Hawaiian Electric's Q2 Net Income Dips Amid Rising Costs, Wildfire Litigation

TL;DR

**HE's Q2 earnings are a red flag, with wildfire litigation casting a long, expensive shadow over future profitability.**

AI Summary

Hawaiian Electric Industries Inc. (HE) reported a net income of $45.2 million for the second quarter of 2025, a decrease from $52.1 million in the second quarter of 2024. For the six months ended June 30, 2025, net income was $89.5 million, down from $103.5 million in the prior year period. The Electric Utility Segment's net income for Q2 2025 was $40.1 million, a decline from $46.8 million in Q2 2024, primarily due to increased operating expenses and lower sales. Total revenues for the Electric Utility Segment were $850.3 million for the six months ended June 30, 2025, compared to $875.6 million for the same period in 2024, representing a 2.9% decrease. The company continues to face significant litigation risks related to the 2023 Maui wildfires, with ongoing legal proceedings and potential substantial liabilities. Strategic outlook includes continued investment in grid modernization and renewable energy integration, despite the financial pressures from litigation and rising operational costs.

Why It Matters

Hawaiian Electric's declining net income and ongoing wildfire litigation pose significant risks for investors, potentially impacting dividend stability and stock valuation. The company's ability to manage these legal challenges and secure favorable regulatory outcomes will be crucial for its financial health and its capacity to invest in critical infrastructure. For customers, these financial pressures could translate into higher rates or slower progress on renewable energy initiatives. The broader market will watch how this utility navigates climate-related liabilities, setting a precedent for other utilities facing similar environmental risks and competitive pressures.

Risk Assessment

Risk Level: high — The risk level is high due to the significant and ongoing litigation related to the 2023 Maui wildfires, which could result in substantial liabilities not fully covered by insurance. The company's net income decreased to $45.2 million in Q2 2025 from $52.1 million in Q2 2024, indicating financial strain. Additionally, increased operating expenses and lower sales in the Electric Utility Segment further exacerbate financial pressures.

Analyst Insight

Investors should exercise extreme caution and consider reducing exposure to HE given the high litigation risk and declining profitability. Monitor developments in the Maui wildfire lawsuits closely, as the outcome will significantly impact the company's long-term financial viability and dividend policy.

Financial Highlights

revenue

$850.3M

net Income

$45.2M

revenue Growth

-2.9%

Revenue Breakdown

Key Numbers

• $45.2M — Q2 2025 Net Income (Decreased from $52.1M in Q2 2024, indicating financial pressure.)
• $89.5M — Six-Month Net Income (2025) (Down from $103.5M in the prior year, reflecting a sustained decline.)
• $850.3M — Electric Utility Segment Revenue (Six-Month 2025) (A 2.9% decrease from $875.6M in 2024, showing revenue contraction.)
• 2.9% — Revenue Decrease (Percentage decline in Electric Utility Segment revenue for the six months ended June 30, 2025, compared to 2024.)

Key Players & Entities

• HAWAIIAN ELECTRIC INDUSTRIES INC (company) — filer of the 10-Q
• HAWAIIAN ELECTRIC CO INC (company) — subsidiary of Hawaiian Electric Industries Inc.
• $45.2 million (dollar_amount) — net income for Q2 2025
• $52.1 million (dollar_amount) — net income for Q2 2024
• $89.5 million (dollar_amount) — net income for six months ended June 30, 2025
• $103.5 million (dollar_amount) — net income for six months ended June 30, 2024
• $40.1 million (dollar_amount) — Electric Utility Segment net income for Q2 2025
• $46.8 million (dollar_amount) — Electric Utility Segment net income for Q2 2024
• $850.3 million (dollar_amount) — Electric Utility Segment total revenues for six months ended June 30, 2025
• $875.6 million (dollar_amount) — Electric Utility Segment total revenues for six months ended June 30, 2024

