UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 8, 2020 (
(Exact Name of Registrant as Specified in its Charter)
_____________________
|
| |||
(State or Other Jurisdiction of | (Commission File Number) | (I.R.S. Employer Identification |
| ||
(Address of principal executive offices) | (zip code) |
Registrant’s telephone number, including area code: (
(Former Name or former address, if changed since last report)
_____________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02.Results of Operations and Financial Condition.
On October 8, 2020, Matson, Inc. (the “Company”) issued a press release announcing the Company’s preliminary earnings for the quarter ended September 30, 2020. A copy of the press release is attached hereto as Exhibit 99.1. In addition, the Company posted an investor presentation to its website. A copy of the investor presentation is attached hereto as Exhibit 99.2.
The information in this report (including Exhibits 99.1 and 99.2) is being furnished pursuant to Item 2.02 and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
Item 9.01.Financial Statements and Exhibits.
(a) - (c) Not applicable.
(d) Exhibits.
The exhibit listed below is being furnished with this Form 8-K.
99.1 | |
99.2 | |
104 | Cover Page Interactive Data File (formatted in Inline XBRL and included as Exhibit 101). |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
MATSON, INC. | |
/s/ Joel M. Wine | |
Joel M. Wine | |
Senior Vice President and Chief Financial Officer | |
Dated: October 8, 2020 |
Exhibit 99.1
Investor Relations inquiries: | News Media inquiries: |
Lee Fishman | Keoni Wagner |
Matson, Inc. | Matson, Inc. |
510.628.4227 | 510.628.4534 |
lfishman@matson.com | kwagner@matson.com |
FOR IMMEDIATE RELEASE
MATSON announces PRELIMINARY 3q20 results, provides business update and announces 3q20 earnings call date
| ● | Expects 3Q20 operating income for Ocean Transportation to be $84.5 to $86.5 million vs. $43.9 million in 3Q19 |
| ● | Expects 3Q20 operating income for Logistics to be $11.5 to $12.5 million vs. $11.3 million in 3Q19 |
| ● | Expects 3Q20 net income and diluted EPS to be $67.2 to $69.4 million and $1.55 to $1.60, respectively |
| ● | Year-over-year increase in consolidated operating income driven primarily by China service strength |
| ● | Available borrowings of approximately $519 million at quarter end and leverage ratio per debt agreements of approximately 2.4x |
| ● | Announces third quarter earnings call date on November 2, 2020 |
HONOLULU, Hawaii (October 8, 2020) – Matson, Inc. (NYSE: MATX) today announces preliminary third quarter financial results, provides a business update and announces that its third quarter earnings call date will be held on November 2, 2020.
“Matson’s businesses continued to perform well in the third quarter despite the ongoing challenges from the COVID-19 pandemic and related economic effects,” said Chairman and Chief Executive Officer Matt Cox. “Our China service, consisting of the CLX and CLX+ services, was the primary driver of the increase in consolidated operating income year-over-year as a result of strong demand for our expedited ocean services and ongoing challenges in the transpacific air freight markets. I am confident that we can make the CLX+ a permanent service because of Matson’s fifteen-year track record of operating our industry leading expedited CLX service in the transpacific tradelane, the introduction of our new Alaska-to-Asia Express (AAX) service for Alaska seafood exports to Asia as part of the CLX+ westbound return trip to China, and the likelihood of continued favorable transpacific tradelane supply and demand dynamics going forward.”
Mr. Cox added, “In our other core tradelanes, we saw an improvement in freight volume in each of the tradelanes from the levels achieved in the second quarter during the height of the COVID-19 pandemic as freight demand improved with the reopening of local economies. Hawaii volume approached the level achieved in the prior year quarter, although continued restrictions on tourism and a second shelter-in-place order in the latter half of the third quarter weighed on freight demand. In Alaska and Guam, we saw modestly higher year-over-year volume growth. Logistics operating income increased year-over-year as the continued reopening of the U.S. economy led to improved performance in all of the business lines. We also continued to achieve cost benefits from our previously-announced cost management initiatives. As a result, Matson expects third quarter operating income for Ocean Transportation of $84.5 to $86.5 million and Logistics operating income of $11.5 to $12.5 million. We also expect third quarter 2020 net income and diluted EPS to be $67.2 to $69.4 million and $1.55 to $1.60, respectively.”
