On August 9, 2024, Hawaiian Electric Industries Inc (HE, Financial) released its 8-K filing for the second quarter of 2024. Hawaiian Electric Industries is the parent company of three Hawaii-based regulated utilities and Hawaii's American Savings Bank. The utilities provide electricity on the five islands of Oahu, Hawaii, Maui, Molokai, and Lanai.
Performance and Challenges
Hawaiian Electric Industries Inc (HE, Financial) reported a consolidated net loss of $1.30 billion, or $11.74 per share, for the second quarter of 2024. This significant loss includes a $1.71 billion ($1.27 billion after taxes) accrual for estimated wildfire liabilities from tort-related legal claims, an $82.2 million ($66.1 million after taxes) goodwill impairment at American Savings Bank (ASB), and $9.8 million ($7.2 million after taxes) of other Maui wildfire-related expenses. Excluding these items, core net income was $49.1 million, or $0.44 per share, compared to $54.6 million in the second quarter of 2023.
Financial Achievements
Despite the challenges, Hawaiian Electric Industries Inc (HE, Financial) demonstrated resilience in its core operations. The utility segment continued to advance wildfire mitigation and resilience efforts, while the bank's net interest margin expanded to 2.79%, up 4 basis points compared to the first quarter. The bank also maintained strong credit quality and released reserves reflecting a healthy Hawaii economy.
Income Statement Highlights
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Total Revenues | $897.4 million | $895.7 million |
| Total Expenses | $2.62 billion | $802.7 million |
| Net Income (Loss) | $(1.30) billion | $55.1 million |
| Basic Earnings (Loss) Per Share | $(11.74) | $0.50 |
Balance Sheet and Cash Flow
Hawaiian Electric Industries Inc (HE, Financial) reported total revenues of $897.4 million for the second quarter of 2024, slightly up from $895.7 million in the same period last year. However, total expenses surged to $2.62 billion, primarily due to the wildfire-related liabilities and goodwill impairment. The company's net loss for common stockholders was $1.30 billion, translating to a basic loss per share of $11.74.
Commentary
“Our core operations remain strong across the enterprise, and both our utility and bank remain very well-positioned to continue serving our customers and communities for the long term. The utility continues to rapidly advance wildfire mitigation and resilience efforts, and excluding the goodwill impairment taken during the quarter, our bank is improving profitability while maintaining a strong capital and liquidity position,” said Scott Seu, HEI president and CEO.
Analysis
The significant losses reported by Hawaiian Electric Industries Inc (HE, Financial) highlight the financial impact of the Maui wildfires and the associated legal claims. The accrual for wildfire liabilities and the goodwill impairment at ASB have severely affected the company's financial performance. However, the core operations of both the utility and the bank remain robust, indicating a potential for recovery once the immediate challenges are addressed.
Investors should closely monitor the company's ongoing efforts to finalize the wildfire settlement and develop a financing plan to address the associated liabilities. The suspension of the utility dividend to HEI and the "going concern" risk disclosed in the financial statements are critical factors that could influence the company's future financial stability.
For more detailed information, please refer to the full 8-K filing.
Explore the complete 8-K earnings release (here) from Hawaiian Electric Industries Inc for further details.
