Matson, Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS ​ MATSON, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Income and Comprehensive Income (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ ​ September 30, ​ September 30, ​ (In millions, except per share amounts) 2022 2021 2022 2021 Operating Revenue: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ocean Transportation ​ $ 918.5 ​ $ 863.5 ​ $ 2,911.6 ​ $ 2,106.9 ​ Logistics ​ 196.3 ​ 208.1 ​ 629.8 ​ 551.4 ​ Total Operating Revenue ​ 1,114.8 ​ 1,071.6 ​ 3,541.4 ​ 2,658.3 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Costs and Expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating costs ​ ( 738.4 ) ​ ( 649.3 ) ​ ( 2,170.5 ) ​ ( 1,809.6 ) ​ Income from SSAT ​ 23.4 ​ 13.0 ​ 82.1 ​ 35.0 ​ Selling, general and administrative ​ ( 64.5 ) ​ ( 57.4 ) ​ ( 192.0 ) ​ ( 171.7 ) ​ Total Costs and Expenses ​ ( 779.5 ) ​ ( 693.7 ) ​ ( 2,280.4 ) ​ ( 1,946.3 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating Income ​ 335.3 ​ 377.9 ​ 1,261.0 ​ 712.0 ​ Interest income ​ ​ 1.3 ​ ​ — ​ ​ 1.3 ​ ​ — ​ Interest expense ​ ( 5.0 ) ​ ( 5.1 ) ​ ( 14.3 ) ​ ( 17.9 ) ​ Other income (expense), net ​ 2.5 ​ 1.8 ​ 6.3 ​ 4.7 ​ Income before Taxes ​ 334.1 ​ 374.6 ​ 1,254.3 ​ 698.8 ​ Income taxes ​ ( 68.1 ) ​ ( 91.4 ) ​ ( 268.4 ) ​ ( 165.9 ) ​ Net Income ​ $ 266.0 ​ $ 283.2 ​ $ 985.9 ​ $ 532.9 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other Comprehensive Income (Loss), Net of Income Taxes: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Income ​ $ 266.0 ​ $ 283.2 ​ $ 985.9 ​ $ 532.9 ​ Other Comprehensive Income (Loss): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Amortization of prior service cost ​ ( 0.8 ) ​ ( 1.1 ) ​ ( 2.6 ) ​ ( 3.4 ) ​ Amortization of net loss (gain) ​ 0.1 ​ 1.0 ​ 2.9 ​ 3.5 ​ Other adjustments ​ ( 1.9 ) ​ ( 0.1 ) ​ ( 3.5 ) ​ ( 0.2 ) ​ Total Other Comprehensive Income (Loss) ​ ( 2.6 ) ​ ( 0.2 ) ​ ( 3.2 ) ​ ( 0.1 ) ​ Comprehensive Income ​ $ 263.4 ​ $ 283.0 ​ $ 982.7 ​ $ 532.8 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic Earnings Per Share ​ $ 6.95 ​ $ 6.60 ​ $ 24.83 ​ $ 12.31 ​ Diluted Earnings Per Share ​ $ 6.89 ​ $ 6.53 ​ $ 24.65 ​ $ 12.19 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted Average Number of Shares Outstanding: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ 38.3 ​ 42.9 ​ 39.7 ​ 43.3 ​ Diluted ​ 38.6 ​ 43.4 ​ 40.0 ​ 43.7 ​ ​ See Notes to Condensed Consolidated Financial Statements. ​ 1 Table of Contents MATSON, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ December 31, ​ (In millions) 2022 2021 ASSETS ​ ​ ​ ​ ​ ​ ​ Current Assets: ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 242.8 ​ $ 282.4 ​ Accounts receivable, net of allowance for credit losses of $ 11.6 million and $ 10.1 million, respectively ​ 328.5 ​ 343.7 ​ Prepaid expenses and other assets ​ 303.2 ​ 78.4 ​ Total current assets ​ 874.5 ​ 704.5 ​ Long-term Assets: ​ ​ ​ ​ ​ ​ ​ Investment in SSAT ​ 87.2 ​ 58.7 ​ Property and equipment, net ​ 1,907.4 ​ 1,878.3 ​ Operating lease right of use assets ​ ​ 421.0 ​ ​ 434.6 ​ Goodwill ​ 327.8 ​ 327.8 ​ Intangible assets, net ​ ​ 178.0 ​ ​ 181.1 ​ Capital Construction Fund ​ ​ 565.0 ​ ​ — ​ Deferred dry-docking costs, net ​ ​ 62.0 ​ ​ 68.7 ​ Other long-term assets ​ 36.1 ​ 39.4 ​ Total long-term assets ​ ​ 3,584.5 ​ ​ 2,988.6 ​ Total Assets ​ $ 4,459.0 ​ $ 3,693.1 ​ ​ ​ ​ ​ ​ ​ ​ ​ LIABILITIES AND SHAREHOLDERS’ EQUITY ​ ​ ​ ​ ​ ​ ​ Current Liabilities: ​ ​ ​ ​ ​ ​ ​ Current portion of debt ​ $ 57.3 ​ $ 65.0 ​ Accounts payable and accruals ​ 293.1 ​ 308.4 ​ Operating lease liabilities ​ ​ 147.1 ​ ​ 137.6 ​ Other liabilities ​ 102.4 ​ 101.4 ​ Total current liabilities ​ 599.9 ​ 612.4 ​ Long-term Liabilities: ​ ​ ​ ​ ​ ​ ​ Long-term debt, net of deferred loan fees ​ 461.3 ​ 549.7 ​ Long-term operating lease liabilities ​ ​ 284.3 ​ ​ 307.4 ​ Deferred income taxes ​ 687.8 ​ 425.2 ​ Other long-term liabilities ​ ​ 127.1 ​ ​ 131.0 ​ Total long-term liabilities ​ 1,560.5 ​ 1,413.3 ​ Commitments and Contingencies (see Note 13) ​ ​ ​ ​ ​ ​ ​ Shareholders’ Equity: ​ ​ ​ ​ ​ ​ ​ Common stock ​ 28.3 ​ 30.7 ​ Additional paid in capital ​ 290.4 ​ 314.1 ​ Accumulated other comprehensive loss, net ​ ( 34.1 ) ​ ( 30.9 ) ​ Retained earnings ​ 2,014.0 ​ 1,353.5 ​ Total shareholders’ equity ​ 2,298.6 ​ 1,667.4 ​ Total Liabilities and Shareholders’ Equity ​ $ 4,459.0 ​ $ 3,693.1 ​ ​ See Notes to Condensed Consolidated Financial Statements. ​ 2 Table of Contents MATSON, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended September 30, ​ (In millions) 2022 2021 Cash Flows From Operating Activities: ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 985.9 ​ $ 532.9 ​ Reconciling adjustments: ​ ​ ​ ​ ​ ​ ​ Depreciation and amortization ​ 105.6 ​ 100.9 ​ Amortization of operating lease right of use assets ​ ​ 113.9 ​ ​ 73.9 ​ Deferred income taxes ​ 146.3 ​ 30.3 ​ Share-based compensation expense ​ 15.5 ​ 14.2 ​ Income from SSAT ​ ( 82.1 ) ​ ( 35.0 ) ​ Distributions from SSAT ​ ​ 40.3 ​ ​ 46.9 ​ Other ​ ​ ( 0.2 ) ​ ​ ( 1.1 ) ​ Changes in assets and liabilities: ​ ​ ​ ​ ​ ​ ​ Accounts receivable, net ​ 13.9 ​ ( 75.2 ) ​ Deferred dry-docking payments ​ ( 16.7 ) ​ ( 25.8 ) ​ Deferred dry-docking amortization ​ 18.6 ​ 18.0 ​ Prepaid expenses and other assets ​ ( 110.2 ) ​ ( 46.7 ) ​ Accounts payable, accruals and other liabilities ​ ( 5.0 ) ​ 30.2 ​ Operating lease liabilities ​ ​ ( 113.8 ) ​ ​ ( 72.1 ) ​ Other long-term liabilities ​ ( 9.5 ) ​ ( 8.1 ) ​ Net cash provided by operating activities ​ 1,102.5 ​ 583.3 ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash Flows From Investing Activities: ​ ​ ​ ​ ​ ​ ​ Capitalized vessel construction expenditures ​ ​ ( 11.9 ) ​ ​ — ​ Other capital expenditures ​ ( 113.4 ) ​ ( 244.7 ) ​ Cash deposits into Capital Construction Fund ​ ( 579.7 ) ​ ( 31.2 ) ​ Withdrawals from Capital Construction Fund ​ ​ 14.7 ​ ​ 31.2 ​ Other ​ ​ ( 2.6 ) ​ ​ 2.2 ​ Net cash used in investing activities ​ ( 692.9 ) ​ ( 242.5 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash Flows From Financing Activities: ​ ​ ​ ​ ​ ​ ​ Repayments of debt ​ ( 97.2 ) ​ ( 41.1 ) ​ Proceeds from revolving credit facility ​ ​ — ​ ​ 304.3 ​ Repayments of revolving credit facility ​ — ​ ( 376.1 ) ​ Payment of financing costs ​ ​ — ​ ​ ( 3.0 ) ​ Dividends paid ​ ​ ( 36.9 ) ​ ( 33.3 ) ​ Repurchase of Matson common stock ​ ​ ( 296.9 ) ​ ( 115.7 ) ​ Tax withholding related to net share settlements of restricted stock units ​ ​ ( 19.6 ) ​ ​ ( 14.4 ) ​ Net cash used in financing activities ​ ( 450.6 ) ​ ( 279.3 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Net (Decrease) Increase in Cash, Cash Equivalents and Restricted Cash ​ ( 41.0 ) ​ 61.5 ​ Cash, Cash Equivalents and Restricted Cash, Beginning of the Period ​ 287.7 ​ 19.7 ​ Cash, Cash Equivalents and Restricted Cash, End of the Period ​ $ 246.7 ​ $ 81.2 ​ ​ ​ ​ ​ ​ ​ ​ ​ Reconciliation of Cash, Cash Equivalents and Restricted Cash, End of the Period: ​ ​ ​ ​ ​ ​ ​ Cash and Cash Equivalents ​ $ 242.8 ​ $ 75.9 ​ Restricted Cash ​ ​ 3.9 ​ ​ 5.3 ​ Total Cash, Cash Equivalents and Restricted Cash, End of the Period ​ $ 246.7 ​ $ 81.2 ​ ​ ​ ​ ​ ​ ​ ​ ​ Supplemental Cash Flow Information: ​ ​ ​ ​ ​ ​ ​ Interest paid, net of capitalized interest ​ $ 13.6 ​ $ 15.3 ​ Income tax payments, net of refunds ​ $ 212.4 ​ $ 162.1 ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-cash Information: ​ ​ ​ ​ ​ ​ ​ Capital expenditures included in accounts payable, accruals and other liabilities ​ $ 3.9 ​ $ 5.6 ​ ​ See Notes to Condensed Consolidated Financial Statements. ​ 3 Table of Contents MATSON, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Shareholders’ Equity (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ Common Stock ​ Additional ​ Other ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Stated ​ Paid In ​ Comprehensive ​ Retained ​ ​ ​ (In millions, except per share amounts) Shares Value Capital Income (Loss) Earnings Total Balance at December 31, 2021 41.0 ​ $ 30.7 $ 314.1 ​ $ ( 30.9 ) ​ $ 1,353.5 ​ $ 1,667.4 Net income — ​ — — ​ — ​ 339.2 ​ 339.2 Other comprehensive income (loss), net of tax — ​ — — ​ 0.2 ​ — ​ 0.2 Share-based compensation — ​ — 4.7 ​ — ​ — ​ 4.7 Shares issued, net of shares withheld for employee taxes 0.2 ​ 0.2 ( 19.5 ) ​ — ​ — ​ ( 19.3 ) Shares repurchased ( 0.7 ) ​ ​ ( 0.5 ) ​ ​ ( 3.1 ) ​ ​ — ​ ​ ( 65.0 ) ​ ​ ( 68.6 ) Dividends ( $ 0.30 per share) — ​ — — ​ — ​ ( 12.9 ) ​ ( 12.9 ) Balance at March 31, 2022 40.5 ​ ​ 30.4 ​ 296.2 ​ ​ ( 30.7 ) ​ ​ 1,614.8 ​ ​ 1,910.7 Net income — ​ — — ​ — ​ 380.7 ​ 380.7 Other comprehensive income (loss), net of tax ​ — ​ — — ​ ( 0.8 ) ​ — ​ ( 0.8 ) Share-based compensation — ​ — 5.7 ​ — ​ — ​ 5.7 Shares issued, net of shares withheld for employee taxes 0.1 ​ — ( 0.2 ) ​ — ​ — ​ ( 0.2 ) Shares repurchased ( 1.6 ) ​ ​ ( 1.2 ) ​ ​ ( 7.0 ) ​ ​ — ​ ​ ( 129.9 ) ​ ​ ( 138.1 ) Dividends ( $ 0.30 per share and $ 0.31 per share) ​ — ​ — — ​ — ​ ( 24.4 ) ​ ( 24.4 ) Balance at June 30, 2022 39.0 ​ ​ 29.2 ​ 294.7 ​ ​ ( 31.5 ) ​ ​ 1,841.2 ​ ​ 2,133.6 Net income — ​ — — ​ — ​ 266.0 ​ 266.0 Other comprehensive income (loss), net of tax — ​ — — ​ ( 2.6 ) ​ — ​ ( 2.6 ) Share-based compensation — ​ — 5.1 ​ — ​ — ​ 5.1 Equity interest in SSAT — ​ ​ — ​ — ​ — ​ ( 15.5 ) ​ ( 15.5 ) Shares repurchased ( 1.2 ) ​ ​ ( 0.9 ) ​ ​ ( 9.4 ) ​ ​ — ​ ​ ( 77.7 ) ​ ​ ( 88.0 ) Balance at September 30, 2022 37.8 ​ $ 28.3 $ 290.4 ​ $ ( 34.1 ) ​ $ 2,014.0 ​ $ 2,298.6 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ Common Stock ​ Additional ​ Other ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Stated ​ Paid In ​ Comprehensive ​ Retained ​ ​ ​ (In millions, except per share amounts) Shares Value Capital Income (Loss) Earnings Total Balance at December 31, 2020 43.2 ​ $ 32.4 $ 321.5 ​ $ ( 50.8 ) ​ $ 658.1 ​ $ 961.2 Net income — ​ — — ​ — ​ 87.2 ​ 87.2 Other comprehensive income (loss), net of tax — ​ — — ​ ( 0.1 ) ​ — ​ ( 0.1 ) Share-based compensation — ​ — 4.8 ​ — ​ — ​ 4.8 Shares issued, net of shares withheld for employee taxes 0.2 ​ 0.2 ( 14.3 ) ​ — ​ — ​ ( 14.1 ) Dividends ( $ 0.23 per share) — ​ — — ​ — ​ ( 10.1 ) ​ ( 10.1 ) Balance at March 31, 2021 43.4 ​ ​ 32.6 ​ 312.0 ​ ​ ( 50.9 ) ​ ​ 735.2 ​ ​ 1,028.9 Net income — ​ — — ​ — ​ 162.5 ​ 162.5 Other comprehensive income (loss), net of tax ​ — ​ — — ​ 0.2 ​ — ​ 0.2 Share-based compensation — ​ — 4.7 ​ — ​ — ​ 4.7 Shares issued, net of shares withheld for employee taxes 0.1 ​ — ( 0.2 ) ​ — ​ — ​ ( 0.2 ) Dividends ( $ 0.23 per share and $ 0.30 per share) ​ — ​ — — ​ — ​ ( 23.3 ) ​ ​ ( 23.3 ) Balance at June 30, 2021 43.5 ​ ​ 32.6 ​ 316.5 ​ ​ ( 50.7 ) ​ ​ 874.4 ​ ​ 1,172.8 Net income — ​ — — ​ — ​ 283.2 ​ 283.2 Other comprehensive income (loss), net of tax — ​ — — ​ ( 0.2 ) ​ — ​ ( 0.2 ) Share-based compensation — ​ — 4.7 ​ — ​ — ​ 4.7 Shares issued, net of shares withheld for employee taxes — ​ ​ — ​ ( 0.1 ) ​ — ​ 0.1 ​ ​ 0.0 Shares repurchased ( 1.5 ) ​ ​ ( 1.1 ) ​ ​ ( 7.2 ) ​ ​ — ​ ​ ( 107.4 ) ​ ( 115.7 ) Balance at September 30, 2021 ​ 42.0 ​ $ 31.5 $ 313.9 ​ $ ( 50.9 ) ​ $ 1,050.3 ​ $ 1,344.8 ​ See Notes to Condensed Consolidated Financial Statements. 