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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, 2023

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, 2023: 35,289,089

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

23

Item 4.

Controls and Procedures

23

Part II—OTHER INFORMATION

23

Item 1.

Legal Proceedings

23

Item 1A.

Risk Factors

24

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)

    

2023

    

2022

    

2023

    

2022

 

Operating Revenue:

Ocean Transportation

$

616.9

$

1,049.2

$

1,167.9

$

1,993.1

Logistics

 

156.5

 

211.9

 

310.3

 

433.5

Total Operating Revenue

 

773.4

 

1,261.1

 

1,478.2

 

2,426.6

Costs and Expenses:

Operating costs

 

(604.7)

 

(728.4)

 

(1,202.2)

 

(1,432.1)

(Loss) Income from SSAT

 

(1.4)

 

24.7

 

(3.2)

 

58.7

Selling, general and administrative

 

(70.6)

 

(64.3)

 

(137.4)

 

(127.5)

Total Costs and Expenses

 

(676.7)

 

(768.0)

 

(1,342.8)

 

(1,500.9)

Operating Income

 

96.7

 

493.1

 

135.4

 

925.7

Interest income

8.7

16.9

Interest expense

 

(2.9)

 

(4.5)

 

(7.4)

 

(9.3)

Other income (expense), net

 

1.8

 

1.8

 

3.6

 

3.8

Income before Taxes

 

104.3

 

490.4

 

148.5

 

920.2

Income taxes

 

(23.5)

 

(109.7)

 

(33.7)

 

(200.3)

Net Income

$

80.8

$

380.7

$

114.8

$

719.9

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

Net Income

$

80.8

$

380.7

$

114.8

$

719.9

Other Comprehensive Income (Loss):

Amortization of prior service cost

 

(0.7)

 

(0.9)

 

(1.4)

 

(1.8)

Amortization of net loss (gain)

 

(0.2)

 

2.0

 

(0.3)

 

2.8

Other

 

(0.7)

 

(1.9)

 

0.7

 

(1.6)

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

 

(1.6)

 

(0.8)

 

(1.0)

 

(0.6)

Comprehensive Income

$

79.2

$

379.9

$

113.8

$

719.3

Basic Earnings Per Share

$

2.28

$

9.54

$

3.21

$

17.82

Diluted Earnings Per Share

$

2.26

$

9.49

$

3.19

$

17.69

Weighted Average Number of Shares Outstanding:

Basic

 

35.5

 

39.9

 

35.8

 

40.4

Diluted

 

35.7

 

40.1

 

36.0

 

40.7

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)

    

2023

    

2022

    

ASSETS

Current Assets:

Cash and cash equivalents

$

122.0

$

249.8

Accounts receivable, net of allowance for credit losses of $11.6 million and $13.0 million, respectively

 

285.0

 

268.5

Prepaid expenses and other assets

 

170.8

 

241.3

Total current assets

 

577.8

 

759.6

Long-term Assets:

Investment in SSAT

 

80.1

 

81.2

Property and equipment, net

 

2,029.0

 

1,962.5

Operating lease right of use assets

331.2

396.9

Goodwill

 

327.8

 

327.8

Intangible assets, net

184.4

174.9

Capital Construction Fund

583.9

518.2

Deferred dry-docking costs, net

51.1

55.3

Other long-term assets

 

52.8

 

53.6

Total long-term assets

3,640.3

3,570.4

Total Assets

$

4,218.1

$

4,330.0

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current Liabilities:

Current portion of debt

$

41.7

$

76.9

Accounts payable and accruals

 

271.1

 

255.6

Operating lease liabilities

127.3

143.6

Other liabilities

 

108.9

 

105.5

Total current liabilities

 

549.0

 

581.6

Long-term Liabilities:

Long-term debt, net of deferred loan fees

 

408.5

 

427.7

Long-term operating lease liabilities

212.5

262.5

Deferred income taxes

 

643.9

 

646.5

Other long-term liabilities

114.2

114.8

Total long-term liabilities

 

1,379.1

 

1,451.5

Commitments and Contingencies (see Note 13)

Shareholders’ Equity:

Common stock

 

