Alexander & Baldwin, Inc. (NYSE:ALEX) today reported that
net income for the second quarter of 2009 was $12.6 million, or
$0.31 per diluted share. Net income in the second quarter of 2008
was $29.6 million, or $0.71 per diluted share. Revenue in the
second quarter of 2009 was $355.1 million, compared to revenue of
$460.5 million in the second quarter of 2008.
Net income for the first half of 2009 was $15.6 million, or
$0.38 per diluted share. Net income in the first half of 2008 was
$71.7 million, or $1.72 per diluted share. Revenue for the first
half of 2009 was $674.5 million, compared to revenue of $1,038.7
million in the same period of 2008.
COMMENTS ON QUARTER
“A&B’s second quarter 2009 performance improved considerably
from the first quarter of the year – principally as a result of
Matson’s return to profitability, and, to a lesser extent,
increased real estate sales,” said W. Allen Doane, chairman and
chief executive officer of A&B. “These improvements were
partially offset, however, by poor performance in our Agribusiness
division, as well as the pervasive impacts of the national and
global recession. In response to the difficult economic
environment, we have taken necessary measures this year to better
align our cost structure with the realities of today’s lower levels
of demand. These efforts are producing tangible results.”
“The Company remains on solid financial ground and is generating
significant cash flow from its operating businesses. We have
reduced our debt levels since year-end 2008, maintained our
dividend, and reduced capital spending to appropriate levels while
keeping ample liquidity and debt capacity for future investments
and growth.”
“And while our cost alignment actions have been effective, we
expect choppy earnings results for the remainder of 2009. Our
performance in the balance of the year will be restrained by the
impact of previously reported non-cash increases in pension
expense, ongoing volume pressure at Matson and MIL, low shipping
rates in the Trans-Pacific trade lane and suppressed real estate
markets. Our heavy losses in Agribusiness have compelled a
comprehensive evaluation of the Company’s sugar operation, which is
expected to be completed by year-end.”
“The Ocean Transportation segment earned $21.1 million in
operating profit for the quarter, as sequential quarter to quarter
volume improved in all of our trade lanes and service lines. We
additionally began to realize during the quarter the benefits of
headcount reductions and fleet optimization initiatives made
earlier in the year. These cost reduction initiatives offset, to
some degree, the impact of the lower levels of volume and higher
contractual stevedoring rates on a year-over-year basis. During the
quarter, the Matson Navigation team launched service in Xiamen,
China, which enhances our market presence and provides additional
revenue opportunities in that trade lane.”
“Matson Integrated Logistics posted operating earnings of $1.8
million, a modest improvement over first quarter 2009 results, as
unabated weakness in domestic freight movements continues. Similar
to Matson, MIL began to realize the benefits of a series of cost
reduction initiatives, which include reductions in headcount and
consolidating underutilized operating centers.”
“As previously communicated, sugar production levels have been
adversely impacted by the effects of the unprecedented drought in
2007-08, which will be most pronounced in 2009. The production
decline has led to an operating loss of $11.3 million for the
Agribusiness segment in total. The sizeable loss is attributed to
low sugar yields, reduced power revenue and non-cash pension
expenses. Unfortunately, second half 2009 losses are also expected
to be significant.”
“Our Real Estate Leasing segment achieved operating profit of
$11.0 million, the result of strong occupancy levels of 95 percent
in our Hawaii properties, which currently generate approximately 45
percent of the portfolio net operating income, and a well-balanced
mix of property types with a broadly diversified tenant base.
Sequentially, occupancy was unchanged from the first quarter in our
Hawaii portfolio, and down 6 percent in our mainland properties, of
which 4 percent was attributable to bringing a large warehouse
building in Savannah, Georgia on line in March 2009.”
“Real Estate Sales posted operating profit of $9.6 million in
the quarter, resulting from the sale of Hawaii income properties
and several Maui land parcels during the quarter. The favorable
pricing realized reflects the intrinsic value of Hawaii holdings
and allows the Company to capture embedded gains within our
portfolio to generate cash for 1031 tax-deferred re-investment in
higher-return opportunities. As previously announced, in late May
the Company increased its investment at the Kukui’ula joint venture
development project, a statement of our confidence in Hawaii
development, and to the unique opportunity presented by this
project to capture rising buyer demand as real estate markets
recover over time.”
