Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended September 30, 2025, for Hawaiian Electric Industries, Inc. (HEI) and its principal subsidiary, Hawaiian Electric Company, Inc. (Hawaiian Electric). HEI operates primarily through its electric utility subsidiaries serving Hawaii, excluding Kauai. The company recently divested its banking subsidiary (ASB) in December 2024 and is actively divesting non-utility assets, including the sale of Pacific Current's solar and battery storage facilities in August 2025 and Hamakua Holdings in March 2025.
Key Financial Metrics (Nine Months Ended Sept 30, 2025)
| Metric | HEI Consolidated | Hawaiian Electric |
|---|---|---|
| Total Revenues | $2,281.1 million | $2,268.3 million |
| Operating Income | $168.2 million | $203.3 million |
| Net Income (Common Stock) | $83.5 million | $124.0 million |
| Diluted EPS | $0.48 | N/A |
| Operating Cash Flow | $284.7 million | $320.0 million |
| Capital Expenditures | $255.5 million | $253.9 million |
| Long-Term Debt (Net) | $2,295.2 million | $2,057.6 million |
| Cash & Equivalents | $548.2 million | $503.9 million |
Note: HEI Consolidated figures include "All Other" segments (corporate, GLST1, Pacific Current). Hawaiian Electric figures represent the regulated utility operations.
Material Changes vs. Prior Period
- Profitability Improvement: HEI reported a net income of $83.5 million for the nine months ended Sept 30, 2025, a significant turnaround from a net loss of $1.36 billion in the same period of 2024. This improvement is primarily due to the absence of the $1.875 billion wildfire tort-related claim accrual recorded in 2024.
- Revenue Decline: Total revenues decreased by approximately 6% year-over-year. This was driven by lower fuel oil prices and reduced kilowatt-hour (kWh) generation, partially offset by higher Annual Revenue Adjustment (ARA) revenues.
- Asset Divestitures: The company completed the sale of Hamakua Holdings (March 2025) and Pacific Current's solar and battery storage assets (August 2025). A loss of $13.2 million was recorded on the Hamakua sale.
- Debt Management: HEI repaid $384 million of senior notes in April 2025 using proceeds from the ASB sale. Hawaiian Electric issued $500 million in new unsecured senior notes in September 2025.
Guidance, Outlook, and Risks
Maui Wildfire Settlement
HEI and Hawaiian Electric have entered into definitive settlement agreements to resolve tort-related legal claims arising from the August 2023 Maui windstorm and wildfires. The total contribution is approximately $1.99 billion, payable in four equal annual installments of roughly $479 million, with the first payment expected no sooner than early 2026. HEI has transferred the first installment amount into a restricted subsidiary (GLST1).
Liquidity and Capital Markets
Management believes current liquidity ($1.6 billion total available including credit facilities and cash) is sufficient for the next 12 months. However, the company faces challenges accessing capital markets due to below-investment-grade credit ratings. HEI has an at-the-market equity offering program for up to $250 million and is working on financing plans for remaining settlement payments.
Regulatory and Operational Risks
- Renewable Energy Transition: Delays in renewable projects and potential loss of federal tax credits due to new legislation (One Big Beautiful Bill Act) may impact the timeline for achieving 70% carbon reduction by 2030.
- Trade Policy: Potential tariffs on imported capital goods and battery components could increase project costs.
- Insurance: Remaining insurance coverage for wildfire-related claims is limited ($11 million excess liability, $72 million D&O), with future premiums expected to rise.
Investor Verification Checklist
- Settlement Finality: Verify the status of court approvals for the Class Settlement Agreement and the resolution of subrogation insurer claims, which are conditions precedent to payment.
- Financing Plan: Monitor HEI's progress in securing financing for the remaining $1.44 billion of wildfire settlement liabilities beyond the first installment.
- Regulatory Approvals: Track PUC decisions on the re-basing of target revenues for the next Multi-Year Rate Period (MRP2) and the implementation of the wheeling policies under Act 266.
- Renewable Project Viability: Assess the impact of federal tax credit changes and trade policies on the cost and timeline of Stage 3 renewable energy projects.
- Credit Ratings: Watch for further rating agency actions, as current below-investment-grade ratings constrain access to unsecured debt markets.