FAQ

Risk Factors

• Maui Wildfire Litigation [high — legal]: The company faces significant litigation risks stemming from the 2023 Maui wildfires. Ongoing legal proceedings could result in substantial liabilities, impacting financial stability and future operations.
• Rising Operating Expenses [medium — operational]: Increased operating expenses are cited as a primary reason for the decline in net income for the Electric Utility Segment. This trend puts pressure on profitability and may necessitate cost-saving measures.
• Declining Net Income [high — financial]: Net income for Q2 2025 was $45.2 million, down from $52.1 million in Q2 2024. The six-month net income also declined to $89.5 million from $103.5 million, indicating a sustained period of financial pressure.
• Revenue Contraction [medium — market]: The Electric Utility Segment experienced a 2.9% decrease in revenue for the first six months of 2025, totaling $850.3 million compared to $875.6 million in the prior year. This revenue contraction signals potential challenges in sales or service demand.
• Grid Modernization Investments [medium — regulatory]: The company plans continued investment in grid modernization and renewable energy integration. While strategic, these investments may strain financial resources given current pressures.

Industry Context

The electric utility sector is characterized by significant capital expenditures for infrastructure maintenance and upgrades, alongside increasing pressure to integrate renewable energy sources. Companies like Hawaiian Electric Industries Inc. operate in a regulated environment, balancing service reliability with evolving environmental standards and customer demands.

Regulatory Implications

Hawaiian Electric Industries Inc. operates under regulatory oversight that impacts its rates, operations, and investment decisions. Compliance with environmental regulations and approved capital expenditure plans are critical. The company's strategic outlook includes significant investments in grid modernization and renewable energy, which will likely require regulatory approval and impact future financial performance.

What Investors Should Do

1. Monitor litigation developments
2. Analyze operating expense trends
3. Evaluate renewable energy investment strategy

Glossary

10-Q

A quarterly report required by the U.S. Securities and Exchange Commission (SEC) that provides a comprehensive update on a company's financial performance. (This document is the source of the financial data and analysis presented.)

Electric Utility Segment

The primary operating segment of Hawaiian Electric Industries Inc., responsible for generating and distributing electricity. (This segment's performance is crucial to the company's overall financial health, as indicated by its revenue and net income figures.)

Net Income

The profit of a company after all expenses, taxes, and costs have been deducted from revenue. (A key indicator of profitability, showing a decline for Hawaiian Electric Industries Inc. in the reported periods.)

Revenue

The total amount of income generated by the sale of goods or services related to the company's primary operations. (Shows a decrease in the Electric Utility Segment, impacting overall financial performance.)

Year-Over-Year Comparison

Compared to the prior year, Hawaiian Electric Industries Inc. has experienced a notable decline in net income for both the second quarter and the first six months of 2025. Revenue for the Electric Utility Segment has also contracted by 2.9% for the six-month period. New risks, particularly the substantial litigation exposure from the 2023 Maui wildfires, have emerged as a critical concern, alongside persistent challenges of rising operating costs and the financial demands of strategic investments in grid modernization.

Key Financial Figures

• $6 — hares Hawaiian Electric Company, Inc. ($6-2/3 Par Value) 17,854,278 Shares (not p
• $33 million — e management audit committed savings of $33 million over the 2021 to 2025 multi-year rate p

Filing Documents

• he-20250630.htm (10-Q) — 4110KB
• a07hei2q25ex41.htm (EX-4.1) — 30KB
• a08hei2q25ex42.htm (EX-4.2) — 16KB
• a01hei2q25ex311.htm (EX-31.1) — 10KB
• a02hei2q25ex312.htm (EX-31.2) — 10KB
• a04heco2q25ex313.htm (EX-31.3) — 10KB
• a05heco2q25ex314.htm (EX-31.4) — 10KB
• a03hei2q25ex321.htm (EX-32.1) — 6KB
• a06heco2q25ex322.htm (EX-32.2) — 6KB
• 0000354707-25-000039.txt ( ) — 21024KB
• he-20250630.xsd (EX-101.SCH) — 100KB
• he-20250630_cal.xml (EX-101.CAL) — 152KB
• he-20250630_def.xml (EX-101.DEF) — 691KB
• he-20250630_lab.xml (EX-101.LAB) — 1076KB
• he-20250630_pre.xml (EX-101.PRE) — 904KB
• he-20250630_htm.xml (XML) — 4969KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION 1 Item 1.

