Q2 2024 Hawaiian Electric Industries Inc Earnings Call

August 9, 2024

Audra: Good afternoon, my name is Audra, and I will be your conference operator today. At this time, I would like to welcome everyone to the Hawaiian Electric Industries Inc. Earnings Conference Call. Today's conference is being recorded. All lines have been placed on mute to prevent any background noise.

Audra: Good afternoon, my name is Audra, and I will be your conference operator today. At this time, I would like to welcome everyone to the Q2 2024 Hawaiian Electric Industries Inc. Earnings conference call. Today's conference is being recorded. All lines have been placed on mute to forget any background noise after the speaker's remarks. There will be a question and answer session. If you would like to ask a question during this time, simply press the star key, followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again.

Audra: Good afternoon, my name is Audra and I will be your conference operator today.

Speaker Change: At this time, I would like to welcome everyone to the Q2 2024 Hawaiian Electric Industries, Inc. Earnings Conference Call.

Speaker Change: Today's conference is being recorded.

Audra: All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press the star key, followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again.

Mateo Garcia: At this time, I would like to turn the conference over to Mateo Garcia, Director, Investor Relations. Please go ahead.

Audra: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press the star key, followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. At this time, I would like to turn the conference over to Mateo Garcia, Director of Investor Relations. Please go ahead.

Audra: At this time, I would like to turn the conference over to Mateo Garcia, Director Investor Relations. Please go ahead.

Unknown Executive: Thank you.

Mateo Garcia: Thank you. Welcome everyone to HEI's second quarter 2024 earnings call. Joining me today are Scott Seu, HAI President and CEO, Scott Deghetto, HAI Executive Vice President, CFO, and Treasurer, Shelee Kimura, Hawaiian Electric President and CEO, Ann Teranishi, American Savings Bank President and CEO, and other members of senior management.

Mateo Garcia: Welcome everyone to HEI's second quarter 2024 earnings call. Joining me today are Scott Seu, HAI President and CEO, Scott Deghetto, HAI Executive Vice President, CFO, and Treasurer, Shelee Kimura, Hawaiian Electric President and CEO, Ann Teranishi, American Savings Bank President and CEO, and other members of senior management.

Audra: I'm sorry. I'm sorry.

Mateo Garcia: Thank you.

Mateo Garcia: and Taranishi, American Savings Bank President and CEO, and other members of Senior Management.

Mateo Garcia: 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 Seu will begin with his remarks. Aloha kakou.

Mateo Garcia: 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 Seu will begin with his remarks.

Mateo Garcia: Our earnings release and our presentation for this call are available in the Investor Relations section of our website.

Mateo Garcia: 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.

Mateo Garcia: Today's presentation also includes references to non-GAAP financial measures.

Mateo Garcia: You should refer to the information contained in the slides accompanying today's presentation for definitional information and reconfiliations of historical non-GAAP measures to the closest GAAP financial measure.

Mateo Garcia: 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.

Scott Seu: Now Scott Seu will begin with his remarks. Aloha Kakao. Welcome everyone.

Scott Seu: Aloha kkou. Welcome, everyone. For today's call, I'll start with key updates regarding the Maui wildfires and the proposed settlement announced last week. I'll then touch on operational progress we've made at the utility in our ongoing efforts to mitigate risk and enhance reliability. And finally, I'll discuss American Savings Bank's results and comment briefly on HEI's review of strategic options for ASB. I'll then turn it over to Scott DeGhetto, who will walk through our second quarter financial results in more detail and discuss the financial implications of recent announcements before we open it up for questions.

Mateo Garcia: Now Scott Seu will begin with his remarks.

Scott Seu: Welcome, everyone. For today's call, I'll start with key updates regarding the Maui wildfires and the proposed settlement announced last week. I'll then touch on operational progress we've made at the utility in our ongoing efforts to mitigate risk and enhance reliability. And finally, I'll discuss American Savings Bank's results and comment briefly on HEI's review of strategic options for ASB. I'll then turn it over to Scott DeGhetto, who will walk through our second quarter financial results in more detail and discuss the financial implications of recent announcements before we open it up for questions.

Scott Seu: Aloha kakou. Welcome everyone. For today's call, I'll start with key updates regarding the Maui wildfires and the proposed settlement announced last week.

Scott Seu: I'll then touch on operational progress we've made at the utility in our ongoing efforts to mitigate risk and enhance reliability.

Scott Seu: And finally, I'll discuss American Savings Bank's results and comment briefly on HEI's review of strategic options for ASB.

Scott Seu: I'll then turn it over to Scott Deghetto, who will walk through our second quarter financial results in more detail and discuss the financial implications of recent announcements before we open it up for questions.

Scott Deghetto: I'll then turn it over to Scott Deghetto who will walk through our second quarter financial results in more detail and discuss the financial implications of recent announcements before we open it up for questions.

Scott Seu: Yesterday marked one year since the wildfires on Maui forever altered the lives of so many of Maui's and Hawaii's residents. We know that for many, the pain of loss is as fresh today as it was over a year ago. Our hearts remain with our friends, families, neighbors, and employees. We suffered so much in the wake of last year's wildfires. It's been heartening for all of us here in Hawaii to see the many ways our community has come together to support the people of Lahaina and Upcountry Maui and to help chart a pathway forward.

Speaker Change: Yesterday marked one year since the wildfires on Maui forever altered the lives of so many of Maui's and Hawai'i's residents.

Speaker Change: We know that for many, the pain of loss is as fresh today as it was over a year ago.

Scott Seu: Our hearts remain with our friends, families, neighbors, and employees who suffered so much in the wake of last year's wildfires. It's been heartening for all of us here in Hawai'i to see the many ways our community has come together to support the people of Lahaina and upcountry Maui and to help chart a pathway forward. Last week, we saw an important milestone in those efforts. Following four months of mediation efforts, ATI, Hawaiian Electric, and other parties reached a settlement agreement in principle to offer those who suffered losses an accelerated path to recover. I'm thankful for the Governor's leadership in helping to expedite the agreement and keeping all of us focused on working together to do what is best for Maui and Hawaii.

Speaker Change: Our hearts remain with our friends, families, neighbors, and employees who suffered so much in the wake of last year's wildfires.

Speaker Change: It's been heartening for all of us here in Hawaii to see the many ways our community has come together to support the people of Lahaina and upcountry Maui, and to help chart a pathway forward.

Scott Seu: Last week, we saw an important milestone in those efforts. Following four months of mediation efforts, HEI, Hawaiian Electric, and other parties reached a settlement agreement in principle to offer those who suffered loss an accelerated path to recover. I'm thankful for the governor's leadership in helping to expedite the agreement and keeping all of us focused on working together to do what is best for Maui and Hawaii. For HCI, the settlement provides a clearer line of sight toward resolution of the wildfire-related tort litigation and increased certainty for our company's path ahead. Under the terms of the proposed settlement, the defendants have agreed to collectively pay over $4 billion to those who were harmed in last year's fires on Maui to settle all tort claims. HCI and Hawaiian Electric's contribution is a total of $1.99 billion pre-tax and includes the $75 million we previously contributed to the one-ohana initiative.

Scott Seu: For HEI, the settlement provides a clearer line of sight toward resolution of the wildfire-related tort litigation and increased certainty for our company's path ahead. Under the terms of the proposed settlement, the defendants have agreed to collectively pay over $4 billion to those who were harmed in last year's fires on Maui to settle all tort claims. HEI and Hawaiian Electric's contribution is a total of $1.99 billion pre-tax and includes the $75 million we previously contributed to the One Ohana Initiative. The settlement amount would be paid annually in four equal installments as a result of the proposed settlement. We recorded a $1.71 billion pre-tax loss for the quarter, which Scott Deghetto will discuss in more detail.

Speaker Change: Last week we saw an important milestone in those efforts.

Scott Seu: Following four months of mediation efforts, HEI, Hawaiian Electric, and other parties reached a settlement agreement in principle to offer those who suffered loss an accelerated path to recovery. I'm thankful for the Governor's leadership in helping to expedite the agreement and keeping all of us focused on working together to do what is best for Maui and Hawaii. For HEI, the settlement provides a clearer line of sight toward resolution of the wildfire-related tort litigation and increased certainty for our company's path ahead, under the terms of the proposed settlement.

Scott Seu: The defendants have agreed to collectively pay over $4 billion to those who were harmed in last year's fires on Maui to settle all tort claims. HEI and Hawaiian Electric's contribution is a total of $1.99 billion pre-tax and includes the $75 million we previously contributed to the One Ohana Initiative. The settlement amount would be paid annually in four equal installments. As a result of the proposed settlement, we recorded a $1.71 billion pre-tax loss for the quarter, which Scott Deghetto will discuss in more detail.

Speaker Change: Following four months of mediation efforts, HEI, Hawaiian Electric, and other parties reached a settlement agreement in principle to offer those who suffered loss an accelerated path to recovery.

Speaker Change: I'm thankful for the Governor's leadership in helping to expedite the agreement and keeping all of us focused on working together to do what is best for Maui and Hawaii.

Speaker Change: For HEI, the settlement provides a clearer line of sight toward resolution of the wildfire-related tort litigation and increased certainty for our company's path ahead.

Speaker Change: Under the terms of the proposed settlement, the defendants have agreed to collectively pay over $4 billion to those who were harmed in last year's fires on Maui to settle all tort claims.

Speaker Change: HEI and Hawaiian Electric's contribution is a total of $1.99 billion pre-tax and includes the $75 million we previously contributed to the One Ohana Initiative.

Scott Seu: The settlement amount would be paid annually in four equal installments.

Speaker Change: The settlement amount would be paid annually in four equal installments.

Scott Seu: As a result of the proposed settlement, we recorded a $1.71 billion pre-tax loss for the quarter, which Scott Deghetto will discuss in more detail. At this point, the proposed settlement is an agreement in principle between the defendants and attorneys representing individual and class plaintiffs, and would resolve over 600 lawsuits, which name both HCI and Hawaiian Electric as defendants. The settlement would also resolve all claims among the defendants. The agreement is conditioned on a resolution of the claims of the insurance companies that have paid claims for property loss and other damages, with no additional payments from defendants.

Speaker Change: As a result of the proposed settlement, we recorded a $1.71 billion pre-tax loss for the quarter, which Scott Deghetto will discuss in more detail.

Scott Seu: At this point, the proposed settlement is an agreement in principle between the defendants and attorneys representing individual and class plaintiffs, and would resolve over 600 lawsuits, which name both HEI and Hawaiian Electric as defendants. The settlement would also resolve all claims among the defendants. The agreement is conditioned on the resolution of the claims of the insurance companies that have paid claims for property loss and other damages, with no additional payments from the defendants.

Scott Seu: At this point, the proposed settlement is an agreement in principle between the defendants and attorneys representing individual and class plaintiffs, and would resolve over 600 lawsuits, which name both HEI and Hawaiian Electric as defendants. The settlement would also resolve all claims among the defendants. The agreement is conditioned on a resolution of the claims of the insurance companies that have paid claims for property loss and other damages, with no additional payments from defendants. Subrogation claims have been filed by about 160 different insurers with exposure on Maui.

