HEI Exhibit 99
May 3, 2007
| | |
| Contact: Suzy P. Hollinger | | (808) 543-7385 Telephone |
| Manager, Treasury and Investor Relations | | E-mail:shollinger@hei.com |
HAWAIIAN ELECTRIC INDUSTRIES, INC. REPORTS FIRST QUARTER 2007 EARNINGS
HONOLULU — Hawaiian Electric Industries, Inc.(NYSE - HE) today reported consolidated net income for the first quarter of 2007 of $6.8 million, or $0.08 per share, compared with $32.3 million, or $0.40 per share for the first quarter of 2006.
“Several challenges we experienced in 2006 persisted in the first quarter of 2007. Our utility continued to incur increased other operation and maintenance (O&M) expenses, while at the bank, the inverted to flat yield curve continued to pressure net interest margin and noninterest expenses remained high,” said Constance H. Lau, HEI president and chief executive officer. “Another significant reason for the decline in earnings was a $6.9 million write-off, net of taxes, of a portion of the costs associated with the Keahole plant expansion project on the island of Hawaii. The write-off was made in connection with a settlement agreement with the State of Hawaii Office of Consumer Advocacy for Hawaii Electric Light Company’s pending rate case,” said Lau. “Quarter-over-quarter results for the holding and other companies were relatively flat.”
UTILITY RESULTS
Electric utility net income for the first quarter of 2007 was $0.5 million compared with $21.0 million for the same quarter in 2006. “Higher quarter-over-quarter O&M expenses and the
Hawaiian Electric Industries, Inc. News Release
May 3, 2007
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write-off of Keahole expansion project costs more than offset the impacts of slightly higher quarter-over-quarter kilowatthour sales,” said Lau.
Kilowatthour sales were up 0.6% from the same quarter of 2006 primarily due to new load growth, largely resulting from new construction and an increase in the number of customers.
O&M expenses for the quarter were higher than in the first quarter of 2006 by $15.5 million due primarily to $7.2 million of costs related to the increased number and scope of generating unit overhauls, $1.2 million of higher substation maintenance, $1.0 million of increased retirement benefits expenses, and $0.8 million of higher vegetation management expenses. The remaining increase in O&M expenses of $5.3 million includes increased costs to ensure reliable operations, support customer services and execute energy efficiency programs.
Depreciation expense was higher by $1.7 million due to 2006 additions to plant in service, including Hawaiian Electric Company’s new dispatch center, the Ford Island substation, and Maui Electric Company’s 18-megawatt steam turbine, which completed the installation of a high efficiency dual-train combined cycle unit at its Maalaea power plant.
Recovery of increased O&M expenses and capital expenditures are primary reasons all three utilities—Hawaiian Electric Company, Hawaii Electric Light Company, and Maui Electric Company—have filed rate cases with the Hawaii Public Utilities Commission.
BANK RESULTS
Bank net income was $11.6 million in the first quarter of 2007 compared to $16.8 million for the same quarter last year, a decrease of $5.2 million.
“The combination of higher short-term and falling longer-term interest rates have made the interest rate environment significantly more challenging than it was during the first quarter of
Hawaiian Electric Industries, Inc. News Release
May 3, 2007
Page 3
last year,” said Lau. “This impacted comparative quarter-over-quarter bank results. Additionally, noninterest expenses were higher. On the positive side, credit quality remained strong,” Lau added.
Net interest income in the first quarter of 2007 was $49.3 million compared to $52.7 million in the first quarter of 2006. Increased interest income, primarily due to higher rates and balances on loans, was more than offset by increased funding costs due to higher rates on deposits and borrowings. Net interest margin was 3.07% in the first quarter of 2007, compared with 3.29% in the first quarter of 2006 and 3.05% in the fourth quarter of 2006.
Continued strong asset quality offset the need to provision for loan growth in the first quarter of 2007.
Noninterest income increased $1.2 million compared to the first quarter of 2006, due primarily to higher fee income on deposit liabilities.
Noninterest expenses for the quarter ended March 31, 2007 were $6.5 million higher than the same period in 2006, primarily due to higher legal and litigation related expenses, as well as higher compensation, occupancy and other expenses.
