Hawaiian Electric Industries Reports Second Quarter 2016 Earnings

Diluted Earnings Per Share (EPS) of $0.41 and Core EPS[1] of $0.43

Company Release - 8/4/2016 4:30 PM ET

HONOLULU, Aug. 4, 2016 /PRNewswire/ -- Hawaiian Electric Industries, Inc. (NYSE - HE) (HEI) today reported consolidated net income for common stock of $44.1 million and diluted earnings per share (EPS) of $0.41 for the second quarter of 2016 compared to consolidated net income of $35.0 million and EPS of $0.33 for the second quarter of 2015.  Excluding costs related to the recently terminated merger with NextEra Energy, Inc., the cancelled spin-off of ASB Hawaii, Inc. and the recently terminated liquefied natural gas (LNG) contract, which after-tax totaled $2.7 million and $7.2 million in the second quarters of 2016 and 2015, respectively, core earnings1 and core EPS1 for the second quarter of 2016 were $46.9 million and $0.43, respectively, compared to $42.2 million and $0.39, respectively, for the second quarter of 2015.

"HEI had a solid quarter as we continued to invest in our Hawaii-based businesses.  Through the first half of the year, Hawaiian Electric invested $157 million (more than twice its earnings for the first half of the year) in local infrastructure projects to modernize the electric grid and to integrate more renewable energy reliably.  At American Savings Bank, we continued to deliver profitable performance with year-to-date annualized loan growth of 6.0% and deposit growth of 8.2% driving higher net interest income," said Constance H. Lau, HEI president and chief executive officer and chairman of the boards of Hawaiian Electric and American Savings Bank.

"HEI remains a strong company and is well-positioned to help Hawaiian Electric achieve Hawaii's 100% renewable energy goal by 2045.  Our utilities will continue transforming to focus on providing customer value and options.  We will accomplish this through innovation and a balanced generation portfolio, distributed generation, enhanced electrification of transportation and demand response initiatives.  And American Savings Bank will continue to move forward as one of the leading financial institutions in Hawaii delivering a full range of financial products and services to its customers."  

__________________________ 

1

Non-GAAP measure which excludes costs related to the recently terminated merger between HEI and NextEra Energy, Inc. and the cancelled spin-off of ASB Hawaii, Inc. and costs related to the recently terminated LNG contract, which required PUC approval of the merger with NextEra Energy, Inc.  See the "Explanation of HEI's Use of Certain Unaudited Non-GAAP measures" and the related reconciliation.

 

HAWAIIAN ELECTRIC COMPANY EARNINGS

Hawaiian Electric Company's2 net income for the second quarter of 2016 was $35.9 million compared to $32.8 million in the second quarter of 2015.  The net income increase was mainly driven by $4 million (after-tax) higher net revenues primarily due to the recovery of costs for clean energy and reliability investments partially offset by $2 million (after-tax) higher depreciation expense as a result of increasing investments for improved customer reliability and greater system efficiency, and the integration of more renewable energy.

Other operations and maintenance expenses were relatively flat compared to the prior year quarter.  The second quarter of 2016 included higher overhaul and LNG consulting and legal expenses compared to the second quarter of 2015 which included higher vegetation management and boiler and steam maintenance expenses.


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.



2

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.

 

AMERICAN SAVINGS BANK EARNINGS

American Savings Bank's (American) net income for the second quarter of 2016 was $13.3 million compared to $12.7 million in the first (or linked) quarter of 2016 and $12.9 million in the second quarter of 2015.  Second quarter 2016 net income was $0.6 million higher than the linked quarter, primarily driven by $1 million (after-tax) higher revenues due to higher noninterest income, which included gains on sale of securities and higher mortgage banking income, and higher net interest income primarily due to growth in the commercial real estate and consumer loan portfolios.  Higher revenues were partially offset by $1 million (after-tax) higher noninterest expense due primarily to costs related to the replacement and upgrade of the electronic banking platform.

Compared to the second quarter of 2015, net income improved by $0.4 million, primarily driven by $3 million (after-tax) higher net interest income due to growth in the commercial real estate and consumer loan and investment portfolios and higher yields on interest-earning assets.  This was offset by the following on an after-tax basis:

  • $2 million higher provision for loan losses mainly driven by commercial real estate and consumer loan growth and downgrades of specific commercial credits in the second quarter of 2016; and
  • $1 million higher noninterest expense primarily due to costs related to the replacement and upgrade of the electronic banking platform. 

