HOUSTON, April 27, 2011 /PRNewswire/ -- Kirby Corporation
("Kirby") (NYSE: KEX) today announced net earnings attributable to
Kirby for the first quarter ended March 31,
2011 of $32.4 million, or
$.60 per share, compared with
$24.7 million, or $.46 per share, for the 2010 first quarter.
The 2010 first quarter net earnings included a charge for
retirements and shore staff reductions of $4.1 million before taxes, or $.05 per share. Kirby's published 2011
first quarter earnings guidance range was $.56 to $.61 per share. Consolidated
revenues for the 2011 first quarter were $299.4 million compared with $268.3 million reported for the 2010 first
quarter.
Joe Pyne, Kirby's Chief Executive
Officer commented, "Both our marine transportation and diesel
engine services businesses improved during the quarter compared
with the majority of the 2010 quarters. Our strong balance
sheet has allowed us to take advantage of acquisition opportunities
which have expanded both our marine transportation and diesel
engine services footprints. The acquisitions are discussed in
detail below."
Segment Results – Marine Transportation
Marine transportation revenues and operating income for the 2011
first quarter increased 10% and 25%, respectively, compared with
the 2010 first quarter. Demand levels for the petrochemical
tank barge fleet continued to improve during the 2011 first
quarter. Low natural gas prices, a basic feedstock used by many
customers, continued to positively impact the global
competitiveness of the United
States petrochemical industry. Black oil products
demand levels also remained strong, driven by refinery maintenance
and the exportation of diesel fuel and heavy fuel oils.
During the 2011 first quarter, tank barge utilization for the
petrochemical and black oil products fleets moved into the low 90%
levels. Diesel fuel prices for the 2011 first quarter
increased 24% compared with the 2010 first quarter, positively
impacting marine transportation revenues since fuel price increases
are covered by fuel escalation and de-escalation clauses in term
contracts.
The marine transportation segment's 2011 first quarter operating
margin was 21.8% compared with 19.3% for the first quarter of 2010.
The higher margin reflected the improved petrochemical and black
oil products demand and equipment utilization levels, modestly
higher term and spot contract pricing, and the positive impact of
cost reduction initiatives. These were partially offset by
the cost impact of rising diesel fuel prices and increased delay
days from more difficult winter weather operating conditions and
lock delays.
Segment Results – Diesel Engine Services
Diesel engine services revenues and operating income for the
2011 first quarter increased 18% and 31%, respectively, compared
with the 2010 first quarter. The increase in revenues and
operating income reflected a stronger medium-speed power generation
market with engine-generator set upgrade projects and higher parts
and engine sales, stronger maintenance cycles for Midwest and West
Coast medium-speed marine customers, and an improvement in direct
parts sales to transit railroad customers. These increases
were offset by continued weak service levels and direct parts sales
for both the medium-speed and high-speed Gulf Coast oil services
markets. The diesel engine services operating margin was 11.5% for
the 2011 first quarter compared with 10.4% for the 2010 first
quarter.
Cash Generation
EBITDA for the 2011 first quarter was $80.4 million compared with $66.2 million for the 2010 first quarter.
Capital expenditures were $31.1
million, including $12.7
million for new inland tank barge and towboat construction
and $18.4 million primarily for
upgrades to the existing fleet. Acquisition costs of
businesses and marine equipment were $58.5
million. Total debt as of March
31, 2011 was $200.1 million,
consisting primarily of a $200
million private placement loan that matures in February 2013, and Kirby's debt-to-capitalization
ratio was 14.3%. Cash and cash equivalents at March 31, 2011 were $172.1
million compared with $195.6
million at December 31, 2010
and $121.4 million at March 31, 2010.
President and Chief Operating Officer
Kirby also announced that Greg
Binion has been elected President and Chief Operating
Officer. Prior to his election to his new position, Mr.
Binion was the President of Kirby Inland Marine, Kirby's principal
marine transportation subsidiary. Bill Ivey was elected
President of Kirby Inland Marine. Mr. Ivey was formerly the
Executive Vice President of Marketing for Kirby Inland Marine.
Outlook
Commenting on the 2011 second quarter and full year market
outlook and guidance, Mr. Pyne said, "Our earnings guidance for the
2011 second quarter is $.67 to $.77
per share, reflecting a 24% to 43% increase compared with
$.54 per share reported for the 2010
second quarter. This guidance range is larger than we
typically give for a quarter. However, we currently have high
water and lock issues on the Ohio River with the Ohio River north
of Paducah closed for inbound and
outbound traffic. These high water conditions will make their
way into the Mississippi River, exacerbating current high water
conditions on this waterway. Based on what we know today, we
anticipate high water conditions throughout the Mississippi River
System for the majority of the second quarter, thereby creating
significant operating inefficiencies. On a positive note, our
second quarter guidance reflects continued strong petrochemical and
black oil products markets and continued modest increases in term
and spot contract pricing. Our second quarter guidance also
assumes accretive earnings from our recently completed
acquisitions."
Mr. Pyne further commented, "For the 2011 year, we raised our
earnings guidance to $2.70 to $2.90
from previous guidance of $2.55 to
$2.80 per share, compared with $2.15 earned in 2010. Our high end guidance
assumes continued strong petrochemical and black oil products
markets with equipment utilization for these markets remaining in
the low 90% range, and modest improvements in term and spot
contract pricing. Our low end guidance assumes some
deterioration in equipment utilization levels back to high 80%
levels with term and spot contract pricing improving modestly later
in the year. Both our 2011 year low end and high end guidance
factors in an estimated $.02 to $.07
per share impact of the current high water and lock issues on our
inland tank barge segment. Our guidance also assumes our
diesel engine services segment will continue to face challenges in
its Gulf Coast oil services market, with some gradual improvement
as the year progresses, and assumes stable marine and power
generation markets. In addition, our full year low and high
end guidance assumes accretive earnings from United in the
$.20 to $.25 per share range and
assumes K-Sea's earnings contribution will be offset by one-time
merger transaction fees of approximately $.05 per share. Our 2011 capital spending
guidance range is $220 to $230
million, including approximately $100
million for the construction of 40 new inland tank barges
and three new inland towboats, and approximately $36 million in progress payments on the
construction of a new offshore integrated dry-bulk barge and
tugboat unit with an estimated total cost of $50 million."
2011 Acquisitions
On February 9, 2011, Kirby
purchased from Kinder Morgan Petcoke, L.P. ("Kinder Morgan") for $4.1
million in cash a 51% interest in a shifting operation and
fleeting facility for dry cargo barges and tank barges on the
Houston Ship Channel. In addition, Kirby purchased a towboat
from Kinder Morgan for $1.2 million in cash. Financing of the
acquisition was through Kirby's operating cash flows.
On February 24, 2011, Kirby
purchased 21 inland and offshore tank barges and 15 inland towboats
and offshore tugboats from Enterprise Marine Services LLC
("Enterprise") for $53.2 million in
cash. The acquired equipment provides transportation and
delivery services for ship bunkers (engine fuel) to cruise ships,
container ships and freighters primarily in the Miami, Port Everglades and Cape Canaveral, Florida area, the three
largest cruise ship ports in the United
States, as well as Tampa,
Florida, Mobile, Alabama
and Houston, Texas.
Financing of the acquisition was through Kirby's operating
cash flows.
On April 15, 2011, Kirby purchased
United Holdings LLC ("United"), a distributor and service provider
of engine and transmission related products for the oil and gas
services, power generation and transportation industries, and a
manufacturer of oilfield service equipment. The purchase
price was $270 million in cash,
before post-closing adjustments. In addition, there is a
three-year earnout provision for up to an additional $50 million payable in 2014. United,
headquartered in Oklahoma City,
Oklahoma with 21 locations across 13 states, distributes and
services equipment and parts for Allison Transmission, MTU Detroit
Diesel Engines, Daimler Trucks NA, and other diesel and natural gas
engines. United also manufactures oilfield service equipment,
including hydraulic fracturing equipment. United's principal
customers are oilfield service companies, oil and gas operators and
producers, compression service companies and transportation
companies. The acquisition was financed through Kirby's
operating cash flows and from borrowings under Kirby's revolving
credit facility.
On March 13, 2011, Kirby announced
the signing of an agreement to acquire K-Sea Transportation
Partners L.P. ("K-Sea"), an operator of tank barges and tugboats
participating in the coastwise transportation primarily of refined
petroleum products in the United
States, pursuant to which a subsidiary of Kirby will merge
with K-Sea, with K-Sea surviving the merger as a wholly owned
subsidiary of Kirby. The total value of the transaction is
approximately $600 million, before
fees. The consideration will consist of cash, Kirby common
stock and the refinancing of K-Sea debt. Financing of the
acquisition will be through a combination of existing cash flows,
common stock, borrowings under Kirby's revolving credit facility
and a new $540 million five-year
unsecured term loan.
K-Sea's fleet, comprised of 58 tank barges with a capacity of
3.8 million barrels and 63 tugboats, operates along the East Coast,
West Coast and Gulf Coast of the United
States, as well as in Alaska and Hawaii. K-Sea's tank barge fleet, 54 of
which are doubled hulled, has an average age of approximately nine
years and is one of the youngest fleets in the coastwise trade.
K-Sea's customers include major oil companies and refiners,
many of which are current Kirby customers for inland tank barge
services. Headquartered in East
Brunswick, New Jersey, K-Sea has major operating facilities
in New York, Philadelphia, Norfolk, Seattle and Honolulu.
On April 13, 2011, the Federal
Trade Commission granted Kirby early termination of the
Hart-Scott-Rodino waiting period for the acquisition of K-Sea.
The transaction is anticipated to close in the 2011 third
quarter.
Conference Call
A conference call is scheduled at 10:00
a.m. central time tomorrow, Thursday, April 28, 2011, to
discuss the 2011 first quarter performance as well as the outlook
for the 2011 second quarter and year. The conference call
number is 800-446-2782 for domestic callers and 847-413-3235 for
international callers. The leader's name is Steve Holcomb. The confirmation number is
29509420. A live audit webcast of the conference call will be
available to the public by visiting Kirby's website at
http://www.kirbycorp.com/. A written conference call
transcript will be available to the public from Friday, April 29, 2011 through 5:00 p.m. central time on Friday, May 27, 2011 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 2010 and 2009 years and quarters are
available at Kirby's web site, http://www.kirbycorp.com/, under the
caption Performance Measurements in the Investor Relations section.
About Kirby Corporation
Kirby Corporation, based in Houston,
Texas, is in the marine transportation business, principally
operating inland tank barges and towing vessels, and transporting
petrochemicals, black oil products, refined petroleum products and
agricultural chemicals throughout the
United States' inland waterway system. 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, power generation and railroad applications, and
distributes and services high-speed diesel engines, transmissions,
pumps and compression products and manufacturers oilfield service
equipment, including hydraulic fracturing equipment, for land-based
pressure pumping and oilfield services markets.
In connection with the proposed merger of Kirby and K-Sea, Kirby
will file with the Securities and Exchange Commission ("SEC") a
registration statement on Form S-4 that will include a proxy
statement of K-Sea and a prospectus of Kirby. The definitive
proxy statement/prospectus will be mailed to unitholders of K-Sea.
INVESTORS ARE URGED TO CAREFULLY READ THE REGISTRATION
STATEMENT AND THE PROXY STATEMENT/PROSPECTUS AND OTHER MATERIALS
REGARDING THE PROPOSED MERGER WHEN THEY BECOME AVAILABLE, BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT KIRBY AND K-SEA AND
THE PROPOSED TRANSACTION. Investors may obtain a free copy of
Kirby's registration statement on Form S-4 and the proxy
statement/prospectus when they are available and other documents
containing information about Kirby and K-Sea, without charge, from
the SEC's website at www.sec.gov. Copies of the proxy
statement/prospectus and the filings with the SEC that will be
incorporated by reference in the proxy statement/prospectus can
also be obtained, when available, without charge, from Kirby's
website at www.kirbycorp.com.
This communication shall not constitute an offer to sell or the
solicitation of an offer to sell or the solicitation of an offer to
buy any securities, nor shall there be any sale of any securities
in any jurisdiction in which such offer, solicitation or sale would
be unlawful prior to registration or qualification under the
securities laws of any such jurisdiction.
Kirby and its directors, executive officers and certain other
persons may be deemed to be participants in the solicitation of
proxies with respect to the proposed transaction. Information
about Kirby's directors and executive officers is available in
Kirby's Annual Report on Form 10-K for the year ended December 31, 2010, filed with the SEC on
February 25, 2011, and its proxy
statement for its 2011 Annual Meeting of Stockholders, filed with
the SEC on March 18, 2011.
Other information about the participants in the proxy
solicitation for the proposed transaction will be contained in the
proxy statement/prospectus and other materials to be filed with the
SEC in connection with the proposed transaction.
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,
2010 filed with the Securities and Exchange Commission.
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF EARNINGS
|
|
|
|
|
|
First
Quarter
|
|
|
2011
|
2010
|
|
|
(unaudited, $ in thousands
except
per share
amounts)
|
|
Revenues:
|
|
|
|
Marine
transportation
|
$
241,677
|
$
219,562
|
|
Diesel engine
services
|
57,682
|
48,691
|
|
|
299,359
|
268,253
|
|
Costs and expenses:
|
|
|
|
Costs of sales and
operating expenses
|
185,499
|
164,952
|
|
Selling, general and
administrative
|
29,457
|
33,371
|
|
Taxes, other than on
income
|
3,501
|
3,503
|
|
Depreciation and
amortization
|
25,193
|
23,370
|
|
Loss on disposition of
assets
|
66
|
44
|
|
|
243,716
|
225,240
|
|
|
|
|
|
Operating
incomeOperating income
|
55,643
|
43,013
|
|
Other income.Other income
(expense)
|
51
|
12
|
|
Interest
expenseIInterest expense
|
(2,833)
|
(2,668)
|
|
|
|
|
|
Earnings before taxes on
incomeEarnings before taxes on
income
|
52,861
|
40,357
|
|
Provision for taxes on
incomeProvProvision for taxes on
income
|
(19,961)
|
(15,446)
|
|
|
|
|
|
Net
earningsNet earnings
|
32,900
|
24,911
|
|
Less: Net earnings
attributable to noncontrolling interestsLessLess:
Net earnings attributable to noncontrolling interests
|
(470)
|
(237)
|
|
Net earnings attributable
to KirbyNet earnings attributable to
Kirby
|
$
32,430
|
$
24,674
|
|
|
|
|
|
Net earnings per share
attributable to Kirby common stockholders:
|
|
|
|
Basic
|
$ 0.60
|
$ 0.46
|
|
Diluted
|
$ 0.60
|
$ 0.46
|
|
Common stock outstanding (in
thousands):
|
|
|
|
Basic
|
53,167
|
53,405
|
|
Diluted
|
53,368
|
53,527
|
|
|
|
|
CONDENSED
CONSOLIDATED FINANCIAL INFORMATION
|
|
|
First
Quarter
|
|
|
2011
|
2010
|
|
|
(unaudited, $ in
thousands)
|
|
EBITDA: (1)
|
|
|
|
Net earnings attributable
to Kirby
|
$ 32,430
|
$ 24,674
|
|
Interest expense
|
2,833
|
2,668
|
|
Provision for taxes on
income
|
19,961
|
15,446
|
|
Depreciation and
amortization
|
25,193
|
23,370
|
|
|
$
80,417
|
$
66,158
|
|
|
|
|
|
Capital expenditures
|
$ 31,114
|
$ 34,423
|
|
Acquisitions of businesses and
marine equipment
|
$ 58,500
|
$
–
|
|
|
|
|
|
March
31,
|
|
|
2011
|
2010
|
|
|
(unaudited, $ in
thousands)
|
|
Cash and cash equivalents
|
$
172,093
|
$
121,364
|
|
Long-term debt, including
current portion
|
$
200,124
|
$
200,224
|
|
Total equity
|
$
1,197,714
|
$
1,082,870
|
|
Debt to capitalization
ratio
|
14.3%
|
15.6%
|
|
|
|
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MARINE
TRANSPORTATION STATEMENTS OF EARNINGS
|
|
|
|
|
|
First
Quarter
|
|
|
2011
|
2010
|
|
|
(unaudited, $ in
thousands)
|
|
|
|
|
|
Marine transportation
revenues
|
$
241,677
|
$
219,562
|
|
|
|
|
|
Costs and expenses:
|
|
|
|
Costs of sales and
operating expenses
|
142,626
|
129,814
|
|
Selling, general and
administrative
|
19,509
|
22,482
|
|
Taxes, other than on
income
|
3,270
|
3,209
|
|
Depreciation and
amortization
|
23,574
|
21,748
|
|
|
188,979
|
177,253
|
|
|
|
|
|
Operating
income
|
$
52,698
|
$
42,309
|
|
|
|
|
|
Operating
margins
|
21.8
%
|
19.3
%
|
|
|
|
|
|
|
|
|
DIESEL
ENGINE SERVICES STATEMENTS OF EARNINGS
|
|
|
|
|
|
First
Quarter
|
|
|
2011
|
2010
|
|
|
(unaudited, $ in
thousands)
|
|
|
|
|
|
Diesel engine services
revenues
|
$ 57,682
|
$ 48,691
|
|
|
|
|
|
Costs and expenses:
|
|
|
|
Costs of sales and
operating expenses
|
42,873
|
35,138
|
|
Selling, general and
administrative
|
7,063
|
7,159
|
|
Taxes, other than on
income
|
219
|
292
|
|
Depreciation and
amortization
|
921
|
1,059
|
|
|
51,076
|
43,648
|
|
|
|
|
|
Operating
income
|
$
6,606
|
$
5,043
|
|
|
|
|
|
Operating
margins
|
11.5
%
|
10.4
%
|
|
|
|
|
|
|
|
|
OTHER COSTS
AND EXPENSES
|
|
|
|
|
|
First
Quarter
|
|
|
2011
|
2010
|
|
|
(unaudited, $ in
thousands)
|
|
|
|
|
|
General corporate
expenses
|
$
3,595
|
$
4,295
|
|
|
|
|
|
Loss on disposition of
assets
|
$
66
|
$
44
|
|
|
|
|
|
|
|
|
|
|
|
|
MARINE
TRANSPORTATION PERFORMANCE MEASUREMENTS
|
|
|
|
|
|
First
Quarter
|
|
|
2011
|
2010
|
|
|
|
|
|
Ton Miles (in millions)
(2)
|
3,229
|
3,058
|
|
Revenue/Ton Mile (cents/tm)
(3)
|
7.2
|
7.0
|
|
Towboats operated (average)
(4)
|
230
|
224
|
|
Delay Days (5)
|
1,981
|
1,822
|
|
Average cost per gallon of fuel
consumed
|
$ 2.65
|
$ 2.14
|
|
Tank barges:
|
|
|
|
Active
|
829
|
861
|
|
Inactive
|
40
|
19
|
|
Barrel Capacities (in
millions):
|
|
|
|
Active
|
16.1
|
16.6
|
|
Inactive
|
.4
|
.3
|
|
|
|
|
|
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(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.
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|
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(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.
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(3)
|
Inland marine
transportation revenues divided by ton miles. Example:
First quarter 2011 inland marine transportation revenues of
$232,459,000 divided by 3,229,000,000 marine transportation ton
miles = 7.2 cents.
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(4)
|
Towboats operated are the
average number of owned and chartered towboats operated during the
period.
|
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(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