Net earnings of Kirby Corporation dropped by 42% yoy in Q3 2016

Kirby CorporationThe net earnings of US tank barge operator Kirby Corporation dropped by 42% yoy in Q3 2016, amounting to 32.0 million USD. The earnings of the US largest tank barge operator decreased on the background of downtrend in oil demand, lower freight rates and weaker transportation of refined petroleum products. The inland tank barge utilization of the company was in the low-to-mid 80% range. The revenues downtrend was slighter, as the consolidated revenues of Kirby Corporation in Q3 2016 decreased by 18% yoy to 434.7 million USD. However, the company remains in strong liquidity with total debt of 726.0 million USD and debt-to-capitalization ratio of 23.3%.

“Our results in the third quarter reflected trends across our markets that were largely as expected. In our inland marine transportation market, barge utilization was in the low-to-mid 80% range, down from the high-80% to low-90% range during the second quarter”, said the President and CEO of Kirby Corporation, David Grzebinski. “The third quarter was aided somewhat by increased demand for refined petroleum product and black oil movements following a series of customer supply chain disruptions late in the quarter. In the coastal marine transportation market, tank barge utilization was in the low-to-mid 80% range during the third quarter and the trend of customers moving to the spot market continued”, added he.

Since the beginning of the year, EBITDA of Kirbi Corporation amounted to 336.1 million USD, representing a decrease of 23% yoy. During the period, the company ordered building of new inland tank barge and towboat, settled payment for construction of three new coastal articulated tank barges and tugboats and two coastal tugboats. Also started renovation of the existing inland and coastal fleets.

Last month, Kirby Corporation was engaged in several environmental scandals, including collision of barge convoy with tug Capt Jim Green at Subsea 7 facility near Port Isabel, which caused spill of 18 tons of low-sulfur diesel fuel in Intercoastal Waterway in Texas, as well as grounding and partially sinking of the tug Nathan E Steward at Edge Reef in Seaforth Channel at Bella Bella Island, causing spill of large amount of diesel oil. In late September, the Kirbi reached an out-court agreement for settlement for Houston Ship Channel oil spill for March 2014, agreeing to pay 4.9 million USD civil settlement until the Clean Water Act. The direct costs for all these accident will be accounted for the next quarter and probably will weight on the finance statement of the company.

However, Kirbi Corporation projected earnings per share guidance of 0.45-0.60 USD during the next quarter and full 2016 year earnings per share guidance at range 2.47-2.62 USD.