KEX Kirby

Eric Holcomb VP, IR
David Grzebinski President & Director
William Harvey EVP & CFO
Randall Giveans Jefferies
Jack Atkins Stephens Inc.
Jonathan Chappell Evercore ISI
Michael Webber Webber Research
Benjamin Nolan Stifel, Nicolaus & Company
Gregory Lewis BTIG
Justin Bergner Gabelli Funds
Call transcript
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Good morning, and welcome to the Kirby Corporation 2019 Fourth Quarter and Full Year Earnings Conference Call. [Operator Instructions]. Please note that this event is being recorded.

I would now like to turn the conference over to Mr. Eric Holcomb, Kirby's Vice President of Investor Relations. ahead. go Please

Eric Holcomb

Financial thank are and Officer; joining With and us. Bill Good Grzebinski, you Kirby's today Chief President Vice David Kirby's Executive President me Harvey, morning, Executive for Officer. and and Chief

A found the issued release as as earnings website our for at slide can that be today's presentation today call well conference earlier on was

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

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

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

turn will David. over call I to the now

David Grzebinski

good inventory everyone. On GAAP Thank charges and per $X.XX This XXXX basis, quarter. $X.XX reported the onetime fourth adjusted including $X.XX per morning, earnings severance. Eric, Earlier share. excludes announced today, of share, earnings of per fourth write-downs you, and quarter oilfield-related we of we a share for

earnings year, $X.XX share. per GAAP full were For the

to XXXX $X.XX Excluding the of compares onetime charges, $X.XX earnings which XXXX earnings share. share, were per per

million Inland minutes. business. and Marine a Inland includes the towboats, fleet which Savage marine to agreement strategic an approximately the discuss a significant Today, Savage $XXX about to fleet, Savage's transportation to I the Marine more being the fit acquisitions, few is in XX acquisition want definitive with of tank excellent XX in barges signing of X Kirby's most I'll discuss The with of cash. for purchase purchase

an the also the Charles fleeting With fourth acquisition, the able in needs. will operation this year purchased planned customers' experienced inland significant be this projects critical petrochemical during improved expansion Louisiana our our in Lake we service in in barging new is growing quarter. area fleeting to future. We market, and that better barge we Lake last Charles, more a capabilities has with small

and expands servicing January purchased this and distribution we $XX In of King OEM. the and In refrigeration Convoy Convoy our equipment early primary territory distribution services, is parts for Texas geographic with Company This in Thermo significantly services Colorado. and Northern million. supplier

third by declined operations fourth Looking a at of good the results as fog wind marine along to business Gulf the quarter were our Coast. quarter, transportation relative our slowed inland seasonal impact and

our efficiencies XX% our overall days While and this tripled. And weather-related increased delay significantly profitability. more than sequentially, affected delays

quarter, extended expenses bit conference call. had the Additionally, contributed softened which chemical refinery chemical due operating barge utilization levels turnarounds. relative maintenance, plant plant quarter. a announced and third We as our higher to to in on during part Also, to higher -- refinery the third quarter planned

market the about strong, That said, we my and during business will seeing I discuss comments. in the are more inland very outlook is what

contracts. continued and In coastal, in particularly the capacity mid-XX% Atlantic utilization our good the and Gulf market quarter, the conditions the increases barge and experienced pricing large vessels, on availability fundamentals tight with Coast in were of resulted limited range. market regions, in market Throughout this renewing

as third spot new now revenues relative into gas and our trading demand reduced service demand for of a and there for and as activity business, in orders the entered were term of overhauls, and in and lack and spending their distribution have the had levels. oil which and transmissions quarter market contracts. parts to where in customers earnings The services, In impact distribution our several curtailed our Additionally, felt declined well barges, weak experienced as was manufacturing been remanufacturing. new which

timing will recovery Although demand levels oilfield XXXX modestly unclear. and the growing, is believe pent-up activity for in a these of recover we businesses remains

During also current valuation the the pressure certain to market additional and inventory align oilfield with reductions, quarter, adjusted pumping-related workforce of and conditions. implemented we we

believe While were our these decisions necessary were difficult, these rightsize we business. actions to

strong. we market, actions fleet In term while acquisitions. the growing Pent-up improving, market segment summary, coastal rightsize challenges. fourth oil for intact. the these our Despite and through inevitable inland had the gas some quarter is long-term market maintaining are remains ability The recent our the ensured to earnings strengthen continue we and inland in headwinds, demand recovery. benefit from Kirby's and near our that have to power in remains Fundamentals

In moments, I before sheet. our quarter our and Bill call more the But outlook results for to the about talk do, XXXX. and I'll discuss a fourth balance to few Savage turn segment over the I'll acquisition

William Harvey

Thank and you, David, morning, good everyone.

in quarter. inventory results, relates resulted want by and per segment onetime the our million fourth constructed review services in $X.X retirement on to provide charges $XX.X The pumping expenses million included These rigs, In share. to million relates marine in of $X.X the write-downs significant or I severance of to workforce including charge & our charges prior per recorded to we to which segment and or million several charge transportation. were totaling The or I reductions, Stewart $XX.X total, which acquisition Stevenson totaling million and XXXX. to share, in oilfield Before pretax results per XXXX are and additional $X.X most relates remaining we charges $X.XX which incurred $X.XX pressure early share. distribution details the relates $X.XX

Transportation segment and Increases acquisitions. income Marine same operating primarily a Compared the operating due million increase $XX.X our margin margin. to of XX.X%. revenues XXXX, our an in in X% represents results. in to of with inland fourth this pricing million and X% revenue quarter, were XXXX $XXX are an to operating quarter higher a segment In increase Turning marine the in

to and the declined decreased revenues demand of These are on plant quarter, operating refinery lower third utilization. increased X% and largely days million. $X the by to and chemical delay Compared impact income attributable reductions

both relative had quarter, and Additionally, maintenance third shipyard inland Coastal. in planned the to we increased

were the approximately increased business, to than due as acquisition the result Compared to and delays third declined pricing. chemical of of XXXX, our fourth a In quarter quarter, recent refinery slightly revenues higher utilization. the plant inland and inland improved weather X% revenues lower and

revenue. rates a quarter, approximately was longer, inland XX% of the mid-single-digit range from those with XX% from or the were business the to spot in of the year-on-year. XX% higher During or year time XX% quarter low in digits, and increased contributed contracts transportation of the marine of charters Term contributed approximately and during revenue, transportation renewed market contracts fourth contracts inland X that contracts marine term affreightment. Long-term mid-single

to range. business revenues was year-over-year, term the barges During higher operating onetime the approximately into Compared result seasonal XXXX. the a being maintenance pricing $X.X revenues fourth the were utilization the mid-teens quarter, mid-XX% as being vessels severance in of in with and retirements conditions and the Alaska. contributed of margin quarter, business, offset shipyard in million included fourth retirement new to expense. X% and barge by unchanged coastal in placed utilization of declined quarter quarter inland and In contracts and activity resulted that during the several planned third the Tight in occurred coastal in market reductions

the geographic XX%. market X% vessel location, are year-on-year being factors such general, pricing, size, to in higher to and transported, rates as on average contracts approximately a improved and although various contingent products range capabilities XX% regards term rates vessel With in spot renewed of

term contracts revenue fourth under quarter, coastal were percentage XX% approximately which was time of charters. the the -- During of XX%, approximately term

included quarter presentation fourth of was tank which $XXX,XXX. projections retirement the respect year high expenses, our onetime With on in in favorably by as in changes digits single was the severance margin to of were and barge to mid lower fleet, expenses operating our the Coastal's by the XXXX, quarter offset fourth impacted for our earnings call operating website. and partially in as reconciliation posted XXXX well a full is and

with the $XXX.X fourth operating and loss services. quarter Revenues of XXXX distribution to for million. were Moving $X.X million an

down negative services oil income and $X.X reduced of approximately resulted lower million, to activity charges fourth units, gas operating gas-related by declined partially revenue down due and demand million. to million income the were distribution which of gas-related and power higher was in activity, segment and Sequentially, overhaul expense. in revenues for mix, million, due our parts. seasonal severance Compared operating margin quarter, $X.X XX% severance $XX.X sales levels, with the which operating as was to Excluding pressure represented pumping was well oil new and $X.X revenue income In as oilfield year-on-year and our engines XXXX in quarter, in In operating distribution unchanged utilization oil lower severance. digits, to operating and generation and offset XX% the and revenues had included overall, as transmissions commercial businesses reductions new activity of power income fourth and lower services marine and sales. high and remanufactured backup but single were an This the approximately businesses. market, of result a low mid primarily

In to marine businesses. offset primarily generation, improvements and standby as in of a of generation XXXX commercial Thermo declined by units. engines. These due of of compared and our rentals seasonal quarter, to power refrigeration King marine modestly, revenues sales result partially commercial the Compared and quarter, reductions the were on-highway industrial equipment sales third new to in power reductions market fourth increased increased revenue

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

balance the to sheet. Turning

XX.X%. total XX, was debt of As $X.XX December billion our and debt-to-cap was

cash $XX.X from inland to barge company expenditures During in the flow used the of operations fund and Louisiana. quarter, purchase capital we fleeting to million

quarter, During debt. in down paid $XX the million we

$X.XX billion. week, our debt As balance of this was

I'll for now the XXXX our and discuss back guidance acquisition. to turn over call David Savage the to

David Grzebinski

Thank you, Bill.

Intercoastal fleet today's River approximately of Before acquisition future Gulf barges XX ability is like conducts transportation average XXXX, towboats. the the Savage's Marine It used further fleet Waterway, service remaining Savage's are will fit. XX purchase system guidance the bunkering announcement and about majority business along approximately I inland perfect a have Inland of our to inland an strategic lower of Coast. towing our reduce fleet more barges tank fleet. XX X.X with capacity, The regarding with million The barges they and in lower Gulf the on Savage's on our improve expenditures. age discuss age for capital XX and consists comment This of years. average operations customers, of of barrels to the I'd Mississippi using a

Savage expands existing bunkering in which operations Florida, us New our beyond this significant bunker has service Coast the ability operations business, Texas port. giving customers the to and Gulf Orleans, in Additionally, important

the expect in expense. million normal first integrate quarter approximately revolver, through time to expect borrowings be regulatory will of deal $XXX fleet close modestly acquisition price we In financed additional taking our and and be and purchase integration XXXX, needed late approvals. to the conditions subject this The closing to into inherited the we and maintenance interest to will consideration accretive contracts, Kirby's costs, earnings, on

significant anticipated provide XXXX, for the Beyond this we enhanced realize benefits will earnings synergies, power as acquisition of Kirby.

our announced to our respect morning, per With to $X.XX XXXX of $X.XX in press our we release share. guidance this guidance

contribution Our a Savage, and reductions including guidance distribution and contemplates range in year-on-year coastal growth to continued in growth flat modest inland services. Marine, for from

be cash million, for this spending of year-on-year flow is to a fleet. approximately and average between strong XX% should be XX%, $XXX represents $XXX and free reduction capital XXXX for range it generation requirements expected includes in This CapEx XXXX. and million Our very our to

demand segments. GDP that and additional barge throughout our online. marine at robust demand coming modest driven remain inland volumes capacity barge by we -- transportation, from Looking expect increases the will inland In petrochemical in new XXXX,

factors, to to Together expect higher. will in contracts range barge from low in to XXXX. of result anticipated expect increase with continue remain double-digit low compared mid-XX% expected during we these the and a will are contribution that the rates range As to the Savage, year, we strong mid-teens utilization revenues our the inland term renew to

our XX% contracts. into term term and tight high continued placed will in anticipate contracts, market throughout new which year. In many that to demand will market of year, coastal, contribute recently throughout utilization to barges spot pricing strong be increases expect we the our With range the barge customer on the conditions we mid

yield XXXX, large vessels announced, determined new which water to ballast barges of return would However, shipyards, on not required in an that as at coastal their which retire systems previously treatment Kirby are plans capacity adequate have we would X X capital.

offset -- activity are anticipate currently to largely improved XXXX. we full reduced our pricing will and transportation impact combined coastal and coal in on an business year These and in Additionally, expected during are largely factors the have utilization.

revenues modestly result, we year-on-year. anticipate be to a will that As coastal flat higher

increase marine in to that XXXX low-teens anticipate year-on-year. will transportation, revenues the high the Overall, digits we single in

should full coastal transportation marine low the the mid-single in high-teens expect improve We with operating and the mid-teens for inland into year, margin digits. the the to in

quarterly to as normal will significant With anticipate have results the the coastal. lowest seasonal maintenance due the first to the beyond year we first as contribution regards performance, shipyard well planned quarter of improve in should quarter. factors Quarterly

segment, and Moving activity to that Services the oil will near and remain expect we term. Distribution our levels limited gas in

XXXX gas Although levels industry fleet likely will We in rationalization business pressure sales and capacity incremental XXXX distribution relative we significant improve do will initiatives as in anticipate pumping in restrain that activities of to expect will progresses. year and in customer increase manufacturing ongoing quarter oil the increase excess our fourth orders.

and segment industrial from revenues growth Thermo anticipate to year. be markets, the XX% in will approximately expect industrial and industrial for in Convoy we Overall, businesses we with and the XXXX, the acquisition XXXX commercial commercial our King XX% the our revenues compared distribution representing of in and markets, XX% down full services, on-highway including to our In business. contribution to

of pumping oil the in assumes remanufactured -- The units and manufacturing and service for gas oil pressure and weakness higher guidance assumes gas continued with our and end market. orders The lower in new end and improves range activity distribution. sales incremental high approves

the Segment full operating are the digits to expected being for quarter mid-single with low the be lowest. in the first margins year to

was with strong year a in XXXX wrap good growth things transportation. up. to marine Now

XXXX, the have and flow revenues In we In our the margin flooding at poised our able changing inland better year point the complete, portfolio cash Savage. demands and adjust near in presented and the of to closing business fleet better XXXX, this repeat challenges major historic our acquisition with service strong we anticipated necessary delivered taken double-digit actions acquisition. for and many -- of are and marine, for be in any than we Although growth positive earnings Once to services, the conditions history. to growth integrating continued significant distribution posted improvement a to customers and market XXXX. will in free workforce despite and is will

future. and with continued We marine in demand to the for expected, is continued -- increases earnings strong inland revenue positioned deliver foreseeable meaningful

to to of to improve significantly, quarters cost margins. coastal, consecutive In And Industry the fleet positive are we've pay our performance impact in moving had tight in is our improved the is and near reduce coming off, and term, XXXX will and improving in expected operating with X actions The efficiency years. the X we financial has coming the expect increasing have higher. begun our capacity although returns market retirements barge the remain years. utilization in barge prices

the pent-up In we've costs continues and taken operations. actions necessary confident In is rightsize distribution meantime, and that oilfield to are is reduce challenges, our services, and inevitable. while growing recovery a we the the some demand present to

internally thereafter. acquisition power the segment efforts for provide our to and In commercial the and businesses stability grow additional diversity, earnings will other industrial, XXXX in and and Convoy

took distribution could XXXX we strong some And strategy significant take reduction strengthen from our cash our balance for financial positive XXXX, expect opportunities services positive to shareholders. finally, priority, they will create our acquisition marine align to improve in generate if with top company advantage and our our In sheet Debt although we our and and reduced with expenditures. returns be capital contributions of and and significant we flexibility. flow operations, free steps

our Operator, that concludes prepared remarks.

to ready questions. We now are take


[Operator Instructions].

Jefferies. Randy question Giveans first from Our with comes

Randall Giveans

first, the obviously Savage acquisition. yes, on So congrats

from XX inland will earnings be business. year? barges tank that the large acquisition, a be might for I of place barges, to Just But the biased. a is for quickly little contribution what percentage the full then uplift a of what maybe for is And those a for on sense bunkering get a acquisition. the days EBITDA of rate? are this how and great contracted kind year Orleans New trying how run

David Grzebinski

fits our as are wheelhouse. the right bulk Coast in within obvious, Yes. lower XX Gulf Sure. state of those is Kirby. on system. this It the Well, you in River the perfectly look, barges to know, Mississippi The

into So ability as will we customers it our with cargo and integrate perfectly service the to some have synergies fleet. they fit higher having moves. prior be likelihood significant There our for better the of compatibility

fits EBITDA on little perfectly in it in the a we the So than high Kirby. the think into paid -- a We $XXX million. paid trailing revenue basis, We contributions, high Xs. more

the be multiples. factor of when kind we'll the terms you So synergies, EBITDA in in Xs of in

pleased for with standard We're much us. pretty it. very it's So

think now, and part delighted have with it's we're excited well them this I a acquisition. their staff, -- Kirby. excellent getting excellent to to to well we're very acquisition some some maintained, run. coming as shore very mariners They're high And getting of fleet, us. we're right fairly We're utilization's and have young the frankly,

Randall Giveans


good. this release D&S I and And that non-oil revenues between kind gas? pressure of kind declining and you manufacturing year. details, services? then the Sounds gas mentioned and out of think current the gas, secondly, for XX% Can backlog so then and XX%, more your And press break oil pumping, and what's oil

David Grzebinski


to work, cut to going free are They driven maintenance show Let flow. not and D&S do and guidance. context but spending. in in they our flow the and maintenance only happening have come OpEX. we fourth our and quarter, cash some They're they curtailed That's what's me back around capital unsustainable. try customers what's their to cut Look, spending, in put very some cash saw but

look it. So to we XXXX, when had at end we book

about made $XX million. we take So XXXX D&S, if you in

we 'XX. you lot million million business. of free D&S, made cash so Now in breakeven. $XX XXXX in probably But as But that flow saw cash in were in we out $XXX did the free quarter fourth generate in flow, -- we essentially of a

and those think So low frac of the we're about X%. the frac up because to that, be we just if utilizations of lower you We January, middle on know bookends end our many come do fruition. we spreads on say oilfield the somewhere hearing XXXX, what to of the how think? we're crew the in said, side middle maybe going in are will don't for That guidance, activity

comes from frac is try than book-ends, So halfway back, us get just end. a the end. If The would end to high the the book-end low to it those market less that assuming kind of high we between low end to our little maybe the halfway. X

In terms But as equipment disclose there imagine, that. in of backlog, might we new don't quarter. almost the you no fourth orders were for

Randall Giveans

I non-oil revenue, to you XXXX finally, then XXXX. gas And Sure. guess, and expect your over that do increase

David Grzebinski

Yes. sure Yes, do. we

on generation. in is our A activity a the seems something look industrial -- you D&S highway, up in lot you revenues, bit and and marine our growing at even when we about terms expect look commercial and repair. we up Yes, gas be engine When of picking be If of of repair, inland. power oil need at will marine said that all is the with on still XX% which And backup look about engine the at prepared that's growing. you you nicely generation, from XX%. comments, to power growth and GDP-plus people offshore, in little market

manufacturing. happens big next and swing is in what The factor commercial is growing industrial yes, year. So


with Jack Our Atkins question from next Stephens Inc. comes

David Grzebinski

you there? Jack,

Jack Atkins

David, can now? you hear me

David Grzebinski

we you. got Yes,

Jack Atkins


mute. I Sorry, on was

guidance inland. the to typically yes, think we of found about now earnings a inland in at the you start have we've morning their seems And and is the what a I what head at kind upswing. and seem it's third wider but have you it But taken. in seems row strong looking there people of is stabilized acquisitions guys provide. had business. a year fairly improving footing actions kind to a at you've $X and than guys large a D&S X just have for is range, has challenge, with we're off, midpoint, have from on to said the to guess, and Coastal I So Obviously, guidance this the wide scratching

to think the move people Marine expecting here, So -- think lot sort back? forward, earnings I power the what Because things that sort of -- of I as in makes as about a guess, to forward move business, holding step we of really take given sort you begin if of business sense. what's a the the are leverage

David Grzebinski

well. Yes. you I the think summarized inland very Look, guidance is No, improving.

margin XX% growth. You our revenue is prepared in look growth The continued comments, got whole industry XX% we've nice at utilized. to in inland inland,

term saw, think that's as we the that in We So on quarter. had going renewed increase you contracts fourth to pricing continue.

holding are not earnings forward. is nicely If it's clearly, to back. provide going inland And as target. So us acquisitions we continue these advancing anything, on to and leverage go

way that's have we retire, will Coastal, to and utilization that's And it. large to continue retire did sound but say we expect We and are coastal to in those units have footing, nice -- tighten to X -- more going a XXXX. would see even pricing improvements. as up

term contracts I had from improvements quarter. XX% anywhere to think in Coastal in the fourth on renewed we pricing that X%

So that services. manufacturing orders we the looks real half and The the executing. is distribution In XXXX, lot we first a were of of had drag of side positive.

repeated frankly, XXXX really we made and we'd that's above driving $XX handicap and how We be very, that's lower frac working end equipment demand. million just we very good our new there results. issue that's in it, XXXX. If but and, have we new is equipment And top know working. So out hard, occur orders equipment many And We there. we know for the will the Jack, range, the D&S, had the quite is the to don't pent-up what results to well tried really know they're there range in do. of we the wider

Jack Atkins


And weeks, you reading restructuring play I as is within in been see as do you. you impact a going Kirby my inland? been do could to acquisitions think for for has I how out to that's question consolidating the guys these you here. last what #X And Okay, follow-up, years? have few guess got the the out? guess on it we've encouraging I you And really the my in couple player the guess, market look next over is that of inland contemplating press

David Grzebinski

Look, in mean the has no very ownership been secret private part, it's Yes. I that model. equity highly that's ACL levered.

is I they're everything you're the can customers they they've there of well. just levered, much very can. highly leverage. team doing when take they and think done business It's to The best the management care too their run

think they It's it a bankruptcy not that to some give to What for will speculate. hard them means if situation, relief. me I go say. into best us industry? for or the probably It's


Our ISI. with next Jon question Chappell comes from Evercore

Jonathan Chappell

David, Jack's I a you in think to And to want my I me, the asking wonder I questions. -- dig little two use right if just deeper. allow

First, the range. oil environment. worst-case gas think for But of you've scenario, of rightsized business you kind these end I side, the write-downs, lower you and said that clear the how challenging of it's explained cuts kind through guidance the and your on the inventory severance

range, oil the release. a is indicate throughout the maybe to low go well were continuation XXXX, kind in it be into there the as Because of XQ done? feels that gas, explained more relates If rate could the of to negative like to a as breakeven, is would the you into which opposed margin year guidance run and a end press of it rightsizing

David Grzebinski

have reduced between somewhere we've we very our business, you're In No, we've But at XXX to employees, We manufacturing when more. But and doesn't point, context. got some correct. want what very, we've Yes. put to we respond. -- done headcount it do painful. XXX think it by more? D&S, And market taken me I is this XXX and in do we'd Would think about out if you the let pick about Could ability and XX%. absolutely we've going But look right. we now. clearly, At some to do right more? activity rightsized got up, to we've recover, about

same which take things businesses on of everybody had systems. computer and we out different putting some costs, among these system, We -- computer principally come the doing are them hopefully, some other will disparate that to on is one

things So to share share going resources be importantly, like we're and and able to that. inventory

standing about going So continue do looks We're some have like improve throughout right. it If more But then we're core. to get at the to its not we fourth working that quarter, we've I XXXX, to still. the more rightsized it's of and we business may think do.

Jonathan Chappell

with this of guidance sense. is And being bit the then in fleet, maybe a a contracts and renewing, are you me XXXX reset, from have recent Okay. follow-up in-house or a But on business, for broken makes more high-teens better. the come younger, be of power a track record. you've have pricing's mid-XXs. my to just for this we more could record have 'XX, inland the That would modern bottom, it that you XXXX margins the One the think out

business that of to that margin run rate So a now? why XX-plus seems 'XX? are we to get kind go be still looking for high-teens in all right on And when systems we can percent

David Grzebinski

forecast put it's Yes. Good we When the an question. full year. together, our for average

a lower. it's the and little the includes it first lower then a than typically first the quarter but So fourth which is quarter, margin, generally is quarter higher

profile, margin average an full look the it's So year. the when at for we

new if as third with the I for will pierce continue pricing increase, XX%. yes, XX% what quarter XXXX think will we But with continued low things of of the seems levels. mid- are in to there come me, to all the at equipment now. online. steady we together year for that mid-XX% for -- Building low expect just kind continue get just we Plants average. the industry. utilization putting to excuse signs a We're above think the But full high-X

to with increase about which GDP. that's a is add probably at in the adds, line If year X% and industry XX net you barge look barges this XXXX, count, we'd in in

plants demand. So we stay maybe pretty more get have it, inland utilization a tighter range, little as the same at the as in should much look

into we So XXs. towards capital should justify the the getting We there be -- to need the to deployed. be got all we've

whole think providing. service the capital justify to and range be to the I in needs we're that industry the

giving of steady the we're just I the you So XXXX. of that you, margin and average hear the climb. of on kind But we're for view


next Webber Michael question comes Webber with from Research. Our

Michael Webber

away kind from to pivot wanted margins. I of

The And is the does for capacity I compare XXx EBITDA of like million think kind it. at hit margin, accretion to One, looking think Jon should where that I X.X then dig the for the new inland Savage, new in of ballpark? two, X.X $X.XX for you is XXx think and in or that fleet? to market on to $XXX you're where -- at just to $X.XX capacity? be in per And on to revenue a Savage, quarter. that mid-teens of

David Grzebinski

Yes. me when from put Savage at The all that probably replacement you acquisition, is Look, let the capital standpoint. replacement with the context in it a get the million. $XXX we assets look Savage, cost

you some we're value. of for replacement age, Now if discounted below the that paying discount

we pretty range until we towards full trailing Yes, priced, that. year. So synergies We the to come get good the -- and were get feel of EBITDA some X.X the XXXX on that. down XX is to in The but look, synergies, end won't the part accretion to going that's get of better pretty may our with take about us a Xs. it's

that at context we the that's So it. look

be to barge answering knows rates a I'm to XX% it. higher. million. to in for XX,XXX-barrel the And think need they new And towboats To justified higher. different a the put $X justify return, industry be when a where XX% newbuilds, to have rates XX% get the about I it type -- to be you return, need perhaps capital A question. your is But with

expense we're justify coming our think trying the additional through to capital all regulations. I that's and

lot inspected of For industry. example, towboat, you That's adding M. the as we've to got, Subchapter a know, cost

And really it cost, has things as we'll to pricing. cost I think over time. able need wear the happen for there's So really replace equipment in higher out. pressures equipment Otherwise, never drive be to the

William Harvey

Michael, we another that way is if the get you building with it to look Savage acquisition, get synergies, XX% for on capital. a And just at at there. look can't return the we new,

that's the and XX% So what this is -- drives is the way return, this us.

too, think triangulate look do return it, how you Your And numbers of sort on way, the it could other of we capital. just too. on

Michael Webber

to those trending I if morning, dead less on I historical that that it to the the want the reconcile a added XXXX, biggest the in this market to of that now earning as synergies is in on are a the about I'm going to and to sometime return it what and were XX% seems and trying synergies into OFS new need at be of around of doing side be historical results results that's EBITDA tight suggest mid-XXs, between then within I appreciate well And the horse everyone side that. the of and And the look -- to the into kind the $X.XX some would using else think well. but with hurdle. look get the the dig the been side, to to kind Yes, if referencing you -- delta guide XXXX, but capacity aren't get be versus capital think is context the on as share. don't I that in context inland generating side XXXX, that and recognized synergies to you're on market, and the to high-teens considerably at X.Xx the just -- beat return guide trying D&S dovetail on here, as I inland in there. And where on I I

I'm trying those just to to two. -- trying So reconcile I'm

clarity or So be any helpful. would any help

William Harvey

say Michael, double Well, economies of we synergies we manning. integrate, we scale and when have when as first

it things a to and right, has first do lot that cost happen have to in year. We of the puts that year this for

So in quickly, happen come costs top the additional it. of synergies on there's that but

hear in gone the have in revenue the Costs return. to -- other order move the to we continue that's mean to we've get will is factor. the price too. what have I and seen about -- to have up industry, up, up end, I our the you And in and

David Grzebinski

put me of context in Let XXXX. also it

it in term you is in If contracts XXXX than term on where are pricing they take is XXXX XX% contracts. versus to about on XX% now higher pricing XXXX today, in probably

above example. take where average was 'XX, least you If XX% the X-barge now. at right a it contract is for tow, In price

got So here. room It to still grow we has to happen.

Michael Webber


me more allow to you'll sneak one in. If

pressure? guys a there's entertain, the In pricing expanding is where bunkering in Gulf, to some coast distress a either the of scenario and business of would terms that bit where there you

David Grzebinski

is, answer yes, there's Okay. Short a scenario.

look But we need let know, you our interested As be we delever get me in I And at we our now. comments, that in. it floats, clear. anything prepared said industry. to

we free another so can for year cash going was this paid free to opportunities. acquisition be delever is flow We But large balance than our it course, bought we acquisition. where year, sheet would Cenac we in lot cash Cenac. get just did Of hope be and context, to at put we and that our last able it like higher we year, basically a look last flow back to should and our


from Our comes Nolan question Ben Stifel. with next

Benjamin Nolan

you Can go. we me? hear There

David Grzebinski


Benjamin Nolan

thought going I to Good. be I next. Yes, was

sort market still at towboats. same like or think barge like on building Are So you you well, Savage, into first can of comparison, and But to but can the to towboat getting just -- sort overpowered business. new you my and X:X, capital excess to question doing It close you're to of overpowered? this close why do and relates power? the about at it's effectively was that buy should time, Or just the also pretty point out to the broader or you when that we new this go spend and to guys I've to things capacity continue X:X. say capacity? get -- just tows How

David Grzebinski

getting help younger said, is fleet. No, fleet We're customer base our Yes. me does towboat younger of down. a It and -- average our be this helps clear, age spend bring That let requiring younger less this us capital. the towboats. well,

have down. that some years age use when if are some use XX bring that to older we the fleet, even customers it our So look than towboats at they're years you them There older average are there than won't of old. XX that are towboat Actually, won't old.

say of take need So Savage old replace a to reduces out the some of lot our doing I that we horsepower, will to but have that horsepower.

So of customers got look to age. requirements it's and just the our horsepower one of those the major for all things you at where

continue so spend. this build horsepower, to how but acquisition slows some And we replacement we'll have much to actually

oh, area a basis. towboats look have well. we to tell drive here as as by by year, ratable own 'XX, Houston can our reminder, last cost that guidance, our right our versus our own next XX%, versus And XX% a shipyard down at we've And on CapEx capital keeps small in we facility, free it can build where and slow that you significant you our the just When way, will cash reduced flow.

Benjamin Nolan

Got you.

to it's to that coastal single-digit of color. think of improve, of spending changing that geographic that my acquisition the just helpful and But extent acquisition. And product sort side the of in put or sort for for a something allocation, Convoy to just really inland of either don't capital looks you important there $XX go? it like That's follow-up, like then the and gears about that, maybe proposition. small, bit. about of it the that on D&S your the increases continuing D&S economies does Convoy a dollars or seems that in scale that a is -- in that oil on the -- high special it's kind Okay. of whereas curious it industrial million appreciate synergies footprint return the terms know when the gas in value also little business, just same probably capital add thinking deemphasized Is in I particular, a but I even where there are that some or high margins, does

David Grzebinski


business. You're us that get part gives There northern part. with scale of Texas We is the This King Thermal in that had some acquisition. we the correct. precisely southern our

solid stable. Thermo very revenue-type So is now a King $XXX and relatively contributor our business -- it's million-type business, and it's

it, But capital in much point, This lot that non-oilfield we'd tuck-in and just your King point, broader rather with there business, helps your business. D&S. to it diversify are to of synergies in little to a revenue perfect and deploy marine benefits our So Thermal there's which great is fit a our there. was existing the

William Harvey

than We aspect very the low. and, multiple also well, the we've the purchase -- what a better or is are little it needs lowered other EBITDA of is CapEx forward one going as

fit view, it of our ongoing point was a without nice needs. from So capital any


BTIG. Our next Greg question comes Lewis from with

Gregory Lewis

kind -- just a looks, quarters like I back you upswings And more to that, how -- mean, wanted think it anything talking in to that's kind market. could I don't at if know, of helpful. X about the just seeing I on up-cycle maybe seems bit any I you is broadly as touch David, this look it are think, of into guess, it, market, different? around about I the recovery is margins. mean, kind we're, anything I typically of little X inland. I color will Is Or kind be go a wondering the and previous in of I'm

David Grzebinski

more a I Yes. is would cycle. say this normal

the and cycle I quickly. shale on up that the sharp was think to There to the XXXX weren't all it the came on very came pipeline. XXXX because market, of crude

up faster snapped it our So other probably cycles. prior than

the X took up-cycle of and is go you normal. more this X out, years coming into XXXX to the XXXX probably XXXX, play It's if back out If that to will, barge ratable. to you recession, more

contracts ratable. to range, XXXX more time renew in XXXX, low and of with Back that's on. more kind coming the in You're the mid-single-digit that things seeing all tight so normal, crude got our of frame, kind

barges You'll the recall, and in we in up that got it in XX, industry used frame. to to crude, time XXX run 'XX about XXX

fast anomaly more -- So you're that money, rise. market. what building probably see the This slow is more is speak, because barges. to new we was fast ratable you so steady a the This And that's, and going to up. get went don't frankly, like how it fast,

spec. bunch building of a You see won't equipment on people

we of like up. grind and So steady this kind slow

faster Now more to would like longer? cycle. normal Sure. there a and we this stay there get But is

Gregory Lewis


which touching of one, Bill's just on on like that below company. XX% well I mean, guys was and about return Clearly, the are right for you capital. -- finding Savage, parts other the And for so core comments now,

is -- I clearly, I the generate out is think clearly, What of we look I heard hurdle some done mean, XX% in I I kind kind of Just the why the think company, wanted what next, what kind is returns single X the X, over possible. targeting? lot this high mean, about have view Savage as we kind reasonable this we've to type it, consolidation. -- were you XX% What digit, I And do know market. a curious, So we of they type? know, and high a highest guys mean, when you of as years? out mean guys about you are you -- don't sold, distress is rate? don't a but

David Grzebinski

buy. We cost Look, Yes. we of our capital of the life over XX% plus X%, target little. or equipment a is probably the minus

XX-year it bonus have tax So you pretty of about look basis. in with an the after-tax are if think good. terms on depreciation, to you it Clearly, at of will, And lives. got also attributes this equipment to you

cash of one say And is you D&S, of business our hope different and at very cycle-dependent you capital. are the D&S, And is of we be if look it. I that realizing when coastal as terms -- coastal business endpoint-dependent cycle. it and kind way will, cycles should investments, free equipment a look look these they're cycle. that's very inland, that's say short XX% and know. inland would that would I think throughout things better We we is business. in that. But long discounted at But comes all our if XX%. average But little on at would and a look a you return the businesses, or we're the we so we a X out in lower cycle the have We long. be than different flow, as then when you the medium-cycle; Typically, our at of cycle; because targeting very of

earn put through -- we you our business, double-digit hope each the cycles of So capital. would be, all in a it together, cost above when but

William Harvey

on return cost The of capital.

it's Now and inland been the see stuff, our pain on whether obviously side. other competitors you some there's

pain our seeing of some you're -- with seen larger competitors. You've

is you're both my of the our early On in indication the we of where financial stress inland the cycle. That well the pain some coast-wise side, We're as coastal cycle seeing with in mind. and innings in Their an you competitors. tell the some that. should are of

Gregory Lewis

guess, Yes. I diverse is, what clearly, mean, customer base. I I you have wondering I'm a mean,

players, of through is the the possible capital where barge pet-chem filtering in about just firsthand players. that, part of energy filtering what's it's discipline inland? maybe into going decisions. all see side business? I mean the the you you and have the D&S have that's business is capital all more it it You making discipline, on Is Is

David Grzebinski

the Yes I'd inland clearly, major additional Well, cost of -- no. in no. particular say stress But the no. M business, vetting towboats, financial and doing the and stronger business with with in inspected customers, Subchapter lot stronger of they're fill they but our all from oil these environmental oil things cost. better, compliance, thing, are good is -- our because requirements which a making industry a add good

all give in So the business I barge it returns. think that for cost more to us difficult of is making

itself pricing permeating this through business. And up justify I And business. that so the is think get have to we to

got think our doing I all to recover with, we've costs struggling business. of hey, these are of competitors barge

what think that to spending. on it's more a is trying they're I industry. long and probably expenditures discipline to get some extent, focused to adding their justify that's convoluted capital so but everybody the know answer, I returns And on

Eric Holcomb

one we're to wrap All going right, longer. a and run take call going little we'll to We're Joelle, more it up. then


G.research. comes Our next question Justin with from Bergner

Justin Bergner

guess I had I $X.XX. last you First of guidance range you $X.XX year similar D&S were do compares and when you entering entering of for to off, as mean that revenue range XXX enter the of XXXX. last the range guidance point a basis year, sort

given sort of is range the range revenue the drives guide, similar? the D&S that in what So broader

David Grzebinski

a OpEx nonexistent little we the cautious spending, is in bit business. think a -- variability as essentially grown the with fourth variability manufacturing terms range. quarter view orders of actually the on manufacturing D&S. what's -- D&S XXXX, has saw cut in because were more manufacturing going little we it our made and we new through and And thought We when the and take they Well, us of obviously it

Justin Bergner

in But there of the fully pricing not material should there it the And retired secondly, just that. Okay. some of I That's margin barges. be the lack versus forecasted XXXX up, seem versus the helpful. sure guide, then improvement you margin coastal lack with follow I 'XX. improvement side, on XXXX. revenue like understand would I'm finished where

William Harvey

that, when were with short end at any to nice-margin left, high-capacity, I and that think period ballast didn't the And life. having part the of was of put make of in, were factor it they key you treatment they just vessels, the water sense. life

-- to business year. remember, contributors. The the is margin lot has of contract good were that under a they term through So renew our

did an everything margin -- see or lose through we lose upward yes. year, getting better, will good So but contributors we some the progression,


This any concludes question-and-answer back turn today's remarks. would I closing Eric session. call now Holcomb over to for you. to Thank the like

Eric Holcomb

call All today. right. you, Thank everyone, in you, our Joelle, for thank and participating

If questions today comments, free at you feel to additional Thanks, XXX-XXX-XXXX. reach day. everyone. good Have any have or a me


this and conference today's Thank concludes Ladies gentlemen, you call. for participating.

You may now disconnect.