4 Table of Contents MATSON, INC. AND SUBSIDIARIES NOTES TO THE CONDENSED CONSOLIDATED FINANICAL STATEMENTS (Unaudited) ​ 1. DESCRIPTION OF THE BUSINESS ​ Matson, Inc., a holding company incorporated in the State of Hawaii, and its subsidiaries (“Matson” or the “Company”), is a leading provider of ocean transportation and logistics services. The Company consists of two segments, Ocean Transportation and Logistics: ​ Ocean Transportation: Matson’s Ocean Transportation business is conducted through Matson Navigation Company, Inc. (“MatNav”), a wholly-owned subsidiary of Matson, Inc. Founded in 1882, MatNav provides a vital lifeline of ocean freight transportation services to the domestic non-contiguous economies of Hawaii, Alaska and Guam, and to other island economies in Micronesia. MatNav also operates premium, expedited services primarily from China to Long Beach, California, and provides services to Okinawa, Japan and various islands in the South Pacific, and operates an international export service from Dutch Harbor, Alaska to Asia. In addition, subsidiaries of MatNav provide stevedoring, refrigerated cargo services, inland transportation and other terminal services for MatNav and other ocean carriers on the Hawaiian islands of Oahu, Hawaii, Maui and Kauai, and in the Alaska locations of Anchorage, Kodiak and Dutch Harbor. ​ Matson has a 35 percent ownership interest in SSA Terminals, LLC, a joint venture between Matson Ventures, Inc., a wholly-owned subsidiary of MatNav, and SSA Ventures, Inc., a subsidiary of Carrix, Inc. (“SSAT”). SSAT currently provides terminal and stevedoring services to various carriers at eight terminal facilities on the U.S. West Coast, including three facilities dedicated for MatNav’s use. Matson records its share of income from SSAT in costs and expenses in the Condensed Consolidated Statements of Income and Comprehensive Income, and within the Ocean Transportation segment due to the nature of SSAT’s operations. ​ Logistics: Matson’s Logistics business is conducted through Matson Logistics, Inc. (“Matson Logistics”), a wholly-owned subsidiary of MatNav. Established in 1987, Matson Logistics extends the geographic reach of Matson’s transportation network throughout North America and Asia, and is an asset-light business that provides a variety of logistics services to its customers including: (i) multimodal transportation brokerage of domestic and international rail intermodal services, long-haul and regional highway trucking services, specialized hauling, flat-bed and project services, less-than-truckload services, and expedited freight services (collectively, “Transportation Brokerage” services); (ii) less-than-container load (“LCL”) consolidation and freight forwarding services (collectively, “Freight Forwarding” services); (iii) warehousing, trans-loading, value-added packaging and distribution services (collectively, “Warehousing” services); and (iv) supply chain management, non-vessel operating common carrier (“NVOCC”) freight forwarding and other services. ​ ​ 2. GENERAL AND SIGNIFICANT ACCOUNTING POLICIES ​ Basis of Presentation: The Condensed Consolidated Financial Statements are unaudited, and include the accounts of Matson, Inc. and all wholly-owned subsidiaries, after elimination of intercompany amounts and transactions. Significant investments in businesses, partnerships, and limited liability companies in which the Company does not have a controlling financial interest, but has the ability to exercise significant influence, are accounted for under the equity method. The Company accounts for its investment in SSAT using the equity method of accounting. ​ Due to the nature of the Company’s operations, the results for interim periods are not necessarily indicative of results to be expected for the year. These Condensed Consolidated Financial Statements reflect all normal recurring adjustments that are, in the opinion of management, necessary for fair presentation of the results of the interim periods, and do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete consolidated financial statements. ​ The Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the Securities and Exchange Commission (“SEC”) on February 25, 2022. ​ 5 Table of Contents Fiscal Period: The period end for Matson covered by this report is September 30, 2022. The period end for MatNav and its subsidiaries covered by this report is September 30, 2022. ​ Significant Accounting Policies: The Company’s significant accounting policies are described in Note 2 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. ​ Use of Estimates: The preparation of the interim Condensed Consolidated Financial Statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the amounts reported. Estimates and assumptions are used for, but not limited to: impairment of investments; impairment of long-lived assets, intangible assets and goodwill; capitalized interest; allowance for doubtful accounts and other receivables; legal contingencies; insurance reserves and other related liabilities; accrual estimates; pension and post-retirement estimates; multi-employer withdrawal liabilities; operating lease assets and liabilities; income from SSAT; and income taxes. Future results could be materially affected if actual results differ from these estimates and assumptions. ​ Prepaid Expenses and Other Assets: Prepaid expenses and other assets consist of the following at September 30, 2022 and December 31, 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ December 31, Prepaid Expenses and Other Assets (in millions) 2022 2021 Income tax receivables ​ $ 232.9 ​ $ 23.1 Prepaid fuel ​ 32.4 ​ 22.6 Prepaid insurance and insurance related receivables ​ 13.8 ​ 10.1 Restricted cash - vessel construction obligations ​ ​ 3.9 ​ ​ 5.3 Other ​ 20.2 ​ 17.3 Total ​ $ 303.2 ​ $ 78.4 ​ Income tax receivables include a federal income tax refund related to the Company’s 2021 federal tax return, overpayments of federal and state taxes paid during the nine months ended September 30, 2022, and other income tax receivables. ​ Recognition of Revenues and Expenses: Revenue in the Company’s Condensed Consolidated Financial Statements is presented net of elimination of intercompany transactions. The following is a description of the Company’s principal revenue generating activities by segment, and the Company’s revenue recognition policy for each activity for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended Nine Months Ended ​ ​ September 30, September 30, Ocean Transportation (in millions) (1) ​ 2022 2021 2022 2021 Ocean Transportation services ​ $ 908.4 ​ $ 855.2 ​ $ 2,885.3 ​ $ 2,083.8 Terminal and other related services ​ ​ 5.4 ​ ​ 4.8 ​ ​ 13.8 ​ ​ 12.5 Fuel sales ​ ​ 3.2 ​ ​ 1.9 ​ ​ 7.9 ​ ​ 5.1 Vessel management and related services ​ ​ 1.5 ​ ​ 1.6 ​ ​ 4.6 ​ ​ 5.5 Total ​ $ 918.5 ​ $ 863.5 ​ $ 2,911.6 ​ $ 2,106.9 (1) Ocean Transportation revenue transactions are primarily denominated in U.S. dollars except for less than 3 percent of Ocean Transportation services revenue and fuel sales revenue categories which are denominated in foreign currencies. ​ ◾ Ocean Transportation services revenue is recognized ratably over the duration of a voyage based on the relative transit time completed in each reporting period. Vessel operating costs and other ocean transportation operating costs, such as terminal operating overhead and selling, general and administrative expenses, are charged to operating costs as incurred. ◾ Terminal and other related services revenue is recognized as the services are performed. Related costs are recognized as incurred. ◾ Fuel sales revenue and related costs are recognized when the Company has completed delivery of the product to the customer in accordance with the terms and conditions of the contract. ◾ Vessel management and related services revenue is recognized in proportion to the services completed. Related costs are recognized as incurred. ​ 6 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended Nine Months Ended ​ ​ September 30, September 30, Logistics (in millions) (1) ​ 2022 ​ 2021 ​ 2022 ​ 2021 Transportation Brokerage and Freight Forwarding services ​ $ 169.2 ​ $ 186.1 ​ $ 548.5 ​ $ 495.9 Warehousing and distribution services ​ ​ 15.5 ​ ​ 12.2 ​ ​ 41.4 ​ ​ 31.8 Supply chain management and other services ​ 11.6 ​ 9.8 ​ 39.9 ​ 23.7 Total ​ $ 196.3 ​ $ 208.1 ​ $ 629.8 ​ $ 551.4 (1) Logistics revenue transactions are primarily denominated in U.S. dollars except for approximately 6.5 percent of transportation brokerage and freight forwarding services revenue, and supply chain management and other services revenue categories which are denominated in foreign currencies. ​ ◾ Transportation Brokerage and Freight Forwarding services revenue consists of amounts billed to customers for services provided. The primary costs include third-party purchased transportation services, agent commissions, labor and equipment. 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. ◾ Warehousing and distribution services revenue consist of amounts billed to customers for storage, handling, and value-added packaging of customer merchandise. Storage revenue is recognized in the month the service is provided to the customer. Storage related costs are recognized as incurred. Other warehousing and distribution services revenue and related costs are recognized in proportion to the services performed. ◾ Supply chain management and other services revenue, and related costs are recognized in proportion to the services performed. ​ The Company generally invoices its customers at the commencement of the voyage or the transportation service being provided, or as other services are being performed. Revenue is deferred when services are invoiced in advance to the customer. The Company’s receivables are classified as short-term as collection terms are for periods of less than one year. The Company expenses sales commissions and contract acquisition costs as incurred because the amounts are generally immaterial. These expenses are included in selling, general and administrative expenses in the Condensed Consolidated Statements of Income and Comprehensive Income. ​ Capital Construction Fund: 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 September 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 short term U.S. Treasury Obligation Funds 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 September 30, 2022, the Company deposited $ 569.0 million into the CCF and made qualifying cash withdrawals of $ 4.0 million from the CCF. No CCF deposits or withdrawals were made during the three months ended September 30, 2021. During the nine months ended September 30, 2022 and 2021, the Company deposited $ 579.7 million and $ 31.2 million into the CCF and made qualifying cash withdrawals of $ 14.7 million and $ 31.2 million from the CCF, respectively. The balance of cash on deposit at September 30, 2022 was $ 565.0 million and was nominal at December 31, 2021. ​ 7 Table of Contents Investment in SSAT: Condensed income statement information for SSAT for the three and nine months ended September 30, 2022 and 2021 consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended Nine Months Ended ​ ​ September 30, September 30, (In millions) ​ 2022 2021 2022 2021 Operating revenue ​ $ 369.8 ​ $ 316.3 ​ $ 1,191.3 ​ $ 944.6 ​ Operating costs and expenses ​ ​ ( 286.9 ) ​ ​ ( 274.2 ) ​ ​ ( 894.3 ) ​ ​ ( 831.3 ) ​ Operating income ​ ​ 82.9 ​ ​ 42.1 ​ ​ 297.0 ​ ​ 113.3 ​ Net Income (1) ​ $ 68.9 ​ $ 37.3 ​ $ 247.0 ​ $ 100.5 ​ Company Share of SSAT’s Net Income (2) ​ $ 23.4 ​ $ 13.0 ​ $ 82.1 ​ $ 35.0 ​ (1) Includes earnings from equity method investments held by SSAT less earnings allocated to non-controlling interests. (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 $ 87.2 million and $ 58.7 million at September 30, 2022 and December 31, 2021, respectively. On September 16, 2022, SSAT completed the purchase of a 20 percent non-controlling equity interest in SSAT Terminals (Oakland), LLC (“SSAT Oakland”) from a third-party company. After completion of this transaction, SSAT Oakland became a wholly-owned subsidiary of SSAT. The operating results of SSAT Oakland continue to consolidate into the operating results of SSAT. As a result of this transaction, the Company recorded a decrease of $ 15.5 million in its investment in SSAT and a corresponding decrease in retained earnings during the three months ended September 30, 2022 to reflect its proportionate share of this purchase. ​ Dividends: The Company’s third quarter 2022 cash dividend of $ 0.31 per share was paid on September 1, 2022. On October 27, 2022, the Company’s Board of Directors declared a cash dividend of $ 0.31 per share payable on December 1, 2022 to shareholders of record on November 10, 2022. ​ Repurchase of Shares: During the three months ended September 30, 2022, the Company repurchased approximately 1.1 million shares for a total cost of $ 88.0 million. During the nine months ended September 30, 2022, the Company repurchased approximately 3.5 million shares for a total cost of $ 294.7 million. As of September 30, 2022, the maximum number of remaining shares that may be repurchased under the Company’s share repurchase program was approximately 3.0 million shares. ​ Deferred Income Taxes: During the three months ended September 30, 2022, the Company filed its 2021 federal income tax return. As a result of the Company depositing $ 565.0 million into the Capital Construction Fund, the Company’s federal income tax return resulted in a federal income tax refund position as the deposit is allowed as a deduction in the 2021 taxable period. The Company recorded the federal income tax refund receivable in Prepaid expenses and other assets, and a corresponding increase in Deferred income taxes in the Company’s Condensed Consolidated Balance Sheet at September 30, 2022. Other changes in deferred income taxes related to the recording of the Company’s income tax provision for the nine months ended September 30, 2022. ​ Recent U.S. Tax Legislation: On August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was signed into law in the United States. The new provisions impose a one percent excise tax on the fair market value of share repurchases after December 31, 2022. The provisions of the IRA also include a 15 percent alternative minimum tax rate that generally applies to U.S. corporations with adjusted financial statement income in excess of $1 billion, and is effective in taxable years beginning after December 31, 2022. The Company is reviewing the provisions of the IRA and monitoring any guidance with respect to having these provisions apply to the Company’s tax provision in future periods. ​ Subsequent Events: On November 1, 2022, MatNav signed vessel construction agreements with Philly Shipyard, Inc. for three new LNG-ready Aloha Class containerships. Each of the new 3,600 TEU vessels is expected to provide 500 containers of additional capacity per voyage in the CLX service. The contract cost of this new Jones Act vessel program is expected to be approximately $ 1 billion and delivery of the first vessel is currently anticipated to be in the fourth quarter of 2026 with subsequent deliveries in the second and fourth quarters of 2027. Upon signing the agreements, the Company made its first milestone payment of $ 50 million from the CCF. The Company expects to finance the remaining construction-related payments with cash currently on deposit in the CCF, cash and cash equivalents on the balance sheet and through cash flows from operations, borrowings available under the Company’s unsecured revolving credit facility and additional debt financings. ​ 8 Table of Contents 3. REPORTABLE SEGMENTS ​ Reportable segments are components of an enterprise that engage in business activities from which it may earn revenues and incur expenses, whose operating results are regularly reviewed by the chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. The Company’s chief operating decision maker is its Chief Executive Officer. ​ The Company consists of two reportable segments, Ocean Transportation and Logistics, which are further described in Note 1. Reportable segments are measured based on operating income. In arrangements where the customer purchases ocean transportation and logistics services, the revenues are allocated to each reportable segment based upon the contractual amounts for each type of service. The Company’s SSAT segment has been aggregated into the Company’s Ocean Transportation segment due to the operations of SSAT being an integral part of the Company’s Ocean Transportation business. ​ 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 $ 78.2 million and $ 57.8 million for the three months ended September 30, 2022 and 2021, and $ 220.6 million and $ 140.5 million for the nine months ended September 30, 2022 and 2021, respectively, have been eliminated from operating revenues in the table below. ​ Reportable segment financial information for the three and nine months ended September 30, 2022 and 2021 are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ September 30, ​ September 30, ​ (In millions) 2022 2021 2022 2021 Operating Revenue: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ocean Transportation (1) ​ $ 918.5 ​ $ 863.5 ​ $ 2,911.6 ​ $ 2,106.9 ​ Logistics (2) ​ 196.3 ​ 208.1 ​ 629.8 ​ 551.4 ​ Total Operating Revenue ​ $ 1,114.8 ​ $ 1,071.6 ​ $ 3,541.4 ​ $ 2,658.3 ​ Operating