Matson Inc

Previous wording

FIRST QUARTER 2024 DISCUSSION AND OUTLOOK FOR 2024

Current wording

SECOND QUARTER 2024 DISCUSSION AND OUTLOOK FOR 2024

Previous wording

In Guam, the Company’s container volume in the first quarter 2024 was flat year-over-year. In the near-term, the Company expects continued improvement in the Guam economy with a low unemployment rate and a modest increase in tourism. For 2024, the Company expects volume to approximate the level achieved last year.

Current wording

In Guam, the Company’s container volume in the second quarter 2024 decreased 6.1 percent year-over-year. The decrease was primarily due to one less sailing. In the near term, the Company expects continued improvement in the Guam economy underpinned by a low unemployment rate. For 2024, the Company expects volume to approach the level achieved last year.

Previous wording

In Alaska, the Company’s container volume for the first quarter 2024 decreased 5.1 percent year-over-year primarily due to one less northbound sailing. In the near-term, the Company expects continued economic growth in Alaska supported by a low unemployment rate, jobs growth and lower levels of inflation. For 2024, the Company expects volume to approximate the level achieved last year.

Current wording

In Alaska, the Company’s container volume for the second quarter 2024 increased 4.9 percent year-over-year primarily due to two additional northbound sailings. In the near term, the Company expects continued economic growth in Alaska supported by a low unemployment rate, jobs growth and lower levels of inflation. For 2024, the Company expects volume to approximate the level achieved last year.

Previous wording

The contribution in the first quarter 2024 from the Company’s SSAT joint venture investment was $0.4 million, or $2.2 million higher than the first quarter 2023. The increase was primarily due to higher lift volume. For 2024, the Company expects the contribution from SSAT to be higher than the levels achieved in 2023 due to an expected increase in lift volumes.

Current wording

The contribution in the second quarter 2024 from the Company’s SSAT joint venture investment was $1.2 million, or $2.6 million higher than the second quarter 2023. The increase was primarily due to higher lift volume. For 2024, the Company expects the contribution from SSAT to be modestly higher than the levels achieved in 2023 due to an expected increase in lift volumes.

Previous wording

As a result of first quarter performance and the outlook trends noted above, the Company expects full year 2024 Ocean Transportation operating income to be higher than the $294.8 million achieved in 2023 and higher than the previous outlook. In the second quarter 2024, the Company expects Ocean Transportation operating income to be moderately higher than the level achieved in the second quarter 2023.

Current wording

As a result of the outlook trends noted above, the Company expects third quarter 2024 operating income for Ocean Transportation to be meaningfully higher than the $118.2 million achieved last year, and in the fourth quarter 2024, the Company expects Ocean Transportation operating income to be moderately higher than the $66.4 million achieved in the fourth quarter 2023.

Previous wording

Depreciation and Amortization: For the full year 2024, the Company expects depreciation and amortization expense to be approximately $180 million, inclusive of dry-docking amortization of approximately $27 million.

Current wording

Depreciation and Amortization: For full year 2024, the Company expects depreciation and amortization expense to be approximately $180 million, inclusive of dry-docking amortization of approximately $27 million.

Previous wording

*Interest Income:*The Company expects interest income for the full year 2024 to be approximately $45 million. The increase in expected interest income from the prior outlook is due to the receipt on April 19, 2024 of $10.2 million in interest income earned on the federal tax refund related to the Company’s 2021 federal tax return.

Current wording

*Interest Income:*The Company expects interest income for the full year 2024 to be approximately $45 million. This includes the receipt on April 19, 2024 of $10.2 million in interest income earned on the federal tax refund related to the Company’s 2021 federal tax return.

Previous wording

Income Taxes: In the first quarter 2024, the Company’s effective tax rate was 20.3 percent. For the full year 2024, the Company expects its effective tax rate to be approximately 22.0 percent.

Current wording

Income Taxes: In the second quarter 2024, the Company’s effective tax rate was 20.9 percent. For the full year 2024, the Company expects its effective tax rate to be approximately 22.0 percent.

Previous wording

Capital and Vessel Dry-docking Expenditures: For the first quarter 2024, the Company made capital expenditure payments excluding vessel construction expenditures of $54.2 million, capitalized vessel construction expenditures of $1.1 million, and dry-docking payments of $5.2 million. For the full year 2024, the Company expects to make other capital expenditure payments, including maintenance capital expenditures, of approximately $110 to $120 million, new

Current wording

Capital and Vessel Dry-docking Expenditures: In the second quarter 2024, the Company made capital expenditure payments excluding vessel construction expenditures of $32.7 million, capitalized vessel construction expenditures of $37.1 million, and dry-docking payments of $12.1 million. For the full year 2024, the Company expects to make other capital expenditure payments, including maintenance capital expenditures, of approximately $110 to $120 million, new

Previous wording

vessel construction expenditures (including capitalized interest and owner’s items) of approximately $75 million, LNG installations and reengining on existing vessels of approximately $70 to $80 million, and dry-docking payments of approximately $35 million.

Current wording

vessel construction expenditures (including capitalized interest and owner’s items) of approximately $75 million, expenditures for LNG installations and reengining on existing vessels of approximately $85 to $95 million, and dry-docking payments of approximately $35 million.

Previous wording

The decrease in interest expense for the three months ended March 31, 2024, compared to the three months ended March 31, 2023, was due to lower outstanding debt during the period, and a higher offset of capitalized interest associated with new vessels construction.

Current wording

The decrease in interest expense for the three months ended June 30, 2024, compared to the three months ended June 30, 2023, was due to lower outstanding debt during the period, and a higher offset of capitalized interest related to the construction of new vessels.

Previous wording

Income tax expense was $9.2 million or 20.3 percent of income before taxes for the three months ended March 31, 2024, compared to $10.2 million or 23.1 percent of income before taxes for the three months ended March 31, 2023. The effective tax rate for the three months ended March 31, 2024 benefited from a 2.0 percent deduction related to foreign-derived intangible income (“FDII”) under Section 250 of the Internal Revenue Code that lowered the effective tax rate for the current period, compared to a 0.8 percent FDII deduction for the three months ended March 31, 2023. The FDII deduction for the three months ended March 31, 2023 was lower primarily due to lower projected income generated from the Company’s China service. The effective tax rate for the three months ended March 31, 2024 also benefited from certain discrete tax adjustments that lowered the effective tax rate in the current period.

Current wording

Income tax expense was $29.9 million or 20.9 percent of income before taxes for the three months ended June 30, 2024, compared to $23.5 million or 22.5 percent of income before taxes for the three months ended June 30, 2023. The effective tax rate for the three months ended June 30, 2024 benefited from a 2.5 percent deduction related to foreign-derived intangible income (“FDII”) under Section 250 of the Internal Revenue Code that lowered the effective tax rate for the current period, compared to a 1.7 percent FDII deduction for the three months ended June 30, 2023. The FDII deduction for the three months ended June 30, 2024 was higher primarily due to higher projected income generated from the Company’s China service. The effective tax rate for the three months ended June 30, 2024 also benefited from certain discrete tax adjustments that lowered the effective tax rate in the current period.

Previous wording

The increase in interest income for the three months ended March 31, 2024, compared to the three months ended March 31, 2023, was due to increased amounts of cash and CCF funds that are invested in interest bearing accounts, and higher interest rates during the period.

Current wording

The increase in interest income for the six months ended June 30, 2024, compared to the six months ended June 30, 2023, 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 increase in interest income was also due to increased amounts of cash and cash equivalent, and CCF funds that are invested in interest bearing accounts during the six months ended June 30, 2024, compared to the same prior year period.

Previous wording

On a year-over-year FEU basis, Hawaii container volume decreased 1.7 percent primarily due to lower general demand; Alaska volume decreased 5.1 percent primarily due to one less northbound sailing; China volume was 4.0 percent lower primarily due to a more traditional post-Lunar New Year period with a gradual recovery of volume after factories reopened and workers returned compared to a more accelerated increase in volume experienced post-Lunar New Year last year; Guam volume was flat; and Other containers volume decreased 12.2 percent.

Current wording

On a year-over-year FEU basis, Hawaii container volume decreased 3.6 percent primarily due to lower general demand; Alaska volume increased 4.9 percent primarily due to two additional northbound sailings; China volume was 3.0 percent higher; Guam volume decreased 6.1 percent primarily due to one less sailing; and Other containers volume was flat.

Previous wording

Ocean Transportation operating income decreased $0.2 million, or 0.7 percent, during the three months ended March 31, 2024, compared with the three months ended March 31, 2023. The decrease was primarily due to higher vessel operating costs, including fuel-related expenses, and the timing of fuel-related surcharge collections, partially offset by higher freight rates in China.

Current wording

Ocean Transportation operating income increased $26.6 million, or 32.3 percent, during the three months ended June 30, 2024, compared with the three months ended June 30, 2023. The increase was primarily due to significantly higher freight rates in China, partially offset by higher vessel operating costs (including fuel-related expenses) and higher selling, general and administrative costs.

Previous wording

The Company’s SSAT terminal joint venture investment contributed $0.4 million during the three months ended March 31, 2024, compared to a loss of $1.8 million during the three months ended March 31, 2023. The increase was primarily driven by higher lift volume.

Current wording

The Company’s SSAT terminal joint venture investment contributed $1.2 million during the three months ended June 30, 2024, compared to a loss of $1.4 million during the three months ended June 30, 2023. The increase was primarily driven by higher lift volume.

Previous wording

Ocean Transportation revenue increased $28.0 million, or 5.1 percent, during the three months ended March 31, 2024, compared with the three months ended March 31, 2023. The increase was primarily due to higher freight rates in China and the domestic tradelanes, partially offset by lower volume in China, Hawaii, and Alaska, and lower fuel-related surcharge revenue.

Current wording

Ocean Transportation revenue increased $101.0 million, or 8.6 percent, during the six months ended June 30, 2024, compared with the six months ended June 30, 2023. The increase was primarily due to significantly higher freight rates in China and higher freight rates in the domestic tradelanes, partially offset by lower volume in Hawaii and lower fuel-related surcharge revenue.

Previous wording

Logistics revenue decreased $10.7 million, or 7.0 percent, during the three months ended March 31, 2024, compared with the three months ended March 31, 2023. The decrease was primarily due to lower revenue in transportation brokerage.

Current wording

Logistics revenue decreased $9.7 million, or 3.1 percent, during the six months ended June 30, 2024, compared with the six months ended June 30, 2023. The decrease was primarily due to lower revenue in transportation brokerage.

Previous wording

Logistics operating income decreased $1.6 million, or 14.7 percent, during the three months ended March 31, 2024, compared with the three months ended March 31, 2023. The decrease was primarily due to a lower contribution from transportation brokerage.

Current wording

Logistics operating income decreased $0.3 million, or 1.2 percent, during the six months ended June 30, 2024, compared with the six months ended June 30, 2023. The decrease was primarily due to a lower contribution from transportation brokerage, partially offset by a higher contribution from supply chain management.

Previous wording

Cash and Cash Equivalents, Restricted Cash and Accounts Receivable: Cash and cash equivalents, restricted cash and accounts receivable as of March 31, 2024, compared to December 31, 2023 were as follows:

Current wording

Cash and Cash Equivalents, Restricted Cash, Accounts Receivable and CCF: Cash and cash equivalents, restricted cash, accounts receivable and CCF as of June 30, 2024 compared to December 31, 2023 were as follows:

Previous wording

Changes in the Company’s cash and cash equivalents, and restricted cash for the three months ended March 31, 2024, compared to the three months ended March 31, 2023 were as follows:

Current wording

Changes in the Company’s cash and cash equivalents, and restricted cash for the six months ended June 30, 2024, compared to the six months ended June 30, 2023 were as follows:

Previous wording

Changes in net cash provided by operating activities for the three months ended March 31, 2024, compared to the three months ended March 31, 2023, were due to the following:

Current wording

Changes in net cash provided by operating activities for the six months ended June 30, 2024, compared to the six months ended June 30, 2023, were due to the following:

Previous wording

Net income was $36.1 million for the three months ended March 31, 2024, compared to $34.0 million for the three months ended March 31, 2023. Income from SSAT was $0.4 million for the three months ended March 31, 2024, compared to a loss of $1.8 million for the three months ended March 31, 2023. The increase in income from SSAT was due to higher lift volume during the three months ended March 31, 2024, compared to the same prior year period. The Company received $14.0 million of cash distributions from SSAT during the three months ended March 31, 2024, compared to no cash distributions received from SSAT during the three months ended March 31, 2023. 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 higher accounts receivable outstanding as of March 31, 2024, compared to the same prior year period, and also due to the timing of collections associated with those

Current wording

Net income was $149.3 million for the six months ended June 30, 2024, compared to $114.8 million for the six months ended June 30, 2023. Income from SSAT was $1.6 million for the six months ended June 30, 2024, compared to a loss of $3.2 million for the six months ended June 30, 2023. The increase in income from SSAT was due to higher lift volume during the six months ended June 30, 2024, 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, compared to no cash distributions received from SSAT during the six months ended June 30, 2023. 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 higher accounts receivable outstanding as of June 30, 2024, compared to the same prior year period, and also due to the timing of collections associated with those receivables. Changes in prepaid

Previous wording

receivables. Changes in prepaid expenses and other assets were primarily due to a decrease in prepaid income taxes for the three months ended March 31, 2024, compared to the same prior year period. Changes in accounts payable, accruals and other liabilities were due to the timing of payments associated with those liabilities. Changes in operating lease liabilities were primarily due to new operating lease additions and renewals, offset by operating lease payments and terminations during the three months ended March 31, 2024, compared to the same prior year period. Deferred dry-docking payments for the three months ended March 31, 2024 were $5.2 million, compared to $2.4 million for the three months ended March 31, 2023. Changes in deferred dry-docking is primarily due to the timing of when the dry-docking of vessels occurs.

Current wording

expenses and other assets were primarily due to a decrease in prepaid income taxes as the Company received the 2021 federal income tax refund of $118.6 million 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 liabilities were primarily due to new operating lease additions and renewals, offset by operating lease payments and terminations during the six months ended June 30, 2024, compared to the same prior year period. Deferred dry-docking payments for the six months ended June 30, 2024 were $17.3 million, compared to $8.9 million for the six months ended June 30, 2023. Changes in deferred dry-docking is primarily due to the timing of when the dry-docking of vessels occurs.

Previous wording

Changes in net cash used in investing activities for the three months ended March 31, 2024, compared to the three months ended March 31, 2023, were due to the following:

Current wording

Changes in net cash used in investing activities for the six months ended June 30, 2024, compared to the six months ended June 30, 2023, were due to the following:

Previous wording

The Company received $6.0 million of interest and accretion in the CCF during the three months ended March 31, 2024, compared to $5.5 million of interest and $100.0 million of cash deposits in the CCF during the three months ended March 31, 2023. Cash and cash equivalents, and investments in the CCF are intended to fund milestone payments for the construction of three new Jones Act vessels. During the three months ended March 31, 2023, the Company paid $12.4 million related to an intangible asset acquisition. There were no acquisition related payments made during the three months ended March 31, 2024. Capitalized vessel construction expenditures (including capitalized interest) were $1.1 million for the three months ended March 31, 2024, compared to $0.4 million for the three months ended March 31, 2023. Capitalized vessel construction expenditures relate to milestone payments and capitalized interest for the construction of three new Jones Act vessels. Maintenance and other capital expenditures payments were $54.2 million for the three months ended March 31, 2024, compared to $35.5 million for the three months ended March 31, 2023. Maintenance and other capital expenditures primarily relate to vessel related expenditures, the acquisition of containers, chassis and other equipment, and expenditures on other capital related projects. The increase in maintenance and other capital expenditure for the three months ended March 31, 2024, 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.

Current wording

The Company deposited $35.8 million into the CCF to repurchase assigned accounts receivable and made $35.8 million of qualifying withdrawal payments out of the CCF during the six months ended June 30, 2024. The Company deposited $100.0 million of cash deposits into the CCF and made $49.9 million of qualifying withdrawal payments out of the CCF during the six months ended June 30, 2023. The Company received $16.2 million of interest and accretion in the CCF during the six months ended June 30, 2024, compared to $13.1 million of interest received during the six months ended June 30, 2023. Cash and cash equivalents, and investments in the CCF are intended to fund milestone payments for the construction of three new Jones Act vessels. During the six months ended June 30, 2023, the Company paid $12.4 million related to an intangible asset acquisition. There were no acquisition related payments made during the six months ended June 30, 2024. Capitalized vessel construction expenditures (including capitalized interest) were $38.2 million for the six months ended June 30, 2024, compared to $50.8 million for the six months ended June 30, 2023. Capitalized vessel construction expenditures relate to milestone payments and capitalized interest for the construction of three new Jones Act vessels. Maintenance and other capital expenditures payments were $86.9 million for the six months ended June 30, 2024, compared to $75.5 million for the six months ended June 30, 2023. Maintenance and other capital expenditures primarily relate to vessel related expenditures, the acquisition of containers, chassis and other equipment, and expenditures on other capital related projects. The increase in maintenance and other capital expenditure for the six months ended June 30, 2024, 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.

Previous wording

Changes in net cash used in financing activities for the three months ended March 31, 2024, compared to the three months ended March 31, 2023, were due to the following:

Current wording

Changes in net cash used in financing activities for the six months ended June 30, 2024, compared to the six months ended June 30, 2023, were due to the following:

Previous wording

During the three months ended March 31, 2024, the Company paid $47.3 million to repurchase Matson common stock, compared to $40.0 million during the three months ended March 31, 2023. During the three months ended March 31, 2024, the Company paid $10.1 million in scheduled fixed debt payments, compared to $26.4 million of prepaid Title XI debt and $14.4 million in scheduled fixed debt payments during the three months ended March 31, 2023. During the three months ended March 31, 2024, the Company paid $17.2 million in withholding taxes related to vested restricted stock units, compared to $12.4 million during the three months ended March 31, 2023. The increase in withholding tax was primarily due to the increase of the Company’s stock price as of the vesting date of the restricted stock units. During the three months ended March 31, 2024, the Company paid $11.1 million in dividends, compared to $11.3 million during the three months ended March 31, 2023. The decrease in dividend payments was due to the

Current wording

During the six months ended June 30, 2024, the Company paid $120.1 million to repurchase Matson common stock, compared to $82.5 million during the six months ended June 30, 2023. During the six months ended June 30, 2024, the Company paid $19.9 million in scheduled fixed interest debt payments, compared to $26.4 million of prepaid Title XI debt and $28.7 million in scheduled fixed interest debt payments during the six months ended June 30, 2023. During the six months ended June 30, 2024, the Company paid $17.0 million in withholding taxes related to vested restricted stock units, compared to $12.5 million during the six months ended June 30, 2023. The increase in withholding tax was

Previous wording

The Company intends to use withdrawals from the CCF cash and cash equivalents, and investments account to fund qualified milestone progress payments for the construction of three new Jones Act vessels.

Current wording

CCF cash and cash equivalents, and investments account are intended to fund milestone payments for the construction of three new Jones Act vessels.

Previous wording

Total Debt decreased by $10.1 million during the three months ended March 31, 2024, compared to December 31, 2023, primarily due to scheduled repayments of private placement term loans.

Current wording

Total Debt decreased by $19.9 million during the six months ended June 30, 2024, compared to December 31, 2023, primarily due to scheduled fixed interest debt repayments.

Previous wording

Working Capital: The Company had a working capital deficit of $18.5 million and a working capital surplus of $40.0 million at March 31, 2024 and December 31, 2023, respectively. Working capital is primarily impacted by the amount of net cash provided by operating activities, the amount of capital expenditures, thetiming 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 March 31, 2024, compared to December 31, 2023 is primarily due to the decrease in cash provided by operating activities and higher capital expenditure during the three months ended March 31, 2024.

Current wording

Working Capital: The Company had a working capital deficit of $38.3 million at June 30, 2024, compared to a working capital surplus of $40.0 million at December 31, 2023. Working capital is primarily impacted by the amount of net cash provided by operating activities, the amount of capital expenditures, thetiming 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, 2024, compared to December 31, 2023 is primarily due to higher capitalized vessel construction expenditures and capital expenditures during the six months ended June 30, 2024.

Previous wording

Capital Expenditures: During the three months ended March 31, 2024, there were no material changes to the Company’s expected capital expenditures for the years ending December 31, 2024, 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, 2023.

Current wording

Capital Expenditures: Except as described below, during the quarter ended June 30, 2024, there were no material changes to the Company’s expected capital expenditures for the years ending December 31, 2024, 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, 2023.

Previous wording

The following represents the estimated timing of future milestone payments under the vessel construction agreements as of March 31, 2024, as described in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023:

Current wording

During the three and six months ended June 30, 2024, the Company paid $35.8 million in milestone payments under the vessel construction agreements. The following represents the estimated timing of future milestone payments under the vessel construction agreements as of June 30, 2024, as described in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023:

Previous wording

Repurchase of Shares: During the three months ended March 31, 2024, the Company repurchased approximately 0.4 million shares for a total cost of $48.9 million. The maximum number of remaining shares that may be purchased under the Company’s share repurchase program was approximately 2.0 million shares at March 31, 2024.

Current wording

Repurchase of Shares: 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 maximum number of remaining shares that may be purchased under the Company’s share repurchase program was approximately 1.4 million shares at June 30, 2024.

Previous wording

The Company’s first quarter 2023 cash dividend of $0.32 per share was paid on March 7, 2024. On April 25, 2024, the Company’s Board of Directors declared a cash dividend of $0.32 per share payable on June 6, 2024 to shareholders of record on May 9, 2024.

Current wording

The Company’s second quarter 2024 cash dividend of $0.32 per share was paid on June 6, 2024. On June 27, 2024, the Company’s Board of Directors declared a cash dividend of $0.34 per share payable on September 5, 2024 to shareholders of record on August 1, 2024.