KEX - Earnings call transcript Q3 2021

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Operator

Good morning and welcome to the Kirby Corporation 2021 Third Quarter Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. We ask that you please limit your questions to one question and one follow-up. [Operator Instructions] Please note this event is being recorded. to conference like to now would turn over the Mr. I Investor Kirby’s Vice Holcomb, Relations. President Eric of Please go ahead.

Eric Holcomb

at and on and Good release, the us. President for are today, President today’s With earlier and and which me Executive our morning thank A be kirbycorp.com. as can today was David you Chief Financial conference Grzebinski, issued slide Executive call Harvey, earnings Kirby’s Bill for website Officer. joining Chief found Vice Officer; presentation Kirby’s as well

During financial conference refer comparable under Financials. certain the the this are included we call, to and available Reconciliations directly release are also non-GAAP may in measures. Investor financial on in Relations of or press website our GAAP most measures section adjusted financial measures the earnings non-GAAP to our

statements contained reflect These statements. this future events. in are with with to conference statements future the respect respect a As reminder, to forward-looking management’s judgment reasonable call

differ statements response involve those COVID-XX on and our a uncertainties, and anticipated of and Forward-looking results global risks governments of related factors, the impact including materially pandemic as the the from of result various could actual the found regional Kirby’s of these to David. be A conditions Form and list will and factors XX, can XX-K the the businesses. risk XXXX. December call over market company’s year for I turn ended on now

David Grzebinski

charge, our devastating marine and about to quarter, coastal We’ll the one-time Thank economic morning reported with as cases X.X% marine transportation, our including which third Earlier August quarter our impacted products pace increased issues one-time a regions discuss Overall, the with of excludes our impacted. these, crude. a inland our charge Delta more August, earnings declined inland in in increased, mariners. adjusted GAAP announced first COVID-XX related improving and of with quarter per marine the share. key messy non-cash for you, In in customer overall markets. the In moments, I’ll to $X.XX per business good in of of declined, per we $X.XX among an basis, for charge the but of rise significantly the the loss we volumes business. demand. talk share of our in business the traveled and a In XXXX a slowed few coastal, which Eric, reduced and which today, net including totaling the U.S. one-time variant started related decline share the experienced recovery the barge all Vehicle operations, demand positive each COVID-XX. everyone. our a meaningful we On refined hurricane, cases U.S. $X.XX a was miles however,

charter a seamless. result, we horsepower during operations the costs additional incurred As our ensure were increased to quarter to

Hurricane as to storm, impacted This which a storm infrastructure. was destruction, as marine also plants, of Our significant made well customer to in prolonged waterway near New Orleans category which by left led and materially shutdowns widespread of many four significant inland business landfall a Ida, equipment late damage August. path

The transportation at operating plants from cases into production compared docks XX% vessels, in to me, offline reduced tank operating perspective, barrels to was height and chemical Baton Kirby than barges through New complex and the in utilization numerous much to from production forced a surge storm Rouge per and levels refineries this As barges fell to during in the in of September in XX% September infrastructure. free the XX% of the August Southeast Louisiana damage XX% corridor, as or in so into storm, with at shutdown storm were sector backwards in included refinery that marine all significant and were flowed damaged shutdowns. in closed significant. petrochemical XX% estimated million in The River X entire was declined storm, rates refinery Mississippi many reducing barges. remain Pad nearly more and industry excuse storm plants as ethylene approached, some October. Orleans, the many which Southeast August. resulting many And the was August September. to III nameplate and the break causing It’s At so tank capacity damage waterway XX X,XXX cargo as been as the customer day well dry that From

we All Waterway, of of a parts lock lengthy in routes of remains third Mississippi quarter. our and resulted Gulf estimate about week effect a This full closure closure Overall, resulted hurricane totaling in per to damage in this September has Intercostal that lost which on $X.XX and the throughout additional the a of significant the share lengthy closure by delays directly costs the October. River equipment revenue and during approximately contributed caused today. for and alternative

the utilization reduced remain some market during did quarter, coastal, third increases the and spot contributed barge to challenging experienced in losses. which we in modest Moving market to operating increases demand, but

four third took resulted fleet. actions our including in impairment non-cash laid marine improve the wire sale of in assets importantly, actions tugboats quarter. a These the to we transportation the in of in up Hawaii retirement and XX one-time More significant our coastal business, tank barges charge the coastal and

However, coastal it there and for positions forward. the business success going significant positives are

demand growth of In structure and the with we were to compared of industrial environmentally, gas partially capital service with of in reduced to generation pumping product and although market oil manufacturer and in sequential first revenues, many pressure This is in the industrial, strong markets two build customers the and These our King generated to marine in grew parts In revenues for to deliveries following meaningfully In supply significant distribution from years. more to expect and counts a many well Bill outlook. First, reduces In more a revenues of for activity power transportation reliable momentum to good U.S. and for orders summary, one-time and news been delayed newer ATBs. of based gas, and seen these in wire operating old improved our Texas, when safe, fleet earnings developments oil remote activity as contributing fleet key environment incremental challenging development a turn risk as to in is balance commercial improve marine the allow well well also forward, moments, to in the attractive operating reflected and primarily energy service storage strong field, and the our in tugboats and to efficient, margins and major which the as high marine. equipment by repair, growth improvements our sheet. led gains less improvement for and closures inland laid-up technology year-on-year generation levels and the higher utilization temporary rig XX% that weeks the power increasing the as equipment. discuss going barge sequential friendly The partner offset and This completions rental led to Overall, to profile in ultimately with results operating our I’ll more Frankly, Hawaii, fundamentals the and manufacturing, safe our has utilization talk sequential for services, economy. and poor power retirement well materially call cost about constraints few oil electric Kirby XX% sequential a coastal field generate The on applications. third oil positive as several of the wire reduction facility in major less activity our in is electric demand time view our chain for will will solutions that favorable the our a tow returns backlog us significant competitive overhauls barges we timing be power as smaller outdated will In improved October, also and continues outlays. about by new with major In increasing new than key and coastal range. and segment significant seasonal exiting and in as to results activity has years. storage Ida. modest and quarter continued future which sales recent services rest our energy over and In new fracturing focus returns. market reductions greatly acquired as cost of decisions transmissions important and development results. Distribution as acquisition systems demand solutions a and I’ll reduced quarter’s generation. Thermo small Hurricane first, favorably the drove But increases our equipment. for charge demand backup margins. future contributed installations Increased due in contributed to customers. more a improves have customer

