HOUSTON, July 27, 2016 /PRNewswire/ -- Kirby
Corporation ("Kirby") (NYSE: KEX) today announced net earnings
attributable to Kirby for the second quarter ended June 30, 2016 of $38.9
million, or $0.72 per share,
compared with $58.1 million, or
$1.04 per share, for the 2015 second
quarter. Consolidated revenues for the 2016 second quarter
were $441.6 million compared with
$543.2 million reported for the 2015
second quarter.
David Grzebinski, Kirby's
President and Chief Executive Officer, commented, "Our results for
the second quarter were largely in-line with our
expectations. In our inland marine transportation market, we
benefitted from barges acquired in mid-April, as well as strong
utilization levels early in the quarter. However, these
positive developments were partially offset by tank barge
utilization that declined later in the quarter. In our
coastal marine transportation market, overall dynamics were similar
to the first quarter, with some customers electing to source
equipment on short-term, or spot, contracts, and with pricing and
volume trends relatively unchanged."
Mr. Grzebinski continued, "Within our diesel engine services
segment, market conditions were similar to those we experienced
during the first quarter. In the land-based market, we
received an increased number of orders for pressure pumping unit
service and remanufacturing work, which could ultimately prove to
be early signs of an overall market recovery. However, we
continued to experience weak demand for the sale of engines,
transmissions and parts and did not receive orders for new pressure
pumping units. In our marine diesel engine markets, we
experienced further deferrals of major overhaul projects in most of
our marine markets and continued weakness in the Gulf of Mexico oilfield services market."
Segment Results – Marine Transportation
Marine
transportation revenues for the 2016 second quarter were
$378.3 million compared with
$425.1 million for the 2015 second
quarter. Operating income for the 2016 second quarter was
$72.7 million compared with
$97.0 million for the 2015 second
quarter.
Demand for inland tank barge transportation of petrochemicals
was stable, while demand for black oil, crude oil and agricultural
chemicals was weaker both on a year-over-year and sequential
basis. Refined product volume increased as a result of the
acquisition completed in April. Kirby's inland tank barge
utilization was in the high-80% to low-90% range during the
quarter. Spot market pricing began to firm in April, with
some carriers seeking a sequential rate increase, but the momentum
did not carry-through as utilization dipped later in the
quarter. Term contract renewals also priced at lower levels
relative to last year. Operating conditions during the
quarter were seasonally normal, although flooding and high currents
at floodgates and river crossings along the Gulf Intracoastal
Waterway did lead to some delays and periods of congestion along
the Gulf Coast.
In the coastal marine transportation market, demand for the
transportation of black oil and petrochemicals was stable, although
an increase in the amount of equipment trading in the spot market
led to increased idle time and voyage costs. Demand for the
transportation of refined products declined, primarily as a result
of weak distillate and gasoline demand in the Northeast which was
mainly the result of high product inventory levels.
Utilization for the coastal tank barge fleet was in the mid-80%
range. Also during the quarter, Kirby took delivery of the
second newbuild 185,000 barrel coastal articulated tank barge and
tugboat unit (ATB) which entered service under a long-term customer
contract in mid-June.
The marine transportation segment's 2016 second quarter
operating margin was 19.2% compared with 22.8% for the second
quarter of 2015.
Segment Results – Diesel Engine Services
Diesel engine
services revenues for the 2016 second quarter were $63.3 million with a $2.0
million operating loss, compared with 2015 second quarter
revenues of $118.1 million and
operating income of $4.9 million.
The lower revenues and operating loss as compared to the second
quarter of 2015 were primarily due to a lack of pressure pumping
unit manufacturing and lower sales of engines, transmissions and
parts in the land-based diesel engine services market.
Results in the marine diesel engine services markets additionally
contributed to the decline, a result of customer deferrals of major
maintenance projects and continued weakness in the Gulf of Mexico oilfield services market.
Demand in the power generation market was stable during the
quarter.
The diesel engine services operating margin was (3.1)% for the
2016 second quarter compared with 4.2% for the 2015 second
quarter.
Cash Generation
EBITDA of $230.3 million for the 2016 first six months
contributed to Kirby's cash flow from operations during the 2016
first six months, which compares with EBITDA of $292.9 million for the 2015 first six
months. Cash flow was used to fund capital expenditures of
$111.0 million, including
$3.6 million for new inland tank
barge and towboat construction, $53.9
million for progress payments on the construction of three
new coastal ATBs, two 4900 horsepower coastal tugboats and a 35,000
barrel coastal petrochemical tank barge, and $53.5 million primarily for upgrades to the
existing inland and coastal fleets. In addition to these
capital expenditures, during the 2016 second quarter, $81 million was used to purchase the SEACOR
inland tank barge fleet, $13.5
million was used to purchase a leased coastal tank barge
from the lessor and $26.5 million was
used to purchase four coastal tugboats. Total debt as of
June 30, 2016 was $798.7 million and Kirby's debt-to-capitalization
ratio was 25.4%.
Outlook
Commenting on the 2016 third quarter and full
year market outlook and guidance, Mr. Grzebinski said, "Our
earnings guidance for the 2016 third quarter is $0.50 to $0.65 per share compared with
$1.04 per share in the 2015 third
quarter. In July we experienced utilization in the low-to-mid
80% range across our inland marine system. Our third quarter
guidance range contemplates inland marine transportation
utilization in the low-to-mid 80% range for the low end and
high-80% range for the high end. In our coastal
market, we expect utilization in the low-to-mid-80% range, as we
continue to anticipate having more coastal equipment trade in the
spot market. In our diesel engine services markets, we expect
results in the marine and power generation markets to be largely
consistent with the first half of the year, including depressed
market conditions in the Gulf of
Mexico oilfield services market. In our land-based
diesel engine services market, we expect the challenging market
conditions of this year to continue."
Mr. Grzebinski continued, "We are lowering our full year
earnings per share guidance to a range of $2.40 to $2.70 from the previous guidance range
of $2.80 to $3.20 to reflect a
potential continuation of the deterioration in the inland marine
market seen in July. We believe the weakness in July has been
related to a confluence of several factors, including high terminal
and refinery inventory levels, as well as softer utilization that
is common in mid-summer as operating conditions improve.
Should the inland marine transportation market materially improve,
we will update our guidance accordingly. In our coastal
market, utilization and pricing have held at levels slightly better
than we expected earlier in the year, but we continue to expect
headwinds related to the transition of equipment on term contracts
into the spot market, which leads to lower utilization and an
increase in non-revenue generating repositioning costs. In
our diesel engine services markets, at the midpoint of guidance we
expect the trends from the first half of 2016 to remain largely
unchanged in the second half of the year."
Kirby expects 2016 capital spending to be unchanged in the
$230 to $250 million range.
Capital spending guidance includes approximately $10 million for the construction of seven inland
tank barges and one inland towboat to be delivered in 2016.
The capital spending guidance range also includes approximately
$100 million in progress payments on
new coastal equipment, including one 185,000 barrel coastal ATB,
two 155,000 barrel coastal ATBs, two 4900 horsepower coastal
tugboats, and a new coastal petrochemical tank barge. The
balance of $120 to $140 million is
primarily for capital upgrades and improvements to existing inland
and coastal marine equipment and facilities, as well as diesel
engine services facilities.
Conference Call
A conference call is scheduled for
7:30 a.m. central time tomorrow, Thursday,
July 28, 2016, to discuss the 2016 second quarter
performance as well as the outlook for the 2016 third quarter and
full year. The conference call number is 888-317-6003 for
domestic callers and 412-317-6061 for international callers.
The confirmation number is 3909824. An audio playback
will be available at 1:00 p.m. central
time on Thursday, July 28,
2016, through 5:00 p.m. central
time on Thursday, August 4,
2016, by dialing 877-344-7529 for domestic callers and
412-317-0088 for international callers. The replay access
code is 10088682. A live audio webcast of the conference call
will be available to the public and a replay available after the
call by visiting Kirby's website at
http://www.kirbycorp.com/.
GAAP to Non-GAAP Financial Measures
The financial and
other information to be discussed in the conference call is
available in this press release and in a Form 8-K filed with the
Securities and Exchange Commission. This press release and
the Form 8-K include a non-GAAP financial measure, EBITDA, which
Kirby defines as net earnings attributable to Kirby before interest
expense, taxes on income, depreciation and amortization. A
reconciliation of EBITDA with GAAP net earnings attributable to
Kirby is included in this press release. This earnings press
release includes marine transportation performance measures,
consisting of ton miles, revenue per ton mile, towboats operated
and delay days. Comparable performance measures for the 2015
year and quarters are available at Kirby's website,
http://www.kirbycorp.com/, under the caption Performance
Measurements in the Investor Relations section.
Forward-Looking Statements
Statements contained in
this press release with respect to the future are forward-looking
statements. These statements reflect management's reasonable
judgment with respect to future events. Forward-looking
statements involve risks and uncertainties. Actual results
could differ materially from those anticipated as a result of
various factors, including cyclical or other downturns in demand,
significant pricing competition, unanticipated additions to
industry capacity, changes in the Jones Act or in U.S. maritime
policy and practice, fuel costs, interest rates, weather conditions
and timing, magnitude and number of acquisitions made by
Kirby. Forward-looking statements are based on currently
available information and Kirby assumes no obligation to update any
such statements. A list of additional risk factors can be
found in Kirby's annual report on Form 10-K for the year ended
December 31, 2015 filed with the
Securities and Exchange Commission.
About Kirby Corporation
Kirby Corporation, based in
Houston, Texas, is the nation's
largest domestic tank barge operator transporting bulk liquid
products throughout the Mississippi River System, on the Gulf
Intracoastal Waterway, coastwise along all three United States coasts, and in Alaska and Hawaii. Kirby transports
petrochemicals, black oil, refined petroleum products and
agricultural chemicals by tank barge. Kirby also operates
offshore dry-bulk barge and tugboat units engaged in the offshore
transportation of dry-bulk cargoes in the
United States coastal trade. Through the diesel engine
services segment, Kirby provides after-market service for
medium-speed and high-speed diesel engines and reduction gears used
in marine and power generation applications. Kirby also
distributes and services diesel engines, transmissions and pumps,
and manufactures and remanufactures oilfield service equipment,
including pressure pumping units, for land-based oilfield service
and oil and gas operator and producer markets.
CONDENSED
CONSOLIDATED STATEMENTS OF EARNINGS
|
|
|
|
|
|
|
Second
Quarter
|
Six
Months
|
|
2016
|
2015
|
2016
|
2015
|
|
(unaudited, $ in
thousands except per share amounts)
|
|
|
|
|
|
Revenues:
|
|
|
|
|
Marine
transportation
|
$
378,303
|
$
425,053
|
$
756,646
|
$
844,958
|
Diesel engine
services
|
63,279
|
118,103
|
143,669
|
285,871
|
|
