Q2 2024 Matson Inc Earnings Call

Speaker Change: Please also note that the date of this conference is August 1st, 2020, and any forward-looking statements that we make today are based on assumptions as stated.

Operator: And when they turn the call, we'll talk to Matt.

Speaker Change: We undertake no obligation to compensate for the loss of a patient.

Operator: Okay, Justin, thanks. Thanks to those on the call.

Justin Schoenberg: Thanks. Thanks to those on the call. Starting on slide three.

Speaker Change: And we'll now turn the call over to up and at.

Matt Cox: Starting on slide three, Matson's ocean transportation and logistics business segments form well prior year-over-year operating income in the second quarter. In ocean transportation, operating income increased over year. Our China service, significantly higher year-over-year pre-rates, was the primary driver of sufficient consolidated operating income. We had higher year-over-year volumes in Alaska, primarily due to two additional sailings. Hawaii and Guam Sal lower over year volume. In logistics, operating income increased over year on the strength of supply chain management.

Speaker Change: Okay Justin, thanks. Thanks to those on the call.

Justin Schoenberg: Matson's ocean transportation and logistics business segment performed well, posting higher year-over-year operating income in the second quarter.

Justin: Starting on slide three.

Matson: Matson's ocean transportation and logistics business segment performed well to hire a year-over-year operating income in the second quarter.

Speaker Change: In ocean transportation, operating income increased for over a year.

Speaker Change: Our China service saw significantly higher year-over-year rate rates.

Speaker Change: who is the primary driver of the nation's consolidated operating income.

Justin Schoenberg: We had higher year-over-year volumes in Alaska, primarily due to two additional sailings. Hawaii and Guam South decreased their over-year volume.

Speaker Change: We had higher year-over-year volumes in Alaska, primarily due to two additional sailings.

Justin Schoenberg: In logistics, offering income based year over year on the strength of the supply chain. As a result of our performance in the second quarter and the expected strength of our China service in the back half of the year, we are raising our outlook for 2024. Joel will go into more detail on our updated outlook later in the presentation. But now, I'll go through the second quarter performance of our trade lanes, SSAT, and logistics. Please turn to the next slide.

Speaker Change: Hawaii and Guam sell lower over year volume.

Speaker Change: and Logistics, offering income based year-over-year on the strength of supply chain management.

Matt Cox: As a result of our performance in the second quarter and the expected strength of our China service in the back half of the year, we're raising our outlook in 2024. Joel will go into more detail on our updated outlook later in the presentation.

Speaker Change: As a result of our performance in the second quarter and the expected strength of our China service in the back half of the year, we are raising our outlook for 2024. Joel will go into more detail on our updated outlook later in the presentation.

Matt Cox: I'll now go through the second quarter performance of our trade lanes, the SAT and logistics, so we'll turn to the next slide. Container volume in our Hawaii service decreased 3.6% in the second quarter of the year. The decrease was primarily due to lower general demand. Tourist arrivals in the second quarter were lower, primarily due to significantly lower visitor traffic to Maui. As a result of the wildfires last year.

Joel: I'll now go through the second quarter performance of our Trade Lanes, SSAT, and Logistics, so please turn to the next slide.

Justin Schoenberg: Container volume in our Hawaii service decreased 3.6% in the second quarter of 2020. The decrease was primarily due to lower general demand. Tourist arrivals in the second quarter were lower, primarily due to significantly lower visitor traffic to Maui as a result of the wildfires last year.

Joel: Container volume in our Hawaii service decreased 3.6% in the second quarter of 2020. The decrease was primarily due to lower general demand.

Speaker Change: Tourist arrivals in second quarter were lower primarily due to significantly lower visitor traffic to Maui as a result of the wildfires last year.

Matt Cox: I will go through our trigger outlook on the next slide, so please turn to slide 5. According to your hero's second quarter of 2024 economic report, the Hawaii economy has projected to grow modestly in 2024, supported by a low unemployment rate increasing construction. While we're encouraged by your hero's long-term forecast and some of the positive factors supporting that growth, our recent performance is reflective of a softer market. We expect volume in 2024 to be modestly lower than the level achieved last year, primarily due to continued challenges in population growth and lower discretionary income as a result of higher inflation in interest rates.

Speaker Change: I will go through our full year outlook on the next slide, so please turn slide 5.

Speaker Change: According to you heroes, second quarter 2024 economic

Justin Schoenberg: The Hawaii economy is projected to grow modestly in 2024, supported by a low unemployment rate. Well, we're encouraged by your heroes' longer-term forecast and some of the positive factors supporting that. A recent performance is reflective of a soft market. Moving on to our China service on slide six. Matson's volume in the second quarter of 2024 was 3% higher year over year, as we continue to see a high level of demand from e-commerce and garment. We achieved average freight rates that were significantly higher year over year. The supply and demand dynamics we experienced in the second quarter were not consistent with normalized...

Speaker Change: The Hawaii economy is projected to grow modestly in 2024, supported by a low unemployment rate and economic growth.

Speaker Change: Increasing construction activity.

Speaker Change: Well, we're encouraged by you heroes' longer-term forecast and some of the positive factors supporting that growth.

Speaker Change: Our recent performance is reflective of a softer market.

Speaker Change: We expect volume in 2024 to be modestly lower than the level achieved last year, primarily due to continued challenges in population growth and lower discretionary income as a result of higher inflation and interest rates.

Matt Cox: Moving on to our China service on slide 6. Madison's volume in the second quarter of 2024 was 3% higher year over year as we continue to see a high level of demand from the e-commerce and garment customers. We achieved average freight rates that were significantly higher year over year.

Speaker Change: Moving on to our China service on slide 6.

Speaker Change: Matson's volume in second quarter 2024 was 3% higher year over year as we continue to see a high level of demand from the e-commerce and garment customers.

Speaker Change: We achieved average freight rates that were significantly higher year-over-year.

Matt Cox: Please turn to slide 7. A support of economic and consumer demand in the U.S. coupled with tighter supply chain could lead to elevated freight rates during the quarter. The supply and demand dynamics we experience in the second quarter were not consistent, normalized operating environment. We outperform from a freight rate perspective. We expect our China service to continue to see elevated freight rates during the traditional peak season and the third in early form quarter. What we feel good about rate levels during the traditional peak season period, trajectory after the peak season is uncertain given several factors including the strength, U.S.

Speaker Change: Please turn to slide 7.

Speaker Change: A supportive economic and consumer demand environment in the U.S. coupled with tighter supply chain conditions led to elevated freight rates during the quarter.

Speaker Change: The supply and demand dynamics we experienced in the second quarter were not consistent with a normalized operating environment, and could be outperformed from a free rate perspective.

Speaker Change: We expect our China service to continue to see elevated freight rates during the traditional peak season in the 3rd and early 4th quarters.

Justin Schoenberg: Well, we feel good about rate levels during the traditional peak season period trajectory after the Trans-Pacific Supply, the Red Sea situation and its related supply chain effects, the East Coast labor union negotiation, and the U.S. election. Nonetheless, we expect free rates to remain elevated as long as the underlying economic, supply chain, and geopolitical conditions persist. At some point, we expect rates to normalize, the timing of which will likely depend on the duration and the degree to which these factors influence supply and demand dynamics in the trade lane.

