Good day, and thank you for standing by. Welcome to the Matson Fourth Quarter 2022 Financial Results Conference Call. At this time, all participants on a listen- only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised today's conference is being recorded. I would now like to hand the conference over to your speaker for today, Lee Fishman. Please go ahead. Thank you, Lisa. Joining me on the call today are Matt Cox, Chairman and Chief Executive Officer, and Joel Wine, Executive Vice President and Chief Financial Officer. Slides from this presentation are available for download at our website, www.matson.com, under the Investors tab. Before we begin, I would like to remind you that during the course of this call, we will make forward-looking statements within the meaning of the federal securities laws regarding expectations, predictions, projections, or future events. We believe that our expectations and assumptions are reasonable. We caution you to consider the risk factors that could cause actual results to differ materially from those in the forward-looking statements in the press release, the presentation slides and this conference call. These risk factors are described in our press release and presentation and are more fully detailed under the caption Risk Factors on pages 26- 37 of our Form 10-Q, filed on November 3rd, 2022, and in our subsequent filings with the SEC. Please also note that the date of this conference call is February 21st, 2023, and any forward-looking statements that we make today are based on assumptions as of this date. We undertake no obligation to update these forward-looking statements. I'll now turn the call over to Matt. Thanks, Lee, and thanks to those on the call. I'll start on slide three. For the fourth quarter, Matson's differentiated ocean service performed well in a difficult business environment. Matson's in a solid financial position with low leverage and currently $622 million in cash deposits in our CCF for the new vessel program, while returning $445 million in cash to shareholders in 2022 through dividends and share repurchases. For the fourth quarter, within ocean transportation, our China services achieved lower year-over-year volume and freight rate, which contributed to the decline in our ocean consolidated operating income. We also saw lower year-over-year volumes in Alaska, Hawaii, and Guam compared to the year-ago period. In logistics, operating income decreased year-over-year, primarily due to a lower contribution from supply chain management, consistent with lower demand in the Transpacific trade lane. I'll now go through the fourth quarter performance of our trade lanes, SSAT and Logistics. Please turn to the next slide. Hawaii container volume for the fourth quarter decreased 13% year-over-year, primarily due to lower retail and hospitality-related demand compared to the elevated pandemic levels in the year-ago period and the effect of one less week. Excluding the 53rd week in the year-ago period, volume in the quarter decreased 7.9% year-over-year. Volume in the fourth quarter of 2022 was 3.2% lower than the volume achieved in 2019. We saw retail customers continue to manage inventories to weaker consumer demand levels, despite continued improvement in the Hawaii economy. Hawaii tourism during the quarter remained relatively strong, including a modest improvement in international tourist trends, although there was a little bit of softness in December. For the full year, container volume decreased 5.8% year-over-year, primarily due to lower retail-related demand compared to the elevated pandemic levels in the prior year and the effects of one less week. Excluding the 53rd week in 2021, volume declined 4.4% year-over-year. Please turn to slide five. Throughout the year, the Hawaii economy continued to recover from the pandemic, with increasing tourist arrivals and a decline in the unemployment rate. Excuse me. Tourism was predominantly driven by domestic arrivals, the industry did see some modest improvement in international tourist arrivals in the second half of 2022. In the latter half of 2022, we saw our retail-related customers manage their inventories down to a lower consumer demand levels. Through the first seven weeks of 2023, we have seen a steadier level of retail-related freight demand consistent with pre-pandemic trends. UHERO's December projections continue to show economic growth in 2023, supported by continued strength in tourism and a low unemployment rate. The economic growth trajectory is uncertain given the negative trends as a result of higher inflation, higher interest rates, and the end of the pandemic era stimulus helping personal income. Moving to our China service on slide six. Matson's volume in the fourth quarter of 2022 was 47.2% lower year-over-year, primarily due to lower demand for our CLX and CLX+ services, the discontinuation of the CCX service in the third quarter of 2022, and one less week. Excluding the 53rd week in the year-ago period, volume declined 42.1% year-over-year. Matson continued to realize a significant rate premium over the Shanghai Containerized Freight Index in the fourth quarter of 2022, but achieved average freight rates that were lower than in the year-ago period. For the year, volume was 11.7% lower, primarily due to the lower demand for the CLX and CLX+ services and one less week, partially offset by incremental volume on the CCX service. Excluding the 53rd week in 2021, volume declined 9.4% year-over-year. Please turn to slide seven. On our November earnings call, we indicated that we expected the fourth quarter of 2022 and the first quarter of 2023 to be challenging in the Transpacific trade lane as retailers inventories adjusted to consumer demand levels as ocean liners reduced vessel capacity to meet these lower demand levels. We did see this happen. We continue to see vessel capacity adjust as retailers continue to right-size inventories amid weakening consumer demand, increasing interest rates and economic uncertainty. In the weeks ahead of Lunar New Year, we saw a modest improvement in demand for our CLX and CLX+ services compared to December. In the weeks post-Lunar