Earnings call transcript Q1 2023

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Operator

Good day, and thank you for standing by. Welcome to the Kirby Corporation 2023 First Quarter Earnings Conference Call. [Operator Instructions]

Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Kurt Niemietz. ahead. go Please

Kurt Niemietz

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

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

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

involve Forward-looking XX, risk Kirby's the anticipated for to uncertainties, in could those actual our from year Form A statements of materially made filings from factors. other time. result and SEC risks differ December time found ended in and various the can be list a results as XXXX, XX-K and with of factors these

I call to will over now David. turn the

David Grzebinski

good and Thank you, everyone. Kurt, morning,

delayed on per $X.XX activities refund which compares engagement interest earnings first offset strategic $X.XX our of XXXX and Earlier results $X.XX. to earnings Included quarter $X.XX. onetime shareholder today, are share events, $XXX IRS share per of in X quarter we review announced per first related $X.XX The revenue costs the to and per of by of million share of share. offsetting net onetime were

higher the operating during revenue and year-over-year. Both of income our segments well quarter, delivering performed significantly

Marine Marine Distribution market Services. continued offset results and & fundamentals Services, The for supply and weather in steady partially first navigation constraints chain Distribution Transportation challenges reflected in and both by significant & quarter

on solid we even quarter, headwinds. remain focused and delivered and operating results as with efficiently safely possible these the as During as

impacted Gulf along heavily navigational Rivers. Illinois the by were were delays high fog the lock results our operations slowed significantly impacted of and first quarter by to first our and challenged affreightment. days the quarter, weather transit Overall, increased Throughout Coast These delay Mississippi heavy Marine, quarter Inland In times the and the on issues compared XX% days. XX% and delay financial of winds contracts of fourth the and and to our compared quarter. XXXX performance related

rates with to demand low a utilization the activity was in on with year-over-year. the and prices From to inflation, range coupled continued in strong prices quarter. customer mid-single upward digits strong to and XX% upward running barges, put demand -- the spot the due conditions standpoint, sequentially market quarter mid-XX% throughout pressure up range supply the in limited prices large Tight in with low

increases first low in teens the versus higher double-digit prices inland and increased Term year-over-year XX% with quarter low year range. renewed Overall, ago. contract revenues also a margins were

In improve our coastal, market levels to in XX% utilization range. fundamentals mid- continue the slowly running with high barge to

term demand quarter, large which contract deals. in new price spot renewals limited resulted double-digit of the solid on vessels, low capacity saw on low customer increases we During increases and XX% and availability

As maintenance several on noted however, our in the results vessels. impacted were fourth by planned large adversely quarter, shipyard

quarter. low operating margins operations hindered single and negative extensive year-over-year Coast revenues the by fog quarter the the on Additionally, Gulf digits. our coastal slightly were throughout first decreased were Overall, in

demand by new across friendly for generation levels growth and were Services, revenues markets and our equipment pressure In pumping for manufacturing, and in backlog. driven orders of healthy with up year-over-year, strong equipment environmentally our remained Distribution power demand & sequentially high e-frac. In

during quarter. many new delayed deliveries the issues chain supply significant expected, as However, equipment

chain to diligently to manage continue these work challenges. supply We

sectors. the marine demand businesses with and In on-highway growth overall our across power solid market, commercial from remained our and coming different generation industrial repair,

pushing supply/demand first our dynamics issues. results industry-wide, strong segments our by The planned are strength rates favorable. summary, inland market challenged despite supply shipyards are revenue near-term market and is while continued quarter and chain for fundamentals meaningful in higher reflected weather both coastal In is

and is are utilization is outlook barge while foreseeable in are the demand supply good, increases. realizing the for further persist rate And is to strong. in and distribution contributing chain segment. to Strong expected we Our future, the for bottlenecks growth services market the

segment call about more sheet. the balance turn But to the the outlook first talk I'll to over I'll later. quarter first, discuss results Raj our and

Raj Kumar

Thank good morning, and you, everyone. David,

the to and Marine Compared and XXX%. Inland or more I'll million X% In the revenues, of quarter income fourth revenues revenues total million minute. decreased while of margin and operating operating down coastal with XXXX, the quarter increased this $XXX million increased $XX in Compared operating income X%. up and first XXXX, was XXXX, Transportation together Marine Marine a segment of on of $XX add $XX or income were to first XX.X%. quarter operating an were million, coastal total down was and was color inland XX%

