Hawaiian Electric Industries Navigates Wildfire Aftermath with Strategic Shifts in Q1 2025

Hawaiian Electric Industries (HE) reported mixed results for its first quarter of 2025, posting revenue of $744.1 million—a 6% year-over-year decline—amid ongoing efforts to recover from the 2023 Maui wildfires and restructure its business. While core earnings improved significantly, driven by utility operations and cost controls, the company’s stock dipped slightly in after-hours trading as investors digested lingering liabilities and regulatory uncertainties.

Revenue Decline, Core Gains, and Strategic Progress

The revenue drop stems from the sale of non-core assets, including the Hamakua Energy facility, which reduced non-utility contributions. However, adjusted core earnings surged to $0.23 per share (from -$0.14 in Q1 2024), reflecting stronger utility performance. Key drivers included:
- Utility efficiency gains: Improved heat rate performance and higher demand response revenues.
- Regulatory tailwinds: The Annual Revenue Adjustment Mechanism (ARA) boosted top-line stability.
- Debt reduction: Proceeds from the $1.9 billion sale of American Savings Bank (ASB) slashed holding company debt by $384 million in April 2025, bolstering liquidity to $492 million.

Wildfire Mitigation: A $400M Gamble on Safety and Resilience

The Maui wildfires remain central to HE’s strategy. The company plans to invest $400 million from 2025 to 2027 in wildfire safety, with $120 million allocated in 2025 alone. Over three-quarters of this capital will target grid hardening, including vegetation management and equipment upgrades, while the remainder funds grid modernization and community partnerships. These efforts have already yielded results:
- Reduced wildfire risk through 5G-enabled monitoring systems and enhanced situational awareness.
- Progress on litigation settlements, with a $479 million payment expected in early 2026.

Legislative Lift and Operational Challenges

Hawaii’s recent legislative wins—House Bill 1001 (funding state wildfire liabilities) and Senate Bill 897 (establishing liability caps and authorizing securitization for safety costs)—are critical to HE’s recovery. These measures aim to stabilize finances, protect ratepayers, and support decarbonization goals, including achieving 100% renewable energy by 2045.

However, operational hurdles persist. The utility’s trailing twelve-month ROE fell to 7.0%, below Hawaii Public Utilities Commission (HPUC)-mandated 9.5%, signaling regulatory friction. Compounding this, Q1 net income of $27 million ($0.15 per share) missed consensus estimates of $0.25 due to one-time losses from asset sales and elevated wildfire-related costs.

Investment Thesis: Caution Amid Resilience

HE’s Q1 results highlight a company in transition—strategically deleveraging, executing on wildfire mitigation, and benefiting from legislative reforms. Yet, near-term risks linger:
- Liquidity pressures: The $479 million wildfire settlement payment in 2026 could strain cash reserves.
- Regulatory alignment: Achieving the 9.5% ROE target will require operational efficiency and regulatory cooperation.

The stock’s post-earnings dip (down 0.52% in after-hours trading) reflects investor skepticism about HE’s ability to consistently beat earnings expectations. Still, the company’s debt reduction, $10 million dividend payout to the holding company, and progress on settlements suggest a path toward stabilization.

Conclusion: Positioning for Long-Term Value

Hawaiian Electric Industries is navigating a complex recovery with mixed results. While revenue headwinds and regulatory challenges persist, its strategic moves—debt reduction, wildfire safety investments, and legislative progress—position it to address near-term liabilities while advancing sustainability goals.

Crucial milestones ahead include:
- Finalizing the wildfire settlement and securing the 2026 payment.
- Returning to investment-grade credit metrics, supported by $600 million in accessible liquidity.
- Improving ROE to meet regulatory targets through operational efficiency and rate-case wins.

For investors, HE’s stock—a mere $10.51 post-earnings—presents a contrarian opportunity if legislative tailwinds and safety investments translate to sustained earnings growth. However, the path remains fraught with wildfire-related uncertainties, requiring patience and a long-term horizon.

In sum, HE is a work in progress—its resilience in Q1 underscores progress, but its ultimate success hinges on executing its $400 million safety plan and regaining regulatory favor. The question remains: Can a utility once synonymous with disaster become a symbol of Hawaii’s energy future? The next 18 months will tell.