KIRBY CORPORATION HOUSTON, Oct. 29, 2014 /PRNewswire/ -- Kirby Corporation ("Kirby") (NYSE: KEX) today announced record net earnings attributable to Kirby for the third quarter ended September 30, 2014 of $76.7 million, or $1.34 per share, compared with $69.1 million, or $1.21 per share, for the 2013 third quarter, which included a $0.08 per share benefit due to the reduction of the United earnout liability. Consolidated revenues for the 2014 third quarter increased 24% to $680.7 million compared with $551.1 million reported for the 2013 third quarter.
David Grzebinski, Kirby's President and Chief Executive Officer, commented, "We reported record results for the quarter as marine industry fundamentals remained positive and utilization was in the 90% to 95% range. Although we are pleased with our record results, an increase in downtime at some major petrochemical plants and refineries resulted in some inland marine horsepower inefficiency. In addition, a change in our bunkering business had an unfavorable impact on our inland marine results. In our land-based diesel engine services market, we continued to see a pickup in demand for parts and services across our portfolio of oilfield equipment, including the manufacturing and remanufacturing of pressure pumping units."
Segment Results - Marine Transportation
Marine transportation revenues for the 2014 third quarter were $448.7 million compared with $436.2 million for the 2013 third quarter. Operating income for the 2014 third quarter was $112.1 million compared with $113.6 million for the 2013 third quarter.
Inland marine transportation continued its strong performance with tank barge utilization in the 90% to 95% range and pricing continued to improve modestly. During the third quarter, several petrochemical plants and large refineries experienced outages which marginally impacted demand for inland tank barges and created horsepower inefficiencies. Inland operating results and operating margin were negatively impacted by these outages and by the cost of additional charter towboats added in anticipation of new inland tank barges which were delayed by late shipyard deliveries. In addition, the results were negatively impacted by changes in Kirby's Florida bunkering operation where a customer change led to a decrease in dedicated equipment and reduced revenue. Overall, operating conditions throughout the inland waterway system were seasonally normal during the quarter.
Mr. Grzebinski continued, "Inland marine transportation revenue per ton mile declined during the quarter. As we've stated in previous quarters, there are numerous factors which can drive changes in revenue per ton mile. Certain time charter equipment was moved from shorter cross channel canal moves to longer river moves during 2014. Revenue per ton mile was also impacted by a reduction in delay days and lower revenue in the bunkering business which does not generate ton miles. Although revenue per ton mile was down, pricing continued to increase."
The coastal marine transportation markets reflected continued strong utilization in the 90% to 95% range, consistent with the 2014 first half and above the 90% range experienced throughout 2013. Demand for the coastal transportation of refined products, black oil, including crude oil and condensate, and petrochemicals remained at healthy levels, leading to continued favorable term and spot contract pricing.
The marine transportation segment's 2014 third quarter operating margin was 25.0% compared with 26.1% for the third quarter of 2013, reflecting the impact of the plant outages, added horsepower costs and changes in the bunkering business.
Segment Results - Diesel Engine Services
Third quarter diesel engine services revenues were $232.0 million compared with $114.9 million for the 2013 third quarter. Operating income for the third quarter of 2014 was $20.0 million compared with operating income of $9.1 million for the 2013 third quarter, which included a $7.9 million benefit from the reduction of the fair value of the United contingent earnout liability.
The higher revenues reflected continued improvement in the land-based diesel engine services market and stable demand for parts sales and services in the marine diesel engine and power generation markets. The land-based market benefited primarily from an improvement in the sale and service of engines, transmissions and pressure pumping units. Demand for the remanufacturing of pressure pumping units also increased when compared with the 2014 second quarter.
During the 2014 third quarter, demand in the marine diesel engine services market remained stable, benefiting from major service projects along the Gulf Coast and in the Midwest. The power generation market benefited from major generator set upgrades and parts sales for both domestic and international power generation customers.
The diesel engine services operating margin was 8.6% for the 2014 third quarter compared with 7.9% for the 2013 third quarter, which included a $7.9 million benefit from the contingent earnout liability reduction.
Cash Generation
Kirby continued to generate strong cash flow during the 2014 first nine months with EBITDA of $484.6 million compared with $448.3 million for the 2013 first nine months. During the 2014 first nine months, capital expenditures were $234.1 million, including $66.2 million for new inland tank barge and towboat construction, $57.4 million for progress payments on the construction of four new coastal articulated tank barge and tugboat units ("ATBs"), and $110.5 million primarily for upgrades to the existing inland and coastal fleets, as well as the final costs for the construction of two offshore dry-bulk barge and tugboat units delivered during 2013. In addition, Kirby purchased a previously leased coastal tank barge in August 2014 for $6.5 million. Total debt as of September 30, 2014 was $649.4 million, reflecting a reduction of $99.8 million since December 31, 2013, and Kirby's debt-to-capitalization ratio was 22.4%.
