HE - Earnings call transcript Q4 2019 | Hawaiian Electric Industries, Inc.

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Operator

Good day, and welcome to the Fourth Quarter 2019 Hawaiian Electric Industries, Inc. Earnings Conference call and Webcast. [Operator Instructions]. Please note, this event is being recorded.

I would now like to turn the conference over to Ms. Investor Strategic of Director Smolinski, Relations Planning. and Julie go ahead. Please

Julie Smolinski

and Thank XXXX Hawaiian welcome, Electric Elisa, Earnings Industries Call. Year to Full everyone, you, and Fourth Conference Quarter

and Executive Connie and President President Financial and Executive Hawaiian and members Executive Officer; Chief Electric, Officer; President today Officer; Executive Hawaiian Chief Lau, Rich Oshima, Chief Savings and senior me Hazelton, HEI of Executive well are and Joining Bank as Wacker, Electric, Chief as President Officer; Alan Scott Greg Vice incoming President HEI Officer; American Chief Sue, other management.

questions overview by our answers. Hawaii's and fourth an provide will you for and update quarter who outlook on for Connie our the and results followed with Greg, XXXX. year will Then full economy, conclude we'll

non-GAAP call, measures performance. we'll our operating using today's describe be to financial During

webcast measures. website Relations to Our are press and the these release equivalent of contain and HEI's posted measures on Investor GAAP presentation reconciliations

on statements could made Forward-looking our Factors results website. the found our be expectations webcast also actual SEC differ in slides, that the filings cause will materially HEI on can with from be today's and call. to

And begin with Lau, I'll Connie to ask overview. now an our CEO,

Constance Lau

on to consolidated achievement earnings was We X%. at We the financial grew everyone. to and year the our of earnings strong and a equity at return utility solid X.X% ROE ROE solid maintained achieved bank. at Thank a Julie, operational to you, and and utility for and bank aloha from companies, improved results. our XXXX to environmental both earned consolidated our strengthened

and for state carbon leadership a especially plan. priorities key Hawaii in transforming were Our energy proud recognized deliver of their utility on of to that clean economy. Electric Hawaiian state X-year We're the neutral to our its continued

highlighted state's year Utility fortnightly. and energy was and Mountain Rocky in utility Hawaiian Institute leadership dive. was And by recent XXXX of Public transformation the Utilities innovation by in reports Electric the clean Our named

X.X% delivering interest peers. a performed loan net growth its and also margin Bank well, above Savings American maintaining

exited rates. as Bank up Excluding on a interest onetime to campus. gain slightly net moved were despite it properties, the from lower-than-expected XXXX its bank new sale of earnings

current our the investment performance on confidence prospects, share its financial and quarterly optimizing and per to With in in sustainable a raising opportunities. to or $X.XX pursuing annually. increase portfolio our team Pacific dividend additional continued our second Our our existing approved continued the Board consecutive annual from $X.XX focus dividend $X.XX future project

offering energy the stakeholders on our of goals strategic working market initiatives strengthening transformation At strength cost-effective have a Hawaiian to clean accomplishments and on technology stakeholder reflect culture industry delivering XXXX our models this to Electric, our portfolio, and and from modern financial solutions, company which plan, ensuring customer and relationships improving experiences with XXXX regulatory focused we XXXX and ambitious deliver with platform, to creating transformation and and a our grid energy and the state's improving goals. company, align transformation innovative energy

from renewables those storage largest XX year single bids. and XXXX. great date which than sales more experienced XX%, increase RFP, combined power by in capacity. solar of solar, rooftop PUC clean utility, solar each reached work made our and in great we a these solar on ever our At evaluating renewables, agreements have energy, to increase storage strides We utility-scale plus II purchase momentum in nearly of driven largest and and we're approval seen We secured hard Stage new services Hawaii. grid into On X% priorities the private cost X for our at lowest bidders, energy launched attracted we

of incentive. also company-owned which PPA, proposed customer our we approval to the bills. savings, In is Hawaiian Ireland reduce solar in renegotiated Penrith solar approved we've our performance achieved is PUC the top completed customer by Thermal also satisfaction request, We if in customer third delivering a expected On scores industry. which Westlock the experience, lowest the the now the project, state. cost We shared

for energy footprint programs campaign renewable new transformation. Hawaii's and and project. participate to develop our to approval community-based customers sustainable the the project contribute Hawaii's includes clean renewable customers This in to adopt includes to continue it energy first to goals, energy We practices inspire of

sited past, As grid especially the top recognition of of without we've achieve the connecting resources other customers land, rooftop department and we've energy we to with other customer mentioned a limited renewable and in reorganized XXX% and importance resources, devices. cannot our to with energy customer serve customer on Oahu, resources. solar the created dedicated private In floor

large Given customer we technologies and enhanced amounts renewable of renewables. scale capable modernized plans, our integrating of utility both sited with need ambitious grids

