2020 Annual Report
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Financial Highlights
(In thousands, except per share amounts)
2020
2019
2018
2017
2016
For the years ended December 31,
Revenues:
Marine transportation
Distribution and services
$ 1,404,265
$ 1,587,082
$ 1,483,143
$ 1,324,106
$ 1,471,893
767,143
1,251,317
1,487,554
890,312
298,780
$ 2,171,408
$ 2,838,399
$ 2,970,697
$ 2,214,418
$ 1,770,673
Net earnings (loss) attributable to Kirby
$ (272,546) $ 142,347
$
78,452
$ 313,187
$ 141,406
Net earnings attributable to Kirby,
excluding one-time items*
Net earnings (loss) per share attributable
$ 109,9711
$ 174,0722
$ 171,4083
$ 110,6904
$
141,406
to Kirby (diluted)
$
(4.55) $
2.37
$
1.31
$
5.62
$
2.62
Net earnings per share attributable to Kirby,
excluding one-time items* (diluted)
$
1.841
$
2.902
$
2.863
$
1.994
$
2.62
Adjusted EBITDA:**
Net earnings (loss) attributable to Kirby
$ (272,546) $
142,347
$
78,452
$ 313,187
$ 141,406
Interest expense
48,739
55,994
46,856
21,472
Provision (benefit) for taxes on income
(189,759)
46,801
35,081
(240,889)
Impairment of long-lived assets
Impairment of goodwill
165,304
387,970
—
—
82,705
105,712
2,702
—
17,690
84,942
—
—
Depreciation and amortization
219,921
219,632
224,972
202,881
200,917
Adjusted EBITDA**
$ 359,629
$
464,774
$
470,768
$
402,363
$
444,955
Property and equipment, net
$ 3,917,070
$ 3,777,110
$ 3,539,802
$ 2,959,265
$ 2,921,374
Total assets
$ 5,924,174
$ 6,079,097
$ 5,871,594
$ 5,127,427
$ 4,289,895
Long-term debt, including current portion
$ 1,468,586
$ 1,369,767
$ 1,410,188
$ 992,406
$ 722,802
Total equity
$ 3,087,553
$ 3,371,592
$ 3,216,301
$ 3,114,223
$ 2,412,867
* Net earnings attributable to Kirby, excluding one-time items, and net earnings per share attributable to Kirby, excluding one-time items, are non-GAAP financial measures
which exclude certain one-time items as defined in footnotes 1, 2, 3, and 4. Management believes that the exclusion of certain one-time items from these financial
measures enables it and investors to assess and understand operating performance, especially when comparing those results with previous and subsequent periods
or forecasting performance for future periods, primarily because management views the excluded items to be outside of Kirby’s normal operating results.
** Adjusted EBITDA, defined as net earnings attributable to Kirby before interest expense, taxes on income, depreciation and amortization, impairment of long-lived assets,
and impairment of goodwill, 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 (impairment of long-lived assets, impairment of goodwill, depreciation and amortization).
1 The 2020 year included the following one-time items (after tax): $433.3 million, or $7.24 per share, non-cash charges related to inventory write-downs, impairment of
long-lived assets, including intangible assets and property and equipment, and impairment of goodwill in the distribution and services segment; and $50.8 million per share
or $0.85 per share tax benefit related to 2018 and 2019 net operating loss carrybacks under the U.S. Coronavirus Aid, Relief, and Economic Security Act.
2 The 2019 year included the following one-time items (after tax): $28.0 million, or $0.47 per share, non-cash inventory write-downs; and $3.7 million, or $0.06 per share,
severance and early retirement expense.
3 The 2018 year included the following one-time items (after tax): $67.2 million, or $1.12 per share, non-cash impairment of long-lived assets and lease cancellation costs;
$2.1 million, or $0.04 per share, non-cash impairment of goodwill; $18.1 million, or $0.30 per share, expenses related to the retirement of Kirby’s Executive Chairman;
$3.0 million, or $0.05 per share, of non-cash expenses related to an amendment to the employee stock plan; and $2.5 million, or $0.04 per share, transaction costs
associated with the Higman Marine acquisition.
4 The 2017 year included the following one-time items (after tax): $269.5 million, or $4.83 per share, deferred tax revaluation benefit, the result of federal law reform legislation
that resulted in the remeasurement of Kirby’s U.S. deferred tax assets and liabilities, and $67.0 million, or $1.20 per share, non-cash impairment of long-lived assets.
Kirby Corporation
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To Our Shareholders
W hen we look back on
Kirby Corporation’s
(“Kirby” or the
“Company”) long history,
2020 will undoubtedly be remem-
bered as one of the most challenging
on record. In a year that started with
tremendous positive momentum,
including strong marine transportation
markets, new accretive acquisitions,
and growth opportunities in distribution
and services (“D&S”), the dramatic
decline in activity was shocking. Like
for many companies around the world,
the COVID-19 pandemic depressed
our markets, deeply impacting
our operations and our financial
performance. If the pandemic was
not enough, our operations endured
a historic hurricane season which
created widespread disruptions from
June through October. With this
backdrop, it was critical to focus on
factors that were within our control,
and we believe that your entire
Company was successful in that regard.
As the COVID-19 pandemic accelerated,
we immediately activated our pandemic
response plan and implemented
safeguards to protect our employees.
In the summer, we also activated our
hurricane response plan, ultimately
managing through numerous powerful
storms with no material damage or
losses. Overall, through the dedication
and commitment of our employees,
the businesses operated seamlessly
throughout the year, reinforcing Kirby’s
position as an essential business
delivering critical products and
services to our customers. Despite
the hardships of 2020, we are very
proud that our relentless focus on
safety and our Zero Harm culture
contributed to an overall reduction in
Kirby’s recordable incident rate and lost
time incident rate. When you consider
the difficulty of social distancing,
working remotely, and limited
in-person training, this is a remarkable
accomplishment. Importantly, from a
financial perspective, we implemented
aggressive cost controls across the
Company which minimized the impact
of falling demand on our financial
performance. These actions contributed
to strong cash flow generation and
significant repayments of debt in a very
difficult year. We believe our actions
have placed Kirby in a strong financial
position for 2021 and set the Company
up for continued future success as the
economy recovers and demand for
our products and services normalizes.
Looking at our 2020 financial
performance, we generated $2.17
billion in revenues, a net loss of $273
million, and a net loss per share of
$4.55. Excluding one-time items,
net earnings were $110 million, and
earnings per share were $1.84. The
one-time items occurred during the
first quarter and included after-tax
impairments in the D&S oil and gas
market totaling $433 million or $7.24
per share which were triggered by
depressed oil markets and the
COVID-19 pandemic. The impairments
were partially offset by an income tax
benefit of $50.8 million or $0.85 per
share related to new U.S. tax legisla-
tion under the Coronavirus Aid, Relief,
and Economic Security Act.
In inland marine transportation, 2020
started strong with booming markets
and barge utilization at record levels
exceeding 95%. Pricing for our
services were steadily increasing,
and our operating margins were
approaching 20%. During this time, we
announced our acquisition of Savage
Inland Marine’s (“Savage”) marine
transportation fleet for approximately
$279 million. Savage’s fleet included
92 well-maintained tank barges with a
total capacity of 2.5 million barrels and
45 towboats. The purchase also
included their ship bunkering business
in New Orleans, which was an ideal
expansion of Kirby’s existing bunkering
operations in Texas and Florida.
The Savage acquisition closed as the
COVID-19 pandemic was intensifying
and many of our customers were
significantly cutting their production
levels. In just a few short weeks,
refinery utilization plummeted from
near 90% to below 70%. Similarly,
chemical plant utilization declined
from the mid-70% range to the low
70% range. These reductions had a
significant impact on our barge activity
levels, and by mid-year, our inland
barge utilization declined to 75%.
The second half of 2020 proved to
be just as difficult with a very active
hurricane season significantly impacting
our operations. During the 2020
hurricane season, there were 30
named storms including 12 that made
landfall in the United States. Of these
storms, eight impacted our inland
operations, resulting in further
reductions in volumes and widespread
disruptions including prolonged
closures of some refineries, chemical
plants, waterways, and major ports.
These factors, when combined with
a second wave of the pandemic,
ultimately drove our barge utilization
down to historic lows in the high 60%
range by the end of the year. These
weak market conditions contributed to
sharp reductions in pricing, with spot
market rates declining approximately
25% year-on-year and term contracts
renewing approximately 10% to 12%
lower in the fourth quarter. Throughout
the year, as our revenues declined, we
took action to aggressively control
our costs. As a result, despite a
year-on-year revenue reduction of
nearly $130 million, operating profit
only declined $33 million, and we
maintained full-year inland operating
margins in the mid-teens.
There were some highlights in 2020 as
we improved our asset base by adding
the 92 young tank barges acquired
from Savage and six new pressure
barges. The fleet age was enhanced
by these additions and the retirements
of 94 barges. At the end of 2020,
we had an inland fleet of 1,066 tank
barges, representing 24.1 million
barrels of capacity, with an average
age of 14 years.
1
2020 Annual Report
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Coastal marine transportation also
started the year with tight market
conditions, favorable barge utilization
near 85%, and significant pricing
momentum. These market dynamics
were short-lived, however, as the
effects of the pandemic ultimately
resulted in significant reductions in
demand for refined product and black
oil transportation. As a result, spot
market activity declined, and coastal
barge utilization declined into the
mid-70% range for the second
through fourth quarters. While the
spot market was weak, Kirby’s term
contract portfolio, which historically
has represented approximately 85% of
coastal revenues, helped to minimize
the impact on the full-year results.
However, as the year progressed,
some equipment under term contracts
was returned as our customers did not
have sufficient volumes to warrant
contract extensions. Despite the
challenging market dynamics, pricing
was relatively stable with spot rates
holding steady and term contracts
declining around 5% on average during
the second half of the year.
For the equipment in our coastal
business, in 2020, Kirby retired five
older coastal tank barges with a
total barrel capacity of 0.5 million,
including three barges which
would have required ballast water
treatment systems as mandated by
new regulations. We also returned
one chartered tank barge to its owner.
At the end of 2020, we had a fleet of
44 coastal tank barges, representing
4.2 million barrels of capacity, with
an average age of 15.2 years.
In distribution and services, we
experienced a difficult year, particularly
in the oil and gas market. Prior to the
pandemic, this market was already
under significant pressure as a result
of low commodity prices and an
oversupply of pressure pumping
equipment. As the pandemic
intensified, wells were shut-in across
the U.S., and oil prices turned negative
for the first time in history. In the
second quarter, the oilfield industry
was battered by a 50% sequential
decline in the rig count and an 80%
reduction in active fracturing crews.
Nearly overnight, demand for our oil
and gas products and services
evaporated, and we took immediate
action to significantly reduce our
cost structure. Through workforce
reductions, furloughs, and strict
management of all discretionary costs,
operating losses were materially
reduced by the end of the third quarter.
As the year progressed, U.S. oilfield
activity started to slowly recover, with
active fracturing crews climbing from
a bottom of approximately 50 in the
second quarter to approximately
150 by year end. Demand for new
engines and transmissions, parts
and service slowly improved, and
new orders for environmentally
friendly oilfield equipment were
received, setting the stage for
continued improvement in 2021.
The D&S commercial and industrial
market was also impacted by the
pandemic in 2020. Lockdowns across
the U.S. and reduced economic activity
resulted in materially reduced demand
at our on-highway repair centers,
particularly in the second quarter.
In power generation, new orders
and service demand also declined
sharply as many major projects were
postponed. As economies started
to reopen in the third quarter, demand
for on-highway truck service and parts
started to recover, but bus repair
demand remained muted for the
remainder of the year. Demand for
back-up power installations and service
also improved as cities reopened,
and the rental fleet benefited from
increased generator utilization
during the record hurricane season.
Elsewhere, although down year-on-
year, the marine repair business was
relatively stable with a robust inland
dry cargo market and sales of new
marine engines helping to support
activity levels during the year.
On a brighter note, we purchased the
assets of Convoy Servicing Company
(“Convoy”) in early 2020, further
diversifying the commercial and
industrial business. Convoy is a
Thermo King refrigeration system
sales, service, and parts distributor
with operations in North Texas and
Colorado. This acquisition expanded
our geographic distribution territory for
Thermo King to include a significant
portion of Texas, and extended our
reach into the growing Denver market.
During 2020, Convoy performed well
and provided a positive earnings
contribution to the D&S segment.
While faced with the challenges of
2020, we were very focused on
improving the long-term positioning of
the D&S business. Throughout
the year, we took aggressive and
proactive steps including: consolidating
Kirby Corporation
2
businesses, support functions, and
management teams; renewing and
expanding OEM relationships and
product offerings; completing the
implementation of a common ERP
system; rolling out a new online parts
sales platform; and developing and
prototyping new products for the
expanding wave of electrification.
Overall, our efforts during 2020 will
further diversify the D&S business,
and should improve profitability
ultimately strengthen the segment for
improved returns in the long term.
With the pandemic having a material
impact on our operations during 2020,
we maintained tight controls on capital
expenditures and reduced spending by
40% compared to 2019. Approximately
85% of the $148.2 million invested
related to improvements to our
existing marine transportation fleet
and facilities. Approximately $7.5
million was related to new towboat
construction, including the delivery
of one new 2680 horsepower
retractable wheelhouse towboat for
our inland operations. The balance
of $14.2 million related to D&S and
information technology projects,
including the implementation of the
common ERP system and a new
online parts sales platform.
From a liquidity perspective, Kirby
remains in a strong position despite
the impact COVID-19 had on our
operations. At the end of the year, we
had available liquidity of $684 million,
including cash on hand of $80 million.
Our total debt was $1.47 billion, which
compared to $1.37 billion at the end of
2019, and our debt-to-capitalization
ratio at year-end was 32%. During 2020,
we generated strong cash flow from
operations totaling $445 million which
was used to fund our acquisitions,
including Savage and Convoy, as well
as the capital expenditures discussed
above. As of February 28, 2021, our
available liquidity was approximately
$781 million.
Our outlook for 2021 contemplates
improving market conditions for our
businesses as the pandemic eases,
economic activity recovers, and energy
consumption increases. However, with
the pandemic still ongoing in the early
part of the year, we expect the
recovery will be gradual with modest
improvements in the second quarter
and a more meaningful recovery in the
second half of the year.
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In inland marine, although we expect
market conditions in the first half of
the year will remain challenging, we
are very optimistic for a strong
recovery in the second half of 2021
as demand improves and spot market
dynamics become more favorable.
As well, several new petrochemical
plants are scheduled to come on-line
throughout 2021, and the limited
construction of new barges is likely
to be more than offset by retirements
across the industry. All of this should
help improve the supply and demand
situation and lead to a significant
increase in our barge utilization as
the year progresses. However, until
demand meaningfully improves,
pricing is not expected to increase in
the near term as rates typically move
with barge utilization.
In coastal, poor market conditions
and low barge utilization are expected
to have a meaningful impact on its
2021 results and contribute to lower
revenues and increased operating
losses. Throughout 2020, many
coastal vessels operated under
term contracts established in more
favorable market conditions prior to
the pandemic. With many of these
contracts now starting to expire, and
low demand for refined products and
black oil expected in the near term,
we expect lower average pricing in
2021. In addition, the retirement of
three older large capacity coastal
vessels in 2020 due to ballast water
treatment regulations, and the
retirement of an additional barge in
mid-2021, will also contribute to lower
financial results. While the near-term
outlook remains difficult, similar
to inland, we expect the coastal
business will improve in the second
half of the year.
In the D&S segment, improving
economic activity and recovery in
the oilfield are expected to contribute
to meaningful year-over-year
improvement in revenue and operating
income. In commercial and industrial,
revenues are expected to benefit from
an improving economy, as well as
from growth in the on-highway
business. Power generation is also
expected to improve as demand for
electrification and back-up power
intensifies. In oil and gas, favorable oil
prices and increasing well completions
activity are expected to contribute to
improved product sales and service
of transmissions and engines, as
well as higher pressure pumping
remanufacturing activity. Additionally,
a heightened focus on sustainability
across the energy sector and industrial
complex is expected to generate new
demand for Kirby’s extensive portfolio
of environmentally friendly equipment
during 2021.
In summary, 2020 was a difficult year
for Kirby, and 2021 continues to
present some near-term challenges.
Nonetheless, we are confident Kirby is
in a very strong position to meaningfully
benefit when the pandemic eases and
demand for our products and services
improves. In marine transportation, it
was only one year ago that our barge
utilization was exceptionally strong and
prices were materially increasing. With
an improving economy, limited new
barge construction, and significant
retirements of equipment, we believe
a meaningful recovery is imminent.
When you consider our inland fleet
expansion over the last three years,
which is approximately 40% higher
on barrel of capacity basis, we believe
there is significant earnings potential
in marine transportation. In D&S, the
economic recovery and improved oil
markets are already contributing to
increased activity levels in the new
year. We believe our recent steps to
streamline the business, reduce costs,
and develop new innovative products
will not only result in improved
profitability in 2021, but also contribute
to more favorable returns in the future.
From a balance sheet perspective, we
have significant liquidity, and we
expect to continue to generate
meaningful free cash flow in 2021
which we intend to use to pay down
debt and further increase liquidity.
Before we close, we’d like to highlight
a couple milestones with respect to
environmental, social and governance
(“ESG”) initiatives. During 2020, we
issued a significantly enhanced
sustainability report which aligned our
ESG disclosures with the Sustainability
Accounting Standards Board (“SASB”)
framework for marine transportation
companies, including amongst many
items the disclosure of our scope 1
and scope 2 greenhouse gas
emissions. In this report, we also
committed to reducing our marine
transportation fleet’s CO2e emissions
by 25% on a per barrel of capacity
basis by 2025. We also recently
published our first report on Task
Force on Climate-Related Financial
Disclosures (“TCFD”). In these
disclosures, we provided insights into
how the Board and Kirby view and
manage climate-related risks with
in-depth scenario analysis in our
marine transportation business.
In closing, we’d like to express our
warmest thanks to our Board of
Directors. Each of you bring invaluable
experience to Kirby, and we want to
extend our appreciation for your
thoughtful guidance and support as
we navigated through a truly historic
year. We especially want to thank
Monte Miller, a Kirby Board member
since 2006, for his long and dedicated
service. His expertise, guidance, and
support contributed significantly to
Kirby’s growth over the last 15 years,
and we wish him well in his future
endeavors after he completes his
Board service at our Annual Meeting
in April. To our customers, thank you
for your business and confidence in
Kirby’s products and services, and to
our shareholders, we thank you for
your continued support despite the
many challenges 2020 brought
to our businesses.
Finally, to our employees, your
resilience and commitment to the
success of our Company was
unparalleled. Last year presented
many obstacles, including a pandemic,
unprecedented reductions in demand,
and a historic hurricane season.
Through all this, you remained
steadfast in your commitment to
safety and customer service. Kirby
is a stronger company as a result of
your actions, and we look forward
to a brighter future ahead.
Respectfully submitted,
Joseph H. Pyne
Chairman of the Board
David W. Grzebinski
President and Chief
Executive Officer
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3
2020 Annual Report
Marine Transportation
Kirby Corporation, through its wholly owned
subsidiaries Kirby Inland Marine and Kirby
Offshore Marine, is the United States’ largest
tank barge operator, providing transportation
services for petrochemicals, black oil, refined
products, and agricultural chemicals for large
petrochemical and refining companies in
the United States. All of Kirby’s tank barges
and towing vessels operate under the United
States flag and are qualified to trade under
the Jones Act.
Marine transportation is the most environmentally friendly
and energy-efficient means of transporting bulk commodities
compared with railroads and trucks. The cargo capacity of
one inland unit tow consisting of two 27,500-barrel tank
barges is the equivalent of 92 railroad tank cars or 288
tractor-trailer tank trucks. Similarly, the cargo capacity of
a 100,000-barrel coastal tank barge is the equivalent of
approximately 165 railroad tank cars and 525 tractor-trailer
tank trucks. From an emissions perspective, railroad and
tractor trailer trucks, respectively, emit approximately
30% and 900% more CO2 per million ton-miles of cargo
transported than marine transportation.1
At the end of 2020, Kirby’s marine transportation businesses
had approximately 3,400 employees of which approximately
2,700 were vessel crew members.
Revenue
52% Petrochemicals
26% Black Oil
19% Refined Products
13% Agricultural Chemicals
SAFE WATCHES*
99.96%
* A SAFE WATCH ENTAILS “NO HARM” TO PEOPLE,
ENVIRONMENT, OR EQUIPMENT DURING A
SIX-HOUR PERIOD ON A KIRBY MARINE VESSEL.
1 Source: National Waterways Foundation study – January 2017
Kirby Corporation
4
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1,066
24.1 MM
818
162
76
10
38
30
135
31
11
3
248
31
13
44
Inland
Inland Tank Barge Fleet
Petrochemicals / refined products
Black oil
Pressure
Anhydrous ammonia
Total
Total Barrel Capacity
Inland Towboat Fleet
800-1300 HP
1400-1900 HP
2000-2400 HP
2500-3200 HP
3300-4800 HP
5000 HP and greater
Total
Coastal
Coastal Tank Barge Fleet
Petrochemicals / refined products
Black oil
Total
Total Barrel Capacity
4.2 MM
Coastal Tugboat Fleet
1000-1900 HP
2000-2900 HP
3000-3900 HP
4000-4900 HP
5000-6900 HP
7000 HP and greater
Total
Offshore dry-bulk barge
and tugboat units
4
1
7
10
14
8
44
4
Kirby Inland Marine is the largest transporter of bulk
liquid cargos by inland tank barge in the United States,
offering services throughout the Mississippi River System,
Gulf Intracoastal Waterway, and Houston Ship Channel.
The nation’s inland tank barge fleet is comprised of
approximately 4,000 barges which are owned and operated
by approximately 30 large transportation companies, small
operators, and captive fleets owned by refining and
petrochemical companies. At the end of 2020, Kirby Inland
Marine operated 1,066 tank barges or approximately 27%
of the industry fleet, and nearly 250 towboats. Kirby Inland
Marine transports petrochemicals, black oil, refined
petroleum products, and agricultural chemicals. During 2020,
the Company moved over 45 million tons of liquid cargos
on the United States inland waterway system. In April
2020, Kirby Inland Marine continued to expand through its
acquisition of Savage Inland Marine’s marine transportation
fleet for $279 million, including 92 inland tank barges
representing 2.5 million barrels of capacity and 45 inland
towboats. In 2020, Kirby Inland Marine contributed
approximately 78% of marine transportation revenues.
The M/V Kenny Shaver, a 2680 horsepower Kirby Inland
Marine towboat, transits the Gulf Intracoastal Waterway near
Galveston, Texas, with a unit tow comprised of two 30,000
barrel tank barges. The M/V Kenny Shaver was completed in
2019 at Kirby’s San Jac Marine shipyard in Channelview, Texas.
Kirby Offshore Marine is a leading participant in the
United States coastal tank barge industry, which consists
of approximately 20 marine transportation companies
and small operators which transport refined petroleum
products, black oil, and petrochemicals along the East,
Gulf, and West Coasts and in Alaska and Hawaii. The
nation’s coastal tank barge fleet in the 195,000 barrels or
less category consists of approximately 280 barges with
20.5 million barrels of capacity. Kirby Offshore Marine is
the nation’s largest tank barge operator by capacity with
approximately 20% market share. At the end of 2020, Kirby’s
fleet consisted of 44 coastal tank barges with 4.2 million
barrels of capacity and 44 tugboats which have the flexibility
to access ports inaccessible to large vessels while still
delivering large volumes of product. Kirby Offshore Marine’s
fleet also includes two offshore dry-bulk barge and tugboat
units which transport raw sugar from Florida to the East
Coast. Additionally, Kirby Ocean Transport carries coal
across the Gulf of Mexico to a power generation facility in
Florida with two offshore dry-bulk barge and tugboat units.
In 2020, Kirby Offshore Marine contributed approximately
22% of marine transportation revenues.
The M/V Cape Lookout, a 5000 horsepower Kirby Offshore
Marine tugboat, enters the harbor in Boston, Massachusetts
with the DBL 102, a 107,000 barrel tank barge, loaded
with refined products. The M/V Cape Lookout is one of
Kirby Offshore Marine’s new Tier 4 emissions rated tugboats,
and is one of the most efficient and environmentally friendly
vessels in the fleet.
5
2020 Annual Report
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Distribution and Services
In the Distribution and Services segment,
Kirby Corporation operates through its wholly
owned subsidiaries Stewart & Stevenson
(“S&S”), United Holdings (“United”), and
Kirby Engine Systems (“KES”) and is a
nationwide service provider and distributor
of engines, transmissions, parts, industrial
equipment, and oilfield services equipment.
Kirby’s distribution and services businesses
operate in two distinct and diversified markets:
commercial and industrial and oil and gas.
In commercial and industrial (“C&I”), which represented
approximately 74% of 2020 segment revenues, Kirby
supports domestic and international customers through the
distribution and service of medium-speed and high-speed
diesel engines and ancillary equipment used primarily in
marine, power generation, and on-highway applications.
In other C&I sectors, Kirby sells and rents back-up power
generation systems; manufactures, sells and rents railcar
movers; and rents high-capacity lift trucks and industrial
compressors.
In oil and gas, which represented approximately 26% of
2020 segment revenues, Kirby is a leading distributor and
service provider for diesel engines, transmissions, and
pumps, as well as a supplier of OEM replacement parts in
the United States. Through its manufacturing group, Kirby
is an industry leader in the construction of new oilfield
service equipment, including environmentally friendly
and conventional pressure pumping units, cementers,
blenders, drive systems, switchgear, and other equipment,
both for North American and international markets. Kirby’s
manufacturing group also specializes in the remanufacture
and service of existing pressure pumping equipment.
Kirby’s customer base includes major, large, and mid-cap
oilfield service companies, operators, and producers.
This Page:
Top: A Stewart & Stevenson FT-3001Q trailer-mounted fully
electric fracturing unit manufactured for U.S. Well Services.
Bottom: Technicians install a 3MW 20V4000 MTU stand by
power generator at a data center in Texas.
Opposite Page:
Top: The Stewart & Stevenson Power Rental mobile generator
fleet can provide up to 2MW of back-up power for mission
critical applications. Center: The Key West Express passenger
ferry is regularly serviced by Kirby’s FDDA subsidiary in
Florida and was recently repowered with lower emission
MTU 16V4000M64 engines. Bottom: A Stewart & Stevenson
technician removes the charge air pipe and hoses on a
Class 8 truck in the Dallas, Texas branch.
Kirby Corporation
6
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Revenue
(by Market)
74% Commercial
& Industrial
26% Oil & Gas
Revenue
(by Group)
93% Distribution
07% Manufacturing
OEM Brands
OEM Partners
In power generation, Kirby primarily sells pre-packaged
and fabricated back-up power system solutions for
emergency, standby, and auxiliary power for nuclear,
commercial, and industrial applications, as well as rents
generator systems. Power generation customers include
the worldwide nuclear power industry, domestic utilities,
municipalities, universities, medical facilities, data
centers, petrochemical plants, oilfield service companies,
manufacturing facilities, retail stores, and office complexes.
In marine, Kirby is a major service and OEM replacement
parts provider for diesel engines and ancillary products,
such as reduction gears and transmissions, with service
centers across the United States. Kirby also sells new diesel
engines. Kirby’s marine engine businesses participate
in many sectors of the marine vessel industry, including
inland towboats and offshore tugboats, oilfield supply
vessels, U.S. Coast Guard vessels, fishing vessels, harbor
docking equipment, ferries, and luxury yachts.
In on-highway, Kirby distributes, sells parts, and services
diesel engines and transmissions for trucking companies,
commercial truck and bus fleets, and municipalities
primarily in the United States. Kirby is also a distributor
for Thermo King refrigeration systems for key markets in
Texas and Colorado.
7
2020 Annual Report
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2020 Sustainability Highlights
Kirby has a long history of promoting
sustainability as an integral part of our
corporate culture and business strategy.
In 2020, we made considerable progress in
our Environmental, Social, and Governance
(“ESG”) journey, including the publication
of our most robust sustainability report
to date which aligned our disclosures with
the Sustainability Accounting Standards
Board (“SASB”). We also recently published
our first-ever report on Task Force on
Climate-Related Financial Disclosures
(“TCFD”). The following are some key tenets
of Kirby’s Sustainability program, as well as
some highlights from the 2020 Sustainability
Report which will drive the long-term
success and resiliency of the Company.
The Kirby Way
“
The Kirby Way” defines our
core values of Safety, People,
Excellence, Community, and
Integrity. These core values are
the foundation of our sustainability
initiatives and strategies.
Safety - Our guiding principle is No Harm to people,
the environment, or equipment. Safety is at the core of
everything we do and always drives our decision making.
People - Our people make the difference. We invest in
the tools and resources to empower our employees and
we promote a workplace that values mutual respect,
knowledge, and teamwork.
Integrity - Do the right thing by having the highest ethical
standards while always being transparent and accountable
for our actions.
Excellence - Creating value for our customers and
shareholders by providing the highest quality service
and products.
Community - Sharing our success with each other and
the communities we live and work in by protecting the
environment and encouraging volunteerism.
Kirby Corporation
8
Environmental Stewardship
Kirby is committed to continuously improving the compatibility
of our operations with the environment. Management and the
employees of Kirby pledge to:
• Conduct our business and operate our vessels in a manner
that protects the environment and the health and safety of
our employees and the public
• Recognize and be responsive to public concerns about
waterborne transportation and its effects on the environment
• Make safety, health, and the environment a priority in our
business planning
• Commit to reduce overall emissions and waste generation,
and comply with all laws and regulations concerning
emissions and waste
• Participate with government and the public in creating
responsible laws, regulations, and standards to safeguard
the workplace, community, and environment
• Establish and maintain, in cooperation with public authorities
and others, emergency preparedness procedures and plans
to mitigate the effects of accidents which may occur
17%
RELATIVE CO2e EMISSIONS PER BARREL OF
CAPACITY SINCE 2015* (*As of December 2019)
Kirby’s environmentally friendly oilfield equipment
Electric Frac
Reduces NOx emissions 99%
Dual Fuel Frac
Displaces diesel consumption
by up to 85% when using
natural gas
Quiet Frac
Reduces decibel levels by
more than 3x
Compared to conventional frac equipment
46059herD2R2.nar.indd 8
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Social Responsibility
Governance & Ethics
Kirby has a long history of supporting foundations, associations,
and institutions whose charitable work is related to our
core values. The Company also shares its success with the
communities we live and work in by helping to protect the
environment, giving charitably, and encouraging volunteerism.
When disaster strikes, Kirby’s Disaster Relief Fund strives
to provide our employees and their families support and
resources when they need it most.
$325,000
FUNDS RAISED IN 2020 TO AID
WITH RECOVERY EFFORTS
At Kirby, our employees are
our most important assets.
Wellness, education
and training, and employee
engagement create positive
morale and a family-friendly atmosphere.
5,000 Training certificates issued by
the Kirby Marine Training Center
since 2017
Kirby continues to make inroads to build
a more diverse workplace
20% Females on the Board of Directors
22% Females in Executive Leadership
28% Females in Managerial
and Professional Roles
Kirby is committed to the highest ethical standards, effective
governance practices, and to leveraging its expertise within
the industries in which Kirby operates.
2020 INSTITUTIONAL INVESTOR AWARD:
BEST IN CORPORATE GOVERNANCE
AMONGST TRANSPORTATION COMPANIES
FIRST LEAD INDEPENDENT DIRECTOR
ELECTED IN 2020
Business Ethics Guidelines
All Kirby directors, executives, and employees are
required to sign and uphold our Business Ethics
Guidelines which define Kirby’s commitment to
doing business the right way, or “The Kirby Way.”
Vendor Code of Conduct
In 2020, Kirby implemented stronger guidelines for
our suppliers which were designed to help ensure
responsible product sourcing and the safety and
well-being of workers across the global supply chain.
Human Rights
Kirby is committed to ensuring a work environment that
is free from human trafficking, forced labor, harmful
child labor, and discrimination and harassment. Our
employees are to always respect the human rights
of those with whom they work and come into
contact, and encourage partners, suppliers, and other
third parties to adopt similar standards.
No Harm
Our guiding principle is No Harm to people, the environment,
or equipment. Safety is at the core of everything we do and
always drives our decision making.
To learn more about Kirby’s sustainability program, key
initiatives, and disclosures, please visit the Sustainability
section of our website at www.kirbycorp.com.
9
2020 Annual Report
46059herD2R2.nar.indd 9
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Corporate Leadership
Board of Directors
Corporate Officers
David W. Grzebinski
President and Chief Executive Officer
William G. Harvey
Executive Vice President
and Chief Financial Officer
Christian G. O’Neil
President of Marine Transportation
Joseph H. Reniers
President of Distribution & Services
Dorman Lynn Strahan
President of Kirby Engine Systems
Kim B. Clarke
Vice President and Chief Human Resources Officer
Ronald A. Dragg
Vice President, Controller and Assistant Secretary
Eric S. Holcomb
Vice President of Investor Relations
Amy D. Husted
Vice President, General Counsel and Secretary
Scott P. Miller
Vice President and Chief Information Officer
Kurt A. Niemietz
Vice President and Treasurer
William Matthew Woodruff
Vice President of Public and Government Affairs
Anne-Marie N. Ainsworth1
Retired President and Chief Executive Officer
of the general partner of Oiltanking Partners, L.P.
and of Oiltanking Holding Americas, Inc.
Director since 2015
Richard J. Alario1,3
Former Interim Chief Executive Officer of NOW Inc.
Retired Chief Executive Officer of Key Energy Services, Inc.
Director since 2011
Tanya S. Beder1
Chairman and Chief Executive Officer of SBCC Group, Inc.
Director since 2019
Barry E. Davis1,2
Chairman and Chief Executive Officer of EnLink Midstream
GP, LLC and EnLink Midstream Manager, LLC
Director since 2015
C. Sean Day2,3
Retired Chairman Emeritus of Teekay Corporation
Director since 1996
David W. Grzebinski
President and Chief Executive Officer of Kirby
Director since 2014
Monte J. Miller2,3
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. Stewart1
Retired President and Chief Executive Officer
of GE Aero Energy
Director since 2008
William M. Waterman3
Retired President and Chief Executive Officer
of Penn Maritime Inc.
Director since 2012
1 Audit Committee
2 Compensation Committee
3 Governance Committee
Kirby Corporation
10
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark One)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2020
or
□ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File no. 1-07615
Kirby Corporation
(Exact name of registrant as specified in its charter)
Nevada
(State or other jurisdiction of incorporation or organization)
55 Waugh Drive, Suite 1000
Houston, Texas
(Address of principal executive offices)
74-1884980
(I.R.S. Employer Identification No.)
77007
(Zip Code)
Registrant’s telephone number, including area code:
(713) 435-1000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock
Trading Symbol(s)
KEX
Name of each exchange on which registered
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No □
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes □ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes ☒ No □
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to
Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required
to submit and post such files). Yes ☒ No □
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company,
or an emerging growth company. See the definitions of ‘‘large accelerated filer,’’ ‘‘accelerated filer,’’ ‘‘smaller reporting company,’’ and ‘‘emerging
growth company’’ in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
Non-accelerated filer
☒
□
Accelerated filer
Smaller reporting company
Emerging growth company
□
□
□
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with
any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. □
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its
internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm
that prepared or issued its audit report.☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes □ No ☒
The aggregate market value of common stock held by non-affiliates of the registrant as of June 30, 2020, based on the closing sales price of
such stock on the New York Stock Exchange on June 30, 2020, was $3,178,530,000. For purposes of this computation, all executive officers, directors
and 10% beneficial owners of the registrant are deemed to be affiliates. Such determination should not be deemed an admission that such executive
officers, directors and 10% beneficial owners are affiliates.
As of February 19, 2021, 60,085,000 shares of common stock were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Company’s definitive proxy statement in connection with the Annual Meeting of Stockholders to be held April 27, 2021, to be
filed with the Commission pursuant to Regulation 14A, are incorporated by reference into Part III of this report.
KIRBY CORPORATION
2020 FORM 10-K
TABLE OF CONTENTS
PART I
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Documents and Information Available on Website. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
BUSINESS AND PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
MARINE TRANSPORTATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Marine Transportation Industry Fundamentals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inland Tank Barge Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Coastal Tank Barge Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Competition in the Tank Barge Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Products Transported . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Demand Drivers in the Tank Barge Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Marine Transportation Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contracts and Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Governmental Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Environmental Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
DISTRIBUTION AND SERVICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commercial and Industrial Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commercial and Industrial Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commercial and Industrial Competitive Conditions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Oil and Gas Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Oil and Gas Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Oil and Gas Competitive Conditions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Human Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Information about the Company’s Executive Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1A. Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1B. Unresolved Staff Comments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 4. Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 6. Selected Financial Data. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. . . . .
Item 7A. Quantitative and Qualitative Disclosures about Market Risk. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 8. Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . .
Item 9A. Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 9B. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART III
Items 10 Through 14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART IV
Item 15. Exhibits and Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 16. Form 10-K Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Page
2
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1
Item 1.
Business
PART I
THE COMPANY
Kirby Corporation (the ‘‘Company’’) is the nation’s largest domestic tank barge operator, transporting bulk
liquid products throughout the Mississippi River System, on the Gulf Intracoastal Waterway, coastwise along all
three United States coasts, and in Alaska and Hawaii. The Company transports petrochemicals, black oil, refined
petroleum products and agricultural chemicals by tank barge. The Company also operates four offshore dry-bulk
cargo barges, four offshore tugboats and one docking tugboat transporting dry-bulk commodities in the United States
coastal trade. Through its distribution and services segment, the Company provides after-market service and parts for
engines, transmissions, reduction gears, and related equipment used in oilfield services, marine, power generation,
on-highway and other industrial applications. The Company also rents equipment including generators, industrial
compressors, railcar movers, and high capacity lift trucks for use in a variety of industrial markets, and manufactures
and remanufactures oilfield service equipment, including pressure pumping units, for land-based oilfield service
customers.
Unless the context otherwise requires, all references herein to the Company include the Company and its
subsidiaries.
The Company’s principal executive office is located at 55 Waugh Drive, Suite 1000, Houston, Texas 77007, and
its telephone number is 713-435-1000. The Company’s mailing address is P.O. Box 1745, Houston, Texas
77251-1745. Kirby Corporation is a Nevada corporation and was incorporated in 1969 although the history of the
Company goes back to 1921.
Documents and Information Available on Website
The Internet address of the Company’s website is http://www.kirbycorp.com. The Company makes available
free of charge through its website, all of its filings with the Securities and Exchange Commission (‘‘SEC’’), including
its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments
to those reports, as soon as reasonably practicable after they are electronically filed with or furnished to the SEC.
The following documents are available on the Company’s website in the Investor Relations section under
Corporate Governance:
•
•
•
•
•
Audit Committee Charter
Compensation Committee Charter
Governance Committee Charter
Business Ethics Guidelines
Corporate Governance Guidelines
The Company is required to make prompt disclosure of any amendment to or waiver of any provision of its
Business Ethics Guidelines that applies to any director or executive officer or to its chief executive officer, chief
financial officer, chief accounting officer or controller or persons performing similar functions. The Company will
make any such disclosure that may be necessary by posting the disclosure on its website in the Investor Relations
section under Corporate Governance.
2
BUSINESS AND PROPERTY
The Company, through its subsidiaries, conducts operations in two reportable business segments: marine
transportation and distribution and services.
The Company, through its marine transportation segment, is a provider of marine transportation services,
operating tank barges and towing vessels transporting bulk liquid products throughout the Mississippi River System,
on the Gulf Intracoastal Waterway, coastwise along all three United States coasts, and in Alaska and Hawaii.
The Company transports petrochemicals, black oil, refined petroleum products and agricultural chemicals by tank
barge. The Company operates offshore dry-bulk barge and tugboat units engaged in the offshore transportation of
dry-bulk cargoes in the United States coastal trade. The segment is a provider of transportation services for its
customers and, in almost all cases, does not assume ownership of the products that it transports. All of the Company’s
vessels operate under the United States flag and are qualified for domestic trade under the Jones Act.
The Company, through its distribution and services segment, sells genuine replacement parts, provides service
mechanics to overhaul and repair engines, transmissions, reduction gears and related oilfield services equipment,
rebuilds component parts or entire diesel engines, transmissions and reduction gears, and related equipment used in
oilfield services, marine, power generation, on-highway and other industrial applications. The Company also rents
equipment including generators, industrial compressors, railcar movers and high capacity lift trucks for use in a
variety of industrial markets, and manufactures and remanufactures oilfield service equipment, including pressure
pumping units, for land-based oilfield service customers.
The Company has approximately 5,400 employees, the large majority of whom are in the United States.
3
MARINE TRANSPORTATION
The marine transportation segment is primarily a provider of transportation services by tank barge for the inland
and coastal markets. As of December 31, 2020, the equipment owned or operated by the marine transportation
segment consisted of 1,066 inland tank barges with 24.1 million barrels of capacity, and an average of 248 inland
towboats during the 2020 fourth quarter, as well as 44 coastal tank barges with 4.2 million barrels of capacity,
44 coastal tugboats, four offshore dry-bulk cargo barges, four offshore tugboats and one docking tugboat with the
following specifications and capacities:
Class of equipment
Inland tank barges (owned and leased):
Regular double hull:
Number
in class
Average age
(in years)
Barrel
capacities
20,000 barrels and under . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Over 20,000 barrels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Specialty double hull . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
347
665
54
Total inland tank barges. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,066
14.0
12.3
35.3
14.0
4,053,000
19,114,000
913,000
24,080,000
Inland towboats (owned and chartered):
800 to 1300 horsepower. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1400 to 1900 horsepower. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2000 to 2400 horsepower. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2500 to 3200 horsepower. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3300 to 4800 horsepower. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Greater than 5000 horsepower. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total inland towboats . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Coastal tank barges (owned and leased):
30,000 barrels and under . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
50,000 to 70,000 barrels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
80,000 to 90,000 barrels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
100,000 to 110,000 barrels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
120,000 to 150,000 barrels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Over 150,000 barrels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total coastal tank barges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Coastal tugboats (owned and chartered):
1000 to 1900 horsepower. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2000 to 2900 horsepower. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3000 to 3900 horsepower. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4000 to 4900 horsepower. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5000 to 6900 horsepower. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Greater than 7000 horsepower. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total coastal tugboats. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Offshore dry-bulk cargo barges (owned). . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Offshore tugboats and docking tugboat (owned and chartered). . . . . . . . . . . .
38
30
135
31
11
3
248
2
9
17
6
3
7
44
4
1
7
10
14
8
44
4
5
35.1
24.0
11.1
12.7
27.3
17.4
17.4
26.1
15.4
16.5
14.5
19.0
7.7
15.2
32.5
45.1
38.2
13.0
10.1
13.8
18.3
22.1
29.5
37,000
437,000
1,422,000
630,000
416,000
1,210,000
4,152,000
Deadweight
Tonnage
67,000
4
The 248 inland towboats, 44 coastal tugboats, four offshore tugboats and one docking tugboat provide the power
source and the 1,066 inland tank barges, 44 coastal tank barges and four offshore dry-bulk cargo barges provide the
freight capacity for the marine transportation segment. When the power source and freight capacity are combined,
the unit is called a tow. The Company’s inland tows generally consist of one towboat and from one to up to 25 tank
barges, depending upon the horsepower of the towboat, the waterway infrastructure capacity and conditions, and
customer requirements. The Company’s coastal and offshore tows primarily consist of one tugboat and one tank barge
or dry-bulk cargo barge.
Marine Transportation Industry Fundamentals
The United States inland waterway system, composed of a network of interconnected rivers and canals that serve
the nation as water highways, is one of the world’s most efficient transportation systems. The nation’s inland
waterways are vital to the United States distribution system, with over 1.1 billion short tons of cargo moved annually
on United States shallow draft waterways. The inland waterway system extends approximately 26,000 miles,
12,000 miles of which are generally considered significant for domestic commerce, through 38 states, with 635
shallow draft ports. These navigable inland waterways link the United States heartland to the world.
The United States coastal waterway system consists of ports along the Atlantic, Gulf and Pacific coasts, as well
as ports in Alaska, Hawaii and on the Great Lakes. Like the inland waterways, the coastal trade is vital to the
United States distribution system, particularly the regional distribution of refined petroleum products from refineries
and storage facilities to a variety of destinations, including other refineries, distribution terminals, power plants and
ships. In addition to distribution directly from refineries and storage facilities, coastal tank barges are used frequently
to distribute products from pipelines. Many coastal markets receive refined petroleum products principally from
coastal tank barges. Smaller volumes of petrochemicals are distributed from Gulf Coast plants to end users and black
oil, including crude oil and natural gas condensate, is distributed regionally from refineries and terminals along the
United States coast to refineries, power plants and distribution terminals.
Based on cost and safety, barge transportation is often the most efficient and safest means of surface
transportation of bulk commodities when compared to railroads and trucks. The cargo capacity of a 27,500 barrel
inland tank barge is the equivalent of 46 railroad tank cars or 144 tractor-trailer tank trucks. A typical Company lower
Mississippi River linehaul tow of 15 barges has the carrying capacity of approximately 216 railroad tank cars plus
six locomotives, or approximately 1,050 tractor-trailer tank trucks. The Company’s inland tank barge fleet capacity
of 24.1 million barrels equates to approximately 40,300 railroad tank cars or approximately 126,000 tractor-trailer
tank trucks. Furthermore, barging is much more energy efficient. One ton of bulk product can be carried 647 miles
by inland barge on one gallon of fuel, compared to 477 miles by railcar or 145 miles by truck. In the coastal trade,
the carrying capacity of a 100,000 barrel tank barge is the equivalent of approximately 165 railroad tank cars or
approximately 525 tractor-trailer tank trucks. The Company’s coastal tank barge fleet capacity of 4.2 million barrels
equates to approximately 6,950 railroad tank cars or approximately 21,750 tractor-trailer tank trucks. Marine
transportation generally involves less urban exposure than railroad or truck transportation and operates on a system
with few crossing junctures and often in areas relatively remote from population centers. These factors generally help
to reduce the number of waterway incidents.