26.3

 

27.2

Additional paid in capital

 

282.7

 

290.4

Accumulated other comprehensive loss, net

 

(7.9)

 

(6.9)

Retained earnings

 

1,988.9

 

1,986.2

Total shareholders’ equity

 

2,290.0

 

2,296.9

Total Liabilities and Shareholders’ Equity

$

4,218.1

$

4,330.0

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)

    

2023

    

2022

    

Cash Flows From Operating Activities:

Net income

$

114.8

$

719.9

Reconciling adjustments:

Depreciation and amortization

 

72.1

 

71.1

Amortization of operating lease right of use assets

75.7

75.3

Deferred income taxes

 

(3.0)

 

9.4

Share-based compensation expense

 

9.8

 

10.5

Loss (income) from SSAT

 

3.2

 

(58.7)

Distributions from SSAT

26.3

Other

(1.7)

(0.7)

Changes in assets and liabilities:

Accounts receivable, net

 

(16.8)

 

(37.6)

Deferred dry-docking payments

 

(8.9)

 

(14.7)

Deferred dry-docking amortization

 

12.4

 

12.9

Prepaid expenses and other assets

 

68.3

 

(48.3)

Accounts payable, accruals and other liabilities

 

3.6

 

4.5

Operating lease liabilities

(76.3)

(74.2)

Other long-term liabilities

 

(6.7)

 

(4.6)

Net cash provided by operating activities

 

246.5

 

691.1

Cash Flows From Investing Activities:

Capitalized vessel construction expenditures

(50.8)

(11.4)

Other capital expenditures

 

(75.5)

 

(68.4)

Proceeds from disposal of property and equipment, net

 

0.1

0.8

Payment for intangible asset acquisition

(12.4)

Cash deposits and interest into the Capital Construction Fund

 

(113.1)

 

(10.7)

Withdrawals from Capital Construction Fund

49.9

10.7

Net cash used in investing activities

 

(201.8)

 

(79.0)

Cash Flows From Financing Activities:

Repayments of debt

 

(55.1)

 

(32.5)

Dividends paid

(22.4)

 

(25.0)

Repurchase of Matson common stock

(82.5)

 

(208.5)

Tax withholding related to net share settlements of restricted stock units

(12.5)

(19.5)

Net cash used in financing activities

 

(172.5)

 

(285.5)

Net (Decrease) Increase in Cash, Cash Equivalents and Restricted Cash

 

(127.8)

 

326.6

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

 

253.7

 

287.7

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

$

125.9

$

614.3

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

Cash and Cash Equivalents

$

122.0

$

609.0

Restricted Cash

3.9

5.3

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

$

125.9

$

614.3

Supplemental Cash Flow Information:

Interest paid, net of capitalized interest (including debt prepaid fees)

$

7.1

$

8.4

Income tax payments (refunds), net

$

(28.8)

$

211.7

Non-cash Information:

Capital expenditures included in accounts payable, accruals and other liabilities

$

8.4

$

6.1

Non-cash payment for intangible asset acquisition

$

4.1

$

Accrued dividends

$

11.2

$

12.4

See Notes to Condensed Consolidated Financial Statements.

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Table of Contents

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, 2022

 

36.3

$

27.2

 

$

290.4

$

(6.9)

$

1,986.2

$

2,296.9

Net income

 

 

 

 

 

 

34.0

 

34.0

Other comprehensive income (loss), net of tax

 

 

 

 

 

0.6

 

 

0.6

Share-based compensation

 

 

 

 

4.6

 

 

 

4.6

Shares issued, net of shares withheld for employee taxes

 

0.3

0.2

 

 

(12.6)

 

 

 

(12.4)

Shares repurchased

 

(0.7)

(0.5)

(2.7)

(38.9)

(42.1)

Dividends ($0.31 per share)

 

 

 

 

 

 

(11.3)

 

(11.3)

Balance at March 31, 2023

 

35.9

26.9

 

279.7

(6.3)

1,970.0

2,270.3

Net income

 

 

 

 

 

 

80.8

 

80.8

Other comprehensive income (loss), net of tax

 

 

 

 

(1.6)

 

 

(1.6)

Share-based compensation

 

 

 

 

5.2

 

 

 

5.2

Shares issued, net of shares withheld for employee taxes

 

 

 

 

0.1

 

 

 

0.1

Shares repurchased

 

(0.6)

(0.6)

(2.3)

(39.5)

(42.4)

Dividends ($0.31 per share and $0.32 per share)

 

 

 

 

 

(22.4)

 

(22.4)

Balance at June 30, 2023

 

35.3

$

26.3

 

$

282.7

$

(7.9)

$

1,988.9

$

2,290.0

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

See Notes to Condensed Consolidated Financial Statements.

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Table of Contents

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 from China to Long Beach, California, provides services to Okinawa, Japan and various islands in the South Pacific, and operates an international export service from ports in Alaska to Asia. In addition, subsidiaries of MatNav provide stevedoring, refrigerated cargo services, inland transportation and other terminal services for MatNav on the Hawaiian islands of Oahu, Hawaii, Maui and Kauai, and for MatNav and other ocean carriers in Alaska.

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.          GENERAL AND 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, 2022, filed with the Securities and Exchange Commission (“SEC”) on February 24, 2023.

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Table of Contents

Fiscal Period: The period end for Matson covered by this report is June 30, 2023. The period end for MatNav and its subsidiaries covered by this report is June 30, 2023.

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, 2022.

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.

Prepaid Expenses and Other Assets: Prepaid expenses and other assets consisted of the following at June 30, 2023 and December 31, 2022:

June 30, 

December 31, 

Prepaid Expenses and Other Assets (in millions)

    

2023

    

2022

Income tax receivables, net

$

105.9

$

170.8

Prepaid fuel

 

25.2

 

26.3

Prepaid insurance and insurance related receivables

 

15.4

 

17.4

Restricted cash - vessel construction obligations

3.9

3.9

Other

 

20.4

 

22.9

Total

$

170.8

$

241.3

Income tax receivables include an expected federal income tax refund related to the Company’s 2021 federal tax return and other income tax receivables, offset by current federal income tax payables.

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)

2023

    

2022

 

2023

    

2022

Ocean Transportation services

$

605.8

$

1,040.2

$

1,145.3

$

1,976.9

Terminal and other related services

6.6

4.7

13.5

8.4

Fuel sales

2.8

2.8

5.7

4.7

Vessel management and related services

1.7

1.5

3.4

3.1

Total

$

616.9

$

1,049.2

$

1,167.9

$

1,993.1

(1)Ocean Transportation revenue transactions are primarily denominated in U.S. dollars except for less than 3 percent of Ocean Transportation revenues 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.

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Table of Contents

Three Months Ended

 

Six Months Ended

June 30, 

 

June 30, 

Logistics (in millions) (1)

2023

2022

2023

2022

Transportation Brokerage and Freight Forwarding services

$

139.5

$

184.4

$

277.2

$

379.3

Warehousing and distribution services

10.0

13.8

19.6

25.9

Supply chain management and other services

 

7.0

 

13.7

 

13.5

 

28.3

Total

$

156.5

$

211.9

$

310.3

$

433.5

(1)Logistics revenue transactions are primarily denominated in U.S. dollars except for less than 3 percent of Logistics revenues which are denominated in foreign currencies.

Transportation Brokerage and Freight Forwarding services revenue consists of amounts billed to customers for services provided. The primary costs include third-party purchased transportation services, agent commissions, labor and equipment. Revenue and the related purchased third-party transportation costs are recognized over the duration of a delivery based upon the relative transit time completed in each reporting period. Labor, agent commissions, and other operating costs are expensed as incurred. The Company reports revenue on a gross basis as the Company serves as the principal in these transactions because it is responsible for fulfilling the contractual arrangements with the customer and has latitude in establishing prices.
Warehousing and distribution services revenue consist of amounts billed to customers for storage, handling, and value-added packaging of customer merchandise. Storage revenue is recognized in the month the service is provided to the customer. Storage related costs are recognized as incurred. Other Warehousing and distribution services revenue and related costs are recognized in proportion to the services performed.
Supply chain management 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 administrative 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, 2022. A summary of the CCF cash account for the six months ended June 30, 2023 and 2022 consisted of the following:

Six Months Ended

June 30, 

(In millions)

    

2023

    

2022

CCF balance at beginning of period

$

518.2

$

Cash deposits into CCF

100.0

10.7

Interest earned on deposits

15.6

Qualifying withdrawal payments

(49.9)

(10.7)

CCF balance at end of period

$

583.9

$

The Company had $583.9 million and $518.2 million on deposit in the CCF as of June 30, 2023, and December 31, 2022, respectively. Cash on deposit in the CCF is invested in a U.S. Treasury obligations fund with daily liquidity. At June 30, 2023, securities held within this fund had a weighted average life of 41 days. Cash on deposit in the CCF is classified as a long-term asset on the Company’s Condensed Consolidated Balance Sheets, as the Company intends to use withdrawals to fund qualified milestone progress payments for the construction of three new Jones Act vessels.

During the six months ended June 30, 2023, the Company pledged $200.0 million of accounts receivable into the CCF. There were no pledged amounts during the six months ended June 30, 2022. As of June 30, 2023 and December 31, 2022, $210.0 million and $9.9 million of eligible accounts receivable were assigned to the CCF, respectively. 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.

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Table of Contents

Investment in SSAT: Condensed income statement information for SSAT for the three and six months ended June 30, 2023 and 2022 consisted of the following:

Three Months Ended

 

Six Months Ended

 

June 30, 

 

June 30, 

 

(In millions)

2023

    

2022

 

2023

    

2022

 

Operating revenue

$

242.9

$

391.1

$

473.7

$

821.5

Operating costs and expenses

(248.9)

(300.5)

(484.8)

(607.4)

Operating (loss) income

(6.0)

90.6

(11.1)

214.1

Net (Loss) Income (1)

$

(4.1)

$

78.0

$

(8.9)

$

178.1

Company Share of SSAT’s Net (Loss) Income (2)

$

(1.4)

$

24.7

$

(3.2)

$

58.7

(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 (loss) 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 $80.1 million and $81.2 million at June 30, 2023 and December 31, 2022, respectively.

Dividends: The Company’s second quarter 2023 cash dividend of $0.31 per share was paid on June 1, 2023. On June 22, 2023, the Company’s Board of Directors declared a cash dividend of $0.32 per share payable on September 7, 2023 to shareholders of record on August 3, 2023.

Repurchase of Shares: During the three months ended June 30, 2023, the Company repurchased approximately 0.6 million shares for a total cost of $42.4 million. As of June 30, 2023, the maximum number of remaining shares that may be repurchased under the Company’s share repurchase program was approximately 3.3 million shares.

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 $54.4 million and $69.2 million for the three months ended June 30, 2023 and 2022, and $94.5 million and $142.4 million for the six months ended June 30, 2023 and 2022, respectively, have been eliminated from operating revenues in the table below.

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Table of Contents

Reportable segment financial information for the three and six months ended June 30, 2023 and 2022 are as follows:

Three Months Ended

Six Months Ended

June 30, 

June 30, 

(In millions)

    

2023

    

2022

    

2023

    

2022

Operating Revenue:

Ocean Transportation (1)

$

616.9

$

1,049.2

$

1,167.9

$

1,993.1

Logistics (2)

 

156.5

 

211.9

 

310.3

 

433.5

Total Operating Revenue

$

773.4

$

1,261.1

$

1,478.2

$

2,426.6

Operating Income:

Ocean Transportation (3)

$

82.4

$

470.0

$

110.2

$

886.2

Logistics

 

14.3

 

23.1

 

25.2

 

39.5

Total Operating Income

 

96.7

 

493.1

 

135.4

 

925.7

Interest income

8.7

 

16.9

 

Interest expense

 

(2.9)

 

(4.5)

 

(7.4)

 

(9.3)

Other income (expense), net

 

1.8

 

1.8

 

3.6

 

3.8

Income before Taxes

 

104.3

 

490.4

 

148.5

 

920.2

Income taxes

 

(23.5)

 

(109.7)