Q4 2023 Hawaiian Electric Industries Inc Earnings Call
Operator: Good day, and welcome to the Hawaiian Electric Industries fourth quarter 2023 earnings conference call. Please note that this call is being recorded. All lines have been placed on mute to prevent any background noise.
Good day and welcome to the Hawaiian Electric industries fourth quarter 'twenty twenty-three earnings conference call. Please.
Please note that this call is being recorded.
All lines have been placed on mute to prevent any background noise.
Operator: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question, please press star followed by the number 1 on your telephone keypad. To withdraw your question, press star 1 again.
After the Speakers' remarks, there will be a question and answer session.
If you would like to ask a question. Please press star followed by the number one on your telephone keypad.
So withdraw your question press Star one again.
Operator: I will now turn the call over to Mateo Garcia, Director of Investor Relations. You may begin your conference. Thank you.
I will now turn the call over to Matteo Garcia Director of Investor Relations you May begin your conference.
Matteo Garcia: Thank you welcome everyone to <unk> fourth quarter and full year 2023 earnings call.
Mateo Garcia: Welcome everyone to HEI's fourth quarter and full year 2023 earnings call. Joining me today are Scott Siu, HEI President and CEO, Scott Togeto, HEI Executive Vice President, CFO, and Treasurer, Shelley Kimura, Hawaiian Electric President and CEO, Anne Taranishi, American Savings Bank President and CEO, and other members of senior management. Our earnings release and our presentation for this call are available in the Investor Relations section of our website. As a reminder, forward-looking statements will be made on today's call. Factors that could cause actual results to differ materially from expectations can be found in our presentation, our SEC filings, and in the Investor Relations section of our website. Today's presentation also includes references to non-GAAP financial measures. You should refer to the information contained in the slides accompanying today's presentation for definitional information and reconciliations of historical non-GAAP measures to the closest GAAP financial measure. Now, Scott, see you. We'll begin with his remarks. Aloha kkou.
Joining me today are Scott few hei, President and CEO, Scott to Ghetto, Hei Executive Vice President CFO, and Treasurer, Shelly Kimura, Hawaiian electric President and CEO Antero Nishi American savings Bank, President and CEO and other members of senior management.
Matteo Garcia: Our earnings release and a presentation for this call are available in the Investor Relations section of our website.
Matteo Garcia: A reminder, forward looking statements will be made on today's call.
Matteo Garcia: Factors that could cause actual results to differ materially from expectations can be found in our presentation, our SEC filings and in the Investor Relations section of our website.
Matteo Garcia: Today's presentation also includes references to non-GAAP financial measures.
Matteo Garcia: You should refer to the information contained in the slides accompanying today's presentation for definition of information and reconciliations of historical non-GAAP measures to the closest GAAP financial measure.
Matteo Garcia: Now Scot few will begin with his remarks.
Scott Siu: Welcome, everyone. For today's call, I'll start with key updates regarding the Maui wildfires, followed by financial and operational updates. And then, together, we'll walk you through our 2023 financial results in more detail before we open it up for questions. It's been just over six months since the tragedy of the August 8 wildfires. Our community continues to grieve, and we know that it will be a long road ahead.
Hello Hook all cool welcome everyone for today's call I'll start with key updates regarding the Maui wildfires, followed by financial and operational updates and then I will walk you through our 2023 financial results in more detail before we open it up for questions.
Scot: It's been just over six months since the tragedy of the August 8th wildfires. Our community continues to grief and we know that it will be a long road ahead, however, I'm encouraged and inspired by the way. So many in our communities have come together to work towards the near and long term solutions necessary to help our state heal any more.
Scott Siu: However, I'm encouraged and inspired by the way so many in our community have come together to work towards the near and long-term solutions necessary to help our state heal and emerge stronger. It's clear that supporting Maui's recovery and addressing the increasing risk of wildfires as our climate changes will take a whole-of-society approach. We're seeing this whole-of-society view reflected in the One Ohana Initiative Governor Josh Green announced last fall and in our state's legislative session that is now underway.
Scot: Stronger.
Scot: It's clear that supporting Molly's recovery and addressing the increasing risk of wildfires as our climate changes will take a whole of society approach.
Scot: We're seeing this whole of society view reflected in the one <unk> initiative Governor Josh screen announced last fall and in our states legislative session that is now underway.
Scott Siu: One Ohana lays out a holistic framework to support Maui's recovery, protect our communities against future extreme weather events, and ensure that as a state, we can attract the capital needed to invest in wildfire mitigation and keep our communities safe. Governor Greene has also stated his intention for our state to avoid protracted legal conflicts, which could not only jeopardize Hawaii's energy future but could also severely delay reconstruction and economic recovery. The intentions of One Ohana align with our company's values and priorities. Under One Ohana, many parties are working together to find solutions to help the families most impacted by the fires, reduce the risk of catastrophic wildfires, and provide economic stabilization for the state. Meaningful progress has been made towards these goals in just the three months since One Ohana was announced.
Scot: One O Hunter lays out a holistic framework to support I'm always recovery protect our communities against future extreme weather events and ensure that as a state we can attract the capital needed to invest in wildfire mitigation and keep our communities safe.
Scot: Governor Green has also stated its intention for a state to avoid protracted legal conflicts, which could not only jeopardize Hawaii's energy feature but could also severely delayed reconstruction and economic recovery.
Scot: The intentions of one O hunter aligned with our company's values and priorities under one or Hunter. Many parties are working together to find solutions to help the families most impacted by the fires.
To reduce the risk of catastrophic wildfires and provide economic stabilization for the state.
Meaningful progress has been made towards these goals in just the three months since one or Hunter was announced.
Scott Siu: The Maui Recovery Fund, one aspect of the Governor's One Ohana Initiative, provides an alternative to litigation for families who have lost a loved one and those who were severely injured in the Maui fires. It now has $175 million in commitments and is targeting a March 1st launch. Hawaiian Electric will contribute up to $75 million, and the State of Hawaii, Maui County, Kamehameha Schools, Spectrum, and Hawaiian Telecom have committed to contribute the remainder. The speed at which this first fund has come together is encouraging, and, as the governor has said, it will help with healing and help everyone move forward.
Scot: The moly recovery fund one aspect of the Governor's one or Hunter initiative provides an alternative to litigation for families who have lost their loved ones and those who were severely injured and I'm always fires.
Scot: It now has $175 million of commitments and is targeting a march 1st launch.
Scot: Hawaiian electric will contribute up to $75 million and the state of Hawaii, Maui County called me, how many schools spectrum and Hawaiian Telecom has committed to contribute the remainder.
Scot: The speed at which this first fund has come together is encouraging and as the Governor has said it will help with healing and help everyone move forward.
