Matson (MATX) 21 Feb 232022 Q4 Earnings call transcript

Good day and thank you for standing by. Welcome to the Matson Fourth Quarter 2022 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded.

to Fishman, conference please like speaker to now Lee today, go would hand over the your I ahead.

Thank you, Lisa.

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

our meaning of forward-looking like We begin, remind press you could or the caution course I you cause statements release, the and this make the expectations forward-looking will from to that to would projections to reasonable. results the the factors Laws this we materially believe Securities we Before presentation differ slides during call, risk predictions, and assumptions Federal call. actual regarding those of conference are within that that the consider in expectations, We in the events. future statements

factors that based XX, fully date. date the call make February conference XXXX, that forward-looking no obligation of XXXX, undertake presentation we We XX-Q forward-looking on our are our are to XX on press statements our SEC. and These the in filings these with the on subsequent of today XX assumptions statements. is as any this Please in and note also this of Factors update to X, November under Risk detailed filed release described Pages risk more and Form are and caption

the turn now to I'll over Matt. call

thanks, the I'll Okay, call. start on to thanks Slide three. Lee. And on those

dividends deposits million our while a share solid new repurchases. leverage with a $XXX Ocean CCF performed vessel through million shareholders in had and in for business Matson's in in and in difficult the environment. low differentiated quarter, XXXX Matson's cash position fourth cash Service the currently $XXX returning program, For to financial well

and consolidated year-over-year For which achieved the our operating freight decline in Ocean our within volume Ocean China the quarter lower income. fourth to rage, Transportation, services contributed

volumes ago Alaska, compared in to year-over-year saw also Hawaii the Guam year period. lower We and

from year-over-year In Transpacific management, logistics, decrease operating with consistent income tradelane. contribution demand the primarily to lower a supply chain lower due in

quarter I'll now SSAT the our go tradelanes, through and performance logistics. of fourth

So slide. next please the turn to

due Hawaii quarter and of the container ago in effect demand the retail year-over-year related hospitality elevated primarily volume the period to lower and compared pandemic decreased week. to XX% one fourth levels for year less the

XXXX the the year in ago achieved the volume in quarter XXrd lower volume than Volume the XXXX. year-over-year. in in of week decreased was period, Excluding the fourth X.X% X.X% quarter

consumer levels We in trends. saw relatively retail weaker demand customers improvement in improvement Tourism the despite during the a to Hawaii continued economy. strong, continue tourists inventories Hawaii international remained to manage including modest quarter

a little in December. was there Although of softness bit

primarily of For levels effects prior elevated year-over-year, the the volume to to lower year, week. full in container due compared pandemic demand less one the X.X% related the and year retail decreased

Excluding the year-over-year. XXrd in week XXXX, volume X.X% declined

some second Slide from by and Please Throughout driven to But to international in see was Tourism modest industry the Hawaii decline with year the XXXX. half a the continued in unemployment improvement X. predominantly arrivals. arrivals tourist arrivals the rate. in of tourist domestic turn the pandemic did the increasing economy recover

freight first steadier In level manage we trends. pre customers to demand pandemic retail related demand down saw a XXXX, the of with XXXX, inventories Through levels. seen a lower our latter consistent have half their we the consumer weeks retail of seven related of

in in continue low growth a December show to and rate. strength by economic XXXX, UHERO's continued projections unemployment supported tourism,

stimulus, helping the personal a given and trends negative economic trajectory as interest pandemic of of the inflation, is uncertain, higher result and the growth higher income. rates, However, the end era

CCX ClX+ the Slide to XXXX and the week. primarily of services, lower year-over-year, demand third our on less volume due and of Matson's one six. the fourth service for of XXXX in China CLX quarter in lower quarter was service the our to discontinuation Moving XX.X%,

XXrd the XX.X% ago year-over-year. in Excluding volume week declined period, year the

rate Shanghai in average year realize index were the to rates fourth continued lower significant Matson Containerized freight premium period. a the quarter over that ago XXXX, of than Freight in but achieved the

volume was XX.X% primarily year, lower offset for less the on one services, and to demand CLX+ CLX the service. week, For lower, due partially incremental volume by and CCX the the

year-over-year. volume week Excluding the in XXrd XXXX, X.X% declined

see to Please of retailers meet indicated continue we earnings did meet the XXXX this turn consumer quarter to these and levels. call, happened size to to of Slide lower in X. the Ocean uncertainty. Transpacific economic fourth inventories quarter adjusted vessel demand continue tradelane, the to demand we capacity increasing as as On XXXX expected liners our be interest that challenging first weakening we see retailers November demand, inventory rates right consumer vessel and We to and reduced capacity as adjust to levels,

