What changed in this filing

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Item 2. Management’s Discussion and Analysis

2020-11-02 compared with 2020-08-05 · 95 added, 97 removed, 139 unchanged (58% of the section changed)

6 unchanged sentences

Forward-looking statements are typically identified by words or phrases such as “trend,” “potential,” “opportunity,” “pipeline,” “believe,” “comfortable,” “expect,” “anticipate,” “current,” “intention,” “estimate,” “position,” “assume,” “outlook,” “continue,” “remain,” “maintain,” “sustain,” “seek,” “achieve,” or similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “may” or similar expressions.

The Company cautions that forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time, including, but not limited to, the risk factors that are described in Part II, Item 1A, “Risk Factors” of Matson’s Quarterly Report on Form 10-Q for the period ended March 31, 2020.

Forward-looking statements speak only as of the date they are made, and the Company assumes no duty to and does not undertake any obligation to update forward-looking statements.

3 unchanged sentences

MD&A is provided as a supplement to the Condensed Consolidated Financial Statements and notes herein, and should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, the Company’s reports on Forms 10-Q and 8-K, and other publicly available information.

SECOND QUARTER 2020 DISCUSSION AND UPDATE ON BUSINESS CONDITIONS

THIRD QUARTER 2020 DISCUSSION AND UPDATE ON BUSINESS CONDITIONS

Ocean Transportation:

The Company’s container volume in the Hawaii service in the second quarter 2020 was 4.0 percent lower year-over-year primarily due to lower volume as a result of the state’s COVID-19 mitigation efforts including restrictions on tourism, partially offset by volume associated with the dry-docking of one of Pasha’s vessels.

The westbound container market in the second quarter 2020 declined approximately 15 percent year-over-year.

Since March of this year, the State of Hawaii implemented several orders to address the spread of COVID-19 on the islands.

As a result, tourism to Hawaii has been near-zero and is expected to have a meaningfully negative impact on Hawaii’s economy in the near-term.

In China, the Company’s container volume in the second quarter 2020 was 68.1 percent higher year-over-year primarily due to volume from a supplemental “CLX+” service with vessel charter sailings added during the quarter in addition to higher volume on the CLX service.

Matson continued to realize a rate premium in the second quarter 2020 and achieved average freight rates that were higher than in the year ago period .

The Company expects the disruption and loss of capacity in the transpacific air cargo and ocean freight markets to provide opportunities for its differentiated, expedited

CLX service as well as its supplemental CLX+ chartered vessel service.

Matson will continue to offer the CLX+ service through the peak season (end of October) and potentially longer as customers’ needs dictate.

In Guam, the Company’s container volume in the second quarter 2020 was 12.5 percent lower due to lower demand for retail-related goods as COVID-19 mitigation measures remained in effect.

In the near-term, we expect the retail environment to modestly improve with businesses reopening, but the loss of tourism is expected to have a negative impact on the Guam economy.

In Alaska, the Company’s container volume for the second quarter 2020 decreased 9.0 percent year-over-year with lower northbound volume primarily due to lower demand for retail-related goods, as an effect of the state’s COVID-19 mitigation efforts, and one less sailing compared to the prior year period, and moderately lower southbound volume.

Despite improved economic activity in the state during the latter half of the second quarter resulting from the gradual reopening of the local economy, the residual negative economic effects from the COVID-19 pandemic coupled with a low oil price environment is expected to have a meaningfully negative impact on Alaska’s economy in the near-term.

The contribution in the second quarter 2020 from the Company’s SSAT joint venture investment was $3.7 million, or $2.8 million higher than the second quarter 2019.

The increase was primarily due to the absence of the additional expense related to the early adoption of the lease accounting standard in the second quarter of 2019, partially offset by lower lift volume.

In the second quarter 2020, operating income for the Company’s Logistics segment was $8.9 million, or $2.4 million lower compared to the operating income achieved in the second quarter 2019.

The decrease was due primarily to lower contributions from transportation brokerage and freight forwarding, both of which saw lower retail-related volumes as a result of COVID-19 mitigation efforts and related economic effects.

