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Alexander & Baldwin Reports Third Quarter 2012 Results



            Alexander & Baldwin Reports Third Quarter 2012 Results

-- EPS improves to $0.31 per share

-- Sale of 286-acre agricultural parcel on Maui in July generates $7.3 million
gain

-- Leasing operating profit improves 11 percent

-- Investment in One Ala Moana Tower positions the Company to benefit further
from growing demand for residential product in Honolulu's urban core

-- Agribusiness continues strong financial performance

PR Newswire

HONOLULU, Nov. 8, 2012

HONOLULU, Nov. 8, 2012 /PRNewswire/ -- Alexander & Baldwin, Inc. (NYSE:ALEX)
(A&B or Company) today announced results for the third quarter of 2012.

(Logo: http://photos.prnewswire.com/prnh/20120801/LA50085LOGO)

"Financial performance improved significantly over last year's third quarter
as we experienced meaningful increases in leasing and agribusiness results and
recognized a $7.3 million gain on the sale of a 286-acre agricultural parcel
on Maui," said Stanley M. Kuriyama, A&B chairman and chief executive officer.
"We also made headway on a number of value-creating activities in the quarter.
Chief among them is a $20 million preferred investment in the One Ala Moana
luxury condominium project planned to be developed atop the Nordstrom parking
structure in the Ala Moana Center, Hawaii's premier retail destination. This
investment expands our exposure to the improving urban residential segment of
Hawaii's real estate market."

One Ala Moana is a 23-story condominium tower consisting of 206 luxury
residential units that is being developed by a partnership of the Howard
Hughes Corporation, The MacNaughton Group and Kobayashi Group. Marketing of
the condominium units is expected to begin soon.

Third Quarter Financial Results

Excluding $0.4 million, or $0.01 per diluted share, of after-tax charges
recognized in the quarter related to the June 2012 separation of the Company
and Matson, Inc., adjusted net income for the three months ended September 30,
2012 was $13.8 million, or $0.32 per diluted share^1. On an unadjusted basis,
net income for the third quarter of 2012 was $13.4 million, or $0.31 per
diluted share. Net income for the third quarter of 2011 was $4.4 million, or
$0.10 per diluted share. Revenue for the third quarter of 2012 was
$92.9 million, compared to $61.9 million for the third quarter of 2011.

Real estate leasing operating profit in the quarter of $10.2 million was 11
percent higher than the $9.2 million recorded last year. Comparative results
benefited from lower expenses and the timing of sales and acquisitions.
Occupancy for both the Hawaii and Mainland portfolios was 93 percent, an
improvement over last year's occupancy rates of 91 percent for Hawaii and 92
percent for the Mainland. Cash net operating income for the quarter was $16.0
million, an eight percent increase over the third quarter of 2011.^2

During the quarter, the Company re-leased 80,000 square feet of office space
at the Concorde Commerce Center in Phoenix, Arizona that was set to expire in
2013. The re-leasing of this space, together with the second quarter renewal
of the Savannah warehouse lease to Matson Logistics and other lease renewals
to date, have substantially reduced the lease rollover originally projected
for 2013. Over the past three quarters, the 2013 lease rollover exposure for
gross leasable area has been reduced by 64 percent (29.3 percent of portfolio
GLA to 10.6 percent of GLA), and the exposure for expiring gross rents has
been reduced by 49 percent (16.4 percent of portfolio rents to 8.3 percent).

Operating profit for the real estate development and sales segment was $3.3
million for the quarter, consistent with the $3.5 million recorded last year.
Sales for the quarter, inclusive of joint venture sales, comprised 286 acres
of agricultural-zoned land on Maui, a lot and two club cottage units at
Kukui'ula, and a residential unit on Hawaii Island.  

Agribusiness operating profit for the third quarter of 2012 was $9.1 million,
$5.3 million higher than last year principally due to higher sugar margins
resulting from higher prices per ton achieved on two completed sugar voyages
in the third quarter as compared to one lower-priced voyage completed in the
third quarter of 2011, higher molasses margins, higher power margins due to an
increased volume of power sold, and $0.4 million of insurance proceeds that
are not expected to recur.

