HEI Reports Second Quarter 2017 Earnings
HONOLULU, Aug. 3, 2017 /PRNewswire/ -- Hawaiian Electric Industries, Inc. (HEI) (NYSE - HE) today reported consolidated net income for common stock for the second quarter of 2017 of $38.7 million and diluted earnings per share (EPS) of $0.36 compared to $44.1 million and EPS of $0.41 for the second quarter of 2016. Second quarter 2016 core earnings(1) and core EPS(1) were $46.9 million and $0.43, respectively.
"Our utilities continue to bring more renewable resources online, strengthen our energy delivery networks to make them more reliable and resilient and promote sustainable communities. We are encouraged by our regulators' acceptance of our Power Supply Improvement Plan, which describes the near-term steps to move Hawaii closer to its 100 percent renewable energy goal. At American Savings Bank, we continued to deliver strong performance through the second quarter with higher returns from improving credit quality, higher yields and greater efficiency while maintaining healthy capital levels," said Constance H. Lau, HEI president and chief executive officer.
HAWAIIAN ELECTRIC COMPANY EARNINGS
Hawaiian Electric Company's(2) net income for the second quarter of 2017 was $25.6 million compared to $35.9 million in the second quarter of 2016. Core earnings(1) were $25.6 million and $36.6 million in the second quarters of 2017 and 2016, respectively. The $11.0 million core net income decrease from the prior year quarter was primarily driven by the following after-tax items:
____________________________
Note: Amounts indicated as "after-tax" in this earnings release
are based upon adjusting items for the composite statutory tax
rates of 39% for the utilities and 40% for the bank.
(1) Non-GAAP measure that excludes after-tax income and costs related
to the terminated merger with NextEra Energy, Inc., the cancelled
spin-off of ASB Hawaii, Inc., and the termination of the
liquefied natural gas (LNG) contract which required PUC approval
of the merger with NextEra Energy, Inc. (the "Transaction
Adjustments"). See the "Explanation of HEI's Use of Certain
Unaudited Non-GAAP measures" and the related reconciliation.
(2) Hawaiian Electric Company refers to the three utilities, Hawaiian
Electric Company, Inc. on Oahu, Maui Electric Company, Limited,
and Hawaii Electric Light Company, Inc.
-- $5 million lower net revenues(3) mainly due to the expiration of the
Hawaii Public Utilities Commission-approved 2013 settlement agreement
with the Consumer Advocate that had allowed Hawaiian Electric Company,
Inc. to record calendar year rate adjustment mechanism revenues from
January 1, 2014 - December 31, 2016(4);
-- $5 million higher operations and maintenance expenses(5) compared to the
prior year quarter primarily due to higher overhaul expenses due to
timing, increased maintenance costs, enterprise resource planning costs,
partial write-off of deferred geothermal RFP costs, higher property
damage reserve for a customer claim and grid modernization consulting
costs; and
-- $1 million higher depreciation expense as a result of increasing
investments for the integration of more renewable energy and improved
customer reliability.
AMERICAN SAVINGS BANK EARNINGS
American Savings Bank's (American) net income for the second quarter of 2017 was $16.7 million compared to $15.8 million in the first (or linked) quarter of 2017 and $13.3 million in the second quarter of 2016.
Compared to the second quarter of 2016, the $3.4 million increase was primarily driven by $3 million (after-tax) higher net interest income mainly due to growth in the commercial real estate and consumer loan portfolios as well as the deployment of deposit growth into our investment portfolio.
______________________________
(3) 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, Inc. and Subsidiaries'
Condensed Consolidated Statements of Income.
4 With the expiration of the 2013 settlement agreement with the Consumer
Advocate that was approved by the PUC, in 2017 the Oahu rate adjustment
mechanism (RAM) revenues revert to being recorded for accounting
purposes from a calendar year recognition period to a period beginning
on June 1 of each year through May 31 of the subsequent year. The
periods in which the cash reflecting RAM revenues is collected did not
change as a result of the settlement agreement and have always been
aligned to the June 1 to May 31 periods. Therefore, the expiration of
the 2013 settlement agreement will have no impact on Hawaiian Electric
Company cash collections.
