KEX - Earnings call transcript Q3 2024

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Operator

Welcome to the Kirby Corporation 2024 Third Quarter Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Kurt Niemietz, Kirby's VP of Investor Relations and Treasurer.

Kurt Niemietz

Good morning, and thank you for joining the Kirby Corporation 2024 Third Quarter Earnings Call. With me today are David Grzebinski, Kirby's Chief Executive Officer; Christian O'Neil, Kirby's President and Chief Operating Officer; and Raj Kumar, Kirby's Executive Vice President and Chief Financial Officer. A slide presentation for today's conference call as well as the earnings release, which was issued earlier today can be found on our website.

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

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

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

David W. Grzebinski

you, Thank and everyone. morning, Kurt, good

Florida, we days. employees, our considerable recently by to without Hurricane begin, Milton. that several many power our were area especially left and our across the like I fast-moving were Before team members employees in impacted disrupting for recognize The the lives of would Florida-based damage

During to the support of the the their exceptional I the during challenge. storm customer resilience they well this our meet as our want and businesses needs thank each on [indiscernible] other recovery them for remain as thereafter, focused and during to continue event. immediate efforts and

announced quarter earnings. Today, quarter per $X.XX earnings we to third share per earnings third Now of to turning XXXX share of $X.XX. compared

in Marine year-over-year. with and and even financial execution third Services navigational good for weather and we that the live modest revenues up both Transportation earnings challenges X% experienced by offset and Our Marine and performance up and Distribution led steady XX% during share Distribution per reflected though to were both quarter in Distribution Marine and Services quarter strong results total in Services. These fundamentals challenges and continued some headwinds

rates reflected our which stock. In million also further we debt free to quarter running generated with contract $XX to paying increased year-over-year. Term down $XX in throughout mid-single offset standpoint, quarter, prices the quarter. million the sequentially in in weather the in increases up renewed and with XX% in In flow navigational margins pricing, Transportation, range third third activity high delays. cash the by strengthen low also demand barge a XX% running were a fundamentals Spot low utilization mid- used XX% in digits and the was levels with low balance conditions remain our results higher of the double-digit We inland versus modest quarter Marine utilization single-digit the from inland sheet our range million prices increased year steady revenues year-over-year the to XX% range. barge ago. in and further in for From due high back over by customer to in range. and impact gains buy Overall, lock coastal, to $XXX somewhat market steady

rates resulted was that in the and year-over-year. increases the coastal third limited contract and renewals operating of the market average range and on double-digit increased strong capacity which year-over-year term high increased year-over-year XX% Overall, demand customer continued vessels XX% During margin quarter, the large spot revenues in in low mid-teens. availability quarter

softness business by strength e-frac up sequentially gas, segments. power wins up power orders our industrial The from year-over-year was quarter with demand across several summary, strong, industrial In backup large continued XX% the year-over-year, in to dynamics repair. down our oil but results delays driven some a that third revenues X% or in our by commercial and market, some with sequentially, our adding offset other X% by power for and up was our and for slowness in is we reflected revenue favorable. both more soft Distribution Services, growth project by driven steady was revenues partially in year-over-year, upward delays. ongoing pace supply of to In by demand fundamentals on-highway gas were partially critical. coastal, In and mixed generation, need areas in X% by in market conventional marine inland X% business. In Turning and customers very In and very driven offset end solid and repair, offset pricing. remain growth industry-wide grew other truck The supply-demand markets and as backlog service becomes saw were engine areas. was market oil

is power quarter are utilization areas. realizing segment offsetting demand barge other and and detail. in to the softness and I'll gas later. talk increases. Increased results rate Distribution to real sheet our discuss and about I'll we the oil Services is mostly strong, Our outlook third more first, for turn But over Raj call and and generation balance in

Raj Kumar

income million combined, delays million operations quarter $XXX XXXX, XX%. impacted you, as were was hurricanes operating X and XX%. million X%. Weather everyone. of operating XX% million increased income Total $XX marine marine revenues, we the around and segment Marine the compared of to quarter an morning, revenues margin Thank quarter revenues XXXX, and quarter. loss XXXX, the third and while flat or $XX of inland Transportation third experienced David, or In operating and increased Compared second with total increased to income modestly the during operating were $XX good coastal

were during customer had impact they and we a pricing solid Overall, did on execution. most These in customer the briefly improved delay our by activity importantly, experienced operations, XX% limited year-over-year increase slow demand, Although direct the underlying quarter. headwinds hurricanes offset days.

