Matson, Inc. · NYSE:MATX
Matson — Q4 2018 Earnings Presentation
22 slides from Matson's earnings presentation, Feb 21, 2019
Slide 1: Fourth Quarter 2018 Earnings Conference Call
1 Fourth Quarter 2018 Earnings Conference Call Fourth Quarter 2018 Earnings Conference Call February 21, 2019
Slide 2: Forward-Looking Statements
2 Fourth Quarter 2018 Earnings Conference Call 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 21, 2019. We belie
Slide 3: Opening Remarks
3 Fourth Quarter 2018 Earnings Conference Call Opening Remarks • Matson’s results in 4Q18 were in-line with expectations – Strong contributions from China service and Logistics • Recap of FY 2018 results – Favorable contributors: • Higher rates in China • Significant contributions from SSAT and Logi
Slide 4: Current Priorities
4 Fourth Quarter 2018 Earnings Conference Call Current Priorities • Complete Hawaii service fleet renewal – Daniel K. Inouye entered service in November 2018 – Kaimana Hila and Lurline to enter service in 2019, Matsonia to enter service in 2020 • Upon Lurline entering service, expect to shift to a f
Slide 5: Hawaii Service
5 Fourth Quarter 2018 Earnings Conference Call Hawaii Service Fourth Quarter 2018 Performance • Container volume was flat YoY – Stable market share • Favorable ongoing economic conditions in Hawaii Container Volume (FEU Basis) Full Year 2018 Performance • Container volume decreased 0.7% YoY – Lower
Slide 6: Hawaii Economic Indicators
6 Fourth Quarter 2018 Earnings Conference Call Hawaii Economic Indicators Real GDP Growth Construction Jobs Growth Real Building Permits Growth “As expected, the [Hawaii] economy’s rate of expansion has slowed as the business cycle has matured, and risks to the external environment have increased. B
Slide 7: China Expedited Service (CLX)
7 Fourth Quarter 2018 Earnings Conference Call China Expedited Service (CLX) Fourth Quarter 2018 Performance • Experienced elevated demand late in quarter during period traditionally not as strong • Container volume increased 3.8% YoY • Continued to realize a sizeable rate premium Container Volume (
Slide 8: Guam Service
8 Fourth Quarter 2018 Earnings Conference Call Guam Service Fourth Quarter 2018 Performance • Container volume increased 10.6% – Primarily due to typhoon relief volume • Market was flat YoY Container Volume (FEU Basis) Full Year 2019 Outlook • Expect modestly lower volume as highly competitive envir
Slide 9: Alaska Service
9 Fourth Quarter 2018 Earnings Conference Call Alaska Service Fourth Quarter 2018 Performance • Container volume increased 4.2% YoY – Increase in NB volume • Alaska’s economic indicators improving Container Volume (FEU Basis) 10,000 12,000 14,000 16,000 18,000 20,000 22,000 Q1 Q2 Q3 Q4 2017 2018 Ful
Slide 10: Alaska Economic Indicators
10 Fourth Quarter 2018 Earnings Conference Call Alaska Economic Indicators Anchorage and Alaska Employment Growth(1)(2) Anchorage Population Growth(1) -2.0% -1.5% -1.0% -0.5% 0.0% 0.5% 1.0% 1.5% 2.0% 2009 2011 2013 2015 2017 2019F YoY Growth in Employment Anchorage (AEDC) Alaska (Alaska Dept. of Lab
Slide 11: SSAT Joint Venture
11 Fourth Quarter 2018 Earnings Conference Call SSAT Joint Venture Fourth Quarter 2018 Performance • Terminal joint venture contribution was $8.0 million, $0.9 million lower than last year – Higher operating costs, partially offset by higher revenue resulting from increased lift volume Equity in Inc
Slide 12: Matson Logistics
12 Fourth Quarter 2018 Earnings Conference Call Matson Logistics Fourth Quarter 2018 Performance • Operating income increased $4.4 million YoY to $9.1 million Operating Income Full Year 2019 Outlook • Expect operating income to approximate 2018 level of $32.7 million, which was a historic high $ 0.0
Slide 13: Financial Results – Summary Income Statement
13 Fourth Quarter 2018 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 of $2.9 million resulting from discrete adjustments in applying the provisions of the Tax Act.
Slide 14: Cash Generation and Uses of Cash
14 Fourth Quarter 2018 Earnings Conference Call Cash Generation and Uses of Cash ($ 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 Net Borrowings (Repayment) Maint. Capex New Vessel Capex (1) Dividends Net increase in cas
Slide 15: New Vessel Payments and Percent of Completion
15 Fourth Quarter 2018 Earnings Conference Call Percent of Completion(2) Current Delivery Timing Kaimana Hila 94% end of 1Q ’19 Lurline 75% 4Q ’19 Matsonia 14% 3Q ’20 New Vessel Payments and Percent of Completion Actual and Estimated Vessel Progress Payments(3) FY 2018 ($ in millions) 1Q 2Q 3Q 4Q(1)
Slide 16: Financial Results – Summary Balance Sheet
16 Fourth Quarter 2018 Earnings Conference Call Financial Results – Summary Balance Sheet • Total debt of $856.4 million • Net debt of $836.8 million • Net debt-to-LTM EBITDA of 2.81x See the Addendum for a reconciliation of GAAP to non-GAAP Financial Metrics. Debt Levels ($ in millions) ASSETS Cash
Slide 17: Maunalei Sale-Leaseback Transaction
17 Fourth Quarter 2018 Earnings Conference Call Maunalei Sale-Leaseback Transaction • Transaction announced on November 27, 2018 • Gross proceeds of $106.0 million • Proceeds used to reduce outstanding revolver borrowings – Approximately $4.0 million in interest savings in 2019 • Annual lease expens
Slide 18: 2019 Outlook
18 Fourth Quarter 2018 Earnings Conference Call 2019 Outlook FY 2019 Outlook Items Full Year First 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 Approximately $10 million Logi
Slide 19: Actual and Estimated Other Capital Expenditures
19 Fourth Quarter 2018 Earnings Conference Call Actual and Estimated Other Capital Expenditures ($ in millions) Actual and Estimated Other Capital Expenditures (including maintenance capex)(1) $55.0 $62.6 $120.0 $85.0 2017 2018 2019E 2020E (1) Cost and timing of projects subject to change. Key Proje
Slide 20: Select Outlook Items to FY 2021
20 Fourth Quarter 2018 Earnings Conference Call Select Outlook Items to FY 2021 ($ in millions) Actual and Estimated Depreciation and Amortization (incl. dry-dock amortization)(1) Actual and Estimated Interest Expense (in P&L and capitalized)(1)(2) $146.6 $130.9 $130.0 $135.0 $145.0 2017 2018 2019E
Slide 21: Addendum
21 Fourth Quarter 2018 Earnings Conference Call Addendum
Slide 22: Addendum – Non-GAAP Measures
22 Fourth Quarter 2018 Earnings Conference Call Addendum – 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, he