What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-08-02 compared with 2022-05-04 · 100 added, 58 removed, 385 unchanged (29% of the section changed)

3 unchanged sentences

Three Months Ended

Six Months Ended

(In millions, except per share amounts)

10 unchanged sentences

Other income (expense), net

Income before Income Taxes

Income before Taxes

Other Comprehensive Income (Loss), Net of Income Taxes:

48 unchanged sentences

Condensed Consolidated Statements of Cash Flows

Three Months Ended March 31,

Six Months Ended June 30,

(In millions)

32 unchanged sentences

Net cash used in financing activities

Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash

Net Increase in Cash, Cash Equivalents and Restricted Cash

Cash, Cash Equivalents and Restricted Cash, Beginning of the Period

6 unchanged sentences

Interest paid, net of capitalized interest

Income tax payments and (refunds), net

Income tax payments, net of refunds

Non-cash Information:

Capital expenditures included in accounts payable, accruals and other liabilities

Accrued dividends

See Notes to Condensed Consolidated Financial Statements.

11 unchanged sentences

Balance at March 31, 2022

Other comprehensive income (loss), net of tax

Share-based compensation

Shares issued, net of shares withheld for employee taxes

Shares repurchased

Dividends ( $ 0.30 per share and $ 0.31 per share)

Balance at June 30, 2022

Comprehensive

7 unchanged sentences

Balance at March 31, 2021

Other comprehensive income (loss), net of tax

Share-based compensation

Shares issued, net of shares withheld for employee taxes

Dividends ( $ 0.23 per share and $ 0.30 per share)

Balance at June 30, 2021

See Notes to Condensed Consolidated Financial Statements.

32 unchanged sentences

Fiscal Period:

The period end for Matson covered by this report is March 31, 2022.

The period end for MatNav and its subsidiaries covered by this report occurred on April 1, 2022.

The period end for Matson covered by this report is June 30, 2022.

The period end for MatNav and its subsidiaries covered by this report occurred on July 1, 2022.

Significant Accounting Policies:

7 unchanged sentences

capitalized interest;

allowance for doubtful accounts and note receivables;

allowance for doubtful accounts and other receivables;

legal contingencies;

11 unchanged sentences

Three Months Ended

Six Months Ended

Ocean Transportation (in millions) (1)

12 unchanged sentences

Three Months Ended

Six Months Ended

Logistics (in millions) (1)

7 unchanged sentences

Revenue and the related purchased third-party transportation costs are recognized over the duration of a delivery based upon the relative transit time completed in each reporting period.

Labor, agent commissions, and other operating costs are expensed as incurred.

The Company reports revenue on a gross basis as

the Company serves as the principal in these transactions because it is responsible for fulfilling the contractual arrangements with the customer and has latitude in establishing prices.

commissions, and other operating costs are expensed as incurred.

The Company reports revenue on a gross basis as the Company serves as the principal in these transactions because it is responsible for fulfilling the contractual arrangements with the customer and has latitude in establishing prices.

◾ Warehousing and distribution services revenue consist of amounts billed to customers for storage, handling, and value-added packaging of customer merchandise.

10 unchanged sentences

The Company’s Capital Construction Fund (“CCF”) is described in Note 7 to the Consolidated Financial Statements included in Part II, Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

As of March 31, 2022 and December 31, 2021, $ 9.8 million of eligible accounts receivable was assigned to the CCF.

As of June 30, 2022 and December 31, 2021, $ 9.8 million of eligible accounts receivable was assigned to the CCF.

Due to the nature of the assignment of eligible accounts receivable into the CCF, such assigned amounts are classified as part of accounts receivable in the Condensed Consolidated Balance Sheets.

Cash on deposit in the CCF is held in a money market account and classified as a long-term asset in the Company’s Condensed Consolidated Balance Sheets, as the Company intends to use qualified cash withdrawals to fund long-term investment in the construction of new vessels.

