KIRBY CORPORATION 
By HOUSTON, July 24, 2013 /PRNewswire/ -- Kirby Corporation ("Kirby") (NYSE: KEX) today announced net earnings attributable to Kirby for the second quarter ended June 30, 2013 of $63.1 million, or $1.11 per share, compared with $47.6 million, or $.85 per share, for the 2012 second quarter. Consolidated revenues for the 2013 second quarter were $563.9 million compared with $511.8 million reported for the 2012 second quarter.
Kirby's 2013 second quarter results included a $6.1 million before taxes, or $.07 per share, credit reducing the fair value of the contingent earnout liability associated with the acquisition of United Holdings LLC ("United") in April 2011. In addition, the 2013 second quarter included an estimated $.03 per share negative impact from high water on the Mississippi and Illinois Rivers throughout the quarter, and the closure of the Algiers Lock, a major lock on the Gulf Intracoastal Waterway near New Orleans.
Joe Pyne, Kirby's Chairman and Chief Executive Officer, commented, "Our second quarter results benefited from continued strong demand and favorable pricing in our inland and coastal marine transportation markets. We were also able to manage through the high water and lock closure issues with only an estimated $.03 per share negative impact. Our land-based diesel engine services market remained weak. However, there are signs the cycle has bottomed."
Kirby reported net earnings attributable to Kirby for the 2013 first six months of $119.7 million, or $2.10 per share, compared with $98.5 million, or $1.76 per share, for the first six months of 2012. Consolidated revenues for the 2013 first six months were $1.12 billion compared with $1.08 billion for the first six months of 2012.
Segment Results - Marine Transportation
Marine transportation revenues for the 2013 second quarter were $423.9 million compared with $342.2 million for the 2012 second quarter. Operating income for the 2013 second quarter was $97.6 million compared with $71.7 million for the 2012 second quarter.
The inland marine transportation markets remained strong with fleet utilization in the 90% to 95% range and continued favorable pricing trends. High water on the Mississippi and Illinois Rivers throughout the quarter resulted in increased transit times and additional horsepower requirements. In addition, the closure of the Algiers Lock due to structural damage during the entire second quarter created heavy congestion and multi-day delays in the New Orleans area, and also resulted in delays at the Bayou Sorrels and Port Allen Locks.
The coastal marine transportation markets also remained strong with fleet utilization in the 90% range compared with 75% for the second quarter of 2012, leading to higher term and spot contract pricing. The higher utilization resulted from increased demand for crude oil and gas condensate movements and expansion of the coastal customer base to include inland's major customers with coastal requirements. As anticipated, the second quarter was negatively impacted by a heavy fleet maintenance schedule, and resulting lost revenue days and higher expenditures.
The marine transportation operating margin for the 2013 second quarter was 23.0% compared with 21.0% for the second quarter of 2012. The 2013 second quarter margin reflected the overall strong inland and coastal demand and equipment utilization, and higher term and spot contract pricing, partially offset by the negative impact of the high water and lock issues and higher maintenance impact of the coastal fleet.
Segment Results - Diesel Engine Services
Diesel engine services revenues for the 2013 second quarter were $140.0 million compared with $169.7 million for the 2012 second quarter. Operating income for the 2013 second quarter was $14.9 million, including a $6.1 million credit to the United contingent earnout liability, compared with operating income of $15.1 million for the 2012 second quarter.
The decline in revenue primarily reflected a continued weakness in demand for the manufacture of pressure pumping units, and lower sales and service of land-based engines, transmissions and parts. The market for the remanufacturing of older pressure pumping units remained steady. The marine diesel engine services market benefited from large service projects for inland and coastal customers, as well as service work for international drilling rigs.
The diesel engine services operating margin was 10.7% for the 2013 second quarter, including the positive impact of the $6.1 million credit to the contingent earnout liability, compared with 8.9% for the 2012 second quarter.
Cash Generation
Cash flow remained strong during the 2013 first six months, with EBITDA of $288.9 million compared with $242.8 million for the 2012 first six months. The cash flow was used in part to fund capital expenditures of $168.2 million, including $106.3 million for new inland tank barge and towboat construction, $12.3 million for progress payments on the construction of two offshore dry-bulk barge and tug units completed during the 2013 second quarter, and $49.6 million primarily for upgrades to the existing inland and coastal fleets. Total debt as of June 30, 2013 was $1.02 billion and Kirby's debt-to-capitalization ratio was 35.7%.
