MATX - Earnings call transcript Q3 2024

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Operator

Good day, ladies and gentlemen, and welcome to the conference call to discuss Matson's Third Quarter 2024 Results.

As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Mr.

Justin Schoenberg. Please go ahead, sir.

Justin Schoenberg

you. Thank

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

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

Matthew Cox

Matson primary of income China higher on very those call. consolidated both was Starting our the had rates operating Ocean third year-over-year expectations and the year-over-year that income. with service driver and on quarter in in Ocean saw thanks In Transportation, freight operating Slide to Thanks, and our exceeded a Transportation Logistics. Justin, higher strong the increase X. significantly

lower from saw For income and supply in our we contributions domestic and Hawaii tradelanes, increased but In operating to higher volume Guam. services. year-over-year higher due chain management in year-over-year brokerage transportation volume Alaska, year-over-year Logistics,

the our updated tradelanes, a service third the performance and this in outlook for in in the SSAT of China our strength performance we're will raising outlook through of quarter fourth and the expected later third detail XXXX. more go now go of will As our on quarter, result our presentation. I our into quarter logistics. Joel

report, which slide, have on a Economic been tourist projected slowly supported will X. to rate, Container XXXX, in The decreased pace economy low the turn According slide. our in arrivals. stalled third so continues X.X% in primarily weakness I So yen Hawaii's with quarter XXXX third statewide to economy grow in service lower due general the please rate. next outlook declines arrivals, U.S. to our the arrivals. by please Japanese to Hawaii activity sluggish Hawaii exchange to demand. construction wildfires continues turn to tourist tourism in and dollar the year quarter UHERO's growth low slowly volume full of to increasing by year-over-year. is year's the decrease and was by by growth the last through be in the Maui unemployment recovery following the impacted Tourism go in Slide grow next tourist impacted to in

inflation result to last in continued volume interest lower we no as XXXX, of and challenges low income primarily lower discretionary rates. population level tourism, growth modestly or the due expect in year, than For growth to a be higher achieved and

sailings. X. China year-over-year additional due XXXX of quarter X.X% was in Matson's our volume to on to third two Moving service higher Slide the

elevated and services to XXXX with chain an supply quarter market. as continued were continue year-over-year. retail U.S. categories during demand and services a From third freight rates. a quarter rates We see like third freight CLX solid consumer turn quarter our environment, transpacific for with than the resilient a higher the Slide demand. and primarily strong peak MAX strong conditions of seasonally stable average as well to e-commerce freight The overall our economy Please in X. demand tighter freight strong to coupled driver garments rates supported to demand were elevated these grow faster during sales U.S. perspective, achieved e-goods. due and both continued demand and to A E-commerce significantly be traditional for the season retail underlying

and routing in to conversion to West on as and management well tighter Gulf e-goods Red through consumer airfreight in augmented the traditional U.S. to Coast the risk some the to shifting impacts continued response East vertical. see as of Sea disruptions supply conditions, chain With particularly from We also the respect the was to MAX, Coasts. negotiations the CLX continue peak ILA of the in by against

we as uncertainties, peak a Looking quarter in achieved proposition X.X% to year-over-year we expedited geopolitical eases. lower differentiated the ahead, food retail than economic to fastest container the arrivals to quarter, economic, stable two unemployment the visitors. to in chain continuing the supply rates next lower services persist, and in Please underlying the by as expect the third Guam economy season the in remain slow long Guam, average Matson's most airfreight to demand achieved the remain recovery been and significantly levels tourism. and value segments. services and geopolitical fourth the with for on low beverage quarter as the Japanese but the from to have and Regardless growth higher than year in with demand compared third Hawaii, rate, we tourist slow be focused consists Guam decreased CLX a MAX our the In near-term, due the and the the rates impacted freight as ocean Similar In XXXX to turn in China reliable of deliver service but as of the expect ago period Transpacific. volume slide.

lower expect slide. we than third X.X% and higher volume be Alaska, last turn XXXX low In Alaska, to achieved year. Please to inflation. growth job XXXX, economic the supported rate, lower expect quarter year-over-year level the due In for container demand. of growth retail-related a For levels volume the in by Matson's increased next continued container to we the near-term, of unemployment

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

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

be to an lift expected XXXX from due year increase full volume. higher than For XXXX, in contribution expect to we the SSAT

than Turning to and third results approximately The in from at Operating supply quarter XX. $XX.X on Logistics now higher Slide income year or million the higher brokerage. million $X.X chain ago period. management increase the in primarily transportation the contributions was due in came to

benefited service a stronger management condition to chain transportation those service, supply business China demand. Our benefited from international market from in our our intermodal similar brokerage while

