KEX - Earnings call transcript Q1 2024

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Operator

Good morning, and welcome to the Kirby Corporation 2024 First Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions]

I would now like to turn the conference over today to Kurt Niemietz, Kirby's VP of Investor Relations and Treasurer. Please go ahead.

Kurt Niemietz

you Call. the thank First Corporation and Earnings Quarter morning, for Kirby joining XXXX Good today website. David President was release, me Kirby's conference Raj be Officer; With call are can Christian issued Marine Kumar, Executive and and on as presentation found Kirby's earlier Officer; Transportation Chief as Group. A today Executive for President well which Vice O'Neil, and slide Financial Grzebinski, Chief our of Kirby's today's President earnings the

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

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

our result filing call and the now statements factors. time be our differ a from as factors XX-K Kirby's risk and involve found made filings the other would materially in risks to SEC anticipated over can in actual turn latest to Forward-looking of David. list time. I results of Form those could and uncertainties A with various from

David W. Grzebinski

morning, Thank you, Kurt, and good everyone.

Distribution role, operations take our Kirby Transportation over begin, for President many history like for the Kirby's and effective to we on will Annual Christian Before our strong be a various service whole thank and we ] and I'd him of responsible spanning role roles at I announce benefit to O'Neil this growing would In Kirby. both experience, Marine wealth and XX years that report [ will become CEO Chief continue to as businesses. With his and new a customer-focused years a that Meeting, this with to moment Christian congratulate like day-to-day me excellence operational company. and tomorrow new will Officer. of across Christian at Services KDS brings and will as the businesses, Kirby's as of a of mindset company, the a Christian Operating

Christian O'Neil

the fundamentals we've and you, times to my I optimistic with experienced. assume the and for today we're par excited the some had enjoying to very Kirby. lie role, years market of forward what that I'm are about looking on Thank all can best for most future the humbled I'm my In us. say David. and [ new I'm ] with the promising company,

David W. Grzebinski

said, Well Christian.

quarter our income $X.XX. the during we of of our This earnings. $XXX first at earnings quarter earnings segments performed share operating higher both per year-over-year. Overall, million today, XXXX revenue Earlier revenue announced quarter, and compares share and looking per $X.XX. Now to first significantly well delivering of

and results fundamentals weather quarter's challenges reflected modest The and Transportation first D&S. Marine in in for and steady and navigational Services. both partially Distribution continued These were chain market constraints by supply Marine offset

delays were delivered fog headwinds. along the Marine we modestly our quarter, and quarter, first our on Illinois impacted challenged on remain Coast operations safely these solid high throughout locked and the results with delayed results and delays winds, Inland the efficiently During quarter In River, operating the Throughout Transportation, by days. the by even system. Gulf were focused

compared of quarter affreightment. the and times XX% our financial to navigational fourth the year-over-year. XXXX, performance modestly impacted and of slowed increased Overall, delay transit were down but days weather These of issues contracts

limited which customer pricing. in utilization with standpoint, rates availability, a quarter, the to due favorable running with barge throughout contributed was Market quarter. From coupled remained barge demand customer in demand strong the inflation, mid-XX% continued low the range activity conditions and strong to to

renewed margins also with year-over-year XX% in the to were XX% quarter and sequentially the contract first increased in year range revenues the prices mid-single digits in prices increases and versus low Inland were higher up year-over-year. up high Overall, ago. the double-digit a low Spot Term teens.

in to mid- XX% In utilization Coastal, high market with barge remain fundamentals our range. levels the strong running

solid in demand quarter, and offset inflation, the renewals from increases capacity increases the with large and ballast expense saw availability capital and mitigate prices. range market of limited contract we XX% partially increases which vessels, addition water low low term treatment spot systems. the of in customer During helped on particularly XX% price resulted shipyards These

revenues on single to first to we maintenance and Overall, range. XX% operating wind Coastal were low double-digit large shipyard and for quarter continues planned increased the [ down, several in ] Our vessels X quarter. brought back year-over-year margins in large unit high maintenance the

provide to XX% and Oil quarter, and areas: to detail this X Power and on Commercial Oil and Gas, we and XX%, Beginning where Power Turning distribution DNS Industrial XX% Commercial Generation, in and Generation, KDS and going comprises revenues. are of Industrial services. Gas,

