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KEX Kirby

Participants
Eric Holcomb Vice President, Investor Relations
David Grzebinski President & Chief Executive Officer
Bill Harvey Executive Vice President, Finance & Chief Financial Officer
Ben Nolan Stifel
Michael Webber Wells Fargo
Jon Chappell Evercore
Greg Jerry Lewis BTIG
Kevin Sterling Seaport Global Securities
Jack Atkins Stephens
Randy Giveans Jefferies
David Beard Coker & Palmer
Bill Baldwin Anthony Securities
John Daniel Simmons Energy
Call transcript
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Operator

Good morning and welcome to Kirby Corporation's 2018 Fourth Quarter and Full Year Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. We ask that you limit yourself to one question and one follow-up. [Operator Instructions] Please also note this event is being recorded. to conference like to now would turn over the Mr. I Investor Kirby's Vice Holcomb, Relations. President Eric of Please go ahead.

Eric Holcomb

our and be and Good the well us. President slide are issued President presentation With was and of earnings me Executive found morning thank Financial today website conference earlier today release David you Finance and for at Grzebinski, that Officer. Executive today's Harvey, kirbycorp.com. as Kirby's Bill for on Chief joining Chief can Vice Officer; A Kirby's as call,

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

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

for XX-K involve those XXXX. actual Forward-looking quarter A year these statements for XX, XX-Q and December be as ended differ as risk various factors as found list result anticipated, materially factors. of can our of could results Kirby's a in over risks Form subsequent and uncertainties turn Form on September ended well XX, the now I filing David. will XXXX, call the the to from

David Grzebinski

our of water vessels related for business. and after without as to of charges today tax $X.XX as GAAP Earlier $X.XX treatment share earnings Thank to the remaining goodwill that includes share. would were impairment fourth of XXXX non-cash of to charges range everyone. This and we one-time in loss announced earnings adjusted you, ballast is of the morning, of per $X.XX, portion This good Eric, systems per the share impairment Osprey our per well require $X.XX $X.XX. loss a primarily coastal of impairments compares quarter. guidance

impairment relative share. $X.XX earnings Today earnings fourth we market charges items were in XX% Including signing for XXXX levels in was in minutes. marine announced I about marine and a Cenac $X.XX is in a with the were resulted and modern marine represents million identified quarters year the per few agreement age fleet the Marine these complement average In per one-time in transportation and that to ideal This Kirby's share. one-time the definitive share business to of with XXXX conditions of quarter, full in XX,XXX-barrel which activity, fleet years the the GAAP age For mid-XX% increase transportation levels for the other per tight our the cash. of an approximately fleet purchase per well-maintained an acquisition robust transportation Services net earnings towboats to items. of share also barges $XXX Cenac fleet utilization more a with Cenac's will four our discuss low to six years. average barge inland inland range. of of experienced earnings an

range digit increased conditions market to single third the market tight these grades to compared mid With high spot the in quarter.

along compared days wind in increase to quarter, the the a quarter. in the and we experienced resulting and XX% fog seasonal delays block delay Coast During third extensive Gulf

and construction teens. which availability signs Coast. limited quarter in we barges will a excellent XX,XXX-barrel showed These in quarter, operator operating large from approximately ATB, the the range operate XX Coast In fundamentals of of Throughout five closed our In along to an an the acquired new our improvement. under particularly to This conditions in renewing modest operating affreightment, CGBM petrochemical saw margins the multiyear low Kirby to another market delivery the that contract are regions, state-of-the-art pricing a XXX,XXX-barrel quarter ATB fleet, contacts addition Coast. which quarter. we the continues in of high the adverse maintained and inland given in mid-single-digit these our mid deals. of been Gulf vessels second tank of on age increases In continued and Gulf in barges first had with on business the customer especially under years. build-out average of new coastal, the from Atlantic which in spot to capacity commence on the we similar December, While effects efficiencies had petrochemical major and resulted particularly Gulf third mid-December, contracts with clean operations we the the purchase took

leased in impairment for treatment to elected We non-cash these As analysis comprehensive these water fourth we four during in ATBs ballast the related life. therefore a the older the mentioned barge fleet. barges, sufficient shorten my systems systems. one not our water a have coastal treatment that viability and that assets a impair ballast and all their completed determined financial remaining return installing opening, on charge in We we vessels we require on quarter of to investment earn incremental the could took

ballast lower these major reported prices in group's and the despite shipyard issues, between the manufacturing Permian, oil deliver chain which ongoing regulations. We during coincides hindered date, revenue supply pumping to new reductions activity quarter. range as and increases on and capacity XXXX third income expect In takeaway Vendor we oilfield ability to were overcome. their units compliance insufficient of quarter in to our and the Distribution compared the third and result for pressure the which both with operating date largely next mandatory a early water XXXX Services new in ATBs retire

a had our to increase substantial we units result, customers. delivered in a sequential new As

good as customers for some services for fleets demand was remanufacturing Additionally, and XXXX. readied

an end as to third of orders to the During the to we our manufacturing in the continue quarter, backlog increase book number new which compared of resulted quarter. a

our results us of only where XXXX. backlog In per summary commitment XXXX. quarter upper talk solid provide But our turn earnings underscores I Bill second the guidance share trending and an and moments more has From rates experience in we prices activity to should back do, slight future of continues Our to the the today experienced about and with quarter, higher. discuss our improvement segment uneconomic market. invest sense a backlog good outlook conditions. makes oilfield services favorable I'll the enables capital fourth results the Coastal Cenac with levels balance to over well perspective, and for despite had to of financial utilization in a acquisition for our sheet. is distribution equipment. range. quarter it call before our the quarter and fourth at operations In improved market I'll aging impairment avoid to investments an charge sequentially, steady And into few and Inland a uncertain end

