Matson (MATX) Q3 Earnings call transcript Oct 30, 2024

Matson Inc., a leading provider of ocean transportation and logistics services, released its third quarter 2024 results, demonstrating strong financial performance and optimism for the future. During the earnings call, executives highlighted significant growth in operating income, particularly in its China service, driven by higher freight rates and robust demand.

Strong Performance in Ocean Transportation and Logistics

Matson reported higher year-over-year operating income in both its Ocean Transportation and Logistics sectors. In Ocean Transportation, the China service saw a significant increase in freight rates, primarily due to the strong demand for its CLX and MAX services. This growth was a major contributor to the consolidated operating income for the quarter.

In Logistics, operating income increased due to higher contributions from supply chain management and transportation brokerage services. The company's supply chain management service benefited from similar market conditions as its Ocean Transportation sector, while its transportation brokerage business saw stronger international intermodal demand.

Outlook for 2024

Based on the strong performance in the third quarter, Matson raised its outlook for 2024. The company expects higher year-over-year operating income in both Ocean Transportation and Logistics, driven by the continued strong demand in its China service and the growth in its logistics services.

Challenges and Opportunities in Hawaii and Guam

Matson also provided an update on its operations in Hawaii and Guam. In Hawaii, the company reported a decrease in container volume due to lower demand, primarily in the retail and food and beverage segments. Despite this, the company expects a stable economy with low unemployment rates and continued economic growth, supported by a low unemployment rate, job growth, and lower levels of inflation.

In Guam, the company experienced a decrease in container volume due to lower demand from retail and food and beverage segments. However, the company expects a stable economy with a low unemployment rate and slow growth in tourism. Similar to Hawaii, the Guam tourist arrivals have been impacted by the slow recovery in Japanese visitors.

Investments and Future Outlook

During the call, executives provided an update on the company's investments, including the new Aloha Class vessels, which will have dual fuel engines capable of operating on both conventional marine fuels and LNG. These new vessels will allow Matson to carry approximately 15,000 more containers per year in its China service once all three vessels are in service. The company also provided an update on its share repurchase program, which has repurchased approximately 11 million shares or 25.2% of its stock for a total cost of approximately $925 million.

Looking ahead, Matson remains committed to returning excess capital to shareholders and plans to continue its share repurchase program in the absence of any significant organic or inorganic growth opportunities. The company also expects to reduce its total debt to $395 million by the end of 2024, reflecting its focus on financial discipline and strategic investments.

Conclusion

Matson's strong third quarter performance and optimistic outlook for 2024 signal a promising future for the company. With its focus on innovation, operational excellence, and strategic investments, Matson is well-positioned to capitalize on the growing demand for efficient and reliable logistics solutions. As the company continues to navigate the dynamic landscape of global trade, it remains committed to delivering value for its customers and shareholders.