Kirby Corporation Announces 2010 Third Quarter Results

HOUSTON, Oct. 27 /PRNewswire-FirstCall/ -- Kirby Corporation ("Kirby") (NYSE: KEX) today announced net earnings attributable to Kirby for the third quarter ended September 30, 2010 of $30.7 million, or $.57 per share, compared with $35.0 million, or $.65 per share, for the 2009 third quarter.  Kirby's published 2010 third quarter guidance range was $.52 to $.57 per share.  Consolidated revenues for the 2010 third quarter were $281.3 million compared with $272.2 million reported for the 2009 third quarter.  

Joe Pyne, Kirby's Chief Executive Officer, commented, "During the 2010 third quarter, the United States petrochemical and refining industries produced volumes which allowed Kirby's marine transportation segment's petrochemical and black oil markets to maintain tank barge utilization levels in the high 80% range.  The United States petrochemical industry continues to be helped by strong exports.  Low priced natural gas, used as a petrochemical feedstock, has helped to improve the global competitiveness of the United States petrochemical industry.  Our diesel engine services segment experienced a relatively strong power generation market, offset by weak marine markets, particularly the Gulf Coast oil services market which continues to be negatively impacted by deferrals of major maintenance projects, as well as the drilling moratorium and pending new safety regulations."  

Kirby reported net earnings attributable to Kirby for the 2010 first nine months of $84.6 million, or $1.56 per share, compared with $96.7 million, or $1.79 per share, for the first nine months of 2009.  Consolidated revenues for the 2010 first nine months were $823.2 million compared with $822.6 million for the first nine months of 2009.

Segment Results – Marine Transportation

Marine transportation revenues for the 2010 third quarter were $232.8 million, a 2% increase compared with the 2009 third quarter, while operating income was $51.4 million, an 11% decrease compared with the third quarter of 2009.  The higher marine transportation revenues reflected a continued modest improvement in tank barge demand and equipment utilization in the petrochemical and black oil markets, driven primarily by improved petrochemical production, including exported petrochemicals.  The higher revenues were also impacted by a 15% increase in fuel prices during the 2010 third quarter compared with the 2009 third quarter.  Offsetting the modestly higher 2010 third quarter demand and equipment utilization levels was the negative impact of higher delay days, as well as lower term contract and spot contract rates.  

The marine transportation operating margin for the 2010 third quarter was 22.1% compared with 25.3% for the 2009 third quarter, reflecting lower term contract and spot contract pricing, higher fuel costs and increased delay days, partially offset by modestly higher utilization and by the cost reduction initiatives implemented during 2009 and in the 2010 first quarter.

Segment Results – Diesel Engine Services

Diesel engine services 2010 third quarter revenues were $48.5 million, a 9% increase compared with the 2009 third quarter, and operating income was $4.5 million, a 3% decrease compared with the 2009 third quarter.  The medium-speed power generation market for the 2010 third quarter was positively impacted by additional engine-generator set upgrades and higher parts and new engines sales.  Demand levels for service and direct parts sales across the majority of the marine markets remained weak as customers continued to defer major maintenance projects, which resulted in the lower operating income.  The Gulf Coast oil services market has been particularly weak.  Excluding some required repair work for customers involved in the Gulf Coast oil spill cleanup, the market was further weakened by the Gulf of Mexico deep water drilling moratorium and the uncertainty around new drilling regulations.

The diesel engine services segment's operating margin for the 2010 third quarter was 9.3% compared with 10.4% for the third quarter of 2009.  The lower operating margin reflected continued low service and direct parts sales in the marine markets, resulting pricing pressure in the high-speed marine market and lower overall labor utilization, partially offset by the positive impact of the higher power generation revenue.  

Cash Flow

Kirby continued to generate strong cash flow during the 2010 first nine months, with EBITDA of $216.1 million.  The cash flow was used in part to fund capital expenditures of $108.0 million, including $60.3 million for new tank barge and towboat construction and $47.7 million primarily for upgrades to the existing fleet.  The cash flow was also used to purchase $20.6 million of Kirby common stock, more fully described below.  Total debt as of September 30, 2010 was $200.2 million, consisting predominately of a $200 million private placement loan that matures in 2013.  Kirby's debt-to-capitalization ratio was 15.1% at September 30, 2010.  Cash and cash equivalents at September 30, 2010 were $149.2 million compared with $97.8 million at December 31, 2009 and $39.8 million at September 30, 2009.  

Treasury Stock Purchases

During the 2010 third quarter, Kirby purchased 497,000 shares of its common stock for $18.9 million, for an average price per share of $38.01.  From June through October 26, 2010, Kirby purchased 615,000 shares of its common stock for $23.6 million, for an average price per share of $38.47.  The common stock was purchased through a combination of open market purchases and through a stock trading plan entered into with a brokerage firm pursuant to Rule 10b5-1 under the Securities and Exchange Act of 1934.  The Rule 10b5-1 plan authorizes the broker to repurchase stock for Kirby during the normal quarterly trading blackouts preceding Kirby's earnings press releases for the second, third and fourth quarters of 2010.  Effective November 1, 2010, the end of Kirby's third quarter trading blackout period, Kirby will have 2,086,000 shares available under its existing repurchase authorizations.  

Outlook

Commenting on the 2010 fourth quarter and full year guidance, Mr. Pyne said, "Our earnings guidance for the 2010 fourth quarter is $.52 to $.57 per share compared with the $.54 per share earned for the 2009 fourth quarter.  The 2009 fourth quarter results included a $.05 per share charge for staff reductions and a partial impairment of goodwill, net of a reduction in Kirby's allowance for doubtful accounts.  For the 2010 year, we are updating our earnings per share guidance to $2.08 to $2.13 compared with $2.34 per share for 2009.  Our fourth quarter and full year guidance range assumes tank barge demand and equipment utilization levels and pricing will remain in line with the 2010 third quarter.  Our guidance assumes our diesel engine services marine markets will continue to face challenges, particularly the Gulf Coast oil services market, and assumes a continued stable power generation market.  Our 2010 capital spending guidance range remains unchanged at $135 to $145 million, including approximately $70 million for the construction of 58 tank barges and three towboats, and prepayments on 2011 tank barge construction."  

Mr. Pyne further stated, "Kirby is in the enviable position of having a strong balance sheet that will allow for acquisitions, equipment additions and replacements, and opportunistic stock repurchases.  On September 30, we had $149 million of cash and cash equivalents, after purchasing $20.6 million of our common stock, $200 million of senior notes outstanding, an undrawn $250 million revolving line of credit, and a debt-to-capitalization ratio of 15.1%.  Net of cash and cash equivalents, our debt-to-capitalization ratio on September 30 was 4.3%."  

Conference Call

A conference call is scheduled at 10:00 a.m. central time tomorrow, Thursday, October 28, 2010, to discuss the 2010 third quarter performance as well as the outlook for the 2010 fourth quarter and year.  The conference call number is 800-446-1671 for domestic callers and 847-413-3362 for international callers.  The leader's name is Steve Holcomb.  The confirmation number is 28061226.  An audio playback will be available at 1:00 p.m. central time on Thursday, October 28, through 5:00 p.m. central time on Friday, November 26, 2010 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 2009 and 2008 years and quarters are available at Kirby's web site, http://www.kirbycorp.com/, under the caption Performance Measurements in the Investor Relations section.  

About Kirby Corporation

Kirby Corporation, based in Houston, Texas, operates inland tank barges and towing vessels, transporting petrochemicals, black oil products, refined petroleum products and agricultural chemicals throughout the United States inland waterway system.  Kirby also owns and operates four ocean-going barge and tug units transporting dry-bulk commodities in United States coastwise trade.  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, power generation and railroad applications.

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, 2009 filed with the Securities and Exchange Commission.  

SOURCE Kirby Corporation