Matson (MATX) 9 Aug 202020 Q2 Earnings call transcript

Good afternoon, ladies and gentlemen, and welcome to the Second Quarter 2020 Financial Results Conference Call. At this time, all participants are in a listen-only mode, later we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call may be recorded. I would now like to turn the conference over to your host today, Mr. Lee Fishman, Director of Investor Relations. yours. is floor the Sir,

Thank you, Joanna.

Slides the Joining our Chairman President website, are are Officer. Cox, www.matson.com under tab. today Chief me and for Executive at Financial Vice on and Senior Officer; Matt Wine, presentation Investors call and download this from the Chief available Joel

the to are on the Xth, of the in statements is undertake update and on also XXXX, Xth, call any on under we Matt. regarding would or statements. to I May of you are we to reasonable. date. subsequent and statements forward-looking based events. the more the meaning described in that We XXXX, make detailed to presentation we these the that These note Form that conference and risk in will the the caution today Please factors course from slides, filed press this our with filings XX over and Before materially our the could our forward-looking projections you of make the results like no call. our turn Pages are assumptions begin, during assumptions to forward-looking federal call expectations, securities We and actual release release, believe XX-Q this fully August laws factors the of statements to conference I in as consider future that press call, risk cause remind We predictions, Factors of obligation are SEC. and now those Risk date forward-looking will this that differ caption presentation XX expectations within this

our a our the thanks start response for priorities. to I'd environment recap our COVID-XX through before current those second of Lee, quick today. and I to call walk results and the Thanks, on like quarter with

had a voyages including X. primarily in volume in income and improvement Matson's a CLX was and economic very are Please well our environment. because due The by transportation be led led a one COVID-XX to pandemic. improved better retail-related In Alaska businesses China COVID-XX we pandemic CLX+ contributions good forwarding, despite which both by turn seven X. was as related of volume business the service, from turn effects. was we dry and carried challenges continue So the freight quarter of we freight Ocean better challenged slide to well May performed please strength to slide in Pasha's the reopened some as regular service, lower lower our our of decline had from volume year-over-year lines expected June, local the Hawaii volume service of of to as service. portion economy call the its vessels. latter than the docking the to half demand. supplemental as expected logistics, volumes in of which brokerage than in gradually operating led of transportation by And and into In our COVID-XX

and service months managing to in I second and such quarterly opportunity, few we earnings discussed during last spend consolidated period barge the discretionary vendor number increase regular introduction largest the of year-over-year one our a where drove or One the freeze of process, the to stand and instituting the initiatives economic difficult initiatives The CLX Other to during port this in in minutes the island undertaken under Hawaii I LA, On in financial reducing shifting principally late complete quarter. led opportunities. how in second responding business hiring the few eliminating operating we've quarter was including reducing our in our Seattle including income. CLX+ and the actions reduction our frequency cost, calls today. uncertainty. those maintenance June. to costs, had of or helped evaluation terminal neighbor period and and the a of vessels have in service third the first spend revisiting and call, Daniel newest to K. salary still operational Reducing We through quarter of terminal, we expect consolidation the Matson executed pandemic the and plan. Tacoma into this which a actions want service, of operations

period results operational we're we highlighted opportunities and revenue that uncertainty we line and cost with call, on evolve. all additional the additional the on of $XX operating actively initiatives have and May we million the this management of together, taken the Xth range to we improvement. pursuing expect are continues of million improvement. evaluating $XX high also is We to end operating earnings as All remain Bottom exceed opportunities track for results to

quarter our results the whose home those of and and vigilant to achieved third of them other EBITDA distancing year. safeguarding disinfecting, diluted working agencies. of safety CDC, our remain forth throughout last social on position functions for health third employees the the and we of income, put at exceed job to We our priorities. X XXXX, to the slide so. government by Guard, for Please the and allow the processes in for Lastly, organization operating guided summary EPS, the from and by turn net We're also current do expect Coast PPE, maintaining a quarter consolidated income,

customers means and is of terminal time, as the our ensuring to cargo services. related Ocean is the quickly This on consistency making second sure the Transportation closely priority arriving possible. at our Our as available

critical we we with particularly times. that best-in-class our communities during these challenging for imperative lifeline maintain it's international Coast, on-time customers US our West performance the freight serve For and

deliver to conditions want as to customers continue maximum demand logistics and We service for also exceptional remain volatile. our supply

maintaining is third an for cost in and Our extended downturn. capital discipline preparation priority

economy trajectory has the remains of depths the highly quarter, While the second from US uncertain. improved the

paying capital considered or spending committed. previously and Island free the As down Sand program. -- include first flow These terminal intensely these focused debt. continuing include in eliminate capital renewal briefly vessel moment or and scrubber committed remain cash which defer projects, vessel We're program, go such essential not phase we I'll upgrade, to Hawaii generating of all a through on the the six

