Matson, Inc.

Good day, and thank you for standing by. Welcome to the Madison's First Quarter 2023 Financial Results Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you'll need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To answer a question, please press star 11 again. Please be advised today's conference is being recorded. I would now like to hand the conference over to your speaker for today, Justin Schoenberg, Director of Investor Relations. Please go ahead.

Thank you, Lisa. Joining me on the call today are Matt Cox, Chairman and Chief Executive Officer, and Joel Winney, 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 February 20th, 2024, 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, Justin, and thanks to those on the call. I'll be starting on slide three. Matson's ocean transportation and logistics business segments performed well in the fourth quarter. capping off a solid year for both business segments. Mattson's in a solid operational and financial position. We are the leading expedited ocean freight provider in the Trans-Pacific, and we're well positioned for growth in our Jones Act and logistics markets. Our balance sheet is strong with a low-cost capital structure and low leverage. We're in very good funding position on our new Aloha class vessels with the program two-thirds funded at year end with approximately $600 million in our capital construction fund. And lastly, we returned approximately $203 million to shareholders in 2023 in the form of share repurchases and dividends. For the fourth quarter within ocean transportation, our China service experienced solid freight demand with higher year-over-year volume but lower year-over-year rates, which, when combined with higher operating costs across all trade lanes, resulted in a year-over-year decline in operating income. In logistics, operating income declined year-over-year primarily due to a lower contribution from transportation brokerage. I will now go through fourth quarter performance of our trade lanes, SSAT, and logistics, so please turn to the next slide. Hawaii container volume for the fourth quarter declined 1.9% year over year due to lower general demand. Volume in the fourth quarter of 2023 was 5.1% lower than volume achieved in the fourth quarter of 2019. Tourist arrivals in the fourth quarter were modestly lower year over year as tourism to Maui was impacted by wildfires. For the full year 2023, Container volume decreased 3% year over year, primarily due to lower general westbound demand and lower eastbound volume. For the full year 2024, we expect volume to be comparable to the level in 2023, reflecting modest economic growth in Hawaii and stable market share. Please turn to slide five. The Hawaii economy held up well in 2023, despite high interest rates, high inflation, a modest decline in population, and headwinds to tourism from the Maui wildfires and the slow return of international visitors. According to UHERO's December economic report, the Hawaii economy is predicted to grow modestly in 2024, underpinned by a low unemployment rate and easing inflation. Construction jobs are projected to increase due in large part from government-related projects as well as initial rebuilding efforts in Maui. Near-term growth in visitor arrivals is expected to be challenging due to reduced tourism to Maui as a result of the wildfires last year and sluggish recovery of international tourism. Moving to our China service on slide six. That since volume in the fourth quarter of 2023 was 23.3% higher year over year, primarily due to higher demand for the China service, resulting in higher volumes for both the CLX and CLX Plus. We achieved average freight rates in the quarter that were lower than the year ago period, but well above those achieved in the fourth quarter of 2019. For the full year 2023, container volume decreased 13.7% year over year, primarily due to the CCX volume in the first nine months of 2022. Recall that we discontinued the CCX service in the third quarter of 2022. Please turn to slide seven. Currently in the Trans-Pacific marketplace, we continue to see steady U.S. consumer demand. As is typical in the Trans-Pacific trade lane, Our CLX and CLX-plus vessels experienced light volume coming out of the Christmas and New Year period, but near capacity as we approached Lunar New Year. We expect the post-Lunar New Year period to be more traditional, with factories closed for a couple of weeks and the workforce slowly returning to work. As we did in the prior year, We decided not to sail the CLX Plus vessels from Shanghai for a few weeks because the cargo package could be accommodated with a weekly CLX departure. We currently expect volume demand to gradually recover over a four to six week period as factories return to normal post-holiday. For a full year 2024, We expect similar demand for our CLX and CLX Plus services as in 23, and average freight rates to be modestly higher and above pre-pandemic freight rate levels. To date, our China service has seen a very limited effect from the supply chain disruptions caused by the Panama Canal drought and the events in the Red Sea. Depending on the duration and evolution of these situations, it's possible we could see further impact on our expedited ocean services. We know more customers are evaluating their shipping options in light of these events, but we're not aware of any material changes to our customers' cargo routing. Regardless of the uncertainty of these and other events, we're focused on maintaining the two fastest and most reliable ocean services in the Trans-Pacific. On February 18th, we renamed the CLX Plus service to the MAX, Mattson Asian Express. CLX Plus was introduced in 2020 to accommodate extraordinary demand for Mattson's expedited Trans-Pacific service during the pandemic, and it's had industry-leading performance for the last four years. We've rebranded the CLX Plus to MAX to reflect this highly differentiated service. including a recently added sixth ship that provides schedule flexibility to ensure a weekly departure from China. MAPS is the only liner service in the Trans-Pacific trade lane providing customers with this unique service element. Please turn to the next slide. In Guam, MAPS container volume in the fourth quarter of 2023 increased 2% year over year. the increase was primarily due to higher general demand. Volume in the fourth quarter of 2023 was 4.2% higher than the level achieved in the fourth quarter of 2019. For the full year 2023, container volume decreased 4.7% due to lower general demand. In the near term, we expect continued improvement in the Guam economy with low unemployment rate and a modest increase in tourism. For 2024, we expect container volume to approximate the level achieved last year. Please turn to the next slide. In Alaska, Mattson's container volume for the fourth quarter of 2023 decreased 0.6% year-over-year. The decrease was due to lower export seafood volume from AAX partially offset by higher northbound volume due to an additional sailing and higher southbound volume due to higher domestic seafood volume. Compared to the fourth quarter of 2019, volume in the quarter was 20.3% higher. For the full year 2024, we expect Alaska volume to approximate the level achieved last year. Please turn to slide 10. The Alaska economy continues to show good economic growth and improvement in key economic indicators despite flattish growth in population. In 2023, the state saw widespread job growth across almost every industry, and the Alaska Department of Labor projects continued job growth in 2024. In the near term, we expect the Alaska economy to grow supported by low unemployment, job growth, and lower levels of inflation. The state's economy is also expected to benefit in the near and medium term from increased energy-related exploration and production activity, as well as significant infrastructure investment funded by the federal infrastructure bill by the Inflation Reduction Act. Please turn to slide 11. Our terminal joint venture, SSAT, increased $3.1 million year-over-year to $4.1 million. The higher contribution was primarily due to higher lift revenue, partially offset by lower demurrage revenue. For the full year 2023, SSAT contributed $2.2 million, reflecting a year-over-year decrease of $80.9 million, primarily due to lower demurrage revenue. In 2024, we expect contributions to be higher from increased lift volumes. Turning now to logistics on slide 12, operating income in the fourth quarter came in at $8.9 million, or approximately $3.9 million lower than the result in the year-ago period. The decrease was primarily due to a lower contribution from transportation brokerage. For the full year 2023, operating income was $48 million, reflecting a year-over-year decrease of $24.4 million. The decrease was due to a lower contribution from transportation brokerage and supply chain management. For 2024, we expect operating income to be lower than the level achieved in 2023. For transportation brokerage, we expect challenging business conditions at least through the first half of 2024. We expect demand for our freight forwarding, supply chain management, and warehousing business lines to be comparable to 2023. And I will now turn the call over to Joel for a review of our financial performance.