Q4 2025 Matson Inc Earnings Call

February 24, 2026

Speaker #3: We believe that our expectations and assumptions are reasonable. We caution you to consider the risk factors that could cause actual results to differ materially from those in the forward-looking statements in the press release, the presentation slides, and this conference call.

Speaker #3: These risk factors are described in our press release and presentation, and are more fully detailed under the caption, "Risk Factors," on pages 28 to 40 of our Form 10-Q filed on November 5, 2025, and in our subsequent filings with the SEC.

Justin Schoenberg: These risk factors are described in our press release and presentation and are more fully detailed under the caption Risk Factors on pages 28 to 40 of our Form 10-Q, filed on 5 November 2025, and in our subsequent filings with the SEC. Please also note that the date of this conference call is 24 February 2026, and any forward-looking statements that we make today are based on assumptions as of this date. We undertake no obligation to update these forward-looking statements. I will now turn the call over to Matt.

Speaker #3: Please also note that the date of this conference call is February 24, 2026, and any forward-looking statements that we make today are based on assumptions as of this date.

Speaker #3: We undertake no obligation to update these forward-looking statements. I will now turn the call over to Matt.

Speaker #2: Thanks, Justin. And thanks to those on the call. Starting on slide three, Matson had a solid finish to the year with consolidated fourth-quarter results that exceeded our expectations.

Matt Cox: Thanks, Justin, thanks to those on the call. Starting on slide 3, Matson had a solid finish to the year with consolidated Q4 results that exceeded our expectations. For the quarter, ocean transportation operating income approached the level achieved in the prior year period, primarily due to higher-than-expected freight rates and volumes in our China service, driven by strong e-commerce and e-goods demand. Our China service benefited from strong freight demand in our key customer segments, as well as a more stable trading environment in the Transpacific trade lane as a result of the U.S.-China trade and economic deal announced on 30 October, which greatly reduced uncertainty regarding tariffs, port entry fees, global trade, and other geopolitical factors. In our domestic ocean trade lanes, we saw higher year-over-year volumes in Hawaii and Guam and lower year-over-year volume in Alaska.

Speaker #2: For the quarter, Ocean Transportation Operating Income approached the level achieved in the prior year period, primarily due to higher-than-expected freight rates and volumes in our China service, driven by strong e-commerce and e-goods demand.

Speaker #2: Our China service benefited from strong freight demand in our key customer segments as well as a more stable trading environment in the Trans-Pacific Trade Lane as a result of the US-China trade and economic deal announced on October 30th, which greatly reduced uncertainty regarding tariffs, port entry fees, global trade, and other geopolitical factors.

Speaker #2: In our domestic ocean trade lanes, we saw higher year-over-year volumes in Hawaii and Guam, and lower year-over-year volume in Alaska. In logistics, quarterly operating income decreased year-over-year primarily due to a lower contribution from supply chain management.

Matt Cox: In the logistics, quarterly operating income decreased year-over-year, primarily due to a lower contribution from supply chain management. For the full year, our consolidated operating income decreased year-over-year, primarily due to lower volume and freight rates in our China service over the last 3 quarters as customers managed freight in a challenging environment marked by uncertainty and volatility arising from tariffs and global trade. Looking ahead, for full year 2026, we expect consolidated operating income to approach the level achieved in the full year 2025, based on our expectations of continued solid US consumer demand and a stable trading environment in the Transpacific trade lane. For 2026 compared to 2025, we also expect to see a more normal operating income seasonality pattern, with our Q2 and Q3 being the strongest relative to the Q1 and Q4.

Speaker #2: For the full year, our consolidated operating income decreased year-over-year primarily due to lower volume and freight rates in our China service over the last three quarters, as customers managed freight in a challenging environment marked by uncertainty and volatility arising from tariffs and global trade.

Speaker #2: Looking ahead, for full year 2026, we expect consolidated operating income to approach the level achieved in full year 2025, based on our expectations of continued solid U.S. consumer demand and a stable trading environment in the Trans-Pacific trade lane.

Speaker #2: For 2026, compared to 2025, we also expect to see a more normal operating income seasonality pattern, with our second and third quarters being the strongest relative to the first and fourth quarters.

Speaker #2: I will now go through the fourth quarter and full-year performance of our trade lanes, SSAT, and logistics. So please turn to the next slide.

Matt Cox: I will now go through the Q4 and full year performance of our trade lanes, SSAT, and logistics. Please turn to the next slide. Hawaii container volume for the Q4 increased 0.6% year-over-year due to higher general demand. For the full year 2025, container volume increased 1.6% year-over-year, primarily due to higher general demand and a dry docking of a competitor's vessel in the first half of 2025. For the full year of 2026, we expect volume to be comparable to the level in 2025, reflecting similar economic conditions as 2025 and a stable market share. Please turn to Slide 5. According to UHERO's December economic report, the Hawaii economy remains sluggish as softer tourism and ongoing inflationary pressures, including elevated interest rates, more than offset strength in construction activity.

Speaker #2: Hawaii container volume for the fourth quarter increased 0.6% year-over-year due to higher general demand. For the full year 2025, container volume increased 1.6% year-over-year, primarily due to higher general demand and a dry docking of a competitor's vessel in the first half of 2025.

Speaker #2: For the full year 2026, we expect volume to be comparable to the level in 2025, reflecting similar economic conditions as 2025 and a stable market share.

Speaker #2: Please turn to slide five. According to UHERO's December economic report, the Hawaii economy remained sluggish as softer tourism and ongoing inflationary pressures, including elevated interest rates, more than offset strength in construction activity.

Matt Cox: International tourism remains weak. Visitor arrivals are expected to decline in 2026 before recovering in 2027. Maui tourism improved in 2025, but remains significantly below the levels prior to the devastating 2023 wildfires. Moving to our China service on Slide 6, Matson's container volume in Q4 2025 was 7.2% lower year-over-year. For the full year 2025, container volume decreased 9.5% year-over-year, primarily due to the difficult trading environment in the Trans-Pacific in the last 3 quarters of 2025, marked by continued uncertainty and volatility arising from tariffs and global trade. Please turn to Slide 7. In Q4 2025, we saw higher-than-expected freight rates and volume driven by strong e-commerce and e-goods demand.

Speaker #2: International tourism remains weak and visitor arrivals are expected to decline in 2026 before recovering in 2027. Maui tourism improved in 2025 but remained significantly below the levels prior to the devastating 2023 wildfires.

Speaker #2: Moving to our China service on slide six, Matson's container volume in the fourth quarter of 2025 was 7.2% lower year-over-year. For the full year 2025, container volume decreased 9.5% year-over-year primarily due to the difficult trading environment in the Trans-Pacific in the last three quarters of 2025, marked by continued uncertainty and volatility arising from tariffs and global trade.

Speaker #2: Please turn to slide seven. In the fourth quarter of 2025, we saw higher-than-expected freight rates and volume, driven by strong e-commerce and e-goods demand.

Speaker #2: Our China service benefited from strong freight and demand in our key customer segments as well as a more stable trading environment in the Trans-Pacific Trade Lane as a result of the US-China trade and economic deal announced on October 30th, which reduced uncertainty regarding tariffs, port entry fees, global trade, and other geopolitical factors.

Matt Cox: Our China service benefited from a strong freight and demand in our key customer segments, as well as a more stable trading environment in the Trans Pacific trade lane as a result of the U.S.-China trade and economic deal announced on 30 October, which reduced uncertainty regarding tariffs, port entry fees, global trade, and other geopolitical factors. So far in 2026, we've experienced stable freight demand up to the Lunar New Year holiday in mid-February. We did not see a traditional bump in demand prior to Lunar New Year. We expect freight demand to increase post-holiday as workers return to the factories and production ramps. As such, for Q1 2026, we expect lower volume compared to the prior year period as we return to a more traditional Lunar New Year environment. Please turn to the next slide.

Speaker #2: So far in 2026, we've experienced Year holiday in mid-February. We did not see a traditional bump in demand prior to Lunar New Year, but we expect freight demand to increase post-holiday as workers return to the factories and production ramps.

Speaker #2: As such, for the first quarter of 2026, we expect lower volume compared to the prior year period as we return to a more traditional Lunar New Year environment.

Speaker #2: Please turn to the next slide. For the full year 2026, we expect volume to be modestly higher than the level achieved in 2025, based on continued solid U.S. consumer demand and a more stable trading environment in the Trans-Pacific trade lane.

Matt Cox: For the full year 2026, we expect volume to be modestly higher than the level achieved in 2025, based on continued solid US consumer demand and a more stable trading environment in the Trans Pacific trade lane. The US consumer remains resilient. The US economy continues to show good growth. We believe the significant tariff uncertainties that we encountered last year are mostly behind us. We also expect to see a return to a more normal seasonality pattern in 2026, with our Q2 and Q3 being the strongest relative to the Q1 and Q4. As you may recall, we experienced a significant decline in volume in the Q2 2025 due to the implementation of tariffs. We expect our China volume in the Q2 this year to be higher than that level achieved from last year.

Speaker #2: The US consumer remains resilient, and the US economy continues to show good growth. And we believe the significant tariff uncertainties that we encountered last year are mostly behind us.

Speaker #2: We also expect to see a return to a more normal seasonality pattern in 2026 with our second and third quarters being the strongest, relative to the first and fourth quarters.

Speaker #2: As you may recall, we experienced a significant decline in volume in the second quarter of 2025 due to the implementation of tariffs, so we expect our China volume in the second quarter this year to be higher than the level achieved last year.

Matt Cox: 2026, we are not expecting all of our ships to be full. Our focus in the Trans Pacific trade lane is to maximize the yield in every sailing out of Shanghai and maintain price. The premium rates in our China service reflect our unique value proposition relative to air freight, and the consistency and reliability of our CLX and MAX services, which are the fastest and second fastest ocean services from Shanghai to Long Beach. In 2025, we moved with our customers. We added a second weekly for feeder service from Vietnam, and in December, commenced a weekly feeder service from Thailand. Our customers continue to look at shifting manufacturing out of China to diversify their operations. We remain focused on expanding our network in Southeast Asia. We continue to believe the maximum tariff uncertainty is behind us, with continued cooperation between the US and China.

Speaker #2: For 2026, we are not expecting all of our ships to be full. Our focus in the Trans-Pacific Trade Lane is to maximize the yield in every sailing out of Shanghai and maintain price.

Speaker #2: The premium rates in our China service reflect our unique value proposition relative to air freight and the consistency and reliability of our CLX and MAX services which are the fastest and second-fastest ocean services from Shanghai to Long Beach.

Speaker #2: In 2025, we moved with our customers. We added a second weekly feeder service from Vietnam, and in December commenced a weekly feeder service from Thailand.

Speaker #2: Our customers continue to look at shifting manufacturing out of China to diversify their operations. We remain focused on expanding our network in Southeast Asia.

Speaker #2: We continue to believe the maximum tariff uncertainty is behind us, with continued cooperation between the US and China. And as I said on previous earnings calls, there was too much at stake for both countries not to come to a long-term economic agreement.

Matt Cox: As I said on previous earnings calls, there is too much at stake for both countries not to come to a long-term economic agreement. Please turn to the next slide. In Guam, Matson's container volume in Q4 2025 increased 4.4% year-over-year. The increase was primarily due to higher general demand. For full year 2025, container volume decreased 4.3% year-over-year, primarily due to lower general demand. In the near term, we expect Guam's economy to moderate, reflecting a challenging tourism environment. As such, for 2026, we expect container volume to be comparable to the level achieved last year. Please turn to the next slide. In Alaska, Matson's container volume for Q4 2025 decreased 3.3% year-over-year.

Speaker #2: Please turn to the next slide. In Guam, Matson's container volume in the fourth quarter of 2025 increased 4.4% year-over-year. The increase was primarily due to higher general demand.

Speaker #2: For full-year 2025, container volume decreased 4.3% year-over-year, primarily due to lower general demand. In the near term, we expect Guam's economy to moderate, reflecting a challenging tourism environment.

Speaker #2: As such, for 2026, we expect container volume to be comparable to the level achieved last year. Please turn to the next slide. In Alaska, Matson's container volume for the fourth quarter of 2025 decreased 3.3% year-over-year.

Speaker #2: The decrease was primarily due to one less northbound sailing compared to the year-ago period, partially offset by higher export seafood volume on our AAX service.