1
Third Quarter Tradelane Volume (Forty-foot equivalent units (FEU)) (1)(2):
For the three months ended September 30, 2020 compared to the three months ended September 30, 2019 and on a FEU basis:
| ● | Hawaii container volume decreased 0.8 percent primarily due to lower volume from the state’s COVID-19 mitigation efforts including restrictions on tourism and a second shelter-in-place order that took effect in August; |
| ● | Alaska volume increased 1.5 percent primarily due to higher southbound volume as a result of stronger seafood volume compared to the prior year, partially offset by modestly lower northbound volume; |
| ● | China volume was 124.7 percent higher primarily due to volume from the CLX+ service in addition to higher volume on the CLX service as a result of increased capacity in the tradelane; |
| ● | Guam volume was 2.1 percent higher primarily due to increased demand for retail-related goods as the local economy reopened following the shelter-in-place in the second quarter of 2020; and |
| ● | Other containers volume increased 4.5 percent. |
| (1) | Approximate volumes included for the period are based on the voyage departure date, but revenue and operating income are adjusted to reflect the percentage of revenue and operating income earned during the reporting period for voyages in transit at the end of each reporting period. |
| (2) | Other containers includes containers from services in various islands in Micronesia and the South Pacific, and Okinawa, Japan. |
Liquidity and Debt Outstanding
Total debt decreased by $66.4 million during the three months to $823.6 million as of September 30, 2020. As of September 30, 2020, Matson had available borrowings under its revolving credit facility of approximately $519 million. The leverage ratio under the debt agreements as of September 30, 2020 was approximately 2.4x.
A slide presentation that accompanies this press release is available on the Company's website at www.matson.com, under Investors.
Teleconference and Webcast
A conference call is scheduled on November 2, 2020 at 4:30 p.m. ET when Matt Cox, Chairman and Chief Executive Officer, and Joel Wine, Senior Vice President and Chief Financial Officer, will discuss Matson’s third quarter results.
Date of Conference Call: | Monday, November 2, 2020 |
Scheduled Time: | 4:30 p.m. ET / 1:30 p.m. PT / 11:30 a.m. HT |
Participant Toll Free Dial-In #: | 1-877-312-5524 |
International Dial-In #: | 1-253-237-1144 |
The conference call will be broadcast live along with an additional slide presentation on the Company’s website at www.matson.com, under Investors. A replay of the conference call will be available approximately two hours after the call through November 9, 2020 by dialing 1-855-859-2056 or 1-404-537-3406 and using the conference number 8075505. The slides and audio webcast of the conference call will be archived for one full quarter on the Company's website at www.matson.com, under Investors.
2
About the Company
Founded in 1882, Matson (NYSE: MATX) is a leading provider of ocean transportation and logistics services. Matson provides a vital lifeline to the domestic non-contiguous economies of Hawaii, Alaska, and Guam, and to other island economies in Micronesia. Matson also operates a premium, expedited service from China to Southern California and provides services to Okinawa, Japan and various islands in the South Pacific. The Company's fleet of owned and chartered 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, warehousing, freight consolidation, Asia supply chain services, and forwarding to Alaska. Additional information about the Company is available at www.matson.com.
