Consolidated Earnings Per Share of $0.46
Utility and Bank Deliver Solid Results In Line with Expectations
Board Declares Dividend of $0.31 Per Share
HONOLULU, Nov. 6, 2014 /PRNewswire/ -- Hawaiian Electric Industries, Inc.(NYSE - HE) (HEI) today reported consolidated net income for common stock for the third quarter of 2014 of $47.8 million, or $0.46 diluted earnings per share (EPS), compared to $48.2 million, or $0.48 diluted EPS for the third quarter of 2013.
"At the utility, we continue to work aggressively to lower customer bills by reducing Hawaii's dependence on imported oil. The recent energy plans we filed with the PUC are providing the starting point to launch important initiatives with a broad set of stakeholders to achieve our shared vision for Hawaii's clean energy future," said Constance H. Lau, HEI president and chief executive officer. "In addition, we are proud of our dedicated utility company employees who worked tirelessly to restore power and help customers after Tropical Storm Iselle while completing our energy plans on time," added Lau.
"American Savings Bank continued to deliver profitable growth with year-to-date annualized loan growth of 5.9% and strong credit quality. American paid dividends of $9 million to HEI in the quarter while maintaining strong capital levels," said Lau.
HAWAIIAN ELECTRIC COMPANY CONTINUES INVESTMENTS FOR IMPROVED RELIABILITY TO BETTER SERVE OUR CUSTOMERS
Hawaiian Electric Company's1 net income for the third quarter of 2014 was $38.9 million compared to $37.8 million in the third quarter of 2013. The $1.1 million increase from the prior year was driven by the following items (on an after-tax basis):
-
Net revenues2 were $8 million higher compared to the third quarter of 2013 primarily due to $7 million in 2014 revenues attributable to the recovery of costs for clean energy and reliability investments and $1 million for better fuel efficiency performance.
These increases were partially offset by the following (on an after-tax basis):
-
Operations and maintenance (O&M) expenses3 were $2 million higher in the third quarter of 2014 compared to the same quarter last year. This is largely due to consulting costs associated with recent regulatory filings, storm restoration expenses and the initial phase of our smart grid installations as part of our grid modernization program, partially offset by lower customer service expenses, lower overhaul costs and savings from the deactivation of generating units;
-
Depreciation expense for the third quarter of 2014 was $2 million higher as a result of increasing investments for the integration of more renewable energy, improved customer reliability and greater system efficiency; and
-
A favorable deferred income tax adjustment of $3 million recorded in the third quarter of 2013 related to prior years.
1Hawaiian 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.
2 Net revenues represent the after-tax impact of "Revenues" less the following expenses which are largely pass through items in revenues: "fuel oil", "purchased power" and "taxes, other than income taxes" as shown on the Hawaiian Electric Company Consolidated Statements of Income.
3 Excludes net income neutral expenses covered by surcharges or by third parties of $3 million in the third quarter of 2014 and $2 million in the third quarter of 2013. See "Explanation of HEI's Use of Certain Unaudited Non-GAAP measures" and the related reconciliation.
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.
AMERICAN SAVINGS BANK CONTINUES TO DELIVER SOLID PERFORMANCE
American Savings Bank's (American) net income for the third quarter of 2014 was $13.3 million compared to $11.7 million in the second, or linked, quarter of 2014 and $15.3 million in the third quarter of 2013.
Third quarter 2014 net income was $1.6 million higher than the linked quarter primarily driven by (on an after-tax basis) higher mortgage banking and fee income of $1 million and higher net interest income of $1 million due to higher loan balances and the recognition of interest associated with the payoff of a non-performing commercial loan.
Compared to the third quarter of 2013, net income decreased by $2.0 million. The decrease was primarily driven by (on an after-tax basis): $1 million higher provision for loan losses, $1 million lower fee income on other financial products and mortgage banking income and $1 million net gain on the strategic sale of the credit card portfolio in the third quarter of 2013, partially offset by $1 million higher net interest income.
Overall, American achieved solid profitability with a year-to-date annualized return on average equity of 9.9% and a return on average assets of 0.98%.
Please also refer to the American news release issued on October 30, 2014.
HOLDING AND OTHER COMPANIES
The holding and other companies' net losses were $4.3 million in the third quarter of 2014 compared to $4.9 million in the third quarter of 2013. The lower net loss was primarily due to lower interest expense.
BOARD DECLARES QUARTERLY DIVIDEND
On November 5, 2014, the board of directors maintained HEI's quarterly cash dividend of 31 cents per share, payable on December 10, 2014, to shareholders of record at the close of business on November 21, 2014 (ex-dividend date is November 19, 2014). The dividend is equivalent to an annual rate of $1.24 per share.
Dividends have been paid continuously since 1901. At the indicated annual dividend rate and the closing share price on November 5, 2014 of $28.12, HEI's yield is 4.41%.
HEI WEBCAST AND CONFERENCE CALL TO DISCUSS EARNINGS AND EPS GUIDANCE
Hawaiian Electric Industries, Inc. will conduct a webcast and conference call to review its third quarter 2014 earnings and 2014 EPS guidance on Thursday, November 6, 2014 at 12:00 p.m. Hawaii time (5:00 p.m. Eastern time). The event can be accessed through HEI's website at www.hei.com or by dialing (800) 299-9086, passcode: 92619059 for the teleconference call. The presentation for the webcast will be on HEI's website 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'sSecurities and Exchange Commission (SEC) filings and HEI's public conference calls and webcasts. Also, at the Investor Relations section of HEI's website, investors may sign up to receive e-mail alerts (based on each investor's selected preferences). The information on HEI's website is not incorporated by reference in this document or in HEI's and Hawaiian Electric Company'sSEC 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'sSEC filings.
An on-line replay of the webcast will be available on HEI's website beginning about two hours after the event. Audio replays of the teleconference will also be available approximately two hours after the event through November 20, 2014, by dialing (888) 286-8010, passcode: 41279979.
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 pages 14 to 15 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 Annual Report on Form 10-K for the year ended December 31, 2013, HEI's Quarterly Report on Form 10-Q for the quarter ended 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.
|
Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited) |
| Three months ended September 30 |
| Nine months ended September 30 |
(in thousands, except per share amounts) |
2014 |
| 2013 |
| 2014 |
| 2013 |
Revenues |
|
|
|
|
|
|
| Electric utility |
$ |
803,565 |
| $ |
764,054 |
| $ |
2,262,056 |
| $ |
2,210,020 |
Bank |
63,536 |
| 65,058 |
| 187,771 |
| 195,841 |
Other |
(5) |
| 56 |
| (325) |
| 106 |
Total revenues |
867,096 |
| 829,168 |
| 2,449,502 |
| 2,405,967 |
Expenses |
|
|
|
|
|
|
| Electric utility |
727,409 |
| 694,201 |
| 2,045,166 |
| 2,030,071 |
Bank |
43,964 |
| 42,223 |
| 129,528 |
| 126,550 |
Other |
4,621 |
| 4,706 |
| 13,125 |
| 12,276 |
Total expenses |
775,994 |
| 741,130 |
| 2,187,819 |
| 2,168,897 |
Operating income (loss) |
|
|
|
|
|
|
| Electric utility |
76,156 |
| 69,853 |
| 216,890 |
| 179,949 |
Bank |
19,572 |
| 22,835 |
| 58,243 |
| 69,291 |
Other |
(4,626) |
| (4,650) |
| (13,450) |
| (12,170) |
Total operating income |
91,102 |
| 88,038 |
| 261,683 |
| 237,070 |
Interest expense, net-other than on deposit liabilities and other bank borrowings |
(19,170) |
| (19,043) |
| (58,648) |
| (56,216) |
Allowance for borrowed funds used during construction |
740 |
| 498 |
| 1,877 |
| 1,626 |
Allowance for equity funds used during construction |
1,937 |
| 1,255 |
| 4,933 |
| 4,030 |
Income before income taxes |
74,609 |
| 70,748 |
| 209,845 |
| 186,510 |
Income taxes |
26,323 |
| 22,041 |
| 73,265 |
| 62,590 |
Net income |
48,286 |
| 48,707 |
| 136,580 |
| 123,920 |
Preferred stock dividends of subsidiaries |
471 |
| 471 |
| 1,417 |
| 1,417 |
Net income for common stock |
$ |
47,815 |
| $ |
48,236 |
| $ |
135,163 |
| $ |
122,503 |
Basic earnings per common share |
$ |
0.47 |
| $ |
0.49 |
| $ |
1.33 |
| $ |
1.24 |
Diluted earnings per common share |
$ |
0.46 |
| $ |
0.48 |
| $ |
1.32 |
| $ |
1.23 |
Dividends per common share |
$ |
0.31 |
| $ |
0.31 |
| $ |
0.93 |
| $ |
0.93 |
Weighted-average number of common shares outstanding |
102,416 |
| 99,204 |
| 101,768 |
| 98,670 |
Adjusted weighted-average shares |
103,026 |
| 99,818 |
| 102,478 |
| 99,290 |
Net income (loss) for common stock by segment |
|
|
|
|
|
|
| Electric utility |
$ |
38,879 |
| $ |
37,817 |
| $ |
108,529 |
| $ |
90,939 |
Bank |
13,260 |
| 15,276 |
| 39,475 |
| 45,350 |
Other |
(4,324) |
| (4,857) |
| (12,841) |
| (13,786) |
Net income for common stock |
$ |
47,815 |
| $ |
48,236 |
| $ |
135,163 |
| $ |
122,503 |
Comprehensive income attributable to Hawaiian Electric Industries, Inc. |
$ |
46,504 |
| $ |
47,339 |
| $ |
137,919 |
| $ |
113,240 |
Return on average common equity (twelve months ended)1 |
|
|
|
|
10.1% |
| 8.4% |
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, 2013 and HEI's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2014, June 30, 2014 and September 30, 2014 (when filed), as updated by SEC Forms 8-K. 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, 2014 and 2013 return on average common equity (twelve months ended September 30) were 10.1% and 9.9%, respectively. See reconciliation of GAAP to non-GAAP measures.
