Kirby Corporation

Good day, and thank you for standing by. Welcome to the Kirby Corporation 2024 Second Quarter Earnings Conference Call. At this time, all participation are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please 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 first speaker today, Mr. Kurt Nemitz, Kirby's Vice President of Investor Relations and Treasurer, please go ahead.

Good morning, and thank you for joining the Kirby Corporation 2024 Second Quarter Earnings Call. With me today are David Grzybinski, Kirby's Chief Executive Officer, Christian O'Neill, Kirby's President and Chief Operating 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. 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 factors can be found in Kirby's latest form, 10-K, and in our 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. Before we begin, I'd like to recognize our employees, especially our Texas-based team members that were recently impacted by Hurricane Beryl. Their lives were disrupted and many were left without power for several days and actually up to a week or two, but they remained focused on and continued to meet the needs of our customers and business as well as support each other during this event. I want to thank them for their exceptional efforts and resilience during this challenge. Now turning to the second quarter earnings, today we announced earnings per share of $1.43, which compares to 2023 second quarter earnings of $0.95 per share. Our second quarter results reflected steady market fundamentals in both marine transportation and distribution and services, even though we experienced some modest weather and navigation challenges for marine and continued supply challenges in distribution and services. These headwinds were mostly offset by good execution. Solid demand in both marine and distribution and services continued during the quarter and led to strong financial performance. In inland marine transportation, our second quarter results reflected continued pricing momentum with a modest impact from poor navigational conditions due to weather and lock delays. From a demand standpoint, customer activity was steady with barge utilization rates running in the low to mid 90% range throughout the quarter. Bot prices increased in the low to mid single digits sequentially and in the mid-teens range year-over-year. Term contract prices also renewed up higher, with mid-single-digit increases versus a year ago. Overall, second-quarter inland revenues increased 11% year-over-year, and margins were in the low 20% range. In coastal, market fundamentals remained steady, with our barge utilization levels running in the mid- to high-90% range. During the quarter, we saw strong customer demand and limited availability of large capacity vessels, which resulted in high teens percentage increases on term contract renewals year over year. Average spot market rates increased in the high single digits sequentially and in the mid 20% range year over year. These increases help soften continued inflationary pressures particularly with shipyards, and helped partially offset the capital expense from the addition of ballast water treatment systems. Overall, second quarter coastal revenues increased 24% year over year and had an operating margin in the low teens range. Turning to distribution and services, in total, demand was stable across our end markets with sequential growth in revenue and operating income. In power generation, revenue grew 9% year over year, and the pace of orders was strong with several large project wins from backup power and other industrial customers as power continues to become more critical. In oil and gas, revenues were down year on year, but up 22% sequentially, driven by some growth in our EFRAC business. In our commercial and industrial market, revenues were up 9% year over year and 16% sequentially, driven by steady demand across our different businesses, with growth coming from the Thermo King product deliveries. In summary, our second quarter results reflected ongoing strength in market fundamentals for both segments. The inland market is strong, and we see continued pricing momentum. In coastal, Industry-wide supply-demand dynamics remain very favorable. Our barge utilization is strong, and we are realizing real rate increases. Increased demand for power generation and distribution and services is mostly offsetting softness in oil and gas areas. I'll talk more about our outlook later, but first I'll turn the call over to Raj to discuss the second quarter segment results and balance sheet in more detail.