Toggle SGML Header (+)


Section 1: 8-K (8-K)

he-20200505
00003547070000046207falsefalse00003547072020-05-052020-05-050000354707he:HawaiianElectricCompanyInc.Member2020-05-052020-05-05

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: May 5, 2020
Exact Name of RegistrantCommissionI.R.S. Employer
as Specified in Its CharterFile NumberIdentification No.
Hawaiian Electric Industries, Inc.1-850399-0208097
Hawaiian Electric Company, Inc.1-495599-0040500
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
  Not applicable
(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:
RegistrantTitle of each classTrading Symbol(s)Name of each exchange on which registered
Hawaiian Electric Industries, Inc.Common Stock, Without Par ValueHENew 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 May 5, 2020, HEI issued a news release, “HEI Reports First Quarter 2020 Results.” This news release is furnished as HEI Exhibit 99.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits 
News release, dated May 5, 2020, “HEI Reports First Quarter 2020 Results”
104Cover Page Interactive Data File (embedded within the Inline XBRL document)

The information furnished in connection with Item 2.02 of this current report on Form 8-K including HEI Exhibit 99 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. HazeltonTayne S. Y. Sekimura
Executive Vice President andSenior Vice President and
Chief Financial OfficerChief Financial Officer
Date: May 5, 2020Date: May 5, 2020

1
(Back To Top)

Section 2: EX-99 (EX-99)

Document

HEI Exhibit 99
403866227_heicatalyst2a391.jpg NEWS RELEASE
May 5, 2020

Contact:Julie R. Smolinski Telephone: (808) 543-7300
Director, Investor Relations & Strategic Planning           E-mail: ir@hei.com
HEI REPORTS FIRST QUARTER 2020 RESULTS

1Q 2020 Diluted Earnings Per Share (EPS)1 of $0.31
Focused on Supporting Our Customers and Communities, Contributing to Hawaii’s Recovery
Solid Liquidity Enterprise-wide


HONOLULU - Hawaiian Electric Industries, Inc. (NYSE - HE) (HEI) today reported consolidated net income for common stock for the first quarter of 2020 of $33.4 million and EPS of $0.31 compared to $45.7 million and EPS of $0.42 for the first quarter of 2019.
“Hawaii is facing an unprecedented challenge from the COVID-19 pandemic, and we’re especially mindful of the essential roles our companies play,” said Constance H. Lau, president and CEO of HEI. “Through our utility, we provide reliable electricity to keep our hospitals, homes and essential businesses running, and through our bank, we help ensure that money keeps flowing through our economy. I’m proud of the dedication of our employees in continuing to provide these essential services to our customers and communities throughout this challenging time, even with personal risk to themselves and their families.
“HEI entered this crisis in a strong financial position, and that has served us well to weather the challenges of COVID-19. We’ve also taken steps to further enhance our strong liquidity position, which has further enabled our companies to implement a number of programs to support our customers and communities through this uncertain time. We’re also focused on how we can help support and advance our state’s recovery, and we continue to partner with stakeholders to progress clean energy projects and identify opportunities to rebuild our economy with Hawaii’s green economy goals in mind.
“American Savings Bank’s results reflect solid execution and good loan and deposit growth as the team kicked off 2020, however an increase in the allowance for credit losses was necessary to reflect the
_____________
1  Unless otherwise indicated, throughout this release earnings per share (EPS) refers to diluted earnings per share.
1


challenges customers face due to the economic crisis that began towards quarter end. The bank’s healthy capital and liquidity position has enabled it to help customers and the community move toward recovery, particularly through helping customers and non-customers obtain needed funding under the Small Business Administration’s Paycheck Protection Program. We are proud that American secured over $300 million in federal loans to approximately 2,500 small businesses employing roughly 40,000 in the first authorization, and that Hawaii banks in total obtained funding for 78% of our state’s eligible payrolls. American remains focused on helping our customers through this challenging time and supporting our state as we move toward recovery.” said Lau.

HAWAIIAN ELECTRIC COMPANY EARNINGS
        Hawaiian Electric Company’s (Hawaiian Electric) net income for the first quarter of 2020 was $23.9 million, compared to $32.1 million in the first quarter of 2019, primarily driven by the following after-tax items:
$3 million revenue increase resulting from higher rate adjustment mechanism (RAM) revenues, including $2 million from Hawaiian Electric (Oahu), and $1 million total from Maui Electric (Maui County) and Hawaii Electric Light (Hawaii Island);
$1 million revenue increase from recovery of the West Loch project and Grid Modernization projects under the major project interim recovery (MPIR) mechanism; and
$1 million lower interest expense due to debt refinancings in 2019 at lower rates.
These items were more than offset by the following after-tax items:
$7 million higher operations and maintenance expenses compared to the first quarter of 2019, primarily due to $2 million higher bad debt expense due to the economic impact of the COVID-19 pandemic on customers, the absence of a one-time net income benefit recorded in the first quarter of 2019 related to the Public Utilities Commission granting deferral treatment of certain previously-incurred expenses to modify existing generating units on Maui, an increase in vegetation management work and higher outside services costs related to customer service operations and energy management systems;
$1 million higher depreciation expense due to increasing investments for the integration of more renewable energy, improved customer reliability and greater system efficiency;
$1 million due to the absence of the performance incentive received in 2019 for procurement of renewable resources;

_________________
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.
2



$1 million due to revenues received for mutual assistance work reimbursement in 2019; and
$1 million due to lower allowance for funds used during construction as there were fewer long-duration projects in construction work in progress in 2020.

