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KEX Kirby

Participants
Eric Holcomb Vice President, Investor Relations
David Grzebinski President & Chief Executive Officer
Bill Harvey Executive Vice President & Chief Financial Officer
Jack Atkins Stephens
Randy Giveans Jefferies
Ken Hoexter Bank of America
Jon Chappell Evercore ISI
Greg Lewis BTIG
Ben Nolan Stifel
Justin Bergner G. Research
Call transcript
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Operator

Good morning and welcome to Kirby Corporation 2021 First Quarter Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to hand the conference over to Mr. Eric Holcomb, Kirby's VP of Investor Relations. Sir…

Eric Holcomb

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

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

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

company's turn involve Forward-looking market to the response anticipated on uncertainties could those XX-K A actual ended and XXst, our from year of including for statements the impact materially will Kirby's factors factors business. result found over risks regional differ the related and various global pandemic and the a results as governments and and risk of the list COVID-XX of Form I XXXX. December the can be call conditions now these in David. of

David Grzebinski

and February extreme today, the shut storm industry essentially the to a talking XXXX the customers. a net impact Uri, the full The like Gulf announced has petrochemical descended by our down brought It cold a the of quarter. with Texas pandemic Gulf significant the everyone. start and loss we heavily it in pushed for cold major the virtually quarter. it mid-February a The during first and the Coast recovery quarter. winter Thank Louisiana back bringing by I'd winter COVID-XX Earlier the on you, had quarter's and morning into of temperatures storm severe storm effects for Kirby Coast and Eric $X.XX refining specifically share results about wave. which and continuing good and impacted of were to balance our

storm the pipelines and infrastructure to an froze came business collapsed grid halt. and Texas plant abrupt During electric the

into customers' contributed shutdowns facilities beyond Our implemented. were hurricanes even an with emergency orderly unit typically damage planned shutdown events be which forced happens can hard where to what like and

impact of impacting height decline XX% customers. the glycol January of storm, propylene XX% of so year the to Coast production. our majority rates than capacity, corresponding plants March nameplate and Overall, of more of widespread for impacted, were where utilization US petrochemicals, major through February XX% was damage production As Texas in to was not This portion lowest declined capacity Coast refining ethylene are ethylene to US in in in and refinery without X plummeted restarted XX% Gulf across resins and EIA's yet consumption. offline chemical entire customers not levels. of have at level the that also our feedstock complex the saying of an above back the particularly capacity, this XX% of XX% production, Gulf to extensive on XX% In published largest and their volumes plant the including and was and polypropylene epoxy XX% and severe of of ethylene olefins the of more and production production, record some production, the production is and result the over businesses than a also February represents recover XX% XX%. period. a declined that in fully utilization end materially on complex from plants It back and In impact the petrochemical production stretching the and With overall levels goes declined inland until recently At our customers, March. PADD large Operating extended the full XX% in which demand just did significantly data. in it Kirby's in March.

we contributing estimate $X.XX per contributed for losses to revenue As storm the you pricing with locations quarter. the and had directly impact also delays. project this during closed would reduced several prior stabilized a which in on activity of to was impacted Distribution share to days and by totaling the our Louisiana Oklahoma, negative lower the storm. Texas, expect storm approximately had services and most winter Overall, first

Transportation Looking utilization at refinery since was had seen the demand in of XXXX. not levels returned as summer improving gradually with segments, the quarter activity Marine improving to and started our the market inland economic

this both in in However, set further the shut Coast and with Gulf spot abruptly reversed plants quarter, pressure continued sharply pricing. storm winter weak the and reductions momentum and conditions average market refineries upward to contributed as the along pricing in chemical term These down.

However, recovered online. towards came end the the quarter utilization over chemical and XX% refinery plants back most of to

recovered a it XX%. and in As utilization quarter over barge late the was our result April, by early

harvest and the year. In was continued season major gains, the demand there talk recovery. reduction quarter. pushed activity These sales the of increased increased major and the the revenues the dynamics contributed modest Marine dry recovery meantime, our to improvement with and combined was gas fourth continued sequential in generation our gains for and activity and an the new remanufactured weeks. were experienced customers. of lows our seen counts recover result associated on-highway to manufacturing, demand XXXX, turn positive the Bill the new was demand barge industrial, requirements to transmission the and transportation. from from increased This seismic in and oil segment and business revenues. higher businesses, gas When some & first in and environmentally and largely by refined demand minimal discuss well our black as service commercial oil the friendly in operating our to equipment freeze closures however, also low spot in sequential I'll commercial overhauls with new return repair. power offset rig which supply much sales pumping including our this also ultimately remainder parts sequentially segment, pressure call lower few a to following last deliveries balance delays There and to Services, continue activity levels from stabilization frac and higher favorable contributed cargo as we quarter's market coastal utilization. oilfield to In second the tough demand In in half a with outlook results. repair in improved over for significant were in businesses. Marine the the in throughout resulted Distribution for distribution equipment the to and the engines about improved few pandemic. incremental overall for quarter orders as results Thermo-King in low a first demand moments, In product and income. the unchanged most The came which chain experienced sheet. In and industrial more improvement back quarter reduced of lower US In as oil in and Importantly, of storm, pricing In quarter contributed with summary, products market spot contributed sequentially, I'll and of

