• 2020 February 2 14:31

    Kirby announces Q4 and 2019 full year results

    Kirby Corporation (“Kirby”) (NYSE: KEX) announced net earnings attributable to Kirby for the fourth quarter ended December 31, 2019 of $2.8 million or $0.05 per share, compared with a net loss of ($24.4) million or ($0.41) per share for the 2018 fourth quarter.  Excluding one-time charges in both quarters, 2019 fourth quarter net earnings attributable to Kirby were $34.5 million or $0.58 per share, compared with $44.9 million or $0.75 per share for the 2018 fourth quarter. Consolidated revenues for the 2019 fourth quarter were $655.9 million compared with $721.5 million reported for the 2018 fourth quarter.

    For the 2019 full year, Kirby reported net earnings attributable to Kirby of $142.3 million or $2.37 per share, compared with $78.5 million or $1.31 per share for 2018. Excluding one-time items in both years, 2019 net earnings attributable to Kirby were $174.0 million or $2.90 per share, compared with $171.4 million or $2.86 per share for 2018. Consolidated revenues for 2019 were $2.84 billion compared with $2.97 billion for 2018.

    Kirby’s 2019 fourth quarter and full year results were impacted by one-time pre-tax charges of $40.3 million or $0.53 per share which included write-downs of oilfield and pressure pumping related inventory of $35.5 million or $0.47 per share, and severance and early retirement expense of $4.8 million or $0.06 per share.

    Kirby also announced the signing of a definitive agreement to acquire the inland tank barge fleet of Savage Inland Marine (“Savage”) for approximately $278 million in cash and the assumption of leases. Savage’s tank barge fleet consists of 90 inland tank barges with approximately 2.5 million barrels of capacity and 46 inland towboats. Savage primarily moves petrochemicals, refined products, and crude oil on the Mississippi River, its tributaries, and the Gulf Intracoastal Waterway. Savage also operates a significant ship bunkering business as well as barge fleeting services along the Gulf Coast. The closing of the acquisition is expected to occur late in the first quarter of 2020 and is subject to customary closing conditions and regulatory approvals. The purchase will be financed through additional borrowings.

    David Grzebinski, Kirby’s President and Chief Executive Officer, commented, “The fourth quarter’s financial results were impacted by one-time charges primarily related to the oil and gas market of our distribution and services segment. These actions were necessary to align our operations with oilfield market conditions and anticipated activity levels in 2020. Excluding the one-time charges, our earnings were $0.58 per share.

    “In inland marine transportation, we experienced favorable market conditions with barge utilization rates in the low 90% range and pricing increases on term contract renewals. As anticipated, however, the efficiency of our operations declined with the onset of winter weather conditions and major lock maintenance closures which contributed to a 33% increase in delay days as compared to the third quarter. Additionally, the quarter’s results were impacted by higher planned barge maintenance.

    “The purchase of Savage’s inland tank barge and towboat fleet represents an excellent strategic addition to Kirby’s inland marine fleet with young, well-maintained vessels. In the last few years, Savage has built a diverse and well-respected inland marine transportation business with a strong presence in towing, bunkering, and fleeting along the Gulf Coast. These operations complement Kirby’s inland business very well and will enable us to better service our customer’s towing and fleeting needs. Further, Savage’s ship bunkering business in New Orleans is an ideal expansion of Kirby’s existing bunkering operations in Texas and Florida, and gives Kirby the ability to service bunker customers in this important Gulf Coast port.

    “In coastal, we continued to experience strong customer demand and tightening market conditions with reduced availability of equipment, particularly in the Atlantic and Gulf Coast regions. As a result, barge utilization was in the mid-80% range, pricing on term contracts renewed higher, and many of our spot market barges were placed into new term contracts.

    “In distribution and services, results in our oil and gas related businesses declined with many of our key customers cutting their spending and activity levels through the quarter and holidays. In manufacturing, our financial results were heavily impacted by very few orders and weak demand for remanufacturing. Similarly, sales of oilfield related equipment, parts, and service in our distribution businesses were also at reduced levels. Although we believe there will be an increase in oilfield activity levels in 2020, the outlook for our business remains challenging in the near-term as our customers continue to rationalize their pressure pumping fleets and focus on cash flow. As a result, we implemented additional workforce reductions and adjusted the value of oilfield and pressure pumping related inventory to align with current market conditions.

    “In the commercial and industrial market, we acquired Convoy Servicing Company (“Convoy”) for $40 million. Convoy is a Thermo King refrigeration system sales, service and parts distributor for North Texas, East Texas, and Colorado. This acquisition expands our geographic distribution territory for Thermo King to include a significant share of Texas and extends our reach into Colorado. The Convoy acquisition closed on January 3rd and is expected to be accretive to our earnings in 2020,” Mr. Grzebinski concluded.

    Segment Results – Marine Transportation
    Marine transportation revenues for the 2019 fourth quarter were $402.0 million compared with $382.5 million for the 2018 fourth quarter. Operating income for the 2019 fourth quarter was $54.5 million and included $1.5 million of one-time severance and early retirement expense. This compares with operating income of $44.5 million for the 2018 fourth quarter. Operating margin was 13.6% for the 2019 fourth quarter compared to 11.6% for the 2018 fourth quarter.

    In the inland market, barge utilization was in the low 90% range during the quarter and was adversely impacted by reduced chemical plant and refinery utilization and extended turnarounds for some major customers. Operating conditions were negatively impacted by significant wind and fog, as well as lock maintenance closures along the Gulf Coast and the Illinois River. Pricing continued to improve year-on-year, with spot rates increasing in the mid-single digits and average rates on renewing term contracts increasing in the low to mid-single digits percentage range. Revenues in the inland market increased 7% compared to the 2018 fourth quarter due to improved pricing and the contribution from the Cenac acquisition, but were partially offset by the impact of reduced chemical plant and refinery utilization. During the quarter, inland represented approximately 78% of marine transportation revenue and had an operating margin in the mid-teens. Inland’s operating income was impacted by increased levels of planned barge maintenance and one-time severance and early retirement expense of $1.1 million.

    In the coastal market, barge utilization rates were in the mid-80% range and benefited from strong customer demand and several spot market barges which were placed on term contracts during the 2019 fourth quarter. Compared to the 2018 fourth quarter, spot market pricing increased approximately 10%, and expiring term contracts repriced higher in a range between 5% and 15%. Revenues in the coastal market were up moderately year-on-year primarily due to increased pricing and higher barge utilization. During the quarter, coastal represented approximately 22% of marine transportation revenue and had an operating margin in the mid-to high single digits. Coastal operating income was favorably impacted by lower operating expenses which were partially offset by one-time severance and early retirement expense of $0.4 million.

    Segment Results – Distribution and Services
    Distribution and services revenues for the 2019 fourth quarter were $253.9 million compared with $339.0 million for the 2018 fourth quarter. Distribution and services generated an operating loss of ($2.7) million in the 2019 fourth quarter which included $3.3 million of one-time severance and early retirement expense.  This compares to operating income of $28.2 million for the 2018 fourth quarter. Operating margin for the 2019 fourth quarter was slightly above breakeven excluding the severance expense compared to 8.3% for the 2018 fourth quarter. The reduced operating margin is primarily the result of significant activity reductions in the oil and gas market and the one-time charges.

    In the oil and gas market, revenues and operating income declined compared to the 2018 fourth quarter primarily due to reduced activity in the oilfield which resulted in lower customer demand for new and overhauled transmissions, parts and service in the distribution businesses. The manufacturing group also reported lower year-on-year revenue and an operating loss as a result of reduced orders and deliveries of new and remanufactured pressure pumping equipment. During the quarter, the oil and gas businesses incurred one-time severance and early retirement charges of $3.3 million. The oil and gas market represented approximately 47% of distribution and services revenue and had a negative operating margin in the mid-to high single digits.

    In the commercial and industrial market, revenues increased compared to the 2018 fourth quarter primarily due to improvement in the power generation, commercial marine, and on-highway businesses. Operating income declined modestly due to service and product sales mix. During the quarter, the commercial and industrial market represented approximately 53% of distribution and services revenue and had an operating margin in the mid-single digits.

