HOUSTON, Feb. 2, 2012 /PRNewswire/ -- Kirby Corporation
("Kirby") (NYSE: KEX) today announced record net earnings
attributable to Kirby for the fourth quarter ended December 31, 2011 of $56.2
million, or $1.00 per share,
compared with $31.6 million, or
$.59 per share, for the 2010 fourth
quarter. Consolidated revenues for the 2011 fourth quarter
were a record $550.1 million compared
with $286.3 million reported for the
2010 fourth quarter.
The 2011 fourth quarter results included a $2.7 million before taxes, or $.03 per share, multi-year income tax refund, a
$1.25 million before taxes, or
$.01 per share, severance charge
associated with the integration of K-Sea Transportation Partners
LLC ("K-Sea") into Kirby, and a $3.7
million before taxes, or $.04
per share, charge associated with increasing the fair value of
United Holdings LLC's ("United") contingent earnout liability.
Joe Pyne, Kirby's Chairman and
Chief Executive Officer, commented, "Our record fourth quarter
results were a reflection of continued favorable United States petrochemical production levels
and a continued strong export market, all leading to high inland
tank barge utilization levels and favorable term and spot contract
pricing. K-Sea, our coastwise transportation company acquired
on July 1, 2011, as anticipated, had
its results impacted by a seasonal decline in refined products
demand, winter weather operating conditions and the severance
charge."
Mr. Pyne continued, "Our record fourth quarter results also
reflected record earnings from United, our land-based
distributor and service provider of engine and transmission related
products and manufacturer of oilfield equipment, acquired on
April 15, 2011. United's
operating results reflect a continued strong market for the
manufacture of oilfield equipment used in the hydraulic fracturing
of shale formations, and the sale and service of transmissions and
engines."
Kirby reported net earnings attributable to Kirby for the 2011
year of $183.0 million, or
$3.33 per share, compared with
$116.2 million, or $2.15 per share for 2010. Consolidated
revenues for 2011 were $1.85 billion
compared $1.11 billion for 2010.
Segment Results – Marine Transportation
Marine transportation revenues for the 2011 fourth quarter were
$335.1 million, a 44% increase
compared with the 2010 fourth quarter, and operating income was
$73.0 million, a 48% increase
compared with the 2010 fourth quarter. The fourth quarter
results reflected continued strong inland petrochemical and black
oil products tank barge utilization levels in the low to mid 90%
range. The United States
petrochemical industry benefited from low natural gas prices and
its positive impact on the industry's global competitiveness,
leading to continued favorable production volumes for both domestic
and foreign destinations. The black oil products fleet
benefited from the continued 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 2011 fourth quarter. Diesel fuel prices for the 2011
fourth quarter increased 37% compared with the 2010 fourth quarter,
thereby positively impacting marine transportation revenues since
fuel price increases are covered by fuel escalation and
de-escalation clauses in term contracts.
K-Sea generated approximately 20% of the marine transportation
segment's 2011 fourth quarter revenues. Normal fourth quarter
seasonality of the refined products market, winter weather
conditions and seasonal Alaska and
Great Lakes market closures negatively impacted K-Sea's fleet
utilization levels and operating results. K-Sea's operating
results also included a $1.25 million
severance charge associated with the integration of K-Sea into
Kirby. K-Sea's fleet utilization level averaged in the 75% to
80% range.
The marine transportation operating margin for the 2011 fourth
quarter was 21.8% compared with 21.2% for the 2010 fourth quarter,
reflecting the strong inland petrochemical and black oil products
markets, the resulting strong equipment utilization levels and
higher term and spot contract pricing, partially offset by a lower
K-Sea operating margin, including the $1.25
million severance charge.
Segment Results – Diesel Engine Services
Diesel engine services revenues for the 2011 fourth quarter were
$215.0 million compared with
$53.9 million for the 2010 fourth
quarter, and operating income was $22.7
million compared with $6.9
million for the 2010 fourth quarter. United's
continued strong land-based market for the manufacture of oilfield
equipment used in the hydraulic fracturing of shale formations, and
continued strong sale and service of diesel engines, transmissions
and compression systems were the primary contributors to the
significantly higher revenues and operating income. United
contributed approximately 75% of the 2011 fourth quarter diesel
engine services segment's revenues.
The segment also benefited from more favorable service work and
direct parts sales from its medium-speed and high-speed marine
markets, a reflection of the improved inland marine transportation
market. Service and direct parts sales in both the
medium-speed and high-speed Gulf Coast oil services market
generally remained weak and competitive.
The diesel engine services 2011 fourth quarter and year
operating results included a charge to selling, general and
administrative expense of $3.7
million, or $.04 per share,
and $6.3 million, or $.07 per share, respectively, increasing the fair
value of the contingent earnout liability associated with the
April 2011 acquisition of United.
As part of the United acquisition, United's former owners are
eligible to receive a three-year earnout provision for up to an
additional $50 million payable in
2014, dependent on achieving certain financial targets. The
estimated fair value of the earnout to be paid to the former owners
is recorded as a contingent liability on Kirby's balance sheet. The
estimated fair value of the earnout is based on probability
weighting and discounting various potential payments. Any
change in the fair value of the contingent liability during a
quarter is included in earnings until the earnout is settled.
As of December 31, 2011, the
Company had recorded a contingent earnout liability of $22.6 million.
The diesel engine services operating margin for the 2011 fourth
quarter was 10.6%, reflecting the continued strong land-based
markets and favorable inland marine market.
General Corporate Expenses
General corporate expenses for the 2011 fourth quarter and year
were $2.7 million and $17.9 million compared with $2.6 million and $13.2
million for the 2010 fourth quarter and year, respectively.
The year over year increase of $4.7
million primarily reflected United and K-Sea acquisition
related transaction fees and other expenses.
Provision for Taxes on Income
The provision for taxes on income for the 2011 fourth quarter
was 35% compared with 38% for the first three quarters of 2011 and
the 2010 fourth quarter. The reduction reflects a multi-year
income tax refund of $2.7 million,
$1.8 million after tax, or
$.03 per share.
Cash Generation
Cash flow generation remained strong throughout 2011, with
EBITDA of $436.2 million. The
cash flow was used in part to fund capital expenditures of
$226.2 million, including
$114.7 million for new inland tank
barge and towboat construction, $33.3
million for progress payments on two offshore dry-bulk barge
and tug units scheduled for completion in 2012, and $78.2 million primarily for upgrades to the
existing inland and coastwise fleets. Total debt as of
December 31, 2011 was $802 million, consisting primarily of a
$540 million bank term loan issued in
July 2011 to finance the K-Sea
acquisition with a current balance of $507
million, a $200 million
private placement loan that matures in February 2013 and $95
million outstanding under Kirby's $250 million revolving credit facility.
Kirby's debt-to-capitalization ratio was 35.5% at
December 31, 2011 compared with 36.0%
at September 30, 2011 and 14.7% as of
December 31, 2010.
Acquisition of Seaboats, Inc.
On December 15, 2011, Kirby
purchased the coastwise tank barge fleet of Seaboats, Inc. and
affiliated companies, consisting of three 80,000 barrel coastwise
tank barge and tug units for $42.7
million in cash. The three coastwise tank barge and
tug units operate along the East Coast and have an average age of
five years. Financing of the purchase was through Kirby's
$250 million revolving credit
facility.
Outlook
Commenting on the 2012 full year and first quarter market
outlook and guidance, Mr. Pyne said, "Our 2012 full year earnings
guidance is $3.85 to $4.05 per share,
excluding any potential changes to the United contingent earnout
liability." Regarding the United contingent earnout
liability, Kirby will perform a fair value assessment each quarter
of the contingent liability using a probability weighted and
discounted valuation with any change to the earnout recorded in
earnings.
Mr. Pyne continued, "While the United States economy has shown
signs of a slow recovery during 2011, a significant amount of
uncertainty still exists in the United
States and world economies as we move into 2012. This
uncertainty is reflected in our 2012 full year earnings guidance.
The low end guidance of $3.85 assumes
marine transportation inland and coastwise equipment utilization
levels will be consistent with the last half of 2011, inland term
and spot contract renewals will be consistent with 2011 average
rate increases and coastwise pricing will be neutral. For the
diesel engine services segment, our low end guidance assumes our
land-based oil services market will not be as robust as 2011, with
some softness in the manufacture of oilfield equipment used in
hydraulic fracturing, and our marine and power generation markets
will perform similarly to 2011, with some minor improvement in the
Gulf Coast oil services market. Our high end guidance of
$4.05 assumes both inland and
coastwise marine transportation utilization levels will improve
modestly, leading to higher term and spot contract pricing.
For the diesel engine services segment, our high end guidance
assumes our land-based oil services market will be similar to 2011
with continued strong manufacturing and new remanufacturing of
oilfield equipment, as well as stronger service levels in
land-based, marine, Gulf Coast oil services and power generation
markets."
Regarding the first quarter guidance, Mr. Pyne stated, "Our 2012
first quarter guidance is $.86 to
$.93 per share, excluding any potential changes to the
United contingent earnout liability, compared with $.60 per share reported for the 2011 first
quarter. Our guidance includes some unfavorable winter
weather conditions in both our inland and coastwise trade,
equipment utilization levels in the low to mid 90% levels in our
inland petrochemical and black oil products fleets and low to mid
70% utilization levels in our liquid coastwise trade, leading to
continued favorable inland pricing and stable pricing in our
coastwise market. In our diesel engine services segment, we
anticipate continued favorable demand for the land-based
manufacture and remanufacture of oilfield equipment, and sale and
service of transmissions and engines."
Mr. Pyne further commented, "Our 2012 capital spending guidance
range is $255 to $265 million,
including approximately $100 million
for the construction of 55 inland tank barges and five inland
towboats. This guidance range also includes approximately
$70 million in progress payments on
the construction of two offshore articulated dry-bulk barge and
tugboat units scheduled for delivery in the 2012 fourth quarter
with an estimated cost of $52 million
each. The balance of approximately $85
to $95 million is primarily capital upgrades and
improvements to existing marine equipment and facilities."
Conference Call
A conference call is scheduled at 10:00
a.m. central time tomorrow, Friday, February 3, 2012, to
discuss the 2011 fourth quarter performance as well as the outlook
for the 2012 first 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
31547305. An audio playback will be available at 1:00 p.m. central time on Friday, February 3, through 5:00 p.m. central time on Friday, March 2, 2012 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, coastwise along all three
United States coasts and in
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, transmissions, pumps,
compression products and manufactures oilfield 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
September 30, 2011 filed with the
Securities and Exchange Commission.
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF EARNINGS
|
|
|
|
|
|
|
Fourth
Quarter
|
Year
|
|
|
2011
|
2010
|
2011
|
2010
|
|
|
(unaudited, $ in thousands
except per share amounts)
|
|
Revenues:
|
|
|
|
|
|
Marine
transportation
|
$
335,112
|
$
232,443
|
$
1,194,607
|
$
915,046
|
|
Diesel engine
services
|
215,033
|
53,875
|
655,810
|
194,511
|
|
|
550,145
|
286,318
|
1,850,417
|
1,109,557
|
|
Costs and expenses:
|
|
|
|
|
|
Costs of sales and
operating expenses
|
369,512
|
177,328
|
1,228,440
|
683,236
|
|
Selling, general and
administrative
|
49,102
|
27,328
|
170,386
|
117,694
|
|
Taxes, other than on
income
|
2,711
|
3,038
|
13,179
|
13,209
|
|
Depreciation and
amortization
|
35,796
|
24,937
|
126,029
|
95,296
|
|
Loss on disposition of
assets
|
111
|
23
|
40
|
78
|
|
|
457,232
|
232,654
|
1,538,074
|
909,513
|
|
Operating
income
|
92,913
|
53,664
|
312,343
|
200,044
|
|
Other income
|
183
|
383
|
306
|
556
|
|
Interest expense
|
(5,817)
|
(2,845)
|
(17,902)
|
(10,960)
|
|
Earnings before taxes on
income
|
87,279
|
51,202
|
294,747
|
189,640
|
|
Provision for taxes on
income
|
(30,510)
|
(19,279)
|
(109,255)
|
(72,258)
|
|
Net earnings
|
56,769
|
31,923
|
185,492
|
117,382
|
|
Less: Net earnings attributable
to noncontrolling interests
|
(599)
|
(303)
|
(2,466)
|
(1,133)
|
|
|
|
|
|
|
|
Net earnings attributable
to Kirby
|
$
56,170
|
$
31,620
|
$
183,026
|
$
116,249
|
|
|
|
|
|
|
|
Net earnings per share
attributable to Kirby common stockholders:
|
|
|
|
|
|
Basic
|
$
1.01
|
$
.59
|
$3.35
|
$2.16
|
|
Diluted
|
$
1.00
|
$
.59
|
$3.33
|
$2.15
|
|
Common stock outstanding (in
thousands):
|
|
|
|
|
|
Basic
|
55,206
|
53,041
|
54,191
|
53,331
|
|
Diluted
|
55,453
|
53,194
|
54,413
|
53,466
|
|
|
|
|
|
|
|
CONDENSED
CONSOLIDATED FINANCIAL INFORMATION
|
|
|
|
|
|
|
Fourth
Quarter
|
Year
|
|
|
2011
|
2010
|
2011
|
2010
|
|
|
(unaudited, $ in
thousands)
|
|
EBITDA: (1)
|
|
|
|
|
|
Net earnings attributable
to Kirby
|
$
56,170
|
$
31,620
|
$
183,026
|
$
116,249
|
|
Interest expense
|
5,817
|
2,845
|
17,902
|
10,960
|
|
Provision for taxes on
income
|
30,510
|
19,279
|
109,255
