Slide 1: Third Quarter 2014 Earnings Conference Call — November 6, 2014
Third Quarter 2014 Earnings Conference Call — November 6, 2014
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, November 6, 2014. We believe that our expectations and assumptions are rea
Slide 3: Opening Remarks: A strong third quarter 2014
A strong third quarter 2014, resulting from: 3.8 percent YOY Hawaii container volume growth Timing of fuel surcharge recoveries Higher freight yields in major trades Improved lift volume and productivity at SSAT Continuing YOY improvement in Logistics 4Q 2014 operating income expected to exceed 4Q 2
Slide 4: EBITDA, EPS – 3Q 2014
EBITDA, EPS – 3Q 2014 3Q14 Net Income of $21.5 million versus 3Q13 Net Income of $17.2 million See the Addendum for a reconciliation of GAAP to non-GAAP for Financial Metrics
Slide 5: EBITDA, EPS – YTD 2014
EBITDA, EPS – YTD 2014 YTD 2014 Net Income of $43.0 million versus YTD 2013 Net Income of $46.4 million See the Addendum for a reconciliation of GAAP to non-GAAP for Financial Metrics
Slide 6: Hawaii Service Third Quarter Performance
Hawaii Service Third Quarter Performance Market growth continued Container volume up 3.8 percent Higher freight rates Automobile volume down 20.8 percent due to select customer losses Outlook for 4Q 2014 Expect growth in the Hawaii trade to continue, with Matson’s Hawaii volume to modestly exceed 4Q
Slide 7: Hawaii Economic Indicators
Hawaii Economic Indicators Indicator (% Change YOY) 2013 2014F 2015F 2016F Real Gross Domestic Product 1.9 2.9 3.5 2.7 Visitor Arrivals 1.7 1.2 1.9 1.0 Construction Jobs 5.6 0.9 5.9 6.0 Residential Building Permits 16.5 7.8 27.5 22.2 Non-Residential Building Permits (10.7) 23.9 9.6 5.8 Sources: UHER
Slide 8: Guam Service
Guam Service Outlook for 4Q 2014 Modest volume improvement expected, assuming no new competitor enters market Third Quarter Performance Slight increase in volume Steady ongoing economic activity
Slide 9: China Expedited Service (CLX)
China Expedited Service (CLX) Source: Shanghai Shipping Exchange Third Quarter Performance Volume declined due to one fewer sailing in the quarter compared to last year Sizable premium to market rates Continued strong demand for expedited services Outlook for 4Q 2014 Market overcapacity expected to
Slide 10: SSAT Joint Venture
SSAT Joint Venture Third Quarter Performance Improved lift volume throughout operations Productivity improvements at Oakland terminal Outlook for 4Q 2014 Modest profit expected Incremental volume gains
Slide 11: Matson Logistics
Matson Logistics Third Quarter Performance Highway volume and yield growth Warehouse operating improvements Lower intermodal yield Source: Association of American Railroads Outlook for 4Q 2014 Improvement in volume Continued expense control and improvements in warehouse operations Source: Transport
Slide 12: 3Q2014 Operating Income
3Q2014 Operating Income SSAT had a $3.1 million contribution in 3Q14 compared to a $2.4 million loss in 3Q13 3Q13 3Q14 Change Revenue $310.1 $329.5 $19.4 Operating Income $25.5 $42.6 $17.1 Oper. Income Margin 8.2% 12.9% 3Q13 3Q14 Change Revenue $104.9 $112.3 $7.4 Operating Income $1.7 $2.4 $0.7 Oper
Slide 13: YTD 2014 Operating Income
YTD 2014 Operating Income SSAT had a $5.4 million contribution YTD 2014 compared to a $3.0 million loss YTD 2013 YTD13 YTD14 Change Revenue $920.0 $945.2 $25.2 Operating Income $78.3 $84.8 $6.5 Oper. Income Margin 8.5% 9.0% YTD13 YTD14 Change Revenue $306.3 $325.5 $19.2 Operating Income $4.1 $5.8 $1
Slide 14: Condensed Statement of Income
Condensed Statement of Income Key Items Total Revenue increased 6.5% Operating costs increased 2.9% Effective tax rate of 47% LTM EBITDA of $177.9 million See the Addendum for a reconciliation of GAAP to non-GAAP for Financial Metrics (in $ millions) 3Q14 3Q13 Operating Revenue Ocean transportation
Slide 15: Condensed Balance Sheet
Condensed Balance Sheet Assets (in $ millions) 9/30/14 12/31/13 Cash and cash equivalents $ 230.9 $ 114.5 Other current assets 233.8 234.4 Total current assets 464.7 348.9 Investment in terminal joint venture 63.2 57.6 Property and equipment, net 706.3 735.4 Other assets 126.6 106.4 Total assets $1,
Slide 16: Cash Generation and Uses of Cash
Cash Generation and Uses of Cash * LTM = Last Twelve Months as of September 30, 2014; Does not include $100 million financing in January 2014 or $8.1 million in Other sources of Cash
Slide 17: Fourth Quarter 2014 Outlook
Outlook excludes any future impact of the molasses incident, which is unknown, and is being provided relative to 2013 operating income excluding the $9.95 million Litigation Charge taken in 4Q13 Ocean Transportation operating income for 4Q 2014 expected to increase from 4Q 2013 level of $26.0 millio
Slide 18: Summary Remarks
Summary Remarks Continued confidence about Hawaii growth prospects as the containerized demand portion of the construction cycle begins to materialize Guam economic activity steady Unique, expedited CLX service running at full capacity with strong demand Logistics and SSAT businesses improving Stron
Slide 19: Addendum
Addendum Long Beach Container Terminal
Slide 20: 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 21: GAAP to Non-GAAP Reconciliation (Net Debt and EBITDA)
GAAP to Non-GAAP Reconciliation (Net Debt and EBITDA) (in $ millions) Third Quarter LTM 2014 2013 Change Net Income 21.5 17.2 4.3 50.3 Add: Income tax expense 19.1 6.4 12.7 41.7 Add: Interest expense 4.4 3.6 0.8 16.5 Add: Depreciation & amortization 17.2 16.9 0.3 69.4 EBITDA $62.2 $44.1 $18.1 $177.9