In on XXXX, phase when milestone of modernization strategy grid important and we strategy. now executing that in reached the improved we're our was an March, first

competitively Our expertise maintain on operate and we electric distribution recognized the serving installations in to developing XX contract awarded grids were a bid when here XX-year operating system, and complex in was own, Oahu. army's October

the Our pending is contract PUC. request with approval of for now that

in with future. communities ways work clean that's affordable, words what future a to There We energy that clean X reliable Hawaiian he are achieve and work must stakeholders together achieve continue and energy to describe to the a our to which resilient. best find way the

grid working resource workshops a together. is, in whole XXXX, we done planning. community In take or is must that our It right engagement. first we integrated planning on way be have gain also input stakeholder focused stakeholder meaning for The just and our grid includes communities. This to phase undertake our that it as will and of is next

of workshops PBR, stakeholders in Stakeholder In utility ongoing been framework. our the to Oahu. will planning has also the central performance-based regulatory side phase includes be the of evolution regulation, XXXX. also commission, of design community-based windward began the or engagement which XXXX, the implemented on resilience It and

and look Parties their collaboration have submitted we PBR continued with to proposals, forward stakeholders.

as surprises been we no have design progressed there that through encouraged phase. the are We

key completing consolidation was initiative. XXXX accomplishment and across efforts of to We all also company utilities functions our under utilities of advanced our improve in the X culture the one

and as and initiatives. a earned health earnings ROE Finally, cost we to management our of improve of continue improved, we number to the continue utility pursue financial

bank in a XXXX. had of achievements Our also significant number

Although performed we business interest gains the turned environment record be the highlighting was business sales different model. was slightly its stability when the up and well the its earnings interest American out income, which year. to the started of net XXXX, expectations very year. property rate from a challenging bank from XXXX's from and excluding Despite rate environment, consistency

for first also of XXXX for its the into new Pacific including and The operating bank Hamakua own margin milestone slightly up in was meet bank's Pacific signed to with net important our an portion new benefits in focused biodiesel. year, state-of-the-art XXXX. is with a maintained with consolidation above leadership, management interest sourced campus. the Current, supply is plant's the move interest environment, interest of a realizing contract was from Current a its bank rate despite now and their team low place. team collaboration American the peer an on year of its net our the space, X.XX% efficiency. members, margin This for year locally the increased Under fuel

the independence Pacific that to Current sustainability proud our energy to islands. contribute and of transactions are is execute that We able

adoption. the buildings of We charging EV of move the for to and storage operational also Hawaii joint the year. seeing start throughout electric plus office Hawaii vehicle projects broader we Charge for those launched forward, venture high-rise multiunit encourage Construction solar the projects ever and to accessibility also University dwelling become address will

a very we've see, had as across active can So you enterprise. our productive year and

results financial ask guidance. XXXX Greg our also now I'll to you XXXX and on update our

Gregory Hazelton

Connie. Thanks,

As sales the a visitor at shown expenditures Unemployment with increase record volumes year. slightly. and This $XX average. represented X, well and stable also for X.X% on over Hawaii the level the at finished XXXX, for flat. homes remains of a single-family real remained prices visitors, low Hawaii's of were on X.X% in were up million below exceeding Slide national economy up Oahu as December, XXXX estate year

with year. and potential at are GDP prices and in outlook impacts volumes Condo XXXX. economy were moderate down, slightly our coronavirus on prior developments expected growth closely up sales and condo X.X% businesses. over Hawaii state's we note, X.X% would while is monitoring The the I our the stable also in were XXXX

with increased X% earnings results. achieved we consolidated XXXX, In our consolidated both $X.XX solid million approximately at performance results the XXXX $XXX to good financial to or Turning the utility. and share. bank per

gain X Our cost XXXX million included properties. $X.X associated of on results the a former sale, net bank of