5 Excludes net income neutral expenses covered by surcharges or by third
parties and merger-related costs including the terminated LNG contract
costs. See the "Explanation of HEI's Use of Certain Unaudited Non-
GAAP measures" and the related reconciliation.
The $1 million (after-tax) lower provision for loan losses was offset by $1 million (after-tax) higher non-interest expense.
Compared to the linked first quarter of 2017, the $0.9 million increase was primarily driven by the following on an after-tax basis:
-- $1 million higher net interest income driven mainly by higher loan
portfolio yields and growth in our consumer loan and investment
portfolios;
-- $1 million lower provision for loan losses; and
-- $1 million higher noninterest income mainly due to improved performance
from bank-owned life insurance investments.
These increases were offset by $2 million (after-tax) higher noninterest expense primarily due to higher compensation and benefit costs.
Total loans were $4.7 billion at June 30, 2017 and included growth in the consumer, home equity line of credit and residential loan portfolios during the second quarter of 2017.
Total deposits were $5.7 billion at June 30, 2017, an increase of $175 million or 6.3% annualized from December 31, 2016. Low-cost core deposits increased $143 million or 5.8% annualized from December 31, 2016. The average cost of funds was 0.21% for the second quarter of 2017 compared to 0.20% for the first quarter of 2017 and 0.23% for the second quarter of 2016.
Overall, American achieved solid profitability in the second quarter of 2017 with a return on average equity of 11.3% and a return on average assets of 1.02%.
For additional information, refer to the American news release issued on July 28, 2017.
HOLDING AND OTHER COMPANIES
The holding and other companies' net losses were $3.7 million in the second quarter of 2017 compared to the $5.0 million net loss in the second quarter of 2016. Excluding the Transaction Adjustments which totaled $2.0 million in the second quarter of 2016, holding and other companies' net losses were $3.7 million and $3.0 million in the second quarters of 2017 and 2016, respectively.
WEBCAST AND CONFERENCE CALL TO DISCUSS EARNINGS AND EPS GUIDANCE
HEI will conduct a webcast and conference call to discuss its second quarter of 2017 earnings and 2017 EPS guidance on Thursday, August 3, 2017, at 9:00 a.m. Hawaii time (3:00 p.m. Eastern time).
Interested parties within the United States may listen to the conference by calling (844) 834-0652 and international parties may listen to the conference by calling (412) 317-5198 or by accessing the webcast on HEI's website, www.hei.com, under the heading "Investor Relations." HEI and Hawaiian Electric Company intend to continue to use HEI's website as a means of disclosing additional information. Such disclosures will be included on HEI's website in the Investor Relations section. Accordingly, investors should routinely monitor such portions of HEI's website, in addition to following HEI's, Hawaiian Electric Company's and American's press releases, HEI's and Hawaiian Electric Company's Securities and Exchange Commission (SEC) filings and HEI's public conference calls and webcasts. The information on HEI's website is not incorporated by reference in this document or in HEI's and Hawaiian Electric Company's SEC filings unless, and except to the extent, specifically incorporated by reference. Investors may also wish to refer to the Public Utilities Commission of the State of Hawaii (PUC) website at dms.puc.hawaii.gov/dms in order to review documents filed with and issued by the PUC. No information on the PUC website is incorporated by reference in this document or in HEI's and Hawaiian Electric Company's SEC filings.
An online replay of the webcast will be available at the same website beginning about two hours after the event. Replays of the conference call will also be available approximately two hours after the event through August 17, 2017, by dialing (877) 344-7529 or (412) 317-0088 and entering passcode: 10108918.
HEI supplies power to approximately 95% of Hawaii's population through its electric utilities, Hawaiian Electric Company, Inc., Hawaii Electric Light Company, Inc. and Maui Electric Company, Limited and provides a wide array of banking and other financial services to consumers and businesses through American Savings Bank, F.S.B., one of Hawaii's largest financial institutions.
NON-GAAP MEASURES
See "Explanation of HEI's Use of Certain Unaudited Non-GAAP Measures" and related reconciliations on pages 12 to 13 of this release.
Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three months ended June 30 Six months ended June 30
(in thousands, except per share
amounts) 2017 2016 2017 2016
------------------------------- ---- ---- ---- ----
Revenues
Electric utility $556,875 $495,395 $1,075,486 $977,447
Bank 75,329 70,749 148,185 139,589
Other 77 100 172 168
Total revenues 632,281 566,244 1,223,843 1,117,204
-------------- ------- ------- --------- ---------
Expenses
Electric utility 501,828 424,709 971,501 851,435
Bank 50,533 50,525 99,229 99,771
Other 4,024 5,555 9,355 11,692
Total expenses 556,385 480,789 1,080,085 962,898
-------------- ------- ------- --------- -------
Operating income (loss)
Electric utility 55,047 70,686 103,985 126,012
Bank 24,796 20,224 48,956 39,818
Other (3,947) (5,455) (9,183) (11,524)
Total operating income 75,896 85,455 143,758 154,306
---------------------- ------ ------ ------- -------
Interest expense, net-other
than on deposit liabilities and
other bank borrowings (20,440) (17,301) (40,008) (37,427)
Allowance for borrowed funds
used during construction 1,143 760 2,032 1,422
Allowance for equity funds used
during construction 3,027 1,997 5,426 3,736
------------------------------- ----- ----- ----- -----
Income before income taxes 59,626 70,911 111,208 122,037
Income taxes 20,492 26,310 37,408 44,611
------------ ------ ------ ------ ------
Net income 39,134 44,601 73,800 77,426
Preferred stock dividends of
subsidiaries 473 473 946 946
Net income for common stock $38,661 $44,128 $72,854 $76,480
=========================== ======= ======= ======= =======
Basic earnings per common share $0.36 $0.41 $0.67 $0.71
=============================== ===== ===== ===== =====
Diluted earnings per common
share $0.36 $0.41 $0.67 $0.71
=========================== ===== ===== ===== =====
Dividends declared per common
share $0.31 $0.31 $0.62 $0.62
============================= ===== ===== ===== =====
Weighted-average number of
common shares outstanding 108,750 107,962 108,712 107,791
========================== ======= ======= ======= =======
Weighted-average shares
assuming dilution 108,797 108,133 108,869 107,978
======================= ======= ======= ======= =======
Net income (loss) for common
stock by segment
Electric utility $25,644 $35,857 $47,109 $61,224
Bank 16,733 13,285 32,546 25,958
Other (3,716) (5,014) (6,801) (10,702)
------ ------ ------ -------
Net income for common stock $38,661 $44,128 $72,854 $76,480
=========================== ======= ======= ======= =======
Comprehensive income
attributable to Hawaiian
Electric Industries, Inc. $41,031 $46,236 $76,209 $87,388
========================== ======= ======= ======= =======
Return on average common equity
(twelve months ended)(1) 12.1% 8.8%
=============================== ==== ===
This information should be read
in conjunction with the
condensed consolidated financial
statements and the notes thereto
in HEI filings with the SEC.
Results of operations for
interim periods are not
necessarily indicative of
results to be expected for
future interim periods or the
full year.
(1) On a core basis, 2017 and
2016 returns on average common
equity (twelve months ended June
30) were 8.9% and 9.3%,
respectively. See
reconciliation of GAAP to non-
GAAP measures.
Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(dollars in thousands) June 30, 2017 December 31, 2016
--------------------- ------------- -----------------
Assets
------
Cash and cash equivalents $210,381 $278,452
Accounts receivable and unbilled revenues, net 249,539 237,950
Available-for-sale investment securities, at fair
value 1,302,886 1,105,182
Stock in Federal Home Loan Bank, at cost 11,706 11,218
Loans receivable held for investment, net 4,688,278 4,683,160
Loans held for sale, at lower of cost or fair value 5,261 18,817
Property, plant and equipment, net of accumulated
depreciation of $2,508,291 and $2,444,348 at June
30, 2017 and December 31, 2016, respectively 4,726,524 4,603,465
Regulatory assets 938,277 957,451
Other 478,763 447,621
Goodwill 82,190 82,190
Total assets $12,693,805 $12,425,506
============ =========== ===========
Liabilities and shareholders' equity
------------------------------------
Liabilities
Accounts payable $194,755 $143,279
Interest and dividends payable 22,124 25,225
Deposit liabilities 5,724,386 5,548,929
Short-term borrowings-other than bank 49,789 -
Other bank borrowings 188,130 192,618
Long-term debt, net-other than bank 1,618,647 1,619,019
Deferred income taxes 750,413 728,806
Regulatory liabilities 431,630 410,693
Contributions in aid of construction 543,204 543,525
Defined benefit pension and other postretirement
benefit plans liability 626,795 638,854
Other 434,610 473,512
Total liabilities 10,584,483 10,324,460
----------------- ---------- ----------
Preferred stock of subsidiaries -not subject to
mandatory redemption 34,293 34,293
----------------------------------------------- ------ ------
Shareholders' equity
Preferred stock, no par value, authorized
10,000,000 shares; issued: none - -
Common stock, no par value, authorized 200,000,000
shares; issued and outstanding: 108,785,486 shares
and 108,583,413 shares at June 30, 2017 and
December 31, 2016, respectively 1,660,403 1,660,910
Retained earnings 444,400 438,972
Accumulated other comprehensive loss, net of tax
benefits (29,774) (33,129)
-------
Total shareholders' equity 2,075,029 2,066,753
Total liabilities and shareholders' equity $12,693,805 $12,425,506
========================================== =========== ===========
This information should be read
in conjunction with the
condensed consolidated
financial statements and the
notes thereto in HEI filings
with the SEC.
Hawaiian Electric Company, Inc. (Hawaiian Electric) and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three months ended June 30 Six months ended June 30
(dollars in thousands, except per
barrel amounts) 2017 2016 2017 2016
--------------------------------- ---- ---- ---- ----
Revenues $556,875 $495,395 $1,075,486 $977,447
-------- -------- -------- ---------- --------
Expenses
Fuel oil 141,259 91,899 285,529 205,639
Purchased power 153,067 139,058 280,191 254,917
Other operation and maintenance 106,374 99,563 206,614 203,471
Depreciation 48,156 46,760 96,372 93,541
Taxes, other than income taxes 52,972 47,429 102,795 93,867
Total expenses 501,828 424,709 971,501 851,435
-------------- ------- ------- ------- -------
Operating income 55,047 70,686 103,985 126,012
Allowance for equity funds used
during construction 3,027 1,997 5,426 3,736
Interest expense and other charges,
net (18,214) (15,103) (35,718) (32,411)
Allowance for borrowed funds used
during construction 1,143 760 2,032 1,422
--------------------------------- ----- --- ----- -----
Income before income taxes 41,003 58,340 75,725 98,759
Income taxes 14,860 21,984 27,618 36,537
------------ ------ ------ ------ ------
Net income 26,143 36,356 48,107 62,222
Preferred stock dividends of
subsidiaries 229 229 458 458
---------------------------- --- --- --- ---
Net income attributable to Hawaiian
Electric 25,914 36,127 47,649 61,764
Preferred stock dividends of Hawaiian
Electric 270 270 540 540
Net income for common stock $25,644 $35,857 $47,109 $61,224
=========================== ======= ======= ======= =======
Comprehensive income attributable to
Hawaiian Electric $25,684 $35,102 $47,608 $61,485
==================================== ======= ======= ======= =======
OTHER ELECTRIC UTILITY INFORMATION
Kilowatthour sales (millions)
Hawaiian Electric 1,624 1,625 3,149 3,182
Hawaii Electric Light 257 260 510 518
Maui Electric 269 271 529 541
---
2,150 2,156 4,188 4,241
===== ===== ===== =====
Cooling degree days (Oahu) 1,278 1,257 2,162 2,141
Average fuel oil cost per barrel $69.86 $44.98 $67.78 $49.05
Twelve months ended June 30 2017 2016
--------------------------- ---- ----
Return on average common equity (%)
(simple average)
Hawaiian Electric 7.25 7.95
Hawaii Electric Light 6.91 7.47
Maui Electric 7.50 8.67
Hawaiian Electric Consolidated 7.23 7.98
This information should be read
in conjunction with the
condensed consolidated
financial statements and the
notes thereto in Hawaiian
Electric filings with the SEC.