Scott Siu: The next phase of this process will seek to support property owners and businesses who have been severely impacted by the fire. As part of the One Ohana framework, Governor Greene also laid out intentions to explore legislative solutions to address not only Maui's recovery but also measures for the state to address the impacts of increasingly severe weather events going forward. The legislative session began last month, and in the range of bills that have been introduced, we're seeing a whole-of-society approach to ensuring our state, utilities, and communities have the tools needed to address the challenges we face.
Scot: The next phase of this process will seek to support property owners and businesses, who have been severely impacted by the fire.
Scot: As part of the one off on a framework Governor Green also laid out intentions to explore and legislative solutions to address not only Maui recovery, but also measures for a state to address the impacts of increasingly severe weather events going forward.
Scot: The legislative session began last month and in the range of bills that have been introduced we're seeing a whole of society approach to ensuring our state utilities and communities have the tools needed to address the challenges we face.
Scott Siu: We're focused on bills that would establish a fund for property owners to recover damages from future catastrophic wildfires. Wildfire risk mitigation planning requirements would be overseen by the Public Utilities Commission, along with cost recovery for implementing approved plans, and Securitization as a financing option. The Office of the Governor has expressed the importance of legislation that can help stabilize the electric utility and Hawaii's energy future. His administration has proposed a bill that requires the utility to develop a wildfire mitigation plan overseen by the Public Utilities Commission and also includes securitization as a tool to finance wildfire safety and recovery. Dozens of bills have been introduced to address other aspects of wildfire risk more broadly. The legislature is considering bills that would establish a state fire marshal, a state wildfire fuel reduction task force, a Wildfire Safety Advisory Board, and a State Firefighting Helicopter Program, to name a few examples. It's still early in the legislative process, and bills can undergo significant changes over the legislative session, which will run through early May.
Scot: We're focused on bills that would establish a fund for property owners to recover damages from future catastrophic wildfires.
Wildfire risk mitigation planning requirements overseen by the public Utilities Commission, along with cost recovery for implementing approved plans.
Scot: And securitization as a financing option.
Scot: The office of the Governor has expressed the importance of legislation that can help stabilize the electric utility and Hawaii's energy future.
Scot: His administration has proposed a bill that requires the utility to develop a wildfire mitigation plan overseen by the public Utilities Commission and also includes securitization as a tool to finance wildfire safety and recovery.
Scot: Dozens of bills have been introduced to address other aspects of wildfire risk more broadly.
Scot: The legislature is considering bills that would establish a state fire Marshal our state wildfire field reduction task force.
Scot: Wildfire safety Advisory Board and the state firefighting helicopter program to name a few examples.
It's still early in the legislative process and bills can undergo significant changes over the legislative session, which will run through early may.
Scott Siu: However, I am pleased to see commitment among so many in Hawaii to urgently address the risks wildfires and other extreme weather events pose to our state. We also continue to work through the litigation process. As of February 12, Hawaiian Electric Company has been named as a defendant in 101 lawsuits by plaintiffs claiming losses related to the August 8 windstorm and wildfires, and HEI has been named in 101 as well. Most of these lawsuits have been removed from state court to federal court, but jurisdiction is still in the process of being settled.
However, I am pleased to see commitment amongst so many in Hawaii to urgently address the risks wildfires and other extreme weather events posed to our state.
Scot: We also continue to work through the litigation process.
Scot: As of February 12, Hawaiian Electric company has been named as a defendant in 101 lawsuits by plaintiffs, claiming losses related to the August eight windstorm and wildfires and Hei has been named in 101 as well.
Scot: Most of these lawsuits have been removed from the state court to federal court, but jurisdiction is still in the process of being settled.
Scott Siu: Certain milestone dates that were set earlier by the state court, such as when we'll need to file counterclaims, are no longer in effect and will be revisited once jurisdiction is settled. Subrogation claims from about 150 different insurers with exposure on Maui have also been filed, and we will respond to those complaints once they are served on us. Turning to the next slide, our utility received several constructive regulatory decisions in recent months that support our efforts to strengthen the resiliency of our system while we continue to advance Hawai'i's clean energy goals. Earlier this month, Hawaiian Electric received PUC approval for its five-year, $190 million grid resilience plan. The plan includes a slate of foundational resilience investments as the first phase of a long-term climate adaptation effort that will help harden the utility's grids against severe weather-related events fueled by climate change.
Scot: Certain milestone dates that were set earlier by the state court such as when we'll need to file counter claims are no longer in effect and will be revisited once jurisdiction is settled.
Scot: Subrogation claims from about 150 different insurers with exposure on mall. We have also been filed and we will respond to those complaints once they are served on us.
Scot: Turning to the next slide our utility received several constructive regulatory decisions in recent months that support our efforts to strengthen the resiliency of our system, while we continue to advance Hawaii's clean energy goals.
Scot: Earlier this month Hawaiian electric received PUC approval for their five year $190 million grid resiliency plan.
Scot: The plan includes a slate of foundational resilience investments as the first phase of a long term climate adaptation effort that will help harden the utilities grids against severe weather related events fueled by climate change.
Scott Siu: This approval enables the utility to move forward with $95 million in Department of Energy Infrastructure Investment and Jobs Act funding by matching it with $95 million in rate recovery. The utility also received several important regulatory decisions prior to 2023 year-end, including approvals to defer costs associated with the Maui wildfires and to recover $8.8 million in previously deferred costs from the COVID-19 pandemic. Our approximately $82 million Waina Battery Energy Storage Project on Maui was also approved. This is a critical project for ensuring the adequacy of supply on the island. The utility has continued to progress its Stage 3 RFP, its largest renewables procurement ever. Contract negotiations are in progress with the developers of 16 renewable energy projects across our island. The projects will further reduce Hawai'i's dependence on imported oil for power generation.
Scot: This approval enables a utility to move forward with $95 million and department of energy infrastructure investment and jobs Act funding by matching it with $95 million and rate recovery.
Scot: The utility also received several important regulatory decisions prior to 2023 year end, including approvals to deferred costs associated with the Maui wildfires and to recover $8 $8 million in previously deferred costs from the COVID-19 pandemic.
Scot: Our approximately $82 million Windup battery energy storage project in Maui was also approved.
Scot: This is a critical project for ensuring adequacy of supply on the island.
Scot: Yeah.
Scot: The utility has continued to progress at stage III RFP, its largest renewables procurement ever.
Scot: Contract negotiations are in process with the developers of 16 renewable energy projects across our islands.
The projects will further reduce hawaii's dependence on imported oil for power generation.
Scott Siu: The negotiations are expected to produce long-term contracts for approximately 517 megawatts of variable generation, 694 megawatts of firm renewable generation, and 2.1 gigawatt hours of storage. As we've discussed previously, the utility's own 253-megawatt Wai'au repowering project on O'ahu was selected in the RFP. The project will be built at the site of Hawaiian Electric's existing 85-year-old facility and could potentially use renewable gas or hydrogen when it becomes commercially available. The utility is working closely with the Department of Energy on federal loan funding options to help fund the project. We are also pursuing additional federal funding sources, including nearly $450 million in grants for grid resilience, modernization, and innovation for investments to increase resilience to natural hazards, including wildfires. In December, the utility connected the world's most advanced battery energy storage system to Oahu's grid. The Kapolei Energy Storage Battery Plant provides 185 megawatts of total power capacity and 565 megawatt hours of energy, and this is the first time a stand-alone battery has provided grid-forming services at this scale.
The negotiations are expected to produce long term contracts for approximately 517 megawatts of variable generation.
Scot: 694 megawatts of firm renewable generation and two one gigawatt hours of storage.
Scot: As we've discussed previously the utility's own 253 megawatt while Repowering project on Oahu was selected in the RFP.
Scot: The project will be built at the site of Hawaiian Electric's existing 85 year old facility and could potentially use renewable gas or hydrogen when it becomes commercially available.
The utility is working closely with the department of energy on Federal loan funding options to help fund the project.
Scot: We are also pursuing additional federal funding sources, including nearly $450 million of grants for grid resilience modernization and innovation for investments to increase resilience to natural hazards, including wildfires.
Scot: In December the utility connected the world's most advanced battery energy storage system to Oahu grid.
Scot: The couple of energy storage battery plant provides 185 megawatts of total power capacity and 565 megawatt hours of energy and this is the first time, a standalone battery has provided grid forming services at this scale.
Scott Siu: We're pleased with the utility's continued progress towards a clean energy-powered grid and encouraged by the constructive regulatory and federal government engagement on Hawaii's clean energy future. I'm also pleased to announce that we recently reached agreement with our union, IBEW 1260, on a new three-year contract effective through October 2027. The contract provides stability and visibility as we continue performing critical work to modernize our generation system and make our electric grids more resilient. Turning now to our financial results. Our core operations have continued to perform in line with expectations while we work alongside others in the Maui reconstruction efforts.
Scot: We're pleased with the utilities continued progress towards a clean energy powered grid and encouraged by the constructive regulatory and federal government engagement on Hawaii's clean energy future.
Scot: I'm also pleased to announce that we recently reached agreement with our Union IBEW to $1 60 on a new three year contract effective through October 2027.
Scot: The contract provides stability and visibility as we continue performing critical work to modernize our generation system and make our electric grid more resilient.
Scot: Turning now to our financial results.
Scot: Our core operations have continued to perform in line with expectations, while we work alongside others in the Maui reconstruction efforts.
Scot: On a consolidated basis 2023, net income was $199 2 million and earnings per share was $1 81.
Scott Siu: On a consolidated basis, 2023 net income was $199.2 million, and earnings per share was $1.81. This included about $14 million of Maui wildfire-related expenses, net of insurance recoveries and deferrals, and a loss in the sale of securities of $11 million resulting from a strategic balance sheet repositioning at the bank. Excluding these items, core net income was $224 million, and EPS was $2.04, down about 5% compared to last year's core net income, which excludes the gain on sale of an equity method investment recorded in 2022 at Pacific Current. Utility net income and EPS were $194 million and $1.76, or $195.1 million and $1.77 on a core basis, up about 3% compared to 2022. Bank Net Income and EPS were $53.4 million and $0.48, respectively.
Scot: This included about $14 million of Maui wildfire related expenses net of insurance recoveries and deferrals and a loss on the sale of securities of $11 million, resulting from our strategic balance sheet repositioning at the bank.
Scot: Excluding these items core net income was $224 million and EPS was $2 <unk> down about 5% compared to last year's core net income, which excludes the gain on sale of an equity method investment recorded in 2022 at Pacific current.
Scot: Utility net income and EPS were $194 million.
Scot: And $1 76, or $195 1 million and $1 77 on a core basis up about 3% compared to 2022.
Scot: Bank net income and EPS were $53 4 million and 48.
Scot: Excluding wildfire related expenses in the securities laws.
Scot: Core net income was $72 6 million and EPS was <unk> 66.
Scot: Down from $80 million and <unk> 73 last year.
Scot: At the holding company level, the net loss of $48 1 million in 2023 was up from $27 8 million in the prior year and included $4 $7 million of wildfire related expenses.
Scott Siu: Excluding wildfire-related expenses and the securities loss, core net income was $72.6 million, and EPS was 66 cents, down from $80 million and 73 cents last year. At the holding company level, the net loss of $48.1 million in 2023 was up from $27.8 million in the prior year and included $4.7 million of wildfire-related expenses. Excluding these expenses, the core net loss was $43.4 million, and the core EPS loss was $0.39.
Scot: Excluding these expenses core net loss was $43 4 million and core EPS loss was 39.
Scot: Turning to the bank.
Asps business proved resilient through the economic impacts of the Maui wildfires and the challenging interest rate environment experienced in 2023.
Scot: Asp's loyal and long tenured deposit base remained stable during the year and as of December 31, 86% of deposits were FDIC insured or fully collateralized.
Scott Siu: Turning to the bank, ASB's business proved resilient through the economic impacts of the Maui wildfires and the challenging interest rate environment experienced in 2023. ASB's loyal and long-tenured deposit base remained stable during the year, and as of December 31, 86% of deposits were FDIC-insured or fully collateralized. Customer deposits are safe, and there is no risk to customer deposits as a result of legal claims related to the wildfires. Asset quality remains strong, and the Hawaii market continues to be characterized by strong credit quality and low delinquency rates in comparison to the mainland. The bank's capital remains strong, with ample liquidity and lending capacity.
Scot: Customer deposits are safe and there is no risk to customer deposits as a result of legal claims related to the wildfires.
Scot: Asset quality remains strong and the Hawaii market continues to be characterized by strong credit quality and low delinquency rates in comparison to the mainland the.
Scot: The bank's capital remains strong with ample liquidity and lending capacity.
Scot: The sale of investment securities executed in the fourth quarter.
Scot: Physicians ESP for improved profitability and net interest margin, while strengthening the balance sheet.
Scot: In the fourth quarter, the bank sold low yielding securities and reduced high cost deposits with proceeds.
Scot: Scott Deangelo will discuss the transaction in greater detail.
Scott DeAngelo: TSB has continued to support the Maui community at a time when they most need us and the bank has provided numerous options for our Maui customers facing financial hardship as a result of the fires, including waived ATM fees, forbearance and deferment for commercial and consumer loans and emergency personal lines of <unk>.
Scott Siu: The sale of investment securities executed in the fourth quarter positions ASB for improved profitability and net interest margin while strengthening the balance sheet. In the fourth quarter, the bank sold low-yielding securities and reduced high-cost deposits with proceeds. Scott DeGhetto will discuss the transaction in greater detail. ASB has continued to support the Maui community at a time when they most need us, and the bank has provided numerous options for our Maui customers facing financial hardship as a result of the fires, including waived ATM fees. Forbearance and Deferment for Commercial and Consumer Loans and Emergency Personal Lines of Credit
Scott DeAngelo: Credit.
