Yahoo Finance Matson Inc (MATX) Q1 2024 Earnings Call Transcript Highlights: Key Financial Shifts and ...
Consolidated Operating Income: Decreased $1.8 million year-over-year to $36.9 million.
Ocean Transportation Operating Income: Declined slightly by $0.2 million.
Logistics Operating Income: Decreased by $1.6 million.
Net Income: Increased 6.2% year-over-year.
Diluted Earnings Per Share: Increased 10.6% year-over-year.
Interest Income: Increased by $0.6 million year-over-year to $8.8 million.
Interest Expense: Decreased by $2.3 million year-over-year.
Container Volume: Hawaii down 1.7%, Alaska down 5.1%, Guam flat, China down 4%.
Freight Rates: Higher year-over-year in China.
SSAT Contribution: Increased $2.2 million year-over-year to $0.4 million.
Share Repurchase: Approximately 4.4 million shares for $48.9 million in Q1.
Total Debt: Reduced by $10.1 million to $430.5 million at the end of Q1.
Federal Tax Refund: Received $118.6 million plus $10.2 million in interest income.
Release Date: April 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: On your second quarter growth, that implies a pretty big sequential ramp from 1Q. Is that all volume or is there pricing there too? Can you give us a sense of what you're thinking when you say up modestly for consolidated EBITDA in the second quarter?A: (Matthew Cox - CEO) We're seeing a more traditional first quarter, with a longer ramp-up period post-Lunar New Year, which we expect to be our normal moving forward. The first quarter is traditionally the weakest, but we saw nice volumes coming out of it. Freight rates will also be higher than last year. Joel Wine (CFO) added that "modestly" means just a little bit more, and "moderately" is a bit more than modestly.
: Last quarter, you mentioned no real impact from the Red Sea disruptions with spot rates remaining elevated. Is that still the case?A: (Matthew Cox - CEO) The carriers that traditionally used the Red Sea and the Suez Canal have rerouted around Africa, adding capacity to accommodate longer transits. This has been relatively painless from a customer supply chain perspective. We haven't seen much disruption as an industry and very little impact on Matson.
Q: As we think about SSAT, which was slightly profitable in the quarter, is there any reason it can't get back to 4Q profitability levels as we progress through the year?A: (Matthew Cox - CEO) We expect continued improvement in SSAT, but it will likely take until 2025 to see a more normalized level of profitability for the full year. We believe we've hit the bottom in terms of volume and expect steady improvement based on our market views.
Q: On the demand side for ocean, you sound a bit more optimistic than others about US demand. How much of this is due to a secular shift from airfreight to expedited ocean, and how are changes in your customer base affecting this outlook?A: (Matthew Cox - CEO) US consumer demand remains strong, supporting volume growth on the U.S. West Coast. Specific to Matson, our expedited market demand is underpinned by healthy airfreight markets, growth of e-commerce, and healthy customer inventory levels. We aim to capture the lion's share of this market by maintaining the fastest and most reliable service.
Q: With the tax payment of $190 million received, how much of the new vessel payments needed over the coming years is already funded?A: (Joel Wine - CFO) We've paid about $100 million of the total $1 billion for new vessels, with about $900 million more to go. The Capital Construction Fund (CCF) currently has about $606 million, covering two-thirds of the remaining obligations. We expect to use funds from our cash and cash equivalents starting around 2026 to cover the rest.
Q: Are you seeing any opportunities for inorganic growth given the current market conditions?A: (Joel Wine - CFO) We've seen an uptick in companies potentially going to market after a slow M&A period. However, expectations for multiples remain high, making it challenging to align seller expectations with market realities. We continue to focus on assets that fit our strategic profile, maintaining discipline in our acquisition strategy.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
