KIRBY CORP Q4 FY2024 earnings call

• Fourth quarter GAAP earnings per share were $0.74, with a one-time inventory write-down and Louisiana tax law credit. Excluding one-time items, adjusted earnings were $1.29 per share.
• Experienced seasonal softness in marine transportation and distribution/services but had strong execution from teams. Generated over $151 million in free cash flow, used to pay down debt and buy back stock.
• Inland marine had weather and navigation challenges but barge utilization averaged 90%, term contract renewals up, and operating margin ~20%. Coastal had steady market fundamentals, high barge utilization, and mid-to-high 20% term contract renewal increases.
• Distribution and services had mixed demand, with power generation growth offsetting oil and gas softness, and commercial and industrial operating income up due to product mix and cost control.

In the fourth quarter of 2024, the Marine Transportation segment had revenues of $467 million and operating income of $86 million, with an operating margin around 18%. Inland contributed approximately 82% of segment revenue, with average barge utilization in the 90% range and term contract renewals up in the high single digits. Coastal revenues increased 6% year-over-year, with an operating margin in the low-teens range, and barge utilization in the mid-to-high 90% range. The Distribution and Services segment had total revenues of $336 million, operating income of $27 million, and an operating margin of 8%. Power generation revenues were up 36% year-over-year, commercial and industrial operating income was up 28% year-over-year, while oil and gas revenues were down 38% year-over-year.

• Anticipates strong growth in 2025. Inland revenues expected to grow mid to high single digits, barge utilization low-to-mid 90% range, operating margins to improve 200-300 basis points. Coastal revenues expected high single to low double-digit increase, operating margins mid-teens. Distribution and services flat to slightly down, earnings per share 15%-25% increase year-over-year.

• Weather and navigation challenges impacting marine operations. Seasonal slowness in distribution/services. Inventory impairment related to weak market conditions for conventional diesel fracturing equipment. Inflationary pressures including mariner shortage, shipyard labor constraints, and electronic component costs.

Q: How is pricing performing and what drives improved pricing despite weather challenges?

A: There was a speed bump in Q4 due to weather and refinery pull-back, but utility has recovered, spot pricing has rebounded. Weather can tighten utility, but focus on full-year margins expected to improve 200-300 basis points.

Q: Any perspective on tariffs and Lyondell closing a refinery?

A: Tariffs are a negotiation tool, generally good for Kirby as it's 100% domestic. Lyondell closing a refinery may lead to rationalization of refining capacity, potentially creating new trade lane opportunities.

Q: Color on PowerGen backlog and growth?

A: PowerGen backlog is lumpy, with data center and backup power demand growing. 80% of backlog is PowerGen, with milestones like delivering 1 gigawatt of natural gas power generation products, and strong order growth in this segment.