What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-10-31 compared with 2023-08-02 · 127 added, 80 removed, 426 unchanged (33% of the section changed)

3 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In millions, except per share amounts)

4 unchanged sentences

Operating costs

(Loss) Income from SSAT

Income (Loss) from SSAT

Selling, general and administrative

7 unchanged sentences

Other Comprehensive Income (Loss):

Amortization of prior service cost

Amortization of net loss (gain)

Net change in pension and post-retirement liabilities

Other adjustments

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

6 unchanged sentences

Condensed Consolidated Balance Sheets

September 30,

(In millions)

36 unchanged sentences

Condensed Consolidated Statements of Cash Flows

Six Months Ended June 30,

Nine Months Ended September 30,

(In millions)

30 unchanged sentences

Net cash used in financing activities

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

Net Decrease in Cash, Cash Equivalents and Restricted Cash

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

10 unchanged sentences

Non-cash payment for intangible asset acquisition

Accrued dividends

See Notes to Condensed Consolidated Financial Statements.

17 unchanged sentences

Balance at June 30, 2023

Other comprehensive income (loss), net of tax

Share-based compensation

Shares issued, net of shares withheld for employee taxes

Shares repurchased

Balance at September 30, 2023

Comprehensive

14 unchanged sentences

Balance at June 30, 2022

Other comprehensive income (loss), net of tax

Share-based compensation

Equity interest in SSAT

Shares repurchased

Balance at September 30, 2022

See Notes to Condensed Consolidated Financial Statements.

32 unchanged sentences

Fiscal Period:

The period end for Matson covered by this report is June 30, 2023.

The period end for MatNav and its subsidiaries covered by this report is June 30, 2023.

The period end for Matson covered by this report is September 30, 2023.

The period end for MatNav and its subsidiaries covered by this report is September 29, 2023.

Significant Accounting Policies:

14 unchanged sentences

operating lease assets and liabilities;

income from SSAT;

income (loss) from SSAT;

and income taxes.

1 unchanged sentence

Prepaid Expenses and Other Assets:

Prepaid expenses and other assets consisted of the following at June 30, 2023 and December 31, 2022:

Prepaid expenses and other assets consisted of the following at September 30, 2023 and December 31, 2022:

September 30,

Prepaid Expenses and Other Assets (in millions)

1 unchanged sentence

Prepaid insurance and insurance related receivables

Prepaid operating expenses

Prepaid leases

Restricted cash - vessel construction obligations

4 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Ocean Transportation (in millions) (1)

12 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Logistics (in millions) (1)

21 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, 2022.

A summary of the CCF cash account for the six months ended June 30, 2023 and 2022 consisted of the following:

Six Months Ended

A summary of the CCF cash account for the nine months ended September 30, 2023 and 2022 consisted of the following:

Nine Months Ended

September 30,

(In millions)

4 unchanged sentences

CCF balance at end of period

The Company had $ 583.9 million and $ 518.2 million on deposit in the CCF as of June 30, 2023, and December 31, 2022, respectively.

The Company had $ 591.6 million and $ 518.2 million on deposit in the CCF as of September 30, 2023, and December 31, 2022, respectively.

Cash on deposit in the CCF is invested in a U.S.

Treasury obligations fund with daily liquidity.

At June 30, 2023, securities held within this fund had a weighted average life of 41 days .

At September 30, 2023, securities held within this fund had a weighted average life of 44 days .

Cash on deposit in the CCF is classified as a long-term asset on the Company’s Condensed Consolidated Balance Sheets, as the Company intends to use withdrawals to fund qualified milestone progress payments for the construction of three new Jones Act vessels.

During the six months ended June 30, 2023, the Company pledged $ 200.0 million of accounts receivable into the CCF.

There were no pledged amounts during the six months ended June 30, 2022.

As of June 30, 2023 and December 31, 2022, $ 210.0 million and $ 9.9 million of eligible accounts receivable were assigned to the CCF, respectively.

During the nine months ended September 30, 2023, the Company pledged $ 200.0 million of accounts receivable into the CCF.

There were no pledged amounts during the nine months ended September 30, 2022.

As of September 30, 2023 and December 31, 2022, $ 213.2 million and $ 9.9 million of eligible accounts receivable were assigned to the CCF, respectively.

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.

Investment in SSAT:

Condensed income statement information for SSAT for the three and six months ended June 30, 2023 and 2022 consisted of the following:

Condensed income statement information for SSAT for the three and nine months ended September 30, 2023 and 2022 consisted of the following:

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In millions)

2 unchanged sentences

Operating (loss) income

Net (Loss) Income (1)

Company Share of SSAT’s Net (Loss) Income (2)

Net Income (Loss) (1)

Company Share of SSAT’s Net Income (Loss) (2)

(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 (loss) 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 $ 80.1 million and $ 81.2 million at June 30, 2023 and December 31, 2022, respectively.

The Company’s second quarter 2023 cash dividend of $ 0.31 per share was paid on June 1, 2023.

On June 22, 2023, the Company’s Board of Directors declared a cash dividend of $ 0.32 per share payable on September 7, 2023 to shareholders of record on August 3, 2023.

(2) The Company records its share of net income (loss) 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 $ 81.4 million and $ 81.2 million at September 30, 2023 and December 31, 2022, respectively.

Capitalized Interest:

The Company capitalizes interest costs during the period the qualified assets are being readied for their intended use.

The Company determined that the vessel construction costs are considered qualifying assets for the purposes of capitalizing interest on these assets.

Capitalized interest is determined based on the number of payments incurred related to the construction of these vessels using a weighted average interest rate.

The weighted average interest rate is determined using the Company’s average borrowings outstanding during the period.

Capitalized interest is included in vessel construction in progress in property and equipment in the Company’s Condensed Consolidated Balance Sheets (see Note 4).

During the three and nine months ended September 30, 2023, the Company capitalized $ 0.8 million and $ 1.7 million of interest related to the construction of new vessels, respectively.

There was no capitalized interest during the three months ended September 30, 2022.

During the nine months ended September 30, 2022, the Company capitalized $ 0.4 million of interest related to the construction of new vessels.

The Company’s third quarter 2023 cash dividend of $ 0.32 per share was paid on September 7, 2023.

On October 26, 2023, the Company’s Board of Directors declared a cash dividend of $ 0.32 per share payable on December 7, 2023 to shareholders of record on November 9, 2023.

Repurchase of Shares:

During the three months ended June 30, 2023, the Company repurchased approximately 0.6 million shares for a total cost of $ 42.4 million.

As of June 30, 2023, the maximum number of remaining shares that may be repurchased under the Company’s share repurchase program was approximately 3.3 million shares.

During the three months ended September 30, 2023, the Company repurchased approximately 0.3 million shares for a total cost of $ 25.8 million.

As of September 30, 2023, the maximum number of remaining shares that may be repurchased under the Company’s share repurchase program was approximately 3.0 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 $ 54.4 million and $ 69.2 million for the three months ended June 30, 2023 and 2022, and $ 94.5 million and $ 142.4 million for the six months ended June 30, 2023 and 2022, respectively, have been eliminated from operating revenues in the table below.

Reportable segment financial information for the three and six months ended June 30, 2023 and 2022 are as follows:

Accordingly, inter-segment revenue of $ 61.1 million and $ 78.2 million for the three months ended September 30, 2023 and 2022, and $ 155.6 million and $ 220.6 million for the nine months ended September 30, 2023 and 2022, respectively, have been eliminated from operating revenues in the table below.

Reportable segment financial information for the three and nine months ended September 30, 2023 and 2022 are as follows:

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In millions)

10 unchanged sentences

Income before Taxes

(1) Ocean Transportation operating revenue excludes inter-segment revenue of $ 19.0 million and $ 24.0 million for the three months ended June 30, 2023 and 2022, and $ 35.1 million and $ 45.8 million for the six months ended June 30, 2023 and 2022, respectively.

(2) Logistics operating revenue excludes inter-segment revenue of $ 35.4 million and $ 45.2 million for the three months ended June 30, 2023 and 2022, and $ 59.4 million and $ 96.6 million for the six months ended June 30, 2023 and 2022, respectively.

(3) Ocean Transportation segment information includes $ ( 1.4 ) million and $ 24.7 million of equity in income from the Company’s equity investment in SSAT for the three months ended June 30, 2023 and 2022, and $ ( 3.2 ) million and $ 58.7 million for the six months ended June 30, 2023 and 2022, respectively.

(1) Ocean Transportation operating revenue excludes inter-segment revenue of $ 22.5 million and $ 28.0 million for the three months ended September 30, 2023 and 2022, and $ 57.6 million and $ 73.8 million for the nine months ended September 30, 2023 and 2022, respectively.

(2) Logistics operating revenue excludes inter-segment revenue of $ 38.6 million and $ 50.2 million for the three months ended September 30, 2023 and 2022, and $ 98.0 million and $ 146.8 million for the nine months ended September 30, 2023 and 2022, respectively.

(3) Ocean Transportation segment information includes $ 1.3 million and $ 23.4 million of income from the Company’s equity investment in SSAT for the three months ended September 30, 2023 and 2022, and $ ( 1.9 ) million and $ 82.1 million of (loss) income for the nine months ended September 30, 2023 and 2022, respectively.

PROPERTY AND EQUIPMENT

Property and equipment as of June 30, 2023 and December 31, 2022 consisted of the following:

Property and equipment as of September 30, 2023 and December 31, 2022 consisted of the following:

September 30,

(In millions)

6 unchanged sentences

Total Property and Equipment, net

New vessel construction in progress at June 30, 2023 and December 31, 2022 includes milestone progress payments, capitalized interest and other costs related to the construction of three new Jones Act vessels.

New vessel construction in progress at September 30, 2023 and December 31, 2022 includes milestone progress payments, capitalized interest and other costs related to the construction of three new Jones Act vessels.

GOODWILL AND INTANGIBLES

Goodwill by segment as of June 30, 2023 and December 31, 2022 consisted of the following:

Goodwill by segment as of September 30, 2023 and December 31, 2022 consisted of the following:

(In millions)

Transportation

Intangible assets as of June 30, 2023 and December 31, 2022 consisted of the following:

Intangible assets as of September 30, 2023 and December 31, 2022 consisted of the following:

September 30,

(In millions)

9 unchanged sentences

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 2022 annual impairment tests, the Company concluded that an impairment triggering event did not occur during the three months ended June 30, 2023.

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 June 30, 2023 and December 31, 2022, the Company’s debt consisted of the following:

As of September 30, 2023 and December 31, 2022, the Company’s debt consisted of the following:

September 30,

(In millions)

15 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 June 30, 2023, the Company had $ 642.5 million of remaining borrowing availability under the revolving credit facility.

The Company used $ 7.5 million of the revolving credit facility

for letters of credit outstanding as of June 30, 2023.

There were no outstanding borrowings under the revolving credit facility as of June 30, 2023 and December 31, 2022.

As of September 30, 2023, the Company had $ 642.6 million of remaining

borrowing availability under the revolving credit facility.

The Company used $ 7.4 million of the revolving credit facility for letters of credit outstanding as of September 30, 2023.

There were no outstanding borrowings under the revolving credit facility as of September 30, 2023 and December 31, 2022.

On February 9, 2023, the Company amended the revolving credit facility to replace LIBOR with a new benchmark interest rate, the Secured Overnight Financing Rate (“SOFR”).

4 unchanged sentences

Debt Security and Guarantees:

All of the debt of the Company and MatNav, including related guarantees, as of June 30, 2023 was unsecured, except for the Title XI debt.

All of the debt of the Company and MatNav, including related guarantees, as of September 30, 2023 was unsecured, except for the Title XI debt.

Debt Maturities:

As of June 30, 2023, debt maturities during the next five years and thereafter are as follows:

As of September 30, 2023, debt maturities during the next five years and thereafter are as follows:

Year (in millions)

June 30, 2023

September 30, 2023

Remainder of 2023

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 and six months ended June 30, 2023 and 2022 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 nine months ended September 30, 2023 and 2022 consisted of the following:

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In millions)

3 unchanged sentences

Total lease cost

Maturities of operating lease liabilities at June 30, 2023 are as follows:

Maturities of operating lease liabilities at September 30, 2023 are as follows:

Year (in millions)

June 30, 2023

September 30, 2023

Remainder of 2023

4 unchanged sentences

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Changes in accumulated other comprehensive income (loss) by component, net of tax, for the six months ended June 30, 2023 consisted of the following:

Changes in accumulated other comprehensive income (loss) by component, net of tax, for the nine months ended September 30, 2023 consisted of the following:

Comprehensive

3 unchanged sentences

Amortization of prior service cost

Amortization of net loss (gain)

Amortization of net gain (loss)

Foreign currency exchange

1 unchanged sentence

Amortization of prior service cost

Amortization of net loss (gain)

Amortization of net gain (loss)

Foreign currency exchange

Balance at June 30, 2023

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

Amortization of prior service cost

Amortization of net gain (loss)

Foreign currency exchange

Balance at September 30, 2023

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

Comprehensive

3 unchanged sentences

Amortization of prior service cost

Amortization of net loss (gain)

Amortization of net gain (loss)

Foreign currency exchange

1 unchanged sentence

Amortization of prior service cost

Amortization of net loss (gain)

Amortization of net gain (loss)

Foreign currency exchange

1 unchanged sentence

Balance at June 30, 2022

Amortization of prior service cost

Amortization of net gain (loss)

Foreign currency exchange

Other adjustments

Balance at September 30, 2022

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 June 30, 2023 and December 31, 2022 are as follows:

The carrying value and fair value of the Company’s financial instruments as of September 30, 2023 and December 31, 2022 are as follows:

Quoted Prices in

4 unchanged sentences

(In millions)

June 30, 2023

Fair Value Measurements at June 30, 2023

September 30, 2023

Fair Value Measurements at September 30, 2023

Cash and cash equivalents

12 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 June 30, 2023 and 2022.

The computations for basic and diluted earnings per share for the three and six months ended June 30, 2023 and 2022 are as follows:

Three Months Ended June 30, 2023

Six Months Ended June 30, 2023

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, 2023 and 2022.

The computations for basic and diluted earnings per share for the three and nine months ended September 30, 2023 and 2022 are as follows:

Three Months Ended September 30, 2023

Nine Months Ended September 30, 2023

(In millions, except per share amounts)

Effect of Dilutive Securities

Three Months Ended June 30, 2022

Six Months Ended June 30, 2022

Three Months Ended September 30, 2022

Nine Months Ended September 30, 2022

(In millions, except per share amounts)

1 unchanged sentence

SHARE-BASED COMPENSATION

The Company granted time-based restricted stock units and performance-based shares to certain of its employees totaling approximately 12,600 and 265,900 shares with a weighted average grant date fair value of $ 63.78 and $ 65.84 per share during the three and six months ended June 30, 2023, 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 $ 5.2 million and $ 5.8 million for the three months ended June 30, 2023 and 2022, and $ 9.8 million and $ 10.5 million for the six months ended June 30, 2023 and 2022, respectively.

Total unrecognized compensation cost related to unvested share-based compensation arrangements was $ 28.1 million at June 30, 2023, and is expected to be recognized over a weighted average period of approximately 2.0 years.

The Company granted time-based restricted stock units and performance-based shares to certain of its employees totaling approximately 1,100 and 267,100 shares with a weighted average grant date fair value of $ 76.50 and $ 65.89 per share during the three and nine months ended September 30, 2023, 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 $ 7.8 million and $ 5.0 million for the three months ended September 30, 2023 and 2022, and $ 17.6 million and $ 15.5 million for the nine months ended September 30, 2023 and 2022, respectively.

Total unrecognized compensation cost related to unvested share-based compensation arrangements was $ 30.2 million at September 30, 2023, and is expected to be recognized over a weighted average period of approximately 1.8 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, 2022 .

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, 2023 and 2022 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 nine months ended September 30, 2023 and 2022 consisted of the following:

Pension Benefits

Post-retirement Benefits

Three Months Ended June 30,

Three Months Ended September 30,

(In millions)

Components of net periodic benefit cost (benefit):

Components of net periodic benefit cost (credit):

Interest cost

2 unchanged sentences

Amortization of prior service credit

Net periodic benefit cost (benefit)

Net periodic benefit cost (credit)

Pension Benefits

Post-retirement Benefits

Six Months Ended June 30,

Nine Months Ended September 30,

(In millions)

Components of net periodic benefit cost (benefit):

Components of net periodic benefit cost (credit):

Interest cost

2 unchanged sentences

Amortization of prior service credit

Net periodic benefit cost (benefit)

Net periodic benefit cost (credit)

COMMITMENTS AND CONTINGENCIES

5 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