Item 2. Management’s Discussion and Analysis
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the Condensed Consolidated Financial Statements and related notes, and other financial information appearing elsewhere in this Quarterly Report on Form 10-Q.
FORWARD-LOOKING STATEMENTS
Except for historical information, the statements made in this Quarterly Report on Form 10-Q are forward-looking statements made pursuant to the safe-harbor provisions of the Private Security Litigation Reform Act of 1995. Such forward-looking statements may be contained in, among other things, SEC filings, such as reports on Forms 10-K, 10-Q and 8-K, the Annual Report to Shareholders, press releases made by the Company, the Company’s Internet Websites (including Websites of its subsidiaries), and oral statements made by officers of the Company.
This report, and other statements that the Company may make, may contain forward-looking statements with respect to the Company’s future financial, business or ESG performance, strategies or expectations. 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,” “design,” “goal,” “plan,” 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 I, Item 1A, “Risk Factors” of Matson’s Annual Report on Form 10-K for the year ended December 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. Actual results could differ materially from those anticipated in forward-looking statements and future results could differ materially from historical performance.
OVERVIEW
Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is designed to provide a discussion of the Company’s financial condition, results of operations, liquidity and certain other factors that may affect its future results from the perspective of management. The discussion that follows is intended to provide information that will assist in understanding the changes in the Company’s financial statements from period to period, the primary factors that accounted for those changes, and how certain accounting principles, policies and estimates affect the Company’s financial statements. 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 2021 DISCUSSION AND UPDATE ON BUSINESS CONDITIONS
Ocean Transportation: The Company’s container volume in the Hawaii service in the third quarter 2021 was 11.5 percent higher year-over-year. The increase was primarily due to higher retail and hospitality-related demand due to the continued rebound in tourism and the Hawaii economy compared to the pandemic-reduced volume in the year ago period. Volume in the third quarter 2020 was negatively impacted by the state’s COVID-19 mitigation efforts, including restrictions on tourism. Domestic visitor travel to the state remained strong throughout much of the third quarter 2021 until the end of the quarter when the state’s efforts to address the spread of the COVID-19 Delta variant, including the Governor’s request to defer travel plans, led to a softening in airline passenger traffic. As a result, we experienced a modest negative impact in freight demand late in the quarter. In the near-term, the Hawaii economy may experience a brief slowdown as a result of the state’s response to the COVID-19 Delta variant and the related impacts on tourism trends. In late October, the Governor announced that non-essential travel to the state can resume on November 1, 2021.
In China, the Company’s container volume in the third quarter 2021 increased 21.7 percent year-over-year. The increase was primarily due to volume from the China-California Express (“CCX”) service and volume from an extra loader. The total number of eastbound voyages in the China service increased by six year-over-year of which five were from CCX
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voyages and one from an extra loader. Volume demand in the quarter was driven by e-commerce, garments and other goods. Matson continued to realize a significant rate premium in the third quarter 2021 and achieved average freight rates that were considerably higher than in the year ago period. Currently, supply chain congestion continues in the Transpacific tradelane with the combination of ongoing elevated consumption trends, inventory restocking, and bottlenecks at critical points for both ocean and overland transportation . We expect these conditions to remain largely in place at least through mid-year 2022.
In Guam, the Company’s container volume in the third quarter 2021 increased 14.6 percent year-over-year primarily due to higher retail-related demand compared to the pandemic-reduced volume in the year ago period. The economic recovery trajectory in Guam continues to remain uncertain as the economy recovers slowly and tourism remains constrained.
In Alaska, the Company’s container volume for the third quarter 2021 increased 10.7 percent year-over-year due to
(i) the addition of volume from the Alaska-Asia Express, (ii) higher northbound volume primarily due to an additional sailing and higher retail-related demand, and (iii) higher southbound volume. In the near-term, we expect improving economic trends in Alaska, but the recovery’s trajectory continues to remain uncertain.
The contribution in the third quarter 2021 from the Company’s SSAT joint venture investment was $13.0 million, or $5.3 million higher than the third quarter 2020. The increase was primarily driven by higher lift volume.
Logistics: In the third quarter 2021, operating income for the Company’s Logistics segment was $16.0 million, or $4.1 million higher compared to the level achieved in the third quarter 2020. The increase was due primarily to higher contributions from supply chain management and transportation brokerage as a result of elevated goods consumption, inventory restocking and favorable supply and demand fundamentals in our core markets.
