Kirby Corporation (KEX) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary and Q&A indicate a mixed outlook. Inland and coastal marine transportation show stable to improving conditions, but uncertainties exist in pricing and demand. The power generation segment has growth potential, but supply chain constraints and inflationary pressures pose risks. Share repurchases and improved free cash flow are positive, but unclear guidance and cautious management responses create uncertainty. Overall, the sentiment is balanced, leading to a neutral stock price prediction.
Key Financial Performance
Marine Transportation segment revenues $482 million in Q4 2025, a 3% increase year-over-year ($14.9 million increase). The increase was driven by steady demand and higher contract prices in the coastal business.
Marine Transportation segment operating income $100 million in Q4 2025, a 17% increase year-over-year ($14 million increase). This was due to aggressive cost management and improved utilization.
Inland Marine revenues Decreased 1% year-over-year in Q4 2025 due to lower utilization. However, revenues increased 3% sequentially due to improved market conditions.
Coastal Marine revenues Increased 22% year-over-year in Q4 2025 due to steady demand, higher contract prices, and limited availability of large capacity equipment.
Distribution and Services segment revenues $370 million in Q4 2025, a 10% increase year-over-year ($35 million increase). Growth was driven by the power generation business.
Distribution and Services segment operating income $30 million in Q4 2025, a 12% increase year-over-year ($3 million increase). Growth was driven by the power generation business.
Power Generation revenues Increased 47% year-over-year in Q4 2025 due to significant orders from data centers and industrial applications, resulting in higher backlog.
Oil and Gas revenues Decreased 45% year-over-year in Q4 2025 due to lower rig counts and fracking activity. However, profitability was maintained through aggressive cost management.
Free Cash Flow $406 million for 2025, exceeding guidance due to favorable working capital release in Q4 2025.
Capital Expenditures (CapEx) $264 million for 2025, with $220 million for marine maintenance and $45 million for growth capital spending.
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Operating Highlights
Power Generation: Total revenues grew 10% sequentially and 47% year-over-year, driven by execution on existing backlog, strong order flow, and multiple large project wins. Customers are prioritizing reliable power solutions.
Inland Marine Market: Barge utilization strengthened, averaging mid- to high 80% and exiting the year close to 90%. Spot prices rebounded in the low to mid-single digits sequentially.
Coastal Marine Market: Barge utilization levels were in the mid- to high 90% range, supported by limited availability of large capacity vessels. Pricing improved gradually.
Cost Management: Aggressive cost management helped offset softer pricing and inflationary pressures, particularly in the inland marine business.
Debt Reduction: Paid down $130 million in debt, further strengthening the balance sheet.
Free Cash Flow: Generated over $400 million in free cash flow for 2025, exceeding expectations.
Capital Allocation: Returned over $100 million to shareholders through share repurchases and continued to pursue long-term value-creating investments.
Market Positioning: Focused on maintaining profitability in oil and gas despite softness, and leveraging strong demand in power generation to offset weaknesses in other areas.
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Risk or Challenges
Inland Marine Transportation: Market softness due to muted demand and high barge availability early in the quarter. Spot prices and term renewals were down in the low single digits sequentially, reflecting pricing pressure. Seasonal weather delays negatively impacted operations and efficiency, with an 82% sequential increase in delay days.
Coastal Marine Transportation: Expected margin headwinds in the first quarter of 2026 due to a higher number of planned shipyards. Elevated shipyard activity is anticipated to persist throughout the year, potentially impacting operational efficiency and margins.
Distribution and Services - Oil and Gas Market: Continued softness in the conventional frac market, with revenues down 45% year-over-year and 33% sequentially. Lower rig counts and fracking activity are tempering demand for new engines, transmission, service, and parts.
Medical Costs: Increasing trend in medical costs, which impacted fourth-quarter operating margins and is expected to continue in 2026, posing a challenge to cost management.
Supply Constraints: Persistent supply constraints in the power generation space are posing headwinds to managing working capital, especially in the first half of 2026.