Scott DeAngelo: In addition, the bank has provided $135000 of charitable contributions to support the Maui community and has partnered with the Hawaii Restaurant Association, the Hawaii Bankers Association and others to provide donations and other resources for Maui residents. During this difficult time.
Scott DeAngelo: We are optimistic regarding Hawaii's economic outlook and the economy has proved resilient following the wildfires in August.
Scott Siu: In addition, the bank has provided $135,000 in charitable contributions to support the Maui community and has partnered with the Hawaii Restaurant Association, the Hawaii Bankers Association, and others to provide donations and other resources for Maui residents during this difficult time. We are optimistic regarding Hawaii's economic outlook, and the economy has proved resilient following the wildfires in August. Hawaii's statewide seasonally adjusted unemployment rate was 2.9 percent in December and continues to outperform the U.S. average of 3.7 percent.
Scott DeAngelo: Our statewide seasonally adjusted unemployment rate was two 9% in December and continues to outperform the U S average of three 7%.
Scott DeAngelo: The University of Hawaii, Economic research organization or your hero.
Scott DeAngelo: <unk> forecast that the state unemployment rate will remain low at two 5% in 2024.
You heroes latest outlook is an improvement compared to their outlook immediately following the wildfires.
Scott DeAngelo: Euro had initially predicted a more prolonged recovery.
Estimating that Molly's visitor arrivals would be 50% of the previous years and Maui unemployment would be over 10%.
Scott DeAngelo: I'm always unemployment rate was around 5% as of year end and in the month of December visitor arrivals to Maui was 75% of the previous years.
Scott Siu: The University of Hawai'i Economic Research Organization, or UHERO, forecasts that the state unemployment rate will remain low at 2.5 percent in 2024. YouHero's latest outlook is an improvement compared to their outlook immediately following the wildfire. UHERO had initially predicted a more prolonged recovery, estimating that Maui's visitor arrivals would be 50% of the previous years, and Maui unemployment would be over 10%. However, Maui's unemployment rate was around 5% as of year-end, and in the month of December, visitor arrivals to Maui were 75% of the previous years. Total statewide arrivals for the year were 90% of pre-pandemic levels.
Scott DeAngelo: Total statewide arrivals for the year, where 90% of pre pandemic levels.
Scott DeAngelo: Despite the economic impacts from the Maui wildfires.
Scott DeAngelo: Wide visitor spending for the full year was up over 2022.
Scott DeAngelo: Visitor spending increased five 5% to $28 billion in 2023.
Scott DeAngelo: This is well above pre pandemic levels by almost 20%.
Scott DeAngelo: Despite Japanese visitor arrivals being at about half of pre pandemic levels.
Scott DeAngelo: Real estate values and Hawaii remained consistently strong in December at the Oahu median single family home price was over $1 million and the median condo sales price was just under $510000.
Scott Siu: Despite the economic impacts from the Maui wildfires, statewide visitor spending for the full year was up over 2022. Visitor spending increased 5.5% to $20.8 billion in 2023. This is well above pre-pandemic levels by almost 20%, despite Japanese visitor arrivals being at about half of pre-pandemic levels. Real estate values in Hawai'i remain consistently strong.
Scott DeAngelo: Home sales volumes were down year over year, but were encouraged to see the recent decline in mortgage rates.
Scott DeAngelo: Hawaii's market continues to be characterized by limited inventory and stable prices supported by limited land available for property development.
Scott DeAngelo: I'll now hand, it off to Scott <unk> to walk through our financial results in more detail.
Scott: Thank you Scott.
Scott: I'll start with our results for the year on slide eight.
Scott: We earned consolidated net income of $199 2 million and EPS of $1 81 for the full year that included $14 1 million or about <unk> 13 per share of wildfire related expenses net of insurance recoveries, and deferrals and $11 million or <unk> 10 per.
Scott Siu: In December, the O'ahu median single-family home price was over $1 million, and the median condo sales price was just under $510,000. Home sales volumes were down year over year, but we're encouraged to see the recent decline in mortgage rates. Hawaii's market continues to be characterized by limited inventory and stable prices, supported by limited land available for property development. I'll now hand it off to Scott DiGhetto to walk through our financial results in more detail. Thank you, Scott. I'll start with our results for the year on slide 8. We earned consolidated net income of $199.2 million, and an EPS of $1.81 for the full year.
Scott: Share from a loss on the sale of securities as the bank, resulting from the bank's balance sheet repositioning.
Scott: Excluding those nonrecurring expenses core net income and EPS for $224 3 million and $2 <unk> compared to 235 million and $2 14 and 2022.
Scott: Utility net income included $1 1 million of wind storm in wildfire related impacts bank net income included $8 3 million in the holding company and other segment included $4 7 million of these costs.
Scott Togetto: That included $14.1 million, or about $0.13 per share, of wildfire-related expenses, net of insurance recoveries and deferrals, and $11 million, or $0.10 per share, from a loss on a sale of securities at the bank resulting from the bank's balance sheet repositioning. Excluding those non-recurring expenses, core net income in EPS was $224.3 million and $2.04 compared to $235 million Utility net income included 1.1 million of windstorm and wildfire-related impacts. Bank net income included $8.3 million, and the holding company and other segments included $4.7 million of these costs.
Scott: In December the PUC granted the utility's request for deferral treatment of wind storm in wildfire related incremental non labor expenses.
Scott: And as a result, the utility deferred $10 9 million of after tax O&M expenses in 2023.
Scott: In total the utilities incremental after tax Maui windstorm in wildfire related expenses of $1 1 million were comprised of $29 6 million of expenses net of $17 5 million of insurance related recoveries and the $10 9 million in deferred costs.
Scott: As mentioned the bank executed a balance sheet repositioning in the fourth quarter that resulted in an $11 million after tax loss on the sale of investment securities.
Scott Togetto: In December, the PUC granted the utility's request for deferral treatment of windstorm and wildfire-related incremental non-labor expenses. As a result, the utility deferred $10.9 million of after-tax O&M expenses in 2023. In total, the utility's incremental after-tax Maui windstorm and wildfire-related expenses of $1.1 million were comprised of $29.6 million of expenses, a net of $17.5 million of insurance-related recoveries, and $10.9 million in deferred costs. As mentioned, the bank executed a balance sheet repositioning in the fourth quarter that resulted in an $11 million after-tax loss on the sale of investment securities.
Scott: This resulted from our strategic sale of $185 million of low yielding assets with proceeds used to reduce asp's highest cost source of funding, which was certificates of deposit.
Scott: The transaction is expected to improve this year as net interest income and net interest margin.
In addition, lower asset levels will allow asp's leverage ratio to improve faster.
Scott: On a consolidated basis.
Scott: Core ROE remains healthy at nine 9%, excluding wildfire impacts and the loss on sale of securities.
Scott: This is down from 10, 2% core ROA last year, due primarily to lower bank earnings and a higher holding company loss.