with XX% The improvement of more XX% XX% from quarter segment slightly lower with revenue. contributed contracts inland revenue the XX% X of detail. contracts XXXX, XX% charters which longer, barge second those Looking transportation of of was contracts and of utilization inland was a in in marine business XXXX. Long-term of Average or business for quarter, affreightment. of inland over contributed than the quarter time at term year the approximately but third the range from the approximately an

helps in As and that to to were conditions quarter revenues compared by XX% quarter range points pricing. third the primarily during basis low David by of increasing margins increased year. Compared contract ongoing pricing higher XXX mid-single on single sequentially, market Inland year-over-year in renewed compared the and of the flat contracts which rates the double-digit around lingering operating inflationary pressures. cost due of to XX sequentially average and the higher impact spot market to and revenues Term year-over-year. to to term basis up prior the Inland low inland high improved XXXX, by in second points digits third driven mentioned, digits were improved contributed the blunt spot the quarter XXXX. management,

coastal mid-teens from revenues XX% shipyard second line pricing third coastal have Transportation XX% quarter pricing was higher to high is of [ the increased and of business we the the to to quarter in segment. range, utilization will and with the Marine on Now given higher Over reverse Overall, represented coastal shipyards of the for shipyards. margin Coastal in XX% due and timing. moving high resulting both revenues which number operating mid- year-over-year schedule. The coastal the XXXX. in barge fewer range, XXXX of the average had in the business. temporarily contract This quarter an fourth ]

year-over-year. was Average average were quarter, the XX%, approximately During the term Renewals the under XX% percentage charters. range were in time approximately market up digit rates high revenue in coastal the on contracts term contract which low range of XX% prices spot double year-over-year. of were of higher

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

Services Now income and Distribution X% due million X.X%. $XX and $XX segment. or of $X increased quarter million XXXX, revenues mix. the to third an increased by performance or income segment X%. decreased for to of or revenue by or Compared of $XXX million margin XXXX operating the of Total were and compared $X segment the by X%, of the second by Distribution I'll million third quarter income to the X% while million XXXX, million increased operating When operating segment and an operating $X review of the Services revenues with quarter

markets segments more detail. to XX% the power and sequentially tied in end year-over-year. revenues to generation, XX% Moving our were up industrial In

generation data orders power and backup significant centers backlog industrial We other in continue see from to applications. resulting power, higher

the XX%. delays of to were oil tied with related decline was gas year-over-year down product down revenues. sequentially XX% generation margins contribute in revenues lumpiness. Altogether, with continue revenues and to the XX% Power were generation, generation to to and down and gas oil space and year-over-year power X% operating power total income year-over-year Our as represented operating around segment

repair offset particularly activity activity in commercial on-highway the and lower areas, other side, service. in On industrial steady truck marine

and had XX% gas solid continue oil This new throughout As revenues year-over-year. made market, X% and income frac-related in savings in ongoing tempered cost operating product to XX% softness equipment XXX% fracking a rig related X% for Oil see as the demand partially XX% Operating to oil then up we result, and e-frac by mix and favorable was backlog. transmissions high the down driven conventional year-over-year demand counts digits. year-over-year get gas the e-frac in In single continues up backlog up lower while in sequentially and income by by were revenues commercial third and and and initiatives. Commercial as represented parts the margins segment quarter conventional operating margins XX% and industrial increased softness quarter. up of but orders lower in and engines, industrial of work high were mid- and new gas revenue single the execution and and segment is lower execution operating to year-over-year, sequentially on up replaced digits. XX% being equipment. Revenues of offset

to I'll balance the turn Now sheet.

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

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

from benefited of operations flow Third million. working from $XX a quarter capital approximately cash reduction

quarter the reduced debt our equipment. during by an quarter, over just we We cash million. continue and cash related the maintenance unwinding million $XX cash to in of We XXXX. to or expenditures hand capital fourth average fund more stock generation $XX $XXX $XX of on repurchase the around capital million used into $XXX quarter and was at flow primarily target to and CapEx marine And used flow of Free working during to price million.

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

posing investments associated between rental remain in some $XXX improvements. We $XXX million increase inland XXXX, XXXX chain Approximately make capital power orders plan shipped are generate track for facility as is million some both unwind spending flow million generation million equipment in of businesses. For to respect operations to growth year. cash slight still with term. driven additional This by $XXX from $XXX million associated higher working with Approximately existing range near the marine our Having CapEx, headwinds managing business. in capital the improvements into supply and prior represents expect and more to targeting in capital constraints, we said to especially range see on to marine and we $XXX our is as of from and that, to the $XXX to million maintenance we capital a we generation working power $XXX space, to to to earnings. in and million XXXX. With coastal our capital revenues spending

million We flow expect to result cash for the $XXX net provide continue year. million the $XXX approximately free to to of

