Kirby Inland Revenue Jumps 35 Percent Year-Over-Year
Kirby Corporation reported third-quarter net earnings of $39.1 million or $0.65 per share, on revenues of $745.8 million.
The net income follows a net loss of $264.7 million or $4.41 per share for the third quarter of 2021; however, that quarter included significant one-time items such as a restructuring of Kirby’s coastal marine business and Hurricane Ida. Excluding those one-time factors, adjusted net earnings for the Q3 of 2021 were $10.3 million or $0.17 per share.
“I am pleased with Kirby’s third quarter results and the improvement in both of our segments,” said David Grzebinski, Kirby president and CEO, in the October 24 announcement. “During the third quarter, our inland marine transportation business delivered strong results with significant sequential and year-over-year improvement in profitability. Tight market conditions in inland led to sequential increases in spot market rates in the high single digits, and term contract pricing that continued to push higher. Overall, higher demand and pricing improvements helped to improve inland operating margins into the low double digits during the quarter.”
In Kirby’s marine segment, revenues were $433 million for the third quarter, compared with $338.5 million a year ago. The segment’s operating margin was 9.6 percent, compared with 5 percent in the 2021 third quarter.
In the inland market, Kirby reported its third-quarter barge utilization was in the low 90 percent range, compared to the low 80 percent range in the 2021 third quarter. Fewer weather and lock delays contributed to a 16 percent decrease in delay days compared to a year ago. Kirby said average spot market rates increased in the mid 20-percent range compared to a year ago, and term contracts that renewed in the third quarter increased in the low teens range. Inland revenues were up 35 percent compared to the 2021 third quarter primarily due to increased volumes, barge utilization, pricing and fuel rebills, Kirby said.
On the coastal side, Kirby reported barge utilization in the low- to mid-90 percent range. The coastal business continued to show improvement in operating margins with margins in the low-to-mid single digits during the quarter, the company reported.
The inland market represented 80 percent of Kirby’s marine transportation segment revenues for the third quarter, and the coastal market provided 20 percent.
In Kirby’s distribution and services segment, revenues were $312.8 million for the 2022 third quarter, compared with $260.4 million for the 2021 third quarter. The operating margin was 7.1 percent, compared with 4.2 percent a year ago.
Kirby projects that favorable conditions will continue in the near future, driven by high refinery and petrochemical plant utilization, increased volumes from new petrochemical plants and minimal new barge construction across the industry. The company expects these strengths to be offset by increasing delay days due to normal seasonal weather conditions and record low-water conditions on the Mississippi River.
Overall, Kirby expects 2022 inland revenues to grow by 20 to 25 percent on a full-year basis as market conditions remain tight and term contracts renew higher.
Kirby expects 2022 capital spending of between $170 million and $190 million. Approximately $5 million is associated with the construction of new inland towboats, and approximately $145 million to $155 million is associated with marine maintenance capital and improvements to existing inland and coastal marine equipment and facility improvements. The balance largely relates to new machinery and equipment and facility improvements in the distribution and services segment, as well as information technology projects in corporate.
Kirby expects to generate net cash provided by operating activities of $390 million to $450 million, with free cash flow of $200 million to $280 million in 2022.
“We had a good quarter with both businesses performing well,” Grzebinski said. “Refinery activity remains at high levels, our barge utilization is strong in both inland and coastal, and rates are steadily increasing.
“While we expect some near-term headwinds related to record low-water conditions on the Mississippi River, increasing delay days due to normal seasonal weather conditions, and high levels of shipyard activity in coastal, our outlook in the marine market remains strong. In distribution and services, despite ongoing supply chain constraints and delays, demand for our products and services is growing, and we continue to receive new orders in manufacturing. Overall, we expect these favorable conditions to continue, and barring supply chain bottlenecks worsening, expect our businesses to deliver improved financial results in the coming quarters.”