Speaker Change: While we feel good about rate levels during the traditional peak season period,

Matt Cox: economy and interest rates, trans-specific supply, the Red Sea situation, and its related supply chain effects, the East Coast labor union negotiation, and the U.S. elections. Nonetheless, we expect free race to remain elevated as long as the underlying economic supply chain and geopolitical conditions persist. At some point, we expect a race to normalize timing in which will likely be the motivation, the degree to which these factors influence supply and demand dynamics in the trade lane. Regardless of the environment, we expect the ongoing shift from air freight to expedited ocean to continue growth in the e-commerce goods to drive long-term demand for our China service, and confident in our positioning with the two fastest and most reliable expedited ocean services in the trans-Pacific trade lane and our unmatched destination services.

Speaker Change: is uncertain given several factors including the strength of the U.S. economy and interest rates, trans-Pacific supply, the Red Sea situation and its related supply chain effects, the East Coast labor union negotiations, and the U.S. elections.

Speaker Change: Nonetheless, we expect free rates to remain elevated as long as the underlying economic supply chain and geopolitical conditions persist.

Speaker Change: At some point, we expect rates to normalize, the timing of which will likely depend on the duration and the degree to which these factors influence supply and demand dynamics in the trade lane.

Justin Schoenberg: Regardless of the environment, we expect the ongoing shift from air freight to expedited ocean and the continued growth of e-commerce to drive long-term demand for our China service. I'm confident in our positioning with the two fastest and most reliable expedited ocean services in the Trans-Pacific Trade Lane and our unmatched destination service. Please turn to the next slide.

Speaker Change: Regardless of the environment, we expect the ongoing shift from air freight to expedited ocean and the continued growth of e-commerce goods.

Speaker Change: to drive long-term demand for our China service.

Speaker Change: I'm confident in our positioning with the two fastest and most reliable expedited ocean services in the Trans Pacific Trade Lane and our unmatched destination services.

Matt Cox: Please turn to the next slide. In Guam, masses container volume in the second quarter of May 24, decreased 6.1% year-over-year due to one less sailing compared to last year. In the near-term, we expect continued improvement in the Guam economy, underpinned by a low unemployment rate. For 2024, we expect container volume growth to level achieved last year.

Justin Schoenberg: In Guam, massive container volume in the second quarter of 2024 decreased 6.1% year-over-year due to one less sailing compared to last year. In the near term, we expect continued improvement in the quantum economy underpinned by low unemployment.

Speaker Change: Please turn to the next slide.

Speaker Change: In Guam, massive container volume in the second quarter of 2024 decreased 6.1% year-over-year due to one less sailing compared to last year.

Speaker Change: In the near term, we expect continued improvement in the quantum economy underpinned by low unemployment rates.

Speaker Change: For 2024, we expect container volume to approach the level achieved last year.

Matt Cox: Please turn to the next slide. In Alaska, masses container volume for the second quarter of 2024 increased 4.9% year-over-year due to two additional northbound sailings compared to last year. In the near-term, we expect continued economic growth in Alaska, supported by a low unemployment rate, job growth, and lower levels of inflation. For 2024, we expect Alaska volume to approximate the level achieved last year.

Justin Schoenberg: In Alaska, Matson's container volume for the second quarter of 2024 increased 4.9% year-over-year due to two additional northbound sailings compared to last year. In the near term, we expect continued economic growth in Alaska, supported by a low unemployment rate, job growth, and lower levels of inflation. Please turn to slide 10.

Speaker Change: Please turn to the next slide.

Bassin: In Alaska, Matson's container volume for the second quarter of 2024 increased 4.9% year-over-year due to two additional northbound sailings compared to last year.

Bassin: In the near term, we expect continued economic growth in Alaska, supported by a low unemployment rate, job growth, and lower levels of inflation. For 2024, we expect Alaska volume to approximate the level achieved last year.

Matt Cox: Please turn to slide 10. Our terminal joint venture, SSAT, in $2.6 million a year-over-year to $1.2 million. The higher concentration of contribution was primarily due to higher lift volumes. Although container volumes on the U.S. West Coast have been particularly strong in the first half of the year; volume across SSAT's terminals has not been as strong. In 2024, we expect the contribution from SSAT to be modestly higher than 2023 due to an expected increase in lift volumes.

Bassin: Please turn to slide 10.

Justin Schoenberg: $2.6 million year-over-year to $1.2 million. The higher contribution was primarily due to the higher lift volume. Although container volumes on the U.S. West Coast have been particularly strong in the first half of the year, volumes across SSAT terminals have not been as strong. In 2024, we expect the contribution from SSAT to be modestly higher than in 2023 due to an expected increase in living costs. Operating income in the second quarter came in at $15.6 million, or approximately $1.3 million higher than the result in the year-ago period.

Speaker Change: Our terminal joint venture SSAT in 2.6 million dollars year-over-year to 1.2 million dollars.

Speaker Change: The higher contribution was primarily due to higher lift volumes.

Speaker Change: Although container volumes on the U.S. West Coast have been particularly strong in the first half of the year, volume across SSAT terminals has not been as strong.

Speaker Change: In 2024, we expect the contribution from SSAT to be modestly higher than 2023 due to an expected increase in lift volumes.

Matt Cox: Turning now to logistics on slide 11, operating income in the second quarter came in at $15.6 million, or approximately $1.3 million higher than the result in the year-over-period. The increase was primarily due to a higher contribution from supply chain management. Our supply chain management services includes purchase order management, origin operation, and destination services, and allows us to provide a comprehensive solution from factory floor to destinations across D. For the third and fourth quarters of 2044, we expect operating income to approximate the level achieved last year.

Speaker Change: Turning now to logistics on slide 11.

Speaker Change: Operating income in the second quarter came in at $15.6 million, or approximately $1.3 million higher than the result in the year-ago period.

Justin Schoenberg: The increase is primarily due to a higher contribution from supply chain mints. Our Supply Chain Management Service, Purchase Order Management, Origin Operations, and Destination Services allows us to provide a comprehensive solution from the factory floor to destinations across the. For the third and fourth quarters of 2024, we expect operating income to approximate the level achieved last year.

Speaker Change: The increase is primarily due to a higher contribution from supply chain management.

Speaker Change: Our Supply Chain Management Service...

Speaker Change: Purchase Order Management, Origin Operations, and Destination Services.

Speaker Change: It allows us to provide a comprehensive solution.

Speaker Change: from factory floor to destinations across the United States.

Speaker Change: For the 3rd and 4th quarters of 2024, we expect operating income to approximate the level achieved last year. And with that, I will now turn the call over to Joel for a review of our financial performance.

Matt Cox: And with that, I will now turn the call over to Joel for a review of our financial performance. Okay, thanks, Matt.

Joel Wine: Please turn to slide 12 for review of our second quarter results. For the second quarter, consolidated operating income increased 27.9 million year-over-year to 124.6 million, higher contributions from ocean transportation and logistics, 26.6 million and 1.3 million, respectively. The increase in ocean transportation, operating income in the second quarter was primarily due to significantly higher freight rates in China, partially offset by higher vessel operating costs, including fuel-related expenses, and higher SG&A costs. The increase in logistics operating income was primarily due to higher contribution from supply chain management. In the quarter, we had interest income of 18.8 million, which includes 10.2 million of interest income earned on our 2021 federal income tax refund.

Joel: Okay, thanks, Matt.

Justin Schoenberg: For the second quarter, consolidated bringing income increased $27.9 million year-over-year to $124.6 million, with higher contributions from ocean transportation and logistics, $26.6 million and $1.3 million, respectively. The increase in ocean transportation operating income in the second quarter was primarily due to significantly higher freight rates in China, partially offset by higher vessel operating costs. The increase in logistics operating income was primarily due to higher contributions from supply chain management.