Results of operations for
interim periods are not
necessarily indicative of
results to be expected for
future interim periods or the
full year.
Hawaiian Electric Company, Inc. (Hawaiian Electric) and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(dollars in thousands, except par
value) June 30, 2017 December 31, 2016
--------------------------------- ------------- -----------------
Assets
Property, plant and equipment
Utility property, plant and equipment
Land $53,178 $53,153
Plant and equipment 6,711,418 6,605,732
Less accumulated depreciation (2,430,097) (2,369,282)
Construction in progress 272,438 211,742
------------------------ ------- -------
Utility property, plant and equipment,
net 4,606,937 4,501,345
Nonutility property, plant and
equipment, less accumulated
depreciation of $1,233 and $1,232
at June 30, 2017 and December 31,
2016, respectively 7,410 7,407
----- -----
Total property, plant and equipment,
net 4,614,347 4,508,752
------------------------------------ --------- ---------
Current assets
Cash and cash equivalents 42,582 74,286
Customer accounts receivable, net 126,161 123,688
Accrued unbilled revenues, net 103,596 91,693
Other accounts receivable, net 3,684 5,233
Fuel oil stock, at average cost 72,392 66,430
Materials and supplies, at average
cost 57,099 53,679
Prepayments and other 36,340 23,100
Regulatory assets 74,167 66,032
Total current assets 516,021 504,141
-------------------- ------- -------
Other long-term assets
Regulatory assets 864,110 891,419
Unamortized debt expense 690 208
Other 75,987 70,908
Total other long-term assets 940,787 962,535
Total assets $6,071,155 $5,975,428
============ ========== ==========
Capitalization and liabilities
Capitalization
Common stock ($6 2/3 par value,
authorized 50,000,000 shares;
outstanding 16,019,785 shares at
June 30, 2017 and December 31, 2016) $106,818 $106,818
Premium on capital stock 601,486 601,491
Retained earnings 1,095,025 1,091,800
Accumulated other comprehensive income
(loss), net of income taxes 177 (322)
-------------------------------------- --- ----
Common stock equity 1,803,506 1,799,787
Cumulative preferred stock -not
subject to mandatory redemption 34,293 34,293
Long-term debt, net 1,318,845 1,319,260
Total capitalization 3,156,644 3,153,340
-------------------- --------- ---------
Current liabilities
Short-term borrowings from non-
affiliates 43,990 -
Accounts payable 162,375 117,814
Interest and preferred dividends
payable 19,497 22,838
Taxes accrued 142,263 172,730
Regulatory liabilities 2,883 3,762
Other 53,140 55,221
Total current liabilities 424,148 372,365
------------------------- ------- -------
Deferred credits and other liabilities
Deferred income taxes 759,972 733,659
Regulatory liabilities 428,747 406,931
Unamortized tax credits 91,386 88,961
Defined benefit pension and other
postretirement benefit plans
liability 587,718 599,726
Other 79,336 76,921
Total deferred credits and other
liabilities 1,947,159 1,906,198
-------------------------------- --------- ---------
Contributions in aid of construction 543,204 543,525
Total capitalization and liabilities $6,071,155 $5,975,428
==================================== ========== ==========
This information should be read
in conjunction with the
condensed consolidated
financial statements and the
notes thereto in Hawaiian
Electric filings with the SEC.
American Savings Bank, F.S.B.
