Hawaiian Electric Q1 2025 Earnings Preview: Navigating Renewable Progress Amid Financial Headwinds

Hawaiian Electric Industries, Inc. (HEI) faces a pivotal moment as it prepares to report Q1 2025 earnings on May 9, 2025. The company’s journey toward a renewable energy future is advancing, but its financial health remains strained by litigation costs, credit downgrades, and regulatory pressures. Investors will scrutinize whether Hawaiian Electric can balance its ambitious clean energy goals with stabilized profitability.

Earnings Preview: A Rocky Road to Recovery

Analysts expect Hawaiian Electric to report diluted earnings per share (EPS) of $0.23 for Q1 2025, a steep 51% decline from the $0.45 recorded in the same quarter last year. This drop reflects ongoing challenges from the 2023 Maui wildfires, which triggered $1.9 billion in wildfire-related settlement accruals in 2024. Excluding these costs, core net income improved to $124 million in 2024, but the Hawaii Supreme Court’s recent ruling dismissing some wildfire claims could now offer relief.

The “Hold” rating from analysts (based on 4 estimates) underscores skepticism about near-term returns. Meanwhile, Hawaiian Electric’s liquidity has strengthened, with a record $558 million equity offering in 2024 and a $250 million accounts receivable-backed credit facility. These moves have created its strongest liquidity position in company history, but credit ratings remain in the non-investment grade range, with S&P at B- and Moody’s at Ba3.

Renewable Progress: Ambitions vs. Reality

Hawaiian Electric’s push for a 40% renewable portfolio standard (RPS) by 2030 is gaining traction. In 2024, it achieved 36% RPS, up from 33% in 2023, driven by grid modernization investments and strategic divestitures. A notable move was the sale of 90.1% of American Savings Bank for $405 million, redirecting capital toward core utility operations and debt reduction.

However, the $120 million allocated in 2024 to wildfire safety and grid hardening highlights the dual challenge of balancing infrastructure costs with regulatory targets. Hawaiian Electric’s ability to narrow the gap between its Ratemaking Return on Common Equity (ROACE) and the PUC-authorized 9.5% is critical. In 2023, ROACE for Oahu, Maui, and Hawaii Island stood at 9.28%, 4.47%, and 8.27%, respectively—underscoring uneven performance.

Credit and Litigation: Shadows Over the Horizon

The lingering effects of wildfire litigation have weighed heavily on Hawaiian Electric’s finances. While the Hawaii Supreme Court’s January 2025 ruling reduced liability risks, the company still faces $1.3 billion in losses tied to 2023 wildfires, which depressed 2024 earnings. The resolution of these claims could free up capital for grid upgrades and renewable projects, but credit agencies remain cautious.

Non-investment-grade ratings have increased borrowing costs, complicating the $450 million three-year grid modernization plan. Hawaiian Electric’s focus on lowering leverage through asset sales and equity raises is a positive step, but investors will monitor whether Q1 results signal a turning point in credit stabilization.

Conclusion: A Delicate Balance

Hawaiian Electric’s Q1 2025 results will test whether its renewable ambitions can offset financial headwinds. While progress toward a 40% RPS by 2030 is on track, the company must demonstrate:

1. Litigation clarity: The Maui wildfire settlement’s final resolution could reduce uncertainty and free up capital.
2. ROACE improvement: Closing the gap to the 9.5% authorized return will be vital for regulatory approval and investor confidence.
3. Credit recovery: Stabilizing ratings above B- could lower borrowing costs, easing pressure on margins.

With liquidity at a decade-high and wildfire risks partially mitigated, Hawaiian Electric’s long-term prospects remain tied to Hawaii’s decarbonization goals. However, Q1’s EPS decline and ongoing credit challenges suggest the road to profitability will remain bumpy. Investors should watch for signs of stabilization in Q1 results—particularly in wildfire-related expenses and grid modernization progress—to determine whether this utility is finally turning the corner.

John Gapper