UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



Form 10-Q/A
 
Amendment No. 1
 

Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2020

Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number 1-7615


KIRBY CORPORATION
(Exact name of registrant as specified in its charter)



Nevada
 
74-1884980
(State or other jurisdiction of incorporation or organization)
 
(IRS Employer Identification No.)

55 Waugh Drive, Suite 1000
Houston, TX
 
77007
(Address of principal executive offices)
 
(Zip Code)

(713) 435-1000
(Registrant’s telephone number, including area code)

No Change
(Former name, former address and former fiscal year, if changed since last report)


Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock
KEX
New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulations S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer
 
Accelerated filer
Non-accelerated filer
 
Smaller reporting company
     
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

As of May 7, 2020, 60,038,000 shares of the Registrant’s $0.10 par value per share common stock were outstanding.





EXPLANATORY NOTE

Kirby Corporation (the “Company”) is filing this Amendment No. 1 on Form 10-Q/A to amend and restate in their entirety the following items of its Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 as originally filed with the Securities and Exchange Commission on May 8, 2020 (the “Original Form 10-Q”): (i) Item 1 of Part I “Financial Statements,” (ii) Item 2 of Part I, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” (iii) Item 4 of Part I, “Controls and Procedures,” and (iv) Item 6 of Part II, “Exhibits”, and the Company has also updated the signature page, the certifications of the Chief Executive Officer and Chief Financial Officer in Exhibits 31.1, 31.2, and 32, and the financial statements formatted in Inline Extensible Business Reporting Language (“Inline XBRL”) in Exhibits 101 and 104. No other sections were affected, but for the convenience of the reader, this report on Form 10-Q/A restates in its entirety, as amended, the Company’s Original Form 10-Q. This report on Form 10-Q/A is presented as of the filing date of the Original Form 10-Q and does not reflect events occurring after that date, or modify or update disclosures in any way other than as required to reflect the restatement described below.

After the Company filed the original Form 10-Q, the Company determined that its results reported for the quarter ended March 31, 2020 in the Original Form 10-Q included a goodwill impairment expense that was understated as a result of not applying a specific provision of the Accounting Standards Update 2017-04, “Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”) which was adopted by the Company on January 1, 2020.  ASU 2017-04 requires goodwill impairment be measured as the excess of the carrying value of the reporting unit over the estimated fair value.  Pursuant to paragraph 350-20-55-23A, the recognition of an impairment of goodwill loss creates a cycle of impairment because the decrease in book value of goodwill increases the deferred tax assets (or decreases the deferred tax liabilities), when tax-deductible goodwill is involved, such that the carrying amount of the reporting unit immediately exceeds its fair value upon recognition of the loss.  As a result, a simultaneous equation prescribed by the accounting literature should be applied, which the Company did not apply.

The condensed financial statements for the quarter ended March 31, 2020 included in this Form 10-Q/A have been restated to apply this equation of the new guidance in ASU 2017-04, and the Company increased its goodwill impairment charge in the three months ending March 31, 2020 by $127,933,000 before taxes, $98,773,000 after taxes or $1.65 per share resulting in total impairments and other charges of $561,274,000 before taxes, $433,341,000 after taxes or $7.24 per share.  This adjustment does not affect previously reported cash flows or revenues, nor does it affect segment profit of the marine transportation or distribution and services segments reported for the quarter ended March 31, 2020.  A detail of all adjustments recorded is included in Note 1, Basis for Preparation of the Condensed Financial Statements.  The Company has made necessary conforming changes in Item 2 of Part I, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” resulting from the correction of this error.

 


 

 
PART I – FINANCIAL INFORMATION

Item 1.  Financial Statements

KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES

CONDENSED BALANCE SHEETS
(Unaudited)

 
March 31,
2020
(Restated)
   
December 31,
2019
 
   
($ in thousands)
 
ASSETS
           
Current assets:
           
Cash and cash equivalents
 
$
322,571
   
$
24,737
 
Accounts receivable:
               
Trade – less allowance for doubtful accounts
   
389,616
     
379,174
 
Other
   
253,688
     
104,175
 
Inventories – net
   
341,498
     
351,401
 
Prepaid expenses and other current assets
   
60,640
     
58,092
 
Total current assets
   
1,368,013
     
917,579
 
                 
Property and equipment
   
5,366,596
     
5,324,090
 
Accumulated depreciation
   
(1,589,812
)
   
(1,546,980
)
Property and equipment – net
   
3,776,784
     
3,777,110
 
                 
Operating lease right-of-use assets
   
157,333
     
159,641
 
Goodwill
   
576,165
     
953,826
 
Other intangibles, net
   
73,694
     
210,682
 
Other assets
   
57,655
     
60,259
 
Total assets
 
$
6,009,644
   
$
6,079,097
 
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
Current liabilities:
               
Bank notes payable
 
$
17
   
$
16
 
Income taxes payable
   
698
     
665
 
Accounts payable
   
227,020
     
206,778
 
Accrued liabilities
   
205,667
     
236,350
 
Current portion of operating lease liabilities
   
25,903
     
27,324
 
Deferred revenues
   
37,027
     
42,982
 
Total current liabilities
   
496,332
     
514,115
 
                 
Long-term debt, net – less current portion
   
1,702,476
     
1,369,751
 
Deferred income taxes
   
552,990
     
588,204
 
Operating lease liabilities – less current portion
   
138,884
     
139,457
 
Other long-term liabilities
   
93,208
     
95,978
 
Total long-term liabilities
   
2,487,558
     
2,193,390
 
                 
Contingencies and commitments
   
     
 
                 
Equity:
               
Kirby stockholders’ equity:
               
Common stock, $0.10 par value per share. Authorized 120,000,000 shares, issued 65,472,000 shares
   
6,547
     
6,547
 
Additional paid-in capital
   
837,879
     
835,899
 
Accumulated other comprehensive income – net
   
(38,991
)
   
(37,799
)
Retained earnings
   
2,518,698
     
2,865,939
 
Treasury stock – at cost, 5,475,000 shares at March 31, 2020 and 5,513,000 at December 31, 2019
   
(301,424
)
   
(301,963
)
Total Kirby stockholders’ equity
   
3,022,709
     
3,368,623
 
Noncontrolling interests
   
3,045
     
2,969
 
Total equity
   
3,025,754
     
3,371,592
 
Total liabilities and equity
 
$
6,009,644
   
$
6,079,097
 

See accompanying notes to condensed financial statements.

