HEI's Q4 2024 Earnings: Navigating Wildfire Challenges and Settlement Agreements

As Hawaiian Electric Industries (HEI) wrapped up the fourth quarter of 2024, the company faced significant challenges stemming from wildfire-related expenses and settlement agreements. Despite these hurdles, HEI demonstrated resilience and a commitment to addressing these issues head-on. In this article, we will delve into the key takeaways from HEI's Q4 2024 earnings call and explore the potential implications for customers, shareholders, and the company's financial position.



HEI's financial performance in 2024 was impacted by the accrual of estimated wildfire liabilities, higher operations and maintenance (O&M) expenses, and increased depreciation expense. These factors contributed to a net loss of $1,426 million, or $11.23 per share, compared to net income of $199 million, or $1.81 per share, in 2023. Excluding the impacts of discontinued operations, Maui wildfire-related expenses, and the Pacific Current asset impairment, Core income from continuing operations was $124 million, or $0.98 per share, compared to $152 million, or $1.38 per share, in 2023.

The fourth quarter of 2024 saw a net loss of $68 million, or $0.40 per share, compared to net income of $49 million, or $0.44 per share, in the fourth quarter of 2023. Core income from continuing operations was $35 million for the fourth quarter of 2024 compared to $37 million in the fourth quarter of 2023.



HEI's strategic objectives for 2024 focused on addressing the challenges posed by the Maui wildfires and maintaining the company's financial strength. The signing of final settlement agreements in the Maui wildfire tort litigation in November 2024 provided an accelerated path to recovery for those impacted by the fires. However, the company still faces ongoing challenges in securing supportive legislation for a wildfire recovery fund and mechanisms to support clean energy project financing.

HEI's capital expenditure (CapEx) plans over the next few years are driven by several key factors, including wildfire risk reduction efforts, grid modernization, operational practices, situational awareness, and hardening the grid. These investments are expected to have a significant impact on rate-based growth and FFO to debt targets. HEI plans to invest nearly $400 million in capital from 2025 to 2027 to further reduce wildfire risk, with approximately $120 million invested in 2025 alone.

HEI plans to finance the settlement payments through a combination of cash on hand, equity offerings, and potentially securitization. The potential implications for customers, shareholders, and the company's financial position include increased rates for customers, impacts on shareholder value, and strain on the company's financial position. However, HEI is committed to balancing these impacts and maintaining its financial health.

In conclusion, HEI's Q4 2024 earnings call highlighted the challenges posed by wildfire-related expenses and settlement agreements. Despite these hurdles, HEI demonstrated resilience and a commitment to addressing these issues head-on. The company's capital expenditure plans and financing strategies aim to balance the impacts on customers, shareholders, and the company's financial position. As HEI continues to navigate these challenges, investors should monitor the company's progress and assess the potential implications for the utility sector and the broader economy.