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Section 1: 8-K (8-K)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: November 1, 2019
Exact Name of Registrant
Commission
I.R.S. Employer
as Specified in Its Charter
File Number
Identification No.
Hawaiian Electric Industries, Inc.
1-8503
99-0208097
Hawaiian Electric Company, Inc.
1-4955
99-0040500
State of Hawaii
(State or other jurisdiction of incorporation)
 1001 Bishop Street, Suite 2900, Honolulu, Hawaii  96813 - Hawaiian Electric Industries, Inc. (HEI)
1001 Bishop Street, Suite 2500, Honolulu, Hawaii  96813 - Hawaiian Electric Company, Inc. (Hawaiian Electric)
(Address of principal executive offices and zip code)
 Registrant’s telephone number, including area code:
 (808) 543-5662 - HEI
(808) 543-7771 - Hawaiian Electric
 900 Richards Street, Honolulu, Hawaii 96813 - Hawaiian Electric Company, Inc. (Hawaiian Electric)
(Former name or former address, if changed since last report.)
  
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to 12(b) of the Act:
Registrant
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Hawaiian Electric Industries, Inc.
Common Stock, Without Par Value
HE
New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule12b-2 of the Securities Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
Hawaiian Electric Industries, Inc.
Hawaiian Electric Company, Inc.
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Hawaiian Electric Industries, Inc.
Hawaiian Electric Company, Inc.




Item 2.02 Results of Operations and Financial Condition.
On November 1, 2019, HEI issued a news release, “HEI Reports Third Quarter 2019 Earnings.” This news release is furnished as HEI Exhibit 99.



Item 9.01 Financial Statements and Exhibits.

(d) Exhibits    
 
HEI Exhibit 99
News release, dated November 1, 2019, “HEI Reports Third Quarter 2019 Earnings”

The information furnished in connection with this current report on Form 8-K shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.















SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrants have duly caused this report to be signed on their behalf by the undersigned thereunto duly authorized. The signature of the undersigned companies shall be deemed to relate only to matters having reference to such companies and any subsidiaries thereof.

HAWAIIAN ELECTRIC INDUSTRIES, INC.
HAWAIIAN ELECTRIC COMPANY, INC.
(Registrant)
(Registrant)
/s/ Gregory C. Hazelton
/s/ Tayne S. Y. Sekimura
Gregory C. Hazelton
Tayne S. Y. Sekimura
Executive Vice President, Chief Financial
Senior Vice President and
Officer and Treasurer
Chief Financial Officer
 
 
 
 
Date: November 1, 2019
Date: November 1, 2019
 
 

1



EXHIBIT INDEX

        
Exhibit No.
Description
News release, dated November 1, 2019, “HEI Reports Third Quarter 2019 Earnings”


2
(Back To Top)

Section 2: EX-99 (EXHIBIT 99)

Exhibit


HEI Exhibit 99
400762485_heicatalyst2a31.jpg NEWS RELEASE
November 1, 2019

Contact:
Julie R. Smolinski
Telephone: (808) 543-7300
 
Director, Investor Relations & Strategic Planning
           E-mail: [email protected]
 
 
 
 
 
 
HEI REPORTS THIRD QUARTER 2019 EARNINGS

3Q 2019 Diluted Earnings Per Share (EPS) of $0.58
Utility Performing as Expected
Solid Loan Growth and Strong Capital Position at Bank

HONOLULU - Hawaiian Electric Industries, Inc. (NYSE - HE) (HEI) today reported consolidated net income for common stock for the third quarter of 2019 of $63.4 million and diluted earnings per share of $0.58 compared to $65.9 million and EPS of $0.60 for the third quarter of 2018.
“HEI’s third quarter earnings were consistent with our expectations, and we continue to execute well on key initiatives across our enterprise,” said Constance H. Lau, president and CEO of HEI. “Our utilities continue to work together with our communities and other stakeholders toward achieving a renewable energy future that’s affordable, reliable and resilient. This work includes the ongoing performance-based regulation process and our latest renewable energy and grid services request for proposals.”
“Our bank’s results and earnings growth reflect good performance in a volatile market environment. American continued to deliver strong loan growth and steady net interest margins despite the continued challenges of lower interest rates. In October, American completed the sale of its former headquarters,” said Lau.




