REPORT FROM HAWAIIAN ELECTRIC — Hawaiian Electric Industries, Inc. (NYSE – HE) (HEI) today reported consolidated net income for common stock for the third quarter of 2012 of $47.7 million, or $0.49 diluted earnings per share (EPS), compared to $48.4 million, or $0.50 diluted EPS for the third quarter of 2011.
“HEI had another solid quarter as we continued to invest in our Hawaii-based businesses. Through the first nine months of this year, Hawaiian Electric Company1 invested $188 million, close to twice its earnings, in local infrastructure projects to modernize the electric grid and reliably integrate increasing amounts of renewable energy. At American Savings Bank (American), loans to customers, excluding residential lending, increased over $100 million in the first nine months of the year, with a $15 million increase in clean energy loans. Over $600 million of new residential mortgages were originated by American during this period, more than double the amount for the same period last year,” said Constance H. Lau, HEI president and chief executive officer.
“Reducing Hawaii’s dependence on oil is critical to an economically and environmentally vibrant future for our state and our utility’s customers. Since the end of 2010, a typical monthly Oahu residential electric bill increased by about $52, of which $42is due to higher fuel oil costs. This is why we are committed to continuing to seek ways to help stabilize customer bills and accelerate Hawaii’s move to clean energy,” said Lau.
HAWAIIAN ELECTRIC COMPANY CONTINUES TO INVEST IN CLEAN ENERGY AND RELIABILITY
Hawaiian Electric Company’s net income for the third quarter of 2012 was $38.4 million, nearly flat with $38.0 million in the third quarter of 2011 as recovery of costs for reliability and clean energy investments were largely offset by higher expenses.
The primary variances impacting net income for the quarter were (on an after-tax basis):
- $4 million recovery of costs, net of lower heat rate earnings;
- A favorable tax settlement of $1 million recorded in the third quarter 2012 related to prior years;
- $4 million higher operations and maintenance (O&M) expenses2; and
- $1 million higher depreciation expense.
O&M expenses2 were approximately 7% higher in the third quarter of 2012 compared to the third quarter of 2011 largely due to higher customer service expenses, offset by lower plant overhaul expenses due to timing of work within the year. While year-to-date O&M expenses are essentially flat with the same period last year, management expects an increase in the fourth quarter of 2012 due to the timing of projects and expects full year O&M expense to be 4% higher than 2011. This is down from the previously expected 6% increase largely due to the revised timing of various studies.
1 “Hawaiian Electric Company” or “utility”, 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 Excludes demand side management (DSM) program costs. DSM program costs were $2 million in third quarter of 2012 compared to $1 million in third quarter of 2011. DSM program costs are recovered through a surcharge.
AMERICAN SAVINGS BANK’S STABLE RESULTS REFLECT DISCIPLINED APPROACH
American’s net income for the third quarter of 2012 was $14.2 million compared with $14.2 million in the second, or linked, quarter of 2012 and $15.5 million in the third quarter of 2011. Third quarter 2012 net income was consistent with the linked quarter as higher revenue, primarily driven by gains on sales of loans, were offset by slightly higher provision for loan losses and noninterest expense.
Compared to the same quarter of 2011, net income declined by $1.2 million. Higher noninterest expense, primarily driven by spending for new products and projects aimed at longer-term growth, and lower net interest income from declining yields on assets, were partially offset by higher gains on sale of new residential mortgages. Residential mortgage production totaled $272 million in the quarter compared to $123 million in the same quarter last year, outperforming the overall Hawaii market growth.
Overall, American continued to deliver solid results in third quarter 2012 with a return on average equity of 11.2% and a return on average assets of 1.15%.
Also refer to the American news release issued on October 30, 2012.
HOLDING AND OTHER COMPANIES
The holding and other companies’ net losses were $4.9 million in the third quarter of 2012 compared to $5.0 million in the third quarter of 2011.
BOARD DECLARES QUARTERLY DIVIDEND
On November 7, 2012, the board of directors maintained HEI’s quarterly cash dividend of 31 cents per share, payable onDecember 12, 2012, to shareholders of record at the close of business on November 19, 2012 (ex-dividend date is November 15, 2012). 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 onNovember 6, 2012 of $25.68, HEI’s yield is 4.8%.
WEBCAST AND TELECONFERENCE
Hawaiian Electric Industries, Inc. will conduct a webcast and teleconference call to review its third quarter 2012 earnings on Thursday, November 8, 2012, at 8:00 a.m. Hawaii time (1:00 p.m. Eastern time). The event can be accessed through HEI’s website at www.hei.com or by dialing (866) 383-8008, passcode: 56693947 for the teleconference call. The presentation for the webcast will be on HEI’s website under the headings “Investor Relations,” “News & Events” and “Presentations & Webcasts.” HEI and Hawaiian Electric Company, Inc. (HECO) 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, HECO’s and American’s press releases, HEI’s and HECO’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 HECO’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 HECO’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 teleconference call will also be available approximately two hours after the event through November 22, 2012, by dialing (888) 286-8010, passcode: 43247040.
HEI supplies power to approximately 450,000 customers or 95% of Hawaii’s population through its electric utilities, HECO,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, one of Hawaii’s largest financial institutions.
FORWARD-LOOKING STATEMENTS
This release may contain “forward-looking statements,” which include statements that are predictive in nature, depend upon or refer to future events or conditions, and usually include words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “predicts,” “estimates” or similar expressions. In addition, any statements concerning future financial performance, ongoing business strategies or prospects or possible future actions are also forward-looking statements. Forward-looking statements are based on current expectations and projections about future events and are subject to risks, uncertainties and the accuracy of assumptions concerning HEI and its subsidiaries, the performance of the industries in which they do business and economic and market factors, among other things. These forward-looking statements are not guarantees of future performance.
Forward-looking statements in this release should be read in conjunction with the “Forward-Looking Statements” and “Risk Factors” discussions (which are incorporated by reference herein) set forth in HEI’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 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, HECO, 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.