[Executive Summary & Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Highlights) [2Q25 Financial Highlights](index=1&type=section&id=2Q25%20Financial%20Highlights) Matson's Q2 2025 net income and diluted EPS decreased year-over-year, with slight declines in consolidated revenue and operating income; the company also repurchased 0.9 million shares and raised its full-year outlook 2Q25 Key Financial Data | Metric | 2Q25 | 2Q24 | Change | Change % | | :--- | :--- | :--- | :--- | :--- | | Net Income (USD in millions) | 94.7 | 113.2 | (18.5) | -16.3% | | Diluted EPS (USD) | 2.92 | 3.31 | (0.39) | -11.8% | | Consolidated Revenue (USD in millions) | 830.5 | 847.4 | (16.9) | -2.0% | | Consolidated Operating Income (USD in millions) | 113.0 | 124.6 | (11.6) | -9.3% | | EBITDA (USD in millions) | 163.6 | 171.5 | (7.9) | -4.6% | - The company repurchased approximately **0.9 million shares** and raised its full-year outlook in the second quarter of 2025[3](index=3&type=chunk) [CEO Commentary and Outlook](index=1&type=section&id=CEO%20Commentary%20and%20Outlook) CEO Matt Cox noted that Q2 financial performance exceeded expectations despite tariffs and trade uncertainties, with the company raising its full-year outlook for Ocean Transportation operating income - Q2 financial performance **exceeded expectations** despite market uncertainties from tariffs and global trade[2](index=2&type=chunk) - Ocean Transportation operating income declined year-over-year, primarily due to lower China service volume, though transpacific service demand rebounded in mid-May after a temporary tariff reduction agreement[2](index=2&type=chunk) - In domestic tradelanes, Hawaii and Alaska volumes increased year-over-year, while Guam volume decreased[2](index=2&type=chunk) - Logistics operating income decreased year-over-year, mainly due to a lower contribution from transportation brokerage[2](index=2&type=chunk) - The company raised its full-year outlook for Ocean Transportation operating income, expecting it to be slightly below the prior year, while Logistics operating income is expected to be flat[2](index=2&type=chunk) - For 3Q25, Ocean Transportation operating income is expected to be significantly lower than the prior year period due to lower freight rates and volumes in the China service and a muted peak season; Logistics operating income is expected to be flat[2](index=2&type=chunk) [2Q25 Discussion and Outlook](index=2&type=section&id=2Q25%20Discussion%20and%20Outlook) [Ocean Transportation Segment Discussion](index=2&type=section&id=Ocean%20Transportation%20Segment%20Discussion) The Ocean Transportation segment saw mixed results in Q2 2025, with increased volumes in Hawaii and Alaska offset by declines in China and Guam, alongside a significant rise in SSAT joint venture contributions [Hawaii Service](index=2&type=section&id=Hawaii%20Service) Hawaii service container volume grew 2.6% year-over-year due to higher overall demand, with the local economy remaining stable despite potential headwinds from a tourism slowdown and inflation - Hawaii service container volume **increased 2.6% year-over-year** in 2Q25, primarily due to higher overall demand[4](index=4&type=chunk) - The Hawaii economy remains stable, supported by strong construction activity, but faces potential headwinds from a tourism slowdown, rising unemployment, and high inflation and interest rates[4](index=4&type=chunk) - The company expects 2025 Hawaii service volume to be slightly higher than the 2024 level, reflecting modest economic growth and a stable market share[4](index=4&type=chunk) [China Service](index=2&type=section&id=China%20Service) China service container volume fell 14.6% year-over-year, impacted by tariffs and global trade uncertainty, though demand rebounded in mid-May after a temporary tariff relief agreement - China service container volume **decreased 14.6% year-over-year** in 2Q25, primarily due to tariffs and global trade uncertainty[5](index=5&type=chunk) - Freight rates in the quarter were slightly higher than the prior year period; demand fell significantly in April post-tariff implementation but rebounded in mid-May after a temporary tariff relief agreement[5](index=5&type=chunk) - The company expects lower year-over-year freight rates and volumes in 3Q25 with a muted peak season; full-year average freight rates and volumes are also expected to decline[5](index=5&type=chunk) [Guam Service](index=2&type=section&id=Guam%20Service) Guam service container volume declined 2.2% year-over-year, while the local economy is expected to remain stable in the near-term with a slow tourism recovery and increased construction activity - Guam service container volume **decreased 2.2% year-over-year** in 2Q25[6](index=6&type=chunk) - In the near-term, the Guam economy is expected to remain stable, with a slow tourism recovery, low unemployment, and increased construction activity[6](index=6&type=chunk) - The company expects 2025 Guam service volume to be slightly lower than the prior year level[6](index=6&type=chunk) [Alaska Service](index=2&type=section&id=Alaska%20Service) Alaska service container volume grew 0.9% year-over-year, driven by higher AAX volume, with the state's economy poised for continued growth supported by low unemployment and energy sector activity - Alaska service container volume **increased 0.9% year-over-year** in 2Q25, primarily due to higher AAX volume, partially offset by two fewer northbound sailings[7](index=7&type=chunk) - In the near-term, the Alaska economy is expected to see continued growth, supported by low unemployment, job growth, and ongoing oil and gas exploration and production activities[7](index=7&type=chunk) - The company expects 2025 Alaska service volume to be slightly higher than the prior year level[7](index=7&type=chunk) [SSAT Joint Venture](index=2&type=section&id=SSAT%20Joint%20Venture) The company's investment contribution from the SSAT joint venture reached $7.3 million in Q2 2025, a $6.1 million increase from Q2 2024, driven primarily by higher lift volume SSAT Joint Venture Contribution | Metric | 2Q25 | 2Q24 | Change | | :--- | :--- | :--- | :--- | | SSAT Contribution (USD in millions) | 