Report
Matthew Young
EUR 850.00 For Business Accounts Only

Morningstar | Kirby's Inland Barging Business Healthy With Hints of Improvement on the Coastal Front

Kirby's marine segment (previously its flagship operations before the third-quarter 2017 Stewart & Stevenson acquisition) is the dominant player in the U.S. inland and coastal marine tank barging industry, and its scale yields efficiency advantages that drive industry-leading profitability. Furthermore, the inland tank barging industry is regulated by the Jones Act, which prevents non-U.S.-based firms from operating between domestic ports—a solid intangible asset. Of note, Kirby's coastal barging segment is grappling with pricing pressure linked to an abundance of capacity and is facing headwinds from customers' near-term preference for trading equipment in the spot market, which boosts idle time exposure. That said, these headwinds should abate in the year ahead as providers across the industry retire old barges and Kirby's inland and coastal shipment volume enjoys an incremental lift from favorable trends in U.S. petrochemical production.Diesel-engine overhaul services have long been a part of Kirby’s portfolio, but its distribution and services division, or D&S, started broadening its scope into land-based oilfield-services equipment with the 2012 United acquisition. The large S&S acquisition in 2017 took Kirby even further into the oilfield-equipment services market by vastly boosting its operating scale. Overall, Kirby’s D&S division (United and S&S together) manufactures, remanufactures, and distributes oilfield-service equipment to energy customers and sells/services high-speed diesel engines for marine and other commercial and industrial end markets. Kirby is now the leading pressure pump manufacturer/remanufacturer in the U.S. Following a few years in the doldrums (especially 2015 and 2016), the D&S segment saw a solid rebound in demand for oilfield equipment manufacturing and refurbishing in 2017 and 2018 thanks to improved drilling activity among energy end-market customers.
Underlying
Kirby Corporation

Kirby operates tank barge. The company's marine transportation segment provides marine transportation services, operating tank barges and towing vessels transporting bulk liquid products. The company transports petrochemicals, black oil, refined petroleum products and agricultural chemicals by tank barge. The company's 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 diesel engines, transmissions and reduction gears, and related equipment used in oilfield services, marine, power generation, on-highway and other industrial applications.

Provider
Morningstar
Morningstar

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.

Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.

We have operations in 27 countries.

Analysts
Matthew Young

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