Kirby Annual Report 2014

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FY2014 Annual Report · Kirby

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Kirby Corporation

2014 Annual Report

2014 Quarterly Review

(In thousands, except per share amounts) (Unaudited)

First Quarter

Revenues

Net earnings*

Earnings per share*

EBITDA

2014
________
$ 589,246
$ 62,246
1.09
$
$ 146,889

Change
________ ______

2013

• Marine transportation inland and coastal ﬂeets demand strong with utilization

$ 558,785

$ 56,578

$ 1.00

$ 139,946

10%

in the 90% to 95% range and favorable pricing trends

• Diesel engine services land-based demand reﬂected modest improvement,

while marine and power generation demand stable

• Included a $.03 per share severance charge and an estimated $.03 per
share combined impact from winter weather and expenses related to an
incident in the Houston Ship Channel

• 2013 included a $.05 per share credit to the fair value of United’s contingent

earnout liability

Second Quarter

Revenues

Net earnings*

Earnings per share*

EBITDA

Third Quarter

Revenues

Net earnings*

Earnings per share*

EBITDA

2014
________
$ 628,054
$ 74,992
1.31
$
$ 167,636

2014
________
$ 680,721
$ 76,717
1.34
$
$ 170,090

Change
________ ______

2013

• Marine transportation inland and coastal ﬂeets demand strong with utilization

$ 563,908

$ 63,093

$ 1.11

$ 148,925

11%

19%

18%

13%

in the 90% to 95% range and favorable pricing trends

• Diesel engine services land-based demand strengthened as industry

fundamentals improved, while marine and power generation demand reﬂected
a modest improvement

• 2013 included a $.07 per share credit to the fair value of United’s contingent

earnout liability

Change
________ ______

2013

• Marine transportation inland and coastal ﬂeets demand strong with utilization

$ 551,105

$ 69,123

$ 1.21

$ 159,464

24%

11%

in the 90% to 95% range and favorable pricing trends

• Diesel engine services land-based demand strengthened as industry

fundamentals continued to improve, while marine and power generation
demand stable

• 2013 included a $.08 per share credit eliminating United’s contingent

earnout liability

Fourth Quarter

Revenues

Net earnings*

Earnings per share*

EBITDA

2014
________
$ 668,297
$ 68,051
1.19
$
$ 157,946

Change
________ ______

2013

$ 568,397

18%

$ 64,267

$ 1.13

$ 149,414

• Marine transportation inland and coastal ﬂeets demand strong with utilization

in the 90% to 95% range and pricing trends moderating for inland

• Diesel engine services land-based demand strong; however, results negatively

impacted by fourth quarter decline in crude oil prices that resulted in customers
deferring deliveries and cancelling orders, coupled with production inefﬁciencies

• Marine and power generation demand stable

* Net earnings represent net earnings attributable to Kirby and earnings per share represents

diluted earnings per share attributable to Kirby common stockholders.

Statements made in this Annual Report with respect to the future are forward-looking statements. These statements reﬂect Management’s reasonable judgment with respect to future events. Forward-looking statements involve risks
and uncertainties. Actual results could differ materially from those anticipated as a result of various factors. Forward-looking statements are based on currently available information and Kirby assumes no obligation to update any such
statements. A list of these factors can be found in Kirby’s Annual Report on Form 10-K for the year ended December 31, 2014, included in this Annual Report and ﬁled with the Securities and Exchange Commission.

On the Cover: A Kirby Inland Marine tow, consisting of a towboat and two pressure barges, follows a Kirby tow along the Gulf Intracoastal Waterway. Photo taken by James Bates, a Pilot for Kirby Inland Marine.

Financial Highlights

(In thousands, except per share amounts)

Revenues:
Marine transportation
Diesel engine services

Net earnings attributable to Kirby

Net earnings per share attributable to Kirby
common stockholders (diluted)

EBITDA–Earnings before interest, taxes,
depreciation and amortization:*
Net earnings attributable to Kirby
Interest expense
Provision for taxes on income
Depreciation and amortization

EBITDA*

Property and equipment, net
Total assets
Long-term debt, including current portion
Total equity

For the years ended December 31,

2014
_________

2013
_________

2012

2011

_________ _________

2010
_________

$ 1,770,684

795,634
_________
$ 2,566,318
_________
_________
$ 282,006
_________
_________

$ 1,713,167
529,028
_________
$ 2,242,195
_________
_________
$ 253,061
_________
_________

$ 1,408,893

$ 1,194,607

$ 915,046

703,765

655,810
_________ _________
$ 1,850,417
$ 2,112,658
_________ _________
_________ _________
$ 209,438
$ 183,026
_________ _________
_________ _________

194,511
_________
$ 1,109,557
_________
_________
$ 116,249
_________
_________

$ 4.93
_________
_________

$ 4.44
_________
_________

$ 3.33
$ 3.73
_________ _________
_________ _________

$ 2.15
_________
_________

$ 282,006

21,461

169,782

169,312
_________
$ 642,561
_________
_________

$ 2,589,498

$ 4,141,909

$ 716,700

$ 2,264,913

$ 253,061
27,872
152,379
164,437
_________
$ 597,749
_________
_________

$ 2,370,803
$ 3,682,517
$ 749,150
$ 2,022,153

$ 209,438
24,385
127,907
145,147

$ 183,026

$ 116,249

17,902

109,255

10,960

72,258

126,029
_________ _________
$ 506,877
$ 436,212
_________ _________
_________ _________

95,296
_________
$ 294,763
_________
_________

$ 2,315,165

$ 1,822,173

$ 1,118,161

$ 3,653,128

$ 2,960,411

$ 1,794,937

$ 1,135,110

$ 802,005

$ 200,134

$ 1,707,054

$ 1,454,158

$ 1,159,139

Revenues
(In millions)

Earnings Per Share

EBITDA*
(In millions)

Return on
Invested Capital**

$2,566

$2,242

$2,113

$1,850

$4.93

$4.44

$3.73

$3.33

$643

$598

11.1%

10.6%

10.4%

9.3%

9.6%

$507

$436

$1,110

$2.15

$295

* EBITDA, deﬁned as net earnings attributable to Kirby before interest expense, taxes on income, depreciation and amortization, is a non-GAAP ﬁnancial measure used by Kirby because of its wide acceptance as a measure of

operating proﬁtability before nonoperating expenses (interest and taxes) and noncash charges (depreciation and amortization).