David delay negatively and increase produced pricing. planned and mentioned, XX% shipyard improved weather the headwinds impacted impacted high coastal the were Coast customer underlying demand and in days sequential year-over-year and and solid As operations winds along and activity offset XX% by fog business. Gulf while These a efficiency,

seen The that in the XX% the the segment quarter, for in low first and digits to was renewed digits double first contracts from to business year-over-year. contracts XX% discuss charters market were during revenue. in utilization or the range prior the quarter year contracts spot quarter compares mid-single contributed revenue, more to affreightment. approximately time is approximately XX% business from increasing of Long-term I'll XXXX to XX% the contracts average marine transportation or the Improved those market contributed low sequentially of inland in on inland in range in conditions with term and longer than contributed mid-XX% with in better and compared First, utilization Average the the which mid-XX% the quarter Term barge fourth XXXX. inland the rates up XX% a of of range X low the of of detail. slightly to year.

primarily of to inland spot increased were fourth revenues higher due and quarter barge to and XX% and to the conditions. the utilization. flat quarter increased revenues of XXXX term inland unfavorable aforementioned XXXX, due compared first pricing, contract pricing and the Compared higher Despite to navigation operating

was XX% operating flat As impact driven a sequentially were such, inland by pricing. margins navigation of delay increase also higher days, offset by in the sequential which

digits partially revenues Coastal to prices X% the weather planned Overall, business. and from along and were year-over-year improved moving the the increased by operating negative higher impacted in adverse quarter. by Transportation poor days weather XX% and business conditions low the single Now and Coastal coastal coastal was shipyards of the contract margin segment. Coast utilization. for downtime as Marine The a offset barge revenues represented Gulf shipyard the winter had decreased during

the range, low barge which the compares mid- the utilization range in to to coastal XXXX. was high first in XX% of quarter XX% Average

contracts the the on During revenue the spot digits which quarter, higher year-over-year. the term percentage of market charters. were mid-single XX%, low XX% contracts low to was renewals coastal rates time approximately average were double sequentially Average term of approximately digits were in and under of up in

a of presentation This posted the is for for representing a earnings had million the Marine X,XXX At both With provided Coastal first tank the a badges, as in our a of barrels fleet of call in the have inland we On to well end as total million remain end quarter, year. number changes XX.X inland reactivations. included XX.X of expected with our barrels barges, businesses, currently inland for the X,XXX representing XXXX. barge capacity. on capacity net our expect fleet, by quarter respect reconciliation and the of to website. unchanged driven the we is basis, of coastal to XXXX projections first modest

fourth I'll Services million, Distribution increased $XX revenue or quarter $XX quarter or Services XXX%. operating saw million margin the review operating the to $XX When by XXXX, increasing revenues income the the Now and XXXX, quarter first $X & of the an $XX by XX% X.X%. million with by and or by of million XX% operating increase income compared or the increased with were for million Distribution of million segment to first Revenues XX%. income of operating $XXX of Compared of XXXX performance segment. &

rig in revenues. increase oil throughout favorable new market, prices the gas contributed sequential the commodity for experienced parts engines, demand and activity completions to XX% increased strong and quarter. and In We year-over-year and XX% and transmissions a

the favorable bottlenecks, Despite revenue oil the manufacturing the business XX% represented backlog. digits. As and operating in David first continued new orders to and mid-single trends mentioned, in had issues, these navigate and supply in we of segment quarter experienced manufacturing continue our chain especially approximately Overall, margins in gas business.

XX% also year-over-year year-over-year. a by activity On on-highway marine service for improved repair and revenues industrial strong in the our of industrial side, and up parts to contributed equipment, X%. with quarter to Power and businesses. commercial increased revenues generation XXXX, fourth was commercial the in increase and Compared demand

Thermo business that growth. Our revenue experience impacted continued supply chain due King delays to to constraints

margin digits in the approximately offset in revenue single businesses commercial operating high and during Overall, activity by represented and and was this the an repair. increased However, generation first power marine, quarter. had the industrial XX% on-highway segment of

These shareholder that amount general million review costs year-over-year, completed our Moving $X.X note other shows Please with interest of income offset costs the expenses associated a by to IRS similar in higher items. corporate for and our were Total on driven refund. other recently this onetime quarter higher up strategic delayed income. by were activities. onetime due engagement

turning the balance Now sheet. to

XX, our total improved ratio of and As we $X to March debt-to-cap of had with cash million around of billion $XX debt XX.X%.