7.3 | 1.2 | 6.1 | - The increased contribution was primarily due to higher lift volume[8](index=8&type=chunk) - The company expects the 2025 SSAT contribution to be slightly higher than the prior year's level of $17.4 million (excluding a $18.4 million impairment charge in 4Q24)[8](index=8&type=chunk) [Ocean Transportation Outlook](index=2&type=section&id=Ocean%20Transportation%20Outlook) The company now expects full-year 2025 Ocean Transportation operating income to be higher than its early May guidance but slightly below the prior year, with Q3 results projected to be significantly lower - The company expects full-year 2025 Ocean Transportation operating income to be **higher than the guidance provided in early May**, but slightly below the prior year's level[9](index=9&type=chunk) - 3Q25 Ocean Transportation operating income is expected to be **significantly lower** than the prior year period, primarily due to lower freight rates and volumes in the China service and a muted peak season[9](index=9&type=chunk) [Logistics Segment Discussion and Outlook](index=2&type=section&id=Logistics%20Segment%20Discussion%20and%20Outlook) Logistics operating income was $14.4 million in Q2 2025, a decrease of $1.2 million year-over-year due to a lower contribution from transportation brokerage, with Q3 and full-year results expected to be flat Logistics Operating Income | Metric | 2Q25 | 2Q24 | Change | | :--- | :--- | :--- | :--- | | Operating Income (USD in millions) | 14.4 | 15.6 | (1.2) | - The decrease was primarily due to a lower contribution from transportation brokerage[10](index=10&type=chunk) - The company expects 3Q25 Logistics operating income to be flat with the $15.4 million in 3Q24, and full-year operating income is also expected to be flat with the prior year[10](index=10&type=chunk) [Consolidated Operating Income Outlook](index=2&type=section&id=Consolidated%20Operating%20Income%20Outlook) The company projects Q3 2025 consolidated operating income to be significantly below the $242.3 million of Q3 2024, while full-year results are expected to exceed prior guidance but fall slightly short of 2024 levels - The company expects 3Q25 consolidated operating income to be **significantly lower** than the $242.3 million in 3Q24[11](index=11&type=chunk) - The company expects full-year 2025 consolidated operating income to be **higher than the guidance provided in early May**, but slightly below the $551.3 million in 2024[12](index=12&type=chunk) [Other Financial Outlook](index=4&type=section&id=Other%20Financial%20Outlook) The company provides specific full-year 2025 forecasts for depreciation and amortization, interest income and expense, other income, tax rate, and capital and vessel dry-docking expenditures [Depreciation and Amortization Outlook](index=4&type=section&id=Depreciation%20and%20Amortization%20Outlook) The company forecasts full-year 2025 depreciation and amortization expense to be approximately $200 million, which includes about $26 million in dry-docking amortization Full-Year 2025 Depreciation and Amortization Outlook | Metric | Amount (USD in millions) | | :--- | :--- | | Depreciation and Amortization Expense | ~200 | | Dry-docking Amortization | ~26 | [Interest Income Outlook](index=4&type=section&id=Interest%20Income%20Outlook) The company projects approximately $31 million in interest income for the full-year 2025, noting that Q2 2024 interest income of $18.8 million included $10.2 million from a 2021 federal tax refund Full-Year 2025 Interest Income Outlook | Metric | Amount (USD in millions) | | :--- | :--- | | Interest Income | ~31 | - The 2Q24 interest income of $18.8 million included **$10.2 million** related to a 2021 federal tax refund[13](index=13&type=chunk) [Interest Expense Outlook](index=4&type=section&id=Interest%20Expense%20Outlook) The company anticipates its full-year 2025 interest expense will be approximately $7 million Full-Year 2025 Interest Expense Outlook | Metric | Amount (USD in millions) | | :--- | :--- | | Interest Expense | ~7 | [Other Income (Expense) Outlook](index=4&type=section&id=Other%20Income%20(Expense)%20Outlook) The company expects full-year 2025 other income to be approximately $9 million, primarily attributable to the amortization of certain net periodic benefit costs or credits in its pension and post-retirement plans Full-Year 2025 Other Income (Expense) Outlook | Metric | Amount (USD in millions) | | :--- | :--- | | Other Income (Expense) | ~9 (Income) | - This income is attributable to the amortization of certain net periodic benefit costs or credits in the company's pension and post-retirement benefit plans[14](index=14&type=chunk) [Income Taxes Outlook](index=4&type=section&id=Income%20Taxes%20Outlook) The company's effective tax rate was 22.2% for the second quarter of 2025 and is projected to be approximately 22.0% for the full year Income Tax Rate | Metric | 2Q25 | Full-Year 2025 Outlook | | :--- | :--- | :--- | | Effective Tax Rate | 22.2% | ~22.0% | [Capital and Vessel Dry-docking Expenditures Outlook](index=4&type=section&id=Capital%20and%20Vessel%20Dry-docking%20Expenditures%20Outlook) The company reports Q2 2025 capital expenditures of $48.9 million (excluding new vessels), new vessel payments of $37.4 million, and dry-docking payments of $13.4 million, with updated full-year forecasts Capital and Vessel Dry-docking Expenditures | Metric | 2Q25 Actual (USD in millions) | Full-Year 2025 Outlook (USD in millions) | | :--- | :--- | :--- | | Other Capital Expenditures (excl. new vessels) | 48.9 | 100 - 120 | | New Vessel Construction Payments | 37.4 | 305 | | Dry-docking Payments | 13.4 | 40 | [Results By Segment](index=4&type=section&id=Results%20By%20Segment) [Ocean Transportation Segment Performance](index=4&type=section&id=Ocean%20Transportation%20Segment%20Performance) The Ocean Transportation segment showed divergent trends in Q2 and the first half of 2025, with Q2 revenue and operating income declining on lower China volume, while first-half results grew on higher freight rates and SSAT contributions [Performance for the Three Months Ended June 30, 2025](index=4&type=section&id=OT%203M%20Performance) For the three