Matson, Inc.

Thanks, Justin, and thanks to those on the call. I'll start on slide three. Matson's off to a solid start for the year with ocean transportation performing better than expected and logistics meeting our expectations for the first quarter of 2024. In ocean transportation, operating income was roughly flat year over year, reflecting an improvement over our outlook provided in late February. Our China service experienced healthy demand coming out of a more traditional post-Lunar New Year period with higher year-over-year freight rates, but with lower year-over-year volume. We had lower year-over-year volumes in Hawaii and Alaska, and in Guam, the volume was flat year-over-year. In logistics, operating income declined year-over-year due to continued market softness in transportation brokerage. As a result of the performance in the first quarter and expected improving demand for our CLX and MAX services, we are raising our full-year outlook. For 2024, we now expect consolidated operating income to be modestly higher than the $342.8 million achieved in 2023, with a higher contribution from ocean transportation than in our previous outlook from February. Joel will go into more detail on our updated outlook later in the presentation. I will now go through the first quarter performance of our trade lanes, SSAT, and logistics. So please turn to the next slide. Hawaii container volume for the first quarter decreased 1.7% year-over-year due to lower general demand. Tourist arrivals in the first quarter were comparable year-over-year despite the continued impact of Maui tourism from last year's wildfires. For the full year 2024, we expect volume to approach the level achieved last year. Please turn to slide five. According to UHERO's first quarter 2024 economic report, the Hawaii economy is projected to grow modestly in 2024, underpinned by low unemployment rate and increasing construction activity. Construction jobs are projected to increase due to large federal and state contracts and home building on Oahu. Tourism is projected to increase modestly as the industry continues to recover from the Maui wildfires last year and the gradual return of international visitors. While UHERO projects modest economic growth in 2024, our outlook is a little more cautious reflecting feedback from our retail related customers that saw a tepid demand for consumer goods in the first quarter and expect to see this sluggish environment continue in the near term. Moving to our China service on slide six. Mattson's volume in the first quarter of 2024 was 4% lower year over year with lower volume for both CLX and MAX. We achieved average freight rates that were higher year over year. Please turn to slide seven. Our China service experienced healthy demand coming out of a more traditional post-Lunar New Year period with a gradual recovery of volume after factories reopened and workers returned compared to a more accelerated increase in volume experienced post-Lunar New Year last year. The rampant volume in the post-Lunar New Year period met our expectations, but our freight rates in the post-Lunar New Year period were higher than we expected. Currently in the Trans-Pacific Marketplace, we continue to see steady US consumer demand. For 2024, we expect improving demand for CLX and MAX services in 2024 as compared to 2023. We also expect average freight rates to be higher than the 2023 levels. We're in a good position with CLX and MAX And our primary focus with these two service is to consistently demonstrate the speed and reliability that our customers have enjoyed. Please turn to the next slide. In Guam, Matson's container volume in the first quarter of 2024 was flat year over year. 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 first quarter 2024 decreased 5.1% year over year, primarily due to one less northbound sailing compared to last year. Adjusting for one less sailing, northbound volume was roughly flat and overall Alaska volume decreased 1.7%. In the near term, we expect continued economic growth in Alaska supported by a low unemployment rate, jobs growth, and a lower level of inflation. For 2024, we expect Alaska volume to approximate the level achieved last year. Please turn to slide 10. Our terminal joint venture, SSAT, increased $2.2 million year over year to $0.4 million. The higher contribution was primarily due to higher lift volumes. In 2024, we expect the contribution from SSAT to be higher than 2023 due to an expected increase in lift volumes. Turning now to logistics on slide 11. Operating income in the first quarter came in at $9.3 million, or approximately $1.6 million lower than the result in the year-ago period. The decrease was primarily due to lower contribution from transportation brokerage. For 2024, we expect challenging business conditions for the transportation brokerage to continue. And as such, we expect operating income to be lower than the level achieved in 2023. I will now turn the call over to my partner, Joel, for a review of our financial performance.

