Continues Cost Restructuring, Extends Shipping Presence and Expands Industrial
Property Footprint
HONOLULU--(Business Wire)--
Alexander & Baldwin, Inc. (NYSE:AXB) today reported that net income for the
first quarter of 2009 was $3.0 million, or $0.07 per diluted share. Net income
in the first quarter of 2008 was $42.1 million, or $1.01 per diluted share.
Revenue for the first quarter of 2009 was $319.9 million compared to revenue of
$578.7 million for the first quarter of 2008.
COMMENTS ON QUARTER
"Our financial performance for the first quarter of 2009 was negatively impacted
by the deepening national and international economic contraction. Increased
weakness in our transportation segments, slower sales and leasing activity in
our real estate businesses and increased non-cash pension expenses combined to
significantly decrease earnings. Despite these factors, and various workforce
restructuring costs of over $6 million, we posted a modest profit," said W.
Allen Doane, A&B`s chairman and chief executive officer.
"While earnings declined considerably from the year earlier period, the
preponderance of first quarter 2008 earnings was driven by real estate sales at
a single project. In addition, the severity of the drop in freight volume at
Matson Navigation has no modern parallel. In Hawaii, we posted a 14 percent
decline in the quarter, compared to the prior year, and a 44 percent plunge in
auto shipments. At the same time, the wrenching reduction in world trade has
taken its toll on our highly successful China business where volume was off 18
percent in the first quarter as compared to the same period in 2008."
"Matson has taken a number of measures to reduce its cost structure for these
lower volumes but it takes time for these actions to produce tangible results.
Other business units at A&B are also engaged in cost reduction programs. Equally
important, we are extending our reach to grow our businesses - Matson will
extend its market presence in China during the second quarter and A&B Properties
has recently acquired two well occupied industrial properties at favorable
prices in supply constrained markets."
"The Ocean Transportation segment posted an operating loss of $0.5 million, the
result of dramatically lower volume levels in our Hawaii and China trade lanes,
higher non-cash pension costs and a significant restructuring charge associated
with workforce reductions. Absent the reductions, which trimmed Matson`s
non-union workforce by nearly 15 percent and resulted in a $6 million
restructuring charge, Ocean Transportation posted a $5.5 million operating
profit in the first quarter. In response to the steeper than expected declines
in volume, in late March we successfully transitioned from a ten-ship to a
nine-ship fleet deployment to reduce operating costs, and in May we will add a
port of call in Xiamen to enhance our market presence."
"At Matson Integrated Logistics (MIL), accelerated weakness in domestic freight
movement, coupled with a dramatic drop in international intermodal demand
stemming from lower import and export activity, resulted in reduced earnings of
$1.5 million. Due to the weakened demand, MIL embarked on an initiative to pare
staffing levels and seek further cost takeouts throughout its operating
network."
"Our Agribusiness segment posted an operating loss of $1.9 million in the
quarter due to reduced power revenue from lower prices, lower volume and an
unfavorable 2008 Hawaii Public Utilities Commission ruling, and higher non-cash
pension expenses. Unfortunately, the pace of losses in this segment is expected
to accelerate markedly in the second quarter as more sugar is produced at a
loss."
"Real Estate Leasing posted operating profit of $12.0 million, the result of
stable performance in this well-diversified portfolio and high occupancy levels,
although we note a 6 percent drop in occupancy levels in our mainland portfolio,
partly due to bringing a large warehouse building in Savannah on line. Cash flow
from operations matched last year`s results, while non-cash expenses increased
due chiefly to higher depreciation associated with recent acquisitions. Looking
out, we continue to be relatively successful in our retention efforts, and have
reduced our 2009 open lease exposure by half."
"Our Real Estate Sales segment posted operating profit of $5.6 million,
resulting from the sales of an office property in Phoenix, Arizona and land
parcels and ground leases on Maui. The Arizona sale, at a favorable price,
reduces our exposure in this market and in this asset class, and continues our
dedicated strategy to capture embedded gains within our portfolio to generate
cash for 1031 tax-deferred re-investment in higher-return opportunities. Sales
at ongoing development projects, however, remain minimal, a reflection of
depressed market conditions."
"I am also pleased to announce that today the Board of Directors declared a
quarterly dividend of $0.315 per share, reflecting our confidence in the
strength of our current operations and the prospects for growth in the coming
years."
TRANSPORTATION-OCEAN TRANSPORTATION
Quarter Ended March 31,
(dollars in millions) 2009 2008 Change
Revenue $ 201.1 $ 243.0 -17 %
Operating profit before restructuring costs $ 5.5 $ 15.9 -65 %
Restructuring costs $ (6.0 ) $ -- NM
Total operating profit (loss) $ (0.5 ) $ 15.9 NM
Operating profit margin -0.2 % 6.5 %
Volume (Units)
Hawaii containers 32,500 37,900 -14 %
Hawaii automobiles 14,400 25,600 -44 %
China containers 9,600 11,700 -18 %
Guam containers 3,400 3,400 -- %
For the first quarter of 2009, lower container volume in the Hawaii and China
trade lanes and lower fuel surcharges, due to lower fuel prices, resulted in a
$41.9 million decrease in revenues, as compared to the first quarter of 2008.
Operating profit decreased by $16.4 million compared with the first quarter of
2008, due to lower volume and higher pension expense, partially offset by
favorable yields and cost containment initiatives. Operating profit was
additionally negatively impacted by a restructuring charge of $6.0 million
related to Matson`s workforce reduction initiative. Hawaii container and
automobile volume declines (14 and 44 percent, respectively) reflect broad-based
weakness in the economy. China container volume decreased 18 percent compared
with the first quarter of 2008, due to significantly lower Asian import demand.
TRANSPORTATION-LOGISTICS SERVICES
Quarter Ended March 31,
(dollars in millions) 2009 2008 Change
Intermodal revenue $ 44.5 $ 65.0 -32 %
Highway revenue 31.7 37.6 -16 %
Total Revenue $ 76.2 $ 102.6 -26 %
Operating profit $ 1.5 $ 4.7 -68 %
Operating profit margin 2.0 % 4.6 %
First quarter 2009 Logistics Services revenue of $76.2 million was $26.4
million, or 26 percent, lower than the first quarter of 2008, on lower volume,
lower fuel surcharges due to lower fuel prices, and modest rate decreases.
Volume dropped by 24 and 20 percent, respectively, in the Intermodal and Highway
businesses. Operating profit of $1.5 million was $3.2 million, or 68 percent,
lower than in the comparable period last year, due principally to lower volume
levels and modestly lower yields.
REAL ESTATE-INDUSTRY
Real Estate Leasing and Sales revenue and operating profit are analyzed before
discontinued operations are removed. This is consistent with how the Company
evaluates and makes decisions regarding capital allocation.
REAL ESTATE-LEASING
The Company regularly makes dispositions of commercial properties from its
leasing portfolio and land under ground leases or vacant land parcels and
subsequently reinvests proceeds, on a tax-deferred basis, in new properties. As
a result, the Company often incurs higher depreciation expenses attributable to
a step-up in the cost basis of its properties or to the replacement of formerly
non-depreciable property with depreciable property. Further, due to the inherent
timing lag between disposition and reinvestment, the Company incurs modest loss
of revenue and income in these interim periods.
Quarter Ended March 31,
(dollars in millions) 2009 2008 Change
Revenue $ 27.2 $ 28.8 -6 %
Operating profit $ 12.0 $ 13.9 -14 %
Operating profit margin 44.1 % 48.3 %
Occupancy Rates:
Mainland 90 % 96 % -6 %
Hawaii 95 % 98 % -3 %
Leasable Space (million sq. ft.):
Mainland 7.1 5.2 37 %
Hawaii 1.4 1.4 -- %
Real Estate Leasing revenue for the first quarter of 2009 was $27.2 million, a
decrease of 6 percent, and operating profit of $12.0 million decreased 14
percent, compared to the first quarter of 2008. Revenue and earnings were lower
due principally to the non-recurrence of a $1.4 million business interruption
payment received in 2008, and to a lesser degree, to lower occupancy. During the
quarter, the Company placed its Savannah Logistics Park Building B in service,
which had the effect of lowering the mainland occupancy by 2 percent.
During the quarter, the Company sold its Southbank office building (Arizona) and
ground lease parcels on Maui while also acquiring two industrial centers
(California and Hawaii). Leasable space increased by a net 1.9 million square
feet as compared to the first quarter of 2008, due to the net effect of the
described quarterly transactions and other transactions throughout the past
year.
REAL ESTATE-SALES
Quarter Ended March 31,
(dollars in millions) 2009 2008 Change
Improved property sales $ 20.1 $ -- NM
Development sales 0.4 186.5 NM
Unimproved/other property sales 4.7 0.9 5X
Total revenue $ 25.2 $ 187.4 -87 %
Operating profit before joint ventures $ 5.6 $ 25.5 -78 %
Gain on insurance settlement -- 7.7 NM
Earnings from joint ventures -- 8.2 NM
Total operating profit $ 5.6 $ 41.4 -86 %
First quarter 2009 Real Estate Sales revenues and operating profit were
significantly lower than the same period from a year earlier, due principally to
revenue and profit from the closing of 300 units at the Company`s Keola La`i
project in the first quarter of 2008. First quarter 2008 operating profit
additionally included a non-recurring gain of $7.7 million on an insurance
settlement and earnings from joint ventures, principally at the Company`s Kai
Malu residential project on Maui. The Company had limited sales at ongoing
developments, offset by holding costs at these developments.
AGRIBUSINESS
The operating results of the Agribusiness segment are dependent on a number of
factors, particularly weather conditions, which affect yields, volume of
hydro-electric generation, planting, harvesting, and factory operations, as well
as regulatory rulings. Consequently, operating results from the Agribusiness
segment will vary from period to period and year to year.
Quarter Ended March 31,
(dollars in millions) 2009 2008 Change
Revenue $ 17.7 $ 22.5 -21 %
Operating profit (loss) $ (1.9 ) $ 4.8 NM
Operating profit (loss) margin -10.7 % 21.3 %
Tons sugar produced 12,200 14,200 -14 %
Agribusiness revenue for the first quarter of 2009 decreased 21 percent due
primarily to lower power revenue resulting from lower prices and volume.
Operating profit decreased by $6.7 million, compared to the first quarter of
2008, due to lower power prices and volume, as well as lower sugar margins that
result from a higher estimated production cost per ton. The higher production
cost per ton is due to expected lower production volume for 2009 as compared to
2008, and to higher operating costs, principally pension expenses.
CORPORATE EXPENSE, OTHER
First quarter 2009 corporate expenses of $6.1 million were $0.4 million, or 7
percent, higher than the first quarter of 2008. The increase is due principally
to higher non-cash pension expense.
CONDENSED CASH FLOW TABLE
Year-to-Date March 31,
(dollars in millions, unaudited) 2009 2008
Cash Flow from Operating Activities $ 8 $ 160
Capital Expenditures (1)
Transportation (6 ) (4 )
Real Estate (8 ) (46 )
Agribusiness and other (2 ) (5 )
Total Capital Expenditures (16 ) (55 )
Other Investing Activities, Net 24 1
Cash From (Used in) Investing Activities $ 8 $ (54 )
Net Debt Proceeds (Payments) (11 ) 33
Repurchase of Capital Stock (1 ) (50 )
Dividends Paid (13 ) (12 )
Other Financing Activities, Net -- 1
Cash Used in Financing Activities $ (25 ) $ (28 )
Net (Decrease) Increase in Cash (9 ) 78
(1) Excludes non-cash 1031 transactions and real estate development activity.
Alexander & Baldwin, Inc., headquartered in Honolulu, is engaged in ocean
transportation and logistics services, through its subsidiaries, Matson
Navigation Company, Inc. and Matson Integrated Logistics, Inc.; in real estate,
through A&B Properties, Inc.; and in agribusiness, through Hawaiian Commercial &
Sugar Company and Kauai Coffee Company, Inc. Additional information about A&B
may be found at its web site: www.alexanderbaldwin.com.
Statements in this press 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. 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 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.
ALEXANDER & BALDWIN, INC.
2009 and 2008 Consolidated First-Quarter Results (Condensed)
(In Millions, Except Per Share Amounts, Unaudited)
2009 2008
Three Months Ended March 31:
Revenue $ 319.9 $ 578.7
Income (Loss) From Continuing Operations $ (2.0 ) $ 40.5
Discontinued Operations: Properties1 $ 5.0 $ 1.6
Net Income $ 3.0 $ 42.1
Basic Earnings (Loss) per Share:
Continuing Operations $ (0.05 ) $ 0.98
Net Income $ 0.07 $ 1.02
Diluted Earnings (Loss) per Share:
Continuing Operations $ (0.05 ) $ 0.97
Net Income $ 0.07 $ 1.01
Weighted Average Basic Shares Outstanding 41.0 41.4
Weighted Average Diluted Shares Outstanding 41.0 41.7
1 "Discontinued Operations: Properties" consists of sales, or intended sales, of
certain lands and buildings that are material and have separately identifiable
earnings and cash flows.
Industry Segment Data (Condensed)
(In Millions, Except Per Share Amounts, Unaudited)
Three Months Ended
March 31,
2009 2008
Revenue:
Transportation
Ocean Transportation $ 201.1 $ 243.0
Logistics Services 76.2 102.6
Real Estate
Leasing 27.2 28.8
Sales 25.2 187.4
Less Amounts Reported In Discontinued Operations (25.2 ) (4.1 )
Agribusiness 17.7 22.5
Reconciling Items (2.3 ) (1.5 )
Total Revenue $ 319.9 $ 578.7
Operating Profit, Net Income (Loss):
Transportation
Ocean Transportation $ (0.5 ) $ 15.9
Logistics Services 1.5 4.7
Real Estate
Leasing 12.0 13.9
Sales 5.6 41.4
Less Amounts Reported In Discontinued Operations (8.8 ) (2.5 )
Agribusiness (1.9 ) 4.8
Total Operating Profit 7.9 78.2
Interest Expense (5.6 ) (6.1 )
General Corporate Expenses (6.1 ) (5.7 )
Income (Loss) From Continuing Operations
Before Income Taxes (3.8 ) 66.4
Income Tax (Benefit) Expense 1.8 (25.9 )
Income (Loss) From Continuing Operations (2.0 ) 40.5
Income from Discontinued Operations 5.0 1.6
Net Income $ 3.0 $ 42.1
Basic Earnings (Loss) Per Share, Continuing Operations $ (0.05 ) $ 0.98
Basic Earnings Per Share, Net Income $ 0.07 $ 1.02
Diluted Earnings (Loss) Per Share, Continuing Operations $ (0.05 ) $ 0.97
Diluted Earnings Per Share, Net Income $ 0.07 $ 1.01
Weighted Average Basic Shares Outstanding 41.0 41.4
Weighted Average Diluted Shares Outstanding 41.0 41.7
Condensed Consolidated Balance Sheet
(In Millions)
March 31, December 31,
2009 2008
(Unaudited)
ASSETS
Current Assets $ 267 $ 284
Investments in Affiliates 212 208
Real Estate Developments 79 78
Property, Net 1,613 1,590
Employee Benefit Plan Assets 3 3
Other Assets 153 187
Total $ 2,327 $ 2,350
LIABILITIES & EQUITY
Current Liabilities $ 209 $ 238
Long-Term Debt 460 452
Liability for Benefit Plans 127 122
Other Long-Term Liabilities 52 52
Deferred Income Taxes 417 414
Shareholders` Equity 1,062 1,072
Total $ 2,327 $ 2,350
Alexander & Baldwin, Inc.
For media inquiries:
Meredith J. Ching, 808-525-6669
mching@abinc.com
For investor relations inquiries:
Kevin L. Halloran, 808-525-8422
khalloran@abinc.com
Copyright Business Wire 2009
