KEX Kirby

Eric Holcomb Vice President of Investor Relations
David Grzebinski President and Chief Executive Officer
Bill Harvey Executive Vice President of Finance and Chief Financial Officer
Jonathan Chappell Evercore
Ben Nolan Stifel
Mike Webber Wells Fargo
Ken Hoexter Bank of America Merrill Lynch
Randy Giveans Jefferies
Jack Atkins Stephens
Justin Bergner G. Research
Call transcript
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Good morning, and welcome to the Kirby Corporation 2019 First Quarter 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. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Mr. President Relations. Vice Kirby's Holcomb, of Investor Eric Please go ahead.

Eric Holcomb

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

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

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

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

David Grzebinski

Earlier everyone. and adjusted This earnings revenue of we $X.XX revenue $XXX million Thank compares quarter of and good per to million of and you, Eric, per morning, announced quarter share. $XXX first today, of earnings XXXX share. first $X.XX

profitability, share significant adjusted per marine year-on-year, generally improved XX%, challenges. and revenues Although increase flat navigational weather a despite earnings in led by were transportation revenue and by significant

our XXXX In by were quarter oil field, our group, of result as the and transit by weather-related River Mississippi the significantly quarter, was contracts the Marine fog affreightment. slowed our and Throughout levels record results periods were the similar performance in financial Although ice Transportation near-record-high Coast, operations income declined distribution services days. the impacted prolonged and impacted issues the spending the River. negatively a revenue segment's delay Gulf heavily levels. operating on to first along Illinois These times of of the heavy water lower challenged on on

closure XX% compared which barge lock approximately strong to XX% Additionally, into climbing a more with negatively our estimate were of significantly. XX delay mid-to-upper days storage ongoing impact the the increased can fourth added standpoint, as Marine customer of $X.XX the fleet, to demand XX offshore Ultimately, seen The result of XXs further infrastructure we and tugboats. late earnings quarter. facility Houston first in of barges, In quarter. in chemical activity the year-on-year projects count in purchase transportation impacted more first barge the a mid-March, utilization the fleet quarter towboats was Cenac inland tank despite young fire closed in the to up our From we in by the quarter Channel Overall, XXXX being per quarter. than delay included March share and a quarter. two and rates delays the compared the down the ton-miles, be the which slightly than days of Ship

XX% levels integrate continued half second market range. have expect of coastal, begin with I utilization this earnings In that We into quickly to to increasing in slowly the contribute moved acquisition fleet, fundamentals to the this barge our improve year. will and to low

the limited however, results fourth term in resulted vessels, customer on of availability large During increases quarter, adversely on impacted new mid-single-digit spot deals. which we Similar large-capacity saw demand by to our the renewals pricing and and several were quarter, shipyard contract solid maintenance vessels.

The and and the revenue Services, In improvement both teams favorable our improvement and oil income pumping international sales and In was a pressure uncertainty a transmissions to delivering and commercial power and oil new sequential by from parts as generation extensive due Distribution hindered new primarily to units were and in quarter. engines, market of in and in to in manufacturing we throughout by oilfield Coast U.S. came in despite Gulf reduction executed customers. increase operating spending. well, however, customer customers gas sales with equipment field the on operations were experienced sequential This in business. revenue in partially our the results distribution Additionally, fog sequential in part customers. our increase offset, industrial, sizable reductions

for challenged higher well resulting navigational increased in were in of as across activity much levels of coastal. timing and marine parts. delays our sales of in marine the summary, of Additionally, experienced the by shipyard sector, earnings weather we quarter, as and In maintenance volumes engines transportation

call we well and discuss and our commercial Harvey over for results executed few from of turn the first had sheet. our current our portfolio. in Distribution I'll the the In talk strengthened industrial to and manufacturing Bill before I a I'll and and output balance strong do, but Services, to quarter remainder However, about outlook segment moments, our XXXX, –

Bill Harvey

an an of this you, higher with Thank was first same quarter's revenue company's quarter and In margin represents in the first $XX segment, David, operating than income XXXX, quarter the increase more were of fourth an Transportation Compared million operating X% income, revenues income In adjusted everyone. quarter the Marine onetime good excluded and and or X.X%. the several $XXX.X income our than which of operating operating operating million morning, to doubled. XXXX, items. in $X.X million million $XX.X

decreased the and In contribution the XXXX, year-on-year were XX% offset, XXXX inland the in and acquisitions the well as compared as first first by or of the items the an increased to quarter. due by operating These to revenues quarter, revenues to income higher pricing. X%. Compared fourth impact XXXX partially XXXX quarter expenses income onetime $XX.X million Excluding delay from business, were severance however, fourth increase approximately approximately million. inland Compared days in XX% declined quarter, operating declined $X.X the to rose in by XX%. X% revenues

contributed of was Long-term Term contracts mid-XXs. is revenue mid-single of during were revenue, and the year-on-year. XX% XX% inland transportation average. which on year to market approximately with quarter, marine business and marine increased contracts a time that the contracts and transportation XX% attributable mid-to-high slightly rates were than the of the digits approximately contributed the barge During up range of or charters XX% higher first term the XX% contracts, single-digit average those in from renewed from in inland affreightment. longer, quarter the utilization one or more with sequentially prior on higher average the quarter, Spot rate in

declined revenues business quarter, to impacted In low days operating driven the the first the contracts approximately pricing. winter year-over-year, poor revenues by fourth was days as quarter, the business, mid-teens a first affreightment. along Compared increased weather shipyard X% partially weather of was well result the conditions effect heavily by the and increased improved the increased During This margin coastal as shipyard in of to high Gulf X% as by delay and of Coast. inland offset our declined quarter the approximately delays. in was maintenance on

average rates and regard the low improvements to market on geographic Our rates vessel barge vessel as mid-single digits. general, the XX% into capabilities being products factors are various improved in to range. although in year-on-year, pricing, XX% XX% spot location, transported, improved such utilization with contingent size, With slightly the sequential

term digits. realize renewals We contract in the to pricing on mid-single also increases continue

was fleet, the barrels in revenues by weather of the and the to increased respect contracts time total quarter, shipyard quarter, negative inland was tank impacted Coastal's the mid-single margin the sectors of in million with digits With a During low percentage days Cenac. the XX first adversely we in in quarter tank was quarter. acquired first approximately our which term coastal charters. from X.X adverse XX% XX%, operating of and barge XX,XXX-barrel under during approximately the capacity the to were barges

capacity the barges of quarter. XX.X retired of On the marine We with of expect of net inland barrels coastal one had our the barge the also with X,XXX the capacity. we to representing with XX.X capacity first XXX,XXX we charter market, five barge returned of XXXX representing total end total combined barges, retired approximately barrels million barrels. basis, capacity. a of currently one million In fleet during a barrels X,XXX and At fleet a from end inland XX,XXX quarter, barges, a

one end XXXX to of During intend charter small X.X we barges capacity. with basis, expect remainder the return barge. million to additional XX with of On XXXX, currently coastal a we net barrels

and of million. Compared operating partially activity and our Looking income increased in $XXX.X XXXX in to revenues the Distribution revenues This first the a commercial Services due and declined increased quarter primarily $XX.X business. gas result quarter, to at in equipment, revenues our quarter, lower primarily sector income million million power million, $XX.X first income offset revenues marine oil the or higher an XXXX and and was marine demand with were by increased to of segment, higher XXXX oilfield operating improved demand generation. of deliveries in Compared as XX% generation. fourth $X.X power the for

and pressure to margin and operating quarter, commercial income in diesel During pressure industrial to and were and revenue In as remanufacturing. In In but oil and deliveries service revenue for a Services by Coast the the international Florida. and In lower with well fourth new engines in demand market, primarily the year-on-year activity this along overhaul which in the oilfield due quarters, the for XX%. of manufacturing, Gulf the of mitigated represented demand the engines, operating and operating income demand improved fourth the experienced was we first and and new operating XX% pumping due softening XXXX parts. resulted as units, income Distribution increased first pressure quarter, first the new approximately improved market, increased, oilfield, of to transmissions, oil segment's to compared to XXXX equipment. unit market in and was our quarter, parts and marine the levels compared first and gas gas down pumping businesses and however, revenue reduced inland XXXX for quarter Compared services units revenue. our increased pumping

and first we high an our the to quarter, In single mid of margin digits. commercial represented in XX% operating Additionally, services had and had revenue the income approximately in operating power business. distribution and generation the businesses revenue industrial increased and

sheet. to Turning the balance

compared related to XX.X%. increase the end and As of $X.XX the the of debt-to-cap XX, of acquisition year Cenac. March debt to $XXX was total million billion was The our

the previously amended agreement restated and we credit As quarter. announced, our during

credit this due the of revolving Kirby's company and for agreement, the new added significantly. we we loan $XXX of without repayment XXXX, this term $XXX of March allows term in have part As XXXX, which million With amendment, facility to early million March penalty. liquidity extended also enhanced we

on the remain to in of the prioritize Our financial use we our debt and flow for policies repayment intend XXXX. unchanged short term, cash of the of remainder the

debt XXXX. the turn As I'll was this back billion. to David week, remainder of balance over outlook our discuss of $X.XX to now for the our call

David Grzebinski

Thank Bill. $XXX per reaffirmed press capital this a of morning, XXXX we spending our share reaffirmed our to $XXX earnings million In $X.XX guidance as as plan well to release of share our you, $X.XX million.