|
72,258
|
|
Depreciation and
amortization
|
35,796
|
24,937
|
126,029
|
95,296
|
|
|
$
128,293
|
$
78,681
|
$
436,212
|
$294,763
|
|
|
|
|
|
|
|
Capital expenditures
|
$ 63,028
|
$ 28,805
|
$
226,238
|
$
136,841
|
|
Acquisitions of businesses and
marine equipment
|
$ 42,745
|
$
―
|
$
859,512
|
$
―
|
|
|
|
|
December
31,
|
|
|
|
|
2011
|
2010
|
|
|
(unaudited,
$ in thousands)
|
|
Cash and cash equivalents
|
$
16,249
|
$
195,600
|
|
Long-term debt, including
current portion
|
$ 802,005
|
$
200,134
|
|
Total equity
|
$ 1,454,158
|
$ 1,159,139
|
|
Debt to capitalization
ratio
|
35.5%
|
14.7%
|
|
MARINE
TRANSPORTATION STATEMENTS OF EARNINGS
|
|
|
Fourth
Quarter
|
Year
|
|
|
2011
|
2010
|
2011
|
2010
|
|
|
(unaudited,
$ in thousands)
|
|
|
|
|
|
|
|
Marine transportation
revenues
|
$ 335,112
|
$ 232,443
|
$1,194,607
|
$915,046
|
|
|
|
|
|
|
|
Costs and expenses:
|
|
|
|
|
|
Costs of sales and
operating expenses
|
202,193
|
137,876
|
717,443
|
540,427
|
|
Selling, general and
administrative
|
25,832
|
18,967
|
91,688
|
80,938
|
|
Taxes, other than on
income
|
2,639
|
2,888
|
11,991
|
12,213
|
|
Depreciation and
amortization
|
31,423
|
23,319
|
111,292
|
88,710
|
|
|
262,087
|
183,050
|
932,414
|
722,288
|
|
|
|
|
|
|
|
Operating
income
|
$
73,025
|
$49,393
|
$262,193
|
$192,758
|
|
|
|
|
|
|
|
Operating
margins
|
21.8%
|
21.2%
|
21.9%
|
21.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DIESEL
ENGINE SERVICES STATEMENTS OF EARNINGS
|
|
|
|
|
|
|
Fourth
Quarter
|
Year
|
|
|
2011
|
2010
|
2011
|
2010
|
|
|
(unaudited,
$ in thousands)
|
|
|
|
|
|
|
|
Diesel engine services
revenues
|
$ 215,033
|
$ 53,875
|
$655,810
|
$194,511
|
|
|
|
|
|
|
|
Costs and expenses:
|
|
|
|
|
|
Costs of sales and
operating expenses
|
167,319
|
39,452
|
510,997
|
142,809
|
|
Selling, general and
administrative
|
21,329
|
6,448
|
63,764
|
26,131
|
|
Taxes, other than
income
|
61
|
141
|
1,143
|
963
|
|
Depreciation and
amortization
|
3,616
|
941
|
11,801
|
4,055
|
|
|
192,325
|
46,982
|
587,705
|
173,958
|
|
|
|
|
|
|
|
Operating
income
|
$
22,708
|
$
6,893
|
$68,105
|
$20,553
|
|
|
|
|
|
|
|
Operating
margins
|
10.6%
|
12.8%
|
10.4%
|
10.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER COSTS
AND EXPENSES
|
|
|
|
|
|
|
Fourth
Quarter
|
Year
|
|
|
2011
|
2010
|
2011
|
2010
|
|
|
(unaudited,
$ in thousands)
|
|
|
|
|
|
|
|
General corporate
expenses
|
$
2,709
|
$
2,599
|
$17,915
|
$13,189
|
|
|
|
|
|
|
|
Loss on disposition of
assets
|
$
111
|
$
23
|
$40
|
$78
|
|
|
|
|
|
|
|
MARINE
TRANSPORTATION PERFORMANCE MEASUREMENTS
|
|
|
|
|
|
|
Fourth
Quarter
|
Year
|
|
|
2011
|
2010
|
2011
|
2010
|
|
Inland Performance
Measurements:
|
|
|
|
|
|
Ton Miles
(in millions) (2)
|
3,392
|
3,317
|
13,414
|
12,957
|
|
Revenue/Ton
Mile (cents/tm) (3)
|
7.7
|
6.7
|
7.6
|
6.8
|
|
Towboats
operated (average) (4)
|
239
|
220
|
240
|
221
|
|
Delay Days
(5)
|
1,721
|
1,498
|
6,777
|
5,772
|
|
Average
cost per gallon of fuel consumed
|
$ 3.14
|
$ 2.29
|
$ 3.08
|
$ 2.22
|
|
Barges (active):
|
|
|
|
|
|
Inland tank barges
|
819
|
825
|
|
Coastwise and local tank
barges
|
59
|
―
|
|
Coastwise dry cargo
barges
|
4
|
4
|
|
Barrel capacities (in
millions):
|
|
|
|
Inland tank barges
|
16.2
|
15.9
|
|
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: Fourth quarter 2011 inland marine transportation
revenues of $261,029,000 divided by
3,392,000,000 marine transportation ton miles = 7.7 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.
SOURCE Kirby Corporation