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

David W. Grzebinski

Raj. you, Thank

and our of beginning fourth operations the Hurricane and by While strong down Milton. of in so quarter temporarily services we distribution ended challenged position the marine businesses, some in shut hurricane quarter The locations. a impacted far our the was our

environment, have pleased hard through working challenging quickly teams we're worked conditions. returned and normal Our to to the

some we large will seasonal outlook, marine what solid these for to availability of to a quarter range remains the overall market on be by part the of refining bit detail we outlook of is softness softening final Demand inland, year. in limited our of early the Nonetheless, and with driven For anticipate continue tempered in In levels. fundamentals, weather, the of the new market positive market the limited the dynamics little higher due maintenance a our around in the by year, seen quarter. refining barge onset expect be sector in but the to the barge rates construction. remainder have we solid, throughout utilization XX% solid equipment

We expect final term in of improvement occur as quarter also continued throughout pricing year. the contract renewals the

see We in Cost continue shortage expect inland and areas, in supply the be be to continue driving market to revenues industry pressure That costs. fleet. on balance mariner in and should there the due down pressures compared normal equipment of in pressures operating the demand is an and fourth are upward inflationary will conditions the the put the with These slightly expected our said, range. some as flat labor to coastal, remained Steady demand quarter. In prices. with to the industry expected are in along seasonality is fourth favorable quarter our down quarter we up increasing to to mid-XX% and customer utilization in barge very across third consequently, acute margins

of issues, and Services because overall and deferring the digits the in from Distribution to of the in mid-single levels and are uncertainty single see high the sequentially oil shipyards to near-term expect the to maintenance be mid- the segment, sector. fourth In down digits, given be of number revenues margins in the shipyards. in lower We Postal activity gas a we expected fourth quarter quarter. in customers planned supply

Overall, on-highway power close for services is and backup market We build we orders strong in conditions market and continued and fourth in quarter to remained segment lead mid-single oil to repair and to the the the anticipate look investment gas. new in high products quarter. To equipment longer be anticipate contributing OEM products generation recently. incremental bottom conclude, we rates with has on-highway orders this quarter meaningful schedule to in industrial, into us, down we've for A growth new center certain strong outlook in to to continue environment. Similar gas, and next we sequentially, a oil of and demand overall market lack led and supply year. and issues. in repair commercial marine continue and and feels expects in the through we have generation, supply check, gas current equipment that need bottoming receive as experienced a delivery volatile and demand of in marine expect we the company what for In mid- the the the digits However, do of new while but In is products, parts in like a of power as for in margins somewhat for outlook from as quarter recession favorable demand to from times single term, to feels and steady, the work the improved weak oil to XXXX. solid strong. lower the revenues third service power good operating trucking data execution extended in very digits, as than we close the

through businesses will this financial sheet expect fundamentals this and produce to XXXX. generate years. we balance continuing We the flow year few remainder move quarter and in our expect favorable the is we Our results significant strong, into and as of next and see cash solid

shareholder our Christian, Operator, core intend questions. Raj strong our and long on we of value ready and As to market driving prepared this continue are to fundamentals now our are concludes in creation. confident strategy. take we term, remarks. the I businesses and we long-term look strength capitalizing

Operator

question Inc. [Operator Instructions] first at Imbro from Our Daniel Stephens comes

Daniel Imbro

excise increased season Congrats that. just vantage you spot net on that's on XQ? renewals the In you do contract expectations. slide, at coming here fleet update And and pricing, and to your down the On like provide high with the point, your an took about that mid-single. price quarter. it environment in I then bid into into looks want can given David, rates looks XXXX? how year-end in start maybe feel comp up single, you backdrop like But from of from year-end it maybe

David W. Grzebinski

supply age, me that going count, in that of Christian is XX-year market. as terms not part check. barge. X,XXX, up retire let for on last and Well, barge retirements pieces lot chime clean supply some what in to continuing In barges which of of new which I a We've well. new think some into supplies break coming going in we're and industry quarter, to Sure. there's cost is our a from good this hit the the to fundamentally look, actually some barges, business X,XXX will barges $X.X even down on is Yes. is XX,XXX hearing that's just we're as doing seen of be mark the million inland we're go normal in demand And because in a barrel

that's good So supply check, has been a in and thing.

