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Table of Contents

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 June 30, 2022

OR

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 June 30, 2022: 38,981,142

Table of Contents

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

15

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

22

Item 4.

Controls and Procedures

22

Part II—OTHER INFORMATION

23

Item 1.

Legal Proceedings

23

Item 1A.

Risk Factors

23

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

24

Item 3.

Defaults Upon Senior Securities

24

Item 4.

Mine Safety Disclosures

24

Item 5.

Other Information

24

Item 6.

Exhibits

25

Signatures

26

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

MATSON, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income and Comprehensive Income

(Unaudited)

Three Months Ended

Six Months Ended

June 30, 

June 30, 

(In millions, except per share amounts)

    

2022

    

2021

    

2022

    

2021

    

Operating Revenue:

Ocean Transportation

$

1,049.2

$

682.9

$

1,993.1

$

1,243.4

Logistics

 

211.9

 

192.0

 

433.5

 

343.3

Total Operating Revenue

 

1,261.1

 

874.9

 

2,426.6

 

1,586.7

Costs and Expenses:

Operating costs

 

(728.4)

 

(615.6)

 

(1,432.1)

 

(1,160.3)

Income from SSAT

 

24.7

 

12.8

 

58.7

 

22.0

Selling, general and administrative

 

(64.3)

 

(58.2)

 

(127.5)

 

(114.3)

Total Costs and Expenses

 

(768.0)

 

(661.0)

 

(1,500.9)

 

(1,252.6)

Operating Income

 

493.1

 

213.9

 

925.7

 

334.1

Interest expense

 

(4.5)

 

(5.5)

 

(9.3)

 

(12.8)

Other income (expense), net

 

1.8

 

1.5

 

3.8

 

2.9

Income before Taxes

 

490.4

 

209.9

 

920.2

 

324.2

Income taxes

 

(109.7)

 

(47.4)

 

(200.3)

 

(74.5)

Net Income

$

380.7

$

162.5

$

719.9

$

249.7

Other Comprehensive Income (Loss), Net of Income Taxes:

Net Income

$

380.7

$

162.5

$

719.9

$

249.7

Other Comprehensive Income (Loss):

Amortization of prior service cost

 

(0.9)

 

(1.2)

 

(1.8)

 

(2.3)

Amortization of net loss (gain)

 

2.0

 

1.3

 

2.8

 

2.5

Other adjustments

 

(1.9)

 

0.1

 

(1.6)

 

(0.1)

Total Other Comprehensive Income (Loss)

 

(0.8)

 

0.2

 

(0.6)

 

0.1

Comprehensive Income

$

379.9

$

162.7

$

719.3

$

249.8

Basic Earnings Per Share

$

9.54

$

3.74

$

17.82

$

5.75

Diluted Earnings Per Share

$

9.49

$

3.71

$

17.69

$

5.70

Weighted Average Number of Shares Outstanding:

Basic

 

39.9

 

43.5

 

40.4

 

43.4

Diluted

 

40.1

 

43.8

 

40.7

 

43.8

See Notes to Condensed Consolidated Financial Statements.

1

Table of Contents

MATSON, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Unaudited)

June 30, 

December 31, 

(In millions)

    

2022

    

2021

    

ASSETS

Current Assets:

Cash and cash equivalents

$

609.0

$

282.4

Accounts receivable, net of allowance for credit losses of $10.9 million and $10.1 million, respectively

 

380.6

 

343.7

Prepaid expenses and other assets

 

123.1

 

78.4

Total current assets

 

1,112.7

 

704.5

Long-term Assets:

Investment in SSAT

 

93.1

 

58.7

Property and equipment, net

 

1,894.7

 

1,878.3

Operating lease right of use assets

455.1

434.6

Goodwill

 

327.8

 

327.8

Intangible assets, net

175.8

181.1

Deferred dry-docking costs, net

60.8

68.7

Other long-term assets

 

38.6

 

39.4

Total long-term assets

3,045.9

2,988.6

Total Assets

$

4,158.6

$

3,693.1

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current Liabilities:

Current portion of debt

$

65.0

$

65.0

Accounts payable and accruals

 

304.8

 

308.4

Operating lease liabilities

152.4

137.6

Other liabilities

 

109.9

 

101.4

Total current liabilities

 

632.1

 

612.4

Long-term Liabilities:

Long-term debt, net of deferred loan fees

 

517.9

 

549.7

Long-term operating lease liabilities

314.2

307.4

Deferred income taxes

 

433.8

 

425.2

Other long-term liabilities

127.0

131.0

Total long-term liabilities

 

1,392.9

 

1,413.3

Commitments and Contingencies (see Note 13)

Shareholders’ Equity:

Common stock

 

29.2

 

30.7

Additional paid in capital

 

294.7

 

314.1

Accumulated other comprehensive loss, net

 

(31.5)

 

(30.9)

Retained earnings

 

1,841.2

 

1,353.5

Total shareholders’ equity

 

2,133.6

 

1,667.4

Total Liabilities and Shareholders’ Equity

$

4,158.6

$

3,693.1

See Notes to Condensed Consolidated Financial Statements.