Income: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ocean Transportation (3) ​ $ 315.2 ​ $ 361.9 ​ $ 1,201.4 ​ $ 677.0 ​ Logistics ​ 20.1 ​ 16.0 ​ 59.6 ​ 35.0 ​ Total Operating Income ​ 335.3 ​ 377.9 ​ 1,261.0 ​ 712.0 ​ Interest income ​ ​ 1.3 ​ ​ — ​ 1.3 ​ — ​ Interest expense ​ ( 5.0 ) ​ ( 5.1 ) ​ ( 14.3 ) ​ ( 17.9 ) ​ Other income (expense), net ​ 2.5 ​ 1.8 ​ 6.3 ​ 4.7 ​ Income before Taxes ​ 334.1 ​ 374.6 ​ 1,254.3 ​ 698.8 ​ Income taxes ​ ( 68.1 ) ​ ( 91.4 ) ​ ( 268.4 ) ​ ( 165.9 ) ​ Net Income ​ $ 266.0 ​ $ 283.2 ​ $ 985.9 ​ $ 532.9 ​ (1) Ocean Transportation operating revenue excludes inter-segment revenue of $ 28.0 million and $ 21.8 million for the three months ended September 30, 2022 and 2021, and $ 73.8 million and $ 55.6 million for the nine months ended September 30, 2022 and 2021, respectively. (2) Logistics operating revenue excludes inter-segment revenue of $ 50.2 million and $ 36.0 million for the three months ended September 30, 2022 and 2021, and $ 146.8 million and $ 84.9 million for the nine months ended September 30, 2022 and 2021, respectively. (3) Ocean Transportation segment information includes $ 23.4 million and $ 13.0 million of equity in income from the Company’s equity investment in SSAT for the three months ended September 30, 2022 and 2021, and $ 82.1 million and $ 35.0 million for the nine months ended September 30, 2022 and 2021, respectively. ​ ​ 9 Table of Contents 4. PROPERTY AND EQUIPMENT ​ Property and equipment as of September 30, 2022 and December 31, 2021 consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ December 31, ​ (In millions) 2022 2021 ​ Cost: ​ ​ ​ ​ ​ ​ ​ Vessels ​ $ 2,277.1 ​ $ 2,243.8 ​ Containers and equipment ​ ​ 730.7 ​ ​ 680.9 ​ Terminal facilities and other property ​ ​ 131.5 ​ ​ 128.3 ​ Vessel construction in progress ​ ​ — ​ ​ 14.9 ​ Other construction in progress ​ ​ 65.4 ​ ​ 19.5 ​ Total Property and Equipment ​ ​ 3,204.7 ​ ​ 3,087.4 ​ Less: Accumulated Depreciation ​ ​ ( 1,297.3 ) ​ ​ ( 1,209.1 ) ​ Total Property and Equipment, net ​ $ 1,907.4 ​ $ 1,878.3 ​ ​ ​ ​ 5. GOODWILL AND INTANGIBLES ​ Goodwill by segment as of September 30, 2022 and December 31, 2021 consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ocean ​ ​ ​ ​ ​ ​ (In millions) Transportation Logistics Total Goodwill ​ $ 222.6 ​ $ 105.2 ​ $ 327.8 ​ ​ ​ Intangible assets as of September 30, 2022 and December 31, 2021 consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ December 31, ​ (In millions) 2022 2021 ​ Customer Relationships: ​ ​ ​ ​ ​ ​ ​ Ocean Transportation ​ $ 140.6 ​ $ 140.6 ​ Logistics ​ ​ 95.3 ​ ​ 90.1 ​ Total ​ ​ 235.9 ​ ​ 230.7 ​ Less: Accumulated Amortization ​ ​ ( 85.2 ) ​ ​ ( 76.9 ) ​ Total Customer Relationships, net ​ ​ 150.7 ​ ​ 153.8 ​ Trade name – Logistics ​ ​ 27.3 ​ ​ 27.3 ​ Total Intangible Assets, net ​ $ 178.0 ​ $ 181.1 ​ ​ The change in customer relationships related to new customers acquired during the three months ended September 30, 2022. ​ The Company evaluates its goodwill and intangible assets for possible impairment in the fourth quarter, or whenever events or changes in circumstances indicate that it is more likely than not that the fair value is less than its carrying amount. The Company has reporting units within the Ocean Transportation and Logistics reportable segments. The Company considered the general economic and market conditions 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 September 30, 2022. ​ 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. ​ ​ 10 Table of Contents 6. DEBT ​ As of September 30, 2022 and December 31, 2021, the Company’s debt consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ December 31, (In millions) 2022 2021 Private Placement Term Loans: ​ ​ ​ ​ ​ ​ 3.66 %, payable through 2023 ​ $ 9.1 ​ $ 13.7 4.16 %, payable through 2027 ​ — ​ 28.8 3.37 %, payable through 2027 ​ ​ 63.5 ​ ​ 69.2 3.14 %, payable through 2031 ​ ​ 132.8 ​ ​ 151.2 4.31 %, payable through 2032 ​ — ​ 25.4 Title XI Debt: ​ ​ ​ ​ ​ ​ 5.34 %, payable through 2028 ​ 13.2 ​ 15.4 5.27 %, payable through 2029 ​ 15.4 ​ 17.6 1.22 %, payable through 2043 ​ ​ 170.1 ​ ​ 174.1 1.35 %, payable through 2044 ​ ​ 127.7 ​ ​ 133.6 Total Debt ​ 531.8 ​ 629.0 Less: Current portion ​ ( 57.3 ) ​ ( 65.0 ) Total Long-term Debt ​ ​ 474.5 ​ ​ 564.0 Less: Deferred loan fees ​ ​ ( 13.2 ) ​ ( 14.3 ) Total Long-term Debt, net of deferred loan fees ​ $ 461.3 ​ $ 549.7 ​ Except as described below, the Company’s debt is described in Note 8 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. ​ Revolving Credit Facility: The Company’s revolving credit facility has committed available borrowing of up to $ 650 million and matures on March 31, 2026. As of September 30, 2022, the Company had $ 642.2 million of remaining borrowing availability under the revolving credit facility. The Company used $ 7.8 million of the revolving credit facility for letters of credit outstanding as of September 30, 2022. There were no outstanding borrowings under the revolving credit facility as of September 30, 2022 and December 31, 2021. ​ Private Placement Term Loans: On September 15, 2022, the Company prepaid $ 26.2 million of outstanding principal on the 4.16 percent term loans due in 2027, and $ 24.2 million of outstanding principal on the 4.31 percent term loans due in 2032, which represented all of the remaining outstanding principal for both term loans. ​ Debt Security and Guarantees: All of the debt of the Company and MatNav, including related guarantees, as of September 30, 2022 was unsecured, except for the Title XI debt. ​ Debt Maturities: As of September 30, 2022, debt maturities during the next five years and thereafter are as follows: ​ ​ ​ ​ ​ ​ ​ As of Year (in millions) September 30, 2022 Remainder of 2022 ​ $ 14.3 2023 ​ 52.7 2024 ​ 44.1 2025 ​ 44.1 2026 ​ 44.1 Thereafter ​ 332.5 Total Debt ​ $ 531.8 ​ ​ ​ 11 Table of Contents 7. LEASES ​ The Company’s leases are described in Note 9 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 Lease Cost: Components of lease cost recorded in the Company’s Condensed Consolidated Statement of Income and Comprehensive Income for the three and nine months ended September 30, 2022 and 2021 consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ September 30, ​ September 30, (In millions) 2022 ​ 2021 ​ 2022 ​ 2021 Operating lease cost ​ $ 40.8 ​ $ 26.7 ​ $ 120.8 ​ $ 79.4 Short-term lease cost ​ 0.2 ​ 0.1 ​ 0.4 ​ 2.9 Variable lease cost ​ 0.2 ​ 0.1 ​ 0.6 ​ 0.5 Total lease cost ​ $ 41.2 ​ $ 26.9 ​ $ 121.8 ​ $ 82.8 ​ Maturities of operating lease liabilities at September 30, 2022 are as follows: ​ ​ ​ ​ ​ ​ As of Year (in millions) September 30, 2022 Remainder of 2022 ​ $ 41.8 2023 ​ 146.0 2024 ​ 121.3 2025 ​ 70.4 2026 ​ 28.2 Thereafter ​ 59.4 Total lease payments ​ ​ 467.1 Less: Interest ​ ​ ( 35.7 ) Present value of operating lease liabilities ​ ​ 431.4 Less: Short-term portion ​ ​ ( 147.1 ) Long-term operating lease liabilities ​ $ 284.3 ​ ​ ​ ​ ​ ​ 8. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) ​ Changes in accumulated other comprehensive income (loss) by component, net of tax, for the nine months ended September 30, 2022 consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ Post- ​ Non- ​ ​ ​ Other ​ ​ ​ Pension ​ Retirement ​ Qualified ​ ​ ​ Comprehensive ​ (In millions) Benefits Benefits Plans Other Income (Loss) Balance at December 31, 2021 ​ $ ( 39.1 ) ​ $ 10.1 ​ $ ( 0.7 ) ​ $ ( 1.2 ) ​ $ ( 30.9 ) ​ Amortization of prior service cost ​ ​ ( 0.2 ) ​ ​ ( 0.7 ) ​ ​ — ​ ​ — ​ ​ ( 0.9 ) ​ Amortization of net loss ​ ​ 0.6 ​ ​ 0.2 ​ ​ — ​ ​ — ​ ​ 0.8 ​ Foreign currency exchange ​ ​ — ​ ​ — ​ ​ — ​ ​ 0.3 ​ ​ 0.3 ​ Balance at March 31, 2022 ​ ​ ( 38.7 ) ​ ​ 9.6 ​ ​ ( 0.7 ) ​ ​ ( 0.9 ) ​ ​ ( 30.7 ) ​ Amortization of prior service cost ​ ​ ( 0.2 ) ​ ​ ( 0.7 ) ​ ​ — ​ ​ — ​ ​ ( 0.9 ) ​ Amortization of net loss ​ ​ 0.7 ​ ​ 0.2 ​ ​ — ​ ​ 1.1 ​ ​ 2.0 ​ Foreign currency exchange ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 2.3 ) ​ ​ ( 2.3 ) ​ Other adjustments ​ ​ — ​ ​ — ​ ​ — ​ ​ 0.4 ​ ​ 0.4 ​ Balance at June 30, 2022 ​ ​ ( 38.2 ) ​ ​ 9.1 ​ ​ ( 0.7 ) ​ ​ ( 1.7 ) ​ ​ ( 31.5 ) ​ Amortization of prior service cost ​ ​ ( 0.1 ) ​ ​ ( 0.7 ) ​ ​ — ​ ​ — ​ ​ ( 0.8 ) ​ Amortization of net loss ​ ​ — ​ ​ 0.1 ​ ​ — ​ ​ — ​ ​ 0.1 ​ Foreign currency exchange ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 2.0 ) ​ ​ ( 2.0 ) ​ Other adjustments ​ ​ — ​ ​ — ​ ​ — ​ ​ 0.1 ​ ​ 0.1 ​ Balance at September 30, 2022 ​ $ ( 38.3 ) ​ $ 8.5 ​ $ ( 0.7 ) ​ $ ( 3.6 ) ​ $ ( 34.1 ) ​ ​ 12 Table of Contents Changes in accumulated other comprehensive income (loss) by component, net of tax, for the nine months ended September 30, 2021 consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ Post- ​ Non- ​ ​ ​ Other ​ ​ ​ Pension ​ Retirement ​ Qualified ​ ​ ​ Comprehensive ​ (In millions) Benefits Benefits Plans Other Income (Loss) Balance at December 31, 2020 ​ $ ( 61.7 ) ​ $ 12.2 ​ $ ( 0.6 ) ​ $ ( 0.7 ) ​ $ ( 50.8 ) ​ Amortization of prior service cost ​ ​ ( 0.4 ) ​ ​ ( 0.7 ) ​ ​ — ​ ​ — ​ ​ ( 1.1 ) ​ Amortization of net loss ​ ​ 0.9 ​ ​ 0.2 ​ ​ 0.1 ​ ​ — ​ ​ 1.2 ​ Foreign currency exchange ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 0.2 ) ​ ​ ( 0.2 ) ​ Balance at March 31, 2021 ​ ​ ( 61.2 ) ​ ​ 11.7 ​ ​ ( 0.5 ) ​ ​ ( 0.9 ) ​ ​ ( 50.9 ) ​ Amortization of prior service cost ​ ​ ( 0.4 ) ​ ​ ( 0.7 ) ​ ​ ( 0.1 ) ​ ​ — ​ ​ ( 1.2 ) ​ Amortization of net loss ​ ​ 1.0 ​ ​ 0.3 ​ ​ — ​ ​ — ​ ​ 1.3 ​ Foreign currency exchange ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 0.1 ) ​ ​ ( 0.1 ) ​ Other adjustments ​ ​ — ​ ​ — ​ ​ — ​ ​ 0.2 ​ ​ 0.2 ​ Balance at June 30, 2021 ​ ​ ( 60.6 ) ​ ​ 11.3 ​ ​ ( 0.6 ) ​ ​ ( 0.8 ) ​ ​ ( 50.7 ) ​ Amortization of prior service cost ​ ​ ( 0.5 ) ​ ​ ( 0.6 ) ​ ​ — ​ ​ — ​ ​ ( 1.1 ) ​ Amortization of net loss (gain) ​ ​ 1.0 ​ ​ — ​ ​ — ​ ​ — ​ ​ 1.0 ​ Foreign currency exchange ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 0.1 ) ​ ​ ( 0.1 ) ​ Balance at September 30, 2021 ​ $ ( 60.1 ) ​ $ 10.7 ​ $ ( 0.6 ) ​ $ ( 0.9 ) ​ $ ( 50.9 ) ​ ​ ​ ​ ​ 9. FAIR VALUE OF FINANCIAL INSTRUMENTS ​ The Company values its financial instruments based on the fair value hierarchy of valuation techniques for fair value measurements. Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date. Level 2 inputs include quoted prices for similar assets and liabilities in active markets and inputs other than quoted prices observable for the asset or liability. Level 3 inputs are unobservable inputs for the asset or liability. If the technique used to measure fair value includes inputs from multiple levels of the fair value hierarchy, the lowest level of significant input determines the placement of the entire fair value measurement in the hierarchy. ​ The Company uses Level 1 inputs for the fair values of its cash, cash equivalents, restricted cash and Capital Construction Fund, and Level 2 inputs for its variable and fixed rate debt. The fair values of cash, cash equivalents, restricted cash and Capital Construction Fund, and variable rate debt approximate their carrying values due to the nature of the instruments. 