I I'm like going there's you're going it's but seeing have we to that at quarter, retirements, be not how sure been with the all. an And be retire think -- through year-to-date about then us to third barges enormous XX quarter, number many delivered some not in delivered. barges. fourth will the

to going I think of a barges. the fair retire industry is number

number we out net barges So standpoint, contraction see of there. actually supply in may from the a

when and strong for that it's look the us at industry. pretty So you supply picture,

are put There in last supply Christian that. or good demand can a the pricing saw, little you some But X% Christian on refiners year-over-year basis, in little a that's third to you spot. and up We you contracts and some still on XX% the prices a in the that. quarter. bright in bit were X% XX%. month and in X% spots the to spot in on here on when pullback sequentially quarter, fourth up set demand more some on you as and together, for the give our more demand give side. have -- cycle side. But color good few We to range spot, it's renewal the so, Term up seen can weeks, a we're was X% renewed color And last

side color turn constructive little feeling very we're here. give of So the and the side. same on I'll demand day-to-day to forward Chris more he's you what over looking seeing to on more a it and

Christian O'Neil

David. Thank Sure. you,

QX the you maintenance the can think a season, of we're some affect around season the It's course, normal spot pricing, see start their Day, doing I winds what of lot Labor down driving early into of around turnaround refineries get into seasonality quarter. peak volumes.

usually weather what in the [indiscernible] offsets that conditions. However, QX is

we're a It's real We had cold large help and maintenance big in question term renewals whole. fog done a not going winter amount, around our to of in QX, your being better a seeing but utility it's watch fronts, as renewals, to the will To chemical but business. great re-tighten a Interestingly, refining at term very a well. that barge the the point and haven't also maybe David's yet dose something offset market in uptick companies. interesting some QX are little across that of

happy. Our major customers are really

They're really at Our for They very performance high pleased. been that service. very us has a reward level.

So term renewals of going QX were nicely.

you end the I the about until won't of that. XXXX. benefit, heard think see But lot ask I we of that a at really Now question

as on touch that So I want well. to

Daniel Imbro

color. that backdrop, year-over-year. points of least about in you've maybe few a the improvement inland at margin hundred all then basis appreciate really on a just it. talked the follow-up And I given past, David,

remained puts Can if forward, look next third rates margin years? you did of this of lower, during and keep higher. inland forward the in takes year cycle margins to the can that just as in walk where kind guess, supply to this year, you you again the backdrop, as look see quarter. I I going demand shipbuilding and get given think you for coming and getting through where you that

David W. Grzebinski

sure. Sure,

were price 'XX continue the and saying it by not full increases, to prepared that customers, is the quarter year, the said, points inflation. you points we year-over-year. And year margins in XX demand comments, of XXX of weather third for just we getting up we at price second some quarter he Let the up basis seasonality, to like end fight basis that just our are Christian -- looking it some look because me at sequentially, year like you seasonality increases. nominal were on said. to full real what full When of at average in 'XX about, to inland. we talked a But from about average our start we look And basis heard Raj's year-over-year,

the for We're Raj be had So said of basis number points. in XXX XXX up 'XX gave. we'd based to the versus dab 'XX, we middle smack that on

Looking be you whole into of that, market pretty one And board, and basis XXX as industry going the that in Marine range. rates, 'XX, would coastal. on been across XXX acute inland a I we'll shortages points them. lot affect Labor of There's across up being mariners the in both to there's that would say labor sector. we've can been expect, the through inflation

So fighting we've been that.

seeing And debates, real. it prices heard newbuild still inputs other are for is the all know even the prices barges, the We're just coming up. prices input up. are all little but bit, steel down rhetoric with and I You inflation see political you the the a

put you XXX for that XXX all basis in there, still think points probably year. to we So next inland

got more very disappointed we cycle don't this several if picture. margins, to was our be XX%-ish, the I'd on demand above I I of where we question, maybe be years right which X supply I'd we quarter -- XX.X%. your and had go about were disappointed think through we based last cycle. this base think go don't if We've peak peak,

are how really we're good this I ourselves So about [indiscernible] and constructive. feels. Christian

Operator

BTIG. comes at question next from Greg Lewis Our

Gregory Lewis

on spotty to be going ago, market I term. hey, than be to -- is the short [indiscernible] term fleet to like XX months David, be guess back than the if XX, we you more we're on, going were going is side the -- look focused very

today mix, in that's didn't as you side? where I at we mix terms the next quarters, how out But imagine of As term are remarks. the improved. about thinking look spot spot over we the are couple the prepared of look I been the in inland term we on hear of anything

David W. Grzebinski

years, we give we there and that least. about you the with to And prices No, the XX% they didn't supply-demand equipment we're from a XX% next pricing couple in When side. of comfortable at million, for again, and XX% continue it's number, we that gets picture. surprised up but I'm we building term, because barge least the back $X.X up pricing spot about XX,XXX-barrel inland new at believe where all should go it need are. to -- Yes. think Yes, at spot

going we're you Maybe, term we'll good view is to for with and have the to on where get see. up it about years. Could So next XX% this next demand stay year? see supply really it. because We're very comfortable that again, constructive average several is we

Gregory Lewis

or what and we where down, think it's your up -- $XX I what should margin oil pass-through $XX side for the then the oil be -- thinking just -- had we know want frame don't maybe or But on to it's it's fuel environment realizing about it price. whether an really around if volatile, at how should margins? today, guess a I a little I If are type we largely impact And up wondering is is price of did the maybe Great. be let's in you. Okay. that I'm on like on look the about in ability a Clearly, and pricing we about bit ask where on has that both how impact you do I ways. thinking

