HEI Q2 2026 Earnings Call Summary

1Key Financial Results and Metrics

Net Income: $123.2 million, or $0.71 per share, influenced by a non-cash accounting adjustment related to the Maui wildfire settlement liability.

Core Net Income: $22.5 million ($0.13 per share), down from $35.4 million ($0.20) in Q2 2025.

Utility Core Net Income: $32.6 million, down from $42.5 million in the prior year, attributed to higher interest and operational expenses.

Total Liquidity: Approximately $1.3 billion, with $52 million and $186 million in unrestricted cash for the holding company and utility, respectively.

2Strategic Updates and Business Highlights

Wildfire Mitigation Plan (WMP): PUC approved a $350 million recovery plan through the Exceptional Project Recovery Mechanism (EPRM) and plans to seek securitization for cost recovery.

Rate Rebasing: A proposed $170 million base rate increase phased over two years, with a request for interim decision by December 2026 to implement the first phase by January 2027.

Integrated Grid Plan (IGP): Submitted an annual action plan update, focusing on affordability and competitive procurements for renewable energy, including a significant RFP for 1,650 GWh of renewable energy.

Credit Ratings Improvement: S&P upgraded HEI and Hawaiian Electric to double B-minus, recognizing efforts to reduce wildfire risk.

3Forward Guidance and Outlook

O&M Expenses: Expected to remain elevated due to inflationary pressures, increased vegetation management, and higher insurance costs.

Rate Case Timeline: Next rate case anticipated around 2032 after the current multi-year plan concludes.

Securitization Plans: Application for securitization of WMP costs to be submitted later this year, expected to reduce customer costs.

4Bad News, Challenges, or Points of Concern

Declining Core Metrics: Core net income and utility core net income decreased year-over-year, reflecting higher operational costs and interest expenses.

Increased O&M Costs: Anticipated higher O&M expenses due to inflation, storm response costs, and increased insurance premiums, which may impact profitability.

Regulatory Challenges: The PUC's request for a demonstration of need before advancing significant procurements could delay planned projects.

Competitive Pressures: JERA's proposal to establish a regulated generation utility raises questions about future competition and market dynamics in Hawaii.

5Notable Q&A Insights

Securitization Impact: If approved, the $350 million for WMP would not be included in the rate base, allowing for recovery through securitization.

Rate Case Filing: Future rate cases are expected to follow a structured timeline, with potential for earlier filings depending on regulatory developments.

O&M Cost Management: Management is actively addressing rising costs through operational efficiencies and strategic planning, though higher expenses are anticipated to persist.

Stakeholder Engagement: HEI remains committed to participating in discussions regarding JERA's proposal, emphasizing the need for any changes to serve the best interests of Hawaii's customers. Overall, HEI is navigating a transitional year with a focus on safety, affordability, and regulatory compliance while facing challenges related to rising operational costs and competitive pressures.