HOLDING AND OTHER COMPANIES’ RESULTS
The holding and other companies’ net losses were $5.3 million in the first quarter of 2007 versus net losses of $5.5 million in 2006. The quarter-over-quarter improvement was primarily due to a $0.9 million after-tax gain on the sale of the company’s remaining investment in Hoku Scientific, Inc. in the first quarter of 2007 compared with a net after-tax investment loss on the Hoku Scientific investment of $0.4 million in the first quarter of 2006, partially offset by a quarter-over-quarter increase in general and administrative and interest costs.
Hawaiian Electric Industries, Inc. News Release
May 3, 2007
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WEBCAST AND TELECONFERENCE
Hawaiian Electric Industries, Inc. will conduct a webcast and teleconference call to review its first quarter 2007 earnings on Friday, May 4, 2007, at 8:00 a.m. Hawaii Time (2:00 p.m. Eastern Time). The event can be assessed through HEI’s website athttp://www.hei.com or by dialing (800) 260-8140, passcode: 81515262 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 18, 2007, by dialing (888) 286-8010, passcode: 76793883.
Representing management will be Constance H. Lau, president and chief executive officer, Hawaiian Electric Industries, Inc., chairman, Hawaiian Electric Company, Inc. and chairman, president and chief executive officer, American Savings Bank, F.S.B.; T. Michael May, president and chief executive officer, Hawaiian Electric Company, Inc.; and Eric K. Yeaman, financial vice president, treasurer and chief financial officer, Hawaiian Electric Industries, Inc.
HEI supplies power to over 400,000 customers or 95% of Hawaii’s population through its electric utilities, Hawaiian Electric Company, Hawaii Electric Light Company and Maui Electric Company and provides a wide array of banking and other financial services to consumers and businesses through American Savings Bank, the state’s third largest financial institution based on asset size.
Hawaiian Electric Industries, Inc. News Release
May 3, 2007
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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, 2006, 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.
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Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
| | | | | | | | | | | | | | | | |
| | | Three months ended
March 31, | | | Twelve months ended
March 31, | |
(in thousands, except per share amounts) | | 2007 | | | 2006 | | | 2007 | | | 2006 | |
Revenues | | | | | | | | | | | | | | | | |
Electric utility | | $ | 447,678 | | | $ | 475,056 | | | $ | 2,027,512 | | | $ | 1,906,665 | |
Bank | | | 104,460 | | | | 100,004 | | | | 412,821 | | | | 390,690 | |
Other | | | 1,885 | | | | (98 | ) | | | (368 | ) | | | 20,543 | |
| | | | | | | | | | | | | | | | |
| | | 554,023 | | | | 574,962 | | | | 2,439,965 | | | | 2,317,898 | |
| | | | | | | | | | | | | | | | |
Expenses | | | | | | | | | | | | | | | | |
Electric utility | | | 434,686 | | | | 429,476 | | | | 1,893,382 | | | | 1,730,988 | |
Bank | | | 86,032 | | | | 72,989 | | | | 332,850 | | | | 287,727 | |
Other | | | 4,764 | | | | 3,346 | | | | 14,947 | | | | 15,281 | |
| | | | | | | | | | | | | | | | |
| | | 525,482 | | | | 505,811 | | | | 2,241,179 | | | | 2,033,996 | |
| | | | | | | | | | | | | | | | |