Joel: Please turn to slide 12 for review of our second quarter results.

Joel: For the second quarter, Consolidated Upbringing Income increased $27.9 million year-over-year to $124.6 million, with higher contributions from Ocean Transportation and Logistics, $26.6 million and $1.3 million respectively.

Joel: The increase in ocean transportation operating income in the second quarter was primarily due to significantly higher freight rates in China, partially offset by higher vessel operating costs, including fuel-related expenses and higher SG&A costs.

Joel: The increase in logistics operating income was primarily due to higher contribution from supply chain management.

Joel: In the quarter, we had interest income of $18.8 million, which includes $10.2 million of interest income earned on our 2021 federal income tax refund.

Joel Wine: The interest expense in the quarter decreased 0.8 million year-over-year due to the decline in outstanding debt in the past year. The income increased 40.1% year-over-year; diluted earnings for a share increased 46.5% year-over-year, the difference between the two due to a 4.2 million-percent decrease in the diluted weighted average shares outstanding.

Justin Schoenberg: The interest expense in the quarter decreased $0.8 million year-over-year due to the decline in outstanding debt in the past year. That income increased 40.1% year-over-year. Diluted earnings for a share increased 46.5% year-over-year. The difference between the two is due to a 4.2 million percent decrease in the diluted weighted average shares outstanding.

Joel: The interest expense in the quarter decreased $0.8 million year-over-year due to the decline in outstanding debt in the past year.

Joel: That income increased 40.1% year-over-year, and diluted earnings for a share increased 46.5% year-over-year. The difference between the two is due to a 4.2 million percent decrease in the diluted weighted average shares outstanding.

Joel Wine: Please turn to slide 13. This slide shows that we allocated our trailing 12 months of cash flow generation. The LTM period generated a cash flow from operations of approximately 608.5 million, from which we used 41.7 million to retire debt, 206.9 million on maintenance and other cat-backs, 40.3 million on new vessel cat-backs, including capitalized interest and owner's items, 24.6 million in cash deposits and interest income in the CCF, netted withdrawals for milestone payments, 12.8 million on other cash flow outflows, while returning approximately 237.5 million to shareholders via dividends and sharey purchase.

Joel: Please turn to slide 13.

Joel: This slide shows how we allocated our trailing 12 months of cash flow generation.

Joel: The LTM period generated a cash flow from operations of approximately $608.5 million from which we used $41.7 million to retire debt $206.9 million on maintenance and other capex

Joel: $40.3 million on new vessel CapEx including capitalized interest and owner's items.

Justin Schoenberg: $24.6 million in cash deposits and interest income in the CTF, net of withdrawals for milestone payments, and $12.8 million on other cash outflows, while returning approximately $237.5 million to shareholders via dividends and share repayments. Year-to-date, we repurchased approximately 1 million shares for a total cost of $121.1 million, including tax. 24.4% of our stock. As we have said before, we are committed to returning excess capital to shareholders and plan to continue to do so in the absence of any large organic or inorganic growth investment opportunities. Turning to our debt levels, our total debt at the end of the second quarter was $420.7 million, a reduction of $9.8 million from the end of the first quarter.

Joel: $24.6 million in cash deposits and interest income in the CTF, net of withdrawals for milestone payments.

Joel: $12.8 million on other cash outflows while returning approximately $237.5 million to shareholders via dividends and share repurchase.

Joel Wine: Please turn to slide 14 for a summary of our sharey purchase program and balance sheet. During the second quarter, we repurchased approximately 0.6 million shares for a total cost of 72.2 million, including taxes. Year-to-date, we repurchased approximately 1 million shares for a total cost of 111.1 million, including taxes. Since we initiated our sharey purchase program in August of 2021 through June of this year, we repurchased approximately 10.6 million shares or 24.4% of our stock for a total cost of approximately 877 million. As we have said before, we are committed to returning excess capital to shareholders and plan to continue to do so in the absence of any large, organic, or inorganic growth investment opportunities.

Joel: Please turn to slide 14 for a summary of our Shared Purchase Program and Balance Sheet.

Joel: During the second quarter, we repurchased approximately 0.6 million shares for a total cost of $72.2 million, including taxes.

Joel: Year-to-date we repurchased approximately 1 million shares for a total cost of $121.1 million, including taxes.

Joel: Since we initiated our share repurchase program in August of 2021 through June of this year, we have repurchased approximately 10.6 million shares, or 24.4% of our stock, for a total cost of approximately $877 million.

Joel: As we have said before, we are committed to returning excess capital to shareholders and plan to continue to do so in the absence of any large organic or inorganic growth investment opportunities.

Joel Wine: Turning to our debt levels, our total debt at the end of the second quarter was 420.7 million, a reduction of 9.8 million from the end of the first quarter. Two other items to note. On April 19, 2024, Matson received a federal tax refund related to the company's 2021 federal tax return of $118.6 million, as well as $10.2 million in interest income earned on the tax refund. During the quarter, we also paid $35.8 million into the CCF related to a milestone payment on our new VELSO program.

Joel: Turning to our debt levels, our total debt at the end of the second quarter was $420.7 million, a reduction of $9.8 million from the end of the first quarter.

Justin Schoenberg: Two other items to note, on April 19, 2024, Matson received a federal tax refund related to the company's 2021 federal tax return of $118.6 million, as well as $10.2 million in interest income earned on the tax refund. During the quarter, we also paid $35.8 million into the CCF, related to a milestone payment on our new vessel program. With that, let me now turn to slide 15 and walk through our outlook for the third and fourth quarters of 2024 on the left-hand side of this page. We expect our China service to continue to see elevated rates during the traditional peak season, the third and early fourth quarter.

Joel: Two other items to note. On April 19, 2024, Matson received a federal tax refund related to the company's 2021 federal tax return of $118.6 million, as well as $10.2 million in interest income earned on the tax refund.

Joel: During the quarter, we also paid $35.8 million into the CCF related to a milestone payment on our new vessel program.

Joel Wine: With that, let me now turn to slide 15 and walk through our outlook for the third and fourth quarters of 2024 on the left-hand side of this page. We expect ocean transportation operating income the third quarter 2024 to be meaningfully higher than the 118.2 million achieved last year. In the fourth quarter 2024, we expect operating income to be moderately higher than the 66.4 million achieved in the fourth quarter 2020. We expect our China service to continue to see elevated rates during the traditional peak season, the third and early fourth quarters. For our domestic trade lines, we expect volumes to approach the levels in 2023 as an insignificant change in the trajectory of the U.S.

Justin Schoenberg: For our domestic trade lanes, we expect volumes to approach their levels in 2023 after a significant change in the trajectory of the U.S. economy. For logistics, we expect operating income in both the third and fourth quarters of 2024 to approximate the levels achieved last year. On the right-hand side of this slide, we expect the following Outlook items for the full year: appreciation and amortization to approximate $180 million, inclusive of $27 million for dry dock amortization.

Joel: With that, let me now turn to slide 15 and walk through our outlook for the third and fourth quarters of 2024 on the left-hand side of this page.

Joel: We expect Ocean Transportation Operating Income in the 3rd quarter 2024 to be meaningfully higher than the $118.2 million achieved last year, and in the 4th quarter 2024 we expect Operating Income to be moderately higher than the $66.4 million achieved in the 4th quarter 2023.

Joel: We expect our China service to continue to see elevated rates during the traditional peak season third and early fourth quarters.

