Earnings call transcript: Hawaiian Electric beats Q2 2025 earnings expectations

Hawaiian Electric Industries Inc. (HE) reported its Q2 2025 earnings, surpassing analysts’ expectations with an EPS of $0.20 compared to the forecasted $0.18, marking an 11.11% positive surprise. The company’s revenue reached $746.39 million, contributing to its trailing twelve-month revenue of $3.17 billion. Despite the earnings beat, the stock experienced a slight decline of 0.09% in after-hours trading, closing at $11.04. According to InvestingPro analysis, the stock is currently trading below its Fair Value, presenting a potential opportunity for value investors.

Key Takeaways

• Hawaiian Electric reported a Q2 2025 EPS of $0.20, exceeding forecasts by 11.11%.
• Revenue for the quarter was $746.39 million.
• The company is focusing on wildfire safety and simplifying its business model.
• Stock price saw a minor decrease of 0.09% in after-hours trading.

Company Performance

Hawaiian Electric demonstrated resilience in Q2 2025, with a strong performance in its core utility operations. The company reported a consolidated core net income of $35.4 million, translating to $0.20 per share. Although utility core net income slightly decreased to $42.5 million from $43.9 million in the previous year, the holding company improved its core net loss from $15.5 million in 2024 to $7.1 million.

Financial Highlights

• Revenue: $746.39 million
• Earnings per share (EPS): $0.20, up from the forecasted $0.18
• Utility core net income: $42.5 million, down from $43.9 million in 2024
• Holding company core net loss: Improved to $7.1 million from $15.5 million in 2024

Earnings vs. Forecast

Hawaiian Electric exceeded expectations with an EPS of $0.20 against a forecast of $0.18, representing an 11.11% surprise. This performance highlights the company’s effective cost management and strategic initiatives despite challenges.

Market Reaction

Following the earnings announcement, Hawaiian Electric’s stock declined by 0.09% in after-hours trading to $11.04. This movement keeps the stock close to its 52-week low of $8.14, reflecting cautious investor sentiment amid ongoing operational changes and wildfire mitigation efforts.

Outlook & Guidance

The company expects to make its first settlement payment in early 2026, with plans to finance a second payment through debt in Q1 2026. Hawaiian Electric will provide further CapEx and rate base forecasts in November, as it continues to streamline its corporate structure.

Executive Commentary

"Our company’s investment thesis is stronger today than it has been at any point since the Maui wildfires," stated Scott Siu, President and CEO. CFO Scott DeGhetto added, "We have made a decision... our intention is to raise that money up at HEI and raise it in the form of either straight debt and or convertible debt."

Risks and Challenges

• Increased wildfire mitigation expenses and insurance costs.
• Transitioning to a simplified business model focused on regulated utility operations.
• Potential challenges in establishing a wildfire recovery fund.
• Need for legislative support for infrastructure resilience.
• Market volatility and economic uncertainties impacting utility operations.

Q&A

Analyst Nicholas Campanella from Barclays inquired about the financing of the second settlement payment and future CapEx outlook. CFO Scott DeGhetto confirmed plans to raise the second payment through debt at the HEI level, with further details on the rate base forecast expected in November.

Full transcript - Hawaiian Electric Industries Inc (HE) Q2 2025:

Audra, Conference Operator: Good afternoon. My name is Audra, and I will be your conference operator today. At this time, I would like to welcome everyone to the HEI Second Quarter twenty twenty five Earnings Conference Call. Today’s conference is being recorded. All lines have been placed on mute to prevent any background noise.

After the speakers’ remarks, there will be a question and answer session. At this time, I would like to turn the conference over to Matteo Garcia, Director of Investor Relations. Please go ahead.

Matteo Garcia, Director of Investor Relations, HEI: Thank you. Welcome everyone to HEI’s second quarter twenty twenty five earnings call. Joining me today are Scott Siu, HEI President and CEO Scott DeGhetto, HEI Executive Vice President and CFO Shelly Kimura, Hawaiian Electric President and CEO and other members of senior management. Our earnings release and our presentation for this call are available in the Investor Relations section of our website. As a reminder, forward looking statements will be made on today’s call.

Factors that could cause actual results to differ materially from expectations can be found in our presentation, our SEC filings and in the Investor Relations section of our website. Today’s presentation also includes references to non GAAP financial measures. You should refer to the information contained in the slides accompanying today’s presentation for definitional information and reconciliations of historical non GAAP measures to the closest GAAP financial measure. We will take questions from institutional investors at the end of this call. Individual investors and others can reach out to Investor Relations.

Now Scott Sioux will begin with his remarks.