the when XXXX. the primarily excluding year-over-year at from and gain company sales. higher net loss incremental the in long-term grew other The debt The from property interest issued expense segment due holding bank, to grew late even earnings

was consolidated ROE, year. the of for XX X.X%, XX XX on was -- on from right the last comparable months the the On points slide points, last last including months Slide ROE gain Utility our for side bank while sale the XX basis to basis last X, year. the ROE improved impact of up

incentives $X call lower income Slide basis, net the million income after-tax increase renewable contributing due from and under improved Turning million net recovery project well recovery revenue in reliability of investments debt On the $XX interim million X. the revenue under interest increases center expense $X increase to increase grew $X.XX. revenue to rate and to recovery major renewable better energy, guidance our to the performance Schofield $XX RAM refinancing. significant X% for customers from integrate $X.XX for range for performance procuring of reliability million, energy within and and $X.XX low-cost under to million system Utility customer mechanism, generation earned EPS, drivers our an additional $XXX efficiency. to project achieving from from most more were

due million facilities, and decisions. costs, planning to and part to were support overhaul management and resource enterprise to systems, services support for pension included in software partially and of generating costs offset grid rates costs and in higher the Oahu case from by XXXX, projects County as primarily These energy maintenance expenses management and outside operations modernization of reset related compared on higher higher for maintenance rate Maui expenses asset $XX costs

due to higher customer to tax investments increasing net reliability $X lower and XXXX energy, due million $X in integrate million system renewable increase income XXXX. Also, adjustments improved more And depreciation to efficiency. expense favorable versus

bank to American's earned over $X.XX, the sale. the sales, On guidance also net our excluding million net onetime $X.XX within $X about range gain, the gain earnings EPS grew Contributing when also net of was from gain the $XX which Slide which property $X.XX on -- the consolidated million. including included XXXX to XX,

and within loans $X The for most reflecting the to specific real sales $XX.X interest-earning strong commercial to significant interest loan expense, reserves million assets, provision consumer primarily $X from the variance XXXX noninterest as borrower million increased and driven due by banking the and portfolios. in after losses, related primarily well campus higher tax reserves occupancy drivers higher million net $XX circumstances growth. higher commercial additional move. noninterest were income, primarily higher income, and properties from gain due estate pretax additional higher loan $X increase income expenses costs mortgage benefit on the for million as to former and requiring compensation of million growth on the in loan portfolio of

including profitable up Return to peers to basis sales, impact in XX.X% XXX compare XXXX, at a to Turning in continued on points, to was on favorably from Slide XXXX. basis property gain the on XXXX. solidly on return equivalent net XX. equity American assets remains XXX points the

XX. has at Slide both flat X.XX% to peers. similarly and the to to on key margin margin for guidance that the against Hawaii-based to of range net interest end our of well Net net X.XX%. and Let's income compared XXXX elements turn X.XX% of our American's profitability continued sized low was interest drove perform year and

to and to quarter Fourth interest-earning the fourth interest on the assets. X.XX% linked was XXXX, the lower quarter with margin primarily net decline due of X.XX% quarter in compared yields X.XX% in

As see, was quarter prior quarters. fourth interest-earning of our and asset the X% lower you yield year both linked than can

to low has approach the our on full we year relationship focus benefit continue disciplined For remained XXXX of funds Cost was as interest-earning and from X.XX%. yield asset banking.

quarter, XX points was in funds of cost well the below Our peers. fourth basis

CD as billion On Slide retail XX, as loans of of XX, December December up loans were grew healthy X.X% for core year from XX, prior the Total of $X.X prior while billion Net the to income government X.X%. strategic over reflecting XXXX $XXX.X from X.X% in increased year, deposits increase X.X%. X.X% the $X.X an grew reduction deposits total a with a interest million. year, funding, up to

pretax primarily interest was XXXX properties increased quarter million elevated of gain lower fourth income. and net of on in mortgage due the million quarters. linked noninterest income well $XX.X income banking Fourth year was full than the year While former $XX.X slightly to in the quarter as as prior sales

after-tax before, a stated this of $X.X the gain in sale resulted As million net resulted exit -- costs. we've

remains credit On quality portfolios in the And with remains our Slide portfolio to XX, quality strong and rates. Hawaii management solid due commercial estate and our credit values of prudent collateral stable risk sound stable. residential low are economy. The commercial real default