New Year, we saw light demand for our CLX service, and as a result, we decided not to sail the CLX+ vessels from Shanghai for a few weeks. In the regions in which we operate in China, we are seeing businesses and factories reopen and life returning to normal from the most recent COVID-19 wave. Looking ahead, for the first quarter and the first half of the year, we expect our CLX and CLX+ services to reflect freight demand levels below normalized condition with lower year-over-year volumes and a lower rate environment. Absent an economic hard landing in the U.S., we expect improved trade dynamics in the second half of 2023 as the Transpacific marketplace transitions to a more normalized level of demand. We will continue to manage volume in the CLX and CLX+ at freight rates commensurate with the premium services we provide on the ocean, at the terminals, and at shippers transport. Currently, freight rates for our CLX and CLX+ services are above pre-pandemic levels. Regardless of the economic environment, we operate the two fastest and most reliable ocean services, and as a result, we continue to expect to earn a significant rate premium to the Shanghai Containerized Freight Index. Please turn to the next slide. In Guam, Matson's container volume in the fourth quarter of 2022 decreased 14% year-over-year. The decrease was primarily due to lower retail-related demand. There was no impact from the 53rd week in the year-ago period. Volume in the fourth quarter of 2022 was higher than the level achieved in the fourth quarter of 2019. For the full year, container volume decreased 3.7% year-over-year, primarily due to lower retail-related demand. In the near- term, we expect continued improvement in the Guam economy, with increasing tourism and a low unemployment rate. There are negative trends as a result of higher inflation, higher interest rates, and the end of the pandemic-era stimulus helping personal income that creates uncertainty in the economic growth trajectory. Please turn to slide nine. In Alaska, Matson's container volume for the fourth quarter of 2022 decreased 7.7% year-over-year. The decrease was due to lower northbound volume, primarily due to one less sailing and one less week, and lower southbound volume, primarily due to lower domestic seafood volume and one less week, partially offset by higher export seafood volume from AAX. Excluding the 53rd week in the year-ago period, volume declined 5.3% year-over-year. Volume in the fourth quarter of 2022 was higher than the level achieved in the fourth quarter of 2019. For the full year, volume increased 8.6% year-over-year. The increase was due to higher export seafood volume from AAX, higher northbound volume, primarily due to higher Excuse me, higher retail-related demand and volume related to a competitor's dry docking, partially offset by one less week, and higher southbound volume, primarily due to higher domestic seafood volume. Excluding the 53rd week in 2021, volume increased 9.3% year-over-year. Turning next to slide 10. The Alaska economy continues to show good growth and improvement in the key indicators from the depth of the pandemic. In the near term, we expect the economy to benefit from low unemployment and continued job growth. The federal infrastructure bill is expected to lead to additional jobs in the near and medium- term. The state's economy is also expected to benefit from increased energy-related exploration and production activity as a result of elevated oil prices. However, there are negative trends as a result of higher inflation, higher interest rates, and the end of the pandemic-era stimulus, helping personal income that creates uncertainty in the economic growth trajectory. Please turn to slide 11. Our terminal joint venture, SSAT, contributed $1 million in the fourth quarter of 2022 compared to $21.3 million in the prior year period. The lower contribution was primarily due to lower other terminal revenue, lower lift volume, and higher operating costs. SSAT saw significantly less detention and demurrage revenue in the quarter due to easing port congestion and lower lift volume, consistent with lower demand in the Transpacific trade lane. For the year, SSAT contributed $83.1 million, or an increase of $26.8 million year-over-year. The increase was primarily due to higher other terminal revenue. For 2023, we expect the first half lift volume to reflect the challenging environment in the Transpacific trade lane. Absent an economic hard landing, we expect SSAT to trend to pre-pandemic profitability levels in the second half of the year. For the year, we expect significantly lower detention and demurrage revenue due to the easing of port congestion in Southern California. Turning now to logistics on slide 12. Operating income in the fourth quarter came in at $12.8 million, or $2 million lower than the result in the year-ago period. The decrease was primarily due to a lower contribution from supply chain management, consistent with the lower demand in the Transpacific trade lane. For the full year, operating income was $72.4 million or $22.6 million higher than 2021. The increase is primarily due to higher concentrations from transportation brokerage and freight forwarding. In the near term, we expect a mix of activity across the logistic lines of business. We expect continued growth in Alaska to be supportive of freight forwarding demand. We expect supply chain management to track our China service, so a challenging environment in the first half of the year, as I previously discussed. We expect our transportation brokerage business to weaken from the highs achieved in the pandemic period as freight demand normalizes, modal shifts amid markedly improved rail congestion conditions, and over-inventoried retail customers continue to manage down consumer goods. I will now turn the call over to Joel for a review of our financial performance. Joel? Thanks, Matt. Please turn to slide 13 for a review of our fourth quarter and full year results. For the fourth quarter, consolidated operating income decreased $382.9 million year-over-year to $92.6 million, with lower contributions from ocean transportation and