Slide 1: Second Quarter 2015 Earnings Conference Call
Second Quarter 2015 Earnings Conference Call
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 4, 2015. We believe that our expectations and assumptions are reaso
Slide 3: Opening Remarks
A strong second quarter 2015, benefitting from: Higher freight rates in expedited China service Yield improvements in Hawaii and Guam Inclusion of Alaska operations for the month of June 2015 Lower bunker fuel prices and favorable timing of fuel surcharge collections Continuing YOY improvements at S
Slide 4: Molasses Settlement
July 27, 2015 – Matson announced settlement with the State of Hawaii Resolved all Hawaii civil, criminal and administrative claims Terminated molasses operations in Honolulu Matson paid a total of $5.9 million in cash to the State Matson has committed to remove the molasses tanks and risers at Sand
Slide 5: EBITDA, EPS – 2Q 2015
EBITDA, EPS – 2Q 2015 2Q15 Net Income of $9.9 million versus 2Q14 Net Income of $18.1 million 2Q15 Net Income would have been $24.4 million excluding Acquisition related SG&A and Molasses Settlement Impact of Acquisition related SG&A in excess of incremental run-rate target Impact of costs related t
Slide 6: EBITDA, EPS – YTD 2015
EBITDA, EPS – YTD 2015 YTD15 Net Income of $34.9 million versus YTD14 Net Income of $21.5 million YTD15 Net Income would have been $49.4 million excluding Acquisition related SG&A and Molasses Settlement $149.8 $1.12 $11.4 $13.5 $0.16 $0.17 Impact of Acquisition related SG&A in excess of incremental
Slide 7: Hawaii Service
Hawaii Service Second Quarter Performance Modest westbound market growth was offset by lower eastbound backhaul freight Higher freight yields Automobile volume down 9.2 percent due to certain customer losses Second Half 2015 Outlook Anticipating modest overall market growth in Hawaii trade New Pasha
Slide 8: Hawaii Economic Indicators
Hawaii Economic Indicators Indicator (% Change YOY) 2013 2014 2015F 2016F 2017F Real Gross Domestic Product 1.9 2.3 3.3 2.8 2.3 Visitor Arrivals 1.7 2.0 2.1 0.6 0.2 Construction Jobs 5.6 1.8 4.8 6.5 5.4 Residential Building Permits 16.5 (9.8) 10.1 29.1 20.8 Non-Residential Building Permits (10.7) 28
Slide 9: Alaska Market Overview
Alaska Market Overview Horizon's 2014 Alaska Volume by Customer Segment % of Total Container Volume Freight Forwarders 24% Food, Grocery, Produce 27% Retail 13% Autos 10% Seafood & Seafood Supplies 8% Building Materials 5% Paper Producs, Agriculture and other 4% Household Goods 4% Government 4%
Slide 10: Alaska Service
Alaska Service Second Half 2015 Outlook Expect Alaska volumes to approximate 2H2014 level of ~35,000 containers Commencing exhaust gas scrubber installation on first ship in Q3 Second Quarter Performance Included Alaska operations for the period from May 29 to June 30, 2015 No changes to schedule or
Slide 11: Guam Service
Guam Service Second Half 2015 Outlook Stable economic activity Modest container volume growth expected, assuming no new competitor enters market Second Quarter Performance Volume decreased 4.8 percent due to the timing of select shipments
Slide 12: China Expedited Service (CLX)
China Expedited Service (CLX) Source: Shanghai Shipping Exchange Second Quarter Performance Continued strong demand for premium expedited service Sizeable premium to market rates Second Half 2015 Outlook Market overcapacity expected to continue Expect strong demand for Matson CLX service to continue
Slide 13: SSAT Joint Venture
SSAT Joint Venture Second Quarter Performance Clearing of international carrier cargo backlog PMA and ILWU ratified new five-year contract Second Half 2015 Outlook Profit to exceed the 2H2014 level Well positioned in LA/LB and Oakland for increased lift volumes from major international carriers
Slide 14: Matson Logistics
Matson Logistics Second Quarter Performance Lower international intermodal and highway volume Lower fuel surcharge revenue Favorable changes in business mix Improved warehouse results Source: Association of American Railroads Second Half 2015 Outlook Operating income expected to approximate 2H2014 l
Slide 15: 2Q2015 Operating Income
2Q2015 Operating Income SSAT had a $5.2 million contribution in 2Q15 compared to a $2.1 million contribution in 2Q14 2Q14 2Q15 Change Revenue $321.1 $346.7 $25.6 Operating Income $32.8 $31.4 ($1.4) Oper. Income Margin 10.2% 9.1% 2Q14 2Q15 Change Revenue $115.3 $100.9 ($14.4) Operating Income $2.9 $2
Slide 16: YTD 2015 Operating Income
YTD 2015 Operating Income SSAT had a $8.6 million contribution in YTD15 compared to a $2.3 million contribution in YTD14 YTD14 YTD15 Change Revenue $615.7 $652.2 $36.5 Operating Income $42.2 $75.3 $33.1 Oper. Income Margin 6.9% 11.5% YTD14 YTD15 Change Revenue $213.2 $193.6 ($19.6) Operating Income
Slide 17: Condensed Statement of Income
Condensed Statement of Income Key Items Total revenue increased 2.6% Exclusive of Acquisition related SG&A and Molasses Settlement costs Operating margin increased to 13.1% from 8.2% EBITDA improved 41.5% YOY Unusually high effective tax rate of 66% due to: $4.8 million non-cash adjustment to deferr
Slide 18: Condensed Balance Sheet
Condensed Balance Sheet Assets (in $ millions) 6/30/15 12/31/14 Cash and cash equivalents $ 15.8 $ 293.4 Other current assets 307.1 226.1 Total current assets 322.9 519.5 Investment in terminal joint venture 68.9 64.4 Property and equipment, net 839.2 691.2 Capital Construction Fund deposits 27.5 27
Slide 19: Alaska Acquisition: Review of Key Metrics
Alaska Acquisition: Review of Key Metrics Alaska Acquisition Summary At Announcement November 2014 Current Update Transaction Value (1) $456 million $469 million Integration Timeline Within 2 years post-closing Within 2 years post-closing Run-Rate Annual EBITDA (post-Integration) ~$70 million ~$70 m
Slide 20: Alaska Acquisition: Run-Rate Earnings and Cash Flow Accretion
Alaska Acquisition: Run-Rate Earnings and Cash Flow Accretion Illustrative Cash Flow per share Accretion (post-Integration) ($ in millions, except per share amounts) ($ in millions, except per share amounts) Run-rate EBITDA before corporate overhead $85 $85 Run-rate EBITDA (within 2 years post-closi
Slide 21: EBITDA Amended to Include Vessel Dry-Docking Amortization
Previous definition of EBITDA did not add back deferred dry-docking amortization. Amending EBITDA definition to include the add-back of deferred dry-docking amortization which aligns our definition with Horizon’s historical disclosures and is consistent with the majority of comparable marine transpo
Slide 22: Cash Generation and Uses of Cash
Cash Generation and Uses of Cash Does not include $8.8 million in other sources of cash Based on total cash consideration (including common shares, warrants, repaid debt, accrued interest and breakage fees)
Slide 23: 2015 Outlook
Outlook is exclusive of Acquisition related SG&A in excess of incremental run-rate target, excludes the impact of the Molasses Settlement, and is being provided relative to 2014 operating income Ocean Transportation operating income for FY2015 expected to be substantially higher than FY2014 Ocean Tr
Slide 24: Summary Remarks
Summary Remarks Upgraded our outlook for the second half of 2015 driven by: Contribution of Alaska operations Hawaii construction activity and market growth Sustained premium rates in our China expedited service Continued improvement at SSAT Steady performance in Logistics Alaska operations integrat
Slide 25: Addendum
Addendum
Slide 26: Addendum – Use of Non-GAAP Measures
Addendum – 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 in
Slide 27: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation
Slide 28: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Diluted Earnings per Share before Acquisition Related SG&A and Molasses Settlement Reconciliation (in millions, except per share amount) Six Months Ended June 30, 2015 Net Income $ 9.9 $ 34.9 Add: Acquisition related SG&A in excess of run-rate target 13.5 13.5 Add: Mo
Slide 29: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation (in $ millions) 2014 2013 2012 2011 Net Income 70.8 53.7 45.9 34.2 Subtract: Income (loss) from discontinued operations - (6.1) (11.6) Add: Income tax expense 51.9 32.2 33.0 25.1 Add: Interest expense 17.3 14.4 11.7 7.7 Add: Depreciation & amortization 69.0 69.0 72.1