Kirby Corporation's Q1 2025: Unpacking Contradictions in Acquisitions, Backlogs, and Pricing Dynamics

Acquisition opportunities and capital deployment, power generation backlog and its impact on business, acquisition strategy and opportunities, supply and demand dynamics, inland pricing and demand dynamics are the key contradictions discussed in Kirby Corporation's latest 2025Q1 earnings call.



Inland Marine Transportation Market Dynamics:
- The Inland Marine Transportation segment reported a significant increase in delay days, up 50% sequentially and 15% from the prior year, impacting operations and financial performance.
- Despite weather challenges, market conditions improved due to limited barge availability and strong customer demand, leading to low to mid-90% utilization rates.
- Spot market rates increased in the low single digits sequentially and high single digits year-over-year.

Coastal Marine Segment Performance:
- Coastal Marine revenues decreased 6% year-over-year due to shipyard maintenance affecting operations.
- Barge utilization remained high at mid to high 90%, with continued strength in customer demand, resulting in mid-20% range price increases on term contract renewals.
- Coastal revenues are expected to increase in the high single to low double-digit range for 2025, reflecting improved operating margins.

Distribution and Services Segment Performance:
- Power Generation revenues were down 23% year-over-year, affected by supply delays, despite strong inbound orders and continued project wins.
- Commercial and Industrial revenues grew 6% sequentially and 12% year-over-year, driven by marine repair activity and favorable product mix.
- Oil and Gas revenues decreased 18% year-over-year, but operating income improved by 123% due to e-frac initiatives.

Capital Allocation and Acquisition Environment:
- Kirby's strong financial position supports significant free cash flow, allowing for investments such as the $97.3 million acquisition of 14 barges.
- The acquisition environment has become more constructive, with increased conversations and fewer distressed sellers, indicating potential for future M&A opportunities.