Matson, Inc. · NYSE:MATX
Matson — Q1 2019 Earnings Presentation
21 slides from Matson's earnings presentation, May 8, 2019
Slide 1: First Quarter 2019 Earnings Conference Call
1 First Quarter 2019 Earnings Conference Call First Quarter 2019 Earnings Conference Call May 8, 2019
Slide 2: Forward-Looking Statements
2 First 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 May 8, 2019. We believe that our expectation
Slide 3: Opening Remarks
3 First Quarter 2019 Earnings Conference Call Opening Remarks • Recap of Matson’s 1Q19 results: – Ocean Transportation came in as expected – positive and negative YoY factors • Strong demand in China • Steady performance in SSAT • Significant weather-related issues that primarily impacted our Hawaii
Slide 4: Current Priorities
4 First Quarter 2019 Earnings Conference Call Current Priorities Priority Commentary Complete Hawaii service fleet renewal • Kaimana Hila was delivered on March 28th and placed in service on April 18th • Lurline delivery on track for Q4 2019 • Daniel K. Inouye performing well Upgrade Sand Island ter
Slide 5: New Arrivals
5 First Quarter 2019 Earnings Conference Call New Arrivals April was busy with the Kaimana Hila entering service and the new gantry cranes arriving at the Sand Island terminal. Kaimana Hila entering the Port of Seattle. New gantry cranes for Sand Island terminal.
Slide 6: Update on IMO 2020 Strategy
6 First Quarter 2019 Earnings Conference Call Update on IMO 2020 Strategy Matson will be 100% compliant with IMO 2020 guidelines. • Commenced dry-dock and installation of scrubber on the first of three CLX vessels – Expect two of three CLX vessels to be back in service with scrubbers by year end – E
Slide 7: Hawaii Service First Quarter 2019 Performance
7 First Quarter 2019 Earnings Conference Call Hawaii Service First Quarter 2019 Performance • Container volume declined 2.2% YoY – One less WB sailing – Weather-related impacts • Flattish container market environment • Hawaii economy showing modest growth; some softening economic factors – Construct
Slide 8: Hawaii Economic Indicators
8 First Quarter 2019 Earnings Conference Call Hawaii Economic Indicators Real GDP Growth Construction Jobs Growth Real Building Permits Growth “The construction industry has now settled on a plateau. Last year’s 21% expansion of total permits, as well as anticipated gains for the next two years, wil
Slide 9: China Expedited Service (CLX) First Quarter 2019 Performance
9 First Quarter 2019 Earnings Conference Call China Expedited Service (CLX) First Quarter 2019 Performance • Container volume increased 16.0% YoY – One additional sailing – Stronger volume post Lunar New Year • Continued to realize a sizeable rate premium Container Volume (FEU Basis) Full Year 2019
Slide 10: Guam Service First Quarter 2019 Performance
10 First Quarter 2019 Earnings Conference Call Guam Service First Quarter 2019 Performance • Container volume increased 4.1% – Primarily due to typhoon relief-related volume • Market was flat YoY Container Volume (FEU Basis) Full Year 2019 Outlook • Expect modestly lower volume as highly competitive
Slide 11: Alaska Service First Quarter 2019 Performance
11 First Quarter 2019 Earnings Conference Call Alaska Service First Quarter 2019 Performance • Container volume decreased 5.7% YoY – TOTE dry-dock volume in 1Q 2018 – One less NB sailing • Modest market growth supported by improving economic indicators in Alaska Container Volume (FEU Basis) 10,000 1
Slide 12: SSAT Joint Venture First Quarter 2019 Performance
12 First Quarter 2019 Earnings Conference Call SSAT Joint Venture First Quarter 2019 Performance • Terminal joint venture contribution was $8.5 million, $2.0 million lower than last year – YoY decline primarily due to the absence of favorable one-time items in the year ago period – Higher YoY lift v
Slide 13: Matson Logistics First Quarter 2019 Performance
13 First Quarter 2019 Earnings Conference Call Matson Logistics First Quarter 2019 Performance • Operating income increased $3.9 million YoY to $8.1 million – All service lines performed well – YoY increase primarily driven by transportation brokerage and Span Alaska Operating Income Full Year 2019
Slide 14: Financial Results – Summary Income Statement
14 First 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 $2.9 million resulting from discrete adjustments in applying the provisions of the
Slide 15: Cash Generation and Uses of Cash
15 First Quarter 2019 Earnings Conference Call Cash Generation and Uses of Cash ($ 50.0) $ 50.0 $ 150.0 $ 250.0 $ 350.0 $ 450.0 $ 550.0 Cash Flow from Operations Proceeds from Sale-Leasebacks Other Cash Flows Debt Repayment Maint. Capex New Vessel Capex (1) Dividends Net increase in cash $ in millio
Slide 16: Financial Results – Summary Balance Sheet
16 First Quarter 2019 Earnings Conference Call Financial Results – Summary Balance Sheet • Total debt of $868.1 million • Net debt of $852.7 million • Net debt-to-LTM EBITDA of 3.0x See the Addendum for a reconciliation of GAAP to non-GAAP Financial Metrics. Debt Levels($ in millions) ASSETS Cash an
Slide 17: New Vessel Payments and Percent of Completion
17 First Quarter 2019 Earnings Conference Call Percent of Completion(2) Current Delivery Timing Lurline 85% 4Q ’19 Matsonia 18% 3Q ’20 New Vessel Payments and Percent of Completion Actual and Estimated Vessel Progress Payments(3) FY 2019 ($ in millions) 1Q(1) Cash Capital Expenditures $ 16.2 Capital
Slide 18: 2019 Outlook
18 First Quarter 2019 Earnings Conference Call 2019 Outlook FY 2019 Outlook Items Full Year Second Quarter Operating Income: Ocean Transportation To approximate $131.1 million achieved in FY 2018 after adjusting 2018 result for full year impact of vessel sale-leaseback Moderately lower than the 2Q18
Slide 19: Actual and Estimated Other Capital Expenditures
19 First Quarter 2019 Earnings Conference Call Actual and Estimated Other Capital Expenditures ($ in millions) Actual and Estimated Other Capital Expenditures (including maintenance capex)(1) $55.0 $62.6 $120.0 $85.0 $27.0 2017 2018 2019E 2020E (1) Cost and timing of projects subject to change. Key
Slide 20: Appendix
20 First Quarter 2019 Earnings Conference Call Appendix
Slide 21: Appendix – Non-GAAP Measures
21 First 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, hel