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Item 2. Management’s Discussion and Analysis

2021-07-30 compared with 2021-04-28 · 153 added, 89 removed, 98 unchanged (71% of the section changed)

12 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, 2020 , the Company’s reports on Forms 10-Q and 8-K, and other publicly available information.

FIRST QUARTER 2021 DISCUSSION AND UPDATE ON BUSINESS CONDITIONS

SECOND QUARTER 2021 DISCUSSION AND UPDATE ON BUSINESS CONDITIONS

Ocean Transportation:

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 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 Company’s container volume in the Hawaii service in the second quarter 2021 was 9.9 percent higher year-over-year.

The increase was primarily due to higher retail and hospitality-related demand due to the reopening of the Hawaii economy compared to the pandemic low in the year ago period, partially offset by volume associated with the dry-docking of a competitor’s vessel in the year ago period.

Domestic visitor travel to the state accelerated since the beginning of the year and the local economy continued to reopen with COVID-19 vaccinations, leading to a sharp rebound in Hawaii’s tourism industry and economy.

The economic recovery in the state is on a cautiously optimistic trajectory due to improving tourism and unemployment trends.

In China, the Company’s container volume in the second quarter 2021 increased 59.1 percent year-over-year.

The increase was primarily due to incremental volume from the CLX+ service in addition to higher volume in the CLX service as a result of our increased capacity in the tradelane.

The total number of eastbound voyages in the China service increased by nine year-over-year of which six were from incremental CLX+ voyages and three from extra loaders.

Volume demand in the quarter was driven by e-commerce, garments and other goods.

Matson continued to realize a significant rate premium in the second quarter 2021 and achieved average freight rates that were considerably

higher than in the year ago period .

Currently in the Transpacific tradelane, supply chain congestion continues, and consumption trends remain elevated.

We expect these conditions to remain in place and lead to a high level of demand at least until Lunar New Year in the first quarter of 2022.

As a result of the exceptional level of demand for our expedited Transpacific services, Matson recently announced the initiation of our CCX service as a seasonal string with Matson-owned vessels from China to the U.S.

West Coast with Oakland as the first call.

Consequently, we expect our vessels in the CLX, CLX+ and CCX services to be operating at capacity at least until Lunar New Year next year.

In Guam, the Company’s container volume in the second quarter 2021 increased 35.7 percent year-over-year primarily due to higher retail-related demand compared to the pandemic low in the year ago period as well as volume attributable to a competitor’s schedule issues.

The economic recovery trajectory in Guam remains uncertain as the economy recovers slowly and tourism remains constrained.

In Alaska, the Company’s container volume for the second quarter 2021 increased 15.2 percent year-over-year due to higher northbound volume primarily due to (i) higher retail-related demand compared to the pandemic low in the year ago period, (ii) higher southbound volume and (iii) the addition of volume from the Alaska-Asia Express service, partially offset by one less northbound sailing.

In the near-term, we expect improving economic trends in Alaska, but the recovery’s trajectory continues to remain uncertain.

The contribution in the second quarter 2021 from the Company’s SSAT joint venture investment was $12.8 million, or $9.1 million higher than the second 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.

In the second quarter 2021, operating income for the Company’s Logistics segment was $12.9 million, or $4.0 million higher compared to the pandemic low operating income achieved in the second quarter 2020.

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

CONSOLIDATED RESULTS OF OPERATIONS

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

Three Months Ended March 31,

Consolidated Results - Three months ended June 30, 2021, compared with 2020:

Three Months Ended June 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 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 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.

The decrease in interest expense for the three months ended June 30, 2021, compared to the three months ended June 30, 2020, was due to lower outstanding debt during the period.

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.

Income tax expense was $47.4 million or 22.6 percent of income before income taxes for the three months ended June 30, 2021, compared to $11.7 million or 26.3 percent of income before income taxes for the three months ended June 30, 2020.

