Matson, Inc.

rising from tariffs and global trade. In ocean transportation, operating income was lower year over year, primarily due to lower year over year freight rates and container 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 lower contributions from freight forwarding, transportation brokerage, and supply chain management. For the fourth quarter 2025, we expect consolidated operating income to be approximately 30% lower year over year. We're also optimistic and expect a more stable trading environment for our customers starting in the fourth quarter, as a result of the reduction in uncertainty regarding tariffs, port entry fees, global trade, and other geopolitical factors due to the trade and economic deal between the US and China announced on October 30th. Joel will go into more detail on our updated forecast and outlook later in the 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 increased 0.3% in the third quarter year over year. For the full year 2025, we expect volume to be comparable to the level achieved in 2024, reflecting modest economic growth in Hawaii and stable market share. Please turn to slide five. According to UHERO's September economic report, The Hawaii economy is softening as slowing tourism and high inflation and interest rates weigh against stronger construction activity. Construction is a bright spot in the Hawaii economy, supported by public sector projects and the Maui rebuilding effort. Hawaii tourism softened considerably over the summer as tourist arrivals and spending declined year over year, in part due to tariff uncertainties impacting international tourism. Moving to our China service on slide six. Container volume in the third quarter of 2025 decreased 12.8% year over year, primarily due to the difficult environment marked by continued uncertainty and volatility arising from tariffs and global trade. Freight rates in the quarter were lower year over year. Please turn to slide seven. The Trans-Pacific trade lane in the third quarter experienced a muted peak season compared to the elevated demand levels last year due to businesses advancing cargo in the late second quarter and early third quarter ahead of US tariff deadlines, which led to slower third quarter demand for our expedited services. The muted demand we experienced in the third quarter persisted through October as consumers continue to navigate tariff uncertainty. As such, for the fourth quarter 2025, we expect lower year-over-year freight rates and volume in our China service, as we expect many of our China service customers to be cautious on inventory levels and work through previously purchased inventory. However, we expect a more stable trading environment for our customers in the fourth quarter 2025, as a result of the reduction in uncertainty regarding tariffs, port entry fees, global trade, and other geopolitical factors due to the trade and economic deal between the U.S. and China announced on October 30th. Please turn to slide eight. When port entry fee collection commenced in the U.S. and China on October 14th, we did not let these fees impact our China service. We advise our customers that our CLX and MAX services from China would not change and that port entry fees would not be passed on to them. At that time, based on our initial assessment of our anticipated fleet schedule, vessel charters, and expected dry dockings, we expected to pay approximately $20 million in port entry fees in the fourth quarter 2025 and approximately $80 million annually in port entry fees in 2026 and 2027. Then, on October 30th, the US and China reached a trade and economic deal. The deal includes a one-year suspension of port entry fees and a cumulative reduction by 10% for tariffs on Chinese imports to curb fentanyl flows for one year, each starting on November 10th. We expect the USTR and the China Ministry of Transport to publish specific instructions regarding port entry fees shortly. This was a welcome development, and we are optimistic that this is a positive step towards a longer lasting agreement between the two countries. Quarter to date, we have paid $6.4 million in port entry fees. Again, we have not passed these port entry fees on to our customers. Our philosophy in the trade lane is to charge rates based on the value we provide with our expedited services given the underlying supply and demand conditions. In our nearly 20 years of operating our China service, we have not passed on surcharges or temporary fees to our customers, and we did not and do not intend to do so with these port entry fees. I want to underscore that we are business as usual with the CLX and MAX services operating without interruption. We remain committed to the Trans-Pacific trade lane and are highly confident in our positioning with the two fastest and most reliable Trans-Pacific services and will continue providing our CLX and MAX customers with world-class service. Moving to the next slide, in Guam, Madison's container volume in the third quarter of 2025 decreased 4.2% year over year due to lower general demand. In the near term, we expect Guam's economy to moderate, reflecting a challenging tourism environment. As such, for the full year 2025, we expect volume to be modestly lower than the level achieved last year. Please turn to slide 10. In Alaska, Matson's container volume for the third quarter of 2025 increased 4.1% year-over-year. The increase was primarily due to one additional northbound sailing compared to the year-ago period and higher AAX volume. In the near term, we expect continued economic growth in Alaska supported by a low unemployment rate, job growth, and continued in oil and gas exploration and production activity. As such, for the full year 2025, we expect container volume to be modestly higher than the level achieved last year. Please turn to slide 11. In the third quarter, our SSAT terminal joint venture contributed $9.3 million, representing a year-over-year increase of $2.4 million. the increase was primarily due to higher lift revenue. For full year 2025, we expect the contribution from SSAT to be higher than the $17.4 million achieved last year without taking into account the $18.4 million impairment charge recorded by SSAT during the fourth quarter of 2024. Turning now to logistics on slide 12, Operating income in the third quarter came in at $13.6 million, or $1.8 million lower than the result in the year-ago period. The decrease was primarily due to lower contributions from freight forwarding, transportation brokerage, and supply chain management. In the fourth quarter of 2025, we expect logistics operating income to be modestly lower than the level achieved last year. And with that, I will now turn the call over to my partner, Joel, for a review of our financial performance.

Joel. Okay. Thanks, Matt. Please turn to slide 13 for a review of our third quarter results. For the third quarter, consolidated operating income decreased $81.3 million year over year to $161 million with lower contributions from ocean transportation and logistics of $79.5 million and $1.8 million respectively. The decrease in ocean transportation operating income in the third quarter was primarily due to lower freight rates and volume in China. As Matt noted, the decrease in logistics operating income was primarily due to lower contributions from freight forwarding, transportation brokerage, and supply chain management. We had interest income of $7.6 million in the quarter compared to $10.4 million in the same period last year. Interest expense in the quarter was unchanged year over year. Net income decreased 32.3% year over year to $134.7 million, and diluted earnings per share decreased 28% year over year to $4.24 per share. Lastly, diluted weighted average shares outstanding decreased 5.9% year over year. Please turn to slide 14. We continue to generate strong cash flows. For the trailing 12 months, we generated cash flow from operations of $544.9 million. We returned capital in the form of dividends and share repurchases of $302.5 million, and we had maintenance capex of $186.6 million. Our cash flow from operations exceeded the aggregate spend on maintenance capex, dividends, and share repurchases by $55.8 million. Please turn to slide 15 for a summary of our share repurchase program and balance sheet. During the third quarter, we repurchased approximately 0.6 million shares for a total cost of 66.4 million, including taxes. Year to date, we repurchased approximately 2 million shares for a total cost of 229.3 million, including taxes. Since we initiated our share repurchase program in August of 2021, through September of this year, we have repurchased approximately 13.1 million shares or 30.2% of our stock for a total cost of approximately $1.2 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 third quarter was $370.9 million, a reduction of $10.1 million from the end of the second quarter. Please turn to slide 16, where I will walk through our outlook. Based on the outlook trends Matt mentioned earlier, we expect ocean transportation operating income to be lower than the $137.4 million achieved in the fourth quarter of 2024. For logistics, we expect operating income in the fourth quarter of 2025 to be modestly lower than the level achieved last year. In total, we expect consolidated operating income in the fourth quarter to be approximately 30% lower than the prior year. In addition, we expect the following for the full year of 2025. Depreciation and amortization to approximate $196 million, inclusive of $28 million for dry dock amortization. interest income to be approximately $32 million, and interest expense to be approximately $7 million, other income to be approximately $9 million, an effective tax rate of approximately 22.0%, and dry docking payments of approximately $45 million. Lastly, I'd like to discuss our CapEx projections for the full year 2025. Compared to what we previously provided on our second quarter earnings call, Our expectation for maintenance and other capital expenditures this year has increased to approximately $130 million due to some CapEx now expected to occur before the end of 2025 versus previously expected to occur in early 2026. Overall, we are confident our annual maintenance CapEx will remain in the $100 to $120 million range going forward. Our estimate for expected new vessel Construction milestone payments in 2025 is now approximately $248 million. This is lower than our prior estimate as a milestone payment has been pushed back to the first half of 2026. Please note that the total cost of our new vessel program remains the same at approximately $1 billion. Please turn to slide 17. I wanted to spend a moment on our current CCF funding of the new vessel build program. As of September 30th, the $628 million in cash deposits and treasury securities in our capital construction fund covers approximately 92% of the remaining milestone payment obligations, which excludes future interest income or accretion earned on cash deposits and treasury securities. Assuming the interest income rate on our CCF money market funds remains at our current rate of 4%, we expect only approximately $28 million of additional CCF cash deposits to be required for the final milestone payments in late fourth quarter 2027. In addition to the current CCF balance, we also had $93 million in cash and cash equivalents as of September 30th. These two balances combined exceed our remaining milestone payments, so we're in a great funding position on the new bill program. This year in the fourth quarter, we expect to make approximately $101 million in milestone payments from the CCF, of which we already made approximately $36 million in milestone payments in October. Lastly, the targeted build schedule also remains unchanged. We recently received an update from Hanwha Philly Shipyard, and there has been no change to the schedule we previously communicated. We continue to expect our three vessels to be delivered in the first quarter of 2027, the third quarter of 2027, and the second quarter of 2028. With that, I'll turn the call back over to Matt.

Okay.