MATX - Earnings call transcript Q4 2019

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Operator

Good afternoon, ladies and gentlemen, and welcome to the Matson Fourth Quarter 2019 Financial Results Conference Call. At this time all participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Mr. Lee Fishman, Director of Investor Relations. sir. ahead, go Please

Lee Fishman

Alexander. you, Thank

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

or of to expectations, Before we statements forward-looking will like that events. the securities the regarding remind future meaning laws federal begin, projections we would course during predictions, make within you I of call, the this

We the our could and are materially to the results believe filings presentation XX forward-looking and to We reasonable. March the filed described and and assumptions the X, differ release, release in under the detailed XXXX, slides, are that XX-K our These are risk expectations subsequent fully this our Risk statements, factors caution Factors you with press Pages presentation call. in caption, and from on to SEC. XXXX Form cause risk in on more consider those in of that the XX factors actual press our conference

assumptions We Please make and update XX, are of that any statements this that we date these undertake date. as no on statements. call obligation XXXX, is forward-looking forward-looking based this the also conference note February today of to

now will turn I the call over Matt. to

Matt Cox

this turn to Please afternoon. Slide thanks call my Thanks the And for opening on Lee. remarks. those to X

came came its from lanes in performance in expectation. consolidated expected, our Matson's quarter, trade fourth the below but as For the results

the U.S. situation. exceptionally ago which the by seasonal outperformed strong demand year service driven tariff the period, China Our China included

discuss service our the weak and modest continued execute expectations to the rebound most contribution our I’ll across contributions SSAT, from solid short softer within in later logistics due which largely in in lane after trade presentation. came quarters several of lines Despite met and a our performance of of conditions weaker well brokerage. We and transportation to industry than a lanes, we business segment up the phase our expected Hawaii saw trade

busy for with delivery Sand very three work trade a the vessels at the had lane two new including cranes. of gantry facility, Hawaii of We installation Island XXXX new service and our renovation our

two with year also we up progress the also facilities. at of We Span facility two installations third end the scrubber the to leased in and new completed Alaska Anchorage the replace opened

this since the steam into beginning XXXX put To of fleet $XXX we’ve day, over manner, responsible efforts in into three the in our stepped environmentally disposed assets a transition service. perspective earnings down making. into years for night were this an to placed of a and service, shift period call million These ships Hawaii rotation

For the had contributions in trade solid favorable lane and the Alaska performance a service another lower full-year lower services were good we had outstanding and from logistic these our from and joint year, lane venture. contributions ellipsing our in SSAT Catering XXXX. volumes XXXX, China trade contribution Hawaii

from with cycle service, our our Upon to in are Turning placed stepped December in highlight January. X our for Starting renewal, continue rotation delivered current our I was XX down service final X, you of to and in early late Hawaii investment we our major to entering Slide Hawaii want priorities. ships. into stretch ships fleet Lurline to fleet the and

the the and Matsonia fourth to year. of is well, vessel in progressing is construction scheduled this quarter be delivered

project. Sand terminal Island renovation our to Next

we and remain three in modifications During existing that use. the we three demolished quarter, began cranes other fourth on will cranes

complete the be this will will renovation towards end the year; of second phase the begin phase of this first The year.

Pasha Kapalama compliant B, moves was the We XXXX with January next to the door, for expansion new continue fully on piers IMO harbor. into X. and prepare the across to facility when XXA Matson

fourth vessel six the vessels are three in vessel dock today, program is scrubber of As in in dry scrubbers the and back with now. service

to is scrubber complete end the by of XXXX. Our be on program track

will scrubbers and evaluate lowest want performance, optionality to a said position us good economics Matson long-term to operational the I’ve sense cost, we we customers. on be continue that that vessels, our Given in before maximizes always to make for but find and for our new as the solutions Hawaii

As the X.X leverage end of XXXX, our below of covenant times. was

in Xs. to to leverage expect continue after delever cash to our flow the our which mid-to-low we quarter, balance We peak significant to the use will sheet first the

credit which We’re view low metrics grade our balance cost committed as we and sustaining competitive to maintaining sheet, a investment advantage.

