Matson, Inc. · NYSE:MATX
Matson — Q2 2019 Earnings Presentation
23 slides from Matson's earnings presentation, Aug 7, 2019
Slide 1: Second Quarter 2019 Earnings Conference Call
1 Second Quarter 2019 Earnings Conference Call Second Quarter 2019 Earnings Conference Call August 7, 2019
Slide 2: Forward-Looking Statements
2 Second 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 August 7, 2019. We believe that our expecta
Slide 3: Opening Remarks
3 Second Quarter 2019 Earnings Conference Call Opening Remarks • Recap of Matson’s 2Q19 results: – Ocean Transportation came in lower-than-expected • Strong demand in China • Improved performance in Alaska • Weaker-than-expected Hawaii market • Lower contribution from SSAT – Stronger-than-expected q
Slide 4: Current Priorities
4 Second Quarter 2019 Earnings Conference Call Current Priorities Priority Commentary Complete Hawaii service fleet renewal • Lurline christened June 15th; on track for delivery in 4Q19 • Matsonia construction started on building ways • Daniel K. Inouye and Kaimana Hila performing well Upgrade Sand
Slide 5: Lurline Christening
5 Second Quarter 2019 Earnings Conference Call Lurline Christening Lurline’s christening ceremony was held on June 15th at the NASSCO Shipyard.
Slide 6: Hawaii Service
6 Second Quarter 2019 Earnings Conference Call Hawaii Service Second Quarter 2019 Performance • Container volume declined 2.3% 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
Slide 7: Hawaii Economic Indicators
7 Second Quarter 2019 Earnings Conference Call Hawaii Economic Indicators Hawaii Economic Indicators Market Commentary • Westbound container volume driven primarily by consumption and replenishment, population growth and construction – Tourist arrivals at record levels, but visitor expenditure has d
Slide 8: China Expedited Service (CLX)
8 Second Quarter 2019 Earnings Conference Call China Expedited Service (CLX) Second Quarter 2019 Performance • Container volume increased 2.5% YoY – Continued strong demand for the expedited service • Continued to realize a sizeable rate premium Container Volume (FEU Basis) Full Year 2019 Outlook •
Slide 9: Guam Service
9 Second Quarter 2019 Earnings Conference Call Guam Service Second Quarter 2019 Performance • Container volume was flat YoY • Market was essentially flat YoY Container Volume (FEU Basis) Full Year 2019 Outlook • Expect volume to approximate the 2018 level – Highly competitive environment remains • M
Slide 10: Alaska Service
10 Second Quarter 2019 Earnings Conference Call Alaska Service Second Quarter 2019 Performance • Container volume increased 8.0% YoY – Timing of two additional NB sailings • Market growth supported by improving economic indicators in Alaska Container Volume (FEU Basis) 10,000 12,000 14,000 16,000 18
Slide 11: AEDC 3-Year Outlook
11 Second Quarter 2019 Earnings Conference Call AEDC 3-Year Outlook • Industries most affected by the oil-recession are on the rebound •“Robust activity on the North Slope is an encouraging sign of optimism among producers.” – AEDC, July 31, 2019 • State fiscal certainty and sustainability an import
Slide 12: SSAT Joint Venture
12 Second Quarter 2019 Earnings Conference Call SSAT Joint Venture Second Quarter 2019 Performance • Terminal joint venture contribution was $0.9 million, $8.2 million lower than last year primarily due to: – Additional expense related to the early adoption of new lease accounting standard – Higher
Slide 13: SSAT Joint Venture – Seattle Terminal Plan
13 Second Quarter 2019 Earnings Conference Call SSAT Joint Venture – Seattle Terminal Plan Matson’s move to T-5 is part of the first phase in the Seattle terminal plan. • SSAT is currently operating at (with JV partners): –T-5 –T-18 –T-30
Slide 14: Matson Logistics
14 Second Quarter 2019 Earnings Conference Call Matson Logistics Second Quarter 2019 Performance • Operating income increased $1.8 million YoY to $11.3 million – All service lines performed well – YoY increase primarily driven by Span Alaska and transportation brokerage Operating Income Full Year 20
Slide 15: Matson Logistics Operating Income and Margin
15 Second Quarter 2019 Earnings Conference Call 0% 1% 2% 3% 4% 5% 6% 7% 8% $0 $5 $10 $15 $20 $25 $30 $35 $40 $45 2012 2013 2014 2015 2016 2017 2018 LTM Operating Income Margin Operating Income ($ in millions) Operating Income Operating Income Margin Matson Logistics Note: Acquired Span Alaska in 3Q
Slide 16: Financial Results – Summary Income Statement
16 Second 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 $2.9 million resulting from discrete adjustments in applying the provisions of the
Slide 17: Cash Generation and Uses of Cash
17 Second Quarter 2019 Earnings Conference Call Cash Generation and Uses of Cash ($ 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 Other Cash Flows Debt Repayment Maint. Capex New Vessel Capex (1) Dividends N
Slide 18: Financial Results – Summary Balance Sheet
18 Second Quarter 2019 Earnings Conference Call Financial Results – Summary Balance Sheet • Total debt of $844.6 million • Net debt of $820.6 million • Net debt-to-LTM EBITDA of 3.0x • We are continuing to look at capital structure optimization alternatives, including Title XI See the Addendum for a
Slide 19: New Vessel Payments and Percent of Completion
19 Second Quarter 2019 Earnings Conference Call Percent of Completion(1) Current Delivery Timing Lurline 94% 4Q ’19 Matsonia 24% 3Q ’20 New Vessel Payments and Percent of Completion Actual and Estimated Vessel Progress Payments(2) FY 2019 ($ in millions) 1Q 2Q Cash Capital Expenditures $ 16.2 $ 6.4
Slide 20: 2019 Outlook
20 Second Quarter 2019 Earnings Conference Call 2019 Outlook FY 2019 Outlook Items Full Year Third Quarter Operating Income: Ocean Transportation Approximately 20% lower than the $131.1 million achieved in FY 2018 after adjusting 2018 result for full year impact of vessel sale-leaseback Moderately l
Slide 21: A Look at 2020
21 Second 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 tim
Slide 22: Appendix
22 Second Quarter 2019 Earnings Conference Call Appendix
Slide 23: Appendix – Non-GAAP Measures
23 Second 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, he