Kirby says first quarter results in line with expectations

APRIL 26, 2017 — Kirby Corporation (NYSE: KEX) today announced net earnings for the first quarter ended March 31, 2017 of $27.5 million, or $0.51 per share, compared with $38.1 million, or $0.71 per share, for the 2016 first quarter. Consolidated revenues for the 2017 first quarter were $491.7 million compared with $458.7 million reported for the 2016 first quarter.

"Our first quarter results were in line with our expectations," said President and CEO David Grzebinski, "In our inland marine transportation market, barge utilization was in the high 80% to low 90% range for the quarter. Utilization was affected by operating restrictions caused by poor, but seasonally normal weather conditions, and stronger utilization in our black oil fleet primarily as a result of turnarounds and seasonal factors affecting the U.S. Gulf Coast refining complex. In the coastal marine transportation market, tank barge utilization was in the mid-70% to low 80% range during the first quarter as the market continued to be impacted by barges moving from term contracts into the spot market. In response to continued difficult coastal market dynamics, we have taken measures to cut costs, reducing headcounts and temporarily taking barges out of service until market conditions improve."

Mr. Grzebinski continued, "Within our diesel engine services segment, the land-based market continued to experience strong demand for remanufacturing of pressure pumping units and transmission overhauls. There was also a modest improvement during the quarter in the demand for the manufacture of new pressure pumping units and the sale of new transmissions. In the marine diesel engine services market, revenues were down year-over-year, but operating profit increased as a result of cost control measures implemented in 2016. In the power generation market, demand was comparable to the 2016 first quarter."

Outlook

Commenting on the 2017 second quarter and full year market outlook and guidance, Mr. Grzebinski said, "Our earnings guidance for the 2017 second quarter is $0.40 to $0.55 per share compared with $0.72 per share for the 2016 second quarter. Our full year earnings guidance remains $1.70 to $2.20 per share. Second quarter and full year guidance contemplates inland marine transportation utilization in the mid-80% range at the low end and low 90% range at the high end. We believe tank barge retirements will continue in response to the weak pricing environment in the inland market, further closing the gap between tank barge supply and demand. At the middle to high end of our full year guidance we have accounted for a modest improvement in pricing in the second half of the year. In our coastal market, we expect utilization in the mid-70% to low 80% range for the second quarter and full year. The cost reduction measures taken in the 2017 first quarter and early second quarter should allow us to operate at quarterly breakeven operating margins or a slight operating loss for the rest of the year."

Capital spending

Kirby expects 2017 capital spending to be in the $165 to $185 million range, unchanged from previous guidance. Capital spending guidance includes approximately $50 million in progress payments on new coastal equipment, including a 155,000 barrel ATB, two 4900 horsepower and six 5000 horsepower coastal tugboats. The balance of $115 to $135 million is primarily for five new inland tank barges and capital upgrades and improvements to existing inland and coastal marine equipment and facilities, as well as diesel engine services facilities.

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