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Introduction & Market Context
Hawaiian Electric Industries Inc (NYSE:HE) presented its second-quarter 2025 financial results on August 7, 2025, highlighting a significant year-over-year improvement in core earnings and substantial progress in wildfire risk reduction efforts. The company continues to reposition itself following the 2023 Maui wildfires, with a focus on a simpler business model and enhanced safety measures. HE shares closed at $11.04, showing a slight decline of 0.09% on the day, but representing a notable improvement from the $10.51 level reported after Q1 2025 earnings.
Quarterly Performance Highlights
HEI reported GAAP income from continuing operations of $26.1 million or $0.15 per share for Q2 2025. After excluding the impact of Maui wildfire expenses and Pacific Current impairment/tax credit recapture, core earnings came in at $35.4 million or $0.20 per share. This represents a significant improvement from the -$0.14 core EPS reported in the same period last year.
As shown in the following chart of quarterly financial performance:
The year-over-year improvement was driven by several factors, including heat rate performance ($2.9 million), ARA revenue ($3.9 million), and O&M improvements ($6.3 million), though these gains were partially offset by $5.2 million in higher after-tax wildfire mitigation program expenses. The utility segment increased from $0.40 to $0.25 per share.
The Q2 2025 core EPS of $0.20 represents a slight sequential decline from the $0.23 reported in Q1 2025, though this still demonstrates the company’s continued progress toward financial stability.
Wildfire Mitigation Initiatives
Hawaiian Electric has made substantial progress in implementing its wildfire risk reduction strategy, with significant investments across four key pillars: grid hardening and redesign, situational awareness, operational practices, and stakeholder and community partnerships.
The company’s presentation detailed specific achievements in wildfire risk reduction:
These efforts include replacing or upgrading over 3,000 wood poles, replacing 36 miles of overhead copper conductor, installing 101 weather stations in wildfire-prone areas, and participating in more than 100 public outreach events. The company emphasized that these measures have led to a "substantial reduction in risk of ignition from utility equipment."
Looking forward, HEI has outlined a comprehensive wildfire safety strategy with nearly $400 million in capital investments planned from 2025-2027, with approximately $120 million to be invested in 2025 alone. The breakdown of these investments shows a strong focus on grid hardening:
Settlement Progress & Legislative Support
The company continues to make progress toward resolving the wildfire tort litigation related to the 2023 Maui wildfires. Definitive settlement agreements were signed in November 2024, and the company received a favorable Hawaii Supreme Court decision in February 2025. The State Legislature passed legislation appropriating the State’s contribution to the settlement, which was signed in July 2025 as Act 301.
HEI expects to make its first payment under the settlement in early 2026, with $479 million already set aside in a special purpose entity for this payment, classified as restricted cash.
The company also highlighted recent legislative actions that support its operations and risk management:
Act 258 directs the Public Utilities Commission to establish an aggregate liability cap on economic damages from future wildfires and authorizes securitization to finance $500 million of wildfire safety improvements. This legislation represents a significant step in providing regulatory certainty for the utility.
Financial Position & Outlook
HEI maintained a solid liquidity position at the end of Q2 2025, with $44 million and $106 million of unrestricted cash at the holding company and utility levels, respectively. The company has access to $756 million in liquidity from various facilities and programs, and retired $384 million in holding company long-term debt on April 9.
The utility declared a $10 million dividend to HEI for the quarter, demonstrating some recovery in its ability to generate returns for shareholders.
The company’s actual Q2 2025 core ROE was 7.2%, compared to an allowed ROE of 9.5%. The difference was primarily attributed to non-recoverable items (-0.4%) and actual O&M, depreciation, and return on rate base over recovery (-2.0%).
For transparency, HEI provided a detailed reconciliation of GAAP to non-GAAP measures:
The reconciliation shows the adjustments made to arrive at core earnings, primarily related to wildfire expenses and Pacific Current impairment/tax credit recapture.
Forward-Looking Statements
Hawaiian Electric is focusing on a simpler, more focused business model going forward. The company plans to file a consolidated rate case application before the end of 2025, following the PUC’s Order No. 41575 allowing it to move forward with a 2026 test year consolidated rate case.
With the legislative support for wildfire liability caps and the ongoing implementation of enhanced safety measures, HEI appears to be positioning itself for more stable operations in the coming years. However, challenges remain, including the execution of the settlement agreement and the significant capital expenditures required for wildfire safety improvements.
The company’s focus on grid hardening, situational awareness, and operational practices demonstrates a comprehensive approach to risk reduction that will likely be a key factor in its long-term recovery and growth strategy.
Full presentation:
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