the linked down same outstanding were at last from linked the quarter last provision borrower the previously in the the circumstances $XX.X As commercial quarter was mentioned, loans the loans. year. X.XX% specific and and and XXXX, than modestly X.XX%, consumer, for million provision related equivalent higher portfolio was loan to related losses certain Allowance for loan same slightly where of year. of quarter lower the above consumer real quarter loans estate year-end, to Nonaccrual commercial and

year to of driven commercial personal credit. from and the to the unsecured portfolio net charge-off increased loan ratio for basis basis XX charge-off partial points by points Our the compared XX XXXX, the

fourth ratio partial quarter, down just the charge-off The which we net charge-off mentioned. for was quarter from the the -- just a charge-off linked of partial included

to utility well grid forecast. for baseline our improving invested with XXXX. CapEx planned as for turn our revised our CapEx, investments CapEx projects, performance, certain CapEx originally as $XXX year well above projects among guidance for we of XXXX, million on the as accelerated modernization focused included others. This starting we reliability, resilience Let's future expectations In

into acceleration forecast XXXX. reflects Our XXXX of $XXX the of million CapEx partial

per and our of range the expect Xx and XXXX are average, investments expenditures about million While million XXXX the million resilience depreciation. modernization, reliability periods, period, grid the to $XXX CapEx approximately per necessary over XXXX goals. investments In on $XXX to midpoint to million we year-end perfectly of year consistent with $XXX achieve time year, XXXX $XXX our it's capital to to or average difficult guidance

battery base baseline X% rate starting to an average XXXX. X% light to base This as period growth, planned X% lower through XXXX annual the end future of provided in growth the of XXXX to growth to a those battery for of storage with projects CapEx decisions. utility guidance than Our the storage rate range a reevaluation XXXX we translates period 'XX X the X% investment and through in forecast slightly to of is denial due the opportunities of

grid. maintaining on and energy capital integrate resilience investments Our and renewable as focused we remain reliability more modernize our

we utility its be Importantly, access forecasted to to self-fund able CapEx expect continue markets. retained XXXX to via to through the and earnings the debt capital

of Slide condition. in $XX company PUC has outlook to our average to be equity continued financial XXXX, an our invest increase for self-funding strong that The financing plans payout capital industry program performance. support XXXX. been ASB's $XX its XX% On reflects expected provide million. able is million, expect ratio approved XX, dividends approximately consistent And the Electric's capital which million to and structure. XXXX, HEI -- was its a given approximately bank, investment In XX% increase HEI Hawaiian and long strong to of to from holding dividends, increase The to has XXXX utility to to we to support $XX

With improved do the need from anticipate and additional cash distributions significant to we not any opportunities. utility, identify unless external accretive we equity bank investment in issue XXXX, the

capital company a guidance at to structure $X.XX segment. we the to at earnings outlook bank of $X.XX, utility, XXXX to has to to our dividend loss the managing the of per investment-grade the other Slide $X.XX while rating. company improved Our are consisting $X.XX of $X.XX holding in $X.XX share, flow $X.XX and our $X.XX cash allowed grow our us XX, HEI and On to earnings consolidated maintain initiating

assumes mechanisms guidance regulatory order utility recovery our as await XXXX the change expected at no we year-end, to approving PUC's PBR. major final the of Our design

or material We to rate from customer includes also impacts agreed the at Hawaiian bill benefits Electric last a incentive and increasing below performance Utility O&M in income shown expense penalties our continued guidance Maui as million or no also impact cases reductions appendix. or assume and rewards. from $X approximately Electric inflation in net

XXXX, the bank, consistent the Americans continued relatively XXXX onetime from guidance the property with from earnings with million $X.X sales. gain reflects Our bank stability excluding

low to for continued guidance growth It investments and low approach American's expectations targeted bank reflects reflects environment upgrade digits. as rate growth a to The technology systems. disciplined to asset earning also needed mid-single core to as with interest well

As we closing for continue platform, will to not that continue it XXXX earnings. now to remarks. Connie contribute build out we the meaningfully Pacific to make Current expect will

Constance Lau

accomplishments sustainable and for we of as and we we've viewed all space guidance community. success our value the We've long our about talked of deliver with of as linked customers, for our and to The today Thanks, value the is Greg. value whole. our our a strategy economy our inextricably are And employees the long-term financial enterprise deliver stakeholders. the of health our to our deliver shareholders our environment, and part