Bill Harvey

everyone. and David you, good morning Thank

our on coastal to want marine. charge little review results, I the segment one-time I a Before detail provide more and

proceeds and we quarter, tugboats third cash assets of transportation for in $XX.X Hawaii, the four tank including million. During our seven barges sold coastal marine

four in in also acceptance We impairment charge had a utilization. tank resulted retired tugboats, wire non-cash These and which million. events $XXX.X barges XX customer low limited of

resulted interim to million a occurred impairment share. million or in tests after that quantitative $XXX.X concluded coastal $XXX performed coastal had on related non-cash which equipment goodwill and $XXX impairment a In company the tax associated in recorded a result, the company non-cash tax, a total, As triggering totally charge event $X.XX before marine per million. totally goodwill, impairment and

operating X% the during were the coastal operating X% million due had of barge Ida. $XX.X pricing mix improvements income Compared XX%. increased coastal average is costs fuel Improved term in $X.X the margin Operating Looking utilization diesel Hurricane inland an revenues increased Hurricane it’s. the XXXX or and third higher a contracts Compared impact X%. million $XXX.X quarter, result primarily marine due to of Operating offset quarter marine sales to revenues as lower to fuel $XX.X made of modest in utilization by increased the at operating increased to segments, to contract inland and pricing marine increased lower an quarter our income term revenues transportation or due million XXXX year. declined with $XX.X last declined cost second billion and and fuel as income third in on increased million rebuilds $X.X of that barge in primarily renewed the had of horsepower Ida in rebuilds.

the COVID-XX year XX% During improved XXXX quarter respect to customer compared was inland term segment the market to compared of the Average average affreightment. second during variant low of with Hurricane business utilization marine quarter volumes result was following to XX% as the in slightly contributed by XX% quarter, improve revenue XX% improved was transportation during to of by XXXX the and and approximately revenues in single-digits. average second mid-to-high those due Delta the and to impacted contracts market and of were were revenues increases pricing to an the With the inland low range, revenue. term contracts spot renewed in from segment quarter, on but a represented and to renewals In quarter. longer the or the the XX% significant shutdowns coastal reduced XX% the had a heavily resulting down market time in of which approximately one quarter. second inland barge spot Compared XX% term Average inland average range the with rates the from conditions barge rates Barge quarter. the Long-term, XX% low-to-mid utilization were were contracts. third term the stable utilization offset contracts or charters pricing, stable. X% rates contributed contracts contracts in of inland modestly single-digits. compared and range quarter, Overall, were barge spot margin third in down operating the mid few the third XXXX up lower quarter, quarter, Compared fuel Of of market stable. in revenues during rebuilds utilization third Ida. that

call low are presentation the the transportation respect of X% of to posted XXXX the that activity. fuel as Overall third under XX% was earnings increased segment quarter, XXXX quarter, time projections our marine approximately XX% single represented in revenues a negative market barge and percentage and spot primarily of XX% for tank and increases the revenues, charters. of rebuilds reconciliation sequentially modest changes term coastal contracts website. included third third coastal due in coastal to a in per of fleet, margin approximately Revenues which in to XX% With digits. the on remainder higher compared the well were During term operating our in as quarter, our

Revenues operating $XXX.X income to distribution to operating the $XX.X X.X%. a revenues Moving million XXXX million operating These for for $XX.X operating $XX income in and margin XX% increased to with the were third XXXX or of increased improved significant services. to and compared products Compared and increase of distribution $X.X third or an quarter million and quarter million. income services. due demand million and XXXX primarily the services and an increased and are second $X.X million, quarter XX%, our gas oil improvements revenue

for power increased Ida. at contributed down utilization and commercial the storm benefit for power demand reduce Hurricane also Marine industrial were increased has Thermo King to the Ida. and as generation. U.S. fleet following markets. parts as facilities summer from due the year-on-year economic well service rental well industrial, Louisiana economic on-highway. including and repair major sequentially The in revenues and generation and Hurricane activity activity As our sequential reductions the overhauls, parts raised during demand which as season, equipment year-on-year of commercial in improved service conditions In and across to equipment, and increased

in revenues the most gas, had oil from revenue in During and distribution mid-single revenues business oil increased approximately represented prices the increase and sequentially commodity and third an field In and year-on-year the was better contributed for in margin The in income. oil to transmissions the industrial digits. customers. and increased commercial business operating service activity our major operating demand XX% of and XX% and significant significant with new field sequential increases year-on-year. segment favorable Overall, parts quarter, and X%