Bill Harvey

XXXX, million. inland in revenue of Thank in with you, represents were income in third quarter increase The and to an revenues operating increase segment XX% an of XX% $XXX.X good operating million by the income slightly Compared David, this income the and operating reduction everyone. in quarter, Marine our In morning, decreased million $X to income. a XX.X%. and margin Transportation increased same operating revenues large and XXXX XXXX the coastal customer fourth quarter and delay $XX.X Compared increase several quarter, Compared the acquisition, of primarily higher fourth days than pressure barge capacity to business, additions to due last were demand we third inland to our to due the in market revenues increased to rising Higman quarter, spot fleet. increased the pricing. and discussed on vessels that shipyard XX% attributable revenues in planned maintenance In our earnings is on approximately inland the call.

Spot or marine transportation the transportation contributed During time with with XX% the quarter, XX% of fourth high of range year the to those contracts revenue market were a affreightment. inland XX% of approximately of approximately attributable revenue sequentially. contracts in charters term which and to inland contracts few renewed Long-term contracts that one unchanged a rates is increased in single-digit business Term contributed higher from mid with or quarter sequentially. longer, generally XX% marine the exceptions.

XX% such the the as result factors, seasonal for revenues revenues in business, Overall, transported, several operating in market capabilities X% unchanged regards to up utilization high vessels. activity the our to business planned and the various coastal year-on-year low the fourth in the are shipyard vessel as sequential and reductions being a significant improved quarter improvement in fourth location, size, approximately was the During With to quarter, year-over-year. was range. vessel pricing, mid-single Alaska to however, in were quarter, third large in teens. X% maintenance geographic on with margin although, general, mid the spot contingent of In rates declined inland products digits. Compared the average approximately rates

term on contract We also realized some renewals. pricing increases

XX%, the approximately maintenance percentage During coastal the quarter the in quarter, operating was XX% vessels Coastal's notable fourth our of approximately With time fourth the XXXX, for shipyard term posted having of several fleet, included was charters. were year in our tank and impact. to of earnings margin mid-single respect call negative barge the under as a which quarter projections revenue digits our changes with key the contracts in of fourth as the website. presentation is XXXX, reconciliation well a full in on

our offset of partially demand were increased improved a by and fourth due $XX.X deliveries activity operating the million $XXX Compared declined and in gas XXXX distribution $XX.X operating primarily fourth units. quarter revenues income commercial services Compared result operating XXXX higher business with and million These to million increased segment. the our rentals. and to equipment generation power or X% revenues primarily third oil at lower as of and for were reduced the quarter pumping marine. of Revenues pressure Looking in income million. income quarter, XXXX to $X.X

were operating new due gas During fourth and market, and in overhaul margin softening lower engines in for and the customers. demand parts fourth of which down for to quarter, activity XXXX revenue oil In compared segment's quarter, levels X.X%. to the operating transmissions, our was our oilfield income resulted the and the

pumping issues new in number reduced sequential also recent pumping to we units were resolved, Compared pressure the however, experienced of pressure revenue for units. as the increased for significant pumping delivered chain resulting improved income supply demand demand quarter operating remanufactured and in pressure third to customers. remanufactured our quarter. vendor units and Additionally, new Furthermore, increase during the a

our of result margin gas Coast. hurricane improved of revenues to of revenue high the and XX% rentals income of to offshore single compared the digits. Compared activity generation reductions quarter, quarter, for and approximately and as increased industrial to market and standby during on represented units. power fourth operating was seasonal In This oil diesel our the season. the service third revenue quarter, and power Thermo-King partially equipment reduced and to higher XXXX businesses offset commercial the market equipment and operating demand primarily experienced generation the distribution For business market marine had fourth and related which sales XXXX the commercial industrial an declined engines in due the by service a Gulf had year-on-year standby along in levels of rentals refrigeration of the in inland

distribution quarter, operating an fourth had and approximately the represented margin the single in For and XX% and digits. services revenue industrial high commercial businesses of the

to balance Turning sheet. the

was As XX, total of billion. debt $X.X December

Our debt-to-cap XX.X%. ratio quarter at the of the fourth was end

quarter, units capital we as of million first from cash pumping in Recent units increases XX one and new the used During flow operations to delayed well expenditures of shipped. shipments pressure capital working half XXXX are expected $XX decline fund in $XX.X as resulting inland the purchase from to barges million as towboat. are of to

billion. week Cenac I'll XXXX call guidance this $X.X turn our for acquisition. is the to of back and discuss debt As our now to balance David the

David Grzebinski

Thank you, Bill.

