Matson, Inc. · NYSE:MATX
Matson — Q2 2020 Earnings Presentation
24 slides from Matson's earnings presentation, Aug 5, 2020
Slide 1: Second Quarter 2020 Earnings Conference Call
1 Second Quarter 2020 Earnings Conference Call Second Quarter 2020 Earnings Conference Call August 5, 2020
Slide 2: Forward-Looking Statements
2 Second Quarter 2020 Earnings Conference Call Forward-Looking Statements Statements made during this 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 August 5, 2020. We believe that our expecta
Slide 3: Recap of Second Quarter 2020 Results
3 Second Quarter 2020 Earnings Conference Call Recap of Second Quarter 2020 Results • Recap of Matson’s 2Q20 results: – Matson’s businesses performed well despite the challenges from the COVID-19 pandemic and related economic effects – Ocean Transportation: • Led primarily by strength in China servi
Slide 4: Responding to the New Reality
4 Second Quarter 2020 Earnings Conference Call Responding to the New Reality • Operational and financial actions taken in the last few months have helped during this difficult period and led to opportunities – Introduction of CLX+ vessel charters – principally drove the increase in 2Q20 consolidated
Slide 5: Current Priorities
5 Second Quarter 2020 Earnings Conference Call Current Priorities • Safeguard employee health and safety • Ensure consistency of Ocean Transportation services and continue to deliver for our Matson Logistics customers • Maintain cost and capital discipline in preparation for an extended downturn – F
Slide 6: Hawaii Service Second Quarter 2020 Performance
6 Second Quarter 2020 Earnings Conference Call Hawaii Service Second Quarter 2020 Performance • Container volume decreased 4.0% YoY – Freight volume decline primarily due to near-zero tourism and temporary closure of retail stores – Partially offset by volume from Pasha due in part to the dry-dockin
Slide 7: Hawaii Service – Current Business Trends
7 Second Quarter 2020 Earnings Conference Call Hawaii Service – Current Business Trends • Hawaii economy remains challenged by the near-zero tourism due to COVID-19 mitigation efforts – State’s 14-day quarantine for visitors extended at least to August 31 – Environment remains difficult for tourism-
Slide 8: China Expedited Service Second Quarter 2020 Performance
8 Second Quarter 2020 Earnings Conference Call China Expedited Service Second Quarter 2020 Performance • Container volume increased 68.1% YoY • Continued dislocation in air freight markets led to strong demand for Matson’s expedited service – Normal weekly vessels sailed at capacity; higher volume Y
Slide 9: China Expedited Service: Why Matson introduced the CLX+ vessel charters
9 Second Quarter 2020 Earnings Conference Call China Expedited Service Why Matson introduced the CLX+ vessel charters in the second quarter… • Builds upon our successful 15-year track record of operating the CLX Matson will offer this weekly CLX+ service through peak season (end of October) or poten
Slide 10: China Expedited Service – Current Business Trends
10 Second Quarter 2020 Earnings Conference Call China Expedited Service – Current Business Trends • Expect continued demand for CLX and CLX+ expedited ocean services as disruption and loss of capacity in the transpacific air cargo and ocean freight markets remain – Increasing demand for e-commerce g
Slide 11: Guam Service Second Quarter 2020 Performance
11 Second Quarter 2020 Earnings Conference Call Guam Service Second Quarter 2020 Performance • Container volume decreased 12.5% YoY – Freight volume decline primarily due to lower demand for retail-related goods as COVID-19 mitigation measures remained in effect – To a lesser extent, reduced tourism
Slide 12: Alaska Service Second Quarter 2020 Performance
12 Second Quarter 2020 Earnings Conference Call Alaska Service Second Quarter 2020 Performance • Container volume decreased 9.0% YoY – Lower northbound volume primarily due to: • Lower demand for retail-related goods, as an effect of the state’s COVID-19 mitigation efforts • One less sailing compare
Slide 13: Alaska Service – Current Business Trends
13 Second Quarter 2020 Earnings Conference Call Alaska Service – Current Business Trends • Alaska economy remains challenged in the near-term and expect NB volume to be negatively impacted YoY in the 3Q20 – Despite gradual reopening of economy ahead of our other tradelanes, residual negative economi
Slide 14: SSAT Joint Venture Second Quarter 2020 Performance
14 Second Quarter 2020 Earnings Conference Call SSAT Joint Venture Second Quarter 2020 Performance Equity in Income of Joint Venture Note: 2Q 2019 equity in income negatively impacted by the timing of lease accounting. $ 0.0 $ 1.0 $ 2.0 $ 3.0 $ 4.0 $ 5.0 $ 6.0 $ 7.0 $ 8.0 $ 9.0 Q1 Q2 Q3 Q4 $ in mill
Slide 15: Matson Logistics Second Quarter 2020 Performance
15 Second Quarter 2020 Earnings Conference Call Matson Logistics Second Quarter 2020 Performance Operating Income $ 0.0 $ 2.0 $ 4.0 $ 6.0 $ 8.0 $ 10.0 $ 12.0 Q1 Q2 Q3 Q4 $ in millions 2019 2020 • Operating income decreased $2.4 million YoY to $8.9 million – Lower contributions from transportation br
Slide 16: Financial Results – Summary Income Statement
16 Second Quarter 2020 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 reversal of $2.9 million resulting from discrete adjustments in applying the provisions of the
Slide 17: Cash Generation and Uses of Cash
17 Second Quarter 2020 Earnings Conference Call Cash Generation and Uses of Cash ($ 50.0) $ 0.0 $ 50.0 $ 100.0 $ 150.0 $ 200.0 $ 250.0 $ 300.0 $ 350.0 $ 400.0 Cash Flow from Operations Net Borrowings Proceeds from Sale-Leasebacks Maint. Capex New Vessel Capex (1) Dividends Other Cash Flows (2) Net D
Slide 18: Cash Generation
18 Second Quarter 2020 Earnings Conference Call Cash Generation • LTM cash flow from operations (CFFO)(1) remained strong with 2Q20 CFFO performance of approximately $72.0 million – Under CARES Act, reclaimed AMT receivable in 2Q20 for approximately $22.9 million $ 0.0 $ 50.0 $ 100.0 $ 150.0 $ 200.0
Slide 19: Financial Results – Summary Balance Sheet
19 Second Quarter 2020 Earnings Conference Call Financial Results – Summary Balance Sheet • Total Debt of $890.0 million(1) • Net Debt of $870.5 million(2) See the Addendum for a reconciliation of GAAP to non-GAAP Financial Metrics. (1) Total Debt is presented before any reduction for deferred loan
Slide 20: Capital Structure and Leverage
20 Second Quarter 2020 Earnings Conference Call Capital Structure and Leverage See the Addendum for a reconciliation of GAAP to non-GAAP Financial Metrics. (1) Total Debt is presented before any reduction for deferred loan fees as required by US GAAP. (2) Reflects an interest rate of approximately 3
Slide 21: Capital Structure and Leverage (continued)
21 Second Quarter 2020 Earnings Conference Call Capital Structure and Leverage (continued) • Announced first Title XI financing transaction on April 30, 2020: – $185.9 million and $177.2 million in gross and net proceeds, respectively – Net proceeds used to reduce outstanding debt – Matures October
Slide 22: New Vessel Payments and Percent of Completion
22 Second Quarter 2020 Earnings Conference Call New Vessel Payments and Percent of Completion Actual and Estimated Vessel Progress Payments(1) FY 2020 ($ in millions) 1Q 2Q Cash Capital Expenditures $ 7.2 $ 5.7 Capitalized Interest 1.9 1.7 Capitalized Vessel Construction Expenditures $ 9.1 $ 7.4 ($
Slide 23: Appendix
23 Second Quarter 2020 Earnings Conference Call Appendix
Slide 24: Appendix – Non-GAAP Measures
24 Second Quarter 2020 Earnings Conference Call Appendix – 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