Good day, and thank you for standing by. Welcome to the Matson Q3 2023 Financial Results Conference Call. At the time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during that session, you will need to press star one one on your phone. 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 that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Mr. Lee Fishman, Vice President of Finance. Sir, please go ahead. Thank you, Chris. 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 14-24 of our Form 10-K, filed on February 24, 2023, and in our subsequent filings with the SEC. Please also note that the date of this conference call is October 30, 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 will now turn the call over to Matt. Okay, thanks, Lee, and thanks to those on the call. Starting on slide three. Matson's Ocean Transportation and Logistics business segments continued to perform well, despite a challenging business environment and relatively difficult economic conditions impacting the U.S. consumer. For the Q3 within Ocean Transportation, our China service experienced solid freight demand despite the muted peak season in the Transpacific trade lane, but generated lower year-over-year volume and freight rates, which were the primary contributors to the year-over-year decline in our consolidated operating income. We also saw lower year-over-year volumes in Hawaii, Alaska, and Guam compared to the year ago period. In logistics, operating income decreased year-over-year, primarily due to lower contributions from Transpacific brokerage. I will now go through the Q3 performance of our trade lanes, SSAT, and Logistics. Please turn to the next slide. Hawaii container volume for the Q3 decreased 1.9% year-over-year, primarily due to lower general demand. Volume in the Q3 of 2023 was 0.8% higher than the volume achieved in the Q3 of 2019. Please turn to Slide five. In August, Maui experienced a significant economic disruption from devastating wildfires. According to UHERO, September's economic report, tourism to the islands may not fully recover in the next several years, and the rebuilding of homes and businesses may take many years. Demand for construction workers is expected to increase with the rebuilding efforts in Lahaina and other areas in Maui. In the near term, Matson expects economic growth in Hawaii to moderate as tourism and visitor arrivals slowly rebound from the effects of the Maui wildfires. Moving to our China service on Slide six. Matson's volume in the Q3 of 2023 was 1.3% lower year-over-year, primarily due to no CCX service in the quarter, partially offset by higher CLX Plus volume. The higher CLX Plus volume in the quarter compared to the prior year period was a result of higher utilization on the vessels and greater capacity of the CLX Plus fleet. As you may recall, in the Q3 of last year, we began to see a path to normalization from the pandemic-driven highs as congestion throughout the supply chain eased. During the quarter, we continued to see solid demand in the e-commerce and e-goods verticals and stable demand from the garments vertical. We achieved average freight rates in the quarter that were lower than the year ago period, but well above those achieved in the Q3 of 2019. Matson continued to realize a significant rate premium over the SCFI in the Q3 of 2023. Please turn to slide seven. Currently, in the Transpacific marketplace, we continue to see a reduction of deployed capacity in light of lower volumes as a result of lower consumer demand for retail goods. We continue to differentiate our China service from the others in the trade lane, with a high degree of reliability and consistency, an 11-day ocean transit time, and 24-hour availability at the unique Shippers Transport off-dock facility. At 10%-15% of the cost of air freight, our China service continues to offer a significant value proposition for air freight customers with only 5-7 days of additional transit time.... For those customers looking to reduce their product's carbon footprint while saving a considerable amount of money, our customers tell us that switching from air freight to our expedited ocean freight product reduces their CO2 emissions by approximately 95%. Looking forward, absent an economic hard landing in the U.S., we expect trade dynamics in 2024 to be comparable to 2023, as consumer-related spending activity is expected to remain stable. Furthermore, regardless of the economic backdrop, we continue to expect to earn a significant rate premium to the SCFI, reflecting our fast and reliable ocean services and unmatched destination services. Please turn to the next slide. In Guam, Matson's container volume in the Q3 of 2023 decreased 1.9% year-over-year. The decrease was primarily due to lower general demand. Volume in the Q3 of 2023 was 12.8% higher than the level achieved in the Q3 of 2019. In the near term, we expect continued improvement in the Guam economy, with a low unemployment rate and a modest increase in tourism from low levels. Please