Scott Deghetto: At this point, the proposed settlement is an agreement in principle between the defendants and attorneys representing individual and class plaintiffs, and would resolve over 600 lawsuits, which name both HEI and Hawaiian Electric as defendants.

Scott Deghetto: The settlement would also resolve all claims among the defendants.

Scott Deghetto: The agreement is conditioned on a resolution of the claims of the insurance companies that have paid claims for property loss and other damages, with no additional payments from defendants.

Scott Seu: Subrogation claims have been filed from about 160 different insurers with exposure on Maui. A hearing is scheduled for August 13 to obtain a court order limiting the insurer's recovery to the already agreed-upon settlement amount. Once a final settlement agreement is signed, it will take effect following judicial review and approval. The payments would begin after such approval and are expected to commence no earlier than mid-2025. Scott Deghetto will discuss the financial implications of the settlement and the work underway to develop a financing plan.

Speaker Change: Subrogation claims have been filed from about 160 different insurers with exposure on Maui.

Scott Seu: A hearing is scheduled for August 13 to obtain a court order limiting the insurer's recovery to the already agreed-upon settlement amount. Once a final settlement agreement is signed, it will take effect following judicial review and approval. The payments would begin after such approval and are expected to commence no earlier than mid-2025. Scott Deghetto will discuss the financial implications of the settlement and the work underway to develop a financing plan. Following the filing of the settlement agreement in principle with the Second Circuit Court, all trial dates for the Maui wildfire tort-related claims were vacated, meaning there are currently no trial dates pending in any of the tort-related lawsuits.

Speaker Change: A hearing is scheduled for August 13 to obtain a court order limiting the insurer's recovery to the already agreed-upon settlement amounts.

Scott Seu: Once a final settlement agreement is signed, it will take effect following judicial review and approval. The payments would begin after such approval and are expected to commence no earlier than mid-2025.

Speaker Change: Once a final settlement agreement is signed, it will take effect following judicial review and approval. The payments would begin after such approval and are expected to commence no earlier than mid-2025.

Scott Seu: Scott Deghetto will discuss the financial implications of the settlement and the work underway to develop a financing plan. Following the filing of the settlement agreement and principle with the Second Circuit Court, all trial dates for the Maui wildfire tort-related claims were vacated, meaning there are currently no trial dates pending in any of the tort-related lawsuits. With greater certainty for a path forward, our enterprise will be better positioned to invest in a sustainable and resilient future for Maui and all of a body. That includes advancing the utility's wildfire safety strategy and strengthening Hawaii's infrastructure to ensure the resilience and reliability of the grid.

Speaker Change: Scott Deghetto will discuss the financial implications of the settlement and the work underway to develop a financing plan.

Scott Seu: Following the filing of the settlement agreement in principle with the Second Circuit Court, all trial dates for the Maui wildfire tort-related claims were vacated, meaning there are currently no trial dates pending in any of the tort-related lawsuits.

Speaker Change: Following the filing of the settlement agreement in principle with the Second Circuit Court, all trial dates for the Maui wildfire tort related claims were vacated, meaning there are currently no trial dates pending in any of the tort related lawsuits.

Scott Seu: With greater certainty for our path forward, our enterprise will be better positioned to invest in a sustainable and resilient future for Maui and all of Hawaii. That includes advancing the utility's wildfire safety strategy and strengthening Hawaii's infrastructure to ensure the resilience and reliability of the grid. On our last earnings call, we noted that the utility was implementing enhanced wildfire operational strategies and practices, including a Public Safety Power Shutoff Program, or PSPS, as a last line of defense. The utility officially launched the PSPS program on July 1, and this means that power can now be preemptively shut off in certain areas identified as high risk during periods of high winds and dry conditions.

Speaker Change: With greater certainty for our path forward, our enterprise will be better positioned to invest in a sustainable and resilient future for Maui and all of Hawaii.

Speaker Change: That includes advancing the utility's wildfire safety strategy and strengthening Hawai'i's infrastructure to ensure the resilience and reliability of the grid.

Scott Seu: On our last earnings call, we noted that the utility was implementing enhanced wildfire operational strategies and practices, including a public safety power shutoff program or PSPS as a last line of defense. The utility officially launched the PSPS program on July 1st, and this means that power can now be preemptively shut off in certain areas identified as high risk during periods of high winds and dry conditions. The utility intends to continue coordinating closely with public agencies, first responders, community organizations, and customers to refine and enhance this new program to make it more targeted and effective going forward.

Speaker Change: On our last earnings call, we noted that the utility was implementing enhanced wildfire operational strategies and practices.

Speaker Change: including a Public Safety Power Shutoff Program, or PSPS, as a last line of defense.

Speaker Change: The utility officially launched the PSPS program on July 1st and this means that power can now be preemptively shut off in certain areas identified as high risk during periods of high winds and dry conditions.

Scott Seu: The utility intends to continue coordinating closely with public agencies, first responders, community organizations, and customers to refine and enhance this new program to make it more targeted and effective going forward. Meanwhile, while PSPS is an important tool to help keep our communities safe, we're also advancing a broader program of wildfire mitigation work to enhance resilience. Over 35% of the utility's capital budget this year, nearly $120 million, is dedicated to these efforts. One element of the wildfire safety strategy is to improve situational awareness through the use of advanced technology.

Speaker Change: The utility intends to continue coordinating closely with public agencies, first responders, community organizations, and customers to refine and enhance this new program to make it more targeted and effective going forward.

Scott Seu: While PSPS is an important tool to help keep our communities safe, we're also advancing a broader program of wildfire mitigation work to enhance resilience. Over 35% of the Utilities Capital Budget this year, nearly 120 million dollars, is dedicated to these efforts. One element of the wildfire safety strategy is to improve situational awareness through the use of advanced technologies. The Utility has already deployed 52 new weather stations across its service territory, which will help inform decisions about whether a PSPS event is necessary. And by the end of September, Hawaiian Electric expects to have installed 44 AI-enhanced video cameras in elevated risk areas, helping the company, fire agencies, and emergency operation centers to identify potential wildfires early and respond more quickly.

Speaker Change: While PSPS is an important tool to help keep our communities safe, we're also advancing a broader program of wildfire mitigation work to enhance resilience.

Speaker Change: Over 35% of the utility's capital budget this year, nearly $120 million, is dedicated to these efforts.

Scott Seu: The utility has already deployed 52 new weather stations across its service territory, which will help inform decisions about whether a PSPS event is necessary. And by the end of September, Hawaiian Electric expects to have installed 44 AI-enhanced video cameras in elevated risk areas, helping the company, fire agencies, and emergency operations centers to identify potential wildfires early and respond more quickly.

Speaker Change: One element of the wildfire safety strategy is to improve situational awareness through the use of advanced technologies.

Speaker Change: The utility has already deployed 52 new weather stations across its service territory, which will help inform decisions about whether a PSPS event is necessary.

Hawaiian Electric: And by the end of September, Hawaiian Electric expects to have installed 44 AI-enhanced video cameras in elevated risk areas.

Hawaiian Electric: helping the company, fire agencies, and emergency operations centers to identify potential wildfires early and respond more quickly.

Scott Seu: Hardening the grid is another important component of the utility strategy. This includes making investments to upgrade poles, install covered conductors, and strategically underground lines. Importantly, the investments Hawaiian Electric is making to harden the grid will increase resilience to many different kinds of environmental risks that we face in Hawaii, including hurricanes, floods, tsunamis, and wildfires. Strengthening this infrastructure will also enhance the reliability of service to customers. The utility also continues to make important progress to enhance reliability through the expansion of the Renewable Generation Fleet in our state.

Scott Seu: Hardening the grid is another important component of the utility strategy. This includes making investments to upgrade poles, install covered conductors, and strategically underground lives. Importantly, the investments Hawaiian Electric is making to harden the grid will increase resilience for many different kinds of environmental risks that we face in Hawaii, including hurricanes, floods, tsunamis, and wildfires. Strengthening this infrastructure will also enhance the reliability of service to customers.

Hawaiian Electric: Hardening the grid is another important component of the utility strategy.

Hawaiian Electric: This includes making investments to upgrade poles, install covered conductors, and strategically underground lines.

Hawaiian Electric: Importantly, the investments Hawaiian Electric is making to harden the grid will increase resilience for many different kinds of environmental risks that we face in Hawaii, including hurricanes, floods, tsunamis, and wildfires.

Hawaiian Electric: Strengthening this infrastructure will also enhance the reliability of service to customers.

Scott Seu: The Utility also continues to make important progress to enhance reliability through the expansion of the renewable generation fleet in our state. The Utility recently placed two new Solar Plus Storage projects in service on Maui and Oahu. The Kuihilani project is Maui's first Solar Plus Storage project and the biggest in Hawaiian Electric system, providing the island with 60 megawatts of solar generation capacity and 240 megawatt hours of storage. The Kupono project, now Oahu's largest solar plus storage project, will provide over 40 megawatts of solar generation capacity and 168 megawatt hours of storage.

Hawaiian Electric: The utility also continues to make important progress to enhance reliability through the expansion of the Renewable Generation Fleet in our state.

Scott Seu: The Utility recently placed two new Solar Plus storage projects in service on Maui and O'Auth. The Kuihilani Project is Maui's first solar plus storage project and the biggest in the Hawaiian electric system, providing the island with 60 megawatts of solar generation capacity and 240 megawatt hours of storage.

Scott Seu: The utility recently placed two new solar plus storage projects in service on Maui and Oahu. The Kuihilani Project is Maui's first solar plus storage project and the biggest in the Hawaiian electric system, providing the island with 60 megawatts of solar generation capacity and 240 megawatt hours of storage. The Kupono Project, now O'ahu's largest solar plus storage project, will provide over 40 megawatts of solar generation capacity and 168 megawatt hours of storage.

Hawaiian Electric: The utility recently placed two new Solar Plus storage projects in service on Maui and O'ahu.

Hawaiian Electric: The Kuihilani project is Maui's first solar plus storage project and the biggest in Hawaiian electric system, providing the island with 60 megawatts of solar generation capacity and 240 megawatt hours of storage.

Scott Seu: The Kupono Project, now O'ahu's largest solar plus storage project, will provide over 40 megawatts of solar generation capacity and 168 megawatt hours of storage. Turning now to the bank. As we've discussed over the last year, HEI has been advancing a strategy designed to support a strong, financially healthy enterprise that will empower a thriving future for Hawai'i. Consistent with this approach, HEI has been undertaking a comprehensive review of strategic options for ASB. However, there is no set timetable for the review, and there can be no assurances that any actions regarding ASB will result from this ongoing evaluation.

Hawaiian Electric: The Kupono Project, now O'ahu's largest solar plus storage project, will provide over 40 megawatts of solar generation capacity and 168 megawatt hours of storage.

Scott Seu: Turning now to the bank. As we've discussed over the last year, HEI has been advancing a strategy designed to support a strong, financially healthy enterprise that will empower a thriving future for Hawaii. Consistent with this approach, HEI has been undertaking a comprehensive review of strategic options for ASB. There is no set timetable for the review, and there can be no assurances that any actions regarding ASB will result from our evaluation.