months ended June 30, 2025, Ocean Transportation revenue fell 2.1% and operating income fell 9.5%, driven by lower China service volume, partially offset by higher China freight rates and fuel surcharge timing Ocean Transportation (For the Three Months Ended June 30, 2025) | Metric | 2025 (USD in millions) | 2024 (USD in millions) | Change (USD in millions) | Change % | | :--- | :--- | :--- | :--- | :--- | | Revenue | 675.6 | 689.9 | (14.3) | (2.1)% | | Operating Costs and Expenses | (577.0) | (580.9) | 3.9 | (0.7)% | | Operating Income | 98.6 | 109.0 | (10.4) | (9.5)% | | Operating Margin | 14.6% | 15.8% | | | | **Volume (FEU):** | | | | | | Hawaii containers | 36,000 | 35,100 | 900 | 2.6% | | Alaska containers | 21,700 | 21,500 | 200 | 0.9% | | China containers | 32,300 | 37,800 | (5,500) | (14.6)% | | Guam containers | 4,500 | 4,600 | (100) | (2.2)% | | Other containers | 4,400 | 4,400 | — | —% | - The decrease in revenue was primarily due to lower volume in the China service, partially offset by higher freight rates in the China service[17](index=17&type=chunk) - The decrease in operating income was primarily due to lower volume in the China service, partially offset by higher freight rates in the China service and the timing of fuel-related surcharge collections[19](index=19&type=chunk) - The SSAT terminal joint venture contributed **$7.3 million**, a significant increase from $1.2 million in the prior year period, driven primarily by higher lift volume[20](index=20&type=chunk) [Performance for the Six Months Ended June 30, 2025](index=6&type=section&id=OT%206M%20Performance) For the six months ended June 30, 2025, Ocean Transportation revenue grew 3.5% and operating income rose 26.1%, driven by higher freight rates in China and Hawaii, fuel surcharge timing, and increased SSAT contributions Ocean Transportation (For the Six Months Ended June 30, 2025) | Metric | 2025 (USD in millions) | 2024 (USD in millions) | Change (USD in millions) | Change % | | :--- | :--- | :--- | :--- | :--- | | Revenue | 1,313.0 | 1,268.9 | 44.1 | 3.5% | | Operating Costs and Expenses | (1,140.8) | (1,132.3) | (8.5) | 0.8% | | Operating Income | 172.2 | 136.6 | 35.6 | 26.1% | | Operating Margin | 13.1% | 10.8% | | | | **Volume (FEU):** | | | | | | Hawaii containers | 71,700 | 69,700 | 2,000 | 2.9% | | Alaska containers | 41,400 | 40,300 | 1,100 | 2.7% | | China containers | 60,800 | 66,700 | (5,900) | (8.8)% | | Guam containers | 8,700 | 9,500 | (800) | (8.4)% | | Other containers | 7,800 | 8,000 | (200) | (2.5)% | - The increase in revenue was primarily due to higher freight rates in the China and Hawaii services, partially offset by lower volume in the China service[23](index=23&type=chunk) - The increase in operating income was primarily due to higher freight rates in the China and domestic tradelanes, the timing of fuel-related surcharge collections, and a higher contribution from SSAT, partially offset by lower China service volume and higher G&A and direct cargo costs[25](index=25&type=chunk) - The SSAT terminal joint venture contributed **$13.9 million**, a significant increase from $1.6 million in the prior year period, driven primarily by higher lift volume[26](index=26&type=chunk) [Logistics Segment Performance](index=8&type=section&id=Logistics%20Segment%20Performance) The Logistics segment experienced year-over-year declines in both revenue and operating income for Q2 and the first half of 2025, primarily due to a reduced contribution from its transportation brokerage services [Performance for the Three Months Ended June 30, 2025](index=8&type=section&id=Logistics%203M%20Performance) For the three months ended June 30, 2025, Logistics revenue decreased 1.7% and operating income fell 7.7%, mainly due to lower revenue and contribution from transportation brokerage Logistics (For the Three Months Ended June 30, 2025) | Metric | 2025 (USD in millions) | 2024 (USD in millions) | Change (USD in millions) | Change % | | :--- | :--- | :--- | :--- | :--- | | Revenue | 154.9 | 157.5 | (2.6) | (1.7)% | | Operating Costs and Expenses | (140.5) | (141.9) | 1.4 | (1.0)% | | Operating Income | 14.4 | 15.6 | (1.2) | (7.7)% | | Operating Margin | 9.3% | 9.9% | | | - The decrease in revenue was primarily due to lower revenue from transportation brokerage[27](index=27&type=chunk) - The decrease in operating income was primarily due to a lower contribution from transportation brokerage[28](index=28&type=chunk) [Performance for the Six Months Ended June 30, 2025](index=8&type=section&id=Logistics%206M%20Performance) For the six months ended June 30, 2025, Logistics revenue declined 0.4% and operating income fell 8.0%, driven by lower contributions from transportation brokerage and freight forwarding Logistics (For the Six Months Ended June 30, 2025) | Metric | 2025 (USD in millions) | 2024 (USD in millions) | Change (USD in millions) | Change % | | :--- | :--- | :--- | :--- | :--- | | Revenue | 299.5 | 300.6 | (1.1) | (0.4)% | | Operating Costs and Expenses | (276.6) | (275.7) | (0.9) | 0.3% | | Operating Income | 22.9 | 24.9 | (2.0) | (8.0)% | | Operating Margin | 7.6% | 8.3% | | | - The decrease in revenue was primarily due to lower revenue from transportation brokerage[29](index=29&type=chunk) - The decrease in operating income was primarily due to lower contributions from transportation brokerage and freight forwarding[30](index=30&type=chunk) [Liquidity, Cash Flows and Capital Allocation](index=8&type=section&id=Liquidity%2C%20Cash%20Flows%20and%20Capital%20Allocation) As of June 30, 2025, Matson's cash position decreased significantly, operating cash flow declined year-over-year due to a prior-year tax refund, capital expenditures increased, total debt was reduced, and the company continued its share repurchase program and dividend payments Liquidity Overview | Metric | June 30, 2025 (USD in millions) | Dec 31, 2024 (USD in millions) | Change (USD in millions) | | :--- | :--- | :--- | :--- | | Cash and Cash Equivalents | 59.1 | 266.8 | (207.7) | | Capital Construction Fund (CCF) | 656.7 | 642.6 | 14.1 | | Total Debt | 381.0 | 400.9 | (19.9) | - As of June 30, 2025, the company had available borrowings under its