What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-04-28 compared with 2020-11-02 · 88 added, 135 removed, 99 unchanged (69% 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” below.

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.

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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, 2020 , the Company’s reports on Forms 10-Q and 8-K, and other publicly available information.

THIRD QUARTER 2020 DISCUSSION AND UPDATE ON BUSINESS CONDITIONS

FIRST QUARTER 2021 DISCUSSION AND UPDATE ON BUSINESS CONDITIONS

Ocean Transportation:

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.

The Company’s container volume in the Hawaii service in the first quarter 2021 was 0.6 percent higher year-over-year primarily due to higher demand for sustenance and home improvement goods, partially offset by one less westbound sailing and lower tourism activity as a result of the pandemic.

The low tourism levels during the COVID-19 pandemic have had a meaningfully negative impact on Hawaii’s economy.

With eased visitor travel restrictions and increased vaccinations on the mainland, tourism to the Hawaiian islands has recently picked up and is expected to accelerate into the summer as vaccinations become more widespread.

The recovery in tourism is expected to lead to gradually improving economic conditions in the state, but the economic recovery trajectory continues to remain uncertain.

In China, the Company’s container volume in the first quarter 2021 increased 218.6 percent year-over-year primarily due to volume from the CLX+ service in addition to higher volume on the CLX service as a result of our increased capacity in the tradelane.

Matson continued to realize a significant rate premium in the first quarter 2021 and achieved average freight rates that were considerably higher than in the year ago period .

At present, significant supply chain congestion continues, particularly at the California ports, and these conditions will most likely persist through the second quarter

2021 and into the traditional peak season.

We also expect demand in the Transpacific tradelane to remain favorable as elevated consumption trends, including heightened e-commerce activity, are expected to continue beyond the second quarter.

Accordingly, we expect significant demand for our expedited CLX and CLX+ services to remain throughout the peak season into late October.

In Guam, the Company’s container volume in the first quarter 2021 increased 2.0 percent year-over-year primarily due to higher demand for sustenance and home improvement goods, partially offset by lower tourism activity as a result of the pandemic.

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.

In Alaska, the Company’s container volume for the first quarter 2021 decreased 4.9 percent year-over-year as a result of lower northbound volume primarily due to one less sailing this year and volume related to a competitor’s dry-docking in the year ago period and lower southbound volume, partially offset by volume from the Alaska-to-Asia Express service.

Normalizing for the one less sailing this year and volume related to a competitor’s dry-docking in the year ago period, Alaska volume increased approximately 2.5 percent.

In the near-term, we expect the Alaska economy to slowly recover, but remain challenged until the pandemic subsides and the unemployment rate improves.

The contribution in the first quarter 2021 from the Company’s SSAT joint venture investment was $9.2 million, or $5.2 million higher than the first quarter 2020.

The increase was driven by higher lift volume.

In the first quarter 2021, operating income for the Company’s Logistics segment was $6.1 million, or $1.0 million higher compared to the operating income achieved in the first quarter 2020.

The increase was due primarily to higher contributions from transportation brokerage and supply chain management as a result of elevated goods consumption and inventory restocking in addition to tight supply and demand fundamentals in our core markets.

CONSOLIDATED RESULTS OF OPERATIONS

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

Three Months Ended September 30,

Consolidated Results - Three months ended March 31, 2021, compared with 2020:

Three Months Ended March 31,

(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 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.

The decrease in interest expense for the three months ended March 31, 2021, compared to the three months ended March 31, 2020, was due to lower outstanding debt during the period, offset by a lower amount of capitalized interest associated with the new vessel construction in 2020.

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 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)

Operating revenue

Operating costs and expenses

Operating income

Interest expense

Other income (expense), net

Income before income taxes

Basic earnings per share

Diluted earnings per share

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 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 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.

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 March 31, 2021.

Income tax expense was $27.1 million or 23.7 percent of income before income taxes for the three months ended March 31, 2021, compared to $1.2 million or 24.0 percent of income before income taxes for the three months ended March 31, 2020.

The effective tax rate for the three months ended March 31, 2021 was lower than the effective tax rate

for the three months ended March 31, 2020 as it benefitted from discrete adjustments related to stock compensation and foreign taxes that lowered the effective tax rate for that period.

