Hawaiian Electric Industries Inc (HE) Q3 2024 Earnings Call Highlights: Navigating Challenges ...

GuruFocus.com11-09

Consolidated Net Loss: $104.4 million or $0.91 per share for the third quarter. Wildfire Liabilities Accrual: Additional $203 million pre-tax loss recorded for estimated wildfire liabilities. Pacific ...

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GuruFocus has detected 5 Warning Signs with HE.\n\nRelease Date: November 08, 2024\nFor the complete transcript of the earnings call, please refer to the full earnings call transcript.\n Positive Points \n\nHawaiian Electric Industries Inc (NYSE:HE) finalized a definitive settlement agreement for the Maui wildfire tort litigation, providing a clearer path forward for the company.\nThe utility has rapidly advanced its wildfire risk mitigation strategies, including the implementation of a public safety power shutoff program and deployment of advanced technologies.\nAmerican Savings Bank, a subsidiary of HE, continues to perform well with strong net income and profitability, benefiting from strategic balance sheet repositioning.\nEconomic indicators in Hawaii remain healthy, supporting strong credit quality across the bank's loan portfolio.\nHE successfully closed an equity offering, raising approximately $558 million, which will be used to fund the first settlement payment and for general corporate purposes.\n\n Negative Points \n\nHE recorded a consolidated net loss of $104.4 million for the quarter, impacted by significant one-time losses related to wildfire liabilities and asset impairments.\nThe utility's core net income decreased due to higher operating and maintenance expenses, including costs related to wildfire mitigation and increased insurance premiums.\nHE faces ongoing legal proceedings with insurers regarding the Maui wildfire claims, adding uncertainty to the settlement process.\nThe company recorded a $35.2 million pre-tax asset impairment at Pacific Current, reflecting challenges in its strategic review process.\nDespite resolving the going concern issue, HE still faces significant financial obligations with the settlement payments scheduled over the next four years.\n\n Q & A Highlights \nQ: Can you provide an update on the strategic review of Pacific Current and the bank? A: Scott Seu, President and CEO, confirmed that the strategic review for both Pacific Current and the bank is ongoing. Scott DeGhetto, CFO, added that they will not comment further on the review processes until a determination is made by the Board.\nQ: What are the prospects of resolving the settlement with insurers through negotiation? A: Scott Seu mentioned that while it's possible for individual plaintiffs and subrogation plaintiffs to reach a negotiated agreement, Hawaiian Electric is not directly involved in these discussions.\nQ: Are you considering accelerating the settlement payments instead of the four-year installment plan? A: Scott DeGhetto stated that while they currently plan to pay over four installments, they have the option to pre-pay at any time with a 5.5% discount rate embedded in the settlement agreement.\nQ: How is the PBR framework review process progressing, and what are the implications of recent developments? A: Joe Viola, Senior VP, explained that the comprehensive review of the PBR framework is ongoing, with stakeholder meetings and commission staff involvement. The review will consider all developments, including the Maui wildfires, to design the next multi-year rate plan.\nQ: Were there any material differences between the definitive settlement agreement and the agreement in principle? A: Scott Seu confirmed that the terms of the definitive settlement agreement were consistent with the agreement in principle.\nQ: What caused the decrease in core utility income, and were there any one-time items involved? A: Paul Ito, CFO of Hawaiian Electric, noted that higher O&M costs, including wildfire mitigation efforts and one-time items like settlement administrative fees and state indemnification claims, contributed to the decrease. The one-time items amounted to approximately $2.6 million each after tax.\nFor the complete transcript of the earnings call, please refer to the full earnings call transcript.This article first appeared on \nGuruFocus.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.1","shortVersion":"4.29.1","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2482419409"}