Item 1. Financial Statements
ITEM 1. FINANCIAL STATEMENTS
MATSON, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income and Comprehensive Income
(Unaudited)
Three Months Ended
March 31,
(In millions, except per share amounts)
2025
2024
Operating Revenue:
Ocean Transportation
$
637.4
$
579.0
Logistics
144.6
143.1
Total Operating Revenue
782.0
722.1
Costs and Expenses:
Operating costs
( 631.1 )
( 612.2 )
Income from SSAT
6.6
0.4
General and administrative
( 75.4 )
( 73.4 )
Total Costs and Expenses
( 699.9 )
( 685.2 )
Operating Income
82.1
36.9
Interest income
9.4
8.8
Interest expense
( 1.7 )
( 2.2 )
Other income (expense), net
2.4
1.8
Income before Taxes
92.2
45.3
Income taxes
( 19.9 )
( 9.2 )
Net Income
$
72.3
$
36.1
Comprehensive Income (Loss), Net of Income Taxes:
Net Income
$
72.3
$
36.1
Other Comprehensive Income (Loss):
Net change in pension and post-retirement liabilities
( 0.8 )
( 0.8 )
Other adjustments
0.5
( 0.8 )
Total Other Comprehensive Income (Loss), Net of Income Taxes
( 0.3 )
( 1.6 )
Total Comprehensive Income
$
72.0
$
34.5
Basic Earnings Per Share
$
2.20
$
1.05
Diluted Earnings Per Share
$
2.18
$
1.04
Weighted Average Number of Shares Outstanding:
Basic
32.8
34.4
Diluted
33.2
34.6
See Notes to Condensed Consolidated Financial Statements.
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MATSON, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
March 31,
December 31,
(In millions)
2025
2024
ASSETS
Current Assets:
Cash and cash equivalents
$
122.0
$
266.8
Accounts receivable, net of allowance for credit losses of $ 9.3 million and $ 9.8 million, respectively
270.7
268.9
Prepaid expenses and other assets
75.3
73.9
Total current assets
468.0
609.6
Long-term Assets:
Investment in SSAT
91.0
84.1
Property and equipment, net
2,314.0
2,260.9
Operating lease right of use assets
325.2
357.7
Goodwill
327.8
327.8
Intangible assets, net
156.3
159.4
Capital Construction Fund
685.4
642.6
Deferred dry-docking costs, net
77.8
73.7
Other long-term assets
81.5
79.6
Total long-term assets
4,059.0
3,985.8
Total Assets
$
4,527.0
$
4,595.4
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Current portion of debt
$
39.7
$
39.7
Accounts payable and accruals
274.0
268.5
Operating lease liabilities
119.2
129.0
Other liabilities
113.5
123.2
Total current liabilities
546.4
560.4
Long-term Liabilities:
Long-term debt, net of deferred loan fees
340.9
350.8
Long-term operating lease liabilities
206.2
229.5
Deferred income taxes
693.9
693.4
Other long-term liabilities
106.4
109.3
Total long-term liabilities
1,347.4
1,383.0
Commitments and Contingencies (see Note 15)
Shareholders’ Equity:
Common stock
24.5
24.7
Additional paid in capital
284.7
296.7
Accumulated other comprehensive loss, net
( 6.8 )
( 6.5 )
Retained earnings
2,330.8
2,337.1
Total shareholders’ equity
2,633.2
2,652.0
Total Liabilities and Shareholders’ Equity
$
4,527.0
$
4,595.4
See Notes to Condensed Consolidated Financial Statements.
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MATSON, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended March 31,
(In millions)
2025
2024
Cash Flows From Operating Activities:
Net income
$
72.3
$
36.1
Reconciling adjustments:
Depreciation and amortization
40.6
37.2
Amortization of operating lease right of use assets
34.5
33.9
Deferred income taxes
0.4
2.3
Share-based compensation expense
5.8
5.7
Income from SSAT
( 6.6 )
( 0.4 )
Distributions from SSAT
—
14.0
Other
( 1.9 )
( 1.7 )
Changes in assets and liabilities:
Accounts receivable, net
( 1.6 )
( 23.7 )
Deferred dry-docking payments
( 10.4 )
( 5.2 )
Deferred dry-docking amortization
6.6
6.8
Prepaid expenses and other assets
( 6.9 )
2.4
Accounts payable, accruals and other liabilities
( 5.3 )
( 34.3 )
Operating lease assets and liabilities, net
( 35.1 )
( 34.6 )
Other long-term liabilities
( 3.4 )
( 1.9 )
Net cash provided by operating activities
89.0
36.6
Cash Flows From Investing Activities:
Vessel construction expenditures
( 66.7 )
( 1.1 )
Capital expenditures (excluding vessel construction expenditures)
( 22.5 )
( 54.2 )
Proceeds from disposal of property and equipment, net
0.2
2.3
Cash and interest deposited into the Capital Construction Fund
( 105.4 )
( 6.0 )
Withdrawals from Capital Construction Fund
65.0
—
Net cash used in investing activities
( 129.4 )
( 59.0 )
Cash Flows From Financing Activities:
Repayments of debt
( 10.1 )
( 10.1 )
Dividends paid
( 11.3 )
( 11.1 )
Repurchase of Matson common stock
( 66.9 )
( 47.3 )
Tax withholding related to net share settlements of restricted stock units
( 16.1 )
( 17.2 )
Net cash used in financing activities
( 104.4 )
( 85.7 )
Net Decrease in Cash, Cash Equivalents and Restricted Cash
( 144.8 )
( 108.1 )
Cash and Cash Equivalents, and Restricted Cash, Beginning of the Period
266.8
136.3
Cash and Cash Equivalents, and Restricted Cash, End of the Period
$
122.0
$
28.2
Reconciliation of Cash, Cash Equivalents and Restricted Cash, End of the Period:
Cash and Cash Equivalents
$
122.0
$
25.9
Restricted Cash
—
2.3
Total Cash and Cash Equivalents, and Restricted Cash, End of the Period
$
122.0
$
28.2
Supplemental Cash Flow Information:
Interest paid, net of capitalized interest
$
1.7
$
0.5
Income tax payments (refunds), net
$
1.6
$
1.1
Non-cash Information:
Capital expenditures included in accounts payable, accruals and other liabilities
$
7.6
$
16.0
See Notes to Condensed Consolidated Financial Statements.
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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, 2024
33.0
$
24.7
$
296.7
$
( 6.5 )
$
2,337.1
$
2,652.0
Net income
—
—
—
—
72.3
72.3
Other comprehensive income (loss), net of tax
—
—
—
( 0.3 )
—
( 0.3 )
Share-based compensation
—
—
5.8
—
—
5.8
Shares issued, net of shares withheld for employee taxes
0.1
0.1
( 16.2 )
—
—
( 16.1 )
Shares repurchased
( 0.5 )
( 0.3 )
( 1.6 )
—
( 67.3 )
( 69.2 )
Dividends ( $ 0.34 per share)
—
—
—
—
( 11.3 )
( 11.3 )
Balance at March 31, 2025
32.6
$
24.5
$
284.7
$
( 6.8 )
$
2,330.8
$
2,633.2
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, 2023
34.4
$
25.8
$
293.4
$
( 8.2 )
$
2,089.7
$
2,400.7
Net income
—
—
—
—
36.1
36.1
Other comprehensive income (loss), net of tax
—
—
—
( 1.6 )
—
( 1.6 )
Share-based compensation
—
—
5.7
—
—
5.7
Shares issued, net of shares withheld for employee taxes
0.2
0.1
( 17.3 )
—
—
( 17.2 )
Shares repurchased
( 0.4 )
( 0.3 )
( 1.6 )
—
( 47.0 )
( 48.9 )
Equity interest in SSAT (See Note 4)
—
—
—
—
10.1
10.1
Dividends ( $ 0.32 per share)
—
—
—
—
( 11.1 )
( 11.1 )
Balance at March 31, 2024
34.2
$
25.6
$
280.2
$
( 9.8 )
$
2,077.8
$
2,373.8
See Notes to Condensed Consolidated Financial Statements.
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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 from China to Long Beach, California, provides services to Okinawa, Japan and various islands in the South Pacific, and operates an international export service from Alaska to Asia. In addition, subsidiaries of MatNav provide stevedoring, refrigerated cargo services, inland transportation and other terminal services for MatNav on the Hawaiian islands of Oahu, Hawaii, Maui and Kauai, and in Alaska.
Matson has a 35 percent ownership interest in SSA Terminals, LLC (“SSAT”), a joint venture between Matson Ventures, Inc., a wholly-owned subsidiary of MatNav, and SSA Ventures, Inc., a subsidiary of Carrix, Inc. 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) purchase order management, booking services, and non-vessel operating common carrier (“NVOCC”) freight forwarding services (collectively, “Supply Chain Management” 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, 2024, filed with the Securities and Exchange Commission (“SEC”) on February 28, 2025.
