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Kirby's (KEX) Q1 Earnings in Line, Revenues Increase Y/Y

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Kirby Corporation KEX reported first-quarter 2022 earnings of 29 cents per share, meeting the Zacks Consensus Estimate. In the year-ago period, the company had incurred a loss of 6 cents per share.

Total revenues of $611 million outperformed the Zacks Consensus Estimate of $583 million and also improved approximately 23% year over year. The upside was driven by higher revenues at the marine transportation, and distribution and services segments. Total costs and expenses (on a reported basis) escalated 17.7% year over year to $581.09 million.

Segmental Performance

The company operates via two segments, namely, marine transportation; and distribution and services.

In the first quarter, revenues in the marine transportation unit increased 18.1% year over year to $355.54 million despite operations being disrupted by Omicron-induced woes in January and February. Segmental operating income jumped to $16.9 million in the first quarter compared with $1.9 million in the year-ago period. Operating margin improved to 4.8% compared with 0.6% in the year-ago period.

Inland market revenues accounted for 78% of the segmental revenues. Operating margin for the inland business was in the high single digits. The metric was hurt by Omicron-induced woes and inflationary pressures.

Kirby Corporation Price, Consensus and EPS Surprise

Kirby Corporation Price, Consensus and EPS Surprise
Kirby Corporation Price, Consensus and EPS Surprise

Kirby Corporation price-consensus-eps-surprise-chart | Kirby Corporation Quote


Revenues in the coastal market accounted for 22% of the segmental revenues. The coastal market recorded a negative operating margin in the mid-single digits due to soft revenues and high costs, thanks to Omciron-induced woes. Average barge utilization in the March quarter was in the low-90% range.

In the distribution and services segment, revenues rose 30.3% to $255.2 million, owing to improved performance in the oil and gas, as well as commercial and industrial markets. Moreover, the segment reported an operating margin of 4.3% in the first quarter of 2022 compared with 1.5% in the first quarter of 2021.

The oil and gas sub-group, which accounted for 42% of the segmental revenues during the March quarter, benefited from higher oilfield activity, and increased orders and deliveries of new pressure pumping and power generation equipment for electric fracturing. The segment had an operating margin in the low-single digits.

The commercial and industrial sub-group, which accounted for 58% of the segmental revenues, benefited from improved economic activity as well as increased product sales in Thermo King. Operating margin at the commercial and industrial sub-group was in the mid-high single digits range.

Balance Sheet Highlights

As of Mar 31, 2022, Kirby, carrying a Zacks Rank #3 (Hold), had cash and cash equivalents of $32.40 million compared with $34.81 million at the end of 2021. Long-term debt (including current portion) declined to $1.15 billion at the end of the first quarter from $1.16 billion at the end of the fourth quarter of 2021. Debt-to-capitalization ratio at the end of the March quarter of 2022 was 0.28 compared with 0.29 at the end of December 2021.

2022 Outlook

At the distribution and services segment, Kirby is seeing increased demand for products and services despite supply chain constraints. Favorable oilfield fundamentals and strong demand in commercial and industrial are expected to boost performance of the Distribution and Services segment in 2022. However, supply chain issues and long lead times are expected to persist in the near term. In commercial and industrial, KEX expects revenues to climb in low double-digit percentage range in 2022 due to increased activity in power generation, marine repair, and on-highway.

In inland marine, the company expects favorable market conditions such as high refinery and petrochemical plant utilization, increased volumes from new petrochemical plants, and minimal new barge construction to lead to improved barge utilization. With this, KEX expects continued improvement in the spot market, which contributes substantially to inland revenues. Inland revenues are estimated to increase 15-20% year over year.

In coastal marine, Kirby expects a slight improvement in customer demand. Barge utilization is predicted to be in the 90% range. Coastal revenues are expected to decline in low-single digits in 2022 compared with 2021 due to the company’s exit from the Hawaii market and reductions in coal shipments. Coastal operating margin is forecast to be hurt by planned shipyard maintenance and ballast water treatment installations on certain vessels.

However, Kirby is facing increased costs due to labor constraints and inflationary pressures. Rising fuel prices are an added headwind for the company. For 2022, the company expects capital expenditures of $170 and $190 million. Free cash flow is predicted to be $230 million-$310 million in 2022.

Sectorial Snapshot

Within the broader Transportation sector, Delta Air Lines DAL and J.B. Hunt Transport Services JBHT recently reported first-quarter 2022 results.

Delta, carrying a Zacks Rank #2 (Buy), incurred a loss (excluding 25 cents from non-recurring items) of $1.23 per share in the first quarter of 2022, narrower than the Zacks Consensus Estimate of a loss of $1.28. With Omicron hampering travel plans in the early part of first-quarter 2022, the carrier incurred a loss in said time period after reaping profits in the last two quarters of 2021. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Delta’s first-quarter revenues came in at $9,348 million, which not only beat the Zacks Consensus Estimate of $9,063.5 million, but also soared in excess of 100% from the year-ago figure. The uptick in air-travel demand in the United States can be gauged from the fact that 80.5% of first-quarter 2022 passenger revenues came from domestic markets.

J.B. Hunt, carrying a Zacks Rank #3, reported first-quarter 2022 earnings of $2.29 per share, which surpassed the Zacks Consensus Estimate of $1.91. The bottom line surged 67.2% year over year on higher revenues across all segments.

J.B. Hunt’s first-quarter operating revenues of $3,488.6 million also outperformed the Zacks Consensus Estimate of $3,260.5 million. The top line jumped 33.3% year over year. Total operating revenues, excluding fuel surcharges, rose 27.4% year over year.


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