Hawaiian Electric Industries' Q3 2025: Shifting Promises on Earnings Guidance, Dividend Strategy, and Rate Rebase Timelines

Date of Call: November 7, 2025

Financials Results

• EPS: $0.18 per share (net income); consolidated core EPS $0.19 for Q3 2025, compared to core EPS $0.29 in Q3 2024

Guidance:

• Rebasing proposal due to the PUC on January 7, 2026; if not approved, expect a 2027 test-year rate case filing in H2 2026.
• First settlement payment expected no sooner than early 2026; second payment expected to be funded with debt and/or convertible debt; subsequent payments to be funded with a mix of debt and equity depending on markets.
• 2025 CapEx ~ $400M; 2026 CapEx $550M–$700M (ARA $350M–$400M; EPRM ~$150M–$200M; wildfire/resilience via securitization $50M–$100M).
• 2026–2028 CapEx expected to be ~$1.8B–$2.4B; expect to fund higher spend primarily with retained earnings and proceeds from recent debt issuance; subject to PUC approvals.

Business Commentary:

• Financial Strength and Liquidity Improvement:
• Hawaiian Electric Industries (HEI) generated net income of $30.7 million or $0.18 per share in Q3, with holding company core net loss improving to $6.8 million compared to $10.9 million in 2024.

• The improvement was driven by successful debt issuance, upsizing and extending revolving credit facilities, and lower interest expenses due to debt retirement.

• Wildfire Safety and Operational Risk Reduction:

• HEI continued implementing wildfire safety measures, including deploying all weather stations and AI-assisted cameras, and establishing an in-house meteorologist, enhancing operational risk profile.

• These investments were funded by securitization to ensure lower costs for customers, improving safety and resilience.

• Tort Litigation Settlement Progress:

• The Maui wildfire tort litigation settlement is on track, with a court hearing for final approval expected on January 8, 2026.

• The progress is attributed to effective collaboration with relevant parties and administrative steps required for settlement approval.

• Capital Expenditure Increase:

• HEI plans to increase capital expenditure (CapEx) significantly in the coming years, with $1.8 billion to $2.4 billion expected over the next 3 years.

• This is driven by strategic objectives to reduce wildfire risk, increase reliability, and repower firm generation, supported by retained earnings and recent debt issuance proceeds.

• Alternative Rebasing Process for PBR:

• HEI requested PUC approval for an alternative non-rate case process to rebase rates, involving collaboration with PBR working group parties to develop a proposal for PUC approval.
• This proactive approach aims to streamline the process, reduce costs, and accommodate multiple resource-intensive processes related to Act 25.

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted a successful $500M unsecured debt offering and increased credit capacity, stating: "we improved our liquidity and financial flexibility through a successful debt issuance and the upsize and extension of our revolving credit facilities." They said the Maui settlement "is on track" with first payment expected no sooner than early 2026 and emphasized progress on wildfire-safety measures and operational risk improvement.

Q&A:

• Question from Jamieson Ward (Jefferies LLC): How should we think about the revenue requirement and timing under the alternative rebasing filing, the Gen 7 filing? What are the key elements that you're looking to align with the PBR Phase 6 modifications and so on? So just that revenue requirement and timing.
  Response: Rebasing proposal is due Jan 7, 2026; goal is to set a new starting point/target revenues for MRP2 to allow earning the authorized ROE and to update PBR rules; if the proposal isn’t approved, expect a 2027 test-year rate case filing in H2 2026.

• Question from Jamieson Ward (Jefferies LLC): Given that utility dividends have resumed, albeit in a small amount, what's the sustainable cadence of utility to holdco dividends through the settlement years? And what are the gating criteria?
  Response: Utility dividends will be set based on holding-company needs and are expected to continue to be sized/distributed based on those needs for the foreseeable future.

• Question from Jamieson Ward (Jefferies LLC): As we look forward, how do you think about earnings guidance and ultimately, of course, EPS, which will have to include the financing element there. Could we see EPS guidance in the Q4 call? Or is that not something we should put expectations on?
  Response: Management will not reinstate EPS/earnings guidance until final settlement approval and greater clarity on rebasing; possible after settlement but not assured for Q4.

• Question from Michael Brown (Barclays Bank PLC): Can you provide an update on the sale of the remaining portion of the bank?
  Response: Company intends to monetize the remaining ~9.9% stake in American Savings but has no firm timeline; will reassess market conditions and likely re-evaluate within the next ~6 months.

