Matson (MATX) Q1 2025 Earnings Call May 05, 2025 04:30 PM ET Speaker0 you for standing by and welcome to Matson's First Quarter twenty twenty five Financial Results Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Justin Schoenberg, Investor Relations and Corporate Development at Matson. Please ...

[Q1 2025 Financial & Operational Highlights](index=1&type=section&id=MATSON%2C%20INC.%20ANNOUNCES%20FIRST%20QUARTER%202025%20RESULTS) The company reported significant year-over-year increases in net income, diluted EPS, consolidated revenue, operating income, and EBITDA for Q1 2025, alongside share repurchases Financial Performance Overview | Financial Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Income | $72.3 million | $36.1 million | | Diluted EPS | $2.18 | $1.04 | | Consolidated Revenue | $782.0 million | $722.1 million | | Consolidated Operating Income | $82.1 million | $36.9 million | | EBITDA | $131.7 million | $82.8 million | - The company repurchased approximately **0.5 million shares** during the first quarter of 2025[3](index=3&type=chunk) [Management Commentary & Outlook](index=1&type=section&id=Management%20Commentary%20%26%20Outlook) Management attributes strong Q1 performance to China service but anticipates significant uncertainty and lower operating income for Q2 and full-year 2025 across both Ocean Transportation and Logistics segments [CEO's Performance Review](index=1&type=section&id=CEO%27s%20Performance%20Review) The CEO attributed strong Q1 operating income to the China service, with mixed domestic tradelane volumes and lower Logistics segment performance - The primary driver for the strong Q1 performance was the China service, which benefited from elevated freight rates from Q4 2024 and healthy demand after the Lunar New Year[2](index=2&type=chunk) - Domestic tradelane volumes were higher year-over-year in Hawaii and Alaska, but lower in Guam[2](index=2&type=chunk) - Logistics operating income declined year-over-year, mainly due to reduced contributions from freight forwarding and transportation brokerage[2](index=2&type=chunk) [Business Outlook](index=1&type=section&id=Business%20Outlook) Management anticipates significant uncertainty from tariffs and global trade, projecting lower Q2 and full-year operating income for both Ocean Transportation and Logistics segments - The company faces significant uncertainty from potential tariffs, global trade dynamics, regulatory measures, and the U.S. economy's trajectory[2](index=2&type=chunk) - Ocean Transportation operating income for Q2 2025 is expected to be "meaningfully lower" than Q2 2024, with full-year income also projected to be lower than the prior year[2](index=2&type=chunk)[9](index=9&type=chunk) - Logistics operating income is also expected to be lower in Q2 2025 and for the full year compared to the prior year, attributed to a challenging environment across all its business lines[2](index=2&type=chunk)[10](index=10&type=chunk) [Segment Performance & Outlook](index=2&type=section&id=Results%20By%20Segment) Ocean Transportation operating income surged in Q1 due to China service rates, while Logistics declined, with both segments forecasting lower full-year performance amid market uncertainties [Ocean Transportation](index=2&type=section&id=Ocean%20Transportation) Ocean Transportation operating income surged 166.7% in Q1 2025 due to China service rates, but anticipates lower Q2 and full-year income amid declining demand and trade uncertainties Ocean Transportation Performance | Metric (Q1 2025 vs Q1 2024) | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $637.4M | $579.0M | +10.1% | | Operating Income | $73.6M | $27.6M | +166.7% | | **Volume (FEU)** | | | | | Hawaii | 35,700 | 34,600 | +3.2% | | Alaska | 19,700 | 18,800 | +4.8% | | China | 28,500 | 28,900 | -1.4% | | Guam | 4,200 | 4,900 | -14.3% | - The increase in operating income was primarily due to significantly higher freight rates in China and a higher contribution from the SSAT joint venture[18](index=18&type=chunk) - For the full year 2025, Ocean Transportation operating income is expected to be lower than the prior year, with the magnitude dependent on global trade and macroeconomic uncertainties[9](index=9&type=chunk) [Hawaii Service](index=2&type=section&id=Hawaii%20Service) Hawaii service container volume