SEC Filing | MATSON

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-34187

Matson, Inc.

(Exact name of registrant as specified in its charter)


Hawaii	99-0032630
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1411 Sand Island Parkway Honolulu, HI (Address of principal executive offices)	96819 (Zip Code)

(808) 848-1211

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address, and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, without par value	MATX	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ☒	Accelerated filer ☐

Non-accelerated filer ☐	Smaller reporting company ☐

	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Number of shares of common stock outstanding as of March 31, 2021: 43,435,607

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MATSON, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

		Page
Part I—FINANCIAL INFORMATION		1

Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Statements of Income and Comprehensive Income	1
	Condensed Consolidated Balance Sheets	2
	Condensed Consolidated Statements of Cash Flows	3
	Condensed Consolidated Statements of Shareholders’ Equity	4
	Notes to the Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	19
Item 4.	Controls and Procedures	19

Part II—OTHER INFORMATION		20

Item 1.	Legal Proceedings	20
Item 1A.	Risk Factors	20
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	20
Item 3.	Defaults Upon Senior Securities	20
Item 4.	Mine Safety Disclosures	20
Item 5.	Other Information	20
Item 6.	Exhibits	21
	Signatures	22

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

MATSON, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income and Comprehensive Income

(Unaudited)


	Three Months Ended
	March 31,
(In millions, except per share amounts)	2021		2020
Operating Revenue:
Ocean Transportation	$	560.5	$	400.9
Logistics		151.3		113.0
Total Operating Revenue		711.8		513.9

Costs and Expenses:
Operating costs		(544.7)		(448.3)
Income from SSAT		9.2		4.0
Selling, general and administrative		(56.1)		(56.6)
Total Costs and Expenses		(591.6)		(500.9)

Operating Income		120.2		13.0
Interest expense		(7.3)		(8.6)
Other income (expense), net		1.4		0.6
Income before Income Taxes		114.3		5.0
Income taxes		(27.1)		(1.2)
Net Income	$	87.2	$	3.8

Other Comprehensive Income (Loss), Net of Income Taxes:
Net Income	$	87.2	$	3.8
Other Comprehensive Income (Loss):
Amortization of prior service cost		(1.1)		(1.2)
Amortization of net loss		1.2		1.3
Other adjustments		(0.2)		(0.7)
Total Other Comprehensive Income (Loss)		(0.1)		(0.6)
Comprehensive Income	$	87.1	$	3.2

Basic Earnings Per Share	$	2.01	$	0.09
Diluted Earnings Per Share	$	1.99	$	0.09

Weighted Average Number of Shares Outstanding:
Basic		43.4		43.0
Diluted		43.8		43.3

See Notes to Condensed Consolidated Financial Statements.

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MATSON, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Unaudited)


	March 31,		December 31,
(In millions)	2021		2020
ASSETS
Current Assets:
Cash and cash equivalents	$	11.8	$	14.4
Accounts receivable, net of allowance for credit loss of $6.5 million and $6.3 million, respectively		261.1		253.4
Prepaid expenses and other assets		41.0		38.1
Total current assets		313.9		305.9
Long-term Assets:
Investment in SSAT		47.5		48.7
Property and equipment, net		1,684.0		1,689.9
Operating lease right of use assets		279.0		251.4
Goodwill		327.8		327.8
Intangible assets, net		189.3		192.0
Deferred dry-docking costs, net		53.7		51.9
Other long-term assets		34.5		33.0
Total long-term assets		2,615.8		2,594.7
Total Assets	$	2,929.7	$	2,900.6

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Current portion of debt	$	59.2	$	59.2
Accounts payable and accruals		259.9		283.1
Operating lease liabilities		91.0		72.4
Other liabilities		109.0		96.8
Total current liabilities		519.1		511.5
Long-term Liabilities:
Long-term debt, net of deferred loan fees		624.3		685.6
Long-term operating lease liabilities		197.6		186.9
Deferred income taxes		396.1		389.6
Other long-term liabilities		163.7		165.8
Total long-term liabilities		1,381.7		1,427.9
Commitments and Contingencies
Shareholders’ Equity:
Common stock		32.6		32.4
Additional paid in capital		312.0		321.5
Accumulated other comprehensive loss, net		(50.9)		(50.8)
Retained earnings		735.2		658.1
Total shareholders’ equity		1,028.9		961.2
Total Liabilities and Shareholders’ Equity	$	2,929.7	$	2,900.6

See Notes to Condensed Consolidated Financial Statements.

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MATSON, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Three Months Ended March 31,
(In millions)	2021		2020
Cash Flows From Operating Activities:
Net income	$	87.2	$	3.8
Reconciling adjustments:
Depreciation and amortization		34.5		27.0
Amortization of operating lease right of use assets		23.9		17.4
Deferred income taxes		6.5		2.7
Share-based compensation expense		4.8		3.1
Income from SSAT		(9.2)		(4.0)
Distribution from SSAT		10.5		7.8
Other		(1.1)		(0.1)
Changes in assets and liabilities:
Accounts receivable, net		(7.7)		(12.9)
Deferred dry-docking payments		(9.5)		(2.6)
Deferred dry-docking amortization		6.6		6.1
Prepaid expenses and other assets		(4.8)		(0.2)
Accounts payable, accruals and other liabilities		5.6		38.9
Operating lease liabilities		(22.5)		(16.9)
Other long-term liabilities		(1.9)		(1.5)
Net cash provided by operating activities		122.9		68.6

Cash Flows From Investing Activities:
Capitalized vessel construction expenditures		—		(9.1)
Other capital expenditures		(38.5)		(26.1)
Proceeds from disposal of property and equipment		1.4		14.5
Cash deposits into Capital Construction Fund		—		(70.4)
Withdrawals from Capital Construction Fund		—		70.4
Net cash used in investing activities		(37.1)		(20.7)

Cash Flows From Financing Activities:
Repayments of debt		(14.4)		(11.4)
Proceeds from revolving credit facility		108.1		111.4
Repayments of revolving credit facility		(154.9)		(133.5)
Payment of financing costs		(3.0)		(3.1)
Dividends paid		(10.1)		(9.5)
Tax withholding related to net share settlements of restricted stock units		(14.1)		(4.5)
Net cash used in financing activities		(88.4)		(50.6)

Net Decrease in Cash, Cash Equivalents and Restricted Cash		(2.6)		(2.7)
Cash, Cash Equivalents and Restricted Cash, Beginning of the Period		19.7		28.4
Cash, Cash Equivalents and Restricted Cash, End of the Period	$	17.1	$	25.7

Reconciliation of Cash, Cash Equivalents and Restricted Cash, End of the Period:
Cash and Cash Equivalents	$	11.8	$	19.9
Restricted Cash		5.3		5.8
Total Cash, Cash Equivalents and Restricted Cash, End of the Period	$	17.1	$	25.7

Supplemental Cash Flow Information:
Interest paid, net of capitalized interest	$	5.7	$	8.6
Income tax (refunds) and payments, net	$	(0.4)	$	(0.3)

Non-cash Information:
Capital expenditures included in accounts payable, accruals and other liabilities	$	8.8	$	3.5

See Notes to Condensed Consolidated Financial Statements.

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MATSON, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Shareholders’ Equity

(Unaudited)


						Accumulated
	Common Stock			Additional		Other
		Stated		Paid In		Comprehensive		Retained
(In millions, except per share amounts)	Shares	Value		Capital		Income (Loss)		Earnings		Total
Balance at December 31, 2020	43.2	$	32.4	$	321.5	$	(50.8)	$	658.1	$	961.2
Net income	—		—		—		—		87.2		87.2
Other comprehensive loss, net of tax	—		—		—		(0.1)		—		(0.1)
Share-based compensation	—		—		4.8		—		—		4.8
Shares issued, net of shares withheld for employee taxes	0.2		0.2		(14.3)		—		—		(14.1)
Dividends ($0.23 per share)	—		—		—		—		(10.1)		(10.1)
Balance at March 31, 2021	43.4	$	32.6	$	312.0	$	(50.9)	$	735.2	$	1,028.9