TRANSPORTATION—OCEAN TRANSPORTATION
Quarter Ended June 30, (dollars
in millions)
2009 2008
Change Revenue
$ 218.5 $ 268.4
-19 % Operating profit
$ 21.1 $ 37.4 -44 % Operating
profit margin
9.7 % 13.9 %
Volume (Units) Hawaii containers
34,300
39,000 -12 % Hawaii automobiles
27,200 23,600 15 % China
containers
11,100 12,700 -13 % Guam containers
3,600 3,600 -- %
For the second quarter of 2009, revenue decreased 19 percent
from the year earlier period due to lower fuel surcharges, net
volume decreases and lower rates in the China trade, offset by
improved rates and cargo mix in the Hawaii trade. Container volume
continues to be affected by the economic downturn, resulting in
weak demand in the Hawaii and China trade lanes, where second
quarter volumes were 12 and 13 percent lower, respectively, than
the second quarter of 2008. Automobile volume increased 15 percent
from the year earlier period, due primarily to the timing of rental
fleet replacement shipments. Operating profit was $16.3 million
lower in the second quarter compared to 2008 due to lower volume,
higher inactive vessel and dry-dock expenses, increases in terminal
handling costs attributable to higher contractual stevedoring rates
and higher non-cash pension expense, partially offset by improved
net yields, and cost containment initiatives, including headcount
reductions and fleet optimization efforts in first quarter
2009.
Six Months Ended June 30,
(dollars in millions)
2009 2008
Change Revenue
$ 419.6 $ 511.4
-18 % Operating profit
$ 20.6 $ 53.3 -61 %
Operating profit margin
4.9 %
10.4 % Volume (Units) Hawaii containers
66,800 76,900 -13 % Hawaii automobiles
41,600 49,200
-15 % China containers
20,700 24,400 -15 % Guam containers
7,000 7,000
-- %
For the first half of 2009, Ocean Transportation revenue
decreased, principally due to the same factors cited for the second
quarter. Container volume decreases also were due to the same
factors cited for the quarter. Auto volume declined in total in the
first half of the year due principally to the economic downturn,
despite a second quarter volume increase related to the timing of
rental fleet shipments. Operating profit for the first six months
of 2009 decreased by 61 percent, primarily due to lower volume,
higher operating and terminal handling costs, headcount reduction
expenses, higher dry dock costs and higher non-cash pension
expense. Improved yields, lower fuel costs, and cost containment
initiatives, including improved equipment control and fleet
management efforts, partially offset reductions in operating
profit.
TRANSPORTATION—LOGISTICS SERVICES
Quarter Ended June 30, (dollars
in millions)
2009 2008
Change Intermodal revenue
$ 46.8 $ 73.3
-36 % Highway revenue
33.5 42.2 -21 %
Total Revenue
$ 80.3 $ 115.5
-30 % Operating profit
$ 1.8 $ 4.6 -61
% Operating profit margin
2.2 %
4.0 %
Logistics Services revenue for the second quarter of 2009 was 30
percent, or $35.2 million, lower than the second quarter of 2008
due primarily to lower volume in all service lines and lower rates,
which were driven largely by lower fuel surcharges. In the second
quarter 2009, Intermodal and Highway volume decreased by 26 and 12
percent, respectively, as compared to the second quarter of 2008.
Logistics operating profit fell by $2.8 million compared to the
second quarter of 2008, due principally to the lower volumes cited
above.
Six Months Ended June 30,
(dollars in millions)
2009 2008
Change Intermodal revenue
$ 91.3
$ 138.3 -34 % Highway revenue
65.2 79.8
-18 % Total Revenue
$ 156.5 $
218.1 -28 % Operating profit
$ 3.3 $
9.3 -65 % Operating profit margin
2.1 %
4.3 %
For the first half of 2009, logistics revenue and gross margins
decreased as a result of principally the same factors cited for the
quarter. Intermodal and Highway volume decreased by 25 and 16
percent, respectively, in the first half of 2009 as compared to the
first half of 2008. Operating profit and volume decreases were due
to the same factors cited for the quarter.
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 investment,
disposition and capital allocation decisions.
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
typically 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 June 30, (dollars
in millions)
2009 2008 Change Revenue
$ 25.9 $ 27.3 -5 % Operating
profit
$ 11.0 $ 12.6 -13 % Operating profit margin
42.5 % 46.2 %
Occupancy Rates: Mainland
84 % 96 % -12 % Hawaii
95 % 99 % -4 % Leasable
Space (million sq. ft.): Mainland
7.1 5.9 20 % Hawaii
1.3 1.3 -- %
Real Estate Leasing revenue for the second quarter of 2009 was
$25.9 million, a decrease of 5 percent from the second quarter of
2008, due to lower occupancies, primarily in the mainland
portfolio, the net effect of property sales and acquisitions and
the non-reinvestment of proceeds from a late 2008 disposition.
Operating profit of $11.0 million was $1.6 million, or 13 percent,
lower than the second quarter of 2008 for the reasons cited above,
as well as to higher depreciation expenses and increased bad debt
reserves.
In June 2009, the Company sold the Hawaii Business Park (Oahu).
Leasable space increased by a net 1.2 million square feet as
compared to the second quarter of 2008, due to the net effect of
several acquisitions and dispositions throughout the preceding year
and to the placement in service of several industrial properties
after the second quarter of 2008 with large gross leasable areas.
These include Savannah Logistic Park Building B and Republic
Distribution Center, which accounted for 4 percent and 2 percent,
respectively, of the 12 percent year over year decline in
occupancy.
Six Months Ended June 30,
(dollars in millions)
2009 2008 Change
Revenue
$ 53.1 $ 56.1 -5 %
Operating profit
$ 23.0 $ 26.5 -13 % Operating profit
margin
43.3 % 47.2 %
Occupancy Rates: Mainland
87 % 96 % -9 %
Hawaii
95 % 99 % -4 %
For the first half of 2009, real estate leasing revenue and
operating profit decreased by 5 percent and 13 percent
respectively, from the year earlier period. Revenue was lower due
to the non-recurrence of a $1.4 million business interruption
payment received in 2008, lower occupancy, the timing of property
sales and acquisitions, and the non-reinvestment of proceeds from a
late 2008 disposition. Operating profit was lower due to the
aforementioned factors, and to increased depreciation and
amortization expenses and increased bad debt reserves.
REAL ESTATE—SALES
Quarter Ended June 30, (dollars
in millions)
2009 2008 Change Improved
property sales
$ 13.1 $ 12.1 8 %
Development sales
2.5 18.1 -86 % Unimproved/other property
sales
5.7 1.0 6 X Total revenue
$ 21.3 $ 31.2 -32 %
Operating profit /(loss) before joint ventures
$ 9.4
$ 7.4 27 % Earnings from joint ventures
0.2
1.7 -88 % Total operating profit
$ 9.6
$ 9.1 5 %
Second quarter 2009 Real Estate Sales revenue was $21.3 million,
or 32 percent lower than the second quarter of 2009, due
principally to higher revenue from the second quarter 2008 closings
of residential units at the Company’s Keola La’i and Keala’ula
projects. In the second quarter of 2009, the Company sold Hawaii
Business Park, three residential units at Keola La’i and one unit
at its Keala’ula project, and several leased fee and non-core land
parcels on Maui. Second quarter 2009 operating profit before joint
ventures of $9.4 million was $2.0 million higher than in the second
quarter of 2008, due to higher-margin sales noted above.
Six Months Ended June 30,
(dollars in millions)
2009 2008 Change
Improved property sales
$ 33.2 $ 12.1
3 X Development sales
2.9 204.6 -99 %
Unimproved/other property sales
10.4 1.9 5 X
Total revenue
$ 46.5 $ 218.6
-79 % Operating profit before joint ventures
$
15.0 $ 32.9 -54 % Gain on insurance settlement
-- 7.7
NM Equity in earnings of joint ventures
0.2
9.9 -98 % Total operating profit
$ 15.2
$ 50.5 -70 %
For the first half of 2009, revenue was substantially lower than
from the same period in 2008, principally as a result of extensive
sales at Keola La’i in the first quarter of 2008. Operating profit
was $35.3 million lower in the first half of 2009 as compared to
2008, due principally to the Keola La’i sales.
AGRIBUSINESS
Quarter Ended June 30, (dollars
in millions)
2009 2008 Change Revenue
$ 29.2 $ 36.2 -19 % Operating
loss
$ (11.3 ) $ (4.9 )
NM Tons sugar produced
43,300
50,100 -14 %
Second quarter 2009 Agribusiness revenue declined $7.0 million,
or 19 percent, principally as a result of lower power prices and
lower sugar revenue from lower production volume. Power prices
decreased by more than 50 percent compared to the prior year
quarter due to lower oil prices and an unfavorable PUC ruling in
2008. Operating losses increased considerably, as compared to the
second quarter of 2008, primarily due to the lower power sales
prices and to lower sugar margins as a result of lower forecasted
production volume. Sugar production was 14 percent lower in the
second quarter of 2009 than the same period in 2008, due mostly to
lower average yields per acre resulting from unprecedented 2007-08
drought conditions.
Six Months Ended June 30,
(dollars in millions)
2009 2008 Change
Revenue
$ 46.9 $ 58.7 -20 %
Operating loss
$ (13.2 ) $ (0.1
) NM Tons sugar produced
55,500
64,400 -14 %
In the first half of 2009, Agribusiness revenues and operating
profit decreased significantly compared to the first half of 2008,
for the reasons cited above.
CORPORATE EXPENSE
Second quarter 2009 corporate expenses of $4.5 million were $0.9
million lower than the second quarter of 2008. The decrease is due
principally to reductions in performance-based incentive programs
and to other cost containment initiatives related to corporate
overhead.
CONDENSED CASH FLOW TABLE
Year-to-Date June 30, (dollars
in millions, unaudited)
2009 2008
Change Cash Flow from Operating Activities
$
46 $ 181 -75 % Capital Expenditures (1)
Transportation
(9 ) (16 ) -44 % Real Estate
(8
) (49 ) -84 % Agribusiness and other
(2
) (10 ) -80 % Total Capital Expenditures
(19
) (75 ) -75 % Other Investing Activities, Net
22 (14 ) NM Cash Provided by/(Used in) Investing
Activities
$ 3 $ (89 ) NM Net Debt
Proceeds/(Payments)
(30 ) (18 ) 67 % Repurchase of
Capital Stock
-- (50 ) NM Dividends Paid
(26 )
(25 ) 4 % Other Financing Activities, Net
-- 4
NM Cash Provided by/(Used in) Financing Activities
$
(56 ) $ (89 ) -37 % Net (Decrease) Increase in
Cash
$ (7 ) $ 3 NM
(1) Excludes non-cash 1031 exchange transactions and real estate
development activity.
Alexander & Baldwin, Inc., headquartered in Honolulu, is
engaged in ocean transportation and integrated 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 Second-Quarter and
First-Half Results (Condensed) (In Millions, Except Per Share
Amounts, Unaudited)
2009
2008
Three Months Ended June 30:
Revenue
$ 355.1 $ 460.5 Income From Continuing
Operations
$ 6.2 $ 24.1 Discontinued Operations:
Properties1
$ 6.4 $ 5.5 Net Income
$
12.6 $ 29.6 Basic Earnings Per Share Continuing Operations
$ 0.15 $ 0.58 Net Income
$ 0.31 $ 0.72
Diluted Earnings Per Share Continuing Operations
$
0.15 $ 0.58 Net Income
$ 0.31 $ 0.71 Basic
Weighted Average Shares Outstanding
41.0 41.2 Diluted
Weighted Average Shares Outstanding
41.0 41.6
2009
2008
Six
Months Ended June 30:
Revenue
$ 674.5 $ 1,038.7 Income From Continuing
Operations
$ 3.6 $ 64.4 Discontinued Operations:
Properties1
$ 12.0 $ 7.3 Net Income
$
15.6 $ 71.7 Basic Earnings Per Share Continuing Operations
$ 0.09 $ 1.56 Net Income
$ 0.38 $ 1.74
Diluted Earnings Per Share Continuing Operations
$
0.09 $ 1.55 Net Income
$ 0.38 $ 1.72 Basic
Weighted Average Shares Outstanding
41.0 41.3 Diluted
Weighted Average Shares Outstanding
41.0 41.6
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, Net Income (Condensed) (In Millions, Except
Per Share Amounts, Unaudited)
Three Months Ended
Six
Months Ended
June 30
June 30
Revenue:
2009
2008
2009
2008
Transportation Ocean Transportation
$ 218.5 $ 268.4
$ 419.6 $ 511.4 Logistics Services
80.3 115.5
156.5 218.1 Real Estate Leasing
25.9 27.3
53.1
56.1 Sales
21.3 31.2
46.5 218.6 Less Amounts Reported
In Discontinued Operations
(17.3 ) (15.5 )
(43.0 ) (20.0 ) Agribusiness
29.2 36.2
46.9 58.7 Reconciling Items
(2.8 )
(2.6 )
(5.1 ) (4.2 ) Total
Revenue
$ 355.1 $ 460.5
$ 674.5 $
1,038.7
Operating Profit, Net Income:
Transportation Ocean Transportation
$ 21.1 $ 37.4
$ 20.6 $ 53.3 Logistics Services
1.8 4.6
3.3 9.3 Real Estate Leasing
11.0 12.6
23.0
26.5 Sales
9.6 9.1
15.2 50.5 Less Amounts Reported In
Discontinued Operations
(10.3 ) (8.9 )
(19.5
) (11.8 ) Agribusiness
(11.3 )
(4.9 )
(13.2 ) (0.1 ) Total Operating
Profit
21.9 49.9
29.4 127.7 Interest Expense
(6.9 ) (5.6 )
(12.5 ) (11.7 ) General
Corporate Expenses
(4.5 ) (5.4 )
(10.6 ) (11.1 ) Income From Continuing
Operations Before Income Taxes
10.5 38.9
6.3 104.9
Income Taxes
4.3 14.8
2.7
40.5 Income From Continuing Operations
6.2 24.1
3.6
64.4 Income from Discontinued Operations(net of income taxes)
6.4 5.5
12.0 7.3 Net
Income
$ 12.6 $ 29.6
$ 15.6 $ 71.7
Basic Earnings Per Share, Continuing Operations
$
0.15 $ 0.58
$ 0.09 $ 1.56 Basic Earnings Per
Share, Net Income
$ 0.31 $ 0.72
$ 0.38
$ 1.74 Diluted Earnings Per Share, Continuing Operations
$ 0.15 $ 0.58
$ 0.09 $ 1.55 Diluted
Earnings Per Share, Net Income
$ 0.31 $ 0.71
$
0.38 $ 1.72 Basic Weighted Average Shares Outstanding
41.0 41.2
41.0 41.3 Diluted Weighted Average Shares
Outstanding
41.0 41.6
41.0 41.6 Consolidated
Balance Sheet (Condensed) (In Millions, Unaudited)
June 30,
December 31,
2009
2008
ASSETS Current Assets
$ 264 $ 284 Investments
213 208 Real Estate Developments
84 78 Property, Net
1,586 1,590 Other Assets
175 190 Total
$ 2,322 $ 2,350 LIABILITIES & EQUITY
Current Liabilities
$ 235 $ 238 Long-Term Debt,
Non-Current Portion
442 452 Liability for Benefit Plans
126 122 Other Long-Term Liabilities
53 52 Deferred
Income Taxes
411 414 Shareholders’ Equity
1,055 1,072 Total
$ 2,322 $ 2,350
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