of our power market the We to appropriately are significance the to generation growth. this doing reflect

issues. of made long-term order for new markets market the Power across of power generation excited installation power demand and strong up health total, are XX/X shipments driver and e-frac for and a and coastal, overall continues driven driven industry-wide power power continued and different dynamics strength with port rental revenues industrial of XX% manufacturing, inland care coming customers. wins repair first delayed continued previously and conditions by demand generation, healthy despite service center generation we're and for In summary, our sequentially, standby levels is is year-over-year and from In and new market market. In across growth by equipment. The from data The a chain XX% centers services, the fundamentals project and higher with retail businesses our by sequential our up with as is distribution segments marine results financial, commercial for steady is well are rates. In drove the this growth products. In revenues D&S demand supply as fundamental in units deliveries on backup Our reflected strong generation and market demand supply-demand growth outlook strength In data power other both and and customers. industrial to X% of key backlog. our orders remained several stable quarter this sector. high favorable. related large in from market was in of we increase investment for weather market, market

sheet about to barge the and discuss and Raj other services more more to gas extent oil call Our in over our realizing turn first some are rate in a in the Strong real detail. outlook and and and but utilization to segment lesser areas. I'll weakness distribution for power is and mostly good results balance I'll talk generation offsetting first, later, we demand is quarter increases.

Raj Kumar

segment Transportation revenues of were David, operating $XXX or million operating $XX XX% XXXX, to morning, the you, and Marine $XX and million quarter XX.X%. or an operating with million, good total Thank income first In of XXXX, the XX%. was first Compared increased margin and million quarter everyone. revenues Marine increased of $XX income

to Compared Marine XX%. revenues, and and increased of fourth total X%, together inland coastal operating quarter XXXX, the income increased

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

of are to increasing revenue revenue. more in contracts time similarly contracts the business Term or year-over-year. range low The marine Compared unfavorable and renewed Average transportation those primarily XXXX, contributed the from digits during barge the first XXX the inland the driven increased improved of days. Inland to quarter operating that utilization XXXX continued the prior quarter on and average first contributed due revenues compared segment mid-single of inland to detail. year. digits which XX% low the XXXX save revenues fourth of points, Looking of to and utilization the affreightment. Improved of XX% management XXXX. Inland rates was to compassed with by range slightly contract and market at the XX% in conditions to low Long-term is pricing spot impact nearly the first conditions. margins in cost the quarter which for in from fewer off were mid-single year lingering X a pressures. approximately approximately despite navigation term up mid-XX% fourth of market low quarter sequentially and better helped business higher double increased contributed inland of XX%, charters in quarter by term inland than higher to spot basis seen the quarter, XX% XX% in and with to pricing contracts longer the digits of the delay operating compared and contracts inflationary

quarter. X had single operating year-over-year XX% contract and the high during leverage. planned shipyards. reenter Coastal Coastal to higher the coastal from We double-digit and its large in fewer business. increased Now resulting prices had moving Overall, vessel an to service the higher low due pricing cost shipyard and range, to concludes revenues margin

for represented the of revenues with coastal The in in first coastal XX% XXXX. business is utilization mid- to the range, high Marine XX% Average the barge Transportation of was line segment. which quarter

we we which quarter, the tank for With barges respect were the expect posted were capacity. inland spot term inland both website. At XX% around million quarter During fleet fleet average the coastal the barges XXXX. of This mid-single XX% in sequentially year-over-year. barrels representing announced end low net the reconciliation first businesses, acquired newly for term presentation the million as unchanged time the contracts X,XXX projections to approximately under market of were barges, On and with with changes we the provided capacity. have charters. Average XX% of the barrels included percentage the in the contracts remain earnings a total Coastal Renewals well rates low of to and for quarter, higher our in representing on year-over-year. XX% our in with XX.X of was X,XXX XX.X digits end Marine on range a up had a to barge is the approximately call our today, coastal as expected of is of revenue of XXXX basis, inland year. to first

margin saw or by review D&S XXXX, the was of the income decreasing first million I'll and quarter to segment X% $XXX performance Compared operating of operating million segment. of Now income for operating $XX $X the X%. X.X%. of by D&S approximately with of XXXX decreased quarter revenue with Revenues the the million first an

