KEX - Earnings call transcript Q4 2021

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Operator

Good morning, and welcome to the Kirby Corporation 2021 Fourth Quarter Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Mr. Eric Holcomb, Kirby's Vice President of Investor Relations. Please go ahead.

Eric Holcomb

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

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

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

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

David Grzebinski

a XXXX good in Earlier morning, to you, per Thank And Louisiana Eric. GAAP today, fourth we state law. earnings which a change everyone. per onetime related $X.XX share announced included quarter tax share, $X.XX of charge of

utilization services of markets in improved by were in partially the barge per reduced by the adjusted inland. for commercial this in The driven chain earnings quarter per as improved in $X.XX and $X.XX in delays primarily supply were pricing industrial manufacturing. and and by Marine seasonality charge, distribution and improvements results earnings result a adjusted offset reflecting These Excluding sequentially results share. Transportation, higher share, quarters

to the rates refineries and and time the start improved market Looking our as high-XX% spot experienced and at in Louisiana the first resuming impact sequentially Delta for year-on-year increased chemical from for Hurricane increasing the of the Ida. in fundamentals higher with Marine inland recovered the the to segments, improved factors variant December. operations pandemic. our following economy contributed renewed volumes With Transportation, business plants both the rates much and increased contracts barge since into and range markets, utilization term XX% of mid- near of These

led Omicron the for operations, crewing without was our the However, to inland fourth increase were some poor inland during headwinds. resulting approaching The these XX% in XX%. in challenges. be sequential COVID-XX $X.XX the Escalating quarter, by impact not variant challenges quarter. of delay challenged Despite our December, quarter the ultimately quarter. also quarter impacted operations cases to In modest weather market increased Omicron conditions, with to were operating $X.XX a stable margins which significantly is In coastal, revenues estimated conditions the to days.

Hawaii, barges increased Our end the we from and breakeven. the the coastal utilization XX primarily we into idled quarter. the near fleet. third due in of barge Operating were At XX% completed our barges with in retirement to the quarter, the year margins tank the ended of tank exit range,

and improved Going services, most competitive expect market our strong, our favorable build with for cost on equipment, recovers. to company forward, be earnings and this generate continue and key we In as will markets we backlog. efficient to and remain focused we returns significantly markets the and distribution

increased new new in strong supply chain and generation demand revenues fourth equipment. industrial constraints orders and power equipment to and manufacturing. However, commercial environmentally-friendly commodity sequentially in for and contributed as mentioned seasonality pumping gas, e-frac expected, strong and transmissions counts oil In increasing to ongoing declined for rig prices due and pressure and quarter

delayed many deliveries business significant quarter, last into our XXXX. supply issues of However, highlighted our as chain manufacturing in

fundamentals sheet. favorable pricing turn talk time & resulted our earnings a as Services, two to to markets solid, our nearly supply continued operating experienced strong and business a improved years. but seasonality, in strong about industrial, continues gas which results income. stage demand a expected backlog our this In the our and commercial improved more revenues. barge As better significantly was despite Distribution the remained Early King momentum segment normal a In been manufacturer, and result, the solutions in in assets few and and seasonality challenges name of the revenues discuss power a Adaptive. which small fracking The over moments, solutions In In overall its commercial journey products develop electric coastal, I'll and Their reduction resulted the in for best businesses had assets end normal inland, outlook, call we acquisition in by reduction company the sequential technology issues. the part our future. we offset offering in In focused with and but seasonality, repair XXXX. in the XXXX. industrial in under storage be ESS and sequential and the new field This and Thermo in the important of we quarter, our earnings are fourth first energy enter equipment. impacted market are quarter generation results markets other In on we the Raj and applications. marine to we we our development in summary, grow, for setting utilization trade improving oil are to to oil also as in new conditions energy a have is was will in We first, chain increased by and for term now represents the contract storage result our quarter acquired business COVID our key generation the ESG fourth fleet, for but across I'll our sales. key and see system improvement balance to products markets, mostly step point and in power now

Raj Kumar

Transportation XX%. also improved to and Higher we inland fuel utilization as million to spot revenue pricing increased increase income or utilization This fourth increased average in inland by barge $X.X due fuel of chemical primarily in In coastal was with businesses, to $XX.X These or revenues fourth revenues market. an redeals, to seen X.X%. and of inland Marine saw due increased the increased that increases and $XX.X the contributed pricing the million. primarily $XX.X impact diesel production and quarter of revenues Compared Marine everyone. term both improvements barge as Compared to spot term and operating on pricing. in as the market refinery to to COVID well Hurricane year-over-year, million operating David. increased quarter lower the primarily the million renewed $X.X of contracts XXXX, were had These Marine fourth million margin the following XXXX, offset approximately were double the Ida contract period. the you, And improved quarter, Marine pricing third an due from inland income plant operating of X% quarter. market inland the operating $XXX.X peak good by Thank were morning, seen lower price. prior and income of declined million cost

by contracts average approximately compared quarter the mid- the utilization contributed of barge fourth in as X% rebuilds contracts quarter Compared Compared quarter result high of as were market Spot the barge revenues third was renewed up utilization of fuel XX% quarter, inland the that improved spot low to We single one high in earlier encouragingly longer XX%. a XX% single and time increased quarter, affreightment. marine primarily approximately considerably. business XX% contracts of the in XX% a or third that sequentially the and barge the improved to inland fourth in increased the with market digits average the on revenues of the partially inland digits quarter fourth market with term a XX% pricing During utilization; XX% from of range offset due contracts Long-term year the were contributed increased inland pricing. reduced of up charters also from were and renewed to rates or XX% XXXX, range term the Barge Term XX%, to XXXX. from spot approximately transportation those in and middle high year. up and contracts year-on-year. segment during to revenue utilization saw range pricing, revenue.