David W. Grzebinski

fuel Yes. handle fuel I don't make our the hard fuel, than want to on you really customers to nail with Most are the pass-through fuel. -- and of money work able to better don't hit we risk head, We We want our money lose are on for customers. mean that it on on we a is us. anyway.

direct much. from it's a impact, So not

I customers think price and for refiners. chemical oil usually the better the deck is higher our for our

oil does industry. the So on volumes. it stimulate margin, some for better And probably higher the the demand. do lower is care the our the what really -- we price, about The

say making to it's So want higher money. I a they're mix, good The money. to They're with upward a deal by when customers the Look, you and making for is nicer it is would but us. side. biased lot large, better your usually the

So that -- that you to they're nice any day, not not with understand. deal but

the oil that D&S side, deck Brent, look, for and gas oil the almost WTI and on $XX said, at Now D&S this is It's our gas of even price the $XX per oilfield, nonexistent. business, conventional and business minimal.

this For probably time in frac conventional decades, deliver X we first the will a not system. year

old conventional as equipment. frac. electric of off of they I All frac some orders are of see our you mean, And their can the impairments it from some our write announcing customers

business Our is very gas weak. low, and oil really very, base

e-frac I that. happy And just and have And making that We're we bottomed? very just Now great we have everybody e-frac great know. gains that seems efficiency. the to on is offering. of thankful inherent don't because we're is a have focused

both base the of that or be question, is pressure because I will e-frac equipment it's down, oil for the and themselves. to grow e-frac, just I our pumping goes bulk gas think up still until much your to the customers and think efficient out e-frac customers So there E&P more we'll if continue good

a long-winded you that's hope answer. I So [indiscernible] got I

Operator

Nolan comes Ben next Our Stifel. question at from

Benjamin Nolan

a electrification issues to like you about, you're talked supply obviously There's little I grow but business chain the the wanted continuing hit that to bit. it sounds on the backlog.

in quarter? X that know, the backlog for what like X, to or in business First, or something how maybe like, in I years maybe is possible will about that know, it don't you you like could in, much -- it whatever is or next, grow is you how And don't frame for TAM maybe the think what did what that? the think the that or something frame doable you I third

David W. Grzebinski

seen well-worn hate the -- publish little I'll we're now on frankly, you [ with color, supply ordered some I engines now, every right engines give it out first, chain. try numbers big there right sure. suppliers, excuse delivery. big the reticent Yes, of the that, major engine any you but a 'XX backlog it's of But doing blaming from things to engine and the are you've if ] quarter.

struggling delayed of then That been said, center first some start of into to the we've the second 'XX and deliveries. data with quarter. our It's late see quarter data in you'll that. some deliveries So center

continue next to pig some to big it's I is deliveries from millions in -- said, of of a that's will out of throw just year, kind there's we're dollars, That we see meaningful. the to we'll number, python, $XX years backlog up a ago. and our the more want few and million start hundreds become and a and So it grow backlog,

So on rental getting we're we in some greater book-to-bill. what also just the well. X to is I continuing new color rental? We're data share you on center well. business than seeing world. to tell would our have go you really to want It's continue some that customers Christian, doing

Christian O'Neil

for obviously, Yes. very it was I mean, a us. hurricane season busy

was stores quite the so backup storms, keep and business were rental running strong. helping power chasing we And the box

commented hurricanes. So slight as again, But really hedge. has a small have we don't David before, like we

storm So quarter season. heavy business on a a of back had the rental the good

David W. Grzebinski

And Ben, we're in that. investing

the go Meg talking clear, we residential do when scale. We're we're to the we're demand to fleet, smaller KW may a look have we frankly, to up of end power, type tick talking continues CapEx industrial You XX the at big seen year. And backup X thing. just power, at for adding XXX to rental be units, the we're KW And it as not here talking up. that's our our -- little

continues business invest normal that going to in it with capital grow. So continue our to to discipline. to We're

Benjamin Nolan

Right.