our into inland fleet of announcement purchase young which the consists marine more XXXX, today's XX transportation Cenac's operate Cenac's I XX on inland I'd XXXXX-barrel to on comment for deal Before the in and tank guidance and interest of conditions we barges regarding and regulatory taking financed two this discuss system fleet of acquisition that's price of approximately and acquisition like fleet. also borrowings XXXX, to million This lower contracts, close The integration The to we net expense. it to the inherited customers includes account approvals. will additional capital win reduce expenditures. improve Kirby is a Intercoastal and needed future oceangoing lower as closing will earnings. purchase normal costs, offshore the age to clear neutral barge Mississippi fleet the slightly be time will In to integrate and expect positive the $XXX be subject through service ability strategic River Waterway. Gulf the average our first to and quarter one higher Kirby's And late expect tugboats. purchase towboats the

enhanced earnings of charges. reflects release benefits year-on-year in announced The guidance earnings contracts this acquisition will realize In the Kirby than midpoint to $X.XX $X.XX compared XX% and Beyond XXXX press one-time morning, per as guidance to returns. for existing range and share. our per a anticipated more share we expire provide of our XXXX synergies, XXXX of we this our growth excluding higher

capital is also XX%. that and to the million Our $XXX year-on-year between approximately represents capital capital spending XXXX expected for and Cenac in fleet. million for This of includes be $XXX a spending some reduction

at the barge volumes the – additional to new Permian barge to which transportation increases inland we pipelines Looking XXXX segment, and additional expect inland Coast. in crude by our in bring segments remain marine startup driven throughout that demand the scheduled GDP modest will strong petrochemical capacity Gulf demand will

full balance expect market. low rise spot during to the approximately transportation digits as a result our In as year-on-year. stable XXXX will the to of high we utilization clean capacity in the year should in and inland combined expect utilization we in volumes expected primarily barrels ballast and year to rates and of to In water anticipate revenue, rates As X.X from expected to in improvements million expected improvement are demand. factors, range. Overall treatment yield to to revenues XXXX This in which to progresses. moderate market regulations. marine continue Cenac crude and acquisitions, yield in low ranging improvements increase the XX% will increase mid-XX% pricing range mid-single-digit with low contracts barge to that to single slight coming Term the of due the slight demand the revenues retirements, remain XX% will totaled in a of continue mid-XX% year-on-year are are from revenue barge XXXX the offshore, year utilization inland, contribution of In impact improvement healthy customer with the coastal the modest with Industry year-on-year. low-teens pricing should to growth. represent XX% result barge these we

We expect improving high inland to these coastal first the the with improve marine or to to positive. the improvements mid ranging mid-double-digits transportation operating on gradually occur These year are the quarter to of low and as to ranges. progresses expected margin with in low the the being breakeven should teens slightly end

Distribution creating segment our customers. For and are activity for oilfield declines and price key Services uncertainty recent volatility our

sale provide in our transmissions engines, related particularly currently background we gas our see and backlog their and to XXXX. parts. services of year-on-year current sustained of distribution expect however, diesel levels of As overhaul In first half new associated manufacturing reduced a activity oil activity business, through will result, to the for and the contrast of strength -- the

oilfield. seek more demand into as customers international and the the is Additional to for half and as fleets environmentally pumping second units economical pressure year-on-year for continue remanufactured in pressure Furthermore, projects to expected demand year. as working equipment friendly keep is well for expected to the pumping of service units increase alternatives efficient

end and lower industrial gas have expected for XXXX, primarily year. Activity XXXX. rentals. marine Overall, Distribution not which of and to to in backup to we oil commercial only nuclear guidance revenue. demand Services power business we expect in mid-single the oilfield of in sales, throughout will and increasing Services contracts the good XXXX provide is but year. systems equipment In for also several new the our digits for year. revenue online projects this markets our oil operating be demand In power range from and driven through and Distribution demand and the in later up flat generation large and pipelines year-on-year and be is come maintenance approximately our assumes service second equipment the Permian in year, markets. and improvement end XX% backup market The continued continued the represent gas and growth For stable commercial by of the revenues The as income, assumes the half for high softness expect expected to specialty we planned in

gas and sales, will equipment in operating system, to unfavorable by be being adversely opportunities higher-margin high by similar keep backup synergies mix power operating the additional XXXX including replaced margins should lower-margin While digits. service oil margins product savings impacted cost revenues single and

revenue finished Now from recent our Marine and setting acquisitions up two on more In market our operations our things improvement. have right-sized marine customers. taken Inland to this Inland fleet XXXX show strong forward. giving high new business, In into With demand, of last begun closing steps our more cost team In to strong the and made service meaningful Marine for flexibility going deliver the segments we returns we note, significant counter-cyclically continued results wrap ever, earnings to is invested additional up, signs a coastal structure maximize in XXXX. have increases reduce efficient to growth had anticipated delivering than to including and efficient the our poised and and fleet years, to of equipment. Cenac the of in larger

way market the the demand of expansion growth and XXXX. segment Our our some growth improvement the while in finally, power sheet recovers. And pumping should and presents Services, profitability strong. generation oilfield year-on-year this during term, actions and uncertainty in the provide orders, near Distribution for when paved some remanufacturing stability continued additional equipment pressure in balance In fully remains

smaller priority, the reduction our generate a significant positive increase some advantage flow in to still could create we and We will during acquisitions cash strategy our be shareholders. XXXX align take for expect might company and that with free our top and but debt of returns

prepared our concludes that operator, So, remarks.

now are ready take to We questions.

Operator

begin now question Ben session. question-and-answer first Stifel. [Operator with Nolan Instructions] the from Our will We comes

Ben Nolan

Thanks. guard. off little me Caught Great.

QX quarter this quarter, you didn't guidance. that or noticed quick, really First, one provide

approach about maybe Just a what or of that? little to that's bit a think curious, change in if

David Grzebinski

a of a Good morning, Ben. Yeah, there's change. bit

And long-term our and person people to business. term agree they've a shareholders we large want the shareholders. to numbers. with just get and the We long have quarterly guidance not because out focusing on of that, quarterly recommended we us the And canvassed

caused what change what that that's led change. to that So or us

Ben Nolan

Okay.

Sounds good.

So, now business. the real onto

say maybe how looks going things to then, accretive let's get take year good. trying be? a does Cenac A, that. it. the is So integrated this But frame after exactly to it's value where with this out appreciating But to of related would think this to and in where about accretion fully pretty you B, probably it how maybe two – acquisition think the to that do next fall something And think? replacement could to you say, cost like this year possibly do relative about

David Grzebinski

Yeah.

So with because the there us, a around is capital in we numbers especially group And there a very And exact of very about synergies great It's value. particularly fleet. major at here. to significant that I'll a buying are Cenac it's XX% But XX% equipment, value. come approximately. a very to share point, in or second well-run good really it some spending. are for – company. discount this to discount acquisition probably It's look top-notch replacement your young mariners, replacement

the discount to you year replacement it's average, still discount discounted for on age four to five it If the value. XX% approximately

about about in it's some to plus to and in kind synergies So to set numbers of helps get It takes us. neutral the call your that's while now to it. next more And to win say roll-off really it's for as – ago. terms well-maintained year. of and put on excited the And it. in equipment have while it's meaningful to contracts our that of remarks, precise even positive. some fleet were younger in come great a hard slightly a we're with It's prepared well-run But said point the accretion for we quite a our

things our so it what our cost We under the don't One is them of to know in know fleet context we're Cenac with buying run We financials. we financials. know their assets, of roughly would that scenario.

give it's win-win a but think a we be it's to meaningful XXXX. Don't for you precise fairly to number, for going So us. want

Ben Nolan

think Okay. Thanks, have I limit. but Great. question used my I’ve appreciate I up questions, I David. two other it.

David Grzebinski

Ben. Thanks,

Operator

with Wells question comes Michael Fargo. from Webber next Our

Michael Webber

Hi. Good you? guys. How morning, are

David Grzebinski

morning, Michael. Good

Michael Webber

where the imply or a you the first of kind on discount acquiring it's I Does Cenac that? discount at kind the FY a loss to And mean year? kind acquisition. rectify is just replace in discounted [ph] or just want David would've to to generating I'm to those just kind been that to business for even lack of of look views. of versus trying of the trying the idea that at time kind a back rectify I'm I of XX% accretion X? onto it a [disposing] follow two acquired up just steep

David Grzebinski

generating. into No, the team. less just those and a a loss probably the no. It's it's the takes for around get lot than year, integrating are year. not us to first while synergies but It's our neutral while. horsepower in of accretive certainly their still slightly to accretive It a synergies $X.XX, first takes in. management team for And It just

Michael Webber

I'm Yes. Higman, I this? four took right? Which quarters to and compare to half, for two trying said like just quarter versus it

David Grzebinski

Higman. to closer we're Hopefully, yes. Well,

Michael Webber

Okay.

David Grzebinski

we're a But integrate work realistically. there's of fleets you but these at a as and might great looking imagine. it fleet to It's lot

Michael Webber

Sure.

Bill Harvey

put And Michael, quarters. the it. we of close accretion should this course first three assume at we when the a against we're that thing talking so financing end do course we cost of quarter, And will of

Michael Webber

Yes.

Bill Harvey

we be impact can want after just much in about to you those it to nine conservative So we expect integration be how it just have first the If costs months. really accretive.

Michael Webber

Yes.

slide And David That's X. it's on Okay. That's fair. fair. I think then

kind annual of about to much about a figure of I versus area look QX of to in backlog XXXX? think that at does QX through activity QX those mean -- bullet of in QX XXXX. a imply terms You XXXX you level of does the focus. talk look what say right orders in kind -- It's if of kind lens way the your of Is And D&S? mentioned of kind If guess obviously that is and into visibility And how XXXX. visibility variability the in new stable improvement kind there the I D&S imply is the and last right that D&S forward the that guidance? I the reflected of big for

David Grzebinski

healthy. is The gets That's pressure very manufacturing of customers. capital with between half. orders and equipment And backlog companies well in the Obviously, there. need as on We're pumping we'd fill us balance having discipline. for We come. And very the think new busy. really very second to the they'll conversations there's actually you out good they're question. hard. there through you the orders. let's great now pressure very into quarter. clear, back Yes. this I additional hear that's a think up mean, our equipment be maintenance But running amount they're activity still And know huge We

replacement mix nice a maintenance. there's So, of needed and

the some XXXX flow. are XX% within spending saw news flow. they And where I for their to cash within flow it’s cash is numbers them spending recent XX%, cash I were closer good XX% saw spending numbers are their about within said Now, that now. of some

doing But months really replacement think we six that's on the to do But -- is what out. maintenance. think I healthy. to order been hard continue they've we it's based and they'll periodic do the equipment which levels, then predict activity

way feels it a the they're headed. lot So, healthier

Permian's mean, price the in and for hearing relatively the positive. you here. listened is But watch a XX% you and curve. from pause it's to sure some of We that drilling going gives from the seeing decline I customers, it the around read or we're the course Permian move you've strong. and -- crude Of little pumping the it I'm of of saw transcripts companies, replacement pressure statistics; declining some said still production the some of everything

way activity on that's oilfield units there. in equipment got and and international going side, international. units increase also but equipment hydration do we The do lot frac And frac seismic largely that blenders equipment. But so the manufacturing We King. non-oilfield do we've other a supply Rail things have equipment. goes just by on do good. like then and our group the there's So, besides going to out is we We nitrogen some