						Accumulated
	Common Stock			Additional		Other
		Stated		Paid In		Comprehensive		Retained
(In millions, except per share amounts)	Shares	Value		Capital		Income (Loss)		Earnings		Total
Balance at December 31, 2019	42.9	$	32.2	$	306.2	$	(36.9)	$	504.2	$	805.7
Net income	—		—		—		—		3.8		3.8
Other comprehensive loss, net of tax	—		—		—		(0.6)		—		(0.6)
Share-based compensation	—		—		3.1		—		—		3.1
Shares issued, net of shares withheld for employee taxes	0.1		0.1		(4.6)		—		—		(4.5)
Equity interest in SSAT	—		—		—		—		2.2		2.2
Dividends ($0.22 per share)	—		—		—		—		(9.5)		(9.5)
Balance at March 31, 2020	43.0	$	32.3	$	304.7	$	(37.5)	$	500.7	$	800.2

See Notes to Condensed Consolidated Financial Statements.

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MATSON, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANICAL STATEMENTS

(Unaudited)

1. DESCRIPTION OF THE BUSINESS

Matson, Inc., a holding company incorporated in the State of Hawaii, and its subsidiaries (“Matson” or the “Company”), is a leading provider of ocean transportation and logistics services. The Company consists of two segments, Ocean Transportation and Logistics:

Ocean Transportation: Matson’s Ocean Transportation business is conducted through Matson Navigation Company, Inc. (“MatNav”), a wholly-owned subsidiary of Matson, Inc. Founded in 1882, MatNav provides a vital lifeline of ocean freight transportation services to the domestic non-contiguous economies of Hawaii, Alaska and Guam, and to other island economies in Micronesia. MatNav also operates two premium, expedited services from China to Long Beach, California, and provides services to Okinawa, Japan and various islands in the South Pacific, and operates an international export service from Dutch Harbor to Asia. In addition, subsidiaries of MatNav provide stevedoring, refrigerated cargo services, inland transportation and other terminal services for MatNav and other ocean carriers on the Hawaiian islands of Oahu, Hawaii, Maui and Kauai, and in the Alaska locations of Anchorage, Kodiak and Dutch Harbor.

Matson has a 35 percent ownership interest in SSA Terminals, LLC, a joint venture between Matson Ventures, Inc., a wholly-owned subsidiary of MatNav, and SSA Ventures, Inc., a subsidiary of Carrix, Inc. (“SSAT”). SSAT currently provides terminal and stevedoring services to various carriers at seven terminal facilities on the U.S. West Coast, including three facilities dedicated for MatNav’s use. Matson records its share of income from SSAT in costs and expenses in the Condensed Consolidated Statements of Income and Comprehensive Income, and within the Ocean Transportation segment due to the nature of SSAT’s operations.

Logistics: Matson’s Logistics business is conducted through Matson Logistics, Inc. (“Matson Logistics”), a wholly-owned subsidiary of MatNav. Established in 1987, Matson Logistics is an asset-light business that provides a variety of logistics services to its customers including: (i) multimodal transportation brokerage of domestic and international rail intermodal services, long-haul and regional highway trucking services, specialized hauling, flat-bed and project services, less-than-truckload services, and expedited freight services (collectively, “Transportation Brokerage” services); (ii) less-than-container load (“LCL”) consolidation and freight forwarding services (collectively, “Freight Forwarding” services); (iii) warehousing and distribution services; and (iv) supply chain management, non-vessel operating common carrier (“NVOCC”) freight forwarding and other services.

2. SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation: The Condensed Consolidated Financial Statements are unaudited, and include the accounts of Matson, Inc. and all wholly-owned subsidiaries, after elimination of intercompany amounts and transactions. Significant investments in businesses, partnerships, and limited liability companies in which the Company does not have a controlling financial interest, but has the ability to exercise significant influence, are accounted for under the equity method. The Company accounts for its investment in SSAT using the equity method of accounting.

