Hawaiian Electric Industries Reports 2014 Year-End & Fourth Quarter Earnings

2014 Net Income of $168.3 Million;

2014 Diluted Earnings Per Share (EPS) of $1.64 and Core EPS[1] of $1.68

Fourth Quarter Net Income of $33.2 Million; EPS of $0.32 and Core EPS[1] of $0.36

Results In Line with EPS Guidance

Company Release - 2/12/2015 4:15 PM ET

HONOLULU, Feb. 12, 2015 /PRNewswire/ --

Selected 2014 Highlights:

  • Reported net income of $168.3 million vs $161.5 million in 2013, up 4%;
    Core net income[1] of $173.2 million vs $161.5 million in 2013, up 7%
  • Reported EPS of $1.64 vs $1.62 in 2013, up 1%;
    Core EPS[1] of $1.68 vs $1.62 in 2013, up 4%
  • Reported ROE of 9.6%;Core ROE[1] of 9.8%
  • 114-year history of continuous dividends
  • Continued legacy of delivering value for customers and Hawaii:
    • Record 21%[2] of electricity used by Hawaiian Electric customers generated from renewable sources
      • Surpassed Hawaii's 2015 renewable portfolio standard of 15%
      • Avoided-oil equivalent purchase of 2 million barrels which would have cost our state approximately $259 million[3] in imported oil in 2014
      • Led the nation in the integration of customer-sited solar: 13% of Oahu residential customers and 12% of all of our residential customers using rooftop solar by the end of 2014
    • Filed utility's Power Supply Improvement Plan (PSIP) proposals with the Hawaii Public Utilities Commission in 2014 to:
      • Lower electric bills by 20 percent by 2030
      • Increase renewable energy to more than 65 percent by 2030
      • Triple the amount of distributed solar by 2030
      • Offer customers expanded products and services
    • Limited other operations and maintenance (O&M) expense[4] increases to 1% over the 2013 level, less than the 2014 anticipated Honolulu inflation rate of 1.5%, while accommodating approximately $12 million in additional costs associated with strategic initiatives and storm recovery
    • Bank provided over $1.5 billion of credit to consumers and businesses and originated over 3,600 mortgages
    • Bank credit quality excellent with net charge offs of only 1 basis point on a loan book of $4.4 billion
    • Contributed over 16,000 volunteer hours and over $2 million of charitable contributions to community organizations
    • Announced plans for Hawaiian Electric Industries (HEI) and NextEra Energy to combine, as well as plans to spin off ASB Hawaii, the parent company of American Saving Bank, into a new, publicly traded company, mutually contingent upon the closing of the proposed combination of HEI and NextEra Energy

Hawaiian Electric Industries, Inc. (NYSE - HE) today reported 2014 year-end consolidated net income for common stock of $168.3 million, or diluted earnings per share (EPS) of $1.64. For the fourth quarter of 2014, consolidated net income for common stock was $33.2 million, or $0.32 EPS. Excluding $4.9 million after-tax of merger-related costs associated with the pending merger with NextEra Energy, Inc. and the spin-off of ASB Hawaii, core earnings[1] for 2014 were $173.2 million or $1.68 EPS, compared to $161.5 million or $1.62 EPS in 2013. For the fourth quarter of 2014, core earnings[1] were $37.5 million or $0.36 EPS compared to $39.0 million or $0.39 EPS for the same quarter last year.

"We continued to grow our businesses in steady fashion and delivered a competitive core return on equity[1] of 9.8% for the year as HEI's combination of companies continues to provide us with the financial resources to efficiently invest in future opportunities," said Constance Lau, HEI president and chief executive officer. "Our utility continued to invest in the modernization and improvement of our electric grid as we integrated more renewable energy. These investments helped us achieve an energy portfolio powered by 21% renewable sources in 2014, far in excess of Hawaii's 2015 RPS target of 15%. Thirteen percent of Oahu residential customers now have customer-sited solar, a rate of integration that leads the nation. Even as recent oil price decreases have brought our customers bill relief, we remain focused on further reducing costs for our customers with proposed grid-scale solar and wind projects. We also are working with other stakeholders to bring liquefied natural gas to Hawaii as a cleaner, lower-cost alternative to oil while we continue to aggressively pursue more renewable generation sources. Furthermore, as we did earlier in 2014 for Hawaiian Electric, we recently filed our abbreviated rate case for Maui Electric in which we offered to forgo the opportunity to request additional base revenues."

"Our bank delivered solid financial results in 2014 in a challenging regulatory and interest rate environment. We produced strong loan growth while improving credit quality and maintaining healthy capital levels. Our bank continues to improve the ways it delivers to its customers and is poised in 2015 to continue growing its balance sheet and earnings," said Lau.

"Last December we announced our proposed merger with NextEra Energy, and we are looking forward to working with NextEra Energy as a partner to help accelerate Hawaii's clean energy transformation. We also announced the related spin off of American Savings Bank, and we are very confident that American, as a new, publicly-traded entity, will remain a strong community bank for Hawaii," added Lau.

HAWAIIAN ELECTRIC COMPANY EARNINGS CONSISTENT WITH EXPECTATIONS

Full Year Results:

Hawaiian Electric Company's[5] full-year 2014 net income was $137.6 million compared to $122.9 million in 2013. The $14.7 million increase from the prior year was driven by the following items on an after-tax basis:

  • Net revenues[6] were $31 million higher compared to the prior year primarily due to $29 million in 2014 revenues attributable to the recovery of costs for clean energy and reliability investments and a $3 million refund to Maui Electric customers which reduced 2013 revenues, partially offset by $1 million due to reduced fuel efficiency performance; and
  • Higher allowance for funds used during construction of $1 million.

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

  • $8 million higher depreciation expense in 2014 as a result of increasing investments for the integration of more renewable energy, improved customer reliability and greater system efficiency;
  • O&M expenses[4] were $3 million higher in 2014 compared to the prior year. However, excluding the unanticipated Tropical Storm Iselle restoration expenses and consulting costs associated with our energy transformation plans, O&M expenses for 2014 would have decreased by approximately $4 million compared to the prior year. Included in 2014 O&M expenses were grid modernization program costs for smart grid installations and the upgrade of our customer information system which were more than offset by lower customer services expenses, lower overhaul costs due to reduced scope of work and savings from the deactivation of generating units compared to the prior year;
  • Higher interest expense and other charges, net of $3 million in 2014, including lower revenue balancing account (RBA) interest income of $2 million primarily due to the lower interest rates applied; and
  • A favorable deferred income tax adjustment of $3 million recorded in 2013 related to prior years.

Fourth Quarter Results:

Fourth quarter 2014 net income was $29.1 million compared to $32.0 million in the fourth quarter of 2013. The $2.9 million decline from the prior year quarter was primarily driven by the following items on an after-tax basis:

  • O&M expenses[4] were $8 million higher in the fourth quarter of 2014 compared to the prior quarter. This is largely due to no major overhauls in the fourth quarter of 2013, consulting costs associated with our energy transformation plans, the customer information system upgrade, and the initial phase of our smart grid installations as part of our grid modernization program, partially offset by the savings from the deactivation of generating units; and
  • Depreciation expense in the fourth quarter of 2014 was $2 million higher than the prior year quarter due to increases in utility property, plant and equipment.

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

  • Net revenues[6] were $6 million higher compared to the prior year quarter primarily due to 2014 revenues attributable to the recovery of costs for clean energy and reliability investments; and
  • Tax-related items of $1 million.

AMERICAN SAVINGS BANK: SOLID PERFORMANCE AND LOAN GROWTH

Full Year Results:

American Savings Bank's (American) net income for 2014 was $51.5 million compared to $57.5 million in 2013. Lower 2014 earnings compared to the prior year reflected the continued impact of regulatory changes and the low interest rate environment. The primary drivers impacting net income for the year were as follows on an after-tax basis: 

  • $7 million lower noninterest income primarily due to lower mortgage banking income related to the decline in refinancing volume, lower interchange fees as a result of rate caps mandated by the Durbin Amendment, which became effective for American in July 2013, and the gain reflected in the prior year related to the sale of the credit card portfolio;
  • $3 million higher provision for loan losses due primarily to normal growth in the loan portfolio and the $1 million release of reserves in 2013 related to the sale of the credit card portfolio; and
  • $3 million higher net interest income as contributions from loan growth more than offset the lower yields on loans.

American achieved strong loan growth of 6.8% in 2014 despite the competitive Hawaii market environment, and credit quality improved with the 2014 net charge-off ratio of 0.01% of average loans compared to 0.09% in 2013. Total deposits were $4.6 billion at December 31, 2014, an increase of $251 million from December 31, 2013.

Overall, American's return on average equity for the full year remained solid at 9.6% in 2014 compared to 11.4% in 2013, and the return on average assets was 0.95% in 2014 compared to 1.13% in 2013.

Fourth Quarter Results:

Fourth quarter 2014 net income of $12.0 million was $1.2 million lower than the linked quarter and $0.2 million lower than the same quarter of 2013. Compared to the linked quarter of 2014, the $1.2 million net income decline was primarily driven by the following on an after-tax basis:

  • $1 million higher noninterest expense largely attributable to the settlement of a purported class action lawsuit related to overdraft fees on debit card transactions and costs related to the strategic designation of a new corporate campus in Honolulu;
  • $1 million higher provision for loan losses related to loan growth in the quarter; and
  • $1 million of higher net interest income primarily due to loan growth.

American's fourth quarter 2014 return on average equity was 8.8%, compared to 9.9% in the linked quarter and 9.6% in the same quarter last year. Return on average assets was 0.87% for the fourth quarter of 2014, compared to 0.98% from the linked quarter and 0.94% in the same quarter last year.

Also refer to the American news release issued on January 30, 2015.

HOLDING AND OTHER COMPANIES

The holding and other companies' net losses were $20.8 million in 2014 compared to $18.9 million in 2013. Fourth quarter net losses were $8.0 million in 2014 compared to $5.2 million in the fourth quarter 2013. The full year 2014 and the fourth quarter 2014 net loss included $4.9 million after-tax and $4.3 million after-tax, respectively, of costs related to the pending merger with NextEra Energy, Inc. and expenses incurred in connection with plans to spin off ASB Hawaii. Excluding the pending merger-related costs, the full year and the fourth quarter 2014 net loss declined primarily due to lower interest expense compared to 2013.

WEBCAST AND CONFERENCE CALL

HEI TO ANNOUNCE 2015 EPS GUIDANCE IN EARNINGS CONFERENCE CALL

Hawaiian Electric Industries, Inc. will conduct a webcast and conference call to review its 2014 earnings on Thursday, February 12, 2015, at 12:00 noon Hawaii time (5:00 p.m. Eastern time). HEI will announce 2015 EPS guidance during the scheduled webcast and conference call.

Interested parties may listen to the conference by calling (800) 884-5695 and entering passcode: 41634040, or by accessing the webcast on HEI's website at www.hei.com under the heading "Investor Relations."  HEI and Hawaiian Electric Company intend to continue to use HEI's website, www.hei.com, 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 four hours after the event and will remain on HEI's website for 12 months. Replays of the conference call will also be available approximately four hours after the event through February 26, 2015, by dialing (888) 286-8010, passcode: 65598214.

HEI supplies power to approximately 450,000 customers or 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, 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 page 17 of this release.

FORWARD-LOOKING STATEMENTS

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 Quarterly Report on Form 10-Q for the quarter ended September 30, 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.

[1]

Non-GAAP measure which excludes $4.9 million and $4.3 million of merger-related costs after-tax for the full year 2014 and for the fourth quarter of 2014, respectively.  See the "Explanation of HEI's Use of Certain Unaudited Non-GAAP measures" and the related reconciliation.  

[2]

Based upon preliminary Renewable Portfolio Standard information as of 12/31/14.

[3]

Estimate based on the 2014 average price per barrel of $129.65.

[4]

Excludes net income neutral expenses covered by surcharges or by third parties of $10 million and $8 million for the full year 2014 and 2013, respectively, and $3 million in both the fourth quarter of 2014 and 2013. See "Explanation of HEI's Use of Certain Unaudited Non-GAAP measures" and the related reconciliation.

[5]

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.

[6]

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' Consolidated Statements of Income.

 


Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)




Three months ended December 31


Years ended December 31

(in thousands, except per share amounts)


2014


2013


2014


2013

Revenues









Electric utility


$

725,267


$

770,152


$

2,987,323


$

2,980,172

Bank


64,726


62,306


252,497


258,147

Other


47


45


(278)


151

Total revenues


790,040


832,503


3,239,542


3,238,470

Expenses









Electric utility


666,389


704,588


2,711,555


2,734,659

Bank


47,350


44,540


176,878


171,090

Other


9,060


5,026


22,185


17,302

Total expenses


722,799


754,154


2,910,618


2,923,051

Operating income (loss)









Electric utility


58,878


65,564


275,768


245,513

Bank


17,376


17,766


75,619


87,057

Other


(9,013)


(4,981)


(22,463)


(17,151)

Total operating income


67,241


78,349


328,924


315,419

Interest expense, net—other than on deposit liabilities and other bank borrowings


(17,704)


(19,263)


(76,352)


(75,479)

Allowance for borrowed funds used during construction


702


620


2,579


2,246

Allowance for equity funds used during construction


1,838


1,531


6,771


5,561

Income before income taxes


52,077


61,237


261,922


247,747

Income taxes


18,447


21,751


91,712


84,341

Net income


33,630


39,486


170,210


163,406

Preferred stock dividends of subsidiaries


473


473


1,890


1,890

Net income for common stock


$

33,157


$

39,013


$

168,320


$

161,516

Basic earnings per common share


$

0.32


$

0.39


$

1.65


$

1.63

Diluted earnings per common share


$

0.32


$

0.39


$

1.64


$

1.62

Dividends per common share


$

0.31


$

0.31


$

1.24


$

1.24

Weighted-average number of common shares outstanding


102,561


99,853


101,968


98,968

Adjusted weighted-average shares


103,991


100,525


102,937


99,623

Net income (loss) for common stock by segment









Electric utility


$

29,112


$

31,990


$

137,641


$

122,929

Bank


12,017


12,184


51,492


57,534

Other


(7,972)


(5,161)


(20,813)


(18,947)

Net income for common stock


$

33,157


$

39,013


$

168,320


$

161,516

Comprehensive income attributable to Hawaiian Electric Industries, Inc.


$

19,773


$

57,949


$

157,692


$

171,189

Return on average common equity






9.6%


9.7%


This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI's Annual Report on SEC Form 10-K for the year ended December 31, 2014 (when filed) and HEI's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2014, June 30, 2014 and September 30, 2014, as updated by SEC Forms 8-K.

 


Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries

CONSOLIDATED BALANCE SHEETS

(Unaudited)


December 31


2014


2013

(dollars in thousands)





Assets





Cash and cash equivalents


$

175,542


$

220,036

Accounts receivable and unbilled revenues, net


313,696


346,785

Available-for-sale investment securities


550,394


529,007

Stock in Federal Home Loan Bank of Seattle, at cost


69,302


92,546

Loans receivable held for investment, net


4,389,033


4,110,113

Loans held for sale, at lower of cost or fair value


8,424


5,302

Property, plant and equipment, net of accumulated depreciation of $2,250,950 and $2,192,422 at the respective dates


4,148,774


3,865,514

Regulatory assets


905,264


575,924

Other


541,542


512,627

Goodwill


82,190


82,190

Total assets


$

11,184,161


$

10,340,044

Liabilities and shareholders' equity





Liabilities





Accounts payable


$

186,425


$

212,331

Interest and dividends payable


25,336


26,716

Deposit liabilities


4,623,415


4,372,477

Short-term borrowings—other than bank


118,972


105,482

Other bank borrowings


290,656


244,514

Long-term debt, net—other than bank


1,506,546


1,492,945

Deferred income taxes


631,734


529,260

Regulatory liabilities


344,849


349,299

Contributions in aid of construction


466,432


432,894

Defined benefit pension and other postretirement benefit plans liability


632,845


288,539

Other


531,230


524,224

Total liabilities


9,358,440


8,578,681

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: 102,565,266 shares and 101,259,800 shares at the respective dates


1,521,297


1,488,126

Retained earnings


297,509


255,694

Accumulated other comprehensive loss, net of tax benefits


(27,378)


(16,750)

Total shareholders' equity


1,791,428


1,727,070

Total liabilities and shareholders' equity


$

11,184,161


$

10,340,044


This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI's Annual Report on SEC Form 10-K for the year ended December 31, 2014 (when filed) and HEI's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2014, June 30, 2014 and September 30, 2014, as updated by SEC Forms 8-K.

 


Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


Years ended December 31

2014


2013

(in thousands)




Cash flows from operating activities




Net income

$

170,210


$

163,406

Adjustments to reconcile net income to net cash provided by operating activities




Depreciation of property, plant and equipment

172,762


160,061

Other amortization

8,476


4,667

Provision for loan losses

6,126


1,507

Loans receivable originated and purchased, held for sale

(155,755)


(249,022)

Proceeds from sale of loans receivable, held for sale

155,030


273,775

Gain on sale of credit card portfolio


(2,251)

Increase in deferred income taxes

59,184


80,399

Excess tax benefits from share-based payment arrangements

(277)


(430)

Allowance for equity funds used during construction

(6,771)


(5,561)

Change in cash overdraft

(1,038)


1,038

Changes in assets and liabilities




Decrease in accounts receivable and unbilled revenues, net

33,089


16,038

Decrease in fuel oil stock

28,041


27,332

Increase in regulatory assets

(17,000)


(65,461)

Decrease in accounts, interest and dividends payable

(92,294)


(23,153)

Change in prepaid and accrued income taxes and utility revenue taxes

12,845


(19,406)

Increase (decrease) in defined benefit pension and other postretirement benefit plans liability

22,251


(33,014)

Change in other assets and liabilities

(93,400)


(2,779)