** Return on invested capital is deﬁned as net earnings attributable to Kirby plus interest expense (net of taxes) divided by total average invested capital (average equity plus average debt). For 2010, adjusted to reﬂect average debt

levels net of cash and cash equivalents.

To Our Shareholders

The 2014 year was our fourth consecutive year of record-

pricing, as well as an unprecedented level of United States

setting operating results. Our 2014 results reﬂected con-

petrochemical plant construction and expansion of existing

tinued strong inland and coastal marine transportation

plants, should add signiﬁcant volumes to our future marine

markets throughout the year, stable marine and power

transportation markets.

generation diesel engine service markets, and a brief

The operating performance of our inland marine trans-

but unsustained improvement in our land-based diesel

portation operations remained strong throughout 2014,

engine services market before crude oil prices fell during

with utilization of our petrochemical, black oil and reﬁned

the fourth quarter.

products ﬂeets in the 90% to 95% range. The United

Our 2014 revenues were $2.6 billion, a 14% increase

States petrochemical industry continued to contribute

compared with $2.2 billion in 2013. Net earnings were

strong volumes from Gulf Coast plants for domestic

$282 million, an 11% increase compared with $253 mil-

consumption and to terminals for export destinations.

lion in 2013. Earnings per share were $4.93, an 11%

Favorable black oil demand continued to be driven by

increase over $4.44 in 2013. EBITDA was $643 million,

stable reﬁnery output and the movement of crude oil and

an 8% increase compared with $598 million in 2013.

natural gas condensate from United States shale forma-

Our marine transportation segment carries a diversiﬁed

tions. Reﬁned products demand also remained positive

array of products for our many customers. This year, as

throughout 2014, as exports of diesel fuel and heavy fuel

part of our annual report, we have included a simpliﬁed

oils remained brisk.

chart that illustrates the variety of feedstocks, includ-

Our coastal marine transportation operations reﬂected

ing crude oil, natural gas condensate and natural gas,

continued strong demand for the transportation of

that go through the petrochemical and reﬁning process

reﬁned products, black oil, including crude oil and natural

to become ﬁnished products, as well as coal, salt and

gas condensate, and petrochemicals. Fleet utilization

ore as they impact the petroleum, chemical and reﬁning

remained in the 90% to 95% range throughout 2014. The

process. The chart highlights the importance of marine

coastal market remained supply constrained throughout

transportation to the United States petrochemical and

2014 and we continued to beneﬁt from price increases

reﬁning industries, as numerous feedstocks, intermedi-

on contract renewals.

ates and end products are transported on a daily basis.

We put capital to work in 2014 with both ﬂeet expan-

Kirby Corporation provides a vital link in moving raw and

sion and share repurchases. We spent $355 million on

intermediate materials to facilities where they will ulti-

capital additions and upgrades during 2014. We spent

mately become ﬁnished products.

$126 million for new inland tank barges and towboats, and

For both our inland and coastal markets, today’s lower

$138 million primarily for upgrading our existing marine

energy prices are a net positive. In a consumer-driven

transportation ﬂeet and ﬁnal payment on two offshore dry-

economy, lower energy prices mean more money in the

bulk barge and tugboat units completed in 2013. We also

consumers’ hands, which is good for the economy and,

spent $91 million on progress payments for two 185,000

therefore, positive for the volumes we transport. The long-

barrel and two 155,000 barrel coastal articulated tank

term fundamental drivers of our marine transportation

barge and tugboat units scheduled for completion from

markets are positive. With an abundant supply of United

late 2015 through 2017. The four coastal units are more

States shale formation natural gas and condensate, which

fully described on page 13 of this annual report.

are basic petrochemical feedstocks, the United States pet-

During 2014, we took delivery of 61 new inland tank

rochemical plants have a competitive advantage globally.

barges. Net of inland tank barge retirements, we added

Even at today’s lower crude oil price levels, natural gas

approximately 500,000 barrels of inland ﬂeet capac-

feedstock remains a signiﬁcantly lower priced feedstock

ity during 2014. With these new inland tank barges, we

option as compared with crude oil. Favorable natural gas

continued to decrease the average age of our inland ﬂeet,

Kirby 2014 Annual Report

from 23.9 years old in 2008 to 15.3 years old today. The

Our Board of

newer inland tank barge ﬂeet improves reliability and reduces

Directors brings a

maintenance costs. A table on page 11 of this annual report

wealth of exper-

shows the decline in the average age of our inland tank

tise to Kirby and

barge ﬂeet.

In our diesel engine services segment, business

we want to thank

them for their sup-

improved during 2014, but there were headwinds gather-

port, guidance

ing late in the year due to the collapse of crude oil pricing.

and direction. We

Through the third quarter of 2014, our land-based diesel

are also pleased

engine services market saw improving demand across its

to note the nomi-

entire oil services portfolio, including orders for the manu-

nation of a new

facture of new pressure pumping units and oil service

director, Barry

equipment, and increased demand for the remanufacture

Davis, President

of pressure pumping units, as well as increased service

and CEO of

and sale of engines and parts. With the signiﬁcant drop

EnLink Midstream

in crude oil prices in the fourth quarter, we experienced

Partners, LP and

some customer deferrals of new equipment deliveries until

EnLink Midstream,

2015, cancellations of new equipment orders and requests

LLC, who has

David Grzebinski
President and Chief Executive Ofﬁcer

Joe Pyne
Chairman

for price reductions on new equipment. We continue to

been nominated for election to our Board at our 2015

emphasize growth in the remanufacturing portion of this

Annual Meeting of Stockholders on April 28, 2015.

business and operating expense discipline to dampen the

We also want to extend a special thank you to Bob

earnings volatility in future oil and gas cycles.

Gower, a Kirby Board member since 1998. Bob will retire

Our marine diesel engine services market beneﬁted from

from the Board at our April Annual Meeting, having served

modest improvements in service activity and direct parts

on our Board for 17 years. Bob’s wealth of petrochemical

sales from its inland and offshore customers, as well as off-

and ﬁnancial expertise, leadership and support contributed

shore oil service and drilling customers. Our power genera-

greatly to the growth of Kirby during his tenure on the Board.

tion market remained stable as a result of engine generator

While the 2015 year is beginning with some uncer-

set upgrades and parts sales for both domestic and inter-

tainty related to lower crude oil prices, we are very well

national customers.

positioned to continue to prosper and create value for our

During the 2014 fourth quarter and early 2015, we took

shareholders. The long-term fundamentals of both our

advantage of a signiﬁcant reduction in the price of our

marine transportation and diesel engine services segments

common stock and initiated a share repurchase program.

remain intact. Our balance sheet is very strong with a debt-

From mid-December 2014 through February 2015, we

to-capital ratio of 24.0% at year-end 2014. We will continue

have repurchased approximately 1.4 million shares of our

to be disciplined in our approach as we evaluate compet-

common stock for $113 million, at an average price of

ing alternatives for our allocation of capital.

$78.72 per share. Our remaining repurchase authorization

is currently 3.5 million shares.

Respectfully submitted,

We wish to thank each and every Kirby employee who

contributed to making 2014 a record-setting year. We truly

believe our marine transportation and diesel engines ser-

vices employees are the best in the business.

Joseph H. Pyne
Chairman of the Board

David W. Grzebinski
President and Chief Executive Ofﬁcer

Houston, Texas
March 9, 2015

Marine Transportation

The United States tank barge industry serves the inland waterways, consisting of the Mississippi River
System and the Gulf Intracoastal Waterway, and coastal ports along all three coasts and in Alaska and
Hawaii. The nation’s inland tank barge ﬂeet is comprised of approximately 3,650 liquid tank barges.
We operate 890 inland tank barges, or 24% of the nation’s inland ﬂeet. The nation’s coastal tank barge
ﬂeet, in the 195,000 barrels or less category, is comprised of approximately 260 liquid tank barges.
We operate 69 coastal tank barges, or 27% of the nation’s coastal ﬂeet. We also operate six offshore
dry-bulk cargo barges.

Kirby Inland Marine is the United States’ largest inland tank barge operator, transporting petrochemicals,

black oil, reﬁned petroleum products and agricultural chemicals throughout the Mississippi River
System, Gulf Intracoastal Waterway and Houston Ship Channel.

Kirby Offshore Marine is the United States’ largest coastal tank barge operator in the 195,000 barrels

or less category, transporting petrochemicals, black oil and reﬁned petroleum products along all three
coasts and in Alaska and Hawaii, as well as dry bulk cargoes along the Gulf Coast and East Coast.

Our inland and coastal tank barge customers consist of the large petrochemical and reﬁning companies

that operate in the United States, providing a critical link in customers’ supply chains, transporting and
transferring bulk liquid products that keep plants and reﬁneries operating efﬁciently. The coastal dry-bulk
ﬂeet’s customers primarily consist of a Florida utility, sugar producers and a concrete manufacturer.

Revenues
(In millions)

Operating Income
(In millions)

Operating Margin

$1,713

$1,771

$1,409

$1,195

$915

$312

$262

$193

$430

$408

23.8%

22.1%

24.3%

21.9%

21.1%

Kirby 2014 Annual Report

A Kirby Inland Marine tow, the M/V Jeff Montgomery, an
1800 horsepower towboat, with two loaded 30,000 barrel
tank barges, transits the Houston Ship Channel.

Results of Operations for 2014

• Operating income of $430 million on revenues of
$1.8 billion compared with operating income of
$408 million on revenues of $1.7 billion for 2013.
• Operating margin of 24.3% compared with 23.8%

for 2013.

• 68% of marine transportation revenues from inland

• Fundamental drivers of inland and coastal marine

transportation markets remained intact throughout
2014, the result of low-priced natural gas, which gives
petrochemical producers a competitive advantage
globally, and production of crude oil and natural
gas condensate from United States shale formations.

operations and 32% from coastal operations.

• Inland transportation markets reﬂected consistent

• 47% of revenues from transportation of petrochemicals,
25% black oil, 25% reﬁned petroleum products and
3% agricultural chemicals.

• Higher revenues and operating income reﬂected

consistent demand across all inland transportation
markets with 90% to 95% equipment utilization
levels and favorable pricing trends for majority of
year. Coastal transportation markets reﬂected strong
demand across all markets with 90% to 95% utilization
and favorable pricing trends.

volumes from United States petrochemical customers
for both domestic and foreign destinations, steady
reﬁnery production levels with strong volumes of reﬁned
products and heavy fuel oils for export destinations,
along with steady movements of crude oil and natural
gas condensate along the Gulf Intracoastal Waterway
and Mississippi River System.

• Coastal transportation markets reﬂected consistent
volumes of reﬁned products, crude oil and natural
gas condensate, and petrochemicals, along with
continued success in expanding the coastal customer
base to inland customers with coastal transportation
requirements.

Kirby Provides a Vital Link in Converting Natural Resources to Finished Products

On the adjacent page and foldout page is
a simpliﬁed chart reﬂecting the movement
of crude oil and natural gas condensate,
natural gas, coal, salt and ore from
their original composition, through the
petrochemical and reﬁning process, to
ﬁnished products. The chart reﬂects the
numerous feedstocks, intermediates and
end products that we transport on a daily
basis throughout the Mississippi River
System, the Gulf Intracoastal Waterway,
coastwise along all three United States
coasts and in Alaska and Hawaii.

Crude oil and natural gas are the
most important natural resources of
the industrialized world. Crude oil is the
primary source of fuel for vehicles, vessels,
machinery and airplanes. It is used to
generate heat, pave roads and provide
fuel for utilities. Crude oil and natural gas
components are used to manufacture
almost all petrochemical products, such as
plastics, polyester ﬁbers, textiles, paints and
even pharmaceuticals.

