Hello, and thank you for standing by. My name is Regina, and I'll be your conference operator today. At this time, I would like to welcome everyone to the HEI First Quarter 2025 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star and the number 1 on your telephone keypad. To withdraw your question, press star 1 again. I would now like to turn the conference over to Mateo Garcia, Director of Investor Relations. Please go ahead.

Welcome, everyone, to HEI's first quarter 2025 earnings call. Joining me today are Scott Sioux, HEI President and CEO, Scott DeGhetto, HEI Executive Vice President and CFO, Shelley Kimura, Hawaiian Electric President and CEO, and other members of senior management. Our earnings release and our presentation for this call are available in the Investor Relations section of our website. As a reminder, forward-looking statements will be made on today's call. Factors that could cause actual results to differ materially from expectations can be found in our presentation, our SEC filings, and in the Investor Relations section of our website. Today's presentation also includes references to non-GAAP financial measures. You should refer to the information contained in the slides accompanying today's presentation for definitional information and reconciliations of historical non-GAAP measures to the closest GAAP financial measure. We will take questions from institutional investors at the end of this call. Individual investors and others can reach out to Investor Relations. Now Scott Sioux will begin with his remarks.

Aloha kakou. Welcome, everyone. For today's call, I'll start with an update on our continued efforts to regain HEI's financial strength and emerge a stronger, more resilient company. I'll also touch on the recently concluded Hawaii legislative session and the remaining steps required for execution of the Maui wildfire. I'll then turn it over to Scott DeGhetto, who will walk through our financial results and then we'll open it up for questions. we discussed the important progress made in 2024 to ensure a strong financially healthy future for HEI and to best position our company to serve the communities in which we operate for the long term as continued in 2025 with important strides made to resolve the Maui wildfire tort litigation while laying a foundation for financial strength and resilience moving forward. In February, the Holy State Supreme Court issued a decision resolving the outstanding issue with insurers who filed subrogation claims related to the Maui wildfires. We clarify that, once the settlement becomes final, insurers seeking to recover amounts they've paid to settling plaintiffs cannot separately sue defendants. The decision aligned with our position and was a key step in finalizing critical, supportive Supreme Court decision. The remaining administrative steps are expected to be completed early next year, after which will make our first $479 million payment. In March, Governor Green announced the commencement of the first disbursement under the $175 million One Ohana Initiative to participating families who lost loved ones and individuals who suffered serious physical injuries in the Maui wildfires. The One Ohana Initiative was established to provide relief as quickly as possible to those most seriously impacted. Our company contributed $75 million to One Ohana, and this is part of our $1.99 billion total resolving the Maui wildfire tort litigation is clearer now than at any time since August 2023. With the sale of American Savings Bank and ongoing divestiture, we're moving to a simpler business model, which will eventually be focused solely with the actions we took last year to improve our balance sheet and liquidity. We're also moving forward with greater financial strength. We're well-positioned to finance the remaining settlement payments amidst the robust capex cycle expected at Hawaiian Electric. The significant investments planned in the utility's generation system and electric grid will enhance safety, reliability, and resilience. We're also moving forward with an operational risk profile that's greatly improved since the 2023 Maui wildfires. The utility has continued to implement the enhanced wildfire safety measures outlined in the 2025-2027 wildfire safety strategy submitted to the Public Utilities Commission in January. Another priority for 2025 and 2026 is to rebase the utility's target revenues in the Performance-Based Regulation framework. In February, the PUC ordered that target revenues should be rebased ahead of the second multiyear rate period of the PBR framework using a rate case-like proceeding. We expect to file an application to rebase target revenues towards the later part of this year. Our progress in making our company stronger and more resilient has not come at the expense of other key priorities. We remain committed to advancing our state's clean energy goals and our path to 100% RPS and net zero by 2045. In summary, we believe our company's investment thesis is stronger today than it has been at any point since the Maui wildfires. We've made significant progress toward resolving the wildfire tort litigation and simplifying our corporate structure and the actions we've taken to improve our company's risk. Turning to the next slide, this legislative session, several measures passed and are awaiting signature by Governor Greene. The legislature passed appropriating funds for the state of Hawaii's contribution to the Maui Wildfire Tort Litigation Settlement. This was a crucial step to ensure the settlement is implemented. The legislature also passed Senate Bill 897, directing the Public Utilities Commission to establish an aggregate liability cap on economic damages from future wildfires. Numerous factors will be considered in determining the cap, including impacts on the liability cap, the utility needs to have a PUC-approved wildfire mitigation plan, and a PUC determination that the plan is being implemented on an approved timeline. Senate Bill 897 also authorizes securitization to finance wildfire safety improvements. This will ensure that these critical safety improvements can be implemented at lower cost to customers. And Senate Bill 897 also directs the PUC to study the creation of a recommendation. to fulfill 897 is a milestone piece of legislation that can reduce wildfire liability risk exposure for the utility going forward. It also allows for lower cost financing so that the utility can implement wildfire mitigation plans in a more cost-effective manner. Hawaii is now one of 15 states that have passed or are considering utility-related wildfire legislation, including laws to limit utilities' exposure to liability if they take action to reduce the risk of Legislation was also passed supporting the utility's ability to procure reliable, affordable clean energy. Senate Bill 1501 will help reduce financial risk concerns for independent power producers contracting with the utility. It authorizes the State to ensure utility payments to independent power producers. This ensures that we provide the utility with clean, reliable power while preserving project at an RPS and carbon neutrality by 2014. This year's constructive legislative outcome was the result of months of debate, collaboration, and hard work from policymakers and numerous employees to continuing our work with the The PUC and other stakeholders after these bills are signed into law. Slide 5 shows the expected timing for the remaining steps required. The group is working through the administrative steps. These include granting approvals of the agreements and making good faith determinations, among other steps. We expect these steps will be completed in early towards payment obligations. We'll hand the call off to Scott DeGhetto, who will take you through the quarter's financial.

