Thank you for standing by. Welcome to the Matson's Fourth Quarter 2025 Financial Results Conference Call. [Operator Instructions] As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Justin Schoenberg, Director of Investor Relations and Corporate Development. Please go ahead, sir.

Thank you. Joining me on the call today are Matt Cox, Chairman and Chief Executive Officer; and Joel Wine, Executive Vice President and Chief Financial Officer. Slides from this presentation are available for download at our website, www.matson.com, under the Investors tab. Before we begin, I would like to remind you that during the course of this call, we will make forward-looking statements within the meaning of the federal securities laws regarding expectations, predictions, projections or future events. We believe that our expectations and assumptions are reasonable. We caution you to consider the risk factors that could cause actual results to differ materially from those in the forward-looking statements in the press release, the presentation slides and this conference call. These risk factors are described in our press release and presentation and are more fully detailed under the caption Risk Factors on Pages 28 to 40 of our Form 10-Q filed on November 5, 2025, and in our subsequent filings with the SEC. Please also note that the date of this conference call is February 24, 2026, and any forward-looking statements that we make today are based on assumptions as of this date. We undertake no obligation to update these forward-looking statements. I will now turn the call over to Matt.

Thanks, Justin, and thanks to those on the call. Starting on Slide 3. Matson had a solid finish to the year with consolidated fourth quarter results that exceeded our expectations. For the quarter, Ocean Transportation operating income approached the level achieved in the prior year period, primarily due to higher-than-expected freight rates and volumes in our China service driven by strong e-commerce and e-goods demand. Our China service benefited from strong freight demand in our key customer segments as well as a more stable trading environment in the Transpacific trade lane as a result of the U.S. China trade and economic deal announced on October 30, which greatly reduced uncertainty regarding tariffs, port entry fees, global trade and other geopolitical factors. In our domestic ocean trade lanes, we saw higher year-over-year volumes in Hawaii and Guam and lower year-over-year volume in Alaska. In the Logistics, quarterly operating income decreased year-over-year primarily due to a lower contribution from supply chain management. For the full year, our consolidated operating income decreased year-over-year primarily due to lower volume and freight rates in our China service over the last 3 quarters as customers manage freight in a challenging environment marked by uncertainty and volatility arising from tariffs and global trade. Looking ahead, for full year 2026, we expect consolidated operating income to approach the level achieved in the full year 2025 and based on our expectations of continued solid U.S. consumer demand and a stable trading environment in the Transpacific trade lane. For 2026 compared to 2025, we also expect to see a more normal operating income seasonality pattern with our second and third quarters being the strongest relative to the first and fourth quarters. I will now go through the fourth quarter and full year performance of our trade lanes, SSAT and Logistics.…

Okay. Thanks, Matt. So please turn to Slide 14 for a review of our fourth quarter and full year 2025 results. For the fourth quarter, consolidated operating income decreased $3.8 million year-over-year to $143.7 million with lower contributions from Ocean Transportation and Logistics of $1.4 million and $2.4 million, respectively. The decrease in Ocean Transportation operating income in the fourth quarter was primarily due to a lower contribution from China, partially offset by a higher contribution from SSAT. As Matt noted, the increase in SSAT equity income was primarily due to an impairment charge related to the write-down of the terminal operating lease asset in the year ago period, which impacted our operating income by $18.4 million. Decrease in Logistics operating income was primarily due to a lower contribution from supply chain management. We had interest income of $6.7 million in the quarter, which is $3.6 million lower than the prior year due to a lower balance of cash and cash equivalents and deposits in the CCF as compared to the prior year period. The effective tax rate in the quarter was 5.2% compared to 19.1% in the year ago period. We benefited from a onetime tax adjustment of $18.5 million related to the company's deferred tax assets and liabilities which favorably impacted diluted EPS by $0.59 of earnings per share. In the fourth quarter, net income and diluted earnings per share were $143.1 million and $4.60, respectively. For the full year, consolidated operating income decreased $51.5 million year-over-year to $499.8 million with lower contributions from Ocean Transportation and Logistics of $45.3 million and $6.2 million, respectively. The decrease in Ocean Transportation operating income for the year was primarily due to a lower contribution from China, partially offset by a higher contribution from SSAT. The decrease in Logistics operating income…