As King units. you know we do Rail make

clear So, second that's it the all the point, first our but little in we're half. into healthy your pretty of about less -- excited to and a pretty gets look you half, so visibility when

Michael Webber

I helpful. you. That's time Thank Okay. appreciate guys. the

David Grzebinski

Yes, Michael. thanks

Operator

Our with next from Chappell Evercore. comes question Jon

Jon Chappell

morning you. Thank David. Good

David Grzebinski

Hey, good morning, Jon.

Jon Chappell

on the Cenac one Just more acquisition.

made the and in it press this way One legacy contracts one to kind contracts be gauge you timing neutral of probably contracts comments any why how year. reasons just information their the their any Is would was is of the release of on or the existing there or of about the get the contract year anniversary? any in of market soon about as -- rollovers? happen Are mark-to-market we one much maybe they And terms, how your to year? just they the one typically below year expect we nature, way should to after also so put step-up think in potential contracts broad next are kind

David Grzebinski

year. contracts. pretty They is No, average contract multiyear some do accurate one probably have think characterization is The your I Yes. there.

in seen announcing roll going should prices been you've yes, of bulk as XX sequentially. as it's We've And spot the have So, you months been the -- just would expect to -- roughly the off them. prices up going next it.

some those older of just to that are there market. the of kind to have to going just it's reprice -- contracts So,

about guide. could rough repricing that we've increases That's You there. what been rates sequential probably would a trying much be you're look figure as of how and at in spot out use to a if saying gauge a

Jon Chappell

Okay, margin And on then guidance. second that's helpful. the inland

that full think integration at spot transaction term given were improvements had point touch from the back and about peak, in than could high the too at be they in probably still in the both talking and to the May side, or far it to there may you year-over-year be improvement pricing XXXX, is But that realistic this and was on margins you've which peak. sequential Granted that mid- Investor mentioned XXXX but is last still you a trough. which teens -- could some you Higman the the over spoken ambitious least cycle? the point in that XXs be thought to Day some at higher synergies the seems You're that peak is we're just XXXX in the or

David Grzebinski

we could in needs – a -- inland want approach a terms really probably it last online the year plants teens margins. right? cycle, ambitious. demand well, high the we orderly. to petrochemical picking year. would days on this This the of positive. don't The of longer continues GDP expect our XX% and take that We and about income supply It's is that spiky was to early the demand and over higher mid- if we're I And that mean, at be but of as in and think that up end business things XX%, guess the come little the be year, it's to same thing. the pace, I cycle may mid-teens I to like rollout than continue we and nice operating

it should up big more be not a rateable So margins. ramp and in

Jon Chappell

Okay. That's helpful. Thanks, David.

David Grzebinski

Thanks, Jon.

Operator

Jerry comes with Greg question next from BTIG. Lewis Our

Greg Jerry Lewis

guys. morning. are How you? Hey, Good

David Grzebinski

Great, Jerry. How are you?

Greg Jerry Lewis

doing great. I'm

couple the through -- So you the question of job a I I acquisitions. over I the kind guys down guess, of of have last would first cycle of taking good through years -- ask growing is did

be do growth. that be As the we Cenac as about we thinking growth? versus fleet think think much could of renewal acquisition, we absolute guess, how in maybe incremental of I that about terms should

David Grzebinski

growth, much would but I incremental total our mostly as view age of makes Well, Cenac it portfolio lower.

if done up. million marine than less statistics. you in me give Let them acquisitions, little months, In the in you some add the we space XX last just $XXX have all

look up we now So beginning of barrel the at if to Cenac, the our including XXXX XX%. the have number capacity, you XX% barges right and of is is capacity about up barge at

we're the a the kind decent about coming power So, bottom it's starting of into the been. kind to just get think the now it's of And of when ever environment. out the cycle company, the highest you of earnings return of

with the So -- and the all much the for And of company. the earnings kind capacity fleet. having context barge those the increases ever barrel age average into than numbers barge our that's incremental. barge And increasing been is power capacity it's that's just of higher of

of average our was of If years. at beginning probably XXXX you the XX.X age look about barges

Haven't XX. XX. maybe will done we myself the math XX, I a be it's below maybe here, think with but little probably Cenac, around

expanding year average So age while the our we X.X took fleet, of it. another off

earlier when I So of it's kind it's a -- win. guess I characterized Cenac, said strategic

Greg Jerry Lewis

I I And in other. of just guys. back mean crude or oil how seen crude -- in was think There increased have in then the last you've few it today as I over we fourth rail talking the system think about quarter of months? as and U.S. by about mean XXXX. the half the seen perfect the was volumes one journal the -- inland Okay, that any on crude increases of production, also you

David Grzebinski

There heavy market have. refineries It's we like may more out that Venezuela the potentially of Gulf crude. as backing are moving the crude. see with here, Yes, interesting barges Coast actually we more

in So more could have -- their don't pipeline was at But there's general this supply seen bring come to if is know then pickup But than out, number south. to and barges astronomical, the and it last moving crude. backing volumes down more It's by a Louis demand capacity, Canadian in in we not barges is see. more that area to I demand. for it then Venezuela year We'll more time we come your see the sure. for might question, of crude. St. to but answer the transfer water that

Greg Jerry Lewis

you Okay much guys. time. the Thank very for

David Grzebinski

Thanks. All right, Greg.

Operator

next Our Securities. Global Kevin Sterling comes Seaport from question with

Kevin Sterling

much great are David their the and industry. much was you the know about So we going their -- back David contract? versus to things. congrats way morning, bit consolidate Cenac, Bill. How of how and contracts continue How some good you? spot talked by job acquisition, guys business do that on little to of I But Hey, a a

David Grzebinski

little most it know number Yes precise largely the is was I very it contracted fleet. don't but contracted. had -- They spot. was of

Kevin Sterling

owner a you a of just maybe Would in their or distress given kind Had was far to tough they've of its young Since growth with sale? skis a little it say, environment the looking leveraged? front their couple of years look like past had exit bit they of business? just the gotten a fleet more little lot was too bit the in here it a

David Grzebinski

There and very latter. we more they it's very at what about well-capitalized well-run. were financials, distressed all. a change. company, well-run was were know situation we was don't have but well Well, it's well make their capitalized. from owner a distressed to the Yes, This It -- not not a ready

Kevin Sterling

little looks that four concern, think that that call for barge think here deliveries Does the that? first question then deliveries or inland mainly could like barge say probably a after is And for David. be we year should muted replacement? pause It tank increase years Okay. last bit it give of about you doubling. XXXX, we see you How possibly

David Grzebinski

is barges. for there. a me we've net Yes. let years in addition terms There mostly in context It's decline four put some of replacement. last had it the here, But

Sandor put our I think on you is great, Toth by that's delivery -- Transport River last a great year out know business. News well published the journal

think estimating like I last pretty for decade be new saying XXXX. he And lowest the while. a demand. version latest or XX that he the XXX out a which not more came than pent-up if low XXXX is it's barges maybe was It number was but much in his was that, so, and something this in in of may the more week, delivered about long barges

think replace you older pent-up some there's business, may a demand others. have a some people more If be of And equipment. been cash-strapped, to little bit about our than

not overly probably we're retirements X%. not think We overly concerned So outside we're some all. concerned. But a it's at little We of the see be order but on maybe growth, X%, the here. do fleet there'll may on

Kevin Sterling

you this he Okay. David. what Well, Thank time you, Sandor, industry. said does I with Thank you that’s a for the I great had. would your morning. echo job all

David Grzebinski

Ken. Thanks,

Operator

Atkins Jack The comes with next from Stephens. question

Jack Atkins

Eric, morning. Bill, good David,

David Grzebinski

morning, Jack. Hi. Good

Jack Atkins

on to those early started the of way me think the of timeline. some referenced a just the the number like steady-state think early? just -- barrels, retirements? number on We're after retiring to fleet of of vessels you these or just about just look go-forward side. there of then will the older So or plan get coastal I'm vessels, David, gave Is what let retirement you kind trying here the us you about that

David Grzebinski

five retired. basically retiring retired the XXXX out now. was being again, their vessels them. say, coming There's barges. as approximately, through out one It year four per all one Yes. you actually We been retired on Then way One shipyard. the will come just has other And they come XXXX. just regulatory of leased in just the starting essentially for We'll might plan it.

Jack Atkins

Okay.

David Grzebinski

and So, come yes, earnings. I immediate can not their off -- out an vessels it's impact work They'll the contracts. not five

Jack Atkins

Okay, lot okay. It a of sense. makes

On of Bill, things you give in you delivery and deferrals, of be update have side, an stands. sort for where us those guys that progress terms some that because still vendor equipment to stand could services made get feel equipment the It the on first of issues? maybe distribution like sounds resolved. getting Just trying the quarter? a of vendor needs issues you delivered have where lot in to But do bottleneck a

Bill Harvey

towards equipment end and fourth But some and results October, towards, always of there's the lot some September the that for the the was as over, excuse quarter. delays. there's always of was the quarter. -- or in big mentioned, Well, we you A me, saw was bottleneck in that

the AR. bigger know settling the and to we're David the -- inventory just end going got inventory that doing that And basically --- just through effect, in was manufacturing. now as backlog So steady and -- what by -- so And earlier through down mentioned, the of quarter. is we more had we is,

Jack Atkins

squeeze okay. last hear. here. good to in it one, Okay, That's One if I could

revenue XXXX, and small acquired Sort of revenue to of including, of of, months to think including of think, terms the in including XXXX? I Is some inland assumption is for Cenac. in guidance call terms what the up, it, a your XX%, Cenac couple about in XX% there for Just way acquisitions. of Higman a maybe that other

quite the months -- for you guys get acquisitions that revenue acquired a few are XX Just because assuming I for trying last the over feel a that to been XXXX. know there's

David Grzebinski

Yes. off is our already have don't head I of We are problem the Part the it number of Targa have prepared. and here. don't the top fully Higman integrated.

Jack Atkins

Right. Yes.

David Grzebinski

much is pretty fully CBGM integrated.

want $XX revenue million to in think you Cenac million, $XXX about but... to I think incremental it, if be could

Jack Atkins

On basis? a year full

David Grzebinski

Yes ballpark shoot a that's full Yes It in. basis. a a to rough year you gives number. on

Jack Atkins

much. that’s Thanks helpful, the time. again very Okay, David. for Thanks

David Grzebinski

All right, thanks Jack.