Thank you, Scott. first quarter, we generated net income 15 cents per share. The quarter's results include a $13.2 million pre-tax loss on sale, resulting from the sale of its largest asset, the Hamakua Power Plant. The quarter's results also include $4.5 million of pre-tax Maui wildfire-related expenses, net of insurance recoveries and deferrals. Approximately $2.5 million of the $4.5 million in net wildfire expenses was recorded at the utility. Excluding these items, consolidated core net income was $39.8 million for the quarter, or $0.23 per year, from continuing operations for $28.4 million, or $26 million for 2024. Income from continuing operations as the appropriate 2024 includes the operations of American Savings Bank, which we sold at the end of last year. Utility core net income for the quarter was $49.7 million, compared to $44.2 million in the first quarter of 2024. The increase in utility core net income was driven by better heat rate performance, higher annual revenue adjustment mechanism revenues, higher mitigation program expenses, and company core net loss was $9.9 million, compared to $15.8 million in the first quarter of 2024. The lower core net loss was driven by higher interest income from holding company cash being held on the balance sheet, primarily to make the first settlement payment. Turning to the next slide, I'll provide a few key updates on our capitalization and liquidity. As of the end of the first quarter, the holding company and the utility had approximately $492 million, and $130 million of unwritten company cash balance includes the approximately $384 million from the ASB sale that was used to retire debt on April 9th. In addition, the holding company has approximately $300 million in combined liquidity available under its ATM program and revolver capacity. The utility also has approximately $300 million of liquidity available under its accounts receivable credit facility. This is included in restricted cash on the balance sheet until we make the first settlement payment expected in early 2026. We mentioned previously that the net proceeds from last year's sale of 90.1% of American Savings Bank would be used for debt reduction at the holding company. Following a successful tender offer in mind, HEI retired approximately $384 million. The lower holding company debt balance gives us more financial flexibility. Looking ahead, HEI remains committed to a simpler, more focused business model. The utility dividend to HEI has been reinstated after the second quarter 2024 dividend. Hawaiian Electric's Board of Directors approved a $10 million quarterly dividend for the first quarter of 2025. This decision was made after considering several factors, including the continued progress as well as the utility's results of operations and liquidity position.

We will now begin the question and answer session. In order to ask a question, press star followed by the number one on your telephone keypad.

Our first question comes from the line of nicholas campanella with barclays please go ahead this is michael brown on for nicholas campanella do you anticipate a positive feedback from the rating agencies if sb 8897 is signed into law how do you think that they will view that yeah the the simple answer to that is yes we don't want to speculate on you know what the rating agencies are thinking or how they'll respond to that but they've given us very strong indications that once that is signed um as well as a number of other key milestones including um the final court approval of the settlement agreement that those are all credit positives question is um if sb897 is signed into law

is this like what kind of step forward is this for the wildfire fund going forward Mike, this is Scott.

I'm not quite sure your question with respect to 897 is what?

How will this legislation shift the discussion towards a future wildfire fund implementation?

Well, as part of Senate Bill 897, there is a component that requires the PUC to study the viability of a wildfire fund and come back to the legislature prior to the next session with recommendations on, you know, whether a fund should be created. If so, how large should it be? What should be the structure and other considerations? So the PUC will be doing this study towards the end of this year.