revolving credit facility of **$643.9 million**[31](index=31&type=chunk) Cash Flow and Capital Expenditures (For the Six Months Ended June 30) | Metric | 2025 (USD in millions) | 2024 (USD in millions) | Change (USD in millions) | | :--- | :--- | :--- | :--- | | Net Cash from Operating Activities | 194.6 | 344.5 | (149.9) | | Capital Expenditures (incl. vessel construction) | 175.5 | 125.1 | 50.4 | - The year-over-year decrease in net cash from operating activities was primarily due to the receipt of a **$118.6 million federal tax refund** in 2Q24[31](index=31&type=chunk) - In 2Q25, the company repurchased approximately **0.9 million shares** for a total cost of $93.7 million, with approximately 2.5 million shares remaining under the repurchase program at quarter-end[32](index=32&type=chunk) - The Board of Directors declared a cash dividend of **$0.36 per share**, payable on September 4, 2025[32](index=32&type=chunk) [Financial Statements](index=11&type=section&id=Financial%20Statements) [Consolidated Statements of Income](index=11&type=section&id=Consolidated%20Statements%20of%20Income) This section provides Matson's condensed consolidated statements of income for the three and six months ended June 30, 2025, detailing operating revenues, costs, operating income, interest, taxes, net income, and earnings per share Consolidated Statements of Income | (Unaudited) | | | Three Months Ended | | | | Six Months Ended | | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | (USD in millions, except per share amounts) | | June 30, 2025 | | 2024 | | June 30, 2025 | | 2024 | | **Operating Revenues:** | | | | | | | | | | Ocean Transportation | $ | 675.6 | $ | 689.9 | | $ 1,313.0 | | $ 1,268.9 | | Logistics | | 154.9 | | 157.5 | | 299.5 | | 300.6 | | **Total Operating Revenues** | | 830.5 | | 847.4 | | 1,612.5 | | 1,569.5 | | **Costs and Expenses:** | | | | | | | | | | Operating costs | | (650.4) | | (646.9) | | (1,281.5) | | (1,259.1) | | Income from SSAT | | 7.3 | | 1.2 | | 13.9 | | 1.6 | | General and administrative | | (74.4) | | (77.1) | | (149.8) | | (150.5) | | **Total Costs and Expenses** | | (717.5) | | (722.8) | | (1,417.4) | | (1,408.0) | | **Operating Income** | | 113.0 | | 124.6 | | 195.1 | | 161.5 | | Interest income | | 8.0 | | 18.8 | | 17.4 | | 27.6 | | Interest expense | | (1.7) | | (2.1) | | (3.4) | | (4.3) | | Other income (expense), net | | 2.4 | | 1.8 | | 4.8 | | 3.6 | | **Income Before Income Taxes** | | 121.7 | | 143.1 | | 213.9 | | 188.4 | | Provision for income taxes | | (27.0) | | (29.9) | | (46.9) | | (39.1) | | **Net Income** | $ | 94.7 | $ | 113.2 | $ | 167.0 | $ | 149.3 | | **Basic Earnings Per Share** | $ | 2.95 | $ | 3.34 | $ | 5.14 | $ | 4.38 | | **Diluted Earnings Per Share** | $ | 2.92 | $ | 3.31 | $ | 5.09 | $ | 4.33 | | **Weighted Average Shares Outstanding:** | | | | | | | | | | Basic | | 32.1 | | 33.9 | | 32.5 | | 34.1 | | Diluted | | 32.4 | | 34.2 | | 32.8 | | 34.5 | [Consolidated Balance Sheets](index=12&type=section&id=Consolidated%20Balance%20Sheets) This section presents Matson's condensed consolidated balance sheets as of June 30, 2025, and December 31, 2024, outlining the composition of its assets, liabilities, and shareholders' equity Consolidated Balance Sheets | (Unaudited) | | June 30, 2025 | | Dec 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | (USD in millions) | | | | | | **ASSETS** | | | | | | **Current Assets:** | | | | | | Cash and cash equivalents | $ | 59.1 | $ | 266.8 | | Other current assets | | 365.4 | | 342.8 | | **Total Current Assets** | | 424.5 | | 609.6 | | **Non-Current Assets:** | | | | | | Investment in SSAT | | 98.3 | | 84.1 | | Property and equipment, net | | 2,359.7 | | 2,260.9 | | Goodwill | | 327.8 | | 327.8 | | Intangible assets, net | | 152.9 | | 159.4 | | Capital Construction Fund | | 656.7 | | 642.6 | | Other non-current assets | | 462.2 | | 511.0 | | **Total Non-Current Assets** | | 4,057.6 | | 3,985.8 | | **Total Assets** | $ | 4,482.1 | $ | 4,595.4 | | **LIABILITIES AND SHAREHOLDERS' EQUITY** | | | | | | **Current Liabilities:** | | | | | | Current portion of debt | $ | 39.7 | $ | 39.7 | | Other current liabilities | | 507.2 | | 520.7 | | **Total Current Liabilities** | | 546.9 | | 560.4 | | **Non-Current Liabilities:** | | | | | | Long-term debt, less deferred loan costs | | 331.5 | | 350.8 | | Deferred income taxes | | 693.8 | | 693.4 | | Other non-current liabilities | | 291.9 | | 338.8 | | **Total Non-Current Liabilities** | | 1,317.2 | | 1,383.0 | | **Total Shareholders' Equity** | | 2,618.0 | | 2,652.0 | | **Total Liabilities and Shareholders' Equity** | $ | 4,482.1 | $ | 4,595.4 | [Consolidated Statements of Cash Flows](index=13&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section provides Matson's condensed consolidated statements of cash flows for the six months ended June 30, 2025, detailing cash flows from operating, investing, and financing activities Consolidated Statements of Cash Flows | (Unaudited) | | | Six Months Ended | | | :--- | :--- | :--- | :--- | :--- | | (USD in millions) | 2025 | | | 2024 | | **Cash Flows from Operating Activities:** | | | | | | Net income | $ | 167.0 | $ | 149.3 | | **Adjustments:** | | | | | | Depreciation and amortization | | 81.8 | | 75.5 | | Amortization of operating lease right-of-use assets | | 66.9 | | 68.1 | | Deferred income taxes | | 0.3 | | 7.5 | | Stock-based compensation | | 11.7 | | 12.0 | | Income from SSAT | | (13.9) | | (1.6) | | Distributions from SSAT | | — | | 14.0 | | Other | | (4.7) | | (5.6) | | **Changes in assets and liabilities:** | | | | | | Accounts receivable, net | | (19.7) | | (28.9) | | Deferred dry-docking payments | | (23.8) | | (17.3) | | Amortization of deferred dry-docking | | 13.6 | | 13.7 | | Prepaid expenses and other assets | | (10.6) | | 114.6 | | Accounts payable, accrued and other liabilities | | (3.0) | | 17.4 | | Operating lease assets and liabilities, net | | (67.8) | | (69.0) | | Other long-term liabilities | | (3.2) | | (5.2) | | **Net Cash Provided by Operating Activities** | | 194.6 | | 344.5 | | **Cash Flows from Investing Activities:** | | | | | | Vessel construction payments | | (104.1) | | (38.2) | | Capital