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HEI Reports Third Quarter 2017 Earnings Of $60.1 Million

HONOLULU, Nov. 2, 2017 /PRNewswire/ -- Hawaiian Electric Industries, Inc. (HEI) (NYSE: HE) today reported consolidated net income for common stock for the third quarter of 2017 of $60.1 million and diluted earnings per share (EPS) of $0.55 compared to $127.1 million and EPS of $1.17 for the third quarter of 2016. Third quarter of 2016 core earnings1 and core EPS1 were $63.3 million and $0.58, respectively. HEI's third quarter of 2016 core earnings1 included $6 million of favorable tax adjustments at the holding company as HEI moved out of a federal net operating loss position, enabling the recognition of tax benefits.

"HEI's core earnings1 for the quarter compared well to the prior year quarter. The utility performed as we expected, and we saw strong performance by American Savings Bank. The bank delivered higher earnings and profitability driven by improving credit quality and higher yields on interest-earning assets. This exemplifies the value of the unique combination of businesses which comprise HEI," said Constance H. Lau, HEI president and chief executive officer.

___________________________


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.

HAWAIIAN ELECTRIC COMPANY EARNINGS

Hawaiian Electric Company's2 net income for the third quarter of 2017 was $47.5 million as our utilities continue to perform according to plan for this transition year compared to $47.0 million in the third quarter of 2016. The $0.5 million net income increase from the prior year quarter was primarily driven by the following after-tax items:

  • $2 million higher net revenues3 mainly due to higher recovery of costs for integrating more renewables and reliability investments and the Hawaii Electric Light 2016 interim rate increase which became effective on August 31, 2017;
  • $2 million higher allowance for funds used during construction primarily due to the Schofield generating plant project expected to be placed in service in the second quarter of 2018; and
  • $1 million favorable tax adjustments as the utility moved out of a federal net operating loss position, enabling the recognition of tax benefits in the third quarter of 2017.

These increases were offset by the following after-tax items:

  • $4 million higher operations and maintenance expenses4 compared to the prior year quarter primarily due to higher overhaul expenses and enterprise resource planning project costs; and
  • $1 million higher depreciation expense as a result of increasing investments for the integration of more renewable energy and improved customer reliability.

______________________

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.

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

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.American Savings Bank earnings

AMERICAN SAVINGS BANK EARNINGS

American Savings Bank's (American) net income for the third quarter of 2017 was $17.6 million compared to $16.7 million in the second (or linked) quarter of 2017 and $15.1 million in the third quarter of 2016.

Compared to the third quarter of 2016, the $2.5 million increase was primarily driven by the following on an after-tax basis:

  • $3 million higher net interest income driven mainly by growth in interest-earning assets funded by strong deposit growth and overall improvement in asset yields; and
  • $3 million lower provision for loan losses resulting from work to improve commercial loan asset quality.

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

  • $2 million lower noninterest income primarily due to lower mortgage banking income and no gain on sale of real estate; and
  • $1 million higher noninterest expense primarily due to higher performance-based incentive cost.

Compared to the linked second quarter of 2017, the $0.9 million increase was primarily driven by lower provision for loan losses.

Total loans were $4.7 billion at September 30, 2017, a decrease of $65 million or 1.8% annualized from December 31, 2016. This decrease reflects American's work to improve overall commercial loan quality through a strategic decrease in its exposure to national syndicated credits, as well as a reduction in its commercial real estate loan portfolio. The decrease in American's commercial portfolio was partially offset by growth in home equity lines of credit, consumer and residential loan portfolios.

Total deposits were $5.8 billion at September 30, 2017, an increase of $203 million or 4.9% annualized from December 31, 2016. Low-cost core deposits increased $153 million or 4.2% annualized from December 31, 2016. The average cost of funds was 0.20% for the third quarter of 2017 compared to 0.21% for the second quarter of 2017 and 0.24% for the third quarter of 2016.

Overall, American achieved solid profitability in the third quarter of 2017 with a return on average equity of 11.6% and a return on average assets of 1.07%.

For additional information, refer to the American news release issued on October 30, 2017.

HOLDING AND OTHER COMPANIES

The holding and other companies' net loss was $5.0 million in the third quarter of 2017 compared to $65.1 million net income in the third quarter of 2016. Excluding the Transaction Adjustments which totaled $63.8 million in the third quarter of 2016, the holding and other companies' net loss was $5.0 million in the third quarter of 2017 compared to $1.2 net income in the third quarter of 2016. The holding company's third quarter of 2016 net income included $6.0 million of favorable tax adjustments as HEI moved out of a federal net operating loss position, enabling the recognition of tax benefits.

