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YoY shift: Neutral
Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is 0.12pp more bullish than last year's.
Why YoY instead of absolute: the LM lexicon has ~6.6× more negative words than positive (legal/risk-disclosure language is heavy on hedging), so every 10-K reads bearish on raw tone. Year-over-year change strips that bias and surfaces the actual shift in management's framing.
Tone shift by section
The two components the gauge averages: how Risk Factors and MD&A each shifted in net tone versus last year's 10-K. The headline above is their average, so a green needle over a soft section just means the other section carried it.
Risk Factors
+0.08pp
Flat
Net-tone change vs last year's 10-K.
MD&A
+0.17pp
Flat
Net-tone change vs last year's 10-K.
Per-snippet highlights
Sentence-level sentiment highlighting with category and subcategory filters is coming once the snippet-scoring pipeline lands. For now, dig into the actual section text on the Sections tab.
Language change vs prior 10-K
Risk Factors (Item 1A) - words with the biggest YoY frequency increase
Negative rising
delays+1
scrutiny+1
overruns+1
limitations+1
invalidation+1
Positive rising
satisfy+1
progress+1
leading+1
Risk Factors (Item 1A)
8,488 words
ITEM 1A. RISK FACTORS
The following material risks, events and uncertainties may make an investment in the Company speculative or risky and should be reviewed carefully. The Company faces the material risks set forth below; however, the description below does not purport to include all risks the Company faces, and additional risks or uncertainties that are currently unknown or are not currently believed to be material may occur or become material. Moreover, some of the factors, events and contingencies discussed below may have occurred in the past, but the disclosures below are not representations as to whether or not the factors, events or contingencies have occurred in the past, and instead reflect our beliefs and opinions as to the factors, events, or contingencies that could materially and adversely affect us in the future. The occurrence of these or the risks and uncertainties described below may, in ways the Company may not be able to accurately predict, recognize or mitigate, adversely affect the Company’s business, competitive environment, strategy, financial condition, results of operations, cash flow, liquidity, demand, revenue, growth, prospects, reputation or stock price. All forward-looking statements made in this Form 10-K are qualified by the risks and uncertainties described below.
Language change vs prior 10-K
MD&A (Item 7) - words with the biggest YoY frequency increase
Negative rising
difficult+1
sluggish+1
volatility+1
deficit+1
Positive rising
effective+2
stable+2
benefited+2
strong+2
strength+1
MD&A (Item 7)
7,857 words
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS AND RISK FACTORS
The Company, from time to time, may make or may have made certain forward-looking statements, whether orally or in writing, such as, among others, forecasts or projections of the Company’s future performance or statements of management’s plans and objectives. These statements are considered “forward-looking” statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements may be contained in, among other things, SEC filings such as Forms 10-K, 10-Q and 8-K, the Company’s Annual Report to Shareholders, the Company’s Sustainability Report, press releases made by the Company, the Company’s Internet websites (including websites of its subsidiaries), and oral statements made by officers of the Company. Except for historical information contained in these written or oral communications, all other statements are forward-looking statements. These include, for example, all references to 2026 or future years, including such references included under “Fourth Quarter 2025 Discussion and Outlook for 2026,” as well as statements generally identified through the inclusion of words such as “anticipate,” “believe,” “can,” “commit,” “estimate,” “expect,” “focus,” “goal,” “hope,” “intend,” “may,” “plan,” “seek,” “should,” “target,” and “will,” or similar statements or variations of such terms and other similar expressions. New risks or uncertainties may emerge from time to time, risks that the Company currently does not consider to be material could become material, and it is not possible for the Company to predict all such risks, nor can it assess the impact of all such risks on the Company’s business or the extent to which any factor, or combination of factors, may cause actual results or outcomes, or the timing of results or outcomes, to differ materially from those contained in any forward-looking statements. Accordingly, forward-looking statements cannot be relied upon as a guarantee of future results or outcomes and involve a number of risks and uncertainties that could cause actual results or outcomes to differ materially from those projected in the statements, including but not limited to the factors that are described in Part I, Item 1A under the caption “Risk Factors” of this Annual Report on Form 10-K, which section is incorporated herein by reference, and elsewhere in this report. Except as required by law, the Company undertakes no obligation to revise or update publicly forward-looking statements or any factors that may affect actual results, whether as a result of new information, future events, circumstances occurring after the date of this report, or otherwise.
Repeal, invalidation, substantial amendment, or waiver of the Jones Act or changes in its application would have an adverse effect on the Company’s business.
The Merchant Marine Act of 1920 (commonly referred to as the Jones Act) regulates all interstate and intrastate marine commerce within the U.S. From time to time, various interests have sought to repeal, amend or waive the Jones Act. For example, in February 2025, a lawsuit was filed in the U.S. District Court for the District of Columbia challenging the Jones Act, arguing that it violates the Port Preference Clause of the U.S. Constitution; the Company has intervened in this lawsuit and believes this lawsuit is without merit. If the Jones Act were to be repealed, invalidated, substantially amended or waived and, as a consequence, competitors were to enter the Hawaii or Alaska markets with lower operating costs by utilizing their ability to acquire and operate foreign-flagged and foreign-built vessels and/or being exempt from other U.S. regulations, the Company’s business would be adversely affected. In addition, the Company’s position as a U.S. citizen operator of Jones Act vessels would be negatively impacted if periodic efforts and attempts by foreign interests, including recent campaigns by foreign governments, to circumvent or repeal certain aspects of the Jones Act were successful. If maritime cabotage services were included in international trade agreements, or if the restrictions contained in the Jones Act were otherwise altered, the shipping of cargo between covered U.S. ports could be opened to foreign-flagged or foreign-built vessels, which could have other adverse impacts to our business.
The Company’s business would be adversely affected if the Company were determined not to be a U.S. citizen under the Jones Act.
Certain provisions of the Company’s articles of incorporation protect the Company’s ability to maintain its status as a U.S. citizen under the Jones Act. If non-U.S. citizens were able to defeat such articles of incorporation restrictions and own, in the aggregate, more than 25 percent of the Company’s common stock, the Company would no longer be considered a U.S. citizen under the Jones Act. Such an event could result in the Company’s ineligibility to engage in coastwise trade and the imposition of substantial penaltiesagainst the Company, including seizure or forfeiture of its vessels.
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Risks Related to the Company’s Operations
Changes in macroeconomic conditions, geopolitical developments, or governmental policies have affected and could in the future affect the Company.
The transportation industry in which the Company operates has been and could in the future be impacted by macroeconomic fluctuations, volatility, downturns, inflation, recessions, interest rates and other economic shifts or market instabilities, including due to instability in financial institutions, as well as the development of and changes in governmental policies, relations, priorities and budgeting constraints, and uncertainties resulting from the U.S. political environment, including increased political polarization and the potential for political gridlock (such as a shutdown of the U.S. federal government), and geopolitical developments across the jurisdictions in which it operates. For example, there have been increases in geopolitical and trade tensions among a number of the world’s major economies, including the United States’ imposition of tariffs and the imposition by other countries of new or increased tariffs. These tensions have resulted in measures by governments, including reciprocal tariffs, port entry fees, non-tariff trade barriers, and sanctions, including the use of export control restrictions and sanctions against certain countries and individual companies. In the past, the U.S. Trade Representative has imposed entry fees on certain Chinese-owned, -operated, or - built vessels entering U.S. ports and additional duties on cranes, certain chassis and spare parts. China has also imposed port entry fees on certain U.S.-owned or operated, or U.S.-flagged vessels entering Chinese ports. These actions and uncertainty regarding domestic and foreign tariff policy, including uncertainty associated with the scope, level, magnitude, duration and product range of tariffs, have, and may continue to have, an adverse economic impact in the markets in which the Company operates and could result in a reduced demand for the Company’s services.
These adverse economic conditions can also impact the Company’s customers’ business levels and needs. Within the U.S., a weakening of economic drivers in Hawaii, Alaska or Guam, which include tourism, military spending, construction, personal income growth and employment, the weakening of consumer confidence, market demand, the economy in the U.S. Mainland, inflation, interest rates, recession, increased political polarization and the potential for political gridlock, and the effect of a change in the strength of the U.S. dollar against other foreign currencies has reduced and could in the future reduce the demand for goods, adversely affecting inland and ocean transportation volume or rates. In addition, overcapacity in the global or transpacific ocean transportation markets, a change in the cost of goods or currency exchange rates, pressure from U.S. or foreign governments, and changes in tariff policies or international trade policies and related uncertainties could adversely affect freight volume and rates in the Company’s China services. Additionally, fluctuations in the price of oil could further impact the Alaskan economy, which in turn could impact the Company’s business.
The shipping industry is competitive, and the Company has been and may continue to be impacted by new or increased competition.
The Company has faced and may continue to face new competition by established or start-up shipping operators that enter into the Company’s markets. The shipping industry is competitive with limited barriers to entry. Ocean carriers can shift vessels in and out of tradelanes or charter vessels to manage capacity and meet customer demands. The Company also competes with air freight carriers, some of which are able to offer more attractive schedules and services, or to increase capacity. The entry of a new competitor or the addition of new vessels or capacity by existing competitors on any of the Company’s existing routes could result in a significant increase in available shipping capacity that could have an adverse effect on the Company’s volume and rates.
