Matson(MATX) - 2025 Q1 - Quarterly Results

Q1 2025 Financial & Operational Highlights 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] Management Commentary & Outlook 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 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] - Domestic tradelane volumes were higher year-over-year in Hawaii and Alaska, but lower in Guam[2] - Logistics operating income declined year-over-year, mainly due to reduced contributions from freight forwarding and transportation brokerage[2] Business Outlook 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] - 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][9] - 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][10] Segment Performance & Outlook 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 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] - 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] Hawaii Service 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] - Full-year 2025 volume is expected to be comparable to 2024 levels[4] China Service 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] - Container volume declined approximately 30% year-over-year in April after tariffs were implemented[5] - The company expects both container volume and average freight rates to be lower year-over-year for Q2 and the full year 2025[5] Guam Service 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] - Full-year 2025 volume is expected to approach the level achieved in 2024[6] Alaska Service 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] - Full-year 2025 volume is expected to be comparable to 2024[7] SSAT Joint Venture 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][19] - For the full year 2025, the contribution from SSAT is expected to be lower than the $17.4 million achieved in 2024[8] 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] - 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] Full Year 2025 Financial Outlook 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 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] 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 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 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 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] - Net cash from operating activities was $89.0 million for Q1 2025, compared to $36.6 million for Q1 2024[22] - Total debt decreased by $10.1 million to $390.8 million as of March 31, 2025[22] Capital Return 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] - Declared a cash dividend of $0.34 per share, payable on June 5, 2025[23] Consolidated Financial Statements 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 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 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 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) 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 |