Our experienced equipment. substantial power and also manufacturing related for new frac in pumping generation businesses increases orders pressure

business supply the was sharply the OEM of impacted deliveries chain by timing manufacturing issues. While revenues year-on-year, increased and negatively

businesses and During of the had the in oil third and the segment margin XX% oil related quarter year-on-year. increased Overall, and XX% single-digits. sequentially revenue gas operating revenues gas in XXX% approximately represented low-to-mid an

balance the Turning sheet. to

September XX, $XX total have XX.X%. acquisition ratio Savage we X, of a cash of debt of in debt-to-cap million billion had April Since As $X.XX with nearly of we in the debt. XXXX, million repaid $XXX of

During cash of quarter, strong million, the flow was generated Net from $XX million. expenditures flow operations of $XX $XX we free capital cash million. of

marine quarter, Hawaii. million the assets total in million. composed of sold we At primarily proceeds the also of net We with end had quarter, $XX of during available the coastal of assets $XXX liquidity

to As of this billion. week, our net debt has been further $X.X reduced

be marine $XXX For capital than the of to $XXX represents for reduction million is which our full year, XX% expect and to XXXX fleet. to primarily million, maintenance spending compared composed we more requirements approximately a

flow also million the $XXX We expect million generate of to to year. full cash $XXX for free

David. now rate we perspective, the tax an over of back a effective from call in approximately tax to quarter. Lastly, fourth I’ll expect XX% the turn

David Grzebinski

Thank you, Bill.

Although its third the certainly quarter challenges. had

the and favorable for offset earnings overall carried market and sequential in extended stage we quarter, waterway earnings issues increased in coming by which the market shutdowns, part supply nominal and In in We have customer Marine setting near-term are year. are the services across very and in Ida materially by barge a expect the In fourth repairs, issues Hurricane for an the conditions and market transportation fundamentals improvement some over, and by in businesses, continued normality the distribution improving our driven with associated encouraged chain although revenues volumes including inland more closures. improved

remains Our very positive. outlook

with the and barge that XXs. high a During been mid-XX% end high recent has XX% October, to at high then the utilization our range utilization in of

times. increase which have waterway Louisiana, be this closures in can attributed Some transit to extended of

demand waterways in Well, soon. are large the turnarounds are to driving pent-up expected also up reopen volumes. fully However,

construction chemical retirements, We spot barge going impacted in and levels utilization forward. barge Hurricane weather. affected and the new market plants, new plants winter economic minimally will improvements expect be further coming activity increased Ida to up the of online onset continued of the expect due inland minimum ramping With we levels, improvements,

around reflect gradually improvement to increased next quarter transportation. to refined quarter the we to reset Overall recent improved will lower reset the In retirement of recover that modest black margins, products XX%. coastal, fourth fourth expect The marine are sequentially quarter. in with in continue demand operating improving around expected into year, market utilization and wire to to market the term are pandemic barge result During renewed and oil expected for the the fourth and will inland the contracts the revenues for coastal barge equipment XX% during conditions. with being

a the we the operate customer under some result quarter. fourth barges. been through are on Although capacity expire. agreement to we fourth In break at expected assets And larger our sold, coastal the the a activity revenue even Coastal year the in quarter, or mid-single reduction in margins shipyard has Hawaii – contracts compared end the will fourth third that several charter for will the below our existing anticipate slightly elevated digits in continue the quarter. equipment to of be the to of when do operating

and frac our Looking backlog by friendly commodity and equipment. modest remain favorable strong, distribution well generation levels as strong orders remanufacturing rig services, and activity at business. to related In prices as pressure growing well power our completions driven new to and gas yield, conventional expected equipment manufacturing of counts distribution expected well also are are equipment, increasing as of environmentally some and pumping in oil demand continued as

to supply into delay sales the sales deliveries and some – persist quarter issues will expected and they project XXXX. chain OEM are fourth However, throughout the

the in economic reduction activity, revenues reductions be industrial, to marine the margins revenue a operating result, generation a In Thermo sequential and oil will with our operating and sequential in low-to-mid in expect seasonality Overall there will distribution operating quarter repair, we the As improving revenues and to modestly normal in compared services resulting income commercial and in in businesses income quarter. and fourth gas experience King expected power and despite XXXX, quarter. the decline in are single-digits. third modest

Now to wrap things up.

were Although and see improved supply quarter, and and quarter’s the the coastal and we disappointing, chain seasonality and shipyards results services. third results distribution issues in planned fourth despite

inland has strong and range. across XX% mid-to-high we – revenues increased averaging our we businesses, our with growth see the which October barge And believe coming we utilization importantly, the which More with momentum believe XX% drive years. will in earnings will in meaningful recently touched building

inland around economy market to the services, are pandemic, earnings expected market and to with will corner. coming growth for expect and industrial improved. from its XX% to benefit business are beginning exit will in barge products challenging to positive spot focus we and market distribution In economic best strong conditions and in allow the oil directed prices world to as or of should gas the Hawaiian that and decisions turned markets gas on retire the returns and improvements has the difficult, the market With although pre-pandemic inventories improved this our barge drilling. forward. long-term move on recent increased business our with commodity but assets U.S. generate businesses necessary commercial oil assets positives utilized in expectations emerge quarters and will lead to minimal In With believe higher demand levels supply, steadily low exceed refined XXXX, meet in coastal, earnings new in inland we pricing going remain utilization the

focus generation pumping into optimistic in for our friendly low a focus pressure increasingly our heightened power environmentally enhanced demand And liquidity. discipline about products services. of eFrac finally, solutions, on activity including translated to throughout flow increasing our profitability and solutions are significant has We intense and and for generation levels strict significantly our us the cash enabled will to carbon These equipment lead on growth XXXX. debt customer and Further, improve our has our pandemic capital reduce backlog. in increased

on very remarks. going potential future our we prepared strategic to opportunities result, concludes increase well our earnings to positioned a act forward. As this Operator, are

ready now take questions. are We to

Operator

Thank you.

with We question-and-answer from comes Instructions] begin Stifel. the session. first [Operator Ben will Nolan now The question

is line open. Your

Ben Nolan

Thank good you Dave morning, and and Bill.

