Hawaiian Electric Industries, Inc. (HE) Cash Flow Statement

The negative OCF in 2026Q2 appears to be a one-off event, likely driven by large regulatory deferrals or settlement payments, but it underscores the unpredictability of cash generation under current regulatory scrutiny. Excluding that quarter, OCF has been relatively stable, averaging around $100M per quarter, which suggests the core utility operations still generate positive cash flow. However, the volatility may indicate that the regulatory construct is not providing timely recovery of costs, a key risk for investors.

The CAPEX/OCF ratio has exceeded 100% in several quarters, indicating that HE is funding capital investment with external capital or cash reserves. This is typical for utilities, but the scale of investment appears insufficient for the company's stated renewable goals and wildfire mitigation needs. The 2024Q4 CAPEX of $282.4M is an anomaly, likely reflecting a one-time asset acquisition or write-down, but the overall trend suggests a stalled capital program that could impair rate base growth and future earnings.

The company appears to be relying on credit facility drawdowns to fund operations, as evidenced by the recent drawdowns mentioned in disclosures. The lack of new long-term debt issuance suggests that capital markets may be closed to HE at reasonable terms, given the legal overhang. The $556.7M stock issuance in 2024Q3 provided a temporary buffer, but the balance sheet remains strained, with a debt-to-equity ratio that appears understated. Investors should monitor the company's ability to refinance upcoming maturities and access new capital.

The suspension of the dividend is a clear sign of financial distress, as the company prioritizes liquidity over shareholder returns. Even before the suspension, OCF-to-dividend coverage was strong, but the legal liabilities from the Maui wildfires likely made the payout unsustainable. The absence of dividends may also deter income-focused investors, further pressuring the stock price. The key question is whether the dividend will be reinstated once the litigation is resolved, but that appears uncertain.

The large depreciation and amortization charge in 2026Q2 may indicate a write-down of assets, possibly related to wildfire damage or impaired generation assets. This non-cash charge inflates reported earnings relative to cash generation, as evidenced by the negative OCF in the same quarter. Investors should adjust for such items to assess the true cash-earnings power of the utility. The bank segment's provision for credit losses may also distort the consolidated picture, requiring a sum-of-the-parts analysis.