CONSOLIDATED RESULTS OF OPERATIONS
Consolidated Results - Three months ended September 30, 2021 compared with 2020:
Three Months Ended September 30,
(Dollars in millions, except per share amounts)
2021
2020
Change
Operating revenue
$
1,071.6
$
645.2
$
426.4
66.1
%
Operating costs and expenses
(693.7)
(546.8)
(146.9)
26.9
%
Operating income
377.9
98.4
279.5
284.0
%
Interest expense
(5.1)
(5.7)
0.6
(10.5)
%
Other income (expense), net
1.8
2.4
(0.6)
(25.0)
%
Income before income taxes
374.6
95.1
279.5
293.9
%
Income taxes
(91.4)
(24.2)
(67.2)
277.7
%
Net income
$
283.2
$
70.9
$
212.3
299.4
%
Basic earnings per share
$
6.60
$
1.65
$
4.95
300.0
%
Diluted earnings per share
$
6.53
$
1.63
$
4.90
300.6
%
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, 2021, compared to the three months ended September 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 $91.4 million or 24.4 percent of income before income taxes for the three months ended September 30, 2021, compared to $24.2 million or 25.4 percent of income before income taxes for the three months ended September 30, 2020. The effective tax rate for the three months ended September 30, 2021 was lower than the effective tax rate for the three months ended September 30, 2020 due to the impact of state taxes that lowered the effective tax rate for the current period.
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Consolidated Results - Nine months ended September 30, 2021 compared with 2020:
Nine Months Ended September 30,
(Dollars in millions, except per share amounts)
2021
2020
Change
Operating revenue
$
2,658.3
$
1,683.2
$
975.1
57.9
%
Operating costs and expenses
(1,946.3)
(1,520.6)
(425.7)
28.0
%
Operating income
712.0
162.6
549.4
337.9
%
Interest expense
(17.9)
(22.5)
4.6
(20.4)
%
Other income (expense), net
4.7
4.5
0.2
4.4
%
Income before income taxes
698.8
144.6
554.2
383.3
%
Income taxes
(165.9)
(37.1)
(128.8)
347.2
%
Net income
$
532.9
$
107.5
$
425.4
395.7
%
Basic earnings per share
$
12.31
$
2.50
$
9.81
392.4
%
Diluted earnings per share
$
12.19
$
2.48
$
9.71
391.5
%
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 nine months ended September 30, 2021, compared to the nine months ended September 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.
Income tax expense was $165.9 million or 23.7 percent of income before income taxes for the nine months ended September 30, 2021, compared to $37.1 million or 25.7 percent of income before income taxes for the nine months ended September 30, 2020. The effective tax rate for the nine months ended September 30, 2021 was lower than the effective tax rate for the nine months ended September 30, 2020 as it benefitted from discrete adjustments related to the release of the valuation allowance against the Company’s foreign income tax net operating losses and stock compensation that lowered the effective tax rate for the current period.
ANALYSIS OF OPERATING REVENUE AND INCOME BY SEGMENT
Ocean Transportation Operating Results - Three months ended September 30, 2021 compared with 2020:
Three Months Ended September 30,
(Dollars in millions)
2021
2020
Change
Ocean Transportation revenue
$
863.5
$
498.3
$
365.2
73.3
%
Operating costs and expenses
(501.6)
(411.8)
(89.8)
21.8
%
Operating income
$
361.9
$
86.5
$
275.4
318.4
%
Operating income margin
41.9
%
17.4
%
Volume (Forty-foot equivalent units (FEU), except for automobiles) (1)
Hawaii containers
40,600
36,400
4,200
11.5
%
Hawaii automobiles
12,600
12,900
(300)
(2.3)
%
Alaska containers
21,800
19,700
2,100
10.7
%
China containers
46,500
38,200
8,300
21.7
%
Guam containers
5,500
4,800
700
14.6
%
Other containers (2)
5,400
4,600
800
17.4
%
(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 $365.2 million, or 73.3 percent, during the three months ended September 30, 2021, compared with the three months ended September 30, 2020. The increase was primarily due to higher revenue in China, higher fuel-related surcharge revenue, and higher revenue in Hawaii and Alaska.
