Alexander & Baldwin Management Discusses Q3 2010 Results – Earnings Call Transcript
Alexander & Baldwin, Inc. (
)
Q3 2010 Earnings Call
November 3, 2010; 05:00 pm ET
Executives
Stanley Kuriyama - A&B President & Cheif Executive Officer
Christopher Benjamin - A&B Cheif Financial Officer & General Manager of HC&S
Norb Buelsing - President of A&B Property
Matthew Cox - President of Matson Navigation Company
Suzy Hollinger – Director, Investor Relations
Analysts
George Pickral – Stephens
Sheila Mcgrath – KBW
Brendan Maiorana – Wells Fargo
Sloan Bohlen – Goldman Sachs
Tom Spiro - Spiro Capital
Louis Keith – Year Capital Management
Presentation
Operator
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Good day ladies and gentlemen, and welcome to the third quarter 2010 Alexander & Baldwin earnings conference call. My name is Rancy and I am your operator for today. At this time, all participants are in listen-only mode. (Operator Instructions)
I would now like to turn the presentation over to your host for today’s call Ms. Suzy Hollinger, Madam, you may proceed.
Suzy Hollinger
Thank you, operator. Good afternoon and welcome to Alexander & Baldwin’s third quarter 2010 earnings call. On the call with me today from Honolulu are Stan Kuriyama, A&B President and CEO, Chris Benjamin, A&B CFO and also General Manager of HC&S, and Norb Buelsing, President of A&B Property. And joining us from Matson’s headquarters in Oakland is Matt Cox, President of Matson Navigation Company.
Before we commence, please note that statements in this call and presentation that set forth expectations or predictions are based on facts and situations that are known to us as of today, November 3, 2010. Actual results may differ materially due to risks and uncertainties such as those described on pages 17 through 26 of our 2009 Form 10-K and our other subsequent filings with the SEC. Statements in this call and presentation are not guarantees of future performance.
Slides from this presentation are available for your download at our website, www.alexanderbaldwin.com. You will see an icon at the top of the website to direct you to the appropriate section for download.
This slide provides an agenda for our presentation, after which we will take your question. We’ll start with Stan who will comment on the performance for the quarter.
Stanley Kuriyama
Thank you, Suzy. We are pleased with the company’s performance in the third quarter given the overall economic conditions across the markets we serve. Net income for the third quarter was $26 million, or $0.62 a share, substantially higher than the earnings for the same quarter last year of $9 million or $0.21 a share. With this performance, year-to-date earnings have already surpassed 2009 full year earnings by over 60%.
Third quarter results were driven principally by 67% increase in Ocean Transportation operating profit and the turnaround in Agribusiness performance compared with the prior year’s quarter. Let me now brief you on the third quarter highlights. Our China Long Beach service performed extremely well and was again the principal driver of overall results.
Favorable market dynamics have resulted in significantly improved rates and the peak season surcharge typically levy from August to September was in effect for the entire third quarter. Volumes were also up driving earnings improvement in our stevedoring joint venture SSAT.
The initiation of our second China service, CLX2 is progressing nicely and our financial performance is tracking our previous estimates. Volumes for our Hawaii and Guam trade lanes were relatively stable.
And real estate despite, lower third quarter leasing results, we’ve noted that both occupancies and rates in our lease portfolio have stabilized. And we’re encouraged by the general pickup in leasing interest. In the third quarter, we acquired a 35 acre industrial park on Oahu. And we laid the ground work for the sale of a large warehouse complex in Ontario, California that closed in early October.
And for the acquisition of 142,000-square-foot grocery-anchored retail center in Sandy, Utah which we closed last week. Finally, higher sugar prices and a 23% increase in tons of sugar produced helped further the turnaround in Agribusiness performance. And we’re on course for breakeven, for even modest profitability for the year.
Now before I turn the call over to the other participants, let me briefly comment on the Hawaii economy.
Tourism was up strongly in July and August. Visitor arrivals increased driven by improved visit accounts from the Mainland in Canada. Visitor expenditures of state wide hotel occupancies increased as well. The outlook for tourism remains positive and several airlines have announced an increase in seats to Hawaii.
Year-to-date residential resale volumes were significantly higher than last year and medium prices on Oahu, Hawaii’s largest market were up 4% over the same period. Unemployment dropped from the last month and last year and remains well below the national rate. While these indications are encouraging, economic recovery has not extended to all sectors of Hawaii’s economy and that’s not yet translated into improved performance for some of our business lines.
For example, construction, which is a large driver of Matson's Hawaiian container volumes, remains week. As with past presentations, we’ve included information on Hawaii’s economic performance in the appendix.
With that let me now ask Matt to update you on Matson’s performance.
Matthew Cox
Thanks, Stan, and good afternoon to everyone. As Stan mentioned, Ocean Transportation’s operating profit was up dramatically in the third quarter, compared with last year primarily from the strong performance in our China service. Overall strength in this trade lane also drove income from our SSAT joint venture hire while volumes for Hawaii and Guam were relatively stable.
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