Matson (MATX) 30 Apr 242024 Q1 Earnings call transcript

Good day, and thank you for standing by. Welcome to Matson's First Quarter 2024 Financial Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to Justin Schoenberg, Director of Investor Relations. Please go ahead.

Vic. Thanks,

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

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

X. year-over-year, an better quarter Ocean to off start on outlook expected roughly and first flat Matson February. income performing and a Transportation, year meeting improvement Transportation start in with of reflecting those I'll solid than our for XXXX. call. expectations the operating provided on late the thanks was the for is logistics our Justin, Ocean to Thanks, over Slide In

more Our was China In rates, New service operating We volume continued experienced market period Year healthy Alaska but a softness the higher year-over-year. Hawaii had income freight year-over-year declined lower in demand with out Guam, in lower flat and volume. with Logistics, year-over-year due traditional post-Lunar of year-over-year transportation volumes and coming in year-over-year brokerage. to

a and expected demand for As the services, quarter CLX outlook. are performance our year and the result of our raising first in we full MAX improving

ocean with operating later $XXX.X to our outlook For contribution higher XXXX, from Joel than in on performance detail we our through will previous from higher first outlook a the logistics. SSAT and expect tradelanes, modestly go now transportation be in achieved I presentation. updated income will quarter into now consolidated our than XXXX of the million the more go in February.

container slide. So demand. turn Hawaii the the general to lower year's please X.X% to next first first the from last volume Tourist in despite Maui were wildfires. comparable for quarter quarter due tourism impact to continued year-over-year decreased the year-over-year arrivals

to increase Please year. expect the by on underpinned wildfires the and year in approach economic Maui industry to projected and are homebuilding construction activity. unemployment is continues and First to Tourism XXXX contracts the the Construction return modestly recover X. of Oahu. UHERO's For and modestly jobs to to international low economy volume the as from projected due large Hawaii increasing rate Quarter XXXX, XXXX, to federal last state the achieved to turn year to we is full Slide visitors. increase grow gradual level projected According report, last

continue to from more consumer our reflecting demand that in goods the expect quarter our term. XXXX, feedback is the While cautious, this little outlook near for first UHERO in environment sluggish saw and projects modest economic customers growth retail-related in a tepid see

Moving turn service to quarter CLX Please MAX. with Slide were higher XXXX volume was X. volume lower rates year-over-year, We year-over-year. X. that and for Matson's first Slide lower to our the China of X% both achieved on in average freight

were freight in New Currently, the we demand a out expected. service volume Lunar expectations, in our New we the Year China workers our experienced Year consumer New a post year. steady but post-Lunar post to return healthy more of continue New rates in in of increase marketplace, in a Year demand. and transpacific period experienced recovery after period Year gradual met compared reopened accelerated traditional more period higher Lunar coming Our the see post-Lunar U.S. factories last ramp to volume with The volume than

we expect compared for and services XXXX. MAX XXXX, improving as CLX to demand XXXX For in

freight average XXXX consistently CLX demonstrate be the levels. focus expect speed a enjoyed. with good We're and the to our than X in to rates primary reliability these also We have MAX and higher service with customers In that Matson's our unemployment position and was is in volume the near XXXX low in Guam, first year-over-year. rate the slide. of quarter Please continued In we term, modest tourism. increase expect in Guam flat turn next with economy container to a improvement the the and

Alaska the container approximate For X.X% less year-over-year, level term, to supported rate, slide. Alaska, sailing, unemployment first and flat due quarter X sailing compared inflation. the and decreased expect a by volume next achieved the northbound last In X Alaska, continued level of volume container XXXX, last to Matson's turn volume a growth northbound the primarily XXXX expect to volume we year. overall in growth jobs to year. was we low Please In roughly less X.X%. economic lower for for near decreased Adjusting

Please Alaska to we last turn the XX. level year. approximate achieved to For Slide expect volume XXXX,

was expect $X.X year-over-year to higher due in million. In lift expected XXXX million to $X.X volumes. to The an higher XXXX, terminal Our primarily SSAT, increase higher be venture, volumes. contribution the to SSAT lift from joint increased contribution due than we

period. million primarily due or in approximately $X.X The XX. $X.X year-ago Turning first at contribution on Slide from result now the was quarter lower than to Logistics income million decrease the in transportation to brokerage. lower in the Operating came

For income than conditions to XXXX. operating turn to such, brokerage will partner, challenging my a lower we to the call for business in Joel, financial expect we our XXXX, Joel? performance. level the review I achieved be now for the continue. expect as transportation of over And

