HEI Exhibit 99.1
August 4, 2008
Contact: | Suzy P. Hollinger | (808) 543-7385 Telephone | ||
Manager, Treasury and Investor Relations | (808) 203-1155 Facsimile | |||
E-mail:shollinger@hei.com |
HAWAIIAN ELECTRIC INDUSTRIES, INC. REPORTS SOLID SECOND QUARTER 2008 PERFORMANCE
HONOLULU — Hawaiian Electric Industries, Inc.(NYSE—HE) today reported consolidated net income for the second quarter of 2008 of $5.1 million, or $0.06 per share, compared to $17.5 million, or $0.21 per share for the second quarter of 2007. Second quarter 2008 results include $35.6 million ($0.42 cents per share) of previously-disclosed after-tax charges related to the successful strategic restructuring of its bank’s balance sheet in June.
“Excluding the effects of the bank balance sheet restructuring, net income would have been $40.7 million, or $0.48 per share for the second quarter of 2008,” said Constance H. Lau, HEI president and chief executive officer. “All areas of the company contributed to solid performance in the quarter,” said Lau. “Our utilities continued to regain financial strength from interim rate relief after several tough quarters last year. Excluding the balance sheet restructuring charges, the bank’s earnings and profitability improved quarter-over-quarter. Additionally, holding and other company losses were lower due to lower interest and general and administrative expenses,” noted Lau.
Hawaiian Electric Industries, Inc. News Release
August 4, 2008
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UTILITY RESULTS
Electric utility net income for the second quarter of 2008 was $27.4 million compared with $10.7 million for the same quarter in 2007. “We are seeing recovery from unusually low earnings a year ago when our utilities were awaiting rate increases to earn a return on reliability investments and recover higher operating costs,” said Lau.
At the same time, kilowatthour sales were down slightly compared with the same quarter of 2007 largely due to the effects of conservation and demand-side management programs more than offsetting the impact of mildly warmer temperatures. “Hawaii customers have been diligently seeking ways to conserve energy in response to the dramatic rise in the cost of fuel, which impacts the price of nearly all goods and services here in Hawaii,” said Lau.
Other operations and maintenance (O&M) expenses were flat quarter-over-quarter, as higher operations expenses for customer efficiency programs and operations reliability were slightly more than offset by lower maintenance expense resulting primarily from the lower scope of unit overhauls and timing of vegetation management expenses. “However, we expect higher O&M expense levels for the second half of 2008 due to planned increases in production and transmission and distribution maintenance work,” noted Lau.
The utility also recorded $1.1 million in higher quarter-over-quarter depreciation expenses due to 2007 plant additions.
Hawaiian Electric Industries, Inc. News Release
August 4, 2008
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BANK RESULTS
Bank net loss for the second quarter of 2008 was $18.1 million, compared to net income of $12.6 million for the same quarter last year. Results include after-tax charges of $35.6 million related to the balance sheet restructuring and the following other after-tax items: a $1.2 million previously-disclosed technology project write-off, a $2.6 million insurance recovery, and a $0.6 million gain on the sale of MasterCard stock.
“Bank operations were strong in the second quarter,” said Lau. “We are excited that the balance sheet restructuring, along with product enhancements and productivity initiatives, have successfully positioned the bank for greater profitability.”
Net interest income in the second quarter of 2008 was $52.6 million compared to $51.1 million in the second quarter of 2007. The impact of lower interest expense, primarily due to lower rates on deposits and borrowings and lower deposit balances, more than offset the decline in interest income, primarily due to lower yields on assets and lower investment balances. Net interest margin expanded to 3.39% in the second quarter of 2008, compared with 3.20% in the second quarter of 2007.
In the second quarters of 2008 and 2007, the bank recorded $1.2 million in provision for loan losses. “The overall credit quality of the bank’s loan portfolio remains good. However, we remain cautious and are actively monitoring our loan portfolios as there are signs that the local economy and real estate market are slowing,” added Lau.
Quarter-over-quarter bank noninterest income and noninterest expense were primarily impacted by the aforementioned balance sheet restructuring, technology project write-off, insurance recovery and gain on sale of MasterCard stock. Services expenses were lower by $3.7 million, primarily due to lower consulting and legal expenses.