441,582
|
543,156
|
900,315
|
1,130,829
|
Costs and
expenses:
|
|
|
|
|
Costs of sales and operating
expenses
|
276,897
|
343,745
|
565,807
|
728,526
|
Selling, general and
administrative
|
42,842
|
49,165
|
93,303
|
100,209
|
Taxes, other than on
income
|
5,468
|
5,378
|
10,872
|
9,923
|
Depreciation and
amortization
|
49,661
|
46,825
|
98,285
|
92,591
|
Gain on disposition of
assets
|
(94)
|
(91)
|
(161)
|
(1,646)
|
|
374,774
|
445,022
|
768,106
|
929,603
|
Operating income
|
66,808
|
98,134
|
132,209
|
201,226
|
Other income
(expense)
|
179
|
(303)
|
314
|
(243)
|
Interest
expense
|
(4,513)
|
(4,759)
|
(8,706)
|
(10,009)
|
Earnings before taxes on
income
|
62,474
|
93,072
|
123,817
|
190,974
|
Provision for
taxes on income
|
(23,365)
|
(34,696)
|
(46,224)
|
(71,187)
|
Net earnings
|
39,109
|
58,376
|
77,593
|
119,787
|
Less: Net earnings
attributable to noncontrolling interests
|
(167)
|
(301)
|
(552)
|
(634)
|
|
|
|
|
|
Net earnings attributable to
Kirby
|
$
38,942
|
$
58,075
|
$
77,041
|
$
119,153
|
|
|
|
|
|
Net earnings per
share attributable to Kirby common stockholders:
|
|
|
|
|
Basic
|
$
0.72
|
$
1.04
|
$
1.43
|
$
2.14
|
Diluted
|
$
0.72
|
$
1.04
|
$
1.43
|
$
2.13
|
Common stock
outstanding (in thousands):
|
|
|
|
|
Basic
|
53,451
|
55,315
|
53,446
|
55,446
|
Diluted
|
53,526
|
55,432
|
53,505
|
55,565
|
|
|
|
|
|
CONDENSED
CONSOLIDATED FINANCIAL INFORMATION
|
|
|
|
|
Second
Quarter
|
Six Months
|
|
2016
|
2015
|
2016
|
2015
|
|
(unaudited, $ in
thousands)
|
EBITDA:
(1)
|
|
|
|
|
Net earnings attributable to
Kirby
|
$
38,942
|
$
58,075
|
$
77,041
|
$
119,153
|
Interest expense
|
4,513
|
4,759
|
8,706
|
10,009
|
Provision for taxes on
income
|
23,365
|
34,696
|
46,224
|
71,187
|
Depreciation and
amortization
|
49,661
|
46,825
|
98,285
|
92,591
|
|
$
116,481
|
$
144,355
|
$
230,256
|
$
292,940
|
|
|
|
|
|
Capital
expenditures
|
$
60,525
|
$
93,619
|
$
111,048
|
$
190,152
|
Acquisitions of
businesses and marine equipment
|
$
120,991
|
$
-
|
$
120,991
|
$
41,250
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
|
2016
|
2015
|
|
(unaudited, $ in
thousands)
|
Long-term debt,
including current portion
|
$
798,687
|
$
803,986
|
Total
equity
|
$
2,350,679
|
$
2,255,843
|
Debt to
capitalization ratio
|
25.4%
|
26.3%
|
|
MARINE
TRANSPORTATION STATEMENTS OF EARNINGS
|
|
|
|
Second
Quarter
|
Six
Months
|
|
2016
|
2015
|
2016
|
2015
|
|
(unaudited, $ in
thousands)
|
|
|
|
|
|
Marine transportation
revenues
|
$
378,303
|
$
425,053
|
$
756,646
|
$
844,958
|
|
|
|
|
|
Costs and
expenses:
|
|
|
|
|
Costs of sales and operating
expenses
|
228,592
|
251,784
|
455,344
|
500,868
|
Selling, general and
administrative
|
26,600
|
28,660
|
59,297
|
57,393
|
Taxes, other than on
income
|
4,953
|
4,816
|
9,791
|
8,947
|
Depreciation and
amortization
|
45,432
|
42,782
|
89,693
|
84,470
|
|
305,577
|
328,042
|
614,125
|
651,678
|
|
|
|
|
|
Operating income
|
$
72,726
|
$
97,011
|
$
142,521
|
$
193,280
|
|
|
|
|
|
Operating margins
|
19.2%
|
22.8%
|
18.8%
|
22.9%
|
|
|
|
|
|
|
|
|
|
|
DIESEL ENGINE
SERVICES STATEMENTS OF EARNINGS
|
|
|
|
|
Second
Quarter
|
Six
Months
|
|
2016
|
2015
|
2016
|
2015
|
|
(unaudited, $ in
thousands)
|
|
|
|
|
|
Diesel engine
services revenues
|
$
63,279
|
$
118,103
|
$
143,669
|
$
285,871
|
|
|
|
|
|
Costs and
expenses:
|
|
|
|
|
Costs of sales and operating
expenses
|
48,305
|
91,961
|
110,463
|
227,658
|
Selling, general and
administrative
|
13,178
|
17,603
|
28,309
|
37,335
|
Taxes, other than
income
|
502
|
549
|
1,053
|
947
|
Depreciation and
amortization
|
3,262
|
3,059
|
6,618
|
6,157
|
|
65,247
|
113,172
|
146,443
|
272,097
|
|
|
|
|
|
Operating income (loss)
|
$
(1,968)
|
$
4,931
|
$
(2,774)
|
$
13,774
|
|
|
|
|
|
Operating margins
|
(3.1)%
|
4.2%
|
(1.9)%
|
4.8%
|
OTHER COSTS AND
EXPENSES
|
|
|
|
|
Second
Quarter
|
Six
Months
|
|
2016
|
2015
|
2016
|
2015
|
|
(unaudited, $ in
thousands)
|
|
|
|
|
|
General corporate
expenses
|
$
4,044
|
$
3,899
|
$
7,699
|
$
7,474
|
|
|
|
|
|
Gain on disposition
of assets
|
$
94
|
$
91
|
$
161
|
$
1,646
|
MARINE
TRANSPORTATION PERFORMANCE MEASUREMENTS
|
|
|
|
|
Second
Quarter
|
Six
Months
|
|
2016
|
2015
|
2016
|
2015
|
Inland Performance
Measurements:
|
|
|
|
|
Ton Miles (in
millions) (2)
|
2,792
|
3,261
|
5,540
|
6,359
|
Revenue/Ton Mile
(cents/tm) (3)
|
8.8
|
8.6
|
8.9
|
8.7
|
Towboats
operated (average) (4)
|
241
|
251
|
241
|
250
|
Delay Days
(5) (5)
|
2,035
|
2,076
|
4,271
|
4,454
|
Average cost per
gallon of fuel consumed
|
$
1.35
|
$
2.03
|
$
1.31
|
$
2.04
|
Barges
(active):
|
|
|
|
|
Inland tank
barges
|
|
|
901
|
912
|
Coastal tank
barges
|
|
|
69
|
69
|
Offshore dry-cargo
barges
|
|
|
6
|
6
|
Barrel capacities (in
millions):
|
|
|
|
|
Inland tank
barges
|
|
|
18.3
|
18.1
|
Coastal tank
barges
|
|
|
6.1
|
6.0
|
|
|
(1)
|
Kirby has
historically evaluated its operating performance using numerous
measures, one of which is EBITDA, a non-GAAP financial
measure. Kirby defines EBITDA as net earnings attributable to
Kirby before interest expense, taxes on income, depreciation and
amortization. EBITDA is presented because of its wide
acceptance as a financial indicator. EBITDA is one of the
performance measures used in Kirby's incentive bonus plan.
EBITDA is also used by rating agencies in determining Kirby's
credit rating and by analysts publishing research reports on Kirby,
as well as by investors and investment bankers generally in valuing
companies. EBITDA is not a calculation based on generally
accepted accounting principles and should not be considered as an
alternative to, but should only be considered in conjunction with,
Kirby's GAAP financial information.
|
(2)
|
Ton miles indicate
fleet productivity by measuring the distance (in miles) a loaded
tank barge is moved. Example: A typical 30,000 barrel
tank barge loaded with 3,300 tons of liquid cargo is moved 100
miles, thus generating 330,000 ton miles.
|
(3)
|
Inland marine
transportation revenues divided by ton miles. Example:
Second quarter 2016 inland marine transportation revenues of
$245,670,000 divided by 2,792,000,000 inland marine transportation
ton miles = 8.8 cents.
|
(4)
|
Towboats operated are
the average number of owned and chartered towboats operated during
the period.
|
(5)
|
Delay days measures
the lost time incurred by a tow (towboat and one or more tank
barges) during transit. The measure includes transit delays
caused by weather, lock congestion and other navigational
factors.
|
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SOURCE Kirby Corporation