Kirby Corporation (KEX)

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Kirby Corporation (KEX)

Q4 2013 Earnings Call

January 30, 2013 11:00 a.m. ET

Executives

Steve Holcomb – VP, IR

Joe Pyne – Chairman and CEO

David Grzebinski – President, COO and CFO

Greg Binion – President, Marine Transportation Group

Andy Smith – EVP, Finance

Analysts

Michael Webber – Wells Fargo Securities

Greg Lewis – Credit Suisse

Jon Chappell – Evercore Partners

Ken Hoexter – Bank of America Merrill Lynch

Jack Atkins – Stephens Inc

William Horner – BB&T Capital Markets

Chaz Jones – Wunderlich Securities

John Barnes – RBC Capital Markets

John Larkin – Stifel Nicolaus

Matt Young – Morningstar Equity Research

Presentation

Operator

Welcome to the Kirby Corporation 2013 Fourth Quarter Year End Conference Call. My name is Trish and I'll be your operator for today's call. (Operator Instructions) I would now like to turn the call over to Steve Holcomb. Mr. Holcomb, you may begin.

Steve Holcomb

Thank you for joining us this morning. With me today are Joe Pyne, Kirby's Chairman and Chief Executive Officer; David Grzebinski, Kirby's President, Chief Operating Officer and Chief Financial Officer; Greg Binion, President of our Marine Transportation Group and Andy Smith, currently our Executive Vice President of Finance.

During this conference call, we may refer to certain non-GAAP or adjusted financial measures. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures is available on our website at kirbycorp.com in the Investor Relations section under non-GAAP financial data.

Statements contained in this conference call with respect to future are forward-looking statements. These statements reflect management's reasonable judgment with respect to future events. Forward-looking statements involve risk and uncertainties.

Our actual results could differ materially from those anticipated as a result of various factors. A list of these risk factors can be found in Kirby's Form 10-K for the year ended December 31, 2012, filed with Securities and Exchange Commission.

I will now turn the call over to Joe.

Joe Pyne

Thank you, Steve. Yesterday afternoon we announced record fourth quarter earnings of $1.13 per share, and near the upper end of our $1.15 per share guidance range. That compares to a $1.03 per share reported for the 2012 fourth quarter. A quarter which included a $0.09 per share credit reducing the contingent earn-out liability associated with our acquisition of United Holdings in April 2011.

For the year, we again achieved $4.44 per share compared with $3.73 per share for the 2012 year. Our 2013 results included $0.20 per share and the 2012 results, a $0.05 per share credit to the earn-out liability associated with the acquisition of United. United continued liability earn-out was eliminated as of September 30, 2013.

Our guidance range for last year was $4.37 to $4.47 per share. Now during the fourth quarter, our marine transportations inland and coastal tank barge fleets continue to experience healthy levels of demand across all market. High equipment utilization levels and favorable pricing trends.

We continue to benefit from strong US petrochemical production levels, stable refinery production levels, the export refined products and fuel oils and the movement of crude oil and natural gas condensate from US shale formations. We did experience higher than anticipated delayed days in our inland operations during the quarter.

Primarily, the result of high winds and fog along the Gulf Coast as well as some difficult weather in our coastal operations.

Our land-based diesel engine service market remains challenged. We think this will improve in 2014. Our marine diesel and power generation markets were stable with results consistent to the prior quarters in 2013.

As we announced in early January. David Grzebinski was named President and Chief Operating Officer. The first step in the succession plan that we announced in April of last year, with the goal of transitioning my Chief Executive Officer position to David, this year. I'm going to welcome Andy Smith to our management team. Andy, started in early January and his current title is Executive Vice President, Finance.

Andy will replace David as Kirby's Chief Financial Officer in late February after the filing of Kirby's 10-K for 2013 and tend to step down as Kirby's CEO at our Annual Shareholder's Meeting in late April. I'll remain as Kirby's Executive Chairman and look forward to working with David and the Kirby Management team. I will now turn the call over to David, who will discuss in more detail our marine transportation and diesel engine service markets and give you a financial update. Following his remarks, I'll come back with some comments about our first quarter and year end guidance and outlook.

David Grzebinski

All right, thank you Joe and good morning to everyone. Let me start with our inland business. During the fourth quarter, our inland marine transportation sector continued its overall strong performance with equipment utilization in the 90% to 95% range in favorable term and spot contract pricing.

We did as Joe mentioned experienced high delay days during the quarter, which was primarily the result of seasonal frontal system along the Gulf Coast and accompanied with some high winds and fog. Delayed days totaled 1,985 days which was 34% higher than the 1,479 delayed days reported in the fourth quarter of last year and 54% higher than the 1,289 delayed days reported in 2013 third quarter.

For the fourth quarter, inland transportation revenues from our long-term contracts that is contracts over one year or longer or 75% of revenue with the remaining 25% spot of the term contracts, 57% were from time charters and the remaining 43% from contracts of the freight [indiscernible].

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