HOUSTON, April 26, 2017 /PRNewswire/ -- Kirby
Corporation ("Kirby") (NYSE: KEX) today announced net earnings
attributable to Kirby for the first quarter ended March 31, 2017 of $27.5
million, or $0.51 per share,
compared with $38.1 million, or
$0.71 per share, for the 2016 first
quarter. Consolidated revenues for the 2017 first quarter
were $491.7 million compared with
$458.7 million reported for the 2016
first quarter.
David Grzebinski, Kirby's
President and Chief Executive Officer, commented, "Our first
quarter results were in line with our expectations. In our
inland marine transportation market, barge utilization was in the
high 80% to low 90% range for the quarter. Utilization was
affected by operating restrictions caused by poor, but seasonally
normal weather conditions, and stronger utilization in our black
oil fleet primarily as a result of turnarounds and seasonal factors
affecting the U.S. Gulf Coast refining complex. In the
coastal marine transportation market, tank barge utilization was in
the mid-70% to low 80% range during the first quarter as the market
continued to be impacted by barges moving from term contracts into
the spot market. In response to continued difficult coastal
market dynamics, we have taken measures to cut costs, reducing
headcounts and temporarily taking barges out of service until
market conditions improve."
Mr. Grzebinski continued, "Within our diesel engine services
segment, the land-based market continued to experience strong
demand for remanufacturing of pressure pumping units and
transmission overhauls. There was also a modest improvement
during the quarter in the demand for the manufacture of new
pressure pumping units and the sale of new transmissions. In
the marine diesel engine services market, revenues were down
year-over-year, but operating profit increased as a result of cost
control measures implemented in 2016. In the power generation
market, demand was comparable to the 2016 first quarter."
Segment Results – Marine Transportation
Marine
transportation revenues for the 2017 first quarter were
$343.7 million compared with
$378.3 million for the 2016 first
quarter. Operating income for the 2017 first quarter was
$35.3 million compared with
$69.8 million for the 2016 first
quarter.
Demand for inland tank barge transportation of petrochemicals,
refined petroleum products, and agricultural chemicals was stable,
while black oil and pressure barge demand was higher
sequentially. Kirby's inland tank barge utilization was in
the high 80% to low 90% range during the quarter. Both term
and spot contract pricing were at lower levels relative to the
first quarter of 2016, although spot pricing remained stable
compared to the 2016 fourth quarter. Operating conditions
during the quarter were seasonally normal, including periodic wind
and fog which increased delay days and, consequently, reduced our
efficiency on work performed under affreightment contracts.
The operating margin for the inland business was in the
mid-teens.
In the coastal marine transportation market, demand for the
transportation of black oil, petrochemicals, and dry products was
stable. Demand for the transportation of refined petroleum
products and crude oil was lower than the 2016 first quarter, and
reflected general and seasonal weakness in the Northeast and
Alaska. The growing number of vessels trading in the spot
market continued to drive increased idle time and voyage
costs. Utilization for the coastal tank barge fleet was in
the mid-70% to low 80% range. Additionally, coastal marine
results were negatively impacted by customer requested acceleration
of regulatory shipyards on two large units during the
quarter. The operating margin for the coastal marine business
was in the negative mid-single digits.
The marine transportation segment's 2017 first quarter operating
margin was 10.3% compared with 18.4% for the first quarter of 2016
as a result of weaker pricing in the inland marine market and
increased idle time in the coastal market as more barges operated
in the spot market.
Segment Results – Diesel Engine Services
Diesel engine
services revenues for the 2017 first quarter were $148.1 million with operating income of
$13.7 million, compared with 2016
first quarter revenues of $80.4
million and an operating loss of $0.8
million.
The higher revenues and operating income as compared to the
first quarter of 2016 were due to elevated demand for the
remanufacturing of pressure pumping units, rebuilt transmissions,
and a modest uptick in the sale of new pressure pumping units.
In our marine diesel engine services business, revenues
declined compared to the 2016 first quarter due to customer
deferrals of major overhauls, particularly in the Midwest, and weak
demand for new engines. Gulf Coast oilfield services activity
remained slow. However, cost controls implemented in the
marine diesel engine services business last year contributed to an
increase in operating income relative to the 2016 first
quarter. Demand in the power generation market remained
stable for the quarter, both sequentially and compared to the 2016
first quarter.
The diesel engine services operating margin was 9.3% for the
2017 first quarter compared with (1.0)% for the 2016 first quarter
due primarily to increased activity in our land-based diesel engine
services market and improved efficiency in our marine diesel engine
services business.
Cash Generation
EBITDA of $93.5
million for the 2017 first quarter compares with EBITDA of
$113.8 million for the 2016 first
quarter. Cash flow was used to fund capital expenditures of
$45.8 million, including $3.8 million for new inland tank barge and
towboat construction, $15.2 million
for progress payments on the construction of a new coastal
articulated tank barge and tugboat unit ("ATB"), two 4900
horsepower coastal tugboats and six 5000 horsepower coastal ATB
tugboats, final costs of $2.2 million
on a 35,000 barrel coastal petrochemical tank barge delivered in
December 2016, and $24.6 million primarily for upgrades to the
existing inland and coastal fleets. Total debt as of
March 31, 2017 was $674.6 million and Kirby's debt-to-capitalization
ratio was 21.7%.
Outlook
Commenting on the 2017 second quarter and full
year market outlook and guidance, Mr. Grzebinski said, "Our
earnings guidance for the 2017 second quarter is $0.40 to $0.55 per share compared with
$0.72 per share for the 2016 second
quarter. Our full year earnings guidance remains $1.70 to $2.20 per share. Second quarter
and full year guidance contemplates inland marine transportation
utilization in the mid-80% range at the low end and low 90% range
at the high end. We believe tank barge retirements will
continue in response to the weak pricing environment in the inland
market, further closing the gap between tank barge supply and
demand. At the middle to high end of our full year guidance
we have accounted for a modest improvement in pricing in the second
half of the year. In our coastal market, we expect
utilization in the mid-70% to low 80% range for the second quarter
and full year. The cost reduction measures taken in the 2017 first
quarter and early second quarter should allow us to operate at
quarterly breakeven operating margins or a slight operating loss
for the rest of the year."
Mr. Grzebinski continued, "In our diesel engine services
markets, we anticipate pressure pumping remanufacturing and
transmission overhaul service work in our land-based diesel engine
services business will continue at relatively high levels for the
second quarter, and remain healthy for the remainder of the
year. Orders for new pressure pumping units and new
transmissions in the second quarter have yet to materialize,
although we have received several customer inquiries. We
expect a slight, seasonal decline for the marine diesel engine and
power generation businesses in the second quarter, and steady
results the remainder of the year."
Kirby expects 2017 capital spending to be in the $165 to $185 million range, unchanged from
previous guidance. Capital spending guidance includes
approximately $50 million in progress
payments on new coastal equipment, including a 155,000 barrel ATB,
two 4900 horsepower and six 5000 horsepower coastal tugboats.
The balance of $115 to $135 million
is primarily for five new inland tank barges and 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,
April 27, 2017, to discuss the 2017 first quarter
performance as well as the outlook for the 2017 second quarter and
year. The conference call number is 888-317-6003 for domestic
callers and 412-317-6061 for international callers. The
confirmation number is 3101617. An audio playback will
be available at 1:00 p.m. central
time on Thursday, April 27,
2017, through 5:00 p.m. central
time on Thursday, May 4, 2017,
by dialing 877-344-7529 for domestic callers and 412-317-0088 for
international callers. The replay access code is
10104602. 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 2016
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, 2016 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
|
|
|
|
First
Quarter
|
|
2017
|
2016
|
|
(unaudited, $ in
thousands except per
share amounts)
|
Revenues:
|
|
|
Marine
transportation
|
$
343,652
|
$
378,343
|
Diesel engine
services
|
148,053
|
80,390
|
|
491,705
|
458,733
|
Costs and
expenses:
|
|
|
Costs of sales and operating
expenses
|
345,296
|
288,910
|
Selling, general and
administrative
|
46,118
|
50,461
|
Taxes, other than on
income
|
6,649
|
5,404
|
Depreciation and
amortization
|
48,170
|
48,624
|
Gain on disposition of
assets
|
(99)
|
(67)
|
|
446,134
|
393,332
|
|
|
|
Operating income
|
45,571
|
65,401
|
Other income
(expense)
|
(116)
|
135
|
Interest
expense
|
(4,457)
|
(4,193)
|
|
|
|
Earnings before taxes on income
|
40,998
|
61,343
|
Provision for taxes
on income
|
(13,353)
|
(22,859)
|
|
|
|
Net earnings
|
27,645
|
38,484
|
Less: Net
earnings attributable to noncontrolling interests
|
(162)
|
(385)
|
Net earnings attributable to Kirby
|
$
27,483
|
$
38,099
|
|
|
|
Net earnings per
share attributable to Kirby common stockholders:
|
|
|
Basic
|
$
0.51
|
$
0.71
|
Diluted
|
$
0.51
|
$
0.71
|
Common stock
outstanding (in thousands):
|
|
|
Basic
|
53,542
|
53,442
|
Diluted
|
53,609
|
53,483
|
|
|
CONDENSED
CONSOLIDATED FINANCIAL INFORMATION
|
|
First
Quarter
|
|
2017
|
2016
|
|
(unaudited, $ in
thousands)
|
EBITDA:
(1)
|
|
|
Net earnings attributable to
Kirby
|
$
27,483
|
$
38,099
|
Interest expense
|
4,457
|
4,193
|
Provision for taxes on
income
|
13,353
|
22,859
|
Depreciation and
amortization
|
48,170
|
48,624
|
|
$
93,463
|
$
113,775
|
|
|
|
Capital
expenditures
|
$
45,765
|
$
50,523
|
|
|
|
|
March
31,
|
|
2017
|
2016
|
|
(unaudited, $ in
thousands)
|
Long-term debt,
including current portion
|
$
674,552
|
$
712,163
|
Total
equity
|
$
2,433,673
|
$
2,316,660
|
Debt to
capitalization ratio
|
21.7%
|
23.5%
|
MARINE
TRANSPORTATION STATEMENTS OF EARNINGS
|
|
|
|
First
Quarter
|
|
2017
|
2016
|
|
(unaudited, $ in
thousands)
|
|
|
|
Marine transportation
revenues
|
$
343,652
|
$
378,343
|
|
|
|
Costs and
expenses:
|
|
|
Costs of sales and operating
expenses
|
230,134
|
226,752
|
Selling, general and
administrative
|
27,878
|
32,697
|
Taxes, other than on
income
|
6,098
|
4,838
|
Depreciation and
amortization
|
44,288
|
44,261
|
|
308,398
|
308,548
|
|
|
|
Operating income
|
$
35,254
|
$
69,795
|
|
|
|
Operating margins
|
10.3 %
|
18.4 %
|
|
|
DIESEL ENGINE
SERVICES STATEMENTS OF EARNINGS
|
|
|
|
First
Quarter
|
|
2017
|
2016
|
|
(unaudited, $ in
thousands)
|
|
|
|
Diesel engine
services revenues
|
$
148,053
|
$
80,390
|
|
|
|
Costs and
expenses:
|
|
|
Costs of sales and operating
expenses
|
115,162
|
62,158
|
Selling, general and
administrative
|
15,694
|
15,131
|
Taxes, other than on
income
|
541
|
551
|
Depreciation and
amortization
|
2,922
|
3,356
|
|
134,319
|
81,196
|
|
|
|
Operating income (loss)
|
$
13,734
|
$
(806)
|
|
|
|
Operating margins
|
9.3%
|
(1.0)%
|
|
|
OTHER COSTS AND
EXPENSES
|
|
|
|
First
Quarter
|
|
2017
|
2016
|
|
(unaudited, $ in
thousands)
|
|
|
|
General corporate
expenses
|
$
3,516
|
$
3,655
|
|
|
|
Gain on disposition
of assets
|
$
99
|
$
67
|
|
|
|
MARINE
TRANSPORTATION PERFORMANCE MEASUREMENTS
|
|
|
|
First
Quarter
|
|
2017
|
2016
|
|
|
|
Inland Performance
Measurements:
|
|
|
Ton Miles (in millions)
(2)
|
2,977
|
2,748
|
Revenue/Ton Mile (cents/tm)
(3)
|
8.0
|
8.9
|
Towboats operated (average)
(4)
|
235
|
240
|
Delay Days
(5)
|
2,267
|
2,236
|
Average cost per gallon of
fuel consumed
|
$
1.78
|
$
1.27
|
|
|
|
Barges
(active):
|
|
|
Inland tank
barges
|
864
|
885
|
Coastal tank
barges
|
68
|
70
|
Offshore dry-cargo
barges
|
5
|
6
|
Barrel Capacities (in
millions):
|
|
|
Inland tank
barges
|
17.6
|
17.6
|
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:
First quarter 2017 inland marine transportation revenues of
$236,712,000 divided by 2,977,000,000 inland marine transportation
ton miles = 8.0 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