Joel: For our domestic trade lanes, we expect volumes to approach their levels in 2023, after a significant change in the trajectory of the U.S. economy.

Joel Wine: economy. For logistics, we expect operating income in both the third and fourth quarters of 2024 to approximate the levels achieved last year.

Joel: For logistics, we expect operating income in both the 3rd and 4th quarters of 2024 to approximate the levels achieved last year.

Joel Wine: On the right-hand side of this slide, we expect the following outlook items for the full year. Appreciation and amrization to approximate 180 million, close to the 27 million for dry dock amrization, interest income to be approximately 45 million, interest expense to be approximately 8 million. Other income to be approximately 7 million and effective tax rate of approximately 22.0 percent. And dry docking payments that approximately 35 million.

Joel: On the right hand side of this slide, we expect the following outlook items for the full year. Appreciation and amortization to approximate $180 million, inclusive of $27 million for dry dock amortization.

Justin Schoenberg: Interest income to be approximately $45 million, interest expense to be approximately $8 million, and other income to be approximately $7 million. An effective tax rate of approximately 22.0%. Moving to slide 16, the table on the slide shows the CapEx projection for 2024. Milestone payments for new vessel construction are expected to be paid from the Capital Construction Fund, which already covers

Joel: Interest income to be approximately 45 million, interest expense to be approximately 8 million.

Joel: Other income to be approximately $7 million, an effective tax rate of approximately 22.0%.

Joel Wine: Moving to slide 16, the table on the slide shows the CAPEX projection for 2024. Compared to what we previously brought in our first quarter call in April, we increased our CAPEX expenditure out of for LNG installations and re-engineering projects by 15 million to 85 to 95 million because of higher parts in labor associated with the LNG installation of Monikai. All other line items remain unchanged. Mao's own payments for a new vessel construction are expected to be paid from the CAPEX construction fund, which already covers approximately 71 percent of the remaining obligations.

Joel: and dry docking payments at approximately $35 million.

Joel: Moving to slide 16, the table on the slide shows the CapEx projection for 2024.

Speaker Change: Compared to what we previously provided on our first quarter call in April , we increased our capital expenditure outlook for LNG installations and reengineering projects by $15 million to $85 to $95 million because of higher parts and labor associated with the LNG installation on Mauna Kea.

Speaker Change: All other line items remain unchanged.

Speaker Change: Milestone payments for new vessel construction are expected to be paid from the Capital Construction Fund, which already covers approximately 71% of the remaining obligations.

Matt Cox: I will now turn the call back over to Matt. Okay, thanks, Joel. In closing, that's performed well in the first half of the year. For the remainder of the year, we expect higher year-over-year financial performance than largely by elevated freight rates in the China service. At some point, we expect supply and demand activity in the Trans-Pacific trade lane to trend towards normalized operating. And while we acknowledge a number of factors in China's service out will remain uncertain, we remain confident in our ability to respond to changing market conditions to serve our at an extremely high level.

Justin Schoenberg: In closing, Matson performed well in the first half of the year.

Speaker Change: I will now turn the call back over to Matt.

Speaker Change: Okay, thanks Joel. In closing, Matson performed well in the first half of the year.

Speaker Change: For the remainder of the year, we expect higher year-over-year financial performance driven largely by elevated free rents in the China service.

Justin Schoenberg: At some point, we expect supply and demand activity in the Trans-Pacific Trade Lane to trend towards normalized operating conditions. And while we acknowledge a number of factors in China's surface outlook remain uncertain, we remain confident in our ability to respond to changing market conditions to serve our customers at an extremely high level. And with that, I will turn the call back, Operator, and ask for your questions.

Speaker Change: At some point, we expect supply and demand activity in the Trans Pacific Trade Lane to trend towards normalized operating efficiency.

Speaker Change: And while we acknowledge a number of factors in China's service outlook remain uncertain, we remain confident in our ability to respond to changing market conditions to serve our customers.

Matt Cox: And with that, I will turn the call back over to the operator and ask for your questions. Thank you.

Speaker Change: at an extremely high level. And with that, I will turn the call back to the operator and ask for your questions.

Operator: Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from Ben Nolan of Stifle.

Operator: At this time, we will conduct the question-and-answer session. As a reminder to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.

Speaker Change: Thank you. At this time, we will conduct the question and answer session. As a reminder to ask a question, you will need to press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again. Please stand by while we compile the Q&A roster.

Operator: Please stand by while we compile the Q&A roster.

Ben Nolan: Our first question comes from Ben Nolan of Stakeful.

Ben Nolan: Your line is now open. Thanks. Good quarter, guys. I've got a couple. Can I do three? Is that allowed? Sure. Sure, Ben. Okay, I appreciate it.

Speaker Change: Our first question comes from Ben Nolan of Stifle. Your line is now open.

Ben Nolan: Thanks. Good quarter, guys.

Ben Nolan: Thanks. Good quarter, guys. I've got a couple. Can I do three? Is that allowed?

Operator: I've got a couple. Can I do three? Is that allowed? Sure, sure, Ben. Okay, I appreciate it. First of all, it was breaking up a little bit, but Matt, did you say that SSAT, while there was a lot of volume moving through the West Coast, SSAT did not have as much as some of the other ports? Is that what you'd say? Yeah. Yeah, Ben. I did say that

Matt Cox: So, first of all, it was breaking up a little bit, but Matt, did you say that S.S.A.T., while there was a lot of volume moving through the West Coast, S.S.A.T. did not have as much as some of the other ports of that that we used to explain that a little bit? Yeah, sure. So we operate a portfolio of eight terminals along the U.S. West Coast. That is the S.S.A.T. joint venture does. And two of those are in LA Long Beach, two are in Oakland, with the balance being in the Pacific Northwest, both are to come operation and three terminals in Seattle area.

Speaker Change: Sure. Sure, Ben. Okay, I appreciate it. So, first of all, it was breaking up a little bit, but Matt, did you say that SSAT, while there was a lot of volume moving through the West Coast, SSAT did not have as much as some of the other ports? Is that what you'd say? Yeah.

Justin Schoenberg: Yeah, sure. So we operate a portfolio of eight terminals along the US West Coast; that is what the SSAT joint venture does. And two of those are in LA Long Beach, two are in Oakland, with the balance being in the Pacific Northwest, both our Tacoma operation and three terminals in the Seattle area. And what we saw as the volumes increased generally in the Trans-Pacific, that cargo historically, and in this case, the same, generally fills up in Southern California first, and then migrate north to Oakland, and lastly go to the Pacific Northwest.

Speaker Change: Can you maybe explain that a little bit?

Matt: Yeah, sure. So we operate...

Speaker Change: portfolio of eight terminals along the US West Coast that is the SSAT joint venture does

Speaker Change: And two of those are in L.A. Long Beach.

Speaker Change: Two are in Oakland, with the balance being in the Pacific Northwest.

Matt Cox: And what we saw as the volumes increased generally in the Trans-Pacific, that cargo historically, and in this case, the same generally fill up in Southern California first, and then migrate north to Oakland, and lastly go to the Pacific Northwest. And it's really in the Pacific Northwest, is where most of that volume really did not appear and has not yet appeared. And so that was the explanation for why we didn't see the averages move up, given the portfolio and the geographical occasion of those terminals.

Speaker Change: both our Tacoma operation and three terminals in Seattle area. And what we saw as the volumes increased generally in the Trans Pacific, that cargo historically, and in this case the same, generally fill up in Southern California first.