Corporate expenses for the quarter were $3.7 million compared to $4.7 million
last year. Included in corporate expenses for the third quarter of 2012 were
$0.7 million of costs ($0.4 million net of taxes) associated with the
Company's June 2012 separation from Matson, Inc. Corporate expenses for the
third quarter declined compared to last year primarily due to lower
compensation-related expenses and a decrease in professional services fees.

During the third quarter of 2012, the Company's effective tax rate was 12
percent primarily due to federal and state tax credits associated with the
six-megawatt solar project being developed by the Company in Port Allen,
Kauai. The project is expected to be placed in service in late December.

Year-To-Date Financial Results

Excluding $11.8 million, or $0.28 per diluted share, of year-to-date after-tax
separation charges and charges for the reduction of the carrying value of two
California development properties recognized in the second quarter of 2012 due
to the Company's separation-related change in development strategy, adjusted
net income for the nine months ended September 30, 2012 was $23.6 million, or
$0.56 per diluted share^1. On an unadjusted basis, net income for the nine
months ended September 30, 2012 was $11.8 million, or $0.28 per diluted share.
Net income for the nine months ended September 30, 2011 was $26.5 million, or
$0.63 per diluted share. Revenue for the nine months ended September 30, 2012
was $206.8 million, compared to $181.1 million for the same period last year.

Analysis of Financial Results

Real estate development and sales and leasing revenue and operating profit are
analyzed before subtracting amounts related to discontinued operations. This
is consistent with how the Company evaluates performance and makes decisions
regarding capital allocation, acquisitions and dispositions. Direct
year-over-year comparison of real estate development and sales results may not
provide a consistent, measurable indicator of future performance because
results from period to period are significantly affected by the mix and timing
of property sales. Operating results, by virtue of each project's asset class,
geography and timing, are inherently episodic. Earnings from joint venture
investments are not included in segment revenue, but are included in operating
profit.

Real Estate Leasing – Third quarter of 2012 compared with 2011

                                             Quarter Ended September 30,
(dollars in millions)                        2012        2011     Change
Revenue                                      $  24.9     $ 24.5   2%
Operating profit                             $  10.2     $ 9.2    11%
Operating profit margin                         41.0%      37.6%
Average occupancy rates:
Mainland                                        93%        92%
Hawaii                                          93%        91%
Leasable space (million sq. ft.) — improved
Mainland                                        6.5        6.5
Hawaii                                          1.4        1.4

Real estate leasing revenue and operating profit for the third quarter of 2012
was higher than 2011 primarily due to lower expenses and the net impact of
acquisitions and dispositions.

Real Estate Leasing – First nine months of 2012 compared with 2011

                                             Nine Months Ended September 30,
(dollars in millions)                        2012          2011       Change
Revenue                                      $  75.9       $  75.5    1%
Operating profit                             $  31.4       $  30.2    4%
Operating profit margin                         41.4%         40.0%
Average occupancy rates:
Mainland                                        93%           92%
Hawaii                                          92%           91%
Leasable space (million sq. ft.) — improved
Mainland                                        6.5           6.5
Hawaii                                          1.4           1.4

Real estate leasing revenue for the first nine months of 2012 increased by
$0.4 million compared to 2011. The revenue increase primarily resulted from
the positive net impact of acquisitions and dispositions that was partially
offset by effects of lower occupancy at two California office properties.

Operating profit for the first nine months of 2012 was four percent higher
than 2011, principally due to the timing of acquisitions and dispositions
previously cited and higher overall Mainland and Hawaii occupancies.

