Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2025
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 001-34187
Matson, Inc.
(Exact name of registrant as specified in its charter)
Hawaii
99-0032630
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
1411 Sand Island Parkway
Honolulu, HI
(Address of principal executive offices)
96819
(Zip Code)
(808) 848-1211
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address, and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, without par value
MATX
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ◻
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧ No ◻
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒
Accelerated filer ☐
Non-accelerated filer ☐
Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Number of shares of common stock outstanding as of June 30, 2025: 31,789,018
MATSON, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
Page
Part I—FINANCIAL INFORMATION
1
Item 1.
Financial Statements (Unaudited)
Condensed Consolidated Statements of Income and Comprehensive Income
Condensed Consolidated Balance Sheets
2
Condensed Consolidated Statements of Cash Flows
3
Condensed Consolidated Statements of Shareholders’ Equity
4
Notes to the Condensed Consolidated Financial Statements
5
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
18
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
27
Item 4.
Controls and Procedures
Part II—OTHER INFORMATION
Legal Proceedings
Item 1A.
Risk Factors
28
Unregistered Sales of Equity Securities and Use of Proceeds
Defaults Upon Senior Securities
Mine Safety Disclosures
Item 5.
Other Information
Item 6.
Exhibits
29
Signatures
31
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Statements of Income and Comprehensive Income
(Unaudited)
Three Months Ended
Six Months Ended
June 30,
(In millions, except per share amounts)
2025
2024
Operating Revenue:
Ocean Transportation
$
675.6
689.9
1,313.0
1,268.9
Logistics
154.9
157.5
299.5
300.6
Total Operating Revenue
830.5
847.4
1,612.5
1,569.5
Costs and Expenses:
Operating costs
(650.4)
(646.9)
(1,281.5)
(1,259.1)
Income from SSAT
7.3
1.2
13.9
1.6
General and administrative
(74.4)
(77.1)
(149.8)
(150.5)
Total Costs and Expenses
(717.5)
(722.8)
(1,417.4)
(1,408.0)
Operating Income
113.0
124.6
195.1
161.5
Interest income
8.0
18.8
17.4
27.6
Interest expense
(1.7)
(2.1)
(3.4)
(4.3)
Other income (expense), net
2.4
1.8
4.8
3.6
Income before Taxes
121.7
143.1
213.9
188.4
Income taxes
(27.0)
(29.9)
(46.9)
(39.1)
Net Income
94.7
113.2
167.0
149.3
Comprehensive Income (Loss), Net of Income Taxes:
Other Comprehensive Income (Loss):
Net change in pension and post-retirement liabilities
(0.9)
(0.7)
(1.5)
Other adjustments
1.4
0.3
1.9
(0.5)
Total Other Comprehensive Income (Loss), Net of Income Taxes
0.5
(0.4)
0.2
(2.0)
Total Comprehensive Income
95.2
112.8
167.2
147.3
Basic Earnings Per Share
2.95
3.34
5.14
4.38
Diluted Earnings Per Share
2.92
3.31
5.09
4.33
Weighted Average Number of Shares Outstanding:
Basic
32.1
33.9
32.5
34.1
Diluted
32.4
34.2
32.8
34.5
See Notes to Condensed Consolidated Financial Statements.
Condensed Consolidated Balance Sheets
December 31,
(In millions)
ASSETS
Current Assets:
Cash and cash equivalents
59.1
266.8
Accounts receivable, net of allowance for credit losses of $9.0 million and $9.8 million, respectively
289.1
268.9
Prepaid expenses and other assets
76.3
73.9
Total current assets
424.5
609.6
Long-term Assets:
Investment in SSAT
98.3
84.1
Property and equipment, net
2,359.7
2,260.9
Operating lease right of use assets
294.2
357.7
Goodwill
327.8
Intangible assets, net
152.9
159.4
Capital Construction Fund
656.7
642.6
Deferred dry-docking costs, net
83.5
73.7
Other long-term assets
84.5
79.6
Total long-term assets
4,057.6
3,985.8
Total Assets
4,482.1
4,595.4
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Current portion of debt
39.7
Accounts payable and accruals
282.4
268.5
Operating lease liabilities
109.1
129.0
Other liabilities
115.7
123.2
Total current liabilities
546.9
560.4
Long-term Liabilities:
Long-term debt, net of deferred loan fees
331.5
350.8
Long-term operating lease liabilities
185.0
229.5
Deferred income taxes
693.8
693.4
Other long-term liabilities
106.9
109.3
Total long-term liabilities
1,317.2
1,383.0
Commitments and Contingencies (see Note 15)
Shareholders’ Equity:
Common stock
23.8
24.7
Additional paid in capital
288.0
296.7
Accumulated other comprehensive loss, net
(6.3)
(6.5)
Retained earnings
2,312.5
2,337.1
Total shareholders’ equity
2,618.0
2,652.0
Total Liabilities and Shareholders’ Equity
Condensed Consolidated Statements of Cash Flows
Six Months Ended June 30,
Cash Flows From Operating Activities:
Net income
Reconciling adjustments:
Depreciation and amortization
81.8
75.5
Amortization of operating lease right of use assets
66.9
68.1
7.5
Share-based compensation expense
11.7
12.0
(13.9)
(1.6)
Distributions from SSAT
—
14.0
Other
(4.7)
(5.6)
Changes in assets and liabilities:
Accounts receivable, net
(19.7)
(28.9)
Deferred dry-docking payments
(23.8)
(17.3)
Deferred dry-docking amortization
13.6
13.7
(10.6)
114.6
Accounts payable, accruals and other liabilities
(3.0)
Operating lease assets and liabilities, net
(67.8)
(69.0)
(3.2)
(5.2)
Net cash provided by operating activities
194.6
344.5
Cash Flows From Investing Activities:
Vessel construction expenditures
(104.1)
(38.2)
Capital expenditures (excluding vessel construction expenditures)
(71.4)
(86.9)
Proceeds from disposal of property and equipment, net
3.2
Cash and interest deposited into the Capital Construction Fund
(109.1)
(45.0)
Withdrawals from Capital Construction Fund
100.7
35.8
Net cash used in investing activities
(183.4)
(131.1)
Cash Flows From Financing Activities:
Repayments of debt
(19.9)
Dividends paid
(22.3)
(22.1)
Repurchase of Matson common stock
(160.4)
(120.1)
Tax withholding related to net share settlements of restricted stock units
(16.3)
(17.0)
Net cash used in financing activities
(218.9)
(179.1)
Net (Decrease) Increase in Cash, Cash Equivalents and Restricted Cash
(207.7)
34.3
Cash and Cash Equivalents, and Restricted Cash, Beginning of the Period
136.3
Cash and Cash Equivalents, and Restricted Cash, End of the Period
170.6
Reconciliation of Cash, Cash Equivalents and Restricted Cash, End of the Period:
Cash and Cash Equivalents
168.2
Restricted Cash
Total Cash and Cash Equivalents, and Restricted Cash, End of the Period
Supplemental Cash Flow Information:
Interest paid, net of capitalized interest
2.7
3.5
Income tax payments (refunds), net
40.7
(114.3)
Non-cash Information:
Capital expenditures included in accounts payable, accruals and other liabilities
4.0
15.3
Accrued dividends
11.4
Condensed Consolidated Statements of Shareholders’ Equity
Accumulated
Common Stock
Additional
Stated
Paid In
Comprehensive
Retained
Shares
Value
Capital
Income (Loss)
Earnings
Total
Balance at December 31, 2024
33.0
72.3
Other comprehensive income (loss), net of tax
(0.3)
Share-based compensation
5.8
Shares issued, net of shares withheld for employee taxes
0.1
(16.2)
(16.1)
Shares repurchased
(67.3)
(69.2)
Dividends ($0.34 per share)
(11.3)
Balance at March 31, 2025
32.6
24.5
284.7
(6.8)
2,330.8
2,633.2
5.9
(0.2)
(2.4)
(90.6)
(93.7)
Dividends ($0.34 per share and $0.36 per share)
(22.4)
Balance at June 30, 2025
31.8
Balance at December 31, 2023
34.4
25.8
293.4
(8.2)
2,089.7
2,400.7
36.1
5.7
(17.2)
(47.0)
(48.9)
Equity interest in SSAT (See Note 4)
10.1
Dividends ($0.32 per share)
(11.1)
Balance at March 31, 2024
25.6
280.2
(9.8)
2,077.8
2,373.8
6.3
(0.6)
(69.8)
(72.2)
Dividends ($0.32 per share and $0.34 per share)
Balance at June 30, 2024
33.6
25.2
(10.2)
2,098.8
2,398.5
NOTES TO THE CONDENSED CONSOLIDATED FINANICAL STATEMENTS
1. DESCRIPTION OF THE BUSINESS
Matson, Inc., a holding company incorporated in the State of Hawaii, and its subsidiaries (“Matson” or the “Company”), is a leading provider of ocean transportation and logistics services. The Company consists of two segments, Ocean Transportation and Logistics.