WEBCAST AND CONFERENCE CALL TO DISCUSS EARNINGS AND EPS GUIDANCE

HEI will conduct a webcast and conference call to discuss its third quarter of 2017 earnings and 2017 EPS guidance on Thursday, November 2, 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 November 16, 2017 by dialing (877) 344-7529 or (412) 317-0088 and entering passcode: 10112461.

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 September 30


Nine months ended September 30

(in thousands, except per share amounts)


2017


2016


2017


2016

Revenues









Electric utility


$

598,769



$

572,253



$

1,674,255



$

1,549,700


Bank


74,289



73,708



222,474



213,297


Other


127



94



299



262


Total revenues


673,185



646,055



1,897,028



1,763,259


Expenses









Electric utility


511,693



482,441



1,483,194



1,333,876


Bank


47,525



50,981



146,754



150,752


Other


4,422



7,191



13,777



18,883


Total expenses


563,640



540,613



1,643,725



1,503,511


Operating income (loss)









Electric utility


87,076



89,812



191,061



215,824


Bank


26,764



22,727



75,720



62,545


Other


(4,295)



(7,097)



(13,478)



(18,621)


Total operating income


109,545



105,442



253,303



259,748


Merger termination fee




90,000





90,000


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


(19,227)



(19,365)



(59,235)



(56,792)


Allowance for borrowed funds used during construction


1,339



854



3,371



2,276


Allowance for equity funds used during construction


3,482



2,274



8,908



6,010


Income before income taxes


95,139



179,205



206,347



301,242


Income taxes


34,595



51,592



72,003



96,203


Net income


60,544



127,613



134,344



205,039


Preferred stock dividends of subsidiaries


471



471



1,417



1,417


Net income for common stock


$

60,073



$

127,142



$

132,927



$

203,622


Basic earnings per common share


$

0.55



$

1.17



$

1.22



$

1.89


Diluted earnings per common share


$

0.55



$

1.17



$

1.22



$

1.88


Dividends declared per common share


$

0.31



$

0.31



$

0.93



$

0.93


Weighted-average number of common shares outstanding


108,786



108,268



108,737



107,951


Weighted-average shares assuming dilution


108,865



108,472



108,909



108,171


Net income (loss) for common stock by segment









Electric utility


$

47,487



$

46,974



$

94,596



$

108,198


Bank


17,592



15,104



50,138



41,062


Other


(5,006)



65,064



(11,807)



54,362


Net income for common stock


$

60,073



$

127,142



$

132,927



$

203,622


Comprehensive income attributable to Hawaiian Electric Industries, Inc.


$

60,627



$

125,473



$

136,836



$

212,861


Return on average common equity (twelve months ended)1






8.5

%


12.3

%


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 September 30) were 8.5% and 9.5%, respectively. See reconciliation of GAAP to non-GAAP measures.

Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)


(dollars in thousands)


September 30, 2017


December 31, 2016

Assets





Cash and cash equivalents


$

202,173



$

278,452


Accounts receivable and unbilled revenues, net


264,426



237,950


Available-for-sale investment securities, at fair value


1,320,110



1,105,182


Stock in Federal Home Loan Bank, at cost


9,706



11,218


Loans receivable held for investment, net


4,623,234



4,683,160


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


15,728



18,817


Property, plant and equipment, net of accumulated depreciation of $2,537,320 and $2,444,348 at September 30, 2017 and December 31, 2016, respectively


4,813,875



4,603,465


Regulatory assets


936,964



957,451


Other


474,444



447,621


Goodwill


82,190



82,190


Total assets


$

12,742,850



$

12,425,506


Liabilities and shareholders' equity





Liabilities





Accounts payable


$

160,897



$

143,279


Interest and dividends payable


26,484



25,225


Deposit liabilities


5,752,326



5,548,929


Short-term borrowings—other than bank


24,498




Other bank borrowings


153,552



192,618


Long-term debt, net—other than bank


1,618,446



1,619,019


Deferred income taxes


756,814



728,806


Regulatory liabilities


466,216



410,693


Contributions in aid of construction


565,118



543,525


Defined benefit pension and other postretirement benefit plans liability


620,788



638,854


Other


460,396



473,512


Total liabilities


10,605,535



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: 108,785,978 shares and 108,583,413 shares at September 30, 2017 and December 31, 2016, respectively