prioritizing With on organic growth peaking, our opportunities. remains our debt focus

planning the combined involved projects leverage of in logistics. to number ocean We transportation are phases and on the a actively of services

these will come in to more discuss when they fruition. We opportunities detail

Slide turn X. Please

lane trade situation a dynamic continues and and I unfold. our few on our views to the COVID-XX negatively anticipated and moments it spend highly may to The on discuss I have could businesses. Before services, or impacts potential want situation our positively as change materially the is today

impact little for immediate be the direct expected our the to of Traditionally, said, activity weeks of New see that extension to and Year. to we couple a Year New factories Lunar Lunar the expect and by is elongation weeks longer. low. the With post most Year a New an post we week, chains This year last disrupted; of with idled low for temporarily supply the Lunar additional business

in currently XX% weeks get and logistics couple of be to infrastructure gradual anticipate and factories predict reopened the at March, throughout will to a hard will working difficult to factories are rise full when back the strength. a but be next customers back when production Our we in it’s

manufacturing are operational in particular Our customers three currently facing issues.

expect first affect factory Matson and on of quarter. the intermodal efforts to in inventory their volume of is the Lunar New year majority at own of the no do course our the or top protect the vast financial with from parts low the in to and supply first SSAT personal their the Year Therefore, negatively low services, virus. chain international the This Logistics service, of the we impact volumes CLX labor, half of of lack services. shortage post deport logistic A elongated of

Specifically, carriers lower terminals, of the in consist international volume revenue average volume supply and CLS freight for less volume. our rates impact business SSAT our and lower at China, for will chain from intermodal lower services service, lower negative international

volume However, freight when use be we to confident come the on orderly the to for will chaotic throughout like or companies will track. the CLX and It’s services expedited know CLX well-positioned hard think supply year, will be but to chains back of how is need we the that the behind back, cargo the the recovery does recovery. rest curve service get feel

a the first impact the we impact quarter. negatively expect With in majority to respect businesses first year in vast outlook, of the with our Matson’s the COVID-XX to half XXXX of

today. While difficult COVID-XX, currently the following the we precision, based predict to it’s with financial information to of us on available impact expect

we COVID-XX factored the For majority Ocean the operating financial to be our is $XX negative estimate approximately Transportation and million full-year impact for impact to of $XX consolidated million quarter operating XXXX, into that The vast EBTIDA. income income the XXXX. first the

quarter to call XXXX income have first negative will and modest and COVID-XX. logistics earnings you for a financial in Joel later on first from full-year more quarter includes will operating on report our provide on to the impact outlook the information The call. outlook more

services. our onto trade Now, lane

on increased market year-over-year, the service Hawaii fourth X. positive container to X.X% volume due Slide quarter our to Hawaii growth. Turning container for

For decline year-over-year volume. negative in our to XXXX, container market the X.X% full-year container led a growth

from during their to construction flattened, earnings a quarter slowing aggregate presented as combination growth, we gradual in call, shift our condos inventories saw lower master-planned communities customers noted including we the more retail our the As growth within of visitor economy muted a aggregate and for and second factors, also pro population adjust consumption expenditures year. headwinds to

For and key the to achieved of through X remain volumes economic economic I the conditions will touched within some expect the state walk XXXX, favorable. to as higher, Slide ease be of we UHERO's briefly compared factors. some in upon just I economic summarizes the headwinds latest level forecast. XXXX

next expected couple to of is The expected is GDP in with years after negative XXXX around of forecast of a rate stabilizing low years to remain Modest growth and growth in growth historical is Hawaii X%. standards. couple although unemployment increase, be muted the by Population growth. national to over

is in in to of increase is negative but flattish, a third traffic of despite year, the the hit the traffic. year, UHERO effects to despite is expenditure the traffic half which in real in forecasting this visitor quarter. Growth to first Visitor fully new forecast the remain recovering impact visitor record COVID-XX, expected

of Lastly, activity the projects construction for a and bright level remains least is as sustain spot a activity in economic there the at residential good of of high a could years. couple next that picture pipeline non-residential

Hawaii traffic growth to will in is emerged increases persist, activity economic expected factors view to that economic visitor key that GDP but slowdown continue continued support growth. Our are recent such as construction in in and XXXX

capacity to demand our in those volume Matson’s year-over-year, X, Slide XXXX deployed quarter on trade lower service X.X% due coupled fourth in in modestly of XXXX. China were for lane, service. our vessel achieved was rates in primarily strong with the higher than to on the freight the quarter Average Moving the fourth quarter differentiated larger

a situation. last China experienced fourth trade the As quarter of in year, the company performance strong reminder, the result a unusually as U.S.