    Cash Generation
    EBITDA of $72.0 million for the 2019 fourth quarter included $35.5 million of non-cash one-time inventory write-downs and compares with EBITDA of $124.5 million for the 2018 fourth quarter. Cash flow was used to fund capital expenditures of $64.1 million during the 2019 fourth quarter, including $2.3 million for progress payments on the construction of inland towboats, $2.3 million for progress payments on the construction of three 5000 horsepower coastal ATB tugboats, $51.6 million primarily for upgrades to existing inland and coastal fleets, and $7.9 million in distribution and services and corporate. Total debt as of December 31, 2019 was $1,369.8 million, and Kirby’s debt-to-capitalization ratio was 28.9%.

    2020 Outlook
    Commenting on the 2020 full year outlook and guidance, Mr. Grzebinski said, “Our earnings guidance range for the year is $2.60 to $3.40 per share, reflecting continued growth in inland, flat to modest growth in coastal, and a modest earnings contribution from Savage which takes into consideration integration costs, the time needed to integrate the fleet, inherited contracts, and interest expense. In distribution and services, although we anticipate a modest recovery in our oil and gas businesses relative to fourth quarter 2019 activity levels, significant uncertainty exists in our outlook, particularly regarding manufacturing activity.”

    In the inland marine transportation market, 2020 guidance contemplates favorable market conditions with continued growth in customer demand, increased volumes from new petrochemical plants, and modest net new barge construction in the industry. These factors are expected to result in barge utilization rates in the low to mid-90% range throughout the year. Combined with the anticipated contribution from Savage, inland revenues are expected to increase in the low double digits to mid-teens percentage range year-on-year with an overall operating margin in the high teens.

    In the coastal market, barge utilization is expected to improve into the mid-to high 80% range driven by strong customer demand and tight industry capacity. Kirby’s retirement of four aging coastal barges, three of which are large capacity vessels that would have required ballast water treatment systems, as well as anticipated activity reductions in the coal transportation business will have an impact on the full year. As a result, coastal revenues are expected to only be flat to slightly up year-on-year with positive operating margins in the low to-mid single digits.

    In distribution and services, 2020 revenues are expected to decline 12% to 17% compared to 2019. In the oil and gas market, activity levels are expected to remain restrained in the near term, particularly in manufacturing as customers continue to rationalize excess capacity in their pressure pumping fleets. In oil and gas distribution, sales of transmissions, engines, and parts, as well as service activities are expected to increase from 2019 fourth quarter levels as the year progresses, but the magnitude of the improvement will be dependent on oilfield activity levels. In commercial and industrial, revenues are expected to increase with share growth in the on-highway and industrial markets, including the Thermo-King business with the acquisition of Convoy. Overall, operating margins in distribution and services are expected to be positive in the low to mid-single digits.

    Kirby expects 2020 capital spending to be in the $155 to $175 million range, including capital requirements for the Savage fleet. This range represents a 30% to 40% reduction in capital spending compared to 2019. Capital spending guidance includes approximately $25 to $30 million in progress payments on six new 2600 HP inland towboats. Approximately $110 to $120 million is associated with capital upgrades and improvements to existing inland and coastal marine equipment and facility improvements. The balance of approximately $20 to $25 million largely relates to new machinery and equipment, facility improvements, and information technology projects in the distribution and services segment and corporate.