David Grzebinski

good Hi, morning, Ben.

Ben Nolan

of of to the question, is inflation headed. in constraint first on more like what’s the two categories. see If of I seeing some the is? maybe of one my petroleum the those for excess start some that with if issues, crossover for something supply definitely we’re I and any starting of a chain to strategic And to things market are bit landscape driver it’s sort little significant railroads sort – transportation those be or to share for broader all products those of certainly other sort things even priced market store – – first but wanted My function shortages capacity the of is specifically inflation, Hi. ability of impacting a get two being and the the more where those there areas or is of am curious or you chemical modes guys out capture expensive? the somewhat

David Grzebinski

a I Yes. on of basically you crossover. inflation does. happening. sure general, it is be in water, could not There some tell lot can if just it I’m would there is – move

seeing pressure. gave raises July, had wage but we’ve little We’re a problem filling not some a in positions. We

year. know, in continued started is the Ben, have you started kind We throughout a training of Kirby January mariners a school, which and As advantage. our we

of pretty in about excited terms feel good labor are we about pretty we where and our that. So we’re supply

and is inflation for news We whatnot, are seeing and the supplies big is with but growing. it’s us The far some really okay. demand so food that

you above consumer, demand in five-year average. orders mean, it is consumer We’re the better. see can Gasoline are I up. starting see The is to it. backup right. doing the Manufacturing back,

really doing well. are customers chemical Our

earnings announcements. at You can look their

the really Our integrated one, inventories are spreads refining and customers seeing low high. but crack

during their shutdown our it. of restarted COVID customers refinery independent had refining has One that

means better base our not environment. real It’s just check in you demand saw know And pricing demand. and increasing. with is demand really supply a demand So, much business. It’s for crossover we from that as perspective our we’re that that headed

We’re that now. starting see to

prices spot and the well are along contract things there. really above We’re market, prices spot moving are price increases. getting In

Ben Nolan

the switch color. guys around a Appreciate it. That’s know for sort question, have then gears danced and I from offshore as a update if perspective? or maybe on in I’m wind the great. sort the sort just of coastal of right, frame opportunities to around that just Kirby And where some second can of you mentioned bit give been set an a development. some you my side, little curious good opportunity All stands of

David Grzebinski

Well, to careful. be we’ve Yes. got very

a under NDAs be and we in of We’re whether couple too much hard we’re wind imagine working different say to it. in you specific, installation and can’t want could very it’s service really we but much on the wind service business or

forward operations. in Kirby tell I we progress. some could, avenues marine much future more the these projects drag in of but for we’re our As and to than seen really wants, that. to anybody things suffice with fast as it’s out meaningful you’ve not of offshore kind installations, I of say see the growth wish it but contracts over as and can’t time you middle looking these as moving we’ll

Ben Nolan

on for be lookout that. I’ll Understood, that

So appreciate it. Thanks guys.

David Grzebinski

Thanks, Ben.

Bill Harvey

Ben. Thanks,

Operator

Thank you.

Evercore Chappell John next from Our question comes with ISI.

is open. line Your

John Chappell

you. Good Thank morning everybody.

David Grzebinski

Hi, good morning, John.

John Chappell

inland on I renewal, said David were contract Bill reset they down. XQ, was few a so and guess contracts there the

some petrochemical XQ, So number with of when anticipate of and XX% quarter? in least production positive touching book, renewals at to a everything contractual coming contract speak out back your you magnitude some you’ve online, laid the renewals of would just as revisions you percentage can think about see utilization also given you on XQ this to and starting flat level to

Bill Harvey

be that actually. than more Well, positive I’d

lows lapped kind of we’ve COVID – the renewals. of We’re

fourth what think contract is about and is growing, And up. but we’ll contract. spot So inland the pricing and you some is around horsepower, how market the we renewals – tightness will low contract much at tightness we’re they happening the anticipate We’ll higher these very quarter in well reprice pricing. COVID a will around when we we’re see supply up, renew optimistic contract particularly above look be be to in what’s of

So it’s too a I because numerous can’t be negotiation specific customers. with

say quarters. it’s usually twice quarter. of quarter I heavier other of the kind know, you any As would fourth one is

the the First, fourth second, same, heaviest. the second more the around and maybe a but always kind of are in the than is third, third all little and the first

optimistic. pretty we’re So

mariners to, Labor heading short short up. in is We’re going is it will. Pricing go it needs It to up. is in in supply. are has set and up demands to supply. and It tight. Horsepower

John Chappell

utilization, visibility Great. lot theme sticking a have tend of utilization, on because product watch people week. with refinery And that actually every then that refined we to well, as

I overall, the plant think or are kind of the as what you a kind period, about XQ maybe the rebounds think petrochemical XX%. and production numbers just Is that meaningful go on back Southeast new any was provided up overall to I November utilization you you of but for that of ramp online, customers from rates XX% out that when post December run of your expecting Louisiana when data – coming are pretty and some petrochemical you from know XX% there decline?