Scott Seu: We reported a non-cash goodwill impairment charge for the bank, which Scott Deghetto will discuss shortly. However, the bank's core operations and earnings remain strong as it continues to serve as a trusted financial partner to customers across Hawaii. Excluding the goodwill impairment and Maui wildfire-related expenses, ASB improved profitability and grew net income in the second quarter compared to last year. It saw net interest margin expansion and, through prudent expense control, a decrease in non-interest expense. ASB's loyal and long-tenured deposit base remains stable, and as of June 30, 83% of deposits were FDIC-insured or fully collateralized.

Scott Seu: Turning now to The Bank. As we've discussed over the last year, HEI has been advancing a strategy designed to support a strong, financially healthy enterprise that will empower a thriving future for Hawaii. Consistent with this approach, HEI has been undertaking a comprehensive review of strategic options for ASB. However, there is no set timetable for the review, and there can be no assurances that any actions regarding ASB will result from this ongoing evaluation.

Speaker Change: Turning now to the bank.

Speaker Change: As we've discussed over the last year, HEI has been advancing a strategy designed to support a strong, financially healthy enterprise that will empower a thriving future for Hawaii.

Speaker Change: Consistent with this approach, HEI has been undertaking a comprehensive review of strategic options for ASB.

Speaker Change: There is no set timetable for the review, and there can be no assurances that any actions regarding ASB will result from our evaluation.

Scott Seu: In connection with this ongoing evaluation, we reported a non-cash goodwill impairment charge for the bank, which Scott DeGhetto will discuss shortly. The bank's core operations and earnings remain strong, as it continues to serve as a trusted financial partner to customers across Hawaii. Excluding the goodwill impairment and Maui wildfire-related expenses, ASB improved profitability and grew net income in the second quarter compared to last year. ASB saw net interest margin expansion and, through prudent expense control, a decrease in non-interest. ASB's loyal and long-tenured deposit-based remains stable, and as of June 30, 83% of deposits were FDIC insured or fully collateralized.

Speaker Change: in connection with this ongoing evaluation.

Scott Deghetto: We reported a non-cash goodwill impairment charge for the bank, which Scott Deghetto will discuss shortly.

Scott Deghetto: The bank's core operations and earnings remain strong as it continues to serve as a trusted financial partner to customers across Hawaii.

Scott Deghetto: Excluding the goodwill impairment and Maui wildfire related expenses, ASB improved profitability and grew net income in the second quarter compared to last year.

Scott Deghetto: ASB saw net interest margin expansion and, through prudent expense control, a decrease in non-interest expense.

Scott Deghetto: ASB's loyal and long-tenured deposit base remained stable, and as of June 30, 83% of deposits were FDIC-insured or fully collateralized.

Scott Seu: In summary, our operations remain strong across our companies, and we've made significant progress to clarify the path forward for our company. As we look ahead, we'll continue to take prudent and measured actions to ensure our companies are well-positioned to serve our customers and community for the long term.

Scott Seu: ASB's loyal and long-tenured deposit base remains stable, and as of June 30, 83% of deposits were FDIC-insured or fully collateralized. In summary, our operations remain strong across our company, and we've made significant progress to clarify the path forward for our company. As we look ahead, we'll continue to take prudent and measured actions to ensure our companies are well positioned to serve our customers and community for the long term. With that, I'll now turn the call over to Scott DeGhetto, who will discuss our financial results. Scott DeGhetto Thank you.

Scott Seu: In summary, our operations remain strong across our company, and we've made significant progress to clarify the path forward for our company. As we look ahead, we'll continue to take prudent and measured actions to ensure our companies are well positioned to serve our customers and community for the long term. With that, I'll now turn the call over to Scott Deghetto, who will discuss our financial results. Thank you, Scott. I'll start with our results for the quarter on slide six. For the second quarter, we recorded a consolidated net loss of $1.3 billion, or $11.74 per share.

Scott Deghetto: In summary, our operations remain strong across our companies.

Scott Deghetto: and we've made significant progress to clarify the path forward for our company.

Scott Deghetto: As we look ahead, we'll continue to take prudent and measured actions to ensure our companies are well positioned to serve our customers and community for the long term.

Scott Deghetto: With that, I'll now turn the call over to Scott DeGhetto, who will discuss our financial results.

Scott Deghetto: As Scott mentioned, the quarter's results included two significant one-time losses. First, at the utility, we recorded a $1.71 billion loss for $1.27 billion after taxes due to the accrual of estimated wildfire liabilities from tort-related claims as a result of the proposed settlement announced last week. Including the loss accrual, the utility's net loss for the quarter was $1.23 billion. The $1.71 billion loss accrued at the utility is lower than the $1.99 billion we have agreed to under the proposed settlement for two reasons.

Scott Deghetto: Thank you, Scott. I'll start with our results for the quarter on slide 6. For the second quarter, we recorded a consolidated net loss of $1.3 billion, or $11.74 per share. As Scott mentioned, the quarter's results included two significant one-time losses. First, at the utility, we recorded a $1.71 billion loss for $1.27 billion after taxes due to the accrual of estimated wildfire liabilities from tort-related claims as a result of the proposed settlement announced last week. Including the loss accrual, the utility's net loss for the quarter was $1.23 billion.

Scott Deghetto: With that, I'll now turn the call over to Scott Deghetto, who will discuss our financial results.

Scott Deghetto: Thank you, Scott. I'll start with our results for the quarter on slide six. For the second quarter, we recorded a consolidated net loss of $1.3 billion for $11.74 cents per share. As Scott mentioned, the quarter's results included two significant one-time losses. First, at the utility, we recorded a $1.71 billion loss for $1.27 billion after taxes due to the accrual of estimated wildfire liabilities from tort-related claims as a result of the proposed settlement announced last week. Including the loss accrual, utility net loss for the quarter was $1.23 billion. The $1.71 billion loss accrued at the utility is lower than the $1.99 billion we have agreed to under the proposed settlement for two reasons.

Scott Deghetto: First, the $1.99 billion includes the $75 million Wanohana contribution that was accrued in 2023. Second, the settlement amount is spread over four equal annual installments, and the loss recorded is our best estimate of an equivalent lump sum amount. Second, we also recorded an $82.2 million goodwill impairment for $66.1 million after taxes at ASB in connection with HEI's ongoing review of strategic options. The goodwill was related to acquisitions that took place in the 1980s and 1990s. The impairment is non-cash and has no impact on ASB's liquidity.

Scott Deghetto: The $1.71 billion loss accrued at the utility is lower than the $1.99 billion we have agreed to under the proposed settlement for two reasons. First, the $1.99 billion includes the $75 million Wanohana contribution that was accrued in 2023. Second, the settlement amount is spread over four equal annual installments, and the loss recorded is our best estimate of an equivalent lump sum amount.

Scott Deghetto: Thank you, Scott. I'll start with our results for the quarter on slide six.

Scott Deghetto: Second, we also recorded an $82.2 million goodwill impairment for $66.1 million after taxes at ASB in connection with HEI's ongoing review of strategic options. The goodwill was related to acquisitions that took place in the 1980s and 1990s. The impairment is non-cash and has no impact on ASB's liquidity.

Scott Deghetto: In addition to the $1.71 billion tort-related accrual, there were $2.8 million of pre-tax wildfire-related expenses, net of insurance recoveries and deferrals recorded at the utility in the second quarter. Bank wildfire-related pre-tax expenses were $500,000, and holding company wildfire-related pre-tax expenses were $6.5 million. Excluding these expenses, Consolidated Coordinated Income and EPS were $49.1 million and 44 cents per share compared to $54.6 million and 50 cents per share in the second quarter of 2023.

Speaker Change: For the second quarter, we recorded a consolidated net loss of $1.3 billion, or $11.74 per share. As Scott mentioned, the quarter's results included two significant one-time losses.

Scott Deghetto: In addition to the $1.71 billion tort-related accrual, there were $2.8 million of pre-tax wildfire-related expenses, net of insurance recoveries and deferrals recorded at the utility in the second quarter. Bank wildfire-related pre-tax expenses were $500,000, and holding company wildfire-related pre-tax expenses were $6.5 million. Excluding these expenses, Consolidated Coordinate Income and EPS were $49.1 million and 44 cents per share compared to $54.6 million and 50 cents per share in the second quarter of 2023.

Scott Deghetto: Utility Core Net Income was $43.9 million compared to $45.3 million in the same quarter last year. Bank Core Net Income of $20.7 million was up from $20.2 million compared to the same quarter last year. And Holding Company Core Net Loss of $15.5 million was up from $10.9 million. Lower utility core net income was driven by higher O&M and higher wildfire mitigation expense.

Scott Deghetto: Utility Core Net Income was $43.9 million, compared to $45.3 million in the same quarter last year. Bank Core Net Income of $20.7 million was up from $20.2 million compared to the same quarter last year. And Holding Company Core Net Loss of $15.5 million was up from $10.9 million. Lower utility core net income was driven by higher O&M and higher wildfire mitigation expense. The Bank's core net income was up slightly due to prudent expense management in higher non-interest income, partially offset by lower net interest income. The core net loss of the holding company was driven by higher losses at Pacific Current.

Scott Deghetto: First, at the utility, we recorded a 1.71 billion dollar loss for 1.27 billion after taxes due to the accrual of estimated wildfire liabilities from tort-related claims as a result of the proposed settlement announced last week.

Scott Deghetto: Turning to our liquidity on slide 7, we continue to prudently manage our liquidity, and as of the end of the second quarter, the holding company and utility had $124 million and $89 million of cash on hand, respectively. In connection with the proposed global settlement related to the wildfires on Maui, HEI and Hawaiian Electric are working closely with financial advisors to develop a financing plan for our settlement contribution. As Scott noted, the payments would begin after judicial approval of a final settlement and are expected to begin no earlier than mid-2025.

Scott Deghetto: We intend to finance the settlement payments through a mix of debt, common equity, equity-linked securities, or other potential options, although there can be no assurance at this time as to the availability of terms of any such financing. Because a plan is still being developed to finance the payments we've agreed to under the settlement, HEI and Hawaiian Electric are required to disclose that there is substantial doubt regarding each company's ability to continue as a going concern.

Scott: Including the loss accrual, utility net loss for the quarter was $1.23 billion.

Scott: The $1.71 billion loss accrued at the utility is lower than the $1.99 billion we have agreed to under the proposed settlement for two reasons.

Scott Deghetto: First, the $1.99 billion includes the $75 million 100 contribution that was accrued in 2023. Second, the settlement amount is spread over four equal annual installments, and the loss recorded is our best estimate of an equivalent sum amount. Second, we also recorded an $82.2 million goodwill impairment for $66.1 million after taxes at ASB in connection with HEI's ongoing review of strategic options. The goodwill was related to acquisitions that took place in the 1980s and 1990s. The impairment is non-cash and has no impact on ASB's liquidity. In addition to the $1.71 billion tort-related accrual, there were 2.8 million of pre-tax wildfire-related expenses net of insurance recoveries and deferrals recorded at the utility in the second quarter.

