KEX - Kirby Up Strongly On A Multiyear Pricing And Margin Expansion Opportunity

2024-06-13 12:17:36 ET

Summary

• Kirby is leveraging stronger inland and coastal tank barge dynamics, as limited supply growth and increased petrochemical refining activity is driving higher utilization and pricing.
• Kirby should be set for multiple years of 300bp+ margin improvement on the back of tight inland and coastal barge fundamentals.
• Increased demand for backup power among industrial, retail, and data center customers is driving strong growth within the D&S business, but this remains a lower-margin segment relative to marine operations.
• Kirby shares have already enjoyed a big move, but past up-cycles suggest that there could still be upside.

When the market offers to teach you a lesson, it’s generally a good idea to pay attention. I’ve long been quite positive on the quality of Kirby ’s ( KEX ) management and business, particularly with the company’s strong share of the U.S. inland tank barge market and its focus on disciplined fleet management. I was also positive on the overall dynamics of the industry, as supply and demand were developing in Kirby’s favor given the expansion of Gulf Coast petrochemical production and limited industry fleet growth....

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