Hawaiian Electric outlines $1.8B–$2.4B CapEx plan through 2028 as wildfire settlement advances

Earnings Call Insights: Hawaiian Electric Industries, Inc. (HE) Q3 2025

MANAGEMENT VIEW

* CEO Scott W. Seu provided an update on the company's ongoing initiatives to strengthen financial resilience and outlined progress on wildfire safety, stating, "We had a successful quarter progressing the initiatives we've talked about for much of the last 2 years, implementing wildfire safety improvements, advancing the Maui wildfire tort litigation toward final court approval and laying the groundwork for a successful second multiyear rate period under our performance-based regulation, or PBR framework."
* Seu described key regulatory developments: "In February, and as we had requested, the PUC issued an order establishing that Hawaiian Electric's target revenues should be rebased ahead of the second PBR multiyear rate period set to begin on January 1, 2027, and that a general rate case type proceeding is the most efficient means for doing so."
* Progress on the Maui wildfire tort litigation was highlighted, with Seu noting that final approval processes are advancing and the first payment is expected "no sooner than early 2026."
* Seu emphasized operational risk improvements: "We fully deployed all weather stations and AI-assisted high-definition video cameras outlined in our strategy ahead of schedule. For the first time, the utility now has its own in-house meteorologist."
* CFO Scott Deghetto reported, "In the third quarter, we generated net income of $30.7 million or $0.18 per share. Quarter's results include $4.5 million of pretax Maui wildfire-related expenses net of insurance recoveries and deferrals. Excluding these items, consolidated core net income was $32.8 million for the quarter or $0.19 per share."
* Deghetto also detailed improved liquidity: "As of the end of the third quarter, the holding company and the utility had approximately $40 million and $504 million of unrestricted cash on hand, respectively. In September, we completed a successful $500 million unsecured debt offering at Hawaiian Electric, while also increasing our credit facility capacity at HEI and Hawaiian Electric by a combined $225 million."

OUTLOOK

* The company expects 2025 CapEx to be approximately $400 million. For 2026, CapEx is projected at $550 million to $700 million, with roughly $1.8 billion to $2.4 billion in total CapEx expected between 2026 and 2028.
* Deghetto explained the funding strategy: "We expect to fund the higher spend primarily with retained earnings and proceeds from our recent debt issuance."
* The outcome of ongoing regulatory proceedings, including PUC approval of the wildfire safety strategy and Waiau repowering project, will impact future CapEx forecasts.
* No explicit earnings guidance was provided, as Deghetto stated, "We really have been looking at reinstituting earnings guidance, but we really don't want to do that until we get through the final settlement approval process and put that behind us."

FINANCIAL RESULTS

* Net income for the quarter was $30.7 million or $0.18 per share, including $4.5 million of pretax Maui wildfire-related expenses net of insurance recoveries and deferrals.
* Consolidated core net income was $32.8 million or $0.19 per share, compared to $32.7 million or $0.29 per share in Q3 2024.
* Utility core net income was $39.6 million compared to $43.7 million in Q3 2024, with the decrease attributed to lower R&D tax credits, higher legal and consulting costs, and higher wildfire mitigation program expenses.
* Holding company core net loss was $6.8 million compared to $10.9 million in Q3 2024, benefiting from lower interest expense and higher interest income.
* $479 million continues to be held in a subsidiary for the first settlement payment, expected no sooner than early 2026.

Q&A

* Jamieson Ward, Jefferies: Asked about revenue requirement and timing under the alternative rebasing filing. Seu responded that discussions are in progress, with a proposal for rebasing due January 7, 2026, and if unsuccessful, a 2027 test year rate case would follow. Joe Viola added that the goal is "setting a new starting point for the second multiyear rate plan."
* Ward: Inquired about the cadence of utility to holdco dividends during settlement years. Deghetto answered, "The utility dividend to the holding company...has been set based on what the needs are up at the holding company. I don't see that changing for the foreseeable future."
* Ward: Sought clarity on the prospect of EPS guidance. Deghetto stated, "Too soon to say...we really don't want to do that until we get through the final settlement approval process."
* Michael Brown, Barclays: Requested an update on the sale of the remaining stake in American Savings Bank. Deghetto replied, "We do intend to monetize that stake. We haven't really given a time frame on it...probably in the next 6 months or so, we probably look again pretty hard at that."
* Brown: Asked about expectations for the commission's report on the wildfire fund. Seu responded that the report is on track to be submitted before the next legislative session.
* Brown: Queried about potential legislative movement in 2026. Seu replied, "Too soon to say."

SENTIMENT ANALYSIS

* Analysts focused on timing and mechanics of rate rebasing, dividend sustainability, CapEx outlook, and potential for future guidance, indicating a neutral to slightly cautious tone, with persistent questions about major regulatory and financial events.
* Management maintained a measured and factual tone, emphasizing progress, regulatory engagement, and liquidity improvements. Hesitation appeared on earnings guidance timing, with Deghetto stating, "Too soon to say."
* Compared to the previous quarter, analysts' tone remained consistent, pressing for clarity on strategic milestones, while management sustained a confident but cautious posture, particularly around regulatory and litigation outcomes.

QUARTER-OVER-QUARTER COMPARISON

* Strategic focus shifted from legislative implementation and business simplification to advancing wildfire settlement, operational risk mitigation, and executing on large-scale CapEx plans.
* Both quarters emphasized strengthening financial resilience and settlement progress, but the current quarter provided multi-year CapEx projections and regulatory process updates.
* Analysts' questions in both quarters focused on liquidity, settlement funding, and timing of new guidance. This quarter, additional attention was paid to CapEx scale and rate rebasing process.
* Management's confidence in liquidity and access to capital was more pronounced this quarter, supported by the recent debt issuance and credit facility expansion.

RISKS AND CONCERNS

* Ongoing regulatory proceedings may affect CapEx plans and timing of rate rebasing.
* Final approval of the Maui wildfire tort litigation settlement is pending, with the first payment due no sooner than early 2026.
* Future earnings guidance is delayed pending settlement approval and clarity on rebasing outcomes.
* Potential impacts from new wildfire-related legislation and recovery fund mechanisms remain uncertain.
* Management cited higher legal and consulting costs, elevated wildfire mitigation expenses, and the need for additional regulatory approvals as ongoing challenges.

FINAL TAKEAWAY

Management emphasized that Hawaiian Electric Industries is advancing on multiple fronts, from progressing the Maui wildfire litigation settlement and deploying enhanced wildfire safety measures to securing enterprise-wide liquidity and outlining a significant multi-year CapEx plan. With regulatory processes and settlement milestones still ahead, the company aims to fortify its operational resilience and financial flexibility as it transitions toward a more focused utility model and prepares for future growth and reliability investments.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/he/earnings/transcripts]

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