Hawaiian Electric Industries, Inc.

Good afternoon, and thank you for attending today's Hawaiian Electric Industries Earnings Conference call. My name is Don Yeo, and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question, please press star followed by one on your telephone keypad. It is now my pleasure to pass the conference over to our host, Mateo Garcia, Director of Investor Relations. Mateo, the floor is yours.

Thank you, Danielle. Welcome everyone to HAI's full year and fourth quarter 2022 earnings call. Joining me today are Scott Siu, HAI President and CEO, Paul Ito, HAI CFO, Shelly Kimura, Hawaiian Electric President and CEO, Ann Teranishi, American Savings Bank 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. Now, Scott will begin with his remarks.

Aloha kākou. Greetings, everyone. Thank you for joining us today. I'll give an overview of our results and accomplishments over the past year, update you on the Hawaii economy, and then turn the call over to Paul to further discuss our financial results and guidance. 2022 was a year of strong achievement for HEI, highlighting the strategic benefits we continue to see from our combination of companies. We earned $241 million in net income and $2.20 in earnings per share for the full year. reflecting solid performance at both the utility and bank. Despite an unprecedented combination of macroeconomic challenges occurring in the first full year under our new regulatory framework, Hawaiian Electric grew earning 6% year over year to $189 million. This was consistent with our expectations and in line with the improved guidance we messaged during our third quarter webcast. ASB had a strong year as well, with the strongest loan growth in a decade, reflecting continued solid credit quality and a healthy Hawaii economy. Bank earnings of $80 million were in line with the increased earnings guidance we communicated in the third quarter. As a reminder, the $101 million the bank earned in 2021 reflected benefits from unique pandemic recovery related items that Paul will highlight later. Last week we raised our annual dividend for the fifth year in a row, reflecting our confidence that our combination of companies will continue to deliver steady results going forward. Turning to slide three. 2022 was our first full year of performance-based regulation or PBR. Given the unusual convergence of macro headwinds during the year, We saw 2022 as a successful stress test of this new regulatory framework. Our utilities showed an ability to quickly adjust and maintain operational efficiency despite multiple challenges from inflation, interest rates, and fuel costs. We executed well and delivered earnings growth even in these stress test conditions. We recognize that 2022 was not an easy year for our customers. Historically high inflation and oil prices rising borrowing costs, and volatile food and commodity prices challenged Hawaii as they did the rest of the nation, and we responded by finding more ways to care for our customers in need of assistance. Elevated fuel prices and the resulting customer bill pressures seen in 2022 further highlight the importance of our renewable energy transition. In 2022, we continue to execute on key elements of the utility's Climate Change Action Plan. which targets reducing carbon emissions in 2030, 70% below 2005 levels, and achieving net zero carbon emissions by 2045. In September, we achieved a major milestone in our climate change action plan with the retirement of Hawaii's last coal plant. Despite global supply chain challenges that have impacted renewables projects nationwide, we reached an important milestone last summer. when O'ahu's first utility scale solar plus storage project was energized, and last month we brought another of these projects online. We continue to expand our procurement of renewables, and in 2022 we laid the groundwork for our recently launched Stage 3 RFP. Based on the amount of renewable energy we're seeking, this would be our largest renewables procurement ever. In 2022, we achieved a renewable portfolio standard or RPS level of 39.1%, up from 38% in 2021. I'll note here that there is a new definition of RPS now in effect under Hawaii state law. Going forward, we'll only reference RPS achievement in terms of the new definition, which is consistent with the RPSA performance incentive mechanism. Under the new definition, our 2022 RPS achievement was 31.8%, up from 31% in 2021. Even with the new definition, we expect to meet the 40% RPS by 2030 milestone ahead of schedule. Customer-owned renewable generation remains key to moving Hawaii towards 100% renewable energy. Our battery bonus program, which provides a cash incentive and bill credits, for customers to add storage to existing or new rooftop solar systems made great progress in 2022. This is an innovative program that benefits both the battery bonus customer and other customers on the broader energy system, as the batteries are programmed to discharge to the grid during the EAP period. Our utility is taking additional steps to ensure our renewables transition benefits the communities we serve. In November, the utility selected seven solar projects across the islands for our community-based renewable energy program for customers who meet low and moderate income levels and are unable to install privately owned rooftop solar. The electrification of transportation is also key to a greener Hawaii, and in 2022, the utility launched the Charge Up Commercial Pilot Program to help non-residential customers reduce the upfront investment and complexity of installing EV charging stations. Turning to the bank. American Savings Bank continued to perform very well through 2022, demonstrating the value of its conservative management approach, good credit quality, and low-cost funding base. ASB continues to generate a dividend that provides efficient capital to support both our consolidated investment-grade capital structure and our growing dividends to shareholders. ASB leveraged its strong customer relationships and best-in-class customer service to grow loans by 15% in 2022, the strongest growth in over a decade, while maintaining our high standards of loan underwriting. As Paul will discuss shortly, we expect loan growth to return to more normalized levels in 2023. Excluding the pandemic recovery related items unique to 2021, the bank grew earnings meaningfully in 2022, while continuing to execute on key initiatives such as digital transformation. For example, ASB implemented Zelle in 2022. providing customers with a secure, fast, and convenient way to send money digitally to friends and family. We've continued to see an accelerated pace of digital adoption, first brought on by the pandemic, and over half of transactions are now executed through digital channels, compared to less than 20% pre-pandemic. Turning to the economy. Hawaii's economy has continued to show signs of strength and resilience. and we believe it remains well-positioned to weather potential economic headwinds. The University of Hawaii Economic Research Organization , which provides the most frequent forecasts of our state's economy, is not expecting a recession in 2023, in part due to continued recovery of Japanese tourism and surging public sector construction. The strength of Hawaii's economy is also evident in the strong loan growth our bank generated this past year in both residential and commercial real estate. Hawaii's unemployment rate was down to 3.2% in December, continuing the downward trajectory we saw throughout the year. Our state's unemployment has been lower than the national average since October, and this is notable as we had the highest unemployment in the nation during the early days of the pandemic. Employment here has fared comparatively well during downturns and performed better than the national average during the financial crisis. Hawaii's housing market had a strong year, with housing prices remaining near record levels despite slower sales activity due to higher interest rates. The median O'ahu single-family home price was $1.1 million for the full year, up 11.6% versus 2021. Tight supply continues to characterize Hawaii's housing market, supporting housing prices through downturns and contributing to the strong credit quality of our bank loan portfolio. Tourism arrivals recovered to over 91% of pre-pandemic levels as of December, primarily due to a strong recovery in domestic travel. Visitor spending for the full year was up 9% from 2019 levels. As I hand the call over to Paul, I'm pleased to say that he is now our CFO after serving as our interim CFO since July of last year. Many of you likely saw our press release last month announcing Paul's appointment effective January 1. I look forward to continuing to work with him in this capacity, and we're excited to have him in the CFO seat. And with that, I'll turn the call over to Paul.