Matson, Inc.

Good day and thank you for standing by. Welcome to the Mattson Third Quarter 2023 Financial Results Conference Call. At the time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during that session, you will need to press star 1 1 on your phone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded, and I would now like to hand the conference over to your speaker today, Mr. Lee Fishman, Vice President of Finance. Sir, please go ahead.

Thank you, Chris. Joining me on the call today are Matt Cox, Chairman and Chief Executive Officer, and Joel Winnie, Executive Vice President and Chief Financial Officer. Slides from this presentation are available for download at our website, www.matson.com under the Investors tab. Before we begin, I would like to remind you that during the course of this call, we will make forward-looking statements within the meaning of the federal securities laws regarding expectations, predictions, projections, or future events. 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. These risk factors are described in our press release and presentation and are more fully detailed under the caption risk factors on pages 14 to 24 of our Form 10-K, filed on February 24, 2023, and in our subsequent filings with the SEC. Please also note that the date of this conference call is October 30, 2023, 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.

Okay. Thanks, Lee, and thanks to those on the call. Starting on slide three, Patson's ocean transportation and logistics business segments continued to perform well despite a challenging business environment and relatively difficult economic conditions impacting the U.S. consumer. For the third quarter within ocean transportation, our China service experienced solid freight demand despite the muted peak season in the Trans-Pacific trade lane, but generated lower year-over-year volume and freight rates, which were the primary contributors to the year-over-year decline in our consolidated operating income. We also saw lower year-over-year volumes in Hawaii, Alaska, and Guam compared to the year-ago period. In logistics, Operating income decreased year-over-year primarily due to lower contributions from trans-Pacific brokerage. I will now go through the third quarter performance of our trade lanes, SSAT, and logistics, so please turn to the next slide. Hawaii container volume for the third quarter decreased 1.9% year-over-year primarily due to lower general demand. Volume in the third quarter of 2023 was 0.8% higher than the volume achieved in the third quarter of 2019. Please turn to slide five. In August, Maui experienced a significant economic disruption from devastating wildfires. According to UHERO, September's economic report, tourism to the islands may not fully recover in the next several years. and the rebuilding of homes and businesses may take many years. Demand for construction workers is expected to increase with the rebuilding efforts in Lahaina and other areas in Maui. In the near term, Matson expects economic growth in Hawaii to moderate as tourism and visitor arrivals slowly rebound from the effects of the Maui wildfires. Moving to our China service on slide six. Matson's volume in the third quarter of 2023 was 1.3% lower year over year, primarily due to no CCX service in the quarter, partially offset by higher CLX Plus volume. The higher CLX Plus volume in the quarter compared to the prior year period was a result of higher utilization on the vessels and greater capacity of the CLX Plus fleet. As you may recall, in the third quarter of last year, we began to see a path to normalization from the pandemic-driven highs as congestion throughout the supply chain eased. During the quarter, we continued to see solid demand in the e-commerce and e-goods verticals and stable demand from the garments vertical. We achieved average freight rates in the quarter that were lower than the year-ago period, but well above those achieved in the third quarter of 2019. Matson continued to realize a significant rate premium over the SCFI in the third quarter of 2023. Please turn to slide seven. Currently in the Trans-Pacific Marketplace, we continue to see a reduction of deployed capacity in light of lower volumes as a result of lower consumer demand for retail services. We continue to differentiate our China service from the others in the trade lane with a high degree of reliability and consistency and 11 day ocean transit time and 24 hour availability at the unique shippers transport off dock facility. At 10 to 15% of the cost of air freight, our China service continues to offer a significant value proposition for air freight customers with only five to seven days of additional transit time. And for those customers looking to reduce product's carbon footprint while saving a considerable amount of money, our customers tell us that switching from air freight to our expedited ocean freight product reduces their CO2 emissions by approximately 95 percent. Looking forward, absent an economic hard landing in the U.S., we expect trade dynamics in 2024 to be comparable to 2023 as consumer-related spending activity is expected to remain stable. Furthermore, regardless of the economic backdrop, we continue to expect to earn a significant rate premium to the SCFI, reflecting our fast and reliable ocean services and unmatched destination services. Please turn to the next slide. Matson's container volume in the third quarter of 2023 decreased 1.9% year over year. The decrease was primarily due to lower general demand. Volume in the third quarter of 2023 was 12.8% higher than the level achieved in the third quarter of 2019. In the near term, we expect continued improvement in the Guana economy with a low unemployment rate and a modest increase in tourism. from low levels. Please turn to the next slide. In Alaska, MatSense container volume for the third quarter of 2023 decreased 9.1% year-over-year. The decrease was due to lower export seafood volume from AAX, lower northbound volume due to lower retail-related demand, and lower southbound volume primarily due to lower domestic seafood volumes. Approximately 85% of the year-over-year volume decline is a result of lower seafood volumes in the AAX and southbound services. Year-to-year, there can be rather meaningful changes in the summer volumes depending on the strength of the seasonal Alaskan catch. Compared to the third quarter of 2019, volume in the quarter was 12.9% higher. In the near term, we expect the Alaska economy to continue to benefit from low unemployment and increased energy-related exploration and production activity as a result of elevated oil prices. Please turn to slide 10. Our terminal joint venture, SSAT, declined $22.1 million year-over-year to $1.3 million. The lower contribution was primarily due to lower demurrage revenue and lower lift volume. SSAT saw significantly less demurrage revenue in the quarter due to easing port congestion and lower lift volume consistent with lower year-over-year demand in the Trans-Pacific service. In the fourth quarter of 2023, we expect lift volume to reflect a relatively challenging environment for the Trans-Pacific trade lane. Turning now to logistics on slide 11, Operating income in the third quarter came in at $13.9 million, or $6.2 million lower than the result in the year-ago period. The decrease was primarily due to a lower contribution from transportation brokerage. In the near term, we expect a mix of activity across the logistics lines of business. We expect continued growth in Alaska to be supportive of our freight forwarding demand. we expect supply chain management to track our China service. And for transportation brokerage, we expect continued near-term challenges with lower freight demand and excess capacity. And with that, I will now turn the call over to Joel for a review of our financial performance.