Matson, Inc. announces first quarter 2020 results

Matson, Inc., a leading U.S. carrier in the Pacific, today reported net income of $3.8 million, or $0.09 per diluted share, for the quarter ended March 31, 2020.  Net income for the quarter ended March 31, 2019 was $12.5 million, or $0.29 per diluted share.  Consolidated revenue for the first quarter 2020 was $513.9 million compared with $532.4 million for the first quarter 2019.

Matt Cox, Matson's Chairman and Chief Executive Officer, commented, "Matson's businesses performed well in the first quarter.  However, much of the quarter occurred prior to seeing most of the impacts from the evolving COVID-19 situation.  Our China service returned to normal volume levels in March, slightly ahead of our expectation, and we saw relatively steady volume in our Hawaii, Alaska and Guam tradelanes as consumers bought essential goods and home food.  But we also faced challenges at SSAT and in our Logistics business segment due to the COVID-19 situation."
Cox added, "Our Hawaii, Guam and Alaska tradelanes currently face the challenge of dramatically reduced tourism, and each of our business lines is faced with an economic backdrop of increasing uncertainties regarding the COVID-19 pandemic.  Regardless, we remain focused on safeguarding the health and safety of our employees and maintaining our best-in-class vessel on-time performance to provide a high-quality service to our customers and the communities that count on us during this difficult time.  We are also focused on ensuring Matson has adequate financial liquidity, and our most recent debt agreement amendments provide the necessary headroom for us to manage through the economic downturn."
First Quarter 2020 Discussion and Update on Business Conditions
Ocean Transportation:  The Company's container volume in the Hawaii service in the first quarter 2020 was 1.7 percent higher year-over-year primarily due to increased volume of home food and essential goods as residents sheltered-in-place due to COVID-19.  In March of this year, the State of Hawaii implemented several orders to address the spread of COVID-19 on the islands.  As a result, tourism to Hawaii fell significantly in late March and in April, and is expected to have a meaningfully negative impact on Hawaii's economy in the near-term.  
In China, the Company's container volume in the first quarter 2020 was 6.5 percent lower year-over-year primarily due to an elongated post-Lunar New Year period as China's shelter-in-place orders impacted factory production, factory-to-port infrastructure logistics, and inventory sourcing.  Matson continued to realize a rate premium in the first quarter 2020 and achieved average freight rates that approximated the level achieved in the first quarter 2019.  The Company expects the disruption and loss of capacity in the transpacific air cargo and ocean freight markets to provide opportunities for its differentiated, expedited CLX service.     
In Guam, the Company's container volume in the first quarter 2020 was 3.9 percent lower on a year-over-year basis primarily due to typhoon relief-related volume in the year ago period, partially offset by higher volume due to COVID‑19 related home food and essential goods demand.  The loss of tourism and the temporary closure of retail stores is expected to have a meaningfully negative impact on the Guam economy in the near-term.
In Alaska, the Company's container volume for the first quarter 2020 increased 11.0 percent year-over-year.  The Company experienced higher northbound volume in the quarter compared to the year ago period primarily due to greater demand for home food and essential goods as residents sheltered-in-place due to COVID-19 as well as volume associated with the dry-docking of a competitor's vessel.  Southbound volume in the quarter was modestly lower than the level achieved in first quarter 2019.  The combination of negative economic effects from the COVID-19 mitigation efforts and a low oil price environment is expected to have a meaningfully negative impact on Alaska's economy in the near-term.
The contribution in the first quarter 2020 from the Company's SSAT joint venture investment was $4.0 million, or $4.5 million lower than the first quarter 2019.  The decrease was primarily due to the additional expense related to the new lease accounting standard adopted in the second quarter of 2019, and lower lift volume due to cancelled transpacific sailings.  
Logistics:  In the first quarter 2020, operating income for the Company's Logistics segment was $5.1 million, or $3.0 million lower compared to the operating income achieved in the first quarter 2019.  The decrease was due primarily to lower contributions from transportation brokerage and freight forwarding.