PUUNENE – Hawaiian Commercial & Sugar Co. General Manager Chris Benjamin characterized last week’s long-awaited state decision on Na Wai Eha stream waters as a reprieve, rather than a victory, for the plantation struggling for survival.
On Thursday, the state Commission on Water Resource Management ordered 12.5 million gallons of water per day to no longer be diverted from West Maui Mountain streams, also called Na Wai Eha, or the "Four Great Streams."
That amount to be returned was only about a third of what had been proposed by Dr. Lawrence Miike, a commissioner and the contested hearings officer for the ongoing water dispute.
"I would say that the commission’s decision is nuanced," Benjamin said. "I would not use the word ‘victory.’ The reality is we still lost a significant amount of water for a plantation that lost $45 million over the last couple years because of low crop yields (due to drought conditions).
"It’s a setback in that respect, but relative to the initial recommendation, it’s a dramatic improvement," Benjamin said. "In the long term, at least this gives us hope when we’re just trying to stay in business."
The Last Sugar Mill in Hawaii HC&S Puunene Maui CLICK HERE for larger imageAlexander & Baldwin, Inc. (ALEX)
Q1 2010 Earnings Call Transcript
May 4, 2010 5:00 pm ET
Executives
Suzy Hollinger – Director, IR
Stan Kuriyama – President & CEO
Matt Cox – President, Matson Navigation Company, Inc.
Norb Buelsing – President, A&B Properties, Inc.
Chris Benjamin – SVP, CFO & Treasurer; General Manager, HC&S
Analysts
William Horner – Stephens Incorporated
Sloan Bohlen – Goldman Sachs
Sheila McGrath – KBW
Brendan Maiorana – Wells Fargo
Tom Wilson – Wilson Capital Management
Tom Spiro – Spiro Capital Management
Presentation
Operator
Good day, ladies and gentlemen. Welcome to the first quarter Alexander & Baldwin earnings conference call. My name is O'Meara and I will be your operator for today. At this time, all participants are in listen-only mode. Later, we will be conducting a question-and-answer session. (Operator Instructions) As a reminder, this conference is being recorded for replay purposes.
I would now like to turn this conference over to your host for today’s call, Ms. Suzy Hollinger, Director of Investor Relations. Please proceed.
Suzy Hollinger
Thank you, operator. Aloha and welcome to Alexander & Baldwin's first quarter 2010 earnings call. On the call with me today are Stan Kuriyama, A&B's President and CEO; Chris Benjamin, A&B's CFO and also General Manager of HC&S; Norb Buelsing, President of A&B Properties; and joining us from Matson's headquarters in Oakland is Matt Cox, President of Matson Navigation Company.
Before we commence, please note that statements in this call and presentation that set forth expectations or predictions are based on facts and situations that are known to us as of today, May 04, 2010. Actual results may differ materially due to risks and uncertainties such as those described on pages 17 through 26 of our 2009 Form 10-K and our other subsequent filings with the SEC. Statements in this call and presentation are not guarantees of future performance.
Slides from this presentation are available for download at our website www.alexanderbaldwin.com. You will see an icon at the top of the website to direct you to the appropriate section for download.
This slide provides an agenda for our presentation, after which we will take your questions. We will start with Stan who will comment on the performance for the quarter.
Stan Kuriyama
Thank you, Suzy. I'm pleased to report that A&B posted a solid first quarter and a positive start to 2010. Net income was significantly higher in the first quarter at $17 million or $0.42 per share compared to earnings in the first quarter of 2009 of $3 million or $0.07 a share.
As you'll note from this chart, operating results for all segments improved in the first quarter of 2010 with the exception of real estate leasing. Consolidated operating profit was $42 million in the quarter compared to $17 million a year ago. However, our first quarter '09 operating profit was impacted by a $6 million workforce reduction charge that did not recur in the first quarter of 2010.
Let me now brief you on the quarter highlights from each of our business units. In ocean transportation, our China service is benefitting from the recovery in both volume and rates. Volumes in particular were significantly higher than a year ago and rates are higher on a sequential basis. Matt will have more details for you later in the presentation.
Hawaii container volumes and rates were relatively flat in the quarter compared to last year. While we believe that material increases in volumes and rates are unlikely for the rest of the year, we are pleased that the Hawaii trade seems to have bottomed. Guam's performance was also stable for the quarter. Overall, operating profits in our ocean transportation business continue to benefit from the vessel deployment changes, workforce reduction, and other cost cutting and operating efficiencies implemented over the past two years.
