Hello, and thank you for standing by. My name is Regina, and I will 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 speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] I would now like to turn the conference over to Mateo Garcia, Director of Investor Relations. Please go ahead.

Thank you. Welcome, everyone, to HEI's first quarter 2025 earnings call. Joining me today are Scott Seu, HEI President and CEO; Scott DeGhetto, HEI Executive Vice President and CFO; Shelee 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 measures. 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 Seu will begin with his remarks.

[Foreign Language] 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 settlement agreement. 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. Last quarter, 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. This progress has continued in 2025 with the important strides made to resolve the Maui wildfire tort litigation, while laying a foundation for financial strength and resilience moving forward. In February, the Hawaii State Supreme Court issued a decision resolving the outstanding issue with insurers who filed subrogation claims related to the Maui wildfires. The court clarified 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 the settlement. With this critical supportive Supreme Court decision, the remaining administrative steps required to finalize the settlement are expected to be completed early next year, after which we'll 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. As a reminder, 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,…

Thank you, Scott. I'll start with our financial results for the quarter on Slide 6. In the first quarter, we generated net income of $26.7 million or $0.15 per share. The quarter's results include a $13.2 million pretax loss on sale recorded at Pacific Current resulting from the sale of its largest asset, the Hamakua power plant. The quarter's results also include $4.5 million of pretax 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 share. This compares to core income from continuing operations of $28.4 million or $0.26 per share in the first quarter of 2024. As a reminder, income from continuing operations is the appropriate 2024 metric to compare to as it excludes 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 and lower bad debt expense, partially offset by higher wildfire mitigation program expenses and higher insurance costs. Holding 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…

[Operator Instructions] Our first question comes from the line of Nicholas Campanella with Barclays.

Hi. This is Michael Brown on for Nicholas Campanella. First question is, do you anticipate a positive feedback from the rating agencies if SB 897 is signed into law? How do you think that they will view that?

Yeah. The simple answer to that is yes. We don't want to speculate on 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 as well as a number of other key milestones, including the final court approval of the settlement agreement, that those are all credit positives.

My next question is, if SB 897 is signed into law, is this like -- what kind of step forward is this for the wildfire fund going forward?

Mike, this is Scott. See, I'm not quite sure -- your question with respect to 897 is what?

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

Well, as part of the 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 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.

Thank you.

Our next question will come from the line of Julien Dumoulin-Smith with Jefferies. Please go ahead.

Hey, good afternoon. Good morning, or good afternoon. Thank you for the time. Let me just pick up on SB 897 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 appropriate or 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, Julien. 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 which are listed in the bill itself. And the PUC will take into account -- 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 establish exactly what the best form is to serve the purposes of the cap.

And if I can just add a little bit more color to that, Julien -- this is Shelee, 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 at $1 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 ratepayers -- 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 term -- 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 ahead?

So -- and I know you ask this every quarter, and I tend to answer it the same, Julien, 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. 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 will be a combination of both debt and equity.

Yeah. No, fair enough. I get it's preliminary. We're all chopping at the bit, and I hope you appreciate that, Scott. Look, let me ask...

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

Got it. And you talked about getting to the final line on some of the stuff. I mean how do you think about -- 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?

Yes. So at this stage, I mean, that was probably one of the most important decisions 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, individual plaintiffs approval of their settlement as well. After you get to the class settlement, preliminary approvals, then there's some administrative steps, including notice to the class, 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 in the first quarter of 2026. And then following that, we would make our first payment.

One other point, Julien, 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. Appreciate you following. Hi, guys. Thank you all very much. Appreciate it. Best of luck.

Thanks, Julien.

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, obviously, it's for the wildfire mitigation and resiliency investment. Is that -- will you approach it that way as a securitization or is it something we could see as an investment to generate earnings on?

Yes. Mike, the way that SB 897 is drafted is that it appears as though the first $500 million of utility CapEx towards wildfire mitigation would be using the securitization method.

Okay. Thank you. And then to follow up on the financing, is there -- I know you talked about combo of debt and equity over time. The settlement period is over four years. Is there a scenario where you could be opportunistic with some block equity or your ATM in the event your -- 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, that's changing on a daily basis, if not more frequently than that. And so 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, two, three and four years from now, we're looking at financing the balance of those payments. I mean if it made sense to prefund based upon what was happening in the markets at a particular time, yes, we would absolutely look at taking advantage. But right now, we're not -- we don't have any current plans in the near future to finance any of those payments. Again, the first payment will not be made until first quarter of 2026, at least that's the time line that we believe will play out.

Great. And then, thank you – and then, lastly for me, just wondering if you could talk about the planned rate case filing, the key components of it. Is it going to be a 12 month forward test year? And what are your expectations for potential revisions to the five year PBR framework?

Yes. I'll kick things off here and maybe if Shelee or others from the utility want to add in. But essentially, what's happening, Mike, is when PBR was first adopted by the PUC, they established that the current multiyear rate period will end May 31 of next year. The next period, the second multiyear 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, 2027, the utility will go through the process of rebasing the target revenues ahead of the start of the second multiyear 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. It will be -- and the PUC was very explicit in their order. It will be a rate case-like proceeding. 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 PBR context. So it's early on. We are going to be going through this preparation for the filing. And once the filing is made, there's going to be 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 -- 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. 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 positively or negatively.

Yes.

Scott, I wanted to go back to Senate Bill 897. Just found it interesting. After months of debate around the issues, why do you think the legislature ultimately just deferred these very important decisions around the liability cap and then potentially creation of the fund to the PUC, just kind of punt it on them?

Yeah. The legislature, I mean, they really spent quite a bit of time digging into what things to consider, how would you establish a methodology, what should be -- what are some other examples, what's happening 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.

Okay. Curious, what is your understanding of what the Governor's position is on the liability cap since ultimately, he has to sign off on what the PUC rules are?

Well, again, I can't speak for the Governor. But the governor's office was -- they always play a very active role in any legislative session. They did provide testimony on various stages of this bill as it worked through the legislative process. Ultimately, having the Governor have that say, once the PUC completes the rulemaking, it provides the Governor his opportunity to weigh in and have 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 from many stakeholders, including the Governor.

Got it. Okay. Well, we'll be watching that to see how it plays out. Appreciate the time and good luck on the process forward.

Thanks, Jonathan.

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

All right. 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.