But we Year, a in the Lunar Year, not In and post compared for the vessels saw weeks from weeks. and our Shanghai ahead decided for we the CLX New weeks few improvement a demand saw for Lunar CLX modest service sell CLX+ services to of New CLX+ as in December. we our to light result, demand a

wave. we In seeing China, to we are the which returning life operate businesses from most normal reopen and the in recent regions and in factories COVID-XX

and normalized for expect of year-over-year to condition, quarter ahead, we CLX below half the lower lower environment. freight the services our demand levels reflect year, in with a volumes first rate Looking CLX+ first the

hard in as normalized Absent level half the the we dynamics transitions improved landing demand. a more the of to in of trade an economic XXXX second U.S., marketplace Transpacific expect

rates with transport. Ocean, the to We will on services terminals premium the to CLX provide we the and continue volume shippers it at at in manage the CLX+ and measure freight

environment, services, for pandemic CLX+ we premium pre operate levels. most to of Freight rates a economic our significant to are reliable rate Shanghai and the we Containerized to above Regardless two continue and CLX and freight result, fastest a the services Currently as earn the expect Index. ocean

fourth the to retail level primarily demand. in related in Matson's Please fourth fourth quarter no was volume in the the the There next slide. the week XXrd quarter was XXXX, The of ago impact was year-over-year. XXXX. the container quarter than XX% XXXX achieved higher the of turn lower due to in year of from decreased period. Guam, decrease Volume In

full expect volume term, container year, In the improvement decreased low near in the in due continued unemployment we demand. lower year-over-year, economy X.X% increasing related to primarily a rate. the retail For tourism Guam with

personal a end in creates and However, stimulus there result higher the that pandemic as uncertainty rates economic income era growth of trends are negative higher inflation, interest the helping of trajectory. the

to week. northbound quarter nine. week In and Slide and due lower decrease to due X.X% higher one fourth year-over-year. volume the from decreased for less volume, by AAX. selling primarily domestic less turn lower seafood XXXX Please offset southbound to was one The Matson's Partially Alaska, and export one to lower volume volume less volume container primarily seafood due

higher Excluding Volume the XXXX quarter year-over-year. in quarter XXrd was declined week X.X% fourth in the ago the achieved period, the fourth in of year the level than volume XXXX. of

X.X% For year-over-year. year, the full increased volume

AAX, seafood increase offset and higher seafood end primarily northbound related due to from partially due volume The to domestic volume. week southbound due volume competitors one higher volume higher to volume drydocking higher -- was a related by primarily export less retail demand higher and to higher

Excluding the X.X% year-over-year. XXrd volume week XXXX, increased in

we depths Slide to growth. unemployment to economies the XX. the of near good in pandemic. the continued term, The low and benefit In expect to growth from continues the show from key improvement Alaska and economy next the Turning indicators job

production and and The to to in activity additional to near exploration The energy oil benefit is as is jobs from bill Federal economy Infrastructure result increased expected elevated related state's lead term. a of the medium expected prices. also

the growth result a rates of that interest However, in at the trends stimulus, pandemic higher uncertainty there personal are income era inflation, end as trajectory. of the negative higher helping creates economic

to turn Slide XX. Please

to and cost. lower higher Transpacific in saw volume, with in contributed SSAT joint and to primarily XXXX significantly lower operating period. in lower contribution of less demurrage SSAT venture was the $X lower volume the compared fourth prior in Our the lift to for other lower consistent revenue demand The million revenue, detention due $XX.X tradelane. and terminal congestion easing million year due terminal quarter the quarter lift

due For for SSAT increase million contributed increase of revenue. The an the higher terminal was $XX.X to year, $XX.X primarily million year-over-year. other

first in reflect year. to landing, pre expect half Absent Transpacific of pandemic we the trend tradelane. to the profitability levels an the hard XXXX, to half we environment the volume lift challenging expect SSAT second the economic For in

For in we congestion detention revenue expect demurrage the Southern California. year, Port lower due significantly and to of easing the

Turning now Slide to XX. logistics on

than quarter Transpacific Operating lower $XX.X income the result million $X in in primarily tradelane. supply decrease period. year with to in a the lower was lower million the The consistent in management, demand chain contribution ago fourth the from due or the came at

due primarily and million was $XX.X income transportation For than the increase from full million higher year, XXXX. freight higher The is $XX.X or brokerage concentrations forwarding. operating to

mix business. of lines term, activity a the near the In logistic across we expect of

freight supportive expect We continued of forwarding be in demand. growth Alaska to

