HE — Hawaiian Electric Industries, Inc.

HEI Q4 2025 Earnings Call Summary

1. Key Financial Results and Metrics

• Net Income: HEI reported a net income of $123.1 million or $0.71 per share for 2025, a significant recovery from a net loss of approximately $1.4 billion in 2024.
• Core Net Income: Excluding non-core items, consolidated core net income was $149.3 million or $0.86 per share, compared to $124.3 million or $0.98 per share in 2024.
• Utility Core Net Income: Decreased slightly to $177.5 million from $180.7 million in 2024, attributed to higher operational expenses.
• Cash Position: At the end of Q4, the holding company had $16 million in unrestricted cash, while the utility had $486 million. Combined liquidity available was approximately $1.1 billion.

2. Strategic Updates and Business Highlights

• Maui Wildfire Settlement: Progress was made in finalizing the tort settlement related to the 2023 Maui wildfires, with court approvals moving forward. The company anticipates making the first $479 million settlement payment in the second half of 2026.
• Legislative Measures: HEI is actively pursuing legislative support for wildfire safety and financial stability, with a three-year wildfire safety strategy approved by the PUC.
• Renewable Energy Goals: The utility achieved a 37% renewable portfolio standard (RPS) in 2025, on track to meet the 40% target by 2030.
• Financial Assistance: HEI provided over $1 million in payment assistance to working families, maintaining stable customer bills despite significant investments in safety and resilience.

3. Forward Guidance and Outlook

• 2026 Objectives: HEI plans to continue resolving litigation conditions, advance rate rebasing efforts, and implement wildfire risk reduction measures. The company expects capital expenditures (CapEx) of $550 million to $700 million in 2026, increasing in subsequent years.
• PBR Framework: A joint rebasing proposal is set to be submitted by March 6, focusing on innovative rate-setting processes and potential improvements to performance incentive mechanisms (PIMs).

4. Bad News, Challenges, or Points of Concern

• Ongoing Litigation: The company faces risks associated with outstanding appeals from subrogation insurers, which could delay settlement payments.
• Operational Costs: Increased operational and maintenance expenses have impacted utility core net income, raising concerns about cost management amid ongoing investments.
• Leadership Transition: The upcoming transition in CFO roles may introduce uncertainties, although the outgoing CFO will remain as a consultant.

5. Notable Q&A Insights

• Insurers' Appeal: Management expressed cautious optimism regarding the likelihood of the Hawaii Supreme Court denying the insurers' appeal, viewing it as a final step in the settlement process.
• Financing Plans: The company is leaning towards utilizing convertible debt for financing the second settlement payment, with no plans to raise funds until after settlement approval.
• PBR Rebasement Details: Key elements of the upcoming joint proposal include adjustments to the inflationary factor and refining PIMs to ensure they are achievable and meaningful.
• Wildfire Fund Timeline: The liability cap process is expected to take 18 to 24 months, with no immediate legislative actions anticipated in 2026.

Overall, HEI demonstrated a strong recovery in financial performance while navigating significant challenges related to wildfire litigation and operational costs. The company is focused on strategic initiatives to enhance safety, sustainability, and regulatory compliance moving forward.