Or freight? that business? or But could Marine That's movement but Greg's not back your go the I have the touched Okay. narrowed. connection like do it of don't I spreads of Christian, if Maybe that crack And as that? that earlier, is seen big seasonality lately, is it's not one refineries and you And know things spreads helpful. between crack a the direct similar in sort in on as the spread the is if we've Like you crack the to of exactly this incentivize want what. side. there of question,

Christian O'Neil

customers I just think as good, market. spreads integrated go throughput big crack as possibly when our regional throughput simply, I'll supply they major as the much we extremely happy. up but They Not can. refiners, their trying some even refining of answer are global it are to they to see the smaller this are the tend refiners,

spread much thing That generally, to historically said, When the move supply So a very about for crack side good in well crack on about been we us a the a spreads utilization. lot care you're good refinery refineries how transacting. ability taking have finished rates of and just our environment. high we or but as of of enjoy the environments. the care as all end spread moving utilization the high feedstocks product probably really out, typically at is what in are day crack connected, are liquids the we They do

pretty of the down, versus world. healthy is And you it's XX% the historical some it's I mind, off spread think driven if though today, revenues today, you're in on good historical spread -- look the coming at about spreads. chemical crack highs inland by think still And market chemical our keep crack manufacturers. crack in even -- I chemicals the

that QX, to we'll operations assets in chemical U.S. and or little hearing European the see of watch their We're crack closely. not strength economy. their the chemical we the or assets. attention better is paying assets So to very Asian a close our spreads, from margins. spiking attention the are to football, while versus paying but Middle GDP. we're chemicals Eastern Those drive that continue very we we customers like things are And a high again, do close What

theme And have think the Mexico. workforce economic and the thematic in in we've talked -- and so the invested in a always the billions workforce stable I of been the of about is manufacturing Gulf Coast the good a with chemical Gulf industry the dollars development

we're what U.S. from customers is We hearing chemical are outperforming a And are our of beneficiary assets. consistently that assets their their global direct that.

beginning we're bit little so see of come there pretty And that think to volumes good. a we feels back

Operator

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

Gregory Wasikowski

there out growth on Any lot to flow. Obviously, opportunities free this direct deploy is anywhere of I get cash touch business specific the itself? within coastal in just buybacks, than there's question a probably there want cash share Other or You that to but a inland it. B&S? the lot,

Raj Kumar

a going Raj flow. flow this mean generation. I of million very cash to going lot see free here. to be free good million, We're of year is strong $XXX cash $XXX

-- that our buyback. disciplined into direct the We've We're XX% with decisions. look [indiscernible] buy balanced framework we of business, has our our very investments. when us investment back year-to-date, I cash a that strong David very us ROIC. got free to power seen been good investments mean at rental very returns. generation done allows stock directed to We've flow we've allocated about always mentioned You've

you us continue should to that. balance So see

You've paid a also very some down quarter, sheet that in puts position cost debt from seen strong this higher we a balance in perspective. us relatively

said, service the we to side, at always power tuck-in generation some inland investments about. and around at we've distribution want look stuff do talked investments, in you we always the we've as do type side, So that on -- KDS us that should look we see with

hard So doing acquisitions, buybacks. like We've soft overall, stock. it's been to but our predict we

I forward. to continue us think should that going do you see

David W. Grzebinski

just Greg, in and a would I both year bit we've inland elevated Yes. that little CapEx of offshore. is our more and add, bubble from last about, standpoint, a year the maintenance maybe talked a longer-term because this year bit little and next also

As that free up. see cash tempers, flow our go you'll

quite on integrating earn We're an customer plainly, our to invested to we do quite open as always always are love good being do a acquisitions, have our very bread but return able inland disciplined We service capital. would at it. We adding and approach those said when and Raj acquisition. we about That's butter. to it's

do dozen always look, you a acquisitions a but we keep be news investments, because right always that's see the -- So is it. we'll stock. lot see that a you we've our we best now, getting the a lower transaction is in We're we inland of -- company We more got more is preference. betting the be it. probably the good things buy It we some a but to do stuff. don't quarter, at and it's meaningful flow would that at a price reasonable probably not bolt-ons. us know with there good good may But is absence pretty here the the look open barge always doing Kirby market given right We're to type power cash or in discipline. about which company going generation, do to us little a But little looking integration there, vertical

Gregory Wasikowski

assuming maintenance presumably Got I'm the it. where [indiscernible] speaking What Awesome. now you impact terms peak of market next curious, I'm reached are on expecting the of then barge And is it's and it David, the cycle, hasn't cycle? market year. yet, right in

David W. Grzebinski

that every to going I'm day. give Christian Christian because it lives

Christian O'Neil

Greg. Thanks, Yes.

referenced Regarding we barge go you'll inspection. the the that COI XX% industry see through bubble the 'XX of renewal inland 'XX, its maintenance tank over has to of and certificate

the so And is far that, XXXX XXXX, probably behind. peak but really not of

go -- their again, math, the both tank barges, And CI. So it's XX% heavy years of the industry. my have to cycles it's to through according for have we'll maintenance very about

is still continue So a industry demand. through there. for maintenance and be bubble and will The it progressing supply to factor the it is still

Operator

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

Ken Hoexter

Jumping agree, coastal. I of hundred the And points. your Dave, few basis a that on years to Hopefully, more few continues on with over answer the inland.

capacity you margins, was in the just I about talking that the to move mid-teens the pullout? were huge Given surveys. the the know, Christian, run-up with

just were we a And the should one also Christian? the where talking right, pullout you think see we've because that inland run [indiscernible], there, huge given so about Dave, for side Coastal, to, move to or got I right?

