Kirby Q2 Earnings Call Highlights

Key Points

• Kirby reaffirmed and raised its earnings outlook: Second-quarter EPS was $1.67, flat year over year but up 11% sequentially, and management now expects full-year EPS growth toward the upper end of its 5%–15% range.
• Marine transportation remained well utilized despite margin pressure: Revenue increased 9% year over year, while operating income fell 11% due to temporarily higher fuel costs and elevated shipyard activity. Kirby expects to recover most of the fuel-cost impact through contractual adjustments in the third quarter.
• Power generation and marine repair drove Distribution and Services growth: Segment revenue rose 6%, while the power-generation backlog expanded to $1 billion–$1.5 billion, supported by demand from data centers and industrial customers. Kirby also repurchased nearly $60 million of stock during the quarter and about $29 million more early in the third quarter.

Kirby NYSE: KEX reported second-quarter 2026 earnings per share of $1.67, up 11% sequentially and unchanged from the prior-year quarter, as strong marine transportation utilization and growth in power generation and marine repair supported results.

Chief Executive Officer David Grzebinski said the company’s businesses benefited from “constructive marine transportation fundamentals, high asset utilization,” and continued momentum in Distribution and Services. Kirby reaffirmed its full-year earnings-per-share growth outlook of 5% to 15% and said it now expects results to trend toward the upper end of that range.

Marine transportation revenue rises, while fuel and shipyard costs weigh on profit

Marine transportation revenue totaled $537 million in the quarter, up 9% from a year earlier and 8% sequentially. Segment operating income was $88 million, down 11% year over year and down 2% from the first quarter, producing a 16.4% operating margin.

Chief Financial Officer Raj Kumar said the year-over-year decline in operating income reflected temporarily higher fuel costs ahead of contractual recovery mechanisms and elevated shipyard activity in the coastal business.

Inland marine, which represented 80% of segment revenue, recorded average barge utilization in the low 90% range. Spot market rates increased in the low- to mid-single-digit range from the first quarter but remained down in the low-single-digit range from the prior-year period. Renewing term contracts increased in the low-single-digit range year over year.

Grzebinski said inland conditions were supported by refinery utilization, refined-product and crude movements, petrochemical activity and limited industry capacity additions. He added that Venezuelan crude imports into the Gulf Coast had recovered to more than 600,000 barrels per day from prior lows of about 200,000 barrels per day.

Management said the fuel-cost effect created a roughly $0.05 to $0.10 per-share headwind in the second quarter, toward the higher end of that range. The company expects to recover most of the impact in the third quarter through fuel-adjustment clauses in customer contracts.

For the full year, Kirby expects inland revenue growth in the mid- to high-single-digit range and operating margins in the high teens to low 20% range. Grzebinski said spot pricing is currently about 10% to 15% above contract pricing, which he views as constructive ahead of the company’s heavy fourth-quarter contract renewal season.

Coastal marine revenue, representing 20% of marine segment revenue, rose 10% year over year. Barge utilization was in the high 90% range, while term-contract renewals declined in the low-single-digit range due to market dynamics affecting 80,000- to 100,000-barrel articulated tug-barge vessels.

Christian O’Neil, Kirby’s president and chief operating officer, said the pricing pressure was limited to a small subsection of the fleet and did not reflect broad weakness in coastal markets. Management expects full-year coastal revenue to increase in the mid-single-digit range, with margins in the mid- to high-teens range.

Distribution and Services supported by power generation and marine repair

Distribution and Services revenue was $385 million, up 6% from the prior-year quarter and 11% sequentially. Operating income increased 8% year over year to $38 million and rose 63% from the first quarter, while operating margin reached 10%.

Power generation revenue increased 8% from a year earlier, supported by demand for behind-the-meter and backup power systems used by data centers and industrial customers. Kumar said original equipment manufacturer engine availability continues to determine how quickly order demand converts into revenue.

Grzebinski said the company’s power-generation backlog has grown to between $1 billion and $1.5 billion, up from its previous estimate of $500 million to $1 billion. He said much of the incoming demand involves behind-the-meter systems that operate continuously and could create future service and parts opportunities.

O’Neil said Kirby is expanding its aftermarket approach through Kirby Integrated Power Systems, an operation intended to provide service support for data-center and power customers seeking uptime and turnkey solutions.

Commercial and industrial revenue rose 12% year over year, aided by strong marine repair activity. Oil and gas revenue increased 20% sequentially and operating income rose 67% sequentially, though both remained below prior-year levels as market activity stayed subdued.

Kirby expects full-year Distribution and Services revenue to rise in the mid-single-digit range, with operating margins in the mid- to high-single-digit range.

Cash flow, capital spending and buybacks

Kirby ended the quarter with $39 million in cash, $1.04 billion in total debt and $566 million in available liquidity. Its debt-to-capitalization ratio was 23.1%.

Cash flow from operations was $72.2 million during the quarter, while capital expenditures totaled $71.5 million. Kumar said working-capital needs were elevated because of stronger activity, collection timing and higher marine fuel receivables, but the company expects those requirements to normalize during the second half and support improved free cash flow.

The company maintained its full-year capital spending forecast of $220 million to $260 million and its operating cash-flow outlook of $575 million to $675 million. It repurchased $59.7 million of stock during the second quarter at an average price of $142 per share, followed by approximately $29 million of additional repurchases early in the third quarter at an average price of $140.

Management said it will continue to evaluate acquisitions, particularly in marine transportation, while using free cash flow for buybacks when acquisition opportunities do not materialize.

About Kirby (NYSE:KEX)

Kirby Corporation is a leading domestic maritime transporter of bulk liquid products in the United States. Through its Marine Transportation segment, the company operates one of North America's largest fleets of inland tank barges and towing vessels. Kirby's fleet moves petrochemicals, black oil, refined petroleum products and agricultural chemicals along coastal and inland waterways, providing critical logistical support to energy, chemical and agricultural producers.

In addition to its marine operations, Kirby's Distribution and Services segment offers diesel engine and power generation services, along with aftermarket parts sales.

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