turn to the next slide. In Alaska, Matson's container volume for the Q3 of 2023 decreased 9.1% year-over-year. The decrease was due to lower export seafood volume from AAX, lower northbound volume due to lower retail-related demand, and lower southbound volume, primarily due to lower domestic seafood volumes. Approximately 85% of the year-over-year volume decline is a result of lower seafood volumes in the AAX and southbound services. Year-to-year, there can be rather meaningful changes in the summer volumes, depending on the strength of the seasonal Alaskan catch. Compared to the Q3 of 2019, volume in the quarter was 12.9% higher. In the near term, we expect the Alaska economy to continue to benefit from low unemployment and increased energy-related exploration and production activity as a result of elevated oil prices. Please turn to Slide 10. Our terminal joint venture, SSAT, declined $22.1 million year-over-year to $1.3 million. The lower contribution was primarily due to lower demurrage revenue and lower lift volume. SSAT saw significantly less demurrage revenue in the quarter due to easing port congestion and lower lift volume, consistent with lower year-over-year demand in the Transpacific service. In the Q4 of 2023, we expect lift volume to reflect a relatively challenging environment for the Transpacific trade lane. Turning now to logistics on Slide 11. Operating income in the Q3 came in at $13.9 million, or $6.2 million lower than the result in the year ago period. The decrease was primarily due to a lower contribution from transportation brokerage. In the near term, we expect a mix of activity across the logistics lines of business. We expect continued growth in Alaska to be supportive of our freight forwarding demand. We expect slight supply chain management to track our China service. And for Transpacific, Pacific brokerage, excuse me. And for transportation brokerage, we expect continued near-term challenges with lower freight demand and excess capacity. And with that, I will now turn the call over to Joel for a review of our financial performance. Joel? Okay, thanks, Matt. Please turn to Slide 12 for a review of our Q3 results. For the Q3, consolidated operating income decreased $203.2 million year-over-year to $132.1 million, with lower contributions from ocean transportation and logistics of $97 million and $6.2 million, respectively. The decrease in ocean transportation operating income in the Q3 was primarily due to lower freight rates in China and a lower contribution from SSAT, partially offset by higher volume in the CLX Plus service and lower operating costs and expenses, including fuel-related expenses, primarily related to discontinuation of the CCX service, which occurred in September of last year. As Matt noted, the decrease in logistics operating income was primarily due to a lower contribution from transportation brokerage. We had interest income of $9.3 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 the prior year period. Interest expense in the quarter decreased $2.6 million year-over-year due to the decline in outstanding debt as compared to the prior year period. The effective tax rate in the quarter was 14.5%, compared to 20.4% in the year ago period. Please turn to the next slide. The slide shows how we allocated our trailing twelve months of cash flow generation. For the LTM period, we generated cash flow from operations of approximately $568.5 million, from which we used $81.5 million to retire debt, $168.9 million on maintenance and other CapEx, $102.6 million on new vessel CapEx, including capitalized interest and owners' items, $24.1 million in cash deposits and interest income in the CCF, net of withdrawals for milestone payments, $24.5 million on other cash outflows, while returning $253.2 million to shareholders via dividends and share repurchase. Please turn to Slide 14 for a summary of our share repurchase program and balance sheet. During the quarter, we repurchased approximately 0.3 million shares for a total cost of $25.8 million, including taxes. For the first 9 months of the year, we repurchased 1.6 million shares for a total cost of $110.3 million. Since we initiated our share repurchase program in August 2021 through September 30th of this year, we have repurchased 9 million shares or nearly 21% of our stock for a total cost of over $705 million. As we have said before, we are committed to returning excess capital to shareholders and plan to continue to do so in the absence of any large organic or inorganic growth investment opportunities. Turning to our debt levels. Our total debt at the end of the Q3 was $450.3 million, a reduction of $12.1 million from the end of the Q2. I'm now going to walk through an update on a couple of financial items, so please turn to the next slide. The cash balance in the CCF at the end of the quarter was $591.6 million. Based on the remaining milestone payments of roughly $899 million today, nearly two-thirds of the program is funded by restricted cash in the CCF. Note that the two-thirds figure excludes cash and cash equivalents currently on our balance sheet, interest income on cash and CCF deposits that may be earned in future years, and also excludes the 2022 tax year IRS refund of $119 million that we still expect to receive. On vessel construction payments, we continue to expect to make our next milestone payment in the Q2 of next year. Lastly, for the Q4, we anticipate an effective tax rate of approximately 23% versus the 14.5% tax rate in the Q3. I'll now turn the call back over to Matt. Okay, thanks, Joel. Please turn to Slide 16, where I'll go through some closing thoughts. We expect consolidated operating income in the Q4 of 2023 to be higher than the level achieved in the Q1 of 2023. Normal seasonality trends have returned to our domestic trade lanes and logistics. For our China service, we expect continued solid freight demand with some seasonality in the post-holiday timeframe. We also expect CLX and CLX Plus freight rates in the Q4 of 2023 to be well above pre-pandemic rates. Lastly, as I mentioned in our last earnings call, we are beginning to see consistency in our demand levels post-pandemic, and therefore, continue to evaluate the return of our annual financial outlook with the release of our Q4 earnings in February. And with that, I will turn the call back to the operator and ask for your questions. Thank you. As a reminder, to ask a question, please press star one, one on your phone and wait for your name to be announced. To withdraw your question, please press star one, one again. Stand by as we compile the Q&A roster. One moment, please, for our first question. Our first question will come from Jack Atkins of Stephens. Your line is open. Okay, great. Good afternoon, guys, and congratulations on, on just executing really well in this tough environment. Thanks, Jack. So I guess, you know, Matt, if I could maybe kinda start with your, you know, one of your closing comments there, which is around Q4 consolidated operating income being above the Q1. I guess directionally that helps a lot, but I guess when I go back and think about kind of normal seasonality, sort of pre-COVID, Q3 to Q4 typically saw earnings, you know, decline, call it 45% or 50%, something like that, just with normal seasonality. You know, would there be any reason why you would expect this year to be materially different? If so, could you maybe kind of help us think through the puts and takes there? Yeah, sure. Be happy to try to do that, Jack. So I would say, firstly, we still do expect the seasonality that we saw pre-pandemic return. And so as we, as you know, in our business, the second and Q3 are our busiest, and our fourth and first are weaker just because of the amount of cargo in the market, given the seasonality of purchasing and holiday periods in our market. It always has been, and it always will be that way to a certain extent. But one of the verticals, Jack, that might be just a bit different coming out of the pandemic than going in, as we've talked about this on last quarter's call, was the growth of e-commerce. There's an element we believe, although we don't know exactly what it is yet, but there's some of that e-commerce moves year-round. There's less seasonal pattern. It's recurring items that people purchase rather than holiday gifts or back to school, or there's a seasonal element to it. And so that may explain why the differences, both frankly in our Q4 and Q1, may not be as seasonal as we've seen pre-pandemic, but we still overall expect the seasonality pattern to remain pre- and post-pandemic, if that helps. Oh, okay. So, so if anything, maybe there's a little bit less seasonality. And I understand we're still trying to understand what the new normal looks like, but, but perhaps maybe there's a little bit less seasonality in the business going forward than there has been in the past, just based on that, on that e-commerce factor. That's right. Yeah. Okay. Okay, got it. That's helpful. I'd also love to maybe touch on a comment that you made, Matt, around, you know, the kind of thoughts around the 2024 Transpacific trade. You know, I think one of the questions we get a lot is just folks kinda trying to understand what's happening with, you know, inventory balances and, you know, have we kind of reached a new normal from an inventory destocking perspective? You know, I guess, what are your customers telling you about how to think about that going into next year? It sounds like they're expecting relatively stable volume, but do you feel like we're kind of through the destocking phase of this last, you know, call it a year and a half? Yeah, I'm gonna answer that in two ways, Jack. To answer your question directly, we are hearing from many of our customers that this inventory overhang that they had, when there was a, you know, very sharp decline in the year ago period, most of our retailers have worked through those inventories. And so, now there are exceptions, and there are SKUs or product lines that they are