Transportation, year. pipelines the bringing additional increases our segments, at demand, start balance remain Looking this the activity believe scheduled capacity GDP, new later for petrochemical to of Marine volumes with in strong the to modest Coast strong crude up additional Gulf and year, customer we should in Permian

continue inland result remain of range. into our Channel on in market our quarter, second rates high marine In Houston be will conditions the operations and the barge expect with River the Ship near-term utilization anticipate June. mid-XX% in a we Mississippi water the the will factors, well challenged that by delays As we to these tight

in to high in the weather result improvements modest water in should income. treatment we improvement of to as respect However, coastal With revenue In with margins meaningful inherited we begins we increased income should half expect the the range and to pricing the to high-single operating to low-double-digit contribution a Cenac, complete our second roll expect off. across market, in and mid- to contract integration system pricing operating returning the the to mid-XXs year shipyard yield improved the weather utilization the percent teens. breakeven in duration additional the to be second expect the sequential with and margins ballast second revenue will days, the regulations. operating for possible reduced range for and expected volumes activity improvements around that due of industry and to in In barge quarter. quarter, retirements Pacific we improved seasonal the improvements low in Operating are sequential XXXX, in

and in segment, and some recovered further the E&Ps the For the our end were of Distribution first remains improvements. has modestly oilfield favorable, outlook XXXX, pointed companies unclear. quarter activity although latter have results Services of for expectations Since and part recently the XXXX the of to service

could the forecasting their consensus the remained industry on believe if many For that Regardless, half some our remain participant we oil steadfast a returns varies, above with have on up of to second for prices barrel. and capital, activity which among industry $XX focus is the year, in commitment industry. healthy their ramp

all the experienced orders decline pumping that of does due new expect a not until in and Kirby Since in quarter, manufacturing income to operating manufacturing part have the what that quarter. mean and incur So currently businesses? pressure business shipments distribution end revenues we for that the second equipment. may year, in some services We slowing will for in third the our

flat distribution, built equipment run In in service improves. in for with industry we continues, and we until outlook our growth domestic operating decline the customers and opportunities industrial second oilfield the continued will primarily driven and and by we for are is long-term pipelines revenue transmissions, backup for continue activity parts demand being of equipment of the income, be new that coming and increased for systems year. Activity rentals. Permian is new in expect stable equipment half online for more customers mix for slightly expected meaningfully for international hard, slightly driving markets, see However, power quarter in have are XXXX. will contracts sales, engines, throughout In very all be projects, commercial commercial large the positive This which and activity oilfield and to from the service is be mid we expect demand also business. to decline various second Nonetheless, offset to margins do expect potential revenues disciplined. getting In not equipment Operating specialty digits will the power the total, with only reductions in single is increased in into manufacturing that the marine the year. maintenance to first our we compared to business reduction. provide revenues the XXXX, revenue but to by and of duration down expected to new Distribution quarter high mid–- generation. being with unfavorable additional In Services,

for transmission for orders pumping new and pressure results the new XXXX. certain. full materialize, If remanufactured equipment will guidance range, inland solid full and we're from the on momentum second engines, For back we as remain year, parts the second barge of does activities not the our all dependent optimistic, XXXX. contribution high enhanced end utilization and indications a half. recovery be assumes levels in levels the but are and softness more be well oil regard Distribution pricing oilfield market will continued with and year, to In assumes in increased The the XXXX that muted a our with the to gas off Services guidance Cenac Overall, full in of as limited year half and originally lower end than for demand – stronger conclusion, half overall, strong start contemplated. in

and results. expectations transportation result of franchise and diversity strength temporary a as delays, weather distribution helped services navigational underperformed the and our marine the of quarter's Although

market to forward, have in and As Kirby capture despite oilfield, Cenac an throughout excited for closing inland in of our the we the series lies inland excellent uncertainty benefits of position we're In recovery. about look ongoing ahead firmly downturn of what strategic marine, Kirby. the the recent placed acquisitions near-term the

We to have are our in the largest, tight and youngest and fleet our history, this in better customers serve most-efficient very market. we able

continue barge more the pricing on of years to efficient with the customer additional cost invested market proactive and In returns show expect – two continued coastal's demand good increases and in with signs We've structure, strong this improve industry to and marine regulations. we equipment. meaningful to continues in revenue due beyond. continued improvement, steps poised our current rightsized new and inland deliver coastal, taken and in into XXXX retirements and momentum, strong earnings fleet and to is to last new horizon maximize countercyclically to the demand We

the new contribution this with market service Our up diversity will some is second for industrial to revenues major and to year some of term, in oilfield into of installations year-on-year year. approximately for the Demand Distribution improvement XXXX. commercial the the near the segment, and actions In Services, backup profitability of make our portfolio uncertainty presents XXXX we stability earnings the paved power and half the positive generation while systems brings estimated and XX% benefit in potential and this way and for power contracts. growing, from the

in in to significant with see we as production the expected the recover oilfield improvement basins. XXXX, Permian a Beyond increased opportunity and other is

