Kirby Corporation Reports on Impact of Mississippi River System High Water and Flooding Issues
HOUSTON, May 12, 2011 /PRNewswire/ — Kirby Corporation (“Kirby”) (NYSE: KEX) announced today that the current high water and flooding issues on the Mississippi River System may have a greater impact on the 2011 second quarter results than originally anticipated. On April 27, 2011, as part of Kirby’s first quarter earnings announcement, Kirby announced 2011 second quarter earnings guidance of $.67 to $.77 per share, including an estimated $.02 to $.07 per share negative impact from the high water and lock issues on Kirby’s marine transportation segment, dependent on the severity and length of time of the high water on the waterways. Kirby estimates the impact may be greater than $.07 per share, but is unable to further quantify the impact until the situation more fully evolves.
Since April 27, conditions on the Mississippi River System have continued to deteriorate. The Ohio Valley received record rainfall and the heavy rainfall extended into May, thereby prolonging flooding conditions on the Ohio and Tennessee Rivers, extending the Smithland Lock closure near Paducah, Kentucky and creating additional delays for both inbound and outbound barge traffic on the Ohio River. As of today, predictions are that the Smithland Lock on the Ohio River will remain closed for several more days.
The high water on the Ohio River, as well as the upper Mississippi River, is flowing into the lower Mississippi River and creating flooding conditions as the high water crest makes its way south. Water levels at Memphis crested on Tuesday, May 10, at 47.8 feet, slightly below the historic high levels of 48.7 feet recorded in 1937. It is anticipated that as the high water crest moves south, water levels at Vicksburg, Natchez, Baton Rouge and New Orleans will reach or exceed historic record levels.
In anticipation of these high water levels on the levees between Natchez and Baton Rouge, and high water crests at Baton Rouge and New Orleans, the Army Corps of Engineers has opened the Bonnet Carre Spillway south of Baton Rouge and indicated the Morganza Spillway located north of Baton Rouge may also be opened. Water flowing into the Atchafalaya River will flood the Atchafalaya River Basin causing high water and swift currents. The United States Coast Guard has issued notice that when certain conditions are met, it will close the Gulf Intracoastal Waterway in the Morgan City area to marine traffic. This closure may last up to several weeks. The high water on the Mississippi River System and the potential closure of the Gulf Intracoastal Waterway will impact tank barge traffic.
Joe Pyne, Kirby’s Chairman and Chief Executive Officer, commented, “The current flooding conditions on the Mississippi River System and the anticipated closure of the Gulf Intracoastal Waterway will have a negative impact on our inland marine transportation operations and second quarter earnings. However, the majority of movements west of Morgan City on the Gulf Intracoastal Waterway, including the Lake Charles, Beaumont, Port Arthur, Houston and Corpus Christi areas are operating as usual. The upper Mississippi River and Illinois River have returned to normal navigation. Based on current conditions, we anticipate the Ohio River to return to normal navigation in mid to late May, and the lower Mississippi River to return to normal navigation by the end of May or early June. We anticipate the last area to resume normal navigation will be the Gulf Intracoastal Waterway’s Morgan City area as the Atchafalaya River Basin is just now being impacted and may be the slowest to recover. Unfortunately, until the flooding subsides and tank barge traffic resumes, it is not possible for us to accurately assess the financial impact of these historic events.”
Mr. Pyne continued, “We will revise or confirm our second quarter earnings guidance when our assessment of the financial impact of the high water events is completed. Approximately 50% of our marine transportation revenue under term contracts is from time charters, which are insulated from revenue fluctuations caused by weather and navigational delays. These high water issues will pass and the Mississippi River System and the Gulf Intracoastal Waterway will return to normal navigation levels and activity. Our inland tank barge fundamentals have not changed and remain strong. As we said in our first quarter earnings announcement, we anticipate that U.S. petrochemical production for both domestic use and exports will remain strong based in part on the continued low United States natural gas prices. United States refinery utilization is also anticipated to remain stable, with continued exports of diesel fuel and heavy fuel oil.”
Kirby Corporation, based in Houston, Texas, operates inland tank barges and towing vessels, transporting petrochemicals, black oil products, refined petroleum products and agricultural chemicals throughout the United States inland waterway system. Through the diesel engine services segment, Kirby provides after-market service for medium-speed and high-speed diesel engines and reduction gears used in marine and power generation applications, and distributes and services high-speed diesel engines, transmissions, including hydraulic fracturing equipment, for land-based pressure pumping and oilfield service markets.
Statements contained in this press release with respect to the future are forward-looking statements. These statements reflect management’s reasonable judgment with respect to future events. Forward-looking statements involve risks and uncertainties. Actual results could differ materially from those anticipated as a result of various factors, including cyclical or other downturns in demand, significant pricing competition, unanticipated additions to industry capacity, changes in the Jones Act or in U.S. maritime policy and practice, fuel costs, interest rates, weather conditions, and timing, magnitude and number of acquisitions made by Kirby. Forward-looking statements are based on currently available information and Kirby assumes no obligation to update such statements. A list of additional risk factors can be found in Kirby’s annual report on Form 10-K for the year ended December 31, 2010, filed with the Securities and Exchange Commission.
SOURCE Kirby Corporation