Slide 1: Second Quarter 2012 Earnings Conference Call
Second Quarter 2012 Earnings Conference Call August 2, 2012
Slide 2: Forward-Looking Statements
Forward-Looking Statements Statements 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, August 2, 2012. We believe that our expectations and assumptions are reasonable
Slide 3: Earnings Conference Call Agenda
Earnings Conference Call Agenda Opening remarks and review of operations by Matt Cox Review of financial performance and outlook by Joel Wine Summary by Matt Cox Questions and Answers
Slide 4: Opening Remarks
Opening Remarks Successfully completed separation from A&B Headquarters established in Honolulu Launched Matson Foundation, our own corporate giving program Positive reception as a stand-alone company from debt and equity markets MATX began trading on NYSE Maintained operational focus
Slide 5: Operating Income
Operating Income Second Quarter Pre-tax Separation Costs (Millions) 2011 $0.0 2012 $5.8 First Half Pre-tax Separation Cost (Millions) 2011 $0.0 2012 $8.3 Second Quarter (Millions) $29.2 $32.5 $0 $10 $20 $30 $40 2011 2012 First Half (Millions) $35.9 $38.6 $0 $10 $20 $30 $40 2011 2012
Slide 6: Ocean Transportation
Ocean Transportation Second Quarter SSAT ($Millions) 2011 $2.8 2012 $1.6 First Half SSAT ($Millions) 2011 $4.0 2012 $2.4 6.4% 6.3% 10.4% 9.9% Margin 14.6% 15.1% Q2 Operating Profit (Millions) $27.1 $31.2 $0 $10 $20 $30 $40 2011 2012 First Half Operating Profit (Millions) $32.3 $37.0 $0 $10 $20 $30 $
Slide 7: Hawaii Service
Hawaii Service Second Quarter Performance Container volume down 4.8% Overall trade lane down Non-U.S. freight conversion from West Coast relay to foreign direct Competitive pressure Hawaii automobiles down 11.8% Outlook Second Half 2012 Expect construction activity to remain muted Expect flat to mod
Slide 8: Hawaii Economic Indicators
4.8 7.2 7.6 0.3 (2.0) (8.1) Construction Jobs 2 11.1 5.0 2.4 2.4 2014F 5.3 4.6 2.3 2.4 2015F 2.2 6.5 3.8 7.7 Visitor Arrivals 1 Indicator (% Change YOY, except Unemployment rate) 2010 2011 2012F 2013F Real Gross Domestic Product 1 1.2 1.2 2.2 2.3 Unemployment Rate 2 6.9 6.7 6.2 5.6 Building Permits
Slide 9: Guam Service
Guam Service Outlook Second Half 2012 Increased volume until entrance of new competitor Timing of another carrier entering the trade lane is unknown U.S. military troop relocation from Okinawa continues to be delayed Second Quarter Performance 79.4% increase in volume reflects competitor exit in Nov
Slide 10: China Expedited Service
China Expedited Service Second Quarter Performance Matson ships remain full Increased freight rates Freight conversion from Hawaii service to China service Optimize yields through cargo selection Outlook Second Half 2012 Expect Matson ships to remain full through the end of the year Expect freight r
Slide 11: Matson Logistics
Matson Logistics Profit Millions Revenue Millions Second Quarter Performance Decrease in highway and international intermodal Lower profitability of warehouse Partially offset by domestic intermodal Outlook Second Half 2012 Expect profitability to be flat to modestly lower Dependent upon improved wa
Slide 12: Separation Update
Separation Update Announced December 1, 2011 Completed June 29, 2012 Alexander & Baldwin reported as discontinued operations Separation costs in line with previous estimates $5.8 million pre-tax in Q2 $8.3 million pre-tax YTD
Slide 13: Selected Unaudited Income Statement Data
Selected Unaudited Income Statement Data 0.07 (0.15) 0.02 (0.18) Discontinued Operations $0.57 $0.26 $0.44 $0.18 Net income per diluted share 3.2 (6.1) 1.0 (7.5) Income from Discontinued Operations $23.9 $11.2 $18.7 $7.8 Net Income $32.1 $34.7 $27.3 $30.6 Income before taxes $35.9 $38.6 $29.2 $32.5
Slide 14: Discontinued Operations, Unaudited Net of Tax
Discontinued Operations, Unaudited Net of Tax Dollars in millions, except per share Second Quarter First Half 2012 2011 2012 2011 Net (loss) income from A&B (4.4) 12.3 (1.6) 22.1 CLX2 operating and shutdown losses (1.4) (11.3) (2.8) (18.9) Separation related tax expenses (1.7) -- (1.7) -- Income (lo
Slide 15: Income from Continuing Operations
Income from Continuing Operations First Half After-Tax Separation Cost (Millions) 2011 $0.0 2012 $6.9 First Half After-Tax Separation Cost (Millions) 2011 $0.0 2012 $4.8 First Half (Millions) $20.7 $17.3 $0 $7 $14 $21 2011 2012
Slide 16: Second Quarter 2012 Tax Rate
Second Quarter 2012 Tax Rate 50.0% effective tax rate for the quarter driven by two non-recurring items: Significant amount of one-time separation costs with no tax benefit Re-measurement of uncertain tax provisions required as part of separation tax accounting treatment Expect effective tax rate to
Slide 17: Unaudited Cash Flow Highlights
Unaudited Cash Flow Highlights Six Months Ended (10.7) (9.7) Net cash provided by (used in) investing activities1 Cash Flow from Continuing Operations Dollars in Millions June 30, 2012 June 30, 2011 Cash flows provided by operating activities $ 25.4 $ 26.1 Net cash provided by financing activities 2
Slide 18: Additional Cash Flow Data
Additional Cash Flow Data Dollars in Millions Q1 2012 Q2 2012 First Half 2012 Capital Expenditures Ocean Transportation $8.3 $8.9 $17.2 Logistics Services 0.2 0.2 0.3 Total CAPEX $8.5 $9.0 $17.5 Separation Cash Outflows Capital distribution to A&B -- -- $156.1 Separation costs -- -- 8.3 Capitalized
Slide 19: Unaudited Condensed Balance Sheet
Unaudited Condensed Balance Sheet Dollars in Millions Assets 6/30/12 12/31/11 Other current assets $ 236.8 $ 210.2 Current assets related to A&B discontinued operations -- 64.8 Total current assets 236.8 275.0 Investments in affiliates 58.7 56.5 Property, net 783.0 800.5 Other assets 111.0 95.2 LT a
Slide 20: Debt Capitalization Summary
Debt Capitalization Summary Total debt outstanding on June 30, 2012 was $372.8 million Revolving credit facility balance of $72.0 million Long-term term debt of $300.8 million Debt/EBITDA ratio of 2.3 EBITDA/Interest ratio of 20.7
Slide 21: Remainder of 2012 Outlook
Remainder of 2012 Outlook Ocean transportation operating profit for second half of the year expected to be modestly better than last year Operating profit for Q3 will be negatively impacted by timing of dry dockings compared with last year Expect additional administrative expenses of approximately $
Slide 22: Summary Remarks
Summary Remarks Financial results for the quarter mixed Ocean transportation improving, but below our long-term goal to return to 10 to 12 percent operating margin Logistics operating profit below long-term expectations of 2 to 4 percent operating margin Achieved successful separation Continue to be