Matson, Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS ​ MATSON, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Income and Comprehensive Income (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Six Months Ended ​ ​ ​ June 30, ​ June 30, ​ (In millions, except per share amounts) 2020 2019 2020 2019 Operating Revenue: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ocean Transportation ​ $ 410.8 ​ $ 415.4 ​ $ 811.7 ​ $ 813.3 ​ Logistics ​ 113.3 ​ 142.5 ​ 226.3 ​ 277.0 ​ Total Operating Revenue ​ 524.1 ​ 557.9 ​ 1,038.0 ​ 1,090.3 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Costs and Expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating costs ​ ( 426.3 ) ​ ( 472.8 ) ​ ( 874.6 ) ​ ( 939.9 ) ​ Income from SSAT ​ 3.7 ​ 0.9 ​ 7.7 ​ 9.4 ​ Selling, general and administrative ​ ( 50.3 ) ​ ( 55.0 ) ​ ( 106.9 ) ​ ( 111.3 ) ​ Total Costs and Expenses ​ ( 472.9 ) ​ ( 526.9 ) ​ ( 973.8 ) ​ ( 1,041.8 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating Income ​ 51.2 ​ 31.0 ​ 64.2 ​ 48.5 ​ Interest expense ​ ( 8.2 ) ​ ( 6.1 ) ​ ( 16.8 ) ​ ( 10.7 ) ​ Other income (expense), net ​ 1.5 ​ 0.8 ​ 2.1 ​ 1.4 ​ Income before Income Taxes ​ 44.5 ​ 25.7 ​ 49.5 ​ 39.2 ​ Income taxes ​ ( 11.7 ) ​ ( 7.3 ) ​ ( 12.9 ) ​ ( 8.3 ) ​ Net Income ​ $ 32.8 ​ $ 18.4 ​ $ 36.6 ​ $ 30.9 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other Comprehensive Income (Loss), Net of Income Taxes: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Income ​ $ 32.8 ​ $ 18.4 ​ $ 36.6 ​ $ 30.9 ​ Other Comprehensive Income (Loss): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Amortization of prior service cost ​ ( 1.1 ) ​ ( 1.2 ) ​ ( 2.3 ) ​ ( 2.3 ) ​ Amortization of net loss ​ 1.3 ​ 0.9 ​ 2.6 ​ 1.8 ​ Other adjustments ​ ( 0.1 ) ​ ( 0.2 ) ​ ( 0.8 ) ​ ( 0.2 ) ​ Total Other Comprehensive Income (Loss) ​ 0.1 ​ ( 0.5 ) ​ ( 0.5 ) ​ ( 0.7 ) ​ Comprehensive Income ​ $ 32.9 ​ $ 17.9 ​ $ 36.1 ​ $ 30.2 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic Earnings Per Share ​ $ 0.76 ​ $ 0.43 ​ $ 0.85 ​ $ 0.72 ​ Diluted Earnings Per Share ​ $ 0.76 ​ $ 0.43 ​ $ 0.85 ​ $ 0.72 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted Average Number of Shares Outstanding: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ 43.1 ​ 42.8 ​ 43.0 ​ 42.8 ​ Diluted ​ 43.3 ​ 43.2 ​ 43.3 ​ 43.2 ​ ​ See Notes to Condensed Consolidated Financial Statements. ​ 1 Table of Contents MATSON, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ December 31, ​ (In millions) 2020 2019 ASSETS ​ ​ ​ ​ ​ ​ ​ Current Assets: ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 19.5 ​ $ 21.2 ​ Accounts receivable, net of allowance for credit loss of $ 5.9 million and $ 4.3 million, respectively ​ 215.2 ​ 205.9 ​ Prepaid expenses and other assets ​ 38.9 ​ 62.5 ​ Total current assets ​ 273.6 ​ 289.6 ​ Long-term Assets: ​ ​ ​ ​ ​ ​ ​ Investment in SSAT ​ 77.5 ​ 76.2 ​ Property and equipment, net ​ 1,578.4 ​ 1,598.1 ​ Operating lease right of use assets ​ ​ 241.9 ​ ​ 256.1 ​ Goodwill ​ 327.8 ​ 327.8 ​ Intangible assets, net ​ ​ 197.5 ​ ​ 202.9 ​ Deferred dry-docking costs, net ​ ​ 52.0 ​ ​ 56.9 ​ Other long-term assets ​ 28.9 ​ 37.8 ​ Total long-term assets ​ ​ 2,504.0 ​ ​ 2,555.8 ​ Total Assets ​ $ 2,777.6 ​ $ 2,845.4 ​ ​ ​ ​ ​ ​ ​ ​ ​ LIABILITIES AND SHAREHOLDERS’ EQUITY ​ ​ ​ ​ ​ ​ ​ Current Liabilities: ​ ​ ​ ​ ​ ​ ​ Current portion of debt ​ $ 50.5 ​ $ 48.4 ​ Accounts payable and accruals ​ 247.4 ​ 235.7 ​ Operating lease liabilities ​ ​ 63.5 ​ ​ 66.6 ​ Other liabilities ​ 88.2 ​ 86.0 ​ Total current liabilities ​ 449.6 ​ 436.7 ​ Long-term Liabilities: ​ ​ ​ ​ ​ ​ ​ Long-term debt, net of deferred loan fees ​ 823.5 ​ 910.0 ​ Long-term operating lease liabilities ​ ​ 186.5 ​ ​ 198.0 ​ Deferred income taxes ​ 348.8 ​ 337.6 ​ Other long-term liabilities ​ ​ 153.7 ​ ​ 157.4 ​ Total long-term liabilities ​ 1,512.5 ​ 1,603.0 ​ Commitments and Contingencies ​ ​ ​ ​ ​ ​ ​ Shareholders’ Equity: ​ ​ ​ ​ ​ ​ ​ Common stock ​ 32.3 ​ 32.2 ​ Additional paid in capital ​ 306.7 ​ 306.2 ​ Accumulated other comprehensive loss, net ​ ( 37.4 ) ​ ( 36.9 ) ​ Retained earnings ​ 513.9 ​ 504.2 ​ Total shareholders’ equity ​ 815.5 ​ 805.7 ​ Total Liabilities and Shareholders’ Equity ​ $ 2,777.6 ​ $ 2,845.4 ​ ​ See Notes to Condensed Consolidated Financial Statements. ​ 2 Table of Contents MATSON, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Six Months Ended June 30, ​ (In millions) 2020 2019 Cash Flows From Operating Activities: ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 36.6 ​ $ 30.9 ​ Reconciling adjustments: ​ ​ ​ ​ ​ ​ ​ Depreciation and amortization ​ 55.6 ​ 47.5 ​ Amortization of operating lease right of use assets ​ ​ 35.6 ​ ​ 33.5 ​ Deferred income taxes ​ 11.4 ​ 9.9 ​ Share-based compensation expense ​ 6.1 ​ 6.2 ​ Income from SSAT ​ ( 7.7 ) ​ ( 9.4 ) ​ Distribution from SSAT ​ ​ 7.8 ​ ​ 9.5 ​ Other ​ ​ 0.5 ​ ​ ( 1.6 ) ​ Changes in assets and liabilities: ​ ​ ​ ​ ​ ​ ​ Accounts receivable, net ​ ( 9.3 ) ​ 10.8 ​ Deferred dry-docking payments ​ ( 7.6 ) ​ ( 6.9 ) ​ Deferred dry-docking amortization ​ 11.8 ​ 17.2 ​ Prepaid expenses and other assets ​ 25.2 ​ 25.5 ​ Accounts payable, accruals and other liabilities ​ 14.0 ​ ( 29.6 ) ​ Operating lease liabilities ​ ​ ( 36.0 ) ​ ​ ( 33.3 ) ​ Other long-term liabilities ​ ( 3.4 ) ​ ( 2.0 ) ​ Net cash provided by operating activities ​ 140.6 ​ 108.2 ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash Flows From Investing Activities: ​ ​ ​ ​ ​ ​ ​ Capitalized vessel construction expenditures ​ ​ ( 16.5 ) ​ ​ ( 30.6 ) ​ Other capital expenditures ​ ( 34.0 ) ​ ( 38.4 ) ​ Proceeds from disposal of property and equipment ​ 15.4 ​ 2.2 ​ Cash deposits into Capital Construction Fund ​ ( 97.1 ) ​ ( 26.4 ) ​ Withdrawals from Capital Construction Fund ​ ​ 97.1 ​ ​ 26.4 ​ Net cash used in investing activities ​ ( 35.1 ) ​ ( 66.8 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash Flows From Financing Activities: ​ ​ ​ ​ ​ ​ ​ Proceeds from issuance of debt ​ 325.5 ​ — ​ Repayments of debt ​ ( 192.8 ) ​ ( 11.8 ) ​ Proceeds from revolving credit facility ​ ​ 411.5 ​ ​ 212.8 ​ Repayments of revolving credit facility ​ ( 612.6 ) ​ ( 212.8 ) ​ Payment of financing costs ​ ​ ( 18.5 ) ​ ​ — ​ Proceeds from