flow we quarter, had the During million. of operating from $XX.X net activities cash

the a underlying of operations business. cash quarter driven was from growth in build flow by approximately capital $XXX million working impacted by First

CapEx to We used and continue cash of of capital fund related progresses. flow year We on unwinding capital $XX.X working expenditures to target primarily hand as or cash to equipment. million maintenance the

repurchase we During $X.X just used the at also million price average an to stock $XX. under quarter,

XX, we March million. had of approximately available $XXX liquidity As total of

from million of to generate XXXX, net we to $XXX expect For $XXX million. continue operating activities cash flow to

high of as range at CapEx Our a is are play. this and number year wide factors

our heavy this a year for both have and inland offshore we shipyard First, fleet. schedule

you systems the in to similar timing due this to regulatory maintenance As situation A treatment of bubble requirements. related is sector. year industry a know, offshore occurring regulatory the water next large inland impacting is ballast the there and industry

$XXX for be CapEx to both is million to will year, around $XXX million million in maintenance the $XXX fleets $XXX This typical million. Our it range.

of specialized approximately higher for this level spending, to our to compelling we marine strategic some add CapEx. addition have equipment marine will million that projects In $XX

up to long-term and provide $XXX to stable to key services to and systems year expect these the release returns electric The streams accretive million this income customers. we business. and distribution will related Finally, tracking that are invest in systems for

to free expected million to the to in is $XXX So XXXX expect to range. note It even spending, the that $XXX million be of is million capital cash to CapEx level million $XXX in in higher generate important summary, our flow. guidance for $XXX we with anticipated

We to free approach, balanced are committed allocation repurchase to to and we use expect a cash flow of this stock. most capital

call outlook discuss to turn back David XXXX. I the now to of for remainder will our the

David Grzebinski

you, Raj. Thank

results in receive and for and we challenged Although expect exited the were chain and results Distribution in to continue the weather quarter services as our first to orders Services, Marine we transportation, quarters. materially marine businesses deliver bad supply despite In and in progress remainder constraints, results position, to of we in quarter manufacturing. Overall, is coming through continue we by products our the improved XXXX. anticipate excellent demand strong, financial we new improved & an

labor all higher this of inflationary to due rates pressures our and additional While costs continue constraints and to is are interest are mindful we starting economic that related although to rising some to slowing encouraging, Also, headwinds of across this businesses, moderate. is possible. contributing challenges

on cash in costs continue strong from operations. flow With we will these our uncertainties focus to drive mind, and

expected steady is favorable plant for are and spot approximately inland next requirements and with constrained. XX% to availability marine, by the are demand lingering contribute inland part These factors represent further -- inland to revenues. represent demand, further and support continue barge future. construction maintenance also pressures These which combined and in to improvements very high In utilization increases. Barge Limited excuse range expected years, inflationary in supply the the X low high rate drive new support expected industry to in to higher barge chemical are should driven large of me, refinery our what barge utilization to market dynamics mid-XX% running for utilization. foreseeable

full grow the We not approximately to expect mid-teens contract inland year also improvement gradually expect for and occur and will operating throughout term pricing year. improve to, renewals year low in continued close to throughout digits XXXX, in expect ending as the margins revenues double Overall, inland XX%. at the average the we near-term if

industry on expected shipments demand business cargo year liquid cargo full projected be in conditions expected double this to installations year are steadily revenues getting to is to planned is our to be be if expected almost are treatment digits near coastal, Even expected Good largely a In to is business last balance some higher to XXXX remain and utilization Full year. by water to expected flat core are low compared days there market maintenance fundamentals breakeven basis. the to low offshore to Kirby's which coal our the offset are as dry softness, across single the margins market and ballast closer company's Operating to maintenance year-over-year. are in improve range. fleet. coastal year mid-XX% supply and coastal in the barge

Looking demand stable and Distribution have in the demand provide continue. segment. first to a and activity manufacturing expect this counts OEM service for and completions we added we oil rig new well high equipment, business. products Services, In strong incremental outlook In across orders will growing market, service at manufacturing, trend continue the and & commodity and distribution for the we prices, the are favorable gas expected in to and parts quarter, parts,

challenge. are between issues earlier, As are product times XXXX choppiness deliveries, beyond to from equipment year and to These supply perhaps we new which, some long in remain XXXX. I a shift a within contribute which some the cases, mentioned likely some to OEM lead issues into chain potentially could with expect and extending quarters even

demand industrial, and we and steady on-highway service commercial on municipal by parts highway In work. and repair increased driven expect on

demand products. be ridership for bit continued may increased all King of supply offset refrigeration Again, We improvement a chain delays. expect by and in bus this Thermo

remain parts service be markets continues to strong West solid are power for the activity power increasing and and and improved to expected In demand is repair generation, of and new on XX/X Coast. expected Marine grow. power backup the electrification installation East Gulf with as commercial to in activity Mexico also

low we to double-digit commercial continue revenue for For year, the XXXX full range the and expect growth in industrial.

will we industrial XX% to the issues supply representing While of new representing & to XX% the equipment with segment XXXX continue increase excuse product by are year, and chain Distribution expect expected -- segment approximately impacting for Services, full and and deliveries XX% me, in revenues in gas commercial XX% revenues oil and remainder.

in for operating We expect mid- to will single be year. high segment XXXX margins the the digits

income, To conclude, our on well improved performed our 'XX. solid and during well operating overall, in we're quarter, segments off delivering objectives. Both to start and executed near-term revenue the team a

free to despite generate Our significant that flow cash year, balance and expect of sheet repurchase strong, to flow this is cash we to free higher and expect we the CapEx shares. majority use

financial results our that will and the for a see have produce recession impact businesses. improving potential continuing in and businesses may are closely expect monitoring we any to XXXX, favorable our Although markets we

Having we to capital we the core strength said long-term, of are now driving we're continue some strong fundamentals value that, on long-term businesses our with the we and look confident in experiencing strategy, capitalizing our and shareholders. to intend shareholder creation returning as

concludes. this Operator,

difficulty] [Technical

Operator

of from the ISI. [Operator question comes Instructions] line Chappell of Evercore Our Jon first

Jon Chappell

here, the of calling full-blown start could second I economically most going inland we've soft context landing thus your for start a natural pretty macro an give you've the to for kind somewhere half. utilization. far on kind ended refined has on historical the morning. some do historically earnings guide between of and it [indiscernible] And any heard on to you're mainly in Good but kind and negative traditional How of watching the you of the very out? cyclicality sensitive. contemplate with just hard businesses you. from those you it's core recession but progression. here, recession, know but can of economists been are laid us have you magnitude everything Thank have products impact been Petrochemicals kind X I I so wasn't here, season

David Grzebinski

tracked Sure. for Jon, years. Yes. and Typically, you've this

I -- and -- up GDP volumes is think the we our down know see go when with GDP. You generally, down,

So percent of -- a rocking, recession That mild a let's of just sold negative a off -- at It's we're our might we're say out. couple fully we you I GDP. almost rocking. But to say don't want get couple as percent but take utilization. we're heard, we're

know, get really you than can't much As XX% better you utility.

A happening of we're that. well. and very very tell maintenance it's supply cycle 'XX. busy. of you There's because and going -- as this barge of is the industry. We're on huge the regulatory lot bullish. be really there's So the busy. really the it for all side a Industry a of to that's I 'XX lot is heavy barges reasons in very, birthdays of for of It's cycle, most the of all would

own. capacity that's on building very equipment new -- still of is And nobody then equipment soaking cost is new there's up some the its high. So just really because

supply side really is about the the ever it. best So we've seen

So a more demand that picture. make does it of

we've operating Latin don't it the industry secure blowout right? environment more one way some are most world, I The I refiners than little better certainly and is South particular back and is than the issues chemicals America to a got doing refiners, has. today. feedstocks like America You probably And Europe have bit. can the and see chemical that But Asia of mean, the pulled announced the efficient certainly, the well. in the think a earnings in U.S. about have

they're the the the U.S., the if is industry are the going chemical got plants, the secure of they've efficient plants think in to most feedstocks. most to like ones I So run

it. continue to run going they're to So

products back refined gasoline, this recession We diesel, But on about is an just worry opinion. the do jet. in pulling

If COVID, last coming driving. or think cut money they're you of not the it's capital a plans, is given into go I whether people want flying on thing to it's but recession, spending to maybe out their goods, travel going

demand like a lanes. couple may it's pricing back it shouldn't that margin. but feels and be ability trade impact that a pull the -- to lot even So percent, if And our our a pushing it pulls little pollyannish, in keep back, of it if won't

really is little Now money, holding that low, deep it's negative said, to That's seems making are if good. Inventories pretty happen. a GDP. construct going customers I it's are be The really and a think recession But that's different. XX% to demand don't up. good

You can miles track driven. the airlines and vehicle

remain very optimistic. I So

Jon Chappell

Okay.

Now the different. helpful capacity it is a super context on may how be bit

weather was second XQ mean, and is pretty teen have low were it one a bit to you get able optimistic but always a you seem in quarter XQ, still tone. like -- My margin. more I this weather extreme,

the year, second steady of So as just up is as by of about would end the XQ kind year a more path as in and slower we think normalize from kind conditions? as of go you maybe it of progression there [XX%] you the the then way reset? XQ towards maybe as to operating weather contracts kind Or of big higher touching and think you all about the half a the XQ through step grind

David Grzebinski

pretty think I then mean in will see step-up I QX is Yes. almost always quarter. big and best our we QX, a

see the the way I remainder like then the That’s the QX steady, I So though. progress kind pretty and of it. come on here blocks we’re through of out of to good going year.

Yes. of balance, construct as going here where they and for third the on think with there here, best a But recession get demand day. we’re every if to couple and and hard And supply we’re years like us, it’s we’ve up multiple of short-lived, I is and as in margins just we’ve front anxious think to our that’s to inning seen. be I and years. starting got is analogy, the use need baseball the a – we’re working that It’s to ever a no, run about look,

Operator

comes next Our Nolan from line question the [Operator Stifel. Ben of of Instructions]

Ben Nolan

have David, A I few can call to guys if a me. you up Raj, You questions. through -- going hope as things, call you came couple are of questions whatever The well. me I you're I want can. that

it what weren't just in think possible side just there there's in be sounds it's the things. the you of on the it a like side. the about is pretty you realize area for and possible, in of margins It normal upside is How So and like able this aren't -- I'm it's coastal if the to what look we longer-term, good if frame that like as would sounds shipyard to much curious environment? because potentially fundamental maybe shipyard momentum year? revenue there this dynamic first all would uplift if of

David Grzebinski

Yes.

got We've ballast I we've Look, Ben, our think X X%, we're remaining. know put systems in treatment XX% kind XX% -- you of XX%, -- margins. to through got fleet. water this, got we've

end be of ballast typical we're revenue those So can a are tail this. water almost to at XX to shipyard, days. A it the from anywhere days really XX painful treatment adds lost and

the tail just treatment systems at or of it. water quarter that quarter, be we're We've X delivered this will being finished that and will second the got ballast X. leave almost So end

we lost this a heard, quarter. you money in first little coastal As

our year shipyards, for think mid-single that's we've prepared said lot remarks, weather for of up I but digits the in kind end of a Some coastal. low to we'll related, it margins of

we'll 'XX 'XX we think if we I in be don't digits And even I'd in high I'd double exit -- and hit running. hit be maybe 'XX, it in coastal. digits surprised hit single

an order new dynamic build probably new you to that unit, offshore same unit to is ballast wouldn't any The if in a these treatment, building and offshore And XXXX. business. got in put you see the water shipyards industries like, right? all even to capacity You got happening say, until were with there, Nobody's deal

now terms supply our right double are and digits heard now balance now. -- kind up we're of -- in prices you So and in demand inflecting are

more a and there's and we to rates even continue coastal it's good 'XX capacity no raise on to start contributor I out there. point inflection and new in to the at be we're think as So 'XX going

Raj Kumar

Ben, planned also in of supply add, couple And could you'll think the that happening if also help next that see coastal I there'll side. to in retirements the going I be dynamic years, that's

Ben Nolan

That's for more as helpful. it fracking little look then the are -- second I look new it units. of Page pressing And I really I the But to that ask thing all leasing don't a question, bit Okay. is to about want my the for want side me that or being the at at there I barges are XX that showed on reactivated builds. inland and is X

Just by nothing curious My was new? and to see And else. begun taking actually if you reactivations? built okay. here can or anybody you say, those impression have risk almost crossing a Are of threshold was building primarily being anybody the we

Raj Kumar

up. in comments, reactivations allocated was Ben, now, barges of we I tightness million seeing about we're laid Most the be marine think And of that in had barges for to So work. right going market ready us, look to those prepared the projects the we is are it, way that that. around some that given to strategic talked to my related I at $XX

that So building just we're we've laid barges David? new. not out. reactivating We're

David Grzebinski

see We anybody really Yes. new don't building now.

more reactivate a maybe we some the equipment sense part have we'll to of bring Once I XX the of and -- I the that we'll seeing that not maintenance But built is we're reactivate. and a out just off end laid there's now of that on XX good. [end] up max and the bank that more We're being then bank the it. it's done. now. to we much there. barges is we're of some it makes complete new can dollars had -- now year. XX that think which picture. We CapEx little add laid was we pretty much won't COVID We and building, up think between I that it during handful needed the stuff mean, this, construction And

e-frac. did And you mention

a XXXX. now put million. started we in context, stuff advanced tracks customers' building We're it's is new The we this. our excited that super-efficient one offering our really and -- electric of said in We're and on to X,XXX really really there. on driving our about in horsepower customers talking fifth That's technologically. customers. interest of in about our for What excess trailer Just lot We're $XXX generation.

of a that really some It Given of spend excited while, the will control for takes to while. but that some we volatility. for we're lets component really for No, is it. kind while. for to think in and want give a lot earnings a a it, this us KBS going good technology few out us smooth we technology years control I It it more? about Are it a

add that. So anyway, on that's just to to

Raj Kumar

and And I think, be still Ben, flow, $XXX to generate free it's share of even of most to to $XXX we're important higher CapEx going that note repurchases. is year, that with cash million this million going to dedicated towards

Ben Nolan

Jack if little I to I at will know but want a ticked and that me everybody I me. did. and be keep Greg bating just you’re going, Man, off

but it better So appreciate I’d turn I over, it.

Operator

[Operator question BOA. line from comes Instructions] next of the of Ken Our Hoexter

Ken Hoexter

Greg but and Jack, thanks. I'm Ben. to Thanks, close

to on the was pull quarter to impact left continuing running, to any then does does figure up out impact what is guess, it so, following the low tighten So what's of reprice? happens residual all yet XQ, if backward impact still things aided get process get XXs. And as into -- I'm Dave and the better? Was you forward, The pricing? to maintenance first of smooth utilization your Raj. I out if any a looking the guess those. pricing and refinery that by in that, I in Or trying there's just couple and

David Grzebinski

down. Look, by tightening everything up does Yes. just slows utility, weather the than No, help mean the latter right? weather it's former. more I

our it get contracts paid there's So the for to of -- although but utilization, that adds help does don't on affreightment, of barge you it kind the construct.

years. least the full -- right say in And said, out that -- a years. pace the momentum a making real. it's for in which It's good be nervous tight maintenance even would now, as pricing that's It's just had industry I And been all coming. -- little spot it's think about is there. this I gaining, a at going But is not tight waning, really gaining, availability, And weather thing. X long bubble not some to say the of lean waning. gets And I time better. But anything, very strong. if momentum and would is that's in it's market We've and can tight is

Ken Hoexter

So were thoughts But still Ben answers. me I -- just out of just guess, couple maybe kind you margins no because the that understand generating we're the because I'll coastal just market. guess in If near-term, you're on a the they're yes effectively of ask help utilization I you're with maybe pulling almost if negative running roll really, capacity. in or through

high imagine near-term? where because to long, just in low market you -- -- mean, pricing then... and up can't it about can't your talking can't And just utilization is mid-XXs, take You're take demand the is so you meet to I a contracts that I are

David Grzebinski

Yes. No.

Ken Hoexter

Yes, go ahead.

David Grzebinski

Yes. cut typically it's contracts I to contracted. year. are don't coastal, But mean Those you XX% off. X in

were contracts the full takes just a cycle. year it first quarter renewed up the in in XX% coastal that The So and range.

market there's nature, in it's right versus We're contract And lot a the inflecting of market. So the it's just the happening. inland because less coastal spot now.

Ken Hoexter

the [underwater]. if now $XXX you're terms we've been company like the it in the down being doubling Ben's seems just the Maybe of million of balance your sheet? on out D&S just I'll while in And for is we're about assets. in about, adding a on keeping just talking talking question terms this lastly, to It thought this Yes. last the throw

David Grzebinski

really going grow pretty No, EPS. terms we’re we’re And we’re good it is are of very just kind earnings. where that in right high to But Ken, very term that be not very going of down. accretive can just this not smooths returns now. and portfolio. we’re say probably imagine at earnings for just is This out excited. be special. the The It’s to margin I would going It’s high. to you doubling for lease it’s technology.

Operator

from next line Lewis Our question Greg [Operator BTIG. Instructions] of the comes of

Greg Lewis

$XX the you million investment. takes investment, you the on CapEx Raj, barge on out out and guess, million puts the So guidance the $XXX I called of frac and called

As us a what the through the what is end, that end, us we the just fall end? of to think that million to we're 'XX? low $XXX is -- gets just if that gets high $XXX about And low lot to to that million, CapEx at

Raj Kumar

Yes, Greg.

this is gave a D&S but supply into is talk about about industry So going the next a supply going maintenance why do range regulations when slippage to we talk the is chain. wide impacted a shipyards. that, our that that talked we some be wide such lot of we is When fleets whole chain there David and range year. chain gave about with I all for in the business, And Guard supply the could here the goes this why such that's bulk also Coast [indiscernible] yards we through. because be driven the

Given probably the would is, this be phenomenon. to bubble it I look going way X-year a at maintenance is

the chain. supply and -- part we're because seeing there with So of hedge of all the is

David Grzebinski

Greg, the is free really though, flow news, bubble, think cash the once jump. good the we will get I through

start You'll our what back in and then jump down it... will see CapEx be to 'XX, 'XX to

Raj Kumar

more. little bit A

David Grzebinski

-- as said, higher with in about flow But $XXX I mean, we're year, Raj cash going to million level and excess those Typical. that. CapEx, we're of this generate even still, this excited of in free

Greg Lewis

did you direction, margin touch going Yes, inland, XXX%. because on talked And it there. then in getting interesting like the Jonathan with I when progression didn't seem and to -- it in the want right was

bit the and of is of maybe single in to going we is like we're bit kind maybe it it talk C&I I C&I that in it a where something Could and susceptible D&S. visibility to little it On D&S, for the a little -- C&I such the there have you are mean about, is year? sideways Or recession? -- maybe business where just those more digits, and that seems margins the sectors, guidance and is already trend divisions just mid-high of those just that kind forward looks is in in rest

David Grzebinski

Yes.

think the mid-single high there's digits. high C&I's gas in well, mean gas digits. X oil kind manufacturing and were -- and I then single right? low and there's -- of digits the and margins single C&I mid- were pieces, Manufacturing, single to lower, oil side. I to

all together, D&S. think put I what, X.X%? you when for so X.X% And margin our average it was,

the right. slows progression because margin even margins. hurts amazing. it's the of manufacturing our And VFD, the back efficiency, It there simple in And drive are holding the it could challenges could missing nature or It's what really a is out assembly our that box, it manufacturing. as be it chain. What's facilities of be supply part does impacts you're is down efficiency it variable electric takes which just chain -- for a could frequency kind supply or an line as the camshaft engine be the a an

still word. I into disappointed high you seeing day, We're D&S. improvement margins and in right digits the there -- tell chain, hoping we're it's if some 'XX in be supply that gets would you in in we're every I'd better, will single not expand. as see it's the hoping not but the that is the

Raj Kumar

I add if And then could Greg, to that.

its see As you also even chain position. unwinding QX, is unwind but build chain works to capital inventory business in working capital, way built a start the that system, here we of should because get inventory You'll through the progression we was better, we and the that through issues, notice the supply supply working had work right? we target good, that should

Greg Lewis

And not clear, would cash right? just analysis be Yes. flow addition, be Raj, that's to of that part in the

Raj Kumar

Yes.

Operator

Greg line the & Instructions] from Advisory. Wasikowski comes Webber Our next of question at [Operator Research

Greg Wasikowski

being also like rate the hearing are same really building rates long supply-demand tightness. and seems economically momentum feasible. obviously, off on We're things, a from new still It way

of the could there that types then far of you alternative a rates really hurts rail along transportation the point increasing it kind if methods? for onshore wondering transportation are much marine over of any concerns And picture any way, us was are? off I actually other versus or how so David, at paint So of we competitiveness

David Grzebinski

Yes.

still barging cost question more much per Let is we're last mile, first. me from your terms the so last -- of cost-effective take -- trucking. in ton Gosh, rail and for certainly

a we're there. being way, noncompetitive from long So way

number, going going cost -- I a think to is day a to to a to equipment the $XX,XXX of use -- talk new. It's we to is something building justify you're $XX,XXX need don't the just add different of the to Subchapter have cost about which regulations right? And is costs compliance, whether it's regulations, is have cost inspected gone just M insurance Coast continued lot the up. and towboats. The Guard

a So we're from new justify -- when builds. put all still together, you ways that rates away that