Scott Siu, President and CEO, HEI: Aloha kakou. Welcome everyone. For today’s call, I’ll start with an update on our continued progress improving our company’s financial strength and resilience. I’ll also touch on the ongoing implementation of our wildfire safety strategy. Scott DeGhetto will then walk through our financial results and then we’ll open it up for questions.

In the second quarter, we continued to take actions ensuring the long term strength and resilience of HEI, while best positioning our company to serve the communities in which we operate for the long term. On our last earnings call, we discussed the Hawaii State Legislature’s passage of three important pieces of legislation. As a reminder, the legislation appropriates funds for the state’s contribution to the Maui wildfire tort litigation settlement, directs the Public Utilities Commission to establish an aggregate liability cap for economic damages from future wildfires and supports reliable, affordable clean energy procurement. In July, Governor Josh Green signed all three pieces of legislation into law. Under the liability cap legislation, which is now known as Act two fifty eight, the Public Utilities Commission will initiate a rulemaking proceeding to establish the maximum amount the utility may pay to resolve claims arising from future catastrophic wildfires.

There is no set time period for the Commission to establish the cap, as Act two fifty eight stipulates only that the cap shall be determined as soon as practical. The act also authorizes securitization to finance $500,000,000 of wildfire safety improvements and other infrastructure resilience investments. This will ensure that these critical safety improvements can be implemented at a lower cost to customers. In addition, PAC-two 58 directs the Commission to conduct a study to examine the establishment of a wildfire recovery fund to provide efficient compensation for damage resulting from future wildfires caused or exacerbated by an electric utility and to help protect the financial integrity of Hawaii’s regulated utilities. The Commission has already started the process of information gathering and collecting stakeholder input regarding the wildfire fund and will submit a report of its findings and recommendations to the Hawaii State Legislature twenty days prior to the start of the twenty twenty six legislative session, which takes place in mid January.

Turning to the settlement, we continue to see progress toward implementation of the Maui wildfire tort litigation settlement agreement. The process to obtain final court approval of the class and individual plaintiff agreements continues to proceed as expected. The parties are working through the remaining administrative steps necessary for the settlement to take effect and we still expect these steps to be completed in early twenty twenty six, which will then trigger our first payment obligation. Last quarter, we discussed our strategy to move forward with a simpler HEI business model. We’ve continued to make progress on this front since selling 90.1% of American Savings Bank at the end of last year and selling Pacific Current’s largest asset, the Hamakua Energy Plant, in the first quarter of this year.

Just this week, we announced the sale of Pacific Current’s solar and battery energy storage facilities on Kauai, Oahu and Maui. The strategic review is ongoing for Pacific Current’s remaining asset, a biomass plant on Kauai. We also expect to divest our remaining stake in American Savings Bank sometime over the next year. While we move forward with our strategy to focus solely on our utility business, the utility continues to remove risk from its system through implementation of the enhanced wildfire safety measures outlined in its wildfire safety strategy. In the second quarter, the utility advanced its four pillar approach to wildfire safety as laid out on Slide four, implementing technologies and practices that make our communities safer.

Over the next six to twelve months, the utility will expand the implementation of these measures from high wildfire risk areas to medium wildfire risk areas as well. These medium risk areas are also important to focus on, particularly given the backdrop of increasingly severe weather events seen elsewhere. With the wildfire safety strategy and legislative framework in place to better protect our communities from the risk of future wildfires, with the continued progress of the Maui wildfire tort litigation settlement and with our simpler, more focused business, our company’s path toward financial strength and resilience is clearer now than ever. We’re pleased to see that all three of our credit rating agencies have recognized this in recent months as we’ve received upgrades from Moody’s, S and P and Fitch. We know that it will take time to get back to investment grade.

However, we’ll continue to manage the metrics and a profile consistent with investment grade ratings. In summary, our company’s investment thesis is stronger today than it has been at any point since the Mali wildfires. We’ve made significant progress toward resolving the wildfire tort litigation, simplifying our corporate structure and improving our risk profile, and we believe we’re well positioned for a strong and resilient future. I’ll now hand the call off to Scott DeGhetto, who will take

Scott DeGhetto, Executive Vice President and CFO, HEI: you through the quarter’s financial results. Thank you, Scott. I’ll start with our financial results for the quarter on Slide five. In the second quarter, we generated net income of $26,100,000 or $0.15 per share. The quarter’s results include $5,400,000 of earnings impacts related to the sale of Pacific Current assets that Scott mentioned, primarily from the recapture of solar investment tax credits.