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Guidance & Outlook
2026 Financial Performance: The company expects steady growth and solid performance in 2026, with earnings projected to strengthen year-over-year.
Inland Marine Segment: Barge utilization is anticipated to average in the low 90% range for 2026, with pricing improving steadily as demand strengthens. Inland revenues are expected to increase in the low to mid-single digits year-over-year. Operating margins are projected to average in the high teens or low 20s for the full year.
Coastal Marine Segment: Barge utilization is expected to remain in the mid-90% range. Revenue growth is projected in the mid-single digits year-over-year, supported by gradual pricing improvement. Operating margins are expected to be in the high teens range for the full year, with some pressure in the first part of the year due to heavy shipyard activity.
Distribution and Services Segment: Revenues are expected to be flat to slightly higher year-over-year. Power generation is projected to drive growth, supported by a robust order pipeline and expanding backlog. Operating margins are expected to average in the mid- to high-single-digit range for the full year.
Capital Expenditures (CapEx): CapEx for 2026 is expected to range between $220 million and $260 million, primarily for marine maintenance and growth capital spending.
Free Cash Flow: The company expects to generate operating cash flow ranging from $575 million to $675 million in 2026, with significant free cash flow anticipated.
Market Conditions: Limited new build activity in the marine market is expected to keep industry supply in check. Refinery utilization is projected to remain healthy, with early signs of strengthening petrochemical demand. Coastal market conditions are expected to remain favorable, with balanced supply and demand.
Oil and Gas Market: Revenues are expected to decline in the double-digit range due to soft demand, but the company aims to maintain profitability through cost control.
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Shareholder Return Plan
Share Repurchase: Kirby Corporation returned capital to shareholders with over $100 million in share repurchases during the fourth quarter of 2025. The average price for the repurchased shares was just under $99.
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Key Q&A
Q:What caused the slight decline in 4Q term contract pricing, and does it reflect customer demand outlook for 2026?
A:The slight decline in 4Q term contract pricing was due to weak demand early in the quarter, carrying over from a weaker third quarter, which led to more barge availability and short-term pressure on term pricing. Management does not believe it reflects customer demand outlook for 2026. Spot prices have already retraced and improved in January, indicating a better renewal cycle for the year.
Q:What is the expected revenue growth for the coastal side in 2026, and what factors contribute to this growth?
A:Revenue for the coastal side is expected to grow in the mid-single-digit range in 2026, driven entirely by price increases as there is limited room to increase volumes due to shipyard constraints. The market remains tight, and no new capacity is being built, which supports pricing.
Q:Why is the EPS guidance range so wide, and what factors contribute to this uncertainty?
A:The wide EPS guidance range is due to uncertainties in power generation deliveries, which are affected by OEM supply chain constraints, and the inland market's pricing improvements throughout the year. Management remains optimistic but cautious due to potential demand pullbacks and inflationary pressures.
Q:What is the outlook for inland market pricing and margins in 2026?
A:Management expects inland market pricing to improve, with supply and demand in excellent condition. Spot markets are showing positive momentum, and Venezuelan crude dynamics could provide significant upside. However, inflationary pressures, including wage and medical costs, may impact margins, leading to a cautious outlook.
Q:What is the company's approach to capital allocation and share repurchases?
A:The company is focused on enhancing shareholder value through disciplined capital allocation. While they are exploring M&A opportunities, they also prioritize share repurchases, having deployed $360 million of free cash flow to buybacks in 2025. They plan to continue this approach, balancing acquisitions and buybacks.
Q:What is the growth outlook for the power generation business, and what factors influence it?
A:The power generation business is expected to grow 10%-20% annually over the next few years, driven by strong demand for backup and behind-the-meter power systems. Growth is constrained by OEM supply chain limitations, but expansions in capacity and service opportunities are expected to support long-term growth.
Q:What impact does Venezuelan crude have on the company's business?
