Kirby Corp. (NYSE: KEX) reported Q2 EPS of $0.48, versus $0.71 reported last year. Revenue for the quarter came in at $802.7 million versus the consensus estimate of $761.7 million.

Outlook

Commenting on the 2018 third quarter and full year market outlook and guidance, Mr. Grzebinski said, "Our earnings guidance range for the third quarter is $0.50 to $0.70 per share which is down sequentially primarily due to vendor delays and timing of revenue recognition in distribution and services, but partially offset by continued improvement in inland marine transportation. For the full year, we expect our GAAP earnings range to be $2.15 to $2.55 per share, or $2.50 to $2.90 per share excluding the $0.30 per share charge for Mr. Pyne's retirement and the $0.05 per share non-cash expenses related to a first quarter amendment to the employee stock plan."

Mr. Grzebinski continued, "In our inland marine transportation market, third quarter and full year guidance contemplates utilization in the low to mid-90% range. We continue to expect that industry-wide barge retirements, minimal new-builds, and additional petrochemical capacity will yield favorable industry utilization rates throughout the remainder of 2018. Term contract renewals, which started to move higher in the second quarter, are expected to continue this trend. This should result in a mid-single digit average pricing inflection on term contracts renewing in the second half of 2018. However, as the inland market has started to recover, the labor market has tightened. As a result, we implemented wage increases for our inland mariners and shore staff effective this quarter. This will result in higher compensation costs going forward, and impact our earnings by approximately $0.05 per share for the remainder of 2018. This is included in our updated guidance. In our coastal market, we expect utilization in the low to mid-80% range for the remainder of 2018. Our guidance range assumes a stabilized pricing environment in this market for the remainder of the year."

Mr. Grzebinski also said, "In our distribution and services segment, we expect reduced revenue and operating income in the third and fourth quarters compared to the second quarter. Current lead times for engines, transmissions and parts from our vendors indicate that the completion and revenue recognition of many new pressure pumping units being manufactured will be delayed into the 2018 fourth quarter and 2019. Additionally, operator issues related to sand, labor, pricing, and pipeline take-away capacity are contributing to some near-term softening of new pressure pumping equipment orders. However, remanufacturing and maintenance activities remain strong. In our commercial and industrial market, we expect results to be unchanged sequentially. Overall, we continue to expect that distribution and services 2018 revenue will range between $1.45 billion and $1.65 billion, with operating margins in the high single digits."

Mr. Grzebinski concluded, "The long-term outlook for Kirby remains very bright. We are confident that the marine transportation segment has bottomed, and expect further improvement as the inland market continues its recovery. The coastal market, while challenging in the near term, has stabilized and will likely rebound in the next year or so. Kirby is well-positioned with significant recent investments in our fleet. The acquisition of Stewart & Stevenson and its successful integration into our distribution and services segment has made us a market leader in this business. With our enlarged scale and geographic diversity, we are poised to capitalize on anticipated growth in U.S. shale oil and gas, stand-by power generation, and the improving commercial marine industry."

GUIDANCE:

Kirby Corp. sees FY2018 EPS of $2.50-$2.90, versus the consensus of $2.98.

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