1




HAWAIIAN ELECTRIC COMPANY EARNINGS
Hawaiian Electric Company’s (Hawaiian Electric)1 net income for the third quarter of 2019 was $46.8 million compared to $49.7 million in the third quarter of 2018, primarily driven by the following after-tax items:
$6 million revenue increase resulting from rate increases and higher rate adjustment mechanism (RAM) revenues, including $2 million from Hawaiian Electric (Oahu), $3 million from Maui Electric (Maui County), and $1 million from Hawaii Electric Light (Hawaii Island);
$2 million revenue increase from recovery of the Schofield generation project under the major project interim recovery (MPIR) mechanism;
$2 million from higher AFUDC and lower interest expense; and
$1 million in revenues from pole attachment fees.
These items were partially offset by the following after-tax items:
$8 million higher operations and maintenance expenses2 compared to the third quarter of 2018, primarily due to higher overhaul and maintenance expenses for generating facilities and higher vegetation management expenses;
$5 million in net income impact experienced in the third quarter of 2018 due to net favorable tax adjustments primarily related to differences between the 2017 year-end tax accrual and the filing of the 2017 tax return. There were no significant differences between the 2018 year-end tax accrual and the filing of the 2018 tax return that impacted net income in 2019; and
$2 million higher depreciation expense due to increasing investments for the integration of more renewable energy, improved customer reliability and greater system efficiency.    




_________________
Note:  Amounts indicated as after-tax in this earnings release are based upon adjusting items using the current year composite statutory tax rates of 25.75% for the utilities and 26.79% for the bank.
1 Hawaiian Electric, unless otherwise defined, refers to the three utilities, Hawaiian Electric Company, Inc. on Oahu, Hawaii Electric Light Company, Inc. on Hawaii Island, and Maui Electric Company, Limited, serving Maui County.

2 Includes pension but excludes other net income neutral expenses covered by surcharges or by third parties. See the “Explanation of HEI’s Use of Certain Unaudited Non-GAAP Measures” and the related reconciliation accompanying this release.


2




AMERICAN SAVINGS BANK EARNINGS
American Savings Bank’s (American) third quarter 2019 net income was $22.9 million compared to $17.0 million in the second, or linked, quarter and $21.2 million in the prior year quarter. The increase in net income compared to the linked and prior year quarters was driven by a lower provision expense, higher non-interest income, higher net interest income and, compared to the linked quarter, lower non-interest expense.
Total loans were $5.1 billion as of September 30, 2019, up $240.0 million or 6.6% annualized from December 31, 2018, driven mainly by increases in the home equity lines of credit, commercial, and commercial real estate portfolios.
Total deposits were $6.2 billion at September 30, 2019, an increase of $37.4 million or 0.8% annualized from December 31, 2018. Low-cost core deposits were $5.4 billion as of September 30, 2019.
American’s return on average equity3 was 13.7% in the third quarter of 2019 compared to 10.5% in the second quarter of 2019 and 13.8% in the prior year quarter. Return on average assets was 1.29% in the third quarter of 2019 compared to 0.96% in the second quarter of 2019 and 1.22% in the third quarter of 2018.
Please refer to American’s news release issued on October 30, 2019 for additional information on American.

HOLDING AND OTHER COMPANIES
The holding and other companies’ net loss was $6.2 million in the third quarter of 2019 compared to $5.0 million in the prior year quarter. The higher net loss was primarily due to higher interest expense associated with long-term debt issued in the fourth quarter of 2018.  
BOARD DECLARES QUARTERLY DIVIDEND
On October 31, 2019, the Board of Directors maintained HEI’s quarterly cash dividend of $0.32 per share, payable on December 10, 2019, to shareholders of record at the close of business on November 22, 2019 (ex-dividend date is November 21, 2019). The dividend would be equivalent to an annual rate of $1.28 per share. Dividends have been paid uninterrupted since 1901. At the indicated annual dividend rate and based on the closing price per share on October 31, 2019 of $45.15, HEI’s dividend yield is 2.8%.



______________
3 Bank return on average equity calculated using weighted average daily common equity.

3




WEBCAST AND CONFERENCE CALL TO DISCUSS EARNINGS AND EPS GUIDANCE
HEI will conduct a webcast and conference call to review its third quarter 2019 earnings and 2019 EPS guidance on Friday, November 1, 2019, at 10:15 a.m. Hawaii time (4:15 p.m. Eastern time).
Interested parties within the United States may listen to the conference by calling (844) 834-0652 and international parties may listen to the conference by calling (412) 317-5198 or by accessing the webcast on HEI’s website at www.hei.com under the “Investor Relations” section, sub-heading “News and Events.”  HEI and Hawaiian Electric intend to continue to use HEI’s website, www.hei.com, as a means of disclosing additional information. Such disclosures will be included on HEI’s website in the Investor Relations section.
Accordingly, investors should routinely monitor the Investor Relations section of HEI’s website at www.hei.com in addition to following HEI’s, Hawaiian Electric’s and American’s press releases, HEI’s and Hawaiian Electric’s Securities and Exchange Commission (SEC) filings and HEI’s public conference calls and webcasts. The information on HEI’s website is not incorporated by reference in this document or in HEI’s and Hawaiian Electric’s SEC filings unless, and except to the extent, specifically incorporated by reference. Investors may also wish to refer to the Public Utilities Commission of the State of Hawaii (PUC) website at dms.puc.hawaii.gov/dms in order to review documents filed with and issued by the PUC. No information on the PUC website is incorporated by reference in this document or in HEI’s and Hawaiian Electric’s SEC filings.
An online replay of the November 1, 2019 webcast will be available on HEI’s website beginning about two hours after the event. Audio replays of the conference call will also be available approximately two hours after the event through November 15, 2019, by dialing (877) 344-7529 or (412) 317-0088 and entering passcode: 10134898.
HEI supplies power to approximately 95% of Hawaii’s population through its electric utilities, Hawaiian Electric Company, Inc., Hawaii Electric Light Company, Inc. and Maui Electric Company, Limited; provides a wide array of banking and other financial services to consumers and businesses through American Savings Bank, one of Hawaii’s largest financial institutions; and helps advance Hawaii’s clean energy and sustainability goals through investments by its non-regulated subsidiary, Pacific Current, LLC.

4




FORWARD-LOOKING STATEMENTS
This release may contain “forward-looking statements,” which include statements that are predictive in nature, depend upon or refer to future events or conditions, and usually include words such as “will,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “predicts,” “estimates” or similar expressions. In addition, any statements concerning future financial performance, ongoing business strategies or prospects or possible future actions are also forward-looking statements. Forward-looking statements are based on current expectations and projections about future events and are subject to risks, uncertainties and the accuracy of assumptions concerning HEI and its subsidiaries, the performance of the industries in which they do business and economic, political and market factors, among other things. These forward-looking statements are not guarantees of future performance.
Forward-looking statements in this release should be read in conjunction with the “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” discussions (which are incorporated by reference herein) set forth in HEI’s Annual Report on Form 10-K for the year ended December 31, 2018 and HEI’s other periodic reports that discuss important factors that could cause HEI’s results to differ materially from those anticipated in such statements. These forward-looking statements speak only as of the date of the report, presentation or filing in which they are made. Except to the extent required by the federal securities laws, HEI, Hawaiian Electric, American and their subsidiaries undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

NON-GAAP MEASURES
See “Explanation of HEI’s Use of Certain Unaudited Non-GAAP Measures” and related reconciliations on pages 9 and 10 of this release.

###



5



Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME DATA
(Unaudited)
 
 
Three months ended September 30
 
Nine months ended September 30
(in thousands, except per share amounts)
 
2019
 
2018
 
2019
 
2018
Revenues
 
 
 
 
 
 
 
 
Electric utility
 
$
688,330

 
$
687,409

 
$
1,900,609

 
$
1,865,962

Bank
 
83,201

 
80,496

 
247,940

 
233,019

Other
 
4

 
143

 
86

 
218

Total revenues
 
771,535

 
768,048

 
2,148,635

 
2,099,199

Expenses
 
 
 
 
 
 
 
 
Electric utility
 
616,537

 
613,373

 
1,716,562

 
1,685,413

Bank
 
54,240

 
53,232

 
171,605

 
153,951

Other
 
3,450

 
3,379

 
12,589

 
11,083

Total expenses
 
674,227

 
669,984

 
1,900,756

 
1,850,447

Operating income (loss)
 
 
 
 
 
 
 
 
Electric utility
 
71,793

 
74,036

 
184,047

 
180,549

Bank
 
28,961

 
27,264

 
76,335

 
79,068

Other
 
(3,446
)
 
(3,236
)
 
(12,503
)
 
(10,865
)
Total operating income
 
97,308

 
98,064

 
247,879

 
248,752

Retirement defined benefits expense—other than service costs
 
(648
)
 
(1,276
)
 
(2,172
)
 
(4,673
)
Interest expense, net—other than on deposit liabilities and other bank borrowings
 
(22,425
)
 
(22,523
)
 
(69,081
)
 
(66,042
)
Allowance for borrowed funds used during construction
 
1,208

 
1,006

 
3,465

 
3,815

Allowance for equity funds used during construction
 
3,250

 
1,962

 
9,335

 
8,239

Income before income taxes
 
78,693

 
77,233

 
189,426

 
190,091

Income taxes
 
14,803

 
10,862

 
36,390

 
36,473

Net income
 
63,890

 
66,371

 
153,036

 
153,618

Preferred stock dividends of subsidiaries
 
471

 
471

 
1,417

 
1,417

Net income for common stock
 
$
63,419

 
$
65,900

 
$
151,619

 
$
152,201

Basic earnings per common share
 
$
0.58

 
$
0.61

 
$
1.39

 
$
1.40

Diluted earnings per common share
 
$
0.58

 
$
0.60

 
$
1.39

 
$
1.40

Dividends declared per common share
 
$
0.32

 
$
0.31

 
$
0.96

 
$
0.93

Weighted-average number of common shares outstanding
 
108,973

 
108,879

 
108,941

 
108,847

Weighted-average shares assuming dilution
 
109,363

 
109,055

 
109,378

 
109,090

Net income (loss) for common stock by segment
 
 
 
 
 
 
 
 
Electric utility
 
$
46,779

 
$
49,712

 
$
111,479

 
$
108,356

Bank
 
22,888

 
21,221

 
60,743

 
60,742

Other
 
(6,248
)
 
(5,033
)
 
(20,603
)
 
(16,897
)
Net income for common stock
 
$
63,419

 
$
65,900

 
$
151,619

 
$
152,201

Comprehensive income attributable to Hawaiian Electric Industries, Inc.
 
$
66,716

 
$
61,311

 
$
177,856

 
$
131,014

Return on average common equity (twelve months ended)1
 
 
 
 
 
9.2
%
 
8.7
%

This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI filings with the SEC.
Results of operations for interim periods are not necessarily indicative of results to be expected for future interim periods or the full year.
1 On a core basis, 2019 and 2018 returns on average common equity (twelve months ended September 30) were 9.2% and 9.4%, respectively.  See reconciliation of GAAP to non-GAAP measures.

6



Hawaiian Electric Company, Inc. (Hawaiian Electric) and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME DATA
(Unaudited)
 
 
Three months ended September 30
 
Nine months ended September 30
($ in thousands, except per barrel amounts)
 
2019
 
2018
 
2019
 
2018
Revenues
 
$
688,330

 
$
687,409

 
$
1,900,609

 
$
1,865,962

Expenses
 
 

 
 

 
 
 
 
Fuel oil
 
199,093

 
206,551

 
541,322

 
545,236

Purchased power
 
175,037

 
177,590

 
472,336

 
478,238

Other operation and maintenance
 
124,415

 
113,553

 
361,805

 
333,805

Depreciation
 
53,935

 
50,983

 
161,795

 
151,810

Taxes, other than income taxes
 
64,057

 
64,696

 
179,304

 
176,324

Total expenses
 
616,537

 
613,373

 
1,716,562

 
1,685,413

Operating income
 
71,793

 
74,036

 
184,047

 
180,549

Allowance for equity funds used during construction
 
3,250

 
1,962

 
9,335

 
8,239

Retirement defined benefits expense—other than service costs
 
(723
)
 