Our next question will come from the line of Julian DeMullen-Smith with Jeffries. Please go ahead.

Hey, good afternoon, or good morning, good afternoon, as it may be. Thank you for the time. Let me just pick up on SB897 from a second ago. I mean, what is this liability cap, if you will? I mean, obviously, they're directing the PUC to establish one. How do you think about a range that's appropriated? How do you even think about the concept of this supposed liability cap? I mean, and how are you engaging with parties on even approaching what that might conceivably construed as being?

Yeah, hi, Julian. This is Scott. I think what's important is that SB 897, it essentially says that there shall be an aggregate liability cap. So that's the first important point. The meat of the bill, of course, is directing the PUC to start a rulemaking process to consider a number of different factors that we touched upon in my earlier remarks, and are which are listed in the bill itself and the PUC will will take into account you know should this should the liability cap be based on a cap within a set time period should it be on a per event basis should it be a flat dollar amount should be a percent of our market cap or rate base so a number of these different factors all listed in the legislation so I think it's important that we don't get ahead of the PUC process but just remember that the bill directs that a cap

will be established and it's put to the PUC to follow their rulemaking process to to establish exactly what the best form is to to serve the purposes of the cap and if I can just add a little bit more to that Julian this is Shelley to help you put some parameters around it during the legislative session proposals were made to have it be the lesser of 500 million or some other parameters and later in legislation it was discussed that a billion. The challenge in the legislative session was folks getting comfortable with that number and the way the legislation is written now is that for the PUC to determine the amount it's similar to the California law, where it's looking at what can the utility pay without harming rate payers or our ability to deliver service.

Got it. No, fair enough. And I get it. It's early on. So I appreciate that it's dynamic. And then maybe if I can come back, like, look, I mean, just in terms of assuming this legislation becomes law, can you elaborate on your financing strategy for the remaining three settlement payments, right? I mean, obviously, you elaborate. You spoke to the first one here. But how are you thinking about the remaining payments here? and maybe securitization elements potentially had?

So, and I know you ask this every quarter, and I tend to answer it the same, Julian, which is we're continuously looking at the capital markets to determine how to best finance it. We're going to do that by looking at a variety of different factors. You know, as it turns out, the first payment will not be made until sometime in early 2026. So we're still about a year out from thinking about raising the funds for the second payment. So I think it's premature to come to any definitive conclusions as to how we'll finance it other than what I've been saying in the past, which is it'll be a combination of both debt and equity.

Yeah, no, fair enough. I get as preliminary. We're all chomping at the bed, and I hope you appreciate this, Scott.

As time goes on and we get closer, we'll be more definitive in how we answer that question.

Got it. And you talk about, you know, getting to the final line on some of this stuff. I mean, how do you think about, you know, you got the Supreme Court decision on subrogation. You checked that box.

Are there any remaining obstacles that remain here to get that final approval done and fully close that out yeah so at this stage i mean that was probably one of the most important decisions um to allow the settlement process to continue forward so going ahead the maui circuit court will go through a number of proceedings including preliminary approval of the class settlement agreement um individual plaintiffs approval of their settlement as well. After you get to the CLAS settlement preliminary approvals, then there's some administrative steps, including notice to the CLAS opportunities for individuals to sign on. And that period will probably span several months, all of which would lead to our estimation that a final approval hearing would happen sometime the first quarter of 2026. And then following that, we would make our first payment.

One other point, Julian, I wanted to make because I didn't answer the second part of your question on securitization. Just to be clear, the securitization authorization is for utility CapEx. It is not for funding any of the settlement or the settlement payments.

Okay. Thank you for that clarity. I appreciate you following up. All right, guys. Thank you all very much. Appreciate it. Best of luck. We'll see what happens.

Our next question comes from the line of Michael Lonegan with Evercore. Please go ahead.

Hi, thanks for taking my questions. So to follow up on the securitization, you know, obviously it's for the wildfire mitigation and resiliency investment. Will you approach it that way as a securitization, or is it something we could, you know, see as an investment to generate earnings on?

Yeah, Mike, the way that SB897 is drafted is that it appears as though the first $500 million of utility CapEx towards wildfire mitigation would be using this securization method.

Okay, thank you. And then to follow up on the financing, is there, you know, I know you've talked about combo of debt and equity over time, you know, the settlement periods over four years. Is there a scenario where you could be opportunistic with, you know, some block equity or your ATM, you know, in the event you're say your stock price is boosted with clarity on the tariff situation and the economy?

Good question. I mean, as it relates to the tariffs, you know, that's changing, you know, on a daily basis, if not more frequently than that. And so, you know, based upon that and where we're looking at the future financings, I would tell you that I'm hoping the tariffs don't play into it. And, again, we have, as you said, you know, two, three, and four years from now we're looking at financing the balance of those payments. I mean, if it made sense to pre-fund based upon what was happening in the markets at a particular time, yeah, we would absolutely look at taking advantage. But right now, we're not, you know, we don't have any current plans in the near future to finance, you know, any of those payments. Again, the first payment, you know, will not be made until first quarter of 2026. At least that's the timeline that we believe will play out.

And then, thank you. And then, lastly, from me, just wondering if you could talk about the planned rate case filing, you know, the key components of it.

You know, is it going to be a 12-month forward test year? and you know what are your expectations for you know potential revisions to the five-year pdr framework yeah i'll i'll kick things off here and uh maybe if shelley or or others from the utility want to add in but essentially what what's happening mike is when pbr was first adopted by the PUC, they established that the current multi-year rate period will end May 31st of next year. The next period, the second multi-year rate period, will commence beginning of 2027, January 1, 2027. So what the PUC ordered back in February of this year was that between now and January 1 of 2027 the utility will go through the process of rebasing the target revenues ahead of the start of the second multi-year rate period in 2027 and then that translates to as I said in my remarks the utility will file information to the PUC towards the later part of this year to support the rebasing of target revenues um it will be a and and the PUC was very explicit in their order it will be a rate case like proceeding um they wanted to reserve the ability to provide some flexibility in terms of the process for that proceeding to make it more efficient and to be very much focused on the you know the PBR context so um it's early on um we are going to be going through this uh preparation for the filing um and once the filing is made um you know there's going to be a an ongoing process focused on the target revenue rebasing but also looking at what other modifications might be appropriate to the overall pbr framework so there's going to be a number of moving parts happening in parallel there great i would just add one thing that i think that i

Scott did a really good job describing it. I think the one question you asked was the test year. So we're looking at a 2026 test year.

Okay, thank you.

Our next question will come from the line of Jonathan Reeder with Wells Fargo. Please go ahead.

Hey, good morning team. Thanks for taking my question. I just wanted to follow up quickly on that last topic. You said a 2026 test year. Or is it safe to say that the 9.5% allowed ROE and 57%, I believe it is equity ratio, that those items will be scrutinized and readdressed?

So we're going to take another look at that, given our current environment and our current context. And so that is something that we'll be evaluating and proposing in our filing later this year.

Okay, but it will be an item that, I guess, could potentially change, you know, positively. Scott, I wanted to go back to Senate Bill 897. Just found it interesting, you know, after months of debate around the issues, why do you think the legislature ultimately just deferred these very important decisions, you know, around the liability cap and then potentially creation of the fund to the PUC?

Just kind of, you know, punt it on them. yeah um you know the the legislature i mean they really spent quite a bit of time um digging into you know what things to consider um how would you establish a methodology what should be um what what are some other examples what what's happened with other states and so on At the end of the day, it was felt that the PUC would be able to use a more robust, more in-depth process to really dive into the details of all these different considerations, many of which are very technical in nature. And that's why they ended up deciding that rather than trying to just throw out a number and put it into law, have the PUC work through a very thoughtful rulemaking process. So it wasn't meant to be, I don't think it would, it's fair to consider that, consider this as a, let's just punt it to the PUC. It was a very thoughtful and very deliberative discussion that they came to this.

Curious, what is your understanding of what the governor's position is on the liability cap?

You know, ultimately he has to sign off on what the PUC rules are. well um again i can't speak for the governor um but the governor's office was uh they always play a very active role um in any legislative session um uh they they did provide testimony on various uh stages of this bill as it worked through the legislative process um ultimately having the governor have that say uh once the puc completes the rulemaking it provides the governor his opportunity to to weigh in um and have have any any other thoughts considered by the puc if necessary so i think overall again the outcome of the bill provides for appropriate process and input uh from from many stakeholders including the governor got it okay um well we'll be watching that to see how it plays out uh appreciate the time and uh you know good luck on the on the process forward Thanks, Jonathan.

And that will conclude our question and answer session. I'll hand the call back over to Scott Sewell for closing remarks.

Well, I just want to thank everybody again for joining us today. In closing, I want to reiterate that we are in a stronger position today than at any point since the 2023 Maui wildfires. Our position is a direct result of the actions that we've taken to regain our financial strength and emerge a stronger, more resilient company. With resolution of the wildfire tort litigation expected over the next year, our simpler business model focused solely on regulated operations, our strong and improving safety profile, and earnings improvement opportunities on the horizon, we're very optimistic about our future. So thank you again, everybody.

This will conclude today's call. Thank you all for joining. You may now disconnect.