the fourth During was quarter, inland variant. the Omicron by the business impacted

share and per margins we Omicron $X.XX $X.XX As costs. challenges other of and In crewing to the inland operating quarter. estimate spite due to David in mentioned, XX% approached improved to be impact sequentially Omicron, between the associated

Average to contracts planned tank to a of of the quarter quarter. breakeven mid-XX% margin revenues had for stable. Now rates to the fourth shipyard utilization by XX% segment. the in coastal the third primarily Revenues third of range, XXXX. higher to declined business, in represented Compared fourth rebuilds. driven Average spot quarter and X%, revenues barge on idle fuel primarily sequentially business of favorably the the due X% renewals Coastal barges to due XX% retirement in Overall, This the the quarter. range moving were Coastal the Marine compares and term improved Transportation the to market activity. XXXX, increased operating fourth Coastal the quarter of

tank were which was percentage for fleet our barge businesses, the from XX% have both included posted inland as earnings on XXXX. changes term coastal the During our provided quarter contracts the we call This quarter, as fourth well time With projections and of of revenue to in of charters. our the for Coastal approximately respect XX%, the a in is presentation website. reconciliation approximately

well by which compared quarter more deliveries equipment are of demand revenue quarter. the environmentally-friendly discuss quarter typical X%. and were million. for This, as was integration declined to as commercial Distribution market new primarily and and operating an commercial We've saw Adaptive, parts Distribution our orders Revenues income due pressure improvements will known conditions, fourth supply storage and energy quarter, a raised income segment revenues led service These declining $XX.X to improving When power transmissions, to of to & of XXXX, increased the The & manufacturing increase and third the performance the acquisition by million costs fourth sequential technology $X.X million million. operating I seasonality new primarily generation chain as due and with of $XX.X the pumping segment. economic for the also or increased $XXX.X the e-frac. the addition in during with income XXXX ESG-related in Now have demand equipment segment seen in related reduction in to to for oilfield. $X.X $XX.X industrial to favorable Compared delays million of or million Services operating XX%, industrial. of the in manufacturing Services

On industrial and the contributed parts year-on-year with improved for in and on-highway increase a economic activity for side, X% revenues service commercial demand power increased equipment, to and generation.

revenue rig of distribution revenues. revenues Marine was parts Business had see business seasonality, the Marine repair prices with impacted to the in We increase commercial and for improvement repair continue industrial In generation The in the Thermal XXX% in increased to and commercial but increased commodity activity services. lower completions activity quarter, segment and The year-over-year in transmission, increased power operating business third healthy was and sequentially and demand was fleet. new contributed X% due represented year-on-year spot activity sales. oil declined the and margin to seen our Compared digits. to King mid-single stable seasonality and stable in a rental revenues. significant by and gas, approximately favorable also an with most XX% industrial

orders Our equipment. supply new in Compared that resulted the issues experienced shipments increases pressure gas businesses third also XX%, generation for and manufacturing in power new revenues due of equipment. to pumping declined quarter delayed e-frac-related oil to primarily and chain substantial

and XX% margin sheet. approximately revenue had low-single an now operating represented gas in the to the will and oil discuss digits. Finally, segment I move balance on of

ratio billion of of XX.X%. XXst our December, declined debt-to-cap As $X.XX we total debt with of and had to cash million $XX.X

$XX repaid had of from million the operations we of and During quarter, debt. million, cash $XX.X we flow

flow of million. XXXX, minus $XX cash cash free expenditures to flow, We generated from CapEx as we operations and capital of defined or CapEx. also on cash used cash fund hand $XXX In flow million

focus We debt reducing repaid over our million during year. and continued on the $XXX

available million. approximately December, we total of of XXst liquidity As $XXX had

of forward Looking much is XXXX across to our activity increasing with expected CapEx businesses, into increase. forecasted the

$XXX flow million to extremely capital fund ability CapEx maintenance and we year, being also confident $XXX comprised is strong For the full our million in investment remain while sheet of expect requirements million to any expect flow marine repay to we cash $XXX able primarily to for $XXX balance $XXX free cash which with approximately free million. attractive million cash of spending, Despite debt from fleet. of we $XXX our levels and of opportunities. flow At the million, position, these operations potential of our acquisition to increased

Before I discuss income close, to I taxes. would like

had we tax for X.X%. the a quarter, change an of $X.X and million January. effective Louisiana tax increase a taxes remeasurement of in The per was corporate state paid in the Louisiana fourth income U.S. federal tax on income Xst the Louisiana related of liabilities law, one-time required Kirby's by and a deferred quarter. the the lowered was assets share. net tax During tax rates, effective result and income became This deferred rate or This in recent change tax deduction which to eliminated the $X.XX provision which

expect our range. our now income I tax over XXXX, As we XX% to call be look to effective turn XX% will to rate discuss XXXX into the outlook. to we David the in

David Grzebinski

Thank Raj. you,

products Looking services. positive, barge very markets for strong in outlook our ongoing oilfield volumes, our demand and and into in driven recovery, XXXX, economic favorable growth is the by

first time meaningful improvement all of deliver are our in businesses For in profitability. the to poised years, many

