Matson, Inc. [MATX] Filings

10-Q 1 matx-20240630x10q.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 June 30, 2024

☐

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 June 30, 2024: 33,579,287

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MATSON, INC. AND SUBSIDIARIES

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		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	17
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	26
Item 4.	Controls and Procedures	26

Part II—OTHER INFORMATION		26

Item 1.	Legal Proceedings	26
Item 1A.	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27
Item 3.	Defaults Upon Senior Securities	27
Item 4.	Mine Safety Disclosures	27
Item 5.	Other Information	27
Item 6.	Exhibits	28
	Signatures	29

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

MATSON, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income and Comprehensive Income

(Unaudited)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
(In millions, except per share amounts)	2024		2023		2024		2023
Operating Revenue:
Ocean Transportation	$	689.9	$	616.9	$	1,268.9	$	1,167.9
Logistics		157.5		156.5		300.6		310.3
Total Operating Revenue		847.4		773.4		1,569.5		1,478.2

Costs and Expenses:
Operating costs		(646.9)		(604.7)		(1,259.1)		(1,202.2)
Income (Loss) from SSAT		1.2		(1.4)		1.6		(3.2)
Selling, general and administrative		(77.1)		(70.6)		(150.5)		(137.4)
Total Costs and Expenses		(722.8)		(676.7)		(1,408.0)		(1,342.8)

Operating Income		124.6		96.7		161.5		135.4
Interest income		18.8		8.7		27.6		16.9
Interest expense		(2.1)		(2.9)		(4.3)		(7.4)
Other income (expense), net		1.8		1.8		3.6		3.6
Income before Taxes		143.1		104.3		188.4		148.5
Income taxes		(29.9)		(23.5)		(39.1)		(33.7)
Net Income	$	113.2	$	80.8	$	149.3	$	114.8

Other Comprehensive Income (Loss), Net of Income Taxes:
Net Income	$	113.2	$	80.8	$	149.3	$	114.8
Other Comprehensive Income (Loss):
Net change in pension and post-retirement liabilities		(0.7)		(0.9)		(1.5)		(1.7)
Other adjustments		0.3		(0.7)		(0.5)		0.7
Total Other Comprehensive Income (Loss), Net of Income Taxes		(0.4)		(1.6)		(2.0)		(1.0)
Comprehensive Income	$	112.8	$	79.2	$	147.3	$	113.8

Basic Earnings Per Share	$	3.34	$	2.28	$	4.38	$	3.21
Diluted Earnings Per Share	$	3.31	$	2.26	$	4.33	$	3.19

Weighted Average Number of Shares Outstanding:
Basic		33.9		35.5		34.1		35.8
Diluted		34.2		35.7		34.5		36.0

See Notes to Condensed Consolidated Financial Statements.

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MATSON, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Unaudited)


	June 30,		December 31,
(In millions)	2024		2023
ASSETS
Current Assets:
Cash and cash equivalents	$	168.2	$	134.0
Accounts receivable, net of allowance for credit losses of $9.8 million and $9.9 million, respectively		308.0		279.4
Prepaid expenses and other assets		70.0		188.9
Total current assets		546.2		602.3
Long-term Assets:
Investment in SSAT		86.4		85.5
Property and equipment, net		2,151.2		2,089.9
Operating lease right of use assets		247.7		289.6
Goodwill		327.8		327.8
Intangible assets, net		169.1		176.4
Capital Construction Fund		613.9		599.4
Deferred dry-docking costs, net		62.9		57.3
Other long-term assets		68.7		66.4
Total long-term assets		3,727.7		3,692.3
Total Assets	$	4,273.9	$	4,294.6

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Current portion of debt	$	39.7	$	39.7
Accounts payable and accruals		291.3		277.9
Operating lease liabilities		122.7		136.7
Other liabilities		130.8		108.0
Total current liabilities		584.5		562.3
Long-term Liabilities:
Long-term debt, net of deferred loan fees		370.0		389.3
Long-term operating lease liabilities		130.5		159.3
Deferred income taxes		679.9		669.3
Other long-term liabilities		110.5		113.7
Total long-term liabilities		1,290.9		1,331.6
Commitments and Contingencies (see Note 15)
Shareholders’ Equity:
Common stock		25.2		25.8
Additional paid in capital		284.7		293.4
Accumulated other comprehensive loss, net		(10.2)		(8.2)
Retained earnings		2,098.8		2,089.7
Total shareholders’ equity		2,398.5		2,400.7
Total Liabilities and Shareholders’ Equity	$	4,273.9	$	4,294.6

See Notes to Condensed Consolidated Financial Statements.

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MATSON, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Six Months Ended June 30,
(In millions)	2024		2023
Cash Flows From Operating Activities:
Net income	$	149.3	$	114.8
Reconciling adjustments:
Depreciation and amortization		76.4		72.1
Amortization of operating lease right of use assets		68.1		75.7
Deferred income taxes		7.5		(3.0)
Share-based compensation expense		12.0		9.8
(Income) loss from SSAT		(1.6)		3.2
Distributions from SSAT		14.0		—
Other		(6.5)		(1.7)
Changes in assets and liabilities:
Accounts receivable, net		(28.9)		(16.8)
Deferred dry-docking payments		(17.3)		(8.9)
Deferred dry-docking amortization		13.7		12.4
Prepaid expenses and other assets		114.6		68.3
Accounts payable, accruals and other liabilities		17.4		3.6
Operating lease liabilities		(69.0)		(76.3)
Other long-term liabilities		(5.2)		(6.7)
Net cash provided by operating activities		344.5		246.5

Cash Flows From Investing Activities:
Capitalized vessel construction expenditures		(38.2)		(50.8)
Capital expenditures (excluding vessel construction expenditures)		(86.9)		(75.5)
Proceeds from disposal of property and equipment, net		3.2		0.1
Payment for intangible asset acquisition		—		(12.4)
Cash deposits and interest into the Capital Construction Fund, net		(45.0)		(113.1)
Withdrawals from Capital Construction Fund, net		35.8		49.9
Net cash used in investing activities		(131.1)		(201.8)

Cash Flows From Financing Activities:
Repayments of debt		(19.9)		(55.1)
Dividends paid		(22.1)		(22.4)
Repurchase of Matson common stock		(120.1)		(82.5)
Tax withholding related to net share settlements of restricted stock units		(17.0)		(12.5)
Net cash used in financing activities		(179.1)		(172.5)

Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash		34.3		(127.8)
Cash and Cash Equivalents, and Restricted Cash, Beginning of the Period		136.3		253.7
Cash and Cash Equivalents, and Restricted Cash, End of the Period	$	170.6	$	125.9

Reconciliation of Cash, Cash Equivalents and Restricted Cash, End of the Period:
Cash and Cash Equivalents	$	168.2	$	122.0
Restricted Cash		2.4		3.9
Total Cash and Cash Equivalents, and Restricted Cash, End of the Period	$	170.6	$	125.9

Supplemental Cash Flow Information:
Interest paid, net of capitalized interest	$	3.5	$	7.1
Income tax payments (refunds), net	$	(114.3)	$	(28.8)

Non-cash Information:
Capital expenditures included in accounts payable, accruals and other liabilities	$	15.3	$	8.4
Non-cash payment for intangible asset acquisition	$	—	$	4.1
Accrued dividends	$	11.4	$	11.2

See Notes to Condensed Consolidated Financial Statements.

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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, 2023	34.4	$	25.8	$	293.4	$	(8.2)	$	2,089.7	$	2,400.7
Net income	—		—		—		—		36.1		36.1
Other comprehensive income (loss), net of tax	—		—		—		(1.6)		—		(1.6)
Share-based compensation	—		—		5.7		—		—		5.7
Shares issued, net of shares withheld for employee taxes	0.2		0.1		(17.3)		—		—		(17.2)
Shares repurchased	(0.4)		(0.3)		(1.6)		—		(47.0)		(48.9)
Equity interest in SSAT (See Note 4)	—		—		—		—		10.1		10.1
Dividends ($0.32 per share)	—		—		—		—		(11.1)		(11.1)
Balance at March 31, 2024	34.2		25.6		280.2		(9.8)		2,077.8		2,373.8
Net income	—		—		—		—		113.2		113.2
Other comprehensive income (loss), net of tax	—		—		—		(0.4)		—		(0.4)
Share-based compensation	—		—		6.3		—		—		6.3
Shares issued, net of shares withheld for employee taxes	—		—		0.2		—		—		0.2
Shares repurchased	(0.6)		(0.4)		(2.0)		—		(69.8)		(72.2)
Dividends ($0.32 per share and $0.34 per share)	—		—		—		—		(22.4)		(22.4)
Balance at June 30, 2024	33.6	$	25.2	$	284.7	$	(10.2)	$	2,098.8	$	2,398.5


						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, 2022	36.3	$	27.2	$	290.4	$	(6.9)	$	1,986.2	$	2,296.9
Net income	—		—		—		—		34.0		34.0
Other comprehensive income (loss), net of tax	—		—		—		0.6		—		0.6
Share-based compensation	—		—		4.6		—		—		4.6
Shares issued, net of shares withheld for employee taxes	0.3		0.2		(12.6)		—		—		(12.4)
Shares repurchased	(0.7)		(0.5)		(2.7)		—		(38.9)		(42.1)
Dividends ($0.31 per share)	—		—		—		—		(11.3)		(11.3)
Balance at March 31, 2023	35.9		26.9		279.7		(6.3)		1,970.0		2,270.3
Net income	—		—		—		—		80.8		80.8
Other comprehensive income (loss), net of tax	—		—		—		(1.6)		—		(1.6)
Share-based compensation	—		—		5.2		—		—		5.2
Shares issued, net of shares withheld for employee taxes	—		—		0.1		—		—		0.1
Shares repurchased	(0.6)		(0.6)		(2.3)		—		(39.5)		(42.4)
Dividends ($0.31 per share and $0.32 per share)	—		—		—		—		(22.4)		(22.4)
Balance at June 30, 2023	35.3	$	26.3	$	282.7	$	(7.9)	$	1,988.9	$	2,290.0

See Notes to Condensed Consolidated Financial Statements.

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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 from China to Long Beach, California, provides services to Okinawa, Japan and various islands in the South Pacific, and operates an international export service from Alaska to Asia. In addition, subsidiaries of MatNav provide stevedoring, refrigerated cargo services, inland transportation and other terminal services for MatNav on the Hawaiian islands of Oahu, Hawaii, Maui and Kauai, and for MatNav and an ocean carrier in Alaska.

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) purchase order management, booking services, and non-vessel operating common carrier (“NVOCC”) freight forwarding services (collectively, “Supply Chain Management” services).

2. GENERAL AND 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, 2023, filed with the Securities and Exchange Commission (“SEC”) on February 23, 2024.

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Fiscal Period: The period end for Matson covered by this report is June 30, 2024. The period end for MatNav and its subsidiaries covered by this report is June 28, 2024.

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, 2023.

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 other receivables; legal contingencies; insurance reserves and other related liabilities; contingent acquisition related consideration; accrual estimates; pension and post-retirement estimates; multi-employer withdrawal liabilities; operating lease assets and liabilities; income (loss) from SSAT; and income taxes. Future results could be materially affected if actual results differ from these estimates and assumptions.

Prepaid Expenses and Other Assets: Prepaid expenses and other assets consisted of the following at June 30, 2024 and December 31, 2023:


	June 30,		December 31,
Prepaid Expenses and Other Assets (in millions)	2024		2023
Prepaid fuel	$	27.2	$	22.5
Prepaid insurance and insurance related receivables		15.8		19.3
Prepaid operating expenses		8.6		8.2
Prepaid leases		4.8		4.1
Income tax receivables, net		2.6		125.2
Restricted cash - vessel construction obligations		2.4		2.3
Other		8.6		7.3
Total	$	70.0	$	188.9

Income tax receivables at December 31, 2023 include a federal income tax refund related to the Company’s 2021 federal tax return of $118.6 million and other income tax receivables. On April 19, 2024, the Company received the federal income tax refund of $118.6 million and interest of $10.2 million earned on the federal income tax refund.

Capital Construction Fund Investments: Capital Construction Fund (“CCF”) investments are held in fixed-rate U.S. Treasuries with various maturity dates of up to three years. These held-to-maturity debt securities are initially recognized at cost and subsequently measured at accreted cost, less any expected credit losses. The accreted cost is adjusted for accretion of discounts to maturity. The Company has classified these securities as held-to-maturity as the Company has the intent and ability to hold such securities until maturity.

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				Six Months Ended
	June 30,				June 30,
Ocean Transportation (in millions) (1)	2024		2023		2024		2023
Ocean Transportation services	$	674.2	$	605.8	$	1,240.0	$	1,145.3
Terminal and other related services		11.0		6.6		19.7		13.5
Fuel sales		3.1		2.8		6.0		5.7
Vessel management and related services		1.6		1.7		3.2		3.4
Total	$	689.9	$	616.9	$	1,268.9	$	1,167.9

(1)	Ocean Transportation revenue transactions are primarily denominated in U.S. dollars except for less than 3 percent of Ocean Transportation services revenues 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

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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				Six Months Ended
	June 30,				June 30,
Logistics (in millions) (1)	2024		2023		2024		2023
Transportation Brokerage and Freight Forwarding services	$	139.2	$	139.5	$	266.6	$	277.2
Warehousing and distribution services		10.3		10.0		19.4		19.6
Supply Chain Management services		8.0		7.0		14.6		13.5
Total	$	157.5	$	156.5	$	300.6	$	310.3

(1)	Logistics revenue transactions are primarily denominated in U.S. dollars except for less than 3 percent of transportation brokerage and freight forwarding services revenue and supply chain management 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 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 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 administrative expenses in the Condensed Consolidated Statements of Income and Comprehensive Income.

Capitalized Interest: The Company capitalizes interest costs during the period as the qualified assets are being readied for their intended use. The Company determined that the vessel construction costs are considered qualifying assets for the purposes of capitalizing interest on these assets. The amount of capitalized interest is calculated based on the amount of expenditures incurred related to the construction of these vessels using a weighted average interest rate. The weighted average interest rate is determined using the Company’s average borrowings outstanding during the period. Capitalized interest is included in vessel construction in progress in property and equipment in the Company’s Condensed Consolidated Balance Sheets (see Note 5). The Company capitalized $1.0 million and $0.5 million of interest related to the construction of new vessels for the three months ended June 30, 2024 and 2023, and $1.8 million and $0.9 million for the six months ended June 30, 2024 and 2023, respectively.

Dividends: The Company’s second quarter 2024 cash dividend of $0.32 per share was paid on June 6, 2024. On June 27, 2024, the Company’s Board of Directors declared a cash dividend of $0.34 per share payable on September 5, 2024 to shareholders of record on August 1, 2024.

Repurchase of Shares: During the three and six months ended June 30, 2024, the Company repurchased approximately 0.6 million and 1.0 million shares for a total cost of $72.2 million and $121.1 million, respectively. As of June 30, 2024, the maximum number of remaining shares that may be repurchased under the Company’s share repurchase program was approximately 1.4 million shares.

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New Accounting Pronouncements: In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 requires disclosure of incremental segment information on an annual and interim basis. The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and requires retrospective application to all prior periods presented in the financial statements. Early adoption is permitted. The Company is currently evaluating the effects of adopting ASU 2023-07 but does not expect it will have a material impact on the Company’s consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. ASU 2023-09 is effective for annual periods beginning after December 15, 2024, and interim periods within fiscal years beginning after December 15, 2025. The Company is currently evaluating the effects of adoption ASU 2023-09 but does not expect it to have a material impact on the Company’s consolidated financial statements.

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 $61.8 million and $54.4 million for the three months ended June 30, 2024 and 2023, and $108.4 million and $94.5 million for the six months ended June 30, 2024 and 2023, respectively, have been eliminated from operating revenues in the table below.

Reportable segment financial information for the three and six months ended June 30, 2024 and 2023 are as follows:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
(In millions)	2024		2023		2024		2023
Operating Revenue:
Ocean Transportation (1)	$	689.9	$	616.9	$	1,268.9	$	1,167.9
Logistics (2)		157.5		156.5		300.6		310.3
Total Operating Revenue	$	847.4	$	773.4	$	1,569.5	$	1,478.2
Operating Income:
Ocean Transportation (3)	$	109.0	$	82.4	$	136.6	$	110.2
Logistics		15.6		14.3		24.9		25.2
Total Operating Income		124.6		96.7		161.5		135.4
Interest income		18.8		8.7		27.6		16.9
Interest expense		(2.1)		(2.9)		(4.3)		(7.4)
Other income (expense), net		1.8		1.8		3.6		3.6
Income before Taxes		143.1		104.3		188.4		148.5
Income taxes		(29.9)		(23.5)		(39.1)		(33.7)
Net Income	$	113.2	$	80.8	$	149.3	$	114.8

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(1)	Ocean Transportation operating revenue excludes inter-segment revenue of $22.8 million and $19.0 million for the three months ended June 30, 2024 and 2023, and $42.5 million and $35.1 million for the six months ended June 30, 2024 and 2023, respectively.

(2)	Logistics operating revenue excludes inter-segment revenue of $39.0 million and $35.4 million for the three months ended June 30, 2024 and 2023, and $65.9 million and $59.4 million for the six months ended June 30, 2024 and 2023, respectively.

(3)	Ocean Transportation segment information includes net income (loss) of $1.2 million and $(1.4) million from the Company’s equity investment in SSAT for the three months ended June 30, 2024 and 2023, and $1.6 million and $(3.2) million for the six months ended June 30, 2024 and 2023, respectively.

4. INVESTMENT IN SSAT

The Company’s investment in SSAT is described in Note 4 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. Condensed income statement information for SSAT for the three and six months ended June 30, 2024 and 2023 consisted of the following:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
(In millions)	2024		2023		2024		2023
Operating revenue	$	273.9	$	242.9	$	544.2	$	473.7
Operating costs and expenses		(278.5)		(248.9)		(556.9)		(484.8)
Operating loss		(4.6)		(6.0)		(12.7)		(11.1)
Net Profit (Loss) (1)	$