Alexander & Baldwin, Inc. (NYSE:ALEX) today reported that
net income for the third quarter of 2009 was $8.5 million, or $0.21
per diluted share. Net income in the third quarter of 2008 was
$36.8 million, or $0.89 per diluted share. Revenue in the third
quarter of 2009 was $375.9 million, compared to revenue of $456.2
million in the third quarter of 2008.
Net income for the first nine months of 2009 was $24.1 million,
or $0.59 per diluted share. Net income in the first nine months of
2008 was $108.5 million, or $2.61 per diluted share. Revenue for
the first nine months of 2009 was $1,049.8 million, compared to
revenue of $1,494.5 million in the same period of 2008.
COMMENTS ON QUARTER
“Market conditions continue to affect the Company’s core
transportation and real estate businesses. Results for the third
quarter were mixed, with Ocean Transportation and Real Estate
Leasing performing relatively well in their respective markets
while Real Estate Sales and Logistics Services results were
modest,” said W. Allen Doane, chairman and chief executive officer
of A&B. “The loss in Agribusiness, while anticipated, was
painful.”
“In response to the difficult economic environment, we have
taken necessary measures across all of the business units to better
align our cost structure with the realities of today’s conditions.
These efforts are producing tangible results.”
“The Company remains on solid financial ground and our core
operating units continue to generate significant cash flow
augmented by a multitude of cost reduction programs and reduced
capital spending. As a result, we have trimmed outstanding debt by
$33 million through the first nine months of the year, leaving
ample capacity to make what may be significant investments over the
course of the next eighteen months in distressed real estate
development opportunities and in an expansion of our transportation
services.”
“The Ocean Transportation segment earned $24.2 million in
operating profit for the quarter, on increased, sequential
quarter-to-quarter container volume in our Hawaii and China trade
lanes. These volume gains partially offset a significant first half
2009 decline in rates for trans-Pacific containers, where recent
rate recovery in the China trade may be helpful in the future. We
also continue to realize the financial benefits of headcount
reductions and fleet optimization initiatives made earlier in the
year. This right-sizing of our fleet has resulted in network
utilization rates approaching 90 percent, and a corresponding
improvement in quarter-to-quarter operating margin.”
“Matson Integrated Logistics posted operating earnings of $2.2
million, a modest improvement over second quarter 2009 results, as
weak industry demand resulted in excess capacity that trimmed gross
margins in our brokerage services. MIL continues to realize
benefits from its own series of cost reduction initiatives, as well
as improving performance in its warehouse and distribution
operations.”
“Our Agribusiness segment posted a significant loss of $13.8
million during the quarter, driven by reduced power sales, low
sugar yields and non-cash pension expenses. Power sales reflect the
impact of lower crude oil prices on the price of power, while the
decline in sugar yield is primarily the result of a severe two-year
drought. However, losses are expected to be considerably less in
the fourth quarter, due to the completion of the annual sugar
harvest in late October.”
“Real Estate Leasing achieved operating profit of $10.2 million,
the result of high occupancy levels in our Hawaii properties and a
good mix of property types with a broadly diversified tenant base
in our U.S. Mainland facilities. Sequentially, occupancy was
essentially unchanged from the second quarter. However, operating
profit declined from earlier in the year due primarily to lower
rents and tenant concessions in our U.S. Mainland portfolio.”
“Real Estate Sales posted operating profit of $3.5 million in
the quarter, resulting from the sale of a Southern California
income property and two small Maui land parcels during the quarter.
While sales at ongoing developments were negligible, we are still
realizing favorable pricing for commercial property sales, and will
continue to opportunistically capture embedded gains within our
commercial portfolio to generate cash for 1031 tax-deferred
re-investment in higher-return assets. This turnover is essential
to maintaining a strong and diversified portfolio that increases in
value over time. Additionally, we are making good progress in
planning, permitting and construction at key development projects,
in anticipation of rising buyer demand in the future.”
“Finally, our Board of Directors recently declared a quarterly
dividend of $0.315 per share, reflecting our continued confidence
in the strength of our operations and the prospects for growth in
the coming years.”
TRANSPORTATION—OCEAN TRANSPORTATION
Quarter Ended September 30,
(dollars in millions)
2009 2008 Change
Revenue
$ 234.2 $ 272.8 -14 %
Operating profit
$ 24.2 $ 31.4 -23 % Operating profit
margin
10.3 % 11.5 %
Volume (Units) Hawaii containers
35,100 39,900
-12 % Hawaii automobiles
21,200 21,800 -3 % China containers
12,400 12,300 1 % Guam containers
3,500
3,600 -3 %
For the third quarter of 2009, revenue decreased 14 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. Hawaii container volume
continues to be affected by the economic downturn, resulting in 12
percent lower volume in the third quarter versus the same period in
the prior year. Automobile volume decreased 3 percent from the year
earlier period, due primarily to the timing of rental fleet
replacement shipments. China volume improved modestly due to the
addition of a third port of call at Xiamen, China. Operating profit
was $7.2 million, or 23 percent, lower in the third quarter
compared to 2008 due to lower volume, increases in terminal
handling costs attributable to higher contractual stevedoring rates
and higher non-cash pension expense, partially offset by lower
vessel costs stemming from fleet optimization efforts, lower
general and administrative expenses and improved net yields.