First quarter operating results for MIL benefitted from a large movement for the Department of Defense, as well as from prior year's cost cutting measures. Some stabilization in MIL's intermodal business also occurred in the quarter. In real estate, we continue to observe demand and favorable pricing for quality commercial properties as evidenced by our sales of Mililani Shopping Center in January. This sale drove quarter results for this segment, as well as for the overall company.
Leasing, however, was challenged by several factors; the downward reset of market rents, lower occupancies in our Mainland portfolio, and the time lag between sales and acquisitions of properties in our 1031 exchange program. Norbert would be addressing this further in our presentation.
Agribusiness results improved in the quarter with losses declining by $800,000. However, we didn’t plan on harvesting any sugar in the first quarter, meaningful performance comparisons can't be made until the second quarter. As Chris will describe later, we continue to expect significant improvement for the full year and we recently learned federal grant monies will be made available to help us accelerate our bioenergy research at HC&S.
HONOLULU, Feb 03, 2010 (BUSINESS WIRE) — Alexander & Baldwin, Inc. (NYSE:ALEX) today reported that net income for the full year 2009 was $44.2 million, or $1.08 per diluted share. Net income for the full year 2008 was $132.4 million, or $3.19 per diluted share. Revenue for the full year 2009 was $1,404.8 million, compared to revenue of $1,879.8 million for the full year 2008.
Net income for the fourth quarter of 2009 was $20.1 million, or $0.49 per diluted share. Net income in the fourth quarter of 2008 was $23.9 million, or $0.58 per diluted share. Revenue for the fourth quarter of 2009 was $365.0 million, compared to revenue of $395.4 million in the same period of 2008.
Maui Sugar Cane Tassels CLICK for larger imageWAILUKU — Sugar production on Maui got a reprieve on Thursday, at least through the end of the year.
Alexander & Baldwin Inc.’s board of directors met in Honolulu Thursday morning to mull over shuttering its Maui subsidiary, Hawaiian Commercial & Sugar Co., after it recorded about $45 million in losses over the past two years. In a statement, the company said it would continue sugar operations through the end of the year, but that the company’s fate beyond 2010 would depend on a "favorable outcome" in water cases pending before the state Commission on Water Resource Management, as well as HC&S’s ability to increase its sugar production levels.
An attorney for the environmental and Native Hawaiian groups that are petitioning the state to order HC&S to return more water to Maui streams called the company’s announcement Thursday a "stunt" aimed at pressuring the water commission to give it what it wants.
Asked on Thursday when the board of A&B would reevaluate the sugar company’s fate, HC&S General Manager Chris Benjamin said, "It’s hard to say. No later than the end of the year, but (the review) could happen at any time. It will depend on whether there’s an adverse development, if it’s a water decision or something else.
Sugar Needs Water! Save HC&S Jobs! Click for Larger ImagePUUNENE – They came out on their coffee breaks and at the end of their shifts, in dust-covered shirts and grease-flecked work boots and with rough hands. A circle of soot rimmed their cheeks where their respirators had been minutes before.
About 20 Hawaiian Commercial & Sugar Co. employees held their own news conference Thursday afternoon, along with a few HC&S supervisors, to make their case to the public that 800 full-time Maui jobs with benefits are at stake if the state Water Resource Management Commission rules against them in the Na Wai Eha streams case.
At issue is HC&S’ current practice of diverting up to 70 million gallons a day from Na Wai Eha, or "the four great waters" – Iao, Waihee, Waikapu and Waiehu streams. Water Commission Hearings Officer Dr. Lawrence Miike, who also sits on the independent board, has proposed reducing that amount by half.
HC&S agronomist Mae Nakahata said that if Miike’s proposed decision stands, about 5,500 acres of sugar cane above and below Honoapiilani Highway in Central Maui would be lost forever.
"If this goes against us, it could be a show stopper," said Robert Lu’uwai, HC&S vice president of factory operations. "Our expenses keep going up, and this year was the lowest sugar production we’ve ever had because of the (three-year-old) drought."
The mill typically produces up to 200,000 pounds of sugar, but produced just 127,000 pounds this year, Lu’uwai said.
Hookipa Maui Harvest Click for Larger ImagePUUNENE – Sugar prices are through the roof this year, but that will be of little help to Hawaiian Commercial & Sugar Co., which will have its sugar output reduced by drought to an estimated 125,000 to 130,000 tons this year.
But even if HC&S had more to sell, it still wouldn’t benefit, because it sold its production on forward contracts at what now seem like low prices.
The Alexander & Baldwin subsidiary does not participate in the government loan price support program, which is irrelevant this year, since world and American prices are far higher than the 18 cents per pound support rate.
HC&S will soon complete its harvest and shut down the mill, but for much longer than the usual one or two months.