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On a year-over-year FEU basis, Hawaii container volume increased 11.5 percent primarily due to higher retail and hospitality-related demand due to the continued rebound in tourism and the Hawaii economy compared to the volume in the year ago period, which was negatively impacted by the state’s COVID-19 mitigation efforts, including restrictions on tourism; Alaska volume increased 10.7 percent due to the addition of volume from the Alaska-Asia Express, higher northbound volume primarily due to an additional sailing and higher retail-related demand, and higher southbound volume; China volume was 21.7 percent higher primarily due to CCX volume and volume from an extra loader; Guam volume was 14.6 percent higher primarily due to higher retail-related demand; and Other containers volume increased 17.4 percent primarily due to higher volume in Okinawa.
Ocean Transportation operating income increased $275.4 million during the three months ended September 30, 2021, compared with the three months ended September 30, 2020. The increase was primarily due to a higher contribution from China.
The Company’s SSAT terminal joint venture investment contributed $13.0 million during the three months ended September 30, 2021, compared to a contribution of $7.7 million during the three months ended September 30, 2020. The increase was primarily driven by higher lift volume.
Ocean Transportation Operating Results - Nine months ended September 30, 2021 compared with 2020:
Nine Months Ended September 30,
(Dollars in millions)
2021
2020
Change
Ocean Transportation revenue
$
2,106.9
$
1,310.0
$
796.9
60.8
%
Operating costs and expenses
(1,429.9)
(1,173.3)
(256.6)
21.9
%
Operating income
$
677.0
$
136.7
$
540.3
395.2
%
Operating income margin
32.1
%
10.4
%
Volume (Forty-foot equivalent units (FEU), except for automobiles) (1)
Hawaii containers
116,100
108,100
8,000
7.4
%
Hawaii automobiles
36,000
34,400
1,600
4.7
%
Alaska containers
58,800
55,000
3,800
6.9
%
China containers
131,200
78,500
52,700
67.1
%
Guam containers
16,200
13,900
2,300
16.5
%
Other containers (2)
14,600
12,600
2,000
15.9
%
(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 $796.9 million, or 60.8 percent, during the nine months ended September 30, 2021, compared with the nine months ended September 30, 2020. The increase was primarily due to higher revenue in China and Hawaii, higher fuel-related surcharge revenue and higher revenue in Alaska.
On a year-over-year FEU basis, Hawaii container volume increased 7.4 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 6.9 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; China volume was 67.1 percent higher primarily due to incremental volume from the CLX+ service, higher volume on the CLX service as a result of increased capacity in the tradelane, and the addition of volume from the CCX service; Guam volume was 16.5 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; and Other container volume increased 15.9 percent primarily due to higher volume in Okinawa.
Ocean Transportation operating income increased $540.3 million during the nine months ended September 30, 2021, compared with the nine months ended September 30, 2020. The increase was primarily due to a higher contribution from China.
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The Company’s SSAT terminal joint venture investment contributed $35.0 million during the nine months ended September 30, 2021, compared to a contribution of $15.4 million during the nine months ended September 30, 2020. The increase was primarily driven by higher lift volume.
Logistics Operating Results: Three months ended September 30, 2021, compared with 2020:
Three Months Ended September 30,
(Dollars in millions)
2021
2020
Change
Logistics revenue
$
208.1
$
146.9
$
61.2
41.7
%
Operating costs and expenses
(192.1)
(135.0)
(57.1)
42.3
%
Operating income
$
16.0
$
11.9
$
4.1
34.5
%
Operating income margin
7.7
%
8.1
%
Logistics revenue increased $61.2 million, or 41.7 percent, during the three months ended September 30, 2021, compared with the three months ended September 30, 2020. The increase was primarily due to higher transportation brokerage and supply chain management revenue.
Logistics operating income increased $4.1 million, or 34.5 percent, for the three months ended September 30, 2021, compared with the three months ended September 30, 2020. The increase was primarily due to higher contributions from supply chain management and transportation brokerage.
Logistics Operating Results: Nine months ended September 30, 2021, compared with 2020:
Nine Months Ended September 30,
(Dollars in millions)
2021
2020
Change
Logistics revenue
$
551.4
$
373.2
$
178.2
47.7
%
Operating costs and expenses
(516.4)
(347.3)
(169.1)
48.7
%
Operating income
$
35.0
$
25.9
$
9.1
35.1
%
Operating income margin
6.3
%
6.9
%
Logistics revenue increased $178.2 million, or 47.7 percent, during the nine months ended September 30, 2021, compared with the nine months ended September 30, 2020. The increase was primarily due to higher transportation brokerage and supply chain management revenue.
Logistics operating income increased $9.1 million, or 35.1 percent, for the nine months ended September 30, 2021, compared with the nine months ended September 30, 2020. The increase was due primarily to higher contributions from transportation brokerage, supply chain management, and freight forwarding.
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LIQUIDITY AND CAPITAL RESOURCES
Sources of liquidity available to the Company as of September 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 as of September 30, 2021, compared to December 31, 2020 were as follows:
September 30,
December 31,
(In millions)
2021
2020
Change
Cash and cash equivalents
$
75.9
$
14.4
$
61.5
Restricted cash
$
5.3
$
5.3
$
—
Accounts receivable, net (1)
$
328.6
$
253.4
$
75.2
(1) As of September 30, 2021 and December 31, 2020, $1.8 million and $1.7 million of eligible accounts receivable were assigned to the CCF, respectively.
Changes in the Company’s cash, cash equivalents and restricted cash for the nine months ended September 30, 2021, compared to the nine months ended September 30, 2020 were as follows:
Nine Months Ended September 30,
(In millions)
2021
2020
Change
Net cash provided by operating activities (1)
$
583.3
$
270.8
$
312.5
Net cash used in investing activities (2)
(242.5)
(95.6)
(146.9)
Net cash used in financing activities (3)
(279.3)
(187.9)
(91.4)
Net increase (decrease) in cash, cash equivalents and restricted cash
61.5
(12.7)
74.2
Cash, cash equivalents and restricted cash, beginning of the period
19.7
28.4
(8.7)
Cash, cash equivalents and restricted cash, end of the period
$
81.2
$
15.7
$
65.5
(1) Change in net cash provided by operating activities:
Changes in net cash provided by operating activities for the nine months ended September 30, 2021, compared to the nine months ended September 30, 2020, were due to the following:
(In millions)
Change
Net income
$
425.4
Amortization of operating lease right of use assets
20.8
Depreciation and amortization
16.4
Non-cash deferred income taxes
(3.2)
Other non-cash related changes, net
0.6
Income and distributions from SSAT, net
(10.6)
Accounts receivable, net
(46.3)
Prepaid expenses and other assets
(66.3)
Accounts payable, accruals and other liabilities
6.2
Operating lease liabilities
(18.4)
Deferred dry-docking payments
(14.7)
Deferred dry-docking amortization
0.2
Other long-term liabilities
2.4
Total
$
312.5
Income and cash distributions from SSAT was $35.0 million and $46.9 million for the nine months ended September 30, 2021, respectively, compared to $15.4 million and $37.9 million for the nine months ended September 30, 2020. The change in income and cash distributions was due to greater levels of operating profits generated by SSAT during the nine months ended September 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 prepaid expenses and other assets were primarily due to increased prepaid fuel and other operating related costs, primarily due to increased levels of operations, and prepaid income taxes, primarily due to increased levels of earnings for the nine months ended September 30, 2021, as compared to the same prior year period. Changes in accounts payable, accruals and other liabilities were primarily due to increased levels of operating costs and the timing of
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payments associated with those liabilities. Deferred dry-docking payments for the nine months ended September 30, 2021 were $25.8 million, compared to $11.1 million for the nine months ended September 30, 2020. The increase in deferred dry-docking payments was due to an increase in dry-dock related activity during the nine months ended September 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 nine months ended September 30, 2021, compared to the nine months ended September 30, 2020, were due to the following:
(In millions)
Change
Cash deposits into CCF
$
65.9
Withdrawals from CCF
(65.9)
Other capital expenditures
(191.2)
Capitalized vessel construction expenditures
57.8
Proceeds from disposal of property and equipment, net
(13.5)
Total
$
(146.9)
Capitalized vessel construction expenditures (including capitalized interest) were $57.8 million for the nine months ended September 30, 2020. There were no capitalized vessel construction expenditures during the nine months ended September 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 $244.7 million for the nine months ended September 30, 2021, compared to $53.5 million for the nine months ended September 30, 2020. During the nine months ended September 30, 2021, the Company increased its acquisition of containers, chassis and other terminal equipment, as compared to the same prior year period, primarily driven by the increased level of operating activities. The increase in other capital expenditure payments was also due to the repurchase of Maunalei for $95.8 million, repurchase of other leased equipment, installation of scrubbers on certain vessels, and 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 nine months ended September 30, 2020. There were no sale and leaseback transactions during the nine months ended September 30, 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, 2021, compared to the nine months ended September 30, 2020, were due to the following:
(In millions)
Change
Proceeds received from issuance of fixed interest debt
$
(325.5)
Repayments of fixed interest debt
163.1
Repayments and borrowings under revolving credit facility, net
184.3
Repurchase of Matson common stock
(115.7)
Payment of financing costs
15.5
Tax withholding related to net share settlements of restricted stock units
(8.8)
Dividends paid
(4.2)
Change in other payments, net
(0.1)
Total
$
(91.4)
During the nine months ended September 30, 2021, the Company paid $41.1 million in scheduled fixed debt payments, compared to $34.7 million in scheduled fixed debt payments and redeemed debt at par of $169.5 million during the nine months ended September 30, 2020. During the nine months ended September 30, 2021, the Company decreased net borrowings under the revolving credit facility by $71.8 million, compared to a $256.1 million decrease during the nine months ended September 30, 2020. During the nine months ended September 30, 2021, the Company paid $3.0 million in financing costs, compared to $18.5 million paid during the nine months ended September 30, 2020, related to amendments of its revolving credit facility, private placement term loans and Title XI debt. During the nine months ended September 30, 2021, the Company paid $14.4 million in taxes related to vested restricted stock units, compared to $5.6 million for the nine months ended September 30, 2020. The increase in taxes was primarily due to the increase of
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the Company’s stock price as of the vesting date of the restricted stock units. During the nine months ended September 30, 2021, the Company paid $33.3 million in dividends, compared to $29.1 million during the nine months ended September 30, 2020. The increase in dividend payments resulted from an increase in dividends declared per share of common stock by the Company. During the nine months ended September 30, 2021, the Company paid $115.7 million for the repurchase of Matson common stock. There was no stock repurchase activity during the prior year.
Debt: Total Debt as of September 30, 2021 and December 31, 2020 is as follows:
September 30,
December 31,
(In millions)
2021
2020
Change
Revolving credit facility
$
—
$
71.8
$
(71.8)
Fixed interest debt
647.2
688.3
(41.1)
Total Debt
$
647.2
$
760.1
$
(112.9)
Total Debt decreased by $112.9 million during the nine months ended September 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 nine months ended September 30, 2021.
As of September 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 $65.6 million and $205.6 million at September 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 decrease in working capital deficit at September 30, 2021 is primarily due to the increase in cash flow generated from operating activities during the nine months ended September 30, 2021, compared to the nine months ended September 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
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
There have been no changes during this quarter to the Company’s critical accounting estimates as discussed in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.
OTHER MATTERS
The Company’s third quarter 2021 cash dividend of $0.30 per share was paid on September 2, 2021. On October 28, 2021, the Company’s Board of Directors declared a cash dividend of $0.30 per share payable on December 2, 2021.
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From October 1, 2021 through November 2, 2021, Matson repurchased an additional 0.4 million shares for a total cost of $33.1 million. As of November 2, 2021, the Company had approximately 1.1 million shares remaining on its share repurchase program.
In early November, the Company announced short, medium and long-term goals designed to significantly reduce its impact on climate change by lowering the Company’s greenhouse gas emissions. To help meet these goals, the Company plans to install tanks, piping and other equipment on Daniel K. Inouye , its first Aloha Class vessel, to operate its dual fuel engine on liquefied natural gas (“LNG”) as originally designed . The installation is expected to take approximately five months to complete and is scheduled to begin during the first quarter of 2023, at an estimated cost of approximately $35 million. The Company is actively considering further LNG installations on Kaimana Hila and the two Kanaloa Class vessels ( Lurline and Matsonia ). In addition, the Company plans to re-engine Manukai to operate on both LNG and conventional fuels at an estimated cost of approximately $60 million. The Company is continuing to evaluate different initiatives to increase efficiency and lower emissions. For more information about risks and uncertainties associated with the Company’s greenhouse gas emissions reduction goals, please see Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Forward-Looking Statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes to the Company’s market risk position from the information provided under Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” of our Annual Report on Form 10-K for the year ended December 31, 2020.
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