With all to are and climate clean here risk of carbon Hawaii Island goals, the operations state opportunities transportation with ambitious attuned the energy, and presented both neutrality also and very our change. we by renewable in

Last our core metrics on time change retreat ESG XXX% our change of reporting transition certain environmental, most ESG renewable strategies formally management on climate help integrating We've ESG disclosures. Hawaii or well its as considerations. then, of strategic spent Board for enterprise planning, key risk our and been is social since into been some energy. to strategic and summer, and governance we've to our Since climate as other one

of further first report TCFD or thereafter. in see Force disclosures in also goals, add portfolio targeting renewable our standards to strategic on Task the include and ahead the compensation aligned our Board and issue timelines. And Disclosures Climate-related upcoming proxy. Board, are of performance-based our to We'll proportion with that plan Financial XXXX of state-mandated executive you'll To incentives management expanding or align to achievement increased Sustainability our our SASB, has be Accounting standards

proxy always to Our our see adopting over majority Board's strong enhance proposals years. focused three next board on our you'll is And voting in our board declassifying also policies the the by and governance. statement, governance

initiatives is see line we and guidance, was We continuing reflect performance profile across consistent these to to and XXXX summary, financial results governance expectations strategies forward and with companies deliver In XXXX. enhancing core in our further in our look practices. to best

ensuring achieving goals, continue will affordable, energy. resilient utilities carbon neutral and clean our energy focus to on while reliable state's Our and XXX% economy

Our bank communities. investment customers, strong is Pacific promising our sustainable continue sustained deliver to and pursuing continues and to further Current provide a a stable, shareholders for value platform platform opportunities. we'll

Our company communities for shareholders here while Hawaii, creating everywhere. value for allows our us to create value our long-term in sustainable

welcome, Finally, to before want our turning Board Q&A, to of Directors. to I

yesterday, As Hawaii's that Valueact our and we customers renewable to we Spring announced the carbon committed desire our believe ambitious communities we serve as well. from Eva Board are joins goals, Fund and the same neutral energy Valueact including goals and to the and

that With and our focus here and your said, XXXX topics. XXXX ask we're discuss to results on you questions today those guidance that

Oshima's Alan webcast. last is this Finally,

him Alan our succeeds achieve continue leading-edge change. I to amazing on February work our of helping Scott during his state Sue thank for we great of time want our utility So that are goals. confident this will leadership XX, he of and

to your And that, questions. look we with forward

Operator

comes today America Bank [Operator first Merrill Eric Instructions]. And Lee question of of Lynch. the from

Eric Lee

the see and expectations Maybe it interest-earning drivers a X% there asset for just that is we just ASP. check XXXX. average I off, about should wanted first about that portfolio basis? for Could discuss in I on you growth How forward growth? think to for

Richard Wacker

to Thanks -- digits. question. low Rich. targeting mid-single is the This We're mid-single Yes. for

growth the I of offset be reductions last We of and there. X%, core see you would that if government the X% what brought year. X% did back that kind in to that kind So Greg of range, And about some was CD, some in higher think highlighted, us with the X% down deposit we year, this overall. typically

done. So we had adjustments think we've

doing it's multiple bank business, range. that primary We've And customer years, for X% and we're X% that to trying expansion around to course had growing So kind customers. just of consistent. -- keep primary normal that's everything relationship through it

Eric Lee

Got it.

embedded to back that? back normalize to towards at within it the XXXX expect should for normalization guidance least we a within expectation as -- So

Richard Wacker

Right.

Eric Lee

Okay, like as high? that's prior It was you guidance? it a you then helpful. of million pull the a I a just bit. well bit outlook And decrease to discuss a and the shifting Could million seems CapEx are outlook subsequently. the little bit 'XX-'XX under $XXX rate $XXX seems get was maybe there there the utility to drivers there but as a that forward towards relative more? lower low Could into discuss a base 'XX And bit little like of and 'XX the to