logistics of $380.9 million and $2 million, respectively. The decrease in ocean transportation operating income in the fourth quarter was primarily due to lower volume and average freight rates in China and a lower contribution from SSAT, partially offset by lower operating costs and expenses, primarily related to the discontinuation of the CCX service. As Matt noted, the decrease in logistics operating income was primarily due to lower contribution from supply chain management. We had interest income of $6.9 million in the quarter due to higher cash investment rates on our cash and cash equivalents and cash deposits in the CCF as compared to no interest income in the prior year period. Interest expense in the quarter decreased $1 million year-over-year due to the decline in outstanding debt in the past year, including the $50.4 million in debt principal we prepaid in the third quarter. The effective tax rate in the quarter was 20.4%, compared to 16.5% in the year-ago period. For the full year, consolidated operating income increased $166.1 million year-over-year to $1,353.6 million, with higher contributions from ocean transportation and logistics of $143.5 million and $22.6 million, respectively. The increase in ocean transportation operating income for the year was primarily due to higher freight rates in China and a higher contribution from SSAT, partially offset by lower volume in China, higher operating costs and expenses, primarily due to the CLX+ service and higher terminal handling costs. The increase in logistics operating income was primarily due to higher contributions from transportation brokerage and freight forwarding. Please turn to the next slide. The next slide shows how we allocated our trailing 12 months of cash flow generation. For the LTM period, we generated cash flow from operations of $1,271.9 million, from which we used $111.5 million to retire debt, $146.9 million on maintenance and other CapEx. $62.4 million on new vessel CapEx, including capitalized interest and owners' items. $518.2 million in cash deposits and interest income in the CCF, net of withdrawals for milestone payments. $21.9 million on other cash outflows while returning $445 million to shareholders via dividends and share repurchase. Please turn to slide 15 for a summary of our share repurchase program and balance sheet. During the fourth quarter, we repurchased approximately 1.5 million shares for a total cost of $101.9 million. For the year, we repurchased approximately 5 million shares for a total cost of $397 million. At the end of 2022, we had approximately 1.5 million shares remaining on our share repurchase program. Turning to our debt levels, our total debt at the end of the quarter was $517.5 million. We reduced outstanding debt principal by $111.5 million during the year, of which $60.1 million was through regular amortization, and the balance of $50.4 million was through the prepayment of long-term debt that we highlighted on the third quarter earnings call. In January 2023, we prepaid $14.3 million for all the outstanding principal on the Maunawili Title XI debt, and we plan to prepay in March $12.1 million for all of the outstanding principal on the Mauna Kea Title XI debt. I'm now going to walk through an update on the Capital Construction Fund. Please turn to the next slide. We ended 2022 with cash deposits of approximately $518 million in the Capital Construction Fund. Year to date 2023, we have had interest income of approximately $4 million. This month, we deposited an additional $10 million, an additional $100 million in cash into the CCF and pledged accounts receivable to reduce taxable income in 2022. Following this $100 million cash deposit, we currently have approximately $622 million in cash deposits in the CCF to cover 66% of the approximately $949 million in remaining milestone payments for the new vessel program. Note that this funding calculation excludes the cash and cash equivalents on the balance sheet, which was approximately $250 million at year-end. We currently do not expect to make additional cash contributions to the CCF for milestone payments until 2026. I would like to note that interest income on CCF cash deposits is tax-advantaged and will help pay for future milestone payments. Considering the interest rate environment we currently are in, interest income could be a meaningful contributor of additional cash deposits into the CCF in the next couple of years. Please turn to slide 17. The table on this slide summarizes our $209.3 million in capital expenditures in 2022. We had capitalized construction expenditures of $62.4 million, of which $11.9 million was for the new Inter-island barge placed into service in the third quarter, and $50.5 million was for a milestone payment and other related costs on the new vessel program. We had maintenance CapEx and other CapEx of $146.9 million, of which $60.5 million was for equipment to support new trade lane services and to provide fluidity in the network. $21.3 million was for the LNG installations on the Daniel K. Inouye, Kaimana Hila, and Mauna Kea. Please turn to the next slide. Slide 18 shows the key areas for capital deployment over the next three years. Starting with maintenance and other capital expenditures, we expect $80 million-$90 million per year. This capital spend includes phase II and phase III work at Sand Island in Honolulu and normal course capital expenditures to support our vessels, shore side operations, and logistics businesses. The next line item relates to the new vessel program. The figures shown reflect the milestone payments, owners' items, and capitalized interest we currently expect. There's enough cash on deposit in the CCF today to pay for all of the remaining expected milestone payments in the next three years and partially into 2026. The last item is the LNG installation and re-engineering CapEx on existing vessels. The Daniel K. Inouye is currently in dry dock for its LNG installation and is expected to be back in service in the middle of this year. Following Daniel K. Inouye, Mauna Kea will enter the dry dock for a one-year project to re-engine to operate on both LNG and conventional fuels. Kaimana Hila will enter the dry dock in the second quarter of 2024 for a roughly five-month period for its LNG installation. In total, we expect capital expenditures of $195 million-$210 million in 2023, $205 million-$220 million in 2024, and $440 million-$450 million in 2025. With that, I'll now turn the call back over to Matt. Okay, Joel, thanks. Please turn to slide 19, where I'll go through some closing thoughts. We expect the financial performance in the first quarter of 2023 to be the weakest of the year. Normal seasonality trends are returning to our domestic trade lanes and logistics. As mentioned previously, in the quarter, we expect to see freight demand for our China service below normalized condition. In the near term, we expect continued economic growth in Hawaii, Alaska and Guam to be supportive of freight demand, but we recognize the potential economic overhang that could negatively affect volumes in each of these core domestic markets. We expect challenging conditions in the Transpacific trade lane in the first half of the year, with freight demand below normalized levels. In the second half of the year, we expect improved trade dynamics as the market transition to a more normalized level of demand. Please turn to slide 20. Matson is well-positioned financially and operationally to capitalize on opportunities as they emerge. The Matson brand has never been stronger, and we are in an enviable position to leverage the brand on our portfolio of essential high-quality businesses to drive new opportunities. Supporting our opportunistic growth ambitions is a solid investment-grade balance sheet with low leverage. As of today, nearly two-thirds of the remaining milestone payments in the new vessel program are funded with cash deposits in the CCF, earning interest income on a tax-advantaged basis. We're in very good funding position with the CCF on this large vessel project, which will reduce our reliance on using cash flows in the next few years to fund vessel CapEx commitments. Going forward, we will allocate the shareholders capital like we always have in a disciplined manner, regardless of the economic environment. We invest for the long- term to create value for shareholders. In some cases, the capital decisions we make today are to power us for decades to come, like our $1 billion new vessel build program. We're always on the lookout for opportunities to expand the Matson brand and drive organic growth. We did this during the pandemic with the CLX+ service and derivative opportunities in logistics, and we're confident that we're positioned well with our customers in the marketplace to drive future opportunities. We will look to acquire businesses as an extension of the great collection of assets we have today. We want to ensure that any business we acquire complements one or more of our existing businesses, provides a unique or differentiated value proposition to our customers, fits culturally with ours, and is purchased at a double-digit cash-on-cash yield with good long-term cash flow characteristics. We did close a small tuck-in acquisition in 2022. We're actively looking at acquisitions, including tuck-ins, in both ocean transportation and logistics. We still believe that valuation expectations are higher than justified by earnings fundamentals and growth prospects, especially in light of current economic conditions. This may change in the coming year. We expect attractive candidates to emerge that meet our investment criteria. We also have a solid balance sheet, which provides a lot of optionality for us. Last but not least, we will continue to return capital to shareholders after funding our maintenance CapEx expenditures, long-term investments, and dividend. In the last two years, we've re-repurchased approximately 7.5 million shares for nearly $600 million. Going forward, we expect to be a steady buyer of shares. As I've said before, we remain focused only on what we can control and doing what we've always done, and that's to maintain vessel service reliability, provide high-quality customer service, and allocate shareholders capital to its highest and best use to create value over the long- term. With that, I will turn the call back to the operator and ask for your questions. Thank you. As a reminder, if you'd like to ask a question, please press star one one on your telephone. One moment while we compile the Q&A roster. First question is coming from Jack Atkins of Stephens. Your line is open. Okay, great. good afternoon. Thank you for taking my questions. I guess, Matt, I'd love to maybe kinda start with a macro question or two. You know, you guys have such a, you know, an interesting look, into what's going on because of your relationship with your customers beginning in their supply chains in China. You know, is it your sense that, you know, retail shippers are gonna be back to more normal ordering patterns, you know, around the middle of the year? Is that what's sort of underpinning your outlook for, you know, things to kind of maybe get back towards normal in the second half of the year? I'm not trying to put words in your mouth. I'm just trying to kinda understand the outlook from that perspective. Yeah, I think, first of all, thanks, Jack, for the question. A couple of things. I think our view now is that because of the very significant contraction in Transpacific demand and ordering that occurred in, especially in the fourth quarter, but we saw it beginning towards the end of the third quarter, as retailers saw a slowing demand pattern by their customers and a significant catch-up of inventory that was caught in the supply chain congestion, caused an air pocket to occur, if you will, in Transpacific demand as our customers individually curtailed future purchase orders as they, our customers, were being more cautious in their buying to get their inventories down where they needed them to be. I think what we're seeing, and we're obviously listening to our large customers, the big box retailers and others, for how well they're managing their inventory levels. We're watching that metric very closely. The early read on that is, while there has