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Matson, Inc. (NYSE: MATX) recently announced its preliminary second quarter financial results, as well as providing a business update. The company expects the operating income for its Ocean Transportation division in 2Q23 to be in the range of $78.0 to $83.0 million. For its Logistics division, Matson expects the operating income to range from $13.5 to $14.5 million. Additionally, the company anticipates that its net income and diluted EPS for the second quarter of 2023 will be between $76.3 to $81.5 million and $2.14 to $2.28, respectively.

The decrease in consolidated operating income year-over-year is mainly attributed to the lower contribution from Matson’s China service. In the second quarter of 2023, the company repurchased approximately 0.6 million shares. Matson has also announced that its second quarter earnings call will take place on August 1, 2023.

Matson’s Chairman and CEO, Matt Cox, commended the performance of the Ocean Transportation and Logistics segments, stating that they performed well despite a challenging business environment and sluggish economic growth. Cox explained that the decline in consolidated operating income was primarily due to lower year-over-year volume and freight rates in the China service. He also mentioned that while there have been modest reductions in deployed capacity in the Transpacific marketplace, retail inventories are in a better position than earlier in the year. Nevertheless, retailers are cautiously managing inventory levels due to lower consumer demand. Cox expects the tradelane to experience a muted peak season, but for Matson, the China service is expected to be near full during this time. He expressed optimism that trade dynamics will gradually improve for the remainder of the year as the Transpacific marketplace transitions to a more normalized level of consumer demand and retail inventory stocking levels. Regardless of the economic environment, Matson expects to continue earning a significant rate premium to the Shanghai Containerized Freight Index due to its fast and reliable ocean services and destination services.

Regarding Matson’s domestic ocean tradelanes, Cox noted lower year-over-year volumes in Hawaii, Alaska, and Guam compared to the same period last year. The decline in Hawaii’s volume was primarily due to lower retail-related volume. In Guam and Alaska, the year-over-year volume declines were driven by lower general demand and lower seafood volume, respectively. As for the Logistics division, the decrease in operating income is primarily attributed to lower contributions from transportation brokerage and supply chain management.

Matson expects its second quarter operating income for Ocean Transportation to range from $78.0 to $83.0 million, while operating income for Logistics is expected to range from $13.5 to $14.5 million. The company also projects its second quarter 2023 net income and diluted EPS to be between $76.3 to $81.5 million and $2.14 to $2.28, respectively.

Additionally, Matson provided information on second-quarter tradelane volumes expressed in Forty-foot equivalent units (FEU). Hawaii container volume decreased by 7.1 percent primarily due to lower retail-related volume. Alaska container volume decreased by 7.2 percent, attributable to lower export seafood volume from the Alaska-Asia Express service, lower northbound volume, and lower southbound volume. China container volume was 24.6 percent lower due to factors such as discontinued services and lower capacity. Guam container volume was 7.5 percent lower due to lower general demand. Other container volume decreased by 29.0 percent.

In terms of liquidity, Matson had approximately $120.0 million in cash and cash equivalents as of June 30, 2023, excluding cash on deposit within the Capital Construction Fund (CCF). The company’s total debt as of that date was $462.4 million. During the second quarter of 2023, Matson made a milestone payment of approximately $50.0 million from the CCF for its new vessel build program. Furthermore, the company repurchased approximately 0.6 million shares during the same period, amounting to a total cost of $42.4 million. Matson still has around 3.3 million shares remaining in its share repurchase program.

Matson will hold its second quarter earnings call on August 1, 2023, with Chairman and CEO Matt Cox and CFO Joel Wine discussing the company’s financial results. The conference call will be broadcast live on Matson’s website, accompanied by a slide presentation. Participants are encouraged to register for the conference call in advance to receive the dial-in number and unique PIN code.

Matson, founded in 1882, is a prominent provider of ocean transportation and logistics services. The company is essential for ensuring the transport of goods to the non-contiguous economies of Hawaii, Alaska, and Guam, as well as other island economies in Micronesia. Matson also operates expedited services from China to Long Beach, California, provides service to Okinawa, Japan, and various islands in the South Pacific, and has an international export service from Dutch Harbor to Asia. The company’s fleet includes a range of vessels, such as containerships, combination container and roll-on/roll-off ships, and custom-designed barges. Matson Logistics, established in 1987, expands Matson’s transportation network throughout North America and Asia through its integrated, asset-light logistics services.

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