In the near-term, we expect transportation brokerage and freight forwarding to continue to be negatively impacted by lower retail-related volumes as a result of the COVID-19 pandemic.

For the third quarter of 2020, the Company expects consolidated operating income, net income, diluted earnings per share and EBITDA to exceed the results achieved in the third quarter of 2019.

The Company’s container volume in the Hawaii service in the third quarter 2020 was 0.8 percent lower year-over-year primarily due to lower volume from the state’s COVID-19 mitigation efforts including restrictions on tourism and a second shelter-in-place order that took effect in August.

The State of Hawaii recently eased visitor travel restrictions to the islands, but the levels of tourism are expected to remain low in the near-term and to have a meaningfully negative impact on Hawaii’s economy.

In China, the Company’s container volume in the third quarter 2020 was 124.7 percent higher year-over-year primarily due to volume from the CLX+ service in addition to higher volume on the CLX service as a result of increased capacity in the tradelane.

Matson continued to realize a rate premium in the third quarter 2020 and achieved average freight rates that were higher than in the year ago period .

The Company expects increased consumption of e-commerce and other commodities along with potential further disruption in air cargo markets to continue to provide opportunities for its CLX and CLX+ expedited ocean services.

In Guam, the Company’s container volume in the third quarter 2020 was 2.1 percent higher primarily due to increased demand for home improvement and government cargo.

In the near-term, we expect depressed tourism levels to have a negative impact on the Guam economy.

In Alaska, the Company’s container volume for the third quarter 2020 increased 1.5 percent year-over-year primarily due to higher southbound volume as a result of stronger seafood volume compared to the prior year, partially offset by modestly lower northbound volume.

The Alaska economy continues to recover from the second quarter low, but residual negative economic effects from the COVID-19 pandemic coupled with a low oil price environment is expected to have a negative impact on Alaska’s economy in the near-term.

The contribution in the third quarter 2020 from the Company’s SSAT joint venture investment was $7.7 million, or $0.7 million lower than the third quarter 2019.

The decrease was primarily due to lower lift volume.

In the third quarter 2020, operating income for the Company’s Logistics segment was $11.9 million, or $0.6 million higher compared to the operating income achieved in the third quarter 2019.

The increase was due primarily to improved performance in all of the business lines (i.e., transportation brokerage, freight forwarding, warehousing and distribution, and supply chain management and other services) driven by the continued reopening of the U.S.

In the near-term, we expect the elevated consumption of e-commerce and other high demand goods to benefit most of the business lines.

For the fourth quarter of 2020, the Company expects its businesses to continue to perform well and to generate strong financial results.

CONSOLIDATED RESULTS OF OPERATIONS

Consolidated Results - Three months ended June 30, 2020, compared with 2019:

Three Months Ended June 30,

Consolidated Results - Three months ended September 30, 2020, compared with 2019:

Three Months Ended September 30,

(Dollars in millions, except per share amounts)

8 unchanged sentences

Changes in operating revenue, and operating costs and expenses are further described below in the Analysis of Operating Revenue and Income by Segment.

The increase in interest expense for the three months ended June 30, 2020, compared to the three months ended June 30, 2019, was due to a lower amount of capitalized interest associated with the new vessel construction.

The decrease in interest expense for the three months ended September 30, 2020, compared to the three months ended September 30, 2019, was due to lower outstanding debt during the period, offset by a lower amount of capitalized interest associated with the new vessel construction.

Other income (expense) relates to the amortization of certain components of net periodic benefit costs or gains related to the Company’s pension and post-retirement plans, and interest received from income tax refunds.

The increase in Other income (expense) was due to higher interest received from income tax refunds during the three months ended June 30, 2020.

Income tax expense was $11.7 million or 26.3 percent of income before income taxes for the three months ended June 30, 2020, compared to $7.3 million or 28.4 percent of income before income taxes for the three months ended June 30, 2019.

The effective tax rate for the three months ended June 30, 2019 was higher primarily due to the timing of foreign taxes paid during that period.

Consolidated Results - Six months ended June 30, 2020, compared with 2019:

Six Months Ended June 30,

The increase in Other income (expense) was due to favorable adjustments related to the Company’s pension and post-retirement plan liabilities during the three months ended September 30, 2020.

