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GENERAL AND SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended
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Sep. 30, 2024
GENERAL AND SIGNIFICANT ACCOUNTING POLICIES |
Basis of Presentation | Basis of Presentation: The Condensed Consolidated Financial Statements are unaudited, and include the accounts of Matson, Inc. and all wholly-owned subsidiaries, after elimination of intercompany amounts and transactions. Significant investments in businesses, partnerships, and limited liability companies in which the Company does not have a controlling financial interest, but has the ability to exercise significant influence, are accounted for under the equity method. The Company accounts for its investment in SSAT using the equity method of accounting. ​ Due to the nature of the Company’s operations, the results for interim periods are not necessarily indicative of results to be expected for the year. These Condensed Consolidated Financial Statements reflect all normal recurring adjustments that are, in the opinion of management, necessary for fair presentation of the results of the interim periods, and do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete consolidated financial statements. ​ The Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission (“SEC”) on February 23, 2024.
Fiscal Period | Fiscal Period: The period end for Matson covered by this report is September 30, 2024. The period end for MatNav and its subsidiaries covered by this report is September 27, 2024.
Significant Accounting Policies | Significant Accounting Policies: The Company’s significant accounting policies are described in Note 2 to the Consolidated Financial Statements included in Part II, Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. ​
Use of Estimates | Use of Estimates: The preparation of the interim Condensed Consolidated Financial Statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the amounts reported. Estimates and assumptions are used for but not limited to: impairment of investments; impairment of long-lived assets, intangible assets and goodwill; capitalized interest; allowance for doubtful accounts and other receivables; legal contingencies; insurance reserves and other related liabilities; contingent acquisition related consideration; accrual estimates; pension and post-retirement estimates; multi-employer withdrawal liabilities; operating lease assets and liabilities; income (loss) from SSAT; and income taxes. Future results could be materially affected if actual results differ from these estimates and assumptions.
Prepaid Expenses and Other Assets | Prepaid Expenses and Other Assets: Prepaid expenses and other assets consisted of the following at September 30, 2024 and December 31, 2023: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | September 30, | ​ | December 31, |
Prepaid Expenses and Other Assets (in millions) |  | 2024 |  | 2023 |
Prepaid fuel | ​ | $ | 28.5 | ​ | $ | 22.5 | ​
Prepaid insurance and insurance related receivables | ​ |  | 14.8 | ​ |  | 19.3 | ​
Prepaid operating expenses | ​ | ​ | 8.6 | ​ | ​ | 8.2 | ​
Prepaid leases | ​ | ​ | 3.4 | ​ | ​ | 4.1 | ​
Income tax receivables, net | ​ | ​ | 1.8 | ​ | ​ | 125.2 | ​
Restricted cash - vessel construction obligations | ​ | ​ | 2.4 | ​ | ​ | 2.3 | ​
Other | ​ |  | 10.9 | ​ |  | 7.3 | ​
Total | ​ | $ | 70.4 | ​ | $ | 188.9 | ​
​ Income tax receivables at December 31, 2023 include a federal income tax refund related to the Company’s 2021 federal tax return of $118.6 million and other income tax receivables. On April 19, 2024, the Company received the federal income tax refund of $118.6 million and interest of $10.2 million earned on the federal income tax refund.
Recognition of Revenues and Expenses | Recognition of Revenues and Expenses: Revenue in the Company’s Condensed Consolidated Financial Statements is presented net of elimination of intercompany transactions. The following is a description of the Company’s principal revenue generating activities by segment, and the Company’s revenue recognition policy for each activity for the periods presented: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Three Months Ended |  | Nine Months Ended
​ | ​ | September 30, |  | September 30,
Ocean Transportation (in millions) (1) | ​ | 2024 |  | 2023 |  | 2024 |  | 2023
Ocean Transportation services | ​ | $ | 787.9 | ​ | $ | 654.3 | ​ | $ | 2,027.9 | ​ | $ | 1,799.6
Terminal and other related services | ​ | ​ | 7.4 | ​ | ​ | 10.8 | ​ | ​ | 27.1 | ​ | ​ | 24.3
Fuel sales | ​ | ​ | 3.3 | ​ | ​ | 2.7 | ​ | ​ | 9.3 | ​ | ​ | 8.4
Vessel management and related services | ​ | ​ | 0.1 | ​ | ​ | 1.6 | ​ | ​ | 3.3 | ​ | ​ | 5.0
Total | ​ | $ | 798.7 | ​ | $ | 669.4 | ​ | $ | 2,067.6 | ​ | $ | 1,837.3
(1) | Ocean Transportation revenue transactions are primarily denominated in U.S. dollars except for less than 3 percent of Ocean Transportation services revenues and fuel sales revenue categories which are denominated in foreign currencies.
​
◾ | Ocean Transportation services revenue is recognized ratably over the duration of a voyage based on the relative transit time completed in each reporting period. Vessel operating costs and other ocean transportation operating costs, such as terminal operating overhead and selling, general and administrative expenses, are charged to operating costs as incurred.
◾ | Terminal and other related services revenue is recognized as the services are performed. Related costs are recognized as incurred.
◾ | Fuel sales revenue and related costs are recognized when the Company has completed delivery of the product to the customer in accordance with the terms and conditions of the contract.
◾ | Vessel management and related services revenue is recognized in proportion to the services completed. Related costs are recognized as incurred.
​ ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Three Months Ended |  | Nine Months Ended
​ | ​ | September 30, |  | September 30,
Logistics (in millions) (1) | ​ | 2024 | ​ | 2023 | ​ | 2024 | ​ | 2023
Transportation Brokerage and Freight Forwarding services | ​ | $ | 143.1 | ​ | $ | 138.6 | ​ | $ | 409.7 | ​ | $ | 415.8
Warehousing and distribution services | ​ | ​ | 10.6 | ​ | ​ | 11.9 | ​ | ​ | 30.0 | ​ | ​ | 31.5
Supply Chain Management services | ​ |  | 9.6 | ​ |  | 7.6 | ​ |  | 24.2 | ​ |  | 21.1
Total | ​ | $ | 163.3 | ​ | $ | 158.1 | ​ | $ | 463.9 | ​ | $ | 468.4
(1) | Logistics revenue transactions are primarily denominated in U.S. dollars except for less than 3 percent of transportation brokerage and freight forwarding services revenue and supply chain management services revenue categories which are denominated in foreign currencies.
​
◾ | Transportation Brokerage and Freight Forwarding services revenue consists of amounts billed to customers for services provided. The primary costs include third-party purchased transportation services, agent commissions, labor and equipment. Revenue and the related purchased third-party transportation costs are recognized over the duration of a delivery based upon the relative transit time completed in each reporting period. Labor, agent commissions, and other operating costs are expensed as incurred. The Company reports revenue on a gross basis as the Company serves as the principal in these transactions because it is responsible for fulfilling the contractual arrangements with the customer and has latitude in establishing prices.
◾ | Warehousing and distribution services revenue consist of amounts billed to customers for storage, handling, and value-added packaging of customer merchandise. Storage revenue is recognized in the month the service is provided to the customer. Storage related costs are recognized as incurred. Other warehousing and distribution services revenue and related costs are recognized in proportion to the services performed.
◾ | Supply Chain Management services revenue, and related costs are recognized in proportion to the services performed.
​ The Company generally invoices its customers at the commencement of the voyage or the transportation service being provided, or as other services are being performed. Revenue is deferred when services are invoiced in advance to the customer. The Company’s receivables are classified as short-term as collection terms are for periods of less than one year. The Company expenses sales commissions and contract acquisition costs as incurred because the amounts are generally immaterial. These expenses are included in selling, general and administrative expenses in the Condensed Consolidated Statements of Income and Comprehensive Income.
Capitalized Interest | Capitalized Interest: The Company capitalizes interest costs during the period as the qualified assets are being readied for their intended use. The Company determined that the vessel construction costs are considered qualifying assets for the purposes of capitalizing interest on these assets. The amount of capitalized interest is calculated based on the amount of expenditures incurred related to the construction of these vessels using a weighted average interest rate. The weighted average interest rate is determined using the Company’s average borrowings outstanding during the period. Capitalized interest is included in vessel construction in progress in property and equipment in the Company’s Condensed Consolidated Balance Sheets (see Note 5). The Company capitalized $1.2 million and $0.8 million of interest related to the construction of new vessels for the three months ended September 30, 2024 and 2023, and $3.0 million and $1.7 million for the nine months ended September 30, 2024 and 2023, respectively.
Dividends | Dividends: The Company’s third quarter 2024 cash dividend of $0.34 per share was paid on September 5, 2024. On October 24, 2024, the Company’s Board of Directors declared a cash dividend of $0.34 per share payable on December 5, 2024 to shareholders of record on November 7, 2024.
Repurchase of Shares | Repurchase of Shares: During the three and nine months ended September 30, 2024, the Company repurchased approximately 0.4 million and 1.4 million shares for a total cost of $48.1 million and $169.2 million, respectively. As of September 30, 2024, the maximum number of remaining shares that may be repurchased under the Company’s share repurchase program was approximately 1.0 million shares. ​
New Accounting Pronouncements | New Accounting Pronouncements: In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 requires disclosure of incremental segment information on an annual and interim basis. The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and requires retrospective application to all prior periods presented in the financial statements. Early adoption is permitted. The Company is currently evaluating the effects of adopting ASU 2023-07 but does not expect it will have a material impact on the Company’s consolidated financial statements. ​ In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. ASU 2023-09 is effective for annual periods beginning after December 15, 2024, and interim periods within fiscal years beginning after December 15, 2025. The Company is currently evaluating the effects of adopting ASU 2023-09 but does not expect it to have a material impact on the Company’s consolidated financial statements.

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