Matt Cox: The decrease is primarily due to one less northbound sailing compared to the year-ago period, partially offset by higher export seafood volume on our AAX service. For full year 2025, container volume increased 1.7% year-over-year, primarily due to higher export seafood volume on AAX, partially offset by one less northbound sailing compared to the year-ago period. For full year 2026, we expect Alaska volume to be comparable to the level achieved last year. Please turn to slide 11. The Alaska economy continues to show good economic growth and improvement in key economic indicators, despite flattish growth in population. In 2025, the state continued to add jobs, with oil and gas and healthcare having the largest year-over-year increase.

Speaker #2: For full-year 2025, container volume increased 1.7% year-over-year, primarily due to higher export seafood volume on AAX, partially offset by one less northbound sailing compared to the year-ago period.

Speaker #2: For full-year 2026, we expect Alaska volume to be comparable to the level achieved last year. Please turn to slide 11. The Alaska economy continues to show good economic growth and improvement in key economic indicators despite flattish growth in population.

Speaker #2: In 2025, the state continued to add jobs, with oil and gas and healthcare having the largest year-over-year increase. For 2026, we expect continued economic growth in Alaska, supported by a low unemployment rate, jobs growth, and continued oil and gas production activity.

Matt Cox: For 2026, we expect continued economic growth in Alaska, supported by a low unemployment rate, jobs growth, and continued oil and gas production activity. The oil and gas sector continues to be a key driver of Alaska's economy. In recent years, we've seen meaningful investment in the North Slope projects. With more accommodative federal policies, there is the potential for significant investment supporting resources, resource development in the state. Please turn to slide 12. In the Q4, our SSAT terminal joint venture contributed $9.3 million, representing a year-over-year increase of $18.8 million. The increase was primarily due to an impairment charge related to a write-down of a terminal operating lease asset at SSAT, which negatively impacted our Q4 2024 operating income by $18.4 million.

Speaker #2: The oil and gas sector continues to be a key driver of Alaska's economy. In recent years, we've seen meaningful investment in the North Slope projects with more accommodative federal policies; there is the potential for significant investment supporting resources development in the state.

Speaker #2: Please turn to slide 12. In the fourth quarter, our SSAT terminal joint venture contributed $9.3 million representing a year-over-year increase of 18.8 million dollars.

Speaker #2: The increase was primarily due to an impairment charge related to a write-down of a terminal operating lease asset at SSAT, which negatively impacted our fourth quarter 2024 operating income by $18.4 million.

Speaker #2: For the full-year 2025, our SSAT terminal joint venture contributed 32.5 million dollars compared to a loss of $1 million in the prior year. The increase was due to the same 18.4 million dollar impairment charge and higher lift volume.

Matt Cox: For the full year 2025, our SSAT terminal joint venture contributed $32.5 million, compared to a loss of $1 million in the prior year. The increase was due to the same $18.4 million impairment charge and higher lift volume. In 2026, we expect the contribution from our SSAT terminal joint venture to be comparable to the $32.5 million achieved in 2025. Turning now to logistics on slide 13. Operating income in Q4 came in at $7.7 million, or $2.4 million lower than the result in the year-ago period. The decrease was primarily due to a lower contribution from supply chain management. For the full year 2025, operating income was $44.2 million, reflecting a year-over-year decrease of $6.2 million.

Speaker #2: In 2026, we expect the contribution from our SSAT terminal joint venture to be comparable to the $32.5 million achieved in 2025. Turning now to Logistics on slide 13, operating income in the fourth quarter came in at $7.7 million, or $2.4 million lower than the result in the year-ago period.

Speaker #2: The decrease was primarily due to a lower contribution from supply chain management. For the full year 2025, operating income was $44.2 million, reflecting a year-over-year decrease of $6.2 million.

Matt Cox: The decrease was primarily due to lower contributions from freight forwarding and transportation brokerage. For 2026, we are expecting operating income to approach the level achieved in 2025. I'll now turn the call over to my partner, Joel, for a review of our financial performance. Joel?

Speaker #2: The decrease was primarily due to lower contributions from forwarding and transportation brokerage. For 2026, we expect operating income to approach the level achieved in 2025.

Speaker #2: I'll now turn the call over to my partner, Joel, for a review of our financial performance. Joel. Okay, thanks, Matt. Please turn to slide 14 for a review of our fourth quarter and full-year 2025 results.

Joel Wine: Okay, thanks, Matt. Please turn to slide 14 for a review of our Q4 and full year 2025 results. For Q4, consolidated operating income decreased $3.8 million year-over-year to $143.7 million, with lower contributions from ocean transportation and logistics of $1.4 million and $2.4 million, respectively. The decrease in ocean transportation operating income in Q4 was primarily due to a lower contribution from China, partially offset by a higher contribution from SSAT. As Matt noted, the increase in SSAT equity income was primarily due to an impairment charge related to the write-down the terminal operating lease asset in the year-ago period, which impacted our operating income by $18.4 million. The decrease in logistics operating income was primarily due to a lower contribution from supply chain management.

Speaker #2: For the fourth quarter, consolidated operating income decreased 3.8 million year-over-year to $143.7 million with lower contributions from ocean transportation and logistics of 1.4 million and 2.4 million, respectively.

Speaker #2: The decrease in ocean transportation operating income in the fourth quarter was primarily due to a lower contribution from China, partially offset by a higher contribution from SSAT.

Speaker #2: As Matt noted, the increase in SSAT equity income was primarily due to an impairment charge related to the write-down of a terminal operating lease asset in the year-ago period, which impacted our operating income by $18.4 million.

Speaker #2: The decrease in Logistics operating income was primarily due to a lower contribution from Supply Chain Management. We had interest income of $6.7 million in the quarter, which is $3.6 million lower than the prior year, due to a lower balance of cash and cash equivalents and deposits in the CCF as compared to the prior year period.

Joel Wine: We had interest income of $6.7 million in the quarter, which is $3.6 million lower than the prior year, due to a lower balance of cash and cash equivalents and deposits in the CCF as compared to the prior year period. The effective tax rate in the quarter was 5.2%, compared to 19.1% in the year-ago period. We benefited from a one-time tax adjustment of $18.5 million, related to the company's deferred tax assets and liabilities, which favorably impacted diluted EPS by $0.59 of earnings per share. In Q4, net income and diluted earnings per share were $143.1 million and $4.60, respectively.

