Kirby Reports Higher Earnings
Kirby Corporation announced net earnings for the first quarter of $44.3 million, or 74 cents per share, compared with earnings of $32.5 million, or 54 cents per share, for the 2018 first quarter. Excluding certain one-time charges, 2018 first quarter net earnings were $37.9 million, or 63 cents per share, the company said in the May 2 announcement.
Consolidated revenues for the 2019 first quarter were $744.6 million, compared with $741.7 million reported for the 2018 first quarter.
“Kirby’s first quarter results were challenged by temporary weakness in marine transportation which resulted from record delay days,” said David Grzebinski, Kirby president and CEO. “Our distribution and services segment performed well, helping to offset the results from our marine businesses.
“In inland marine transportation, our quarter’s results were heavily impacted by unusually poor operating conditions throughout the U.S. waterway network, which negatively impacted our earnings by approximately 5 cents per share,” he continued. “Although we anticipated weather-related delays in the first quarter, this year we experienced significantly more than expected with persistent fog along the Gulf Coast, extended periods of ice on the Illinois River, and near record high water conditions on the Mississippi River. Additionally, there were significant navigational delays resulting from lock maintenance and the closure of the Houston Ship Channel in March due to a fire at a chemical storage facility. These conditions resulted in an approximate 80 percent increase in delay days from the more normal year-ago quarter.
“However, customer demand remained strong throughout the quarter, and barge utilization strengthened into the mid-90 percent range on average. I would like to thank our mariners and shore staff who performed extremely well despite these very difficult operating conditions, remaining focused on safety and serving the needs of our customers.”
Grzebinski said the March acquisition of Cenac Marine Services brings to Kirby “a young fleet of well-maintained 30,000-barrel tank barges and new modern towboats, as well as highly-trained and first class mariners.” The acquisition was well-timed and will enhance Kirby’s long-term earnings potential, he said.
Spot market and term contract pricing improved during the quarter, with spot rates increasing in the mid-to-high single-digit range sequentially and approximately 20 percent year-over-year. Average term contract pricing on expiring contracts increased in the mid-single digits, Kirby said.
The company reported capital expenditures of $60.9 million during the 2019 first quarter, which included $7.9 million for new inland towboat construction, $6.9 million for progress payments on the construction of three 5,000 horsepower coastal ATB tugboats, $1.8 million for final costs on the new 155,000-barrel coastal ATB that delivered in the 2018 fourth quarter, $34.9 million primarily for upgrades to existing inland and coastal fleets, and $9.4 million related to projects in distribution and services.
During the quarter, Kirby entered into an amended credit agreement with a group of banks that extended the term of Kirby’s $850 million revolving credit facility until March 27, 2024, and added a new five-year term loan in the amount of $500 million. Total debt as of March 31 was $1,667.5 million, and Kirby’s debt-to-capitalization ratio was 33.8 percent.
The company said it expects capital spending for all of 2019 to be in the $225 million to $245 million range.
“Capital spending guidance includes approximately $45 million in progress payments on new marine vessels, which includes three 5,000 hp. coastal tugboats and thirteen 2,600 hp. inland towboats,” the Kirby announcement said. “Approximately $155 to $165 million is associated with capital upgrades and improvements to existing inland and coastal marine equipment (including approximately $25 million for coastal ballast water treatment systems) and marine facility improvements. The balance of approximately $30 million largely relates to new machinery and equipment, rental fleet growth, facility improvements, and information technology projects in the distribution and services segment.”