Hawaiian Electric Industries, Inc. (HE): BCG Matrix [Dec-2025 Updated]

You need a straight read on Hawaiian Electric Industries, Inc. (HE) right now, and mapping their business units through the BCG Matrix shows a company caught between massive risk and mandated growth. Honestly, the core regulated utility is still a solid Cash Cow, generating $39.6 million in Q3 2025 net income and holding $544 million in unrestricted cash, but that strength is immediately challenged by the looming Question Mark of the $4 billion global wildfire settlement you'll need to finance. We'll break down how their required renewable transition acts as a Star investment, while legacy assets become Dogs, giving you the clear strategic picture you're looking for.

Background of Hawaiian Electric Industries, Inc. (HE)

You're looking to map out the current strategic position of Hawaiian Electric Industries, Inc. (HEI), and to do that right, we first need a solid picture of where the company stands as of late 2025. Honestly, the last couple of years have been a major pivot for this organization.

Hawaiian Electric Industries, Inc. is the holding company for Hawaiian Electric, which is the primary utility serving the islands. To be precise, this subsidiary supplies power to approximately 95% of Hawaii's population. That's a near-monopoly position in a geographically constrained market, which is key context for any portfolio analysis.

The company's recent focus has been on simplifying its structure and managing significant external pressures. HEI has been actively divesting non-utility assets, specifically selling off Pacific Current's solar and battery assets and planning to sell its remaining stake in American Savings Bank. This signals a clear strategic move to focus almost entirely on the regulated utility business.

Financially, the third quarter of 2025 showed a return to stability for the utility arm. Hawaiian Electric, the subsidiary, posted a net income of $37 million for Q3 2025, a sharp turnaround from the net loss recorded in the same quarter of 2024. This improvement was largely due to the absence of major wildfire liabilities from the prior year and higher revenues coming from the annual revenue adjustment mechanism.

For the parent holding company, HEI, the reported net income for Q3 2025 was $31 million, with core income from continuing operations coming in at $33 million, or $0.19 per share. This shows the core utility operations are performing, even while the holding and other companies segment still reported a net loss of $6 million in Q3 2025.

To fund its massive capital needs, especially for grid modernization and safety, HEI has been shoring up its balance sheet. They successfully expanded their credit facility capacity to $600 million from $375 million and completed a significant debt issuance of approximately $500 million. These maneuvers were designed to enhance liquidity for critical investments in generation, safety, reliability, and resilience across the islands.

A major overhang that's finally moving toward resolution is the Maui wildfire tort litigation settlement. The process is advancing toward final court approval, with the first settlement payment expected no earlier than the first quarter of 2026. This progression helps reduce litigation uncertainty, which is a big deal for investor confidence.

The core of the business, the Electric utility segment, remains the overwhelming revenue driver. In Q2 2025, this segment brought in $742.48 million out of the total $746.39 million in revenue. The company is heavily invested in its four-pillar wildfire safety strategy, rolling out measures to medium-risk zones over the next 6 to 12 months.

Hawaiian Electric Industries, Inc. (HE) - BCG Matrix: Stars

You're looking at the core growth engine for Hawaiian Electric Industries, Inc. (HE) right now, which is the massive, mandated transition to clean energy. These are the areas demanding heavy investment to secure future market leadership, even though they currently consume significant cash to fuel that growth.

The utility's mandated renewable energy transition is a high-growth market driven by state policy. Hawaiian Electric achieved a 36% consolidated Renewable Portfolio Standard (RPS) in 2024 for O'ahu, Hawai'i Island, and Maui County, accelerating progress toward the 40% RPS milestone targeted for 2030. The ultimate goal for the State of Hawai'i is achieving 100% renewable energy by 2045.

This transition is being executed through substantial build-outs of utility-scale generation paired with storage, alongside massive customer adoption of distributed resources.

• Customer-sited rooftop solar and battery storage connected capacity surpassed 1 gigawatt as of September 2025.
• The company is executing on plans that include procuring 460 MW of solar energy and nearly 3 GWh of storage capacity.
• The pace of new installations is high; new private rooftop solar installations totaled 61 MW in 2024.

