Kirby Corporation Announces 2020 Third Quarter Results
Kirby Corporation (KEX) reported Q3 2020 earnings of $0.46 per share, down from $0.80 in Q3 2019. Total revenues fell to $496.6 million, compared to $666.8 million last year. Strong cash flow from operations was evident with $118 million generated, alongside an expected FY2020 free cash flow of $300 to $350 million. The company's marine transportation segment faced challenges due to low demand and hurricanes, contributing to reduced barge utilization. Despite improving activity in distribution and services, overall revenues dropped significantly, and the outlook remains cautious amid ongoing economic uncertainty.
- Generated strong cash flow from operations of $118 million.
- Expected free cash flow for FY2020 between $300 million to $350 million.
- Sequential improvement in revenues and operating margins in distribution and services.
- Net earnings dropped significantly from $48 million in Q3 2019 to $27.5 million.
- Marine transportation revenues decreased to $320.6 million from $412.7 million year-on-year.
- Operating margin for marine transportation fell to 10.1% compared to 17.6% in Q3 2019.
- Barge utilization in the inland market dropped to low 70% compared to low 90% in 2019.
- Overall revenues decreased by 25% in the coastal market due to reduced demand.
- Third quarter 2020 earnings of
$0.46 per share - Distribution and services at breakeven as a result of significant cost reductions and improved activity
- Marine results impacted by reduced volumes and hurricanes
- Strong net cash flow provided by operating activities of
$118 million and free cash flow of$81 million in the third quarter - Expect FY2020 free cash flow of
$300 t o$350 million
HOUSTON, Oct. 29, 2020 (GLOBE NEWSWIRE) -- Kirby Corporation (“Kirby” or the “Company”) (NYSE: KEX) today announced net earnings attributable to Kirby for the third quarter ended September 30, 2020 of
David Grzebinski, Kirby’s President and Chief Executive Officer, commented, “The COVID-19 pandemic and the associated economic slowdown adversely impacted Kirby’s businesses during the third quarter. Although general economic activity was slightly improved and increased profitability was realized in the distribution and services segment, the marine transportation businesses experienced lower volumes and barge utilization.
“In marine transportation, our inland and coastal businesses were heavily affected by weak demand for liquid products including refined products, crude, and black oil. Throughout the third quarter, refinery utilization was well below historical norms as many of our customers experienced low consumer demand, high product inventories, and unfavorable economics. Additionally, a very active hurricane season resulted in further reductions in volumes and widespread disruptions including prolonged closures of some refineries, chemical plants, waterways, and major ports. These challenging market conditions during the quarter contributed to low barge utilization and limited spot market activity.
“In distribution and services, financial results sequentially improved during the third quarter as activity levels began to recover, and we realized the benefit of cost reductions. In commercial and industrial, activity levels in on-highway and power generation increased as lockdowns eased and economic activity rebounded. Additionally, we experienced higher utilization levels in our power generation rental fleet as a result of hurricanes along the Gulf Coast. In the oilfield, although activity remained muted, U.S. frac activity levels improved from second quarter lows, leading to modest increases in service demand and sales of pressure pumping equipment. Overall, revenues increased
Third Quarter 2020 Segment Results – Marine Transportation
Marine transportation revenues for the 2020 third quarter were
In the inland market, average barge utilization was in the low
In the coastal market, reduced demand for refined products and black oil resulted in limited spot market activity and barge utilization in the mid
Third Quarter 2020 Segment Results – Distribution and Services
Distribution and services revenues for the 2020 third quarter were
In the oil and gas market, revenues and operating income declined compared to the 2019 third quarter due to low oil prices and reduced oilfield activity which resulted in limited customer demand for new and overhauled transmissions, parts and service. The manufacturing business experienced a sharp reduction in orders year-on-year with minimal deliveries of new and remanufactured pressure pumping equipment. During the quarter, the oil and gas market represented approximately
In the commercial and industrial market, revenues declined compared to the 2019 third quarter primarily due to reduced economic activity which resulted in lower activity levels in the on-highway and power generation businesses. The marine business was also down year-on-year due to reduced major overhaul activity and new 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
Cash Generation
For the 2020 third quarter, EBITDA was
2020 Outlook
Commenting on the fourth quarter outlook, Mr. Grzebinski said, “Although Kirby continues to be challenged by unprecedented declines in demand as a result of the COVID-19 pandemic, our business activity and utilization levels have bottomed. Economic activity is slowly improving, and we have seen pockets of increased demand. While this is encouraging, in the fourth quarter our results are expected to be impacted by continued low barge utilization and pricing pressure, normal seasonality from weather in marine, and likely, customer budget exhaustion in distribution and services. Looking beyond 2020, while the timing and magnitude of a material economic recovery are unclear, we believe this demand driven downturn is temporary and demand will rebound sometime in 2021. In marine, as discussed before, pricing typically does not improve until barge utilization is in the mid
In inland marine, absent potential new lockdowns related to COVID-19, Kirby expects improvement in barge utilization going forward as refinery and chemical plants along the Gulf Coast recover from recent hurricanes and economic activity gradually increases. The reopening of the Illinois River in October is also expected to contribute some sequential improvement in barge utilization. However, until a meaningful recovery in demand occurs, market conditions are expected to remain challenging. As well, increased delays from seasonal winter weather are expected to have an adverse impact on operating efficiencies. Overall, compared to the 2020 third quarter, Kirby expects inland revenues and operating margins will be flat to down slightly in the fourth quarter.
In coastal, the spot market is expected to remain challenging in the near term until demand for refined products and black oil materially improves. However, compared to the third quarter, reduced delays associated with recent hurricanes and tropical storms on the East and Gulf Coasts are expected to modestly benefit the fourth quarter’s results. Overall, Kirby expects coastal fourth quarter revenues will be flat sequentially with operating margins in the negative low single digits.
In distribution and services, activity levels are slowly recovering from 2020 second quarter lows. In the fourth quarter, Kirby expects to benefit from the gradual improvement in the economy, but a weak oil and gas market, potential customer budget exhaustion, and some seasonality will likely result in sequential reductions in revenue and operating income. In the oil and gas market, activity is expected to be minimal as customers continue to rationalize excess pressure pumping capacity resulting in limited deliveries of new pressure pumping units. Also, many oil and gas companies are expected to slow drilling and completions activity in the fourth quarter, further reducing demand for parts and service. In commercial and industrial, demand for parts and new engines in marine and on-highway is expected to increase as economic activity improves and customers complete projects. These gains, however, will be partially offset by seasonal activity reductions associated with the dry cargo harvest in marine and reduced utilization of the power generation rental fleet following hurricane season. Overall, compared to the 2020 third quarter, segment revenues are expected to modestly decline in the fourth quarter with operating margins in the negative low to mid-single digits.
On the balance sheet, as of September 30, 2020, Kirby had approximately
Conference Call
A conference call is scheduled for 7:30 a.m. Central Standard Time today, Thursday, October 29, 2020, to discuss the 2020 third quarter performance as well as the outlook for the 2020 fourth quarter. To listen to the webcast, please visit the Investor Relations section of Kirby’s website at https://kirbycorp.com. A slide presentation for this conference call will be posted on Kirby’s website approximately 15 minutes before the start of the webcast. For listeners who wish to participate in the question and answer session of the conference call webcast, you may access the call by dialing (866) 691-5839 within the U.S. and Canada or +1 (409) 216-0840 internationally. The conference ID for the call is 2166834. A replay of the webcast will be available for a period of one year by visiting the News & Events page in the Investor Relations section of Kirby’s website.
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 includes a non-GAAP financial measure, EBITDA, which Kirby defines as net earnings (loss) attributable to Kirby before interest expense, taxes on income, depreciation and amortization, impairment of long-lived assets, and impairment of goodwill. A reconciliation of EBITDA with GAAP net earnings (loss) attributable to Kirby is included in this press release. This press release also includes non-GAAP financial measures which exclude certain one-time items, including earnings before taxes on income (excluding one-time items), net earnings attributable to Kirby (excluding one-time items), and diluted earnings per share (excluding one-time items). A reconciliation of these measures with GAAP is included in this press release. Management believes the exclusion of certain one-time items from these financial measures enables it and investors to assess and understand operating performance, especially when comparing those results with previous and subsequent periods or forecasting performance for future periods, primarily because management views the excluded items to be outside of Kirby’s normal operating results. This press release also includes a non-GAAP financial measure, free cash flow, which Kirby defines as net cash provided by operating activities less capital expenditures. A reconciliation of free cash flow with GAAP is included in this press release. Kirby uses free cash flow to assess and forecast cash flow and to provide additional disclosures on the Company’s liquidity as a result of uncertainty surrounding the impact of the COVID-19 pandemic on global and regional market conditions. Free cash flow does not imply the amount of residual cash flow available for discretionary expenditures as it excludes mandatory debt service requirements and other non-discretionary expenditures. This press release also includes marine transportation performance measures, consisting of ton miles, revenue per ton mile, towboats operated and delay days. Comparable marine transportation performance measures for the 2019 year and quarters are available in the Investor Relations section of Kirby’s website, https://kirbycorp.com, under Financials.
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, and the impact of the COVID-19 pandemic and the related response of governments on global and regional market conditions. 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, 2019 and in subsequent quarterly filings on Form 10-Q.
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. In addition, Kirby participates in the transportation of dry-bulk commodities in United States coastwise 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, industrial compressors, railcar movers, and high capacity lift trucks 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 | ||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||
| (unaudited, $ in thousands, except per share amounts) | |||||||||||||
| Revenues: | |||||||||||||
| Marine transportation | $ | 320,602 | $ | 412,665 | $ | 1,104,846 | $ | 1,185,072 | |||||
| Distribution and services | 175,965 | 254,144 | 576,806 | 997,400 | |||||||||
| Total revenues | 496,567 | 666,809 | 1,681,652 | 2,182,472 | |||||||||
| Costs and expenses: | |||||||||||||
| Costs of sales and operating expenses | 340,764 | 458,514 | 1,167,871 | 1,558,664 | |||||||||
| Selling, general and administrative | 61,720 | 64,656 | 199,412 | 206,602 | |||||||||
| Taxes, other than on income | 9,077 | 10,909 | 33,548 | 31,486 | |||||||||
| Depreciation and amortization | 54,779 | 54,455 | 165,067 | 164,771 | |||||||||
| Impairments and other charges | — | — | 561,274 | — | |||||||||
| (Gain) loss on disposition of assets | 316 | 374 | 13 |
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FAQ
What were Kirby's earnings per share for Q3 2020?
Kirby reported earnings of $0.46 per share for Q3 2020.
How did Kirby's revenues change in Q3 2020 compared to Q3 2019?
Revenues fell from $666.8 million in Q3 2019 to $496.6 million in Q3 2020.
What is Kirby's expected free cash flow for FY2020?
Kirby expects free cash flow for FY2020 to be between $300 million to $350 million.
How did marine transportation performance affect Kirby's financial results?
Marine transportation revenues decreased significantly due to lower demand and hurricanes, impacting overall profitability.
What are the outlook and challenges Kirby faces in Q4 2020?
Kirby anticipates continued low barge utilization and pricing pressure, alongside recovering economic activity.
Kirby Corporation
NYSE:KEXKEX RankingsKEX Latest NewsKEX Stock Data
7.28B
56.85M
0.91%
99.23%
1.52%
Marine Shipping
Water Transportation
United States of America
HOUSTON
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