David Grzebinski

dropped just Yes. look you I’ll Ida, they around as Louisiana ethylene running as to plants I’ll – use Pre-Hurricane XX%, in ethylene an south Southeastern – corridor that we example. were at they XX%. – When were heard,

full the backed for higher – and are them, chemical positive big and run I are some know you think customers, to are There’s the and saying they’re running of saying maybe going of out that. they’re exact same thing. out saying to refiners The not the of they’re up a as little And they’re barge which even than independent products seeing heavier some – little them XX% feedstock barging. byproducts. some those is readily more more heavier maybe pretty in lead the feedstock a The to movements run pipelines. generally byproducts moved hard. heavier we’re mix, Also mix, refiners

refiners chemical we’re doing talking refinery I always think utilization about production, been variant, They hopefully, when looks all Whether We starting of variant to it’s the all right. the good demand good and levels It’s are good and utilization, corner. nicely. impact customers had up aromatics from pre-pandemic perspective, And better at but chemical not start all more recovered shaping doing have your Ida pre-pandemic it’s pretty coming. because of COVID, But tired we’re above They’re ethylene hopefully better actually its from another and demand up. there’s co-product they’re money, the production. production, they’re picking So back or or get plant and our kind integrated, the increasing. And is CX looking turning that’s to making and guys the everything has real. Delta levels. just

John Chappell

hear. to All right. David. Well, all that’s great you, Thank

David Grzebinski

Yes, thanks.

Bill Harvey

John. Thanks,

Operator

Our from next Stephens. Jack question with is Atkins

open. is line Your

Jack Atkins

Okay, great, taking my and good for morning questions. thanks

David Grzebinski

Jack. Hi, good morning,

Jack Atkins

referenced with on a six would right stocks. to a a over in thought course think you into So, of able fundamentals the David, as moving curious be positive maybe natural any commitment, your maybe – the XX capitalize way out, may sort bit about you’ve with maybe then as markets Is months could And last be maybe negative some to several accelerating activity? XX stronger feed that on the you you on inland, prices two-parter of I be trying that about beginning I to start some going maybe that there inland business? to the guess maybe to output just with versus to just of gas to months. a heavier Can turn. even contracts yourself look or and locking talk now that as months but to in petrochemical impacts environment think you pricing how shorter higher market, term is the a or expand participate

David Grzebinski

Yes.

the ethylene as big The them CXs part cracking crack split of or those work to heavier of a is ethane more that. start up, heavies, feedstocks. feedstock natural take And kind the as But one right. prices for gas me because math could part for first. seeing starts go look Let – we’re and or ethane that prices go plants, heavier is first up, naphtha the be They’ll the you’ll propane. for

there’s see. Lippy the on that good plants. they more think the feedstocks And I that Dan crack, publish more and you’ll us. going that, to the are chemical in naphtha that’s again, but The heavies heavier for

a Butadiene CXs got nice cargo is a good could You products. out. one pressure see and butadiene Kirby pressure and it’s has a pretty position in coming because

cracking and of taking are a heavy. little kind more yes, the advantage dynamics the of So, crackers pricing flexi

more what the In versus terms spots contract, of about XX%... you spot Bill, said

Bill Harvey

XX…

David Grzebinski

book are the quarter. a our reprice contracts And in here we’ve now. got right lot of of to that going XX% then fourth

this spots with right. more it increases, and Jack? but mean, I like roll feels that we capture through So, you big – will pretty I quickly. feels loud see we’ll still and It hear pretty about price reprice goes. pretty spot clear. good where to XX% we’d XX%

Bill Harvey

you. lose We

Jack Atkins

No, no, I’m here.

Sorry. Thanks I Yes. mute. that. for on David was Thanks.

some underperforming coastal guess, with the took I XX% now moving clean to But or with forward you that as kind up understanding some my contracts. at and utilization, that of modestly pricing profitability like thinking feel quarter during you at that the profitable? barging took sort clean regard for How complete breakeven be the can there current are actions fourth about the of to so kind market do question assets now, some So, up action you you issues quarter? the impacts up business even of the you follow and there of in there’s

David Grzebinski

Yes.

hopeful, year. still market. be the little next coastal There’s We’re we’ll excess and overhang a in equipment breakeven-ish

amount equipment too turn need frac some more. little inventories product in we’re refinery the And much If fair up getting it’s news the picking we in refined utilizations about And demand there’s volumes I the right? as the coastal a low, about out stronger, competitors. but business, a my comments, amongst of still to equipment of still increasing, pick spreads in are aware offshore there. The previous there. are to think pretty heard idle is heavy are of talked up. They good And, you everybody’s up as think supply terms our of There’s you is, blueshot closer products. business. just

just got is that the of than inland turn out further because turn market that overbuilt how after. think I

you years I than As oil crude a recall, a say, And that. by crude lot it’s probably back, of coastal moving of Jack, was a few now. a would fleet the There’s there moving were the handful barges normally less third barge.

soaked be products, to just So refined and that’s little a all capacity by happening demand It’s happening. up excess has that slower.

right it’s in the but So, head direction.

part. our doing are We

these water that treatment also to out wire And others I older think some pieces. retire. taking may We’re equipment out ballast drive

with along water We’re fleet ballast our pretty far on treatment.

other treatment. few curve behind on our water ballast competitors of the are a think I

spend perhaps see start we’ll they as capital, to retirement. So some that

we still we’ll were right felt and demand’s based little actions, on of next the And think, I took breakeven-ish a So see it’s But direction. that a supply heading say in now. answer balance. to necessary. long-winded that year we out the And it’s be what we

Bill Harvey

retired Jack, assets. assets capital, thing, the assets, that to is and one focus us insignificant. place are in capital. required not And It prepare not the we These the to spend David – Hawaiian good the allows put mentioned significant the would’ve in but the on that’s remarks,

Unidentified Analyst

Okay.

for total makes the Thanks time sense. guys. Now

David Grzebinski

Jack. Thanks

Operator

you. Thank

Our from America. Bank Ken of with comes question next Hoexter

open. is Your line

Ken Hoexter

Hey, good morning.

