Business Context and Reporting Period
This Form 10-K covers the fiscal year ended December 31, 2024, for Hawaiian Electric Industries, Inc. (HEI) and its principal subsidiary, Hawaiian Electric Company, Inc. (Hawaiian Electric). HEI is a holding company primarily engaged in the electric utility business through its regulated subsidiaries (Hawaiian Electric, Hawaii Electric Light, and Maui Electric) and non-regulated renewable energy investments via Pacific Current. A significant corporate development occurred on December 31, 2024, when HEI sold 90.1% of American Savings Bank, F.S.B. (ASB), resulting in the bank's operations being classified as discontinued operations. The company's operations are concentrated in Hawaii, serving approximately 95% of the state's population across five isolated grids.
Key Financial Metrics
| Metric | 2024 | 2023 |
|---|---|---|
| Total Revenues | $3,220 million | $3,288 million |
| Operating Income (Loss) | $(1,707) million | $275 million |
| Net Income (Loss) from Continuing Operations | $(1,323) million | $146 million |
| Net Income (Loss) for Common Stock | $(1,426) million | $199 million |
| Diluted EPS (Continuing Ops) | $(10.42) | $1.33 |
| Long-Term Debt (Net) | $2,690 million | $2,826 million |
| Cash and Cash Equivalents | $751 million | $244 million |
| Total Available Liquidity | $1,153 million | Not explicitly stated |
Note: 2024 results include a $1.92 billion pre-tax provision for wildfire tort-related claims. Discontinued operations (ASB) resulted in a net loss of $103 million in 2024.
Material Changes vs. Prior Period
- Wildfire Settlement Accrual: The primary driver of the 2024 net loss was the accrual of approximately $1.92 billion related to the settlement of tort claims arising from the August 2023 Maui windstorm and wildfires. This represents a massive increase from the $75 million provision recorded in 2023.
- Discontinued Operations: The sale of ASB on December 31, 2024, removed the bank segment from continuing operations. The sale generated $405.5 million in proceeds but resulted in a net loss on the sale of $115.8 million.
- Revenue Decline: Total revenues decreased by 2% to $3.22 billion, driven by lower fuel oil prices and a slight decrease in kilowatt-hour sales volume, partially offset by higher Annual Revenue Adjustment (ARA) revenues.
- Dividend Suspension: HEI suspended its quarterly cash dividend in August 2023 to preserve liquidity for wildfire restoration and settlement obligations. No dividends were paid in 2024.
Guidance, Outlook, and Risks
- Settlement Payments: HEI and Hawaiian Electric have agreed to a settlement totaling $1.99 billion (including a prior $75 million humanitarian contribution) to resolve Maui wildfire tort claims. Payments are structured in four equal annual installments of approximately $479 million, with the first payment expected no earlier than the fourth quarter of 2025.
- Financing Needs: While HEI raised approximately $557.7 million via a common stock offering in September 2024 to fund the first settlement installment, the company is actively working on financing plans to raise the remaining capital required for the subsequent three installments ($1.44 billion).
- Credit Ratings: Credit ratings for HEI and Hawaiian Electric were downgraded to below investment grade (e.g., B/B1/B- by major agencies) in August 2023. This restricts access to capital markets and increases borrowing costs. The outlook remains negative or stable depending on the agency.
- Going Concern: Management previously disclosed substantial doubt about the company's ability to continue as a going concern in Q2 2024. However, management believes that current cash balances, restricted cash, available credit facilities, and the recent equity offering have alleviated these conditions for the next 12 months.
- Regulatory Risks: The company faces risks related to the Public Utilities Commission of Hawaii (PUC) regarding the recovery of wildfire-related costs, the implementation of performance-based regulation, and the potential for penalties if Renewable Portfolio Standards (RPS) are not met.
Key Facts for Investor Verification
- Settlement Finality: Verify the status of court approvals and the resolution of insurer subrogation claims, which are conditions precedent to the settlement payments becoming due.
- Financing Execution: Monitor the company's progress in securing the additional financing required for the remaining $1.44 billion in settlement payments, given current below-investment-grade credit ratings.
- Dividend Restrictions: Confirm the status of the PUC Agreement restrictions on dividends, as the electric utility subsidiaries' common stock equity fell to 33% of total capitalization (below the 35% threshold) as of December 31, 2024.
- Insurance Recoveries: Track the realization of insurance recoveries, as the company estimates approximately $13 million, nil, and $122 million of remaining coverage under excess liability, professional liability, and directors and officers policies, respectively.
- Renewable Energy Progress: Assess the impact of credit rating downgrades on the ability of Independent Power Producers (IPPs) to finance new renewable projects, which could delay the company's decarbonization goals and RPS compliance.