Outlook
Commenting on the 2013 third quarter and full year market outlook and guidance, Mr. Pyne said, "Our earnings guidance for the 2013 third quarter is $1.05 to $1.15 per share compared with $.95 per share reported for the 2012 third quarter. For the 2013 year, we are raising our guidance to $4.15 to $4.35 to reflect the net effect of the earnout credit and the impact of the high water and lock issues. This compares with $3.73 per share for the 2012 year. Our third quarter guidance range reflects continued strong demand across all inland marine transportation markets, 90% to 95% utilization levels, and favorable pricing trends. We anticipate continued improvement in our coastal marine transportation markets, 90% utilization levels, and improving pricing trends. For our diesel engine services segment, we continue to believe we are at the bottom of the cycle in our land-based market and should begin to see some improvement later this year or early 2014. Our guidance assumes our marine diesel and power generation sectors will remain consistent with the 2013 first half."
Mr. Pyne continued, "Our 2013 capital spending guidance range is currently $230 to $240 million, including approximately $135 million for the construction of 68 inland tank barges and three inland towboats, and approximately $12 million in progress payments on the construction of two offshore articulated dry-bulk barge and tugboat units placed in service in the 2013 second quarter. The balance of $83 to $93 million is primarily capital upgrades and improvements to existing inland and coastal marine equipment. The increase from the previous capital spending guidance range of $190 to $200 million is primarily related to new construction contracts signed in the 2013 second quarter for 52 inland tank barges to be delivered beginning in the 2013 fourth quarter and into the 2014 first half, plus additional capital upgrades to our existing marine transportation fleet, principally the coastal fleet."
Conference Call
A conference call is scheduled at 10:00 a.m. central time tomorrow, Thursday, July 25, 2013, to discuss the 2013 second quarter performance as well as the outlook for the 2013 third 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 35242862. An audio playback will be available at 1:00 p.m. central time on Thursday, July 25, through 5:00 p.m. central time on Friday, August 23, 2013 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 2012 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, 2012 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, refined petroleum products, black oil 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
---------------------------------------------
Second Quarter Six Months
-------------- ----------
2013 2012 2013 2012
---- ---- ---- ----
(unaudited, $ in thousands except per
share amounts)
Revenues:
Marine transportation $423,868 $342,195 $842,386 $678,152
Diesel engine services 140,040 169,653 280,307 400,631
------- ------- ------- -------
563,908 511,848 1,122,693 1,078,783
------- ------- --------- ---------
Costs and expenses:
Costs of sales and operating
expenses 369,587 345,916 738,861 730,275
Selling, general and
administrative 40,938 43,199 85,094 96,299
Taxes, other than on income 4,397 3,907 8,875 7,821
Depreciation and
amortization 40,271 35,197 81,267 71,671
Gain on disposition of
assets (537) (69) (505) (41)
---- --- ---- ---
454,656 428,150 913,592 906,025
------- ------- ------- -------
Operating income 109,252 83,698 209,101 172,758
Other income 101 30 176 179
Interest expense (7,219) (5,901) (15,207) (11,741)
------ ------ ------- -------
Earnings before taxes on
income 102,134 77,827 194,070 161,196
Provision for taxes on
income (38,342) (29,392) (72,726) (60,882)
------- ------- ------- -------
Net earnings 63,792 48,435 121,344 100,314
Less: Net earnings
attributable to
noncontrolling interests (699) (884) (1,673) (1,819)
---- ---- ------ ------