Income tax expense was $24.2 million or 25.4 percent of income before income taxes for the three months ended September 30, 2020, compared to $12.3 million or 25.4 percent of income before income taxes for the three months ended September 30, 2019.

Consolidated Results - Nine months ended September 30, 2020, compared with 2019:

Nine Months Ended September 30,

(Dollars in millions, except per share amounts)

8 unchanged sentences

Changes in operating revenue, and operating costs and expenses are further described below in the Analysis of Operating Revenue and Income by Segment.

The increase in interest expense for the six months ended June 30, 2020, compared to the six months ended June 30, 2019, was due to a lower amount of capitalized interest associated with the new vessel construction.

The increase in interest expense for the nine months ended September 30, 2020, compared to the nine months ended September 30, 2019, was due to a lower amount of capitalized interest associated with the new vessel construction.

The increase in Other income (expense) was due to higher interest received from income tax refunds during the six months ended June 30, 2020.

Income tax expense was $12.9 million or 26.1 percent of income before income taxes for the six months ended June 30, 2020, compared to $8.3 million or 21.2 percent of income before income taxes for the three months ended June 30, 2019.

In connection with the Tax Cuts and Jobs Act of 2017 (the “Tax Act”), the Company recorded a non-cash tax adjustment of $2.9 million that decreased income taxes for the six months ended June 30, 2019.

Excluding the impact of this discrete tax adjustment, the adjusted effective tax rate would have been 28.6 percent for the six months ended June 30, 2019.

The adjusted effective tax rate for the six months ended June 30, 2019 is higher than the effective tax rate for the six months ended June 30, 2020 due to discrete tax adjustments recorded during that period.

The increase in Other income (expense) was due to favorable adjustments related to the Company’s pension and post-retirement plan liabilities and higher interest received from income tax refunds during the nine months ended September 30, 2020.

Income tax expense was $37.1 million or 25.7 percent of income before income taxes for the nine months ended September 30, 2020, compared to $20.6 million or 23.5 percent of income before income taxes for the nine months ended September 30, 2019.

In connection with the Tax Cuts and Jobs Act of 2017 (the “Tax Act”), the Company recorded a non-cash tax adjustment of $2.9 million that decreased income taxes for the nine months ended September 30, 2019.

Excluding the impact of this non-cash tax adjustment, the adjusted effective tax rate would have been 26.8 percent for the nine months ended September 30, 2019.

The adjusted effective tax rate for the nine months ended September 30, 2019 is higher than the effective tax rate for the nine months ended September 30, 2020 due to discrete tax adjustments recorded during that period.

ANALYSIS OF OPERATING REVENUE AND INCOME BY SEGMENT

Ocean Transportation Operating Results - Three months ended June 30, 2020, compared with 2019:

Three Months Ended June 30,

Ocean Transportation Operating Results - Three months ended September 30, 2020, compared with 2019:

Three Months Ended September 30,

(Dollars in millions)

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(2) Includes containers from services in various islands in Micronesia and the South Pacific, and Okinawa, Japan.

Ocean Transportation revenue decreased $4.6 million during the three months ended June 30, 2020, compared with the three months ended June 30, 2019.

The decrease was primarily due to lower service revenue in Hawaii, Alaska and Guam and lower fuel-related surcharge revenue, partially offset by higher freight revenue in China including revenue associated with the CLX+ vessel charters.

On a year-over-year FEU basis, Hawaii container volume decreased 4.0 percent primarily due to lower volume as a result of the state’s COVID-19 mitigation efforts including restrictions on tourism, partially offset by volume associated with the dry-docking of one of Pasha’s vessels;

Alaska volume decreased 9.0 percent with lower northbound volume, primarily due to lower demand for retail-related goods as an effect of the state’s COVID-19 mitigation efforts, and one less sailing compared to the prior year period, and moderately lower southbound volume;

China volume was 68.1 percent higher primarily due to volume from the CLX+ vessel charters in addition to the regular CLX service;

Guam volume was 12.5 percent lower due to lower demand for retail-related goods as COVID-19 mitigation measures remained in effect;

and Other containers volume decreased 18.8 percent.