Stewart business, will this our positioned remained to the with United be Holdings which combined investment our nicely that coming rewarded shareholders And capture is strong. growth. years. I industry-leading Stevenson Our an believe & has lastly, sheet in in created firmly well And balance

inland to financial strong cash balances. use We have the acquisitions, ensure term improve have contribution following to to generate free further significant credit a and loan we even liquidity adding reduce recent recently extending during we by a and we from of acted ample marine these flow expect facility series our With our prioritize our cash debt that proactively XXXX, to of market and acquisitions. will flexibility flow the our

two could Operator, returns shareholders. and positive take we advantage our for However, remarks. strategy it can or aligns smaller concludes our company if our of a that acquisition and create our with

to take ready questions. now are We


The question Chappell begin [Operator now from the comes Jonathan will Instructions] We first session. question-and-answer Evercore. with

Jonathan Chappell

morning, guys. Thank you. Good

David Grzebinski

Good morning, Jon.

Bill Harvey

morning. Good

Jonathan Chappell

about started a the elaborate then XQ, remedying issue of strictly itself? bit, is quarter, similar mid-XX% issues inland on really to question kind first you well, already improvements, costs? a in the ton-miles pricing or saw think the is exceptional it and the quarter in as XX second in relates robust the it first the kind just utilization, the and weather late quarter, XQ weather the what could David, we as second of function carryover in And first and you to as of is –

David Grzebinski

some little still water. and are it's still river some system, costs, just some We're of is still the the slower. question under the Houston better have down there's bridges. transiting Coast, flowing I'll bridges is here. itself. we big this April But the are Ship only challenges, that a additional weather the have better, morning with wind first. through May fog on last high and system, in we – part the daylight on take but Channel. St. The that better. we It particularly Yes. there the water think hours have into getting was is still remedying challenges Louis of on Gulf already every bridge of I discussing this high particularly go Jon, the to you south river Many for were but

down. you that So slows

tows smaller so the running river's operate because You fast.

extra you costs so And the damaging You that horsepower the bridges put barges get and all bridge. bridge the to delays. at hitting extra – adds through or through to difficult have help that transit without are the that certain an that towboat

the For unless contracts moving our you and charterers, portfolio, have as on affreightment. unlike delivering don't you're those of you paid know, barrels. time fair amount And get a we of

quarter off. barrel, we've customer. quarter – pays by worst it weather we the hauls getting can of first better. for same efficient and the one you by impacts So token, but bad – in the that's weathers. contracts But this and is what But challenges, get was get delivered the in move quicker seen. when back the we're the of really when barrel Still affreightment some They summer those you when paid

the also, as large The I us. decade seen a a else bad and certainly you think of and Houston we've as then the our everything Channel fog part as is in Ship river operation. know, impacted system was

the We lot around of have a concentration Houston and in area.

storage for equipment some facility Ship catching and shut the fire, our impacted Channel that time the With of some directly. down Houston quite

the the There around that. in much as but and well. quarter factor Ship up. restrictions pretty behind they're also in a had Channel, That's are that Houston some clearing still So

Jonathan Chappell


a follow-up If the it's decade, my yet guidance to to kind in year, full you from the of something optimistic, at worst $X.XX $X.XX range let's is and second the the question. means impact of quarters maybe I then to because the you D&S. this impact, leads about inland That still think, that weather So the assume in in carryover mentioned year. likely you're least for maintain more the uncertainty second half relates would the even as of most it $X.XX

mid-to-high about we to year can given teens in hit first realistic it the assume for into XXXX? year outlook for in exit you So inland you quarter, as full run the be the that would the and But commentary. maybe this margin impact XX% a rate talked the

David Grzebinski

possible certainly Yes. the It's in there we could quarter. get third

best. get that's impacted we bit the you But think now. of year. in as the right You margins weather, XX% you came know board. in weather dip when headed may right we're quarter. say the to just the direction. third start on get usually little and Cenac fourth know, to It's is We hard quarter, fourth an got One, by momentum's margin don't to the that we've the in see bump going the I this average a But to the quarter. them

is integration. would that there lower. back They we also roll needs and is have As some the were have over, cost there work to do it a with run to know, contract lot when associated portfolio set you rates integration a

pretty the demand's we've good. got bit, utilization does Clearly, to work there, up but some pretty So the get is right but tighten momentum do now weather to a high.

okay. I doing it's helps but that you those – a U.S. well. volumes as plants lot there. and know, of starting as we're new doing wouldn't well. There is petrochemical some economy robust, to see say The on, incremental Our is coming volumes are customers

where year. could headed, before a in still put XX% pleased it's the we'd to certainly – like the pretty a get going. in we but we margins pleased third we're with XX% it's that the have and we in ways whole to we're get when for maybe back close So together, But the high all direction with that quarter, to average we're teens,

Jonathan Chappell

very Okay. Understood. Thanks David. much,

David Grzebinski

Jon. right. All Thanks,


question next with Nolan from Stifel. Ben Your comes

Ben Nolan

Yes, thanks.

