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MI

Matson, Inc. (MATX)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 beat on revenue and EPS vs S&P Global consensus: Revenue $830.5M vs $809.2M*, EPS $2.92 vs $2.28*, while reported EBITDA was $163.6M; S&P Global’s EBITDA “actual” for the consensus series was $149.6M*, highlighting definition differences . Q2 beats were driven by stronger pricing in China, a rebound in demand from mid-May, and cost actions, partially offset by lower China volumes .
  • Management raised the full-year 2025 outlook: Ocean Transportation operating income now expected to be higher than May guidance (but moderately below 2024), Logistics operating income expected to be comparable to 2024, and consolidated operating income expected to be higher than May guidance (but moderately below $551.3M in 2024) .
  • Near-term caution: Q3 2025 Ocean Transportation operating income expected to be “meaningfully lower” YoY on lower China rates/volumes and a muted peak season; consolidated Q3 operating income also expected to be meaningfully lower YoY .
  • Capital allocation remained shareholder-friendly: 0.9M shares repurchased for $93.7M in Q2 and dividend increased to $0.36 (13th consecutive annual increase) . The stock narrative catalyst: raised FY outlook vs caution on Q3; widening premium to SCFI underscores competitive moat in expedited service .

What Went Well and What Went Wrong

What Went Well

  • Pricing and execution offset volume headwinds: China freight rates were modestly higher YoY; cost tightening in April supported margins; SSAT JV contribution increased to $7.3M in Q2 (+$6.1M YoY) .
  • Domestic tradelanes resilience: Hawaii and Alaska volumes rose YoY (+2.6% and +0.9%, respectively), supported by construction and oil & gas activity .
  • Strategic expansion and service differentiation: Transshipment rose to ~21% of China service (from ~13% in Q1) as Matson followed customer production shifts across Asia; premium to SCFI widened due to service differentiation and brand .
    • “We are raising our outlook for the full year 2025” .
    • “Our premium to SCFI widened and we significantly outperformed the market…due to our service differentiation” .

What Went Wrong

  • China volume headwind and muted peak season: China FEU volume fell 14.6% YoY; management expects lower YoY rates/volumes in Q3 and a muted peak season .
  • Logistics softness: Logistics operating income declined $1.2M YoY in Q2, driven by lower contribution from transportation brokerage .
  • Consolidated outlook for Q3 is weak: Ocean Transportation and consolidated operating income expected to be “meaningfully lower” vs Q3 2024; macro/tariff uncertainty persists .

Financial Results

Consolidated P&L (oldest → newest)

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$890.3 $782.0 $830.5
Operating Income ($M)$147.5 $82.1 $113.0
Net Income ($M)$128.0 $72.3 $94.7
Diluted EPS ($)$3.80 $2.18 $2.92
EBITDA ($M)$195.2 $131.7 $163.6

Q2 2025 vs S&P Global Consensus

MetricActualConsensusDelta
Revenue ($USD Millions)$830.5 $809.2*+$21.3; +2.6% (beat)
Diluted EPS ($)$2.92 $2.28*+$0.64; +28% (beat)
EBITDA ($M)$149.6*$136.5*+$13.1; +9.6% (beat)

Values marked with * retrieved from S&P Global.

Note: Matson reported Q2 EBITDA of $163.6M, while S&P Global’s “actual” for the consensus series shows $149.6M, reflecting differing EBITDA definitions/normalizations . Values retrieved from S&P Global.

Segment Breakdown (oldest → newest)

SegmentMetricQ4 2024Q1 2025Q2 2025
Ocean TransportationRevenue ($M)$742.1 $637.4 $675.6
Operating Income ($M)$137.4 $73.6 $98.6
Operating Margin (%)18.5% 11.5% 14.6%
LogisticsRevenue ($M)$148.2 $144.6 $154.9
Operating Income ($M)$10.1 $8.5 $14.4
Operating Margin (%)6.8% 5.9% 9.3%

KPIs: FEU Volume (oldest → newest)

KPI (FEUs)Q4 2024Q1 2025Q2 2025
Hawaii34,800 35,700 36,000
Alaska18,000 19,700 21,700
China37,400 28,500 32,300
Guam4,500 4,200 4,500
Other4,300 3,400 4,400

Guidance Changes

MetricPeriodPrevious Guidance (May 5, 2025)Current Guidance (Jul 31, 2025)Change
Ocean Transportation Operating IncomeFY 2025Lower than 2024 level Higher than May guidance; moderately lower than 2024 ($500.9M) Raised
Logistics Operating IncomeFY 2025Lower than 2024 Comparable to 2024 Raised
Consolidated Operating IncomeFY 2025Lower than 2024 ($551.3M) Higher than May guidance; moderately lower than $551.3M Raised
Ocean Transportation Operating IncomeQ3 2025—Meaningfully lower vs Q3 2024 ($226.9M) New/Lower
Logistics Operating IncomeQ3 2025—Comparable to Q3 2024 ($15.4M) New/Flat
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 income ≈$9M income Maintained
Effective Tax RateFY 2025≈23% ≈22% Lowered
Maintenance/Other CapExFY 2025$100–$120M $100–$120M Maintained
New Vessel ConstructionFY 2025≈$305M ≈$305M Maintained
Dry-docking PaymentsFY 2025≈$40M ≈$40M Maintained
New Vessel MilestonesQ3 2025—≈$71M in Q3 New
DividendQ3 2025$0.34/sh (Q1 declaration) $0.36/sh (announced 6/26) Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024)Previous Mentions (Q1 2025)Current Period (Q2 2025)Trend
Transpacific rates & supply chainElevated rates supported by Red Sea disruption; Q1 2025 expected strong; 2H depends on Red Sea normalization April tariffs drove ~30% YoY volume decline; Q2 rates/volumes expected lower YoY Modestly higher YoY rates amid tariff volatility; premium to SCFI widened on service quality Mixed: structural premium intact, demand volatility
Tariffs/macro uncertaintyRed Sea/geopolitics key swing factors for 2025 Significant uncertainty; lowered FY outlook vs 2024 Uncertainty persists; FY raised vs May on Q2 performance, but still below 2024 Improving vs May, still cautious
Southeast Asia transshipmentNot emphasizedDiscussed diversification of “catchment basin” Transshipment ~21% vs ~13% in Q1; new expedited Ho Chi Minh service; expect higher non-China mix over time Expanding
Domestic tradelanesHawaii/Alaska stable to modest growth; Guam softer HI/AK up; Guam down HI/AK up; Guam slightly down; stability expected Stable
Competition in expedited services——Several “near-expedited” competitors; difficult to sustain at low SCFI; Matson #1/#2 fastest Moat durable
Cost actions——G&A belt-tightening in April supporting margins Leaner opex
SSAT JVQ4 impairment drove loss $6.6M income Q1 $7.3M in Q2; FY modestly higher ex-impairment Improving

Management Commentary

  • “Our second quarter financial performance exceeded our expectations amid the challenges of market uncertainty and volatility arising from tariffs and global trade…we are raising our outlook for the full year 2025.” — Matt Cox, CEO .
  • “Our premium to SCFI widened and we significantly outperformed the market…due to our service differentiation and brand reputation.” — Matt Cox .
  • “We did take some [G&A] actions early in April…Those are still in place…part of the reason for the operating margin…in Q2.” — Joel Wine, CFO .
  • “During the second quarter, we moved with our customers as they shifted production throughout Asia…our transshipment volume…represented ~21%…vs ~13% in the first quarter.” — Matt Cox .
  • “We entered into a new five-year revolving credit facility…$550 million…reduced from $650 million” with build program nearly funded; next Jones Act build cycle mid-2030s. — Joel Wine .

Q&A Highlights

  • China volumes and peak season: Q3 volumes/rates expected lower YoY; peak season “relatively muted” due to inventory and lapping extra sailings; run-rate volumes similar to mid-May–June .
  • Expedited competitive landscape: New “near-expedited” strings exist but are costly to sustain at low SCFI; Matson maintains #1 and #2 fastest services .
  • Southeast Asia growth: Low-20% non-China origin mix expected near term; long-term customer “China+1” diversification to drive mix while China remains a manufacturing powerhouse .
  • Cost discipline: April G&A actions to persist through year, aiding margins alongside stronger YoY pricing in Q2 .
  • Capital structure/liquidity: New $550M revolver sized for lower capital needs through decade; Q3 expected milestone payment ≈$71M .

Estimates Context

  • Q2 2025 vs S&P Global consensus: Revenue $830.5M vs $809.2M* (beat); EPS $2.92 vs $2.28* (beat); EBITDA $149.6M* vs $136.5M* (beat). Note Matson reported Q2 EBITDA $163.6M; S&P’s lower “actual” reflects normalization/definition differences . Values retrieved from S&P Global.
  • Forward consensus snapshot: Q4 2025 consensus — Revenue $789.1M*, EPS $2.77*, EBITDA $152.7M*; given management’s raised FY view vs May but Q3 caution, street models may need to reflect stronger FY baseline with softer 3Q seasonality and emphasis on mix/pricing vs volume in China . Values retrieved from S&P Global.

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • The quarter was fundamentally stronger than feared: broad beats vs consensus and a raised FY outlook vs May despite tariff-driven volatility; near-term caution centers on a muted Q3 peak season and lower China volumes/rates .
  • Service moat widening: Premium to SCFI increased and share gains in transshipment/SE Asia underpin Matson’s differentiated expedited offering (key for mid-cycle margins) .
  • Domestic stability provides ballast: Hawaii and Alaska continued to grow; Logistics stabilized QoQ with better margin despite YoY OI decline .
  • Cost discipline and capital allocation are supportive: April G&A actions, continued buybacks ($93.7M in Q2) and dividend increase to $0.36 underscore confidence and FCF durability .
  • Watch Q3 setup and tariffs: Management explicitly guided Q3 OI “meaningfully lower” YoY; tariff and macro paths remain the key wildcards; any visibility improvement or rate stabilization could be a positive catalyst .
  • Structural growth vector: Rising non-China origin mix (Vietnam) and transshipment expansion support a durable premium service strategy, potentially smoothing volatility over time .
  • Balance sheet/liquidity intact: New $550M revolver and CCF funding status cover vessel milestones, with total debt at $381.0M and $59.1M cash at quarter-end .

Supporting Detail and Additional Disclosures

  • Additional Q2 2025 financials: Operating income $113.0M; effective tax rate 22.2%; cash from operations (YTD) $194.6M; cash $59.1M; total debt $381.0M; share repurchases ~0.9M shares ($93.7M) in Q2 .
  • Prior quarter context: Q1 2025 EPS $2.18; revenue $782.0M; EBITDA $131.7M; Ocean OI $73.6M; Logistics OI $8.5M .
  • Q4 2024 context: EPS $3.80; revenue $890.3M; EBITDA $195.2M; Ocean OI $137.4M; Logistics OI $10.1M .

All consensus/estimate values marked with * are Values retrieved from S&P Global.