to power and orders fourth and installation. compared or or increased million industrial XX% decreased by data revenues from centers saw $XX pickup XXXX, power a revenues generation, decreased In operating in generation power $X XX%. we quarter income backup the other for by customers million and X% as When of year-over-year

margins operating power of income single driven had continue was and equipment also generation total in in generation XX% XX% digits. high space. Power natural of We the revenues. the operating generation to represented Power steady oil gas year-over-year up see deliveries segment gas and

and On chain partially the to marine commercial industrial bottlenecks activity business. our offset lower King in in supply side, repair Thermo due steady deliveries

industrial This revenues revenues were partially transmissions offset product in to the see a made with gas by commercial Commercial period, driven favorable year-over-year, single XX% and activity softness mix. up quarter. by and were As the equipment down backlog partially as up operating time and margins frac-related as lower was XX% engines, mix of saving income e-frac to and segment marine in increased XXXX, result, in throughout X% parts favorable In tempered orders the and market, equipment. rig of supply cost new on quarter and XX% the continue of by industrial is fourth ongoing we product new by increased revenues conventional driven same decreased initiatives. Compared constraints Thermo commercial offset year-over-year. Operating King repair. Operating over the high counts income for and industrial execution softness digits. oil demand XX% chain being by

Oil Revenues down digits. the of in and and and first gas mid-single the were quarter year-over-year represented XX% in had XX% operating segment revenue sequentially. oil XX% in and margins gas

the balance Now turning sheet. to

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

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

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

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

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

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

with beyond. to million For higher on cash some are we track $XXX $XXX see from We generate EBITDA. $XXX and maintenance and to $XXX some associated chain million improvements year. between flow with to inland year. XXXX, supply is still of constraints in should revenues million equipment to provide on million net marine associated the posing operations capital and our working capital The said and headwinds facility approximately spending range managing XXXX this result the cash to With free expect Approximately both million targeting million $XXX improvements. Approximately existing $XXX shipped capital million are and working in of unwind coastal in term. Having to respect $XX for is to the for million as growth $XXX spending we that, near of orders to capital flow and businesses. we capital CapEx, marine

for to always, XXXX. we this and discuss investment pursue a to are now back capital will committed David remainder return to the and balanced cash As acquisition and opportunistically shareholders opportunities. I approach continue of use flow allocation turn to to long-term capital outlook call to we'll the our value-creating

David W. Grzebinski

our quarter, delivering revenue executed despite Marine well Transportation and and supply Both weather-related D&S. the delays chain Raj. income, segments segment continuing improved Thank in our constraints you, operating in performed and the well team during of

We we earnings for favorable progresses steady the continue progression fundamentals to as year. expect XXXX see of and the quarterly remainder

Our for increasing is utilization barge across the and strong year. the inland in outlook the levels, coastal, activity strong rates remains is high in board. and at Refinery our are full market both Marine

deliver in In both products through our helping volatility remainder to we demand as the and Services, are gas receive orders manufacturing, Distribution and markets. we to of XXXX. soften businesses move are the services, Overall, of uptick we in which results and power continue financial our an seeing expect oil we for inherent new and of improving to generation

In going Inland dynamics many construction new in units market the anticipate combined limited industry maintenance, barge we positive to with steady Marine, for and demand. due in customer

full our utilization low expect With be range these mid- year. Overall, mid-XX% are to expected single-digit high revenues on in throughout the range we to the to basis. in strong conditions, year grow a barge Inland rates market the to

for growth the the supply need the gradually year lock strengthened quarter's to anticipate generation, backup level weak expect full water growth we basis. range. repair continued in we concluding, XXXX. Coastal the demand, single year. In and low segment. to strong. the In double-digit In the expect Strong I utilization around could major However, delays across first and parts the said, and with and to unexpected give incremental conditions is expected Coastal, expected are be to to is year a XX% somewhat the or to to revenues the while will the range a in for continue drop low potential higher for is are ballast margins the year and from demand average water in and for is recession, increase Commercial services single or on in impact during the That caveats, normal power Services, along full with could outlook the In double-digit as high operating conditions. margins improve center low demand we throughout services. need compared fleet. market high very to of with on-highway the power considerably a demand year to in mid-XX% and shipyards is customer With products have data operating refrigeration range industry low barge in expected products, see full installations demand expected Industrial, favorable and Marine our and demand exception strong, Distributions treatment as

power our levels supply Engine engines, be -- about given the bottoming. growth but issues. get however, are is generation and would to chain we strength the to lower, Gas, able is we talk could them us Oil see. into heard be supply, seem constraining In you've activity However, here. package market line more bottom we The if large the

start levels to a backlog revenues Our To they flat off basis to to We year-over-year of that. Overall, margins manufacturing of due we're working have and slightly high mid- to but for for digits single OEM products year. conclude, remainder most schedules mix. the activity anticipate provide be XXXX does 'XX. a of certain full throughout lead slightly times expects segment stable with down will solid year the a in operating company and do in delivery the through extended overall, to outlook volatility continue, we're lower favorable the contribute in to to on

expect we the opportunities. We move to year. market of and see sheet for continuing is expect levels high majority balance despite significant flow repurchases our Our of cash CapEx cash businesses strong, year, produce expect generate free and as that growth financial through improving and we use or the will we share free flow favorable results this to

businesses We strength As on and we the strategy. our continue of core fundamentals confident value we strong and capitalizing look in shareholder our market driving term, long to creation. are intend long-term

concludes this prepared our Operator, remarks.

ready take now questions. are to We

Operator

[Operator first Instructions] at Our comes Nolan Ben from Stifel. question

Benjamin Nolan

Christian, Well, congrats, one on first, right. if since you're the I'll And and I on, well, ask upgrade guess, here. this ahead go it's all you

to is just higher of a sort acceleration my of million the at As in Normally, you be was $XXX the what maybe I side. where first the lot like through how a put margin thought operating sort come whole into basis was $XXX the lot we than on guide? together, walk like to and conservatism I think I of to than Or all that third is don't I in, If improvement XXX that? points know, quarter. moving XXX, than on of the me look better frame going more up income. Can what it the XXX, it quarter, numbers million get I second Marine looks

David W. Grzebinski

you is margins. seriousness, all low we high David. the have This first don't look 'XX XXX No, like I'll we at said XXX kind give start this move things year look can water color on around we Ben, Part in better things way we talked it the a similar is what start then We at supply-demand point headwinds. on about in to inflationary you picture, of the and I here. call. see in increasing margins important Chris' the But is quarters of 'XX, 'XX we're in terms of a some the year. Obviously, let based pickup other weather. and seeing And think off we're hit is to is a a and [indiscernible]. to the likely let average basis more this the points. about are I'll the that hurricanes, that are happening full to kind a into we're is the But in of it way color 'XX. as all on in when in great of could lock delays, year-over-year Ben, in know, water, for around rise and multiyear. We've some on [indiscernible]. and market the want little basis kind you to was I'll thing, talking going some But give average think full that I Christian probably we Christian that margins.

Christian O'Neil

merits still weather pressure delays of labor travel of side then mean, season high of the previous very and everything maintenance that tough conservatism that lock little that we the a price the of bubble inflation, cycles. experiencing There's conservatism. And a unknowns, other is just there's of to major is David of calls, some that vessels, is mean there's through and a the I has inflation Yes. referenced add do to the going items justify around and high. that in And crude lot things. real. feed probably the that might hurricane David lot couple steel, equipment a very referenced I cost industry almost cost shipyard

David W. Grzebinski

mean, I pretty we're But optimistic. Ben,

to first what the probably or hard spike we my You the know in you XX% higher. It's quarter, football if mean. comments here heard

Benjamin Nolan

Yes. Well for curious the Yes. the was got I guess, just change for you. -- side. on power X I follow-up, bit. then and things. about to breakout a I I little -- my generation gears appreciate

and of industrial side? gas you the from when portion all, was the of a of was it out, all First break Or oil it? out did side of that it

generation then to revenue recurring Or element going forward, the is those is with build along and it it? any as about sell done you're lines, we and there then And power you think that? equipment