During the three months ended March 31, 2022, the Company deposited $ 10.7 million into the CCF and made qualifying cash withdrawals of $ 10.7 million from the CCF.

The balance of cash on deposit at March 31, 2022 and December 31, 2021 was nominal.

During the six months ended June 30, 2022 and 2021, the Company deposited $ 10.7 million and $ 31.2 million into the CCF and made qualifying cash withdrawals of $ 10.7 million and $ 31.2 million from the CCF, respectively.

The balance of cash on deposit at June 30, 2022 and December 31, 2021 was nominal.

Investment in SSAT:

Condensed income statement information for SSAT for the three months ended March 31, 2022 and 2021 consisted of the following:

Condensed income statement information for SSAT for the three and six months ended June 30, 2022 and 2021 consisted of the following:

Three Months Ended

Six Months Ended

(In millions)

6 unchanged sentences

(2) The Company records its share of net income from SSAT in costs and expenses in the Condensed Consolidated Statement of Income and Comprehensive Income due to the nature of SSAT’s operations.

The Company’s investment in SSAT was $ 92.7 million and $ 58.7 million at March 31, 2022 and December 31, 2021, respectively.

The Company’s first quarter 2022 cash dividend of $ 0.30 per share was paid on March 3, 2022.

On April 28, 2022, the Company’s Board of Directors declared a cash dividend of $ 0.30 per share payable on June 2, 2022 to shareholders of record on May 12, 2022.

The Company’s investment in SSAT was $ 93.1 million and $ 58.7 million at June 30, 2022 and December 31, 2021, respectively.

The Company’s second quarter 2022 cash dividend of $ 0.30 per share was paid on June 2, 2022.

On June 22, 2022, the Company’s Board of Directors declared a cash dividend of $ 0.31 per share payable on September 1, 2022 to shareholders of record on August 4, 2022.

Repurchase of Shares:

During the three months ended March 31, 2022, the Company repurchased approximately 0.7 million shares for a total cost of $ 68.6 million.

On January 27, 2022 the Company announced an increase of three million shares in its existing share repurchase program.

As of March 31, 2022, the maximum number of remaining shares that may be repurchased under the Company’s stock repurchase program was approximately 2.8 million shares.

During the three months ended June 30, 2022, the Company repurchased approximately 1.6 million shares for a total cost of $ 138.1 million.

During the six months ended June 30, 2022, the Company repurchased approximately 2.3 million shares for a total cost of $ 206.7 million.

As of June 30, 2022, the maximum number of remaining shares that may be repurchased under the Company’s stock repurchase program was approximately 1.2 million shares.

REPORTABLE SEGMENTS

6 unchanged sentences

The Company’s Ocean Transportation segment provides ocean transportation services to the Logistics segment, and the Logistics segment provides logistics services to the Ocean Transportation segment in certain transactions.

Accordingly, inter-segment revenue of $ 73.2 million and $ 33.7 million for the three months ended March 31, 2022 and 2021, respectively, have been eliminated from operating revenues in the table below.

Reportable segment financial information for the three months ended March 31, 2022 and 2021 are as follows:

Accordingly, inter-segment revenue of $ 69.2 million and $ 49.0 million for the three months ended June 30, 2022 and 2021, and $ 142.4 million and $ 82.7 million for the six months ended June 30, 2022 and 2021, respectively, have been eliminated from operating revenues in the table below.

Reportable segment financial information for the three and six months ended June 30, 2022 and 2021 are as follows:

Three Months Ended

Six Months Ended

(In millions)

8 unchanged sentences

Other income (expense), net

Income before Income Taxes

(1) Ocean Transportation operating revenue excludes inter-segment revenue of $ 21.8 million and $ 15.1 million for the three months ended March 31, 2022 and 2021, respectively.

(2) Logistics operating revenue excludes inter-segment revenue of $ 51.4 million and $ 18.6 million for the three months ended March 31, 2022 and 2021, respectively.