Gregory Hazelton

million -- range, actually you last a CapEx the a on planning couple And to to capital that in Yes, think, get just procured And the know, $XXX guidance guidance slightly you've above seen, and this think forward we've, which -- forward about several as we $XXX previously as major included were also be them got -- QX we clarity as our will you you we And conjunction projects a update of competitively forecast a year. a into that's $XXX versus shown of build, we've on relative X declined because for puts projects to conservatively basis. we those previously, accelerated. battery million of we level, I you've as put we forward reevaluated some the highlighted, bit -- projects. look really consistent to down with timing revised then that's to were midpoint our really the how before, the million what types of system, much the battery those may investments utility being of with million had estimate projects look board range point million those storage on projects across $XXX as as of the the the basis That energy from XXXX going-forward I our million, a $XXX at with mentioned that XXXX. as and $XXX

Eric Lee

media. the Yes. So those certainly That's helpful. are

is high storage the the would what battery end, like presumably? be seems it towards So

Gregory Hazelton

that's they you in a [Indiscernible] bit -- lumpy, come why team. from range in year-to-year projects, and any they a Of and a have major that

Constance Lau

to adding and making what the higher said, accelerate and schedule end forward, what acceleration depending may some that the then of also come the the when grid in, that of we grid would those out, come with on do trust could And the project, of in to in Greg acceleration. may the our Yes, the They depending Army privatization. are forecast expenditures. pace there for got be We've decision don't the project that be able some over put example, for best of range big but of modernization, on like decision some on they you to comes projects, expenditures, know, a this And we with X chunk. modernization the commission as morning smoothly period.

that, range. could higher have some of So the of the that support we end

Eric Lee

That's it. helpful. I question before And X pass Got just more perhaps. it on,

have DR you presumably meeting I spend RPS just around plans and going broadly mod goals. you mod potential Could maybe So integration? with given grid And just your discussions know towards PBR? there on rooftop so support to also DR earlier into ties for discuss mentioned solar in conversation need the been integration grid how the incentives

Alan Oshima

This Alan. is

generalities. can we think just I speak in

private each forward We've for on other. that's complementing their each increased and increased base solar, small penetration other dependent combined Hawaii, available our response private seeing recently DR, of rooftop, rooftop very demand folks to rooftop benefit the activities combined DER or percentage an look storage. relative offsetting behind-the-meter with of We renewable projects. of are We land given in

so that have generating different our question parts many renewable there's question? did many resources looking and our Or efforts, you So answer your to at total to a to moving XXX%. mind? different in get Does we're

Eric Lee

in have been I their know discussions discussed wondering, mechanisms one PBR, that around that, for just was was I supporting Performance the just that, to with Yes, in pens Integration? DR of PBR. pillars how going incentive potential addition Incentive

point anything to? So wondering just if there's to

Joseph Viola

Joe Hawaiian is the Viola with regulatory affairs This Electric. in

call So kind Phase PBR design the we of is identified, correct. that's the X, as as Currently, fee. docket the in you've it, the

has integration. the parties asked So propose to DER specifically to develop commission related all mechanisms, incentive and the

been So that's proposals, Current have in developing this of collectively have indicated, in year. process. other the The decision expect and companies have submitted proposals a to stakeholders has several those Parties have December on electric commission proposals.

we're So we're -- waiting. still

Operator

Paul The Patterson Glenrock comes next question from today of Associates.

Paul Patterson

So just on just base base all acceleration, to I'm when XXXX? what itself than look have going that follow-up into -- the Rate -- and a we the before rate without clarify expectation CapEx question. expectations get Is you before. at sort to bit timing of be of you. in little seems the what just if lower because like that what's storage, decrease substantial could substantially battery causing were the you your for XXXX,

Tayne Sekimura

is Yes. this Paul, Tayne.

was of you saw of was storage of completion battery had in slated energy And projects about here what investments what's terms $XXX storage it for Oahu. In previously causing that for time in decline, and battery million that frame. the forecast what we in the

Constance Lau

remember to were Paul, the projects, going put So into bid competitive those done be RFP. that were they companies you if and

Paul Patterson

constructive where comment you with you on are PBR, think or that? a on. respect could you. proceeding? to a a you any Okay, for the then how got you Do have potential settlement you Or that's given stakeholder that process process I And more that mentioned little going color collaborative guys bit there's on now? Or guys just

Joseph Viola

This is Joe Viola again.

just -- sure I today. we're we over still not a a from just I'm -- had came actually, workshop So

we stakeholders focus know all I that on doc developing So We positions, settlement. encouraged and has and parties for alignment, the any exchange type certainly to their to the continuing expect parties see the understand better but commission but calls between proposals. the many of own don't the schedule areas of of

has asked do address provide very proposals to to want promote the commission to comprehensive in what parties to the outcomes expect detailed We this proceeding. to us they the do,

Paul Patterson

Okay.

congratulations. the I Alan, to. So wanted

Alan Oshima

you, Paul. Thank

Paul Patterson

Follow-up on it. Good.

ago, think rate for with increases cetera. quarters but the too asked early. with with respect -- I I was potential PBR, a the about a et So few it you little transformation, And

an and you potential outlook what And out We've stuff -- that leading outlook update on impact or increase at you? have your do have comfortable rate of coming picture. base and wondering have further in you in, now? I looking now in you fuel should sort rate terms guys the of just rate might things are given how you're think been we along about felt commenting on along how just the and what in the I'm rate guys the think of be PBR further

Alan Oshima

All question. I this unsatisfactory to a be think answer update. an very have will of an don't good we

won't is the are this docket the one utility it is all of of guiding we As At been Joe policy, a of financial energy is coal in as all financial of most understanding earlier, think us operating think are all regulators time, always a it, possible. together, we're by because the process makes environmental mentioned which caught the the end that true year. mentioned, emphasized state utility and that that full and is ambitious get results realization, has We're But totality the be underlying integrity seeing, of fully we I all committed towards being comforting until of PBR, to. still very the it's the grid discussed. principles, aspect I same to the the of the of is it this our as and how there's some aspects the Connie that

it don't with color a give more So answer. as be that. may far. been I terms of a metrics-driven than can good so that, unsatisfactory we that mean, process to But I think it's any in as

Paul Patterson

top amount the you just coronavirus, finally, opposed you And But I of No virus have know guys like, what great. the the you, from China on tourism. off can Asia Okay, of problem. as how the percentage comes travel a much that of -- obviously, your that substantial head, Asian general? tourism have have and do in then to

Gregory Hazelton

We've Yes. that. at looked

As or you get XX annually. Hong about know, and we just visitors through threshold. approximately China it's From Kong, broke slightly Mainland We below. that million X%

minimal pretty So it's overall.

willingness things get is which somewhat. the concerned we'd be to general, travel, impact could travel So on in about and economy people's the planes

Operator

The comes Fishman Morningstar. from question next of Charles

Charles Fishman

luck good Alan, first, you. Well, to

Alan Oshima

very you Thank much.

Charles Fishman

a which about year this sure for generated And guidance. headquarter was me bank or year, of I'm then this midpoint right. these from $X.XX that about The about let the is last the got $X.XX leaving make of $X.XX, sale, I about thinking

the yet What's little more is a X/X higher you're give on can So what going that increase flattish, roughly gain, the on? color essentially, you projecting excluding bank that? like is a dividend --

Richard Wacker

Yes. Yes.

So question. the thanks for

So the second notice new our We up year. ticked capital process. for if levels the across accounting CECL, the you'll adopting We're half were in this year. of provisions the standard

were a capital. bit we so And more retaining little

capital that capitalization. end is that So up which offset good in the an our adjustment to to provision level, provision comes adjustment a adjustment relative onetime we to the spot overall when a through, to level

so that, the dividend have of And through more and we with the a year a stay as we go to bit in up our earnings good ability little spot.

Constance Lau

still And the ratio. been targeting X so target X.X% leverage Charles, -- be bank the that just what has of about add will I'll our long-time Tier on

that. be back So coming just trended and had down Rich now of to they'll noted, they as towards end that XXXX, above the

Charles Fishman

million is base $XX pretty for XXXX new much the of So a you're forward? going that dividend projecting

Richard Wacker

No, as that we you. of of traditional this the to been past, we thank On too. little component a in an projected we've to reset And levels right that would. XXXX be you'd earnings ongoing leverage basis, year ratio about bit adjustment ongoing the we in expect our an the no, have

Gregory Hazelton

period performance And remember of that time. we're through anticipating this consistent earnings

some dividend bank of the to forward. of consistency be there'll level the capabilities So going

Charles Fishman

Got it. That's helpful.