David Grzebinski

Good morning, Dave.

Ken Hoexter

Hey, Dave morning, Bill. good and

the at easy long remains your a supply on O&G Maybe rising side You Just overhang. chain, Maybe, versus talked of the demand. thought talk but bit thought supply your you answers on the chain the an drag no the about margin about issues? how can obviously that to DNS.

David Grzebinski

hearing. you with look It’s that, tell I deliveries. Yes. it’s – been what engine problems you’ve can we’re having

the as problems in with kind the would’ve been chip if could – you deliveries, and had, and nature a inbound taking much electrical electrical we would We’re of having few product other we based might circuitry, imagine motherboards, of have with we’re stuff more you what has an be tell in components, components some of quarter. shipping we slow. that, engines in fourth I would transmission gotten

it’s tired hearing early real. I of guys chain. you think, supply in are know itself, resolves I COVID but it about and XXXX,

been it’s about but it tired We’re real. too,

OEMs You they’re can to catch starting engine at some big look of the up.

optimistic. I’m But So, they real. were

in we hundreds. And is meaningfully. lot like I millions, pumping our huge small to our the energy little of battery and they’re things percentage. that mean, think or a encouraging on actual heard jumped backlog bought as not sounds of though, is but tell we generation systems do their even is, that reduction helps capabilities. carbon and pressure have sophisticated. the integration, our if also batteries, electric it. you customers, equipment I’ll very it down builds spread, ESS the load an our that’s, for quarter the gas and the we centric. oil a pump, frac we’re new company particular will. system And But and of you, is and you the customers customers, one during vertical about got in is book-to-bill talking the has a that’s more equipment it’s tens that Ken, great ESS, may so of so a ESG backlog ramping I A on growing. excited And really you it that up thing ESS kind that more that add any we’re is thing about element the storage of

very it for can business, parts industrial it’s to also as will able high add those helping technology. completely We’re able rambling future and business the tugboat marine, answer. you we’re Hope, hybrid a and need into commercial excited you right other to And I electric the there. power. you and can No, power our product growing us got got offering strong wanted ESS building and this a is long a having that. on place and to now, Ken small about answer from KDS of extend that it a a an be basically it imagine electric run take distribution And the we’re but will really us. with electric even see that’s We then keeps help acquisition, to

Ken Hoexter

just, helpful. It’s it’s guess No, understand to yes. I

inland? like from follow flow you real that follow-up there. inland mean, quick maybe on coastal a little a really on just I’m still you’re from concerned in your up pricing then I on it answer while are clarity sounds your terms of, through, the at just Jack confused some seeing thoughts and inflection little Maybe strength So, in seeing a

David Grzebinski

Yes.

I terms in inland it’s but way of really sorry it needs as hasn’t the way up rising So just but coastal to, moving characterize well, we’re the so like. seeing a is not nice flat that coastal yet definitely pricing not inflection would not we’d on confusion, pricing. on inland yes, going for declining. and in started, It’s

Ken Hoexter

descaling and you this on the Maybe how or the like more the side. general now on So, step business. eFrac do that’s the I move think to other part you the things of ask the inland I stand the I guess was eliminate with expectations side, by let thoughts something on just on It scaling third just maybe distribution think on adding corporate a I’m versus you’re parts what me coastal one, coming and were but back the acquisition little a know and sounds your inside, pipe surprised marine actions. of down but within services organization?

David Grzebinski

no, marine. Yes, we’re think very excited I about

mean, this look, I small it I think is, small… you’ll acquisition see really

Bill Harvey

immaterial some it’s in Its – XX ways…

David Grzebinski

assuming very outflow. working it, really that’s the it little extent Yes, and of XX some basically cash capital liabilities,

at in not terms it’s it’s of of in – materiality not cash. So meaningful all terms

be marine business. anything, depending wind cash contracts As deployment how we the some, to type If to might in big on may look on and spend CapEx the continue vessels you be deployment doing go. capital business, at our will support inland serious we’re consolidate would But that the the the business. side some meaningful of us see marine

assets, from customers meaningful that the restructure we away favor But just offshore the of they side. running to to we commercial around I capital protect barges said, every we’re you tell side, every, it, we eFrac of acquisitions meaningful servicing. too, well ATBs. been DNS, is seen coming restructuring the do almost the have I be likely and look gravitated as they marine a up, to looking and need the and to And on nowadays used more we’ve at and come with themselves. business would in what industrials along has that and kind need electrification at the gas rest will reliability was our offshore that wire of would or the think And I as in really side, of that. took tell deployment you the power that in oil generation grid that

our of So, the of capital, we’re eFracs. integration doesn’t that, require or go It’s a take ESS was really us doesn’t of but This small a low pretty really already selling because pretty with vertical that we’re about CapEx. lot buy a excited small piece acquisition right? CapEx. know, That’s, companies you lot as to

Ken Hoexter

Bill. Thanks. time. the Appreciate Dave. Thanks, Great.

David Grzebinski

you. Thank

Operator

Thank you.

comes next Our from Giveans Jeffries. Randy question with

is line Your open.

Randy Giveans

going? it how’s gentleman, Hi

David Grzebinski

Good.

Bill Harvey

Good. you doing Randy? How are

Randy Giveans

Good.

has so just the first largely during was to you So guess mentioned that fourth still Hurricane lingering trying subsided? impacts any in there third impact I expected from the quarter. know there $X.XX I get negative question, real the or quarter, an here are impact Ida

David Grzebinski

a all activities of going repaired thinking still – haven’t itself of of that. were Yes. should barges We the impacted right next on that – now down couple factored They’re worth now be revenue bit because or our They repair a yet. with cents The probably impact October, some there still have coming we in weeks. three we the of is from four just up. are in have care into that Ida. There little that been the take were plants underway

causes little next divert think or times week so. I But get new up us Orleans to a And capacity, does New longer some around waterway say lingering is ramping real Rouge of Orleans. our inter-coastal full the the but open that the that’s transit closed What back. back in major corridor. thing customers to Baton just now they’re coming near to only is to I’d to that is going just, were still to

were, bit us it’s not almost fourth a as in about it’s that’s all little fourth will guidance. in large quarter what as quarter in some and behind there, headwinds look but the saw what like, there talked we the near our third the So And there’s quarter. we

Randy Giveans

kind And the of wire profitability I point? inland sale little tank this of the or sales guess then a of larger assets, the I appetite that retirement Yes. that mentioned other for but for think and those for few minutes maybe barge assets, profitability of acquisitions Hawaii of terms All lost coastal, a equipment, the then potential is bit on at right. any meaningful here the how of you additional side in this ago,

David Grzebinski

income kind but And, that. revenue let little about of operating Bill and I’ll a for and Yes. about come talk talk back magnitude of I’ll acquisition. the bit

Bill Harvey

those were ending Yes, and perspectively were employed. been there the didn’t see underperforming look that contracts well, assets Randy, we at as and generating not assets profitability assets. would’ve we looked and were They profitability were capital

capital. invest would’ve had to we So,

the at way the was all We up the lined contracts leave. the we looked So it to end of had year. time the right to

assets $XX deploy million took the our elsewhere. sold we’ll we So, capital and and

Randy Giveans

it. Got

Okay.

David Grzebinski

Yes. lot And been pain both it’s of there’s a secret of and in offshore the terms inland. side, no acquisitions in look marine

down one our been and operating the some there out in the market’s were pre-pandemic of had lower, of this an We competitors history. pandemic or as work low. think cash of con Many way then set been of bottom some ever have just we kind new well. I coming the a at breakeven,

You can look lows. at our record kind They inland right? were margins, of

mid-single were, coming that’s low, we back, digits. Now,

I of, I in in we’re would for our from think opportunities. a and there inland. through this the we’ve in thinking would I third some really a Now the at could teens lot as mid break and this quarter, do even competitors, low that the see, margins But very paid down in X.X we XXXX we’re pandemic you kind did we’ll side round caveat XX% of heard debt inland in when be we’ve hopefully well been start prudent of get margins is, fourth and quarter. Bill. you the we into many

same at cap below we more, there. but there to could want I’m we’re two. out the got, to think so going XX%. gotten in XX%-ish some the now prospects it’s our XX%. total a year more. down de-lever debt-to We I be token, But little going by could, over $XXX It’s just paid some, flow. we’ve We’ll couple down million to strong think debt, we in there’s tell look prudent as a you acquisitions, and still generating there cash be acquisition, but a well years, we’re I be would rough prudent. the been we’re Bill de-lever It’s or looking we’ve coming Savage lot really continue to since and for a de-lever I little pain of be

Randy Giveans

Okay. for Yes, Thanks time. sense. all makes of that

David Grzebinski

Randy. Thanks,

Operator

from Greg Thank with you. BTIG. And question comes our Lewis next

is line open. Your

Greg Lewis

disruptions, weather Petchem wanted the good the barge across QX, Thank clearly major I Hey, and and thank I on morning, the David, mean, to was everybody. was refining you. side the on, there touch you to side.

kind what given of traditionally As the utilization not QX, then of just be had thinking and quarter It in QX terms we we in seems good in about then, normal in up step down, how you and a you in should terms little means QX, kind step but think QX, seasonal normal, that we a pricing, of and in about spot of QX? maybe QX saw path, what was does that pricing. in change, setting it, utilization like down QX really historically,

David Grzebinski

restructuring about Hurricane $X.XX. but probably that we was all Look $X.XX. question. about messy. tired of good because or that much we’re coastal $X.XX it, of the talk there’s I of didn’t COVID no cost We think really Yes, doubt was QX us Ida COVID, talking had

had COVID We we had costs, off higher divert them medical to re-crew, marine our take toes. cetera. we hit to higher had we crews, had because et As, to

So and a throw we had higher onto tax then the third quarter that you too. if rate

forward. of So would look you away. going it that, definitely was gone away. I a messy are quarter as I those tell that some Ida’s of kind headwinds

make always is when of and know where as almost you affreightment quarter Third of our we good best, but because margins. contracts the our that’s good, that’s weather’s

three So, it anomaly. think it I I an cliche, was sounds know quarter but

COVID be in us four do Ida as That quarter normal, but weather this be some quarter and you As to and the quarter. one that’ll what as has well. bad know near won’t it has did as weather say

Bill Harvey

first factor that, and it still quarter, was have to in a look way It first that, Other quarter is rising a but weather’s at a market. fourth factor.

