Kirby’s second-quarter earnings were backed by steady fundamentals in its coastal tank barge fleet that neared full utilisation, mirroring the first quarter.
The Houston tug and barge owner reported a net income of $83.9m, a significant rise from $57.4m in the first three months of 2023.
Chief executive David Grzebinski said: “Solid demand in both marine and distribution and services, continued during the quarter and led to strong financial performance.
“Our second-quarter results reflected steady fundamentals … with some modest weather and navigational challenges for marine and continued supply constraints in distribution and services.”
In its marine transportation segment, Kirby’s results reflected continued pricing momentum with a modest impact from poor navigational conditions due to bad weather and lock delays.
On a results call, Kirby president and chief operating officer Christian O’Neil said: “We’re coming out of a quarter where we had some lock outages due to maintenance that were pretty significant.
“Flooding in the Houston and Texas area caused a 2.5-day closure of the Houston Ship Channel, that’s something we haven’t seen in 25 years. There are 80, 90 barge-tows in the queue trying to get through the broadest river floodgates.”
Customer activity within its marine transport business was steady, with barge utilisation rates running in the low to mid-90% range throughout the quarter. Spot prices also increased in the low to mid-single digits and in the mid-teens year on year.
Market fundamentals for the company’s coastal fleet remained steady, with its barge utilisation levels running in the mid to high-90% range.
“During the quarter, we saw strong customer demand and limited availability of large capacity vessels which resulted in high teens percentage increases on term contract renewals year over year,” Grzebinski said.
In addition, average spot market rates increased in the high-single digits and the mid-20% range year on year, he indicated.
Overall, second-quarter coastal revenues increased 24% year on year and had an operating margin in the low teens.
The result was $484m in revenue for the New York-listed company’s marine transport fleet, up from $26m in the second quarter of 2023.
Operating income rose to $120m from $87m.
Meanwhile, Kirby’s distribution and services business also recorded stable demand.
“In power generation, the pace of orders was strong with several large projects wins from backup power and other industrial customers as power becomes more critical,” Grzebinski said.
In this segment, its operating income was only marginally down at $29m, while revenue slipped to $339m, down from $350m a year earlier.
Looking ahead, Grzebinski envisages favourable markets continuing and expects businesses to produce strong financial results this year and into the next.
This is despite a looming hurricane season and the beginning of a third quarter already challenged by Hurricane Beryl.
“The hurricane impacted our marine operations and temporarily shut down some of our distribution and services locations due to power outages,” Grzebinski said.
“Despite these challenges, pricing in the marine market continues to improve, demand is strong and our distribution and services businesses continue to hold steady.”
Kirby operates a fleet of 1,078 inland tank barges, 28 coastal tank barges and four offshore dry-cargo barges.
