Kirby Corporation Q2 FY2025 earnings call

Management Statement and Operational Highlights

• Marine Transportation: Inland had favorable market conditions, steady barge utilization, and pricing gains. Coastal had strong fundamentals, high utilization, and reduced shipyard maintenance impact.
• Distribution and Services: Strong Q2 with growth in revenue and operating income across end-markets, particularly Power Generation and commercial/industrial.
• Balance Sheet: As of June 30, 2025, $68 million cash, $1.12 billion debt, debt-to-cap ratio 24.8%, net debt-to-EBITDA under 1.4x. Net cash from ops $94 million, used $71 million for CapEx, repurchased $31.2 million stock. Expect to generate $620-720 million cash flow from ops in 2025.

Segment Performance

• Inland Marine Transportation: Market conditions favorable in Q2 with barge utilization in low to mid-90% range. Term contract renewals up low to mid-single digits. Operating margins in low 20% range, contributing approximately 81% of Marine Transportation segment revenue.
• Coastal Marine Transportation: Revenues up 3% year-over-year and 14% sequentially. Barge utilization mid- to high-90% range, term contract renewals up mid-20% range. Operating margins in high teens, representing 19% of Marine Transportation segment revenue.
• Distribution and Services: Revenues $363 million, operating income $35 million, margin 9.8%. Power Generation revenues up 31% YOY driven by data centers and industrial customers. Commercial and Industrial revenues up 5% YOY with operating income up 24% YOY. Oil and Gas operating income up 180%+ YOY despite revenue decline, driven by e-frac equipment.

Guidance

• 2025 earnings per share expected 15%-25% growth, but if demand muted, closer to lower end. Inland revenues low to mid-single-digit growth, Coastal revenues high single to low double-digit growth. Distribution and Services segment total revenues flat to slightly up, margins in high single digits.

Risks

• Macro environment complexity, trade policy shifts introducing uncertainty.
• Supply constraints affecting working capital.
• Inflationary pressures and labor constraints impacting operations.

Question and Answer

Q: About Inland spot market softness and July spot pricing.

A: David and Christian discuss chemical demand pullback, seasonal factors, and supply side dynamics.

Q: On Coastwise margins surpassing Inland.

A: David explains inland's chemical exposure vs coastal's supply constraints and margin expectations.

Q: Deferral of CapEx.

A: Raj and David talk about free cash flow, capital allocation, and deferral of growth-related CapEx.

Q: Inland contract pricing and margins.

A: David discusses reasoned pricing approach, partnership with customers, and upside potential for inland margins.

Q: Power gen inquiries and international opportunities.

A: David states most power gen inquiries are domestic, driven by data centers with strong backlog growth