Matson, Inc. · NYSE:MATX
Matson — JP Morgan Transportation Investment Conference 2013
35 slides from Matson's conference presentation, Mar 6, 2013
Slide 1: JP Morgan Transportation Investment Conference
1 JP Morgan Transportation Investment Conference March 6, 2013
Slide 2: Forward-looking statements
2 Statements in this presentation that set forth expectations or predictions are based on facts and situations that are known to us as of the date of this filing. Actual results may differ materially, due to risks and uncertainties, such as those described on pages 9-15 of our 2012 Form 10-K and oth
Slide 3: Key Investment Highlights
Key Investment Highlights Matt Cox President and CEO Matson, Inc.
Slide 4: Key Investment Highlights
4 Key Investment Highlights Great brand equity Leading market share in core Hawaii and Guam shipping lanes Significant advantages in premium China service Superior asset quality and flexibility Experienced management team Strong balance sheet and cash flow generation Attractive cash dividend
Slide 5: The Matson Brand
5 The Matson Brand Premier Ocean Transportation and Logistics Provider 130 years of Leadership in the Pacific Service and Reliability Beyond the Norm Financial Stability Delivering Value to Our Customers 5
Slide 6: Matson Ocean Transportation Connecting the Pacific
6 Shanghai Ningbo Xiamen Guam Honolulu, Hawaii Long Beach Oakland Portland Seattle Micronesia Matson Ocean Transportation Connecting the Pacific Unlike Anyone Else
Slide 7: Matson South Pacific Acquisition
Matson South Pacific Acquisition Acquired primary assets of Reef Shipping for $9.6 million Expansion into strategically attractive adjacent Pacific regions New platform creates opportunities to link with Guam/China/Hawaii Will be included in Ocean Transportation segment for reporting purposes North
Slide 8: Hawaii Service
Hawaii Service Fourth Quarter Performance Slight uptick in volume YOY Lower vessel operating costs as fleet returned to 9-ship deployment Barge dry-docking led to higher outside transportation costs Outlook for 2013 Modest volume gains Core 9-ship deployment expected for most of year due to lighter
Slide 9: Hawaii: Poised for Growth
Hawaii: Poised for Growth Positive economic trends International tourism a growth opportunity Hawaii among the world’s most desirable vacation destinations Experience catering to growing demand from Asian tourists Infrastructure projects expected to support expansion of construction industry 0.6% 9.
Slide 10: Guam Service
Guam Service Outlook for 2013 Muted economic activity Volume similar to 2012, assuming no new competitor enters market Military redeployment pushed out to 2015, at earliest Fourth Quarter Performance Container volume up significantly YOY reflecting competitor exit in 4Q2011 Overall market has contra
Slide 11: China Expedited Service (CLX)
China Expedited Service (CLX) Fourth Quarter Performance YOY spot freight rates up significantly Benefits approximately 50% of volume Container volume down 11.4% in 4Q12 Delayed sailing slipped into 2013 Ships running near full capacity Outlook for 2013 Record global capacity added Average annual fr
Slide 12: SSA Terminals Joint Venture
12 SSA Terminals Joint Venture Formed July 1999 – SSA Marine (65%) and Matson (35%) Service U.S. West Coast Stevedoring/Terminal Operator Container Equipment Maintenance Chassis Pools On-Dock Rail Locations Terminals SSAT Total %SSAT* Long Beach/LA 2 12 5-10% Oakland 2 6 35-40% Seattle/Tacoma 2 8 25
Slide 13: Strategic Benefits of Dedicated Terminals
13 Guaranteed berth/cranes Quick turn of vessels Maintain sailing schedules Fast cargo availability Quick truck turns Quick yard turns Flexibility to receive freight close to departure Increased customer satisfaction Strategic Benefits of Dedicated Terminals
Slide 14: SSAT Joint Venture
1 SSAT Joint Venture Outlook for 2013 Customer loss will negatively impact joint venture contributions Aggressive expense control initiatives Breakeven performance expected Fourth Quarter Performance Customer losses continue to weigh on performance Overall market has contracted slightly Equity in In
Slide 15: Matson Logistics: A National Network of Integrated Services
15 Matson Logistics A National Network of Integrated Services Seattle Portland Houston Reno St Paul Chicago Birmingham Dallas Philadelphia Atlanta Savannah Jacksonville Akron Indianapolis Long Beach Phoenix Boston Columbus SF/ Oakland Source: Matson management Warehousing & Distribution China Supply
Slide 16: Matson Logistics Priorities
16 Matson Logistics Priorities 16 Achieve organic growth Highway and intermodal brokerage Distribution and warehouse services Increase coordinated cross-selling with Ocean Transportation Further develop the 53-foot intermodal domestic container pilot program Goal to return operating margins to histo
Slide 17: Seasoned Management Team
17 Seasoned Management Team Name Title Matson Years in Transportation Matthew J. Cox President & CEO 2001 24 Joel M. Wine SVP & CFO 2011 2 Ronald J. Forest SVP, Operations 1995 35 David L. Hoppes SVP, Ocean Services 1989 32 Kevin C. O’Rourke SVP, General Counsel 1992 35 Vic S. Angoco SVP, Pacific 19
Slide 18: Financial Highlights
Financial Highlights Joel Wine Senior Vice President and Chief Financial Officer
Slide 19: Key Investment Highlights
19 Key Investment Highlights Great brand equity Leading market share in core Hawaii and Guam shipping lanes Significant advantages in premium China service Superior asset quality and flexibility Experienced management team Strong balance sheet and cash flow generation Attractive cash dividend
Slide 20: EBITDA, EPS and ROIC – FY 2012
EBITDA, EPS and ROIC – FY 2012 See the Addendum for a reconciliation of GAAP to non-GAAP for Financial Metrics FY12 Net Income of $45.9 million versus FY11 Net Income of $34.2 million FY EBITDA ($millions) $150.2 $168.8 $50.0 $100.0 $150.0 $200.0 $250.0 FY11 FY12 FY ROIC (%) 9.9% 0.0% 4.0% 8.0% 12.0
Slide 21: Ocean Transportation
Ocean Transportation SSAT contributed $0.1 million in 4Q12 and $3.2 million in FY 2012 8.8% $26.7 $303.7 4Q12 $14.2 $12.5 Operating Income 4.4% Oper. Income Margin Change 4Q11 $21.6 Revenue $282.1 8.1% $96.6 $1,189.8 FY12 $22.9 $73.7 Operating Income 6.8% Oper. Income Margin Change FY11 $113.6 Reven
Slide 22: Matson Logistics
Matson Logistics (3.0%) ($2.8) $94.6 4Q12 ($2.1) ($0.7) Operating Income (0.8%) Oper. Income Margin Change 4Q11 $1.8 Revenue $92.8 0.0% $0.1 $370.2 FY12 ($4.8) $4.9 Operating Income 1.3% Oper. Income Margin Change FY11 ($16.2) Revenue $386.4 4Q 2012 Operating Income ($millions) ($0.7) ($2.8) -$4 -$2
Slide 23: Matson Financial Data: EBITDA and Capital Expenditures
23 EBITDA1, 2 (Dollars in Millions) $10 $133 $129 $175 $219 $68 $38 $13 $71 $47 Matson Financial Data 1 EDITDA and capital expenditure information extracted from previously filed Form 10-Ks which include other income and exclude intercompany income. 2Operating Income is from continuing operations. 2
Slide 24: Condensed Balance Sheet
Condensed Balance Sheet 35.5 19.9 Cash Assets (dollars in millions) 12/31/12 6/30/12 Other total current assets 214.2 201.3 Investments in affiliates 59.6 58.7 Property, net 762.5 783.0 Other assets 118.1 111.0 Total $1,174.3 $1,189.5 28.4 16.4 Current portion of long-term debt 179.3 177.0 Other cur
Slide 25: 2013 Outlook
Ocean Transportation operating income for 2013 expected to be modestly higher than 2012, impacted by: Modest uptick in Hawaii volume 9-ship fleet deployment due to lighter dry-dock schedule Flat Guam volume Modest erosion in China rates Break-even performance at SSAT Logistics operating income expec
Slide 26: Appendix
Appendix Matson.
Slide 27: Ocean Transportation Operating Income
27 More detailed information is available in previously filed Form 10-Ks and 10-Qs Ocean Transportation Operating Income Operating Income Operating Margin 10-year Average Annual Operating Income: $101.4 million $ millions Adjusted Operating Income Operating Margin $93.2 $105.6 $126.5 $105.6 $57.8 $7
Slide 28: SSAT Investment Pre-Tax Income
28 Pre-Tax Income (Loss) SSAT Investment More detailed information is available in previously filed Form 10-Ks and 10-Qs 10-year Average Annual Pre-tax Income: $8.5 million $ millions $4.7 $17.1 $13.3 $10.7 $5.2 $6.2 $12.8 $8.6 $3.2 $3.4 $0 $2 $4 $6 $8 $10 $12 $14 $16 $18 $20 2003 2004 2005 2006 200
Slide 29: Logistics Operating Income
29 Logistics Operating Income More detailed information is available in previously filed Form 10-Ks and 10-Qs Operating Income Operating Margin 10-year Average Annual Operating Income: $10.8 million $ millions Operating Income Operating Margin $4.3 $8.9 $20.8 $21.8 $18.5 $6.7 $7.1 $14.4 $4.9 $0.1 $0
Slide 30: Quarterly Operating Income: Ocean Transportation
30 Unaudited, more detailed information is available in previously filed Form 10-Ks and 10-Qs Quarterly Operating Income from Continuing Operations Operating Income Operating Margin $ millions Ocean Transportation $10.3 $28.6 $5.2 $27.1 $28.9 $5.8 $31.2 $32.9 $26.7 $12.5 $42.5 $36.9 $0 $5 $10 $15 $2
Slide 31: Quarterly Operating Income: Logistics
31 Unaudited, more detailed information is available in previously filed Form 10-Ks and 10-Qs Quarterly Operating Income from Continuing Operations Operating Income Operating Margin $ millions Logistics $1.9 $2.0 $1.5 $2.1 $2.0 $0.3 $1.3 $1.3 -$2.8 -$0.7 $1.8 $1.5 -$4 -$3 -$2 -$1 $0 $1 $2 $3 1Q10 2Q
Slide 32: Selected Segment Data
32 Selected Segment Data More detailed information is available in previously filed Form 10-Ks and 10-Qs $73.8 $ 3.2 $70.6 $47.2 $ 3.0 0 $44.2 2011 2003 2004 2005 2006 2007 2008 2009 2010 2012 Capital Expenditures Ocean Transportation $133.2 $128.6 $173.9 $217.1 $65.8 $35.5 $12.7 $69.4 $37.0 Vessel
Slide 33: 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 34: GAAP to Non-GAAP Reconciliation (Net Debt and EBITDA)
GAAP to Non-GAAP Reconciliation (Net Debt and EBITDA) 18.6 150.2 168.8 9.9 30.4 40.3 EBITDA 5.5 (11.6) (6.1) 5.0 (5.1) (0.1) Subtract: Loss from discontinued operations 7.9 25.1 33.0 1.3 3.1 4.4 Add: Income tax expense 11.7 34.2 45.9 14.0 1.6 15.6 Net Income 72.1 11.7 2012 Full Year 71.6 7.7 2011 0.
Slide 35: GAAP to Non-GAAP Reconciliation (EBITDA)
GAAP to Non-GAAP Reconciliation (EBITDA) 213.2 65.2 148.0 2007 186.4 59.6 126.8 2006 203.5 60.9 142.6 2005 177.0 58.0 119.0 2004 196.2 135.1 192.6 149.4 96.7 EBITDA 70.8 70.6 68.5 51.9 51.2 Segment Depreciation and Amortization 125.4 64.5 124.1 97.5 45.5 Segment Operating Income Excluding Discontinu
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