HEI(HE) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For Q3 2024, the company recorded a consolidated net loss of $104.4 million or$0.91 per share, which included significant one-time losses related to wildfire liabilities and asset impairment [23][25] - The utility's core net income was $43.7 million, down from$53.8 million in the same quarter last year, primarily due to higher operating and maintenance (O&M) expenses [27] - The bank's core net income increased to $19.4 million from$17.6 million year-over-year, attributed to lower provisions for credit losses and higher non-interest income [28] Business Line Data and Key Metrics Changes - The utility's additional accrual of $203 million for wildfire liabilities contributed to the overall net loss, while the bank continued to perform strongly with net interest margin expansion [23][19] - The Pacific Current segment reported a$35.2 million pre-tax asset impairment charge as part of a strategic review [26] Market Data and Key Metrics Changes - The bank's balance sheet remains strong, with 83% of deposits being FDIC-insured or fully collateralized as of September 30 [20] - The utility has made significant investments in grid hardening and wildfire mitigation, which are expected to enhance resilience against various environmental risks [18][17] Company Strategy and Development Direction - The company is focused on a comprehensive review of strategic options for Pacific Current, with no set timetable for potential actions [21] - The utility has implemented a Public Safety Power Shutoff program and is enhancing operational strategies to mitigate wildfire risks [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the settlement agreement related to the Maui wildfires, viewing it as a positive step towards financial recovery [7][8] - The company plans to file a comprehensive wildfire mitigation plan by January 2025, indicating a proactive approach to future risks [18] Other Important Information - The company expects to make a total of $1.99 billion in pre-tax contributions under the settlement agreement, with payments structured over four years [9][25] - The utility received final approval for a$250 million accounts receivable backed credit facility, enhancing its financial flexibility [32] Q&A Session Summary Question: Is there an ongoing strategic review for the bank? - Management confirmed that a strategic review for both the bank and Pacific Current is ongoing [35] Question: What are the carrying costs or core earnings for Pacific Current this quarter? - Management declined to provide specific figures until a determination is made regarding the review [37] Question: What are the prospects for resolving settlements through negotiation? - Management indicated that while negotiations are possible, they are not directly involved in those discussions [39] Question: Will the company consider accelerating settlement payments? - Currently, the company anticipates adhering to the four-installment payment plan but retains the option to prepay if desired [40] Question: What are the thoughts on the upcoming review of the PBR Framework? - Management noted that a comprehensive review is underway, considering all developments, including the Maui wildfires [44]