issuance of capital stock ​ ​ 0.1 ​ ​ — ​ Dividends paid ​ ​ ( 19.1 ) ​ ( 18.2 ) ​ Tax withholding related to net share settlements of restricted stock units ​ ​ ( 5.5 ) ​ ​ ( 3.2 ) ​ Net cash used in financing activities ​ ( 111.4 ) ​ ( 33.2 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Net (Decrease) Increase in Cash, Cash Equivalents and Restricted Cash ​ ( 5.9 ) ​ 8.2 ​ Cash, Cash Equivalents and Restricted Cash, Beginning of the Period ​ 28.4 ​ 24.5 ​ Cash, Cash Equivalents and Restricted Cash, End of the Period ​ $ 22.5 ​ $ 32.7 ​ ​ ​ ​ ​ ​ ​ ​ ​ Reconciliation of Cash, Cash Equivalents and Restricted Cash, End of the Period: ​ ​ ​ ​ ​ ​ ​ Cash and Cash Equivalents ​ $ 19.5 ​ $ 24.0 ​ Restricted Cash ​ ​ 3.0 ​ ​ 8.7 ​ Total Cash, Cash Equivalents and Restricted Cash, End of the Period ​ $ 22.5 ​ $ 32.7 ​ ​ ​ ​ ​ ​ ​ ​ ​ Supplemental Cash Flow Information: ​ ​ ​ ​ ​ ​ ​ Interest paid, net of capitalized interest ​ $ 17.9 ​ $ 7.8 ​ Income tax (refunds) and payments, net ​ $ ( 21.0 ) ​ $ ( 26.2 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-cash Information: ​ ​ ​ ​ ​ ​ ​ Capital expenditures included in accounts payable, accruals and other liabilities ​ $ 4.6 ​ $ 3.7 ​ Accrued dividends ​ $ 10.0 ​ $ 9.4 ​ ​ See Notes to Condensed Consolidated Financial Statements. 3 Table of Contents ​ MATSON, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Shareholders’ Equity (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ Common Stock ​ Additional ​ Other ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Stated ​ Paid In ​ Comprehensive ​ Retained ​ ​ ​ (In millions, except per share amounts) Shares Value Capital Income (Loss) Earnings Total Balance at December 31, 2019 42.9 ​ $ 32.2 $ 306.2 ​ $ ( 36.9 ) ​ $ 504.2 ​ $ 805.7 Net income — ​ — — ​ — ​ 3.8 ​ 3.8 Other comprehensive loss, net of tax — ​ — — ​ ( 0.6 ) ​ — ​ ( 0.6 ) Share-based compensation — ​ — 3.1 ​ — ​ — ​ 3.1 Shares issued, net of shares withheld for employee taxes 0.1 ​ 0.1 ( 4.6 ) ​ — ​ — ​ ( 4.5 ) Equity interest in SSAT ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 2.2 ​ ​ 2.2 Dividends ($ 0.22 per share) — ​ — — ​ — ​ ( 9.5 ) ​ ( 9.5 ) Balance at March 31, 2020 43.0 ​ ​ 32.3 ​ 304.7 ​ ​ ( 37.5 ) ​ ​ 500.7 ​ ​ 800.2 Net income — ​ — — ​ — ​ 32.8 ​ 32.8 Other comprehensive income, net of tax ​ — ​ — — ​ 0.1 ​ — ​ 0.1 Share-based compensation — ​ — 3.0 ​ — ​ — ​ 3.0 Shares issued, net of shares withheld for employee taxes 0.1 ​ — ( 1.0 ) ​ — ​ — ​ ( 1.0 ) Dividends ($ 0.22 per share and $ 0.23 per share) — ​ — — ​ — ​ ( 19.6 ) ​ ( 19.6 ) Balance at June 30, 2020 43.1 ​ $ 32.3 $ 306.7 ​ $ ( 37.4 ) ​ $ 513.9 ​ $ 815.5 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ Common Stock ​ Additional ​ Other ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Stated ​ Paid In ​ Comprehensive ​ Retained ​ ​ ​ (In millions, except per share amounts) Shares Value Capital Income (Loss) Earnings Total Balance at December 31, 2018 42.7 ​ $ 32.0 $ 297.8 ​ $ ( 34.5 ) ​ $ 460.0 ​ $ 755.3 Adoption of new lease accounting standard ​ — ​ — — ​ — ​ ​ 4.4 ​ 4.4 Net income — ​ — — ​ — ​ 12.5 ​ 12.5 Other comprehensive loss, net of tax — ​ — — ​ ( 0.2 ) ​ — ​ ( 0.2 ) Share-based compensation — ​ — 3.2 ​ — ​ — ​ 3.2 Shares issued, net of shares withheld for employee taxes 0.1 ​ 0.1 ( 3.2 ) ​ — ​ — ​ ( 3.1 ) Dividends ($ 0.21 per share) — ​ — — ​ — ​ ( 9.1 ) ​ ( 9.1 ) Balance at March 31, 2019 42.8 ​ ​ 32.1 ​ 297.8 ​ ​ ( 34.7 ) ​ ​ 467.8 ​ ​ 763.0 Net income — ​ — — ​ — ​ 18.4 ​ 18.4 Other comprehensive loss, net of tax ​ — ​ — — ​ ( 0.5 ) ​ — ​ ( 0.5 ) Share-based compensation — ​ — 3.0 ​ — ​ — ​ 3.0 Shares issued, net of shares withheld for employee taxes 0.1 ​ — ( 0.1 ) ​ — ​ — ​ ( 0.1 ) Dividends ($ 0.21 per share and $ 0.22 per share) — ​ — — ​ — ​ ( 18.6 ) ​ ( 18.6 ) Balance at June 30, 2019 42.9 ​ $ 32.1 $ 300.7 ​ $ ( 35.2 ) ​ $ 467.6 ​ $ 765.2 ​ ​ See Notes to Condensed Consolidated Financial Statements. 4 Table of Contents MATSON, INC. AND SUBSIDIARIES NOTES TO THE CONDENSED CONSOLIDATED FINANICAL STATEMENTS (Unaudited) ​ 1. DESCRIPTION OF THE BUSINESS ​ Matson, Inc., a holding company incorporated in the State of Hawaii, and its subsidiaries (“Matson” or the “Company”), is a leading provider of ocean transportation and logistics services. The Company consists of two segments, Ocean Transportation and Logistics: ​ Ocean Transportation: Matson’s Ocean Transportation business is conducted through Matson Navigation Company, Inc. (“MatNav”), a wholly-owned subsidiary of Matson, Inc. Founded in 1882, MatNav provides a vital lifeline of ocean freight transportation services to the domestic non-contiguous economies of Hawaii, Alaska and Guam, and to other island economies in Micronesia. MatNav also operates a premium, expedited service from China to Long Beach, California, and also provides services to Okinawa, Japan and various islands in the South Pacific. In addition, subsidiaries of MatNav provide container stevedoring, refrigerated cargo services, inland transportation and other terminal services for MatNav and other ocean carriers on the Hawaiian islands of Oahu, Hawaii, Maui and Kauai, and in the Alaska locations of Anchorage, Kodiak and Dutch Harbor. ​ Matson has a 35 percent ownership interest in SSA Terminals, LLC, a joint venture between Matson Ventures, Inc., a wholly-owned subsidiary of MatNav, and SSA Ventures, Inc., a subsidiary of Carrix, Inc. (“SSAT”). SSAT provides terminal and stevedoring services to various carriers at eight terminal facilities on the U.S. West Coast, including four facilities dedicated for MatNav’s use. Matson records its share of income from SSAT in Costs and Expenses in the Condensed Consolidated Statements of Income and Comprehensive Income, and within the Ocean Transportation segment due to the nature of SSAT’s operations. ​ Logistics: Matson’s Logistics business is conducted through Matson Logistics, Inc. (“Matson Logistics”), a wholly-owned subsidiary of MatNav. Established in 1987, Matson Logistics is an asset-light business that provides a variety of logistics services to its customers including: (i) multimodal transportation brokerage of domestic and international rail intermodal