STATEMENTS OF INCOME DATA
(Unaudited)
Three months ended Six months ended June 30
(in thousands) June 30, 2017 March 31, 2017 June 30, 2016 2017 2016
------------- ------------- -------------- ------------- ---- ----
Interest and dividend income
Interest and fees on loans $52,317 $50,742 $49,690 $103,059 $98,127
Interest and dividends on investment
securities 6,763 6,980 4,443 13,743 9,460
Total interest and dividend income 59,080 57,722 54,133 116,802 107,587
---------------------------------- ------ ------ ------ ------- -------
Interest expense
Interest on deposit liabilities 2,311 2,103 1,691 4,414 3,283
Interest on other borrowings 824 816 1,467 1,640 2,952
Total interest expense 3,135 2,919 3,158 6,054 6,235
---------------------- ----- ----- ----- ----- -----
Net interest income 55,945 54,803 50,975 110,748 101,352
Provision for loan losses 2,834 3,907 4,753 6,741 9,519
-----
Net interest income after provision
for loan losses 53,111 50,896 46,222 104,007 91,833
----------------------------------- ------ ------ ------ ------- ------
Noninterest income
Fees from other financial services 5,810 5,610 5,701 11,420 11,200
Fee income on deposit liabilities 5,565 5,428 5,262 10,993 10,418
Fee income on other financial
products 1,971 1,866 2,207 3,837 4,412
Bank-owned life insurance 1,925 983 1,006 2,908 2,004
Mortgage banking income 587 789 1,554 1,376 2,749
Gains on sale of investment
securities, net - - 598 - 598
Other income, net 391 458 288 849 621
Total noninterest income 16,249 15,134 16,616 31,383 32,002
------------------------ ------ ------ ------ ------ ------
Noninterest expense
Compensation and employee benefits 24,742 23,237 21,919 47,979 44,353
Occupancy 4,185 4,154 4,115 8,339 8,253
Data processing 3,207 3,280 3,277 6,487 6,449
Services 2,766 2,360 2,755 5,126 5,666
Equipment 1,771 1,748 1,771 3,519 3,434
Office supplies, printing and
postage 1,527 1,535 1,583 3,062 2,948
Marketing 839 517 899 1,356 1,760
FDIC insurance 822 728 913 1,550 1,797
Other expense 4,705 4,311 5,382 9,016 9,357
Total noninterest expense 44,564 41,870 42,614 86,434 84,017
------------------------- ------ ------ ------ ------ ------
Income before income taxes 24,796 24,160 20,224 48,956 39,818
Income taxes 8,063 8,347 6,939 16,410 13,860
Net income $16,733 $15,813 $13,285 $32,546 $25,958
========== ======= ======= ======= ======= =======
Comprehensive income $18,956 $16,648 $16,051 $35,604 $36,361
==================== ======= ======= ======= ======= =======
OTHER BANK INFORMATION (annualized
%, except as of period end)
Return on average assets 1.02 0.98 0.86 1.00 0.85
Return on average equity 11.25 10.82 9.22 11.04 9.06
Return on average tangible common
equity 13.06 12.58 10.75 12.82 10.57
Net interest margin 3.68 3.68 3.58 3.68 3.60
Efficiency ratio 61.73 59.87 63.05 60.81 63.00
Net charge-offs to average loans
outstanding 0.21 0.29 0.15 0.25 0.18
As of period end
Nonaccrual loans to loans receivable
held for investment 0.44 0.41 1.02
Allowance for loan losses to loans
outstanding 1.19 1.19 1.16
Tangible common equity to tangible
assets 7.88 7.78 8.15
Tier-1 leverage ratio 8.5 8.5 8.7
Total capital ratio 13.7 13.6 13.2
Dividend paid to HEI (via ASB
Hawaii, Inc.) ($ in millions) $9.4 $9.4 $9.0 $18.8 $18.0
This information should be read in
conjunction with the condensed
consolidated financial statements and
the notes thereto in HEI filings with
the SEC. Results of operations for
interim periods are not necessarily
indicative of results to be expected
for future interim periods or the
full year.
American Savings Bank, F.S.B.
BALANCE SHEETS DATA
(Unaudited)
(in thousands) June 30, 2017 December 31, 2016
------------- -------------
Assets
Cash and due from banks $128,609 $137,083
Interest-bearing deposits 37,049 52,128
Restricted cash - 1,764
Available-for-sale investment securities,
at fair value 1,302,886 1,105,182
Stock in Federal Home Loan Bank, at cost 11,706 11,218
Loans receivable held for investment 4,744,634 4,738,693
Allowance for loan losses (56,356) (55,533)
------------------------- ------- -------
Net loans 4,688,278 4,683,160
--------- --------- ---------
Loans held for sale, at lower of cost or fair
value 5,261 18,817
Other 354,898 329,815
Goodwill 82,190 82,190
Total assets $6,610,877 $6,421,357
============ ========== ==========
Liabilities and shareholder's equity
Deposit liabilities-noninterest-bearing $1,694,150 $1,639,051
Deposit liabilities-interest-bearing 4,030,236 3,909,878
Other borrowings 188,130 192,618
Other 101,974 101,635
Total liabilities 6,014,490 5,843,182
----------------- --------- ---------
Common stock 1 1
Additional paid in capital 344,062 342,704
Retained earnings 271,739 257,943
Accumulated other comprehensive loss, net of
tax benefits
Net unrealized losses on
securities $(5,687) $(7,931)
Retirement benefit plans (13,728) (19,415) (14,542) (22,473)
-------
Total shareholder's equity 596,387 578,175
Total liabilities and shareholder's equity $6,610,877 $6,421,357
========================================== ========== ==========
This information should be read
in conjunction with the
condensed consolidated
financial statements and the
notes thereto in HEI filings
with the SEC.
EXPLANATION OF HEI'S USE OF CERTAIN UNAUDITED NON-GAAP MEASURES
HEI and Hawaiian Electric Company management use certain non-GAAP measures to evaluate the performance of HEI and the utility. Management believes these non-GAAP measures provide useful information and are a better indicator of the companies' core operating activities given the non-recurring nature of these items. 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 GAAP(1) earnings to non-GAAP core earnings and the adjusted return on average common equity (ROACE) for HEI and the utility.
The reconciling adjustments from GAAP earnings to core earnings are limited to income, costs and associated taxes related to the terminated merger between HEI and NextEra Energy, Inc., the cancelled spin-off of ASB Hawaii, Inc., and the termination of the liquefied natural gas (LNG) contract which required the Hawaii Public Utilities Commission approval of the merger with NextEra Energy, Inc. For more information on the transactions, see HEI's Form 8-K filed on July 18, 2016 and HEI's Form 8-K filed on July 19, 2016. 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 costs related to the terminated merger discussed above. "O&M-related net income neutral items" which are O&M expenses covered by specific surcharges or by third parties have also been excluded. These "O&M-related net income neutral items" are grossed-up in revenue and expense and do not impact net income.
RECONCILIATION OF GAAP(1) TO NON-GAAP MEASURES
----------------------------------------------
Hawaiian Electric Industries, Inc. and Subsidiaries (HEI)
Unaudited Three months ended June 30 Six months ended June 30
($ in millions, except per
share amounts) 2017 2016 2017 2016
-------------------------- ---- ---- ---- ----
HEI CONSOLIDATED COSTS RELATED TO THE
TERMINATED MERGER WITH NEXTERA ENERGY
AND CANCELLED SPIN-OFF OF ASB HAWAII
Pre-tax expenses $ - $2.0 $ - $3.6
Current income tax
benefits - - - -
After-tax expenses $ - $2.0 $ - $3.6
------------------ --- --- ---- --- --- ----
HEI CONSOLIDATED LNG CONTRACT COSTS(2)
Pre-tax expenses $ - $1.2 $ - $3.4
Current income tax
benefits - (0.5) - (1.3)
------------------ ---
After-tax expenses $ - $0.7 $ - $2.1
================== === === ==== === === ====