The effective tax rate for the three months ended June 30, 2021 was lower than the effective tax rate for the three months ended June 30, 2020 as it benefitted from discrete adjustments related to the valuation allowance

against the Company’s foreign income tax net operating losses and stock compensation that lowered the effective tax rate for that period.

Consolidated Results - Six months ended June 30, 2021, compared with 2020:

Six Months Ended June 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 decrease in interest expense for the six months ended June 30, 2021, compared to the six months ended June 30, 2020, was due to a lower outstanding debt during the period.

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.

The increase in Other income (expense) was due to adjustments related to the Company’s pension and post-retirement plan liabilities during the six months ended June 30, 2021.

Income tax expense was $74.5 million or 23.0 percent of income before income taxes for the six months ended June 30, 2021, compared to $12.9 million or 26.1 percent of income before income taxes for the six months ended June 30, 2020.

The effective tax rate for the six months ended June 30, 2021 was lower than the effective tax rate for the six months ended June 30, 2020 as it benefitted from discrete adjustments related to the valuation allowance against the Company’s foreign income tax net operating losses and stock compensation that lowered the effective tax rate for that period.

ANALYSIS OF OPERATING REVENUE AND INCOME BY SEGMENT

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

Three Months Ended March 31,

Ocean Transportation Operating Results - Three months ended June 30, 2021, compared with 2020:

Three Months Ended June 30,

(Dollars in millions)

12 unchanged sentences

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

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.

Ocean Transportation revenue increased $272.1 million, or 66.2 percent, during the three months ended June 30, 2021, compared with the three months ended June 30, 2020.

The increase was primarily due to higher revenue in China and Hawaii, higher fuel-related surcharge revenue and higher revenue in Alaska and Guam.

On a year-over-year FEU basis, Hawaii container volume increased 9.9 percent primarily due to higher retail and hospitality-related demand due to the reopening of the Hawaii economy compared to the pandemic low in the year ago period 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 a competitor’s vessel in the year ago period;

Alaska volume increased 15.2 percent due to higher northbound volume primarily due to higher retail-related demand compared to the pandemic low in the year ago period as a result of the state’s COVID-19 mitigation efforts, higher southbound volume and the addition of volume from the Alaska-Asia Express service, partially offset by one less northbound sailing;

China volume was 59.1 percent higher primarily due to incremental volume from the CLX+ service in addition to higher volume in the CLX service as a result of our increased capacity in the tradelane;

Guam volume was 35.7 percent higher primarily due to higher retail-related demand compared to the pandemic low in the year ago period as a result of the island’s COVID-19 mitigation measures as well as volume attributable to a competitor’s schedule issues;

and Other containers volume increased 33.3 percent primarily due to higher volume in Okinawa.

Ocean Transportation operating income increased $158.7 million during the three months ended June 30, 2021, compared with the three months ended June 30, 2020.

The increase was primarily due to higher contributions from the China and Hawaii services and SSAT, partially offset by higher vessel operating costs, higher terminal handling costs and higher depreciation.

The Company’s SSAT terminal joint venture investment contributed $12.8 million during the three months ended June 30, 2021, compared to a contribution of $3.7 million during the three months ended June 30, 2020.

The increase was driven by higher lift volume.

Ocean Transportation Operating Results - Six months ended June 30, 2021, compared with 2020:

Six Months Ended June 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 $431.7 million, or 53.2 percent, during the six months ended June 30, 2021, compared with the six months ended June 30, 2020.

The increase was primarily due to higher revenue in China, Hawaii and Guam.