The quarter’s results also include $5,200,000 of pre tax Maui wildfire related expenses, net of insurance recoveries and deferrals. Approximately 4,500,000 of the $5,200,000 in Maui wildfire expenses was recorded at the utility. Excluding these items, consolidated core net income was $35,400,000 for the quarter or $0.20 per share. This compares to core net income from continuing operations of $28,400,000 or $0.26 per share in the 2024. Utility core net income for the quarter was $42,500,000 compared to $43,900,000 in the 2024.

The decrease in utility core net income was driven by higher wildfire mitigation program expenses and higher insurance costs, partially offset by higher annual revenue adjustment mechanism revenues and better heat rate performance. Holding company core net loss was $7,100,000 compared to $15,500,000 in the 2024. The lower core net loss was driven by lower interest expense due to lower holding company debt balance following the $384,000,000 debt retirement in April and higher interest income from holding company cash being held on the balance sheet primarily to make the first settlement payment. Turning to the next slide, I’ll provide a few key updates on our capitalization and liquidity. As of the end of the second quarter, the holding company and utility had approximately $44,000,000 and $106,000,000 of unrestricted cash on hand respectively.

In addition, the holding company has approximately $374,000,000 in combined liquidity available under its ATM program and credit facility capacity. The utility also has approximately $382,000,000 of liquidity available under its accounts receivable facility and credit facility capacity. The first settlement payment of $479,000,000 continues to be held in a subsidiary created for addressing the first installment payment pursuant to the Maui wildfire settlement. This is included in restricted cash on the balance sheet until we make the first settlement payment expected in early twenty twenty six. Looking ahead, HEI remains committed to a simpler more focused business model as we explore strategic alternatives for the remaining Pacific Current asset, a biomass facility on Kauai and our remaining 9.9% stake in American Savings Bank.

Lastly, Hawaiian Electric’s Board of Directors approved a $10,000,000 quarterly dividend to HEI for the 2025. At that, let’s open up the call to questions.

Audra, Conference Operator: Thank you. We will now begin the question and answer session. We’ll go first to Nicholas Campanella at Barclays.

Nicholas Campanella, Analyst, Barclays: Hey. Good morning or good afternoon. Hope everyone’s doing well. Thanks for the update.

Scott Siu, President and CEO, HEI: Yeah. Hi, Nick.

Nicholas Campanella, Analyst, Barclays: So hey. So so thanks for running through the financing and the liquidity slides. I think you set aside $4.79 for the first installment. Just updated thoughts on how you’re thinking about derisking that second payment. I understand you have a good amount of time before getting there, but are you waiting to get through these asset sales reviews?

Or could you do anything in the near term to maybe address that? Thanks.

Scott DeGhetto, Executive Vice President and CFO, HEI: Yes. No. Thanks for the question, Nick. It’s Scott DeGhetto. So in terms of the second payment, I think you know based upon the timeline that we believe the settlement is on, we wouldn’t look to raise that next payment probably until first quarter of next year.

That said, we have made a decision. So at this point, our intention is to raise that money up at HEI and raise it in the form, of either straight debt and or convertible debt. So it’ll be well, basically, we’ll be relevering, HEI for that second payment.

Nicholas Campanella, Analyst, Barclays: Okay. That’s great. And then you are kind of getting into the later innings of you know, having having clarity so just be able to give, you know, new CapEx outlook, new rate based forecast book. Could it could it be in any other thoughts there as it comes together?

Scott DeGhetto, Executive Vice President and CFO, HEI: Yeah. I think, Nick, if could repeat that. You were, going in and out. I don’t know if you’re on a cell phone.

Nicholas Campanella, Analyst, Barclays: I’m sorry. I hope that I’m I hope that I’m coming through okay. I was just asking, when you think you could give more of a view on the consolidated rate base growth in CapEx, with all the kind of moving pieces behind you.

Scott DeGhetto, Executive Vice President and CFO, HEI: Yes. Based upon the way we’re looking at it right now, we should be able to do that later this year, probably in the November time frame.

Matteo Garcia, Director of Investor Relations, HEI: Thank you.

Audra, Conference Operator: And that concludes our Q and A session. I will now turn the conference back over to Scott Sue for closing remarks.

Scott Siu, President and CEO, HEI: All right. Thank you again everybody for joining us today. In closing, we’re well positioned to continue serving our communities with safe, reliable and resilient utility operations for the long term. We really do believe that we are in a stronger position than at any point over the past two years. And this is a direct result of the actions we’ve taken to regain HEI’s financial strength and emerge a stronger company following the Maui wildfires.

With the expected resolution of the wildfire tort litigation, our simpler business model focused solely on regulated utility operations and our strong and improving safety profile, we are optimistic about our future. Thank you again.

Audra, Conference Operator: And this concludes today’s conference call. Thank you for your participation. You may now disconnect.

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