Our build four-vessel shipyard service. quarter Diego, San is the fourth remains program for the to priority year. for vessel on the this track fourth in NASSCO in christened new Xnd Hawaii vessel the complete in Matsonia We delivery of final the July at and on

existing to is cranes. to with first this to the in our plan complete remain cranes use we that demolition of the year terminal Sand phase four of project. as three regular Our to modifications as our well the track phase fifth later priority the end-of-life final first on We Island the service of complete the older the last

and scrubbers priority quarter quarter down decline on second the completion four working was market on to program scrubber in to container is the Our docking mitigation quarter business X. this one volume six decreased volume of year-over-year efforts. X% fourth tourism track program. due decline complete XX% freight in and The offsetting the fifth The of near-zero Pasha quarter currently state's of to primarily in for in The basis. because the the well. the remains vessel vessel container performance and trends. program All on for was year. second of Please retail last year-over-year. are Partially provide of go COVID-XX the stores dry-dock. The in current temporary volume turn second is through installed from this in-service the closure of westbound its the approximately was due commentary to I'll dry now slide a vessels. part Hawaii the

may through and March COVID-XX historic hitting led the affected decline the economic the order activity second quarter a state you materially with to tourism the islands. recall, forward and several orders XX-day on a unemployment announced The As carry quarantine in to high. spread precipitous mitigate in of

many week-to-week volume to of COVID-XX goods for extended opening some quarter. volume May. the third so majority month. further to The slide tourism down the And the and any a remains its close volume presented of difficult service them sustenance modest remained highly environment Hawaii state island declined of mitigation turn businesses the high and hotels at evolve. for tourism reopening it don't quarter, well post of The in you please amount goods has to a state's remain businesses very particularly included a go give trends retail year-over-year a also The now the difficult carry August on tourism-related X. reopened. the July, XX-day remains any of pretty would business see quarter continuation Hawaii quarantine across not consistent July. second westbound Pasha XXX sense that environment reopening approximately volume mitigation top trajectory closed. in by of container second the is have businesses, unemployment of and state the near-zero the with recovery in The in the the COVID-XX elevated and didn't I'll in historic Pasha To XX.X% as westbound visitors our This This through tourism, tourism-related as to largely XXst, our for date. the of the be trends from in quarter. extend due was challenged carry We for the dependent through the efforts we current rate the throughout will surprise The of efforts. economic economy but us X.X% expect hotels consisted beyond XX.X% of volume the

in was XXXX the seven primarily our Matson's the was supplemental X. quarter the of to China second due slide Service voyages. volume with quarter increase service CLX+ year-over-year. Moving the to XX.X% chartered higher on introduction The in

at also these CLX capacity. service an on vessels sailing increase regular volume in We with a saw

embarked CLX+ We few strong high-demand Matson's and continue demand PPE, which CLX+ electronics, in for May and so the lead from market to service. CLX a dislocation the exceptionally in back that Demand was come see to e-commerce, on goods. other driven by Demand in air we moments. expedited working-from-home to I'll strong was opportunity freight

reopened modest shelter-in-place. in the retail as also West gradually goods rebound saw after US the We a Coast

introduced the quarter-end As to Matson CLX+ want few for into better turn to why service slide Please add when X. the position This fully service would trip spend previously the I to mentioned, additional containers on XXX at K. vessel in minutes quarter. second Inouye a Daniel to the CLX roughly capacity regular utilized. demand. we to moved XXX

XX growth. in Over strong in As many has Through demonstrated a our this this ocean relationship CLX long-standing with on of market Transpacific on-time availability. freight our has best-in-class expedited service been integral been a service reliability, timeframe, their we've freight focus where know, developed the customers you we've for years. relentless

a service our regular a concert regular quarter, start set opportunity to service. vessel the an provided with chartered Matson in unique During CLX of conditions running

environment COVID-XX markets. expedited the for variety the Our secondarily of the ocean in particularly freight and saw capacity, a CLX Transpacific customers for air looking were the freight in ocean additional goods, an increased demand they and given disruption

significantly We opportunity saw pre-COVID as low economic for costs relied than new the pandemic, and through that customers' opportunity the rates have now air Matson. We traditionally which a weekly season vessel on activity were of multi-month from started very fell freight What to demand a global our service. levels. result as late dictate. lower potentially charter longer a in peak customers Due decline the also offer fuel became to October levels week-to-week or as CLX+ to is business needs plan

operating trajectory CLX+ XX. to of pending the Our the Please service one turn conditions. permanent goal a to and slide and make customers' our the business is needs

loss the For and transpacific capacity ocean expect the air freight we a disruption of quarter, cargo and continued markets. third in

As expect e-commerce continued a customers demand high-demand necessitating goods service. other we reliable from a ocean expedited and result,

rebound begin as mitigation expect apparel a such also and goods to garments to build the as ease holiday retail-related We inventories continue for in COVID-XX and efforts season.

CLX second K. the in CLX vessels, led Aloha service. Hila, CLX+ increased in by sense give year-over-year this our the be and the CLX+ to July and To operating quarter. Kaimana Eastbound expect of the you volume class the Daniel the of volume due to CLX vessels volume Inouye container volume but XXX.X% current a capacity trend, the the on at higher We also third in

of was Turning measures to in the primarily in a the freight slide modest demand. impact In on To as a had container tourism consumption XXXX demand lower result COVID-XX to lesser second decreased retail-related Guam, XX.X% of goods quarter mitigation XX. negative and lower islands extent, year-over-year. effect. volume decline remained Matson's a for volume the The goods

For westbound note X% July, container for increased XXXX volume the an our important service. unusually month but that year-over-year, of the to soft July month was it's

expect challenged experiencing were demand. modest improvement easing expect we near a In but the impact retail the businesses in on in the see the saw remain what reopened continued and to versus of we improvement COVID-XX environment freight mitigation During by XXXX, term, July retail-related in environment, second we COVID-XX to negative also quarter with tourism measures. have we as

Moving now Alaska, year-ago to decreased saw volume In one sailing compared an state's a container quarter plus Matson's lower to We due demand volume the less X%. lower to COVID-XX goods slide for for XX. retail-related the year-over-year of efforts the second effect mitigation northbound period. as

We June, also the demand. and due saw first came led lower reopening local volume our of versus improved expectations early than southbound Northbound to late gradual May better modestly the economy in in freight call the quarter to in volume. earnings which expected

the our reopening negative Despite provide XX, slide of effects from on thoughts other pandemic I'll residual remain. the economy Alaska. to trade COVID-XX the Turning business in the of ahead current lanes, some gradual trends

of in tourism of will which in remains, XX.X%. impact local to price presents is activity the demand. the budgets reduced April summer rate oil And the this and oil freight June remains levels. to near expect which the expected the from The year production XX.X%, we its economy In exploration challenges term. was down effects in high addition, below Business during in unemployment well negative in the impact significantly environment low pre-COVID-XX state season,

third impacted we As northbound such, to our in expect be volume negatively the quarter.