(682
)
 
(2,127
)
 
(2,934
)
Interest expense and other charges, net
 
(17,429
)
 
(18,968
)
 
(53,945
)
 
(54,822
)
Allowance for borrowed funds used during construction
 
1,208

 
1,006

 
3,465

 
3,815

Income before income taxes
 
58,099

 
57,354

 
140,775

 
134,847

Income taxes
 
10,822

 
7,144

 
27,800

 
24,995

Net income
 
47,277

 
50,210

 
112,975

 
109,852

Preferred stock dividends of subsidiaries
 
228

 
228

 
686

 
686

Net income attributable to Hawaiian Electric
 
47,049

 
49,982

 
112,289

 
109,166

Preferred stock dividends of Hawaiian Electric
 
270

 
270

 
810

 
810

Net income for common stock
 
$
46,779

 
$
49,712

 
$
111,479

 
$
108,356

Comprehensive income attributable to Hawaiian Electric
 
$
46,805

 
$
49,740

 
$
111,552

 
$
108,441

OTHER ELECTRIC UTILITY INFORMATION
 
 
 
 
 
 
 
 
Kilowatthour sales (millions)
 
 
 
 
 
 
 
 
   Hawaiian Electric
 
1,823

 
1,761

 
4,840

 
4,855

   Hawaii Electric Light
 
279

 
277

 
777

 
796

   Maui Electric
 
312

 
291

 
832

 
818

 
 
2,414

 
2,329

 
6,449

 
6,469

Average fuel oil cost per barrel
 
$
82.30

 
$
90.93

 
$
83.64

 
$
84.67

Return on average common equity (twelve months ended)1
 
 
 
 
 
7.6
%
 
7.2
%

This information should be read in conjunction with the consolidated financial statements and the notes thereto in Hawaiian Electric filings
with the SEC. Results of operations for interim periods are not necessarily indicative of results to be expected for future interim periods or the
full year.
1 Simple average. On a core basis, 2019 and 2018 returns on average common equity (twelve months ended September 30) were 7.6% and 7.7%, respectively.  See reconciliation of GAAP to non-GAAP measures.




7



American Savings Bank, F.S.B.
STATEMENTS OF INCOME DATA
(Unaudited)
 
 
Three months ended 
 
Nine months ended September 30
($ in thousands)
 
September 30, 2019
 
June 30, 2019
 
September 30, 2018
 
2019
 
2018
Interest and dividend income
 
 

 
 

 
 

 
 
 
 
Interest and fees on loans
 
$
59,260

 
$
58,620

 
$
55,885

 
$
175,740

 
$
163,318

Interest and dividends on investment securities
 
7,599

 
7,535

 
9,300

 
25,762

 
27,130

Total interest and dividend income
 
66,859

 
66,155

 
65,185

 
201,502

 
190,448

Interest expense
 
 

 
 
 
 
 
 
 
 
Interest on deposit liabilities
 
4,384

 
4,287

 
3,635

 
12,923

 
9,876

Interest on other borrowings
 
422

 
411

 
404

 
1,361

 
1,293

Total interest expense
 
4,806

 
4,698

 
4,039

 
14,284

 
11,169

Net interest income
 
62,053

 
61,457

 
61,146

 
187,218

 
179,279

Provision for loan losses
 
3,315

 
7,688

 
6,033

 
17,873

 
12,337

Net interest income after provision for loan losses
 
58,738

 
53,769

 
55,113

 
169,345

 
166,942

Noninterest income
 
 

 
 
 
 
 
 
 
 
Fees from other financial services
 
5,085

 
4,798

 
4,543

 
14,445

 
13,941

Fee income on deposit liabilities
 
5,320

 
5,004

 
5,454

 
15,402

 
15,781

Fee income on other financial products
 
1,706

 
1,830

 
1,746

 
5,129

 
5,075

Bank-owned life insurance
 
1,660

 
2,390

 
2,663

 
6,309

 
4,667

Mortgage banking income
 
1,490

 
976

 
169

 
3,080

 
1,399

Gains on sale of investment securities, net
 
653

 

