Matson, Inc. Q3 FY2025 earnings call

• Business segments performed well in a tough environment marked by tariffs and global trade uncertainty.
• Ocean Transportation operating income lower due to lower freight rates and China container volume; domestic tradelanes had mixed volume.
• Logistics operating income lower due to lower contributions from freight forwarding, etc.
• Hawaii service volume up 0.3% y/y in Q3; full year 2025 volume expected comparable.
• Hawaii economy softening due to tourism, inflation, and interest rates; construction a bright spot.
• China service volume down 12.8% y/y in Q3 2025.
• Transpacific tradelane had muted peak season; Q4 2025 expected lower freight rates and volume in China service.
• Port entry fees paid $6.4 million in Q3; U.S.-China deal suspended port entry fees for 1 year, etc.
• Guam volume down 4.2% y/y in Q3; near term expected moderate.
• Alaska volume up 4.1% y/y in Q3; full year 2025 expected modestly higher.
• SSAT terminal contributed $9.3 million in Q3, up $2.4 million y/y.
• Logistics operating income $13.6 million in Q3, $1.8 million lower y/y.

In the third quarter, Ocean Transportation had lower operating income year-over-year primarily due to lower freight rates and container volume in the China service. Domestic tradelanes saw higher volume in Hawaii and Alaska, but lower volume in Guam. Logistics had lower operating income year-over-year due to lower contributions from freight forwarding, transportation brokerage, and supply chain management. Container volume in Hawaii service increased 0.3% year-over-year in Q3; full year 2025 volume expected comparable to 2024. China service container volume decreased 12.8% year-over-year in Q3 2025. Guam container volume decreased 4.2% year-over-year in Q3 2025. Alaska container volume increased 4.1% year-over-year in Q3 2025. SSAT terminal joint venture contributed $9.3 million in Q3, a year-over-year increase of $2.4 million. Logistics operating income in Q3 was $13.6 million, $1.8 million lower year-over-year.

• Q4 2025 consolidated operating income expected to be approximately 30% lower year-over-year.
• Optimistic about more stable trading environment for customers starting Q4 due to U.S.-China trade deal.
• Ocean Transportation operating income expected lower than Q4 2024; Logistics operating income expected modestly lower year-over-year in Q4 2025.
• Full year 2025 depreciation and amortization to approximate $196 million, inclusive of $28 million for dry dock amortization; interest income ~$32 million, interest expense ~$7 million, etc.
• Maintenance and other capital expenditures for 2025 increased to ~$130 million; new vessel construction milestone payments ~$248 million (lower than prior estimate due to milestone pushback).

• Risk factors from SEC filings related to tariffs, global trade uncertainty, geopolitical factors, etc., as detailed in Form 10-Q filed on May 6, 2025, and subsequent filings.

Q: Do you view the current pricing levels on the Transpacific lane as sustainable?

A: Yes, we held prices based on belief in less expedited volumes, and absolute freight rates likely to come down orderly.

Q: Are the utilization headwinds in the quarter just due to your actions on pricing?

A: Yes, utilization was lower due to front-loading of inventory rather than broader market supply and demand.

Q: Are the $6.4 million in port fees included in the operating profit down 30% in 4Q?

A: Yes, they are included.

Q: Are there mechanisms to get the $6.4 million in port fees refunded?

A: Awaiting final regulations from USTR and China MOC expected shortly.

Q: Do you see the spot market rebound impacting your business?

A: Matson's pricing is disconnected; our pricing is based on customer needs for fast delivery.

Q: Are customers potentially getting weary of sourcing from China?

A: Customers are diversifying with China Plus One strategy but China remains important.

Q: Where is volume from CLX and MAX services coming from?

A: Largest chunks from Vietnam, with Thailand, etc., expected to grow.

Q: How is pricing in domestic lanes?

A: Annual rate increases mirroring cost increases, including fuel surcharges.