David W. Grzebinski

a shipyard there's some Look, on cycle. can and Yes. I'll color. start, add Christian the XX-month offshore side,

you these in shipyards. expensive pretty for bring months, XX got every to units So

going in fourth the over to quarter a see starting it we're for first fleet. bit little and our into year carrying so coastal next quarter the And

color average, So that's full up coastal terms said, in of basis at it. add bit quite on 'XX that year market average. a seeing Chris, That you're full you of what in versus side a XXX going also be to margin impact points sequential on 'XX look some and the newbuild can year if should fourth you think year-over-year quarter the margins. in we

Christian O'Neil

X Yes.

begin deliver context on termed our It's the add construction. supply no I'll offshore want XXX% and dynamic. XXXX. good. some is We The conference that very it I as a until with demand fleet today If a tonnage this call. new to dynamic not see we is sit would very market, think would to up player positive

XX% year-over-year, rate term in business level spot, we're XX% at -- the the term to of able Our in we And year-over-year, that gain the to rates pushed rate on up recent here quarters rate in realm our to XX%. is XX% of increases.

So supply. a we lot see a lot momentum, lot and of of of demand a not

think. So up the nicely I for set are very coastal a fundamentals long run,

David W. Grzebinski

Yes. Christian earlier, it what, somebody order wanted a to new was wouldn't see 'XX? telling me if unit, you to

Christian O'Neil

Yes sir, XXXX.

David W. Grzebinski

Coastal. We're about really excited

getting back deployed. long was brutal followed to and number it's good a on start It and for know, years, you we've Ken, back for you've start As pretty that that time. of a us capital us earning

Ken Hoexter

the seasonal We seeing quarter just there what on or... the do I'm but double-digit margins sorry, used pullback was to fourth I'm comment [indiscernible] those coastal. at not about see

David W. Grzebinski

that probably have pull can't of -- digits dollars, to the mid- were maintenance We'll Yes, of in in We single third per because bunch We give units tens a these you number, process. fourth the some have still we be the cost the of yes, in mid-teens expense gets capitalized. some We maintenance I not get dollar keep of of supplies. you -- but in and big fairly been out quarter few crews crews. still of heavy get those quarter. of have twenties back. The units, thousands a the high day do a you it's -- expensed they we big help

when the margins some put when hit shipyard. you you -- when that down together, especially the units, So big pulls have all that these of

[indiscernible] we very the that right average go up. market continue focus tight It's a year again, So full to you're now. to on going

I we're think in in of any high XXs utility. terms day, given

Ken Hoexter

that X%. had like sounds It I even for it's pullback. than better

you higher. like You even saying sound were

XX% XX%, gets [indiscernible] to there first? and of who inland between So coastal a war Christian, is

Christian O'Neil

There's us bed It in level of morning. competition of healthy out a here. gets around the

Ken Hoexter

All right.

this, digit, thinking of I'm administration, So guess tariffs. change XQ the know on that talked the [indiscernible] heading high to state mid-season, we refined single gas if maybe on production lower boost into drilling, prices here about and forward? or does mid-single about I a and back the digit accelerated move the even enhance contracts more inland demand bit to from could of you what thoughts goes going little given I maybe

David W. Grzebinski

Yes.

chemical production certainly key I prices would our global it with input. chemical think -- is U.S. or gas make big natural natural a lower facilities boost for gas customers our better even U.S.-based

talked the gets the But natural price good. good or lower business. oil lower e-frac is the stuff So oil goes. deck, the with also prices, a little for lower a price we've our the little wonky, as It's spreads and crack particularly gas higher price bit earlier

it's gas space. natural to hard largest to say, the chemical So is but probably the input

the building big power that for of input our so And what prime It's way, power. we're Oh, a gen, by positive. call a could lot e-frac certainly a in we business. be gas

the and natural power power prime grid. So that's take put equipment to make our that in gas will people

up order from somebody just that picked that's seeing We've that this quarter. grow. doing we're an So

So it's generate prices it. helps our and lower gas [indiscernible] power terms whole model gas in prime natural that to of and interesting using natural product

Ken Hoexter

bid the season? into thoughts your sorry, I'm And

David W. Grzebinski

I'm renewals? quarter sorry, bid the -- fourth

Unknown Executive

Yes.