Scott: First, the $1.99 billion includes the $75 million One Ohana contribution that was accrued in 2023.

Scott: Second, the settlement amount is spread over four equal annual installments and the loss recorded is our best estimate of an equivalent lump sum amount.

Scott: Second, we also recorded an $82.2 million goodwill impairment for $66.1 million after taxes at ASB in connection with HEI's ongoing review of strategic options.

Scott: The Goodwill was related to acquisitions that took place in the 1980s and 1990s. The impairment is non-cash and has no impact on ASB's liquidity.

Scott: In addition to the $1.71 billion tort-related accrual, there were $2.8 million of pre-tax wildfire-related expenses, net of insurance recoveries, and deferrals recorded at the utility in the second quarter.

Scott Deghetto: Bank wildfire-related pre-tax expenses were $500,000, and holding company wildfire-related pre-tax expenses were $6.5 million. Excluding these expenses, consolidated coordinate income and EPS were $49.1 million in $0.44 per share compared to $0.6 million in $50 per share in the second quarter of 2023. Utility coordinate income was $43.9 million compared to $45.3 million in the same quarter last year. Bank coordinate income of $20.7 million was up from $20.2 million compared to the same quarter last year. In holding company coordinate loss of $15.5 million was up from $10.9 million. Lower utility cornnet income was driven by higher O&M and higher wildfire mitigation expenses.

Scott: Bank wildfire related pre-tax expenses were $500,000 and holding company wildfire related pre-tax expenses were $6.5 million.

Scott: Excluding these expenses, Consolidated Coordinate Income and EPS were 49.1 million dollars and 44 cents per share compared to 54.6 million dollars and 50 cents per share in the second quarter of 2023.

Scott: Utility Core Net Income was $43.9 million compared to $45.3 million in the same quarter last year.

Scott: Bank Core Net Income of $20.7 million was up from $20.2 million compared to the same quarter last year. And Holding Company Core Net Loss of $15.5 million was up from $10.9 million.

Scott: Lower utility core net income was driven by higher O&M and higher wildfire mitigation expenses.

Scott Deghetto: Banked cornnet income was up slightly due to prudent expense management in higher non-interest income, partially offset by lower net interest income. The cornet loss at the holding company was driven by higher losses at Pacific Current.

Scott Deghetto: The Bank's core net income was up slightly due to prudent expense management in higher non-interest income partially offset by lower net interest income. The core net loss of the holding company was driven by higher losses at Pacific Current. Turning to our liquidity on slide 7, we continue to prudently manage our liquidity, and as of the end of the second quarter, the holding company and utility had $124 million and $89 million of cash on hand, respectively.

Scott: Bank core net income was up slightly due to prudent expense management in higher non-interest income, partially offset by lower net interest income.

Scott: The core net loss at the holding company was driven by higher losses at Pacific Current.

Scott Deghetto: Turning to our liquidity on slide 7, we continued to prudently manage our liquidity, and as of the end of the second quarter, the holding company and utility had 124 million in 89 million of cash on hand, respectively. In connection with the proposed global settlement related to the wildfires on Maui, HEI and Hawaiian Electric are working closely with financial advisors to develop a financing plan for our settlement contribution. As Scott noted, the payments would begin after judicial approval of a final settlement and are expected to begin no earlier than mid 2025. We intend to finance the settlement payments through a mix of debt, common equity, equity-linked securities, or other potential options, although there can be no assurance at this time as to the availability of terms of any such financing.

Scott Deghetto: Accounting rules require that a financing plan be probable of being implemented in order to resolve the conditions giving rise to the substantial doubt disclosure. Once a financing plan is sufficiently progressed, we expect the going concern issue to be resolved. As a result of the going concern assessment, the utility dividend to HEI has been suspended. At that, let's open up the call to questions.

Scott: Turning to our liquidity on slide 7. We continue to prudently manage our liquidity and as of the end of the second quarter, the holding company and utility had $124 million and $89 million of cash on hand, respectively.

Scott Deghetto: In connection with the proposed global settlement related to the wildfires on Maui, HEI and Hawaiian Electric are working closely with financial advisors to develop a financing plan for our settlement contribution. As Scott noted, the payments would begin after judicial approval of a final settlement and are expected to begin no earlier than mid-2025. We intend to finance the settlement payments through a mix of debt, common equity, equity-linked securities, or other potential options, although there can be no assurance at this time as to the availability of terms of any such financing.

Scott: in connection with the proposed global settlement related to the wildfires on Maui.

Scott: HEI and Hawaiian Electric are working closely with financial advisors to develop a financing plan for our settlement contribution. As Scott noted, the payments would begin after judicial approval of a final settlement and are expected to begin no earlier than mid-2025.

Scott: We intend to finance the settlement payments through a mix of debt, common equity, equity-linked securities, or other potential options, although there can be no assurance at this time as to the availability of terms of any such financing.

Scott Deghetto: Because a plan is still being developed to finance the payments we've agreed to under the settlement, HEI and Hawaiian Electric are required to disclose that there is a substantial doubt regarding each company's ability to continue as a going concern. Accounting rules require that a financing plan be probable of being implemented in order to resolve the conditions giving rise to the substantial doubt disclosure. Once a financing plan is sufficiently progressed, we expect the going concern issue to be resolved. As a result of the going concern assessment, the utility dividend to HEI has been suspended.

Scott: Because a plan is still being developed to finance the payments we've agreed to under the settlement, HEI and Hawaiian Electric are required to disclose that there is a substantial doubt regarding each company's ability to continue as a going concern.

Scott: Accounting rules require that a financing plan be probable of being implemented in order to resolve the conditions giving rise to the substantial doubt disclosure. Once a financing plan is sufficiently progressed, we expect the going concern issue to be resolved.

Speaker Change: As a result of the going concern assessment, the utility dividend to HEI has been suspended. At that, let's open up the call to questions.

Audra: At that, let's open up the call to questions. Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again.

Operator: So, let's open up the call to questions. Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again.

Audra: Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. We'll take our first question from Michael Lonegan at Evercore ISI.

Speaker Change: Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again.

Michael Lonegan: We'll take our first question from Michael Lonegan at Evercore ISI. Hi, thanks for taking my questions. So the plaintiffs and defendants agreed to settle the wildfire cases without the insurance companies, who are looking for a significant amount.

Scott Seu: We'll take our first question from Michael Lonegan at Evercore ISI. Hi, thanks for taking my questions. So the plaintiffs and defendants agreed to settle the wildfire cases without the insurance companies, you know, who are looking for a significant amount. Just wondering, you know, what gives you confidence the settlement will ultimately be finalized under the terms of the deal, where the plaintiffs still need to reach an agreement with the insurers or obtain a court order barring them from recovering outside the settlement? Yeah, hi Mike.

Speaker Change: We'll take our first question from Michael Lonegan at Evercore ISI.

Scott Seu: Hi, thanks for taking my questions. So the plaintiffs and defendants agreed to settle the wildfire cases without the insurance companies, you know, who are looking for a significant amount. Just wondering, you know, what gives you confidence the settlement will ultimately be finalized under the terms of the deal, where the plaintiffs still need to reach an agreement with the insurers or obtain a court order barring them from recovering outside the settlement?

Michael Lonegan: Hi, thanks for taking my questions. So, the plaintiffs and defendants agreed to settle the wildfire cases without the insurance companies.

Scott Deghetto: Just wondering, what gives you confidence the settlement will ultimately be finalized under the terms of the deal where the plaintiffs still need to reach an agreement with the insurers or obtain the court order borrowing them from recovering outside the settlement.

Michael Lonegan: who are looking for a significant amount. Just wondering, you know, what gives you confidence the settlement will ultimately be finalized under the terms of the deal, you know, where the plaintiffs still need to reach an agreement with the insurers or obtain the court order barring them from recovering outside the settlement?

Scott Seu: Yeah, hi Mike, this is Scott Seu. The settlement really does represent a very important move forward in that it does lay out the most significant terms to settle the claims, the TORC claims. It is recognized that at this stage, yes, the sub-subrogation plaintiffs still have not agreed to the allocation of the total amount of money that would be provided by the defendants. But, very importantly, it allows 90 days for those discussions between the individual plaintiffs, their lawyers, and the subrogation plaintiffs to work that out.

Scott Deghetto: Hi, Mike. This has got to you. You know, the settlement really does represent a very important move forward in that it does lay out the most significant terms to settle the claims, the court claims. It's recognized that at this stage, yes, the subrogation plaintiffs still have not agreed to the allocation of the total amount of money that would be provided by the defendants. But very importantly, it allows 90 days for those discussions between the individual plaintiffs, lawyers, and the subrogation plaintiffs to work that out. Or, in the alternative, for the court to actually issue an order, which helps to resolve the issue.

Scott Seu: This is Scott Seu. You know, the settlement really does represent a very important move forward in that it does lay out the most significant terms to settle the claims, the TORC claims. It is recognized that at this stage, yes, the subsegregation plaintiffs still have not agreed to the allocation of the total amount of money that would be provided by the defendants. But, very importantly, it allows 90 days for those discussions between the individual plaintiffs, their lawyers, and the subrogation plaintiffs to work that out.

Michael Lonegan: Yeah, hi Mike, this is Scott Seu.

Scott Seu: You know, the settlement really does represent a very important move forward in that it does lay out the most significant terms.

Speaker Change: to settle the claims, the TORC claims. It's recognized that at this stage, yes, the subsegregation plaintiffs still have not agreed to the allocation of the total amount of money that would be provided by the defendants.

Speaker Change: but very importantly it allows 90 days for those discussions between the individual plaintiffs lawyers and the subrogation plaintiffs to work that out.

Scott Seu: Or, in the alternative, for the court to actually issue an order which helps to resolve the issue. So I think it's very important that, again, it brings clarity for everybody, and then it provides a pretty well-defined process ahead of us to resolve that issue. Great, thank you.

Speaker Change: or in the alternative for the court to actually issue an order which helps to resolve the issue.

Scott Deghetto: So I think it's very important that, again, it brings clarity for everybody. And then it provides a pretty, pretty well-defined process ahead of us to resolve that issue.

Speaker Change: I think it's very important that, again, it brings clarity for everybody and then it provides a pretty well-defined process ahead of us to resolve that issue.

Michael Lonegan: Thank you.

Michael Lonegan: Great.

Paul Ito: Great, thank you. And then, secondly, from me, you laid out a mix of financing options that you could use to pay for the settlement. Do you have a level of capital spending in mind over this four-year period and an FFO to debt target over that timeframe?

Michael Lonegan: Thank you.

Michael Lonegan: And then secondly, from me, you laid out a mix of financing options that you could use to pay for the settlement.

Speaker Change: Great, thank you. And then secondly from me, you laid out a mix of financing options that you could use to pay for the settlement. Do you have a level of capital spending in mind over this four-year period and an FFO to debt target over that time frame?

Scott Deghetto: Do you have a level of capital spending in mind over this four-year period and then FFO to debt target over that time frame? So, Mike, this is Paul. So, we're currently working on our long-term capital plans, and obviously a lot depends on what happens or the timing of this settlement agreement. Clearly, you know, we feel good about getting to a settlement and, based on that, having access to the capital markets more broadly for a lot of the growth investments that we foresee in the future. Things like our YL generation project and, of course, our increased wildfire mitigation type spend.

