Release Date: February 25, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Matson Inc (MATX, Financial) reported a strong fourth quarter, exceeding expectations and capping off a strong year.
- The China service was a primary driver of increased ocean transportation operating income due to higher freight rates.
- Logistics operating income increased year over year, driven by a higher contribution from supply chain management.
- The company successfully reduced total debt by $39.7 million over the year.
- Matson Inc (MATX) returned approximately $243.9 million to shareholders through dividends and share repurchases.
Negative Points
- Hawaii container volume decreased 1.7% in the fourth quarter and 2.3% for the full year due to lower general demand.
- The SSAT joint venture recorded an $18.4 million impairment charge, impacting fourth-quarter earnings.
- Guam's container volume decreased 10% in the fourth quarter due to lower demand from retail and food and beverage segments.
- The company expects logistics operating income to be modestly lower in 2025 due to challenging business conditions.
- There is uncertainty regarding the impact of tariffs and geopolitical factors on future freight rates and demand.
Q & A Highlights
Q: Could you break out the drivers behind the outlook for the first quarter of 2025, which is expected to be meaningfully higher than the previous year?
A: The outlook is driven by a variety of factors. In domestic trade lanes, we expect steady performance. In logistics, the environment is more challenging but stable. The significant change is in China, where elevated freight rates, which began in the second quarter of 2024, are expected to continue into the first quarter of 2025. This is the primary driver for the higher outlook. - Joel Winnie, CFO
Q: How have freight rates trended sequentially, and what should investors expect for the first quarter of 2025?
A: Freight rates remained relatively steady from the second quarter through the end of 2024. We did reduce our peak season surcharge towards the end of the fourth quarter, which is consistent with our historical practice. Rates have been reset to a lower level post-peak season but remain steady. It's not advisable to follow spot rates on the SCFI as an indicator for our rates. - Matt Cox, CEO
Q: What are the opportunities for capital allocation, and are there any plans for additional services or acquisitions?
A: On the ocean transportation side, opportunities are limited, so we focus on organic growth leveraging our existing capabilities. In logistics, there are both organic and M&A opportunities. We look for niche, defensible businesses that offer good returns and fit our profile. - Joel Winnie, CFO
Q: How does the USTR proposed rule on China shipbuilding affect Matson, and what is the company's exposure to Chinese-built vessels?
A: We are in the early stages of discussions between the US and China, and it's too early to tell the impact. Matson operates four Chinese-built vessels out of a total of 30, with no new vessels under construction in China. We are monitoring the situation closely, but our expedited China services position us well in uncertain supply chain environments. - Matt Cox, CEO
Q: Regarding the three new vessels being built in Philadelphia, what caused the delay, and are there any risks of further delays or cost increases?
A: The delay was due to a previous project occupying the construction dock. Hanwa Philly Shipyard believes there are no other significant changes that could cause further delays. We have a fixed-price contract with some escalators for steel costs, but we don't expect material changes to the overall project cost. The primary impact is the delayed benefit of additional capacity. - Matt Cox, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