• Question from Michael Brown (Barclays Bank PLC): What are the expectations of the commission's report on the wildfire fund going into the new legislative window? With the report, do you anticipate movement in 2026 on any key legislation?
  Response: PUC's wildfire-fund study is on track for submission (20 days before the next legislative session); management is unsure whether the report will recommend legislation in 2026 and will not speculate on outcomes.

Contradiction Point 1

Earnings Guidance

It involves changes in financial forecasts regarding earnings guidance, which is critical for investors to make informed decisions about the company's performance and potential growth.

How do you approach earnings guidance and EPS, including the financing element? Will there be EPS guidance in the Q4 call, or should we not expect it? - Jamieson Ward(Jefferies LLC)

2025Q3: Too soon to say. We are considering reinstituting earnings guidance, but want to wait until after the final settlement is approved. It's challenging to give guidance during the rate rebasing process, and we don't want to provide guidance we'd have to change significantly. - Scott Deghetto(CFO)

When do you expect to provide guidance on consolidated rate base growth and CapEx once the moving pieces are resolved? - Nicholas Joseph Campanella(Barclays Bank PLC)

2025Q2: We expect to reinstate guidance in the second half of this year. - Scott DeGhetto(CFO)

Contradiction Point 2

Dividend Strategy

It involves the company's dividend policy, which is crucial for shareholder returns and investor expectations.

What is the sustainable dividend cadence from utility to holdco over the settlement years, and what are the key criteria? - Jamieson Ward(Jefferies LLC)

2025Q3: The utility dividend to the holding company has been set based on the needs at the holding company, and this will continue for the foreseeable future. - Scott Deghetto(CFO)

Can you update us on your approach to derisking the second payment in the Maui Wildfire Tort Litigation settlement? - Nicholas Joseph Campanella(Barclays Bank PLC)

2025Q2: We continue to be disciplined in our capital allocation decisions and are committed to returning capital to shareholders, including the utility dividends to the holding company. - Scott T. DeGhetto(CFO)

Contradiction Point 3

Rate Rebase and Timing

It involves differing perspectives on the timing and approach to rate rebase and revenue requirement alignment, which could impact financial forecasting and regulatory strategy.

What are the revenue requirements and timing under the Gen 7 alternative rebasing filing, and what key elements align with PBR Phase 6 modifications? - Jamieson Ward (Jefferies LLC, Research Division)

2025Q3: The discussions with the PBR parties are underway. The proposal for rebasing is due to the PUC on January 7, 2026. If successful, we will proceed with the rebasing process. If not, we will consider filing a 2027 test year rate case later in the year. - Scott W. Seu(CEO)

Can you discuss the planned rate case filing and its key components? Will it use a 12-month forward test year? Do you expect potential revisions to the five-year PBR framework? - Michael Lonegan (Evercore ISI)

2025Q1: In 2026, the target revenues will be rebased before the end of the first multiyear rate period. The new rate case-like proceeding will focus on changes to target revenues and potential modifications to the overall PBR framework. - Scott DeGhetto(CFO)

Contradiction Point 4

Securitization of Wildfire Mitigation CapEx

It involves differing interpretations of the potential securitization of wildfire mitigation CapEx, which could impact funding strategies and financial structuring.

What is the revenue requirement and timing under the Gen 7 filing? What key elements are aligned with PBR Phase 6 modifications? - Jamieson Ward (Jefferies LLC, Research Division)

2025Q3: The goal is to set a new starting point for the second multiyear rate plan, allowing efficient performance to earn the authorized ROE. We will also develop changes to the PBR framework to make it successful during MRP2. - Joe Viola(CLO)

Would you consider using block equity or your ATM if your stock price rises due to clarity on tariffs and the economy? - Michael Lonegan (Evercore ISI)

2025Q1: SB 897 allows for securitization of the first $500 million of utility CapEx towards wildfire mitigation. - Scott DeGhetto(CFO)

Contradiction Point 5

Dividend Strategy and Sustainability

It directly impacts investor expectations regarding the sustainability and strategic direction of the company's dividend policy, which is a key factor in assessing the company's financial health and stability.

What is the sustainable cadence of utility-to-holdco dividends during the settlement years, and what are the gating criteria? - Jamieson Ward (Jefferies LLC, Research Division)

2025Q3: The utility dividend to the holding company has been set based on the needs at the holding company, and this will continue for the foreseeable future. - Scott Deghetto(CFO)

What is the dividend cadence? And will utilities see a faster dividend increase in 2025? - Pierre Ferragu (New Street Research)

2024Q4: We're starting out in utility dividends of $25 million a quarter, and it should scale up as we go forward, but that's the first step in the process. - Scott Deghetto(CFO)