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Fiscal Period: The period end for Matson covered by this report is March 31, 2025. The period end for MatNav and its subsidiaries covered by this report is March 28, 2025.
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, 2024.
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; contingent acquisition related consideration; accrual estimates; pension and post-retirement estimates; multi-employer withdrawal liabilities; operating lease assets and liabilities; income (loss) from SSAT including estimates for impairment charges; 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 consisted of the following at March 31, 2025 and December 31, 2024:
March 31,
December 31,
Prepaid Expenses and Other Assets (in millions)
2025
2024
Vessel fuel
$
31.6
$
31.2
Prepaid insurance and insurance related receivables
17.5
19.1
Prepaid operating expenses
8.8
8.8
Income tax receivables, net
2.6
2.0
Other
14.8
12.8
Total
$
75.3
$
73.9
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
March 31,
Ocean Transportation (in millions) (1)
2025
2024
Ocean Transportation services
$
632.9
$
565.8
Terminal and other related services
2.5
8.7
Fuel sales
2.0
2.9
Vessel management and related services
—
1.6
Total
$
637.4
$
579.0
(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 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. In July 2024, the Company discontinued its vessel management and related services.
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Three Months Ended
March 31,
Logistics (in millions) (1)
2025
2024
Transportation Brokerage and Freight Forwarding services
$
127.3
$
127.4
Warehousing services
9.0
9.1
Supply Chain Management services
8.3
6.6
Total
$
144.6
$
143.1
(1) Logistics revenue transactions are primarily denominated in U.S. dollars except for less than 3 percent of Transportation Brokerage and Freight Forwarding services revenue, and Supply Chain Management 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 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 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 general and administrative expenses in the Condensed Consolidated Statements of Income and Comprehensive Income.
Capitalized Interest: The Company capitalizes interest costs during the period as the qualified assets are being readied for their intended use. The Company determined that vessel construction costs are considered qualifying assets for the purposes of capitalizing interest on these assets. The amount of capitalized interest is calculated based on the amount of expenditures 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 5). During the three months ended March 31, 2025 and 2024, the Company capitalized $ 1.1 million and $ 0.8 million, respectively, of interest related to the construction of new vessels.
Dividends: The Company’s first quarter 2025 cash dividend of $ 0.34 per share was paid on March 6, 2025. On April 24, 2025 , the Company’s Board of Directors declared a cash dividend of $ 0.34 per share payable on June 5, 2025 to shareholders of record on May 8, 2025 .
Repurchase of Shares: During the three months ended March 31, 2025, the Company repurchased approximately 0.5 million shares for a total cost of $ 69.2 million. As of March 31, 2025, the maximum number of remaining shares that may be repurchased under the Company’s share repurchase program was approximately 3.3 million shares.
Reclassification: The Company reclassified amortization of deferred loan fees of $ 0.4 million from Depreciation and amortization to Other within cash flows from operating activities in the Consolidated Statements of Cash Flows for the three months ended March 31, 2024, to conform to current year cash flow presentation. There were no changes in Net cash provided by operating activities as a result of this reclassification for the three months ended March 31, 2024.
New Accounting Pronouncements: In November 2024, the Financial Accounting Standards Board (“FASB”) issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”). ASU 2024-03 requires disclosure of certain expenses in the financial statements including employee compensation, depreciation and amortization of intangible
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assets on an annual and interim basis. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027. ASU 2024-03 can be adopted either: (i) prospectively to the financial statements issued for reporting periods after the effective date of the ASU or (ii) retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating the effects of adopting ASU 2024-03 but does not expect it will have a material impact on the Company’s consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. ASU 2023-09 is effective for annual periods beginning after December 15, 2024, and interim periods within fiscal years beginning after December 15, 2025. The Company is currently evaluating the effects of adopting ASU 2023-09 but does not expect it to have a material impact on the Company’s consolidated financial statements.
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 (“CODM”) 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 CODM is its Chief Executive Officer.
The Company identified two reportable segments on the basis of internal information provided to the CODM: Ocean Transportation and Logistics which are described in Note 1. Each segment is managed separately based upon fundamental differences in the operations of each segment. The Company’s Ocean Transportation service primarily involves the transportation of customer cargo on Company owned and chartered vessels. The Company’s Logistics service provides customers with logistics solutions primarily using third-party purchased transportation. The Company’s CODM assesses the performance of each segment using operating income. The Company’s CODM reviews the performance of each segment using monthly internal reports which provide variance analysis of actual results by segment compared to budget, forecast and prior year. The Company’s CODM uses this information when making decisions about the allocation of operating and capital resources to each segment. Segment balance sheet information is not provided to the CODM as capital decisions are based upon the Company’s consolidated balance sheet.
Reportable segment financial information for the three months ended March 31, 2025 and 2024 are as follows:
Three Months Ended
Three Months Ended
March 31, 2025
March 31, 2024
(In millions)
Ocean Transportation
Logistics
Total
Ocean Transportation
Logistics
Total
Operating Revenue (1)(2)
$
637.4
$
144.6
$
782.0
$
579.0
$
143.1
$
722.1
Operating Expenses:
Operating costs:
Direct cargo expense
238.2
—
238.2
228.6
—
228.6
Vessel operating expense
147.4
—
147.4
153.0
—
153.0
Operating overhead (3)
87.1
—
87.1
76.1
—
76.1
Direct operating costs
—
117.8
117.8
—
117.3
117.3
Depreciation and amortization
37.2
3.4
40.6
34.4
2.8
37.2
Total operating costs
509.9
121.2
631.1
492.1
120.1
612.2
Income from SSAT
( 6.6 )
—
( 6.6 )
( 0.4 )
—
( 0.4 )
General and administrative
60.5
14.9
75.4
59.7
13.7
73.4
Total Costs and Expenses
563.8
136.1
699.9
551.4
133.8
685.2
Operating Income:
$
73.6
$
8.5
82.1
$
27.6
$
9.3
36.9
Interest income
9.4
8.8
Interest expense
( 1.7 )
( 2.2 )
Other income (expense), net
2.4
1.8
Income before Taxes
92.2
45.3
Income taxes
( 19.9 )
( 9.2 )
Net Income
$
72.3
$
36.1
Capital Expenditures (4)
$
88.1
$
1.1
$
89.2
$
51.0
$
4.3
$
55.3
(1) Ocean Transportation operating revenue excludes inter-segment revenue of $ 21.4 million and $ 19.7 million for the three months ended March 31, 2025 and 2024, respectively.
(2) Logistics operating revenue excludes inter-segment revenue of $ 32.6 million and $ 26.9 million for the three months ended March 31, 2025 and 2024, respectively.
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(3) Ocean Transportation operating overhead includes dry-docking amortization of $ 6.6 million and $ 6.8 million for the three months ended March 31, 2025 and 2024, respectively.
(4) Capital expenditures exclude accrued capital expenditures of $ 7.6 million and $ 16.0 million as of March 31, 2025 and 2024, respectively.
Ocean Transportation’s operating expenses includes the following:
● Operating costs includes:
o Direct Cargo Expense includes terminal handling costs including labor and wharfage, outside purchased transportation and other related costs.
o Vessel Operating Expense includes crew wages and related costs; fuel; pilots, tugs, lines and related costs; vessel charter expenses; and other vessel operating related expenses.
o Operating Overhead Expense includes vessel repair and maintenance costs, inactive vessel costs, dry-docking amortization, equipment lease costs, equipment repair costs, vessel insurance, port engineers and other maintenance costs, other vessel and shoreside related overhead and other indirect costs.
o Depreciation and Amortization Expense includes depreciation of property and equipment and amortization of intangible assets.
● Income from SSAT includes the Company’s share of income from its equity investment in SSAT and has been aggregated into the Ocean Transportation segment due to the operations of SSAT being an integral part of the Company’s Ocean Transportation business (see Note 4).
● General and Administrative Expense includes employee salaries, wages and other related costs, equipment maintenance, computer hardware and software, professional fees and other general and administrative expenses.
Logistics’ operating expenses includes the following:
● Operating costs includes:
o Direct Operating Expense includes transportation costs, transportation brokerage expenses, agency commissions, leases of warehouses, cross-dock and other facility operating costs, wages and other related costs, and other operating overhead.
o Depreciation and Amortization Expense includes depreciation of property and equipment and amortization of intangible assets.
● General and Administrative Expense includes employee salaries, wages and other related costs, computer hardware and software, professional fees and other general and administrative expenses.
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 $ 54.0 million and $ 46.6 million for the three months ended March 31, 2025 and 2024, respectively, have been eliminated from consolidated operating revenues. 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.
4. INVESTMENT IN SSAT
The Company’s investment in SSAT is described in Note 4 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. Condensed income statement information for SSAT for the three months ended March 31, 2025 and 2024 consisted of the following:
Three Months Ended
March 31,
(In millions)
2025
2024
Operating revenue
$
311.5
$
270.3
Operating costs and expenses
( 297.5 )
( 278.4 )
Operating income (loss)
14.0
( 8.1 )
SSAT’s Net Income (Loss) (1)
$
17.7
$
( 3.8 )
Company’s Share of SSAT’s Net Income (Loss) (2)
$
6.6
$
0.4
(1) Includes earnings and losses from equity method investment held by SSAT less earnings and losses allocated to non-controlling interests.
(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.
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The Company’s investment in SSAT was $ 91.0 million and $ 84.1 million at March 31, 2025 and December 31, 2024, respectively.
On March 1, 2024, SSAT completed the sale of 25 percent of its equity interest in SSA Terminals (Seattle Terminals), LLC (“SSAT ST”) to a third-party company. After the completion of this transaction, SSAT retains a 50 percent controlling interest in SSAT ST, while the third-party company increased its non-controlling interest to 50 percent in SSAT ST. As a result of this transaction during the three months ended March 31, 2024, the Company recorded an increase in its investment in SSAT of approximately $ 13.2 million and increase in deferred income taxes of $ 3.1 million, and a corresponding increase in retained earnings of $ 10.1 million.
5. PROPERTY AND EQUIPMENT
Property and equipment as of March 31, 2025 and December 31, 2024 consisted of the following:
March 31,
December 31,
(In millions)
2025
2024
Cost:
Vessels
$
2,479.0
$
2,475.2
Containers and equipment
886.2
883.8
Terminal equipment and other property
152.5
152.3
New vessel construction in progress
265.5
198.8
Other construction in progress
53.9
42.6
Total Property and Equipment
3,837.1
3,752.7
Less: Accumulated Depreciation
( 1,523.1 )
( 1,491.8 )
Total Property and Equipment, net
$
2,314.0
$
2,260.9
New vessel construction in progress at March 31, 2025 and December 31, 2024 includes milestone progress payments, capitalized interest and other costs related to the construction of three new Jones Act vessels.
6. GOODWILL AND INTANGIBLES
Goodwill by segment as of March 31, 2025 and December 31, 2024 consisted of the following:
Ocean
(In millions)
Transportation
Logistics
Total
Goodwill
$
222.6
$
105.2
$
327.8
Intangible assets as of March 31, 2025 and December 31, 2024 consisted of the following:
March 31,
December 31,
(In millions)
2025
2024
Customer Relationships:
Ocean Transportation
$
140.6
$
140.6
Logistics
106.7
106.2
Total
247.3
246.8
Less: Accumulated Amortization
( 118.3 )
( 114.7 )
Total Customer Relationships, net
129.0
132.1
Trade name – Logistics
27.3
27.3
Total Intangible Assets, net
$
156.3
$
159.4
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
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amount of excess of fair value over the carrying value of the reporting units in the 2024 annual impairment tests, the Company concluded that an impairment triggering event did not occur during the three months ended March 31, 2025.
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, including the impact of tariffs. 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.
7. CAPITAL CONSTRUCTION FUND
The 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, 2024. A summary of the activities within the CCF cash and cash equivalents, and investments account for the three months ended March 31, 2025 and 2024 consisted of the following:
Three Months Ended
March 31,
(In millions)
2025
2024
CCF Cash and Cash Equivalents:
CCF cash and cash equivalents balance at beginning of period
$
230.7
$
599.4
Cash withdrawal for the purchase of U.S. Treasury debt securities and accrued interest
—
( 449.8 )
Proceeds from U.S. Treasury debt securities at maturity
20.3
—
Interest income on cash and cash equivalents, and CCF investments
4.1
7.2
Repurchase of assigned accounts receivable
100.7
—
Qualifying withdrawal payments out of the CCF
( 65.0 )
—
Total CCF cash and cash equivalents balance at end of period
290.8
156.8
CCF Investments:
CCF investments balance at beginning of period
411.9
—
Purchase of U.S. Treasury debt securities
—
448.1
Withdrawals of U.S. Treasury debt securities at maturity
( 20.3 )
—
Accretion of investments
3.0
1.9
Total CCF investments balance at end of period
394.6
450.0
Total CCF cash and cash equivalents, and investments balance at end of period
$
685.4
$
606.8
CCF Cash and Cash Equivalents: Cash on deposit in the CCF account is invested in a short-term U.S. Treasury obligations fund with daily liquidity. At March 31, 2025, these short-term securities had a weighted average life of 89 days .
CCF Investments: In February 2024, the Company purchased approximately $ 448.1 million of fixed-rate U.S. Treasuries with accrued interest of $ 1.7 million using CCF cash. The fixed-rate debt securities were purchased at a discount and have various maturity dates of less than 2 years . The cost of these investments accretes to face value on a straight-line basis until maturity. Such accretion is included in interest income in the Condensed Consolidated Statements of Income and Comprehensive Income.
As of March 31, 2025, CCF investments maturities are as follows:
As of
March 31, 2025
Year (in millions)
Cost
Fair Value
2025
$
173.0
$
173.2
2026
169.3
169.9
2027
52.3
52.6
Total CCF investments
$
394.6
$
395.7
CCF cash and cash equivalents, and investments are 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.
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CCF Assigned Accounts Receivable: As of March 31, 2025 and December 31, 2024, eligible accounts receivable of $ 79.2 million and $ 178.1 million 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.
8. DEBT
As of March 31, 2025 and December 31, 2024, the Company’s debt consisted of the following:
March 31,
December 31,
(In millions)
2025
2024
Private Placement Term Loans:
3.37 %, payable through 2027
$
34.6
$
34.6
3.14 %, payable through 2031
93.0
100.1
Title XI Debt:
1.22 %, payable through 2043
150.3
150.3
1.35 %, payable through 2044
112.9
115.9
Total Debt
390.8
400.9
Less: Current portion
( 39.7 )
( 39.7 )
Total Long-term Debt
351.1
361.2
Less: Deferred loan fees
( 10.2 )
( 10.4 )
Total Long-term Debt, net of deferred loan fees
$
340.9
$
350.8
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, 2024.
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 March 31, 2025, the Company had $ 643.9 million of remaining borrowing availability under the revolving credit facility. The Company used $ 6.1 million of the revolving credit facility for letters of credit outstanding as of March 31, 2025. There were no outstanding borrowings under the revolving credit facility as of March 31, 2025 and December 31, 2024.
Debt Security and Guarantees: All of the debt of the Company and MatNav, including related guarantees, as of March 31, 2025 was unsecured, except for the Title XI debt.
Debt Maturities: As of March 31, 2025, debt maturities are as follows:
As of
Year (in millions)
March 31, 2025
Remainder of 2025
$
29.6
2026
39.7
2027
39.7
2028
28.2
2029
28.2
Thereafter
225.4
Total Debt
$
390.8
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9. 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, 2024.
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, 2025 and 2024 consisted of the following:
Three Months Ended
March 31,
(In millions)
2025
2024
Operating lease cost
$
38.2
$
35.9
Short-term lease cost
1.6
2.0
Variable lease cost
0.1
0.2
Total lease cost
$
39.9
$
38.1
Maturities of operating lease liabilities at March 31, 2025 are as follows:
As of
Year (in millions)
March 31, 2025
Remainder of 2025
$
95.5
2026
98.6
2027
71.8
2028
21.8
2029
10.3
Thereafter
79.7
Total lease payments
377.7
Less: Interest
( 52.3 )
Present value of operating lease liabilities
325.4
Less: Short-term portion
( 119.2 )
Long-term operating lease liabilities
$
206.2
10. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Changes in accumulated other comprehensive income (loss) by component, net of tax, for the three months ended March 31, 2025 consisted of the following:
Accumulated
Post-
Non-
Other
Pension
Retirement
Qualified
Comprehensive
(In millions)
Benefits
Benefits
Plans
Other
Income (Loss)
Balance at December 31, 2024
$
( 14.0 )
$
8.1
$
( 0.4 )
$
( 0.2 )
$
( 6.5 )
Amortization of prior service credit
—
( 0.7 )
—
—
( 0.7 )
Amortization of net actuarial gain (loss)
—
( 0.1 )
—
—
( 0.1 )
Foreign currency exchange
—
—
—
0.3
0.3
Other adjustments
—
—
—
0.2
0.2
Balance at March 31, 2025
$
( 14.0 )
$
7.3
$
( 0.4 )
$
0.3
$
( 6.8 )
Changes in accumulated other comprehensive income (loss) by component, net of tax, for the three months ended March 31, 2024 consisted of the following:
Accumulated
Post-
Non-
Other
Pension
Retirement
Qualified
Comprehensive
(In millions)
Benefits
Benefits
Plans
Other
Income (Loss)
Balance at December 31, 2023
$
( 20.3 )
$
11.0
$
( 0.2 )
$
1.3
$
( 8.2 )
Amortization of prior service credit
—
( 0.7 )
—
—
( 0.7 )
Amortization of net actuarial gain (loss)
0.1
( 0.2 )
—
—
( 0.1 )
Foreign currency exchange
—
—
—
( 0.9 )
( 0.9 )
Other adjustments
—
—
—
0.1
0.1
Balance at March 31, 2024
$
( 20.2 )
$
10.1
$
( 0.2 )
$
0.5
$
( 9.8 )
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11. 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 and cash equivalents, and CCF cash and cash equivalents and investments, and Level 2 inputs for fixed rate debt. The fair values of cash and cash equivalents, and cash and cash equivalents in the CCF approximate their carrying values due to the nature of the instruments. The fair value of investments in the CCF is calculated based upon quoted prices available in active markets. 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, 2025 and December 31, 2024 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)
March 31, 2025
Fair Value Measurements at March 31, 2025
Cash and cash equivalents
$
122.0
$
122.0
$
122.0
$
—
$
—
CCF - Cash and cash equivalent
$
290.8
$
290.8
$
290.8
$
—
$
—
CCF - Investments
$
394.6
$
395.7
$
395.7
$
—
$
—
Fixed rate debt
$
390.8
$
315.9
$
—
$
315.9
$
—
(In millions)
December 31, 2024
Fair Value Measurements at December 31, 2024
Cash and cash equivalents
$
266.8
$
266.8
$
266.8
$
—
$
—
CCF - Cash and cash equivalent
$
230.7
$
230.7
$
230.7
$
—
$
—
CCF - Investments
$
411.9
$
412.5
$
412.5
$
—
$
—
Fixed rate debt
$
400.9
$
317.7
$
—
$
317.7
$
—
12. 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 non-vested restricted stock units. The computation of weighted average common shares outstanding excluded a nominal amount of anti-dilutive restricted stock units for each period ended March 31, 2025 and 2024.
The computations for basic and diluted earnings per share for the three months ended March 31, 2025 and 2024 are as follows:
Three Months Ended March 31, 2025
Three Months Ended March 31, 2024
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:
$
72.3
32.8
$
2.20
$
36.1
34.4
$
1.05
Effect of Dilutive Securities:
—
0.4
( 0.02 )
—
0.2
( 0.01 )
Diluted:
$
72.3
33.2
$
2.18
$
36.1
34.6
$
1.04
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13. SHARE-BASED COMPENSATION
During the three months ended March 31, 2025, the Company granted time-based restricted stock units and performance-based shares to certain of its employees totaling approximately 133,200 shares with a combined weighted average grant date fair value of $ 143.66 per share.
Total share-based compensation cost recognized in the Condensed Consolidated Statements of Income and Comprehensive Income as a component of general and administrative expenses was $ 5.8 million and $ 5.7 million for the three months ended March 31, 2025 and 2024, respectively. Total unrecognized compensation cost related to unvested share-based compensation arrangements was $ 38.5 million at March 31, 2025, 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. 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, 2024 . 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, 2025 and 2024 consisted of the following:
Pension Benefits
Post-retirement Benefits
Three Months Ended March 31,
Three Months Ended March 31,
(In millions)
2025
2024
2025
2024
Components of net periodic benefit cost (credit):
Service cost
$
1.1
$
0.9
$
—
$
0.1
Interest cost
2.6
2.4
0.3
0.3
Expected return on plan assets
( 4.4 )
( 3.8 )
—
—
Amortization of net actuarial loss (gain)
—
0.1
( 0.2 )
( 0.2 )
Amortization of prior service credit
—
—
( 0.9 )
( 0.9 )
Net periodic benefit credit
$
( 0.7 )
$
( 0.4 )
$
( 0.8 )
$
( 0.7 )
15. COMMITMENTS AND CONTINGENCIES
Environmental Matters: The Company’s Ocean Transportation business has certain risks that could result in expenditures for environmental remediation. 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.
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.
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.