Kirby Reports Higher Earnings As COVID Wanes
Kirby Corporation, Houston, announced first quarter net earnings of $17.4 million or $0.29 per share, compared with a loss of $3.4 million, or $0.06 per share for the 2021 first quarter. Consolidated revenues for the 2022 first quarter were $610.8 million compared with $496.9 million reported for the 2021 first quarter.
“Kirby’s businesses continued to gain momentum with improved market conditions and increased demand, delivering sequential and year-on-year revenue and earnings growth,” said David Grzebinski, Kirby president and CEO, in the April 28 announcement. “These tailwinds were somewhat offset by the impact of the COVID-19 Omicron variant, which we estimate reduced marine transportation earnings by approximately $0.10 per share during the first quarter. Although we continue to navigate supply chain constraints, distribution and services performed well.
“Our outlook for 2022 remains favorable, and we expect meaningful quarterly earnings progression for the remainder of the year,” he said.
The Omicron variant was a significant challenge for inland marine in the first two months of the quarter, leading to crewing challenges, lost revenue and increased operating costs, he said.
“Despite these challenging circumstances, market conditions rapidly improved in March as cases of the Omicron variant dissipated and refinery utilization ramped up,” Grzebinski said. “These conditions contributed to Kirby’s barge utilization increasing to over 90 percent since mid-March.”
Kirby’s marine transportation revenues for the 2022 first quarter were $355.5 million, compared with $301 million for the 2021 first quarter. Operating income for the 2022 first quarter was $16.9 million, compared with $1.9 million a year ago.
“Although first quarter results were materially impacted by the Omicron variant in marine transportation, we exited the quarter in a solid position,” Grzebinski said. “Refinery utilization is back to pre-pandemic levels, our barge utilization is strong in both inland and coastal, and rates are increasing. In distribution and services, despite supply chain constraints, demand for our products and services is growing, and we continue to receive new orders in manufacturing. Overall, we see momentum continuing to build, and we expect our businesses to deliver improved financial results in the coming quarters.
“While all of this is encouraging, we are mindful that ongoing challenges related to COVID-19, high commodity prices impacting demand and additional economic headwinds are possible. Labor constraints and inflationary pressures are also contributing to rapidly rising costs across our businesses.
“In marine, we currently expect that cost escalators and rate recovery mechanisms in some term contracts will lag these cost headwinds in the second quarter. With these uncertainties in mind, we will continue to focus on costs and drive strong cash flow from operations. In the near-term, we intend to use this cash flow to reduce debt and further strengthen our balance sheet, but we will also continue to evaluate accretive acquisitions and high-return organic growth opportunities to create long-term shareholder value.”
In inland marine, favorable market conditions have contributed to barge utilization being at or modestly above 90 percent since mid-March, Kirby said. This improvement is expected to continue going forward, driven by high refinery and petrochemical plant utilization, increased volumes from new petrochemical plants and minimal new barge construction across the industry; as a result, continued improvements are expected in the spot market, which currently represents approximately 35 percent of inland revenues, the company said.
Kirby expects 2022 capital spending to range between $170 million and $190 million. Approximately $5 million is associated with the construction of new inland towboats, and approximately $145 to $155 million is associated with marine 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 and facility improvements in distribution and services, as well as information technology projects in corporate, the company said.