Operating income (loss) | | | | | | | | | | | | | | | | |
Electric utility | | | 12,992 | | | | 45,580 | | | | 134,130 | | | | 175,677 | |
Bank | | | 18,428 | | | | 27,015 | | | | 79,971 | | | | 102,963 | |
Other | | | (2,879 | ) | | | (3,444 | ) | | | (15,315 | ) | | | 5,262 | |
| | | | | | | | | | | | | | | | |
| | | 28,541 | | | | 69,151 | | | | 198,786 | | | | 283,902 | |
| | | | | | | | | | | | | | | | |
Interest expense–other than on deposit liabilities and other bank borrowings | | | (20,511 | ) | | | (19,117 | ) | | | (77,072 | ) | | | (75,591 | ) |
Allowance for borrowed funds used during construction | | | 598 | | | | 702 | | | | 2,775 | | | | 2,295 | |
Preferred stock dividends of subsidiaries | | | (473 | ) | | | (473 | ) | | | (1,890 | ) | | | (1,891 | ) |
Allowance for equity funds used during construction | | | 1,232 | | | | 1,548 | | | | 6,032 | | | | 5,566 | |
| | | | | | | | | | | | | | | | |
Income from continuing operations before income taxes | | | 9,387 | | | | 51,811 | | | | 128,631 | | | | 214,281 | |
Income taxes | | | 2,623 | | | | 19,474 | | | | 46,203 | | | | 78,595 | |
| | | | | | | | | | | | | | | | |
Income from continuing operations | | | 6,764 | | | | 32,337 | | | | 82,428 | | | | 135,686 | |
Discontinued operations - loss on disposal, net of income taxes | | | — | | | | — | | | | — | | | | (755 | ) |
| | | | | | | | | | | | | | | | |
Net income | | $ | 6,764 | | | $ | 32,337 | | | $ | 82,428 | | | $ | 134,931 | |
| | | | | | | | | | | | | | | | |
Per common share | | | | | | | | | | | | | | | | |
Basic earnings (loss) - Continuing operations | | $ | 0.08 | | | $ | 0.40 | | | $ | 1.01 | | | $ | 1.68 | |
- Discontinued operations | | | — | | | | — | | | | — | | | | (0.01 | ) |
| | | | | | | | | | | | | | | | |
| | $ | 0.08 | | | $ | 0.40 | | | $ | 1.01 | | | $ | 1.67 | |
| | | | | | | | | | | | | | | | |
Diluted earnings (loss) - Continuing operations | | $ | 0.08 | | | $ | 0.40 | | | $ | 1.01 | | | $ | 1.67 | |
- Discontinued operations | | | — | | | | — | | | | — | | | | (0.01 | ) |
| | | | | | | | | | | | | | | | |
| | $ | 0.08 | | | $ | 0.40 | | | $ | 1.01 | | | $ | 1.66 | |
| | | | | | | | | | | | | | | | |
Dividends | | $ | 0.31 | | | $ | 0.31 | | | $ | 1.24 | | | $ | 1.24 | |
| | | | | | | | | | | | | | | | |
Weighted-average number of common shares outstanding | | | 81,448 | | | | 80,981 | | | | 81,260 | | | | 80,906 | |
| | | | | | | | | | | | | | | | |
Adjusted weighted-average shares | | | 81,713 | | | | 81,363 | | | | 81,435 | | | | 81,237 | |
| | | | | | | | | | | | | | | | |
Income (loss) from continuing operations by segment | | | | | | | | | | | | | | | | |
Electric utility | | $ | 453 | | | $ | 20,988 | | | $ | 54,412 | | | $ | 81,405 | |
Bank | | | 11,596 | | | | 16,827 | | | | 50,551 | | | | 63,949 | |
Other | | | (5,285 | ) | | | (5,478 | ) | | | (22,535 | ) | | | (9,668 | ) |
| | | | | | | | | | | | | | | | |
Income from continuing operations | | $ | 6,764 | | | $ | 32,337 | | | $ | 82,428 | | | $ | 135,686 | |
| | | | | | | | | | | | | | | | |
This information should be read in conjunction with the consolidated financial statements and the notes thereto incorporated by reference in HEI’s Annual Report on SEC Form 10-K for the year ended December 31, 2006 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, 2007 (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.
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Hawaiian Electric Company, Inc. (HECO) and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
| | | | | | | | |
Three months ended March 31, | | 2007 | | | 2006 | |
| (in thousands) | | | | | | |
Operating revenues | | $ | 446,797 | | | $ | 473,971 | |
| | | | | | | | |
Operating expenses | | | | | | | | |
Fuel oil | | | 159,929 | | | | 175,338 | |
Purchased power | | | 111,516 | | | | 117,720 | |
Other operation | | | 47,193 | | | | 42,019 | |
Maintenance | | | 27,336 | | | | 17,052 | |
Depreciation | | | 34,267 | | | | 32,533 | |
Taxes, other than income taxes | | | 42,547 | | | | 44,523 | |
Income taxes | | | 4,506 | | | | 13,224 | |
| | | | | | | | |
| | | 427,294 | | | | 442,409 | |
| | | | | | | | |
Operating income | | | 19,503 | | | | 31,562 | |
| | | | | | | | |
Other income | | | | | | | | |
Allowance for equity funds used during construction | | | 1,232 | | | | 1,548 | |
Other, net | | | (6,198 | ) | | | 909 | |
| | | | | | | | |
| | | (4,966 | ) | | | 2,457 | |
| | | | | | | | |
Income before interest and other charges | | | 14,537 | | | | 34,019 | |
| | | | | | | | |
Interest and other charges | | | | | | | | |
Interest on long-term debt | | | 11,496 | | | | 10,778 | |
Amortization of net bond premium and expense | | | 546 | | | | 543 | |
Other interest charges | | | 2,141 | | | | 1,913 | |
Allowance for borrowed funds used during construction | | | (598 | ) | | | (702 | ) |
Preferred stock dividends of subsidiaries | | | 229 | | | | 229 | |
| | | | | | | | |
| | | 13,814 | | | | 12,761 | |
| | | | | | | | |
Income before preferred stock dividends of HECO | | | 723 | | | | 21,258 | |
Preferred stock dividends of HECO | | | 270 | | | | 270 | |
| | | | | | | | |
Net income for common stock | | $ | 453 | | | $ | 20,988 | |
| | | | | | | | |
OTHER ELECTRIC UTILITY INFORMATION | | | | | | | | |
Kilowatthour sales (millions) | | | 2,404 | | | | 2,390 | |
Cooling degree days (Oahu) | | | 845 | | | | 771 | |
Average fuel oil cost per barrel | | $ | 58.19 | | | $ | 63.59 | |
This information should be read in conjunction with the consolidated financial statements and the notes thereto incorporated by reference in HECO’s Annual Report on SEC Form 10-K for the year ended December 31, 2006 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, 2007 (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.
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American Savings Bank, F.S.B. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
| | | | | | |
Three months ended March 31, | | 2007 | | 2006 |
| (in thousands) | | | | |
Interest and dividend income | | | | | | |
Interest and fees on loans | | $ | 60,281 | | $ | 55,153 |
Interest and dividends on investment and mortgage-related securities | | | 28,165 | | | 30,077 |
| | | | | | |
| | | 88,446 | | | 85,230 |
| | | | | | |
Interest expense | | | | | | |
Interest on deposit liabilities | | | 20,738 | | | 15,393 |
Interest on other borrowings | | | 18,406 | | | 17,162 |
| | | | | | |
| | | 39,144 | | | 32,555 |
| | | | | | |
Net interest income | | | 49,302 | | | 52,675 |
Provision for loan losses | | | — | | | — |
| | | | | | |
Net interest income after provision for loan losses | | | 49,302 | | | 52,675 |
| | | | | | |
Noninterest income | | | | | | |
Fees from other financial services | | | 6,501 | | | 6,440 |
Fee income on deposit liabilities | | | 6,055 | | | 4,189 |
Fee income on other financial products | | | 2,012 | | | 2,437 |
Other income | | | 1,446 | | | 1,708 |
| | | | | | |
| | | 16,014 | | | 14,774 |
| | | | | | |
Noninterest expense | | | | | | |
Compensation and employee benefits | | | 18,396 | | | 17,837 |
Occupancy | | | 4,948 | | | 4,463 |
Equipment | | | 3,478 | | | 3,496 |
Services | | | 8,358 | | | 3,717 |
Data processing | | | 2,557 | | | 2,460 |
Other expense | | | 9,180 | | | 8,461 |
| | | | | | |
| | | 46,917 | | | 40,434 |
| | | | | | |
Income before income taxes | | | 18,399 | | | 27,015 |
Income taxes | | | 6,803 | | | 10,188 |
| | | | | | |
Net income for common stock | | $ | 11,596 | | $ | 16,827 |
| | | | | | |
Net interest margin (%) | | | 3.07 | | | 3.29 |
This information should be read in conjunction with the consolidated financial statements and the notes thereto incorporated by reference in HEI’s Annual Report on SEC Form 10-K for the year ended December 31, 2006 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, 2007 (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.
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