The loss of or damage to key customer relationships may adversely affect the Company’s business.
The Company’s businesses are dependent on their relationships with customers and derive a significant portion of their revenues from the Company’s largest customers. The Company’s business relies on its relationships with the U.S. military, freight forwarders and non-vessel owning common carriers, large retailers and consumer goods manufacturers, as well as other larger customers. For more information regarding the Company’s significant customers, see the discussion in Part I, Item 1 of this Annual Report. The loss of or damage to any of these key relationships may adversely affect the Company’s business and revenue.
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The Company is dependent upon key vendors and third parties for equipment, capacity, facilities, infrastructure and services essential to operate its business, and if the Company fails to secure sufficient third-party services, its business could be adversely affected.
The Company’s businesses are dependent upon key vendors who provide terminal, rail, truck, agent and ocean transportation services. Service structures and relationships with these parties are important in the Company’s intermodal business, as well as in the China, Guam, Micronesia, Japan, Alaska export and South Pacific services. If the Company cannot reliably secure sufficient transportation equipment, capacity or services from these third parties at reasonable prices or rates to meet its or its customers’ needs and schedules, or if there are changes to the costs of such services, customers may seek to have their transportation and logistics needs met by others on a temporary or permanent basis. If this were to occur, the Company’s business, financial condition, results of operations and cash flow could be adversely affected. The loss of or damage to any of these key relationships may also adversely affect the Company’s business and revenue.
An increase in fuel prices, changes in the Company’s ability to collect fuel-related surcharges, and/or the cost or limited availability of required fuels may adversely affect the Company’s profits.
Fuel, including LNG fuels and biofuels, is a significant operating expense for the Company’s Ocean Transportation business. The price and supply of fuel are difficult to predict and fluctuate based on events beyond the Company’s control, including impacts from global macroeconomic conditions, geopolitical events and governmental policies. Increases in the price of fuel may adversely affect the Company’s results of operations. Any such increases also can lead to increases in other expenses, such as energy costs and costs to purchase outside transportation services. In the Company’s Ocean Transportation and Logistics services segments, the Company utilizes fuel-related surcharges, although increases in the fuel-related surcharges may adversely affect the Company’s competitive position and may not correspond exactly with the timing of increases in fuel expense. Changes in the Company’s ability to collect fuel-related surcharges, including recovery of all or most fuel-related expenses, also may adversely affect its results of operations.
The development of alternative fuels (such as low- or carbon-neutral fuels), including the necessary infrastructure and technology to utilize such fuels, is still in early experimental stages. There is significant uncertainty as to when, if at all, these alternative fuels will become commercially available or viable at a reasonable cost and in sufficient quantities, and whether Matson will be able to utilize or have access to these alternative fuels (or any such alternative fuels developed in the future) in a timely and cost- effective manner. In addition, advances in fuel technology could require Matson to incur significant capital costs to utilize any such technologies (including, for example, efforts to accelerate building of new vessels, retrofit existing vessels, retire vessels early or make reserve vessels unusable) and Matson may be unable to equip its vessels with these technologies on a timely basis, if at all. It is also uncertain to what extent charter vessel owners may be willing to experiment with, or make the necessary investments to utilize, alternative fuels.
Evolving regulations and stakeholder expectations related to sustainability matters exposes the Company to heightened scrutiny, additional costs, operational challenges and a number of risks.
Certain regulators, investors, advisory firms, employees, customers, suppliers, governments and certain other stakeholders have increased their focus and scrutiny on sustainability matters and related corporate practices, disclosures and initiatives. Evolving regulations in certain of the jurisdictions in which the Company operates and stakeholder expectations may impact the Company’s reputation, business and attractiveness as an investment, employer or business partner to the extent the Company – including its initiatives, goals and reporting – fails to satisfy or is perceived to fail to satisfy those regulations and expectations, including as a result of any third-party rating or assessment. The adoption and expansion of related legislation and regulations have also resulted and may again result in increased capital expenditures and compliance, operational and other costs to the Company. For example, the state of California has adopted greenhouse gas and climate change disclosure requirements. Compliance with these rules and regulations could require significant effort and resources and result in changes to the Company’s current GHG emission reduction goals.
The Company’s sustainability and related initiatives are aspirational and based on standards and frameworks for presenting and measuring progress that are not harmonized and are still developing, assumptions that may change, disclosure controls and procedures that continue to evolve, and technological, policy and other progress and changes outside of our control (particularly those relating to the development of alternative fuels). The Company’s use, interpretation or application of disclosure frameworks and standards may change from time to time or differ from those of others. This may result in a lack of consistent or meaningful comparative data from period to period or between the
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Company and other companies in the same industry. The Company’s sustainability initiatives and goals, including human capital practices, may not satisfy all stakeholders and could impact the attraction and retention of investors, customers and employees, legal enforcement or reputation risk, as well as the Company’s willingness to do business with other companies or customers or their willingness to do business with the Company. Efforts to achieve or accurately track the Company’s initiatives and goals face numerous risks and may be untimely, be unsuccessful, result in additional costs or experience delays, and as a result may have an adverse impact on the Company, including its brand, reputation, financial performance and growth and stock price, and may expose the Company to increased scrutiny from the investment community as well as enforcement authorities.
The Company may not be timely or successful in completing its fleet upgrade initiatives, which may result in significant costs and adversely impact the Company’s ability to meet its emission reduction goals.
The Company’s four commissioned Aloha and Kanaloa class vessels include dual fuel capable engines that can run on low sulfur fuel oil or LNG. The Company has completed the installation of tanks, piping and cryogenic equipment on its two Aloha class vessels, Daniel K. Inouye and Kaimana Hila , and re-engined Manukai to operate on LNG. In addition, construction has begun on three new LNG-ready Aloha Class vessels. The Company has made and anticipates making significant capital expenditures in connection with these fleet initiatives. The Company may incur additional operating costs to the extent use of LNG presents new maintenance requirements or unforeseencomplications.
The Company’s investments in LNG-ready vessels, whether on their own or in addition to other Company initiatives, may be insufficient to meet the Company’s previously announced GHG emission reduction goals on a timely basis or at all. There is no guarantee that the Company will be able to secure LNG via bunker barges or other methods on the U.S. West Coast or in China in sufficient amounts to fuel its vessels or at a reasonable cost, as increased demand for LNG could decrease available supply of LNG and increase prices. Governments have in the past and may again in the future impose tariffs on LNG that also may increase supply costs. As a result of these risks, the Company may not fully realize the benefits of these investments.
The Company’s vessel construction agreements with Philly Shipyard subject the Company to risks.
On November 1, 2022, MatNav and Philly Shipyard entered into vessel construction agreements pursuant to which Philly Shipyard will construct three new 3,400-TEU Aloha Class dual-fuel capable containerships, with expected delivery dates during the first quarter 2027, the third quarter 2027 and the second quarter 2028. Failure of any party to the vessel construction agreements to fulfill its obligations under the agreements could have an adverse effect on the Company’s financial condition and results of operations. Such a failure could happen for a variety of reasons, including but not limited to (i) delivery delays, (ii) delivery of vessels that fail to meet any of the required operating specifications (for example, capacity, fuel efficiency or speed), (iii) events in South Korea that prevent one or more significant subcontractors to Philly Shipyard from performing, (iv) loss of key personnel at either Philly Shipyard or any of its subcontractors, (v) work stoppages or other labor disruptions that may occur as a result of the failure of Philly Shipyard to negotiate collective bargaining agreements with its unions, (vi) the insolvency of, or the refusal or inability to perform for any reason, by Philly Shipyard or any of its subcontractors, (vii) the ability of Hanwha Ocean and Hanwha Systems (collectively, “Hanwha”) to integrate Philly Shipyard successfully into their global operations, or (viii) delays in the construction of vessels scheduled to be completed before the Company’s vessels. Significant delays in the delivery of the new vessels could limit our ability to replace aging vessels in the Alaska service without substantial modifications and delay the Company’s ability to upsize the CLX service, which could also have an adverse impact on the Company’s business, financial condition, results of operations and cash flow.
The Company’s operations are susceptible to weather, natural disasters, maritime accidents, spill events and other physical and operating risks.
As a maritime transportation company, the Company’s operations are vulnerable to delay, disruptions and loss of life and property as a result of weather, natural disasters, bad weather at sea (including increased storm severity), lightning strikes, wildfires, heat waves, lava flows, hurricanes, typhoons, tsunamis, droughts, windstorms, floods and earthquakes. The Company’s operations are also vulnerable to risks related to the operation of ocean- going vessels, including risks of potential marine accidents, or disasters, including grounding, fires, explosions, collisions, mechanical failures, human error, maintenance issues, latent defects, oil or other spill or environmental accidents, whale strikes, war, terrorism and piracy, lost or damaged cargo, delays, injury and loss of life. Changing macroeconomic and geopolitical conditions, including geopolitical conflict, may also result in increased attacks on vessels, piracy or terrorism.
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Such events could interfere with the Company’s ability to provide on-time scheduled service, require evacuation of personnel or stoppage of services, or impact the Company’s customer’s operations, resulting in increased expenses and potential loss of business associated with such events. In addition, severe weather and natural disasters can result in interference with the Company’s or its partners’ terminal operations. These impacts could be particularly acute in Hawaii and Alaska given the local economies’ dependence on these ports for ocean cargo, and in ports such as Dutch Harbor and Kodiak, Alaska where the Company is dependent on a single crane. The occurrence of any of these events may result in damage to or loss of terminals, port facilities and infrastructure, cranes, vessels, containers, cargo and other equipment, increased maintenance expense, loss of life or physical injury to its employees or people, pollution, or the slow down or suspension of operations. For example, damage to the Company’s vessels could require repair at a dry-docking facility. The costs of repairs may be substantial which may adversely affect the Company’s business, financial condition, results of operation and cash flow. Further, the Company may be unable to find space at a suitable dry-docking facility, the vessels may be forced to wait for space or be towed to a different facility, all of which could result in additional expenses and delays, and may adversely affect the Company’s business. These events can also expose the Company to reputational harm and liability for resulting damages, including for loss of life and property, and possible penalties that, pursuant to typical maritime industry policies, it must pay and then seek reimbursement from its insurer. Affected vessels may also be removed from service and thus would be unavailable for income-generating activity.
There is no assurance that our efforts to mitigate the impact of these risks, including from severe weather or other events on our operations, will be effective. Although we take measures that we believe are reasonable to mitigate these risks, it is not practicable to eliminate such risks altogether. The Company’s casualty and liability insurance policies are generally subject to large retentions and deductibles and may not cover all losses the Company may incur. Some types of losses, such as losses resulting from a port blockage, generally are not insured. In some cases, the Company retains the entire risk of loss because it is not economically prudent to purchase insurance coverage or because of the perceived remoteness of the risk. Other risks are uninsured because insurance coverage may not be commercially available. Finally, the Company retains all risk of loss that exceeds the limits of its insurance.
The Company may be impacted by transitional and other risks arising from climate change.
The Company may be impacted by transitional and other risks arising from climate change and the global shift toward a low carbon future. Organizational, industrial and governmental shifts in operations as well as legal and regulatory requirements to reduce or eliminate emissions and/or increase efficiency, or any amendments, modifications or changes in the interpretation, application or enforcement of any such operations or requirements, may require the Company to increase expenditures, make changes to existing infrastructure, vessels and equipment, limit the speed at which the Company’s vessels are permitted to travel, and make other changes to its business model. For example, the maritime industry is moving toward deployment of clean energy technologies and use of electricity powered by renewable energy sources to power terminal operations as a way to reduce shoreside GHG emissions. As the Company and SSAT increase their reliance on the power grid at terminals, including for cold-ironing and ground service fleets, the Company may experience increased risks related to power outages, brown outs or black outs. The likelihood of these risks is compounded by uncertainties regarding the reliability of renewable energy sources as well as any increased frequency of extreme weather events that may disrupt the generation or transmission of electricity.
In addition, compliance with regulations such as the IMO’s CII requirements, or any amendments, modifications or changes in the interpretation, application or enforcement of any such requirements or regulations, may create schedule disruptions and could require Matson’s fleet to slow down if efficiencyimprovements or transitions to alternative fuels together are not enough to reduce GHG emissions sufficiently, thus impacting Matson’s expedited business model and competitive advantage.
New environmental requirements for vessel performance and operation could also require the Company to accelerate the building of new vessels, increase the construction costs for new vessels and equipment to accommodate even newer technology as it emerges while today’s technology becomes obsolete, initiate unexpected retrofit projects for existing vessels, retire older vessels earlier than expected, or render reserve vessels unusable. If these outcomes were to occur, the Company’s business, financial condition, results of operations and cash flow could be adversely affected.
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The Company faces risks related to actual or threatened health epidemics, outbreaks of disease, pandemics or other major health crises, which could significantly disrupt the Company’s business.
The Company’s business has in the past, and could in the future, be impacted adversely by outbreaks of disease, the effects of public health epidemics, pandemics or other major heath crises (which the Company refers to collectively as public health crises), such as the COVID-19 pandemic. Actual or threatened public health crises can have a number of adverse impacts, including volatility in the global economy, impacts to the Company’s customers’ business operations, reduced tourism in the markets the Company serves, potential restrictions on employee travel, or significant disruptions in ocean-borne transportation of goods, logistics demand and supply chain activity, caused by a variety of factors such as quarantines, factory and office closures, port closures, or other government-imposed restrictions, any of which can adversely impact the Company’s business, financial condition, results of operation and cash flow.
The Company’s significant operating agreements and leases could be renewed/replaced on less favorable terms or may not be renewed/replaced on acceptable terms, if at all.
The significant operating agreements and leases entered into by the Company in the course of its operations, including those related to terminals, chartered vessels, bonded and unbonded container yards, cross-dock facilities, warehouses and offices as well as those entered into with SSAT, expire at various points in time and may not be renewed/replaced with comparable assets with the specifications necessary for the Company’s or SSAT’s businesses or could be renewed/replaced on less favorable terms, if at all, thereby adversely affecting the Company’s business, financial condition, results of operations and cash flow.
The Company may face unexpected dry-docking or repair costs for its vessels.
The Company routinely engages shipyards to drydock its vessels for regulatory compliance and to provide repair and maintenance, and capital enhancements. Vessels may also have to be drydocked or repaired at sea in the event of accidents or other unforeseendamage. Unexpected dry-dockings or repairs could require the Company to activate a reserve vessel, purchase additional fuel and operate a less- efficient, smaller vessel for a period of time. The Company also operates a number of older active and reserve vessels that may require more frequent and extensive maintenance. The cost of repairs is difficult to predict and can be substantial. In addition, the time when a vessel is out of service for maintenance is determined by a number of factors, including regulatory deadlines, market conditions, shipyard availability, shipyard location, availability of employees and repairmen, and customer requirements, and accordingly, the length of time that a vessel may be out of service may be longer than anticipated, which could adversely affect the Company’s business, financial condition, results of operations and cash flow. The timing and expense required for repairs could be exacerbated by compliance with the U.S. Department of Transportation Maritime Administration and Jones Act requirements.
The Company is involved in a joint venture and is subject to risks associated with joint venture relationships.
The Company is involved in a terminal joint venture with SSAT (and through SSAT, other joint ventures at various U.S. West Coast terminals), and may initiate future joint venture projects. A joint venture involves certain risks for the Company such as:
The Company’s lack of voting control over the joint venture, including the risk that the joint venture takes actions resulting in reputational harm to the Company;
Misalignment or inconsistency of interests between the Company and the joint venture partner;
Reliance on the joint venture partner to fund its share of capital or fulfill its other commitments, including the risk that the joint venture partner could become bankrupt; and
Operating difficulties and financial losses, including from abandonment or termination of terminal lease agreements, at the joint venture, which may lead to SSAT writing down assets or incurring impairment charges.
In addition, the Company relies on SSAT for its stevedoring services at the ports of Long Beach and Oakland, California and Tacoma, Washington on the U.S. West Coast. The Company could be adversely affected by any changes in the services provided or to the costs of such services provided by SSAT. Furthermore, the Company’s results of operations have been and may continue to be impacted by lower share of income from SSAT, including as a result of declines in lift volume due to reduced carrier volume into U.S. West Coast ports or increases in SSAT’s operating costs.
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The Company is subject to risks associated with conducting business in foreign markets.
Matson’s China service and other international services are subject to risks associated with conducting business in foreign markets, which include:
Challenges associated with operating in foreign countries and developing relationships with foreign companies, business associates and governments, including as a result of cultural differences;
Difficulties in staffing and managing foreign operations, including dynamic employment and immigration laws;
The Company’s ability to comply with U.S. and foreign legal and regulatory restrictions, including anti-corruption laws such as the Foreign Corrupt Practices Act;
Not having continued access to existing port facilities or feeder vessels;
The Company’s ability to manage changes in the cost of goods or currency exchange rate fluctuations;
Geopolitical and economic instability;
Economic downturns or slower growth in the local markets or geographic areas in which we conduct business;
Dynamics involving U.S. trade relations with other countries, including uncertainty associated with the scope, level , magnitude, duration and product range of tariffs, port entry fees, non-tariff trade barriers or sanctions, including the use of export control restrictions and sanctions against certain countries and individual companies, or other retaliatory governmental actions, and responsive actions taken by the Company’s customers, including with respect to their supply chains;
The Company’s ability to offer a differentiated service for which customers are willing to pay a significant premium; and
Customer preferences to diversify supply chains away from, or otherwise limit sourcing from, certain countries.
The Company’s terminals in Hawaii and Alaska require modernization.
The Company has completed the first phase of renovating and modernizing its Sand Island terminal in Honolulu Harbor. However, significant upgrades remain, including the long-term expansion program at the Sand Island terminal and projects to improve resiliency to risks from events such as severe weather and natural disasters. While reconstruction of the Port of Alaska has begun, significant upgrades are needed to improve operational safety and efficiency, accommodate modern shipping operations, and improve resiliency, including to risks due to severe weather events and natural disasters. For example, the aging cranes and dock facilities of the port are increasingly exposed to the risk of failure due to corrosion, deterioration, and the loss of load-bearing capacity particularly in the event of extreme seismic events or other natural disasters. The Company has purchased three used utility-powered cranes for the new terminal to replace the aging cranes. Regulatory, construction or other delays or cost overruns related to the expansion and modernization of the terminals as well as delays or cost overruns related to the refurbishing, delivery and commissioning of the cranes, could have an adverse impact on the Company’s business plans, financial condition, results of operations and cash flow. In addition, the terminal modernization programs may not result in improved operational productivity or improved resiliency to severe weather events, extreme seismic events or other natural disasters or generate expected returns.
Heightened security measures, war, actual or threatened terrorist attacks, efforts to combat terrorism and other acts of violence may adversely impact the Company’s operations and profitability.
War, terrorist attacks and other acts of violence may cause consumer confidence and spending to decrease, or may affect the ability or willingness of tourists to travel to Hawaii, Guam or Alaska, thereby adversely affecting those economies and the Company. Wars or terrorism could impact global supply chains due to changes in vessel routing, product sourcing decisions, or governmental sanctions or restrictions. Additionally, acts of war and future terrorist attacks could increase volatility in the U.S. and worldwide financial markets. Acts of war or terrorism may also be directed at the Company’s shipping operations or may cause the U.S. government to take control of Matson’s vessels for military operations. Heightened security measures, including customs inspections and related procedures in countries of origin and destination, potentially slow the movement and increase the cost of freight through U.S. or foreign ports, across borders or on U.S. or foreign railroads or highways.
Acquisitions may have an adverse effect on the Company’s business.
The Company’s growth strategy includes expansion through acquisitions, but there is no assurance that the Company will be successful in identifying, negotiating or consummating any future acquisitions. Even if suitable candidates are
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identified, such transactions may result in regulatory scrutiny, litigation or difficulties assimilating acquired assets or companies, and may result in the diversion of the Company’s capital and its management attention from other business issues and opportunities. The Company may not be able to integrate companies that it acquires successfully, including their personnel, financial systems, distribution, operations and general operating procedures. The Company may also encounter challenges in achieving appropriate internal control over financial reporting in connection with the integration of an acquired company. The Company may pay a premium for an acquisition, resulting in goodwill that may later be determined to be impaired.
Risks Related to Employees
Work stoppages or other labor disruptions caused by the Company’s unionized workers and other workers or their unions in related industries could adversely affect the Company’s operations.
A significant portion of Matson’s employees are covered by collective bargaining agreements. Furthermore, the Company relies on the services of third parties, including SSAT, which employ persons covered by collective bargaining agreements. For additional information on collective bargaining agreements with unions, see Part I, Item 1, Subheading C. Employees and Labor Relations of this Annual Report.
Previously, the Company has been adversely affected by actions taken by employees of the Company or other companies in related industries against efforts by management of the Company or other companies to control labor costs, restrain wage or benefit increases or modify work practices. In the past, strikes, slow-downs and disruptions have occurred as a result of the failure of Matson or other companies in its industry to negotiate collective bargaining agreements with such unions successfully.
In addition, any slow-downs, strikes, lock-outs or other disruptions, including limits on the availability of labor through trade union hiring halls, have had and in the future, particularly in years when collective bargaining agreements are being negotiated, could have an adverse impact on Matson’s or SSAT’s operations.
Loss of the Company’s key personnel or failure to adequately manage human capital could adversely affect its business.
The Company’s future success depends, in significant part, upon the continued services of its key personnel and skilled employees, including its senior management, as well as key personnel at its joint venture partners. The permanent or temporary loss of the services of key personnel could adversely affect the Company’s future operating results because of such employees’ experience with and knowledge of the Company’s business and customer relationships. If key personnel and skilled employees depart or are unable or unwilling to work, the Company’s ability to execute its business model could be impaired to the extent it cannot replace such personnel or sufficiently train new personnel in a timely manner. In addition, the Company may incur significant costs to replace these employees. Whether the Company can meet its labor needs is subject to a variety of pressures, including market compensation and benefit levels, which may be impacted by pressure within the industry to increase wages, including due to the threat of a labor strike; the availability of labor, which may be impacted by national and global labor trends including higher-than-normal levels of individuals leaving the workforce and industry trends including aging workforces that may reduce the available pool of skilled workers; a mismatch of skills or experience to support the evolving needs of the Company’s business; and employee expectations or desire for changes in the work environment. In addition, the Company’s workforce is aging, and within the next few years an increasing number of employees will be eligible to retire, which may result in a period of higher turnover rates than we have historically experienced and could amplify these challenges. The Company does not maintain key person insurance on any of its key personnel.
The Company’s investments in and efforts to manage its human capital and maintain a desirable workplace culture, including to create a safe and healthy work environment, and foster a rewarding workplace for employee development and advancement, may not be successful in identifying, attracting, developing, motivating, retaining, competing for or replacing qualified personnel. These efforts and the Company’s reputation may also be impacted by any failure or perceived failure to meet or timely progress on publicly disclosed human capital-related goals and initiatives, or to compare favorably with the progress or goals of its industry or peers, and stakeholders may have differing views on these goals and initiatives.
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Risks Related to Information Technology
If the Company is not able to use its information technology and communications systems effectively, the Company’s ability to conduct business might be negatively impacted.
The Company is highly dependent on the proper functioning of its information technology systems to enable operations and compete effectively. The Company regularly updates its information technology systems or implements new systems, which could cause substantial business interruption. There is no assurance that the systems upgrades or new systems will meet the Company’s current or future business needs, or that they will operate as designed. In addition, adoption of new and rapid changes in technology, such as the rise in artificial intelligence (“AI”) applications, may impact the transportation and logistics industry. If Matson does not appropriately adapt its operations to these new technologies as quickly or effectively as its competitors, the Company’s business could be adversely affected.
The Company’s information technology systems also rely on third-party service providers for access to the Internet, satellite-based communications systems, the electric grid, database storage facilities and telecommunications providers. The Company has no control over the operations of these third-party service providers. In the past, disruptions in the Company’s third-party service providers have impacted the Company’s operations, including the Company’s ability to book and manage freight, stow vessels, and process customs declarations. Some of the Company’s employees work from home or remotely, increasing the Company’s dependence on its information technology systems and third-party providers during those times. If the Company’s information technology and communications systems experience reliability issues, integration or compatibility concerns or if the Company’s third-party providers are unable to perform effectively or experience disruptions, cyber attacks or failures, there could be an adverse impact on the availability and functioning of the Company’s information technology and communications systems, which could lead to business disruption or inefficiencies, reputational harm or loss of customers.
The Company’s information technology systems have in the past and may in the future be exposed to cybersecurity risks and other disruptions that could impair the Company’s ability to operate and adversely affect its business.
The Company relies extensively on its information technology systems and third-party service providers in many aspects of its business, including cloud services for accounting, billing, disbursement, cargo booking and tracking, vessel scheduling and stowage, equipment tracking, customer service, banking, payroll and employee communication systems. The Company also collects, stores and transmits sensitive data, including its proprietary business information and that of its customers, and personally identifiable information of its customers and employees. The Company’s practices, policies and other efforts, including as described in Part I, Item 1C of this Annual Report, may not be sufficient to prevent, detect or remediate all cybersecurity risks or other disruptions, and the Company and its service providers have in the past experienced and may in the future experience cybersecurity incidents, disruptions, threats and vulnerabilities such as malware (including computer viruses and ransomware), software bugs, denial-of-service attacks, phishing, spoofing, deep fakes, identity-based attacks, code injection attacks, cyber terrorism, sabotage, circumvention of security systems (whether physical or virtual), malfeasance, breaches due to employee error, natural disasters, accidents, power disruptions or loss, telecommunications failure, unauthorized access or other catastrophic events or failures at the Company’s facilities, aboard its vessels or at third-party locations. In addition, as AI capabilities improve and are increasingly adopted, cybersecurity attacks perpetrated through the use of AI may proliferate, leading to an increase in the frequency, speed, scale and automation of such attacks.
Any failure, breach or unauthorized access to the Company’s systems or those of third parties on which the Company relies could result in the loss of confidential, sensitive or proprietary information, interruptions in its service or production or otherwise impact the Company’s ability to conduct business operations, and potentially could result in reductions in revenue and profits, damage to its reputation or liability.
Risks Related to Financial Matters
A deterioration of the Company’s credit profile, disruptions of the credit markets or higher interest rates could restrict its ability to access the debt capital markets or increase the cost of debt.
Deterioration in the Company’s credit profile may have an adverse effect on the Company’s ability to access the private or public debt markets and also may increase its borrowing costs. If the Company’s credit profile deteriorates
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significantly, its access to the debt capital markets or its ability to renew its committed lines of credit may become restricted, or the Company may not be able to refinance debt at the same levels or on the same terms. Because the Company relies on its ability to draw on its revolving credit facility to support its operations when required, any volatility or disruption in the credit and financial markets or other development that prevents the Company from accessing funds (for example, a lender that does not fulfill its lending obligation) or renewing its revolving credit facility could have an adverse effect on the Company’s financial condition, results of operation and cash flow. Additionally, the Company’s credit agreements generally include an increase in borrowing rates if the Company’s credit profile deteriorates. Furthermore, the Company incurs interest under its revolving credit facility based on floating rates. Floating rate debt creates higher debt service requirements as market interest rates increase, as was the case in connection with the U.S. Federal Reserve’s interest rate increases in 2022 and 2023, and high interest rates can adversely affect the Company’s cash flow and results of operations. Disruptions to the credit markets as a result of macroeconomic, geopolitical, or financial market developments could increase the Company’s cost of capital and limit the Company’s access to capital.
Failure to comply with certain restrictive financial covenants contained in the Company’s credit facilities could preclude the payment of dividends, impose restrictions on the Company’s business segments, capital resources or other activities or otherwise adversely affect the Company.
The Company’s credit facilities contain certain restrictive financial covenants, the most restrictive of which include a maximum ratio of debt to earnings before interest, taxes, depreciation and amortization (“EBITDA”) and certain limitations on additional priority debt. If the Company does not maintain these and other required covenants, and a breach of such covenants is not cured timely or waived by the lenders, resulting in a default, the Company’s access to credit may be limited or terminated, dividends may be suspended, and the lenders could declare any outstanding amounts due and payable. The Company’s continued ability to borrow under its credit facilities is subject to compliance with these financial and other non-financial covenants.
The Company’s effective income tax rate may vary.
Various internal and external factors may have favorable or unfavorable material or immaterial effects on the Company’s effective income tax rate and, therefore, impact the Company’s net income and earnings per share. These factors include, but are not limited to changes in tax rates; changes in tax laws, regulations, and rulings; changes in interpretations of existing tax laws, regulations and rulings; changes in the evaluation of the Company’s ability to realize deferred tax assets, and changes in uncertain tax positions; changes in accounting principles; changes in current pre-tax income as well as changes in forecasted pre-tax income; changes in the level of CCF deductions, non-deductible expenses, and expenses eligible for tax credits; changes in the mix of earnings among countries with varying tax rates; changes to the allowable amounts of foreign-derived deduction eligible income; and changes in the Company’s corporate structure, including potential acquisitions. These factors may result in periodic revisions to the Company’s effective income tax rate, which could affect the Company’s financial condition, results of operations and cash flow.
Changes in the value of pension assets, or a change in pension law or key assumptions, may adversely affect the Company’s financial performance.
The amount of the Company’s employee pension and post-retirement benefit costs and obligations is calculated on assumptions used in the relevant actuarial calculations. Adverse changes in any of these assumptions due to economic or other factors, changes in discount rates, higher health care costs, or lower actual or expected returns on plan assets, may adversely affect the Company’s financial condition, results of operations and cash flow. In addition, a change in federal law, including changes to the Employee Retirement Income Security Act or Pension Benefit Guaranty Corporation premiums, may adversely affect the Company’s single-employer and multi-employer pension plans and plan funding. These factors, as well as a decline in the fair value of pension plan assets, may put upward pressure on the cost of providing pension and medical benefits and may increase future pension expense and required funding contributions. There can be no assurance that the Company will be successful in limiting future cost and expense increases, and continued upward pressure in costs and expenses could further reduce the profitability of the Company’s businesses.
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The Company may have exposure under its multi-employer pension and post-retirement plans in which it participates that extends beyond its funding obligation with respect to the Company’s employees.
The Company contributes to various multi-employer pension plans. In the event of a partial or complete withdrawal by the Company from any plan that is underfunded, the Company would be liable for a proportionate share of such plan’s unfunded vested benefits (see Note 11 to the Consolidated Financial Statements in Item 8 of Part II of this Annual Report). Based on the limited information available from plan administrators, which the Company cannot independently validate, the Company believes that its portion of the contingent liability in the case of a full withdrawal or termination may be material to its financial condition, results of operations and cash flow. If any other contributing employer withdraws from any plan that is underfunded, and such employer (or any member of its controlled group) cannot satisfy its obligations under the plan at the time of withdrawal, then the Company, along with the other remaining contributing employers, would be liable for its proportionate share of such plan’s unfunded vested benefits. In addition, if any of the multi-employer plans to which the Company contributes fails to satisfy the minimum funding requirements, the Internal Revenue Service will impose certain penalties and taxes on the Company and other contributing employers.
Risks Related to Legal, Regulatory and Compliance Matters
As an ocean transportation and logistics services company, the Company is subject to numerous safety, environmental, and other laws and regulations that impact the Company’s operations, are costly to comply with and expose the Company to liability.
The Company, including its vessels and terminals, is subject to numerous federal, state and local laws and regulations, including those related to safety, cabotage, equipment standards and government rates. In addition, the Company is subject to environmental laws and regulations, including those relating to air quality initiatives at port locations; air emissions; use of shore power at California ports; wastewater discharges; management of storm water; the storage, transportation, handling, emission and disposal of solid and hazardous materials, oil and oil related products, hazardous substances and wastes; the investigation and remediation of contamination and liability for damages to the environment; health, safety and the protection of the environment and natural resources; and climate change, including any regulations, mandates or restrictions related to GHG emissions, such as a potential carbon tax, and energy use. Any changes in applicable laws and regulations, including their enforcement, interpretation or implementation that result in more stringent requirements than currently anticipated, as well as any new laws and regulations that are adopted could impose significant additional costs and limitations on the Company’s ability to operate. Mitigation strategies or contingency plans to remain in compliance with applicable laws and regulations may be unsuccessful, result in additional costs or experience delays. Such costs may not be recoverable through increased payments from customers. For a discussion of specific laws and regulations, see Part I, Item 1 of this Annual Report.
Federal, state and local laws and regulations require us to obtain certificates of financial responsibility and to adopt procedures for oil and hazardous substance spill prevention, response and clean up, among other requirements impacting the Company’s business. In complying with applicable laws and regulations, the Company has incurred expenses and may incur material future costs and expenses related to vessel and equipment modifications, new equipment, higher-priced fuel, changes in operating practices and procedures, tracking emissions, changing routes, adopting or modifying energy sources and undergoing additional oversight inspections, all of which could adversely affect the Company’s financial condition, results of operations and cash flow. For example, Matson’s vessels operate within emissions control areas, and the Company’s U.S. flagged vessels generally must be maintained “in class” and are subject to periodic inspections by the American Bureau of Shipping or similar classification societies. They also must be periodically inspected by, or on behalf of, the United States Coast Guard. The Company’s vessels’ operating certificates and licenses are renewed periodically during the required annual surveys of the vessels, but there is no assurance that the Company’s programs and policies will be sufficient to have such certificates and licenses renewed. The EPA also requires vessels to obtain coverage under a general permit and to comply with inspection, monitoring, discharge, recordkeeping and reporting requirements.
These laws and regulations provide for substantial fines, sanctions, as well as criminal and civil penalties and significant environmental liabilities, in the event of any violations of, or non-compliance with, their requirements (including any waivers, permits or recordkeeping and other reporting requirements). Any vessel-generated pollution from incidents in U.S. waters within three nautical miles, and in some cases, within the 200-mile exclusive economic zone, for example, could expose us to such fines or penalties.
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The Company is subject to, and may in the future be subject to, disputes, legal or other proceedings, and government inquiries or investigations that could have an adverse effect on the Company.
The nature of the Company’s business exposes it to the potential for disputes, legal or other proceedings, and government inquiries or investigations relating to antitrust matters, labor and employment matters, personal injury, loss of life and property damage, environmental, shore power and other matters, as discussed in the other risk factors disclosed in this section or in other Company filings with the SEC. For example, Matson is a common carrier, whose tariffs, rates, rules and practices in dealing with its customers are governed by extensive and complex foreign, federal, state and local regulations, which may be the subject of disputes or administrative or judicial proceedings. If these disputes develop into proceedings, these proceedings, individually or collectively, could involve or result in significant expenditures or losses by the Company, or result in significant changes to Matson’s tariffs, rates, rules and practices in dealing with its customers.
OVERVIEW
Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is designed to provide a discussion of the Company’s financial condition, results of operations, liquidity and certain other factors that may affect its future results from the perspective of management. The discussion that follows is intended to provide information that assists in understanding the changes in the Company’s Consolidated Financial Statements from year to year, the primary factors that accounted for those changes, and how certain accounting principles, policies and estimates affected the Company’s Consolidated Financial Statements. The MD&A is provided as a supplement to the Consolidated Financial Statements and the accompanying notes to the Consolidated Financial Statements in Item 8 of Part II below, and should be read in conjunction with the entirety of the Company’s Annual Report on Form 10-K and other reports on Forms 10-Q and 8-K, and other publicly available information. Discussion and analysis of the financial condition and results of operations of Matson for the year ended December 31, 2024 compared with the year ended December 31, 2023 can be found in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 28, 2025 .
The MD&A is presented in the following sections:
Historical Financial Information
Fourth Quarter 2025 Discussion and Outlook for 2026
Consolidated Results of Operations
Analysis of Operating Revenue and Income by Segment
Liquidity and Capital Resources
Commitments, Contingencies and Off-Balance Sheet Arrangements
Critical Accounting Estimates
Other Matters
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HISTORICAL FINANCIAL INFORMATION
The comparative selected financial information of the Company is presented for each of the past five years ended December 31, 2025. The information should be read in conjunction with Item 8, “Financial Statements and Supplementary Data.” All fiscal years include 52 weeks, except for the year ended December 31, 2021 which includes 53 weeks (a description of the Company’s fiscal year is included in Note 2 to the Consolidated Financial Statements in Item 8 of Part II below):
Total Debt (before deferred loan fees deduction) (4)
Total Shareholders’ equity
Shares outstanding
The Ocean Transportation segment includes $32.5 million, $(1.0) million, $2.2 million, $83.1 million and $56.3 million of equity in income/(loss) from the Company’s investment in SSAT for 2025, 2024, 2023, 2022 and 2021, respectively.
Capital expenditures represent amounts included in cash flows from investing activities in the Company’s Consolidated Statements of Cash Flows for the years presented.
The Company’s Capital Construction Fund is described in Note 7 to the Consolidated Financial Statements in Item 8 of Part II.
The Company’s debt is described in Note 8 to the Consolidated Financial Statements in Item 8 of Part II.
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FOURTH QUARTER 2025 DISCUSSION AND OUTLOOK FOR 2026
Ocean Transportation: The Company’s container volume in the Hawaii service in the fourth quarter 2025 was 0.6 percent higher year-over-year primarily due to higher general demand. Hawaii’s economy remains sluggish as softer tourism and ongoing inflationary pressures, including elevated interest rates, more than offset strength in construction activity. The Company expects volume in full year 2026 to be comparable to the level achieved in 2025, reflecting similar economic conditions and stable market share.
In China, the Company’s container volume in the fourth quarter 2025 decreased 7.2 percent year-over-year. The Company saw higher than expected freight rates and volume driven by strong e-commerce and e-goods demand. The Company benefited from strong freight demand in its key customer segments as well as a more stable trading environment in the Transpacific tradelane as a result of the U.S.-China trade and economic deal announced on October 30, 2025, which reduced uncertainty regarding tariffs, port entry fees, global trade and other geopolitical factors. In the first quarter 2026, the Company expects lower volume compared to the prior year period. The Company expects volume in full year 2026 to be modestly higher than the level achieved in 2025 based on our expectations of continued solid U.S. consumer demand and a stable trading environment in the Transpacific tradelane.
In Guam, the Company’s container volume in the fourth quarter 2025 increased 4.4 percent year-over-year primarily due to higher general demand. In the near term, the Company expects Guam’s economy to moderate reflecting a challenging tourism environment. For full year 2026, the Company expects volume to be comparable to the level achieved last year.
In Alaska, the Company’s container volume for the fourth quarter 2025 decreased 3.3 percent year-over-year. The decrease was primarily due to one less northbound sailing compared to the year ago period, partially offset by higher export seafood volume on AAX. In the near term, the Company expects continued economic growth in Alaska supported by a low unemployment rate, jobs growth and continued oil and gas exploration and production activity. For full year 2026, the Company expects volume to be comparable to the level achieved last year.
The contribution in the fourth quarter 2025 from the Company’s SSAT joint venture investment was $9.3 million, or $18.8 million higher than fourth quarter 2024. The increase was primarily due to an impairment charge related to the write-down of a terminal operating lease asset at SSAT which impacted fourth quarter 2024 operating income, net income and diluted earnings per share by $18.4 million, $14.0 million and $0.42 per share, respectively. For full year 2026, the Company expects the contribution from SSAT to be comparable to the $32.5 million achieved in full year 2025.
Based on the outlook trends noted above, the Company expects Ocean Transportation operating income for the first quarter 2026 to be approximately $50 million. For full year 2026, the Company expects Ocean Transportation operating income to approach the level achieved in full year 2025 . For 2026 compared to 2025, the Company also expects to see a more normal operating income seasonality pattern with second and third quarters being the strongest relative to the first and fourth quarters.
Logistics: In the fourth quarter 2025, operating income for the Company’s Logistics segment was $7.7 million, or $2.4 million lower compared to the level achieved in the fourth quarter 2024. The decrease was primarily due to a lower contribution from supply chain management. For the first quarter 2026, the Company expects Logistics operating income to be modestly lower than the $8.5 million achieved in the first quarter 2025. For full year 2026, the Company expects Logistics operating income to approach the $44.2 million achieved in full year 2025.
Consolidated Operating Income: For the first quarter 2026, the Company expects consolidated operating income to be lower than the $82.1 million achieved in the first quarter 2025. For full year 2026, the Company expects consolidated operating income to approach the level achieved in full year 2025 based on our expectations of continued solid U.S. consumer demand and a stable trading environment.
Depreciation and Amortization: For full year 2026, the Company expects depreciation and amortization expense to be approximately $210 million, inclusive of dry-docking amortization of approximately $35 million.
Interest Income: The Company expects interest income for the full year 2026 to be approximately $15 million.
Interest Expense: The Company expects interest expense for the full year 2026 to be approximately $6 million.
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Other Income (Expense): The Company expects full year 2026 other income (expense) to be approximately $7 million in income, which is attributable to the amortization of certain components of net periodic benefit costs or gains related to the Company’s pension and post-retirement plans.
Income Taxes: In the fourth quarter 2025, the Company’s effective tax rate was 5.2 percent and benefited from a one-time tax adjustment of $18.5 million, or $0.59 per share, related to the Company’s deferred tax assets and liabilities. For the full year 2025, the Company’s effective tax rate was 16.7 percent. For the full year 2026, the Company expects its effective tax rate to be approximately 21.0 percent.
Capital and Vessel Dry-docking Expenditures: For the full year 2025, the Company made capital expenditure payments excluding new vessel construction expenditures of $149.1 million, new vessel construction expenditures (including capitalized interest and owner’s items) of $244.3 million, and dry-docking payments of $49.4 million. For the full year 2026, the Company expects to make other capital expenditure payments, including maintenance capital expenditures, of approximately $150 to $170 million, new vessel construction expenditures (including capitalized interest and owner’s items) of approximately $425 million, and dry-docking payments of approximately $45 million.
CONSOLIDATED RESULTS OF OPERATIONS
The following analysis of the financial results of operations of Matson for the years ended December 31, 2025 and 2024 should be read in conjunction with the Consolidated Financial Statements in Item 8 of Part II below.
Consolidated Results: 2025 compared with 2024:
Years Ended December 31,
(Dollars in millions, except per share amounts)
Change
Operating revenue
Operating costs and expenses
Operating income
Interest income
Interest expense
Other income (expense), net
Income before taxes
Income taxes
Net income
Basic earnings per share
Diluted earnings per share
Fiscal Year: Fiscal years ended December 31, 2025 and 2024 include 52 weeks.
Consolidated Operating Revenue for the year ended December 31, 2025 decreased $77.3 million, or 2.3 percent, compared to the prior year. The decrease was due to a decrease in Ocean Transportation revenue of $74.2 million and a decrease in Logistics revenue of $3.1 million.
Operating Costs and Expenses for the year ended December 31, 2025 decreased $25.8 million, or 0.9 percent, compared to the prior year. The decrease was due to a decrease in Ocean Transportation operating costs and expenses of $28.9 million which was partially offset by an increase in Logistics operating costs and expenses of $3.1 million.
Operating Income for the year ended December 31, 2025 decreased $51.5 million, or 9.3 percent, compared to the prior year. The decrease was due to a decrease in Ocean Transportation operating income of $45.3 million and a decrease in Logistics operating income of $6.2 million.
The reasons for changes in operating revenue, operating costs and expenses, and operating income are described below, by business segment, in “Analysis of Operating Revenue and Income by Segment.”
Interest Income was $31.7 million for the year ended December 31, 2025, compared to $48.3 million in the prior year. The interest income for the year ended December 31, 2024 included interest of $10.2 million earned on a federal income tax refund. Excluding that amount, the decrease in interest income was due to a decreased amount of cash and cash
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equivalent accounts, and cash on deposit and investments within the CCF that were invested in interest bearing accounts during the year ended December 31, 2025, compared to the prior year.
Interest Expense was $6.8 million for the year ended December 31, 2025, compared to $7.5 million in the prior year. The decrease in interest expense was due to lower outstanding debt, offset by capitalized interest related to the construction of new vessels during the year ended December 31, 2025, compared to the prior year.
Other Income (Expense), net was $9.1 million for the year ended December 31, 2025, compared to $7.3 million in the prior year, and relates to the amortization of certain components of net periodic benefit costs or gains related to the Company’s pension and post-retirement plans. The increase in other income (expense) was due to an increase in the amortization of favorable adjustments reflected in the Company’s pension and post-retirement plan liabilities.
Income Taxes for the year ended December 31, 2025 were $89.0 million, or 16.7 percent of income before income taxes, compared to $123.0 million, or 20.5 percent of income before income taxes in the prior year. The effective tax rate for the year ended December 31, 2025 benefited from a one-time adjustment of $18.5 million or 3.5 percent related to the Company’s deferred tax assets and liabilities. Excluding this adjustment, the effective tax rate for the year ended December 31, 2025 would have been 20.1 percent.
Net Income during the year ended December 31, 2025 decreased $31.6 million, or 6.6 percent, to $444.8 million, compared to the prior year.
ANALYSIS OF OPERATING REVENUE AND INCOME BY SEGMENT
The following analysis of operating revenue and income by segment for the years ended December 31, 2025 and 2024 should be read in conjunction with the Company’s reportable segments information included in Note 3 to the Consolidated Financial Statements in Item 8 of Part II.
Ocean Transportation: 2025 compared with 2024:
Years Ended December 31,
(Dollars in millions)
Change
Ocean Transportation revenue
Operating costs and expenses
Operating income
Operating income margin
Volume (Forty-foot equivalent units (FEU)) (1)
Hawaii containers
Alaska containers
China containers (2)
Guam containers
Other containers (3)
Approximate volume included for the period are based on the voyage departure date, but revenue and operating income are adjusted to reflect the percentage of revenue and operating income earned during the reporting period for voyages in transit at the end of each reporting period.
Includes containers from China and other Asia origins.
Includes containers from services in various islands in Micronesia and the South Pacific, and Okinawa, Japan.
Ocean Transportation revenue decreased $74.2 million, or 2.6 percent, during the year ended December 31, 2025, compared with the year ended December 31, 2024. The decrease was primarily due to lower volume in China.
On a year-over-year FEU basis, Hawaii container volume increased 1.6 percent primarily due to higher general demand and the dry-docking of a competitor’s vessel in the first half of 2025; Alaska volume increased 1.7 percent primarily due to higher export seafood volume on AAX, partially offset by one less northbound sailing; China volume decreased 9.5 percent primarily due to the difficult trading environment in the Transpacific in the last three quarters of 2025 marked by continued uncertainty and volatility arising from tariffs and global trade; Guam volume decreased 4.3 percent primarily due to lower general demand; and Other containers volume increased 1.2 percent.
Ocean Transportation operating income decreased $45.3 million, or 9.0 percent, during the year ended December 31, 2025, compared with the year ended December 31, 2024. The decrease was primarily due to a lower contribution from China, partially offset by a higher contribution from SSAT.
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The Company’s SSAT terminal joint venture investment contributed $32.5 million during the year ended December 31, 2025, compared to a loss of $1.0 million during the year ended December 31, 2024. The increase was primarily due to an impairment charge related to the write-down of a terminal operating lease asset at SSAT in the year ago period which impacted operating income by $18.4 million and higher lift volume.
Logistics: 2025 compared with 2024:
Years Ended December 31,
(Dollars in millions)
Change
Logistics revenue
Operating costs and expenses
Operating income
Operating income margin
Logistics revenue decreased $3.1 million, or 0.5 percent, during the year ended December 31, 2025, compared with the year ended December 31, 2024. The decrease was primarily due to lower revenue in transportation brokerage and supply chain management, partially offset by higher revenue in freight forwarding.
Logistics operating income decreased $6.2 million, or 12.3 percent, during the year ended December 31, 2025, compared with the year ended December 31, 2024. The decrease was primarily due to lower contributions from freight forwarding and transportation brokerage.
LIQUIDITY AND CAPITAL RESOURCES
The Company’s primary sources of liquidity are its cash flows generated from operating activities and its debt. Sources of liquidity available to the Company as of December 31, 2025 compared to December 31, 2024, were as follows:
Cash and Cash Equivalents, Restricted Cash and Accounts Receivable : Cash and cash equivalents, restricted cash and accounts receivable, net as of December 31, 2025 and 2024 were as follows:
As of December 31,
(In millions)
Change
Cash and cash equivalents
Accounts receivable, net (1)
CCF - cash and cash equivalents, and investments account
Eligible accounts receivable of $82.3 million and $178.1 million at December 31, 2025 and 2024, respectively, were assigned to the CCF. For additional information on the CCF, see Note 7 to the Consolidated Financial Statements.
Changes in the Company’s cash and cash equivalents and restricted cash for the years ended December 31, 2025, 2024 and 2023 were as follows:
As of December 31,
Change
(In millions)
Net cash provided by operating activities (1)
Net cash used in investing activities (2)
Net cash used in financing activities (3)
Net (decrease) increase in cash, cash equivalents and restricted cash
Cash and cash equivalents, and restricted cash, beginning of the period
Cash and cash equivalents, and restricted cash, end of the period
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Changes in Net Cash Provided by Operating Activities: Changes in net cash provided by operating activities for the years ended December 31, 2025, 2024 and 2023 were as follows:
Change
(In millions)
Net income
Non-cash depreciation and amortization
Deferred income taxes, net
Other non-cash related changes, net
Income and distribution from SSAT, net
Accounts receivable, net
Prepaid expenses and other assets
Accounts payable, accruals and other liabilities
Operating lease assets and liabilities, net
Non-cash amortization of operating lease right-of-use assets
Deferred dry-docking payments
Non-cash deferred dry-docking amortization
Other long-term liabilities
Total
Income from SSAT was $32.5 million for the year ended December 31, 2025, compared to a loss from SSAT of $1.0 million in the prior year, which included the Company’s portion of an impairment charge of $18.4 million related to the write-down of a terminal operating lease asset. Excluding this impairment charge, the increase in income from SSAT was due to higher operating profits generated by SSAT during the year ended December 31, 2025 due to increased lift volume. No impairment charge was recorded by SSAT during the year ended December 31, 2025. Cash dividends received from SSAT was $21.0 million for the year ended December 31, 2025, compared to $14.0 million in the prior year. Cash distributions from SSAT are dependent on the level of cash available for distribution after consideration of SSAT’s operational and capital needs. Changes in accounts receivable were primarily due to the timing of collections associated with those receivables. Changes in prepaid expenses and other assets were primarily due to a decrease in prepaid income tax receivables at December 31, 2024 due to a refund of $118.6 million related to the Company’s 2021 federal tax return that was received during the year ended December 31, 2024. Changes in accounts payable, accruals and other liabilities were primarily due to the timing of payments associated with those liabilities. Changes in operating lease assets and liabilities, net, were primarily due to new operating leases entered into during the year ended December 31, 2025, offset by lease payments and operating leases that expired during the same year. Deferred dry-docking payments were $49.4 million for the year ended December 31, 2025, compared to $30.2 million in the prior year. The increase in deferred dry-docking payments was due to an increase in vessel drydock related activities during the year ended December 31, 2025. Changes in other long-term liabilities primarily related to payments of pension and post-retirement liabilities, and multi-employer liabilities.
Changes in Net Cash Used in Investing Activities: Changes in net cash used in investing activities for the years ended December 31, 2025, 2024 and 2023 were as follows:
Change
(In millions)
Cash deposits and interest into the CCF
Withdrawals from CCF
Vessel construction expenditures
Capital expenditures (excluding vessel construction expenditures)
Proceeds from disposal of property and equipment, net, and other
Payments for asset acquisitions
Total
During the year ended December 31, 2025, cash deposits into the CCF included $100.7 million from the repurchase of assigned accounts receivables and $17.9 million of interest income, compared to $50.0 million of cash deposits, $53.8 million from the repurchase of assigned accounts receivable and $16.9 million of interest income in the prior year, respectively. During the year ended December 31, 2025, cash withdrawals from the CCF for the payment of vessel construction milestone payments were $237.3 million, compared to $89.6 million in the prior year. Capitalized vessel construction expenditures were $244.3 million for the year ended December 31, 2025, compared to $95.6 million in the prior year. The increase in capitalized vessel construction expenditures was due to the timing of milestone payments related to the Company’s fleet renewal program. Capital expenditures (excluding vessel construction expenditures) were
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$149.1 million for the year ended December 31, 2025, compared to $214.5 million for the prior year. Capital expenditures for the year ended December 31, 2024 included costs associated with LNG installations and the reengining of an existing vessel, which were completed during that year. No comparable costs were incurred during the year ended December 31, 2025. Capital expenditures (excluding vessel construction expenditures) during the year ended December 31, 2025 included the purchase of containers, chassis and other terminal equipment to support the Company’s operating activities.
Changes in Net Cash Used in Financing Activities: Changes in net cash used in financing activities for the years ended December 31, 2025, 2024 and 2023 were as follows:
Change
(In millions)
Repurchase of Matson common stock
Repayments of fixed interest debt
Shares withheld for taxes related to settlement of restricted stock units
Dividends paid
Payments of deferred loan fees
Total
The Company paid $303.3 million to repurchase common stock during the year ended December 31, 2025, compared to $199.1 million in the prior year. The Company did not issue any new fixed interest debt during the years ended December 31, 2025 and 2024. The Company paid $39.7 million of scheduled fixed interest debt principal payments in each of the years ended December 31, 2025 and 2024. The value of shares withheld by the Company for taxes related to the settlement of restricted stock units was $16.4 million for the year ended December 31, 2025, compared to $17.6 million in the prior year.
Capital Construction Fund: The Company utilizes its CCF to fund milestone payments for the construction of new vessels. The Company’s CCF is described in Note 7 to the Consolidated Financial Statements. Cash on deposit and investments in the CCF as of December 31, 2025 and 2024 were as follows:
As of December 31,
(In millions)
Capital Construction Fund - Cash and cash equivalents, and investments account
Cash on deposit in the CCF is invested in a U.S. Treasury obligations fund with daily liquidity. The CCF decreased by $109.9 million during the year ended December 31, 2025 due to vessel milestone payments of $237.3 million paid during the year ended December 31, 2025, offset by $100.7 million of cash deposited into the CCF for the repurchase of assigned accounts receivable, and interest income and investment accretion earned in the CCF.
Debt: The Company utilizes a mix of fixed and variable debt for liquidity and to fund the Company’s operations. The Company’s debt is described in Note 8 to the Consolidated Financial Statements in Item 8 of Part II. Total debt as of December 31, 2025 and 2024 is as follows:
Fixed interest debt - Title XI debt and private placement term loans
Total Debt (excluding deferred loan fees)
Total debt decreased by $39.7 million during the year ended December 31, 2025 compared to the prior year. The decrease in fixed interest debt was due to the scheduled debt repayments made during the year ended December 31, 2025. As of December 31, 2025, the Company had $544.3 million of unused capacity under the revolving credit facility, with a maturity date of July 23, 2030.
Working Capital: The Company had a working capital deficit of $55.5 million at December 31, 2025, compared to a working capital surplus of $49.2 million at December 31, 2024. Working capital is primarily impacted by the amount of net cash provided by operating activities, the amount of capital expenditures, the amount and timing of collections associated with accounts receivable, prepaid expenses and other assets, and the amount and timing of payments associated with accounts payable, accruals, income taxes, debt and other liabilities. The decrease in the Company’s working capital during the year ended December 31, 2025 was due to a decrease in cash provided by operating activities and higher capital expenditures during the year.
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Capital Expenditures: The Company expects to make the following capital expenditures during the years ending December 31, 2026, 2027 and 2028:
(In millions)
New vessel construction milestone payments and related costs, owner’s items and change orders
Maintenance and other capital expenditures
Total Estimated Capital Expenditures
New vessel construction milestone payments and related costs (including owner’s items and change orders) are for the Company’s construction of three new Aloha class vessels with expected delivery dates during the first quarter 2027, the third quarter 2027 and the second quarter 2028. Future construction milestone payments are expected to be financed with cash currently on deposit in the Company’s CCF, cash and cash equivalents on the Consolidated Balance Sheets, cash flows generated from future operations, borrowings available under the Company’s unsecured revolving credit facility or additional debt financings.
Maintenance and other capital expenditures include amounts that the Company expects to spend on various capital projects, including capital expenditures related to the second and third phase of its program to modernize and renovate its terminal facility at Sand Island, Honolulu, Hawaii, repurchases of leased equipment, vessel capital maintenance and annual equipment purchases to support the Company’s operations. The Company expects to fund capital expenditures with cash and cash equivalents on the Consolidated Balance Sheets and through cash flows generated from future operating activities.
Repurchase of Shares: During the year ended December 31, 2025, the Company repurchased approximately 2.7 million shares for a total cost of $307.4 million. The remaining number of shares that may be repurchased under the Company’s stock repurchase program was approximately 1.1 million shares at December 31, 2025.
COMMITMENTS, CONTINGENCIES AND OFF-BALANCE SHEET ARRANGEMENTS
Commitments and Contingencies: A description of other commitments and contingencies is set forth in Note 9, Note 11 and Note 17 to the Consolidated Financial Statements in Item 8 of Part II below, and is incorporated herein by reference.
Off-balance Sheet Arrangements: The Company is not currently party to any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on the Company’s financial condition, results of operations or cash flows.
CRITICAL ACCOUNTING ESTIMATES
The Company’s significant accounting policies are described in Note 2 to the Consolidated Financial Statements in Item 8 of Part II below. The preparation of Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States of America, upon which the Company’s Management Discussion and Analysis of Financial Condition and Results of Operations is based, requires that management exercise judgment in making accounting estimates about future events that may affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Future events and their effects cannot be determined with certainty and actual results will, inevitably, differ from those accounting estimates. These differences could be material.
The Company considers an accounting estimate to be critical if (i)(a) the accounting estimate requires the Company to make assumptions that are difficult or subjective about matters that were highly uncertain at the time that the accounting estimate was made, (b) changes in the estimate are reasonably likely to occur in periods after the period in which the estimate was made, or (c) the Company could have used different estimates; and (ii) changes in those accounting estimates would have had a material impact on the financial condition or results of operations of the Company. The critical accounting policies and estimates considered in the preparation of the Company’s Consolidated Financial Statements are described below.
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Long-Lived Assets, Intangible Assets and Goodwill: The Company evaluates its long-lived assets, intangible assets and goodwill for possible impairment in the fourth quarter, or whenever events or changes in circumstances indicate that it is more likely than not that the fair value is less than its carrying amount. The Company has reporting units within the Ocean Transportation and Logistics reportable segments.
Long-lived Assets and Finite-lived Intangible Assets: Long-lived assets and finite-lived intangible assets are grouped at the lowest level for which identifiable cash flows are available. In evaluating for impairment, the estimated future undiscounted cash flows generated by each of these asset groups are compared with the carrying value recorded for each asset group to determine if its carrying value is recoverable. If this review determines that the amount recorded will not be recovered, the amount recorded for the asset group is reduced to its estimated fair value. These asset impairment analyses are highly subjective because they require management to make assumptions and apply considerable judgments to, among other things, estimates of the timing and amount of future cash flows, expected useful lives of the assets, potential impact of future events, including changes in economic conditions and operating performance, and future costs of maintenance and improvements of the assets. If management uses different assumptions or if different conditions occur in future periods, the Company’s financial condition or its future operating results could be materially impacted. The Company has evaluated its long-lived assets and finite-lived intangible assets for impairment and determined that there was no impairment for the years ended December 31, 2025, 2024, and 2023.
Indefinite-life Intangible Assets and Goodwill: The Company’s indefinite-life intangible assets include goodwill and a trade name, and are grouped at the lowest level reporting unit for which identifiable cash flows are available. In estimating the fair value of a reporting unit, the Company uses a combination of a discounted cash flow model and fair value based on market multiples of EBITDA. The discounted cash flow approach requires the Company to use a number of assumptions, including market factors specific to the business, the amount and timing of estimated future cash flows generated by the business over an extended period of time, long-term growth rates for the business, and a discount rate that considers the risks related to the amount and timing of the cash flows. Although the assumptions used by the Company in its discounted cash flow model are consistent with the assumptions the Company used to generate its internal strategic plans and forecasts, significant judgment is required to estimate the amount and timing of future cash flows from the reporting unit and the risk of achieving those cash flows. When using market multiples of EBITDA, the Company makes judgments about the comparability of multiples in closed and proposed transactions. Accordingly, changes in assumptions and estimates, including, but not limited to, changes driven by external factors, such as industry and economic trends, and those driven by internal factors, such as changes in the Company’s business strategy and its internal forecasts, could have a material effect on the Company’s financial condition or its future operating results. The Company has evaluated its indefinite-life intangible assets and goodwill for impairment and determined that there was no impairment for the years ended December 31, 2025, 2024, and 2023.
Insurance Related Liabilities: The Company purchases insurance with deductibles or self-insured retentions to mitigate significant risks that it is exposed to. Such insurance includes, but is not limited to, employee health, workers’ compensation, marine liability, cybersecurity, auto liability and physical damage to property and equipment. For certain risks, the Company elects to not purchase insurance because of the excessive cost of such insurance, the perceived remoteness of the risk or insurance coverage is not commercially available. The Company retains the risk of loss for insurance deductibles and self-insured retentions, for amounts that exceed the limits of the Company’s insurance policies, and for other risks not covered by insurance.
When estimating its reserves for retained risks and related liabilities, the Company considers a number of factors, including historical claims experience, demographic factors, current trends, and analyses provided by independent third parties. Periodically, management reviews its assumptions and estimates used to determine the adequacy of the Company’s reserves for retained risks and other related liabilities. The Company’s retained risks and other related liabilities contain uncertainties because management is required to apply judgment and make long-term assumptions to estimate the ultimate cost to settle reported claims, and of claims incurred but not reported, as of the balance sheet date. Insurance related liabilities were $43.1 million and $52.8 million at December 31, 2025 and 2024, respectively. The Company’s estimate of insurance related liabilities could change if management uses different assumptions or if different conditions occur in future periods, however the Company does not expect any such change would have a material impact on the Company’s financial condition, results of operations or cash flows.
Pension and Post-Retirement Plans: The estimation of the Company’s pension and post-retirement benefit expenses and liabilities requires the Company to make various assumptions. These assumptions include factors such as discount rates, expected long-term rate of return on pension plan assets, salary growth, health care cost trend rates, inflation, retirement rates, mortality rates and expected contributions. Actual results that differ from the assumptions made could
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materially affect the Company’s financial condition or its future operating results. The effects of changing assumptions are included in unamortized net gains and losses, which directly affect accumulated other comprehensive income (loss). Additionally, these unamortized gains and losses are amortized and reclassified to income (loss) over future periods.
Additional information about the Company’s pension and post-retirement plans and assumptions used is included in Note 11 to the Consolidated Financial Statements in Item 8 of Part II below.
Income Taxes: The Company’s income tax expense requires the Company to make various judgments and estimates. These judgments and estimates are applied in the calculation of taxable income, tax credits, tax benefits, CCF related tax deductions, foreign-derived deduction eligible income and other tax deductions, and in the calculation of certain deferred tax assets and liabilities, which arise from differences in the timing of recognition of revenue, costs and expenses for tax purposes. The calculation of deferred tax assets and liabilities may be impacted by various factors including but not limited to changes in tax rates; changes in tax laws, regulations, rulings and interpretations of existing tax laws; and changes in the evaluation of the Company’s ability to realize deferred tax assets including operating loss and tax credit carryforwards in future years. Significant changes to these judgments and estimates may result in an increase or decrease to the Company’s income taxes in a subsequent period.
Additional information about the Company’s income taxes is included in Note 10 to the Consolidated Financial Statements in Item 8 of Part II below.
OTHER MATTERS
New Accounting Pronouncements: See Note 2 to the Consolidated Financial Statements in Item 8 of Part II below for additional information on new accounting pronouncements.