Hawaiian Electric Industries, Inc. News Release
August 4, 2008
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HOLDING AND OTHER COMPANIES’ RESULTS
The holding and other companies’ net losses were $4.2 million in the second quarter of 2008 compared with $5.7 million in the second quarter of 2007. The quarter-over-quarter improvement was primarily due to lower interest and general and administrative expenses.
WEBCAST AND TELECONFERENCE
Hawaiian Electric Industries, Inc. will conduct a webcast and teleconference call to review its second quarter 2008 earnings on Tuesday, August 5, 2008, at 8:00 a.m. Hawaii Time (2:00 p.m. Eastern Time). The event can be accessed through HEI’s website athttp://www.hei.com or by dialing (866) 510-0710, passcode: 57495087 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 August 19, 2008, by dialing (888) 286-8010, passcode: 43538430.
Representing management will be Constance H. Lau, president and chief executive officer, Hawaiian Electric Industries, Inc. and chairman, 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, Ltd. and provides a wide array of banking and
Hawaiian Electric Industries, Inc. News Release
August 4, 2008
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other financial services to consumers and businesses through American Savings Bank, F.S.B., the state’s third largest financial institution based on 2007 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 iv of HEI’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008, 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 June 30, | Six months ended June 30, | Twelve months ended June 30, | ||||||||||||||||||||||
(in thousands, except per share amounts) | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 | ||||||||||||||||||
Revenues | ||||||||||||||||||||||||
Electric utility | $ | 688,121 | $ | 492,712 | $ | 1,312,010 | $ | 940,390 | $ | 2,477,934 | $ | 2,016,257 | ||||||||||||
Bank | 85,950 | 107,526 | 191,794 | 211,986 | 405,303 | 417,791 | ||||||||||||||||||
Other | (16 | ) | 525 | (132 | ) | 2,410 | 2,067 | 1,711 | ||||||||||||||||
774,055 | 600,763 | 1,503,672 | 1,154,786 | 2,885,304 | 2,435,759 | |||||||||||||||||||
Expenses | ||||||||||||||||||||||||
Electric utility | 632,725 | 463,923 | 1,205,631 | 898,609 | 2,282,751 | 1,893,184 | ||||||||||||||||||
Bank | 116,942 | 87,832 | 199,423 | 173,864 | 367,044 | 344,285 | ||||||||||||||||||
Other | 2,786 | 3,699 | 6,270 | 8,463 | 13,279 | 14,924 | ||||||||||||||||||
752,453 | 555,454 | 1,411,324 | 1,080,936 | 2,663,074 | 2,252,393 | |||||||||||||||||||
Operating income (loss) | ||||||||||||||||||||||||
Electric utility | 55,396 | 28,789 | 106,379 | 41,781 | 195,183 | 123,073 | ||||||||||||||||||
Bank | (30,992 | ) | 19,694 | (7,629 | ) | 38,122 | 38,259 | 73,506 | ||||||||||||||||
Other | (2,802 | ) | (3,174 | ) | (6,402 | ) | (6,053 | ) | (11,212 | ) | (13,213 | ) | ||||||||||||
21,602 | 45,309 | 92,348 | 73,850 | 222,230 | 183,366 | |||||||||||||||||||
Interest expense–other than on deposit liabilities and other bank borrowings | (18,186 | ) | (19,282 | ) | (37,435 | ) | (39,793 | ) | (76,198 | ) | (77,220 | ) | ||||||||||||
Allowance for borrowed funds used during construction | 835 | 586 | 1,597 | 1,184 | 2,965 | 2,642 | ||||||||||||||||||
Preferred stock dividends of subsidiaries | (473 | ) | (473 | ) | (946 | ) | (946 | ) | (1,890 | ) | (1,890 | ) | ||||||||||||
Allowance for equity funds used during construction | 2,105 | 1,202 | 4,006 | 2,434 | 6,791 | 5,646 | ||||||||||||||||||
Income before income taxes | 5,883 | 27,342 | 59,570 | 36,729 | 153,898 | 112,544 | ||||||||||||||||||
Income taxes | 747 | 9,793 | 20,467 | 12,416 | 54,329 | 39,791 | ||||||||||||||||||
Net income | $ | 5,136 | $ | 17,549 | $ | 39,103 | $ | 24,313 | $ | 99,569 | $ | 72,753 | ||||||||||||