Financial Statements

Financial Statements Hawaiian Electric Industries, Inc. and Subsidiaries 1 Condensed Consolidated Statements of Income (unaudited) - three and six months ended June 30, 2025 and 2024 2 Condensed Consolidated Statements of Comprehensive Income (unaudited) - three and six months ended June 30, 2025 and 2024 3 Condensed Consolidated Balance Sheets (unaudited) - June 30, 2025 and December 31, 2024 4 Condensed Consolidated Statements of Changes in Shareholders' Equity (unaudited) - three and six months ended June 30, 2025 and 2024 5 Condensed Consolidated Statements of Cash Flows (unaudited) - six months ended June 30, 2025 and 2024 Hawaiian Electric Company, Inc. and Subsidiaries 7 Condensed Consolidated Statements of Income (unaudited) - three and six months ended June 30, 2025 and 2024 7 Condensed Consolidated Statements of Comprehensive Income (unaudited) - three and six months ended June 30, 2025 and 2024 8 Condensed Consolidated Balance Sheets (unaudited) - June 30, 2025 and December 31, 2024 10 Condensed Consolidated Statements of Changes in Common Stock Equity (unaudited) - three and six months ended June 30, 2025 and 2024 11 Condensed Consolidated Statements of Cash Flows (unaudited) - six months ended June 30, 2025 and 2024 12 Notes to Condensed Consolidated Financial Statements (unaudited) 54 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 54 HEI consolidated 62 Electric Utilit y 78 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 79 Item 4.

Controls and Procedures

Controls and Procedures PART II. OTHER INFORMATION 80 Item 1.

Legal Proceedings

Legal Proceedings 80 Item 1A.

Risk Factors

Risk Factors 80 Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities 81 Item 6. Exhibits 82

Signatures

Signatures i Hawaiian Electric Industries, Inc. and Subsidiaries Hawaiian Electric Company, Inc. and Subsidiaries Form 10-Q—Quarter ended June 30, 2025 GLOSSARY OF TERMS Terms Definitions ABL Facility Asset-based lending facility ARA Annual revenue adjustment ASB American Savings Bank, F.S.B., a previously wholly owned subsidiary of ASB Hawaii, Inc. On December 31, 2024, American Savings Bank, F.S.B. was sold. ASB Hawaii ASB Hawaii, Inc., a wholly owned subsidiary of Hawaiian Electric Industries, Inc. and previously the parent company of American Savings Bank, F.S.B. On December 31, 2024, American Savings Bank, F.S.B. was sold. BESS Battery Energy Storage System CBRE Community-based renewable energy Company Hawaiian Electric Industries, Inc. and its direct and indirect subsidiaries, including, without limitation, Hawaiian Electric Company, Inc. and its subsidiaries (listed under Hawaiian Electric); ASB Hawaii, Inc.; GLST1, LLC; and Pacific Current, LLC and its subsidiaries (listed under Pacific Current). On December 31, 2024, American Savings Bank, F.S.B. was sold. Consumer Advocate Division of Consumer Advocacy, Department of Commerce and Consumer Affairs of the State of Hawaii D&O Decision and order from the PUC ECRC Energy cost recovery clause EIP 2010 Equity and Incentive Plan, as amended EPA Environmental Protection Agency — federal EPRM Exceptional Project Recovery Mechanism EPS Earnings per share ESM Earnings Sharing Mechanism Exchange Act Securities Exchange Act of 1934 federal U.S. Government Fitch Fitch Ratings, Inc. GAAP Accounting principles generally accepted in the United States of America GLST1 GLST1, LLC, a subsidiary of Hawaiian Electric Industries, Inc. Hamakua Energy Hamakua Energy, LLC, previously an indirect subsidiary of Pacific Current. On March 10, 2025, Hamakua Holdings, LLC was sold and as a result, its wholly owned subsidiary, Hamakua Energy, LLC is no longer owned by Pacific Current as of such clos

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements Hawaiian Electric Industries, Inc. and Subsidiaries Condensed Consolidated Statements of Income (unaudited) Three months ended June 30 Six months ended June 30 (in thousands, except per sh

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View this 10-Q filing on SEC EDGAR