Matson (MATX) Q1 2020 Earnings Call Transcript
We expect the fleet repositioning, operating changes, and cost management initiatives to improve operating results by $40 million to $50 million in 2020, of which two-thirds is from fleet repositioning and other operational changes. However, the financial benefits from these actions will only partially offset profit declines in our businesses as a result of the COVID-19 situation and its economic effects. These committed capital projects include the Hawaii vessel renewal program, where our fourth and final vessels are expected to be delivered in the fourth quarter. We expect the deferral and elimination of CAPEX to result in approximately $30 million in savings in 2020. While we have a rather limited ability to curtail CAPEX in 2020 due to the committed projects I mentioned, we have more flexibility to contract the capital spending in 2021 and 2022 to the extent the depth or duration of the economic cycle is more pronounced. The first is in the category of deploying our largest assets in the market that seems the most active. What's clear is Hawaii will remain muted for the time being at least. And so moving our larger vessels into the CLX where we happen to have this unprecedented level of demand given the relocation of the market will produce some of that benefit. And then we basically did a bottom-up as most companies are doing, bottom-up look at ways in which we can reduce our operating expenses in line with the lower expected levels of freight volume. And so there are, I would say, over 100 separate initiatives from every terminal, from every location, every one of our locations, which are looking at ways to reduce our operating costs. And then, of course, we're looking at deferring capital and deferring all sorts of discretionary expenditures until we get a better look at this cycle. So I would say with regard to your question about when and how they roll out a number of the initiatives that we're looking at are only get a three-quarter year or eight-month benefit. So the annual run rate of that $40 million to $50 million is actually higher. And to the extent that the economic cycle remains muted into the future, we'll have a running head start on cost reduction initiatives going into 2021 if that's necessary. So given that it was difficult for us to know exactly what was going to happen, we've decided to take a very strong firm reduction at our recurring operating expenses given the uncertainty. But we're also careful to do nothing that would create permanent damage to our services so that when the cycle ends, our whole goal is to remain effective and to be able to bounce back when that eventual recovery occurs, although, for planning purposes, we're not assuming it happens in the next nine to 12 months. But what else would you add, Joel, for that?