Basic earnings per common share | $ | 0.06 | $ | 0.21 | $ | 0.47 | $ | 0.30 | $ | 1.20 | $ | 0.89 | ||||||||||||
Diluted earnings per common share | $ | 0.06 | $ | 0.21 | $ | 0.47 | $ | 0.30 | $ | 1.20 | $ | 0.89 | ||||||||||||
Dividends per common share | $ | 0.31 | $ | 0.31 | $ | 0.62 | $ | 0.62 | $ | 1.24 | $ | 1.24 | ||||||||||||
Weighted-average number of common shares outstanding | 84,052 | 81,907 | 83,762 | 81,679 | 83,249 | 81,461 | ||||||||||||||||||
Adjusted weighted-average shares | 84,155 | 82,124 | 83,822 | 81,906 | 83,283 | 81,644 | ||||||||||||||||||
Net income (loss) by segment | ||||||||||||||||||||||||
Electric utility | $ | 27,432 | $ | 10,650 | $ | 52,017 | $ | 11,103 | $ | 93,070 | $ | 47,776 | ||||||||||||
Bank | (18,093 | ) | 12,582 | (3,517 | ) | 24,178 | 25,412 | 46,915 | ||||||||||||||||
Other | (4,203 | ) | (5,683 | ) | (9,397 | ) | (10,968 | ) | (18,913 | ) | (21,938 | ) | ||||||||||||
Net income | $ | 5,136 | $ | 17,549 | $ | 39,103 | $ | 24,313 | $ | 99,569 | $ | 72,753 | ||||||||||||
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 Reports on SEC Form 10-Q for the quarters ended March 31, 2008 and June 30, 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.
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Hawaiian Electric Company, Inc. (HECO) and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
(in thousands) | 2008 | 2007 | 2008 | 2007 | ||||||||||||
Operating revenues | $ | 686,647 | $ | 491,249 | $ | 1,309,141 | $ | 938,046 | ||||||||
Operating expenses | ||||||||||||||||
Fuel oil | 273,755 | 167,121 | 523,298 | 327,050 | ||||||||||||
Purchased power | 177,226 | 133,727 | 328,021 | 245,243 | ||||||||||||
Other operation | 59,422 | 53,643 | 115,001 | 100,836 | ||||||||||||
Maintenance | 23,990 | 29,869 | 47,603 | 57,205 | ||||||||||||
Depreciation | 35,401 | 34,272 | 70,835 | 68,539 | ||||||||||||
Taxes, other than income taxes | 62,371 | 44,903 | 119,857 | 87,450 | ||||||||||||
Income taxes | 17,094 | 6,492 | 32,472 | 10,998 | ||||||||||||
649,259 | 470,027 | 1,237,087 | 897,321 | |||||||||||||
Operating income | 37,388 | 21,222 | 72,054 | 40,725 | ||||||||||||
Other income | ||||||||||||||||
Allowance for equity funds used during construction | 2,105 | 1,202 | 4,006 | 2,434 | ||||||||||||
Other, net | 1,111 | 1,049 | 2,207 | (5,149 | ) | |||||||||||
3,216 | 2,251 | 6,213 | (2,715 | ) | ||||||||||||
Income before interest and other charges | 40,604 | 23,473 | 78,267 | 38,010 | ||||||||||||
Interest and other charges | ||||||||||||||||
Interest on long-term debt | 11,810 | 11,390 | 23,534 | 22,886 | ||||||||||||
Amortization of net bond premium and expense | 639 | 646 | 1,270 | 1,192 | ||||||||||||
Other interest charges | 1,059 | 874 | 2,045 | 3,015 | ||||||||||||
Allowance for borrowed funds used during construction | (835 | ) | (586 | ) | (1,597 | ) | (1,184 | ) | ||||||||
Preferred stock dividends of subsidiaries | 229 | 229 | 458 | 458 | ||||||||||||
12,902 | 12,553 | 25,710 | 26,367 | |||||||||||||
Income before preferred stock dividends of HECO | 27,702 | 10,920 | 52,557 | 11,643 | ||||||||||||
Preferred stock dividends of HECO | 270 | 270 | 540 | 540 | ||||||||||||
Net income for common stock | $ | 27,432 | $ | 10,650 | $ | 52,017 | $ | 11,103 | ||||||||
OTHER ELECTRIC UTILITY INFORMATION | ||||||||||||||||
Kilowatthour sales (millions) | 2,476 | 2,501 | 4,885 | 4,905 | ||||||||||||
Cooling degree days (Oahu) | 1,295 | 1,255 | 2,249 | 2,100 | ||||||||||||
Average fuel cost per barrel | $ | 104.78 | $ | 62.74 | $ | 99.29 | $ | 60.43 |
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 Reports on SEC Form 10-Q for the quarters ended March 31, 2008 and June 30, 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.
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American Savings Bank, F.S.B. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three months ended June 30, | Six months ended June 30, | |||||||||||||
(in thousands) | 2008 | 2007 | 2008 | 2007 | ||||||||||
Interest and dividend income | ||||||||||||||
Interest and fees on loans | $ | 61,747 | $ | 60,093 | $ | 125,212 | $ | 120,374 | ||||||
Interest and dividends on investment and mortgage-related securities | 22,729 | 30,428 | 47,180 | 58,593 | ||||||||||
84,476 | 90,521 | 172,392 | 178,967 | |||||||||||
Interest expense | ||||||||||||||
Interest on deposit liabilities | 15,619 | 20,832 | 33,839 | 41,570 | ||||||||||
Interest on other borrowings | 16,265 | 18,581 | 35,414 | 36,987 | ||||||||||
31,884 | 39,413 | 69,253 | 78,557 | |||||||||||
Net interest income | 52,592 | 51,108 | 103,139 | 100,410 | ||||||||||
Provision for loan losses | 1,155 | 1,200 | 2,055 | 1,200 | ||||||||||
Net interest income after provision for loan losses | 51,437 | 49,908 | 101,084 | 99,210 | ||||||||||
Noninterest income | ||||||||||||||
Fees from other financial services | 5,413 | 6,885 | 12,236 | 13,386 | ||||||||||
Fee income on deposit liabilities | 6,767 | 6,457 | 13,561 | 12,512 | ||||||||||
Fee income on other financial products | 1,639 | 1,856 | 3,443 | 3,868 | ||||||||||
Loss on sale of securities | (18,323 | ) | — | (17,388 | ) | — | ||||||||
Other income | 5,978 | 1,807 | 7,550 | 3,253 | ||||||||||
1,474 | 17,005 | 19,402 | 33,019 | |||||||||||
Noninterest expense | ||||||||||||||
Compensation and employee benefits | 19,039 | 18,164 | 37,279 | 36,560 | ||||||||||
Occupancy | 5,390 | 5,341 | 10,787 | 10,289 | ||||||||||
Equipment | 3,221 | 3,785 | 6,335 | 7,263 | ||||||||||
Services | 4,170 | 7,895 | 9,843 | 16,253 | ||||||||||
Data processing | 2,609 | 2,646 | 5,225 | 5,203 | ||||||||||
Loss on early extinguishment of debt | 39,843 | — | 39,843 | — | ||||||||||
Other expense | 9,653 | 9,336 | 18,847 | 18,516 | ||||||||||
83,925 | 47,167 | 128,159 | 94,084 | |||||||||||
Income (loss) before income taxes | (31,014 | ) | 19,746 | (7,673 | ) | 38,145 | ||||||||
Income taxes (benefits) | (12,921 | ) | 7,164 | (4,156 | ) | 13,967 | ||||||||
Net income (loss) | $ | (18,093 | ) | $ | 12,582 | $ | (3,517 | ) | $ | 24,178 | ||||
Net interest margin (%) | 3.39 | 3.20 | 3.27 | 3.14 |
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 Reports on SEC Form 10-Q for the quarters ended March 31, 2008 and June 30, 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.
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