Good day, ladies and gentlemen and welcome to the Second Quarter 2018 Financial Results Conference Call. At this time, all participants are in a listen only-mode. Later, we will conduct a question and answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to Director Strategic Development and Investor Relations, Lee Fishman. Sir you may begin.

Thank you Shelby. Joining me on the call today are Matt Cox, Chairman and Chief Executive Officer; and Joel Wine, Senior 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 are more fully detailed under the caption Risk Factors on Pages 13 to 21 of our 2017 Form 10-K filed on February 23, 2018, and in our subsequent filings with the SEC. Please also note that the date of this conference call is July 31, 2018, 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, Lee, and thanks to those on the call. Please turn to Slide 3 for my opening remarks. Matson had a good quarter with transportation results approaching the level achieved in the second quarter of last year and logistics coming in with strong results across all of its service lines. Within ocean transportation, we saw a lower revenue from Guam, partly offset by lower vessel operating costs contribution from our new Okinawa service and strong continued performance from SSAT. In the quarter, we earned net income of $32.6 million, or $0.76 per share, compared with $24 million or $0.55 per share in the year ago period. We generated EBITDA of $79.3 million in the quarter versus $85 million in the second quarter last year. Moving onto the outlook for 2018, based on the performance in the first half of the year, we are maintaining our 2018 outlook for ocean transportation and raising our outlook for logistics. For the full year 2018, we expect ocean transportation operating income to be modestly higher than the $126.4 million achieved in 2017, and in logistics we expect the year-over-year improvement in the second half of 2018 to approximate the year-over-year increase we saw in the first half of the year. For the third quarter 2018, we expect ocean transportation operating income to be modestly lower than the $51 million achieved in the third quarter last year and logistics operating income to be moderately higher than $7.3 million achieved in the prior year period. Joe will go into more detail on the financials and outlook later on in this presentation. Now on to our trade Lane services. Turning to our Hawaii service on Slide 4. Despite favorable economic conditions in Hawaii, container volume for the second quarter was flat year-over-year with no meaningful year-over-year variances…

Thanks, Matt. Please turn to Slide 13 for our second quarter and year-to-date financial results. Ocean transportation operating income for the second quarter decreased by 3.5 million year-over-year to 36.5 million. This decrease is primarily attributable to higher terminal handling costs and lower revenue in Guam. Partially offsetting these unfavorable year-over-year comparisons were lower vessel operating costs, higher container rates in Hawaii and higher contribution from SSAT. Logistics operating income for the quarter was 9.5 million or 2.5 million over the results in the year ago period. The increase was due primarily to higher contributions and highway brokerage. EBITDA for the quarter decreased 5.7 million year-over-year due to lower consolidated operating income of 1 million, and lower depreciation and amortization, including dry-dock amortization of 6.2 million, partially offset by favorable increase in other expense of 1.5 million. On a year-to-date basis, ocean transportation operating income increased by 5.7 million year-over-year to 61 million. This increase is primarily attributable to lower vessel operating costs and higher contribution from SSAT, partially offsetting these favorable year-over-year comparisons or higher terminal handling costs and lower revenue from Guam. Logistics operating income for the first half of the year was 13.7 million or 4.8 million over the results in the year ago period. The increase was due primarily to higher contributions and highway brokerage and freight forwarding. EBITDA for the first six months of the year increased 4.1 million due to higher consolidated operating income of 10.5 million and a favorable income and other income expense of 3.1 million, partially offset by lower depreciation and amortization, including dry-dock amortization of 9.5 million. Turning to Slide 14 for a summary of our balance sheet. You will note that our total debt at the end of the quarter was 932.5 million, and our net debt to LTM…

Okay Joel thanks. To conclude our prepared remarks, we had a good first half set of results from our diverse set of transportation and logistics services, and we look forward to building upon this performance into the second half of the year. We remain intensely focused on cash flow generation and managing our leverage as we advance our new vessel build program and progress on the Sand Island crane investments this year. And with that, I will turn the call back to the operator and ask for your questions. Operator.

Thank you. [Operator Instructions] And our first question comes from Jack Atkins from Stephens Inc. Your line is now open.

So Matt if I could kind of start with the Hawaii trade for a moment, if you could sort of kind of comment from for a minute about maybe the different end markets that you are serving there and sort of where you are seeing areas of strengths and maybe where you are seeing little bit of - just a bit more challenging backdrop. I mean with the Hawaii economy fairly strong, we had flat volume growth, so sort of curious if you could sort of help us sort of parse it out?

Yes. I can try Jack. I think when we look at the overall economy clearly is performing at a high level; unemployment is below national averages, the state is in strong surplus, the hotel occupancy are at record levels, the visitor arrivals are at record levels. So the economy is based on three fundamental pillars; one is, tourism; one is the military and government and then just a general industry. I would say military has been very steady as has tourism, as we have noted many times there was a significant amount of building early in this economic cycle. We continue to see projects that are likely to be advanced for example in urban Honolulu the luxury high-rise products in the Ala Moana area seemed to have capped, but there are plans underway for example, for potentially four new building projects that are more market oriented pricing that are likely to get built over the next few years. We know that West Oahu and Collinear area, we have talked before about the single family home projects in central and West Oahu, we are aware of potential hotel developments and so as we look in the medium or longer term, we continue to see projects that are likely to get built, but we find ourselves in an area where in the construction cycle is somewhat plateaued. And we see construction cranes moving around, but the total count of construction cranes isn’t changing. So we are at a I guess a plateau level, as the overall economy is not producing significant growth in containerized volume right now. So that’s the best color I can give you Jack.

Okay now that definitely helps. I didn’t know if the construction demand was maybe a little bit softer on a year-over-year basis and that was sort of offsetting strength in the sort of the core sort of Hawaii economic growth and if you thought that maybe that would sort of begin to bottom out at some point in the next couple of quarters where we can maybe see that the underlying growth was in the Hawaii economy may be showing up.

Yes. The other way for me to put that Jack is when we speak with the largest general contractors in Hawaii many of whom are our good customers. They are bidding a lot of work, they are working on design work and were not saying that’s going to turn into freight volume right way, but they are busy bidding on new projects and continue to even this late part of this economic cycles. So we are encouraged by that, but it’s not going to turnaround overnight for us unfortunately on that segment.

Okay alright that helps Matt, thank you. And then shifting gears to the CLX business, you mentioned Matt that you are not seeing really any signs of projections rhetoric showing up in terms of trade flows. I’m just curious as you talk to your customers is there maybe any interest on their part in terms of pulling forward inventory in the United States ahead of any changes to your policy or I guess are they telling you about anything that will make you think that there could be some changes coming down the road whether it's six months, 12 months out?

Yes. It’s a good question Jack. I think in the little world that we participate in, the air freight alternatives expedited market were not hearing much, people still have needs, there are still late orders, there are still peoples who’s business is built around a very expedited ocean service. And so in the field that we that we play in were not seeing much, but we are observing to your point that nor are we hearing much from customers about very definitive strategies around that. But nonetheless if you look for example at June port volumes that are published widely we have seen very large year-over-year increases and wonder out loud like you do. Whether there is some impact as the trade tariffs are implemented and that some of the dialogue escalates on both sides. So there maybe some effect to the broader market and that may affect the timing of the broader market, but in our little universe. We remain very confident we are going to be full between now and the end of the year.

Okay that defiantly makes sense. Last question and I will turn it over, it’s a follow-up question on the trade front, but is there a way to think about Hawaiian imports from China just in terms of their overall import volume and is there an opportunity, maybe with increased tariffs overtime depending upon it continues forward, so that maybe source more from the U.S main land and maybe that helps your [Jones Act] (Ph) rate, just trying to thinking out loud on that, is that perhaps an opportunity if we were to see things continue to ramp up from a trade perspective.

Yes it’s a good question and part of the question is what commodities that are moving at - depending on tariff impact tax could change in sourcing patterns in the underlying cost of that product. Today as you might know Jack, product makes its way from China into Hawaii two ways, one is that it moves directly on the ONE or ONE Network which is the previous combination of the three Japanese lines that emerge this year. They have a direct service that comes from Japan and China into Hawaii. And the second is our service. We do have very weak cargo that that right around effectively from Shanghai through LA, Long Beach stays on the ship and rides it’s way to Honolulu. So those are the two primary ways to get there, it’s a little hard to speculate perhaps on the margin and none of that is really reflected in our thinking at this point Jack.

Okay. Thank you Matt. I appreciate the color.

You bet Jack.

Thank you. And our next question comes from Ben Nolan of Stifel. Your line is now open.

So, thinking back to the CLX and the transpacific trade, a couple of weeks ago there was some announcements that a few of the participants in that market were shrinking the size of their exposure there and I think in aggregate by something like 7% of total transpacific trades. Does that leave you any more optimistic on may be the volume that you might be able to pick up or potential pricing or is it just going to get closer to what would be a balanced market do you think?

Yes, you have made some good points Ben. There are at least two alliances that have and reductions in capacity going into this year’s peak. I think let me just differentiate the market comments from Matson’s and just divide them into two and then I will start with the market and then I will circle back to Matson. So we have seen at least two alliances reduced capacity, we saw one APL introduced some capacity, but your point is a good one, there was a net reduction of capacity in the transpacific, but it is also true that deployed capacity even after those net reductions remains above last year. But I think what we have seen in the broader market, spot markets which is one way to measure it is through this SCFI that we mentioned earlier, we have seen increases in the spot market and part we think as a result of carriers withdrawing their capacity. So I think a stronger market in terms of spot freight rates is always healthy for Matson. Now I will transition over to Matson. Effectively that may help our spot rates as we go into the market cycle, but as I said earlier, regardless of that rate, which could be impacted by this we are going to be full to the rest of the year. So our volume is limited, and on the margin it could be helpful and then of course where does this trade war go, hopefully it will get deescalated, but really nobody knows at this point what is going to play out here. So there is a number of factors that in the broader market have yet to play out and on the margin could impact Matson’s economics.

Okay so then just to sort of go full circle there, when thinking through the rate assumptions that you are using for your guidance for the marine transportation side of it in general, are you assuming effectively flat rate or from the CLX service year-over-year or how should we think about…

Yes so we noted last year, I’m sorry in the second quarter, that while the market rates were down year-over-year Matson’s freight rates were up over the previous year. So we actually were able to obtain higher rates and given our mix and our expedited product. For the second half of year I think we are guiding to the same or approximately the same rates as last year and again last year was a pretty good year for us as well. So these rates are satisfactory to us.

Okay that's helpful. And then just following on some of Jack’s questions. When you look at your product mix of what is coming from China as it relates tariffs is there anything explicitly that - I appreciate that it’s so far so good right, but are there anything that you guys specialize in that appear to be especially vulnerable or inverse of that when you look at your list of things that you are normally moving into nothing has made the list thus far.

Yes, I mean I think there are in that first list of U.S. tariffs that a lot of the key commodities that we move garments and other things were not included, they were subsequently included, but it's not as easy for customers in the short run to change their sourcing and that the thing about the China market and the Shanghai are in general, it’s a network of suppliers, it’s not just a single supplier in commodities. There is for example in the garment trade, there is the fabric, there is a dye, there is zipper, there is the button, there is skilled assemblers, there is a whole bunch of things that can't be replicated easily or overnight in these models. So again, we see little impact, but again, we don't know exactly how this is going to play out, but hopeful both sides can come to a resolution of the matter.

Okay, that’s helpful. And then lastly just really quick for me Joel. Your tax rate looks like it came in a bit below where we had been thinking and below where you kind of guide for the back half of the year, any color there.

There were some items that were relatively immaterial in signs that were adjustments in this quarter Ben that really drove that below our expected level about 28%. So is this just tax adjustments that hit at this quarter is what is 21% for this quarter.

Okay. Alright. Nice quarter guys. Thanks.

Okay. Thanks Ben.

Thank you. And our next question comes from Kevin Sterling from Seaport Global Securities. Your line is now open.

Thank. Good afternoon Matt and Joel. Just to touch on logistics obviously very nice upside, where is that coming from is it truck brokerage, inner modal both, I mean I know that the truck market extremely tight, but maybe you could just break them down kind of really what is driving while that strength there.

The way I would answer that Kevin is to say that each of our lines of business was better than the previous year, so its warehousing business, our rail and truck brokerage business, our relatively newly acquired span Alaska business, our Asian freight forwarding [NPO] (Ph) business. So, we were firing on all cylinders in the logistics business. Of course, as you know the biggest part of our businesses in rail and truck, brokerage, and so that is where the - just by waiting I have done the percentages relative to each of the lines of business. But clearly the truck and rail brokerage businesses were most by dollar amount significant increase year-over-year because of they are the most significant lines for existing business.

Got you. I’m just glad you didn't say Jerome Holland and I don’t want him to taking all the credit for all of your success.

He has good talent doesn’t he?

He has done a great job there.

I know he is, I couldn’t resist. In CLX if we back out your multiple dry-dock return volumes, what was your China volumes have been like in 2018, were they have been up?

I still think in the first half of the year we saw two things, we saw of course the dry-dock, which was extraordinary amount of volume in 2017 and as you know Kevin those follow our dry-dock cycles of our Jone’s Act ownership that allow us once we dry-dock in Asia to carry that incremental volume. But I would also note that we had a somewhat slower post lunar New Year in 2018 than we had in 2017. As you know, traditionally post lunar New Year the factories or literally the factories closed and the workers typically - many of them go home to the western provinces and come back a few weeks later. In 2017 not only we had extra volume, but we had a relatively short post lunar New Year period. So I would say 2018 was a more traditional slowdown post lunar New Year. And so despite the noise or the fewer dry-dock voyages, we had a more traditional lunar New Year in 2018 compared to 2017, which also accounts for some of that difference.

Okay. Thanks and maybe could you touch base on the competitive landscape in Hawaii. It seems that dive down about a third competitor coming in, is there anything new to add there?

Kevin no, there’s no new information we are aware off, things seemed to have gone quiet there and I think we are back to a more traditional, stable two carrier market. Of course, we continue to compete with the barge operators of which there are two coming out of the Pacific Northwest, they primarily carry construction materials that can survive a longer and rougher transit, and those volumes we know have been down because they primarily focus on construction materials, but beyond that there is really nothing to note in the competitive landscape.

Got you okay, thank you. And you guys mentioned all of your new vessels will be compliant with IMO 2020 and new install scrubbers, as we look at some of the competition do you know where they stand, are they kind of behind the eight ball or is everyone pretty much compliant like you are?

Well our understanding in the Alaska market. I will start. Our primary ocean competitor there TOTE or Totem Ocean Express is currently earning NGL, which is diesel on their two vessels; they have a strategy we understand to convert their vessels to LNG and are working through trying to obtain LNG on the West Coast in order to fulfill that. So their near-term strategy allows them to be compliant and with an idea of potentially longer term conversion to LNG. That is our understanding of the Alaska market. In Hawaii, our understanding is that for our primary competitor Pasha, they have vessels which are under construction and they are said to be LNG ready on day one. And again, those are under construction; the remaining vessels - I don't think Pasha has made any explicit announcements about two of the older vessels. But we understand, they are evaluating doing the conversion of those engines to allow them to burn compliant fuel. So that is what we understand the market to be and the market will as we understand it there will be no disruption to market service post 2020 at least that is our understanding at this point in time.

Okay. Thanks. That all I had and congrats on a solid quarter.

Okay Kevin. Thank you.

Thanks Kevin.

Thank you. And our next question comes from Steve O'Hara from Sidoti. Your line is now open. Steve O’Hara: Hi good afternoon. Hi just wanted to ask a question on just logistics performance. I wasn't sure if the improvement versus your expectations was due to maybe some issues that the market is having right now or is it more due to the fact that business is performing better than expected. So I guess I’m asking is this sustainable level that you think is operating at, I mean it would seem that there should be upside of last year comes back, can you talk about that a little more?

Sure, yes I can. I think when we saw the trend emerging into the first quarter are really into the end of last year as electronic logging devices were effectively withdrawing some of the market, the strong U.S. economy, the raising prices in diesel, some of the congestion on the rails were all creating a disrupted market, causing a reset of pricing across lots of modal sectors. At the end of the first quarter and as we look into the year, we saw the beginning of that trend, we were not confident enough at the time to say we see this as a trend, but now that we seen it for we are half a year, we are relatively confident in our ability to expect that the trends were seeing now will remain in place especially as we move into the traditional peak season that that happens in the second half of the year. So as to how long the duration is Steve, it’s a little harder to say whether it has legs passed 2018. Some of the factors that were originally put in place will remain so the electronic logging, the shortage of people willing to operate in the trucking industry. Again, given the economy and where those people might otherwise work in relatively low unemployment rate, so as long as the economy remains strong, which we have no indication that it won't, those elements will remain. Where fuel goes is anybody's guess, but to the extent fuel prices remain at current levels or higher, that will continue to be a significant factor for pricing in the environment. So it's a little - we are not making a 2019 call, but we are expecting some of these dynamics to remain in the market for some time. Steve O’Hara: Okay. Thank you and then just moving to ocean station, I mean it looks like I think that you came in a little bit below your expectations and I know you talked about the Hawaiian economy and seems to be performing well, maybe construction not is good but not maybe great, but was basically Guam that was the differential between the results and the expectation originally?

Yes, Steve I think when we set our expectation for the full year and the first quarter, we expected ocean transportation to I think we said to approach last year's level and that's about where we came out. So I think our feeling is a high level. We came in about where we expected. And we expected the Hawaii economy to be flattish and that is kind of what we have seen. We expect to continue highly competitive and contested environment in Guam, and that is shipping up, fortunately just as we expected by its an [indiscernible] right there, but what we were pleased about was strong performance out of SSAT, a good strong China market, knowing that we have less capacity to carry because of fewer dry-dock volumes and the Alaska economy has been plugging a lot, it’s been okay. So I think it’s shaping up a little bit about where we came up on the ocean transport side and the big step up is really as we said earlier on the logistics side, which has performed beyond our expectations. Steve O’Hara: Okay and then maybe lastly on the - you ran through the options you are considering for compliance, can you just talk about the cost ranges for those options, or it’s too early to kind of talk about that?

Yes. I mean the cost options that we can talk about are the cost of converting the vessels that we talked had about being in the $8 million to $10 million per shipment it is not just buying the scrubber, but it is in all the engineering and piping and other things that happened to the vessel in connection with the installation of the scrubber. With regard to other pricing, it's really difficult for us to understand the spreads that will exist, we can look at today's spread between let’s say compliant fuel and fuel that needs to be scrubbed before it can be admitted and so it's hard to know whether those spreads between those various fuels will get wider. That is the cost differentials, partly will be a result of how much refined product of various types are out in the marketplace, but we do know that if you just use today’s spreads that there is a strong economic case for in a relatively short payback. And we know how to run the scrubber systems, we have got good experience operating them in Alaska they work, they are economic and we are certainly going to be taking a close look at it. So while you look at $8 million to $10 million, I would just also add, relatively short payback period on that investment that is the way we are looking at it. Steve O’Hara: Okay. Thank you very much.

You bet.

Thanks Steve.

[Operator Instructions] And our next question comes from Michael Webber from Wells Fargo Security. Your line is now open.

Hey guys this is actually [indiscernible] on for Mike. On the other end of Ben’s question with regards to the SSAT JV and basically measures reporting to transpac reductions. How should we be thinking about the rest of the year relative to your 2017 and your presentation talks about how the full year should be higher than 2017 levels, but net out the kind of exceptional Q1 how should we be thinking about the rest of the year trending against the 2017?

Yes. I think I guess without being specific I can make some general comments. Some of the year-over-year increase in the SSAT volume was a result of last year's reformation of the alliances and reduction from going to four to three alliances, and so we see that business and the elements and the increase in volumes resulted from that dynamic we see as relatively stable. The other thing from an SSAT perspective is that the volume can come from multiple locations. So for example in China, if there is a tariff item that renders one product, on economics that is sourced from China that volume can be sourced let’s say from another Asian country and that still turns into a container that goes through SSAT joint venture. So while China is still a 600 pound gorilla. There is no question about it. Some of the differences could over time be sourced from other countries which would be less impactful for SSAT.

Got it that’s helpful. And then when we think about the Guam trade, just recognize a competitive dynamics there and you guys have acknowledge that for a long-term and you are going to continue fight for that piece of business. But when do you expect to sort of steady state of market share to kind of settle in justly into last two quarters, it almost looks like we were there, or do you kind - where do you see that kind see that market share going.

Yes. It’s really hard for us to know it will be when our primary competitor decides it's done trying to acquire share by lowering his freight rates and so it's really hard to predict, but it's really up to them. So it's a little hard to try to determine when that will be, but this is a night around [doubt] (Ph) and so were in it to the end.

Sure and then I guess just last really quickly with regards to IMO 2020. The two CLX vessels that you guys plan on evaluating once they are dry-docking, can you remind us what those dates are?

Well the two that we said we would look at as the sister ships that the first one we already commented to would be 2019, what we are saying is that the other two vessels that, that would add to a total of three scrubbers there is two remain, those two remaining have dry-docking in 2021 timeframes we will be looking at 2019, 2020 timeframe. Potentially the earlier or in conjunction with the 2021 dry-docking of those remaining two vessels. So that is about 24 plus months away, but that is what we are saying we are continuing to evaluate it and look at our options over that period of time.

Got it. Thank you very much guys.

Okay. You bet. Thanks.

Thank you. And I would now like to turn the call back to Matt Cox for any further remarks.

Okay well thanks everybody for listening in. We look forward to catching up with everyone on our third quarter call. Aloha.