1


KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES

CONDENSED STATEMENTS OF EARNINGS
(Unaudited)

 
Three months ended March 31,
 
   
2020
(Restated)
   
2019
 
   
($ in thousands, except
per share amounts)
 
Revenues:
           
Marine transportation
 
$
403,257
   
$
368,121
 
Distribution and services
   
240,669
     
376,500
 
Total revenues
   
643,926
     
744,621
 
                 
Costs and expenses:
               
Costs of sales and operating expenses
   
453,568
     
536,655
 
Selling, general and administrative
   
72,080
     
72,796
 
Taxes, other than on income
   
11,406
     
9,998
 
Depreciation and amortization
   
55,786
     
55,223
 
Impairments and other charges
   
561,274
     
 
Gain on disposition of assets
   
(492
)
   
(2,157
)
Total costs and expenses
   
1,153,622
     
672,515
 
                 
Operating income (loss)
   
(509,696
)
   
72,106
 
Other income (expense)
   
2,723
     
(568
)
Interest expense
   
(12,799
)
   
(13,201
)
                 
Earnings (loss) before taxes on income
   
(519,772
)
   
58,337
 
(Provision) benefit for taxes on income
   
172,809
     
(13,880
)
                 
Net earnings (loss)
   
(346,963
)
   
44,457
 
Less: Net earnings attributable to noncontrolling interests
   
(278
)
   
(161
)
                 
Net earnings (loss) attributable to Kirby
 
$
(347,241
)
 
$
44,296
 
                 
Net earnings (loss) per share attributable to Kirby common stockholders:
               
Basic
 
$
(5.80
)
 
$
0.74
 
Diluted
 
$
(5.80
)
 
$
0.74
 

See accompanying notes to condensed financial statements.

2


KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES

CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)

 
Three months ended March 31,
 
   
2020
(Restated)
   
2019
 
   
($ in thousands)
 
       
Net earnings (loss)
 
$
(346,963
)
 
$
44,457
 
Other comprehensive income (loss), net of taxes:
               
Pension and postretirement benefits
   
82
     
411
 
Foreign currency translation adjustments
   
(1,274
)
   
129
 
Total other comprehensive income (loss), net of taxes
   
(1,192
)
   
540
 
                 
Total comprehensive income (loss), net of taxes
   
(348,155
)
   
44,997
 
Net earnings attributable to noncontrolling interests
   
(278
)
   
(161
)
                 
Comprehensive income (loss) attributable to Kirby
 
$
(348,433
)
 
$
44,836
 

See accompanying notes to condensed financial statements.

3


KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES

CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)

 
Three months ended March 31,
 
   
2020
(Restated)
   
2019
 
   
($ in thousands)
 
Cash flows from operating activities:
           
Net earnings (loss)
 
$
(346,963
)
 
$
44,457
 
Adjustments to reconcile net earnings (loss) to net cash provided by operations:
               
Depreciation and amortization
   
55,786
     
55,223
 
Provision (benefit) for deferred income taxes
   
(35,242
)
   
12,490
 
Impairments and other charges
   
561,274
     
 
Amortization of unearned share-based compensation
   
5,331
     
4,900
 
Amortization of major maintenance costs
   
7,103
     
4,974
 
Other
   
112
     
(1,778
)
Decrease in cash flows resulting from changes in operating assets and liabilities, net
   
(175,900
)
   
(81,737
)
Net cash provided by operating activities
   
71,501
     
38,529
 
                 
Cash flows from investing activities:
               
Capital expenditures
   
(49,225
)
   
(60,932
)
Acquisitions of businesses and marine equipment
   
(60,422
)
   
(247,470
)
Proceeds from disposition of assets
   
3,993
     
13,187
 
Net cash used in investing activities
   
(105,654
)
   
(295,215
)
                 
Cash flows from financing activities:
               
Borrowings (payments) on bank credit facilities, net
   
485,001
     
(240,801
)
Borrowings on long-term debt
   
     
500,000
 
Payments on long-term debt
   
(150,000
)
   
 
Payments of debt issue costs
   
     
(2,232
)
Proceeds from exercise of stock options
   
353
     
1,415
 
Payments related to tax withholding for share-based compensation
   
(3,165
)
   
(2,003
)
Other
   
(202
)
   
(204
)
Net cash provided by financing activities
   
331,987
     
256,175
 
Increase (decrease) in cash and cash equivalents
   
297,834
     
(511
)
                 
Cash and cash equivalents, beginning of year
   
24,737
     
7,800
 
Cash and cash equivalents, end of period
 
$
322,571
   
$
7,289
 
                 
Supplemental disclosures of cash flow information:
               
Cash paid (received) during the period:
               
Interest paid
 
$
21,734
   
$
23,257
 
Income taxes refunded
 
$
(160
)
 
$
(1,024
)
Operating cash outflow from operating leases
 
$
9,738
   
$
10,142
 
Non-cash investing activity:
               
Capital expenditures included in accounts payable
 
$
(2,707
)
 
$
(5,022
)
Right-of-use assets obtained in exchange for lease obligations
 
$
4,677
   
$
1,292
 

See accompanying notes to condensed financial statements.

4


KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES

CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)

 
Common Stock
   
Additional
Paid-in-
   
Accumulated
Other
Comprehensive
   
Retained
   
Treasury Stock
   
Noncontrolling
       
   
Shares
   
Amount
   
Capital
   
Income, Net
   
Earnings
   
Shares
   
Amount
   
Interests
   
Total
 
   
(in thousands)
 
Balance at December 31, 2019
   
65,472
   
$
6,547
   
$
835,899
   
$
(37,799
)
 
$
2,865,939
     
(5,513
)
 
$
(301,963
)
 
$
2,969
   
$
3,371,592
 
Stock option exercises
   
     
     
26
     
     
     
15
     
327
     
     
353
 
Issuance of stock for equity awards, net of forfeitures
   
     
     
(3,377
)
   
     
     
61
     
3,377
     
     
 
Tax withholdings on equity award vesting
   
     
     
     
     
     
(38
)
   
(3,165
)
   
     
(3,165
)
Amortization of unearned share-based compensation
   
     
     
5,331
     
     
     
     
     
     
5,331
 
Total comprehensive loss, net of taxes
   
     
     
     
(1,192
)
   
(347,241
)
   
     
     
278
     
(348,155
)
Return of investment to noncontrolling interests
   
     
     
     
     
     
     
     
(202
)
   
(202
)
Balance at March 31, 2020
(Restated)
   