Inland Tank Barge Industry
The Company operates within the United States inland tank barge industry, a diverse and independent mixture
of approximately 30 large integrated transportation companies and small operators, as well as captive fleets owned
by refining and petrochemical companies. The inland tank barge industry provides marine transportation of bulk
liquid cargoes for customers and, in the case of captives, for their own account, throughout the Mississippi River and
its tributaries and on the Gulf Intracoastal Waterway. The most significant markets in this industry include the
transportation of petrochemicals, black oil, refined petroleum products and agricultural chemicals. The Company
operates in each of these markets. The use of marine transportation by the petroleum and petrochemical industry is
a major reason for the location of United States refineries and petrochemical facilities on navigable inland waterways.
Texas and Louisiana currently account for approximately 80% of the United States production of petrochemicals.
Much of the United States farm belt is likewise situated with access to the inland waterway system, relying on marine
transportation of farm products, including agricultural chemicals. The Company’s principal distribution system
encompasses the Gulf Intracoastal Waterway from Brownsville, Texas, to Port St. Joe, Florida, the Mississippi River
System and the Houston Ship Channel. The Mississippi River System includes the Arkansas, Illinois, Missouri, Ohio,
Red, Tennessee, Yazoo, Ouachita and Black Warrior Rivers and the Tennessee-Tombigbee Waterway.
5
The number of tank barges that operate on the inland waterways of the United States declined from an estimated
4,200 in 1982 to 2,900 in 1993, remained relatively constant at 2,900 until 2002, decreased to 2,750 from 2002
through 2006, then increased over the years to approximately 3,850 by the end of 2015 and 2016, and slightly
decreased to an estimated 3,825 at the end of 2017. By the end of 2019, the number of tank barges increased to near
4,000, and remained flat during 2020. The Company believes the decrease from 4,200 in 1982 to 2,750 in 2006
primarily resulted from: the increasing age of the domestic tank barge fleet, resulting in scrapping; rates inadequate
to justify new construction; a reduction in tax incentives, which previously encouraged speculative construction of
new equipment; stringent operating standards to adequately cope with safety and environmental risk; the elimination
of government regulations and programs supporting the many small refineries and the proliferation of oil traders
which created a strong demand for tank barge services; an increase in the average capacity per barge; and an increase
in environmental regulations that mandate expensive equipment modification, which some owners were unwilling or
unable to undertake given capital constraints and the age of their fleets. The cost of tank barge hull work for required
periodic United States Coast Guard (‘‘USCG’’) certifications, as well as general safety and environmental concerns,
force operators to periodically reassess their ability to recover maintenance costs. The increase from 2,750 tank
barges in 2006 to approximately 3,850 by the end of 2016 primarily resulted from increased barge construction and
deferred retirements due to strong demand and resulting capacity shortages. The number of industry tank barges has
remained relatively constant from 2016 through the end of 2020. The Company’s 1,066 inland tank barges represent
approximately 27% of the industry’s 4,000 inland tank barges.
For 2018, the Company estimated that industry-wide 75 new tank barges were placed in service and 100 tank
barges were retired. For 2019, the Company estimated that industry-wide 150 new tank barges were placed in service
and 100 tank barges were retired. For 2020, the Company estimated that industry-wide approximately 150 new tank
barges were placed in service and 150 tank barges were retired. During 2018 and 2019, demand for inland tank barge
transportation and industry barge utilization rates increased above 90% due to a favorable pricing environment for
customers’ products, new petrochemical industry capacity that led to increased movements of petrochemicals, and
higher volumes of crude oil moved from the Northern U.S. to the Gulf Coast. During 2020, tank barge utilization
decreased from the low to mid-90% range in the 2020 first quarter to the high 60% range during the 2020
fourth quarter as a result of a reduction in demand due to the COVID-19 pandemic. The Company estimates that
approximately 35 new tank barges were ordered for delivery in 2021. Generally, the risk of an oversupply of tank
barges may be mitigated by increased petrochemical, black oil and refined petroleum products volumes from
increased production from current facilities, plant expansions, the opening of new facilities, and the fact that the
inland tank barge industry has approximately 350 tank barges over 30 years old and approximately 260 of those are
over 40 years old, which could lead to retirement of older tank barges. The average age of the nation’s inland tank
barge fleet is approximately 15 years.
The Company’s inland marine transportation segment also owns a shifting operation and fleeting facility for dry
cargo barges and tank barges on the Houston Ship Channel, in Freeport and Port Arthur, Texas, and Lake Charles,
Louisiana, and a shipyard for building inland towboats and providing routine maintenance on marine vessels.
The Company also owns a two-thirds interest in Osprey Line, L.L.C. (‘‘Osprey’’), a transporter of project cargoes and
cargo containers by barge on the United States inland waterway system.
Coastal Tank Barge Industry
The Company also operates in the United States coastal tank barge industry, operating tank barges in the
195,000 barrels or less category. This market is composed of approximately 20 large integrated transportation
companies and small operators. The 195,000 barrels or less category coastal tank barge industry primarily provides
regional marine transportation distribution of bulk liquid cargoes along the United States’ Atlantic, Gulf and Pacific
coasts, in Alaska and Hawaii and, to a lesser extent, on the Great Lakes. Products transported are primarily refined
petroleum products and black oil from refineries and storage facilities to a variety of destinations, including other
refineries, distribution terminals, power plants and ships, the regional movement of crude oil and natural gas
condensate to Gulf Coast, Northeast and West Coast refineries, and the movement of petrochemicals primarily from
Gulf Coast petrochemical facilities to end users.
The number of coastal tank barges that operate in the 195,000 barrels or less category is approximately 280, of
which the Company operates 44 or approximately 16%. The average age of the nation’s coastal tank barge fleet is
approximately 14 years. In June 2018, the Company purchased a 155,000 barrel coastal articulated tank barge and
tugboat unit (‘‘ATB’’) under construction from another operator that was delivered to the Company in the 2018
fourth quarter. The Company is aware of one small specialized coastal ATB under construction by a competitor for
6
delivery in 2021. The coastal tank barge fleet has approximately 20 tank barges over 25 years old. The number of
older tank barges, coupled with low industry-wide barge utilization levels and ballast water treatment regulations,
could lead to further retirements of older tank barges in the next few years.
Competition in the Tank Barge Industry
The tank barge industry remains very competitive. Competition in this business is based on price and reliability,
and with many of the industry’s customers emphasizing enhanced vetting requirements, an increased emphasis on
safety, the environment, and quality, frequently requiring that their supplier of tank barge services have the capability
to handle a variety of tank barge requirements. These requirements include distribution capability throughout the
inland waterway system and coastal markets, with high levels of flexibility, and an emphasis on safety, environmental
responsibility and financial responsibility, as well as adequate insurance and high quality of service consistent with
the customer’s own operational standards.
In the inland markets, the Company’s direct competitors are primarily noncaptive inland tank barge operators.
‘‘Captive’’ fleets are owned by refining and petrochemical companies which occasionally compete in the inland tank
barge market, but primarily transport cargoes for their own account. The Company is the largest inland tank barge
carrier, both in terms of number of barges and total fleet barrel capacity. The Company’s inland tank barge fleet has
grown from 71 tank barges in 1988 to 1,066 tank barges as of December 31, 2020, or approximately 27% of the
estimated total number of domestic inland tank barges.
In the coastal markets, the Company’s direct competitors are the operators of United States tank barges in the
195,000 barrels or less category. Coastal tank barges in the 195,000 barrels or less category have the ability to enter
the majority of coastal ports. Ocean-going tank barges and United States product tankers in the 300,000 barrels plus
category, excluding the fleet of large tankers dedicated to Alaska crude oil transportation, occasionally compete in
the 195,000 barrels or less market to move large volumes of refined petroleum products within the Gulf of Mexico
with occasional movements from the Gulf Coast to the East Coast, along the West Coast and from Texas and
Louisiana to Florida. However, of the approximately 45 such vessels, because of their size, their access to ports is
limited by terminal size and draft restrictions.
While the Company competes primarily with other tank barge companies, it also competes with companies who
operate refined product and petrochemical pipelines, railroad tank cars and tractor-trailer tank trucks. As noted above,
the Company believes that both inland and coastal marine transportation of bulk liquid products enjoy a substantial
cost advantage over railroad and truck transportation. The Company believes that refined product and crude oil
pipelines, although often a less expensive form of transportation than inland and coastal tank barges, are not as
adaptable to diverse products and are generally limited to fixed point-to-point distribution of commodities in high
volumes over extended periods of time.
Products Transported
The Company transports petrochemicals, black oil, refined petroleum products and agricultural chemicals by
tank barge throughout the Mississippi River System, on the Gulf Intracoastal Waterway, coastwise along all
three United States coasts, and in Alaska and Hawaii. During 2020, the Company’s inland marine transportation
operation moved over 45 million tons of liquid cargo on the United States inland waterway system.
Petrochemicals. Bulk liquid petrochemicals transported include such products as benzene, styrene, methanol,
acrylonitrile, xylene, naphtha and caustic soda, all consumed in the production of paper, fiber and plastics.
Pressurized products, including butadiene, isobutane, propylene, butane and propane, all requiring pressurized
conditions to remain in stable liquid form, are transported in pressure barges. The transportation of petrochemical
products represented 52% of the segment’s 2020 revenues. Customers shipping these products are petrochemical and
refining companies.
Black Oil. Black oil transported includes such products as residual fuel oil, No. 6 fuel oil, coker feedstock,
vacuum gas oil, asphalt, carbon black feedstock, crude oil, natural gas condensate and ship bunkers (engine fuel).
Such products represented 26% of the segment’s 2020 revenues. Black oil customers are refining companies,
marketers, and end users that require the transportation of black oil between refineries and storage terminals, to
refineries and to power plants. Ship bunker customers are oil companies and oil traders in the bunkering business.
7
Refined Petroleum Products. Refined petroleum products transported include the various blends of finished
gasoline, gasoline blendstocks, jet fuel, No. 2 oil, heating oil and diesel fuel, and represented 19% of the segment’s
2020 revenues. The Company also classifies ethanol in the refined petroleum products category. Customers are oil
and refining companies, marketers and ethanol producers.
Agricultural Chemicals. Agricultural chemicals transported represented 3% of the segment’s 2020 revenues.
Agricultural chemicals include anhydrous ammonia and nitrogen-based liquid fertilizer, as well as industrial
ammonia. Agricultural chemical customers consist mainly of domestic and foreign producers of such products.
Demand Drivers in the Tank Barge Industry
Demand for tank barge transportation services is driven by the production volumes of the bulk liquid
commodities. Marine transportation demand for the segment’s four primary commodity groups, petrochemicals,
black oil, refined petroleum products and agricultural chemicals, is based on differing circumstances. While the
demand drivers of each commodity are different, the Company has the flexibility, in certain cases, of reallocating
inland equipment and coastal equipment among the petrochemical, refined petroleum products and black oil markets
as needed.
Petrochemical products are used in both consumer non-durable and durable goods. Bulk petrochemical volumes
have historically tracked the general domestic economy and correlate to the United States Gross Domestic Product.
From late 2010 through 2015, inland petrochemical tank barge utilization remained relatively stable in the 90% to
95% range. During 2016, barge utilization declined to the high 80% range on average with periods of barge utilization
in the low 80% range. During 2017 and 2018, barge utilization ranged from the mid-80% to the mid-90% range,
reaching the mid-90% range in the late 2017 third quarter from the impact of Hurricanes Harvey and Irma, and in
the low to mid-90% range during the 2017 fourth quarter and the majority of 2018 and 2019 as a result of a favorable
pricing environment for customers’ products, new petrochemical industry capacity that led to increased movements
of petrochemicals, and the continued retirement of older barges from the segment’s fleet. During 2020, Gulf Coast
petrochemical plants saw reduced production levels as a result of lower demand due to the COVID-19 pandemic
thereby decreasing marine transportation volumes of basic petrochemicals to both domestic consumers and terminals
for export destinations. In addition, during the 2020 third quarter, the petrochemical complex along the Gulf Coast
was impacted by hurricanes and tropical storms, further reducing barge volumes and closing critical waterways for
extended periods of time. As a result, barge utilization decreased from the low to mid-90% range during the 2020
first quarter to the high 60% range in the 2020 fourth quarter. Coastal tank barge utilization for the transportation of
petrochemicals remained steady in the mid-to-high 80% range for 2018 through 2020 due to a high percentage of
term contracts.
The demand for black oil, including ship bunkers, varies by type of product transported. Demand for
transportation of residual oil, a heavy by-product of refining operations, varies with refinery utilization and usage of
feedstocks. During the majority of 2015, inland black oil tank barge utilization remained strong, in the 90% to
95% range, due to strong demand driven by steady refinery production levels from major customers and the export
of diesel fuel and heavy fuel oil. With the decline in the price of crude oil in late 2014 and the low price throughout
2015 and 2016, crude oil and natural gas condensate movements by tank barge were at reduced levels industry-wide.
During 2015 and 2016, the Company and the industry were generally successful in repositioning barges from that
trade to other markets. During 2018 and 2019, the Company continued to transport crude oil and natural gas
condensate produced from the Eagle Ford and Permian Basin shale formations in Texas both along the
Gulf Intracoastal Waterway with inland vessels and in the Gulf of Mexico with coastal equipment, and continued to
transport Utica crude oil and natural gas condensate downriver from the Mid-Atlantic to the Gulf Coast, albeit, at
reduced levels as some of the product was transported by newly constructed pipelines. During 2020, the Company
experienced a further decrease in volumes being transported along these routes as a result of reduced demand due
to the COVID-19 pandemic and oil price volatility during the year. During 2018, strong demand for crude oil and
natural gas condensate movements resulted in inland black oil tank barge utilization in the mid-90% range, and
increased into the mid-to high 90% range during 2019. During 2020, the COVID-19 pandemic resulted in reduced
demand for crude oil and natural gas condensate movements and resulted in a decrease in black oil tank barge
utilization from the low to mid-90% range during the 2020 first half to the mid-60% to low 70% range during the
2020 second half. Coastal black oil tank barge utilization increased from the low 90% range in 2018 to the high
90% range in 2019 due to the retirement of coastal barges throughout the industry and declined slightly to the mid
8
90% range in 2020, despite the reduced demand as a result of the COVID-19 pandemic as utilization was supported
by a high percentage of term contracts. Inland and coastal asphalt shipments are generally seasonal, with higher
volumes shipped during April through November, months when weather allows for efficient road construction.
Refined petroleum product volumes are driven by United States gasoline and diesel fuel consumption,
principally vehicle usage, air travel, and weather conditions. Volumes can also be affected by gasoline inventory
imbalances within the United States. Generally, gasoline and No. 2 oil are exported from the Gulf Coast where
refining capacity exceeds demand. The Midwest is a net importer of such products. Volumes were also driven by
diesel fuel transported to terminals along the Gulf Coast for export to South America. Ethanol, produced in the
Midwest, is moved from the Midwest to the Gulf Coast. In the coastal trade, tank barges are frequently used
regionally to transport refined petroleum products from a coastal refinery or terminals served by pipelines to the end
markets. Many coastal areas rely upon access to refined petroleum products by using marine transportation in the
distribution chain. Coastal refined petroleum products tank barge utilization declined from the 90% to 95% range for
the majority of 2015 to the low to mid-80% range for the majority of 2016, and declined throughout 2017 from the
low 80% range in first quarter to the low 60% range in the fourth quarter, all predominately from the industry-wide
oversupply of coastal tank barge capacity. In 2018 and 2019, barge utilization increased from the mid-60% range to
the low 70% range primarily due to the retirement of out-of-service coastal barges during the 2017 fourth quarter and
improved customer demand resulting in higher barge utilization in the spot market in 2019. In 2020, coastal refined
petroleum products tank barge utilization declined to the low 60% range due to the COVID-19 pandemic and the
resulting reduction in demand.
Demand for marine transportation of domestic and imported agricultural fertilizer is seasonal and directly related
to domestic nitrogen-based liquid fertilizer consumption, driven by the production of corn, cotton and wheat. During
periods of high natural gas prices, the manufacturing of nitrogen-based liquid fertilizer in the United States is
curtailed. During these periods, imported products, which normally involve longer barge trips, replace the domestic
products to meet Midwest and South Texas demands. Such products are delivered to the numerous small terminals
and distributors throughout the United States farm belt.
Marine Transportation Operations
The marine transportation segment operates a fleet of 1,066 inland tank barges and an average of 248 inland
towboats during the 2020 fourth quarter, as well as 44 coastal tank barges and 44 coastal tugboats. The segment also
operates four offshore dry-bulk cargo barges, four offshore tugboats and one docking tugboat transporting dry-bulk
commodities in United States coastal trade.
Inland Operations. The segment’s inland operations are conducted through a wholly owned subsidiary,
Kirby Inland Marine, LP (‘‘Kirby Inland Marine’’). Kirby Inland Marine’s operations consist of the Canal, Linehaul
and River fleets, as well as barge fleeting services.
The Canal fleet transports petrochemical feedstocks, processed chemicals, pressurized products, black oil, and
refined petroleum products along the Gulf Intracoastal Waterway, the Mississippi River below Baton Rouge,
Louisiana, and the Houston Ship Channel. Petrochemical feedstocks and certain pressurized products are transported
from one plant to another plant for further processing. Processed chemicals and certain pressurized products are
moved to waterfront terminals and chemical plants. Black oil is transported to waterfront terminals and products such
as No. 6 fuel oil are transported directly to the end users. Refined petroleum products are transported to waterfront
terminals along the Gulf Intracoastal Waterway for distribution.
The Linehaul fleet transports petrochemical feedstocks, chemicals, agricultural chemicals and lube oils along the
Gulf Intracoastal Waterway, Mississippi River and the Illinois and Ohio Rivers. Loaded tank barges are staged in the
Baton Rouge area from Gulf Coast refineries and petrochemical plants, and are transported from Baton Rouge,
Louisiana to waterfront
terminals and plants on the Mississippi, Illinois and Ohio Rivers, and along the
Gulf Intracoastal Waterway, on regularly scheduled linehaul tows. Barges are dropped off and picked up going up and
down river.
The River fleet
transports petrochemical feedstocks, chemicals, refined petroleum products, agricultural
chemicals and black oil along the Mississippi River System above Baton Rouge. The River fleet operates unit tows,
where a towboat and generally a dedicated group of barges operate on consecutive voyages between loading and
discharge points. Petrochemical feedstocks and processed chemicals are transported to waterfront petrochemical and
chemical plants, while black oil, refined petroleum products and agricultural chemicals are transported to waterfront
terminals.
9
The inland transportation of petrochemical feedstocks, chemicals and pressurized products is generally
consistent throughout the year. Transportation of refined petroleum products, certain black oil and agricultural
chemicals is generally more seasonal. Movements of black oil, such as asphalt, generally increase in the spring
through fall months. Movements of refined petroleum products, such as gasoline blends, generally increase during
the summer driving season, while heating oil movements generally increase during the winter months. Movements
of agricultural chemicals generally increase during the spring and fall planting seasons.
The marine transportation inland operation moves and handles a broad range of sophisticated cargoes. To meet
the specific requirements of the cargoes transported, the inland tank barges may be equipped with self-contained
heating systems, high-capacity pumps, pressurized tanks, refrigeration units, stainless steel tanks, aluminum tanks or
specialty coated tanks. Of the 1,066 inland tank barges currently operated, 818 are petrochemical and refined
petroleum products barges, 162 are black oil barges, 76 are pressure barges and 10 are refrigerated anhydrous
ammonia barges. Of the 1,066 inland tank barges, 1,029 are owned by the Company and 37 are leased.
The fleet of 248 inland towboats ranges from 800 to 6,100 horsepower. Of the 248 inland towboats, 210 are
owned by the Company and 38 are chartered. Towboats in the 800 to 2,100 horsepower classes provide power for
barges used by the Canal and Linehaul fleets on the Gulf Intracoastal Waterway and the Houston Ship Channel.
Towboats in the 1,400 to 3,200 horsepower classes provide power for both the River and Linehaul fleets on the
Gulf Intracoastal Waterway and the Mississippi River System. Towboats above 3,600 horsepower are typically used
on the Mississippi River System to move River fleet unit tows and provide Linehaul fleet towing. Based on the
capabilities of the individual towboats used in the Mississippi River System, the tows range in size from 10,000 to
30,000 tons.
Marine transportation services for inland movements are conducted under term contracts, which have contract
terms of 12 months or longer, or spot contracts, which have contract terms of less than 12 months, with customers
with whom the Company has traditionally had long-standing relationships. Typically, term contracts range from one
to three years, some of which have renewal options. During 2018, 2019, and 2020 approximately 65% of inland
marine transportation revenues were under term contracts and 35% were spot contract revenues.
All of the Company’s inland tank barges used in the transportation of bulk liquid products are of double hull
construction and are capable of controlling vapor emissions during loading and discharging operations in compliance
with occupational safety and health regulations and air quality regulations.
The Company has the ability to offer to its customers distribution capabilities throughout the Mississippi River
System and the Gulf Intracoastal Waterway. Such capabilities offer economies of scale resulting from the ability to
match tank barges, towboats, products and destinations efficiently to meet its customers’ requirements.
Through the Company’s proprietary vessel management computer system, the Company’s barge and towboat
fleet is dispatched from a centralized dispatch group. The towboats are equipped with cellular and satellite positioning
and communication systems that automatically transmit the location of the towboat to the Company’s customer
service department. Electronic orders are communicated to vessel personnel with reports of towing activities
communicated electronically back to the customer service department. The electronic interface between the customer
service department and the vessel enables matching of customer needs to barge capabilities, thereby promoting
efficient utilization of the tank barge and towboat fleet. The Company’s customers are able to access information
concerning the movement of their cargoes, including barge locations, through the Company’s website and proprietary
electronic customer service portal.
Kirby Inland Marine operates the largest commercial tank barge fleeting service (barge storage facilities) in
numerous ports, including Houston, Corpus Christi, Freeport and Orange, Texas, Baton Rouge, Covington, Lake
Charles and New Orleans, Louisiana, Mobile, Alabama, and Greenville, Mississippi. Included in the fleeting service
is a shifting operation and fleeting service for dry cargo barges and tank barges on the Houston Ship Channel, in
Freeport and Port Arthur, Texas, and Lake Charles, Louisiana. Kirby Inland Marine provides shifting and fleeting
services for its own barges, as well as for customers and third party carriers, transferring barges within the areas
noted, as well as fleeting barges.
Kirby Inland Marine also provides shore-based barge tankermen to the Company and third parties. Services to
the Company and third parties cover the Gulf Coast, mid-Mississippi Valley, and the Ohio River Valley.
10
San Jac Marine, LLC (‘‘San Jac’’), a subsidiary of Kirby Inland Marine, owns and operates a shipyard in
Channelview, Texas which builds marine vessels for both inland and coastal applications, and provide maintenance
and repair services. Kirby Inland Marine also builds inland towboats and performs routine maintenance and repairs
at the shipyard.
The Company owns a two-thirds interest in Osprey, which transports project cargoes and cargo containers by
barge on the United States inland waterway system.
Coastal Operations. The segment’s coastal operations are conducted through wholly owned subsidiaries, Kirby
Offshore Marine, LLC (‘‘Kirby Offshore Marine’’) and Kirby Ocean Transport Company (‘‘Kirby Ocean Transport’’).
Kirby Offshore Marine provides marine transportation of refined petroleum products, petrochemicals and black
oil in coastal regions of the United States. The coastal operations consist of the Atlantic and Pacific Divisions.
The Atlantic Division primarily operates along the eastern seaboard of the United States and along the
Gulf Coast. The Atlantic Division vessels call on various coastal ports from Maine to Texas, servicing refineries,
storage terminals and power plants. The Atlantic Division also operates equipment, to a lesser extent, in the Eastern
Canadian provinces. The tank barges operating in the Atlantic Division are in the 10,000 to 194,000 barrels capacity
range and coastal tugboats in the 2,400 to 10,000 horsepower range, transporting primarily refined petroleum
products, petrochemicals and black oil.
The Pacific Division primarily operates along the Pacific Coast of the United States, servicing refineries and
storage terminals from Southern California to Washington State, throughout Alaska, including Cook Inlet, and from
California to Hawaii. The Pacific Division’s fleet consists of tank barges in the 52,000 to 194,000 barrels capacity
range and tugboats in the 1,000 to 11,000 horsepower range, transporting primarily refined petroleum products.
The Pacific Division services local petroleum retailers and oil companies distributing refined petroleum products
and black oil between the Hawaiian Islands and provides other services to the local maritime community. The Hawaii
fleet consists of tank barges in the 53,000 to 86,000 barrels capacity range and tugboats in the 1,000 to
5,000 horsepower range, transporting refined petroleum products for local and regional customers, black oil to power
generation customers and delivering bunker fuel to ships. The Hawaii fleet also provides service docking, standby
tug assistance and line handling to vessels using the single point mooring installation at Barbers Point, Oahu, Hawaii,
a facility for large tankers to safely load and discharge their cargos through an offshore buoy and submerged pipeline
without entering the port.
The coastal transportation of refined petroleum products and black oil is impacted by seasonality, partially
dependent on the area of operations. Operations along the West Coast of the United States and in Alaska have been
subject to more seasonal variations in demand than the operations along the East Coast and Gulf Coast regions of
the United States. Seasonality generally does not impact the Hawaiian market. Movements of refined petroleum
products such as various blends of gasoline are strongest during the summer driving season while heating oil
generally increases during the winter months.
The coastal fleet consists of 44 tank barges with 4.2 million barrels of capacity, primarily transporting refined
petroleum products, black oil and petrochemicals. The Company owns 43 of the coastal tank barges and leases one
barge. Of the 44 coastal tank barges currently operating, 31 are refined petroleum products and petrochemical barges
and 13 are black oil barges. The Company operates 44 coastal tugboats ranging from 1,000 to 11,000 horsepower,
of which 40 are owned by the Company and four are chartered.
Coastal marine transportation services are conducted under long-term contracts, primarily one year or longer,
some of which have renewal options, for customers with which the Company has traditionally had long-standing
relationships. During both 2018 and 2019, approximately 80% of the coastal marine transportation revenues were
under term contracts and 20% were spot contract revenues. During 2020, approximately 85% of the coastal marine
transportation revenues were under term contracts and 15% were spot contract revenues.
Kirby Offshore Marine also operates a fleet of two offshore dry-bulk barge and tugboat units involved in the
transportation of sugar and other dry products between Florida and East Coast ports. These vessels primarily operate
under long-term contracts of affreightment.
Kirby Ocean Transport owns and operates a fleet of two offshore dry-bulk barges, two offshore tugboats and one
docking tugboat. Kirby Ocean Transport operates primarily under term contracts of affreightment, including a
contract that expires in 2022 with Duke Energy Florida (‘‘DEF’’) to transport coal across the Gulf of Mexico to DEF’s
power generation facility at Crystal River, Florida.
11
Kirby Ocean Transport is also engaged in the transportation of coal, fertilizer, sugar and other bulk cargoes on
a short-term basis between domestic ports and occasionally the transportation of grain from domestic ports to ports
primarily in the Caribbean Basin.
Contracts and Customers
Marine transportation inland and coastal services are conducted under term or spot contracts for customers with
whom the Company has traditionally had long-standing relationships. Typically, term contracts range from one to
three years, some of which have renewal options. The majority of the marine transportation contracts with its
customers are for terms of one year. Most have been customers of the Company’s marine transportation segment for
many years and management anticipates continued relationships; however, there is no assurance that any individual
contract will be renewed.
A term contract is an agreement with a specific customer to transport cargo from a designated origin to a
designated destination at a set rate (affreightment) or at a daily rate (time charter). The rate may or may not include
escalation provisions to recover changes in specific costs such as fuel. Time charters, which insulate the Company
from revenue fluctuations caused by weather and navigational delays and temporary market declines, represented
approximately 66% of the marine transportation’s inland revenues under term contracts during 2020, 62% of revenue
under term contracts during 2019 and 59% of the revenue under term contracts during 2018. A spot contract is an
agreement with a customer to move cargo from a specific origin to a designated destination for a rate negotiated at
the time the cargo movement takes place. Spot contract rates are at the current ‘‘market’’ rate and are subject to
market volatility. The Company typically maintains a higher mix of term contracts to spot contracts to provide the
Company with a reasonably predictable revenue stream while maintaining spot market exposure to take advantage
of new business opportunities and existing customers’ peak demands. During 2020, 2019, and 2018, approximately
65% of inland marine transportation revenues were under term contracts and 35% were spot contract revenues.
Coastal time charters represented approximately 90% of the marine transportation’s coastal revenues under term
contracts in 2020 and approximately 85% of coastal revenues under term contracts in 2019 and 2018.
No single customer of the marine transportation segment accounted for 10% or more of the Company’s revenues
in 2020, 2019, or 2018.
Properties
The principal offices of Kirby Inland Marine, Kirby Offshore Marine, Kirby Ocean Transport and Osprey are located
in Houston, Texas, in three facilities under leases that expire in July 2021, December 2025 and December 2027. Kirby
Inland Marine’s operating locations are on the Mississippi River at Baton Rouge and New Orleans, Louisiana, and
Greenville, Mississippi, three locations in Houston, Texas, on or near the Houston Ship Channel, one in Miami, Florida,
one in Gibson, Louisiana, one in Lake Charles, Louisiana, several properties in Westwego, Louisiana, one in Corpus
Christi, Texas, and two in Orange, Texas. The New Orleans, Gibson, Westwego, Houston, and Orange facilities are owned
by the Company, and the Baton Rouge, Corpus Christi, Lake Charles, Greenville, and Miami facilities are leased. Kirby
Offshore Marine’s operating facilities are located in Staten Island, New York, Seattle, Washington and Honolulu, Hawaii.
All of Kirby Offshore Marine’s operating facilities are leased, including piers and wharf facilities and office and warehouse
space. San Jac’s operating location is near the Houston Ship Channel.
Governmental Regulations
General. The Company’s marine transportation operations are subject to regulation by the USCG, federal laws,
state laws and certain international conventions. The agencies establish safety requirements and standards and are
authorized to investigate incidents.
Most of the Company’s tank barges are inspected by the USCG and carry certificates of inspection.
The Company’s inland and coastal towing vessels and coastal dry-bulk barges are also subject to USCG regulations.
The USCG has enacted safety regulations governing the inspection, standards, and safety management systems of
towing vessels. The regulations also create many new requirements for design, construction, equipment, and
operation of towing vessels. The USCG regulations supersede the jurisdiction of the United States Occupational
Safety and Health Administration (‘‘OSHA’’) and any state regulations on vessel design, construction, alteration,
repair, maintenance, operation, equipping, personnel qualifications and manning. The regulations requiring towing
vessels to obtain a certificate of inspection became effective for existing towing vessels on July 20, 2018. Other
portions of the regulations are phased in following the July 20, 2018 effective date through July 19, 2022.
12
All of the Company’s coastal tugboats and coastal tank and dry-bulk barges are built to American Bureau of
Shipping (‘‘ABS’’) classification standards and/or statutory requirements by the USCG, and are inspected
periodically by ABS and the USCG to maintain the vessels in class and compliant with all U.S. statutory
requirements, as applicable to the vessel. The crews employed by the Company aboard inland and coastal vessels,
including captains, pilots, engineers, tankermen and ordinary seamen, are licensed by the USCG.
The Company is required by various governmental agencies to obtain licenses, certificates and permits for its
vessels depending upon such factors as the cargo transported, the waters in which the vessels operate and other
factors. The Company believes that its vessels have obtained and can maintain all required licenses, certificates and
permits required by such governmental agencies for the foreseeable future. The Company’s failure to maintain these
authorizations could adversely impact its operations.
The Company believes that additional security and environmental related regulations relating to contingency planning
requirements could be imposed on the marine industry. Generally, the Company endorses the anticipated additional
regulations and believes it is currently operating to standards at least equal to anticipated additional regulations.
Jones Act. The Jones Act is a federal cabotage law that restricts domestic marine transportation in the
United States to vessels built and registered in the United States and manned, owned and operated by United States
citizens. For a corporation to qualify as United States citizens for the purpose of domestic trade, it is to be 75% owned
and controlled by United States citizens within the meaning of the Jones Act. The Company monitors citizenship and
meets the requirements of the Jones Act for its owned and operated vessels.
Compliance with United States ownership requirements of the Jones Act is important to the operations of the
Company, and a violation of the Jones Act could have a material negative effect on the Company and its vessels’
ability to operate. The Company monitors the citizenship of its employees and stockholders and complies with
United States build requirements.
User Taxes. Federal legislation requires that inland marine transportation companies pay a user tax based on
propulsion fuel used by vessels engaged in trade along the inland waterways that are maintained by the United States
Army Corps of Engineers. Such user taxes are designed to help defray the costs associated with replacing major
components of the inland waterway system, such as locks and dams. A significant portion of the inland waterways
on which the Company’s vessels operate is maintained by the Army Corps of Engineers.
The Company presently pays a federal fuel user tax of 29.1 cents per gallon consisting of a 0.1 cent per gallon
leaking underground storage tank tax and 29 cents per gallon waterways user tax.
Security Requirements. The Maritime Transportation Security Act of 2002 requires, among other things,
submission to and approval by the USCG of vessel and waterfront facility security plans (‘‘VSP’’ and ‘‘FSP’’,
respectively). The Company maintains approved VSP and FSP and is operating in compliance with the plans for all
of its vessels and facilities that are subject to the requirements.
Environmental Regulations
The Company’s operations are affected by various regulations and legislation enacted for protection of the
environment by the United States government, as well as many coastal and inland waterway states and international
jurisdictions to the extent that the Company’s vessels transit in international waters. Government regulations require
the Company to obtain permits, licenses and certificates for the operation of its vessels. Failure to maintain necessary
permits or approvals could require the Company to incur costs or temporarily suspend operation of one or more of
its vessels. Violations of these laws may result in civil and criminal penalties, fines, or other sanctions.
Water Pollution Regulations. The Federal Water Pollution Control Act of 1972, as amended by the Clean Water
Act of 1977 (‘‘Clean Water Act’’), the Comprehensive Environmental Response, Compensation and Liability Act of
1981 (‘‘CERCLA’’) and the Oil Pollution Act of 1990 (‘‘OPA’’) impose strict prohibitions against the discharge of
oil and its derivatives or hazardous substances into the navigable waters of the United States. These acts impose civil
and criminal penalties for any prohibited discharges and impose substantial strict liability for cleanup of these
discharges and any associated damages. Certain states also have water pollution laws that prohibit discharges into
waters that traverse the state or adjoin the state, and impose civil and criminal penalties and liabilities similar in nature
to those imposed under federal laws.
The OPA and various state laws of similar intent substantially increased over historic levels the statutory liability
of owners and operators of vessels for oil spills, both in terms of limit of liability and scope of damages.
13
One of the most important requirements under the OPA was that all newly constructed tank barges engaged in
the transportation of oil and petroleum in the United States be double hulled, and all existing single hull tank barges
be either retrofitted with double hulls or phased out of domestic service by December 31, 2014.
The Company manages its exposure to losses from potential discharges of pollutants through the use of
well-maintained and equipped vessels, through safety, training and environmental programs, and through the
Company’s insurance program. There can be no assurance, however, that any new regulations or requirements or any
discharge of pollutants by the Company will not have an adverse effect on the Company.
Clean Water Act. The Clean Water Act establishes the National Pollutant Discharge Elimination System
(‘‘NPDES’’) permitting program which regulates discharges into navigable waters of
the United States.
The United States Environmental Protection Agency (‘‘EPA’’) regulates the discharge of ballast water and other
substances in United States waters under the Clean Water Act. Pursuant to the NPDES program, effective February 6,
2009, the EPA issued regulations requiring vessels 79 feet in length or longer to comply with a Vessel General Permit
authorizing ballast water discharges and other discharges incidental to the operation of the vessels. The EPA
regulations also imposed technology and water quality based effluent limits for certain types of discharges and
established specific inspection, monitoring, recordkeeping and reporting requirements for vessels to ensure effluent
limitations are met. The Vessel Incidental Discharge Act (‘‘VIDA’’), signed into law on December 4, 2018,
established a new framework for the regulation of vessel incidental discharges under the Clean Water Act. VIDA
requires the EPA to develop national performance standards for those discharges within two years of enactment and
requires the USCG to develop implementation, compliance, and enforcement regulations within two years of the
EPA’s promulgation of standards. Under VIDA, all provisions of the Vessel General Permit which became effective
December 19, 2013, remain in force and effect until the USCG regulations are finalized. The Company maintains
Vessel General Permits and has established recordkeeping and reporting procedures in compliance with the EPA’s
interim requirements.
The USCG adopted regulations on ballast water management treatment systems establishing a standard for the
allowable concentration of living organisms in certain vessel ballast water discharged in waters of the United States
under the National Invasive Species Act. The regulations include requirements for the installation of engineering
equipment to treat ballast water by establishing an approval process for ballast water management systems
(‘‘BWMS’’). The BWMS implementation was suspended until December 2016 at which time the USCG approved
manufacturers’ systems that met
to the International Maritime
Organization’s D-2 standard. The phase-in schedule for those existing vessels requiring a system to install a BWMS
is dependent on vessel build date, ballast water capacity, and drydock schedule. Compliance with the ballast water
treatment regulations requires the installation of equipment on some of the Company’s vessels to treat ballast water
before it is discharged. The installation of BWMS equipment will require significant capital expenditures at the next
scheduled drydocking to complete the installation of the approved system on those existing vessels that require a
system in order to comply with the BWMS regulations.
the regulatory discharge standard equivalent
Financial Responsibility Requirement. Commencing with the Federal Water Pollution Control Act of 1972, as
amended, vessels over 300 gross tons operating in the Exclusive Economic Zone of the United States have been
required to maintain evidence of financial ability to satisfy statutory liabilities for oil and hazardous substance water
pollution. This evidence is in the form of a Certificate of Financial Responsibility (‘‘COFR’’) issued by the USCG.
The majority of the Company’s tank barges are subject to this COFR requirement, and the Company has fully
complied with this requirement since its inception. The Company does not foresee any current or future difficulty in
maintaining the COFR certificates under current rules.
Clean Air Regulations. The Federal Clean Air Act of 1979 (‘‘CAA’’) requires states to draft State
Implementation Plans (‘‘SIPs’’) under the National Ambient Air Quality Standards designed to reduce atmospheric
pollution for six common air pollutants to levels mandated by this act. The EPA designates areas in the United States
as meeting or not meeting the standards. Several SIPs implement the regulation of barge loading and discharging
emissions at waterfront facilities as a measure to meet the CAA standard. The implementation of these regulations
requires a reduction of hydrocarbon emissions released into the atmosphere during the loading of most petroleum
products and the degassing and cleaning of barges for maintenance or change of cargo. These regulations require
vessel operators that operate in states with areas of nonattainment of air quality standards under the CAA to install
vapor control equipment on their barges. The Company expects that future emission regulations will be developed
and will apply this same technology to many chemicals that are handled by barge. Most of the Company’s barges
engaged in the transportation of petrochemicals, chemicals and refined petroleum products are already equipped with
14
vapor control systems. Although a risk exists that new regulations could require significant capital expenditures by
the Company and otherwise increase the Company’s costs, the Company believes that, based upon the regulations
that have been proposed thus far, no material capital expenditures beyond those currently contemplated by the
Company and no material increase in costs are likely to be required.
Contingency Plan Requirement. The OPA and several state statutes of similar intent require the majority of the
vessels and terminals operated by the Company to maintain approved oil spill contingency plans as a condition of
operation. The Company has approved plans that comply with these requirements. The OPA also requires
development of regulations for hazardous substance spill contingency plans. The USCG has not yet promulgated
these regulations; however, the Company anticipates that they will not be more difficult to comply with than the oil
spill plans.
Occupational Health Regulations. The Company’s inspected vessel operations are primarily regulated by the
USCG for occupational health standards. Uninspected vessel operations and the Company’s shore-based personnel
are subject to OSHA regulations. The Company believes that it is in compliance with the provisions of the regulations
that have been adopted and does not believe that the adoption of any further regulations will impose additional
material requirements on the Company. There can be no assurance, however, that claims will not be made against the
Company for work related illness or injury, or that the further adoption of health regulations will not adversely affect
the Company.
Insurance. The Company’s marine transportation operations are subject to the hazards associated with operating
vessels carrying large volumes of bulk cargo in a marine environment. These hazards include the risk of loss of or
damage to the Company’s vessels, damage to third parties as a result of collision, fire or explosion, adverse weather
conditions, loss or contamination of cargo, personal injury of employees and third parties, and pollution and other
environmental damages. The Company maintains hull, liability, general liability, workers compensation and pollution
liability insurance coverage against these hazards. For shipyard operations, the Company has ship repairer’s liability
and builder’s risk insurance. The Company uses a Texas domiciled wholly owned insurance subsidiary, Adaptive
KRM, LLC, to provide cost effective risk transfer options to insure certain exposures of the Company and certain of
its subsidiaries in its marine transportation and distribution and services segments. The Company also maintains
insurance in the commercial insurance market to address liabilities arising in connection with its distribution and
services segment.
Environmental Protection. The Company has a number of programs that were implemented to further its
commitment to environmental responsibility in its operations. In addition to internal environmental audits, one such
program is environmental audits of barge cleaning vendors principally directed at management of cargo residues and
barge cleaning wastes. Another is the participation by the Company in the American Waterways Operators
Responsible Carrier program which is oriented towards continuously reducing the barge industry’s impact on the
environment, including the distribution services area.
Safety. The Company manages its exposure to the hazards associated with its business through safety, training
and preventive maintenance efforts. The Company emphasizes its safety commitment through programs oriented
toward extensive monitoring of safety performance for the purpose of identifying trends and initiating corrective
action, and for continuously improving employee safety behavior and performance.
Training. The Company believes that among the major elements of a successful and productive work force are
effective training programs. The Company also believes that training in the proper performance of a job enhances
both the safety and quality of the service provided. New technology, regulatory compliance, personnel safety, quality
and environmental concerns create additional demands for training. Refer to Human Capital below for further
discussion regarding training programs the Company has developed and instituted.
Quality. Kirby Inland Marine has made a substantial commitment to the implementation, maintenance, and
improvement of quality assurance systems. Kirby Offshore Marine is certified under ABS ISM standards. These
Quality Assurance Systems and certification have enabled both shore and vessel personnel to effectively manage the
changes which occur in the working environment, as well as enhancing the Company’s safety and environmental
performance.
15
DISTRIBUTION AND SERVICES
The Company, through its wholly owned subsidiary Kirby Distribution & Services, Inc. and its wholly owned
subsidiaries Kirby Engine Systems LLC, (‘‘Kirby Engine Systems’’), Stewart & Stevenson LLC (‘‘S&S’’) and
United Holdings LLC (‘‘United’’), and through Kirby Engine Systems’ wholly owned subsidiaries Marine Systems,
Inc. (‘‘Marine Systems’’) and Engine Systems, Inc. (‘‘Engine Systems’’), serves two markets, commercial and
industrial, and oil and gas. The Company sells genuine replacement parts, provides service mechanics to overhaul and
repair engines, transmissions, reduction gears and related oilfield service equipment, rebuilds component parts or
entire diesel engines, transmissions and reduction gears, and related equipment used in oilfield services, marine,
power generation, on-highway, and other commercial and industrial applications. The Company manufactures and
remanufactures oilfield service equipment, including pressure pumping units, for North American as well as for
international oilfield service companies, and oil and gas operator and producer markets. The Company also sells
engines, transmissions, power generation systems, and rents equipment including generators, industrial compressors,
railcar movers, and high capacity lift trucks for use in a variety of commercial and industrial markets.
For the commercial and industrial market, the Company sells Original Equipment Manufacturers (‘‘OEM’’)
replacement parts and new diesel engines, provides service mechanics and maintains facilities to overhaul and repair
diesel engines and ancillary products for marine and on-highway transportation companies, and industrial companies.
The Company provides engineering and field services, OEM replacement parts and safety-related products to power
generation operators and to the nuclear industry, manufactures engine generator and pump packages for power
generation operators and municipalities, offers power generation systems customized for specific commercial and
industrial applications, and rents equipment including generators, industrial compressors, railcar movers, and high
capacity lift trucks for use in a variety of industrial markets.
For the oil and gas market, the Company sells OEM replacement parts, sells and services diesel engines, pumps
and transmissions, manufactures and remanufactures pressure pumping units, and manufactures cementing and
pumping equipment as well as coil tubing and well intervention equipment. Customers include oilfield service
companies, and oil and gas operators and producers.
No single customer of the distribution and services segment accounted for 10% or more of the Company’s
revenues in 2020, 2019, or 2018. The distribution and services segment also provides service to the Company’s
marine transportation segment, which accounted for approximately 3% of the distribution and services segment’s
2020 revenues and 2% of the segment’s 2019 and 2018 revenues. Such revenues are eliminated in consolidation and
not included in the table below.
The following table sets forth the revenues for the distribution and services segment (dollars in thousands):
Service and parts. . . . . . . . . . . . . . .
Manufacturing . . . . . . . . . . . . . . . . .
Year Ended December 31,
2020
%
2019
%
2018
%
$
$
711,051
56,092
767,143
93% $
7
939,246
312,071
75% $
25
1,059,270
428,284
100% $
1,251,317
100% $
1,487,554
71%
29
100%
Commercial and Industrial Operations
The Company serves the marine, on-highway, power generation, and other commercial and industrial markets
primarily in the United States. The commercial and industrial operations represented approximately 74% of the
segment’s 2020 revenues.