For Joel our of operating level achieved be income XXXX, expect to we turn review financial higher I'll a call quarter the to over of performance. last the now for fourth modestly year. than the

Joel M. Wine

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

in respectively. the and higher million, Ocean and $XXX.X third increase tradelanes, from was year-over-year to quarter, with due freight income the contributions $XXX.X The in $X.X $XXX.X Transportation offset in primarily the significantly China to freight in third of vessel million For income higher quarter increased higher Ocean operating by consolidated rates million, operating partially Transportation higher costs. rates Logistics million operating and domestic

to We year. months Net million decline year-over-year income a past XX.X% between trailing to was year-over-year in weighted shows logistics income operating Matt allocated in the a earnings $XX.X cash the the Slide turn $X.X how decreased XX debt chain noted, diluted This increased in interest quarter quarter. had the of supply expense due X million from and contributions primarily the outstanding transportation in brokerage. average diluted flow increase the to X.X% shares and in by per our As Please decrease Interest with difference to of higher year-over-year we slide the increased income outstanding. share due in XX. generation. XX.X% due management

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

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

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

our Turning debt levels. to

to With second Slide the Our million of million debt quarter left-hand page. that, $XX.X was quarter outlook of of the the from side third for $XXX.X the of end XX and me reduction $XX walk total now our the on a let XXXX at of quarter year-to-date. turn fourth million, the end this through and

for year. be of expect achieved Transportation million income We than higher operating to XXXX the $XX.X the quarter last Ocean fourth meaningfully

but year China to the in in and higher the our fourth the expect achieved service elevated the period, quarter to this the see of year the in rates rates significantly than third achieved than ago levels quarter as season for eases. demand We to peak average continue be lower rates

the aggregate, year in expect achieved full tradelanes to a change U.S. we domestic absent significant our the in in of levels For the XXXX, approach trajectory economy. volumes

For last be Logistics, year. than we operating the in expect achieved higher quarter level fourth XXXX to of the modestly income

quarter in tax expect an we to of have Lastly, effective the of XXXX. rate XX% fourth

tax slide, side right-hand income following $XX income approximately Depreciation XX approximately amortization. for earned million, dry we refund $XX.X be dry-docking expect income includes expense on $XXX $X to $X $XX this million, million for was in this year. payments dock be million. approximately items quarter, interest as approximate federal Interest the our April amortization second of this of to million in the that inclusive approximately noted million. to of And the on and be year. $XX received to the full and Interest outlook On million other of

at other shows said previously we Compared what payments our and capital The $XX for $XXX new reengineering We in for expenditures full to our million. LNG the million on quarter to million Slide to XXXX. same to CapEx and August, range the provided million our our $XXX to and for increased projections our call projects slide is Moving XX. million. vessel versus previously, our milestone $XX this range on million maintenance million tightened to table to by $XX year slightly $X million $XX second $XX

So next our exiting LNG projects $XXX we to week. to overall million. in vessel for in turn back expect we year, like total completed dock be the expect note to service that with CapEx slide. would to starting Komanahila million dry of of now I the we October, the Please and that $XXX next all

first Aloha conventional We Class officially Shipyard delivery, dual these Pennsylvania. vessels began the first both that construction XX, of vessels of Upon update are fuel the share the operating capable the new our on of to on engines fuels steel new marine with LNG. at on have will Philly in September and X cutting excited

to and XXXX. Please per vessels We XXXX delivered vessel to be be X to table in approximately containers our expect the quarter the build for payments expected milestone turn more The now once in carry of Slide in fourth program. service slide currently remaining all we XX. expect shows on the first reminder, are delivered new X vessel the our a service. year the XX,XXX China As in vessels to

cash These million combined $XXX in million. X XX, $XXX and As CCF cash milestone payments. of balances and our we of the remaining had of cash September exceed equivalents deposits

are So the position a great program. in we new funding on build

call October, in payment Lastly, referenced that will over turn quarter Matt fourth the I approximately back million. now made remarks. $XX milestone closing for I would to out the like to point of we

Matthew Cox

Joel. Thanks,

lower third service. very And were elevated rates quarters fourth than be by results quarter, consolidated primarily although our operating year-over-year China in X remain year-to-date driven the income meaningfully last the quarter. the in achieved to Our higher our expect China our in service strong, rates elevated, those in freight as we

As note. high out a XXXX result, we expect to on close a

some in this any earnings the chain XXXX. As the at expect conditions. if I Transpacific but unclear it during and said on will freight the moment, timing to the on geopolitical elevated of moderate, underlying supply normalize elements persistence we tradelane depend of the rates of point, risk the economic, last is call, will At

We back provide the will ask to your questions. to until our February and wait call our outlook call for I And year with earnings in the ahead. will operator turn that, the for

Operator

comes And first our Daniel from Stephens. Imbro for question line today the from of

Daniel Imbro

have we airfreight I fallen, obviously, quarter strong. the ocean moderation you're backdrop the remains want how as topical. maybe the left season? start sounds peak tight. in maybe rate but on XQ, on to It but near-term side, Ocean one was like looks And have third market a expecting Matt, broadly trended it like rate rates rates some

about we but pricing? And investors guys like to anticipating maybe should your what think don't as is, down a standpoint of rate about I help second way you a just you part to quantify it, sequential how expectations? step think calibrate know you're question typically So can that any from

Matthew Cox

point the we're moment strongest second a the is quarter traditional more and step about earnings. seeing. the weakest. with followed what we moderation if quarter, just by look and the note to is QX versus quarter that QX is take your in first to always expect in you would just see answer and I'll the say quarter the line back, I question third for the But a our fourth you a then Yes. overall opportunities if And specifically more first

going And a base itself, a the be repeating to so, into that is higher there's pattern expected quarter. expect we we but on that initially than

is into distribution the selling various at our hand a and dynamics, Thanksgiving so look Transpacific lot get frankly, on product season customers, seasons. large of the and the into as you If the you warehouse the they on of globally, in festive that and on water largely Christmas of the its product the carried trade or for have is way systems

We as seeing So, changes X of a a retail. couple sort of over to cargo that have last tends to There's little traditional been years. seasonal. moderation see the be we're of there. That uncertainties structural more occurring sales a compared couple and a traditional less e-commerce

mid-January. four, and that questions five that's we There over ILA element the are renewal And continue. so the that's last happened an continued three, about expect years, to some contract

We early year. an this Lunar New have Year

the And of election the factors, happening so, are some But fourth there all tariffs. things that and are quarter. are on the presidential margin that course, potential may impact those

specific, feel of the quarter, back fourth these the performing about to give it. going be above going color. But able as over I more I'm on events lots we well to any that quarter to provide air in can So, the quarter, Joel to we to previous things on fourth the fourth have year. the the overall, fourth color be look questions the in he to then turn think above up we're in if occurred see still one that And once to trying with well more regard quarter, be to

Joel M. Wine

I think the all points, you hit Matt. key

the Daniel, due So, rate lot trends of this because environment have versus just it's discussed, that expect to earnings I mentioned. quarter, mean, strengths fourth the we year's we're meaningfully just Matt and last higher a going Matt fourth of quarter to and

there. add to really nothing So,

Daniel Imbro

in what as as lock reprice I you've 'XX? ships then rates because guys in. above I about ships of chartered half as of could this reprice a of noted few tailwind CLS margin last when maybe charter MAX mean, back and into to And you the you've the the them next line, of years, market operating these begin And on you we have be think costs? year that follow-up question, you when those year kind think do those some locked

Joel M. Wine

Daniel, thanks question. that for

into the actually XXXX So, ships our MAX we've in couple into charters service XXXX. of actually extended now six for the and a all

the now. tight So, is that market I tell still pretty charter you right can

or have But for say, but lower charter ago. will of a around be little huge, moved were, XX favorable XXXX, let's won't charter bit million than $X in so XXXX. of months at be number us. nine rates there market relative we're or It costs where So, up cost to looking rates a

XXXX most of cost we there locked XXXX. bit The lock into good have thing to now little service to a feel So, benefit we side. that important really the and really us on that was meet that these vessels our and in requirements,

Operator

And comes our Wolfe the from next question line Research. of from Lacks Jake

Jacob Lacks

like freight import in lot How should a guess this big lot that just reason structurally the robust do domestic is? import of it this is contrast at So, a we sustainable pretty some I to there we remains And forward? data get. higher think Or look you feels levels picture, maybe of data pull is the be here?