and is rising rising tide, utility the tide there. pricing the So of

Greg Lewis

Yes.

than of then, I And or any maybe of tank do bulk a Is to, barge medium mean, whether of on dry there market? barges great. mean, barges supply, type submerge barge it’s for, sense we barge, term more, what barge or any hat I was the Ida touched sense impact the wet. on on, the have long-term, negative Okay, obviously you loss phenomenon

David Grzebinski

vessels a Yes, it’s Yes, barges it doc that But significant. left got come barges It I was and retire it’s, use There only drive now I in had may lot don’t customer was very handful dry from impacted. were shipyards a think cargo out docs we’ve think were old XX were impacted you example, it. had, I the We But more as impacted. there’s damaged other liquid if a some impact an retirement, I amount liquid temporary. recovering it’s think, probably all would was I of Kirby the of pretty were, tank know that barge to temporary, repair. the Ida. were barges. that to market some if And barge, you

the a rip have much through of a largely rest almost do inland we’re and a of I than fleets lot different not So, change wouldn’t impact market. were the is in the it. Mississippi river temporary think the but think It impact, I industry And was flow meaningful a It’s though. we go that. systemic it’s significant to was It and northward up. to

Greg Lewis

Okay, perfect. Great.

Thank Okay. for you Hey time. everybody. the

David Grzebinski

Greg. Thanks

Eric Holcomb

take one One Eric. is more Hey, Carmen. This We’ll more. question.

Operator

Yes, sir.

next with Research. is Our from the Wasikowski Webber question Greg

Your line is open.

Greg Wasikowski

for Hey, in David Bill. and me Thanks Good morning. squeezing

David Grzebinski

Greg. How you doing?

Greg Wasikowski

Good. Good.

five, are side picture new for in there it supply normalized XX, were increase order pretty in attributable constructive a First the be we curious would factors that steel hesitation inland the at another obsolescence in prices is pretty there the just and specifically, years years risk and few to looks way any the technology, probably book directly in looking And come. or prices of, here? saying there, prices barges, looking prices construction, for other build thinking on of underlying kind And owners XX constructive next looking or at – there new steel question’s is, that play I’m book maybe is I’m future. ahead embedded from of still if higher order kind to just in supply sorry sort

David Grzebinski

labor. is more Yes, mean, if dirty are hot multifactor of But look, and hot, I Kirby. question barge, so Yes, portion barge, that, cost that’s, goes think the XXXX, whether since go of price just good think why, the about young way for of everything about And kind that’s as prices paint, XXXX barges can clean a oil you build it’s double steel almost welding better, this would the them, that about, I to pre-pandemic. up a where too. the now tell us better that’s or look new the has it’s of it’s installed almost, of cost a there. that the steel. you think are can prices, and a gone huge big into I is But you, in and to we is and we would a Right. you or not say it back higher, cost base necessarily up steel got it. We’ve of barges look well yes, no so for up inflation, barges is bad it’s thing maintained. XXX%, new relatively yes, at that up doubt majority XXX% price steel went the that the is

Kirby’s building for owner outstrip technology not they barge say becoming it’s could equipment. rating, on typical A that industry right a some is of six ESG, nominal. tell tell your three more would would that I And order while obsolescence. been operators deliveries terms I rating on retirements important, and steel order not there, the there’s pounds. barge. a obsolescence, deliveries there you steel only would I have a box, a now built lot technology you in it’s should pressure that, more barge. of sophisticated, So the big but you a pound and imagined are a of is more has but had is not, There it of It’s most more pressure there’s been barge are new because or

lot the and emissions you coming pound barge for pound there’s it, to our less starting by line emissions three about And think And So are six they’re six I recognize barge. that. their pound customers, worried barges. from a a a mean, fence starting are than market, they premium about a market’s the [indiscernible] on and if

fact, an it’s Now, Those an right. more their obsolescence more. reported thing? measured a, emissions getting down. and thing. sure It’s and more That everybody it’s is just obsolescence wants more and are that Not a emissions

barges premium it’s a obsolescence into per that’s more leak market not but seeing into kind we’re not, pound of driven So se. for well by technical versus three the a, desire pounds, the market, six

Greg Wasikowski

in months ago. being it of a terms helpful. flatter recovery? a six to benefits or Got in And maybe and being the Can speak run on as long of previously a longer, of, Thank it you the it’s V-shaped as sustainable V-shape year maybe one the curve than more one it about just it. of not quick inland then more recovery That’s it’s maybe pace you. thinking thought

David Grzebinski

benefits also as barges, it’s could Look obvious so, a a some us. pain, lot sobers maybe that, up just like building to keeps building a be say about now it we that people so our the It’s returns to or I’ll of that pain competitors. Yes, longer, well, building them, and benefit look as but I’m tough it’s of on tough new trying up. from of at we’re that that. we’d on expanding, see our that just lot are, down and we discourage, right. like of but that there’s you But may people expand not pain

fee, it’s sharp are they So want things move moving a but not and to that and we welcome. need

Greg Wasikowski

time Okay, guys. Appreciate the

David Grzebinski

All right. you. Thank

Bill Harvey

Thanks, Greg.

Eric Holcomb

And Thanks today. right. thanks All for Greg. us everyone joining

you have questions additional to will the me free comments, a everyone. directly to day. I or be in great day. out office. you reach throughout any feel If the Thanks Have

Operator

the today’s and conference concluded. presentation attending And disconnect. you has now for now you Thank may

Kirby (KEX) 28 Oct 212021 Q3 Earnings call transcript