Real Estate Development and Sales – Third quarter and first nine months of
2012 compared with 2011

                                         Quarter Ended September 30,
(dollars in millions)                    2012      2011     Change
Improved property sales revenue          $ --      $ 8.5           NM
Development sales revenue                  --        0.7           NM
Unimproved/other property sales revenue    8.4       0.1    84X
Total revenue                              8.4       9.3    -10%
Operating profit before joint ventures     4.4       4.5    -2%
Loss from joint ventures                   (1.1)     (1.0)  10%
      Total operating profit             $ 3.3     $ 3.5    -6%
Operating profit margin                    39.3%     37.6%

                                         Nine Months Ended September 30,
(dollars in millions)                    2012         2011     Change
Improved property sales revenue          $  5.0       $ 45.1   -89%
Development sales revenue                   8.1         5.5    47%
Unimproved/other property sales revenue     13.7        6.4    2X
Total revenue                               26.8        57.0   -53%
Operating profit before joint ventures      7.8         25.5   -69%
and impairment
Impairment of Santa Barbara                 (5.1)       --           NM
development project
Impairment and equity loss related          (4.7)       --           NM
to Bakersfield joint venture
Earnings (loss) from joint ventures         (3.7)       0.6          NM
      Total operating profit (loss)      $  (5.7)     $ 26.1         NM
Operating profit margin                     NM          45.8%

2012 Third Quarter: Revenue was $8.4 million, principally related to the
revenue recognized from the sale of 286 acres of agricultural-zoned land on
Maui. Operating profit also included joint venture sales of a residential lot
and two club cottages at Kukui'ula and a residential unit on the island of
Hawaii, which were more than offset by joint venture expenses.

2012 – Nine Months Ended September 30: Revenue for the first nine months of
2012 was $26.8 million and, in addition to the sales described above, included
the sales of a 4.1-acre parcel at Maui Business Park II, two leased fee
parcels on Maui, two residential units on Oahu, a California office property,
a 79-acre non-core land parcel on Maui, and joint venture sales of a parcel
and a cottage at Kukui'ula and four residential units on the island of Hawaii.
The margin on these sales was partially offset by $9.8 million of impairment
charges in the second quarter of 2012, related to the Company's Santa Barbara
and Bakersfield development projects in California, resulting from the
Company's change in its development strategy to focus on development projects
in Hawaii, as well as joint venture expenses. 

2011 Third Quarter: Revenue and operating profit were $9.3 million and $3.5
million, respectively, and included the sales of an industrial property on
Maui and one residential unit on Oahu.

2011 – Nine Months Ended September 30: Revenue for the first nine months of
2011 was $57.0 million, and included the sales of a retail center in Texas,
three commercial properties on Maui and Oahu, an 86-acre vacant parcel and a
four-acre vacant parcel on Maui, and four residential units on Oahu. In
addition to these sales, operating profit of $26.1 million for the first nine
months of 2011 included a gain from the sale of the Company's interest in the
Bridgeport Marketplace joint venture development in Valencia, California, a
four-acre commercial parcel at the Company's Kukui'ula joint venture on Kauai,
and four units at the Company's Ka Milo joint venture development on the
island of Hawaii, partially offset by ongoing joint venture expenses.

Agribusiness – Third quarter of 2012 compared with 2011

                                  Quarter Ended September 30,
(dollars in millions)             2012       2011      Change
Revenue                           $ 67.9     $ 37.1    83%
Operating profit                  $ 9.1      $ 3.8     2X
Operating profit margin             13.4%      10.2%
Tons sugar produced                 78,200     74,300  5%
Tons sugar sold (bulk raw sugar)    72,400     36,300  99%

Agribusiness revenue for the third quarter of 2012 increased $30.8 million, or
83 percent, compared to the third quarter of 2011.

The increase was primarily due to higher sugar sales revenue due to the
completion of two sugar voyages in the third quarter of 2012 as compared to
the completion of one voyage in the third quarter of 2011. Molasses revenue
was also higher in the third quarter of 2012 as compared to the third quarter
of 2011 due to the timing of molasses shipments and sales.

Operating profit for the third quarter of 2012 increased $5.3 million, or more
than two times, compared to the third quarter of 2011. The increase was
principally due to higher sales volume resulting from higher raw sugar prices
and the extra voyage in the quarter mentioned above, higher molasses sales
margin due to higher volume sold during the quarter, higher power margins
primarily due to the higher volume of power sold, and the receipt of insurance
proceeds that is not expected to recur. 

