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HEI First Quarter 2008 Earnings Recover

HONOLULU--(BUSINESS WIRE)--May 5, 2008--Hawaiian Electric Industries, Inc. (NYSE:HE) today reported consolidated net income for the first quarter of 2008 of $34.0 million or 41 cents per share, compared with $6.8 million or 8 cents per share and $32.3 million or 40 cents per share for the first quarters of 2007 and 2006, respectively.

"First quarter earnings recovered from depressed levels a year ago on better results from both utility and banking operations," said Constance H. Lau, HEI president and chief executive officer. "A year ago, utility earnings declined severely as the company sought rate increases to recover and earn a return on reliability investments and costs at all three of its electric utilities and wrote off $7 million after-tax of Keahole power plant expansion costs. In this year's first quarter, interim rate increases granted by the Hawaii Public Utilities Commission later in 2007 helped utility earnings," noted Lau. "Bank earnings increased 26% quarter-over-quarter as the Federal Reserve's easing of interest rates helped improve American Savings Bank's net interest margin and there were improvements in both noninterest income and noninterest expense. Additionally, credit quality remained good."

UTILITY RESULTS

Electric utility net income for the first quarter of 2008 was $24.6 million compared with $0.5 million and $21.0 million for the first quarters in 2007 and 2006, respectively. "After a tough first quarter last year due to the Keahole write-off and pending rate case decisions, we are now in a better position to earn a more reasonable return for our investors," said Lau.

Kilowatthour sales were flat compared with the same quarter of 2007 largely because conservation and demand-side management programs offset the impact of slightly warmer temperatures and an additional day of sales in February due to the leap year.

"Operations and maintenance expenses were up $4.7 million or 6% quarter-over-quarter and we expect this higher level of expense to continue due to additional planned production and transmission and distribution maintenance work," said Lau.

The utility also recorded $1.2 million in higher quarter-over-quarter depreciation expenses due to 2007 plant additions.

BANK RESULTS

Bank net income was $14.6 million in the first quarter of 2008 compared to $11.6 million for the same quarter last year, an increase of $3.0 million.

"Given the volatility in the financial and credit markets, we are especially pleased with the bank's solid first quarter results," said Lau. Net interest income in the first quarter of 2008 was $50.5 million compared to $49.3 million in the first quarter of 2007. Lower interest expense, primarily due to lower rates on deposits and borrowings, more than offset lower interest income, primarily due to lower yields on loans. Net interest margin expanded to 3.16% in the first quarter of 2008, compared with 3.07% in the first quarter of 2007.

In the first quarter of 2008, the bank recorded a $0.9 million provision for loan losses. No provision for loan losses was recorded in the same period in 2007. "The overall credit quality of the bank's loan portfolio remains good. We are not seeing any significant deterioration in the quality of our residential loan portfolio. The provision taken in the quarter was due to loan growth as well as the reclassification of certain commercial loans. Our delinquent and nonaccrual loans remain near historical lows. However, as the economy begins to slow and we add more loans to the portfolio, we expect to see an increase in loan loss provisions," added Lau.

Noninterest income increased $1.9 million compared to the first quarter of 2007. Fee income from deposits was higher by $0.7 million and fees from other financial services were higher by $0.3 million. The bank recorded a $0.9 million gain on the sale of stock in a membership organization in the first quarter of 2008.

Noninterest expense for the quarter ended March 31, 2008 was $2.7 million lower than the same period in 2007, primarily due to lower legal and litigation related expenses.

HOLDING AND OTHER COMPANIES' RESULTS

The holding and other companies' net losses were $5.2 million in the first quarter of 2008 versus net losses of $5.3 million for the first quarter of 2007, relatively flat quarter-over-quarter.

WEBCAST AND TELECONFERENCE

Hawaiian Electric Industries, Inc. will conduct a webcast and teleconference call to review its first quarter 2008 earnings on Wednesday, May 7, 2008 at 8:00 a.m. Hawaii Time (2:00 p.m. Eastern Time). The event can be accessed through HEI's website at http://www.hei.com or by dialing (800) 638-4817, passcode: 92157354 for the teleconference call.

An online replay of the webcast will be available at the same website beginning about two hours after the event. Replays of the teleconference call will also be available approximately two hours after the event through May 21, 2008, by dialing (888) 286-8010, passcode: 87186146.

Representing management will be Constance H. Lau, president and chief executive officer, Hawaiian Electric Industries, Inc., chairman, Hawaiian Electric Company, Inc. and chairman and chief executive officer, American Savings Bank, F.S.B.; T. Michael May, president and chief executive officer, Hawaiian Electric Company, Inc.; and Timothy K. Schools, president, American Savings Bank, F.S.B.

