Matson, Inc. · NYSE:MATX
Matson — Q1 2020 Earnings Presentation
24 slides from Matson's earnings presentation, May 5, 2020
Slide 1: First Quarter 2020 Earnings Conference Call
1 First Quarter 2020 Earnings Conference Call First Quarter 2020 Earnings Conference Call May 5, 2020
Slide 2: Forward-Looking Statements
2 First 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 May 5, 2020. We believe that our expectation
Slide 3: COVID-19 Priorities
3 First Quarter 2020 Earnings Conference Call COVID-19 Priorities We are executing on a number of objectives to manage the business through this period of economic uncertainty. • Safeguarding employee health and safety • Ensuring consistency of service • Responding to the new reality and preparing f
Slide 4: Responding to the New Reality and Preparing for an Extended Downturn
4 First Quarter 2020 Earnings Conference Call Responding to the New Reality and Preparing for an Extended Downturn • Evaluating a number of operational initiatives to increase efficiencies and better align capacity to demand – Move one of our fastest and largest vessels, Daniel K. Inouye, to the CLX
Slide 5: Responding to the New Reality and Preparing for an Extended Downturn (continued)
5 First Quarter 2020 Earnings Conference Call Responding to the New Reality and Preparing for an Extended Downturn (continued) • Defer or eliminate capital projects in FY 2020 – Continue to fund remaining payments on new vessel, phase I Sand Island terminal upgrade and scrubber program – Non-essenti
Slide 6: Recap of First Quarter 2020 Results
6 First Quarter 2020 Earnings Conference Call Recap of First Quarter 2020 Results • Recap of Matson’s 1Q20 results: – Consolidated operating income performance better than expected despite COVID-19 situation – Better-than-expected performance in Ocean Transportation • Consumption of home food and es
Slide 7: Hawaii Service First Quarter 2020 Performance
7 First Quarter 2020 Earnings Conference Call Hawaii Service First Quarter 2020 Performance • Container volume increased 1.7% YoY – Primarily due to consumption of home food and essential goods as residents shelter in place due to COVID-19 Container Volume (FEU Basis) Current Business Trends • State
Slide 8: Hawaii Economic Conditions
8 First Quarter 2020 Earnings Conference Call Hawaii Economic Conditions • Current general state of activity in Hawaii: – Statewide stay-at-home order through May 31 – Virtually no tourism to the islands; flights to Hawaii at “bare bones” levels – Big box retailers, pharmacies, grocery stores and ot
Slide 9: China Expedited Service (CLX) First Quarter 2020 Performance
9 First Quarter 2020 Earnings Conference Call China Expedited Service (CLX) First Quarter 2020 Performance • Container volume decreased 6.5% YoY – Elongated post-Lunar New Year period due to China’s COVID-19 mitigation efforts – Returned to normal volume levels in March • Average freight rates appro
Slide 10: China Expedited Service (CLX)
10 First Quarter 2020 Earnings Conference Call China Expedited Service (CLX) • Transpacific air freight market capacity-constrained with loss of passenger jet belly space – CLX’s expedited service remains an attractive alternative • Expect disruptive conditions in the transpacific tradelane to remai
Slide 11: Guam Service First Quarter 2020 Performance
11 First Quarter 2020 Earnings Conference Call Guam Service First Quarter 2020 Performance • Container volume decreased 3.9% YoY – Lower primarily due to typhoon relief- related volume in the year ago period, – Partially offset by higher volume due to COVID-19 • Increased demand for home food and es
Slide 12: Alaska Service First Quarter 2020 Performance
12 First Quarter 2020 Earnings Conference Call Alaska Service First Quarter 2020 Performance • Container volume increased 11.0% YoY – Higher demand for home food and essential goods – Approximately one-third of volume increase related to volume from dry-dock of TOTE’s vessel – Modestly lower southbo
Slide 13: Alaska Economic Conditions
13 First Quarter 2020 Earnings Conference Call Alaska Economic Conditions • Current state of activity in Alaska: – Statewide shelter-in-place; some non-essential businesses allowed to reopen – Travel ban to and within the State; cruise lines cancelled summer season – Precipitous fall in oil prices t
Slide 14: SSAT Joint Venture First Quarter 2020 Performance
14 First Quarter 2020 Earnings Conference Call SSAT Joint Venture First Quarter 2020 Performance • Terminal joint venture contribution was $4.0 million, $4.5 million lower than last year – Additional expense related to the early adoption of new lease accounting standard in 2Q19, – Lower lift volume
Slide 15: Matson Logistics First Quarter 2020 Performance
15 First Quarter 2020 Earnings Conference Call Matson Logistics First Quarter 2020 Performance Operating Income Current Business Trends • April impacted by lower import volume on U.S. West Coast and temporary closure of retail stores • Expect majority of Logistics businesses to face challenging cond
Slide 16: Financial Results – Summary Income Statement
16 First 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 $2.9 million resulting from discrete adjustments in applying the provisions of the
Slide 17: Cash Generation and Uses of Cash
17 First Quarter 2020 Earnings Conference Call Cash Generation and Uses of Cash ($ 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 Net increa
Slide 18: Financial Results – Summary Balance Sheet
18 First Quarter 2020 Earnings Conference Call Financial Results – Summary Balance Sheet • Total debt of $924.9 million • Net debt of $905.0 million See the Addendum for a reconciliation of GAAP to non-GAAP Financial Metrics. Debt Levels
Slide 19: Leverage, Capital Structure and CARES Act
19 First Quarter 2020 Earnings Conference Call Leverage, Capital Structure and CARES Act • On April 6, 2020, announced amendments to debt agreements to enhance liquidity • Amendments to provide financial flexibility until December 30, 2021 • Allowable leverage ratio increased from 3.75x to: • At end
Slide 20: Leverage, Capital Structure and CARES Act (continued)
20 First Quarter 2020 Earnings Conference Call Leverage, Capital Structure and CARES Act (continued) • Announced Title XI financing transaction on April 30, 2020: – Approximately $186 million and $177 million in gross and net proceeds, respectively – Net proceeds used to reduce outstanding debt – Ma
Slide 21: New Vessel Payments and Percent of Completion
21 First Quarter 2020 Earnings Conference Call New Vessel Payments and Percent of Completion Actual and Estimated Vessel Progress Payments(1) FY 2020 ($ in millions) 1Q Cash Capital Expenditures $ 7.2 Capitalized Interest 1.9 Capitalized Vessel Construction Expenditures $ 9.1 ($ in millions) Cumulat
Slide 22: Concluding Remarks
22 First Quarter 2020 Earnings Conference Call Concluding Remarks • 2Q20 likely to be the worst period in this cycle – Lack of tourism a key negative in the near-term – Economic headwinds from shelter-in-place orders • Matson’s high quality services will be a standout – Lifeline to remote communitie
Slide 23: Appendix
23 First Quarter 2020 Earnings Conference Call Appendix
Slide 24: Appendix – Non-GAAP Measures
24 First 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, hel