2

Table of Contents

MATSON, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)

Six Months Ended June 30, 

(In millions)

    

2022

    

2021

    

Cash Flows From Operating Activities:

Net income

$

719.9

$

249.7

Reconciling adjustments:

Depreciation and amortization

 

71.1

 

67.9

Amortization of operating lease right of use assets

75.3

49.2

Deferred income taxes

 

9.4

 

15.2

Share-based compensation expense

 

10.5

 

9.5

Income from SSAT

 

(58.7)

 

(22.0)

Distribution from SSAT

26.3

21.0

Other

(0.7)

(1.0)

Changes in assets and liabilities:

Accounts receivable, net

 

(37.6)

 

(60.2)

Deferred dry-docking payments

 

(14.7)

 

(17.4)

Deferred dry-docking amortization

 

12.9

 

12.6

Prepaid expenses and other assets

 

(48.3)

 

(38.7)

Accounts payable, accruals and other liabilities

 

4.5

 

3.7

Operating lease liabilities

(74.2)

(47.1)

Other long-term liabilities

 

(4.6)

 

(3.6)

Net cash provided by operating activities

 

691.1

 

238.8

Cash Flows From Investing Activities:

Capitalized vessel construction expenditures

(11.4)

Other capital expenditures

 

(68.4)

 

(101.3)

Proceeds from disposal of property and equipment

 

0.8

 

1.7

Cash deposits into Capital Construction Fund

 

(10.7)

 

(31.2)

Withdrawals from Capital Construction Fund

10.7

31.2

Net cash used in investing activities

 

(79.0)

 

(99.6)

Cash Flows From Financing Activities:

Repayments of debt

 

(32.5)

 

(26.8)

Proceeds from revolving credit facility

241.9

Repayments of revolving credit facility

 

 

(313.7)

Payment of financing costs

(3.0)

Dividends paid

(25.0)

 

(20.2)

Repurchase of Matson common stock

(208.5)

 

Tax withholding related to net share settlements of restricted stock units

(19.5)

(14.4)

Net cash used in financing activities

 

(285.5)

 

(136.2)

Net Increase in Cash, Cash Equivalents and Restricted Cash

 

326.6

 

3.0

Cash, Cash Equivalents and Restricted Cash, Beginning of the Period

 

287.7

 

19.7

Cash, Cash Equivalents and Restricted Cash, End of the Period

$

614.3

$

22.7

Reconciliation of Cash, Cash Equivalents and Restricted Cash, End of the Period:

Cash and Cash Equivalents

$

609.0

$

17.4

Restricted Cash

5.3

5.3

Total Cash, Cash Equivalents and Restricted Cash, End of the Period

$

614.3

$

22.7

Supplemental Cash Flow Information:

Interest paid, net of capitalized interest

$

8.4

$

10.4

Income tax payments, net of refunds

$

211.7

$

75.2

Non-cash Information:

Capital expenditures included in accounts payable, accruals and other liabilities

$

6.1

$

7.7

Accrued dividends

$

12.4

$

13.2

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, 2021

 

41.0

$

30.7

 

$

314.1

$

(30.9)

$

1,353.5

$

1,667.4

Net income

 

 

 

 

 

 

339.2

 

339.2

Other comprehensive income (loss), net of tax

 

 

 

 

 

0.2

 

 

0.2

Share-based compensation

 

 

 

 

4.7

 

 

 

4.7

Shares issued, net of shares withheld for employee taxes

 

0.2

 

0.2

 

 

(19.5)

 

 

 

(19.3)

Shares repurchased

 

(0.7)

(0.5)

(3.1)

(65.0)

(68.6)

Dividends ($0.30 per share)

 

 

 

 

 

 

(12.9)

 

(12.9)

Balance at March 31, 2022

 

40.5

30.4

 

296.2

(30.7)

1,614.8

1,910.7

Net income

 

 

 