increased 3.2% in Q1 2025 due to a competitor's dry-docking, with full-year volume expected to be comparable to 2024 - Q1 2025 volume increased **3.2% YoY**, primarily due to a competitor's vessel being in dry-dock[4](index=4&type=chunk) - Full-year 2025 volume is expected to be comparable to 2024 levels[4](index=4&type=chunk) [China Service](index=2&type=section&id=China%20Service) China service achieved significantly higher Q1 2025 freight rates, but anticipates lower Q2 and full-year volume and rates due to a 30% April decline post-tariffs - Achieved significantly higher freight rates in Q1 2025 compared to Q1 2024[5](index=5&type=chunk) - Container volume declined approximately **30% year-over-year** in April after tariffs were implemented[5](index=5&type=chunk) - The company expects both container volume and average freight rates to be lower year-over-year for Q2 and the full year 2025[5](index=5&type=chunk) [Guam Service](index=2&type=section&id=Guam%20Service) Guam's container volume decreased 14.3% in Q1 2025 due to lower retail and food/beverage demand, with full-year volume expected to approach 2024 levels - Q1 2025 volume decreased **14.3% YoY** due to lower demand in retail and food/beverage[6](index=6&type=chunk) - Full-year 2025 volume is expected to approach the level achieved in 2024[6](index=6&type=chunk) [Alaska Service](index=2&type=section&id=Alaska%20Service) Alaska's container volume increased 4.8% in Q1 2025 due to higher northbound volume, with full-year volume expected to be comparable to 2024 - Q1 2025 volume increased **4.8% YoY**, mainly from higher northbound volume[7](index=7&type=chunk) - Full-year 2025 volume is expected to be comparable to 2024[7](index=7&type=chunk) [SSAT Joint Venture](index=2&type=section&id=SSAT%20Joint%20Venture) SSAT joint venture contribution increased significantly to $6.6 million in Q1 2025 due to higher lift volume, but is expected to be lower for full-year 2025 - Q1 2025 contribution was **$6.6 million**, a **$6.2 million increase** from Q1 2024, driven by higher lift volume[8](index=8&type=chunk)[19](index=19&type=chunk) - For the full year 2025, the contribution from SSAT is expected to be lower than the **$17.4 million** achieved in 2024[8](index=8&type=chunk) [Logistics](index=2&type=section&id=Logistics) Logistics segment operating income decreased 8.6% in Q1 2025 due to lower freight forwarding and brokerage contributions, with lower Q2 and full-year income anticipated Logistics Performance | Metric (Q1 2025 vs Q1 2024) | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $144.6M | $143.1M | +1.0% | | Operating Income | $8.5M | $9.3M | -8.6% | - The decrease in operating income was mainly due to lower contributions from freight forwarding and transportation brokerage, partially offset by a higher contribution from supply chain management[21](index=21&type=chunk) - For the full year 2025, Logistics operating income is expected to be lower than the prior year due to a challenging environment for all business lines[10](index=10&type=chunk) [Full Year 2025 Financial Outlook](index=2&type=section&id=Full%20Year%202025%20Financial%20Outlook) The company projects lower full-year 2025 consolidated operating income due to market uncertainties, providing guidance for key financial metrics and substantial capital expenditures [Consolidated Outlook & Guidance](index=2&type=section&id=Consolidated%20Outlook) Full-year 2025 consolidated operating income is expected to be lower than 2024 due to market uncertainties, with specific guidance provided for depreciation, interest, other income, and effective tax rate - Full-year 2025 consolidated operating income is expected to be lower than the **$551.3 million** achieved in 2024[11](index=11&type=chunk) Full Year 2025 Guidance | Full Year 2025 Guidance | Amount (Approx.) | | :--- | :--- | | Depreciation & Amortization | $200 million | | Interest Income | $31 million | | Interest Expense | $7 million | | Other Income | $9 million | | Effective Tax Rate | 23.0% | [Capital & Dry-docking Expenditures](index=3&type=section&id=Capital%20and%20Vessel%20Dry-docking%20Expenditures) The company made significant Q1 2025 capital investments, projecting substantial full-year expenditures including $305 million for new vessel construction and $100-120 million for other capital