The Company is engaged in the overhaul and repair of medium-speed and high-speed marine diesel engines and
reduction gears, line boring, block welding services and related parts sales for customers in the marine industry.
Medium-speed diesel engines have an engine speed of 400 to 1,000 revolutions per minute (‘‘RPM’’) with a
horsepower range of 800 to 32,000. High-speed diesel engines have an engine speed of over 1,000 RPM and a
horsepower range of 50 to 8,375. The Company services medium-speed and high-speed diesel engines utilized in the
inland and offshore barge industries. It also services marine equipment and offshore drilling equipment used in the
offshore petroleum exploration and oilfield service industry, marine equipment used in the offshore commercial
fishing industry, harbor docking vessels, commercial ferries, vessels owned by the United States government and
large pleasure crafts.
16
The Company has marine repair operations throughout the United States providing in-house and in-field repair
capabilities and related parts sales. The Company’s emphasis is on service to its customers, and it sends its crews
from any of its locations to service customers’ equipment anywhere in the world. The medium-speed operations are
located in Houma, Louisiana, Houston, Texas, Chesapeake, Virginia, Paducah, Kentucky, Seattle, Washington and
Tampa, Florida, serving as the authorized distributor for EMD Power Products (‘‘EMD’’) throughout
the
United States. The Company is also a distributor and representative for certain Alfa Laval products in the Midwest
and on the East Coast, Gulf Coast, and West Coast. All of the marine locations are authorized distributors for Falk
Corporation reduction gears and Oil States Industries, Inc. clutches. The Chesapeake, Virginia operation concentrates
on East Coast inland and offshore dry-bulk, tank barge and harbor docking operators, and the United States
government. The Houma, Louisiana and Houston, Texas operations concentrate on the inland and offshore barge and
oilfield services industries. The Tampa, Florida operation concentrates on Gulf of Mexico offshore dry-bulk, tank
barge and harbor docking operators. The Paducah, Kentucky operation concentrates on the inland river towboat and
barge operators and the Great Lakes carriers. The Seattle, Washington operation concentrates on the offshore
commercial fishing industry, the offshore barge industry, the United States government, and other customers in
Alaska, Hawaii and the Pacific Rim.
The high-speed marine operations are located in Houston, Texas, Houma, Baton Rouge, Belle Chasse and
New Iberia, Louisiana, Paducah, Kentucky, Mobile, Alabama, Lodi and Thorofare, New Jersey, and 10 locations in
Florida. The Company serves as a factory-authorized marine dealer for Caterpillar diesel engines in multiple states.
The Company also operates factory-authorized full service marine distributorships/dealerships for Cummins, Detroit
Diesel, John Deere, MTU and Volvo Penta diesel engines, as well as Falk, Lufkin and Twin Disc marine gears.
High-speed diesel engines provide the main propulsion for a significant amount of the United States flagged
commercial vessels and large pleasure craft vessels, other marine applications, including engines for power
generators and barge pumps.
The Company distributes, sells parts for and services diesel engines and transmissions for on-highway use and
provides in-house and in-field service capabilities. The Company is the largest on-highway distributor for Allison
Transmission and Detroit Diesel/Daimler Truck North America, providing parts, service and warranty on engines,
transmissions and related equipment in Arkansas, Colorado, Florida, Louisiana, New Mexico, New York, Oklahoma,
Texas, Wyoming, and the country of Colombia. The Company also provides similar service for off-highway use and
additionally has distributor rights for Deutz and Isuzu diesel engines. Off-highway applications are primarily surface
and underground mining equipment, including loaders, crawlers, crushers, power screens, pumps, cranes, generators,
and haul trucks, as well as equipment rental.
The Company is engaged in the overhaul and repair of diesel engines and generators, and related parts sales for
power generation customers. The Company is also engaged in the sale and distribution of diesel engine parts, engine
modifications, generator modifications, controls, governors and diesel generator packages to the nuclear industry.
The Company services users of diesel engines that provide emergency standby, peak and base load power generation.
The Company also sells power generation systems that are customized for specific applications and the rental of
power generation systems.
The Company has power generation operations throughout the United States providing in-house and in-field
repair capabilities and products for power generation applications. Through its Rocky Mount, North Carolina
operation, the Company serves as the exclusive worldwide distributor of EMD products to the nuclear industry, the
worldwide distributor for Woodward, Inc. products to the nuclear industry, the worldwide distributor of Cooper
Machinery Services (‘‘Cooper’’) products to the nuclear industry, and owns the assets and technology necessary to
support the Nordberg medium-speed diesel engines used in nuclear applications. In addition, the Rocky Mount
operation is an exclusive distributor for Norlake Manufacturing Company transformer products to the nuclear
industry, an exclusive distributor of Hannon Company generator and motor products to the nuclear industry, and a
non-exclusive distributor of analog Weschler Instruments metering products and an exclusive distributor of digital
Weschler metering products to the nuclear industry. The Company is also a non-exclusive distributor of Ingersoll
Rand air start equipment to the nuclear industry worldwide.
The Company sells pre-packaged and fabricated power generation systems for emergency, standby and auxiliary
power for commercial and industrial applications. The Company also offers rental generator systems from MTU,
Atlas Copco, and Multiquip from 50 to 2,000 kilowatts of power to a broad range of customers. The Company also
17
is engaged in the rental of industrial compressors, railcar movers and high capacity lift trucks. In addition, the
Company provides accessory products such as cables, hoses, fuel cells, air dryers, air compressor boosters and ground
heaters. Lastly, the Company is a dealer for Thermo King refrigeration systems for trucks, railroad cars and other land
transportation markets in Texas and Colorado.
Commercial and Industrial Customers
The results of the distribution and services industry are largely tied to the industries it serves and, therefore, are
influenced by the cycles of such industries. The Company’s major marine customers include inland and offshore
barge operators, oilfield service companies, offshore fishing companies, other marine transportation entities, the
United States government and large pleasure crafts. Since the marine business is linked to the relative health of the
inland towboat, offshore and coastal tugboat, harbor docking tugboat, offshore oilfield service, oil and gas drilling,
offshore commercial fishing industries, Great Lakes ore vessels, dredging vessels, coastal ferries, United States
government vessels and the pleasure craft industry, there is no assurance that its present gross revenues can be
maintained in the future.
The Company’s on-highway customers are long-haul and short-haul trucking companies, commercial and
industrial companies with truck fleets, buses owned by municipalities and private companies. Off-highway
companies include surface and underground mining operations with a large variety of equipment.
The Company’s power generation customers are domestic utilities and the worldwide nuclear power industry,
municipalities, universities, medical facilities, data centers, petrochemical plants, manufacturing facilities, shopping
malls, office complexes, residential and other industrial users.
The Company’s rental customers are primarily commercial and industrial companies, and residential customers
with short-term rental requirements.
Commercial and Industrial Competitive Conditions
The Company’s primary marine competitors are independent distribution and services companies and other
factory-authorized distributors, authorized service centers and authorized marine dealers. Certain operators of diesel
powered marine equipment also elect to maintain in-house service capabilities. While price is a major determinant
in the competitive process, reputation, consistent quality, expeditious service, experienced personnel, access to parts
inventories and market presence are also significant factors. A substantial portion of the Company’s business is
obtained by competitive bids. However, the Company has entered into service agreements with certain operators of
diesel powered marine equipment, providing such operators with one source of support and service for all of their
requirements at pre-negotiated prices.
The Company is one of a limited number of authorized resellers of EMD, Caterpillar, Cummins, Detroit Diesel,
John Deere, MTU and Volvo Penta parts. The Company is also the marine distributor for Falk, Lufkin and Twin Disc
reduction gears throughout the United States.
The Company’s primary power generation competitors are other independent diesel service companies and
manufacturers. While price is a major determinant in the competitive process, reputation, consistent quality,
expeditious service, experienced personnel, access to parts inventories and market presence are also significant
factors. A substantial portion of the Company’s business is obtained by competitive bids.
As noted above, the Company is the exclusive worldwide distributor of EMD, Cooper, Woodward, Nordberg,
Norlake and Hannon parts for the nuclear industry, and non-exclusive distributor of Weschler parts and Ingersoll
Rand air start equipment for the nuclear industry. Specific regulations relating to equipment used in nuclear power
generation require extensive testing and certification of replacement parts. OEM parts need to be properly tested and
certified for nuclear applications.
Oil and Gas Operations
The Company is engaged in the distribution and service of high-speed diesel engines, pumps and transmissions,
and the manufacture and remanufacture of oilfield service equipment. The oil and gas operations represented
approximately 26% of the segment’s 2020 revenues. The Company offers custom fabricated oilfield service
equipment, fully tested and field ready. The Company manufactures and remanufactures oilfield service equipment,
including pressure pumping units, nitrogen pumping units, cementers, hydration equipment, mud pumps and
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blenders, coil tubing, and well intervention equipment. The Company sells OEM replacement parts, and sells and
services diesel engines, pumps and transmissions, and offers in-house and in-field service capabilities. The Company
is the largest off-highway distributor for Allison Transmission and a major distributor for MTU in North America.
The Company’s manufacturing and remanufacturing facilities and service facilities are based in Houston, Texas
and Oklahoma City, Oklahoma, key oil and gas producing regions.
Oil and Gas Customers
The Company’s major oil and gas customers include large and mid-cap oilfield service providers, oil and gas
operators and producers. The Company has long standing relationships with most of its customers. Since the oil and
gas business is linked to the oilfield services industry, and oil and gas operators and producers, there is no assurance
that its present gross revenues can be maintained in the future. The results of the Company’s oil and gas distribution
and services operations are largely tied to the industries it serves and, therefore, are influenced by the cycles of such
industries.
Oil and Gas Competitive Conditions
The Company’s primary competitors are other oilfield equipment manufacturers and remanufacturers, and
equipment service companies. While price is a major determinant in the competitive process, equipment availability,
reputation, consistent quality, expeditious service, experienced personnel, access to parts inventories and market
presence are also significant factors. A substantial portion of the Company’s business is obtained by competitive bids.
Properties
The principal office of the distribution and services segment is located in Houston, Texas. There are 61 active
facilities in the distribution and services segment, of which 25 facilities are owned and 36 facilities are leased.
The oil and gas operation’s principal manufacturing facilities are located in Houston, Texas and Oklahoma City,
Oklahoma, with both facilities owned by the Company. The oil and gas focused operations have 17 parts and service
facilities, with one in Arkansas, two in Colorado, three in Louisiana, one in New Mexico, one in Oklahoma, eight in
Texas and one in Wyoming, with many of these facilities shared with the commercial and industrial operations.
The commercial and industrial businesses operate 42 parts and service facilities, with one facility in Alabama,
one in Connecticut, one in Colorado, 11 in Florida, one in Kentucky, two in Louisiana, one in Massachusetts, one
in Oklahoma, three in New Jersey, one in New York, one in North Carolina, 11 in Texas, one in Virginia, one in
Washington and five facilities located in Colombia, South America.
Human Capital
Employment. The Company has approximately 5,400 employees, the large majority of whom are in the
United States. The Company has approximately 150 general corporate employees.
The Company’s marine transportation segment has approximately 3,400 employees, of which approximately
2,700 are vessel crew members. None of the segment’s inland operations are subject to collective bargaining
agreements. The segment’s coastal operations include approximately 600 vessel employees some of which are subject
to collective bargaining agreements in certain geographic areas. Approximately 250 Kirby Offshore Marine vessel
crew members employed in the Atlantic Division are subject to a collective bargaining agreement with the Richmond
Terrace Bargaining Unit in effect through August 31, 2022. In addition, approximately 125 vessel crew members of
Penn Maritime Inc., a wholly owned subsidiary of Kirby Offshore Marine, are represented by the Seafarers
International Union under a collective bargaining agreement in effect through April 30, 2022.
The Company’s distribution and services segment has approximately 1,850 employees. None of the
to collective bargaining agreements.
United Holdings and Kirby Engine Systems operations are subject
Approximately 55 S&S employees in New Jersey are subject to a collective bargaining agreement with the Local
15C, International Union of Operating Engineers, AFL-CIO that expires in October 2023. The remaining S&S
employees are not subject to collective bargaining agreements.
Training, Development, and Promotions. Centralized training is provided through the Operations Personnel and
Training Department, which is charged with developing, conducting and maintaining training programs for the
benefit of all of the Company’s operating entities. It is also responsible for ensuring that training programs are both
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consistent and effective. For the marine business, the Company’s training facility includes state-of-the-art equipment
and instruction aids, including a full bridge wheelhouse simulator, a working towboat, two tank barges and a tank
barge simulator for tankermen training. During 2020, approximately 1,000 certificates were issued for the completion
of courses at the training facility, of which approximately 300 were USCG approved classes and the balance were
employee development and Company required classes, including leadership, communication and navigation courses.
The Company uses the Seaman’s Church Institute as an additional training resource for its wheelhouse crewmembers.
The marine segment provides a clear career progression for vessel personnel from entry level deckhand to captain
and regularly reviews promotions from one level to another.
In distribution and services, Company facilitates training courses via online courses and instructor-led classes
that cover a range of skill related topics generator knowledge, introduction to hydraulic systems, introduction to
electrical diagrams, introduction to transformers, and Electrical Generation Systems Association journeyman study,
as well as numerous courses led by our OEM partners. The distribution and services segment has multiple career
progressions within its numerous job groups.
In addition, the Company facilitates a number of training courses that cover a range of topics that increase skill
sets, increase productivity, and educate employees about safety and enhance team morale across both business
segments. Training classes include environmental, health, and safety classes, legal compliance classes and skills
related courses. Environmental, health, and safety topics include defensive and distracted driving, first aid basic and
medical emergencies, global safety principles, oil management, and hazardous substances training. Legal compliance
topics include anti-corruption training, cybersecurity awareness, business ethics, compliance, and promoting
diversity. Skill related topics include business writing, risk-based thinking, initiating and planning a project, and
transitioning into a project management role.
Succession Planning. Succession planning is a key responsibility of the CEO and Chief Human Resources
Officer. While the process is ongoing all year succession planning is reported annually to the Board of Directors.
Succession plans address all senior executive positions to ensure smooth transition and to facilitate ongoing
conversations related to promotion, and diversity and to address any potential talent gaps.
Culture and Engagement. The Company recognizes the importance of employee engagement and inclusion and
has implemented a regular process of surveying its employees to obtain their feedback on both what is working well
and areas of improvement. The main take-aways from the initial survey was that Company employees are committed
to safety, understand the Company’s strategic direction, and believe the Company’s overall focus is on the customer.
Employees voiced their desire to see more opportunity for community involvement and communication from senior
management. This feedback led to specific initiatives including an increased use of town halls both in person and
virtual and the establishment of an employee led community involvement committee for 2021. Another initiative
developed following the Company’s culture survey was the development of the Company’s core values. The core
values are a product of a cross functional team that used the employee responses from the culture survey to reflect
the common values of the Company. The core values are principles that are communicated and owned throughout
the organization.
Diversity. The Company has a diversity committee whose purpose is to continuously improve its diversity of
employees. In 2019 and 2020, committee initiatives included training to help increase awareness and drive inclusive
behaviors, identifying areas for improvement and providing oversight for hiring, promotions and mentoring as
needed.
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Information about the Company’s Executive Officers
The executive officers of the Company are as follows:
Name
Age
Positions and Offices
David W. Grzebinski
William G. Harvey
Christian G. O’Neil
Joseph H. Reniers
Dorman L. Strahan
Kim B. Clarke
Ronald A. Dragg
Eric S. Holcomb
Amy D. Husted
Scott P. Miller
Kurt A. Niemietz
William M. Woodruff
59
63
48
President and Chief Executive Officer
Executive Vice President and Chief Financial Officer
President – Kirby Inland Marine, Kirby Offshore Marine, and San Jac
Marine, LLC
President – Kirby Distribution & Services, Inc.
President – Kirby Engine Systems
46
64
65 Vice President and Chief Human Resources Officer
57 Vice President, Controller and Assistant Secretary
46 Vice President – Investor Relations
52 Vice President, General Counsel and Secretary
42 Vice President and Chief Information Officer
48 Vice President and Treasurer
60 Vice President – Public and Governmental Affairs
No family relationship exists among the executive officers or among the executive officers and the directors.
Officers are elected to hold office until the annual meeting of directors, which immediately follows the annual
meeting of stockholders, or until their respective successors are elected and have qualified.
David W. Grzebinski is a Chartered Financial Analyst and holds a Master of Business Administration degree
from Tulane University and a degree in chemical engineering from the University of South Florida. He has served
as President and Chief Executive Officer since April 2014. He served as President and Chief Operating Officer from
January 2014 to April 2014 and as Chief Financial Officer from March 2010 to April 2014. He served as Chairman
of Kirby Offshore Marine from February 2012 to April 2013 and served as Executive Vice President from
March 2010 to January 2014. Prior to joining the Company in February 2010, he served in various operational and
financial positions since 1988 with FMC Technologies Inc. (‘‘FMC’’), including Controller, Energy Services,
Treasurer, and Director of Global SAP and Industry Relations. Prior to joining FMC, he was employed by Dow
Chemical Company in manufacturing, engineering and financial roles.
William G. Harvey is a Chartered Financial Analyst and holds a Master of Business Administration degree from
the University of Toronto and a degree in mechanical engineering from Queens University. He has served as
Executive Vice President and Chief Financial Officer since February 2018. He served as Executive Vice President
– Finance from January 2018 to February 2018. Prior to joining the Company, Mr. Harvey served as Executive Vice
President and Chief Financial Officer of Walter Energy, Inc. from 2012 to 2017, Senior Vice President and
Chief Financial Officer of Resolute Forest Products Inc. (‘‘Resolute’’) from 2008 to 2011, and as Executive Vice
President and Chief Financial Officer of Bowater Inc., a predecessor company of Resolute, from 2004 to 2008.
Christian G. O’Neil holds a Master of Business Administration degree from Rice University, a doctorate of
jurisprudence from Tulane University and a bachelor of arts degree from Southern Methodist University. He has
served as President of Kirby Inland Marine and Kirby Offshore Marine since January 2018 and as President of
San Jac Marine, LLC since October 2018. He served as Executive Vice President and Chief Operating Officer of
Kirby Inland Marine and Kirby Offshore Marine from May 2016 to January 2018. He also served as Executive Vice
President – Commercial Operations of Kirby Inland Marine and Kirby Offshore Marine from April 2014 to
May 2016, Vice President – Human Resources of the Company from May 2012 to April 2014, Vice President – Sales
for Kirby Inland Marine from 2009 to 2012 and President of Osprey from 2006 through 2008. He has also served
in various sales and business development roles at the Company and Osprey. Prior to joining the Company, he served
as Sales Manager and Fleet Manager at Hollywood Marine, Inc. (‘‘Hollywood Marine’’) after joining Hollywood
Marine in 1997 which was subsequently merged into the predecessor of Kirby Inland Marine.
Joseph H. Reniers holds a Master of Business Administration degree from the University of Chicago Booth
School of Business and a degree in mechanical engineering from the United States Naval Academy. He has served
the Company as President – Kirby Distribution & Services, Inc. since September 2017. He served as Executive Vice
President – Diesel Engine Services and Supply Chain from May 2016 to September 2017, Senior Vice President –
Diesel Engine Services and Marine Facility Operations from February 2015 to May 2016, Vice President – Strategy
21
and Operational Service from April 2014 to February 2015, Vice President – Supply Chain from April 2012 to
April 2014 and Vice President – Human Resources from March 2010 to April 2012. Prior to joining the Company,
he was a management consultant with McKinsey & Company serving a wide variety of industrial clients. Prior to
joining McKinsey, he served as a nuclear power officer in the Navy.
Dorman L. Strahan attended Nicholls State University and has served the Company as President of Kirby Engine
Systems since May 1999, President of Marine Systems since 1986 and President of Engine Systems since 1996. After
joining the Company in 1982 in connection with the acquisition of Marine Systems, he served as Vice President of
Marine Systems until 1985.
Kim B. Clarke holds a Bachelor of Science degree from the University of Houston. She has served as
Vice President and Chief Human Resources Officer since October 2017. She served as Vice President – Human
Resources from December 2016 to October 2017. Prior to joining the Company, she served in senior leadership roles
in human resources, safety, information technology and business development as Senior Vice President and
Chief Administration Officer for Key Energy Services, Inc. from 2004 to March 2016.
Ronald A. Dragg is a Certified Public Accountant and holds a Master of Science in Accountancy degree from
the University of Houston and a degree in finance from Texas A&M University. He has served the Company as
Vice President, Controller and Assistant Secretary since April 2014. He also served as Vice President and Controller
from January 2007 to April 2014, as Controller from November 2002 to January 2007, Controller – Financial
Reporting from January 1999 to October 2002, and Assistant Controller – Financial Reporting from October 1996
to December 1998. Prior to joining the Company, he was employed by Baker Hughes Incorporated.
Eric S. Holcomb is a Certified Public Accountant and holds a Bachelor of Business Administration degree in
accounting from Southern Methodist University. He has served the Company as Vice President – Investor Relations
since December 2017. Prior to joining the Company, he was employed by Baker Hughes Incorporated from 2003 to
December 2017 serving in various roles including Investor Relations Director, Finance Director for North America
Land, Finance Director for North America Offshore and Finance Director for Canada.
Amy D. Husted holds a doctorate of jurisprudence from South Texas College of Law and a Bachelor of Science
degree in political science from the University of Houston. She has served the Company as Vice President, General
Counsel and Secretary since April 2019. She also served as Vice President and General Counsel from January 2017
to April 2019, Vice President – Legal from January 2008 to January 2017 and Corporate Counsel from
November 1999 through December 2007. Prior to joining the Company, she served as Corporate Counsel of
Hollywood Marine from 1996 to 1999 after joining Hollywood Marine in 1994.
Scott P. Miller holds a Bachelor of Science in Management of Information Systems from Louisiana State
University and a Master of Business Administration degree from the University of Houston. He has served as
Vice President and Chief Information Officer since April 2019. Prior to joining the Company, he was employed by
Key Energy Services, Inc. from May 2006 to March 2019, serving in various senior leadership roles including
Managing Director of Strategy, Vice President and Chief Information Officer from March 2013 to December 2015
and as Senior Vice President, Operations Services and Chief Administrative Officer from January 2016 to
March 2019.
Kurt A. Niemietz holds a Master of Business Administration degree from St. Mary’s University and a degree
in accounting from the University of Texas at San Antonio. He has served as Vice President and Treasurer since
April 2019. Prior to joining the Company, he was employed by Pacific Drilling from 2013 to 2019, serving in various
roles of increasing responsibility, including Treasurer from 2017 to 2019, and in various financial positions with
FMC, from 2006 to 2013. Prior to joining FMC, he was employed by Austin, Calvert & Flavin as a buy-side equity
analyst.
William M. Woodruff holds a doctorate of jurisprudence from the University of Houston Law Center and a
bachelor of science degree from Texas A&M University. He has served as Vice President – Public and Governmental
Affairs since October 2017. He served as Director – Public & Government Affairs from 2014 to October 2017 after
joining the Company as Director – Government Affairs in 2004. Prior to joining the Company, he was a maritime
lawyer in private practice and Vice President and General Counsel of Coastal Towing, Inc.
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Item 1A. Risk Factors
The following risk factors should be considered carefully when evaluating the Company, as its businesses,
results of operations, or financial condition could be materially adversely affected by any of these risks.
The following discussion does not attempt to cover factors, such as trends in the United States and global economies
or the level of interest rates, among others, that are likely to affect most businesses.
Marine Transportation Segment Risk Factors
The Inland Waterway infrastructure is aging and may result in increased costs and disruptions to the Company’s
marine transportation segment. Maintenance of the United States inland waterway system is vital to the Company’s
operations. The system is composed of over 12,000 miles of commercially navigable waterway, supported by over
240 locks and dams designed to provide flood control, maintain pool levels of water in certain areas of the country
and facilitate navigation on the inland river system. The United States inland waterway infrastructure is aging, with
more than half of the locks over 50 years old. As a result, due to the age of the locks, scheduled and unscheduled
maintenance outages may be more frequent in nature, resulting in delays and additional operating expenses. One-half
of the cost of new construction and major rehabilitation of locks and dams is paid by marine transportation companies
through a 29 cent per gallon diesel fuel tax and the remaining 50% of waterway infrastructure and improvement is
paid from general federal tax revenues. Failure of the federal government to adequately fund infrastructure
maintenance and improvements in the future would have a negative impact on the Company’s ability to deliver
products for its customers on a timely basis. In addition, any additional user taxes that may be imposed in the future
to fund infrastructure improvements would increase the Company’s operating expenses.
The Company could be adversely impacted by a marine accident or spill event. A marine accident or spill event
could close a portion of the inland waterway system or a coastal area of the United States for an extended period of
time. Although statistically marine transportation is the safest means of surface transportation of bulk commodities,
accidents do occur, both involving Company equipment and equipment owned by other marine operators.
The Company transports a wide variety of petrochemicals, black oil, refined petroleum products and agricultural
chemicals throughout the Mississippi River System, on the Gulf Intracoastal Waterway, coastwise along all three
United States coasts and in Alaska and Hawaii. The Company manages its exposure to losses from potential
unauthorized discharges of pollutants through the use of well-maintained and equipped tank barges and towing
vessels, through safety, training and environmental programs, and through the Company’s insurance program, but a
discharge of pollutants by the Company could have an adverse effect on the Company. Risks may arise for which the
Company may not be insured. Claims covered by insurance are subject to deductibles, the aggregate amount of which
could be material, and certain policies impose limitations on coverage. Existing insurance coverage may not be able
to be renewed at commercially reasonable rates or coverage capacity for certain risks may not be available or
adequate to cover future claims. If a loss occurs that is partially or completely uninsured, or the carrier is unable or
unwilling to cover the claim, the Company could be exposed to liability.
The Company’s marine transportation segment is dependent on its ability to adequately crew its towing vessels.
The Company’s vessels are crewed with employees who are licensed or certified by the USCG, including its captains,
pilots, engineers and tankermen. The success of the Company’s marine transportation segment is dependent on the
Company’s ability to adequately crew its vessels. As a result, the Company invests significant resources in training
its crews and providing crew members an opportunity to advance from a deckhand to the captain of a Company
towboat or tugboat. Inland crew members generally work rotations such as 20 days on, 10 days off rotation, or a
30 days on, 15 days off rotation. For the coastal fleet, crew members are generally required to work rotations such
as 14 days on, 14 days off rotation, a 21 days on, 21 days off rotation or a 30 days on, 30 days off rotation, dependent
upon the location. The nature of crewmember work schedules and assignments away from home for extended periods
require special recruiting and at times it can be difficult to find candidates. With ongoing retirements and competitive
labor pressure in the marine transportation segment, the Company continues to monitor and implement market
competitive pay practices. The Company also utilizes an internal development program to train Maritime Academy
graduates for vessel leadership positions.
The Company’s marine transportation segment has approximately 3,400 employees, of which approximately
2,700 are vessel crew members. None of the segment’s inland operations are subject to collective bargaining
agreements. The segment’s coastal operations include approximately 600 vessel employees, of whom approximately
375 are subject to collective bargaining agreements in certain geographic areas. Any work stoppages or labor disputes
could adversely affect coastal operations in those areas. To date, the Company has been able to manage crewing of
23
its vessels despite the COVID-19 pandemic, with only minimal vessel delays and disruption of services, but with
some loss of revenue which have primarily impacted our offshore vessels. The Company continues to update its
processes relating to management of COVID-19 and provide related employee education as new information and
guidance becomes available.
The Company’s marine transportation segment is subject to the Jones Act. The Company’s marine transportation
segment competes principally in markets subject to the Jones Act, a federal cabotage law that restricts domestic
marine transportation in the United States to vessels built and registered in the United States, and manned, owned
and operated by United States citizens. The Company presently meets all of the requirements of the Jones Act for
its owned and operated vessels. The loss of Jones Act status could have a significant negative effect on the Company.
The requirements that the Company’s vessels be United States built and manned by United States citizens, the
crewing requirements and material requirements of the USCG, and the application of United States labor and tax laws
increases the cost of United States flagged vessels compared to comparable foreign flagged vessels. The Company’s
business could be adversely affected if the Jones Act or international trade agreements or laws were to be modified
or waived as to permit foreign flagged vessels to operate in the United States as these vessels are not subject to the
same United States government imposed regulations, laws, and restrictions. Since the events of September 11, 2001,
the United States government has taken steps to increase security of United States ports, coastal waters and inland
waterways. The Company believes that it is unlikely that the current cabotage provisions of the Jones Act would be
eliminated or significantly modified in a way that has a material adverse impact on the Company in the foreseeable
future.
The Secretary of Homeland Security is vested with the authority and discretion to waive the Jones Act to such
extent and upon such terms as the Secretary may prescribe whenever the Secretary deems that such action is
necessary in the interest of national defense. On September 8, 2017, following Hurricanes Harvey and Irma, the
Department of Homeland Security issued a waiver of the Jones Act for a 7-day period for shipments from New York,
Pennsylvania, Texas and Louisiana to South Carolina, Georgia, Florida and Puerto Rico. The waiver was specifically
tailored to address the transportation of refined petroleum products due to disruptions in hurricane-affected areas.
On September 11, 2017, the waiver was extended for 11 days and expanded to include additional states. Following
Hurricane Maria, on September 28, 2017, the Department of Homeland Security issued a waiver of the Jones Act for
movement of products shipped from United States coastwise points to Puerto Rico through October 18, 2017.
Waivers of the Jones Act, whether in response to natural disasters or otherwise, could result in increased competition
from foreign tank vessel operators, which could negatively impact the marine transportation segment.
The Company’s marine transportation segment is subject to extensive regulation by the USCG, federal laws,
other federal agencies, various state laws and certain international conventions, as well as numerous environmental
regulations. The majority of the Company’s vessels are subject to inspection by the USCG and carry certificates of
inspection. The crews employed by the Company aboard vessels are licensed or certified by the USCG. The Company
is required by various governmental agencies to obtain licenses, certificates and permits for its owned and operated
vessels. The Company’s operations are also affected by various United States and state regulations and legislation
enacted for protection of the environment. The Company incurs significant expenses and capital expenditures to
comply with applicable laws and regulations and any significant new regulation or legislation, including climate
change laws or regulations, could have an adverse effect on the Company.
The Company’s marine transportation segment is subject to natural gas and crude oil prices as well as the
volatility of their prices as well as the volatility in production of refined products and petrochemicals in the
United States. For 2020, 52% of the marine transportation segment’s revenues were from the movement of
petrochemicals, including the movement of raw materials and feedstocks from one refinery or petrochemical plant
to another, as well as the movement of more finished products to end users and terminals for export. During 2020,
petrochemical and refined products volumes decreased relative to 2019 and 2018, as a result of reduced demand due
to the COVID-19 pandemic and petrochemical and refinery plant shutdowns. However,
the United States
petrochemical industry continues to benefit from a low-cost domestically produced natural gas feedstock advantage,
producing strong volumes of raw materials and intermediate products for transportation between Gulf Coast
petrochemical plants and the transportation of more finished products to terminals for both domestic consumers and
for export destinations. In addition, approximately seven new United States petrochemical projects, including
expansion of existing plants or new plants, are scheduled to be completed during 2021, which should provide
24
additional movements for the marine transportation segment. Higher natural gas and crude oil prices are generally
better for the Company’s businesses, however higher natural gas prices and other factors could negatively impact the
United States petrochemical industry and its production volumes, which could negatively impact the Company.
Demand for tank barge transportation services is driven by the production of volumes of the bulk liquid
commodities such as petrochemicals, black oil and refined petroleum products that the Company transports by tank
barge. This production can depend on the prevailing level of natural gas and crude oil prices, as well as the volatility
of their prices. In general, lower energy prices are good for the United States economy and typically translate into
increased petrochemical and refined product demand and therefore increased demand for tank barge transportation
services. However, during 2016 and 2017 lower crude oil prices resulted in a decline in domestic crude oil and natural
gas condensate production and reduced volumes to be transported by tank barge. The Company estimates that at the
beginning of 2015 there were approximately 550 inland tank barges and 35 coastal tank barges in the 195,000 barrels
or less category transporting crude oil and natural gas condensate. At the end of 2016, the Company estimated that
approximately 140 inland tank barges and approximately 10 coastal tank barges in the 195,000 barrels or less
category were transporting such products, a reduction of approximately 410 inland tank barges and 25 coastal tank
barges that moved into other markets. At the end of 2017, the Company estimated that approximately 250 inland tank
barges and approximately three coastal tank barges were transporting crude and natural gas condensate. At the end
of 2018, the Company estimates that approximately 375 inland tank barges and approximately three coastal tank
barges were transporting crude and natural gas condensate. As of the end of 2019, the Company estimates that
approximately 335 inland tank barges and approximately five coastal tank barges were transporting crude and natural
gas condensate. During 2020, the COVID-19 pandemic and oil price volatility resulted in a sharp decrease in volumes
of crude and natural gas condensate being transported. As of the end of 2020, the Company estimates that
approximately 100 to 150 inland tank barges and one coastal tank barge were transporting crude and natural gas
condensate. Volatility in the price of natural gas and crude oil can also result in heightened uncertainty which may
lead to decreased production and delays in new petrochemical and refinery plant construction. Increased competition
for available black oil and petrochemical barge moves caused by reduced crude oil and natural gas condensate
production could have an adverse impact on the Company’s marine transportation segment including as a result of
lower spot and term contract rates and/or reluctance to enter into or extend term contracts.
The Company’s marine transportation segment could be adversely impacted by the construction of tank barges
by its competitors. At the present time, there are an estimated 4,000 inland tank barges in the United States, of which
the Company operates 1,066, or 27%. The number of tank barges peaked at an estimated 4,200 in 1982, slowly
declined to 2,750 by 2003, and then gradually increased to an estimated 3,850 by the end of 2015 and 2016 and
remained relatively flat since 2015. For 2018, the Company estimated that industry-wide 75 new tank barges were
placed in service, of which one was by the Company, and 100 tank barges were retired, 48 of which were by the
Company. For 2019, the Company estimated that industry-wide 150 new tank barges were placed in service, of which
none were by the Company, and 100 tank barges were retired, 17 of which were by the Company. For 2020, the
Company estimated that industry-wide approximately 150 new tank barges were placed in service, six of which were
purchased by the Company from another operator, and approximately 150 tank barges were retired, 95 of which were
by the Company. The increase for 2015 reflected the improved demand for inland petrochemical, refined petroleum
products and black oil barges experienced in 2014 and federal tax incentives on new equipment. The decrease in the
number of tank barges at the end of 2018 was primarily due to continued industry-wide tank barge retirements and
minimal new tank barge construction. The Company estimates that approximately 35 new tank barges have been
ordered during 2020 for delivery in 2021 and expects many older tank barges, including an expected 26 by the
Company, will be retired, dependent on 2021 market conditions.
The long-term risk of an oversupply of inland tank barges may be mitigated by the fact that the inland tank barge
industry has approximately 350 tank barges that are over 30 years old and approximately 260 of those over 40 years
old. Given the age profile of the industry inland tank barge fleet and extensive customer vetting standards, the
expectation is that older tank barges will continue to be removed from service and replaced by new tank barges as
needed, with the extent of both retirements and new builds dependent on petrochemical and refinery production levels
and crude oil and natural gas condensate movements, both of which can have a direct effect on industry-wide tank
barge utilization, as well as term and spot contract rates.
During 2018, 2019, and 2020, a decline in industry-wide demand for the movement of crude oil and natural gas
condensate transportation volumes increased available capacity and resulted in some reluctance among certain
25
customers to extend term contracts, which led to an increase in the number of coastal vessels operating in the spot
market. In addition, the Company and the industry added new coastal tank barge capacity during 2018, 2019, and
2020. Much of this new capacity is replacement capacity for older vessels anticipated to be retired.
The Company estimates there are approximately 280 tank barges operating in the 195,000 barrels or less coastal
industry fleet, the sector of the market in which the Company operates, and approximately 20 of those are over
25 years old. In June 2018, the Company purchased a 155,000 barrel coastal ATB under construction from another
operator that was delivered to the Company in the 2018 fourth quarter. The Company is aware of three coastal ATBs
placed in service in 2018, two in 2019, and one in 2020 by competitors. There is currently one announced small
specialized coastal ATB under construction by a competitor for delivery in 2021.
Higher fuel prices could increase operating expenses and fuel price volatility could reduce profitability. The cost
of fuel during 2020 was approximately 6% of marine transportation revenue. All of the Company’s marine
transportation term contracts contain fuel escalation clauses, or the customer pays for the fuel. However, there is
generally a 30 to 90 day delay before contracts are adjusted depending on the specific contract. In general, the fuel
escalation clauses are effective over the long-term in allowing the Company to adjust to changes in fuel costs due
to fuel price changes; however, the short-term effectiveness of the fuel escalation clauses can be affected by a number
of factors including, but not limited to, specific terms of the fuel escalation formulas, fuel price volatility, navigating
conditions, tow sizes, trip routing, and the location of loading and discharge ports that may result in the Company
over or under recovering its fuel costs. The Company’s spot contract rates generally reflect current fuel prices at the
time the contract is signed but do not have escalators for fuel.
Significant increases in the construction cost of tank barges and towing vessels may limit the Company’s ability
to earn an adequate return on its investment in new tank barges and towing vessels. The price of steel, economic
conditions, and supply and demand dynamics can significantly impact the construction cost of new tank barges and
towing vessels. Over the last 20 years, the Company’s average construction price for a new 30,000 barrel capacity
inland tank barge has fluctuated up or down significantly. For example, the average construction price for a new
30,000 barrel capacity tank barge in 2009 was approximately 90% higher than in 2000, with increases primarily
related to higher steel costs. During 2009, the United States and global recession negatively impacted demand levels
for inland tank barges and as a result, the construction price of inland tank barges fell significantly in 2010, primarily
due to a significant decrease in steel prices, as well as a decrease in the number of tank barges ordered. In 2018
through 2020, increases in steel costs and improvement in supply and demand dynamics resulted in construction
prices for a new 30,000 barrel tank barge increasing compared to prices in 2017 when there was an industry-wide
over-capacity of inland tank barges in the market.
The Company’s marine transportation segment could be adversely impacted by the failure of the Company’s
shipyard vendors to deliver new vessels according to contractually agreed delivery schedules and terms.
The Company contracts with shipyards to build new vessels and currently has many vessels under construction.
Construction projects are subject to risks of delay and cost overruns, resulting from shortages of equipment, materials
and skilled labor; lack of shipyard availability; unforeseen design and engineering problems; work stoppages;
weather interference; unanticipated cost increases; unscheduled delays in the delivery of material and equipment; and
financial and other difficulties at shipyards including labor disputes, shipyard insolvency and inability to obtain
necessary certifications and approvals. A significant delay in the construction of new vessels or a shipyard’s inability
to perform under the construction contract could negatively impact the Company’s ability to fulfill contract
commitments and to realize timely revenues with respect to vessels under construction. Significant cost overruns or
delays for vessels under construction could also adversely affect the Company’s financial condition, results of
operations and cash flows. To date, the Company has not experienced significant shipyard delays associated with the
COVID-19 pandemic, including at its subsidiary, San Jac.
The Company is subject to competition in its marine transportation segment. The inland and coastal tank barge
industry remains very fragmented and competitive. The Company’s primary competitors are noncaptive inland tank
barge operators and coastal operators. The Company also competes with companies who operate refined product and
petrochemical pipelines, railroad tank cars and tractor-trailer tank trucks. Increased competition from any significant
expansion of or additions to facilities or equipment by the Company’s competitors could have a negative impact on
the Company’s results of operations. In addition, the Company’s failure to adhere to its safety, reliability and
performance standards may impact its ability to retain current customers or attract new customers.
26
Distribution and Services Segment Risk Factors
The Company’s distribution and services segment could be adversely impacted by future legislation, executive
or other governmental orders, or additional regulation of oil and gas extraction, including hydraulic fracturing
practices. The Company, through its United and S&S subsidiaries, is a distributor and service provider of engine and
transmission related products for the oil and gas services, power generation and transportation industries, and a
manufacturer of oilfield service equipment, including pressure pumping units. The EPA is studying hydraulic
fracturing practices, and legislation may be enacted by Congress that would authorize the EPA to impose additional
regulations on hydraulic fracturing. In addition, a number of states have adopted or are evaluating the adoption of
legislation or regulations governing hydraulic fracturing or byproducts of the fracturing process. In January 2021, the
Secretary of the Interior ordered a 60-day pause on issuing new drilling permits and new leases on federal lands in
response to a related executive order issued by President Biden, and it is uncertain what further action may be taken.
Such federal or state legislation, executive or governmental orders, and/or regulations could materially impact
customers’ operations and greatly reduce or eliminate demand for the Company’s pressure pumping fracturing
equipment and related products. The Company is unable to predict whether future legislation or any other regulations
will ultimately be enacted and, if so, the impact on the Company’s distribution and services segment.
The Company’s distribution and services segment could be adversely impacted by the construction of pressure
pumping units by its competitors. In early 2015, an estimated 21.0 million horsepower of pressure pumping units
were working, or available to work, in North America. By late 2016, the working horsepower in North America had
declined to an estimated 6.0 million, with an estimated 2.0 million horsepower scrapped, an estimated 2.0 million
horsepower available for work and an estimated 12.5 million horsepower stacked, the large majority of which would
require major service before being placed back in service. A significant drop in demand due to the low price of crude
oil resulted in an oversupply in the pressure pumping market and negatively impacted the Company’s 2015 and 2016
results of operations. During 2017 and 2018, with the stabilization of crude oil prices in the $40 to $70 per barrel
range, the United States land rig count improved and service intensity in the well completion business increased. As a
result, the Company experienced a healthy rebound in service demand during 2018, particularly with pressure
pumping unit remanufacturing and transmission overhauls, and with the acquisition of S&S in September 2017, the
manufacture of oilfield service equipment, including pressure pumping units, and the sale of transmissions. At the end
of 2019, an estimated 15.0 million horsepower of pressure pumping units were working in North America, with an
estimated 6.0 million horsepower available to work, and 3.0 million horsepower stacked and in need of major repair.
During 2020, a significant reduction in oilfield activity as a result of oil price volatility throughout 2019 and 2020
and the COVID-19 pandemic resulted in a decrease to an estimated 6.0 million horsepower of pressure pumping units
working in North America, with an estimated 1.5 million horsepower available to work, and 12.0 million horsepower
stacked and in need of major repair. Increased expansion of, or additions to, facilities or equipment by the Company’s
competitors could have a negative impact on the Company’s results of operations.
Prevailing natural gas and crude oil prices, as well as the volatility of their prices, could have an adverse effect
on the distribution and services segment business. Lower energy prices generally result in a decrease in the number
of oil and gas wells being drilled. Oilfield service companies reduce their capital spending, resulting in decreased
demand for new parts and equipment, including pressure pumping units, provided by the Company’s distribution and
services segment. This may also lead to order cancellations from customers or customers requesting to delay delivery
of new equipment. The Company also services offshore supply vessels and offshore drillings rigs operating in the
Gulf of Mexico, as well as internationally. Low energy prices may negatively impact the number of wells drilled in
the Gulf of Mexico and international waters. Prolonged downturns in oil and gas prices may cause substantial
declines in oilfield service and exploration expenditures and could adversely impact oil and gas manufacturing,
remanufacturing, parts and distribution business. In addition, energy price volatility may also result in difficulties in
the Company’s ability to ramp up and ramp down production on a timely basis and, therefore, could result in an
adverse impact on the Company’s distribution and services segment.
The Company is subject to competition in its distribution and services segment. The distribution and services
industry is very competitive. The segment’s oil and gas market’s principal competitors are independent distribution
and service and oilfield manufacturing companies and other factory-authorized distributors and service centers.
In addition, certain oilfield service companies that are customers of the Company also manufacture and service a
portion of their own oilfield equipment. Increased competition in the distribution and services industry and continued
low price of natural gas, crude oil or natural gas condensate, and resulting decline in drilling for such natural
resources in North American shale formations, could result in less oilfield equipment being manufactured and
remanufactured, lower rates for service and parts pricing and result in less manufacturing, remanufacturing, service
27
and repair opportunities and parts sales for the Company. For the commercial and industrial market, the segment’s
primary marine diesel competitors are independent diesel services companies and other factory-authorized
distributors, authorized service centers and authorized marine dealers. Certain operators of diesel powered marine
equipment also elect to maintain in-house service capabilities. For power generation, the primary competitors are
other independent service companies.
Loss of a distributorship or other significant business relationship could adversely affect the Company’s
distribution and services segment. The Company’s distribution and services segment has had a relationship with
EMD, the largest manufacturer of medium-speed diesel engines, for over 50 years. The Company, through Kirby
Engine Systems, serves as both an EMD distributor and service center for select markets and locations for both
service and parts. With the acquisition of S&S in September 2017, the Company added additional EMD exclusive
distributorship rights in key states, primarily through the Central, South and Eastern areas of the United States. With
the S&S acquisition, the Company became the United States distributor for EMD marine and power generation
applications. Sales and service of EMD products account for approximately 4% of the Company’s revenues for 2020.
Although the Company considers its relationship with EMD to be strong, the loss of the EMD distributorship and
service rights, or a disruption of the supply of EMD parts, could have a negative impact on the Company’s ability
to service its customers. In 2020, with the acquisition of Convoy Servicing Company and Agility Fleet Services, LLC,
the Company expanded its dealership network of Thermo King refrigeration systems for trucks, railroad cars, and
other land transportation markets in Texas and Colorado. In 2020, sales and service of Thermo King products
comprised approximately 5% of the Company’s revenues.
United and S&S have maintained continuous exclusive distribution rights for MTU and Allison since the 1940s.
United and S&S are two of MTU’s top five distributors of off-highway engines in North America, with exclusive
distribution rights in multiple states. In addition, as distributors of Allison products, United and S&S have exclusive
distribution rights in multiple key growth states. United and S&S are also the distributor for parts, service and
warranty on Daimler truck engines and related equipment in multiple states. Sales and service of MTU, Allison, and
Daimler products accounted for approximately 8% of the Company’s revenues during 2020. Although the Company
considers its relationships with MTU, Allison, and Daimler to be strong, the loss of MTU, Allison, or Daimler
distributorships and service rights, or a disruption of the supply of MTU or Allison parts, could have a negative
impact on the Company’s ability to service its customers.
In addition to its relationships with MTU, Allison, and Daimler, the Company also has relationships with many
other distributors and parts suppliers and the loss of a distributorship and service rights, or a disruption of the supply
of parts from any of these other distributors or part suppliers could also have a negative impact on the Company’s
ability to service its customers.
General Risk Factors
The Company is subject to adverse weather conditions in its marine transportation and distribution and services
segments. The Company’s marine transportation segment is subject to weather condition volatility. Adverse weather
conditions such as high or low water on the inland waterway systems, fog and ice, tropical storms, hurricanes, and
tsunamis on both the inland waterway systems and throughout the United States coastal waters can impair the
operating efficiencies of the marine fleet. Such adverse weather conditions can cause a delay, diversion or
postponement of shipments of products and are totally beyond the control of the Company. Tropical storms and
hurricanes may also impact the Company’s customers resulting in reduced demand for the Company’s services.
In addition, adverse water and weather conditions can negatively affect a towing vessel’s performance, tow size,
loading drafts, fleet efficiency, limit navigation periods and dictate horsepower requirements. The Company’s
distribution and services segment is also subject to tropical storms and hurricanes impacting its coastal locations and
those of its customers as well as tornadoes impacting its Oklahoma facilities. The risk of flooding as a result of
hurricanes and tropical storms as well as other weather events may impede travel via roadways, suspend service
work, and impact deliveries and the Company’s ability to fulfill orders or provide services in the distribution and
services segment.
The Company may be unable to make attractive acquisitions or successfully integrate acquired businesses, and
any inability to do so may adversely affect the Company’s business and hinder its ability to grow. The Company has
made asset and business acquisitions in the past and may continue to make acquisitions of assets or businesses in the
future that complement or expand the Company’s current business. The Company may not be able to identify
attractive acquisition opportunities. Even if attractive acquisition opportunities are identified, the Company may not
28
be able to complete the acquisition or do so on commercially acceptable terms. The success of any completed
acquisition depends on the Company’s ability to integrate the acquired assets or business effectively into the
Company’s existing operations. The process of integrating acquired assets or businesses may involve difficulties that
require a disproportionate amount of the Company’s managerial and financial resources to resolve. The value of
acquired assets or businesses may be negatively impacted by a variety of circumstances unknown to the Company
prior to the acquisition. In addition, possible future acquisitions may be larger and for purchase prices significantly
higher than those paid for earlier acquisitions. No assurance can be given that the Company will be able to identify
additional suitable acquisition opportunities, negotiate acceptable terms, obtain financing for acquisitions on
acceptable terms or successfully acquire identified targets. The Company’s failure to achieve synergies, to integrate
successfully the acquired businesses and assets into the Company’s existing operations, or to minimize any
unforeseen operational difficulties could have a material adverse effect on the Company’s business, financial
condition, and results of operations. In addition, agreements governing the Company’s indebtedness from time to
time may impose certain limitations on the Company’s ability to undertake acquisitions or make investments or may
limit the Company’s ability to incur certain indebtedness and liens, which could limit the Company’s ability to make
acquisitions.
The Company’s failure to comply with the Foreign Corrupt Practices Act (‘‘FCPA’’), or similar local applicable
anti-bribery laws, could have a negative impact on its ongoing operations. The Company’s operations outside the
United States require the Company to comply with both a number of United States and international regulations.
For example, in addition to any similar applicable local anti-bribery laws, its operations in countries outside the
United States are subject to the FCPA, which prohibits United States companies or their employees and third party
representatives from providing anything of value to a foreign official for the purposes of influencing any act or
decision of these individuals in their official capacity to help obtain or retain business, direct business to any person
or corporate entity, or obtain any unfair advantage. The Company has internal control policies and procedures and
has implemented training and compliance programs for its employees and third party representatives with respect to
the FCPA. However, the Company’s policies, procedures and programs may not always protect it from reckless or
criminal acts committed by its employees or third party representatives, and severe criminal or civil sanctions could
be the result of violations of the FCPA or any other applicable anti-bribery law in countries where the Company does
business. The Company is also subject to the risks that its employees, joint venture partners, and third party
representatives outside of the United States may fail to comply with other applicable laws.
The Company is subject
to risks associated with possible climate change legislation, regulation and
international accords. Greenhouse gas emissions, including carbon emissions or energy use, have increasingly
become the subject of a large amount of international, national, regional, state and local attention. Pursuant to an
April 2007 decision of the United States Supreme Court, the EPA was required to consider if carbon dioxide was a
pollutant that endangers public health. On December 7, 2009, the EPA issued its ‘‘endangerment finding’’ regarding
greenhouse gasses under the CAA. The EPA found that the emission of six greenhouse gases, including carbon
dioxide (which is emitted from the combustion of fossil fuels), may reasonably be anticipated to endanger public
health and welfare. Based on this finding, the EPA defined the mix of these six greenhouse gases to be ‘‘air pollution’’
subject to regulation under the CAA. Although the EPA has stated a preference that greenhouse gas regulation be
based on new federal legislation rather than the existing CAA, many sources of greenhouse gas emissions may be
regulated without the need for further legislation.
The United States Congress has considered in the past legislation that would create an economy-wide
‘‘cap-and-trade’’ system that would establish a limit (or cap) on overall greenhouse gas emissions and create a market
for the purchase and sale of emissions permits or ‘‘allowances.’’ Any proposed cap-and-trade legislation would likely
affect the chemical industry due to anticipated increases in energy costs as fuel providers pass on the cost of the
emissions allowances, which they would be required to obtain under cap-and-trade to cover the emissions from fuel
production and the eventual use of fuel by the Company or its energy suppliers. In addition, cap-and-trade proposals
would likely increase the cost of energy, including purchases of diesel fuel, steam and electricity, and certain raw
materials used or transported by the Company. Proposed domestic and international cap-and-trade systems could
materially increase raw material and operating costs of the Company’s customer base. Future environmental
regulatory developments related to climate change in the United States that restrict emissions of greenhouse gases
could result in financial impacts on the Company’s operations that cannot be predicted with certainty at this time.
In addition, current global trends incorporating carbon neutral policies and reduction in greenhouse gas
emissions are driving decarbonization initiatives across all industries to mitigate the impact on climate change and
29
may result in a decline in global and U.S. hydrocarbon usage. Such a decline in hydrocarbon usage (for example, as
a result of an increase in electric vehicles) could result in a reduction in demand for (a) the Company’s services in
its marine transportation segment to the extent there is reduced demand for crude oil and other feedstocks used and
the products produced by the Company’s major refining customers and (b) for the Company’s products and services
in its distribution and services segment to the extent there is reduced demand in the exploration and production of
hydrocarbons by the Company’s oil and gas customers.
Loss of a large customer could adversely affect the Company. Five marine transportation customers accounted
for approximately 18% of the Company’s 2020, 19% of 2019 and 18% of 2018 revenue. The Company has contracts
with these customers expiring in 2021 through 2026. Three distribution and services customers accounted for
approximately 3% of the Company’s 2020 revenue, 12% of 2019 revenue, and 13% of 2018 revenue. Although the
Company considers its relationships with these companies to be strong, the loss of any of these customers, or their
inability to meet financial obligations, could have an adverse effect on the Company.
The Company relies on critical operating assets including information systems for the operation of its
businesses, and the failure of such assets or any critical information system, including as a result of natural disasters,
terrorist acts, a cyber-security attack, or other extraordinary events, may adversely impact
its businesses.
The Company is dependent on its critical operating assets and technology infrastructure and must maintain and rely
upon critical information systems and security of its assets for the effective and safe operation of its businesses. These
assets include vessels, vessel equipment, property and facilities, as well as information systems, such as software
applications, hardware equipment, and data networks and telecommunications.
The Company’s critical assets and information systems,
including the Company’s proprietary vessel
management computer system, are subject to damage or interruption from a number of potential sources, including
but not limited to, natural disasters, terrorist acts, cyber-security attacks, software viruses, and power failures.
In addition to standard safety operating procedures, the Company has implemented measures such as business
continuity plans, hurricane preparedness plans, emergency recovery processes, and security preparedness plans to
protect physical assets and to recover from damage to such assets. The Company has also implemented virus
protection software, intrusion detection systems and annual attack and penetration audits to protect information
systems to mitigate these risks. However, the Company cannot guarantee that its critical assets or information systems
cannot be damaged or compromised.
Any damage or compromise of its critical assets or data security or its inability to use or access these critical
assets and information systems could adversely impact the efficient and safe operation of its businesses, or result in
the failure to safely operate its equipment, and maintain the confidentiality of data of its customers or its employees
and could subject the Company to increased operating expenses or legal action, which could have an adverse effect
on the Company.
A deterioration of the Company’s credit profile, disruptions of the credit markets or higher interest rates could
restrict its ability to access the debt capital markets or increase the cost of debt. Deterioration in the Company’s credit
profile may have an adverse effect on the Company’s ability to access the private or public debt markets and also may
increase its borrowing costs. If the Company’s credit profile deteriorates significantly its access to the debt capital
markets or its ability to renew its committed lines of credit may become restricted, its cost of debt may increase, or
the Company may not be able to refinance debt at the same levels or on the same terms. Because the Company relies
on its ability to draw on its Revolving Credit Facility to support its operations as needed, any volatility in the credit
and financial markets that prevents the Company from accessing funds on acceptable terms could have an adverse
effect on the Company’s financial condition and cash flows. Additionally, the pricing grids on Company’s Revolving
Credit Facility and Term Loan contain a ratings grid that includes a possible increase in borrowing rates if the
Company’s rating declines. Furthermore, the Company incurs interest under its Revolving Credit Facility based on
floating rates. Floating rate debt creates higher debt service requirements if market interest rates increase, which
would adversely affect the Company’s cash flow and results of operations. In addition, as the floating rate on certain
borrowings under the Revolving Credit Facility is tied to LIBOR, the uncertainty regarding the future of LIBOR as
well as the transition from LIBOR to an alternate benchmark rate or rates could adversely affect the Company’s
financing costs.
Continuing widespread health developments and economic uncertainty resulting from the recent global
COVID-19 pandemic could materially and adversely affect our business,
financial condition and results of
operations. In December 2019, COVID-19 surfaced in Wuhan, China. In response to the resulting pandemic, various
30
countries, including the United States, either mandated or recommended business closures, travel restrictions or
limitations, social distancing, and/or self-quarantine, among other actions. Additionally, various state and local
governments in locations where the Company operates took similar actions. The full impact and duration of the
outbreak is still unknown and the situation continues to evolve. Many governments are in various stages of removing
or easing these actions. In some cases, governments have reinstated actions or slowed reopenings and they may
impose new actions in an effort to reduce or manage current or anticipated levels of infection. The full extent and
duration of these impacts is unknown at this time, but there has been and continues to be a negative impact on the
global and United States economies, including the oil and gas industry, which has reduced demand for the Company’s
products and services.
These impacts could continue to place limitations on the Company’s ability to execute on its business plan and
materially and adversely affect its business, financial condition and results of operations. The Company continues to
monitor the situation, actively implemented policies and procedures to address the situation, including its pandemic
response plan and business continuity plan, and took steps to reduce costs. As the pandemic continues to further
unfold,
its current policies and procedures as government mandates or
recommendations change or as more information and guidance become available. The impact of the COVID-19
pandemic may also exacerbate other risks discussed above, any of which could have a material effect on the
Company. This situation is changing rapidly and additional impacts may arise that the Company is not aware of
currently.
the Company may further adjust
Item 1B. Unresolved Staff Comments
Not applicable.
Item 2.
Properties
The information appearing in Item 1 under ‘‘Marine Transportation– Properties’’ and ‘‘Distribution and
Services– Properties’’ is incorporated herein by reference. The Company believes that its facilities are adequate for
its needs and additional facilities would be available if required.
Item 3.
Legal Proceedings
See Note 14, Contingencies and Commitments to the Company’s financial statements.
Item 4.
Mine Safety Disclosures
Not applicable.
31
PART II
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
The Company’s common stock is traded on the New York Stock Exchange under the symbol KEX.
As of February 19, 2021,
the Company had 60,085,000 outstanding shares held by approximately
575 stockholders of record; however, the Company believes the number of beneficial owners of common stock
exceeds this number.
The Company does not have an established dividend policy. Decisions regarding the payment of future
dividends will be made by the Board of Directors based on the facts and circumstances that exist at that time.
Since 1989, the Company has not paid any dividends on its common stock. The Company’s credit agreements contain
covenants restricting the payment of dividends by the Company at any time when there is a default under the
agreements.
Item 6.
Selected Financial Data
The comparative selected financial data of the Company and consolidated subsidiaries is presented for the
five years ended December 31, 2020. The information should be read in conjunction with Management’s Discussion
and Analysis of Financial Condition and Results of Operations of the Company in Item 7 and the Financial
Statements included under Item 8 (selected financial data in thousands, except per share amounts).
Revenues:
Marine transportation . . . . . . . . . . . . . . . . . .
Distribution and services. . . . . . . . . . . . . . . .
2020
Year Ended December 31,
2018
2017
2019
2016
$1,404,265
767,143
$1,587,082
1,251,317
$1,483,143
1,487,554
$1,324,106
890,312
$1,471,893
298,780
$2,171,408
$2,838,399
$2,970,697
$2,214,418
$1,770,673
Net earnings (loss) attributable to Kirby . . .
$ (272,546) $ 142,347
$
78,452
$ 313,187
$ 141,406
Net earnings (loss) per share attributable to
Kirby common stockholders:
Basic. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
(4.55) $
(4.55) $
2.38
2.37
$
$
1.31
1.31
$
$
5.62
5.62
$
$
2.63
2.62
Common stock outstanding:
Basic. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
59,912
59,912
59,750
59,909
59,557
59,689
55,308
55,361
53,454
53,512
Property and equipment, net . . . . . . . . . . . . .
Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt, including current portion . .
Total equity . . . . . . . . . . . . . . . . . . . . . . . . . .
$3,917,070
$5,924,174
$1,468,586
$3,087,553
$3,777,110
$6,079,097
$1,369,767
$3,371,592
2020
2019
December 31,
2018
$3,539,802
$5,871,594
$1,410,188
$3,216,301
2017
2016
$2,959,265
$5,127,427
$992,406
$3,114,223
$2,921,374
$4,289,895
$722,802
$2,412,867
32
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Statements contained in this Form 10-K that are not historical facts, including, but not limited to, any projections
contained herein, are forward-looking statements and involve a number of risks and uncertainties. Such statements
can be identified by the use of forward-looking terminology such as ‘‘may,’’ ‘‘will,’’ ‘‘expect,’’ ‘‘anticipate,’’
‘‘estimate,’’ or ‘‘continue,’’ or the negative thereof or other variations thereon or comparable terminology. The actual
results of the future events described in such forward-looking statements in this Form 10-K could differ materially
from those stated in such forward-looking statements. Among the factors that could cause actual results to differ
materially are: adverse economic conditions, industry competition and other competitive factors, adverse weather
conditions such as high water, low water, tropical storms, hurricanes, tsunamis, fog and ice, tornados, COVID-19 or
other pandemics, marine accidents, lock delays, fuel costs, interest rates, construction of new equipment by
competitors, government and environmental laws and regulations, and the timing, magnitude and number of
acquisitions made by the Company. For a more detailed discussion of factors that could cause actual results to differ
from those presented in forward-looking statements, see Item 1A-Risk Factors. Forward-looking statements are based
on currently available information and the Company assumes no obligation to update any such statements.
For purposes of Management’s Discussion, all net earnings per share attributable to Kirby common stockholders
are ‘‘diluted earnings per share.’’ The weighted average number of common shares outstanding applicable to diluted
earnings per share for 2020, 2019 and 2018 were 59,912,000, 59,909,000 and 59,689,000, respectively.
Overview
The Company is the nation’s largest domestic tank barge operator, transporting bulk liquid products throughout
the Mississippi River System, on the Gulf Intracoastal Waterway, coastwise along all three United States coasts, and
in Alaska and Hawaii. The Company transports petrochemicals, black oil, refined petroleum products and agricultural
chemicals by tank barge. As of December 31, 2020, the Company operated a fleet of 1,066 inland tank barges with
24.1 million barrels of capacity, and operated an average of 248 inland towboats during the 2020 fourth quarter. The
Company’s coastal fleet consisted of 44 tank barges with 4.2 million barrels of capacity and 44 coastal tugboats. The
Company also owns and operates four offshore dry-bulk cargo barges, four offshore tugboats and one docking
tugboat transporting dry-bulk commodities in United States coastal trade. Through its distribution and services
segment, the Company provides after-market service and parts for engines, transmissions, reduction gears, and
related equipment used in oilfield services, marine, power generation, on-highway, and other industrial applications.
The Company also rents equipment including generators, industrial compressors, railcar movers, and high capacity
lift trucks for use in a variety of industrial markets, and manufactures and remanufactures oilfield service equipment,
including pressure pumping units, for land-based oilfield service customers.
For 2020, net loss attributable to Kirby was $272,546,000, or $4.55 per share, on revenues of $2,171,408,000,
compared to 2019 net earnings attributable to Kirby of $142,347,000, or $2.37 per share, on revenues of
$2,838,399,000. The 2020 first quarter included $561,274,000 before taxes, $433,341,000 after taxes, or $7.24 per
share, non-cash charges related to inventory write-downs, impairment of long-lived assets, including intangible assets
and property and equipment, and impairment of goodwill in the distribution and services segment. See Note 7,
Impairments and Other Charges for additional information. In addition, the 2020 first quarter was favorably impacted
by an income tax benefit of $50,824,000, or $0.85 per share related to net operating losses generated in 2018 and
2019 used to offset taxable income generated between 2013 and 2017. See Note 9, Taxes on Income for additional
information. The 2019 fourth quarter included $35,525,000 before taxes, $27,978,000 after taxes, or $0.47 per share,
non-cash inventory write-downs and $4,757,000 before taxes, $3,747,000 after taxes, or $0.06 per share, severance
and early retirement expense.
Marine Transportation
For 2020, 65% of the Company’s revenues were generated by its marine transportation segment. The segment’s
customers include many of the major petrochemical and refining companies that operate in the United States.
Products transported include intermediate materials used to produce many of the end products used widely by
businesses and consumers — plastics, fibers, paints, detergents, oil additives and paper, among others, as well as
residual fuel oil, ship bunkers, asphalt, gasoline, diesel fuel, heating oil, crude oil, natural gas condensate and
agricultural chemicals. Consequently, the Company’s marine transportation business is directly affected by the
volumes produced by the Company’s petroleum, petrochemical and refining customer base.
33
The Company’s marine transportation segment’s revenues for 2020 decreased 12% compared to 2019 and
operating income decreased 24%, compared to 2019. The decreases were primarily due to reduced barge utilization
in the inland and coastal markets and decreased term and spot contract pricing in the inland market, each as a result
of a reduction in demand due to the COVID-19 pandemic, lower fuel rebills, retirements of three large coastal barges,
and planned shipyard activity in the coastal market. These reductions were partially offset by the acquisition of the
Savage Inland Marine, LLC (‘‘Savage’’) fleet acquired on April 1, 2020 and the Cenac Marine Services, LLC
(‘‘Cenac’’) fleet acquired on March 14, 2019. The 2020 third quarter was impacted by hurricanes and tropical storms
along the East and Gulf Coasts and the closure of the Illinois river. The 2020 first quarter and 2019 first six months
were each impacted by poor operating conditions and high delay days due to heavy fog and wind along the Gulf
Coast, high water on the Mississippi River System, and closures of key waterways as a result of lock maintenance
projects, as well as increased shipyard days on large capacity coastal vessels. The 2019 first six months was also
impacted by prolonged periods of ice on the Illinois River and a fire at a chemical storage facility on the Houston
Ship Channel. For 2020 and 2019, the inland tank barge fleet contributed 78% and 77%, respectively, and the coastal
fleet contributed 22% and 23%, respectively, of marine transportation revenues.
During 2020, reduced demand as a result of the COVID-19 pandemic and the resulting economic slowdown
contributed to lower barge utilization. Inland tank barge utilization levels averaged in the low to mid-90% range
during the 2020 first quarter, the mid-80% range during the 2020 second quarter, the low 70% range during the 2020
third quarter, and the high 60% range during the 2020 fourth quarter. For 2019, barge utilization averaged in the
mid-90% range during both the first and second quarters and the low 90% range during both the third and fourth
quarters. The 2020 first quarter and full year 2019 each experienced strong demand from petrochemicals, black oil,
and refined petroleum products customers. Extensive delay days due to poor operating conditions and lock
maintenance projects in the 2020 first quarter and 2019 first six months slowed the transport of customer cargoes and
contributed to strong barge utilization during those periods.
Coastal tank barge utilization levels averaged in the low to mid-80% range during the 2020 first quarter and the
mid-70% range during each of the 2020 second, third, and fourth quarters. In 2019, barge utilization averaged in the
low 80% range during the first quarter and the mid-80% range during each of the second, third, and fourth quarters.
Barge utilization in the coastal marine fleet continued to be impacted by the oversupply of smaller tank barges in the
coastal industry during 2020 and 2019.
During both 2020 and 2019, approximately 65% of the inland marine transportation revenues were under term
contracts and 35% were spot contract revenues. These allocations provide the operations with a reasonably
predictable revenue stream. Inland time charters, which insulate the Company from revenue fluctuations caused by
weather and navigational delays and temporary market declines, represented 66% of the inland revenues under term
contracts during 2020 compared to 62% during 2019. Rates on inland term contracts renewed in the 2020 first quarter
increased in the 1% to 3% average range compared to term contracts renewed in the 2019 first quarter. Rates on
inland term contracts renewed in the 2020 second quarter were flat compared to term contracts renewed in the 2019
second quarter. Rates on inland term contracts renewed in the 2020 third quarter decreased in the 1% to 3% average
range compared to term contracts renewed in the 2019 third quarter. Rates on inland term contracts renewed in the
2020 fourth quarter decreased in the 10% to 12% average range compared to term contracts renewed in the 2019
fourth quarter. Spot contract rates in the 2020 first quarter increased in the 4% to 6% average range compared to the
2019 first quarter. Spot contract rates in the 2020 second quarter decreased in the 5% to 10% average range compared
to the 2019 second quarter. Spot contract rates in the 2020 third quarter decreased approximately 10% compared to
the 2019 third quarter. Spot contract rates in the 2020 fourth quarter decreased approximately 25% compared to the
2019 fourth quarter. There was no material rate increase on January 1, 2020, related to annual escalators for labor
and the producer price index on a number of inland multi-year contracts.
During 2020 and 2019, approximately 85% and 80%, respectively, of the coastal revenues were under term
contracts and 15% and 20%, respectively, were spot contract revenues. Coastal
time charters represented
approximately 90% of coastal revenues under term contracts during 2020 compared to 85% during 2019. Spot and
term contract pricing in the coastal market are contingent on various factors including geographic location, vessel
capacity, vessel type and product serviced. Rates on coastal term contracts renewed in the 2020 first quarter increased
in the 10% to 15% average range compared to term contracts renewed in the 2019 first quarter. Rates on coastal term
contracts renewed in the 2020 second quarter were flat compared to term contracts renewed in the 2019
second quarter. Rates on coastal term contracts renewed in both the 2020 third and fourth quarters decreased in the
34
4% to 6% average range compared to term contracts renewed in the 2019 third and fourth quarters. Spot market rates
in the 2020 first quarter increased in the 10% to 15% average range compared to the 2019 first quarter. Spot market
rates in each of the 2020 second, third, and fourth quarters were flat compared to the 2019 second, third, and
fourth quarters.
The 2020 marine transportation operating margin was 11.7% compared to 13.6% for 2019.
Distribution and Services
During 2020, the distribution and services segment generated 35% of the Company’s revenues, of which 93%
was generated from service and parts and 7% from manufacturing. The results of the distribution and services
segment are largely influenced by cycles of the land-based oilfield service and oil and gas operator and producer
markets, marine, power generation, on-highway and other industrial markets.
Distribution and services revenues for 2020 decreased 39% compared to 2019 and operating income decreased
118% compared to 2019. The decreases were primarily attributable to reduced activity in the oilfield as a result of
oil price volatility throughout 2019 and 2020, the extensive downturn in oil and gas exploration due to low oil prices,
caused in part by the COVID-19 pandemic, an oversupply of pressure pumping equipment in North America, and
reduced spending and enhanced cash flow discipline for the Company’s major oilfield customers. As a result,
customer demand and incremental orders for new and remanufactured pressure pumping equipment and sales of new
and overhauled transmissions and related parts and service declined during 2020. For 2020, the oil and gas market
represented approximately 26% of distribution and services revenues.
The 2020 commercial and industrial market revenues decreased compared to 2019, primarily due to reductions
in on-highway and power generation service demand as a result of the COVID-19 pandemic and the resulting
economic slowdown and nationwide, state, and local stay-at-home orders, partially offset by contributions from the
Convoy Servicing Company and Agility Fleet Services, LLC (collectively ‘‘Convoy’’) acquisition on January 3,
2020. Demand in the marine business was also down due to reduced major overhaul activity. For 2020, the
commercial and industrial market contributed 74% of the distribution and services revenues.
The distribution and services operating margin for 2020 was (1.6)% compared to 5.4% for 2019.
Cash Flow and Capital Expenditures
The Company generated favorable operating cash flow during 2020 with net cash provided by operating
activities of $444,940,000 compared to $511,813,000 of net cash provided by operating activities for 2019, a 13%
decrease. The decline was driven by decreased revenues and operating income in both the marine transportation and
distribution and services segments. The decrease in the marine transportation segment was driven by decreased barge
utilization in the inland and coastal markets and decreased term and spot contract pricing in the inland market, each
as a result of a reduction in demand due to the COVID-19 pandemic, partially offset by the Savage acquisition in
April 2020 and the Cenac acquisition in March 2019 and reduced costs. The decrease in the distribution and services
segment was primarily attributable to reduced activity in the oilfield as a result of oil price volatility throughout 2019
and 2020, the extensive downturn in oil and gas exploration due to low oil prices, caused in part by the COVID-19
pandemic, an oversupply of pressure pumping equipment in North America, and reduced spending and enhanced cash
flow discipline for the Company’s major oilfield customers. The decline was also partially offset by changes in
certain operating assets and liabilities primarily related to reduced incentive compensation payouts in the 2020
first quarter and a larger decrease in trade accounts receivable compared to an increase during 2019, driven by
reduced business activity levels in both the marine transportation and distribution and services segments. In addition,
during 2020, the Company received a tax refund of $30,606,000 for its 2018 tax return related to net operating losses
being carried back to offset taxable income generated during 2013. During 2020 and 2019, the Company generated
cash of $17,310,000 and $57,657,000, respectively, from proceeds from the disposition of assets, and $353,000 and
$5,743,000, respectively, from proceeds from the exercise of stock options.
For 2020, cash generated and borrowings under the Company’s Revolving Credit Facility were used for capital
expenditures of $148,185,000, (including a decrease in accrued capital expenditures of $13,280,000) including
$7,506,000 for inland towboat construction and $140,679,000 primarily for upgrading existing marine equipment and
marine transportation and distribution and services facilities. The Company also used $354,972,000 for acquisitions
of businesses and marine equipment, more fully described under Acquisitions below.
35
For 2019, cash generated and borrowings under the Company’s Revolving Credit Facility were used for capital
expenditures of $248,164,000 (including a decrease in accrued capital expenditures of $13,875,000), including
$22,008,000 for inland towboat construction, $18,433,000 for progress payments on three 5000 horsepower coastal
ATB tugboats, $2,294,000 for final costs on a 155,000 barrel coastal ATB under construction purchased from another
operator that was delivered to the Company in the 2018 fourth quarter, and $205,429,000 primarily for upgrading
existing marine equipment and marine transportation and distribution and services facilities. The Company also used
$262,491,000 for acquisitions of businesses and marine equipment, more fully described under Acquisitions below.
The Company’s debt-to-capitalization ratio increased to 32.2% at December 31, 2020 from 28.9% at
December 31, 2019, primarily due to borrowings under the Revolving Credit Facility to acquire the Savage fleet in
the 2020 second quarter and the Convoy acquisition in the 2020 first quarter as well as the decrease in total equity,
primarily from the net loss attributable to Kirby for 2020 of $272,546,000. The Company’s debt outstanding as of
December 31, 2020 and December 31, 2019 is detailed in Long-Term Financing below.
During 2020, the Company acquired 92 inland tank barges from Savage with a total capacity of approximately
2.5 million barrels, purchased six newly constructed inland pressure barges, retired 94 inland tank barges, transferred
one tank barge to coastal, returned two leased inland tank barges, and brought back into service 12 inland tank barges.
The net result was an increase of 13 inland tank barges and approximately 0.7 million barrels of capacity during 2020.
The Company projects that capital expenditures for 2021 will be in the $125,000,000 to $145,000,000 range.
The 2021 construction program will consist of approximately $15,000,000 for the construction of new inland
towboats, $95,000,000 to $110,000,000 primarily for capital upgrades and improvements to existing marine
equipment and facilities, and $15,000,000 to $20,000,000 for new machinery and equipment,
facilities
improvements, and information technology projects in the distribution and services segment and corporate.
Outlook
While there remains significant uncertainty around the full impact of the COVID-19 pandemic, the Company
expects improved business activity and utilization levels in the second half of 2021. The first half of 2021 is expected
to remain challenging until the pandemic eases and refinery utilization materially recovers and the U.S. economy
rebounds. In the first quarter, the Company expects weak market conditions in marine transportation to continue with
pricing pressure on contract renewals. Additionally, surging cases of COVID-19 across the United States have
impacted the Company’s ability to crew its vessels, resulting in delays and in some cases, lost revenue primarily
impacting the Company’s offshore vessels. As a result, first quarter 2021 earnings are expected to decline sequentially
with improving results thereafter as the effects of the pandemic moderate and demand for the Company’s products
and services increases.
In the inland marine transportation market, conditions are expected to remain challenging in the coming months,
with gradual improvement in the second quarter and a more meaningful recovery in the second half of 2021. Barge
utilization is projected to start the year in the low to mid-70% range and improve into the high 80% to low 90% range
by the end of the year. Pricing, which typically improves with barge utilization, is expected to remain under pressure
in the near-term. First quarter revenues and operating margin are expected to be the lowest of the year, sequentially
down from the 2020 fourth quarter due to the impact of lower pricing on term contract renewals and increased delays
from seasonal winter weather. Anticipated improvements in the spot market later in 2021 should contribute to
increased barge utilization and better operating margins as the year progresses. However, the full year impact of lower
term contract pricing is expected to result in full year operating margins lower than the mid-teens margins realized
in 2020.
As of December 31, 2020, the Company estimated there were approximately 4,000 inland tank barges in the
industry fleet, of which approximately 350 were over 30 years old and approximately 260 of those over 40 years old.
The Company estimates that approximately 35 new tank barges have been ordered for delivery in 2021 and many
older tank barges, including an expected 26 by the Company, will be retired, dependent on 2021 market conditions.
Historically, 75 to 150 older inland tank barges are retired from service each year industry-wide. The extent of the
retirements is dependent on petrochemical and refinery production levels, and crude oil and natural gas condensate
movements, both of which can have a direct effect on industry-wide tank barge utilization, as well as term and spot
contract rates.
In the coastal marine transportation market, with limited spot demand and the return of some term equipment,
lower term contract pricing, crewing difficulties due to the COVID-19 pandemic, the retirement of three older large
36
capacity coastal vessels during 2020, and the retirement of an additional vessel in mid-2021, financial results are
expected to be lower in 2021 than 2020. In the 2021 first quarter, the Company expects coastal revenues and
operating margin to decline compared to the 2020 fourth quarter, primarily due to the impact of lower term contract
pricing and challenges crewing vessels due to the COVID-19 pandemic. For the full year, coastal revenues are
expected to decline compared to 2020 with negative operating margins, the magnitude of which will be dependent
on the timing of a material improvement in refined products and black oil demand later in 2021.
As of December 31, 2020, the Company estimated there were approximately 280 tank barges operating in the
195,000 barrels or less coastal industry fleet, the sector of the market in which the Company operates, and
approximately 20 of those were over 25 years old. The Company is aware of one announced small specialized coastal
ATB in the 195,000 barrels or less category under construction by a competitor for delivery in 2021.
The results of the distribution and services segment are largely influenced by the cycles of the land-based oilfield
service and oil and gas operator and producer markets, marine, power generation, on-highway and other industrial
markets. Improving economic activity and growth in the oilfield are expected to boost activity levels and contribute
to meaningful year-over-year improvement in revenue and operating income. In commercial and industrial, revenues
are expected to benefit from improving economic conditions as well as from growth in the on-highway market, due
in part to the Company’s new online parts sales platform which was launched in 2020. However, these gains are
expected to be partially offset by lower sales of new marine engines which remained strong throughout 2020.
In the distribution and services oil and gas market, higher commodity prices and increasing well completions
activity are expected to contribute to improved demand for new transmission, service, and parts, as well as higher
pressure pumping remanufacturing activity. Additionally, a heightened focus on sustainability across the energy
sector and industrial complex is expected to result in continued growth in new orders for Kirby’s portfolio of
environmentally friendly equipment during the year. Overall, operating margins in distribution and services are
expected to be positive in the low to mid-single digits for the full year with the first quarter being the lowest and the
third quarter being the highest prior to normal seasonal declines in the fourth quarter.
While the COVID-19 pandemic has adversely impacted the Company’s business, to date, it has not materially
adversely impacted its ability to conduct its operations in either business segment. The Company has maintained
business continuity and expects to continue to do so.
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with United States generally accepted accounting
principles requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the
reporting period. The Company evaluates its estimates and assumptions on an ongoing basis based on a combination
of historical information and various other assumptions that are believed to be reasonable under the particular
circumstances. Actual results may differ from these estimates based on different assumptions or conditions. The
Company believes the critical accounting policies that most impact the consolidated financial statements are
described below. It is also suggested that the Company’s significant accounting policies, as described in the
Company’s financial statements in Note 1, Summary of Significant Accounting Policies, be read in conjunction with
this Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Accounts Receivable. The Company extends credit to its customers in the normal course of business. The
Company regularly reviews its accounts and estimates the amount of uncollectible receivables each period and
establishes an allowance for uncollectible amounts. The amount of the allowance is based on the age of unpaid
amounts, information about the current financial strength of customers, and other relevant information. Estimates of
uncollectible amounts are revised each period, and changes are recorded in the period they become known.
Historically, credit risk with respect to these trade receivables has generally been considered minimal because of the
financial strength of the Company’s customers; however, a United States or global recession or other adverse
economic condition could impact the collectability of certain customers’ trade receivables which could have a
material effect on the Company’s results of operations.
Property, Maintenance and Repairs. Property is recorded at cost; improvements and betterments are capitalized
as incurred. Depreciation is recorded using the straight-line method over the estimated useful lives of the individual
assets. When property items are retired, sold, or otherwise disposed of, the related cost and accumulated depreciation
are removed from the accounts with any gain or loss on the disposition included in the statement of earnings.
37
Maintenance and repairs on vessels built for use on the inland waterways are charged to operating expense as incurred
and includes the costs incurred in USCG inspections unless the shipyard extends the life or improves the operating
capacity of the vessel which results in the costs being capitalized. The Company’s ocean-going vessels are subject
to regulatory drydocking requirements after certain periods of time to be inspected, have planned major maintenance
performed and be recertified by the ABS. These recertifications generally occur twice in a five-year period. The
Company defers the drydocking expenditures incurred on its ocean-going vessels due to regulatory marine
inspections by the ABS and amortizes the costs of the shipyard over the period between drydockings, generally 30
or 60 months, depending on the type of major maintenance performed. Drydocking expenditures that extend the life
or improve the operating capability of the vessel result in the costs being capitalized. Routine repairs and maintenance
on ocean-going vessels are expensed as incurred. Interest is capitalized on the construction of new ocean-going
vessels.
The Company performs an impairment assessment whenever events or changes in circumstances indicate that
the carrying amount of long-lived assets may not be recoverable. If a triggering event is identified, the Company
compares the carrying amount of the asset group to the estimated undiscounted future cash flows expected to result
from the use of the asset group. If the carrying amount of the asset group exceeds the estimated undiscounted future
cash flows, the Company measures the amount of the impairment by comparing the carrying amount of the asset
group to its estimated fair value. Assets to be disposed of are reported at the lower of the carrying amount or fair value
less costs to sell. There are many assumptions and estimates underlying the determination of an impairment event or
loss, if any. The assumptions and estimates include, but are not limited to, estimated fair market value of the assets
and estimated future cash flows expected to be generated by these assets, which are based on additional assumptions
such as asset utilization, length of service the asset will be used, and estimated salvage values. Although the Company
believes its assumptions and estimates are reasonable, deviations from the assumptions and estimates could produce
a materially different result.
Goodwill. The excess of the purchase price over the fair value of identifiable net assets acquired in transactions
accounted for as a purchase is included in goodwill. Management monitors the recoverability of goodwill on an
annual basis, or whenever events or circumstances indicate that interim impairment testing is necessary. The amount
of goodwill impairment, if any, is typically measured based on projected discounted future operating cash flows using
an appropriate discount rate and valued based on the excess of a reporting unit’s carrying amount over its fair value,
incorporating all tax impacts caused by the recognition of the impairment loss. The assessment of the recoverability
of goodwill will be impacted if estimated future operating cash flows are not achieved. There are many assumptions
and estimates underlying the determination of an impairment event or loss, if any. Although the Company believes
its assumptions and estimates are reasonable, deviations from the assumptions and estimates could produce a
materially different result.
Accrued Insurance. The Company is subject to property damage and casualty risks associated with operating
vessels carrying large volumes of bulk liquid and dry cargo in a marine environment. The Company maintains
insurance coverage against these risks subject to a deductible, below which the Company is liable. In addition to
expensing claims below the deductible amount as incurred, the Company also maintains a reserve for losses that may
have occurred but have not been reported to the Company, or are not yet fully developed. The Company uses historic
experience and actuarial analysis by outside consultants to estimate an appropriate level of accrued liabilities. If the
actual number of claims and magnitude were substantially greater than assumed, the required level of accrued
liabilities for claims incurred but not reported or fully developed could be materially understated. The Company
records receivables from its insurers for incurred claims above the Company’s deductible. If the solvency of the
insurers became impaired, there could be an adverse impact on the accrued receivables and the availability of
insurance.
Acquisitions
During 2020, the Company purchased six newly constructed inland pressure barges for $39,350,000 in cash.
Financing of these equipment purchases was through borrowings under the Company’s Revolving Credit Facility.
On April 1, 2020, the Company completed the acquisition of the inland tank barge fleet of Savage for
$278,999,000 in cash. Savage’s tank barge fleet consisted of 92 inland tank barges with approximately 2.5 million
barrels of capacity and 45 inland towboats. The Savage assets that were acquired primarily move petrochemicals,
38
refined products, and crude oil on the Mississippi River, its tributaries, and the Gulf Intracoastal Waterway. The
Company also acquired Savage’s ship bunkering business and barge fleeting business along the Gulf Coast. Financing
of the acquisition was through borrowings under the Company’s Revolving Credit Facility.
On January 3, 2020, the Company completed the acquisition of substantially all the assets of Convoy for
$37,180,000 in cash. Convoy is an authorized dealer for Thermo King refrigeration systems for trucks, railroad cars
and other land transportation markets for North and East Texas and Colorado. Financing of the acquisition was
through borrowings under the Company’s Revolving Credit Facility.
During the year ended December 31, 2019, the Company purchased, from various counterparties, a barge
fleeting operation in Lake Charles, Louisiana and nine inland tank barges from leasing companies for an aggregate
of $17,991,000 in cash. The Company had been leasing the barges prior to the purchases. Financing of these
acquisitions was through borrowings under the Company’s Revolving Credit Facility.
On March 14, 2019, the Company completed the acquisition of the marine transportation fleet of Cenac for
$244,500,000 in cash. Cenac’s fleet consisted of 63 inland 30,000 barrel tank barges with approximately 1,833,000
barrels of capacity, 34 inland towboats and two offshore tugboats. Cenac transported petrochemicals, refined products
and black oil, including crude oil, residual fuels, feedstocks and lubricants on the lower Mississippi River, its
tributaries, and the Gulf Intracoastal Waterway for major oil companies and refiners. The average age of the inland
tank barges was approximately five years and the inland towboats had an average age of approximately seven years.
Financing of the acquisition was through borrowings under the Company’s Revolving Credit Facility.
On December 28, 2018, the Company purchased three inland tank barges from a leasing company for
$3,120,000 in cash. The Company had been leasing the barges prior to the purchase. Financing of the equipment
acquisition was through borrowings under the Company’s Revolving Credit Facility.
On December 14, 2018, the Company purchased 27 inland tank barges with a barrel capacity of 306,000 barrels
from CGBM 100, LLC (‘‘CGBM’’) for $28,500,000 in cash. The 27 tank barges transport petrochemicals and refined
products on the Mississippi River System and the Gulf Intracoastal Waterway. The average age of the barges was
eight years. Financing of the equipment acquisition was through borrowings under the Company’s Revolving Credit
Facility.
On November 30, 2018, the Company purchased an inland towboat from a leasing company for $3,050,000 in
cash. The Company had been leasing the towboat prior to the purchase. Financing of the equipment acquisition was
through borrowings under the Company’s Revolving Credit Facility.
On May 10, 2018, the Company completed the purchase of Targa Resources Corp.’s (‘‘Targa’’) inland tank barge
business from a subsidiary of Targa for $69,250,000 in cash. Targa’s inland tank barge fleet consisted of 16 pressure
barges with a total capacity of 258,000 barrels, many of which were under multi-year contracts that the Company
assumed from Targa. The 16 tank barges transport petrochemicals on the Mississippi River System and the Gulf
Intracoastal Waterway. Financing of the business acquisition was through borrowings under the Company’s
Revolving Credit Facility.
On March 15, 2018, the Company purchased two inland pressure tank barges from a competitor for $10,400,000
in cash. The average age of the two tank barges was five years. Financing of the equipment acquisition was through
borrowings under the Company’s Revolving Credit Facility.
On February 14, 2018, the Company completed the acquisition of Higman for $421,922,000 in cash. Higman’s
fleet consisted of 163 inland tank barges with 4.8 million barrels of capacity, and 75 inland towboats, transporting
petrochemicals, black oil, including crude oil and natural gas condensate, and refined petroleum products on the
Mississippi River System and the Gulf Intracoastal Waterway. The average age of the inland tank barges was
approximately seven years and the inland towboats had an average age of approximately eight years. Financing of
the acquisition was through the issuance of the 2028 Notes (as defined in Note 5, Long-Term Debt to the Company’s
financial statements). The 2028 Notes were issued on February 12, 2018 in preparation for closing of the acquisition.
39
Results of Operations
The following tables set forth the Company’s net earnings (loss) attributable to Kirby, along with per share
amounts, and marine transportation and distribution and services revenues and the percentage of each to total
revenues for the comparable periods (dollars in thousands):
Year Ended December 31,
2019
2018
2020
Net earnings (loss) attributable to Kirby . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (272,546) $ 142,347 $
2.37 $
Net earnings (loss) attributable to Kirby per share - diluted . . . . . . . . . . . . . $
(4.55) $
78,452
1.31
Marine transportation . . . . . . . . . . .
Distribution and services . . . . . . . .
Year Ended December 31,
2020
%
2019
%
2018
%
$ 1,404,265
767,143
$ 2,171,408
65% $ 1,587,082
1,251,317
35
56% $ 1,483,143
1,487,554
44
100% $ 2,838,399
100% $ 2,970,697
50%
50
100%
The 2020 first quarter included $561,274,000 before taxes, $433,341,000 after taxes, or $7.24 per share,
non-cash charges related to inventory write-downs, impairment of long-lived assets, including intangible assets and
property and equipment, and impairment of goodwill in the distribution and services segment. See Note 7,
Impairments and Other Charges to the Company’s financial statements for additional information. In addition, the
2020 first quarter was favorably impacted by an income tax benefit of $50,824,000, or $0.85 per share related to net
operating losses generated in 2018 and 2019 used to offset taxable income generated between 2013 and 2017. See
Note 9, Taxes on Income to the Company’s financial statements for additional information.
The 2019 fourth quarter included $35,525,000 before taxes, $27,978,000 after taxes, or $0.47 per share,
non-cash inventory write-downs and $4,757,000 before taxes, $3,747,000 after taxes, or $0.06 per share, severance
and early retirement expense.
The 2018 fourth quarter included $85,108,000 before taxes, $67,235,000 after taxes, or $1.12 per share,
non-cash impairment of long-lived assets and lease cancellation costs and $2,702,000 before taxes, $2,135,000 after
taxes, or $0.04 per share, non-cash impairment of goodwill. The 2018 second quarter included a one-time
non-deductible expense of $18,057,000, or $0.30 per share, related to the retirement of Joseph H. Pyne as executive
Chairman of the Board of Directors, effective April 30, 2018. The 2018 first quarter included $3,261,000 before taxes,
or $0.04 per share, of one-time transaction costs associated with the Higman acquisition, as well as $2,912,000 before
taxes, or $0.04 per share, of severance and retirement expenses, primarily related to cost reduction initiatives in the
coastal marine transportation market and the integration of Higman.
Marine Transportation
The Company, through its marine transportation segment, provides marine transportation services, operating
tank barges and towing vessels transporting bulk liquid products throughout the Mississippi River System, on the
Gulf Intracoastal Waterway, coastwise along all three United States coasts, and in Alaska and Hawaii. The Company
transports petrochemicals, black oil, refined petroleum products and agricultural chemicals by tank barge. As of
December 31, 2020, the Company operated 1,066 inland tank barges, including 37 leased barges, with a total capacity
of 24.1 million barrels and an average of 248 inland towboats during the 2020 fourth quarter, of which 38 were
chartered. This compares with 1,053 inland tank barges operated as of December 31, 2019, including 24 leased
barges, with a total capacity of 23.4 million barrels and an average of 299 inland towboats during the 2019
fourth quarter, of which 75 were chartered.
The Company’s coastal tank barge fleet as of December 31, 2020 consisted of 44 tank barges, of which one was
leased, with 4.2 million barrels of capacity, and 44 coastal tugboats, of which four were chartered. This compares with
49 coastal tank barges operated as of December 31, 2019, of which two were leased, with 4.7 million barrels of
capacity, and 47 coastal tugboats, of which five were chartered. As of December 31, 2020 and 2019, the Company
owned four offshore dry-bulk cargo barge and tugboat units engaged in the offshore transportation of dry-bulk
cargoes. The Company also owns shifting operations and fleeting facilities for dry cargo barges and tank barges on
40
the Houston Ship Channel, in Freeport and Port Arthur, Texas, and Lakes Charles, Louisiana, and a shipyard for
building towboats and performing routine maintenance near the Houston Ship Channel, as well as a two-thirds
interest in Osprey, which transports project cargoes and cargo containers by barge.
The following table sets forth the Company’s marine transportation segment’s revenues, costs and expenses,
operating income and operating margins (dollars in thousands):
Marine transportation revenues. . . . . . . . . . . $
1,404,265 $
1,587,082
(12)%$
1,483,143
7%
2020
2019
% Change
2018
% Change
Year Ended December 31,
Costs and expenses:
Costs of sales and operating expenses . . .
Selling, general and administrative. . . . . .
Taxes, other than on income . . . . . . . . . . .
Depreciation and amortization . . . . . . . . .
907,119
111,182
35,528
186,798
1,240,627
Operating income . . . . . . . . . . . . . . . . . . . . . $
Operating margins . . . . . . . . . . . . . . . . . . . . .
163,638 $
11.7%
1,034,758
122,202
34,538
179,742
1,371,240
215,842
(12)
(9)
3
4
(10)
997,979
122,421
33,020
182,307
1,335,727
4
—
5
(1)
3
(24)%$
147,416
46%
13.6%
9.9%
The following table shows the marine transportation markets serviced by the Company,
the marine
transportation revenue distribution, products moved and the drivers of the demand for the products the Company
transports:
Markets Serviced
2020
Revenue
Distribution
Petrochemicals . . . . . . . . . . . . .
52%
Black Oil . . . . . . . . . . . . . . . . .
26%
Products Moved
Drivers
Benzene, Styrene, Methanol,
Acrylonitrile, Xylene, Naphtha,
Caustic Soda, Butadiene,
Propylene
Residual Fuel Oil, Coker
Feedstock, Vacuum Gas Oil,
Asphalt, Carbon Black
Feedstock, Crude Oil, Natural
Gas Condensate, Ship Bunkers
Consumer non-durables — 70%
Consumer durables — 30%
Fuel for Power Plants and Ships,
Feedstock for Refineries, Road
Construction
Refined Petroleum Products . .
19%
Gasoline, No. 2 Oil, Jet Fuel,
Heating Oil, Diesel Fuel, Ethanol
Vehicle Usage, Air Travel,
Weather Conditions, Refinery
Utilization
Agricultural Chemicals . . . . . .
3%
Anhydrous Ammonia, Nitrogen-
Based Liquid Fertilizer, Industrial
Ammonia
Corn, Cotton and Wheat
Production, Chemical Feedstock
Usage
2020 Compared to 2019
Marine Transportation Revenues
Marine transportation revenues for 2020 decreased 12% compared to 2019. The decrease was primarily due to
reduced barge utilization in the inland and coastal markets and decreased term and spot contract pricing in the inland
market, each as a result of a reduction in demand due to the COVID-19 pandemic, lower fuel rebills, retirements of
three large coastal barges, and planned shipyard activity in the coastal market. These reductions were partially offset
by the acquisition of the Savage fleet acquired on April 1, 2020 and the Cenac fleet acquired on March 14, 2019. The
2020 third quarter was impacted by hurricanes and tropical storms along the East and Gulf Coasts and the closure
41
of the Illinois River. The 2020 first quarter and 2019 first six months were each impacted by poor operating
conditions and high delay days due to heavy fog and wind along the Gulf Coast, high water on the Mississippi River
System, and closures of key waterways as a result of lock maintenance projects, as well as increased shipyard days
on large capacity coastal vessels. The 2019 first six months was also impacted by prolonged periods of ice on the
Illinois River and a fire at a chemical storage facility on the Houston Ship Channel. For 2020 and 2019, the inland
tank barge fleet contributed 78% and 77%, respectively, and the coastal fleet contributed 22% and 23%, respectively,
of marine transportation revenues. The Savage fleet was quickly integrated into the Company’s own fleet and the
former Savage equipment began operating under Company contracts soon after the acquisition closed, with former
Savage barges working with the Company’s existing towboats and vice versa resulting in differences in vessel
utilization and pricing among individual assets and the consolidated fleet. Due to this quick integration, it is not
practical to provide a specific amount of revenues for the Savage fleet but the acquisition in April 2020 was one of
the factors that offset decreases in marine transportation revenues in 2020 as compared to 2019.
During 2020 reduced demand as a result of the COVID-19 pandemic and the resulting economic slowdown
contributed to lower barge utilization. Inland tank barge utilization levels averaged in the low to mid-90% range
during the 2020 first quarter, the mid-80% range during the 2020 second quarter, the low 70% range during the 2020
third quarter, and the high 60% range during the 2020 fourth quarter. In 2019, inland tank barge utilization levels
averaged in the mid-90% range during both the 2019 first and second quarters and the low 90% range during both
the 2019 third and fourth quarters. The 2020 first quarter and full year 2019 each experienced strong demand from
petrochemicals, black oil, and refined petroleum products customers. Extensive delay days due to poor operating
conditions and lock maintenance projects in the 2020 first quarter and 2019 first six months slowed the transport of
customer cargoes and contributed to strong barge utilization during those periods.
Coastal tank barge utilization levels averaged in the low to mid-80% range during the 2020 first quarter and the
mid-70% range during each of the 2020 second, third, and fourth quarters. In 2019, coastal tank barge utilization
levels averaged in the low 80% range during the 2019 first quarter and the mid-80% range during each of the 2019
second, third, and fourth quarters. Barge utilization in the coastal marine fleet continued to be impacted by the
oversupply of smaller tank barges in the coastal industry during 2020 and 2019.
The petrochemical market, the Company’s largest market, contributed 52% of marine transportation revenues
for 2020, reflecting reduced volumes from Gulf Coast petrochemical plants for both domestic consumption and to
terminals for export destinations as a result of the COVID-19 pandemic. Also, during the 2020 third quarter, the
petrochemical complex along the Gulf Coast was impacted by hurricanes and tropical storms, reducing barge
volumes and closing critical waterways for extended periods of time. During 2020, U.S. chemical plant capacity
utilization declined to an average in the low to mid-70% range.
The black oil market, which contributed 26% of marine transportation revenues for 2020, reflected reduced
demand as refinery production levels and the export of refined petroleum products and fuel oils declined as a result
of the COVID-19 pandemic and the impact from hurricanes and tropical storms along the Gulf Coast during the third
and fourth quarters. During 2020, U.S. refinery utilization peaked in the low to mid-90% range early in the first
quarter and troughed in the high 60% range during the second quarter. During the third and fourth quarters, refinery
utilization stabilized in the low 70% to low 80% range with the low end resulting from significant hurricane and
tropical storm activity along the Gulf Coast during September and October and increased to the low 80% range late
in the fourth quarter. During 2020, the Company continued to transport crude oil and natural gas condensate produced
from the Permian Basin as well as reduced volumes from the Eagle Ford shale formation in Texas, both along the
Gulf Intracoastal Waterway with inland vessels and in the Gulf of Mexico with coastal equipment. Additionally, the
Company transported volumes of Utica natural gas condensate downriver from the Mid-Atlantic to the Gulf Coast
and Canadian and Bakken crude downriver from the Midwest to the Gulf Coast.
The refined petroleum products market, which contributed 19% of marine transportation revenues for 2020,
reflected lower volumes in both the inland and coastal markets as a result of reduced demand related to the
COVID-19 pandemic and the impact from hurricanes and tropical storms along the Gulf Coast during the third and
fourth quarters. During 2020, U.S. refinery utilization peaked in the low to mid-90% range early in the first quarter
and troughed in the high 60% range during the second quarter. During the third and fourth quarters, refinery
utilization stabilized in the low 70% to low 80% range with the low end resulting from significant hurricane and
tropical storm activity along the Gulf Coast during September and October and increased to the low 80% range late
in the fourth quarter.
42
The agricultural chemical market, which contributed 3% of marine transportation revenues for 2020, saw modest
reductions in demand for transportation of both domestically produced and imported products during the quarter,
primarily due to reduced demand associated with the COVID-19 pandemic.
For 2020, the inland operations incurred 10,408 delay days, 22% fewer than the 13,259 delay days that occurred
during 2019. Delay days measure the lost time incurred by a tow (towboat and one or more tank barges) during transit
when the tow is stopped due to weather, lock conditions, or other navigational factors. Reduced delay days during
2020 is primarily due to lower barge utilization, despite significant delays associated with hurricane activity along
the Gulf Coast during the third quarter. In addition, delay days for the 2020 first quarter and 2019 first six months
reflected poor operating conditions due to heavy fog and wind along the Gulf Coast, high water conditions on the
Mississippi River System, and closures of key waterways as a result of lock maintenance projects. The 2019 first
six months was also impacted by prolonged periods of ice on the Illinois River and a fire at a chemical storage facility
on the Houston Ship Channel.
During both 2020 and 2019, approximately 65% of the inland marine transportation revenues were under term
contracts and 35% were spot contract revenues. These allocations provide the operations with a reasonably
predictable revenue stream. Inland time charters, which insulate the Company from revenue fluctuations caused by
weather and navigational delays and temporary market declines, represented 66% of the inland revenues under term
contracts during 2020 compared to 62% during 2019. Rates on inland term contracts renewed in the 2020 first quarter
increased in the 1% to 3% average range compared to term contracts renewed in the 2019 first quarter. Rates on
inland term contracts renewed in the 2020 second quarter were flat compared to term contracts renewed in the 2019
second quarter. Rates on inland term contracts renewed in the 2020 third quarter decreased in the 1% to 3% average
range compared to term contracts renewed in the 2019 third quarter. Rates on inland term contracts renewed in the
2020 fourth quarter decreased in the 10% to 12% average range compared to term contracts renewed in the 2019
fourth quarter. Spot contract rates in the 2020 first quarter increased in the 4% to 6% average range compared to the
2019 first quarter. Spot contract rates in the 2020 second quarter decreased in the 5% to 10% average range compared
to the 2019 second quarter. Spot contract rates in the 2020 third quarter decreased approximately 10% compared to
the 2019 third quarter. Spot contract rates in the 2020 fourth quarter decreased approximately 25% compared to the
2019 fourth quarter. There was no material rate increase on January 1, 2020, related to annual escalators for labor
and the producer price index on a number of inland multi-year contracts.
During 2020 and 2019, approximately 85% and 80%, respectively, of the coastal revenues were under term
time charters represented
contracts and 15% and 20%, respectively, were spot contract revenues. Coastal
approximately 90% of coastal revenues under term contracts during 2020 compared to 85% during 2019. Spot and
term contract pricing in the coastal market are contingent on various factors including geographic location, vessel
capacity, vessel type and product serviced. Rates on coastal term contracts renewed in the 2020 first quarter increased
in the 10% to 15% average range compared to term contracts renewed in the 2019 first quarter. Rates on coastal term
contracts renewed in the 2020 second quarter were flat compared to term contracts renewed in the 2019
second quarter. Rates on coastal term contracts renewed in both the 2020 third and fourth quarters decreased in the
4% to 6% average range compared to term contracts renewed in the 2019 third and fourth quarters. Spot market rates
in the 2020 first quarter increased in the 10% to 15% average range compared to the 2019 first quarter. Spot market
rates in each of the 2020 second, third, and fourth quarters were flat compared to the 2019 second, third, and
fourth quarters.
Marine Transportation Costs and Expenses
Costs and expenses for 2020 decreased 10% compared to 2019. Costs of sales and operating expenses for 2020
decreased 12% compared to 2019 primarily due to cost reductions across the segment, including a reduction in
towboats during the second and third quarters and a reduction in maintenance expenses, partially offset by the
addition of the Savage fleet in April 2020 and the Cenac fleet in March 2019.
The inland marine transportation fleet operated an average of 287 towboats during 2020, of which an average
of 52 were chartered, compared to 299 during 2019, of which an average of 75 were chartered. The decrease was
primarily due to the chartered towboats released during the 2020 second and third quarters, partially offset by the
addition of inland towboats with the Savage acquisition in April 2020. Generally, as demand or anticipated demand
increases or decreases, as tank barges are added to or removed from the fleet, as chartered towboat availability
43
changes, or as weather or water conditions dictate, the Company charters in or releases chartered towboats in an effort
to balance horsepower needs with current requirements. The Company has historically used chartered towboats for
approximately one-fourth of its horsepower requirements.
During 2020, the inland operations consumed 47.5 million gallons of diesel fuel compared to 50.0 million
gallons consumed during 2019. The average price per gallon of diesel fuel consumed during 2020 was $1.41 per
gallon compared to $2.06 per gallon for 2019. Fuel escalation and de-escalation clauses on term contracts are
designed to rebate fuel costs when prices decline and recover additional fuel costs when fuel prices rise; however,
there is generally a 30 to 90 day delay before contracts are adjusted. Spot contracts do not have escalators for fuel.
Selling, general and administrative expenses for 2020 decreased 9% compared to 2019. The decrease is
primarily due to cost reduction initiatives throughout the organization as a result of reduced business activity levels
due to the COVID-19 pandemic.
Taxes, other than on income, for 2020 increased 3% compared to 2019. The increase is primarily due to higher
property taxes on marine transportation equipment, including the Savage and Cenac fleets.
Depreciation and amortization for 2020 increased 4% compared to 2019. The increase is primarily due to the
acquisition of the including the Savage fleet in 2020 and Cenac fleet in 2019.
Marine Transportation Operating Income and Operating Margins
Marine transportation operating income for 2020 decreased 24% compared to 2019. The operating margin was
11.7% for 2020 compared to 13.6% for 2019. The decreases in operating income and operating margin were primarily
due to reduced barge utilization in the inland and coastal markets and reduced term and spot contract pricing in the
inland market, each as a result of a reduction in demand due to the COVID-19 pandemic, partially offset by cost
reductions throughout
including chartered towboats released during the 2020 second and
third quarters.
the organization,
2019 Compared to 2018
Marine Transportation Revenues
Marine transportation revenues for 2019 increased 7% compared to 2018. The increase was primarily due to the
addition of the Higman fleet acquired on February 14, 2018, the Targa pressure barge fleet acquired on May 10, 2018,
the CGBM inland tank barges acquired on December 14, 2018, and the Cenac fleet acquired on March 14, 2019, as
well as improved barge utilization in the coastal market and higher spot and term contract pricing in the inland and
coastal markets. Partially offsetting the increase were unusually poor operating conditions due to heavy fog along the
Gulf Coast, prolonged periods of ice on the Illinois River, high water on the Mississippi River System, closures of
key waterways as a result of lock maintenance projects, extended delays in the Houston Ship Channel, and increased
shipyard days on several large capacity coastal vessels during the 2019 first and fourth quarters. For 2019 and 2018,
the inland tank barge fleet contributed 77% and 76%, respectively, and the coastal fleet 23% and 24%, respectively,
of marine transportation revenues. The Cenac fleet was quickly integrated into the Company’s own fleet and the
Cenac equipment began to operate on the Company’s contracts soon after the acquisition and Cenac barges worked
with the Company’s towboats and vice versa resulting in differences in vessel utilization and pricing among
individual assets and the consolidated fleet. Due to this quick integration, it is not practical to provide a specific
amount of revenues for Cenac but the acquisition in March 2019 was one of the factors that drove increases in marine
transportation revenues in 2019 as compared to 2018.
Tank barge utilization levels in the Company’s inland marine transportation markets averaged the mid-90%
range during both the 2019 first and second quarters and low 90% range during both the 2019 third and
fourth quarters. Strong demand from petrochemicals, black oil, refined petroleum products and agricultural chemicals
customers, along with extensive delay days due to poor operating conditions which slowed the transport of customer
cargoes, contributed to increased barge utilization during the 2019 first and second quarters. Better weather during
the 2019 third quarter and receding flood waters on the Mississippi River System resulted in fewer delay days and
contributed to modestly lower barge utilization during the 2019 third quarter. In the 2019 fourth quarter, weather
conditions seasonally deteriorated, however, reduced refinery and chemical plant utilization for many of the
Company’s major customers resulted in tank barge utilization remaining in the low 90% range for the quarter.
44
Coastal tank barge utilization levels averaged in the low 80% range during the 2019 first quarter and mid-80%
range during each of the 2019 second, third and fourth quarters. The improvement in barge utilization in 2019
primarily reflected improved customer demand resulting in higher barge utilization in the spot market. Barge
utilization in the coastal marine fleet continued to be impacted by the oversupply of smaller tank barges in the coastal
industry.
The petrochemical market, the Company’s largest market, contributed 54% of marine transportation revenues
for 2019, reflecting continued stable volumes from Gulf Coast petrochemical plants for both domestic consumption
and to terminals for export destinations, and the addition of the Targa pressure barge fleet in May 2018. Low priced
domestic natural gas, a basic feedstock for the United States petrochemical industry, provides the industry with a
competitive advantage relative to naphtha-based foreign petrochemical producers. In addition, favorable commodity
prices and the addition of new petrochemical industry capacity in 2018 and 2019 benefited the market.
The black oil market, which contributed 23% of marine transportation revenues for 2019, reflected strong
demand from steady refinery production levels and the export of refined petroleum products and fuel oils. The
Company continued to transport crude oil and natural gas condensate produced from the Eagle Ford and Permian
Basin shale formations in Texas, both along the Gulf Intracoastal Waterway with inland vessels and in the Gulf of
Mexico with coastal vessels. Additionally, the Company transported increased volumes of Utica natural gas
condensate downriver from the Mid-Atlantic to the Gulf Coast and Canadian and Bakken crude downriver from the
Midwest to the Gulf Coast.
The refined petroleum products market, which contributed 19% of marine transportation revenues for 2019,
reflected increased volumes in the inland market, due in part to the acquisition of Cenac, and stable volumes in
coastal.
The agricultural chemical market, which contributed 4% of marine transportation revenues for 2019, saw typical
seasonal demand for transportation of both domestically produced and imported products during 2019.
For 2019, the inland operations incurred 13,259 delay days, 32% more than the 10,046 delay days that occurred
during 2018. The increase in delay days reflected unusually poor operating conditions during 2019 due to heavy fog
along the Gulf Coast, extended periods of ice on the Illinois River, near record high water conditions on the
Mississippi River System, closures of key waterways as a result of lock maintenance projects and extended delays
in the Houston Ship Channel. Flood waters on the Mississippi River System receded in the beginning of August 2019.
During both 2019 and 2018, approximately 65% of marine transportation inland revenues were under term
contracts and 35% were spot contract revenues. Inland time charters, which insulate the Company from revenue
fluctuations caused by weather and navigational delays and temporary market declines, represented 62% of inland
revenues under term contracts during 2019 compared to 59% during 2018.
Rates on inland term contracts renewed in the 2019 first quarter increased in the 4% to 6% average range
compared to term contracts renewed in the 2018 first quarter. Rates on inland term contracts renewed in the 2019
second quarter increased in the 5% to 8% average range compared to term contracts renewed in the 2018 second
quarter. Rates on inland term contracts renewed in the 2019 third quarter increased in the 3% to 4% average range
compared to term contracts renewed in the 2018 third quarter. Rates on inland term contracts renewed in the 2019
fourth quarter increased in the 2% to 4% average range compared to term contracts renewed in the 2018
fourth quarter. Spot contract rates in the 2019 first quarter increased approximately 20% compared to the 2018 first
quarter. Spot contracts rates in both the 2019 second and third quarters increased approximately 15% compared to
the 2018 second and third quarters. Spot contract rates in the 2019 fourth quarter increased approximately 5%
compared to the 2018 fourth quarter. Effective January 1, 2019, annual escalators for labor and the producer price
index on a number of inland multi-year contracts resulted in rate increases on those contracts of approximately 1.7%,
excluding fuel.
During both 2019 and 2018, approximately 80% of the coastal revenues were under term contracts and 20%
were spot contract revenues. Coastal time charters which insulate the Company from revenue fluctuations caused by
weather and navigational delays and temporary market declines, represented approximately 85% of coastal revenues
under term contracts during both 2019 and 2018. Spot and term contract pricing in the coastal market are contingent
on various factors including geographic location, vessel capacity, vessel type and product serviced. Rates on coastal
term contracts renewed in each of the 2019 first, second, and third quarters increased in the 4% to 6% average range
compared to term contracts renewed in the 2018 first, second, and third quarters. Rates on coastal term contracts
45
renewed in the 2019 fourth quarter increased in the 5% to 15% average range compared to term contracts renewed
in the 2018 fourth quarter. Spot contract rates in both the 2019 first and second quarters increased in the 10% to 15%
average range compared to the 2018 first and second quarters. Spot contract rates in the 2019 third quarter increased
approximately 20% compared to the 2018 third quarter. Spot contract rates in the 2019 fourth quarter increased
approximately 10% compared to the 2018 fourth quarter.
Marine Transportation Costs and Expenses
Costs and expenses for 2019 increased 3% compared to 2018. Costs of sales and operating expenses for 2019
increased 4% compared to 2018, primarily due to the addition of the Higman fleet in February 2018 and the Cenac
fleet in March 2019, partially offset by lower fuel costs.
The inland marine transportation fleet operated an average of 299 towboats during 2019, of which an average
of 75 were chartered, compared to 278 during 2018, of which an average of 77 were chartered. The increase was
primarily due to the addition of inland towboats with the Cenac acquisition on March 14, 2019. Generally, as demand,
or anticipated demand, increases or decreases, as tank barges are added to or removed from the fleet, as chartered
towboat availability changes, or as weather or water conditions dictate, the Company charters in or releases chartered
towboats in an effort to balance horsepower needs with current requirements. The Company has historically used
chartered towboats for approximately one-fourth of its horsepower requirements.
During 2019, the inland operations consumed 50.0 million gallons of diesel fuel compared to 49.3 million
gallons consumed during 2018. The average price per gallon of diesel fuel consumed during 2019 was $2.06 per
gallon compared to $2.20 per gallon for 2018. Fuel escalation and de-escalation clauses on term contracts are
designed to rebate fuel costs when prices decline and recover additional fuel costs when fuel prices rise; however,
there is generally a 30 to 90 day delay before the contracts are adjusted. Spot contracts do not have escalators for fuel.
Selling, general and administrative expenses for 2019 was consistent with 2018. The 2019 fourth quarter
included $1,447,000 related to severance and early retirement expense. The 2019 year also included Cenac
acquisition related costs of $442,000 as well as salaries and other related costs of personnel acquired in the Higman
acquisition. In 2018, there were transaction costs of $3,261,000, consisting primarily of legal, audit and other
professional fees associated with the Higman acquisition and severance charges of $2,591,000 associated with the
integration of Higman into the Company and further reduction in headcount in the coastal sector in order to manage
costs, both of which were incurred in the 2018 first quarter.
Taxes, other than on income for 2019 increased 5% compared to 2018, mainly due to higher property taxes on
marine transportation equipment, including the Higman, Targa, CGBM, and Cenac fleets.
Marine Transportation Operating Income and Operating Margins
Marine transportation operating income for 2019 increased 46% compared to 2018. The operating margin was
13.6% for 2019 compared to 9.9% for 2018. The operating income increase in 2019 compared to 2018 was primarily
due to the acquisitions of Higman, Targa’s pressure barge fleet, CGBM’s inland tank barges, and Cenac’s fleet as well
as improved barge utilization in the coastal market and higher spot and term contract pricing in the inland and coastal
markets, partially offset by significant weather and navigational challenges in 2019.
Distribution and Services
The Company, through its distribution and services segment, sells genuine replacement parts, provides service
mechanics to overhaul and repair engines, transmissions, reduction gears and related oilfield services equipment,
rebuilds component parts or entire diesel engines, transmissions and reduction gears, and related equipment used in
oilfield services, marine, power generation, on-highway and other industrial applications. The Company also rents
equipment including generators, industrial compressors, railcar movers, and high capacity lift trucks for use in a
variety of industrial markets, and manufactures and remanufactures oilfield service equipment, including pressure
pumping units, for land-based oilfield service customers.
46
The following table sets forth the Company’s distribution and services segment’s revenues, costs and expenses,
operating income and operating margins (dollars in thousands):
Distribution and services revenues . . . . . . . . .
$ 767,143
$1,251,317
(39)% $1,487,554
(16)%
2020
2019
% Change
2018
% Change
Year Ended December 31,
Costs and expenses:
Costs of sales and operating expenses . . . .
Selling, general and administrative . . . . . . .
Taxes, other than on income . . . . . . . . . . . .
Depreciation and amortization. . . . . . . . . . .
604,238
140,449
6,392
28,255
779,334
995,288
145,473
7,357
35,998
1,184,116
(39)
(3)
(13)
(22)
(34)
1,162,967
149,756
6,177
39,349
1,358,249
(14)
(3)
19
(9)
(13)
Operating income. . . . . . . . . . . . . . . . . . . . . . .
Operating margins . . . . . . . . . . . . . . . . . . . . . .
$ (12,191)
$
67,201
(118)% $ 129,305
(48)%
(1.6)%
5.4%
8.7%
The following table shows the markets serviced by the Company, the revenue distribution, and the customers
for each market:
Markets Serviced
2020
Revenue
Distribution
Commercial and Industrial . .
74%
Customers
Inland River Carriers — Dry and Liquid, Offshore Towing — Dry
and Liquid, Offshore Oilfield Services — Drilling Rigs & Supply
Boats, Harbor Towing, Dredging, Great Lakes Ore Carriers, Pleasure
Crafts, On and Off-Highway Transportation, Power Generation,
Standby Power Generation, Pumping Stations
Oil and Gas . . . . . . . . . . . . . .
26%
Oilfield Services, Oil and Gas Operators and Producers
2020 Compared to 2019
Distribution and Services Revenues
Distribution and services revenues for 2020 decreased 39% compared to 2019. The decrease was primarily
attributable to reduced activity in the oilfield as a result of oil price volatility throughout 2019 and 2020, the extensive
downturn in oil and gas exploration due to low oil prices, caused in part by the COVID-19 pandemic, an oversupply
of pressure pumping equipment in North America, and reduced spending and enhanced cash flow discipline for the
Company’s major oilfield customers. As a result, customer demand and incremental orders for new and
remanufactured pressure pumping equipment and sales of new and overhauled transmissions and related parts and
service declined during 2020. For 2020 and 2019, the oil and gas market contributed 26% and 53%, respectively, of
the distribution and services revenues.
The commercial and industrial market revenues decreased compared to 2019 primarily due to reductions in
on-highway and power generation service demand as a result of the COVID-19 pandemic and the resulting economic
slowdown and nationwide, state, and local stay-at-home orders, partially offset by contributions from the Convoy
acquisition. Demand in the marine business was also down due to reduced major overhaul activity and new engine
sales. For 2020 and 2019, the commercial and industrial market contributed 74% and 47%, respectively, of the
distribution and services revenues.
Distribution and Services Costs and Expenses
Costs and expenses for 2020 decreased 34% compared to 2019. Costs of sales and operating expenses for 2020
decreased 39% compared to 2019, reflecting lower demand for new and overhauled transmissions and related parts
and service and reduced demand for new pressure pumping equipment in the oil and gas market.
47
Selling, general and administrative expenses for 2020 decreased 3% compared to 2019. The decrease was
primarily due to cost reduction initiatives throughout the organization as a result of reduced business activity levels
due to the COVID-19 pandemic, partially offset by the Convoy acquisition, a bad debt expense charge of $3,339,000
as a result of the bankruptcy of a large oil and gas customer, and $1,354,000 of severance expense as a result of
continued workforce reductions, each recorded during the 2020 second quarter.
Depreciation and amortization for 2020 decreased 22% compared to 2019. The decrease was primarily due to
lower amortization of intangible assets other than goodwill, which were impaired during the 2020 first quarter.
Distribution and Services Operating Income (Loss) and Operating Margins
Operating income for the distribution and services segment for 2020 decreased 118% compared to 2019. The
operating margin was (1.6)% for 2020 compared to 5.4% for 2019. The results primarily reflected a decrease in
margins in the commercial and industrial market and losses in the oil and gas market.
2019 Compared to 2018
Distribution and Services Revenues
Distribution and services revenues for 2019 decreased 16% compared to 2018. The decrease was primarily
attributable to reduced activity in the oilfield as a result of oil price volatility in late 2018 and early 2019, an
oversupply of pressure pumping equipment in North America, and reduced spending and enhanced cash flow
discipline for the Company’s major oilfield customers. During the first half of 2019, although oilfield activity levels
and new orders for the Company’s oilfield related products and services declined as compared to the same period in
2018, the segment benefited from a significant backlog of manufacturing orders for new and remanufactured pressure
pumping equipment received in the 2018 third and fourth quarters. Most of these orders were completed in the 2019
first and second quarters as oilfield activity levels further declined for many of the Company’s customers. As a result,
customer demand and incremental orders for new and remanufactured pressure pumping equipment declined
significantly for the duration of 2019, and sales of new and overhauled transmissions and related parts and service
were minimal during the 2019 third and fourth quarters. For 2019, the oil and gas market represented approximately
53% of distribution and services revenues.
The commercial and industrial market, which contributed 47% of distribution and services revenues for 2019,
saw increased service levels and new engine sales in the marine repair business for much of the year, although activity
levels in the inland market declined during the 2019 third quarter as many customers reduced maintenance activities
following months of river flooding conditions and during the summer harvest season. The commercial and industrial
market also experienced increased demand for power generation equipment compared to 2018, including the sale and
installation of significant back-up power systems for major data centers in the 2019 first and second quarters. Activity
levels for the Company’s specialty rental units, back-up power systems, and refrigeration equipment seasonally
increased in anticipation of and as a result of summer storms and warm weather conditions in the 2019 second and
third quarters. Demand in the nuclear power generation market was stable compared to 2018.
Distribution and Services Costs and Expenses
Costs and expenses for 2019 decreased 13%, compared to 2018. Costs of sales and operating expenses for 2019
decreased 14% compared to 2018, reflecting lower demand for new and remanufactured pressure pumping equipment
and reduced demand for new and overhauled transmissions and related parts and service in the oil and gas market.
Selling, general and administrative expenses for 2019 decreased 3%, compared to 2018, primarily due to lower
incentive compensation and professional fees, partially offset by $3,310,000 related to severance and early retirement
expense incurred in the 2019 fourth quarter.
Depreciation and amortization expenses for 2019 decreased 9%, compared to 2018 primarily due to sales of
distribution and services facilities resulting in lower depreciation.
Distribution and Services Operating Income and Operating Margins
Operating income for the distribution and services segment for 2019 decreased 48% compared to 2018. The
operating margin for 2019 was 5.4% compared to 8.7% for 2018. The results primarily reflected decreased sales in
higher margin oil and gas related revenue and increased sales of lower margin power generation equipment.
48
General Corporate Expenses
General corporate expenses for 2020, 2019 and 2018 were $11,050,000, $13,643,000 and $35,590,000,
respectively. The general corporate expenses for 2018 are higher compared to both 2020 and 2019 primarily due to
a one-time non-deductible expense of $18,057,000 in the 2018 second quarter related to the retirement of the
Company’s executive Chairman, effective April 30, 2018, and higher incentive compensation accruals.
Gain on Disposition of Assets
The Company reported net gains on disposition of assets of $118,000, $8,152,000, and $1,968,000 in 2020,
2019, and 2018, respectively. The net gains were predominantly from the sales or retirements of marine equipment
and distribution and services facilities.
Other Income and Expenses
The following table sets forth impairments and other charges,
lease cancellation costs, other income,
noncontrolling interests, and interest expense (dollars in thousands):
Impairments and other charges. . . . . . . . . . . . . . . .
Lease cancellation costs . . . . . . . . . . . . . . . . . . . . .
Other income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncontrolling interests . . . . . . . . . . . . . . . . . . . . .
Interest expense. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairments and Other Charges
2020
$(561,274)
—
8,147
(954)
(48,739)
Year Ended December 31,
% Change
2019
2018
% Change
$(35,525)
—
3,787
(672)
(55,994)
(1,480)% $(85,407)
(2,403)
— %
5,726
115 %
42 %
(626)
(13)% (46,856)
(58)%
(100)%
(34)%
7 %
20 %
For 2020, impairment and other charges includes $561,274,000 before taxes, $433,341,000 after taxes, or
$7.24 per share, non-cash charges related to inventory write-downs, impairment of long-lived assets, including
intangible assets and property and equipment, and impairment of goodwill in the distribution and services segment.
For 2019 impairment and other charges includes a $35,525,000 non-cash pre-tax write-down of oilfield and
pressure pumping related inventory in the distribution and services segment. The after-tax effect of the charge was
$27,978,000 or $0.47 per share.
For 2018, impairment and other charges includes $82,705,000 before taxes, $65,337,000 after taxes, or $1.09 per
share, non-cash charges related to impairment of long-lived assets and $2,702,000 impairment of goodwill in the
marine transportation segment.
See Note 7, Impairments and Other Charges for additional information.
Other Income
Other income for 2020, 2019 and 2018 includes income of $6,186,000, $3,454,000 and $4,517,000, respectively, for
all components of net benefit costs except the service cost component related to the Company’s defined benefit plans.
Interest Expense
The following table sets forth average debt, average interest rate, and capitalized interest excluded from interest
expense (dollars in thousands):
Year Ended December 31,
2019
2018
2020
Average debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Average interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capitalized Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,567,523
$1,502,044
$1,370,905
3.1%
— $
3.7%
3.5%
1,003
$
2,206
$
Interest expense for 2020 decreased 13% compared to 2019, primarily due to a lower average interest rate,
partially offset by higher average debt outstanding as a result of borrowings to finance the Convoy acquisition in
January 2020 and the Savage acquisition in April 2020. Interest expense for 2019 increased 20% compared to 2018
49
primarily due to borrowings to finance the Higman acquisition in February 2018, the acquisition of Targa’s pressure
barge fleet in May 2018, the purchase of the 155,000 barrel coastal ATB under construction in June 2018, the
acquisition of CGBM’s tank barges in December 2018, and the acquisition of Cenac’s fleet in March 2019.
(Provision) Benefit for Taxes on Income
During 2020, pursuant to provisions of the CARES Act, net operating losses generated during 2018 through
2020 were used to offset taxable income generated between 2013 through 2017. Net operating losses carried back
to tax years 2013 through 2017 were applied at the higher federal statutory tax rate of 35% compared to the statutory
rate of 21% currently in effect at December 31, 2020. The Company generated an effective tax rate benefit in 2020
as a result of such carrybacks.
Financial Condition, Capital Resources and Liquidity
Balance Sheet
The following table sets forth the significant components of the balance sheets (dollars in thousands):
2020
2019
December 31,
% Change
2018
% Change
Assets:
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,047,971 $
Property and equipment, net. . . . . . . . . . . . . . . .
Operating lease right-of-use assets . . . . . . . . . . .
Investment in affiliates . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other intangibles, net . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
917,579
3,777,110
159,641
2,025
953,826
210,682
58,234
$ 5,924,174 $ 6,079,097
3,917,070
174,317
2,689
657,800
68,979
55,348
Liabilities and stockholders’ equity:
Current liabilities. . . . . . . . . . . . . . . . . . . . . . . . . $
Long-term debt, net — less current portion . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . .
Operating lease liabilities — less current
466,032 $
1,468,546
606,844
514,115
1,369,751
588,204
portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other long-term liabilities. . . . . . . . . . . . . . . . . .
Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
163,496
131,703
3,087,553
139,457
95,978
3,371,592
$ 5,924,174 $ 6,079,097
14% $ 1,096,489
3,539,802
4
—
9
2,495
33
953,826
(31)
224,197
(67)
(5)
54,785
(3)% $ 5,871,594
(9)% $
7
3
607,782
1,410,169
542,785
—
17
94,557
37
3,216,301
(8)
(3)% $ 5,871,594
(16)%
7
N/A
(19)
—
(6)
6
4%
(15)%
(3)
8
N/A
2
5
4%
2020 Compared to 2019
Current assets as of December 31, 2020 increased 14% compared to December 31, 2019. Trade accounts
receivable decreased 17% driven by decreased business activity in the distribution and services segment, primarily
related to the oil and gas market and reduced barge utilization in the marine transportation segment, partially offset
by trade accounts receivable acquired from Convoy. Other accounts receivable increased 173%, primarily due to
federal income taxes receivable of $188,177,000 recorded for net operating losses generated during tax years 2019
and 2020 offset against taxable income during tax years 2014 through 2017 under provisions of the Coronavirus Aid,
Relief, and Economic Security Act (‘‘CARES Act’’). Inventories, net decreased by 12% primarily due to reduced
business activity levels in the oil and gas market and write downs of oilfield and pressure pumping related inventory,
partially offset by inventory acquired from Convoy.
Property and equipment, net of accumulated depreciation, at December 31, 2020 increased 4% compared to
December 31, 2019. The increase reflected $134,905,000 of capital expenditures (net of a decrease in accrued capital
expenditures) for 2020, more fully described under Cash Flows and Capital Expenditures above, and $250,544,000 of
acquisitions, primarily including the six newly constructed inland pressure barges purchased in 2020 and the aggregate fair
value of the property and equipment acquired in the Savage and Convoy acquisitions, partially offset by $210,686,000 of
depreciation expense, $16,395,000 of impairment charges, and $18,408,000 of property disposals during 2020.
50
Operating lease right-of-use assets as of December 31, 2020 increased 9% compared to December 31, 2019,
primarily due to leases acquired as part of the Savage and Convoy acquisitions.
Goodwill as of December 31, 2020 decreased 31% compared to December 31, 2019, primarily due to a goodwill
impairment in the distribution and services segment, partially offset by goodwill recorded as part of the Savage and
Convoy acquisitions.
Other intangibles, net, as of December 31, 2020 decreased 67% compared to December 31, 2019, primarily due
to impairments of customer relationship, tradename, and distributorship assets in the distribution and services
segment as well as amortization of intangibles, partially offset by intangible assets recorded as part of the Convoy
and Savage acquisitions.
Current liabilities as of December 31, 2020 decreased 9% compared to December 31, 2019. Accounts payable
decreased 21%, primarily due to decreased shipyard maintenance accruals on coastal equipment and reduced activity
levels in both the marine transportation and distribution and services segments, partially offset by accounts payable
assumed in the Convoy acquisition. Accrued liabilities decreased 5%, primarily due to lower accrued incentive
compensation during 2020, partially offset by accrued payroll taxes deferred under provisions of the CARES Act.
Deferred revenues increased 6%, primarily reflecting progress billings for new projects in the distribution and
services oil and gas market, partially offset by reduced business activity in the marine transportation segment.
Long-term debt, net – less current portion, as of December 31, 2020 increased 7% compared to December 31,
2019, primarily reflecting additional borrowings of $250,000,000 under the Revolving Credit Facility, partially offset
by the repayment of $150,000,000 of 2.72% unsecured senior notes upon maturity. Net debt discounts and deferred
issuance costs were $6,454,000 at December 31, 2020 and $5,249,000 (excluding $2,650,000 attributable to the
Revolving Credit Facility included in other assets on the balance sheet) at December 31, 2019.
Deferred income taxes as of December 31, 2020 increased 3% compared to December 31, 2019, primarily
reflecting the 2020 deferred tax provision of $25,163,000.
Operating lease liabilities – less current portion, as of December 31, 2020 increased 17% compared to
December 31, 2019, primarily due to leases acquired as part of the Savage and Convoy acquisitions.
Other long-term liabilities as of December 31, 2020 increased 37% compared to December 31, 2019, primarily
due to an increase in pension liabilities and accrued payroll taxes deferred under provisions of the CARES Act,
partially offset by amortization of intangible liabilities.
Total equity as of December 31, 2020 decreased 8% compared to December 31, 2019. The decrease was
primarily the result of a net loss attributable to Kirby of $272,546,000 for 2020 and tax withholdings of $3,193,000
on restricted stock and RSU vestings, partially offset by an increase in additional paid-in capital due to amortization
of unearned share-based compensation of $14,722,000.
2019 Compared to 2018
Current assets as of December 31, 2019 decreased 16% compared to December 31, 2018. Trade accounts
receivable decreased 9% mainly due to decreased activities in the distribution and services oil and gas market,
partially offset by increased activities in the inland marine transportation market. Inventories, net, decreased 31%,
primarily reflecting lower inventory levels due to reduced business activity levels in the oil and gas market and
write-downs of oilfield and pressure pumping related inventory of $35,525,000.
Property and equipment, net of accumulated depreciation, at December 31, 2019 increased 7% compared to
December 31, 2018. The increase reflected $234,289,000 of capital expenditures for 2019, more fully described under
Cash Flows and Capital Expenditures above, the fair value of the property and equipment acquired in the Cenac
acquisition of $247,122,000, and the nine inland tank barges purchased during 2019 for $13,040,000,
less
$204,592,000 of depreciation expense and $52,150,000 of property disposals during 2019.
Operating lease right-of-use assets increased due to the adoption of Accounting Standard Update
(‘‘ASU’’) 2016-02 ‘‘Leases (Topic 842)’’ (‘‘ASU 2016-02’’) on January 1, 2019.
Other intangibles, net, as of December 31, 2019 decreased 6% compared to December 31, 2018, primarily due
to amortization of intangibles other than goodwill.
Other assets at December 31, 2019 increased 6% compared to December 31, 2018 primarily due to the reclassification
of unamortized debt issuance costs of $2,650,000 attributable to the Revolving Credit Facility to other assets.
51
Current liabilities as of December 31, 2019 decreased 15% compared to December 31, 2018. Accounts payable
decreased 26%, primarily due to reduced business activity levels in the distribution and services oil and gas market.
Accrued liabilities decreased 4% primarily due to lower accrued employee incentive compensation during 2019.
Current portion of operating lease liabilities increased due to the adoption of ASU 2016-02 on January 1, 2019.
Deferred revenues decreased 46%, primarily reflecting reduced business activity levels in the distribution and
services oil and gas market.
Long-term debt, net — less current portion, as of December 31, 2019 decreased 3% compared to December 31,
2018, primarily reflecting payments of $417,373,000 on the amended and restated Revolving Credit Facility offset
by the addition of the five-year Term Loan on March 27, 2019 with $375,000,000 outstanding as of December 31,
2019. Net debt discount and deferred issuance costs were $7,899,000 (of which $2,650,000 attributable to the
Revolving Credit Facility is included in other assets on the balance sheet) and $7,204,000 as of December 31, 2019
and December 31, 2018, respectively.
Deferred income taxes as of December 31, 2019 increased 8% compared to December 31, 2018, primarily
reflecting the 2019 deferred tax provision of $46,839,000.
Operating lease liabilities increased due to the adoption of ASU 2016-02 on January 1, 2019.
Other long-term liabilities as of December 31, 2019 increased 2% compared to December 31, 2018. The increase
was primarily due to accrued pension liabilities, offset by a decrease due to the adoption of ASU 2016-02 on
January 1, 2019 and the resulting reclassification of unfavorable leases to operating lease right-of-use assets and the
reclassification of deferred rent liabilities to long-term operating lease liabilities and contributions of $3,064,000 to
the Higman pension plan during 2019.
Total equity as of December 31, 2019 increased 5% compared to December 31, 2018. The increase was
primarily the result of $142,347,000 of net earnings attributable to Kirby for 2019, and an increase in additional
paid-in capital of $12,552,000, primarily due to employee stock awards.
Retirement Plans
The Company sponsors a defined benefit plan for its inland vessel personnel and shore based tankermen. The
plan benefits are based on an employee’s years of service and compensation. The plan assets consist primarily of
equity and fixed income securities. The Company’s pension plan funding strategy is to make annual contributions in
amounts equal to or greater than amounts necessary to meet minimum government funding requirements. No pension
contributions were made in 2020, 2019 or 2018. The fair value of plan assets was $357,801,000 and $319,176,000
at December 31, 2020 and December 31, 2019, respectively.
On April 12, 2017, the Company amended its pension plan to cease all benefit accruals for periods after May 31, 2017
for certain participants. Participants grandfathered and not impacted were those, as of the close of business on May 31,
2017, who either (a) had completed 15 years of pension service or (b) had attained age 50 and completed 10 years of
pension service. Participants non-grandfathered are eligible to receive discretionary 401(k) plan contributions.
On February 14, 2018, with the acquisition of Higman, the Company assumed Higman’s pension plan for its
inland vessel personnel and office staff. On March 27, 2018, the Company amended the Higman pension plan to close
it to all new entrants and cease all benefit accruals for periods after May 15, 2018 for all participants. The Company
did not incur any one-time charges related to this amendment but the Higman pension plan’s projected benefit
obligation decreased by $3,081,000. The Company made contributions to the Higman pension plan of $797,000 in
2020 for the 2019 plan year, $1,438,000 in 2020 for the 2020 plan year, $1,615,000 in 2019 for the 2018 plan year,
$1,449,000 in 2019 for the 2019 plan year, $6,717,000 in 2018 for the 2016 and 2017 plan years and $1,385,000 in
2018 for the 2018 year. The fair value of plan assets was $37,336,000 and $39,021,000 at December 31, 2020 and
December 31, 2019, respectively.
The Company’s investment strategy focuses on total return on invested assets (capital appreciation plus dividend
and interest income). The primary objective in the investment management of assets is to achieve long-term growth
of principal while avoiding excessive risk. Risk is managed through diversification of investments within and among
asset classes, as well as by choosing securities that have an established trading and underlying operating history.
The Company makes various assumptions when determining defined benefit plan costs including, but not
limited to, the current discount rate and the expected long-term return on plan assets. Discount rates are determined
annually and are based on a yield curve that consists of a hypothetical portfolio of high quality corporate bonds with
52
maturities matching the projected benefit cash flows. The Company used discount rates of 2.8% for the Kirby pension
plan and 2.9% for the Higman pension plan in 2020 and 3.5% for each plan in 2019, in determining its benefit
obligations. The Company estimates that every 0.1% decrease in the discount rate results in an increase in the
accumulated benefit obligation (‘‘ABO’’) of approximately $8,631,000. The Company assumed that plan assets
would generate a long-term rate of return of 6.75% and 7.0% in 2020 and 2019, respectively. The Company
developed its expected long-term rate of return assumption by evaluating input from investment consultants and
comparing historical returns for various asset classes with its actual and targeted plan investments. The Company
believes that long-term asset allocation, on average, will approximate the targeted allocation.
Long-Term Financing
The following table summarizes the Company’s outstanding debt (in thousands):
December 31,
2020
2019
Long-term debt, including current portion:
Revolving Credit Facility due March 27, 2024(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 250,000 $
Term Loan due March 27, 2024(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.72% senior notes due February 27, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.29% senior notes due February 27, 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.2% senior notes due March 1, 2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Credit line due June 30, 2021. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bank notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
375,000
—
350,000
500,000
—
40
—
375,000
150,000
350,000
500,000
—
16
Unamortized debt discount and issuance costs(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,475,040
(6,454)
1,375,016
(5,249)
$1,468,586 $1,369,767
(a) Variable interest rate of 1.5% and 2.9% at December 31, 2020 and December 31, 2019, respectively.
(b)
Excludes $2,650,000 attributable to the Revolving Credit Facility included in other assets at December 31, 2019.
The Company has an amended and restated credit agreement (‘‘Credit Agreement’’) with a group of commercial
banks, with JPMorgan Chase Bank, N.A. as the administrative agent bank, allowing for an $850,000,000 revolving
credit facility (‘‘Revolving Credit Facility’’) and an unsecured term loan (‘‘Term Loan’’) with a maturity date of
March 27, 2024. The Term Loan is repayable in quarterly installments currently scheduled to commence
September 30, 2023, with $343,750,000 due on March 27, 2024. The Term Loan is prepayable, in whole or in part,
without penalty. During 2019, the Company repaid $125,000,000 under the Term Loan prior to the originally
scheduled installments. The Revolving Credit Facility includes a $25,000,000 commitment which may be used for
standby letters of credit. Outstanding letters of credit under the Revolving Credit Facility were $5,063,000 and
available borrowing capacity was $594,937,000 as of December 31, 2020.
On February 27, 2020, upon maturity, the Company repaid in full $150,000,000 of 2.72% unsecured senior
notes.
Outstanding letters of credit under the $10,000,000 credit line were $1,007,000 and available borrowing capacity
was $8,993,000 as of December 31, 2020.
As of December 31, 2020, the Company was in compliance with all covenants under its debt instruments. For
additional information about the Company’s debt instruments, see Note 5, Long-Term Debt.
Treasury Stock Purchases
The Company did not purchase any treasury stock during 2020 or 2019. During 2018, the Company purchased
11,000 shares of its common stock for $776,000, for an average price of $69.61 per share pursuant to a stock trading
plan entered into with a brokerage firm pursuant to Rule 10b5-1 under the Securities Exchange Act of 1934. As of
February 19, 2021, the Company had approximately 1,400,000 shares available under its existing repurchase
authorizations. Historically,
treasury stock purchases have been financed through operating cash flows and
borrowings under the Company’s Revolving Credit Facility. The Company is authorized to purchase its common
stock on the New York Stock Exchange and in privately negotiated transactions. When purchasing its common stock,
53
the Company is subject to price, trading volume and other market considerations. Shares purchased may be used for
reissuance upon the exercise of stock options or the granting of other forms of incentive compensation, in future
acquisitions for stock or for other appropriate corporate purposes.
Liquidity and Capital Resources
The Company generated net cash provided by operating activities of $444,940,000, $511,813,000, and
$346,999,000 for the years ended December 31, 2020, 2019, and 2018, respectively. The decline in 2020 was driven
by decreased revenues and operating income in both the marine transportation and distribution and services segments.
The decrease in the marine transportation segment was driven by decreased barge utilization in the inland and coastal
markets and decreased term and spot contract pricing in the inland market, each as a result of a reduction in demand
due to the COVID-19 pandemic, partially offset by the Savage acquisition in April 2020 and the Cenac acquisition
in March 2019. The decline was also partially offset by changes in certain operating assets and liabilities primarily
related to reduced incentive compensation payouts in the 2020 first quarter and a larger decrease in trade accounts
receivable compared to 2019, driven by reduced business activity levels in both the marine transportation and
distribution and services segments. In addition, during 2020, the Company received a tax refund of $30,606,000 for
its 2018 tax return related to net operating losses being carried back to offset taxable income generated during 2013.
During February 2021, the Company received a tax refund of $119,493,000, including accrued interest, for its 2019
tax return.
The increase in 2019 was driven by increased revenues and operating income in the marine transportation
segment driven by the acquisitions of the Higman fleet in February 2018, the Targa fleet in May 2018, the CGBM
barges in December 2018, and the Cenac fleet in March 2019, as well as improved barge utilization in the coastal
market and higher spot and term pricing in the inland and coastal markets. The increase was also due to a net increase
in cash flows from the change in operating assets and liabilities of $153,953,000, primarily due to a decrease in
inventories reflecting reduced business activity levels in the distribution and services segment in 2019 compared to
an increase in 2018.
Funds generated from operations are available for acquisitions, capital expenditure projects, common stock
repurchases, repayments of borrowings and for other corporate and operating requirements. In addition to net cash
flow provided by operating activities, as of February 19, 2021, the Company had cash equivalents of $69,014,000,
availability of $704,937,000 under its Revolving Credit Facility and $8,829,000 available under its Credit Line.
Neither the Company, nor any of its subsidiaries, is obligated on any debt instrument, swap agreement, or any
other financial instrument or commercial contract which has a rating trigger, except for pricing grids on its Credit
Agreement.
The Company expects to continue to fund expenditures for acquisitions, capital construction projects, common
stock repurchases, repayment of borrowings, and for other operating requirements from a combination of available
cash and cash equivalents, funds generated from operating activities and available financing arrangements.
The Revolving Credit Facility’s commitment is in the amount of $850,000,000 and expires March 27, 2024. As
of December 31, 2020, the Company had $594,937,000 available under the Revolving Credit Facility. The 3.29%
senior unsecured notes do not mature until February 27, 2023, and require no prepayments. The 4.2% senior
unsecured notes do not mature until March 1, 2028 and require no prepayments. The outstanding balance of the Term
Loan is subject to quarterly installments, currently beginning September 30, 2023, with $343,750,000 due on
March 27, 2024. The Term Loan is prepayable, in whole or in part, without penalty.
There are numerous factors that may negatively impact the Company’s cash flow in 2021. For a list of
significant risks and uncertainties that could impact cash flows, see Note 14, Contingencies and Commitments in the
financial statements, and Item 1A — Risk Factors. Amounts available under the Company’s existing financing
arrangements are subject to the Company continuing to meet the covenants of the credit facilities as described in
Note 5, Long-Term Debt in the financial statements.
The Company has issued guaranties or obtained standby letters of credit and performance bonds supporting
performance by the Company and its subsidiaries of contractual or contingent legal obligations of the Company and
its subsidiaries incurred in the ordinary course of business. The aggregate notional value of these instruments is
54
$23,180,000 at December 31, 2020, including $13,586,000 in letters of credit and $9,594,000 in performance bonds.
All of these instruments have an expiration date within three years. The Company does not believe demand for
payment under these instruments is likely and expects no material cash outlays to occur in connection with these
instruments.
All of the Company’s marine transportation term contracts contain fuel escalation clauses, or the customer pays
for the fuel. However, there is generally a 30 to 90 day delay before contracts are adjusted depending on the specific
contract. In general, the fuel escalation clauses are effective over the long-term in allowing the Company to recover
changes in fuel costs due to fuel price changes. However, the short-term effectiveness of the fuel escalation clauses
can be affected by a number of factors including, but not limited to, specific terms of the fuel escalation formulas,
fuel price volatility, navigating conditions, tow sizes, trip routing, and the location of loading and discharge ports that
may result in the Company over or under recovering its fuel costs. The Company’s spot contract rates generally
reflect current fuel prices at the time the contract is signed but do not have escalators for fuel.
During the last three years, inflation has had a relatively minor effect on the financial results of the Company.
The marine transportation segment has long-term contracts which generally contain cost escalation clauses whereby
certain costs, including fuel as noted above, can be passed through to its customers. Spot contract rates include the
cost of fuel and are subject to market volatility. The repair portion of the distribution and services segment is based
on prevailing current market rates.
Contractual Obligations
The contractual obligations of the Company and its subsidiaries at December 31, 2020 consisted of the following
(in thousands):
Payments Due By Period
2-3
Years
Less Than
1 Year
4-5
Years
Total
After
5 Years
Long-term debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,475,040 $
Non-cancelable operating leases — barges . . . . . . . .
Non-cancelable operating leases — towing
43,415
40 $ 381,250 $ 593,750 $ 500,000
12,194
13,235
8,475
9,511
vessels(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
34,712
6,010
9,159
9,159
10,384
Non-cancelable operating leases — land, buildings
and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
164,982
24,703
39,161
27,205
73,913
$1,718,149 $
40,264 $ 442,805 $ 638,589 $ 596,491
(a)
Towing vessel payments are determined in accordance with Topic 842, Leases, and exclude non-lease components. The Company estimates
that non-lease components comprise approximately 70% of charter rental costs, related to towboat crew costs, maintenance and insurance.
The Company’s pension plan funding strategy is to make annual contributions in amounts equal to or greater
than amounts necessary to meet minimum government funding requirements. The ABO is based on a variety of
demographic and economic assumptions, and the pension plan assets’ returns are subject to various risks, including
market and interest rate risk, making an accurate prediction of the pension plan contribution difficult resulting in the
Company electing to only make an expected pension contribution forecast of one year. As of December 31, 2020, the
Company’s pension plan funding was 82% of the pension plans’ ABO, including the Higman pension plan. The
Company expects to make additional pension contributions of $2,385,000 in 2021.
Accounting Standards
For a discussion of recently issued accounting standards, see Note 1, Summary of Significant Accounting
Policies.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
The Company is exposed to risk from changes in interest rates on certain of its outstanding debt. The outstanding
loan balances under the Company’s bank credit facilities bear interest at variable rates based on prevailing short-term
interest rates in the United States and Europe. A 1% increase in variable interest rates would impact the 2020 interest
expense by $6,250,000 based on balances outstanding at December 31, 2020, and would change the fair value of the
Company’s debt by approximately 3%.
55
Item 8.
Financial Statements and Supplementary Data
The response to this item is submitted as a separate section of this report (see Item 15, page 94 and pages 57
to 93 of this report).
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Not applicable.
Item 9A. Controls and Procedures
Disclosure Controls and Procedures. The Company’s management, with the participation of the Chief Executive
Officer and the Chief Financial Officer, has evaluated the Company’s disclosure controls and procedures (as defined
in Rule 13a-15(e) under the Securities Exchange Act of 1934 (‘‘Exchange Act’’)), as of December 31, 2020, as
required by Rule 13a-15(b) under the Exchange Act. Based on that evaluation, the Chief Executive Officer and the
Chief Financial Officer concluded that, as of December 31, 2020, the disclosure controls and procedures were
effective to ensure that information required to be disclosed by the Company in the reports that it files or submits
under the Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in the
Securities and Exchange Commission’s rules and forms and (ii) is accumulated and communicated to the Company’s
management, including the Chief Executive Officer and the Chief Financial Officer, as appropriate to allow timely
decisions regarding required disclosure.
Management’s Annual Report on Internal Control Over Financial Reporting. Management of the Company is
responsible for establishing and maintaining adequate internal control over financial reporting (as defined in
Rule 13a-15(f) under the Exchange Act). The Company’s management, with the participation of the Chief Executive
Officer and the Chief Financial Officer, evaluated the effectiveness of the Company’s internal control over financial
reporting as of December 31, 2020 using the framework in Internal Control — Integrated Framework (2013) issued
by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that evaluation, management
concluded that the Company’s internal control over financial reporting was effective as of December 31, 2020.
KPMG LLP, the Company’s independent registered public accounting firm, has audited the Company’s internal
control over financial reporting, as stated in their report which is included herein.
Because of its inherent
internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies
or procedures may deteriorate.
limitations,
Changes in Internal Control Over Financial Reporting. During the fourth quarter of 2020, certain distribution
and services branch locations completed the preparation and implementation of a series of changes to their financial
reporting systems and processes. There were no other changes in the Company’s internal control over financial
reporting during the quarter ended December 31, 2020 that have materially affected, or are reasonably likely to
materially affect, the Company’s internal control over financial reporting.
Item 9B. Other Information
Not applicable.
Items 10 Through 14.
PART III
The information for these items is incorporated by reference to the definitive proxy statement to be filed by the
Company with the Commission pursuant to Regulation 14A within 120 days of the close of the fiscal year ended
December 31, 2020, except for the information regarding executive officers which is provided under Item 1.
56
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
Kirby Corporation:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Kirby Corporation and subsidiaries (the Company)
as of December 31, 2020 and 2019, the related consolidated statements of earnings, comprehensive income,
stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2020, and the
related notes (collectively,
the consolidated financial
the consolidated financial statements). In our opinion,
statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and
2019, and the results of its operations and its cash flows for each of the years in the three-year period ended
December 31, 2020, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2020, based on criteria
established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations
of the Treadway Commission, and our report dated February 23, 2021 expressed an unqualified opinion on the
effectiveness of the Company’s internal control over financial reporting.
Change in Accounting Principle
As discussed in Note 1 to the consolidated financial statements, the Company has changed its method of accounting
for leases as of January 1, 2019 due to the adoption of Accounting Standards Update 2016-02, Leases (Topic 842),
and related amendments, and its method of accounting for impairment of goodwill as of January 1, 2020 due to the
adoption of Accounting Standards Update 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test
for Goodwill Impairment.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is
to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the Company in accordance with the
U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and
the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of
material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks
of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing
procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the
amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as well as evaluating the overall presentation of the
consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated
financial statements that were communicated or required to be communicated to the audit committee and that: (1)
relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our
especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter
in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating
the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or
disclosures to which they relate.
Evaluation of potential impairment indicators for offshore vessel classes
As discussed in Note 1 to the consolidated financial statements, the Company performs an impairment assessment
when circumstances indicate that the carrying amount of its long-lived assets may not be recoverable. If a triggering
event is identified, the Company compares the carrying amount of the asset group to the estimated undiscounted
57
future cash flows expected to result from the use of the asset group. If the carrying amount of the asset group exceeds
the estimated undiscounted future cash flows, the Company measures the amount of the impairment by comparing
the carrying amount of the asset group to its estimated fair value. Recoverability of marine transportation assets is
assessed based on vessel classes.
We identified the evaluation of potential impairment indicators for offshore vessel classes as a critical audit matter.
Evaluating the Company’s judgments in determining whether there was a triggering event required a high degree of
subjective auditor judgment.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design
and tested the operating effectiveness of certain internal controls related to the Company’s process to identify and
assess triggering events that indicate that the carrying amount of an offshore vessel class may not be recoverable. This
included controls related to the consideration of forecasted to actual operating results and market conditions in the
determination of a triggering event. We assessed the Company’s identification of triggering events by evaluating
future expected revenues from executed contracts with customers. We compared data used by the Company in
forecasting future revenues, noting that such data included both internal and external elements, to analyst and industry
reports. We evaluated the Company’s responses related to the elements considered and whether the Company omitted
any significant internal or external elements in its evaluation.
Assessment of the acquisition-date fair value of property and equipment assets
As discussed in Note 2 to the consolidated financial statements, on April 1, 2020, the Company acquired the inland
tank barge fleet of Savage Inland Marine, LLC (Savage). Savage’s fleet consisted of 92 inland tank barges and 45
inland towboats. The acquisition-date fair value of these assets was $210,065,000.
We identified the assessment of the acquisition-date fair value of the property and equipment assets acquired from
Savage as a critical audit matter. There was a high degree of subjectivity in evaluating the determination of the fair
value of these assets, which included internally developed adjustments based on the Company’s historical experience
with similar assets. These adjustments, some of which had limited observable market information, included estimated
salvage value and estimated physical depreciation based on normal useful life. In addition, a higher degree of auditor
judgment was required due to the sensitivity of these adjustments to reasonably possible changes.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design
and tested the operating effectiveness of certain internal controls related to the Company’s acquisition-date valuation
process. This included controls related to the development of the adjustments used in the determination of fair value
of the property and equipment assets. We involved valuation professionals with specialized skills and knowledge,
who assisted in:
•
•
evaluating the estimated fair value of the property and equipment assets
evaluating the estimated physical depreciation using the normal useful life ranges and salvage values based
on industry standard guidelines published by the American Society of Appraisers, observable third-party
market information, and experience with valuing similar assets.
Evaluation of goodwill impairment analysis of a reporting unit in the distribution and services segment
As discussed in Note 1 to the consolidated financial statements, the goodwill balance relating to the Company’s
distribution and services segment as of December 31, 2020 was $170,590,000. Goodwill is tested for impairment
annually in the fourth quarter, or more frequently when events or changes in circumstances indicate that the fair value
of a reporting unit has declined below its carrying value. During the first quarter of the year ended December 31,
2020, the Company determined that the carrying value of a reporting unit in its distribution and services segment
exceeded its fair value, resulting in a goodwill impairment charge of $387,970,000. The Company used a weighted
combination of an income approach and a market approach to determine the fair value of the reporting unit.
We identified the evaluation of the goodwill impairment analysis of a reporting unit in the distribution and services
segment as a critical audit matter. A high degree of subjectivity was involved when evaluating the reporting unit’s
forecasted cash flows and discount rate assumptions used in the income approach. Reasonably possible changes to
these assumptions could have a significant effect on the fair value of the reporting unit and the amount of the
impairment charge. Additionally, specialized skills and knowledge were required to evaluate the fair value of the
reporting unit.
58
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design
and tested the operating effectiveness of certain internal controls related to the Company’s goodwill impairment
analysis process. This included controls related to the development of the reporting unit’s forecasted cash flows and
discount rate assumptions. To assess the Company’s ability to forecast cash flows, we compared the Company’s
previous forecasts to actual results for the reporting unit. We performed sensitivity analyses to assess the effect of
reasonably possible changes to the forecasted cash flows and discount rate assumptions on the reporting unit’s fair
value. We evaluated the Company’s forecasted revenue growth rates included in the reporting unit’s forecasted cash
flows by comparing the growth rates to those of the Company’s peers. We also evaluated the reporting unit’s
forecasted cash flows by comparing them to historical actual results. In addition, we involved valuation professionals
with specialized skills and knowledge, who assisted in:
•
•
evaluating the Company’s discount rate by comparing it to a discount rate that was independently
developed using publicly available third-party market data for comparable entities
developing an estimate of the reporting unit’s fair value using the reporting unit’s forecasted cash flows and
the independently developed discount rate, and comparing the results of our estimate of fair value to the
Company’s fair value estimate.
Evaluation of long-lived asset impairment analysis of an asset group in the distribution and services
segment
As discussed in Note 7 to the consolidated financial statements, during the first quarter of the year ended
December 31, 2020, the Company recorded long-lived asset impairment charges of $165,304,000 related to certain
long-lived assets,
including property and equipment as well as intangible assets associated with customer
relationships, tradenames, and distributorships within an asset group in the distribution and services segment. The
Company performs an impairment assessment when circumstances indicate that the carrying amount of the long-lived
assets may not be recoverable. If a triggering event is identified, the Company compares the carrying amount of the
asset group to the estimated undiscounted future cash flows expected to result from the use of the asset group. If the
carrying amount of the asset group exceeds the estimated undiscounted future cash flows, the Company measures the
amount of the impairment by comparing the carrying amount of the asset group to its estimated fair value. The
Company used an income approach to determine the fair value of the asset group.
We identified the evaluation of the long-lived asset impairment analysis of an asset group in the distribution and
services segment as a critical audit matter. A high degree of subjectivity was involved when evaluating the asset
group’s forecasted cash flows, royalty rate, and discount rate assumptions used in the income approach. Reasonably
possible changes to these assumptions could have a significant effect on the fair value of the asset group and the
amount of the impairment charge. Additionally, specialized skills and knowledge were required to evaluate the fair
value of the asset group.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design
and tested the operating effectiveness of certain internal controls related to the Company’s long-lived asset
impairment assessment process. This included controls related to the development of the asset group’s forecasted cash
flows and the royalty and discount rates. To assess the Company’s ability to forecast cash flows, we compared the
Company’s previous forecasts to actual results for the asset group. We performed sensitivity analyses to assess the
effect of reasonably possible changes to the forecasted cash flows and discount rate assumptions on the fair value of
the long-lived assets in the asset group. We evaluated the Company’s forecasted revenue growth rates included in the
asset group’s forecasted cash flows by comparing the growth rates to those of the Company’s peers. We also
evaluated the asset group’s forecasted cash flows by comparing them to historical actual results. In addition, we
involved valuation professionals with specialized skills and knowledge, who assisted in:
•
•
•
evaluating the Company’s discount rate by comparing it to a discount rate that was independently
developed using publicly available third-party market data for comparable entities
evaluating the Company’s royalty rate by comparing it against publicly available market data
developing an estimate of the asset group’s fair value using the asset group’s forecasted cash flows and
royalty rate, and the independently developed discount rate, and comparing the results of our estimate of
fair value to the Company’s fair value estimate.
/s/ KPMG LLP
We have served as the Company’s auditor since 1992.
Houston, Texas
February 23, 2021
59
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
Kirby Corporation:
Opinion on Internal Control Over Financial Reporting
We have audited Kirby Corporation and subsidiaries’ (the Company) internal control over financial reporting as of
December 31, 2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in
all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria
established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations
of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2020 and 2019, the related
consolidated statements of earnings, comprehensive income, stockholders’ equity, and cash flows for each of the
years in the three-year period ended December 31, 2020, and the related notes (collectively, the consolidated financial
statements), and our report dated February 23, 2021 expressed an unqualified opinion on those consolidated financial
statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for
its assessment of the effectiveness of internal control over financial reporting, included in the accompanying
Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an
opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting
firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with
the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission
and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit
also included performing such other procedures as we considered necessary in the circumstances. We believe that our
audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A company’s internal control over financial reporting includes those
policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance
with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have
a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
/s/ KPMG LLP
Houston, Texas
February 23, 2021
60
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31,
2020
2019
($ in thousands)
Current assets:
ASSETS
Cash and cash equivalents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable:
Trade — less allowance for doubtful accounts of $8,807 ($8,372 in 2019) . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories — at lower of average cost or net realizable value . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
80,338
$
24,737
315,283
284,899
309,675
57,776
1,047,971
379,174
104,175
351,401
58,092
917,579
Property and equipment:
Marine transportation equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Land, buildings and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and equipment — net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease right-of-use assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment in affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other intangibles, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,999,777
615,623
5,615,400
(1,698,330)
3,917,070
174,317
2,689
657,800
68,979
55,348
$ 5,924,174
4,770,213
553,877
5,324,090
(1,546,980)
3,777,110
159,641
2,025
953,826
210,682
58,234
$ 6,079,097
Current liabilities:
LIABILITIES AND STOCKHOLDERS’ EQUITY
Bank notes payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued liabilities:
Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Insurance premiums and claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Employee compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taxes — other than on income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current portion of operating lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred revenues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt, net — less current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease liabilities — less current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
40
474
162,507
$
16
665
206,778
11,272
111,359
32,918
44,366
24,940
32,750
45,406
466,032
1,468,546
606,844
163,496
131,703
2,370,589
12,700
108,405
42,875
39,286
33,084
27,324
42,982
514,115
1,369,751
588,204
139,457
95,978
2,193,390
Contingencies and commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
Equity:
Kirby stockholders’ equity:
Common stock, $0.10 par value per share. Authorized 120,000,000 shares, issued
65,472,000 in 2020 and 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive income — net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Treasury stock — at cost, 5,434,000 shares in 2020 and 5,513,000 shares in 2019 . . . . . . . .
Total Kirby stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities and equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,547
844,979
(61,452)
2,593,393
(299,161)
3,084,306
3,247
3,087,553
$ 5,924,174
6,547
835,899
(37,799)
2,865,939
(301,963)
3,368,623
2,969
3,371,592
$ 6,079,097
See accompanying notes to consolidated financial statements.
61
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
Year Ended December 31,
2019
($ in thousands, except per share amounts)
2020
2018
Revenues:
Marine transportation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,404,265 $1,587,082 $1,483,143
1,487,554
Distribution and services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,970,697
Total revenues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
767,143
2,171,408
1,251,317
2,838,399
Costs and expenses:
Costs of sales and operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taxes, other than on income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairments and other charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lease cancellation costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on disposition of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total costs and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Earnings (loss) before taxes on income . . . . . . . . . . . . . . . . . . . . . . . . . .
(Provision) benefit for taxes on income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,510,818
258,272
42,000
219,921
561,274
—
(118)
2,592,167
(420,759)
8,147
(48,739)
(461,351)
189,759
2,030,046
277,388
41,933
219,632
35,525
—
(8,152)
2,596,372
242,027
3,787
(55,994)
189,820
(46,801)
Net earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Net earnings attributable to noncontrolling interests . . . . . . . . . . . . . . .
(271,592)
(954)
143,019
(672)
Net earnings (loss) attributable to Kirby. . . . . . . . . . . . . . . . . . . . . . . . . . $ (272,546) $ 142,347 $
2,160,946
304,397
39,251
224,972
85,407
2,403
(1,968)
2,815,408
155,289
5,726
(46,856)
114,159
(35,081)
79,078
(626)
78,452
Net earnings (loss) per share attributable to Kirby common stockholders:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(4.55) $
(4.55) $
2.38 $
2.37 $
1.31
1.31
See accompanying notes to consolidated financial statements.
62
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net earnings (loss). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive loss, net of taxes:
Pension and postretirement benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation adjustments . . . . . . . . . . . . . . . . . . . . . . . . .
Reclassification to retained earnings of stranded tax effects from tax
reform. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total other comprehensive loss, net of taxes . . . . . . . . . . . . . . . . . . . .
Year Ended December 31,
2020
2019
2018
$ (271,592)
($ in thousands)
$ 143,019
$ 79,078
(23,320)
(333)
—
(23,653)
(4,203)
(85)
—
(4,288)
7,638
(819)
(7,925)
(1,106)
Total comprehensive income (loss), net of taxes . . . . . . . . . . . . . . . . . . . . .
Net earnings attributable to noncontrolling interests . . . . . . . . . . . . . . . .
Comprehensive income (loss) attributable to Kirby . . . . . . . . . . . . . .
(295,245)
(954)
$ (296,199)
138,731
(672)
$ 138,059
77,972
(626)
$ 77,346
See accompanying notes to consolidated financial statements.
63
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
2020
Year Ended December 31,
2019
($ in thousands)
2018
Cash flows from operating activities:
Net earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to reconcile net earnings (loss) to net cash provided by
operations:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision (credit) for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on disposition of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairments and other charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of unearned share-based compensation. . . . . . . . . . . . . . . .
Amortization of major maintenance costs. . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase (decrease) in cash flows resulting from changes in:
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued and other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . .
$(271,592) $ 143,019
$ 79,078
219,921
3,716
25,163
(118)
561,274
14,722
30,214
(90)
(124,941)
47,076
(29,994)
8,826
(39,795)
558
444,940
219,632
(873)
46,839
(8,152)
35,525
13,612
23,962
1,683
43,078
122,773
(25,470)
(2,503)
(57,405)
(43,907)
511,813
224,972
1,289
34,881
(1,968)
85,407
19,104
20,760
863
12,511
(144,685)
(38,090)
(457)
22,622
30,712
346,999
Cash flows from investing activities:
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisitions of businesses and marine equipment, net of cash acquired . .
Proceeds from disposition of assets and other . . . . . . . . . . . . . . . . . . . . . . .
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(148,185)
(354,972)
17,310
(485,847)
(248,164)
(262,491)
57,657
(452,998)
(301,861)
(533,897)
53,142
(782,616)
Cash flows from financing activities:
Borrowings (payments) on bank credit facilities, net. . . . . . . . . . . . . . . . . .
Borrowings on long-term debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments on long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment of debt issue costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Return of investment to noncontrolling interests . . . . . . . . . . . . . . . . . . . . .
Proceeds from exercise of stock options. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments related to tax withholding for share-based compensation . . . . . .
Net cash provided by (used in) financing activities . . . . . . . . . . . . . . . . .
Increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents, beginning of year . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents, end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
250,024
(417,376)
— 500,000
(125,000)
(2,397)
(817)
5,743
—
(2,031)
(41,878)
16,937
7,800
$ 24,737
(150,000)
—
(676)
353
—
(3,193)
96,508
55,601
24,737
$ 80,338
(78,455)
499,295
—
(4,276)
(915)
13,264
(776)
(4,822)
423,315
(12,302)
20,102
7,800
$
Supplemental disclosures of cash flow information:
Cash paid (received) during the period:
Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes paid (refunded) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating cash outflow from operating leases . . . . . . . . . . . . . . . . . . . . .
$ 48,721
$ (35,571) $
$ 43,639
$ 55,766
2,926
$ 39,376
$ 40,772
640
$
—
$
Non-cash investing activity:
Capital expenditures included in accounts payable . . . . . . . . . . . . . . . . .
Cash acquired in acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Right-of-use assets obtained in exchange for lease obligations . . . . . . . .
$ (13,280) $ 13,875
$
557
$ 46,511
$
$ 21,195
— $
$
$ (16,441)
2,313
—
See accompanying notes to consolidated financial statements.
64
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
For the Years Ended December 31, 2020, 2019 and 2018
Common
Stock
Shares Amount
Additional
Paid-in-
Capital
Accumulated
Other
Comprehensive
Income
Retained
Earnings
Treasury Stock
Shares Amount
Noncontrolling
Interests
Total
(in thousands)
$6,547
$802,961
$(32,405)
$2,646,937 (5,783) $(313,220)
$3,403
$3,114,223
Balance at December 31, 2017. . . 65,472
Cumulative effect of adoption of
ASU 2014-09. . . . . . . . . . . .
—
Cumulative effect of adoption of
ASU 2018-02. . . . . . . . . . . .
Stock option exercises . . . . . . . .
Issuance of stock for equity
awards, net of forfeitures. . . . .
Tax withholdings on equity award
vesting . . . . . . . . . . . . . . . .
Amortization of unearned share-
based compensation . . . . . . . .
Treasury stock purchases . . . . . .
Total comprehensive income, net
of taxes . . . . . . . . . . . . . . .
Return of investment to
noncontrolling interests . . . . . .
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
2,161
(879)
—
19,104
—
—
—
—
—
—
—
—
—
—
(9,722)
—
—
7,925
—
—
—
—
—
—
232
15
—
11,151
879
(61)
(4,822)
—
(11)
—
—
—
(776)
—
—
—
—
—
—
—
—
—
626
(915)
(9,722)
7,925
13,312
—
(4,822)
19,104
(776)
77,972
(915)
(1,106)
78,452
—
—
Balance at December 31, 2018. . . 65,472
$6,547
$823,347
$(33,511)
$2,723,592 (5,608) $(306,788)
$3,114
$3,216,301
Stock option exercises . . . . . . . .
Issuance of stock for equity
awards, net of forfeitures. . . . .
Tax withholdings on equity award
vesting . . . . . . . . . . . . . . . .
Amortization of unearned share-
based compensation . . . . . . . .
Total comprehensive income, net
of taxes . . . . . . . . . . . . . . .
Return of investment to
noncontrolling interests . . . . . .
—
—
—
—
—
—
—
—
—
—
—
—
675
(1,735)
—
13,612
—
—
—
—
—
—
—
—
—
—
(4,288)
142,347
—
—
93
32
5,121
1,735
(30)
(2,031)
—
—
—
—
—
—
—
—
—
—
672
(817)
5,796
—
(2,031)
13,612
138,731
(817)
Balance at December 31, 2019. . . 65,472
$6,547
$835,899
$(37,799)
$2,865,939 (5,513) $(301,963)
$2,969
$3,371,592
Stock option exercises . . . . . . . .
Issuance of stock for equity
awards, net of forfeitures. . . . .
Tax withholdings on equity award
vesting . . . . . . . . . . . . . . . .
Amortization of unearned share-
based compensation . . . . . . . .
Total comprehensive loss, net of
taxes . . . . . . . . . . . . . . . . .
Return of investment to
noncontrolling interests . . . . . .
—
—
—
—
—
—
—
—
—
—
—
—
26
(5,668)
—
14,722
—
—
—
—
—
—
—
—
—
—
(23,653)
(272,546)
—
—
15
103
327
5,668
(39)
(3,193)
—
—
—
—
—
—
—
—
—
—
353
—
(3,193)
14,722
954
(295,245)
(676)
(676)
Balance at December 31, 2020. . . 65,472
$6,547
$844,979
$(61,452)
$2,593,393 (5,434) $(299,161)
$3,247
$3,087,553
See accompanying notes to consolidated financial statements.
65
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Summary of Significant Accounting Policies
Principles of Consolidation. The consolidated financial statements include the accounts of Kirby Corporation
and all majority-owned subsidiaries (the ‘‘Company’’). All investments in which the Company owns 20% to 50% and
exercises significant influence over operating and financial policies are accounted for using the equity method. All
material intercompany accounts and transactions have been eliminated in consolidation. Certain reclassifications
have been made to reflect the current presentation of financial information. Such reclassifications have no impact on
previously reported net earnings (loss), stockholders’ equity, or cash flows.
Accounting Policies
Cash Equivalents. Cash equivalents consist of all short-term, highly liquid investments with maturities of three
months or less at date of purchase.
Accounts Receivable. In the normal course of business, the Company extends credit to its customers. The
Company regularly reviews the accounts and makes adequate provisions for probable uncollectible balances. It is the
Company’s opinion that the accounts have no impairment, other than that for which provisions have been made.
Included in accounts receivable-trade as of December 31, 2020 and 2019 were $91,850,000 and $103,996,000,
respectively, of accruals for revenues earned which have not been invoiced as of the end of each year.
The Company’s marine transportation and distribution and services operations are subject to hazards associated
with such businesses. The Company maintains insurance coverage against these hazards with insurance companies.
Included in accounts receivable-other as of December 31, 2020 and 2019 were $83,145,000 and $72,591,000,
respectively, of receivables from insurance companies to cover claims in excess of the Company’s deductible.
Concentrations of Credit Risk. Financial instruments which potentially subject the Company to concentrations
of credit risk are primarily trade accounts receivables. The Company’s marine transportation customers include the
major oil refining and petrochemical companies. The distribution and services customers are oilfield service
companies, oil and gas operators and producers, on-highway transportation companies, marine transportation
companies, commercial fishing companies, construction companies, power generation companies, and the United
States government. The Company regularly reviews its accounts and estimates the amount of uncollectible
receivables each period and establishes an allowance for uncollectible amounts. The amount of the allowance is based
on the age of unpaid amounts, information about the current financial strength of customers, and other relevant
information. Estimates of uncollectible amounts are revised each period, and changes are recorded in the period they
become known.
Property, Maintenance and Repairs. Property is recorded at cost or acquisition date fair value; improvements
and betterments are capitalized as incurred. Depreciation is recorded using the straight-line method over the estimated
useful lives of the individual assets as follows: marine transportation equipment, 5-40 years; buildings, 10-40 years;
other equipment, 2-10 years; and leasehold improvements, term of lease. When property items are retired, sold, or
otherwise disposed of, the related cost and accumulated depreciation are removed from the accounts with any gain
or loss on the disposition included in the statement of earnings. Maintenance and repairs on vessels built for use on
the inland waterways are charged to operating expense as incurred and includes the costs incurred in United States
Coast Guard (‘‘USCG’’) inspections unless the shipyard extends the life or improves the operating capacity of the
vessel which results in the costs being capitalized.
Drydocking on Ocean-Going Vessels. The Company’s ocean-going vessels are subject to regulatory drydocking
requirements after certain periods of time to be inspected, have planned major maintenance performed and be
recertified by the American Bureau of Shipping (‘‘ABS’’). These recertifications generally occur twice in a five-year
period. The Company defers the drydocking expenditures incurred on its ocean-going vessels due to regulatory
marine inspections by the ABS and amortizes the costs of the shipyard over the period between drydockings,
generally 30 or 60 months, depending on the type of major maintenance performed. Drydocking expenditures that
extend the life or improve the operating capability of the vessel result in the costs being capitalized. The Company
recognized amortization of major maintenance costs of $30,214,000, $23,962,000 and $20,760,000 for the years
ended December 31, 2020, 2019, and 2018, respectively, in costs of sales and operating expenses. Routine repairs
66
and maintenance on ocean-going vessels are expensed as incurred. Interest is capitalized on the construction of new
ocean-going vessels. Interest expense excludes capitalized interest of $1,003,000 and $2,206,000 for the years ending
December 31, 2019 and 2018, respectively. For the year ended December 31, 2020, no interest was capitalized.
Environmental Liabilities. The Company expenses costs related to environmental events as they are incurred or
when a loss is considered probable and reasonably estimable.
Goodwill. The excess of the purchase price over the fair value of identifiable net assets acquired in transactions
accounted for as a purchase is included in goodwill. The Company conducted its annual goodwill impairment tests
at November 30, 2020, 2019 and 2018. The Company also conducted an interim goodwill impairment test at
March 31, 2020. Refer to Note 7, Impairments and other charges for more information. The Company will continue
to conduct goodwill impairment tests as of November 30 of subsequent years, or whenever events or circumstances
indicate that interim impairment testing is necessary. The amount of goodwill impairment, if any, is typically
measured based on projected discounted future operating cash flows using an appropriate discount rate. The
following table summarizes the changes in goodwill (in thousands):
Marine
Transportation
Distribution and
Services
Total
Balance at December 31, 2017 (gross) . . . . . . . . . . . . . . . . . . . . . $
Accumulated impairment and amortization . . . . . . . . . . . . . . . .
Balance at December 31, 2017. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Higman acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Targa acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at December 31, 2018 (gross) . . . . . . . . . . . . . . . . . . . . .
Accumulated impairment and amortization . . . . . . . . . . . . . . . .
Balance at December 31, 2018. . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Balance at December 31, 2019 (gross) . . . . . . . . . . . . . . . . . . . . . $
Accumulated impairment and amortization . . . . . . . . . . . . . . . .
Balance at December 31, 2019. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Savage acquisition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Convoy acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at December 31, 2020 (gross) . . . . . . . . . . . . . . . . . . . . .
Accumulated impairment and amortization . . . . . . . . . . . . . . . .
Balance at December 31, 2020. . . . . . . . . . . . . . . . . . . . . . . . . . . . $
403,376 $
(15,872)
387,504
(2,702)
4,657
16,116
—
424,149
(18,574)
405,575 $
424,149 $
(18,574)
405,575
—
81,635
—
505,784
(18,574)
487,210 $
549,226 $
(1,595)
547,631
—
—
—
620
549,846
(1,595)
548,251 $
549,846 $
(1,595)
548,251
(387,970)
—
10,309
560,155
(389,565)
170,590 $
952,602
(17,467)
935,135
(2,702)
4,657
16,116
620
973,995
(20,169)
953,826
973,995
(20,169)
953,826
(387,970)
81,635
10,309
1,065,939
(408,139)
657,800
Other Intangibles. Other intangibles include assets for favorable contracts and customer relationships,
distributorship and dealership agreements, trade names and non-compete agreements and liabilities for unfavorable
leases and contracts. The following table summarizes the balances of other intangible assets and other intangible
liabilities (in thousands):
December 31,
2020
2019
Other intangible assets – gross. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Accumulated amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
203,217 $
(134,238)
332,656
(121,974)
Other intangible assets – net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
68,979 $
210,682
Other intangible liabilities – gross . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Accumulated amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other intangible liabilities – net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
13,860 $
(10,960)
2,900 $
13,860
(7,956)
5,904
67
The costs of intangible assets and liabilities are amortized to expense in a systematic and rational manner over
their estimated useful lives. For the years ended December 31, 2020, 2019, and 2018, the amortization expense for
intangibles was $9,235,000, $15,040,000 and $16,760,000, respectively. Estimated net amortization expense for
amortizable intangible assets and liabilities for the next five years (2021 – 2025) is approximately $7,749,000,
$7,466,000, $7,947,000, $8,513,000 and $8,513,000, respectively. As of December 31, 2020, the weighted average
amortization period for intangible assets and liabilities was approximately nine years.
Revenue Recognition. The majority of marine transportation revenue is derived from term contracts, ranging
from one to three years, some of which have renewal options, and the remainder is from spot market movements. The
majority of the term contracts are for terms of one year. The Company provides marine transportation services for
its customers and, in almost all cases, does not assume ownership of the products it transports. A term contract is an
agreement with a specific customer to transport cargo from a designated origin to a designated destination at a set
rate or at a daily rate. The rate may or may not escalate during the term of the contract, however, the base rate
generally remains constant and contracts often include escalation provisions to recover changes in specific costs such
as fuel. A spot contract is an agreement with a customer to move cargo from a specific origin to a designated
destination for a rate negotiated at the time the cargo movement takes place. Spot contract rates are at the current
‘‘market’’ rate, including fuel, and are subject to market volatility. The Company uses a voyage accounting method
of revenue recognition for its marine transportation revenues which allocates voyage revenue based on the percent
of the voyage completed during the period. The performance of the service is invoiced as the transaction occurs and
payment is required depending on each specific customer’s credit.
Distribution products and services are generally sold based upon purchase orders or preferential service
agreements with the customer that include fixed or determinable prices. Parts sales are recognized when control
transfers to the customer, generally when title passes upon shipment to customers. Service revenue is recognized over
time as the service is provided using measures of progress utilizing hours worked or costs incurred as a percentage
of estimated hours or expected costs. Revenue from rental agreements is recognized on a straight-line basis over the
rental period. The Company recognizes the revenues on contract manufacturing activities upon shipment and transfer
of control to the customer. The transactions in the distribution and services segment are typically invoiced as parts
are shipped or upon the completion of the service job. Contract manufacturing activities are generally invoiced upon
shipment and the Company will often get deposits from its customers prior to starting work, or progress payments
during the project depending on the credit worthiness of the customer and the size of the project.
Stock-Based Compensation. The Company has share-based compensation plans covering selected officers and
other key employees as well as the Company’s Board of Directors. Stock-based grants made under the Company’s
stock plans are recorded at fair value on the date of the grant and the cost for all grants made under the director plan
and for grants made under the employee plan prior to February 19, 2018 is recognized ratably over the vesting period
of the stock option or restricted stock. On February 19, 2018, the employee stock award plan was amended to also
allow for the granting of restricted stock units (‘‘RSUs’’) to selected officers and other key employees. The
amendment included a provision for the continued vesting of unvested stock options and RSUs for employees who
meet certain years of service and age requirements at the time of their retirement. The vesting change resulted in
shorter expense accrual periods on stock options and RSUs granted after February 19, 2018 to employees who are
nearing retirement and meet the service and age requirements. Stock option grants are valued at the date of grant as
calculated under the Black-Scholes option pricing model. The Company accounts for forfeitures as they occur. The
Company’s stock-based compensation plans are more fully described in Note 8, Stock Award Plans.
Taxes on Income. The Company follows the asset and liability method of accounting for income taxes. Under
the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their
respective tax basis and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date.
Accrued Insurance. Accrued insurance liabilities include estimates based on individual
incurred claims
outstanding and an estimated amount for losses incurred but not reported (‘‘IBNR’’) or fully developed based on past
experience. Insurance premiums, IBNR losses and incurred claim losses, in excess of the Company’s deductible for
the years ended December 31, 2020, 2019, and 2018 were $30,564,000, $32,372,000, and $29,306,000, respectively.
68
Treasury Stock. The Company follows the average cost method of accounting for treasury stock transactions.
Impairment of Long-lived Assets and for Long-lived Assets to Be Disposed Of. The Company performs an
impairment assessment whenever events or changes in circumstances indicate that the carrying amount of long-lived
assets may not be recoverable.