AMERICAN SAVINGS BANK EARNINGS
American Savings Bank’s (American) first quarter 2020 net income was $15.8 million compared to $28.2 million in the fourth, or linked quarter of 2019, which included an after tax gain of $7.7 million2 related to the sales of former properties, net of exit costs to transition to American’s new campus, and $20.8 million in the first quarter of 2019. The decrease in net income compared to the linked and prior
year quarters reflects a higher provision for credit losses due to additional credit loss reserves related to
COVID-19, and, compared to the linked quarter, lower noninterest income due to the aforementioned gain on sale of properties.
Total loans were $5.2 billion as of March 31, 2020, up 4.7% annualized from December 31, 2019, driven mainly by increases in the commercial and commercial real estate portfolios, offset by reductions in the retail loan portfolios.
Total deposits were $6.4 billion as of March 31, 2020, an increase of 7.1% annualized from December 31, 2019. The average cost of funds was 0.24% for the quarter, down two basis points versus the linked quarter and down seven basis points versus the prior year quarter.
Overall, American’s return on average equity3 for the first quarter of 2020 was 9.1%, compared to 16.5% in the linked quarter and 13.1% in the first quarter of 2019. Return on average assets was 0.87% for the first quarter of 2020, compared to 1.58% in the linked quarter and 1.18% in the same quarter last year. Return on average equity and return on average assets for the linked quarter were elevated as a result of the previously mentioned net gain on sale of properties.
Please refer to American’s news release issued on April 30, 2020 for additional information on American.

HOLDING AND OTHER COMPANIES
The holding and other companies’ net loss was $6.2 million for the first quarter of 2020 compared to $7.3 million in the prior year quarter. The lower net loss was primarily due to lower corporate expenses.
_____________
2  The after-tax gain on sale of properties and the after-tax campus transition costs for the fourth quarter of 2019 were $7.9 million and $0.2 million, respectively.
3   Bank return on average equity calculated using weighted average daily common equity.

3


BOARD MAINTAINS QUARTERLY DIVIDEND
        On May 4, 2020, the Board of Directors maintained HEI’s quarterly cash dividend of $0.33 per share payable on June 10, 2020, to shareholders of record at the close of business on May 22, 2020 (ex-
dividend date is May 21, 2020). This quarterly dividend is equivalent to an annual rate of $1.32 per share. Dividends have been paid on an uninterrupted basis since 1901. At the indicated annual dividend rate and based on the closing price per share on May 4, 2020 of $38.32, HEI’s dividend yield is 3.4%.

HEI EARNINGS RELEASE, HEI WEBCAST AND CONFERENCE CALL TO DISCUSS EARNINGS AND 2020 GUIDANCE
HEI will conduct a webcast and conference call to review its consolidated earnings, including American’s earnings, and 2020 earnings guidance and outlook at 7:30 a.m. Hawaii time (1:30 p.m. Eastern time) on Tuesday, May 5, 2020.
 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. Parties may also access any presentation materials for the conference call and/or listen to the conference call by accessing the webcast on HEI’s website at www.hei.com under the “Investor Relations” section, sub-heading “News and Events – Events and Presentations.”
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 on-line replay of the May 5, 2020 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 May 19, 2020 by dialing (877) 344-7529 or (412) 317-0088 and entering passcode 10142250.
HEI supplies power to approximately 95% of Hawaii’s population through its electric utility, Hawaiian Electric; provides a wide array of banking and other financial services to consumers and
4


businesses through American, 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.

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, 2019 and HEI’s and Hawaiian Electric’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 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 release, 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.

###
5



Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME DATA
(Unaudited)
Three months ended March 31,
(in thousands, except per share amounts)20202019
Revenues
Electric utility$597,442  $578,495  
Bank79,738  83,052  
Other 68  
Total revenues677,186  661,615  
Expenses 
Electric utility553,484  521,935  
Bank
60,335  56,930  
Other3,665  4,813  
Total expenses617,484  583,678  
Operating income (loss) 
Electric utility43,958  56,560  
Bank19,403  26,122  
Other(3,659) (4,745) 
Total operating income59,702  77,937  
Retirement defined benefits expense—other than service costs(934) (763) 
Interest expense, net—other than on deposit liabilities and other bank borrowings
(21,775) (23,123) 
Allowance for borrowed funds used during construction688  1,078  
Allowance for equity funds used during construction2,015  2,910  
Income before income taxes39,696  58,039  
Income taxes5,803  11,878  
Net income33,893  46,161  
Preferred stock dividends of subsidiaries473  473  
Net income for common stock$33,420  $45,688  
Basic earnings per common share$0.31  $0.42  
Diluted earnings per common share$0.31  $0.42  
Dividends declared per common share$0.33  $0.32  
Weighted-average number of common shares outstanding
109,051  108,913  
Weighted-average shares assuming dilution109,365  109,268  
Net income (loss) for common stock by segment
Electric utility$23,905  $32,126  
Bank15,761  20,839  
Other(6,246) (7,277) 
Net income for common stock$33,420  $45,688  
Comprehensive income attributable to Hawaiian Electric Industries, Inc.
$51,632  $54,929  
Return on average common equity (twelve months ended)9.2 %9.7 %