Paul Ito: And then, secondly, from me, you laid out a mix of financing options that you could use to pay for the settlement. Do you have a level of capital spending in mind over this four-year period and an FFO to debt target over that timeframe? So we're, Mike, this is Paul.

Scott Deghetto: So we're, Mike, this is Paul. So we're currently working on our long-term capital plans, and obviously, a lot depends on what happens or the timing of this settlement agreement. Clearly, you know, we feel good about getting to a settlement and, based on that, having access to the capital markets more broadly for a lot of the growth investments that we foresee in the future, things like our Wai'au Generation Project and, of course, our increased wildfire mitigation type spend. We are targeting investment grade credit metrics over the long term. That's critical and important for us because it also translates into lower customer bills. So we're very focused on that. Yeah.

Paul Ito: So we're currently working on our long-term capital plans, and obviously, a lot depends on what happens or the timing of this settlement agreement. Clearly, you know, we feel good about getting to a settlement and, based on that, having access to the capital markets more broadly for a lot of the growth investments that we foresee in the future. Things like our Wai'au Generation Project and, of course, our increased wildfire mitigation type spend. We are targeting investment grade credit metrics over the long-term.

Speaker Change: So we're

Speaker Change: So Mike, this is Paul.

Mike: So we're currently working on our long-term capital plans and obviously a lot depends on what happens or the timing of this settlement agreement.

Speaker Change: Clearly, you know, we feel good about getting to a settlement and based on that having access to the capital markets more broadly for a lot of the growth investments.

Speaker Change: that we foresee in the future.

Speaker Change: think like our WYAO generation project.

Scott Deghetto: We are targeting investment grade credit metrics over the long term. That's critical and important for us because it also translates into lower customer bills. So, we're very focused on that.

Speaker Change: and of course our increased wildfire mitigation type spin.

Speaker Change: We are targeting investment grade credit metrics over the long term.

Paul Ito: That's critical and important for us because it also translates into lower customer bills. So we're very focused on that. Yeah, Mike, and Scott Deghetto.

Speaker Change: That's critical and important for us because it also translates into lower customer bills, so we're very focused on that.

Scott Deghetto: Yeah, Mike, Scott Deghetto. On the broader kind of financing of the settlement, what I would say is we're working closely with our financial advisors to develop a financing plan for our settlement contribution. You know, keep in mind that this settlement was just, you know, agreed to a week ago, and we don't expect payments to begin until mid 2025 at the earliest. So, we believe that gives us sufficient time to develop and finalize that plan. And then, as far as the FFO to debt goes, what I would say is we're in constant communication with the rating agencies just in terms of discussing where we are and where we'd like to be over time.

Scott Deghetto: On the broader kind of financing of the settlement, what I would say is we're working closely with our financial advisors to develop a financing plan for our settlement contribution. You know, keep in mind that this settlement was just, you know, agreed to a week ago, and we don't expect payments to begin until mid-2025 at the earliest.

Speaker Change: Yeah, Mike, Scott Deghetto. On the broader kind of financing of the settlement...

Mike: What I would say is we're working closely with our financial advisors to develop a financing plan for our settlement contribution.

Speaker Change: You know, keep in mind that this settlement was just...

Speaker Change: you know, agreed to a week ago.

Speaker Change: and we don't expect payments to begin until mid 2025 at the earliest.

Scott Deghetto: And then as far as the FFO to debt ratio goes, what I would say is we're in constant communication with the rating agencies, just in terms of discussing where we are and where we'd like to be over time.

Speaker Change: So we believe that gives us sufficient time to develop and finalize that plan.

Scott Deghetto: So we believe that gives us sufficient time to develop and finalize that plan. And then, as far as the FFO to debt goes, what I would say is we're in constant communication with the rating agencies, just in terms of discussing where we are and where we'd like to be over time. Great, thank you.

Speaker Change: And then as far as the FFO to debt goes, what I would say is we're in constant communication with the rating agencies just in terms of discussing where we are and where we'd like to be over time.

Michael Lonegan: Great, thank you.

Scott Deghetto: And then lastly for me, so in your financing plans, you talked about, you know, a mix of debt, common equity, equity links, securities, and then, you know, broadly speaking, you mentioned other potential options. So you've already disclosed, you know, strategic alternatives for American Savings Bank. And I'm just wondering, is it fair to say all options are on the table, including maybe selling a stake in the utility or a smaller scale sale like Pacific Current or, you know, just in general, is there any more color you could provide about the other potential options you mentioned?

Scott Deghetto: And then lastly for me, so in your financing plans, you talked about, you know, a mix of debt, common equity, equity links, securities, and then, you know, broadly speaking, you mentioned other potential options. So you've already disclosed, you know, strategic alternatives for American Savings Bank. I'm just wondering, is it fair to say all options are on the table, you know, including maybe selling a stake in the utility or a smaller scale sale like Pacific Current or, you know, just in general. Is there any more color you could provide about the other potential options you mentioned?

Michael Lonegan: And then lastly for me, so on your financing plans, you talked about, you know, a mix of debt, common equity, equity-linked securities, and then, you know, broadly speaking, you mentioned other potential options. So, you already disclosed, you know, strategic alternatives potentially for American Savings Banks.

Speaker Change: Great, thank you. And then lastly, from me, so on your financing plans you talked about, you know, a mix of debt, common equity, equity linked securities, and then, you know, broadly speaking, you mentioned other potential options.

Speaker Change: So you've already disclosed, you know, strategic alternatives potentially for American savings banks.

Scott Deghetto: And I'm just wondering, is it fair to say all options are on the table, you know, including maybe selling a stake in the utility or a smaller scale, you know, sale like Pacific Current or, you know, just in general, is there any more color you could provide about the other potential options you mentioned? Yeah, we're not going to get into specifics about the other potential options. You know, from my perspective, if we wanted to keep it as broad as possible, I mean, there's the regular way debt. Equity equity link that you mentioned, but there's a lot of other different financing mechanisms available in the marketplace that we want to make sure, you know, we take a look at.

Speaker Change: I'm just wondering, is it fair to say all options are on the table, you know, including maybe selling a stake in the utility or a smaller scale, you know, sale like Pacific Current or, you know, just in general, is there any more color you could provide about the other potential options you mentioned?

Scott Deghetto: Yeah, we're not going to get into specifics about the other potential options. You know, from my perspective, we wanted to keep it as broad as possible. I mean, there's the regular ways of debt, equity, equity length that you mentioned, but there are a lot of other different financing mechanisms available in the marketplace that we want to make sure we take a look at.

Scott Deghetto: Yeah, we're not going to get into specifics about the other potential options. You know, from my perspective, we wanted to keep it as broad as possible. I mean, there's the regular way of debt, equity, equity length that you mentioned, but there's a lot of other different financing mechanisms available in the marketplace that we want to make sure you know, we take a look at.

Speaker Change: Yeah

Speaker Change: We're not going to get into specifics about the other potential options. You know, from my perspective, we wanted to keep it as broad as possible. I mean, there's the regular way debt, equity, equity link that you mentioned, but there's a lot of other different financing mechanisms available in the marketplace that we want to make sure, you know, we take a look at.

Michael Lonegan: Great, thanks for taking my questions. Thanks, Mike.

Scott Deghetto: Great. Thanks for taking my questions. Thanks, Mike. We'll move next to Jonathan Reeder at Wells Fargo. Hey team, how's it going today?

Scott Deghetto: Great, thanks for taking my question.

Speaker Change: Great, thanks for taking my questions.

Jonathan Reader: We'll move next to Jonathan Reader at Wells Fargo.

Unknown Executive: We'll move next to Jonathan Reeder at Wells Fargo.

Mike: Thanks, Mike.

Mike: We'll move next to Jonathan Reeder at Wells Fargo.

Jonathan Reader: Hey, team, how's it going today? Hi, Jonathan. Thanks for taking my question. First off, as a non-legal expert, can you just please explain how Judge K.

Unknown Executive: Hey team, how's it going today? Hi Jonathan. Thanks for taking my question. First off, as a non-legal expert, can you just please explain how Judge Cahill's court, I guess, could force the insurers into accepting the settlement and waiving their ability to pursue the subrogation claims against the defendant?

Operator: Hi Jonathan. Thanks for taking my question. First off, as a non-legal expert, can you just please explain how Judge Cahill's court, I guess, could force the insurers into accepting the settlement and waiving their ability to pursue the subrogation claims against the defendant?

Speaker Change: Hey team, how's it going today? Hi, Jonathan.

Jonathan Reeder: Thanks for taking my question. First off, as a non-legal expert, can you just please explain how Judge Cahill's court, I guess, could force the insurers into accepting the settlement and waiving their ability to pursue the subrogation claims against the defendants?

Scott Deghetto: Hill's Court, I guess, could force the insurers into accepting the settlement and waiving their ability to pursue the subrogation claims against the defense. Sure, Jonathan.

Unknown Executive: Sure, Jonathan. And again, keep in mind that I am also a non-lawyer. So what's in play right now is you have individual plaintiffs who, let's see what the actual date was, I think it was Anyway, I, just a few weeks ago, they actually filed in Judge Cahill's court a motion which challenges the subrogation plaintiff's ability to independently seek claims. So that is one of the ongoing efforts by the individual plaintiffs. Judge Cahill has agreed to hold a hearing on August 13th, in which he will really look at the issue of whether or not individual plaintiffs, I'm sorry, segregation plaintiffs are required to work through individual plaintiffs settlement amounts, as opposed to themselves in parallel, coming against the defendant.

Scott Seu: And again, keep in mind, I am also a non-lawyer. So, what's in play right now is you have individual plaintiffs who, let's see what the actual date was, I think it was Anyway, I, just, just a few weeks ago, they actually filed in Judge Cahill's court, a motion which challenges the subrogation plaintiff's ability to independently seek claims. So that is one of the ongoing efforts by the individual plaintiffs. Judge Cahill has agreed to hold a hearing on August 13th, in which he will really look at the issue of whether or not, individual plaintiffs, I'm sorry, segregation plaintiffs, are required to work through individual settlement amounts, as opposed to themselves in parallel, coming against the defendant. So the August 13th hearing is just that. It's a trial. We don't have any particular sense of how long it will take for the judge to rule on this issue.

Scott Deghetto: And, again, keep in mind, I am also a non-Boyer. So, what's in play right now is you have individual plaintiffs who, let's see what was the actual date. I think it was just a few weeks ago, they actually filed in Judge K. Hill's court a motion which challenges the subregation plaintiffs' ability to independently seek claims. So, that is one of the ongoing efforts by the individual plaintiffs. Judge K. Hill has agreed to hold a hearing on August 13th in which he will really look at the issue of whether or not individual plaintiffs, I'm sorry, subrogation plaintiffs are required to work through individual plaintiffs' settlement amounts as opposed to themselves in parallel coming against the defendants.

Speaker Change: Thanks for watching, and don't forget to like, share, and subscribe to our channel.

