News Column

Hawaiian Electric Industries Reports Second Quarter 2014 Earnings

August 13, 2014

ENP Newswire - 13 August 2014

Release date- 12082014 - HONOLULU - Hawaiian Electric Industries, Inc. (NYSE - HE) today reported consolidated net income for common stock for the second quarter of 2014 of $41.4 million, or $0.41 diluted earnings per share, compared to $40.6 million, or $0.41 diluted EPS for the second quarter of 2013.

'HEI's financial results were in line with internal expectations. Our utilities are aggressively managing costs and redirecting savings to accelerate investments for the benefit of our customers. We are making investments to improve reliability, increase the amount of renewables and pave the way for expected lower costs for customers,' said Constance H. Lau, HEI president and chief executive officer.

'American Savings Bank continued to deliver solid results with year-to-date annualized loan growth of 6.5% which helped offset the impact of the continued low interest rate environment. American paid dividends of $9.75 million to HEI in the quarter while maintaining strong capital levels,' added Lau.


Hawaiian Electric Company's1 net income for the second quarter of 2014 was $34.2 million compared to $28.7 million in the second quarter of 2013. The $5.5 million increase from the prior year was driven by the following items (on an after-tax basis):

Net revenues were $11 million higher compared to the second quarter of 2013 primarily due to $8 million in 2014 revenues attributable to the recovery of costs for clean energy and reliability investments and a $4 million refund to customers recorded in the second quarter 2013 resulting from the final Maui County 2012 rate case decision.

These increases were partially offset by the following (on an after-tax basis):

Operations and maintenance (O&M) expenses3 were $2 million higher in the second quarter of 2014 compared to the same quarter last year. This is largely due to expenses related to installing smart grid technologies as part of our grid modernization program and reversals in the second quarter of 2013 of previously expensed costs, partially offset by savings from the deactivation of generating units;

Depreciation expense for the second quarter of 2014 was $2 million higher as a result of increasing investments for integration of more renewable energy, improved customer reliability and greater system efficiency and

Interest expense was $1 million higher in the second quarter of 2014 due to new debt issued in the fourth quarter of 2013 to fund our clean energy and reliability investments.

Hawaiian Electric Company, unless otherwise defined, refers to the three utilities, Hawaiian Electric Company, Inc. on Oahu, Maui Electric Company, Limited, and Hawaii Electric Light Company, Inc.

Net revenues represent the after-tax impact of 'Revenues' less the following expenses which are largely pass through items in revenues: 'fuel oil', 'purchased power' and 'taxes, other than income taxes' as shown on the Hawaiian Electric Company Consolidated Statements of Income.

Excludes net income neutral expenses covered by surcharges or by third parties of $3 million in the second quarter of 2014 and $2 million in the second quarter of 2013.


American Savings Bank's (American) net income for the second quarter of 2014 was $11.7 million compared to $14.5 million in the first, or linked, quarter of 2014 and $15.9 million in the second quarter of 2013.

Second quarter 2014 net income was $2.9 million lower than the linked quarter primarily driven by (on an after-tax basis) a first quarter $2 million gain on the sale of the municipal bond securities portfolio and a $1 million increase in noninterest expense due to higher branch security expense, product development expenses and the timing of expenses associated with debit cards.

Compared to the second quarter of 2013, net income decreased by $4.2 million. The decrease was primarily driven by (on an after-tax basis): $1 million lower interchange fees due to the Durbin Amendment which placed a limit on interchange fees and became effective on July 1, 2013; $1 million decrease in mortgage banking income; $1 million lower gain on sale of securities and $1 million higher provision for loan losses.


The holding and other companies' net losses were $4.5 million in the second quarter of 2013 compared to $4.0 million in the second quarter of 2013. The higher net loss was due to higher administrative and general expenses partially offset by lower interest expense.


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 '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 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 '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, 2013, HEI's Quarterly Report on Form 10-Q for the quarter ended March 31, 2014 and HEI's future 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 report, presentation or filing in which they are made. Except to the extent required by the federal securities laws, HEI, Hawaiian Electric Company, 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.


HEI and Hawaiian Electric Company management use certain non-GAAP measures to evaluate the performance of the utility and HEI. Management believes these non-GAAP measures provide useful information and are a better indicator of the companies' core operating activities.

Core earnings and other financial measures as presented here may not be comparable to similarly titled measures used by other companies. The accompanying tables provide a reconciliation of reported GAAP1earnings to non-GAAP core earnings for both the utility and HEI consolidated and the corresponding adjusted return on average common equity (ROACE).

The reconciling adjustments from GAAP earnings to core earnings are limited to the settlement charge for the partial write-off of utility assets in the fourth quarter of 2012. For more information on the settlement charge recorded in 2012, see the Form 8-K filed on March 20, 2013. Management does not consider these items to be representative of the company's fundamental core earnings.

The accompanying table also provides the calculation of utility GAAP O&M adjusted for 'O&M-related net income neutral items' which are O&M expenses covered by specific surcharges or by third parties. This item is grossed-up in revenue and expense and does not impact net income.


Clifford H. Chen


Investor Relations

Tel: (808) 543-7384


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Source: ENP Newswire

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