|
| Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries |
CONSOLIDATED BALANCE SHEETS |
(Unaudited) |
| (dollars in thousands) |
September 30, 2014 |
| December 31, 2013 |
Assets |
|
|
| Cash and cash equivalents |
$ |
192,555 |
| $ |
220,036 |
Accounts receivable and unbilled revenues, net |
365,728 |
| 346,785 |
Available-for-sale investment and mortgage-related securities |
531,603 |
| 529,007 |
Investment in stock of Federal Home Loan Bank of Seattle |
75,063 |
| 92,546 |
Loans receivable held for investment, net |
4,291,960 |
| 4,110,113 |
Loans held for sale, at lower of cost or fair value |
2,328 |
| 5,302 |
Property, plant and equipment, net of accumulated depreciation of $2,241,677 and $2,192,422 at the respective dates |
4,048,106 |
| 3,865,514 |
Regulatory assets |
575,712 |
| 575,924 |
Other |
505,226 |
| 512,627 |
Goodwill |
82,190 |
| 82,190 |
Total assets |
$ |
10,670,471 |
| $ |
10,340,044 |
Liabilities and shareholders' equity |
|
|
| Liabilities |
|
|
| Accounts payable |
$ |
177,495 |
| $ |
212,331 |
Interest and dividends payable |
26,051 |
| 26,716 |
Deposit liabilities |
4,533,797 |
| 4,372,477 |
Short-term borrowings-other than bank |
150,576 |
| 105,482 |
Other bank borrowings |
263,204 |
| 244,514 |
Long-term debt, net-other than bank |
1,517,946 |
| 1,492,945 |
Deferred income taxes |
585,432 |
| 529,260 |
Regulatory liabilities |
357,090 |
| 349,299 |
Contributions in aid of construction |
448,811 |
| 432,894 |
Defined benefit pension and other postretirement benefit plans liability |
274,909 |
| 288,539 |
Other |
499,459 |
| 524,224 |
Total liabilities |
8,834,770 |
| 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: 102,562,464 shares and 101,259,800 shares at the respective dates |
1,519,256 |
| 1,488,126 |
Retained earnings |
296,146 |
| 255,694 |
Accumulated other comprehensive loss, net of tax benefits |
(13,994) |
| (16,750) |
Total shareholders' equity |
1,801,408 |
| 1,727,070 |
Total liabilities and shareholders' equity |
$ |
10,670,471 |
| $ |
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, 2013 and HEI's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2014, June 30, 2014 and September 30, 2014 (when filed), as updated by SEC Forms 8-K.
|
| Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries |
CONSOLIDATED STATEMENTS OF CASH FLOWS |
(Unaudited) |
| Nine months ended September 30 |
2014 |
| 2013 |
(in thousands) |
|
|
| Cash flows from operating activities |
|
|
| Net income |
$ |
136,580 |
| $ |
123,920 |
Adjustments to reconcile net income to net cash provided by operating activities |
|
|
| Depreciation of property, plant and equipment |
129,574 |
| 120,355 |
Other amortization |
5,454 |
| 2,352 |
Provision for loan losses |
3,566 |
| 953 |
Loans receivable originated and purchased, held for sale |
(102,523) |
| (199,772) |
Proceeds from sale of loans receivable, held for sale |
106,918 |
| 223,221 |
Gain on sale of credit card portfolio |
- |
| (2,251) |
Increase in deferred income taxes |
48,900 |
| 60,580 |
Excess tax benefits from share-based payment arrangements |
(271) |
| (469) |
Allowance for equity funds used during construction |
(4,933) |
| (4,030) |
Change in cash overdraft |
(1,038) |
| - |
Changes in assets and liabilities |
|
|
| Decrease (increase) in accounts receivable and unbilled revenues, net |
(18,943) |
| 12,740 |
Decrease in fuel oil stock |
15,784 |
| 24,332 |
Increase in regulatory assets |
(17,531) |
| (53,314) |
Decrease in accounts, interest and dividends payable |
(75,812) |
| (21,708) |
Change in prepaid and accrued income taxes and utility revenue taxes |
(2,044) |
| (19,212) |
Decrease in defined benefit pension and other postretirement benefit plans liability |
(2,594) |
| (509) |
Change in other assets and liabilities |
(47,677) |
| (20,462) |
Net cash provided by operating activities |
173,410 |
| 246,726 |
Cash flows from investing activities |
|
|
| Available-for-sale investment and mortgage-related securities purchased |
(130,578) |
| (39,721) |
Principal repayments on available-for-sale investment and mortgage-related securities |