expenditures (excl. vessel construction) | | (71.4) | | (86.9) | | Proceeds from disposition of property and equipment, net | | 0.5 | | 3.2 | | Cash and interest deposited to Capital Construction Fund | | (109.1) | | (45.0) | | Withdrawals from Capital Construction Fund | | 100.7 | | 35.8 | | **Net Cash Used in Investing Activities** | | (183.4) | | (131.1) | | **Cash Flows from Financing Activities:** | | | | | | Repayment of debt | | (19.9) | | (19.9) | | Dividends paid | | (22.3) | | (22.1) | | Repurchase of Matson common stock | | (160.4) | | (120.1) | | Taxes withheld related to net settlement of restricted stock units | | (16.3) | | (17.0) | | **Net Cash Used in Financing Activities** | | (218.9) | | (179.1) | | **Net (Decrease) Increase in Cash, Cash Equivalents and Restricted Cash** | | (207.7) | | 34.3 | | Cash, cash equivalents and restricted cash, beginning of period | | 266.8 | | 136.3 | | **Cash, cash equivalents and restricted cash, end of period** | $ | 59.1 | $ | 170.6 | | **Reconciliation of cash, cash equivalents and restricted cash at end of period:** | | | | | | Cash and cash equivalents | $ | 59.1 | $ | 168.2 | | Restricted cash | | — | | 2.4 | | **Total cash, cash equivalents and restricted cash, end of period** | $ | 59.1 | $ | 170.6 | | **Supplemental Cash Flow Information:** | | | | | | Interest paid, net of capitalized interest | $ | 2.7 | $ | 3.5 | | Income taxes paid (refunded), net | $ | 40.7 | $ | (114.3) | | **Non-cash Information:** | | | | | | Capital expenditures included in accounts payable, accrued and other liabilities | $ | 4.0 | $ | 15.3 | | Accrued dividends | $ | 11.4 | $ | 11.4 | [Net Income to EBITDA Reconciliations](index=14&type=section&id=Net%20Income%20to%20EBITDA%20Reconciliations) This section provides a reconciliation of Matson's net income to EBITDA for the three and six months ended June 30, 2025, where EBITDA is defined as earnings before interest, taxes, depreciation, and amortization Net Income to EBITDA Reconciliations | (Unaudited) | | | | | Three Months Ended | | | | | | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | (USD in millions) | | | June 30, 2025 | | 2024 | Change | | Trailing Twelve Months | | | Net Income | | $ | 94.7 | $ | 113.2 | $ | (18.5) | $ | 494.1 | | Less: | Interest income | | (8.0) | | (18.8) | | 10.8 | | (38.1) | | Plus: | Interest expense | | 1.7 | | 2.1 | | (0.4) | | 6.6 | | Plus: | Provision for income taxes | | 27.0 | | 29.9 | | (2.9) | | 130.8 | | Plus: | Depreciation and amortization | | 41.2 | | 38.2 | | 3.0 | | 159.4 | | Plus: | Dry-docking amortization | | 7.0 | | 6.9 | | 0.1 | | 27.1 | | **EBITDA (1)** | | $ | 163.6 | $ | 171.5 | $ | (7.9) | $ | 779.9 | | | | | | | Six Months Ended | | | | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | | | | June 30, 2025 | | 2024 | Change | | | Net Income | | $ | 167.0 | $ | 149.3 | $ | 17.7 | | | Less: | Interest income | | (17.4) | | (27.6) | | 10.2 | | | Plus: | Interest expense | | 3.4 | | 4.3 | | (0.9) | | | Plus: | Provision for income taxes | | 46.9 | | 39.1 | | 7.8 | | | Plus: | Depreciation and amortization | | 81.8 | | 75.5 | | 6.3 | | | Plus: | Dry-docking amortization | | 13.6 | | 13.7 | | (0.1) | | | **EBITDA (1)** | | $ | 295.3 | $ | 254.3 | $ | 41.0 | | [Additional Information](index=9&type=section&id=Additional%20Information) [Teleconference and Webcast](index=9&type=section&id=Teleconference%20and%20Webcast) Matson will hold a teleconference and webcast on July 31, 2025, to discuss its second quarter results, with registration and access information provided - A conference call is scheduled for **July 31, 2025, at 4:30 p.m. ET** to discuss Matson's second quarter results[34](index=34&type=chunk) - The meeting will be broadcast live on the company's website at www.matson.com, under the Investors page, with a slide presentation available; participants must register to receive a dial-in number and PIN[34](index=34&type=chunk)[35](index=35&type=chunk) [About the Company](index=9&type=section&id=About%20the%20Company) Founded in 1882, Matson is a leading provider of ocean transportation and logistics services, offering a vital lifeline to domestic non-contiguous economies and operating a premium, expedited service from China to Long Beach - Founded in 1882, Matson is a leading provider of ocean transportation and logistics services[36](index=36&type=chunk) - The company provides vital ocean freight transportation to the economies of Hawaii, Alaska, Guam, and other island economies in Micronesia, and operates a premium, expedited service from China to Long Beach[36](index=36&type=chunk) - Matson Logistics, established in 1987, provides integrated, asset-light logistics services including rail intermodal, highway brokerage, warehousing, freight consolidation, supply chain management, and Alaska freight forwarding[36](index=36&type=chunk) [GAAP to Non-GAAP Reconciliation](index=9&type=section&id=GAAP%20to%20Non-GAAP%20Reconciliation) The company utilizes non-GAAP financial measures, such as EBITDA, to evaluate performance, make operating decisions, help investors understand its ability to service debt and fund capital expenditures, and analyze period-over-period performance without special items - The company uses non-GAAP measures like **EBITDA** to evaluate performance, make operating decisions, help investors understand its ability to service debt and fund capital expenditures, and analyze period-over-period performance without special items[37](index=37&type=chunk) - EBITDA is defined as the sum of net income plus interest expense, provision for income taxes, and depreciation and amortization (including deferred dry-docking amortization)[37](index=37&type=chunk)[48](index=48&type=chunk) [Forward-Looking Statements](index=9&type=section&id=Forward-Looking%20Statements) Statements in the press release that are not historical facts are "forward-looking statements" that involve risks and uncertainties which could cause actual results to differ materially, and the company undertakes no obligation to update them - Statements in the press release that are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995[38](index=38&type=chunk) - These statements involve a number of risks and uncertainties that could cause actual results to differ materially from those anticipated, including but not limited to the Jones Act, macroeconomic conditions, geopolitical developments, competition, fuel prices, and climate change-related risks[38](index=38&type=chunk)[39](index=39&type=chunk) - The company undertakes no obligation to update any forward-looking statements[39](index=39&type=chunk)

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 second quarter on July 31, 2025 [1] - A conference call is scheduled for 4:30 p.m. ET on the same day, featuring discussions by the Chairman and CEO, Matt Cox, and the CFO, Joel Wine [1][2] - The conference call will be available for live broadcast on the company's website, along with a slide presentation [2]

Industry Overview - The Zacks Transportation-Services industry is currently facing challenges such as dull freight rates, high inflation, and ongoing supply-chain disruptions, along with tariff-related uncertainties and geopolitical issues [1][4][7] - Companies in this industry provide logistics, leasing, and maintenance services, focusing on global logistics management and third-party logistics solutions [3] Current Trends - Supply-chain disruptions and weak freight rates continue to negatively impact the industry, with the Cass Freight Shipments Index declining by 2.4% year over year in June, marking a deterioration for 11 consecutive months [4] - The industry is experiencing significant inflation, particularly in labor and freight costs, prompting companies to implement cost-cutting measures to improve productivity and efficiency [5] - Despite economic recovery, the industry's earnings outlook is negative, with a 31.2% decrease in earnings estimates for 2025 since August 2024 [10] Financial Performance - The Zacks Transportation-Services industry has underperformed the S&P 500, declining by 12.8% over the past year, while the S&P 500 appreciated by 12.2% [12] - The industry is currently trading at a forward price-to-sales ratio of 1.32X, significantly lower than the S&P 500's 5.26X and the sector's 1.45X [15] Company Highlights - Expeditors International of Washington (EXPD) has a Zacks Rank 2 (Buy) and has consistently beaten earnings estimates by an average of 13.3% over the last four quarters, despite facing weak volumes [17] - C.H. Robinson Worldwide (CHRW) holds a Zacks Rank 3 (Hold) and has surpassed earnings estimates by an average of 14.5% in the past four quarters, with a strong liquidity position [21] - Matson (MATX), also with a Zacks Rank 3, has implemented effective cost-management actions and has beaten earnings estimates in three of the last four quarters, with an average beat of 9.7% [24]

Core Insights - Matson (MATX) differentiates itself from typical shipping stocks by focusing on high-value, niche routes rather than pursuing scale like competitors ZIM and Maersk [1] - The company primarily operates in the Hawaii and China-Long Beach routes, emphasizing its specialized market approach [1] Company Strategy - Matson does not engage in heavy spending like larger competitors, which allows it to maintain a unique position in the shipping industry [1] - The focus on niche markets enables Matson to potentially achieve higher margins compared to companies that chase volume [1] Market Position - The company's strategy of targeting specific, high-value routes positions it favorably against larger shipping firms that may be more exposed to market fluctuations [1] - By concentrating on less competitive, specialized routes, Matson can leverage its operational efficiencies and customer relationships [1]

Core Insights - Matson, Inc. has released its 2024 Sustainability Report, highlighting its commitment to ethical standards, environmental impact reduction, and community support [1] Company Overview - Matson, founded in 1882, is a prominent provider of ocean transportation and logistics services, serving non-contiguous economies such as Hawaii, Alaska, and Guam, as well as other island economies in Micronesia [2] - The company operates a diverse fleet that includes containerships, combination container and roll-on/roll-off ships, and barges, and offers premium expedited services from China to Long Beach, California [2] - Matson Logistics, established in 1987, enhances the company's transportation network across North America and Asia, providing integrated logistics services such as rail intermodal, highway brokerage, and supply chain management [2]

Core Insights - Matson is a Hawaii-based shipping vessel operator with a fleet of 26 ships and three under construction, focusing on key shipping routes between China and the USA, as well as between the US non-contiguous states like Alaska [1] Company Overview - The company operates in significant shipping lanes, indicating its strategic importance in the logistics and transportation sector [1] Fleet Information - Matson's current fleet consists of 26 ships, with an additional three vessels under construction, showcasing its commitment to expanding operational capacity [1]

Key Points - Matson, Inc. (MATX) announced a 5.9% increase in its quarterly cash dividend, raising it to 36 cents per share from 34 cents, effective September 4, 2025 [1][9] - This marks the thirteenth consecutive annual increase in Matson's quarterly dividend, reflecting the company's strong business performance and confidence in long-term free cash flow growth [2][4] - In Q1 2025, Matson returned $78.2 million to shareholders through dividends and share repurchases, with $11.3 million in dividends and $66.9 million in share buybacks [2][9] - The company has consistently rewarded shareholders, with dividends totaling $44.8 million in 2024, $45 million in 2023, and $48 million in 2022, alongside significant share repurchase activities [2] - Dividend-paying stocks like MATX are considered safer investments, providing a steady income stream and acting as a hedge against economic uncertainty [3] - Other companies in the transportation sector, such as Delta Air Lines and FedEx, have also announced dividend hikes in 2025, indicating a broader trend of returning capital to shareholders [5][6][7]

Company Overview - Matson, Inc. is a leading provider of ocean transportation and logistics services, founded in 1882 [3] - The company offers vital 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, with logistics services extending throughout North America and Asia [3] Dividend Announcement - The Board of Directors has declared a third quarter dividend of $0.36 per common share, marking a 5.9% increase from the previous quarter [1] - This increase represents the thirteenth consecutive annual increase to Matson's quarterly dividend, reflecting the strength of the business and confidence in long-term free cash flow growth [2] Capital Allocation Strategy - The company emphasizes a disciplined approach to capital allocation, committing to return excess capital to shareholders through share repurchases after funding dividends and supporting operations [2] - Matson aims to maintain an investment-grade balance sheet while investing in growth opportunities [2]

Core Points - The recent high-level economic talks between China and the U.S. in Geneva resulted in significant agreements, including a reduction of bilateral tariffs, with the U.S. canceling 91% of additional tariffs and China reciprocating with a similar reduction [1] - The easing of trade tensions is expected to boost cross-border trade, lower input costs, and alleviate supply chain pressures in key industries, leading to positive market reactions, particularly in shipping, semiconductors, and logistics [1] Shipping and Logistics - Stocks such as ZIM, Matson, FedEx, UPS, and Uber saw significant pre-market gains, benefiting from increased trade volumes and improved cross-border transportation efficiency due to reduced tariffs [3] Semiconductors - Companies like Nvidia, AMD, Marvell Technology, TSMC, ASML, and Intel experienced notable pre-market stock increases, as tariff reductions are expected to ease supply chain disruptions and lower manufacturing costs for chipmakers [4] Retailers - Major retailers including Walmart, Amazon, Costco, and Target reported pre-market stock gains, as lower import costs could enhance profit margins and pricing power for those reliant on Chinese goods [5] Automotive and Parts - Automotive stocks such as Tesla, Ford, General Motors, and Aptiv saw pre-market increases, benefiting from reduced costs of metals and electronic components, which could enhance profitability for major manufacturers [6] Industrial Equipment - Companies like Caterpillar and Deere & Company experienced stock gains, as tariff reductions on machinery parts may improve profit margins and production capacity for firms reliant on imported components [7] Consumer Electronics - Apple and Dell saw pre-market stock increases, as supply chain cost savings are expected to enhance profitability, particularly for companies with supply chains centered in China [8] Airlines - Airline stocks including United Airlines, American Airlines, Delta Airlines, and JetBlue experienced pre-market gains, as reduced tariffs could lower operational costs and potentially increase air freight demand due to strengthened global trade [9] Chinese Tech Giants Listed in the U.S. - Stocks of Alibaba, JD.com, and Baidu saw pre-market increases, as tariff reductions are likely to alleviate supply chain pressures and improve market access conditions for these companies [10]

Part I: Financial Information [Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) The company's Q1 2025 results show significant growth in net income and operating income, alongside robust cash flow and continued capital investment [Income Statement Highlights](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20and%20Comprehensive%20Income) Q1 2025 saw substantial increases in revenue, operating income, and net income compared to the prior year **Q1 2025 vs Q1 2024 Income Statement (in millions, except per share)** | Metric | Q1 2025 | Q1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | **Total Operating Revenue** | $782.0 | $722.1 | +8.3% | | Ocean Transportation Revenue | $637.4 | $579.0 | +10.1% | | Logistics Revenue | $144.6 | $143.1 | +1.0% | | **Operating Income** | $82.1 | $36.9 | +122.5% | | **Net Income** | $72.3 | $36.1 | +100.3% | | **Diluted EPS** | $2.18 | $1.04 | +109.6% | [Balance Sheet Highlights](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet reflects stable total assets and a significant decrease in cash due to vessel investments and share repurchases **Balance Sheet Position (in millions)** | Metric | March 31, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $122.0 | $266.8 | | Total Assets | $4,527.0 | $4,595.4 | | Total Liabilities | $1,893.8 | $1,943.4 | | Total Shareholders' Equity | $2,633.2 | $2,652.0 | - The company's cash and cash equivalents decreased significantly from **$266.8 million** at year-end 2024 to **$122.0 million** at the end of Q1 2025, primarily due to investments in new vessels and share repurchases[11](index=11&type=chunk)[13](index=13&type=chunk) [Cash Flow Highlights](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow increased significantly, while investing and financing activities led to a net decrease in cash **Q1 2025 vs Q1 2024 Cash Flows (in millions)** | Cash Flow Activity | Q1 2025 | Q1 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)** | - Investing activities included **$66.7 million** for vessel construction and a net deposit of **$40.4 million** into the Capital Construction Fund (CCF)[13](index=13&type=chunk) - Financing activities included **$66.9 million** for share repurchases and **$11.3 million** in dividends[13](index=13&type=chunk) [Key Notes to Financial Statements](index=9&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) Notes detail segment performance, joint venture income, vessel construction progress, and share repurchase activities - The company consists of two reportable segments: **Ocean Transportation**, which provides ocean freight services, and **Logistics**, which offers multimodal transportation brokerage, freight forwarding, and warehousing[16](index=16&type=chunk)[17](index=17&type=chunk)[19](index=19&type=chunk) **Segment Revenue Breakdown Q1 2025 (in