a Last fully country, not And units. another CapEx, the maybe sort about And didn't you mean, cycling nobody because diesel appreciating, something of utility. industry understandable at on in on canary analyst on but I hear the with here we Just the of if about world. lot you're time. with concern going the question talked certainly the side. the renewable quarter, is the this least that's the the a with that, especially of what's you that hearing that the of talk talk about this in I --

said In or below fact, O&M inflation. you on the at guidance,

talk you Or just didn't it. So a is that that about something onetimer? just was

Alan Oshima

we show so 'XX. Well, increase to did year-over-year XXXX as a it

Ultimately, Those it's be in have work energy, that units renewable backstop a you're of order cycle. our the and this absolutely results some to So was in to year. of all kept in right. good

prospectively, major those them major think them. to the to we and that And have cycle annually. those. we've higher have overhauls periods with have to we if Is we But Tayne? through maintenance overhauls levels, I a don't operate be appropriate for the However, gone have right, of done series

Tayne Sekimura

Yes.

Tayne is this Charles, Sekimura. So

overhaul, look between in we there lumpy our run on hours, at depends when So planned and overhauls, it they be and years. can

I little period recovery at as also if time. to standpoint, what link look you be from it a and it it of could mean, lumpy we over a so you And a see

have live where well benefits talk being into things our of for In XXXX O&M to XXXX, our efficiencies do of purchasing in us bringing company below help did Those system also and functions efficiencies or well. trying to consistency went our that XXXX. strategic and of in as As which our it, at enabling X about we you more in as forecast utility our us SAP, the area. initiative, How think from forecast though, we new standardization will or understand inflation. to we work, are restructured of of allow in to embedded look as and like this also terms to embedded the using about fourth sourcing quarter XXXX, completion more use

So forecast you can below or O&M that's inflation. level how to allowed see an at we're

Constance Lau

I'd the said ramped those ramping to XXXX. now up Tayne Charles, are were up. add over about what savings fully ERP They because

year. the for now XXXX up ramped fully they're So

Charles Fishman

it's That's Okay. providing to Well, I benefit. good hear forgot that about that that's SAP. right.

Operator

of Andy The Exoduspoint. Levi today last question comes from

Andrew Levi

ones. Just quick two very

Just I on guess the up Paul, on following coronavirus. just

will tourism I affect this understand guys affect? how I you but how does part, the mean, does How would it So I the earnings? it specifically decouple. thought

Gregory Hazelton

impact that deployed our also procurement the down of and on the Well, slow into either the close it potentially, through a community, lending eye commercial renewable X bank could those could projects. We've keeping be that supply cost constrained or enterprises concern. the somewhat. is where If the has gets of would for chain activity capital economic commercial That activity go up.

to it's bringing online important but We date, haven't us. very seen to those monitor to something projects continue because anything is

Andrew Levi

It's and more bank-related. project-related

Gregory Hazelton

I would think so.

Andrew Levi

-- just embedding ROE earned you forecast XXXX, that? ROE And in for in what then are just the utility, Okay. your for

Gregory Hazelton

you of slight to the midpoint range, We if improvement where would be the But haven't actually we're it today. use a disclosed at that.

some assuming closed at a -- over we we a anticipate would modest improvement on. rate that. the cases would improvement going couple year, have see don't and midpoint If know, we of -- you X.X% we of we say, do As the I range,

term We'll July decision will interim it interim see implementation potential about beyond some time ongoing ROE. an XXXX. the plays holdco and frame for PBR provide improvements the and HECO benefit. in expect the have to that, have which on on significant the hearing case, We out achieved rate may how in But in

Andrew Levi

last rate XX. on just my the And Okay. slide question, base

X% to kind Is that 'XX? X% how off So works. it to of

Gregory Hazelton

trying align our 'XX It between we is because how range normalize comparability. we well as the done had to as differentials to base also and the previous for and 'XX. 'XX were that guidance with And guidance, using a

Andrew Levi

off of So off X% of to it's 'XX. X% X% to X% 'XX

to you for And that. moving afternoon. the call thank Wednesday get I Okay.

Operator

Julie to This the closing remarks. over concludes any Smolinski the session. back like I turn to for question-and-answer would conference

Julie Smolinski

to And and us Alan all, thank last on for Mahalo of most Just today. congratulations webcast. your joining you all

Alan Oshima

you. Thank

Julie Smolinski

week. And you. great I Thank have you a hope rest the of all

Operator

The concluded. presentation. conference now today's for has Thank you attending

disconnect. now may You

Hawaiian Electric Industries (HE) 13 Feb 202019 Q4 Earnings call transcript