Kirby Corp (KEX) 2002 Q4 法說會逐字稿

Good morning and welcome to the 2002 fourth quarter and year end results teleconference. All participants will be able to listen only until the question and answer portion of the call. Today's conference is being recorded. If you should have any objections you should disconnect at this time.

I would now like to turn the meeting to Mr. Steve Holcum, Vice President of Investor Relations. Sir, please begin when you're ready.

Good morning, thank you for joining us. With me today is Berdon Lawrence, Kirby's Chairman, Joe Pyne, the President and Chief Executive Officer of Kirby, and Norman Nolen, Kirby's Executive Vice President and Chief Financial Officer. Statements made in this conference call with respect to the future are forward-looking statements. These statements reflect managment's reasonable judgement with respect to future events. Forward-looking statements involve risk and uncertainties. Actual results could differ materially from those anticipated as a result of various factors. A list of these factors can be found in Kirby's annual report on form 10k for the year ending December 31, 2001, filed with the SEC.

I will now turn the call over to Joe Pyne.

Yeah, thank you Steve. This morning we reported our 2002 fourth quarter results of 43 cents per share for an impairment charge earning 10.4 million on revenues of almost 140 million. 43 cents per share is in line with our published earning guidance in a range of 40-44 cents per share. The impairment charge, primarily for active single-skin barges and out of service single-hull and double-hull barges totalled 18.9 million dollars before taxes, or 12.5 million after taxes, which represents 52 cents per share.

Norman will discuss this in more detail later in the call. During the fourth quarter, upriver movements of petrochemicals were consistent with third quarter volumes and reflected a continued slow improvement in this market. Petrochemicals along the Gulf Coast continue to be sluggish but did show some signs of improvement towards the end of the quarter.

Our refined products market was strong, driven by Midwest refinery outages for planned maintenance turn-arounds. But not as strong as they were in 2001, when a significant refinery fire closed a large Midwest refinery.

Fertilizer volumes were down in the fourth quarter as our largest customer significantly curtailed its fertilizer output during a production problem at one of its facilities.

Our black oil volumes improved, due to the addition of the Coastal Towing fleet, which was added on October 31. I will comment later on the outlook for 2003, both the first quarter and the year, and Berdon will address our 2002 and 2003 acquisitions as well as - as well as our tank barge building program. But first, I will turn the call over to Norman to discuss the financial highlights for the quarter and the year.

Thank you, Joe. Capital spending before acquisitions for 2002 was $47.7 million, which was in line with our guidance of 47 to $52 million. Eight point four million of the total was for the construction of six petrochemical barges. Our capital spending guidance for 2003, excluding acquisitions, is in the 55 to $60 million range. It will also include the purchase of six new petrochemical paint barges and two new black oil barges.

Increased capital spending in 2003 over 2002 is primarily due to the two new black oil barges and expenditures on the tank barge fleets which we purchased from Coastal Towing, Dow/Union Carbide and Seariver in late 2002 and 2003. On the acquisition front, Kirby spent $44.8 million on three acquisitions in 2002, 2.8 million for 15 cargo carriers tank barges in the first quarter, 18.9 million for 10 black oil barges and 13 towboats purchased from Coastal Towing in November and $23 million for 94 tank barges purchased from Dow/Union Carbide in December.

As Joe noted, we took a $12-and-a-half million after tax, non-cash impairment charge in the fourth quarter, most of which related to Kirby's fleet of single hull tank barges. For many years, our single hull barge fleet has been subject to a mandatory 2015 phase-out date required by the Oil Pollution Act of 1990. In 2002, the Coast Guard adopted new regulations that will require the installation of tank level monitoring devices on all single hull tank barges by October 2007. The substantial cost of installing these devices would have a material impact in the economics of operating these barges and therefore we expect to retire our single hull fleet by October 2007 instead of the mandatory phase-out date of 2015.

Most of the remainder of the $12-and-a-half million impairment charge included a reduction in value of 21 inactive double hull tank barges and five inactive towboats held for sale. Although depreciation in 2003 will be reduced by the impairment, we expect this decrease to be offset by increased appreciation on our double hull fleet in 2003. We reduced the book life of certain double barges to reflect their expected retirement date, which will result in increased depreciation. This depreciation increase will roll off over a two-year period.