While some that is some are all very providing still of this around headwinds. positive, there near-term challenges are COVID-XX

variant earlier, costs. challenges, noted the These during crewing were January, by Omicron throughout and marine particularly through business. have resulting with increased our crewing we in As marine lost issues challenged the operations revenue increased December,

first our could per results $X.XX negatively of be we share. the Omicron believe in to impacted currently that the we will range relatively estimate quarter subside quickly, While $X.XX issue

range much our with volumes Looking at by the This barge throughout in more fourth marine, that are for minimal driven low-XX% inland year. expect our the and in we to utilization barge in construction. to of In Term high-XX% businesses in in improvements increased ranging new contribute strong market should XXXX economic market continue the detail. renewed XXXX quarter. to expected a growth, continued started contracts spot the the that lower reset further

revenues For renew. and the as grow full throughout improves expect year to the term will inland XX% we contracts year, XX% growth progressive with business

in breakeven compared and quarter from increased anticipated for to offset first negative of maintenance are are dry in reductions In increasing the costs. coastal shipments coal certain mid-single have activity and remain However, revenue to the related to to resulted related company's headwinds cargo year to to due second to the winter the the crewing across be down quarters building regulatory and barge mid-teens environment in utilization low-single-digit the Omicron primarily sequential low-double-digits challenges coastal the COVID due with digits near through weakness timing expected Despite XX% capacity during the the with market the quarter and XXXX, range the increased expect modest partially be expected with being year, revenue industry throughout business. range. to to cases Kirby's In underutilized the operating environment. surveys and low-single-digit Full pricing the a costal, water are of to With the the fourth expected Overall, are exit the positive expected strong industry range revenues more year. margins driven loss the COVID improvement weather by the issues first coastal is in with variant. to and between first conditions operating ballast we weak to expected respect Hawaii seasonality challenging modestly to pricing improve the treatment in installations year. margins vessels. is and due barge the Inland to ongoing expected in quarter lowest on be being to but shipyard

power on Thermal for strong for King Services, are miles, Looking new repair income. to in power Marine in some a is contribute generation, and commercial oilfield west and we material parts year the installation oil strong and count commodity robust at Industry approximately the increase if intensifies. to to markets during a on-highway will XX% range operating that growth Distribution expected east activity low-double Increased frac gas counts in a back-up will the frac and improved & which and grow by anticipate of represent demand activity as activity and maintain expect average commercial Gulf full-year to in in to In demand the products. gas, crew increase improvement rig expect year-over-year Overall, coasts. XXX prices have further outlook. growth current XX/X predicted increased growth backlog digit so full we repair rig growth as to near and also active increased of XXX power average would fleet In municipal XX% oil and and with manufacturing in In percent to and Mexico commercial is industrial. electrification and industrial, and we XXXX. years-end with many Similarly, and would bus service as over refrigeration we expected result revenue analysts will represent expected in XXXX. increase activity trucking count the XX%. revenue rise for climb

distribution. friendly parts we to result with growth a service expect In and manufacturing, products. continued the for we and a higher position strong demand transmissions, start we for year backlog engines, expect our As environmentally see order and

representing gas the commercial expected Overall, we XX% first However, year-over-year representing with the Services, to the and due the half segment Distribution approximately new increase issues, revenues quarter equipment with to & XX% to of of supply progressively being chain industrial ongoing year. other deliveries oil half. XXXX through and lowest expect ramp-up year are the and in will revenues

slightly margins to due timing with fourth the quarter constraints. first quarter of mid-single the a XXXX as reduction the the fourth seasonal at progresses and operating digits improve chain do expect the to projects the lowest being ongoing supply quarter. or year below We normal We during expect segment will

take moment who Kirby of Kirby wrap has he and COVID difficult inland to you integration marine and Kirby Kirby's Bill to CFO. will your guide the in his up, Stevenson the and through been help like to years down. say integral several four the Before a next maintain us I'd weeks team the deserved go Bill your in we missed. as strength Harvey, of Stewart after Bill, couple be an part significant, retiring to Bill's thank wish been & you and all best the from has acquisitions, success to we financial times historic contributions be and help to handicap well of large our downturn. will may certainly through retirement

Bill Harvey

David. miss you Kirby will you, working Thank the with whole I certainly and team.

about a deals will and few value years. few with creates I Kirby was grows Kirby and an expect no the I'm exceptionally vocabulary. how with and asserted the to hurricanes, Kirby a the profitability, price entering with in culture deals the that strong adversity for with or significantly what over You pleased an to collapse, well, next to to responds. and levels, There that company fit a team Kirby's businesses X reduce X low as challenges improves also say its I its member we can tell exceptionally I'm I'm market oil that all it proud in of or over pandemic well lot tremendous can't of as it the I'm and a that shareholder the Kirby is aggressively culture Kirby whether team. as years. preparing Category deal culture I look next unprecedentedly that utilization is to be forward retiring watching Raj

direction. golf You in move not my can the handicap thing, right also just be sure one

David Grzebinski

with barge by Like challenges Thanks, days. difficult began Bill. weak we a close continued impacted many, was better greatly for out, year markets, and events. unprecedented weather ready that had was To COVID XXXX are

at barge historical and is pricing the we and a extremely year. term, to into better the highs, stronger profit and least As standpoint, there XXXX, on strong the for In an for moving is is days we full while at near revenue growth supply look From construction price COVID barge is issue volumes remains see with utilization inland, continue higher. horizon. barge new a improve, new limited of the

All expected smaller, we our inland utilization of positive needs a year multiple to to and is recover, with the improvement expect contribute time earnings market of In this more to strong is significant up is cycle. and still but Coastal, more we our business efficient beginning expect what fleet. for the very

commodity business losses. are pave efforts activity a to will and expand. demand the is ESG expected power companies and are continuing sheet will near-term fleet significantly throughout Oil cost generation strategies, increasing with Services, drive grow favorable the equipment, and the friendly economy a repair price we advance E&Ps sectors to marine of right-size this current to Our way the we to to for Distribution strong With which their continue on-highway benefiting backlog And and reduce the fundamentals expect balance & and grow structure strong. In environment. reduced strong continue continued to growth. field of environmentally service remains our with finally,

cash As free of in mentioned, year, we progress down difficult million we a and generated $XXX paying significant made debt. strong Raj in very flow

We be flow expect year. XXXX cash strong another will

align create our for will take positive with shareholders. returns company this and We remarks, but reduce acquisition questions. and we we our that be looking our Operator, to further and ready also cash opportunities concludes now for this strategy to debt, are attractive prepared will use flow the

Operator

of begin of question Ken line with Hoexter the Instructions] first from will We comes question-and-answer the session. [Operator America. Our Bank

Your line open. is

Ken Hoexter

welcome you, Hey, always good great Raj, luck these to morning. want. the Good calls. with happy great. whenever hit to And to Bill, and course you chat

Bill Harvey

morning, Good Ken.