Ocean Transportation: Matson’s Ocean Transportation business is conducted through Matson Navigation Company, Inc. (“MatNav”), a wholly-owned subsidiary of Matson, Inc. Founded in 1882, MatNav provides a vital lifeline of ocean freight transportation services to the domestic non-contiguous economies of Hawaii, Alaska and Guam, and to other island economies in Micronesia. MatNav also operates premium, expedited services from China to Long Beach, California, which includes transshipment of cargo from other Asia origins, provides services to Okinawa, Japan and various islands in the South Pacific, and operates an international export service from Alaska to Asia. In addition, subsidiaries of MatNav provide stevedoring, refrigerated cargo services, inland transportation and other terminal services for MatNav on the Hawaiian islands of Oahu, Hawaii, Maui and Kauai, and in Alaska.
Matson has a 35 percent ownership interest in SSA Terminals, LLC (“SSAT”), a joint venture between Matson Ventures, Inc., a wholly-owned subsidiary of MatNav, and SSA Ventures, Inc., a subsidiary of Carrix, Inc. SSAT currently provides terminal and stevedoring services to various carriers at eight terminal facilities on the U.S. West Coast, including three facilities dedicated for MatNav’s use. Matson records its share of income from SSAT in costs and expenses in the Condensed Consolidated Statements of Income and Comprehensive Income, and within the Ocean Transportation segment due to the nature of SSAT’s operations.
Logistics: Matson’s Logistics business is conducted through Matson Logistics, Inc. (“Matson Logistics”), a wholly-owned subsidiary of MatNav. Established in 1987, Matson Logistics extends the geographic reach of Matson’s transportation network throughout North America and Asia, and is an asset-light business that provides a variety of logistics services to its customers including: (i) multimodal transportation brokerage of domestic and international rail intermodal services, long-haul and regional highway trucking services, specialized hauling, flat-bed and project services, less-than-truckload services, and expedited freight services (collectively, “Transportation Brokerage” services); (ii) less-than-container load (“LCL”) consolidation and freight forwarding services (collectively, “Freight Forwarding” services); (iii) warehousing, trans-loading, value-added packaging and distribution services (collectively, “Warehousing” services); and (iv) purchase order management, booking services, and non-vessel operating common carrier (“NVOCC”) freight forwarding services (collectively, “Supply Chain Management” services).
2. GENERAL AND SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation: The Condensed Consolidated Financial Statements are unaudited, and include the accounts of Matson, Inc. and all wholly-owned subsidiaries, after elimination of intercompany amounts and transactions. Significant investments in businesses, partnerships, and limited liability companies in which the Company does not have a controlling financial interest, but has the ability to exercise significant influence, are accounted for under the equity method. The Company accounts for its investment in SSAT using the equity method of accounting.
Due to the nature of the Company’s operations, the results for interim periods are not necessarily indicative of results to be expected for the year. These Condensed Consolidated Financial Statements reflect all normal recurring adjustments that are, in the opinion of management, necessary for fair presentation of the results of the interim periods, and do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete consolidated financial statements.
The Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, filed with the Securities and Exchange Commission (“SEC”) on February 28, 2025.
Fiscal Period: The period end for Matson covered by this report is June 30, 2025. The period end for MatNav and its subsidiaries covered by this report is June 27, 2025.
Significant Accounting Policies: The Company’s significant accounting policies are described in Note 2 to the Consolidated Financial Statements included in Part II, Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
Use of Estimates: The preparation of the interim Condensed Consolidated Financial Statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the amounts reported. Estimates and assumptions are used for but not limited to: impairment of investments; impairment of long-lived assets, intangible assets and goodwill; capitalized interest; allowance for doubtful accounts and other receivables; legal contingencies; insurance reserves and other related liabilities; accrual estimates; pension and post-retirement estimates; multi-employer withdrawal liabilities; operating lease assets and liabilities; income (loss) from SSAT including estimates for impairment charges; and income taxes. Future results could be materially affected if actual results differ from these estimates and assumptions.
Prepaid Expenses and Other Assets: Prepaid expenses and other assets consisted of the following at June 30, 2025 and December 31, 2024:
Prepaid Expenses and Other Assets (in millions)
Vessel fuel
31.7
31.2
Prepaid insurance and insurance related receivables
19.6
19.1
Prepaid operating expenses
11.8
8.8
Income tax receivables, net
2.0
13.2
12.8
Recognition of Revenues and Expenses: Revenue in the Company’s Condensed Consolidated Financial Statements is presented net of elimination of intercompany transactions. The following is a description of the Company’s principal revenue generating activities by segment, and the Company’s revenue recognition policy for each activity for the periods presented:
Ocean Transportation (in millions) (1)
Ocean Transportation services
671.0
674.2
1,303.9
1,240.0
Terminal and other related services
11.0
4.4
19.7
Fuel sales
3.1
4.7
6.0
Vessel management and related services
6
Logistics (in millions) (1)
Transportation Brokerage and Freight Forwarding services
137.2
139.2
264.5
266.6
Warehousing services
10.0
10.3
19.0
19.4
Supply Chain Management services
7.7
16.0
14.6
The Company generally invoices its customers at the commencement of the voyage or the transportation service being provided, or as other services are being performed. Revenue is deferred when services are invoiced in advance to the customer. The Company’s receivables are classified as short-term as collection terms are for periods of less than one year. The Company expenses sales commissions and contract acquisition costs as incurred because the amounts are generally immaterial. These expenses are included in general and administrative expenses in the Condensed Consolidated Statements of Income and Comprehensive Income.
Capitalized Interest: The Company capitalizes interest costs during the period as the qualified assets are being readied for their intended use. The Company determined that vessel construction costs are considered qualifying assets for the purposes of capitalizing interest on these assets. The amount of capitalized interest is calculated based on the amount of expenditures incurred related to the construction of these vessels using a weighted average interest rate. The weighted average interest rate is determined using the Company’s average borrowings outstanding during the period. Capitalized interest is included in vessel construction in progress in property and equipment in the Company’s Condensed Consolidated Balance Sheets (see Note 5). The Company capitalized $1.0 million and $1.0 million of interest related to the construction of new vessels for the three months ended June 30, 2025 and 2024, and $2.1 million and $1.8 million for the six months ended June 30, 2025 and 2024, respectively.
Dividends: The Company’s second quarter 2025 cash dividend of $0.34 per share was paid on June 5, 2025. On June 26, 2025, the Company’s Board of Directors declared a cash dividend of $0.36 per share payable on September 4, 2025 to shareholders of record on August 7, 2025.
Repurchase of Shares: During the three and six months ended June 30, 2025, the Company repurchased approximately 0.9 million and 1.4 million shares for a total cost of $93.7 million and $162.9 million, respectively. During the three and six months ended June 30, 2024, the Company repurchased approximately 0.6 million and 1.0 million shares for a total cost of $72.2 million and $121.1 million, respectively. As of June 30, 2025, the maximum number of remaining shares that may be repurchased under the Company’s share repurchase program was approximately 2.5 million shares.
