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Kirby's (KEX) Q4 Earnings Beat, Decline Y/Y on Low Revenues
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Kirby Corporation’s (KEX - Free Report) fourth-quarter 2020 earnings of 37 cents per share surpassed the Zacks Consensus Estimate of 24 cents. However, the bottom line plunged 36.2% year over year.
Total revenues of $489.8 million lagged the Zacks Consensus Estimate of $495.1 million and declined 25.3% year over year. The top line was hurt by a decline in revenues at the marine transportation, and distribution and services segments, stemming from the coronavirus-induced weak economic conditions.
Segmental Performance
The company, through its subsidiaries, operates via the segments marine transportation, and distribution and services.
In the fourth quarter, revenues in the marine transportation unit fell 25.5% year over year to $299.4 million. Segmental operating income also declined 46.4% year over year to $29.2 million. However, operating margin deteriorated to 9.7% from 13.6% in the year-ago quarter.
Inland market revenues dropped 28% year over year due to reduced barge utilization and low fuel rebills. The operating margin for the inland business was in the low-to-mid teens.
Kirby Corporation Price, Consensus and EPS Surprise
Revenues at the coastal market fell 18% year over year due to reduced barge utilization, lower fuel rebills, retirements of three large capacity vessels, and delays associated with hurricanes in the Gulf of Mexico in October. The coastal market recorded negative operating margin in the low-to-mid single digits.
At the distribution and services segment, revenues slumped 25% to $190.3 million due to below-par performance in the oil and gas market. Moreover, the segment reported (1.5%) operating margin in the reported quarter compared with (1.1%) in the year-ago period. On a positive note, activity levels have started to gradually recover in the segment since the fourth quarter.
The oil and gas market was weak during the third quarter due to reduction in oilfield activity and low oil prices. The oil and gas market had a negative operating margin in the mid-teens.
In the commercial and industrial market, revenues increased year over year due to benefits from the acquisition of Convoy Servicing Company in January 2020. The commercial and industrial operating margin was in the low-single digits.
Balance Sheet Highlights
As of Dec 31, 2020, the company had $80.3 million of cash and cash equivalents, compared with $24.7 million at the end of 2019. Long-term debt (including current portion) for this Zacks Rank #4 (Sell) stock increased to $1.5 billion at the end of the fourth quarter from $1.4 billion at the end of Dec 2019. Debt-to-capitalization ratio at the end of fourth-quarter 2020 was 32.2% compared with 28.9% at the end of 2019.
Outlook
While coronavirus-led woes continue to put significant pressure on Kirby’s business, the company expects improvement in business activity and utili
ation levels in the second half of 2021, thanks to vaccine distributions and hopes for an acceleration in economic recovery. At the marine transportation unit, the company anticipates persistent weakness in market conditions with increased pricing pressure on contract renewals in the first quarter. Amid surging COVID-19 cases in the United States and the resultant disruptions on its operations, Kirby expects first-quarter earnings to decline sequentially.
Kirby anticipates market conditions to remain challenging in inland marine business until the second half of the year, when a recovery is likely. Revenues and operating margin at the unit are expected to decline sequentially in the first quarter of 2021 due to lower pricing on term contract renewals and delays from seasonal winter weather.
The company anticipates coronavirus-led woes to hamper the coastal market’s performance significantly in 2021 and in turn hurt overall results. It estimates coastal revenues and operating margin to decline sequentially in the first quarter primarily due to lower term contract pricing and challenges regarding crewing vessels. For the full year, Kirby anticipates coastal revenues to decline year over year with negative operating margins.
For the distribution and services segment, Kirby forecasts year-over-year improvement in revenues and operating income in 2021 with improvement in economic activity and growth in oilfield. The company anticipates improving economic conditions and growth in on-highway market to aid commercial and industrial revenues in the current year. In the oil and gas market, the company anticipates higher commodity prices and increasing well completions activity to lead to higher demand for new transmissions, service and parts, as well as higher pressure pumping remanufacturing activity. With this, Kirby estimates operating margins in the distribution and services segment to be positive in the low-to-mid single digits for the full year.
Kirby expects to incur capital expenditures of $125 million-$145 million in 2021. Additionally, net cash provided by operating activities is expected to be $375 million-$455 million for the company in 2021. Free cash flow is estimated to be $230 million-$330 million in the year.
Sectorial Snapshot
Let’s take a look at some of the other recently released earnings reports from companies within the Zacks Transportation sector.
United Airlines (UAL - Free Report) , carrying a Zacks Rank #3 (Hold), incurred a loss (excluding 6 cents from non-recurring items) of $7 per share in the fourth quarter of 2020, wider than the Zacks Consensus Estimate of a loss of $6.56. Meanwhile, operating revenues of $3,412 million lagged the Zacks Consensus Estimate of $3,420.4 million. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
J.B. Hunt Transport Services (JBHT - Free Report) , carrying a Zacks Rank #3, reported earnings of $1.44 per share, beating the Zacks Consensus Estimate of $1.27. Total operating revenues of $2,737.7 million also surpassed the Zacks Consensus Estimate of $2,514.3 million.
Delta Air Lines (DAL - Free Report) , carrying a Zacks Rank #3, incurred a loss (excluding $1.34 from non-recurring items) of $2.53 per share in the fourth quarter of 2020, wider than the Zacks Consensus Estimate of a loss of $2.43. Total revenues of $3,973 million topped the Zacks Consensus Estimate of $3,754.5 million.
