.18% Return on average equity (core) 14.78% Corporates Mortgage A- or higher Non-rated 1% Revenue Bonds 1% 1% 1% Loans 64% Core De
Slide 28: 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 29: Cautionary Note Regarding Forward Looking Statements
Cautionary Note Regarding Forward Looking Statements • the timing, speed and extent of changes in interest rates and the shape of the yield curve, which could result in lower portfolio yields and net interest margin, or higher borrowing costs; • changes in interest rates and market liquidity, as wel
Slide 30: 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 31: 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 32: Reconciliation of GAAP to Non-GAAP Measures—Hawaiian Electric Industries
Reconciliation of GAAP to Non-GAAP Measures—Hawaiian Electric Industries 32
Slide 33: Reconciliation of GAAP to Non-GAAP Measures—Hawaiian Electric Company
Reconciliation of GAAP to Non-GAAP Measures—Hawaiian Electric Company 33
Slide 34: Reconciliation of GAAP to Non-GAAP Measures—American Savings Bank
Reconciliation of GAAP to Non-GAAP Measures—American Savings Bank 34
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