Kirby Corporation

Good morning, and welcome to the Kirby Corporation's 2020 First Quarter Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. We ask that you limit your questions to one question and one follow-up. To ask a question, you may press star, then 1 on your touchtone phone. To withdraw your question, please press the pound key. Please note, this event is being recorded. I would now like to turn the conference over to Mr. Eric Holcomb, Kirby's Vice President of Investor Relations. Please go ahead, sir.

Good morning, and thank you for joining us. With me today are David Grzybinski, Kirby's President and Chief Executive Officer at and Bill Harvey, Kirby's Executive Vice President and Chief Financial Officer. A slide presentation for today's conference call as well as the earnings release that was issued earlier today can be found on our website at kirbycorp.com. During this conference call, we may refer to certain non-GAAP or adjusted financial measures. Reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures are included in in our earnings press release and are also available on our website in the investor relations section under financials. As a reminder, statements contained in this conference call with respect to the future are forward-looking statements. These statements reflect management's reasonable judgment with respect to future events. Forward-looking statements involve risks and uncertainties and our actual results could differ materially from those anticipated as a result of various factors including the impact of the COVID-19 pandemic and the related response of governments on global and regional market conditions and the company's business. A list of these risk factors can be found in Kirby's Form 10-K for the year ended December 31, 2019, and subsequent quarterly filings on Form 10-Q. I will now turn the call over to David.

Thank you, Eric, and good morning, everyone. Earlier today, we announced 2020 first quarter adjusted earnings of 59 cents per share, which excludes several one-time items totaling $4.74 per share. On a GAAP basis, we reported a net loss of $4.15 per share for the first quarter. We'll talk more about the first quarter and the one-time items in a few moments. First, and most importantly, I'd like to express my sincere sympathy to all of those that have been affected by the present pandemic, and I hope all of you and your families are safe and well. My deepest gratitude goes out to all of the healthcare workers and first responders who are dealing with this crisis on the front lines. I'd like to start today by discussing our response to the virus and the impact it is having on our businesses. All of Kirby's businesses have been deemed essential. Therefore, our boats, barges, distribution, and service operations have continued to fulfill their roles transporting and providing essential goods and services. Kirby had in place a pandemic response plan designed to ensure business continuity, uninterrupted customer service, and for the safety of our employees. We activated our plan in early March, and through the dedication and commitment of our employees, all of our businesses have continued to operate despite the challenging circumstances. During this crisis, we have implemented many safeguards to protect our employees, including working remotely where possible, enhanced PPE and medical protocols, limited mariner interaction with shoreside personnel, modified crew change, timing, and modified procedures. We also immediately quarantined employees as a precaution whenever risks of potential exposure were identified. Further, in an effort to support the fight against the virus, a team of engineers from our Stuart and Stevenson subsidiary have worked together with Rice University to design a prototype low-cost ventilator. This project has moved with rapid speed, going from design to prototype in a matter of weeks. and we are currently awaiting emergency use approval from the FDA. In summary, I'm extremely proud and humbled by the dedicated Kirby employees who have stepped up during these challenging times to ensure continuous operations without compromising safety or customer service. Looking at our segments in marine transportation, although the first quarter was impacted by near-record delay days in inland and planned shipyard maintenance and coastal, the year started strong with high barge utilization, robust customer demand, and improved pricing. Throughout March and the first part of April, activity remained very tight, and our inland barge utilization surpassed the mid-90% range as many of our customers readied their supply chains, reallocated products, and secured storage. However, as the national shutdown and stay-at-home orders slowed the economy, many refineries and some chemical plants have cut production, and our barge utilization has declined in recent weeks. In distribution and services, first quarter activity was stable, with a slight improvement in transmission sales and service to oil and gas customers, and in manufacturing, we constructed some new pressure pumping units. As oil prices collapsed in March, our customers responded by cutting their 2020 capital spending budgets dramatically, and activity levels in our businesses were reduced. And commercial and industrial activity levels were good in the first quarter, particularly for our marine repair business, which benefited from a very active barge market. Since the onset of COVID-19 in the U.S., Nationwide stay-at-home orders have curtailed demand, especially in our power generation business, which has significant operations in some of the major metropolitan areas hardest hit by the pandemic. We also experienced activity reductions in our on-highway business, particularly related to bus transportation. However, our thermorefrigeration business has continued to see steady activity levels supporting grocery supply chain distribution systems. In response to the expectations that oil and gas markets will not rebound anytime soon, we have made some tough but necessary decisions to further realign this segment's cost structure. Recent actions include workforce reductions, furloughs, and reduced work schedules. We are limiting discretionary spending, reducing capital expenditures, and consolidating facilities. In a few moments, I'll talk more about how we think COVID-19 could impact our businesses for the balance of the year. But before I do, I'll turn the call over to Bill to discuss our first quarter results, our liquidity, and the balance sheet.