Snapshot
Kirby Corp reported $855M of revenue in Q2 2025, up 3.8% year over year, with diluted EPS of $1.67 and an operating margin of 15.4%.
- Revenue
- $855M
- YoY growth
- +3.8%
- Diluted EPS
- $1.67
- Operating margin
- 15.4%
What management said
- •The slide presentation for today's conference call, as well as the earnings release which was issued earlier today, can be found on our website.
- •Reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures are included in our earnings press release and are also available on our website in the Investor Relations section.
- •Earlier today we announced second quarter earnings per share of $1.67, a 17% increase year-over-year from $1.43 in the second quarter of 2024.
- •Our second quarter performance reflected solid execution across both of our business segments and continued strength in our core markets, supported by healthy customer demand, disciplined pricing, and solid operational performance.
- •Customer activity was steady with barge utilization rates consistently in the low to mid 90% range, reflecting healthy demand across our core markets.
- •Spot market rates increased in the low single digits sequentially and in the mid single-digits year-over-year, supported by limited barge availability and firm customer demand.
- •The combination of improved pricing, disciplined execution, and resilient demand helped drive operating margins into the low 20% range.
- •Barge utilization was consistently in the mid to high 90% range and was supported by steady customer demand and limited supply of large capacity vessels.
- •While some maintenance activity continued, its impact was less pronounced, allowing for improved asset availability and improved revenue generation.
- •Turning to distribution and services, our teams delivered a strong second quarter, achieving year-over-year growth in both revenue and operating income with solid contributions across most of our end markets.
- •In power generation, revenues were up 31% year-over-year, driven by robust demand from data centers and industrial customers.
- •The pace of inbound orders remained strong, further building our backlog and positioning us well for the second half of this year.
What went well
- •Kirby reported second quarter earnings per share of $1.67, a 17% increase year-over-year from $1.43 in the second quarter of 2024.
- •Inland marine delivered solid results with barge utilization consistently in the low to mid 90% range, spot rates up low single digits sequentially and mid single digits year-over-year, and operating margins in the low 20% range.
- •Coastal marine maintained barge utilization in the mid to high 90% range with term contract renewals increasing in the mid 20% range year-over-year and operating margins reaching the high teens, helped by fewer planned shipyards.
- •Distribution and services grew revenue and operating income year-over-year, led by power generation revenue up 31% on robust data center and industrial demand, with backlog continuing to build.
- •Oil and gas operating income increased more than 180% year-over-year despite a revenue decline, driven by EFRAC equipment growth and disciplined cost management.
- •The balance sheet remained strong with net debt to EBITDA just under 1.4 times, and the company raised its free cash flow guidance for 2025.
What went wrong
- •Navigational and lock delays in inland marine posed a modest headwind that challenged operational efficiency during the quarter.
- •Conventional FRAC-related equipment demand stayed soft as lower rig counts tempered orders, contributing to a 27% year-over-year revenue decline in oil and gas.
- •Second quarter cash flow from operations was impacted by an approximately $83 million working capital build ahead of projects, especially in power generation.
- •Entering July, softness in chemical customer volumes began to materialize, prompting a more cautious near-term outlook and a likely finish at the lower end of full-year guidance.
Guidance changes
| Metric | Period | Previous | Current | Change |
|---|---|---|---|---|
| Full-year EPS growth | FY2025 | 15%-25% year-over-year | 15%-25% year-over-year, likely toward the lower end if trends persist | Reaffirmed range with cautious skew to low end |
| Inland barge utilization | Q3 2025 | Low to mid 90% range (Q2) | Around 90% / low 90% range | Moderated slightly |
| Inland revenue growth | FY2025 | Not specified | Low to mid single digit range | New full-year guide |
| Coastal revenue growth | FY2025 | Not specified | High single to low double digit range vs 2024 | New full-year guide |
| Coastal operating margins | FY2025 | Not specified | Mid to high teens range | New full-year guide |
| Distribution and services revenue | FY2025 | Not specified | Flat to slightly up, operating margins high single digits | New full-year guide |
| Cash flow from operations | FY2025 | Prior year guide | $620 to $720 million | Raised free cash flow guidance by about $50 million |
Performance breakdown
| Metric | YoY change | Reason |
|---|---|---|
| Earnings per share | +17% | Solid execution across both segments, healthy demand, disciplined pricing |
| Marine Transportation revenue | +2% (total marine $7.8M increase) | Pricing gains offsetting navigational challenges |
| Marine Transportation operating income | +4% | Improved pricing and execution; marine operating margin 20.1% |
| Distribution and services revenue | +7% ($23M) | Growth in power generation and commercial and industrial |
| Distribution and services operating income | +20% ($6M) | Favorable product mix and cost control |
| Power generation revenue | +31% | Robust demand from data centers and industrial customers |
| Oil and gas operating income | +182% | EFRAC growth and disciplined cost management despite 27% revenue decline |
Earnings call themes & trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Power generation / data center demand | Building backlog with supply delays on large engines | Strong deliveries, backlog up 15%-20% in the quarter, 95% of orders outside oil and gas | Accelerating |
| Inland chemical demand | Volumes held up despite a negative tape for over a year | Chemical volumes starting to pull back entering July | Softening |
| Inland pricing | Steady mid single digit gains | Spot up low single digits sequentially, potential moderation if demand softens | Plateauing near-term |
| Coastal market | Strong with shipyard headwinds | Very tight supply, mid 20% renewal increases, fewer shipyards | Strengthening |
| Barge supply | Limited new construction | Net decline in inland barges (about 27 delivered vs 35 retired), 35%-40% rate increase needed to justify new builds | Constructive |
Q&A summary
What is driving the move to the lower end of the 15%-25% guidance range and where is July demand trending?
If chemical demand stays muted Kirby is likely closer to the low end, but it would not take much (housing, auto, heavier refinery feedstock returning) to firm demand given the tight supply side; Q3 utilization is guided around 90% and the latter half of July looked better than early July seasonal softness.
Can coastal margins surpass inland given inland's chemical-driven softness?
About 60% of inland volume is petrochemicals versus roughly 10% on coastal, so coastal is less exposed; management remains very bullish on coastal due to extreme supply constraints (three years to build new), while inland margins should still march slowly upward toward the high 20s over time.
Why was CapEx reduced and what is the capital allocation priority?
Some growth-related CapEx deferred into 2026, but free cash flow guidance went up about $50 million; absent acquisitions Kirby will use the majority of free cash flow to buy back stock, with a preference for marine, especially inland, acquisitions.
For power generation, how many quotes are going to non-oil-and-gas buyers and are inquiries accelerating?
About 95% of power gen orders are outside oil and gas, mostly data centers and prime power; inquiries continue to accelerate with backlog up 15%-20% in the quarter, and the market is supply constrained on engines.
What is putting downward pressure on new build barge pricing?
Management is not seeing new build pricing come down; steel remains stubbornly high and shipyard labor costs are unchanged, and it now takes roughly 35%-40% higher rates to justify building a new two-piece tow.
How do you think about contract pricing and ultimate inland margin potential?
Kirby takes a reasoned partnership approach with large chemical customers; rates are up 50% since 2022 but need another 35%-40% to justify new capital, and management still believes inland margins can reach the high 20s through slow and steady increases.