HEI supplies power to over 400,000 customers or 95% of Hawaii's population through its electric utilities, Hawaiian Electric Company, Inc., Hawaii Electric Light Company, Inc. and Maui Electric Company, Limited and provides a wide array of banking and other financial services to consumers and businesses through American Savings Bank, F.S.B., the state's third largest financial institution based on year-end asset size.

FORWARD-LOOKING STATEMENTS

This release may contain "forward-looking statements," which include statements that are predictive in nature, depend upon or refer to future events or conditions, and usually include words such as expects, anticipates, intends, plans, believes, predicts, estimates or similar expressions. In addition, any statements concerning future financial performance (including future revenues, expenses, earnings or losses or growth rates), ongoing business strategies or prospects and possible future actions, which may be provided by management, are also forward-looking statements. Forward-looking statements are based on current expectations and projections about future events and are subject to risks, uncertainties and assumptions about HEI and its subsidiaries, the performance of the industries in which they do business and economic and market factors, among other things. These forward-looking statements are not guarantees of future performance.

Forward-looking statements in this release should be read in conjunction with the "Forward-Looking Statements" discussion (which is incorporated by reference herein) set forth on page v of HEI's Annual Report on Form 10-K for the year ended December 31, 2007, and in HEI's future periodic reports that discuss important factors that could cause HEI's results to differ materially from those anticipated in such statements. Forward-looking statements speak only as of the date of this release.

Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)                 Three months ended   Twelve months ended
                                March 31,             March 31,
                           ------------------- -----------------------
(in thousands, except per
 share amounts)              2008      2007       2008        2007
----------------------------------------------------------------------
Revenues
Electric utility           $623,889  $447,678  $2,282,525  $2,027,512
Bank                        105,844   104,460     426,879     412,821
Other                          (116)    1,885       2,608        (368)
                           --------- --------- ----------- -----------
                            729,617   554,023   2,712,012   2,439,965
                           --------- --------- ----------- -----------
Expenses
Electric utility            572,906   434,686   2,113,949   1,893,382
Bank                         82,481    86,032     337,934     332,850
Other                         3,484     4,764      14,192      14,947
                           --------- --------- ----------- -----------
                            658,871   525,482   2,466,075   2,241,179
                           --------- --------- ----------- -----------
Operating income (loss)
Electric utility             50,983    12,992     168,576     134,130
Bank                         23,363    18,428      88,945      79,971
Other                        (3,600)   (2,879)    (11,584)    (15,315)
                           --------- --------- ----------- -----------
                             70,746    28,541     245,937     198,786
                           --------- --------- ----------- -----------
Interest expense - other
 than on deposit
 liabilities and other
 bank borrowings            (19,249)  (20,511)    (77,294)    (77,072)
Allowance for borrowed
 funds used during
 construction                   762       598       2,716       2,775
Preferred stock dividends
 of subsidiaries               (473)     (473)     (1,890)     (1,890)
Allowance for equity funds
 used during construction     1,901     1,232       5,888       6,032
                           --------- --------- ----------- -----------
Income before income taxes   53,687     9,387     175,357     128,631
Income taxes                 19,720     2,623      63,375      46,203
                           --------- --------- ----------- -----------
Net income                 $ 33,967  $  6,764  $  111,982  $   82,428
                           ========= ========= =========== ===========
Basic earnings per common
 share                     $   0.41  $   0.08  $     1.35  $     1.01
                           ========= ========= =========== ===========
Diluted earnings per
 common share              $   0.41  $   0.08  $     1.35  $     1.01
                           =========-========= =========== ===========
Dividends per common share $   0.31  $   0.31  $     1.24  $     1.24
                           ========= ========= =========== ===========
Weighted-average number of
 common shares outstanding   83,472    81,448      82,716      81,260
                           ========= ========= =========== ===========
Adjusted weighted-average
 shares                      83,614    81,713      82,876      81,435
                           ========= ========= =========== ===========

Income (loss) by segment
 Electric utility          $ 24,585  $    453  $   76,288  $   54,412
 Bank                        14,576    11,596      56,087      50,551
 Other                       (5,194)   (5,285)    (20,393)    (22,535)
                           --------- --------- ----------- -----------
Net income                 $ 33,967  $  6,764  $  111,982  $   82,428
                           ========= ========= =========== ===========

This information should be read in conjunction with the consolidated
 financial statements and the notes thereto for the year ended
 December 31, 2007 (included in HEI's Form 8-K dated February 21,
 2008) and the consolidated financial statements and the notes thereto
 in HEI's Quarterly Report on SEC Form 10-Q for the quarter ended
 March 31, 2008 (when filed). Results of operations for interim
 periods are not necessarily indicative of results to be expected for
 future interim periods or the full year.
Hawaiian Electric Company, Inc. (HECO) and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

Three months ended March 31,                         2008      2007
----------------------------------------------------------------------
(in thousands)
Operating revenues                                 $622,494  $446,797
                                                   --------- ---------
Operating expenses
Fuel oil                                            249,543   159,929
Purchased power                                     150,795   111,516
Other operation                                      55,579    47,193
Maintenance                                          23,613    27,336
Depreciation                                         35,434    34,267
Taxes, other than income taxes                       57,486    42,547
Income taxes                                         15,378     4,506
                                                   --------- ---------
                                                    587,828   427,294
                                                   --------- ---------
Operating income                                     34,666    19,503
                                                   --------- ---------
Other income (loss)
Allowance for equity funds used during
 construction                                         1,901     1,232
Other, net                                            1,096    (6,198)
                                                   --------- ---------
                                                      2,997    (4,966)
                                                   --------- ---------
Income before interest and other charges             37,663    14,537
                                                   --------- ---------
Interest and other charges
Interest on long-term debt                           11,724    11,496
Amortization of net bond premium and expense            631       546
Other interest charges                                  986     2,141
Allowance for borrowed funds used during
 construction                                          (762)     (598)
Preferred stock dividends of subsidiaries               229       229
                                                   --------- ---------
                                                     12,808    13,814
                                                   --------- ---------
Income before preferred stock dividends of HECO      24,855       723
Preferred stock dividends of HECO                       270       270
                                                   --------- ---------
Net income for common stock                        $ 24,585  $    453
                                                   ========= =========
OTHER ELECTRIC UTILITY INFORMATION
Kilowatthour sales (millions)                         2,409     2,404
Cooling degree days (Oahu)                              954       845
Average fuel oil cost per barrel                   $  93.89  $  58.19

This information should be read in conjunction with the consolidated
 financial statements and the notes thereto for the year ended
 December 31, 2007 (included in HECO Exhibit 99.1 to HECO's Form 8-K
 dated February 21, 2008) and the consolidated financial statements
 and the notes thereto in HECO's Quarterly Report on SEC Form 10-Q for
 the quarter ended March 31, 2008 (when filed). Results of operations
 for interim periods are not necessarily indicative of results to be
 expected for future interim periods or the full year.
American Savings Bank, F.S.B. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

Three months ended March 31,                             2008    2007
----------------------------------------------------------------------
(in thousands)
Interest and dividend income
Interest and fees on loans                             $63,465 $60,281
Interest and dividends on investment and mortgage-
 related securities                                     24,451  28,165
                                                       ------- -------
                                                        87,916  88,446
                                                       ------- -------
Interest expense
Interest on deposit liabilities                         18,220  20,738
Interest on other borrowings                            19,149  18,406
                                                       ------- -------
                                                        37,369  39,144
                                                       ------- -------
Net interest income                                     50,547  49,302
Provision for loan losses                                  900       -
                                                       ------- -------
Net interest income after provision for loan losses     49,647  49,302
                                                       ------- -------
Noninterest income
Fees from other financial services                       6,823   6,501
Fee income on deposit liabilities                        6,794   6,055
Fee income on other financial products                   1,804   2,012
Gain on sale of securities                                 935       -
Other income                                             1,572   1,446
                                                       ------- -------
                                                        17,928  16,014
                                                       ------- -------
Noninterest expense
Compensation and employee benefits                      18,240  18,396
Occupancy                                                5,397   4,948
Equipment                                                3,114   3,478
Services                                                 5,673   8,358
Data processing                                          2,616   2,557
Other expense                                            9,194   9,180
                                                       ------- -------
                                                        44,234  46,917
                                                       ------- -------
Income before income taxes                              23,341  18,399
Income taxes                                             8,765   6,803
                                                       ------- -------
Net income                                             $14,576 $11,596
                                                       ======= =======

Net interest margin (%)                                   3.16    3.07

This information should be read in conjunction with the consolidated
 financial statements and the notes thereto for the year ended
 December 31, 2007 (included in HEI Exhibit 13 to HEI's Form 8-K dated
 February 21, 2008) and the consolidated financial statements and the
 notes thereto in HEI's Quarterly Report on SEC Form 10-Q for the
 quarter ended March 31, 2008 (when filed). Results of operations for
 interim periods are not necessarily indicative of results to be
 expected for future interim periods or the full year.

CONTACT:
Hawaiian Electric Industries, Inc.
Suzy P. Hollinger, 808-543-7385
Manager, Treasury and Investor Relations
Facsimile: 808-203-1155
shollinger@hei.com

SOURCE: Hawaiian Electric Industries, Inc.