Kirby reports record earnings
Inland waterways giant Kirby Corporation yesterday announced record net earnings for the fourth quarter ended December 31, 2004 of $13,496,000, a 22 percent increase compared with $11,050,000 for the fourth quarter of 2003. On a diluted per share basis, 2004 fourth quarter earnings were $.53, up 18 percent from $.45 for the 2003 fourth quarter. Kirby's published earnings guidance range for the 2004 fourth quarter was $.50 to $.54 per share. Consolidated revenues for the 2004 fourth quarter were $173,739,000, a 14 percent increase compared with $152,028,000 for the 2003 fourth quarter.
Kirby also reported record net earnings for the 2004 year of $49,544,000, a 21 percent increase compared with $40,918,000 for the 2003 year. Diluted earnings per share for the 2004 year were $1.97, up 18 percent from $1.67 for the 2003 year. Kirby's latest published earnings guidance range for the 2004 year was $1.94 to $1.98 per share. Consolidated revenues for the 2004 year were $675,319,000, a 10 percent increase compared with $613,474,000 for the 2003 year.
Kirby's marine transportation segment's revenues increased 13% for the 2004 fourth quarter and 11% for the 2004 year when compared with the 2003 fourth quarter and year. Operating income increased 18% for the 2004 fourth quarter and 20% for the 2004 year when compared with the 2003 corresponding periods. The results for both periods reflected improved petrochemical and black oil product volumes when compared with the prior year periods. As a result of the increased volumes, the segment was successful in modestly increasing contract rates during the year and spot market rates were generally higher than contract rates for most markets. Operating margins for the 2004 fourth quarter improved to 16.4% compared with 15.7% for the 2003 fourth quarter and for the 2004 year improved to 15.7% compared with 14.6% for the 2003 year.
The diesel engine services segment reported a 24% increase in revenues and a 21% increase in operating income for the 2004 fourth quarter when compared with the 2003 fourth quarter. For the 2004 year, revenues increased 4% and operating income rose 6% when compared with 2003. The higher 2004 fourth quarter and year results were primarily from increased direct parts sales to nuclear power generation and rail customers, and the acquisition of the diesel engine service operation and parts inventory of Walker Paducah Corp. in April 2004. Also, the East Coast, West Coast and Midwest marine markets strengthened during the 2004 fourth quarter. The Gulf Coast offshore oil and gas services market remained weak during all of 2004. The lower operating margin for the 2004 fourth quarter reflected an increase in direct parts sales, as parts sales typically earn a lower margin than service work.
Kirby reported record EBITDA of $38.7 million for the 2004 fourth quarter and $148.3 million for the 2004 year.
Capital expenditures for 2004 totaled $93.6 million, including $42.7 million for new tank barges, which replace older tank barges removed from service, and $50.9 million principally for upgrading the existing marine transportation fleet.
Acquisitions of businesses and marine equipment for 2004 were $11.5 million, including $4.2 million for a one-third interest in Osprey Line and $5.8 million for the acquisition from Walker. Outstanding debt at December 31, 2004 was $218.7 million, 14% lower than the $255.3 million reported at December 31, 2003. Kirby's debt-to-capitalization ratio at December 31, 2004 declined to 33.4% compared with 40.7% at December 31, 2003.
Joe Pyne, Kirby's President and CEO, said "the principal contributing factor to our success was the improved U.S. and global economies. As a result of the improved economies, our core petrochemical market, which represented 68 percent of our 2004 marine transportation revenue, reflected increased volumes as our petrochemical customers increased their production. Our black oil market also remained strong the entire year. Our upriver refined products market was generally at traditional levels throughout the year, while our agricultural chemical market was weak for the entire year, but reflected some improvement in the fourth quarter."
Pyne said the record 2004 results "were not achieved without some challenges."
"We incurred record navigational delay days," he noted, "including key lock closures for repairs, high water conditions, principally during the second and fourth quarters, Hurricane Ivan in September, and a significant number of fog days along the Gulf Coast in February, March, November and December. Delay days for the 2004 year were 30 percent higher than 2003, while the 2004 fourth quarter delay days were 59% higher than the fourth quarter of 2003."
Commenting on the 2005 guidance, Pyne said, "We are forecasting net earnings for the 2005 first quarter in the $.42 to $.48 per share range compared with net earnings of $.36 per share reported for the 2004 first quarter. We have a wider earnings guidance range for the first quarter, as our first quarter results are more volatile due to the probability of increased delay days, the result of high or low water conditions, ice conditions in the Midwest and fog along the Gulf Coast. These conditions result in longer transit times and the operation of additional towboats to meet customer demands. Our 2005 first quarter guidance range is based on firm petrochemical and black oil volumes, normal seasonal upriver refined products volumes, and some improvement in agricultural chemical volumes."
Pyne further commented, "For the 2005 year, Kirby's earnings per share guidance is $2.20 to $2.30. The guidance range includes an estimated $.04 per share of expense assuming the adoption, effective July 1, 2005, of the fair value method of accounting for stock-based employee compensation. Capital spending guidance for 2005 is $110 to $120 million and includes approximately $65 million for the construction of 18 double hull 30,000 barrel capacity inland tank barges and 20 double hull 10,000 barrel capacity inland tank barges. The $65 million estimate for the construction of new tank barges is subject to the fluctuation of steel prices."
Kirby Corporation, based in Houston, Texas, operates inland tank barges and towing vessels, transporting petrochemicals, black oil products, refined petroleum products and agricultural chemicals throughout the United States inland waterway system. Through the diesel engine services segment, Kirby provides after-market service for large medium-speed diesel engines used in marine, power generation and industrial, and railroad applications.
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