Matson, Inc.

Good day, ladies and gentlemen, and welcome to the conference call to discuss Matson's third quarter 2024 results. As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Mr. Justin Schoenberg. Please go ahead, sir.

Thank you. 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 13 to 25 of our Form 10-K filed on February 23, 2024, and in our subsequent filings with the SEC. Please also note that the date of this conference call is October 30, 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.

Thanks, Justin, and thanks to those on the call. Starting on slide three, Matson had a very strong third quarter that exceeded our expectations with higher year-over-year operating income in both ocean transportation and logistics. In ocean transportation, our China service saw significantly higher year-over-year freight rates and was the primary driver of the increase in consolidated operating income. For our domestic trade lanes, we saw higher year-over-year volume in Alaska, but lower year-over-year volume in Hawaii and Guam. In logistics, operating income increased year over year due to higher contributions from supply chain management and transportation brokerage services. As a result of our performance in the third quarter and the expected strength of our China service in the fourth quarter, we're raising our outlook for 2024. Joel will go into more detail on our updated outlook later in this presentation. I will now go through the third quarter performance of our trade lanes. SSAT, and logistics, so please turn to the next slide. Container volume in our Hawaii service decreased 2.2 percent in the third quarter year-over-year. The decrease was primarily due to lower general demand. Hawaii's economy continues to grow slowly with stalled growth in statewide tourist arrivals. Tourism continues to be impacted by declines in Maui tourism following last year's wildfires and by the sluggish pace of the recovery in Japanese tourist arrivals, which has been impacted by weakness in the end to the U.S. dollar exchange rate. I will go through our full year outlook on the next slide, so please turn to slide five. According to HERO's third quarter 2024 economic report, The Hawaii economy is projected to grow slowly in 2024, supported by a low unemployment rate, increasing construction activity, and low growth in tourist arrivals. For 2024, we expect volume to be modestly lower than the level achieved last year, primarily due to low or no growth in tourism, continued challenges in population growth, and lower discretionary income as a result of higher inflation and interest rates. Moving to our China service on slide six. Matson's volume in the third quarter of 2024 was 2.6% higher year over year due to two additional sailings. We continued to see strong demand for our CLX and MAX services and achieved significantly higher average freight rates year over year. Please turn to slide seven. The elevated freight rates in the third quarter 2024 were primarily due to a traditional peak season with strong freight demand. A resilient U.S. economy and a stable consumer demand environment coupled with tighter supply chain conditions supported these elevated rates. From a demand perspective, U.S. retail sales during the quarter were solid and e-commerce continued to grow faster than overall retail market. e-commerce continued to be an underlying driver of freight demand for both our trans-Pacific services during the third quarter, as well as seasonally strong categories like garments and e-goods. We also continued to see conversion of air freight to the CLX and MAX, particularly in the e-goods vertical. With respect to tighter supply chain conditions, the traditional peak was augmented by some shifting of consumer routing through the U.S. West Coast in response to continued disruptions in the Red Sea, as well as to risk management against impacts from the ILA negotiations on the East and Gulf coasts. Looking ahead, for the fourth quarter, we expect our China service freight rates to be significantly higher than the levels achieved in the year-ago period, as long as the underlying economic, supply chain, and geopolitical consistence persist, but lower than the average rates achieved in the third quarter as the peak season demand eases. Regardless of the economic and geopolitical uncertainties, we remain focused on continuing to deliver a differentiated value proposition as compared to air freight with CLX and MAX services as the two fastest and most reliable expedited ocean services in the Trans-Pacific. Please turn to the next slide. In Guam, Matson's container volume in the third quarter of 2024 decreased 9.4% year-over-year due to lower demand from retail and food and beverage segments. In the near term, we expect the Guam economy to remain stable with a low unemployment rate but slow growth in tourism. Similar to Hawaii, the Guam tourist arrivals have been impacted by the slow recovery in Japanese visitors. For 2024, we expect container volume to be lower than the level achieved last year. Please turn to the next slide. In Alaska, Mattson's container volume for the third quarter of 2024 increased 1.4% year-over-year due to higher retail-related demand. In the near term, we expect continued economic growth in Alaska supported by a low unemployment rate, job growth, and lower levels 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 $5.6 million year-over-year to $6.9 million. The higher contribution was primarily due to higher lift volume. For full year 2024, we expect the contribution from SSAT to be higher than 2023 due to an expected increase in lift volume. Turning now to logistics on slide 11, operating income in the third quarter came in at $15.4 million, or approximately $1.5 million higher than the result in the year-ago period. The increase was primarily due to higher contributions from supply chain management and transportation brokerage. Our supply chain management service benefited from a similar market condition to those in our China service, while our transportation brokerage business benefited from stronger international intermodal demand. For the fourth quarter of 2024, we expect operating income to be modestly higher than the level achieved last year. I'll now turn the call over to Joel for a review of our financial performance.