Alexander & Baldwin, Inc. (ALEX)

Separation Plan Announcement Conference Call

December 02, 2011 08:00 am ET

Executives

Suzy Hollinger - Director, IR

Stan Kuriyama - President & CEO

Joel Wine - CFO

Chris Benjamin - President, Alexander & Baldwin Land Group

Matt Cox - President, Matson Navigation Company

Analysts

Jack Atkins - Stephens Inc.

Sheila Mcgrath - KBW

Brendan Maiorana - Wells Fargo

Presentation

Operator

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Good day, ladies and gentlemen and welcome to the Alexander & Baldwin Inc Separation Plan announcement webcast. My name is Diana and I will be the operator for today. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. (Operator Instructions) As a reminder, today’s conference is being recorded for replay purposes. I would now like to turn the call over to your host, Ms. Suzy Hollinger, Director, Investor Relations. Please proceed Ma’am.

Suzy Hollinger

Thank you, operator. Hello and welcome to Alexander & Baldwin’s call to discuss our plans to separate our land and transportation company. On the call with me today are Stan Kuriyama, Alexander & Baldwin President and CEO; Joel Wine, CFO; Chris Benjamin, President of Alexander & Baldwin Land Group; and 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, December 2, 2011. Actual results may differ materially due to risks and uncertainties such as those described in our December 1 press release announcing the separation plans and on pages 17 through 25 of our 2010 Form 10-K and our other subsequent filings with the SEC.

Statements in this call and presentation are not guarantees of future performance and we do not undertake any obligation to update our forward-looking statements. Slides from this presentation are available for your download at our website www.alexanderbaldwin.com. You’ll see an icon at the top of the website to direct you to the appropriate section for download.

I’ll turn the presentation now over to Stan, who will begin the formal presentation.

Stan Kuriyama

Good morning everyone and thank you for joining our call. We are excited to announce today a new chapter in Alexander & Baldwin’s 140-year history. After many years of periodically evaluating A&B structure, our Board of Directors has decided that the time is now right to separate the company to two independent public companies, one focused on real estate and agriculture and the other on transportation.

In the past our real estate business has benefited from the steady financial contribution from Matson. Over the past decade however, we’ve succeeded in growing our real estate business to the point where it is roughly equal in asset size and earnings with our transportation business. Most importantly we’ve doubled the size of our commercial portfolio where we now have nearly 8 million square feet quality office, industrial and retail properties which produced a significant and reliable source of income for our real estate business.

We’ve also invested heavily in our development business to create a robust pipeline of residential and commercial projects across the state of Hawaii. And last but not least, we’ve restored our agricultural operations to stability and profitability. In short, we’ve created a much larger and stronger real estate company that is not only capable of standing on its own, but it’s poised for growth and success as we continue to identify good near-term investment opportunities in Hawaii and as our real estate markets begin to recover over the longer term.

We’ve also strengthened our transportation companies over the same period of time. Matson has expanded its reach from its core Hawaii and Guam services to establish a successful premium service in China. We have invested over $0.5 billion building four container ships which gives us the youngest average vessel age among the Jones Act carriers. And we have built a top 10 logistics company with nationwide service which will serve as another platform for growth in future years. There are a number of benefits to this separation including the two fundamental ones; greater focus for each company's operations and greater clarity for each company's investors and analysts.

Separation will allow each company to focus solely on its own strategies, opportunities and challenges. And given the very different characteristics of our two businesses, separation will allow analysts and investors to obtain a better understanding of each company allowing us to develop a shareholder base that is more attractive to and better aligned with each respective business.

In this morning’s presentation Joe and I will provide you with some historical context with summary of the transaction and the rationale supporting separation. Chris and Matt will then give an overview of the two companies and their strategic outlooks. We will conclude with closing remarks and Q&A. From a historical perspective, the ownership of these two very distinct operations make sense.

A&B of course started as a sugar plantation, one of a number of plantations throughout the state in order to ship the state’s raw sugar to the West Coast for refining and sale, a co-op of the sugar plantations owned by Matson. It was not until 1969 however that the company bought out the interest of the other sugar plantations and Matson became a wholly-owned subsidiary.

In the meantime beginning with the construction of homes for its sugar workers A&B expanded into the real estate development business and primarily through the use of 1031 exchanges began to assemble a portfolio of commercial properties in Hawaii and on the mainland. The land business will continue to carry the Alexander & Baldwin name and will consist of our real estate leasing, real estate sales and agro business segments. Throughout this presentation we will refer to this new company as A&B.

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