Kirby reports increased earnings and revenues

Written by Nick Blenkey
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OCTOBER 26, 2018 — Houston headquarter Kirby Corporation (NYSE: KEX) reports net earnings for the third quarter ended September 30, 2018 of $41.8 million, or $0.70 per share, compared with $28.6 million, or $0.52 per share, for the 2017 third quarter. Consolidated revenues for the 2018 third quarter were $704.8 million compared with $541.3 million reported for the 2017 third quarter.

“Overall, I am pleased with Kirby’s third quarter results and the continued improvement in our marine transportation businesses,” said President and CEO David Grzebinski. “In inland marine transportation, increasing volumes from petrochemical and black oil customers, lock closures, and refinery turnarounds all contributed to increased utilization for our tank barge fleet during the quarter. These tight market conditions prompted sequential increases in spot market rates in the mid-single digits, and term contracts continued to move higher. Overall, higher demand, pricing improvements, and lower operating and maintenance costs helped to improve inland operating margins into the mid-to high teens during the quarter.

“In our coastal marine business, there were initial signs of a recovery with overall market conditions modestly improving during the third quarter. Higher demand in the Atlantic driven by refinery turnarounds, as well as favorable conditions in the Pacific, contributed to higher revenues compared to the second quarter. Additionally, several term contracts repriced modestly higher. Overall, these factors coupled with continued cost discipline resulted in breakeven operating income for our coastal business during the third quarter.

“As anticipated, in our distribution and services segment, vendor supply chain constraints impacted our ability to deliver new pressure pumping equipment during the third quarter, resulting in a decline in revenue and operating income compared to the second quarter. Also, as expected, there was modest sequential softening in demand from our key oil and gas customers which also contributed to this decline.”

CAPITAL SPENDING

Kirby expects 2018 capital spending to be in the $275 million to $290 million range. Capital spending guidance includes approximately $130 million in progress payments on new marine vessels, which includes $65 million for six 5,000 horsepower coastal tugboats and fifteen 2,600 horsepower inland towboats, and $65 million for a new 155,000 barrel coastal ATB acquired in the 2018 second quarter that was originally under construction by a competitor. Approximately $135 to $145 million is associated with capital upgrades and improvements to existing inland and coastal marine equipment, and facility improvements. The balance largely relates to rental fleet growth, new machinery and equipment, and facility improvements in the distribution and services segment.

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