Kirby Q3 Earnings Call Highlights

Key Points

• Record quarterly performance: Kirby reported third-quarter EPS of $2.09, up 27% year over year, driven by strong utilization, pricing and demand across its marine transportation and Distribution & Services businesses. The company expects full-year 2026 earnings growth near the upper end of its 10%–15% outlook.
• Marine transportation remains strong: Segment revenue rose 17% and operating income increased 26%, supported by tight inland barge supply, high utilization and improved pricing. Coastal operations face near-term margin pressure from elevated shipyard activity, labor and material costs.
• Power-generation backlog and capital deployment: Distribution & Services benefited from demand for behind-the-meter and backup power systems, with power-generation backlog exceeding $1.5 billion, though engine availability limits revenue conversion. Kirby agreed to acquire $115 million of inland marine assets and repurchased $112 million of stock during the quarter.

Kirby NYSE: KEX reported record third-quarter earnings per share of $2.09, up 27% from a year earlier, as its marine transportation and Distribution & Services businesses benefited from strong utilization, pricing and demand for power-generation equipment.

Chief Executive Officer David Grzebinski said the company’s results reflected “strong continued momentum across both businesses” and execution across its operations. Kirby narrowed its full-year 2026 earnings growth outlook to 10% to 15% and said it expects results near the upper end of that range.

Marine transportation revenue rises 17%

Marine transportation generated third-quarter revenue of $569 million, up $84 million, or 17%, from the prior-year quarter. Operating income rose 26% to $112 million, producing a 20% operating margin. Sequentially, marine revenue increased 6% and operating income rose 27%.

Kirby’s inland business accounted for 81% of marine segment revenue. Average inland barge utilization was in the low 90% range, supported by refinery operating rates, petrochemical activity and limited additions to industry capacity.

Spot market rates increased in the low- to mid-single-digit percentage range from the second quarter and in the mid-single-digit range from a year earlier. Term contracts renewed during the quarter increased in the low-single-digit range year over year. Inland revenue increased 21% from the prior-year period, while operating margins were in the 20% range.

Grzebinski said higher fuel costs remained a near-term headwind because rate-recovery mechanisms and cost escalators only partially offset the increased expense during the quarter. He said Kirby expects the timing impact from fuel costs to recover as contract clauses adjust, assuming fuel prices do not rise further.

Coastal marine represented 19% of segment revenue and maintained average utilization in the high 90% range. Coastal revenue increased 3% year over year, while operating margins were in the mid-teens range. The business had one contract renewal during the quarter, which rose in the low-double-digit percentage range.

Management said coastal margins are expected to face pressure in the fourth quarter from elevated shipyard activity involving larger vessels. Christian O’Neil, Kirby’s president and chief operating officer, also cited inflation in skilled labor, steel and other shipyard inputs, as well as pricing pressure on smaller vessels serving refined-product movements on the East Coast.

Pricing outlook supported by tight barge supply

Kirby expects inland revenue to grow in the low-double-digit percentage range for the full year, with operating margins in the high teens to low 20% range. The company said approximately 35% to 40% of its inland term-contract portfolio typically renews in the fourth quarter, positioning the business for a more substantial renewal period than the third quarter.

O’Neil said the company’s spot-to-term pricing spread was approximately 10% to 15%, toward the higher end of that range, and noted that the company’s utilization had exceeded 95% at times during recent weeks. He said approximately 65 barges are expected to be delivered industrywide this year, with much of that volume appearing to be replacement capacity.

Management also pointed to stronger chemical demand, saying European capacity rationalization, damage to Middle East infrastructure and the Gulf Coast’s feedstock advantages have supported activity. O’Neil said Kirby’s 10,000-barrel barges were nearly fully deployed and operating near record utilization levels.

For coastal marine, Kirby expects full-year revenue growth in the mid- to high-single-digit percentage range and operating margins in the mid-teens range.

Distribution & Services gains from power generation and marine repair

Distribution & Services revenue rose 6% year over year to $408 million, while operating income increased 13% to $48 million. The segment’s operating margin was 12%, up 200 basis points sequentially.

The company attributed the performance primarily to demand for behind-the-meter and backup power systems, as well as higher marine repair activity. Power generation revenue increased 8% year over year and represented about 46% of segment revenue. Commercial and industrial revenue increased 8%, aided by marine repair work, while operating income in that business increased 23%.

Kirby said power-generation backlog exceeded $1.5 billion and that orders continued to exceed revenue, with book-to-bill above one. Grzebinski said approximately two-thirds of the backlog was related to behind-the-meter, or customer-supplied, power systems. However, constrained engine availability from original equipment manufacturers continues to limit the pace at which Kirby can convert backlog into revenue.

Management said behind-the-meter systems could create future parts and service demand because Kirby supplies equipment around the engines, including cooling, air-intake, sound-attenuation and power-distribution systems. O’Neil said the company expects the maintenance cycle for these installations to begin becoming more meaningful in roughly three to four years.

Cash flow, acquisition and capital returns

Kirby ended the quarter with $38 million in cash, $1.07 billion in total debt and $530 million of available liquidity. Net cash from operations totaled $143.5 million, while capital expenditures were $69.5 million, resulting in free cash flow of $74 million.

The company said working capital remained elevated due to higher revenue, collection timing and fuel-related receivables, but it expects requirements to normalize in the fourth quarter. Kirby maintained its full-year operating cash flow outlook of $575 million to $675 million and its capital-spending forecast of $220 million to $260 million.

During the quarter, Kirby agreed to acquire certain inland marine assets for approximately $115 million. The transaction includes nine towboats, 14 tank barges, nine bow thrusters and a fleeting operation in Rockport, Texas. Management said the assets would enhance Kirby’s network in South Texas.

Kirby also repurchased $112 million of stock during the quarter at an average price of $137 per share. The company said it will continue to evaluate acquisition opportunities while returning capital to shareholders.

About Kirby (NYSE:KEX)

Kirby Corporation is a Houston-based marine transportation and industrial services company. Through its marine transportation operations, the company is the largest tank barge operator in the United States, transporting bulk liquid products on the nation's inland and coastal waterways.

Kirby's marine transportation business carries petrochemicals, refined petroleum products, black oil, agricultural chemicals and other bulk liquids for industrial customers. Its operations primarily serve the U.S.

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