Slide 1: Fourth Quarter 2012 Earnings Conference Call
Fourth Quarter 2012 Earnings Conference Call - February 7, 2013
Slide 2: Forward Looking Statements
Forward Looking Statements Statements made during this call and 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 today, February 7, 2013. We believe that our expectations and assumptions are rea
Slide 3: Opening Remarks
Solid results in Ocean Transportation during the quarter Strong volume in Guam and rate gain in China Acquired primary assets of Reef Shipping in early January $9.5 million debt pay down in 4Q12, $53.7 million since Separation One-time charges in NorCal warehouse operations in 4Q12 Opening Remarks
Slide 4: EBITDA, EPS – 4Q 2012
EBITDA, EPS – 4Q 2012 4Q12 Net Income of $15.6 million versus 4Q11 Net Income of $1.6 million See the Addendum for a reconciliation of GAAP to non-GAAP for Financial Metrics 4Q EBITDA ($millions) $30.4 $40.3 $0.0 $10.0 $20.0 $30.0 $40.0 $50.0 4Q11 4Q12 4Q EPS from Continuing Operations, Fully Dilute
Slide 5: EBITDA, EPS and ROIC – FY 2012
EBITDA, EPS and ROIC – FY 2012 See the Addendum for a reconciliation of GAAP to non-GAAP for Financial Metrics FY12 Net Income of $45.9 million versus FY11 Net Income of $34.2 million FY EBITDA ($millions) $150.2 $168.8 $50.0 $100.0 $150.0 $200.0 $250.0 FY11 FY12 FY ROIC (%) 9.9% 0.0% 4.0% 8.0% 12.0
Slide 6: Hawaii Service
Hawaii Service Fourth Quarter Performance Slight uptick in volume YOY Lower vessel operating costs as fleet returned to 9-ship deployment Barge dry-docking led to higher outside transportation costs Outlook for 2013 Modest volume gains Core 9-ship deployment expected for most of year due to lighter
Slide 7: Hawaii Economic Indicators
Hawaii Economic Indicators 8.6 9.3 7.7 0.6 (2.0) (8.1) Construction Jobs 2 9.3 5.0 2.7 2.5 2014F 4.2 4.6 2.6 2.5 2015F 3.9 9.4 4.0 7.7 Visitor Arrivals 1 Indicator (% Change YOY, except Unemployment rate) 2010 2011 2012F 2013F Real Gross Domestic Product 1 1.4 (0.2) 1.6 2.4 Unemployment Rate 2 6.9 6
Slide 8: SSAT Joint Venture
SSAT Joint Venture Outlook for 2013 Customer loss will negatively impact joint venture contributions Aggressive expense control initiatives Breakeven performance expected Fourth Quarter Performance Customer losses continue to weigh on performance Overall market has contracted slightly Equity in Inco
Slide 9: Guam Service
Guam Service Outlook for 2013 Muted economic activity Volume similar to 2012, assuming no new competitor enters market Military redeployment pushed out to 2015, at earliest Fourth Quarter Performance Container volume up significantly YOY reflecting competitor exit in 4Q2011 Overall market has contra
Slide 10: Matson South Pacific Acquisition
Matson South Pacific Acquisition Acquired primary assets of Reef Shipping for $9.6 million Reef in business since 1968 Four small container ships Approximately 1,300 containers Included two market-rate charters (2/5 year terms) Expansion into strategically attractive adjacent Pacific regions New pla
Slide 11: China Expedited Service (CLX)
China Expedited Service (CLX) Fourth Quarter Performance YOY spot freight rates up significantly Benefits approximately 50% of volume Container volume down 11.4% in 4Q12 Delayed sailing slipped into 2013 Ships running near full capacity Outlook for 2013 Record global capacity added Average annual fr
Slide 12: Matson Logistics
Matson Logistics Fourth Quarter Performance Improvement in domestic intermodal and highway margins Lower G&A $3.9 million one-time charges in NorCal warehousing Outlook for 2013 Expense control focus Improve margins to 1-2% of revenues Operational improvement in NorCal warehousing YOY Growth in AAR
Slide 13: Consolidated Operating Income
Consolidated Operating Income $23.9 ($2.8) $26.7 4Q12 ($2.1) ($0.7) Logistics $12.1 $11.8 TOTAL Change 4Q11 $14.2 Ocean Transportation $12.5 $96.7 $0.1 $96.6 FY12 ($4.8) $4.9 Logistics $18.1 $78.6 TOTAL Change FY11 $22.9 Ocean Transportation $73.7 4Q 2012 Operating Income ($millions) $11.8 $23.9 $0
Slide 14: Ocean Transportation
Ocean Transportation SSAT contributed $0.1 million in 4Q12 and $3.2 million in FY 2012 8.8% $26.7 $303.7 4Q12 $14.2 $12.5 Operating Income 4.4% Oper. Income Margin Change 4Q11 $21.6 Revenue $282.1 8.1% $96.6 $1,189.8 FY12 $22.9 $73.7 Operating Income 6.8% Oper. Income Margin Change FY11 $113.6 Reven
Slide 15: Matson Logistics
Matson Logistics (3.0%) ($2.8) $94.6 4Q12 ($2.1) ($0.7) Operating Income (0.8%) Oper. Income Margin Change 4Q11 $1.8 Revenue $92.8 0.0% $0.1 $370.2 FY12 ($4.8) $4.9 Operating Income 1.3% Oper. Income Margin Change FY11 ($16.2) Revenue $386.4 4Q 2012 Operating Income ($millions) ($0.7) ($2.8) -$4 -$2
Slide 16: Dividend and Capital Expenditures
Declared quarterly dividend of $0.15 2012 capital expenditures were $38.1 million Maintenance capital expenditures expected to be $40-$50 million in 2013 Company may make deposits to the Capital Construction Fund if it is able to finalize its vessel replacement plan Any deposits will impact cash tax
Slide 17: Condensed Balance Sheet
Condensed Balance Sheet 35.5 19.9 Cash Assets (dollars in millions) 12/31/12 6/30/12 Other total current assets 214.2 201.3 Investment in terminal joint venture 59.6 58.7 Property, net 762.5 783.0 Other assets 118.1 111.0 Total $1,174.3 $1,189.5 28.4 16.4 Current portion of long-term debt 179.3 177.
Slide 18: 2013 Outlook
Ocean Transportation operating income for 2013 expected to be modestly higher than 2012, impacted by: Modest uptick in Hawaii volume 9-ship fleet deployment due to lighter dry-dock schedule Flat Guam volume Modest erosion in China rates Break-even performance at SSAT Logistics operating profit expec
Slide 19: Summary Remarks
Summary Remarks Historic year for Matson – Separation, 130th year in service Financial results for the quarter solid, FY results satisfactory Ocean transportation margin improvement expected to continue Taken necessary steps at Logistics to rationalize operations, especially in NorCal warehousing St
Slide 20: Addendum
Addendum
Slide 21: Use of Non-GAAP Measures
Use of 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, help investors understand our ability to incur and ser
Slide 22: GAAP to Non-GAAP Reconciliation (Net Debt and EBITDA)
GAAP to Non-GAAP Reconciliation (Net Debt and EBITDA) 18.6 150.2 168.8 9.9 30.4 40.3 EBITDA 5.5 (11.6) (6.1) 5.0 (5.1) (0.1) Subtract: Loss from discontinued operations 7.9 25.1 33.0 1.3 3.1 4.4 Add: Income tax expense 11.7 34.2 45.9 14.0 1.6 15.6 Net Income 72.1 11.7 2012 Full Year 71.6 7.7 2011 0.
Slide 23: GAAP to Non-GAAP Reconciliation (ROIC)
GAAP to Non-GAAP Reconciliation (ROIC) 7.2 Add: Interest expense (tax effected)1 (6.1) Subtract: Loss from discontinued operations 279.9 Shareholder Equity 59.2 Total Return 9.9% ROIC (Total Return/Total Invested Capital) 45.9 Net Income 599.0 319.1 2012 Dollars in Millions, unless otherwise noted T