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, 2026
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, 2026: 29,903,458
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
Unregistered Sales of Equity Securities and Use of Proceeds
28
Defaults Upon Senior Securities
Mine Safety Disclosures
Item 5.
Other Information
Item 6.
Exhibits
29
Signatures
30
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)
2026
2025
Operating Revenue:
Ocean Transportation
$
767.4
675.6
1,373.9
1,313.0
Logistics
202.0
154.9
353.3
299.5
Total Operating Revenue
969.4
830.5
1,727.2
1,612.5
Costs and Expenses:
Operating costs
(737.3)
(650.4)
(1,361.2)
(1,281.5)
Income from SSAT
4.8
7.3
9.8
13.9
General and administrative
(78.0)
(74.4)
(155.5)
(149.8)
Total Costs and Expenses
(810.5)
(717.5)
(1,506.9)
(1,417.4)
Operating Income
158.9
113.0
220.3
195.1
Interest income
5.0
8.0
11.1
17.4
Interest expense, net
(1.6)
(1.7)
(3.2)
(3.4)
Other income (expense), net
1.6
2.4
3.6
Income before Taxes
163.9
121.7
231.8
213.9
Income taxes
(34.5)
(27.0)
(45.8)
(46.9)
Net Income
129.4
94.7
186.0
167.0
Comprehensive Income (Loss), Net of Income Taxes:
Other Comprehensive Income (Loss):
Net change in pension and post-retirement liabilities
(0.5)
(0.9)
(1.0)
Other adjustments
(1.9)
1.4
1.9
Total Other Comprehensive Income (Loss), Net of Income Taxes
(2.4)
0.5
(2.9)
0.2
Total Comprehensive Income
127.0
95.2
183.1
167.2
Basic Earnings Per Share
4.30
2.95
6.16
5.14
Diluted Earnings Per Share
4.27
2.92
6.10
5.09
Weighted Average Number of Shares Outstanding:
Basic
30.1
32.1
30.2
32.5
Diluted
30.3
32.4
30.5
32.8
See Notes to Condensed Consolidated Financial Statements.
Condensed Consolidated Balance Sheets
December 31,
(In millions)
ASSETS
Current Assets:
Cash and cash equivalents
119.3
141.9
Accounts receivable, net of allowance for credit losses of $7.9 million and $8.6 million, respectively
335.3
256.8
Prepaid expenses and other assets
81.4
73.2
Total current assets
536.0
471.9
Long-term Assets:
Investment in SSAT
106.2
96.2
Property and equipment, net
2,680.3
2,499.4
Operating lease right-of-use assets
373.0
369.6
Goodwill
327.8
Intangible assets, net
140.3
146.6
Capital Construction Fund
345.8
532.7
Deferred dry-docking costs, net
109.6
Other long-term assets
94.5
96.7
Total long-term assets
4,177.5
4,163.7
Total Assets
4,713.5
4,635.6
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Current portion of debt
39.7
Accounts payable and accruals
297.9
244.9
Operating lease liabilities
132.8
128.5
Other liabilities
133.4
114.3
Total current liabilities
603.8
527.4
Long-term Liabilities:
Long-term debt, net of deferred loan fees
292.7
312.1
Long-term operating lease liabilities
251.2
246.8
Deferred income taxes, net
704.4
701.9
Other long-term liabilities
88.3
88.4
Total long-term liabilities
1,336.6
1,349.2
Commitments and Contingencies (see Note 16)
Shareholders’ Equity:
Common stock
22.4
22.8
Additional paid in capital
280.0
295.2
Accumulated other comprehensive income (loss), net
(1.3)
Retained earnings
2,472.0
2,439.4
Total shareholders’ equity
2,773.1
2,759.0
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
84.3
81.8
Amortization of operating lease right-of-use assets
68.8
66.9
2.5
0.3
Share-based compensation expense
11.7
(9.8)
(13.9)
Other
(0.1)
(4.7)
Changes in assets and liabilities:
Accounts receivable, net
(78.6)
(19.7)
Deferred dry-docking payments
(24.6)
(23.8)
Deferred dry-docking amortization
16.1
13.6
(9.2)
(10.6)
Accounts payable, accruals and other liabilities
50.3
(3.0)
Operating lease assets and liabilities, net
(63.6)
(67.8)
(2.2)
Net cash provided by operating activities
231.6
194.6
Cash Flows From Investing Activities:
Vessel construction expenditures
(199.8)
(104.1)
Capital expenditures (excluding vessel construction expenditures)
(55.7)
(71.4)
Proceeds from disposal of property and equipment, net
Cash and interest deposited into the Capital Construction Fund
(9.5)
(109.1)
Withdrawals from Capital Construction Fund
197.7
100.7
Net cash used in investing activities
(67.4)
(183.4)
Cash Flows From Financing Activities:
Repayments of debt
(19.9)
Dividends paid
(22.0)
(22.3)
Repurchase of Matson common stock
(119.8)
(160.4)
Tax withholding related to net share settlements of restricted stock units
(25.1)
(16.3)
Net cash used in financing activities
(186.8)
(218.9)
Net Decrease in Cash and Cash Equivalents
(22.6)
(207.7)
Cash and Cash Equivalents, Beginning of the Period
266.8
Cash and Cash Equivalents, End of the Period
59.1
Supplemental Cash Flow Information:
Interest paid, net of capitalized interest
2.7
Income taxes paid, net of income tax refunds
31.7
40.7
Non-cash Information:
Capital expenditures included in accounts payable, accruals and other liabilities
3.8
4.0
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, 2025
30.4
—
56.6
Other comprehensive income (loss), net of tax
Share-based compensation
5.5
Shares issued, net of shares withheld for employee taxes
(25.3)
Shares repurchased
(0.4)
(0.3)
(0.8)
(53.3)
(54.4)
Dividends ($0.36 per share)
(11.0)
Balance at March 31, 2026
22.7
274.6
1.1
2,431.7
2,730.1
6.2
(66.7)
Dividends ($0.36 per share and $0.38 per share)
(22.4)
Balance at June 30, 2026
29.9
Balance at December 31, 2024
33.0
24.7
296.7
(6.5)
2,337.1
2,652.0
72.3
5.8
0.1
(16.2)
(16.1)
(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)
(0.7)
(90.6)
(93.7)
Dividends ($0.34 per share and $0.36 per share)
Balance at June 30, 2025
31.8
23.8
288.0
(6.3)
2,312.5
2,618.0
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL 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 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 in Hawaii and 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 seven 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 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 Part II, Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
Fiscal Period: The period end for Matson covered by this report is June 30, 2026. The period end for MatNav and its subsidiaries covered by this report is June 26, 2026.
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, 2025.
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: useful lives of property and equipment, impairment of investments; impairment of long-lived assets, intangible assets and goodwill; capitalized interest; allowance for credit losses; legal contingencies; insurance reserves and other related liabilities; accrual estimates; pension and post-retirement estimates; multi-employer withdrawal liabilities; operating lease assets and liabilities; estimates of income (loss) from SSAT; and income tax estimates. Future results could be materially affected if actual results differ from these estimates and assumptions.
Recognition of Revenues and Expenses: Revenue and expenses in the Company’s Condensed Consolidated Financial Statements are presented net of elimination of intercompany amounts and transactions. The following is a description of the Company’s principal revenue generating activities by segment, and the Company’s revenue and expense recognition policy for each activity for the periods presented:
Ocean Transportation (in millions) (1)
Ocean Transportation services
760.3
671.0
1,361.7
1,303.9
Terminal and other related services
2.6
4.4
Fuel sales
4.5
7.4
4.7
Total
Logistics (in millions) (1)
Transportation Brokerage and Freight Forwarding services
186.3
137.2
321.2
264.5
Warehousing services
7.0
10.0
16.3
19.0
Supply Chain Management services
8.7
7.7
15.8
16.0
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. Deferred revenue is included in other liabilities in the Company’s Condensed Consolidated Financial Statements. 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 $0.8 million and $1.0 million of interest related to the construction of three new vessels for the three months ended June 30, 2026 and 2025, and $1.7 million and $2.1 million for the six months ended June 30, 2026 and 2025, respectively.
Dividends: The Company’s second quarter 2026 cash dividend of $0.36 per share was paid on June 4, 2026. On June 25, 2026, the Company’s Board of Directors declared a cash dividend of $0.38 per share payable on September 3, 2026 to shareholders of record on August 6, 2026.
Repurchase of Shares: During the three and six months ended June 30, 2026, the Company repurchased approximately 0.3 million and 0.7 million shares for a total cost of $67.8 million and $122.2 million, respectively. 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.
On April 23, 2026, the Company’s Board of Directors approved an additional 3.0 million shares of common stock to be added to the Company’s existing share repurchase program and extended the program to December 31, 2029. As of June 30, 2026, the maximum number of remaining shares that may be repurchased under the Company’s share repurchase program was approximately 3.4 million shares.
Recently adopted accounting pronouncements: In July 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2025-05, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025-05”). ASU 2025-05 provides optional simplified methods for estimating credit losses on current accounts receivable. ASU 2025-05 is effective for interim and annual periods beginning after December 31, 2025. The adoption of ASU 2025-05 during the six months ended June 30, 2026 did not have a material impact on the Company’s Consolidated Financial Statements.
New Accounting Pronouncements: In November 2024, the 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.
7
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 Condensed Consolidated Balance Sheets.
Reportable segment financial information for the three months ended June 30, 2026 and 2025 are as follows:
June 30, 2026
June 30, 2025
Operating Revenue (1)(2)
Operating Expenses:
Operating costs:
Direct cargo expense
(261.8)
(249.7)
Vessel operating expense
(174.2)
(150.6)
Operating overhead (3)
(90.5)
(86.5)
Direct operating costs
(168.7)
(122.4)
(39.1)
(42.1)
(37.9)
(3.3)
(41.2)
Total operating costs
(565.6)
(171.7)
(524.7)
(125.7)
(62.6)
(15.4)
(59.6)
(14.8)
(623.4)
(187.1)
(577.0)
(140.5)
Operating Income:
144.0
14.9
98.6
14.4
Capital Expenditures (4)
206.1
207.2
85.1
1.2
86.3
8
Reportable segment financial information for the six months ended June 30, 2026 and 2025 are as follows:
Operating Revenue (5)(6)
(496.5)
(487.9)
(312.8)
(298.0)
Operating overhead (7)
(172.3)
(173.5)
(295.3)
(240.3)
(78.2)
(6.1)
(84.3)
(75.2)
(6.6)
(81.8)
(1,059.8)
(301.4)
(1,034.6)
(246.9)
Income (Loss) from SSAT
(125.3)
(30.2)
(120.1)
(29.7)
(1,175.3)
(331.6)
(1,140.8)
(276.6)
198.6
21.7
172.2
22.9
Capital Expenditures (8)
253.2
2.3
255.5
173.2
175.5
Ocean Transportation’s operating expenses includes the following:
Logistics’ operating expenses includes the following:
9
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 $72.3 million and $62.5 million for the three months ended June 30, 2026 and 2025, and $119.9 million and $116.5 million for the six months ended June 30, 2026 and 2025, 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 Part II, Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. Condensed income statement information for SSAT for the three and six months ended June 30, 2026 and 2025 consisted of the following:
Operating revenue
294.1
307.7
576.8
619.2
Operating costs and expenses
(278.9)
(294.6)
(564.3)
(592.1)
Operating income
15.2
13.1
12.5
27.1
SSAT’s Net Income (1)
20.9
18.7
24.9
36.4
Company’s Share of SSAT’s Net Income (2)
The Company’s investment in SSAT was $106.2 million and $96.2 million at June 30, 2026 and December 31, 2025, respectively.
5. PROPERTY AND EQUIPMENT
Property and equipment as of June 30, 2026 and December 31, 2025 consisted of the following:
Cost:
Vessels
2,423.6
2,405.0
Containers and equipment
974.6
943.0
Terminal equipment and other property
175.4
171.7
Vessel construction in progress
643.0
443.2
Other construction in progress
39.8
44.1
Total Property and Equipment
4,256.4
4,007.0
Less: Accumulated Depreciation
(1,576.1)
(1,507.6)
Total Property and Equipment, net
Vessel construction in progress at June 30, 2026 and December 31, 2025 includes milestone progress payments, capitalized interest and other costs related to the construction of three new vessels. Delivery of the vessels are expected during the first quarter 2027, the third quarter 2027 and the second quarter 2028.
10
6. GOODWILL AND INTANGIBLES
The Company’s goodwill and intangibles are described in Note 6 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, 2025. Goodwill by reportable segment as of June 30, 2026 and December 31, 2025 consisted of the following:
As of June 30, 2026
As of December 31, 2025
Ocean
Transportation
222.6
105.2
Intangible assets by reportable segment as of June 30, 2026 and December 31, 2025 consisted of the following:
Customer Relationships:
140.6
106.6
247.2
Less: Accumulated Amortization
(134.2)
(127.9)
Total Customer Relationships, net
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 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 2025 annual impairment tests, the Company concluded that an impairment triggering event did not occur during the three and six months ended June 30, 2026.
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.
11
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, 2025. A summary of the activities within the CCF cash and cash equivalents, and CCF investments account for the six months ended June 30, 2026 and 2025 consisted of the following:
CCF Cash and Cash Equivalents:
CCF cash and cash equivalents balance at beginning of period
307.2
230.7
Proceeds from U.S. Treasury debt securities at maturity
115.5
91.1
Interest income on cash and cash equivalents, and CCF investments
7.1
8.3
Repurchase of assigned accounts receivable
Qualifying withdrawal payments for vessel construction expenditures
(197.7)
(100.7)
Total CCF cash and cash equivalents balance at end of period
233.7
330.1
CCF Investments:
CCF investments balance at beginning of period
225.5
411.9
Sale of U.S. Treasury debt securities at maturity
(115.5)
(91.1)
Accretion of CCF investments
2.1
Total CCF investments balance at end of period
112.1
326.6
Total CCF cash and cash equivalents, and investments balance at end of period
656.7
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, 2026, these short-term securities had a weighted average life of 99 days.
CCF Investments: The cost of CCF 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.
CCF Maturities: As of June 30, 2026, CCF investments maturities are as follows:
As of
Year (in millions)
Cost
Fair Value
Remainder of 2026
59.6
2027
52.5
52.6
Total CCF investments
112.2
CCF cash and cash equivalents, and investments are classified as a long-term asset in 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 vessels.
CCF Assigned Accounts Receivable: As of June 30, 2026 and December 31, 2025, eligible accounts receivable of $82.3 million and $82.3 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.
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8. DEBT
The Company’s debt is described in Note 8 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, 2025. Total debt as of June 30, 2026 and December 31, 2025 consisted of the following:
Private Placement Term Loans:
3.37 %, payable through 2027
17.2
23.1
3.14 %, payable through 2031
78.7
85.8
Title XI Debt:
1.22 %, payable through 2043
138.5
142.4
1.35 %, payable through 2044
106.9
109.9
Revolving credit facility, maturity date of July 23, 2030
Total Debt
341.3
361.2
Less: Current portion of debt
(39.7)
Total Long-term Debt
301.6
321.5
Less: Deferred loan fees
(8.9)
(9.4)
Total Long-term Debt, net of deferred loan fees
Revolving Credit Facility: As of June 30, 2026, the Company had $544.2 million of remaining borrowing availability under its $550 million revolving credit facility. The Company used $5.8 million of the revolving credit facility for letters of credit outstanding as of June 30, 2026. Borrowings under the revolving credit facility are classified as long-term debt in the Company’s Condensed Consolidated Balance Sheets, as principal payments are not required until the maturity date.
Debt Maturities: As of June 30, 2026, debt maturities are as follows:
19.8
2028
28.2
2029
2030
Thereafter
197.2
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, 2025.
Components of Lease Cost: Components of lease cost recorded in the Company’s Condensed Consolidated Statements of Income and Comprehensive Income for the three and six months ended June 30, 2026 and 2025 consisted of the following:
Operating lease cost
39.3
35.8
77.1
74.0
Short-term lease cost
2.9
3.3
4.3
4.9
Variable lease cost
42.3
39.2
81.6
79.1
Sublease income
(1.5)
(3.1)
(1.8)
(6.7)
Total lease cost, net
40.8
36.1
79.8
72.4
13
Minimum Lease Payments: Future minimum lease payments of operating lease liabilities that have non-cancelable lease terms in excess of one year at June 30, 2026 are as follows:
124.2
78.0
47.3
29.1
81.3
Total lease payments
439.0
Less: Operating lease interest
(55.0)
Present value of operating lease liabilities
384.0
Less: Current portion of operating lease liabilities
(132.8)
10. INCOME TAXES
The Company’s income taxes are described in Note 10 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, 2025.
Income Taxes: Income taxes consist of the following for the three and six months ended June 30, 2026 and 2025:
Three Months Ended June 30,
Current:
Federal
26.9
34.6
38.5
State
3.5
6.1
Foreign
1.8
Total current tax expense
32.7
27.0
42.7
46.4
Deferred:
3.0
0.6
0.7
(0.6)
Total deferred tax expense
3.1
Total income taxes
34.5
45.8
46.9
Income Tax Legislation: 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 were effective in fiscal 2025 and in the beginning of fiscal 2026, while others are effective in future years. The application of the Act did not have a material impact on the Company’s effective tax rate during the three and six months ended June 30, 2026 and 2025.
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11. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Changes in accumulated other comprehensive income (loss) by component, net of tax, for the six months ended June 30, 2026 consisted of the following:
Non-
Post-
Qualified
Pension
Retirement
Benefits
(8.6)
8.9
2.0
Amortization of prior service credit
Amortization of net actuarial gain (loss)
Foreign currency exchange
8.4
Amortization of net actuarial loss
7.9
Changes in accumulated other comprehensive income (loss) by component, net of tax, for the six months ended June 30, 2025 consisted of the following:
(14.0)
8.1
6.4
1.7
12. 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 CCF cash and cash equivalents approximate their carrying values due to the nature of the instruments. The fair value of CCF investments 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, 2026 and December 31, 2025 are as follows:
Quoted Prices in
Significant
Active Markets
Observable
Unobservable
Carrying Value
Total
(Level 1)
Inputs (Level 2)
Inputs (Level 3)
Fair Value Measurements at June 30, 2026
CCF - Cash and cash equivalents
CCF - Investments
Fixed rate debt
272.8
December 31, 2025
Fair Value Measurements at December 31, 2025
226.4
293.6
13. 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, 2026 and 2025.
The computations for basic and diluted earnings per share for the three and six months ended June 30, 2026 and 2025 are as follows:
Three Months Ended June 30, 2026
Six Months Ended June 30, 2026
Weighted
Per
Average
Common
Net
Share
Income
Amount
Effect of Dilutive Securities
(0.03)
(0.06)
Three Months Ended June 30, 2025
Six Months Ended June 30, 2025
(0.05)
14. SHARE-BASED AWARDS
The Company’s share-based awards are described in Note 15 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, 2025. During the three and six months ended June 30, 2026, the Company granted time-based restricted stock units and performance-based shares to certain of its employees totaling approximately 6,500 shares and 267,400 shares, with a combined weighted average grant date fair value of $170.13 and $117.58 per share, respectively.
Total share-based compensation expense, net of forfeitures recognized in the Condensed Consolidated Statements of Income and Comprehensive Income as a component of general and administrative expenses was $6.2 million and $5.9 million for the three months ended June 30, 2026 and 2025, and $11.7 million and $11.7 million for the six months ended June 30, 2026 and 2025, respectively. Total unrecognized compensation cost related to non-vested stock units and performance based equity awards was $33.4 million at June 30, 2026, and is expected to be recognized over a weighted average period of approximately 1.9 years.
16
15. 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, 2025. 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, 2026 and 2025 consisted of the following:
Pension Benefits
Post-retirement Benefits
Components of net periodic benefit cost (credit):
Service cost
1.3
Interest cost
Expected return on plan assets
(3.8)
(4.4)
Amortization of net actuarial loss (gain)
Net periodic benefit credit
2.2
5.1
5.2
(8.2)
(8.8)
(1.1)
(1.4)
16. COMMITMENTS AND CONTINGENCIES
The Company’s commitments and contingencies are described in Note 17 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, 2025. Contingencies and other litigation related matters are described as follows:
Environmental Matters: The Company faces certain risks that could result in material expenditures related to environmental remediation. The Company believes that based on all information currently 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, Securities and Exchange Commission (“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 2026 or future years, including such references included under “Second Quarter 2026 Discussion and Outlook for 2026,” as well as statements generally identified through the inclusion of words such as “anticipate,” “believe,” “can,” “commit,” “estimate,” “expect,” “focus,” “goal,” “hope,” “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-K for the year ended December 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, 2025, the Company’s reports on Forms 10-Q and 8-K, and other publicly available information.
SECOND QUARTER 2026 DISCUSSION AND OUTLOOK FOR 2026
Ocean Transportation: The Company’s container volume in the Hawaii service in the second quarter 2026 was 1.1 percent lower year-over-year primarily due to lower general demand. Hawaii’s economy remains stable, supported by strong construction activity and modest growth in tourist arrivals, but continues to face headwinds from higher energy-related inflation. The Company expects volume in full year 2026 to approach the level achieved in 2025, based on the Company’s expectation of similar economic conditions and stable market share.
In the China service, the Company’s container volume in the second quarter 2026 increased 15.2 percent year-over-year primarily due to significantly higher demand compared to the prior year period, which included a market decline in Transpacific demand due to the tariffs imposed in April 2025. In the second quarter 2026, momentum in the China service carried over from the post-Lunar New Year period, and the Company’s CLX and MAX services saw higher-
than-expected freight rates and demand across e-commerce, garments and e-goods against a backdrop of tighter supply conditions in the Transpacific tradelane. The Company expects its China service to be at or near capacity through peak season. For the fourth quarter 2026, the Company expects demand to reflect a more traditional seasonality pattern compared to the elevated period of freight demand experienced in the Transpacific market in the fourth quarter 2025 following the U.S.-China trade and economic agreement announced on October 30, 2025. As such, the Company expects volume in full year 2026 to be higher than the level achieved in 2025 based on the Company’s expectations of continued solid U.S. consumer demand and a stable trading environment in the Transpacific tradelane.
In the Guam service, the Company’s container volume in the second quarter 2026 increased 4.4 percent year-over-year. In the near term, the Company expects Guam’s economy to remain stable. For full year 2026, the Company expects volume to be comparable to the level achieved last year.
In the Alaska service, the Company’s container volume in the second quarter 2026 decreased 2.3 percent year-over-year primarily due to lower export seafood volume on AAX, partially offset by one additional northbound sailing. In the near term, the Company expects Alaska’s economy to remain stable supported by a low unemployment rate, steady job market and continued oil and gas exploration and production activity. For full year 2026, the Company expects volume to approach the level achieved last year.
The contribution from the Company’s SSAT joint venture investment was $4.8 million in the second quarter 2026, or $2.5 million lower than second quarter 2025. The decrease was primarily due to lower lift volume and higher operating expenses. For full year 2026, the Company expects the contribution from SSAT to be lower than the $32.5 million achieved in full year 2025.
Based on the outlook trends noted above, the Company expects Ocean Transportation operating income in the third quarter 2026 to be approximately 45 percent higher than the $147.4 million achieved in the third quarter 2025. The Company also expects Ocean Transportation operating income in the fourth quarter 2026 to be modestly lower than the $136.0 million achieved in the fourth quarter 2025. For full year 2026, the Company expects Ocean Transportation operating income to be higher than the $455.6 million achieved in full year 2025.
Logistics: Operating income for the Company’s Logistics segment was $14.9 million in the second quarter 2026, or $0.5 million higher compared to the level achieved in the second quarter 2025. The increase was primarily due to higher contributions from freight forwarding and transportation brokerage, partially offset by a lower contribution from warehousing. For the third and fourth quarters 2026, the Company expects Logistics operating income to be modestly higher than the $13.6 million and $7.7 million achieved in the third and fourth quarters 2025, respectively. For full year 2026, the Company expects Logistics operating income to be higher than the $44.2 million achieved in full year 2025.
Consolidated Operating Income: To date, the Iran conflict has not impacted the Company’s operating performance or service levels; however, it has impacted fuel prices in all of the Company’s markets. The Company continues to expect to fully recover fuel costs by the end of the year. For the third quarter 2026, the Company expects consolidated operating income to be approximately 45 percent higher than the level achieved in the third quarter 2025. For full year 2026, the Company expects consolidated operating income to be higher than the level achieved in full year 2025 based on the Company’s expectations of continued solid U.S. consumer demand and a stable trading environment in the Transpacific tradelane.
Depreciation and Amortization: For full year 2026, the Company expects depreciation and amortization expense to be approximately $205 million, inclusive of dry-docking amortization of approximately $35 million.
Interest Income: The Company expects interest income for the full year 2026 to be approximately $18 million.
Interest Expense, Net: The Company expects interest expense, net for the full year 2026 to be approximately $6 million.
Other Income (Expense), Net: The Company expects full year 2026 other income (expense), net to be approximately $7 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.
Income Taxes: For the second quarter 2026, the Company’s effective tax rate was 21.0 percent. For the full year 2026, the Company expects its effective tax rate to be approximately 21.0 percent.
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Capital and Vessel Dry-docking Expenditures: For the second quarter 2026, the Company made capital expenditure payments excluding vessel construction expenditures of $25.4 million, vessel construction expenditures (including capitalized interest and owner’s items) of $181.8 million, and dry-docking payments of $12.7 million. For the full year 2026, the Company expects to make capital expenditure payments, including maintenance capital expenditures, of approximately $150 to $170 million, vessel construction expenditures (including capitalized interest and owner’s items) of approximately $400 million, and dry-docking payments of approximately $45 million.
CONSOLIDATED RESULTS OF OPERATIONS
Consolidated Results – Three months ended June 30, 2026 compared with 2025:
(Dollars in millions, except per share amounts)
Change
138.9
16.7
%
(93.0)
13.0
45.9
40.6
(37.5)
(5.9)
(33.3)
Income before taxes
42.2
34.7
(7.5)
27.8
36.6
Basic earnings per share
1.35
Diluted earnings per share
46.2
Consolidated Operating Revenues for the three months ended June 30, 2026 increased by $138.9 million, or 16.7 percent, compared to the three months ended June 30, 2025. The increase was due to an increase in Ocean Transportation revenue of $91.8 million and an increase in Logistics revenue of $47.1 million.
Operating Costs and Expenses for the three months ended June 30, 2026 increased by $93.0 million, or 13.0 percent, compared to the three months ended June 30, 2025. The increase was due to an increase in Ocean Transportation operating costs and expenses of $46.4 million and an increase in Logistics operating costs and expenses of $46.6 million.
Operating Income for the three months ended June 30, 2026 increased by $45.9 million, or 40.6 percent, compared to the three months ended June 30, 2025. The increase was due to an increase in Ocean Transportation operating income of $45.4 million and an increase in Logistics operating income of $0.5 million.
Changes in operating revenue, operating costs and expenses, and operating income are further described below in the Analysis of Operating Revenue and Income by Segment.
Interest Income was $5.0 million for the three months ended June 30, 2026, compared to $8.0 million for the three months ended June 30, 2025. The decrease in interest income for the three months ended June 30, 2026, compared to the three months ended June 30, 2025, was due to lower amounts of cash and cash equivalents, and CCF funds that were invested in interest bearing accounts during the three months ended June 30, 2026.
Interest Expense, Net was $1.6 million for the three months ended June 30, 2026, compared to $1.7 million for the three months ended June 30, 2025. Interest expense, net incurred during the quarter ended June 30, 2026 was lower due to a reduction in outstanding debt during the period, which was offset by a reduction in capitalized interest related to the construction of three new vessels for the three months ended June 30, 2026, compared to the three months ended June 30, 2025.
Other Income (Expense), Net was $1.6 million for the three months ended June 30, 2026, compared to $2.4 million for the three months ended June 30, 2025. Other income (expense), net relates to the amortization of certain components of net periodic benefit costs or gains related to the Company’s pension and post-retirement plans. The decrease in other income (expense), net was due to a decrease in the amortization of favorable adjustments related to the Company’s pension and post-retirement plan liabilities.
20
Income Taxes were $34.5 million, or 21.0 percent of income before taxes, for the three months ended June 30, 2026, compared to $27.0 million, or 22.2 percent of income before taxes, for the three months ended June 30, 2025. The effective tax rate for the three months ended June 30, 2026 benefited from higher discrete tax adjustments that lowered the effective tax rate for that period, compared to the same prior year period.
Consolidated Results – Six months ended June 30, 2026 compared with 2025:
114.7
(89.5)
6.3
25.2
12.9
(36.2)
(1.2)
(25.0)
17.9
(2.3)
1.02
1.01
Consolidated Operating Revenues for the six months ended June 30, 2026 increased by $114.7 million, or 7.1 percent, compared to the six months ended June 30, 2025. The increase was due to an increase in Ocean Transportation revenue of $60.9 million and an increase in Logistics revenue of $53.8 million.
Operating Costs and Expenses for the six months ended June 30, 2026 increased by $89.5 million, or 6.3 percent, compared to the six months ended June 30, 2025. The increase was due to an increase in Ocean Transportation operating costs and expenses of $34.5 million and an increase in Logistics operating costs and expenses of $55.0 million.
Operating Income for the six months ended June 30, 2026 increased by $25.2 million, or 12.9 percent, compared to the six months ended June 30, 2025. The increase was due to an increase in Ocean Transportation operating income of $26.4 million, partially offset by a decrease in Logistics operating income of $1.2 million.
Interest Income was $11.1 million for the six months ended June 30, 2026, compared to $17.4 million for the six months ended June 30, 2025. The decrease in interest income for the six months ended June 30, 2026, compared to the six months ended June 30, 2025, was due to lower amounts of cash and cash equivalents, and CCF funds that were invested in interest bearing accounts during the six months ended June 30, 2026.
Interest Expense, Net was $3.2 million for the six months ended June 30, 2026, compared to $3.4 million for the six months ended June 30, 2025. Interest expense, net incurred during the six months ended June 30, 2026 was lower due to a reduction in outstanding debt during the period, which was offset by a reduction in capitalized interest related to the construction of three new vessels for the six months ended June 30, 2026, compared to the six months ended June 30, 2025.
Other Income (Expense), Net was $3.6 million for the six months ended June 30, 2026, compared to $4.8 million for the six months ended June 30, 2025. Other income (expense), net relates to the amortization of certain components of net periodic benefit costs or gains related to the Company’s pension and post-retirement plans. The decrease in other income (expense), net was due to a decrease in the amortization of favorable adjustments related to the Company’s pension and post-retirement plan liabilities.
Income Taxes were $45.8 million, or 19.8 percent of income before taxes, for the six months ended June 30, 2026, compared to $46.9 million, or 21.9 percent of income before taxes, for the six months ended June 30, 2025. The effective tax rate for the six months ended June 30, 2026 benefited from higher discrete tax adjustments related to share-based payment awards and other adjustments that lowered the effective tax rate for that period, compared to the same prior year period.
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ANALYSIS OF OPERATING REVENUE AND INCOME BY SEGMENT
Ocean Transportation Operating Results – Three months ended June 30, 2026 compared with 2025:
(Dollars in millions)
Ocean Transportation revenue
91.8
(46.4)
45.4
46.0
Operating income margin
18.8
14.6
Volume by Service (Forty-foot equivalent units (FEU)) (1)
Hawaii containers
35,600
36,000
(400)
Alaska containers
21,200
21,700
(500)
China containers (2)
37,200
32,300
4,900
Guam containers
4,700
4,500
200
Other containers (3)
3,900
4,400
(11.4)
Ocean Transportation revenue increased $91.8 million, or 13.6 percent, during the three months ended June 30, 2026, compared with the three months ended June 30, 2025. The increase was primarily due to higher volume and freight rates in the China service.
On a year-over-year FEU basis, Hawaii service container volume decreased 1.1 percent primarily due to lower general demand; Alaska service volume decreased 2.3 percent primarily due to lower export seafood volume on AAX, partially offset by one additional northbound sailing; China service volume increased 15.2 percent primarily due to significantly higher demand compared to the prior year period, which included a market decline in Transpacific demand due to the tariffs imposed in April 2025; Guam service volume increased 4.4 percent; and Other containers volume decreased 11.4 percent.
Ocean Transportation operating income increased $45.4 million, or 46.0 percent, during the three months ended June 30, 2026, compared with the three months ended June 30, 2025. The increase was primarily due to a higher contribution from the China service, partially offset by higher vessel operating expense primarily due to higher fuel-related costs.
The Company’s SSAT terminal joint venture investment contributed $4.8 million during the three months ended June 30, 2026, compared to $7.3 million during the three months ended June 30, 2025. The decrease was primarily due to lower lift volume and higher operating expenses.
Ocean Transportation Operating Results – Six months ended June 30, 2026 compared with 2025:
60.9
4.6
26.4
15.3
14.5
69,300
71,700
(2,400)
40,500
41,400
(900)
63,000
60,800
2,200
8,900
8,700
7,200
7,800
(600)
(7.7)
22
(3)
Includes containers from services in various islands in Micronesia and the South Pacific, and Okinawa, Japan.
Ocean Transportation revenue increased $60.9 million, or 4.6 percent, during the six months ended June 30, 2026, compared with the six months ended June 30, 2025. The increase was primarily due to higher freight rates and volume in the China service.
On a year-over-year FEU basis, Hawaii service container volume decreased 3.3 percent primarily due to lower general demand; Alaska service volume decreased 2.2 percent primarily due to lower general demand; China service volume increased 3.6 percent primarily due to significantly higher demand in the second quarter 2026 compared to the second quarter 2025, which included a market decline in Transpacific demand due to the tariffs imposed in April 2025; Guam service volume increased 2.3 percent; and Other containers volume decreased 7.7 percent.
Ocean Transportation operating income increased $26.4 million, or 15.3 percent, during the six months ended June 30, 2026, compared with the six months ended June 30, 2025. The increase was primarily due to a higher contribution from the China service, partially offset by higher vessel operating expense primarily due to higher fuel-related costs.
The Company’s SSAT terminal joint venture investment contributed $9.8 million during the six months ended June 30, 2026, compared to $13.9 million during the six months ended June 30, 2025. The decrease was primarily due to lower lift volume.
Logistics Operating Results – Three months ended June 30, 2026 compared with 2025:
Logistics revenue
47.1
(46.6)
33.2
9.3
Logistics revenue increased $47.1 million, or 30.4 percent, during the three months ended June 30, 2026, compared with the three months ended June 30, 2025. The increase was primarily due to higher revenue in transportation brokerage.
Logistics operating income increased $0.5 million, or 3.5 percent, during the three months ended June 30, 2026, compared with the three months ended June 30, 2025. The increase was primarily due to higher contributions from freight forwarding and transportation brokerage, partially offset by a lower contribution from warehousing.
Logistics Operating Results – Six months ended June 30, 2026 compared with 2025:
53.8
18.0
19.9
(5.2)
7.6
Logistics revenue increased $53.8 million, or 18.0 percent, during the six months ended June 30, 2026, compared with the six months ended June 30, 2025. The increase was primarily due to higher revenue in transportation brokerage.
Logistics operating income decreased $1.2 million, or 5.2 percent, during the six months ended June 30, 2026, compared with the six months ended June 30, 2025. The decrease was primarily due to a lower contribution from warehousing, partially offset by a higher contribution from freight forwarding.
LIQUIDITY AND CAPITAL RESOURCES
The Company’s primary sources of liquidity are its cash flows generated from operating activities and its debt. Sources of liquidity available to the Company as of June 30, 2026 compared to December 31, 2025 were as follows:
23
Cash and Cash Equivalents, Accounts Receivable and CCF: Cash and cash equivalents, accounts receivable and CCF as of June 30, 2026 compared to December 31, 2025 were as follows:
Accounts receivable, net (1)
78.5
CCF - cash and cash equivalents, and investments account
(186.9)
Changes in the Company’s cash and cash equivalents for the six months ended June 30, 2026, compared to the six months ended June 30, 2025, are as follows:
Net cash provided by operating activities (1)
37.0
Net cash used in investing activities (2)
116.0
Net cash used in financing activities (3)
Net decrease in cash and cash equivalents
185.1
Cash and cash equivalents, beginning of the period
(124.9)
Cash and cash equivalents, end of the period
60.2
(1) Changes in net cash provided by operating activities:
Changes in net cash provided by operating activities for the six months ended June 30, 2026, compared to the six months ended June 30, 2025, were due to the following:
Non-cash depreciation and amortization
Other non-cash related changes, net
Income and distribution from SSAT, net
4.1
(58.9)
53.3
4.2
Non-cash amortization of operating lease right-of-use assets
1.0
Net income was $186.0 million for the six months ended June 30, 2026, compared to $167.0 million for the six months ended June 30, 2025. Income from SSAT was $9.8 million for the six months ended June 30, 2026, compared to $13.9 million for the six months ended June 30, 2025. The decrease in income from SSAT was primarily due to lower lift volume and higher operating expenses during the six months ended June 30, 2026, compared to the same prior year period. There were no distributions received from SSAT during the six months ended June 30, 2026 and 2025. Changes in accounts receivable, net were primarily due to an increase in revenue and the timing of collections associated with those receivables. Changes in accounts payable, accruals and other liabilities were due to higher liability balances resulting from higher operating costs and the timing of payments associated with those liabilities. Changes in operating lease assets and liabilities, net 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, 2026 were $24.6 million, compared to $23.8 million for the six months ended June 30, 2025. 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, 2026, compared to the six months ended June 30, 2025, were due to the following:
Cash deposits and interest into the CCF
99.6
Withdrawals from CCF
97.0
(95.7)
15.7
During the six months ended June 30, 2026, cash deposits into the CCF included $7.9 million of interest income and $1.6 million from the repurchase of assigned accounts receivable, compared to $8.4 million of interest income and $100.7 million from the repurchase of assigned accounts receivable for the same prior year period. During the six months ended June 30, 2026, cash withdrawals from the CCF for the payment of vessel construction milestone payments were $197.7 million, compared to $100.7 million for the same prior year period. The increase in vessel construction milestone payments was due to progress made in the construction of three new vessels and the timing of related milestone payments. Capital expenditures (excluding vessel construction expenditures) were $55.7 million for the six months ended June 30, 2026, compared to $71.4 million for the six months ended June 30, 2025. Capital expenditures (excluding vessel construction expenditures) primarily relate to vessel maintenance related expenditures, the acquisition of containers, chassis and other equipment, and expenditures on other capital related projects. The decrease in capital expenditures for the six months ended June 30, 2026, compared to the same prior year period primarily related to the timing of when vessel maintenance activities are performed and when expenditures on 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, 2026, compared to the six months ended June 30, 2025, were due to the following:
Shares withheld for taxes related to settlement of restricted stock units
During the six months ended June 30, 2026, the Company paid $119.8 million to repurchase Matson common stock, compared to $160.4 million during the six months ended June 30, 2025. During the six months ended June 30, 2026, the Company paid $19.9 million in scheduled fixed interest debt payments, compared to $19.9 million during the six months ended June 30, 2025. During the six months ended June 30, 2026, the Company paid $25.1 million in withholding taxes related to vested restricted stock units, compared to $16.3 million during the six months ended June 30, 2025. During the six months ended June 30, 2026, the Company paid $22.0 million in dividends, compared to $22.3 million during the six months ended June 30, 2025. The decrease in dividend payments was due to a reduction in common stock outstanding, partially offset by an increase in dividends declared per share of common stock by the Company.
Working Capital: The Company had a working capital deficit of $67.8 million at June 30, 2026, compared to a working capital deficit of $55.5 million at December 31, 2025. 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, 2026, compared to December 31, 2025 is primarily due to a decrease in cash and cash equivalents as described above.
25
Capital Construction Fund: The Company’s CCF is described in Note 7 of Part I, Item 1 above. The Company utilizes its CCF to fund milestone payments for the construction of three new vessels. Cash on deposit and CCF investments as of June 30, 2026 and December 31, 2025 are as follows:
CCF - Cash and cash equivalents, and investments account
The Company’s CCF decreased by $186.9 million during the six months ended June 30, 2026 due to vessel milestone payments of $196.1 million, offset by approximately $9.2 million of cash deposited into the CCF.
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, 2026 and December 31, 2025 consisted of the following:
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, 2026, compared to December 31, 2025, due to scheduled fixed interest debt repayments.
As of June 30, 2026, the Company had $544.2 million of remaining borrowing availability under the revolving credit facility.
Capital Expenditures: During the six months ended June 30, 2026, there were no material changes to the Company’s expected capital expenditures for the year ending December 31, 2026 as described in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
During the six months ended June 30, 2026, the Company paid $179.8 million in milestone payments under the vessel construction agreements, compared to $100.7 million for the six months ended June 30, 2025. The following represents the estimated timing of future milestone payments under the vessel construction agreements as of June 30, 2026:
Paid
Future Milestone Payments
Vessel Construction Obligations(in millions)
As ofJune 30, 2026
Three Aloha Class Containerships
622.9
176.7
180.6
22.3
1,005.4
Repurchase of Shares: During the three and six months ended June 30, 2026, the Company repurchased approximately 0.3 million and 0.7 million shares for a total cost of $67.8 million and $122.2 million, respectively. 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. 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.
On April 23, 2026, the Company’s Board of Directors approved an additional 3.0 million shares of common stock to be added to the Company’s existing share repurchase program and extended the program to December 31, 2029. The maximum number of remaining shares that may be repurchased under the Company’s share repurchase program was approximately 3.4 million shares at June 30, 2026.
Other Material Cash Requirements: During the six months ended June 30, 2026, there were no other material changes to the Company’s other material cash requirements for the year ending December 31, 2026 as described in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
There have been no changes during the three and six months ended June 30, 2026 to the Company’s critical accounting policies and estimates as described in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
26
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 during the three and six months ended June 30, 2026 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, 2025.
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, 2026, 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, 2026, 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
Environmental Matters: The Company faces certain risks that could result in material expenditures related to 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.
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 I, Item 1A, “Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 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, 2026:
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, 2026
127,400
171.12
3,641,178
May 1 – 31, 2026
97,500
181.30
3,543,678
June 1 – 30, 2026
142,500
193.75
3,401,178
367,400
182.60
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, 2026, no director or Section 16 officer adopted or terminated any Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements.
ITEM 6. EXHIBITS
10.1*,**
Consulting Agreement with J. Lauer
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.
** Filed herewith.
*** Furnished herewith.
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 4, 2026
/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)