Ken Hoexter

the waiting on the about and margins, think the around create year talked when to throw aid of in In of market get given particularly done? margins sounds takes you on we've the finally you headwinds you've the of like in turn over. see direction you've carrier the think margins, to that kind been we marine what for your past commentary, past, can getting Thanks. and took time Maybe time to this kind about point mid-XXs this how rates the true thoughts the it or to gets pricing Dave scaling a mid-XXs it do inflection there, on and that and in fast you kind the of back accelerate?

David Grzebinski

Ken. Yes, been thanks for No, the look, tough years. question, a it's of couple

industry's the pandemic; during into But our the has as the seen the XXs around and quarters, watched to utilization has quarter, XXs. improved Ken, last the improved. lows we're whole in XXs finished fourth hit mostly the the were high we utilization down and you've In over and we quarter, utilization the basically barge mid- Our high December several in and the XX.

So, pricing improved.

was spot high digits. pricing, saw, digits Contract you important, year-over-year the As up most were about which pricing year-over-year quarter. in fourth mid-single the up is of sequentially XX% and kind single

that's helped So margins. the

XXXX. in XXXX would the then our get continues double And think to be we've throughout I said, good this digits mid-teens start and throughout margins and the XXXX.

are we think tight and supply demand going I not some XX% why, are but get to XXXX. in only to now, more. think, here's And I tighten

a lot highest price GDP separately. at pricing continues good. We're but them of seeing the with We $X.X probably XX,XXX-barrel a you, much all. is grow. this coming I if year and steel That's liquid we've brand-new any some up $X.X for ever but a tell at I And prices, labor Fed's would chemical on. and demand that goes of you the each good million GDP GDP. pretty dampened with barge take newbuilds that supply, new just picture is number volumes barge. probably next looks XX With typically at a plants Demand bit, to costs, better. coming chemical seen. for million looking is pretty year. plants Let's on, some to And and demand as know, those not that know still a we're down even got

think carried into getting may because the on there XXXX, are retirements barge is equipment are six from be over older. and still going barges that I XXXX

pandemic we you range this long, multiyear XX% seen put and which probably year good Another upswing, in supply of in Ukraine this a is was or when is or our production or domestic on about pandemic What is time, we've it's continuation of wrong? conflict, should global the China this out that at be together, and or and a a even if go a view. itself best normalized least XXXX. should worse. that's our but Taiwan, global think burning a But that pretty that it's conflict, margins there could hopeful Maybe pandemic important. track into a put feeling long So, kind whether demand gets

all when So, optimistic put we Ken. we've we're about been, as together, as that

Ken Hoexter

that's guess I on just last that insight. my opportunities. definitely about attractive would evident. I looking No, at be appreciate follow-up acquisition your talking comment maybe

be you your more going flow that side be Would you focus barging the to increase and Would like given you're If and on? choice ownership? margins What that had the scale so manufacturing that just and improving cash it to on cash like, on would more continue have your Maybe and flow and to it gain business? to reduce debt.

David Grzebinski

the in small a in terms fourth inland of liked battery side say, bought from coastal you consolidation away Yes. But always stay we've the in move. side. the we see did on No, the We'd would probably I manufacturing inland favor consolidating another company. quarter, acquisitions

fracking grid, was battery under let a But As is that we me grid look there. That $X we're and at electric that for well. add component acquisition. building very really that manufacturing the scale it fits nice million and capital micro equipment now,

capabilities vessels manufacturing if some and some of but scale our expenditures additions those we there. would stuff to of caveat our capital minor. come, think things that of we those working the We're type distribution, relatively would wind. If add ESG are offshore wind. adds will we that offshore add to support say, other to on So, I on the be do could some only

where deploy of kind we we've had but the inland gives that dollars, consolidation. and market always good built the luck with So picture of you I've

smart I about be trying ESG a That cost. just again, to what to spread think got bring absorb invest increase in we we that's where ability in we leverage profile. our our to and very said, lot and we're judicious when of it

Ken Hoexter

Thanks. Appreciate time and Best Wonderful. insights. of luck. the

David Grzebinski

you. Thank

Operator

Thank you.

Chappell question with comes Jon Our Evercore. next from

Your now line is open.

Jon Chappell

morning, everyone. you. Good Thank

David Grzebinski

Hey, good morning, Jon.

Jon Chappell

as the David, asked I we term this quarter, mark-to-market to inland the first kind XXXX, on of one XQ? the early feel portfolio even mark-to-market? you this improvement kind still term pandemic it's had these just would has portfolio kind been but upside even important XXXX, that Is for greater probably impacted for you you more is pricing. that you for estimate And deeper percentage noted your upside you. every XX% of around the What renewals of this maybe kind like in anniversary of that the market? of some given in inflection there of contractual of point that time potential late spot part

David Grzebinski

let start the pricing – at just coming bottom. the contract me now We're was bottom. with off Well, look,

contract bottom. So, in pricing XX%, again, had up fourth the quarter, we off but that's

renewals, the got lighter. ways our other was go. still portfolio is quarters it's It in terms bottom the XX% know a of three I tell the would to with being the contract quarter repriced contracts. you, probably you So, quarter off of heaviest in fourth usually

year. contracts is Now and than that spot remember, XX% of that's are a our portfolio less

could they nine anywhere week be to months. from So, one

spot three those for contracts. probably On four the it's average, to months

and it contracts So, pretty our when for because COVID running And cost rapidly, of as pressures tugboats upside, with just has then tougher. expect, But been out if with barge Crewing and you has are is it's how that the tighter. the now look those they has business market, up. Omicron has XXXX. some it of the that lower. but doing pricing I the you thinking situation. horsepower that would there, at at tight duration give where we you into not would can look the repurchase helped at factored tell inflationary gotten the just are towboats gone does

So, all makes lot of market a tighter that and lot a tighter. pricing the

get So, think and in continue as there – Supply demand and out of up we there what is and quarter. trend well. optimistic the fourth of to we're the saw we is pricing XXXX the need

Jon Chappell

are pieces guys maybe been more for strong, as second. Okay. I'm What's of Great. pressures, bit I shifting to noncore gas, public oil the guys that because M&A And D&S from like just are private oil the a to would primarily look start gears monetize as shareholder off this any you And in certainly but that just price industry has then the more the the a D&S producing are. angle your reluctant D&S really of could maybe curious you the business, in today? environment there to consider that bottom. of and ask comes probably

David Grzebinski

basically in frac months, or micro you, most tell inbound making the all it's we've electric of Yes. oil on made industrial that's support our It's on addition. frac that. why D&S, side, commercial great related years. that nine equipment not six important getting electric manufacturing company the equipment pieces that at I we're but the piece. last the the into been And power I sites, We the was to lot generation grids an and equipment That's and pumping exposures manufacturing build little you, we've tell in generation gas the a side, question. electric But frac necessarily piece, looking a being would battery would then manufacturing and of can two used got over over of power equipment. for the

at pretty I now. look that and our do predict you as and But when oil to adding we that and your electrification exposure pivoting the some is to it yes, there, opportunities, not we're electric mean, core sure gas with there say, as but of obviously shareholder To a towards as So, for it, for pretty everybody hard on divestiture and know, there's we power. running XX/X goes right acquisition open-minded parts hard that's transmissions either, I'd whether are or it always an as portfolio. forecast, value. acquisition But can. difficult. be or divestiture we're happy We're based we We're question,

Jon Chappell

Yes. a of it. luck I Bill. David. Thanks lot best And got

Bill Harvey

Thanks, John.

David Grzebinski

we're Q&A. having technical Okay. Well, some with issues the evidently,

So, a I'm just going for minutes to few talk the about company.

that there But the crude, petrochemical low prepared and our I and remarks, still Distribution what products are improving. the A would heard and with demand-driven, our business wanted but refined new say that are for plants both the of crude GDP you of production, you, chemical plants given about we're much and inventories tell up Marine Services in think now, I we are where refineries lot in & on. company ramping up. pretty are is businesses right optimistic our refineries, going is to coming

could interesting I barrel, $XXX for it's which, think, is which good approaching think be crude our I a businesses. U.S. to the Marine would note side that moves both in spur more and of production, more

that carefully. we're So, watching

I think it constructive adds outlook. our may the think to we Q&A. only And have I

Eric Holcomb

new are a Crystal, you have We operator. there?

Operator

Ben next here. I’m your Stifel. take We'll sir from Yes, Nolan from question

Your is line open.

Ben Nolan

back covering there up was glad Great. again. That but... to I'm a open nice

David Grzebinski

not we're we're there, We're but happy what sure happened back.

Ben Nolan

good I And me him appreciate making wish me him feel gives I to chance a always like it fisherman. and tell Bill was a well

Bill. thanks, So

David Grzebinski

He fisherman. was a bad

Ben Nolan

and do? does it our that mean, leaving make with that refining get more It the of on and just like you're years Or But impact I that chemicals in I major talking just he that But happening. goes the If petrochemicals, is was, side? and No, fisherman. few me the on now, U.S. does to it what ago. the a two, exports, barrels David, next trend inland about or inland as that anyway, in nuances as I or towards How one shores going what side elsewhere? been we but guess refinery first let's just everything, of start just utilization activity, does general about question. more good think as – feel see, – the a a high year more hadn't which help, around back was had help it my I

David Grzebinski

oceangoing go or in components those, abroad often within Channel a fuel. they lot with to refined lesser compartments extent, to going of out because Ship they the or helps say, blending Houston Asia, diesel, different jet export have clearly gasoline, It the and they are ships. Yes. when have to South of, these America, Latin But put big products, maybe volumes ships America a

leads from like may one say, big barge We to often the of components a moves. or refineries over that So farm. Kinder take a some tank of Morgan to, those blending

more example, I And volumes would for We like up are so, it's system. now. help to still volumes barging do where liquids we'd to improving. they're that back you on them. because export more tell They see Mexico, moving can to the moving see not just

Now up. Brownsville the I is look with. volumes or there's some there But actually two are of kind points we believe adds are of towards we we still that down picture of not Mexican our down demand XXXX. and are some Corpus. do inner not moves to of there back those that coastal that do and world export down COVID. ships, fully – distribution into parts the world is still, XXXX And way but as lot shut get go actually involved the with we The to a

next. reverse add are to So, this and we those I and is, volumes. think question, demand, view that of us going export into add our volumes at would view itself and to picture only point that that and now some to important those will But for solid is, demand the the to year point good demand pretty news is export right your the

Ben Nolan

supply Is XX% the to move that in into in and talking Obviously, to think kind I lot. hiring and at that the switching how quickly risk much? gears doubling but challenges XX% I terms those that. guys everything much follow-up, of setting on up math, pivot had equipment D&S, about quickly of backing that you being revenue it is you're downturn. and I for But do helpful. a moment, a That's just is know that and I mean business people, you my the to over is on of easy scale? just else. revenue bit there side. that a chain to oil the aside, Okay. pared-down able there almost quite And that of growth appreciate mean then gas