(3) Ocean Transportation segment information includes $ 34.0 million and $ 9.2 million of equity in income from the Company’s equity investment in SSAT for the three months ended March 31, 2022 and 2021, respectively.

Income before Taxes

(1) Ocean Transportation operating revenue excludes inter-segment revenue of $ 24.0 million and $ 18.7 million for the three months ended June 30, 2022 and 2021, and $ 45.8 million and $ 33.8 million for the six months ended June 30, 2022 and 2021, respectively.

(2) Logistics operating revenue excludes inter-segment revenue of $ 45.2 million and $ 30.3 million for the three months ended June 30, 2022 and 2021, and $ 96.6 million and $ 48.9 million for the six months ended June 30, 2022 and 2021, respectively.

(3) Ocean Transportation segment information includes $ 24.7 million and $ 12.8 million of equity in income from the Company’s equity investment in SSAT for the three months ended June 30, 2022 and 2021, and $ 58.7 million and $ 22.0 million for the six months ended June 30, 2022 and 2021, respectively.

PROPERTY AND EQUIPMENT

Property and equipment as of March 31, 2022 and December 31, 2021 consisted of the following:

Property and equipment as of June 30, 2022 and December 31, 2021 consisted of the following:

(In millions)

7 unchanged sentences

GOODWILL AND INTANGIBLES

Goodwill by segment as of March 31, 2022 and December 31, 2021 consisted of the following:

Goodwill by segment as of June 30, 2022 and December 31, 2021 consisted of the following:

(In millions)

Transportation

Intangible assets as of March 31, 2022 and December 31, 2021 consisted of the following:

Intangible assets as of June 30, 2022 and December 31, 2021 consisted of the following:

(In millions)

7 unchanged sentences

The Company has reporting units within the Ocean Transportation and Logistics reportable segments.

The Company considered the general economic and market conditions due to COVID-19 and its impact on the performance of each of the Company’s reporting units.

Based on the Company’s assessment of its market capitalization, future forecasts and the amount of excess of fair value over the carrying value of the reporting units in the 2021 annual impairment tests, the Company concluded that an impairment triggering event did not occur during the three months ended March 31, 2022.

The Company considered the general economic and market conditions and its impact on the performance of each of the Company’s reporting units.

The Company will monitor events and changes in circumstances that could negatively impact the key assumptions used in determining the fair value, including the amount and timing of estimated future cash flows generated by the reporting units, long-term growth and discount rates, comparable company market valuations, and industry and economic trends.

It is possible that future changes in such circumstances, including future changes in the assumptions and estimates used in assessing the fair value of the reporting unit, could require the Company to record a non-cash impairment charge.

As of March 31, 2022 and December 31, 2021, the Company’s debt consisted of the following:

As of June 30, 2022 and December 31, 2021, the Company’s debt consisted of the following:

(In millions)

17 unchanged sentences

The Company’s revolving credit facility has committed available borrowing of up to $ 650 million and matures on March 31, 2026.

As of March 31, 2022, the Company had $ 642.0 million of remaining borrowing availability under the revolving credit facility.

The Company used $ 8.0 million of the revolving credit facility for letters of credit outstanding as of March 31, 2022.

There were no outstanding borrowings under the revolving credit facility as of March 31, 2022 and December 31, 2021.

As of June 30, 2022, the Company had $ 642.0 million of remaining borrowing availability under the revolving credit facility.

The Company used $ 8.0 million of the revolving credit facility for letters of credit outstanding as of June 30, 2022.

There were no outstanding borrowings under the revolving credit facility as of June 30, 2022 and December 31, 2021.

Debt Security and Guarantees:

All of the debt of the Company and MatNav, including related guarantees, as of March 31, 2022 was unsecured, except for the Title XI debt.

All of the debt of the Company and MatNav, including related guarantees, as of June 30, 2022 was unsecured, except for the Title XI debt.

Debt Maturities:

As of March 31, 2022, debt maturities during the next five years and thereafter are as follows:

As of June 30, 2022, debt maturities during the next five years and thereafter are as follows:

Year (in millions)

March 31, 2022

June 30, 2022

Remainder of 2022

1 unchanged sentence

Components of Lease Cost:

Components of lease cost recorded in the Company’s Condensed Consolidated Statement of Income and Comprehensive Income for the three months ended March 31, 2022 and 2021 consisted of the following:

Components of lease cost recorded in the Company’s Condensed Consolidated Statement of Income and Comprehensive Income for the three and six months ended June 30, 2022 and 2021 consisted of the following:

Three Months Ended

Six Months Ended

(In millions)

3 unchanged sentences

Total lease cost

Maturities of operating lease liabilities at March 31, 2022 are as follows:

Maturities of operating lease liabilities at June 30, 2022 are as follows:

Year (in millions)

March 31, 2022

June 30, 2022

Remainder of 2022

4 unchanged sentences

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Changes in accumulated other comprehensive income (loss) by component, net of tax, for the three months ended March 31, 2022 consisted of the following:

Changes in accumulated other comprehensive income (loss) by component, net of tax, for the six months ended June 30, 2022 consisted of the following:

Comprehensive

6 unchanged sentences

Balance at March 31, 2022

Changes in accumulated other comprehensive income (loss) by component, net of tax, for the three months ended March 31, 2021 consisted of the following:

Amortization of prior service cost

Amortization of net loss

Foreign currency exchange

Other adjustments

Balance at June 30, 2022

Changes in accumulated other comprehensive income (loss) by component, net of tax, for the six months ended June 30, 2021 consisted of the following:

Comprehensive

6 unchanged sentences

Balance at March 31, 2021

Amortization of prior service cost

Amortization of net loss

Foreign currency exchange

Other adjustments

Balance at June 30, 2021

FAIR VALUE OF FINANCIAL INSTRUMENTS

7 unchanged sentences

The fair value of fixed rate debt is calculated based upon interest rates available for debt with terms and maturities similar to the Company’s existing debt arrangements.

The carrying value and fair value of the Company’s financial instruments as of March 31, 2022 and December 31, 2021 are as follows:

The carrying value and fair value of the Company’s financial instruments as of June 30, 2022 and December 31, 2021 are as follows:

Quoted Prices in

4 unchanged sentences

(In millions)

March 31, 2022

Fair Value Measurements at March 31, 2022

June 30, 2022

Fair Value Measurements at June 30, 2022

Cash and cash equivalents

10 unchanged sentences

The calculation of diluted earnings per share includes the dilutive effect of unexercised non-qualified stock options and non-vested restricted stock units.

The computation of weighted average common shares outstanding excluded a nominal amount of anti-dilutive non-qualified stock options for each period ended March 31, 2022 and 2021.

The computations for basic and diluted earnings per share for the three months ended March 31, 2022 and 2021 are as follows:

Year Ended March 31, 2022

Year Ended March 31, 2021

The computation of weighted average common shares outstanding excluded a nominal amount of anti-dilutive non-qualified stock options for each period ended June 30, 2022 and 2021.

The computations for basic and diluted earnings per share for the three and six months ended June 30, 2022 and 2021 are as follows:

Three Months Ended June 30, 2022

Six Months Ended June 30, 2022

(In millions, except per share amounts)

Effect of Dilutive Securities

Three Months Ended June 30, 2021

Six Months Ended June 30, 2021

(In millions, except per share amounts)

Effect of Dilutive Securities

SHARE-BASED COMPENSATION

During the three months ended March 31, 2022, the Company granted approximately 168,100 in total of time-based restricted stock units and performance-based shares to certain of its employees at a weighted average grant date fair value of $ 101.38 per share.