Greg Wasikowski

in, And Got spike make a day X the you state for for that eventually the process would influx eventually be there, the an them it. satisfy is difficult there's along lines came? rates make they yards, it them That's how much Can yards for orders comment to right? the in sense, inertia newbuild come what if if of it be And of like say we very scale how would same the up helpful. to get then there? on and orders

David Grzebinski

me fair Yes. – the Well, the repair to and maintenance there’s let There’s type them. number there’s – X and parts shipyards. there’s shipyards, a of

they’re where extra labor Now else is tight. very labor now, shipyard They’re experiencing is capacity getting everybody right shifts. is busy and is tight, working all everything very Yes, tight. they’re

as shifts, situation So and is much to number terms trying of in they working of very – ramp ships the the as evenings nights. up can tight. They’re shipyard of repair side the

large, some relationships really very We yards. have obviously good some being with top-notch

particularly about not worried repair for our it work. we’re So

side So shipyards. of the the that’s maintenance

have happening ramp demand gorilla easily converted price a some think, builds just that’s lines of up capacity But newbuilds, cargo of to barges there. ability high. lines. still the or [Arcosa]. their they I would has if to barges barge the produce ability I dry is terms new year over could and liquid the they, barge the Arcosa there’s don’t are do see that in I out because XXX there, to XXX of But and XXX-pound if call really, to to They take one, what

lot The they’ve liquid building of in lot need There dry is that handful build not Arcosa liquid easier barges build barges. now, some barge. dry Arcosa again, can That busy with ones a a a that can are – to said, barges. one. barges, build is of big dry cargo right is which cargo But than are been liquid a cheaper, cargo barges other business the and very

Operator

Stephens [Operator Instructions] Our Inc. the line next comes Jack Atkins question from of of

Jack Atkins

Great. Congrats. Okay.

David, there, I contracts to maybe go So of that Is I when long think the out to And as the investment? that's I that in that could that's you interesting CapEx power back guess, earnings and sort to year? would from if think 'XX? that related guess, you smoothing about really signing D&S accretion I half something of to seeing Could second you're this and going start the hit that? be are expect how

David Grzebinski

Yes, the of to delivering there -- those start we're half. year, kind second going throughout this

some then some see in probably to -- accretion and the start really fourth you'll 'XX. nice quarter, So you'll accretion see in in

Jack Atkins

or like guidance much any fair in you of is that Okay. the that But line it sort doesn't sound the item your outlook of Is if or... earnings gave.

David Grzebinski

construction Yes, about years. run that's going under fair. they're to for I typically, X mean they're now. No,

-- so to it's really be be -- And to a going deal. good it's going

Jack Atkins

you that see It's Yes, guys great absolutely. market-leading to have technology there.

So it's see great rewarded. to getting that

my down and me, go. profitability excuse accelerating, think allocation seeing about -- of more with the before are you guess cash CapEx cash sort I higher. flow I either kind of as the yes, pivoting about potentially you coming next be And so going accelerating flow let maybe follow-up focused the But guys I increase? for additional as really flow do accelerating year just then underlying inflect profitability into question, should guess towards you How capital really opportunities? buyback? think to M&A Or cash you opportunities it with is ramp

David Grzebinski

some out another expectations that’s of would our recently. There acquisition that you competitor are there’s bought prospects a great I robust. smaller consolidating deals one think tell are there. question. couple But a Look, of I pretty competitors by price was Yes,

buy I You disciplined. tell now you, right know Jack, going stay company us, would Kirby. very And is we’re this, to from best barge the following

and so Kirby is And on is best a seen pretty back buying position the we’ve bullish. short focused answer stock. it long the probably we’re really in for we’re time, – we’ve

Operator

for you. Thank would to back the now to like time, over At remarks. this closing I Kurt call turn Niemietz

Kurt Niemietz

today. for you, thank and on call [indiscernible], the you, Thank participating everyone,

questions. have any reach if feel you to free As always, out

Operator

program. today's in This participation does your conference. conclude for you Thank Okay. the

You may now disconnect.

Kirby (KEX) 27 Apr 232023 Q1 Earnings call transcript