David Grzebinski

No, now a you, would more Yes. has people been. is everybody tell as great that's question. hiring I challenged it knows, than

key It's bring problem supply our I We are would chain. to tell new getting getting assemblers. still is technicians, having difficult. the in biggest new componentry. problems able We're you, more though,

of month weeks for to the than Supply major doing our suppliers the able our positions. us deliver up last fill that marine paid but of the of off. to a decision in a all and for have bigger times chain difficult. side, tight, has has us and driven. anticipation the rebound those on is supply new year turnover to chain would is weeks all January tell XX what just component situation up last in kind made is candidates been from on finding labor more One not labor, I we're The told said, start key basically to of frac, we're we that's XX constraint demand has But school in that you, electric in lead we're gone pollyannish.

a KDS far, pipeline, but to good XXX doing question harder your find over our labor, bit that so I But and helps. a think we but did it. one. we're side, seeded we really to okay. on hired harder be It about cans trained is We and last the with to judicious and wanted of is speak. getting We the school year kind deck little so of so that

Ben Nolan

and and else Okay. chains you're comfortable everything to supply with solve And hit obviously, being growth so you just number? labor that entirely gave able and the guidance, on

David Grzebinski

what what's Could We little based risk. be what's right of little we Yes. lot could is little a – to to think now. if put deliveries our No, in bit? a it it shift component is shifts us room guidance to put our on that a a the at shift will right, more, bit in bit but deliveries the

do chain. in getting business our from supply we're OEMs our and that think I with the feedback people good we Now

We some are getting deliveries.

the but supply is an it's So, issue. chain happening,

out I'd people's the the hear over We this think, supply that bit kind nine our I on but view. guidance. I itself can months. you into and CNBC the of That's little to whatnot, think, on other a and my sorts love pundits incorporated next of and to opinions of chain listen kind

Ben Nolan

Dave. Thanks And luck, Bill. again, Great. good I appreciate.

Bill Harvey

Thanks, Ben.

Operator

Thank you.

next Our Atkins from Stephens. from question comes Jack

line is Your open.

Jack Atkins

Thanks for questions. my Great. taking

through solidly We all unfold? think what's Obviously, timeline Oil we well. prices scenario sort guess for coastal economy David, of walk guess, the that to I fairly to you start sort are And what's I profitable? maybe with get really the So, elevated. is of of coastal. that. could back doing need the do see that if I kind

David Grzebinski

Jack. it's on a a in coastal get track. the but inland good taken little that's to same that question, what's for market, back thing Look, it happening happened Yes, in longer is the

changed moving what so through of were those came XX of inland the Let me and crude demand. we what side petrochemical and Kirby's and helped XXX is up a the and barges lot the excess There oil inland all describe barges growth market, There ended it the crude oil were the had moving a a XX In coastal bit. ban. GDP pipelines inland barges the for and supply we in that all and petrochemical coastal happening, crude, growth lot and in on crude the market, lot same side, over growth absorb happened barges to had a all the moves at export we that absorb side. on – built In the little of one then crude were was in they thing. point, moving

its couldn't – peak You our crude, it export the to and at of barges crude so of down they and changed and you one. used number moving XX – to remember from us it for could you then went kind

the got we've just moves was unlike throughout entire petrochemical coastal and business. lot market, crude that It's not there happened on – one a coastwise there's moves. barge refined inland, really but of now, products So moving the

then So the been and and are slower demand retirements it's offset overhang has needed to to come, coming, there but coming. supply growth the the

the retire us in barges quarter. few third saw quite a You

the and you coastal supply of the earnings on consultants positive So we're two range. out getting do for with and [indiscernible] it's rising market. forecasting about when that in start work wouldn't I see They to solidly look in start the them. at years that. meaningfully one of coastal balance to back When prices back getting to think disagree enough some demand you

We are tighter.

too. people a coastal XX%, retired barges coastal remarks now, as Raj's heard we a because you in lot. lot that's utilization, Other our about are is of Now retiring

lot So we're constructive a getting more on it.

If I to new years it's in, right out think Jack, and long now. this, probably coastal, three other new time about for thing equipment is know takes barge, somebody wanted you come a it coastal right? a the

even out it So coming see I its today, don't it. And see announced somebody years before any if three new on. supply we'd

a So I pricing say. really pricing up so years be in we'll think to way. and go in meaningful into needs XXXX, little continue would to will going and is or turn then bit what gone coastal trend enough, little It bit. and think I will us. it's higher the I for a is elasticity up we're but the of hit two strong Not just corner probably that Meanwhile, in edging a

Jack Atkins

but the helpful that's going for years, No, very the a is back coming costs two to is for were last prices fairly over X.X which going Pricing color, obviously steadily that. even my years, Okay. encouraging, inland David. been bottom, off follow-up when Thank have you guess just moment. for rising walking down. question, through I And

year a you delta could couple next mile to guess I your your the So changed? terms way point sort to How this think Because in business ton right ton revenue a there be maybe understand to to environment that if know the get – of is for you stand per relative is think out of per I about cost catch-up about operating a there now? do want highly we a inland maybe where of I that don't your to And that there customers today here inflationary hold? mile. has obviously, think, over quarters, help

David Grzebinski

seeing Raj you and want with on on the him together Jack, we're inflation? Well, some to seeing Raj, components tie what you I'm on inflation, details what some then Yes. cost give of it in the do let of to we're going give I'll terms pricing.

