HOUSTON, Oct. 26, 2011 /PRNewswire/ -- Kirby Corporation
("Kirby") (NYSE: KEX) today announced record net earnings
attributable to Kirby for the third quarter ended September 30, 2011 of $52.7 million, or $.94 per share, compared with $30.7 million, or $.57 per share, for the 2010 third quarter.
Consolidated revenues for the 2011 third quarter were a
record $563.6 million compared with
$281.3 million reported for the 2010
third quarter.
Joe Pyne, Kirby's Chairman and
Chief Executive Officer, commented, "Our record third quarter
results were a reflection of strong United States petrochemical production levels,
stable refinery production levels, and a continued strong
exportation market, all leading to high inland tank barge
utilization levels and favorable term and spot contract pricing.
K-Sea Transportation Partners LLC ("K-Sea"), our coastwise
and local transportation company acquired on July 1, 2011, was accretive to our third quarter
operating results, but, as anticipated, K-Sea's operating results
were offset by acquisition related expenditures, and higher
interest expense and common shares outstanding associated with the
acquisition." The K-Sea acquisition is discussed in detail on
page 4 of this press release.
Mr. Pyne continued, "Our record third quarter results also
reflected record earnings from United Holdings LLC
("United"), our land-based distributor and service provider of
engine and transmission related products and manufacturer of
oilfield service equipment acquired on April
15, 2011. United's operating results reflected a
continued strong market for the manufacturing of hydraulic
fracturing equipment and the sale and service of transmissions and
engines."
Kirby reported record net earnings attributable to Kirby for the
2011 first nine months of $126.9
million, or $2.33 per share,
compared with $84.6 million, or
$1.56 per share, for the first nine
months of 2010. Consolidated revenues for the 2011 first nine
months were a record $1.3 billion
compared with $823.2 million for the
first nine months of 2010.
Segment Results – Marine Transportation
Marine transportation revenues for the 2011 third quarter were
$351.2 million, a 51% increase
compared with the 2010 third quarter, and operating income was
$78.1 million, a 52% increase
compared with the third quarter of 2010. The positive third
quarter results reflected increased production volumes by
United States petrochemical
producers for both domestic and foreign destinations, benefiting
from low natural gas prices and its impact on the global
competitiveness of the United
States petrochemical industry. As a result, Kirby's
inland petrochemical fleet was close to fully utilized, operating
in the low to mid 90% utilization levels. Kirby's black oil
products fleet also operated at close to full utilization levels,
benefiting from stable United
States refinery production levels, the exportation of heavy
fuel oils and demand for the transportation of crude oil
principally from the Eagle Ford shale formations in South Texas and from the Midwest to the Gulf
Coast. The strong utilization levels in both the
petrochemical and black oil products fleets led to higher term and
spot contract pricing during the quarter. Diesel fuel prices
for the 2011 third quarter increased 51% compared with the 2010
third quarter, thereby positively impacting marine transportation
revenues since fuel price increases are covered by fuel escalation
and de-escalation clauses in term contracts.
The higher marine transportation revenues and operating income
also reflected the acquisition of K-Sea effective July 1, 2011, generating approximately 20% of the
marine transportation segment's 2011 third quarter revenues.
K-Sea's coastwise and local fleet utilization level,
primarily from the transportation of refined petroleum products,
averaged in the 75% to 80% range.
The marine transportation operating margin for the 2011 third
quarter was 22.2% compared with 22.1% for the third quarter of
2010, reflecting the strong petrochemical and black oil products
demand, strong equipment utilization levels and higher term and
spot contract pricing, partially offset by a lower K-Sea operating
margin and the cost impact of higher diesel fuel prices.
Segment Results – Diesel Engine Services
Diesel engine services revenues for the 2011 third quarter were
$212.4 million, a 338% increase
compared with the 2010 third quarter, and operating income was
$21.2 million, a 371% increase
compared with the third quarter of 2010. The significantly
higher revenues and operating income were attributable to United
and its continued strong land-based market for manufacturing of
hydraulic fracturing equipment used in recovering oil and gas
reserves from United States
land-based shale formations, and from the sale and service of
transmissions, diesel engines and compressor systems. For the
2011 third quarter, United generated approximately 75% of the
diesel engine services segment's revenues.
The segment also benefited from stronger service work and direct
parts sales from its medium-speed and high-speed marine market, a
reflection of the improved inland marine transportation market, and
a continued favorable medium-speed power generation market for
engine-generator set upgrade projects and direct parts and engine
sales. Service and direct parts sales in both the
medium-speed and high-speed Gulf Coast oil services market
generally remained weak, with some modest improvement the result of
Gulf of Mexico plug and
abandonment activities.
The diesel engine services operating margin was 10.0% for the
2011 third quarter compared with 9.3% for the 2010 third quarter.
The favorable operating margin reflected the stronger inland
marine and power generation markets and higher than historical
operating margin for United.
General Corporate Expenses
General corporate expenses for the 2011 third quarter were
$7.1 million compared with
$3.2 million for the 2010 third
quarter, primarily reflecting acquisition transaction fees and
other costs associated with the acquisition and integration of
K-Sea.
Cash Generation
Kirby continued to generate strong cash flow during the 2011
first nine months, with EBITDA of $307.9
million. The cash flow was used in part to fund
capital expenditures of $163.2
million, including $110.1
million for new tank barge and towboat construction and
$53.1 million primarily for upgrades
to the existing fleet. Total debt as of September 30, 2011 was $796.9 million, consisting primarily of a bank
term loan issued in July 2011 to
finance the K-Sea acquisition with a current balance of
$513.5 million, a $200.0 million private placement loan that
matures in February 2013 and
$83.3 million outstanding under
Kirby's $250 million revolving credit
facility. Kirby's debt-to-capitalization ratio was 36.0% at
September 30, 2011 compared with
20.5% as of June 30, 2011 and 15.1%
as of September 30, 2010.
Outlook
Commenting on the 2011 fourth quarter and full year market
outlook and guidance, Mr. Pyne said, "Our earnings guidance for the
2011 fourth quarter is $.97 to $1.02
per share, a 64% to 73% increase compared with $.59 per share reported for the 2010 fourth
quarter. Our guidance reflects close to full equipment
utilization in our petrochemical and black oil products fleets and
continued favorable term and spot contract rate increases. We
anticipate our inland marine transportation segment will be
negatively impacted by winter weather conditions in the fourth
quarter. Our guidance also includes positive operating
results from our coastwise and local markets, but due to
seasonality of the refined products market and winter weather
conditions we do anticipate lower operating results compared with
the third quarter. In our diesel engine services segment, we
anticipate continued strong demand for the manufacturing of
hydraulic fracturing equipment and sale and service of
transmissions and engines, partially offset by fewer power
generation engine-generator set upgrade projects during the fourth
quarter. For the 2011 year, we are raising and tightening our
earnings per share guidance to $3.30 to
$3.35 compared with $2.15 per
share for the 2010 year."
Mr. Pyne continued, "Our 2011 capital spending guidance range
remains at $225 to $235 million,
including approximately $120 million
for the construction of 40 inland tank barges, two inland towboats
and progress payments on 2012 inland tank barge and towboat
construction. This guidance range also includes approximately
$35 million in progress payments on
the construction of two offshore articulated dry-bulk barge and
tugboat units scheduled for delivery in the second half of 2012
with an estimated cost of $50 million
each. The balance of approximately $70
to $80 million is primarily capital upgrades and
improvements to existing marine equipment and facilities."
K-Sea Transportation Acquisition
On July 1, 2011, Kirby purchased
K-Sea, an operator of tank barges and tugboats participating in the
coastwise and local transportation of primarily refined petroleum
products in the United States. The
total consideration of the transaction was approximately
$604 million, excluding transaction
fees, consisting of $228 million in
cash paid to K-Sea common and preferred unit holders and the
general partner, $263 million of cash
to retire K-Sea's outstanding debt, and $113
million through the issuance of approximately 1,939,000
shares of Kirby common stock valued at $58.28 per share, Kirby's closing share price on
July 1, 2011. The acquisition was
financed through a combination of a new $540
million bank term loan and the issuance of Kirby common
stock.
K-Sea's fleet, comprised of 57 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 double hull, has an average age of approximately nine
years and is one of the youngest fleets in the coastwise and local
trade. K-Sea's customers include major oil companies and
refiners, many of which are current Kirby customers for inland tank
barge services. K-Sea has major operating facilities in
New York, Philadelphia, Norfolk, Seattle and Honolulu.
Conference Call
A conference call is scheduled at 10:00
a.m. central time tomorrow, Thursday, October 27, 2011, to
discuss the 2011 third quarter performance as well as the outlook
for the 2011 fourth 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
30918652. An audio playback will be available at 1:00 p.m. central time on Thursday, October 27, through 5:00 p.m. central time on Friday, November 25, 2011 by dialing 888-843-7419
for domestic and 630-652-3042 for international callers. 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 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 the nation's largest domestic tank barge operator,
transporting bulk liquid products throughout the Mississippi River
System, the Gulf Intracoastal Waterway and coastwise along all
three United States coasts,
Alaska and Hawaii. Kirby transports petrochemicals,
black oil products, refined petroleum products and agricultural
chemicals by tank barge. 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 high-speed diesel engines and transmissions, pumps and
compression products, and manufacturers oil field service
equipment, including hydraulic fracturing equipment, for land-based
pressure pumping and oilfield service markets.
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 and quarterly report on Form 10-Q for the period ended
June 30, 2011 filed with the
Securities and Exchange Commission.
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF EARNINGS
|
|
|
|
|
|
|
Third
Quarter
|
Nine
Months
|
|
|
2011
|
2010
|
2011
|
2010
|
|
|
(unaudited,
$ in thousands except per share amounts)
|
|
Revenues:
|
|
|
|
|
|
Marine
transportation
|
$
351,206
|
$
232,785
|
$
859,495
|
$
682,603
|
|
Diesel engine
services
|
212,376
|
48,532
|
440,777
|
140,636
|
|
|
563,582
|
281,317
|
1,300,272
|
823,239
|
|
Costs and expenses:
|
|
|
|
|
|
Costs of sales and
operating expenses
|
378,520
|
172,029
|
858,928
|
505,908
|
|
Selling, general
and administrative
|
52,780
|
29,334
|
121,284
|
90,366
|
|
Taxes, other than
on income
|
3,244
|
3,092
|
10,468
|
10,171
|
|
Depreciation and
amortization
|
36,827
|
24,135
|
90,233
|
70,359
|
|
Loss (gain) on
disposition of assets
|
(97)
|
(8)
|
(71)
|
55
|
|
|
471,274
|
228,582
|
1,080,842
|
676,859
|
|
Operating
income
|
92,308
|
52,735
|
219,430
|
146,380
|
|
Other income (expense).
|
(6)
|
131
|
123
|
173
|
|
Interest expense
|
(5,974)
|
(2,750)
|
(12,085)
|
(8,115)
|
|
Earnings before
taxes on income
|
86,328
|
50,116
|
207,468
|
138,438
|
|
Provision for taxes on
income
|
(32,734)
|
(19,211)
|
(78,745)
|
(52,979)
|
|
Net earnings
|
53,594
|
30,905
|
128,723
|
85,459
|
|
Less: Net earnings attributable
to noncontrolling interests
|
(860)
|
(218)
|
(1,867)
|
(830)
|
|
|
|
|
|
|
|
Net earnings
attributable to Kirby
|
$
52,734
|
$
30,687
|
$
126,856
|
$
84,629
|
|
|
|
|
|
|
|
Net earnings per share
attributable to Kirby common stockholders:
|
|
|
|
|
|
Basic
|
$
.95
|
$
.57
|
$
2.33
|
$
1.57
|
|
Diluted
|
$
.94
|
$
.57
|
$
2.33
|
$
1.56
|
|
Common stock outstanding (in
thousands):
|
|
|
|
|
|
Basic
|
55,151
|
53,318
|
53,853
|
53,430
|
|
Diluted
|
55,371
|
53,439
|
54,066
|
53,559
|
|
|
|
|
|
|
|
CONDENSED
CONSOLIDATED FINANCIAL INFORMATION
|
|
|
|
|
|
|
Third
Quarter
|
Nine
Months
|
|
|
2011
|
2010
|
2011
|
2010
|
|
|
(unaudited,
$ in thousands)
|
|
EBITDA: (1)
|
|
|
|
|
|
Net earnings
attributable to Kirby
|
$
52,734
|
$
30,687
|
$
126,856
|
$
84,629
|
|
Interest
expense
|
5,974
|
2,750
|
12,085
|
8,115
|
|
Provision for taxes
on income
|
32,734
|
19,211
|
78,745
|
52,979
|
|
Depreciation and
amortization
|
36,827
|
24,135
|
90,233
|
70,359
|
|
|
$
128,269
|
$
76,783
|
$
307,919
|
$
216,082
|
|
|
|
|
|
|
|
Capital expenditures
|
$
65,237
|
$
40,399
|
$
163,210
|
$ 108,036
|
|
Acquisitions of businesses and
marine equipment
|
$ 486,365
|
$
-
|
$
816,767
|
$
-
|
|
|
|
|
|
|
|
|
|
September
30,
|
|
|
|
|
2011
|
2010
|
|
|
(unaudited,
$ in thousands)
|
|
Cash and cash equivalents
|
$
8,365
|
$
149,204
|
|
Long-term debt, including
current portion
|
$
796,882
|
$
200,151
|
|
Total equity
|
$ 1,417,757
|
$ 1,125,731
|
|
Debt to capitalization
ratio
|
36.0%
|
15.1%
|
|
|
|
|
|
|
|
|
|
MARINE
TRANSPORTATION STATEMENTS OF EARNINGS
|
|
|
Third
Quarter
|
Nine
Months
|
|
|
2011
|
2010
|
2011
|
2010
|
|
|
(unaudited,
$ in thousands)
|
|
|
|
|
|
|
|
Marine transportation
revenues
|
$ 351,206
|
$ 232,785
|
$ 859,495
|
$ 682,603
|
|
|
|
|
|
|
|
Costs and expenses:
|
|
|
|
|
|
Costs of sales and
operating expenses
|
210,810
|
135,897
|
515,250
|
402,551
|
|
Selling, general
and administrative
|
27,052
|
20,237
|
65,856
|
61,971
|
|
Taxes, other than
on income
|
2,786
|
2,809
|
9,352
|
9,325
|
|
Depreciation and
amortization
|
32,449
|
22,440
|
79,869
|
65,391
|
|
|
273,097
|
181,383
|
670,327
|
539,238
|
|
|
|
|
|
|
|
Operating income
|
$
78,109
|
$
51,402
|
$
189,168
|
$
143,365
|
|
|
|
|
|
|
|
Operating margins
|
22.2%
|
22.1%
|
22.0%
|
21.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DIESEL
ENGINE SERVICES STATEMENTS OF EARNINGS
|
|
|
|
|
|
|
Third
Quarter
|
Nine
Months
|
|
|
2011
|
2010
|
2011
|
2010
|
|
|
(unaudited,
$ in thousands)
|
|
|
|
|
|
|
|
Diesel engine services
revenues
|
$ 212,376
|
$ 48,532
|
$ 440,777
|
$ 140,636
|
|
|
|
|
|
|
|
Costs and expenses:
|
|
|
|
|
|
Costs of sales and
operating expenses
|
167,710
|
36,132
|
343,678
|
103,357
|
|
Selling, general
and administrative
|
19,405
|
6,639
|
42,435
|
19,683
|
|
Taxes, other than
income
|
448
|
272
|
1,082
|
822
|
|
Depreciation and
amortization
|
3,633
|
989
|
8,185
|
3,114
|
|
|
191,196
|
44,032
|
395,380
|
126,976
|
|
|
|
|
|
|
|
Operating income
|
$
21,180
|
$
4,500
|
$
45,397
|
$
13,660
|
|
|
|
|
|
|
|
Operating margins
|
10.0%
|
9.3%
|
10.3%
|
9.7%
|
|
|
|
|
|
OTHER COSTS
AND EXPENSES
|
|
|
|
|
|
|
Third
Quarter
|
Nine
Months
|
|
|
2011
|
2010
|
2011
|
2010
|
|
|
(unaudited,
$ in thousands)
|
|
|
|
|
|
|
|
General corporate
expenses
|
$
7,078
|
$
3,175
|
$
15,206
|
$
10,590
|
|
|
|
|
|
|
|
Loss (gain) on disposition of
assets
|
$
(97)
|
$
(8)
|
$
(71)
|
$
55
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MARINE
TRANSPORTATION PERFORMANCE MEASUREMENTS
|
|
|
|
|
|
|
Third
Quarter
|
Nine
Months
|
|
|
2011
|
2010
|
2011
|
2010
|
|
Inland Performance
Measurements:
|
|
|
|
|
|
Ton Miles
(in millions) (2)
|
3,552
|
3,246
|
10,022
|
9,640
|
|
Revenue/Ton
Mile (cents/tm) (3)
|
7.6
|
6.9
|
7.6
|
6.8
|
|
Towboats
operated (average) (4)
|
244
|
217
|
241
|
221
|
|
Delay Days
(5)(5)
|
1,111
|
1,006
|
5,056
|
4,274
|
|
Average
cost per gallon of fuel consumed
|
$ 3.27
|
$ 2.17
|
$ 3.06
|
$ 2.20
|
|
Barges (active):
|
|
|
|
|
|
Inland tank
barges
|
827
|
850
|
|
Coastwise
and local tank barges
|
57
|
-
|
|
Coastwise
dry cargo barges
|
4
|
4
|
|
Barrel capacities (in
millions):
|
|
|
|
Inland tank
barges
|
16.3
|
16.4
|
|
Coastwise
and local tank barges
|
3.8
|
-
|
|
|
|
|
|
|
|
|
|
|
|
(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
inland tank barge is moved. Example: A typical 30,000
barrel inland 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:
Third quarter 2011 inland marine transportation revenues of
$270,363,000 divided by 3,552,000,000 marine transportation ton
miles = 7.6 cents.
(4) Towboats operated are
the average number of owned and chartered inland towboats operated
during the period.
(5) Delay days measures
the lost time incurred by an inland tow (inland towboat and one or
more inland 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