"off" summer in month this For point container in the the X.X% two-year declined year-over-year. this northbound season our just that of I'd like cycle. season is natural to the seafood July, out volume

As volume we to a expect southbound lower year-over-year. be result,

further uncertainty with regarding reopening plans, economy term the recovery. is Alaska in trajectory than Alaska expect we local be too challenged the while most So along the states its economic the of to near much in

in improvement to SSAT prior venture the primarily accounting to due COVID-XX compared the offset is pandemic. partially of $X.X a due as the lower of joint the volume the $XXX,XXX was contributed year quarter related number in of year quarter significant blank standard during in quarter to second lift The lower period. absence volume. million of early the XXXX, last adoption terminal year-over-year result transpacific sailings Our expense to lease second by of The the the additional the lift

capacity this improvement expect We the capacity lift normal with total The volume remains second below in an ocean quarter. SSAT levels. from reinstated quarter some active transpacific

recovery closely moment. SSAT and expect be speed the of tied Both we've to in As unclear at which US said before, recovery economy. the we the lift volumes remain to of the at

related We further impacts standard results this accounting to lease adopted no also year year. the expect last to SSAT's

results to Turning US the our decrease highway continue of volume COVID-XX The intermodal million or to came business and now impacted mitigation to in be economic than second stores logistics the lower impacted the from on lower XX. freight the closure business. contributions income a Operating forwarding, quarter $X.X brokerage import $X.X volumes result brokerage, retail primarily at the on year-over-year by as million in period. was temporary negatively of transportation lower and which in related of transportation due coast year-ago our both West Within effects. efforts lower retail-related and impacted slide

COVID-XX we negatively the a pandemic and retail-related impact saw May Our freight But gradual to volume. to basis, first of economy the June, COVID-XX we In brokerage the impacted on negatively early stores to to local of reopening forwarding mitigation freight was in relates particularly near transportation a in late to under it quarter forwarding the in the half efforts. temporary as Alaska business term, pickup volume. of year-over-year closure expect continue the with retail by

have you higher transportation are Most in Alaska, with which brokerage weakness Historically, mitigation environments businesses driving business, early Alaska. Southern been the of late the recently, reopened well the May, These we COVID-XX this. transportation forwarding seeing rates. volatile than the through such lower as Alaska's term. in our trucking significantly due near brokerage, business in a conditions July, since chaotic likely businesses in West due in color Within seen reversed and in I'll little our improving it's freight the and trend picked give performed truck this. to conditions [Indiscernible] remain and improving conditions course is to volume saw May in relatively highway intermodal congestion April US volume. businesses many in Throughout although last June, May in as has on in efforts rails for steady, line up import July of and are However, our Span July, late intermodal remained volatile year. steady we've to California Coast on

warehousing to our continue saw and will a Joel? par activity on we the capital of steady the quarters turn financial see activity partner, in we of I in supply the for first review Joel, performance the services to structure business two call my and with now Lastly, over chain year. recent updates.

Matt. Thanks,

was offset contributed service. of primarily early contribution was The SSAT the the lower of accounting more from second the Hawaii prior $X.X expense timing in absence $X.X related surcharge million venture quarter of a The collections, increase Hawaii our to transpacific million year-over-year higher to second second Transportation Logistics million, less period. was and contribution financial $XX.X will million $X.X of million service, The than a increase on operating the than the operating lower Interest CLX+ the of second million primarily first was and to the including further run and to consolidated million from Ocean income million. the depreciation $XX.X the income $XX.X partially contributions quarter contribution service. due on Matt for due offset operating income China quarter the million vessel to presentation. EBITDA for by impact due XXXX. period. the adoption $XX.X during increased XX. the the XXXX, of year additional amortization year brokerage higher the $XX.X quarter this for vessel in the freight investments Now, million the fuel higher that or The or to income interest comment million decrease lower prior quarter terminal which dry-dock expense to mentioned. million, of $X.X the operating related the results increased due quarter of higher lower service quarter company's and the year $X.X $X.X Lower quarter I standard for other slide later from our of due including $X.X the was by on year-over-year than one of amortization. in partially to costs expense rate or operating transportation lower primarily $X.X the from lift to canceled lease includes forwarding. sailings million volume joint

The allocated forwarding. the prior was XX terminal was lift prior Logistics months contributions we than quarter attributable tax Slide investment increase China income that the a was million due operating operating $XX.X to million On lower shows the brokerage to largely cash XX.X%. increased Lastly, The in period. from year effective rate year-to-date Ocean a flow or the from primarily a our contribution basis higher and million. to basis, to joint was trailing $XX.X Transportation generation. than freight income on due year-over-year vessel contribution volume. lower service the from The company's the CLX+ the transportation in The million the cost of SSAT decrease contribution venture $X.X operating including of primarily year one service. including Hawaii offset or $X.X service, vessel million service, from Hawaii period, less $X.X a contributed lower year-to-date the $XX less by and was million impact decrease XX lower partially operating lower

shareholders cash the in from received want $XX.X slide million $XXX and via cash dividends. agreements overall the basis, period, million operations quarter. from financing to to Please million the costs on $XXX.X to of And while on few items. XX. new $XX.X CapEx net maintenance to debt interest we generated on million of a Title amendments spend moments For which first we borrowed related million we and $XX.X in outflows used including generation million, sale-leasebacks $XX.X XXXX two $XX.X half I and flow XI next million $XX.X from million turn vessel on LTM cash in on on flow including other the the transactions, capitalized the to a owners returning second CapEx,

second the of receivable. million that Our On AMT first remained cash from million. an quarter other flow of Act, flow slide EBITDA in amount flow under the line found our operations flow full the would item in the assets from And contributor reclaim $XX I remaining which AMT our The AMT LTM operations indeed receivable quarter, receivable, million, the cash second from equal of the chart receive cash from LTM from EBITDA on mentioned tax our statement. did operations quarter this we LTM cash meaningfully were able the be be expenses with flow in call, cash LTM our In tax operations. we prepaid the $XX.X bridge basis, can $XX.X strong CARES and approximately positive to a and shows LTM of on period. with inflow to

summary cash million. our sheet revolving as million in the noted long-term deferred slide private guarantee of and made balance payments to equivalents In facility are two the XI million, as XX part and Title on on in at for footnote recent balance reduction approximately will debt during rules, placement this of transactions we debt note debt quarter. the amendments $XXX include net loan accordance Title we and slide. was to fees end with the $XX.X to a that credit the Deferred of debt, quarter loan total total executed other shown new as cash and $XXX.X related our our XI the fees was debt the accounting and you sheet, GAAP of Turning a

the to deferred moments plan financial on leverage took were the we make and notes fee our I that presentation, there capital our a show of number to structure slide to release, debt though, excluding in in and few changes investors. XX forward, the balance quarter. to continue loan on the capital that earnings place to spend the also Going a aligned earnings important during total clear statements to as structure want representing

First executed straight-line at rate period. has interest over a approximately Each transactions and has schedule X.XX%. Title that $XXX million of weighted in two amortization off, XX-year a final we date successful approximately for XI a tranche aggregate cash maturity

end approximately second facility rate the was a now XX. full on first million June month X.XX% end two these the our XI annually, the the average The annual structure year. this notes which quarter on higher our is at the reduced amount of transactions. $XXX weighted cash at the million, actions, million quarter on Net our in Secondly, principal the and million expense lower of million basis on reduced redeemed in significantly and revolving an is $XX debt weighted it approximately basis interest of quarter, credit rate end interest of $XX for X.X% coupon note proceeds less $X.X or of the borrowings we Based And based debt $XX.X outstanding rate the is XXXX debt of revolver outstanding private interest second matured rates average from $XXX points quarter one the we million. run generation and than rate total by capital at approximately the assuming per for million lowered and XXX the approximately at of by than which principal third, $X our matured first private were or on XXXX from cash of flow the end a interest outstanding. interest on annualized Title

our the first times ratio leverage the quarter. end at to quarter the run the ratio, at end, for to end So progress overall, made the times available allowable end borrowings approximately The progress times reducing compared the X.X quarter Significant interest was $XXX was of in we on of amended which X.XX made was compared quarter substantial this agreements. million $XXX leverage rate. the at X.X debt quarter expense also million, first approximately our of at to

under As the is and in we a agreements. release our this EBITDA in the reminder, our lower reported EBITDA different press than calculated and debt presentation

current extended ratio As Matt an downturn. previously, our reduce is of to mentioned preparation our leverage one for priorities in

the years, two's ratio last $X leverage reduce couple of program. low following Over new the our that nearly want to we have our billion vessel we build to said

the to the of want environment priority. reducing we two's are remains to leverage the an uncertainty low important reiterate that our ratio Given in, we

On Title XX. quarter our XI slide K. that call, lists Inouye. the transaction the and we also earnings the I of transaction first executed the executed the on we second through This the quarter of to Moving details in slide walked XI Title transaction that April Daniel in Kaimana on some Hila.

Turning to vessel of payments. for slide review our XX new

shows on second the $X.X expenditures new XX. of had side remaining and progress the the the new at we vessel of quarter, as $X.X The total For and interest payments million cash capital slide million capitalized capitalized cumulative table expenditures for vessel of vessel construction right-hand June of $X.X million.

paid the $XX.X Matsonia. in close, Following July after the quarter we launch of a milestone the payment million

delivery its have is the on milestone Matsonia currently the Xnd on in Diego The only one payment complete. at XX% is at I'll of shipyard as the NASSCO the we million. Matsonia christening July for picture and call in of now So the fourth quarter With to San back Matt. turn the over that, the of today, $XX.X the upon vessel approximately slide remaining

operate of Every this businesses. Joel. the customers' needs. going on also delivery the business staging focused our It's customer each finding know as we we CLX+ and political the election profitable There's a us, mitigation recovery evolves. as ultimate happen lines our on relationships what's in by drive economies current Matson's new exceptional reopening uncertainty local We're us. to and on of day, There has the of as it service the to uncertainty broader lot difficult may the pandemic with in efforts presented surrounding meet we economy, on-time towards reminded are Thanks, Despite businesses plans new is our evolve. timing is goal remain have in future to trajectory of impact also focused opportunities uncertainty pandemic like and and the and the of US. the simple, sea head to day and uncertainty build service,

achieved inception is by flows Our the mistake, and foundation in managing across but also the businesses in while our and services XXXX the middle to has these, been in strong public providing with grow. turn to strategy a there lot questions. of the to that, portfolio to for your of. time. opportunities streams our will work proud and to weather look this times created call unprecedented that be to ask in And derisk we're through like continues for operator now recession this has since back cash broaden a make year-to-date And diversify I'm no revenue ahead I the us the of will the we challenging to of which help navigate work geographies more environment,

Thank the you. We Sidoti our Instructions] [Operator line question. first of from Company. Steve It's from coming have O'Hara &

Your line is open.

question. for afternoon. good Hi, taking my Thanks

Hi, Steve.

Hi.

this that than of in a to used October And talk scale then if point. back CLX+, going that what peak How just said about quickly place forward, kind I this years you to to, you I quickly of have October season in think, can make -- at decision don't happens and the kind Just about things -- I that CLXX out? you on the know committed is you you talk guess can pivot you're in in see business can how if to continue you can ago. you maybe through then different pan

we environment it container asked able allow and book Yes, do we've also regular say of doubling support both a let in some unwinding And from vessels That's our this to for equipment from happened fixture. and continue some continue fundamental value also we're or in vessels spending of vessels. whether clear. ramp CapEx our if we've I of different a is me than us chartering first it. I comments, leased good vessel, these question for do purchases that part But the vessel, us you up fuel be if service. to operate six so be whether effectively vessels it. importantly easily lessors will to to cargo all the desire our customers make if what fairly to market we having that. equipment to have -- and means a and but said said dictate see choose my to repeating, more I to of is we've first to think double six bears China permanent accelerated our that, our will -- to simple if of short relatively duration, additional chartered will And goal the questions. relatively the if we most They're have basically continue potentially traditional would our these to economics this chartered our customers and CLX+ continue But service.

capital would anyway ability we're we to spend as and forward off-hire worst the pulling of replacement time. normal that is just CapEx happens Secondarily, have that thing CapEx the over we on really leased that equipment our our some

around Kong, a saw years Central low also and exit. sensible. in number China, at, question time So consumer to for ago Hong investors down. at the really service CLX, that time, but where And second are which which after an that China, time, into of at in effectively it's demand Shanghai, chartered was driving those heads economic are the not a our and Ningbo, relatively CLXX collapse service started it Yantian, that's of Xiamen a vessels, And relatively after straightforward we covers who tried exit but second was not which South we again shortly create the part we a costs Matson

I now there some we differences as is market. The this would are in see first and some all, is, are similarities, think, core way say differences. them I of Steve, are so there the our

So it, we first XX all are years of into it. now

into air that is the dislocated freight. This today. example, comes We coming air are for the air the Shanghai, market Xiamen. of is the recover to also which service market that that freight from lack until out half owing air for service leader, of last amount in of same Mostly Shanghai a about week IATA, that not United And International onto Transport the the expected we is know freight significant exists this that normal Air a likely recognized XXXX. States Association, of Ningbo, market as exists. travel recovery the to to passenger

to believe So reasons legs. are has this that there

introduced. it's market the has around the ocean And sailings they remarkable levels there of economic that that than not the which in were The that think or interest have rates international been ocean time alliances discipline until happened blanking service we for the carriers other factor remaining -- manage a don't cycle last capacity the CLXX to that that's carriers result able of frankly have seen that, at keep at the international is more vessel side to In the I which up demands. in different decades. service and a by been CLXX is, the consolidated as adding was are operate we significantly freight in to

various of hit high. the Shanghai SCFI which Shanghai is International destinations, fact, Freight Index, global a measuring week In to XX-year out cargo last

to that pull declaring And require of we to again, and we will us require some this if do going but caused course, underpinnings customers unfolds, We're to to CLXX so. us so are focused see different not remain We're the market of the time. how we'd And victory. the do. think like to wait out,

question, I've totally So, Steve. answered your over

sensitive markets a maybe world in look that's markets No, a And I good maybe all post-COVID is of but understand -- you as other just your helpful. and very follow-up, make still think? this term, That's your at if color. do a today, you longer you sense topic,

sense. it's short time a business make and at good businesses good their whether question, mean of see for to think I they a every the look yes. is And answer operator Yes. I to portfolio it's

are them money. of All making

businesses to recovery Matson depending partly And to whenever standpoint, the -- the stand some And needed of businesses them to on was But allowed the up good. market we've to CLX think on I continue medicine Steve, saw They're of service, but hundreds portfolio, all freight for Jones on allow more kinds thrive. occurs. part planned come our hours, to the took of not to each are solid. going our do done resizing and in to advantage -- that dislocation poised quickly is opportunity of we of for a individual All environment. what markets are on Steve. back. overtime From our China lookout conservative us and to fundamentally are the we frankly all as But we Act markets. core quick our it taken that's are our those we're and in the recovery markets relatively We've be frankly, and trying a the we projects hundreds we feel significant how new businesses, we're got of for networks, the sound and and reason size why

Okay, jump in all right. back Thank you queue. very I'll much.

is Jack question of next from Stephens. Your Atkins

Your line is open.

afternoon, congratulations Hey, great. all a guys, phenomenal the you Good quarter face. that volatility and on given

So great job executing that.

Jack. Thanks,

months through me over think look thing to to So, into of XXXX about, you but I I kind things when just for some decision to you and in more be have the do think to permanent? shortage forward rates to moment. service can whether to guess talk sort kind guess the kind because of commit of you is most mean, of go of air that terms tree like more for next course And I CLX+ I back imagine service freight the of or I the market would that around walk beyond. exciting a into of as while. we customer the I I'd what a see XXXX, couple need of will making do the I commitments mean about that is to that it

business needed. going immediately was full. so the it service, think up friction is is we're we around stood desperately about thinking second the CLX our I much is when mean, they on a service, There to I chartered Yes. get -- who way core Jack, that that that it's got

other even this, on and when of we PPE the we of you lots world started. seeing understood and as now started opportunity Jack, was part caught we were what the So lot they governments of saw But can -- we're imagine get flat-footed from an the supplies. from PPE service, to around just

a so on in big of businesses lots service. since so given in chunk a was that And that of middle more and slices product, acceleration expedited and way that various we've economic of their makes it to to seen customers an more demand reasons customers reducing freight The requires for spend sense and recession. of initially new e-commerce air boom expedited but there different other the like that and move has

middle everyone's course we in as think I of are full. so season, do we of what is we traditional difficult forecast. are now, times the in that is although peak forward are So expect season move to vessels again peak This we're our

months Itself very quarters, know, is the into and quarter. the fourth season. and economics, in there we market and year without products. our the expect demand the all all position peak for third how after season, has we profitable at it going slower second for peak in relatively after willing managed expect at to We But remain then full Matson, you and during busy make contribution first times to margin, look less service less round as this even tolerate are CLX business lesser to

we're we level and is is what the that profitability going lower of find the a keep freight, in business we're of going slower can tolerate out So the profitability what's but support point, what month the -- but is of if level and going. there, to to level this in freight and

Okay, that's great.

fantastic longer-term think I the if that were that would be story for case. the

a we for to shift and moment. So Can Hawaii maybe that's hear. talk about gears great

the Hawaii? is tourism do fact in down digit is the there do Or some think rate there there July encouraging no I an the how in that's sort reflective Do still the about on thought that like we You July westbound to update from sort activity level inventory was of relative know, restocking feel state. that happening low-single happening you pretty going outlook? is economic given what's economic Just, think of level? run you current the of the of

-- mean I I'll Yes. little speculate a bit.

over reported re-imposing limit Hawaii been and is XXX and my restrictions notes, has in to a activity. Mayors more what, I I the to further new Governor to some a cases cases consider day recent in outbreak of which and this think the there prepared causing mentioned

think September see that to we reopening. we're so And it's going unlikely Xst

I the announcements, to going I'm very expectation exists with knowledge, dealing at that outbreak was today. any XX%. down state mini have is they're It right us. and of insight July sort for said be as I tiny the around economy least -- our will open to speculating. up as you X% single-digit than stock or X%. at about high I market businesses up But that hurricane think about our cautious they haven't the people a is, at don't that reopened the be bump doubt the that XX%, to X% they have opening In any fact, that least while view made that, are but our is is end was know, could but the thinking There feels more partially, the within market a season, of for having but travel or

in of this but this a It's I feels we'll think, kind phase And an Hawaii. in while. be that, in may while phase. right our thinking we're X% there think, now for I So element think XX% to of us for I be

Okay.

million different across have $XX related, do much is in the done to helpful. how any, last to Okay, on guess, out temporary guess in How million really that And sort terms I that is reductions how about Well, then two that. operating then we to the if How $XX tied service? of I the permanent slice the cost more to in $XX CLX+ think question, million queue $XX that in much and jump and breaks of back business? it? of, ways you versus of job one a but great executing to guys initiatives, I'll that's cost million --

it's Joel. Jack,

exceed think that. million, we'll first thing included the $XX million So we is in to reiterated CLX+ on the that. $XX that we

of on be initiatives. but initiatives. just, biggest not world -- pieces a revenue respond the in. many we're not lot to it's COVID So just that and growth it's permanent. the well. believe done CLX+ other to things it that there as piece, and also can the cost Also many, those is is we to Its all The are we've side It cost

reflection of of network Some coming and our businesses. are volumes our a through those lower

and permanent when we expand customers can But that. And hours of And we'll so like back, our a as the CLX+ way, come and terminal as our piece is of things volumes gate number reduce that. costs of reintroduce have without impacting hours handling some able cargo negative to, be costs. of to in we're some them But all well. biggest a of the those

comp as have other numbers categories G&A the down how will too, up business also out, We on that so compensation in and and plays depending those are go there more performs. formulaic,

to So whether bag those of of it's the end on we head be And some that one a next updates costs items. of going mixed year, into this we'll give permanent are those as not. or that's year thing

the sneak the to we'll payments you Joel, in in to try one progress $XX last to Maybe quick guided you great. of know year. vessels. I second million Okay, for CapEx on half related for question,

July. paid I think second for that already Well, your what's total in the half a year? has the of outlook been CapEx slug of

Jack. outlook, giving not We're

scrubber projects but as the the months are Sand of big the will for $XX that was the withdrawn million. vessels think that projects. that the CapEx have I we've first the you two We size committed, know, Island six that about talked And projects the continue, are and

six is scrubbers. So The Those those will overall million are $XX per scrubber significant. program continue.

will that in of year this half the year. fall about calendar So

of CapEx so And year. this of million it $XX only in far, third the is about a

number scrubbers in and because Sand of because months. be talked for the items first going six we the of the Island had the about what the we've to see just you're of So neighborhood

to XXXX equipment China equipment buying bought to from The typically volumes we're other our evaluating more growth we're and service, of Matt is perspective to need of that may we for we the CLX+ in in for accelerate the though because may an have we some thing would throughout year. the that service. the allow -- CLX+ equipment. us And be alluded in well-positioned we that equipment the always And the

little of only growth a scrubber bit you've it in you if it CapEx of QX, but would so see infrastructure of the Island program. because what the with Sand the this our continuation in rest be QX seen and related -- program of year and initiatives, the far So uptick

again Okay, for time. great. Thanks the

Jack. Thanks,

Thanks, Jack.

[Operator from Nolan question Ben Stifel. Instructions] next of Your is

Your line is open.

well. you Hey, Matt and Joel. guys Hope are

Hi, Ben. do think? What you

Yes, good.

sort that's I seems and versus in I, from Maybe lot. and service So of Coast with like most the CLX+. I have have get for guys the services. but APL may both expedited queue. perspective what be I I'll introduced know, ZIM back to compare China like they do you a believe formula the Can going today, start what do? to contrast I'll on, of, a West It you have also

mean, see, Yes, all, or has -- for four service three first think sure. APL who I of an had years. I expedited

out seeing to Shanghai, had vessels some be able So this market, Central us is the of they a expedited air connection service provide competed their Ningbo to same that against upsized China, in they've markets. additional dislocated And of with have, capacity.

And they've who Kong, it's operating ZIM, of service Yantian market. China, So Hong in South out to a expedited participant been LA. is in the --

-- freight it's the it's impact. the directly competition our from with market some onto China South drew amount CLX+ it's, Matson We or nominal So service. but CLX of not in service,

they my understanding what understanding relatively speeds relatively and that charter Ben, what ships. Where also match South can ZIM part, the at and is this China, quickly area, is bonded run the has availability. until do but is with, as associated come facility my in them service we them so I through and They are move full. advantage is -- Transport in, make LA would at cargo in that can is their is from difference can so And higher that APL can't there Beach when they days as it -- terminals of available gets and shipping Long that Shippers to at their full

on have that service the for California transit it an those creates of to And Southern untouchable are some complex advantages. focused relates where we that, as

APL and need the been that's unflattering then a this to way are be and of to But track is ships be So competitor, the And don't have Matson way -- they've of good continue done but call but, expected. full, there in -- been, about too it's kind a think to they I job, when the years then XX be we full, they may and there but others, market that's be advantages. continue record. to I

brand in in if this -- a an to late after shipment, people the rushed whether whether a something they we're have call We market. markets, XX a whatever, it's needs first it's and China Matson, move in choice order, e-commerce the whether it's so where years know or

CLX+ That have. I gets or of but have is days a next in into competitive -- three other kind infrastructure where guess the same to long-term about replicate geographies the nobody advantage opening Okay. And have else the could my advantage? be instance or you competitive advantage you any Obviously, primary here you're big could doing think whatever, a do that maybe that two, question. or to difference; you opportunities is and currently distinct Seattle. In said has for picture, there, the even what competitive that

the local the There and and California where That's That's Yes, market air answer, customers individual so warehouse in go. millions Oakland, rail in infrastructure, some their of That's market the But in feet short That's where are. to a set wants capacity in all distribution answer, anything go. fraction wants to is the it millions wants it's want could to Southern freight that's a where Seattle/Tacoma of good infrastructure, is to is infrastructure, forwarders there the or centers those the to the the where of square trucking be that are. but question. possible. LA. The this long-run where go is. infrastructure the cargo because

don't mean Okay. maybe to Well, or that. and it think would calls Southern flip China just know Korea, you I Japan, to add anything is that. more possible and like then about port I or

fact, Shanghai service and moving places, on on customers, CLX of and and Vietnam, okay, that's or brand and Korea so-called to we border sea-air on, are cargo put a a so and China air what Shanghai Japan, is that in [indiscernible], is to have our Thailand, just cargo Well, the service that go vessel, electronics in is either lot CLX+. moving, company an by is will be in CLX+ cargo into we as across in see our actually today example, Thailand our other name that and large CLX originates program out that of

an that programs, So their us and We that are way there additional last on remain providing is phenomenal the cargo would what Ningbo serves lots that port could, that focused in look are of has for outstanding Ningbo its Ningbo or which on XX so an we part it's sea-air And truck-air to the want years market. at the but found to port? we've the and with over Shanghai e-commerce. seen do region we the exploded focused And to just has is larger e-commerce. growth of service of

focus -- So our answered over current in is there. our we the keeping And service your so is the have is I Ben. speed simple current question, thinking probably reliability to. could our won't we

out able fluctuation any you're don't When there in, then back freight, currently all crazy, price your this of freight, lot. of just pricing went it's air even that maybe and thinking come about, obviously the but sort when you're you're is sea spilled freight you just no, how guys into No, course and over but you get is to it? helpful. no. it for has in have a the here turn it I freight pricing your And I'll been that's appreciate over about are pricing when volume it's and/or in and get pricing out quarter out and specifically, what and me, although you, and lastly of air extra the Right, break last

was of dislocated freight. was Yes, of I out, stand their point just mean, There because caught Ben, was no down governments were significantly it's and or by as national the amount initial just huge around clear it freight the they that air reserved what the that what the that, with curtailed of world. was CLX+ you because pants capacity so available on PPE

produce norms. more But rates, And ago historic were wasn't really They've factors a market That also markets come month -- so freight have the with last you ocean does but not air but it. become market. to We're allows out, because has think margin, rate unmindful we're our of of the we're the have pointed air ship, to freight this there pricing Air the shown the to available. have over not now. astronomical. that of more orderly much as more on it is freight where week-by-week the we even our I fill capacity, we the hybrid then back continue are one and freight unmindful So us we've ability what rise product, month, us carry capacity rates cargo, to seen to CLX+ on we is again. the to the for

times. adjustment And a things good so, earn price especially very us obviously, we'll and and take advantage in market to allows of that that busy in factors terms to return, of pricing other

Okay.

think that pricing a of or basis I from was the basis CLX freight came pricing another experience on that put were expect had not July up should that materially perspective quarter. air and XXX% maybe this in, you the be to should some a So yes your in in an less way, pricing or you We XXX% specific it able so. aggregate said second

I wouldn't that. say

Okay.

in healthy and expect say, did the year. seen freight make we say quarter continuing to And we've last rates. I see to would the money we've more in than healthy of freight said would third I quarter we third rates

All it. you, guys. Thank right. appreciate I

Ben. Thanks. Okay,

Ben. Thank you,

from Stephens. another of have question we Atkins Speakers, Jack

open. is line Your

my taking for Thanks follow-up.

me rid You couldn't that get of easy.

Jack. problem, No

back. of to kind just go wanted I So,

broad talking detail I of organic to I Act on I maybe us are strokes other of through these Are but in you Are have this sensitive States? call Jones opportunities, guys markets. to maybe about and talking maybe maybe these to bit you you're public evaluating the you little opportunities? maybe some of course that you're on think for to couple degree, you what making earlier, I you be of a there. sort asking United conference references different know call, it perhaps dislocations guys a take acquisition advantage this was parts that said Asia about listening just give a that about of or more of mean are your but Ben know, I in And those very some would opportunities some call color could the as times to bit be maybe a would by know competitors well, if these more Are what little claims? other think helpful?

a strong been at we Matson Okay. and want Yes, that this pretty -- I say traditionally cash flow Jack to has producer. point,

from what Alexander businesses us looked that to into coming think, what I ourselves valuations consistent -- done? markets it's cycle, separated you've grow we're ourselves Matson through recession. so grown that Baldwin, markets managing We're has also been economic we would for think pain but at markets have & are been. far okay, I what if down organically. down we -- positioning this are, in We we reasonably is that able we haven't that that model in paying has We've traditionally to delivery at continue that allow the our service into And which so adjacent reasonably debt, since have to our with the And seen priced what yet. us traditionally well investments find are

lookout a done we've acquisitions taken done are costs paying what take and to we can't kinds Jones going medicine have [indiscernible] mean, on so until again exactly the And recession. to have our and and opportunities. those initiatives. going not want now this again, We're service jumping I be businesses, cycle. advantage do foxhole good and other on Act and say trajectory to of a our want I but of And We of we waiting the There's of that. in putting are, deals. our think to on be opportunities. in debt. -- And for needed I coming and we our down I end be we've think our on -- towards there to they is

Joel ask comment to going I'm well. as to Now

also to it about CLX+ we think with with customers. we right, what with about what, grow a is Jack. grow I our way exactly it to that's is Yes, our love one mean And communicate to do and customers.

our We and to have customers oversubscribed. on want get who we're ship,

of we're markets business. for our to And markets. network looking we're with a or customers ways in then, course, So new grow always existing

new we do. the off So of our into it go we're looking can really where our we that other our piece leverage leverage what how today adjacent network. constantly we infrastructure And network is at and in markets

majority at at, fall that everything, network. Does majority but with that's call do falls The into the of traditional M&A and two leveraging existing sense? what we opportunities categories. look what our those you and And kind customers, we make organic into of dimensions, of look So, they opportunities. what growth would not

Okay. No, it does. me logistics the I totally segment. that yes for on -- It did. Last appreciate no, -- that. question is

would market, of do obviously trajectory positive when September. and trucking a anticipate the the the course the quarters, a intermodal tough I third I smaller inflection there to of know the July, continue guys be to on in you the happening. after of of going appears the pie, that? incrementally to think it's brokerage extremely is cycle several a get be guess in with sort next to think to but quarters I in regard And just your playing I you're quarter. anecdotes out mean, US businesses. better brokerage we piece that I the about see I the think truckload August over your next obviously several and be pretty getting be We'd how take curious

logistics earner. our a think at been if unit, feeling consistent think so -- our domestic I has businesses small, Jack, look warehousing you although in our I Yes. --

about If you look the truck at the off same we're seeing have your thing. pricing improving; brokerage business, been they comments but

sequentially all logistic broader the other economy, the I placed. all that in we're And, we've what like our we're and with uncertainties and and things the it, think the hard of do happens to course, of we so pandemic, talked but about, better well in getting feeling predict, see happens And what feel businesses. stimulation,

who that pointed you, but tough knows but the are So heck victory to we're we your in encouraged going some encouraged, happen, what's really to by you because of question. out trends that the that's declare

you Thank great. Okay, again.

Jack. Thanks, Okay.

Jack. Thanks,

this am to go please I Matt at to Thank Cox, CEO. ahead. you, Sir, speakers. the showing conference questions no Mr. further back time. like I turn would

Okay. in. the stays Well, on And listening I catching safe everybody we and hope Thanks. you with to third look for call. well. forward quarter everyone thanks, up

Ladies joining. all for Thank call. you today's you, concludes and gentlemen, conference speakers. this Thank

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