Interest expense for the 2002 fourth quarter was 3.3 million, 34 percent below the fourth quarter of 2001. And total interest expense for 2002 was 13-and-a-half million, which was 29 percent below 2001, due to lower interest rates and debt levels. Our debt to capitalization ratio increased from 41.8 percent at September 30 to 45.1 percent at year end, due to the barge and twoboat purchases from Coastal Towing and Dow/Union Carbide and a $17-and-a-half million contribution to Kirby's pension plan made in the fourth quarter. Kirby's policy for pension plan funding is to fund 100 percent of the plan's accumulated benefit obligations. In the press release we issued this morning, we disclosed the number of our active and inactive tank barges and towboats in the fleet. We believe this is important information that the investment community can use in their modelling of Kirby. We will update this count each quarter in the future.

I'll now turn the call over to Berdon.

Thank you Norman. In 2000--the 2002 year was a very active and exciting year for Kirby on the acquisitions front. As discussed earlier during the year we purchased a tank barge fleet, ten barges, and thirteen towboats from Coastal Towing and entered into a management agreement to manage the rest of Coastal's active tank barge fleet, and later in the year, we purchased the Union Carbide tank barge fleet, which we have been leasing from Dow Chemical. In mid January 2003 we purchased 45 double-hulled tank barges and seven towboats from Seariver Maritime, assumed from Seariver the leases of 16 additional barges, and entered into a two-year contract with Seariver with multi-year options to service the inland marine transportation requirements of Exxon Mobile. We expect to purchase three additional inland tank barges currently leased by Seariver at a later date. During 2002 we also had an active construction program in place taking delivery of six 30,000-barrel barges for use in the petrochemical and refined products markets. These six barges, with a total purchase price of approximately 8.9 million, were replacement barges for single-hulled barges removed from service. We have on order for delivery in the first quarter of 2003, two black oil tank barges, at a total cost of approximately 3.6 million. We also have a contract for the construction of six tank barges for use in the petrochemical and refined products markets, with the delivery time frame scheduled over a six months' period starting in March 2003. The total purchase price for these six barges is approximately 8.9 million. We recently signed a contract for the construction of six additional tank barges for delivery starting in 2004.

Our new building program is designed to replace both clean and black oil tank barges that we elect to retire with the intention of not losing market share. I want to assure you that Kirby remains in an excellent financial position to take advantage of additional growth opportunities in our inland tank barge and diesel engine service business. It is our intent to continue to position Kirby to be the most flexible and efficient tank barge company in our business, with the ability to safely and competitively service our customer's tank barge requirements anywhere on the inland waterway systems.

I will now turn the call back to Joe, who will talk about Kirby's 2003 first quarter and full-year outlook.

Thank you Berdon. This morning we announced 2003 first quarter earning guidance in the range of $0.36 to $0.40 per share. This compares to the 2002 first quarter at earnings of $0.36 per share. The 2003 year, our earnings guidance is $1.75 to a $1.85 per share compared to the 2002 year reported earnings before the impairment charge of $1.64 per share. This is a cautious view of the world, but with the uncertainty in our economy we think caution is prudent and appropriate. Looking specifically at the first quarter, we anticipate a transportation asset purchases consummated in the 2002 fourth quarter and the first quarter of 2003 to be accretive to our 2003 earnings. First quarter is historically our lowest earnings quarter, primarily due to weather conditions and the seasonality of our refine products and fertilizer markets. They're currently light-loading our tank barges for destination into the Midwest, particularly St. Louis or into the Illinois River due to low water conditions between Cairo, Illinois and St. Louis. We are also currently being hampered by ice conditions on the Illinois River, and fog and reoccurring high winds along the gulf coast as cold fronts past through this area. In the second half of 2003, we anticipate the petrochemical industry to show some signs of improvement. Our petrochemical customers are cautiously more optimistic about the latter half of 2003. We expect the black oil market to perform similar to what it did last year.

A combination with Coastal Towing will help this business segment because we are able to benefit from lower G&A costs and some synergies. This business may strengthen if natural gas prices continue to remain high, which should encourage principally utility customers to switch from natural gas to residual oil as boiler fuel. (Inaudible) products buy-ins for 2003, as in prior years, will fluctuate with season demand, Midwest inventory imbalances in planned and unplanned refinery outages for maintenance. We anticipate a normal spring fertilizer season. Again, if natural gas prices continue to increase, U.S. production of nitrogen based fertilizer would be curtailed with the Midwest demand met through foreign imports. If this occurs, it would disrupt the normal tank barge and rail distribution system and create additional barging opportunities for Kirby.

During 2002, we worked hard to position Kirby for the future. We took an impairment charge for our single full fleet, adjusting remaining depreciable lives to correspond with the 2007 Coast Guard regulation. We also impaired 21 inactive - or out-of-service - double hole tank barges as well as five inactive inland tug boats, which we plan to sell this year. In 2003, we will continue to work diligently to reduce our costs, increase efficiencies by better utilizing our assets and providing the best service available to our customer base.

All and all, 2002 was a good year given the market conditions we faced. In fact, it was our second best performance. We see nothing in the current year which suggests different market conditions, and anything else other than prudent forecasting.

Operator, we're now ready to accept calls and questions.

Thank you, sir. At this time, if you would like to ask a question, please press star then 1, you will be required to ask me your question. To withdraw your question please dial star then 2. Once again, if you would like to ask your question please dial star then 1 on your keypad now.

Our first question comes from Natasha Boyden representing Sidoti.

Alright, good morning gentlemen, how are you?

Good morning Natasha.

Norman, if I could just ask you again to, I'm sorry I actually got disconnected from the call, when you were going through your cap expenditures in 2002?

Yeah, sure.

Thanks... There?

Yeah. 2002 was 47.7 million, Natasha-

OK.

With a guidance of 47-52, and 8.4 of that was for the construction of six petrochemical barges.

OK, you said the guidance was 47-52 for 03?

For 02. For 03 it's 55-60.

55-60. Ok great, thanks.

It's six new clean barges, and two new black oil barges.

Great. That helps, thank you. questions. Obviously you've done a lot of acquisitions in 2002, and obviously we got to see those, how many more of these types of acquisitions are out there, Joe? Are you still looking?

Well, we are always looking and we think that this is a business that still is relatively fractured. There are a number of small operators, as well as a number of shippers who own fleets, and we believe the consolidation will continue.

OK, great, and also I want to touch base with you on the situation in Venezuela and find out what kind of impact that may have had on you, especially in the Gulf area of operations.

Yeah, we don't believe that's had any significant impact. For the most part, the customers that are directly effected by Venezuela, and it's principally the crude oil imports that they process in the refineries, have been generally able to replace to crude oil from other sources. How long Venezuela stays in disarray is an open question, and, of course, the longer it does, the more important it will become to have a stable crude oil supply.

Right I guess-

There's a lot of unknown right now.

So I guess we've heard in the last couple days or so that output in Venezuela is starting to move up, I think they're close to a million barrels now. So I should imagine that the , that perhaps they're getting back to normal.

It's certainly encouraging.

OK, great, thank you very much gentleman.

Our next question comes from David Yuschak, representing Sanders Morris and Harris.

Hey, great quarter, guys. First of all, Joe, let me just kind of just drill down a little bit on your expectations for this year as far as - you mentioned chemicals being stronger maybe in the second half of this year compared to, I guess, versus this first half even though you maybe had a very good fourth quarter in chemicals.

Well, we actually saw chemicals, at least in the river segment, stabilize to third quarter levels. At the end of the fourth quarter, we did see some improvement in the canal area, which is encouraging. You know, we'll just have to see how that plays out in the first half. With respect to the comment of the latter half of 2003, that really comes from our customers. They're more optimistic about their performance in 2003 than 2003.

You have to assume that's based on what they see, but also remember that they're coming off of two very difficult years and some optimism is important, just to feel good about the business. And we hope that that optimism translates into increased volumes. Having said that, there are some independent sources that are predicting better volumes in 2003 for the petrochemical business than 2002 and if that's true, that's going to be very helpful to us.

As far as the - I mean, excluding your acquisitions that you made will have the increment to revenues this year, is there any way you could give us some guidance as far as that $1.75, $1.85 range as far as where you expect the contributions to come from by product line?

Not - I'm not prepared to do that because we typically don't do that. But let me - let me put it this way because I think this is - this is going to be helpful. We are forecasting a - essentially, a flat year with our kind of reoccurring business prior to the acquisitions. And, in fact, a slight decline in the refined products area. So most, if not all the increase is coming from the additional business that we acquired. The forecast that we have in front of you makes the assumption that 2003 is going to see, essentially, the same market conditions that 2002 saw. Now if, in fact, the economy strengthens, if we see more petrochemical volumes than we saw in 2002, that's going to be helpful. And that should translate to earnings in the upper end of the range and maybe even above the range.

So the $1.75 would assume, basically, a - the contribution from the acquisitions and the extra 10 cents would be a recovering economy. Would - is that kind of a good way to look at it?

I would, you know, probably put that number kind of in the middle of the range. I mean, we kind of shoot - we will bracket - it's very difficult to, of course, in ...

How much ...

... late January to forecast the next 11 months, given this environment, but we kind of target a number and then we'll put the range around the numbers.

OK. And then, as far as the acquisition, how much in actual revenue might that produce?

Let me - let me defer that to Norman.

OK.

I'm not sure if I have that number handy. Let's see, I think we could say that will produce an additional--I think it's about $40 million, and I think at , we were saying incrementally between 20 and 30 million.

OK.

The , you know, is diminimous and of course Union Carbide, you--what you did was you turned a lease into a purchase. There is some adjustment in revenue, but it you know, it's not more than a couple million dollars.

Let me just ask one more quick one, then I'll circle back into queue if necessary. The pipeline--the explore pipeline you had commented you expected the refined to be a little less this year in the mix than maybe 2002. Is some of that because of the explore pipeline ramping up?

Yeah. I think--we're--let me give--give you some other--other, I think, information, based on kind of how we're forecasting the business. We're--we think that our revenues in the marine transportation segment are going to be somewhat like this: 65 percent chemical/petrochemical, approximately 20 percent, you know, 18, 17, 17, 18 percent to 20 percent black oil, 10 percent refined products, and 5 percent fertilizer. Now that contrasts with a 20 percent exposure to refined products the last couple of years. You know we're--we're kind of de-emphasizing refined products.

We think that you know, chemicals and black oil are going to kind of make up for the shortfall. Now, again, refined products is a--it's a seasonal business. It is affected by pipelines. As you know from last year, the new pipeline that went into service, kind of first quarter last year, I think had less of an effect than--than maybe some thought it would. It about had the same effect that we believed it would. This is a business that's going to be driven by inventory issues in the Midwest, where--where those shortages are, how the traders can take advantage of these shortages with respect to--to price differentials, and where those price differentials are--are appropriate, they use barge--barging volumes, because they're volumes that can be very flexibly placed where they need them to fill those requirements, and that--that in itself will create barging opportunities.

When we're looking at the refinery outlook in the next couple of years, it does look like there's going to be increased down time because of the requirements, just doesn't seem to be--that's been kind of delayed, but it does look like potentially in 2003, 2004 that could accelerate.

Yeah, that--and it's a wild card too.

Yeah.

We may--we may well find that the refined products business is better than we think it's going to be.

Well thanks a lot for your comments.

Your next question comes from representing .

, of , good morning.

Good morning, Tom.

I have two questions. Joe, first, I just wondered if you could give us a flavor for how spot and contract pricing are fluctuating these days?

Spot rates are at their fourth-quarter levels, up from the third quarter. Contract prices continue to roll over about as expiring, so kind of same scenario as last year.

Is spot above or below contract?

It depends on the contract, but generally slightly below.

I see. And secondly, the write down today included a write down relating to some double hole barge and inactive tow boats?

That is correct.

Was there something peculiar about those barges or tow boats that necessitated a write down, or is that sort of a suggestion that the equipment today simply isn't worth what it was a few years ago?

No, no. No. What it reflects is equipment that we are going to sell and we are just writing it down to reflect what we think it will sell for in a service other than a cargo carrying service. In other words, we sell this equipment into the barge market and the value for a barge is going to be less than a tank barge.

And we are selling it because we don't expect to, I guess, to need it in the foreseeable future?

