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Matson Inc.
Matson Inc.
08/02/2012 | Press release
Matson, Inc. Announces Second Quarter 2012 Financial Results
distributed by noodls on 08/05/2012 13:58
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Media inquiries:
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Investor inquiries:
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Jeff S. Hull
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Phyllis Proffer
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Matson, Inc.
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Matson, Inc.
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510.628.4534
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510.628.4021
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jhull@matson.com
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pproffer@matson.com
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FOR IMMEDIATE RELEASE
Matson, Inc. Announces Second Quarter 2012 Financial
Results
· Operating Income increased 11.3% to $32.5
million
· Consolidated Revenue of $394.2 million was up
4.5%
· Income from Continuing Operations of $0.36 per
diluted share
· Net Income of $0.18 per diluted share
· Matson separates from parent and becomes stand-alone
company
HONOLULU, Hawaii (August 2, 2012) - Matson, Inc. (NYSE:
MATX), a premier ocean transportation and logistics
company, today reported net income for the second
quarter ended June 30, 2012 of $7.8 million, or $0.18
per diluted share. Net income for the second quarter
ended June 30, 2011 was $18.7 million, or $0.44 per diluted
share. Net income for the second quarter of 2012 was
negatively impacted by $4.8 million of aftertax
separation costs, a high effective tax rate for the quarter
of 50.0 percent due to separation items, and a net loss
from discontinued operations of $7.5 million. Total
consolidated revenue of $394.2 million for the second quarter
ended June 30, 2012 was 4.5 percent higher than the
$377.4 million of revenue generated during the second
quarter last year.
Operating income increased 11.3 percent to $32.5
million for the second quarter ended June 30, 2012
compared with $29.2 million last year. Operating income for
the second quarter of 2012 was negatively impacted by
separation costs of $5.8 million.
Income from continuing operations for the second
quarter ended June 30, 2012 was $15.3 million, or $0.36
per diluted share, compared with $17.7 million, or $0.42
per diluted share, last year. Income from continuing
operations for the second quarter of 2012 was
negatively impacted by separation costs of $4.8 million
after-tax and a significantly higher tax rate compared
with the second quarter last year due to the
separation.
The financial results for the second quarter and first
six months of 2012 reflect Matson's separation from
its former parent corporation, Alexander & Baldwin, Inc.
("A&B"), on June 29, 2012. The separation of
Matson from A&B was originally announced on December 1,
2011. Due to the structure of the separation transaction,
A&B's non- Matson operations have been included in
Matson's financial statements as discontinued
operations.
Commenting on the quarter, President and Chief
Executive Officer Matt Cox said, "While we are
reporting improved operating income for the second quarter
compared with last year, the financial performance of
our businesses continues to be mixed with weaker Hawaii
freight volume more than offset by improved volume in Guam
and improved freight rates in China.
"Our volume in the Hawaii trade lane remains
suppressed in part due to ongoing weakness in
construction activity. However, we are benefitting from
increased volume in the Guam trade lane resulting from
the exit of a major competitor in late 2011 and
improved rates for our premium niche service in the China
trade lane. The financial performance of our
wholly-owned subsidiary, Matson Logistics, is beginning to
improve but continues to perform below 2011 levels due
primarily to our Northern California warehousing
business," Cox said.
During the quarter, Matson executed a new $375 million
five-year unsecured revolving credit facility with a
syndicate of banks and raised $170 million of new
long-term privately placed debt with a weighted average
coupon of 3.97 percent and a weighted average duration
of 9.3 years. Matson's total outstanding debt at the end
of the second quarter was $372.8 million. As previously
announced, Matson's Board of Directors declared a
cash dividend of $0.15 per share payable on September 6, 2012
to shareholders of record on August 2, 2012. Capital
expenditures for the first half of 2012 were $17.5
million.
Discontinued Operations
Matson, Inc. does not beneficially own any shares of
A&B's common stock and will not consolidate
A&B's financial results for the purpose of its financial
reporting. For prior periods, including the second
quarter of 2012, the historical financial results of A&B
will be reflected in Matson's consolidated
financial statements as discontinued operations.