Total loans were $4.8 billion at June 30, 2016, an increase of $112 million and $138 million in the second quarter and year-to-date 2016, respectively.  Year-to-date annualized loan growth was 6.0%, in line with American's target of mid-single digit loan growth for the full year. 

Total deposits were $5.2 billion at June 30, 2016, an increase of $92 million and $207 million in the second quarter and year-to-date 2016, respectively.  Year-to-date annualized deposit growth of 8.2% was primarily driven by the $126 million (5.6% year-to-date annualized) increase in low-cost core deposits.   Average cost of funds remained low at 0.23% for the second quarter of 2016, unchanged from the linked quarter and 1 basis point higher than the prior year quarter.

Overall, American achieved solid profitability in the second quarter of 2016 with a return on average equity of 9.2% and a return on average assets of 0.86%.

For additional information, refer to the American news release issued on July 29, 2016.

HOLDING AND OTHER COMPANIES

The holding and other companies' net losses were $5.0 million in the second quarter of 2016 compared to $10.7 million in the second quarter of 2015.  Excluding after-tax costs of $2.0 million associated with the recently terminated merger with NextEra Energy, Inc. and the cancelled spin-off of ASB Hawaii, Inc. in the second quarter of 2016 and $7.2 million in the second quarter of 2015, the holding and other companies' net losses in 2016 and 2015 were $3.0 million and $3.5 million, respectively.

WEBCAST AND CONFERENCE CALL TO DISCUSS EARNINGS AND EPS GUIDANCE

Hawaiian Electric Industries, Inc. will conduct a webcast and conference call to review its second quarter of 2016 earnings on Thursday, August 4, 2016, at 11:00 a.m. Hawaii time (5:00 p.m. Eastern time). 

Interested parties within the United States may listen to the conference by calling (888) 311-8190 and entering passcode: 16065228.  International parties may listen to the conference by calling (330) 863-3378 and entering passcode: 16065228 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 two hours after the event.  Replays of the conference call will also be available approximately two hours after the event through August 18, 2016, by dialing (855) 859-2056 or (404) 537-3406 and entering passcode: 16065228.

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, 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 and 13 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 "will," "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, 2015, HEI's Quarterly Report on Form 10-Q for the quarter ended March 31, 2016 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.


 

Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)



Three months ended June 30


Six months ended June 30

(in thousands, except per share amounts)


2016


2015


2016


2015

Revenues









Electric utility


$

495,395



$

558,163



$

977,447



$

1,131,605


Bank


70,749



65,783



139,589



130,131


Other


100



(34)



168



38


Total revenues


566,244



623,912



1,117,204



1,261,774


Expenses









Electric utility


424,709



492,002



851,435



1,007,808


Bank


50,525



46,057



99,771



89,774


Other


5,555



13,123



11,692



21,956


Total expenses


480,789



551,182



962,898



1,119,538


Operating income (loss)









Electric utility


70,686



66,161



126,012



123,797


Bank


20,224



19,726



39,818



40,357


Other


(5,455)



(13,157)



(11,524)



(21,918)


Total operating income


85,455



72,730



154,306



142,236


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


(17,301)



(18,906)



(37,427)



(38,006)


Allowance for borrowed funds used during construction


760



682



1,422



1,181


Allowance for equity funds used during construction


1,997



1,896



3,736



3,309


Income before income taxes


70,911



56,402



122,037



108,720


Income taxes


26,310



20,911



44,611



40,890


Net income


44,601



35,491



77,426



67,830


Preferred stock dividends of subsidiaries


473



473



946



946


Net income for common stock


$

44,128



$

35,018



$

76,480



$

66,884


Basic earnings per common share


$

0.41



$

0.33



$

0.71



$

0.63


Diluted earnings per common share


$

0.41



$

0.33



$

0.71



$

0.63


Dividends per common share


$

0.31



$

0.31



$

0.62



$

0.62


Weighted-average number of common shares outstanding


107,962



107,418



107,791



105,361


Adjusted weighted-average shares


108,133



107,694



107,978



105,659


Net income (loss) for common stock by segment









Electric utility


$

35,857



$

32,841



$

61,224



$

59,715


Bank


13,285



12,851



25,958



26,326


Other


(5,014)



(10,674)



(10,702)



(19,157)


Net income for common stock


$

44,128



$

35,018



$

76,480



$

66,884


Comprehensive income attributable to Hawaiian Electric Industries, Inc.


