10-Q 1 matx-20220331x10q.htm 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                     to                   

Commission file number 001-34187

Matson, Inc.

(Exact name of registrant as specified in its charter)

Hawaii

99-0032630

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

1411 Sand Island Parkway

Honolulu, HI

(Address of principal executive offices)

96819

(Zip Code)

(808) 848-1211

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address, and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, without par value

MATX

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

Number of shares of common stock outstanding as of March 31, 2022: 40,541,412

MATSON, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

  

Page

Part I—FINANCIAL INFORMATION

1

Item 1.

Financial Statements (Unaudited)

1

Condensed Consolidated Statements of Income and Comprehensive Income

1

Condensed Consolidated Balance Sheets

2

Condensed Consolidated Statements of Cash Flows

3

Condensed Consolidated Statements of Shareholders’ Equity

4

Notes to the Condensed Consolidated Financial Statements

5

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

14

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

19

Item 4.

Controls and Procedures

20

Part II—OTHER INFORMATION

20

Item 1.

Legal Proceedings

20

Item 1A.

Risk Factors

20

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

21

Item 3.

Defaults Upon Senior Securities

21

Item 4.

Mine Safety Disclosures

21

Item 5.

Other Information

21

Item 6.

Exhibits

22

Signatures

23

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

MATSON, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income and Comprehensive Income

(Unaudited)

Three Months Ended

 

March 31, 

(In millions, except per share amounts)

    

2022

    

2021

 

Operating Revenue:

Ocean Transportation

$

943.9

$

560.5

Logistics

 

221.6

 

151.3

Total Operating Revenue

 

1,165.5

 

711.8

Costs and Expenses:

Operating costs

 

(703.7)

 

(544.7)

Income from SSAT

 

34.0

 

9.2

Selling, general and administrative

 

(63.2)

 

(56.1)

Total Costs and Expenses

 

(732.9)

 

(591.6)

Operating Income

 

432.6

 

120.2

Interest expense

 

(4.8)

 

(7.3)

Other income (expense), net

 

2.0

 

1.4

Income before Income Taxes

 

429.8

 

114.3

Income taxes

 

(90.6)

 

(27.1)

Net Income

$

339.2

$

87.2

Other Comprehensive Income (Loss), Net of Income Taxes:

Net Income

$

339.2

$

87.2

Other Comprehensive Income (Loss):

Amortization of prior service cost

 

(0.9)

 

(1.1)

Amortization of net loss (gain)

 

0.8

 

1.2

Other adjustments

 

0.3

 

(0.2)

Total Other Comprehensive Income (Loss)

 

0.2

 

(0.1)

Comprehensive Income

$

339.4

$

87.1

Basic Earnings Per Share

$

8.29

$

2.01

Diluted Earnings Per Share

$

8.23

$

1.99

Weighted Average Number of Shares Outstanding:

Basic

 

40.9

 

43.4

Diluted

 

41.2

 

43.8

See Notes to Condensed Consolidated Financial Statements.

1

MATSON, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Unaudited)

March 31, 

December 31, 

(In millions)

    

2022

    

2021

    

ASSETS

Current Assets:

Cash and cash equivalents

$

392.8

$

282.4

Accounts receivable, net of allowance for credit losses of $11.4 million and $10.1 million, respectively

 

371.4

 

343.7

Prepaid expenses and other assets

 

110.6

 

78.4

Total current assets

 

874.8

 

704.5

Long-term Assets:

Investment in SSAT

 

92.7

 

58.7

Property and equipment, net

 

1,894.6

 

1,878.3

Operating lease right of use assets

506.7

434.6

Goodwill

 

327.8

 

327.8

Intangible assets, net

178.5

181.1

Deferred dry-docking costs, net

64.7

68.7

Other long-term assets

 

37.7

 

39.4

Total long-term assets

3,102.7

2,988.6

Total Assets

$

3,977.5

$

3,693.1

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current Liabilities:

Current portion of debt

$

65.0

$

65.0

Accounts payable and accruals

 

301.6

 

308.4

Operating lease liabilities

158.5

137.6

Other liabilities

 

85.1

 

101.4

Total current liabilities

 

610.2

 

612.4

Long-term Liabilities:

Long-term debt, net of deferred loan fees

 

535.7

 

549.7

Long-term operating lease liabilities

359.5

307.4

Deferred income taxes

 

431.1

 

425.2

Other long-term liabilities

130.3

131.0

Total long-term liabilities

 

1,456.6

 

1,413.3

Commitments and Contingencies (see Note 13)

Shareholders’ Equity:

Common stock

 

30.4

 

30.7

Additional paid in capital

 

296.2

 

314.1

Accumulated other comprehensive loss, net

 

(30.7)

 

(30.9)

Retained earnings

 

1,614.8

 

1,353.5

Total shareholders’ equity

 

1,910.7

 

1,667.4

Total Liabilities and Shareholders’ Equity

$

3,977.5

$

3,693.1

See Notes to Condensed Consolidated Financial Statements.

2

MATSON, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)

Three Months Ended March 31, 

(In millions)

    

2022

    

2021

    

Cash Flows From Operating Activities:

Net income

$

339.2

$

87.2

Reconciling adjustments:

Depreciation and amortization

 

35.6

 

34.5

Amortization of operating lease right of use assets

36.2

23.9

Deferred income taxes

 

6.6

 

6.5

Share-based compensation expense

 

4.7

 

4.8

Income from SSAT

 

(34.0)

 

(9.2)

Distribution from SSAT

10.5

Other

(0.2)

(1.1)

Changes in assets and liabilities:

Accounts receivable, net

 

(27.7)

 

(7.7)

Deferred dry-docking payments

 

(8.6)

 

(9.5)

Deferred dry-docking amortization

 

6.7

 

6.6

Prepaid expenses and other assets

 

(31.5)

 

(4.8)

Accounts payable, accruals and other liabilities

 

(16.2)

 

5.6

Operating lease liabilities

(35.4)

(22.5)

Other long-term liabilities

 

(1.5)

 

(1.9)

Net cash provided by operating activities

 

273.9

 

122.9

Cash Flows From Investing Activities:

Capitalized vessel construction expenditures

(9.4)

Other capital expenditures

 

(37.4)

 

(38.5)

Proceeds from disposal of property and equipment

 

0.4

 

1.4

Cash deposits into Capital Construction Fund

 

(10.7)

 

Withdrawals from Capital Construction Fund

10.7

Net cash used in investing activities

 

(46.4)

 

(37.1)

Cash Flows From Financing Activities:

Repayments of debt

 

(14.4)

 

(14.4)

Proceeds from revolving credit facility

108.1

Repayments of revolving credit facility

 

 

(154.9)

Payment of financing costs

(3.0)

Dividends paid

(12.9)

 

(10.1)

Repurchase of Matson common stock

(70.4)

 

Tax withholding related to net share settlements of restricted stock units

(19.4)

(14.1)

Net cash used in financing activities

 

(117.1)

 

(88.4)

Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash

 

110.4

 

(2.6)

Cash, Cash Equivalents and Restricted Cash, Beginning of the Period

 

287.7

 

19.7

Cash, Cash Equivalents and Restricted Cash, End of the Period

$

398.1

$

17.1

Reconciliation of Cash, Cash Equivalents and Restricted Cash, End of the Period:

Cash and Cash Equivalents

$

392.8

$

11.8

Restricted Cash

5.3

5.3

Total Cash, Cash Equivalents and Restricted Cash, End of the Period

$

398.1

$

17.1

Supplemental Cash Flow Information:

Interest paid, net of capitalized interest

$

4.5

$

5.7

Income tax payments and (refunds), net

$

103.1

$

(0.4)

Non-cash Information:

Capital expenditures included in accounts payable, accruals and other liabilities

$

7.1

$

8.8

See Notes to Condensed Consolidated Financial Statements.

3

MATSON, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Shareholders’ Equity

(Unaudited)

Accumulated

Common Stock

Additional

Other

Stated

Paid In

Comprehensive

   Retained   

(In millions, except per share amounts)

    

Shares

    

Value

    

Capital

    

Income (Loss)

    

Earnings

    

      Total      

Balance at December 31, 2021

 

41.0

$

30.7

 

$

314.1

$

(30.9)

$

1,353.5

$

1,667.4

Net income

 

 

 

 

 

 

339.2

 

339.2

Other comprehensive income (loss), net of tax

 

 

 

 

 

0.2

 

 

0.2

Share-based compensation

 

 

 

 

4.7

 

 

 

4.7

Shares issued, net of shares withheld for employee taxes

 

0.2

 

0.2

 

 

(19.5)

 

 

 

(19.3)

Shares repurchased

 

(0.7)

(0.5)

(3.1)

(65.0)

(68.6)

Dividends ($0.30 per share)

 

 

 

 

 

 

(12.9)

 

(12.9)

Balance at March 31, 2022

 

40.5

$

30.4

 

$

296.2

$

(30.7)

$

1,614.8

$

1,910.7

Accumulated

Common Stock

Additional

Other

Stated

Paid In

Comprehensive

   Retained   

(In millions, except per share amounts)

    

Shares

    

Value

    

Capital

    

Income (Loss)

    

Earnings

    

      Total      

Balance at December 31, 2020

 

43.2

$

32.4

 

$

321.5

$

(50.8)

$

658.1

$

961.2

Net income

 

 

 

 

 

 

87.2

 

87.2

Other comprehensive income (loss), net of tax

 

 

 

 

 

(0.1)

 

 

(0.1)

Share-based compensation

 

 

 

 

4.8

 

 

 

4.8

Shares issued, net of shares withheld for employee taxes

 

0.2

 

0.2

 

 

(14.3)

 

 

 

(14.1)

Dividends ($0.23 per share)

 

 

 

 

 

 

(10.1)

 

(10.1)

Balance at March 31, 2021

 

43.4

$

32.6

 

$

312.0

$

(50.9)

$

735.2

$

1,028.9

See Notes to Condensed Consolidated Financial Statements.

4

MATSON, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANICAL STATEMENTS

(Unaudited)

1.          DESCRIPTION OF THE BUSINESS

Matson, Inc., a holding company incorporated in the State of Hawaii, and its subsidiaries (“Matson” or the “Company”), is a leading provider of ocean transportation and logistics services. The Company consists of two segments, Ocean Transportation and Logistics:

Ocean Transportation: Matson’s Ocean Transportation business is conducted through Matson Navigation Company, Inc. (“MatNav”), a wholly-owned subsidiary of Matson, Inc. Founded in 1882, MatNav provides a vital lifeline of ocean freight transportation services to the domestic non-contiguous economies of Hawaii, Alaska and Guam, and to other island economies in Micronesia. MatNav also operates premium, expedited services primarily from China to Long Beach, California, and provides services to Okinawa, Japan and various islands in the South Pacific, and operates an international export service from Dutch Harbor, Alaska to Asia. In addition, subsidiaries of MatNav provide stevedoring, refrigerated cargo services, inland transportation and other terminal services for MatNav and other ocean carriers on the Hawaiian islands of Oahu, Hawaii, Maui and Kauai, and in the Alaska locations of Anchorage, Kodiak and Dutch Harbor.

Matson has a 35 percent ownership interest in SSA Terminals, LLC, a joint venture between Matson Ventures, Inc., a wholly-owned subsidiary of MatNav, and SSA Ventures, Inc., a subsidiary of Carrix, Inc. (“SSAT”). SSAT currently provides terminal and stevedoring services to various carriers at eight terminal facilities on the U.S. West Coast, including three facilities dedicated for MatNav’s use. Matson records its share of income from SSAT in costs and expenses in the Condensed Consolidated Statements of Income and Comprehensive Income, and within the Ocean Transportation segment due to the nature of SSAT’s operations.

Logistics: Matson’s Logistics business is conducted through Matson Logistics, Inc. (“Matson Logistics”), a wholly-owned subsidiary of MatNav. Established in 1987, Matson Logistics extends the geographic reach of Matson’s transportation network throughout North America and Asia, and is an asset-light business that provides a variety of logistics services to its customers including: (i) multimodal transportation brokerage of domestic and international rail intermodal services, long-haul and regional highway trucking services, specialized hauling, flat-bed and project services, less-than-truckload services, and expedited freight services (collectively, “Transportation Brokerage” services); (ii) less-than-container load (“LCL”) consolidation and freight forwarding services (collectively, “Freight Forwarding” services); (iii) warehousing, trans-loading, value-added packaging and distribution services (collectively, “Warehousing” services); and (iv) supply chain management, non-vessel operating common carrier (“NVOCC”) freight forwarding and other services.

2.          SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation: The Condensed Consolidated Financial Statements are unaudited, and include the accounts of Matson, Inc. and all wholly-owned subsidiaries, after elimination of intercompany amounts and transactions. Significant investments in businesses, partnerships, and limited liability companies in which the Company does not have a controlling financial interest, but has the ability to exercise significant influence, are accounted for under the equity method. The Company accounts for its investment in SSAT using the equity method of accounting.

Due to the nature of the Company’s operations, the results for interim periods are not necessarily indicative of results to be expected for the year. These Condensed Consolidated Financial Statements reflect all normal recurring adjustments that are, in the opinion of management, necessary for fair presentation of the results of the interim periods, and do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete consolidated financial statements.

The Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the Securities and Exchange Commission (“SEC”) on February 25, 2022.

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Fiscal Period: The period end for Matson covered by this report is March 31, 2022. The period end for MatNav and its subsidiaries covered by this report occurred on April 1, 2022.

Significant Accounting Policies: The Company’s significant accounting policies are described in Note 2 to the Consolidated Financial Statements included in Part II, Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

Use of Estimates: The preparation of the interim Condensed Consolidated Financial Statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the amounts reported. Estimates and assumptions are used for, but not limited to: impairment of investments; impairment of long-lived assets, intangible assets and goodwill; capitalized interest; allowance for doubtful accounts and note receivables; legal contingencies; insurance reserves and other related liabilities; accrual estimates; pension and post-retirement estimates; multi-employer withdrawal liabilities; operating lease assets and liabilities; income from SSAT; and income taxes. Future results could be materially affected if actual results differ from these estimates and assumptions.

Recognition of Revenues and Expenses: Revenue in the Company’s Condensed Consolidated Financial Statements is presented net of elimination of intercompany transactions. The following is a description of the Company’s principal revenue generating activities by segment, and the Company’s revenue recognition policy for each activity for the periods presented:

Three Months Ended

March 31, 

Ocean Transportation (in millions) (1)

2022

    

2021

Ocean Transportation services

$

936.7

$

554.2

Terminal and other related services

3.7

2.8

Fuel sales

1.9

1.4

Vessel management and related services

1.6

2.1

Total

$

943.9

$

560.5

(1)Ocean Transportation revenue transactions are primarily denominated in U.S. dollars except for less than 3 percent of Ocean Transportation services revenue and fuel sales revenue categories which are denominated in foreign currencies.

Ocean Transportation services revenue is recognized ratably over the duration of a voyage based on the relative transit time completed in each reporting period. Vessel operating costs and other ocean transportation operating costs, such as terminal operating overhead and selling, general and administrative expenses, are charged to operating costs as incurred.
Terminal and other related services revenue is recognized as the services are performed. Related costs are recognized as incurred.
Fuel sales revenue and related costs are recognized when the Company has completed delivery of the product to the customer in accordance with the terms and conditions of the contract.
Vessel management and related services revenue is recognized in proportion to the services completed. Related costs are recognized as incurred.

Three Months Ended

March 31, 

Logistics (in millions) (1)

2022

2021

Transportation Brokerage and Freight Forwarding services

$

194.9

$

135.3

Warehousing and distribution services

12.1

9.2

Supply chain management and other services

 

14.6

 

6.8

Total

$

221.6

$

151.3

(1)Logistics revenue transactions are primarily denominated in U.S. dollars except for approximately 6.5 percent of transportation brokerage and freight forwarding services revenue, and supply chain management and other services revenue categories which are denominated in foreign currencies.

Transportation Brokerage and Freight Forwarding services revenue consists of amounts billed to customers for services provided. The primary costs include third-party purchased transportation services, agent commissions, labor and equipment. Revenue and the related purchased third-party transportation costs are recognized over the duration of a delivery based upon the relative transit time completed in each reporting period. Labor, agent commissions, and other operating costs are expensed as incurred. The Company reports revenue on a gross basis as

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the Company serves as the principal in these transactions because it is responsible for fulfilling the contractual arrangements with the customer and has latitude in establishing prices.
Warehousing and distribution services revenue consist of amounts billed to customers for storage, handling, and value-added packaging of customer merchandise. Storage revenue is recognized in the month the service is provided to the customer. Storage related costs are recognized as incurred. Other warehousing and distribution services revenue and related costs are recognized in proportion to the services performed.
Supply chain management and other services revenue, and related costs are recognized in proportion to the services performed.

The Company generally invoices its customers at the commencement of the voyage or the transportation service being provided, or as other services are being performed. Revenue is deferred when services are invoiced in advance to the customer. The Company’s receivables are classified as short-term as collection terms are for periods of less than one year. The Company expenses sales commissions and contract acquisition costs as incurred because the amounts are generally immaterial. These expenses are included in selling, general and administration expenses in the Condensed Consolidated Statements of Income and Comprehensive Income.

Capital Construction Fund: The Company’s Capital Construction Fund (“CCF”) is described in Note 7 to the Consolidated Financial Statements included in Part II, Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. As of March 31, 2022 and December 31, 2021, $9.8 million of eligible accounts receivable was assigned to the CCF. Due to the nature of the assignment of eligible accounts receivable into the CCF, such assigned amounts are classified as part of accounts receivable in the Condensed Consolidated Balance Sheets. Cash on deposit in the CCF is held in a money market account and classified as a long-term asset in the Company’s Condensed Consolidated Balance Sheets, as the Company intends to use qualified cash withdrawals to fund long-term investment in the construction of new vessels. During the three months ended March 31, 2022, the Company deposited $10.7 million into the CCF and made qualifying cash withdrawals of $10.7 million from the CCF. The balance of cash on deposit at March 31, 2022 and December 31, 2021 was nominal.

Investment in SSAT: Condensed income statement information for SSAT for the three months ended March 31, 2022 and 2021 consisted of the following:

Three Months Ended

 

March 31, 

 

(In millions)

2022

    

2021

 

Operating revenue

$

430.4

$

306.1

Operating costs and expenses

(306.9)

(273.1)

Operating income

123.5

33.0

Net Income (1)

$

100.1

$

28.9

Company Share of SSAT’s Net Income (2)

$

34.0

$

9.2

(1)Includes earnings from equity method investments held by SSAT less earnings allocated to non-controlling interests.
(2)The Company records its share of net income from SSAT in costs and expenses in the Condensed Consolidated Statement of Income and Comprehensive Income due to the nature of SSAT’s operations.

The Company’s investment in SSAT was $92.7 million and $58.7 million at March 31, 2022 and December 31, 2021, respectively.

Dividends: The Company’s first quarter 2022 cash dividend of $0.30 per share was paid on March 3, 2022. On April 28, 2022, the Company’s Board of Directors declared a cash dividend of $0.30 per share payable on June 2, 2022 to shareholders of record on May 12, 2022.

Repurchase of Shares: During the three months ended March 31, 2022, the Company repurchased approximately 0.7 million shares for a total cost of $68.6 million. On January 27, 2022 the Company announced an increase of three million shares in its existing share repurchase program. As of March 31, 2022, the maximum number of remaining shares that may be repurchased under the Company’s stock repurchase program was approximately 2.8 million shares.

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3.          REPORTABLE SEGMENTS

Reportable segments are components of an enterprise that engage in business activities from which it may earn revenues and incur expenses, whose operating results are regularly reviewed by the chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. The Company’s chief operating decision maker is its Chief Executive Officer.

The Company consists of two reportable segments, Ocean Transportation and Logistics, which are further described in Note 1. Reportable segments are measured based on operating income. In arrangements where the customer purchases ocean transportation and logistics services, the revenues are allocated to each reportable segment based upon the contractual amounts for each type of service. The Company’s SSAT segment has been aggregated into the Company’s Ocean Transportation segment due to the operations of SSAT being an integral part of the Company’s Ocean Transportation business.

The Company’s Ocean Transportation segment provides ocean transportation services to the Logistics segment, and the Logistics segment provides logistics services to the Ocean Transportation segment in certain transactions. Accordingly, inter-segment revenue of $73.2 million and $33.7 million for the three months ended March 31, 2022 and 2021, respectively, have been eliminated from operating revenues in the table below. 

Reportable segment financial information for the three months ended March 31, 2022 and 2021 are as follows:

Three Months Ended

March 31, 

(In millions)

    

2022

    

2021

Operating Revenue:

Ocean Transportation (1)

$

943.9

$

560.5

Logistics (2)

 

221.6

 

151.3

Total Operating Revenue

$

1,165.5

$

711.8

Operating Income:

Ocean Transportation (3)

$

416.2

$

114.1

Logistics

 

16.4

 

6.1

Total Operating Income

 

432.6

 

120.2

Interest expense, net

 

(4.8)

 

(7.3)

Other income (expense), net

 

2.0

 

1.4

Income before Income Taxes

 

429.8

 

114.3

Income taxes

 

(90.6)

 

(27.1)

Net Income

$

339.2

$

87.2

(1)Ocean Transportation operating revenue excludes inter-segment revenue of $21.8 million and $15.1 million for the three months ended March 31, 2022 and 2021, respectively.
(2)Logistics operating revenue excludes inter-segment revenue of $51.4 million and $18.6 million for the three months ended March 31, 2022 and 2021, respectively.
(3)Ocean Transportation segment information includes $34.0 million and $9.2 million of equity in income from the Company’s equity investment in SSAT for the three months ended March 31, 2022 and 2021, respectively.

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4.          PROPERTY AND EQUIPMENT

Property and equipment as of March 31, 2022 and December 31, 2021 consisted of the following:

March 31, 

December 31, 

(In millions)

    

2022

    

2021

Cost:

Vessels

$

2,245.2

$

2,243.8

Containers and equipment

697.3

680.9

Terminal facilities and other property

131.4

128.3

Vessel construction in progress

24.2

14.9

Other construction in progress

36.3

19.5

Total Property and Equipment

3,134.4

3,087.4

Less: Accumulated Depreciation

(1,239.8)

(1,209.1)

Total Property and Equipment, net

$

1,894.6

$

1,878.3

5.          GOODWILL AND INTANGIBLES

Goodwill by segment as of March 31, 2022 and December 31, 2021 consisted of the following:

Ocean

 

(In millions)

    

Transportation

    

Logistics

    

Total

 

Goodwill

$

222.6

$

105.2

$

327.8

Intangible assets as of March 31, 2022 and December 31, 2021 consisted of the following:

March 31, 

December 31, 

(In millions)

    

2022

    

2021

Customer Relationships:

Ocean Transportation

$

140.6

$

140.6

Logistics

90.1

90.1

Total

230.7

230.7

Less: Accumulated Amortization

(79.5)

(76.9)

Total Customer Relationships, net

151.2

153.8

Trade name – Logistics

27.3

27.3

Total Intangible Assets, net

$

178.5

$

181.1

The Company evaluates its goodwill and intangible assets for possible impairment in the fourth quarter, or whenever events or changes in circumstances indicate that it is more likely than not that the fair value is less than its carrying amount. The Company has reporting units within the Ocean Transportation and Logistics reportable segments. The Company considered the general economic and market conditions due to COVID-19 and its impact on the performance of each of the Company’s reporting units. Based on the Company’s assessment of its market capitalization, future forecasts and the amount of excess of fair value over the carrying value of the reporting units in the 2021 annual impairment tests, the Company concluded that an impairment triggering event did not occur during the three months ended March 31, 2022.

The Company will monitor events and changes in circumstances that could negatively impact the key assumptions used in determining the fair value, including the amount and timing of estimated future cash flows generated by the reporting units, long-term growth and discount rates, comparable company market valuations, and industry and economic trends. It is possible that future changes in such circumstances, including future changes in the assumptions and estimates used in assessing the fair value of the reporting unit, could require the Company to record a non-cash impairment charge.

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6.          DEBT

As of March 31, 2022 and December 31, 2021, the Company’s debt consisted of the following:

March 31, 

December 31, 

(In millions)

    

2022

    

2021

    

Private Placement Term Loans:

3.66 %, payable through 2023

$

13.7

$

13.7

4.16 %, payable through 2027

 

28.8

 

28.8

3.37 %, payable through 2027

69.2

69.2

3.14 %, payable through 2031

142.0

151.2

4.31 %, payable through 2032

 

25.4

 

25.4

Title XI Debt:

5.34 %, payable through 2028

 

14.3

 

15.4

5.27 %, payable through 2029

 

16.5

 

17.6

1.22 %, payable through 2043

174.1

174.1

1.35 %, payable through 2044

130.7

133.6

Total Debt

 

614.7

 

629.0

Less: Current portion

 

(65.0)

 

(65.0)

Total Long-term Debt

549.7

564.0

Less: Deferred loan fees

(14.0)

 

(14.3)

Total Long-term Debt, net of deferred loan fees

$

535.7

$

549.7

Except as described below, the Company’s debt is described in Note 8 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

Revolving Credit Facility: The Company’s revolving credit facility has committed available borrowing of up to $650 million and matures on March 31, 2026. As of March 31, 2022, the Company had $642.0 million of remaining borrowing availability under the revolving credit facility. The Company used $8.0 million of the revolving credit facility for letters of credit outstanding as of March 31, 2022. There were no outstanding borrowings under the revolving credit facility as of March 31, 2022 and December 31, 2021.

Debt Security and Guarantees: All of the debt of the Company and MatNav, including related guarantees, as of March 31, 2022 was unsecured, except for the Title XI debt.

Debt Maturities: As of March 31, 2022, debt maturities during the next five years and thereafter are as follows:

As of

Year (in millions)

    

March 31, 2022

Remainder of 2022

$

50.6

2023

 

60.4

2024

 

51.7

2025

 

51.7

2026

 

51.7

Thereafter

 

348.6

Total Debt

$

614.7

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7.          LEASES

The Company’s leases are described in Note 9 to the Consolidated Financial Statements included in Part II, Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

Components of Lease Cost: Components of lease cost recorded in the Company’s Condensed Consolidated Statement of Income and Comprehensive Income for the three months ended March 31, 2022 and 2021 consisted of the following:

Three Months Ended

March 31, 

(In millions)

    

2022

2021

Operating lease cost

$

38.4

$

25.3

Short-term lease cost

 

0.1

 

2.0

Variable lease cost

 

0.2

 

0.2

Total lease cost

$

38.7

$

27.5

Maturities of operating lease liabilities at March 31, 2022 are as follows:

    

As of

Year (in millions)

    

March 31, 2022

Remainder of 2022

$

126.4

2023

 

144.5

2024

 

124.2

2025

 

73.5

2026

 

31.1

Thereafter

 

59.0

Total lease payments

558.7

Less: Interest

(40.7)

Present value of operating lease liabilities

518.0

Less: Short-term portion

(158.5)

Long-term operating lease liabilities

$

359.5

8.          ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Changes in accumulated other comprehensive income (loss) by component, net of tax, for the three months ended March 31, 2022 consisted of the following:

Accumulated

Post-

Non-

Other

Pension

Retirement

Qualified

Comprehensive

(In millions)

    

Benefits

    

Benefits

    

Plans

    

Other

    

Income (Loss)

 

Balance at December 31, 2021

$

(39.1)

$

10.1

$

(0.7)

$

(1.2)

$

(30.9)

Amortization of prior service cost

(0.2)

(0.7)

(0.9)

Amortization of net loss

0.6

0.2

0.8

Foreign currency exchange

0.3

0.3

Balance at March 31, 2022

$

(38.7)

$

9.6

$

(0.7)

$

(0.9)

$

(30.7)

Changes in accumulated other comprehensive income (loss) by component, net of tax, for the three months ended March 31, 2021 consisted of the following:

Accumulated

Post-

Non-

Other

Pension

Retirement

Qualified

Comprehensive

(In millions)

    

Benefits

    

Benefits

    

Plans

    

Other

    

Income (Loss)

 

Balance at December 31, 2020

$

(61.7)

$

12.2

$

(0.6)

$

(0.7)

$

(50.8)

Amortization of prior service cost

(0.4)

(0.7)

(1.1)

Amortization of net loss

0.9

0.2

0.1

1.2

Foreign currency exchange

(0.2)

(0.2)

Balance at March 31, 2021

$

(61.2)

$

11.7

$

(0.5)

$

(0.9)

$

(50.9)

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9.          FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company values its financial instruments based on the fair value hierarchy of valuation techniques for fair value measurements. Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date. Level 2 inputs include quoted prices for similar assets and liabilities in active markets and inputs other than quoted prices observable for the asset or liability. Level 3 inputs are unobservable inputs for the asset or liability. If the technique used to measure fair value includes inputs from multiple levels of the fair value hierarchy, the lowest level of significant input determines the placement of the entire fair value measurement in the hierarchy.

The Company uses Level 1 inputs for the fair values of its cash, cash equivalents and restricted cash, and Level 2 inputs for its variable and fixed rate debt. The fair values of cash, cash equivalents and restricted cash, and variable rate debt approximate their carrying values due to the nature of the instruments. The fair value of fixed rate debt is calculated based upon interest rates available for debt with terms and maturities similar to the Company’s existing debt arrangements.

The carrying value and fair value of the Company’s financial instruments as of March 31, 2022 and December 31, 2021 are as follows: