MATX - Earnings call transcript Q2 2024

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Operator

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

Justin Schoenberg

Thank you, Karin.

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

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

Matthew Cox

Ocean Transportation income Ocean performed second business those increased on income quarter. operating the In Justin, on well, year-over-year. in to X. operating segment call. Starting Okay, Logistics thanks. Matson's the Slide and Transportation, higher year-over-year Thanks

and higher strength on operating significantly volume. higher Hawaii management. volumes of was fee X year-over-year saw operating peaked Our in had income. We the year-over-year lower the primary income China chain additional In and primarily sailings. Alaska, Logistics, driver Guam to year-over-year of consolidated due service rates supply saw year-over-year

our a in in will quarter in back raising go updated of our presentation. I'll of half detail go the service the China the Joel result quarter strength in through performance we're more second expected later our of logistics. into of the our second on 'XX. outlook year, lanes, outlook As now performance our SSAT, and trade the the and

last service to turn in the please through the year lower slide. the the to So decrease next lower the of quarter second wildfires will primarily demand. in result arrivals primarily volume Maui quarter decreased general year-over-year. second due year. I Hawaii our significantly Container due go as to next our were in the traffic was full lower slide. The visitor to on outlook Tourist X.X%

to X. in to is So rate supported low According modestly second unemployment Hawaii quarter by please turn grow UHERO's to the activity. projected economy report, increasing and construction economic XXXX Slide XXXX,

While we're is supporting positive factors that of growth, market. encouraged softer performance by UHERO's longer-term recent of the a forecast reflective of our some

as last rates. a to higher XXXX in and primarily in population income and lower continued modestly to than growth challenges volume result year, achieved interest expect level the We due discretionary lower be of inflation

to environment, demand supply perspective. freight we a environment of were in consistent with the China chain Slide consumer from in the quarter. with Moving achieved see service We turn average second significantly the on customers. U.S., second X% freight dynamics and as outperform we higher were year-over-year was tighter garments on X. economic rates normalized The Matson's our to year-over-year. Please high of demand continue quarter and to volume XXXX elevated in a the Supportive higher level rates freight e-commerce rating quarter experienced we and from that during not Slide supply to the demand led X. coupled operating

continue to rates peak to service quarters. during in the fourth third expect see China season and We traditional elevated early the freight our

the less from drive freight long-term we expect turn during next in While and its feel due trade our volume near the peak sailing last interest e-commerce reliable season the ongoing In supply, positioning after rate, most decreased the Red rates, season related our situation and to with factors, transpacific confident effects, peak Matson' is services quarter East fastest the economy and container demand good our uncertain Sea strength trajectory levels the including lane supply traditional expect union about and in the and improvement U.S. negotiation, the by ocean ocean Coast Guam the rate transpacific the XXXX chain expect of we which U.S. continued unmatched labor environment, expedited the expect growth will In given demand continued destination elections. several dynamics chain factors unemployment Nonetheless, rates persist. At in term, Guam, economy long services. Please of influence these which X to normalize, expedited I'm low in air duration supply X.X% of as as geopolitical year-over-year we to the point, economic likely freight on remain rates in the China compared for the underlying the the we to we of slide. to conditions Regardless year. and timing rate. the supply degree to of X elevated and to shift lane. and goods and to trade the second depend service. some underpinned

we term, by we low last and lower economic slide. job to In growth, expect rate, for to continued In Alaska, XXXX volume unemployment a level X achieved increased levels additional of inflation. northbound the volume to container supported year. sailings X.X% approach year. Please second growth the quarter in due the XXXX, to expect the next compared of year-over-year near For last turn Matson's Alaska, container

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

Our terminal year-over-year higher due million. volumes. SSAT, venture, million was $X.X primarily lift joint to $X.X The contribution to increase higher

lift first in Although strong. half increase container of from been SSAT XXXX, volumes. strong the than to contribution Coast in volumes to be In due the XXXX on terminals we systems expect as SSAT the across particularly the year, modestly an higher have U.S. volume has not West expected been