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.

6


Hawaiian Electric Company, Inc. (Hawaiian Electric) and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME DATA
(Unaudited)
Three months ended March 31,
($ in thousands, except per barrel amounts)20202019
Revenues$597,442  $578,495  
Expenses
Fuel oil173,221  160,609  
Purchased power139,816  134,445  
Other operation and maintenance127,547  118,130  
Depreciation55,850  53,947  
Taxes, other than income taxes57,050  54,804  
Total expenses553,484  521,935  
Operating income43,958  56,560  
Allowance for equity funds used during construction2,015  2,910  
Retirement defined benefits expense—other than service costs(381) (703) 
Interest expense and other charges, net(16,594) (17,986) 
Allowance for borrowed funds used during construction688  1,078  
Income before income taxes29,686  41,859  
Income taxes5,282  9,234  
Net income24,404  32,625  
Preferred stock dividends of subsidiaries229  229  
Net income attributable to Hawaiian Electric24,175  32,396  
Preferred stock dividends of Hawaiian Electric270  270  
Net income for common stock$23,905  $32,126  
Comprehensive income attributable to Hawaiian Electric$23,931  $32,150  
OTHER ELECTRIC UTILITY INFORMATION
Kilowatthour sales (millions)
   Hawaiian Electric1,496  1,424  
   Hawaii Electric Light252  245  
   Maui Electric258  247  
2,006  1,916  
Average fuel oil cost per barrel$80.78  $80.39  
Return on average common equity (twelve months ended)1
7.4 %7.8 %

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.



7


American Savings Bank, F.S.B.
STATEMENTS OF INCOME DATA
(Unaudited)
 Three months ended 
($ in thousands)March 31, 2020December 31, 2019March 31, 2019
Interest and dividend income   
Interest and fees on loans$55,545  $57,892  $57,860  
Interest and dividends on investment securities9,430  7,160  10,628  
Total interest and dividend income64,975  65,052  68,488  
Interest expense
Interest on deposit liabilities3,587  3,907  4,252  
Interest on other borrowings313  249  528  
Total interest expense3,900  4,156  4,780  
Net interest income61,075  60,896  63,708  
Provision for credit losses10,401  5,607  6,870  
Net interest income after provision for credit losses50,674  55,289  56,838  
Noninterest income
Fees from other financial services4,571  4,830  4,562  
Fee income on deposit liabilities5,113  5,475  5,078  
Fee income on other financial products1,872  1,378  1,593  
Bank-owned life insurance794  1,378  2,259  
Mortgage banking income2,000  1,863  614  
Gain on sale of real estate—  10,762  —  
Other income, net413  654  458  
Total noninterest income14,763  26,340  14,564  
Noninterest expense
Compensation and employee benefits25,777  26,383  25,512  
Occupancy5,267  5,429  4,670  
Data processing3,837  3,953  3,738  
Services2,809  2,378  2,426  
Equipment2,339  2,344  2,064  
Office supplies, printing and postage1,341  1,192  1,360  
Marketing802  1,035  990  
FDIC insurance102  (45) 626  
Other expense4,194  3,537  3,854  
Total noninterest expense46,468  46,206  45,240  
Income before income taxes18,969  35,423  26,162  
Income taxes3,208  7,193  5,323  
Net income$15,761  $28,230  $20,839  
Comprehensive income$35,608  $33,300  $27,091  
OTHER BANK INFORMATION (annualized %, except as of period end)
Return on average assets0.87  1.58  1.18  
Return on average equity9.15  16.45  13.09  
Return on average tangible common equity10.39  18.69  15.03  
Net interest margin3.72  3.74  3.99  
Efficiency ratio61.27  52.97  57.80  
Net charge-offs to average loans outstanding0.44  0.41  0.39  
As of period end
Nonaccrual loans to loans receivable held for investment0.90  0.58  0.83  
Allowance for loan losses to loans outstanding1.49  1.04  1.12  
Tangible common equity to tangible assets8.3  8.6  8.1  
Tier-1 leverage ratio 8.8  9.1  8.7  
Total capital ratio 13.9  14.3  13.9  
Dividend paid to HEI (via ASB Hawaii, Inc.) ($ in millions)$28.0  $9.0  $18.0  

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
(Back To Top)