Kirby Corporation

Good morning and welcome to the Kirby Corporation 2023 Fourth Quarter Earnings Conference Call. All participants will be in a listen-only mode. 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. Please note this event is being recorded. I would now like to turn the conference over to Mr. Kurt Nemitz, Kirby's VP of Investor Relations and Treasurer. Please go ahead.

Good morning, and thank you for joining the Kirby Corporation 2023 Fourth Quarter Earnings Call. 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. The slide presentation for today's conference call, as well as the earnings release, which was issued earlier today, can be found on our website. 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 evolved 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 latest Form 10-K filing and in our other filings made with the SEC from time to time. With that, I will now turn the call over to David.

Thank you, Kurt, and good morning, everyone. Earlier today, we announced fourth quarter revenue of $799 million and earnings per share of $1.04. This compares to 2022 fourth quarter revenue of $730 million and earnings per share of $0.62. During the fourth quarter, continued strong fundamentals in both our businesses resulted in significant year-over-year growth in our revenue and earnings. In marine transportation, pricing on spot and term contracts benefited from strong demand and limited availability of barges, while the onset of winter weather conditions proved to be a headwind to our efficiency in the quarter. Distribution and services delivered higher revenues sequentially, but margins were down slightly from the third quarter as a result of lower demand in our power rental business and typical seasonal impacts. We ended the year on a good note, and we anticipate strong growth in 2024. In Inland Marine, we continued to experience strong demand and high barge utilization with our barge utilization rates in the low 90% range. Spot market prices continued to push higher and we were up in the low to mid single digits sequentially and in the mid teens year over year. Pricing increases on term contract renewals were up year over year on average in the high single digits during the quarter. While the efficiency of our operations was challenged during the quarter, with the late days up 86% sequentially, strong pricing and utilization mostly offset this, allowing for inland marine margins to remain flat sequentially, with operating margins remaining in the high teens on average. In our coastal marine business, we saw consistent customer demand during the fourth quarter that helped maintain barge utilization in the low to mid 90% range. Overall, coastal marine revenues were up 4% sequentially, as improved spot and term contract pricing more than offset planned maintenance and ballast water treatment installations, which reduced equipment availability. As a result, the coastal business was able to finish the year with operating margins in the low single digit for the quarter. In distribution and services, demand in the fourth quarter remained steady throughout much of the segment, marked by a sequential increase in revenues, increases in new orders, and steady backlog. In oil and gas, revenues and operating income were up sequentially and year over year as solid execution on our backlog and deliveries were partially offset by lingering supply chain delays. In commercial and industrial, While revenues were up sequentially, the seasonal fall-off in our power rentals business led to a sequential decline in operating income. Despite supply chain issues and seasonal weakness, the business segment overall concluded the year very strong. Overall segment revenues were up 13% year-over-year, and operating margins were in the high single digits. In summary, our fourth quarter results reflected ongoing strength in market conditions for both segments. Despite the temporary headwinds of seasonal winter weather in the quarter, the inland market is strong and rates continue to push higher, helping to offset lingering inflation. While our coastal revenue was challenged near-term by planned shipyards, industry-wide supply and demand dynamics remain very favorable, our utilization is good, and we are realizing healthy rate increases. Steady demand and distribution and services is contributing to further growth in the segment. And while supply chain bottlenecks are expected, the outlook for the market is stable. I'll talk more about our 2024 outlook later, but first I'll turn the call over to Raj to discuss the fourth quarter segment results and balance sheet in more detail.