We to expect our service. supply management chain China track

challenging half consumer continue our retail markedly a the manage and in down shifts the previously period environment to freight we year improved brokerage So as rail congestion demand normalizes. in expect I highs inventory transportation achieved the And from of goods. Modal weaken pandemic to discussed. the over customers first business conditions as amid

a I to Joel? turn our the will review now Joel, of for call performance. over financial

of Please quarter Matt. fourth Thanks, and to review full a for XX our Okay. results. Slide turn year

was rates expenses, volume of and of with and a offset operating the service. consolidated from to from primarily lower the fourth lower million, CCX Transportation and China transportation Ocean respectively. partially related in due income to lower decrease to $X logistics quarter, year-over-year in million operating $XXX.X quarter the SSAT, freight The and fourth in discontinuation For $XXX.X lower income operating costs decreased by the Ocean primarily million average and contributions $XX.X contribution

income the noted, management. supply decrease was in operating to due from Matt chain As contribution primarily logistics lower

to the had $X.X cash income in interest period. the our year in rates cash million as on prior and and to deposits of CCF the equivalents quarter income We in due cash no investment compared interest higher cash

the expense Interest quarter principal decreased effective including tax debt third due million year The $XX.X the in was in the year, debt to ago in outstanding in in million XX.X% in in XX.X% the past the prepaid quarter. the compared the quarter period. year-over-year, rate decline to we $X

respectively. year million from Transportation Ocean of and million year-over-year contributions million increased with and $XX.X $X,XXX.X full to operating logistics higher million $XXX.X the For consolidated income $XXX.X

due China, CLX+ primarily costs and for China operating higher due The was SSAT, to lower and volume income higher to year higher increase the terminal in the costs. Transportation a expenses in rates by and partially freight primarily offset contribution service Ocean higher from operating in handling

higher increase forwarding. logistics in from brokerage contributions due to transportation operating was The primarily and income freight

XX allocated to The shows months turn of slide. cash our trailing we slide next the Please how flow generation. next

to other and operations orders cash on period, outflows to maintenance million million on from LTM CapEx interest generated CapEx, interest returning which deposits from withdrawals capitalized items, retire $XX.X new milestone million from of flow CCF other via and $XX.X net cash million we including the debt, $XXX.X while million vessel repurchase. $XXX cash the million and shareholders in $XXX.X and $XXX.X used $X,XXX.X income we For million in on dividends share payments.

XX turn balance of for our Please repurchase to Slide a and share sheet. program summary

quarter, cost fourth a of the $XXX.X million million. repurchased total for we During approximately X.X shares

a the for cost year shares For we $XXX million of million. repurchase X approximately total

the approximately our shares we X.X on At of program. end repurchase XXXX, share had remaining million

million the highlighted our debt of of and $XXX.X quarter was million. end which reduced debt on call. at balance through the we was quarter that to of levels, year, Turning debt $XX.X outstanding million the third debt during We million long-term of total regular $XX.X earnings the our the prepayment by the through amortization was principal $XXX.X

In for all in outstanding X Manukai January Title March prepay Maunawili the principal and XXXX Title the principal debt. million XI on for all we prepaid debt $XX.X we of outstanding million the plan $XX.X to on the

the to through construction going funds, on to please next turn the update now an I'm capital so slide. walk

income cash with of additional approximately pledged the into CCF in and an XXXX in cash receivable $X we reduce interest an million to and ended have $XXX we $XXX income approximately capital year-to-date XXXX. million million. construction deposits We month, accounts taxable the in of deposited fund, XXXX, This

cash in on CCF at cover year was Note the the balance we remaining million in approximately milestone this calculation of equivalents vessel deposits funding for which XX% program. sheet, deposit, million $XXX this payments and cash million that Following cash excludes end. currently the million cash the approximately $XXX $XXX $XXX have the to new approximately

cash until do CCF make could advantaged we help XXXX. pay couple payments. of income to interest for interest currently deposits the to are would meaningful to next of the CCF interest additional income contributor in, future rate expect note the and additional years. cash into contributions like milestone will milestone not be in Considering environment, on a payments currently CCF the deposits We that for is cash tax I

had table on expenditures the third was other Slide turn program. barge on construction capital to the million in slide in in Island of payment expenditures a million, million costs vessel was XX. summarizes the $XX.X our Please million of The new this quarter inter We related which capitalized service $XX.X placed milestone and for for XXXX. and $XXX.X into $XX.X new

maintenance million CapEx the other Inouye, Kaimana LNG the was CapEx Manukai. $XXX.X of Hila of for services new $XX.X and million network. had equipment provide solidity and to tradelane and installations $XX.X And Daniel million, which the for to support We K. on in was

million maintenance X $XX and year. key course to to businesses. deployment areas the per capital capital Island shore Please for the Honolulu, and capital at work three we and with years. next $XX expenditures turn Phase vessels, to next shows Sand expect Starting capital and other over Phase XX Slide support slide. million expenditures side logistics X includes normal spend in operations our This the