been improvement in managing inventory levels down in some cases, in other cases, in other retailers, it hasn't occurred as quickly as they'd expected. We're expecting some of the slowness that we saw in that 4th quarter to, you know, continue into the 1st quarter and frankly, into the 1st half. We do expect, you know, more normal seasonality to occur as we approach the Thanksgiving and Christmas holiday seasons. We're expecting a, you know, a weaker first half of the year owing to those questions and also ongoing impacts of higher interest rates and the Fed's desire to curb inflation, some persistent inflation. Some of the macro trends that all of us are following closely will weigh on demand, we think, particularly in the first half. Okay. Okay. Got it. No, that's helpful, Matt. Thank you for that. I guess, you know, maybe to kind of help us frame up the first quarter or the first half, I know you guys are not giving guidance, but, you know, this is the forum maybe if you could help us think a little bit about seasonality and maybe, you know, what that looks like. You said the first quarter is gonna be the, the most challenging quarter of the year from a financial perspective if I, you know, in terms of the EPS or the profitability, if I, if I heard you correctly. If I think back and kind of look back to how the business historically kind of trends fourth quarter to first quarter, you know, typically, marine transportation margins can, you know, be roughly half of, you know, in the first quarter what they were in the fourth quarter. You know, is that the right way to think about the business this year? You know, is that maybe a good baseline? Anything to kind of help us think about how to frame that up, just because there's just so many moving pieces this year. I'm not trying to put you on the spot with guidance, just kind of looking for some. Yeah some direction. Yeah. You know, part of our lack of guidance is the macro uncertainties that we're seeing. It's not as if we have a number, and we're not gonna share it with you. We're watching it along with everyone else. We do think that, as we've said, if you look historically, and what I mean by that is pre-pandemic or over a period of time, the first quarter has historically been our weakest, followed by, I guess you would say, the fourth quarter, and our historically, our two strongest quarters are in the second and third quarter. If you just look historically there. We're also seeing, I think, in the first quarter of this year, we had some disruptions related to COVID-19 in China, and, you know, a weakening on certain demand pattern. I also think the piece that I haven't mentioned, but I think is going to bear on what happens in the second half of the year, we saw it beginning in the fourth quarter, but I don't think it's taken its full force, is in the China markets. Will the other international ocean carriers resize their transportation fleets in line with the lower expected demand? We're seeing some of that occur. We've seen announcements, I think more of that does need to occur, so that there isn't an overhang of capacity in the market, that could weigh down on freight rates. I would say as without, you know, talking about margins relative to the fourth quarter, I would just urge you to think about historic earnings and then, you know, just apply what we see as a more cautious first half than the second half. That's about as good as I could do, Jack. No, that helps a lot, Matt. Thank you. That gets me up to work with there. Let me maybe ask one more and I'll jump back in queue. I guess, you know, Joel, if you have some thoughts on this, love to get you to chime in on it too. You know, when we kind of think about the last couple of years, obviously we've been extremely strong from an underlying demand perspective. A lot of things kind of happening. Easy to layer on some maybe additional costs through that process. You know, now that the business is normalizing, in some cases, maybe below normalized levels, are there opportunities to maybe take costs out of the business, maybe kind of look for ways to tighten the belt a bit in certain parts of the business that can help offset some of the challenges from a business perspective? Yeah, Jack, let me start with my thoughts, and then I'm gonna turn it over to Joel to give his perspective. I think. The biggest levers that we can pull, as you know, are really around fleet deployments. Our cancellation of the CCX service that occurred, you know, towards the end of the third quarter and through the fourth quarter, is a way in which we could take every one of our vessels which were deployed, put them back in some cases into reserve status and lower the operating costs by our fleet size. The other element that we're gonna be focused on in 2023, is at its peak, we had seven vessels in the CLX+ service, and we're gonna be moving towards a more conventional five vessels, as we continue the CLX+ service into 2023 and likely moving forward. Those are a couple of big levers. One of the things that did not occur, Jack, in the last three years of the pandemic was really on the G&A and people side. We added less than 3% to our workforce in each of the two years of the pandemic. We have a normal level of retirement and some other kinds of things that doesn't put us in a position where we feel like our people resources are significantly overstaffed. Having said that, we're gonna go back to doing what we've done in a normal environment, is looking for ways in which to operate more efficiently, whether it's the speed of our vessels, the size of our equipment fleets, the use of overtime and gate times, and a lot of just blocking and tackling that will occur and does occur in a normal environment that will allow us to reflect that we're in a different environment and trying to keep our costs in line with this, you know, less congestion and the lower demand environment overall. I would turn it over to Joel for his thoughts as well. Yeah. I mean, those are the key items, Jack. Just to put a little bit of order of magnitude on them, our biggest cost is terminal handling. As the freight package goes up and down over time, and right now it's soft with the declines you've seen, that naturally goes down. You do get some reduction in cost on a per unit basis as you have less freight moving through your terminals. The next cost is the vessel operating costs broadly, including fuel. There, as Matt said, you know, our fleet is pretty fixed right now. We will be able to ratchet down two units on the CLX+ from 7 ships to 5. That'll help. We'll do that over the course of the first two quarters of this year. The rest of it's a pretty fixed network of vessels, staying on schedule, and then we have fuel that fluctuates based on fuel prices. That's the next biggest category. Then equipment, Matt touched upon that. We did flex up. We purchased a lot of equipment in the early and midstream days of the pandemic, and then we actually leased quite a bit in the last 12 months that we now can off-hire and turn that equipment back to the lessors and ratchet down a little bit of across our network there, which will help the cost structure a little bit. Then the last piece is the people. As Matt said, we, the CLX and the additional China services do not require big increases in our headcounts. We're pretty disciplined about adding people only when necessary in the last couple of years. Therefore, there's not a big additional number of headcount that increased our cost structure. That's, that just puts a little bit of color in terms of the order of magnitude on each of those cost buckets, Jack. No, I really appreciate that, Joel. Thank you. I'll hand it over and jump back in queue. Thank you. One moment while we prepare for the next question. Our next question is coming from Jacob Lacks of Wolfe Research. Your line is open. Hey, thanks for your time. Hi, Jake. We spent a fair amount of time talking about the demand environment. Can you talk about how you view the supply side for the balance of the year? I think you talked a bit about some blank sailings, but the order book is pretty elevated. Could that be offset by vessel scrapping? Just would like to get your thoughts there. Yeah, I sure, I can give you my thoughts. Let me give you my thoughts about what should happen. Well, what I think will happen and what should happen, that is that the international ocean carriers operating through their global alliances will ultimately resize their fleets in the Transpacific and globally, but in the markets we care about in the Transpacific, for ultimately the level of demand that is needed in the trades. We acknowledge there is a, you know, a larger order book that those vessels are gonna be delivered. Some of those will be delayed as ocean carriers seek to push back the delivery. We'll see some advanced level of scrapping. We'll see for vessels that are chartered, which represent about 50% of the global fleet, many of those vessels will be returned to their vessel owners when the charter periods are over. I think you're gonna see a combination of resizing that's going to occur, and even potentially laying up vessels or again, scrapping vessels that should have been scrapped or would have been scrapped except for the extraordinary market cycle that has occurred over the last few years. You'll see a combination of all of those things occurring over the coming months. As I said, some of it has occurred. We ourselves are an example of that, having three Transpacific services at our peak and then scaling that back to two in light of slack or falling demand. Those are really our thoughts about what should and are very likely to happen as we go through 2023. Got it. Thanks. Then I understand there's a lot of noise right now given inventory destocking, do you think there's sufficient demand for two weekly Transpacific services year-round, or is there an option to make the CLX+ seasonal or every other week or something? Yeah, I mean, I think our view is, let me address the market that we care about, which is the expedited market. It's a good reminder that even while customers may be, you know, handling a lot of, seeing a lot of inventory in their systems, in part as a result of inflation on the underlying cost of that inventory, there is still going to be a need for product that is moving, that needs to be replenished. Our view is that while customers will likely remain cautious on managing through their inventory levels, they are going to want to fill the shelves. Matson's view is that, there is a size of a market sufficient in the expedited space for two weekly services. It's our view that, if we remain the fastest and most reliable, which we expect to, that we're gonna get the lion's share of all that expedited freight, and there's enough expedited freight in the market, that will allow us to sustain two services. Yep, that makes sense. one last one for me. you noted some weakness in the demand environment and one keep coming out of China. you had a big decline in rates from 3Q- 4Q. Has that found a bottom yet, or should we think rates decline again in first quarter? Yeah. It's a good question. I mean, I think, and I think it's important here to differentiate between what we'll say are market rates or spot rates and then what Matson's rates are. Let me first start. Yep. Start talking about our thoughts about the spot rates in the market. I think typically, what you see are after, historically, after Lunar New Year or before the factories reopen, we typically see that as the lowest point in the year for spot rates. The demand is lowest, international ocean carriers typically void or cancel or blank sailings during that period, and that's when you see the spot rates at their lowest. Whether we're exactly at the bottom or near the bottom, I think we're close, if we're not there. I think what we're going to do, and based on my belief and expectation that the, ultimately the capacity will be reset, as I mentioned, that spot rates will come up from these lows. The extent to which it will be determined by lots of factors on the supply and demand side. I think we're at or near the bottom on the spot rate side. I think if you look at then we move into the sort of in the Transpacific, this annual contracting cycle, what I expect to occur, is that in the entire transportation trade, we will see lower contracted rates than in the previous year as these contracts renew. They're likely to be above the spot rates but below the rates at which they were contracted last year. That's pretty clear. The other thing but for Matson, while our rates are down from the previous year, and volumes were down, as we mentioned, our rates remain significantly higher than the market rates, and they remain above where they were pre-pandemic in our expedited space. It's hard to know exactly what will occur, but we feel comfortable that we are receiving a premium to the market that is commensurate with our highly differentiated service. Not knowing exactly how it's going, we like our, where our position is in the market. All right. Thanks for your time. Sure. Thank you. One moment. Our next question will be coming from Jack Atkins? Yes. Of Stephens. Yes. Jack Atkins with Stephens. Thanks for letting me jump back in and ask a couple more questions. I guess, you know, I know you guys don't like to talk about trade lane level profitability, but I, there's a lot of question, I think, out there in terms of, like, you know, with rates where they are and the CLX+ not necessarily having that full double head all like the original CLX has, you know, how does it fare in this type of operating environment? You know, do you feel like that with the cost levers that you have to pull in terms of, you know, being able to blank sailings when necessary, going from seven ships to five ships, that you'd be able to keep CLX+ profitable or at worst neutral to earnings even in this type of rate environment? Is that reasonable to expect? It's a good question. I'll start by saying we don't talk about trade level profitability. What I can say with confidence, Jack, is this: there is, even in this last week's sailing, more demand for expedited service than we can fit on our CLX+ service. This is at, you know, the seasonal low. We do expect that the size of the expedited market can't be satisfied with the single vessel, even in a down market we're in an overshot market. We also firmly believe that over time there will be long-term value creation by having the fastest and second fastest markets in the trade. There's a demand for it. There'll be, you know, pressure to try to move product out of air freight into our expedited or deferred air type product. I would say that obviously profitability is gonna be lower on all of our Transpacific services than in the previous year, but we remain confident that these two services will create long-term value for our shareholder. Okay. Okay. Got it. I knew that was gonna be a tough question to answer, but I wanted to see if you guys would maybe elaborate. I guess maybe kind of shifting gears to a couple of other items. You know, Joel, could you maybe help us think about how interest expense should trend. I know interest rates can move around a lot, so I'm not asking for a full year look. You know, with the, you know, the progress payments being made into the Capital Construction Fund and higher rates on your cash balance, I mean, what's the right way to think about interest income, I guess I should say, over the next couple quarters? Yes. Yeah, well, this interest expense will be very easy to project. We'll have four instruments after we pay off these two Title XI here in the first quarter. We'll have two remaining private placement tranches and two remaining Title XI tranches. That'll be very fixed on the interest expense side. Your question on the interest income side is just take a look at the cash on deposit in the CCF as well as cash and cash equivalents on the balance sheet itself. All of those funds will be invested in short-term, you know, high-rated securities. What's the interest income on those two total amounts going to be? I mean, right now it's running close to 4%. And we told you what we made. We made $4 million of interest income here so far year to date in just the CCF alone, which had $518 million at year-end and through up until the $100 million deposit we made just this past week. It's really a function of this. Look at those two numbers together on the balance sheet, Jack, CCF+ cash and equivalents, and then look at what market rates are for, you know, high-quality money market, government backed funds, government-type securities, because we'll maintain a very high quality of money market type investments with those funds. That's the kind of return you should expect on the interest income side. In terms of, like, how that nets out onto the P&L, we're looking at something maybe slightly north of what you saw in the fourth quarter, again, depending on the potential fluctuation we could see in rates. Yes. Okay. got it. Thank you for that, Joel. In terms of, you know, thinking about a couple of other items on the, on the cash and cash flow side, with the deposit into the Capital Construction Fund, you know, should we be thinking about the cash taxes being, you know, just basically backed out of the alternative minimum tax? Is that the right way to think about that, plus your state income tax? Yeah. To put it another way, it should be pretty fairly minimal cash taxes. It should revert to something more normal, I would say, in 2023. What you saw is in 2021 and 2022, we had very high levels of profitability. We did have high amounts of cash taxes. If you look at those two years together, we're gonna get some refund back on the 2022 amount of cash taxes we paid. That'll help overall cash flow. Going forward, Jack, in 2023, we'll actually revert to something more normal in terms of cash taxes relative to our underlying earnings. Okay. The Capital Construction depot, that's going to shield, you know, the. That's gonna drive a refund from prior periods and going forward, it's gonna be more, your cash taxes and your pay on taxes, you know, maybe will be fairly similar. Yeah. Yes, they'll be much closer together. Okay. The way that what we'll have to do in 2023 is start making quarterly estimated cash tax payments. You'll see that. That'll be a little bit overwhelmed by, at some point here, we'll get a refund from the IRS. We don't know when, but at some point this year we'll receive a big one-time refund. Okay. We'll also be making regularly quarterly cash tax payments to the IRS based on our 2023 estimated profitability. Okay. I hope I'm gonna get a refund this year, too, but I'm not holding my breath. I guess maybe last question, and I'll turn it over. You know, it's on the sort of the pace of share repurchases. You know, you guys have been pretty active on those over the last couple years, and it's really, you know, lowered your share count pretty significantly. You know, how should we be thinking about that moving forward? I mean, is it gonna be kind of a similar pace, a little bit more ratable? Are you guys gonna be more opportunistic with it? Just how should we be thinking about that? Yeah. I would say it's gonna be a slower pace than what we've done in this first year and a half. I mean, remember we started in August of 2021, in that 18 months we've bought back 7.5 million shares already. That's more than the steady pace you'd expect for the rest of this decade. The reason we did that is because we had such, you know, very large levels of cash flow and profitability in 2021 and 2022. As things kind of revert back to something more normal in 2023 and beyond, the share repurchase activity will go down and reduce from that annual pace. More of a steady Eddie pace that's more commensurate with our cash flow from operations minus our kind of maintenance CapEx levels because we funded the big vessel for CapEx in the CCF already two-thirds of that. More of a steady Eddie. Less pace than what we've seen in the last 18 months, but a steady pace for years to come is what we expect, Jack. Okay. No, that's great to hear. I guess maybe one last one from me, and I'll hand it over. I just would like to maybe kind of go back to this idea of sort of what normalized earnings could look like for Matson. I know it's a difficult question to answer. I guess as you guys think about sort of the margin range for marine transportation, historically it's sort of been mid-single digits at the trough of a cycle, mid-teens at the peak of a cycle. Let's throw the COVID times out for a moment. you know, and sort of high single digit, low double digit, you know, in a more normalized operating environment. Is there any reason to think that that range has kind of changed one way or the other through the cycles we look forward? I mean, is that still the right way to think about it? Do you feel like the business is structurally more profitable? Any sort of color around that, I think would be helpful for investors. Yeah, Jack, this is Matt. I'm gonna try to answer part of it, and then I'll turn it over to Joel. I think we continue to believe that our earnings coming out of this pandemic will be higher than it was going in. I'm not sure whether we've hit normalized earnings, especially in the first half of this year, but we do expect eventually to get there. I think our view there is partly driven from the addition of the CLX+, which as I said earlier, we think will drive long-term value over and above our core earnings. I think the value of our CLX and the brand that it, that it stood out in a really disruptive cycle is also going to allow us to continue to earn a very healthy premium. In a few years' time, I do expect these three new builds to put these additional 500 containers per sailing for those three ships that we're gonna be introducing into the CLX to be another bolt-on of additional earnings through, you know, upsizing, kind of an organic growth initiative. I expect us to be on the lookout for small tuck-ins, and I think those acquisitions and other growth opportunities, absent of, you know, a very large acquisition, which are not included in our comments if we can find one that fits. Without trying to put a% on it, those are some of the things I think give us confidence to say that we do believe that we're gonna be a different company than we are going into it. I'll turn it over to Joel to give you the mid-cycle% profit margins. Which and Jack, you've heard us say before, because there's so many moving parts, especially fuel, that margin analysis becomes very, very difficult. I know you went through in your question, you know, a couple of predicates there in terms of what margins might be in normalized and lower end and high end, low points in the cycle. We, honestly, we just don't think of it that way. We don't think of our businesses in terms of what margins they're gonna produce. We think of our businesses in terms of what aggregate EBITDA and operating income they're gonna produce. I think for investors, we've always talked about taking a run rate and then doing your analysis of what you think is gonna happen in the future off that run rate. If you assume more volume at X price, then you can back into what your contribution and incremental contribution margin might look like, and then you can start working on aggregate EBITDA and operating income based on, based upon that starting point, as opposed to building a revenue number and then applying a margin against it. Does that make sense? It does. It does. I just, you know, I think you guys know your business better than anybody else, and it's tough from the outside looking in with all the different trade lanes to be able to, you know, and a lot of these businesses overlap on each other to be able to really model it and think about where things are gonna settle out. I think that once we can get some more clarity around that, I think that will help valuation once we can kinda get some views. I was just trying to get you guys to go on the record on that, but I guess we'll know, we'll have a better sense for that in the second half of the year. Thank you again for the time. Really appreciate it. Okay. Thanks, Jack. Thank you. That concludes the Q&A session for today. I would like to turn the call back over to Matt Cox for closing remarks. Okay. Well, thanks everybody for your interest in today's call. We look forward to catching up with everyone next quarter. Aloha. Thank you all for attending today's conference call. You all have a great evening, and you may disconnect.