The investment in grid-scale solar and storage projects is concrete and ongoing, representing a high-growth segment where Hawaiian Electric Industries is actively securing capacity.

This necessary growth requires significant capital outlay. Planned capital expenditures for grid modernization and related infrastructure upgrades are projected between $1.8 billion to $2.4 billion for the period spanning 2026 through 2028. For the current fiscal year, 2025 CapEx is estimated at approximately $400 million, with projections for 2026 CapEx set between $550 million to $700 million.

A critical, high-growth investment area is wildfire safety, which is consuming substantial near-term capital to manage operational risk. The expanded Wildfire Safety Strategy for 2025-2027 is estimated to cost about $450 million. Specifically for 2025, $120 million is allocated, or $137 million is budgeted, depending on the filing referenced. This investment includes deploying AI-assisted high-definition video camera stations and weather stations to enhance situational awareness.

• Total 2025-2027 Wildfire Safety Strategy cost: approximately $450 million.
• Capital expenditures for wildfire safety in 2025 alone: $120 million or $137 million.
• Capital portion of the 3-year plan targeting grid hardening: Over three-quarters of the $400 million investment from 2025 to 2027.

Hawaiian Electric Industries, Inc. (HE) - BCG Matrix: Cash Cows

You're looking at the core engine of Hawaiian Electric Industries, Inc. (HEI) here-the regulated utility business. This segment fits the Cash Cow profile perfectly: high market share in a mature, regulated environment, which means the cash generation is highly predictable, even if top-line growth is constrained by regulation.

The core regulated electric utility business, which operates under Hawaiian Electric Company, Hawai'i Electric Light Company, and Maui Electric Company, supplies power to approximately 95% of Hawaii's population. This near-monopoly across five islands-Oahu, the Big Island, Maui, Lanai, and Molokai-creates that stable, monopoly revenue stream you want in a Cash Cow.

To be fair, even Cash Cows face headwinds. The Q3 2025 Utility core net income came in at $39.6 million. That's a step down from the $43.7 million reported in Q3 2024, largely due to increased wildfire mitigation program expenses and higher legal/consulting costs, even though some of those costs were deferred. Still, the utility maintains strong financial footing to support the parent company.

Here's a quick look at how the utility's key figures stacked up in the third quarter of 2025:

The company is definitely milking this segment for capital. The Hawaiian Electric Board of Directors approved a $10 million quarterly dividend to HEI for Q3 2025. That cash flow is vital for the holding company to cover administrative costs, service debt, and pay dividends to shareholders, which is exactly what a Cash Cow is supposed to do.

The focus for this segment isn't aggressive growth promotion, but rather supporting infrastructure to improve efficiency and cash flow. You see this in the capital expenditure plans, which are substantial but aimed at resilience and safety, not market expansion:

• Projected CapEx for 2025: Approximately $400 million.
• Expected CapEx for 2026: Between $550 million to $700 million.
• Total CapEx projected for 2026-2028: Estimated at $1.8 billion to $2.4 billion.

Liquidity remains strong at the utility level, which is key for operational stability. As of the end of Q3 2025, the utility had approximately $504 million in unrestricted cash on hand, with total liquidity availability reaching $544 million. This enhanced liquidity was further supported by a successful $500 million unsecured debt offering in September 2025. This financial flexibility helps them manage the ongoing wildfire mitigation efforts and other long-term grid hardening projects. It's a business unit that generates more cash than it consumes, allowing HEI to fund its riskier Question Marks. You'd want to invest here just to maintain that current level of productivity; it's the bedrock.

The holding company itself maintains a smaller cash buffer, with approximately $40 million in unrestricted cash as of the end of Q3 2025. The utility's cash flow is what defintely keeps the lights on, both literally and financially, for the entire enterprise.

Hawaiian Electric Industries, Inc. (HE) - BCG Matrix: Dogs

Dogs are units or products with a low market share and low growth rates. They frequently break even, neither earning nor consuming much cash. Dogs are generally considered cash traps because businesses have money tied up in them, even though they bring back almost nothing in return. These business units are prime candidates for divestiture.

For Hawaiian Electric Industries, Inc., the Dog quadrant is characterized by assets that are either mandated for retirement, non-core and actively being sold off, or represent significant, non-revenue-generating liabilities tied to risk mitigation. These units require capital but offer low or uncertain future returns within the core utility strategy.

Legacy fossil fuel generation assets represent a category facing forced obsolescence due to the mandate to meet the 100% clean energy goal by 2045. While essential for current operations, their long-term growth is zero, and they are candidates for retirement, making them Dogs from a strategic growth perspective. For instance, the 180 MW AES coal plant on Oahu was previously scheduled for retirement by the end of 2022, and the 38 MW oil-fired Kahului power plant by the end of 2024. The company is also looking to retire two units of its Waiau oil-fired plant, totaling 49 MW, as soon as possible. The fuel composite cost of generation as of November 2025 was 1,649.82 cents per million BTU.

The strategic exit from non-core businesses further defines this quadrant. Pacific Current's divested assets show a clear move to shed units that do not align with the streamlined utility focus. The sale of the 60 MW Hamakua Energy Plant occurred in March 2025. Subsequently, in August 2025, Hawaiian Electric Industries, Inc. closed the sale of Pacific Current's solar and battery storage assets, which was noted as not expected to be material to HEI's financial statements. The strategic review for the remaining asset, a biomass plant on Kauai, continues.

The remaining non-controlling stake in American Savings Bank (ASB), while a source of capital, is a residual holding from a divested non-core segment. Hawaiian Electric Industries, Inc. completed the sale of 90.1% of ASB in January 2025 for $405 million in cash, valuing the bank at $450 million. Hawaiian Electric Industries, Inc. retains a 9.9% non-controlling interest. ASB, Hawaii's third-largest lender, had about $9.3 billion in total assets and accounted for approximately 11% of Hawaiian Electric Industries, Inc.'s consolidated revenue in 2023.

High-risk, non-performing assets in wildfire-prone areas are cash consumers due to necessary mitigation spending, fitting the cash-trap characteristic of Dogs. Hawaiian Electric Industries, Inc. plans to invest $400 million from 2025 to 2027 in wildfire safety. Specifically, $120 million is allocated for 2025 alone, with over three-quarters targeting grid hardening. The financial impact is visible in recent earnings: Q3 2025 results included $4.5 million of pretax Maui wildfire-related expenses net of insurance recoveries and deferrals. For Q2 2025, there were $5.2 million in higher after-tax wildfire mitigation program expenses.

Here is a summary of the key financial and statistical data points associated with these Dog-like segments:

The ongoing capital requirement for risk mitigation is a clear cash drain. The utility plans to invest $400 million between 2025 and 2027 for safety, with $120 million planned for 2025 alone. This spending is necessary to mitigate risks in wildfire-prone areas, which are low-growth areas demanding capital without immediate revenue generation.

The divestiture strategy is designed to remove these non-core, low-growth/high-cost elements. The sale of 90.1% of American Savings Bank for $405 million in cash in January 2025 directly supports debt reduction and funding for utility initiatives, effectively removing a non-utility asset that required management attention.

The legacy fossil fuel assets are structurally Dogs because their market-providing power-is being intentionally phased out to meet the 100% clean energy mandate by 2045. The company is actively replacing this capacity with renewable projects, signaling the low-growth/terminal status of the existing fossil fuel fleet.

• Legacy coal plant retirement targeted by end of 2022 (AES, 180 MW).
• Oil-fired Kahului plant retirement targeted by end of 2024 (38 MW).
• Waiau oil-fired units (49 MW total) targeted for retirement ASAP.
• Pacific Current solar/battery assets sale closed August 2025.
• Hamakua Energy Plant sale closed March 2025.
• HEI Q2 2025 core ROE was 7.2%, below the allowed ROE of 9.5%.

Finance: draft 13-week cash view by Friday.