Net cash provided by operating activities

301,479


327,146

Cash flows from investing activities




Available-for-sale investment securities purchased

(183,778)


(112,654)

Principal repayments on available-for-sale investment securities

91,013


158,558

Proceeds from sale of available-for-sale investment securities

79,564


71,367

Redemption of stock from Federal Home Loan Bank of Seattle

23,244


3,476

Net increase in loans held for investment

(283,810)


(398,426)

Proceeds from sale of real estate acquired in settlement of loans

3,213


9,212

Capital expenditures

(339,721)


(353,879)

Contributions in aid of construction

41,806


32,160

Proceeds from sale of credit card portfolio


26,386

Other

(39)


40

Net cash used in investing activities

(568,508)


(563,760)

Cash flows from financing activities




Net increase in deposit liabilities

250,938


142,561

Net increase in short-term borrowings with original maturities of three months or less

13,490


21,789

Net decrease in retail repurchase agreements

(9,465)


(1,418)

Proceeds from other bank borrowings

130,601


130,000

Repayments of other bank borrowings

(75,000)


(80,000)

Proceeds from issuance of long-term debt

125,000


286,000

Repayment of long-term debt

(111,400)


(216,000)

Excess tax benefits from share-based payment arrangements

277


430

Net proceeds from issuance of common stock

26,898


55,086

Common stock dividends

(126,458)


(98,383)

Preferred stock dividends of subsidiaries

(1,890)


(1,890)

Other

(456)


(1,187)

Net cash provided by financing activities

222,535


236,988

Net increase (decrease) in cash and cash equivalents

(44,494)


374

Cash and cash equivalents, January 1

220,036


219,662

Cash and cash equivalents, December 31

$

175,542


$

220,036


This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI's Annual Report on SEC Form 10-K for the year ended December 31, 2014 (when filed) and HEI's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2014, June 30, 2014 and September 30, 2014, as updated by SEC Forms 8-K.

 


Hawaiian Electric Company, Inc. (Hawaiian Electric) and Subsidiaries

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)




Three months ended December 31


Years ended December 31

(dollars in thousands, except per barrel amounts)


2014


2013


2014


2013

Revenues


$

725,267


$

770,152


$

2,987,323


$

2,980,172

Expenses









Fuel oil


265,696


307,814


1,131,685


1,185,552

Purchased power


175,887


184,012


722,008


710,681

Other operation and maintenance


115,129


102,547


410,612


403,270

Depreciation


41,597


38,160


166,387


154,025

Taxes, other than income taxes


68,080


72,055


280,863


281,131

Total expenses


666,389


704,588


2,711,555


2,734,659

Operating income


58,878


65,564


275,768


245,513

Allowance for equity funds used during construction


1,838


1,531


6,771


5,561

Interest expense and other charges, net


(15,768)


(15,319)


(64,757)


(59,279)

Allowance for borrowed funds used during construction


702


620


2,579


2,246

Income before income taxes


45,650


52,396


220,361


194,041

Income taxes


16,039


19,907


80,725


69,117

Net income


29,611


32,489


139,636


124,924

Preferred stock dividends of subsidiaries


229


229


915


915

Net income attributable to Hawaiian Electric


29,382


32,260


138,721


124,009

Preferred stock dividends of Hawaiian Electric


270


270


1,080


1,080

Net income for common stock


$

29,112


$

31,990


$

137,641


$

122,929

Comprehensive income attributable to Hawaiian Electric


$

28,517


$

33,516


$

137,078


$

124,507

OTHER ELECTRIC UTILITY INFORMATION









Kilowatthour sales (millions)









   Hawaiian Electric


1,720


1,759


6,782


6,859

   Hawaii Electric Light


269


273


1,062


1,076

   Maui Electric


288


292


1,132


1,135



2,277


2,324


8,976


9,070

Wet-bulb temperature (Oahu average; degrees Fahrenheit)


70.0


69.3


69.6


68.8

Cooling degree days (Oahu)


1,206


1,135


4,909


4,506

Average fuel oil cost per barrel


$

122.04


$

133.88


$

129.65


$

131.10










Twelve months ended December 31






2014


2013

Return on average common equity (%) (simple average)









   Hawaiian Electric






8.74


7.98

   Hawaii Electric Light






6.71


7.41

   Maui Electric






8.81


8.91

   Hawaiian Electric Consolidated






8.40


8.02


This information should be read in conjunction with the consolidated financial statements and the notes thereto in Hawaiian Electric's Annual Report on SEC Form 10-K for the year ended December 31, 2014 (when filed) and the consolidated financial statements and the notes thereto in Hawaiian Electric's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2014, June 30, 2014 and September 30, 2014 , as updated by SEC Forms 8-K.