The owner’s XXXX. deposit and items in next years new the capitalized all program. the interest the figures of enough to -- in vessel item expected The remaining the cash payments expect. currently to milestone CCF shown line milestone There's three for into today the the on reflect of pay next and partially payments, we all related

be and currently is for in the expected on installation, service to the this year. The drydock and middle And Inouye K. Daniel existing in of installation last vessels. back the item is LNG CapEx reengineering LNG its is in

enter the Following operate its drydock project reengine drydock the in enter a roughly will Daniel for will the and Inouye, to for quarter K. to both conventional fuels. LNG installation. Manukai Kaimana five-month XXXX period one-year second for on LNG And of a Hila

XXXX. million expenditures $XXX capital million in expect $XXX million we to and $XXX in total, to in $XXX $XXX million to in XXXX $XXX So of XXXX, million

over I'll to the With back call turn now that, Matt.

Slide Okay, through closing Joel, to turn go thanks. some where I'll XX, Please thoughts.

the to expect And the our be quarter first quarter, see previously, year. to We in financial weakest performance our the are and tradelanes we of to domestic trends condition. for service freight logistics. China seasonality the as expect the in XXXX mentioned returning below normalized of Normal demand

In we markets. supportive we in could the continued negatively potential the of these Guam growth Hawaii, to economic be economic near of freight demand. in But that volumes term, each expect Alaska domestic recognize and overhang core affect

the challenging conditions trade in expect tradelane half improved level in year, half with normalized more of levels. the to normalized the the first In We the the Transpacific dynamics expect transition we of of freight demand. demand a as market below year, second

enviable And operationally emerge. our businesses turn they an The of new Matson quality well leverage capitalize essential brand Slide Please Matson opportunities. we're in on to high never positioned to XX. financially on and opportunities brand as been stronger. to position drive has the to is portfolio

low leverage. balance a opportunistic sheet with is grade solid our growth investment Supporting ambitions

today, payments and CCF with advantaged the on As vessel the tax milestone new funded nearly interest cash of remaining deposits a in income two-thirds program are earning of basis. the

in with the project, which So commitments. vessel good on will cash reliance the reduce flows this on very next few to in funding our we're years CCF position fund vessel CapEx using large

term long Going for environment. in vessel regardless forward, capital make billion capital come, manner $X today economic for the build to like the for shareholders. to We invest us we a cases, program. value we the to the like allocate disciplined some shareholders new of our decades are In have we power always decisions will create

on derivative the in the opportunities did opportunities CLX+ well growth. to during confident this logistics, with we're future customers Matson our the positioned pandemic the organic and we're that and for lookout the opportunities. in expand brand service, and always We with We're to drive drive marketplace

of customers, with cash differentiated the look or and we digit at great on to is acquire purchased unique a of cash we our with or provides proposition have to characteristics. yield term fits acquire businesses that one cash good double will We businesses, our as to flow we any more ensure want a of existing extension value long an assets complements collection today, business ours, culturally

did economic Transportation in fundamentals higher at growth may attractive light earnings current expectations This in emerge in looking valuation and We year. both by in our tuck-in and of coming the justified expect believe meet we investment are XXXX conditions. prospects, criteria. especially change candidates to we're small and Ocean that acquisition And that a close tuck-ins We logistics. actively than including still acquisitions

We have optionality funding a CapEx dividend. In and last to expenditures, for least, not after capital two investments the million. our return we've And balance shares we a approximately lot also for which solid years shareholders $XXX long-term nearly but sheet million continue provides will us. repurchased X.X last maintenance to of

to steady forward, expect of shares. be a Going buyer we

before, As and done. to over And maintain always value what remain highest control service use and on shareholders and focused capital create quality we only we've I've high its that's allocate customer said vessels long-term. we can service, best provide reliability, to doing the to what

that, ask with the call for questions. your will operator I back to and turn And the

[Operator coming Instructions] First Atkins Stephens. question is of Jack from

is line Your open.

for questions. thank Good afternoon, and great. my Okay, you taking

the I mouth, with perspective. don't understand I'm So underpinning sort get outlook more going normal have that of because be to interesting with to such trying maybe words Matt, to what's the half are look or know the I going the kind in retail to outlook China. of not to into their things you that year? towards But, supply is normal love of guys from your -- sense back for an in start ordering trying I'm year, a macro patterns your in I'd to kind maybe chain two, customers the of guess, around question your kind your in -- of it beginning back relationship put middle what's on that your of is of second shippers

thanks, for think all, things. the -- of of question. Yes, Jack first I A couple

I future in we of saw now that customers and up is demand that think of the ordering beginning our significant pattern air in demand, retailers catch inventories them contraction in the fourth cautious in quarter by more third buying inventory slowing -- chain congestion caused because where demand will, an a in a that as occurred being view significant individually customers customers was curtailed saw their caught the of our occur, as get Transpacific needed if orders to in were and you our to the as quarter, supply towards pocket Transpacific they they end down very purchase the especially to be. the their their

So, big large managing what and box well obviously inventory for the our and others is that seeing I they're their we're we're how customers, levels. think -- to listening retailers

been And they closely. on so inventory watching And that down in improvement we're had expected. other that hasn't as as metric occurred early the while cases managing is, has and other cases, read that levels there in and some quickly very retailers

of frankly, that and the occur into approach expecting Christmas we slowness the into to the first some holiday more quarter and we're fourth saw Thanksgiving normal And continue to we seasonality So, quarter seasons. the do then we that in first half. expect as

and some those weigh closely, of persistent of curb inflation, the will all weaker so that interest higher half. on half we us are think rates the we're and impacts the following of And demand, inflation, the macro trends expecting some also desire year, first to owing Feds we're ongoing questions particularly a first of to

it. got Okay,

If guys bit challenging And you most in that help this first like, Now, frame kind I correctly. us guidance. is I us guess, can of know, think little the quarter of you to you quarter year you from first be going looks of the maybe is seasonality. the said, that. that's you you maybe maybe the the quarter forum, I a not if heard perspective, But about helpful, or EPS know to up help are the first financial giving of half. the what Matt, a profitability. terms And the for thank

trends maybe of typically, transportation so just back help the that of frame that business marine looking roughly kind If quarter, baseline. how is look back trying just I'm moving in I or there's the not fourth fourth of to quarter kind half guidance, the you quarter, a to to be to kind quarter to year, pieces just were kind about this this put they on us first business of spot about up, the think and some to in right what it good because can Anything the for is the many way margins, year. think of historically direction. think how first with

seeing. Yes. of lack And, uncertainties part the macro of that is our we're guidance

along is we're it's we've not have everyone watching number, period quarters a as been So what as quarter. historically by you fourth it or to you if strongest two But third of guess think quarter historically, the followed that, in that we a would pre over you. And we weakest, else. said, I has and our I with our and if our do pandemic, historically, time, with look second mean not quarter. share are the going say, it by first We're the

the there, weakening that in in and bear think China. disruptions what but certain haven't year, you related year. this COVID some in half on I of second to it's we're I think And piece mentioned, historically if just also the So going quarter also a we the demand to the first seeing, had I I look think, pattern. of happens

beginning it its of China that weigh of down markets. more think overhang ocean line rates. in isn't occur, expected need market, seeing that in resize transportation quarter, freight some Will I announcements. saw it's that the we've on fourth does their demand, could an capacity in occur, force but the fleets so I is full seen don't lower with in We carriers other But international the the taken we're there of to think that the

second historic just a what see think about Jack. more do just about apply to than cautious as talking the as urge and say I fourth quarter, you would could relative earnings, first I I we that's without would half margins as half. then So as And about good to the

up No, that that And to helps then with me work there. a lot gives Matt. Thank you.

let let it So have you maybe when on you me on I'll it But, I in back ask Joel, get more, too. some But on thoughts to if in me guess, jump about kind couple to perspective, think last additional we underlying of of easy demand from that maybe kind the lot through extremely obviously years, of strong on process. been of layer so costs things one a and queue. an happening, this, chime

the in of things business, businesses parts levels. are maybe the of some that challenges a to business belt the opportunities that offset can below costs help Now of the from take there normalizing, to the perspective? for Are some maybe look bit normalized a cases, of in maybe certain business the ways out tighten kind

my let it start thoughts. his to perspective. then And Jack, Yes, me Joel I'm with to just turn going over to get

deployments. you know, fleet we pull, as I can that biggest really the are levers around what we think --

end and And so lower one quarter of of reserve our into is the deployed, every the our operating in put way which third could them we status, a by in vessels CCX the back, of and quarter some cases the our size. cancellation and occurred costs take that service fleet towards fourth were which the through

and towards is into to a more XXXX, in CLX+ service as be the we're focused seven had as we're five its The vessels we 'XX we going CLX+ on likely vessels, be moving going conventional to that peak, other moving continue service. we to forward. in element at And

levers. So there's of a level couple big

two of pandemic. pandemic in not the than that the Jack, in side. was the We added of three the the our One less did each X% years occur, G&A really to things the of last workforce and on of years people

have are doesn't overstep. where a of people normal of we a feel we our and level things that significantly and kinds like other us resources So, in retirements put position

and that, and times, a done a our overall. But a back ways looking less occur operate of speed our vessels, in a lot it's tackling line in keep said blocking go the that normal of our in with the to use of environment us to what the efficiently, fleets, will environment we're whether more allow does will in to different and in this to that a reflect of normal overtime, we're trying having for just occur we've equipment and going lower gait costs congestion environment which and and to demand size that is environment doing

Joel as But turn well. it thoughts would over his I to for

Yes, that I just the magnitude mean, little of are items key those bit of a to Jack. And order put on.

is biggest handling. Our cost terminal

the that the declines And now goes over right freight with time, you've soft up and goes down so as it's and naturally seen, package down.

you so And less do have per freight you reduction basis, your unit a as get some in on through costs moving terminals.

fuel costs our and The are Matt vessel the broadly, costs pretty including there’s next operating as said, fleet is fixed now. right

that'll first over two units help. of two We from seven that the do And the on this year. of five, to quarters we'll to down ships CLX+ ratchet will go the course

And vessels, prices. fuel rest fixed that we have fluctuates and the of fuel of pretty then staying network is on it on schedule, based

So that's the next biggest category.

XX then months equipment Matt up, days turn the in cost that We the of And now in lot back midstream and our and then early structure upon a little is last actually network down the that pandemic. we help And quite the the bit can did hire and will of ratchet little repurchased a which of we bit there a touched equipment flex equipment to we've bit. that. across a leased lessor

additional people our big do services see the said, election, require we Matt is piece headcount. not last the then as increases in channel And

So adding we're disciplined of about people pretty couple only the when in last years. necessary

additional a not number cost there's not that of structure. there's increased therefore, so big headcount And our

of order of those bit color just costs, it's little a put So of that magnitude each terms the on but Jack. in of

I appreciate And it really thank you. over jump I'll that. back Joel, in hand queue. No, and

from Jake of is Wolfe question Lacks, coming Our next Research.

is line open. Your

time. your thanks Hey, for

Hi, Jacob.

the fair amount be scrapping? talked a some spent think book would order like demand there. to the about for thoughts supply the I that the but environment. vessel by a you blank the of bit we about Can your year? of about get offset time talk So Could talking sailings, pretty elevated. balance I you you side is view how

in global their Yes, And give operating thoughts. happen. what demand needed my fleets I me what give sure but you the level should about the ultimately in of thoughts markets globally about for will the the Well, in Transpacific we through alliances what in international happen. That I Ocean that can ultimately you Transpacific the should resize their is that and let care my will think happen is carriers, and I trades. the

was those a larger seek to be of Ocean delayed, will vessels to we'll delivered, book, delivery, the carriers of are order chartered, which some over. XX% see periods some global as returned push are for advanced back acknowledged vessel We'll going We those be there that of to be vessels owners about charter are see fleet, vessels the will when many level their the of scrapping. those represent that

So I over have again, the vessels resizing to market would should last see even or to few cycle think except extraordinary been that that's has scrapping vessels been or years. up of scrapped, that scrapped, a going combination you're have for going and occur, laying potentially occurred the

of all of months. coming a things occurring So you'll over see the those combination

peak, two are slack, some of ourselves and an that, said, falling to scaling that light We And as of occurred. three our it demand. of at having transpacific I services example then back has in

through should thoughts XXXX. we our those as likely very go what to are happen those So about are are and really

it. of there or sufficient transpacific seasonal And a a given stocking. then, make or services demand lot I other an there's for week think to weekly now, you inventory do something? plus But Or two is Thanks. year round? Got option every right noise there's CLX+ understand

let a they are to view inventory. that going our And view I a managing need the I will of view their market. lot about, that weekly address needs going And think two systems, is may expedited a inventory for And it's good even the of want their there lot that our product to on of reminder remain result market the shelves. in cautious cost customers -- still on we replenished. for that a is customers services. the expedited care that as to sufficient me Yes, levels, the is fill a a moving, that which inventory space market to inflation Matson's is be through in There size underlying is part mean, is of likely that a be handling of while be in seeing is while

our it's freight that And to the allow fastest most that market we view enough and we two services. there's remained expedited we're reliable, going lion's to expect get of that will all that share to expedited in if the and us freight, the sustain which

last one then me. And sense. for one makes That

some noted the and coming out one environment weakness of in China. key You demand

in decline You XQ again, quarter? in from yet? decline that bottom rates Q, had big we think rates a a first to X Or should has found

a here say differentiate good Yes, think it's it's since rates important our to mean, between question. are. rates I I rates think what what and or spot we'll I market and that

So the let talking first me rates about in the me our market. about start let thoughts spot

Year, demand their New as international or you after, is see during And ocean the the that's are we historically, when rates is the or before spot spot but in typically year point as reopened, for you I see see or void low Lunar that the at carriers typically think cancel period. lowest. sailings that lowest the after rates, blank typically what factory

the we're near So whether close, not we're I exactly we're there. at if bottom, or the bottom think

my reset, I will extent be on or factors at on the to it bottom to from side. these lows, rates spot think ultimately determined I the going we're So and supply based do, which side. as the up the come But what rate belief we're capacity will spot that mentioned, expectation I of that and lots be will the on near demand the think and by

contracted the if in we year I move transportation contracted trade, above last rates at you the rates spot of they into sort likely were in the pretty this then think what That's in contracting cycle Transpacific the then I renew. will contracts but lower that is expect see below clear. at previous these They'll we year. to as occur look annual and to the which be the rates entire

our that market they above year, space. are down remain significantly were we higher the our mentioned, the while as where and rates expedited up thing they Matson for down pre our in and other The than rates rates volumes remained were from pandemic previous

to highly receiving that hard the we exactly it's know a commensurate occur. with So to that will market premium is our we differentiated But what feel are comfortable service.

going. knowing it's is market. in the position We how exactly not our where So like

thanks right, All for your time.

And our from next Atkins question be Jack coming will of Stephens.

Yes, a Jack back couple more letting and jump ask for Atkins me with questions. Stephen, thanks in

a that to original talk this having and with like CLX+ So think environment, like operating even of to like levers head Is sailings in to CLX+ double type fare seven you lot in terms where at what do in terms question, to five that I does profitability. in they necessarily blank But type I to the the necessary, it cost of rates environment? of full don't How that out able going the of be there's pull to to guess, and tradelane have has. or not about reasonable I are, that being all profitable you worst there ships, level CLX able know expect? ships you neutral earnings, of rate should keep feel that when like from this guys

in seasonal good I'll confidence is fit say talk a the I And sailing, profitability. What is by with level There for can And this can we is at trade service. service more about expedited start our last it's this. don't question. Jack even on we demand this week saying low. Yes, CLX+ than

even be down do vessel So of can't in a the market we overshot the we're that market. expedited with in a size market satisfied single an expect

for into long-term be fastest to of over the demand there time, and trade, firmly we air there's second fastest a a out having also creation be freight a markets value move there'll will try to it, pressure product And by that there's in believe or expedited for value but our shareholder. the create services, our these term services profitability all to I long our previous on deferred in transpacific remained is two obviously be lower year, airtight product. that say And that, will and confident of we would going

Okay. to want a answer. would, to be I Got would it. to elaborate. I you knew But see that question guys going maybe if tough was

maybe a of I gears couple items. guess shifting of other So to kind

could you interest rates it's could I lot. trend? Joel, you move how interest help think can should us know maybe about around know, expense You a

-- the full progress So on construction couple right payments way a capital not what's rates over interest income, fund higher quarters? say, for asking the into your look. and think being year I made cash should with the the I But, to guess the next balance? mean, about I

instruments be have tranches. off two after project pay tranches, Well, that to easy placement and Title very we so XI Title here two Yes. private will we'll two expense first these four the interest in quarter, remain XI remaining

expense very be interest fixed the that'll side. on So

So your income question the side. on interest

take as Just in the on well itself. the the balance cash equivalents cash deposit and look as sheet cash a on at CCF

high be of funds those all So will securities. in rated invested short term,

on the And right close total what income -- so And end made the had million going this year week. and CCF alone, $XXX $X now amounts of year to up interest we to interest just be? through far at on to here, we I deposit past so which $XXX we two million the X%. made and what's we -- just until made, income mean, that it's million date, running you those told

on of quality look together a with and really what are backed maintain a market, high very rates securities, numbers those of cash it's at type look funds. plus for sheet funds, market investments then CCF government government quality this, and equivalents, function market money the those balance types money two So at we'll Jack, because of high

the should on kind the you side. of interest return income expect that's So

So maybe nets of out with onto you depending saw fluctuation terms fourth like we're P&L, quarter, what in of in how potential the the north on the something slightly looking again, at that container rates?

Yes.

about in and side, minimum thinking And another backed of think other fund, the construction of a with plus Joel. cash way tax, is to that, the cash should cash income for taxes? deposit you items just couple Thank Is tax? the cash into about it. the that about fairly flow out thinking terms taxes state right minimal then we your be that be being basically capital to on the the alternative there Got of Okay. way

in it say would should Well, I to revert XXXX. more normal, something

high of cash XXXX, and XXXX, in is saw we taxes. profitability, you we very levels had what have of high So amounts did

you refund we two if amount So years on of XXXX paid. going at to cash together, look back the get those some taxes we're

terms XXXX So to that'll flow. underlying will normal revert Jack of in overall But forward, cash to taxes cash actually going more help in our relative something earnings.

