Matson, Inc. · NYSE:MATX
Matson — Q2 2018 Earnings Presentation
20 slides from Matson's earnings presentation, Jul 31, 2018
Slide 1: Second Quarter 2018 Earnings Conference Call
Second Quarter 2018 Earnings Conference Call July 31, 2018
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, July 31, 2018. We believe that our expectations and assumptions are reason
Slide 3: Opening Remarks
Opening Remarks Matson’s results in 2Q18 were solid Favorable contributors include: Lower vessel operating costs New Okinawa service Higher contribution from Logistics Higher contribution from SSAT Unfavorable trends include: Lower contribution from Guam FY 2018 Outlook Maintain higher outlook for O
Slide 4: Hawaii Service Second Quarter 2018 Performance
Hawaii Service Second Quarter 2018 Performance Container volume was flat YoY Stable market share Favorable ongoing economic conditions in Hawaii Container Volume (FEU Basis) 40,000 38,000 36,000 34,000 32,000 30,000 Q1 Q2 Q3 Q4 2017 2018 Full Year 2018 Outlook Expect volume to approximate the level
Slide 5: Hawaii Economic Indicators
Hawaii Economic Indicators Real GDP Growth Construction Jobs Growth Real Building Permits Growth “Now in its ninth year, Hawaii’s expansion shows no signs of letting up. Tourism has surged again in the first part of 2018, extending one of the longest periods of sustained visitor growth. Construction
Slide 6: China Expedited Service (CLX) Second Quarter 2018 Performance
China Expedited Service (CLX) Second Quarter 2018 Performance Container volume decreased 5.9% YoY 1 dry-dock return voyage in 2Q17 Continued to realize a sizeable rate premium Container Volume (FEU Basis) 20,000 18,000 16,000 14,000 12,000 10,000 8,000 Q1 Q2 Q3 Q4 2017 2018 Full Year 2018 Outlook Tr
Slide 7: Guam Service Second Quarter 2018 Performance
Guam Service Second Quarter 2018 Performance Container volume decreased 11.1% YoY Continued competitive pressure from APL Market was essentially flat YoY Container Volume (FEU Basis) 6,000 5,500 5,000 4,500 4,000 3,500 3,000 Q1 Q2 Q3 Q4 2017 2018 Full Year 2018 Outlook Expect heightened competitive
Slide 8: Alaska Service Second Quarter 2018 Performance
Alaska Service Second Quarter 2018 Performance Container volume decreased 0.6% YoY primarily due to lower SB volume Delayed start to the seafood season Signs of Alaska economy beginning to stabilize Container Volume (FEU Basis) 22,000 20,000 18,000 16,000 14,000 12,000 10,000 Q1 Q2 Q3 Q4 2017 2018 N
Slide 9: AEDC 3-Year Outlook
AEDC 3-Year Outlook “ 2018 [will mark] the point at which we’ll start seeing measurable signs of economic turn-around. While the latest available data indicates Anchorage losing jobs in the first half of 2018, the expected trend is that job losses will continue to moderate, reaching a point by early
Slide 10: IMO 2020 Strategy
IMO 2020 Strategy New ship program will allow Matson to be 100% compliant with IMO 2020 guidelines New vessels will have ability to convert to LNG Evaluating current options available to Matson to lower post-2020 cost of fuel Unclear how soon 0.5% residual fuel will be available on the West Coast Pr
Slide 11: SSAT Joint Venture Second Quarter 2018 Performance
SSAT Joint Venture Second Quarter 2018 Performance Terminal joint venture contribution was $9.1 million, $2.2 million higher than last year Increase primarily attributable to increased lift volume Equity in Income of Joint Venture $ in millions $ 12.0 $ 10.0 $8.0 $ 6.0 $ 4.0 $ 2.0 $0.0 Q1 Q2 Q3 Q4 2
Slide 12: Matson Logistics Second Quarter 2018 Performance
Matson Logistics Second Quarter 2018 Performance Operating income increased $2.5 million YoY to $9.5 million Improved performance across all service lines Tight truck market plays to Matson Logistics’ strengths in customer service Alaska economy is showing signs of stabilizing, benefiting Span Alask
Slide 13: Financial Results – Summary Income Statement
Financial Results – Summary Income Statement See the Addendum for a reconciliation of GAAP to non-GAAP Financial Metrics. (1) Includes a non-cash tax adjustment of $3.1 million resulting from a reduction in the alternative minimum tax receivable under the Tax Cuts and Jobs Act. Year-to-Date Second Q
Slide 14: Financial Results – Summary Balance Sheet
Financial Results – Summary Balance Sheet Total debt of $932.5 million Net debt of $919.7 million Net debt-to-LTM EBITDA of 3.06x See the Addendum for a reconciliation of GAAP to non-GAAP Financial Metrics. Debt Levels ($ in millions) ASSETS Cash and cash equivalents $ 12.8 $ 19.8 Other current asse
Slide 15: Cash Generation and Uses of Cash
Cash Generation and Uses of Cash (1) Includes capitalized interest and owner’s items. ($ 50.0) $ 50.0 $ 150.0 $ 250.0 $ 350.0 $ 450.0 $ 550.0 Cash Flow from Operations Net Borrowings Other Maint. Capex New Vessel Capex (1) Dividends Share Repurchase Net decrease in cash $ in millions Last Twelve Mon
Slide 16: New Vessel Payments and Percent of Completion
New Vessel Payments and Percent of Completion Vessel Construction Expenditures Actual and Estimated Vessel Progress Payments FY 2018 ($ in millions) 1Q 2Q Cash Capital Expenditures $ 54.0 $ 104.6 Capitalized Interest 3.7 4.5 Capitalized Vessel Construction Expenditures $ 57.7 $ 109.1 Cumulative thro
Slide 17: 2018 Outlook
2018 Outlook Outlook Items FY 2018 3Q 2018 Operating income: Ocean Transportation Modestly higher than $126.4 million(1) achieved in FY 2017 Modestly lower than $51.0 million(2) achieved in 3Q 2017 Logistics 2H YoY improvement in operating income to approximate 1H YoY increase of $4.8 million Modera
Slide 18: Matson Addendum
Matson® Addendum
Slide 19: Addendum – Operating Income Reconciliation
Addendum – Operating Income Reconciliation OPERATING INCOME RECONCILIATION Three Months Ended Year Ended Ocean Transportation (in million) March 31, 2017 June 30, 2017 September 30, 2017 December 31, 2017 Operating income as previously reported $ 14.5 $ 39.0 $ 54.6 $ 20.7 $ 128.8 Reclassification of
Slide 20: Addendum – Non-GAAP Measures
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, help investors understand our ability to incur and