January 28, 2010
Kirby to build more barges
Despite a 2009 fourth quarter that saw earnings per share come in below its published guidance, Kirby Corporation (NYSE: KEX) says its 2010 capital spending guidance range is $125 to $135 million, including approximately $60 million for the construction of 61 new tank barges and finishing the construction of three towboats."
Kirby reported net earnings for the fourth quarter ended December 31, 2009 of $29.2 million, or $.54 per share, compared with $38.4 million, or $.72 per share, for the 2008 fourth quarter. It published 2009 fourth quarter guidance range was $.57 to $.62 per share. Consolidated revenues for the 2009 fourth quarter were $259.6 million compared with $326.7 million reported for the 2008 fourth quarter.
The 2009 fourth quarter results included a $4.8 million before taxes, or $.05 per share, charge for shore staff reductions, a $1.9 million before taxes, or $.02 per share, charge for impairment of goodwill of Osprey Line and a $2.0 million before taxes, or $.02 per share, net positive impact from the reduction in Kirby's allowance for doubtful accounts. Kirby's published 2009 fourth quarter guidance range was $.57 to $.62 per share. Consolidated revenues for the 2009 fourth quarter were $259.6 million compared with $326.7 million reported for the 2008 fourth quarter.
President and CEO Joe Pyne called 2009 "a challenging year for Kirby with the current economic environment."
He said that a decline in volumes in all four marine transportation markets resulted in lower tank barge utilization levels industry wide that led to increased downward pressure on term contract and spot market pricing throughout 2009. Kirby's diesel engine services segment's marine and railroad service levels and direct parts sales were also
well below 2008 levels due to weak markets that resulted in deferrals of maintenance on customers' idled equipment."
Mr. Pyne said that in the 2009 fourth quarter, as a result of continued low demand, the company had further reduced shore staff, taking a charge of $4.8 million before taxes. "Our 2010 first quarter results will also include an estimated shore staff reduction charge of $3.9 million before taxes, or $.04 per share," he noted. "Since our peak headcount in October 2008,' we have reduced our shore staff positions by 21percent through early retirements, staff reductions and through attrition. We have also addressed a number of other costs including a reduction in the number of chartered towboats we operate, reduced maintenance on laid-up equipment and on-going cost reduction initiatives."
Kirby continued to generate strong cash flow during 2009 with EBITDA totaling $309.0 million. The cash flow was used to fund capital expenditures of $192.7 million, including $142.4 million for new tank barge and towboat construction and $50.3 million primarily for upgrades to the existing fleet, and to reduce debt by $47.1 million. Total debt as of December 31, 2009 was $200.2 million and the debt-to-capitalization ratio was 15.9%, down from 21.7% at December 31, 2008. Cash and cash equivalents at December 31, 2009 totaled $97.8 million compared with $8.6 million at December 31, 2008. As of January 27, 2010, the cash and cash equivalents balance was $113.8 million.
Commenting on the 2010 first quarter and full year market conditions and guidance, Mr. Pyne said, "For the 2010 first quarter, our earnings guidance is $.42 to $.47 per share compared with $.52 per share for the 2009 first quarter. Our first quarter guidance includes an estimated $.04 per share charge for shore staff reductions as we continue to respond to a lower utilization and service environment, and anticipated unfavorable winter weather conditions. The first quarter guidance also reflects our expectation of continued excess industry-wide tank barge capacity, utilization rates in the low 80% level and continued downward pressure on term contract renewals and spot market pricing. For the 2010 year, our guidance range is $1.85 to $2.20 per share compared with $2.34 per share for 2009. Our low end guidance assumes volumes will be consistent with current volumes throughout 2010, with continued downward pressure on term contract renewals and spot market pricing in the first half of 2010. Our high end guidance assumes an improvement in volumes as the year progresses, some reduction in excess tank barge capacity and some improvement in term contract and spot market pricing. We anticipate our diesel engine services segment will continue to face challenges but we do believe we have reached the bottom of the diesel engine services business cycle. Our guidance represents our current judgment with respect to our 2010 performance as the economy remains weak and somewhat unpredictable. Our 2010 capital spending guidance range is $125 to $135 million, including approximately $60 million for the construction of 61 new tank barges and finishing the construction of three towboats."
Commenting on the financial condition of Kirby, Mr. Pyne said, "Despite the pain of this recession, Kirby is in excellent financial condition with an investment grade rated balance sheet, sustainable cash flows and low debt levels. During this time of economic uncertainly, Kirby will continue to focus on the areas we can control: customer service, safety, cost, upgrading our fleet and looking for opportunities to continue to grow our marine transportation and diesel engine services businesses."