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
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