A:Venezuelan crude could positively impact the company's inland barge business by increasing the movement of heavy crude and intermediates between refineries. However, the volumes have not yet materialized significantly, and management remains cautiously optimistic about its potential impact.
Q:What is the current state of the chemical market, and what is the outlook for improvement?
A:The chemical market has been weak due to global challenges, including plant shutdowns in Europe and Asia. However, U.S. chemical plants remain efficient due to favorable feedstock conditions. Management is optimistic about a potential bottoming out and improvement in the market, supported by increased homebuilding and auto production in the U.S.
Q:What is the company's capacity for growth in the power generation segment?
A:The company has significant capacity for growth in power generation, with two major manufacturing facilities that are not yet running 24/7. They are expanding facilities to handle larger equipment and are focused on adding service technicians to support growth. The segment is expected to grow steadily, with potential for higher growth as OEM capacity expands.
Q:What is the current spread between spot and contract pricing in the inland market, and what does it indicate?
A:The current spread between spot and contract pricing in the inland market is about 10%, which is considered healthy. This indicates a constructive market environment, with no significant new equipment being built, supporting favorable pricing dynamics.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the potential volumes of Venezuelan crude and its exact impact on the business, citing early stages and lack of significant data. Additionally, they did not provide precise figures for power generation backlog or the exact impact of inflation on margins, using general terms like 'constructive' and 'optimistic' without detailed quantification.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Coastal market
Gen revenue
Industrial revenue
Industrial segment
Inland cost
Marine Transportation
Officer Slide
Power Gen
Pricing softness
Relations reminder
Revenues oil
SEC record
Services demand
Slide presentation
Term renewal
Transportation Distribution
Transportation segment
activity utilization
availability capacity
claim loss
digit term
efficiency
end softness
flow generation
focus safety
gas profitability
highway activity
highway market
income statement
loss focus
margin Distribution
marine revenue
repair highway
revenue utilization
segment income
softness market
softness repair
team
utilization mid
KEX Transcript
Kirby Corporation (KEX) Q4 2025 Earnings Call Transcript
Unknown1-29
The earnings call summary and Q&A indicate a mixed outlook. Inland and coastal marine transportation show stable to improving conditions, but uncertainties exist in pricing and demand. The power generation segment has growth potential, but supply chain constraints and inflationary pressures pose risks. Share repurchases and improved free cash flow are positive, but unclear guidance and cautious management responses create uncertainty. Overall, the sentiment is balanced, leading to a neutral stock price prediction.
Kirby Corporation (KEX) Q3 2025 Earnings Call Transcript
Positive10-29
The earnings call summary indicates mixed financial performance with strong growth in power generation and coastal revenues, offset by declines in inland and oil & gas revenues. Management provided optimistic guidance and highlighted strong cash flow and share repurchases, which are positive signals. The Q&A section revealed record power generation backlog and stable inland market, although some uncertainty remains. Adjusting for these insights, the overall sentiment is positive, suggesting a potential stock price increase of 2% to 8% over the next two weeks.
Kirby Corporation (KEX) Q2 2025 Earnings Call Transcript
Positive7-31
The earnings call reveals strong financial performance with increased revenues across segments, particularly in power generation and oil and gas, despite some macroeconomic challenges. The Q&A section highlights strong demand and positive outlook in key areas, such as coastal margins and power generation backlog. The company's strategic focus on M&A and share repurchases, along with raised free cash flow guidance, further supports a positive sentiment. However, some caution is warranted due to chemical demand softness and unclear guidance on coastal margins surpassing inland margins.
Kirby Corporation (KEX) Q1 2025 Earnings Call Transcript
Unknown5-1
Earnings call shows mixed signals: strong EPS growth and positive shareholder returns contrast with revenue declines in key segments and economic uncertainties. Q&A reveals constructive M&A outlook and margin improvement, but delays in revenue acceleration and unclear EPS guidance create ambiguity. Stock repurchases are a positive, yet overall sentiment remains mixed, suggesting a neutral short-term stock price movement.
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