Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Matson Inc (MATX, Financial) reported higher year-over-year operating income in its Ocean Transportation segment, driven by significantly higher freight rates in its China service.
- The company experienced increased container volumes in Alaska due to two additional sailings, indicating strong demand in that region.
- Matson Inc (MATX) raised its outlook for 2024, expecting continued strength in its China service in the latter half of the year.
- The Logistics segment saw an increase in operating income, primarily due to higher contributions from supply chain management.
- Matson Inc (MATX) returned approximately $237.5 million to shareholders through dividends and share repurchases, demonstrating a commitment to shareholder value.
Negative Points
- Container volume in Hawaii decreased by 3.6% year-over-year, primarily due to lower general demand and reduced tourist arrivals.
- Guam experienced a 6.1% year-over-year decrease in container volume due to one less sailing compared to the previous year.
- The SSAT joint venture's contribution was lower than expected due to weaker volume across its terminals, particularly in the Pacific Northwest.
- Higher vessel operating costs, including fuel-related expenses, partially offset the increase in Ocean Transportation operating income.
- The company faces uncertainties in freight rate trajectories post-peak season due to factors like the US economy, interest rates, and geopolitical conditions.
Q & A Highlights
Q: Can you explain why SSAT did not experience as much volume as other ports despite increased activity on the West Coast?
A: Matthew Cox, Chairman and CEO, explained that SSAT operates eight terminals along the US West Coast. The volume typically fills up in Southern California first, then migrates north to Oakland, and lastly to the Pacific Northwest. The Pacific Northwest did not see the expected volume increase, which explains the lower averages for SSAT.
Q: What is happening with freight volumes, given the discrepancy between international freight markets and the domestic logistics market?
A: Matthew Cox noted that while international freight markets are performing well, domestic markets are not. Customers are managing inventory levels closely, and there is no surplus inventory. The consumer demand remains strong, supporting import levels. However, excess supply in trucking is putting downward pressure on rates.
Q: Is the supply chain management business a new focus for Matson, and how does it fit into the logistics strategy?
A: Matthew Cox confirmed that supply chain management is a growing part of Matson's logistics business, particularly in China. It involves consolidating less-than-container-load shipments and integrating them into Matson's expedited service. This segment is expected to grow organically as Matson's China business continues to perform well.
Q: Can you provide more details on the expected outperformance in Ocean Transportation for the third quarter?
A: Matthew Cox stated that the third quarter is expected to be "meaningfully higher" than the previous year, similar to the second quarter's performance. However, specific details were not provided, and the term "meaningfully" is left to interpretation.
Q: How are you planning to deploy the increased cash flow from stronger pricing, and is there any change in CapEx guidance?
A: Joel Wine, CFO, mentioned that the CapEx guidance was slightly increased due to higher costs on a specific LNG reengineering project. There is no change in the overall CapEx strategy, and the company remains committed to returning excess capital to shareholders through dividends and share repurchases.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
