HEI Reports Third Quarter 2024 Results

Signed Settlement Agreements a Key Milestone in Efforts to Regain HEI’s Financial Strength

2Q Going Concern Matter Resolved

Utility and Bank Operations Remain Solid

• On November 4, HEI and Other Parties Finalized the Settlement Agreements to Resolve the Maui Wildfire Tort Litigation
• 3Q24 Net Loss of $104.4 million, or $0.91 Per Share, Includes an Additional $203.0 million ($150.7 million after tax) Accrual for Estimated Wildfire Liabilities From Tort-Related Legal Claims 1 , and a $35.2 million ($26.1 million after tax) Asset Impairment at Pacific Current
• Excluding the Additional Accrual of Estimated Wildfire Liabilities, Pacific Current Asset Impairment and Other Maui Wildfire-Related Expenses, Results Were Solid for the Quarter, with Core Net Income 2 and Core EPS 2 of $52.2 million and $0.46
• Utility Continues to Advance Wildfire Mitigation and Resilience Efforts
• Bank Net Interest Margin Expanded to 2.82%, Up 3 Basis Points Compared to 2Q
• Continued Strength of Bank Credit Quality and Capital Position

News Release from HEI, 11/08/2024

HONOLULU--(BUSINESS WIRE)-- Hawaiian Electric Industries, Inc. (NYSE - HE) (HEI) today reported a consolidated net loss for the third quarter of 2024 of $104.4 million, or $0.91 per share. The quarter’s results include an additional $203.0 million loss accrued for estimated wildfire liabilities from tort-related legal claims ($150.7 million after tax) 1 , and a $35.2 million asset impairment recorded at Pacific Current ($26.1 million after tax). Total insurance recoveries and deferrals, net of other wildfire-related expenses, provided a benefit of $27.4 million ($20.3 million after tax). Excluding these items, core net income 3 was $52.2 million for the third quarter of 2024 compared to $61.5 million in the third quarter of 2023.

“On Monday, HEI, Hawaiian Electric and other defendants signed definitive settlement agreements with individual and class plaintiffs in the Maui wildfire tort litigation. Our Board and management team are pleased to sign these final settlement agreements just three months after agreeing in principle to key terms. The signed agreements are an important milestone in our efforts to offer those who suffered loss an accelerated path to recovery, and to regain the financial strength of our enterprise. We remain confident that this settlement represents the best outcome for HEI and our community, and we are moving forward with a clearer line of sight toward resolution of the wildfire-related tort litigation,” said Scott Seu, HEI president and CEO.

“In the third quarter we took an additional accrual for estimated wildfire liabilities from tort-related legal claims, while also reclassifying a portion of the estimated liabilities as long term. The additional accrual and reclassification, along with the recent capital raise to fund the first settlement payment, allowed us to resolve the going concern matter disclosed in the previous quarter’s financials, and take another step toward regaining HEI’s financial strength.

“Our core operations performed well in the third quarter. The utility continued making important advancements on key strategic initiatives, such as wildfire mitigation and resilience efforts, and American Savings Bank generated strong net income and profitability, expanding net interest margin for a third consecutive quarter.

“In accordance with our strategy to support a strong, financially healthy enterprise that will empower a thriving future for Hawaii, HEI has been undertaking a comprehensive review of strategic options for Pacific Current, which is what led us to report a non-cash asset impairment for the quarter. We will continue to take prudent and measured actions to ensure our companies are well positioned to serve our customers and community for the long term,” said Seu.

There is no set timetable for HEI’s comprehensive review of strategic options for Pacific Current, and there can be no assurances that any actions regarding Pacific Current will result from this evaluation. Neither HEI nor Pacific Current expect to disclose or provide an update concerning developments related to this process unless or until HEI’s Board of Directors has approved a definitive course of action or otherwise determined that further disclosure is appropriate or necessary.

GOING CONCERN ASSESSMENT UPDATE

On September 25, 2024 HEI announced the successful closing on an offering of newly issued shares of common stock, resulting in $557.7 million in net proceeds. As noted in the prospectus supplement filed with the SEC on September 24, 2024, HEI intends to use the net proceeds to fund its contribution to the expected Maui wildfire tort litigation settlement and for general corporate purposes. HEI expects to pay the total $1.92 billion payment obligation in four equal annual installments of approximately $478.8 million, and the company is now positioned to fund HEI’s first settlement payment, which is expected to be required in late 2025. As a result, management has determined that the conditions that led to the substantial doubt regarding HEI’s ability to continue as a going concern have been mitigated.

HAWAIIAN ELECTRIC COMPANY (HAWAIIAN ELECTRIC) EARNINGS 4

Hawaiian Electric’s net loss for the third quarter of 2024 was $82.6 million, compared to net income of $43.5 million in the third quarter of 2023, with the decrease primarily driven by the following after-tax items:

• $121 million after-tax loss due to the accrual of additional estimated wildfire liabilities related to tort-related legal claims and cross claims as of September 30, 2024 (net of insurance recovery);
• $15 million in higher operations and maintenance (O&M) expenses, including $25 million of higher costs partially offset by $10 million of higher Maui windstorm and wildfire related expenses incurred in 2023. The $25 million in higher costs included higher property and general liability insurance costs, higher costs related to the settlement of indemnification claims asserted by the state, higher wildfire mitigation program expenses, settlement administration fees, the write-off of preliminary engineering costs related to federal grant applications that were not awarded, timing of maintenance outage work and increased station maintenance, among other items.

These items were partially offset by the following after-tax items:

• $5 million in higher revenues, including $4 million from the annual revenue adjustment mechanism and $1 million from the major project interim recovery mechanism;
• $2 million lower interest expense; and
• $2 million impact primarily from favorable tax rate adjustments.

Excluding incremental after-tax Maui windstorm and wildfire-related expenses net of insurance recoveries, Hawaiian Electric’s core net income 5 for the quarter was $43.7 million. Incremental after-tax Maui windstorm and wildfire-related expenses of $126.3 million were composed of $169.5 million of Maui wildfire-related expenses, net of $36.8 million of insurance-related recoveries and $6.4 million of costs deferred pursuant to the Public Utilities Commission’s decision allowing Hawaiian Electric to defer these costs.

Utility Dividend Update

The utility dividend to HEI continues to be suspended, as holding company cash needs are limited following HEI’s recent equity issuance and last year’s suspension of the dividend to HEI’s common equity shareholders.

AMERICAN SAVINGS BANK EARNINGS

ASB’s third quarter 2024 net income of $18.8 million compared to a net loss of $45.8 million in the second quarter of 2024 and net income of $11.4 million in the third quarter of 2023. Core net income for the third quarter was $19.4 million. 6

Total earning assets as of September 30, 2024 were $8.8 billion, down approximately 3.8% from December 31, 2023.

Total loans were $6.1 billion as of September 30, 2024, down 2.3% from December 31, 2023.

Total deposits were $8.0 billion as of September 30, 2024, down 1.8% from December 31, 2023. Core deposits declined 2.1% from December 31, 2023, while certificates of deposit were approximately flat. As of September 30, 2024, 83% of deposits were F.D.I.C. insured or fully collateralized, with approximately 79% of deposits F.D.I.C. insured. For the third quarter of 2024, the average cost of funds was 118 basis points, up from 115 basis points in the linked quarter and 102 basis points in the prior year quarter.

In the third quarter of 2024, ASB did not pay a dividend to HEI, supporting ASB’s healthy capital levels. ASB had a Tier 1 leverage ratio of 8.6% as of September 30, 2024.

Please refer to ASB’s news release issued on October 30, 2024 for additional information on ASB.

HOLDING AND OTHER COMPANIES

The holding and other companies’ net loss was $40.6 million in the third quarter of 2024 compared to $13.7 million in the third quarter of 2023. The quarter’s results include a $35.2 million ($26.1 million after tax) asset impairment recorded at Pacific Current in connection with the strategic review process underway, and $4.7 million ($3.5 million after tax) of Maui wildfire related expenses, net of insurance recoveries. Excluding the asset impairment and Maui wildfire-related expenses, core net loss 7 for the third quarter of 2024 was $10.9 million.

EARNINGS RELEASE, WEBCAST AND CONFERENCE CALL TO DISCUSS EARNINGS

HEI will conduct a webcast and conference call to review its third quarter 2024 consolidated financial results today at 11:30 a.m. Hawaii time (4:30 p.m. Eastern).

To listen to the conference call, dial 1-888-660-6377 (U.S.) or 1-929-203-0797 (international) and enter passcode 2393042. Parties may also access presentation materials (which include reconciliation of non-GAAP measures) and/or listen to the conference call by visiting the conference call link on HEI’s website at www.hei.com under “Investor Relations,” sub-heading “News and Events — Events and Presentations.”

A replay will be available online and via phone. The online replay will be available on HEI’s website about two hours after the event. The audio replay will also be available about two hours after the event through November 22, 2024. To access the audio replay, dial 1-800-770-2030 (U.S.) or 1-647-362-9199 (international) and enter passcode 2393042.

HEI and Hawaiian Electric Company, Inc. (Hawaiian Electric) intend to continue to use HEI’s website, www.hei.com , as a means of disclosing additional information; such disclosures will be included in the Investor Relations section of the website. Accordingly, investors should routinely monitor the Investor Relations section of HEI’s website, in addition to following HEI’s, Hawaiian Electric’s and ASB’s press releases, HEI’s and Hawaiian Electric’s Securities and Exchange Commission (SEC) filings and HEI’s public conference calls and webcasts. Investors may sign up to receive e-mail alerts via the “Investor Relations” section of the website. The information on HEI’s website is not incorporated by reference into this document or into HEI’s and Hawaiian Electric’s SEC filings unless, and except to the extent, specifically incorporated by reference.

Investors may also wish to refer to the Public Utilities Commission of the State of Hawaii (PUC) website at https://hpuc.my.site.com/cdms/s/ to review documents filed with, and issued by, the PUC. No information on the PUC website is incorporated by reference into this document or into HEI’s and Hawaiian Electric’s SEC filings.

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