Slide 1: Investor Presentation – November 2013
Investor Presentation – November 2013
Slide 2: Forward-looking statements
Statements in this presentation that set forth expectations or predictions are based on facts and situations that are known to us as of November 13, 2013, the date of this filing. Actual results may differ materially, due to risks and uncertainties, such as those described on pages 9-15 of our 2012
Slide 3: Key Investment Highlights
Key Investment Highlights Great brand equity Leading market share in core Hawaii and Guam shipping lanes Significant advantages in premium China service Superior asset quality and flexibility Experienced management team Strong balance sheet and cash flow generation Attractive cash dividend
Slide 4: The Matson Brand
The Matson Brand Premier Ocean Transportation and Logistics Provider 130 years of Leadership in the Pacific Service and Reliability Beyond the Norm Financial Stability Delivering Value to Our Customers
Slide 5: Matson Ocean Transportation
Matson Ocean Transportation Hawaii: 3 Inter-island Barges LTM = Last twelve months as of September 30, 2013 HON = Honolulu; LB = Long Beach; OAK = Oakland; SEA = Seattle 2 Ships HON / OAK / LB 2 Ships HON / SEA / OAK 5 Ships LB / HON / Guam / China
Slide 6: Hawaii Service Third Quarter Performance
Hawaii Service Third Quarter Performance Volume down 3.1 percent, after strong 1H gains Lull spread across several cargo types Favorable cargo mix helped offset volume decline Benefited from 9-ship fleet deployment Outlook for 4Q 2013 Expect volume near or modestly lower than prior year Core 9-ship
Slide 7: Hawaii: Economic Indicators
Hawaii: Economic Indicators Indicator (% Change YOY, except Unemployment rate) 2011 2012 2013F 2014F 2015F 2016F Real Gross Domestic Product 1 2.1 1.6 2.6 2.4 2.4 2.3 Visitor Arrivals 1 4.0 9.6 4.3 3.2 2.3 1.1 Construction Jobs 2 (0.3) 2.4 7.0 10.8 11.1 8.5 Residential Building Permits 2 (13.5) 18.6
Slide 8: Dedicated Terminals Via SSAT Joint Venture
35% ownership stake in 6 west coast terminals Strategic Benefits Guaranteed berth/cranes Quick turn of vessels Maintain sailing schedules Fast cargo availability Quick truck turns Quick yard turns Flexibility to receive freight close to departure Increased customer satisfaction Dedicated Terminals V
Slide 9: SSAT Joint Venture Third Quarter Performance
SSAT Joint Venture Third Quarter Performance Results impacted by higher than expected transition costs at Oakland terminal Overall market is flat on YOY basis Outlook for 4Q 2013 Oakland transition to be completed, positioning JV well for 2014 and beyond Modest losses expected
Slide 10: Guam Service
Guam Service Outlook for 4Q 2013 Muted ongoing economic activity Volume similar to 2012, assuming no new competitor enters market Third Quarter Performance Volume down slightly due to timing of vessel sailings Adverse arbitration decision related to previously co-owned terminal assets impacted trade
Slide 11: China Expedited Service (CLX)
China Expedited Service (CLX) Source: Shanghai Shipping Exchange Third Quarter Performance Volume decrease due to additional sailing in prior year Ships running full Seeing expansion of premium for expedited services amid market rate erosion Outlook for 4Q 2013 Volume similar to 2012 Expect freights
Slide 12: Matson Logistics: A National Network of Integrated Services
Matson Logistics A National Network of Integrated Services Seattle Portland Houston Reno St Paul Chicago Birmingham Dallas Philadelphia Atlanta Savannah Jacksonville Akron Indianapolis Long Beach Phoenix Boston Columbus SF/ Oakland Warehousing & Distribution China Supply Chain Services Domestic & In
Slide 13: Matson Logistics Third Quarter Performance
Matson Logistics Third Quarter Performance Higher intermodal and highway volume Lower G&A Source: Association of American Railroads Outlook for 4Q 2013 Ongoing expense control focus Margins of 1-2% of revenues Significantly higher YOY performance due to warehouse consolidation and intangibles relate
Slide 14: Seasoned Management Team
Seasoned Management Team Name Title Matson Years in Transportation Matthew J. Cox President & CEO 2001 24 Joel M. Wine SVP & CFO 2011 2 Ronald J. Forest SVP, Operations 1995 35 David L. Hoppes SVP, Ocean Services 1989 32 Kevin C. O’Rourke SVP, General Counsel 1992 35 Vic S. Angoco SVP, Pacific 1996
Slide 15: 3Q2013 Condensed Income Statement
3Q2013 Condensed Income Statement (in $ millions) 3Q13 3Q12 Operating Revenue Ocean transportation $310.1 $ 307.1 Logistics revenue 104.9 94.3 Total operating revenue 415.0 401.4 Costs and Expenses Operating costs 353.6 337.0 Selling, general and administrative 31.8 30.6 Equity in loss (income) of t
Slide 16: Condensed Balance Sheet
Condensed Balance Sheet Assets (in $ millions) 9/30/13 12/31/12 Cash $ 81.8 $ 19.9 Other current assets 230.3 214.2 Total current assets 312.1 234.1 Investment in terminal joint venture 56.6 59.6 Property, net 736.2 762.5 Other assets 115.3 118.1 Total $1,220.2 $1,174.3 Liabilities & Shareholders’ E
Slide 17: Cash Generation and Uses of Cash
Generated $137.8 million in cash flow from operations YTD Maintenance capex of $19.7 million YTD Paid $19.9 million in dividends Reduction of debt by $32.7 million Increased cash position by $61.9 million Cash Generation and Uses of Cash * Does not include $5.7 million in Other Uses of Cash
Slide 18: $100 Million Senior Unsecured Debt Private Placement
Attractive 4.35% fixed rate 30-year final maturity, 14.5-year weighted average life No amortization until 2021 Proceeds for general corporate purposes Substantially same financial covenants as existing $219 million senior unsecured notes Expected funding in January 2014, subject to customary closing
Slide 19: 4Q2013 Outlook
Outlook excludes any molasses release impact, which is unknown Ocean Transportation operating income for 4Q13 expected near or slightly below prior year levels: Hawaii volume modestly lower Flat Guam and China volume Modest erosion in China rates Core 9-ship fleet deployment Modest losses at SSAT Lo
Slide 20: Introducing the Aloha Class
Delivery expected in 3Q/4Q 2018 First ship named in honor of Senator Inouye Introducing the Aloha Class Two 3600 TEU dual fuel, LNG capable containerships from Aker Contract price $418 million
Slide 21: The Case for New Builds
The Case for New Builds Expanded capacity allows for continuation of 9-ship fleet deployment as the market recovers over the next 5+ years Renews Hawaii fleet Will continue superior schedule and cargo reliability to Hawaii Market Leadership Compelling financial returns in excess of cost of capital B
Slide 22: Aloha Class Specifications
Aloha Class Specifications Green Ship Technology 3600 TEU capacity Optimized speed to ensure cargo reliability Additional 45-foot capacity Additional reefer outlets Cell guide spacing (constr. materials) Neighbor Island accessible Fuel efficient hull Dual fuel engines, conventional fuel oils or LNG
Slide 23: LNG Capable
LNG Capable Potentially cheaper source of fuel Dual fuel engines part of vessel design Additional ~$20 million per vessel to complete LNG installation Decision will be driven by LNG availability at the US West Coast ports
Slide 24: Compelling Investment
Compelling Investment Significantly lowers cost per TEU in Hawaii fleet Cost efficiencies driven by: Maintaining 9-ship deployment at significantly higher volumes Lower operating costs of modern vessels Lower fuel consumption – ~30% on a per TEU basis using conventional fuel oils Lower crewing, main
Slide 25: Appendix: Historical Data and Reconciliations
25 25 Appendix Historical Data and Reconciliations
Slide 26: EBITDA and Capex
EBITDA1, 2 (in $ Millions) EBITDA and Capex 1 EDITDA and capital expenditure information extracted from previously filed Form 10-Ks which include other income and exclude intercompany income. 2Operating Income is from continuing operations. 2011 expenses included CLX2 costs of $7.1 million primarily
Slide 27: Ocean Transportation Operating Income
More detailed information is available in previously filed Form 10-Ks and 10-Qs Ocean Transportation Operating Income Operating Income Operating Margin 10-year Average Annual Operating Income: $101.4 million $ millions Adjusted Operating Income Operating Margin $93.2 $105.6 $126.5 $105.6 $57.8 $73.7
Slide 28: SSAT Investment Pre-Tax Income (Loss)
Pre-Tax Income (Loss) SSAT Investment More detailed information is available in previously filed Form 10-Ks and 10-Qs 10-year Average Annual Pre-tax Income: $8.5 million $ millions $4.7 $17.1 $13.3 $10.7 $5.2 $6.2 $12.8 $8.6 $3.2 $3.4 $0 $2 $4 $6 $8 $10 $12 $14 $16 $18 $20 2003 2004 2005 2006 2007 2
Slide 29: Logistics Operating Income
Logistics Operating Income More detailed information is available in previously filed Form 10-Ks and 10-Qs Operating Income Operating Margin 10-year Average Annual Operating Income: $10.8 million $ millions Operating Income Operating Margin $4.3 $8.9 $20.8 $21.8 $18.5 $6.7 $7.1 $14.4 $4.9 $0.1 $0 $5
Slide 30: Non-GAAP measures definitions
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, help investors understand our ability to incur and service debt and to make cap
Slide 31: GAAP to Non-GAAP Reconciliation (Net Debt and EBITDA)
GAAP to Non-GAAP Reconciliation (Net Debt and EBITDA) (in $ millions) Third Quarter Last Twelve Months (LTM) 2013 2012 Change As of September 30, 2013 Net Income 17.2 19.1 (1.9) 62.0 Subtract: (Income) loss from discontinued operations - (0.1) 0.1 0.1 Add: Income tax expense 6.4 11.2 (4.8) 29.5 Add:
Slide 32: GAAP to Non-GAAP Reconciliation (ROIC)
Dollars in Millions, unless otherwise noted 2012 Net Income 45.9 Subtract: Loss from discontinued operations (6.1) Add: Interest expense (tax effected)1 7.2 Total Return 59.2 Total Debt 319.1 Shareholder Equity 279.9 Total Invested Capital2 599.0 ROIC (Total Return/Total Invested Capital) 9.9% The e
Slide 33: GAAP to Non-GAAP Reconciliation (EBITDA)
GAAP to Non-GAAP Reconciliation (EBITDA) Dollars in Millions 2002 2003 2004 2005 2006 2007 2008 2009 2010 Segment Operating Income Excluding Discontinued Ops 45.5 97.5 119.0 142.6 126.8 148.0 124.1 64.5 125.4 Segment Depreciation and Amortization 51.2 51.9 58.0 60.9 59.6 65.2 68.5 70.6 70.8 EBITDA 9