On a year-over-year FEU basis, Hawaii container volume increased 5.3 percent primarily due to higher retail and hospitality-related demand due to the reopening of the Hawaii economy compared to the negatively impacted volume in the year ago period as a result of the pandemic and the state’s COVID-19 mitigation efforts, partially offset by volume associated with the dry-docking of a competitor’s vessel in the second quarter of last year;

Alaska volume increased by 4.8 percent due to higher northbound volume primarily due to higher retail-related demand compared to the negatively impacted volume in the year ago period as a result of the pandemic and the state’s COVID-19 mitigation efforts, higher southbound volume and the addition of volume from the Alaska-Asia Express service, partially offset by two less northbound sailings;

China volume was 110.2 percent higher primarily due to incremental volume from the CLX+

service in addition to higher volume on the CLX service as a result of increased capacity in the tradelane;

Guam volume was 17.6 percent higher primarily due to higher retail-related demand compared to the negatively impacted volume in the year ago period as a result of the pandemic and the island’s COVID-19 mitigation measures as well as volume attributable to a competitor’s schedule issues;

and Other container volume increased 15.0 percent primarily due to higher volume in Okinawa.

Ocean Transportation operating income increased $264.9 million during the six months ended June 30, 2021, compared with the six months ended June 30, 2020.

The Company’s SSAT terminal joint venture investment contributed $22.0 million during the six months ended June 30, 2021, compared to a contribution of $7.7 million during the six months ended June 30, 2020.

The increase was largely attributable to higher lift volume.

Logistics Operating Results:

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

Three Months Ended March 31,

Three months ended June 30, 2021, compared with 2020:

Three Months Ended June 30,

(Dollars in millions)

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Operating income margin

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.

Logistics revenue increased $78.7 million, or 69.5 percent, during the three months ended June 30, 2021, compared with the three months ended June 30, 2020.

The increase was primarily due to higher transportation brokerage revenue.

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.

Logistics operating income increased $4.0 million, or 44.9 percent, for the three months ended June 30, 2021, compared with the three months ended June 30, 2020.

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

Logistics Operating Results:

Six months ended June 30, 2021, compared with 2020:

Six Months Ended June 30,

(Dollars in millions)

Logistics revenue

Operating costs and expenses

Operating income

Operating income margin

Logistics revenue increased $117.0 million, or 51.7 percent, during the six months ended June 30, 2021, compared with the six months ended June 30, 2020.

The increase was primarily due to higher transportation brokerage revenue.

Logistics operating income increased $5.0 million, or 35.7 percent, for the six months ended June 30, 2021, compared with the six months ended June 30, 2020.

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

LIQUIDITY AND CAPITAL RESOURCES

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

Sources of liquidity available to the Company as of June 30, 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:

Cash and cash equivalents, restricted cash and accounts receivable as of June 30, 2021, compared to December 31, 2020 were as follows:

(In millions)

2 unchanged sentences

Accounts receivable, net (1)

(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,

(1) As of June 30, 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 six months ended June 30, 2021, compared to the six months ended June 30, 2020 were as follows:

Six Months Ended June 30,

(In millions)

2 unchanged sentences

Net cash used in financing activities (3)

Net decrease in cash, cash equivalents and restricted cash

Net increase (decrease) 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 three months ended March 31, 2021, compared to the three months ended March 31, 2020, were due to the following:

Changes in net cash provided by operating activities for the six months ended June 30, 2021, compared to the six months ended June 30, 2020, were due to the following:

(In millions)

Net income from operations

Non-cash deferred income taxes

Amortization of operating lease right of use assets

Depreciation and amortization

Non-cash deferred income taxes

Other non-cash related changes, net

Income and distributions from SSAT, net

Operating lease liabilities

Deferred dry-docking payments

Accounts receivable, net

1 unchanged sentence

Accounts payable, accruals and other liabilities

Operating lease liabilities

Deferred dry-docking payments

Deferred dry-docking amortization

Other long-term 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.

Income and cash distributions from SSAT was $22.0 million and $21.0 million for the six months ended June 30, 2021, respectively, compared to $7.7 million and $7.8 million for the six months ended June 30, 2020.

The change in income and cash distributions was due to greater levels of operating profits generated by SSAT during the six months ended June 30, 2021 as compared to the same prior year 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.

