Earnings: Kirby (KEX) Up 15% Today

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Kirby Corporation (NYSE: KEX) delivered a modest earnings beat this morning, posting third-quarter results that rewarded patient investors, with shares up 15.6% on the day.  Revenue topped estimates and cash flow strengthened, this is a company executing well on fundamentals while bracing for potential headwinds.

Distribution Segment Carries the Load

Distribution and Services revenue jumped 12% year over year to $386.2M, more than offsetting softness elsewhere. This segment is where Kirby found its growth engine in Q3. Power generation demand remained robust, and that resilience mattered. Without this 12-point lift, the overall revenue story would have looked far less compelling. The company's marine transportation segment, by contrast, edged down slightly to $484.9M from $486.1M a year ago. Operating margins held steady there, but the revenue decline signals the inland barge market is not yet firing on all cylinders.

Cash Generation Accelerates Despite Capex Discipline

Operating cash flow climbed 10.2% year over year to $227.5M, and free cash flow expanded even faster. That strength gave management room to deploy $120M in share buybacks at an average price of $91.30 per share. Capital expenditures fell 12% to $67.2M, showing the company is being selective about where it deploys capital. I'd keep an eye on this metric going forward. It suggests management sees near-term uncertainty and is preserving dry powder rather than committing aggressively to growth investments.

Key Figures

EPS: $1.65 (vs. $1.62 estimated); up 2.5% year over year Revenue: $871.2M (vs. $846.2M estimated); up 4.8% year over year Operating Income: $129.2M; up 1.8% year over year Operating Cash Flow: $227.5M; up 10.2% year over year Free Cash Flow: $160.3M; strong generation relative to capex Net Income: $92.5M; up 2.8% year over year

The real story here is cash conversion. Operating cash flow growth outpaced earnings growth, which tells you the business is converting revenue into actual cash more efficiently than headline numbers suggest.

CEO Signals Confidence on the Inland Cycle

David Grzebinski struck a measured tone. He acknowledged near-term challenges in the inland market but expressed confidence the inland barge cycle "still has years to go given supply constraints." That's the kind of forward-looking comment that matters more than any single quarter. Coastal marine fundamentals remain favorable, he noted, with limited large-capacity vessel availability supporting pricing power. Kirby is not calling for a boom. Instead, management is positioning for steady conditions with selective opportunities.

Story Continues

On capital allocation, Grzebinski emphasized "disciplined" deployment. The $120M buyback speaks to that discipline. So does the 12% capex reduction. The company is not overextending.

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