Operating Logistics income Turning in the was a in million million to or from to The XX. $XX.X approximately on second quarter primarily year-ago $X.X in due result at period. contribution higher now the supply came increase higher than the management. Slide chain

supply across provide Our destinations destination allows from management, includes factory to and chain comprehensive management floor purchase origin order us solution operation, service services to and [indiscernible]. a

we the I last our of for will fourth to income over XXXX, expect approximate a to the with turn review achieved the quarters Joel that, third year. And call For operating level and of financial performance. now

Joel M. Wine

Slide of results. review our second to turn Matt. Please for a Thanks, quarter Okay. XX

expenses due The quarter, $XX.X vessel China, from management. In to in costs. operating refund. earnings year. a including weighted months million, higher Net operating XX.X% of income year-over-year the million Logistics, Slide second Ocean year-over-year. earned to from offset federal increased income to decline income supply due outstanding The the increased higher in consolidated the $X.X the interest the Diluted $X.X to had increased higher our operating average primarily fuel-related year-over-year. and and and in decreased For turn income between by $XXX.X share higher second Transportation significantly slide The generation. increase million, partially was in to the includes respectively. Transportation million operating The XX. shares on million, million per to $X.X the the our cash decrease of Ocean income in quarter, flow primarily Logistics XX.X% This we quarter chain X we million of XX to how difference higher allocated increase $XX.X outstanding. Please tax million diluted contribution shows costs, past due interest in quarter which interest income contribution year-over-year XXXX freight trailing debt rates expense in SG&A income $XX.X was due our in $XX.X

outflows, which million For sheet. repurchase capitalized on balance $XXX.X $XX.X to the items, operations net returning maintenance generated to other summary including cash of $XX.X dividends milestone CapEx, $XXX.X and debt, and approximately used new in million a interest deposits million we withdrawals million XX approximately for of share shareholders other retire CTF turn on interest in repurchase. Please period, share payments, and the to from $XXX.X from for flow on million we $XX.X of owners' and vessel cash income CapEx, while cash LTM and program Slide $XX.X our via million million,

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

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

our Turning debt to levels.

Our tax the received as end tax as quarter refund. interest total from related refund the well $XXX.X company's the federal $X.X a of million of reduction income Two Matson the return second of at debt On XXXX, on other April of $XXX.X quarter. tax was the XX, federal to to earned XXXX $XX.X million, million first in the million end note. items a

for and me the the related Slide million our the now walk on During side XXXX payment let new quarter, on CCF vessel that, paid third and through milestone to fourth $XX.X our of the page. a you this to of also XX outlook left-hand we into program. With quarters turn

last the of Transportation to higher million quarter the operating million higher achieved from than in $XX.X third the the quarter moderately be achieved year. the quarter we expect expect XXXX. to XXXX of fourth in And in operating $XXX.X Ocean income meaningfully fourth income be XXXX, We of

during season early continue to fourth peak the quarters. third and elevated China service see our expect We rates traditional in the to

in of U.S. expect domestic the volumes approach trade trajectory our XXXX, lines, For significant change levels the economy. we absent to any in the

third For achieved income in to levels operating expect fourth we both XXXX last of quarters the and the year. approximate Logistics,

approximately On to for the approximate approximately to income tax $XXX be $X $XX million, dock year. right-hand Interest interest income of and we payments effective approximately for rate of to slide, to approximately of be side amortization full million, $X million. $XX the and expense expect approximately outlook million, other and guidance million amortization. XX.X% dry following Depreciation be $XX inclusive dry-docking the this of million,

now slide our will CapEx to labor items the Compared back LNG from shows paid on for XX. approximately reengining capital payments capital The we first our the of Manukai. million the of Slide projects to April, line the to vessel we and projection parts expenditure to covers Matt. associated million million with turn on call remain what new in XXXX. for previously installations fund, because to LNG quarter $XX $XX construction and XX% All remaining other table for provided outlook $XX by unchanged. Moving already be expected Milestone construction of the higher to the obligations. I call over installation are which increased