cash -- going the fairly periods your it and a similar? that's from maybe deposit shield to taxes prior to to construction payroll refund be forward, and be Okay, so the -- more going your going it's drive going that's will taxes capital

but Yes, tax in by making way that'll be have is XXXX, the what they'll start cash And then point we'll payments, be much closer a overwhelmed see so quarterly -- together. that at do to some estimated you'll receive XXXX big little a that, based get quarterly we'll But estimated the point making when to IRS. we'll the also at know refund from be one-time this we'll year, here, payments profitability. refund. on cash bit IRS regular We tax a don't some

year, my get I'm to going not a hope to going I'm too, breath. hold Okay, this refund I but

mean, moving opportunistic a pretty that? significantly. How that It’s guys this I over going last the turn those pace similar so the question, of we of of share you’d should pretty I'll be You larger on you thinking I will have been is thinking And more be then its it it. on Okay, be share guess couple forward? How kind repurchases, bit to with ratable? pace years. active of little over. it'd last be more a sort count about should be really the guys about

mean, and what XXXX. this say done slower year would than I we first of half. going we've August it's I to be Yes, in remember, started a a pace

And months, we've XX shares so that bought back in X.X million already.

is this had for flow profitability that very that's of the we cash rest pace and XXXX we in steady XXXX. reason did decade. So expect and you'd because of the than the levels more such And large

beyond So as to more repurchase the things pace. revert annual will 'XX normal that of in down kind reduce go and share back from and something activity

we we cash more CapEx CCF funded our in vessel measured So because the of with of flow from kind for because the already of steady levels, maintenance big more our a operations two-thirds CapEx that. pace minus that's

Jack. we've So, a seen so pace less come. months, years what steady pace in expect, It's a but more the of last we XX steady, to for what and

guess great I know would I about idea to to one to over. as just normalized a it's hear. difficult And maybe look this like what answer. earnings could maybe Matson. to normalized of for think guess a environment. mid-teens of one double I'll that's cycle. in I of more like sort of high and trough I the marine last of But the moment, out a And go sort low And for me, hand no, back it a for at of kind guys sort sort transportation, peak Okay, you for question of a operating because of It's times COVID at cycle, and it's mid-single digits and the margin digit, of digit, we're in range historically, single

still I think other that color that I Is way right the of mean, look more is Any would there investors. about you any structurally profitable? through be cycles sort feel of reason around has for range think the the that one kind Do to forward? that helpful to or business way like changed it? the is we think

Yes, is to try over I'm Matt. going I'll it, answer part Joel. of then Jack, to and turn this it to

out this coming the normalized not I'm be we've And think especially earnings, there first we of which long going in and of higher core partly we was I pandemic there. our earnings. the do hit think view earnings above the will our I continue CLX+, get to than drive as addition half our eventually that value think sure driven in. said year. earlier we believe expect to it over term I whether from And is this will But of

I put very us these it to an ships expect bolt In on we're for a a few CLX additional kind initiative. value to cycle disruptive that stood continue And the XXX earnings expect is premium. three of out the also builds those that introducing really new do allow to us years-time, upsizing into that a our think I to and brand small through for of earn tuck-ins. be healthy to to in lookout organic containers additional three growth another I going sailing be going for of the these CLX to be

And we I our if large growth that think find other can opportunities, fits. of comments in in one absent acquisition, which pretty a not acquisitions are included those

it believe without put going company it. over that So are profit a things the trying you to percentage some that say of we're a to percentage it, give margins. into going But we turn the are those be to I'll do I think, us on Joel competence we to than mid-cycle to different give

say difficult. Jack, Which, heard margin there's very, before, becomes very analysis moving us so and because that you've fuel, many parts, especially

I of so And the in points businesses we it don't way. couple terms and of margins just might that and you in And low don't end we we We terms in a high our what to operating terms to going and of our of businesses EBITDA of went know, your what produce. aggregate they're honestly, in question, normalized of income lower predicates cycle. think through there produce, margins be in think of they're what going think and

then your you what the and going happen is think rate, we've talked about future analysis, investors, that doing think a always I to run So for taking off run rate.

on opposed based can it. can point, your start if if assume on volume what look margin building So aggregate contribution applying then x and upon revenue based the you and And incremental then to as that a you EBITDA at income back starting number against and you into more like. you then price, operating might margin contribution working

Does sense? that make

are able -- know outside other your think anybody you and to these settle about business think to to out. the tough tradelanes on to And a be it going It able the just with to than of else. different overlap looking from in model all where lot guys it's things each does. businesses I I it better does, be in really

can think kind help that that some more we I once I clarity can of will get some think around once views. get that, valuation we So

half record of better that, I go the we'll second for have you on the tried So in the to get a on guys to guess sense year. that just but I

for Really you thank the it. appreciate again So time.

Thanks, sure. Okay, Jack.

the the concludes for closing to today. back Matt to That you. session call turn for like Cox, Thank remarks. over Q&A would I

well, to Okay, thanks, everybody We next interest your up with Aloha. today's for catching quarter. look call. forward in everyone

conference all for attending you Thank call. today's

and all have you great You may disconnect a now. evening