– I market. Jon's capacity towboat David, I So little from know was a in we of already causing that, heard We've real that sort things. in on, of and the understand of what kind tight is questions with tightness weather-related a following your own was that if I flowing your from you that but slot guys power where majority impact you with curious respect? how there power, some of guys relative competitors is inflationary in through associated that be – in to and might might

David Grzebinski

Yes. on Good the tows. tight, like more the question. X,XXX cargo somewhat is of number units. there side horsepower Horsepower is larger but where There horsepower some so business That's tight. larger of the those bigger horsepower pretty dry units type some is for limited been

you inland know, have own for and side. operation we We're under operate we've set the charter towboats about our with XXX As and pretty well fleet, – on – horsepower.

both good One then got and more shape. new about unit operate got of they've is It's of board. – in to Cenac the Cenac great both Higman barges got per good operated relatively It's in unit tow environment. horsepower. operator. boat cruise young average And a tow We're things an able we and kind Higman on more

some with benefit that our we're of So horsepower. getting

have shape towboats XX we good ratably campaign And on pretty in inland through about delivering from those a and year. embarked also we're here the this standpoint. horsepower So build further, been for

few a took this I we more couple we and already think this year. a deliveries expect of year,

to seeing would question, as pressure, – is inflation, But – for little you think on little in of economy you probably Labor about a side. the I rates bit, your cargo labor. expect causing bit a is we're we're shape. labor in U.S. the would bigger dry – impact a here say run an had your little the good good being other is that are as if while. it inflationary of and definitely a pretty the So challenged part a

Ben Nolan

the down your and second for of midpoint On the know sort the switch I of the low activity question what will of and and out you be flat on you're case. the just the to how side then you hard range brown that Okay. and for run midpoint? all those with and of equipments using from bit half the really a white longer-term sand pairing the little that, versus or guidance D&S year being perspective, given think a oilfield normal in things, – Northern order the to things? of high of helpful. That's that for slowdown, or cycle gears assuming the whether in equipment people of Was And new curious these then even to pumping pressure that is what have the kind over my – a life guidance point, normal they is or at kind laid And – quickly. replace effectively business to or fracking back want to there get levels if And kind what not?

David Grzebinski

that Yes. the equipment operating hard. It's they're very very clear

have hard. X.X they that getting in refurbished But you be – about do number, three to of there the horsepower kind can a call refurbishment. equipment's We years overhaul That's before will their XXXX. believe on in major said they is to get clearly, Halliburton their million or XXXX, think that even you think need very estimate not ours. I during worked

for pretty all with that get and quite just maintenance. So for industry. is there difficult. refurbishment think year couple when you healthy number that's to that's you're then us good to good this normalized discipline capital news between seeing, that said, the a very, very general and building a is and We that balance new, But

first backlog we half. said, we've for the As had

to going some see we're to activity. Second half, need

you start to The low how that assumed of it look have question so everything well. we that's precise that the Hard high. up than more And our the and to because midpoint back does decline is we some to then, go if lining is guidance, second why pretty excited but be or we're from come range half. low pretty at decline the in does

You've discipline, got term. which capital long good is

You've coming on. out. got pipelines just is doing Permian Crude the then got being pricing you've equipments okay. worn And

some see half, in So in hopefully pickup some by to should should certainly, that more the all activity. activity but we second lead XXXX,

Now within other things just our pumping. pressure we business, manufacturing do than

You do is things also had Rail of Part quarter. King, movers. ship a manufacturing. good in railcar was things We like units, and do which internationally, saw oilfield that pretty we equipment seismic we like

there So conversations active just happening level are and about schedules delivery to equipment lot right of and None is inbounds of whole the pricing And lot that whatnot. inquiry given certainly I some of now. inbound would lot a right of translated also, a that's orders orders. say a but yet, now really quite

Ben Nolan

whole appreciate nice a David, lot was I it, That quarter. Alright. there. than more betting on I was


The comes next Wells from with question Fargo. Mike Webber

Mike Webber

morning, Hey, guys. How are good you?

David Grzebinski

Well, Mike, are you? how

Mike Webber

in I'm are reprice how maybe exactly of how to and those has figure have levels? David, pricing, Good. on do balance questions I the of repricing so you you for much – kind the your start what equipment? closed growing kind book X.X you that much or XX of that of – leverage you much about yet have – that terms But then deals are months. from have Targa, outside some And to wanted through think how of when the I also the you terms market of next mentioned, but you you'll one that much barges kind quarter, trying of actually, off the both that year inland. you – this with Cenac of on Higman guess, rolling to year, legacy kind in out closed, of of of business we legacy how Cenac, ago, actually do primarily,

David Grzebinski

mid-February contracts all a of Higman's last Most closed We in were year. their almost of year. repriced. Yes. them

So much out. they're all pretty rolled

repriced. small, off. a but we got I rolled think there the oil equipment of has black that contract or Most relatively Targa is two haven't still

really It's that's good. equipment. just the So Cenac pretty

Some probably XX% stuff over back a ago when year two ago, than was years is was contracts of now. pricing almost that from lower it

got start makeup part – of second as of as it's year the we So do to some the and second to those versus and but of our deal calculus part half through think that's the some of quarter reprice.

Mike Webber

next of a months pretty terms but not assume huge we and that fleet? Yes, it's of the spread evenly that's throughout barges, number repricing XX should in

David Grzebinski

a be not not bubble, you bubble, a year-end – bad assumption. ratable be safe will, there a It's could assumption. enormous if probably to is but yes, tends It

Mike Webber

just a inlands. Okay. That's And follow-up on then helpful.

of supply Just is of the fleet. order about sitting It side, like pretty interesting. looking at X.X% looks the kind it's X.X%, the book

last over number, be some produced – would and it look be but it's had where book But – would pricing production has considering to I actually a the capabilities you just is point thought at where is last You that produced at have That, big I point, down. least have – what order mean fact generally back guess months, come about surprising bit down considering would from if six at permanently are even that would isn't flat. remain the making shut pricing can you I that that money. a a people which X

availability? capital Ashland? a kind one and to is just then it's seen I'm you've orders you, little that is of that figure, curious, from limited kind And not function narrower So surprising and big it a Carlsburg that competitors? more just of surprising not a maybe capacity but to Or I Madisonvile of that know is again your

David Grzebinski

a it's number things. I a of of combination think

– we're as costs are taking – any is be honest, considerably. facetious seeing building be far too are we barge concerned, up to As much way, trying to but

on probably go million could depending you XXXX, XX,XXX-barrel back a beginning about of whistles. and to for bells If barge the we purchased $X.X have

million. about $X.X it's Now

a the of and just a higher it's of cost got bit in price So there. in a you've a market. combination of labor shipyard portion A portion the probably also good quite other that steel consolidation of of increase –

that's have barges XXX retired this XXX built year. We we're could to this about to some probably think it. with XXX year, that you of still So XXX –

order that terms but So retirements, it's that of magnitude. than of lower in maybe it's

the So has do adding to because rate capacity some need volumes if feels as it continuing the cost up. a we is increase. and look, added doing system business reasonable industry just of at the gone But the also to

a You've system and Subchapter you legislation towboats, compliance. have operators inspected to some heard environmental compliance, where but of standpoint happening M, stuff, the to from more cost when high what's adding whole all look money that's for spend example, the water for across

some of So to even and they up need going the rates additional cover cost. to compliance of that are go cost the up, some

expensive X to more engines into expensive going you expensive to to buy, got For they're operate, example, towboats and they're more Tier more maintain.

So there cost is inflation. some

take that as them to the market are a I'm the is that it – think say, the bottom, about or surprised go these of long-winded obviously. would boom to don't be up example. for to price are capacity in warranted the some given that's in they and enough even you they're coming of be answer from plus tight there going to need a up, additions – to that need offset to away situation. don't building additions So creep think that, off rates balance. we're the not I keep where at though think I cost levels. not But barges I nowadays a the cost or an And supply

Mike Webber

No, than Yes, Thanks. better helpful. I it. but expect it now it would appreciate looks certainly. we very

David Grzebinski

thank No, you.


Merrill with Bank The Lynch. next of question from America Hoexter Ken

David Grzebinski

Ken. morning, Good

Ken Hoexter

Hey, good morning, Dave and Bill.

in the just in just one Just you stuff Cenac could noted your I because outlook than the that improved, to closed are the even is when moving even want though Is to two real on ago? just rates move month understand you set on March just upside. near are of to I end quick faster that thought the term knock guess, you – upper off. much. only or that have But let me so it's follow-up rates Cenac even saying you

David Grzebinski

we've integration. integrate I'd on Cenac, Yes. it. the system to safety board. got it. part put management It's that's We've all our we got of think through When about to say

stuff, to integration, that our it's It time systems. The done. put is of computer know ability that's kind limited. until our mundane adds takes I upside We capture but have all to cost.

We as have we have integrated, costs rationalize and them we some get to teams to fully together. the put

as guidance sequentially and increased now. at as they've So is about prepared things. momentum year-over-year as getting in and that's contracts wouldn't higher moved say our good. his I really pretty The Bill great and I could much we of those given and but more said how comments, that's integrating we those improve upper are, but – as say good rolled tight We it's end said Cenac two rates. over it, successfully part momentum right it's would about of that

Ken Hoexter

lot That's bit inland but been about right. All D&S, of even coastal kind a on And left little has helpful. talked and behind. then a you've

You just talked do the about as and you Where kind on expecting rebound quarter. period margins is inland, of to kind on are of forward? we rates acceleration get in on the like second stand you of going back there a the there to this break well? seeing there Are even the margins

David Grzebinski

– spot certainly a tight increase inland We retired in market both that's see say seen did to mid-single-digit mid Yes. It's as term others way not the price in direction. and that on as and We tick price have the right increases high-single-digit retired volumes. would contracts, is it. is not equipment. little I headed some We've some – up equipments

we – So XX%. in closer in some to balance, high only to range. the need market's price but to we're again, low momentum, be would get say price getting utilization the XX that I XX% true

in just get here robust that that the get So inland growth We're break the kind it's starting marching we to direction. right even rationalization are also capacity of pace direction. We're Things back to encouraged in we quarter. still could some the we encouraged head need in of to demand the some or second before things. to right

Ken Hoexter

fourth get fall that stay rates at are, well? breakeven, – Or that's off quarter? level? Does Is as to there that to that given you that a just once seasonality you where in

David Grzebinski

fourth No. to first of the the do bit until of quarter, In end some some quarter, it of We Alaska. That the seasonality, first equipment quarter. the in northbound. takes comes deploy work while. a Pacific absolutely. start on a Northwest is There up off the Kind you

the the similar see weaker. and some is seasonality. we quarter there where in fourth inland first to So side are seasonality It's

Ken Hoexter

All right. for Great. the thanks time. Dave, Bill,

David Grzebinski

Ken. Thanks,


The with comes Randy next from Jefferies. question Giveans

Randy Giveans

Howdy gentleman. How you? are

David Grzebinski


Randy Giveans


So legacy, in mentioned, June. backlog I guess, you the XXXX call DES XQ was, or on through January, May your as

has So does Basically, how months orders than it new or three made recent ago? placed. that I versus August curious smaller in September? now backlog that is was months stretch into developed or backlog terms of larger And deliveries in

David Grzebinski

into eaten our we – have backlog backlog. The Yes.

and one, not Our it this backlog got good book-to-bill have seen less guidance. is well. is to see We've was we some unexpected. started is of what that activity. things. marginally King's we've point international on – lower than it Also the expected We seismic – gave Rail than orders, been other will but news into quarter. a pickup It's as lower But last in that's good. a at quarter, was we and third relatively real we when kind we've we a The us have units taken take new our that, do We'll better see. some but

Randy Giveans

the Perfect. the If agreement, primary amended only your to just ones is acquisition for time? And a then for or in And this there for still following Cenac the acquisitions marine opened the and trying up? large acquisitions. that at focus capacity current credit financial sense get were

Bill Harvey

Randy. I'll the agreement, credit cover

our post liquidity – credit As – we yes, the over million. agreement was $XXX

$XXX fact that size. February not which private factored next the into a of includes placement – that due include we have coming million, does Now we

we we strong over $XXX of So year. February for million. the cash generation the of million, balance and the expect pre-finance $XXX in repayment the Again,

David Grzebinski

would. and Yes, now. we what you some so do we do at take and when a acquisition some or good that That when capacity really to, a we would along, us. but like acquisition probably We to small we'd $XXX if in we is it, would way, said sense. have we strategic do debt another they right to acquisition come if is to acquisitions delever. down make wanted and came million with know pay could liquidity, they preference Clearly, now have our say, I look our said,

speak, We're to play good. preference is still inland. right still coming the Our there is We bottom, the on – so now off consolidation inland.

this flow, about year. going cash we're flow you would should generate good but attractive, delever, size of free some be based some. business like But within Bill's to in disciplined as small some disciplined. on acquisitions, our and fit to cash remain free there that's We pretty So comments terms And very we're, though, we could here know, that niche might well. nice as D&S little

So that our should goals. help delevering

Randy Giveans

very Sure. much. it for you me. right, Well, all that's Thank

David Grzebinski

Randy. Okay. Thanks,


The next with Stephens. Jack question from Atkins comes

Jack Atkins

Congratulations morning. a quarter. on good good Guys,

David Grzebinski

Thanks, Jack.

Bill Harvey

Thanks, Jack.

Jack Atkins

So me you. let with David, start

think growth this moving things I right I guess, feels in you view to get like direction It next back curious you inland how the pretty year. year – going Just to a a way. be sort in in just on of demand market are as meaningful minute. about But certainly would for the thoughts and your underlying there

capacity as over being you the are XX out capacity getting sort that capacity, levels for to if industry incremental you doing tight the that given volume core terms sort been talk of a Are of how XX not of now? that moment? months, for about of of increasingly next your And all Gulf of capacity the in inland to of over then able an underlying about are business, to just just could at is sort thinking – chemical worried What's your has several customers around about the next Just securing running for you Coast. coming online customers sort who utilization calls extension the get look from that, quarters?

David Grzebinski


second first, back short then to and answer. it's the take one Let the first. me I'll Yes, the come

a a We – about are are availability bit. look more from for to more spot seeing worry contract move them gentle contract seeing as starting a move positions. We're customers the to

– available. they during as being it know, the know, last when tightened readily we four you years, too capacity, the now. spot had sloppy was got you That's As up to much pretty used market

Lake when are start and to Lyondell projects are to through, and you shift Shintech, think Charles. projects, from mostly you know that six are it's going let's up contract SAS at run I we Oil, some of desire Lake So that normal But these XXXX There Indorama, of for seeing more ethylene Jack. equipment. look – just kind then in demand, gradual

us plants ethylene those all and that we've So coming feed at something. will got

another XXXX. two it There expected of is in talked up a one. is up for about of some MEGlobal slips start into be starting before. Maybe as but Now and year, one new portion will methanol it derivatives – good plants also we've to there projects XXXX. There of are be this them will MEG downstream, polyethylene, two

all it volumes characterize would usually up good. our So with it's GDP. go as I

that's to that And to Now is to tightness some actual we're some adding probably translate the plus to volume but good barges, X% growth. seeing market, Hard all X%. GDP good. we're which

Jack Atkins

of in hear. Well, of but in follow-up my end for of talked year. I it's sort train know about XXXX freight the past, to then terms that's a IMO encouraging you the at question. And have like And guys coming us

moves curious, potential Just could not any if on there are guys I impact in increased terms either by know refining you for perspective. of from coastal updated volume customers. business issue your to a it's this thoughts how be inland your an going or cost your

between may Coast? Just products Gulf on trying we to East to move the the have think about, to given may potentially demand, going or incremental need is refined that drive this markets

David Grzebinski

point tugboats. your using diesel. to sulfur the go all Look, We're ultra-low cost. and me let Well, towboats we're already our on on Yes. already

won't So impact us that there.

Now diesel could prices. in a what see is you in prices spike

to our price watch there So indexes We there. to contracts hurting from we'll have generally that. can passthrough lag or sometimes be within us, but prevent spikes have

be said, want side. completely and our with we get we're a is spike real volatility, bit we If don't I pretty on little to – catch-up just a price prices. impact immune cost of diesel immune. not whipped IMO that big get could pencil we any that's our So think contract on on there lot calculations from But a should

demand make upside use switchover. is be and could be little our that. business I – clearly, to of to that on but have the blending guess think few our still some challenges, could part positive a a blending. the we They'll to cutover will side, a that business other We'll equipment. lead of that bunkering more there, other moves. people's of availability some bunker should depending be barges we happens okay the and maybe places. Miami There lot potential and ships bunker on part of Now Houston, There

we a aggressive the all, but in it's all we maybe positive, positive So to slight on a neutral think wouldn't side. too get

Jack Atkins

David, Okay. the Bill, thanks for time. Make again Eric, sense.

David Grzebinski

Jack. Thanks, right. All

Eric Holcomb

we Shannon, up question. time time, have running on for one have right, All so we – more we're


our Research. Bergner Justin G. next from And question with comes

Justin Bergner

fitting and thank call. in you morning, me Good on for today’s

David Grzebinski

Justin. Thanks,

Justin Bergner

regards inland side, supply barge to on that In the weather other the forward? think mid-XXs going weren't industry would you related disruptions rate and the still a there utilization, utilization if do maintain the

David Grzebinski

see We winter X% would months. extra I say that's between X%. Yes. we there what – of X% lock in weather, see is We X% delays and to typical to the probably utilization.

bad. now So of in that so maybe because be still range pretty high utilization, which XXs been of we'd strong. it's end But on in is terms the weather's the

Justin Bergner

Could lower question pumping that your transmissions talked I press factors into parts demand dichotomy? oilfield release of in for because other new And equipment behind sequential Okay. that this? then you coming units space, Is good units to oilfield Great. going maybe of dichotomy's your clarify transmission the was, And and second and engines, to in pressure sort had you parts Or the the sales about that pressure just the comments, backlog in pumping not? are year were customers. narrow? engines and then and in and there but the were

David Grzebinski

book new And business. right. No, are We – get pumping declined orders, but our that the in the exactly more got in you ship-type pressure of got equipment some will, if Much did parts, it pieces and quarter. – was and that and backlog. you

precisely it have you no, – correct. So

Justin Bergner

dissimilar forward, equipment? different the going too results So not across we your expect of should oilfield parts

David Grzebinski

is agree worn given up trends to the said capacity coming online? activity second actually of in new the half, second we takeaway out basis out, do half. reverse in kind we half. getting see some being orders the more maintenance, with equipments coming what Permian way, pipeline happens those – I in with more another that. Yes. particularly So themselves Permian see the could sporty, of on a would more start that second or question we pick the see Do The more in given

Justin Bergner

thanks. Great, Okay.

David Grzebinski

Justin. All right. Thanks,

Bill Harvey

Justin. Thanks,


This our remarks. closing to conference to turn Eric session. back concludes for question-and-answer I like any the would Mr. over Holcomb

Eric Holcomb

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

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


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

may now You disconnect.