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MI

Matson, Inc. (MATX)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered strong year-over-year growth: revenue $782.0M (+8.3% YoY), EPS $2.18 (+109.6% YoY), operating income $82.1M (+122.5% YoY), EBITDA $131.7M (+59.1% YoY), driven primarily by significantly higher China freight rates and a stronger SSAT JV contribution .
  • Ocean Transportation operating income surged to $73.6M (+166.7% YoY), while Logistics operating income declined to $8.5M (-8.6% YoY) on lower freight forwarding and brokerage contributions .
  • Management lowered Q2 and FY 2025 outlooks on tariff and macro uncertainty; expects Q2 consolidated OI to be meaningfully below Q2 2024 and FY 2025 OI below FY 2024, citing ~30% YoY China volume decline in April and anticipated rate softness .
  • Capital allocation remained active: ~0.5M shares repurchased ($69.2M) and dividend declared at $0.34 in April; subsequently raised to $0.36 in June, marking the 13th consecutive annual increase .

What Went Well and What Went Wrong

What Went Well

  • China service: materially higher freight rates carried over from 4Q24, driving Ocean Transportation revenue and OI uplift; “benefitted from the carryover of elevated freight rates… combined with healthy freight demand” (Matt Cox) .
  • SSAT JV contribution improved to $6.6M (+$6.2M YoY), supported by higher lift volumes .
  • Domestic tradelanes: Hawaii (+3.2% FEU, aided by a competitor drydock) and Alaska (+4.8% FEU) volumes increased YoY .

What Went Wrong

  • China volumes fell ~30% YoY in April post-tariffs; management flagged limited visibility and expects Q2 volume and average rates to be lower YoY, pressuring earnings .
  • Logistics segment OI declined to $8.5M (-8.6% YoY) on weaker freight forwarding and brokerage; management expects full-year Logistics OI to be lower than 2024 .
  • Guam FEU volume down 14.3% YoY on softer retail and F&B demand; near-term recovery expected to be gradual .

Financial Results

Consolidated performance vs prior year, prior quarter, and consensus

MetricQ1 2024Q4 2024Q1 2025
Revenue ($USD Millions)$722.1 $890.3*$782.0
Operating Income ($USD Millions)$36.9 $147.5 $82.1
Net Income ($USD Millions)$36.1 $128.0 $72.3
Diluted EPS ($USD)$1.04 $3.80 $2.18
EBITDA ($USD Millions)$82.8 $197.5*$131.7
Values with asterisks retrieved from S&P Global.

Consensus comparison (Wall Street, S&P Global):

MetricQ1 2025 ConsensusQ1 2025 Actual
Revenue ($USD Millions)791.9782.0
Diluted EPS ($USD)2.272.18
Values retrieved from S&P Global.

Highlights:

  • Revenue and EPS modestly missed consensus; revenue -$9.9M and EPS -$0.09 versus S&P Global estimates, reflecting the early tariff impact and April demand softness signaled by management .

Segment breakdown (Q1 2025 vs Q1 2024)

SegmentQ1 2024 Revenue ($MM)Q1 2024 OI ($MM)Q1 2025 Revenue ($MM)Q1 2025 OI ($MM)
Ocean Transportation$579.0 $27.6 $637.4 $73.6
Logistics$143.1 $9.3 $144.6 $8.5

KPIs (FEU volumes, Q1 2025 vs Q1 2024)

Trade LaneQ1 2024 FEUsQ1 2025 FEUsYoY Change
Hawaii34,600 35,700 +3.2%
Alaska18,800 19,700 +4.8%
China (incl. transshipped)28,900 28,500 -1.4%
Guam4,900 4,200 -14.3%
Other3,600 3,400 -5.6%

Liquidity and capital:

  • Cash and cash equivalents: $122.0M; CCF (cash & investments): $685.4M; Total debt: $390.8M; revolver availability $643.9M .

Guidance Changes

MetricPeriodPrevious Guidance (Q4 2024 call, 2/25)Current Guidance (Q1 2025, 5/5)Change
Ocean Transportation Operating IncomeQ2 2025N/AMeaningfully lower than $109.0M in Q2 2024 Lowered
Logistics Operating IncomeQ2 2025N/ALower than $15.6M in Q2 2024 Lowered
Consolidated Operating IncomeQ2 2025N/AMeaningfully lower than $124.6M in Q2 2024 Lowered
Ocean Transportation Operating IncomeFY 2025Moderately lower vs $500.9M (if Red Sea normalizes H2) or approaching 2024 if disruption persists Lower than $500.9M achieved in 2024 Lowered
Logistics Operating IncomeFY 2025Modestly lower vs $50.4M Lower than $50.4M Lowered
Consolidated Operating IncomeFY 2025Moderately lower to approaching $551.3M Lower than $551.3M Lowered
Depreciation & AmortizationFY 2025~$200M incl. ~$26M dry-dock ~$200M incl. ~$26M dry-dock Maintained
Interest IncomeFY 2025~$31M ~$31M Maintained
Interest ExpenseFY 2025~$7M ~$7M Maintained
Other Income (Expense)FY 2025~$9M ~$9M Maintained
GAAP Effective Tax RateFY 2025~22% ~23% Raised
Dry-docking PaymentsFY 2025~$40M ~$40M Maintained
Capex – New Vessel ConstructionFY 2025$305M $305M Maintained
Capex – Maintenance/OtherFY 2025$120–$140M $100–$120M (lowered by $20M) Lowered
DividendQ2 2025Declared $0.34/share (Apr 24) Increased to $0.36/share for Q3 2025 (Jun 26) Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024)Previous Mentions (Q4 2024)Current Period (Q1 2025)Trend
China service pricingElevated rates on resilient demand and supply chain tightness Elevated rates to continue into Q1; peak surcharge reset seasonally Significantly higher YoY; but expect lower rates in Q2 amid tariffs Moderating from elevated levels
Tariffs/macroWatching proposed tariff changes; Red Sea normalization timing uncertain Range outlook dependent on Red Sea/macro New USTR action; ~30% April volume drop; outlook reduced Deteriorated in April
Airfreight conversion/e-commerceOngoing conversion and e-commerce growth Potential benefit if de minimis exemption goes away De minimis change could accelerate ocean shift; opportunity cited Structural positive tailwind
SSAT JVRecovery underway; higher contribution 4Q impairment ($18.4M); 2025 contribution ~2024 ex-impairment Q1 contribution +$6.2M YoY; FY 2025 expected lower than $17.4M Improving vs Q1 2024; cautious FY
Capacity/operationsMAX charters extended; slight cost tailwind in 2025 6-ship MAX rotation commitment No blank sailings philosophy despite demand shock Operational resilience focus
Hawaii/Alaska/GaumHawaii/Guam weaker; Alaska steady Hawaii soft; Alaska modest growth Hawaii +3.2%; Alaska +4.8%; Guam -14.3% Mixed: HI/AK up; Guam down

Management Commentary

  • “Our first quarter financial performance was as expected with significantly higher year-over-year consolidated operating income… primarily driven by our China service” (Matt Cox) .
  • “Since the tariffs were implemented in April, our container volume has declined approximately 30% year-over-year” (Matt Cox) .
  • “We expect both lower rate and lower volume… for the second quarter and for the full year. We still command a very significant premium… but our rates will move in sympathy with the overall market direction” (Matt Cox) .
  • “During the first quarter, we repurchased approximately 500,000 shares for a total cost of $69.2 million… Total debt… $390.8 million, a reduction of $10.1 million” (Joel Wine) .
  • “We remain committed to maintaining the reliability of our vessel operations and providing high-quality service… Matson’s businesses have historically performed well during periods of supply chain disruption” (Matt Cox) .

Q&A Highlights

  • Vietnam catchment expansion: ~20% of weekly volumes now originate from Vietnam; ability to scale via feeder partners and add capacity as needed .
  • Rates: Market disruptive and mixed post-tariffs; Matson expects lower volumes and rates but to maintain premium vs market .
  • Operations: Management aims to avoid blank sailings to preserve brand/reliability and capture potential snapback when inventories need replenishment .
  • De minimis exemption: Near-term airfreight-to-ocean conversion opportunity; change seen as likely persistent, benefiting expedited ocean services .
  • April 30% China volume decline contextualization: CFO suggested using Q2 2024 as a baseline to conceptualize impact while acknowledging uncertainty in duration .

Estimates Context

  • Q1 2025 revenue and EPS modestly missed S&P Global consensus. Street models likely need to reflect the April tariff shock, expected Q2 rate/volume declines, and lowered FY OI guidance, particularly for Ocean Transportation and Logistics . Values retrieved from S&P Global.

Key Takeaways for Investors

  • Near-term headwinds: April tariff shock (~30% China volume decline) and guided Q2/FY OI reductions suggest earnings pressure into Q2; watch tariff amendments and retailer restocking cadence .
  • China premium intact but moderating: Matson expects lower rates and volumes in Q2 while maintaining premium pricing vs market; monitor SCFI and expedited demand indicators .
  • Diversification efforts: Vietnam/SE Asia catchment expansion provides partial offset to China weakness; capacity can be scaled with feeders; track transshipment flows .
  • Capital strength: Robust CCF ($685.4M), reduced debt ($390.8M), ample revolver ($643.9M), and continued buybacks/dividend growth (to $0.36) underpin balance sheet resilience .
  • Segment mix: Ocean Transportation is the earnings lever; Logistics faces a challenging environment with expected FY OI lower YoY .
  • Watch SSAT contribution: Positive Q1 step-up, but FY 2025 contribution expected below $17.4M; sensitivity to West Coast volumes persists .
  • Operational stance: No blank sailings policy aims to capture demand snapbacks and reinforce reliability; brand value is a competitive moat in expedited ocean .

Additional data and details

  • Condensed consolidated results (Q1 2025): Revenue $782.0M; OI $82.1M; Net income $72.3M; EPS $2.18; EBITDA $131.7M .
  • Liquidity/Capital allocation: Net cash from operations $89.0M in Q1; Capex payments $89.2M; share repurchase ~$69.2M; dividend $0.34 in April .
  • Outlook drivers: USTR Section 301 service fees and proposed duties; Matson exempt from the vessel service fee due to size but indirectly impacted via customer tariffs and equipment costs .

Values with asterisks retrieved from S&P Global.