Petrochemical plants’ primary feedstocks

are components of natural gas such as
ethane, propane and butane, as well as
by-products of the reﬁning process. These
feedstocks are then processed through
an operation known as cracking, the
breaking down of heavy molecules into
lighter, more valuable fractions. Once these
operations are concluded, the building
blocks of the petrochemical industry,
oleﬁns and aromatics, are obtained. From

these products, intermediate products
such as cumene, styrene, propylene oxide
and acrylonitrile are produced, leading to
end products such as polyester, nylon,
polyurethanes and polystyrene, products
used in the manufacture of plastic products,
clothing, adhesives, carpets and packaging
products, just to name a few.

Reﬁneries produce physical and

chemical changes in crude oil and natural
gas condensate through a distillation
process, the separation of crude oil into
lighter groups of hydrocarbons, producing
gasoline blends, heating oil, diesel fuel and
many other products, as well as feedstock
for petrochemical plants.

We provide a vital link in the production
of petrochemicals, ensuring transportation
of raw material feedstocks into the plants,
movement of petrochemical products
from one petrochemical plant to another
for further processing, and movement of
more ﬁnished products to manufacturing
companies and to waterfront terminals for
both domestic and foreign destinations. We
transport gasoline blends and additives,
diesel fuel and jet fuel from reﬁneries to
waterfront terminals for both domestic and
foreign destinations. Black oil, including
crude oil and natural gas condensate, is
transported to reﬁneries and waterfront
terminals, residual fuel to utilities and
asphalt to waterfront terminals. Agricultural
chemicals are transported primarily to
waterfront terminals in the Midwest.

Kirby Corporation–Providing a Vital Link in Converting
Natural Resources to Finished Products

Kirby Corporation

Fertilizer, Fungicides,
Pesticides

Sulfur
This Would be a Subhead Explaining What This Is

Sulfur Recovery

Fuel Gas
for Refinery Use

REFINERY
PROCESS

NATURAL
RESOURCES

PETROCHEMICAL
PROCESS

Phosphoric Acid
and Sulfuric Acid

Products moved by Kirby

Products not moved by Kirby

Refinery process

Home Heating, Cooking,
Petrochemical Feedstock

Propane

Petrochemical Feedstock

Benzene

Aromatics

Ethanol

Chemical &
Gasoline Reforming

Naphtha

Ore

Salt
(Brine)

Coal

Ammonia

Electricity

Caustic Soda

Chlorine

Methanol

Olefins

Petrochemical Feedstock

p-Xylene
(Paraxylene)

Automobile Fuel

Gasoline Blends

Aviation Fuel, Home
Heating, Lighting, Cooking

Kerosene and
Aviation Fuel

Home Heating

Heating Oil

Fuel for Trucks, Automobiles,
and Railroad, Marine and
Farming Equipment

Diesel Fuel

Ship Fuel

Bunker (Ship)
Fuel

Fuel for Manufacturing
and Utilities

Petroleum Coke

Fuel for Utilities

Residual Fuel

Lube Oil, Motor Oil,
Grease

Road Construction,
Roofing

Fuel Oils

Asphalt

Tires

Carbon Black Oil

Kirby 2014 Annual Report

Alkylation

Distillation
Column

Catalytic Cracking

Natural Gas

Vacuum Gas
Distillates

Vacuum Gas
Oil (VGO)

VAM - Vinyl Acetate Monomer
EVA - Ethylene Vinyl Acetate
PVC - Polyvinyl Chloride
ABS - Acrylonitrile Butadiene
Styrene
DMT - Dimethyl Terephthalate
PTA - Purified Terephthatic Acid

Crude Oil
and
Natural Gas
Condensate

LPG
Butane

LPG
Propane

LPG
Ethane

Ethylene

Propylene

Butadiene

Aromatics

Benzene

Xylene

Titanium Dioxide

Paint, Plastics, Paper

Fertilizer

Agriculture Use

PVC, Aluminum, Paper,
Soap, Detergent

Industrial Use, Cleaning
Solutions, Paper

Sanitation, Disinfectant,
PVC Resins

MTBE

Gasoline Blending (Export)

EVA

PVC

Polyethylene

Adhesives, Resins

PVC Pipe, Electric Cable,
Vinyl Siding, Furniture,
Medical Supplies

Packaging, Plastic Bags,
Plastic Consumer Goods

Ethylene Glycol

Polyester Fibers,
Plastics, Antifreeze

Polystyrene

ABS

Packaging, Insulation,
Plastic Consumer Goods,
Food Service Ware

Synthetic Rubber

Appliances, Automotive Use,
Medical Supplies,
Pharmaceuticals

Polyethylene

Packaging, Bottles,
Plastic Consumer Goods

Acrylic Fibers

Clothing, Carpet, Home
Furnishings, Fabric

VAM

Acetic Acid

Ethylene
Dichloride

Vinyl Chloride

Alpha Olefins

Ethylene Oxide

Styrene

Acrylonitrile

Acrylic Acid

Propylene Oxide

Polyurethanes

Furniture, Automotive Use,
Insulation, Adhesives, Hard
Plastic Parts

Cumene

Cyclohexane

Phenol and Acetone

Polycabonates, Epoxies,
Adhesives, Pharmaceuticals

Nylon

Automotive Use, Carpet,
Hosiery, Cords

Ethylene Glycol

DMT/PTA

Polyester

Polyester Fibers, Containers,
Bottles, Textiles, Packaging,
Resins

Strengths

Kirby Inland Marine has a signiﬁcant presence in the
Mississippi River System, Gulf Intracoastal Waterway and
Houston Ship Channel, giving us the ability to service our
customers’ needs throughout the inland waterway system.

Our inland ﬂeet consists of 890 tank barges with

17.9 million barrels of cargo capacity and 247 towboats.
Our inland tank barge ﬂeet represents approximately
24% of the estimated 3,650 inland tank barges operating
in the United States.

