Slide 1: Second Quarter 2013 Earnings Conference Call – August 7, 2013
Second Quarter 2013 Earnings Conference Call – August 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, August 7, 2013. We believe that our expectations and assumptions are reaso
Slide 3: Opening Remarks
Solid YOY results in Ocean Transportation in 2Q13 Modest volume gains in all trade lanes, led by Hawaii Better 2Q result in Logistics Board authorized 6.7% increase in quarterly dividend to $0.16 per share Expect results for balance of 2013 to modestly exceed second half of 2012 Opening Remarks
Slide 4: EBITDA, EPS – 2Q 2013
EBITDA, EPS – 2Q 2013 2Q13 Net Income of $20.1 million versus 2Q12 Net Income of $7.8 million See the Addendum for a reconciliation of GAAP to non-GAAP for Financial Metrics
Slide 5: EBITDA, EPS – YTD 2013
EBITDA, EPS – YTD 2013 YTD 2013 Net Income of $29.2 million versus YTD 2012 Net Income of $11.2 million See the Addendum for a reconciliation of GAAP to non-GAAP for Financial Metrics
Slide 6: Hawaii Service
Hawaii Service Second Quarter Performance Volume up 5.3% YOY, driven by: Modest market growth and gains Additional voyage Improvements in operating expenses Outlook for 2H 2013 Moderate volume gains in total Core 9-ship fleet deployment expected New vessel plans progressing
Slide 7: Hawaii Economic Indicators
Hawaii Economic Indicators Indicator (% Change YOY, except Unemployment rate) 2010 2011 2012 2013F 2014F 2015F Real Gross Domestic Product 1 1.4 (0.2) 1.9 2.4 2.3 2.3 Visitor Arrivals 1 7.7 4.0 9.6 4.3 2.5 2.1 Unemployment Rate 2 6.8 6.5 5.8 4.9 4.5 4.2 Construction Jobs 2 (8.1) (2.0) 2.4 7.1 10.0 1
Slide 8: SSAT Joint Venture
Second Quarter 2013 Earnings Conference Call August 7, 2013 – Slide 8 SSAT Joint Venture Outlook for 2H 2013 • Aggressive expense control initiatives • Breakeven performance expected Second Quarter Performance • Past customer losses weigh down performance • Markets growing modestly
Slide 9: SSAT Oakland Terminal Update
Second Quarter 2013 Earnings Conference Call August 7, 2013 – Slide 9 SSAT Oakland Terminal Update • Creates the premier terminal in Northern California: – Largest acreage (350 contiguous acres) – Expanded customer base – Most deep-water berths – Most post-Panamax cranes (14) • Matson to move termin
Slide 10: Guam Service
Guam Service Outlook for 2H 2013 Muted economic activity Volume similar to 2012, assuming no new competitor enters market Second Quarter Performance YOY volume increase due to timing of shipments Overall market stable
Slide 11: China Expedited Service (CLX)
China Expedited Service (CLX) Second Quarter Performance Matson YOY spot rates slightly lower Impacts approximately 50% of volume Ships ran at full capacity Continued strong demand for expedited service Outlook for 2H 2013 Record global capacity added Matson YOY freight rates expected to erode modes
Slide 12: Matson Logistics
Matson Logistics Second Quarter Performance Higher intermodal and highway volume Lower G&A Progress in NorCal warehousing Outlook for 2H 2013 Expense control focus Margins of 1-2% of revenues Source: Association of American Railroads
Slide 13: 2Q2013 Operating Income
2Q2013 Operating Income SSAT had a $0.8 million loss in 2Q13 vs. a $1.6 million contribution in 2Q12 2Q12 2Q13 Change Revenue $299.5 $310.0 $10.5 Operating Income $31.2 $34.3 $3.1 Oper. Income Margin 10.4% 11.1% 2Q12 2Q13 Change Revenue $94.7 $106.6 $11.9 Operating Income $1.3 $2.2 $0.9 Oper. Income
Slide 14: YTD 2013 Operating Income
YTD 2013 Operating Income SSAT had a $0.6 million loss YTD 2013 versus a $2.4 million contribution YTD 2012 YTD12 YTD13 Change Revenue $579.0 $609.9 $30.9 Operating Income $37.0 $52.8 $15.8 Oper. Income Margin 6.4% 8.7% YTD12 YTD13 Change Revenue $181.3 $201.4 $20.1 Operating Income $1.6 $2.4 $0.8 O
Slide 15: 2Q2013 Condensed Income Statement
Second Quarter 2013 Earnings Conference Call August 7, 2013 – Slide 15 2Q2013 Condensed Income Statement (in $ millions) 2Q13 2Q12 Operating Revenue Ocean transportation $ 310.0 $ 299.5 Logistics revenue 106.6 94.7 Total operating revenue 416.6 394.2 Costs and Expenses Operating costs 344.9 329.0 Se
Slide 16: Cash Generation and Uses of Cash
Generated $79.5 million in cash flow from operations YTD Maintenance capex of $9.8 million YTD Paid $13.0 million in dividends Reduction of debt by $26.7 million ($8.7 million in 2Q) Increased cash position by $19.2 million Cash Generation and Uses of Cash * Does not include $1.2 million in Other Us
Slide 17: Condensed Balance Sheet
Condensed Balance Sheet Assets (in $ millions) 6/30/13 12/31/12 Cash $ 39.1 $ 19.9 Other current assets 214.6 214.2 Total current assets 253.7 234.1 Investment in terminal joint venture 59.0 59.6 Property, net 744.0 762.5 Other assets 111.8 118.1 Total $1,168.5 $1,174.3 Liabilities & Shareholders’ E
Slide 18: Outlook
Second Quarter 2013 Earnings Conference Call August 7, 2013 – Slide 18 • Ocean Transportation operating income for 2H 2013 expected to be flat to modestly higher than 2H 2012: – Moderate increase in Hawaii volume – Flat Guam and China volume – Modest erosion in China rates – Core 9-ship fleet deploy
Slide 19: Summary Remarks
Summary Remarks Continued Hawaii volume growth spurring solid results Better results in Logistics reflect ongoing internal efforts Expanded SSAT operations positions j.v. well for future Exceptional cash flow generation led to increase in dividend Investments in new build plans progressing
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) (in $ millions) Second Quarter Last Twelve Months (LTM) 2012 2013 Change As of June 30, 2013 Net Income 7.8 20.1 12.3 63.9 Subtract: Loss from discontinued operations (7.5) - 7.5 - Add: Income tax expense 15.3 12.8 (2.5) 34.3 Add: Interest expens