 


Hawaiian Electric Company, Inc. (Hawaiian Electric) and Subsidiaries

CONSOLIDATED BALANCE SHEETS

(Unaudited)


December 31


2014


2013

(dollars in thousands, except par value)





Assets





Property, plant and equipment





Utility property, plant and equipment





Land


$

52,299


$

51,883

Plant and equipment


6,009,482


5,701,875

Less accumulated depreciation


(2,175,510)


(2,111,229)

Construction in progress


158,616


143,233

Utility property, plant and equipment, net


4,044,887


3,785,762

Nonutility property, plant and equipment, less accumulated depreciation of $1,227 and $1,223 at respective dates


6,563


6,567

Total property, plant and equipment, net


4,051,450


3,792,329

Current assets





Cash and cash equivalents


13,762


62,825

Customer accounts receivable, net


158,484


175,448

Accrued unbilled revenues, net


137,374


144,124

Other accounts receivable, net


4,283


14,062

Fuel oil stock, at average cost


106,046


134,087

Materials and supplies, at average cost


57,250


59,044

Prepayments and other


66,383


52,857

Regulatory assets


71,421


69,738

Total current assets


615,003


712,185

Other long-term assets





Regulatory assets


833,843


506,186

Unamortized debt expense


8,323


9,003

Other


81,838


67,426

Total other long-term assets


924,004


582,615

Total assets


$

5,590,457


$

5,087,129

Capitalization and liabilities





Capitalization





Common stock ($6 2/3 par value, authorized 50,000,000 shares; outstanding 15,805,327 in 2014 and 15,429,105 shares in 2013)


$

105,388


$

102,880

Premium on capital stock


578,938


541,452

Retained earnings


997,773


948,624

Accumulated other comprehensive income, net of income taxes-retirement benefit plans


45


608

Common stock equity


1,682,144


1,593,564

Cumulative preferred stock — not subject to mandatory redemption


34,293


34,293

Long-term debt, net


1,206,546


1,206,545

Total capitalization


2,922,983


2,834,402

Current liabilities





Current portion of long-term debt



11,400

Accounts payable


163,934


189,559

Interest and preferred dividends payable


22,316


21,652

Taxes accrued


250,402


249,445

Regulatory liabilities


632


1,916

Other


65,146


63,881

Total current liabilities


502,430


537,853

Deferred credits and other liabilities





Deferred income taxes


602,872


507,161

Regulatory liabilities


344,217


347,383

Unamortized tax credits


79,492


73,539

Defined benefit pension and other postretirement benefit plans liability


595,395


262,162

Other


76,636


91,735

Total deferred credits and other liabilities


1,698,612


1,281,980

Contributions in aid of construction


466,432


432,894

Total capitalization and liabilities


$

5,590,457


$

5,087,129


This information should be read in conjunction with the consolidated financial statements and the notes thereto in Hawaiian Electric's Annual Report on SEC Form 10-K for the year ended December 31, 2014 (when filed) and the consolidated financial statements and the notes thereto in Hawaiian Electric's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2014, June 30, 2014 and September 30, 2014, as updated by SEC Forms 8-K.

 


Hawaiian Electric Company, Inc. (Hawaiian Electric) and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


Years ended December 31

2014


2013

(in thousands)




Cash flows from operating activities




Net income

$

139,636


$

124,924

Adjustments to reconcile net income to net cash provided by operating activities




Depreciation of property, plant and equipment

166,387


154,025

Other amortization

8,091


5,077

Increase in deferred income taxes

82,947


64,507

Change in tax credits, net

6,062


7,017

Allowance for equity funds used during construction

(6,771)


(5,561)

Change in cash overdraft

(1,038)


1,038

Changes in assets and liabilities




Decrease in accounts receivable

26,743


49,445

Decrease (increase) in accrued unbilled revenues

6,750


(9,826)

Decrease in fuel oil stock

28,041


27,332

Decrease (increase) in materials and supplies

1,794


(7,959)

Increase in regulatory assets

(17,000)


(65,461)

Decrease in accounts payable

(90,632)


(20,828)

Change in prepaid and accrued income taxes and revenue taxes

(4,036)


(2,028)

Increase (decrease) in defined benefit pension and other postretirement
   benefit plans liability

(961)


2,240

Change in other assets and liabilities

(62,959)


(31,499)

Net cash provided by operating activities

283,054


292,443

Cash flows from investing activities




Capital expenditures

(311,574)


(342,485)

Contributions in aid of construction

41,806


32,160

Other


(230)