ANALYSIS OF OPERATING REVENUE AND INCOME BY SEGMENT

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

Three Months Ended September 30,

(Dollars in millions)

Ocean Transportation revenue

Operating costs and expenses

Operating income

Operating income margin

Volume (Forty-foot equivalent units (FEU), except for automobiles) (1)

Hawaii containers

Hawaii automobiles

Alaska containers

China containers

Guam containers

Other containers (2)

(1) Approximate volumes included for the period are based on the voyage departure date, but revenue and operating income are adjusted to reflect the percentage of revenue and operating income earned during the reporting period for voyages in transit at the end of each reporting period.

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

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,

Ocean Transportation Operating Results - Three months ended March 31, 2021, compared with 2020:

Three Months Ended March 31,

(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 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 0.7 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 $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.

Ocean Transportation revenue increased $159.6 million during the three months ended March 31, 2021, compared with the three months ended March 31, 2020.

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

On a year-over-year FEU basis, Hawaii container volume increased 0.6 percent primarily due to higher demand for sustenance and home improvement goods, partially offset by one less westbound sailing and lower tourism activity as a result of the pandemic;

Alaska volume decreased 4.9 percent due to lower northbound volume primarily due to one less sailing this year and volume related to a competitor’s dry-docking in the year ago period and lower southbound volume, partially offset by volume from the Alaska-to-Asia Express service;

China volume was 218.6 percent higher primarily due to volume from the CLX+ service in addition to higher volume on the CLX service as a result of our increased capacity in the tradelane;

Guam volume was 2.0 percent higher primarily due to higher demand for sustenance and home improvement goods, partially offset by lower tourism activity as a result of the pandemic;

and Other containers volume decreased 2.4 percent.

Ocean Transportation operating income increased $106.2 million during the three months ended March 31, 2021, compared with the three months ended March 31, 2020.

The increase was primarily due to a higher contribution from China, including the contribution from the CLX+ service, and a higher contribution from SSAT, partially offset by a lower contribution from the Alaska service and higher depreciation.

The Company’s SSAT terminal joint venture investment contributed $9.2 million during the three months ended March 31, 2021, compared to a contribution of $4.0 million during the three months ended March 31, 2020.

The increase was driven by higher lift volume.

Logistics Operating Results:

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

Three Months Ended September 30,

Three months ended March 31, 2021, compared with 2020:

Three Months Ended March 31,

(Dollars in millions)

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Operating income margin

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.

Logistics revenue increased $38.3 million, or 33.9 percent, during the three months ended March 31, 2021, compared with the three months ended March 31, 2020.

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:

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

Nine Months Ended September 30,

(Dollars in millions)

Logistics revenue

Operating costs and expenses

Operating income

Operating income margin

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.

Logistics operating income increased $1.0 million, or 19.6 percent, for the three months ended March 31, 2021, compared with the three months ended March 31, 2020.

The increase was primarily due to higher contributions from transportation brokerage and supply chain management.

LIQUIDITY AND CAPITAL RESOURCES

Sources of Liquidity:

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

September 30,

Sources of liquidity available to the Company as of March 31, 2021, compared to December 31, 2020 were as follows:

Cash, Cash Equivalents, Restricted Cash and Accounts Receivable:

Cash and cash equivalents, restricted cash and accounts receivable for the three months ended March 31, 2021, compared to December 31, 2020 were as follows:

(In millions)

2 unchanged sentences

Accounts receivable, net (1)

(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 nine months ended September 30, 2020, compared to the nine months ended September 30, 2019 are as follows:

Nine Months Ended September 30,

(1) As of March 31, 2021 and December 31, 2020, $1.7 million of eligible accounts receivable were assigned to the CCF.

Changes in the Company’s cash, cash equivalents and restricted cash for the three months ended March 31, 2021, compared to the three months ended March 31, 2020 were as follows:

Three Months Ended March 31,

(In millions)

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Net cash used in financing activities (3)

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

Net decrease in cash, cash equivalents and restricted cash

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

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

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:

Changes in net cash provided by operating activities for the three months ended March 31, 2021, compared to the three months ended March 31, 2020, were due to the following:

(In millions)

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Other long-term liabilities

Changes in accounts receivable were primarily due to the timing of collections associated with those receivables.

Changes in accounts payable, accruals and other liabilities were primarily due to the timing of payments associated with those liabilities.

Deferred dry-docking payments for the three months ended March 31, 2021 were $9.5 million, compared to $2.6 million for the three months ended March 31, 2020.

The increase in deferred dry-docking payments was due to the timing of

when vessels are in dry-dock during each period.

Changes in accounts receivable were primarily due to increased levels of revenues, and the timing of collections associated with those receivables.

Changes in accounts payable, accruals and other liabilities were primarily due to accrued income taxes for the three months ended March 31, 2021 which will be paid during the subsequent quarter.

There were no accrued income taxes during the quarter ended March 31, 2020.

In addition, the change is also related to the increased level of operating costs and expenses, and the timing of payments associated with those liabilities.

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

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:

Changes in net cash used in investing activities for the three months ended March 31, 2021, compared to the three months ended March 31, 2020, were due to the following:

(In millions)

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Proceeds from disposal of property and equipment, net

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 (including capitalized interest) were $9.1 million for the three months ended March 31, 2020.

There were no capitalized vessel construction expenditures during the quarter ended March 31, 2021.

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

The reduction is primarily due to the completion of the Company’s fleet renewal program in 2020.

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 $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 nine months ended September 30, 2020.

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

Other capital expenditures payments were $38.5 million for the three months ended March 31, 2021, compared to $26.1 million for the three months ended March 31, 2020.

The increase in other capital expenditures is primarily due to the timing of certain capital project activities incurred during 2021 as compared to 2020.

The decrease 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 three months ended March 31, 2020.

There were no sale and leaseback transactions during the three months ended March 31, 2021.

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

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:

Changes in net cash used in financing activities for the three months ended March 31, 2021, compared to the three months ended March 31, 2020, were due to the following:

(In millions)

Proceeds received from issuance of fixed interest debt

Repayments of fixed interest debt

Borrowings under revolving credit facility, net

Repayments and borrowings under revolving credit facility, net

Payment of financing costs

Dividends paid

Change in other payments, net

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 .

Tax withholding related to net share settlements of restricted stock units

During the three months ended March 31, 2021, the Company paid $14.4 million in scheduled fixed debt payments, compared to $11.4 million during the three months ended March 31, 2020 .

During the three months ended March 31, 2021, the Company decreased net borrowings under the revolving credit facility by $46.8 million, compared to $22.1 million decrease during the three months ended March 31, 2020.

During the three months ended March 31, 2021, the Company paid $3.0 million in financing costs, compared to $3.1 million paid during the three months ended March 31, 2020, related to amendments of its revolving credit facility, private placement term loans and Title XI debt.

During the three months ended March 31, 2021, the Company paid $10.1 million in dividends, compared to $9.5 million during the three months ended March 31, 2020 .

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

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

September 30,

During the three months ended March 31, 2021, the Company paid $14.1 million in taxes related to vested restricted stock units, compared to $4.5 million for the three months ended March 31, 2020.

The increase in taxes is primarily due to the increase of the Company’s stock price as of the vesting date of the restricted stock units.

Total Debt as of March 31, 2021 and December 31, 2020 is as follows:

(In millions)

1 unchanged sentence

Fixed interest debt

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.

Total Debt decreased by $61.2 million during the three months ended March 31, 2021.

The decrease in the Company’s outstanding revolving credit borrowings was primarily due to the increase in net cash provided by operating activities.

The decrease in fixed interest debt was due to the scheduled repayments of private placement term loans and Title XI debt during the three months ended March 31, 2021.

As of March 31, 2021, the Company had $616.9 million of remaining borrowing availability under the revolving credit facility, with a maturity date of March 31, 2026.

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 $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.

The Company had a working capital deficit of $205.2 million and $205.6 million at March 31, 2021 and December 31, 2020, respectively.

The Company manages its working capital needs through the use of borrowings on its revolving credit facility which can be received on short notice.

The increase in working capital deficit at March 31, 2021 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

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.

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, 2020 , which is incorporated herein by reference , except as described in Note 6 of Part I, Item 1 above.

CRITICAL ACCOUNTING ESTIMATES

1 unchanged sentence

OTHER MATTERS

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.

The Company’s first quarter 2021 cash dividend of $0.23 per share was paid on March 4, 2021.

On April 22, 2021, the Company’s Board of Directors declared a cash dividend of $0.23 per share payable on June 3, 2021.

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