 

 
653

 

Other income, net
 
428

 
534

 
736

 
1,420

 
1,708

Total noninterest income
 
16,342

 
15,532

 
15,311

 
46,438

 
42,571

Noninterest expense
 
 

 
 
 
 
 
 
 
 
Compensation and employee benefits
 
25,364

 
25,750

 
23,952

 
76,626

 
72,047

Occupancy
 
5,694

 
5,479

 
4,363

 
15,843

 
12,837

Data processing
 
3,763

 
3,852

 
3,583

 
11,353

 
10,587

Services
 
2,829

 
2,606

 
2,485

 
7,861

 
8,560

Equipment
 
2,163

 
2,189

 
1,783

 
6,416

 
5,385

Office supplies, printing and postage
 
1,297

 
1,663

 
1,556

 
4,320

 
4,554

Marketing
 
1,142

 
1,323

 
993

 
3,455

 
2,723

FDIC insurance
 
(5
)
 
628

 
638

 
1,249

 
2,078

Other expense
 
3,676

 
4,519

 
4,240

 
12,049

 
12,897

Total noninterest expense
 
45,923

 
48,009

 
43,593

 
139,172

 
131,668

Income before income taxes
 
29,157

 
21,292

 
26,831

 
76,611

 
77,845

Income taxes
 
6,269

 
4,276

 
5,610

 
15,868

 
17,103

Net income
 
$
22,888

 
$
17,016

 
$
21,221

 
$
60,743

 
$
60,742

Comprehensive income
 
$
26,697

 
$
31,291

 
$
16,480

 
$
85,079

 
$
39,944

OTHER BANK INFORMATION (annualized %, except as of period end)
 
 
 
 
 
 
 
 
Return on average assets
 
1.29

 
0.96

 
1.22

 
1.14

 
1.18

Return on average equity
 
13.75

 
10.46

 
13.80

 
12.44

 
13.32

Return on average tangible common equity
 
15.68

 
11.97

 
15.93

 
14.23

 
15.40

Net interest margin
 
3.82

 
3.82

 
3.81

 
3.87

 
3.78

Efficiency ratio
 
58.58

 
62.36

 
57.02

 
59.56

 
59.35

Net charge-offs to average loans outstanding
 
0.69

 
0.29

 
0.40

 
0.46

 
0.33

As of period end
 
 
 
 
 
 
 
 
 
 
Nonaccrual loans to loans receivable held for investment
 
0.63

 
0.79

 
0.59

 
 
 
 
Allowance for loan losses to loans outstanding
 
1.04

 
1.17

 
1.14

 
 
 
 
Tangible common equity to tangible assets
 
8.4

 
8.2

 
7.7

 
 
 
 
Tier-1 leverage ratio
 
8.8

 
8.7

 
8.6

 
 
 
 
Total capital ratio
 
14.0

 
14.0

 
13.8

 
 
 
 
Dividend paid to HEI (via ASB Hawaii, Inc.) ($ in millions)
 
$
14.0

 
$
15.0

 
$
14.0

 
$
47.0

 
$
36.0


This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI filings with the SEC.
Results of operations for interim periods are not necessarily indicative of results to be expected for future interim periods or the full year.