Income taxes: On July 4, 2025, new legislation commonly referred to as the One Big Beautiful Bill Act (the “Act”) was signed into law. Among other things, the Act provides for numerous changes to existing tax law including extending or making permanent certain tax provisions of the Tax Cuts and Jobs Act of 2017 that were set to expire. Certain provisions of the Act are expected to impact the Company’s income taxes, including 100 percent bonus depreciation for qualified capital expenditures acquired and placed in service after January 19, 2025 and amendments to the foreign-derived intangible income (“FDII”) regime. Under Accounting Standards Codification (“ASC”) 740, Income Taxes, the
7
effects of the new legislation are recognized in the period of enactment, which is the date when the legislation was signed into law. The Company is currently evaluating the effects of the Act on the Company’s income taxes, but does not expect that it will have a material impact on the Company’s consolidated financial statements.
Reclassification: The Company reclassified amortization of deferred loan fees of $0.9 million from Depreciation and amortization to Other within cash flows from operating activities in the Consolidated Statements of Cash Flows for the six months ended June 30, 2024, to conform to current year cash flow presentation. There were no changes in Net cash provided by operating activities as a result of this reclassification for the six months ended June 30, 2024.
New Accounting Pronouncements: In November 2024, the Financial Accounting Standards Board (“FASB”) issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”). ASU 2024-03 requires disclosure of certain expenses in the financial statements including employee compensation and depreciation and amortization of intangible assets on an annual and interim basis. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027. ASU 2024-03 can be adopted either: (i) prospectively to the financial statements issued for reporting periods after the effective date of the ASU or (ii) retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating the effects of adopting ASU 2024-03 but does not expect it will have a material impact on the Company’s consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. ASU 2023-09 is effective for annual periods beginning after December 15, 2024, and interim periods within fiscal years beginning after December 15, 2025. The Company is currently evaluating the effects of adopting ASU 2023-09 but does not expect it to have a material impact on the Company’s consolidated financial statements.
3. REPORTABLE SEGMENTS
Reportable segments are components of an enterprise that engage in business activities from which it may earn revenues and incur expenses, whose operating results are regularly reviewed by the chief operating decision maker (“CODM”) to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. The Company’s CODM is its Chief Executive Officer.
The Company identified two reportable segments on the basis of internal information provided to the CODM: Ocean Transportation and Logistics which are described in Note 1. Each segment is managed separately based upon fundamental differences in the operations of each segment. The Company’s Ocean Transportation service primarily involves the transportation of customer cargo on Company owned and chartered vessels. The Company’s Logistics service provides customers with logistics solutions primarily using third-party purchased transportation. The Company’s CODM assesses the performance of each segment using operating income. The Company’s CODM reviews the performance of each segment using monthly internal reports which provide variance analysis of actual results by segment compared to budget, forecast and prior year. The Company’s CODM uses this information when making decisions about the allocation of operating and capital resources to each segment. Segment balance sheet information is not provided to the CODM as capital decisions are based upon the Company’s consolidated balance sheet.
8
Reportable segment financial information for the three months ended June 30, 2025 and 2024 are as follows:
June 30, 2025
June 30, 2024
Operating Revenue (1)(2)
Operating Expenses:
Operating costs:
Direct cargo expense
249.7
245.0
Vessel operating expense
150.6
156.8
Operating overhead (3)
86.5
82.6
Direct operating costs
122.4
124.1
37.9
3.3
41.2
34.9
38.4
Total operating costs
524.7
125.7
650.4
519.3
127.6
646.9
(7.3)
(1.2)
59.6
14.8
74.4
62.8
14.3
77.1
577.0
140.5
717.5
580.9
141.9
722.8
Operating Income:
98.6
14.4
109.0
15.6
Capital Expenditures (4)
85.1
86.3
67.9
69.8
Reportable segment financial information for the six months ended June 30, 2025 and 2024 are as follows:
Operating Revenue (5)(6)
487.9
473.8
298.0
309.8
Operating overhead (7)
173.5
158.6
240.3
241.4
75.2
6.6
69.2
1,034.6
246.9
1,281.5
1,011.4
247.7
1,259.1
120.1
29.7
149.8
122.5
28.0
150.5
1,140.8
276.6
1,417.4
1,132.3
275.7
1,408.0
172.2
22.9
136.6
24.9
Capital Expenditures (8)
173.2
2.3
175.5
118.9
6.2
125.1
9
Ocean Transportation’s operating expenses includes the following:
Logistics’ operating expenses includes the following:
The Company’s Ocean Transportation segment provides ocean transportation services to the Logistics segment, and the Logistics segment provides logistics services to the Ocean Transportation segment in certain transactions. Accordingly, inter-segment revenue of $62.5 million and $61.8 million for the three months ended June 30, 2025 and 2024, and $116.5 million and $108.4 million for the six months ended June 30, 2025 and 2024, respectively, have been eliminated from consolidated operating revenues. In arrangements where the customer purchases ocean transportation and logistics services, the revenues are allocated to each reportable segment based upon the contractual amounts for each type of service.
4. INVESTMENT IN SSAT
The Company’s investment in SSAT is described in Note 4 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. Condensed income statement information for SSAT for the three and six months ended June 30, 2025 and 2024 consisted of the following:
Operating revenue
307.7
273.9
619.2
544.2
Operating costs and expenses
(294.6)
(278.5)
(592.1)
(556.9)
Operating income (loss)
13.1
(4.6)
27.1
(12.7)
SSAT’s Net Income (Loss) (1)
18.7
2.1
36.4
Company’s Share of SSAT’s Net Income (Loss) (2)
10
The Company’s investment in SSAT was $98.3 million and $84.1 million at June 30, 2025 and December 31, 2024, respectively.
On March 1, 2024, SSAT completed the sale of 25 percent of its equity interest in SSA Terminals (Seattle Terminals), LLC (“SSAT ST”) to a third-party company. After the completion of this transaction, SSAT retains a 50 percent controlling interest in SSAT ST, while the third-party company increased its non-controlling interest to 50 percent in SSAT ST. As a result of this transaction during the three months ended March 31, 2024, the Company recorded an increase in its investment in SSAT of approximately $13.2 million and increase in deferred income taxes of $3.1 million, and a corresponding increase in retained earnings of $10.1 million.
5. PROPERTY AND EQUIPMENT
Property and equipment as of June 30, 2025 and December 31, 2024 consisted of the following:
Cost:
Vessels
2,487.0
2,475.2
Containers and equipment
910.8
883.8
Terminal equipment and other property
152.8
152.3
New vessel construction in progress
302.9
198.8
Other construction in progress
63.0
42.6
Total Property and Equipment
3,916.5
3,752.7
Less: Accumulated Depreciation
(1,556.8)
(1,491.8)
Total Property and Equipment, net
New vessel construction in progress at June 30, 2025 and December 31, 2024 includes milestone progress payments, capitalized interest and other costs related to the construction of three new Jones Act vessels.
6. GOODWILL AND INTANGIBLES
Goodwill by segment as of June 30, 2025 and December 31, 2024 consisted of the following:
Ocean
Transportation
222.6
105.2
Intangible assets as of June 30, 2025 and December 31, 2024 consisted of the following:
Customer Relationships:
140.6
106.7
106.2
247.3
246.8
Less: Accumulated Amortization
(121.7)
(114.7)
Total Customer Relationships, net
125.6
132.1
Trade name – Logistics
27.3
Total Intangible Assets, net
The Company evaluates its goodwill and intangible assets for possible impairment in the fourth quarter, or whenever events or changes in circumstances indicate that it is more likely than not that the fair value is less than its carrying
11
amount. The Company has reporting units within the Ocean Transportation and Logistics reportable segments. The Company considered the general economic and market conditions and its impact on the performance of each of the Company’s reporting units. Based on the Company’s assessment of its market capitalization, future forecasts and the amount of excess of fair value over the carrying value of the reporting units in the 2024 annual impairment tests, the Company concluded that an impairment triggering event did not occur during the three and six months ended June 30, 2025.
The Company continues to monitor events and changes in circumstances that could negatively impact the key assumptions used in determining the fair value, including the amount and timing of estimated future cash flows generated by the reporting units, long-term growth and discount rates, comparable company market valuations, and industry and economic trends, including the impact of tariffs. It is possible that future changes in such circumstances, including future changes in the assumptions and estimates used in assessing the fair value of the reporting unit, could require the Company to record a non-cash impairment charge.
7. CAPITAL CONSTRUCTION FUND
The Capital Construction Fund (“CCF”) is described in Note 7 to the Consolidated Financial Statements included in Part II, Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. A summary of the activities within the CCF cash and cash equivalents, and investments account for the six months ended June 30, 2025 and 2024 consisted of the following:
CCF Cash and Cash Equivalents:
CCF cash and cash equivalents balance at beginning of period
230.7
599.4
Cash withdrawal for the purchase of U.S. Treasury debt securities and accrued interest
(449.8)
Proceeds from U.S. Treasury debt securities at maturity
91.1
Interest income on cash and cash equivalents, and CCF investments
8.3
Repurchase of assigned accounts receivable
Qualifying withdrawal payments for vessel construction expenditures
(100.7)
(35.8)
Total CCF cash and cash equivalents balance at end of period
330.1
160.6
CCF Investments:
CCF investments balance at beginning of period
411.9
Purchase of U.S. Treasury debt securities
448.1
Sale of U.S. Treasury debt securities at maturity
(91.1)
Accretion of investments
5.2
Total CCF investments balance at end of period
326.6
453.3
Total CCF cash and cash equivalents, and investments balance at end of period
613.9
CCF Cash and Cash Equivalents: Cash on deposit in the CCF account is invested in a short-term U.S. Treasury obligations fund with daily liquidity. At June 30, 2025, these short-term securities had a weighted average life of 99 days.
CCF Investments: In February 2024, the Company purchased approximately $448.1 million of fixed-rate U.S. Treasuries with accrued interest of $1.7 million using CCF cash. The fixed-rate debt securities were purchased at a discount and have various maturity dates of less than 2 years. The cost of these investments accretes to face value on a straight-line basis until maturity. Such accretion is included in interest income in the Condensed Consolidated Statements of Income and Comprehensive Income.
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As of June 30, 2025, CCF investments maturities are as follows:
As of
Year (in millions)
Cost
Fair Value
Remainder of 2025
103.7
2026
170.5
171.0
2027
52.4
52.7
Total CCF investments
327.4
CCF cash and cash equivalents, and investments are classified as a long-term asset on the Company’s Condensed Consolidated Balance Sheets as the Company intends to use withdrawals to fund qualified milestone progress payments for the construction of three new Jones Act vessels.
CCF Assigned Accounts Receivable: As of June 30, 2025 and December 31, 2024, eligible accounts receivable of $80.2 million and $178.1 million were assigned to the CCF, respectively. Due to the nature of the assignment of eligible accounts receivable into the CCF, such assigned amounts are classified as part of accounts receivable in the Condensed Consolidated Balance Sheets.
8. DEBT
As of June 30, 2025 and December 31, 2024, the Company’s debt consisted of the following:
Private Placement Term Loans:
3.37 %, payable through 2027
28.8
34.6
3.14 %, payable through 2031
93.0
100.1
Title XI Debt:
1.22 %, payable through 2043
146.4
150.3
1.35 %, payable through 2044
115.9
Total Debt
381.0
400.9
Less: Current portion
(39.7)
Total Long-term Debt
341.3
361.2
Less: Deferred loan fees
(10.4)
Total Long-term Debt, net of deferred loan fees
Except as described below, the Company’s debt is described in Note 8 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
Private Placement Term Loans: In September 2016, the Company issued $200.0 million of 15-year senior unsecured notes (the “Series D Notes”) at an interest rate of 3.14 percent, payable semi-annually. In December 2016, the Company issued $75 million of 11-year senior unsecured notes at an interest rate of 3.37 percent, payable semi-annually.
Revolving Credit Facility: On July 23, 2025, the Company entered into a Third Amended and Restated Credit Agreement (the “Credit Agreement”), which provides for a five-year revolving credit facility, and $550 million in loan commitments, with an uncommitted $300 million increase option. The Credit Agreement amended certain covenants and other terms including (i) amending the pricing grid to provide for pricing ranging from, at the Company’s election, Secured Overnight Financing Rate (“SOFR”) plus a margin between 1.125 percent and 1.75 percent depending on the Company’s consolidated net leverage ratio, or base rate plus a margin between 0.125 percent and 0.75 percent depending on the Company’s consolidated net leverage ratio; and (ii) eliminating the minimum consolidated interest coverage ratio financial covenant. The Company may prepay any amount outstanding under the Credit Agreement without premium or penalty, in accordance with the terms of the Credit Agreement. The Credit Agreement contains affirmative, negative and financial covenants customary for financings of this type, including, among other things, limitations on certain other indebtedness, loans and investments, liens, mergers, asset sales, and transactions with affiliates. The Credit Agreement also contains customary events of default. The Company paid fees of approximately $1.7 million in connection with the closing of the Credit Agreement.
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As of June 30, 2025, the Company had $643.9 million of remaining borrowing availability under the $650 million revolving credit facility then in effect. The Company used $6.1 million of the revolving credit facility for letters of credit outstanding as of June 30, 2025. Borrowings under the revolving credit facility are classified as long-term debt in the Company’s Consolidated Balance Sheets, as principal payments are not required until the maturity date.
Amendments to Existing Private Placement Term Loan Facilities and New Shelf Facilities (“Private Loan Facilities”): On July 23, 2025, the Company and the holders of the Private Loan Facilities entered into amendments (collectively, the “2025 Note Amendments”) to each of (i) the Third Amended and Restated Note Purchase Agreement and Private Shelf Agreement dated as of September 14, 2016, among the Company and the holders of the notes issued thereunder, as amended; and (ii) the Note Purchase Agreement dated December 21, 2016, in each case as amended prior to such date. The 2025 Note Amendments provide for amendments to certain covenants and other terms, including eliminating the minimum consolidated interest coverage ratio financial covenant.
Debt Maturities: As of June 30, 2025, debt maturities are as follows:
19.8
2028
28.2
2029
Thereafter
225.4
9. LEASES
The Company’s leases are described in Note 9 to the Consolidated Financial Statements included in Part II, Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
Components of Lease Cost: Components of lease cost recorded in the Company’s Condensed Consolidated Statement of Income and Comprehensive Income for the three and six months ended June 30, 2025 and 2024 consisted of the following:
Operating lease cost
36.3
74.0
72.2
Short-term lease cost
5.4
4.9
7.4
Variable lease cost
0.4
39.2
41.9
79.1
80.0
Sublease income
(3.1)
(6.7)
Total lease cost, net
41.7
72.4
79.7
Future minimum lease payments of operating lease liabilities that have non-cancelable lease terms in excess of one year at June 30, 2025 are as follows:
59.5
99.2
22.0
79.8
Total lease payments
343.1
Less: Interest
(49.0)
Present value of operating lease liabilities
294.1
Less: Short-term portion
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10. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Changes in accumulated other comprehensive income (loss) by component, net of tax, for the six months ended June 30, 2025 consisted of the following:
Post-
Non-
Pension
Retirement
Qualified
Benefits
Plans
(14.0)
8.1
Amortization of prior service credit
Amortization of net actuarial loss
(0.1)
Foreign currency exchange
6.4
1.7
Changes in accumulated other comprehensive income (loss) by component, net of tax, for the six months ended June 30, 2024 consisted of the following:
(20.3)
1.3
Amortization of net actuarial gain (loss)
(20.2)
Amortization of prior service cost
(20.1)
9.3
0.8
11. FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company values its financial instruments based on the fair value hierarchy of valuation techniques for fair value measurements. Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date. Level 2 inputs include quoted prices for similar assets and liabilities in active markets and inputs other than quoted prices observable for the asset or liability. Level 3 inputs are unobservable inputs for the asset or liability. If the technique used to measure fair value includes inputs from multiple levels of the fair value hierarchy, the lowest level of significant input determines the placement of the entire fair value measurement in the hierarchy.