Due to the nature of the Company’s operations, the results for interim periods are not necessarily indicative of results to be expected for the year. These Condensed Consolidated Financial Statements reflect all normal recurring adjustments that are, in the opinion of management, necessary for fair presentation of the results of the interim periods, and do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete consolidated financial statements.

The Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, filed with the Securities and Exchange Commission (“SEC”) on February 26, 2021.

Fiscal Period: The period end for Matson covered by this report is March 31, 2021. The period end for MatNav and its subsidiaries covered by this report occurred on the last Friday in March, or March 26, 2021.

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Significant Accounting Policies: The Company’s significant accounting policies are described in Note 2 to the Consolidated Financial Statements included in Part II, Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

Use of Estimates: The preparation of the interim condensed consolidated financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the amounts reported. Estimates and assumptions are used for, but not limited to: impairment of investments; impairment of long-lived assets, intangible assets and goodwill; capitalized interest; allowance for doubtful accounts; legal contingencies; insurance reserves and other related liabilities; accrual estimates; pension and post-retirement estimates; multi-employer withdrawal liabilities; operating lease assets and liabilities; and income taxes. Future results could be materially affected if actual results differ from these estimates and assumptions.

Recognition of Revenues and Expenses: Revenue in the Company’s Condensed Consolidated Financial Statements is presented net of elimination of intercompany transactions. The following is a description of the Company’s principal revenue generating activities by segment, and the Company’s revenue recognition policy for each activity for the periods presented:


	March 31,
Ocean Transportation (in millions) (1)	2021		2020
Ocean Transportation services	$	554.2	$	391.1
Terminal and other related services		2.8		5.8
Fuel sales		1.4		2.6
Vessel management and related services		2.1		1.4
Total	$	560.5	$	400.9

(1)	Ocean Transportation revenue transactions are primarily denominated in U.S. dollars except for less than 3 percent of Ocean Transportation services revenue and fuel sales revenue categories which are denominated in foreign currencies.

◾

Ocean Transportation services revenue is recognized ratably over the duration of a voyage based on the relative transit time completed in each reporting period. Vessel operating costs and other ocean transportation operating costs, such as terminal operating overhead and selling, general and administrative expenses, are charged to operating costs as incurred.

◾	Terminal and other related services revenue is recognized as the services are performed. Related costs are recognized as incurred.

◾	Fuel sales revenue and related costs are recognized when the Company has completed delivery of the product to the customer in accordance with the terms and conditions of the contract.

◾	Vessel management and related services revenue is recognized in proportion to the services completed. Related costs are recognized as incurred.


	March 31,
Logistics (in millions) (1)	2021		2020
Transportation Brokerage and Freight Forwarding services	$	135.3	$	102.1
Warehouse and distribution services		9.2		8.2
Supply chain management and other services		6.8		2.7
Total	$	151.3	$	113.0

(1)	Logistics revenue transactions are primarily denominated in U.S. dollars except for less than 5 percent of transportation brokerage and freight forwarding services revenue, and supply chain management and other services revenue categories which are denominated in foreign currencies.

◾

Transportation Brokerage and Freight Forwarding services revenue consists of amounts billed to customers for services provided. The primary costs include third-party purchased transportation services, agent commissions, labor and equipment. Revenue and the related purchased third-party transportation costs are recognized over the duration of a delivery based upon the relative transit time completed in each reporting period. Labor, agent commissions, and other operating costs are expensed as incurred. The Company reports revenue on a gross basis as the Company serves as the principal in these transactions because it is responsible for fulfilling the contractual arrangements with the customer and has latitude in establishing prices.

◾	Warehousing and distribution services revenue consist of amounts billed to customers for storage, handling, and value-added packaging of customer merchandise. Storage revenue is recognized in the month the service is

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provided to the customer. Storage related costs are recognized as incurred. Other warehousing and distribution services revenue and related costs are recognized in proportion to the services performed.

◾	Supply chain management and other services revenue, and related costs are recognized in proportion to the services performed.

The Company generally invoices its customers at the commencement of the voyage or the transportation service being provided, or as other services are being performed. Revenue is deferred when services are invoiced in advance to the customer. The Company’s receivables are classified as short-term as collection terms are for periods of less than one year. The Company expenses sales commissions and contract acquisition costs as incurred because the amounts are generally immaterial. These expenses are included in selling, general and administration expenses in the Condensed Consolidated Statements of Income and Comprehensive Income.

Capital Construction Fund: The Company’s Capital Construction Fund (“CCF”) is described in Note 7 to the Consolidated Financial Statements included in Part II, Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. As of March 31, 2021 and December 31, 2020, $1.7 million of eligible accounts receivable was assigned to the CCF. Due to the nature of the assignment of eligible accounts receivable into the CCF, such assigned amounts are classified as part of accounts receivable in the Condensed Consolidated Balance Sheets. Cash on deposit in the CCF is held in a money market account and classified as a long-term asset in the Company’s Condensed Consolidated Balance Sheets, as the Company intends to use qualified cash withdrawals to fund long-term investment in the construction of new vessels. The Company made no qualifying cash deposits into or withdrawals from the CCF during the three months ended March 31, 2021. The balance of cash on deposit at March 31, 2021 and December 31, 2020 was nominal.

Investment in SSAT: Condensed income statement information for SSAT for the three months ended March 31, 2021 and 2020 consisted of the following:


	Three Months Ended
	March 31,
(In millions)	2021		2020
Operating revenue	$	306.1	$	278.9
Operating costs and expenses		(273.1)		(265.4)
Operating income		33.0		13.5
Net Income (1)	$	28.9	$	13.0
Company Share of SSAT’s Net Income (2)	$	9.2	$	4.0

(1)	Includes earnings from equity method investments held by SSAT less earnings allocated to non-controlling interests.

(2)	The Company records its share of net income from SSAT in costs and expenses in the Condensed Consolidated Statement of Income and Comprehensive Income due to the nature of SSAT’s operations.

The Company’s investment in SSAT was $47.5 million and $48.7 million at March 31, 2021 and December 31, 2020, respectively.

Contingencies: Environmental Matters: The Company’s Ocean Transportation business has certain risks that could result in expenditures for environmental remediation. The Company believes that based on all information available to it, the Company is currently in compliance, in all material respects, with applicable environmental laws and regulations.

Other Matters: The Company and its subsidiaries are parties to, or may be contingently liable in connection with other legal actions arising in the normal course of their businesses, the outcomes of which, in the opinion of management after consultation with counsel, would not have a material effect on the Company’s financial condition, results of operations, or cash flows.

Dividends: The Company’s first quarter 2021 cash dividend of $0.23 per share was paid on March 4, 2021. On April 22, 2021, the Company’s Board of Directors declared a cash dividend of $0.23 per share payable on June 3, 2021.

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3. REPORTABLE SEGMENTS

Reportable segments are components of an enterprise that engage in business activities from which it may earn revenues and incur expenses, whose operating results are regularly reviewed by the chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. The Company’s chief operating decision maker is its Chief Executive Officer.

The Company consists of two reportable segments, Ocean Transportation and Logistics, which are further described in Note 1. Reportable segments are measured based on operating income. In arrangements where the customer purchases ocean transportation and logistics services, the revenues are allocated to each reportable segment based upon the contractual amounts for each type of service. The Company’s SSAT segment has been aggregated into the Company’s Ocean Transportation segment due to the operations of SSAT being an integral part of the Company’s Ocean Transportation business.

The Company’s Ocean Transportation segment provides ocean transportation services to the Logistics segment, and the Logistics segment provides logistics services to the Ocean Transportation segment in certain transactions. Accordingly, inter-segment revenue of $33.7 million and $19.4 million for the three months ended March 31, 2021 and 2020, respectively, have been eliminated from operating revenues in the table below.

Reportable segment financial information for the three months ended March 31, 2021 and 2020 are as follows:


	Three Months Ended
	March 31,
(In millions)	2021		2020
Operating Revenue:
Ocean Transportation (1)	$	560.5	$	400.9
Logistics (2)		151.3		113.0
Total Operating Revenue	$	711.8	$	513.9
Operating Income:
Ocean Transportation (3)	$	114.1	$	7.9
Logistics		6.1		5.1
Total Operating Income		120.2		13.0
Interest expense, net		(7.3)		(8.6)
Other income (expense), net		1.4		0.6
Income before Income Taxes		114.3		5.0
Income taxes		(27.1)		(1.2)
Net Income	$	87.2	$	3.8

(1)	Ocean Transportation operating revenue excludes inter-segment revenue of $15.1 million and $9.4 million for the three months ended March 31, 2021 and 2020, respectively.

(2)	Logistics operating revenue excludes inter-segment revenue of $18.6 million and $10.0 million for the three months ended March 31, 2021 and 2020, respectively.

(3)	Ocean Transportation segment information includes $9.2 million and $4.0 million of equity in income from the Company’s equity investment in SSAT for the three months ended March 31, 2021 and 2020, respectively.

4. PROPERTY AND EQUIPMENT

Property and equipment as of March 31, 2021 and December 31, 2020 consisted of the following:


	March 31,		December 31,
(In millions)	2021		2020
Cost:
Vessels	$	2,200.1	$	2,191.6
Containers and equipment		559.6		572.3
Terminal facilities and other property		119.9		119.8
Construction in progress		31.8		28.6
Total Property and Equipment		2,911.4		2,912.3
Less: Accumulated Depreciation		(1,227.4)		(1,222.4)
Total Property and Equipment, net	$	1,684.0	$	1,689.9

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5. GOODWILL AND INTANGIBLES

Goodwill by segment as of March 31, 2021 and December 31, 2020 consisted of the following:


	Ocean
(In millions)	Transportation		Logistics		Total
Goodwill	$	222.6	$	105.2	$	327.8

Intangible assets as of March 31, 2021 and December 31, 2020 consisted of the following:


	March 31,		December 31,
(In millions)	2021		2020
Customer Relationships:
Ocean Transportation	$	140.6	$	140.6
Logistics		90.1		90.1
Total		230.7		230.7
Less: Accumulated Amortization		(68.7)		(66.0)
Total Customer Relationships, net		162.0		164.7
Trade name – Logistics		27.3		27.3
Total Intangible Assets, net	$	189.3	$	192.0

The Company evaluates its goodwill and intangible assets 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. The Company considered the general economic and market conditions due to the COVID-19 pandemic and its impact on the performance of each of the Company’s reporting units. Based on the Company’s assessment of its market capitalization, future forecasts and the amount of excess of fair value over the carrying value of the reporting units in the 2020 annual impairment tests, the Company concluded that an impairment triggering event did not occur during the quarter ended March 31, 2021.

The Company will monitor events and changes in circumstances that could negatively impact the key assumptions used in determining the fair value, including the amount and timing of estimated future cash flows generated by the reporting units, long-term growth and discount rates, comparable company market valuations, and industry and economic trends. It is possible that future changes in such circumstances, including a more prolonged and/or severe COVID-19 pandemic, or future changes in the assumptions and estimates used in assessing the fair value of the reporting unit, could require the Company to record a non-cash impairment charge.

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6. DEBT

As of March 31, 2021 and December 31, 2020, the Company’s debt consisted of the following:


	March 31,		December 31,
(In millions)	2021		2020
Private Placement Term Loans:
3.66 %, payable through 2023	$	22.8	$	22.8
4.16 %, payable through 2027		34.0		34.0
3.37 %, payable through 2027		75.0		75.0
3.14 %, payable through 2031		160.4		169.6
4.31 %, payable through 2032		27.9		27.9
Title XI Debt:
5.34 %, payable through 2028		16.5		17.6
5.27 %, payable through 2029		18.7		19.8
1.22 %, payable through 2043		182.0		182.0
1.35 %, payable through 2044		136.6		139.6
Revolving credit facility, maturity date of March 31, 2026		25.0		71.8
Total Debt		698.9		760.1
Less: Current portion		(59.2)		(59.2)
Total Long-term Debt		639.7		700.9
Less: Deferred loan fees		(15.4)		(15.3)
Total Long-term Debt, net of deferred loan fees	$	624.3	$	685.6

Except as described below, the Company’s debt is described in Note 8 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

Revolving Credit Facility Amendment: On March 31, 2021, the Company entered into the Second Amended and Restated Credit Agreement (the “Credit Agreement”). The Credit Agreement extends the maturity date to March 31, 2026, and retains the existing committed aggregate borrowings of up to $650 million, with an uncommitted option to increase the aggregate borrowings by up to $250 million. The Credit Agreement amended certain covenants and other terms set forth in the prior credit agreement, including (i) amending the pricing grid to provide for pricing ranging from, at the Company’s election, LIBOR plus a margin between 1.00 percent and 1.75 percent depending on the Company’s consolidated net leverage ratio, or base rate plus a margin between 0.00 percent and 0.75 percent depending on the Company’s consolidated net leverage ratio; (ii) reducing the maximum permitted consolidated leverage ratio to 3.50 to 1.0, with an option for a one-time increase to 4.0 to 1.0 in connection with a material acquisition; and (iii) removing certain limitations on stock redemptions and repurchases, sale leaseback transactions and asset sales, and the incurrence of priority debt. The Company may prepay any amounts outstanding under the Credit Agreement without premium or penalty. The Credit Agreement contains affirmative, negative and financial covenants customary for financings of this type, including, among other things, limitations on certain other indebtedness, loans and investments, liens, mergers, asset sales, and transactions with affiliates. The Credit Agreement also contains customary events of default. The Company paid fees of approximately $2.2 million in connection with the closing of the Credit Agreement which is included in other long-term assets in the Condensed Consolidated Balance Sheet as of March 31, 2021.

As of March 31, 2021, the Company had $616.9 million of remaining borrowing availability under the revolving credit facility. The Company used $8.1 million of the sublimit for letters of credit outstanding as of March 31, 2021. Based on the Company’s consolidated net leverage ratio, which stipulates borrowing margins, the interest rate applicable to revolving credit facility was approximately 1.58 percent at March 31, 2021. Borrowings under the revolving credit facility are classified as long-term debt in the Condensed Consolidated Balance Sheets, as principal payments are not required until the maturity date.

Private Placement Term Loans Amendments: On March 31, 2021, the Company and the holders of the private placement term loans entered into amendments (collectively, the “2021 Note Amendments”) to each of (i) the Third Amended and Restated Note Purchase Agreement and Private Shelf Agreement dated as of September 14, 2016, among the Company and the holders of the notes issued thereunder, as amended; and (ii) the Note Purchase Agreement dated December 21, 2016 among the Company and the holders of the notes issued thereunder, in each case as amended prior to such date.

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The 2021 Note Amendments amended certain covenants and other terms, including (i) eliminating the Leverage Relief Period and associated quarterly interest enhancement payments; (ii) removing certain other fees and increases to interest rate; (iii) reducing the maximum permitted consolidated leverage ratio to 3.50 to 1.0, with an option for a one-time increase to 4.0 to 1.0 in connection with a material acquisition, with potential interest enhancement payments if leverage is over 3.25 to 1.0; and (iv) removing certain additional limitations on stock redemptions and repurchases, sale leaseback transactions and asset sales, and the incurrence of priority debt. The Company paid fees of approximately $0.8 million related to the 2021 Note Amendments which is included in deferred loan fees in debt in the Condensed Consolidated Balance Sheet as of March 31, 2021.

Debt Security and Guarantees: All of the debt of the Company and MatNav, including related guarantees, as of March 31, 2021 was unsecured, except for the Title XI debt.

Debt Maturities: As of March 31, 2021, debt maturities during the next five years and thereafter are as follows:


	As of
Year (in millions)	March 31, 2021
Remainder of 2021	$	44.8
2022		65.0
2023		60.4
2024		51.7
2025		51.7
Thereafter		425.3
Total Debt	$	698.9

7. LEASES

The Company’s leases are described in Note 9 to the Consolidated Financial Statements included in Part II, Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

Components of Lease Cost: Components of lease cost recorded in the Company’s Condensed Consolidated Statement of Income and Comprehensive Income for the three months ended March 31, 2021 and 2020 consisted of the following:


	Three Months Ended
	March 31,
(In millions)	2021		2020
Operating lease cost	$	25.3	$	20.0
Short-term lease cost		2.0		0.1
Variable lease cost		0.2		0.2
Total lease cost	$	27.5	$	20.3

Sale and Leaseback of Equipment: There were no sale and leaseback transactions during the three months ended March 31, 2021. On March 25, 2020, the Company entered into an agreement for the sale and leaseback of multiple tranches of chassis and container equipment. The net proceeds from the sales were $14.3 million, and the gain on the disposal of the equipment was not material to the Company’s Condensed Consolidated Financial Statements. The Company subsequently leased back the equipment under a five-year operating lease agreement that includes purchase options exercisable at fair market value.

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8. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Changes in accumulated other comprehensive income (loss) by component, net of tax, for the three months ended March 31, 2021 are as follows:


									Accumulated
			Post-		Non-				Other
	Pension		Retirement		Qualified				Comprehensive
(In millions)	Benefits		Benefits		Plans		Other		Income (Loss)
Balance at December 31, 2020	$	(61.7)	$	12.2	$	(0.6)	$	(0.7)	$	(50.8)
Amortization of prior service cost		(0.4)		(0.7)		—		—		(1.1)
Amortization of net loss		0.9		0.2		0.1		—		1.2
Foreign currency exchange		—		—		—		(0.2)		(0.2)
Balance at March 31, 2021	$	(61.2)	$	11.7	$	(0.5)	$	(0.9)	$	(50.9)

Changes in accumulated other comprehensive income (loss) by component, net of tax, for the three months ended March 31, 2020 consisted of the following:


									Accumulated
			Post-		Non-				Other
	Pension		Retirement		Qualified				Comprehensive
(In millions)	Benefits		Benefits		Plans		Other		Income (Loss)
Balance at December 31, 2019	$	(51.9)	$	16.3	$	(0.4)	$	(0.9)	$	(36.9)
Amortization of prior service cost		(0.5)		(0.6)		(0.1)		—		(1.2)
Amortization of net loss		1.1		0.1		0.1		—		1.3
Foreign currency exchange		—		—		—		(0.5)		(0.5)
Other adjustments		—		—		—		(0.2)		(0.2)
Balance at March 31, 2020	$	(51.3)	$	15.8	$	(0.4)	$	(1.6)	$	(37.5)

9. FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company values its financial instruments based on the fair value hierarchy of valuation techniques for fair value measurements. Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date. Level 2 inputs include quoted prices for similar assets and liabilities in active markets and inputs other than quoted prices observable for the asset or liability. Level 3 inputs are unobservable inputs for the asset or liability. If the technique used to measure fair value includes inputs from multiple levels of the fair value hierarchy, the lowest level of significant input determines the placement of the entire fair value measurement in the hierarchy.

The Company uses Level 1 inputs for the fair values of its cash, cash equivalents and restricted cash, and Level 2 inputs for its variable and fixed rate debt. The fair values of cash, cash equivalents and restricted cash, and variable rate debt approximate their carrying values due to the nature of the instruments. The fair value of fixed rate debt is calculated based upon interest rates available for debt with terms and maturities similar to the Company’s existing debt arrangements.

The carrying value and fair value of the Company’s financial instruments as of March 31, 2021 and December 31, 2020 are as follows: