Matson (MATX) Q2 2020 earnings summary

Executive summary

• Ocean results were strong despite COVID-19 disruption, led by China service and seven CLX+ voyages; Logistics faced lower retail-related activity.

• CLX+ was the largest contributor to year-over-year operating improvement; management expects total operating-results improvement to exceed the high end of $40M-$50M.

Financial highlights

• Q2 ocean operating income rose $22.6M YoY to $42.3M; Logistics operating income fell $2.4M YoY to $8.9M.

• Q2 EBITDA increased $21.3M YoY to $86.2M, reflecting $20.2M higher consolidated operating income, $0.7M higher other income and $0.4M higher D&A.

• Q2 interest expense was $8.2M, down $0.4M from Q1; effective tax rate was 26.3%.

• H1 ocean operating income increased $21.1M YoY to $50.2M; Logistics operating income declined $5.4M YoY to $14.0M.

Outlook and guidance

• Q3 2020 consolidated operating income, net income, diluted EPS and EBITDA expected to exceed Q3 2019 results.

• CLX+ planned weekly through peak season in late October or longer as customer needs dictate; making it permanent depends on demand, economics and operating conditions.

• CLX and CLX+ vessels expected at capacity in Q3; management expects continued demand for expedited freight and a retail-goods rebound.

• Management expects to exceed the high end of its $40M-$50M operating-results improvement range; CLX+ is its largest component, alongside cost and other revenue initiatives.

• Matsonia was on track for Q4 delivery; final Sand Island phase and six-vessel scrubber program also targeted for completion in Q4.