Overview of HEI’s Financial Performance

HEI’s revenues decreased 3% to $897 million in the first quarter of 2024, compared to $928 million in the first quarter of 2023. This was primarily driven by lower fuel revenues at the utilities segment and lower sales at the “other” businesses segment, partly offset by higher revenues at the bank segment.

Operating income also decreased 18% to $76 million, due to lower operating income at the utilities segment and higher operating losses in the “other” businesses segment, partially offset by higher operating income at the bank segment.

Net income for common stock declined 23% to $42 million. This was largely due to lower net income at the utilities segment and higher net losses in the “other” segment, partially offset by higher net income at the bank segment.

Financial Metric	Q1 2024	Q1 2023	Change
Revenues	$897 million	$928 million	-3%
Operating Income	$76 million	$93 million	-18%
Net Income	$42 million	$55 million	-23%

Utilities Segment Performance

The utilities segment’s revenues declined by $41 million or 5% compared to the first quarter of 2023. This was primarily driven by:

• $58 million lower fuel oil revenues due to lower fuel prices and lower electricity generation
• Offset by $8 million higher purchased power revenues
  

Fuel expenses declined by $50 million due to lower fuel prices and electricity generation. Purchased power expenses increased by $7 million due to higher purchased electricity volumes.

Operation and maintenance expenses rose by $16 million, largely due to wildfire-related expenses, higher vegetation management costs, and increased corrective maintenance.

The segment’s net income declined by $8 million or 17%, as a result of the various factors discussed above.

Bank Segment Performance

The bank segment performed well in Q1 2024. Revenues rose by $12 million or 13%, driven by higher net interest income from loan growth and higher yields, along with increased noninterest income. However, higher deposit costs partially offset the increase in interest income.

Provision for credit losses was a net benefit of $3 million, as the bank had lower required reserves related to the Maui wildfires. Noninterest expenses increased by $2 million, primarily reflecting higher compensation expenses.

As a result, the bank’s net income rose by $2 million or 11% compared to Q1 2023.

Other Businesses Segment

The “other” segment, consisting of HEI’s non-utility businesses, saw its operating loss widen from $6 million in Q1 2023 to $12 million in Q1 2024. This was primarily attributable to impairment losses and lower asset performance at certain subsidiaries.

Financial Condition

HEI has taken actions to preserve liquidity, including fully drawing on its revolving credit facilities, suspending dividends, and reducing discretionary expenditures.

The company believes it has sufficient liquidity to meet its obligations in the near term. However, the potential wildfire-related liabilities create uncertainty around HEI’s longer-term financial condition.

Outlook

HEI faces ongoing uncertainty related to the impacts of the Maui wildfires, including significant potential damages sought in lawsuits. Higher interest rates and inflation also present headwinds.

However, the fundamentals of HEI’s utility and banking businesses remain strong. The company continues working to mitigate wildfire risks and make the investments needed to accelerate Hawaii’s transition toward renewable energy.