8



EXPLANATION OF HEI’S USE OF CERTAIN UNAUDITED NON-GAAP MEASURES
HEI and Hawaiian Electric management use certain non-GAAP measures, which exclude certain items that are not reflective of ongoing operations or that are not expected to reoccur, to evaluate the performance of HEI and the utility. Management believes these non-GAAP measures provide useful supplemental information and are a better indicator of the companies’ core operating activities. Core earnings and other financial measures as presented below may not be comparable to similarly titled measures used by other companies. The accompanying tables provide a reconciliation of reported GAAP1 earnings to non-GAAP core earnings and the adjusted return on average common equity (ROACE) for HEI and the utility.
The reconciling adjustments from GAAP earnings to core earnings exclude the 2017 impact of the federal tax reform act due to the adjustment of the deferred tax balances and the $1,000 non-executive employee bonuses paid by the bank related to federal tax reform. Management does not consider these items to be representative of the company’s fundamental core earnings. Management has shown adjusted non-GAAP (core) net income, adjusted non-GAAP (core) ROACE in order to provide better comparability of ROACE between periods.
The accompanying table also provides the calculation of utility GAAP other operation and maintenance (O&M) expense adjusted for “O&M-related net income neutral items,” which are O&M expenses covered by specific surcharges or by third parties. These “O&M-related net income neutral items” are grossed-up in revenue and expense and do not impact net income.
RECONCILIATION OF GAAP1 TO NON-GAAP MEASURES
 
 
 
Hawaiian Electric Industries, Inc. and Subsidiaries (HEI)
Unaudited
Twelve months ended September 30
($ in millions)
2019
 
2018
HEI CONSOLIDATED NET INCOME
 
 
 
GAAP (as reported)
$
201.2

 
$
184.6

Excluding special items (after-tax):
 
 
 
One-time non-executive bank employee bonus related to federal tax reform

 
0.7

Federal tax reform impacts2

 
13.4

Non-GAAP (core) net income
$
201.2

 
$
198.7

HEI CONSOLIDATED AVERAGE COMMON EQUITY
$
2,187.4

 
$
2,117.5

HEI CONSOLIDATED RETURN ON AVERAGE COMMON EQUITY (ROACE) (simple average)
 
 
 
Based on GAAP
9.2
%
 
8.7
%
Based on non-GAAP (core)3
9.2
%
 
9.4
%
 
 
 
 
Note: Columns may not foot due to rounding
 
 
 
1  Accounting principles generally accepted in the United States of America
 
 
 
2 Reflects the lower rates enacted by federal tax reform, primarily the adjustments to reduce the unregulated net deferred tax asset balances
3  Calculated as core net income divided by average GAAP common equity
 
 
 

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RECONCILIATION OF GAAP1 TO NON-GAAP MEASURES
 
 
Hawaiian Electric Company, Inc. (Hawaiian Electric) and Subsidiaries
Unaudited
 
 
 
 
 
Twelve months ended September 30
($ in millions)
 
 
 
2019
 
2018
HAWAIIAN ELECTRIC CONSOLIDATED NET INCOME
 
 
 
 
 
 
GAAP (as reported)
 
 
 
$
146.8

 
$
133.7

Excluding special items (after-tax):
 
 
 
 
 
 
Federal tax reform impacts2
 
 
 

 
9.2

Non-GAAP (core) net income
 
 
 
$
146.8

 
$
142.9

HAWAIIAN ELECTRIC CONSOLIDATED AVERAGE COMMON EQUITY
 
$
1,934.7

 
$
1,852.7

HAWAIIAN ELECTRIC CONSOLIDATED RETURN ON AVERAGE COMMON EQUITY (ROACE) (simple average)
 
 
 
 
Based on GAAP
 
 
 
7.6
%
 
7.2
%
Based on non-GAAP (core)3
 
 
 
7.6
%
 
7.7
%
 
 
 
 
 
 
 
 
Three months ended September 30
 
Nine months ended September 30
(in millions)
2019
2018
 
2019
 
2018
HAWAIIAN ELECTRIC CONSOLIDATED OTHER OPERATION AND MAINTENANCE (O&M) EXPENSE
 
 
 
 
 
 
GAAP (as reported)
$
124.4

$
113.6

 
$
361.8

 
$
333.8

Excluding other O&M-related net income neutral items4
0.4

0.2

 
0.5

 
0.7

Non-GAAP (Adjusted other O&M expense)
$
124.0

$
113.3


$
361.3

 
$
333.1

Note: Columns may not foot due to rounding
 
 
 
 
1  Accounting principles generally accepted in the United States of America
2  Reflects the lower rates enacted by federal tax reform, primarily the adjustments to reduce the unregulated net deferred tax asset balances
3  Calculated as core net income divided by average GAAP common equity
4  Expenses covered by surcharges or by third parties recorded in revenues

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