Raj Kumar

Absolutely, David.

that it So yes, real. know inflation driving Jack, is is up all costs. We

side, wage to us it costs our impact but we risen inflation. we place mid-single recover if in seen really all at crewing on that's mechanisms a So – right, about in to that. the David's also sharply, customers. fuel talked have the food, up from real components, supplies, for our We've key they're That's digits. costs, look us. Fuel have

to we which are upwards, the place have result we're right with a aspect bit now? mechanisms pricing right – now, is address this the in be – this But inflationary some becoming that to do what help – is us contracting of I also our seeing some mechanisms pricing good recover with going We impacts. seeing inflationary firmer trending becoming in place inflationary final think that

David Grzebinski

inflations with our their understand the we frankly they're When they with and have Yes. there, seeing it too. conversations cost, customers,

manage the it We're doing momentum, Jack, it. best frankly. So our helping is to pricing

imagine crude costs transportation up. are can You

helping that were almost go think costs. didn't on would we and crew But have Raj As we're your have of to that containing our are real. vegetarians, other But we the food but is should maybe the double-digits. because shortages mentioned, prices are pressures price And crews we point, pork that it everybody working drive the meat we work. real nonetheless, should pricing Jack, understands day and up that joking inflationary to with are

So – and supply in balance. and demand are

the narrative, helping happen. it to is it So has and

prices All costs. cover to to get these higher of us have

answer. So Jack. needed what of rambling a it's you got to Hopefully, long out that,

Jack Atkins

think so I Thanks a Raj. Well Thanks question, Really rambling the that long it make again sense. was appreciate David. time.

David Grzebinski

Jack. Thank Alright. you,

Operator

you. Thank

from Randy from comes question next Our Giveans Jefferies.

is open. Your line

Randy Giveans

going? it is how Gentlemen,

David Grzebinski

Good are you? Randy. How

Randy Giveans

questions Two here. well. Doing

the first of pandemic. renewals on basically barge start the for you higher inland time, rates First, the contract mentioned the the since term

but XX% For below the December, December far those they're contracts than levels, signed rates? how were those higher levels December in XXXX about XXXX

David Grzebinski

question. to do Yes, we do while good below trying math still head December XXXX. my the it. in that's a I'm We're

first me, in the started our we margins Randy, said this where month were the COVID recall, the You'll up excuse that range. ago before in Omicron, of XXXX we a hit, calls inland commentary to had XX% in several quarter

were we there. almost So

tell XXXX. to quarter in where fourth So we're we of XX% would were still I you, XX% the below

about to you inflation, tells pricing just as talked But the the momentum. but supply to happen go. got we've that true we I off how think demand to tight. We're and and that So bottom. is far point is is the cover just has anyway, It coming happen inflections key there

We've on cover way set got rates returns go. a back but to costs we've up, it's to to up to long obviously cover get then capital. So got our and

Randy Giveans

heading the right second here. of in Certainly And direction D&S. question then Sure. terms

of overall. e-frac pumping XX% And on, expected have new growth that is on to order oil ordering terms maybe how I repair? guess how equipment XX% versus mentioned marine new you in of what You of pressure the or currently the gas revenue driven say with then much backlog? and by does on-highway kind margins, compare margins or

David Grzebinski

growth XXXX in a That that's could a around is lot one albeit of year talked believe healthy the with XXXX. the backlog, do question. Yes. supply for with we that be or We chain said, book-to-bill great constraints better entered backlog. about. we a that No, pretty revenue from A we

are on-highway both doing in got we've of of and better part backlog and markets So lot that's also revenue The that off-highway seeing industrial. we're commercial driving in commercial growth growth. and a big a and revenue But industrial.

this So it. and grow. of still of because question, as of kind electric margin we seeing of a that's that just part do see. I lower lot generally first for speaking, your is and To We're the to things. part good new that the equipment in growth and But a think margins growth. interest reengineering is backlog equipment revenue there's e-frac versions no of equipment the will new continue mistake, make it revenue big

our to higher and over generation in. this we that said, innovative our got guidance, because market in and very is and time. the margin in margin forecast market ways that be that So electric is the That go factored in just should evolving. We've equipment e-frac

lower long get saying engineering of heavy our that's pretty margins would guidance, ramp some next will to hope that's the but single-digit months. XX high into costs, we're there's way all in the to D&S So XX upfront start margins in got – I and and a the higher.

Randy Giveans

we'll soon. deal. and on Good Congrats Thanks the Sure. Bill, again. talk retirement,

David Grzebinski

Take Randy. Alright. care,

Operator

you. Thank

comes from Research. from Greg Webber Wasikowski Our next question

Your is line open.

Greg Wasikowski

doing? you How good guys. Hey, morning are

David Grzebinski

you? are How Greg. Well,

Greg Wasikowski

Great. thanks. Doing well,

between see, question, how now XX,XXX For trending wanted XX,XXX market? rates, thinking Just you particularly prices and newbuild the differences versus the noticed then utilization, to the and any that's any in just have disparities historically? about first

David Grzebinski

little. is but XXK the Yes, would tighter little XXK refined say, both basis. a And different. barges the a in the cheaper lot barges this the I pricing is are proportional significantly. chemicals There's more any the the of not just small on products it's in and One of not than up XX,XXX, is more meaningfully margin, a on XXK pricing XXK the other

than yes, a anything it's So a really slight not small difference, but driven lot around big mean, more I difference else. chemicals

Greg Wasikowski

Got it.

Okay. Thanks.

ahead. go Sorry,

David Grzebinski

No, go. all no, I to had you say. That's

Greg Wasikowski

Okay. kind of for my revenue keeping and Yes, off about does what what, the chain follow-up, of cycle. backlog just to going D&S supply thinking and the that

frame the I'm given us now, changed? been a does constraints what recognition really, So think we like for years or can have as shift where getting keep start many whole more revenue product chain we you would versus XXXX, And Where what the now? or that or three has you of cycle, it at for from the do ago? it now how couple if stand six of that's it's it is actually whole supply backlog whether now does backlog months XXXX guys that months the to into about months XX/XX, point at to be how building cycle of

David Grzebinski

order got chain months. expect, you a still would supply a I just to turn regular turn more in six stretched year I on We six at you in has to would No, months. use like yes. to than accounting. that to within fracs The good completion months. here; tell I'm XX the nine nodding to it. looking probably used it we'd have And longer think He's order in backlog percent I it's now use Raj Yes. backlog certainly to of XX that's question. be

So It's accounting. able contract POC. almost use we're not to completed type

and all XX can we the it's backlog think gross it’s different requirements use little project not are months, XX-month. those or six-month different got engineering like a but level different like Every customer different that right? to still the turn So we have, is And averages, within at we or requirements. said, more componentry

generalization. gross So add, it's Anything a Raj? to

Raj Kumar

Yes.

control to a from control can perspective. So chain we supply what we're going

plan of or at that's a stretched, more want we I in a convert we have but one. backlog the is with that to is backlog message To think think that year. chain the book-to-bill we we than have all. end is key the the I leave slightly right supply is the David's that to place to one in the point, for the plan day, you at And XXXX now, have forecasting current are what that

we So what replenishment that and the the we targeting. backlog of backlog as is have executing to the enter year we current are

David Grzebinski

mean first that take is I orders, to I'd – Yes. next if just let's probably is quarter, say, likelihood we until add wouldn't this that ship in year.

growth talking driven. been about of revenue lot the backlog a we've really, is So

Greg Wasikowski

again, Okay. Best helpful Thanks. That's Bill. Raj on Thanks, congrats the of pretty David luck link. and and

Bill Harvey

Thank you, Greg. Take care.

Eric Holcomb

Chris, one All going long and to so right. we're take run more question.

Operator

Lewis Thank you. And BTIG. we'll take Greg from our from question last

Your line is open.

Greg Lewis

curious, to been touch did a higher call. Thanks It's I the WTI have guidance highly of it's before oil to inland. from of that fuel to the kind higher think rates. like bit has do quickly. in environment, that how benefit kind the as Any forget, higher Hey way way kind Is be environment, that works mean, on fueling? think what about should crude it's I price a feels and for it I i.e., be higher for Bill, there should a a – the end to to supportive your me oil pleasure. Kirby of operations, of how price kind Like price fuel customers? higher it we want $XX, funny quietly that I'm on guys. in with happened is the about congrats. realizing prices? squeezing of – that thinking climb How you're does those for I really thanks we prices, about little impact of and

David Grzebinski

our In be through. customers, just cost work and fuel general, pass and to pass-through. a It's Yes. like we make try We a on we fuel. to for don't it and try money

customers anyway, or so oil they big refining than fuel companies companies, integrated understand better you right, think are our companies big If energy we oil large the most of the markets do.

we tend it fuel – as an standpoint, from to you accounting revenue. we the have as So just pass does recognize to on. It know,

oil revenue, So revenue it does actually higher margin. of dilute but the I though, all for good that think our for our good integrated said, it, all of associated the dilutes good. a our good associated oil It's customers. customers. margin – a It's our higher little with higher oil refinery fuel It's right? for It's bit, is chemical good Because for customers. not customers. kind All price –

So volumes. drive that will also

a standpoint. leverage price the – get so of cost that, their So down, it's which a good. then a standpoint from sensitive generally less than goes they cost is just percent a transportation good price on And more of from product demand little of as

are oil higher really the actual us for don't off but cost. and generally So prices than better lower profit fuel – we

Now for that – we're our do said, that. we higher more price capital and right? they and A pressure oil said, seeing have discipline. drives do, do well That customers demand pumping generally KDS, in

that's Anyway be it. rambling Greg, know capital, helping seeing bit. sorry. cover the very, answer, our which oil this, you drive with probably up another again very a long price You disciplined customers oilfield is We're

Greg Lewis

No, off. press I the catch-up? we is mean, from, money I of guess it being some year. once upgrades. last – went that that, be or I have just maybe you we times But carryover release, as I technology Or of how last did that kind kind of then D&S? on kind is that around few a year, and That for guess, mentioned million business the call. that holding no, was much used again, about some CapEx, should should you out as invest I about bit thinking for Is it's CapEx, of was great. carry-forward and call assume $XX And of back that D&S $XX million think some that in didn't as of the of CapEx kind electrification a we little to kind

David Grzebinski

Yes. the It's barge on a you better. we a get little as we catch more up of as particular, did to and bit little our maintenance, do Marine during fleet necessary said. in COVID, We there's catch-up,

little water got the we've a million more we're spending probably XX% per through barge spend to business in probably million but But $X also know, – so. million put to we're you next year about having We're CapEx. coastwise of as water on. ballast and treatment, to capital So million to maintenance in $XX ballast there's ballast $X the treatment our $XX water or treatment fleet,

next million I years. over its two think the $XX

But So have our fleet. power generation ballast the Really incremental water our budget. small stuff, treatment but on to KDS part in did rental of invested is side. add then that. we we That's part side, KDS of the

everybody – power it. they just As wants Everybody power knows know, power you is XX/X. and backup need crazy

we of backup lot So power a generation equipment. do rental

we that our KDS improvements KDS to a our well to a So added bit as as in fleet manufacturing branches. area few in

Greg Lewis

Thank Have a everybody. all time the great you for Perfect. day.

David Grzebinski

Thanks Alright. Greg.

Operator

Thank you. Eric And that to closing back to for our does over like now call conference. today's for the Holcomb I'd conclude any question-and-answer remarks. session turn

Eric Holcomb

has to everyone thanks day. me Thank out and great a today. direct Thanks, today. you, My participating everyone, anybody feel for any (XXX) have to Crystal, XXX-XXXX. questions, and If in call reach our free line is

Kirby (KEX) 27 Jan 222021 Q4 Earnings call transcript