$

46,236



$

31,891



$

87,388



$

67,815


Return on average common equity (twelve months ended)1






8.8

%


8.1

%


This information should be read in conjunction with the 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, 2016 and 2015 returns on average common equity (twelve months ended June 30) were 9.3% and 9.0%.  See reconciliation of GAAP to non-GAAP measures.

 

Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(dollars in thousands)


June 30, 2016


December 31, 2015

Assets





Cash and cash equivalents


$

257,208



$

300,478


Accounts receivable and unbilled revenues, net


224,179



242,766


Available-for-sale investment securities, at fair value


894,021



820,648


Stock in Federal Home Loan Bank, at cost


11,218



10,678


Loans receivable held for investment, net


4,699,623



4,565,781


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


6,217



4,631


Property, plant and equipment, net of accumulated depreciation of $2,387,013 and $2,339,319 at the respective dates


4,482,990



4,377,658


Regulatory assets


885,114



896,731


Other


436,479



480,457


Goodwill


82,190



82,190


Total assets


$

11,979,239



$

11,782,018


Liabilities and shareholders' equity





Liabilities





Accounts payable


$

130,160



$

138,523


Interest and dividends payable


23,490



26,042


Deposit liabilities


5,232,203



5,025,254


Short-term borrowings—other than bank


115,985



103,063


Other bank borrowings


272,887



328,582


Long-term debt, net—other than bank


1,578,842



1,578,368


Deferred income taxes


712,199



680,877


Regulatory liabilities


391,003



371,543


Contributions in aid of construction


516,750



506,087


Defined benefit pension and other postretirement benefit plans liability


578,651



589,918


Other


426,594



471,828


Total liabilities


9,978,764



9,820,085


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: 108,187,063 shares and 107,460,406 shares at the respective dates


1,647,138



1,629,136


Retained earnings


334,398



324,766


Accumulated other comprehensive loss, net of tax benefits


(15,354)



(26,262)


Total shareholders' equity


1,966,182



1,927,640


Total liabilities and shareholders' equity


$

11,979,239



$

11,782,018



The Consolidated Balance Sheet as of December 31, 2015 reflects the retrospective application of ASU No. 2015-03, "Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs," which was adopted in first quarter 2016.


This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI filings with the SEC.

 

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

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)




Three months ended June 30


Six months ended June 30

(dollars in thousands, except per barrel amounts)


2016


2015


2016


2015

Revenues


$

495,395



$

558,163



$

977,447



$

1,131,605


Expenses









Fuel oil


91,899



146,231



205,639



323,037


Purchased power


139,058



149,284



254,917



285,291


Other operation and maintenance


99,563



98,864



203,471



202,866


Depreciation


46,760



44,241



93,541



88,484


Taxes, other than income taxes


47,429



53,382



93,867



108,130


Total expenses


424,709



492,002



851,435



1,007,808


Operating income


70,686



66,161



126,012



123,797


Allowance for equity funds used during construction


1,997



1,896



3,736



3,309


Interest expense and other charges, net


(15,103)



(16,288)



(32,411)



(32,613)


Allowance for borrowed funds used during construction


760



682



1,422



1,181


Income before income taxes


58,340



52,451



98,759



95,674


Income taxes


21,984



19,111



36,537



34,961


Net income


36,356



33,340



62,222



60,713


Preferred stock dividends of subsidiaries


229



229



458



458


Net income attributable to Hawaiian Electric


36,127



33,111



61,764



60,255


Preferred stock dividends of Hawaiian Electric


270



270



540



540


Net income for common stock


$

35,857



$

32,841



$

61,224



$

59,715


Comprehensive income attributable to Hawaiian Electric


$

35,102



$

32,826



$

61,485



$

59,722


OTHER ELECTRIC UTILITY INFORMATION









Kilowatthour sales (millions)