2020 October 30

18:02 Finnlines announces bunker surcharge for Malmö-Travemünde-Malmö
17:38 Expert considers methanol to be more environmentally friendly marine fuel than LNG
17:06 Port of Melbourne releases its 2020 Sustainability Report
16:56 BC Ferries' third battery electric hybrid vessel launches at Damen Shipyard
16:45 Rosmorport took part in the 4th “LNG Fleet, LNG Bunkering and Alternatives” conference
15:21 General Prosecutor's Office confirmed Vostochny Port’s compliance with Presidential instructions on transition to closed coal handling
14:19 Fuelling the industry: Low-emission development strategies at the 7th International LNG Congress
14:03 VARD to build a second advanced stern trawler for Luntos
13:36 Amursky Shipyard launches Ro-Ro ferry and ice-class rescue ship
13:13 Shuttle service to COSCO’s European hub from Vado Gateway commences
13:10 BlueWater Reporting issues intra-Asia container shipping report
12:37 DNV GL hits remote survey hat trick with 20K surveys, 2-year anniversary and new Operational Centre
11:49 Ivan Radchenko appointed as General Manager at Moby Dik Terminal
11:14 Tuapse Sea Commercial Port increased its throughput by 10% in 9M’2020
10:38 IAA PortNews thanks partners and sponsors of 4th LNG Fleet, LNG Bunkering and Alternatives conference
10:17 The CMA CGM Champs Elysees joins the fleet
10:05 Arctic LNG 2 ice-class tanker fleet formation completed
09:43 Bunker Market this morning, Oct 30
09:40 Bunker prices go down in the Port of Saint-Petersburg, Russia (graph)
09:23 Oil prices are recovering
09:12 Baltic Dry Index as of October 29

2020 October 29

18:31 Wan Hai Lines to launch Straits – Bangladesh Express Service
18:09 Lloyd’s Register launches dedicated Maritime Decarbonisation Hub
17:56 Bill on corporatization of FSUE Rosmorport submitted to RF Government
17:56 Hapag-Lloyd announces winter surcharge to and from St. Petersburg and Ust-Luga
17:30 Rosmorport’s Azov-Black Sea Basin Branch purchased 5 tugboats
17:05 Wärtsilä to collaborate with Anemoi Marine Technologies in future sales of Rotor Sail solutions
16:59 Romania’s border authorities using EMSA RPAS for coast guard surveillance
16:35 Jon Fredrik Baksaas appointed DNV GL’s Chair of the Board
16:17 Nordion Energi moves closer to the aim of 100% green energy by joining the European Clean Hydrogen Alliance
16:01 Port of Los Angeles streamlines online permit process
15:28 MABUX released Bunker Weekly Outlook
15:22 Bunker prices are slightly down in the Far East ports of Russia (graph)
15:20 CMA CGM announces Peak Season Surcharge from China to Russia
15:01 Partnership agreement between leading Hamburg Port Authority and Tanger Med Port Authority
14:36 Port Kolomna takes delivery of multibucket dredger of Project 3409
14:11 MAN compressor technology for largest FPSO vessel offshore Brazil
13:53 Novatek to launch LNG terminal in Rostock (Germany) in 2023
13:30 Rosatom looks into using barges for LNG delivery to Arctic regions
13:11 IMEC and ITF opens big quarantine and testing facility in Manila
12:52 RS grants GASA to GTT’s Mark III Technology
12:29 Rosatom expects reactor plants RITM-200 to be efficient for container carriers and oil tankers
12:10 GTT entrusted by Zvezda with the tank design of ten ARC7 ice-breaking LNG сarriers
11:48 USC forecasts complete transition of shipping industry to electric propulsion in 20-25 years
11:30 Rijkswaterstaat has awarded the enlargement of the Twente canals to a consortium of Van Oord - Hakkers - Beens
11:09 DSV Panalpina acquires Prime Cargo
10:50 Novatek to put into operation 30,000-cbm gas carrier under Cryogas-Vysotsk project in 2022
10:37 Volvo Penta IMO III marine generator sets help power five electric ferries in Norway
10:09 International Association of Dredging Companies signs major strategic collaboration agreement with FIDIC
09:51 MABUX: Bunker Market this morning, Oct 29
09:46 Three LNG-powered product tankers for shipment of stable gas condensate from Ust-Luga to be delivered in 2022-23
09:24 Oil prices show slight increase
09:20 Vestdavit wins contract to supply six French Navy vessels
09:12 Baltic Dry Index as of October 28

2020 October 28

18:15 Sri Lanka's East Container Terminal inaugurates for operations
17:51 Tallink Grupp makes temporary changes to Tallinn-Helsinki route schedule from 29 October 2020
17:30 Key element of Russia’s collider facility NICA transshipped in Bronka
17:06 GONDAN delivers new fishing stern trawler to Prestfjord AS
16:39 Rosmorrechflot resumes work on programme for encouraging LNG-powered shipping
16:13 Cavotec launches next generation MoorMaster