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 September 30, 2022 and December 31, 2021 are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Quoted Prices in ​ Significant ​ Significant ​ ​ ​ Total ​ ​ ​ Active Markets ​ Observable ​ Unobservable ​ ​ Carrying Value Total (Level 1) Inputs (Level 2) Inputs (Level 3) ​ (In millions) ​ September 30, 2022 ​ Fair Value Measurements at September 30, 2022 ​ Cash and cash equivalents ​ $ 242.8 ​ $ 242.8 ​ $ 242.8 ​ $ — ​ $ — ​ Restricted cash ​ $ 3.9 ​ $ 3.9 ​ $ 3.9 ​ $ — ​ $ — ​ Capital Construction Fund ​ $ 565.0 ​ $ 565.0 ​ $ 565.0 ​ $ — ​ $ — ​ Fixed rate debt ​ $ 531.8 ​ $ 438.4 ​ $ — ​ $ 438.4 ​ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (In millions) December 31, 2021 ​ Fair Value Measurements at December 31, 2021 ​ Cash and cash equivalents ​ $ 282.4 ​ $ 282.4 $ 282.4 ​ $ — ​ $ — ​ Restricted cash ​ $ 5.3 ​ $ 5.3 ​ $ 5.3 ​ $ — ​ $ — ​ Fixed rate debt ​ $ 629.0 ​ $ 615.1 ​ $ — ​ $ 615.1 ​ $ — ​ ​ ​ ​ ​ 13 Table of Contents 10. EARNINGS PER SHARE ​ Basic earnings per share is determined by dividing net income by the weighted average common shares outstanding during the period. 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 September 30, 2022 and 2021. ​ The computations for basic and diluted earnings per share for the three and nine months ended September 30, 2022 and 2021 are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, 2022 ​ Nine Months Ended September 30, 2022 ​ ​ ​ Weighted Per ​ ​ Weighted Per ​ ​ ​ ​ ​ Average ​ Common ​ ​ ​ ​ Average ​ Common ​ ​ Net ​ Common ​ Share ​ Net ​ Common ​ Share (In millions, except per share amounts) ​ Income ​ Shares ​ Amount ​ Income ​ Shares ​ Amount Basic ​ $ 266.0 38.3 ​ $ 6.95 ​ $ 985.9 39.7 ​ $ 24.83 Effect of Dilutive Securities ​ ​ ​ 0.3 ​ ​ ( 0.06 ) ​ ​ ​ 0.3 ​ ​ ( 0.18 ) Diluted ​ $ 266.0 ​ 38.6 ​ $ 6.89 ​ $ 985.9 ​ 40.0 ​ $ 24.65 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, 2021 ​ Nine Months Ended September 30, 2021 ​ ​ ​ ​ Weighted Per ​ ​ Weighted Per ​ ​ ​ ​ ​ Average ​ Common ​ ​ ​ ​ Average ​ Common ​ ​ Net ​ Common ​ Share ​ Net ​ Common ​ Share (In millions, except per share amounts) ​ Income ​ Shares ​ Amount ​ Income ​ Shares ​ Amount Basic ​ $ 283.2 42.9 ​ $ 6.60 ​ $ 532.9 43.3 ​ $ 12.31 Effect of Dilutive Securities ​ ​ ​ 0.5 ​ ​ ( 0.07 ) ​ ​ ​ 0.4 ​ ​ ( 0.12 ) Diluted ​ $ 283.2 ​ 43.4 ​ $ 6.53 ​ $ 532.9 ​ 43.7 ​ $ 12.19 ​ ​ ​ ​ 11. SHARE-BASED COMPENSATION ​ The Company granted time-based restricted stock units and performance-based shares to certain of its employees totaling approximately 2,400 shares with a weighted average grant date fair value of $ 80.36 per share during the three months ended September 30, 2022, and 182,900 shares with a weighted average grant date fair value of $ 100.55 per share during the nine months ended September 30, 2022. ​ 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 $ 5.0 million and $ 4.7 million for the three months ended September 30, 2022 and 2021, and $ 15.5 million and $ 14.2 million for the nine months ended September 30, 2022 and 2021, respectively. Total unrecognized compensation cost related to unvested share-based compensation arrangements was $ 28.1 million at September 30, 2022, and is expected to be recognized over a weighted average period of approximately 1.9 years. Total unrecognized compensation cost may be adjusted for any unearned performance shares or forfeited shares. ​ ​ 14 Table of Contents 12. PENSION AND POST-RETIREMENT PLANS ​ 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 and nine months ended September 30, 2022 and 2021 consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pension Benefits ​ Post-retirement Benefits ​ ​ Three Months Ended September 30, ​ Three Months Ended September 30, (In millions) 2022 2021 2022 2021 Components of net periodic benefit cost (benefit): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Service cost ​ $ 1.2 ​ $ 1.3 ​ $ 0.2 ​ $ 0.2 Interest cost ​ 1.9 ​ 1.4 ​ 0.3 ​ 0.1 Expected return on plan assets ​ ( 4.0 ) ​ ( 3.5 ) ​ — ​ — Amortization of net loss ​ 0.1 ​ 1.3 ​ 0.2 ​ 0.1 Amortization of prior service credit ​ ( 0.3 ) ​ ( 0.6 ) ​ ( 1.0 ) ​ ( 0.9 ) Net periodic benefit cost (benefit) ​ $ ( 1.1 ) ​ $ ( 0.1 ) ​ $ ( 0.3 ) ​ $ ( 0.5 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pension Benefits ​ Post-retirement Benefits ​ ​ Nine Months Ended September 30, ​ Nine Months Ended September 30, (In millions) 2022 2021 2022 2021 Components of net periodic benefit cost (benefit): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Service cost ​ $ 3.6 ​ $ 3.6 ​ $ 0.5 ​ $ 0.5 Interest cost ​ 5.2 ​ 4.6 ​ 0.7 ​ 0.5 Expected return on plan assets ​ ( 11.9 ) ​ ( 10.8 ) ​ — ​ — Amortization of net loss ​ 1.8 ​ 3.8 ​ 0.6 ​ 0.7 Amortization of prior service credit ​ ( 0.8 ) ​ ( 1.7 ) ​ ( 2.8 ) ​ ( 2.7 ) Net periodic benefit cost (benefit) ​ $ ( 2.1 ) ​ $ ( 0.5 ) ​ $ ( 1.0 ) ​ $ ( 1.0 ) ​ ​ ​ ​ ​ ​ 13. COMMITMENTS AND CONTINGENCIES ​ Environmental Matters: The Company’s Ocean Transportation business has certain risks that could result in expenditures for environmental remediation. 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 (“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. The NOV alleges that Matson’s fleet did not meet the 80 percent thresholds during visits to the Port of Long Beach in 2020. 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 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. Although potential penalties for 2020, 2021 and 2022 violations could, in the aggregate, reasonably be expected to exceed $1 million, they are not expected to be material to the Company’s financial condition, results of operations, or cash flows. ​ Other Matters: The Company and its subsidiaries are parties to, or may be contingently liable in connection with other legal actions arising in the normal course of their businesses, the outcomes of which, in the opinion of management after consultation with counsel, would not have a material effect on the Company’s financial condition, results of operations, or cash flows. ​ ​ ​ ​ ****** 15 Table of Contents