Ocean Transportation operating income increased $22.6 million, or 114.7 percent, during the three months ended June 30, 2020, compared with the three months ended June 30, 2019.

The increase was primarily due to a higher contribution from the China service, including the contribution from the CLX+ vessel charters, lower vessel operating costs, including the impact of one less vessel operating in the Hawaii service, and the timing of fuel-related surcharge collections, partially offset by a lower contribution from the Hawaii service.

The Company’s SSAT terminal joint venture investment contributed $3.7 million during the three months ended June 30, 2020, compared to a contribution of $0.9 million during the three months ended June 30, 2019.

Ocean Transportation Operating Results - Six months ended June 30, 2020, compared with 2019:

Six Months Ended June 30,

Ocean Transportation revenue increased $61.1 million during the three months ended September 30, 2020, compared with the three months ended September 30, 2019.

The increase was primarily due to higher freight revenue in the China service, including revenue associated with the CLX+, partially offset by lower fuel-related surcharge revenue and lower revenue in the Hawaii service.

On a year-over-year FEU basis, Hawaii container volume decreased 0.8 percent primarily due to lower volume from the state’s COVID-19 mitigation efforts including restrictions on tourism and a second shelter-in-place order that took effect in August;

Alaska volume increased 1.5 percent primarily due to higher southbound volume as a result of stronger seafood volume compared to the prior year, partially offset by modestly lower northbound volume;

China volume was 124.7 percent higher primarily due to volume from the CLX+ service in addition to higher volume on the CLX service as a result of Matson’s increased capacity in the tradelane;

Guam volume was 2.1 percent higher primarily due to increased demand for home improvement and government cargo;

and Other containers volume increased 4.5 percent.

Ocean Transportation operating income increased $42.6 million, or 97.0 percent, during the three months ended September 30, 2020, compared with the three months ended September 30, 2019.

The increase was primarily due to a higher contribution from the China service, including the contribution from the CLX+, lower vessel operating costs, including the impact of one less vessel operating in the Hawaii service, and the timing of fuel-related surcharge collections, partially offset by a lower contribution from the Hawaii service and higher general and administrative expenses.

The Company’s SSAT terminal joint venture investment contributed $7.7 million during the three months ended September 30, 2020, compared to a contribution of $8.4 million during the three months ended September 30, 2019.

The decrease was primarily due to lower lift volume.

Ocean Transportation Operating Results - Nine months ended September 30, 2020, compared with 2019:

Nine Months Ended September 30,

(Dollars in millions)

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(2) Includes containers from services in various islands in Micronesia and the South Pacific, and Okinawa, Japan.

Ocean Transportation revenue decreased $1.6 million, or 0.2 percent, during the six months ended June 30, 2020, compared with the six months ended June 30, 2019.

The decrease was primarily due to lower service revenue in Hawaii, lower fuel-related surcharge revenue, and lower freight revenue in Guam, partially offset by higher freight revenue in China including revenue associated with the CLX+ vessel charters.

Ocean Transportation revenue increased $59.5 million, or 4.8 percent, during the nine months ended September 30, 2020, compared with the nine months ended September 30, 2019.

The increase was primarily due to higher freight revenue in the China service, including revenue associated with the CLX+, partially offset by lower revenue in the Hawaii service and lower fuel-related surcharge revenue.

On a year-over-year FEU basis, Hawaii container volume decreased 1.1 percent primarily due to lower volume as a result of the state’s COVID-19 mitigation efforts including restrictions on tourism, partially offset by volume associated with the dry-docking of one of Pasha’s vessels;

Alaska volume increased by 0.3 percent primarily due to volume associated with the dry-docking of a competitor’s vessel in the first quarter of 2020, partially offset by lower volume

resulting from the COVID-19 pandemic and its related effects and one less northbound sailing compared to the prior year period;

China volume was 33.9 percent higher primarily due to volume from the CLX+ vessel charters;

Alaska volume increased by 0.7 percent primarily due to higher northbound volume, including volume associated with the dry-docking of a competitor’s vessel, partially offset by modestly lower southbound volume;

China volume was 66.7 percent higher primarily due to volume from the CLX+ service;

Guam volume was 4.8 percent lower primarily due to lower demand for retail-related goods resulting from the COVID-19 pandemic and its related effects;

and Other container volume decreased 0.8 percent.

