Alexander & Baldwin's Management Host Matson Sell-Side Analyst Day (Transcript)

Alexander & Baldwin, Inc. (ALEX)

2012 Matson Sell-Side Analyst Day Call

April 11, 2012 08:00 am ET


Matt Cox - President, Matson Navigation

Joel Wine - SVP, CFO & Treasurer, ALEX

Dave Hoppes - SVP, Ocean Services

Ronald Forest - SVP, Operations

Rusty Rolfe - EVP, Matson Logistics




Good morning and welcome to the webcast of the Matson Navigation webcast this morning which is April 11, 2012. We filed an 8-K this morning, so in that 8-K there is a statement that this presentation that set forth expectations or predictions are based on facts and situations that are known to us as of the date of this filing. Actual results may differ materially due to risks and uncertainties such as those described on pages 19 through 29 of the Form 10-K in the Alexander & Baldwin 2011 Annual Report and other subsequent filings with the SEC. Statements in this presentation are not guarantees of future performance. We do not undertake any obligation to update our forward-looking statements and with that I would like to move us to the agenda for the day.

With Matson's management, it will begin with Matt Cox who is our President and Joe Winny will give us an update on the separation. We have the good fortune to have three operations folks with us today to talk about their business and that's David Hoppes who is Senior Vice President responsible for Ocean Services; Ron Forest who heads up operations; Rusty Rolfe, who heads up Matson Logistics. Joe Winny will then give a financial overview and Matt then will wrap it up. By the way my name is Celica Proffer and I do welcome you to this webcast and it's with a great deal of pleasure now that I introduce Matt to just kick this off.

Matt Cox

Thanks Celica and good morning and thanks to everyone for coming. We hope that you find this session to be useful in getting some additional information in context about Matson. So on slide 5, one of the slides we are most proud of is the long history of Matson. Matson will celebrate its 130 th anniversary this year. It all started with Captain Matson in 1882 sailing his vessel, the Emma Claudina from San Francisco to Hilo Hawaii and in many ways the history of Matson is really the history of the territory and then eventually the state of Hawaii. We’ve had a great year, we help to developed tourism in the state, when through the warriors were a pioneer in the containerization phase and currently as we’ll talk about more are the largest oceans carrier to the State of Hawaii.

Just to look at our geographic coverage on slide six, upon separation Matson's corporate headquarters will be in Honolulu Hawaii. We have offices throughout the US Mainland, in the Pacific and China. And as Rusty will talk about the logistics network is spread throughout the Continental United States.

Celica touched on this, but it has been announced that Walter Dods who is currently the Chairman of Alexander & Baldwin upon separation will become the Chairman of Matson. I am today the President and will pick up the CEO title, Joel Winny who you will hear from in a moment, for those of you that don’t know Joel, Joel came aboard last fall to Alexander & Baldwin as the CFO, who had then associated with Alexander & Baldwin and Matson for over a decade in a role at Goldman Sachs as an advisor to the company, came aboard as the CFO we are fortunate that he will be joining us as the CFO of Matson upon separation. And the rest of the team who Celica introduced, a couple of folks who aren’t here today have been at this business a long time, Joe brings a fresh insight, into the financial community insight and lot of external facing skills that will be really helpful to us and a terrific advisory background.

The rest of us have been at Ocean Transportation, logistics providers for combined 175 years, the six of us. So we have been at it a long time and we think we know what we are doing and provide a lot of continuity in this business.

Just to look at Matson at a glance, in 2011 we had revenues of just under $1.5 billion, $1.1 billion at the Ocean Transportation level and about $400 million at the logistics level. You could see the bulk of last year’s profit came from the Ocean Transportation segment and just under $80 million in operating profit. We have about 1100 employees. We have 17 vessels and we will go into much more detail in the following slides.

With that I am going transition and spend few minutes on corporate strategy, how we see the world, what are our goals, what are our aspirations, how we organize ourselves, what are we trying to do.

And then on slide 10 we start with our vision, basically we have been as I mentioned in my introductory comments in the Pacific a very long time, it’s our home, it’s our back yard. What we want to do as an overall strategy is to leverage the Matson brand and our capabilities into compatible new geographies and services. That’s how we serve important markets in the specific, we are always looking to where we can expand, as an operating business we are always focusing and operating a 24-hour data network business. It’s important for us to look for ways in which we can continue to improve our network and internally it’s very important in Matson culture to always do the right thing and do those by our customers, our employees and the communities we serve.

So what are our key strategies for Matson? On the Ocean Transportation side many of these topics by the way we will be covering in more detail with the other presenters. So I just want to touch on them here and not delve too deep, but we have plenty of time to talk about these strategies in more detail on the following slides.

On the Ocean Transportation side, we have built over the last six years an absolutely fantastic, unmatchable China service from three ports in Central China in the Long beach. We also having been through the current market cycle in Hawaii are poised to grow faster than the overall economy in Hawaii as it recovers primarily by leveraging the construction segment when it returns. We also from are a significant player into Guam. Guam is an important location for the US military, given the US government, the US military's realignment of its forces into the Pacific and we think we are well placed and want to leverage that move when it occurs.

And then lastly I mentioned this a moment ago, we are always looking for ways in which we can add new or expand our service offerings in compatible geographic locations. On the Logistics side and Rusty will go into more detail about this. At this point we are looking for organic expansion of our truck brokerage and warehousing business. We are looking at piloting this year, but hope to expand our own 53 foot Big Box program on the US Rail Network. We are in the process of building a China freight forwarding and China origin consolidation business which Dave will speak to and on the logistics side, we are looking at a disciplined M&A. What do we mean by that, we are looking for ways in which we can grow this business and we are not actually now looking to pay top dollar for overpriced logistics businesses that place themselves for sale as it is prevalent in some corporate strategies. We find those strategies to be very difficult to hang on to the realized value in the long run for maintaining acquisition awareness when we find a well-priced property we would consider acquiring it but we think organic growth is a key strategy for us at this point.

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