Operator

Jefferies. Randy with Our Giveans from next question comes

Randy Giveans

morning. Hey guys, good

orders new the at January specifically pretty month manufacturing looking pressure is a pumping improving historically. orders equipment I'm strong just So backlog, your for assuming

So or how last longer? today would that three equipment have delivered? you then call that Is those And be of time over seen for four months, six orders when likely lead it let's weeks? three orders months, the a

Bill Harvey

Yes.

other in to January tends any not our I think it different month. it's at business least -- be much is from not --

big seeing This anything. So just steady. we're any surge not is or

to the pretty three delivery six a good the is Towards we is build. -- just continue end probably of to months yes. And year, estimate,

This ongoing. backlog. not that three in a barrel, mix Now was it was some we delivered about talk is months some ongoing of of as It's of being and When lumpy the the first of year the the big well. things.

Randy Giveans

it. Got

XXXX, you just backlog? guidance of So much this looking back If in we terms XXXX, for it's like not the year wouldn't at January anomaly. either have those of half an XXXX, years is were

Bill Harvey

That's any time. at point. months great past Actually point -- six that's would a in next we not see the much

Randy Giveans

backup revenue increases how of And then kind business? are guess of in what just in And systems, you that's that. business much margins annual growth. kind on power of good, generation the clarify area Okay, XXXX an backup in that mentioned expect to you power that versus wanted do I XXXX?

Bill Harvey

than in kind time. double business oilfield of are And to mid-single-digit the into kind manufacturing high thinner than high then tends in digits sometimes they The so that digit the to mid a get at manufacturing be we margins are margins. – -- business, single of

into expect of in that grow. we want And don't do you I XX/X I down generation, to the of and But can't me. backup in power It's expecting said I'm up. because volume little mix. our have but market mix sorry -- that a don't this a think it more mix of it give -- be a everybody in prepared we're you, should for I segments that remarks and We you power bit So year. were about generation. kind we revenue have now the generation impact seems to detail. more that power might that a number from data world front margins if

some it our power to We rental and So want that of willing they fleet to we're -- storm business season backup for continues that that that hoping our in on build. it. during see around pay -- they're particularly customers standby

-- like it and market. but we growing in I it. I revenue, for wouldn't a us it's good business can't So characterize terms of its

Randy Giveans

breakeven back a then And in that second that level? or half XQ, money the makes flip positive the of of quarter coastal question quarter? quick Is Okay. Any kind a of maybe XXXX XQ chance a to market. more to on XX-second first

Bill Harvey

know the unit We of that of a shipyards seven-year got contract quarter a question. the Good I new we a end first there's Yes. not going little probably bit starts, there. And headwind that then the know first We've carryover into think first quarter; the so the quarter. it's to. towards

-- -- So of it'll quarter say won't first money ramp remainder would in up should and -- take while. through a the and will lose we it's the we I it the improve year. through likely

Randy Giveans

That’s for Thank Perfect. you. it me.

David Grzebinski

Randy. Thanks,

Operator

Beard with & Coker David Palmer. from comes question next Our

David Beard

Good morning, gentlemen.

David Grzebinski

Good David. morning,

Bill Harvey

Good morning, David.

David Beard

through that But does other convert picture that of drydock? my on guys lot rise? could boats And in capacity you people the your may a make lives a bigger theory. hat ships answered. that case on little the these game them taking Just decision question betting been if you actually that's out, later -- the tip have to questions With if relative to or market stronger prices coast not a keep will gets put

David Grzebinski

market's is way XX lot discipline math for to years I -- working. My put it's would a -- to but math -- barges they've Yeah. capital good the work. improving, really old. XX Look got are Game The take doesn't and it. a see the to at start can't theory looking they're it that

and discipline. obvious That and us very actually years. shipyards those extend kind say another significantly is for the math say. to for discipline we of five the the differing, try their to XXXX capital get just and ballast and treatment life your think. shipyard that's we in rigid on if capital and on question water core the be on the depends reasons our we We spend add just the it could money said way to So Hard

that based about, at optionality now there. some So think look option does have think becomes the we is market But we if that'll on we don't robust. do recover the happen. and But more there or math that

Bill Harvey

our scenarios, at detail and these realistic pricing amortization scenario at the -- and is action now. looking to we In mark this -- in different needed projections it the and right in at point -- we from judgment David. mark at the the economics -- down that looking Yeah, or -- take our to -- take

probability. optionality, there's it's So a but high not

David Beard

term is rolling then mix switching point it for points longer to impact build-out or the data of that's product product to petrochemical a quite about contracts is you either how -- or to And bigger bit market, this still starting been volume talking waiting or the good. while. moved early out? Good, the given inland, a too just can relative we've again picture Are the because to there any

David Grzebinski

studies any shows at mean, other some comes -- got I some that the those volumes IR matter that at. methanol any fact our are third-party there chart of the I of And know a volumes like I from a can But that free methanol points of increasing. of products in things are I But presentation propylene, of that that and some volumes things the don't there. look there. look up back Yeah, volumes. in databases like you He's other can But growing. that shows don't and we've butadiene, some of just source. you know show Eric increasing. out public put seen studies data

sometimes might Toth you don't that. I locks, volume here That's probably through tip of have my on fingers that -- at -- could look the But that David. source. a -- of quotes be You Sandor locks could any

David Beard

you. no, game offshore that's as as on that -- Appreciate No, the color well fair. Thank the and theory.