   Hawaiian Electric


1,625



1,615



3,182



3,142


   Hawaii Electric Light


260



257



518



510


   Maui Electric


271



272



541



536




2,156



2,144



4,241



4,188


Wet-bulb temperature (Oahu average; degrees Fahrenheit)


69.9



69.2



68.6



67.8


Cooling degree days (Oahu)


1,257



1,181



2,141



1,976


Average fuel oil cost per barrel


$

44.98



$

69.37



$

49.05



$

77.85















Twelve months ended June 30







2016


2015

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









   Hawaiian Electric






7.95



7.87


   Hawaii Electric Light






7.47



6.01


   Maui Electric






8.67



8.87


   Hawaiian Electric Consolidated1






7.98



7.70



This information should be read in conjunction with the 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.


1  On a core basis, 2016 and 2015 returns on average common equity (twelve months ended June 30) were 8.1% and 7.7%.  See reconciliation of GAAP to non-GAAP measures.

 

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

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(dollars in thousands, except par value)


June 30, 2016


December 31, 2015

Assets





Property, plant and equipment





Utility property, plant and equipment





  Land


$

53,175



$

52,792


  Plant and equipment


6,411,544



6,315,698


  Less accumulated depreciation


(2,314,743)



(2,266,004)


  Construction in progress


230,143



175,309


 Utility property, plant and equipment, net


4,380,119



4,277,795


Nonutility property, plant and equipment, less accumulated depreciation of $1,230 and $1,229 at respective dates


7,375



7,272


  Total property, plant and equipment, net


4,387,494



4,285,067


Current assets





Cash and cash equivalents


27,579



24,449


Customer accounts receivable, net


116,265



132,778


Accrued unbilled revenues, net


87,724



84,509


Other accounts receivable, net


4,546



10,408


Fuel oil stock, at average cost


61,572



71,216


Materials and supplies, at average cost


56,911



54,429


Prepayments and other


21,879



36,640


Regulatory assets


90,471



72,231


Total current assets


466,947



486,660


Other long-term assets





Regulatory assets


794,643



824,500


Unamortized debt expense


344



497


Other


72,425



75,486


Total other long-term assets


867,412



900,483


Total assets


$

5,721,853



$

5,672,210


Capitalization and liabilities





Capitalization





Common stock ($6 2/3 par value, authorized 50,000,000 shares; outstanding 15,805,327 shares)


$

105,388



$

105,388


Premium on capital stock


578,926



578,930


Retained earnings


1,057,506



1,043,082


Accumulated other comprehensive income, net of income taxes


1,186



925


Common stock equity


1,743,006



1,728,325


Cumulative preferred stock — not subject to mandatory redemption


34,293



34,293


Long-term debt, net


1,279,123



1,278,702


Total capitalization


3,056,422



3,041,320


Current liabilities





Short-term borrowings from non-affiliates


36,995




Accounts payable


106,521



114,846


Interest and preferred dividends payable


21,309



23,111


Taxes accrued


141,148



191,084


Regulatory liabilities


3,368



2,204


Other


53,347



54,079


Total current liabilities


362,688



385,324


Deferred credits and other liabilities





Deferred income taxes


689,482



654,806


Regulatory liabilities


387,635



369,339


Unamortized tax credits


89,176



84,214


Defined benefit pension and other postretirement benefit plans liability


541,656



552,974


Other


78,044



78,146


Total deferred credits and other liabilities


1,785,993



1,739,479


Contributions in aid of construction


516,750



506,087


Total capitalization and liabilities


$

5,721,853



$

5,672,210



The Consolidated Balance Sheet as of December 31, 2015 reflects the retrospective application of ASU No. 2015-03, "Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs," which was adopted in first quarter 2016.


This information should be read in conjunction with the 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, 2016


March 31, 2016


June 30, 2015


2016


2015

Interest and dividend income











Interest and fees on loans


$

49,690



$

48,437



$

46,035



98,127



91,233


Interest and dividends on investment securities


4,443



5,017



3,306



9,460



6,357


Total interest and dividend income


54,133



53,454



49,341



107,587



97,590


Interest expense











Interest on deposit liabilities


1,691



1,592



1,266



3,283



2,526


Interest on other borrowings


1,467



1,485



1,487



2,952



2,953


Total interest expense


3,158



3,077



2,753



6,235



5,479


Net interest income


50,975



50,377



46,588



101,352



92,111


Provision for loan losses


4,753



4,766



1,825



9,519



2,439


Net interest income after provision for loan losses


46,222



45,611



44,763



91,833



89,672


Noninterest income











Fees from other financial services


5,701



5,499



5,550



11,200



10,905


Fee income on deposit liabilities


5,262



5,156



5,424



10,418



10,739


Fee income on other financial products


2,207



2,205



2,103



4,412



3,992


Bank-owned life insurance


1,006



998



1,058



2,004



2,041


Mortgage banking income


1,554



1,195



2,068



2,749



3,890


Gains on sale of investment securities, net


598







598




Other income, net


288



333



239



621



974


Total noninterest income


16,616



15,386



16,442



32,002



32,541


Noninterest expense











Compensation and employee benefits


21,919



22,434



22,319



44,353



44,085


Occupancy


4,115



4,138



4,009



8,253



8,122


Data processing


3,277



3,172



2,953



6,449



6,069


Services


2,755



2,911



2,833



5,666



5,174


Equipment


1,771



1,663



1,690



3,434



3,391


Office supplies, printing and postage


1,583



1,365



1,303



2,948



2,786


Marketing


899



861



844



1,760



1,685


FDIC insurance


913



884



773



1,797



1,584


Other expense


5,382



3,975



4,755



9,357



8,960


Total noninterest expense


42,614



41,403



41,479



84,017



81,856


Income before income taxes


20,224



19,594



19,726



39,818



40,357


Income taxes


6,939



6,921



6,875



13,860



14,031


Net income


$

13,285



$

12,673



$

12,851



$

25,958



$

26,326


Comprehensive income


$

16,051



$

20,310



$

9,544



$

36,361



$

26,862


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









Return on average assets


0.86



0.84



0.89



0.85



0.93


Return on average equity


9.22



8.89



9.38



9.06



9.67


Return on average tangible common equity


10.75



10.39



11.04



10.57



11.39


Net interest margin


3.58



3.62



3.52



3.60



3.52


Efficiency ratio


63.05



62.96



65.81



63.00



65.67


Net charge-offs to average loans outstanding


0.15



0.21



0.11



0.18



0.08


As of period end











Nonperforming assets to loans outstanding and real estate owned


1.02



1.03



0.70






Allowance for loan losses to loans outstanding


1.16



1.13



1.04






Tangible common equity to tangible assets


8.15



8.08



8.16






Tier-1 leverage ratio


8.7



8.7



8.8






Total capital ratio


13.2



13.2



13.5






Dividend paid to HEI (via ASB Hawaii, Inc.) ($ in millions)


$

9.0



$

9.0



$

7.5







This information should be read in conjunction with the 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, 2016

December 31, 2015






Assets





Cash and due from banks


$

111,738



$

127,201


Interest-bearing deposits


62,850



93,680


Available-for-sale investment securities, at fair value


894,021



820,648


Stock in Federal Home Loan Bank, at cost


11,218



10,678


Loans receivable held for investment


4,754,954



4,615,819


Allowance for loan losses


(55,331)



(50,038)


Net loans


4,699,623



4,565,781


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


6,217



4,631


Other


320,233



309,946


Goodwill


82,190



82,190


Total assets


$

6,188,090



$

6,014,755


Liabilities and shareholder's equity





Deposit liabilities–noninterest-bearing


$

1,583,420



$

1,520,374


Deposit liabilities–interest-bearing


3,648,783



3,504,880


Other borrowings


272,887



328,582


Other


103,396



101,029


Total liabilities


5,608,486



5,454,865


Common stock


1



1


Additional paid in capital


341,849



340,496


Retained earnings


244,622



236,664


Accumulated other comprehensive loss, net of tax benefits





     Net unrealized gains (losses) on securities

$

8,111



$

(1,872)



     Retirement benefit plans

(14,979)


(6,868)


(15,399)


(17,271)


  Total shareholder's equity


579,604



559,890


  Total liabilities and shareholder's equity


$

6,188,090



$

6,014,755



This information should be read in conjunction with the 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.  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 the adjusted return on average common equity (ROACE) for HEI and the utility.

The reconciling adjustments from GAAP earnings to core earnings is limited to the costs related to the recently terminated merger between HEI and NextEra Energy, Inc. and the cancelled spin-off of ASB Hawaii, Inc. and costs related to the recently terminated liquefied natural gas (LNG) contract which required the Hawaii Public Utilities Commission approval of the merger with NextEra Energy, Inc. less the associated current income tax benefits adjustment.  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, respectively.  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 GAAP1 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)

2016

2015


2016

2015

HEI CONSOLIDATED COSTS RELATED TO THE TERMINATED MERGER WITH
NEXTERA ENERGY AND CANCELLED SPIN-OFF OF ASB HAWAII






Pre-tax expenses

$

2.0


$

9.0



$

3.6


$

13.9


Current income tax benefits


(1.8)




(2.0)


After-tax expenses

$

2.0


$

7.2



$

3.6


$

11.9


HEI CONSOLIDATED LNG CONTRACT COSTS2






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)

$

44.1


$

35.0



$

76.5


$

66.9


Excluding special items (after-tax):






Costs related to the terminated merger with NextEra Energy
and cancelled spin-off of ASB Hawaii

2.0


7.2



3.6


11.9


Costs related to the terminated LNG contract2

0.7




2.1



Non-GAAP (core) net income

$

46.9


$

42.2



$

82.1


$

78.8


HEI CONSOLIDATED DILUTED EARNINGS PER COMMON SHARE





GAAP (as reported)

$

0.41


$

0.33



$

0.71


$

0.63


Excluding special items (after-tax):






Costs related to the terminated merger with NextEra Energy
and cancelled spin-off of ASB Hawaii

0.02


0.07



0.03


0.11


Costs related to the terminated LNG contract2

0.01




0.02



Non-GAAP (core) diluted earnings per common share

$

0.43


$

0.39



$

0.76


$

0.75






Twelve months ended June 30





2016

2015

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




Based on GAAP




8.8

%

8.1

%

Based on non-GAAP (core)3




9.3

%

9.0

%







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 GAAP1 TO NON-GAAP MEASURES


Hawaiian Electric Company, Inc. and Subsidiaries

Unaudited

Three months ended June 30


Six months ended June 30

($ in millions)

2016

2015


2016

2015

HAWAIIAN ELECTRIC CONSOLIDATED COSTS RELATED TO THE
TERMINATED MERGER WITH NEXTERA ENERGY






Pre-tax expenses

$


$



$

0.1


$

0.4


Current income tax benefits





(0.2)


After-tax expenses

$


$



$

0.1


$

0.3


HAWAIIAN ELECTRIC CONSOLIDATED LNG CONTRACT COSTS2





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)

$

35.9


$

32.8



$

61.2


$

59.7


Excluding special items (after-tax):






Costs related to the terminated merger with NextEra Energy




0.1


0.3


Costs related to the terminated LNG contract2

0.7




2.1



Non-GAAP (core) net income

$

36.6


$

32.9



$

63.4


$

60.0












Twelve months ended June 30





2016

2015

HAWAIIAN ELECTRIC CONSOLIDATED RETURN ON AVERAGE COMMON EQUITY (ROACE) (simple average)




Based on GAAP




7.98

%

7.70

%

Based on non-GAAP (core)3




8.12

%

7.72

%








Three months ended June 30


Six months ended June 30

($ in millions)

2016

2015


2016

2015

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






GAAP (as reported)

$

99.6


$

98.9



$

203.5


$

202.9


Excluding O&M-related net income neutral items4

1.5


1.6



3.1


3.5


Excluding costs related to the terminated merger with NextEra Energy




0.1


0.4


Excluding costs related to the terminated LNG contract2

1.2




3.4



Non-GAAP (Adjusted other O&M expense)

$

96.8


$

97.2



$

196.8


$

198.9



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


Manager, Investor Relations & Strategic Planning 

E-mail: ir@hei.com

 

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

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/hawaiian-electric-industries-reports-second-quarter-2016-earnings-300309065.html

SOURCE Hawaiian Electric Industries, Inc.