Ocean Transportation operating income increased $21.1 million, or 72.5 percent, during the six months ended June 30, 2020, compared with the six months ended June 30, 2019.

The increase was primarily due to a higher contribution from the China service, including the contribution from the CLX+ vessel charters, and lower vessel operating costs, including the impact of one less vessel operating in the Hawaii service, partially offset by a lower contribution from the Hawaii service.

The Company’s SSAT terminal joint venture investment contributed $7.7 million during the six months ended June 30, 2020, compared to a contribution of $9.4 million during the six months ended June 30, 2019.

Ocean Transportation operating income increased $63.7 million, or 87.3 percent, during the nine months ended September 30, 2020, compared with the nine months ended September 30, 2019.

The increase was primarily due to a higher contribution from the China service, including the contribution from the CLX+, and lower vessel operating costs, including the impact of one less vessel operating in the Hawaii service, partially offset by a lower contribution from the Hawaii service.

The Company’s SSAT terminal joint venture investment contributed $15.4 million during the nine months ended September 30, 2020, compared to a contribution of $17.8 million during the nine months ended September 30, 2019.

The decrease was largely attributable to lower lift volume.

Logistics Operating Results:

Three months ended June 30, 2020, compared with 2019:

Three Months Ended June 30,

Three months ended September 30, 2020, compared with 2019:

Three Months Ended September 30,

(Dollars in millions)

3 unchanged sentences

Operating income margin

Logistics revenue decreased $29.2 million, or 20.5 percent, during the three months ended June 30, 2020, compared with the three months ended June 30, 2019.

The decrease was primarily due to lower revenue in transportation brokerage and, to a lesser extent, freight forwarding, both of which saw lower retail-related volumes as a result of COVID-19 mitigation efforts and related economic effects.

Logistics operating income decreased $2.4 million, or 21.2 percent, for the three months ended June 30, 2020, compared with the three months ended June 30, 2019.

Logistics revenue increased $12.0 million, or 8.9 percent, during the three months ended September 30, 2020, compared with the three months ended September 30, 2019.

The increase was primarily due to higher transportation brokerage revenue.

Logistics operating income increased $0.6 million, or 5.3 percent, for the three months ended September 30, 2020, compared with the three months ended September 30, 2019.

The increase was due primarily to a higher contribution from transportation brokerage.

Logistics Operating Results:

Six months ended June 30, 2020, compared with 2019:

Six Months Ended June 30,

Nine months ended September 30, 2020, compared with 2019:

Nine Months Ended September 30,

(Dollars in millions)

3 unchanged sentences

Operating income margin

Logistics revenue decreased $50.7 million, or 18.3 percent, during the six months ended June 30, 2020, compared with the six months ended June 30, 2019.

The decrease was primarily due to lower revenue in transportation brokerage, and to a lesser extent, freight forwarding as a result of the COVID-19 pandemic.

Logistics operating income decreased $5.4 million, or 27.8 percent, for the six months ended June 30, 2020, compared with the six months ended June 30, 2019.

The decrease was due primarily to lower contributions from transportation brokerage and freight forwarding as a result of the COVID-19 pandemic.

Logistics revenue decreased $38.7 million, or 9.4 percent, during the nine months ended September 30, 2020, compared with the nine months ended September 30, 2019.

The decrease was primarily due to lower transportation brokerage and freight forwarding revenue.

Logistics operating income decreased $4.8 million, or 15.6 percent, for the nine months ended September 30, 2020, compared with the nine months ended September 30, 2019.

The decrease was due primarily to lower contributions from transportation brokerage and freight forwarding.

LIQUIDITY AND CAPITAL RESOURCES

Sources of Liquidity:

Sources of liquidity available to the Company as of June 30, 2020, compared to December 31, 2019 were as follows:

Sources of liquidity available to the Company as of September 30, 2020, compared to December 31, 2019 were as follows:

September 30,

(In millions)

2 unchanged sentences

Accounts receivable, net (1)

(1) As of June 30, 2020 and December 31, 2019, $1.7 million and $1.7 million, respectively, of eligible accounts receivable were assigned to the CCF (see Note 2 of the Condensed Consolidated Financial Statements).