Matthew Cox

In Matson the Joel. of Thanks, the first half performed well in Okay. closing, year.

the outlook at and China questions. we back expect trend uncertain, of serve for the largely the an driven and For and we remainder towards respond in higher some the while our of will call changing And customers to extremely surface our to turn remain to I At China remains point, transpacific activity ask expect year-over-year level. And factors elevated high to confident your to with we service. trade ability rates that, operations. operator freight financial acknowledge lane market in year, a performance, conditions by we supply the the in normalized demand number

Operator

Instructions] from comes [Operator first Stifel. Nolan Ben of Our question

Benjamin Nolan

got couple. a do Can that Is X? allowed? I've I guys. quarter, Good

Matthew Cox

Ben. Sure, Sure.

Benjamin Nolan

Okay. it. appreciate I

said? up through So lot say first of of you a did did SSAT, Matt, breaking all, moving not bit, the little as of other a that it much you ports, that while had what West some as was the SSAT Coast there is volume was but have

Matthew Cox

Yes. Yes, Ben, you can say that.

Benjamin Nolan

that a little explain maybe bit? you Can

Matthew Cox

sure. Yes,

and the X So as a saw Coast X in does. we L.A. Pacific X of the with terminals Seattle in terminals of U.S. portfolio X Long venture along SSAT West that Northwest, being balance both And what Oakland operation we are those appeared. then Tacoma volumes area. in case, of the Beach, And the our the that that and joint in same the did really is not operate to and generally has and increase Oakland really transpacific, yet most Northwest, north where generally first the Northwest the in in in Pacific cargo historically to fill it's appear and volume the is up lastly and Pacific in this California migrate Southern not go are

averages terminals. And explanation so the why was we that the see those of given portfolio the for geographic didn't location move the and up

Benjamin Nolan

positioned -- little trucking been great. talk interesting I've been type has what's just But bit? this the And the happening well to be great, would moving freight building see domestic lot probably the seen logistics maybe seeing, who to -- you're maybe talk demystify what a Anything it going? like a on the vein. doesn't inventories. through It is freight to. not but same know I freight. that's of we've seem has the market you the sort market can talked then really And in in same don't Where to lot what is? of There's you what's It's of thought to help the of all this a into people not it's happening side. Can ports, guys freight been coming of that on up

Matthew Cox

performing close in to we your comment what market continuing U.S. before our you we to to a But agree Matson of international inventory interesting some little and been the I or But first different. Yes. freight markets bit and It's how are same on which specific I'll you very inventories is let we're customer dynamics, seeing which appear try. very the their have the are it's Ben. think it hearing from much markets close hearing, with complicated take attention that customers pay and see generally -- you're me are question, question, than trade. What and go there more a probably sets mentioned I to customers think the domestic to levels. we're things don't be surplus better

not other for than season we're inventory ready getting so levels. peak changes And seeing in seasonal

steady. pretty remains that So

held think parts there if we own. in as -- look its the I consumer, the you has is consumer consumer the at hanging know, spend and

a the holding things around we're mechanisms other intermodal supply, seeing supports changes the and seeing that is imports. trucking some And of are good trades. been domestic that interesting in level What so well. our in of in it of the the broadly, has pretty demand really as excess pricing We're down side, the brokerage increase

been reasons congestion matches downward give most the seeing for it of more have late premium into there has we're insight pressure is and to a cargo capacity. But So consistently for lot bit been fastest different. that, all But market, reliable I service little the last-minute have willing on the to a same surplus air e-commerce I their beyond that can't because for you why seek freight. has trade. we generally and be the -- could And the the thing, for as and production we someone story on in much been the the particular pay rates of and a would orders of say to get to been,

massive strong very All in in demand of those the market things strong the are very particular, to expedited and demand for services. pointing