Nine Months Ended September 30,
(dollars in millions)
2009 2008 Change
Revenue
$ 653.8 $ 784.2 -17 %
Operating profit
$ 44.8 $ 84.7 -47 % Operating profit
margin
6.9 % 10.8 %
Volume (Units) Hawaii containers
101,900
116,800 -13 % Hawaii automobiles
62,800 71,000 -12 % China
containers
33,100 36,700 -10 % Guam containers
10,500 10,600 - 1 %
For the first nine months of 2009, Ocean Transportation revenue
decreased 17 percent, principally due to the same factors cited for
the third quarter. Hawaii container volume decreases were due to
the same factors cited for the quarter. Auto volume declined in
total in the first nine months of the year due principally to lower
new car shipments. China container volume was lower due to weak
U.S. import demand. Operating profit for the first nine months of
2009 decreased by 47 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 September 30,
(dollars in millions)
2009 2008 Change
Intermodal revenue
$ 48.2 $ 73.9
-35 % Highway revenue
34.1 44.2 -23 % Total
Revenue
$ 82.3 $ 118.1
-30 % Operating profit
$ 2.2 $ 5.1 -57 %
Operating profit margin
2.7 %
4.3 %
Logistics Services revenue for the third quarter of 2009 was 30
percent, or $35.8 million, lower than the third quarter of 2008,
due primarily to lower volume in all service lines and lower rates,
which were driven largely by lower fuel surcharges and competitive
pricing pressures. In the third quarter 2009, Intermodal and
Highway volume decreased by 19 and 9 percent, respectively, as
compared to the third quarter of 2008, with a significant reduction
in international intermodal volume related to lower U.S. import
demand. Logistics operating profit fell by $2.9 million compared to
the third quarter of 2008, due principally to the lower volume and
lower rates cited above.
Nine Months Ended September 30,
(dollars in millions)
2009 2008 Change
Intermodal revenue
$ 139.5 $ 212.2
-34 % Highway revenue
99.3 124.0 -20 %
Total Revenue
$ 238.8 $ 336.2
-29 % Operating profit
$ 5.5 $ 14.4 -62
% Operating profit margin
2.3 %
4.3 %
For the first nine months of 2009, Logistics Services revenue
and gross margins decreased as a result of principally the same
factors cited for the quarter. Intermodal and Highway volume
decreased by 23 and 10 percent, respectively, in the first nine
months of 2009 as compared to the first nine months of 2008.
Operating profit and volume decreases were due to the same factors
cited for the quarter.
REAL ESTATE—INDUSTRY
Real Estate Leasing and Real Estate 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 September 30,
(dollars in millions)
2009 2008 Change
Revenue
$ 25.2 $ 26.2 -4 %
Operating profit
$ 10.2 $ 11.1 -8 % Operating profit
margin
40.5 % 42.4 %
Occupancy Rates: Mainland
83 % 95 % -12 %
Hawaii
95 % 98 % -3 %
Leasable Space (million sq. ft.): Mainland
7.1 5.9 20 %
Hawaii
1.4 1.3
8 %
Real Estate Leasing revenue for the third quarter of 2009 was
$25.2 million, a decrease of 4 percent from the third quarter of
2008, due to lower occupancies and rents, 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 $10.2 million was $0.9 million, or 8 percent,
lower than the third quarter of 2008 for the reasons cited above,
as well as to higher depreciation expenses.
Leasable space increased by a net 1.3 million square feet as
compared to the third 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 third quarter of 2008 with large gross leasable areas.
Two industrial properties placed into service account for
approximately one half of the 12 percent year-over-year decline in
occupancy rates. Industrial property vacancies affect occupancy
levels disproportionately in relation to revenue, operating profit
and net operating income, as this asset class generally has
significantly lower rental rates per square foot.
