Kirby(KEX) - 2025 Q1 - Quarterly Report

PART I – FINANCIAL INFORMATION Item 1. Financial Statements The company presents its unaudited condensed consolidated financial statements for Q1 2025, showing increased net earnings and total assets Condensed Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $6,014,601 | $5,851,952 | | Total Current Assets | $1,102,280 | $1,068,559 | | Property and equipment – net | $4,149,299 | $4,022,966 | | Total Liabilities and Equity | $6,014,601 | $5,851,952 | | Total Current Liabilities | $698,583 | $734,753 | | Long-term debt, net | $1,091,032 | $866,722 | | Total Equity | $3,327,754 | $3,353,248 | Condensed Statements of Earnings Highlights (in thousands, except per share) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total Revenues | $785,659 | $808,022 | | Operating Income | $105,546 | $101,523 | | Net Earnings Attributable to Kirby | $75,986 | $70,068 | | Diluted EPS | $1.33 | $1.19 | Condensed Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $36,541 | $123,288 | | Net cash used in investing activities | ($175,856) | ($78,635) | | Net cash provided by (used in) financing activities | $115,949 | ($2,014) | - On March 27, 2025, the company acquired 14 inland tank barges and four high horsepower towboats for $97.3 million in cash[21] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses segment performance, noting improved marine profitability and a higher debt-to-capitalization ratio from acquisitions and buybacks Overview The company reports higher Q1 2025 EPS, a significant drop in operating cash flow, and an increased debt-to-capitalization ratio Q1 2025 Key Operating Results (in thousands, except per share) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total revenues | $785,659 | $808,022 | | Net earnings attributable to Kirby | $75,986 | $70,068 | | Diluted EPS | $1.33 | $1.19 | | Net cash provided by operating activities | $36,541 | $123,288 | | Capital expenditures | $78,687 | $81,047 | - The debt-to-capitalization ratio increased to 24.8% at March 31, 2025, from 20.7% at December 31, 2024, mainly due to an increase in outstanding debt used for acquisitions and $101.5 million in treasury stock purchases[57] - Projected capital expenditures for 2025 are in the range of $280 million to $320 million, with the majority ($180M-$220M) allocated to marine maintenance and improvements[56] Results of Operations Marine Transportation operating income grew on strong pricing, while Distribution and Services operating income rose despite lower revenue Segment Performance vs. Q1 2024 | Segment | Q1 2025 Revenue | YoY Change | Q1 2025 Operating Income | YoY Change | Q1 2025 Operating Margin | | :--- | :--- | :--- | :--- | :--- | :--- | | Marine Transportation (KMT) | $476.1M | 0% | $86.6M | +4% | 18.2% | | Distribution & Services (KDS) | $309.5M | -7% | $22.6M | +3% | 7.3% | Contract Renewal Price Increases (Q1 2025 vs Q1 2024 Renewals) | Market | Contract Type | Price Increase Range | | :--- | :--- | :--- | | Inland | Term | 3% – 5% | | Inland | Spot | 6% – 8% | | Coastal | Term | 24% – 26% | | Coastal | Spot | 18% – 20% | - In KDS, the commercial and industrial market saw increased revenue from marine repair, while the power generation market experienced decreased revenue due to deferred equipment deliveries[69][70] - The oil and gas market revenue declined from lower conventional activity, but operating income increased due to deliveries of electric fracturing equipment and cost management[71] Outlook The company anticipates improved 2025 results, with a positive marine outlook and mixed conditions for distribution and services - The KMT outlook is positive due to limited new barge construction, which is expected to keep utilization high and drive continued improvement in term contract pricing[74] - The KDS outlook is mixed, with strong growth anticipated in power generation orders from data center demand, while on-highway service and oil and gas markets face headwinds[75] Financial Condition, Capital Resources and Liquidity Long-term debt and total assets increased, while operating cash flow declined significantly due to an inventory buildup - Long-term debt increased by 26% from year-end 2024, primarily due to increased borrowings on the 2027 Revolving Credit Facility[110] - Net cash from operating activities decreased by 70% to $36.5 million in Q1 2025 from $123.3 million in Q1 2024, mainly due to an inventory buildup in KDS for future power generation projects[117] - During Q1 2025, the company purchased 1.0 million shares of its common stock for $101.5 million[119] - As of March 31, 2025, the company had $275.0 million of available borrowing capacity under its 2027 Revolving Credit Facility[33][113] Item 3. Quantitative and Qualitative Disclosures about Market Risk The company's exposure to market risk has not materially changed since the previous fiscal year-end - The Company's exposure to market risk has not changed materially since December 31, 2024[128] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls - The CEO and CFO concluded that as of March 31, 2025, the company's disclosure controls and procedures were effective[129] - There were no changes in internal control over financial reporting during the quarter ended March 31, 2025, that have materially affected, or are reasonably likely to materially affect, the company's internal control[131] PART II – OTHER INFORMATION Item 1. Legal Proceedings The company does not expect ongoing legal proceedings, including a notable 2016 incident, to have a material adverse financial effect - The company is involved in a civil action related to the 2016 grounding of the ATB unit Nathan E. Stewart and barge DBL 55 in British Columbia[49] - Management believes its accrual for the estimated liability is adequate and does not expect the incident to have a material adverse effect on its business or financial condition, citing satisfactory insurance coverage[49][50] Item 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the company's 2024 Annual Report - The company's risk factors have not materially changed from those disclosed in its 2024 Annual Report on Form 10-K[134] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased over one million shares of its common stock for $101.5 million during the first quarter of 2025 Issuer Purchases of Equity Securities (Q1 2025) | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | January 2025 | 135,453 | $107.74 | | February 2025 | 339,148 | $104.55 | | March 2025 | 528,160 | $97.36 | | Total | 1,002,761 | $101.19 | Item 5. Other Information No directors or Section 16 officers adopted, modified, or terminated any Rule 10b5-1 trading arrangements during the quarter - No directors or Section 16 officers adopted, modified, or terminated any "Rule 10b5-1 trading arrangements" or "non-Rule 10b5-1 trading arrangements" during the first quarter of 2025[137] Item 6. Exhibits This section provides an index of all exhibits filed with the Form 10-Q, including required CEO and CFO certifications - The report includes required certifications from the Chief Executive Officer (Exhibit 31.1) and Chief Financial Officer (Exhibit 31.2) pursuant to Rule 13a-14(a)[138][139]