52,678 |
| 84,487 |
Proceeds from sale of available-for-sale investment securities |
79,564 |
| 71,367 |
Redemption of stock from Federal Home Loan Bank of Seattle |
17,482 |
| 2,609 |
Net increase in loans held for investment |
(184,766) |
| (293,996) |
Proceeds from sale of real estate acquired in settlement of loans |
2,930 |
| 8,777 |
Capital expenditures |
(236,003) |
| (247,392) |
Contributions in aid of construction |
21,740 |
| 23,633 |
Proceeds from sale of credit card portfolio |
- |
| 26,386 |
Other |
(39) |
| 426 |
Net cash used in investing activities |
(376,992) |
| (363,424) |
Cash flows from financing activities |
|
|
| Net increase in deposit liabilities |
161,320 |
| 80,926 |
Net increase in short-term borrowings with original maturities of three months or less |
45,094 |
| 47,648 |
Net decrease in retail repurchase agreements |
(6,306) |
| (6,314) |
Proceeds from other bank borrowings |
90,000 |
| 120,000 |
Repayments of other bank borrowings |
(65,000) |
| (70,000) |
Proceeds from issuance of long-term debt |
125,000 |
| 50,000 |
Repayment of long-term debt |
(100,000) |
| (50,000) |
Excess tax benefits from share-based payment arrangements |
271 |
| 469 |
Net proceeds from issuance of common stock |
26,910 |
| 18,383 |
Common stock dividends |
(94,674) |
| (73,584) |
Preferred stock dividends of subsidiaries |
(1,417) |
| (1,417) |
Other |
(5,097) |
| (4,033) |
Net cash provided by financing activities |
176,101 |
| 112,078 |
Net decrease in cash and cash equivalents |
(27,481) |
| (4,620) |
Cash and cash equivalents, beginning of period |
220,036 |
| 219,662 |
Cash and cash equivalents, end of period |
$ |
192,555 |
| $ |
215,042 |
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, 2013 and HEI's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2014, June 30, 2014 and September 30, 2014 (when filed), as updated by SEC Forms 8-K. Cash flows for interim periods are not necessarily indicative of cash flows to be expected for future interim periods or the full year.
|
| Hawaiian Electric Company, Inc. (Hawaiian Electric) and Subsidiaries |
CONSOLIDATED STATEMENTS OF INCOME |
(Unaudited) |
|
|
Three months ended September 30 |
| Nine months ended September 30 |
(dollars in thousands, except per barrel amounts) |
2014 |
| 2013 |
| 2014 |
| 2013 |
Revenues |
$ |
803,565 |
| $ |
764,054 |
| $ |
2,262,056 |
| $ |
2,210,020 |
Expenses |
|
|
|
|
|
|
| Fuel oil |
309,432 |
| 283,360 |
| 865,989 |
| 877,738 |
Purchased power |
192,882 |
| 194,861 |
| 546,121 |
| 526,669 |
Other operation and maintenance |
108,313 |
| 104,513 |
| 295,483 |
| 300,723 |
Depreciation |
41,594 |
| 38,995 |
| 124,790 |
| 115,865 |
Taxes, other than income taxes |
75,188 |
| 72,472 |
| 212,783 |
| 209,076 |
Total expenses |
727,409 |
| 694,201 |
| 2,045,166 |
| 2,030,071 |
Operating income |
76,156 |
| 69,853 |
| 216,890 |
| 179,949 |
Allowance for equity funds used during construction |
1,937 |
| 1,255 |
| 4,933 |
| 4,030 |
Interest expense and other charges, net |
(16,414) |
| (15,033) |
| (48,989) |
| (43,960) |
Allowance for borrowed funds used during construction |
740 |
| 498 |
| 1,877 |
| 1,626 |
Income before income taxes |
62,419 |
| 56,573 |
| 174,711 |
| 141,645 |
Income taxes |
23,042 |
| 18,258 |
| 64,686 |
| 49,210 |
Net income |
39,377 |
| 38,315 |
| 110,025 |
| 92,435 |
Preferred stock dividends of subsidiaries |
228 |
| 228 |
| 686 |
| 686 |
Net income attributable to Hawaiian Electric |
39,149 |
| 38,087 |
| 109,339 |
| 91,749 |
Preferred stock dividends of Hawaiian Electric |
270 |
| 270 |
| 810 |
| 810 |
Net income for common stock |
$ 38,879 |
| $ 37,817 |
| $ |
108,529 |
| $ |
90,939 |
Comprehensive income attributable to Hawaiian Electric |
$ |
38,889 |
| $ |
37,834 |
| $ |
108,561 |
| $ |
90,991 |
OTHER ELECTRIC UTILITY INFORMATION |
|
|
|
|
|
|
| Kilowatthour sales (millions) |
|
|
|
|
|
|
| Hawaiian Electric |
1,815 |
| 1,807 |
| 5,062 |
| 5,100 |
Hawaii Electric Light |
273 |
| 275 |
| 793 |
| 803 |
Maui Electric |
296 |
| 294 |
| 844 |
| 843 |
| 2,384 |
