Company News

Kirby Corporation Reports First Quarter Earnings Growth

Kirby Corporation on April 25 announced first-quarter earnings of $32.5 million, or $0.54 per share, compared with $27.5 million, or $0.51 per share, for the 2017 first quarter. Consolidated revenues for the 2018 first quarter were $741.7 million, compared with $491.7 million reported a year ago.

The company said its first quarter results were impacted by one-time expenses associated with the recent acquisition of Higman Marine Inc., an amendment to the employee stock plan and severance.

“Operationally, Kirby’s first-quarter results were in line with expectations, with strength in distribution and services offsetting some temporary weakness in marine transportation due to weather,” said David Grzebinski, Kirby president and CEO. “Despite the temporary challenges in marine transportation, the inland sector continued to show early signs of a recovery during the first quarter, with spot market pricing increasing 10 to 15 percent compared to the 2017 fourth quarter. Increased customer demand and unusually poor seasonal operating conditions contributed to tight market dynamics across the industry. Although our barge utilization rates were in the mid-90 percent range throughout the quarter, our operations were challenged by increased delay days caused by adverse weather conditions across much of inland waterway system.

“Transaction fees and maintenance costs related to Higman also negatively impacted the quarter’s results, but we are very pleased with the progress integrating Higman.”

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Grzebinski continued, “In our coastal marine business, market conditions stabilized during the quarter, with term and spot contract pricing remaining unchanged relative to the 2017 fourth quarter. Utilization rates were in the high 70 percent range. While recent pricing stabilization is encouraging, we continue to expect difficult coastal market conditions in the near term. As a result, we took additional measures to reduce costs, including further workforce reductions and temporarily taking additional barges out of service.”

Marine Transportation Segment

Marine transportation revenues for the first quarter were $340.4 million compared with $343.7 million for the first quarter a year ago, the company said. Operating income for the 2018 first quarter was $16.2 million compared with $35.8 million for the 2017 first quarter.

In the inland market, barge utilization was in the mid-90 percent  range for the quarter, compared to the high 80 percent to low 90 percent range in the 2017 first quarter.

Operating conditions during the quarter were challenged by ice on the Illinois River, high water on the Ohio and Mississippi rivers, and continued infrastructure challenges on the Ohio River. Seasonal fog and strong winds, as well as lock delays along the Gulf Intracoastal Waterway, also resulted in increased delay days throughout the quarter, the company said. These conditions challenged inland operations for much of the 2018 first quarter, and consequently reduced operational efficiency on work performed under affreightment contracts.

Term contract pricing was at lower levels relative to the first quarter of 2017 as contracts renewed at lower levels throughout 2017, however, spot contract pricing increased 10 percent to 15 percent sequentially and year-over-year, Kirby said. Overall, revenues in the inland market increased compared to the 2017 first quarter, primarily due to the contribution from Higman.

In the coastal market, barge utilization rates improved into the high 70 percent range, primarily due to the impairment and early retirement of 12 barges during the 2017 fourth quarter. Revenues from the transportation of black oil and refined petroleum products were lower than the 2017 first quarter, while revenues from the transportation of crude oil and petrochemicals were higher.

Pyne Retires

In an April 24 announcement, Kirby announced that Joseph Pyne will retire as executive chairman of the board, effected April 30, after 40 years of service. He will continue to serve as chairman of the board in a non-executive role, the company said.

Pyne started his career with Kirby in 1978, and has held numerous executive positions including chairman of the board since April 2014; chairman of the board and chief executive officer from January 2014 to April 2014; chairman of the board, president and chief executive officer from April 2013 to January 2014 and from April 2010 to April 2011, and as president and chief executive officer from 1995 to April 2010, executive vice president from 1992 to 1995 and as president of Kirby Inland Marine from 1984 to November 1999. He has served the company as a director since 1988. He also served in various operating and administrative capacities with Kirby Inland Marine from 1978 to 1984.

“On a personal note, I’d like to express my appreciation to Joe Pyne as he prepares to retire from Kirby at the end of the month,” Grzebinski said in the earnings announcement. “For 40 years, Joe has served Kirby, its employees, and its shareholders. Joe’s vision and leadership have transformed Kirby into the industry-leading marine transportation and distribution and services company that it is today. I am grateful for Joe’s mentorship and advice over the years, and I am pleased that he has agreed to retain his role as non-executive Chairman of the Board. I look forward to continuing to work with Joe in his role as Chairman of Kirby.”

Capital Expenditures

The company reported capital expenditures of $41.0 million, including $4.7 million for new inland tank barge and towboat construction, $6.7 million for progress payments on the construction of six 5,000 hp. coastal ATB tugboats, and $29.6 million primarily for upgrades to existing inland and coastal fleets and marine transportation and distribution and services facilities. In addition, cash used in acquisitions was $430.0 million, including $419.6 million for the acquisition of Higman and $10.4 million for two pressure barges acquired from a competitor.

Total debt as of March 31, 2018 was $1,423.3 million and Kirby’s debt-to-capitalization ratio was 31.2 percent.


Grzebinski said the company’s earnings guidance for the second quarter is $.30 to $.50 per share, including approximately $.30 per share for one-time expenses associated with Pyne’s retirement. For the full year, the company lowered its earnings guidance from $2.50–$3.00 per share to $2.15–$2.65 per share, reflecting the retirement charge and changes to the employee stock plan.

“Operationally, our expected results for 2018 are unchanged,” he said.

“In our marine transportation segment, second-quarter and full-year guidance, which now includes Higman, contemplates inland marine utilization in the low to mid-90 percent range and the full-year effect of pricing declines experienced during 2017. We continue to expect that industry-wide barge retirements, minimal new-builds, and additional petrochemical capacity will yield high industry utilization rates throughout the remainder of 2018. This should lead to continued improvement in spot market pricing and a modest mid-single-digit pricing inflection on term contracts renewed in the second half of 2018.

“Regarding Higman, we continue to anticipate that this acquisition will be earnings neutral for the first 12 months in total; however, we will incur some additional costs during the second quarter as we integrate their fleet and perform deferred maintenance. We do, however, expect that Higman will be accretive to earnings in the second half of the year,” Grzebinski said.

Kirby said in the announcement that it expects 2018 capital spending to be in the $200 million to $225 million range.