• 2020 August 2 16:03

    Kirby Corporation announces 2Q, 2020 Results

    Kirby Corporation (“Kirby” or the “Company”) (NYSE: KEX) on July 30 announced net earnings attributable to Kirby for the second quarter ended June 30, 2020 of $25.0 million, or $0.42 per share, compared with net earnings of $47.3 million or $0.79 per share for the 2019 second quarter. Consolidated revenues for the 2020 second quarter were $541.2 million compared with $771.0 million reported for the 2019 second quarter.

    David Grzebinski, Kirby’s President and Chief Executive Officer, commented, “The dramatic economic slowdown associated with the COVID-19 pandemic in the second quarter was felt across our marine transportation and distribution and services businesses. We responded by aggressively lowering costs across the Company and were able to generate solid earnings and strong cash flow. Although the demand impacts have continued into the third quarter, activity appears to have bottomed and is starting to slowly improve.

    “In marine transportation, with demand for many liquid products down significantly during the quarter, refiners scaled back their utilization levels into the high 60% range before it gradually improved into the mid-70% range, and chemical plant utilization fell to near 70%. As a result, demand for barge transportation weakened as the quarter progressed, and when combined with favorable summer operating conditions, our barge utilization fell into the mid-70% range in inland and the low 70% range in coastal by the end of June. To offset the impact of these activity declines, we aggressively implemented additional cost reductions across the business, significantly reducing horsepower, operating costs, and general and administrative expenses. Despite a 6% sequential reduction in segment revenue, our cost reduction efforts contributed to a sequential improvement in segment operating margins from 12.6% to 13.5%.    

    “Distribution and services experienced significant headwinds during the second quarter with a 33% sequential reduction in revenue. In the oilfield, the decline in oil prices, lower rig counts, and reduced demand resulted in an approximate 80% decline in U.S. frac activity and contributed to the bankruptcy of a large customer for which we incurred $0.04 per share of bad debt expense. As a result of the reduced activity, our oil and gas businesses experienced minimal manufacturing orders, parts sales, and service throughout the quarter. In commercial and industrial, activity levels in on-highway and power generation declined sharply as a result of lockdowns for much of the quarter. To reduce the impact of declining activity, we implemented additional workforce reductions, which resulted in severance charges of $0.02 per share, as well as furloughs and aggressive reductions in general and administrative expenses. We expect the segment will remain at a loss in the third quarter, but the impact of our cost reductions combined with an expected slow increase in activity should improve the segment’s results compared to the second quarter,” Mr. Grzebinski concluded.

    Second Quarter 2020 Segment Results – Marine Transportation
    Marine transportation revenues for the 2020 second quarter were $381.0 million compared with $404.3 million for the 2019 second quarter. Operating income for the 2020 second quarter was $51.4 million compared with $53.2 million for the 2019 second quarter. Segment operating margin for the 2020 second quarter was 13.5% compared with 13.2% for the 2019 second quarter.

    In the inland market, average barge utilization was in the mid-80% range during the quarter compared to the mid-90% range in the 2019 second quarter. Barge volumes were heavily impacted by reduced demand for refined products and petrochemicals. Operating conditions were fair with improved weather conditions across the waterway network and reduced flooding on the Mississippi River. Lock delays remained elevated during the quarter. Overall, these conditions resulted in 2,815 delay days or a reduction of 15% compared to the 2019 second quarter. As a result of lower barge utilization, average spot market pricing for the quarter declined in the mid-to high single digits both sequentially and year-on-year. Average term contract pricing on expiring contracts was stable. Revenues in the inland market declined 2% compared to the 2019 second quarter due to the impact of reduced barge utilization and lower fuel rebills, but were partially offset by the Savage Inland Marine (“Savage”) asset acquisition which closed on April 1, 2020. During the second quarter, the inland market represented 80% of segment revenues and had an operating margin in the mid-to high teens.

    In the coastal market, as a result of reduced demand for refined products and black oil transportation, barge utilization was in the mid-70% range during the 2020 second quarter compared to the mid-80% range in the 2019 second quarter. Spot market activity declined throughout the quarter; however, spot market and term contract pricing were stable. Revenues in the coastal market declined 17% compared to the 2019 second quarter as a result of reduced spot market activity, retirements of two large capacity vessels, and planned shipyard activity. The coastal market represented 20% of segment revenues and had a breakeven operating margin during the quarter.

    Second Quarter 2020 Segment Results – Distribution and Services
    Distribution and services revenues for the 2020 second quarter were $160.2 million compared with $366.8 million for the 2019 second quarter. The segment had an operating loss for the 2020 second quarter of $14.1 million which compares with operating income of $23.1 million for the 2019 second quarter. Operating margin was (8.8%) for the 2020 second quarter compared with 6.3% for the 2019 second quarter. The quarter’s results were adversely impacted by $3.3 million of bad debt expense resulting from a large oil and gas customer’s bankruptcy as well as $1.4 million of severance.

    In the oil and gas market, revenues and operating income declined due to low oil prices and reduced activity which resulted in limited customer demand for new and overhauled transmissions, parts and service. The manufacturing business experienced a sharp reduction in orders with minimal deliveries of new and remanufactured pressure pumping equipment. During the quarter, the oil and gas market represented approximately 19% of segment revenues and had a negative operating margin.

    In the commercial and industrial market, revenues declined primarily due to reduced economic activity and stay-at-home orders across the U.S. which heavily impacted activity levels in the on-highway and power generation businesses. The marine repair business was also down year-on-year due to reduced major overhaul activity and 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 81% of segment revenues and had an operating margin in the low single digits.

    Cash Generation
    For the 2020 second quarter, EBITDA of $90.8 million compares with $133.2 million for the 2019 second quarter. During the second quarter, net cash provided by operating activities was $170.6 million, some of which was used to fund capital expenditures of $43.6 million. The Company also used $279.0 million to acquire the Savage assets. As of June 30, 2020, the Company had $108.5 million of cash and cash equivalents on the balance sheet. Total debt was $1,642.8 million, reflecting a $59.7 million reduction compared to March 31, 2020, and the debt-to-capitalization ratio was 35.0%.

    2020 Outlook
    Commenting on the 2020 full year outlook, Mr. Grzebinski said, “In the past quarter, our businesses experienced unprecedented declines in demand as a result of the COVID-19 pandemic. Recently, we have seen slight increases in demand across the Company which we believe represent an initial recovery and a bottom to our activity and utilization levels. However, given the risk of future spikes in virus cases and governments issuing new restrictions, the timing and magnitude of a material recovery remains unclear. Until we see a significant improvement in demand, we will continue to aggressively manage our costs, restrain capital spending, and focus on cash generation. Kirby has ample liquidity, and we continue to expect strong free cash flow in 2020 which will be used to repay debt, increase liquidity, and strengthen the balance sheet.”

    In inland marine, although refinery and petrochemical plant utilization rates have started to improve, Kirby expects a slow recovery going forward until economic activity rebounds more significantly. With barge utilization rates starting the third quarter in the mid-70% range, the Company anticipates sequentially lower average barge utilization for the quarter. This is expected to have an adverse impact on revenues and operating margins. Overall, Kirby expects inland revenues and operating income will sequentially decline in the third quarter.

    In the coastal market, with 85% of revenues under term contracts, much of coastal’s business is expected to be stable through the end of the year. The spot market remains challenging, but reduced shipyard maintenance is expected to benefit the third quarter’s results. Kirby plans to retire one additional large capacity vessel in the third quarter and expects reduced activity in the coal transportation business for the remainder of the year. Overall, Kirby expects coastal third quarter revenues and operating income will modestly improve sequentially.

    In distribution and services, activity in the oil and gas market is expected to remain challenged with all major customers curtailing spending for the duration of 2020. Although some operators are starting to bring shut-in wells back on-line and frac activity is modestly improving, Kirby does not expect to see a material improvement in activity in the short-term as many customers have significant excess pressure pumping capacity available for use. In commercial and industrial, although the Company’s businesses continue to be adversely impacted by reduced economic activity, there have been some recent improvements in the on-highway and power generation sectors. Fleet miles in the nation’s trucking industry are growing, and power generation projects which were previously deferred are being rescheduled for the coming months. Additionally, Kirby expects increased seasonal utilization of the power generation rental fleet and higher activity in the Thermo King refrigeration businesses. As well, the impact of our cost reduction initiatives is expected to be more fully realized in the third quarter. As a result, overall, segment operating margins are expected to improve in the third quarter but remain below breakeven levels.  

    On the balance sheet, as of June 30, 2020, Kirby had approximately $537 million of cash and liquidity available. The Company does not have any scheduled debt maturities until 2023, and there is substantial room available in its bank covenants. Kirby expects 2020 capital spending to be approximately $150 million, representing a year-on-year reduction of approximately 40%. While the Company is committed to regulatory and recurring maintenance on the marine transportation fleet, capital spending is being stringently managed. Overall, Kirby expects to generate net cash provided by operating activities of $400 million to $500 million, with free cash flow of $250 million to $350 million during 2020.

2020 September 25

18:07 Tripartite agreement signed on establishing the FSRU terminal in the Bay of Gdansk
17:55 Baltic Fuel Company shipped first batch of bitumen
17:39 Scorpio Bulkers announces purchase of shares by Scorpio Services
17:34 Vessel “Razul Rza” sent to outer waters after the repair works
17:12 Metal Shark debuts 48-meter catamaran expedition vessel and introduces "Metal Shark Yachts" portfolio
16:51 Ningbo Containerized Freight Index rises significantly in September
16:19 OOCL's service update for Trans-Pacific trade
16:16 Representative office of Marinet opened in China
15:27 GTT signs a contract with the U.S. Dep't of Defense for the Red Hill Bulk Fuel Storage Facility
14:59 RFC held the second stage of the ecological marathon
14:31 Bunker prices are flat in the Port of Saint-Petersburg, Russia (graph)
14:05 Zvezda shipyard to build 10 gas tankers for Arctic LNG 2
13:42 Wärtsilä solutions meet challenging needs of Canadian Coast Guard vessel
13:18 Nuclear-powered container carrier Sevmorput delivered Kamchatka fish to Saint-Petersburg
12:56 Competition for construction of two scientific research ships for Russian Federal Fisheries Agency to be announced in October
12:34 Royal Niestern Sander orders SCHOTTEL thrusters for world’s first shallow-draught ice-breaking W2W vessel
12:11 VEB.RF starts financing construction of ten gas tankers for Arctic LNG 2 project
11:29 LR awards Samsung Heavy Industries AiP for its ammonia-fuelled tanker
10:37 British Ports Association sets out spending review priorities
10:29 New state programme on Arctic development in 2021-2024 drafted by Russia’s ad hoc Ministry
09:53 Debt service guarantees on Yamal LNG removed from NOVATEK
09:30 Oil prices rise in hope of demand
09:12 Baltic Dry Index as of September 24
09:11 MABUX: Bunker market this morning, Sept 25

2020 September 24

18:37 Kongsberg Digital develops cloud-based simulators for maritime industry, with funds from Innovation Norway
18:07 Wärtsilä ranked first in UN challenge to fight climate change with big data
17:45 Alco Bio Fuel, Messer Benelux and IJsfabriek Strombeek once again invest in recycling CO2 in North Sea Port
17:20 World’s first subsea compression system passes five years in operation
17:12 Esben Poulsson reappointed as ICS Chairman for a new term
16:48 Okskaya Shipyard launches first multipurpose dry cargo carrier of Project RSD59 for Astrol
16:24 Severnaya Verf starts cutting steel for seventh trawler of Project 170701 for NOREBO Group
15:50 ASCO's vessel “Razul Rza” sent to outer waters after repairs
15:26 Russian Direct Investment Fund (RDIF) to invest in Sovcomflot, says RDIF CEO
15:02 Diana Shipping announces the sale of a Capesize Dry bulk vessel
14:39 Russian Railways launches regular multimodal service from China to Europe via the ports of Kaliningrad and Hamburg
14:17 MABUX releases its weekly review of bunker market
14:02 Fincantieri starts dry dock works for experimental vessel Zeus
13:40 Freeport of Riga Authority signs Declaration of Cooperation with Port of Shenzhen
13:21 IMO celebrates World Maritime Day 2020
13:08 Total and MOL officially name the world’s largest LNG bunker vessel
12:48 Bunker prices decrease in the Far East ports of Russia (graph)
12:25 ZIM launches new China-Australia Express Line
12:11 Inmarsat Fleet Lte service coverage extended to Gulf of Mexico following successful trials with V.Ships Offshore
11:32 Ships of RF Navy’s Black Sea Fleet take part in "Kavkaz-2020" maneuvers
11:14 Port of Trelleborg offers their shipping customers reliable and fast internet with Nowhere Networks
11:13 "Tatarstan" missile ship of RF Navy’s Caspian Flotilla involved in "Kavkaz-2020" maneuvers
10:09 CTI-Maritec receives DNV GL approval for ballast water testing
09:57 Muuga freight station of Rail Baltica is to be designed by SWECO Projekt AS
09:36 MPC Container Ships ASA announces appointment of new CFO
09:29 Oil prices decrease amid concern over demand/supply imbalance
09:11 Baltic Dry Index as of September 23
08:40 MABUX: Bunker market this morning, Sept 24

2020 September 23

18:15 HMM opens Fleet Control Centre
17:35 Stena develops a solution to use recycled batteries in charging stations at port
17:05 Philippine Ports Authority COVID-19 Molecular Testing Center for seafarers now operational
16:42 British Ports responds to reasonable worst-case scenario Brexit assumptions
16:17 Vestdavit wins contract to supply six Australian Navy patrol boats
16:03 ABB powers P&O super-ferries towards new sustainable transport era
15:43 Royal Niestern Sander orders SCHOTTEL thrusters for world’s first shallow-draught ice-breaking walk-to-work vessel
15:25 FESCO’s Board of Directors elected new Management Board