Slide 1: First Quarter 2014 Earnings Conference Call
First Quarter 2014 Earnings Conference Call — May 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, May 6, 2014. We believe that our expectations and assumptions are reasonab
Slide 3: Opening Remarks
Businesses performed as expected during the first quarter 2014 Sustained demand in core markets Strength in freight rates remained Continuing YOY improvement in Logistics 1Q14 financial results negatively impacted by the timing of fuel surcharge collections Affirming full year Ocean Transportation o
Slide 4: EBITDA, EPS – 1Q 2014
EBITDA, EPS – 1Q 2014 1Q14 Net Income of $3.4 million versus 1Q13 Net Income of $9.1 million See the Addendum for a reconciliation of GAAP to non-GAAP for Financial Metrics
Slide 5: Hawaii Service
Hawaii Service First Quarter Performance Negatively impacted by timing of fuel surcharge collections Volume down 2.9 percent, fully offset by higher rates and favorable cargo mix Outlook for 2014 Overall market volume expected to increase Competitor expected to launch a new vessel by end of 2014 Exp
Slide 6: Hawaii Economic Indicators
Hawaii Economic Indicators Indicator (% Change YOY) 2011 2012 2013 2014F 2015F 2016F Real Gross Domestic Product 0.3 1.0 2.6 2.9 3.9 3.2 Visitor Arrivals 3.7 9.7 2.5 0.7 1.1 1.6 Construction Jobs (0.3) 2.1 4.8 5.8 10.2 8.5 Residential Building Permits (13.5) 18.6 16.5 33.5 37.2 11.6 Non-Residential
Slide 7: Honolulu’s Urban Core
Honolulu’s Urban Core Source: DBEDT: Construction and Hawaii’s Economy, February 20, 2014 http://dbebt.hawaii.gov Waikiki Ritz-Carlton Residences Waikiki Beach broke ground in August 2013 Hyatt Regency Waikiki Resort and Spa to begin $100 million renovation in 2014 Sheraton Princess Kaiulani $500 mi
Slide 8: Honolulu Rail Transit Project
Honolulu Rail Transit Project 20-mile rail project will cost an estimated $5.2 billion First 10-miles to begin operating in 2017; entire 20-mile system to be operational in 2019 Source: HART: March 2014 Quarterly Report www.HononluluTransit.org
Slide 9: Freight Super Cycles in Hawaii
Freight Super Cycles in Hawaii Source: Matson, Inc. Super-cycles have characterized Matson container volume Emerging from bottom of cycle
Slide 10: Guam Service
Guam Service Outlook for 2014 Steady ongoing economic activity Modest volume improvement expected in 2014, assuming no new competitor enters market First Quarter Performance Modest uptick in volume associated with solar installation projects
Slide 11: China Expedited Service (CLX)
China Expedited Service (CLX) Source: Shanghai Shipping Exchange First Quarter Performance Volume decreased due to additional sailing last year Continued strong demand and premium rate for expedited services amid market rate erosion Outlook for 2014 Volume similar to 2013 Overcapacity expected to co
Slide 12: SSAT Joint Venture
SSAT Joint Venture First Quarter Performance Incremental gains in lift volume Continuing optimization of Oakland terminal Outlook for 2014 Modest profits expected in 2014
Slide 13: Matson Logistics
Matson Logistics First Quarter Performance Intermodal and highway volume growth Warehouse operating improvements Severe weather impacted results Source: Association of American Railroads Outlook for 2014 Improvement in core brokerage business, expense control and improvements in warehouse operations
Slide 14: 1Q2014 Operating Income
1Q2014 Operating Income SSAT had a $0.2 million contribution in both 1Q14 and 1Q13 1Q13 1Q14 Change Revenue $299.9 $294.6 ($5.3) Operating Income $18.5 $9.4 ($9.1) Oper. Income Margin 6.2% 3.2% 1Q13 1Q14 Change Revenue $94.8 $97.9 $3.1 Operating Income $0.2 $0.5 $0.3 Oper. Income Margin 0.2% 0.5% 1Q
Slide 15: 1Q2014 Condensed Statements of Income
1Q2014 Condensed Statements of Income Key Items Total Revenue declined 0.6% Operating costs increased 1.5% Effective tax rate of 41.4% LTM EBITDA of $160.6 million See the Addendum for a reconciliation of GAAP to non-GAAP for Financial Metrics (in $ millions) 1Q14 1Q13 Operating Revenue Ocean transp
Slide 16: Condensed Balance Sheet
Condensed Balance Sheet Assets (in $ millions) 3/31/14 12/31/13 Cash and cash equivalents $ 229.7 $ 114.5 Other current assets 227.5 234.4 Total current assets 457.2 348.9 Investment in terminal joint venture 57.8 57.6 Property and equipment, net 722.9 735.4 Other assets 106.4 106.4 Total assets $1,
Slide 17: Cash Generation and Uses of Cash
Cash Generation and Uses of Cash * LTM = Last Twelve Months as of March 31, 2014; Does not include $100 million financing in January 2014 or $6.5 million in Other sources of Cash
Slide 18: 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 2014 expected near or slightly above prior year level of $104.3
Slide 19: Summary Remarks
Summary Remarks Continued confidence about Hawaii growth prospects as construction cycle begins to materialize Activity in Guam muted, but Matson performing well Unique, expedited CLX service running at full capacity Logistics and SSAT businesses well positioned Strong balance sheet and cash flow ge
Slide 20: Addendum
Addendum Oakland International Container Terminal
Slide 21: 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 22: GAAP to Non-GAAP Reconciliation (Net Debt and EBITDA)
GAAP to Non-GAAP Reconciliation (Net Debt and EBITDA) (in $ millions) First Quarter LTM 2014 2013 Change Net Income 3.4 9.1 (5.7) 48.0 Add: Income tax expense 2.4 5.9 (3.5) 28.7 Add: Interest expense 4.1 3.7 0.4 14.8 Add: Depreciation & amortization 17.4 17.3 0.1 69.1 EBITDA $27.3 $36.0 ($8.7) $160.