Joel. Okay. Thanks, Matt. Now on to our financial results on slide 12. For the first quarter, consolidated operating income decreased $1.8 million year-over-year to $36.9 million, with ocean transportation declining $0.2 million and logistics declining $1.6 million. Ocean transportation operating income in the first quarter experienced higher vessel operating costs, including fuel-related expenses, and the timing of fuel-related surcharge collections partially offset by higher freight rates in China. As Matt noted, the decrease in logistics operating income was primarily due to a lower contribution from transportation brokerage. We had an interest income of $8.8 million in the quarter and an increase of $0.6 million year-over-year due to higher interest rates on our cash and cash equivalents and CCF cash deposits and investments in fixed-rate U.S. Treasuries. Interest expense in the quarter decreased $2.3 million year-over-year due to the decline in outstanding debt in the past year. Net income increased 6.2% year-over-year, and diluted earnings per share increased 10.6% year-over-year with a difference between the two due to a 4.7% decrease in the diluted weighted average shares outstanding. Please turn to slide 13. This slide shows how we allocated our trailing 12 months of cash flow generation. For the LTM period, we generated cash flow from operations of approximately $450.4 million, from which we used $46.2 million to retire debt, $214.2 million on maintenance and other CapEx, $53.6 million on new vessel CapEx, including capitalized interest and owner's items, offset by $20.9 million withdrawn from our capital construction fund, $14.2 million on other cash outflows, while returning approximately $207.3 million to shareholders via dividends and share repurchase. Please turn to slide 14 for a summary of our share repurchase program and balance sheet. During the first quarter, we repurchased approximately 4.4 million shares for a total cost of 48.9 million, including taxes. Since we initiated our share repurchase program in August of 2021 through March of this year, we have repurchased approximately 10 million shares, or 23% of our stock, for a total cost of approximately $804 million. 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 the first quarter was $430.5 million, a reduction of $10.1 million from the end of the fourth quarter. On April 19, 2024, Matson received a federal tax refund related to the company's 2021 federal tax return of $118.6 million, as well as $10.2 million in interest income earned on the tax refund. The tax refund was placed into cash and cash equivalents and is expected to be used for general corporate purposes. With that, Let me now turn to slide 15 and walk through our outlook for the full year and the second quarter of 2024. For the full year 2024, we expect year-over-year growth in ocean transportation operating income and for it to be higher than the outlook from the February earnings call based on the performance of ocean transportation in the first quarter and expected improving demand for the CLX and MAX services. Absent a significant change in the trajectory of the US economy, we expect trade dynamics, trade demand dynamics across most of our trade lanes in 2024 to be comparable to 2023 as consumer related spending is expected to remain largely stable. For logistics, we expect challenging business conditions for transportation brokerage, which we expect to lead to lower year over year business segment operating income. As a result, we now expect consolidated operating income to be modestly higher than the level achieved in the prior year with quarterly seasonality patterns similar to 2023. In addition to this full year operating income outlook, we expect the following for the full year. Depreciation and amortization to be approximately 180 million, inclusive of 27 million for dry dock amortization. Interest income to be approximately 45 million an interest expense to be approximately $8 million, other income to be approximately $7 million, an effective tax rate of approximately 22%, and dry docking payments of approximately $35 million. The interest income outlook we are providing is based on current CCF deposits and cash and cash equivalents invested at current short-term government money market rates, as well as the CCF fixed rate portfolio yielding 4.53%. This outlook includes the $10.2 million in interest income received on April 19, 2024 with respect to our federal tax refund. For the second quarter of 2024, we expect ocean transportation operating income to be moderately higher than the $82.4 million achieved in the second quarter of 2023 and logistics operating income to be lower than the $14.3 million achieved in the second quarter of 2023. As such, we expect consolidated operating income in the second quarter to be modestly higher than the prior year. We expect interest income to be approximately $18 million, including $10.2 million of interest earned on our 2021 federal tax return that I mentioned before. Moving to slide 16, the table on the slide shows the CAPEX projection for 2024 to 2026. This outlook remains unchanged from what we provided on our fourth quarter call in February. Again, milestone payments for new vessel construction are expected to be paid from the Capital Construction Fund, which already covers two-thirds of the remaining obligations. I will now turn the call back over to Matt.

Okay. Thanks, Joel. Matt said he had a solid start to the year. We have a great balance sheet and are well-funded on our Aloha Class New Build program, as Joel just described. We are positioned well in all of our markets to capitalize on opportunities as they arise. So far, 2024 is shaping up to be another good year for Madsen. And with that, I will turn the call back to the operator and ask for your questions.