Nine Months Ended September
30,
(dollars in millions)
2009 2008 Change
Revenue
$ 78.3 $ 82.3 -5 %
Operating profit
$ 33.2 $ 37.6 -12 % Operating profit
margin
42.4 % 45.7 %
Occupancy Rates: Mainland
86 % 96 % -10 % Hawaii
95 % 98 % -3 %
For the first nine months of 2009, real estate leasing revenue
and operating profit decreased by 5 percent and 12 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 and rents, 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 September 30,
(dollars in millions)
2009 2008 Change
Improved property sales
$ 8.3 $ 61.2
-86 % Development sales
2.3 7.1 -68 %
Unimproved/other property sales
4.3 8.9 -52 %
Total revenue
$ 14.9 $ 77.2
-81 % Operating profit before joint ventures
$
3.2 $ 25.5 -87 % Earnings from joint ventures
0.3 0.3 -- % Total operating profit
$
3.5 $ 25.8 -86 %
Third quarter 2009 Real Estate Sales revenue was $14.9 million,
or 81 percent lower than the third quarter of 2009. In the third
quarter of 2009, the Company sold its San Jose Avenue industrial
property (Los Angeles, California) and two parcels on Maui. In the
third quarter of 2008, the Company sold three commercial properties
and several residential units at its Keola La’i and Keala’ula
projects. Third quarter 2009 operating profit was $3.5 million, 86
percent lower than in the third quarter of 2008, due principally to
lower sales volume.
Nine Months Ended September 30,
(dollars in millions)
2009 2008 Change
Improved property sales
$ 41.5 $ 73.3
-43 % Development sales
5.2 211.8 -98 %
Unimproved/other property sales
14.7 10.7 37 %
Total revenue
$ 61.4 $ 295.8
-79 % Operating profit before joint ventures
$
18.2 $ 66.0 -72 % Equity in earnings of joint ventures
0.5 10.3 -95 % Total operating profit
$ 18.7 $ 76.3 -75 %
For the first nine months 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 and the
previously described commercial property sales. Operating profit
was 75 percent lower in the first nine months of 2009 as compared
to 2008, principally due to 2008 Keola La’i sales, and 2008 joint
venture income related to sales at the Company’s Kai Malu
residential development.
AGRIBUSINESS
Quarter Ended September 30,
(dollars in millions)
2009 2008 Change
Revenue
$ 32.5 $ 37.5 -13 %
Operating loss
$ (13.8 ) $ (6.7 ) -2 X
Operating profit margin
-42.5 %
-17.9 % Tons sugar produced
53,700 50,500 6 %
Third quarter 2009 Agribusiness revenue declined $5.0 million,
or 13 percent, principally as a result of lower power prices and
sales volume. Power prices decreased by more than 50 percent
compared to the prior year quarter due to lower oil prices.
Operating losses increased considerably, as compared to the third
quarter of 2008, primarily due to the lower power sales prices and
to lower sugar margins. Sugar production increased 6 percent in the
third quarter versus the same period in 2008, mostly due to harvest
timing. The increase was offset by negative sugar margins due to
lower full year production estimates. Lower production levels are
the result of the unprecedented 2007-08 drought conditions.
Nine Months Ended September 30,
(dollars in millions)
2009 2008 Change
Revenue
$ 79.4 $ 96.2 -17 %
Operating loss
$ (27.0 ) $ (6.8 ) -4 X
Operating profit margin
-34.0 %
-7.1 % Tons sugar produced
109,200 114,800 -5
%
In the first nine months of 2009, Agribusiness revenues
decreased and operating loss increased, significantly, compared to
the first nine months of 2008, for primarily the same reasons cited
for the quarter. Power revenues and attendant operating profit were
also adversely impacted in the first nine months of the year, as
compared to the prior year, by an unfavorable third quarter 2008
Public Utilities Commission modification to the Company’s
avoided-cost formula.
CORPORATE EXPENSE
Corporate expenses of $4.9 million declined by 8 percent, or
$0.4 million, in the third quarter of 2009 as compared to the third
quarter of 2008. The decrease is due principally to reductions in
performance-based incentive programs and to other overhead cost
containment initiatives.
CONDENSED CASH FLOW TABLE
Year-to-Date September 30,
(dollars in millions, unaudited)
2009 2008
Change Cash Flow from Operating Activities
$
78 $ 202 -61 % Capital Expenditures (1)
Transportation
(11 ) (29 ) -62 % Real Estate
(12 ) (51 ) -76 % Agribusiness and other
(4 ) (11 ) -64 % Total Capital Expenditures
(27 ) (91 ) -70 % Other Investing Activities,
Net
19 (49 ) NM Cash Used in Investing
Activities
$ (8 ) $ (140 ) -94 % Net
Debt Proceeds/(Payments)
(33 ) 17 NM Repurchase of
Capital Stock
-- (50 ) NM Dividends Paid
(39 )
(38 ) 3 % Other Financing Activities, Net
(1 )
2 NM Cash Used in Financing Activities
$ (73
) $ (69 ) 6 % Net Decrease in Cash
$
(3 ) $ (7 ) -57 %
(1) Excludes non-cash 1031 exchange transactions and real estate
development activity.