Agribusiness – First nine months of 2012 compared with 2011

                                  Nine Months Ended September 30,
(dollars in millions)             2012          2011       Change
Revenue                           $  121.4      $ 96.3     26%
Operating profit                  $  19.6       $ 14.9     32%
Operating profit margin              16.1%        15.5%
Tons sugar produced                  137,500      148,700  -8%
Tons sugar sold (bulk raw sugar)     108,400      72,600   49%

Agribusiness revenue for the first nine months of 2012 increased $25.1
million, or 26 percent, compared to the first nine months of 2011. The
increase was due to higher sugar sales revenue resulting from the completion
of three sugar voyages during the year as compared to the completion of two
voyages in 2011, and higher power sales from higher volume and prices,
partially offset by lower coffee revenue due to the sale of the coffee assets
in 2011 and lower charter revenue.

Operating profit for the first nine months of 2012 increased $4.7 million
compared to the first nine months of 2011. The increase was primarily due to
higher sugar margins resulting from higher sugar prices and the extra voyage
mentioned above, higher power margins from higher volume and prices, and
higher lease and operating margins due to the sale of the coffee assets in
2011, partially offset by lower charter margin.

Year-to-date sugar production was eight percent lower in 2012 than in 2011,
due principally to lower yields on the acres harvested resulting from drought
conditions and lower water availability. However, based on expected yields of
the remaining acres scheduled to be harvested in 2012, the Company expects
that full-year production will approximate 2011 production levels.

About Alexander & Baldwin

Alexander & Baldwin, Inc. is a premier Hawaii land company, with interests in
real estate development, commercial real estate and agriculture. With
ownership of approximately 88,000 acres in Hawaii, A&B is the State's fourth
largest private landowner, and is one of the state's most active real estate
investors. A&B has a diverse portfolio of real estate development projects
throughout Hawaii, and a commercial property portfolio comprising nearly eight
million square feet of leasable space in Hawaii and on the U.S. Mainland. It
is also the owner and operator of the Hawaiian Commercial & Sugar plantation
on Maui, and a significant provider of renewable energy on the islands of Maui
and Kauai. Additional information about A&B may be found at
www.alexanderbaldwin.com.

Forward-Looking Statements

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 pages 20-39 of the information statement filed as
Exhibit 99.1 to Alexander & Baldwin, Inc.'s registration statement on Form 10
and 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. We do not undertake any obligation to update our forward-looking
statements.

^1 Refer to the accompanying disclosures for a statement regarding
management's use of non-GAAP financial measures and for a reconciliation of
net income and diluted earnings per share to adjusted net income and adjusted
diluted earnings per share.

^2 Refer to the accompanying disclosures of this release for a discussion of
the Company's use of non-GAAP financial measures and a reconciliation of
leasing operating profit to cash NOI.

Use of Non-GAAP Financial Measures

Alexander & Baldwin, Inc. reports net income and diluted earnings per share in
accordance with GAAP and on a non-GAAP basis. Reconciliations of the Company's
GAAP to non-GAAP financial measures for the three- and nine-month periods
ended September 30, 2012 and 2011 are presented below.

The Company uses these non-GAAP financial measures when evaluating operating
performance because management believes that the exclusion from net income of
1) one-time advisory, legal, equity conversion and other expenses that were
incurred to effect the separation of the Company from Matson, Inc., and 2) the
reduction in carrying values of two of the Company's Mainland development
projects that do not align with the Company's post-separation focus on Hawaii
real estate development, provides insight into the Company's core operating
results, future cash flow generation, and the underlying business trends
affecting performance on a consistent and comparable basis from period to
period. A&B provides this information to investors as an additional means of
evaluating ongoing core operations. The non-GAAP financial information
presented herein should be considered supplemental to, and not as a substitute
for, or superior to, financial measures calculated in accordance with GAAP.

                                          Three Months Ended Nine Months Ended
                                          September 30       September 30
(dollars in millions)                     2012       2011    2012      2011
Net income                                $  13.4    $ 4.4     11.8      26.5
Professional service and other expenses      0.4       --      5.7       --
incurred to effect separation
Charge to convert pre-separation stock       0.3       --      1.1       --
options to A&B-only options
Write-down of non-strategic Mainland         --        --      9.8       --
development project carrying values
Income tax effect of adjusting items         (0.3)     --      (4.8)     --
Adjusted net income                       $  13.8    $ 4.4     23.6      26.5
Diluted earnings per share, net income    $  0.31    $ 0.10  $ 0.28    $ 0.63
Professional service and other expenses      0.01      --      0.13      --
incurred to effect separation
Charge to convert pre-separation stock       0.01      --      0.03      --
options to A&B-only options
Write-down of non-strategic Mainland         --        --      0.23      --
development project carrying values
Income tax effect of adjusting items         (0.01)    --      (0.11)    --
Diluted earnings per share, adjusted net  $  0.32      0.10  $ 0.56    $ 0.63
income

In addition to adjusted net income and adjusted diluted earnings per share,
the Company presents cash NOI, which is a non-GAAP measure derived from real
estate revenues (determined in accordance with GAAP, less straight-line rental
adjustments) minus property operating expenses (determined in accordance with
GAAP). Cash NOI does not have any standardized meaning prescribed by GAAP, and
therefore, may differ from definitions of cash NOI used by other companies.
Cash NOI should not be considered as an alternative to net income (determined
in accordance with GAAP) as an indicator of the Company's financial
performance, or as an alternative to cash flow from operating activities as a
measure of the Company's liquidity. Cash NOI is commonly used as a measure of
operating performance because it is an indicator of the return on property
investment, and provides a method of comparing property performance over time.
Cash NOI excludes general and administrative expenses, straight-line rental
adjustments, interest income, interest expense, depreciation and amortization,
and gains on sales of interests in real estate. The Company believes that the
real estate leasing segment's operating profit after discontinued operations
is the most directly comparable GAAP measurement to cash NOI. A required
reconciliation of real estate leasing operating profit to real estate leasing
segment same store cash NOI is as follows:

ALEXANDER & BALDWIN
Reconciliation of Real Estate Leasing Operating Profit to Cash NOI
(In Millions, Unaudited)
                                                           Three Months Ended
                                                           September 30,
                                                           2012      2011
Real estate leasing segment operating profit               $ 10.2    $ 9.2
before discontinued operations
Less amounts reported in discontinued operations             --        (0.4)
Real estate leasing segment operating profit after           10.2      8.8
subtracting discontinued operations
Adjustments:
Depreciation and amortization                                5.5       5.6
FASB 13 straight-line lease adjustments                      (0.4)     (0.8)
General and administrative expenses                          0.7       0.8
Discontinued operations                                      --        0.4
Real estate leasing cash NOI                               $ 16.0    $ 14.8