So Ben, that's I answer, probably it's best only half an the give but you. can

Benjamin Nolan

right. All appreciate I me I'll with And and in I this. then hanging for take you appreciate it. it. last,

I is that chain -- looking increased If think you you Or of maybe either how and can of puzzle just that expand that, focus? logistics your could I supply thinking that you but be business. as management area talk you not fits so, time the an guys me you're headed? as is say you or your where about first this remembering, organically remember business, to out the part through would it's are So on inorganically? calling

Matthew Cox

to. time logistics Happy And we've very And it's I called changes profit just right. note for first are would the you're in that believe Yes. out. Sure. also it qualification small. I the for

to between our intermodal China. It But things locations amplify Memphis story. once and it service. with to China final does as operates Matson our typically of Ocean and you part arrives in the destinations and Businesses Logistics tends in Logistics not the are it the regard know, Matson's to inside of Matson also, synergies multiple Long moves terminals and cargo our that locations. other Beach it So Dallas Chicago in highlight core

a container the the I are and that now to the well, radar, moved chain in supply a has provide that and organic change in are steady the in numbers its -- the that pandemic really over than to mean, slow again customers last acknowledgment the offering. accelerated but container sort it's relatively business small out that on -- we been -- very profitability. of load and since consolidated, is those less would onto growth expedited And that approaching service Logistics been build with terms So Matson Matson's of called into China services be we in services are the relative

story the Ben. that's So there,

Benjamin Nolan

it? sort that the to round how in about do of you out, Okay. And trajectory just think

Matthew Cox

see continuing organically. like other businesses grow many I it of our to

We container going see an have they want Matson And China China. LTL for loads to in loaded to consolidated and box growth continue to And to container into last of that that half delivered. well. brand X.X unbelievable have perform segment our the have as customers an by businesses that we're of continue in cargo,

Operator

Lacks to Our from of next Wolfe. coming will question Jake be us

Jacob Lacks

a typically just to the specific see a a in rates. big the if outperformance in could give on little but know So Ocean you it's on couple when pretty spike meaningfully. say get, a of we've I seen perspective than you degree more guide. wanted I more you're little that you thinking

models? there would we any just think recalibrating be thoughts So as helpful about our

Matthew Cox

mean, take I We're got you've Jake, Yes, saying just meaningfully to meaningfully. higher.

elaborate So that. I on can't really

upon say the just second language with that. is Just use leave would meaningfully though best we're than it chosen but your had you quarter, higher quarter last just this year's that based higher. I estimate meaningfully we to going

Jacob Lacks

And are full normalization pretty rate assuming you in a XQ, then there?

Joel M. Wine

Yes.

peak season traditional subside. to of adjustment our October, traditional excess see of fourth period, we're I we return will of point, to first expecting or post-peak normal surcharge in to we after start week half think And meaning a factors as into that so get second market more quarter the this environment. the get a at Jake, more

more and So [indiscernible] of that that a to impact all -- the a qualifications may other about to positive seasonal return traditional turn events it's really external subject negatively. pattern, seasonal

Jacob Lacks

me. And then more one for

-- long-term spoke there or guys are growth demand sort close from of about expedited demand your service, we conversion third reintroduce You how service? for how for far being from and Ocean a expedited to

Joel M. Wine

about asking you're potential third, thirdâ€¦ A a

Matthew Cox

unlikely I there Okay. itself, on a the Yes, certainly of -- but the planning we to to radar. track view it's -- to Thanks, it's vessels horizon under charter certainly able in under to our trade like question. that option on or it's a Jake. ton and it. our market likely put demand is take service not aren't transpacific if current a it but that a that, X available way presents of We we're those the it. something opportunity to I long-term conditions, we the we need different expected got an this conditions able together to good would remains say of have about would -- in respond to lane. see thinking market time be vessels us advantage charter Vessel record that the it. But being be changes would