Alexander & Baldwin, Inc. is headquartered in Honolulu,
Hawaii and is engaged in ocean transportation and logistics
services through its subsidiaries, Matson Navigation Company, Inc.,
Matson Integrated Logistics, Inc. and Matson Global Distribution
Services; 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 Third-Quarter and
Nine Month Results (Condensed)
(In Millions, Except Per Share
Amounts, Unaudited)
2009
2008
Three Months Ended September 30:
Revenue
$ 375.9 $ 456.2 Income From Continuing
Operations
$ 6.1 $ 19.3 Discontinued Operations:
Properties1
$ 2.4 $ 17.5 Net Income
$
8.5 $ 36.8 Basic Earnings Per Share Continuing Operations
$ 0.15 $ 0.47 Net Income
$ 0.06 $ 0.42
Diluted Earnings Per Share Continuing Operations
$
0.15 $ 0.46 Net Income
$ 0.06 $ 0.43 Basic
Weighted Average Shares Outstanding
41.0 41.3 Diluted
Weighted Average Shares Outstanding
41.2 41.5
2009
2008
Nine Months Ended September 30:
Revenue
$ 1,049.8 $ 1,494.5 Income From Continuing
Operations
$ 10.1 $ 83.5 Discontinued Operations:
Properties1
$ 14.0 $ 25.0 Net Income
$
24.1 $ 108.5 Basic Earnings Per Share Continuing Operations
$ 0.25 $ 2.02 Net Income
$ 0.34 $ 0.61
Diluted Earnings Per Share Continuing Operations
$
0.25 $ 2.01 Net Income
$ 0.34 $ 0.60 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
Nine Months Ended
September 30
September 30
Revenue:
2009
2008
2009
2008
Transportation Ocean Transportation
$ 234.2 $ 272.8
$ 653.8 $ 784.2 Logistics Services
82.3 118.1
238.8 336.2 Real Estate Leasing
25.2 26.2
78.3
82.3 Sales
14.9 77.2
61.4 295.8 Less Amounts Reported
In Discontinued Operations
(10.2 ) (72.6 )
(53.8 ) (93.1 ) Agribusiness
32.5 37.5
79.4 96.2 Reconciling Items
(3.0 )
(3.0 )
(8.1 ) (7.1 ) Total
Revenue
$ 375.9 $ 456.2
$ 1,049.8 $
1,494.5
Operating Profit, Net Income:
Transportation Ocean Transportation
$ 24.2 $ 31.4
$ 44.8 $ 84.7 Logistics Services
2.2 5.1
5.5 14.4 Real Estate Leasing
10.2 11.1
33.2
37.6 Sales
3.5 25.8
18.7 76.3 Less Amounts Reported
In Discontinued Operations
(4.0 ) (28.4 )
(23.7 ) (40.6 ) Agribusiness
(13.8
) (6.7 )
(27.0 ) (6.8 )
Total Operating Profit
22.3 38.3
51.5 165.6 Interest
Expense
(6.7 ) (5.8 )
(19.2 ) (17.5 )
General Corporate Expenses
(4.9 ) (5.3
)
(15.5 ) (16.4 ) Income From
Continuing Operations Before Income Taxes
10.7 27.2
16.8 131.7 Income Taxes
4.6 7.9
6.7 48.2 Income From Continuing Operations
6.1
19.3
10.1 83.5
Income from Discontinued
Operations (net of income taxes)
2.4 17.5
14.0 25.0 Net
Income
$ 8.5 $ 36.8
$ 24.1 $ 108.5
Basic Earnings Per Share, Continuing Operations
$
0.15 $ 0.47
$ 0.25 $ 2.02 Basic Earnings Per
Share, Net Income
$ 0.21 $ 0.89
$ 0.59
$ 2.63 Diluted Earnings Per Share, Continuing Operations
$ 0.15 $ 0.46
$ 0.25 $ 2.01 Diluted
Earnings Per Share, Net Income
$ 0.21 $ 0.89
$
0.59 $ 2.61 Basic Weighted Average Shares Outstanding
41.0 41.3
41.0 41.3 Diluted Weighted Average Shares
Outstanding
41.2 41.5
41.0 41.6
Consolidated Balance Sheet
(Condensed)
(In Millions, Unaudited)
September 30,
December 31,
2009
2008
ASSETS Current Assets
$ 281 $ 284 Investments
219 208 Real Estate Developments
85 78 Property, Net
1,605 1,590 Other Assets
141 190 Total
$ 2,331 $ 2,350 LIABILITIES & EQUITY
Current Liabilities
$ 259 $ 238 Long-Term Debt,
Non-Current Portion
412 452 Liability for Benefit Plans
128 122 Other Long-Term Liabilities
53 52 Deferred
Income Taxes
413 414 Shareholders’ Equity
1,066 1,072 Total
$ 2,331 $ 2,350
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