Net earnings attributable to
Kirby $63,093 $47,551 $119,671 $98,495
======= ======= ======== =======
Net earnings per share attributable to Kirby common
stockholders:
Basic $1.11 $.85 $2.11 $1.76
Diluted $1.11 $.85 $2.10 $1.76
Common stock outstanding (in thousands):
Basic 56,339 55,428 56,305 55,403
Diluted 56,529 55,640 56,493 55,638
CONDENSED CONSOLIDATED FINANCIAL INFORMATION
--------------------------------------------
Second Quarter Six Months
-------------- ----------
2013 2012 2013 2012
---- ---- ---- ----
(unaudited, $ in thousands)
EBITDA: (1)
Net earnings attributable to
Kirby $63,093 $47,551 $119,671 $98,495
Interest expense 7,219 5,901 15,207 11,741
Provision for taxes on
income 38,342 29,392 72,726 60,882
Depreciation and
amortization 40,271 35,197 81,267 71,671
------ ------ ------ ------
$148,925 $118,041 $288,871 $242,789
======== ======== ======== ========
Capital expenditures $97,018 $91,979 $168,175 $153,846
June 30,
--------
2013 2012
---- ----
(unaudited, $ in
thousands)
Long-term debt, including current portion $1,021,240 $799,532
Total equity $1,836,160 $1,561,230
Debt to capitalization ratio 35.7% 33.9%
MARINE TRANSPORTATION STATEMENTS OF EARNINGS
--------------------------------------------
Second Quarter Six Months
-------------- ----------
2013 2012 2013 2012
---- ---- ---- ----
(unaudited, $ in thousands)
Marine
transportation
revenues $423,868 $342,195 $842,386 $678,152
-------- -------- -------- --------
Costs and expenses:
Costs of sales and
operating expenses 259,332 210,466 518,561 413,873
Selling, general
and administrative 26,439 24,886 55,415 53,405
Taxes, other than
on income 3,928 3,433 7,838 6,885
Depreciation and
amortization 36,606 31,680 73,756 63,769
------ ------ ------ ------
326,305 270,465 655,570 537,932
------- ------- ------- -------
Operating income $97,563 $71,730 $186,816 $140,220
======= ======= ======== ========
Operating margins 23.0% 21.0% 22.2% 20.7%
==== ==== ==== ====
DIESEL ENGINE SERVICES STATEMENTS OF EARNINGS
---------------------------------------------
Second Quarter Six Months
-------------- ----------
2013 2012 2013 2012
---- ---- ---- ----
(unaudited, $ in thousands)
Diesel engine
services revenues $140,040 $169,653 $280,307 $400,631
-------- -------- -------- --------
Costs and expenses:
Costs of sales and
operating expenses 110,255 135,450 220,300 316,402
Selling, general
and administrative 11,669 15,860 24,434 38,254
Taxes, other than
income 457 462 1,009 912
Depreciation and
amortization 2,727 2,763 5,610 6,391
----- ----- ----- -----
125,108 154,535 251,353 361,959
------- ------- ------- -------
Operating income $14,932 $15,118 $28,954 $38,672
======= ======= ======= =======
Operating margins 10.7% 8.9% 10.3% 9.7%
==== === ==== ===
OTHER COSTS AND EXPENSES
------------------------
Second Quarter Six Months
-------------- ----------
2013 2012 2013 2012
---- ---- ---- ----
(unaudited, $ in thousands)
General corporate
expenses $3,780 $3,219 $7,174 $6,175
====== ====== ====== ======
Gain on disposition
of assets $537 $69 $505 $41
==== === ==== ===
MARINE TRANSPORTATION PERFORMANCE MEASUREMENTS
----------------------------------------------
Second
Quarter Six Months
------- ----------
2013 2012 2013 2012
---- ---- ---- ----
Inland Performance Measurements:
Ton Miles (in millions)(2) 2,969 3,194 5,981 6,476
Revenue/Ton Mile (cents/tm)(3) 9.7 8.3 9.5 8.2
Towboats operated (average)(4) 262 239 259 240
Delay Days(5) 2,520 1,164 4,569 3,635
Average cost per gallon of
fuel consumed $3.22 $3.35 $3.24 $3.26
Barges (active):
Inland tank barges 863 818
Coastal tank barges 79 57
Offshore dry-cargo barges 8 4
Barrel capacities (in millions):
Inland tank barges 17.3 16.4
Coastal tank barges 6.2 3.9
(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: Second
quarter 2013 inland marine
transportation revenues of
$288,749,000 divided by
2,969,000,000 inland marine
transportation ton miles =
9.7 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