Speaker Change: So what's in play right now is you have individual plaintiffs who Let's see. What was the actual date? I think it was

Speaker Change: Anyway, just a few weeks ago, they actually filed in Judge Cahill's court.

Speaker Change: A motion which challenges the subrogation plaintiff's ability to independently seek claims.

Speaker Change: So, that is one of the ongoing efforts by the individual plaintiffs. Judge Cahill has agreed to hold a hearing on August 13th in which he will really look at the issue of whether or not

Speaker Change: Individual plaintiffs, I'm sorry, subrogation plaintiffs are required to work through individual plaintiffs settlement amounts as opposed to themselves in parallel coming against the defendants.

Unknown Executive: So the August 13th hearing is just that. It's a hearing. We don't have any particular sense of how long it will take for the judge to rule on this issue. We're hopeful that it will be resolved fairly quickly, which would allow more clarity to be brought to the overall settlement agreement.

Scott Deghetto: So, the August 13th hearing is just that; it's a hearing. We don't have any particular sense of how long it will take for the judge to rule on this issue. We're hopeful that it will be resolved fairly quickly, which would allow more clarity to be brought to the overall settlement agreement. Okay, so, I mean, again, this is my non-legal understanding, but if he requires the insurance companies to work through the individual complaint and settlement agreements, isn't that kind of putting a substantial financial and legal burden back on the victims after reaching this settlement and really not allowing them to move forward if the insurance companies can essentially go after these individual plaintiffs to try to recoup the 2.3 billion or whatever they paid out so far?

Speaker Change: So, the August 13th hearing is just that, it's a hearing.

Speaker Change: We don't have any particular sense of how long it will take for the judge to rule on this issue. We're hopeful that it will be resolved fairly quickly, which would allow more clarity to be brought to the overall settlement agreement.

Audra: All lines have been placed on mute to forget any background noise after the speaker's remarks. There will be a question and answer session. If you would like to ask a question during this time, simply press the star key, followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again.

Scott Seu: We're hopeful that it will be resolved fairly quickly, which would allow more clarity to be brought to the overall settlement agreement. Okay, so, I mean, Again, this is my non-legal understanding, but if he requires the insurance companies to work through the individual plates and Settlement Agreements, isn't that kind of putting a substantial financial and legal burden back on the victims? After, you know, reaching this settlement and really not allowing them to move forward if, if the insurance companies can essentially go after these individual plaintiffs that try to, you know, recoup the $2.3 billion or whatever that they've paid out so far.

Unknown Executive: Okay, so I mean, Again, this is my non-legal understand, but if he requires the insurance companies to work through the individual plate and- Settlement Agreements, isn't that kind of putting a Scott Deghetto, Hawaiian Electric Industries Inc, After, you know, reaching this, this settlement, and really not allowing them to move forward if, if the insurance companies can essentially go after These individual plaintiffs that try to, you know, recoup the, you know, the $2.3 billion or whatever that they've paid out so far.

Speaker Change: Okay, so, I mean...

Speaker Change: Again, this is my non-legal understanding, but if he requires the insurance companies to work through the individual platents...

Speaker Change: settlement agreements, isn't that kind of putting a substantial financial and legal burden back on the victims?

Mateo Garcia: At this time, I would like to turn the conference over to Mateo Garcia, Director, Investor Relations. Please go ahead. Thank you.

Speaker Change: after you know reaching this this settlement and really not allowing them to move forward if if the insurance companies can essentially go after

Mateo Garcia: Welcome everyone to HEI's second quarter 2024 earnings call. Joining me today are Scott Seu, HEI President and CEO, Scott Deghetto, HEI Executive Vice President, CFO and Treasurer, Shelee Kimura, Hawaiian Electric President and CEO, Ann Teranishi, American Savings Bank President and CEO in 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.

Speaker Change: These individual plaintiffs that try to, you know, recoup the, you know, the $2.3 billion or whatever that they've paid out so far.

Scott Deghetto: Yeah, I mean, in effect, what the individual plaintiffs' lawyers are arguing is that, you know, in effect, it does result between having to resolve the issues between the individual plaintiffs and the insurance companies. So, you're correct.

Scott Seu: Yeah, I mean, in effect, what the individual plaintiffs lawyers are arguing is that. You know, in effect, it does result in having to resolve the issues between the individual plaintiffs and the insurance companies. So you're correct. Okay, yeah, no, that just doesn't seem like an ideal outcome either. So, like, what happens exactly, you know, after 90 days, assuming the court doesn't come to this agreement, and if the victims have not, or sorry, if the insurers and the victims haven't resolved their dispute? What happens after 90 days?

Unknown Executive: Yeah, I mean, in effect, what the individual plaintiffs lawyers are arguing is that, um... In effect, it does result in having to resolve the issues between the individual plaintiffs and the insurance companies. So you're correct.

Speaker Change: Yeah, I mean, in effect, what the individual plaintiff's lawyers are arguing is that

Speaker Change: You know in effect it does result between having to resolve the issues between the individual plaintiffs and the insurance companies. So you're correct.

Unknown Executive: Okay, yeah, no, that just doesn't seem like an ideal outcome either. So, what happens exactly, you know, after 90 days, assuming the court doesn't come to this agreement, and if the victims have not, or, sorry, if the insurers and the victims haven't resolved their dispute? What happens after 90 days? Is it just the settlement, you know, kind of dissolves, and then those court cases would kind of resume that are currently suspended?

Scott Deghetto: Okay, yeah, no, it just doesn't seem like an ideal outcome either. So, like, what happens exactly, you know, after 90 days assuming the court doesn't come to this agreement and if the victims have not, or sorry, if the insurers and the victims haven't resolved their dispute? What happens after 90 days? Is it just the settlement, you know, kind of dissolves, and then those court cases would kind of resume that are currently suspended? Well, you know, so the term sheet does require a condition precedent that, again, within this 90 days either there is an agreement that's reached between the individual plaintiffs and the subrogation plaintiffs, or you receive a court decision that resolves the issue.

Mateo 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. 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 reconfiliations of historical non-GAAP measures to the closest GAAP financial measure.

Speaker Change: Okay, yeah, no, that just doesn't seem like an ideal outcome either.

Speaker Change: So, like, what happens exactly, you know, after 90 days, assuming the court doesn't come to this agreement, and if the victims have not, or sorry, if the insurers and the victims haven't resolved their dispute?

Speaker Change: What happens after 90 days? Is it just the...

Scott Seu: Is it just the settlement, you know, kind of dissolves, and then those court cases would kind of resume that are currently suspended? Well, you know, so the term sheet does require a condition precedent that again, within these 90 days, either there is an agreement that's reached between the individual plaintiffs or this and the subrogation plaintiffs, or you receive a court decision that resolves the issue. If the 90 days comes and goes without either of these happening, then it's fair to say all the parties would assess and reassess what the right steps forward are at that point. But I can't speculate on what those would be.

Speaker Change: The settlement, you know, kind of dissolves and then those court cases would kind of resume that are currently suspended.

Scott Seu: Now Scott Seu will begin with his remarks. Aloha Kakao. Welcome everyone.

Unknown Executive: Well, you know, so the term sheet does require a condition precedent that again within this 90 days, either an agreement is reached between the individual plaintiffs or this and the subrogation plaintiffs, or you receive a court decision that resolves the issue. If the 90 days comes and goes without either of these occurring, then it's fair to say all the parties would assess and reassess what the right steps forward are at that point. But I can't speculate on what that would be.

Scott Seu: For today's call, I'll start with key updates regarding the Maui wildfires and the proposed settlement. I'll then touch on operational progress we've made at the utility in our ongoing efforts to mitigate risk and enhance reliability. Finally, I'll discuss American Savings Bank's results and comment briefly on HEI's review of Strategic Options for ASB. I'll then turn it over to Scott Deghetto, who will walk through our second quarter financial results in more detail and discuss the financial implications of recent announcements before we open it up for questions.

Speaker Change: Well, you know, so the term sheet does require a condition precedent that, again, within this 90 days, either there is an agreement that's reached between the individual plaintiffs and the subrogation plaintiffs.

Speaker Change: or you receive a court decision that resolves the issue.

Scott Deghetto: If the 90 days comes and goes without either of these occurring, then it's fair to say all the parties would assess, reassess what the right steps forward are at that point.

Speaker Change: If the 90 days comes and goes without either of these occurring, then it's fair to say all the parties would would assess, reassess what the right steps forward are at that point.

Scott Deghetto: But I can't speculate on what that would be.

Speaker Change: But I can't speculate on what that would be.

Scott Deghetto: Okay, and then I guess just another one for me, if you don't mind, with the global settlement, I mean, it seems like it's really within reach, you know, and defendants seemingly are highly motivated to reach, you know, the settlement, get it finalized.

Unknown Executive: Okay. And then I guess just another one for me, if you don't mind. With the global settlement, I mean, it seems like it's really within reach, you know, and defendants are seemingly highly motivated to reach, you know, the settlement, get it, get it finalized. It would seem like the, you know, one way to get there might be to increase the total size of the settlement above, you know, the 4.04 billion, so as to hopefully get the insurers on board, you know, but not at the expense of the victims. How would you describe the prospects and willingness of the defendants due to this?

Scott Seu: Okay. And then I guess just another one for me, if you don't mind. With the global settlement, I mean, it seems like it's really within reach, you know, and defendants are seemingly highly motivated to reach, you know, the settlement, get it, get it finalized. It would seem like the, you know, one way to get there might be to increase the total size of the settlement above, you know, the 4.04 billion, so as to hopefully get the insurers on board, you know, but not at the expense of the victims.

Speaker Change: Okay.

Speaker Change: And then, I guess, just another one for me, if you don't mind. With the global settlement, I mean, it seems like it's really within reach, you know.

Speaker Change: Defendants seemingly are highly motivated to reach you know the settlement get it finalized.

Scott Deghetto: It would seem like the, you know, the one way to get there might be to increase the total size of the settlement above, you know, the four point zero four billion, you know, so to hopefully get the insurers on board, you know, but not at the expense of the victims. How would you describe the prospects and willingness of the defendants to do this? Well, I can't speak for the other defendants, Jonathan, but I can say that I think we believe that the, what's reflected in the current term sheet is a fair outcome. And really the issue is between the subrogation plaintiffs and the individual plaintiffs.

Speaker Change: It would seem like the, you know, the one way to get there might be to increase the total size of the settlement above, you know, the $4.04 billion, you know, so as to hopefully get the insurers on board, you know, but not at the expense of the victims.

Scott Seu: How would you describe the prospects and willingness of the defendants due to the Well, I can't speak for the other defendants, Jonathan, but I can say that I think what's reflected in the current term sheet is a fair outcome. And really, the issue is between the segregation plaintiffs and the individual plaintiffs.

Scott Seu: Last week, we saw an important milestone in those efforts. Following four months of mediation efforts, HEI, Hawaiian Electric, and other parties, reached a settlement agreement in principle to offer those suffered loss and accelerated path to recover. I'm thankful for the governor's leadership in helping to expedite the agreement and keeping all of us focused on working together to do what is best for Maui and Hawaii. For HCI, the settlement provides a clearer line of sight toward resolution of the wildfire related tort litigation and increased certainty for our company's path ahead.

