HAWAIIAN ELECTRIC INDUSTRIES INC Q3 FY2024 earnings call

• On November 5, HEI, Hawaiian Electric, and other defendants entered into a definitive settlement agreement for Maui wildfire tort litigation, with HEI and Hawaiian Electric contributing a total of $1.99 billion pretax. - The utility has advanced its public safety power shutoff (PSPS) program, deployed 55 new weather stations and 39 AI-enhanced video cameras, and is making progress on grid hardening, including pole replacements and vegetation management. - The bank's core operations and earnings remain strong, with a stable deposit base and continued net interest margin expansion. - HEI is conducting a comprehensive review of strategic options for Pacific Current, resulting in a non-cash asset impairment charge.

In the third quarter, the utility's core net income was $43.7 million, compared to $53.8 million in the same quarter of the previous year. The bank's Bancorp net income was $19.4 million for the quarter, up from $17.6 million in the same quarter last year, driven by a lower provision for credit losses and higher non-interest income. Additionally, a pretax asset impairment charge of $35.2 million was recorded for Pacific Current related to the ongoing strategic review.

• The settlement amount will be paid in four equal annual installments, with the first payment expected in late 2025. - Proceeds from the September equity offering will be used to fund the first settlement payment and for general corporate purposes. - The going concern issue disclosed last quarter has been resolved.

• Uncertainty regarding the resolution of insurance claims as the Hawaii Supreme Court reviews the circuit court's order, which could impact the settlement. - Potential challenges in executing the multi-year settlement payment plan.

Q: Inquired about the strategic review of Pacific Current and carrying cost/core earnings.

A: Scott DeGhetto stated they would not comment further until the board makes a determination.

Q: Asked about the prospects of settlements through negotiation between subrogating insurers and plaintiffs.

A: Scott Seu said it was possible but they were not directly involved.

Q: Asked about accelerating the settlement payment.

A: Scott Seu mentioned they anticipate paying over four installments but had the option to prepay with a 5.5% discount rate.

Q: Inquired about the PBR framework review.

A: Joe Viola said the PBR comprehensive review was ongoing and would consider developments since 2021.

Q: Asked about differences in the definitive settlement agreement terms.

A: Scott Seu said the terms were consistent.

Q: Inquired about higher O&M at the utility.

A: Paul Ito cited higher O&M due to wildfire mitigation, settlement administrative fees, state indemnification claims, and higher insurance premiums.