| 2,376 |
| 6,699 |
| 6,746 |
Wet-bulb temperature (Oahu average; degrees Fahrenheit) |
72.2 |
| 70.6 |
| 69.5 |
| 68.6 |
Cooling degree days (Oahu) |
1,631 |
| 1,468 |
| 3,703 |
| 3,371 |
Average fuel oil cost per barrel |
$ |
133.26 |
| $ |
127.42 |
| $ |
132.19 |
| $ |
130.15 |
|
|
|
|
|
|
|
|
Twelve months ended September 30 |
| 2014 |
| 2013 |
Return on average common equity (%) (simple average)1 |
|
|
|
|
Hawaiian Electric |
|
|
9.63 |
| 6.69 |
Hawaii Electric Light |
|
|
6.77 |
| 5.41 |
Maui Electric |
|
|
8.55 |
| 6.79 |
Hawaiian Electric Consolidated |
|
|
8.96 |
| 6.46 |
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, 2013 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 (when filed), as updated by SEC Forms 8-K. 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, the 2014 and 2013 return on average common equity (twelve months ended September 30) were 9.6% and 8.5%, respectively for Hawaiian Electric; 6.8% and 6.6%, respectively for Hawaii Electric Light; 8.6% and 8.2%, respectively for Maui Electric and 9.0% and 8.1% respectively, for Hawaiian Electric Consolidated. 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) |
September 30, 2014 |
| December 31, 2013 |
Assets |
|
|
| Property, plant and equipment |
|
|
| Utility property, plant and equipment |
|
|
| Land |
$ |
52,344 |
| $ |
51,883 |
Plant and equipment |
5,902,397 |
| 5,701,875 |
Less accumulated depreciation |
(2,167,545) |
| (2,111,229) |
Construction in progress |
179,190 |
| 143,233 |
Utility property, plant and equipment, net |
3,966,386 |
| 3,785,762 |
Nonutility property, plant and equipment, less accumulated depreciation of $1,229 and $1,223 at respective dates |
6,561 |
| 6,567 |
Total property, plant and equipment, net |
3,972,947 |
| 3,792,329 |
Current assets |
|
|
| Cash and cash equivalents |
18,387 |
| 62,825 |
Customer accounts receivable, net |
189,733 |
| 175,448 |
Accrued unbilled revenues, net |
143,153 |
| 144,124 |
Other accounts receivable, net |
19,508 |
| 14,062 |
Fuel oil stock, at average cost |
118,303 |
| 134,087 |
Materials and supplies, at average cost |
60,639 |
| 59,044 |
Prepayments and other |
50,270 |
| 52,857 |
Regulatory assets |
54,700 |
| 69,738 |
Total current assets |
654,693 |
| 712,185 |
Other long-term assets |
|
|
| Regulatory assets |
521,012 |
| 506,186 |
Unamortized debt expense |
8,619 |
| 9,003 |
Other |
67,891 |
| 67,426 |
Total other long-term assets |
597,522 |
| 582,615 |
Total assets |
$ |
5,225,162 |
| $ |
5,087,129 |
Capitalization and liabilities |
|
|
| Capitalization |
|
|
| Common stock ($6 2/3 par value, authorized 50,000,000 shares; outstanding 15,429,105 shares) |
$ |
102,880 |
| $ |
102,880 |
Premium on capital stock |
541,447 |
| 541,452 |
Retained earnings |
990,784 |
| 948,624 |
Accumulated other comprehensive income, net of income taxes-retirement benefit plans |
640 |
| 608 |
Common stock equity |
1,635,751 |
| 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 |
2,876,590 |
| 2,834,402 |
Current liabilities |
|
|
| Current portion of long-term debt |
11,400 |
| 11,400 |
Short-term borrowings from non-affiliates |
84,987 |
| - |
Accounts payable |
151,978 |
| 189,559 |
Interest and preferred dividends payable |
24,401 |
| 21,652 |
Taxes accrued |
236,481 |
| 249,445 |
Regulatory liabilities |
528 |
| 1,916 |
Other |
62,400 |
| 63,881 |
Total current liabilities |
572,175 |
| 537,853 |
Deferred credits and other liabilities |
|
|
| Deferred income taxes |
565,499 |
| 507,161 |
Regulatory liabilities |
356,562 |
| 347,383 |
Unamortized tax credits |
79,268 |
| 73,539 |
Defined benefit pension and other postretirement benefit plans liability |
248,338 |
| 262,162 |
Other |
77,919 |
| 91,735 |
Total deferred credits and other liabilities |
1,327,586 |
| 1,281,980 |
Contributions in aid of construction |
448,811 |
| 432,894 |
Total capitalization and liabilities |
$ |
5,225,162 |
| $ |
5,087,129 |
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, 2013 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 (when filed), as updated by SEC Forms 8-K.
