Hawaiian Electric Industries Inc. (HE) reported financial results for first quarter 2010. Earnings per share (EPS) came in at 29 cents, a penny below the Zacks Consensus Estimate of 30 cents and the year-earlier earnings of 22 cents per share.
Operational Performance
Hawaiian Electric recorded revenues of $619 million in the reported quarter compared with $543.8 million in the year-ago quarter. The company reported a consolidated net income of $27.1 million compared with $20.4 million in the year-ago quarter.
Segmental Results
Electric Utility: Hawaiian Electric’s Electric Utility segment net income increased to $18.1 million in the reported quarter compared with $14.1 million in the year-ago quarter. Income was boosted by interim rate relief and higher kilowatt-hour sales. These were partially offset by higher operations and maintenance expenses, financing costs and depreciation expense. On the revenue front, the company registered revenues of $548.1 million compared with $461.8 million in the year-ago quarter.
Banking: Hawaiian Electric’s Banking segment recorded a net income of $13.7 million in the reported quarter, compared with a net income of $10.9 million in the year-ago quarter. The quarter’s performance was boosted by lower provision for loan losses, cost savings from performance improvement projects, and higher non-interest income.
These increases were partially offset by lower net interest income and idle cash not generating any income due to depressed market rates. Net interest margin was 4.18% compared with 4.11% in the year-ago quarter.
Other: Hawaiian Electric’s Other segment suffered a net loss of $4.7 million in the reported quarter compared with $4.6 million in the year-ago quarter.
Financial Condition
Hawaiian Electric ended the reported quarter with cash and cash equivalents of $341.3 million compared with $161.4 million in the year-ago period. The company generated $9.9 million of cash flow from operating activities in the reported period compared with $115.7 million generated in the year-ago period. Long-term debt remained unchanged year over year at $1.1 billion.
Outlook
Hawaiian Electric’s fiscal 2010 EPS as per the Zacks Consensus Estimate is presently $1.50. We currently have a market Neutral recommendation on Hawaiian Electric. Given the company’s electric business and unique banking operations, the case for a market-Neutral rating is supported by a high dividend yield and the near-monopoly status in its area of operations within the utility and banking industries.
Operational Performance
Hawaiian Electric recorded revenues of $619 million in the reported quarter compared with $543.8 million in the year-ago quarter. The company reported a consolidated net income of $27.1 million compared with $20.4 million in the year-ago quarter.
Segmental Results
Electric Utility: Hawaiian Electric’s Electric Utility segment net income increased to $18.1 million in the reported quarter compared with $14.1 million in the year-ago quarter. Income was boosted by interim rate relief and higher kilowatt-hour sales. These were partially offset by higher operations and maintenance expenses, financing costs and depreciation expense. On the revenue front, the company registered revenues of $548.1 million compared with $461.8 million in the year-ago quarter.
Banking: Hawaiian Electric’s Banking segment recorded a net income of $13.7 million in the reported quarter, compared with a net income of $10.9 million in the year-ago quarter. The quarter’s performance was boosted by lower provision for loan losses, cost savings from performance improvement projects, and higher non-interest income.
These increases were partially offset by lower net interest income and idle cash not generating any income due to depressed market rates. Net interest margin was 4.18% compared with 4.11% in the year-ago quarter.
Other: Hawaiian Electric’s Other segment suffered a net loss of $4.7 million in the reported quarter compared with $4.6 million in the year-ago quarter.
Financial Condition
Hawaiian Electric ended the reported quarter with cash and cash equivalents of $341.3 million compared with $161.4 million in the year-ago period. The company generated $9.9 million of cash flow from operating activities in the reported period compared with $115.7 million generated in the year-ago period. Long-term debt remained unchanged year over year at $1.1 billion.
Outlook
Hawaiian Electric’s fiscal 2010 EPS as per the Zacks Consensus Estimate is presently $1.50. We currently have a market Neutral recommendation on Hawaiian Electric. Given the company’s electric business and unique banking operations, the case for a market-Neutral rating is supported by a high dividend yield and the near-monopoly status in its area of operations within the utility and banking industries.
The positives are offset by existing risks associated with the outcome of regulatory disputes, a weak Hawaiian economy due to the global recession and volatile financial market, and uncertainties prevailing over the sustainable strength of the Japanese economy. The state of the Japanese economy influences the performance of the company since a substantial chunk of its revenues is derived indirectly from the Japanese tourist traffic in Hawaii.
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