Hawaiian Electric Up on Q1 Earnings Beat - Analyst Blog

Hawaiian Electric Industries Inc. HE posted first quarter 2014 earnings of 45 cents per share, beating the Zacks Consensus Estimate and ahead of the year-ago figure of 34 cents by 32.3%.The year-over-year upside was primarily attributable to solid performance from its Electric Utility.

This did not go unrecognized by the investors with shares gaining 2.71% on May 7, to close at $23.85 per share.

Total Revenues

Total revenues at the end of the reported quarter were $783.8 million, up a marginal 0.2% year over year. Reported results were also higher than the Zacks Consensus Estimate of $739.0 million by 6.1%.

Operating Statistics

Total expenses were down 2.5% year over year to $695.4 million. The cost reduction strategy of the company worked out well as all segments reported a year-over-year decline in expense.

Total operating income was $88.3 million, up 28.3% year over year.

Segment Details

Electric Utility: Segment revenues in the reported quarter were $720.1 million, up 0.4% year over year. Segment net income increased 45.1% year over year to $35.4 million. The results reflect lower operations and maintenance expense, partially offset by higher depreciation expense.

Banking: Segment revenues in the reported quarter were $63.6 million, down 1.7% year over year. Hawaiian Electric's Banking segment recorded a net income of $14.5 million in the reported quarter, up 2.1% from $14.2 million in the year-ago quarter. The year-over-year increase was due to a gain on the sale of the municipal bond securities portfolio and lower non-interest expenses.

Other: Revenues from this segment were $68 million, up 94.3% year over year. The segment reported a quarterly net loss of $4.0 million, narrower than the year-earlier loss of $4.9 million. The narrower loss was primarily due to lower interest expense and higher tax benefits.

Financial Update

Cash and cash equivalents as of Mar 31, 2014, were $269.1 million, up from $220.0 million as of Dec 31, 2013. Long-term debt, net other than bank was $1,492.9 million, unchanged from the 2013 year-end level.

Cash from operating activities at the end of first quarter 2014 was $19.4 million versus $48.3 million in the comparable year-ago quarter. Capital expenditure in the reported quarter was $65.8 million, down 7.3% year over year.

Other Company Release

DTE Energy Company DTE reported first quarter 2014 operating earnings per share of $1.69, beating the Zacks Consensus Estimate of $1.41 by 19.8%.

Entergy Corporation's ETR first quarter 2014 operational earnings came in at $2.29 per share in the quarter, beating the Zacks Consensus Estimate by 8.5%.

CMS Energy Corporation CMS posted first-quarter 2014 earnings per share of 75 cents, beating the Zacks Consensus Estimate of 64 cents by 17.2%.

Our Take

Hawaiian Electric was able to keep the earnings streak alive as a healthy Hawaiian economy continued to support the company's banking services. In addition, Hawaiian Electric's focus on generating more electricity from green sources and deactivating costlier old generation units is appreciable.

Despite an improving Hawaiian economy, the non-performing assets ratio of 1.12% is a concern. We expect the company to bring down this ratio further like it did in the reported quarter.

The company presently has a Zacks Rank #3 (Hold).