 

 

 

380.7

 

380.7

Other comprehensive income (loss), net of tax

 

 

 

 

(0.8)

 

 

(0.8)

Share-based compensation

 

 

 

 

5.7

 

 

 

5.7

Shares issued, net of shares withheld for employee taxes

 

0.1

 

 

 

(0.2)

 

 

 

(0.2)

Shares repurchased

 

(1.6)

(1.2)

(7.0)

(129.9)

(138.1)

Dividends ($0.30 per share and $0.31 per share)

 

 

 

 

 

(24.4)

 

(24.4)

Balance at June 30, 2022

 

39.0

$

29.2

 

$

294.7

$

(31.5)

$

1,841.2

$

2,133.6

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 income (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

Net income

 

 

 

 

 

 

162.5

 

162.5

Other comprehensive income (loss), net of tax

 

 

 

 

0.2

 

 

0.2

Share-based compensation

 

 

 

 

4.7

 

 

 

4.7

Shares issued, net of shares withheld for employee taxes

 

0.1

 

 

 

(0.2)

 

 

 

(0.2)

Dividends ($0.23 per share and $0.30 per share)

 

 

 

 

 

(23.3)

(23.3)

Balance at June 30, 2021

 

43.5

$

32.6

 

$

316.5

$

(50.7)

$

874.4

$

1,172.8

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 premium, expedited services primarily 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, Alaska 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 eight 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 extends the geographic reach of Matson’s transportation network throughout North America and Asia, and 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, trans-loading, value-added packaging and distribution services (collectively, “Warehousing” 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, 2021, filed with the Securities and Exchange Commission (“SEC”) on February 25, 2022.

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Fiscal Period: The period end for Matson covered by this report is June 30, 2022. The period end for MatNav and its subsidiaries covered by this report occurred on July 1, 2022.

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, 2021.

Use of Estimates: The preparation of the interim Condensed Consolidated Financial Statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the amounts reported. Estimates and assumptions are used for, but not limited to: impairment of investments; impairment of long-lived assets, intangible assets and goodwill; capitalized interest; allowance for doubtful accounts and other receivables; legal contingencies; insurance reserves and other related liabilities; accrual estimates; pension and post-retirement estimates; multi-employer withdrawal liabilities; operating lease assets and liabilities; income from SSAT; 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:

Three Months Ended

 

Six Months Ended

June 30, 

 

June 30, 

Ocean Transportation (in millions) (1)

2022

    

2021

 

2022

    

2021

Ocean Transportation services

$

1,040.2

$

674.4

$

1,976.9

$

1,228.6

Terminal and other related services

4.7

4.9

8.4

7.7

Fuel sales

2.8

1.8

4.7

3.2

Vessel management and related services

1.5

1.8

3.1

3.9

Total

$

1,049.2

$

682.9

$

1,993.1

$

1,243.4

(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.

Three Months Ended

 

Six Months Ended

June 30, 

 

June 30, 

Logistics (in millions) (1)

2022

2021

2022

2021

Transportation Brokerage and Freight Forwarding services

$

184.4

$

174.5

$

379.3

$

309.8

Warehousing and distribution services

13.8

10.4

25.9

19.6

Supply chain management and other services

 

13.7

 

7.1

 

28.3

 

13.9

Total

$

211.9

$

192.0

$

433.5

$

343.3

(1)Logistics revenue transactions are primarily denominated in U.S. dollars except for approximately 6.5 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

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commissions, and other operating costs are expensed as incurred. The Company reports revenue on a gross basis as the Company serves as the principal in these transactions because it is responsible for fulfilling the contractual arrangements with the customer and has latitude in establishing prices.
Warehousing and distribution services revenue consist of amounts billed to customers for storage, handling, and value-added packaging of customer merchandise. Storage revenue is recognized in the month the service is provided to the customer. Storage related costs are recognized as incurred. Other warehousing and distribution services revenue and related costs are recognized in proportion to the services performed.
Supply chain management 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, 2021. As of June 30, 2022 and December 31, 2021, $9.8 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. During the six months ended June 30, 2022 and 2021, the Company deposited $10.7 million and $31.2 million into the CCF and made qualifying cash withdrawals of $10.7 million and $31.2 million from the CCF, respectively. The balance of cash on deposit at June 30, 2022 and December 31, 2021 was nominal.