Scott: Utility core ROE was flat at eight 2%, excluding wildfire impacts in bank core ROE was up 80 basis points to 14, 9% excluding wildfire impacts.
Scott Togetto: This resulted from a strategic sale of $185 million of low-yielding assets with proceeds used to reduce ASB's highest-cost source of funding, which was certificates of deposit. The transaction is expected to improve this year's net interest income and net interest margin. In addition, lower asset levels will allow ASB's leverage ratio to improve faster. On a consolidated basis, core ROE remains healthy at 9.9%, excluding wildfire impacts and the loss on sale of securities. This is down from 10.2% core ROE last year, due primarily to lower bank earnings and a higher holding company loss. Utility core ROE was flat at 8.2%, excluding wildfire impacts, and bank core ROE was up 80 basis points to 14.9%, excluding wildfire impacts. The higher bank ROE reflects the impact of higher interest rates on bank AOCI, which reduces shareholders' equity.
Scott: The higher bank ROE reflects the impacts of higher interest rates to bank, LCI, which reduces shareholders' equity.
Scott: The approximately 4% increase in the utilities EPS contribution was the result of a 28% increase in revenues primarily from the annual revenue adjustment and major project interim recovery mechanisms, a 5% increase in <unk> and a <unk> <unk>.
Scott: Kris from the fuel cost risk sharing mechanism.
Scott: These increases were partially offset by a 24% increase in O&M expense.
Scott: The <unk> increase in depreciation three.
Scott: <unk> <unk> of higher interest expense and about <unk> <unk> per share of incremental wildfire costs net of insurance recoveries and deferred costs.
Scott: The approximately 25% decrease in Asps fees EPS contribution was driven by the 10 cent loss from the bank's balance sheet repositioning.
Scott: <unk> of higher noninterest expenses.
Scott: <unk> of wildfire related expenses, including <unk> <unk> of additional provision recorded in Q3, and <unk> <unk> of higher provision, partially offset by a <unk> increase in noninterest income.
Scott Togetto: The approximately $0.04 increase in the utilities EPS contribution was the result of a $0.28 increase in revenues, primarily from the annual revenue adjustment and major project interim recovery mechanisms, a $0.05 increase in AFUDC, and a $0.04 increase from the fuel cost risk sharing mechanism. These increases were partially offset by a 24 cent increase in O&M expense. A six cent increase in depreciation, $0.03 of higher interest expense, and about $0.01 per share of incremental wildfire costs, net of insurance recoveries and deferred costs. The approximately 25 cent decrease in ASB's EPS contribution was driven by the 10 cent loss from the bank's balance sheet repositioning.
Scott: Holding company and other segment expenses were higher by about <unk> 19 per share <unk>.
Scott: Consisting of <unk> and wildfire expenses.
Scott: <unk> from lower Pacific current asset performance.
Scott: <unk> of interest expense and a <unk> <unk> negative variance due to the 2022 gain on sale of an equity investment at Pacific current.
Scott: Turning to our liquidity on slide 10.
Scott: We continue to believe that we have sufficient liquidity runway as we work through the timing and potential impacts of litigation related to the Maui wildfires.
Scott: As of the end of fourth quarter, the holding company and the utility had $137 million and $106 million of cash on hand, respectively.
In addition, we continue to pursue additional financing through an accounts receivable facility at the utility which.
Scott Togetto: $0.09 of higher non-interest expenses, $0.08 of wildfire-related expenses, including $0.04 of additional provision recorded in Q3, and $0.02 of higher provision partially offset by a $0.03 increase in non-interest income. Holding Company and other segment expenses were higher by about 19 cents per share, consisting of $0.04 in wildfire expenses, and $0.05 from lower Pacific Current asset performance.
Scott: Which we expect will provide $200 million to $250 million of additional liquidity.
Scott: Last week Hawaiian Electric's board of directors declared a $13 million quarterly cash dividend to hei.
Scott: With the suspension of hei as dividend to our common shareholders cash needs at the Hei parent company are limited relative to cash needs prior to the dividend suspension.
Scott: Right sizing the utility's dividend to hei allows more cash to be capped at the utility supporting its ability to perform needed restoration work in west Maui and make critical capital investments for wildfire mitigation and other electrical infrastructure, while capital markets access remains.
Scott Togetto: $0.04 of interest expense and a $0.06 negative variance due to the 2022 gain on sale of an equity investment at Pacific Current. Turning to our liquidity on slide 10. We continue to believe that we have sufficient liquidity runway as we work through the timing and potential impacts of litigation related to the Maui wildfires. As of the end of the fourth quarter, the holding company and the utility had $137 million and $106 million of cash on hand, respectively. In addition, we continue to pursue additional financing through an accounts receivable facility at the utility, which we expect will provide $200 to $250 million of additional liquidity. Last week, Hawaiian Electric's Board of Directors declared a $13 million quarterly cash dividend to HEI.
Scott: Strained.
Speaker Change: In closing I want to acknowledge what a challenging year 2023 was for our community our employees and our shareholders.
We will continue taking the right steps and working collaboratively with our community regulators and lawmakers to remain a financially healthy enterprise best positioned to support the needs of our customers in the state and with that let's open up the call to questions.
Speaker Change: Thank you at this time I would like to remind everyone in order to ask a question. Please press star one.
Your first question comes from Michael One again with Evercore. Please go ahead.
Michael: Yes, hi, thanks for taking my question.
Michael: Hello utility cash on hand decreased from $275 million at the end of the third quarter to $106 million as of year end I was just wondering if you could share some of the key uses of cash during the quarter and any details you can share on your current level of Capex.
Scott Togetto: With the suspension of HEI's dividend to our common shareholders, cash needs at the HEI parent company are limited relative to cash needs prior to the dividend suspension. Right-sizing the utility's dividend to HEI allows more cash to be kept at the utility, supporting its ability to perform needed restoration work in West Maui and make critical capital investments for wildfire mitigation and in other electrical infrastructure while the capital market's access remains constrained. In closing, I want to acknowledge what a challenging year 2023 was for our community, our employees, and our shareholders. We will continue taking the right steps in working collaboratively with our community, regulators, and lawmakers to remain a financially healthy enterprise best positioned to support the needs of our customers in the state. And with that, let's open up the call to questions. Thank you. At this time, I would like to remind everyone, in order to ask a question, please press star 1.
Michael: Also online ongoing level of investment given.
Michael: Grid resilience Sars and other projects that are ongoing.
Speaker Change: Yeah, Hey.
Scott: Mike It's Scott.
Scott: Yes, So I think when you look at the $275 million and you compare it to the $106 million, what you need to take to keep in mind is that the $2 75 had a pre funding of the $100 million maturity. So the way I look at it is we really ended the quarter at $1 75.
Scott: And so 175 versus the 106 and again as you know there is varying capital requirements and cash requirements as you move through our business and throughout the year.
Scott: So I would just keep that in mind as you look at the end of the year number. The other thing I can tell you is as we said on the call. We're working through the accounts receivable facility.
Scott: We've retained a large global.
Scott: Bank.
Scott: To work with us on that facility and we're basically finalizing that as we speak.
Operator: Your first question comes from Michael Lonegan with Evercore. Please go ahead. Yeah, hi, thanks for taking my question. So utility cash on hand decreased from $275 million at the end of the third quarter to $106 million as of year-end.
And we will be filing with the peace PUC in the not too distant future to get formal approval for that facility.
Michael Goldenberg: I was just wondering if you could share some of the key uses of cash during the quarter and any details you can share on your current level of CapEx and also ongoing levels of investment given, you know, grid resilience, storage, and other projects that are ongoing. Yeah. Hey, Mike, it's Scott Togetto.
Speaker Change: Great. Thank you on that.
Speaker Change: Secondly for me on the Maui recovery on do you have a sense of our expectation.
Speaker Change: Dissipation.
Speaker Change: And could there be upside to the 175 between now and.
Speaker Change: Launched on March <unk>.
Speaker Change: Yes, Hi, Mike This is Scott <unk>.
Scott: At this stage, we don't have any projections for the potential uptake.
Scott Togetto: Yeah, so when you look at the $275 million and you compare it to the $106 million, what you need to keep in mind is that the $275 had a pre-funding of the $100 million maturity. So the way I look at it is we really ended the quarter at $175. And so, you know, $175 versus $106.
Speaker Change: The sizing of the fund and the consideration of payments of $1 $5 million.
Speaker Change: Per claim.
Scott: We're hopeful I think the Governor's office is trying to get the word out about why this provides an attractive option for claimants to litigation.
Scott: At this stage, we won't be able to tell you until the fund is actually launched on March one.
Speaker Change: Alright, Thanks Scott.
Speaker Change: Okay.
Scott: Sure Mike.
Scott: Your next question comes from Jonathan Reeder with Wells Fargo. Please go ahead.
Scott Togetto: And again, as you know, there are varying capital requirements and cash requirements as you move through the business and throughout the year. And so, I would just keep that in mind as you look at the end-of-the-year number. The other thing I can tell you is, as we said on the call, we're working through the accounts receivable facility. We've retained a large global bank to work with us on that facility, and we're basically finalizing that as we speak. And, you know, we'll be filing with the PUC in the not-too-distant future to get formal approval for that facility. Great, thank you.
Scott: Yeah.
Jonathan Reeder: Hey, good morning team. Thanks for taking my question.
Jonathan Reeder: Hey, Jonathan.
Jonathan Reeder: So I was just kind of curious as currently being considered in the legislature like can you discuss how the governor sponsored bill the HB 2407, Mike does or does not potentially mitigate any of heat goes potential liabilities related to the August 2023, Maui wildfires.
Jonathan Reeder: Okay.
Yes, we also.
Jonathan Reeder: The governor sponsored bills, Jonathan they focus on wildfire mitigation plans and allowing the utility to.
Jonathan Reeder: New securitization to pay for improvements as a result of those plans.
Scott Togetto: And then, secondly for me, on the Maui Recovery Fund, do you have a sense or expectation of participation in it? And could there be upside to the $175 million between now and, you know, the launch on March 1st? Yeah, hi Mike, this is Scott. It's you.
Jonathan Reeder: I would say that those bills as currently drafted are forward looking.
Jonathan Reeder: I think the governor in one of the testimonies on one of the other Bill has made the point that as we consider these bills that are more forward looking with respect to wildfire mitigation strategies securitization, even a wildfire relief fund.
Scott Siu: Um, you know, at this stage, we don't have any projections for the, you know, potential uptake. I mean, the sizing of the fund and the consideration of payments of one and a half million dollars proclaim. We're hopeful.
Jonathan Reeder: It is still noted that we all still have to work through the issues of resolving the claims from last August.
Scott Siu: I think the governor's office is trying to get the word out about why this provides an attractive option for claimants to litigation. However, at this stage, we won't be able to tell you until the fund is actually launched on March 1. Great. Thanks, Scott. Sure, Mike. Your next question comes from Jonathan Reeder with Wells Fargo. Please go ahead. Hey, good morning team.
Jonathan Reeder: We talked a lot about well about fund number one already.
Jonathan Reeder: Suffice to say that there is active discussions happening right now with respect to claims dealing with property damage business losses and the like so.
The.
Jonathan Reeder: Long and short of it is the bills are predominantly forward looking, albeit there is still capacity too.
Jonathan Reeder: Think about funds securitization in the lake, which could possibly applied towards past claims but.
Jonathan Reeder: Thanks for taking my question. Hey Jonathan, So I was just kind of curious, you know, as currently being considered in the legislature, can you discuss how the governor's sponsored bill, HB2407, does or does not potentially mitigate any of HECO's potential liabilities related to the August 2023 Maui wildfires? Yeah, well, the governor-sponsored bills, Jonathan, they focus on wildfire mitigation plans and allowing the utility to use securitization to pay for improvements as a result of I would say that those bills as currently drafted are forward-looking.
Jonathan Reeder: Most of the bills focuses on a forward looking basis.
Jonathan Reeder: Okay. So I mean in terms of any specific legislative proposals that would be more related to the wildfires themselves at this point.
Speaker Change: There is nothing it's more related to I guess, the one ohana.
Speaker Change: Recovery funds.
Speaker Change: Well I would say this I would I would think about it this way Jonathan the one <unk>.
Specifically on fund too.
Speaker Change: There are any number of options available when you consider what the sources of funding might be.
Scott Siu: You know, I think the governor in one of the testimonies on one of the other bills made the point that as we consider these bills that are more forward-looking with respect to wildfire mitigation strategies, securitization, and even a wildfire relief fund, it's still noted that we all still have to work through the issues of resolving the claims from last August. We talked a lot about fund number one already. Suffice to say that there are active discussions happening right now with respect to claims dealing with property damage, business losses, and the like. So the long and short of it is the bills are predominantly forward-looking, albeit there is still capacity to, you know, think about funds, securitization, and the like, which could possibly apply towards past claims, but most of the bill's focus is on a forward-looking basis.
Speaker Change: Which could include for example, anything ranging from.
Speaker Change: Securitization if its deemed appropriate it could include thinking.
Speaker Change: And thinking from the hei prospective shareholder contributions it could include <unk>.
Speaker Change: Use of insurance funds.
Governor has also mentioned potential philanthropy, so I'd say that for fund too. It is still a we're working through a number of different options.
Speaker Change: And there could very well be some overlap or interplay with some of the bills that are being being considered it's still very early in the process for that.
Speaker Change: The legislative bills.
Speaker Change: Okay when does the legislative session.
Speaker Change: Thank you.
Speaker Change: Youre, saying its early in the process.
Speaker Change: Yes, it will end in.
Scott Siu: Okay, so, in terms of any specific legislative proposals that would be more related to the wildfires themselves, at this point, there's nothing. It's more related to, I guess, the Wanahana Recovery Fund stuff. Well, I would say this. I would think about it this way, Jonathan. The one ohana specifically on fund two. There are any number of options available when you consider what the sources of funding might be, which could include, for example, anything ranging from securitization if it's deemed appropriate.
May but I would say that the next significant milestones in the legislature are first crossover on March seven.
Speaker Change: And then later on second crossover is April 11.
Speaker Change: Crossover is very important because at that point, that's when you will see what one house or <unk> or the house or the Senate.
Speaker Change: Where they ultimately land on the initially proposed bills.
Speaker Change: Okay that helps.
Speaker Change: Any further insight into when like the results of the ATF led investigation into the cause of the fire even.
Scott Siu: It could include, you know, thinking from the HEI perspective, shareholder contributions. It could also include the use of insurance funds. The Governor has also mentioned potential philanthropy. So I'd say that for Fund 2, we're still working through a number of different options, and there could very well be some overlap or interplay with some of the bills that are being considered. It's still very early in the process for the legislative bill. Okay, when does the legislative session end? I mean, when you're saying it's early in the process? Yeah, it will end in May, but I would say that the next significant milestones in the legislature are first crossover on March 7. And then later on, the second crossover is April 11. Crossover is very important because at that point, that's when you will see what the House or the Senate ultimately lands on the initially proposed bills.
Speaker Change: The Hawaii <unk> investigation will be finalized and shared.
Speaker Change: Yes, we don't have any further updates Jonathan from what we talked about.
Speaker Change: Last quarter at <unk>.
Speaker Change: That point, there was still no hard and fast schedule for the ETF Maui Fire Department investigation.
Speaker Change: And the state Attorney General's investigation, I think as we talked about last time.
Speaker Change: They had been initially planning to share. Some initial results back in December but there were some delays as they needed to get more information from Maui County, So we still don't know of any further updates to their timing either.
Speaker Change: Okay.
Speaker Change: Then.
Speaker Change: I guess based on the lawsuits.
Speaker Change: And you know maybe just at a time that's passed since the wildfires do you have any.
And what the total damages, maybe excluding obviously any potential punitive damages.
Speaker Change: I think the state is disclosed residential property losses claims or at least the end of November.
Scott Siu: Okay, that helps. Any further insight into when the results of the ATF-led investigation into the cause of the fire, and even, you know, the Hawaii AG's investigation, will be finalized and shared? You know, we don't have any further updates, Jonovan, from what we talked about last quarter. At that point, there was still no hard and fast schedule for the ATF, the Maui Fire Department investigation, and the State Attorney General's investigation. I think, as we talked about last time, they had been initially planning to share some initial results back in December, but there were some delays as they needed to get more information from Maui County.
Speaker Change: Mount to just over $1 5 billion.
Speaker Change: Yes, we don't have any additional information beyond that Jonathan.
Jonathan Reeder: Okay great.
Speaker Change: Youre still working through all that so good luck as you go through the process and.
Speaker Change: Interested to see how it all plays out I appreciate you taking the questions.
Speaker Change: Thank you Jonathan.
Speaker Change: Your next question comes from Paul Patterson with Glenn <unk> Associates. Please go ahead.
Good morning.
Paul Patterson: Hi, Paul.
Paul Patterson: Hi.
Paul Patterson: So Jonathan that's a lot of my questions, but.
Speaker Change: But I'm.
Paul Patterson: Just sort of following up on a few of them.
Paul Patterson: Do we have them.
Paul Patterson: I know, it's still kind of early but you were talking about the wildfire mitigation.
Scott Siu: So we still don't know of any further updates to their timing either. Okay. And then
Going forward kind of efforts and what have you do we have any sense or do you guys have any sense about.
Paul Patterson: What the size of that might be or when we might get a better picture as to.
Scott Siu: I guess, based on the lawsuit filed and, you know, maybe just the time that's passed since the wildfires. Do you have any sense of what the total damages may be, obviously excluding any potential punitive damages? Like, for instance, I think the state has disclosed, you know, that residential property losses claimed through at least the end of November amount to just over $1.5 billion. Yeah, we don't have any additional information beyond that, Jonathan. Okay, great. Now, I know you're still working through all that, so good luck as you go through the process, and I'm interested to see how it all plays out.
Paul Patterson: As to what you were.
Paul Patterson: When we might get a better idea about what that would do.
Paul Patterson: Paul I think you are asking about the proposed wildfire.
Paul Patterson: Relief fund.
Speaker Change: Is that correct.
Paul Patterson: It's actually just work.
Paul Patterson: If theres any idea about what the what.
Paul Patterson: But the level of mitigation expenditures might have to be do we have any sense as to when we'll get a better picture is as opposed to the funding for it just what the actual amount might be do you follow what I'm, saying.
Speaker Change: Yes, I think so that would still thats still needs to be determined Paul.
Speaker Change: One one.
Speaker Change: Component of that is actually sizing what the overall wildfire risk would be to the states and I know that there has been discussion in part of some of the proposals are to do from an actuarial perspective.
Scott Siu: I appreciate you taking the question. Thank you, Jonathan. Your next question comes from Paul Patterson with Glenrock Associates. Please go ahead. Hey, good morning.
Speaker Change: Doing a risk assessment, which will help size the overall risk and what what the fund and potential investments could be.
Paul Patterson: Hi Paul. Hi, so Jonathan asked a lot of my questions, but... But just sort of following up on a few of them, do we have... I knew it was still kind of early, but you were talking about the wildfire mitigation, uh... going forward kind of efforts, and what have you. Do we have any sense, or do you guys have any sense about what the size of that might be, or when we might get a better picture as to when we might get a better idea about what that would be? Paul, I think you're asking about the proposed wildfire relief fund, is that correct? It's not the fund, it's actually just what, if there's any idea about what the level of mitigation expenditures might have to be, do we have any sense as to when we'll get a better picture as opposed to the funding for it, just what the actual amount might be? Do you understand what I'm saying? Yeah, I think so.
Speaker Change: At the youth at the utility of course, it will continue to do its own work looking at its wildfire.
Speaker Change: Mitigation plans.
Speaker Change: And that analysis is still in process and will play out.
Speaker Change: Okay.
Speaker Change: And then.
Speaker Change: In terms of the bank and this.
Speaker Change: This balance sheet.
Speaker Change: Repositioning what would it be.
Speaker Change: Just give a little bit more of a description of.
Speaker Change: The high cost.
Speaker Change: Loans, what have you that you were paying down like what was the cause of the like what did they occur I. Just if you could give me a little bit more flavor on that that'd be helpful.
Speaker Change: Yeah, Hey, Paul this is Antonio.
Antonio: The funds of the proceeds from the sale were used to pay our highest cost funding, which we're public.
Okay.
Antonio: And when did those Cds.
Antonio: What's the tenor on them in other words.
Scott Siu: You know, that still needs to be determined, Paul. One component of that is actually sizing what the overall wildfire risk would be to the state. And I know that there has been discussion, and part of some of the proposals is to do, from an actuarial perspective, a risk assessment, which will help size the overall risk and what the fund and potential investments could be. At the utility, of course, it will continue to do its own work looking at its wildfire mitigation plans, and that analysis is still in process.
Antonio: Are they recently issued Cds.
Antonio: But that high cost just a little surprised.
Antonio: So the public funds were yielding five.
Antonio: Five 6% and they were 60 to 96.
Antonio: If I get to the pilot.
Antonio: Okay.
Okay.
Antonio:
Antonio: Okay, and then just really finally.
Sure.
Antonio: The labor contract can you give us a sense of the.
Antonio: Cost increases that are going to be that.
Antonio: The annual CAGR of or what you guys negotiate with your Union.
Antonio: Hi, Paul This is Shelly Kimura.
Tayne S. Y. Sekimura: Thanks, Joe.
Tayne S. Y. Sekimura: Hi, nice to hear from you. So we're talking about an extension basically of the current contract. So those would be 3% Inc. Increases every year.
Scott Siu: Okay. And then, in terms of the bank and this sale, this balance sheet, repositioning, what would be, could you just give a little bit more of a description as to the high cost? um uh loans and what have you that you were paying down, like what was the cause of them and when did they occur? I just if you could give me a little more flavor on that that would be helpful. The proceeds from the sale were used to pay our highest cost funding, which were public CDs. And when did those CDs come out?
We had a separate component for our linemen given the market rates for linemen NR.
Tayne S. Y. Sekimura: In our sector.
Tayne S. Y. Sekimura: The cost increase for that should not be different and it should actually be a little bit less than what we experienced in 2023, because we had a pilot program ongoing and so the total impact of that should be about in the same range, if not a little bit less.
Scott Togetto: What's the tenor on them, in other words... Are they recently issued CDs? It was that high cost; I was just a little surprised. Yeah, so the public funds were yielding 5.6%, and they were certificates of deposit for 60 to 90 days. Okay, um... Okay, and then, um, just really finally, the, uh... The labor contract, can you give us a sense of the cost increases that are going to be, so the annual tagger of what you guys negotiate with your unions? Hi Paul, this is Shelly Kimura. Hi Shelly,
Speaker Change: Okay, great. Thanks, so much.
Speaker Change: Youre welcome.
Speaker Change: Okay.
Speaker Change: Your next question is a follow up from Jonathan Reeder with Wells Fargo. Please go ahead.
Speaker Change: Okay.
Jonathan Reeder: Hey, perhaps I did miss it in the slide but can you let us know how much utility funded capex is planned for 2024, and perhaps even over like the 2024 to 2026 period.
Jonathan Reeder: Obviously, there is the resiliency spending which portion of that is going to come from the Doe funds, but.
Jonathan Reeder: <unk>.
It looks like you have some.
Utility on Repowering.
Tayne S. Y. Sekimura: Hi, nice to hear from you. So we're talking about an extension basically of the current contract. So those would be 3% increases every year. We have a separate component for our linemen given the market rates for linemen in our sector.
Jonathan Reeder: Battery projects stuff like that can you give us a sense or is that going to be laid out in the K.
Jonathan Reeder: Hey, Jonathan this is Paul so so we are not providing guidance on capex, but what I would say is as we look at our liquidity, we're managing to what we can afford in terms of our financial resources I would say generally we would probably be on the lower end of what we've seen historically.
Tayne S. Y. Sekimura: And the cost increase for that should not be different. It should actually be a little bit less than what we experienced in 2023 because we had a pilot program ongoing. And so the total impact of that should be about the same range, if not a little bit less. Okay, great. Thanks so much. Your next question is a follow-up from Jonathan Reeder with Wells Fargo. Please go ahead.
Jonathan Reeder: As we mentioned we are re prioritizing our spend to focus on critical things like wildfire mitigation resilience.
Jonathan Reeder: There will be some moderation in other areas as long as it doesn't impact public safety, but again, it's a matter of.
Jonathan Reeder: Hey, perhaps I did miss it on the slide, but can you let us know how much utility-funded CapEx is planned for 2024 and perhaps even for the 2024 to 2026 period? You know, obviously, there's the resiliency spending, which, you know, a portion of that's going to come from DOE funds. But, you know, it looks like you have some utility-owned, you know, repowering, you know, battery projects, stuff like that. Can you give us a sensor?
Jonathan Reeder: Managing within.
Jonathan Reeder: Within our financial resources.
Jonathan Reeder: As Scott mentioned, we do have.
Jonathan Reeder: Our facility that we're working on we've made good progress on that so that.
Jonathan Reeder: That should provide additional capital as we operate our business going forward.
Speaker Change: Okay. Thanks, Paul I appreciate that.
Speaker Change: There are no further questions at this time I will now turn the call back over to Scott <unk> for any closing remarks.
Scott: Thank you for joining us today and to our shareholders. Thank you for your continued support and investment through these challenging times.
Jonathan Reeder: Is that going to be laid out in the K? Hey, Jonathan. This is Paul.
Speaker Change: Yes.
Speaker Change:
Paul Ito: So we are not providing guidance on CAPEX, but what I would say is, as we look at our liquidity, you know, we're managing to what we can afford in terms of our financial resources. I would say, generally, we would probably be on the lower end of what we've seen historically. As we mentioned, we are reprioritizing our spend to focus on critical things like wildfire mitigation and resilience. There will be some moderation in other areas, as long as it doesn't impact public safety. But again, it's a matter of managing within our financial resources, and as Scott mentioned, we do have our facility that we're working on. We've made good progress on that, so that should provide additional capital as we operate our business going forward. Okay. Thanks, Paul. I appreciate that. There are no further questions at this time.
Scott: I think all of US here at the company's our hearts continue to be with the people of Maui, including our many customers and of course our own employees.
Scott: So we're going to support and work alongside them every step of the way.
Scott: As I said earlier I am encouraged by the support and collaboration that has really characterize the reconstruction efforts.
Scott: And we look forward to continuing our work with the community Governor lawmakers and others.
Scott: We will charter path forward together so thank you very much.
Speaker Change: This concludes today's conference call. Thank you for joining US you may now disconnect.
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Speaker Change: Yes.
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Speaker Change: Okay.
Scott Hsu: I will now turn the call back over to Scott Hsu for any closing remarks. Thank you for joining us today, and to our shareholders, thank you for your continued support and investment through these challenging times. You know, I think all of us here at the companies, our hearts continue to be with the people of Maui, including our many customers and, of course, our own employees. So we're going to support and work alongside them every step of the way. As I said earlier, I'm encouraged by the support and collaboration that have really characterized the reconstruction efforts, and we look forward to continuing our work with the community, the governor, lawmakers, and others. We will chart our path forward together, so thank you very much. This concludes today's conference call. Thank you for joining us. You may now disconnect.
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