Justin Schoenberg: And it's really in the Pacific Northwest where most of that volume really did not appear and has not yet appeared. And so that was the explanation for why we didn't see the averages move up, given the portfolio and the geographic location of those terminals.

Speaker Change: and then migrate north to Oakland and lastly go to the Pacific Northwest and it's really in the Pacific Northwest is where most of that volume really did not appear and has not yet appeared. And so that was the explanation for why we didn't see the averages move up given the portfolio and the geographic location of those terminals.

Matt Cox: Okay, that's very helpful. I appreciate it. And then, sort of on the same, in the same vein, it's been interesting to see what's happening on the freight side. And I think you guys would probably be really well positioned to talk to, but we've seen a lot of freight coming into the ports, but the trucking markets not been great, the domestic logistics markets not been great. I've talked to a lot of people who just don't know what's happening to all this freight; it doesn't seem like it's building up an inventory. Can maybe talk through what you're seeing, what the type of freight that's moving is, where is it going, anything that can maybe help demystify this a little bit.

Speaker Change: Okay, that's very helpful. I appreciate it and then sort of on the same in the same vein It's it's been interesting to see what's happening on the freight side And I think you guys would probably be really well positioned to talk to it But we've seen a lot of freight coming into the ports, but the trucking markets not been great The domestic logistics markets not been great. There's you know I've talked a lot of people who just don't know what's happening to all this freight doesn't seem like it's building up in inventories You maybe talk through what you're seeing what the type of freight that's moving is Where is it going any anything that can maybe help demystify this a little bit?

Justin Schoenberg: Yeah, I'll try. It's a complicated question, Ben.

Matt Cox: Yeah, I'll try it. It's a complicated question, Jen. But I think what we're seeing, let me first comment on the market more generally before we go to maps and specific customer sets and dynamic, which we think are a little bit different. But I agree with you that it's interesting to see how the international freight markets are performing much better than the U.S. Domestic markets and trade. What we're hearing from customers are probably some of the same things you're hearing, and you mentioned it in your question, which is, you know, there don't appear to be surplus inventories.

Speaker Change: Yeah, I'll try it. It's a complicated question, Ben. But I think what what we're seeing it let me let me first

Justin Schoenberg: But I think what we're seeing, let me first comment on the market more generally before we go to Matson's specific customer sets and dynamics, which we think are a little bit different. But I agree with you that it's interesting to see how the international freight markets are performing much better than the U.S. domestic markets and trade. What we're hearing from customers is probably, Ben, some of the same things you're hearing, and you mentioned it in your question, which is that there don't appear to be surplus inventories.

Speaker Change: comment on the market more generally before we go to Matson's specific customer sets and dynamic, which we think are a little bit different, but I agree with you that it's interesting to see how the international freight markets are performing much better than the U.S. domestic markets and trade. What we're hearing from customers have probably been some of the same things you're hearing, and you mentioned it in your question, which is

Justin Schoenberg: And our customers are continuing to take very close or pay very close attention to their inventory levels. And so we're not seeing, other than seasonal, getting ready for peak season changes in inventory levels. So that remains pretty steady.

Matt Cox: And our customers are continuing to take very close or pay very close attention to their inventory levels. And so we're not seeing, other than seasonal, getting ready for peak season changes in inventory levels. So that remains pretty steady. I think the parts, if you look at the consumer, the, as we know, the consumer is hanging in there and consumer spend has held its own. And so broadly, we're seeing a pretty good level of demand that supports the increase in imports. What has been interesting is really the changes around excess of supply, the trucking side, and other things that are holding down some of the pricing mechanisms and the domestic trades.

Speaker Change: There don't appear to be surplus inventories, and our customers are continuing to take very close or pay very close attention to their inventory levels. And so we're not seeing...

Speaker Change: Other than seasonal, getting ready for peak season changes in inventory level.

Justin Schoenberg: I think the parts, if you look at the consumer, as we know, the consumer is hanging in there, and consumer spend has held its own. And so broadly, we're seeing a pretty good level of demand that supports the increase in imports. What has been interesting is really the changes around excess of supply on the trucking side and other things that are holding down some of the pricing mechanisms in the domestic trades.

Speaker Change: I think the parts, if you look at the consumer, as we know the consumer is hanging in there, and consumer spend has held its own, and so broadly we're seeing

Speaker Change: A pretty good level of demand that supports the increase in imports.

Speaker Change: What has been interesting is really the...

Speaker Change: changes around excess of supply.

Justin Schoenberg: We're seeing it in our intermodal brokerage as well. So we're seeing the same thing. And there has been a lot of downward pressure on rates because of that surplus capacity. But beyond that, I can't give you much more insight generally into the trade, but I can say the maps and story are a little different. And as it has been, we have been, and we seek to be, consistently the fastest and most reliable on the service for e-commerce, for, you know, last minute orders, for late production, for all of the reasons why someone would be willing to pay a premium to get their particular cargo to market, congestion, air freight, all of those things are pointed to very strong demand in the expedited market, and in particular, very strong demand for the maps and services I'll

Speaker Change: on the trucking side and other things that are that are

Matt Cox: We're seeing it in our intermodal brokerage as well. So we're seeing the same thing. And there has been a lot of downward pressure on rates because of that surplus capacity. But beyond that, I can't give you much more insight generally into the trade, but I could say the matching story is a little different. And as it has been, we have been and we seek to and have been consistently the fastest and most reliable on the service for the e-commerce for last minute orders for late production for all of the reasons why someone would be willing to pay a premium to get their particular cargo to market the congestion air freight.

Speaker Change: Holding down some of the pricing mechanisms in the domestic trades. We're seeing it in our intermodal brokerage

Speaker Change: as well so we're seeing the same thing and there has been a lot of downward pressure on capacity on rates because of that surplus capacity but beyond that I can't give you much more insight generally into the trade but I could say

Speaker Change: The Matson story is a little bit different, and as it has been, we have been, and we seek to, and have been consistently the fastest and most reliable on the service for the e-commerce, for

Speaker Change: you know last-minute orders for late production for all of the reasons why someone would be willing to pay a premium to get their their their particular cargo to market.

Ben Nolan: All of those things are pointed to very strong demand, and the expedited market in particular, very strong demand for the matching services. So that's only half an answer then, but it's probably the best I can give you. I'll take it; I appreciate it. All right. And then last, and I appreciate you hanging in with me for this.

Speaker Change: The congestion, air freight, all of those things are pointed to very strong demand in the expedited market, and in particular, very strong demand for the Matson services. So, that's only half an answer, Ben, but it's probably the best I can give you. I'll take it. I appreciate it. All right. And then last, and I appreciate you hanging in with me for this. So, this is the first time that I remember you guys calling out your supply chain management business. I could be not remembering, but is that, would you say, as you're thinking about your logistics business, an area of increased focus? If so, are you looking to expand on that, either organically or inorganically, or can you maybe just talk me through?

Justin Schoenberg: I'll take it. I appreciate it. All right. And then last, I appreciate you hanging in with me through this. So, this is the first time that I remember you guys calling out your supply chain management business. I could be forgetting, but is that what you say as you're thinking about your logistics business, an area of increased focus? If so, are you looking to expand on that either organically or inorganically, or can you maybe just talk me through how that fits as part of the puzzle and where you think it's headed?

Ben Nolan: So this is the first time that I remember you guys calling out your supply chain management business. I could be not remembering. But is that that would you say is you're thinking about your logistics business and area of increased focus. If so, you know, are you looking to expand on that either organically or inorganically, or can you maybe just talk me through how that fits as part of the puzzle and where you think it's headed. Sure, yeah, happy to. And you're right. I believe it's the first time we've called it out. And I would also just note for qualification that the changes in profit for logistics are very small.

Justin Schoenberg: Sure, yeah, happy to. And you're right, I believe this is the first time we've called it out. And, you know, I would also just note, for qualification, that the changes in profit for logistics are very small. So it tends to amplify things that, you know, typically are not part of our core story.

Speaker Change: Thank you.

Speaker Change: Sure, yeah, happy to. And you're right, I believe it's the first time we've called it out. And you know, I would also just note for qualification that the changes in profit for logistics are very small. So it tends to amplify things that, you know, typically are not part of our core story.

Matt Cox: So it tends to amplify things that, you know, typically are not part of our core story. But it does highlight the synergies between Matson Logistics and Matson's ocean businesses with regard to our China service. That's a logistics operates in multiple locations. And inside of China, it also, as you know, moves the intermodal cargo once it arrives in our Long Beach terminals to the final destinations in Chicago, Memphis, and Dallas, and other locations. So, but the supply chain services we called out are those services that we provide to customers in China that are less than container load that would be consolidated, moved into, onto a Matson container and onto Matson's expedited service offering. And that has been, you know, sort of a very slow and steady organic growth bill over the last, well, I mean, it's been really accelerated since the pandemic and is now approaching the radar again with the acknowledgement that the numbers are relatively small in the logistics business in terms of its relative change in profitability.

Justin Schoenberg: But it does highlight the synergies between Matson Logistics and Matson's ocean businesses with regard to our China service. Matson Logistics operates in multiple locations inside of China. It also, as you know, moves the intermodal cargo once it arrives at our Long Beach terminals to the final destinations in Chicago and Memphis and Dallas and other locations. So, the supply chain services we called out are those services that we provide to customers in China that are less than a container load that would be consolidated, moved into a Matson container and onto Matson's expedited service offering.

Speaker Change: But it does highlight the...

Speaker Change: Synergies between Matson Logistics and Matson's Ocean Businesses with regard to our China service. Matson Logistics operates in multiple locations inside of China. It also, as you know, moves the intermodal cargo once it arrives in our Long Beach terminals to the final destinations in Chicago and Memphis and Dallas and other locations.

Speaker Change: So, but the...

Speaker Change: Supply Chain Services we called out are those services that we provide to customers in China that are less than container load, that would be consolidated, moved on to a Matson container and on to Matson's expedited service offering. And that has been sort of a very slow and steady organic growth build over the last – well, I mean, it's been –

Justin Schoenberg: And that has been, you know, sort of a very slow and steady organic growth build over the last, well, I mean, it's been really accelerated since the pandemic and is now approaching the radar again with the acknowledgement that the numbers are relatively small in the logistics business in terms of its relative change in profitability. So that's the story there, Ben. Okay.

Ben Nolan: really accelerated since the pandemic and is now approaching the radar again with the acknowledgement that the numbers are relatively small in in the logistics business in terms of its relative change in profitability. So that's that's the story there, Ben.

Ben Nolan: So that's the story there, Ben. Okay. And just around that out. How do you think about sort of the trajectory of it? I see it like many of our other businesses continuing to grow organically. We have an unbelievable brand in China. And for customers that have three and a half container loads of cargo, they want to have that last half of a container loaded into an LTL box, consolidated by Matson and delivered. And we're going to continue to see growth in that segment as our China businesses continue to perform well. All right. Perfect. I appreciate it.

Justin Schoenberg: Okay, and just to round that out, how do you think about the trajectory of it?

Ben Nolan: Okay, and just to round that out, how do you think about sort of the trajectory of it?

Ben Nolan: I see it like many of our other businesses continuing to grow organically. We have an unbelievable brand in China, and for customers that have...

Speaker Change: Three-and-a-half container loads of cargo they want to have that that last half of a container loaded Into an LTL box consolidated by Matson and delivered And we're going to continue to see growth in that segment as our China businesses, you know continue to perform well

Ben Nolan: All right, perfect. I appreciate it. Thanks for putting up with me. Okay, no problem, Beth. Thanks.

Ben Nolan: Thanks for putting up with me. Okay. No problem, Ben. Thanks. Thank you.

Speaker Change: All right, perfect. I appreciate it. Thanks for putting up with me.

Operator: Thank you. Our next question will be coming to us from Jake Lacks of Wolf. Your line is now open.

Jake lacks: Our next question will be coming to us from Jake Lacks of Wolf.

Speaker Change: Okay, no problem, Beth. Thanks.

Speaker Change: Thank you. Our next question will be coming to us from Jake Wax of Wolf. Your line is now open.

Jake lacks: Your line is now open. Thank you, guys. Thanks for the time. Sure, Jake. So a couple on the guide.

Jake Wax: Hey guys, thanks for your time.

Jacob Lacks: So a couple of questions on the guide. I just wanted to see if you could give a little more perspective on the degree of outperformance in Ocean EBIT you think meaningfully when you say meaningfully. I know it's a little more specific than you typically get, but we've seen a pretty big spike in rates, so any thoughts here would be helpful as we just think about recalibrating our models.

Jake lacks: I just wanted to see if you could give a little more perspective on the degree of outperformance in the ocean, but you're thinking when you say meanfully. I know it's a little more specific than you typically get, but we've seen a pretty big spike in rates. So any thoughts here would be helpful as we just think about retaliating our models. Yeah, Jake. I mean, you got to take meaningfully. We're just saying, meaningfully higher. So I can't really elaborate on that. Just use your best assessment based upon that. I would say though that this this quarter we just had is meaningful higher than last year's second quarter.

Jake Wax: Sure, Jay.

Jake Wax: So a couple on the guide. I just wanted to see if you could give a little more perspective on the degree of outperformance in Ocean EBIT you're thinking when you say meaningfully. I know it's a little more specific than you typically get but we've seen a pretty big spike in rates so any thoughts here would be helpful as we just think about recalibrating our models.

Justin Schoenberg: Yeah, Jake, I mean, you've got to take meaningfully higher. We're just saying meaningfully higher. So, I can't really elaborate on that, just use your best estimate based upon that. I would say, though, that this quarter we just had is meaningfully higher than last year's second quarter. But we're just going to leave it with the language we've chosen: meaningfully higher.

Speaker Change: Yeah, Jake, I mean this you got to take meaningfully we're just saying meaningfully higher So I can't really elaborate on that just use your best estimate based upon that I would say though that this this quarter. We just had is meaningfully higher than last year's Second quarter, but we're just going to leave it with the language. We've chosen meaningfully higher

Matt Cox: But we're just going to leave it with the language you've chosen, meaningfully higher. Yeah. Okay.

Justin Schoenberg: Okay, and then in 4Q, are you assuming a pretty full rate normalization there?

Matt Cox: And then for you, are you assuming a pretty full rate normalization there? Yeah, I think at this point, Jake, we're expecting a more traditional peak period, meaning after the first week or so of October, when we get into our traditional start to see the normal market adjustment factors of existing surcharge to subside. And you know, as we get second half of the fourth quarter, return to a more post-peak season environment. So it's really more of a traditional return in a seasonal turn to a seasonal pattern, subject to all the qualifications about other external events that may affect that.

Speaker Change: Got it. Okay. And then in 4Q, are you assuming a pretty full rate normalization there?

