Kirby Corporation Announces 2021 Second Quarter Results
- Second quarter 2021 earnings per share of
$0.17
- Inland marine results include a 13% sequential revenue increase, operating margin improvement, average barge utilization in the low to mid-80% range, and improved spot market pricing
- Distribution and services delivers significantly improved revenue and operating income
- Kirby expects continued improvement in marine transportation and distribution and services in the second half of 2021
- Free cash flow estimate of
$250 to$310 million for 2021
“In marine transportation, our inland business experienced a strong improvement in demand which resulted in second quarter average barge utilization increasing into the low to mid-80% range. This increase was primarily driven by improved economic conditions, higher refinery and chemical plant utilization, and increased demand for refined products and black oil. The
“In distribution and services, activity levels significantly improved during the second quarter resulting in strong sequential and year-on-year increases in revenue and operating income. In oil and gas, improved market fundamentals and increased rig and well completions activity resulted in higher demand for new transmissions, parts, and service. New orders in our manufacturing business resulted in increased deliveries of new environmentally friendly pressure pumping and frac related power generation equipment. In commercial and industrial, economic growth across the
Second Quarter 2021 Segment Results – Marine Transportation
Marine transportation revenues for the 2021 second quarter were
In the inland market, average barge utilization was in the low to mid-80% range during the quarter compared to the mid-70% range in the 2021 first quarter and the mid-80% range in the 2020 second quarter. Inland barge volumes increased sequentially as the
In the coastal market, weak demand for refined products and black oil transportation contributed to low spot market activity and barge utilization in the low to mid-70% range. Pricing on spot and term contracts was generally stable during the quarter. Revenues in the coastal market were modestly higher compared to the 2020 second quarter and represented 24% of segment revenues. The coastal business had a negative operating margin in the mid-single digits during the quarter.
Second Quarter 2021 Segment Results – Distribution and Services
Distribution and services revenues for the 2021 second quarter were
In the commercial and industrial market, revenues increased compared to the 2020 second quarter, primarily due to improved economic activity across the
In the oil and gas market, revenues and operating income improved compared to the 2020 second quarter due to higher oilfield activity which resulted in increased demand for new and overhauled engines, transmissions, parts, and service. The manufacturing business also experienced year-on-year increases in orders and deliveries of new and remanufactured pressure pumping equipment. During the quarter, the oil and gas market represented approximately 38% of segment revenues and had a negative operating margin in the low single digits.
Cash Generation
For the 2021 second quarter, EBITDA of
2021 Outlook
Commenting on the 2021 full year outlook,
In inland marine, Kirby’s barge utilization, which is currently in the mid-80% range, is expected to gradually increase into the high 80% to 90% range during the second half of 2021. This increase in activity should yield further improvements in the spot market, which currently represents approximately 35% of inland revenue, and contribute favorably to revenues and operating margins. During the balance of 2021 and into 2022, term contracts that renewed lower during the last several quarters should gradually reset to reflect the improved market conditions. Overall, inland revenues are expected to increase in the second half of the year with inland operating margins in the low double digits for the third quarter and further operating margin improvement expected in the fourth quarter subject to seasonal weather disruptions and potential COVID-19 issues slowing the economic recovery.
In coastal, market conditions are expected to remain challenging for the remainder of the year, but increasing demand for refined products is expected to contribute to modest improvement in spot market activity levels. As a result, Kirby expects coastal barge utilization to increase into the mid-70% range with third and fourth quarter revenues and operating margins modestly improved compared to the 2021 second quarter.
In distribution and services, revenue and operating income are expected to further improve in the second half of the year. In commercial and industrial, continued economic improvements are expected to contribute to enhanced activity levels in the on-highway and power generation markets. Third quarter results are also expected to benefit from seasonal summer increases in demand for back-up power generation rental equipment and
Kirby expects 2021 capital spending to range between
Kirby Announces Planned Retirement of Chief Financial Officer
On
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
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CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
| Second Quarter | Six Months | ||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||
| (unaudited, $ in thousands, except per share amounts) | |||||||||||||
| Revenues: | |||||||||||||
| Marine transportation | $ | 332,887 | $ | 380,987 | $ | 633,838 | $ | 784,244 | |||||
| Distribution and services | 226,737 | 160,172 | 422,636 | 400,841 | |||||||||
| Total revenues | 559,624 | 541,159 | 1,056,474 | 1,185,085 | |||||||||
| Costs and expenses: | |||||||||||||
| Costs of sales and operating expenses | 409,479 | 373,539 | 772,519 | 827,107 | |||||||||
| Selling, general and administrative | 62,740 | 65,612 | 132,369 | 137,692 | |||||||||
| Taxes, other than on income | 10,364 | 13,065 | 18,624 | 24,471 | |||||||||
| Depreciation and amortization | 55,132 | 54,502 | 110,022 | 110,288 | |||||||||
| Impairments and other charges | — | — | — | 561,274 | |||||||||
| (Gain) loss on disposition of assets | (2,119 | ) | 189 | (4,252 | ) | (303 | ) | ||||||
| Total costs and expenses | 535,596 | 506,907 | 1,029,282 | 1,660,529 | |||||||||
| Operating income (loss) | 24,028 | 34,252 | 27,192 | (475,444 | ) | ||||||||
| Other income | 2,523 | 2,290 | 6,314 | 5,013 | |||||||||
| Interest expense | (10,706 | ) | (12,708 | ) | (21,672 | ) | (25,507 | ) | |||||
| Earnings (loss) before taxes on income | 15,845 | 23,834 | 11,834 | (495,938 | ) | ||||||||
| (Provision) benefit for taxes on income | (5,493 | ) | 1,429 | (4,602 | ) | 174,238 | |||||||
| Net earnings (loss) | 10,352 | 25,263 | 7,232 | (321,700 | ) | ||||||||
| Less: Net earnings attributable to noncontrolling interests | (162 | ) | (261 | ) | (417 | ) | (539 | ) | |||||
| Net earnings (loss) attributable to Kirby | $ | 10,190 | $ | 25,002 | $ | 6,815 | $ | (322,239 | ) | ||||
| Net earnings (loss) per share attributable to Kirby common stockholders: | |||||||||||||
| Basic | $ | 0.17 | $ | 0.42 | $ | 0.11 | $ | (5.38 | ) | ||||
| Diluted | $ | 0.17 | $ | 0.42 | $ | 0.11 | $ | (5.38 | ) | ||||
| Common stock outstanding (in thousands): | |||||||||||||
| Basic | 60,053 | 59,912 | 60,035 | 59,898 | |||||||||
| Diluted | 60,274 | 59,937 | 60,220 | 59,898 | |||||||||
CONDENSED CONSOLIDATED FINANCIAL INFORMATION
| Second Quarter | Six Months | ||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||
| (unaudited, $ in thousands) | |||||||||||||
| Adjusted EBITDA: (1) | |||||||||||||
| Net earnings (loss) attributable to Kirby | $ | 10,190 | $ | 25,002 | $ | 6,815 | $ | (322,239 | ) | ||||
| Interest expense | 10,706 | 12,708 | 21,672 | 25,507 | |||||||||
| Provision (benefit) for taxes on income | 5,493 | (1,429 | ) | 4,602 | (174,238 | ) | |||||||
| Impairment of long-lived assets | — | — | — | 165,304 | |||||||||
| Impairment of goodwill | — | — | — | 387,970 | |||||||||
| Depreciation and amortization | 55,132 | 54,502 | 110,022 | 110,288 | |||||||||
| $ | 81,521 | $ | 90,783 | $ | 143,111 | $ | 192,592 | ||||||
| Capital expenditures | $ | 24,317 | $ | 43,605 | $ | 38,369 | $ | 92,830 | |||||
| Acquisitions of businesses and marine equipment | $ | 7,470 | $ | 281,825 | $ | 7,470 | $ | 342,247 | |||||
2021 |
2020 |
||||||
| (unaudited, $ in thousands) | |||||||
| Cash and cash equivalents | $ | 53,052 | $ | 80,338 | |||
| Long-term debt, including current portion | $ | 1,275,679 | $ | 1,468,586 | |||
| Total equity | $ | 3,105,329 | $ | 3,087,553 | |||
| Debt to capitalization ratio | 29.1 | % | 32.2 | % | |||
MARINE TRANSPORTATION STATEMENTS OF EARNINGS
| Second Quarter | Six Months | ||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||
| (unaudited, $ in thousands) | |||||||||||||
| Marine transportation revenues | $ | 332,887 | $ | 380,987 | $ | 633,838 | $ | 784,244 | |||||
| Costs and expenses: | |||||||||||||
| Costs of sales and operating expenses | 229,959 | 244,990 | 444,084 | 510,885 | |||||||||
| Selling, general and administrative | 28,272 | 26,816 | 58,850 | 58,740 | |||||||||
| Taxes, other than on income | 8,677 | 11,122 | 15,406 | 20,545 | |||||||||
| Depreciation and amortization | 47,501 | 46,684 | 95,080 | 91,983 | |||||||||
| Total costs and expenses | 314,409 | 329,612 | 613,420 | 682,153 | |||||||||
| Operating income | $ | 18,478 | $ | 51,375 | $ | 20,418 | $ | 102,091 | |||||
| Operating margin | 5.6 | % | 13.5 | % | 3.2 | % | 13.0 | % | |||||
DISTRIBUTION AND SERVICES STATEMENTS OF EARNINGS
| Second Quarter | Six Months | ||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||
| (unaudited, $ in thousands) | |||||||||||||
| Distribution and services revenues | $ | 226,737 | $ | 160,172 | $ | 422,636 | $ | 400,841 | |||||
| Costs and expenses: | |||||||||||||
| Costs of sales and operating expenses | 180,096 | 128,549 | 329,223 | 316,222 | |||||||||
| Selling, general and administrative | 32,987 | 37,225 | 69,475 | 75,197 | |||||||||
| Taxes, other than on income | 1,658 | 1,912 | 3,150 | 3,882 | |||||||||
| Depreciation and amortization | 5,840 | 6,633 | 11,721 | 15,969 | |||||||||
| Total costs and expenses | 220,581 | 174,319 | 413,569 | 411,270 | |||||||||
| Operating income (loss) | $ | 6,156 | $ | (14,147 | ) | $ | 9,067 | $ | (10,429 | ) | |||
| Operating margin | 2.7 | % | (8.8 | )% | 2.1 | % | (2.6 | )% | |||||
OTHER COSTS AND EXPENSES
| Second Quarter | Six Months | ||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||
| (unaudited, $ in thousands) | |||||||||||||
| General corporate expenses | $ | 2,725 | $ | 2,787 | $ | 6,545 | $ | 6,135 | |||||
| Impairment of long-lived assets | $ | — | $ | — | $ | — | $ | 165,304 | |||||
| Impairment of goodwill | $ | — | $ | — | $ | — | $ | 387,970 | |||||
| Inventory write-downs | $ | — | $ | — | $ | — | $ | 8,000 | |||||
| (Gain) loss on disposition of assets | $ | (2,119 | ) | $ | 189 | $ | (4,252 | ) | $ | (303 | ) | ||
ONE TIME CHARGES AND BENEFITS
The 2020 first six months 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):
| First Six Months 2020 | ||||||||||
| Pre-Tax | After-Tax | Per Share | ||||||||
| GAAP loss | $ | (495.9 | ) | $ | (322.2 | ) | $ | (5.38 | ) | |
| 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) | $ | 65.4 | $ | 60.3 | $ | 1.01 | ||||
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):
| Second Quarter | Six Months | ||||||||||||
| 2021 | 2020(3) | 2021 | 2020(3) | ||||||||||
| (unaudited, $ in millions) | |||||||||||||
| Net cash provided by operating activities | $ | 95.2 | $ | 170.6 | $ | 197.8 | $ | 242.1 | |||||
| Less: Capital expenditures | (24.3 | ) | (43.6 | ) | (38.4 | ) | (92.8 | ) | |||||
| Free cash flow(2) | $ | 70.9 | $ | 127.0 | $ | 159.4 | $ | 149.3 | |||||
| FY 2021 Projection | FY 2020(3) | ||||||||||
| Low | High | Actual | |||||||||
| (unaudited, $ in millions) | |||||||||||
| Net cash provided by operating activities | $ | 395.0 | $ | 435.0 | $ | 444.9 | |||||
| Less: Capital expenditures | (145.0 | ) | (125.0 | ) | (148.2 | ) | |||||
| Free cash flow(2) | $ | 250.0 | $ | 310.0 | $ | 296.7 | |||||
MARINE TRANSPORTATION PERFORMANCE MEASUREMENTS
| Second Quarter | Six Months | ||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||
| Inland Performance Measurements: | |||||||||||||
| 3,478 | 3,688 | 6,459 | 7,307 | ||||||||||
| Revenue/Ton Mile (cents/tm) (5) | 7.3 | 8.2 | 7.4 | 8.5 | |||||||||
| Towboats operated (average) (6) | 260 | 324 | 251 | 318 | |||||||||
| Delay Days (7) | 2,922 | 2,815 | 5,776 | 7,305 | |||||||||
| Average cost per gallon of fuel consumed | $ | 2.06 | $ | 1.12 | $ | 1.86 | $ | 1.55 | |||||
| Barges (active): | |||||||||||||
| Inland tank barges | 1,046 | 1,131 | |||||||||||
| Coastal tank barges | 44 | 47 | |||||||||||
| Offshore dry-cargo barges | 4 | 4 | |||||||||||
| Barrel capacities (in millions): | |||||||||||||
| Inland tank barges | 23.4 | 25.6 | |||||||||||
| Coastal tank barges | 4.2 | 4.5 | |||||||||||
(1) 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.
(2) 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.
(3) See Kirby’s 2020 10-K and 2020 second quarter 10-Q for amounts provided by (used in) investing and financing activities.
(4) 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.
(5) Inland marine transportation revenues divided by ton miles. Example: Second quarter 2021 inland marine transportation revenues of
(6) Towboats operated are the average number of owned and chartered towboats operated during the period.
(7) 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.
Contact:
713-435-1545
Source: Kirby Corporation