still surplus on, but our general feeling is that retailers have done a really good job of working through their overhang. But the other context point here, at the risk of overanswering your question, Jack, is where from our perspective, how we see the Trans-Pacific market. In our prepared comments, we refer to 2019 as a benchmark, and the world changed over the last few years. So if you look at the imports into the United States for the first nine months of 2023, compare that to the first nine months of 2019. And cargo volumes into the United States, both East Coast, West Coast, from all foreign origins, is close to 7% higher than 2019. So while it's true that there were significant declines in the year-over-year period, and, you know, what, when and how we lap the bad news, just from a context standpoint, when we talk about seeing a new normal, and are we there? We see the inventories have largely been absorbed, these excess inventories, to your first part of your question. And we see growth from that 2019 those levels. So it's just another data point in our own thinking about us having reached an equilibrium, and is also why we think that 2024 is gonna look a lot like 2023, given those underlying factors. So just again, at risk of over answering your question, I wanted to provide some context into our thinking. No, that's, that's really helpful. Maybe one more from me, and I'll, I'll hand it back and jump back in queue just to make sure everyone can, can jump in. But, you know, I guess, you know, we think about, we're trying to kind of frame up the quote, unquote, "new normal." One area of the business that's underperforming relative to, you know, pre-COVID, is the SSAT joint venture, and obviously it had some really good years there during the supply chain disruption. But it's, you know, it's losing a little bit of money now, on a quarterly basis. You know, how do you think about the normalized earnings power for that part of your business? I guess what level of import activity do we need to see to be able to, to get back to, you know, a stable level of profitability there, do you think? I know you don't own that asset outright. I'm just trying to kind of get a gauge for that. Yeah. Yeah, so first, I'll say firstly, that we're gonna have more to say about that in our year-end earnings call, but I can give you my thoughts at this point. So, 2023 has, we don't think, not been a year of yet of normalization in the joint venture. I think we'll see a normalization occurring in 2024, and there are a couple of reasons for that. First of all, this inventory overhang that put, you know, in the year ago period, a lot less cargo into the overall market has been impacted. But we also had a couple of other factors that we think were suppressing volumes during that period. One was the ILWU contract that was, as you know, extended finally now- Mm-hmm ... has been ratified and in place. We think that cargo was diverted as our customers kind of de-risked by bringing cargo either through the Suez or water route from Asia or in the Panama Canal. But for 2024, I think there's a couple of things that should happen. First of all, the inventory overhang will be largely behind us. There are some issues with the Panama Canal that with regard to the drought, which is causing, on the margin, a reduction of effective capacity for the U.S. Panama all-water services from Asia. And then thirdly, there is a contract renewal for the ILA, which will occur in 2024. And some of the de-risking that our customers did with the ILWU renewal in 2023, we think are likely to play and be a factor on the margin in, again, de-risking. Those are, I think, factors that are gonna allow for a more normal level of performance in 2024 for the SSAT joint venture, but obviously not at levels, pandemic-era levels, where there was significant cargo that was on the terminals and unable to be picked up by their customers because their warehouses were full. So you would probably want to look back to an earlier year of SSAT profitability, pre-pandemic. And I don't have those numbers in front of me. And again, we'll have more to say about that in the next quarter's call. Okay, that's, that's really helpful, Matt. Thank you for that context. I'll jump back in queue. Thank you. Sure. Thank you. One moment, please, for our next question. Our next question will come from Jacob Lacks of Wolfe Research. Your line is open. Hey, thanks for your time. Hey, Jake. So your China volumes took another step up to around 39,000 containers this quarter. So it seems like you're tracking well above the 120,000-130,000 annual run rate you gave a couple of quarters ago. Is this sustainable, or how should we think about these moving forward? Yeah, Jake, it's Joel. It was a strong quarter for us, but we still, we still think there'll be seasonality. So the Q4 will have some light periods of time relative to the Q3. So I would say, don't, don't just take our 39,000 for the Q3 and multiply it times something near four and assume that's the annual rate. So we're still sticking with the 120, 130 total, volume for the 120-130 thousand for the whole year. We'll see how the Q4 plays out, and if we feel like adjusting that in, on a 2024 basis, we can talk about that in February. But I definitely caution, that's not going to be the run rate every quarter. Sounds good. Then it looks like share repurchases slowed a little in the quarter. I guess, how should we think about the cadence there moving forward? Yeah, I mean, we're going to, we're going to continue to be steady buyers. So if you— I would look at our, you know, last 12, last 12 months, 9 months through the course of the year. That's probably a decent run rate for us on a, annual basis, and there'll be some times where we're up a little bit, down a little bit on that, so I wouldn't read much into it. But other than just, we're encouraging all investors to take a long-term view. Our view is long-term, and we want to be steady on a long-term basis. Okay, and then one last one for me. I know you aren't giving guidance today, but if the 2024 trade dynamic is similar to 2023, does that mean Matson's earnings should be stable, or are there some puts and takes for Matson specifically, that you're able to call out? Yeah, we haven't put all of our own thoughts yet together, frankly, on 2024. We did comment that we think that the Transpacific trade and, you know, one of our more important drivers of earnings is going to look a lot like it did this year, which was, frankly, pretty good. We talked about the beginning of a normalization of SSAT, our joint venture, that will be up. There could be others that are down, but, you know, we're saying we'll have more to say. I don't know. Joel, would you add anything to that? Yeah, exactly. There'll be some pieces up and down a little bit, but overall, we're saying it's shaping up to be a year that looks similar to 2023, and we made that comment specific to operating income. Got it. All right. Thanks for your time. Okay. Thank you. Thank you. One moment, please, for our next question. Our next question will come from Ben Nolan of Stifel. Your line is open. Hey, guys, I have a- Hi, Ben. I have a handful. I wanted to circle back on the China volumes. And Joel, I appreciate that it's seasonal, always is, but I think, Matt, you made a comment in the prepared remarks, when referencing the CLX, that there was greater capacity on it. I was curious if you could flesh that out a little bit in terms of, you know, are you now, I don't know, given the chartered-in vessels or whatever, are you now able to carry a little bit more than you had been able to? Ben, it's Joel. So it's not... No, it's not significantly different. What happens sometimes is, in any given quarter, when you have 12 or 13 sailings, you may have a couple of your larger ships that hit twice or even three times versus the smaller ships. So from an overall quarter basis, we don't expect it to be significantly different. Where we're at today is we have five ships on charter today. Four are similar size, one slightly larger of those four, but then we have a fifth ship that's a little bit smaller. So it oftentimes depends on how often that smaller ship hits in any given quarter. I'll also note that we chartered a sixth ship that will take on here in a few weeks to have an additional ship to maintain the highest level of on-time performance that we can. Then that larger sixth ship will be similar size to the other four. So, I think any given quarter, the capacity is going to really boil down to how many times that smaller ship sails in a 12- or 13-week quarter. Okay. So, well, with that, two things. First of all, adding a sixth ship, I would assume if you're not releasing one or even if the one that you're chartering is a little bit bigger, should add capacity. So as long as there's demand, that 120-130 should have some upside. Is that fair? And then along those lines, how much of that is Shanghai-based expedited market do you think that you've captured right now? And is there room to go if you did have a little bit more capacity? Yeah, Ben, this is Matt. So to the two parts of your question, the sixth ship we're adding is primarily intended to always have a ship to be able to sail on time, regardless if there's a weather event or a port closure. So it's really more about ensuring we have the same number of sailings. And so the primary purpose is not to get an extra 6 or 10 voyages in the year, but rather to ensure that the 52 voyages we have are nearly perfect. And so it's really more of an insurance policy, so that we can look at our customers in the eye and say, "We have a reserve ship. We're not going to have a missed voyage," and we're sort of taking the exact opposite tack that the rest of the market seems to be taking. So, just to clarify that one aspect of the question. And then, Joel, do you want to comment on the second point? Yeah. Well, and also, Ben, the comment I was making, and because you asked about the charters, that was all specific to CLX Plus, those 5 and 6 ships. Sure. But the same is true on our regular CLX service with our Jones Act. Not all those 5 ships have the same capacity either, and we have sometimes a smaller vessel. So it also, the same point about the capacity and number of sailings for the smaller vessels in any quarter can skew the capacity, both for CLX and CLX Plus. Right. And with respect to the amount of the market share that you think that you've captured? Yeah, I think we're very focused on that expedited market share each week coming out of Shanghai. We still feel like our num- the CLX and CLX Plus service is the number one and number two service is capturing the majority of that, not all, but not all of that. We do believe we've got the majority of the expedited freight out of Ningbo, Shanghai on a weekly basis. Okay, great. And then, Joel, I was going to ask on the $119 million tax refund. We've been kind of waiting on that for a while. Do you have any clarity? I mean, do you expect it by the end of the year, or is there some sort of dispute associated with that? No, we don't know when we're going to get it. We do still have the highest level of confidence that we will get it. Whether it comes before the year end or not, we just don't know. Our understanding is just taking time to process it within the IRS. It's related, we think, to the CCF deposit that we made, that we've talked about. That was $565 million last year, so it's the tax-affected amount there. And because that doesn't show up in the automated IRS systems, it has to be done manually, and it's just taking time for them to review and make that adjustment manually, is our understanding. Okay. So if we're waiting on the IRS, it could be a few more years. Got it. Just kidding there for technical purposes. Two more, if you'll indulge me. I was going to ask, I know that there was a re-engineering, you know, switching over to LNG of some of the ships, and we haven't really heard much about that lately. Just curious how that process is going and how you're thinking about it and the learnings from that. Yeah. This is Matt, Ben. So the first vessel that we have installed LNG on, that is now operating on LNG is the Daniel K. Inouye. And it went through a conversion process, adding tanks and manifolds and all of it. As you know, the engine was already set to consume or burn LNG fuel when we ordered it. So that vessel is out, and it's on way. The second vessel that's going to go through a gas conversion or a gas and engine conversion is in the shipyard now. And we have another vessel going in next year, in 2024. We'll talk more about the timing of that, but we're very much underway with our conversion projects, in addition to the three new vessels that are not yet cutting steel, but that will be delivered in a couple of years. Those will all also be LNG ready. So we do have... You know, the plan is rolling out just the way we expected and the timing very consistent with our original timing on the conversions. Great. And then lastly, I was going to ask, as it relates to Hawaii and, obviously, there's a horrendous tragedy in Maui. As we think about that longer term, and is this something that just purely obvious from a freight and volume perspective, that could actually lift volumes for you guys as rebuilding happens and so forth? And in the near term, there's some headwinds from tourism, but just trying to think through how what might be the volume impacts of that for you. Yeah, and, you know, it's a sensitive subject because, you know, obviously we're focused on the tragedy and wish it never happened. But in the short term, I think you've got it right. It's going to be a situation where in the near term, there are some headwinds, and but over the longer term, and the rebuild process, we expect, as we mentioned in our prepared comments, the recovery will occur in the medium term. The rebuilding could occur over the longer term. So, but eventually, I think there will be a rebuild. I know the residents of Maui, and the leadership in Maui wants it to be rebuilt, and that will translate into freight volumes at some point into the future. Got it. All right. Well, again, thanks for letting me go four, five here. I appreciate it. And, good quarter, guys. Okay. Thanks, Ben. Thank you, Ben. Thank you. And again, to ask a question, please press star one one on your phone and wait for your name to be announced. To withdraw your question, please press star one one again. Stand by as we compile the Q&A roster. And again, to ask a question, please press star one one on your phone and wait for your name to be announced. And speakers, I am seeing no further questions in the queue. I would now like to turn the conference back to the CEO, Matt Cox, for closing remarks. Okay. Thanks, operator. Thanks for listening in on our call today. We look very much forward to seeing everyone on our year-end call. Aloha. This concludes today's conference call. Thank you all for participating. You may now disconnect and have a pleasant day.