65,472
   
$
6,547
   
$
837,879
   
$
(38,991
)
 
$
2,518,698
     
(5,475
)
 
$
(301,424
)
 
$
3,045
   
$
3,025,754
 

 
Common Stock
   
Additional
Paid-in-
   
Accumulated
Other
Comprehensive
   
Retained
   
Treasury Stock
   
Noncontrolling
       
   
Shares
   
Amount
   
Capital
   
Income, Net
   
Earnings
   
Shares
   
Amount
   
Interests
   
Total
 
   
(in thousands)
 
Balance at December 31, 2018
   
65,472
   
$
6,547
   
$
823,347
   
$
(33,511
)
 
$
2,723,592
     
(5,608
)
 
$
(306,788
)
 
$
3,114
   
$
3,216,301
 
Stock option exercises
   
     
     
52
     
     
     
25
     
1,364
     
     
1,416
 
Issuance of stock for equity awards, net of forfeitures
   
     
     
(802
)
   
     
     
14
     
802
     
     
 
Tax withholdings on equity award vesting
   
     
     
     
     
     
(30
)
   
(2,003
)
   
     
(2,003
)
Amortization of unearned share-based compensation
   
     
     
4,900
     
     
     
     
     
     
4,900
 
Total comprehensive income, net of taxes
   
     
     
     
540
     
44,296
     
     
     
161
     
44,997
 
Return of investment to noncontrolling interests
   
     
     
     
     
     
     
     
(203
)
   
(203
)
Balance at March 31, 2019
   
65,472
   
$
6,547
   
$
827,497
   
$
(32,971
)
 
$
2,767,888
     
(5,599
)
 
$
(306,625
)
 
$
3,072
   
$
3,265,408
 

See accompanying notes to condensed financial statements.

5


KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)

(1)
Basis for Preparation of the Condensed Financial Statements


The condensed financial statements included herein have been prepared by Kirby Corporation and its consolidated subsidiaries  (the “Company”), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Although the Company believes that the disclosures are adequate to make the information presented not misleading, certain information and footnote disclosures, including significant accounting policies normally included in annual financial statements, have been condensed or omitted pursuant to such rules and regulations. It is suggested that these condensed financial statements be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. Certain reclassifications have been made to reflect the current presentation of financial information.


The condensed financial statements for the quarter ended March 31, 2020 have been restated to apply a simultaneous equation to the calculated goodwill impairment, as prescribed by the accounting literature, to adjust for the cycle of goodwill impairment created by the decrease in deferred tax liabilities due to the impairment of tax deductible goodwill as described by paragraph 350-20-55-23A of Accounting Standards Update 2017-04, “Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”).  ASU 2017-04 was adopted by the Company on January 1, 2020, as discussed in Note 2, Accounting Standards Adoptions.  The following table summarizes the effects of the restatement resulting from the correction of this error (in thousands):

 
Previously
Reported
   
Adjustment
   
Restated
 
Condensed Balance Sheet:
                 
Goodwill
 
$
704,098
   
$
(127,933
)
 
$
576,165
 
Total assets
   
6,137,577
     
(127,933
)
   
6,009,644
 
Deferred income taxes
   
582,150
     
(29,160
)
   
552,990
 
Total long-term liabilities
   
2,516,718
     
(29,160
)
   
2,487,558
 
Retained earnings
   
2,617,471
     
(98,773
)
   
2,518,698
 
Total Kirby stockholders’ equity
   
3,121,482
     
(98,773
)
   
3,022,709
 
Total equity
   
3,124,527
     
(98,773
)
   
3,025,754
 
Total liabilities and equity
   
6,137,577
     
(127,933
)
   
6,009,644
 
                         
Condensed Statement of Earnings:
                       
Impairments and other charges
   
433,341
     
127,933
     
561,274
 
Total costs and expenses
   
1,025,689
     
127,933
     
1,153,622
 
Operating income (loss)
   
(381,763
)
   
(127,933
)
   
(509,696
)
Earnings (loss) before taxes on income
   
(391,839
)
   
(127,933
)
   
(519,772
)
(Provision) benefit for taxes on income
   
143,649
     
29,160
     
172,809
 
Net earnings (loss)
   
(248,190
)
   
(98,773
)
   
(346,963
)
Net earnings (loss) attributable to Kirby
   
(248,468
)
   
(98,773
)
   
(347,241
)
Net earnings (loss) per common share – basic and diluted
   
(4.15
)
   
(1.65
)
   
(5.80
)
                         
Condensed Statement of Comprehensive Income:
                       
Net earnings (loss)
   
(248,190
)
   
(98,773
)
   
(346,963
)
Total comprehensive income (loss), net of taxes
   
(249,382
)
   
(98,773
)
   
(348,155
)
Comprehensive income (loss) attributable to Kirby
   
(249,660
)
   
(98,773
)
   
(348,433
)
                         
Condensed Statement of Cash Flows:
                       
Net earnings (loss)
   
(248,190
)
   
(98,773
)
   
(346,963
)
Provision (benefit) for deferred income taxes
   
(6,082
)
   
(29,160
)
   
(35,242
)
Impairments and other charges
   
433,341
     
127,933
     
561,274
 
                         
Condensed Statement of Stockholders’ Equity:
                       
Total comprehensive loss, net of taxes          
   
(249,382
)
   
(98,773
)
   
(348,155
)
Retained earnings          
   
2,617,471
     
(98,773
)
   
2,518,698
 
Total equity
   
3,124,527
     
(98,773
)
   
3,025,754
 


6

(2)
Accounting Standards Adoptions


In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” which simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740, Income Taxes. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted. The Company is currently evaluating this guidance to determine the impact on its consolidated financial statements.


In August 2018, the FASB issued ASU 2018-14, “Compensation – Retirement Benefits - Defined Benefit Plans – General (Subtopic 715-20): Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plans” which amends the annual disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans by removing certain requirements, providing clarification on existing requirements and adding new requirements including adding an explanation of the reasons for significant gains and losses related to changes in the benefit obligation for the period. The guidance is effective for fiscal years ending after December 15, 2020. Early adoption is permitted. The amendments in this update are required to be applied on a retrospective basis to all periods presented. The Company is currently evaluating this guidance to determine the impact on its disclosures.


In January 2017, the FASB issued ASU 2017-04, “Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment” which simplifies the subsequent measurement of goodwill by eliminating Step 2 in the goodwill impairment test that required an entity to perform procedures to determine the fair value of its assets and liabilities at the testing date. An entity instead shall perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying value and record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value, incorporating all tax impacts caused by the recognition of the impairment loss. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The Company adopted ASU 2017-04 on January 1, 2020 on a prospective basis.  See Note 1, Basis for Preparation of the Condensed Financial Statements and Note 8, Impairments and Other Charges for further details.

(3)
Acquisitions


During the three months ended March 31, 2020, the Company purchased three newly constructed inland pressure barges for $20,100,000 in cash.


On January 3, 2020, the Company completed the acquisition of substantially all the assets of Convoy Servicing Company and Agility Fleet Services, LLC (collectively “Convoy”) for $40,322,000 in cash, reduced by a receivable due from Convoy of $3,142,000 recorded for post-closing adjustments that was settled in April 2020.  Convoy is an authorized dealer for Thermo King refrigeration systems for trucks, railroad cars and other land transportation markets for North and East Texas and Colorado.


The fair values of the assets acquired and liabilities assumed from Convoy recorded at the acquisition date were as follows (in thousands):

Assets:
     
Accounts receivable
 
$
5,677
 
Inventories
   
11,771
 
Prepaid expenses
   
177
 
Property and equipment
   
415
 
Operating lease right-of-use assets
   
3,713
 
Goodwill
   
10,309
 
Other intangibles
   
17,170
 
Total assets
   
49,232
 
Liabilities:
       
Accounts payable and accrued liabilities
   
8,339
 
Current portion of operating lease liabilities
   
793
 
Other long-term liabilities
   
2,920
 
Total liabilities
   
12,052
 
Net assets acquired
 
$
37,180
 

7


The Company acquired intangible assets with a weighted average amortization period of 11 years, consisting of $9,000,000 for customer relationships with an amortization period of 10 years, $8,000,000 for distributorships with an amortization period of 12 years and $170,000 for non-compete agreements with an amortization period of three years.


Pro forma results of the acquisitions made in the 2020 first quarter have not been presented as the pro forma revenues and net earnings attributable to Kirby would not be materially different from the Company’s actual results.

(4)
Revenues


The following table sets forth the Company’s revenues by major source (in thousands):

 
Three months ended March 31,
 
   
2020
   
2019
 
Marine transportation segment:
           
Inland transportation
 
$
318,565
   
$
283,085
 
Coastal transportation
   
84,692
     
85,036
 
   
$
403,257
   
$
368,121
 
Distribution and services segment:
               
Oil and gas
 
$
78,678
   
$
223,101
 
Commercial and industrial
   
161,991
     
153,399
 
   
$
240,669
   
$
376,500
 


Contract Assets and Liabilities. Contract liabilities represent advance consideration received from customers, and are recognized as revenue over time as the related performance obligation is satisfied. Revenues recognized in the 2020 and 2019 first quarters that were included in the opening contract liability balances were $32,386,000 and $50,921,000, respectively. The Company presents all contract liabilities within the deferred revenues financial statement caption on the balance sheets.  The Company did not have any contract assets at March 31, 2020 or December 31, 2019.


The Company applies the practical expedient that allows non-disclosure of information about remaining performance obligations that have original expected durations of one year or less.

(5)
Segment Data


The Company’s operations are aggregated into two reportable business segments as follows:


Marine Transportation — Provides marine transportation principally by United States flag vessels of liquid cargoes throughout the United States inland waterway system, along all three United States coasts, in Alaska and Hawaii and, to a lesser extent, in United States coastal transportation of dry-bulk cargoes. The principal products transported include petrochemicals, black oil, refined petroleum products and agricultural chemicals.


Distribution and Services — Provides after-market services and parts for engines, transmissions, reduction gears and related equipment used in oilfield service, marine, power generation, on-highway, and other industrial applications. The Company also rents equipment including generators, industrial compressors, railcar movers, and high capacity lift trucks for use in a variety of industrial markets, and manufactures and remanufactures oilfield service equipment, including pressure pumping units, for land-based oilfield service customers.


The Company’s two reportable business segments are managed separately based on fundamental differences in their operations. The Company evaluates the performance of its segments based on the contributions to operating income of the respective segments, before income taxes, interest, gains or losses on disposition of assets, other nonoperating income, noncontrolling interests, accounting changes, and nonrecurring items. Intersegment revenues, based on market-based pricing, of the distribution and services segment from the marine transportation segment of $10,286,000 and $7,535,000 for the three months ended March 31, 2020 and 2019, respectively, as well as the related intersegment profit of $1,029,000 and $754,000 for the three months ending March 31, 2020 and 2019, respectively, have been eliminated from the tables below.
8



The following tables set forth the Company’s revenues and profit or loss by reportable segment and total assets (in thousands):

 
Three months ended March 31,
 
   
2020
   
2019
 
Revenues:
           
Marine transportation
 
$
403,257
   
$
368,121
 
Distribution and services
   
240,669
     
376,500
 
   
$
643,926
   
$
744,621
 
Segment profit (loss):
               
Marine transportation
 
$
50,716
   
$
35,424
 
Distribution and services
   
3,718
     
37,609
 
Other (Restated)
   
(574,206
)
   
(14,696
)
   
$
(519,772
)
 
$
58,337
 

 
March 31,
2020
   
December 31,
2019
 
Total assets:
           
Marine transportation          
 
$
4,565,489
   
$
4,536,368
 
Distribution and services (Restated)          
   
887,991
     
1,422,394
 
Other          
   
556,164
     
120,335
 
   
$
6,009,644
   
$
6,079,097
 


The following table presents the details of “Other” segment loss (in thousands):

 
Three months ended March 31,
 
   
2020
   
2019
 
General corporate expenses
 
$
(3,348
)
 
$
(3,084
)
Interest expense
   
(12,799
)
   
(13,201
)
Impairments and other charges (Restated)
   
(561,274
)
   
 
Gain on disposition of assets
   
492
     
2,157
 
Other income (expense)
   
2,723
     
(568
)
   
$
(574,206
)
 
$
(14,696
)


The following table presents the details of “Other” total assets (in thousands):

 
March 31,
2020
   
December 31,
2019
 
General corporate assets
 
$
553,965
   
$
118,310
 
Investment in affiliates
   
2,199
     
2,025
 
   
$
556,164
   
$
120,335
 

(6)
Long-Term Debt


The Company has an amended and restated credit agreement (the “Credit Agreement”) with a group of commercial banks, with JPMorgan Chase Bank, N.A. as the administrative agent bank, allowing for an $850,000,000 unsecured revolving credit facility (“Revolving Credit Facility”) and an unsecured term loan (“Term Loan”) with a maturity date of March 27, 2024. The Term Loan is repayable in quarterly installments currently scheduled to commence September 30, 2023, with $343,750,000 due on March 27, 2024.  The Term Loan is prepayable, in whole or in part, without penalty.  As of March 31, 2020, the Company had outstanding borrowings of $485,000,000 and availability of $359,637,000 under the Revolving Credit Facility and borrowings of $375,000,000 under the Term Loan.  The interest rates under the Revolving Credit Facility and Term Loan were 1.9% and 2.1%, respectively, at March 31, 2020.


On February 27, 2020, upon maturity, the Company repaid in full $150,000,000 of 2.72% unsecured senior notes.

9


The estimated fair value of total debt outstanding at March 31, 2020 and December 31, 2019 was $1,810,159,000 and $1,421,325,000, respectively, which differs from the carrying amount of $1,702,493,000 and $1,369,767,000, respectively, included in the consolidated financial statements. The fair value of debt outstanding was determined using inputs characteristic of a Level 2 fair value measurement.

(7)
Leases


The Company currently leases various facilities and equipment under cancelable and noncancelable operating leases.  The accounting for the Company’s leases may require judgments, which include determining whether a contract contains a lease, allocated between lease and non-lease components, and determining the incremental borrowing rates.  Leases with an initial noncancelable term of 12 months or less are not recorded on the balance sheet and related lease expense is recognized on a straight-line basis over the lease term.  The Company has also elected to combine lease and non-lease components on all classes of leased assets, except for leased towing vessels for which the Company estimates approximately 75% of the costs relate to service costs and other non-lease components. Variable lease costs relate primarily to real estate executory costs (i.e. taxes, insurance and maintenance).


Future minimum lease payments under operating leases that have initial noncancelable lease terms in excess of one year were as follows (in thousands):

 
March 31,
   
December 31,
 
   
2020
   
2019
 
2020
 
$
25,421
   
$
33,374
 
2021
   
27,479
     
25,911
 
2022
   
24,551
     
23,098
 
2023
   
20,492
     
19,162
 
2024
   
16,591
     
15,330
 
Thereafter
   
94,868
     
92,991
 
Total lease payments
   
209,402
     
209,866
 
Less: imputed interest
   
(44,615
)
   
(43,085
)
Operating lease liabilities
 
$
164,787
   
$
166,781
 


The following table sets forth lease costs (in thousands):

 
Three months ended March 31,
 
   
2020
   
2019
 
Operating lease cost
 
$
9,041
   
$
10,078
 
Variable lease cost
   
152
     
516
 
Short-term lease cost
   
8,277
     
7,892
 
Sublease income
   
(244
)
   
(240
)
Total lease cost
 
$
17,226
   
$
18,246
 


The following table summarizes other supplemental information about the Company’s operating leases:

 
March 31,
   
December 31,
 
   
2020
   
2019
 
Weighted average discount rate
   
4.0
%
   
4.0
%
Weighted average remaining lease term
 
11 years
   
11 years
 


10

(8)
Impairments and Other Charges


During the 2020 first quarter, Kirby’s market capitalization declined significantly compared to the 2019 fourth quarter.  Over the same period, the overall United States stock market also declined significantly amid market volatility. In addition, as a result of uncertainty surrounding the outbreak of COVID-19 and a sharp decline in oil prices during the 2020 first quarter, many of the Company’s oil and gas customers responded by quickly cutting 2020 capital spending budgets and activity levels quickly declined.  Lower activity levels have resulted in a decline in drilling activity, resulting in lower demand for new and remanufactured oilfield equipment and related parts and service in the distribution and services segment.  As a result, the Company concluded that a triggering event had occurred and performed interim quantitative impairment tests as of March 31, 2020 for certain of the distribution and services segment’s long-lived assets and goodwill.


The Company determined the estimated fair value of such long-lived assets and reporting units using a discounted cash flow analysis and a market approach for comparable companies.  This analysis included management’s judgment regarding short-term and long-term internal forecasts, updated for recent events, appropriate discount rates, and capital expenditures using inputs characteristic of a Level 3 fair value measurement.


In performing the impairment test of long-lived assets within the distribution and services segment, the Company determined that the carrying value of certain long-lived assets, including property and equipment as well as intangible assets associated with customer relationships, tradenames, and distributorships, were no longer recoverable, resulting in an impairment charge of $165,304,000 to reduce such long-lived assets to fair value.


Based upon the results of the goodwill impairment test, the Company concluded that the carrying value of one reporting unit in the distribution and services segment exceeded its estimated fair value.  The goodwill impairment charge of $387,970,000 was calculated as the amount that the carrying value of the reporting unit, including goodwill, and after recording impairments of long-lived assets identified above, exceeded its estimated fair value, incorporating all tax impacts caused by the recognition of the impairment loss.


In addition, the Company determined cost exceeded net realizable value for certain oilfield and pressure pumping related inventory, resulting in an $8,000,000 non-cash write-down.


The following table summarizes the changes in goodwill (in thousands):

 
 
Marine
Transportation
   
Distribution and
Services
(Restated)
   
Total
(Restated)
 
Balance at December 31, 2019 (gross)
 
$
424,149
   
$
549,846
   
$
973,995
 
Accumulated impairment and amortization
   
(18,574
)
   
(1,595
)
   
(20,169
)
Balance at December 31, 2019
   
405,575
     
548,251
     
953,826
 
Impairment
   
     
(387,970
)
   
(387,970
)
Convoy acquisition
   
     
10,309
     
10,309
 
Balance at March 31, 2020 (gross)
   
424,149
     
560,155
     
984,304
 
Accumulated impairment and amortization
   
(18,574
)
   
(389,565
)
   
(408,139
)
Balance at March 31, 2020
 
$
405,575
   
$
170,590
   
$
576,165
 

(9)
Stock Award Plans


During the three months ended March 31, 2020, the Company granted 151,845 restricted stock units (“RSUs”) and 114,600 stock options to selected officers and other key employees under its employee stock award plan.  The RSUs vest ratably over five years and the stock options become exercisable ratably over three years and expire after seven years.