Net cash used in investing activities

(269,768)


(310,555)

Cash flows from financing activities




Common stock dividends

(88,492)


(81,578)

Preferred stock dividends of Hawaiian Electric and subsidiaries

(1,995)


(1,995)

Proceeds from issuance of common stock

40,000


78,500

Proceeds from issuance of long-term debt


236,000

Repayment of long-term debt

(11,400)


(166,000)

Other

(462)


(1,149)

Net cash provided by (used in) financing activities

(62,349)


63,778

Net increase (decrease) in cash and cash equivalents

(49,063)


45,666

Cash and cash equivalents, January 1

62,825


17,159

Cash and cash equivalents, December 31

$

13,762


$

62,825


This information should be read in conjunction with the consolidated financial statements and the notes thereto incorporated by reference in Hawaiian Electric's Annual Report on SEC Form 10-K for the year ended December 31, 2014 (when filed) and the consolidated financial statements and the notes thereto in Hawaiian Electric's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2014, June 30, 2014 and September 30, 2014 , as updated by SEC Forms 8-K.

 


American Savings Bank, F.S.B.

STATEMENTS OF INCOME DATA

(Unaudited)




Three months ended


Years ended December 31,

(in thousands)


December 31, 2014


September 30, 2014


December 31, 2013


2014


2013

Interest and dividend income











Interest and fees on loans


$

46,276


$

45,532


$

43,405


$

179,341


$

172,969

Interest and dividends on investment securities


3,187


2,773


3,372


11,945


13,095

Total interest and dividend income


49,463


48,305


46,777


191,286


186,064

Interest expense











Interest on deposit liabilities


1,303


1,312


1,222


5,077


5,092

Interest on other borrowings


1,468


1,438


1,437


5,731


4,985

Total interest expense


2,771


2,750


2,659


10,808


10,077

Net interest income


46,692


45,555


44,118


180,478


175,987

Provision for loan losses


2,560


1,550


554


6,126


1,507

Net interest income after provision for loan losses


44,132


44,005


43,564


174,352


174,480

Noninterest income











Fees from other financial services


5,760


5,642


5,732


21,747


27,099

Fee income on deposit liabilities


5,074


5,109


4,797


19,249


18,363

Fee income on other financial products


1,806


1,971


2,117


8,131


8,405

Bank-owned life insurance


1,004


1,000


978


3,949


3,928

Mortgage banking income


1,164


875


1,413


2,913


8,309

Gains on sale of securities





2,847


1,226

Other income, net


455


634


492


2,375


4,753

Total noninterest income


15,263


15,231


15,529


61,211


72,083

Noninterest expense











Compensation and employee benefits


19,835


19,892


22,195


79,885


82,910

Occupancy


4,238


4,517


4,197


17,197


16,747

Data processing


2,975


2,684


2,970


11,690


10,952

Services


2,561


2,580


2,160


10,269


9,015

Equipment


1,638


1,672


1,826


6,564


7,295

Office supplies, printing and postage


1,602


1,415


1,427


6,089


4,233

Marketing


1,309


948


1,319


3,999


3,373

FDIC insurance


820


840


748


3,261


3,253

Other expense


7,042


5,116


4,457


20,990


21,726

Total noninterest expense


42,020


39,664


41,299


159,944


159,504

Income before income taxes


17,375


19,572



17,794


75,619


87,059

Income taxes


5,358


6,312


5,610


24,127


29,525

Net income


$

12,017


$

13,260


$

12,184


$

51,492


$

57,534

Comprehensive income


$

5,323


$

11,811


$

23,802


$

47,131


$

60,733

OTHER BANK INFORMATION (annualized %, except as of period end)





Return on average assets


0.87


0.98


0.94


0.95


1.13

Return on average equity


8.84


9.87


9.56


9.62


11.38

Return on average tangible common equity


10.42


11.65


11.39


11.37


13.59

Net interest margin


3.65


3.62


3.67


3.62


3.74

Net charge-offs to average loans outstanding


0.04


0.04


0.15


0.01


0.09

As of period end











Nonperforming assets to loans outstanding and real estate owned *


0.85


0.88


1.20





Allowance for loan losses to loans outstanding


1.03


1.00


0.97





Tier-1 leverage ratio *


8.9


9.1


9.1





Total risk-based capital ratio *


12.3


12.6


12.1





Tangible common equity to total assets


8.25


8.49


8.50





Dividend paid to HEI (via ASHI) ($ in millions)


9


9


10


36


40


*  Regulatory basis

This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI's Annual Report on SEC Form 10-K for the year ended December 31, 2014 (when filed) and HEI's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2014, June 30, 2014 and September 30, 2014, as updated by SEC Forms 8-K.

 


American Savings Bank, F.S.B.

BALANCE SHEETS DATA

(Unaudited)


December 31



2014




2013

(in thousands)








Assets








Cash and due from banks



$

107,233




$

108,998

Interest-bearing deposits



54,230




47,605

Available-for-sale investment securities, at fair value



550,394




529,007

Stock in Federal Home Loan Bank of Seattle, at cost



69,302




92,546

Loans receivable held for investment



4,434,651




4,150,229

Allowance for loan losses



(45,618)




(40,116)

Net loans



4,389,033




4,110,113

Loans held for sale, at lower of cost or fair value



8,424




5,302

Other



304,435




268,063

Goodwill



82,190




82,190

Total assets



$

5,565,241




$

5,243,824

Liabilities and shareholder's equity








Deposit liabilities–noninterest-bearing



$

1,342,794




$

1,214,418

Deposit liabilities–interest-bearing



3,280,621




3,158,059

Other borrowings



290,656




244,514

Other



116,527




105,679

Total liabilities



5,030,598




4,722,670

Common stock



1




1

Additional paid in capital



338,411




336,053

Retained earnings



212,789




197,297

Accumulated other comprehensive loss, net of tax benefits








     Net unrealized gains (losses) on securities

$

462




$

(3,663)



     Retirement benefit plans

(17,020)


(16,558)


(8,534)


(12,197)

Total shareholder's equity



534,643




521,154

Total liabilities and shareholder's equity



$

5,565,241




$

5,243,824


This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI's Annual Report on SEC Form 10-K for the year ended December 31, 2014 (when filed) and HEI's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2014, June 30, 2014 and September 30, 2014, as updated by SEC Forms 8-K.

 

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 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 GAAP1 earnings to non-GAAP core earnings and diluted earnings per share for HEI consolidated and the adjusted return on average common equity (ROACE).

The reconciling adjustment from GAAP earnings to core earnings is limited to the costs related to the pending merger between HEI and NextEra Energy, Inc.  For more information on the pending merger, see HEI's Form 8-K filed on December 4, 2014. 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.

 


RECONCILIATION OF GAAP1 TO NON-GAAP MEASURES

Hawaiian Electric Industries, Inc. and Subsidiaries (HEI)

Unaudited








($ in millions, except per share amounts)








Three months ended December 31


Years ended December 31


2014


2013


2014


2013

HEI CONSOLIDATED NET INCOME








GAAP (as reported)

$

33.2


$

39.0


$

168.3


$

161.5

Excluding special items (after-tax):








Costs related to pending merger with NextEra Energy, Inc.

4.3



4.9


Non-GAAP (core)

$

37.5


$

39.0


$

173.2


$

161.5

HEI CONSOLIDATED DILUTED EARNINGS PER SHARE








GAAP (as reported)

$

0.32


$

0.39


$

1.64


$

1.62

Excluding special items (after-tax):








Costs related to pending merger with NextEra Energy, Inc.

0.04



0.05


Non-GAAP (core) diluted earnings per common share

$

0.36


$

0.39


$

1.68


$

1.62

HEI CONSOLIDATED RETURN ON AVERAGE COMMON EQUITY (ROACE) (simple average)

Based on GAAP





9.6%


9.7%

Based on non-GAAP (core)2





9.8%


9.7%

















RECONCILIATION OF GAAP1 TO NON-GAAP MEASURES

Hawaiian Electric Company, Inc. and Subsidiaries

Unaudited








($ in millions)









Three months ended December 31


Years ended December 31


2014


2013


2014


2013

HAWAIIAN ELECTRIC CONSOLIDATED OTHER OPERATION AND MAINTENANCE (O&M) EXPENSE


GAAP (as reported)

$

115.1


$

102.5


$

410.6


$

403.3

Excluding O&M-related net income neutral items3

2.5


2.9


10.0


8.0

Adjusted other operations and maintenance expense (Non-GAAP measure)

$

112.6


$

99.6


$

400.6


$

395.3

Note:  Columns may not foot due to rounding



1  Accounting principles generally accepted in the United States of America



2 Calculated as core net income divided by average GAAP common equity



3 Expenses covered by surcharges or by third parties recorded in revenues



 

Contact:

Clifford H. Chen

Telephone: (808) 543-7300


Manager, Investor Relations & Strategic Planning

E-mail: ir@hei.com

Logo - http://photos.prnewswire.com/prnh/20110411/LA80136LOGO

 

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SOURCE Hawaiian Electric Industries, Inc.