Kirby Corp. (KEX)
Q2 2011 Earnings Call
July 28, 2011 11:00 a.m. ET
Steve Holcomb - Investor Relations
Joseph Pyne - President, Chief Executive Officer & Director
Greg Binion – President, Chief Operating Officer
David Grzebinski – EVP, Chief Financial Officer
Alex Brand – SunTrust Robinson
Ken Hoexter – Merrill Lynch
Kevin Sterling – BB&T Capital Markets
George Pickral – Stephens
John Barnes – RBC Capital Markets
Chaz Jones - Morgan Keegan & Co.
Steve O’Hara – Sidoti & Company
Previous Statements by KEX
» Kirby Corp. Q2 2009 Earnings Call Transcript
» Kirby Corporation Q1 2009 Earnings Call Transcript
» Kirby Corporation Q4 2008 Earnings Call Transcript
» Kirby Corp. Q3 2008 Earnings Conference Call Transcript
I will now like to turn the call over to Mr. Steve Holcomb. Mr. Holcomb you may begin.
Good morning, thank you for joining us. With me today are Joe Pyne, Kirby’s Chairman and Chief Executive Officer, Greg Binion, Kirby’s President and Chief Financial Officer, and David Grzebinski, our Executive Vice President and Chief Financial Officer.
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 the 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 annual report on Form 10-K for the year ended December 31, 2010 filed with the Securities & Exchange Commission.
I will now turn the call over to Joe.
Thank you, Steve. Late yesterday, we announced net earnings for the 2011 second quarter of $0.77 per share, tying Kirby’s previous record earnings of $0.77 per share reported third quarter of 2008 and reflecting a 43% improvement over the $0.54 per share reported as second quarter last year.
Our 2011 second quarter results included an estimated $0.07 per share impact, negative impact, from the record setting high-water experience throughout the Mississippi River system during the quarter. I’m pleased to report the river system is now back to normal water levels and this occurred kind of mid-July.
The 2011 second quarter was a very active time for Kirby on the acquisition front and I want to briefly bring you up to date with respect to where we are on these acquisitions.
On April 15, we completed the acquisition of the United Holding, a land-based diesel engine and transmission service provider as well as an oil service equipment manufacturer. United is doing well, capitalizing on strong demand in the land-based oil service business, and they are accretive – were immediately accretive to our second quarter earnings, and frankly, ahead of our plan.
To help us manage our expanded diesel engine service business, I’m pleased to announce that David Whisenhunt has joined the Kirby organization as the Executive Vice President of Engine Services. David will bolster our diesel engine service management team and will work with both Kirby Engine Systems, which is our heritage business and United, which is our new business.
David brings 30 years of diesel engine service, over 30 years of diesel engine sales, operations, and management experience to this segment of our business. He previously held positions with The Wood Group, GE Power, and Steward Stevenson.
The acquisition of K-Sea Transportation was completed on July 1. K-Sea is a large U.S. coast wise tank barge operator. K-Sea has a diverse geographic footprint and operates on the East, west and Gulf Coast as well as on the Great Lakes, and in Alaska and Hawaii, and owns one of the youngest fleets in the U.S. coastal tank barge business.
We believe our purchase of K-Sea and our entrance into the U.S. coast wise tank barge market was well timed. This business, supply and demand is coming into balance and it’s improving as demand improves, and as single-hual barges are phased out of service. And also, term and spot rate contracts are currently stabilizing.
Our relatively quick earnings recovery would have been very difficult to forecast a year ago. For a business that traditionally reflects the domestic economy, our success is surprising but also understandable. Low natural gas prices from shale formations have not only changed the competitiveness of the U.S. Petrochemical business, but it provided new crude oil volumes to be transported by tank barge, we think, both inland and off-shore tank barges. And has also helped drive the success that we’re seeing our land-based diesel engine service business
I’m going to come back at the end of our prepared remarks and talk about our 2011 third quarter and our full-year outlook, including United’s and K-Sea’s anticipated contributions.
Now I’m going to turn the call over to Greg, to recap our Marine transportation and diesel engine service second quarter operations.
Thank you, Joe, and good morning to all. During the 2011 second quarter, Kirby’s petrochemical and black oil fleets achieved utilization rates in the low to mid 90% range, the highest equipment utilization rate since the third quarter of 2008. This high equipment unitization was driven by continued strong customer volumes as well as the high water and flooding conditions on the Mississippi River system experienced during the second quarter that created delays and increased transit times.