HOUSTON, Nov. 1, 2017 /PRNewswire/ -- Kirby Corporation ("Kirby") (NYSE: KEX) today announced net earnings attributable to Kirby for the third quarter ended September 30, 2017 of $28.6 million, or $0.52 per share, compared with $32.0 million, or $0.59 per share, for the 2016 third quarter. Consolidated revenues for the 2017 third quarter were $541.3 million compared with $434.7 million reported for the 2016 third quarter.

David Grzebinski, Kirby's President and Chief Executive Officer, commented, "Our third quarter results were better than expected as the negative impact from hurricanes was more than offset by the combination of some cost recoveries from marine customers for delays, a rebound in volume demand after the hurricanes, and strength in our distribution and services segment, including Stewart & Stevenson LLC ("S&S"). Inland utilization increased following Hurricane Harvey as pent-up demand and a stronger pricing environment for our customers' products led to more liquid barge moves. Although this increase in utilization may be temporary, utilization has remained firm into the fourth quarter."

Mr. Grzebinski continued, "In our distribution and services segment, the legacy land-based business continued to operate in an oilfield services environment that incentivizes service sales. We saw this in the continued strong demand in the third quarter for the remanufacture of pressure pumping equipment and overhaul of transmissions. Fulfillment of new pressure pumping equipment orders remained steady compared to the second quarter of 2017, and were complemented by an uptick in demand for the sale of new transmissions and related parts. S&S saw healthy demand for the manufacturing of new pressure pumping equipment and the sale of new product and related parts. S&S's earnings in the quarter were also aided by hurricane-related activity, as demand for rental standby power generation surged and S&S temporarily added shifts to relieve pent-up demand for service work in the aftermath of the storms."

Segment Results - Marine Transportation
Marine transportation revenues for the 2017 third quarter were $318.8 million compared with $359.0 million for the 2016 third quarter. Operating income for the 2017 third quarter was $36.0 million compared with $55.5 million for the 2016 third quarter. The cost and delay impact of Hurricanes Harvey and Irma was approximately $0.07 per share. Approximately $0.04 per share was offset by some cost recoveries from customers for delays, and elevated utilization in the inland business for the remainder of the quarter due primarily to pent-up demand, increased need for logistical solutions, and a higher pricing environment for customers' products.

In the inland market, barge utilization was in the mid-80% to mid-90% range for the quarter. Operating conditions during the quarter were good prior to Hurricane Harvey's arrival on the U.S. Gulf Coast at the end of August. For the remainder of the quarter operating conditions were considerably challenged. Unrelated upriver infrastructure challenges in September also increased delay days. Demand for inland tank barge transportation of petrochemicals and black oil was higher compared to the 2016 third quarter, while demand for the transportation of refined petroleum products was slightly lower. Both term and spot contract pricing were at lower levels relative to the third quarter of 2016, and spot contract pricing was stable sequentially. The operating margin for the inland business was in the mid-to-high teens.

In the coastal market, utilization was in the low 60% to mid-60% range as the market weakened further in the third quarter and barges continued to move from term contracts into the spot market. Revenues from the transportation of refined petroleum products, black oil, and crude oil were lower than the 2016 third quarter, while revenues from the transportation of petrochemicals were stable. The operating margin for the coastal business was in the negative mid-single digits.

The marine transportation segment's 2017 third quarter operating margin was 11.3% compared with 15.4% for the third quarter of 2016 as a result of weaker pricing in both marine markets and increased idle time in the coastal market as more barges operated in the spot market.

Segment Results - Distribution and Services
Distribution and services revenues for the 2017 third quarter were $222.5 million with operating income of $22.0 million, compared with 2016 third quarter revenues of $75.7 million and an operating profit of $4.6 million.

The legacy land-based distribution and services business continued to see strong demand for remanufactured pressure pumping units and transmission overhauls. Revenues were higher and operating margins slightly lower sequentially as a result of an uptick in demand for the sale of new transmissions and increased sales of lower margin parts in the remanufacturing process.

S&S contributed $0.03 per share to 2017 third quarter earnings primarily due to elevated demand for rental equipment and increased service sales as a result of pent-up demand following hurricanes Harvey, Irma, and Maria. S&S also realized sales of new product and related parts in the quarter while experiencing healthy demand for the sale of new pressure pumping equipment.

In the marine distribution and services business, revenues declined compared to the 2016 third quarter due to customer deferrals of major overhauls. Gulf Coast oilfield services activity remained slow. Demand in the power generation market was slightly lower in the quarter, both sequentially and compared to the 2016 third quarter, primarily due to the timing of major projects.

The distribution and services operating margin was 9.9% for the 2017 third quarter compared with 6.1% for the 2016 third quarter primarily as a result of increased activity in the land-based distribution and services business.

Cash Generation
EBITDA of $293.3 million for the 2017 first nine months compares with EBITDA of $336.1 million for the first nine months of 2016. Cash flow was used to fund capital expenditures of $133.4 million, including $8.5 million for new inland tank barge and towboat construction, $41.2 million for progress payments on the construction of one new coastal articulated tank barge and tugboat unit ("ATB"), two 4900 horsepower coastal tugboats and six 5000 horsepower coastal ATB tugboats, and $83.7 million primarily for upgrades to the existing inland and coastal fleets. In addition, cash used in acquisitions was $451.2 million, including $377.9 million for the acquisition of S&S; $68.0 million for the purchase of nine pressure tank barges, four inland tank barges and three inland towboats from a competitor; $1.4 million for the purchase of four inland tank barges; and $3.9 million for the purchase of a barge fleeting and marine fueling business in Freeport, Texas. Total debt as of September 30, 2017 was $1.03 billion and Kirby's debt-to-capitalization ratio was 26.4%.

Outlook
Commenting on the 2017 fourth quarter and full year market outlook and guidance, Mr. Grzebinski said, "Our earnings guidance for the 2017 fourth quarter is $0.40 to $0.55 per share compared with $0.60 per share for the 2016 fourth quarter, and considers the full effect of the shares issued as part of the S&S acquisition. Our full year earnings guidance is updated to $1.90 to $2.05 per share, compared to prior guidance of $1.80 to $2.10 per share. Fourth quarter and full year guidance contemplates inland marine transportation utilization in the mid-80% range at the low end and mid-90% range at the high end. In our coastal market, we expect utilization in the low 60% to mid-60% range for the fourth quarter. In the coastal market we remain focused on managing costs and optimizing the equipment available for commercial use."

Mr. Grzebinski continued, "In our distribution and services segment, we expect demand for pressure pumping remanufacturing to maintain at third quarter levels for the remainder of the year. We anticipate demand for transmission overhauls will dip slightly in the fourth quarter, and demand for new transmissions will remain steady. We also expect to deliver a new pressure pumping fleet in the fourth quarter. For S&S, we are guiding to $0.03 to $0.05 per share, increased from prior guidance of $0.02 to $0.04 per share. This includes the impact of higher average shares outstanding due to the shares issued for the acquisition. We anticipate demand for rental equipment will return to normal levels. In our marine and power generation distribution and services business we expect seasonally lower business levels sequentially."

Kirby expects 2017 capital spending to be in the $175 to $185 million range, updated from previous guidance of $165 to $185 million. Capital spending guidance includes approximately $50 million in progress payments on new coastal equipment, including a 155,000 barrel ATB, two 4900 horsepower and six 5000 horsepower coastal tugboats. The balance of $125 to $135 million is primarily for five new inland tank barges and capital upgrades and improvements to existing inland and coastal marine equipment and facilities, as well as distribution and services facilities.

Conference Call
A conference call is scheduled for 7:30 a.m. central time tomorrow, Thursday, November 2, 2017, to discuss the 2017 third quarter performance as well as the outlook for the 2017 fourth quarter and year. The conference call number is 888-317-6003 for domestic callers and 412-317-6061 for international callers. The confirmation number is 5381009. An audio playback will be available at 1:00 p.m. central time on Thursday, November 2, 2017, through 5:00 p.m. central time on Thursday, November 9, 2017, by dialing 877-344-7529 for domestic callers and 412-317-0088 for international callers. The replay access code is 10113108. 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 2016 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, 2016 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, on 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. Kirby also operates offshore dry-bulk barge and tugboat units engaged in the offshore transportation of dry-bulk cargoes in the United States coastal trade. Through the distribution and services segment, Kirby provides after-market service and parts for engines, transmissions, reduction gears, and related equipment used in oilfield services, marine, power generation, on-highway, and other industrial applications. Kirby also rents equipment including generators, fork lifts, pumps, and compressors for use in a variety of industrial markets, and manufactures and remanufactures oilfield service equipment, including pressure pumping units, for land-based oilfield service customers.



                                                                      CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
                                                                      ---------------------------------------------


                                                                                                                                    Third Quarter                      Nine Months
                                                                                                                                  -------------                     -----------

                                                                                                                        2017        2016         2017          2016
                                                                                                                        ----        ----         ----          ----

                                                                                                                    (unaudited, $ in thousands except per share amounts)

    Revenues:

         Marine transportation                                                                                      $318,810    $359,031     $993,727    $1,115,677

         Distribution and services                                                                                   222,464      75,677      512,580       219,346
                                                                                                                     -------      ------      -------       -------

                                                                                                                     541,274     434,708    1,506,307     1,335,023
                                                                                                                     -------     -------    ---------     ---------

    Costs and expenses:

         Costs of sales and operating expenses                                                                       378,340     282,168    1,048,176       847,975

         Selling, general and administrative                                                                          51,689      40,645      144,338       133,948

         Taxes, other than on income                                                                                   6,518       5,445       19,511        16,317

         Depreciation and amortization                                                                                51,206      50,142      147,669       148,427

         Loss (gain) on disposition of assets                                                                            159         122          199          (39)
                                                                                                                         ---         ---          ---           ---

                                                                                                                     487,912     378,522    1,359,893     1,146,628
                                                                                                                     -------     -------    ---------     ---------

         Operating income                                                                                             53,362      56,186      146,414       188,395

    Other income (expense)                                                                                             (113)      (120)       (230)          194

    Interest expense                                                                                                 (5,388)    (4,507)    (14,310)     (13,213)
                                                                                                                      ------      ------      -------       -------

         Earnings before taxes on income                                                                              47,861      51,559      131,874       175,376

    Provision for taxes on income                                                                                   (19,072)    (19,206)     (49,468)     (65,430)
                                                                                                                     -------     -------      -------       -------

         Net earnings                                                                                                 28,789      32,353       82,406       109,946

    Less: Net earnings attributable to
     noncontrolling interests                                                                                          (182)      (343)       (538)        (895)
                                                                                                                        ----        ----         ----          ----


         Net earnings attributable to Kirby                                                                          $28,607     $32,010      $81,868      $109,051
                                                                                                                     =======     =======      =======      ========


    Net earnings per share attributable to Kirby common stockholders:

         Basic                                                                                                         $0.52       $0.59        $1.51         $2.03

         Diluted                                                                                                       $0.52       $0.59        $1.50         $2.02

    Common stock outstanding (in thousands):

         Basic                                                                                                        54,765      53,455       53,966        53,449

         Diluted                                                                                                      54,803      53,501       54,021        53,503


                                                                       CONDENSED CONSOLIDATED FINANCIAL INFORMATION
                                                                       --------------------------------------------


                                                                                                                                    Third Quarter                       NineMonths
                                                                                                                                  -------------                     ----------

                                                                                                                        2017        2016         2017          2016
                                                                                                                        ----        ----         ----          ----

                                                                                                                           (unaudited, $ in thousands)

    EBITDA: (1)

         Net earnings attributable to Kirby                                                                          $28,607     $32,010      $81,868      $109,051

         Interest expense                                                                                              5,388       4,507       14,310        13,213

         Provision for taxes on income                                                                                19,072      19,206       49,468        65,430

         Depreciation and amortization                                                                                51,206      50,142      147,669       148,427
                                                                                                                      ------      ------      -------       -------

                                                                                                                    $104,273    $105,865     $293,315      $336,121
                                                                                                                    ========    ========     ========      ========


    Capital expenditures                                                                                             $40,928     $58,257     $133,437      $169,305

    Acquisitions of businesses and marine
     equipment                                                                                                      $451,219      $4,641     $451,219      $125,632


                                                                                                                                                                      September 30,
                                                                                                                                                                   -------------

                                                                                                                                   2017         2016
                                                                                                                                   ----         ----

                                                                                                                           (unaudited, $ in thousands)

    Long-term debt, including current portion                                                                                                        $1,033,428                $726,004

    Total equity                                                                                                                                     $2,876,128              $2,386,749

    Debt to capitalization ratio                                                                                                                           26.4%                  23.3%



                                MARINE TRANSPORTATION STATEMENTS OF EARNINGS


                                                    ---

                                                                 Third Quarter                    Nine Months
                                                           -------------                     -----------

                                                           2017             2016              2017             2016
                                                           ----             ----              ----             ----

                                                                 (unaudited, $ in thousands)


    Marine transportation revenues                     $318,810         $359,031          $993,727       $1,115,677
                                                       --------         --------          --------       ----------


    Costs and expenses:

         Costs of sales and operating expenses          204,711          226,543           652,402          681,887

         Selling, general and administrative             26,825           26,089            82,289           85,386

         Taxes, other than on income                      5,651            4,880            17,598           14,671

         Depreciation and amortization                   45,581           46,059           134,376          135,752
                                                         ------           ------           -------          -------

                                                        282,768          303,571           886,665          917,696
                                                        -------          -------           -------          -------


             Operating income                           $36,042          $55,460          $107,062         $197,981
                                                        =======          =======          ========         ========


             Operating margins                            11.3%           15.4%            10.8%           17.7%
                                                           ====             ====              ====             ====



                              DISTRIBUTION AND SERVICES STATEMENTS OF EARNINGS
                              ------------------------------------------------


                                                                      Third Quarter               Nine Months
                                                         -------------                  -----------

                                                           2017             2016              2017             2016
                                                           ----             ----              ----             ----

                                                                 (unaudited, $ in thousands)


    Distribution and services revenues                 $222,464          $75,677          $512,580         $219,346
                                                       --------          -------          --------         --------


    Costs and expenses:

         Costs of sales and operating expenses          173,629           55,625           395,774          166,088

         Selling, general and administrative             21,232           11,709            52,307           40,018

         Taxes, other than income                           856              554             1,879            1,607

         Depreciation and amortization                    4,773            3,155            10,557            9,773
                                                          -----            -----            ------            -----

                                                        200,490           71,043           460,517          217,486
                                                        -------           ------           -------          -------


             Operating income                           $21,974           $4,634           $52,063           $1,860
                                                        =======           ======           =======           ======


             Operating margins                             9.9%            6.1%            10.2%            0.8%
                                                            ===              ===              ====              ===





                                          OTHER COSTS AND EXPENSES
                                          ------------------------


                                                                   Third Quarter              Nine Months
                                                         -------------                  -----------

                                                           2017             2016              2017             2016
                                                           ----             ----              ----             ----

                                                  (unaudited, $ in thousands)


    General corporate expenses                           $4,495           $3,786           $12,512          $11,485
                                                         ======           ======           =======          =======


    Loss (gain) on disposition of assets                   $159             $122              $199            $(39)
                                                           ====             ====              ====             ====

                      MARINE TRANSPORTATION PERFORMANCE MEASUREMENTS
                      ----------------------------------------------


                                                         ThirdQuarter        Nine Months
                                                       ------------        -----------

                                                       2017           2016   2017       2016
                                                       ----           ----   ----       ----



    Inland Performance Measurements:

           Ton Miles (in
            millions) (2)                             2,753          2,648  8,548      8,188

           Revenue/Ton
            Mile (cents/
            tm) (3)                                     8.0            8.6    8.0        8.8

           Towboats
            operated
            (average) (4)                               215            227    224        236

           Delay Days (5)
             (5)                                     1,965            929  5,599      5,200

           Average cost
            per gallon of
            fuel consumed                             $1.61          $1.59  $1.71      $1.40




    Barges (active):

          Inland tank barges                            848            881

          Coastal tank barges                            67             68

          Offshore dry-cargo barges                       5              6

    Barrel capacities (in millions):

          Inland tank barges                           17.4           17.9

          Coastal tank barges                           6.2            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 2017
                      inland marine transportation
                      revenues of $219,305,000 divided
                      by 2,753,000,000 inland marine
                      transportation ton miles = 8.0
                      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.

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SOURCE Kirby Corporation