needs Capital and Dry-docking Expenditures | Expenditure Type | Q1 2025 Payments | Full Year 2025 Expectation | | :--- | :--- | :--- | | Other Capital Expenditures | $22.5M | $100M - $120M | | New Vessel Construction | $66.7M | ~$305M | | Dry-docking Payments | $10.4M | ~$40M | [Liquidity and Capital Allocation](index=5&type=section&id=Liquidity%2C%20Cash%20Flows%20and%20Capital%20Allocation) The company's cash and cash equivalents decreased in Q1 2025 despite increased operating cash flow, while continuing its capital return program through share repurchases and dividends [Liquidity and Cash Flow](index=5&type=section&id=Liquidity%20and%20Cash%20Flow) Cash and cash equivalents decreased to $122.0 million in Q1 2025, despite net cash from operating activities significantly increasing to $89.0 million, while total debt slightly decreased - Cash and Cash Equivalents decreased by **$144.8 million** during Q1 2025 to **$122.0 million**[22](index=22&type=chunk) - Net cash from operating activities was **$89.0 million** for Q1 2025, compared to **$36.6 million** for Q1 2024[22](index=22&type=chunk) - Total debt decreased by **$10.1 million** to **$390.8 million** as of March 31, 2025[22](index=22&type=chunk) [Capital Return](index=5&type=section&id=Capital%20Return) Matson continued its capital return program in Q1 2025 by repurchasing approximately 0.5 million shares for $69.2 million and declaring a $0.34 per share quarterly cash dividend - Repurchased approximately **0.5 million shares** for a total cost of **$69.2 million** in Q1 2025[23](index=23&type=chunk) - Declared a cash dividend of **$0.34 per share**, payable on June 5, 2025[23](index=23&type=chunk) [Consolidated Financial Statements](index=8&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements for Q1 2025 show significant increases in revenue, operating income, and net income, alongside changes in balance sheet items and cash flow activities, with a notable rise in EBITDA [Condensed Consolidated Statements of Income](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Matson reported total operating revenue of $782.0 million in Q1 2025, leading to a significant increase in net income to $72.3 million, or $2.18 per diluted share Condensed Consolidated Statements of Income | (In millions, except per share) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total Operating Revenue | $782.0 | $722.1 | | Operating Income | $82.1 | $36.9 | | Income before Taxes | $92.2 | $45.3 | | **Net Income** | **$72.3** | **$36.1** | | **Diluted Earnings Per Share** | **$2.18** | **$1.04** | [Condensed Consolidated Balance Sheets](index=9&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2025, total assets slightly decreased to $4.53 billion, primarily due to reduced cash and cash equivalents, while total liabilities also decreased and shareholders' equity remained stable Condensed Consolidated Balance Sheets | (In millions) | March 31, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$4,527.0** | **$4,595.4** | | Cash and cash equivalents | $122.0 | $266.8 | | Property and equipment, net | $2,314.0 | $2,260.9 | | Capital Construction Fund | $685.4 | $642.6 | | **Total Liabilities** | **$1,893.8** | **$1,943.4** | | **Total Shareholders' Equity** | **$2,633.2** | **$2,652.0** | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities significantly increased to $89.0 million in Q1 2025, while investing and financing activities led to a net cash decrease of $144.8 million Condensed Consolidated Statements of Cash Flows | (In millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $89.0 | $36.6 | | Net cash used in investing activities | ($129.4) | ($59.0) | | Net cash used in financing activities | ($104.4) | ($85.7) | | **Net Decrease in Cash** | **($144.8)** | **($108.1)** | [Non-GAAP Reconciliation (EBITDA)](index=11&type=section&id=Net%20Income%20to%20EBITDA%20Reconciliations) The company's non-GAAP EBITDA significantly increased to $131.7 million in Q1 2025, up $48.9 million from Q1 2024, reflecting strong underlying operational performance Net Income to EBITDA Reconciliations | (In millions) | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Net Income | $72.3 | $36.1 | $36.2 | | Adjustments (Taxes, Interest, D&A) | $59.4 | $46.7 | $12.7 | | **EBITDA** | **$131.7** | **$82.8** | **$48.9** |