David W. Grzebinski

or we've mean Power it places New revenue. Target. Costco growing as that start power. been financial power other can done followed you What power And those nuclear we expand that's No, -- it's for the tenant for typically of rental I know and or doing like power frac health me seen large is that. But standby familiar and part also and let with they burn you retailers do But let natural those. we've first that aren't been But recurring e-frac, generation, gas. your it York fracturing this the at that for money, backup like the Yes. whether with though In we've example. -- for electric use just in they decades. like Exchange diesel-generated of just for Gen with It's you've it's -- there me power plants, saw that Kirby. question. We been for to care your particularly backup for if market institutions because lot and is particularly that a save do Stock

site, focused sold customers their looking that into sell can or the a are and do needs. grid. And to But on driven So be that just grid. we for well gas generation. power on prime onto not the can oil that's They're of power power generation example, our power generation many as

need seeing in centers seeing and industrials. seeing it broad-based are And hospitals. are and we power. a transcends XX/X. Obviously, oil AI We're data it but Everybody goes it huge, It So needs for everywhere. power into gas. the we're

those power expanding. power generation, expanding. is as said, half being And That are frac sites. generation of that in is specific on XX% our Now about power uses that to used your XX% of that currently question, of revenue it

the standby grid. Some not going just and but of are selling our into to prime customers into power generation

it's exciting. So

But the sold if just really some OEMs of profile. demand are promising remarks, heard we large As prepared could engines get it's the of you out. the could flat we in sell kind engine more my

of terms revenue, maintenance We in Now do We and obviously. everything installations, do think it's you recurring can of. service.

kind full So of we're shop. a

that you generation would I is strength in packaging. our tell power

we're are and things see We very it We're amount We rugged. mobile about it. huge also application. of at We'll an and at a a engine good for And good excited take OEMs very packaging. package customer-specific making we're to here, year-over-year. looking 'XX, opportunity the everybody and forward growing. of It's our They're in out to it. space. growing to Oil can customers you down 'XX knows, listen there public some as been Gas,

Fortunately, a gen of Gas. to we've in Oil power had kind offset little and weakness

Now Oil think said Gas, that's see I bottoming. starting at it's rambling about to all answer. long bottom. that signs We're and its do a Anyway,

Operator

comes Elmaghrabi next at BTIG. question Sherif Our from

Sherif Elmaghrabi

about last think you guys year. barges any offline inland -- XX one talked point I quarter, at having barges this

normalized what's going bubble? similar level? maintenance are start, through to And other just So operators the a

David W. Grzebinski

for which I'll over the will and at next turn -- maintenance Yes. is in. a last level, Christian Christian. going chime X details, into start probably huge I'll least third is answer. yes, years year. to has well, we're the entire But through industry him probably it All the let and the short the Yes,

Christian O'Neil

we way. because barges, to ours stems Sure. years, but around hard you're we're Sherif, bit variation, on XX-something with say like fleet barges. XX, big rest on little of the into in We're average. is a X,XXX, built barges maintenance X X,XXX a still going as boron XX, there's some probably a the coming in those of in Every of to that years -- you're you're that are day, the gets get into at what looking And almost year. But range XX ago major given the average, cycles. better from maintenance bubble in XX and the X we're yard referencing any the the dates

David W. Grzebinski

Yes. this. But Look, our our to understands of customer competitors it. are facing be clear, base all And yes.

hiring margins. higher for I maintenance the a to shipyards is of kind just margin paying just the answer the Everybody is are and part labor issues, wages had Ben have them. alone because is full. The they cost experiencing it. of headwind shipyards people The need think

that capabilities I demand just are kind we But you same industry. and in odd just for that that is So that's the experiencing I for terms is would every picture, Sherif. strong an maintenance positive across But right inflation industry competitor thing It's right. know supply seeing of us our maintenance in plus just question. of time part question, your for now. acute the margin tell the the demand of maintenance very wasn't the

Sherif Elmaghrabi

didn't my wasn't but my -- very you that answer you But question, follow-up segue well into question.

David W. Grzebinski

sorry. I'm I sorry. that question missed? No, I'm What

Sherif Elmaghrabi

No, didn't you miss anything.

question. You set for up the me second

I could that reactivations? kind availability, on because said, like the shipyard of and the you So And chunk supply-demand with sort associated Or big we see it improving some of fleet of does sidelines, barges the of that costs with guess lack the stop more entering market? balance more and kind then this of does introduce the into of volatility barge pricing? the

David W. Grzebinski

a That's question. good Yes. Understand.

