Matson, Inc.

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 24 to 35 of our form 10Q filed on May 6, 2025 and in our subsequent filings with the SEC. Please also note, that the date of this conference closed, July 31st, 2025, 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, our second quarter financial performance exceeded our expectations amid the challenges of market uncertainty and volatility arising from tariffs and global trade. In ocean transportation, operating income was lower year over year, primarily due to lower year over year volume in our China service. In our domestic trade lanes, we saw higher year over year volume in Hawaii and Alaska and lower year over year volume in Guam. In logistics, Our operating income was lower year over year, primarily due to a lower contribution from transportation brokerage. Looking ahead, we expect uncertainty regarding tariffs and global trade, regulatory measures, the trajectory of the U.S. economy, and other geopolitical factors to continue. However, given our financial performance in the second quarter, And assuming these factors do not materially change from current conditions, we are raising our outlook for the full year 2025. Joel will go into more detail on our updated outlook later in the presentation. I will now go through the second quarter performance of our trade lanes, SSAT, and logistics, so please turn to the next slide. Container volume in our Hawaii service increased 2.6% in the second quarter year over year. The increase was primarily due to higher general demand. For the full year 2025, we expect volume to be modestly higher than the level achieved in 2024, reflecting modest economic growth in Hawaii and stable market share. Please turn to slide five. According to UHERO's second quarter 2025 economic report, the Hawaii economy remains stable, supported by strong construction activity, but faces potential headwinds from slowing tourism, increasing unemployment, and high inflation and interest rates. Hawaii is currently experiencing solid construction activity from the public sector and the Maui rebuilding effort. Hawaii tourism showed modest growth in the second quarter despite international tourist arrivals remaining challenged. Please turn to slide six. Moving to our China service, container volume in the second quarter of 2025 decreased 14.6% year over year, primarily due to the challenges of market uncertainty and volatility from tariffs and global trade. Freight rates were modestly higher year over year. As you might recall, we began to see elevated rates in the middle of the second quarter last year due to tighter supply chain conditions, including the effects of the Red Sea situation, coupled with the support of economic and consumer demand environment. Please turn to slide seven. At the onset of tariffs in April, we experienced significantly lower year over year freight demand as our customers held back less urgent shipments to work through the tariff impacts. Many of our customers were negotiating the tariffs with their trading partners on an order by order basis. At the same time, we saw carriers and alliances begin to reduce capacity in the Trans-Pacific trade lane based on the significant volume downturn. Starting in mid-May, we saw a rebound in demand after the US and China agreed to a temporary reduced level of tariffs, but also in anticipation of country-specific reciprocal tariffs returning in August. The buildup of freight that had taken place unwound over several weeks market freight rates increased quickly to meet the higher demand levels and capacity returned over the subsequent few weeks. Following the London meeting in June between the US and China that upheld the terms from May, we saw a stabilization of volume modestly below the prior year period amid a number of evolving trade lane supply and demand factors, including trade lane capacity reductions after the cargo rush in May, customers in Vietnam and other Southeast Asian countries advancing freight ahead of July 9th when the 90-day pause on country-specific reciprocal tariffs expired and some customers pulling forward freight from the traditional peak season in the third quarter to de-risk ahead of the next US-China deadline. Please turn to slide 8. During the second quarter, We moved with our customers as they shifted production throughout Asia in response to the tariffs, which resulted in higher container volume levels originating outside of China. Our transshipment volume in the second quarter 2025 represented approximately 21% of our China service compared to approximately 13% in the first quarter of this year. The sequential quarterly increase is primarily due to higher customer demand and the opening of our new expedited Ho Chi Minh service offering as our second best-in-class service out of Vietnam with our Haiphong service from two years ago. While we don't know where our transshipment percentage will ultimately land given the various factors at play, we do believe in the long run that an increasing percentage of volume will originate from areas outside of China. We remain focused on supporting our customers in the region as they continue to shift their production capabilities, and we will look at opportunities to further expand our transshipment capabilities. Looking ahead, in the third quarter 2025, we expect lower year-over-year freight rates and volume compared to the elevated demand levels achieved in the third quarter last year and our expectation of a muted peak season this year. As I mentioned earlier, we saw a stabilization of volume in June and in July we continued to see stabilized volume and rates, notwithstanding lower demand levels and continued pressure on the SCFI. As a result, our premium to SCFI widened and we significantly outperformed the market relative to the SCFI due to our service differentiation and brand reputation. Assuming tariffs and global trade, Regulatory measures, the trajectory of the U.S. economy, and other geopolitical factors do not materially change from current conditions. We expect for the full year 2025 average freight ration volume to be lower year over year. Please turn to the next slide. In Guam, Mattson's container volume in the second quarter of 2025 decreased 2.2% year over year. In the near term, we expect Guam's economy to remain stable with a slow recovery in tourism, low unemployment rate, and some increase in construction activity. As such, for the full year 2025, we expect container volume to be modestly lower than the level achieved in the last year. Please turn to slide 10. In Alaska, Batson's container volume for the second quarter of 2025 increased 0.9% year over year. The increase was primarily due to higher AAX volume, partially offset by two fewer northbound sailings compared to the year-ago period. In the near term, we expect continued economic growth in Alaska, supported by a low unemployment rate, job growth, and continued oil and gas exploration and production activity. As such, for 2025, we expect container volume to be modestly higher than the level achieved last year. Please turn to slide 11. In the second quarter, our SSAT terminal joint venture contributed $7.3 million, representing a year-over-year increase of $6.1 million. the increase is primarily due to higher lift volume. For 2025, we expect the contribution from SSAT to be modestly higher than the $17.4 million achieved last year without taking into account the $18.4 million impairment charge at SSAT during the fourth quarter of 2024. Turning now to logistics on slide 12, operating income in the second quarter came in at $14.4 million, or $1.2 million lower than the result in the year-ago period. The decrease was primarily due to a lower contribution from transportation brokerage. For the third quarter, 2025, we expect logistics operating income to be comparable to the level achieved last year. And for the full year, 2025, we expect operating income to also be comparable to the level achieved last year. And I will now turn the call over to Joel for a review of our financial performance. Joel?

Thanks, Matt. Please turn to slide 13 for a review of our second quarter results. For the second quarter, consolidated operating income decreased 11.6 million year-over-year to 113 million with lower contributions from ocean transportation and logistics of 10.4 million and 1.2 million, respectively. The decrease in ocean transportation operating income in the second quarter was primarily due to lower volume in China, partially offset by higher freight rates in China, and the timing of fuel-related surcharge collections. As Matt noted, the decrease in logistics operating income was primarily due to a lower contribution from transportation brokerage. We had interest income of $8 million in the quarter compared to $18.8 million in the same period last year. As you may recall, second quarter 2024 included $10.2 million in interest income earned on the federal tax refund related to our 2021 federal tax return. Interest expense in the quarter decreased $0.4 million year-over-year due to the decline in outstanding debt in the past year. Net income decreased 16.3% year over year to 94.7 million and diluted earnings per share decreased 11.8% year over year to $2.92 per share. Note the 10.2 million in one time interest income earned on our federal tax refund I just mentioned contributed 24 cents in the earnings per share in the year ago quarter. Lastly, Diluted weighted average shares outstanding decreased 5.3% year-over-year. Please turn to slide 14. 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 $617.9 million, from which we used $39.7 million to retire debt, $199 million on maintenance and other CapEx, $161.5 million on new vessel CapEx, including capitalized interest and owner's items. $30.3 million in cash deposits and interest income in the CCF net of withdrawals for milestone payments. $14.5 million on other cash outflows, while returning approximately $284.4 million to shareholders via dividends and share repurchase. Please turn to slide 15 for a summary of our share repurchase program and balance sheet. During the second quarter, we repurchased approximately 0.9 million shares for a total cost of 93.7 million, including taxes. Year to date, we repurchased approximately 1.4 million shares for a total cost of 162.9 million, including taxes. Since we initiated our share repurchase program in August of 2021 through June of this year, we have repurchased approximately 12.5 million shares or 28.8% of our stock for a total cost of approximately 1.1 billion. 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 second quarter was $381 million, a reduction of $9.8 million from the end of the first quarter. Lastly, on July 23rd, we entered into a new five-year revolving credit facility with commitments aggregating $550 million. We reduced the size of our credit facility from $650 million to $550 million due to the nearly fully funded status of the new Aloha-class vessel build program and our expected lower level of capital needs for the remainder of the decade due in part to our next Jones Act build cycle not anticipated until the mid-2030s. In connection with the new revolver, we also amended the existing private placement debt to match the covenants and terms of the new revolving credit facility. Please turn to slide 16. I'm going to walk through our outlook starting with the third quarter of 2025 on the left side of the slide. Based on the outlook trends Matt mentioned earlier, we expect ocean transportation operating income to be meaningfully lower than the $226.9 million achieved in the third quarter of 2024. For logistics, we expect operating income in the third quarter of 2025 to be comparable to the level achieved last year. As such, we expect consolidated operating income in the third quarter to be meaningfully lower than the prior year. On the right-hand side of the slide, we have our expectations for full year 2025. Starting with ocean transportation, we expect year-over-year operating income to be higher than the guidance we provided in May, but moderately lower than the $500.9 million achieved in 2024. We also expect logistics full-year operating income to be comparable to the level achieved in the prior year. In addition to this full-year operating income outlook, We expect the following for the full year. Depreciation and amortization to approximate $200 million, inclusive of $26 million for dry dock amortization. Interest income to be approximately $31 million, and interest expense to be approximately $7 million. Other income to be approximately $9 million. An effective tax rate of approximately 22%, and dry docking payments of approximately $40 million. Moving to slide 17, the table on the slide shows our CapEx projections for the full year 2025. Compared to what we previously provided on our first quarter call in May, our range for maintenance and other capital expenditures remains the same at 100 to 120 million for the full year 2025. Our estimate for expected new vessel construction milestone payments in 2025 also remains unchanged at 305 million. Again, milestone payments for new vessel construction are expected to be paid from our capital construction fund, which already covers approximately 92% of the remaining obligations, excluding future interest income and accretion earned on cash deposits and treasury securities. We currently expect our only remaining cash contribution into this CCF for milestone payments to not be until 2028, and the final amount is expected to be less than $30 million. Lastly, in the third quarter, we expect to make approximately $71 million in milestone payments. With that, I will now turn the call back over to Matt.