• 2020 August 2 16:03

    Kirby Corporation announces 2Q, 2020 Results

    Kirby Corporation (“Kirby” or the “Company”) (NYSE: KEX) on July 30 announced net earnings attributable to Kirby for the second quarter ended June 30, 2020 of $25.0 million, or $0.42 per share, compared with net earnings of $47.3 million or $0.79 per share for the 2019 second quarter. Consolidated revenues for the 2020 second quarter were $541.2 million compared with $771.0 million reported for the 2019 second quarter.

    David Grzebinski, Kirby’s President and Chief Executive Officer, commented, “The dramatic economic slowdown associated with the COVID-19 pandemic in the second quarter was felt across our marine transportation and distribution and services businesses. We responded by aggressively lowering costs across the Company and were able to generate solid earnings and strong cash flow. Although the demand impacts have continued into the third quarter, activity appears to have bottomed and is starting to slowly improve.

    “In marine transportation, with demand for many liquid products down significantly during the quarter, refiners scaled back their utilization levels into the high 60% range before it gradually improved into the mid-70% range, and chemical plant utilization fell to near 70%. As a result, demand for barge transportation weakened as the quarter progressed, and when combined with favorable summer operating conditions, our barge utilization fell into the mid-70% range in inland and the low 70% range in coastal by the end of June. To offset the impact of these activity declines, we aggressively implemented additional cost reductions across the business, significantly reducing horsepower, operating costs, and general and administrative expenses. Despite a 6% sequential reduction in segment revenue, our cost reduction efforts contributed to a sequential improvement in segment operating margins from 12.6% to 13.5%.    

    “Distribution and services experienced significant headwinds during the second quarter with a 33% sequential reduction in revenue. In the oilfield, the decline in oil prices, lower rig counts, and reduced demand resulted in an approximate 80% decline in U.S. frac activity and contributed to the bankruptcy of a large customer for which we incurred $0.04 per share of bad debt expense. As a result of the reduced activity, our oil and gas businesses experienced minimal manufacturing orders, parts sales, and service throughout the quarter. In commercial and industrial, activity levels in on-highway and power generation declined sharply as a result of lockdowns for much of the quarter. To reduce the impact of declining activity, we implemented additional workforce reductions, which resulted in severance charges of $0.02 per share, as well as furloughs and aggressive reductions in general and administrative expenses. We expect the segment will remain at a loss in the third quarter, but the impact of our cost reductions combined with an expected slow increase in activity should improve the segment’s results compared to the second quarter,” Mr. Grzebinski concluded.

    Second Quarter 2020 Segment Results – Marine Transportation
    Marine transportation revenues for the 2020 second quarter were $381.0 million compared with $404.3 million for the 2019 second quarter. Operating income for the 2020 second quarter was $51.4 million compared with $53.2 million for the 2019 second quarter. Segment operating margin for the 2020 second quarter was 13.5% compared with 13.2% for the 2019 second quarter.

    In the inland market, average barge utilization was in the mid-80% range during the quarter compared to the mid-90% range in the 2019 second quarter. Barge volumes were heavily impacted by reduced demand for refined products and petrochemicals. Operating conditions were fair with improved weather conditions across the waterway network and reduced flooding on the Mississippi River. Lock delays remained elevated during the quarter. Overall, these conditions resulted in 2,815 delay days or a reduction of 15% compared to the 2019 second quarter. As a result of lower barge utilization, average spot market pricing for the quarter declined in the mid-to high single digits both sequentially and year-on-year. Average term contract pricing on expiring contracts was stable. Revenues in the inland market declined 2% compared to the 2019 second quarter due to the impact of reduced barge utilization and lower fuel rebills, but were partially offset by the Savage Inland Marine (“Savage”) asset acquisition which closed on April 1, 2020. During the second quarter, the inland market represented 80% of segment revenues and had an operating margin in the mid-to high teens.

    In the coastal market, as a result of reduced demand for refined products and black oil transportation, barge utilization was in the mid-70% range during the 2020 second quarter compared to the mid-80% range in the 2019 second quarter. Spot market activity declined throughout the quarter; however, spot market and term contract pricing were stable. Revenues in the coastal market declined 17% compared to the 2019 second quarter as a result of reduced spot market activity, retirements of two large capacity vessels, and planned shipyard activity. The coastal market represented 20% of segment revenues and had a breakeven operating margin during the quarter.

    Second Quarter 2020 Segment Results – Distribution and Services
    Distribution and services revenues for the 2020 second quarter were $160.2 million compared with $366.8 million for the 2019 second quarter. The segment had an operating loss for the 2020 second quarter of $14.1 million which compares with operating income of $23.1 million for the 2019 second quarter. Operating margin was (8.8%) for the 2020 second quarter compared with 6.3% for the 2019 second quarter. The quarter’s results were adversely impacted by $3.3 million of bad debt expense resulting from a large oil and gas customer’s bankruptcy as well as $1.4 million of severance.

    In the oil and gas market, revenues and operating income declined due to low oil prices and reduced activity which resulted in limited customer demand for new and overhauled transmissions, parts and service. The manufacturing business experienced a sharp reduction in orders with minimal deliveries of new and remanufactured pressure pumping equipment. During the quarter, the oil and gas market represented approximately 19% of segment revenues and had a negative operating margin.

    In the commercial and industrial market, revenues declined primarily due to reduced economic activity and stay-at-home orders across the U.S. which heavily impacted activity levels in the on-highway and power generation businesses. The marine repair business was also down year-on-year due to reduced major overhaul activity and engine sales. These reductions were partially offset by the contribution from Convoy Servicing Company (“Convoy”), a Thermo King distributor which was acquired in early 2020. During the quarter, the commercial and industrial market represented approximately 81% of segment revenues and had an operating margin in the low single digits.

    Cash Generation
    For the 2020 second quarter, EBITDA of $90.8 million compares with $133.2 million for the 2019 second quarter. During the second quarter, net cash provided by operating activities was $170.6 million, some of which was used to fund capital expenditures of $43.6 million. The Company also used $279.0 million to acquire the Savage assets. As of June 30, 2020, the Company had $108.5 million of cash and cash equivalents on the balance sheet. Total debt was $1,642.8 million, reflecting a $59.7 million reduction compared to March 31, 2020, and the debt-to-capitalization ratio was 35.0%.

    2020 Outlook
    Commenting on the 2020 full year outlook, Mr. Grzebinski said, “In the past quarter, our businesses experienced unprecedented declines in demand as a result of the COVID-19 pandemic. Recently, we have seen slight increases in demand across the Company which we believe represent an initial recovery and a bottom to our activity and utilization levels. However, given the risk of future spikes in virus cases and governments issuing new restrictions, the timing and magnitude of a material recovery remains unclear. Until we see a significant improvement in demand, we will continue to aggressively manage our costs, restrain capital spending, and focus on cash generation. Kirby has ample liquidity, and we continue to expect strong free cash flow in 2020 which will be used to repay debt, increase liquidity, and strengthen the balance sheet.”

    In inland marine, although refinery and petrochemical plant utilization rates have started to improve, Kirby expects a slow recovery going forward until economic activity rebounds more significantly. With barge utilization rates starting the third quarter in the mid-70% range, the Company anticipates sequentially lower average barge utilization for the quarter. This is expected to have an adverse impact on revenues and operating margins. Overall, Kirby expects inland revenues and operating income will sequentially decline in the third quarter.

    In the coastal market, with 85% of revenues under term contracts, much of coastal’s business is expected to be stable through the end of the year. The spot market remains challenging, but reduced shipyard maintenance is expected to benefit the third quarter’s results. Kirby plans to retire one additional large capacity vessel in the third quarter and expects reduced activity in the coal transportation business for the remainder of the year. Overall, Kirby expects coastal third quarter revenues and operating income will modestly improve sequentially.

    In distribution and services, activity in the oil and gas market is expected to remain challenged with all major customers curtailing spending for the duration of 2020. Although some operators are starting to bring shut-in wells back on-line and frac activity is modestly improving, Kirby does not expect to see a material improvement in activity in the short-term as many customers have significant excess pressure pumping capacity available for use. In commercial and industrial, although the Company’s businesses continue to be adversely impacted by reduced economic activity, there have been some recent improvements in the on-highway and power generation sectors. Fleet miles in the nation’s trucking industry are growing, and power generation projects which were previously deferred are being rescheduled for the coming months. Additionally, Kirby expects increased seasonal utilization of the power generation rental fleet and higher activity in the Thermo King refrigeration businesses. As well, the impact of our cost reduction initiatives is expected to be more fully realized in the third quarter. As a result, overall, segment operating margins are expected to improve in the third quarter but remain below breakeven levels.  

    On the balance sheet, as of June 30, 2020, Kirby had approximately $537 million of cash and liquidity available. The Company does not have any scheduled debt maturities until 2023, and there is substantial room available in its bank covenants. Kirby expects 2020 capital spending to be approximately $150 million, representing a year-on-year reduction of approximately 40%. While the Company is committed to regulatory and recurring maintenance on the marine transportation fleet, capital spending is being stringently managed. Overall, Kirby expects to generate net cash provided by operating activities of $400 million to $500 million, with free cash flow of $250 million to $350 million during 2020.

2020 August 8

15:32 NOAA, U.S. Navy will increase nation’s unmanned maritime systems operations
14:31 Sanmars Sirapinar commences operations in Baltic Sea
13:42 USCG accepts newest fast response cutter
12:03 SCHOTTEL propulsion for first-class expedition cruise vessels
11:18 Australia’s new icebreaker on the move

2020 August 7

18:32 Maersk revamps Europe to Middle East & Indian Subcontinent network
18:00 Rosmorport's to beef up its icebreaking fleet to 38 units in 2020
17:00 World’s first zero-emissions top handlers performing well at Port of Los Angeles
16:01 Port of HaminaKotka seven-month volume fell 16.7%
15:09 Launching of Russia’s first LNG-powered passenger ship Chaika held at Zelenodolsk Shipyard
14:21 North Carolina Ports records year-over-year increases in Fiscal Year 2020
14:09 Cargo traffic at Port Kavkaz in January-July rose 9%
13:21 ABP invests in Port of Lowestoft to support UK Southern North Sea energy sector
13:19 Krasnoye Sormovo Shipyard hosts launching ceremony for the RSD59 series MS Pola Marina
12:49 Rosmorport plans expansion of its fleet by 24 newbuilds
12:08 Jan De Nul signs contract with Dogger Bank Wind Farm
11:22 The second tanker manufactured in Azerbaijan launched for the next stage of construction
10:37 MSC’s Golden Horn service links China, Korea & Russia’s east coast
09:59 Ecochlor receives IMO BWMS Code Type Approval
09:51 MABUX: Bunker market this morning, Aug 07
09:16 Baltic Dry Index as of Aug 6
09:12 Crude futures prices turn down again

2020 August 6

19:00 FSL Trust agrees to sell three containerships
18:27 Sumitomo Heavy Industries has been granted an “Approval in Principle” for a medium-size high-pressure LNG dual-fueled tanker
18:21 Port of Rostov-on-Don seven-month volume rises 4% to 12.7 million tonnes
18:07 ICTSI 1H2020 net income down 12% to US$113.4mln
17:26 Royal IHC awarded major contract for supply of FPSO equipment for Yinson
17:25 Vodohod’s newbuild Mustai Karim arrives at Saint Petersburg
16:36 Nevsky Shipyard launches the Pavel Leonov, last ship of PV22 series duo
16:15 North Sea Port, Flemish Waterways plc, Port of Antwerp, Port of Oostende, Port of Zeebrugge, the Agency for Maritime and Coastal Services, and the Joint Nautical Management to introduce SWINg in 2021
15:43 Zelenodolsk Shipyard to host tomorrow launching and keel-laying ceremonies
15:41 Maritime Autonomous Surface Ships Port Network was established in Singapore
14:27 MABUX Bunker Weekly Review
13:54 Tolyattii bound heavylift project cargo successfully handled at Port Bronka
13:27 Alaska Marine Lines rail barges upgrade ballast systems
12:46 Davie confirms polar leadership with icebreaker launch
12:35 Transit container transport by RZD network soars 30% in Jan-Jul
11:40 CMA CGM to launch its ever-faster service connecting Spain with Algeria
11:35 Carnival Cruise Line joins industrywide pause in U.S. through October 31
10:18 Shell signs charter contracts for six newbuild LNG carriers
10:15 Fourth IMO Greenhouse Gas Study: Shipping emissions are projected to increase by up to 50% until 2050, relative to 2018
09:58 The Flemish government, Port of Antwerp and SeReAnt together improve the water quality at the Port of Antwerp
09:26 Baltic Dry Index as of Aug 5
09:21 Crude futures prices resume climb
09:10 MABUX: Bunker market this morning, Aug 06
08:11 NYK starts operation of its first finished-car logistics terminal in Japan

2020 August 5

18:57 Valenciaport triples air quality control cabins
18:16 U.S. Coast Guard suspends search for missing spearfisher off Maui
18:04 Port of Helsinki turnover decreased by 26.7% to EUR 33.4 million in January–June 2020
17:35 A delegation of the Port of Gdansk visits Klaipeda
17:06 Voluntary ship slowdown through Swiftsure Bank begins August 1
16:49 Mississippi River will get deeper
16:39 MOL introduces FOCUS Project Part Ⅲ: Virtual Ship Visit Application 'Fleet Tour'
16:29 Admiralty Shipyards starts building fourth CT-192 series trawler the Kapitan Martynov
15:27 Solstad secures contract from BP for three vessels in Australia
14:38 ABS to class first Taiwan-built offshore installation vessel
13:22 Hurtigruten temporarily suspends all expedition cruises
13:18 Krasnoye Sormovo to launch the MS Pola Marina cargo ship on August 7
13:12 The Vostochnaya Stevedoring Company completes the upgrade of more than 18,000m2 of storage yard
13:08 Concept of a modular composite fishing boat gets the thumbs up from MARINET