KIRBY CORPORATION 
By HOUSTON, Oct. 28, 2013 /PRNewswire/ -- Kirby Corporation ("Kirby") (NYSE:KEX) today announced record net earnings attributable to Kirby for the third quarter ended September 30, 2013 of $69.1 million, or $1.21 per share, compared with $53.1 million, or $.95 per share, for the 2012 third quarter. Consolidated revenues for the 2013 third quarter were $551.1 million compared with $521.3 million reported for the 2012 third quarter.
Kirby's 2013 third quarter results included a $7.9 million before taxes, or $.08 per share, credit reducing the fair value of the contingent earnout liability, thereby eliminating the remaining liability associated with the acquisition of United Holdings LLC in April 2011.
Joe Pyne, Kirby's Chairman and Chief Executive Officer, commented, "For both our inland and coastal marine transportation markets, strong demand, high tank barge utilization levels and favorable pricing trends continued during the third quarter. However, our land-based diesel engine services business continues to be very challenging. The significant increase in pressure pumping horsepower during 2010, 2011 and early 2012, along with current low natural gas prices, resulted in a very weak market for our land-based diesel engine services sector. However, there are signs that this cycle has bottomed and we anticipate an improved market sometime in 2014."
Kirby reported net earnings attributable to Kirby for the 2013 first nine months of $188.8 million, or $3.32 per share, compared with $151.6 million, or $2.70 per share, for the first nine months of 2012. Consolidated revenues for the 2013 first nine months were $1.67 billion compared with $1.60 billion for the first nine months of 2012.
Segment Results - Marine Transportation
Marine transportation revenues for the 2013 third quarter were $436.2 million compared with $349.8 million for the 2012 third quarter. Operating income for the 2013 third quarter was $113.6 million compared with $81.7 million for the 2012 third quarter.
The inland marine transportation markets continued their strong performance with the petrochemical, black oil and refined products fleets consistently in the 90% to 95% utilization range, with favorable pricing trends. During July, adverse operating conditions continued due to the Algiers Lock closure from structural damage that created heavy congestion and delays in the New Orleans area, and resulting congestion and delays at the Bayou Sorrels and Port Allen Locks. With the reopening of the Algiers Lock in mid-July, traffic delays returned to normal levels by the end of the month. During September, low water levels on the upper Mississippi River System lead to the light loading of tank barges destined for that area.
The coastal marine transportation markets also continued their strong performance with fleet utilization in the 90% range compared with the 75% to 80% range for the 2012 third quarter, leading to favorable short-term and long-term contract renewals and higher spot contract pricing. The higher utilization resulted from increased demand for crude oil and gas condensate movements and continued success in expanding the coastal customer base to include inland's major customers with coastal requirements. The third quarter also benefited from fewer shipyard days compared with previous quarters, as well as cost reductions from the sale in early August 2013 of the New York Harbor bunkering fleet that operated at a loss.
The marine transportation operating margin for the 2013 third quarter was 26.1% compared with 23.4% for the third quarter of 2012.
Segment Results - Diesel Engine Services
Diesel engine services revenues for the 2013 third quarter were $114.9 million compared with $171.6 million for the 2012 third quarter. Operating income for the 2013 third quarter was $9.1 million, including a $7.9 million credit to the contingent earnout liability, compared with operating income of $14.6 million for the 2012 third quarter.
The lower revenue and operating income primarily reflected a continuation of a weak land-based environment for the manufacturing of oil service equipment, including 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 relatively stable. The marine diesel engine services market benefited from major service projects for inland and coastal customers. The power generation market benefited from generator set upgrades and parts sales for both domestic and international customers.
The diesel engine services operating margin was 7.9% for the 2013 third quarter, including the positive impact of the $7.9 million credit to the contingent earnout liability, compared with 8.5% for the 2012 third quarter.
Cash Generation
Cash flow remained strong during the 2013 first nine months, with EBITDA of $448.3 million compared with $370.4 million for the 2012 first nine months. The cash flow was used in part to fund capital expenditures of $207.0 million, including $127.0 million for new inland tank barge and towboat construction and progress payments on the construction of two offshore dry-bulk barge and tug units completed during the 2013 second quarter, and $80.0 million primarily for upgrades to the existing inland and coastal fleets. Total debt as of September 30, 2013 was $860.9 million and the debt-to-capitalization ratio was 31.0%, a significant decrease from total debt as of December 31, 2012 of $1.14 billion and debt-to-capitalization ratio of 39.9%.
Outlook
Commenting on the 2013 fourth quarter and full year market outlook and guidance, Mr. Pyne said, "Our earnings guidance for the 2013 fourth quarter is $1.05 to $1.15 per share compared 2012 fourth quarter earnings of $1.03 per share that included a $.09 per share credit to the United contingent earnout liability. For the 2013 year, we raised and narrowed our guidance range to $4.37 to $4.47 per share compared with $3.73 for 2012. This 2013 annual guidance range includes a cumulative $0.20 per share credit to the United contingent earnout liability. We anticipate continued strong demand across all inland marine transportation markets during the fourth quarter, utilization levels remaining in the 90% to 95% range and favorable pricing trends. For our coastal marine transportation markets, we anticipate continued strong demand, 90% utilization levels and improving pricing trends. Our fourth quarter guidance reflects the beginning of unfavorable winter weather conditions for both our inland and coastal transportation markets. 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 sometime in 2014. Our fourth quarter guidance assumes our diesel engine services marine and power generation markets will remain stable and our land-based market weak."
Mr. Pyne continued, "Our 2013 capital spending guidance is currently in the $240 to $250 million range, including approximately $143 million for the construction of 68 inland tank barges, three inland towboats, and 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 $97 to $107 million is primarily capital upgrades and improvements to existing inland and coastal marine equipment and facilities, and diesel engine services facilities."
Conference Call
A conference call is scheduled at 10:00 a.m. central time today, Monday, October 28, 2013, to discuss the 2013 third quarter performance as well as the outlook for the 2013 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 Steve Holcomb. The confirmation number is 35892904. An audio playback will be available at 1:00 p.m. central time on Monday, October 28, through 5:00 p.m. central time on Friday, November 29, 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
---------------------------------------------
Third Quarter Nine Months
------------- -----------
2013 2012 2013 2012
---- ---- ---- ----
(unaudited, $ in thousands except per share
amounts)
Revenues:
Marine
transportation $436,181 $349,771 $1,278,567 $1,027,923
Diesel engine
services 114,924 171,553 395,231 572,184
------- ------- ------- -------
551,105 521,324 1,673,798 1,600,107
------- ------- --------- ---------
Costs and expenses:
Costs of sales
and operating
expenses 344,396 344,990 1,083,257 1,075,265
Selling,
general and
administrative 43,241 44,473 128,335 140,772
Taxes, other
than on
income 3,714 3,455 12,589 11,276
Depreciation
and
amortization 41,640 35,729 122,907 107,400
Loss (gain) on
disposition
of assets (223) 40 (728) (1)
---- --- ---- ---
432,768 428,687 1,346,360 1,334,712
------- ------- --------- ---------
Operating
income 118,337 92,637 327,438 265,395
Other income
(expense) 60 (56) 236 123
Interest
expense (6,694) (6,056) (21,901) (17,797)
------ ------ ------- -------
Earnings
before taxes
on income 111,703 86,525 305,773 247,721
Provision for
taxes on
income (42,007) (32,794) (114,733) (93,676)
------- ------- -------- -------
Net earnings 69,696 53,731 191,040 154,045
Less: Net
earnings
attributable
to
noncontrolling
interests (573) (676) (2,246) (2,495)
---- ---- ------ ------
Net earnings
attributable
to Kirby $69,123 $53,055 $188,794 $151,550
======= ======= ======== ========
Net earnings per share attributable to
Kirby common stockholders:
Basic $1.22 $.95 $3.33 $2.71
Diluted $1.21 $.95 $3.32 $2.70
Common stock outstanding (in thousands):
Basic 56,375 55,445 56,329 55,416
Diluted 56,572 55,627 56,520 55,634
CONDENSED CONSOLIDATED FINANCIAL INFORMATION
--------------------------------------------
Third Quarter Nine Months
------------- -----------
2013 2012 2013 2012
---- ---- ---- ----
(unaudited, $ in thousands)
EBITDA: (1)
Net earnings
attributable
to Kirby $69,123 $53,055 $188,794 $151,550
Interest
expense 6,694 6,056 21,901 17,797
Provision for
taxes on
income 42,007 32,794 114,733 93,676
Depreciation
and
amortization 41,640 35,729 122,907 107,400
------ ------ ------- -------
$159,464 $127,634 $448,335 $370,423
======== ======== ======== ========
Capital
expenditures $38,872 $102,041 $207,047 $255,887
September 30,
-------------
2013 2012
---- ----
(unaudited, $ in
thousands)
$781,970
Long-term debt, including current
portion $860,930
$1,620,711
Total equity $1,912,255
Debt to capitalization ratio 31.0% 32.5%
MARINE TRANSPORTATION STATEMENTS OF EARNINGS
--------------------------------------------
Third Quarter Nine Months
------------- -----------
2013 2012 2013 2012
---- ---- ---- ----
(unaudited, $ in thousands)
Marine
transportation
revenues $436,181 $349,771 $1,278,567 $1,027,923
-------- -------- ---------- ----------
Costs and expenses:
Costs of
sales
and
operating
expenses 253,093 208,165 771,654 622,038
Selling,
general
and
administrative 28,132 24,759 83,547 78,164
Taxes,
other
than on
income 3,341 2,992 11,179 9,877
Depreciation
and
amortization 37,968 32,160 111,724 95,929
------ ------ ------- ------
322,534 268,076 978,104 806,008
------- ------- ------- -------
Operating
income $113,647 $81,695 $300,463 $221,915
======== ======= ======== ========
Operating
margins 26.1% 23.4% 23.5% 21.6%
==== ==== ==== ====
DIESEL ENGINE SERVICES STATEMENTS OF EARNINGS
---------------------------------------------
Third Quarter Nine Months
------------- -----------
2013 2012 2013 2012
---- ---- ---- ----
(unaudited, $ in thousands)
Diesel
engine
services
revenues $114,924 $171,553 $395,231 $572,184
-------- -------- -------- --------
Costs and expenses:
Costs of
sales
and
operating
expenses 91,303 136,825 311,603 453,227
Selling,
general
and
administrative 11,470 16,880 35,904 55,134
Taxes,
other
than
income 352 453 1,361 1,365
Depreciation
and
amortization 2,722 2,792 8,332 9,183
----- ----- ----- -----
105,847 156,950 357,200 518,909
------- ------- ------- -------
Operating
income $9,077 $14,603 $38,031 $53,275
====== ======= ======= =======
Operating
margins 7.9% 8.5% 9.6% 9.3%
=== === === ===
OTHER COSTS AND EXPENSES
------------------------
Third Quarter Nine Months
------------- -----------
2013 2012 2013 2012
---- ---- ---- ----
(unaudited, $ in thousands)
General
corporate
expenses $4,610 $3,621 $11,784 $9,796
====== ====== ======= ======
Loss
(gain)
on
disposition
of
assets $(223) $40 $(728) $(1)
===== === ===== ===
MARINE TRANSPORTATION PERFORMANCE MEASUREMENTS
----------------------------------------------
Third Quarter Nine Months
------------- -----------
2013 2012 2013 2012
---- ---- ---- ----
Inland Performance Measurements:
Ton
Miles
(in
millions)
(2) 2,904 2,791 8,885 9,267
Revenue/
Ton Mile
(cents/
tm) (3) 9.9 9.8 9.7 8.7
Towboats
operated
(average)
(4) 256 246 258 242
Delay
Days
(5) 1,289 1,244 5,858 4,879
Average
cost
per
gallon
of fuel
consumed $3.11 $3.10 $3.20 $3.20
Barges (active):
Inland tank barges 855 853
Coastal tank barges 72 53
Offshore dry-cargo barges 8 4
Barrel capacities (in millions):
Inland tank barges 17.2 16.9
Coastal tank barges 6.0 3.7
(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 2013
inland marine transportation
revenues of $288,661,000
divided by 2,904,000,000 inland
marine transportation ton miles
= 9.9 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
