HONOLULU - Matson, Inc. ('Matson' or the 'Company') (NYSE: MATX), a leading U.S. carrier in the Pacific, today reported net income of $34.0 million, or $0.94 per diluted share, for the quarter ended March 31, 2023.
* 1Q23 EPS of $0.94
* 1Q23 Net Income and EBITDA of $34.0 million and $81.7 million, respectively
* Year-over-year decrease in 1Q23 consolidated operating income driven primarily by lower contribution from China service
* Repurchased approximately 0.7 million shares in 1Q23
Net income for the quarter ended March 31, 2022 was $339.2 million, or $8.23 per diluted share. Consolidated revenue for the first quarter 2023 was $704.8 million compared with $1,165.5 million for the first quarter 2022.
'Despite being down from the extraordinary pandemic driven demand level over the last two years, Matson's Ocean Transportation and Logistics business segments performed well in a challenging business environment,' said Chairman and Chief Executive Officer Matt Cox. 'Within Ocean Transportation, our China service generated lower year-over-year volume and freight rates, which were the primary contributors to the year-over-year decline in our consolidated operating income. During the first quarter, retail customers continued to conservatively manage inventories amid weakening consumer demand, increasing interest rates and economic uncertainty. Currently in the Transpacific marketplace, business conditions are mixed with general improvement in tradelane capacity and some improvement in retailer inventories, but we continue to see conservative management of inventories by retail customers in light of economic uncertainty. As such, we expect our CLX and CLX+ services in the second quarter to reflect freight demand levels below normalized conditions with lower year-over-year volumes and rates. Absent an economic 'hard landing' in the U.S., we continue to expect improved trade dynamics in the second half of 2023 as the Transpacific marketplace transitions to a more normalized level of demand. Regardless of the economic environment, we expect to continue to earn a significant rate premium to the Shanghai Containerized Freight Index reflecting our fast and reliable ocean services and unmatched destination services.'
Mr. Cox added, 'In our domestic ocean tradelanes, we saw lower year-over-year volumes in Hawaii, Alaska and Guam compared to the year ago period. The modest year-over-year decline in Hawaii volume was primarily due to lower eastbound volume. The year-over-year volume declines in Guam and Alaska were primarily driven by lower retail-related demand and lower seafood volume, respectively. In Logistics, operating income decreased year-over-year primarily due to lower contributions from supply chain management and transportation brokerage.'
'We expect Matson's consolidated operating income in the second quarter of 2023 to be higher than the first quarter. We expect normal seasonality to return to our domestic tradelanes and Logistics and our China service to experience freight demand levels below normalized conditions,' said Mr. Cox. 'In the near-term, we expect continued economic growth in Alaska to be supportive of improved freight demand and in Hawaii and Guam we expect muted freight demand, but recognize the uncertainty in the macroeconomic environment. We continued to repurchase shares during the first quarter, and we remain committed to the return of excess capital to shareholders. As such, we recently announced that our Board approved an additional three million shares for our share repurchase program.'
First Quarter 2023 Discussion and Update on Business Conditions
Ocean Transportation: The Company's container volume in the Hawaii service in the first quarter 2023 was 0.8 percent lower year-over-year. The decrease was primarily due to lower eastbound volume. During the quarter, the Company saw retail customers continue to manage inventories to weaker consumer demand levels despite continued improvement in the Hawaii economy supported by a low unemployment rate and relatively strong tourist arrivals, including a modest improvement in international tourist trends. In the near-term, Matson expects muted freight demand in Hawaii despite continued improvement in the Hawaii economy supported by strength in tourism and a low unemployment rate. There are also negative trends as a result of higher inflation and higher interest rates that create uncertainty in the economic growth trajectory.
In China, the Company's container volume in the first quarter 2023 decreased 35.4 percent year-over-year. The decrease was primarily due to (i) CCX volume in the first quarter 2022 (CCX service was discontinued in the third quarter 2022) and (ii) lower demand for the CLX and CLX+ services. Matson continued to realize a significant rate premium over the Shanghai Containerized Freight Index ('SCFI') in the first quarter 2023 but achieved average freight rates that were lower than in the year ago period. Currently in the Transpacific marketplace, business conditions are mixed with general improvement in tradelane capacity and retailer inventories, but we continue to see retail customers conservatively manage inventories in light of continued economic uncertainty. As such, the Company expects its CLX and CLX+ services in the second quarter to reflect freight demand levels below normalized conditions with lower year-over-year volumes and rates. Absent an economic 'hard landing' in the U.S., the Company continues to expect improved trade dynamics in the second half of 2023 as the Transpacific marketplace transitions to a more normalized level of demand. Regardless of the economic environment, the Company expects to continue to earn a significant rate premium to the SCFI reflecting our fast and reliable ocean services and unmatched destination services.
In Guam, the Company's container volume in the first quarter 2023 decreased 10.9 percent year-over-year primarily due to lower retail-related demand. In the near-term, the Company expects muted freight demand despite continued improvement in the Guam economy with increasing tourism and a low unemployment rate. There are also negative trends as a result of higher inflation and higher interest rates that create uncertainty in the economic growth trajectory.
In Alaska, the Company's container volume for the first quarter 2023 decreased 4.8 percent year-over-year due to (i) lower export seafood volume from the Alaska-Asia Express service ('AAX') primarily due to three less sailings and (ii) lower southbound volume primarily due to lower domestic seafood and household goods volume, partially offset by higher northbound volume primarily due to two additional sailings. In the near-term, the Company expects the Alaska economy to benefit from low unemployment and increased energy-related exploration and production activity as a result of elevated oil prices, but there are negative trends as a result of higher inflation and higher interest rates that create uncertainty in the economic growth trajectory.
The contribution in the first quarter 2023 from the Company's SSAT joint venture investment was $(1.8) million, or $35.8 million lower than the first quarter 2022. The decrease was primarily driven by lower other terminal revenue and lower lift volume.
Logistics: In the first quarter 2023, operating income for the Company's Logistics segment was $10.9 million, or $5.5 million lower compared to the level achieved in the first quarter 2022. The decrease was primarily due to lower contributions from supply chain management, consistent with lower demand in the Transpacific tradelane, and transportation brokerage.
Results By Segment
Ocean Transportation - Three months ended March 31, 2023 compared with 2022: see full release at:
https://investor.matson.com/news-releases/news-release-details/matson-inc-announces-first-quarter-2023-results
MATSON, INC. 