Outlook
Commenting on the 2014 fourth quarter and full year market outlook and guidance, Mr. Grzebinski said, "The plant outages that negatively impacted us in the third quarter are largely behind us. Our earnings guidance for the 2014 fourth quarter is $1.30 to $1.40 per share compared with $1.13 per share in the 2013 fourth quarter. We are raising our full year 2014 guidance to $5.04 to $5.14 per share compared with $4.44 per share for the 2013 year, which included a $0.20 per share United earnout benefit. Our fourth quarter guidance assumes normal seasonal operating conditions in both our inland and coastal marine transportation markets. Utilization in both our inland and coastal fleets is projected to remain in the 90% to 95% range. For our diesel engine services segment, we expect continued improvement in both our land-based and marine diesel engine services markets."
The 2014 capital spending guidance range of $370 to $380 million includes approximately $125 million for the construction of 61 inland tank barges and one inland towboat, all expected to be delivered in 2014. The guidance range also includes approximately $110 million in progress payments on the construction of two 185,000 barrel coastal ATBs and two 155,000 barrel ATBs. The balance of $135 to $145 million is primarily for capital upgrades and improvements to existing inland and coastal marine equipment and facilities, diesel engine services facilities, and final costs related to the construction of two offshore dry-bulk barge and tugboat units delivered during 2013. In addition to the $370 to $380 million of 2014 planned capital spending, Kirby purchased one previously leased coastal tank barge for $6.5 million in August 2014 and two previously leased coastal tank barges for $25.3 million in October 2014.
Conference Call
A conference call is scheduled at 10:00 a.m. central time tomorrow, Thursday, October 30 2014, to discuss the 2014 third quarter performance as well as the outlook for the 2014 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 Sterling Adlakha. The confirmation number is 38279010. An audio playback will be available at 1:00 p.m. central time on Thursday, October 30, 2014, through 5:00 p.m. central time on Friday, November 28, 2014, by dialing 888-843-7419 for domestic and 630-652-3042 for international callers. The passcode is 38279010#. 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 2013 year and quarters are available at Kirby's website, http://www.kirbycorp.com/, under the caption Performance Measurements in the Investor Relations section.
Forward-Looking Statements
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, 2013 filed with the Securities and Exchange Commission.
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, 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 diesel engines, transmissions, pumps, compression products and manufactures and remanufactures oilfield service equipment, including pressure pumping units, for land-based pressure pumping and oilfield service markets.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
---------------------------------------------
Third Quarter Nine Months
------------- -----------
2014 2013 2014 2013
---- ---- ---- ----
(unaudited, $ in thousands except per share amounts)
Revenues:
Marine
transportation $448,744 $436,181 $1,341,260 $1,278,567
Diesel engine
services 231,977 114,924 556,761 395,231
------- ------- ------- -------
680,721 551,105 1,898,021 1,673,798
------- ------- --------- ---------
Costs and expenses:
Costs of sales and
operating expenses 457,177 344,396 1,243,866 1,083,257
Selling, general and
administrative 49,331 43,241 154,994 128,335
Taxes, other than on
income 3,701 3,714 12,905 12,589
Depreciation and
amortization 42,433 41,640 124,876 122,907
Gain on disposition
of assets (47) (223) (625) (728)
--- ---- ---- ----
552,595 432,768 1,536,016 1,346,360
------- ------- --------- ---------
Operating income 128,126 118,337 362,005 327,438
Other income
(expense) 27 60 (86) 236
Interest expense (5,225) (6,694) (16,312) (21,901)
------ ------ ------- -------
Earnings before
taxes on income 122,928 111,703 345,607 305,773
Provision for taxes
on income (45,715) (42,007) (129,472) (114,733)
------- ------- -------- --------
Net earnings 77,213 69,696 216,135 191,040
Less: Net earnings
attributable to
noncontrolling
interests (496) (573) (2,180) (2,246)
---- ---- ------ ------
Net earnings
attributable to
Kirby $76,717 $69,123 $213,955 $188,794
======= ======= ======== ========
Net earnings per share attributable to Kirby common
stockholders:
Basic $1.34 $1.22 $3.75 $3.33
Diluted $1.34 $1.21 $3.74 $3.32
Common stock outstanding (in thousands):
Basic 56,725 56,375 56,658 56,329
Diluted 56,919 56,572 56,858 56,520
CONDENSED CONSOLIDATED FINANCIAL INFORMATION
--------------------------------------------
Third Quarter NineMonths
------------- ----------
2014 2013 2014 2013
---- ---- ---- ----
(unaudited, $ in thousands)
EBITDA: (1)
Net earnings
attributable to
Kirby $76,717 $69,123 $213,955 $188,794
Interest expense 5,225 6,694 16,312 21,901
Provision for taxes
on income 45,715 42,007 129,472 114,733
Depreciation and
amortization 42,433 41,640 124,876 122,907
------ ------ ------- -------
$170,090 $159,464 $484,615 $448,335
======== ======== ======== ========
Capital expenditures $70,799 $38,872 $234,098 $207,047
Acquisitions of
businesses and
marine equipment $6,500 $ - $6,500 $3,643
September 30,
-------------
2014 2013
---- ----
(unaudited, $ in thousands)
Long-term debt, including current portion $649,350 $860,930
Total equity $2,254,451 $1,912,255
Debt to capitalization ratio 22.4% 31.0%
MARINE TRANSPORTATION STATEMENTS OF EARNINGS
---
Third Quarter Nine Months
------------- -----------
2014 2013 2014 2013
---- ---- ---- ----
(unaudited, $ in thousands)
Marine
transportation
revenues $448,744 $436,181 $1,341,260 $1,278,567
-------- -------- ---------- ----------
Costs and expenses:
Costs
of
sales
and
operating
expenses 266,306 253,093 799,964 771,654
Selling,
general
and
administrative 28,576 28,132 90,781 83,547
Taxes,
other
than
on
income 3,146 3,341 11,354 11,179
Depreciation
and
amortization 38,575 37,968 113,501 111,724
------ ------ ------- -------
336,603 322,534 1,015,600 978,104
------- ------- --------- -------
Operating
income $112,141 $113,647 $325,660 $300,463
======== ======== ======== ========
Operating
margins 25.0% 26.1% 24.3% 23.5%
==== ==== ==== ====
DIESEL ENGINE SERVICES STATEMENTS OF EARNINGS
---------------------------------------------
Third Quarter Nine Months
------------- -----------
2014 2013 2014 2013
---- ---- ---- ----
(unaudited, $ in thousands)
Diesel
engine
services
revenues $231,977 $114,924 $556,761 $395,231
-------- -------- -------- --------
Costs
and
expenses:
Costs
of
sales
and
operating
expenses 190,871 91,303 443,902 311,603
Selling,
general
and
administrative 17,680 11,470 55,724 35,904
Taxes,
other
than
income 543 352 1,515 1,361
Depreciation
and
amortization 2,856 2,722 8,484 8,332
----- ----- ----- -----
211,950 105,847 509,625 357,200
------- ------- ------- -------
Operating
income $20,027 $9,077 $47,136 $38,031
======= ====== ======= =======
Operating
margins 8.6% 7.9% 8.5% 9.6%
=== === === ===
OTHER COSTS AND EXPENSES
------------------------
Third Quarter Nine Months
------------- -----------
2014 2013 2014 2013
---- ---- ---- ----
(unaudited, $ in thousands)
General
corporate
expenses $4,089 $4,610 $11,416 $11,784
====== ====== ======= =======
Gain on
disposition
of assets $47 $223 $625 $728
=== ==== ==== ====
MARINE TRANSPORTATION PERFORMANCE MEASUREMENTS
----------------------------------------------
ThirdQuarter Nine Months
------------ -----------
2014 2013 2014 2013
---- ---- ---- ----
Inland Performance Measurements:
Ton Miles (in millions)(2) 3,414 2,904 9,762 8,885
Revenue/Ton Mile (cents/
tm)(3) 8.5 9.9 8.9 9.7
Towboats operated
(average)(4) 248 256 252 258
Delay Days(5) (5) 1,020 1,289 6,034 5,858
Average cost per gallon of
fuel consumed $3.10 $3.11 $3.14 $3.20
Barges (active):
Inland tank barges 870 855
Coastal tank barges 70 72
Offshore dry-cargo barges 7 8
Barrel capacities (in millions):
Inland tank barges 17.3 17.2
Coastal tank barges 6.0 6.0
(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 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.
(3) Inland marine transportation
revenues divided by ton miles.
Example: Third quarter 2014
inland marine transportation
revenues of $289,253,000 divided
by 3,414,000,000 inland marine
transportation ton miles = 8.5
cents.
(4) Towboats operated are the average
number of owned and chartered
towboats operated during the
period.
(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.
SOURCE Kirby Corporation
