Slide 1: Fourth Quarter and Full Year 2014 Earnings Conference Call
Fourth Quarter and Full Year 2014 Earnings Conference Call
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, February 24, 2015. We believe that our expectations and assumptions are re
Slide 3: Opening Remarks: Strong fourth quarter performance
Strong fourth quarter performance Higher than expected rates in China service due to strong demand Favorable timing of fuel surcharge collections Continued rate and volume growth in Hawaii and Guam Achieved better YOY financial results in 2014 Higher freight yields across major trade lanes Improveme
Slide 4: EBITDA, EPS – 4Q 2014
EBITDA, EPS – 4Q 2014 4Q14 Net Income of $27.8 million versus 4Q13 Net Income of $7.3 million 4Q13 Net Income of $13.5 million excluding the Litigation Charge See the Addendum for a reconciliation of GAAP to non-GAAP for Financial Metrics Impact of Litigation Charge $45.3 $0.31
Slide 5: EBITDA, EPS, ROIC – Full Year 2014
EBITDA, EPS, ROIC – Full Year 2014 2014 Net Income of $70.8 million versus 2013 Net Income of $53.7 million See the Addendum for a reconciliation of GAAP to non-GAAP for Financial Metrics Impact of Litigation Charge $179.3 $1.39
Slide 6: Hawaii Service
Hawaii Service Fourth Quarter Performance Market growth continued Container volume up 1.2 percent Higher freight yields Modest competitive losses in eastbound backhaul freight Automobile volume down 21.6 percent due to certain customer losses Outlook for 2015 Anticipating modest market growth in Haw
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 2015 Continued general market growth Flat to modest container volume growth expected, assuming no new competitor enters market Fourth Quarter Performance Volume increased modestly due to general market growth
Slide 9: China Expedited Service (CLX)
China Expedited Service (CLX) Source: Shanghai Shipping Exchange Fourth Quarter Performance Significantly higher freight rates High demand for expedited transpacific service, amplified by port congestion on U.S. West Coast Outlook for 2015 Market overcapacity expected to continue Expect strong deman
Slide 10: SSAT Joint Venture
SSAT Joint Venture Fourth Quarter Performance Improved lift volume throughout operations Outlook for 2015 Modest profit expected for 2015
Slide 11: U.S. West Coast Labor Update
February 20, 2015 – PMA and ILWU announced a tentative agreement on a new five-year contract covering all 29 West Coast ports The agreement is subject to ratification by both parties In Hawaii, the employer group and ILWU will meet to determine when to conduct negotiations To date, Matson’s operatio
Slide 12: Matson Logistics
Matson Logistics Fourth Quarter Performance Highway volume and yield growth Warehouse operating improvements Lower intermodal yield Source: Association of American Railroads Outlook for 2015 Improvement in volume Continued expense control and improvements in warehouse operations Source: Transport In
Slide 13: 4Q2014 Operating Income
4Q2014 Operating Income SSAT had a $1.2 million contribution in 4Q14 compared to a $1.0 million contribution in 4Q13 4Q13 4Q14 Change Revenue $309.4 $333.2 $23.8 Operating Income $16.0 $46.3 $30.3 Oper. Income Margin 5.2% 13.9% 4Q13 4Q14 Change Revenue $101.5 $110.3 $8.8 Operating Income $1.9 $3.1 $
Slide 14: Full Year 2014 Operating Income
Full Year 2014 Operating Income SSAT had a $6.6 million contribution in 2014 compared to a $2.0 million loss in 2013 2013 2014 Change Revenue $1,229.4 $1,278.4 $49.0 Operating Income $94.3 $131.1 $36.8 Oper. Income Margin 7.7% 10.3% 2013 2014 Change Revenue $407.8 $435.8 $28.0 Operating Income $6.0
Slide 15: Condensed Statement of Income
Condensed Statement of Income Key Items Total Revenue increased 7.9% Operating costs decreased 1.7% Effective tax rate of 38.4% Excluding 4Q13 Litigation Charge: 4Q EBITDA improved 46.6% YOY 2014 EBITDA improved 16.6% YOY to $209.0 million See the Addendum for a reconciliation of GAAP to non-GAAP fo
Slide 16: Condensed Balance Sheet
Condensed Balance Sheet Assets (in $ millions) 12/31/14 12/31/13 Cash and cash equivalents $ 293.4 $ 114.5 Other current assets 226.1 234.4 Total current assets 519.5 348.9 Investment in terminal joint venture 64.4 57.6 Property and equipment, net 691.2 735.4 Capital Construction Fund deposits 27.5
Slide 17: Cash Generation and Uses of Cash
Cash Generation and Uses of Cash (1) Does not include $100 million financing in January 2014 or $2.7 million in Other uses of Cash
Slide 18: Significant Free Cash Flow Generation
Significant Free Cash Flow Generation See the Addendum for a reconciliation of GAAP to non-GAAP for Financial Metrics (1) Based on $37.58 closing share price as of 2/23/15 (2) Source: FactSet. Free Cash Flow = Net cash flow from operations less capital expenditures. Based on index closing prices as
Slide 19: 2015 Outlook
Outlook excludes any future impact of the molasses incident, the pending transaction with Horizon, and is being provided relative to 2014 operating income Ocean Transportation operating income for 2015 expected to be modestly higher than 2014 levels Hawaii volume to approximate 2014 level Flat to mo
Slide 20: Summary Remarks
Summary Remarks Prospects bright for 2015, driven by pending acquisition of Horizon’s Alaska operations, Hawaii rebound, continued market position in the CLX, and sustained strength in Logistics and SSAT 2015 areas of focus: Alaska acquisition and integration Maintain and drive further operational e
Slide 21: Addendum
Addendum Long Beach Container Terminal
Slide 22: 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 23: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation (1) We calculate EBITDA as the sum of net income, less income or loss from discontinued operations, plus income tax expense, interest expense and depreciation and amortization. EBITDA should not be considered as an alternative to net income (as determined in accordanc
Slide 24: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation (in millions, except per share amount) Three Months Ended December 31, 2013 Net Income $ 27.8 $ 7.3 Add: Litigation Charge - 9.95 Less: Income Tax Expense effect of Litigation Charge - (3.7) Net Income before Litigation Charge 27.8 13.6 Weighted Average Number of Shar