(1) As of September 30, 2020 and December 31, 2019, $1.7 million and $1.7 million, respectively, of eligible accounts receivable were assigned to the CCF (see Note 2 of the Condensed Consolidated Financial Statements).

Cash, Cash Equivalents and Restricted Cash:

Significant changes in the Company’s cash, cash equivalents and restricted cash for the six months ended June 30, 2020, compared to the six months ended June 30, 2019 are as follows:

Six Months Ended June 30,

Significant changes in the Company’s cash, cash equivalents and restricted cash for the nine months ended September 30, 2020, compared to the nine months ended September 30, 2019 are as follows:

Nine Months Ended September 30,

(In millions)

2 unchanged sentences

Net cash used in financing activities (3)

Net decrease in cash, cash equivalents and restricted cash

Net (decrease) increase in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash, beginning of the period

1 unchanged sentence

(1) Change in net cash provided by operating activities:

Changes in net cash provided by operating activities for the six months ended June 30, 2020, compared to the six months ended June 30, 2019, were due to the following:

Changes in net cash provided by operating activities for the nine months ended September 30, 2020, compared to the nine months ended September 30, 2019, were due to the following:

(In millions)

3 unchanged sentences

Other non-cash related changes, net

Income and distributions from SSAT, net

Operating lease liabilities

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(2) Change in net cash used in investing activities:

Changes in net cash used in investing activities for the six months ended June 30, 2020, compared to the six months ended June 30, 2019, were due to the following:

Changes in net cash used in investing activities for the nine months ended September 30, 2020, compared to the nine months ended September 30, 2019, were due to the following:

(In millions)

4 unchanged sentences

Proceeds from disposal of property and equipment, net

Capitalized vessel construction expenditures (including capitalized interest) were $16.5 million for the six months ended June 30, 2020, compared to $30.6 million for the six months ended June 30, 2019.

Capitalized vessel construction expenditures (including capitalized interest) were $57.8 million for the nine months ended September 30, 2020, compared to $108.7 million for the nine months ended September 30, 2019.

Capitalized vessel construction expenditures relate to progress payments for the construction of new vessels, capitalized interest and owner’s items.

Changes in cash deposits into CCF and withdrawals from CCF primarily relate to the timing of when deposits are made into the CCF, and when the subsequent withdrawals are made out of the CCF for the purposes of vessel construction progress payments.

Other capital expenditures payments were $34.0 million for the six months ended June 30, 2020, compared to $38.4 million for the six months ended June 30, 2019.

Other capital expenditures payments were $53.5 million for the nine months ended September 30, 2020, compared to $62.7 million for the nine months ended September 30, 2019.

The decrease in other capital expenditures is primarily due to the timing of certain capital project activities incurred during 2020 as compared to 2019.

The increase in proceeds from disposal of property and equipment is primarily due to the sale and leaseback of chassis and container equipment for net proceeds of $14.3 million during the six months ended June 30, 2020.

There were no sale and leaseback transactions during the six months ended June 30, 2019.

There were no sale and leaseback transactions during the nine months ended September 30, 2019.

(3) Change in net cash used in financing activities:

Changes in net cash used in financing activities for the six months ended June 30, 2020, compared to the six months ended June 30, 2019, were due to the following:

Changes in net cash used in financing activities for the nine months ended September 30, 2020, compared to the nine months ended September 30, 2019, were due to the following:

(In millions)

5 unchanged sentences

Change in other payments, net

During the six months ended June 30, 2020, the Company received $325.5 million of proceeds from two new Title XI debt issuances, and paid $23.3 million in scheduled fixed debt payments and redeemed debt at par of $169.5 million, compared to $11.8 million during the six months ended June 30, 2019 .

During the six months ended June 30, 2020, the Company decreased net borrowings under the revolving credit facility by $201.1 million, compared to no change in net borrowings under the revolving credit facility during the six months ended June 30, 2019.

During the six months ended June 30, 2020, the Company paid $18.5 million in financing costs related to the amendment of its revolving credit facility, private placement term loans and Title XI debt.