Total share-based compensation cost recognized in the Condensed Consolidated Statements of Income and Comprehensive Income as a component of selling, general and administrative expenses was $ 4.7 million and $ 4.8 million for the three months ended March 31, 2022 and 2021, respectively.

Total unrecognized compensation cost related to unvested share-based compensation arrangements was $ 33.1 million at March 31, 2022, and is expected to be recognized over a weighted average period of approximately 2.3 years.

The Company granted time-based restricted stock units and performance-based shares to certain of its employees totaling approximately 12,400 and 180,500 shares with a weighted average grant date fair value of $ 93.32 and $ 100.83 per share during the three and six months ended June 30, 2022, respectively.

Total share-based compensation cost recognized in the Condensed Consolidated Statements of Income and Comprehensive Income as a component of selling, general and administrative expenses was $ 5.8 million and $ 4.7 million for the three months ended June 30, 2022 and 2021, and $ 10.5 million and $ 9.5 million for the six month ended June 30, 2022 and 2021, respectively.

Total unrecognized compensation cost related to unvested share-based compensation arrangements was $ 33.9 million at June 30, 2022, and is expected to be recognized over a weighted average period of approximately 2.1 years.

Total unrecognized compensation cost may be adjusted for any unearned performance shares or forfeited shares.

1 unchanged sentence

The Company’s pension and post-retirement plans are described in Note 11 to the Consolidated Financial Statements included in Part II, Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 .

Components of net periodic benefit cost and other amounts recognized in Other Comprehensive Income (Loss) for the qualified pension plans and the post-retirement benefit plans for the three months ended March 31, 2022 and 2021 consisted of the following:

Components of net periodic benefit cost and other amounts recognized in Other Comprehensive Income (Loss) for the qualified pension plans and the post-retirement benefit plans for the three and six months ended June 30, 2022 and 2021 consisted of the following:

Pension Benefits

Post-retirement Benefits

Three Months Ended March 31,

Three Months Ended June 30,

(In millions)

5 unchanged sentences

Net periodic benefit cost (benefit)

Pension Benefits

Post-retirement Benefits

Six Months Ended June 30,

(In millions)

Components of net periodic benefit cost (benefit):

Interest cost

Expected return on plan assets

Amortization of net loss

Amortization of prior service credit

Net periodic benefit cost (benefit)

COMMITMENTS AND CONTINGENCIES

2 unchanged sentences

Except as described below, the Company believes that based on all information available to it, the Company is currently in compliance, in all material respects, with applicable environmental laws and regulations.

On November 10, 2021, the California Air Resources Board (“CARB”) issued a Notice of Violation (the “NOV”) to Matson for alleged violations of the Airborne Toxic Control Measure for Auxiliary Diesel Engines Operated on Ocean-Going Vessels At-Berth in a California Port pursuant to California Code of Regulations, title 17, section 93118.3.

On November 10, 2021, the California Air Resources Board (“CARB”) issued a Notice of Violation (“NOV”) to Matson for alleged violations of the Airborne Toxic Control Measure for Auxiliary Diesel Engines Operated on Ocean-Going Vessels At-Berth in a California Port pursuant to California Code of Regulations, title 17, section 93118.3.

CARB regulations require that a company’s fleet plug into shore power for at least 80 percent of visits at California ports and reduce auxiliary engine power generation by at least 80 percent.

1 unchanged sentence

The violations were alleged to have been incurred by chartered vessels in the CLX+ service.

These chartered vessels were not outfitted with alternative maritime power (“AMP”) capability which would have allowed them to plug into the shore power grid and shut down the vessel diesel generators when at dock.

These chartered vessels were not outfitted with alternative maritime power capability which would have allowed them to plug into the shore power grid and shut down the vessel diesel generators when at dock.

The Company has presented mitigating factors for consideration in settlement discussions with CARB, as well as plans to achieve compliance in 2022.

3 unchanged sentences

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 1. Financial Statements