Kirby CEO sees “very favorable” outlook for 2022

Written by Nick Blenkey
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“Looking forward into 2022, the outlook for marine transportation and distribution and services is very favorable, and we expect material growth in earnings during the year,” said David Grzebinski, president and CEO of Houston-headquartered tank barge giant Kirby Corporation (NYSE: KEX), as the company reported its financial results for the period ended December 31, 2021.

Highlights noted by the company included:

  • Fourth quarter 2021 GAAP earnings per share of $0.18 including a one-time $0.09 per share deferred tax provision related to a change in Louisiana tax law
  • Fourth quarter 2021 adjusted earnings per share of $0.27
  • Solid improvement in inland marine with barge market strengthening and operating margins approaching 10%
  • Distribution and services activity sequentially lower due to supply chain delays and seasonality
  • Meaningful improvement expected in 2022 in both inland marine and distribution and services
  • 2022 projected cash flow from operations of $400 million to $480 million and capital expenditures of $170 to $190 million

BARGE UTILIZATION INCREASES

Grzebinski said that fourth quarter adjusted earnings sequentially increased driven by improved results in Kirby’s marine transportation businesses.

“In marine transportation, our inland business experienced improved market fundamentals due to strong refinery and petrochemical plant utilization and increased customer volumes,” he said. “As a result, our barge utilization steadily increased during the quarter with an average in the mid-to high 80% range. Favorable market dynamics also led to increased sequential and year-on-year spot market pricing, as well as higher rates on term contract renewals for the first time since the start of the pandemic.

“However, the quarter was not without its challenges as poor weather conditions yielded a 55% sequential increase in delay days. In December, escalating cases of the COVID-19 Omicron variant contributed to crewing challenges and had an impact of $0.01 to $0.02 per share for the quarter. Overall, inland revenues significantly increased sequentially and year-on-year and operating margins were approaching 10%.”

“In coastal marine, market conditions were stable in the fourth quarter. At the end of the quarter, we completed our exit from the Hawaii market, positioning the coastal business for improved profitability and long-term success.

2022 OUTLOOK

Commenting on the 2022 full year outlook, Grzebinski said, “As our markets rebound, we expect 2022 capital spending to increase, enabling our businesses to capitalize on growth opportunities and ensure safe, efficient and reliable operations. As always, we will continue to focus on costs and the balance sheet to drive strong cash flow from operations. We intend to use this cash flow to further pay down debt and to pursue attractive acquisition opportunities that may arise.”

In inland marine, Kirby’s 2022 guidance contemplates favorable market conditions with continued economic growth, increased volumes from new petrochemical plants, and minimal new barge construction across the industry.

Kirby expects 2022 capital spending to range between $170 to $190 million. Approximately $5 million is associated with the construction of new inland towboats, and approximately $145 to $155 million is associated with maintenance capital and improvements to existing inland and coastal marine equipment and facility improvements. The balance of approximately $20 to $30 million largely relates to new machinery and equipment, facility improvements, and information technology projects in distribution and services and corporate. Overall, Kirby expects to generate net cash provided by operating activities of $400 million to $480 million, with free cash flow of $210 million to $310 million in 2022.

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