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MI

Matson, Inc. (MATX)·Q4 2024 Earnings Summary

Executive Summary

  • Strong Q4: revenue $890.3M (+12.9% y/y) and diluted EPS $3.80 vs $1.78 a year ago, driven by significantly higher China freight rates and seasonally stronger demand; EPS includes a $0.42 per-share hit from an $18.4M SSAT impairment .
  • Ocean Transportation operating income more than doubled y/y to $137.4M (18.5% margin) on elevated CLX/MAX rates; Logistics operating income rose to $10.1M, aided by supply chain management .
  • Outlook: Q1’25 consolidated operating income expected to be meaningfully higher y/y; 2025 operating income ranges from moderately lower than 2024 to approaching 2024 depending on Red Sea normalization; 2025 D&A ~$200M, tax ~22% .
  • Capital allocation/capex: $31.8M of Q4 buybacks; 2025 capex $425–$445M with newbuild schedule delayed ~4 months (now Q1’27/Q3’27/Q2’28) but fixed-price contract limits cost risk; dividend maintained at $0.34/quarter .

What Went Well and What Went Wrong

  • What Went Well

    • China expedited services remained the key growth driver with significantly higher y/y rates and +7.2% volume; Ocean Transportation operating income more than doubled y/y in Q4 .
    • Logistics operating income increased y/y on higher contribution from supply chain management; consolidated Q4 operating income rose to $147.5M from $75.3M .
    • Management reaffirmed steady domestic trades and reiterated share repurchase commitment; Q4 buybacks ~0.2M shares ($31.8M) and continued focus on returning excess capital .

  • What Went Wrong

    • SSAT JV booked an $18.4M impairment (Seattle lease consolidation), resulting in a Q4 loss of $9.5M and a $0.42 EPS headwind; without it, EPS would have been higher .
    • Guam volume -10% y/y on weaker retail and F&B; Hawaii volume -1.7% y/y on lower general demand .
    • Macro/policy uncertainty persists (Red Sea, tariffs, de minimis changes) and could moderate rates if Red Sea normalizes; management highlighted uncertainty into 2025 .

Financial Results

MetricQ4 2023Q3 2024Q4 2024
Revenue ($MM)$788.9 $962.0 $890.3
Diluted EPS ($)$1.78 $5.89 $3.80
Net Income ($MM)$62.4 $199.1 $128.0
Operating Income ($MM)$75.3 $242.3 $147.5
EBITDA ($MM)$119.4 $289.4 $195.2
Effective Tax Rate (%)26.0% (y/y reference) 21.2% 19.1%

Segment performance

SegmentMetricQ4 2023Q3 2024Q4 2024
Ocean TransportationRevenue ($MM)$639.7 $798.7 $742.1
Operating Income ($MM)$66.4 $226.9 $137.4
Operating Income Margin (%)10.4% 28.4% 18.5%
LogisticsRevenue ($MM)$149.2 $163.3 $148.2
Operating Income ($MM)$8.9 $15.4 $10.1
Operating Income Margin (%)6.0% 9.4% 6.8%
SSAT JVIncome (Loss) ($MM)$4.1 $6.9 $(9.5)

KPIs

KPIQ4 2023Q3 2024Q4 2024
China containers (FEU)34,900 40,000 37,400
Hawaii containers (FEU)35,400 36,200 34,800
Alaska containers (FEU)17,800 22,200 18,000
Guam containers (FEU)5,000 4,800 4,500

Context and drivers

  • Elevated CLX/MAX rates and stronger seasonal demand drove Ocean revenue/operating income higher y/y; fuel surcharge timing also helped; SSAT impairment and higher China direct cargo expense/G&A were offsets .
  • Logistics OI gain was primarily from supply chain management; transportation brokerage remains challenging into 2025 .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Ocean Transportation OIQ1 2025N/AMeaningfully higher vs $27.6M in Q1’24 New
Logistics OIQ1 2025N/AModestly lower vs $9.3M in Q1’24 New
Consolidated OIQ1 2025N/AMeaningfully higher vs $36.9M in Q1’24 New
Ocean Transportation OIFY 2025N/AModerately lower than $500.9M (if Red Sea normalizes by mid-year) or approaching 2024 if disruptions persist Scenario-based
Consolidated OIFY 2025N/AModerately lower than $551.3M or approaching 2024 on same scenarios Scenario-based
D&AFY 2025N/A~ $200M (incl. ~$26M dry-dock amortization) New
Interest income / expenseFY 2025N/A~ $31M / ~ $7M New
Other incomeFY 2025N/A~ $9M New
Effective tax rateFY 2025~22% for 2024 outlook ~22% Maintained
Capex (Total)FY 2025N/A$425–$445M (New vessels ~$305M; maintenance/other $120–$140M) New
Newbuild deliveriesProgram1st: 4Q26; 2nd/3rd: 2027 (prior) 1Q’27, 3Q’27, 2Q’28; ~4-month delay Delayed
Dividend1Q 2025$0.34 (run-rate) Declared $0.34 payable Mar 6, 2025 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3)Current Period (Q4)Trend
Red Sea/supply chainPeak season strength; tighter supply chains supporting elevated rates (Q2/Q3) Elevated rates to continue into Q1’25; moderation 2H’25 if Red Sea normalizes; rates stay elevated if disruption persists Elevated but path depends on Red Sea resolution
Tariffs/trade policyTariff/ILA risks flagged (Q3) Proposed tariffs and USTR shipbuilding proposal introduce uncertainty; potential air-to-ocean shift if de minimis/tariffs change Policy uncertainty; potential positive mix shift
E-commerce/airfreight conversionPositive driver, structural mix shift (Q2/Q3) Continued structural mix toward higher-rate e-commerce and air-to-ocean conversion supports pricing Structural support to pricing mix
Domestic tradelanesHawaii/Guam softness; Alaska stable (Q2/Q3) Hawaii -1.7% y/y; Guam -10% y/y; Alaska +1.1% y/y; 2025 similar volumes overall Stable to modest growth ex-Guam softness
SSAT JVRecovery from lows, better lifts in Q3 $18.4M impairment; 2025 contribution to approximate 2024 excluding impairment One-time impairment; underlying ops steady
Newbuild programLaunch and funding position strong (Q3) ~4-month delay; delivery now 1Q’27/3Q’27/2Q’28; fixed-price contract mitigates cost risk Schedule slip; cost risk contained
Capital returnsOngoing buybacks/dividends (Q2/Q3) Continued buybacks ($31.8M in Q4; program expanded Feb 27, 2025) and dividend maintained Ongoing capital return

Management Commentary

  • “Matson had a very strong fourth quarter that exceeded our expectations… China service was the primary driver… significantly higher year-over-year freight rates for our CLX and MAX services” — CEO Matt Cox .
  • “We expect elevated freight rates in our China service to continue into the first quarter of 2025… beyond Q1, rates driven by Red Sea normalization, geopolitics, supply chain activity, and U.S. economy” — CEO .
  • “Q4 Logistics operating income came in at $10.1 million… primarily due to a higher contribution from supply chain management” — CFO Joel Wine .
  • “Net income and diluted EPS were $128 million and $3.80… $18.4 million impairment impacted EPS by $0.42” — CFO .
  • “We plan to continue returning excess capital to shareholders… steady buyers of our shares” — CEO .

Q&A Highlights

  • Drivers of Q1’25 “meaningfully higher” EBIT: elevated China rates vs prior year; domestic trade lanes steady; Logistics steady but challenging .
  • Rate cadence: seasonal step-down from peak as surcharge rolls off; Matson rates less tied to spot indices like SCFI .
  • Red Sea sensitivity: normalization would free capacity and likely pressure global ocean rates; Matson pricing moves in sympathy, albeit not directly tied to liners .
  • Newbuild delay: driven by shipyard sequencing; fixed-price contract with limited steel escalators and LDs; primary impact is delayed capacity benefits, not material cost change .
  • Policy risks: early innings on U.S.-China measures; de minimis/tariff changes could push air cargo to expedited ocean; limited exposure to USTR shipbuilding charges (4 of 30 vessels are China-built) .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4’24 EPS and revenue was unavailable due to S&P Global daily request limits during retrieval; as a result, we cannot quantify beat/miss vs consensus for this quarter. Values would normally be retrieved from S&P Global.
  • Given strong y/y improvements in revenue, operating income, and EPS, and management’s pre-announced expectation for Q4 OI to be meaningfully higher than last year, results appear better than prior-year baselines; estimate revisions likely to focus on sustained China rate strength into Q1’25 and scenario-based 2025 OI paths .

Key Takeaways for Investors

  • Core thesis intact: expedited China services (CLX/MAX) continue to monetize disruption and faster-to-market needs; structural mix shift (e-commerce, air-to-ocean conversion) supports higher pricing versus pre-Red Sea norms .
  • 1Q25 setup constructive: management guides to meaningfully higher consolidated OI y/y as elevated rates persist into Q1; seasonal rate step-down from peak already embedded .
  • 2025 is a “scenario year”: if Red Sea normalizes by mid-year, expect moderation in 2H; if disruptions persist, 2025 OI can approach 2024; model with two paths .
  • One-time SSAT impairment reduced Q4 EPS by $0.42; underlying JV volumes improved y/y; 2025 contribution expected to approximate 2024 ex-impairment .
  • Capex ramp and fleet modernization on track despite ~4-month delay; 2025 capex $425–$445M with fixed-price newbuild contract limiting cost risk; deliveries shifted to 2027/2028 .
  • Capital returns remain a pillar: ongoing buybacks and steady dividend; post-quarter program expanded by 3M shares on Feb 27, 2025 .
  • Watch Guam/Hawaii demand and tariff/de minimis developments as near-term puts/takes; domestic trades steady overall but sensitive to tourism and consumer trends .

Notes:

  • Q4 2024 results and segment details from Matson’s earnings press release and financials .
  • Outlook, macro, and strategy from Q4 2024 earnings call transcript .
  • Prior-quarter comparatives from Q3 and Q2 earnings materials .
  • Dividend and buyback program updates from press releases .