Matthew Cox

Yes.

of Jake, combination it's, two. think a I the

I health to we in out economy remains one and consumer, think know look underlying we talked hanging we're that's there, seeing I in consumer of factors print the which the terms that GDP if of about just the continue. we've U.S. the expect the what strong, the of and and came demand. at in main U.S.

conversion a a traditional things is that's positive. that maybe segment Expedited talked faster, moment do are seeing of we, traditional We is and relative elements in ago, in than the think about faster As of see before, structural, E-commerce one we that growing Matson move far that Transpacific as that e-commerce to more benefit commerce. the e-commerce our the to I we've about which sales. believe really I two talked wants the retail are

airfreight footprint. Then factors. think of and cost its those for we is taking into who some of some a conversion are ongoing questions about significantly reduced also are the factor contract customers, our for the think advantage renewal. customers We other lower a ILA We uncertainty I that COX around around expedited saw those also significantly extension, see product

And renewal, it our making sure we as They're some over given customers, to into adequate we some contract also, that of XX that the until inventory, the have in now, through any excess I business. potential are that's adequate it understand settled. by moving their were risked that but factors, they Those we're seeing playing inventory not Coast West told routings. our have inventory, finally strength are way find the disruption think, of January

Jacob Lacks

And think Has of over year. in anything changed and XXXX good called beyond? then income normal you've the past you the to in maybe baseline respect more try of and operating normalcy in XXXX as of to start of we want more what a I a past, year sort thinking view if

Matthew Cox

normal. Yes. a to taking I the We knew could our our when ago, earnings. higher this when year a XXXX. would There new during then saw as mean, last. want backwards weren't is or actual and just show events significantly make be working an they everything it should had I don't the We overtaken thought we performance day And step and occur. abandon going performance extraordinary could have two question, pandemic, we -- of XXXX in one idea in I happy that XXXX, to to comments.

Sea would really positioning. react or point, out carriers do would really down a to of in think the those. meet market, when But whether positioning. entire reduction would normalize We some But some of we whether likely our to we in conditions. positioning the chain Matson's be new about we our our Red to and to product transpacific other it's that or or geopolitical these supply that other bit to taken given that think somewhat 'XX It's at will And uncertainties, our normal do uncertainties can really freight sympathy something whether I and like it's higher. market our say. change control rates, and our hard in it's changing better good have feel than offering, both occur, turns hard know ours be We a like performance.

#X have the more in that that CLX the with China remain if being anybody believe and of of reliable to the service, can being fastest harvest economics #X, continue we're ability and the expedited to most than MAX to going the market we else. We

So that's a some the just of are long-winded answer, thoughts. but those

Jacob Lacks

Or in at six quick costs keep fleet? the to a is Could at a just good the least Or million expire you charter of $X then mind? to a run going maybe contracts in rate few And of in five? in with scheduled continue there then from couple another follow-ups will on Are XXXX. down then? And least were step MAX think be in back to vessels to I earlier. you just the question the XXXX move

Joel M. Wine

and feel million arrivals. So, $X to question, service. is first on-time yes, on the what maintain adequate provides number for us the that is on-time Jake, we so That flexibility departures

So, permanent of as think fleet. we that six-ship a really

that So on. we number that's the focus

And so versus $X XXXX XXXX the million in is number. yes,

in then For won't rest the XXXX, up be dramatically different. got They and we've a couple 'XX coming in XXXX.

a to not question, step that fit the world important down us want having going unique to I the that. of our be vessels this all in and thing Jake. Again, 'XX there's between 'XX most meaningful of really requirements. second size Not the vessels part So underscore the to service is meet for your

and we've lock 'XX, we in. quarter important We've fleet at in that done the was MAX for X and 'XX for 'XX. service it's important them to our or objective that, had most right find the So looked the last the us vessels, as in

Matthew Cox

add Jake, other this comment. is one I Matt. just would

charge premium in are a of XX-day extra big we carrier think an rotation that we this that so it's allows that differentiator. the a into world for a delivering We incur. are outperform committed us to time. ocean only extra It to adds We the cost our rivals we that ship on significantly know and because

recovering So more cost. the than

and and deliver closure, be our to and port there's a So because is essential a different, the fog it's to if affects to model branding that we able think everyone.

puts everyone better us in ability faster to respond than a Our position.

this kinds certainly is pays investment itself. think more of for an than can't control the other weather that we but things, we So or

Operator

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

Benjamin Nolan

on was is X first got questions. I My meaningfully better. SSAT

sort lag effect I SSAT think you Southern of and California. that was a Pacific because to Oakland last Northwest the overleveraged said to there quarter, sort had of relative is

So all, more second that that about in the so volume, as a does thinking it and about you has and look there California, But all? and CCX like at category. of first more the had there's the -- the part coming first of then volume Oakland that question does into volume that lot resurrecting mean more is, any Northern is think

Matthew Cox

Ben, agree Yes. this call has with conference is with this This an Matt. voice. person I will you. got I -- awesome and helping us who's

So you. added the your terminals. what recovery an calling through of to its that I just we new There I talking XXX% pandemic performance. and side. the XXXX anywhere. the that are we we in strings about the talked were terminals think more when saw agree slightly over regard with at beyond customer seen to were But other service sort Relative beginning about likely said year, operating With of no JV, our moving had are of gone vessels to got important that orderly our a bit we've comments, changes, transition we of larger better the little SSAT taking we

We surplus would we hoped capacity also we said P&W, terminal particular, be. the was, lighter that it where than had in

incremental ILWU through the saw we volume result the process. and more ILA happened what's with our return a Transpacific Then venture currently that back migrated during the over the that's terminals that we renewal. transpacific is, some Transpacific hindsight, contract of in thought of think So of we as Coast I the of contract benefit a had West and cargo saw the mentioned, take little joint as have a associated step renewal we I through in vessels elsewhere cargo bit moved as

cargo I a So over PMW There Canadian think both materially. those more about that in was volume of but threat was or down not strike concerns There calls were brought a individual that. Oakland, factors. incrementally some

little have So that there were happened. things

bottom. recovery. occurs subject way of our at to is be hit It's think How its its on that SSAT things. quickly feeling to I will lots

come hit I enough bottom off think feel we've provides definitely color if we bottom, that we've you. like for and that

Benjamin Nolan

resurrecting And thinking any on then Right. the CCX.

Matthew Cox

yes. mind. of No, I my I say Yes. it's a good question block out that question. Sorry, would

are how always are we ourselves this to how brand where leverage We asking we can going wonderful we've and grow, created.

we our whether at all as to be there's Coast we service sites a shippers be new factors can in it, on to to it or of on that's that have other infrastructure we be competitive anything, decision. whatever. be are is able through highly airfreight, think the for fast premium transport find reasonable going can't find what we our a the as can't and current we look handle it we have market or first West those vessels think that, satisfied relative that or U.S. or but sites in I If a earn X about provide ability to do differentiated we that can which the announcements to rates, with market all, charter X no we

in point, on very the the and there are few, available item one charter. mentioned this speed vessels size for Just very few chartering, his at our comments Joel on of market as

charter change. all obviously, So markets, markets

to markets at around other significant world. continue we the We can brand will our into look expand

I a think out that grow. we to we're good an how going as to figure like us something feels eye long-term keep on to

Benjamin Nolan

Okay.

little the mostly it some and has some it's were been Chinese like doing sort an that and shipper. of that airfreight question, where transport you're Temu, doing? opportunity? any and stuff, that topical type and doing? So you to sit of a in I'm it get something bit. of guys new sort e-commerce companies from of curious Is with away dynamic. for it about some a doesn't maybe within that my fit the around talking that trying Shein what you're respect especially to it of they're something spectrum problem around color for broader of pretty Is next lately, parcel you been Just Is the

Matthew Cox

segment Shein away. and evolving those market raised some for airfreight that is exemption $XXX and you Obviously, said in there's Temu and and expect this low evolving. exemption gorilla, of XXX-pound allows their all priced is via but closes. tariff products a publicly, minimis lower they $XXX, itself move evolving. are themselves that Temu. from cost They and to the The this Shein players has almost minimis structure. at mentioned minimis is that XXXX They really be to de if trade de have exemption for The point today are -- going go to minimis trade threshold de their Amazon of said that markets. this market. Yes. freight Sure. have Shein model the in Temu de Their and when created

in other customers e-commerce of ocean We that that away of our and with and we those going the looking see with need. Again, customers, de solve sell time, at expect as conversion cargo customers -- our airfreight all more like through closely product of to airfreight the of our we amounts the their especially also all over into moving we're customers, freight network whether into networks. are and those our regular while that we forwarder very minimis look macro expedited who the their at our Amazon through Temu, Shein think small and exemption discussion of or e-commerce not would customers

of lots So opportunity.

these one feeling their thing, positioned is I to good relative that work which at are we're where own tackle think parts all about the different there we're each things. now. dynamics different of Generally, in paths e-commerce trying right to probably are of but different journey not XX and the generally, they're for market, because people

Operator

further for I'd the CEO, program to not Instructions]And remarks. to any time. queue the in [Operator I'm further Matt this Cox, hand showing like any questions back at

Matthew Cox

Thanks forward to the listened Okay. on our for just Operator. look on Have after in much, call. up to want a thanks everyone call. everybody very say I Thanks. We who's the catching holiday. with year-end wonderful holidays

Operator

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

disconnect. Good You day. may now

Matson (MATX) 30 Oct 242024 Q3 Earnings call transcript