David W. Grzebinski

the Chris talk be good. but But price that pretty about we're we let should can't you it expecting, give it. I'll

Christian O'Neil

renewals. we're a they're had year, at has Again, of excited our We've high Operationally, about very No, but the fourth Yes. term good year. that really next you'll lot quarter going Ken, see a executed well. a level. very team benefit

we're our is QX hard record And about and today, of in positive happy being we're are rewarded again, our very as it. work. customers safety for incredible. And very, Our

Ken Hoexter

teens, mid double digits, High low single XX%? digits,

David W. Grzebinski

will Yes, It we're all It will good. be of in good. favor that. be

Operator

question Group Wolfe comes last Scott Our from Research. at

Scott Group

I ago. is all maintenance But tonnages like just inland look -- and when and just years that. We've got weather X delays down XX% tonnage

I think sequentially. issue? much revenue say is talking bit you little How any, this, would if about you're demand of down a a

David W. Grzebinski

Christian let I'll Yes. answer that.

Christian O'Neil

Yes.

a of of demand lanes. about think miles the the periods down sort ton crude up in is and complex. is One to some versus today, which the distance, the talking lot of out you're past that been in you That come coming Utica Ohio quite go. A change slowed has oil oil River, trade there's lot Utica, tends the about a fundamental miles. barrel So crude ton some shipping barrel in of

so that our the And industry's impacts miles. ton miles ton and

the mainly business that Fertilizer the Mexico quiet of loaded parts back business I in And a and can the nicely. was miles referring in are in QX. around ton have other those But business is of barges think those Again, the Heartland, big large around the QX. in We're is resurgence That's has been very starting coming that of whip other ton that's The absorbed big to volumes. business. items the up piece whipped miles our business. Gulf volume X see that we've you're business to. -- fertilizer into fertilizer toes, taken the

the most So are see likely crude probably I those trends oil long-haul think and you historical fertilizer. long-haul are

Scott Group

more then orders, less you your give side? update, of construction see 'XX? can an us relative on activity industry perspective or the on 'XX And Would we Okay. you think where just inland we new are build to sort

David W. Grzebinski

really year, have around see shipyard. industry, have the see in diminished having into build which past order a inflationary business you our book those the and referenced realities, the but the in next emerging ability XX-some-odd versus Well, tell good as been driven 'XX, a a will been cycles. only I'll order by well that other different. about you still the it's in shipyard deeply labor, been issues is the are from barge the earlier, XX XX-some-odd I David personal we has of delivered. for of in give the some way shipyards of lot to COVID status barges, don't as inputs focused Hard pretty tank that clearly the A of observation, years I around particular, now. anything think book to we see

the built the replace capacity tank a I cargo for hopper Those side to with compete so for number large barges being also of barges construction think And of barges. business. dry hopper there's on the

-- see I windshield, a in look construction. don't I of whole we new you think lot the if see

out think our see quarter. an I up think I And give We really you construction. interestingly, into consistent prior conversations, from the recent XX,XXX X-pound periodically. price I'll set barges don't interesting I anybody the And in see the tank market. replacement of we went barge most of a inland speculatively anecdote. building price

clean that a price is something quote watch to XX-pound that for a in which the labor, of other So Even due of all is barge abated the though went steel tank this paint, was The pricing. bit, inflationary has commented barge barge. closely shipyard we to steel, a tied that inputs, slight $X.X of price other factors all plate very change in million little a the of due price of actually due to abatement those to the the due price steel, up. to despite the

$XX,XXX, there So a continue I get return in on shareholders I you'll to to [indiscernible]. think building see our tank million $X.X probably to is wouldn't those, barge $XX,XXX day not yet. at barges discipline market The you're have a us construction. have around new want going order know to

we rational are So shipyards just constrained. see really and behavior around still think the some it, I

Scott Group

can. I if lastly, just then And Okay.

didn't a answer? disappointed the you Coastal earlier, if comment this be be You'd get didn't You margin, think to disappointed made you'd XX% said. to cycle I [indiscernible] inland a What's get if

David W. Grzebinski

XX%. it's say I'd Yes.

bumped peak prior up was our XX%, about I against. think already we've which XX%,

-- coastal, keep we there and does and guys are the little it coastal So pushing competition and about question was the hard. between a exist earlier inland

good bit in Christian and them. XX% or push be you a there's inland, the for the difference can a model. margins. barges Coastal, whereas don't disappointed coastal It's both in But do cross you tugboat towboat. in the think little are multiple a single if barge time pair, a the and I we that towboat I'd a the of know with

that But hard. said, that coastal little our guys So there's are out a inland pushing has. advantage there

Operator

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

Kurt Niemietz

you, us joining everyone, [indiscernible], today. for Thank you, and thank

the questions, directly reach me As always, to if throughout follow-up any day. out there's

Operator

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

now may You disconnect.

Kirby (KEX) 30 Oct 242024 Q3 Earnings call transcript