1Q 2025 Earnings Conference Call May 5, 2025 Forward-Looking Statements Statements made during this presentation that set forth expectations, predictions, projections or are about future events are based on facts and situations that are known to us as of May 5, 2025. We believe that our expectations and assumptions are reasonable. Actual results may differ materially, due to risks and uncertainties, such as those described on pages 12-23 of our Form 10-K filed on February 28, 2025 and other subsequent filin ...

HONOLULU, April 28, 2025 /PRNewswire/ -- Matson, Inc. ("Matson" or the "Company") (NYSE: MATX) announced today that Rusty Rolfe, Executive Vice President of Matson and President of Matson Logistics, will retire on July 1, 2025, having led the growth of Matson Logistics from its beginnings as an intermodal marketing company to an award-winning provider of diverse and integrated logistics services over the past 24 years."Rusty's influence at Matson over the past two decades will leave an indelible mark on our ...

Matson (MATX) could be a solid choice for investors given its recent upgrade to a Zacks Rank #2 (Buy). An upward trend in earnings estimates -- one of the most powerful forces impacting stock prices -- has triggered this rating change.The Zacks rating relies solely on a company's changing earnings picture. It tracks EPS estimates for the current and following years from the sell-side analysts covering the stock through a consensus measure -- the Zacks Consensus Estimate.Since a changing earnings picture is ...

Company Overview - Matson, Inc. is a leading provider of ocean transportation and logistics services, founded in 1882 [3] - The company offers ocean freight transportation services to Hawaii, Alaska, Guam, and other Micronesian islands, as well as expedited services from China to Long Beach, California [3] - Matson's fleet includes containerships, combination container and roll-on/roll-off ships, and barges [3] - Matson Logistics, established in 1987, provides integrated logistics services across North America and Asia, including rail intermodal, highway brokerage, and supply chain management [3] Financial Results Announcement - Matson will release its financial results for the first quarter on May 5, 2025 [1] - A conference call is scheduled for 4:30 p.m. ET on the same day, featuring Matt Cox, Chairman and CEO, and Joel Wine, Executive Vice President and CFO [1][2] - The conference call will be available live on the company's website, with a replay accessible approximately two hours after the event [2]

A shipping company operating their fleet exclusively on the pacific is bound to feel the pinch of tariffs and their consequences on trade flows. Matson (NYSE: MATX ) is such a company, the stock is already downStriving to compound knowledge. Long-time fan of Warren and Charlie. Always invert. "To finish first, you must first finish". Investing own and family funds for +20 years. Senior finance roles at public and private corporations for most of that time.Analyst’s Disclosure: I/we have no stock, option or ...

Core Viewpoint - Matson (MATX) demonstrates a strong commitment to shareholders and is actively expanding its operations, leading to impressive share price performance. The current market conditions present a favorable opportunity for investment in MATX shares [1]. Earnings Estimates - The Zacks Consensus Estimate for earnings per share shows significant growth for the first and second quarters of 2025, as well as for the full years of 2025 and 2026, indicating broker confidence in the stock [2]. - The earnings estimate revisions over the past 60 days reflect substantial increases: Q1 by 73.68%, Q2 by 43.75%, E1 by 20.61%, and F2 by 28.12% [3]. Price Performance - MATX shares have appreciated by 18.5% over the past year, outperforming the Zacks Transportation - Services industry, which saw a decline of 1.7% [3]. Earnings Surprise History - Matson has a positive earnings surprise history, exceeding the Zacks Consensus Estimate in each of the last four quarters, with an average surprise of 12.7% [4]. Shareholder Initiatives - The company has expanded its share repurchase program by adding 3 million shares, bringing the total to 15 million shares, with the program running until December 31, 2027 [5][7]. - Since the program's inception in August 2021, Matson has repurchased 11.5 million shares for approximately $1 billion [7]. Fleet Expansion and Modernization - Matson is investing $1 billion in constructing three new "Aloha Class" vessels, which will enhance fleet capacity, operational efficiency, and environmental sustainability. These vessels are designed to reduce greenhouse gas emissions by 40% by 2030 [8].

Core Viewpoint - The stock price of Matson (MATX) has been on a bearish trend, losing 6.7% in the past two weeks, but recent technical indicators suggest a potential trend reversal due to increased buying interest and positive earnings outlook from analysts [1][2]. Technical Analysis - The formation of a hammer chart pattern indicates a possible bottoming out, suggesting that selling pressure may be exhausting and that bulls could be gaining control [2][4]. - A hammer pattern typically forms during a downtrend when the stock opens lower, makes a new low, but then closes near or above the opening price, signaling a potential reversal [3][4]. - Hammer candles can appear on various timeframes and are utilized by both short-term and long-term investors [4]. Fundamental Analysis - Recent upward revisions in earnings estimates for MATX serve as a bullish indicator, correlating strongly with near-term stock price movements [6]. - Over the last 30 days, the consensus EPS estimate for MATX has increased by 15.8%, indicating that analysts expect better earnings than previously predicted [7]. - MATX holds a Zacks Rank of 1 (Strong Buy), placing it in the top 5% of over 4,000 ranked stocks, which typically outperform the market [8].

Revenue and Income - Total operating revenue for 2024 was $3,421.8 million, an increase of 10.6% compared to $3,094.6 million in 2023[199]. - Operating income for 2024 increased by $208.5 million, or 60.8%, to $551.3 million compared to 2023[215]. - Ocean Transportation revenue increased by $332.7 million, or 13.4%, during 2024, primarily due to higher freight rates in China and domestic tradelanes[225]. - Logistics segment operating income for Q4 2024 was $10.1 million, an increase of $1.2 million compared to Q4 2023[208]. - Net income for 2024 reached $476.4 million, up from $297.1 million in 2023, representing a 60.4% growth[285]. Container Volume and Demand - The company's container volume in Hawaii decreased by 1.7% year-over-year in Q4 2024, attributed to lower general demand[202]. - In China, container volume increased by 7.2% year-over-year in Q4 2024, supported by stronger freight demand and elevated freight rates[203]. - Guam's container volume decreased by 10.0% year-over-year in Q4 2024, primarily due to lower demand from retail and food and beverage segments[204]. - Alaska's container volume increased by 1.1% year-over-year in Q4 2024, driven by higher northbound volume[205]. Financial Position and Cash Flow - Cash and cash equivalents as of December 31, 2024, were $266.8 million, an increase of $132.8 million from $134.0 million in 2023[232]. - Net cash provided by operating activities increased to $767.8 million in 2024 from $510.5 million in 2023, a change of $257.3 million[233]. - The Company reported a net increase in cash, cash equivalents, and restricted cash of $130.5 million for 2024, compared to a decrease of $117.4 million in 2023[233]. - Total assets as of December 31, 2024, were $4,595.4 million, up from $4,294.6 million in 2023, indicating a 7.0% increase[290]. - The company’s total liabilities increased to $1,943.4 million in 2024 from $1,893.9 million in 2023, reflecting a 2.6% rise[290]. Capital Expenditures and Investments - The Company expects to make capital expenditures of approximately $120 to $140 million for maintenance and $305 million for new vessel construction in 2025[213]. - Capital expenditures for 2024 were $214.5 million, compared to $195.5 million in 2023, reflecting investments in LNG installations and terminal equipment[234]. - The Company expects to incur total estimated capital expenditures of $425 - $445 million in 2025, including $305 million for new vessel construction milestone payments[240]. - The Company anticipates the delivery of three new Jones Act vessels, with the first expected in Q1 2027 and subsequent deliveries in Q3 2027 and Q2 2028[360]. Debt and Liabilities - Total debt decreased by $39.7 million to $400.9 million as of December 31, 2024, primarily due to scheduled debt repayments[237]. - The Company has a long-term debt net of deferred loan fees of $350.8 million as of December 31, 2024, down from $389.3 million in 2023[374]. - Debt maturities for the next five years total $175.5 million, with $225.4 million due thereafter[384]. - Other liabilities increased from $108.0 million in 2023 to $123.2 million in 2024, driven by higher employee incentives and insurance reserves[321]. Shareholder Returns and Stock Activity - During 2024, the Company repurchased approximately 1.6 million shares for a total cost of $201.0 million, with 830,527 shares remaining under the repurchase program[243]. - Dividends paid in 2024 amounted to $44.8 million, slightly down from $45.0 million in 2023[291]. - The Company recognized dividends as a liability when approved by the Board of Directors, reflecting a commitment to returning value to shareholders[332]. Tax and Interest - The effective tax rate for the full year 2025 is expected to be approximately 22.0%, up from 19.1% in Q4 2024[212]. - Interest income for the full year 2025 is expected to be around $31 million, while interest expense is projected to be approximately $7 million[211]. Impairment and Asset Evaluation - The Company evaluated its long-lived assets and determined no impairment for the years ended December 31, 2024, 2023, and 2022[251]. - The Company evaluated its goodwill for impairment and determined that the fair value of the Span Alaska reporting unit exceeded its carrying amount as of the impairment review date[280]. - The company did not record any impairment charges for long-lived assets or goodwill for the years ended December 31, 2024, 2023, and 2022[318]. Operational Challenges and Outlook - The Company anticipates challenging business conditions for transportation brokerage in 2025, leading to modestly lower operating income compared to 2024[209]. - For 2025, Ocean Transportation operating income is expected to be moderately lower than the $500.9 million achieved in 2024, depending on trade conditions in the Red Sea[207]. - For Q1 2025, the Company expects consolidated operating income to be significantly higher than $36.9 million achieved in Q1 2024, but for the full year 2025, it anticipates operating income to be moderately lower than $551.3 million achieved in 2024 if trade conditions normalize[210].