Matson, Inc.

Matson, Inc. is a leading provider of ocean transportation and logistics services, operating through two segments: Ocean Transportation and Logistics. The Ocean Transportation business, conducted through Matson Navigation Company (MatNav) founded in 1882, 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, and also operates premium, expedited services from China to Long Beach, California, services to Okinawa, Japan and various islands in the South Pacific, and an international export service from Alaska to Asia. The Logistics business, conducted through Matson Logistics (established in 1987), extends the geographic reach of Matson's transportation network throughout North America and Asia, providing multimodal transportation brokerage, less-than-container load consolidation and freight forwarding, warehousing, and supply chain management services.

In the Hawaii service, Matson is the largest carrier of ocean cargo between the U.S. West Coast and Hawaii, with one primary U.S. flagged Jones Act competitor, Pasha, and a barge operator, Aloha Marine Lines. In the Alaska service, Matson has one primary U.S. flagged Jones Act competitor, Totem Ocean Trailer Express, and two primary barge operators, Alaska Marine Lines and Samson Tug & Barge. In the China service, major competitors include international transpacific carriers such as CMA CGM, Zim, Hede and Cosco. In the Guam service, the primary competitor is APL, a subsidiary of CMA CGM. In the Japan service, the major competitor is APL. Matson's Logistics Transportation Brokerage services compete most directly with C.H. Robinson Worldwide, Hub Group, RXO and J.B. Hunt, while its Freight Forwarding services compete with Carlile, Lynden and Odyssey. The Company's 10 largest Ocean Transportation customers account for approximately 19 percent ¹ of the Company's Ocean Transportation revenue, and its 10 largest logistics customers account for approximately 17 percent ² of the Company's Logistics revenue.

Matson generates revenue through two segments: Ocean Transportation and Logistics. Ocean Transportation revenue is derived from ocean carriage services including lift-on/lift-off, roll-on/roll-off and conventional services across multiple trade lanes (Hawaii, China, Guam, Japan, Micronesia, Alaska, South Pacific), as well as terminal and other related services such as stevedoring, refrigerated cargo services, inland transportation, and container equipment maintenance. Logistics revenue is generated from multimodal transportation brokerage, freight forwarding (primarily to the Alaska market through Span Alaska), warehousing, and supply chain management services including purchase order management, customs brokerage, and NVOCC freight forwarding. The Company's Ocean Transportation services have historically experienced seasonality in volume, generally following a pattern of increasing volume starting in the second quarter of each year culminating in the early part of the fourth quarter, while Logistics businesses experience seasonality in demand with elevated activity starting in the second quarter and peaking in the third quarter.

The Ocean Transportation segment provides services across multiple trade lanes. The Hawaii service provides ocean carriage between Long Beach and Oakland, California; Tacoma, Washington; and Honolulu, Hawaii, with a network of inter-island barges connecting to other major Hawaii ports. The China service includes the expedited China-Long Beach Express (CLX) service and the Matson Asia Express (MAX) service, both carrying cargo from Ningbo and Shanghai, China to Long Beach, California, with CLX also calling at Honolulu, Guam, and Okinawa, Japan. The Guam service provides weekly carriage between the U.S. West Coast and Guam as part of the CLX service. The Japan service provides weekly carriage to the port of Naha in Okinawa, Japan as part of the CLX service. The Micronesia service provides carriage between the U.S. West Coast and islands in the Republic of the Marshall Islands, the Federated States of Micronesia, and the Republic of Palau. The Alaska service provides ocean carriage between Tacoma, Washington and Anchorage, Kodiak and Dutch Harbor, Alaska, and includes the Alaska-Asia Express (AAX) service carrying seafood from Alaska to Asia. The South Pacific service (NZX) provides carriage between Auckland, New Zealand and select islands in the South Pacific. The segment also includes terminal services at terminals in Hawaii and Alaska, and a 35 percent ³ ownership interest in SSA Terminals, LLC (SSAT), a joint venture that provides terminal and stevedoring services at seven terminal facilities on the U.S. West Coast, including three facilities dedicated for Matson's use. For the year ended December 31, 2025, Ocean Transportation revenue was $2,735.5 million ⁴ and operating income was $455.6 million ⁵.

The Logistics segment provides Transportation Brokerage services including intermodal rail, highway, and other third-party logistics services for North American customers and international ocean carrier customers, utilizing an owned fleet of 53-foot intermodal containers. Freight Forwarding services are provided primarily to the Alaska market through Span Alaska, which aggregates LCL freight at cross-dock facilities in Auburn, Washington for shipment to Anchorage and a network of other facilities in Alaska. Warehousing services are provided through two warehouses in Georgia and two warehouses in Northern California. Supply Chain Management and other services include purchase order management, booking services, customs brokerage, LCL and full container load NVOCC freight forwarding services, with operations in North America, China and other Asian countries. For the year ended December 31, 2025, Logistics revenue was $609.0 million ⁶ and operating income was $44.2 million ⁷.

Matson is constructing three new Aloha Class vessels (MAKUA, MALAMA, and MAKENA) with expected delivery dates in Q1 2027 ⁸, Q3 2027 ⁹, and Q2 2028 ¹⁰, respectively, each with a capacity of 3,440 TEUs ¹¹ and 400 reefer slots ¹². The cost of the fleet renewal program is approximately $1.0 billion ¹³ (excluding owner's items and change orders). As of December 31, 2025, total vessel construction obligations for the three Aloha Class containerships were $1,006.0 million ¹⁴, with $426.8 million ¹⁵ already paid and future milestone payments of $373.4 million ¹⁶ in 2026, $180.6 million ¹⁷ in 2027, $22.3 million ¹⁸ in 2028, and $2.9 million ¹⁹ in 2029. Matson completed the first phase of its Hawaii Terminal Modernization and Expansion Program at Sand Island, Honolulu, including installation of three new 65 long-ton capacity gantry cranes ²⁰, and is progressing on the second phase. During the year ended December 31, 2025, the Company repurchased approximately 2.7 million ²¹ shares for a total cost of $307.4 million ²². The Board declared a cash dividend of $0.36 per share ²³ for the first quarter 2026. On June 24, 2021, the Board approved a share repurchase program of up to 3.0 million shares ²⁴, with subsequent approvals for the addition of 3.0 million shares ²⁵ on each of January 27, 2022, August 23, 2022, April 27, 2023, and February 27, 2025, for an aggregate total authorization of 15.0 million shares ²⁶ of common stock, expiring on December 31, 2027 ²⁷.

For the fiscal year ended December 31, 2025, total operating revenue was $3,344.5 million ²⁸, a decrease of $77.3 million ²⁹ or 2.3% ³⁰ compared to $3,421.8 million ³¹ in 2024. Operating income was $499.8 million ³², a decrease of $51.5 million ³³ or 9.3% ³⁴ compared to $551.3 million ³⁵ in 2024. Net income was $444.8 million ³⁶, a decrease of $31.6 million ³⁷ or 6.6% ³⁸ compared to $476.4 million ³⁹ in 2024. Diluted earnings per share were $13.81 ⁴⁰ compared to $13.93 ⁴¹ in the prior year. Net cash provided by operating activities was $547.1 million ⁴² compared to $767.8 million ⁴³ in 2024. Cash and cash equivalents were $141.9 million ⁴⁴ at December 31, 2025, compared to $266.8 million ⁴⁵ at December 31, 2024.

For the first quarter 2026, the Company expects Ocean Transportation operating income to be approximately $50 million ⁴⁶. For full year 2026, the Company expects Ocean Transportation operating income to approach the level achieved in full year 2025 ⁴⁷. For the first quarter 2026, the Company expects Logistics operating income to be modestly lower than the $8.5 million ⁴⁸ achieved in the first quarter 2025. For full year 2026, the Company expects Logistics operating income to approach the $44.2 million ⁴⁹ achieved in full year 2025. For the first quarter 2026, the Company expects consolidated operating income to be lower than the $82.1 million ⁵⁰ achieved in the first quarter 2025. For full year 2026, the Company expects consolidated operating income to approach the level achieved in full year 2025 ⁵¹.

In the Hawaii service, the Company expects volume in full year 2026 to be comparable to the level achieved in 2025 ⁵², reflecting similar economic conditions and stable market share. In the China service, the Company expects volume in full year 2026 to be modestly higher than the level achieved in 2025 ⁵³ based on expectations of continued solid U.S. consumer demand and a stable trading environment in the Transpacific tradelane. In the Guam service, for full year 2026, the Company expects volume to be comparable to the level achieved last year ⁵⁴. In the Alaska service, for full year 2026, the Company expects volume to be comparable to the level achieved last year ⁵⁵. For full year 2026, the Company expects the contribution from SSAT to be comparable to the $32.5 million ⁵⁶ achieved in full year 2025.

For full year 2026, the Company expects depreciation and amortization expense to be approximately $210 million ⁵⁷, inclusive of dry-docking amortization of approximately $35 million ⁵⁸. The Company expects interest income for the full year 2026 to be approximately $15 million ⁵⁹. The Company expects interest expense for the full year 2026 to be approximately $6 million ⁶⁰. The Company expects full year 2026 other income (expense) to be approximately $7 million ⁶¹ in income, attributable to the amortization of certain components of net periodic benefit costs or gains related to the Company's pension and post-retirement plans. For the full year 2026, the Company expects its effective tax rate to be approximately 21.0% ⁶².

For the full year 2026, the Company expects to make other capital expenditure payments, including maintenance capital expenditures, of approximately $150 to $170 million ⁶³, new vessel construction expenditures (including capitalized interest and owner's items) of approximately $425 million ⁶⁴, and dry-docking payments of approximately $45 million ⁶⁵. Total estimated capital expenditures for 2026 are $575 to $595 million ⁶⁶, for 2027 are $305 to $325 million ⁶⁷, and for 2028 are $125 to $145 million ⁶⁸.

For the full year 2026, the Company expects to make other capital expenditure payments, including maintenance capital expenditures, of approximately $150 to $170 million ⁶⁹, new vessel construction expenditures (including capitalized interest and owner's items) of approximately $425 million ⁷⁰, and dry-docking payments of approximately $45 million ⁷¹. Future construction milestone payments are expected to be financed with cash currently on deposit in the Company's CCF, cash and cash equivalents on the Consolidated Balance Sheets, cash flows generated from future operations, borrowings available under the Company's unsecured revolving credit facility or additional debt financings.

For the full year 2026, the Company expects to make other capital expenditure payments, including maintenance capital expenditures, of approximately $150 to $170 million ⁷², new vessel construction expenditures (including capitalized interest and owner's items) of approximately $425 million ⁷³, and dry-docking payments of approximately $45 million ⁷⁴. The Company expects to fund capital expenditures with cash and cash equivalents on the Consolidated Balance Sheets and through cash flows generated from future operating activities.

In the first quarter 2026, the Company expects lower volume in the China service compared to the prior year period ⁷⁵. In the near term, the Company expects Guam's economy to moderate reflecting a challenging tourism environment ⁷⁶. In the near term, the Company expects continued economic growth in Alaska supported by a low unemployment rate, jobs growth and continued oil and gas exploration and production activity ⁷⁷.

For 2026 compared to 2025, the Company also expects to see a more normal operating income seasonality pattern with second and third quarters being the strongest relative to the first and fourth quarters ⁷⁸.

The Company faces material risks related to the Jones Act, as approximately 51% ⁷⁹ of Ocean Transportation revenues in 2025 came from Hawaii and Alaska trades subject to the Jones Act; repeal, invalidation, substantial amendment, or waiver of the Jones Act would have an adverse effect on the Company's business. The Company's business would be adversely affected if it were determined not to be a U.S. citizen under the Jones Act, which requires that non-U.S. citizens not own more than 25% ⁸⁰ of the Company's common stock. Changes in macroeconomic conditions, geopolitical developments, or governmental policies, including the imposition of tariffs and port entry fees, have affected and could in the future affect the Company, with the Company noting that the U.S. Trade Representative has imposed entry fees on certain Chinese-owned, -operated, or -built vessels entering U.S. ports and additional duties on cranes, certain chassis and spare parts. The Company's vessel construction agreements with Philly Shipyard for three new 3,400-TEU ⁸¹ Aloha Class dual-fuel capable containerships subject the Company to risks including delivery delays, failure to meet operating specifications, and the insolvency of Philly Shipyard or its subcontractors. The Company may have exposure under its multi-employer pension and post-retirement plans that extends beyond its funding obligation, and based on limited information, the Company believes that its portion of the contingent liability in the case of a full withdrawal or termination may be material to its financial condition, results of operations and cash flow.

Management's tone in the Fourth Quarter 2025 Discussion and Outlook for 2026 is cautiously optimistic, emphasizing expectations for stable or modestly improved performance across most trade lanes while acknowledging headwinds from macroeconomic conditions and geopolitical uncertainty. Key forward-looking statements include expectations for Ocean Transportation operating income for the first quarter 2026 to be approximately $50 million ⁸², and for full year 2026 to approach the level achieved in full year 2025 ⁸³. For Logistics, management expects full year 2026 operating income to approach the $44.2 million ⁸⁴ achieved in full year 2025. Management also provided specific guidance for depreciation and amortization expense of approximately $210 million ⁸⁵ for full year 2026, an effective tax rate of approximately 21.0% ⁸⁶, and capital expenditure plans including new vessel construction expenditures of approximately $425 million ⁸⁷. The strategic priorities emphasized for the period ahead include the successful execution of the fleet renewal program with three new Aloha Class vessels under construction, maintaining stable market share in core Hawaii and Alaska trades, and navigating the evolving tariff and trade environment in the Transpacific tradelane.