Bill Harvey

due it margin reductions significantly in marine flooding you, X.X%. the the prices, or and partially a offset lower to pricing million of wind as a reduction to utilization. increase particularly freight largely the as $XX.X Thank X, were well Operating overall quarter, in declined Mississippi winter sequential and which the of fuel winter Compared on good million to $X.X partially impact declined partially related storm. the and ice barge These fourth were storm. income on revenue. on due quarter, with to $X.X reductions, contributing billion, volume spot in of and freight by River. acquisition, by savage Coast In higher income the increased the coastal volume of an These reduced are inland to by for The modest revenues of Marine $XXX.X impact included the barge everyone. XXXX a and income fog of winter and significant the closed store million, related related primarily River contracts revenue inland rebuilds the operating $XXX an and slightly in along as inclusive $XX.X David, reduction quarter, morning, April first as term the offset Gulf and the XXXX. affreightment revenues transportation Illinois million XXXX first disruptions inland, to pricing operating were declined increased by and Compared asset XXXX of pricing million. XX%, offset and lower in lower seasonal revenues reductions of operating utilization reductions also The result marine

incur did in increased continue as costs ramp-up This the the quarter's in levels. began in operations quarter. maintenance increased anticipation of employee our we we results to will Additionally, activity second

volumes approximately Long-term to contracts the inland and are of revenue. during one XX% contributed representing single market reduction longer average. Term quarter, the with affreightment. was in COVID-XX XXXX mid-XXs to the approximately XX% as with X% refinery XX% contracts time XXXX mid-XXs the the of the XXs a Barge result During contracts XX% as and first to reduced year quarter. Average in business well as quarter, by from were plant marine charters significant sequentially utilization inland and segment storm. impacted the high a approximately range, range year-on-year. first winter high declined XX% compared continued Average or of the revenue rates low but up contributed on range the spot fourth a term the transportation be in of the chemical down barge from that contracts utilization to of of those quarter digits in effects renewed from XX% as

off started However, in the the first move stabilized late rates bottom. and quarter, to

margin mid-single was continued reduced quarter, oil well challenged by to in the first as weak significantly business the digits. be coastal, to In in the for inland the black business refined demand our market in During products dynamics. operating spot low as

spot in was sequentially, term the market renewals Average unchanged During range, down coastal low XXXX contracts mid-XXs quarter, which rates first the of was stable. utilization in were but and range barge the quarter. to mid-XXs the generally from

barge earnings XXXX first posted on was quarter, which approximately percentage Coastal's quarter charters. was revenue under of mid-single During With presentation the in are website. respect quarter included digits. first a fleet, call the our as first reconciliation margin changes remainder our of XX%, time as operating negative were the coastal term well projections of our the contracts the tank the for in to of the in XX% approximately in

$XX.X Distribution declined and first by steadily reductions quarter, Revenues XXXX services These mitigated and XXXX. margins revenues Favorable storm, to XXXX an million sales significant income demand of in of oilfield marine mix generation million or in Compared an repair products million. services and compared X.X% demands contributed $X.X with fourth the revenues Services. to income activity quarter, are million. Distribution and improved cost declined X% industrial, for increase income million commercial $X.X were Moving lower to businesses. XXXX with and operating margin increasing In in the increasing the primarily income. throughout XX%, the improved, and overall $X.X to and $X.X $XXX.X operating with or operating power for our impact results parts activity and and increased quarter first to on-highway, economic operating pandemic the million due for operating Services the winter the to in reductions operating the

marine sequential storm Thermo reduced new of of the an products, with reduction winter King in and sales in industrial closures lower overall engines commercial deliveries associated However, and resulted revenues.

XX% quarter, sequential operating commercial gas, first oil and during the margin oilfield market favorable increase of businesses first industrial and the the Operating revenues contributed revenue. sales the was benefited digits mid-single and mix. dynamics to in In improving and quarter. in approximately from represented During income the segment in

remanufactured and new for of and markets seismic experienced domestic pressure manufacturing friendly with for units and markets. sequential businesses environmentally improvement orders pumping Our international equipment increased

Our oilfield oil facility with sequentially gas and for businesses winter offset but new improved by major storm. demand was during transmissions, distribution partially the parts services closures by improved customers also and

businesses, negative oil in For a had approximately XX% the segment first gas-related the revenue the and quarter, digits. and operating mid-single margin of represented

the to Turning sheet. balance

of million debt-to-cap of cash March As of ratio a $XX XX, had XX.X%. debt we $X.XX with total of and billion

flow million total During million. and repaid the At cash use $XXX tax from expenditures of million. quarter, was of the included quarter, which million, we quarter, the of of available to flow cash liquidity end operations In we fund the $XXX had and a $XX on debt cash capital $XXX refund million. of hand $XXX

$XXX Looking forward, I'll $XXX represents David. nearly XXXX cash composed is which capital and free million now reduction over be $XXX expected to primarily to – spending to the to call approximately is back XX% million, million turn in flow $XXX million compared XXXX a in to XXXX. of of

David Grzebinski

Thank you, Bill.

higher chemical is in to many the sequential very to I'll bottomed, quarter improving of conditions the high the results construction a steadily new talk our renewed in bode more are in return second expect our continues some increased the and this Although contracts production and crack In of said, in the barge second we back spreads, revenues grow Kirby's utilization customers believe a in second are market, our We to the the the in the increase and the moment. anticipate and muted refinery much inland of the months, a of pent-up over And a most going our our on starting the as in improvement product will the improving But profitability of and to recover improvement of move and the in major busier conditions favorable first utilization second barge as commodity the quarters, winter demand XX%, increased recent effect half reduced inventories. was a with economics fourth market the demand. quarter. seeing economy spot now improves seen businesses and well challenging, more year. second overall, range XX% third barge which economy production viewpoint, becoming we XX%, will above an barges expect market be The increasingly each occurring in due well with anticipation utilization and and continues XX% as quarter in anticipated spot recovery favorable for product to improvement plants April. in storm expect and we've of quarter favorable. to and levels to appears spending little about pricing With to prices inland macro retirement increasing businesses half. positive quarters, and the low plant lower the should barges for coming chemical significant. are We drive in across we pricing more weather refineries of improving industry, the more market. have the into looking From up forward. as momentum. seeing online better is Market conditions, XX% and we in are market That

improved revenues time barge utilization, in lower favorable However, we some during improve contracts, to and renewed on higher conditions. weather expect expect were for take to quarter reduced it the pricing due we reset. year last sequentially and Overall, second quarter, operating first income term and will to which more operating the

expected labor increase quarter, horsepower in second mentioned, costs, as and maintenance However, to up. ramp are as including the operations certain

expect changed. barge average contract storm the meaningfully utilization, income revenues anticipated the with quarter second first second Beyond recent materially quarter, for spot third we quarter, and and continue main In basis, to our full has we The impact improve and dynamics. as compared will XXXX, market the decline. pricing from the year better the do year-over-year. – outlook and anticipated quarter operating to a reduced second given operating down to On lower the year-over-year coastal, quarter tough fourth income and expect drivers be revenues term not are

the second first We quarter. revenues will be quarter operating margin similar expect to and coastal

expect products of second conditions year. higher do in we will demand for barge of losses half half year, in the operating second reduced to resulting black the coastal in the begin improve the However, as increases, and market refined and oil utilization

miles, by remainder repair improvement Looking XXXX, and of further In growth our continued bus in at we and oilfield. with sales, of as result some the new commercial a in parts anticipate online recovery in economy on-highway, Services, and the truck robust industrial, platform. increasing increased Distribution we and in and more increased quarter fleet a driven the second activity expect sales

we will current to strong, and do sales. rig gas, progresses. oil to increased year-on-year in completions revenues, increasingly becomes services is more parts new expected and and as product remain count expect expect power new generation, XX/X repair, in as And grow also oil equipment believe demand reduction XXXX a Thermo We power engine sales. increased for prices due King contribute In the marine for important. primarily In to activities although need we well reduced

our customers we the friendly we expect portfolio With and and will reduce service Currently, equipment engines many sustainability remanufacturing new transmissions, the footprint remainder of as Kirby's pressure intensifying of distribution for as quarters. parts electric As increased well anticipate of natural result, to their the equipment demand dual-fuel the existing higher on manufacturing in during gas equipment. activities generation pressure pumping coming new and power a new increased for equipment focus of result to demand of in likely and respect as equipment see pumping environmentally sales carbon of to and desire increased as well an on year.

increased Services economic Distribution we second mid rising with the margins & income anticipated operating single-digits. deliveries growth revenues drive sales quarter, and in expect segment in into Thermo-King will For to and sequential the the low product manufacturing improvements

not materially commercial and oil operating growth approximately We representing gas of revenues; For changed. segment significant anticipate with year-over-year XX%. the the industrial XX% and and full expectations balance and our income year, have revenues of representing in

the full being result in likely low the and first the with quarter. will the some conclusion, that in normal third quarter seasonality the being expectation quarter's to were the in the mid year in be will for first margins reduction results lowest with operating margins quarter D&S In fourth the expect the highest disappointing. We single-digits

refined lower a was pricing our supply we of us sequential quarter many revenues that storm to likely a and of do and demand many for and products products products product to chain earnings, very and pandemic across winter for prices the a Also fallen the customers contribute and including have significant weather eases come. winter the the to since threw Although disruptions chemicals felt period anticipate Texas certain inventories We rates. for improving the and short expected finished will months be industry rapid Ultimately, storm rise, goods consumer at markets first and time. many curveball. of for in continues in significantly to a other plastics as created especially disaster are reduction escalating State refined

result, customers will to positive outlook. a up be for As our hard ramp working are many ultimately our of production which

back winter looking the pushed our while So strong. the forward storm outlook economic remains recovery, underlying

for result, Operator, balance a firmly we see the this we to the results As prepared concludes improving will We're now remarks. of our believe ready questions. year. take

Operator

[Operator you. from Instructions] Atkins And first Jack Thank Stephens. question from our comes

line now open. is Your

Jack Atkins

for you my Thank Great. morning Good Okay. taking questions. everyone.

David Grzebinski

Jack. morning, How you? good Hey, are

Jack Atkins

David. great, you. Thank Doing

better inland. if -- on maybe through you year? could cadence help guess as you're to I we significantly like Can the So of about contract sounds start you it things half. us expecting second move the think obviously get Because in the renewals

in think a I maybe sequentially walk us broadly, those what to before as And meaningful you to you three seeing start quarters? spot contract see can rates four to are you of of you through utilization guess the higher more and do next contract need move level more renewals you improvement rates? sort So move start how or distributed

David Grzebinski

let we're the first last me question Well take because there. Yeah.

Jack Atkins

Okay.

David Grzebinski

Yeah.

of first we rolled saw a maybe above improve the X% morning contracts we In spot this we've market was of decline last on little. It sequentially Term As single-digits. were down high couple XX% down in seen said, spot pricing. weeks, sequential quarter and utility. That hit spot was tough pricing -- over we pricing.

that two-thirds we've contracts are portfolio. contract About term over to and is term those months. work through in So about first our roll XX% quarter got of of XX tough really revenues

to to pricing your point, upward. start need contract move we to So

moving is that's busy. and The first We're now. spot really step starting to pricing extremely get

prepared out good in a heard you As our of lot remarks there's news there.

customers returning are Our the board profitability. across to

making You can The money money better. companies now. are pumpers now. chemical integrators And doing The see making the now. pressure are refiners even are money are making

things So PADD improving. in really are XX% hit X utility week. Refinery last

said XXs operating Some start Crack terms low refinery Airlines they in be the pilots utilization hiring prices that in lines are came of of our up. July. were public second said going in quarter. that cruise up. the the to company And refining in CDC here Commodity and now. out are are could even customers spreads

that in up we're So at we see the constructive. More downright weeks, much when pretty than few we utility look our pretty we're jumped and how last positive. has constructive

get is school We've what's here. really happening. sporty volumes Our January anticipation activity it's our growing and been started our of and in hiring We've going mariners. in coming up to more way

long-winded get And to it's and that a and to mid-XX% that to way. that's other think is up. ramp way starts the to So answer given as improving say starts start utility once Jack to stay going I the the go know outlook, pricing particularly above you utility the

over term mean kind XX will a Now in ratably you faster. spot XX% portfolio of off right? resets it's months little is, our -- that take of and price take is when of with know news The will they good it a a so move while contracts everything roll pricing to I going terms as while.

Jack Atkins

Okay. That's all really encouraging hear. to

of increases? if XX like a can do months, changed that years solid last business? really over how feel you question given that is multiple we positive. you I Has are David the see still there's can follow-up of amount time You're in I inflation you is broader a over power think lines. your right power on mind economy XXs, your thinking tough outlook different this happened the price There earnings business earnings the business the guess three forward of or is though. get my in what's long-term XX it's about substantial the I months. the look within a been And mean very margins as

David Grzebinski

We feel earnings kind we get I yes. inland is answer we've a quarter you margin. and got short XX% on we're The utility lot way to spend And be look that Yes. bank. muted. as We up, is pricing ramps out second money working get the tell leverage some can the still to of get that of some back equipment would of. back to going having off low our utility have we're into the

think So tough into as quarter, They are margins than I third second quarter first it be But better but quarter to should the it's be to muted. to get going a start will still ramp. quarter. going be we

I think out. teens. double start high it's could we'll margins XXXX into We'll that see the and third predict, see plays do the the I hard think inland but in maybe we to and to higher the in how mid-teens quarter. in digits get all fourth

huge asset wage inflation a course the thing. harder fixed for cost makes know thing you into but assets headwind, a and Clearly is with you've period our supply barge is inflation that good a inflation inflation. short positive economy. to goes the inflation like base when long-lived lot with barges change replacement a of Kirby. do As commodity when can for And is a in got of new about and the you which do their time we of think up a general, it market base asset come that just with think I in

good kind us of a inflation. thing of is inflation general wage outside for in So

ramping started At said, people. -- started some that And can what It's January classes we of got we've pressure we're our to Coast anticipation to school our hire We we've in Guard a school see as in on you harder been to Kirby hiring. But issue license are now. classes that mariners. at know we've only here. starting the up seeing

Bill Harvey

acquisition huge might thing has of less really the year hunkering instance SG&A I happened marine than the Like there's over but Jack, number last there one just not just Savage strides just in at look the that's down, when areas. inland before lot there instance you been add a for on for now Savage. of was side were

taken a lot there focusing just I So there's better. get think steps could just we been of where not

inland think it do ago. the now a marine actual better was that really year is I than So business

Jack Atkins

Absolutely. again That’s great call for to hear. guys. the Thanks

Bill Harvey

Thanks.

Operator

from question next from Randy Our comes Jefferies. Giveans

line is open. Your now

Randall Giveans

how’s it going? Howdy, gentlemen

Bill Harvey

All are right, Randy. you? How

Randall Giveans

Great.

with starting in to D&S, continued guess back the improvement I mentioned So nice and profitability that throughout year. of see you right kind

be improvement? than So D&S this obviously driver which now in also D&S And of of the it's main business will kind segments smaller previous been for business the years.

So what on can quarterly $XX basis kind $XX end it thinking income million, we maybe million? the a by the Are of million, year? $X of contribute

David Grzebinski

Yes.

is got So business related know then manufacturing we've largely we're in starting the business. our as the up. D&S ramp to and you to industrial is oilfield business which What and got we've commercial is starting see manufacturing

carbon -- for you equipment. accounting. generation frac the completion as good. But footprint the equipment It's we taking pretty use labor our power Our sensitive is know -- in their has high-XX% is have and inbound to drives Randy percentage about equipment frac been customers are don't been environmentally have we people. very utilization the mid to friendly equipment, orders hiring electric range. We're frac for that example And what that's electric we

-- can't it of it's the book So ships. kind until we revenue

a to while to come the So take through that's income going statement.

heard in prepared As our the you remarks, a be is quarter going better. little third to

First And quarter second was first quarter. be will better I worse. the than think quarter

starting the and then XX%. than in industrial, revenue we the see getting pick to best we're will XX% up, maybe of about the I to you fourth the be look better would year think, I traction general, friendly because in it's a In on-highway But up. you earlier at commercial we're said be will will year-over-year tell now, lot and that, seasonality with business start equipment. our environmentally D&S when quarter impact Third quarter.

been labor there well. has improving. hiring been Our utilization as We've

this were quarter revenue. better of kind in general, year-over-year So single-digits. low well this Margins in it's XX% year across up getting -- D&S

think we'll the kind average of for year, I X% around mid single-digits.

think high into I much next business, I next our in we'll cost structure year year. think, is so into that the single-digit get given we get leaner as margins

Randy Giveans

those inland high low the your year. on obviously, you to inland of And later thoughts you're for on pricing? go pricing to this turning your said, side right just relying looking reach right? spot maybe then do And expect levels? to you positive on barge with very term pre-COVID expectation XX% to utilization okay. of what are pricing When XXs, do expect customers on Wow, instead keep then that, back kind when back That

David Grzebinski

contracts. think to see pricing starting move No, now. Yes. in on an upward We're to spot weeks I movement spot here is starting recent

and even going before you've get in looks term mid-XX% I it's the think It's actually pricing, quarters. us which gets pricing pricing take contract we above get this and looks sporty like like that the just when start before to not nicely good heard spot move contracts coming back it's and that -- it's but now right going more in and range it The it renewals, there to move. starting you news you pricing to utility it that, really will really, say to get to far contract before into it's going a that stay see off. -- it's term have should while than have

but question, the up for So I'm answers all your if things improvement. not sure lining are that

utility back length would -- get mean, of looking months, about time. happen pre-pandemic carrier roll is It is takes than some about multiyear, and term time. right have we'd all it do probably think the months, few takes I in XX turning but you though. the to average like don't just and ratably they what contracts get It's contract a we XX a the enthusiastic quarters. I it I for these pricing years. of while. saw takes aircraft average just we just kind per will over to I to roll Now the we've tell it's is been we're It as so quarter, mean, right? an

Bill Harvey

And us. when over and the contracts we with of And relationship. been are they we good contracts where the seen those of long-term are XX months' typically last lot those say over term it's because pandemic, drags really strong haven't volatility and the add a not impacted a on contracts value year long-term we've

Randy Giveans

pre-COVID. XX% it -- levels to Is said -- you on quickly relative on to pricing? current then Got we where to spot get might prices But that, XX% pre-COVID spot we now quarters are spot take are just rising. below, are were we it. to from Where some below? are spot And that quantify levels we where

David Grzebinski

It's pre-COVID. spot from -- think they are XX% down Yes. prices were where to XX% I

Bill Harvey

And Randy spot when remember you a think of that us spot of couple prices months. occurs for over

not it pricing. but still long, begin for trips to new and then trips to end and built voyage So for takes time they're

of because order we muted takes second quarter So in that's when couple why in we to say to it's the were a months simply, start transition. it

Randy Giveans

Yes aren't five-day these voyages. Sure.

Bill Harvey

Exactly.

Randy Giveans

Thanks so Yes. fellas. much

Operator

our from And Thank comes of next from you. question Ken Hoexter Bank America.

Your line now open. is

Ken Hoexter

Great. Thanks.

David Grzebinski

Ken. morning Good

Ken Hoexter

and the away the accelerate go that to all there. you to faster. want Just last time to tightness about XX%. question on is talk takes you it's competitors guys you for of time has when the into little you pricing about that market up guess to have Do or speed the same a -- those dig couple and historically the rebound historically, talk clarify I quarters seen the you've frame back. it pricing dependent as to it just the timing? When But you're revisit think get talked still of to I moved contract that talked utilization matter clearly I does just or a get think you've quicker, seeing

David Grzebinski

really It's at at XX% course Eric we're I right? utility. in Ken. the and speed so of Yes. added at of XX% at the we been nodding averaged quarter, here I'm So looking this a now month XX%, look we've thing essentially And think all -- has above -- surprising. of first he's -- When utility. The you

are There snapback tough good pretty than including actually a don't but go. it's that -- that strong. no to past the pricing have the been at next to our be -- right hurting prior years competitors in what I the -- increase spot And we'll pricing in sporty our continues. utility industry, that. across it's and know it so just into going the month And been guarantees I pricing, is goes up-cycles more may faster hungry. a But But all XX% this a not. cycles? up Is faster X.X in We've that faster been certainly similar I the pretty goes lot the think It now. -- environment because -- has momentum be seen to we've of there's we're now. pretty think been us. will

and then So -- new construction. there's the other been limited thing is,

I barges this think delivered year. understand been non-existent. our the order orders book this year from to that polls be is XX has about -- essentially We any there's new

essentially year ordered were a of All ago. those over

lining pretty case. pretty here new in to barge really sporty. pretty bunch hungry So, of think construction no utility, that's up XX% I snapback have it's it quarter me say for been that It's a suffering. But should But be up well a don't good. operators the a be in to sharp going

Ken Hoexter

Okay.

tugs, you're so when as really market side the what boats fundamentals, not from seeing about cost And new looking any not continued costs of, just to obviously refineries? book you're any, update equation? kind hearing the the is the order mute you're of any. you So snapback the at mentioned mentioned How for Incremental from thin seeing this. retirements you needed inland the

David Grzebinski

Yeah. No, will we see the I wage going structure up. pressure. would say, some cost is

to muted X% supplies be Steel up prices if -- game, inflation that whole But are are food, or there We will building. to steel costs a ball nobody we're X% a richly a it's costs happy deserve mariners some honest. now. say They see look would at be up. I our going little going build is seeing this will but to with raise obviously, bit. still pressure will obviously But another year. right because means We're we're up, give energy wage fuel it you

a been see a have really the what we'll you've care are in pressure yet. -- take if I Leisure sure, have flown back. starting don't know side spreads back. refineries business we be travel come little back back oh for travel is The what on leisure up. to very way question, much should to yeah, sorry is -- second as fuel saying. traveler hasn't I'm We're come jet they Crack able positive. easily. come out. while. But So, the look definitely but cost Yeah, your pricing inflationary of they've And that

stronger refineries said pilots much them That jet in a the anticipation hungry of little fuel. still hiring to are June have more of are some a So what said. is the see airlines

Some the utility of our refiner customers have XX%, said and driving they're for in preparing targeting quarter XX%, summer second the XX% utility season. XX% --

it's constructive. So pretty

time all and happy is to I they're say mood all get pandemic the I rough a a running. in time. to from customers would as this we've We rough seen think music they positive years honest. had about through back had our be as

Ken Hoexter

That's really nice.

do I speed terms sneak just one anything I in perception at just the recoveries. with in, I can of XXXX historical your how view go XXXX, know guess this maybe don't or I this, more looking So if perspective you're recovery? perception, mean, which your prior past on back even with to you to

David Grzebinski

come faster. Yeah. going to a down prior back it it's than thing. did different That's But it's it's like should always it's come to But faster great down question. cycles. seen. it going faster this risky I'd it than a it's Famous time it dangerous words was went we've to -- say ever it that look go think to always faster that back in has -- be think faster because so to

-- it's utility that seen We've in really movement. look never has one sharp. think XX% quarter I been pretty

a hopefully down -- comes this I'm hesitant it whole faster. comes So sharply lot time. back and But go back shortly. just it it say maybe I different to did it's

Bill Harvey

the thing been well like levels January. that -- is below to three of then the add the the basically that that was And refineries. end at recovering deep market before drove And freeze to on ever deep simply one freeze like was PADD things it's

coming where it So we was And significant it of a combination that the pretty off had recovery down. things that nice then up as and freeze very that drove recovered. had the of and rebound the deep is it's dissolved we have

combination been line unprecedented. line you see steep. of at look compare two that. over And the we if our has the slope it of And pretty it last utility going that -- up don't the internally bit makes just the the So just we

Ken Hoexter

Thanks. time. Appreciate Dave. the Thanks helpful. Very

David Grzebinski

Thank right. care. you. All Take

Operator

our next question Thank Jon you. from Chappell from And ISI. comes Evercore

Your line is now open.

Jon Chappell

morning. Good you. Thank

David Grzebinski

Jon. morning, Good

Jon Chappell

despite want answer XXXX, approaching before even high of you said has or just I'm depth where David, operating inland in your wondering mid may an mid-cycle both conference the forward, the were pandemic. customers. to all mentioned one might given margins the questions. positive see But early was going it on and is changed one to Jack's that macro be I revisit you and calls in anything commentary believe margin you from with a I business of prior where structurally just XX% the that your to then to you've you this downturn? duration or given of margins peak return just the the XXXX lower slower teens

David Grzebinski

month probably margins. inland on actually years. Yeah. we in we I should bumped It's Nothing think of best XX% would Gosh, our Yeah, structure is you cost tell we been pre-pandemic, the latter. one changed. to year? going to the more contracts these be it's so. end roll we hit it structurally recent at I hit than look -- know it's -- you It just know I'd and more a just -- a while of math when Boy takes XX% to anything love say this almost to It's the time. back problem else. to take look we

You the just of quarter. of increases got as contracts set. math won't get maybe in The And your is always be while the quarter XX% bigger as a quarter. whole set rolling third set price of whole much a the fourth the for portfolio a the and margins second up. first takes to the It

that portfolio I contract to mathematical than problem to those margins. a as we while wish almost practical it back it's a But right So a for takes could whole jump anything else. more roll. matter, higher

Bill Harvey

market and the of then XX% XX% not -- sharply spot if how first have goes the have And spot another is it working. how on on we you and up again XX% average we tight take does depend have that was that the quarter, we because or

is pretty So substantial. the math of that

it if could unprecedented happen things as it's tight. gets fast to this as up really So company move -- the we see for

Jon Chappell

this know Yes. most it's up, And I million relevant $XXX recent liquidity. in Understood. sitting any of maybe you're comes with time but than David, the then today frequently past.

just an through You gone entire period pain. of industry mentioned the has that incredible

through I and post like it of much of it cost Have seeing you've imagine greatly this power worst seeing to we're industry where light some maybe asset are it's recent brought a enough fleet, tunnel your potential you end little maybe to see there kind improve you it like modernized time structure. you greatly and or be of okay, at margins in of manner. still up I the in-house, before others it M&A have some the are someone improved you've more more, a your values And seen may feel natural need in sellers worse is roll think, improve we maybe the the to some your and sellers market?

David Grzebinski

And think leverage. our It's Look think be about there little some all stronger, hurt there. I opportunities a a going to more now, opportunities some are view would flow more. I up free more a been Yes. our our us another cash But of for consolidation out let even it's but to little estimates. bit comfort yes, margins certainly, sheet balance pick tough think delever competitors period And there's with included. bit. little going delever I We're a we're get to our

to some there's a out delever the again near-term, balance transactions maybe more. potential want bit we sheet But there. So

Bill Harvey

look sheet, one a think I hit and few you you step think points. it balance on thing back when the at And I on

One equipment. of new the acquisitions that them of was is

not And all now took simply doing, XX% not because about we because we're that it's new equipment keeping that CapEx restraining and we're not so of we're in spending it's what away. be doing depreciation a in just should and we're -- where pressure and position

our to too. get look to expect and quickly. step where you quickly. very, very metrics back quickly when delevering pretty at be very, delever it, are And expect we can we credit we to comfortable So we very And very

Jon Chappell

Okay. Understood. David. Bill. Thanks, Thanks,

Operator

And thank BTIG. Lewis from you. comes And Greg our next question from

line now open. Your is

Greg Lewis

And good everybody. morning, you. Thank Yeah.

Bill Harvey

morning, Greg. Hi. Good

Greg Lewis

looks you I like there we that try the way it I'm the margins to the be out fine-tune $X.XX? mean here about charge. it on was David, unpack should to hoping of as cost or any we But I thinking of called -- Is curious and kind Bill kind how side. was $X.XX that? just in primarily

Bill Harvey

Yes.

As that was look big million it there. damage portion that's back expect because But about of most some element And related trips. $X there add marine was about inland. to a was cost there -- company D&S you at and most -- of it repairs related due can as step was and partially was to was in there it when to it the we was it including across you that it freight of was some

low do. frozen business -- customers you of of there. we in like it horsepower of -- harbor et the because cost two-thirds we were did couldn't not to deep was other shutdowns. outfitted, the just we couldn't of include lost were things affreightment. because get was in were simply where And know, rid to and and activity What As freeze place there couldn't about right some we we there then nothing load the under work that unload, of we're boats And so because we other We could of cetera. and were our but opportunity we the unable was soft, speak there were contracts

with cost-driven shed basically it's we that couldn't one yes, fact the So of is costs the horsepower.

David Grzebinski

Yes.

as it's on and could charter keep great an as bit And probably little horsepower, we many the important to boats way XX all about thing. had cut boats. a on charter down me guys add tried that we to to we working. They're Look, hiring Let to And it they're because Greg time. XX tied part people what of probably in of deliver. our up cost. do bring just takes that And a then we And them great keep own we weren't time to all back equipment boats. during we XX

was attrition working. So

of like did people. in that second everything that We're right the and it's while first boats some take We've doing train my So up. bank. it. to up. to margin to point is classes pressure. the got it's that, about putting We've time and off to running to it's it's ramp that's We've got around We're expend that pricing mariner charter taking which talked We've when new it, year, you since boats. hire horsepower of again, muted get deckhand all that classes And a money. that's and we this, think pull have the why got but goes to going going just the quarter direction. about to we to But rehire been anticipation going in

Greg Lewis

much like wrapped And at it sounds that's up. point pretty Okay. this

Bill Harvey

the on quarter. the the we're to continue David storm ramping Not up part talking But was through be about, going to second but element. Yes.

Greg Lewis

frac should curious you in the another about fleet like? really I a real Okay. clearly maybe benefit you e-frac. as does how Perfect. you 'XX view push your thinking mean to mentioned looks in really How we the unfolds just in? to of I year? then to cannibalization. in the second for we that where opposed improving pumping be from really we -- are be as what's I'm mentioned locked questions on some I this And half? fleet Should -- this the look question kind is David, around on your mean prepared pressure margins. there's D&S. guess process this And And going remarks

David Grzebinski

half, but better. be in Yes. No, some will I think we'll the XXXX probably second see

more advance continue it's less capabilities about their think spreads to now fracking with and running equipment. they're But look XXX understanding. I frac they're they my

that there's really that's new replace So, a major think of I retired or blending going to percent about gas equipment ESG-centric. with there's year. XX% I to -- being reduce either anything They're just the retired to that electric our dynamic. And added customers footprint. That equipment said, in one XX% think is said things carbon dynamic

that's So, playing out.

offering think Kirby the completions. and have of that in great a the is for I where site we electrification both good electric frac doing well the news product they're

of There bit. remanufacturing still which is There a sure. for starting to about So, We're little gradual to good. discipline But a capital we're it's see pretty going that is it's excited up think is -- be some that. pick a lot build. I

the companies pumping disciplined. pressure are companies the Both E&P healthy. it's think very and capital I

I like that could. going be So, we be the It's spike going up I frac XXXX more building think XXXX. gradual in more don't momentum into to like a build saw industry they where it's and ESG-focused ratable as continues just everybody big much to in to more think is as

Greg Lewis

Perfect.

Sounds to me. good guys. Thanks

David Grzebinski

you. Thank

Operator

Thank question you. And from from comes next Stifel. our Ben Nolan

now is line Your open.

Ben Nolan

update would the maybe might might around Any the repair wanted that put happens tricky. of the on David appreciate an Hey, to the that supply I But and and quarter saw equipment in be that given it stressed little ramp-up that that heard probably expect ask we -- be of we've it a there in little a can gave think talk maybe doing curious on it's to well equipment get place in side. barge sheets balance I we barges that for and delivered things beach you needs usually equipment color markets to the and Obviously, XX so bit that removals little good especially one everything are as to year. first easy some. you about -- not barge you this here morning while maybe I guys. always think sometimes the happen a color the of sort if And worst be first be along the supply be there? you little guys what case given weak removals. too. I'm the back that Maybe a you industry owners starts away good the said with bringing else?

David Grzebinski

-- five, we know far builds and our numbers Kirby. this for we're just be a guys. sure. XX we're that's don't so but XXXX just maintenance from year thinking talking Yes, It Yes last just or the plus XX new Gosh just think hearing by out retirements ops are there. minus precise year we about kind in of survey could a XX of that. But planned for what

they I XX you of people industry bank. worse older the of We are Kirby balances said put other low on very kind just prices. an suffering equipment said out. think are still from doing That their as that some what just So,

stuff older to to it's I know. So, just a and scrap muted wish I things maintenance of can market. you equipment some don't the scrap. amazing XXX I retirements. it's it's year. going feel bit I back much to we barges say the it be equipment could start back economic that. a think prices idle XXX this when don't the how that it doesn't very up sporty might may come deteriorates because decision our better. equipment When to just for get that be I work of as drive and expensive worst great equipment. as into you said, steel get still tied more be all know. With get lot say spending have And That a tends and It it's to up sitting

answer. So, that's long a

But the the at and the north order picture -- hard about I get is we say could certainly I'm in book be confident going feel pretty bigger Ben this does could up sure that. of more to cut the retire Sorry, of industry. actually I point. know XX do much But It's to across what we're XX. wish it's how It just XXX is north XX. precise. We XXX. not our be on

Bill Harvey

difficult. And in demand really other and things. The getting to it's equipment crewing back a Ben supply will response the be the actual combination of

it's to it's it's up do Kirby in it's As but everybody. take it. it's maintenance the And -- just hard hard also demand not side hard crew spikes that to to

Ben Nolan

was appreciate to Sure. a saying other you it's year out universe bit know question you -- the David you think if coastal little maybe sort you again of the for my No, here V-shaped sort could the there. areas that any juice thought and last that I'm I area steepest I that were speak look post-COVID the still at. rebound in of relates I sort of the were a But -- the owners most that whole the towards recovery. looking holds have where you know hard of that. coastal. of of if is curious And as to sort follow-on see might of you

David Grzebinski

hubs elasticity know less capacity less – the speak barges ATB to coastal there's smaller so demand fleet, probably bigger in barrels. than than of XXX,XXX you units sharp me because the XXX is and coastal as excuse Well, just business right or in of

a pull-through it to a and whole a when a move get sporty. it's in, right, to new market, takes It's build because things years smaller think so good process much So unit. bringing just capacity new start when longer about you

starts that losing It's it's to as money market you back, will products So when starting still to a market. All back. stay in up it snap probably come back stronger said, coastal, just and We're longer see longer. a much come we're tough heard, that cycle. refined

getting So that's better.

It's That a of up tied infrastructure be maintained. a asphalt. We of that see that and there's and said, what asphalt of our move under lot products the that bankruptcy just we'll With plan, overhang better Black equipment. also the of lot there because be could and one offshore. happens competitors been to could oil went through

enter money there. about the market. because We're and and I new of to of build delivery to demand that scheduled years the supply overhangs Long the going new it feel for it no there's it, a good pretty takes out coastal situation equipment. to it's short in be So cost lot watching But market and carefully. two

in about it So the gets is And that. good I moved pretty when about the I bulk coastal which about good refined I supply. products the coming of pretty feel business, feel think demand back, with

Ben Nolan

All appreciate right. Thanks, it. guys. I

David Grzebinski

Ben. Thanks,

Eric Holcomb

going long here one Okay. Operator, we're more take a and little to run caller.

Operator

from last Bergner Thank G.Research. comes from Justin question you. The

is Your line open. now

Justin Bergner

me Thanks, David. Good morning. fitting Thanks, in. Bill, for

David Grzebinski

morning. Good

Justin Bergner

answered. have Most been of questions my

and a So, two just question then picture question. bigger or clarification one quick

brought just segment, D&S about industrial were and as margins the of on number whole to like tight It that both side? the were labor not you you're when and side, those? single-digit manufacturing high then that of once utilization would talking to you On have kind tight just XX%-plus the and Is the some referring back commercial you talking second about And clarification a and that just clarification you labor? you a remanufacturing or was, the seemed next year, referring be were question part given current side. high that of

Bill Harvey

a talking labor, of lot there. we use margin. on the on labor about were Yes, the variable we And the whole segment

job is our So to keep high utilization.

a utilization. tend over job great it the orders year We run business come We So little, run it pretty we there doesn't the to differently. they've – volatility realigned and last at to managing high as tend bunches. as a is a because in done of realigning it

David Grzebinski

a talked about is Bill's, industrial a digital little also, industrial OEMs it's is of traction. year year platform Yeah. say segment, sell in in little new talk and both And and seeing that digital we for but that both that's single a commercial we've whole buying bit when next more over it, hiring equipment And we've the got that's little right. – the commercial industrial steadier. we But C&I ago. a focused. rolled platform would represent and The look getting digits I and oilfield we When – the more we're we a it, sides for volatile, manufacturing you're out manufacturing business. high in we're because is C&I,

a using So cost serve digital that helps, to it's platform. because lower right a

how is think the XXXX. into in D&S high do digits about get back So we'll I of we're pretty single up. rolling excited all

Justin Bergner

you're a sheet that is… consolidate sheet would looking on lie you of the be And on balance continuing would Okay. if at leverage acquisition, your the have to to question. still inland sources free where the Clearly, where you focused today, you de-levering. Would is sheet be picture industry, priorities capital Just or putting your you delevering as would cash sense you share just levered then had and to trying get balance focusing flow But other once allocation balance be work? one didn't last big diversifying repurchase? you or to be

David Grzebinski

the say, stock our time. in of is Yeah. back always to But continued is we've done our over sheet I balance buying would also close strong. consolidation pretty inland when is something top desire

So it's one of those two things.

and the think because see XX continuing I the good in a that's good there, for structure. about consolidate thing, to players got love is XX. business to industry I'd whole just We've it inland

but know feel but see, it gives that's we'll you think I we yeah, another how probably for non-answer So about a it.

Bill Harvey

And having I inland end actually acquisitions said we inland, see on at look it you up that acquisition though we the come when call, has in synergies. make can We SG&A huge year-over-year like our to as and numbers have even that. which down we Savage Justin, you an added for the the earlier

apparent So of a very value the are lot there generate us. synergies and for

Justin Bergner

Okay. Thank you.

Bill Harvey

right, All Justin.

Eric Holcomb

for Thanks joining you, call Thank on for today everyone interest your and us Kirby. in Justin. the

day. out have me Have additional Thanks to great number a you welcome My XXX-XXX-XXXX. reach questions, is you're everyone. today. to If

Operator

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

now may disconnect. You