millions)** | Segment | Revenue | YoY Change | | :--- | :--- | :--- | | Ocean Transportation | $637.4 | +10.1% | | Logistics | $144.6 | +1.0% | - The company's investment in the SSAT joint venture contributed income of **$6.6 million** in Q1 2025, a significant increase from $0.4 million in Q1 2024[41](index=41&type=chunk)[43](index=43&type=chunk) - During Q1 2025, the company repurchased approximately **0.5 million shares for $69.2 million** and paid a quarterly dividend of $0.34 per share[29](index=29&type=chunk)[30](index=30&type=chunk) [Management's Discussion and Analysis (MD&A)](index=29&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses strong Q1 2025 results driven by China freight rates but presents a cautious outlook for the full year [Outlook for 2025](index=29&type=section&id=First%20Quarter%202025%20Discussion%20and%20Outlook%20for%202025) The company projects lower full-year operating income for its core segments and plans significant capital expenditures for new vessels - **Ocean Transportation:** Full-year 2025 operating income is expected to be **lower than 2024**, with China service volume and freight rates projected to decline year-over-year[76](index=76&type=chunk)[78](index=78&type=chunk)[80](index=80&type=chunk)[82](index=82&type=chunk) - **Logistics:** Full-year 2025 operating income is expected to be **lower than the prior year** due to a challenging environment for all business lines[83](index=83&type=chunk) - **SSAT Joint Venture:** The contribution from SSAT is expected to be **lower in 2025** compared to 2024 (excluding a 2024 impairment charge)[81](index=81&type=chunk) **Full Year 2025 Financial Projections** | Metric | Projected 2025 Value | | :--- | :--- | | Depreciation & Amortization | ~$200 million | | Interest Income | ~$31 million | | Interest Expense | ~$7 million | | Effective Tax Rate | ~23.0% | | New Vessel Construction Capex | ~$305 million | | Maintenance & Other Capex | $100 - $120 million | [Segment Performance Analysis (Q1 2025 vs Q1 2024)](index=34&type=section&id=ANALYSIS%20OF%20OPERATING%20REVENUE%20AND%20INCOME%20BY%20SEGMENT) Ocean Transportation income surged due to higher freight rates, while Logistics income saw a slight decline - **Ocean Transportation** operating income increased **166.7% to $73.6 million**, primarily due to significantly higher freight rates in China and a higher contribution from SSAT[94](index=94&type=chunk)[97](index=97&type=chunk) **Ocean Transportation Volume (FEU) - Q1 2025 vs Q1 2024** | Trade Lane | Q1 2025 FEU | Q1 2024 FEU | Change (%) | | :--- | :--- | :--- | :--- | | 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% | - **Logistics** operating income decreased **8.6% to $8.5 million**, due to lower contributions from freight forwarding and transportation brokerage[99](index=99&type=chunk)[100](index=100&type=chunk) [Liquidity and Capital Resources](index=36&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) The company maintains strong liquidity with significant borrowing capacity despite a working capital deficit and large future capital commitments - Net cash from operations increased to **$89.0 million** in Q1 2025 from $36.6 million in Q1 2024, driven by higher net income and favorable changes in working capital[102](index=102&type=chunk)[103](index=103&type=chunk) - The company had a working capital deficit of **$78.4 million** at quarter-end, a decrease from a surplus of $49.2 million at year-end 2024, primarily due to cash deposited into the Capital Construction Fund (CCF)[111](index=111&type=chunk) - As of March 31, 2025, total debt was **$390.8 million**, and the company had **$643.9 million** of available borrowing capacity under its revolving credit facility[109](index=109&type=chunk)[110](index=110&type=chunk) - The company has committed to future milestone payments of **$749.1 million** for the construction of three new Aloha Class containerships, with payments extending through 2028[113](index=113&type=chunk) Part II: Other Information [Risk Factors](index=44&type=section&id=Item%201A.%20Risk%20Factors) The company faces material risks from potential Jones Act changes, operational challenges, and evolving climate regulations - **Jones Act:** The business would be adversely affected by the repeal, invalidation, or substantial amendment of the Jones Act, which regulates U.S. domestic maritime commerce[130](index=130&type=chunk) - **Operational Risks:** The company is exposed to risks from macroeconomic conditions (inflation, interest rates), geopolitical developments (tariffs, trade tensions), intense competition, and reliance on key third-party vendors for essential services[133](index=133&type=chunk)[135](index=135&type=chunk)[138](index=138&type=chunk) - **Fleet & Fuel Risks:** The company faces risks from fuel price volatility, the uncertain availability and cost of alternative fuels like LNG, and potential delays or cost overruns in its new vessel construction program[139](index=139&type=chunk)[144](index=144&type=chunk)[146](index=146&type=chunk) - **Climate & Sustainability Risks:** Evolving regulations and stakeholder expectations regarding sustainability and climate change (e.g., GHG emissions targets) expose the company to increased costs, operational challenges, and reputational risk[141](index=141&type=chunk)[155](index=155&type=chunk) - **Labor and IT Risks:** A significant portion of the workforce is unionized, making the company susceptible to work stoppages, and it faces significant cybersecurity risks[172](index=172&type=chunk)[180](index=180&type=chunk) [Share Repurchases](index=66&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company actively repurchased shares in Q1 2025 and has significant capacity remaining under its authorized program **Q1 2025 Share Repurchases** | Period | Shares Purchased | Average Price Paid | | :--- | :--- | :--- | | Jan 2025 | 180,000 | $139.12 | | Feb 2025 | 162,505 | $141.22 | | Mar 2025 | 157,066 | $132.21 | | **Total** | **499,571** | **$137.63** | - The Board of Directors approved the addition of **3.0 million shares** to the repurchase program on February 27, 2025, which expires on December 31, 2027[197](index=197&type=chunk)