Investment in SSAT: Condensed income statement information for SSAT for the three and six months ended June 30, 2022 and 2021 consisted of the following:

Three Months Ended

 

Six Months Ended

 

June 30, 

 

June 30, 

 

(In millions)

2022

    

2021

 

2022

    

2021

 

Operating revenue

$

391.1

$

322.2

$

821.5

$

628.3

Operating costs and expenses

(300.5)

(284.0)

(607.4)

(557.1)

Operating income

90.6

38.2

214.1

71.2

Net Income (1)

$

78.0

$

34.3

$

178.1

$

63.2

Company Share of SSAT’s Net Income (2)

$

24.7

$

12.8

$

58.7

$

22.0

(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 $93.1 million and $58.7 million at June 30, 2022 and December 31, 2021, respectively.

Dividends: The Company’s second quarter 2022 cash dividend of $0.30 per share was paid on June 2, 2022. On June 22, 2022, the Company’s Board of Directors declared a cash dividend of $0.31 per share payable on September 1, 2022 to shareholders of record on August 4, 2022.

Repurchase of Shares: During the three months ended June 30, 2022, the Company repurchased approximately 1.6 million shares for a total cost of $138.1 million. During the six months ended June 30, 2022, the Company repurchased approximately 2.3 million shares for a total cost of $206.7 million. As of June 30, 2022, the maximum number of remaining shares that may be repurchased under the Company’s stock repurchase program was approximately 1.2 million shares.

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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 $69.2 million and $49.0 million for the three months ended June 30, 2022 and 2021, and $142.4 million and $82.7 million for the six months ended June 30, 2022 and 2021, respectively, have been eliminated from operating revenues in the table below. 

Reportable segment financial information for the three and six months ended June 30, 2022 and 2021 are as follows:

Three Months Ended

Six Months Ended

 

June 30, 

June 30, 

(In millions)

    

2022

    

2021

    

2022

    

2021

 

Operating Revenue:

Ocean Transportation (1)

$

1,049.2

$

682.9

$

1,993.1

$

1,243.4

Logistics (2)

 

211.9

 

192.0

 

433.5

 

343.3

Total Operating Revenue

$

1,261.1

$

874.9

$

2,426.6

$

1,586.7

Operating Income:

Ocean Transportation (3)

$

470.0

$

201.0

$

886.2

$

315.1

Logistics

 

23.1

 

12.9

 

39.5

 

19.0

Total Operating Income

 

493.1

 

213.9

 

925.7

 

334.1

Interest expense, net

 

(4.5)

 

(5.5)

 

(9.3)

 

(12.8)

Other income (expense), net

 

1.8

 

1.5

 

3.8

 

2.9

Income before Taxes

 

490.4

 

209.9

 

920.2

 

324.2

Income taxes

 

(109.7)

 

(47.4)

 

(200.3)

 

(74.5)

Net Income

$

380.7

$

162.5

$

719.9

$

249.7

(1)Ocean Transportation operating revenue excludes inter-segment revenue of $24.0 million and $18.7 million for the three months ended June 30, 2022 and 2021, and $45.8 million and $33.8 million for the six months ended June 30, 2022 and 2021, respectively.
(2)Logistics operating revenue excludes inter-segment revenue of $45.2 million and $30.3 million for the three months ended June 30, 2022 and 2021, and $96.6 million and $48.9 million for the six months ended June 30, 2022 and 2021, respectively.
(3)Ocean Transportation segment information includes $24.7 million and $12.8 million of equity in income from the Company’s equity investment in SSAT for the three months ended June 30, 2022 and 2021, and $58.7 million and $22.0 million for the six months ended June 30, 2022 and 2021, respectively.

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4.          PROPERTY AND EQUIPMENT

Property and equipment as of June 30, 2022 and December 31, 2021 consisted of the following:

June 30, 

December 31, 

(In millions)

    

2022

    

2021

Cost:

Vessels

$

2,271.5

$

2,243.8

Containers and equipment

725.6

680.9

Terminal facilities and other property

131.1

128.3

Vessel construction in progress

14.9

Other construction in progress

35.0

19.5

Total Property and Equipment

3,163.2

3,087.4

Less: Accumulated Depreciation

(1,268.5)

(1,209.1)

Total Property and Equipment, net

$

1,894.7

$

1,878.3

5.          GOODWILL AND INTANGIBLES

Goodwill by segment as of June 30, 2022 and December 31, 2021 consisted of the following:

Ocean

 

(In millions)

    

Transportation

    

Logistics

    

Total

 

Goodwill

$

222.6

$

105.2

$

327.8

Intangible assets as of June 30, 2022 and December 31, 2021 consisted of the following: