Matson, Inc. Announces Third Quarter 2019 Results; Maintains Full Year 2019 Operating Income Outlook

HONOLULU, Nov. 7, 2019 /PRNewswire/ -- Matson, Inc. ("Matson" or the "Company") (NYSE: MATX), a leading U.S. carrier in the Pacific, today reported net income of $36.2 million, or $0.84 per diluted share, for the quarter ended September 30, 2019. Net income for the quarter ended September 30, 2018 was $41.6 million, or $0.97 per diluted share. Consolidated revenue for the third quarter 2019 was $572.1 million compared with $589.4 million for the third quarter 2018.

For the nine months ended September 30, 2019, Matson reported net income of $67.1 million, or $1.55 per diluted share, compared with $88.4 million, or $2.06 per diluted share, in 2018. Consolidated revenue for the nine month period ended September 30, 2019 was $1,662.4 million, compared with $1,657.9 million in 2018.

Matt Cox, Matson's Chairman and Chief Executive Officer, commented, "Our results in the quarter came in as expected. Within Ocean Transportation, our China tradelane service performed well, but we saw continued weakness in our Hawaii market and experienced softer-than-expected volume in our Alaska service. Within our Logistics segment, we continued to perform well with positive contributions to operating income from nearly all of the service lines."

Mr. Cox added, "Given the performance year-to-date and our expectations for our businesses in the final quarter of the year, we maintain our 2019 consolidated operating income outlook. As we near the end of this transition year with Lurline expected to enter service this quarter, we take a significant step towards realizing our previously-mentioned approximately $30 million in financial benefits in 2020, when compared to 2019, driven primarily from the reduction in Hawaii fleet deployment to nine vessels."

Third Quarter 2019 Discussion and Outlook for 2019

Ocean Transportation: The Company's container volume in the Hawaii service in the third quarter 2019 was 2.1 percent lower year-over-year primarily due to negative container market growth. Hawaii's GDP continues on a slowing growth trajectory despite resilience in key economic factors, such as construction activity and visitor traffic. However, the containerized freight market volume has not been keeping pace with GDP growth. The Company expects volume in 2019 to be lower compared to the level achieved in 2018, reflecting less containerized freight volume in Hawaii and stable market share.

In China, the Company's container volume in the third quarter 2019 was 3.4 percent lower year-over-year primarily due to the timing of an additional sailing in the year ago period. Matson continued to realize a sizeable rate premium in the third quarter 2019 and achieved average freight rates that approximated the level achieved in the third quarter 2018. For 2019, the Company expects volume to approximate the prior year level. In the fourth quarter of 2018, the Company experienced unusually strong performance as a result of the U.S.-China trade situation. For the full year 2019, the Company expects average freight rates to approach the levels achieved in 2018.

In Guam, the Company's container volume in the third quarter 2019 was 2.1 percent lower on a year-over-year basis. For 2019, the Company expects volume to approximate the level achieved last year and expects the highly competitive environment to remain.

In Alaska, the Company's container volume for the third quarter 2019 was flat year-over-year. The Company experienced slightly lower northbound volume including the impact from the timing of an additional northbound sailing in the year ago period. Southbound volume was modestly higher year-over-year. For 2019, the Company expects volume to be modestly higher than the level achieved in 2018 with higher northbound volume and approximately flat southbound volume compared to the levels achieved in 2018.

The contribution in the third quarter 2019 from the Company's SSAT joint venture investment was $0.8 million lower than the third quarter 2018. For 2019, the Company expects the contribution from SSAT to be lower primarily due to higher terminal operating costs, partially offset by higher lift volume.

As a result of the performance in the first nine months and the outlook trends noted above, the Company expects full year 2019 Ocean Transportation operating income to be approximately 25 percent lower than the $131.1 million achieved in 2018 after taking into account a full year net operating expense impact of $7.2 million associated with the sale and leaseback of MV Maunalei.

Logistics: In the third quarter 2019, operating income for the Company's Logistics segment was $1.4 million higher compared to the operating income achieved in the third quarter 2018 with positive contributions from nearly all of the service lines. For 2019, the Company is maintaining its outlook and expects Logistics operating income to be approximately 15 to 20 percent higher than the level achieved in 2018 of $32.7 million.

Depreciation and Amortization: For the full year 2019, the Company expects depreciation and amortization expense to be approximately $135 million, inclusive of dry-docking amortization of approximately $35 million.

Other Income (Expense): The Company expects full year 2019 other income (expense) to be approximately $1 million in income, which is attributable to other component costs related to the Company's pension and post-retirement plans.

Interest Expense: The Company expects interest expense for the full year 2019 to be approximately $25 million.

Income Taxes: In the third quarter 2019, the Company's effective tax rate was 25.4 percent. For the full year 2019, the Company expects its effective tax rate to be approximately 26.0 percent, which excludes a positive non-cash adjustment of $2.9 million in the first quarter of 2019 related to the reversal of an expense adjustment in 2018 arising from the enactment of the Tax Cuts and Jobs Act of 2017.

Net Income and EBITDA: The Company expects net income in 2019 to decline year-over-year and expects EBITDA in 2019 to be approximately $270 million.

Capital and Vessel Dry-docking Expenditures: For the third quarter 2019, the Company made other capital expenditure payments of $24.3 million, capitalized vessel construction expenditures of $78.1 million, and dry-docking payments of $11.0 million. For the full year 2019, the Company expects to make other capital expenditure payments, including maintenance capital expenditures, of approximately $90 million, vessel construction expenditures (including capitalized interest and owner's items) of approximately $215 million, and dry-docking payments of approximately $20 million.


       
              Results By Segment





       
              Ocean Transportation - Three months ended September 30, 2019 compared with 2018






                                                              
            
              Three Months Ended September 30,

                                                                                                                ---


       
              (Dollars in millions)                          2019                                   2018              Change

    ---


       Ocean Transportation revenue                                            $
            437.2                     $
         437.3  $
       (0.1) (0.0)
                                                                                                                                               %



       Operating costs and expenses                                                    (393.3)                         (388.6)      (4.7)   1.2
                                                                                                                                               %




       Operating income                                                         $
            43.9                      $
         48.7  $
       (4.8) (9.9)
                                                                                                                                               %



       Operating income margin                                                            10.0                             11.1
                                                                                              %                               %




        Volume (Forty-foot equivalent units
         (FEU), except for automobiles) (1)



       Hawaii containers                                                                36,700                           37,500       (800) (2.1)
                                                                                                                                               %



       Hawaii automobiles                                                               15,700                           13,900       1,800   12.9
                                                                                                                                               %



       Alaska containers                                                                19,400                           19,400                    
     %



       China containers                                                                 17,000                           17,600       (600) (3.4)
                                                                                                                                               %



       Guam containers                                                                   4,700                            4,800       (100) (2.1)
                                                                                                                                               %



       Other containers (2)                                                              4,400                            4,500       (100) (2.2)
                                                                                                                                               %




              (1)              Approximate volumes included for
                                  the period are based on the
                                  voyage departure date, but
                                  revenue and operating income
                                  are adjusted to reflect the
                                  percentage of revenue and
                                  operating income earned during
                                  the reporting period for
                                  voyages in transit at the end
                                  of each reporting period.



              (2)              Includes containers from
                                  services in various islands in
                                  Micronesia and the South
                                  Pacific, and Okinawa, Japan.

Ocean Transportation revenue decreased $0.1 million during the three months ended September 30, 2019, compared with the three months ended September 30, 2018. The decrease was primarily due to lower fuel surcharge revenue and lower Hawaii container volume, partially offset by higher freight revenue in Alaska and higher average rates in Hawaii.

On a year-over-year FEU basis, Hawaii container volume decreased 2.1 percent primarily due to negative container market growth; Alaska volume was flat with slightly lower northbound volume, including the impact from the timing of an additional northbound sailing in the year ago period, and modestly higher southbound volume; China volume was 3.4 percent lower due to the timing of an additional sailing in the year ago period; Guam volume was 2.1 percent lower; and Other containers volume decreased 2.2 percent.

Ocean Transportation operating income decreased $4.8 million, or 9.9 percent, during the three months ended September 30, 2019, compared with the three months ended September 30, 2018. The decrease was primarily due to higher terminal handling costs, higher vessel operating costs (including MV Maunalei lease expense), and lower volume in Hawaii.

The Company's SSAT terminal joint venture investment contributed $8.4 million during the three months ended September 30, 2019, compared to a contribution of $9.2 million during the three months ended September 30, 2018. The decrease was primarily due to higher terminal operating costs, partially offset by the timing of some of the additional expense related to the early adoption of the new lease accounting standard in the second quarter and higher lift volume.


       
                Ocean Transportation - Nine months ended September 30, 2019 compared with 2018






                                                              
              
                Nine Months Ended September 30,

                                                                                                                      ---

                     (Dollars in millions)                      2019                                      2018                      Change

    ---


       Ocean Transportation revenue                                         $
              1,250.5                          $
          1,223.2    $
         27.3     2.2
                                                                                                                                                            %



       Operating costs and expenses                                                   (1,177.5)                               (1,113.5)        (64.0)    5.7
                                                                                                                                                            %




       Operating income                                                        $
              73.0                            $
          109.7  $
         (36.7) (33.5)
                                                                                                                                                            %



       Operating income margin                                                              5.8                                      9.0
                                                                                               %                                       %




        Volume (Forty-foot equivalent units
         (FEU), except for automobiles) (1)



       Hawaii containers                                                                109,300                                  111,800        (2,500)  (2.2)

                                                                                                                                                            %



       Hawaii automobiles                                                                49,400                                   46,700          2,700     5.8
                                                                                                                                                            %



       Alaska containers                                                                 54,600                                   54,200            400     0.7
                                                                                                                                                            %



       China containers                                                                  47,100                                   45,400          1,700     3.7
                                                                                                                                                            %



       Guam containers                                                                   14,600                                   14,500            100     0.7
                                                                                                                                                            %



       Other containers (2)                                                              12,700                                   11,300          1,400    12.4
                                                                                                                                                            %




              (1)              Approximate volumes included for
                                  the period are based on the
                                  voyage departure date, but
                                  revenue and operating income
                                  are adjusted to reflect the
                                  percentage of revenue and
                                  operating income earned during
                                  the reporting period for
                                  voyages in transit at the end
                                  of each reporting period.



              (2)              Includes containers from
                                  services in various islands in
                                  Micronesia and the South
                                  Pacific, and Okinawa, Japan.

Ocean Transportation revenue increased $27.3 million, or 2.2 percent, during the nine months ended September 30, 2019, compared with the nine months ended September 30, 2018. The increase was primarily due to higher revenue in Alaska, higher average rates in Hawaii, and higher revenue in China, partially offset by lower Hawaii container volume.

On a year-over-year FEU basis, Hawaii container volume decreased 2.2 percent primarily due to negative container market growth and weather-related impacts in the first quarter of 2019; Alaska volume increased by 0.7 percent primarily due to higher northbound volume, partially offset by lower northbound volume related to the dry-docking of a competitor's vessel in the year ago period; China volume was 3.7 percent higher primarily due to stronger volume post Lunar New Year; Guam volume was 0.7 percent higher; and Other containers volume increased 12.4 percent primarily due to the Okinawa service.

Ocean Transportation operating income decreased $36.7 million, or 33.5 percent, during the nine months ended September 30, 2019, compared with the nine months ended September 30, 2018. The decrease was primarily due to higher vessel operating costs (including MV Maunalei lease expense), higher terminal handling costs, a lower contribution from SSAT, and lower container volume in Hawaii, partially offset by a higher contribution from the Alaska and China services.

The Company's SSAT terminal joint venture investment contributed $17.8 million during the nine months ended September 30, 2019, compared to a contribution of $28.8 million during the nine months ended September 30, 2018. The decrease was primarily due to higher terminal operating costs and the absence of favorable one-time items in the year ago nine months period.


       
                Logistics - Three months ended September 30, 2019 compared with 2018






                                                            
              
                Three Months Ended September 30,

                                                                                                                  ---

                     (Dollars in millions)                      2019                                  2018                    Change

    ---


       Logistics revenue                                                  $
              134.9                          $
          152.1  $
        (17.2)  (11.3)
                                                                                                                                                      %



       Operating costs and expenses                                                 (123.6)                               (142.2)         18.6   (13.1)
                                                                                                                                                      %




       Operating income                                                    $
              11.3                            $
          9.9     $
        1.4     14.1
                                                                                                                                                      %



       Operating income margin                                                          8.4                                    6.5
                                                                                           %                                     %

Logistics revenue decreased $17.2 million, or 11.3 percent, during the three months ended September 30, 2019, compared with the three months ended September 30, 2018. The decrease was primarily due to lower transportation brokerage revenue.

Logistics operating income increased $1.4 million, or 14.1 percent, for the three months ended September 30, 2019, compared with the three months ended September 30, 2018. The increase was due primarily to a higher contribution from freight forwarding.


       
                Logistics - Nine months ended September 30, 2019 compared with 2018






                                                            
              
                Nine Months Ended September 30,

                                                                                                                  ---

                     (Dollars in millions)                      2019                                  2018                   Change

    ---


       Logistics revenue                                                  $
              411.9                          $
         434.7  $
        (22.8)  (5.2)

                                                                                                                                                    %



       Operating costs and expenses                                                 (381.2)                              (411.1)         29.9   (7.3)

                                                                                                                                                    %




       Operating income                                                    $
              30.7                           $
         23.6     $
        7.1    30.1

                                                                                                                                                    %



       Operating income margin                                                          7.5                                   5.4
                                                                                           %                                    %

Logistics revenue decreased $22.8 million, or 5.2 percent, during the nine months ended September 30, 2019, compared with the nine months ended September 30, 2018. The decrease was primarily due to lower transportation brokerage revenue, partially offset by higher freight forwarding revenue.

Logistics operating income increased $7.1 million, or 30.1 percent, for the nine months ended September 30, 2019, compared with the nine months ended September 30, 2018. The increase was due primarily to higher contributions from freight forwarding and transportation brokerage.

Liquidity, Cash Flows and Capital Allocation

Matson's Cash and Cash Equivalents increased by $4.0 million from $19.6 million at December 31, 2018 to $23.6 million at September 30, 2019. Matson generated net cash from operating activities of $180.4 million during the nine months ended September 30, 2019, compared to $203.0 million during the nine months ended September 30, 2018. Capital expenditures, including capitalized vessel construction expenditures, totaled $171.4 million for the nine months ended September 30, 2019, compared with $267.3 million for the nine months ended September 30, 2018. Total debt decreased by $26.6 million during the nine months to $883.0 million as of September 30, 2019, of which $834.6 million was classified as long-term debt.

Matson's Net Income and EBITDA were $87.7 million and $267.7 million, respectively, for the twelve months ended September 30, 2019. The ratio of Matson's Net Debt to last twelve months EBITDA was 3.2 as of September 30, 2019.

As previously announced, Matson's Board of Directors declared a cash dividend of $0.22 per share payable on December 5, 2019 to all shareholders of record as of the close of business on November 7, 2019.

Teleconference and Webcast

A conference call is scheduled for 4:30 p.m. EST when Matt Cox, Chairman and Chief Executive Officer, and Joel Wine, Senior Vice President and Chief Financial Officer, will discuss Matson's third quarter results.



      Date of Conference Call:        Thursday, November 7, 2019



     Scheduled Time:                 4:30 p.m. EST /1:30 p.m.
                                       PST /11:30 a.m. HST


      Participant Toll Free Dial-In
       #:                           
     1-877-312-5524


      International Dial-In #:      
     1-253-237-1144

The conference call will be broadcast live along with a slide presentation on the Company's website at www.matson.com, under Investors. A replay of the conference call will be available approximately two hours after the call through November 14, 2019 by dialing 1-855-859-2056 or 1-404-537-3406 and using the conference number 8687339. The slides and audio webcast of the conference call will be archived for one full quarter on the Company's website at www.matson.com, under Investors.

About the Company

Founded in 1882, Matson (NYSE: MATX) is a leading provider of ocean transportation and logistics services. Matson 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. Matson also operates a premium, expedited service from China to Long Beach, California and provides services to Okinawa, Japan and various islands in the South Pacific. The Company's fleet of owned and chartered vessels includes containerships, combination container and roll-on/roll-off ships and various types of barges. Matson Logistics, established in 1987, extends the geographic reach of Matson's ocean transportation network throughout the continental U.S. Its integrated, asset-light logistics services include rail intermodal services, long-haul and regional highway brokerage, warehousing and distribution services, consolidation and freight forwarding services, supply chain management services, and other services. Additional information about the Company is available at www.matson.com.

GAAP to Non-GAAP Reconciliation

This press release, the Form 8-K and the information to be discussed in the conference call include non-GAAP measures. While Matson reports financial results in accordance with U.S. generally accepted accounting principles ("GAAP"), the Company also considers other non-GAAP measures to evaluate performance, make day-to-day operating decisions, help investors understand our ability to incur and service debt and to make capital expenditures, and to understand period-over-period operating results separate and apart from items that may, or could, have a disproportional positive or negative impact on results in any particular period. These non-GAAP measures include, but are not limited to, Earnings Before Interest, Income Taxes, Depreciation and Amortization ("EBITDA") and Net Debt-to-EBITDA.

Forward-Looking Statements

Statements in this news release that are not historical facts are "forward-looking statements," within the meaning of the Private Securities Litigation Reform Act of 1995, including without limitation those statements regarding earnings, net income, operating income, depreciation and amortization including dry-dock amortization, other income (expense), interest expense, profitability and cash flow expectations, fleet renewal progress, fleet deployments, vessel transit times, fuel strategy and scrubber program, organic growth opportunities, economic effects of competitors' services, expenses, rate premiums and market conditions in the China service, trends in volumes, economic growth and construction activity in Hawaii, Sand Island terminal upgrades, economic conditions and seafood harvest levels in Alaska, lift volumes and operating costs at SSAT, timing and amount of SSAT income and cash distributions, vessel deployments and operating efficiencies, debt leverage levels and effective tax rates. These statements involve a number of risks and uncertainties that could cause actual results to differ materially from those contemplated by the relevant forward-looking statement, including but not limited to risks and uncertainties relating to regional, national and international economic conditions; new or increased competition or improvements in competitors' service levels; fuel prices, our ability to collect fuel surcharges and/or the cost or limited availability of low-sulfur fuel; delays or cost overruns related to the installation of scrubbers; our relationship with vendors, customers and partners and changes in related agreements; the actions of our competitors; our ability to offer a differentiated service in China for which customers are willing to pay a significant premium; the imposition of tariffs or a change in international trade policies; the ability of the NASSCO shipyard to construct and deliver the Kanaloa Class vessels on the contemplated timeframes; any unanticipated dry-dock or repair expenses; any delays or cost overruns related to the modernization of terminals; consummating and integrating acquisitions; changes in general economic and/or industry-specific conditions; competition and growth rates within the logistics industry; freight levels and increasing costs and availability of truck capacity or alternative means of transporting freight; changes in relationships with existing truck, rail, ocean and air carriers; changes in customer base due to possible consolidation among customers; conditions in the financial markets; changes in our credit profile and our future financial performance; our ability to obtain future debt financings; continuation of the Title XI and CCF programs; the impact of future and pending legislation, including environmental legislation; government regulations and investigations; repeal, substantial amendment or waiver of the Jones Act or its application, or our failure to maintain our status as a United States citizen under the Jones Act; relations with our unions; satisfactory negotiation and renewal of expired collective bargaining agreements without significant disruption to Matson's operations; war, terrorist attacks or other acts of violence; the use of our information technology and communication systems and cybersecurity attacks; and the occurrence of marine accidents, poor weather or natural disasters. These forward-looking statements are not guarantees of future performance. This release should be read in conjunction with our Annual Report on Form 10-K and our other filings with the SEC through the date of this release, which identify important factors that could affect the forward-looking statements in this release. We do not undertake any obligation to update our forward-looking statements.

                   Investor Relations inquiries: 
     
                News Media inquiries:



     Lee Fishman                                
     Keoni Wagner



     Matson, Inc.                               
     Matson, Inc.



     510.628.4227                               
     510.628.4534


                   lfishman@matson.com           
     
                kwagner@matson.com

                                                                         
          
                MATSON, INC. AND SUBSIDIARIES


                                                                  
              
            Condensed Consolidated Statements of Income


                                                                                     
              (Unaudited)






                                                             Three Months Ended                                               Nine Months Ended


                                                                September 30,                                                 September 30,



                     (In millions, except per share amounts)               2019                           2018                                  2019 2018

    ---


       Operating Revenue:



       Ocean Transportation                                                      $
              437.2                               $
              437.3       $
            1,250.5 $
             1,223.2



       Logistics                                                                             134.9                                           152.1                   411.9              434.7




       Total Operating Revenue                                                               572.1                                           589.4                 1,662.4            1,657.9






       Costs and Expenses:



       Operating costs                                                                     (472.6)                                        (485.5)              (1,412.5)         (1,390.7)


        Equity in income of Terminal Joint Venture                                              8.4                                             9.2                    17.8               28.8



       Selling, general and administrative                                                  (52.7)                                         (54.5)                (164.0)           (162.7)




       Total Costs and Expenses                                                            (516.9)                                        (530.8)              (1,558.7)         (1,524.6)






       Operating Income                                                                       55.2                                            58.6                   103.7              133.3



       Interest expense                                                                      (6.2)                                          (4.4)                 (16.9)            (14.4)



       Other income (expense), net                                                           (0.5)                                            0.7                     0.9                1.9




       Income before Income Taxes                                                             48.5                                            54.9                    87.7              120.8



       Income taxes                                                                         (12.3)                                         (13.3)                 (20.6)            (32.4)




       Net Income                                                                 $
              36.2                                $
              41.6          $
            67.1    $
             88.4






       Basic Earnings Per Share                                                   $
              0.84                                $
              0.97          $
            1.57    $
             2.07



       Diluted Earnings Per Share                                                 $
              0.84                                $
              0.97          $
            1.55    $
             2.06




        Weighted Average Number of Shares Outstanding:



       Basic                                                                                  42.9                                            42.7                    42.8               42.7



       Diluted                                                                                43.3                                            43.1                    43.2               43.0

                                               
         
                MATSON, INC. AND SUBSIDIARIES


                                             
       
                Condensed Consolidated Balance Sheets


                                                          
              (Unaudited)






                                                   September 30,                                    December 31,



       
                (In millions)                          2019                                             2018

    ---


       ASSETS



       Current Assets:



       Cash and cash equivalents                                             $
              23.6                       $
        19.6



       Other current assets                                                             275.9                            298.8




       Total current assets                                                             299.5                            318.4




       Long-term Assets:


        Investment in Terminal Joint Venture                                              83.7                             87.0


        Property and equipment, net                                                    1,485.5                          1,366.6



       Goodwill                                                                         327.8                            327.8



       Intangible assets, net                                                           205.7                            214.0



       Other long-term assets                                                           351.6                            116.6




       Total long-term assets                                                         2,454.3                          2,112.0




       Total assets                                                       $
              2,753.8                    $
        2,430.4





        LIABILITIES AND SHAREHOLDERS' EQUITY



       Current Liabilities:



       Current portion of debt                                               $
              48.4                       $
        42.1



       Other current liabilities                                                        389.3                            328.7




       Total current liabilities                                                        437.7                            370.8




       Long-term Liabilities:



       Long-term debt                                                                   834.6                            814.3



       Deferred income taxes                                                            335.9                            312.7


        Other long-term liabilities                                                      347.9                            177.3



        Total long-term liabilities                                                    1,518.4                          1,304.3






       Total shareholders' equity                                                       797.7                            755.3



        Total liabilities and shareholders'
         equity                                                            $
              2,753.8                    $
        2,430.4


                                                 
       
                MATSON, INC. AND SUBSIDIARIES


                                               
       
         Condensed Consolidated Statements of Cash Flows


                                                         
              (Unaudited)






                                                     Nine Months Ended September 30,




       
                (In millions)                                              2019                            2018

    ---

        Cash Flows From Operating Activities:



       Net income                                                                             $
              67.1      $
          88.4



       Reconciling adjustments:


        Depreciation and amortization                                                                      73.4              70.8


        Non-cash operating lease expense                                                                   52.3



       Deferred income taxes                                                                              21.9              26.5


        Share-based compensation expense                                                                    8.7               8.2


        Equity in income of Terminal Joint
         Venture                                                                                         (17.8)           (28.8)


        Distribution from Terminal Joint
         Venture                                                                                           14.7              42.0



       Other                                                                                             (1.5)            (2.1)


        Changes in assets and liabilities:



       Accounts receivable, net                                                                          (0.2)           (46.1)


        Deferred dry-docking payments                                                                    (17.9)           (10.5)


        Deferred dry-docking amortization                                                                  25.9              27.5


        Prepaid expenses and other assets                                                                  25.3               3.0


        Accounts payable, accruals and other
         liabilities                                                                                     (11.7)             24.8



       Operating lease liabilities                                                                      (51.7)



       Other long-term liabilities                                                                       (8.1)            (0.7)



        Net cash provided by operating
         activities                                                                                       180.4             203.0





        Cash Flows From Investing Activities:


        Capitalized vessel construction
         expenditures                                                                                   (108.7)          (222.6)



       Other capital expenditures                                                                       (62.7)           (44.7)


        Proceeds from disposal of property and
         equipment                                                                                          3.1              31.3


        Cash deposits into Capital
         Construction Fund                                                                               (68.2)          (246.6)


        Withdrawals from Capital Construction
         Fund                                                                                              68.2             247.5



       Other                                                                                                                3.7



        Net cash used in investing activities                                                           (168.3)          (231.4)





        Cash Flows From Financing Activities:


        Repayments of debt and capital leases                                                            (28.4)           (17.0)


        Proceeds from revolving credit
         facility                                                                                         383.3             389.4


        Repayments of revolving credit
         facility                                                                                       (328.3)          (321.4)


        Proceeds from issuance of capital
         stock                                                                                              0.1               0.5



       Dividends paid                                                                                   (27.7)           (26.3)


        Tax withholding related to net share
         settlements of restricted stock units                                                            (3.3)            (4.5)



        Net cash (used in) provided by
         financing activities                                                                             (4.3)             20.7





        Net Increase (Decrease) in Cash, Cash
         Equivalents and Restricted Cash                                                                    7.8             (7.7)


        Cash, Cash Equivalents and Restricted
         Cash, Beginning of the Period                                                                     24.5              19.8



        Cash, Cash Equivalents and Restricted
         Cash, End of the Period                                                               $
              32.3      $
          12.1





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



       Cash and Cash Equivalents                                                              $
              23.6      $
          12.1



       Restricted Cash                                                                                     8.7



        Total Cash, Cash Equivalents and
         Restricted Cash, End of the Period                                                    $
              32.3      $
          12.1





        Supplemental Cash Flow Information:


        Interest paid, net of capitalized
         interest                                                                              $
              16.8      $
          14.5


        Income tax (refunds) payments, net                                                   $
              (25.7)      $
          4.6





       Non-cash Information:


        Capital expenditures included in
         accounts payable, accruals and other
         liabilities                                                                            $
              9.8       $
          0.4

                                                                                           
         
                MATSON, INC. AND SUBSIDIARIES


                                                                                
         
          Total Debt to Net Debt and Net Income to EBITDA Reconciliations


                                                                                                     
              (Unaudited)





       
                NET DEBT RECONCILIATION




                                                                                                                                                                                      September 30,



       
                (In millions)                                                                                                                                                             2019

    ---


       Total Debt:                                                                                                                                                                                 $
         883.0



       Less:   Cash and cash equivalents                                                                                                                                                                 (23.6)




       Net Debt                                                                                                                                                                                    $
         859.4






       
                EBITDA RECONCILIATION




                                                          Three Months Ended


                                              
          
        September 30,                                     Last

                                                                                                                    Twelve



                     (In millions)              2019                  2018                                     Change                                        Months

    ---


       Net Income                                     $
      36.2                                            $
              41.6                                             $
          (5.4)                       $
             87.7



       Add:    Income taxes                               12.3                                                        13.3                                                     (1.0)                                  26.9


        Add:    Interest expense                            6.2                                                         4.4                                                       1.8                                   21.2


        Add:    Depreciation and
         amortization                                      25.7                                                        23.0                                                       2.7                                   96.1


        Add:    Dry-dock amortization                       8.7                                                         9.2                                                     (0.5)                                  35.8




       EBITDA (1)                                     $
      89.1                                            $
              91.5                                             $
          (2.4)                      $
             267.7





                                                                                  
         
           Nine Months Ended


                                                                                    
         
           September 30,




       
                (In millions)                                           2019                                            2018                                          Change

    ---


       Net Income                                                                                    $
              67.1                                               $
         88.4                       $
            (21.3)



       Add:    Income taxes                                                                                      20.6                                                      32.4                                 (11.8)



       Add:    Interest expense                                                                                  16.9                                                      14.4                                    2.5



       Add:    Depreciation and amortization                                                                     72.8                                                      70.2                                    2.6



       Add:    Dry-dock amortization                                                                             25.9                                                      27.5                                  (1.6)




       EBITDA (1)                                                                                   $
              203.3                                              $
         232.9                       $
            (29.6)





              (1)              EBITDA is defined as the sum of net
                                  income plus income taxes, interest
                                  expense and depreciation and
                                  amortization (including deferred
                                  dry-docking amortization).
                                  EBITDA should not be considered as
                                  an alternative to net income (as
                                  determined in accordance with
                                  GAAP), as an indicator of our
                                  operating performance, or to cash
                                  flows from operating activities
                                  (as determined in accordance with
                                  GAAP) as a measure of liquidity.
                                  Our calculation of EBITDA may not
                                  be comparable to EBITDA as
                                  calculated by other companies, nor
                                  is this calculation identical to
                                  the EBITDA used by our lenders to
                                  determine financial covenant
                                  compliance.

View original content to download multimedia:http://www.prnewswire.com/news-releases/matson-inc-announces-third-quarter-2019-results-maintains-full-year-2019-operating-income-outlook-300954332.html

SOURCE Matson, Inc.