1,661,492



1,660,910


Retained earnings


470,750



438,972


Accumulated other comprehensive loss, net of tax benefits


(29,220)



(33,129)


Total shareholders' equity


2,103,022



2,066,753


Total liabilities and shareholders' equity


$

12,742,850



$

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 September 30


Nine months ended September 30

(dollars in thousands, except per barrel amounts)


2017


2016


2017


2016

Revenues


$

598,769



$

572,253



$

1,674,255



$

1,549,700


Expenses









Fuel oil


146,258



128,624



431,787



334,263


Purchased power


160,347



157,750



440,538



412,667


Other operation and maintenance


100,102



94,789



306,716



298,260


Depreciation


48,206



46,759



144,578



140,300


Taxes, other than income taxes


56,780



54,519



159,575



148,386


Total expenses


511,693



482,441



1,483,194



1,333,876


Operating income


87,076



89,812



191,061



215,824


Allowance for equity funds used during construction


3,482



2,274



8,908



6,010


Interest expense and other charges, net


(16,907)



(17,323)



(52,625)



(49,734)


Allowance for borrowed funds used during construction


1,339



854



3,371



2,276


Income before income taxes


74,990



75,617



150,715



174,376


Income taxes


27,005



28,145



54,623



64,682


Net income


47,985



47,472



96,092



109,694


Preferred stock dividends of subsidiaries


228



228



686



686


Net income attributable to Hawaiian Electric


47,757



47,244



95,406



109,008


Preferred stock dividends of Hawaiian Electric


270



270



810



810


Net income for common stock


$

47,487



$

46,974



$

94,596



$

108,198


Comprehensive income attributable to Hawaiian Electric


$

47,509



$

47,125



$

95,117



$

108,610


OTHER ELECTRIC UTILITY INFORMATION









Kilowatthour sales (millions)









Hawaiian Electric


1,776



1,800



4,924



4,982


Hawaii Electric Light


272



277



782



795


Maui Electric


292



295



822



836




2,340



2,372



6,528



6,613


Average fuel oil cost per barrel


$

66.73



$

57.72



$

67.42



$

52.06


Return on average common equity (twelve months ended)1






7.16

%


8.11

%


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.


1 Simple average. On a core basis, 2017 and 2016 returns on average common equity (twelve months ended September 30) were 7.2% and 8.2%, respectively. See reconciliation of GAAP to non-GAAP measures.

Hawaiian Electric Company, Inc. (Hawaiian Electric) and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)


(dollars in thousands, except par value)


September 30, 2017


December 31, 2016

Assets





Property, plant and equipment





Utility property, plant and equipment





Land


$

53,913



$

53,153


Plant and equipment


6,778,254



6,605,732


Less accumulated depreciation


(2,460,429)



(2,369,282)


Construction in progress


307,492



211,742


Utility property, plant and equipment, net


4,679,230



4,501,345


Nonutility property, plant and equipment, less accumulated depreciation of $1,233 and $1,232 at September 30, 2017 and December 31, 2016, respectively


7,409



7,407


Total property, plant and equipment, net


4,686,639



4,508,752


Current assets





Cash and cash equivalents


9,987



74,286


Customer accounts receivable, net


133,135



123,688


Accrued unbilled revenues, net


109,707



91,693


Other accounts receivable, net


4,097



5,233


Fuel oil stock, at average cost


60,253



66,430


Materials and supplies, at average cost


55,959



53,679


Prepayments and other


29,871



23,100


Regulatory assets


72,773



66,032


Total current assets


475,782



504,141


Other long-term assets





Regulatory assets


864,191



891,419


Unamortized debt expense


661



208


Other


80,228



70,908


Total other long-term assets


945,080



962,535


Total assets


$

6,107,501



$

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 September 30, 2017 and December 31, 2016)


$

106,818



$

106,818


Premium on capital stock


601,487



601,491


Retained earnings


1,120,571



1,091,800


Accumulated other comprehensive income (loss), net of income taxes


199



(322)


Common stock equity


1,829,075



1,799,787


Cumulative preferred stock — not subject to mandatory redemption


34,293



34,293


Long-term debt, net


1,318,623



1,319,260


Total capitalization


3,181,991



3,153,340


Current liabilities





Short-term borrowings from non-affiliates


6,000




Accounts payable


124,240



117,814


Interest and preferred dividends payable


25,261



22,838


Taxes accrued


183,365



172,730


Regulatory liabilities


3,399



3,762


Other


59,611



55,221


Total current liabilities


401,876



372,365


Deferred credits and other liabilities





Deferred income taxes


767,611



733,659


Regulatory liabilities


462,817



406,931


Unamortized tax credits


88,827



88,961


Defined benefit pension and other postretirement benefit plans liability


581,713



599,726


Other


57,548



76,921


Total deferred credits and other liabilities


1,958,516



1,906,198


Contributions in aid of construction


565,118



543,525


Total capitalization and liabilities


$

6,107,501



$

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


Nine months ended September 30

(in thousands)


September 30,
2017


June 30,
2017


September 30,
2016


2017


2016

Interest and dividend income











Interest and fees on loans


$

52,210



$

52,317



$

50,444



$

155,269



$

148,571


Interest and dividends on investment securities


6,850



6,763



4,759



20,593



14,219


Total interest and dividend income


59,060



59,080



55,203



175,862



162,790


Interest expense











Interest on deposit liabilities


2,444



2,311



1,871



6,858



5,154


Interest on other borrowings


470



824



1,464



2,110



4,416


Total interest expense


2,914



3,135



3,335



8,968



9,570


Net interest income


56,146



55,945



51,868



166,894



153,220


Provision for loan losses


490



2,834



5,747



7,231



15,266


Net interest income after provision for loan losses


55,656



53,111



46,121



159,663



137,954


Noninterest income











Fees from other financial services


5,635



5,810



5,599



17,055



16,799


Fee income on deposit liabilities


5,533



5,565



5,627



16,526



16,045


Fee income on other financial products


1,904



1,971



2,151



5,741



6,563


Bank-owned life insurance


1,257



1,925



1,616



4,165



3,620


Mortgage banking income


520



587



2,347



1,896



5,096


Gains on sale of investment securities, net










598


Other income, net


380



391



1,165



1,229



1,786


Total noninterest income


15,229



16,249



18,505



46,612



50,507


Noninterest expense











Compensation and employee benefits


23,724



24,742



22,844



71,703



67,197


Occupancy


4,284



4,185



3,991



12,623



12,244


Data processing


3,262



3,207



3,150



9,749



9,599


Services


2,863



2,766



2,427



7,989



8,093


Equipment


1,814



1,771



1,759



5,333



5,193


Office supplies, printing and postage


1,444



1,527



1,483



4,506



4,431


Marketing


934



839



747



2,290



2,507


FDIC insurance


746



822



907



2,296



2,704


Other expense


5,050



4,705



4,591



14,066



13,948


Total noninterest expense


44,121



44,564



41,899



130,555



125,916


Income before income taxes


26,764



24,796



22,727



75,720



62,545


Income taxes


9,172



8,063



7,623



25,582



21,483


Net income


$

17,592



$

16,733



$

15,104



$

50,138



$

41,062


Comprehensive income


$

18,009



$

18,956



$

13,176



$

53,613



$

49,537


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









Return on average assets


1.07



1.02



0.97



1.02



0.89


Return on average equity


11.64



11.25



10.36



11.24



9.5


Return on average tangible common equity


13.47



13.06



12.06



13.04



11.07


Net interest margin


3.69



3.68



3.57



3.68



3.59


Efficiency ratio


61.82



61.73



59.54



61.15



61.81


Net charge-offs to average loans outstanding


0.32



0.21



0.20



0.27



0.19


As of period end











Nonaccrual loans to loans receivable held for investment


0.50



0.44



1.11






Allowance for loan losses to loans outstanding


1.13



1.19



1.24






Tangible common equity to tangible assets


8.01



7.88



8.03






Tier-1 leverage ratio


8.7



8.5



8.6






Total capital ratio


13.9



13.7



13.3






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


$

9.4



$

9.4



$

9.0



$

28.1



$

27.0



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)

September 30, 2017

December 31, 2016






Assets





Cash and due from banks


$

120,492



$

137,083


Interest-bearing deposits


69,223



52,128


Restricted cash




1,764


Available-for-sale investment securities, at fair value


1,320,110



1,105,182


Stock in Federal Home Loan Bank, at cost


9,706



11,218


Loans receivable held for investment


4,676,281



4,738,693


Allowance for loan losses


(53,047)