We provide a critical link in customers’ supply chain,
transporting and transferring bulk liquid products that
keep plants and reﬁneries operating efﬁciently.

At December 31, 2014, approximately 80% of inland
revenues were under term contracts, of which approxi-
mately 56% were under time charters, and approximately
20% of revenues were under spot contracts.

Kirby Inland Marine

Kirby Inland Marine is the leading United States
transporter of bulk liquid cargoes by inland tank barge,
offering distribution services throughout the Mississippi
River System, Gulf Intracoastal Waterway and
Houston Ship Channel. The United States inland
waterway system is one of the most vibrant and
efﬁcient transportation systems in the world, linking
the heartland and coastal states to the rest of the world.
We transport petrochemicals, black oil, reﬁned petroleum
products and agricultural chemicals for a customer base
consisting of the United States’ largest petrochemical
and reﬁning companies. Texas and Louisiana currently
account for approximately 80% of the total United States
production of petrochemicals.

Inland Tank Barge Fleet
Petrochemicals/Reﬁned products 695
119
Black oil
61
Pressure
10
Anhydrous ammonia
5
Specialty

Total

890

Total Barrel Capacity

17.9 MM

Inland Towboat Fleet
800–1300 HP
1400–1900 HP
2000–2400 HP
2500–3200 HP
3300–4900 HP
5000 HP and greater
Spot charters

Total

88
82
47
16
11
2
1

247

A Kirby Inland Marine tow, consisting of the M/V Niceville
and two pressure barges, transits the Gulf Intracoastal
Waterway. Pressurized products include butane, propane,
butadiene, isobutane and propylene, all requiring pressur-
ized conditions to remain in stable liquid form. The picture
was taken by James Bates, a Pilot for Kirby Inland Marine.

Kirby 2014 Annual Report

Typical Products Transported

Inland Tank Barge Construction

Petrochemicals: benzene, styrene, methanol,
acrylonitrile, xylene, caustic soda, butadiene, propylene,
butane and propane
Black Oil: residual fuel, fuel oils, vacuum gas oil, asphalt,
carbon black feedstock, crude oil, natural gas condensate
and ship bunkers
Reﬁned Petroleum Products: ﬁnished gasoline, gasoline
blendstock, aviation fuel, heating oil, diesel fuel, naphtha
and ethanol
Agricultural Chemicals: anhydrous ammonia, nitrogen-
based liquid fertilizer and industrial ammonia

During 2014, we continued to reinvest in our inland tank
barge ﬂeet, spending approximately $126 million for
61 new inland tank barges. Since 2008, through our inland
tank barge construction program, we have consistently
reduced the average age of our inland tank barge ﬂeet
from 23.9 years in 2008 to 15.3 years today (see table
below). Crude oil and natural gas condensate volumes
from new shale formations, increased reﬁnery output,
petrochemical expansions and new petrochemical facilities
have increased the need for barges in order to meet cus-
tomer requirements.

Inland Tank Barge Average Age by Year

Year Barges
2014
2013
2012
2011
2010
2009
2008

890
861
841
819
825
863
914

Barrel
Capacity
(MM)
17.9
17.3
16.7
16.2
15.9
16.7
17.5

Average
Age
(Years)
15.3
16.2
17.7
18.9
20.3
22.2
23.9

Strengths

Kirby Offshore Marine operates in the 195,000 barrels
or less category, having the ﬂexibility to access ports
inaccessible to larger vessels, while still delivering large
volumes of products.

Our coastal ﬂeet consists of 69 tank barges with

6.0 million barrels of cargo capacity and 74 tugboats. Our
coastal tank barge ﬂeet represents approximately 27% of
the estimated 260 coastal tank barges operating in the
United States. Our offshore dry-bulk cargo ﬂeet consists
of six dry-bulk barge and tugboat units.

With a large array of tank barge capabilities and capaci-
ties, as well as a broad geographic presence, we are able
to provide a single source of transportation services to our
petrochemical and reﬁning customers’ supply chain.

As of December 31, 2014, approximately 85% of the

coastal revenues were under term contracts, of which
approximately 90% were under time charters, and approx-
imately 15% of revenues were under spot contracts.

Kirby Offshore Marine

Kirby Offshore Marine is the leading United States
transporter of bulk liquid cargoes by tank barge in the
195,000 barrels or less category, offering safe, dependable
and cost-effective distribution services on the East, Gulf
and West Coasts and in Alaska and Hawaii. We offer
regional distribution of reﬁned products, black oil and
petrochemicals for a customer base consisting of the
United States’ largest reﬁning and petrochemical
companies. Kirby Offshore Marine also transports raw
sugar and other products from the Gulf Coast and Florida
to East Coast ports. Through Kirby Ocean Transport, we
transport coal across the Gulf of Mexico to a power
generation facility in Florida and limestone rock from
Florida across the Gulf of Mexico to Alabama.

Coastal Tank Barge Fleet
Reﬁned products/Petrochemicals 44
25
Black oil

Total

Total Barrel Capacity

6.0 MM

Coastal Tugboat Fleet
1000–1900 HP
2000–2900 HP
3000–3900 HP
4000–4900 HP
5000–6900 HP
Greater than 7000 HP

Total

8
6
15
24
12
9

Offshore Dry-Bulk Cargo Fleet
Dry-bulk barge and tugboat units
Deadweight tonnage

6
113,000

Kirby 2014 Annual Report

Typical Products Transported

New Construction

Reﬁned Petroleum Products: ﬁnished gasoline,
gasoline blendstock, aviation fuel, heating oil,
diesel fuel, naphtha and ethanol
Black Oil: residual fuel, fuel oils, vacuum gas oil, asphalt,
carbon black feedstock, crude oil, natural gas condensate
and ship bunkers
Petrochemicals: cumene, phenol, acetone, cyclohexane
and caustic soda
Dry Products: sugar, coal, limestone rock and fertilizer

With coastal tank barge utilization in the 90% to 95%
range and increasing demand for the movement of crude
oil and natural gas condensate, new capacity is needed to
meet demand and also to replace older coastal tank
barges and tugboats that will be removed from service in
the coming years. During 2014, we announced the signing
of contracts for the construction of four coastal articulated
tank barge and tugboat units. Two of the units have been
chartered to major customers for multiple years with
extension options. The coastal tank barges have the
capacity of moving crude oil, natural gas condensate,
petrochemicals and reﬁned products. Speciﬁcs of the four
coastal articulated tank barge and tugboat units currently
under construction are as follows:

Two 185,000 barrel coastal articulated tank barge and
10000 horsepower tugboat units, one for delivery in mid-
to-late 2015 and one in the 2016 ﬁrst half. Cost of each unit
is approximately $75 to $80 million.

Two 155,000 barrel coastal articulated tank barge and

6000 horsepower tugboat units, one for delivery in the
2016 second half and one in the 2017 ﬁrst half. Cost
of each unit is approximately $65 to $70 million.

A Kirby Offshore Marine articulated coastal tank barge and tug-
boat unit, the M/V Java Sea, a 4800 horsepower tugboat, and
the DBL 78, an 80,000 barrel tank barge, transits the coastal
waters of Alaska. Kirby Offshore Marine operates on the East,
Gulf and West Coasts and in Alaska and Hawaii.

Diesel Engine Services

The marine transportation industry depends on diesel engines for propulsion of its vessels. The power
generation industry depends on diesel engines for standby, peak and base load power generation. The
oil and gas industry depends on diesel engines to power its oilﬁeld service equipment. We offer our
customers a single source for the service and distribution of diesel engines and ancillary products, and
the manufacture and remanufacture of oilﬁeld service equipment, including pressure pumping units.

Kirby Engine Systems serves the marine and power generation industries, providing aftermarket service and
OEM replacement parts for medium-speed and high-speed diesel engines, and ancillary products including
reduction gears, transmissions, starters, governors and marine clutches, as well as the sale of new engines.

United Holdings serves the land-based oil and gas industry, providing aftermarket service, OEM
replacement parts and distribution of high-speed diesel engines, transmissions, pumps and compression
products, and the manufacture and remanufacture of customized oilﬁeld service equipment. There
is approximately 19.5 million horsepower, or 9,000 pressure pumping units, operating in the North
America oilﬁeld service industry, and the heavy-duty cycle associated with hydraulic fracturing is
creating an annuity for remanufacturing and servicing of pressure pumping units.

Revenues
(In millions)

Operating Income
(In millions)

Operating Margin

$704

$656

$529

$796

$68

$66

10.6%

10.4%

9.4%

$60

$43

8.1%

7.5%

$195

$21

Kirby 2014 Annual Report

Results of Operations for 2014

• Operating income of $60 million on revenues of
$796 million compared with operating income of
$43 million on revenues of $529 million for 2013.
• Operating margin of 7.5% compared with 8.1%

for 2013.

• 2013 results included an $18.3 million credit before
taxes, or $.20 per share, reducing the fair value of
the contingent earning liability associated with the
acquisition of United Holdings in April 2011. The
United Holdings earnout liability was eliminated as
of September 30, 2013.

• 72% of revenues from land-based operations and

28% from marine and power generation.

• The land-based market saw improvement in the

sale and service of land-based diesel engines and
transmissions, and an increase in the manufacture of
oilﬁeld service equipment, including pressure pumping

units. However, the sharp decline in crude oil prices
in late 2014 led to some customer deferrals and
cancellations. Demand for the remanufacture of
pressure pumping units remained relatively steady,
increasing to some degree in the 2014 second half.
Results were also negatively impacted by production
inefﬁciencies related to supply chain issues and
difﬁculties hiring qualiﬁed labor to meet demand.

• The marine market saw modest improvement,

beneﬁting from major service projects for inland and
coastal marine customers, as well as Gulf of Mexico
and foreign offshore oilﬁeld service vessels and drilling
operators. The power generation market was stable,
beneﬁting from major generator set upgrades and
parts sales for both domestic and international power
generation customers.

Charles Billiot rebuilds high-speed
diesel engine cylinder heads. Kirby
Engine Systems provides service
and parts through 13 locations
along the Gulf Coast, East Coast,
West Coast and in the Midwest.

Kirby Engine Systems

Kirby Engine Systems is a nationwide marine and power
generation diesel engine services remanufacturer and
OEM replacement parts provider for medium-speed and
high-speed diesel engines. We service ancillary products
including reduction gears, transmissions, starters, gover-
nors, marine clutches, safety-related products and heat
exchangers/separators, and we sell new engines. We pro-
vide in-house and worldwide in-ﬁeld service in support of
our domestic and international marine and power genera-
tion customers’ day-to-day operations.

The principal medium-speed diesel engines we service
are manufactured by Electro-Motive Diesel, Inc. (EMD). We
have a 49-year relationship with EMD, serving as both an
EMD distributor and a service center for select markets
and locations, providing service and parts.

The principal high-speed diesel engines we service are
manufactured by Caterpillar, Cummins, MTU Detroit Diesel
and John Deere.

Strengths

We have long-term distributorships, dealerships and
contract service center relationships with major manufac-
turers of medium-speed and high-speed diesel engines,
reduction gears and ancillary products. Further, we offer
preferential service agreements with operators of diesel-
powered marine equipment.

Our team provides factory-trained and -authorized
project engineers, mechanics and machinists through
13 strategically located service and parts facilities along the
Gulf Coast, East Coast, West Coast and in the Midwest.

Kirby 2014 Annual Report

Markets

Service Locations

Manufacturer Relationships

Marine: Medium-speed and high-speed diesel engines
and ancillary products for inland, coastal and offshore
barge operators, harbor docking operators, Great Lakes
ore carriers, offshore commercial ﬁshing ﬂeets, dredging
companies, offshore drilling companies, offshore oil ser-
vice company vessels, coastal ferries and United States
government vessels.