Matson terminated its second China-Long Beach Express
service (CLX2) in the third quarter of 2011, and those
results are also included in discontinued operations.
Matson reported a $7.5 million loss from discontinued
operations, or a loss of $0.18 per diluted share, for
the second quarter ended June 30, 2012 compared with income
from discontinued operations of $1.0 million, or $0.02
per diluted share, in the second quarter ended June 30,
2011. The loss from discontinued operations for the six
months ended June 30, 2012 was $6.1 million, or a loss
of $0.15 per diluted share, compared with income from
discontinued operations of $3.2 million, or $0.07 per diluted
share, for the same time period last year.
Separation Costs
The costs related to the separation from A&B during the
second quarter ended June 30, 2012 were $5.8 million
pre-tax or $4.8 million after-tax. The costs related to
separation for the six months ended June 30, 2012 were
$8.3 million pre-tax or $6.9 million aftertax.
Separation costs were primarily related to legal,
professional, audit and registration fees.
Tax Rate
Matson's 50.0 percent tax rate in the second
quarter and 50.1 percent in the first half of 2012 were
higher than its previous estimated effective tax rate of 38.8
percent primarily due to certain separation-related
transaction costs incurred for which Matson recorded no
tax benefit and the re-measurement of uncertain tax
provisions as required by the separation transaction.
The Company expects its effective tax rate to be
approximately 38.5 percent in the third and fourth
quarters of 2012.
SECOND
QUARTER
Net Income
Net income for the second quarter ended June 30, 2012
was $7.8 million, or $0.18 per diluted share, including
$4.8 million of after-tax costs related to the separation
from A&B. Net income for the second quarter ended June
30, 2011 was $18.7 million, or $0.44 per diluted
share.
Revenue
Total consolidated revenue of $394.2 million for the
second quarter ended June 30, 2012 was 4.5 percent
higher than the $377.4 million reported for the second
quarter ended June 30, 2011 as a result of revenue
growth in ocean transportation.
Segment Information
Ocean Transportation - Second Quarter of 2012 compared
with 2011
| Quarter Ended June 30 | |||
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(Dollars in millions)
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2012
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2011
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Change
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Revenue
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$ 299.5
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$ 274.3
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9.2% |
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Operating profit
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$ 31.2
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$ 27.1
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15.1%
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Operating profit margin
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10.4%
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9.9%
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Volume (units)*
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|||
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Hawaii containers
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33,900
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35,600
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-4.8%
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Hawaii automobiles
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20,900
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23,700 -
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11.8%
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China containers
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15,200
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14,900
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2.0%
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Guam containers
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6,100
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3,400
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79.4%
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* Container volumes included for the period are based
on the voyage departure date, but revenue and operating
profit are adjusted to reflect the percentage of
revenue and operating profit earned during the reporting
period for voyages that straddle the beginning or end
of each reporting period.
Ocean transportation generated a revenue increase of
9.2 percent in the second quarter ended June 30, 2012
compared with last year, primarily due to increased volume in
the Guam trade lane resulting from the exit of a major
competitor and improved freight rates in the China
trade lane, partially offset by reduced volume in the Hawaii
trade. In addition, there was an increase in fuel
surcharges resulting from higher fuel costs. The
Company expects another carrier to enter the Guam trade
lane eventually, which will negatively impact the
Company's volume of business in that trade lane.
The operating profit of ocean transportation was $31.2
million, or 10.4 percent of revenue, which represents a
15.1 percent increase over last year despite the
negative impact of $5.8 million of separation costs.
The operating profit for the second quarter last year
was $27.1 million, or 9.9 percent of revenue. The increase in
the operating profit margin was primarily attributable
to higher volume in the Guam trade lane and increased
rates in the China trade lane, offset partially by lower
volume in the Hawaii trade lane.
The SSAT joint venture with SSA Ventures, a subsidiary
of Carrix, Inc., contributed $1.6 million to the
operating profit of ocean transportation during the second
quarter ended June 30, 2012 compared with $2.8 million
reported for the same period last year. The decline is
primarily due to lower container lift volume.
Matson Logistics - Second Quarter of 2012 compared with
2011
| Quarter Ended June 30 | |||
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(Dollars in millions)
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2012
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2011
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Change
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Intermodal revenue
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$ 59.2
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$ 63.5
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-6.8%
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Highway revenue
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35.5
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39.6
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-10.4%
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Total Revenue
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$ 94.7
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$ 103.1
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-8.1%
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Operating profit
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$ 1.3
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$ 2.1
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-38.1%
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Operating profit margin
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1.4%
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2.0%
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The revenue for Matson Logistics, a wholly-owned
subsidiary, decreased 8.1 percent in the second quarter
ended June 30, 2012 compared with last year, primarily due to
a decrease in highway, warehousing and international
intermodal volumes, which were partially offset by an
increase in domestic intermodal volume. The decline in
international intermodal volume was primarily due to the
discontinuation of CLX2 and the loss of a major ocean
carrier customer.
Matson Logistics' operating profit for the second
quarter was $1.3 million, or 1.4 percent of revenue,
compared with $2.1 million, or 2.0 percent of revenue last
year. The decline in the operating profit margin was
primarily due to lower profitability of the warehouse
business resulting from the Northern California operations as
well as lower revenue in the highway and international
intermodal businesses.
FIRST
SIX
MONTHS
Net Income
Net income for the six months ended June 30, 2012 was
$11.2 million, or $0.26 per diluted share, including
$6.9 million of after-tax costs related to the separation
from A&B. Net income for the six months ended June 30,
2011 was $23.9 million, or $0.57 per diluted
share.
Revenue
Total consolidated revenue of $760.3 million for the
six months ended June 30, 2012 was 7.5 percent higher
than the $707.1 million reported in the comparable period
last year as a result of revenue growth in the ocean
transportation business.
Segment Information
Ocean Transportation - First Half 2012 compared with
First Half 2011
| First Six Months Ended June 30 | |||
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(Dollars in millions)
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2012
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2011
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Change
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Revenue
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$ 579.0
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$ 512.7
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12.9%
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Operating profit
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$ 37.0
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$ 32.3
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14.6%
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Operating profit margin
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6.4%
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6.3%
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Volume (units)
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Hawaii containers
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66,400
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69,600
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-4.6%
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Hawaii automobiles
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37,800
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41,600
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-9.1%
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China containers
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28,900
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27,800
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4.0%
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Guam containers
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12,500
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6,700
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86.6%
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* Container volumes included for the period are based
on the voyage departure date, but revenue and operating
profit are adjusted to reflect the percentage of
revenue and operating profit earned during the reporting
period for voyages that straddle the beginning or end
of each reporting period.
Ocean transportation generated a revenue increase of
12.9 percent during the six months ended June 30, 2012
compared with last year, primarily due to higher fuel
surcharges resulting from higher fuel prices, increased
volume in the Guam trade lane resulting from the exit
of a major competitor and increased volume and freight rates
in the China trade lane, which were partially offset by
reduced volume in the Hawaii trade.
The operating profit for ocean transportation for the
six months ended June 30, 2012 was $37.0 million, or
6.4 percent of revenue, an increase of 14.6 percent despite
the negative impact of $8.3 million of separation
costs. The operating profit for the same period last
year was $32.3 million, or 6.3 percent of revenue. The
increase in the operating profit margin was primarily
attributable to higher volume in the Guam trade lane
and increased volume as well as increased rates in the China
trade lane, offset partially by lower volume in the
Hawaii trade lane.
The SSAT joint venture with SSA Ventures, a subsidiary
of Carrix, Inc., contributed $2.4 million to the
operating profit of ocean transportation during the first six
months of 2012 compared with $4.0 million for the same
period last year. The decline is primarily due to lower
container lift volume.
Matson Logistics - First Half 2012 compared with
2011
| Fist Six Months Ended June 30 | |||
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(Dollars in millions)
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2012
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2011
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Change
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Intermodal revenue
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$ 111.8
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$ 117.4
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-4.8%
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Highway revenue
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69.5
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77.0
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-9.7%
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Total Revenue
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$ 181.3
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$ 194.4
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-6.7%
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Operating profit
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$ 1.6
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$ 3.6
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-55.6%
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Operating profit margin
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0.9%
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1.9%
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The revenue for Matson Logistics, a wholly-owned
subsidiary, decreased 6.7 percent during the six months
ended June 30, 2012 compared with last year, primarily due to
a decrease in highway, warehousing and international
intermodal volumes, which were partially offset by an
increase in domestic intermodal volume. The decline in
international intermodal volume was primarily due to the
discontinuation of CLX2 and the loss of a major ocean
carrier customer.
Matson Logistics' operating profit for the six
months ended June 30, 2012 was $1.6 million, or 0.9
percent of revenue, compared with $3.6 million, or 1.9
percent of revenue last year. The decline in the
operating profit margin was primarily due to lower
profitability of the warehouse business resulting from the
Northern California operations as well as lower revenue
in the highway and international intermodal
businesses.
TELECONFERENCE
ANDWEBCAST
Matson, Inc. has scheduled a conference call at 4:30
p.m. EDT/1:30 p.m. PDT/10:30 a.m. HST today to discuss
its second quarter performance. The call will be
broadcast live on the Company's Web Site at
www.matson.com; Investor Relations. A replay of the
conference call will be available approximately two hours
after the call and available until 6:30 p.m. EDT on
Thursday, August 16, 2012 by dialing 412-317-0088 or toll
free 877-344-7529 and using the conference number
10016682 followed by the # sign. The audio Webcast of
the conference call will also be archived for one full
quarter on the Company's Web Site on the Events and
Presentation page under Investor Relations.
FORWARD
-LOOKING
STATEMENTS
Statements in this news release that are not historical
facts are "forward-looking statements,"
within the meaning of the Private Securities Litigation
Reform Act of 1995, that involve a number of risks and
uncertainties that could cause actual results to differ
materially from those contemplated by the relevant
forward-looking statement, including but not limited to
risks and uncertainties relating to United States, global or
regional economic conditions; new or increased
competition; fuel prices and our ability to collect
fuel surcharges; our relationship with vendors, customers and
partners and changes in related agreements; the timing
of the entry of a competitor in the Guam trade lane;
conditions in the financial markets; changes in our credit
profile and our future financial performance; the
impact of future and pending legislation, including
environmental legislation; government regulations and
investigations; repeal, substantial amendment or waiver
of the Jones Act or its application, or our failure to
maintain our status as a United States citizen under
the Jones Act; relations with our unions; and the
occurrence of marine accidents, poor weather or natural
disasters. These forward-looking statements are not
guarantees of future performance. This release should be read
in conjunction with our predecessor's (Alexander &
Baldwin, Inc.) Annual Report on Form 10-K and our
predecessor's and our other filings with the SEC through
the date of this release, which identify important
factors that could affect the forward-looking
statements in this release. We do not undertake any
obligation to update our forward-looking
statements.
ABOUT
THECOMPANY
Founded in 1882, Matson is one of the leading U.S.
carriers in the Pacific. Matson provides a vital
lifeline to the island economies of Hawaii, Guam and
Micronesia and premium, expedited service from China to
Southern California. The Company's fleet of 17
vessels includes containerships, combination container and
roll-on/roll-off ships and custom-designed barges.
Matson Logistics, established in 1987, extends the
geographic reach of Matson's transportation network
throughout the continental U.S. Its integrated,
asset-light logistics services include rail intermodal,
highway brokerage and warehousing. Additional
information about Matson, Inc. is available at
www.Matson.com.
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