Good day, ladies and gentlemen, and welcome to the Second Quarter 2016 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct the question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I’d now like to introduce your host for today's conference, Mr. Jerome Holland, Director of Investor Relations. Mr. Holland, you may begin.

Thank you, Danielle. Matt Cox, President & Chief Executive Officer; and Joel Wine, Senior Vice President & Chief Financial Officer are joining the call today. Slides from this presentation are available for download at our Web site, www.matson.com, under the Investor Relations 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 are more fully detailed under the caption Risk Factors on Pages 8 to 15 of our 2015’s Form 10-K, filed on February 26, 2016, and in our subsequent filings with the SEC. Please also note that the date of this conference call is August 02, 2016 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. With that, I’ll turn the call over to Matt.

Thanks, Jerome, and thanks for those on the call. Matson’s core businesses delivered second quarter operating results in line with our expectations. Market conditions in the China trade remained at depressed levels during the quarter which hurt our year-over-year results with when compared to the exceptional demand that benefited our premium expedited China service last year. Our Hawaii trade produced solid results benefiting from an 8.4% increase in year-over-year volume, while we deployed 11 ships during the quarter in order to maintain adequate capacity to serve our customers and made continued market growth. In Alaska I am pleased to report that our integration is substantially complete and we remain on-track to achieve our earnings and cash flow accretion expectations for this business. Looking to the remainder of 2016, we are focused on closing and integrating our recently announced acquisition of Span Alaska, underscoring our long-term commitment to Alaska and solidifying Matson's position as a critical freight transportation provider there. We expect our core businesses to continue to generate significant cash flow, which when combined with our strong balance sheet will provide for the Span Alaska acquisition, the construction of our new Aloha Class vessels, the consideration of additional fleet renewal investments, and the ongoing return of capital to shareholders. Turning to the next two Slides 4 and 5. I'll touch on our high level financial results leaving it to Joel to provide more color later in the call. In the second quarter of 2016, we earned net income of $18 million or $0.42 per share and generated EBITDA of $68.8 million. Year-to-date 2016 Matson earned net income of $36.1 million or $0.83 per diluted share and generated EBITDA of $135.2 million. While these measures are all higher year-over-year for both the quarter and the year-to-date period, I'd like to remind…

Thanks, Matt. As shown on Slide 15, Ocean Transportation operating income for the quarter increased $2.5 million year-over-year, the increase was primarily due to the absence of SG&A expenses related to the Horizon acquisition and cost related to the Molasses settlement as well as higher container volume in Hawaii. Partially offsetting these favorable year-over-year comparisons were lower freight rates and volume in the China service, higher vessel operating expenses related to the deployment of additional vessels in the Hawaii trade, and higher terminal handling expenses. The Company's SSAT joint venture investment contributed 3 million during the second quarter 2016, compared to a 5.2 million contribution in the second quarter 2015. On a year-over-year basis, SSAT's lift volume improved in the second quarter 2016. However, the positive impact of improved lift volume was more than offset by the absence of the benefits related to the clearing of international cargo volume after the U.S. West Coast labor disruptions in the second quarter 2015. Operating income for Logistics was relatively flat in the second quarter year-over-year due to the items Matt mentioned earlier. As shown on Slide 16, Ocean Transportation operating income decreased 8.4 million during the six months ended June 30, 2016 compared with the six months ended June 30, 2015, the decrease was primarily due to lower freight rates and volume in the China service, higher vessel operating expenses related to the deployment of additional vessels in the Hawaii trade and higher terminal handling expenses. Partially offsetting these unfavorable items were the absence of SG&A expenses related to the Horizon acquisition and cost related to the Molasses settlement, higher container volume and yield improvements in Hawaii and the inclusion of operating results from the companies acquired Alaska service. SSAT contributed 5.6 million in the first half 2016, compared to an 8.6…

Thanks, Joel. In summary, the second quarter results were in line with our expectation. And now for the remainder of 2016 we'll turn our attention to closing and integrating the Span Alaska acquisition. We'll continue to evaluate ordering additional new vessels to complete the renewal of our Hawaii fleet and most importantly we'll be focused on our mission, which is to move freight better than anyone and delivering on our long-term commitment to be the service leader in all the markets we serve. Overall I continue to be very confident in the strong cash flow generated from Matson's core businesses that combined with our balance sheet will provide ample capacity to close this pending Span Alaska acquisition, fund our fleet and equipment initiatives, while continuing to return capital to shareholders. And with that I'll turn the call back to the operator and ask for your questions.

Thank you. [Operator Instructions] Our first question comes from Jack Atkins from Stephens. Your line is open.

So I guess just to start off with the question about the Hawaii market, the 8.4% container growth in the second quarter obviously benefiting from having some extra capacity in there, could you maybe comment around what's your west bound utilization looking like now with the 11 ship deployment, in place and sort of how do you view underlying market growth in the Hawaii market sort of as we stand here today?

Sure Jack. Yes so we continue to -- to answer your question first. We continue to believe that the Hawaii economy is sort of in a mid inning recovery we do see continued growth in the economy with the indicators as we talked about construction of course it's a big mover, employment, all those things continue to make us feel good, also while not directly attributed necessarily to our business the visitor industry remains healthy, I mean that growth does provide a source of confidence for hotel renewals and other long-term development. So we continue to feel good there we continue to feel there is legs to it, with respect to the movement into an 11 ship our utilization of an 11 ship -- now the entire 11 ship fleet is in the 80%. We went from a 10 to 11 ship fleet as we mentioned in previous quarters primarily because we had a choke point in our network out of the PNW as a result impart of Pasha’s reconfiguration of its fleet which they decided to no longer serve that market. And so the incremental freight we expect to receive from that 11th ship has more than paid for the deployment of that 11 ship. While our utilization is a bit under our long-term norms of -- once we say we’d get about 90% it's time to add another vessel, that 11th vessel has been paid for by incremental -- in other fleet efficiency. So we really feel good about our deployments, we have got surplus capacity in places that we believe it we will be needed over the next few years. And we feel again really good about both our current Hawaii fleet and of course are excited about the arrival of the Alohas and of course we are continuing to evaluate two more ships to complete the modernization. So overall we feel great about where we are in the Hawaii market.

Okay great Matt thank you for that response and then shifting gears to Alaska for a moment, if you go back to the prepared comments you -- Matt you commented that the expected accretion and both cash flow and earnings from that Alaska acquisition, and you are still on target I guess, as it related to both of those items. And given the decline that we have seen moderate decline we have seen in Alaska container activity just given what's happening in the economy there, I’d be curious to know what sort of leverage you guys have been able to pull internally to get the profitability and the cash flow in line because it seems like container activity is a little bit lower but obviously you guys are doing some things to boost the profitability there?

Yes, I'd say Jack, it’s a good question and as we talked about we did provide a little bit more outside context for Alaska, the AEDC, might be a useful indicator but clearly freight volume has declined on a year-over-year basis. We expect the overall economy to be muted. We've also noted previously that the segment of the economy that we trade more that retail segment has been more resilient and less subject to very large swings. And it's more based on the population and personal income. It is also the case that our integration is now complete and our expectation for the need for additional headcount in our corporate infrastructure has been less than we expected which has allowed us to continue to believe that once we get the new vessels or the vessels with the scrubbers back into service which will happen by the end of this year and with a slightly lower expectation for corporate overhead that we continue to be confident that we're going to hit our original cash flow and earnings expectations out of Alaska. So, despite the headwinds continue to be confident in that.

And then as it relates to some housekeeping item of interest expense, it seems like interest expense was perhaps a little bit higher than originally expected in the second quarter, could you maybe comment on what drove that? And then the 23 million of interest expense for the full year, if I'm reading the press release right that includes the private placement, could you maybe give us a number excluding that if we're going to back that out to exclude Span completely from the guidance?

Sure. On that second piece, Jack we're assuming that the transaction, the new transaction closes in September and so you can take interest expense on $200 million at 3.14% for September through the end of the year and then that'll back out -- get back at the 23 million number. With respect to the slightly higher number here in this quarter you'll see in our pension footnote when we filed our Q there was a slight adjustment to our withdrawal liability to the Horizon Puerto Rico pension and that gave rise to a $1.1 million slight increased charge of interest expense on to the interest expense line for this quarter. So, that's what led to slight increase in Q2.

Thank you. And our next question comes from Ben Nolan from Stifel. You're line is open.

Well first just a follow-on what Jack was asking so that 1.1 that is one-time in nature so it's not something that should be modeled going forward, is that correct Joel?

That's correct, that's correct. Yes.

Now onto a few my I guess other questions, so, as it relates to Hawaii and again sort of the thinking through the impact of the market share gains that you guys have had and a lot of it having to do with Pacific Northwest. At this point do you think it's fair to categorize the market share gains that you have captured, it's actually sticky or not transient, I mean this is kind of the new normal, is that a fair way to think of it do you think?

Ben I think it is, I mean I think what we saw was when we saw originally Pasha’s change you'll recall that they -- as they were going to pull out of the PNW they have only an indirect service that of Northern California but affectively double their capacity in Southern California choosing to focus on that market. So, our original expectation was we're going to pickup freight in the PNW, some in Oakland and lose some in LA but that was benefit to Matson. And that’s basically what's happened. And we do see that these are share based on this revised deployment the series of revised deployments for those that the share breakout to be about settle them where it is now. That’s why we are not really expecting in the second half of this year any change in volume except for that might come out of market growth. So kind that is kind of our cash pacing.

And long as line it looked like there was a pretty big increase in the auto volume, I know that’s a low margin business for you guys but is that a function of you guys having access capacity and just finding something to generate extra income, and is a function of being able to or was it you need to record maybe or something?

Yes I mean there are affects around when the auto -- rental car companies primarily move rental cars where they bring new cars into Hawaii then return them to the Mainland for auction into auctions, retail sales for cars have been relatively healthy in Hawaii as part of that broader economic strength. And so I'd say as you have heard us say before a lot of those cars are moved through our auto manufacturer customers the margins on those business are not significant and so we often talk about those as changes in volume but rarely do we talk about them as movers in our operating income. So yes we did carry more cars we think it was a more of a function of sort of when the auto rental companies chose to move those cars based on auto fleet renewals and a strong economy but not -- I wouldn’t say there was anything other more exceptional than those factors.

Okay great and then shifting quickly to China, it’s obviously a, broader market was really weak in the second quarter but as you mentioned it's been a pretty material uplift and the transpacific international rates since July were almost a doubling of rates since July, still not exceptional levels but better anyway, when I think as a premium that you guys earn is it fair to assume that that premium is static relative to the underlying freight rates such that -- I guess my point being if the market is able to hold these better rate levels on the international side do you think that might translate into potentially better results for your China service than you are forecasting?

Yes I mean it's possible although I would -- the way we are thinking about it and now we talked a little bit about last quarter, the market could strengthen further what we see really this is just more of a seasonal effect that things get busier just because of the retail cycle are they going to be remaining busy for the next few months, but we are not reading anything more into it than seasonal effects as we are starting to get into a busier time of year. We are not -- I mean it's possible Ben but at this point we continue to be very cautious about calling a market upturn maybe we have seen the bottom maybe we haven't but exactly when that market turns and when it’s just really hard to say. So that’s why we are really just continuing to affirm our outlook. Overall we said 15% to 20% down which was consistent with our expectations last quarter when we saw the China market really just take a significant dive so we continue to be rather cautious in calling that. I mean there's a possibility I would say possibility is relatively low at this point.

And along those lines, I know that there has been at least one other operator that has tried to replicate their expedited service, and have you noticed any increased level of competition from that or has it not really shown up on your radar?

Yes I mean I would -- it's the shown up on the fringes of our radar, I can't say that we've had any direct customer losses but they've done an okay job of narrowing the differences, obviously they shaved a number of days off we remain the leader by a number of days. And again we might see it on the margin and some Chinese forwarders as we get into the busier time of year but it really only the margin has impacted us.

Thank you. And our next question comes from Steve O’Hara from Sidoti & Company. Your line is open.

I was just wondering I mean I think I'm not sure if I know the last caller addressed the question of the rate premium, but I mean in terms of where it is historically than versus where it is now, I mean is it at similar level or kind of maybe lower than it was in previously let’s say normal periods absent West Coast port issues or something like that?

Yes I mean I would say that our rate premium has steadily increased over the years. It in 2015 it reached a significant new high over '14, I would say 2016's premium is at or around the 2015. So, we've not a significant erosion in that premium. We've seen market rates go down -- us with it. But that premium has endured at very-very high levels in comparison to 2015. So, we're very pleased about that.

And then just on the scrubber installations and any dry dock that is going on. I mean is there any hit the profitability with having maybe a in-service fleet that is maybe less optimal than you'd like it or is that not a factor right now?

Yes, it is Steve. Just to talk about the scrubbers we're in the process of -- we've gotten through two of the scrubbers, the third scrubber will be done between now and the end of the year in Alaska. While those scrubber project has gone on we have put in its place a steam vessel which is relatively less efficient than as opposed to the diesel engine and has impacted our financial results. So, we don’t talk about segment results for this year as we've gone through the scrubber project. That's one of the reasons why when we get into next year, when we get back into a three ship diesel fleet in the Alaska service, that'll allow us to continue to be confident that we're going to hit the original marks that we set for ourselves but there are higher costs both during -- both in Alaska and in our fleet when we're taking diesel ships out now switching to either the Hawaii service, the Alaska service and replacing them with relatively less efficient steam vessels, there is a hit to our operating profitability. Some of that is moderated by the fact that we're able to recover largely all of our fuel costs during -- through our fuel surcharge mechanism but there're other costs that do impact our earnings overall during those dry dock periods.

And just to wrap-up, just any comments on peak season. How you see that shaping out, kind of maybe the averages of it or maybe before you get into it, compared to last year? And just in terms of peak season, is that primarily, I'd assume just in the China and maybe in the Hawaii as well, but not really Guam. Is that the way that would impact you?

Yes, I mean the way we think about peak season is it presents itself at our domestic logistics business, it presents itself in China as you said. There is a little bit of a seasonal effect in the other markets clearly. In Alaska there is a very strong seasonal component because of the summer time when a lot of construction and tourism and other things makes the economy much more frothy. But I would say in general I'd say we expect and what we’ve seen and what we’ve heard from our customers is they continue to expect a muted and orderly peak season in all the markets. So we don’t expect really, for example in China, we expect it to be muted in orderly that is that if there is a period under which not all freight can move, it will be very short lived and won't have a significant effect on the market beyond just sort of the seasonal strengthening we’re seeing as all of the international competitors gets strong. The domestic side, we’re not expecting a significant peak season on the domestic side. Again we’ll see volume increases. The Alaska season, which is well underway given the summer months, has proved to be very much like previous years. And Hawaii, other than a relatively strong economy that we’re seeing, that’s shaping up to us to appear to be very much like in line with our expectation and consistent with previous years. So nothing remarkable I guess is the short answer Steve.

Thank you. And our next question comes from Ian Zaffino from Oppenheimer. Your line is open.

This is Dan Natoli in for Ian just as a follow-up on the China business, and where that’s going. Is that just, to get a better understanding, is that a result of this trade slowing, or is it something specific to the segment that you specialize in for transport maybe just get a better sense as to why that’s been soft and continues to be soft? And then there is a follow-up. Why are you confident you can maintain your premium in that market? Thank you.

Sure Dan. So with regard to the context, I’ll take the rate premium in a second, but the first question, your second first, which is around the rate premium. We have been in this transpacific trade for over 10 years, approximately 10 years now. We have seen our product that’s expedited, which is 10 day transit and 11 day availability that is something which is extremely difficult for other Ocean carriers who are much larger, operate much more complex networks and much larger vessels to be able to replicate what a series of smaller ships operating at a dedicated terminals can do. And that has been earned over a very long pretty time. What we’ve seen is that customers who really need to move their products which are garment manufacturers, electronics, those that have some production problem but still need to hit a delivery date for a key sale or for an advertisement who want to use us. We see ourselves as something like a deferred air product, where people would rather, if they have plenty of time, they will use the more standardized cheaper commodity-like service of the other Ocean carriers. If, for whatever reason, they need to move it or there is a significant value of that product, it would move in our service. And we continue to believe that that premium will endure.

I think the broader market question is really around a chronic overcapacity of ordering very large ships, displacing smaller ships. The supply growth has grown faster than the demand growth. And that has caused the hatred by the international ocean carrier to try to undercut each other to fill their own ships, and achieving neither their volume goals nor in resulting in significant erosion in freight rates. So, I think it's really just more weak demand and a surplus of capacity, which is creating the dynamics that has provided so much difficultly in the China market for all the international ocean carriers.

Thank you. And our next question comes from Michael Webber from Wells Fargo. Your line is open.

Most of my questions are around the -- as far as rate premium and kind of come to over just a couple more. It seems like, and they could have seen within the deck it seems like the idea of stacking on a couple of more assets to kind of further the replenishment at fleet, has taken I guess a bit more prominent kind of move from options to actually talking about those assets and alike. So, when you think about placing those orders and considering some of the financial stress at some of the shipyards. What's the likelihood that you would place that order elsewhere? And is that something that concerns you when you guys think about the risk profile of actually building those ships and then just how should we think about that?

I would think that given the size of the ships as we talked about with our Aloha Class vessels, there are three or four yards in the United States that can place those orders or that can build those vessels that we're trying to spec. The financial health of a shipyard is always a factor in our decision making and in building, that's our other ships. But we feel like we can reach the right decision and find a yard or yards, we're in discussion with several yards about our most recent project. And we'll hopefully have more to say about that once we have come to our decision in that regard. But again we do feel like we'll be able to find yards that can build the product or the vessels that we need to find.

And without kind of pinning it down on a number or anything like that I'm sure it's too early, would you expect any meaningful or material difference in terms of cost basis on those ships if you were to kind of transition to a new yard?

Well, I think it's really, the two Aloha Class vessels I think we've previously mentioned have a contract price of $209 million per vessel. These vessels, if we build them, would be of a different design. They would be likely rocons that it's have a roll-on, roll-off component. We have a few vessels that in our fleet today that provide that roll-on, roll-off containership combined capacity that'll likely be phased out of our fleet as we move past 2020. So we're looking at that design. That design is more fulsome than a pure containership. And so we would expect the price to be above the $209 million pure containership that is the Aloha Class contract cost.

You would attribute that more to specs than any sort of inflation or deflation associated with the cost of building a similar ship, or anything like that?

That's correct. Yes, it's really the design differences. Yes.

And just one more from me and I'll turn it over it is for Joel. It seems like the -- around the buybacks, it seems like the pace have been pretty consistent, almost remember all the surprises I think kind of November. I am just curious what variables are out there or how do you look at that process that could cause you guys to either pick-up or delay the buyback pace here? Is there a threshold or even without just kind of disclosing where that is. How fluid is that pace in your mind?

Well Mike, it’s 3 million share authorization. We’ve mentioned that we would expect to complete it broadly over about three years. We are not locked in on three years. And we have also said we expect to be relatively steady eddy as she goes through the period of time. So, we don’t have any thresholds or anything else that we talked about. We’re just looking to add that to our toolkit, if you will, on how we return capital to shareholders over the long period of time. We think it's prudent to do that. So beyond 3 million shares and about 3-years, we haven’t commented further, and that’s generally what we still expect.

If you have been able to paying off for into that authorization you ever?

Yes, we said today, 1.1 million. So there is 1.9 million left.

Thank you. And our next question comes from Jack Atkins from Stephens. Your line is open.

A quick question on the Guam market, you mentioned competitive losses there. But the market seems to be growing modestly. Can you talk about, I mean, have you seen any incremental volumes coming from U.S. military now that they’ve decided to move forward with their plans there. And just if you could speak more broadly about what's happening in Guam to drive a little bit growth there in the underlying market?

Sure Jack. The answer is yes, we’ve seen a little bit of market growth, and a small amount of growth is notable there where it's been relatively flat. So we’re seeing both, a slight step up in military construction activity, not dramatic. The broader non-military economy also remains reasonably healthy, as you know. There is a military and tourism visitor component and both seems that they stepped up a notch. So we’re pleased to see a little bit of growth there. We had also noted that our competition there had gotten off to a bit of a slower start than we expected. But that we do expect in the second half to find some volume challenges net of some ongoing losses related to that competitive service. So we’re showing flat for the quarter that is the loss that we -- the competitive losses have been offset by some growth. We think in the second half, it might turn into a little bit of negative growth as the volume and competitive dynamic change a bit. But overall, we’re feeling okay about where we are with Guam. We continue to believe that there is a story of long-term, 10 or 15 year, growth to accommodate military construction. But compared to the previous build-up, this will be much, much longer and much, much less ambitious in terms of this construction. But overall, we’re feeling okay about Guam.

And then not to beat a dead horse, on the China business, but just a kind of a follow-up on some of the questions that have been asked there, when you think about that 50% of your business that is “in the spot market” I know the way we tend to look at these weekly rates with Jenny Max kind of rate Index for jury and just -- I am just curious will you talk about your spot business, does that rate fluctuate weekly like we would see with these indexes? Or is it more stable and we should be looking at these indexes as just more of a directional indicator of sort of what's happening in the underlying market?

Yes it's a good question. I think if you filled in the premium to those spot rates, what you see are a number of -- so it does behave very much like the indexes that go up and down. But what we find is, at the premise of your question, it's less volatile than the peer market. And we've developed relationships with forwarders and others that participate in that spot market that makes those volumes a little less volatile. But we're still exposed, overtime, to needing to, if rates go up, we would go up. If we needed to pull our rates down to address market concerns, we'll do that too. But you're right it is a little less volatile. But on that spot side, we can't escape very far from it, I guess, is the best way to answer that question.

Yes that makes sense Matt. I'm absolutely just curious about the volatility there. And then last question, if I remember correctly, I think two of the older Horizon line ships which you acquired with that transaction and I think originally were planted to be retired. I think you put them to dry dock this year, or they're going to dry dock this year. When do those ships come out of dry dock? And then sort of what's the plan for those vessels once they're available to you guys for service?

This is Matt Joel -- I'll comment on that briefly and then ask Joel to comment. We looked at the entire fleet during the acquisition, did an assessment of the Horizon ships. We found a couple of them worthy of investment, and went through that. We've got one of those vessels in dry dock. Now, the other one has been completed and is already back in-service, and is in the Hawaii trade, as part of our 11 ship deployment and it's working well. So, I would say overall we're pleased with them. Joel what would you add to that?

Yes, and just as a reminder Jack, those vessels are subject to 2.5 year dry docking cycle is not five. So, essentially they would come up for dry docking again 2.5 years from the last nine months. And it'd be at that point in time where we'd make the next decision, whether we want it to dry dock down one last time or retire them, scrap them at that point in time. So, the decision will be about two years away from right now.

Thank you. I'm not showing any further questions at this time. I would now like to turn the call over to Matt Cox for any further remarks.

Okay, well thanks everyone for your participation today. We look forward to catching with everyone when we -- at the next quarterly conference call. Thanks very much. Aloha.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Everyone, have a great day.