Written by
Nick Blenkey
America’s largest tank barge operator, Houston-headquartered Kirby Company (NYSE: KEX), has reported web earnings for the quarter ended September 30, 2023 of $63.0 million or $1.05 per share. That’s up on its earnings of $39.1 million or $0.65 per share for the 2022 third quarter. Consolidated revenues for the 2023 third quarter have been $764.8 million in contrast with $745.8 million reported for the 2022 third quarter.
These figures have been barely beneath analysts expectations, and Zacks Fairness Analysis offers some insights into this and into why another key Kirby metrics could also be extra telling than the headline numbers.
TEMPORARY CHALLENGES
“Each of our segments continued to carry out properly through the quarter regardless of going through some momentary challenges,” mentioned Kirby president and CEO David Grzebinski. “In marine transportation, pricing on spot and time period contracts continued to learn from robust demand and restricted availability of barges. Distribution and companies delivered improved margins whilst we continued to work via provide chain delays through the quarter. Total, our earnings elevated sequentially and year-over-year. We continued to repurchase inventory through the quarter.
“In inland marine transportation, our third quarter outcomes mirrored continued enchancment in pricing partially offset by momentary headwinds from the Illinois River closure and a number of other refinery outages within the quarter. From a requirement standpoint, buyer exercise remained robust within the quarter with barge utilization charges working within the excessive 80% vary. Spot market costs continued to progress greater and have been up within the mid-single digits sequentially and within the mid-teens vary year-over-year. Time period contract costs additionally renewed at greater charges with excessive single digit will increase versus a yr in the past. Margins have been within the excessive teenagers vary.
“In coastal, enhancements in market fundamentals accelerated with stable buyer demand and restricted availability of enormous capability vessels leading to spot worth will increase within the mid-single digits sequentially and within the low 30% vary year-over-year. Throughout the quarter, our barge utilization ranges continued to run within the mid-90% vary.”
Grzebinski famous that outcomes this yr are being impacted by deliberate shipyard upkeep on a number of massive vessels which led to an total lower in third quarter coastal revenues year-over-year and working margins just under break-even.
MARINE TRANSPORT
Marine transportation revenues for the 2023 third quarter have been $429.9 million in contrast with $433.0 million for the 2022 third quarter, experiences Kirby. Working revenue for the 2023 third quarter was $63.5 million in contrast with $41.7 million for the 2022 third quarter. Phase working margin for the 2023 third quarter was 14.8% in contrast with 9.6% for the 2022 third quarter.
Within the inland market, common 2023 third quarter barge utilization was within the excessive 80% vary, decrease when in comparison with the 2022 third quarter as a result of Illinois River lock closures and a number of other refinery outages. Working situations have been unfavorable with lock, climate and navigational delays contributing to a 24% improve in delay days year-over-year. Throughout the quarter, common spot market charges elevated within the mid-single digits sequentially and within the mid-teens vary in comparison with the 2022 third quarter. Time period contracts that renewed within the third quarter elevated within the high-single digits on common in comparison with a yr in the past. Revenues elevated 2% in comparison with the 2022 third quarter regardless of difficult working situations as elevated pricing was partially offset by decrease utilization from the Illinois River lock closures. The inland market represented 82% of section revenues within the third quarter of 2023. Inland’s working margin was within the excessive teenagers for the quarter.
In coastal, market situations have been robust all through the quarter, with barge utilization within the mid-90% vary. Throughout the quarter, common spot market charges elevated within the mid-single digits sequentially and within the low 30% vary in comparison with the 2022 third quarter. Time period contracts that renewed within the third quarter elevated within the low double digits in comparison with a yr in the past. Regardless of these enhancements, revenues within the coastal market decreased when in comparison with the 2022 third quarter primarily resulting from downtime related to deliberate shipyard upkeep days. Coastal represented 18% of marine transportation section revenues through the third quarter. Coastal working margin was round break-even as improved pricing was partially offset by misplaced income and prices incurred on account of deliberate shipyards.
FOURTH QUARTER OUTLOOK
Looking forward to the 2023 fourth quarter, Grzebinski mentioned that Kirby’s outlook within the marine market stays robust. Nonetheless it expects some near-term points associated to low water situations on the Mississippi River, growing delay days resulting from regular seasonal climate situations, and excessive ranges of shipyard exercise in coastal.
“In inland marine, favorable situations are anticipated to proceed, pushed by the mix of excessive refinery and petrochemical plant utilization and minimal new barge development throughout the business,” mentioned Grzebinski. “Kirby expects these strengths to be partially offset by growing delay days resulting from regular seasonal climate situations, lock delays, and low water situations on the Mississippi River. The Firm nonetheless expects additional enhancements in spot market costs, which presently represents roughly 45% of inland revenues. Time period contracts are additionally anticipated to proceed to reset greater. Total, fourth quarter inland revenues are anticipated to be roughly flat sequentially with modest enchancment in margins, exiting the yr near if not at 20%.”
“In coastal marine,” he mentioned, ”revenues and working margins are being impacted this yr by an approximate doubling of deliberate shipyard upkeep days with ballast water therapy installations on sure vessels.” He added that Kirby expects regular buyer demand via the stability of the yr with barge utilization within the low to mid-90% vary. Charges are anticipated to proceed enhancing as the supply of apparatus is tight throughout the business. For the fourth quarter, coastal revenues are anticipated to be up within the low to mid-single digits in comparison with 2023 third quarter as the corporate continues to progress via main shipyard works with the timing of some probably shifting to early 2024. Coastal working margins are anticipated to be close to break-even to low single digits on a full yr foundation.
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