Recoverability on marine transportation assets is assessed based on vessel classes, not on individual assets,
because identifiable cash flows for individual marine transportation assets are not available. Projecting customer
contract volumes allows estimation of future cash flows by projecting pricing and utilization by vessel class but it
is not practical to project which individual marine transportation asset will be utilized for any given contract. Because
customers do not specify which particular vessel is used, prices are quoted based on vessel classes not individual
assets. Nominations of vessels for specific jobs are determined on a day by day basis and are a function of the
equipment class required and the geographic position of vessels within that class at that particular time as vessels
within a class are interchangeable and provide the same service. The Company’s vessels are mobile assets and
equipped to operate in geographic regions throughout the United States and the Company has in the past and expects
to continue to move vessels from one region to another when it is necessary due to changing markets and it is
economical to do so. Barge vessel classes are based on similar capacities, hull type, and type of product and towing
vessels are based on similar hull type and horsepower.
If a triggering event is identified, the Company compares the carrying amount of the asset group to the estimated
undiscounted future cash flows expected to result from the use of the asset group. If the carrying amount of the asset
group exceeds the estimated undiscounted future cash flows, the Company measures the amount of the impairment
by comparing the carrying amount of the asset group to its estimated fair value. Assets to be disposed of are reported
at the lower of the carrying amount or fair value less costs to sell.
Fair Value Measurements. The accounting guidance for using fair value to measure certain assets and liabilities
establishes a three tier value hierarchy, which prioritizes the inputs to valuation techniques used in measuring fair
value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets for identical
assets or liabilities; Level 2, defined as inputs other than quoted prices in active markets that are either directly or
indirectly observable; and Level 3, defined as unobservable inputs in which little, if any, market data exists, therefore
requiring an entity to develop its own assumptions about the assumptions that market participants would use in
pricing the asset or liability. The fair value of the Company’s debt instruments is described in Note 5, Long-Term
Debt.
Accounting Standards
In December 2019, the Financial Accounting Standards Board (‘‘FASB’’) issued ASU 2019-12, ‘‘Income Taxes
(Topic 740): Simplifying the Accounting for Income Taxes’’ which simplifies the accounting for income taxes by
removing certain exceptions to the general principles in Topic 740, Income Taxes. The guidance is effective for fiscal
years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted.
The Company is currently evaluating this guidance to determine the impact on its consolidated financial statements.
In August 2018, the FASB issued ASU 2018-14, ‘‘Compensation – Retirement Benefits - Defined Benefit Plans
– General (Subtopic 715-20): Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit
Plans’’ (‘‘ASU 2018-14’’) which amends the annual disclosure requirements for employers that sponsor defined
benefit pension or other postretirement plans by removing certain requirements, providing clarification on existing
requirements and adding new requirements including adding an explanation of the reasons for significant gains and
losses related to changes in the benefit obligation for the period. The guidance is effective for fiscal years ending after
December 15, 2020. The Company adopted ASU 2018-14 on December 31, 2020 on a retrospective basis.
In January 2017, the FASB issued ASU 2017-04, ‘‘Intangibles – Goodwill and Other (Topic 350): Simplifying
the Test for Goodwill Impairment’’ (‘‘ASU 2017-04’’) which simplifies the subsequent measurement of goodwill by
eliminating Step 2 in the goodwill impairment test that required an entity to perform procedures to determine the fair
value of its assets and liabilities at the testing date. An entity instead shall perform its annual, or interim, goodwill
impairment test by comparing the fair value of a reporting unit with its carrying value and record an impairment
charge based on the excess of a reporting unit’s carrying amount over its fair value, incorporating all tax impacts
caused by the recognition of the impairment loss. An entity still has the option to perform the qualitative assessment
for a reporting unit to determine if the quantitative impairment test is necessary. The Company adopted ASU 2017-04
on January 1, 2020 on a prospective basis. See Note 7, Impairments and Other Charges for further details.
69
In February 2016, the FASB issued ASU 2016-02 ‘‘Leases (Topic 842)’’ (‘‘ASU 2016-02’’), to increase
transparency and comparability among organizations by requiring recognition of lease assets and lease liabilities on
the balance sheet and disclosure of key information about leasing arrangements. The Company adopted ASU 2016-02
on January 1, 2019 under the optional transition method that allows for a cumulative-effect adjustment to the opening
balance of retained earnings in the period of adoption and will not restate prior periods. The Company also elected
certain practical expedients permitted under the transition guidance which allowed the Company to carryforward its
historical lease classification and for the non-recognition of short-term leases. Adoption of ASU 2016-02 resulted in
the recognition of operating lease right-of-use assets for operating leases of $168,149,000 and lease liabilities for
operating leases of $175,778,000 on the Company’s Condensed Balance Sheets as of January 1, 2019, with no
material impact to the Condensed Statements of Earnings or Cash Flows. The Company did not have any financing
leases as of January 1, 2019. See Note 6, Leases for additional information.
(2) Acquisitions
During 2020, the Company purchased six newly constructed inland pressure barges for $39,350,000 in cash.
On April 1, 2020, the Company completed the acquisition of the inland tank barge fleet of Savage Inland Marine,
LLC (‘‘Savage’’) for $278,999,000 in cash. Savage’s tank barge fleet consisted of 92 inland tank barges with
approximately 2.5 million barrels of capacity and 45 inland towboats. The Savage assets that were acquired primarily
move petrochemicals, refined products, and crude oil on the Mississippi River, its tributaries, and the Gulf
Intracoastal Waterway. The Company also acquired Savage’s ship bunkering business and barge fleeting business
along the Gulf Coast. The Company considers Savage to be a natural extension of the current marine transportation
segment, expanding the capabilities of the Company’s inland based marine transportation business and lowering the
average age of its fleet.
On January 3, 2020, the Company completed the acquisition of substantially all the assets of Convoy Servicing
Company and Agility Fleet Services, LLC (collectively ‘‘Convoy’’) for $37,180,000 in cash. Convoy is an authorized
dealer for Thermo King refrigeration systems for trucks, railroad cars and other land transportation markets for North
and East Texas and Colorado.
The fair values of the assets acquired and liabilities assumed from the Savage and Convoy acquisitions recorded
at the respective acquisition dates were as follows (in thousands):
Savage
Convoy
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease right-of-use assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other intangibles. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
— $
—
1,067
210,065
27,085
81,635
2,300
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
322,152
Accounts payable and accrued liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease liabilities, including current portion . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
$
68
43,085
43,153
278,999
$
$
$
$
5,677
11,771
177
415
3,713
10,309
17,170
49,232
8,339
3,713
12,052
37,180
The Company acquired customer relationships with an estimated value of $2,300,000 from Savage with an
amortization period of 10 years. Acquisition related costs of $376,000, consisting primarily of legal and other
professional fees, were expensed as incurred to selling, general and administrative expense. All goodwill recorded for
the Savage acquisition will be deductible for tax purposes.
70
The Company acquired intangible assets from Convoy with a weighted average amortization period of 11 years,
consisting of $9,000,000 for customer relationships with an amortization period of 10 years, $8,000,000 for
distributorships with an amortization period of 12 years and $170,000 for non-compete agreements with an
amortization period of three years. All goodwill recorded for the Convoy acquisition will be deductible for tax
purposes.
Pro forma results of the acquisitions made in the 2020 have not been presented as the pro forma revenues and
net earnings attributable to Kirby would not be materially different from the Company’s actual results.
During the year ended December 31, 2019, the Company purchased, from various counterparties, a barge
fleeting operation in Lake Charles, Louisiana and nine inland tank barges from leasing companies for an aggregate
of $17,991,000 in cash. The Company had been leasing the barges prior to the purchases.
On March 14, 2019, the Company completed the acquisition of the marine transportation fleet of Cenac Marine
Services, LLC (‘‘Cenac’’) for $244,500,000 in cash. Cenac’s fleet consisted of 63 inland 30,000 barrel tank barges
with approximately 1,833,000 barrels of capacity, 34 inland towboats and two offshore tugboats. Cenac transported
petrochemicals, refined products and black oil, including crude oil, residual fuels, feedstocks and lubricants on the
lower Mississippi River, its tributaries, and the Gulf Intracoastal Waterway for major oil companies and refiners. The
average age of the inland tank barges was approximately five years and the inland towboats had an average age of
approximately seven years.
The Company considers Cenac to be a natural extension of the current marine transportation segment, expanding
the capabilities of the Company’s inland based marine transportation business and lowering the average age of its
inland tank barge and towboat fleet.
The fair values of the assets acquired and liabilities assumed from the Cenac acquisition and recorded at the
acquisition date were as follows (in thousands):
Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other intangibles. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
1,138
247,122
340
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
248,600
Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
4,100
244,500
The Company acquired intangible assets with an amortization period of two years and incurred long-term
intangible liabilities related to unfavorable contracts with a weighted average amortization period of approximately
1.3 years. Acquisition related costs of $442,000, consisting primarily of legal and other professional fees, were
expensed as incurred to selling, general and administrative expense in 2019.
On December 28, 2018, the Company purchased three inland tank barges from a leasing company for
$3,120,000 in cash. The Company had been leasing the barges prior to the purchase.
On December 14, 2018, the Company purchased 27 inland tank barges with a barrel capacity of 306,000 barrels
from CGBM 100, LLC for $28,500,000 in cash. The 27 tank barges transport petrochemicals and refined products
on the Mississippi River System and the Gulf Intracoastal Waterway. The average age of the barges was eight years.
On November 30, 2018, the Company purchased an inland towboat from a leasing company for $3,050,000 in
cash. The Company had been leasing the towboat prior to the purchase.
On May 10, 2018, the Company completed the purchase of Targa Resources Corp.’s (‘‘Targa’’) inland tank barge
business from a subsidiary of Targa for $69,250,000 in cash. Targa’s inland tank barge fleet consisted of 16 pressure
barges with a total capacity of 258,000 barrels, many of which were under multi-year contracts that the Company
assumed from Targa. The 16 tank barges transport petrochemicals on the Mississippi River System and the Gulf
Intracoastal Waterway. As a result of the acquisition,
the Company recorded $16,116,000 of goodwill and
$11,000,000 of intangibles with an average amortization period of 15 years. All goodwill recorded for the Targa
acquisition will be deductible for tax purposes.
71
On March 15, 2018, the Company purchased two inland pressure tank barges from a competitor for $10,400,000
in cash. The average age of the two tank barges was five years.
On February 14, 2018, the Company completed the acquisition of Higman Marine, Inc. (‘‘Higman’’) for
$421,922,000 in cash. Higman’s fleet consisted of 163 inland tank barges with 4.8 million barrels of capacity, and
75 inland towboats, transporting petrochemicals, black oil, including crude oil and natural gas condensate, and
refined petroleum products on the Mississippi River System and the Gulf Intracoastal Waterway. The average age of
the inland tank barges was approximately seven years and the inland towboats had an average age of approximately
eight years. Financing of the acquisition was through the issuance of the 2028 Notes (as defined in Note 5,
Long-Term Debt) issued on February 12, 2018 in preparation for closing of the acquisition.
The Company considers Higman to be a natural extension of the current marine transportation segment,
expanding the capabilities of the Company’s inland based marine transportation business and lowering the average
age of its inland tank barge and towboat fleet.
The fair values of the assets acquired and liabilities assumed from the Higman acquisition and recorded at the
acquisition date were as follows (in thousands):
Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
2,313
27,527
5,323
497,951
4,657
30
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 537,801
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
17,012
14,127
40,524
44,216
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 115,879
Net assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 421,922
As a result of the acquisition, the Company recorded $4,657,000 of goodwill of which the majority will be
deductible for tax purposes. The Company also incurred $11,100,000 of intangible liabilities related to unfavorable
contracts with a weighted average amortization period of approximately 4.9 years. Acquisition related costs of
$3,464,000, consisting primarily of legal, audit and other professional fees plus other expenses, were expensed as
incurred to selling, general and administrative expense in 2018.
(3) Revenues
The following table sets forth the Company’s revenues by major source (in thousands):
Year Ended December 31,
2019
2018
2020
Marine transportation segment:
Inland transportation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Coastal transportation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,094,630
309,635
$1,220,878
366,204
$1,119,820
363,323
$1,404,265
$1,587,082
$1,483,143
Distribution and services segment:
Oil and gas. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commercial and industrial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 200,817
566,326
$ 659,364
591,953
$1,010,410
477,144
$ 767,143
$1,251,317
$1,487,554
72
The Company’s revenue is measured based on consideration specified in its contracts with its customers. The
Company recognizes revenue as it satisfies performance obligations in its contracts which occur as the Company
delivers a service over time to its customers, or at the point in time that it transfers control over a part or product to
its customer.
Contract Assets and Liabilities. Contract liabilities represent advance consideration received from customers,
and are recognized as revenue over time as the related performance obligation is satisfied. Revenues recognized
during the years ended December 31, 2020 and 2019 that were included in the opening contract liability balances
were $38,455,000 and $76,412,000, respectively. The Company has recognized all contract liabilities within the
deferred revenues financial statement caption on the balance sheet. The Company did not have any contract assets
at December 31, 2020 or December 31, 2019.
Performance Obligations. The Company applies the practical expedient
that allows non-disclosure of
information about remaining performance obligations that have original expected durations of one year or less.
(4) Segment Data
The Company’s operations are aggregated into two reportable business segments as follows:
Marine Transportation — Provides marine transportation by United States flagged vessels principally of liquid
cargoes throughout the United States inland waterway system, along all three United States coasts, in Alaska and
Hawaii and, to a lesser extent, in United States coastal transportation of dry-bulk cargoes. The principal products
transported include petrochemicals, black oil, refined petroleum products and agricultural chemicals.
Distribution and Services — Provides after-market services and parts for engines, transmissions, reduction gears
and related equipment used in oilfield service, marine, power generation, on-highway, and other industrial
applications. The Company also rents equipment including generators, industrial compressors, railcar movers, and
high capacity lift trucks for use in a variety of industrial markets, and manufactures and remanufactures oilfield
service equipment, including pressure pumping units, for land-based oilfield service customers.
The Company’s two reportable business segments are managed separately based on fundamental differences in
their operations. The Company’s accounting policies for the business segments are the same as those described in
Note 1, Summary of Significant Accounting Policies. The Company evaluates the performance of its segments based
on the contributions to operating income of the respective segments, and before income taxes, interest, gains or losses
on disposition of assets, other nonoperating income, noncontrolling interests, accounting changes, and nonrecurring
items. Intersegment revenues, based on market-based pricing, of the distribution and services segment from the
marine transportation segment of $27,782,000, $27,441,000, and $29,363,000 in 2020, 2019, and 2018, respectively,
as well as the related intersegment profit of $2,778,000, $2,744,000, and $2,936,000 in 2020, 2019, and 2018,
respectively, have been eliminated from the tables below.
The following tables set forth by reportable segment the revenues, profit or loss, total assets, depreciation and
amortization, and capital expenditures attributable to the principal activities of the Company (in thousands):
Revenues:
Marine transportation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Distribution and services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Segment profit (loss):
Marine transportation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Distribution and services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization:
Marine transportation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Distribution and services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
73
Year Ended December 31,
2019
2018
2020
$ 1,404,265
767,143
$ 2,171,408
$ 1,587,082
1,251,317
$ 2,838,399
$ 1,483,143
1,487,554
$ 2,970,697
$
$
163,638
(12,191)
(612,798)
$ (461,351) $
215,842
67,201
(93,223)
189,820
$
$
186,798
28,255
4,868
219,921
$
$
179,742
35,998
3,892
219,632
$
$
$
$
147,416
129,305
(162,562)
114,159
182,307
39,349
3,316
224,972
Capital expenditures:
Marine transportation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Distribution and services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year Ended December 31,
2019
2018
2020
$
$
133,990
4,854
9,341
148,185
$
$
217,364
18,284
12,516
248,164
$
$
284,953
10,742
6,166
301,861
Total assets:
Marine transportation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Distribution and services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31,
2020
2019
$ 4,760,449
805,831
357,894
$ 5,924,174
$ 4,536,368
1,422,394
120,335
$ 6,079,097
The following table presents the details of ‘‘Other’’ segment profit (loss) (in thousands):
General corporate expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on disposition of assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairments and other charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lease cancellation costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year Ended December 31,
2019
(13,643) $
8,152
(35,525)
—
(55,994)
3,787
(93,223) $
2020
(11,050) $
118
(561,274)
—
(48,739)
8,147
(612,798) $
2018
(35,590)
1,968
(85,407)
(2,403)
(46,856)
5,726
(162,562)
$
$
The following table presents the details of ‘‘Other’’ total assets (in thousands):
General corporate assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Investment in affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
December 31,
2020
355,205
2,689
357,894
$
$
2019
118,310
2,025
120,335
(5) Long-Term Debt
The following table presents the carrying value and fair value of debt outstanding (in thousands):
December 31,
2020
2019
Revolving Credit Facility(a) . . . . . . . . . . . . . . . . . . . . . . . $
Term Loan(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.72% senior notes due February 27, 2020 . . . . . . . . . . .
3.29% senior notes due February 27, 2023 . . . . . . . . . . .
4.2% senior notes due March 1, 2028 . . . . . . . . . . . . . . .
Credit Line . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bank notes payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unamortized debt discounts and issuance costs(b) . . . . .
Carrying Value
250,000
375,000
—
350,000
500,000
—
40
1,475,040
(6,454)
$ 1,468,586
Fair Value
$
250,000
375,000
—
364,538
581,115
—
40
1,570,693
—
$ 1,570,693
Carrying Value
$
— $
375,000
150,000
350,000
500,000
—
16
1,375,016
(5,249)
$ 1,369,767
Fair Value
—
375,000
151,547
353,216
541,546
—
16
1,421,325
—
$ 1,421,325
(a) Variable interest rate of 1.5% and 2.9% at December 31, 2020 and 2019, respectively.
(b)
Excludes $2,650,000 attributable to the Revolving Credit Facility included in other assets at December 31, 2019.
74
The fair value of debt outstanding was determined using inputs characteristic of a Level 2 fair value
measurement.
The following table presents borrowings and payments under the bank credit facilities (in thousands):
Year Ended December 31,
2019
2018
2020
Borrowings on bank credit facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Payments on bank credit facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
582,277 $ 1,351,158 $ 2,302,433
(2,380,888)
(1,768,534)
(332,253)
$
250,024 $
(417,376) $
(78,455)
The aggregate payments due on the long-term debt in each of the next five years were as follows (in thousands):
2021. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2022. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
40
—
381,250
593,750
—
500,000
$ 1,475,040
The Company has an amended and restated credit agreement (‘‘Credit Agreement’’) with a group of commercial
banks, with JPMorgan Chase Bank, N.A. as the administrative agent bank, allowing for an $850,000,000 revolving
credit facility (‘‘Revolving Credit Facility’’) and an unsecured term loan (‘‘Term Loan’’) with a maturity date of
March 27, 2024. The Credit Agreement provides for a variable interest rate based on the London interbank offered
rate (‘‘LIBOR’’) or a base rate calculated with reference to the agent bank’s prime rate, among other factors (the
‘‘Alternate Base Rate’’). The interest rate varies with the Company’s credit rating and is currently 112.5 basis points
over LIBOR or 12.5 basis points over the Alternate Base Rate. The Term Loan is repayable in quarterly installments
currently scheduled to commence September 30, 2023, in increasing percentages of the original principal amount of
the loan, with $343,750,000 due on March 27, 2024. The Term Loan is prepayable, in whole or in part, without
penalty. During 2019, the Company repaid $125,000,000 under the Term Loan prior to the originally scheduled
installments. The Credit Agreement contains certain financial covenants including an interest coverage ratio and a
debt-to-capitalization ratio. In addition to financial covenants, the Credit Agreement contains covenants that, subject
to exceptions, restrict debt incurrence, mergers and acquisitions, sales of assets, dividends and investments,
liquidations and dissolutions, capital leases, transactions with affiliates and changes in lines of business. The Credit
Agreement specifies certain events of default, upon the occurrence of which the maturity of the outstanding loans
may be accelerated, including the failure to pay principal or interest, violation of covenants and default on other
indebtedness, among other events. Borrowings under the Credit Agreement may be used for general corporate
purposes including acquisitions. As of December 31, 2020, the Company was in compliance with all Credit
Agreement covenants. The Revolving Credit Facility includes a $25,000,000 commitment which may be used for
standby letters of credit. Outstanding letters of credit under the Revolving Credit Facility were $5,063,000 as of
December 31, 2020.
On February 27, 2020, upon maturity, the Company repaid in full $150,000,000 of 2.72% unsecured senior
notes.
On February 12, 2018, the Company issued $500,000,000 of 4.2% senior unsecured notes due March 1, 2028
(the ‘‘2028 Notes’’) with U.S. Bank National Association, as trustee. Interest payments of $10,500,000 are due
semi-annually on March 1 and September 1 of each year. The Company received cash proceeds of $495,019,000, net
of the original issue discount of $705,000 and debt issuance costs of $4,276,000. The 2028 Notes are unsecured and
rank equally in right of payment with the Company’s other unsecured senior indebtedness. The 2028 Notes contain
certain covenants on the part of the Company, including covenants relating to liens, sale-leasebacks, asset sales and
mergers, among others. The 2028 Notes also specify certain events of default, upon the occurrence of which the
maturity of the notes may be accelerated, including failure to pay principal and interest, violation of covenants or
75
default on other indebtedness, among others. The Company used the proceeds from the issuance of the 2028 Notes
to fund the acquisition of Higman. The remaining net proceeds of the sale of the 2028 Notes were used for the
repayment of indebtedness under the Company’s bank credit facilities.
The Company has $350,000,000 of 3.29% senior unsecured notes due February 27, 2023 (the ‘‘2023 Notes’’).
No principal payments are required until maturity. The 2023 Notes contain certain covenants on the part of the
Company, including an interest coverage covenant, a debt-to-capitalization covenant and covenants relating to liens,
asset sales and mergers, among others. The 2023 Notes also specify certain events of default, upon the occurrence
of which the maturity of the notes may be accelerated, including failure to pay principal and interest, violation of
covenants or default on other indebtedness, among others.
The Company has a $10,000,000 line of credit (‘‘Credit Line’’) with Bank of America, N.A. (‘‘Bank of
America’’) for short-term liquidity needs and letters of credit, with a maturity date of June 30, 2021. The Credit Line
allows the Company to borrow at an interest rate agreed to by Bank of America and the Company at the time each
borrowing is made or continued. The Company had no borrowings outstanding under the Credit Line as of
December 31, 2020. Outstanding letters of credit under the Credit Line were $1,007,000 as of December 31, 2020.
The Company also had $40,000 and $16,000 of short-term secured loans outstanding, as of December 31, 2020
and 2019, respectively, related to its South American operations.
As of December 31, 2020, the Company was in compliance with all covenants under its debt instruments.
(6) Leases
The Company currently leases various facilities and equipment under cancelable and noncancelable operating
leases. The accounting for the Company’s leases may require judgments, which include determining whether a
contract contains a lease, allocating the consideration between lease and non-lease components, and determining the
incremental borrowing rates. Leases with an initial noncancelable term of 12 months or less are not recorded on the
balance sheet and the related lease expense is recognized on a straight-line basis over the lease term. The Company
has also elected to combine lease and non-lease components on all classes of leased assets, except for leased towing
vessels for which the Company estimates approximately 70% of the costs relate to service costs and other non-lease
components. Variable lease costs relate primarily to real estate executory costs (i.e.
insurance and
maintenance).
taxes,
Future minimum lease payments under operating leases that have initial noncancelable lease terms in excess of
one year were as follows (in thousands):
2021. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2022. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total lease payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: imputed interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
The following table summarizes lease costs (in thousands):
December 31,
2020
2019
40,224 $
33,543
28,012
23,578
21,261
96,491
243,109
(46,863)
196,246 $
33,374
25,911
23,098
19,162
15,330
92,991
209,866
(43,085)
166,781
Year Ended December 31,
2020
2019
Operating lease cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Variable lease cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Short-term lease cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sublease income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total lease cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
43,810 $
1,550
25,387
(1,143)
69,604 $
39,064
2,326
31,340
(420)
72,310
76
The following table summarizes other supplemental information about the Company’s operating leases:
Weighted average discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted average remaining lease term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.1%
4.0%
10 years
11 years
December 31,
2020
2019
(7)
Impairments and Other Charges
During the 2020 first quarter, Kirby’s market capitalization declined significantly compared to the 2019 fourth
quarter. Over the same period, the overall United States stock market also declined significantly amid market
volatility. In addition, as a result of uncertainty surrounding the outbreak of COVID-19 and a sharp decline in oil
prices during the 2020 first quarter, many of the Company’s oil and gas customers responded by quickly cutting 2020
capital spending budgets and activity levels quickly declined. Lower activity levels have resulted in a decline in
drilling activity, resulting in lower demand for new and remanufactured oilfield equipment and related parts and
service in the distribution and services segment. As a result, the Company concluded that a triggering event had
occurred and performed interim quantitative impairment tests as of March 31, 2020 for certain of the distribution and
services segment’s long-lived assets and goodwill.
The Company determined the estimated fair value of such long-lived assets and reporting units using a
discounted cash flow analysis and a market approach for comparable companies. This analysis included
management’s judgment regarding short-term and long-term internal forecasts, updated for recent events, appropriate
discount rates, and capital expenditures using inputs characteristic of a Level 3 fair value measurement.
In performing the impairment test of long-lived assets within the distribution and services segment, the
Company determined that the carrying value of certain long-lived assets, including property and equipment as well
as intangible assets associated with customer relationships, tradenames, and distributorships, were no longer
recoverable, resulting in an impairment charge of $165,304,000 (including $148,909,000 impairment of intangible
assets other than goodwill and $16,395,000 impairment of property and equipment) to reduce such long-lived assets
to fair value during the three months ended March 31, 2020.
Based upon the results of the goodwill impairment test, the Company concluded that the carrying value of one
reporting unit in the distribution and services segment exceeded its estimated fair value. For the three months ended
March 31, 2020, the goodwill impairment charge of $387,970,000 was calculated as the amount that the carrying
value of the reporting unit, including goodwill, and after recording impairments of long-lived assets identified above,
exceeded its estimated fair value, incorporating all tax impacts caused by the recognition of the impairment loss.
In addition, the Company determined cost exceeded net realizable value for certain oilfield and pressure
pumping related inventory, resulting in an $8,000,000 non-cash write-down during the three months ended March 31,
2020.
During the fourth quarter of 2019, the Company recorded a $35,525,000 non-cash pre-tax write-down of oilfield
and pressure pumping related inventory in the distribution and services segment.
During the fourth quarter of 2018, the Company recorded a $82,705,000 non-cash pre-tax impairment charge.
The after-tax effect of the charge was $65,337,000 or $1.09 per share. The USCG adopted regulations on ballast water
management systems (‘‘BWMS’’) establishing a standard for the allowable concentration of living organisms in
certain vessel ballast water discharged in waters of the United States under the National Invasive Species Act. The
regulations include requirements for the installation of engineering equipment to treat ballast water by establishing
an approval process for BWMS. The USCG has approved manufacturers’ systems that met the regulatory discharge
standard equivalent to the International Maritime Organization’s D-2 standard. The phase-in schedule for those
existing vessels requiring a system to install BWMS equipment is dependent on vessel build date, ballast water
capacity, and drydock schedule. Compliance with the ballast water treatment regulations requires the installation of
equipment on some of the Company’s vessels to treat ballast water before it is discharged. The installation of BWMS
equipment will require significant capital expenditures at the next scheduled drydocking to complete the installation
of the approved system on those existing vessels that require a system to comply with the BWMS regulations.
Due to the advanced age of four of the Company’s older articulated tank barge and tugboat units (‘‘ATBs’’) and
the high cost of installation of BWMS, the Company expects to retire the ATBs at their next scheduled shipyard dates
77
instead of installing the expensive BWMS equipment required to operate the vessels past their next required shipyard
dates. A pre-tax impairment charge of $78,835,000 was incurred in the fourth quarter of 2018 to reduce the ATBs to
a fair value of $13,247,000 due to reduced estimated cash flows resulting from reduced lives on these four older
ATBs. The reduced estimated useful lives are due to the assessment of the impact of the new regulations by USCG
that require the installation of BWMS. The fair value of the four ATBs of $13,247,000 is presented in marine
transportation equipment at December 31, 2018.
The impairment charge also included a pre-tax charge of $3,870,000 as the Company reduced the carrying value
of its improvements in a leased barge to its scrap value of $220,000. As part of a lease termination, the Company
agreed to terminate the lease, purchase the barge and then scrap the barge which resulted in the Company committing
to put the barge up for sale in December 2018. The barge was scrapped in January 2019. The fair market value of
the barge was $220,000 at December 31, 2018, and was presented in prepaid expenses and other current assets. In
addition, the Company incurred $2,403,000 in lease cancellation costs in December 2018 related to the leased barge.
During the 2018 fourth quarter, the Company took a $2,702,000 charge for the impairment of the remaining
goodwill recorded for Osprey Line, L.L.C., a subsidiary that transports project cargoes and cargo containers by barge
on the United States inland waterway system. The impairment reflected the reduced profitability outlook of the
container-on-barge operations due to the current economic environment. The fair value was determined using a
combination of a discounted cash flow methodology and a market based approach utilizing a net earnings before
interest expense, taxes on income, depreciation and amortization (EBITDA) multiplier.
(8) Stock Award Plans
The Company has share-based compensation plans which are described below. The compensation cost that has
been charged against earnings for the Company’s stock award plans and the income tax benefit recognized in the
statement of earnings for stock awards were as follows (in thousands):
Year Ended December 31,
2019
2018
2020
Compensation cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Income tax benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
14,722 $
4,143 $
13,612 $
3,368 $
19,104
5,903
The Company has an employee stock award plan for selected officers and other key employees which provides
for the issuance of stock options, restricted stock awards and performance awards. On February 19, 2018, the
employee stock award plan was amended to also allow for the granting of RSUs to selected officers and other key
employees. Restricted stock and RSUs generally vest ratably over five years, however, the amendment included a
provision for the continued vesting of unvested stock options and RSUs for employees who meet certain years of
service and age requirements at the time of their retirement. The vesting change resulted in shorter expense accrual
periods on stock options and RSUs granted after February 19, 2018 to employees who are nearing retirement and
meet the service and age requirements.
The exercise price for each option equals the fair market value per share of the Company’s common stock on
the date of grant. Substantially all stock options outstanding under the plan have terms of seven years and vest ratably
over three years. No performance awards payable in stock have been awarded under the plan. At December 31, 2020,
1,100,687 shares were available for future grants under the employee plan and no outstanding stock options under
the employee plan were issued with stock appreciation rights.
The following is a summary of the stock option activity under the employee plan described above:
Outstanding at December 31, 2019. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Canceled or expired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding at December 31, 2020. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
486,059 $
114,600 $
(19,851) $
(3,291) $
577,517 $
71.65
73.29
64.42
95.18
72.09
Outstanding
Non-
Qualified or
Nonincentive
Stock Awards
Weighted
Average
Exercise
Price
78
The following table summarizes information about the Company’s outstanding and exercisable stock options
under the employee plan at December 31, 2020:
Range of Exercise Prices
$51.23 . . . . . . . . . . . . . . . .
$64.65 – $68.50 . . . . . . . .
$73.29 – $75.50 . . . . . . . .
$84.90 – $101.46 . . . . . . .
$51.23 – $101.46 . . . . . . .
Number
Outstanding
62,315
94,218
380,289
40,695
577,517
Options Outstanding
Weighted
Average
Remaining
Contractual
Life in
Years
Weighted
Average
Exercise
Price
2.1
3.5
4.6
1.0
3.9
$ 51.23
$ 67.26
$ 74.32
$ 94.31
$ 72.09
Options Exercisable
Aggregated
Intrinsic
Value
Number
Exercisable
62,315
63,218
157,176
36,225
318,934
$
37,000
Weighted
Average
Exercise
Price
$ 51.23
$ 68.43
$ 74.98
$ 95.47
$ 71.37
Aggregated
Intrinsic
Value
$ 37,000
The following is a summary of the restricted stock award activity under the employee plan described above:
Nonvested balance at December 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nonvested balance at December 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unvested
Restricted
Stock Award
Shares
134,669
(48,450)
(2,317)
83,902
Weighted
Average
Grant Date
Fair Value
Per Share
$
63.28
$ 63.24
$ 62.46
$ 63.33
No restricted stock awards were granted under the employee plan during 2020, 2019, or 2018.
The following is a summary of RSU activity under the employee plan described above:
Nonvested balance at December 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Granted. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nonvested balance at December 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted
Average
Grant Date
Fair Value
Per Unit
$
$
$
$
$
74.96
73.04
75.08
73.91
74.09
Unvested
RSUs
255,167
153,460
(64,039)
(6,170)
338,418
The weighted average grant date fair value of RSUs granted for the years ended December 31, 2020, 2019, and
2018 was $73.04, $74.46, and $75.59, respectively.
During January 2021, the Company granted 309,506 RSUs to selected officers and other key employees under
its employee stock award plan, the majority of which vest ratably over five years.
The Company has a stock award plan for nonemployee directors of the Company which provides for the
issuance of stock options and restricted stock. The director plan provides for automatic grants of restricted stock to
nonemployee directors after each annual meeting of stockholders. In addition, the director plan allows for the
issuance of stock options or restricted stock in lieu of cash for all or part of the annual director fee at the option of
the director. The exercise prices for all options granted under the plan are equal to the fair market value per share
of the Company’s common stock on the date of grant. The terms of the options are ten years. The restricted stock
issued after each annual meeting of stockholders vests six months after the date of grant. Options granted and
restricted stock issued in lieu of cash director fees vest in equal quarterly increments during the year to which they
relate. At December 31, 2020, 421,220 shares were available for future grants under the director plan. The director
stock award plan is intended as an incentive to attract and retain qualified independent directors.
79
The following is a summary of the stock option activity under the director plan described above:
Outstanding at December 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding at December 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding
Non-
Qualified or
Nonincentive
Stock
Awards
115,756
(12,000)
103,756
Weighted
Average
Exercise
Price
$ 73.68
$ 41.24
$ 77.44
The following table summarizes information about the Company’s outstanding and exercisable stock options
under the director plan at December 31, 2020:
Range of Exercise Prices
$56.45 . . . . . . . . . . . . . . . . . . . . . . .
$61.89 – $62.48 . . . . . . . . . . . . . . .
$70.65 – $99.52 . . . . . . . . . . . . . . .
$56.45 – $99.52 . . . . . . . . . . . . . . .
Number
Outstanding
13,276
22,000
68,480
103,756
Options Outstanding
Weighted
Average
Remaining
Contractual
Life in
Years
Weighted
Average
Exercise
Price
Options Exercisable
Aggregate
Intrinsic
Value
Number
Exercisable
Weighted
Average
Exercise
Price
Aggregate
Intrinsic
Value
0.3 $ 56.45
1.6 $ 62.21
3.4 $ 86.39
2.6 $ 77.44 $
13,276
22,000
68,480
— 103,756
$ 56.45
$ 62.21
$ 86.39
$ 77.44 $
—
The following is a summary of the restricted stock award activity under the director plan described above:
Nonvested balance at December 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Granted. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nonvested balance at December 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unvested
Restricted
Stock Award
Shares
1,739
39,913
(40,748)
904
Weighted
Average
Grant Date
Fair Value
Per Share
$
83.68
$ 49.84
51.28
$
49.84
$
The weighted average grant date fair value of restricted stock awards granted under the director plan for the
years ended December 31, 2020, 2019, and 2018 were $49.84, $84.81, and $85.70, respectively.
The total intrinsic value of all stock options exercised under all of the Company’s plans was $745,000,
$1,655,000 and $6,709,000 for the years ended December 31, 2020, 2019, and 2018, respectively. The actual tax
benefit realized for tax deductions from stock option exercises was $210,000, $410,000, and $2,073,000 for the years
ended December 31, 2020, 2019, and 2018, respectively.
The total fair value of all the restricted stock vestings under all of the Company’s plans was $5,649,000,
$5,917,000, and $12,936,000 for the years ended December 31, 2020, 2019, and 2018, respectively. The actual tax
benefit realized for tax deductions from restricted stock vestings was $1,590,000, $1,464,000, and $3,997,000 for the
years ended December 31, 2020, 2019, and 2018, respectively.
The total fair value of all the RSU vestings under the Company’s employee plan was $5,172,000 and $1,727,000
for the years ended December 31, 2020 and 2019, respectively. The actual tax benefit realized for tax deductions from
RSU vestings was $1,455,000 and $427,000 for the years ended December 31, 2020 and 2019, respectively. There
were no RSU vestings for the year ended December 31, 2018.
80
As of December 31, 2020, there was $2,136,000 of unrecognized compensation cost related to nonvested stock
options, $1,468,000 related to restricted stock and $13,298,000 related to nonvested RSUs. The stock options are
expected to be recognized over a weighted average period of approximately 1.7 years, restricted stock over
approximately 0.6 years and RSUs over approximately 3.3 years.
The weighted average per share fair value of stock options granted during the years ended December 31, 2020,
2019, and 2018 was $20.19, $22.77, and $23.53, respectively. The fair value of the stock options granted during the
years ended December 31, 2020, 2019, and 2018 was $2,314,000, $2,666,000, and $2,787,000, respectively. The
Company currently uses treasury stock shares for restricted stock grants, RSU vestings and stock option exercises.
The fair value of each stock option was determined using the Black-Scholes option pricing model.
The key input variables used in valuing the stock options granted were as follows:
Year Ended December 31,
2019
2018
2020
Dividend yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Average risk-free interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock price volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Estimated option term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
None
None
None
1.3%
28%
2.5%
28%
2.7%
27%
5.3 years
5.3 years
5.5 years
(9) Taxes on Income
Earnings (loss) before taxes on income and details of the provision (benefit) for taxes on income were as follows
(in thousands):
Year Ended December 31,
2019
2020
2018
Earnings (loss) before taxes on income:
United States. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$(461,569)
218
$190,839
(1,019)
$117,800
(3,641)
$(461,351)
$189,820
$114,159
Provision (benefit) for taxes on income:
U.S. Federal:
Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$(218,613)
37,436
$
(312)
45,133
$
—
27,102
$(181,177)
$ 44,821
$ 27,102
U.S. State:
Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign:
Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
$
$
3,421
(12,273)
(8,852)
270
—
270
Consolidated:
Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$(214,922)
25,163
$
$
$
$
$
76
1,706
1,782
$
(243)
7,619
$ 7,376
198
—
198
(38)
46,839
$
$
$
443
160
603
200
34,881
$(189,759)
$ 46,801
$ 35,081
On March 27, 2020, the United States Congress passed and the President signed the Coronavirus Aid, Relief,
and Economic Security Act (‘‘CARES Act’’) into law to address the COVID-19 pandemic. One provision of the
CARES Act allows net operating losses generated in 2018 through 2020 to be carried back up to five years. Pursuant
to this provision of the CARES Act, the Company recorded a net federal current benefit for taxes on income for the
81
year ended December 31, 2020 due to carrying back net operating losses generated between 2018 and 2020 used to
offset taxable income generated between 2013 and 2017. Net operating losses carried back to tax years 2013 through
2017 are applied at a federal tax rate of 35% applicable to those tax years, compared to a 21% tax rate effective at
December 31, 2020. Net operating losses generated in 2018 and 2019 were used to offset taxable income generated
between 2013 and 2017 taxed at 35% resulting in a tax benefit of $59,659,000 and a decrease in the company’s
deferred tax asset related to federal net operating losses of $88,292,000. During the year ended December 31, 2020,
the Company received a tax refund of $30,606,000 for its 2018 tax return related to net operating losses being carried
back to offset taxable income generated during 2013. At December 31, 2020, the Company had a federal income tax
receivable of $188,177,000 included in Accounts Receivable – Other on the balance sheet. During February 2021,
the Company received a tax refund of $119,493,000, including accrued interest, for its 2019 tax return.
The Company’s provision for taxes on income varied from the statutory federal income tax rate due to the following:
United States income tax statutory rate . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State and local taxes, net of federal benefit . . . . . . . . . . . . . . . . . . . . . . . . .
CARES Act – net operating loss carryback . . . . . . . . . . . . . . . . . . . . . . . . .
Other – net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year Ended December 31,
2019
2018
2020
21.0%
1.2
21.3
(2.4)
41.1%
21.0%
0.7
—
3.0
24.7%
21.0%
6.5
—
3.2
30.7%
The tax effects of temporary differences that give rise to significant portions of the non-current deferred tax
assets and liabilities were as follows (in thousands):
Deferred tax assets:
Allowance for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Insurance accruals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrealized loss on defined benefit plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill and other intangibles. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pension benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Valuation allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31,
2020
2019
1,793 $
13,496
4,864
6,040
15,929
44,487
82,186
7,444
5,480
181,719
(18,025)
163,694
1,758
13,401
4,397
1,109
10,253
—
143,181
6,825
7,392
188,316
(20,525)
167,791
Deferred tax liabilities:
Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred state taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill and other intangibles. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(678,916)
(74,468)
—
(17,154)
(770,538)
(620,891)
(63,640)
(54,844)
(16,620)
(755,995)
$ (606,844) $ (588,204)
During 2020, the Company generated a federal tax net operating loss mainly caused by taking the full cost
deduction of purchased fixed assets. The deferred tax assets of $53,498,000 has been recorded at December 31, 2020.
The Company had state operating loss deferred tax assets of $23,482,000 in 2020 and $17,282,000 in 2019. The
valuation allowance for state deferred tax assets as of December 31, 2020 and 2019 was $12,819,000 and
$11,760,000, respectively, related to the Company’s state net operating loss carryforwards based on the Company’s
determination that it is more likely than not that the deferred tax assets will not be realized. Expiration of these state
net operating loss carryforwards vary by state through 2040 and none will expire in fiscal 2021.
82
As of December 31, 2020, the Company had a Canadian net operating loss carryforward of $5,206,000 which
expires between 2037 and 2040. A full valuation allowance has been provided for this asset.
The Company or one of its subsidiaries files income tax returns in the United States federal jurisdiction and
various state jurisdictions. The Company’s federal income tax returns for the 2017 through 2019 tax years are
currently under examination. With few exceptions, the Company and its subsidiaries’ state income tax returns are
open to audit under the statute of limitations for the 2014 through 2019 tax years.
As of December 31, 2020, the Company has provided a liability of $971,000 for unrecognized tax benefits
related to various income tax issues which includes interest and penalties. The amount that would impact the
Company’s effective tax rate,
is $790,000, with the difference between the total amount of
unrecognized tax benefits and the amount that would impact the effective tax rate being primarily related to the
federal tax benefit of state income tax items. It is not reasonably possible to determine if the liability for unrecognized
tax benefits will significantly change prior to December 31, 2021 due to the uncertainty of possible examination
results. A reconciliation of the beginning and ending amount of the liability for unrecognized tax benefits is as follows
(in thousands):
if recognized,
Year Ended December 31,
2019
2018
2020
Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Additions based on tax positions related to the current year . . . . . . . . . . .
Additions for tax positions of prior years . . . . . . . . . . . . . . . . . . . . . . . . . .
Reductions for tax positions of prior years . . . . . . . . . . . . . . . . . . . . . . . . .
Settlements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
883 $
262
114
(266)
(210)
783 $
1,443 $
51
58
(669)
—
883 $
1,787
254
70
(668)
—
1,443
The Company accounts for interest and penalties related to uncertain tax positions as part of its provision for
federal and state income taxes. The Company recognized net benefit of $90,000, $71,000, and $209,000 in interest
and penalties for the years ended December 31, 2020, 2019, and 2018, respectively. The Company had $172,000 and
$289,000 of accrued liabilities for the payment of interest and penalties at December 31, 2020 and 2019, respectively.
(10) Earnings Per Share
The following table presents the components of basic and diluted earnings per share (in thousands, except per
share amounts):
Year Ended December 31,
2019
2018
2020
Net earnings (loss) attributable to Kirby . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (272,546) $
Undistributed earnings allocated to restricted shares. . . . . . . . . . . . . . . . . .
Income (loss) available to Kirby common stockholders — basic. . . . . . . .
Undistributed earnings allocated to restricted shares. . . . . . . . . . . . . . . . . .
Undistributed earnings reallocated to restricted shares . . . . . . . . . . . . . . . .
Income (loss) available to Kirby common stockholders — diluted . . . . . . $ (272,546) $
—
(272,546)
—
—
142,347 $
(369)
141,978
369
(369)
141,978 $
Shares outstanding:
Weighted average common stock issued and outstanding . . . . . . . . . . . . . .
Weighted average unvested restricted stock . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted average common stock outstanding — basic. . . . . . . . . . . . . . . .
Dilutive effect of stock options and restricted stock units . . . . . . . . . . . . .
Weighted average common stock outstanding — diluted . . . . . . . . . . . . . .
60,021
(109)
59,912
—
59,912
59,905
(155)
59,750
159
59,909
78,452
(324)
78,128
324
(323)
78,129
59,804
(247)
59,557
132
59,689
Net earnings (loss) per share attributable to Kirby common stockholders:
Basic. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(4.55) $
(4.55) $
2.38 $
2.37 $
1.31
1.31
83
Certain outstanding options to purchase approximately 681,000, 187,000, and 384,000 shares of common stock
were excluded in the computation of diluted earnings per share as of December 31, 2020, 2019, and 2018,
respectively, as such stock options would have been antidilutive. Certain outstanding RSUs to convert to 11,000
shares of common stock were also excluded in the computation of diluted earnings per share as of December 31,
2020, as such RSUs would have been antidilutive. No RSUs were antidilutive at December 31, 2019.
(11) Inventories
The following table presents the details of inventories (in thousands):
December 31,
Finished goods. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 255,491 $
Work in process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
54,184
309,675 $
$
2020
2019
291,214
60,187
351,401
(12) Retirement Plans
The Company sponsors a defined benefit plan (the ‘‘Kirby Pension Plan’’) for its inland vessel personnel and
shore based tankermen. The plan benefits are based on an employee’s years of service and compensation. The plan
assets consist primarily of equity and fixed income securities.
On April 12, 2017, the Company amended the Kirby Pension Plan to cease all benefit accruals for periods after
May 31, 2017 for certain participants. Participants grandfathered and not impacted were those, as of the close of
business on May 31, 2017, who either (a) had completed 15 years of pension service or (b) had attained age 50 and
completed 10 years of pension service. Participants non-grandfathered are eligible to receive discretionary 401(k)
plan contributions.
On February 14, 2018, with the acquisition of Higman, the Company assumed Higman’s pension plan (the
‘‘Higman Pension Plan’’) for its inland vessel personnel and office staff. On March 27, 2018, the Company amended
the Higman pension plan to close it to all new entrants and cease all benefit accruals for periods after May 15, 2018
for all participants. The Company did not incur any one-time charges related to this amendment but the Higman
pension plan’s projected benefit obligation decreased by $3,081,000. The Company made contributions to the
Higman pension plan of $797,000 in 2020 for the 2019 plan year, $1,438,000 in 2020 for the 2020 plan year,
$1,615,000 in 2019 for the 2018 plan year, $1,449,000 in 2019 for the 2019 plan year, $6,717,000 in 2018 for the
2016 and 2017 plan years, and $1,385,000 in 2018 for the 2018 year.
The aggregate fair value of plan assets of the Company’s pension plans was $395,137,000 and $358,197,000 at
December 31, 2020 and 2019 respectively. Pension assets were allocated among asset categories as follows:
Asset Category
U.S. equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
International equity securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31,
2020
2019
Current
Minimum, Target
and Maximum
Allocation Policy
53%
20
25
2
100%
53% 30% — 50% — 70%
19
0% — 20% — 30%
15% — 30% — 55%
26
0% — 0% — 5%
2
100%
At December 31, 2020 and 2019, $25,032,000 and $25,871,000 respectively, was held in cash as well as debt
and equity securities classified within Level 1 of the valuation hierarchy and $138,000 and $125,000, respectively,
was held in real estate investments classified within Level 3 of the valuation hierarchy. All other plan assets are
invested in common collective trusts and valued using the net asset value per share practical expedient and therefore
not valued within the valuation hierarchy.
The Company’s investment strategy focuses on total return on invested assets (capital appreciation plus dividend
and interest income). The primary objective in the investment management of assets is to achieve long-term growth
of principal while avoiding excessive risk. Risk is managed through diversification of investments within and among
asset classes, as well as by choosing securities that have an established trading and underlying operating history.
84
The Company makes various assumptions when determining defined benefit plan costs including, but not
limited to, the current discount rate and the expected long-term return on plan assets. Discount rates are determined
annually and are based on a yield curve that consists of a hypothetical portfolio of high quality corporate bonds with
maturities matching the projected benefit cash flows. The Company assumed that plan assets would generate a
long-term rate of return of 6.75% in 2020 and 7.0% in 2019. The Company developed its expected long-term rate
of return assumption by evaluating input from investment consultants comparing historical returns for various asset
classes with its actual and targeted plan investments. The Company believes that its long-term asset allocation, on
average, will approximate the targeted allocation.
The Company’s pension plan funding strategy is to make annual contributions in amounts equal to or greater
than amounts necessary to meet minimum government funding requirements. The plan’s benefit obligations are based
on a variety of demographic and economic assumptions, and the pension plan assets’ returns are subject to various
risks, including market and interest rate risk, making an accurate prediction of the pension plan contribution difficult.
The Company’s pension plan funding was 82% of the pension plans’ accumulated benefit obligation at December 31,
2020, including both the Kirby Pension Plan and the Higman Pension Plan.
The Company sponsors an unfunded defined benefit health care plan that provides limited postretirement
medical benefits to employees who met minimum age and service requirements, and to eligible dependents. The plan
limits cost increases in the Company’s contribution to 4% per year. The plan is contributory, with retiree contributions
adjusted annually. The plan eliminated coverage for future retirees as of December 31, 2011. The Company also has
an unfunded defined benefit supplemental executive retirement plan (‘‘SERP’’) that was assumed in an acquisition
in 1999. That plan ceased to accrue additional benefits effective January 1, 2000.
The following table presents the change in benefit obligation and plan assets for the Company’s defined benefit
plans and postretirement benefit plan (in thousands):
Pension Benefits
Pension Plans
SERP
Other
Postretirement
Benefits
Postretirement
Welfare Plan
2020
2019
2020
2019
2020
2019
Change in benefit obligation
Benefit obligation at beginning of year . . . . . . . . . . $ 442,861 $ 381,483 $
Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Actuarial loss (gain) . . . . . . . . . . . . . . . . . . . . . .
Gross benefits paid. . . . . . . . . . . . . . . . . . . . . . .
Settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Benefit obligation at end of year . . . . . . . . . . . . . $ 508,694 $ 442,861 $
7,364
16,493
49,478
(11,957)
—
7,671
15,630
58,851
(11,029)
(5,290)
1,225 $
—
40
55
(146)
—
1,174 $
1,246 $
—
52
72
(145)
—
1,225 $
Accumulated benefit obligation at end of year . . . $ 479,999 $ 417,981 $
1,174 $
1,225 $
662
—
22
84
(139)
—
629
629
$
$
$
743
—
31
(22)
(90)
—
662
662
Weighted-average assumption used to determine
benefit obligation at end of year
Discount rate(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.8% / 2.9%
3.5%
2.8%
3.5%
2.8%
3.5%
Rate of compensation increase . . . . . . . . . . . . . . . .
Health care cost trend rate
Initial rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ultimate rate . . . . . . . . . . . . . . . . . . . . . . . . . . .
Years to ultimate . . . . . . . . . . . . . . . . . . . . . . . .
Service-
based
table
Service-
based
table
—
—
—
—
—
—
Change in plan assets
Fair value of plan assets at beginning of year . . . . . $ 358,197 $ 303,151 $
Actual return on plan assets . . . . . . . . . . . . . . . . . .
Employer contribution . . . . . . . . . . . . . . . . . . . . . .
Gross benefits paid. . . . . . . . . . . . . . . . . . . . . . . . .
Settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value of plan assets at end of year . . . . . . . . . . $ 395,137 $ 358,197 $
63,939
3,064
(11,957)
—
51,024
2,235
(11,029)
(5,290)
—
—
—
—
—
—
—
—
—
—
6.5%
5.0%
2025
6.75%
5.0%
2025
— $
—
146
(146)
—
— $
— $
—
145
(145)
—
— $
— $
—
139
(139)
—
— $
—
—
90
(90)
—
—
(a)
The 2020 discount rate was 2.8% for the Kirby pension plan and 2.9% for the Higman pension plan.
85
During the years ended December 31, 2020 and December 31, 2019, the increases in the benefit obligation were
primarily due to the decreases in the discount rates each year, partially offset by actual returns on plan assets
performing better than expected and an update of the actuarial tables.
At December 31, 2020 and December 31, 2019, both the accumulated benefit obligation and the projected
benefit obligations of each of the Company’s pension plans exceeded the fair value of plan assets.
The following table presents the funded status and amounts recognized in the Company’s consolidated balance
sheet for the Company’s defined benefit plans and postretirement benefit plan (in thousands):
Pension Benefits
Pension Plans
SERP
Other Postretirement
Benefits
Postretirement
Welfare Plan
2020
2019
2020
2019
2020
2019
Funded status at end of year
Fair value of plan assets. . . . . . . . . . . . . . . . $ 395,137 $ 358,197 $
Benefit obligations . . . . . . . . . . . . . . . . . . . .
(508,694)
(442,861)
— $
— $
— $
(1,174)
(1,225)
(629)
—
(662)
Funded status and amount recognized at end
of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(113,557) $ (84,664) $
(1,174) $
(1,225) $
(629) $
(662)
Amounts recognized in the consolidated
balance sheets
Current liability . . . . . . . . . . . . . . . . . . . . . .
Long-term liability . . . . . . . . . . . . . . . . . . . .
Amounts recognized in accumulated other
—
(113,557)
—
(84,664)
(159)
(1,015)
(159)
(1,066)
(58)
(571)
(60)
(602)
comprehensive income
Net actuarial loss (gain) . . . . . . . . . . . . . . . . $ 81,376 $ 52,160 $
Prior service cost (credit) . . . . . . . . . . . . . . .
—
—
Accumulated other compensation income. . . $ 81,376 $ 52,160 $
480 $
—
480 $
460
—
460
$ (3,189) $ (3,795)
—
—
$ (3,189) $ (3,795)
The following table presents the expected cash flows for the Company’s defined benefit plans and postretirement
benefit plan (in thousands):
Pension Benefits
Pension Plans
SERP
Other Postretirement
Benefits
Postretirement
Welfare Plan
2020
2019
2020
2019
2020
2019
Expected employer contributions
First year . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2,385
$
2,407
$
— $
— $
— $
—
Expected benefit payments (gross)
Year one . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 13,902
14,902
Year two. . . . . . . . . . . . . . . . . . . . . . . . . . . .
16,123
Year three . . . . . . . . . . . . . . . . . . . . . . . . . . .
17,284
Year four . . . . . . . . . . . . . . . . . . . . . . . . . . .
18,315
Year five. . . . . . . . . . . . . . . . . . . . . . . . . . . .
106,400
Next five years . . . . . . . . . . . . . . . . . . . . . . .
$ 12,063
13,123
14,300
15,572
16,857
100,587
$
$
162
136
110
106
101
406
$
162
158
133
107
103
426
$
59
49
48
47
46
202
61
62
51
51
49
220
86
—
49
—
23
72
(70)
(23)
(93)
The components of net periodic benefit cost and other changes in plan assets and benefit obligations recognized
in other comprehensive income for the Company’s defined benefit plans were as follows (in thousands):
2020
Pension Plans
2019
Pension Benefits
2018
2020
SERP
2019
2018
$
$
7,671
15,630
(23,790)
2,399
1,910
7,364
16,493
(20,956)
1,438
4,339
$
7,622
15,499
(22,406)
2,890
3,605
— $
40
—
35
75
— $
52
—
28
80
Components of net periodic benefit
cost
Service cost . . . . . . . . . . . . . . . . . . $
Interest cost . . . . . . . . . . . . . . . . . .
Expected return on plan assets . . . .
Amortization of actuarial loss . . . . .
Net periodic benefit cost. . . . . . .
Other changes in plan assets and
benefit obligations recognized in
other comprehensive income
Current year actuarial loss (gain). . .
Recognition of actuarial loss . . . . . .
Total recognized in other
comprehensive income . . . . . . . .
29,217
5,059
(10,286)
31,616
(2,399)
6,497
(1,438)
(7,396)
(2,890)
55
(35)
20
73
(28)
45
Total recognized in net periodic
benefit cost and other
comprehensive income . . . . . . . . $
Weighted average assumptions used
to determine net periodic benefit
cost
Discount rate(a). . . . . . . . . . . . . . . . . .
Expected long-term rate of return on
plan assets . . . . . . . . . . . . . . . . . . .
Rate of compensation increase . . . . . .
31,127
$
9,398
$
(6,681)
$
95
$
125
$
(21)
3.5% / 3.10%
6.75%
Service-
based
table
4.4%
7.0%
Service-
based
table
3.7%
3.5%
4.4%
3.7%
7.0%
Service-
based
table
—
—
—
—
—
—
(a)
The 2020 discount rate for benefit cost is 3.5% for the Kirby pension plan and 3.1% for the Higman pension plan. The 2018 discount rate
for benefit cost for the Higman pension plan was changed from 4.13% as of February 14, 2018 and 4.02% as of March 31, 2018 to 4.40%
as of December 31, 2018.
87
The components of net periodic benefit cost and other changes in benefit obligations recognized in other
comprehensive income for the Company’s postretirement benefit plan were as follows (in thousands):
Other Postretirement Benefits
Postretirement Welfare Plan
2019
2018
2020
Components of net periodic benefit cost
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Amortization of actuarial gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net periodic benefit cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
22 $
31 $
(522)
(500)
(540)
(509)
24
(596)
(572)
Other changes in benefit obligations recognized in other comprehensive
income
Current year actuarial loss (gain). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recognition of actuarial gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total recognized in other comprehensive income . . . . . . . . . . . . . . . . . . . . . . . .
84
522
606
(22)
540
518
144
596
740
Total recognized in net periodic benefit cost and other comprehensive income . . $
106 $
9 $
168
Weighted average assumptions used to determine net periodic benefit cost
Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Health care cost trend rate:
3.5%
4.4%
3.7%
Initial rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ultimate rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Years to ultimate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.75%
5.0%
2025
7.0%
5.0%
7.0%
5.0%
2025
2022
The Company also contributes to a multiemployer pension plan pursuant to a collective bargaining agreement
which covers certain vessel crew members of its coastal operations and expires on April 30, 2022. The Company
began participation in the Seafarers Pension Trust (‘‘SPT’’) with the Penn Maritime, Inc. acquisition on December 14,
2012.
Contributions to the SPT are made currently based on a per day worked basis and charged to expense as incurred
and included in costs of sales and operating expenses in the consolidated statement of earnings. During 2020 and
2019, the Company made contributions of $617,000 and $665,000, respectively, to the SPT. The Company’s
contributions to the SPT exceeded 5% of total contributions to the SPT in 2019. Total contributions for 2020 are not
yet available. The Company did not pay any material surcharges in 2020 or 2019.
The federal identification number of the SPT is 13-6100329 and the Certified Zone Status is Green at
December 31, 2019. The Company’s future minimum contribution requirements under the SPT are unavailable
because actuarial reports for the 2020 plan year are not yet complete and such contributions are subject to
negotiations between the employers and the unions. The SPT was not in endangered or critical status for the 2019
plan year, the latest period for which a report is available, as the funded status was in excess of 100%. Based on an
actuarial valuation performed as of December 31, 2019, there would be no withdrawal liability if the Company chose
to withdraw from the SPT although the Company currently has no intention of terminating its participation in the
SPT.
The Company also contributes to a multiemployer pension plan pursuant to a collective bargaining agreement
which covers certain employees of its distribution and services segment in New Jersey and expires on October 8,
2023. The Company began participation in the Central Pension Fund of the International Union of Operating
Engineers and Participating Employers (‘‘CPF’’) with the Stewart & Stevenson LLC (‘‘S&S’’) acquisition on
September 13, 2017.
Contributions to the CPF are made currently based on a fixed hourly rate for each hour worked or paid basis
(in some cases contributions are made as a percentage of gross pay) and charged to expense as incurred and included
in costs of sales and operating expenses in the consolidated statement of earnings. During 2020 and 2019, the
Company made contributions of $691,000 and $693,000, respectively, to the CPF. Total contributions for the 2020
plan year are not yet available. The Company did not pay any material surcharges in 2020 or 2019.
88
The federal identification number of the CPF is 36-6052390 and the Certified Zone Status is Green at
January 31, 2020. The Company’s future minimum contribution requirements under the CPF are unavailable because
actuarial reports for the 2020 plan year, which ended January 31, 2021, are not yet complete and such contributions
are subject to negotiations between the employers and the unions. The CPF was not in endangered or critical status
for the 2019 plan year, ending January 31, 2020, the latest period for which a report is available, as the funded status
was 98%. There would be no withdrawal liability if the Company chose to withdraw from the CPF although the
Company currently has no intention of terminating its participation in the CPF.
In addition to the defined benefit plans,
the Company sponsors various defined contribution plans for
substantially all employees. The aggregate contributions to the plans were $25,514,000, $25,409,000, and
$22,392,000 in 2020, 2019, and 2018, respectively.
(13) Other Comprehensive Income (Loss)
The Company’s changes in other comprehensive income (loss) were as follows (in thousands):
Year Ended December 31
2020
Income
Tax
(Provision)
Benefit
Gross
Amount
2019
Income
Tax
(Provision)
Benefit
Net
Amount
Gross
Amount
2018
Net
Amount
Gross
Amount
Income
Tax
Provision
Net
Amount
Pension and
postretirement
benefits(a):
Amortization of net
actuarial loss. . . . . . . $ 1,912
$ (483) $ 1,429 $
926
$ (236) $
690 $2,317 $ (585) $ 1,732
Actuarial gains
(losses) . . . . . . . . . . .
(31,755)
7,006
(24,749)
(6,548)
1,655
(4,893) 7,322
(1,416)
5,906
Adoption of ASU
2018-02 –
reclassification to
retained earnings . . .
—
—
—
—
—
—
— (7,925)
(7,925)
Foreign currency
translation
adjustments. . . . . . . .
—
Total . . . . . . . . . . . . . . . $(30,176) $6,523
(333)
(333)
—
$(23,653) $(5,707) $1,419
(85)
(85)
(819)
$(4,288) $8,820 $(9,926) $(1,106)
(819)
—
(a) Actuarial gains (losses) are amortized into other income (expense). (See Note 12 – Retirement Plans)
(14) Contingencies and Commitments
In 2009, the Company was named by the Environmental Protection Agency (the ‘‘EPA’’) as a Potentially
Responsible Party (‘‘PRP’’) in addition to a group of approximately 250 named PRPs under the Comprehensive
Environmental Response, Compensation and Liability Act of 1981 (‘‘CERCLA’’) with respect to a Superfund site,
the Portland Harbor Superfund site (‘‘Portland Harbor’’) in Portland, Oregon. The site was declared a Superfund site
in December 2000 as a result of historical heavily industrialized use due to manufacturing, shipbuilding, petroleum
storage and distribution, metals salvaging, and electrical power generation activities which led to contamination of
Portland Harbor, an urban and industrial reach of the lower Willamette River located immediately downstream of
downtown Portland. The Company’s involvement arises from four spills at the site after it was declared a Superfund
site, as a result of predecessor entities’ actions in the area. To date, there is no information suggesting the extent of
the costs or damages to be claimed from the 250 notified PRPs. Based on the nature of the involvement at the Portland
Harbor site, the Company believes its potential contribution is de minimis; however, to date neither the EPA nor the
named PRPs have performed an allocation of potential liability in connection with the site nor have they provided
costs and expenses in connection with the site.
On February 20, 2015, the Company was served as a defendant in a Complaint originally filed on August 14,
2014, in the U.S. District Court of the Southern District of Texas - Houston Division, USOR Site PRP Group vs. A&M
Contractors, USES, Inc. et al. This is a civil action pursuant to the provisions of CERCLA and the Texas Solid Waste
89
Disposal Act for recovery of past and future response costs incurred and to be incurred by the USOR Site PRP Group
for response activities at the U.S. Oil Recovery Superfund Site. The property was a former sewage treatment plant
owned by defendant City of Pasadena, Texas from approximately 1945 until it was acquired by U.S. Oil Recovery
in January 2009. Throughout its operating life, the U.S. Oil Recovery facility portion of the USOR Site received and
performed wastewater pretreatment of municipal and Industrial Class I and Class II wastewater, characteristically
hazardous waste, used oil and oily sludges, and municipal solid waste. Associated operations were conducted at the
MCC Recycling facility portion of the USOR Site after it was acquired by U.S. Oil Recovery from the City of
Pasadena in January 2009. The EPA and the PRP Group entered into an Administrative Settlement Agreement and
Order for Remedial Investigation Study (‘‘Study’’) in May 2015. The Study has not been completed by EPA to date.
The Company joined as a member of the PRP Group companies at its pro-rata allocated share.
On October 13, 2016, the Company, as a successor to Hollywood Marine, Inc. (‘‘Hollywood Marine’’), was
issued a General Notice under CERCLA by the EPA in which it was named as a PRP for liabilities associated with
the SBA Shipyard Site located near Jennings, Louisiana (the ‘‘Site’’). The Site was added to the EPA’s National
Priorities List of sites under CERCLA in September 2016. SBA used the facility for construction, repair, retrofitting,
sandblasting, and cleaning and painting of barges beginning in 1965. Three barge slips and a dry dock are located
off the Mermentau River. The slips were used to dock barges during cleaning or repair. In 2001, a group of PRPs that
had been former customers of the SBA Shipyard facility formed an organization called the SSIC Remediation, LLC
(hereinafter, ‘‘the PRP Group Companies’’) to address removal actions at the Site. In 2002, EPA approved an Interim
Measures/Removal Action of Hazardous/Principal Threat Wastes at SBA Shipyards, Inc. (pursuant to RCRA Section
3008(h)) that was proposed by SBA Shipyard and the PRP Group Companies. Interim removal activities were
conducted from March 2001 through January 2005 under an EPA 2002 Order and Agreement. In September 2012,
the Louisiana Department of Environmental Quality requested EPA address the Site under CERCLA authority. The
Company, as a successor to Hollywood Marine, joined the PRP Group Companies. The PRP Group Companies have
submitted a draft Study work plan to EPA for their review and comment. Higman was named as a PRP in connection
with its activities at the Site. Higman is not a participant in the PRP Group Companies.
With respect to the above sites, the Company has accrued a liability, if applicable, for its estimated potential liability
for its portion of the EPA’s past costs claim based on information developed to date including various factors such as the
Company’s liability in proportion to other PRPs and the extent to which such costs are recoverable from third parties.
On May 10, 2019, two tank barges and a towboat, the M/V Voyager, owned and operated by Kirby Inland
Marine, LP, a wholly owned subsidiary of the Company, were struck by the LPG tanker, the Genesis River, in the
Houston Ship Channel. The bow of the Genesis River penetrated the Kirby 30015T and capsized the MMI 3014. The
collision penetrated the hull of the Kirby 30015T causing its cargo, reformate, to be discharged into the water. The
USCG and the National Transportation Safety Board (‘‘NTSB’’) designated the owner and pilot of the Genesis River
as well as the subsidiary of the Company as parties of interest in their investigation into the cause of the incident.
On June 19, 2019, the Company filed a limitation action in the U.S. District Court of the Southern District of Texas
- Galveston Division seeking limitation of liability and asserting that the Genesis River and her owner/manager are
at fault for damages including removal costs and claims under the Oil Pollution Act of 1990 and maritime law.
Multiple claimants have filed claims in the limitation seeking damages under the Oil Pollution Act of 1990. The
Company has various insurance policies covering liabilities including pollution, marine and general liability and
believes that it has satisfactory insurance coverage for the potential liabilities arising from the incident. The Company
believes its accrual of such estimated liability is adequate for the incident and does not expect the incident to have
a material adverse effect on its business or financial condition.
On October 13, 2016, the tug Nathan E. Stewart and barge DBL 55, an ATB owned and operated by Kirby
Offshore Marine, LLC, a wholly owned subsidiary of the Company, ran aground at the entrance to Seaforth Channel
on Atholone Island, British Columbia. The grounding resulted in a breach of a portion of the Nathan E. Stewart’s fuel
tanks causing a discharge of diesel fuel into the water. The USCG and the NTSB designated the Company as a party
of interest in their investigation as to the cause of the incident. The Canadian authorities including Transport Canada
and the Canadian Transportation Safety Board investigated the cause of the incident. On October 10, 2018, the
Heiltsuk First Nation filed a civil action in the British Columbia Supreme Court against a subsidiary of the Company,
the master and pilot of the tug, the vessels and the Canadian government seeking unquantified damages as a result
of the incident. On May 1, 2019, the Company filed a limitation action in the Federal Court of Canada seeking
limitation of liability relating to the incident as provided under admiralty law. The Heiltsuk First Nation’s civil claim
has been consolidated into the Federal Court limitation action as of July 26, 2019 and it is expected that the Federal
90
Court of Canada will decide all claims against the Company. The Company is unable to estimate the potential
exposure in the civil proceeding. On July 16, 2019, the Company and the Canadian government settled the charges
against the subsidiary of the Company. The subsidiary of the Company agreed to pay the Canadian government a fine
of approximately $2,900,000 Canadian dollars ($2,200,000 U.S. dollars) for violations of the Canadian Fisheries Act,
the Migratory Birds Convention Act, the Pilotage Act and the Shipping Act of 2001. The Company has various
insurance policies covering liabilities including pollution, property, marine and general liability and believes that it
has satisfactory insurance coverage for the cost of cleanup and salvage operations as well as other potential liabilities
arising from the incident. The Company believes its accrual of such estimated liability is adequate for the incident
and does not expect the incident to have a material adverse effect on its business or financial condition.
On March 22, 2014, two tank barges and a towboat, the M/V Miss Susan, owned by Kirby Inland Marine, were
involved in a collision with the M/S Summer Wind on the Houston Ship Channel near Texas City, Texas. The lead
tank barge was damaged in the collision resulting in a discharge of intermediate fuel oil from one of its cargo tanks.
While all legal action to date involving the Company has been resolved, the Company is participating in the natural
resource damage assessment and restoration process with federal and state government natural resource trustees. The
Company believes it has adequate insurance coverage for pollution, marine and other potential liabilities arising from
the incident. The Company believes its accrual of such estimated liability is adequate for the incident and does not
expect the incident to have a material adverse effect on its business or financial condition.
In addition, the Company is involved in various legal and other proceedings which are incidental to the conduct of
its business, none of which in the opinion of management will have a material effect on the Company’s financial condition,
results of operations or cash flows. Management believes its accrual of such estimated liability is adequate and believes
that it has adequate insurance coverage or has meritorious defenses for these other claims and contingencies.
Certain Significant Risks and Uncertainties. The preparation of financial statements in conformity with United
States generally accepted accounting principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates. However, in the opinion of management, the amounts would be immaterial.
The customer base of the marine transportation segment includes major industrial petrochemical and chemical
manufacturers, refining companies and agricultural chemical manufacturers operating in the United States. During
2020, approximately 65% of marine transportation’s inland revenues were from movements of such products under
term contracts,
typically ranging from one year to three years, some with renewal options. During 2020,
approximately 85% of the marine transportation’s coastal revenues were under term contracts. While the
manufacturing and refining companies have generally been customers of the Company for numerous years (some as
long as 40 years) and management anticipates a continuing relationship, there is no assurance that any individual
contract will be renewed. No single customer of the marine transportation segment accounted for 10% or more of the
Company’s revenues in 2020, 2019 or 2018.
Major customers of the distribution and services segment include oilfield service companies, oil and gas operators and
producers, inland and offshore barge operators, offshore fishing companies, on-highway transportation companies,
construction companies, the United States government, and power generation, nuclear and industrial companies.
The results of the distribution and services segment are largely tied to the industries it serves and, therefore, can
be influenced by the cycles of such industries. No single customer of the distribution and services segment accounted
for 10% or more of the Company’s revenues in 2020, 2019, or 2018.
United Holdings LLC (‘‘United’’) has maintained continuous exclusive distribution rights for MTU and Allison
Transmission products since 1946. United is one of MTU’s top five distributors of MTU off-highway engines in North
America with exclusive distribution rights in Oklahoma, Arkansas, Louisiana and Mississippi. In addition, as a distributor
of Allison Transmission products, United has distribution rights in Oklahoma, Arkansas and Louisiana. United is also the
distributor for parts service and warranty on Daimler Truck North America (‘‘DTNA’’) engines and related equipment in
Oklahoma, Arkansas and Louisiana. United, through certain of its subsidiaries, is also a dealer of Thermo King
refrigeration systems for trucks, railroad cars, and other land transportation markets in Texas and Colorado.
S&S is also one of MTU’s top five distributors for off-highway engines with exclusive distribution rights in
multiple states. S&S also has authorized exclusive distribution rights for Allison Transmission, Detroit Diesel, Deutz,
DTNA, EMD, Rolls Royce Power and Volvo Penta diesel engines in multiple key growth states, primarily through
91
the Central, South and Eastern parts of the United States and strategically located near major oil and gas fields,
marine waterways and on-highway transportation routes. In addition, S&S has long-term relationships with numerous
smaller suppliers including Donaldson, Freightliner, Generac and John Deere.
Kirby Engine Systems LLC, through Marine Systems, Inc. and Engine Systems, Inc. (‘‘Engine Systems’’),
operates as an authorized EMD distributor throughout the United States. Engine Systems is also the authorized EMD
distributor for nuclear power applications worldwide. The relationship with EMD has been maintained for over
50 years. The segment also operates factory-authorized full service marine distributorship/dealerships for Cummins,
Detroit Diesel and John Deere high-speed diesel engines and Falk, Lufkin and Twin Disc marine gears, as well as
an authorized marine dealer for Caterpillar diesel engine in multiple states.
Weather can be a major factor in the day-to-day operations of the marine transportation segment. Adverse
weather conditions, such as high or low water, tropical storms, hurricanes, tsunamis, fog and ice, can impair the
operating efficiencies of the marine fleet. Shipments of products can be delayed or postponed by weather conditions,
which are totally beyond the control of the Company. Adverse water conditions are also factors which impair the
efficiency of the fleet and can result in delays, diversions and limitations on night passages, and dictate horsepower
requirements and size of tows. Additionally, much of the inland waterway system is controlled by a series of locks
and dams designed to provide flood control, maintain pool levels of water in certain areas of the country and facilitate
navigation on the inland river system. Maintenance and operation of the navigable inland waterway infrastructure is
a government function handled by the Army Corps of Engineers with costs shared by industry. Significant changes
in governmental policies or appropriations with respect to maintenance and operation of the infrastructure could
adversely affect the Company.
The Company’s marine transportation segment is subject to regulation by the USCG, federal laws, state laws and
certain international conventions, as well as numerous environmental regulations. The Company believes that
additional safety, environmental and occupational health regulations may be imposed on the marine industry. There
can be no assurance that any such new regulations or requirements, or any discharge of pollutants by the Company,
will not have an adverse effect on the Company.
The Company’s marine transportation segment competes principally in markets subject to the Jones Act, a
federal cabotage law that restricts domestic marine transportation in the United States to vessels built and registered
in the United States, and manned, owned and operated by United States citizens. The Jones Act cabotage provisions
occasionally come under attack by interests seeking to facilitate foreign flagged competition in trades reserved for
domestic companies and vessels under the Jones Act. The Company believes that continued efforts will be made to
modify or eliminate the cabotage provisions of the Jones Act. If such efforts are successful, certain elements could
have an adverse effect on the Company. However, the Company believes that it is unlikely that the current cabotage
provisions of the Jones Act would be eliminated or significantly modified in a way that has a material adverse impact
on the Company in the foreseeable future.
The Company has issued guaranties or obtained standby letters of credit and performance bonds supporting
performance by the Company and its subsidiaries of contractual or contingent legal obligations of the Company and its
subsidiaries incurred in the ordinary course of business. The aggregate notional value of these instruments is $23,180,000
at December 31, 2020, including $13,586,000 in letters of credit and $9,594,000 in performance bonds. All of these
instruments have an expiration date within three years. The Company does not believe demand for payment under these
instruments is likely and expects no material cash outlays to occur in connection with these instruments.
(15) Related Party Transactions
David W. Grzebinski, President and Chief Executive Officer of the Company, is a member of the board of
directors for ABS, a not-for-profit that provides global classification services to the marine, offshore and gas
industries. The Company paid ABS $2,377,000 in 2020, $1,774,000 in 2019, and $1,162,000 in 2018 to perform
audits and surveys of the Company’s vessels in the ordinary course of business.
In November 2020, Mr. Grzebinski became a member of the board of directors of UK Protection & Indemnity
Association, a mutual marine protection and indemnity organization that provides protection and indemnity insurance
for third party liabilities and expenses arising from vessel operations. The Company’s marine fleet is insured on a
prorate share basis through UK P&I and Standard Mutual. During 2020, the Company paid $3,000,000 in premiums
for coverage in the 2020-2021 policy period in the ordinary course of business.
92
In January 2019, Amy D. Husted, Vice President, General Counsel and Secretary of the Company, became a
member of the board of directors of Signal Mutual Indemnity Association Ltd (‘‘Signal’’), a group self-insurance
not-for-profit organization authorized by the U.S. Department of Labor as a longshore worker’s compensation
insurance provider. The Company has been a member of Signal since it was established in 1986. The Company paid
Signal $667,000 in 2020 and $1,391,000 in 2019 in the ordinary course of business.
The husband of Ms. Husted is a partner in the law firm of Clark Hill PLC. The Company paid the law firm
$1,598,000 in 2020, $1,278,000 in 2019, and $2,019,000 in 2018 for legal services in connection with matters in the
ordinary course of business.
(16) Quarterly Results (Unaudited)
The unaudited quarterly results were as follows (in thousands, except per share amounts):
Three Months Ended
March 31,
2020
643,926 $
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Costs and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain (loss) on disposition of assets . . . . . . . . . . . . . . . . . . . .
Operating income (loss). . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Earnings (loss) before taxes on income . . . . . . . . . . . . . . .
Benefit for taxes on income . . . . . . . . . . . . . . . . . . . . . . . . . .
Net earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Net earnings attributable to noncontrolling interests . .
Net earnings (loss) attributable to Kirby . . . . . . . . . . . . . . . . $ (347,241) $
1,154,114
492
(509,696)
2,723
(12,799)
(519,772)
172,809
(346,963)
(278)
June 30,
2020
541,159 $
506,718
(189)
34,252
2,290
(12,708)
23,834
1,429
25,263
(261)
25,002 $
September 30,
2020
496,567 $
466,340
(316)
29,911
1,172
(11,809)
19,274
8,419
27,693
(204)
27,489 $
December 31,
2020
489,756
465,113
131
24,774
1,962
(11,423)
15,313
7,102
22,415
(211)
22,204
Net earnings (loss) per share attributable to Kirby common
stockholders:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(5.80) $
(5.80) $
0.42 $
0.42 $
0.46 $
0.46 $
0.37
0.37
Three Months Ended
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Costs and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain (loss) on disposition of assets . . . . . . . . . . . . . . . . . . . .
Operating income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income (expense). . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Earnings before taxes on income . . . . . . . . . . . . . . . . . . . .
Provision for taxes on income. . . . . . . . . . . . . . . . . . . . . . . . .
Net earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Net earnings attributable to noncontrolling interests . .
Net earnings attributable to Kirby. . . . . . . . . . . . . . . . . . . . . . $
Net earnings per share attributable to Kirby common
stockholders:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
March 31,
2019
744,621 $
674,672
2,157
72,106
(568)
(13,201)
58,337
(13,880)
44,457
(161)
44,296 $
June 30,
2019
771,042 $
698,317
3,118
75,843
2,381
(15,515)
62,709
(15,269)
47,440
(153)
47,287 $
September 30,
2019
666,809 $
588,534
(374)
77,901
864
(14,310)
64,455
(16,305)
48,150
(163)
47,987 $
December 31,
2019
655,927
643,001
3,251
16,177
1,110
(12,968)
4,319
(1,347)
2,972
(195)
2,777
0.74 $
0.74 $
0.79 $
0.79 $
0.80 $
0.80 $
0.05
0.05
Quarterly basic and diluted earnings per share may not total to the full year per share amounts, as the weighted
average number of shares outstanding for each quarter fluctuates as a result of the assumed exercise of stock options.
93
PART IV
Item 15.
Exhibits and Financial Statement Schedules
1.
Financial Statements
Included in Part III of this report on pages 57 to 93:
Report of Independent Registered Public Accounting Firm.
Report of Independent Registered Public Accounting Firm.
Consolidated Balance Sheets, December 31, 2020 and 2019.
Consolidated Statements of Earnings, for the years ended December 31, 2020, 2019, and 2018.
Consolidated Statements of Comprehensive Income, for the years ended December 31, 2020, 2019, and 2018.
Consolidated Statements of Cash Flows, for the years ended December 31, 2020, 2019, and 2018.
Consolidated Statements of Stockholders’ Equity, for the years ended December 31, 2020, 2019, and 2018.
Notes to Consolidated Financial Statements, for the years ended December 31, 2020, 2019, and 2018.
2.
Financial Statement Schedules
All schedules are omitted as the required information is inapplicable or the information is presented in the
consolidated financial statements or related notes.
3.
Exhibits
Exhibit
Number
2.1
3.1
3.2
3.3
4.1
4.2
10.1
EXHIBIT INDEX
Description of Exhibit
— Securities Purchase Agreement among Kirby Corporation, Higman Marine, Inc. and the parties
named therein dated February 4, 2018 (incorporated by reference to Exhibit 2.5 to the Registrant’s
Annual Report on Form 10-K for the year ended December 31, 2017).
— Restated Articles of Incorporation of the Company with all amendments to date (incorporated by
reference to Exhibit 3.1 to the Registrant’s Annual Report on Form 10-K for the year ended
December 31, 2014).
— Bylaws of the Company, as amended to March 17, 2020 (incorporated by reference to Exhibit 3.2
to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2014).
— Amendment to Bylaws of Kirby Corporation dated March 18, 2020 (incorporated by reference to
Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on March 19,
2020)
See Exhibits 3.1, 3.2, and 3.3 hereof for provisions of our Restated Articles of Incorporation of the
Company with all amendments to date and the Bylaws of the Company, as amended to date
(incorporated by reference to Exhibit 3.1 and 3.2, respectively, to the Registrant’s Annual Report on
Form 10-K for the year ended December 31, 2014 and Exhibit 3.1 to the Registrant’s Current Report
on Form 8-K filed with the Commission on March 19, 2020).
Long-term debt instruments are omitted pursuant to Item 601(b)(4) of Regulation S-K. The Registrant
will furnish copies of such instruments to the Commission upon request.
— Amended and Restated Credit Agreement dated as of March 27, 2019 among Kirby Corporation,
JPMorgan Chase Bank, N.A., as Administrative Agent, and the banks named therein (incorporated by
reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on
April 2, 2019).
10.2†
— Deferred Compensation Plan for Key Employees (incorporated by reference to Exhibit 10.7 to the
Registrant’s Annual Report on Form 10-K for the year ended December 31, 2005).
94
Exhibit
Number
10.3†
Description of Exhibit
— Annual Incentive Plan Guidelines for 2020 (incorporated by reference to Exhibit 10.6 to the
Registrant’s Annual Report on Form 10-K for the year ended December 31, 2019).
10.4†*
— Annual Incentive Plan Guidelines for 2021.
10.5†
10.6†
10.7
21.1*
23.1*
31.1*
31.2*
32*
— 2000 Nonemployee Director Stock Plan (incorporated by reference to Exhibit 10.1 to the
Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2016).
— 2005 Stock and Incentive Plan (incorporated by reference to Exhibit 10.1 to the Registrant’s
Quarterly Report on Form 10-Q for the quarter ended June 30, 2019).
— Nonemployee Director Compensation Program (incorporated by reference to Exhibit 10.2 to the
Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018).
— Consolidated Subsidiaries of the Registrant.
— Consent of Independent Registered Public Accounting Firm.
— Certification of Chief Executive Officer Pursuant to Rule 13a-14(a).
— Certification of Chief Financial Officer Pursuant to Rule 13a-14(a).
— Certification Pursuant to 18 U.S.C. Section 1350 (As adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002).
101.INS* — Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File
because its XBRL tags are embedded within the Inline XBRL document
101.SCH* — Inline XBRL Taxonomy Extension Schema Document
101.CAL* — Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF* — Inline XBRL Taxonomy Extension Definitions Linkbase Document
101.LAB* — Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE* — Inline XBRL Taxonomy Extension Presentation Linkbase Document
104*
— Cover Page Interactive Data File (embedded within the Inline XBRL document)
*
†
Filed herewith.
Management contract, compensatory plan or arrangement.
Item 16.
Form 10-K Summary
Not applicable
95
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
KIRBY CORPORATION
(REGISTRANT)
By:
/s/ WILLIAM G. HARVEY
William G. Harvey
Executive Vice President and
Chief Financial Officer
Dated: February 23, 2021
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature
Capacity
Date
/s/ JOSEPH H. PYNE
Joseph H. Pyne
/s/ DAVID W. GRZEBINSKI
David W. Grzebinski
/s/ WILLIAM G. HARVEY
William G. Harvey
/s/ RONALD A. DRAGG
Ronald A. Dragg
/s/ ANNE-MARIE N. AINSWORTH
Anne-Marie N. Ainsworth
/s/ RICHARD J. ALARIO
Richard J. Alario
/s/ TANYA S. BEDER
Tanya S. Beder
/s/ BARRY E. DAVIS
Barry E. Davis
/s/ C. SEAN DAY
C. Sean Day
/s/ MONTE J. MILLER
Monte J. Miller
/s/ RICHARD R. STEWART
Richard R. Stewart
/s/ WILLIAM M. WATERMAN
William M. Waterman
Chairman of the Board and Director
February 23, 2021
President, Chief Executive Officer,
and Director
(Principal Executive Officer)
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
Vice President, Controller and
Assistant Secretary
(Principal Accounting Officer)
Director
Director
Director
Director
Director
Director
Director
Director
96
February 23, 2021
February 23, 2021
February 23, 2021
February 23, 2021
February 23, 2021
February 23, 2021
February 23, 2021
February 23, 2021
February 23, 2021
February 23, 2021
February 23, 2021
EXHIBIT 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
In connection with the filing of the report on Form 10-K for the year ended December 31, 2020 by Kirby Corporation,
David W. Grzebinski certifies that:
1.
I have reviewed this report on Form 10-K of Kirby Corporation (the ‘‘registrant’’);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and
have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures
to be designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries,
is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that
occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the
case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board
of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant’s internal control over financial reporting.
Dated: February 23, 2021
/s/ DAVID W. GRZEBINSKI
David W. Grzebinski
President and Chief Executive Officer
EXHIBIT 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
In connection with the filing of the report on Form 10-K for the year ended December 31, 2020 by Kirby Corporation,
William G. Harvey certifies that:
1.
I have reviewed this report on Form 10-K of Kirby Corporation (the ‘‘registrant’’);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and
have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures
to be designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries,
is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that
occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the
case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board
of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant’s internal control over financial reporting.
Dated: February 23, 2021
/s/ WILLIAM G. HARVEY
William G. Harvey
Executive Vice President and
Chief Financial Officer
EXHIBIT 32
Certification Pursuant to Section 18 U.S.C. Section 1350
(As adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)
In connection with the filing of the Annual Report on Form 10-K for the year ended December 31, 2020 (the
‘‘Report’’) by Kirby Corporation (the ‘‘Company’’), each of the undersigned hereby certifies that:
1.
2.
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act
of 1934, as amended; and
The information contained in the Report fairly presents, in all material respects, the financial condition and
results of operations of the Company.
/s/ DAVID W. GRZEBINSKI
David W. Grzebinski
President and Chief Executive Officer
/s/ WILLIAM G. HARVEY
William G. Harvey
Executive Vice President and
Chief Financial Officer
Dated: February 23, 2021
Shareholder Information
ANNUAL MEETING
WEBSITE
COMMON STOCK MARKET PRICE
The 2021 Annual Meeting of Stockholders
will be held virtually via a live webcast, at
10:00 a.m. (CDT), Tuesday, April 27, 2021.
Stockholders of record at the close of
business on March 1, 2021, will be able to
access the 2021 Annual Meeting webcast
online at www.virtualshareholdermeeting.
com/KEX2021 by entering the 16-digit
control number provided in their proxy
materials.
For more investor information, as well
as information about Kirby, visit Kirby’s
website at www.kirbycorp.com.
INDEPENDENT REGISTERED ACCOUNTANTS
KPMG LLP
811 Main Street, Suite 4500
Houston, Texas 77002
2021
First Quarter
(through March 1, 2021)
2020
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
2019
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Sales Price
High
Low
$ 66.12 $ 48.05
$ 92.30 $ 32.76
$ 63.20 $ 39.51
$ 54.69 $ 35.76
$ 56.13 $ 35.10
$ 79.02 $ 65.24
$ 86.44 $ 74.55
$ 84.98 $ 69.71
$ 90.08 $ 76.62
CORPORATE HEADQUARTERS
Executive Office:
55 Waugh Drive, Suite 1000
Houston, Texas 77007
Telephone: 713-435-1000
Fax: 713-435-1010
Website: 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
communications concerning address
changes, lost certificates, and stock
transfers to:
Proxy Services
C/O Computershare Investor Services
P.O. Box 505008
Louisville, Kentucky 40233-9814
Toll-Free Telephone: 877-373-6374
Website: 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 Eric Holcomb, VP – Investor Relations,
at Kirby’s corporate headquarters.
COMMON STOCK INFORMATION
FINANCIAL AND INVESTOR RELATIONS
Stock trading symbol—KEX
The New York Stock Exchange is the
principal market for Kirby’s common
stock. As of March 1, 2021, there were
60,086,000 common shares outstanding
held by approximately 575 registered
shareholders. The number of registered
shareholders does not reflect the number
of beneficial owners of common stock.
Copies of Kirby’s Form 10-K (which is
incorporated in this Annual Report) are
available free of charge. Either contact
Eric Holcomb, VP – Investor Relations,
at Kirby’s corporate headquarters, e-mail
investor.relations@kirbycorp.com, or visit
Kirby’s website at www.kirbycorp.com.
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
The graph below matches Kirby Corporation’s cumulative 5-Year total shareholder return
on common stock with the cumulative total returns of the Russell 2000 index and the
Dow Jones US Transportation Average index. The graph tracks the performance of a $100
investment in our common stock and in each index (with the reinvestment of all dividends)
from 12/31/2015 to 12/31/2020.
$200
$150
$100
$50
12/15
12/16
12/17
12/18
12/19
12/20
Kirby Corporation
100.00
126.38
126.95
128.01
170.14
98.50
Russell 2000
100.00
121.31
139.08
123.76
155.35
186.36
Dow Jones
US Transportation
Average
100.00
122.32
145.59
127.65
154.24
179.72
0
15
16
17
18
19
20
The stock price performance included in this graph is not necessarily indicative of
future stock price performance.
(cid:81) Kirby Corporation (cid:81)(cid:3)Russell 2000 (cid:81)(cid:3)Dow Jones US Transportation Average
46059herD1R2.indd 2
3/4/21 7:44 AM
Corporate Headquarters:
55 Waugh Drive, Suite 1000
Houston, Texas 77007
Mailing Address:
P.O. Box 1745
Houston, Texas 77251-1745
713-435-1000
Fax: 713-435-1010
www.kirbycorp.com
46059herD1R2.indd 1
3/4/21 7:44 AM