Matson, Inc. (MATX) Bundle
Understanding Matson, Inc. (MATX) Revenue Streams
Understanding Matson, Inc.’s Revenue Streams
Matson, Inc. generates revenue primarily from two segments: Ocean Transportation and Logistics. The breakdown of operating revenue for the three and nine months ended September 30, 2024, is as follows:
| Segment | Three Months Ended September 30, 2024 (In millions) | Three Months Ended September 30, 2023 (In millions) | Change (In millions) | Change (%) |
|---|---|---|---|---|
| Ocean Transportation | $798.7 | $669.4 | $129.3 | 19.3% |
| Logistics | $163.3 | $158.1 | $5.2 | 3.3% |
| Total Operating Revenue | $962.0 | $827.5 | $134.5 | 16.3% |
For the nine months ended September 30, 2024, the operating revenue is as follows:
| Segment | Nine Months Ended September 30, 2024 (In millions) | Nine Months Ended September 30, 2023 (In millions) | Change (In millions) | Change (%) |
|---|---|---|---|---|
| Ocean Transportation | $2,067.6 | $1,837.3 | $230.3 | 12.5% |
| Logistics | $463.9 | $468.4 | $(4.5) | (1.0%) |
| Total Operating Revenue | $2,531.5 | $2,305.7 | $225.8 | 9.8% |
The Ocean Transportation segment contributes significantly to the overall revenue, with a year-over-year growth rate driven by higher freight rates in China and increased domestic trade. The contribution of the Ocean Transportation segment to total operating revenue for the nine months ended September 30, 2024, was approximately 81.7%, while Logistics accounted for 18.3%.
In terms of year-over-year revenue growth, the Ocean Transportation segment saw a 12.5% increase in revenue, attributed to higher freight rates despite a decrease in container volume from Hawaii by 2.5%. Conversely, the Logistics segment experienced a slight decline of 1.0% in revenue, attributed to lower transportation brokerage revenue.
Overall, the significant growth in the Ocean Transportation segment highlights the company's resilience and ability to adapt to market demands, while the Logistics segment's performance indicates areas for potential improvement.
A Deep Dive into Matson, Inc. (MATX) Profitability
A Deep Dive into Matson, Inc.'s Profitability
Gross Profit Margin: For the nine months ended September 30, 2024, the gross profit margin was 15.5%, compared to 11.5% for the same period in 2023.
Operating Profit Margin: The operating profit margin for the same period in 2024 was 17.6%, a rise from 12.4% in 2023.
Net Profit Margin: The net profit margin increased to 13.8% in 2024 from 10.2% in 2023.
Trends in Profitability Over Time
Comparing the operating income for the nine months ended September 30, 2024, the operating income was $403.8 million, up from $267.5 million in 2023, reflecting a change of 51.0%.
The net income for the nine months ended September 30, 2024, was $348.4 million, compared to $234.7 million in 2023, marking an increase of 48.4%.
Comparison of Profitability Ratios with Industry Averages
The average operating margin in the transportation industry is around 15%. Matson's operating margin of 17.6% in 2024 outperforms this average.
Net profit margins in the industry typically average around 9%, while Matson's net profit margin stands at 13.8%, indicating a strong competitive position.
Analysis of Operational Efficiency
Operating costs and expenses increased to $2,127.7 million for the nine months ended September 30, 2024, from $2,038.2 million in 2023. However, the increase in revenue to $2,531.5 million from $2,305.7 million demonstrates effective cost management.
The gross margin trend shows an increase from 23.5% in 2023 to 29.5% in 2024, highlighting improved operational efficiency.
| Metric | 2024 | 2023 | Change |
|---|---|---|---|
| Gross Profit Margin | 15.5% | 11.5% | +4.0% |
| Operating Profit Margin | 17.6% | 12.4% | +5.2% |
| Net Profit Margin | 13.8% | 10.2% | +3.6% |
| Operating Income | $403.8 million | $267.5 million | +50.9% |
| Net Income | $348.4 million | $234.7 million | +48.4% |
| Operating Costs | $2,127.7 million | $2,038.2 million | +4.4% |
| Revenue | $2,531.5 million | $2,305.7 million | +9.8% |
Debt vs. Equity: How Matson, Inc. (MATX) Finances Its Growth
Debt vs. Equity: How Matson, Inc. Finances Its Growth
Overview of Debt Levels
As of September 30, 2024, Matson, Inc. reported total debt of $410.6 million, a decrease from $440.6 million at December 31, 2023. This reduction reflects a scheduled repayment of fixed interest debt amounting to $30 million over the nine-month period.
Debt Composition
| Type of Debt | September 30, 2024 (in millions) | December 31, 2023 (in millions) | Change (in millions) |
|---|---|---|---|
| Variable Interest Debt | $0.0 | $0.0 | $0.0 |
| Fixed Interest Debt | $410.6 | $440.6 | ($30.0) |
| Total Debt | $410.6 | $440.6 | ($30.0) |
Debt-to-Equity Ratio
Matson's debt-to-equity ratio as of September 30, 2024, stands at 0.17, calculated using total debt of $410.6 million and total equity of approximately $2.4 billion. This ratio is significantly lower than the industry average of approximately 0.60, indicating a conservative approach to leveraging and financial risk management.
Recent Debt Issuances and Credit Ratings
As of the latest financial reporting, Matson has not issued new debt since the previous fiscal year. The company maintains a revolving credit facility with $644.2 million available as of September 30, 2024, with a maturity date of March 31, 2026. The company currently holds a credit rating of Baa2 from Moody's, reflecting its stable financial outlook and ability to meet financial commitments.
Balancing Debt Financing and Equity Funding
Matson continues to balance its financing through a mix of debt and equity. The total equity as of September 30, 2024, was approximately $2.4 billion, supported by retained earnings and capital contributions. The company actively repurchased shares, spending $167.4 million in stock buybacks during the nine months ended September 30, 2024.
In summary, Matson's financial strategy emphasizes maintaining a low debt-to-equity ratio while ensuring sufficient liquidity through its credit facilities and operational cash flows.
Assessing Matson, Inc. (MATX) Liquidity
Assessing Matson, Inc.'s Liquidity
Current Ratio: As of September 30, 2024, the current ratio is calculated as follows:
| Current Assets (in millions) | Current Liabilities (in millions) | Current Ratio |
|---|---|---|
| $651.8 | $577.7 | 1.13 |
The current ratio indicates that the company can cover its current liabilities with its current assets, reflecting a stable liquidity position.
Quick Ratio: The quick ratio, which excludes inventories, is as follows:
| Cash and Cash Equivalents (in millions) | Accounts Receivable (in millions) | Current Liabilities (in millions) | Quick Ratio |
|---|---|---|---|
| $270.3 | $311.1 | $577.7 | 1.02 |
The quick ratio shows that even without liquidating inventory, the company maintains a solid ability to meet its short-term obligations.
Analysis of Working Capital Trends
Working capital, defined as current assets minus current liabilities, is an important indicator of operational efficiency. As of September 30, 2024, the working capital is:
| Current Assets (in millions) | Current Liabilities (in millions) | Working Capital (in millions) |
|---|---|---|
| $651.8 | $577.7 | $74.1 |
The working capital has increased from the previous year, suggesting improved operational liquidity.
Cash Flow Statements Overview
For the nine months ended September 30, 2024, the cash flow trends are as follows:
| Cash Flows from Operating Activities (in millions) | Cash Flows from Investing Activities (in millions) | Cash Flows from Financing Activities (in millions) |
|---|---|---|
| $593.1 | $(208.8) | $(247.9) |
Net cash provided by operating activities: $593.1 million, an increase of $194.0 million from the previous year.
Net cash used in investing activities: $(208.8) million, showing a decrease in cash outflow compared to $(270.7) million in the prior year.
Net cash used in financing activities: $(247.9) million, an increase in cash outflow from $(221.7) million previously.
Potential Liquidity Concerns or Strengths
As of September 30, 2024, cash and cash equivalents total:
| Cash and Cash Equivalents (in millions) | Restricted Cash (in millions) | Accounts Receivable (in millions) | Total Liquidity (in millions) |
|---|---|---|---|
| $270.3 | $2.4 | $311.1 | $583.8 |
The company has a robust liquidity position, with a total liquidity of $583.8 million, providing a good buffer against any unexpected financial challenges. The Capital Construction Fund (CCF) also shows a balance of:
| CCF Cash and Cash Equivalents (in millions) | Assigned Accounts Receivable (in millions) | Total CCF (in millions) |
|---|---|---|
| $635.4 | $228.3 | $863.7 |
This fund is specifically earmarked for vessel construction, indicating a strategic approach to maintaining liquidity for growth initiatives. Overall, the liquidity and solvency metrics suggest a healthy financial position for the company moving forward into 2024.
Is Matson, Inc. (MATX) Overvalued or Undervalued?
Valuation Analysis
To assess the financial health of the company, key valuation metrics such as the price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios are analyzed.
Price-to-Earnings (P/E) Ratio
As of September 30, 2024, the company's earnings per share (EPS) was $10.28. The current stock price is approximately $95.00.
The P/E ratio is calculated as:
P/E Ratio = Stock Price / EPS = $95.00 / $10.28 ≈ 9.24
Price-to-Book (P/B) Ratio
The book value per share as of September 30, 2024, was $67.50. The P/B ratio is calculated as:
P/B Ratio = Stock Price / Book Value per Share = $95.00 / $67.50 ≈ 1.41
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The enterprise value is calculated as follows:
- Market Capitalization: $3.2 billion
- Total Debt: $410.6 million
- Cash and Cash Equivalents: $635.4 million
Thus, the enterprise value is:
EV = Market Capitalization + Total Debt - Cash = $3.2 billion + $410.6 million - $635.4 million ≈ $2.975 billion
EBITDA for the last twelve months is $403.8 million.
Therefore, the EV/EBITDA ratio is:
EV/EBITDA = EV / EBITDA = $2.975 billion / $403.8 million ≈ 7.37
Stock Price Trends
The stock price trends over the last 12 months show the following data points:
| Date | Stock Price |
|---|---|
| September 2023 | $80.00 |
| December 2023 | $85.00 |
| March 2024 | $90.00 |
| June 2024 | $95.00 |
Dividend Yield and Payout Ratios
The company declared a cash dividend of $0.34 per share for the third quarter of 2024. The annual dividend is:
Annual Dividend = $0.34 x 4 = $1.36
The yield is calculated as:
Dividend Yield = Annual Dividend / Stock Price = $1.36 / $95.00 ≈ 1.43%
The payout ratio is:
Payout Ratio = Annual Dividend / EPS = $1.36 / $10.28 ≈ 13.23%
Analyst Consensus on Stock Valuation
Analyst consensus indicates a range of recommendations:
- Buy: 5 analysts
- Hold: 4 analysts
- Sell: 1 analyst
Key Risks Facing Matson, Inc. (MATX)
Key Risks Facing Matson, Inc.
The financial health of Matson, Inc. is influenced by various internal and external risk factors. These risks can significantly impact the company’s profitability and operational efficiency.
Industry Competition
Matson operates in a highly competitive logistics and transportation sector. The company faces competition from both established players and new entrants, which can lead to pricing pressures. In the nine months ended September 30, 2024, operating revenue increased by $225.8 million, or 9.8%, compared to the same period in 2023, indicating some resilience against competitive pressures.
Regulatory Changes
Changes in regulations, particularly those affecting maritime operations and environmental standards, pose significant risks. Compliance with the Jones Act and other maritime laws is crucial. The failure to adhere to these regulations could result in penalties and operational disruptions.
Market Conditions
Market fluctuations, including changes in consumer demand and global trade dynamics, impact the company’s performance. For instance, during the three months ended September 30, 2024, Hawaii container volume decreased by 2.2%, primarily due to lower general demand.
Operational Risks
Operational challenges, such as vessel maintenance and logistics disruptions, can affect service delivery. The company reported capital expenditures for maintenance and other projects amounting to approximately $110 to $120 million for 2024.
Financial Risks
The company’s financial risk is tied to its debt levels and interest rates. As of September 30, 2024, total debt was $410.6 million, down from $440.6 million at the end of 2023. The interest expense decreased to $1.8 million from $2.4 million year-over-year.
Strategic Risks
Strategic decisions regarding investments and expansions can impact financial health. The company’s investment in SSAT was $93.3 million as of September 30, 2024, reflecting ongoing strategic commitments.
Mitigation Strategies
To address these risks, Matson has implemented various strategies, including diversifying its service offerings and enhancing operational efficiencies. The company’s capital construction fund had $635.4 million in cash and cash equivalents as of September 30, 2024, aimed at funding new vessel constructions.
| Risk Factor | Description | Recent Financial Impact |
|---|---|---|
| Competition | Pressure on pricing and market share | Operating revenue increased by $225.8 million (9.8%) |
| Regulatory Changes | Compliance risks with maritime laws | Potential penalties affecting profitability |
| Market Conditions | Fluctuations in consumer demand | Hawaii container volume decreased by 2.2% |
| Operational Risks | Challenges in logistics and maintenance | Capital expenditures of $110 to $120 million |
| Financial Risks | Debt levels and interest rate fluctuations | Total debt of $410.6 million; interest expense of $1.8 million |
| Strategic Risks | Investment decisions impacting financial health | Investment in SSAT at $93.3 million |
Future Growth Prospects for Matson, Inc. (MATX)
Future Growth Prospects for Matson, Inc. (MATX)
Analysis of Key Growth Drivers
The company is poised for future growth through several key drivers:
- Product Innovations: The ongoing investment in the construction of three new Jones Act vessels, with capitalized vessel construction expenditures projected at approximately $77 million for 2024, is expected to enhance operational capacity and efficiency.
- Market Expansions: The company is focusing on increasing its market share in China, where container volume has increased by 2.6% due to additional sailings.
- Acquisitions: The recent joint venture investment in SSA Terminals has shown a significant increase in profitability, contributing $8.5 million in net income for the nine months ended September 30, 2024, compared to a loss of $1.9 million in the prior year.
Future Revenue Growth Projections and Earnings Estimates
Future revenue growth is projected to be robust:
- Operating revenue for the nine months ended September 30, 2024, reached $2,531.5 million, an increase of 9.8% compared to $2,305.7 million in 2023.
- Operating income for the same period surged to $403.8 million, a growth of 51.0% from $267.5 million in 2023.
- Net income increased to $348.4 million, up 48.4% from $234.7 million in the previous year.
Strategic Initiatives or Partnerships Driving Future Growth
Strategic initiatives include:
- The formation of joint ventures and partnerships that enhance operational efficiencies and market reach.
- Investment in technology to streamline logistics and improve supply chain management, which is critical for maintaining competitive pricing and service delivery.
Competitive Advantages Positioning the Company for Growth
The company benefits from several competitive advantages:
- A strong operational footprint in the Pacific region, ensuring a steady flow of goods and services.
- Proven expertise in navigating regulatory environments, particularly with Jones Act compliance, which offers a barrier to entry for new competitors.
- Established relationships with key stakeholders in both domestic and international markets.
| Financial Metric | 2024 | 2023 | Change (%) |
|---|---|---|---|
| Operating Revenue | $2,531.5 million | $2,305.7 million | 9.8% |
| Operating Income | $403.8 million | $267.5 million | 51.0% |
| Net Income | $348.4 million | $234.7 million | 48.4% |
| Capital Expenditures (New Vessels) | $77 million | N/A | N/A |
| SSAT Contribution to Net Income | $8.5 million | ($1.9 million) | N/A |
Overall, the strategic focus on expanding operational capacity and enhancing service delivery through technology and partnerships positions the company for sustained growth in the coming years.
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Article updated on 8 Nov 2024
Resources:
- Matson, Inc. (MATX) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Matson, Inc. (MATX)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Matson, Inc. (MATX)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.