Changes in prepaid expenses and other assets were primarily due to increased prepaid fuel and other operating related costs, and prepaid income taxes, primarily due to increased levels of operations for the six months ended June 30, 2021, as compared to the same prior year period.

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

Deferred dry-docking payments for the six months ended June 30, 2021 were $17.4 million, compared to $7.6 million for the six months ended June 30, 2020.

The increase in deferred dry-docking payments was due to an increase in dry-dock related activity during the six months ended June 30, 2021 as compared to the same prior year period.

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

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:

Changes in net cash used in investing activities for the six months ended June 30, 2021, compared to the six months ended June 30, 2020, were due to the following:

(In millions)

Capitalized vessel construction expenditures

Cash deposits into CCF

1 unchanged sentence

Other capital expenditures

Capitalized vessel construction expenditures

Proceeds from disposal of property and equipment, net

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.

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

There were no capitalized vessel construction expenditures during the six months ended June 30, 2021 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 $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.

Other capital expenditures payments were $101.3 million for the six months ended June 30, 2021, compared to $34.0 million for the six months ended June 30, 2020.

During the six months ended June 30, 2021, the Company increased its acquisition of containers, chassis and other terminal equipment, as compared to the same prior year period.

The increase in capital expenditure payments was also 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 was 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, 2021.

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

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:

Changes in net cash used in financing activities for the six months ended June 30, 2021, compared to the six months ended June 30, 2020, were due to the following:

(In millions)

Proceeds received from issuance of fixed interest debt

Repayments of fixed interest debt

1 unchanged sentence

Payment of financing costs

Dividends paid

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 .

Dividends paid

Change in other payments, net

During the six months ended June 30, 2021, the Company paid $26.8 million in fixed debt payments, compared to $192.8 million during the six months ended June 30, 2020.

During the six months ended June 30, 2021, the Company decreased net borrowings under the revolving credit facility by $71.8 million, compared to a $201.1 million decrease during the six months ended June 30, 2020.

During the six months ended June 30, 2021, the Company paid $3.0 million in financing costs, compared to $18.5 million paid during the six months ended June 30, 2020, related to amendments of its revolving credit facility, private placement term loans and Title XI debt.

During the six months ended June 30, 2021, the Company paid $14.4 million in taxes related to vested restricted stock units, compared to $5.5 million for the six months ended June 30, 2020.

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

During the six months ended June 30, 2021, the Company paid $20.2 million in dividends, compared to $19.1 million during the six months ended June 30, 2020.

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

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:

Total Debt as of June 30, 2021 and December 31, 2020 is as follows:

(In millions)

1 unchanged sentence

Fixed interest debt

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.

Total Debt decreased by $98.6 million during the six months ended June 30, 2021.

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

The decrease in fixed interest debt was due to the scheduled repayments of private placement term loans and Title XI debt during the six months ended June 30, 2021.

As of June 30, 2021, the Company had $641.9 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 deficit of $205.2 million and $205.6 million at March 31, 2021 and December 31, 2020, respectively.

The Company had a working capital deficit of $129.6 million and $205.6 million at June 30, 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.

The decrease in working capital deficit at June 30, 2021 is primarily due to the increase in revenues generated during the six months ended June 30, 2021, compared to the six months ended June 30, 2020.

Working capital is also impacted by the timing of collections associated with accounts receivable and other assets, and the timing of payments associated with accounts payable, accruals, income taxes 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, 2020 , 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, 2020 , 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, 2021 , which is incorporated herein by reference.

On July 7, 2021, the Company terminated a Bareboat Charter Operating Lease agreement as described in Note 7 of Part I, Item 1 above.

CRITICAL ACCOUNTING ESTIMATES

1 unchanged sentence

OTHER MATTERS

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.

The Company’s second quarter 2021 cash dividend of $0.23 per share was paid on June 3, 2021.

On June 24, 2021, the Company’s Board of Directors declared a cash dividend of $0.30 per share payable on September 2, 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