Operator

Our of coming from will Stephens, Inc. next Daniel be Imbro question

Daniel Imbro

the Joel, guidance. to maybe I follow-up want on

pricing about how see think pull to feeling we'll you're side of to customers half? XQ volume the how kind as Just with sequentially? for some season. through Do the think about are I you talked the growth back expecting still forward? a thinking strength prime you volume growth a in stay talk curious normal season? through peak Maybe peak your the But about you you guys strong of

Joel M. Wine

Thanks, Daniel. Yes.

than round be year mean full to cetera. holidays, expect off et and Linder, CLX know, Year, I MAX were you New periods around We as pretty other much full.

full expect as season, in said, and the the we here of in early also the end the into to fourth third -- So be the early quarter peak we quarter.

Daniel Imbro

think deploying investments And then And of just you you're I pull do think with here CapEx then guess investments as between year. guide windfall that sheet, year. how forward next cash think on a you the from growth, the this a little on about some I of looking is buyback, that other up pricing, cash balance for the bit at? any you about stronger took

Joel M. Wine

Really no Daniel, to honest. be change of in all that,

just we that to line project, thing through of by item was So Manukai are because our one the costs we our project. on due actual only specific reengineering that bumped $XX project, that changed LNG up coming million

a from to XXXX, or change not of another it's period CapEx we've either. quarter, really, forward one no things and And made last So numbers to gave like we XXXX that pull that. for and

So one other some I CapEx is the just picture, specific costs project. than higher would overall, on unchanged describe

Daniel Imbro

you that's about you me a too to give one just growth a add XQ, I me much described to Let bogey the on back know XQ come term. did hear guys but third I as for near color think meaningful? You decent hard meaningful right? when

Joel M. Wine

Yes.

you segments then, year's last talk And yes, quarter. than -- meaningfully about we income year's If for consolidated. well in last second Ocean therefore, quarter consolidated higher the each operating for as performance second compare of year's this and clearly, were

be to -- it amount, meaningfully going it's Reena saying exact not the I'm read higher. don't as that as -- that's but So qualifies not

Daniel Imbro

easier follow-up. Could like be And you you MAX the South would a then string it's think see it what need the company make new it up new guess, think this China do Or lease is add with considerations? ships? one would string line, When to Vietnam, ships, decide owned ships? do to growing about Just worth ships looking about to whether setting I North of that are of you how adding long the or X you would financially? to you demand more

Matthew Cox

I'll Matt. one. answer is this that Daniel, Yes,

do vessels, we if would build foreign that MAX view Those they with radar of to comprised chartered to our -- have chartered we the string, on our moment. vessels service. the and I not as think third very way. are like likely it said, chartered I our we it right would be add were at it's that But is vessels,

ships -- course, as them on you factors the other of mentioned of moment need the chartered And able each availability I ago, would to these some and the charter factors X the like there in would Matson's would pay to demand enough that at a for but the so of sense a demand to places, premium other that the question of of a us a markets, go not much would especially that allow weekly to product, have for into in a markets operate willing make be price whether growing that profits to it to Vietnam, and is service. But that, there's of is be service us do. are level

And But that cargo markets, there so of segment. these smaller not it's isn't a there. there's in smaller some

a out haul So at for line Haiphong a couple example, of regular ships on have trusted loads connects Vietnam, meets particular, that of which in week our move CLX partners Vietnam, MAX. in up that hundred service we one a the Haiphong theater of and with our a with

we that be so voyages be to make profitable. able capacity And a those the markets need will percentage of to those confident much to accommodate greater

Operator

like now would Matt turn it I CEO, for remarks. session. to back Cox, question-and-answer the to closing concludes This

Matthew Cox

call being with for on look forward the Thanks. quarter you third today. Okay. Aloha. We thanks Well, call. up the on catching to

Operator

your conference. the This conclude for does Thank today's in you participation program.

may You now disconnect.

Matson (MATX) 1 Aug 242024 Q2 Earnings call transcript