Hawaiian Electric Industries · NYSE:HE
Hawaiian Electric Industries — Q1 2024 Earnings Presentation
33 slides from Hawaiian Electric Industries's earnings presentation, May 10, 2024
Slide 1: 1Q24 Financial Results
HEI 1Q24 Financial Results May 10, 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 Wildfire Update
Maui Wildfire Update • First phase of One ‘Ohana launched on March 1st • 58 registrations (43 decedent, 15 injury) One ‘Ohana • Registration deadline extended to May 31st; Governor Green has said progressing deadline for completed claims forms will be July 1st • Governor signed SB582 on May 2nd, set
Slide 4: Utility Wildfire Mitigation and Resilience Updates
Utility Wildfire Mitigation and Resilience Updates Taking immediate action to address wildfire ….While pursuing funding that could accelerate risk.... wildfire mitigation efforts and reduce bill impact ✓ Block reclosing and enable fast trip Purpose Est. selection Total Federal match Enhance ✓ Enhanc
Slide 5: ASB Performing Well, Seeing Benefits from Balance Sheet Repositioning
ASB Performing Well, Seeing Benefits from Balance Sheet Repositioning • Net interest margin expanded, with lower cost of funds following Benefits from 4Q previous quarter’s securities sale balance sheet repositioning • Last quarter’s transaction reduced bank’s highest cost funding • $1.5 million of
Slide 6: 1Q24 Financial Performance
1Q24 Financial Performance GAAP Net Income and EPS Core1 Net Income and EPS LTM ROE (GAAP) $54.7 $54.7 $49.3 10.0% $42.1 $18.6 $18.6 $20.9 $20.9 8.1% $47.0 $47.0 $44.2 $39.2 ($10.9) 2023 2024 ($10.9) ($15.8) ($18.0) LTM ROE (Core1) $0.50 $0.50 $0.45 $0.38 $0.17 $0.17 $0.19 10.0% $0.19 9.5% $0.43 $0.
Slide 7: 1Q24 Financial Highlights
1Q24 Financial Highlights $0.01 1Q 2023 vs. 1Q 2024 EPS Variances1 $0.05 $0.06 $0.02 $0.05 $0.01 $0.03 $0.02 $0.02 $0.03 $0.01 Total: ~$(0.07) Total: ~$0.02 Total: ~($0.06) $0.50 HoldCo & Other $0.38 1Q 2023 Revenue Interest O&M Heat rate Wildfire Net interest Provision Noninterest Wildfire Pacific
Slide 8: Liquidity Update
Liquidity Update Prudent liquidity management as we work through timing, impacts of litigation ▪ As of the end of 1Q, the HoldCo and Utility had $127 and $130 million of cash on hand, respectively ▪ Cash being carefully managed across the enterprise and additional sources of liquidity being secured
Slide 9: Q&A
Q&A
Slide 10: Appendix
Appendix —_—e
Slide 11: 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 Mar. 2024 YTD: 2.4M Mar. 2024: 3.1% $19,699 10,000 12 $20,000 $17,716 10 8,000 $15,000 $13,127 8 6,000 6 $10,000 4,00
Slide 12: Adjusted O&M Excluding Pension (non-GAAP)
Adjusted O&M Excluding Pension (non-GAAP)1 $ in millions $126.0 GAAP to non-GAAP reconciliation of O&M, net of exclusions $111.0 1Q 2023 1Q 2024 GAAP O&M $128.0 $144.0 (less): Pension1 12.0 12.0 Covered by surcharges 2.0 3.0 Covered by third parties 3.0 3.0 Adjusted O&M $111.0 $126.0 1Q23 1Q24 1. In
Slide 13: Utility LTM ROE
Utility LTM ROE ROE (%) 9.5% 0.2% 9.3% 0.2% 1.2% 0.2% 0.3% 7.8% Allowed Non-recoverable ROE less Actual O&M, Higher Fuel Worse Fuel Others, Net Actual ROE items (i.e. Incentive Structural Depreciation and Inventory Efficiency 1Q 2024 compensation, Items Return on offset by Fuel ROE advertising, char
Slide 14: 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 15: Status of Key Open Dockets, Continued
Status of Key Open Dockets, Continued Subject and Description Docket # Latest Development Next Milestone Integrated Grid Planning (IGP) 2018-0165 On March 7, 2024, the PUC issued an order which accepts the 2023 The PUC will address the following issues in the next Next phase of long-range planning,
Slide 16: 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 Commission to decide on the Objectives and Scope Investigates Distributed Energy Resources (DER) as they relate t
Slide 17: 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 Pending Department of Energy Contract Executi
Slide 18: 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 2023-0349 On December 27, 2023, the PUC issued a Decision and Order Monthly reporting on deferred costs. Separate Costs authorizi
Slide 19: 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 20: NIM Expansion Driven by Previous Quarter's Strategic Balance Sheet Repositioning
NIM Expansion Driven by Previous Quarter’s Strategic Balance Sheet Repositioning 1 Yield on Earning Assets (%) Cost of Funds (%) Net Interest Margin (%) 3.77 3.88 1.18 3.49 1.17 2.85 2.63 2.75 0.66 1Q23 4Q23 1Q24 1Q23 4Q23 1Q24 1Q23 4Q23 1Q24 Funding sources Q4 2023 average Q1 2024 average Actual 4Q
Slide 21: 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: 1.20% ACL: 1.16% $80 $2.1 $1.2 $74.4 $71.1 $70 $60 $50 $40 $30 $20 $10 $- ACL - 12/31/23 2024 NCOs 2024 Provision for Credit Losses
Slide 22: Maui Loan Exposure
Maui $ in millions Loan Exposure Detail Fire Impact Zone Total Loan Type Balance Exposure1 Resi 1-4 $8.4 $8.4 HELOC 1st Lien $0.9 $2.7 HELOC 2nd Lien $1.2 $2.8 Cons. Unsec., Credit Scored $1.8 $2.4 Commercial & Industrial $6.9 $6.9 CRE $17.9 $17.9 $11.0 Construction - - Total $37.1 $41.2 Maui Total
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 8,006 7,795 411 387 472 608 740 7,446 466 433 817 908 1,064 1,055 7,029 7,184 495 6,820 540 6,278 597 553 6,217 740 776 770 4,571 4,693 4,795 4,882 4,850 4,788 4,469
Slide 24: Bank Liquidity and Capital Remain Strong
Bank Liquidity and Capital Remain Strong Secured Funding Available ($M) ASB has more than $235M of excess equity above the “well capitalized” level Capital Ratio Tier 1 leverage $3,299 $2,910 $3,027 As of 03/31/24 8.03% $1,640 $594 $1,101 “Well capitalized” 5.00% $1,930 $1,633 $1,423 Minimum require
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 8.9% 2.6% 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 3.88% Sectors Ratings Average cost of funds 1.17% Return on average equity 15.64% Corporates Mortgage A- or higher Non-rated 1% Revenue Bonds 1% 1% 1% Loans Core 65% Deposits
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 regarding the companies’ core opera
Slide 31: Reconciliation of GAAP to Non-GAAP Measures—Hawaiian Electric Industries
Reconciliation of GAAP to Non-GAAP Measures—Hawaiian Electric Industries 31
Slide 32: Reconciliation of GAAP to Non-GAAP Measures—Hawaiian Electric Company
Reconciliation of GAAP to Non-GAAP Measures—Hawaiian Electric Company 32
Slide 33: Reconciliation of GAAP to Non-GAAP Measures—American Savings Bank
Reconciliation of GAAP to Non-GAAP Measures—American Savings Bank 33
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