DECEMBER 17, 2014 — Tank barge specialist Kirby Corporation (NYSE: KEX) says it expects 2014 fourth quarter net earnings to be in the $1.10 to $1.20 per share range, below its previously announced earnings guidance range of $1.30 to $1.40 per share. For the full year, Kirby is revising 2014 guidance to $4.84 to $4.94 per share, below previously announced guidance of $5.04 to $5.14.
David Grzebinski, Kirby's President and Chief Executive Officer, commented, "Our fourth quarter performance to date has been disappointing relative to our earlier expectations. The majority of the change in our earnings guidance is a result of changes in our land-based diesel engine services market. Our production ramp up in that market has not gone as well as expected and demand across our product and service portfolio is being impacted by the sharp decline in crude oil prices which have led to customer cancellations and requests to delay delivery of projects. Customers have recently begun to reduce their capital spending plans in light of the decline in oil prices and we expect this to continue into 2015. We continue to monitor market conditions and will provide 2015 guidance during our fourth quarter earnings conference call."
The reduction in revenue and profit in the land-based diesel engine services market, particularly in the manufacturing of new pressure pumping units, was the most significant factor in the change in anticipated fourth quarter results. In addition to customer cancellations and requested order deferrals, inbound orders in the land-based diesel engine services business have slowed. Kirby's emphasis on growing the remanufacturing and service aspects of the business remains a key strategy. The service portion of the land-based diesel engine services business is expected to have less volatility through oil and gas cycles.
Mr. Grzebinski commented further, "In our marine transportation markets, our inland marine utilization is in the low 90% range; however, adverse weather conditions along the Gulf Coast have impacted our fourth quarter performance. In addition, the recent drop in crude oil has affected our customers' feedstock purchasing and trading decisions which impacts not only our efficiency, but also imposes enough uncertainty in the market to reduce transportation pricing momentum. As a result, we expect our inland marine growth rate to moderate going into next year. The globally advantaged feedstock price of domestic producers has not changed with the drop in oil prices, however, the majority of expected benefits from new petrochemical plant openings is likely to occur in 2017 and later."