Justin Schoenberg: I think at this point, Jake, we're expecting a more traditional.

Speaker Change: peak period meaning after the first week or so of October when we get into our traditional

Speaker Change: start to see the normal market adjustment factors of excise and surcharge to subside and and and you know as we get

Speaker Change: second half of the fourth quarter return to a more post-peak season environment. So it's really more of a traditional return to a seasonal pattern, subject to all the qualifications about other external events that may impact that for Matson positive.

Jake lacks: Thank you. Thanks.

Justin Schoenberg: Got it. Thanks. And then one more for me. You guys spoke about long-term demand growth and conversion from air for your expedited ocean service. How close or how far are we from demand being there for, you know, to reintroduce such a service?

Jake lacks: And then one more for me. You guys spoke about long-term demand growth and conversion from air for your ex-bite ocean service. How close are how far are we from demand being there for, you know, to reintroduce sort of a third ex-bited service? A third. He's asking about that. Yeah, okay. Okay, got it. Thanks, Jake. Yeah, it's a good question. We certainly, it's on our long-term planning radar. I would say it's unlikely that we would see the demand in this time horizon if the market opportunity presents itself. We certainly, you know, we have a track record of being able to respond to those changes to be able to take advantage of it.

Speaker Change: Got it. Thanks. And then one more for me. You guys spoke about long-term demand growth and conversion from air for your expedited ocean service. How close or how far are we from demand being there for, you know, to reintroduce sort of a third expedited service?

Justin Schoenberg: It's a good question. We certainly think it's on our long-term planning radar. I would say it's unlikely that we would see demand in this time horizon. However, if the market opportunity presents itself, we certainly have a track record of being able to respond to those opportunities, to be able to take advantage of them. Vessel charter, there aren't a ton of vessels on charter available to put together a service that would need six vessels or something like that, but in the Trans-Pacific Trade Lane. But our view is that it remains an option for us under different market conditions but not likely expected to be under the current conditions of the way we're thinking about it. Great

Speaker Change: He's asking about a potential third service. Okay, I got it. Thanks, Jake. Yeah, it's a good question. We certainly...

Speaker Change: It's on our long-term planning radar. I would say it's unlikely that we would see the demand in this time horizon. If the market opportunity presents itself, we certainly have a track record of being able to respond to those.

Matt Cox: Vessel, charter; there aren't a ton of vessels on charter available to put together a service that would need six vessels or something like that, but in the Trans-Pacific trade lane. But our view is that it remains an option to us under different market conditions, but not likely expected to be in under the current conditions and the way we're thinking about it.

Speaker Change: changes to be able to take advantage of it.

Speaker Change: There aren't a ton of vessels on charter available to put together a service that would need six vessels or something like that.

Speaker Change: in the Trans Pacific Trade Lane, but our view is that it remains an option to us under different market conditions, but not likely expected to be under the current conditions of the way we're thinking about it.

Jake lacks: Great. Thanks for the time. Okay, thank you. Thanks, Jake. Thank you.

Jacob Lacks: Okay, thank you. Thanks, Jake.

Speaker Change: Great. Thanks for your time.

Speaker Change: Okay, thank you. Thanks, Jake.

Daniel Imbro: Our next question will be coming from Daniel Embro of Stevens Inc. Your line is now open. Yeah, thanks. Good evening, guys. Do you all want to follow up, maybe on the guidance? I think you guys talked about accepting pricing to stay strong through peak season, but how do you think about volume through the upcoming peak season? Maybe with some of the strength and two Q, a poll forward? Do you still think we'll see a normal kind of growth sequence? I just curious how you're feeling about the volume growth side as you talk to your customers to the backup?

Operator: Our next question will be coming from Daniel Imbro of Stevens Inc. Your line is now open.

Speaker Change: Thank you.

Speaker Change: Our next question will be coming from Daniel Imbro of Stevens Inc. Your line is now open.

Daniel Imbro: Yeah, thanks. Good evening, guys.

Daniel Imbro: Yeah, thanks. Good evening, guys.

Daniel Imbro: Joel, I want to follow up maybe on that guidance, I think you guys talked about expecting pricing to stay strong through peak season, but how are you thinking about volume through the upcoming peak season, maybe with some of the strength in 2Q, a pull forward, do you still think we'll see a normal kind of growth sequentially, just curious how you're feeling about the volume growth side as you talk to your customers for the back half.

Justin Schoenberg: Yes, thanks Daniel. We expect to be full. I mean, as you know, pretty much year-round CLX and MAX were full other than off periods around holidays, the Lunar New Year, etc. So we expect to be full here in the third quarter and also into the early, the end of the peak season, as we said, early fourth quarter.

Joel Wine: Yes, thanks, Daniel. We expect to be full. I mean, as you know, and pretty much year-round CLX and Max were full other than off periods around holidays, linear New York, et cetera. So we expect to be full here in the third quarter, and also into the early, the end of the peak season to be said, early fourth quarter. Hopefully, and then on the balance sheet. I think you took up Capex guy a little bit here for this year. I guess that's just a poll forward from some of the investments from next year. And then, as you think about the windfall of cash with stronger pricing, how do you think about deploying that cash between growth?

Speaker Change: Yes, thanks Daniel. We expect to be full. I mean, as you know, pretty much year-round, CLX and MACS were full other than off periods around holidays, Lunar New Year, etc. So we expect to be full here in the third quarter and also into the end of the peak season, as we said, early fourth quarter.

Daniel Imbro: Helpful. And then on the balance sheet, I think you took up the CapEx guide a little bit here for this year; I guess that's just a pull forward from some of the investments from next year. And then as you think about the windfall of cash with stronger pricing, how do you think about deploying that cash between growth, buyback, any other investments you're looking at?

Speaker Change: Helpful. And then on the balance sheet, I think you took up CapEx Guide a little bit here for this year. I guess that's just a pull forward from some of the investments from next year. And then as you think about the windfall of cash with stronger pricing, how do you think about deploying that cash between growth, buyback, any other investments you're looking at?

Joel Wine: Bye-bye. Any other investment you're looking at? Really, no change in all of that, Daniel, to be honest. So the only thing we changed was because of actual costs that are coming through on our Monikai project, our LNG reengineering project. We bumped up that line item by 15 million just due to that one specific project. So really, it's not a poll forward of Capex from one period to another, things like that. And last quarter, we gave numbers for 2025 and 2026, and we've made no change to that either. So overall, Capex fixture, I would describe, is unchanged, other than just some higher costs on one specific project.

Justin Schoenberg: Really, no change in all of that, Daniel, to be honest. So the only thing we changed was because of actual costs that are coming through on our Monokai project, our LNG re-engineering project; we bumped up that line item by 15 million just due to that one specific project. So really, it's not a pull forward of CapEx from one period to another or things like that. And last quarter, we gave numbers for 2025 and 2026, and we've made no change to that either. So overall, the CapEx picture I would describe as unchanged, other than just some higher costs on one specific project.

Speaker Change: Really no change in all that, Daniel, to be honest. So the only thing we changed was the because of actual costs that are coming through on our Monokai project, our LNG re-engineering project. We bumped up that lot item by 15 million just due to that one specific project. So really...

Speaker Change: It's not a pull forward of CapEx from one period to another, things like that. And last quarter we gave numbers for 2025 and 2026 and we've made no change to that either. So overall the CapEx picture I would describe as unchanged other than just some higher cost on one specific project.

Joel Wine: Hopefully, let me have third one for me just to come back near-term. I know hard to give too much color on 3Q, but did I hear you right? You described the 2Q growth as meaningful if that's a decent bogey when you go think about meaningful? Yeah, if you compare last year's, you know, we talk about operating income performance for each of the segments and consolidated. And yeah, clearly, clearly this year's second quarter for ocean, and then therefore, consolidate as well, we're meaningfully higher than last year's second quarter. So I'm not saying it's going to be; that's not, don't read that as we're saying it's the exact amount, but its qualifications is meaningfully higher.

Daniel Imbro: helpful, let me have the third one for me just to come back near term. I know it's hard to give too much color on 3Q, but did I hear you right? You described the 2Q growth as meaningful, if that's a decent bogey when you guys think about meaningful.

Speaker Change: Helpful. Let me have a third one from you just to come back near term. I know it's hard to give too much color on 3Q, but did I hear you right? You described the 2Q growth as meaningful, so that's a decent bogey when you guys think about meaningful.

Justin Schoenberg: Yeah, if you compare last year's, we talk about operating income performance for each of the segments and consolidated, and yeah, clearly, this year's second quarter for Ocean and, therefore, consolidated as well was meaningfully higher than last year's second quarter. So I'm not saying it's going to, that's not, don't read that as we're saying it's the exact amount, but it qualifies as meaningfully higher.

Speaker Change: Yeah, if you compare last year's, you know, we talk about operating income performance for each of the segments and consolidated, and yeah, clearly this year's second quarter for ocean and then therefore consolidated as well were meaningfully higher than last year's second quarter. So, I'm not saying it's going to be, that's not, don't read that as we're saying it's the exact amount, but it qualifies as meaningfully higher.

Daniel Imbro: Great. And then there was one more follow-up.

Matt Cox: Great, and then one more follow-up. When you think about adding the new string of ships, whether it's South China or North Vietnam, I guess would you be looking to add company on ships? Could you lease ships like you do with the Max Line? Would that make it easier to do financially? I just think about what are the considerations or how long would you need to see this growing demand to decide if it is worth setting up a new string of six ships? Yeah, Daniel, this is not all into that one. I think our view is, and as I said, it's not right on our radar at the moment, but if we were to add it to the third string, they would very likely be chartered vessels, foreign-built chartered vessels, likely have with our Max service. Those are comprised of chartered vessels that we would do it; we would do it that way.

Speaker Change: Great. And then one more follow-up. When you think about adding a new string of ships, whether it's South China or North Vietnam, I guess, would you be looking to add company-owned ships? Could you lease ships like you do with the MAX line? Would that make it easier to do financially? Just think about what are the considerations or how long would you need to see this growing demand to decide it is worth setting up a new string of six ships?

Daniel Imbro: When you think about adding a new string of ships, whether it's South China or North Vietnam, I guess, would you be looking to add company-owned ships? Or could you lease ships like you do with the MAX line? Would that make it easier to do financially? Just think about what are the considerations, or how long you would need to see this growing demand to decide it is worth setting up a new string of six ships?

Speaker Change: Yeah, Daniel, this is Matt. I'll answer that one. I think our view is, and as I said, it's not right on our radar at the moment, but if we were to

Justin Schoenberg: Yeah, Daniel. This is Matt. I'll answer that one. I think our view is, and as I said, it's not right on our radar at the moment, but if we were to add it to the third string, they would very likely be chartered vessels, foreign-built chartered vessels like we have with our MAX service. Those are comprised of chartered vessels that we would do it that way. And some of the factors that, of course, would go into it are, as I mentioned a moment ago, the availability of chartered ships, and you'd need to charter six of them to be able to have a weekly service.

Matt: chartered vessels, foreign-built chartered vessels like we have with our MAX service. Those are comprised of chartered vessels, that we would do it that way. And some of the factors, of course, that would go into it are, as I mentioned a moment ago, the availability of chartered ships and you'd need

Matt Cox: And some of the factors that, of course, would go into it are the, as I mentioned a moment ago, the availability of chartered ships, and you'd need to charter six of them to be able to have a weekly service. But the other factors are, in each of these markets, especially the growing markets like Vietnam and in other places, the question is not so much whether there's a demand for Max's product, but is there enough demand that would be willing to pay a premium price that would allow us to operate that service at a level of profits that would make sense for us to do?

Justin Schoenberg: But the other factors are, in each of these markets, especially growing markets like Vietnam and other places, the question is not so much whether there's a demand for Matson's product, but is there enough demand that would be willing to pay a premium price that would allow us to operate that service at a level of profits that would make sense for us to do so? And so it's not that there isn't cargo there, but in some of these smaller markets, there's a smaller segment.

Speaker Change: to acquire, charter six of them to be able to have a weekly service. But the other factors are, in each of these markets, especially the growing markets like Vietnam,

Speaker Change: and in other places. The question is not so much whether there's a demand for Matson's product, but is there enough demand that would be willing to pay a premium price that would allow us to operate that service at a level of profits that would make sense for us to do. And so it's not that there isn't cargo there, but in some of these smaller markets, there's a smaller segment.

Matt Cox: And so it's not that there isn't cargo there, but in some of these smaller markets, there's a smaller segment. So, for example, in Vietnam, we have a regular service at a high phone, which connects with one of our trusted feeder partners that move a couple hundred loads a week out of Vietnam, high phone in particular, that meets up with our line-haul ships on the CLX and Max. And so, you know, we'd need to be confident that those markets would be able to accommodate a much greater percentage of the capacity to make those voyages profitable. Great.

Justin Schoenberg: So, for example, in Vietnam, we have a regular service at Haiphong, which connects with one of our trusted feeder partners that move a couple hundred loads a week out of Vietnam, Haiphong in particular, that meets up with our line haul ships on the CLX and MAX. And so we would need to be confident that those markets would be able to accommodate a much greater percentage of the capacity to make those voyages profitable. Great, thanks for all the help.

Speaker Change: So, for example, in Vietnam...

Speaker Change: We have a regular service at a Haiphong, which connects with one of our trusted feeder partners.

Speaker Change: that move a couple hundred loads a week out of Vietnam, Haiphong in particular, that meets up with our line haul ships on the CLX and MAX. And so, you know, we need to be confident that those markets would be able to accommodate a much greater percentage of the capacity to make those voyages profitable.

Daniel Imbro: Great, thanks for all the color. Okay. Thank you, Daniel. Thank you, Daniel.

Daniel Imbro: Thanks for all the color. Okay. Thank you, Daniel. Thank you.

Robert Hiller: Great. Thanks, Robert Hiller.

Speaker Change: Thank you, Daniel. Thank you, Daniel.

Operator: This concludes the question and the answer session.

Operator: This concludes the question and answer session. I would now like to turn it back to Matt Cox, CEO, for closing remarks.

Speaker Change: Thank you.

Matt Cox: I would now like to turn it back to Max Cox, CEO, for closing remarks. Okay. Well, thanks for being on the call today. We look forward to catching up with you on the third quarter call. Thanks. Aloha. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Thank you.

Speaker Change: This concludes the question and answer session. I would now like to turn it back to Matt Cox, CEO , for closing remarks.

Matthew Cox: Okay, well, thanks for being on the call today. We look forward to catching up with you on the third quarter call. Thanks. Aloha.

Matt Cox: Okay, well thanks for being on the call today. We look forward to catching up with you on the third quarter call. Thanks. Aloha.

Speaker Change: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Speaker Change: Thanks for watching!

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