Speaker #2: The effective tax rate in the quarter was 5.2%, compared to 19.1% in the year-ago period. We benefited from a one-time tax adjustment of $18.5 million related to the company's deferred tax assets and liabilities, which favorably impacted diluted EPS by $0.59 per share.

Speaker #2: In the fourth quarter, net income and diluted earnings per share were $143.1 million and $4.60, respectively. For the full year, consolidated operating income decreased $51.5 million year-over-year to $499.8 million, with lower contributions from ocean transportation and logistics of $45.3 million and $6.2 million, respectively.

Joel Wine: For the full year, consolidated operating income decreased $51.5 million year-over-year to $499.8 million, with lower contributions from ocean transportation and logistics of $45.3 million and $6.2 million, respectively. The decrease in ocean transportation operating income for the year was primarily due to a lower contribution from China, partially offset by a higher contribution from SSAT. The decrease in logistics operating income was primarily due to lower contributions from freight forwarding and transportation brokerage. Please turn to the next slide. We continue to generate strong cash flows. For the trailing 12 months, we generated cash flow from operations of $547.1 million. We returned capital in the form of dividends and share repurchases of $348.2 million, and we had maintenance CapEx of $149.1 million.

Speaker #2: The decrease in ocean transportation operating income for the year was primarily due to a lower contribution from China partially offset by a higher contribution from SSAT.

Speaker #2: The decrease in logistics operating income was primarily due to lower contributions from freight forwarding and transportation brokerage. Please turn to the next slide. We continue to generate strong cash flows.

Speaker #2: For the trailing 12 months, we generated cash flow from operations of $547.1 million. We returned capital in the form of dividends and share repurchases of $348.2 million and we had maintenance capex of $149.1 million.

Speaker #2: Our cash flow from operations exceeded the aggregate spend on maintenance capex, dividends, and share repurchases by 49.8 million. Please turn to slide 16 for a summary of our share repurchase program and balance sheet.

Joel Wine: Our cash flow from operations exceeded the aggregate spend on maintenance CapEx, dividends, and share repurchases by $49.8 million. Please turn to slide 16 for a summary of our share repurchase program and balance sheet. During Q4, we repurchased approximately 0.7 million shares for a total cost of $78.1 million. For the full year 2025, we repurchased approximately 2.7 million shares for a total cost of $307.4 million. Since we initiated our share repurchase program in August 2021 through the end of 2025, we repurchased 13.9 million shares or 31.9% of our then outstanding shares for a total cost of approximately $1.3 billion.

Speaker #2: During the fourth quarter, we repurchased approximately 0.7 million shares for a total cost of $78.1 million. For the full year 2025, we repurchased approximately 2.7 million shares for a total cost of $307.4 million.

Speaker #2: Since we initiated our share repurchase program in August of 2021 through the end of 2025, we repurchased 13.9 million shares or 31.9% of our then outstanding shares for a total cost of approximately $1.3 billion.

Speaker #2: As we have said before, we are committed to returning excess capital to shareholders and plan to continue to do so in the absence of any large organic or inorganic growth investment opportunities.

Joel Wine: As we have said before, we are committed to returning excess capital to shareholders and plan to continue to do so in the absence of any large organic or inorganic growth investment opportunities. Turning to our debt levels, our total debt at the end of Q4 was $361.2 million, a reduction of $9.7 million from the end of Q3. For the year, we reduced total debt by $39.7 million. Please turn to slide 17. The table on this slide summarizes our $393.4 million in CapEx in 2025. We had capitalized vessel construction expenditures on our new Aloha Class vessels of $244.3 million, which consisted of $237.3 million in milestone payments and $7 million in capitalized interest and other costs.

Speaker #2: Turning to our debt levels, our total debt at the end of the fourth quarter was $361.2 million; a reduction of 9.7 million from the end of the third quarter.

Speaker #2: For the year, we reduced total debt by 39.7 million. Please turn to slide 17. The table on the slide summarizes our $393.4 million in capital expenditures in 2025.

Speaker #2: We had capitalized vessel construction expenditures on our new a lower-class vessels of $244.3 million which consisted of $237.3 million in milestone payments and $7 million in capitalized interest and other costs.

Speaker #2: Maintenance and other capital expenditures were $149.1 million, which is approximately $20 million higher than what we previously communicated on our third quarter earnings call.

Joel Wine: Maintenance and other capital expenditures were $149.1 million, which is approximately $20 million higher than what we previously communicated on our Q3 earnings call. This amount includes approximately $20 million of financially attractive early lease buyouts of equipment that was already in our fleet. Please turn to the next slide. The table at the top of slide 18 shows the key capital expenditures planned over the next three years. For 2026, we expect $425 million of new vessel construction expenditures, including capitalized interest and owner's items, and $150 to $170 million for maintenance and other CapEx to support our vessels, shoreside operations, and logistics businesses. This includes approximately $20 million in equipment lease buyouts, representing the final sizable tranche of these leases that were executed prior to the pandemic.

Speaker #2: This amount includes approximately $20 million of financially attractive early lease buyouts of equipment that was already in our fleet. Please turn to the next slide.

Speaker #2: The table at the top of slide 18 shows the key capital expenditures planned over the next three years. For 2026, we expect $425 million of new vessel construction expenditures, including capitalized interest and owner's items.

Speaker #2: And $150 to $170 million for maintenance and other capex to support our vessels shore-side operations and logistics businesses. This includes approximately $20 million in equipment lease buyouts representing the final sizable tranche of these leases that were executed prior to the pandemic.

Speaker #2: We also expect to purchase approximately $30 million more than normal in new containers and chassis this year to support our operations and growth. We are planning for greater than normal annual investment in equipment due to the currently favorable pricing dynamics primarily in new dry container pricing which is at an eight-year low.

Joel Wine: We also expect to purchase approximately $30 million more than normal in new containers and chassis this year to support our operations and growth. We are planning for greater than normal annual investment in equipment due to the currently favorable pricing dynamics, primarily in new dry container pricing, which is at an 8-year low. Turning to 2027 and 2028, we expect maintenance CapEx and other CapEx to revert to our targeted range of $100 million to $120 million. Given our plans to pull forward equipment spend this year, we expect maintenance and other CapEx in 2027 and 2028 to come in at the lower end of this range, absent any significant inflationary rises in new equipment costs.

Speaker #2: Turning to 2027 and 2028, we expect maintenance capex and other capex to revert to our targeted range of $100 to $120 million. Given our plans to pull forward equipment spend this year, we expect maintenance and other capex in 2027 and 2028 to come in at the lower end of this range, absent any significant inflationary rises in new equipment costs.

Speaker #2: As of December 31st, we had cash and cash equivalents of approximately $142 million and approximately $533 million in our capital construction fund. Our CCF covers approximately 92% of our remaining milestone payment obligations and when combined with our balance sheet cash exceeds our remaining payment obligations.

Joel Wine: As of 31 December, we had cash and cash equivalents of approximately $142 million and approximately $533 million in our Capital Construction Fund. Our CCF covers approximately 92% of our remaining milestone payment obligations, and when combined with our balance sheet, cash exceeds our remaining payment obligations. Therefore, we continue to be in a great funding position on the new build program. The table in the bottom right of this slide shows our expected 2026 milestone payments by quarter. All payments will be made from our Capital Construction Fund, with funds already set aside for these obligations. With that, now let me turn to slide 19 and walk through our outlook for Q1 and full year 2026.

Speaker #2: Therefore, we continue to be in great funding position on the new build program. The table in the bottom right of the slide shows our expected 2026 milestone payments by quarter.

Speaker #2: All payments will be made from our capital construction fund with funds already set aside for these obligations. With that, now let me turn to slide 19 and walk through our outlook for the first quarter and full year 2026.

Speaker #2: For the first quarter of 2026, we expect ocean transportation operating income to be approximately $50 million which is lower than the first quarter last year, primarily due to lower volume in our China service.

Joel Wine: For Q1 2026, we expect ocean transportation operating income to be approximately $50 million, which is lower than Q1 last year, primarily due to lower volume in our China service. We expect logistics operating income in Q1 to be modestly lower than the $8.5 million achieved in Q1 2025. As such, we expect consolidated operating income in Q1 to be lower than the prior year. For the full year 2026, we expect ocean transportation operating income to approach the $455.6 million achieved in 2025.

Speaker #2: We expect logistics operating income in the first quarter to be modestly lower than the $8.5 million achieved in the first quarter of 2025. As such, we expect consolidated operating income in the first quarter to be lower than the prior year.

Speaker #2: For the full year 2026, we expect ocean transportation operating income to approach the $455.6 million achieved in 2025. For logistics for the full year 2026, we expect operating income to approach the $44.2 million achieved in 2025, and as such, we expect consolidated operating income for the full year 2026 to approach the $499.8 million achieved in 2025.

Joel Wine: For logistics for the full year 2026, we expect operating income to approach the $44.2 million achieved in 2025, and as such, we expect consolidated operating income for the full year 2026 to approach the $499.8 million achieved in 2025. In addition to this full year operating income outlook, we expect the following for the full year: depreciation and amortization to approximate $210 million, including approximately $35 million for dry dock amortization. Interest income to be approximately $15 million, and interest expense to be approximately $6 million. Other income to be approximately $7 million, an effective tax rate of approximately 21%, and dry docking payments of approximately $45 million. I'll now turn the call back over to Matt.

Speaker #2: In addition to this full year operating income outlook, we expect the following for the full year. Depreciation and amortization to approximate $210 million including approximately $35 million for dry dock amortization, interest income to be approximately $15 million and interest expense to be approximately $6 million, other income to be approximately $7 million, and effective tax rate of approximately 21%.

Speaker #2: And dry docking payments of approximately $45 million. I'll now turn the call back over to Matt.

Speaker #1: Okay. Thanks, Joel. Let me close with a few final thoughts. Matson's well-positioned across its business lines as we head into 2026. The US economy remains solid, underpinned by a supportive macroeconomic environment and healthy consumer spending.

Matt Cox: Okay, thanks, Joel. Let me close with a few final thoughts. Matson's well-positioned across its business lines as we head into 2026. The US economy remains solid, underpinned by a supportive macroeconomic environment and healthy consumer spending. The tariff uncertainties from 2025 are mostly behind us, which we expect to provide stability in the Transpacific trading environment. Across all our trade lanes, we remain focused on what we can control, including vessel and schedule integrity, reliability of our operations, and delivering a high-quality service for our customers. These attributes are ingrained in our company's culture through decades-long relationships with our customers, working closely with them and through periods of uncertainty and volatility. In our China service, we're focused on expanding our network in Southeast Asia as our customers continue to diversify their operating locations in the region.

Speaker #1: And the tariff uncertainties from 2025 are mostly behind us, which we expect to provide stability in the Trans-Pacific trading environment. Across all our trade lanes, we remain focused on what we can control, including vessel and schedule integrity, reliability of our operations, and delivering a high-quality service for our customers.

Speaker #1: These attributes are ingrained in our company's culture through decades-long relationships with our customers working closely with them and through periods of uncertainty and volatility.

Speaker #1: In our China service, we're focused on expanding our network in Southeast Asia, as our customers continue to diversify their operating locations in the region.

Speaker #1: Supply chains are becoming more complex, making speed-to-market and schedule integrity paramount for our customers. As the fastest and second-fastest ocean service in the Trans-Pacific, our CLX and MAX services are well-suited for increasing supply chain complexity and tighter inventory control by our customers.

Matt Cox: Supply chains are becoming more complex, making speed to market and schedule integrity paramount for our customers. As the fastest and second fastest ocean service in the Transpacific, our CLX and MAX services are well suited for increasing supply chain complexity and tighter inventory control by our customers. The premium rates in our China service reflect our unique value proposition relative to air freight, and the consistency and reliability of our CLX and MAX services. Our rates in the Transpacific trade lanes remain strong, and we expect to continue to focus on maximizing yield with every weekly sailing from China. We remain committed to looking for ways to grow, either organically or periodically through acquisition. Excuse me. Last, we expect to continue to return capital to shareholders through dividends and our share repurchase program.

Speaker #1: The premium rates in our China service reflect our unique value proposition relative to air freight and the consistency and reliability of our CLX and MAX services.

Speaker #1: Our rates in the Trans-Pacific trade lanes remain strong and we expect to continue to focus on maximizing yield with every weekly sailing from China.

Speaker #1: We remain committed to looking for ways to grow, either organically or periodically through acquisition. Last, we expect to—excuse me. Last, we expect to continue to return capital to shareholders through dividends and our share repurchase program.

Speaker #1: We expect to continue to be steady buyers of our shares. And with that, I will turn the call back to the operator and ask for your questions.

Matt Cox: We expect to continue to be steady buyers of our shares. With that, I will turn the call back to the operator and ask for your questions.

Speaker #3: Certainly. Once again, ladies and gentlemen, if you do have a question at this time, please press *11 on your telephone. And our first question for today comes from the line of Jacob Lax from Wolfe Research.

Operator: Certainly. Once again, ladies and gentlemen, if you do have a question at this time, please press star one on your telephone. Our first question for today comes from the line of Jake Lacks from Wolfe Research. Your question, please.

Speaker #3: Your question, please.

Jake Lacks: Hey, Matt. Hey, Joel. Thanks for your time.

Speaker #4: Hey, Matt. Hey, Joel. Thanks for your time. So a year ago, you gave hey, so a year ago, you gave more of a guidance range dependent on the return of a red sea sailings.

Matt Cox: Hey, Matt.

Jake Lacks: A year ago, you gave more of a guidance range, dependent on the return of Red Sea sailings. This year, you're giving more of a point estimate. To the extent we see a broader resumption in Red Sea sailings, do you think that matters for you? Is this in the guidance one way or the other?

Speaker #4: This year, you're giving more of a point estimate to the extent we see a broader resumption in red sea sailings. Do you think that matters for you?

Speaker #4: And is this in the guidance one way or the other?

Speaker #1: Yeah. Thanks for the question. From our perspective, and we mentioned this in one, I think, our last quarterly call, because of our relative positioning we do see the broader Trans-Pacific trade as oversupplied.

Matt Cox: Yeah, I. Thanks for the question. From our perspective, and we mentioned this in one, I think our last quarterly call, because of our relative positioning, we do see the broader Transpacific trade as oversupplied. That is, capacity, and the ship order book exceeds expected demand, and there's pressure on international freight rates. We also know that, or as estimated, that if the Red Sea does open or reopen, that adds somewhere between 7% to 9% of additional capacity that would be available to be deployed, given the shorter transits. Our guidance is independent of whether the Red Sea opens or doesn't.

Speaker #1: That is, capacity and the ship order book exceeds expected demand. And there's pressure on international freight rates. We also know that or has estimated that if the red sea does open, or reopen, that that adds somewhere between 7 and 9 percent of additional capacity that would be available to be deployed given the shorter transits.

Speaker #1: And our guidance is independent of whether the Red Sea opens or doesn't. We said it largely doesn't matter to us. The ocean freight rates, the ability of the ocean carriers to set the appropriate capacity to support their freight rates—our product has increasingly distanced itself from the supply chain on the generic ocean services.

Matt Cox: We said it largely doesn't matter to us, the ocean freight rates, the ability of the ocean carriers to set the appropriate capacity to support their freight rates. Our product has increasingly distanced itself from the supply chain on the generic ocean services, so it really doesn't matter to us. Accordingly, we really don't have a view of it, because I don't think it affects our own guidance.

Speaker #1: So it really doesn't matter to us. And so, accordingly, we really don't have a view of it because I don't think it affects our own guidance.

Jake Lacks: Got it. That's helpful. You discussed expectation for demand to return post-holiday. Maybe it's a bit too early, but have you seen any signs of a normal seasonal recovery coming out of Lunar New Year yet? Do you have any visibility in that, or is this just an expectation based on history?

Speaker #4: Yeah. That's helpful. And you discussed expectation for demand-to-return post-holiday. Maybe it's a bit too early, but have you seen any signs of a normal seasonal recovery coming out of Lunar New Year yet?

Speaker #4: Or do you have any visibility into that? Or is this just an expectation based on history?

Speaker #1: I mean, I think it feels to us like a more traditional Lunar New Year recovery. We saw demand first of all, in my prepared comments, we saw no significant spike pre-Lunar New Year.

Matt Cox: I mean, I think it feels to us like a more traditional Lunar New Year recovery, where we saw demand, first of all, in my prepared comments, we saw no significant spike pre-Lunar New Year. factory by factory, they made the decision about looking at their order books. Did they close a little bit early? Are they gonna wait a week or two longer for labor to return? That historically, they have a benefit of this whole high-speed rail network, it used to take several days for people who lived in the remote regions to return, now that's really accelerated.

Speaker #1: And factory by factory, they made the decision by looking at their order books. Did they close a little bit early? Are they going to wait a week or two longer for labor to return?

Speaker #1: Historically, they have benefited from this whole high-speed rail network. So it used to take several days for people who lived in the remote regions to return.

Speaker #1: And now that's really accelerated. From a demand standpoint, I guess the way I would put it is we've seen a very traditional recovery from Lunar New Year, which means it's not a speedy recovery, nor is it lagging.

Matt Cox: From a demand standpoint, I guess the way I would put it is, we've seen a very traditional recovery from Lunar New Year, which means it's not a speedy recovery, nor is it lagging. It feels to us really normal at this point. As you point out, time will tell here in terms of the ramp. A little bit early to see it, but we think it'll, with the benefit of hindsight, look like a very traditional Lunar New Year post ramp.

Speaker #1: It feels to us really normal at this point. But as you point out, time will tell here in terms of the ramp. So a little bit early to see it.

Speaker #1: But we think it'll, with the benefit of hindsight, look like a very traditional Lunar New Year post-ramp.

Jake Lacks: That's helpful. We're hearing more and more about data center related volumes moving through air freight. Is any of that spilling over into your expedited ocean service, or is the strength more consumer electronics and e-commerce volumes that you've discussed in the past?

Speaker #4: That's helpful. And we're hearing more and more about data center-related volumes moving through air freight. Is any of that spilling over into your expedited ocean service?

Speaker #4: Or is the strength more consumer electronics and e-commerce volumes that you've discussed in the past?

Speaker #1: Yeah. I mean, there is a subcomponent within our e-goods segment. We're talking about e-commerce, e-goods, garments, the traditional product. But within the electronic goods category, we are moving racking and servers.

Matt Cox: Yeah, I mean, there is a subcomponent within our e-goods segment. You know, we're talking about e-commerce, e-goods, garments, the traditional product, but within the electronic goods category, we are moving racking and servers. Again, to your point, it's moving out of air freight into our expedited service. That's a component of our e-goods that we're seeing in the Q4 and expect to continue to see in 2026.

Speaker #1: And again, to your point, it's moving out of air freight into our expedited service. So that's a component of our e-goods that we're seeing in the fourth quarter and expect to continue to see in 2026.

Speaker #4: Got it. Thanks. I'll turn it over.

Jake Lacks: Got it. Thanks. I'll turn it over.

Speaker #3: Thank you. And our next question comes from the line of Reed See from Stephens Inc. Your question, please.

Operator: Thank you.

Matt Cox: Thank you.

Operator: Our next question comes from the line of Reed Seay from Stephens Inc. Your question please.

Speaker #5: Hey, guys. Thanks for taking my question. I wanted to get a feel for how you see the pricing environment here in 2026. Obviously, it's been a common theme throughout 2025, the new pricing strategy.

Reed Seay: Hey, guys. Thanks for taking my question. I wanted to get a feel for how you see the pricing environment here in 2026. Obviously, it's been a common theme throughout 2025, the new pricing strategy. Do you see your ability to maybe increase it from where you exited 2025, or maybe do volumes not support a price increase this year? Just any thoughts on how you're thinking about pricing going into the year?

Speaker #5: And do you see your ability to maybe increase it from where you exited 2025? Or maybe do volumes not support a price increase this year?

Speaker #5: Just any thoughts on how you're thinking about pricing going into the year?

Speaker #1: Sure. Yeah. We did, as you know, we pivoted last year to focus not necessarily on filling our ships, but rather on yield management.

Matt Cox: Sure. Yeah. You know, we pivoted last year to be focusing on not necessarily filling our ships, but rather focusing on yield management. Part of that was informed by our belief that we could lower the rate, but given the gap we had over the ocean freight rates, we couldn't lower the rates far enough to create demand, given how far our freight rates were above the rest of the market. We see that dynamic continuing to play out in 2026. I would expect for us to, like most carriers, we'll see a ramp up post-Lunar New Year. We'll be watching closely where our demand is week by week.

Speaker #1: And part of that was informed by our belief that we could lower the rate but given the gap we had over the ocean freight rates, we couldn't lower the rates far enough to create demand, given how far our freight rates were above the rest of the market.

Speaker #1: We see that dynamic continuing to play out in 2026. And so I would expect for us to, like most carriers, we'll see a ramp-up post-Lunar New Year.

Speaker #1: We'll be watching closely where our demand is week by week. We're focusing less on the other ocean carriers, and we've given ourselves permission to not have our vessels full while we're focusing on both growing our Southeast Asia cargo and introducing those services to the MAX and CLX service parameters into the new markets in Southeast Asia.

Matt Cox: We're focusing less on the other ocean carriers. We've given ourselves permission to not have our vessels full while we're focusing on both growing our Southeast Asia cargo and introducing those services to the MAX and CLX service parameters into the new markets in Southeast Asia. That'll be an area that we're gonna continue to focus on. Of course, continuing to support our traditional customers out of China for e-commerce and e-goods and garments, those traditional lanes. Getting back to pricing, I think we're thinking 2026 is gonna look a lot like 2025 in terms of our disciplined approach to the market.

Speaker #1: That'll be an area that we're going to continue to focus on. And then, of course, continuing to support our traditional customers out of China for e-commerce and e-goods and garments, those traditional lanes.

Speaker #1: So as it but getting back to pricing, I think 20 we're thinking 2026 is going to look a lot like '25 in terms of our disciplined approach to the market.

Matt Cox: Beyond that, you know, time will tell, but we feel confident enough at this point to provide the guidance from full year earnings to approach the level we saw in 2025.

Speaker #1: Beyond that, time will tell. But we feel confident enough at this point to provide the guidance on full-year earnings to approach the level we saw in 2025.

Matt Cox: Beyond that, you know, time will tell, but we feel confident enough at this point to provide the guidance from full year earnings to approach the level we saw in 2025.

Speaker #5: Got it. That's helpful. And then if we can touch a little bit more on the Thailand route y'all introduced in December. What type of volume is that doing today?

Reed Seay: Got it. That's helpful. If we can touch on a little bit more the Thailand route y'all introduced in December. What type of volume is that doing today? What type of volume can it do in the future? I guess, what is the opportunity that this presents to Matson? I assume this is being trucked to China as opposed to being shipped, like, from Vietnam. Is this more favorable economics? Any color there would be helpful as well.

Speaker #5: What type of volume can it do in the future? I guess, what is the opportunity that this presents to Matson? And I assume this is being trucked to China as opposed to being shipped from Vietnam.

Speaker #5: Is this more favorable economics? Or any color there would be helpful as well.

Speaker #1: Yeah, sure. As it relates to Thailand, as you said, we started that just at the end of the year. And similar to our ramp in Vietnam, first in North Vietnam and then last year in South Vietnam, we expect slow and steady volumes.

Matt Cox: Yeah, sure. As it relates to Thailand, as you said, we started that just at the end of the year. Similar to our ramp in Vietnam, first in North Vietnam and then last year in South Vietnam, we expect a slow and steady volumes. They're consistent with our expectations. You know, it's starting out at 50 loads per sailing, and again, we're just getting started. What's interesting about the customer mix, it's many of the customers that support us in Vietnam and in China are those that know our value proposition. Our goal, of course, we're new to that market, but we'll be continuing to build an organization and work on expanding that book of business.

Speaker #1: They're consistent with our expectation. It's starting out at 50 loads per sailing. And again, we're just getting started. What's interesting about the customer mix, it's many of the customers that support us in Vietnam and in China, are those that know our value proposition.

Speaker #1: But our goal, of course, we're new to that market. And we'll be continuing to build an organization and work on expanding that book of business.

Speaker #1: We don't quite have a specific target in mind, but we do expect our volumes—if you look at our China services for the full year—we'll look back, and our goal is to have modestly higher volume for the full year out of all of our origins. But we do expect continued growth both in Thailand and in Vietnam.

Matt Cox: We don't quite have a specific target in mind, but we do expect our volumes, if you look at our China services for the full year, we'll look back, and our goal is to have modestly higher volume for the full year out of all of our origins. We do expect continued growth, both in Thailand and in Vietnam. Let me comment on the mode in which it travels. If you look historically, at Matson's business on the CLX service with its Shanghai, Ningbo origin, we saw a number of containers that were moving cross-border initially, whether it's from Vietnam or whether it was from Cambodia, from Thailand, that trucked all the way across multiple borders to meet our CLX service.

Speaker #1: Let me comment on the mode in which it travels. So if you look historically, at Matson's business on the CLX service with its Shanghai Ningbo origin, we saw a number of containers that were moving cross-border initially whether it's from Vietnam or whether it was from Cambodia, from Thailand, that trucked all the way across multiple borders to meet our CLX service.

Speaker #1: What we've seen as we moved initially into Vietnam, there's a certain amount of cargo that is carried on our two-weekly Vietnam services that is trucked over the border from Cambodia.

Matt Cox: What we've seen as we moved initially into Vietnam, there's a certain amount of cargo that are carried on our two weekly Vietnam services that are trucked over the border from Cambodia today. As we move to Thailand, there is still some cargo that will move via truck to our various origins, but we also are moving cargo with our trusted feeder partner on a ocean direct service from Thailand to meet up with our services. We are still seeing some cross-border trucking, but we have an all-water option with our trusted feeder partner to allow for that direct connection into Shanghai.

Speaker #1: Today, as we move to Thailand, there is still some cargo that will move via truck to our various origins but we also are moving cargo with our trusted feeder partner on an ocean direct service from Thailand to meet up with our services.

Speaker #1: So we are still seeing some cross-border trucking but we have an all-water option with our trusted feeder partner to allow for that direct connection into Shanghai.

Speaker #5: Got it. Got it. That makes a lot of sense. And then last one from me. The administration put out a maritime action plan. There was a little bit in it.

Reed Seay: Got it. Got it. That makes a lot of sense. Last one from me. If the administration put out a Maritime Action Plan, there was a little bit in it, obviously, some of it concerning Jones Act, American-built ships. I'm not sure if there's anything in there that you expect to impact Matson or if there's anything that we should be looking out for on our side as we see maybe next steps from the administration's plans there. I guess anything stand out to you in that release from the administration?

Speaker #5: Obviously, some of it concerning Jones Act, American-built ships. I'm not sure if there's anything in there that you expect to impact Matson or if there's anything that we should be looking out for on our side, as we see maybe next steps from the administration's plans there.

Speaker #5: So, I guess—anything stand out to you in that release from the administration?

Speaker #1: Yeah. Sure. And again, thanks for the question. So my take on this is this maritime action plan represents really I would call it an aspirational blueprint to revive US shipbuilding and, in particular, US shipbuilding in the international trades.

Matt Cox: Yeah, sure. Again, thanks for the question. My take on this is, this America's Maritime Action Plan represents really, I would call it an aspirational blueprint to revive U.S. shipbuilding, and in particular, U.S. shipbuilding in the international trades. It is very comprehensive for those that have taken the time to read it. It's clear that well, there's no time frames attached to this. Of course, there were no specific proposed changes to the Jones Act. Rather, the focus was really on recreating a U.S. flag vessel fleet in the international trades. It did include a infrastructure or security fee based on the weight of imported cargo, again, without any specific time frame.

Speaker #1: It's very comprehensive for those that have taken the time to read it. It's clear that while there are no timeframes attached to this, and of course, there were no specific proposed changes to the Jones Act.

Speaker #1: Rather, the focus was really on recreating a US-flagged vessel fleet in the international trades. And it did include a infrastructure or security fee based on the weight of imported cargo.

Speaker #1: Again, without any specific timeframe. Those funds could be used to create a trust fund. But they also acknowledged that it was likely to need congressional approval to create this new mechanism on security fees.

Matt Cox: Those funds could be used to create a trust fund, but they also acknowledged that it was likely to need congressional approval to create this new mechanism on security fees, and again, with no time frame. My take on it is, it's really aspirational. There's no specific time frame on it. It doesn't impact the Jones Act. Exactly the timing and what pieces will roll out in what order is really not clear, but it does require, we think, congressional approval. Those are my thoughts on the Maritime Action Plan at this point.

Speaker #1: And again, with no timeframe. My take on it is it's really aspirational. There's no specific timeframe on it. It doesn't impact the Jones Act.

Speaker #1: And exactly the timing and what pieces will roll out in what order is really not clear. But it does require, we think, congressional approval.

Speaker #1: So those are my thoughts on the maritime action plan at this

Speaker #5: That's very helpful. Thank you. Thank you. And our next question is a follow-up from Jacob Lax from Wolf Research. Your question, please.

Operator: That's very helpful. Thank you.

Matt Cox: Sure.

Operator: Thank you. Our next question is a follow-up from Jake Lacks from Wolfe Research. Your question, please.

Jake Lacks: Hey, thanks. Just 1 quick clarification. Were there any port fees you paid in the 4Q results?

Speaker #6: Hey. Thanks. Just one quick clarification. Were there any port fees you paid in the 4Q results?

Joel Wine: It's Joel, Jake. The $6.4 million that we'd already disclosed was the total of what we paid in Q4.

Speaker #1: It's Joel, Jake. The $6.4 million that we'd already disclosed was the total, but we paid it in the fourth quarter.

Joel Wine: It's Joel, Jake. The $6.4 million that we'd already disclosed was the total of what we paid in Q4.

Speaker #6: Okay. Great. Thank you.

Jake Lacks: Okay, great. Thank you.

Speaker #1: Okay. Thanks, Jake.

Joel Wine: Okay. Thanks, Jake.

Speaker #7: Thank you. This does conclude the question-and-answer session of today's program. I'd like to hand the program back to Matt Cox for any further remarks.

Operator: Thank you. This does conclude the question and answer session of today's program. I'd like to hand the program back to Matt Cox for any further remarks.

Speaker #1: Okay. Well, thanks for your participation today. We look forward to catching up with everyone on our first quarter call.

Matt Cox: Okay. Well, thanks for your participation today. We look forward to catching up with everyone on our Q1 call.

Operator: Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.

Q4 2025 Matson Inc Earnings Call

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