Kirby Corporation Announces 2021 Fourth Quarter and Full Year Results and 2022 Outlook
- Fourth quarter 2021 GAAP earnings per share of
$0.18 including a one-time$0.09 per share deferred tax provision related to a change inLouisiana tax law
- Fourth quarter 2021 adjusted earnings per share of
$0.27
- Solid improvement in inland marine with barge market strengthening and operating margins approaching 10%
- Distribution and services activity sequentially lower due to supply chain delays and seasonality
- Meaningful improvement expected in 2022 in both inland marine and distribution and services
- 2022 projected cash flow from operations of
$400 million to$480 million and capital expenditures of$170 to$190 million
For the 2021 full year, Kirby reported a net loss attributable to Kirby of
“In marine transportation, our inland business experienced improved market fundamentals due to strong refinery and petrochemical plant utilization and increased customer volumes. As a result, our barge utilization steadily increased during the quarter with an average in the mid-to high 80% range. Favorable market dynamics also led to increased sequential and year-on-year spot market pricing, as well as higher rates on term contract renewals for the first time since the start of the pandemic. However, the quarter was not without its challenges as poor weather conditions yielded a 55% sequential increase in delay days. In December, escalating cases of the COVID-19 Omicron variant contributed to crewing challenges and had an impact of
“In coastal marine, market conditions were stable in the fourth quarter. At the end of the quarter, we completed our exit from the
“In distribution and services, our markets remained strong and continued to build momentum heading into 2022. In oil and gas, we experienced favorable demand for new transmissions and increased orders for new environmentally friendly pressure pumping equipment and frac related power generation equipment. However, significant supply chain issues delayed many deliveries of new manufactured equipment during the quarter. As a result, our oil and gas businesses reported a sequential reduction in revenues and operating income. In commercial and industrial, demand remained strong as the economy continued to recover from the pandemic. This was offset by normal seasonality in
Segment Results – Marine Transportation
Marine transportation revenues for the 2021 fourth quarter were
In the inland market, average 2021 fourth quarter barge utilization was in the mid-to high 80% range compared to the high 60% range in the 2020 fourth quarter and the low 80% range in the 2021 third quarter. The inland market significantly improved during the quarter as the impact of the
In coastal, market conditions for refined products and black oil transportation were unchanged during the quarter. Pricing on spot and term contracts was also stable. Average coastal barge utilization improved to the 90% range primarily due to the retirement of underutilized barges in the 2021 third quarter. Revenues in the coastal market increased 7% compared to the 2020 fourth quarter primarily due to higher fuel rebills and modest increases in spot market activity, partially offset by increased shipyard activity on large capacity vessels during the quarter. Coastal represented 23% of marine transportation segment revenues during the fourth quarter and had an operating margin near breakeven.
Segment Results – Distribution and Services
Distribution and services revenues for the 2021 fourth quarter were
In the commercial and industrial market, revenues increased compared to the 2020 fourth quarter, primarily due to improved economic activity across the
In the oil and gas market, revenues and operating income improved compared to the 2020 fourth quarter due to higher oilfield activity which resulted in increased demand for transmissions, engines, parts, and service. The manufacturing business, although heavily impacted by supply chain delays, experienced increased year-on-year demand, orders, and deliveries of new environmentally friendly pressure pumping equipment and frac related power generation equipment. Overall, oil and gas revenues increased 110% compared to the 2020 fourth quarter and represented approximately 37% of segment revenues. Oil and gas operating margins were in the low single digits and were modestly impacted by integration costs associated with the ESG related energy storage systems manufacturer acquired during the quarter.
One-time Charges
Kirby’s 2021 fourth quarter results were impacted by a one-time deferred tax provision related to a change in
Cash Generation
For the 2021 fourth quarter, EBITDA was
2022 Outlook
Commenting on the 2022 full year outlook,
In inland marine, 2022 guidance contemplates favorable market conditions with continued economic growth, increased volumes from new petrochemical plants, and minimal new barge construction across the industry. Barge utilization is expected to range between the high 80% and low 90% range, with improvements to the spot market, which currently represents approximately 35% of inland revenues. Term contracts that renewed lower during the first three quarters of 2021, but rebounded in the fourth quarter, should also reset higher during 2022 to reflect improved market conditions. Overall, inland revenues are expected to grow 10% to 15% year-on-year with steady growth throughout the year as business improves and contracts renew. However, growth in the first quarter is expected to be modest in the low single digit percentage range due to the impact of winter weather and the COVID-19 Omicron variant which is resulting in crewing challenges, lost revenue, and incremental costs. Operating margins are expected to range in the low double digits to the mid-teens during the year, with the first quarter being the lowest.
In coastal marine, customer demand is expected to modestly improve in 2022 as refined products and black oil transportation volumes continue to recover from the impact of the pandemic. However, pricing is expected to remain challenged due to underutilized barge capacity across the industry. During the year, Kirby’s coastal barge utilization is expected to be in the 90% range, driven primarily by modest improvement in the spot market and Kirby’s retirement of underutilized tank barges during the 2021 third quarter. For the full year, coastal revenues are expected to be down in the mid-single digits compared to 2021, with the impact of the Company’s exit from the
In distribution and services, economic growth and strong oilfield fundamentals are expected to improve activity levels and contribute to a 30 to 40% year-over-year increase in revenues. In the oil and gas market, higher commodity prices and increasing well completions activity are expected to improve demand for products in the distribution business which include transmissions, service, and parts. In manufacturing, a heightened customer focus on sustainability and Kirby’s current backlog for environmentally friendly pressure pumping and e-frac power generation equipment is expected to result in significant revenue growth. However, due to ongoing supply chain issues, new equipment deliveries are expected to ramp slowly with the first quarter being the lowest of the year. In commercial and industrial, improving economic conditions and growth in key markets are expected to yield full year revenue growth in the low double-digit percentage range, with increased activity in power generation, marine repair, and on-highway. Overall, operating margins in distribution and services are expected to improve to the mid-single digits as the year progresses. First quarter operating margins are expected to be the lowest of the year and similar to or slightly below the 2021 fourth quarter due to the timing of projects and ongoing supply chain delays.
Kirby expects 2022 capital spending to range between
Conference Call
A conference call is scheduled for
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
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
About
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
Fourth Quarter | Year | ||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||
(unaudited, $ in thousands, except per share amounts) | |||||||||||||||
Revenues: | |||||||||||||||
Marine transportation | $ | 350,566 | $ | 299,419 | $ | 1,322,918 | $ | 1,404,265 | |||||||
Distribution and services | 240,700 | 190,337 | 923,742 | 767,143 | |||||||||||
Total revenues | 591,266 | 489,756 | 2,246,660 | 2,171,408 | |||||||||||
Costs and expenses: | |||||||||||||||
Costs of sales and operating expenses | 433,923 | 342,947 | 1,652,961 | 1,510,818 | |||||||||||
Selling, general and administrative | 68,477 | 58,860 | 266,911 | 258,272 | |||||||||||
Taxes, other than on income | 7,710 | 8,452 | 36,251 | 42,000 | |||||||||||
Depreciation and amortization | 50,234 | 54,854 | 213,718 | 219,921 | |||||||||||
Impairments and other charges | — | — | 340,713 | 561,274 | |||||||||||
Gain on disposition of assets | (679 | ) | (131 | ) | (5,761 | ) | (118 | ) | |||||||
Total costs and expenses | 559,665 | 464,982 | 2,504,793 | 2,592,167 | |||||||||||
Operating income (loss) | 31,601 | 24,774 | (258,133 | ) | (420,759 | ) | |||||||||
Other income | 1,855 | 1,962 | 10,001 | 8,147 | |||||||||||
Interest expense | (10,297 | ) | (11,423 | ) | (42,469 | ) | (48,739 | ) | |||||||
Earnings (loss) before taxes on income | 23,159 | 15,313 | (290,601 | ) | (461,351 | ) | |||||||||
(Provision) benefit for taxes on income | (12,010 | ) | 7,102 | 43,830 | 189,759 | ||||||||||
Net earnings (loss) | 11,149 | 22,415 | (246,771 | ) | (271,592 | ) | |||||||||
Net earnings attributable to noncontrolling interests | (188 | ) | (211 | ) | (183 | ) | (954 | ) | |||||||
Net earnings (loss) attributable to Kirby | $ | 10,961 | $ | 22,204 | $ | (246,954 | ) | $ | (272,546 | ) | |||||
Net earnings (loss) per share attributable to Kirby common stockholders: | |||||||||||||||
Basic | $ | 0.18 | $ | 0.37 | $ | (4.11 | ) | $ | (4.55 | ) | |||||
Diluted | $ | 0.18 | $ | 0.37 | $ | (4.11 | ) | $ | (4.55 | ) | |||||
Common stock outstanding (in thousands): | |||||||||||||||
Basic | 60,080 | 59,937 | 60,053 | 59,912 | |||||||||||
Diluted | 60,311 | 59,975 | 60,053 | 59,912 | |||||||||||
CONDENSED CONSOLIDATED FINANCIAL INFORMATION
Fourth Quarter | Year | |||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||
(unaudited, $ in thousands) | ||||||||||||||
Adjusted EBITDA: (1) | ||||||||||||||
Net earnings (loss) attributable to Kirby | $ | 10,961 | $ | 22,204 | $ | (246,954 | ) | $ | (272,546 | ) | ||||
Interest expense | 10,297 | 11,423 | 42,469 | 48,739 | ||||||||||
Provision (benefit) for taxes on income | 12,010 | (7,102 | ) | (43,830 | ) | (189,759 | ) | |||||||
Impairment of long-lived assets | — | — | 121,661 | 165,304 | ||||||||||
Impairment of goodwill | — | — | 219,052 | 387,970 | ||||||||||
Depreciation and amortization | 50,234 | 54,854 | 213,718 | 219,921 | ||||||||||
$ | 83,502 | $ | 81,379 | $ | 306,116 | $ | 359,629 | |||||||
Capital expenditures | $ | 26,047 | $ | 18,814 | $ | 98,015 | $ | 148,185 | ||||||
Acquisitions of businesses and marine equipment | $ | 1,645 | $ | 6,200 | $ | 9,115 | $ | 354,972 | ||||||
2021 | 2020 | ||||||
(unaudited, $ in thousands) | |||||||
Cash and cash equivalents | $ | 34,813 | $ | 80,338 | |||
Long-term debt, including current portion | $ | 1,163,367 | $ | 1,468,586 | |||
Total equity | $ | 2,888,782 | $ | 3,087,553 | |||
Debt to capitalization ratio | 28.7 | % | 32.2 | % | |||
MARINE TRANSPORTATION STATEMENTS OF EARNINGS
Fourth Quarter | Year | ||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||
(unaudited, $ in thousands) | |||||||||||||||
Marine transportation revenues | $ | 350,566 | $ | 299,419 | $ | 1,322,918 | $ | 1,404,265 | |||||||
Costs and expenses: | |||||||||||||||
Costs of sales and operating expenses | 243,063 | 189,196 | 924,380 | 907,119 | |||||||||||
Selling, general and administrative | 30,703 | 25,888 | 119,017 | 111,182 | |||||||||||
Taxes, other than on income | 6,699 | 7,676 | 30,527 | 35,528 | |||||||||||
Depreciation and amortization | 44,419 | 47,503 | 185,979 | 186,798 | |||||||||||
Total costs and expenses | 324,884 | 270,263 | 1,259,903 | 1,240,627 | |||||||||||
Operating income | $ | 25,682 | $ | 29,156 | $ | 63,015 | $ | 163,638 | |||||||
Operating margin | 7.3 | % | 9.7 | % | 4.8 | % | 11.7 | % | |||||||
DISTRIBUTION AND SERVICES STATEMENTS OF EARNINGS
Fourth Quarter | Year | ||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||
(unaudited, $ in thousands) | |||||||||||||||
Distribution and services revenues | $ | 240,700 | $ | 190,337 | $ | 923,742 | $ | 767,143 | |||||||
Costs and expenses: | |||||||||||||||
Costs of sales and operating expenses | 191,755 | 154,290 | 728,855 | 604,238 | |||||||||||
Selling, general and administrative | 36,623 | 32,154 | 141,100 | 140,449 | |||||||||||
Taxes, other than on income | 987 | 756 | 5,607 | 6,392 | |||||||||||
Depreciation and amortization | 3,834 | 6,003 | 20,573 | 28,255 | |||||||||||
Total costs and expenses | 233,199 | 193,203 | 896,135 | 779,334 | |||||||||||
Operating income (loss) | $ | 7,501 | $ | (2,866 | ) | $ | 27,607 | $ | (12,191 | ) | |||||
Operating margin | 3.1 | % | (1.5 | )% | 3.0 | % | (1.6 | )% | |||||||
OTHER COSTS AND EXPENSES
Fourth Quarter | Year | ||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||
(unaudited, $ in thousands) | |||||||||||||||
General corporate expenses | $ | 2,261 | $ | 1,647 | $ | 13,803 | $ | 11,050 | |||||||
Impairment of long-lived assets | $ | — | $ | — | $ | 121,661 | $ | 165,304 | |||||||
Impairment of goodwill | $ | — | $ | — | $ | 219,052 | $ | 387,970 | |||||||
Inventory write-downs | $ | — | $ | — | $ | — | $ | 8,000 | |||||||
Gain on disposition of assets | $ | (679 | ) | $ | (131 | ) | $ | (5,761 | ) | $ | (118 | ) | |||
ONE TIME CHARGES AND BENEFITS
The 2021 fourth quarter and full year and 2020 full year GAAP results include certain one-time charges. The following is a reconciliation of GAAP earnings to non-GAAP earnings, excluding the one-time items for earnings before tax (pre-tax), net earnings attributable to Kirby (after-tax), and diluted earnings per share (per share):
Fourth Quarter 2021 | Full Year 2021 | |||||||||||||||||||
Pre-Tax | After-Tax | Per Share | Pre-Tax | After-Tax | Per Share | |||||||||||||||
(unaudited, $ in millions except per share amounts) | ||||||||||||||||||||
GAAP earnings (loss) | $ | 23.2 | $ | 11.0 | $ | 0.18 | $ | (290.6 | ) | $ | (247.0 | ) | $ | (4.11 | ) | |||||
Impairments and other charges | — | — | — | 340.7 | 275.0 | 4.58 | ||||||||||||||
— | 5.7 | 0.09 | — | 5.7 | 0.09 | |||||||||||||||
Earnings, excluding one-time items(2) | $ | 23.2 | $ | 16.7 | $ | 0.27 | $ | 50.1 | $ | 33.7 | $ | 0.56 | ||||||||
Full Year 2020 | |||||||||||
Pre-Tax | After-Tax | Per Share | |||||||||
(unaudited, $ in millions except per share amounts) | |||||||||||
GAAP loss | $ | (461.4 | ) | $ | (272.5 | ) | $ | (4.55 | ) | ||
Impairments and other charges | 561.3 | 433.3 | 7.24 | ||||||||
Income tax benefit on 2018 and 2019 net operating loss carrybacks | — | (50.8 | ) | (0.85 | ) | ||||||
Earnings, excluding one-time items(2) | $ | 99.9 | $ | 110.0 | $ | 1.84 | |||||
RECONCILIATION OF FREE CASH FLOW
The following is a reconciliation of GAAP net cash provided by operating activities to non-GAAP free cash flow(2):
Fourth Quarter | Year | ||||||||||||||
2021 | 2020(3) | 2021 | 2020(3) | ||||||||||||
(unaudited, $ in millions) | |||||||||||||||
Net cash provided by operating activities | $ | 41.2 | $ | 85.1 | $ | 321.6 | $ | 444.9 | |||||||
Less: Capital expenditures | (26.0 | ) | (18.8 | ) | (98.0 | ) | (148.2 | ) | |||||||
Free cash flow(2) | $ | 15.2 | $ | 66.3 | $ | 223.6 | $ | 296.7 | |||||||
FY 2022 Projection | |||||||
Low | High | ||||||
(unaudited, $ in millions) | |||||||
Net cash provided by operating activities | $ | 400.0 | $ | 480.0 | |||
Less: Capital expenditures | (190.0 | ) | (170.0 | ) | |||
Free cash flow(2) | $ | 210.0 | $ | 310.0 | |||
MARINE TRANSPORTATION PERFORMANCE MEASUREMENTS
Fourth Quarter | Year | ||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||
Inland Performance Measurements: | |||||||||||
3,844 | 2,905 | 13,696 | 13,006 | ||||||||
Revenue/Ton Mile (cents/tm) (5) | 7.1 | 7.8 | 7.3 | 8.4 | |||||||
Towboats operated (average) (6) | 255 | 248 | 250 | 287 | |||||||
Delay Days (7) | 2,330 | 1,768 | 9,605 | 10,408 | |||||||
Average cost per gallon of fuel consumed | $ | 2.51 | $ | 1.20 | $ | 2.13 | $ | 1.41 | |||
Barges (active): | |||||||||||
Inland tank barges | 1,025 | 1,066 | |||||||||
Coastal tank barges | 31 | 44 | |||||||||
Offshore dry-cargo barges | 4 | 4 | |||||||||
Barrel capacities (in millions): | |||||||||||
Inland tank barges | 22.9 | 24.1 | |||||||||
Coastal tank barges | 3.1 | 4.2 |
- Kirby has historically evaluated its operating performance using numerous measures, one of which is Adjusted EBITDA, a non-GAAP financial measure. Kirby defines Adjusted EBITDA as net earnings attributable to Kirby before interest expense, taxes on income, depreciation and amortization, impairment of long-lived assets, and impairment of goodwill. Adjusted EBITDA is presented because of its wide acceptance as a financial indicator. Adjusted EBITDA is one of the performance measures used in Kirby’s incentive bonus plan. Adjusted 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. Adjusted 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.
- Kirby uses certain non-GAAP financial measures to review performance excluding 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. 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 the company's normal operating results. Kirby also uses free cash flow, which is defined as net cash provided by operating activities less capital expenditures, 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. These non-GAAP financial measures are not calculations 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.
- See Kirby’s 2020 10-K for amounts provided by (used in) investing and financing activities.
- 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.
- Inland marine transportation revenues divided by ton miles. Example: Fourth quarter 2021 inland marine transportation revenues of
$271,315,000 divided by 3,844,000,000 inland marine transportation ton miles =7.1 cents .
- Towboats operated are the average number of owned and chartered towboats operated during the period.
- 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.
KIRBY CORPORATION Contact:Eric Holcomb 713-435-1545
Source: Kirby Corporation