David Grzebinski

David. Thanks,

Operator

next question Securities. Baldwin Our comes with Anthony from Bill

Bill Baldwin

morning. and David, good Hi, Eric. Bill

David Grzebinski

Thanks.

Bill Baldwin

Congratulations on another fine acquisition.

David Grzebinski

you. Thank

- Bill Harvey

thanks. Yes,

starts work real Now Bill. know you the as

Bill Baldwin

but know experience of at that. you've a got I lot

terms power job a downturn company. this guys have you in done earning of your heck the of So, a enhancing of during

David Grzebinski

you. Yes. Well thank

Bill Baldwin

their in I as segment initiatives type you the the on those to service shed Any and might had believe can side, On of you equipment. initiatives mentioned maintenance new some you a that be business. what color D&S stated business? also

David Grzebinski

Yes.

-- in of our in have XXXX, employees we've It's Permian some roofline XXX and We Over last we've through units for sitting most up. the well facility the probably now. the particular available customers. invested that on premise ramped in

them that added may techs other and budget waiting maintenance facility Rainier throughout and business. the expended through. have his be our team expanded trickling that of we've -- D&S and But Some for Joe some of

as not That's we've -- people. the more a the capital So to system there it's and -- a the across it's the with is maintenance ways. know added of It's you expended techs but We've it Bill. lot service deal basically summary that opportunities.

Bill Baldwin

that out folks location work Are is? that go equipment to those techs primarily they're Are deployed... their where techs these sites and the

David Grzebinski

both. it's both, It's

Bill Baldwin

Both, have that... Day, still after okay. indicated you target Analyst over XX% & Is I Back the years? much been operating Stewart pretty in think based the indicated Stevenson. margins somewhere the believe Is I realized the it forecast thinking or during were several to was D&S integration of and that the XX% area on synergies next

David Grzebinski

Oracle. in some his that we over Joe And next power have the But I ones The still say. one as got all already. it leveraging a you get after. And is in going inventory that have much, everybody have two it the et synergies takes we it and range. the those locations. will you harder the Yes, up becomes investment there's I'll tougher get. of G&A like about cost in that going there we're organization across give in get in generation. Oracle cost just and team next We're out we But it -- and synergies cetera things identified half But there. sharing takes they're over time once just year gotten that's takes running. to much be across know to example. costs going they're some and year of to easier. about the but like a ones years. But the easy one D&S on Oracle probably rolling we're roll the after. is locations, We we had it to would year roll and it Part talked ERP high This mix example some unfortunately of several that But any out sometimes the single-digit all years in

Bill Baldwin

D&S much roughly a quick business is here, last percent as just And one of Just… Okay. one revenues? how international, your of or

David Grzebinski

XX%. XX% which orders in But lumpier say. its Yeah, It's lumpy activity maybe order, international is can decent if sized you more our some I but seeing a get will. There's right? – of are that helps It -- you revenue our we distribution would nice. kind with

Bill Baldwin

even Schlumberger for points and and international related the inflection a drilling to that completion D&S? oil have gas both activity Right. Halliburton I overseas bit. been little the activity your they’re on and seeing Is indicated primarily an business know

David Grzebinski

gas. exclusively is Yeah primarily almost and oil

Bill Baldwin

Okay. Thank you much. very

David Grzebinski

Thanks, Bill.

Eric Holcomb

one got we’ve time right. for All Kevin, more.

Operator

Our comes question last from with Simmons Daniel Energy. John

John Daniel

for Thanks in. me David. putting Hey,

frac noted You activity business. for higher expected reman the

business. if I you the makes I'm that think the So congratulation fabricator there, mistaken busiest not in

at full characterize this the they customers would you And they blown rebuilds? – to projects it a shave and or reman how approach Are the curious, embarking full are I'm point? a haircut the then blown call Now extent on

David Grzebinski

Yes.

John Daniel

I'll Okay. and I'll do my let to then follow-up. answer that you

David Grzebinski

to some very we to it do Yeah. shave We just kind it's back spending is get that R&M spending could know No, want a description a down. mix. sorry. need We've capital out. fix it's it We and this. got our you a But and keep more. our haircut down Yeah of good

is mix. stuff customer know mix a the the some very So but mean, extremes. so do there does and haircut that base full I then it broad what, probably well two John, shaving reman. and who there's some those of just a It's will between you is know you

John Daniel

kind or question and I obviously then when And just higher about Are we Are big of axle someone you – for tier days? the four can to rebuilds adding engines now ins. the these what is but are and units guys bringing And the again horsepower little engine, apologize bit technical the the out people of a you in virtues Okay. here, describe are today there. bringing on upgrading higher newer the third hearing in of pumps keep we power putting trailers entailing the horsepower? the

David Grzebinski

but have There horsepower newer of up is – we that are some the of would lot. horsepower. to not higher tell you, a orders I some our X,XXX

there's some, higher through very the remans little, the well horsepower. but some So, upgrading

John Daniel

I appreciate. Thank you.

David Grzebinski

Thank you.

Eric Holcomb

and everyone call for All Kirby Well thank your interest in for participating right. you our in today.

can If great or questions at me XXX-XXX-XXXX. you comments have have and you directly any a day. reach Thanks

Operator

attending today's conference concluded. Thank presentation. for now has This you

may You now disconnect.