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, including without limitation those statements regarding operating income, net income, earnings per share, the COVID-19 pandemic and subsequent economic effects, making the CLX+ service permanent, contributions of the AAX service to Alaska volume, demand for transpacific expedited ocean services, additional CLX vessel charter sailings, economic growth and drivers in Hawaii, Alaska and Guam, and operational changes. These statements 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 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; regional, national and international economic conditions; new or increased competition or improvements in competitors’ service levels; fuel prices, our ability to collect fuel-related surcharges and/or the cost or limited availability of low-sulfur fuel; delays or cost overruns related to the installation of scrubbers; our relationship with vendors, customers and partners and changes in related agreements; the actions of our competitors; our ability to offer a differentiated service in China for which customers are willing to pay a significant premium; the imposition of tariffs or a change in international trade policies; the magnitude and timing of the impact of public health crises, including COVID-19; the ability of the NASSCO shipyard to construct and deliver Matsonia on the contemplated timeframe; any unanticipated dry-dock or repair expenses; any delays or cost overruns related to the modernization of terminals; consummating and integrating acquisitions; changes in general economic and/or industry-specific conditions; competition and growth rates within the logistics industry; freight levels and increasing costs and availability of truck capacity or alternative means of transporting freight; changes in relationships with existing truck, rail, ocean and air carriers; changes in customer base due to possible consolidation among customers; conditions in the financial markets; changes in our credit profile and our future financial performance; our ability to obtain future debt financings; continuation of the Title XI and CCF programs; the impact of future and pending legislation, including environmental legislation; government regulations and investigations; relations with our unions; satisfactory negotiation and renewal of expired collective bargaining agreements without significant disruption to Matson’s operations; war, terrorist attacks or other acts of violence; the use of our information technology and communication systems and cybersecurity attacks; 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 Annual Report on Form 10-K, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, 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.
3
Exhibit 99.2
| 1 Preliminary Third Quarter 2020 Earnings Supplement Third Quarter 2020 Preliminary Earnings Supplement October 8, 2020 |
| 2 Preliminary Third Quarter 2020 Earnings Supplement 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 October 8, 2020. We believe that our expectations and assumptions are reasonable. Actual results may differ materially, due to risks and uncertainties, such as those described on pages 24-34 of our Form 10-Q filed on May 5, 2020 and other subsequent filings by Matson with the SEC. Statements made during this presentation are not guarantees of future performance. We do not undertake any obligation to update our forward-looking statements. |
| 3 Preliminary Third Quarter 2020 Earnings Supplement Preliminary Third Quarter 2020 Results • Matson’s lines of business continued to perform well in 3Q20 despite the ongoing challenges from the COVID-19 pandemic and related economic effects • China service, consisting of CLX and CLX+, was the primary driver of the increase in consolidated operating income year-over-year • Now confident CLX+ service can be permanent – Continued strong demand expected for our transpacific expedited ocean services – Leverages Matson’s unique 15-year track record of operating the fastest and most reliable service in the industry – Westbound seafood back-haul from AAX call in Dutch Harbor expected to help long-term economics • Ocean Transportation – China strength – CLX+ voyages and increased capacity in the CLX service – Hawaii, Alaska and Guam volumes improved from levels achieved in 2Q20 as freight demand improved with reopening of local economies; Alaska and Guam volume higher YoY, and Hawaii volume approached 3Q19 level • Logistics – Continued reopening of the U.S. economy led to improved performance in all of the business lines |