HEI CONSOLIDATED NET INCOME
GAAP (as reported) $38.7 $44.1 $72.9 $76.5
Excluding special items (after-tax):
Costs related to the
terminated merger with
NextEra Energy and
cancelled spin-off of
ASB Hawaii - 2.0 - 3.6
Costs related to the
terminated LNG
contract(2) - 0.7 - 2.1
Non-GAAP (core) net income $38.7 $46.9 $72.9 $82.1
========================== ===== ===== ===== =====
HEI CONSOLIDATED DILUTED EARNINGS PER
COMMON SHARE
GAAP (as reported) $0.36 $0.41 $0.67 $0.71
Excluding special items (after-tax):
Costs related to the
terminated merger with
NextEra Energy and
cancelled spin-off of
ASB Hawaii - 0.02 - 0.03
Costs related to the
terminated LNG
contract(2) - 0.01 - 0.02
Non-GAAP (core) diluted
earnings per common share $0.36 $0.43 $0.67 $0.76
-------------------------- ----- ----- ----- -----
Twelve months ended June 30
2017 2016
---- ----
HEI CONSOLIDATED RETURN ON AVERAGE COMMON EQUITY (ROACE) (simple average)
Based on GAAP 12.1% 8.8%
Based on non-GAAP (core)(3) 8.9% 9.3%
-------------------------- --- ---
Note: Columns may not foot
due to rounding
(1) Accounting principles
generally accepted in the
United States of America
(2) The LNG contract was
terminated as it was
conditioned on the merger
with NextEra Energy closing
(3) Calculated as core net
income divided by average
GAAP common equity
RECONCILIATION OF GAAP(1) TO NON-GAAP MEASURES
----------------------------------------------
Hawaiian Electric Company, Inc. and Subsidiaries
Unaudited Three months ended June 30 Six months ended June 30
($ in millions) 2017 2016 2017 2016
---- ---- ---- ----
HAWAIIAN ELECTRIC CONSOLIDATED COSTS
RELATED TO THE TERMINATED MERGER WITH
NEXTERA ENERGY
Pre-tax expenses $ - $ - $ - $0.1
Current income tax
benefits - - - -
After-tax expenses $ - $ - $ - $0.1
------------------ --- --- --- --- --- --- ----
HAWAIIAN ELECTRIC CONSOLIDATED LNG
CONTRACT COSTS(2)
Pre-tax expenses $ - $1.2 $ - $3.4
Current income tax
benefits - (0.5) - (1.3)
After-tax expenses $ - $0.7 $ - $2.1
================== === === ==== === === ====
HAWAIIAN ELECTRIC CONSOLIDATED NET INCOME
GAAP (as reported) $25.6 $35.9 $47.1 $61.2
Excluding special items (after-tax):
Costs related to the
terminated merger with
NextEra Energy - - - 0.1
Costs related to the
terminated LNG
contract(2) - 0.7 - 2.1
Non-GAAP (core) net income $25.6 $36.6 $47.1 $63.4
-------------------------- ----- ----- ----- -----
Twelve months ended June 30
2017 2016
---- ----
HAWAIIAN ELECTRIC CONSOLIDATED RETURN ON
AVERAGE COMMON EQUITY (ROACE) (simple
average)
Based on GAAP 7.23% 7.98%
Based on non-GAAP (core)(3) 7.23% 8.12%
-------------------------- ---- ----
Three months ended June 30 Six months ended June 30
($ in millions) 2017 2016 2017 2016
-------------- ---- ---- ---- ----
HAWAIIAN ELECTRIC CONSOLIDATED OTHER
OPERATION AND MAINTENANCE (O&M) EXPENSE
GAAP (as reported) $106.4 $99.6 $206.6 $203.5
Excluding O&M-related net
income neutral items4 0.9 1.5 2.0 3.1
Excluding costs related to
the terminated merger
with NextEra Energy - - - 0.1
Excluding costs related to
the terminated LNG
contract(2) - 1.2 - 3.4
Non-GAAP (Adjusted other
O&M expense) $105.4 $96.8 $204.6 $196.8
------------------------ ------ ----- ------ ------
Note: Columns may not foot
due to rounding
(1) Accounting principles
generally accepted in the
United States of America
(2) The LNG contract was
terminated as it was
conditioned on the merger
with NextEra Energy closing
(3) Calculated as core net
income divided by average
GAAP common equity
4 Expenses covered by
surcharges or by third
parties recorded in revenues
Contact: Clifford H. Chen Telephone: (808) 543-7300
Treasurer & Manager,
Investor Relations &
Strategic Planning E-mail: ir@hei.com
View original content with multimedia:http://www.prnewswire.com/news-releases/hei-reports-second-quarter-2017-earnings-300498915.html
SOURCE Hawaiian Electric Industries, Inc.