No financing costs were paid during the six months ended June 30, 2019.

During the six months ended June 30, 2020, the Company paid $19.1 million in dividends, compared to $18.2 million during the six months ended June 30, 2019 .

During the nine months ended September 30, 2020, the Company received $325.5 million of proceeds from two new Title XI debt issuances, and paid $204.2 million in scheduled fixed debt payments and redeemed debt at par of $169.5 million, compared to $28.4 million in scheduled fixed debt payments during the nine months ended September 30, 2019 .

During the nine months ended September 30, 2020, the Company decreased net borrowings under the revolving credit facility by $256.1 million, compared to $55.0 million increase during the nine months ended September 30, 2019.

During the nine months ended September 30, 2020, the Company paid $18.5 million in financing costs related to the amendment of its revolving credit facility, private placement term loans and Title XI debt.

No financing costs were paid during the nine months ended September 30, 2019.

During the nine months ended September 30, 2020, the Company paid $29.1 million in dividends, compared to $27.7 million during the nine months ended September 30, 2019 .

The increase in dividend payments resulted from an increase in dividends declared per share of common stock by the Company.

Total Debt as of June 30, 2020 and December 31, 2019 is as follows:

Total Debt as of September 30, 2020 and December 31, 2019 is as follows:

September 30,

(In millions)

1 unchanged sentence

Fixed interest debt

Total Debt decreased by $68.4 million during the six months ended June 30, 2020.

The decrease in the Company’s revolving credit facility was primarily due to the proceeds from issuance of new fixed interest debt and lower capital expenditure.

The increase in fixed interest debt was due to the issuance of new Title XI debt partially offset by the repayment of private placement term loans during the six months ended June 30, 2020.

As of June 30, 2020, the Company had $433.2 million of remaining borrowing availability under the revolving credit facility, with a maturity date of June 29, 2022.

Total Debt decreased by $134.8 million during the nine months ended September 30, 2020.

The decrease in the Company’s outstanding revolving credit borrowings was primarily due to the increase in net cash provided by operating activities, proceeds from issuance of new fixed interest debt and lower capital expenditure.

The increase in fixed interest debt was due to the issuance of new Title XI debt partially offset by the repayment of private placement term loans during the nine months ended September 30, 2020.

As of September 30, 2020, the Company had $518.9 million of remaining borrowing availability under the revolving credit facility, with a maturity date of June 29, 2022.

The Company’s debt is described in Note 6 of Part I, Item 1 above.

Working Capital:

The Company had a working capital deficiency of $176.0 million and $147.1 million at June 30, 2020 and December 31, 2019, respectively.

The increase in working capital deficiency at June 30, 2020 is partially due to the timing of billings and collections associated with accounts receivable and other assets, and the timing of payments associated with accounts payable, accruals and other liabilities.

The Company had a working capital deficiency of $164.0 million and $147.1 million at September 30, 2020 and December 31, 2019, respectively.

The increase in working capital deficiency at September 30, 2020 is partially due to the timing of billings and collections associated with accounts receivable and other assets, and the timing of payments associated with accounts payable, accruals and other liabilities.

CONTRACTUAL OBLIGATIONS, COMMITMENTS, CONTINGENCIES AND OFF-BALANCE SHEET ARRANGEMENTS

There were no material changes during this quarter to the Company’s contractual obligations, commitments, contingencies and off-balance sheet arrangements that are described in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 , which is incorporated herein by reference, except as described in Note 6 of Part I, Item 1 above.

Except as described below, there were no material changes during this quarter to the Company’s contractual obligations, commitments, contingencies and off-balance sheet arrangements that are described in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 , which is incorporated herein by reference.

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 and in the Company’s Quarterly Report on Form 10-Q for the three months ended June 30, 2020.

CRITICAL ACCOUNTING ESTIMATES

1 unchanged sentence

OTHER MATTERS

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.

The Company’s third quarter 2020 cash dividend of $0.23 per share was paid on September 3, 2020.

On October 29, 2020, the Company’s Board of Directors declared a cash dividend of $0.23 per share payable on December 3, 2020.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis