Hawaiian Electric Industries Inc. ( HE ) announced first
quarter 2013 operating earnings of 34 cents per share, missing the
Zacks Consensus Estimate of 39 cents. Also, earnings came below
year-ago quarterly earnings of 40 cents per share.AMER ELEC PWR (AEP): Free Stock Analysis ReportBROOKFIELD INFR (BIP): Free Stock Analysis
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The results reflect higher non-interest expenses and operation and
maintenance (O&M) expenses.
Total revenue of the company at the end of the reported quarter
was $784.1 million, down 3.8% year over year. Reported results were
also below the Zacks Consensus Estimate of $815.0 million.
Segment Net Income
Electric Utility: Segment net income declined
10.6% year over year to $24.4 million. The results reflect higher
O&M expenses and depreciation expense. However, these were
partially offset by recovery of additional costs for reliability
and clean energy investments, net of lower heat rate
The $5 million year-over-year rise in O&M expenses was a
function of timing stemming from higher customer service
Banking: Hawaiian Electric's Banking segment
recorded a net income of $14.2 million in the reported quarter,
marginally down from $15.9 million in the year-ago quarter. The
decline reflects $1 million for a one-time release of tax-related
reserves, higher non-interest expense and lower net interest income
due to declining asset yields. However, these were partially
offset by the favorable effect of loan growth, higher non-interest
income from higher gains on sales of new residential mortgages
originated in the quarter and lower provision for loan losses, as
the credit quality of the bank's loan portfolio improved along with
the improvement in Hawaii's economy.
Overall, the segment continued to deliver solid results in first
quarter 2013 with a return on average equity of 11.3% and a return
on average assets of 1.12%.
Other: The segment digested a quarterly net loss
of $4.9 million, approximately flat year over year.
Cash and cash equivalents as of Mar 31, 2013 were $262.7 million,
up from $219.7 million as of Dec 31, 2012. Long-term debt, net was
$1,422.9 million, approximately flat year over year. Net cash
provided by (used in) operating activities was $48.3 million versus
($15.7) million in first quarter of 2012.
For 2013, the company expects the rate of operating expenses to be
evenly distributed throughout the year. It expects these expenses
to be flat to up 1% compared to 2012 levels as the company is
working to moderate operational spending in targeted areas.
At the Peer
Recently, American Electric Power Company Inc. (
AEP ) posted
adjusted first quarter 2013 operating earnings of 80 cents per
share, which came in line with the Zacks Consensus Estimate as well
as the year-ago profit. The results reflected solid residential and
commercial sales, stemming from positive regulated rate recovery.
However, this was partly offset by weak industrial sales.
Hawaiian Electric's first quarter earnings and revenue failed to
meet the Zacks Consensus Estimate. However, the company is
progressing well on various strategies across its businesses.
During the quarter, the company invested more than $60 million in
local infrastructure. Also, its common stock offering would bring
in capital, and a more modern electric grid and lower-cost
renewable energy would benefit customers. The company is trying to
reduce its dependence on oil and is constantly seeking ways to
increase the use of lower-cost renewables.
We are nevertheless concerned about lower electricity volume
sales, a tourism-dependant Hawaiian economy and uncertainty over
the Japanese economy. The company presently retains a short-term
Zacks Rank #3 (Hold).
Stocks worth considering in the energy space are
Brookfield Infrastructure Partners L.P. ( BIP ) and
Empresa Nacional de Electricidad S.A. ( EOC ), both with a
Zacks Rank #1 (Strong Buy).