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Kirby's (KEX) Q4 Earnings Beat, Decline Y/Y on Low Revenues
Kirby Corporation’s (KEX - Free Report) fourth-quarter 2020 earnings of 37 cents per share surpassed the Zacks Consensus Estimate of 24 cents. However, the bottom line plunged 36.2% year over year.
Total revenues of $489.8 million lagged the Zacks Consensus Estimate of $495.1 million and declined 25.3% year over year. The top line was hurt by a decline in revenues at the marine transportation, and distribution and services segments, stemming from the coronavirus-induced weak economic conditions.
Segmental Performance
The company, through its subsidiaries, operates via the segments marine transportation, and distribution and services.
In the fourth quarter, revenues in the marine transportation unit fell 25.5% year over year to $299.4 million. Segmental operating income also declined 46.4% year over year to $29.2 million. However, operating margin deteriorated to 9.7% from 13.6% in the year-ago quarter.
Inland market revenues dropped 28% year over year due to reduced barge utilization and low fuel rebills. The operating margin for the inland business was in the low-to-mid teens.
Kirby Corporation Price, Consensus and EPS Surprise
Kirby Corporation price-consensus-eps-surprise-chart | Kirby Corporation Quote
Revenues at the coastal market fell 18% year over year due to reduced barge utilization, lower fuel rebills, retirements of three large capacity vessels, and delays associated with hurricanes in the Gulf of Mexico in October. The coastal market recorded negative operating margin in the low-to-mid single digits.
At the distribution and services segment, revenues slumped 25% to $190.3 million due to below-par performance in the oil and gas market. Moreover, the segment reported (1.5%) operating margin in the reported quarter compared with (1.1%) in the year-ago period. On a positive note, activity levels have started to gradually recover in the segment since the fourth quarter.
The oil and gas market was weak during the third quarter due to reduction in oilfield activity and low oil prices. The oil and gas market had a negative operating margin in the mid-teens.
In the commercial and industrial market, revenues increased year over year due to benefits from the acquisition of Convoy Servicing Company in January 2020. The commercial and industrial operating margin was in the low-single digits.
Balance Sheet Highlights
As of Dec 31, 2020, the company had $80.3 million of cash and cash equivalents, compared with $24.7 million at the end of 2019. Long-term debt (including current portion) for this Zacks Rank #4 (Sell) stock increased to $1.5 billion at the end of the fourth quarter from $1.4 billion at the end of Dec 2019. Debt-to-capitalization ratio at the end of fourth-quarter 2020 was 32.2% compared with 28.9% at the end of 2019.
Outlook
While coronavirus-led woes continue to put significant pressure on Kirby’s business, the company expects improvement in business activity and utili
ation levels in the second half of 2021, thanks to vaccine distributions and hopes for an acceleration in economic recovery. At the marine transportation unit, the company anticipates persistent weakness in market conditions with increased pricing pressure on contract renewals in the first quarter. Amid surging COVID-19 cases in the United States and the resultant disruptions on its operations, Kirby expects first-quarter earnings to decline sequentially.
Kirby anticipates market conditions to remain challenging in inland marine business until the second half of the year, when a recovery is likely. Revenues and operating margin at the unit are expected to decline sequentially in the first quarter of 2021 due to lower pricing on term contract renewals and delays from seasonal winter weather.
The company anticipates coronavirus-led woes to hamper the coastal market’s performance significantly in 2021 and in turn hurt overall results. It estimates coastal revenues and operating margin to decline sequentially in the first quarter primarily due to lower term contract pricing and challenges regarding crewing vessels. For the full year, Kirby anticipates coastal revenues to decline year over year with negative operating margins.
For the distribution and services segment, Kirby forecasts year-over-year improvement in revenues and operating income in 2021 with improvement in economic activity and growth in oilfield. The company anticipates improving economic conditions and growth in on-highway market to aid commercial and industrial revenues in the current year. In the oil and gas market, the company anticipates higher commodity prices and increasing well completions activity to lead to higher demand for new transmissions, service and parts, as well as higher pressure pumping remanufacturing activity. With this, Kirby estimates operating margins in the distribution and services segment to be positive in the low-to-mid single digits for the full year.
Kirby expects to incur capital expenditures of $125 million-$145 million in 2021. Additionally, net cash provided by operating activities is expected to be $375 million-$455 million for the company in 2021. Free cash flow is estimated to be $230 million-$330 million in the year.
Sectorial Snapshot
Let’s take a look at some of the other recently released earnings reports from companies within the Zacks Transportation sector.
United Airlines (UAL - Free Report) , carrying a Zacks Rank #3 (Hold), incurred a loss (excluding 6 cents from non-recurring items) of $7 per share in the fourth quarter of 2020, wider than the Zacks Consensus Estimate of a loss of $6.56. Meanwhile, operating revenues of $3,412 million lagged the Zacks Consensus Estimate of $3,420.4 million. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
J.B. Hunt Transport Services (JBHT - Free Report) , carrying a Zacks Rank #3, reported earnings of $1.44 per share, beating the Zacks Consensus Estimate of $1.27. Total operating revenues of $2,737.7 million also surpassed the Zacks Consensus Estimate of $2,514.3 million.
Delta Air Lines (DAL - Free Report) , carrying a Zacks Rank #3, incurred a loss (excluding $1.34 from non-recurring items) of $2.53 per share in the fourth quarter of 2020, wider than the Zacks Consensus Estimate of a loss of $2.43. Total revenues of $3,973 million topped the Zacks Consensus Estimate of $3,754.5 million.
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Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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