Kirby Corporation

Good day and thank you for standing by. Welcome to the Kirby Corporation 2023 first quarter earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, press star 11 again. please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Kurt Nimitz. Please go ahead.

Good morning, and thank you for joining us. With me today are David Grzybinski, Kirby's President and Chief Executive Officer, and Raj Kumar, Kirby's Executive Vice President and Chief Financial Officer. A slide presentation for today's conference call, as well as the earnings release, which was issued earlier today, can be found on our website at www.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 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. A list of these risk factors can be found in Kirby's Form 10-K for the year ended December 31st, 2022, and in other filings made with the SEC from time to time. I will now turn the call over to David.

Thank you, Kurt, and good morning, everyone. Earlier today, we announced first quarter revenue of $750 million and earnings per share of $0.68. Included in the results are two offsetting one-time events. One-time costs related to strategic review and shareholder engagement activities of $0.04 per share, which were offset by interest on our delayed IRS refund of $0.04 per share. The net $0.68 compares to 2022 first quarter earnings per share of 29 cents. Both of our segments performed well during the quarter, delivering significantly higher revenue and operating income year over year. The first quarter results reflected steady market fundamentals in both marine transportation and distribution services, partially offset by significant weather and navigation challenges for marine and continued supply chain constraints and distribution and services. During the quarter, we remained focused on operating as safely and as efficiently as possible and delivered solid results even with these headwinds. In inland marine, our first quarter results were heavily impacted by delay days. Throughout the quarter, our operations were challenged by high winds and heavy fog along the Gulf Coast and locked delays on the Illinois and Mississippi rivers. These weather and navigational related issues significantly slowed transit times and impacted the financial performance of our contracts of the freightmen. Overall delay days increased 31% compared to the first quarter of 2022 and 33% compared to the fourth quarter. From a demand standpoint, Customer activity was strong in the quarter, with barge utilization rates running in the low to mid-90% range throughout the quarter. Tight market conditions due to strong demand and limited supply of barges coupled with continued inflation put upward pressure on prices, with spot prices up in the low to mid-single digits sequentially and in the 25% range year over year. Term contract prices also renewed higher with low double-digit increases versus a year ago. Overall, first quarter inland revenues increased 22% year over year and margins were in the low teens range. In coastal, market fundamentals continued to slowly improve with our barge utilization levels running in the mid to the high 90% range. During the quarter, we saw solid customer demand and limited availability of large capacity vessels, which resulted in low double-digit price increases on term contract renewals and low 20% increases on new spot deals. As noted in the fourth quarter, however, our results were adversely impacted by planned shipyard maintenance on several large vessels. Additionally, our operations on the Gulf Coast were hindered by extensive fog throughout the quarter. Overall, first quarter coastal revenues decreased slightly year over year, and operating margins were negative in the low single digits. In distribution and services, demand remained strong across our markets, with growth in new orders and high levels of backlog. In manufacturing, revenues were up sequentially and year over year, driven by healthy demand for our environmentally friendly pressure pumping equipment and power generation equipment. equipment for EFRAC. However, as expected, significant supply chain issues delayed many new equipment deliveries during the quarter. We continue to work diligently to manage these supply chain challenges. In our commercial and industrial market, overall demand remains solid across our different businesses with growth coming from the marine repair, power generation, and on-highway sectors. In summary, Our first quarter results reflected continued strength in market fundamentals for both segments despite meaningful weather and supply chain issues. The inland market is strong and rates are pushing higher. While our coastal revenue is challenged near-term by planned shipyards, industry-wide supply-demand dynamics are favorable, our barge utilization is good, and we are realizing rate increases. Strong demand in distribution and services is contributing to further growth in the segment, and while supply chain bottlenecks are expected to persist for the foreseeable future, the outlook for the market is strong. I'll talk more about our outlook later, but first I'll turn the call over to Raj to discuss the first quarter segment results in the balance sheet.