|
| Hawaiian Electric Company, Inc. (Hawaiian Electric) and Subsidiaries |
CONSOLIDATED STATEMENTS OF CASH FLOWS |
(Unaudited) |
| Nine months ended September 30 |
2014 |
| 2013 |
(in thousands) |
|
|
| Cash flows from operating activities |
|
|
| Net income |
$ |
110,025 |
| $ |
92,435 |
Adjustments to reconcile net income to net cash provided by operating activities |
|
|
| Depreciation of property, plant and equipment |
124,790 |
| 115,865 |
Other amortization |
4,662 |
| 2,470 |
Increase in deferred income taxes |
67,392 |
| 48,014 |
Change in tax credits, net |
5,816 |
| 4,510 |
Allowance for equity funds used during construction |
(4,933) |
| (4,030) |
Change in cash overdraft |
(1,038) |
| - |
Changes in assets and liabilities |
|
|
| Decrease (increase) in accounts receivable |
(19,731) |
| 42,077 |
Decrease (increase) in accrued unbilled revenues |
971 |
| (5,603) |
Decrease in fuel oil stock |
15,784 |
| 24,332 |
Increase in materials and supplies |
(1,595) |
| (8,349) |
Increase in regulatory assets |
(17,531) |
| (53,314) |
Decrease in accounts payable |
(77,893) |
| (22,974) |
Change in prepaid and accrued income taxes and utility revenue taxes |
(18,075) |
| (15,416) |
Increase (decrease) in defined benefit pension and other postretirement benefit plans liability |
(748) |
| 1,488 |
Change in other assets and liabilities |
(41,629) |
| (10,195) |
Net cash provided by operating activities |
146,267 |
| 211,310 |
Cash flows from investing activities |
|
|
| Capital expenditures |
(229,105) |
| (237,869) |
Contributions in aid of construction |
21,740 |
| 23,633 |
Other |
- |
| 427 |
Net cash used in investing activities |
(207,365) |
| (213,809) |
Cash flows from financing activities |
|
|
| Common stock dividends |
(66,369) |
| (61,183) |
Preferred stock dividends of Hawaiian Electric and subsidiaries |
(1,496) |
| (1,496) |
Net increase in short-term borrowings from non-affiliates and affiliate with original maturities of three months or less |
84,987 |
| 73,246 |
Other |
(462) |
| (42) |
Net cash provided by financing activities |
16,660 |
| 10,525 |
Net increase (decrease) in cash and cash equivalents |
(44,438) |
| 8,026 |
Cash and cash equivalents, beginning of period |
62,825 |
| 17,159 |
Cash and cash equivalents, end of period |
$ |
18,387 |
| $ |
25,185 |
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, 2013 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 (when filed), as updated by SEC Forms 8-K. Cash flows for interim periods are not necessarily indicative of cash flows to be expected for future interim periods or the full year.
|
| American Savings Bank, F.S.B. |
STATEMENTS OF INCOME DATA |
(Unaudited) |
|
|
Three months ended |
| Nine months ended September30 |
(in thousands) |
September 30, 2014 |
| June 30, 2014 |
| September 30, 2013 |
| 2014 |
| 2013 |
Interest and dividend income |
|
|
|
|
|
|
|
|
| Interest and fees on loans |
$ |
45,532 |
| $ |
43,851 |
| $ |
43,337 |
| $ |
133,065 |
| $ |
129,564 |
Interest and dividends on investment and mortgage-related securities |
2,773 |
| 2,950 |
| 3,025 |
| 8,758 |
| 9,723 |
Total interest and dividend income |
48,305 |
| 46,801 |
| 46,362 |
| 141,823 |
| 139,287 |
Interest expense |
|
|
|
|
|
|
|
|
| Interest on deposit liabilities |
1,312 |
| 1,237 |
| 1,262 |
| 3,774 |
| 3,870 |
Interest on other borrowings |
1,438 |
| 1,420 |
| 1,206 |
| 4,263 |
| 3,548 |
Total interest expense |
2,750 |
| 2,657 |
| 2,468 |
| 8,037 |
| 7,418 |
Net interest income |
45,555 |
| 44,144 |
| 43,894 |
| 133,786 |
| 131,869 |
Provision for loan losses |
1,550 |
| 1,021 |
| 54 |
| 3,566 |
| 953 |
Net interest income after provision for loan losses |
44,005 |
| 43,123 |
| 43,840 |
| 130,220 |
| 130,916 |
Noninterest income |
|
|
|
|
|
|
|
|
| Fees from other financial services |
5,642 |
| 5,217 |
| 5,728 |
| 15,987 |
| 21,367 |
Fee income on deposit liabilities |
5,109 |
| 4,645 |
| 4,819 |
| 14,175 |
| 13,566 |
Fee income on other financial products |
1,971 |
| 2,064 |
| 2,714 |
| 6,325 |
| 6,288 |
Mortgage banking income |
875 |
| 246 |
| 1,547 |
| 1,749 |
| 6,896 |
Gain on sale of securities |
- |
| - |
| - |
| 2,847 |
| 1,226 |
Other income, net |
1,634 |
| 1,643 |
| 3,888 |
| 4,865 |
| 7,211 |
Total noninterest income |
15,231 |
| 13,815 |
| 18,696 |
| 45,948 |
| 56,554 |
Noninterest expense |
|
|
|
|
|
|
|
|
| Compensation and employee benefits |
19,892 |
| 19,872 |
| 20,564 |
| 60,050 |
| 60,715 |
Occupancy |
4,517 |
| 4,489 |
| 4,208 |
| 12,959 |
| 12,550 |
Data processing |
2,684 |
| 2,971 |
| 2,168 |
| 8,715 |
| 7,982 |
Services |
2,580 |
| 2,855 |
| 2,424 |
| 7,708 |
| 6,855 |
Equipment |
1,672 |
| 1,609 |
| 1,825 |
| 4,926 |
| 5,469 |
Office supplies, printing and postage |
1,415 |
| 1,456 |
| 907 |
| 4,487 |
| 2,806 |
Marketing |
948 |
| 1,031 |
| 692 |
| 2,690 |
| 2,054 |
Communication |
412 |
| 448 |
| 479 |
| 1,363 |
| 1,374 |
Other expense |
5,544 |
| 5,159 |
| 6,461 |
| 15,026 |
| 18,400 |
Total noninterest expense |
39,664 |
| 39,890 |
| 39,728 |
| 117,924 |
| 118,205 |
Income before income taxes |
19,572 |
| 17,048 |
| 22,808 |
| 58,244 |
| 69,265 |
Income taxes |
6,312 |
| 5,372 |
| 7,532 |
| 18,769 |
| 23,915 |
Net income |
$ |
13,260 |
| $ |
11,676 |
| $ |
15,276 |
| $ |
39,475 |
| $ |
45,350 |
Comprehensive income |
$ |
11,811 |
| $ |
14,434 |
| $ |
14,107 |
| $ |
41,808 |
| $ |
36,931 |
OTHER BANK INFORMATION (annualized %, except as of period end) |
|
|
Return on average assets |
0.98 |
| 0.87 |
| 1.20 |
| 0.98 |
| 1.19 |
Return on average equity |
9.87 |
| 8.78 |
| 12.13 |
| 9.89 |
| 11.99 |
Return on average tangible common equity |
11.65 |
| 10.39 |
| 14.50 |
| 11.70 |
| 14.33 |
Net interest margin |
3.62 |
| 3.55 |
| 3.73 |
| 3.60 |
| 3.77 |
Net charge-offs (recoveries) to average loans outstanding |
0.04 |
| (0.04) |
| - |
| 0.01 |
| 0.06 |
As of period end |
|
|
|
|
|
|
|
|
| Nonperforming assets to loans outstanding and real estate owned * |
0.88 |
| 1.05 |
| 1.33 |
|
|
|
|
Allowance for loan losses to loans outstanding |
1.00 |
| 0.99 |
| 1.01 |
|
|
|
|
Tier-1 leverage ratio * |
9.1 |
| 9.0 |
| 9.3 |
|
|
|
|
Total risk-based capital ratio * |
12.6 |
| 12.6 |
| 12.5 |
|
|
|
|
Tangible common equity to total assets |
8.49 |
| 8.46 |
| 8.36 |
|
|
|
|
Dividend paid to HEI (via ASHI) ($ in millions) |
9 |
| 10 |
| 10 |
|
|
|
|
* 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, 2013 and HEI's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2014, June 30, 2014 and September 30, 2014 (when filed), as updated by SEC Forms 8-K. 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, 2014 |
| December 31, 2013 |
Assets |
|
|
|
|
|
|
| Cash and due from banks |
|
|
$ |
98,879 |
|
|
| $ |
108,998 |
Interest-bearing deposits |
|
|
74,654 |
|
|
| 47,605 |
Available-for-sale investment and mortgage-related securities |
|
|
531,603 |
|
|
| 529,007 |
Investment in stock of Federal Home Loan Bank of Seattle |
|
|
75,063 |
|
|
| 92,546 |
Loans receivable held for investment |
|
|
4,335,421 |
|
|
| 4,150,229 |
Allowance for loan losses |
|
|
(43,461) |
|
|
| (40,116) |
Loans receivable held for investment, net |
|
|
4,291,960 |
|
|
| 4,110,113 |
Loans held for sale, at lower of cost or fair value |
|
|
2,328 |
|
|
| 5,302 |
Other |
|
|
285,659 |
|
|
| 268,063 |
Goodwill |
|
|
82,190 |
|
|
| 82,190 |
Total assets |
|
|
$ |
5,442,336 |
|
|
| $ |
5,243,824 |
|
|
|
|
|
|
|
|
Liabilities and shareholder's equity |
|
|
|
|
|
|
| Deposit liabilities-noninterest-bearing |
|
|
$ |
1,298,726 |
|
|
| $ |
1,214,418 |
Deposit liabilities-interest-bearing |
|
|
3,235,071 |
|
|
| 3,158,059 |
Other borrowings |
|
|
263,204 |
|
|
| 244,514 |
Other |
|
|
107,814 |
|
|
| 105,679 |
Total liabilities |
|
|
4,904,815 |
|
|
| 4,722,670 |
Common stock |
|
|
1 |
|
|
| 1 |
Additional paid in capital |
|
|
337,862 |
|
|
| 336,053 |
Retained earnings |
|
|
209,522 |
|
|
| 197,297 |
Accumulated other comprehensive loss, net of tax benefits |
|
|
|
|
|
|
| Net unrealized losses on securities |
$ |
(1,972) |
|
|
| $ |
(3,663) |
|
|
Retirement benefit plans |
(7,892) |
| (9,864) |
| (8,534) |
| (12,197) |
Total shareholder's equity |
|
|
537,521 |
|
|
| 521,154 |
Total liabilities and shareholder's equity |
|
|
$ |
5,442,336 |
|
|
| $ |
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, 2013 and HEI's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2014, June 30, 2014 and September 30, 2014 (when filed), 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 for both the utility and HEI consolidated and the corresponding adjusted return on average common equity (ROACE).
The reconciling adjustments from GAAP earnings to core earnings are limited to the settlement charge for the partial write-off of utility assets in the fourth quarter of 2012. For more information on the settlement charge recorded in 2012, see the Form 8-K filed on March 20, 2013. Management does not consider these items to be representative of the company's fundamental core earnings.
The accompanying table also provides the calculation of utility GAAP O&M adjusted for "O&M-related net income neutral items" which are O&M expenses covered by specific surcharges or by third parties. This item is grossed-up in revenue and expense and does not impact net income.
RECONCILIATION OF GAAP1 TO NON-GAAP MEASURES |
Hawaiian Electric Industries, Inc. and Subsidiaries (HEI) |
Unaudited |
|
|
| ($ in millions) |
|
|
|
|
|
|
| Twelve months ended September 30 |
2014 |
| 2013 |
HEI CONSOLIDATED NET INCOME |
|
|
| GAAP (as reported) |
$ |
174.2 |
| $ |
136.3 |
Excluding special items (after-tax): |
|
|
| Settlement agreement for the partial writedown of certain utility assets |
- |
| 24.4 |
Non-GAAP (core) |
$ |
174.2 |
| $ |
160.8 |
HEI CONSOLIDATED RETURN ON AVERAGE COMMON EQUITY (ROACE) (simple average) |
Based on GAAP |
10.1% |
| 8.4% |
Based on non-GAAP (core)2 |
10.1% |
| 9.9% |
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 |
|
|
RECONCILIATION OF GAAP1 TO NON-GAAP MEASURES |
Hawaiian Electric Company, Inc. and Subsidiaries |
Unaudited |
| ($ in millions) |
|
|
| Twelve months ended September 30 |
2014 |
| 2013 |
HAWAIIAN ELECTRIC CONSOLIDATED NET INCOME |
|
|
| GAAP (as reported) |
$ |
140.5 |
| $ |
95.2 |
Excluding special items (after-tax): |
|
|
| Settlement agreement for the partial writedown of certain utility assets |
- |
| 24.4 |
Non-GAAP (core) |
$ |
140.5 |
| $ |
119.6 |
|
|
|
|
HAWAIIAN ELECTRIC CONSOLIDATED RETURN ON AVERAGE COMMON EQUITY (ROACE) (simple average): |
|
|
| Based on GAAP |
9.0% |
| 6.5% |
Based on non-GAAP (core)2 |
9.0% |
| 8.1% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hawaiian Electric |
| Hawaii Electric Light |
| Maui Electric |
Twelve months ended September 30 |
2014 |
| 2013 |
|
|
2014 |
| 2013 |
|
|
2014 |
| 2013 |
NET INCOME |
|
|
|
|
|
|
|
|
|
|
|
|
| GAAP (as reported) |
$ |
101.0 |
| $ |
63.9 |
|
|
$ |
18.7 |
| $ |
15.1 |
|
|
$ |
20.8 |
| $ |
16.1 |
Excluding special items (after-tax): |
|
|
|
|
|
|
|
|
|
|
|
|
| Settlement agreement for the partial writedown of certain utility assets |
- |
| 17.7 |
|
|
- |
| 3.4 |
|
|
- |
| 3.4 |
Non-GAAP (core) |
$ |
101.0 |
| $ |
81.6 |
|
|
$ |
18.7 |
| $ |
18.5 |
|
|
$ |
20.8 |
| $ |
19.5 |
|
|
|
|
|
|
|
|
|
|
|
|
RETURN ON AVERAGE COMMON EQUITY (ROACE) (simple average): |
|
|
|
|
|
|
Based on GAAP |
9.6% |
| 6.7% |
|
|
6.8% |
| 5.4% |
|
|
8.6% |
| 6.8% |
Based on non-GAAP (core)2 |
9.6% |
| 8.5% |
|
|
6.8% |
| 6.6% |
|
|
8.6% |
| 8.2% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30 |
|
|
|
|
|
|
|
|
|
|
2014 |
| 2013 |
HAWAIIAN ELECTRIC CONSOLIDATED OTHER OPERATION AND MAINTENANCE (O&M) EXPENSE |
GAAP (as reported) |
|
|
|
|
|
|
|
|
|
|
$ |
108.3 |
| $ |
104.5 |
Excluding O&M-related net income neutral items3 |
|
|
|
|
|
|
|
|
|
|
(2.5) |
| (1.5) |
Adjusted O&M expense (Non-GAAP measure) |
|
|
|
|
|
|
|
|
|
|
$ |
105.8 |
| $ |
103.0 |
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 |
|
|
Manager, Investor Relations & |
Telephone: (808) 543-7384 |
| Strategic Planning |
E-mail: cchen@hei.com |
|
|
|
|
|
|
SOURCE Hawaiian Electric Industries, Inc.
|
HAWAIIAN ELECTRIC INDUSTRIES, INC. 