Okay. Thanks, Joel. Let me close with a few final thoughts. Matson is well positioned across its business lines as we head into 2026. The U.S. economy remains solid, underpinned by a supportive macroeconomic environment and healthy consumer spending. And the tariff uncertainties from 2025 are mostly behind us, which we expect to provide stability in the Transpacific trading environment. Across all our trade lanes, we remain focused on what we can control, including vessel and schedule integrity, reliability of our operations and delivering a high-quality service for our customers. These attributes are ingrained in our company's culture through decades-long relationships with our customers, working closely with them and through periods of uncertainty and volatility. In our China service, we're focused on expanding our network in Southeast Asia as our customers continue to diversify their operating locations in the region. Supply chains are becoming more complex, making speed-to-market and schedule integrity paramount for our customers. As the fastest and second-fastest ocean service in the Transpacific, our CLX and MAX services are well suited for increasing supply chain complexity and tighter inventory control by our customers. The premium rates in our China service reflect our unique value proposition relative to air freight and the consistency and reliability of our CLX and MAX services. Our rates in the Transpacific trade lanes remained strong, and we expect to continue to focus on maximizing yield with every weekly sailing from China. We remain committed to looking for ways to grow, either organically or periodically through acquisition. Last, we expect to return -- excuse me, last, we expect to continue to return capital to shareholders through dividends and our share repurchase program. We expect to continue to be steady buyers of our shares. And with that, I will turn the call back to the operator and ask for your questions.

[Operator Instructions] And our first question for today comes from the line of Jacob Lacks from Wolfe Research.

So a year ago, you gave more of a guidance range depending on the return of Red Sea sailings. This year, you're giving more of a point estimate. To the extent we see a broader resumption in Red Sea sailings, do you think that matters for you? And is this in the guidance one way or the other?

Yes, thanks for the question. From our perspective, and we mentioned this in one -- I think our last quarterly call, because of our relative positioning, we do see the broader Transpacific trade as oversupplied, that is capacity and the ship order book exceeds expected demand, and there's pressure on international freight rates. We also know that -- or has estimated that if the Red Sea does open or reopen that, that adds somewhere between 7% to 9% of additional capacity that would be available to be deployed given the shorter transits. And our guidance is independent of whether the Red Sea opens or doesn't. We said it largely doesn't matter to us. The ocean freight rates, the ability of the ocean carriers to set the appropriate capacity to support their freight rates. Our product has increasingly distanced itself from the supply chain on the generic ocean services. So it really doesn't matter to us. And so accordingly, we really don't have a view of it because I don't think it affects our own guidance.

Got it. That's helpful. And you discussed expectation for demand to return post-holiday. Maybe it's a bit too early, but have you seen any signs of a normal seasonal recovery coming out of Lunar New Year yet? Or do you have any visibility on that? Or is this just an expectation based on history?

I mean I think it feels to us like a more traditional Lunar New Year recovery, where we saw demand -- first of all, in my prepared comments, we saw no significant spike pre-Lunar New Year. And factory by factory, they made the decision about looking at their order books, did they close a little bit early? Are they going to wait 1 week or 2 longer for the labor to return? Historically, they have a benefit of this whole high-speed rail network. So it used to take several days for people who lived in the remote regions to return. And now that's really accelerated. From a demand standpoint, I guess the way I would put it is we've seen a very traditional recovery from Lunar New Year, which means it's not a speedy recovery nor is it lagging. It feels to us really normal at this point. But as you point out, time will tell here in terms of the ramp. So a little bit early to see it, but we think it will -- with the benefit of hindsight, look like a very traditional Lunar New Year post-ramp.

That's helpful. And we're hearing more and more about data center-related volumes moving through air freight. Is any of that spilling over into your expedited ocean service? Or is the strength more consumer electronics and e-commerce volumes that you've discussed in the past?

Yes. I mean there is a subcomponent within our e-goods segment. We're talking about e-commerce, e-goods, garments, the traditional product. But within the electronic goods category, we are moving racking and servers. And again, to your point, it's moving out of air freight into our expedited service. So that's a component of our e-goods that we're seeing in the fourth quarter and expect to continue to see in 2026.

And our next question comes from the line of Reed Seay from Stephens Inc.

I wanted to get a feel for how you see the pricing environment here in 2026. Obviously, it's been a common theme throughout 2025, the new pricing strategy. And do you see your ability to maybe increase it from where you exited 2025? Or maybe do volumes not support a price increase this year? Just any thoughts on how you're thinking about pricing going into the year?

Sure. Yes. We did -- as you know, we pivoted last year to be focusing on not necessarily filling our ships, but rather focusing on yield management. And part of that was informed by our belief that we could lower the rate. But given the gap we had over the ocean freight rates, we couldn't lower the rates far enough to create demand, given how for our freight rates were above the rest of the market. We see that dynamic continuing to play out in 2026. And so I would expect for us to -- like most carriers, we'll see a ramp-up post-Lunar New Year. We'll be watching closely where our demand is week by week. We're focusing less on the other ocean carriers. And we've given ourselves permission to not have our vessels full while we're focusing on both growing our Southeast Asia cargo and introducing those services to the MAX and CLX service parameters into the new markets in Southeast Asia. That will be an area that we're going to continue to focus on. And then, of course, continuing to support our traditional customers out of China for e-commerce and e-goods and garments, those traditional plans. But getting back to pricing, I think we're thinking 2026 is going to look a lot like '25 in terms of our disciplined approach to the market. Beyond that, time will tell, but we feel confident enough at this point to provide the guidance from full year earnings to approach the level we saw in 2025.

Got it. That's helpful. And then if we can touch on a little bit more the Thailand route you all introduced in December. What type of volume is that doing today? What type of volume can it do in the future? I guess, what is the opportunity that this presents to Matson. And I assume this is being trucked to China as opposed to being shipped like from Vietnam, is this more favorable economics? Or any color there would be helpful as well.

Yes, sure. As it relates to Thailand, as you said, we started that just at the end of the year. And similar to our ramp in Vietnam first in North Vietnam and then last year in South Vietnam. We expect a slow and steady volumes. They're consistent with our expectations. It's starting out at 50 loads per sailing. And again, we're just getting started. What's interesting about the customer mix, it's many of the customers that support us in Vietnam and in China are those that know our value proposition. But our goal, of course, we're new to that market. And we'll be continuing to build an organization and work on expanding that book of business. We don't quite have a specific target in mind, but we do expect our volumes, if you look at our China services for the full year, we'll look back and our goal is to have modestly higher volume for the full year out of all of our origins. But we do expect continued growth both in Thailand and in Vietnam. Let me comment on the mode in which it travels. So if you look historically at Matson's business on the CLX service with its Shanghai Ningbo origin, we saw a number of containers that were moving cross-border initially, whether it's from Vietnam or whether it was from Cambodia from Thailand, that trucked all the way across multiple borders to meet our CLX service. What we've seen as we moved initially into Vietnam, there's a certain amount of cargo that are carried on our 2 weekly Vietnam services. that are trucked over the border from Cambodia today. As we move to Thailand, there is still some cargo that will move via truck to our various origins, but we also are moving cargo with our trusted feeder partner on an ocean direct service from Thailand to meet up with our services. So we are still seeing some cross-border trucking, but we have an all-water option with our trusted feeder partner to allow for that direct connection into Shanghai.

Got it. Got it. That makes a lot of sense. And then last one for me. If the administration put out a Maritime Action Plan, there was a little bit in it. Obviously, some of it concerning Jones Act, American-built ships. I'm not sure if there's anything in there that you expect to impact Matson or if there's anything that we should be looking out for on our side as we see maybe next steps from the administration's plans there. So I guess anything stand out to you in that release from the administration?

Yes, sure. And again, thanks for the question. So my take on this is, this Maritime Action Plan represents really, I would call it an aspirational blueprint to revive U.S. shipbuilding and in particular, U.S. shipbuilding in the international trades, it's very comprehensive for those that have taken the time to read it. It's clear that -- well, there's no time frames attached to this. And of course, there were no specific proposed changes to the Jones Act, rather, the focus was really on recreating a U.S. flagged vessel fleet in the international trades. And it did include infrastructure or security fee based on the weight of imported cargo, again, without any specific time frame, those funds could be used to create a trust fund. But they also acknowledge that it was likely to need congressional approval to create this new mechanism on security fees. And again, with no time frame. My take on it is, it's really aspirational. There's no specific time frame on it. It doesn't impact the Jones Act. And exactly the timing and what pieces will roll out in what order is really not clear. but it does require, we think, congressional approval. So those are my thoughts on the Maritime Action Plan at this point.

And our next question is a follow-up from Jacob Lacks from Wolfe Research.

Just one quick clarification. Were there any port fees you paid in the 4Q results?

It's Joel, Jake. The $6.4 million that we had already disclosed was the total that we paid in the fourth quarter.

This does conclude the question-and-answer session of today's program. I'd like to hand the program back to Matt Cox for any further remarks.

Okay. Well, thanks for your participation today. We look forward to catching up with everyone on our first quarter call.

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.