Matson, Inc.

Matson, Inc. provides ocean transportation and logistics services across the Pacific. Its shipping network connects the U.S. mainland with Hawaii, Alaska, Guam and other island markets, and its premium China services carry cargo to Long Beach, California. Matson Logistics provides transportation brokerage, freight forwarding, warehousing and supply-chain services. Shares trade as MATX on the New York Stock Exchange.

Comparable quarterly results

Ocean Transportation's Q3 margin increased to 26.8% from 20.5%, supported by higher freight rates and China volume. Logistics revenue grew to $222.2 million from $161.8 million, while its margin fell to 7.2% from 8.4%. Average diluted shares declined to 30.1 million from 31.8 million.

China volumes include cargo from other Asian origins. Hawaii volume fell 0.3%, Alaska fell 4.8% and Guam rose 4.3%. The SSAT joint venture contributed $7.4 million of income, down from $9.3 million.

Earlier expectations and the revised outlook

On August 3, Matson expected Q3 Ocean Transportation operating income to grow approximately 45% from $147.4 million. Actual growth was 62%, to $239.1 million. The August outlook also assumed a more traditional demand pattern after peak season.

The latest percentage implies approximately $204 million. Matson expects continued strong demand and elevated rates in its China service through year-end and into early 2027, with ships full or nearly full in Q4. It expects Logistics operating income to be modestly above the prior Q4's $7.7 million.

The forecast Q4 tax rate is approximately 20%, compared with 5.2% in Q4 2025, which included an $18.5 million one-time deferred-tax benefit. This changes how much operating growth reaches net income.

Cash flow and the fleet program

Nine-month operating cash flow was $460.6 million, up from $370.2 million. Cash capital spending totaled $349.8 million, including $252.3 million for new ships and $97.5 million for other capital expenditure, compared with $258.7 million of total spending previously. Cash remaining after those payments was $110.8 million versus $111.5 million.

Vessel dry-docking payments of $40.5 million were already included in operating cash flow.

Matson expects approximately $130 million of non-vessel capital spending and $375 million of vessel construction payments in 2026, including capitalized interest and owner-supplied items. Together, that is $505 million, compared with August's $550 million to $570 million. The separate $45 million dry-docking forecast is unchanged.

The three Aloha-class ships are expected to be delivered in Q1 and Q3 2027 and Q2 2028. Remaining contractual milestone payments totaled $332.1 million at September 30: $110.2 million over the rest of 2026, $196.7 million in 2027, $22.3 million in 2028 and $2.9 million in 2029. Owner-supplied items and capitalized interest add to the construction program's cash requirements.

Cash funding, debt and capital returns

Ordinary cash and equivalents were $221.9 million at September 30, up from $141.9 million at year-end. The separate Capital Construction Fund held $227.9 million of cash equivalents and $70.7 million of investments, totaling $298.6 million, intended for qualifying vessel milestone payments.

Withdrawals from that fund supported $248.7 million of construction payments during the first nine months. These transfers are separate from operating cash generation.

Debt principal was $331.2 million, down from $361.2 million at year-end. Its carrying value after deferred loan fees was $322.6 million, with $39.7 million classified as current. Debt consists of fixed-rate private-placement and Title XI loans; the $550 million revolver was undrawn, with $544.2 million available after letters of credit. It matures July 23, 2030.

Nine-month cash share repurchases were $180.1 million, compared with a $182.0 million trade-cost total that includes unsettled purchases and repurchase taxes. Q3 repurchase cost was $59.8 million. About 3.1 million shares remained authorized at September 30.

Nine-month cash dividends totaled $33.4 million. The October 20 declaration pays $0.38 a share on December 3 to holders of record on November 5.