Matson Inc

For the period ended Dec 31, 2023. Filed Feb 23, 2024.

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FY2023 · Filed Feb 23, 2024

MATX$207.00-0.4%Stored close · as of Nov 10, 2026

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Contents

10. Income Taxes

10.	INCOME TAXES

*Income Taxes:*Income taxes consist of the following for the years ended December 31, 2023, 2022 and 2021:


· · Years Ended December 31,
(In millions) · 2023 · 2022 · 2021
Current:
Federal	$44.0	$171.5	$181.2
State	9.2	18.3	35.6
Foreign	3.0	1.3	2.5
Total current tax expense	56.2	191.1	219.3
Deferred:
Federal	18.2	71.1	26.4
State	—	24.3	0.4
Foreign	1.5	1.9	(2.2)
Total deferred tax expense	19.7	97.3	24.6
Total income taxes	$75.9	$288.4	$243.9

Income taxes for the years ended December 31, 2023, 2022 and 2021 differ from amounts computed by applying the statutory federal rate to income before income taxes as follows:

· · · · · · ·
· · Years Ended December 31,
· 2023 · 2022 · 2021
Computed federal income tax expense	21.0%	21.0%	21.0%
State income tax	2.6%	2.8%	3.1%
Foreign-derived intangible income (FDII)	(2.0)%	(2.4)%	(2.5)%
Valuation allowance	—%	—%	(0.3)%
Foreign taxes	0.4%	0.1%	0.2%
Share-based payments	0.5%	—%	(0.2)%
Return to provision true-ups	(2.8)%	0.1%	(0.2)%
Other — net	0.6%	(0.3)%	(0.3)%
Effective income tax rate	20.3%	21.3%	20.8%

The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2023 and 2022, were as follows:


· · As of December 31,
(In millions) · 2023 · 2022
Deferred tax assets:
Operating lease liabilities	$77.4	$102.9
Multi-employer withdrawal liabilities	12.8	13.3
Deferred compensation	11.8	10.9
U.S. state alternative minimum tax credits	7.4	8.8
Insurance reserves	6.3	7.3
Other	12.9	15.4
Total deferred tax assets	128.6	158.6
Valuation allowance	(5.3)	(7.4)
Total deferred tax assets, net of valuation allowance	123.3	151.2

Deferred tax liabilities:
Basis differences for property and equipment	451.4	433.1
Capital Construction Fund	206.9	194.0
Operating lease right of use assets	75.8	100.7
Intangibles	42.3	42.0
Other	16.2	27.9
Total deferred tax liabilities	792.6	797.7
Deferred tax liability, net	$669.3	$646.5

*Valuation Allowance:*Valuation allowances are recorded against the Company’s unusable state income tax net operating losses (“NOLs”) and alternative minimum tax credits, and were $5.3 million and $7.4 million as of December 31, 2023 and 2022, respectively. The Company believes that it is more likely than not that the benefit from these deferred assets will not be realized.

Income Tax Receivables: The Company has income tax receivables, net of income tax payables, of approximately$125.2 million and $170.8 million at December 31, 2023 and 2022, respectively, related to a 2021 federal income tax refund of approximately $118.6 million, overpayments of federal and state taxes paid during the year ended December 31, 2023, and other income tax receivables. These income tax receivable amounts have been included in prepaid expenses and other assets in the Company’s Consolidated Balance Sheets (see Note 2).

*Net Operating Losses and Tax Credit Carryforwards:*The Company’s NOLs and tax credit carryforwards consist of the following at December 31, 2023 and 2022:

· · · · · · · ·
(In millions) · · Expiration Date · 2023 · 2022
U.S. federal income tax NOLs	Various dates beginning in 2027	$—	$0.8
U.S. state income tax NOLs (1)	Various dates beginning in 2032	$152.3	$157.9
U.S. state alternative minimum tax credit	No expiration date	$7.3	$8.6

(1)	U.S. State income tax NOLs are presented on a gross tax basis. The Company does not expect to benefit from $152.3 million of U.S. state income tax NOLs as of December 31, 2023.

The U.S. federal and state income tax NOLs in the Company’s filed income tax returns include unrecognized tax benefits. The deferred tax assets recognized for those NOLs are presented net of these unrecognized tax benefits. As a result of changes in tax legislation, the use of a portion of the Company’s domestic NOL and tax credit carryforwards may be limited in future periods. Further, a portion of the federal and state income tax NOLs and tax credit carryforwards may expire before being applied to reduce future income tax liabilities.

*Unrecognized Tax Benefits:*Total unrecognized benefits represent the amount that, if recognized, would favorably affect the Company’s income taxes and effective tax rate in future periods. The Company does not expect a material

change in gross unrecognized benefits in the next twelve months. A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows:


Unrecognized Tax Benefits (in millions)	Amount
Balance at December 31, 2020		$18.3
Tax position changes in current year		2.3
Tax position changes in prior years		(1.2)
Reductions for lapse of statute of limitations		(0.2)
Balance at December 31, 2021		19.2
Tax position changes in current year		5.8
Tax position changes in prior years		0.3
Reductions for lapse of statute of limitations		(0.2)
Balance at December 31, 2022		25.1
Tax position changes in current year		3.6
Tax position changes in prior years		(0.1)
Reductions for lapse of statute of limitations		(0.2)
Balance at December 31, 2023		$28.4

Included in the balance of unrecognized tax benefits at December 31, 2023 are potential benefits of $24.2 million that, if recognized, would affect the Company’s income taxes and effective tax rate. The Company recognizes potential accrued interest and penalties related to unrecognized tax benefits in income taxes. To the extent interest and penalties are not ultimately assessed with respect to the settlement of uncertain tax positions, amounts accrued will be reduced and reflected as a reduction of the Company’s income taxes. Interest and penalties accrued related to the balance of unrecognized tax benefits were$0.9 million and $1.5 million as of December 31, 2023, and $0.2 million and $1.2 million as of December 31, 2022, respectively. During the years ended December 31, 2023 and 2022, the Company recognized$0.7 million and $0.8 million, respectively, in income taxes related to interest and penalties.

The Company is no longer subject to U.S. federal income tax audits for years before 2016. The Company is routinely involved in federal, state, local income and excise tax audits, and foreign tax audits.

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