lesser this rate trade lunar SCFI. premium For New to to full-year primarily the deployed the achieved a year-over-year, and vessel volume rate in a Year full-year we XXXX, sizeable container lane. X.X% extent the due to stronger volume increased XXXX, larger perspective, post capacity relative From

were approaching positively the volume service. XXXX is Reflecting in testament the impacted of back by second on which freight XXXX, rates a XXXX China CLX’s XXXX the exceeding of and the half both to trade situation the U.S. differentiated level

differed logistic group. deeper could continue by from chains to win our into We from benefit air supply customer and our business freight penetration

lower of average service the currently expect comparable year but result conditions to to in volumes we the half Turning face service XXXX. the strong for second XXXX. operate first in the levels be in as expect achieved we year, second the we and and be freight the to we expect year the Therefore to as rates half we to our achieved of COVID-XX, the expect modestly half the of to XXXX a in prior than outlook, the approximate CLX full-year, challenging usual our of to performance

fourth X. typhoon container due Slide volume volume in relief year the Guam, period. ago year-over-year, XXXX quarter decreased to in to primarily Turning In X.X% Matson's the

due typhoon relief volume. full-year decreased volume absence year-over-year, of the X.X% the For to container XXXX,

highly remain. achieved we to competitive the expect outlook, on volume XXXX to in environment level APL XXXX as expect with full-year approximate to Moving the the we

As we’ve for strategy business. container continue before, to said every of is our single customers our spike to

with much we history of market. a Given Guam strong in an retain shorter customer time transit a record, share our ties, better outside that performance to on-time and long expect

to XXXX slightly now In quarter volume Alaska, XX. volume Slide decreased northbound southbound for the fourth lower X.X% volume. higher or and Matson’s Moving container modestly

to related volume TOTE the dry-docking Matson’s volume, primarily by to X.X% increased period XXXX, ago lower absence container northbound full-year offset year-over-year, due northbound year partially the the and volume a the in of southbound For vessel of higher volume.

recovery Northbound volume gradual state. the economic the benefitted in from

than to compared For to the full-year first slightly higher in expect northbound volume, higher XXXX, volume lower related year volume achieved XXXX. with be we the to achieved this XXXX in southbound the level volume, in dry-docking of container levels and including quarter modestly

the due recover sees gradually as charts slide growth to recent next of resolution a this GAAP states gains supported years population to on employment economy budget situation. in fiscal in the Alaska. the and short-term state XXXX, highlight first Slide to Turning employment its Alaska’s in XX, the four by forecast continues

of wide to Despite population optimistic population anticipated economic to of recovery other address the anchorage to AEDC’s the volatility the and impact in trajectory to influential forecast net of the are prices the mindful area, areas state migration but budget the for long-term Overall, the primarily in Alaska’s such we’re GAAP about highly oil as due muted. economy. XXXX, solution factors the in in in growth remain is continued on state, losses

Slide to next Turning XX.

negative million venture the costs lower year decline year-over-year volume. million due fourth prior in transpacific was year-over-year lane as impact as and $X XXXX, volume primarily contributed quarter terminal from compared to the SSAT higher in XXXX. of seasonal an trade of period. U.S. the a of The situation, stronger $X is number as China The quarter list sailings in Our the XXXX tariff to operating the in terminal in blank effect December well demand in the of decline function fourth a

higher XXXX, due decrease of full-year $XX.X items contributed favorable or full-year The and XXXX, to in $XX higher absence volume. cost the the offset lower by operating lift than partially year. million For SSAT was the last terminal million

the the in additional SSAT reminder, a early to experienced As accounting standard. of of XXXX, second related adoption new a quarter lease expense

on-boarding of of to the these costs, About involving under operating With relatively of which XXXX. high carriers, the terminals, Seattle terminal of the those the all new of reorganizations reversed most a of second of set higher is a including a were managing that terminal cost customer costs new third year-over-year This majority a terminal and related while a complicated opening ocean in of number the largely year, decline the attributable equipment during the half in was and [Xth] attributable the SSAT. of the new some service. respect quarter to of lease level reorganization and to maintain to a

For improved XXXX, to offset lower than in the cost contribution driven negative operating to by Transportation we by expect achieved income lift COVID-XX, primarily partially Ocean lower volume, effects SSAT’s our to the XXXX, efficiencies. of level due operating be

in million result or a XX, the operating brokerage. ago from in million transportation the logistics, primarily came period. due as fourth than decrease $X.X The expected year lower in quarter income now the at was $X.X contribution to lower Turning Slide to on

For to from Every million, forwarding during challenging This is transportation income year increased of $X.X performed and the $XX.X our one lines the primarily contributions the to result business for brokerage. some higher operating despite comparisons. year-over-year XXXX, million the logistics full-year segment. well highest freight ever due

result XXXX. on operating half reflects as and first soft a full-year logistics particularly XXXX. transportation the level international continuing COVID-XX. chain to financial supply year-over-year expected impact environment in the margin our basis, The to of also service XXXX, a intermodal in lower businesses outlook a of than the brokerage the expect challenge income pricing outlook will that be we reflects achieved truck For This

Slide XX logistic income shows segment XXXX. history the the of since operating

years, margin of the leading and last logistics exceptional we’ve the lines business our in highest few from witnessed Over operating performance all within to income XXXX. ever

present continue of as we to well to XXXX of lower, be relatively a income the to diversified expect logistics result challenging segment all operating business business we of conditions revenue the While and more for to expect its perform streams. lines

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

Joel Wine

Matt. Thanks Okay.

contribution and Turning results start and Alaska to year-over-year the to with income financial higher Hawaii lower from collections, decrease costs, services. million. XX, the will operating primarily fourth $X.X quarter walk the $XX.X was related higher due of to decreased Transportation through timing offset The then results contribution Ocean by our surcharge partially a and SSAT, quarter I on Slide full-year results. for a terminal fuel the million handling fourth from

or volume. The decrease terminal joint The X lower primarily was than million from to investment due or was venture lower operating the costs million primarily prior SSAT X.X operating period. quarter contribution terminal X less million million prior-year lower company’s year decrease contributed than the lift income for was The transportation Logistics a period. the higher brokerage. due to X.X and

of expense X.X year million, in Interest million includes XX.X%. and was for and consolidated XX amortization. tax other EBITDA year effective in dry-dock partially X.X quarter rate the the the by decrease the lower to X.X decreased depreciation income income an which quarter due million in operating of of over to X.X for was a X.X million offset million increase amortization, quarter million,

from year-over-year the operating offset For a XX.X full million. decreased from Alaska higher terminal costs, lease decrease including primarily modulate by contribution year higher XX.X income the vessel XXXX due to contribution higher and partially operating transportation expense was the ocean costs, SSAT, handling lower The service. million to

or higher income one-time million XXXX, company's the the XX The for in of full-year volume. Logistics joint million million contributed partially internal cost was less primarily due SSAT absence higher X.X terminal higher venture XX.X offset operating a items lift operating XXXX. decrease was XX.X XXXX XXXX. in The in investment than or to favorable by million than and

higher primarily amortization, of freight amortization. income X.X and transportation million, million due partially decreased X.X dry-dock increase operating income due was to contributions million, other brokerage. EBITDA includes The million, XXX.X to for from XXXX and and increase an forwarding to by of XX decrease million, in a depreciation year-over-year XX.X of offset which consolidated lower

trailing shows cash of how months flow allocated XX we our generation. Slide XX

net million on via to we dividends. from on items, on borrowed million XX.X million and of For maintenance cash used shareholders the from from other owner's million received which XXX.X XXX.X interest in capitalized new CapEx vessel a operations LTM generated XXX returning and we million basis including period, while flows XX.X flow cash CapEx X.X million

to and to debt Turning our a Slide X.X ratio that XX, was of balance for our will million our EBITDA of LTM summary at was XXX.X sheet, total note debt you year end times. the net the

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

expect at or of quarter to this the slightly peak will mid-threes, to end year-end. be leverage first which We it year quarterly continue higher where than the in was ratio the the near

reducing focus in at On After our reduction completion about we an we this cash strong flow half the leverage of our continue leverage generation our X’s. in towards ratio the our level peaking a will turn expect level, to back on targeted program. after annual vessel basis, low

continuing Lastly, alternatives, further financing XX to balance debt sheet. capital we to our are including structure look title optimize at

to Slide for Turning new payments. review XX a vessel our of

full shows progress XX.X payments. and new XXXX, capitalized side expenditures had interest on The vessel cash the the of table we XXX.X expenditures vessel million. of million cumulative construction million for of remaining the XXX.X For of capitalized and the total slide new capital right-hand year vessel

cash quarter of approximately San sheet. escrow, on the delivery the and payments X.X expect XXXX, this expect ways in Diego on be we building year. million at XX in fourth is Matsonia remaining slide complete balance cash the currently For the XX% on NASCO. this of is our of the Matsonia, is already of which in million, we to the net picture The

and let our Slide outlook. now turn to XX full-year that, to me discuss first-quarter With

for operating to higher in XXXX. achieved XXXX, transportation full-year than million the income ocean the be we For XX.X expect

overall logistics, be expect income income XXX For than expect to achieved the in million consolidated XX.X we operating and approximately lower XXXX, operating be to we million.

XXX amortization. We to expect inclusive amortization depreciation million for of approximate dry-docking XX and million

We expect approximately million. to XXX be EBITDA

income. income be expense other X in or to expect million We approximately

income expense our to rate be approximately expect million. We interest finally, year, to XX expect we And effective tax XX.X%. be approximately the for

outlook XX note vessel to mentioned investments incremental reflects of our benefit our from million XXXX. that and to infrastructure previously full-year the when want approximately XXXX compared in I XXXX for

our negatively be of $XX to EBITDA to mentioned, we businesses, to we impact a number approximately income As estimate financial COVID-XX and operating expect Matt impact the million. and

net outlook to flat year-over-year our EBITDA Although drivers this. highlight and is higher, our important two expected is income want be I behind to

interest by expense after driven January First, year-over-year, P&L Lurline is vessel, with increase the service to first this approximately she expected the XX.X associated of week year. this of and on be higher capitalized to interest enters largely is the million the moving

the tax Secondly, X.X of tax a effective XXXX benefited expense rate million. in from non-cash reversal

the have when effective add negative reversal, earnings expense rate outlook. up the approximate tax of XXXX share non-cash are been in These in with to tax items per effective tax an expected million, two compared to XXXX XX% to impact compared X.X this rate $X.XX and Excluding XXXX would our XXXX.

Moving ocean expect the to to we for be income approximately quarter transportation of XXXX, first operating breakeven.

lower XXXX. we X.X operating out to income logistics, things to I first point about expect achieved couple outlook. quarter our million than a of For want in the be

the Transportation during first the vast expected modest expected the first and to in the amount quarter. financial to majority is occur of Ocean XX from financial estimated impact the is segment the segment impact in quarter First, occur during COVID-XX of the logistics in estimated million a

SSAT in negative million in that is X XXXX, for at to Transportation quarter XXXX. comparison adoption year-over-year and the second year-over-year be negatively result income approximately accounting a variance respect expected year-over-year first comparisons lease expect reverse from impacted with versus SSAT to quarter time. Second, the the occurred for on that equity positive in This we to Ocean by

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

Matt Cox

the the the conclude Service Hawaii for To vessel Joel. remarks, of our both point Island in home trade and not the century. throughout our facilities complete, Hawaii the vessels upgrade stretch Pacific the new built in we’re and When into first lane we most to prepared program and service our well touch our Thanks, phase facility. the of are on Sand the modern

leverage near the and intensely remain on flow our of generation focused we cash our peak end quarter. this managing as leverage at We

customers and Coast the our on helping disruptions to by U.S. West in through committed COVID-XX. network, also throughout We chain supply Asia caused the our managed

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

Operator

Inc. Thank Instructions] from We you. Jack Stephens have first your question [Operator Atkins from

open. is line Your

Jack Atkins

Hi guys my taking questions. were Thanks for afternoon.

Matt Cox

Jack? are Sure Jack. How you

Jack Atkins

doing I’m you. Matt. great Thank

shutdown in I there when guidance XXXX, late is occurred have summer degree to as I the your So, that about to of out cleared was know and at late unknown I what for will and West a to and be question lot to as out that COVID-XX this into the benefit that are of the this me backlog look look guess in is think there a spring and as first your we get have some the of there, of forward and into business, sort just you the your factored I back the your I go potential clearly impact could Coast range? guess on sort and but that, significant we you pretty that, for guess third second business XXXX quarter that early

Matt Cox

we period than good question was that in cancelling international element SSAT. slower of occurred are a and ramp saw It’s the going China. Year to much day post approach that hurt the, the dynamic New lunar saw story, to up the because a We the ocean Jack it is front and situation a that’s usual was of factory curfew in said number of the pretty a way sailing carriers shutdowns a or as every us, clear there’s like but Jack which what this you we that new it’s

is the – own be going to how we this and past million, it those to is the and that once $XX period, those and could is we to terminal. do Jack dedicated negative our clear have so get and be disrupted assets see network impacts supply question we say So, we but congested what chain target didn't we

supply things expedited offering that are an and going high is anecdotally come they’re we behind when we’re from hearing be have their in that our to chains be to so back We replenished and service service differentiated needing demand. our customers think

service full the Okay, X has relatively X the after weeks are so been CLX and a year. our or of Lunar without was doubt. for But New post of Year full rest the historically then

So, There mentioned extent into rates an Jack. is upside? section a the in very are and upside but the there is offering primarily our disruptive even upside, volumes be because get our freight There’s I more service relatively full will to situation, as there upside. be we could differentiated

something we we’ll difficult to upside difficult do a into see forecast but kind predict that happen was that. of have for to us orderly that case, we in to call where definitely here, the it going really It’s not have what’s see or recovery you latter it on somewhat and to would and built wheels, whether our make

Jack Atkins

happening. things guess I add if time start spring to correspond in contract recover to some going to are And renegotiations to just that’s when that, to the

that on as So, things there that side I this at time be spot your about could well, or your tight am be thinking a chance benefit just I how thinking that CLX not could given contractual is a not business, of could rates as correctly? guess about that well, that but just benefit the

Joel Wine

Yes.

annual our and capacity redeployment from into disciplined we lane carriers our also week. that insufficient capacity that the international is help is managing segment, I if that the market, would the ship carry additional help every of trade trade in think remain segment, the contracted that the to there freight the the extent or a ocean to PCO would but off of we’re

carriers with those that are ships from our are very different people to TEU fill XX,XXX them with So, discussions the anyway. trying

rate about really the be and market but if going both which freight is, contracted annual one, market it’s constrained, I being point your the this the if is more – spot will selective become effect from that’s think a think good comes it to both pass. spot to I and cargo, benefit and So,

Jack Atkins

who really on a moment, a in very if this the head that question strain on I competing best think ocean a I’ve I as in is if mean within of international Okay. quite are on to that times That’s in carriers, for thin helpful. of your margins. put One lane transpacific sort Matt just more the you bit observer you could, of that putting trade operator market got

I about hitting are the see market some through I thinking XXXX as the the face just you we pretty So, general that coronavirus guess here and combination mean time? could in financial this given you the how some IMO of look situations year, difficult carriers at same

Matt Cox

to able I number think the are carriers debt ocean we be international very have like recover going think questions are with them because be the first carriers I not of fuel or recovery high they of problematic. could for overall levels, cost clear for to Jack. A fast to very ocean are materialize congestion going a disruptions and quarter carriers the and the factors somebody very because slowdown results one international that the to for of very crystal open low-sulfur to the I does ocean extent the is or take two the I ball mean, other demand. wouldn't extra of think international this in is, of more expensive negative

ocean the will steaming. international for turn another and out it could for and slow back on it challenging think example IMO to year carriers be result I

let that get, but this that terms of the not unique CEO this and it Matson's would way. ocean be offering in year, we put sets of me I service to just want slow carrier apart, down chaos of service CLX a All an international

Jack Atkins

it It’s Hawaii. on Absolutely. I’ll over. quick One question and turn

you feel feels of like positive? maybe But certainly turn time you in lane, which like to here. end my growth XX to a corner year-over-year slow on positive about up do back we're you’ve growth talk wrap to kind positive Just it for first saw because happening can volumes a in again, that the turned quarters there, have a what’s more we Hawaii is

Matt Cox

number contractors the disappointing. by a people supports we out of in like I and it’s that quarters we're about are with building been I Lane the in in in lack think fundamentals state in economic so in our Hawaii these after market as the I that’s various that year we’re feeling that been and relatively the growth we’re Jack. think growth rightly modest talking the slightly are pointed as Hawaii has market upbeat with trade projects, right, of talking this have although this you of going given a customers mean, to hoping the perplexed where said, see we’ve pretty strong growth of number

So, okay are now. I feeling we think right where we're about

Jack Atkins

Okay. much Matt, time. very Joel for the thanks

Matt Cox

you. thank Jack, Okay

Joel Wine

Thank you.

Operator

next comes Sidoti. line from Steve Your O'Hara from the question of

Your open. line is

Steve O'Hara

good afternoon. Hi,

Matt Cox

Hi, Steve.

Steve O'Hara

Hi.

on much quickly the how that versus quarter ocean first SSAT just Transportation, transportation? quantify breakeven did is from lower expected Ocean pure of to Just come you for

Matt Cox

but logistics, occur and be we for there between total vast believe et the No, be didn't. is we Steve and What other SSAT. did Transportation on be businesses, will we majority would our down will Ocean break we COVID-XX of it million didn't modest CLX in QX would say meaningful of and the XX impact do cetera, – the but further SSAT that impact impact

Steve O'Hara

think last Okay. year, guys I or as And at that I almost of income but an put or I think you million by I guess was so. is it X.X, mean, up operating X.X I look was, SSAT most

decline seems like could isn't be? maybe seems I – to bad as it significant pretty year-over-year what impact, be as mean, the I So, fair despite a guess maybe like it

Joel Wine

or by [indiscernible]? for saying you Are COVID-XX itself

Steve O'Hara

I this that breakeven looks then within or Transportation at Yes would you significantly guess. Coast that be will mean year, down ports, hit operating I It know West contribution to you like income last think were pretty Ocean would a SSAT, year I without almost with have expect be and volumes SSAT guys there. I the

So, like it's just I looks? not guess it as seems that as bad it

Joel Wine

vessels. a new That’s of of importantly, it it the reaffirmation a this, piece as we we’re Remember, the million all is do $XX now. underneath from benefit of seeing and

a deployment So, for year's this instance versus be will first deployment. quarter X-ship XX-ship

core around this is these some battered been like it the other profitability So, underneath COVID-XX. by has factors improving, of

the in of from investments. will be certain numbers So, trends this positive year's benefiting those

Steve O'Hara

And were CLX the of can I you are terms CLX, right that now, service? the right what now conference what utilization still just out sailing conditions in at of about may were guys capacity right about think service you recently a you talk like with now, Okay. is be talking

Matt Cox

I Steve can that. this is Matt. Yes. do

international I to Hawaii part is not an your Okinawa. We, a West Coast of of in lot requires for because any it to point So, and part right. for the the network be that it’s back load avoid first freight unlike think of our in Guam areas, sailings and integrated did

So, we not. did

reopening this we're year increased week we utilization the lower much a New freight are getting saw we think say shut demand factories post to average and what week that I improvements. I than every as the is – Year checkpoint are in without week-by-week think levels specific, seeing this Lunar we’re factories seeing or XX%, I volume as down, are would but a likely as we’re I seeing what well XX% just sailing to too see

items an to improvements which the do embedded and expect see We continue get around other and interested onto and in million is very typically walked is the late is it trying is impact continue SSAT service. expect moving Joel the We we that that in in CLX through. to our typically But with to to that that from quarter seeing go to that first to know together environment here. week-by-week we’re thinking and $XX improve

to we So, to demand. continue that think have going strong we're

Steve O'Hara

me of follow-up start maybe full-year you things there things the after to Jack's any that come uncertainty? of like guidance maybe little kind kind know mean chaotic real you out rate know Okay. into a baked have Is rate is to a you I so and fair, you benefit, year-over-year there of China within a assuming are know you expecting assuming didn’t And should sounded up. are some then given flat kind clear benefit is, to it one of but or benefit, muted just to SSAT question, much pass you

Joel Wine

Yes.

half, market premium XXXX we’ve CLX XXXX. start we rates and the Transportation or the which within going in that we’re Ocean is, and freight year the freight we see describe would of will like are second our have that seen expect very half to XXXX in the remained rates to And the second strong. segment that I call feel way XXXX the let's just think I

significantly not that what a to market. we transportation orderly What service charge would in have have healthy us meltdown a normal allow factored than as in offerings we more premium seen our competitors in

it which orderly be shifts. ships our chaotic to are or a whether and occur our occur, limited is could be could some given it forecast market it fully does an market if So, there we did not size upside likely but great that,

Steve O'Hara

you Okay. Thank much. very

Matt Cox

Okay, Thank you. Steve.

Operator

the Ben Stifel. next from of Your from comes line question Nolan

Your line is open.

Frank Galanti

This Frank on is Ben. Galanti Hi. for

Matt Cox

Frank. Hi,

Joel Wine

Hi, Frank.

Frank Galanti

Hi.

capital priority a renewal of of the growth finishing last the outside Is warehouse for to first We acquisition? initiatives and program Matson would saw redeployment that bought Merck Coast. kind leverage time, build reducing but interesting I then in are something new kind fleet tuck-in program? there be a the So, week, of is any over know West obviously as is that

Joel Wine

Thanks Yes. question for the Frank.

growth trade been So, opportunities looking for the across organic line. we’ve our interest all of

been vessel has and or been for even in more lower at off this that’s our footprint expand into locations. four to years on three our or whether other So, to business XX look customers, though for leverage going build today ways continuing program we’ve

were and a together of to So, & from business more with business a Transportation our Cradle example that. originate good Ocean The is piece of Grave. trying that Alaska is segment to we’re Oil Gas freight logistics

services hub-and-spoke off grown locations in our and some adding by in we've Pacific. that Pacific and the So, operations

also increasing, with criteria, if for but that strategic been and are we believe forward go so we acquisition those also told we has even actively opportunities would ratio kinds can to we organically, So, have we going our finance we hit continue looking at M&A to them. of our good investors those been saw and look leverage though

change no end all the our to of build So, with really of initiatives the program. vessel we’re that now that in growth coming

We’re of looking both ways. to grow those still in

Frank Galanti

is the good, talk further a mentioned, automobile follow-up lane, And I volumes looks container but for guys as from a happens that the had there you or a Jack thanks. dip is Okay. of pretty that quarter-to-quarter, a that on bit trade just a or potential side? a bit, Hawaii on declines decline That’s know seasonal then could helpful kind about I a timing of but little the and took if automobiles

Matt Cox

Yes.

companies notice you being and don't often as talk auto sales Frank three cars large is, retail through we the principal of Hawaii carry consoles, or but two cars fit as driver in Most explanations quarterly approach the while So – make our of volumes all and a on auto we of that profitability. that competitor will auto go volumes manufactured the buckets, the listed, we [patient]. share about the cars car our different those into our are does

carry relocate We of on perspective privately the people military are also vehicles, cars. from carry. our owned or focused think profitable what those cars different carrying we as from to have moved segments And, been we is we state, vehicles I

in those we’re is situation on than the car cars carrying cars to lots because money of of lot ourselves actively lot rather cars. those, so years of number not a where making So, the a profitability down is between and cars there come of prices carrying of carrying a over right and [indiscernible] competitive the manufactured have point doing what and

so on been and has a and next will make our where approach that are of cars to lot of so that spend we really them. honestly and approach there remain our activity lots And nothing

less down cars. assume profitability because our we’re shouldn't you is that pairing So,

in we We’re the trying just be to carry. cars more selective

Frank Galanti

That's have. of Pretty a lot Thanks makes helpful. much. all I That so sense.

Matt Cox

you. Thank Frank. Okay,

Joel Wine

you. Thank

Operator

[Operator Instructions] from Steve have your Sidoti. from next O'Hara We question

Your line open. is

Steve O'Hara

Thanks taking follow-up. for the Hi.

the things may let’s Just just missed guess you be XXXX I outside scrubbers talk kind cetera. acquisitions in it can of about, on Sand can program including nature CapEx, that about of the just of in Island deck, but the ship you talk ships, et CapEx maybe slide outside and and of of things for I outside and say XXXX, you know, or

Matt Cox

Sure. Thank you.

So, new maintenance level year. around vessel spend a big picture believe is CapEx still $XX we our absent any million

will higher commented in will I’ll scrubbers. and beyond, but We believe, explain. be we of some that are here these continue, than biggest will the and that projects XXXX continue XXXX items in The will haven’t we

this year, will So, each approximately $XX and enacted is that’s the scrubber. alluded and an Island. million big piece are three be you which is other Sand of what work infrastructure additional so There million at mentioned to, $XX those per the

some final the trains finishing installed and work we the investment So, three the well. and backup power those year electrification now is last – storage on that power we’re for of pretty and and the as XXXX, in cranes the significant mainly

continue will in that XXXX. so And

number the of we then work of and the should because mainly really in XXXX in million] will [$XX Sand there as and the be bit scrubbers of the we’ll little and we work towards but say So, that the and over sand get end have be over down Island the [$XX million] island passing a more in XXXX closer year. timeframe, number XXXX glad on XXXX, still to that will to details

Steve O'Hara

you Thank Okay. much. very Alright.

Matt Cox

you, Okay. Thank Steve.

Operator

Sir, further this turn Matt Mr. like please to back showing conference would at now I'm I questions Cox. time. no to continue. the

Matt Cox

Thanks, operator.

Okay. That’s quarter on everyone call. it for with the look us on up our first end. catching Thanks. to forward We

Operator

Thank have today's this day. a wonderful for conference you gentlemen, and your and call. concludes Ladies participation,

may You disconnect. all

Matson (MATX) 25 Feb 202019 Q4 Earnings call transcript