Wednesday, October 31, 2012

Barge Operator Kirby Corporation Q3 Results Bullish for Conrad ($CNRD)

Third quarter results were reported a few days ago and look bullish,

"During the third quarter, overall demand remained strong within the inland tank barge fleet with continued high utilization levels and price increases on both term and spot contract business. For the coastal tank barge fleet, revenues were relatively consistent with the prior year quarter and 2012 second quarter. Utilization levels have begun to increase and there are some signs of overall market improvement. [...]

"Kirby Corporation, based in Houston, Texas, is the nation's largest domestic tank barge operator, transporting bulk liquid products throughout the Mississippi River System, the Gulf Intracoastal Waterway, coastwise along all three United States coasts... [...]

"Inland tank barge fleet utilization during the third quarter remained in the 90% to 95% range with favorable pricing trends, reflecting healthy demand across all major product markets. [...]

"Our 2012 capital spending guidance range is currently $305 to $315 million, including approximately $130 million for the construction of 55 inland tank barges and five inland towboats, and approximately $70 million in progress payments on the construction of two offshore dry-bulk barge and tugboat units scheduled for delivery in 2012 with an estimated cost of $52 million each. The increase from the previous capital spending guidance range of $290 to $300 million is primarily related to timing of shipyards for upgrades to the marine transportation fleet."
The comments from conference call were also bullish,
"Our inland marine transportation sector is performing well with favorable pricing trends and we anticipate this performance to continue. Liquid movements from shale formations and Canadian crude oil movements from the upper river system have kept positive pressure on barge utilization and has absorbed new barge capacity. This should continue into next year. [...]

Our fourth quarter guidance assumes our coastal marine transportation business will experience a normal seasonal decline in the fourth quarter, partially offset by some very modest year-over-year improvement in rates and utilization. This business continues to improve as capacity is removed. It’s also benefiting from crude oil movements, which is absorbing capacity. We see nothing that suggests this won’t continue. The sector would also benefit from a stronger economy.[...]

We’re as busy as we can be in the inland side really.

Yeah, we think that there is going to be another approximately 200 barges built, a combination of 30,000 and 10,000 barrel barges. And that again we think that some of that’s going to be replacement, most of our building program is replacement. And that the industry continues to need capacity to service new requirements particularly their black oil requirement, crude oil requirements.[...]

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