Kirby (KEX) Q2 Earnings Surpass Estimates, Increase Y/Y
Kirby Corporation KEX reported mixed second-quarter 2023 results, wherein earnings outpaced the Zacks Consensus Estimate but revenues missed.
Quarterly earnings of 95 cents per share surpassed the Zacks Consensus Estimate of 83 cents and improved 94% year over year. Then again, total revenues of $777.2 million missed the Zacks Consensus Estimate of $778.8 million. However, it rose 11.4% year over year on the back of higher revenues in the marine transportation, and distribution and services segments.
Total costs and expenses (on a reported basis) grew 5.9% year over year to $689.9 million.
Segmental Performance
The company operates via two segments, namely, marine transportation, and distribution and services.
Kirby Corporation Price, Consensus and EPS Surprise
Kirby Corporation price-consensus-eps-surprise-chart | Kirby Corporation Quote
In the second quarter, revenues in the marine transportation unit increased 5.3% year over year to $427 million. Our estimate showed a 6.8% increase from second-quarter 2022 actuals. Segmental operating income jumped to $64.3 million in the reported quarter compared with $30.8 million in the year-ago period. The operating margin improved to 15% compared with 7.6% in the year-ago period.
Inland market revenues (accounted for 82% of segmental top line) climbed 11% year over year, primarily due to increased pricing and volumes. Inland’s operating margin was in the high teens and benefited from improved navigational conditions and operating efficiencies. Average barge utilization was in the low 90% range.
Coastal revenues, which contributed 18% to segmental top line, decreased slightly year-over-year. Coastal operating margin was positive in the low single digits as higher pricing was partially offset by lost revenues and costs incurred as a result of planned shipyards. Average barge utilization was in the mid-to-high 90% range.
In the distribution and services segment, revenues rose 19.8% to $350.3 million. This exceeded our projection of a 12.6% gain. Segmental operating income amounted to $29.8 million compared with $16.7 million in the year-ago period. Segment operating margin reached 8.5% compared with 5.7% in second-quarter 2022.
The commercial and industrial sub-group, which accounted for 52% of segmental revenues, benefited from strong economic activity across the United States. This resulted in higher business levels in marine repair and on-highway. Increased product sales in Thermo King also contributed favorably to year-over-year growth. The operating margin at the commercial and industrial sub-group was in the high-single digits.
The oil and gas sub-group, accountable for 48% of segmental revenues, was aided by higher oilfield activity, resulting in elevated demand for new transmissions and parts in the distribution business. Although manufacturing was negatively impacted by supply-chain delays, the business continued to witness higher demand with incremental orders and deliveries of new environment-friendly pressure pumping equipments and power generation tools for electric fracturing. The segment had an operating margin in the mid to-high single digits.
Balance Sheet Highlights & Cash Flow
As of Jun 30, 2023, Kirby had cash and cash equivalents of $36.6 million compared with $80.57 million at the end of December 2022. Total debt was $998.4 million at second-quarter end compared with $1,079.62 million at the end of December 2022.
During the reported quarter, KEX generated $211.4 million of net cash from operating activities and capital expenditures came in at $98 million. Free cash flow was $113.4 million.
2023 Outlook
Inland revenues are expected to grow by low-double digits on a full-year basis.
In coastal marine, barge utilization is estimated to be in the low-to-mid 90% range. For the full year, coastal revenues are projected to be flat compared with 2022 levels. Coastal operating margins are anticipated to be near break-even to low-single digits on a full-year basis.
In commercial and industrial, company expects segment revenues to grow 10-20% on a full-year basis with operating margins in the mid-to-high single digits.
Kirby anticipates net cash generated from operating activities to be between $500 million and $580 million (earlier view: $480 million and $580 million). Capital expenditures are still estimated in the $300-$380 million band.
Currently, Kirby carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Q2 Performance of Some Other Transportation Companies
J.B. Hunt Transport Services’ JBHT second-quarter 2023 earnings of $1.81 per share missed the Zacks Consensus Estimate of $1.97 and declined 25.2% year over year. Total operating revenues of $3,132.6 million also missed the Zacks Consensus Estimate of $3,347.5 million. The top line fell 18.4% year over year.
The downfall was due to a decline in revenue per load of 24% in Integrated Capacity Solutions, 13% in Intermodal and 21% in Truckload. A 4% decrease in productivity in Dedicated Capacity Solutions added to the woes. Changes in customer rate, freight mix and lower fuel surcharge revenues resulted in this downtick.
Delta Air Lines’ DAL second-quarter 2023 earnings (excluding 16 cents from non-recurring items) of $2.68 per share comfortably beat the Zacks Consensus Estimate of $2.42. DAL reported earnings of $1.44 a year ago.
Revenues of $15,578 million outshined the Zacks Consensus Estimate of $14,991.6 million. Total revenues increased 12.69% on a year-over-year basis driven by higher air-travel demand. Adjusted operating margin was 17.1% compared with 11.7% in the prior-year period.
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