Power Generation: Medium-speed diesel engines, ancil-
lary products, safety-related products used in standby,
peak and base load power generation, and generator set
upgrades for domestic and international utilities, domestic
municipalities and the worldwide nuclear power industry.

Medium-Speed Diesel Engines
Houma, LA
Paducah, KY
Rocky Mount, NC
Chesapeake, VA
Seattle, WA
Tampa, FL

High-Speed Diesel Engines
Houma, LA
Baton Rouge, LA
Belle Chasse, LA
New Iberia, LA
Mobile, AL
Thorofare, NJ
Houston, TX

Medium-Speed Diesel Engines
Electro-Motive Diesel, Inc. (EMD)
Cooper-Bessemer & Enterprise Engines
Nordberg

High-Speed Diesel Engines
Caterpillar
MTU Detroit Diesel John Deere

Cummins

Ancillary Products
Allison Transmission (transmissions)
Falk Corporation (reduction gears)
Ingersoll-Rand (starters)
Woodward (governors)
Oil States Industries (marine clutches)
Alfa Laval (heat exchangers/separators)
Lufkin (gears)

Herbie Ackman adjusts rocker arm assemblies on
a Caterpillar 3512 marine propulsion engine. Kirby
Engine Systems serves as a factory-authorized marine
dealer for Caterpillar diesel engines in Louisiana,
Alabama, Kentucky, New Jersey and Texas.

United Holdings

Services Offered

Strengths

United Holdings provides factory-trained and -authorized
mechanics to overhaul and repair high-speed diesel
engines and transmissions, sells new engines, trans-
missions and OEM replacement parts, and provides
both in-house and in-ﬁeld service capabilities.

We are a key partner with our customers in the areas
of remanufacturing and service for the pressure pumping
market. We design, manufacture and rebuild a range of
oilﬁeld service equipment, including frac pumps, blenders,
hydration units, nitrogen pumpers, cementers and
coil tubing support equipment.

We also design and manufacture air and natural gas

compression equipment to support gas production,
transmission and gathering systems.

With an estimated 19.5 million horsepower of pressure
pumping units (approximately 9,000 units) operating in
North America, we focus on the remanufacture of exist-
ing pressure pumping units, as well as the manufacture of
new units and other oilﬁeld service equipment.

We have long-standing regional distributorships with
high-speed diesel engine manufacturers and serve as a
distributor for Allison Transmission.

Through 20 strategic locations across seven states, we

have developed well-established customer relationships
with oilﬁeld service providers, oil and gas operators and
producers, and compression companies.

Kirby 2014 Annual Report

Markets

Locations

Manufacturer Relationships

Service and Distribution: Service and distribution
facilities are centered in the United States shale production
regions and transportation corridors. Drivers are the
engines, transmissions and existing oilﬁeld service
equipment, particularly pressure pumping units, used
in the development of United States shale formations,
and engines used in the transportation, power generation,
agriculture and construction industries.
Manufacturing: We manufacture a wide range of oilﬁeld
service equipment supporting the development of the
North American shale oil and gas market. Equipment
includes pressure pumping units and supporting
equipment, as well as cementers and coil tubing support
equipment. Market also includes the manufacture of
customized compression systems for the production,
storage and pipeline transportation of natural gas.

Manufacturing
Oklahoma City, OK (6 locations)
Henderson, CO

Distribution and Service
Oklahoma City, OK
Tulsa, OK
Little Rock, AR
Shreveport, LA
Billings, MT
Amarillo, TX
Austin, TX
Houston, TX
Laredo, TX
Lubbock, TX
Pharr, TX
San Antonio, TX
Casper, WY

MTU Detroit Diesel
Allison Transmission
Daimler Trucks NA
Detroit Diesel
Isuzu
Heil
Tymco
Cameron
Dresser-Rand
Waukesha
FS-Elliott
Gardner Denver
GM Powertrain
Thermo King

A new pressure pumping unit manufactured at United Holdings’
Oklahoma City facility. United Holdings manufactures and
remanufactures oilﬁeld service equipment, including pressure
pumping units, nitrogen pumpers, cementers, hydration
equipment, mud pumps and blenders.

Board of Directors

Richard J. Alario 1, 3
Chairman, President and CEO of
Key Energy Services, Inc.
Director since 2011

C. Sean Day 2, 3
Chairman of Teekay Corporation
Director since 1996

Bob G. Gower 1, 2
Retired Chairman of Lyondell
Petrochemical Company
Director since 1998

David W. Grzebinski
President and Chief Executive Ofﬁcer
of Kirby
Director since 2014

William M. Lamont, Jr. 2
Private Investor
Director since 1979

Monte J. Miller 2, 3
Retired Executive Vice President,
Chemicals, of Flint Hills Resources, LP
Director since 2006

Joseph H. Pyne
Chairman of the Board of Kirby
Director since 1988

Richard R. Stewart 1
Retired President and CEO of
GE Aero Energy
Director since 2008

William M. Waterman 3
Retired President and CEO of
Penn Maritime Inc.
Director since 2012

1 Audit Committee
2 Compensation Committee
3 Governance Committee

Ofﬁcers

Kirby Corporation

Marine Transportation Group

Diesel Engine Services Group

Kirby Engine
Systems, Inc.

Dorman Lynn Strahan
President

Mia C. Cradeur
Vice President and Controller

John A. Manno
Vice President—Business
Development

Engine Systems, Inc.

John A. Manno
Vice President

P. Scott Mangan
Vice President—East Coast

Marine Systems, Inc.