(55,533)


Net loans


4,623,234



4,683,160


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


15,728



18,817


Other


378,224



329,815


Goodwill


82,190



82,190


Total assets


$

6,618,907



$

6,421,357


Liabilities and shareholder's equity





Deposit liabilities–noninterest-bearing


$

1,710,698



$

1,639,051


Deposit liabilities–interest-bearing


4,041,628



3,909,878


Other borrowings


153,552



192,618


Other


107,558



101,635


Total liabilities


6,013,436



5,843,182


Common stock


1



1


Additional paid in capital


344,512



342,704


Retained earnings


279,956



257,943


Accumulated other comprehensive loss, net of tax benefits





Net unrealized losses on securities

$

(5,479)



$

(7,931)



Retirement benefit plans

(13,519)


(18,998)


(14,542)


(22,473)


Total shareholder's equity


605,471



578,175


Total liabilities and shareholder's equity


$

6,618,907



$

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 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 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 other operation and maintenance (O&M ) expense 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
September 30


Nine months ended
September 30

($ in millions, except per share amounts)

2017

2016


2017

2016

HEI CONSOLIDATED (INCOME) EXPENSES RELATED TO THE TERMINATED MERGER WITH NEXTERA ENERGY AND CANCELLED SPIN-OFF OF ASB HAWAII






Pre-tax (income) expenses

$


$

(88.5)



$


$

(84.9)


Current income taxes (benefits)


24.7




24.7


After-tax (income) expenses

$


$

(63.8)



$


$

(60.3)


HEI CONSOLIDATED LNG CONTRACT COSTS2






Pre-tax expenses

$


$



$


$

3.4


Current income taxes (benefits)





(1.3)


After-tax (income) expenses

$


$



$


$

2.1


HEI CONSOLIDATED NET INCOME






GAAP (as reported)

$

60.1


$

127.1



$

132.9


$

203.6


Excluding special items (after-tax):






(Income) expenses related to the terminated merger with NextEra Energy and cancelled spin-off of ASB Hawaii


(63.8)




(60.3)


Costs related to the terminated LNG contract2





2.1


Non-GAAP (core) net income

$

60.1


$

63.3



$

132.9


$

145.4


HEI CONSOLIDATED DILUTED EARNINGS PER COMMON SHARE





GAAP (as reported)

$

0.55


$

1.17



$

1.22


$

1.88


Excluding special items (after-tax):






(Income) expenses related to the terminated merger with NextEra Energy and cancelled spin-off of ASB Hawaii


(0.59)




(0.56)


Costs related to the terminated LNG contract2





0.02


Non-GAAP (core) diluted earnings per common share

$

0.55


$

0.58



$

1.22


$

1.34






Twelve months ended
September 30





2017

2016

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




Based on GAAP




8.5

%

12.3

%

Based on non-GAAP (core)3




8.5

%

9.5

%








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
September 30


Nine months ended
September 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 COSTS2





Pre-tax expenses

$


$



$


$

3.4


Current income tax benefits





(1.3)


After-tax expenses

$


$



$


$

2.1


HAWAIIAN ELECTRIC CONSOLIDATED NET INCOME






GAAP (as reported)

$

47.5


$

47.0



$

94.6


$

108.2


Excluding special items (after-tax):






Costs related to the terminated merger with NextEra Energy





0.1


Costs related to the terminated LNG contract2





2.1


Non-GAAP (core) net income

$

47.5


$

47.0



$

94.6


$

110.3












Twelve months ended
September 30





2017

2016

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






Based on GAAP




7.16

%

8.11

%

Based on non-GAAP (core)3




7.16

%

8.24

%








Three months ended
September 30


Nine months ended
September 30

($ in millions)

2017

2016


2017

2016

HAWAIIAN ELECTRIC CONSOLIDATED OTHER O&M EXPENSE






GAAP (as reported)

$

100.1


$

94.8



$

306.7


$

298.3


Excluding other O&M-related net income neutral items4

0.7


1.4



2.7


4.6


Excluding costs related to the terminated merger with NextEra Energy





0.1


Excluding costs related to the terminated LNG contract2





3.4


Non-GAAP (Adjusted other O&M expense)

$

99.4


$

93.4



$

304.0


$

290.2



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

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SOURCE Hawaiian Electric Industries, Inc.