HE — Hawaiian Electric Industries, Inc.

Summary of Hawaiian Electric Industries, Inc. Q1 2026 Earnings Call

1. Key Financial Results and Metrics

• Net Income: $30.5 million ($0.18 per share), up from $26.7 million ($0.15 per share) in Q1 2025.
• Core Net Income: $31 million ($0.18 per share), down from $39.8 million ($0.23 per share) in Q1 2025.
• Utility Core Net Income: $35.7 million, down from $49.7 million in the prior year, primarily due to increased O&M expenses from severe weather events.
• Holding Company Core Net Loss: $4.8 million, improved from $9.9 million in 2025.
• Liquidity Position: Approximately $1 billion in liquidity, including cash and credit facilities, positioning the company to manage increased working capital requirements due to rising fuel costs.

2. Strategic Updates and Business Highlights

• Maui Wildfire Settlement: The company made its first payment of $479 million as part of a comprehensive settlement agreement related to the 2023 Maui wildfires, marking a significant milestone in the recovery process.
• Wildfire Mitigation Plan: Submitted an updated wildfire mitigation plan to the Public Utilities Commission (PUC) aimed at reducing wildfire risks and enhancing grid resilience.
• Rate Rebasing Proposal: Submitted a joint rate rebasing request, proposing a 5.3% increase in base rates phased over two years, aimed at moderating customer impacts while allowing necessary investments.
• Waial Generating Station: Received PUC approval for the repowering project, with an expected CapEx of $157 million in 2026, although total costs may exceed initial estimates due to inflation.

3. Forward Guidance and Outlook

• 2026 Outlook: Expected to be a transitional year with a focus on strengthening financial foundations and addressing affordability amid rising fuel costs.
• Rate Rebasing: Anticipated approval of the rate rebasing request, which is designed to address increased operational costs and support long-term financial stability.
• Performance Incentive Mechanisms (PIMs): Proposed changes to make PIMs more achievable and aligned with utility performance.

4. Bad News, Challenges, or Points of Concern

• Increased O&M Expenses: Higher operational costs due to severe weather events and increased insurance premiums are expected to significantly outpace inflation in 2026.
• Fuel Cost Volatility: Rising global oil prices are impacting working capital and customer bills, with potential for increased bad debt expenses if high prices persist.
• Regulatory Uncertainty: The timeline for the PUC's decision on the rate rebasing proposal and the wildfire liability cap remains unclear, adding uncertainty to future financial performance.

5. Notable Q&A Insights

• Rebasing Proposal Clarification: No changes to the proposed phasing of the revenue increase were confirmed, and the PUC is expected to provide procedural guidance soon.
• Carrying Costs for Waial Project: The company will accrue Allowance for Funds Used During Construction (AFUDC) at its current approved rate until the project is in service.
• Rating Agency Feedback: Agencies are focused on the outcomes of rate rebasing, wildfire risk reduction efforts, and the liability cap as factors for potential upgrades.
• Bad Debt Expectations: Historical trends suggest that bad debt could increase significantly if elevated fuel prices persist, but the company feels prepared to manage this risk.

Overall, Hawaiian Electric Industries is navigating a year of transition with a focus on recovery from past crises, addressing operational challenges, and positioning for future growth amidst regulatory and market uncertainties.