Speaker Change: How would you describe the prospects and willingness of the defendants to do this?

Unknown Executive: Well, I can't speak for the other defendants, Jonathan, but I can say that we believe that what's reflected in the current term sheet is a fair outcome. And really, the issue is between the segregation plaintiffs and the individual plaintiffs. We feel that, again, we are hopeful and I am cautiously optimistic that it will be able to be worked out.

Speaker Change: Well, I can't speak for the other defendants, Jonathan, but I can say that I think we believe that what's reflected in the current term sheet is a fair outcome.

Speaker Change: And really the issue is between the segregation plaintiffs and the individual plaintiffs. We feel that, again, we are hopeful, I am cautiously optimistic that it will be able to be worked out.

Scott Deghetto: We feel that again, we are hopeful. I am cautiously optimistic that it will be able to be worked out.

Scott Seu: We feel that, again, we are hopeful; I am cautiously optimistic that it will be able to be worked out. Okay, like I know in the term sheet, you know, kind of said that the amount kind of represents the maximum amount that the parties could, you know, kind of handle. Is that true for all of them, or is it based on, I guess, the mediators also like assigned responsibility or liability?

Scott Deghetto: Okay, like I know in the term sheet, you know, kind of said that the amount, you know, kind of represents the maximum amount that the, I guess the parties could, you know, kind of handle it. Is that, is that true for all of them, or is it based on, I guess, the mediators also like assigned responsibility or liability? Yeah, again, I can't comment on what the capacity is of all the different defendants. This was in the overall amount, and the allocated amounts were developed through the mediation process. The mediators considered any number of factors, which again, I can't, I can't really speculate on.

Unknown Executive: Okay, like I know in the term sheet, you know, kind of said that the amount kind of represents the maximum amount that the parties could, you know, kind of handle. Is that true for all of them? Or is it based on, I guess, the mediators also like assigned responsibility or liability?

Jonathan Reeder: Okay, like I know in the term sheet, you know, kind of said that the amount, you know,

Scott Seu: Under the terms of the proposed settlement, the defendants have agreed to collectively pay over $4 billion to those who were harmed in last years' fires on Maui to settle all tort claims. HCI and Hawaiian Electric's contribution is a total of $1.99 billion pre-tax and includes the $75 million we previously contributed to the one-ohana initiative. The settlement amount would be paid annually in four equal installments. As a result of the proposed settlement, we recorded a $1.71 billion pre-tax loss for the quarter, which Scott Deghetto will discuss in more detail.

Speaker Change: kind of represents the maximum amount that the I guess the parties could you know kind of handle it is that is that true for for all of them or is it based on I guess the mediators also like assigned responsibility or liability

Scott Seu: Yeah, again, I can't comment on what the capacity is of all the different defendants. This was an overall amount, and the allocated amounts were developed through the mediation process. The mediators considered any number of factors, which again, I can't, I can't really speculate on.

Unknown Executive: Yeah, again, I can't comment on what the capacity is of all the different defendants. This was an overall amount, and the allocated amounts were developed through the mediation process. The mediators considered any number of factors, which, again, I can't really speculate on. Okay. All right. Thank you.

Speaker Change: I'm sorry. I'm sorry. I'm sorry.

Speaker Change: Yeah again I can't comment on what the capacity is of all the different defendants. This was an overall amount and the allocated amounts were developed through the mediation process.

Speaker Change: The mediators considered any number of factors, which again, I can't really speculate on.

Unknown Executive: Okay, all right. Thank you. I appreciate you taking the questions and good luck with the difficult situation. Thank you.

Scott Deghetto: Okay, all right.

Scott Seu: Okay. All right. Thank you. I appreciate you taking the questions and good luck with the difficult situation.

Jonathan Reader: Thank you.

Jonathan Reader: I appreciate you taking the questions, and good luck with the difficult situation. Thank you, Jonathan.

Scott Seu: At this point, the proposed settlement is an agreement in principle between the defendants and attorneys representing individual and class plaintiffs, and would resolve over 600 lawsuits, which name both HCI and Hawaiian Electric as defendants. The settlement would also resolve all claims among the defendants. The agreement is conditioned on a resolution of the claims of the insurance companies that have paid claims for property loss and other damages, with no additional payments from defendants.

Speaker Change: Okay, all right, thank you. I appreciate you taking the questions and good luck with the difficult situation.

Scott Seu: Thank you, Jonathan. And that concludes our Q&A session. I will now turn the conference back over to Scott Seu for closing remarks. So, in closing, I want to first acknowledge again the significance of the one year anniversary of the Maui wildfires. The perseverance and resilience and togetherness of the Lahaina and Kula communities really shone through all of yesterday's remembrance events.

Audra: And that concludes our Q&A session.

Scott Seu: And that concludes our Q&A session. I will now turn the conference back over to Scott Seu for closing remarks.

Jonathan Reeder: Thank you, Jonathan.

Scott Seu: I will now turn the conference back over to Scott Sue for closing remarks. So thank you all for calling in today.

Jonathan Reeder: And that concludes our Q&A session. I will now turn the conference back over to Scott Seu for closing remarks.

Scott Seu: So thank you all for calling in today. Before I close, I want to first acknowledge again the significance of the one year anniversary of the Maui wildfires. The perseverance and resilience and togetherness of the Lahaina and Kula communities really shone through all of yesterday's remembrance events.

Scott Seu: So, in closing, I want to first acknowledge again the significance of the one-year anniversary of the Maui wildfires. The perseverance and resilience and togetherness of the Lahaina and Kula communities really shone through all of yesterday's remembrance events. I also want to acknowledge our shareholders, a great many of whom are our neighbors here, for your continued investment in HEI. We've made significant progress towards rebuilding the strength of our company and the service of the people of Hawaii. We truly do recognize that service to our people, our communities, and our customers. We feel that this settlement agreement represents significant progress.

Scott Seu: So thank you all for calling in today.

Scott Seu: So in closing I want to first acknowledge again the significance of the one-year anniversary of the Maui wildfires.

Speaker Change: The perseverance and resilience and togetherness of the Lahaina and Kula communities really shone through all of yesterday's remembrance events.

Scott Seu: Subrogation claims have been filed from about 160 different insurers with exposure on Maui, a hearing is scheduled for August 13 to obtain a court order limiting the insurers' recovery to the already agreed-upon settlement amounts. Once a final settlement agreement is signed, it will take effect following judicial review and approval. The payments would begin after such approval and are expected to commence no earlier than mid-2025. Scott Deghetto will discuss the financial implications of the settlement and the work underway to develop a financing plan.

Scott Seu: I also want to acknowledge our shareholders, many of whom are our neighbors here, for your continued investment in HEI. We've made significant progress towards rebuilding the strength of our company in the service of the people of Hawaii. We truly do recognize that service to our people, our communities, and our customers. We feel that this settlement agreement represents significant progress. It's a very large accomplishment as it brings certainty and creates a path forward for us. We do not intend to raise rates to pay for the settlement amounts.

Speaker Change: I also want to acknowledge our shareholders, many of whom are our neighbors here, for your continued investment in HEI.

Speaker Change: We've made significant progress towards rebuilding the strength of our company in the service of the people of Hawaiʻi.

Speaker Change: We truly do recognize that service to our people, our communities, and our customers.

Scott Seu: It's a very large accomplishment, as it brings certainty and creates a path forward for us. We do not intend to raise rates to pay for the settlement amounts. And we believe that we will be ultimately successful in meeting the needs.

Speaker Change: We feel that this settlement agreement represents significant progress. It's a very large accomplishment as it brings certainty and creates a path forward for us.

Scott Seu: And we believe that we will be ultimately successful in meeting these needs. So again, we greatly appreciate your support, and we'll continue to help our communities move forward to a sustainable future. Thank you.

Scott Seu: And we believe that we will be ultimately successful in meeting those needs. So again, we greatly appreciate your support, and we'll continue to help our communities move forward to a sustainable future. Thank you. This concludes today's conference call. Thank you for your participation. You may now disconnect.

Speaker Change: We do not intend to raise rates to pay for the settlement amounts.

Scott Seu: Following the filing of the settlement agreement and principle with the second circuit court, all trial dates for the Maui wildfire tort-related claims were vacated, meaning there are currently no trial dates pending in any of the tort-related lawsuits.

Speaker Change: and we believe that we will be ultimately successful in meeting the needs. So again, we greatly appreciate your support and we'll continue to help our communities move forward to a sustainable future. Thank you.

Scott Seu: So again, we greatly appreciate your support, and we'll continue to help our communities move forward to a sustainable future. Thank you.

Audra: This concludes today's conference call. Thank you for your participation. You may now disconnect.

Scott Seu: With greater certainty for a path forward, our enterprise will be better positioned to invest in a sustainable and resilient future for Maui and all of a body. That includes advancing the utility's wildfire safety strategy and strengthening Hawaii's infrastructure to ensure the resilience and reliability of the grid.

Speaker Change: This concludes today's conference call. Thank you for your participation. You may now disconnect.

Scott Seu: On our last earnings call, we noted that the utility was implementing enhanced wildfire operational strategies and practices, including a public safety power shutoff program or PSPS as a last line of defense. The utility officially launched the PSPS program on July 1st, and this means that power can now be preemptively shutoff in certain areas identified as high risk during periods of high winds and dry conditions. The utility intends to continue coordinating closely with public agencies, first responders, community organizations, and customers to refine and enhance this new program to make it more targeted and effective going forward.

Scott Seu: And by the end of September, Hawaiian Electric expects to have installed 44 AI-enhanced video cameras in elevated risk areas, helping the company, fire agencies, and emergency operation centers to identify potential wildfires early and respond more quickly.

Scott Seu: Hardening the grid is another important component of the Utility strategy. This includes making investments to upgrade poles, install covered conductors, and strategically underground lives. Importantly, the investments Hawaiian Electric is making to harden the grid will increase resilience for many different kinds of environmental risks that we face in Hawaii, including hurricanes, floods, tsunamis, and wildfires. Strengthening this infrastructure will also enhance the reliability of service to customers.

Scott Seu: The Utility also continues to make important progress to enhance reliability through the expansion of the renewable generation fleet in our state. The Utility recently placed two new Solar Plus Storage projects in service on Maui and Oahu. The Kuihilani project is Maui's first Solar Plus Storage project and the biggest in Hawaiian Electric system, providing the island with 60 megawatts of solar generation capacity and 240 megawatt hours of storage. The Kupono project, now Oahu's largest Solar Plus Storage project, will provide over 40 megawatts of solar generation capacity and 168 megawatt hours of storage.

Scott Seu: Turning now to the bank. As we've discussed over the last year, HEI has been advancing a strategy designed to support a strong, financially healthy enterprise that will empower a thriving feature for Hawaii. Consistent with this approach, HEI has been undertaking a comprehensive review of strategic options for ASB.

Scott Seu: There is no set timetable for the review, and there can be no assurances that any actions regarding ASB will result from our evaluation. In connection with this ongoing evaluation, we reported a non-cash goodwill impairment charge for the bank, which Scott DeGhetto will discuss shortly. The bank's core operations and earnings remain strong, as it continues to serve as a trusted financial partner to customers across Hawaii. Excluding the goodwill impairment and Maui wildfire-related expenses, ASB improved profitability and grew net income in the second quarter compared to last year. ASB saw net interest margin expansion and, through prudent expense control, a decrease in non-interest ASB's loyal and long-tenured deposit-based remains stable, and as of June 30, 83% of deposits were FDIC insured or fully collateralized.

Scott Deghetto: With that, I'll now turn the call over to Scott DeGhetto, who will discuss our financial results. Thank you, Scott. I'll start with our results for the quarter on slide six.

Scott Deghetto: For the second quarter, we recorded a consolidated net loss of $1.3 billion for $11.74 cents per share. As Scott mentioned, the quarter's results included two significant one-time losses. First, at the utility, we recorded a $1.71 billion loss for $1.27 billion after taxes due to the accrual of estimated wildfire liabilities from tort-related claims as a result of the proposed settlement announced last week, including the loss accrual utility net loss for the quarter was $1.23 billion.

Scott Deghetto: The $1.71 billion loss accrued at the utility is lower than the $1.99 billion we have agreed to under the proposed settlement for two reasons. First, the $1.99 billion includes the $75 million 100 contribution that was accrued in 2023. Second, the settlement amount is spread over four equal annual installments, and the loss recorded is our best estimate of an equivalent sum amount. Second, we also recorded an $82.2 million goodwill impairment for $66.1 million after taxes at ASB in connection with HEIs ongoing review of strategic options.

Scott Deghetto: The goodwill was related to acquisitions that took place in the 1980s and 1990s. The impairment is non-cash and has no impact on ASB's liquidity. In addition to the $1.71 billion tort-related accrual, there were 2.8 million of pre-tax wildfire-related expenses net of insurance recoveries and deferrals recorded at the utility in the second quarter. Bank wildfire-related pre-tax expenses were $500,000 in holding company wildfire-related pre-tax expenses were $6.5 million. Excluding these expenses, consolidated coordinate income and EPS were $49.1 million in $0.44 per share compared to $0.6 million in $50 per share in the second quarter of 2023.

Scott Deghetto: Utility coordinate income was $43.9 million compared to $45.3 million in the same quarter last year. Bank coordinate income of $20.7 million was up from $20.2 million compared to the same quarter last year. In holding company coordinate loss of $15.5 million was up from $10.9 million. Lower utility cornnet income was driven by higher O&M and higher wildfire mitigation expenses. Banked cornnet income was up slightly due to prudent expense management in higher non-interest income, partially offset by lower net interest income.

Scott Deghetto: The cornnet loss at the holding company was driven by higher losses at Pacific Current. Turning to our liquidity on slide 7, we continued to prudently manage our liquidity and as of the end of the second quarter, the holding company and utility had 124 million in 89 million of cash on hand respectively. In connection with the proposed global settlement related to the wildfires on Maui, HEI and Hawaiian Electric are working closely with financial advisors to develop a financing plan for our settlement contribution.

Scott Deghetto: As Scott noted, the payments would begin after judicial approval of a final settlement and are expected to begin no earlier than mid 2025. We intend to finance the settlement payments through a mix of debt, common equity, equity link securities or other potential options, although there can be no assurance at this time as to the availability of terms of any such financing. Because a plan is still being developed to finance the payments we've agreed to under the settlement, HEI and Hawaiian Electric are required to disclose that there is a substantial doubt regarding each company's ability to continue as a going concern.

Audra: As a result of the going concern assessment, the utility dividend to HEI has been suspended. At that, let's open up the call to questions. Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again.

Scott Deghetto: Hi, Mike. This has got to you. You know, the settlement really does represent a very important move forward in that it does lay out the most significant terms to settle the claims, the court claims. It's recognized that at this stage, yes, the sub subrogation plaintiffs still have not agreed to the allocation of the total amount of money that would be provided by the defendants. But very importantly, it allows 90 days for those discussions between the individual plaintiffs, lawyers and the subrogation plaintiffs to work that out.

Scott Deghetto: Or in the alternative for the court to actually issue an order, which helps to resolve the issue. So I think it's very important that again, it brings clarity for everybody. And then it provides a pretty, pretty well-defined process ahead of us to resolve that issue.

Michael Lonegan: Thank you. Great.

Michael Lonegan: Thank you.

Michael Lonegan: And then secondly, from me, you laid out a mix of financing options that you could use to pay for the settlement. Do you have a level of capital spending in mind over this four year period and then FFO to debt target over that time frame?

Scott Deghetto: So, Mike, this is Paul. So, we're currently working on our long-term capital plans and obviously a lot depends on what happens or the timing of this settlement agreement. Clearly, you know, we feel good about getting to a settlement and based on that having access to the capital markets more broadly for a lot of the growth investments that we foresee in the future. Things like our YL generation project and of course our increased wildfire mitigation type spend.

Scott Deghetto: We are targeting investment grade credit metrics over the long term. That's critical and important for us because it it also translates into lower customer bills. So, we're very focused on that. Yeah, Mike, Scott Deghetto, on the broader kind of financing of the settlement, what I would say is we're working closely with our financial advisors to develop a financing plan for our settlement contribution. You know, keep in mind that this settlement was just, you know, agreed to a week ago and we don't expect payments to begin until mid 2025 at the earliest.

Scott Deghetto: So, we believe that gives us sufficient time to develop and finalize that plan. And then as far as the FFO to debt goes, what I would say is we're in constant communication with the rating agencies just in terms of discussing where we are and where we'd like to be over time.

Scott Deghetto: Great, thank you. And then lastly for me, so on your financing plans, you talked about, you know, mix of debt, common equity, equity links, securities, and then, you know, broadly speaking, you mentioned other potential options. So, you already disclosed, you know, strategic alternatives potentially for American savings banks. And I'm just wondering, is it fair to say all options are on the table, you know, including maybe selling a stake in the utility or a smaller scale, you know, sale like Pacific Current or, you know, just in general, is there any more color you could provide about the other potential options you mentioned?

Scott Deghetto: Yeah, we're not going to get into specifics about the other potential options, you know, from my perspective, if we wanted to keep it as broad as possible, I mean, there's the regular way debt. Equity equity link that you mentioned, but there's a lot of other different financing mechanisms available in the marketplace that we want to make sure, you know, we take a look at.

Michael Lonegan: Great, thanks for taking my questions.

Michael Lonegan: Thanks Mike.

Jonathan Reader: We'll move next to Jonathan Reader at Wells Fargo.

Scott Deghetto: Hey, team, how's it going today? Hi, Jonathan. Thanks for taking my question. First off, as a non-legal expert, can you just please explain how Judge K. Hill's court, I guess, could force the insurers into accepting the settlement and waiving their ability to pursue the subrogation claims against the defense.

Scott Deghetto: Sure, Jonathan. And, again, keep in mind, I am also a non-boyer. So, what's in play right now is you have individual plaintiffs who, let's see what was the actual date. I think it was, just a few weeks ago, they actually filed in Judge K. Hill's court a motion which challenges the subregation plaintiffs ability to independently seek claims. So, that is one of the ongoing efforts by the individual plaintiffs. Judge K. Hill has agreed to hold a hearing on August 13th in which he will really look at the issue of whether or not individual plaintiffs, I'm sorry, subregation plaintiffs are required to work through individual plaintiffs settlement amounts as opposed to themselves in parallel coming against the defendants.

Scott Deghetto: So, the August 13th hearing is just that, it's a hearing. We don't have any particular sense of how long it will take for the judge to rule on this issue. We're hopeful that it will be resolved fairly quickly which would allow more clarity to be brought to the overall settlement agreement.

Jonathan Reader: Okay, so, I mean, again, this is my non-legal understanding but if he requires the insurance companies to work through the individual complaint and settlement agreements, isn't that kind of putting a substantial financial and legal burden back on the victims after reaching this settlement and really not allowing them to move forward if the insurance companies can essentially go after these individual plaintiffs to try to recoup the 2.3 billion or whatever they paid out so far? Yeah, I mean, in effect, what the individual plaintiffs lawyers are arguing is that, you know, in effect, it does result between having to resolve the issues between the individual plaintiffs and the insurance companies. So, you're correct.

Jonathan Reader: Okay, yeah, no, it just doesn't seem like an ideal outcome either.

Scott Deghetto: So, like, what happens exactly, you know, after 90 days assuming the court doesn't come to this agreement and if the victims have not, or sorry, if the insurers and the victims haven't resolved their dispute, what happens after 90 days? Is it just the settlement, you know, kind of dissolves and then those court cases would kind of resume that are currently suspended? Well, you know, so the term sheet does require a condition precedent that, again, within this 90 days either there is an agreement that's reached between the individual plaintiffs and the subregation plaintiffs or you receive a court decision that resolves the issue.

Scott Deghetto: If the 90 days comes and goes without either of these occurring, then it's fair to say all the parties would assess, reassess what the right steps forward are at that point, but I can't speculate on what that would be. Okay, and then I guess just another one for me, if you don't mind, with the global settlement, I mean, it seems like it's really within reach, you know, and defendants seemingly are highly motivated to reach, you know, the settlement, get it finalized.

Scott Deghetto: And really the issue is between the subrogation plaintiffs and the individual plaintiffs. We feel that again, we are hopeful. I am cautiously optimistic that it will be able to be worked out. Okay, like I know in the term sheet, you know, kind of said that the amount, you know, kind of represents the maximum amount that the, I guess the parties could, you know, kind of handle it. Is that, is that true for all of them, or is it based on, I guess, the mediators also like assigned responsibility or liability?

Scott Deghetto: Yeah, again, I can't comment on what the capacity is of all the different defendants. This was in the overall amount and the allocated amounts were developed through the mediation process. The mediators considered any number of factors, which again, I can't, I can't really speculate on.

Jonathan Reader: Okay, all right.

Jonathan Reader: Thank you. I appreciate you taking the questions and good luck with the difficult situation. Thank you, Jonathan.

Unknown Executive: And that concludes our Q&A session.

Scott Seu: I will now turn the conference back over to Scott Sue for closing remarks. So thank you all for calling in today.

Scott Seu: So in closing, I want to first acknowledge again the significance of the one year anniversary of the Maui wildfires. The perseverance and resilience and togetherness of the Lahaina and Kula communities really shown through all of yesterday's remembrance events. I also want to acknowledge our shareholders, a great many of whom are our neighbors here for your continued investment in HEI. We've made significant progress towards rebuilding the strength of our company and the service of the people of Hawaii.

Scott Seu: We truly do recognize that service to our people, our communities and our customers. We feel that this settlement agreement represents significant progress. It's a very large accomplishment as it brings certainty and creates a path forward for us. We do not intend to raise rates to pay for the settlement amounts. And we believe that we will be ultimately successful in meeting the needs. So again, we greatly appreciate your support and we'll continue to help our communities move forward to a sustainable future.

Scott Seu: Thank you.

Unknown Executive: This concludes today's conference call. Thank you for your participation. You may now disconnect.

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