Hawaiian Electric Industries, Inc. (HE) - BCG Matrix: Question Marks

These business units, defined by high growth prospects but low market share, are currently characterized by the massive, uncertain financial obligations stemming from the Maui wildfire litigation. This liability consumes significant cash flow and creates substantial regulatory and financing risk, fitting the profile of a Question Mark that requires heavy investment or divestiture to resolve its status.

The Ultimate Financial Impact of the Maui Wildfire Litigation

The proposed global settlement for the Maui wildfire tort claims stands at a total of $4 billion advancing through the courts. Hawaiian Electric Industries, Inc. (HEI) and its subsidiary, Hawaiian Electric Company, Inc. (Hawaiian Electric), have agreed to a pre-tax contribution totaling $1.99 billion of that amount. This contribution includes the $75 million previously committed to the One 'Ohana Initiative. The company's Q3 2025 results noted that the settlement continues to advance toward final court approval, with a hearing anticipated in the coming months. The base case assumption is that the first settlement payment will occur no earlier than the first quarter of 2026. One specific payment of $479 million is noted as expected in early 2026. The uncertainty surrounding the final judicial approval and the timing of these large outflows places this liability firmly in the Question Mark category, as it represents a massive potential cash drain with an unclear final resolution timeline.

Here's a summary of the key settlement figures:

Financing the Settlement Contribution

Financing the HEI/Hawaiian Electric portion of the settlement requires substantial capital, necessitating a mix of funding sources. The company intends to finance these payments through a combination of debt, common equity, equity-linked securities, or other potential options. This need for external capital raises the risk profile, as the availability and terms of such financing are not assured. To bolster liquidity ahead of these obligations, Hawaiian Electric Industries expanded its credit facility capacity in September 2025 to $600 million from $375 million. Furthermore, the company completed a significant debt issuance of approximately $500 million in the third quarter of 2025. This followed the April 2025 closing of the $1.9 billion sale of American Savings Bank (ASB), which reduced holding company debt by $384 million and boosted liquidity to $492 million as of Q1 2025. The utility's ongoing wildfire mitigation investment, planned at $120 million for 2025 alone, further compounds the cash consumption.

Regulatory Uncertainty and Future Liability Caps

Regulatory decisions directly impact the cash flow available to service the settlement and fund necessary capital expenditures. Uncertainty remains around the cost recovery for wildfire-related capital expenditures and the establishment of future liability caps under Act 258. Act 258 directs the Public Utilities Commission to establish the maximum amount an electric utility may pay to resolve claims from future covered catastrophic wildfires. The commission has sole discretion to establish these maximum payable amounts and applicable time periods. Meanwhile, the utility continues to manage current operating costs, which include wildfire mitigation expenses. For instance, pre-tax wildfire-related expenses in Q3 2025 were $10 million, partially offset by approximately $6 million in costs deferred pursuant to the Public Utilities Commission's decision. The Energy Cost Recovery Factor (ECRF) for August 2025 was set at 17.959 cents per kilowatt-hour (kWh). A residential customer using 500 kWh would see a typical bill of $194.42 based on the August 1, 2025, rates.

Regulatory mechanisms impacting current cash flow include:

• August 2025 ECR Factor: 17.959 cents per kWh
• Residential 500 kWh Bill (August 2025): $194.42
• Q3 2025 Deferred Wildfire Costs: $6 million
• Q3 2025 Pre-tax Wildfire Expenses: $10 million
• 2025 Wildfire Safety Investment Allocation: $120 million

Sustaining the Dividend

The status of the dividend reflects the tension between operational performance and massive liability management. While the utility dividend to the parent company was suspended in connection with the going concern statement raised in 2024, the holding company, HEI, has continued to receive distributions. The Hawaiian Electric Board declared a $10 million cash dividend payable to HEI for the first quarter of 2025, and a $10 million cash dividend for the second quarter of 2025. Core net income for the holding and other companies was a net loss of $6 million in Q3 2025, an improvement from the $41 million net loss in Q3 2024. The utility's net income for Q3 2025 was $37 million, compared to a net loss of $83 million in Q3 2024, showing utility operations are generating positive cash flow to support the holding company distributions, despite the overall financial strain.