Matson Inc

NYSE:MATX

Earnings Call Transcript 2023-Q2

[Operator]

Good day and thank you for standing by. Welcome to the Matson Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded.

I would now like to hand the conference over to your speaker today, Lee Fishman, Vice President of Finance. Please go ahead.

[Lee Fishman, Investor Relations]

Thank you, Brittany. 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 14 to 24 of our Form 10-K filed on February 24, 2023, and in our subsequent filings with the SEC. Please also note that the date of this conference call is August 01, 2023, 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’ll now turn the call over to Matt.

[Matt Cox, Chairman and Chief Executive Officer]

Okay, thanks Lee, and thanks to everyone on the call. I'll start on Slide 3. Matson’s Ocean Transportation and Logistics business segments performed well despite a challenging business environment and sluggish U.S. economic growth. For the second quarter within ocean transportation, our China service saw higher sequential quarterly freight demand, but generated lower year-over-year volume and freight rates, which were the primary contributors to the decline in our consolidated operating income. We also saw lower year-over-year volumes in Hawaii, Alaska and Guam compared to the year ago period. In Logistics, operating income decreased year-over-year, primarily due to lower contributions from transportation brokerage and supply chain management.

I will now go through the second quarter performance of our tradelane, SSAT and Logistics. So please turn to the next slide. Hawaii container volume for the second quarter decreased 7.1% year-over-year, primarily due to lower retail related volume as our retail customers continued to manage inventories to weaker consumer demand levels. Volume in the second quarter of 2023 was 3.4% lower than the volume achieved in 2019. During the quarter, total visitor arrivals increased modestly year-over-year, with growth in international visitor arrivals partially offset a decline in domestic visitor arrivals. Total visitor arrivals in the second quarter of 2023 were just below the second quarter of 2019.

Please turn to Slide 5. For the second half of 2023, we expect continued improvement in the Hawaii economy, supported by continued growth in visitor arrivals and a low unemployment rate. UHERO’s May projections continue to show economic growth in 2023, supported by continued strength in total tourism and a relatively low unemployment rate. UHERO projects weakness in the domestic visitor arrivals from the effects of tighter credit and higher interest rates, to be countered by continued improvement in international visitor trends. Unemployment is expected to rise a little as the economy responds to the effects of higher interest rates to subdue inflationary pressures.

Moving to our China service on Slide 6. Matson’s volume in the second quarter of 2023 was 24.6% lower year-over-year, primarily due to no CCX service in the quarter, lower capacity in the CLX due to the dry docking of the Daniel K. Inouye and one less CLX+ sailing. Nearly three quarters of the year-over-year volume decline was related to the CCX service in the year ago period. Matson continued to realize the significant rate premium over the Shanghai Containerized Freight Index in the second quarter of 2023.

We achieved freight rates that were lower than the year ago period, but well above those achieved in the second quarter of 2019. During the quarter, we saw increased freight demand from our e-commerce vertical and a modest increase in freight demand from garments and e-goods customers. Electronic goods or e-goods consist of computers, tablets, phones and other electronic devices. The e-commerce goods we generally carry are a wide range of high turnover items that need to be replenished on a timely basis.

Please turn to Slide 7. Currently in the transpacific marketplace, we are seeing modest reductions in deployed capacity and retail inventories are in a relatively better position than earlier in the year. But retailers continue to carefully manage inventory levels in the face of lower consumer demand. We further expect the tradelane to experience a muted peak season, but for Matson, we expect our China services to be in solid demand with our vessels near full during the traditional peak season.

Absent and economic hard landing in the U.S., we continue to expect trade dynamics to gradually improve for the remainder of the year as the Transpacific marketplace transitions to a more normalized level of consumer demand and retail inventory stocking levels. Regardless of the economic environment, we expect to earn a significant rate premium to the SCFI, reflecting our fast and reliable ocean services and unmatched destination services.

I want to spend a few minutes on the elements of demand for our China service as we believe important changes have taken place over the last few years that are positive forces for our business. Prior to the pandemic period, we built the Matson brand in China over 13 years with a demonstrated history of the fastest ocean transit in the Transpacific with the CLX service, our unparalleled service reliability and 24-hour cargo -- availability at a unique U.S. Customs bonded off dock facility in Long Beach.

We ensured that this service had a premium high touch customer service effort both at origin and destination. Our key customer groups were garments and accessories, e-goods and footwear. The CLX is also viewed by customers as a relatively fast, cost efficient means to get last minute items to the U.S. West Coast.

During the pandemic, we enhanced the Matson brand in China with the initiation of new services during an extremely challenging environment to address our customer needs. As you may recall we initiated the CLX + service in May of 2020 due to high demand for the CLX. This demand was initially driven by the loss of air freight capacity where many customers viewed our services as the next best option to air freight. These customers quickly came to appreciate our value proposition versus air freight, which is a significantly lower cost for five to seven days of additional transit coupled with reliability and consistency.

We also initiated a temporary service in July of 2021 called the CCX to address the high level of demand for the CLX and CLX+ as a result of the challenges of port congestion in Southern California. We ended this service in September of last year due to a combination of lower overall market demand and the reduced need for expedited ocean services given the significant improvement in the West Coast port congestion.

Across our services in this period of time, we saw a wide range of demand from COVID related supplies to e-commerce and e-goods. We also saw an expanded geographic area of freight origination with loads coming from distant areas within China and cross-border commerce. Post the pandemic, we've seen a significant increase in e-commerce demand as these customers are looking for a consistent and highly reliable expedited ocean service. This book of business complements our existing verticals of garments and e-goods that we've built over the last 16 years.

Going forward, we expect the e-commerce vertical to be an important driver of demand for our China service. According to the U.S. Census Bureau, e-commerce penetration of total U.S. retail sales is approximately 15% and in the first quarter e-commerce sales grew approximately 8% year-over-year. Expectations are for continued growth in e-commerce to outpace the growth of total U.S. retail sales. Based on our customer conversations, there is enough air freight capacity in the market to meet the demand currently.

Most of our customers that exclusively used air freight pre-pandemic have chosen to continue shipping a significant portion of their business with Matson as they've already aligned their operations with our sailing schedule. We are confident that the majority of this business will remain with Matson regardless of air freight capacity as Matson’s service is economically advantageous and reliable relative to air freight.

Over the last 17 years, we've carved a niche reliable service that provides the fastest and second fastest ocean transit coupled with unmatched destination services and unparalleled customer service. The consistency of our China service is a significant differentiator in the marketplace and creates a flywheel of continued success whereby our value proposition and unique service attributes drive our customers to build their supply chains around our two expedited service.

Please turn to Slide 9. In Guam, Matson's container volume in the second quarter of 2023 decreased 7.5% year-over-year. The decrease was primarily due to lower general demand. Volume in the second quarter of 2023 was 2.1% higher than the level achieved in the second quarter of 2019. In the second half of 2023, we expect continued improvement in the Guam economy with a low unemployment rate and a modest increase in tourism from low levels.

Please turn to the next slide. In Alaska, Matson's container volume for the second quarter of 2023 decreased 7.2% year-over-year. The decrease was due to lower export seafood volume from the AAX service, lower northbound volume due to one less sailing and lower volume, primarily due to lower household goods and domestic seafood volume. Compared to the second quarter of 2019, volume in the quarter was 9% higher. In the second-half of 2023, we expect the Alaska economy to continue to benefit from low unemployment and increased energy related exploration and production activity as a result of elevated oil prices.

Please turn to Slide 11. Our terminal joint venture, SSAT declined $26.1 million year-over-year to a negative $1.4 million. The lower contribution was primarily due to lower demerge revenue and lower lift volume. SSAT saw significantly less diverged revenue in the quarter due to easing port congestion and lower lift volume consistent with lower demand in the Transpacific tradelane. For the second-half of 2023, we expect lift volume to reflect a relatively challenging environment in the Transpacific tradelane.

Turning now to logistics on Slide 12. Operating income in the second quarter came in at $14.3 million or $8.8 million lower than the result in the year ago period. The decrease was primarily due to lower contributions from Transpacific brokerage and supply chain management. In the near-term, we expect a mix of activity across the logistics lines of business. We expect continued growth in Alaska to be supportive of freight forwarding demand, we expect supply chain management to track our China service, for transportation brokerage, we expect near term challenges with lower freight demand, excess capacity and declining accessorial fees.

And with that, I will turn the call over to Joel for a review of our financial performance. Joel?

[Joel Wine]

Okay, thanks, Matt. Please turn to slide 13 for your review of our second quarter results. For the second quarter, consolidated operating income decreased $396.4 million year-over-year to $96.7 million with lower contributions from Ocean Transportation and Logistics of $387.6 million and $8.8 million respectively. The decrease in Ocean Transportation operating income in the second quarter was primarily due to lower freight rates and volume in China and a lower contribution from SSAT, partially offset by lower operating costs and expenses including fuel related expenses primarily related to the discontinuation of the CCX service and lower fuel costs and the timing of fuel related surcharge collections.

The decrease in logistics operating income was primarily due to lower contributions from transportation brokerage and supply chain management. We had interest income of $8.7 million in the quarter due to higher cash investment rates on our cash and cash equivalents and cash deposits in the CCF as compared to no interest income in the prior year period. Interest expense in the quarter decreased $1.6 million year-over-year due to the decline in outstanding debt. The effective tax rate in the quarter was 22.5% compared to 22.4% in the year ago period.

Please turn to the next slide. This slide shows how we allocated our trailing 12 months of cash flow generation. For the LTM period, we generated cash flow from operations of approximately $827.3 million from which we used $134.1 million to retire debt, $154 million on maintenance and other CapEx, $101.8 million on new vessel CapEx including capitalized interest and owners items, $581.4 million in cash deposits and interest income in the CCF, net of withdrawals for milestone payments. $28 million for other cash outflows while returning $316.4 million to shareholders via dividends and share repurchase.

Please turn to slide 15 for a summary of our share repurchase program and balance sheet. During the second quarter, we repurchased approximately $0.6 million shares for a total cost of $42.4 million, including taxes. For the first six months of the year, we repurchased $1.3 million shares for a total cost of $84.5 million. Since we initiated our share repurchase program in August of 2021, through June 30th of this year, we have repurchased $8.7 million shares or approximately 20% of our stock for a total cost of over $680 million. As we have said before, we are committed to returning excess capital to shareholders and plan to continue to do so in the absence of any large growth investment opportunities.

Turning to our debt levels, our total debt at the end of the second quarter was $462.4 million, a reduction of $14.3 million from the end of the first quarter. I'm now going to walk through an update on a few financial items, so please turn to the next slide. The cash balance in the CCF at the end of the quarter was $583.9 million. During the quarter, we made an approximately $50 million payment from the CCF for the new vessel build program.

Based on the remaining milestone payments of roughly $899 million today, nearly two thirds of the program is funded by restricted cash in the CCF. Note that the two thirds figure excludes interest income on cash deposits that may be earned in future years. We expect to make our next milestone payment in the second quarter of next year. We continue to expect a general corporate tax refund of approximately $120 million for the cash deposited into the CCF last year that was applied to the 2021 tax year.

Lastly, for the third quarter, we expect an effective tax rate of approximately 15%. That lower expected tax rate compared to the level in the second quarter is primarily due to further refinement of the 2022 tax deduction related to Foreign Derived Intangible Income or FDII under Section 250 of the Internal Revenue Code. The FDII deduction is available to U.S. corporations that generate income from services provided in foreign countries.

For the fourth quarter, we expect the effective tax rate to revert to roughly 24%. With that, I'll now turn the call back over to Matt.

[Matt Cox, Chairman and Chief Executive Officer]

Okay, thanks, Joel. Please turn to Slide 17 where I'll go through some closing thoughts. We expect the consolidated operating income in the third quarter of 2023 to be higher than the second quarter. Normal seasonality trends have returned to our domestic trade lanes and logistics. And as previously mentioned, we expect our China service to be near full during the traditional peak season.

We also expect consolidated operating income in the fourth quarter of 2023 to approach the level achieved in the first quarter of this year. For both the CLX and CLX+ service in the first half of the year, we earned freight rates well above pre-pandemic levels. For the second-half of the year, we expect to continue to earn freight rates well above pre-pandemic levels.

In closing, Matson had a solid performance in the first half of the year despite the challenging business environment. Our balance sheet is in great shape and we're nearly two thirds funded on our new vessel program, as Joel just mentioned. I feel very good about our market positioning and Ocean Transportation and Logistics and the company's potential earnings generation.

We are beginning to see consistency in our demand levels post pandemic and therefore are evaluating the return of our annual financial outlook with the release of our fourth quarter earnings in February.

With that, I will turn the call back to the operator and ask for your questions. All right thank you. We will now conduct the question and answer session as a reminder to ask the question

[Operator]

All right, thank you. We will now conduct the question and answer session. [Operator Instructions] Please stand by while we compile the Q&A roster. All right, our first question comes from the line of Ben Nolan, Stifel. Your line is now open.

[Ben Nolan, Stifel]

Thank you. Hi guys, I apologize if there is background noise on my airplane, but I think for me the first and most important question is around the pricing on the CLX and CLX+ really, we've seen some stability in the Shanghai index, you guys obviously did extremely well there. Does it feel like we have reached as it relates to how you're pricing freight, have we reached sort of a new normal or a flattening point and/or the inverse of that is there are some weird things going on with labor on the West Coast and still normalization. I guess the question is, do you have enough clarity to say, okay, this feels like business as usual, yes?

[Matt Cox, Chairman and Chief Executive Officer]

Yes it's a great question Ben. We -- from our point of view, I think the short answer to your question is yes. I think when we look at the elements of demand that we outlined in our expedited service, something changed during the pandemic period where previously Matson had been able to fill it’s CLX expedited service at much higher than market freight rates. In the in the course of the pandemic we've seen a lot of cargo move out of the air that was moving pre-pandemic and now into our expedited ocean products.

So we think that demand has expanded as a result of the pandemic and that level of demand will allow us to fill our two services. We feel consistently for the reasons that I mentioned and based on that demand level of the expedited service feel that there's firmness in our pricing as a result of the growing market for our expedited offering. So the short answer is yes, we feel confident now. We've said look if there's a recession that could that could mix the economics but frankly the conversion from air free into our expert expedited ocean is so compelling to our customers for those that are able to do it, we even believe there's an efficiency around that. So that's how I'd respond to your question.

[Ben Nolan, Stifel]

Well, I appreciate it and thanks for your candor on that, that sort of leads to the next question. We have seen some of your competitors, they've offered varieties of expedited services, leave those businesses or get out of the business. Do you think there are any opportunities to pick up share or maybe, I don't know, if we tweak the model a little bit and gain some of that business that maybe some of the others will walk away from?

[Matt Cox, Chairman and Chief Executive Officer]

I think I'll answer that in two ways. The first thing I would say is that in our view if we can consistently operate the fastest and second fastest and most reliable services in the Trans Pacific, we're going to remain or retain the lion's share of the expedited market and in fact a segment we invented over the last 17 years and it fulfilled. Will there – are there opportunities to expand, I would say on the margin there is as we may replace over time, a smaller vessel with a larger vessel either in our CLX or CLX+ services, there may be incremental capacity that will gain, we gain over time and frankly the rest of the expedited offering as we see it is relatively small.

So it makes it difficult for other competitors to try to come up against Matson with our combination of benefits and as we've talked about before elements of our expedited model can be replicated but all of them can't including operating at full steam or full speed and our shippers transport. Off doctor facility, the only US Customs bonded facility in Long Beach. So, we're reasonably confident that we're going to retain the leading position in that market regardless of what happens on the margins. Okay, I appreciate it. Thank you.

[Ben Nolan, Stifel]

Okay. Thanks man. Thanks man.

[Operator]

All right. Thank you so much. One moment. Our next question comes from the line of Jack Atkins with Stephens Inc. Your line is now open Jack.

[Jack Atkins, Stephens Inc.]

Okay, great. Thank you and thanks for taking my questions guys. Congrats on a great quarter. I guess Matt if I could maybe pick up where Ben left off and obviously wishing him safe travels on the flight. But you know I guess as you sort of think about the differential between your service and air freight on a per pound basis, I mean if I think back pre-pandemic it was-- air freight was 10 to 12 times more expensive than an expedited ocean offering like yours. How would you kind of think about that today? Is there a way to maybe frame that up roughly?

[Matt Cox, Chairman and Chief Executive Officer]

Yes, sure I can Jack, the economics remain compelling in the way that you said The way if we look at it more recently, our expedited ocean offering is between 10% and 15% of the cost of the equivalent air freight. But it but it adds you know four to five days in the transit. So a customer is making a conscious choice about an opportunity to move at least some of their cargo at a dramatic discount to the air freight equivalent. So that's why we think you know when we said we believe it's economically compelling and even if a recession occurs, it remains in some ways just as or more economically compelling. Gives us confidence to believe that this level of cargo that has migrated from air freight over the last few years is here to stay.

[Jack Atkins, Stephens Inc.]

Okay. Now that's very helpful. And then I guess when we think about the comment that you would expect your CLX services to be roughly full or at full capacity in the third quarter. Would that imply something around 40,000 containers just if I think back you were probably sailing at roughly full capacity in the third quarter last year. Could you maybe help us think about that just in terms of would that be roughly flat year-over-year, is the right way to think about?

[Matt Cox, Chairman and Chief Executive Officer]

Yes, although it’s a little less probably in the mid-30s, Jack, I mean what we said annually it’s 60,000 to 65,000 for each service. So the higher end of that would be 130, but the third quarter does get more than you know 25%. So I'd say in the up- in the mid to upper thirties 40 would be a pretty high number

[Jack Atkins, Stephens Inc.]

Okay, maybe – may be comp

[Matt Cox, Chairman and Chief Executive Officer]

And that depends a little bit on exactly which ships are sailing on -- in any given 90 day period of time.

[Jack Atkins, Stephens Inc.]

Okay, so roughly comparable to the second quarter. If it just -- if I think about that, so that makes sense.

[Matt Cox, Chairman and Chief Executive Officer]

Yes, roughly. I mean, yes. This past quarter we were very full as well. Yes.

[Jack Atkins, Stephens Inc.]

Okay, that helps. Maybe shifting gears to Hawaii for a moment. Could you kind of talk about what you're seeing there? Would you feel like that maybe we're kind of bouncing along the bottom in terms of demand, you know to Hawaii westbound demand, if I kind of think about this year, it looks like you're kind of on a run rate to do a volume level there that it's been quite some time since we've seen something and kind of the run rate that you're at. I guess, how would you maybe characterize the sort of the demand situation in Hawaii for your westbound services?

[Matt Cox, Chairman and Chief Executive Officer]

Yes, I mean, I don't think we've seen any significant weakness nor have we seen dramatic bumps. I would say steady as she goes is how I would describe it. I would say the fundamentals as we described and as you hear our reported have been relatively steady. Our freight demand isn't quite as high as we expected it to be, but I think it's adequate and acceptable. It's going to be moving kind of sideways is the way we would see it. I think there's still a lot of inventory management, active inventory management among our large customers in Hawaii and they're not going to oversupply the market. So we think steady as she goes is our best bet at this point.

[Jack Atkins, Stephens Inc.]

Okay. And then you know Matt, I guess as you sort of look out, maybe it's 2024 beyond. Is there anything that makes you a little bit more optimistic about demand trends in Hawaii whether it's construction activity that may pick up or just any sort of projects on the horizon that would make you feel like that? We could maybe get back to a higher level of demand to Hawaii?

[Matt Cox, Chairman and Chief Executive Officer]

Yes, I -- it's not obvious that there are significant catalysts, I mean I would say they would be more macro, they would be, we’re recovering U.S. economy. Hawaii, as you know, continues to be very desirable place for people to go and holiday. If you look at the level of spending, including the military spending as the U.S. military pivots to the Pacific there, there'll be a tailwind, there should be small but steady. We see low unemployment and a lot of those fundamentals will be underpinning but neither do we see significant catalysts that's going to really take that up. We see small growth overtime kind of consistent with prior history. That's the way I think of it.

[Jack Atkins, Stephens Inc.]

Okay. And then I guess maybe for my last question before I hand it back, when I think about the logistics business obviously doing really well considering how challenging the broader freight environment is within the lower 48 of the U.S. I guess it would seem like that you're sort of complementary services related to China and Alaska are helping to really drive that business. I mean should we think about that kind of seasonal seasonality of the operating income there maybe tracking with the seasonality of the CLX service and the seasonality in Hawaii and excuse me, in Alaska or maybe help us think through what's kind of driving that business quarter-over-quarter because you saw a nice step up of operating income with relatively consistent earnings.

[Matt Cox, Chairman and Chief Executive Officer]

Yes I think you're on the right track there, Jack. I think as it relates to our supply chain services, which track our China services, we do expect very significant parallels as we get into traditional peak season there's more cargo moving, our supply chain services are more active during those seasonal two middle quarters. And with regard to Alaska, as you know, we've got, the summer season is really the same as the construction season. And so we do see, traditionally a spike up during those, the middle of the year or the warmer months.

But I'd also say that we are seeing, we are providing on the margin a little bit more activity to the North Slope which is a relatively new segment that we focused on. And that moves in some ways outside of the more traditional construction cycle for pipe and other materials. And so I would say largely those two verticals that you mentioned within Matson Logistics are welcome expansions to our portfolio over the last few years and we see those as continuing.

[Jack Atkins, Stephens Inc.]

Okay. Thanks again for the time guys and congratulations.

[Matt Cox, Chairman and Chief Executive Officer]

Okay, Jack. Thank you, Jack.

[Operator]

All right, thank you. All right, everyone, please stand by while we compile our Q&A roster. [Operator Instructions] Our next question comes from the line of Jacob Lacks of Wolfe Research. Your line is now open.

[Jacob Lacks, Wolfe Research]

Hi, thanks for the time.

[Matt Cox, Chairman and Chief Executive Officer]

Hi, Jake.

[Jacob Lacks, Wolfe Research]

So, I guess, I wanted to come back to an earlier question there. There was some labor uncertainty at the West Coast in the quarter and now we're seeing labor uncertainty in Canada. Is this helping your demand levels right now or do you think this is entirely the value proposition that you talked to earlier? And then I guess just on the West Coast or are you seeing volume shift back given the tentative agreement?

[Matt Cox, Chairman and Chief Executive Officer]

Yes. So with regard to the labor agreement, I think if you if you look at our SSAT joint venture which was I know not the root of your question. We had seen because of the delay in the renewal of the contract. We did see a lot of the other international ocean carriers and their customers move cargo differently over the West Coast to try to avoid any congestion related to the labor disruption that reflected in lower volumes to the West Coast services went all water or other through the Panama other ports of loading that benefited from the diversion of the cargo.

Our view is that as we're now in the process of the contract being ratified which we expect it to be ratified that cargo will generally migrate back, but and some of that will be permanently lost. But as it relates to the balance of this year's freight volume on the West Coast, because we're in relatively muted peak season now, we're not expecting any dramatic changes just sort of in the second-half of the year from what we saw in the first half of the year.

So that’s -- but that's SSAT. But to your question about whether we think we've benefited from any -- ourselves of the uncertainty, I would say the answer to that is no. I would say most of the expedited market wants to go to the West Coast. It wants to be able to -- as soon as it's just discharged, go to team truck or another method by which to pick it up and move it to interior points. So there's not a lot of that cargo in our view that was that we've benefited from. It was just more of the core e-commerce and E-goods and stuff that was moving pretty reliably on our services over the last quarter.

[Jacob Lacks, Wolfe Research]

That's helpful. And then just on guidance, it assumes a pretty material step down in earnings in four Q. So what do you think is the biggest driver of that and do you think just seasonality for the business is a little more pronounced since adding?

[Matt Cox, Chairman and Chief Executive Officer]

Yes, I think you're right, it's just the seasonality and if you look back at Matson's services, although we're, you know admittedly a little bit different than we were going into the pandemic, I would say we continue to expect that seasonality factor you know in the first week or two of October. Will expect all the holiday shipments to be on the water or be delivered and available for the, you know, the Christmas and holiday selling seasons. And so it's really more of a reversion to historical patterns and really has almost nothing to do with demand factors that are unique to matching or more just a market reaction.

[Jacob Lacks, Wolfe Research]

Great. I appreciate the time.

[Matt Cox, Chairman and Chief Executive Officer]

Okay, Jake. Thanks very much.

[Operator]

Alright, thank you so much. Okay. I'm showing no further questions at this time. I would now like to turn the conference back to Matt Cox for closing remarks.

[Matt Cox, Chairman and Chief Executive Officer]

Okay, thanks, operator. I just want to say thanks for joining the call today. We look forward to catching up with everyone on next quarter's earnings call. Aloha.

[Operator]

All right. This concludes today's conference call. Thank you for participating. You may now disconnect.