services, long-haul and regional highway trucking services, specialized hauling, flat-bed and project services, less-than-truckload services, and expedited freight services (collectively, “Transportation Brokerage” services); (ii) less-than-container load (“LCL”) consolidation and freight forwarding services (collectively, “Freight Forwarding” services); (iii) warehousing and distribution services; and (iv) supply chain management, non-vessel operating common carrier (“NVOCC”) freight forwarding and other services. ​ ​ 2. SIGNIFICANT ACCOUNTING POLICIES ​ Basis of Presentation: The Condensed Consolidated Financial Statements are unaudited, and include the accounts of Matson, Inc. and all wholly-owned subsidiaries, after elimination of intercompany amounts and transactions. Significant investments in businesses, partnerships, and limited liability companies in which the Company does not have a controlling financial interest, but has the ability to exercise significant influence, are accounted for under the equity method. The Company accounts for its investment in SSAT using the equity method of accounting. ​ Due to the nature of the Company’s operations, the results for interim periods are not necessarily indicative of results to be expected for the year. These Condensed Consolidated Financial Statements reflect all normal recurring adjustments that are, in the opinion of management, necessary for fair presentation of the results of the interim periods, and do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete consolidated financial statements. ​ The Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, filed with the Securities and Exchange Commission (“SEC”) on February 28, 2020. ​ Fiscal Period: The period end for Matson covered by this report is June 30, 2020. The period end for MatNav and its subsidiaries covered by this report occurred on the last Friday in June, or June 26, 2020. ​ 5 Table of Contents Significant Accounting Policies: The Company’s significant accounting policies are described in Note 2 to the Consolidated Financial Statements included in Part II, Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. ​ Use of Estimates: The preparation of the interim condensed consolidated financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the amounts reported. Estimates and assumptions are used for, but not limited to: impairment of investments; impairment of long-lived assets, intangible assets and goodwill; capitalized interest; allowance for doubtful accounts; legal contingencies; uninsured risks and related liabilities; accrual estimates; pension and post-retirement estimates; multi-employer withdrawal liabilities; operating lease assets and liabilities; and income taxes. Future results could be materially affected if actual results differ from these estimates and assumptions. ​ Allowance for Doubtful Accounts Receivable: Allowance for doubtful accounts receivable is established by management based on estimates of collectability. Estimates of collectability are principally based on an evaluation of the current financial condition of the customer and the potential risks to collection, the customers’ payment history, expected future credit losses and other factors which are regularly monitored by the Company. ​ Recognition of Revenues and Related Expenses: Revenue in the Company’s Condensed Consolidated Financial Statements is presented net of elimination of intercompany transactions. The following is a description of the Company’s principal revenue generating activities by segment, and the Company’s revenue recognition policy for each activity for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended Six Months Ended ​ ​ June 30, June 30, Ocean Transportation (in millions) (1) ​ 2020 2019 2020 2019 Ocean Transportation services ​ $ 402.6 ​ $ 406.6 ​ $ 793.7 ​ $ 794.5 Terminal and other related services ​ ​ 4.6 ​ ​ 4.8 ​ ​ 10.4 ​ ​ 11.5 Fuel sales ​ ​ 2.1 ​ ​ 2.6 ​ ​ 4.7 ​ ​ 4.6 Vessel management and related services ​ ​ 1.5 ​ ​ 1.4 ​ ​ 2.9 ​ ​ 2.7 Total ​ $ 410.8 ​ $ 415.4 ​ $ 811.7 ​ $ 813.3 (1) Ocean Transportation revenue transactions are primarily denominated in U.S. dollars except for less than 3 percent of Ocean Transportation revenues and fuel sales revenue categories which are denominated in foreign currencies. ​ ◾ Ocean Transportation services revenue is recognized ratably over the duration of a voyage based on the relative transit time completed in each reporting period. Vessel operating costs and other ocean transportation operating costs, such as terminal operating overhead and general and administrative expenses, are charged to operating costs as incurred. ◾ Terminal and other related services revenue is recognized as the services are performed. Related costs are recognized as incurred. ◾ Fuel sales revenue and related costs are recognized when the Company has completed delivery of the product to the customer in accordance with the terms and conditions of the contract. ◾ Vessel management and related services revenue is recognized in proportion to the services completed. Related costs are recognized as incurred. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended Six Months Ended ​ ​ June 30, June 30, Logistics (in millions) (1) ​ 2020 ​ 2019 (2) ​ 2020 ​ 2019 (2) Transportation Brokerage and Freight Forwarding services ​ $ 101.9 ​ $ 131.7 ​ $ 204.0 ​ $ 255.0 Warehouse and distribution services ​ ​ 8.2 ​ ​ 8.3 ​ ​ 16.4 ​ ​ 16.7 Supply chain management and other services ​ 3.2 ​ 2.5 ​ 5.9 ​ 5.3 Total ​ $ 113.3 ​ $ 142.5 ​ $ 226.3 ​ $ 277.0 (1) Logistics revenue transactions are primarily denominated in U.S. dollars except for less than 3 percent of transportation brokerage and freight forwarding services revenue, and supply chain management and other services revenue categories which are denominated in foreign currencies. (2) The Company has reclassified $ 3.0 million and $ 6.1 million from transportation brokerage and freight forwarding services to warehouse and distribution services for the three and six months ended June 30, 2019, respectively, to be consistent with its current period presentation. There was no change in total Logistics revenue for the three