Okay. Thanks, Matt.

our Now Slide results financial on XX. to on

For offset higher vessel quarter, of Ocean fuel-related the operating the in experienced freight first in declining $X.X consolidated million, expenses declining Transportation and million with decreased China. Transportation and costs, rates logistics Ocean operating to the year-over-year quarter income by collections, partially fuel-related including $XX.X first higher operating income surcharge $X.X timing $X.X million. million

$X.X of average in XX. million we our the logistics year-over-year due the turn our the cash cash to XX due contribution how investments per X income due from equivalents due in cash the outstanding to and $X.X quarter an or to expense in deposits rates fixed months share diluted We transportation primarily generation. flow and the year. X.X% the difference between Interest slide a income to to As quarter, and year-over-year Matt rates increase in in cash increased had noted, and was higher CCF This decreased income shares the diluted the year-over-year million earnings lower brokerage. decrease debt treasuries. past interest of on increased in $X.X rate in operating of XX.X% fixed Please decline Net and interest U.S. outstanding. year-over-year, with allocated X.X% million shows a Slide trailing weighted increase decrease

items, $XX.X For by Slide And $XX.X the million our of which XX million and to turn repurchase million $XXX.X from dividends CapEx. share used period, construction for and capitalized maintenance offset other on our capital from returning other fund, share to via generated retire repurchase. approximately and flow $XXX.X sheet. we vessel while operations $XXX.X $XX.X including a million summary to program LTM cash on balance million cash $XX.X million new withdrawn CapEx, on outflows, owners' Please from and approximately million we interest of shareholders debt,

first approximately quarter, program approximately initiated this of our March taxes. repurchase XX a repurchased the stock X.X for million, our year, including of $XXX of total million. XXXX million Since we $XX.X total XX% share August During of cost or approximately in repurchased we have a for cost shares million shares we of through

shareholders returning of growth continue investment large to are absence opportunities. in any inorganic to do so said to the plan As capital committed we or before, to organic have we excess and

to Turning levels. our debt

XX of Our reduction tax from total fourth quarter. million, XXXX, $XX.X debt at $XXX.X Matson end tax the of well return as the of XXXX $XXX.X $XX.X end federal of Slide the a million on let for walk the purposes. used of received federal quarter income the The earned tax into million the refund first April and company's on was XX, me second million related to as a for is the Last, the placed and quarter equivalents year corporate in was cash and tax that, refund our through With refund. turn XXXX. full expected now to to be cash general outlook interest and

full year-over-year be to the we the to stable. the and lanes as the on for CLX U.S. in based our across first we income most performance year comparable outlook Ocean expected it Ocean expect significant Absent change in and of XXXX is an demand than XXXX consumer-related For dynamics, Transportation trajectory of expected economy, improving to Transportation dynamics in XXXX, to operating earnings a higher services. call in largely be for trade the MAX trade trade growth the spending from the remain and February expect the demand of quarter

For to we to logistics, lead lower for we year-over-year transportation operating expect business expect brokerage, challenging business which income. conditions segment

consolidated quarterly seasonality than be a year we prior expect As achieved level now higher to modestly operating the patterns in to with result, similar income the XXXX.

on this effective million; year. deposits million amortization approximately yielding million for income short-term payments to million, outlook, received $XXX the following federal we based CCF to dry-docking as full April of interest with invested of in as inclusive income Depreciation dry and we full respect market and XXXX, other XX% CCF $XX.X income amortization, current current approximately dock cash interest providing to year and interest $XX be approximately million, addition approximately equivalents approximately tax $X million. of tax XX, the to income rate at and In outlook the expense rate be to are refund. be $X approximately an for portfolio million $XX This to and rates on be our well money expect outlook X.XX%. operating the cash is income The fixed $XX includes government interest

Transportation be moderately the For XXXX lower the million operating million the $XX.X quarter in $XX.X income the we XXXX, to in achieved and of quarter income the XXXX. than be of achieved second quarter expect than of second second to Ocean higher operating logistics

the consolidated As year. operating we prior the than to second expect higher income in modestly quarter such, be

mentioned I to income on that earned including approximately $XX before. interest our interest million, expect XXXX of We be tax federal million $XX.X return

the payments new to remaining Moving on Slide CapEx from are call to XXXX. projection in outlook remains February. covers to on be provided This fourth call capital XX. paid back the milestone unchanged obligations. to for turn The we construction Matt. table construction XXXX shows vessel slide the fund, now Again, quarter I our over will what the of expected which X/X the for already from

