Hawaiian Electric Industries · NYSE:HE
Hawaiian Electric Industries — Q3 2023 Earnings Presentation
31 slides from Hawaiian Electric Industries's earnings presentation, Nov 9, 2023
Slide 1: 3Q23 Financial Results
HEI 3Q23 Financial Results November 9, 2023
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: Core Operations Resilient
Core1 Operations Resilient Diluted EPS Core operations healthy at both utility and bank • Utility 1 $0.57 $0.56 ‒ Utility performed well while allocating resources to Maui recovery $0.16 $0.19 $0.37 ‒ EPS of $0.40 includes $0.09 of windstorm and wildfire $0.10 expenses • Bank $0.49 $0.45 $0.40 ‒ ASB
Slide 4: Companies Well-positioned to Serve Customers and Community
Companies Well-positioned to Serve Customers and Community • Requested deferral treatment of Maui windstorm and wildfire-related expenses; seeking decision by end of year. Consumer Advocate has agreed • Stage 3 RFP update Utility • Oahu, Hawaii Island, Maui’s variable generation portion: selection o
Slide 5: Maui Update
Maui Update • Over 400 employees assisting on the ground in Maui recovery efforts • Power now restored to 99% of customers who lost electricity Recovery • In West Maui, all affected customers whose power can be restored are now back online • Ongoing collaboration with Maui community, Maui county off
Slide 6: 3Q23 Financial Performance
3Q23 Financial Performance GAAP Net Income and EPS Core1 Net Income and EPS LTM ROE (GAAP) $62.1 $62.1 $61.5 10.5% $17.6 9.5% $20.8 $41.1 $20.8 $11.4 $49.8 $53.8 $49.8 $43.5 1 ($8.4) ($8.4) ($9.9) 2022 2023 ($13.7) LTM ROE (Core1) $0.57 $0.57 $0.56 $0.19 $0.37 $0.19 $0.16 10.5% 10.4% $0.10 $0.45 $0.
Slide 7: 3Q23 Financial Highlights
3Q23 Financial Highlights 3Q 2022 vs. 3Q 2023 EPS Variances1 $0.02 $0.02 $0.06 $0.07 $0.09 $0.02 $0.02 $0.02 $0.01 $0.04 $0.02 $0.01 $0.01 $0.03 $0.57 Total: ~($0.05)1 Total: ~($0.09) Total: ~($0.05) HoldCo & $0.37 Other 2 3Q22 EPS Revenues FCRS AFUDC O&M Windstorm Noninterest Provision Net interest
Slide 8: Guidance Update
Guidance Update Suspending 2023 guidance Suspending 2023 guidance given the events of August 8 ▪ Will periodically revisit ability to provide guidance as we move forward Liquidity update ✓ Ended Q2 with a strong cash position given prefunding of November utility maturity earlier this year ✓ Revolver
Slide 9: Q&A
Q&A
Slide 10: Appendix
Appendix —_—e
Slide 11: Hawaii Economy Remains Stable
Hawaii Economy Remains Stable Unemployment Rate & Visitor Arrivals Monthly Visitor Arrivals (In thousands) Visitor Arrivals Unemployment Rate 2019 2021 2022 2023 12,000 14 % Sept. 2023 YTD: 7.3M Sept. 2023: 2.8% 12 1,200,000 10,000 10 1,000,000 8,000 8 800,000 6,000 6 600,000 4,000 4 400,000 2,000 2
Slide 12: Adjusted O&M Excluding Pension (non-GAAP)
Adjusted O&M Excluding Pension (non-GAAP) $ in millions $125.9 GAAP to non-GAAP reconciliation of O&M, net of exclusions 3Q 2022 3Q 2023 $103.2 GAAP O&M $121.1 $142.5 (less): Pension1 11.2 11.2 Covered by surcharges 1.9 2.3 Covered by third parties 4.8 3.1 Adjusted O&M $103.2 $125.9 Windstorm and wi
Slide 13: Utility LTM ROE
Utility LTM ROE ROE (%) 0.3% 9.5% 9.2% 0.6% 0.4% 0.3% 7.9% Allowed Non-recoverable ROE less Actual O&M, Incremental Fuel Risk Actual Q3 2023 ROE items (i.e. Incentive Structural Depreciation and Maui Sharing and ROE compensation, Items Return on Windstorm/ Higher Fuel advertising, charitable Wildfir
Slide 14: 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 15: 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 16: 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 Contract negotiations are ongoing. Four-month procurement of small projects; Molokai Phase 2 program capacity expanded to 235 MW contracts submitted for
Slide 17: 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 Order 38829 issued in Jan. 2023 modified the procedural schedule to Pending final Decision by PUC. Request to recover deferred costs associated with COVI
Slide 18: Stable NIM Compared to Peers Despite Industry-wide Impacts from Higher Funding Costs
Stable NIM Compared to Peers Despite Industry-wide Impacts from Higher Funding Costs 1 Yield on Earning Assets (%) Cost of Funds (%) Net Interest Margin (%) 3.56 3.68 1.02 0.83 2.96 2.75 2.70 3.09 0.13 3Q22 2Q23 3Q23 3Q22 2Q23 3Q23 3Q22 2Q23 3Q23 Funding sources Q2 2023 average Q3 2023 average Actua
Slide 19: 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: 1.23% ACL: 1.13% $80 $8.3 $76.4 $69.1 $1.0 $70 $60 $50 $40 $30 $20 $10 $- ACL - 6/30/23 3Q NCOs 3Q Provision for Credit Losses ACL - 09/30/23 2Q23 3Q23 Begi
Slide 20: Maui Loan Exposure
Maui $ in millions Loan Exposure Detail Fire Impact Zone Total Loan Type Balance Exposure1 $13.4 Resi 1-4 $16.3 $16.3 HELOC 1st Lien $1.8 $5.4 HELOC 2nd Lien $2.2 $5.0 Cons. Unsec., Credit Scored $5.1 $7.5 Commercial & Industrial $6.1 $6.1 CRE $19.6 $19.6 Construction - - Total $51.0 $59.8 $51.0 Mau
Slide 21: 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 7,795 411 387 472 7,446 466 433 608 740 908 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 4,649 4,260
Slide 22: Bank Liquidity and Capital Remain Strong
Bank Liquidity and Capital Remain Strong Secured Funding Available ($M) ASB has more than $205M of excess equity above the “well capitalized” level $3,773 Capital Ratio Tier 1 leverage $3,299 $2,768 $1,821 As of 9/30/23 7.69% $1,640 $398 $465 “Well capitalized” 5.00% $1,925 $1,905 $1,633 Minimum req
Slide 23: 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 8.2% 3.6% Personal ✓ ~84% of portfolio secured by real estate * Residential Wtd Avg LTV ~52%; CRE Wtd Avg LTV ~ 55% Constructio
Slide 24: Quality Bank Balance Sheet and Loan Portfolio
Quality Bank Balance Sheet and Loan Portfolio ASB1 Investment Portfolio Investment Portfolio Average yield on earning assets 3.68% Sectors Ratings Average cost of funds 1.02% Return on average equity 9.19% Corporates Mortgage A- or higher Non-rated 1% Revenue Bonds 1% 1% 1% Loans 63% Core Deposits 7
Slide 25: 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 26: 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 27: 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 28: 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 29: Reconciliation of GAAP to non-GAAP Measures
Reconciliation of GAAP' to non-GAAP Measures Hawaiian Electric Industries, Ino. (HE!) and Subsidiaries Unausited ‘Three months ended Nine months ended September 30, 2023 September 30, 2023, Pretax expenses: Legal expenses s 10,751 $ 10,751 Outside services expenses 6,134 6,134 Provision for credit l
Slide 30: Reconciliation of GAAP to non-GAAP Measures
Reconciliation of GAAP’ to non-GAAP Measures Hawaiian Electric Company, Inc. and Subsidiaries Unaudited Three months ended Nine months ended {in thousands) September 30, 2023 September 30, 2023 ‘Maui windstorm and wildfire-related costs Pretax expenses: Legal expenses” s 6251 $ 6.251 Outside service
Slide 31: Reconciliation of GAAP to non-GAAP Measures
Reconciliation of GAAP" to non-GAAP Measures American Savings Bank F.S.B. Unaudited ‘Three months ended Nine months ended 30, 2023 B i i Professional services expense” i i ile afi i ASB net income Excluding expense related to Maui wildfire (after tax): Professional services expense td 8 ‘Maui wildfi
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