The Company uses Level 1 inputs for the fair values of its cash and cash equivalents, and CCF cash and cash equivalents and investments, and Level 2 inputs for fixed rate debt. The fair values of cash and cash equivalents, and cash and cash equivalents in the CCF approximate their carrying values due to the nature of the instruments. The fair value of investments in the CCF is calculated based upon quoted prices available in active markets. The fair value of fixed rate debt is calculated based upon interest rates available for debt with terms and maturities similar to the Company’s existing debt arrangements.
15
The carrying value and fair value of the Company’s financial instruments as of June 30, 2025 and December 31, 2024 are as follows:
Quoted Prices in
Significant
Active Markets
Observable
Unobservable
Carrying Value
(Level 1)
Inputs (Level 2)
Inputs (Level 3)
Fair Value Measurements at June 30, 2025
CCF - Cash and cash equivalent
CCF - Investments
Fixed rate debt
308.4
December 31, 2024
Fair Value Measurements at December 31, 2024
412.5
317.7
12. EARNINGS PER SHARE
Basic earnings per share is determined by dividing net income by the weighted average common shares outstanding during the period. The calculation of diluted earnings per share includes the dilutive effect of non-vested restricted stock units. The computation of weighted average common shares outstanding excluded a nominal amount of anti-dilutive restricted stock units for each period ended June 30, 2025 and 2024.
The computations for basic and diluted earnings per share for the three and six months ended June 30, 2025 and 2024 are as follows:
Three Months Ended June 30, 2025
Six Months Ended June 30, 2025
Weighted
Per
Average
Common
Net
Share
Income
Amount
Effect of Dilutive Securities
(0.03)
(0.05)
Three Months Ended June 30, 2024
Six Months Ended June 30, 2024
13. SHARE-BASED COMPENSATION
During the three and six months ended June 30, 2025, the Company granted time-based restricted stock units and performance-based shares to certain of its employees totaling approximately 98,000 and 231,200 shares, respectively, with a combined weighted average grant date fair value of $112.55 and $130.46 per share, respectively.
Total share-based compensation cost recognized in the Condensed Consolidated Statements of Income and Comprehensive Income as a component of general and administrative expenses was $5.9 million and $6.3 million for the three months ended June 30, 2025 and 2024 and $11.7 million and $12.0 million for the six months ended June 30, 2025 and 2024, respectively. Total unrecognized compensation cost related to unvested share-based compensation arrangements was $32.7 million at June 30, 2025, and is expected to be recognized over a weighted average period of approximately 1.8 years. Total unrecognized compensation cost may be adjusted for any unearned performance shares or forfeited shares.
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14. PENSION AND POST-RETIREMENT PLANS
The Company’s pension and post-retirement plans are described in Note 11 to the Consolidated Financial Statements included in Part II, Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. Components of net periodic benefit cost and other amounts recognized in Other Comprehensive Income (Loss) for the qualified pension plans and the post-retirement benefit plans for the three and six months ended June 30, 2025 and 2024 consisted of the following:
Pension Benefits
Post-retirement Benefits
Three Months Ended June 30,
Components of net periodic benefit cost (credit):
Service cost
1.1
Interest cost
2.6
2.5
Expected return on plan assets
(4.4)
(3.8)
Amortization of net actuarial loss (gain)
(1.0)
Net periodic benefit credit
(0.8)
2.2
(8.8)
(7.6)
Amortization of net loss (gain)
(1.9)
(1.8)
(1.4)
15. COMMITMENTS AND CONTINGENCIES
Environmental Matters: The Company’s Ocean Transportation business has certain risks that could result in expenditures for environmental remediation. The Company believes that based on all information available to it, the Company is currently in compliance, in all material respects, with applicable environmental laws and regulations.
Other Matters: The Company and its subsidiaries are parties to, or may be contingently liable in connection with, other legal actions arising in the normal course of their businesses, the outcomes of which, in the opinion of management after consultation with counsel, would not have a material effect on the Company’s financial condition, results of operations, or cash flows.
******
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the Condensed Consolidated Financial Statements and related notes, and other financial information appearing elsewhere in this Quarterly Report on Form 10-Q.
FORWARD-LOOKING STATEMENTS
The Company, from time to time, may make or may have made certain forward-looking statements, whether orally or in writing, such as, among others, forecasts or projections of the Company’s future performance or statements of management’s plans and objectives. These statements are considered “forward-looking” statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements may be contained in, among other things, SEC filings such as Forms 10-K, 10-Q and 8-K, the Company’s Annual Report to Shareholders, the Company’s Sustainability Report, press releases made by the Company, the Company’s Internet websites (including websites of its subsidiaries), and oral statements made by officers of the Company. Except for historical information contained in these written or oral communications, all other statements are forward-looking statements. These include, for example, all references to 2025 or future years, including such references included under “Second Quarter 2025 Discussion and Outlook for 2025,” as well as statements generally identified through the inclusion of words such as “anticipate,” “believe,” “can,” “commit,” “estimate,” “expect,” “goal,” “intend,” “may,” “plan,” “seek,” “should,” “target,” and “will,” or similar statements or variations of such terms and other similar expressions. New risks or uncertainties may emerge from time to time, risks that the Company currently does not consider to be material could become material, and it is not possible for the Company to predict all such risks, nor can it assess the impact of all such risks on the Company’s business or the extent to which any factor, or combination of factors, may cause actual results or outcomes, or the timing of results or outcomes, to differ materially from those contained in any forward-looking statements. Accordingly, forward-looking statements cannot be relied upon as a guarantee of future results or outcomes and involve a number of risks and uncertainties that could cause actual results or outcomes to differ materially from those projected in the statements, including but not limited to the factors that are described in Part II, Item 1A under the caption “Risk Factors” of the Company’s Form 10-Q for the quarter ended March 31, 2025. Except as required by law, the Company undertakes no obligation to revise or update publicly forward-looking statements or any factors that may affect actual results, whether as a result of new information, future events, circumstances occurring after the date of this report, or otherwise.
OVERVIEW
Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is designed to provide a discussion of the Company’s financial condition, results of operations, liquidity and certain other factors that may affect its future results from the perspective of management. The discussion that follows is intended to provide information that will assist in understanding the changes in the Company’s Condensed Consolidated Financial Statements from period to period, the primary factors that accounted for those changes, and how certain accounting principles, policies and estimates affected the Company’s Condensed Consolidated Financial Statements. The MD&A is provided as a supplement to the Condensed Consolidated Financial Statements and notes herein, and should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, the Company’s reports on Forms 10-Q and 8-K, and other publicly available information.
SECOND QUARTER 2025 DISCUSSION AND OUTLOOK FOR 2025
Ocean Transportation: The Company’s container volume in the Hawaii service in the second quarter 2025 was 2.6 percent higher year-over-year. The increase was primarily due to higher general demand. The Hawaii economy remains stable supported by strong construction activity, but faces potential headwinds from slowing tourism, increasing unemployment, and high inflation and interest rates. The Company expects volume in 2025 to be modestly higher than the level achieved in 2024, reflecting modest economic growth in Hawaii and stable market share.
In China, the Company’s container volume in the second quarter 2025 decreased 14.6 percent year-over-year primarily due to the challenges of market uncertainty and volatility from tariffs and global trade. Freight rates in the second quarter 2025 were modestly higher than the levels achieved in the same period last year. At the onset of tariffs in April, the Company experienced significantly lower year-over-year freight demand, but starting in mid-May saw a rebound in
demand after the U.S. and China agreed to a temporary reduced level of tariffs. During the second quarter, the Company also moved with its customers as they shifted production throughout Asia in response to the tariffs, which resulted in higher container volume levels outside of China than the levels achieved in the first quarter. For the third quarter 2025, the Company expects lower year-over-year freight rates and volume compared to the elevated demand levels achieved in the third quarter last year and the Company’s expectation of a muted peak season this year. Assuming tariffs and global trade, regulatory measures, the trajectory of the U.S. economy and other geopolitical factors do not materially change from current conditions, the Company expects, for full year 2025, average freight rates and volume to be lower year-over-year.
In Guam, the Company’s container volume in the second quarter 2025 decreased 2.2 percent year-over-year. In the near term, the Company expects Guam’s economy to remain stable with a slow recovery in tourism, a low unemployment rate, and some increase in construction activity. For 2025, the Company expects volume to be modestly lower than the level achieved last year.
In Alaska, the Company’s container volume for the second quarter 2025 increased 0.9 percent year-over-year. The increase was primarily due to higher AAX volume, partially offset by two fewer northbound sailings compared to the year ago period. In the near term, the Company expects continued economic growth in Alaska supported by a low unemployment rate, jobs growth and continued oil and gas exploration and production activity. For 2025, the Company expects volume to be modestly higher than the level achieved last year.
The contribution in the second quarter 2025 from the Company’s SSAT joint venture investment was $7.3 million, or $6.1 million higher than second quarter 2024. The increase was primarily due to higher lift volume. For 2025, the Company expects the contribution from SSAT to be modestly higher than the $17.4 million achieved last year without taking into account the $18.4 million impairment charge at SSAT during the fourth quarter 2024.
In addition to the outlook trends noted above, the Company expects uncertainty regarding tariffs and global trade, regulatory measures, the trajectory of the U.S. economy and other geopolitical factors to continue. Assuming these factors do not materially change from current conditions, the Company expects Ocean Transportation operating income for the full year to be higher than the guidance provided in early May, but moderately lower than the level achieved in the prior year. For the third quarter 2025, the Company expects Ocean Transportation operating income to be meaningfully lower than the level achieved in the same period last year primarily due to lower year-over-year freight rates and volume in the China service compared to the elevated demand levels achieved in the third quarter last year and the Company’s expectation of a muted peak season this year.
Logistics: In the second quarter 2025, operating income for the Company’s Logistics segment was $14.4 million, or $1.2 million lower compared to the level achieved in the second quarter 2024. The decrease was primarily due to a lower contribution from transportation brokerage. For the third quarter 2025, the Company expects Logistics operating income to be comparable to the $15.4 million achieved in the third quarter 2024. For full year 2025, the Company expects Logistics operating income to be comparable to the level achieved in the prior year.
Consolidated Operating Income: For the third quarter 2025, the Company expects consolidated operating income to be meaningfully lower than the $242.3 million achieved in the third quarter 2024. For full year 2025, the Company expects consolidated operating income to be higher than the guidance provided in early May, but moderately lower than the $551.3 million achieved in 2024.
Depreciation and Amortization: For full year 2025, the Company expects depreciation and amortization expense to be approximately $200 million, inclusive of dry-docking amortization of approximately $26 million.
Interest Income: The Company expects interest income for the full year 2025 to be approximately $31 million. In the second quarter 2024, the Company’s interest income of $18.8 million included $10.2 million in interest income earned on the federal tax refund related to the Company’s 2021 federal tax return.
Interest Expense: The Company expects interest expense for the full year 2025 to be approximately $7 million.
Other Income (Expense): The Company expects full year 2025 other income (expense) to be approximately $9 million in income, which is attributable to the amortization of certain components of net periodic benefit costs or gains related to the Company’s pension and post-retirement plans.
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Income Taxes: In the second quarter 2025, the Company’s effective tax rate was 22.2 percent. For the full year 2025, the Company expects its effective tax rate to be approximately 22.0 percent.
Capital and Vessel Dry-docking Expenditures: For the second quarter 2025, the Company made capital expenditure payments excluding new vessel construction expenditures of $48.9 million, new vessel construction expenditures (including capitalized interest and owner’s items) of $37.4 million, and dry-docking payments of $13.4 million. For the full year 2025, the Company expects to make other capital expenditure payments, including maintenance capital expenditures, of approximately $100 to $120 million, new vessel construction expenditures (including capitalized interest and owner’s items) of approximately $305 million, and dry-docking payments of approximately $40 million.
CONSOLIDATED RESULTS OF OPERATIONS
Consolidated Results – Three months ended June 30, 2025 compared with 2024:
(Dollars in millions, except per share amounts)
Change
(16.9)
%
5.3
Operating income
(11.6)
(9.3)
(10.8)
(57.4)
(19.0)
0.6
33.3
Income before taxes
(21.4)
(15.0)
2.9
(9.7)
(18.5)
Basic earnings per share
(0.39)
(11.7)
Diluted earnings per share
(11.8)
Changes in operating revenue, and operating costs and expenses are further described below in the Analysis of Operating Revenue and Income by Segment.
The decrease in interest income for the three months ended June 30, 2025, compared to the three months ended June 30, 2024, was due to interest of $10.2 million related to a federal income tax refund received during the three months ended June 30, 2024, and lower amounts of cash and cash equivalent, and CCF funds that were invested in interest bearing accounts during the three months ended June 30, 2025.
The decrease in interest expense for the three months ended June 30, 2025, compared to the three months ended June 30, 2024, was due to lower outstanding debt during the period.
Other income (expense) relates to the amortization of certain components of net periodic benefit costs or gains related to the Company’s pension and post-retirement plans.
Income tax expense was $27.0 million, or 22.2 percent of income before taxes, for the three months ended June 30, 2025, compared to $29.9 million, or 20.9 percent of income before taxes, for the three months ended June 30, 2024. The effective tax rate for the three months ended June 30, 2024 benefited from certain discrete tax adjustments that lowered the effective tax rate for that period.
20
Consolidated Results – Six months ended June 30, 2025 compared with 2024:
43.0
(9.4)
0.7
20.8
(37.0)
0.9
(20.9)
25.5
13.5
(7.8)
19.9
17.7
11.9
0.76
17.6
The decrease in interest income for the six months ended June 30, 2025, compared to the six months ended June 30, 2024, was due to interest of $10.2 million related to a federal income tax refund received during the six months ended June 30, 2024.
The decrease in interest expense for the six months ended June 30, 2025, compared to the six months ended June 30, 2024, was due to lower outstanding debt during the period, and a higher offset of capitalized interest related to the construction of new vessels.
Income tax expense was $46.9 million, or 21.9 percent of income before taxes, for the six months ended June 30, 2025, compared to $39.1 million, or 20.8 percent of income before taxes, for the six months ended June 30, 2024. The effective tax rate for the six months ended June 30, 2024 benefited from certain discrete tax adjustments that lowered the effective tax rate for that period.
ANALYSIS OF OPERATING REVENUE AND INCOME BY SEGMENT
Ocean Transportation Operating Results – Three months ended June 30, 2025 compared with 2024:
(Dollars in millions)
Ocean Transportation revenue
(14.3)
(577.0)
(580.9)
3.9
(9.5)
Operating income margin
15.8
Volume (Forty-foot equivalent units (FEU)) (1)
Hawaii containers
36,000
35,100
900
Alaska containers
21,700
21,500
200
China containers (2)
32,300
37,800
(5,500)
(14.6)
Guam containers
4,500
4,600
(100)
(2.2)
Other containers (3)
4,400
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Ocean Transportation revenue decreased $14.3 million, or 2.1 percent, during the three months ended June 30, 2025, compared with the three months ended June 30, 2024. The decrease was primarily due to lower volume in China, partially offset by higher freight rates in China.
On a year-over-year FEU basis, Hawaii container volume increased 2.6 percent primarily due to higher general demand; Alaska volume increased 0.9 percent primarily due to higher AAX volume, partially offset by two fewer northbound sailings compared to the year ago period; China volume was 14.6 percent lower primarily due to the challenges of market uncertainty and volatility from tariffs and global trade; Guam volume decreased 2.2 percent; and Other containers volume was flat.
Ocean Transportation operating income decreased $10.4 million, or 9.5 percent, during the three months ended June 30, 2025, compared with the three months ended June 30, 2024. The decrease was primarily due to lower volume in China, partially offset by higher freight rates in China and the timing of fuel-related surcharge collections.
The Company’s SSAT terminal joint venture investment contributed $7.3 million during the three months ended June 30, 2025, compared to a contribution of $1.2 million during the three months ended June 30, 2024. The increase was primarily driven by higher lift volume.
Ocean Transportation Operating Results – Six months ended June 30, 2025 compared with 2024:
44.1
(1,140.8)
(1,132.3)
(8.5)
35.6
26.1
10.8
71,700
69,700
2,000
41,400
40,300
1,100
60,800
66,700
(5,900)
8,700
9,500
(800)
(8.4)
7,800
8,000
(200)
(2.5)
Ocean Transportation revenue increased $44.1 million, or 3.5 percent, during the six months ended June 30, 2025, compared with the six months ended June 30, 2024. The increase was primarily due to higher freight rates in China and Hawaii, partially offset by lower volume in China.
On a year-over-year FEU basis, Hawaii container volume increased 2.9 percent primarily due to the dry-docking of a competitor’s vessel in the first half of 2025; Alaska volume increased 2.7 percent due to higher AAX volume and retail-related demand, partially offset by three fewer northbound sailings compared to the year ago period; China volume decreased 8.8 percent due to the challenges of market uncertainty and volatility from tariffs and global trade; Guam volume decreased 8.4 percent primarily due to lower demand from retail and food and beverage segments; and Other containers volume decreased 2.5 percent.
Ocean Transportation operating income increased $35.6 million, or 26.1 percent, during the six months ended June 30, 2025, compared with the six months ended June 30, 2024. The increase was primarily due to higher freight rates in China and the domestic tradelanes, the timing of fuel-related surcharge collections, and a higher contribution from SSAT, primarily offset by lower volume in China and higher operating overhead costs and direct cargo expense.
The Company’s SSAT terminal joint venture investment contributed $13.9 million during the six months ended June 30, 2025, compared to a contribution of $1.6 million during the six months ended June 30, 2024. The increase was primarily driven by higher lift volume.
22
Logistics Operating Results – Three months ended June 30, 2025 compared with 2024:
Logistics revenue
(2.6)
(140.5)
(141.9)
(7.7)
9.9
Logistics revenue decreased $2.6 million, or 1.7 percent, during the three months ended June 30, 2025, compared with the three months ended June 30, 2024. The decrease was primarily due to lower revenue in transportation brokerage.
Logistics operating income decreased $1.2 million, or 7.7 percent, during the three months ended June 30, 2025, compared with the three months ended June 30, 2024. The decrease was primarily due to a lower contribution from transportation brokerage.
Logistics Operating Results – Six months ended June 30, 2025 compared with 2024:
(1.1)
(276.6)
(275.7)
(8.0)
7.6
Logistics revenue decreased $1.1 million, or 0.4 percent, during the six months ended June 30, 2025, compared with the six months ended June 30, 2024. The decrease was primarily due to lower revenue in transportation brokerage.
Logistics operating income decreased $2.0 million, or 8.0 percent, during the six months ended June 30, 2025, compared with the six months ended June 30, 2024. The decrease was primarily due to a lower contribution from transportation brokerage and freight forwarding.
LIQUIDITY AND CAPITAL RESOURCES
Sources of liquidity available to the Company as of June 30, 2025 compared to December 31, 2024 were as follows:
Cash and Cash Equivalents, Accounts Receivable and CCF: Cash and cash equivalents, accounts receivable and CCF as of June 30, 2025 compared to December 31, 2024 were as follows:
Accounts receivable, net (1)
20.2
CCF - cash and cash equivalents, and investments account
14.1
23
Changes in the Company’s cash and cash equivalents for the six months ended June 30, 2025, compared to the six months ended June 30, 2024, were as follows:
Net cash provided by operating activities (1)
(149.9)
Net cash used in investing activities (2)
(52.3)
Net cash used in financing activities (3)
(39.8)
Net (decrease) increase in cash, cash equivalents and restricted cash
(242.0)
Cash and cash equivalents, and restricted cash, beginning of the period
130.5
Cash and cash equivalents, and restricted cash, end of the period
(111.5)
(1) Changes in net cash provided by operating activities:
Changes in net cash provided by operating activities for the six months ended June 30, 2025, compared to the six months ended June 30, 2024, were due to the following:
Non-cash depreciation and amortization
(7.2)
Other non-cash related changes, net
Income and distribution from SSAT, net
(26.3)
9.2
(125.2)
(20.4)
Non-cash amortization of operating lease right of use assets
Net income was $167.0 million for the six months ended June 30, 2025, compared to $149.3 million for the six months ended June 30, 2024. Income from SSAT was $13.9 million for the six months ended June 30, 2025, compared to $1.6 million for the six months ended June 30, 2024. The increase in income from SSAT was primarily due to higher lift volume during the six months ended June 30, 2025, compared to the same prior year period. The Company received $14.0 million of cash distributions from SSAT during the six months ended June 30, 2024. No cash distributions were received from SSAT during the six months ended June 30, 2025. Cash distributions from SSAT are dependent on the level of cash available for distribution after SSAT’s operational and capital needs. Changes in accounts receivable were primarily due to the timing of collections associated with those receivables. Changes in prepaid expenses and other assets were primarily due to a 2021 federal income tax refund of $118.6 million that was received by the Company during the six months ended June 30, 2024. Changes in accounts payable, accruals and other liabilities were due to the timing of payments associated with those liabilities. Changes in operating lease assets and liabilities were primarily due to new operating lease additions and renewals, offset by operating lease payments and terminations. Deferred dry-docking payments for the six months ended June 30, 2025 were $23.8 million, compared to $17.3 million for the six months ended June 30, 2024. Changes in deferred dry-docking are primarily due to the timing of vessel dry-dock related activities and the payments associated with those activities.
24
(2) Changes in net cash used in investing activities:
Changes in net cash used in investing activities for the six months ended June 30, 2025, compared to the six months ended June 30, 2024, were due to the following:
Cash deposits and interest into the CCF
(64.1)
Withdrawals from CCF
64.9
(65.9)
15.5
Proceeds from disposal of property and equipment, net, and other
(2.7)
The Company deposited $109.1 million of cash and interest into the CCF and made $100.7 million of qualifying withdrawal payments out of the CCF during the six months ended June 30, 2025. The Company deposited $45.0 million into the CCF and made $35.8 million of qualifying withdrawal payments out of the CCF during the six months ended June 30, 2024. Qualifying withdrawal payments relate to milestone payments for the construction of three new Aloha Class vessels. Capital expenditures (excluding vessel construction expenditures) were $71.4 million for the six months ended June 30, 2025, compared to $86.9 million for the six months ended June 30, 2024. Capital expenditures (excluding vessel construction expenditures) primarily relate to vessel related expenditures, the acquisition of containers, chassis and other equipment, and expenditures on other capital related projects. The decrease in capital expenditure for the six months ended June 30, 2025, compared to the same prior year period primarily related to the timing of when vessel maintenance activities are performed and when other capital related projects are incurred.
(3) Changes in net cash used in financing activities:
Changes in net cash used in financing activities for the six months ended June 30, 2025, compared to the six months ended June 30, 2024, were due to the following:
(40.3)
Shares withheld for taxes related to settlement of restricted stock units
During the six months ended June 30, 2025, the Company paid $160.4 million to repurchase Matson common stock, compared to $120.1 million during the six months ended June 30, 2024. During the six months ended June 30, 2025, the Company paid $19.9 million in scheduled fixed interest debt payments, compared to $19.9 million during the six months ended June 30, 2024. During the six months ended June 30, 2025, the Company paid $16.3 million in withholding taxes related to vested restricted stock units, compared to $17.0 million during the six months ended June 30, 2024. During the six months ended June 30, 2025, the Company paid $22.3 million in dividends, compared to $22.1 million during the six months ended June 30, 2024. The increase in dividend payments was due to an increase in dividends declared per share of common stock by the Company, offset by a reduction in common stock outstanding.
Working Capital: The Company had a working capital deficit of $122.4 million at June 30, 2025, compared to a working capital surplus of $49.2 million at December 31, 2024. Working capital is primarily impacted by the amount of net cash provided by operating activities, the amount of capital expenditures, the timing of collections associated with accounts receivable, prepaid expenses and other assets, and by the amount and timing of payments associated with accounts payable, accruals, income taxes and other liabilities. The decrease in the Company’s working capital at June 30, 2025, compared to December 31, 2024 is primarily due to $100.7 million of cash withdrawn from cash and cash equivalent and deposited into the CCF during the six months ended June 30, 2025, compared to $35.8 million for the six months ended June 30, 2024.
25
Capital Construction Fund: The Company’s CCF is described in Note 7 of Part I, Item 1 above. CCF cash and cash equivalents, and CCF investments as of June 30, 2025 and December 31, 2024 are as follows:
CCF Cash and cash equivalents
CCF Investments
CCF cash and cash equivalents, and CCF investments are intended to fund milestone payments for the construction of three new Aloha Class vessels.
Debt: The Company’s debt is described in Note 8 of Part I, Item 1 above. The Company utilizes a mix of fixed and variable debt for liquidity and to fund the Company’s operations. Total Debt as of June 30, 2025 and December 31, 2024 is as follows:
Variable interest debt - Revolving credit facility
Fixed interest debt - Title XI debt and private placement term loans
Total Debt (excluding deferred loan fees)
Total Debt decreased by $19.9 million during the six months ended June 30, 2025, compared to December 31, 2024, due to scheduled fixed interest debt repayments.
As described in Note 8 of Part 1, Item 1 above, on July 23, 2025, the Company entered into a Third Amended and Restated Credit Agreement which provides for a five-year revolving credit facility and $550 million in loan commitments, with an uncommitted $300 million increase option. The Company reduced the size of its credit facility from $650 million to $550 million due to: (i) the nearly fully-funded status of the new Aloha Class vessel build program; and (ii) the Company’s expected lower level of capital needs for the remainder of the decade due in part to its next Jones Act build cycle which is not anticipated until the mid-2030s.
As of June 30, 2025, the Company had $643.9 million of remaining borrowing availability under the revolving credit facility.
Capital Expenditures: Except as described below, during the six months ended June 30, 2025, there were no material changes to the Company’s expected capital expenditures for the years ending December 31, 2025 and 2026 that are described in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
During the six months ended June 30, 2025, the Company paid $100.7 million in milestone payments under the vessel construction agreements, compared to $35.8 million for the six months ended June 30, 2024. The following represents the estimated timing of future milestone payments under the vessel construction agreements as of June 30, 2025:
Paid
Future Milestone Payments
Vessel Construction Obligations(in millions)
As ofJune 30, 2025
Remainder of2025
Three Aloha Class Containerships
290.2
189.7
313.6
22.2
1,003.6
The Company intends to use the CCF cash and cash equivalents, and CCF investments to fund future milestone progress payments for the construction of three new Aloha Class vessels.
For the full year 2025, the Company expects to make other capital expenditure payments, including maintenance capital expenditures, of approximately $100 to $120 million, and dry-docking payments of approximately $40 million.
Repurchase of Shares: During the three and six months ended June 30, 2025, the Company repurchased approximately 0.9 million and 1.4 million shares for a total cost of $93.7 million and $162.9 million, respectively. During the three and six months ended June 30, 2024, the Company repurchased approximately 0.6 million and 1.0 million shares for a total cost of $72.2 million and $121.1 million, respectively. The amount of shares repurchased by the Company during any period is dependent on the amount of available cash and cash equivalents, the Company’s stock price and other factors.
26
The maximum number of remaining shares that may be repurchased under the Company’s share repurchase program was approximately 2.5 million shares at June 30, 2025.
Other Material Cash Requirements: There were no other material changes during the quarter ended June 30, 2025 to the Company’s other cash requirements that are described in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
There have been no changes during this quarter to the Company’s critical accounting policies and estimates as discussed in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
OTHER MATTERS
New Accounting Pronouncements: See Note 2 of Part I, Item 1 above for information on new accounting pronouncements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes to the Company’s market risk position from the information provided under Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” of its Annual Report on Form 10-K for the year ended December 31, 2024.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures: The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of June 30, 2025, the Company’s disclosure controls and procedures are effective.
Changes in Internal Control Over Financial Reporting: There were no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the three months ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In accordance with SEC rules, with respect to administrative or judicial proceedings involving the environment, the Company has determined it will disclose any such proceeding if it reasonably believes such proceeding will result in monetary sanctions, exclusive of interest and costs, at or in excess of $1 million. The Company believes that such
threshold is reasonably designed to result in disclosure of environmental proceedings that are material to its business or financial condition.
Other Matters: The Company and its subsidiaries are parties to, or may be contingently liable in connection with other legal actions arising in the normal course of their businesses, the outcomes of which, in the opinion of management after consultation with counsel, would not have a material effect on the Company’s financial condition, results of operations, or cash flows.
ITEM 1A. RISK FACTORS
There were no material changes to the Company’s risk factors previously described in Part II, Item 1A, “Risk Factors” of the Company’s Form 10-Q for the quarter ended March 31, 2025.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
(c) Purchases of Equity Securities by the Issuer and Affiliated Purchases: The following is the summary of Matson shares that were repurchased under the Company’s share repurchase program during the three months ended June 30, 2025:
Total Number of
Maximum Number
Shares Purchased
of Shares that May
as Part of Publicly
Yet Be Purchased
Average Price
Announced Plans or
Under the Plans or
Period
Purchased
Paid Per Share
Programs (1) (2)
Programs
April 1 – 30, 2025
410,000
105.85
2,920,956
May 1 – 31, 2025
260,000
107.88
2,660,956
June 1 – 30, 2025
190,000
112.06
2,470,956
860,000
107.83
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
ITEM 5. OTHER INFORMATION
(c) Trading Plans: During the quarter ended June 30, 2025, no director or Section 16 officer adopted or terminated any Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements except as described below.
On May 8, 2025, Matthew J. Cox, Chairman and Chief Executive Officer, amended a trading plan intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) (previously adopted on February 28, 2025) to sell up to 29,856 shares of Matson common stock through December 8, 2025, subject to certain pricing and other conditions.
ITEM 6. EXHIBITS
10.1*,**
Letter Agreement Counter Parties
10.2*,**
Consulting Agreement with R. Rolfe
10.3**
Third Amended and Restated Credit Agreement among Matson, Inc., Bank of America, N.A. as the Agent, and the lenders thereto, dated as of July 23, 2025
10.4**
Amendment to Third Amended and Restated Note Purchase Agreement and Private Shelf Agreement, dated as of July 23, 2025
10.5**
Amendment to Note Purchase Agreement dated December 21, 2016, dated as of July 23, 2025
10.6*
Matson, Inc. 2025 Incentive Compensation Plan (incorporated by reference to Exhibit 10.1 of Matson’s Form 8-K dated April 28, 2025).
10.7*,**
Form of 2025 Plan Performance Share Award Agreement (ROIC metric) for Executive Employees
10.8*,**
Form of 2025 Plan Performance Share Award Agreement (TSR metric) for Executive Employees
10.9*,**
Form of 2025 Plan Performance Share Award Agreement for Non-Executive Employees
10.10*,**
Form of 2025 Plan Time-Based Restricted Stock Unit Award Agreement for Executive Employees
10.11*,**
Form of 2025 Plan Time-Based Restricted Stock Unit Award Agreement for Non-Executive Employees
10.12*,**
Form of 2025 Plan Restricted Stock Unit Award Agreement for Non-Employee Directors (Deferral Election)
10.13*,**
Form of 2025 Plan Restricted Stock Unit Award Agreement for Non-Employee Directors (No Deferral)
31.1**
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934.
31.2**
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934.
32***
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350.
101.INS**
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH**
Inline XBRL Taxonomy Extension Schema Document
101.CAL**
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF**
Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB**
Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE**
Inline XBRL Taxonomy Extension Presentation Linkbase Document
104**
Cover Page Interactive Data File (formatted in Inline XBRL and included as Exhibit 101).
* Indicates management contract or compensatory plan or arrangement.
** Filed herewith.
*** Furnished herewith.
30
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
MATSON, INC.
(Registrant)
Date: August 1, 2025
/s/ Joel M. Wine
Joel M. Wine
Executive Vice President and
Chief Financial Officer
(principal financial officer)
/s/ Kevin L. Stuck
Kevin L. Stuck
Vice President and Controller
(principal accounting officer)