Matson (MATX) Prelim. Q1 EPS Tops Consensus

Matson, Inc. ("Matson" or the "Company") (NYSE: MATX) today announces preliminary first quarter financial results, provides a business update and announces that its first quarter earnings call will be held on May 4, 2023.

(Consensus sees Q1 EPS of $0.76)

"Despite being down from the extraordinary pandemic driven demand level over the last two years, Matson's Ocean Transportation and Logistics business segments performed well in a challenging business environment," said Chairman and Chief Executive Officer Matt Cox. "Within Ocean Transportation, our China service generated lower year-over-year volume and freight rates, which were the primary contributors to the year-over-year decline in our consolidated operating income. During the first quarter, retail customers continued to conservatively manage inventories amid weakening consumer demand, increasing interest rates and economic uncertainty. Currently in the Transpacific marketplace, business conditions are mixed with general improvement in tradelane capacity and some improvement in retailer inventories, but we continue to see conservative management of inventories by retail customers in light of economic uncertainty. As such, we expect our CLX and CLX+ services in the second quarter to reflect freight demand levels below normalized conditions with lower year-over-year volumes and rates. Absent an economic 'hard landing' in the U.S., we continue to expect improved trade dynamics in the second half of 2023 as the Transpacific marketplace transitions to a more normalized level of demand. Regardless of the economic environment, we expect to continue to earn a significant rate premium to the Shanghai Containerized Freight Index reflecting our fast and reliable ocean services and unmatched destination services."

Mr. Cox added, "In our domestic ocean tradelanes, we saw lower year-over-year volumes in Hawaii, Alaska and Guam compared to the year ago period. The modest year-over-year decline in Hawaii volume was primarily due to lower eastbound volume. The year-over-year volume declines in Guam and Alaska were primarily driven by lower retail-related demand and lower seafood volume, respectively. In Logistics, operating income decreased year-over-year primarily due to lower contributions from supply chain management and transportation brokerage. As a result, Matson expects first quarter operating income for Ocean Transportation of $23.0 to $28.0 million and Logistics operating income of $10.0 to $11.0 million. We also expect first quarter 2023 net income and diluted EPS to be $29.3 to $33.8 million and $0.81 to $0.93, respectively."

First Quarter Tradelane Volume (Forty-foot equivalent units (FEU)) (1)(2):

For the three months ended March 31, 2023 compared to the three months ended March 31, 2022 and on a FEU basis:

• Hawaii container volume decreased 0.8 percent primarily due to lower eastbound volume;
• Alaska volume decreased 4.8 percent due to (i) lower export seafood volume from the Alaska-Asia Express service ("AAX") primarily due to three less sailings and (ii) lower southbound volume primarily due to lower domestic seafood and household goods volume, partially offset by higher northbound volume primarily due to two additional sailings;
• China volume was 35.4 percent lower primarily due to (i) CCX volume in 1Q22 (CCX service was discontinued in 3Q22) and (ii) lower demand for the CLX and CLX+ services;
• Guam volume was 10.9 percent lower primarily due to lower retail-related demand; and
• Other containers volume decreased 22.6 percent.

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⁽¹⁾ Approximate volumes included for the period are based on the voyage departure date, but revenue and operating income are adjusted to reflect the percentage of revenue and operating income earned during the reporting period for voyages in transit at the end of each reporting period.

⁽²⁾ Other containers includes containers from services in various islands in Micronesia and the South Pacific, and Okinawa, Japan.

Liquidity, Debt and Share Repurchases

Matson's cash and cash equivalents as of March 31, 2023 was approximately $88.0 million, which excludes $623.7 million in cash on deposit within the Capital Construction Fund. Total debt as of March 31, 2023 was $476.7 million.⁽³⁾ During the first quarter of 2023, Matson prepaid approximately $26.4 million of outstanding principal on the 5.34% Title XI debt payable through 2028 and the 5.27% Title XI debt payable through 2029, which represented all of the remaining principal amount outstanding for both debt instruments.

During the first quarter of 2023, Matson repurchased approximately 0.7 million shares for a total cost of $41.8 million. As of March 31, 2023, the Company had approximately 0.9 million shares remaining in its share repurchase program.

A slide presentation that accompanies this press release is available on the Company's website at www.matson.com, under Investors.

⁽³⁾ Total debt is presented before any reduction for deferred loan fees as required by GAAP.

Teleconference and Webcast

A conference call is scheduled on May 4, 2023 at 4:30 p.m. ET when Matt Cox, Chairman and Chief Executive Officer, and Joel Wine, Executive Vice President and Chief Financial Officer, will discuss Matson's first quarter results.

The conference call will be broadcast live along with an additional slide presentation on the Company's website at www.matson.com, under Investors.

Participants may register for the conference call at:

https://register.vevent.com/register/BIf4c1f30d251f4af5aad4bf7307788646

Registered participants will receive the conference call dial-in number and a unique PIN code to access the live event. While not required, it is recommended you join 10 minutes prior to the event starting time. A replay of the conference call will be available approximately two hours after the event by accessing the webcast link at www.matson.com, under Investors.

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