Marine transportation firm and bunker barge operator,
Kirby Corporation, posted a net profit of
$28.6 million in the third quarter (Q3) of 2017. The figure represents a drop of $3.4 million, or
10.6 percent, on the $32.0 million net profit achieved during the corresponding period a year ago.
Total revenue in Q3 rose by $106.6 million, or
24.5 percent, to
$541.3 million, up from $434.7 million in Q3 2016.
Earnings before interest, tax, depreciation and amortization (EBITDA) in Q3 dipped $1.6 million, or
1.5 percent, to
$104.3 million.
Marine transportation
Marine transportation revenue in Q3 fell year-on-year (YoY) by $40.2 million, or
11.2 percent, to
$318.8 million, whilst operating income for the period declined by $19.5 million, or
35.1 percent, to
$36.0 million.
The operating margin for the marine transportation segment was
11.3 percent compared with 15.4 percent a year ago. This was said to be due to
weaker pricing in both the inland and coastal marine markets and
increased idle time in the coastal market as more barges operated in the spot market.
In the inland market, barge utilization was in the
mid-80 percent to mid-90 percent range during Q3. Operating conditions during the quarter were said to be "good" prior to Hurricane Harvey's arrival on the U.S. Gulf Coast at the end of August. For the remainder of the quarter, operating conditions were described by Kirby as being "considerably challenged".
Demand for inland tank barge transportation of petrochemicals and black oil was higher compared to Q3 2016, while demand for the transportation of refined petroleum products was slightly down. Both term and spot contract pricing were at lower levels relative to Q3 2016, and spot contract pricing was stable sequentially. The operating margin for the inland business was in the
mid-to-high teens.
In the coastal market, utilization was in the
low-60 percent to mid-60 percent range as the market weakened further and barges continued to move from term contracts into the spot market.
Q3 revenue from the transportation of refined petroleum products, black oil, and crude oil were lower YoY, while revenue from the transportation of petrochemicals was stable. The operating margin for the coastal business was said to be in the
negative mid-single digits.
Acquisitions and capital expenditure
Kirby said cash flow used in acquisitions was
$451.2 million between January and September. This included
$3.9 million for the purchase of a
barge fleeting and marine fuelling business in Freeport, Texas.
Other deals were $377.9 million for the acquisition of Stewart & Stevenson LLC; $68.0 million for the purchase of nine pressure tank barges, four inland tank barges and three inland towboats from a competitor; and $1.4 million for the purchase of four inland tank barges.
Capital expenditure for the period was
$133.4 million, which included $8.5 million for new inland tank barge and towboat construction; $41.2 million for progress payments on the construction of one new coastal articulated tank barge and tugboat unit; two 4900 horsepower coastal tugboats and six 5000 horsepower coastal ATB tugboats; and $83.7 million primarily for upgrades to the existing inland and coastal fleets.
As of September 30, 2017, total debt was
$1.03 billion and Kirby's debt-to-capitalization ratio was
26.4 percent.
Commenting on the results,
David Grzebinski, Kirby's president and chief executive officer, said: "Our third quarter results were
better than expected as the negative impact from hurricanes was more than offset by the combination of some cost recoveries from marine customers for delays, a rebound in volume demand after the hurricanes, and strength in our distribution and services segment, including Stewart & Stevenson LLC (S&S). Inland utilization increased following Hurricane Harvey as pent-up demand and a stronger pricing environment for our customers' products led to more liquid barge moves. Although this increase in utilization may be temporary, utilization has remained firm into the fourth quarter."