stuff would there We just them. has almost but the throughout industry, sense COVID was during of large, that on number it put now During the make by maintain tell barges. a did barges put on to during bank of reactivated. the of and because COVID, all it bank number were that, didn't a you I COVID, ourselves, the But been

shadow there's fleet So use word to a reactivated. don't a I to think be

that think for used a it I ago, to high. been been. Further, was anything million dollars clean X could new has of barge. years X, X, still very the couple have a be is reactivated XX,XXX-barrel of barges price It

Now price, X? what's Christian, the

Christian O'Neil

clean barrels. vanilla of for plan X a ] [ X north million million, XX,XXX

David W. Grzebinski

Yes.

still away. new XX% construction are to justify prices plus So

building. fleets. don't just any People their new trying up. we gone are see Cost to busy So maintain has of money

new Demand is pretty of solid coming see supply a in. don't right we So lot now.

optimistic. So feel we really

Raj and and run. X got years to -- have Christian to have has think thinking X I I been this

Christian O'Neil

within Yes. And activity Sherif, seen the years, X amount years. you new the I if we've would look at lowest XX construction last if of add,

ever lowest are So we've the old the XX candidates retirement. years XXX are over for And seen. that consider have still last another X years in you are the that barges market

forward. pretty side looks supply going So good

Operator

] [ Our next Imbro Daniel from question at comes Stephens Inc.

Unknown Analyst

you Coastal, Daniel. in quarter. profitability saw Grant pretty on a is the in for first huge step-up This

Just at see kind of maybe -- us full continue wide pretty size segment as the the in coastal throughout with to your a for you of of magnitude range could margins year help renew higher? pricing I was you up sequential rest kind improvement for year at that hoping the year. of and cadence the the

David W. Grzebinski

Yes. Grant. question, and Sure. team Christian one. the I'll tag for this Thanks

kind start of quarters, along year-over-year. In look to look, This A our is breakeven a like double of a the quarters. and high just because a digits. way the about single in kind bounced lost at the we money. are 'XX, of We certain of low profile kind money. in The projecting of we we're me activities little Let little made this a by talked coastal Inland. way of margin couple -- best year, digits, couple business shipyards

roughly, Demand to contemplating new a good. I say X the margins it demand longer there's new right even There's build same supply story even years as percent all for that's -- outlook and We're and takes is building nobody would outlook because Coastal is industry something positive full. just an year-over-year. XX% So is improvement -- running now. Inland. in is the Why that? XX-plus It's utility.

supply you probably case, new see best years. won't for So any X

we're Christian, can pretty what you So and Coastal. the seeing more describe pricing about probably environment some in bullish. we're

Christian O'Neil

Thanks, David. Yes.

we pricing is systems trying treatment I expenses came the the that think to with right industry installed. ballast the capital the is help what that offset you in water see now

example, Kirby water had the shy $XXX years, treatment at X ballast systems our just get of to million installed. over For deploy to we last

and new structure. well. industry right and whole as that the to demand recouping now, part is space the in I offshore definitely rate a of that. a rate story There well it David supply the no working is Inflation is explained construction is help think

Unknown Analyst

generation And quick. power real the back maybe just to

you service think You've just noted And that sharply. I'm demand perspective of of can what from for curious the a kind over improvement sustained do increased the you has of seen the margin kind you continued trend that margin see couple as scale there with business? last years? you've

and also, side, frac just the on margin there end market of the Or -- differential I and guess, data is centers the between sites? maybe kind a

David W. Grzebinski

Yes.

a data little has of more stationary fracking to mobile, because rugged. profile environment. It basically, better is mean, I first. a be in margin one last non-harsh has kind this the take be whereas to a center it a me has Let

on digits, digits. prices known. low kind X-megawatt single double comes mid- big well of the are the With And from power to margins engine So maybe to single manufacturers. get the could closer said, some a in little side. But environment any engine scale, that high power is high generation inherently, large power one better frac we gen But piece those margins of are generation of a are digits. big that the pretty type

it's So one to biggest mark pieces. up the of component hard

able goes really that's to itself. it. really engine we're packaging hope that's volumes And we're it's our capture we bring around the though, look everything margins our would It's That we Where vertical Inherently, up where margin on to integration, said, increase and at obviously, as higher. margin it margin much customer specific. is strength, get is. in and making we packaging, our don't some

Unknown Analyst

the on quarter. Congrats

Operator

Research Our next & Greg question at comes Webber from Advisory. Wasikowski

Gregory Wasikowski

Christian, congratulations. the call. to Welcome

Christian O'Neil

very Much appreciated. you Thank much.

Gregory Wasikowski

I And curious I to got centers cetera, gen points I Ben's batteries, fuels kinds stationary follow on I'm appreciate maturity. wanted the how pertains and all earlier technology. alternative of different different et of specifically different levels the as to side environment it about think color things. See at -- of and you combinations just price I sets, stuff. that, on appreciate, of diesel power from microgrids, the all you question if hydrogen, power gen data the I'm could, up your and David, and

So within that M&A, that's or Kirby as kind And whether an you for to you're if guys paying just market add-on, of approaching how or with attention an respect curious not? opportunity not that's and that viewing to area of something I'm that is context?

David W. Grzebinski

Yes. The short answer is yes.

power their Of up. an it's generally standby They're It's running of really for not prime. in course, area back it's M&A. They're But the center, speaking, not for data power. generally technology, at use. terms own generating just

getting to natural with ways power cost gas. problem good So operating That being data for burn cheap, is gas said, natural looking gas for everybody The that. That the gas with gas, centers. to said, the prices cheaper. of the natural the with are is center data backup natural diesel-powered is obviously, natural just a fit

natural the at prime the generate get sell kind can is power grid that if gas, cheap, I actually can think you that it cheaply the People of to right and efforts. pretty you helping time. see power

build that's packaging the seeing that strength. of of We a again, just would their is for that. We're -- So applications we're agnostic. It's variety tell our enormous. lot customer needs in interest anything. We're what And the specific you application. I

power it. backup a We Walmart that a mining a imagine and can to different versus how try work view fracker data target bitcoin of a could be versus shop. center agnostic versus has You

about lot which integrating engine this vertically ability of terms share inherent availability. Look, ways for grow we'd some a there's We're in our add adding looking Obviously, open clearly, to packaging. to But is limited it. pretty excited by be and much to we're space. wallet of growth, of

Gregory Wasikowski

there, I color. for appreciate sure. pie Big the out

backup you similar, pretty a this speaking worse-than-normal but weather on I talk for can but for hearing little hottest and potential for think the we're think does I'm year that I've growing growth true who the temporary. pace something mostly the uncertainty or that you I of guys? Or one, power? that if Next or do later prepare not. But Kirby kind difficult? rentals the something bit you the Is And extreme meteorologist, play can you keep asked is that ultimately for and into of I weather that? the and think does year about And that you too about knows no summer for? to that that mean, before, And make that's I'm that segment? how How of in actionable like I is that

David W. Grzebinski

fellows do because Yes. and rental hurricanes. marine grinning our can weather hurricanes, Greg, our adverse not group all but like we're here power loves you imagine

smile the so all kind right on hurricanes our to and the in a business think impact have we of we for Marine reasons the we And that because from face people. about just as hate

of But a of power weather kind rent standby large lot we power. is a considerably. And deployed fee. goes situation a rate or in pay up it's that once then And adverse that an lot they hurricane the circulation, we that a of rent do on a basis standby

fairly generation. Last think to we I bit, spent a have new about year, power fleet. capital We rental in and that expanded large power a build $XX we new million

to continue our for whatever that's application. rental. a in build power are of for terms generation generation But new revenue. We capabilities small power part The pieces packaging Hopefully... bigger

Operator

Our of [ Instructions] comes [Operator Adam from question Rozowski ] America. of next Bank

Unknown Analyst

Maybe levels for the spot momentum rate mid-teens. Inland gains your of case momentum, with view similar Dave, today. the Hoexter Raj up think in I'm these base continued What's And starting fair on Christian. contract to of to the congrats is that turn and here? just trending year? into Ken later for could it

David W. Grzebinski

Look, healthy market. we're in very a Yes.

remarks contracts double to -- quarter contracts continue the term, on year-over-year the with rates, And is in momentum are with we As tell best double you we've long for low healthy we would the rates probably say what in inflation understand Christian should have that raise maintenance XX% on going to what's they said, that. time. that market. I would said, what's digits. understand were way, That you above bubble. above this prepared which saw need rate recover a -- want how kind pricing. That sophisticated, like renewed is are you up of the very is of customers think digits, ability term very term some I it's in term our I good our said term They that we in this going well seen and environments that spot one a the news

I that? -- suspect to Chris, want that So you would I do goes add to anything know, don't

Christian O'Neil

said. No, that's well I think

a point see I to are is go. we'll reinvesting try continues. inflationary people there's as get pricing term press room that in and again, We're renewals the and spot real the industry to seeing to get the the to the replacement to cover we where the pressures think our to, that market. year momentum still to needs our capital continue or with

Unknown Analyst

that on XX developed looking more. road potential quarter, barges. Is helpful. Very Can just And just this how if addition private to the here? talk Great. the there's sell any barge owners the transaction and about in you down for then more added you

David W. Grzebinski

want for We we these periodically, of have mean be mean, type years. they have into for We've needs I several we cash it people flow them excess could opportunistically. of that people. to some that whatnot. could did various the do or that is last reasons. contracts This equipment Yes. have various some sell -- just stepped I shipyard couple

what a our opportunity That logical the we home let we're -- take look, get to to we get the Christian of of just knows We'll run. got. them. desirability talk kind and I'll ecosystem a buyer

Christian O'Neil

class have into much, We're opportunities portfolio ] the fortuitous and barges fuel our XX, our for Thanks right do, river the in operation high-horsepower very emissions The about that we big barrel line in haul barges us. specialty easily. to They footprint [ XX efficiency, X linehaul performance, our them. really David. vessels improve days very Yes. very to here is acquire and equipment our fit and we'll XX,XXX next the feather into happy what

Operator

Potier [ comes Barclays. Derek from next ] at Our question

Unknown Analyst

pumping that you're or side. equipment message ask e-frac customer us leasing you e-frac about power new on you the constructive e-frac the potentially ordering customers talk acquire potentially equipment, some outlook generation conversations to a could being equipment But wanted to model. additional Just looking about with your of or on speaking to do

color Just maybe and that. more some thoughts on

David W. Grzebinski

would conventional really I tell the -- you is e-frac on active Sure. that side. The very it's nobody anymore. fracs building

I dead don't people forward. fracs forever, I know going building to but think hard if it's see conventional it's

burning maintenance DGB economics, I gas operate, the it's to cheaper burning XXX% blending equipment. converting diesel it not have simple much mean, not to I about some next over of units. And gas level, is to and operators conventional say goes fracs were is right? takes very involved That's converted lot and sophisticated dynamic the cheaper in so only really you'll burning as the mean cost for a equipment. it's think people than we you're electric it I to down right? mean, see I a it's gas, but well. natural just --

replacement really horsepower, would that's frac electric. seeing some replace not to If expanding frac at up, old the here, they're they're So anybody's are going but this equipment continued demand. it's to with point. a long And cut say that answer going got it we they're I

pretty it. We We're And But potential people anybody. new about seeing and from think So think against customers. same. I excited we're and existing up out new we're the got put it. demand. about Obviously, we've our seeing we're state-of-the-art, widget there. other equipment customers excited best would it new the It's

done have leasing. some We

capital we're I that it space. in anxious to think lot of deployed not bit interest frac. activity in of with seeing a we're add are pretty We've a portfolio, quite lease and our to happy now. electric we But

Unknown Analyst

pumps this with And of that. you x you companies get as to amount of are of as ability pressure capacity next-generation adopt equipment? more happy kind see -- out cadence more to do e-frac appreciate far you as the per and think Do expanding your I that over frac pumping time year?

David W. Grzebinski

they constrained supply now. to that I'd guys you engines on well an to engines manufacturing right to than evening love we mean think same generate see give talking are about we've they electricity in the recip power and those activities. got natural mean, same go Yes, as It's I XX/X I'd the our the talked expand. and used, the site gas challenge. generation I generation, anything like go type being to for But other about I right? shift. we're we're engines of -- power more

more constrained more anything. supply if we'd we than certainly could engines, get them. take -- Again, we're So it's

Operator

would This concludes now to for closing our like I remarks. session. back it question-and-answer to turn Niemietz Kurt

Kurt Niemietz

Thank today. you, me. us you, reach questions, everyone, follow-up out thank free to feel Amber, to have please joining you for any and Should

Operator

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

now disconnect. You may

Kirby (KEX) 25 Apr 242024 Q1 Earnings call transcript