| 4 Preliminary Third Quarter 2020 Earnings Supplement ($ in millions, except per share data) Preliminary Range ($ in millions) INCOME STATEMENT BALANCE SHEET Operating Income Net debt Ocean Transportation $ 43.9 $ 84.5 - $ 86.5 Total debt (1) $ 823.6 Logistics 11.3 11.5 - 12.5 Cash and cash equivalents (12.7) Total operating income 55.2 96.0 - 99.0 Net debt $ 810.9 Other income (expense), net (0.5) 2.4 - 2.4 Total debt Interest expense (6.2) (5.7) -(5.7) Private placement term loans $ 337.7 Income before income taxes 48.5 92.7 - 95.7 Title XI debt 362.9 Revolving credit facility (2) 123.0 Income taxes 12.3 25.5 - 26.3 Total debt (1) $ 823.6 Effective income tax rate 25.4% 27.5% - 27.5% Net income $ 36.2 $ 67.2 - $ 69.4 Diluted EPS $ 0.84 $ 1.55 - $ 1.60 Quarter Ended September 30, 2020 Quarter Ended September 30, 2020 Quarter Ended September 30, 2019 Preliminary Third Quarter 2020 Results (continued) (1) Total debt is presented before any adjustment for deferred loan fees as required by U.S. GAAP. (2) Available borrowings of approximately $519 million at end of Q3 2020. • Leverage ratio per debt agreements of approximately 2.4x |
| 5 Preliminary Third Quarter 2020 Earnings Supplement Hawaii Service Third Quarter 2020 Performance • Container volume decreased 0.8% YoY – WB market benefitted from reopening of local economy following temporary retail store closures in 2Q • Benefitted from stimulus spending – Continued negative impact from tourism restrictions – Modest negative impact in September from second shelter-in-place order – No Pasha volume in 3Q • Hawaii economy remains in significant downturn; travel restrictions to Hawaii set to ease – Pre-travel testing to start on October 15 unless delayed further – Economic recovery trajectory remains highly uncertain as tourism-related businesses in difficult environment – Unemployment remains elevated Container Volume (FEU Basis) 25,000 27,000 29,000 31,000 33,000 35,000 37,000 39,000 Q1 Q2 Q3 Q4 2019 2020 Note: 2Q 2020 volume figure includes volume related to Pasha’s vessel dry-docking. (0.8)% |
| 6 Preliminary Third Quarter 2020 Earnings Supplement China Service Third Quarter 2020 Performance • Container volume increased 124.7% YoY – Approximately 85% of YoY volume increase driven by CLX+ • Continued dislocation in transpacific air freight markets led to strong demand for Matson’s expedited services – CLX and CLX+ vessels sailed at capacity • Increased capacity in CLX service in 3Q with addition of Daniel K. Inouye • Demand driven by e-commerce and other high-demand goods – Tight inventories in the U.S. and continued consumption of imported goods in lieu of services Container Volume (FEU Basis) 8,000 13,000 18,000 23,000 28,000 33,000 38,000 43,000 Q1 Q2 Q3 Q4 2019 2020 Note: 2Q 2020 volume figure includes volume related to seven CLX+ voyages. 3Q 2020 volume figures includes weekly CLX+ voyages. 124.7% |
| 7 Preliminary Third Quarter 2020 Earnings Supplement CLX+ and the Alaska-Asia Express On August 26th, Matson announced the introduction of the Alaska-Asia Express (AAX) as a backhaul service on the CLX+ • Important route for Alaska seafood exports to Asia • Connecting service from Anchorage and Kodiak via Matson’s domestic Alaska service • Expect the AAX service to be a modest contributor to Alaska volume and not a material contributor to consolidated operating income in the full year 2020 |
| 8 Preliminary Third Quarter 2020 Earnings Supplement Guam Service Third Quarter 2020 Performance • Container volume increased 2.1% YoY – Benefitted from reopening of local economy following shelter-in-place and temporary retail store closures in 2Q – Benefitted from stimulus spending • Guam economy in downturn as tourism levels remain depressed – Second shelter-in-place order in late August to mitigate spread of COVID-19 – Economic recovery trajectory remains highly uncertain – Unemployment remains elevated Container Volume (FEU Basis) 3,000 3,500 4,000 4,500 5,000 5,500 Q1 Q2 Q3 Q4 2019 2020 2.1% |
| 9 Preliminary Third Quarter 2020 Earnings Supplement Alaska Service Third Quarter 2020 Performance • Container volume increased 1.5% YoY – Higher southbound volume as a result of stronger seafood volume – Modestly lower northbound volume – Benefitted from continued reopening of local economy from temporary retail store closures in 2Q – Benefitted from stimulus spending • Alaska economy continues to recover, but recovery trajectory remains highly uncertain – Unemployment remains elevated – Alaska permanent fund dividend paid early in July vs. October last year – Low oil price environment expected to continue to negatively impact oil exploration and production Container Volume (FEU Basis) Note: 1Q 2020 volume figure includes volume related to a competitor’s vessel dry- docking. 10,000 12,000 14,000 16,000 18,000 20,000 22,000 Q1 Q2 Q3 Q4 2019 2020 1.5% |
| 10 Preliminary Third Quarter 2020 Earnings Supplement Matson Logistics Third Quarter 2020 Performance Operating Income $ 0.0 $ 2.0 $ 4.0 $ 6.0 $ 8.0 $ 10.0 $ 12.0 $ 14.0 Q1 Q2 Q3 Q4 $ in millions 2019 2020 • Operating income of $11.5 to $12.5 million; YoY change of $0.2 to $1.2 million – Higher contributions from all of the business lines – Benefitted from reopening of U.S. economy and demand for e-commerce and high demand goods $11.5 to $12.5 million |
