Hawaiian Electric Industries Inc (NYSE:HE) reported improved first quarter 2025 financial results on May 9, showing signs of recovery as the company continues to address the aftermath of the 2023 Maui wildfires and reposition its business for the future.
Quarterly Performance Highlights
HEI reported GAAP income from continuing operations of $26.7 million ($0.15 per share) for the first quarter of 2025. After adjusting for Maui wildfire expenses of $3.4 million and a $9.8 million loss on the sale at Pacific Current, core income (non-GAAP) reached $39.8 million ($0.23 per share).
The company’s utility operations showed significant improvement, with core EPS increasing from -$0.14 in Q1 2024 to $0.23 in Q1 2025, while the holding company segment maintained a stable core EPS of $0.29.
As shown in the following chart of quarterly financial performance, HEI’s core income increased from $28.4 million in Q1 2024 to $39.8 million in Q1 2025, driven by several factors including heat rate performance, ARA revenue, and other revenue improvements:
The company also demonstrated cost control efforts, with adjusted O&M expenses excluding pension decreasing from $124.6 million in Q1 2024 to $122.0 million in Q1 2025:
Strategic Initiatives & Repositioning
Following the 2023 Maui wildfires, HEI has been implementing a strategic repositioning plan focused on sustainable growth. Key elements include resolving wildfire tort litigation, simplifying the business model, strengthening finances, and planning significant capital investments.
The company’s strategic roadmap outlines how it is addressing current challenges while positioning for future growth:
HEI has made substantial progress on its stated priorities, including signing settlement agreements to resolve wildfire litigation, completing the sale of American Savings Bank (ASB), reducing holding company debt, and implementing enhanced wildfire safety measures:
Wildfire Safety Investments
A central component of HEI’s forward strategy is its enhanced wildfire safety program. The company plans to invest nearly $400 million in capital from 2025 to 2027, with approximately $120 million allocated for 2025. The majority of these investments (76%) will go toward grid hardening, with additional funds for grid modernization, operational practices, situational awareness, and partnership strengthening.
The following chart illustrates the allocation of wildfire safety capital expenditures by category:
HEI has already made significant progress in reducing wildfire risks, implementing numerous measures across four key areas: grid hardening, situational awareness, operational practices, and community partnerships:
Liquidity and Financial Position
The company reported a solid liquidity position as of the end of Q1 2025, with $492 million of unrestricted cash at the holding company level (including ASB proceeds) and $130 million at the utility level. Additionally, $479 million has been set aside for the first payment under the settlement agreement.
HEI has access to an additional $600 million in liquidity from various facilities and recently retired $384 million in holding company long-term debt on April 9, 2025. The utility declared a $10 million dividend to HEI for the quarter.
The company’s utility last twelve months (LTM) return on equity stands at 7.0%, compared to an allowed ROE of 9.5%. The following chart breaks down the components affecting the ROE:
Forward-Looking Statements
HEI continues to make progress toward resolving wildfire tort litigation, with definitive settlement agreements signed in November 2024 and a favorable Hawaii Supreme Court decision received in February 2025. The company expects its first settlement payment in early 2026.
Recent legislative actions are supporting HEI’s recovery efforts. House Bill 1001 appropriates funds to address the State of Hawaii’s settlement claims related to the Maui wildfire tort litigation, while Senate Bill 897 directs the Public Utilities Commission to establish an aggregate liability cap on economic damages from future wildfires and authorizes securitization to finance wildfire safety improvements.
Looking ahead, HEI aims to execute the settlement agreement, return to investment grade credit metrics, continue simplifying its business model, execute on its robust capital spending cycle, and progress with its wildfire safety strategy. The company remains committed to its decarbonization goals, with a path to 100% renewable portfolio standard and net zero emissions by 2045.
The stock closed at $10.51 on May 9, up 0.82% for the day, with a slight decline of 0.52% in aftermarket trading. HEI’s current market price represents a significant discount to its 52-week high of $18.19, reflecting ongoing investor concerns about wildfire liabilities despite the progress made in settlement negotiations.
Full presentation:
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