Kirby Corp Record 2008 Results
Kirby Corporation (NYSE:KEX) announced record net earnings for the fourth quarter ended December 31, 2008 of $38.4m, or $.72 per share, compared with net earnings of $34.4m, or $.64 per share, for the 2007 fourth quarter. The 2008 fourth quarter net earnings included a $6m before taxes, or $.07 per share, increase in Kirby's allowance for doubtful accounts. Consolidated revenues for the 2008 fourth quarter were a record $326.7m, an increase of 6% over the $307.9m reported for the 2007 fourth quarter.
"While our fourth quarter results mark the 20th consecutive quarter that our net earnings exceeded the same quarter of the previous year, both our marine transportation and diesel engine services markets weakened as the economic downturn began to impact our customers," said Joe Pyne, Kirby's President and Chief Executive Officer. "In our marine transportation segment, demand was weakest in our upriver markets but was partially offset by time charter contracts, lower fuel costs and lower operating costs as we responded to the changing economic conditions. We also increased our general reserve for doubtful accounts by $6.0 million in the fourth quarter due to the deteriorating economic environment. Our diesel engine services segment's fourth quarter results reflected a weaker medium-speed market and continued weakness in our high-speed market."
Kirby reported record net earnings for the 2008 year of $157.2m, or $2.91 per share, a 27% increase compared with $123.3m, or $2.29 per share, for 2007. Consolidated revenues for the 2008 year were a record $1.36b, a 16% increase compared with $1.17b for 2007. The Company's debt to capitalization ratio declined from 27.9% to 21.7% during 2008.
Marine transportation operating income for the 2008 fourth quarter was $62.2m, a 15% increase compared with the fourth quarter of 2007, and revenues were $265.5m, a 7% increase compared with the 2007 fourth quarter. Demand for the upriver movements of petrochemicals weakened during the quarter while demand in the Gulf Intracoastal Waterway remained consistent with third quarter levels. In addition to the $.07 per share negative impact from the increase in the allowance for doubtful accounts, the fourth quarter results also reflected a $.06 per share benefit from the timing impact of falling diesel fuel prices, which declined from an average price of $3.99 per gallon consumed in the 2008 third quarter to an average of $2.59 per gallon consumed in the 2008 fourth quarter. The 2008 fourth quarter operating margin was 23.4% compared with 21.8% for the 2007 fourth quarter, reflecting higher term contract pricing implemented throughout 2008, reduced number of charter boats operated and lower fuel costs, partially offset by the increase in the allowance for doubtful accounts.
Diesel engine services operating income for the 2008 fourth quarter was $7.5m, a 19% decrease compared with the fourth quarter of 2007, and revenues were $61.2m, a 3% increase compared with the 2007 fourth quarter. Demand levels for service and direct parts sales weakened in the fourth quarter in the medium-speed market as its customers' activities slowed, particularly in the power generation and railroad markets. The high-speed market, which had been impacted by lower Gulf of Mexico oil services activity during the 2008 first nine months, improved in the fourth quarter as customers recovered from the disruptions of Hurricanes Gustav and Ike. The diesel engine services operating margin was 12.3% for the 2008 fourth quarter compared with 15.6% for the 2007 fourth quarter and 15.0% for the 2008 year compared with 15.6% for 2007. The reduced fourth quarter operating margin reflected lower labor utilization and higher equipment sales, which had lower operating margins.
Commenting on the 2009 first quarter guidance, Mr. Pyne said, "The global recession has limited our visibility for 2009 volumes and we are providing a wider quarterly and annual earnings guidance range until we can forecast with a higher level of confidence. For the 2009 first quarter our earnings guidance is $.45 to $.55 per share, reflecting a 19% to 34% decrease compared with $.68 per share for the 2008 first quarter, as demand is anticipated to remain weak. The 2009 first quarter guidance includes an estimated $.03 to $.06 per share negative diesel fuel price impact. The guidance also includes an estimated $.05 per share charge for early retirement and staff reductions, as we respond to a lower demand and service environment."
Commenting on the 2009 year, Mr. Pyne said, "For the 2009 year, our earnings guidance is $2.40 to $2.65 per share, reflecting a 9% to 18% decrease from 2008 net earnings of $2.91 per share. Our 2009 capital spending guidance range is $185m to $195m, including approximately $140m for the construction of 48 new tank barges and five towboats."