Okay. Thanks, Joel. had start the Matson to year. solid a

great newbuild a just Class Aloha are sheet have balance We and well Joel program, our on described. as funded

We of to our opportunities arise. in are positioned well as on all capitalize markets they

with shaping call up for is ask to that, back good another And and year Matson. questions. XXXX far, the operator I turn to will the your for So be

compile stand Q&A while Please, the we by Instructions] roster. [Operator

Lacks of with Our first Wolfe Research. from question Jacob comes line the

you implies even modestly ramp of sense Higher way for there, XQ. all pretty is that any year-on-year bit the Is in there of ocean pricing you second a And quarter Or big say give you're a then us what too? second a volume? from when up sequential EBIT consolidated thinking can quarter.

let it, for I'll me his to answer and over Jacob, of part turn it then comments. Yes, Joel

workers this and longer after is period to what bit some said the a first our provinces that more the XXXX a comments, longer traditional didn't prepared in New period I I a saw in quarter. ramping the kind Jacob, first the to factory of need ways, And And So mean back Lunar think back seeing, we're home their that, went to we up as little holiday. by a of we since year rush was fill Year orders. pandemic --

our ways, like forward to moving so in be And going this some it seasonality. feels is normal

first weakest the the quarter our traditionally, so business. in And is

volume we that. New out coming up. think to from period nice returning as of the But I ramp -- volumes back Lunar we're to saw Year started

We freight year higher commentary also will be rates noted in that in they ago than our the period. were

refund, which below all in from the interest So that that's line interest comment tax income, on on separate Joel onetime a all, was the made this the benefit.

We And wording there. to better. specific the ocean see are Joe transportation let on be expecting I'll comment

little to just bit the say when more. nothing And little -- Yes, dramatic. a just regular modestly, more meant we so we plain when then It's moderately, we bit modestly. not than Jacob, mean English, on more a than say that's word be

So we those how that's use words.

Okay. you quarter, remaining the impact Red real spoke, when to with mentioned that you seen spot of Or Makes that last City starting through some any is we still sense. business? elevated? your Is And then from rates disruptions to haven't bleed the case?

Canal, I Yes. those I'll specific -- Sea there that longer order all that trades have used question think the chain customers' been -- what that I I transits. have would to perspective. capacity as more Suez the I'll say you painless traditionally But accommodate we the then that's capacity it of most gone, been seen from on and the our around would answer relatively supply say business. know, the generally is answer and carriers in we now what to deployed has additional and has Africa Red

the [indiscernible]. port whether or course, the deployment Coast Europe East are and from the a a from Cargotec's for or longer, that's destined Med Of delivery, transits U.S. but

I routing that's Vietnam as routing. we the countries the industry. changes really percentage or on at there Southeast haven't So like it's few in much And we for a But in if look much are places can-- Coast. an single destined much seen say, is than really Asia disruption margin, can very cargo that East been, seen would haven't other

continues relatively be So Matson. terms small in impact of on its to it

reason think progress -- Got we it. quarter get SSAT, Is this can't clearly, sort the can't it any about That's why million profitable the in around $X quarter. there mean, the you And I affecting any then profitability New was XQ Lunar fourth we in as year? helpful. Is in to levels reason there's through slightly of contributed quarter. that first Year back volumes as there

Yes.

continued I think see to we're in SSAT. improvement going

level it's to going think we seen I year rather see that profitability. speaking than us before individual quarter. I'm of improvement. normalized any We've more probably XXXX into take to full profitability a

believe to based West and see views I here volume going the improvement we've from hit think market perspective, the our Coast. U.S. we're steady of bottom on on we the from

than that So recovered some it's probably our just other bit businesses going more of little to quickly. take longer have a

of the line next Daniel Our Stephens. question comes from Imbro with

the also to side want maybe I demand Ocean. start on for

curious view existing a sound I of little than then any that with think you much demand better year-over-year. of new ocean your demand expedited change maybe Is better e-commerce of demand with think of of what on pricing your your secular does seeing in informing the growth U.S. shippers? and outlook from just maybe the that you're And slides players? that's you others kind Or because to customer kind bit you this and you're how the I how expect customers? airfreight a more hearing. that's think I'm shift

Yes. Sure.

a that. take at me crack Let

start I trade, inform -- that talk specifically. demand I'll talking look me say if and the supply about let by Matson factors that transpacific would then and macro So at you about

significant volumes some you and foresee, see coming West So customers, is and to hang in We've to demand. to if steady continues year-over-year those look consumer U.S. and volumes there. in economy improvement to we're absent continue into and disruption growth plugging seeing along at the view our still going we're year-over-year. don't partly we consumer in The the that in strong seen our is talking Coast,

the Those international as of volume So carriers. ocean for West year-over-year are see the Coast growing positive. if you U.S. use all point, starting the you that on

we've you've specific are the that be previously. the Matson, inflation. and than to market on expedited rates see seen you But look think side, not are drive year. What those previous higher that described Matson and international demand, continue will those, to fundamentals fundamentals the to the if very pivot we at of I our ocean some much

Of inventory, at overhangs for you markets, customer if no expensive demand significant look problems. meaning e-commerce, U.S. is adjustments course, healthy consumer of normal airfreight and continued the orders, of production levels, big inventory late But growth a factor. macro healthy

go All our in continuing to X of those expedited be or strong MAX what service believe we factors towards and services. demand CLX

So going fastest somewhat. be we fastest second our if confident -- and carrier, and reason be lion's outlook can to us give the get position of was we're our share and in reliable to and continues raising most be the market expedited this to

in cash of maintenance maybe, on CapEx, I is looks like side. Helpful. couple then appreciate the I wanted And off drop going just Joel, obviously other materially review. pretty to that up. to the and it follow flow years. It next

Just the the what pay vessel what new whether accelerating your cadence the capital payments of anticipate that you it's of maybe flow? curious, free have cash buyback And most already of with do are with debt or kind spending, you? funded, how priorities or down

Thanks, Daniel, that. for

debt I pretty have, million, paydown long-term X.X% of -- So around other not is mean, because and expense $XXX very priced, oil the that debt million that the at rates. fixed fixed, is X.X% $XXX million attractively much the the a $XXX then interest private placements, debt attractive we

$XX have fixed really we a It year. rate debt. only amortizes low So cost million

that. do to continue we'll So

wouldn't so from overall change a a lot debt perspective. that And of with program I expect

equipment next you're down. So should maintenance or number a new continued -- XX forecast of cycles the LNG the through goes Most have year network our CapEx really into We be don't right, of That replacement overall projects. and projects towards of the coming months. engine to and that operations.

regular at for environment company, new aside the normalized of more a vessels. you're the So putting looking CapEx

there policy, as year prioritization will dividend that earned flow. and to every raised XX free primarily of dividend years we've steady just to lead it. towards does continue a we've over the So a be cash And lot

in on would reward share a we've long, to picture as free large then And is of M&A absent of to or investments that about a steady continue that. the we what we've doing, majority talked the for which share tool we how that it time cash been over we see. flow that repurchasing that's as time. opportunities, that's But Daniel, be towards expect to So continue would earned organic long because basis a shareholders repurchase, the going kind -- that's any we've use pretty

of coming I And that much then in with payment already of just you you I'm or prefunded as to is either just years need received, you million the payments the much clarify CCF how over accounted that, tax on new the how vessel guess, $XXX curious look forward? covered? the for is is now

Yes. of the million We paid about $X total $XXX billion.

$XXX more currently And we about CCF to has XXX. million So have the go. about

order, that So million to just more rough need would that's we about $XXX fund.

then milestone We are to investment this there months as that the income will CCF CCF those help. that will And cash lot that also, put earn our But rate. interest the funds sheet XX at of funds care take next we'll XXXX, will into in cash XXXX, sometime towards cash and earning to the from ultimately, to more money come XXXX. remaining There's around that apply into a we'll And then all time, interest and used balance today. payments. in milestone over on over payments probably then equivalents of probably the XXXX XX QX have be we'll QX, interest the we get time, that of

quarter. had $XXX million $XXX on received that We plus now, that's us that gets million $XX $XXX we million, cash million of $XX end the expense million of $XXX interest so and of leaves up million, So plus $XXX of cash on the so million interest, to and million. the this equivalents, $XXX cash right around at

go begin from the more So there's to a needs that will XXXX that in that into much to CCF, happen timing perspective. not but cash

Our next the Instructions] question with [Operator Nolan Ben from comes line of Stifel.

refund got all start, that modestly to a wanted was that? handful Joel, big to I after guys first I've or here. get curious time. deal to get But a this excited foremost, moderately So finally are, it's if you tax and I and

then. got interest time income to We the the received took we you proper -- was are over mean of for of of rules tell per when long that I It it. all We refund amount on we and also a I'd had years. IRS X pleased get filed that.

kind was of much interest due. nice to So any how not back income actually it on and also have forth was

modestly on pleased factors. So I both would say we're

Here we go.

sort the got guys it question, my areas transportation not but first inorganic handful, are and maybe -- the bit top in at there's you came that But struggling, doing starting environment everybody. not opportunities up to demand like where, you and is this There a -- fine. to or of can again, seem So given I've dollar everything a finally I more earlier. that real for be certainly see are curious, -- good I'm some my little of but for moment these universe there's days? Are guess, segments maybe everybody activity

hands It's a great explore on a reasons M&A after I question, sellers and sitting as market transportation think, more last difficult companies year. Ben. the in and environment of their We're are to themselves appropriate put market very we very COVID a end potentially really for seeing, slow

market Some looking test to sellers now. are the

but So expectations that, there's multiples. an high pretty we've be uptick seen also -- to continues for in

us assets look we X fit to you've say we don't The many heard together. it's a way just So we those at the tough want fit profile -- way though, perspective. our times, is that things from get it,

actually increase a profile. wouldn't at. of words, the I fit sale look assets the so number say things or been for our a In now the not there's number that And discipline looking is and greater of what trying significant becoming dramatic very change to even because we're we're maintain we of at increase that other

Got it.

then -- only are curious a was if back it's to though, more competitive I'm is of from Okay. see like more it to talk or forth great going it's could I -- China volume, the switching bit landscape, pre-COVID. you price Obviously, that more little still particular, to what the airlines Matt, and passenger in China. XX% gears And price. know,

that the starting of seem though should. expedited it there of of would be service. mimic trying have? of test service it plenty the for competitors demand any that would is infrastructure operating you see in to other So kind port to your that way But generally guys or kind as Are you

Yes.

developed think expedited there it that I carriers offer I a that or And to pricing I'd is a market. way -- are, say, ocean that secondary the generic answer above discount market. Matson would is will not there X Matson's X but the are

X And place carriers so there been CMA in or and of been have the X, few those the market are in is for place. in last They continue has that years. one

Zim have take service the that our market, others the We a on -- couple was or sensitive, that cargo either the there's had longer can in in left back and the that a the get of compete market then can't to had are that is on market, transit for they and margins.

So as little rates. cheaper our but than not as Matson bit good a and service,

going reinforces lion's pandemic. the second that share most which as we there. are reliable, be will few it going the there. to the not has business we're been that that And years, us as and and is especially of fastest everyone strategy, and that's last this exist There -- market It's there. fastest long kind developed else remain into the over just is so gradations our market. It of then market And in get

-- the will that. see think rest we dimensions our the about thinking And take service to care on which this we're is way just so market, we this it, development and but just watch I of focus the continue itself we of is in-between

Right.

And Okay. lastly then me. for

doing a so, is fuel. be enhance if I'm bunker curious LNG You use it -- finding a it maybe guys, advantage think, that a little have a handful way your fuel of margins as able to have to another I of all? at capacity And now to And and you're as you if assets sort that? are the

Yes.

a we vessel that So Ben, the answer, is single have has delivered. been yes,

And have course, stages that know arrive, that converted. you delivery. are We are other X when they final intermediate LNG-ready of vessels X or all being in will there vessels of new in stages be then, the upon

we a performance a it. well so to as From in they're the bunkers in from Pacific operating we allow vessels will other pricing on -- mechanisms -- continue a this California. Southern bunkers come number standpoint, fuel. we of is, China as maintain but fuel, That's been speed places of LNG LNG get into it see and engines in our cleaner seen is and burning taking to course, fuel we've us both able positive. have alternative well our characteristics. other a LNG in performing it, vessels more That a and need at those they And bunker trade bit have And the we bit risen, have prices moment, than Prices that a where And lower come really are been market time, more both off. from but to expanding in time were LNG expensive the to fuels, although will recently been has change beforehand. place.

not price advantage a have a we cost that. significant from So related either seen to standpoint, penalty or

-- diesel all that our of We and we like vegetable higher our also routine of to we'll expect hydrogenated those recover are and are of know able clean mechanisms amount fuels just those. of part that experiment with of or I to types surcharge periodically will It's use other be well. oils through existing those other most fuel know and our costs. Many products, business you

with see which don't our the along rest in industry climate as the achieve this for emission a our market in the reduction participants it advantage I is goals, of at of sort a nor a point priority. this disadvantage So as we significant

for question-and-answer remarks. closing today's concludes session. Matt That I'd like to to call the back turn Cox

today. quarter for on in up our everyone thanks tuning second to with Okay. look Aloha. We forward Well, catching call.

call. This Thank concludes you today's for conference participating.

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