During May 2020, the Company granted 39,913 shares of restricted stock to nonemployee directors of the Company under the director stock award plan.  The restricted stock vests six months after the date of grant except that restricted stock granted in lieu of cash director fees vests in equal quarterly increments through March 31, 2021.
11



The compensation cost that has been charged against earnings for the Company’s stock award plans and the income tax benefit recognized in the statement of earnings for stock awards were as follows (in thousands):

 
Three months ended March 31,
 
   
2020
   
2019
 
Compensation cost
 
$
5,331
   
$
4,900
 
Income tax benefit
 
$
1,262
   
$
1,169
 

(10)
Taxes on Income


On March 27, 2020, the United States Congress passed and the President signed the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) into law to address the COVID-19 pandemic.  One provision of the CARES Act allows net operating losses generated in 2018 through 2020 to be carried back up to five years.  Pursuant to this provision of the CARES Act, the Company recorded a federal current benefit for taxes on income for the three months ended March 31, 2020 due to carrying back net operating losses generated between 2018 and 2020 used to offset taxable income generated between 2013 and 2017.  This caused a reduction in the effective tax rate during the three months ended March 31, 2020 as net operating losses carried back to tax years 2013 through 2017 are applied at a federal tax rate of 35% applicable to those tax years, compared to a 21% tax rate effective at March 31, 2020. Net operating losses generated in 2018 and 2019 were used to offset taxable income generated between 2013 and 2017 taxed at 35% resulting in a tax benefit of $50,284,000.  As a result, during the three months ended March 31, 2020, the Company’s deferred tax asset related to federal net operating losses decreased by $77,262,000.


Earnings (loss) before taxes on income and details of the provision (benefit) for taxes on income were as follows (in thousands):

 
Three months ended March 31,
 
   
2020
(Restated)
   
2019
 
Earnings (loss) before taxes on income:
           
United States
 
$
(519,489
)
 
$
58,752
 
Foreign
   
(283
)
   
(415
)
   
$
(519,772
)
 
$
58,337
 
Provision (benefit) for taxes on income:
               
Federal:
               
Current
 
$
(137,696
)
 
$
 
Deferred
   
(23,443
)
   
12,490
 
State and local:
               
Current
   
82
     
1,459
 
Deferred
   
(11,799
)
   
 
Foreign - current
   
47
     
(69
)
   
$
(172,809
)
 
$
13,880
 


12

(11)
Earnings Per Share


The following table presents the components of basic and diluted earnings (loss) per share (in thousands, except per share amounts):

 
Three months ended March 31,
 
   
2020
(Restated)
   
2019
 
Net earnings (loss) attributable to Kirby
 
$
(347,241
)
 
$
44,296
 
Undistributed earnings allocated to restricted shares
   
     
(119
)
Income (loss) available to Kirby common stockholders – basic
   
(347,241
)
   
44,177
 
Undistributed earnings allocated to restricted shares
   
     
119
 
Undistributed earnings reallocated to restricted shares
   
     
(119
)
Income (loss) available to Kirby common stockholders – diluted
 
$
(347,241
)
 
$
44,177
 
                 
Shares outstanding:
               
Weighted average common stock issued and outstanding
   
59,983
     
59,869
 
Weighted average unvested restricted stock
   
(100
)
   
(160
)
Weighted average common stock outstanding – basic
   
59,883
     
59,709
 
Dilutive effect of stock options and restricted stock units
   
     
114
 
Weighted average common stock outstanding – diluted
   
59,883
     
59,823
 
                 
Net earnings (loss) per share attributable to Kirby common stockholders:
               
Basic
 
$
(5.80
)
 
$
0.74
 
Diluted
 
$
(5.80
)
 
$
0.74
 


Certain outstanding options to purchase approximately 681,000 and 479,000 shares of common stock were excluded in the computation of diluted earnings per share as of March 31, 2020 and 2019, respectively, as such stock options would have been antidilutive.  Certain outstanding RSUs to convert to 344,000 and 1,000 shares of common stock were also excluded in the computation of diluted earnings per share as of March 31, 2020 and 2019, respectively, as such RSUs would have been antidilutive.

(12)
Inventories


The following table presents the details of inventories – net (in thousands):

 
March 31,
2020
   
December 31,
2019
 
Finished goods
 
$
274,770
   
$
291,214
 
Work in process
   
66,728
     
60,187
 
   
$
341,498
   
$
351,401
 

(13)
Retirement Plans


The Company sponsors a defined benefit plan for certain of its inland vessel personnel and shore based tankermen. The plan benefits are based on an employee’s years of service and compensation. The plan assets consist primarily of equity and fixed income securities.


On April 12, 2017, the Company amended its pension plan to cease all benefit accruals for periods after May 31, 2017 for certain participants. Participants grandfathered and not impacted were those, as of the close of business on May 31, 2017, who either (a) had completed 15 years of pension service or (b) had attained age 50 and completed 10 years of pension service. Participants non-grandfathered are eligible to receive discretionary 401(k) plan contributions.

13


The Company’s pension plan funding strategy is to make annual contributions in amounts equal to or greater than amounts necessary to meet minimum government funding requirements. The plan’s benefit obligations are based on a variety of demographic and economic assumptions, and the pension plan assets’ returns are subject to various risks, including market and interest rate risk, making an accurate prediction of the pension plan contribution difficult. Based on current pension plan assets and market conditions, the Company does not expect to make a contribution to the Kirby pension plan during 2020.


On February 14, 2018, with the acquisition of Higman Marine, Inc. and its affiliated companies (“Higman”), the Company assumed Higman’s pension plan for its inland vessel personnel and office staff. On March 27, 2018, the Company amended the Higman pension plan to close it to all new entrants and cease all benefit accruals for periods after May 15, 2018 for all participants.  The Company made a contribution of $483,000 to the Higman pension plan in the 2020 first quarter for the 2019 plan year.  In addition, the Company made a contribution of $479,000 to the Higman pension plan during April 2020 for the 2020 plan year.  The Company expects to make an additional contribution of $314,000 to the Higman pension plan during 2020 for the 2019 plan year and contributions of $958,000 for the 2020 plan year.


The Company sponsors an unfunded defined benefit health care plan that provides limited postretirement medical benefits to employees who meet minimum age and service requirements, and to eligible dependents. The plan limits cost increases in the Company’s contribution to 4% per year. The plan is contributory, with retiree contributions adjusted annually. The plan eliminated coverage for future retirees as of December 31, 2011. The Company also has an unfunded defined benefit supplemental executive retirement plan (“SERP”) that was assumed in an acquisition in 1999. That plan ceased to accrue additional benefits effective January 1, 2000.


The components of net periodic benefit cost for the Company’s defined benefit plans were as follows (in thousands):

 
Pension Benefits
 
   
Pension Plan
   
SERP
 
   
Three months ended
March 31,
   
Three months ended
March 31,
 
   
2020
   
2019
   
2020
   
2019
 
Components of net periodic benefit cost:
                       
Service cost
 
$
1,917
   
$
1,768
   
$
   
$
 
Interest cost
   
3,890
     
4,207
     
10
     
13
 
Expected return on plan assets
   
(6,188
)
   
(5,224
)
   
     
 
Amortization of actuarial loss
   
232
     
678
     
9
     
7
 
Net periodic benefit cost
 
$
(149
)
 
$
1,429
   
$
19
   
$
20
 


The components of net periodic benefit cost for the Company’s postretirement benefit plan were as follows (in thousands):

 
Other Postretirement
Benefits
 
   
Postretirement Welfare
Plan
 
   
Three months ended
March 31,
 
   
2020
   
2019
 
Components of net periodic benefit cost:
           
Service cost
 
$
   
$
 
Interest cost
   
6
     
8
 
Amortization of actuarial gain
   
(131
)
   
(135
)
Net periodic benefit cost
 
$
(125
)
 
$
(127
)


14

(14)
Other Comprehensive Income


The Company’s changes in other comprehensive income were as follows (in thousands):

 
Three months ended March 31,
 
   
2020
   
2019
 
   
Gross
Amount
   
Income Tax
Provision
   
Net Amount
   
Gross
Amount
   
Income Tax
Provision
   
Net
Amount
 
Pension and postretirement benefits (a):
                                   
Amortization of net actuarial loss
 
$
110
   
$
(28
)
 
$
82
   
$
550
   
$
(139
)
 
$
411
 
Foreign currency translation
   
(1,274
)
   
     
(1,274
)
   
129
     
     
129
 
Total
 
$
(1,164
)
 
$
(28
)
 
$
(1,192
)
 
$
679
   
$
(139
)
 
$
540
 

(a)
Actuarial gains/(losses) are amortized into other income (expense). (See Note 13, Retirement Plans)

(15)
Contingencies


On May 10, 2019, two tank barges and a towboat, the M/V Voyager, owned and operated by Kirby Inland Marine, LP (“Kirby Inland Marine”), a wholly owned subsidiary of the Company, were struck by the LPG tanker, the Genesis River, in the Houston Ship Channel. The bow of the Genesis River penetrated the Kirby 30015T and capsized the MMI 3014. The collision penetrated the hull of the Kirby 30015T causing its cargo, reformate, to be discharged into the water. The United States Coast Guard (“USCG”) and the National Transportation Safety Board (“NTSB”) designated the owner and pilot of the Genesis River as well as the subsidiary of the Company as parties of interest in their investigation into the cause of the incident. On June 19, 2019, the Company filed a limitation action in the U.S. District Court of the Southern District of Texas - Galveston Division seeking limitation of liability and asserting that the Genesis River and her owner/manager are at fault for damages including removal costs and claims under the Oil Pollution Act of 1990 and maritime law. Multiple claimants have filed claims in the limitation seeking damages under the Oil Pollution Act of 1990. The Company has various insurance policies covering liabilities including pollution, marine and general liability and believes that it has satisfactory insurance coverage for the potential liabilities arising from the incident. The Company believes it has accrued adequate reserves for the incident and does not expect the incident to have a material adverse effect on its business or financial condition.


On October 13, 2016, the tug Nathan E. Stewart and barge DBL 55, an articulated tank barge and tugboat unit (“ATB”) owned and operated by Kirby Offshore Marine, LLC, a wholly owned subsidiary of the Company, ran aground at the entrance to Seaforth Channel on Atholone Island, British Columbia. The grounding resulted in a breach of a portion of the Nathan E. Stewart’s fuel tanks causing a discharge of diesel fuel into the water. The USCG and the NTSB designated the Company as a party of interest in their investigation as to the cause of the incident. The Canadian authorities including Transport Canada and the Canadian Transportation Safety Board investigated the cause of the incident. On October 10, 2018, the Heiltsuk First Nation filed a civil action in the British Columbia Supreme Court against a subsidiary of the Company, the master and pilot of the tug, the vessels and the Canadian government seeking unquantified damages as a result of the incident. On May 1, 2019, the Company filed a limitation action in the Federal Court of Canada seeking limitation of liability relating to the incident as provided under admiralty law. The Heiltsuk First Nation’s civil claim has been consolidated into the Federal Court limitation action as of July 26, 2019 and it is expected that the Federal Court of Canada will decide all claims against the Company. The Company is unable to estimate the potential exposure in the civil proceeding.  The Company has various insurance policies covering liabilities including pollution, property, marine and general liability and believes that it has satisfactory insurance coverage for the cost of cleanup and salvage operations as well as other potential liabilities arising from the incident. The Company believes it has accrued adequate reserves for the incident and does not expect the incident to have a material adverse effect on its business or financial condition.


On March 22, 2014, two tank barges and a towboat, the M/V Miss Susan, owned by Kirby Inland Marine, were involved in a collision with the M/S Summer Wind on the Houston Ship Channel near Texas City, Texas. The lead tank barge was damaged in the collision resulting in a discharge of intermediate fuel oil from one of its cargo tanks.  The Company is participating in the natural resource damage assessment and restoration process with federal and state government natural resource trustees. The Company believes it has adequate insurance coverage for pollution, marine and other potential liabilities arising from the incident. The Company believes it has accrued adequate reserves for the incident and does not expect the incident to have a material adverse effect on its business or financial condition.

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In addition, the Company is involved in various legal and other proceedings which are incidental to the conduct of its business, none of which in the opinion of management will have a material effect on the Company’s financial condition, results of operations, or cash flows. Management believes that it has recorded adequate reserves and believes that it has adequate insurance coverage or has meritorious defenses for these other claims and contingencies.


The Company has issued guaranties or obtained standby letters of credit and performance bonds supporting performance by the Company and its subsidiaries of contractual or contingent legal obligations of the Company and its subsidiaries incurred in the ordinary course of business. The aggregate notional value of these instruments is $23,219,000 at March 31, 2020, including $11,344,000 in letters of credit and $11,875,000 in performance bonds. All of these instruments have an expiration date within two years. The Company does not believe demand for payment under these instruments is likely and expects no material cash outlays to occur regarding these instruments.

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Subsequent Event


On April 1, 2020, the Company completed the acquisition of the inland tank barge fleet of Savage Inland Marine, LLC (“Savage”) for $277,931,000 in cash, subject to certain post-closing adjustments.  Savage’s tank barge fleet consisted of 92 inland tank barges with approximately 2.6 million barrels of capacity and 46 inland towboats. The Savage assets that were acquired primarily move petrochemicals, refined products, and crude oil on the Mississippi River, its tributaries, and the Gulf Intracoastal Waterway.  The Company also acquired Savage’s ship bunkering business and barge fleeting business along the Gulf Coast.

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

Statements contained in this Form 10-Q that are not historical facts, including, but not limited to, any projections contained herein, are forward-looking statements.  These statements reflect management’s reasonable judgment with respect to future events.  Forward-looking statements involve risks and uncertainties. Such statements can be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “anticipate,” “estimate,” or “continue,” or the negative thereof or other variations thereon or comparable terminology. 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 United States maritime policy and practice, fuel costs, interest rates, weather conditions and timing, magnitude and number of acquisitions made by the Company, and the impact of the COVID-19 pandemic and the related response of governments on global and regional market conditions.  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 the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 and Item 1A — Risk Factors below.

For purposes of the Management’s Discussion, all net earnings (loss) per share attributable to Kirby common stockholders are “diluted earnings (loss) per share.” The weighted average number of common shares applicable to diluted earnings (loss) per share for the three months ended March 31, 2020 and 2019 were 59,883,000 and 59,823,000, respectively. The increase in the weighted average number of common shares for the 2020 first quarter compared with the 2019 first quarter primarily reflected the issuance of restricted stock, the issuance of common stock for the vesting of RSUs and the exercise of stock options, partially offset by the exclusion of anti-dilutive stock options and RSUs outstanding during the 2020 first quarter.

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Overview

The Company is the nation’s largest domestic tank barge operator, transporting bulk liquid products throughout the Mississippi River System, on the Gulf Intracoastal Waterway, coastwise along all three United States coasts, and in Alaska and Hawaii. The Company transports petrochemicals, black oil, refined petroleum products and agricultural chemicals by tank barge. As of March 31, 2020, the Company operated a fleet of 1,065 inland tank barges with 23.7 million barrels of capacity, and operated an average of 311 inland towboats. The Company’s coastal fleet consisted of 49 tank barges with 4.7 million barrels of capacity and 47 coastal tugboats. The Company also owns and operates four offshore dry-bulk cargo barges, four offshore tugboats and one docking tugboat transporting dry-bulk commodities in United States coastal trade. Through its distribution and services segment, the Company provides after-market service and parts for engines, transmissions, reduction gears, and related equipment used in oilfield services, marine, power generation, on-highway, and other industrial applications. The Company also rents equipment including generators, industrial compressors, railcar movers, and high capacity lift trucks for use in a variety of industrial markets, and manufactures and remanufactures oilfield service equipment, including pressure pumping units, for land-based oilfield service customers.

For the 2020 first quarter, the net loss attributable to Kirby was $347,241,000, or $5.80 per share, on revenues of $643,926,000, compared with 2019 first quarter net earnings attributable to Kirby of $44,296,000, or $0.74 per share, on revenues of $744,621,000.  The 2020 first quarter included $561,274,000 before taxes, $433,341,000 after taxes, or $7.24 per share, non-cash charges related to inventory write-downs, impairment of long-lived assets, including intangible assets and property and equipment, and impairment of goodwill in the distribution and services segment.  See Note 8, Impairments and Other Charges for additional information.  In addition, the 2020 first quarter was favorably impacted by an income tax benefit of $50,824,000, or $0.85 per share related to net operating losses generated in 2018 and 2019 used to offset taxable income generated between 2013 and 2017.  See Note 10, Taxes on Income for additional information.

Marine Transportation

For the 2020 first quarter, the Company’s marine transportation segment generated 63% of the Company’s revenue. The segment’s customers include many of the major petrochemical and refining companies that operate in the United States. Products transported include intermediate materials used to produce many of the end products used widely by businesses and consumers — plastics, fiber, paints, detergents, oil additives and paper, among others, as well as residual fuel oil, ship bunkers, asphalt, gasoline, diesel fuel, heating oil, crude oil, natural gas condensate, and agricultural chemicals. Consequently, the Company’s marine transportation business is directly affected by the volumes produced by the Company’s petroleum, petrochemical and refining customer base.

The Company’s marine transportation segment’s revenues for the 2020 first quarter increased 10% and operating income increased 43% compared with the 2019 first quarter revenues and operating income. The increases were primarily due to the addition of the Cenac Marine Services, LLC (“Cenac”) fleet acquired on March 14, 2019, and increased spot and term contract pricing in the inland and coastal markets.  The 2020 and 2019 first quarters were impacted by poor operating conditions and high delay days due to heavy fog and wind along the Gulf Coast, high water on the Mississippi River System, and closures of key waterways as a result of lock maintenance projects, as well as increased shipyard days on large capacity coastal vessels. The 2019 first quarter was also impacted by prolonged periods of ice on the Illinois River and a fire at a chemical storage facility on the Houston Ship Channel.  For the 2020 and 2019 first quarters, the inland tank barge fleet contributed 79% and 77%, respectively, and the coastal fleet contributed 21% and 23%, respectively, of marine transportation revenues.

Inland tank barge utilization levels averaged in the low to mid-90% range during the 2020 first quarter compared with the low 90% range during the 2019 fourth quarter and mid-90% range during the 2019 first quarter. The 2020 and 2019 first quarters each experienced strong demand from petrochemicals, black oil, and refined petroleum products customers.  Extensive delay days due to poor operating conditions and lock maintenance projects in the 2020 and 2019 first quarters slowed the transport of customer cargoes and contributed to strong utilization during the 2020 and 2019 first quarters.

Coastal tank barge utilization levels averaged in the low to mid-80% range during the 2020 first quarter compared with the mid-80% range during the 2019 fourth quarter and the low 80% range in the 2019 first quarter.  Utilization in the coastal marine fleet continued to be impacted by the oversupply of smaller tank barges in the coastal industry.

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During the 2020 and 2019 first quarters, approximately 60% and 65%, respectively, of marine transportation’s inland revenues were under term contracts, which have contract terms of 12 months or longer, and 40% and 35%, respectively, were spot contract revenues, which have contract terms of less than 12 months. Inland time charters during the 2020 first quarter represented 65% of the inland revenues under term contracts compared with 6