and six months ended June 30, 2019. ​ 6 Table of Contents ◾ Transportation Brokerage and Freight Forwarding services revenue consists of amounts billed to customers for services provided. The primary costs include third-party purchased transportation services, labor and equipment. Revenue and the related purchased third-party transportation costs are recognized over the duration of a delivery based upon the relative transit time completed in each reporting period. Labor and other operating costs are expensed as incurred. The Company reports revenue on a gross basis as the Company serves as the principal in these transactions because it is responsible for fulfilling the contractual arrangements with the customer and has latitude in establishing prices. ◾ Warehousing and distribution services revenue consist of amounts billed to customers for storage, handling, and value-added packaging of customer merchandise. Storage revenue is recognized in the month the service is provided to the customer. Storage related costs are recognized as incurred. Other warehousing and distribution services revenue and related costs are recognized in proportion to the services performed. ◾ Supply chain management and other services revenue, and related costs are recognized in proportion to the services performed. ​ The Company generally invoices its customers at the commencement of the voyage or the transportation service being provided, or as other services are being performed. Revenue is deferred when services are invoiced in advance to the customer. The Company’s receivables are classified as short-term as collection terms are for periods of less than one year. The Company expenses sales commissions and contract acquisition costs as incurred because the amounts are generally immaterial. These expenses are included in selling, general and administrative expenses in the Condensed Consolidated Statements of Income and Comprehensive Income. ​ Capital Construction Fund: The Company’s Capital Construction Fund (“CCF”) is described in Note 7 to the Consolidated Financial Statements included in Part II, Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. As of June 30, 2020 and December 31, 2019, $ 1.7 million of eligible accounts receivable was assigned to the CCF. Due to the nature of the assignment of eligible accounts receivable into the CCF, such assigned amounts are classified as part of accounts receivable in the Condensed Consolidated Balance Sheets. Cash on deposit in the CCF is held in a money market account and classified as a long-term asset in the Company’s Condensed Consolidated Balance Sheets, as the Company intends to use qualified cash withdrawals to fund long-term investment in the construction of new vessels. During the three and six months ended June 30, 2020, the Company deposited $ 26.7 million and $ 97.1 million into the CCF, and made qualifying cash withdrawals of $ 26.7 million and $ 97.1 million from the CCF, respectively. The balance of cash on deposit at June 30, 2020 and December 31, 2019 was nominal. ​ Investment in SSAT: Condensed income statement information (unaudited) for SSAT for the three and six months ended June 30, 2020 and 2019 consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended Six Months Ended ​ ​ June 30, June 30, (In millions) ​ 2020 2019 2020 2019 Operating revenue ​ $ 243.3 ​ $ 268.8 ​ $ 522.2 ​ $ 536.9 ​ Operating costs and expenses ​ ​ ( 229.9 ) ​ ​ ( 265.0 ) ​ ​ ( 495.3 ) ​ ​ ( 509.2 ) ​ Operating income ​ ​ 13.4 ​ ​ 3.8 ​ ​ 26.9 ​ ​ 27.7 ​ Net Income (1) ​ $ 12.3 ​ $ 4.2 ​ $ 25.3 ​ $ 26.8 ​ Company Share of SSAT's Net Income (2) ​ $ 3.7 ​ $ 0.9 ​ $ 7.7 ​ $ 9.4 ​ (1) Includes earnings from equity method investments held by SSAT less earnings allocated to non-controlling interests. (2) The Company records its share of net income from SSAT in costs and expenses in the Condensed Consolidated Statement of Income and Comprehensive Income due to the nature of SSAT’s operations. ​ The Company’s investment in SSAT was $ 77.5 million and $ 76.2 million at June 30, 2020 and December 31, 2019, respectively. During the six months ended June 30, 2020, the Company recorded an increase of $ 2.2 million in its investment in SSAT and a corresponding increase in retained earnings related to the formation of a new subsidiary of SSAT, whose controlling interest is retained by SSAT. ​ Deferred Loan Fees: The Company records deferred loan fees, excluding those related to the revolving credit facility, as a reduction to Total Debt in the Company’s Condensed Consolidated Balance Sheets in accordance with Accounting Standards Update (“ASU”) 2015-03, Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”). These costs are being amortized over the life of the related debt using the effective interest method (see Note 6). 7 Table of Contents ​ Deferred loan fees related to the Company’s revolving credit facility are recorded in other long-term assets in the Company’s Condensed Consolidated Balance Sheets. These deferred loan fees are being amortized using the straight-line method as the difference between that and the use of the effective interest method is not material. These deferred loan fees were $ 2.8 million and $ 1.3 million at June 30, 2020 and December 31, 2019, respectively. ​ Contingencies: Environmental Matters: The Company’s Ocean Transportation business has certain risks that could result in expenditures for environmental remediation. The Company believes that based on all information available to it, the Company is currently in compliance, in all material respects, with applicable environmental laws and regulations. ​ Other Matters: The Company and its subsidiaries are parties to, or may be contingently liable in connection with other legal actions arising in the normal course of their businesses, the outcomes of which, in the opinion of management after consultation with counsel, would not have a material effect on the Company’s financial condition, results of operations, or cash flows. ​ Dividends: The Company’s second quarter 2020 cash dividend of $ 0.22 per share was paid on June 4, 2020. On June 25, 2020, the Company’s Board of Directors declared a cash dividend of $ 0.23 per share payable on September 3, 2020. ​ New Accounting Pronouncements: ​ Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”): In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016- 13 which amends the current approach to estimate credit losses on certain financial assets, including trade and other receivables, available-for-sale securities and other financial instruments. ASU 2016- 13 requires entities to establish a valuation allowance for the expected lifetime losses of certain financial instruments. Subsequent changes in the valuation allowance are recorded in current earnings and reversal of previous losses is permitted. The new standard is effective for interim and annual periods beginning on or after December 15, 2019. ​ The Company adopted ASU 2016- 13 effective January 1, 2020 using the modified retrospective approach. Upon adoption, the Company included an evaluation of expected future credit losses as part of its estimate for determining the allowance for doubtful accounts. The impact of this change was not material to the Company’s allowance for doubtful accounts receivable in the Condensed Consolidated Financial Statements. The Company will continue to monitor the impact of the recent COVID-19 pandemic on expected future credit losses. The Company’s accounting policy related to allowance for doubtful accounts receivable is described above. ​ Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract (“ASU 2018-15”): In August 2018, FASB issued ASU 2018-15 which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing costs incurred to develop or obtain internal-use software. The Company adopted ASU 2018-15 on a prospective basis effective January 1, 2020. During the six months ended June 30, 2020, the Company capitalized costs of $ 1.3 million related to cloud computing arrangements and which were included in other long-term assets on the Company’s Condensed Consolidated Balance Sheets as of June 30, 2020. ​ ​ 8 Table of Contents 3. REPORTABLE SEGMENTS ​ Reportable segments are components of an enterprise that engage in business activities from which it may earn revenues and incur expenses, whose operating results are regularly reviewed by the chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. The Company’s chief operating decision maker is its Chief Executive Officer. ​ The Company consists of two reportable segments, Ocean Transportation and Logistics, which are further described in Note 1. Reportable segments are measured based on operating income, exclusive of interest expense and income taxes. In arrangements where the customer purchases ocean transportation and logistics services, the revenues are allocated to each reportable segment based upon the contractual amounts for each type of service. The Company’s SSAT segment has been aggregated into the Company’s Ocean Transportation segment due to the operations of SSAT being an integral part of the Company’s Ocean Transportation business. ​ The Company’s Ocean Transportation segment provides ocean transportation services to the Logistics segment, and the Logistics segment provides logistics services to the Ocean Transportation segment in certain transactions. Accordingly, inter-segment revenue of $ 24.2 million and $ 25.3 million for the three months ended June 30, 2020 and 2019, and $ 43.6 million and $ 47.1 million for the six months ended June 30, 2020 and 2019, respectively, have been eliminated from operating revenues in the table below. ​ Reportable segment financial information for the three and six months ended June 30, 2020 and 2019 are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Six Months Ended ​ ​ ​ June 30, ​ June 30, ​ (In millions) 2020 2019 2020 2019 Operating Revenue: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ocean Transportation (1) ​ $ 410.8 ​ $ 415.4 ​ $ 811.7 ​ $ 813.3 ​ Logistics (2) ​ 113.3 ​ 142.5 ​ 226.3 ​ 277.0 ​ Total Operating Revenue ​ $ 524.1 ​ $ 557.9 ​ $ 1,038.0 ​ $ 1,090.3 ​ Operating Income: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ocean Transportation (3) ​ $ 42.3 ​ $ 19.7 ​ $ 50.2 ​ $ 29.1 ​ Logistics ​ 8.9 ​ 11.3 ​ 14.0 ​ 19.4 ​ Total Operating Income ​ 51.2 ​ 31.0 ​ 64.2 ​ 48.5 ​ Interest expense, net ​ ( 8.2 ) ​ ( 6.1 ) ​ ( 16.8 ) ​ ( 10.7 ) ​ Other income (expense), net ​ 1.5 ​ 0.8 ​ 2.1 ​ 1.4 ​ Income before Income Taxes ​ 44.5 ​ 25.7 ​ 49.5 ​ 39.2 ​ Income taxes ​ ( 11.7 ) ​ ( 7.3 ) ​ ( 12.9 ) ​ ( 8.3 ) ​ Net Income ​ $ 32.8 ​ $ 18.4 ​ $ 36.6 ​ $ 30.9 ​ (1) Ocean Transportation operating revenue excludes inter-segment revenue of $ 11.9 million and $ 13.8 million for the three months ended June 30, 2020 and 2019, and $ 21.3 million and $ 25.2 million for the six months ended June 30, 2020 and 2019, respectively. (2) Logistics operating revenue excludes inter-segment revenue of $ 12.3 million and $ 11.5 million for the three months ended June 30, 2020 and 2019, and $ 22.3 million and $ 21.9 million for the six months ended June 30, 2020 and 2019, respectively. (3) Ocean Transportation segment information includes $ 3.7 million and $ 0.9 million of equity in income from the Company’s equity investment in SSAT for the three months ended June 30, 2020 and 2019, and $ 7.7 million and $ 9.4 million for the six months ended June 30, 2020 and 2019, respectively. ​ ​ 9 Table of Contents 4. PROPERTY AND EQUIPMENT ​ Property and equipment as of June 30, 2020 and December 31, 2019 consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ December 31, ​ (In millions) 2020 2019 ​ Cost: ​ ​ ​ ​ ​ ​ ​ Vessels ​ $ 1,898.2 ​ $ 1,653.5 ​ Containers and equipment ​ ​ 525.2 ​ ​ 544.5 ​ Terminal facilities and other property ​ ​ 114.7 ​ ​ 114.4 ​ Vessel construction in progress ​ ​ 190.6 ​ ​ 488.9 ​ Other construction in progress ​ ​ 27.4 ​ ​ 35.4 ​ Total Property and Equipment ​ ​ 2,756.1 ​ ​ 2,836.7 ​ Less: Accumulated Depreciation ​ ​ ( 1,177.7 ) ​ ​ ( 1,238.6 ) ​ Total Property and Equipment, net ​ $ 1,578.4 ​ $ 1,598.1 ​ ​ Vessel construction in progress relates to progress payments for the construction of new vessels, capitalized owner’s items and capitalized interest. During the six months ended June 30, 2020, the newly constructed vessel Lurline was placed into service resulting in $ 308.2 million, including $ 16.5 million of capitalized interest, being transferred from the Vessel construction in progress category to the Vessels category within Property and Equipment. Capitalized interest included in Vessel construction in progress was $ 9.1 million and $ 22.0 million at June 30, 2020 and December 31, 2019, respectively. ​ ​ 5. GOODWILL AND INTANGIBLES ​ Goodwill by segment as of June 30, 2020 and December 31, 2019 consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ocean ​ ​ ​ ​ ​ ​ (In millions) Transportation Logistics Total Goodwill ​ $ 222.6 ​ $ 105.2 ​ $ 327.8 ​ ​ Intangible assets as of June 30, 2020 and December 31, 2019 consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ December 31, ​ (In millions) 2020 2019 ​ Customer Relationships: ​ ​ ​ ​ ​ ​ ​ Ocean Transportation ​ $ 140.6 ​ $ 140.6 ​ Logistics ​ ​ 90.1 ​ ​ 90.1 ​ Total ​ ​ 230.7 ​ ​ 230.7 ​ Less: Accumulated Amortization ​ ​ ( 60.5 ) ​ ​ ( 55.1 ) ​ Total Customer Relationships, net ​ ​ 170.2 ​ ​ 175.6 ​ Trade name – Logistics ​ ​ 27.3 ​ ​ 27.3 ​ Total Intangible Assets, net ​ $ 197.5 ​ $ 202.9 ​ ​ The Company evaluates its goodwill and intangible assets for possible impairment in the fourth quarter, or whenever events or changes in circumstances indicate that it is more likely than not that the fair value is less than its carrying amount. The Company has reporting units within the Ocean Transportation and Logistics reportable segments. The Company considered the deterioration in general economic and market conditions due to the COVID-19 pandemic and its impact on the performance of each of the Company’s reporting units. Based on the Company’s assessment of its market capitalization, future forecasts and the amount of excess of fair value over the carrying value of the reporting units in the 2019 annual impairment tests, the Company concluded that an impairment triggering event did not occur during the quarter ended June 30, 2020. ​ The Company will monitor events and changes in circumstances that could negatively impact the key assumptions used in determining the fair value, including the amount and timing of estimated future cash flows generated by the reporting units, long-term growth and discount rates, comparable company market valuations, and industry and economic trends. It is possible that future changes in such circumstances, including a more prolonged and/or severe COVID-19 pandemic, 10 Table of Contents or future changes in the assumptions and estimates used in assessing the fair value of the reporting unit, could require the Company to record a non-cash impairment charge. ​ ​ 6. DEBT ​ As of June 30, 2020 and December 31, 2019, the Company’s debt consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ December 31, ​ (In millions) 2020 2019 Private Placement Term Loans: ​ ​ ​ ​ ​ ​ ​ 5.79 %, payable through 2020 ​ $ — ​ $ 3.5 ​ 3.66 %, payable through 2023 ​ 27.4 ​ 31.9 ​ 4.16 %, payable through 2027 ​ 36.7 ​ 39.3 ​ 3.37 %, payable through 2027 ​ ​ 75.0 ​ ​ 75.0 ​ 3.14 %, payable through 2031 ​ ​ 178.8 ​ ​ 188.0 ​ 4.31 %, payable through 2032 ​ 29.0 ​ 30.3 ​ 4.35 %, payable through 2044 ​ ​ — ​ ​ 100.0 ​ 3.92 %, payable through 2045 ​ ​ — ​ ​ 69.5 ​ Title XI Debt: ​ ​ ​ ​ ​ ​ ​ 5.34 %, payable through 2028 ​ 18.7 ​ 19.8 ​ 5.27 %, payable through 2029 ​ 20.9 ​ 22.0 ​ 1.22 %, payable through 2043 ​ ​ 185.9 ​ ​ — ​ 1.35 %, payable through 2044 ​ ​ 139.6 ​ ​ — ​ Revolving credit facility, maturity date of June 29, 2022 ​ 178.0 ​ 379.1 ​ Total Debt ​ 890.0 ​ 958.4 ​ Less: Current portion ​ ( 50.5 ) ​ ( 48.4 ) ​ Total Long-term Debt ​ ​ 839.5 ​ ​ 910.0 ​ Less: Deferred loan fees ​ ​ ( 16.0 ) ​ — ​ Total Long-term Debt, net of deferred loan fees ​ $ 823.5 ​ $ 910.0 ​ ​ Except as described below, the Company’s debt is described in Note 6 to the Condensed Consolidated Financial Statements included in the Company’s Quarterly Report on Form 10-Q for the three months ended March 31, 2020. ​ Private Placement Term Loans: On May 12, 2020, the Company redeemed private placement term loans totaling $ 169.5 million at par out of proceeds from the Company’s revolving credit facility. ​ 2020 Title XI Debt: On April 27, 2020, MatNav issued $ 185.9 million in U.S. Government guaranteed vessel financing bonds (Title XI) to partially refinance debt incurred in connection with the construction of Daniel K. Inouye (the “DKI Title XI Debt”). A fee of approximately $ 8.7 million was paid to the United States Maritime Administration (“MARAD”) out of the proceeds at closing. The net proceeds of approximately $ 177 million were used to reduce outstanding debt. The secured bonds mature on October 15, 2043 and have a cash interest rate of 1.22 percent, payable semi-annually in arrears on April 15 and October 15, commencing on October 15, 2020, together with a principal payment of approximately $ 4.0 million. ​ On June 22, 2020, MatNav issued $ 139.6 million in U.S. Government guaranteed vessel financing bonds (Title XI) to partially refinance debt incurred in connection with the construction of Kaimana Hila (together with the DKI Title XI Debt, the “2020 Title XI Debt”). A fee of approximately $ 6.7 million was paid to MARAD out of the proceeds at closing. The net proceeds of approximately $ 132.9 million were used to reduce outstanding debt. The secured bonds mature on March 15, 2044 and have a cash interest rate of 1.35 percent, payable semi-annually in arrears on March 15 and September 15, commencing on September 15, 2020, together with a principal payment of approximately $ 3.0 million. ​ Under the 2020 Title XI Debt agreements, MARAD has guaranteed the obligation of MatNav. MatNav has agreed to reimburse MARAD for any payments it makes under the MARAD guarantees and MatNav’s obligations to MARAD are secured by mortgages on the vessels and certain other related assets. The 2020 Title XI Debt is subject to the debt covenants as described in Note 6 to the Condensed Consolidated Financial Statements included in the Company’s Quarterly Report on Form 10-Q for the three months ended March 31, 2020. 11 Table of Contents ​ Revolving Credit Facility: As of June 30, 2020, the Company had $ 433.2 million of remaining borrowing availability under the revolving credit facility. The Company used $ 8.1 million of the sublimit for letters of credit outstanding as of June 30, 2020. Based on the Company’s consolidated net leverage ratio, which stipulates borrowing margins, the interest rate applicable to revolving credit facility was approximately 3.25 percent at June 30, 2020. Borrowings under the revolving credit facility are classified as long-term debt in the Condensed Consolidated Balance Sheets, as principal payments are not required until the maturity date of June 29, 2022. ​ Debt Security and Guarantees: All of the debt of the Company and MatNav, including related guarantees, as of June 30, 2020 was unsecured, except for the 2020 Title XI Debt and other Title XI debt. ​ Debt Maturities: As of June 30, 2020, debt maturities during the next five years and thereafter are as follows: ​ ​ ​ ​ ​ ​ ​ As of Year (in millions) June 30, 2020 Remainder of 2020 ​ $ 23.7 2021 ​ 59.2 2022 ​ 243.0 2023 ​ 60.4 2024 ​ 51.7 Thereafter ​ 452.0 Total Debt ​ $ 890.0 ​ Deferred Loan Fees: Deferred loan fees are recorded as a reduction of Total Debt in the Condensed Consolidated Balance Sheets in accordance with Accounting Standards Codification (“ASC”) 835, Imputation of Interest (“ASC 835”) . Activity relating to deferred loan fees for the six months ended June 30, 2020 are as follows: ​ ​ ​ ​ ​ Deferred Loan Fees (in millions) Amount Deferred financing costs related to Title XI bonds and private placement debt amendments ​ $ 16.5 Deferred fees expensed related to the redemption of private placement debt ​ ​ ( 0.3 ) Amortization expense for the six months ended June 30, 2020 ​ ( 0.2 ) Balance at June 30, 2020 ​ $ 16.0 ​ As of June 30, 2020, amortization expense relating to deferred loan fees during the next five years and thereafter are as follows: ​ ​ ​ ​ ​ Year (in millions) Amount Remainder of 2020 ​ $ 0.8 2021 ​ 1.5 2022 ​ 1.2 2023 ​ 1.1 2024 ​ 1.1 Thereafter ​ 10.3 Total amortization expense of deferred loan fees ​ $ 16.0 ​ ​ ​ ​ ​ ​ 7. LEASES ​ The Company’s leases are described in Note 9 to the Consolidated Financial Statements included in Part II, Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. 12 Table of Contents ​ Components of Lease Cost: Components of lease cost recorded in the Company’s Condensed Consolidated Statement of Income and Comprehensive Income for the three and six months ended June 30, 2020 and 2019 consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Six Months Ended ​ ​ June 30, ​ June 30, (In millions) 2020 ​ 2019 ​ 2020 ​ 2019 Operating lease cost ​ $ 20.5 ​ $ 16.8 ​ $ 40.5 ​ $ 33.5 Short-term lease cost ​ 2.4 ​ 2.5 ​ 2.5 ​ 4.9 Variable lease cost ​ 0.2 ​ 0.1 ​ 0.4 ​ 0.2 Total lease cost ​ $ 23.1 ​ $ 19.4 ​ $ 43.4 ​ $ 38.6 ​ Sale and Leaseback of Equipment: On March 25, 2020, the Company entered into an agreement for the sale and leaseback of multiple tranches of chassis and container equipment. The net proceeds from the sales were $ 14.3 million, and the gain on the disposal of the equipment was not material to the Company’s Condensed Consolidated Financial Statements. The Company subsequently leased back the equipment under a five-year operating lease agreement that includes purchase options exercisable at fair market value. There were no sale and leaseback transactions during the three months ended June 30, 2020, and during the six months ended June 30, 2019. ​ ​ ​ ​ ​ 8. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) ​ Changes in accumulated other comprehensive income (loss) by component, net of tax, for the six months ended June 30, 2020 are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ Non- ​ ​ ​ Other ​ ​ ​ ​ ​ Post- ​ Qualified ​ ​ ​ Comprehensive ​ (In millions) Pensions Retirement Plans Other Income (Loss) Balance at December 31, 2019 ​ $ ( 51.9 ) ​ $ 16.3 ​ $ ( 0.4 ) ​ $ ( 0.9 ) ​ $ ( 36.9 ) ​ Amortization of prior service cost ​ ​ ( 0.5 ) ​ ​ ( 0.6 ) ​ ​ ( 0.1 ) ​ ​ — ​ ​ ( 1.2 ) ​ Amortization of net loss ​ ​ 1.1 ​ ​ 0.1 ​ ​ 0.1 ​ ​ — ​ ​ 1.3 ​ Foreign currency exchange ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 0.5 ) ​ ​ ( 0.5 ) ​ Other adjustments ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 0.2 ) ​ ​ ( 0.2 ) ​ Balance at March 31, 2020 ​ ​ ( 51.3 ) ​ ​ 15.8 ​ ​ ( 0.4 ) ​ ​ ( 1.6 ) ​ ​ ( 37.5 ) ​ Amortization of prior service cost ​ ​ ( 0.4 ) ​ ​ ( 0.7 ) ​ ​ — ​ ​ — ​ ​ ( 1.1 ) ​ Amortization of net loss ​ ​ 1.1 ​ ​ 0.1 ​ ​ 0.1 ​ ​ — ​ ​ 1.3 ​ Foreign currency exchange ​ ​ — ​ ​ — ​ ​ — ​ ​ 0.3 ​ ​ 0.3 ​ Other adjustments ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 0.4 ) ​ ​ ( 0.4 ) ​ Balance at June 30, 2020 ​ $ ( 50.6 ) ​ $ 15.2 ​ $ ( 0.3 ) ​ $ ( 1.7 ) ​ $ ( 37.4 ) ​ ​ Changes in accumulated other comprehensive income (loss) by component, net of tax, for the six months ended June 30, 2019 consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ Non- ​ ​ ​ Other ​ ​ ​ ​ ​ Post- ​ Qualified ​ ​ ​ Comprehensive ​ (In millions) Pensions Retirement Plans Other Income (Loss) Balance at December 31, 2018 ​ $ ( 55.8 ) ​ $ 21.7 ​ $ ( 0.1 ) ​ $ ( 0.3 ) ​ $ ( 34.5 ) ​ Amortization of prior service cost ​ ​ ( 0.4 ) ​ ​ ( 0.7 ) ​ ​ — ​ ​ — ​ ​ ( 1.1 ) ​ Amortization of net loss ​ ​ 0.7 ​ ​ 0.2 ​ ​ — ​ ​ — ​ ​ 0.9 ​ Balance at March 31, 2019 ​ ​ ( 55.5 ) ​ ​ 21.2 ​ ​ ( 0.1 ) ​ ​ ( 0.3 ) ​ ​ ( 34.7 ) ​ Amortization of prior service cost ​ ​ ( 0.5 ) ​ ​ ( 0.7 ) ​ ​ ( 0.1 ) ​ ​ 0.1 ​ ​ ( 1.2 ) ​ Amortization of net loss ​ ​ 0.7 ​ ​ 0.1 ​ ​ 0.1 ​ ​ — ​ ​ 0.9 ​ Other adjustments ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 0.2 ) ​ ​ ( 0.2 ) ​ Balance at June 30, 2019 ​ $ ( 55.3 ) ​ $ 20.6 ​ $ ( 0.1 ) ​ $ ( 0.4 ) ​ $ ( 35.2 ) ​ ​ ​ ​ ​ 13 Table of Contents 9. FAIR VALUE OF FINANCIAL INSTRUMENTS ​ The Company values its financial instruments based on the fair value hierarchy of valuation techniques for fair value measurements. Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date. Level 2 inputs include quoted prices for similar assets and liabilities in active markets and inputs other than quoted prices observable for the asset or liability. Level 3 inputs are unobservable inputs for the asset or liability. If the technique used to measure fair value includes inputs from multiple levels of the fair value hierarchy, the lowest level of significant input determines the placement of the entire fair value measurement in the hierarchy. ​ The Company uses Level 1 inputs for the fair values of its cash, cash equivalents and restricted cash, and Level 2 inputs for its variable and fixed rate debt. The fair values of cash, cash equivalents and restricted cash, and variable rate debt approximate their carrying values due to the nature of the instruments. The fair value of fixed rate debt is calculated based upon interest rates available for debt with terms and maturities similar to the Company’s existing debt arrangements. ​ The carrying value and fair value of the Company’s financial instruments as of June 30, 2020 and December 31, 2019 are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Quoted Prices in ​ Significant ​ Significant ​ ​ ​ Total ​ ​ ​ Active Markets ​ Observable ​ Unobservable ​ ​ Carrying Value Total (Level 1) Inputs (Level 2) Inputs (Level 3) ​ (In millions) ​ June 30, 2020 ​ Fair Value Measurements at June 30, 2020 ​ Cash and cash equivalents ​ $ 19.5 ​ $ 19.5 ​ $ 19.5 ​ $ — ​ $ — ​ Restricted cash ​ $ 3.0 ​ $ 3.0 ​ $ 3.0 ​ $ — ​ $ — ​ Variable rate debt ​ $ 178.0 ​ $ 178.0 ​ $ — ​ $ 178.0 ​ $ — ​ Fixed rate debt ​ $ 712.0 ​ $ 708.9 ​ $ — ​ $ 708.9 ​ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (In millions) December 31, 2019 ​ Fair Value Measurements at December 31, 2019 ​ Cash and cash equivalents ​ $ 21.2 ​ $ 21.2 $ 21.2 ​ $ — ​ $ — ​ Restricted cash ​ $ 7.2 ​ $ 7.2 ​ $ 7.2 ​ $ — ​ $ — ​ Variable rate debt ​ $ 379.1 ​ $ 379.1 ​ $ — ​ $ 379.1 ​ $ — ​ Fixed rate debt ​ $ 579.3 ​ $ 585.9 ​ $ — ​ $ 585.9 ​ $ — ​ ​ ​ ​ 10. EARNINGS PER SHARE ​ Basic earnings per share is determined by dividing net income by the weighted average common shares outstanding during the period. The calculation of diluted earnings per share includes the dilutive effect of unexercised non-qualified stock options and non-vested restricted stock units. The computation of weighted average common shares outstanding excluded a nominal amount of anti-dilutive non-qualified stock options for each period ended June 30, 2020 and 2019. ​ The denominators used to compute basic and diluted earnings per share for the three and six months ended June 30, 2020 and 2019 are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended June 30, 2020 ​ Six Months Ended June 30, 2020 ​ ​ ​ Weighted Per ​ ​ Weighted Per ​ ​ ​ ​ ​ Average ​ Common ​ ​ ​ ​ Average ​ Common ​ ​ Net ​ Common ​ Share ​ Net ​ Common ​ Share (In millions, except per share amounts) ​ Income ​ Shares ​ Amount ​ Income ​ Shares ​ Amount Basic ​ $ 32.8 43.1 ​ $ 0.76 ​ $ 36.6 43.0 ​ $ 0.85 Effect of Dilutive Securities ​ ​ ​ 0.2 ​ ​ — ​ ​ ​ 0.3 ​ ​ — Diluted ​ $ 32.8 ​ 43.3 ​ $ 0.76 ​ $ 36.6 ​ 43.3 ​ $ 0.85 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended June 30, 2019 ​ Six Months Ended June 30, 2019 ​ ​ ​ ​ Weighted Per ​ ​ Weighted Per ​ ​ ​ ​ ​ Average ​ Common ​ ​ ​ ​ Average ​ Common ​ ​ Net ​ Common ​ Share ​ Net ​ Common ​ Share (In millions, except per share amounts) ​ Income ​ Shares ​ Amount ​ Income ​ Shares ​ Amount Basic ​ $ 18.4 42.8 ​ $ 0.43 ​ $ 30.9 42.8 ​ $ 0.72 Effect of Dilutive Securities ​ ​ ​ 0.4 ​ ​ — ​ ​ ​ 0.4 ​ ​ — Diluted ​ $ 18.4 ​ 43.2 ​ $ 0.43 ​ $ 30.9 ​ 43.2 ​ $ 0.72 ​ ​ ​ 14 Table of Contents 11. SHARE-BASED COMPENSATION ​ During the three and six months ended June 30, 2020, the Company granted approximately 22,000 and 338,200 in total of time-based restricted stock units and performance-based shares to certain of its employees at a weighted average grant date fair value of $ 27.30 and $ 38.64 , respectively. ​ Total share-based compensation cost recognized in the Condensed Consolidated Statements of Income and Comprehensive Income as a component of selling, general and administrative expenses was $ 3.0 million and $ 3.0 million for the three months ended June 30, 2020 and 2019, and $ 6.1 million and $ 6.2 million for the six months ended June 30, 2020 and 2019, respectively. Total unrecognized compensation cost related to unvested share-based compensation arrangements was $ 17.5 million at June 30, 2020, and is expected to be recognized over a weighted average period of approximately 2.0 years. Total unrecognized compensation cost may be adjusted for any unearned performance shares or forfeited shares. ​ ​ 12. PENSION AND POST-RETIREMENT PLANS ​ The Company’s pension and post-retirement plans are described in Note 11 to the Consolidated Financial Statements included in Part II, Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 . Components of net periodic benefit cost and other amounts recognized in Other Comprehensive Income (Loss) for the qualified pension plans and the post-retirement benefit plans for the three and six months ended June 30, 2020 and 2019 consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pension Benefits ​ Post-retirement Benefits ​ ​ Three Months Ended June 30, ​ Three Months Ended June 30, (In millions) 2020 2019 2020 2019 Components of net periodic benefit cost (benefit): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Service cost ​ $ 1.3 ​ $ 1.1 ​ $ 0.2 ​ $ 0.2 Interest cost ​ 1.9 ​ 2.3 ​ 0.2 ​ 0.3 Expected return on plan assets ​ ( 3.3 ) ​ ( 3.2 ) ​ — ​ — Amortization of net loss ​ 1.4 ​ 0.9 ​ 0.1 ​ 0.2 Amortization of prior service credit ​ ( 0.6 ) ​ ( 0.6 ) ​ ( 0.9 ) ​ ( 1.0 ) Net periodic benefit cost (benefit) ​ $ 0.7 ​ $ 0.5 ​ $ ( 0.4 ) ​ $ ( 0.3 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pension Benefits ​ Post-retirement Benefits ​ ​ Six Months Ended June 30, ​ Six Months Ended June 30, (In millions) 2020 2019 2020 2019 Components of net periodic benefit cost (benefit): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Service cost ​ $ 2.5 ​ $ 2.2 ​ $ 0.3 ​ $ 0.3 Interest cost ​ 3.8 ​ 4.6 ​ 0.4 ​ 0.6 Expected return on plan assets ​ ( 6.5 ) ​ ( 6.3 ) ​ — ​ — Amortization of net loss ​ 2.9 ​ 1.8 ​ 0.3 ​ 0.4 Amortization of prior service credit ​ ( 1.2 ) ​ ( 1.2 ) ​ ( 1.8 ) ​ ( 1.9 ) Net periodic benefit cost (benefit) ​ $ 1.5 ​ $ 1.1 ​ $ ( 0.8 ) ​ $ ( 0.6 ) ​ ​ ​ ​ ​ ****** 15 Table of Contents