Lynn A. Ahlemeyer
Vice President—Gulf Coast
and West Coast

Thomas W. Bottoms
Vice President—Midwest

Troy A. Bourgeois
Vice President—Sales

United Holdings LLC

Michael W. Coulter
President

Derek C. Cofﬁe
Vice President—Finance and
Controller

Ronnie E. Stover
Vice President—Sales

Kirk K. Waite
Chief Accounting Ofﬁcer

United Engines

David L. Tonne
Vice President—Aftermarket

UE Manufacturing

Christopher J. Rinehart
Vice President—Engineered
Products

Gregory L. Culp
Vice President

UE Compression

G. Keith Kern
Vice President

Thermo King of Houston

Jason K. Robison
Vice President

Joseph H. Pyne
Chairman of the Board

David W. Grzebinski
President and
Chief Executive Ofﬁcer

C. Andrew Smith
Executive Vice President and
Chief Financial Ofﬁcer

William G. Ivey
President—
Marine Transportation Group

Joseph H. Reniers
Senior Vice President,
Diesel Engine Services and
Marine Facility Operations

Ronald A. Dragg
Vice President and Controller

Mark K. Forbes
Vice President—Human Resources

Amy D. Husted
Vice President—Legal

David R. Mosley
Vice President and
Chief Information Ofﬁcer

Renato A. Castro
Treasurer

Thomas G. Adler
Secretary

Kirby Inland
Marine, LP

William G. Ivey
President

James C. Guidry
Executive Vice President—
Vessel Operations

Christian G. O’Neil
Executive Vice President—
Commercial Operations

Mel R. Jodeit
Executive Vice President—
Marketing

Kirby Offshore
Marine, LLC

James F. Farley
President

James C. Guidry
Executive Vice President—
Vessel Operations

Christian G. O’Neil
Executive Vice President—
Commercial Operations

John W. Sansing, Jr.
Senior Vice President—
Maintenance

John E. Russell
Senior Vice President—Sales

William M. Withers
Senior Vice President—Sales

John W. Sansing, Jr.
Senior Vice President—
Maintenance

William M. Withers
Senior Vice President—Sales

Stephen C. Butts
Vice President—Sales

Patrick C. Kelly
Vice President—Sales

Richard C. Northcutt
Vice President—Sales and
Horsepower Management

Lester A. Parker
Vice President—River Vessel
Operations

Cliff R. Stanich
Vice President—Sales

Thomas H. Whitehead
Vice President—Sales

Carl R. Whitlatch
Vice President and Controller

Charles R. Ferrer, Jr.
Vice President—Sales

John T. Hallmark
Vice President—Sales

William L. Oppenheimer
Vice President—Maintenance

C. Linn Peterson
Vice President—Vessel Operations

Carl R. Whitlatch
Vice President and Controller

Kirby Ocean
Transport Company

Joseph H. Pyne
President

William M. Withers
Vice President

Osprey Line, L.L.C.

John T. Hallmark
President

Charles J. Duet
Vice President

Kirby 2014 Annual Report

Common Stock Market Price

Sales Price
High

Low

$ 82.91 $ 70.89

$106.93 $ 92.86
$117.18 $ 96.00
$124.12 $114.11
$117.78 $ 78.84

$ 78.04 $ 61.41
$ 82.84 $ 71.44
$ 89.19 $ 79.15
$ 99.41 $ 82.16

2015
First Quarter
(through March 9, 2015)

2014
First Quarter
Second Quarter
Third Quarter
Fourth Quarter

2013
First Quarter
Second Quarter
Third Quarter
Fourth Quarter

Financial and Investor Relations
Copies of Kirby’s Form 10-K (which is
incorporated in this annual report) are
available free of charge. Either contact
Mary E. Tucker, Assistant Controller,
at Kirby’s corporate headquarters, e-mail
Mary.Tucker@kirbycorp.com, or visit Kirby’s
web site at www.kirbycorp.com.

Shareholder Information

Annual Meeting
The 2015 Annual Meeting of Stockholders
will be held at Kirby’s Houston ofﬁce,
55 Waugh Drive, 9th Floor, Houston, Texas
77007, at 10:00 a.m. (CDT), Tuesday,
April 28, 2015.

Corporate Headquarters
Executive Ofﬁce:
55 Waugh Drive, Suite 1000
Houston, Texas 77007
Telephone: (713) 435-1000
Fax: (713) 435-1010
Web site: www.kirbycorp.com

Mailing Address:
P.O. Box 1745
Houston, Texas 77251-1745

Inquiries Regarding
Stock Holdings
Registered shareholders (shares held in
owner’s name) should address communica-
tions concerning address changes, lost
certiﬁcates and stock transfers to:

Computershare Trust Company, N.A.
P.O. Box 43078
Providence, Rhode Island 02940-3078
Telephone: (781) 575-2879
Web site: www.computershare.com

Beneﬁcial shareholders (shares held in
the name of banks or brokers) should
address communications to their banks
or stockbrokers.

All other inquiries should be addressed
to Mary E. Tucker, Assistant Controller,
at Kirby’s corporate headquarters.

Web Site
For more investor information, as well
as information about Kirby, visit Kirby’s
web site at www.kirbycorp.com.

Independent Registered Accountants
KPMG LLP
BG Group Place
811 Main Street, Suite 4500
Houston, Texas 77002

Common Stock Information
Stock trading symbol—KEX
The New York Stock Exchange is the
principal market for Kirby’s common
stock. As of March 9, 2015, there were
55,703,000 common shares outstanding
held by approximately 800 registered
shareholders. The number of registered
shareholders does not reﬂect the number
of beneﬁcial owners of common stock.

Comparison of 5 Year Cumulative Total Return
Return on $100 invested on December 31, 2009, in stock or index, including reinvestment of dividends.
Fiscal year ended December 31.

12/09

12/10

12/11

12/12

12/13

12/14

Kirby Corporation

100.00 126.47 189.03 177.69

284.96 231.81

Russell 2000

100.00 126.86 121.56 141.43

196.34 205.95

Dow Jones
US Marine
Transportation

100.00 114.31 119.25 131.43

195.54 155.17

$300

$200

$100

(cid:81) Kirby Corporation (cid:81)(cid:3)Russell 2000 (cid:81)(cid:3)Dow Jones US Marine Transportation

Kirby Corporation

Corporate Headquarters: 55 Waugh Drive, Suite 1000, Houston, Texas 77007

Mailing Address: P. O. Box 1745, Houston, Texas 77251-1745

Telephone: (713) 435-1000 Fax: (713) 435-1010

Web Site: www.kirbycorp.com