Matson, Inc. · NYSE:MATX
Matson — Q3 2019 Earnings Presentation
20 slides from Matson's earnings presentation, Nov 7, 2019
Slide 1: Third Quarter 2019 Earnings Conference Call
1 Third Quarter 2019 Earnings Conference Call Third Quarter 2019 Earnings Conference Call November 7, 2019
Slide 2: Forward-Looking Statements
2 Third Quarter 2019 Earnings Conference Call Forward-Looking Statements Statements made during this presentation that set forth expectations, predictions, projections or are about future events are based on facts and situations that are known to us as of November 7, 2019. We believe that our expect
Slide 3: Opening Remarks
3 Third Quarter 2019 Earnings Conference Call Opening Remarks • Recap of Matson’s 3Q19 results: – Consolidated performance as expected – Slightly weaker-than-expected in Ocean Transportation • Strong demand for our CLX service • Weakness in Hawaii market • Softer-than-expected volume in our Alaska s
Slide 4: Current Priorities
4 Third Quarter 2019 Earnings Conference Call Current Priorities Priority Commentary Complete Hawaii service fleet renewal • Lurline on track for delivery later this quarter • Matsonia on track for delivery in 3Q20 Upgrade Sand Island terminal • All three new cranes in service by the end of 3Q19 • D
Slide 5: Hawaii Service
5 Third Quarter 2019 Earnings Conference Call Hawaii Service Third Quarter 2019 Performance • Container volume declined 2.1% YoY – Negative container market growth • Hawaii GDP continues to grow, but at a slowing pace Container Volume (FEU Basis) 30,000 32,000 34,000 36,000 38,000 40,000 Q1 Q2 Q3 Q4
Slide 6: Hawaii Economic Indicators
6 Third Quarter 2019 Earnings Conference Call Hawaii Economic Indicators Real GDP Growth Construction Jobs Growth Select Hawaii Economic Indicators Hawaii’s economy continues to slow, but conditions remain favorable for continued economic growth. Source: https://uhero.hawaii.edu/assets/19Q3_SU_Publi
Slide 7: China Expedited Service (CLX)
7 Third Quarter 2019 Earnings Conference Call China Expedited Service (CLX) Third Quarter 2019 Performance • Container volume decreased 3.4% YoY – Additional sailing in 3Q18 • Continued to realize a sizeable rate premium Container Volume (FEU Basis) Full Year 2019 Outlook • Expect 2019 volume to app
Slide 8: Guam Service
8 Third Quarter 2019 Earnings Conference Call Guam Service Third Quarter 2019 Performance • Container volume decreased 2.1% YoY • Container market was softer YoY Container Volume (FEU Basis) Full Year 2019 Outlook • Expect volume to approximate the 2018 level – Highly competitive environment remains
Slide 9: Alaska Service
9 Third Quarter 2019 Earnings Conference Call Alaska Service Third Quarter 2019 Performance • Container volume was flat YoY – Slightly lower NB volume; impacted by timing of an additional NB sailing in 3Q18 – Modestly higher SB volume Container Volume (FEU Basis) 10,000 12,000 14,000 16,000 18,000 2
Slide 10: SSAT Joint Venture
10 Third Quarter 2019 Earnings Conference Call SSAT Joint Venture Third Quarter 2019 Performance • Terminal joint venture contribution was $8.4 million, $0.8 million lower than last year – Higher terminal operating costs – Timing of the additional expense related to the early adoption of new lease a
Slide 11: Matson Logistics
11 Third Quarter 2019 Earnings Conference Call Matson Logistics Third Quarter 2019 Performance • Operating income increased $1.4 million YoY to $11.3 million – Positive contributions from nearly all service lines – YoY increase primarily driven by Span Alaska Operating Income Full Year 2019 Outlook
Slide 12: New Span Alaska Anchorage Facility
12 Third Quarter 2019 Earnings Conference Call New Span Alaska Anchorage Facility • Consolidated two leased facilities into one larger- owned facility • Expect significant operating efficiencies • Capacity for long-term growth and service offering expansion
Slide 13: Financial Results – Summary Income Statement
13 Third Quarter 2019 Earnings Conference Call Financial Results – Summary Income Statement See the Addendum for a reconciliation of GAAP to non-GAAP Financial Metrics. (1) Includes a non-cash tax expense reversal of $2.9 million resulting from discrete adjustments in applying the provisions of the
Slide 14: Cash Generation and Uses of Cash
14 Third Quarter 2019 Earnings Conference Call Cash Generation and Uses of Cash ($ 50.0) $ 0.0 $ 50.0 $ 100.0 $ 150.0 $ 200.0 $ 250.0 $ 300.0 $ 350.0 $ 400.0 $ 450.0 Cash Flow from Operations Proceeds from Sale-Leasebacks Net Borrowings Maint. Capex New Vessel Capex (1) Dividends Other Cash Flows Ne
Slide 15: Financial Results – Summary Balance Sheet
15 Third Quarter 2019 Earnings Conference Call Financial Results – Summary Balance Sheet • Total debt of $883.0 million • Net debt of $859.4 million • Net debt-to-LTM EBITDA of 3.2x • We are continuing to look at capital structure optimization alternatives, including Title XI financing See the Adden
Slide 16: New Vessel Payments and Percent of Completion
16 Third Quarter 2019 Earnings Conference Call Percent of Completion(1) Current Delivery Timing Lurline 99% 4Q ’19 Matsonia 41% 3Q ’20 New Vessel Payments and Percent of Completion Actual and Estimated Vessel Progress Payments(2) FY 2019 ($ in millions) 1Q 2Q 3Q Cash Capital Expenditures $ 16.2 $ 6.
Slide 17: 2019 Outlook
17 Third Quarter 2019 Earnings Conference Call 2019 Outlook FY 2019 Outlook Items Operating Income: Ocean Transportation Approximately 25% lower than the $131.1 million achieved in FY 2018 after adjusting 2018 result for full year impact of vessel sale-leaseback Logistics 15 to 20% higher than FY 20
Slide 18: Appendix
18 Third Quarter 2019 Earnings Conference Call Appendix
Slide 19: A Look at 2020
19 Third Quarter 2019 Earnings Conference Call A Look at 2020 NOTE: Numbers used in this slide include previously disclosed: (i) approximately $30 million of total benefits from the 4 new vessels, the magnitude and timing of benefits subject to change based on fleet configuration and in-service timi
Slide 20: Appendix – Non-GAAP Measures
20 Third Quarter 2019 Earnings Conference Call Appendix – Non-GAAP Measures Matson reports financial results in accordance with U.S. generally accepted accounting principles (“GAAP”). The Company also considers other non-GAAP measures to evaluate performance, make day-to-day operating decisions, hel