Kirby Corporation ( KEX Quick Quote KEX - Free Report) reported third-quarter 2021 earnings of 17 cents per share, missing the Zacks Consensus Estimate by 4 cents. Moreover, quarterly earnings plunged 63.04% year over year due to high costs. The lackluster bottom-line performance seems to have displeased investors. Consequently, the stock has lost 2.5% of its value since its earnings release on Oct 28.
Total revenues of $598.9 million, however, surpassed the Zacks Consensus Estimate of $559.4 million and rose 20.6% year over year. The upside was driven by higher revenues at the marine transportation, and distribution and services segments. Total costs (on a reported basis) escalated 96.2% year over year to $915.8 million.
The company operates via the segments of marine transportation, and distribution and services.
In the third quarter, revenues in the marine transportation unit increased 6% year over year to $338.5 million despite operations being still disrupted by COVID-19. Segmental operating income declined 47.8% year over year to $16.9 million. Operating margin deteriorated to 5% from 10.1% in the year-ago quarter.
Inland market revenues contributed to 76% of the segmental revenues. Operating margin for the inland business was in the mid-to-high-single digits. The metric was affected by lower-term contract pricing, increased fuel rebills and reduced operating efficiencies due to Hurricane Ida.
Revenues in the coastal market contributed to 24% of the segmental revenues. The coastal market recorded a negative operating margin in the low-single digits. Average barge utilization in the September quarter was in the mid-70% range
In the distribution and services segment, revenues rose 48% to $260.4 million owing to improved performance in the oil and gas as well as commercial and industrial markets. Moreover, the segment reported an operating margin of 4.2% in the third quarter of 2021 compared with 0.6% recorded in the third quarter of 2020.
The oil and gas sub-group, which contributed to 41% of the segmental revenues during the September quarter, benefited from increased manufacturing deliveries of pressure pumping and frac-based power generation equipment as well as upbeat demand for new transmissions, parts and service in distribution. The segment had operating margin in the low-single digits.
The commercial and industrial sub-group, which contributed to 59% of the segmental revenues, gained from the betterment in demand for equipment, parts and service in on-highway and power generation businesses. Uptick in product sales and seasonal service activity in Thermo-King business also aided results. Operating margin at the commercial and industrial sub-group was in the mid-single digits.
As of Sep 30, 2021, Kirby had cash and cash equivalents of $54.3 million compared with $80.3 million at the end of 2020. Long-term debt (including current portion) of this currently Zacks Rank #4 (Sell) stock declined to $1.21billion at the end of the third quarter of 2021 from $1.47 billion at 2020 end. Debt-to-capitalization ratio at the end of the September quarter of 2021 was 0.298 compared with 0.322 at the end of December 2020.
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Within the marine transportation unit, barge markets are expected to improve in the December quarter. Barge volumes are anticipated to benefit from the uptick in economic growth, increased post-storm production, pent-up demand and new chemical plants. Barge utilization in the fourth quarter is expected in the high 80- 90% range. Revenues are likely to sequentially improve with operating margins around 10%. In the coastal market, operating margin is expected to be at or slightly below breakeven.
With the distribution and services segment, the oil and gas sub-group is likely to be hit in the fourth quarter as supply-chain woes are likely to delay some sales into the next year, thereby resulting in sequential reductions in revenues and operating income.
Revenues in the commercial and industrial sub-group are likely to decline in the fourth quarter, albeit moderately from the third-quarter 2021 actuals. Operating margin is expected in the low to mid-single digit range.
Kirby estimates capital expenditures in the range of $120-$130 million for 2021. The company’s net cash provided by operating activities is expected between $380 million and $410 million (previous expectation: $395 million and $435 million) for 2021. Free cash flow is estimated in the range of $250-$290 million (previous expectation: $250-$310 million) for the current year.
Within the broader
Transportation sector, let’s take a look at the third-quarter results of Delta Air Lines ( DAL Quick Quote DAL - Free Report) , J.B. Hunt Transport Services ( JBHT Quick Quote JBHT - Free Report) and Kansas City Southern .
Delta reported third-quarter earnings (excluding $1.59 from non-recurring items) of 30 cents per share, outpacing the Zacks Consensus Estimate of 15 cents. Revenues of $9,154 million also beat the Zacks Consensus Estimate of $8,370.6 million.
J.B. Hunt reported third-quarter earnings of $1.88 per share, surpassing the Zacks Consensus Estimate of $1.77. Total operating revenues of $3144.8 million outperformed the Zacks Consensus Estimate of $3002.1 million.
Kansas City Southern reported third-quarter earnings (excluding 31 cents from non-recurring items) of $2.02 per share, missing the Zacks Consensus Estimate of $2.07. Quarterly revenues of $744 million, however, surpassed the Zacks Consensus Estimate of $725.9 million.