ALEXANDER & BALDWIN, INC. AND SUBSIDIARIES
Industry Segment Data, Net Income (Condensed)
(In Millions, Except Per Share Amounts, Unaudited)
                                        Three Months Ended Nine Months Ended
                                        September 30       September 30
Revenue:                                2012      2011     2012      2011
Real estate:
Leasing                                 $  24.9     24.5   $ 75.9    $ 75.5
Development and sales                      8.4      9.3      26.8      57.0
Less amounts reported in discontinued      --       (9.0)    (9.0)     (47.7)
operations
Agribusiness                               67.9     37.1     121.4     96.3
Reconciling items^1                        (8.3)    --       (8.3)     --
Total revenue                           $  92.9   $ 61.9   $ 206.8   $ 181.1
Operating profit (loss), net income:
Real estate:
Leasing                                 $  10.2   $ 9.2    $ 31.4    $ 30.2
Development and sales                      3.3      3.5      (5.7)     26.1
Less amounts reported in discontinued      --       (7.2)    (3.9)     (23.9)
operations
Agribusiness                               9.1      3.8      19.6      14.9
Total operating profit                     22.6     9.3      41.4      47.3
Interest expense                           (3.6)    (4.4)    (11.7)    (12.9)
General corporate expenses                 (3.0)    (4.7)    (11.7)    (12.9)
Separation costs                           (0.7)    --       (6.8)     --
Income from continuing operations          15.3     0.2      11.2      21.5
before income taxes
Income tax expense                         1.9      0.1      1.8       9.3
Income from continuing operations          13.4     0.1      9.4       12.2
Income from discontinued operations        --       4.3      2.4       14.3
(net of income taxes)
Net income                              $  13.4   $ 4.4    $ 11.8    $ 26.5
Basic earnings per share, continuing    $  0.31   $ --     $ 0.22    $ 0.29
operations
Basic earnings per share, net income    $  0.31   $ 0.10   $ 0.28    $ 0.63
Diluted earnings per share, continuing  $  0.31   $ --     $ 0.22    $ 0.29
operations
Diluted earnings per share, net income  $  0.31   $ 0.10   $ 0.28    $ 0.63
^
Basic weighted average shares              42.6     42.4     42.5      42.4
outstanding
Diluted weighted average shares            43.3     42.4     42.7      42.4
outstanding

^1 Represents the sale of a 286-acre agricultural parcel in the third quarter
of 2012 classified as "Gain on sale of agricultural parcel" in the condensed
consolidated statements of income, but reflected as revenue for segment
reporting purposes.

ALEXANDER & BALDWIN, INC. AND SUBSIDIARIES
Consolidated Balance Sheet (Condensed)
(In Millions, Unaudited)
                                              September 30, December 31,
                                              2012          2011
Assets
Current assets                                $  70.4       $  68.8
Investments in affiliates                        312.5         290.8
Real estate developments                         144.6         143.3
Property, net                                    843.8         830.6
Other assets                                     67.1          53.1
                                              $  1,438.4    $  1,386.6
Liabilities & equity
Current liabilities                           $  56.2       $  90.0
Long-term debt, non-current portion              244.0         327.2
Deferred income taxes                            156.3         164.1
Accrued pension and post-retirement benefits     54.2          54.6
Other long-term liabilities                      22.2          24.9
Equity                                           905.5         725.8
                                              $  1,438.4    $  1,386.6

ALEXANDER & BALDWIN, INC. AND SUBSIDIARIES
Condensed Cash Flow Table
(In Millions, Unaudited)
                                              Nine Months Ended September 30,
                                              2012               2011
Cash flows used in operating activities:
Cash flows from operating activities before
real estate expenditures for real estate      $   18.9           $  2.7
development inventory
Capital expenditures for real estate              (31.7)            (8.8)
development inventory
Net cash used in operating activities         $   (12.8)         $  (6.1)
Capital expenditures^1
   Leasing                                        (8.6)             (5.1)
   Development and sales                          --                (0.8)
   Agribusiness/other                             (25.8)            (5.6)
Total capital expenditures                        (34.4)            (11.5)
Other investing activities, net                   (5.4)             (6.3)
Cash used in investing activities             $   (39.8)         $  (17.8)
Net debt proceeds                                 118.5             120.7
Payments of debt and deferred financing           (231.1)           (70.7)
costs
Contributions from (distribution to)              146.0             (29.0)
Alexander & Baldwin Holdings, Inc.
Proceeds from issuances of capital,               11.6              --
including excess tax benefit
Cash provided by financing activities         $   45.0           $  21.0
Net decrease in cash and cash  equivalents    $   (7.6)          $  (2.9)

^1 Excludes non-cash 1031 exchange transactions and capital expenditures for
real estate development inventory.

Contact:
Suzy Hollinger
808.525.8422
shollinger@abinc.com

SOURCE Alexander & Baldwin, Inc.

Website: http://www.alexanderbaldwin.com
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