Matson, Inc. · NYSE:MATX
Matson — May Investment Conferences May 2013
38 slides from Matson's conference presentation, May 7, 2013
Slide 1: May Investment Conferences May 2013
1 1 May Investment Conferences May 2013
Slide 2: Forward-looking statements
2 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 o
Slide 3: Key Investment Highlights
3 Key Investment Highlights Matt Cox President and CEO Matson, Inc.
Slide 4: Key Investment Highlights
4 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 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: Connecting the Pacific Unlike Anyone Else
6 6 Shanghai Ningbo Xiamen Guam Honolulu, Hawaii Long Beach Oakland Portland Seattle Micronesia Connecting the Pacific Unlike Anyone Else Matson Ocean Transportation
Slide 7: Matson South Pacific Acquisition
7 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 Included in Ocean Transportation segment for reporting purposes North & West
Slide 8: Hawaii Service: First Quarter Performance and Outlook
8 First Quarter Performance Volume up 5.5% YOY, driven by: Increase in EB activity Market growth and gains Optimal 9-ship deployment Outlook for 2013 Moderate volume gains in total EB volume gains historically volatile 9-ship fleet deployment for full year Hawaii Service
Slide 9: Hawaii: Poised for Growth
9 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 Indic
Slide 10: Guam Service: Performance and Outlook
10 Outlook for 2013 Muted economic activity Volume similar to 2012, assuming no new competitor enters market Military cuts and sequestration impact unclear First Quarter Performance Container volume off due to decreased U.S. military shipments Overall market has contracted slightly Guam Service
Slide 11: China Expedited Service (CLX)
11 First Quarter Performance YOY spot freight rates up significantly Benefits approximately 50% of volume Container volume up 3.6% in 1Q13 due to delayed sailing that slipped into 2013 Outlook for 2013 Record global capacity added YOY freight rates expected to erode modestly Expect flat container vo
Slide 12: SSA Terminals Joint Venture
12 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
Slide 13: Strategic Benefits of Dedicated Terminals
13 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
14 Outlook for 2013 Customer loss will negatively impact joint venture Aggressive expense control initiatives Breakeven performance expected First Quarter Performance Customer losses continue to weigh on performance Markets growing modestly SSAT Joint Venture
Slide 15: Matson Logistics: A National Network of Integrated Services
15 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 Sup
Slide 16: Matson Logistics Priorities
16 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 hi
Slide 17: Matson Logistics: First Quarter Performance and Outlook
17 First Quarter Performance Improvement in domestic intermodal and highway volume Lower G&A Declines in warehouse operations Outlook for 2013 Expense control focus Improve margins to 1-2% of revenues 1. American Association of Railroads Matson Logistics
Slide 18: Seasoned Management Team
18 18 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
Slide 19: Financial Highlights
19 Financial Highlights Joel Wine Senior Vice President and Chief Financial Officer
Slide 20: Key Investment Highlights
20 20 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 21: EBITDA, EPS & ROIC – FY2012
21 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 $34.2 million EBITDA, EPS & ROIC – FY2012 FY EBITDA ($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 22: Condensed Income Statement
22 (dollars in millions) 3/31/13 3/31/12 Operating Revenue Ocean transportation $ 299.9 $ 279.5 Logistics revenue 94.8 86.6 Total operating revenue 394.7 366.1 Costs and Expenses Operating costs 342.8 329.7 Selling, general and administrative 33.4 28.6 Other (0.2) 1.7 Operating Income 18.7 6.1 Inter
Slide 23: Matson Financial Data
23 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
Slide 24: Condensed Balance Sheet
24 Assets (dollars in millions) 3/31/13 12/31/12 Cash $ 11.0 $ 19.9 Other current assets 204.4 214.2 Total current assets 215.4 234.1 Investment in terminal joint venture 59.7 59.6 Property, net 759.0 762.5 Other assets 115.1 118.1 Total $ 1,149.2 $ 1,174.3 Debt Total debt of $301.1 million Current
Slide 25: Uses of Cash
25 Maintained quarterly dividend of $0.15/share 1Q13 maintenance capital expenditures were $6.3 million Reef Shipping Limited asset acquisition was $9.6 million Reduced total debt by $18.0 million in first quarter $40.4 Uses of Cash
Slide 26: Full Year 2013 Outlook
26 Ocean Transportation operating income for 2013 expected to be moderately higher than 2012: Balance of year modestly higher each quarter on a YOY Lose YOY benefit of operating 9-ship fleet in 2Q Moderate increase in Hawaii volume Flat Guam volume Modest erosion in China rates 9-ship fleet deployme
Slide 27: Appendix
Appendix Matson.
Slide 28: Ocean Transportation Operating Income
28 28 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
Slide 29: SSAT Investment Pre-Tax Income
29 29 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
Slide 30: Logistics Operating Income
30 30 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
Slide 31: Quarterly Operating Income: Ocean Transportation
31 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 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
Slide 32: Quarterly Operating Income: Logistics
32 32 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
Slide 33: Selected Segment Data
33 33 Selected Segment Data More detailed information is available in previously filed Form 10-Ks and 10-Qs 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Capital Expenditures Ocean Transportation $133.2 $128.6 $173.9 $217.1 $65.8 $35.5 $12.7 $69.4 $44.2 $37.0 Vessel Purchases $100.1 $ 98.2 $148.
Slide 34: Non-GAAP measures definitions
34 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 service debt and to make
Slide 35: GAAP to Non-GAAP Reconciliation (ROIC)
35 Dollars in Millions, unless otherwise noted 2012 Net Income 45.9 Subtract: Loss from discontinued operations (6.1) Add: Interest expense (tax effected)1 7.2 Total Return 59.2 Total Debt 319.1 Shareholder Equity 279.9 Total Invested Capital2 599.0 ROIC (Total Return/Total Invested Capital) 9.9% Th
Slide 36: GAAP to Non-GAAP Reconciliation (Net Debt & EBITDA)
36 Dollars in Millions First Quarter Last Twelve Months (LTM) 2012 2013 Change As of March 31, 2013 Net Income 3.8 9.1 5.3 51.2 Subtract: Income/Loss from disc. operations 1.8 0.0 (1.8) (7.9) Add: Income tax expense 2.1 5.9 3.8 36.8 Add: Interest expense 2.0 3.7 1.7 13.4 Add: Depreciation & amortiza
Slide 37: GAAP to Non-GAAP Reconciliation (Net Debt & EBITDA)
37 Dollars in Millions Full Year 2012 2011 Change Net Income 45.9 34.2 11.7 Subtract: Loss from discontinued operations (6.1) (11.6) 5.5 Add: Income tax expense 33.0 25.1 7.9 Add: Interest expense 11.7 7.7 4.0 Add: Depreciation & amortization 72.1 71.6 0.5 EBITDA 168.8 150.2 18.6 GAAP to Non-GAAP Re
Slide 38: GAAP to Non-GAAP Reconciliation (EBITDA)
38 GAAP to Non-GAAP Reconciliation (EBITDA) Dollars in Millions 2002 2003 2004 2005 2006 2007 2008 2009 2010 Segment Operating Income Excluding Discontinued Ops 45.5 97.5 119.0 142.6 126.8 148.0 124.1 64.5 125.4 Segment Depreciation and Amortization 51.2 51.9 58.0 60.9 59.6 65.2 68.5 70.6 70.8 EBITD