No. We are selling it because the maintenance that you would have to incur on that equipment, given the current market conditions, does not justify the expenditure.

Thanks a lot and good luck.

Thank you.

Your next question comes from representing .

Hi, good morning, gentlemen. Two questions regarding the acquisition fund. One, on these recent acquisitions, the Sea River - the Coastal Union Carbide. If you could discuss what kinds of multiples of Eva Dow you're typically paying for these companies; and then secondly, as I am sure you are aware, your second largest competitor in the liquid market, American Commercial Lines, is in financial distress teetering on the edge of bankruptcy. Have you guys thought at all, or are you engaged in any kinds of discussions regarding acquiring their fleet of 450 liquid barges?

Yes. Let me answer that first. We, just as a matter of policy, don't comment on acquisitions or discussions that we have with anybody.

Is that something that hypothetically would fit your acquisition profile?

Yes. It would, but they are kind of going through a difficult time assessing what they need to do. That is a significant number of tank barges and we may have some difficulty buying them all, given our current size, because they are the second largest operator in the business. But I think it would be just inappropriate to speculate on what is open that would going to happen there. They are a fine company just in the middle of some significant debt challenges, which they are trying to work through.

See, with respect to your first question, in terms of multiples, I am going to answer this in general terms because this often doesn't fit the shipper fleet profile, but in general terms we target, this is somewhat of an oversimplification of what we pay, but I think it's what you want. Multiples in the 4-6 times EBITDA range. The actual price we ultimately pay is more a discounted cash-flow model derived price. But, with respect to the 17 acquisitions that Kirby has made, we paid between four and six times EBITDA.

The reason that the shipper fleets don't often meet the profile is that they're also tied to contracts, which reflect the capital component of the transaction and in some cases the fleet may be sold at a value that is slightly less in market or a value that is slightly more than market. And the return is then calculated by the capital that the fleet represents. Does that answer your question?

Yes. Thank you very much, appreciate it.

Our next question comes from

Hi, good morning. Most of my questions have been answered, but I think I missed what you said. For this year, depreciation, where do you expect that to be? I think it was around 45 million or so for 02. Where do you expect that in 03 ?

'03 there's going to be a lot of changes. I'll give you some numbers here. You've got impact in general of acquisitions that we made last year, the impact of the impairment and the impact of building new barges, but this years gonna be about 56 million in 2002.

Fifty-six million in 2003?

Yes.

OK.

2003, I'm sorry

OK, thank you.

Our next question comes from

Oh, good morning everyone.

Good morning.

Just curious, the vessel count that you gave us in the press release, is that reflective of all the most recent transactions?

It is. That is the active fleet, and there's a schedule, or information provided at the end of the press release that will kind of reconcile that to the total barge count.

Will you be able to put it on your Web site to provide us some backward-looking data, so we can go back and look at what the numbers look like over the last few quarters and maybe?

Yeah, let us look at that and we'll try to do that.

OK.

We're trying to put more information out to help you understand the company and we're looking at going back and providing that information.

That'd be really helpful. Can you tell us the effective tax rate for fiscal 03 at this point? Should it continue to be around 38%?

pyne Yes.

And help us understand what component of the, how book tax will equate to cash tax in 03, I know you guys have been deferring a good portion of your current tax bill?

I don't have that - I don't have that information right in front of me.

About neutral.

We're getting the information. Just hold on for a second. It looks ...

It looks like you've been deferring about 60 percent of your tax bill or thereabouts, maybe.

What we're - what we're being told - it's about neutral. If that's not correct, we will - we will come back and correct it. OK?

I'm sorry. What does neutral mean? It'll stay the same as you've been deferring for the course of '02?

Why don't we get back to you on that one.

Yes.

We just don't have the numbers in front of us.

Let us - yes. Just - we'll take some other questions and come back to that one.

And then I just have one - I guess, one more follow-up then, I guess. Working capital, obviously, shouldn't be a significant use or source of cash in '03. Is that correct?

Yes.

So, I mean, I guess, just looking at the, you know, the bottom range of your guidance here ...

Let me - the only thing - let me just - the caveat - and I think that's true. The - one thing, it's hard to judge at this point is the market and what a pension contribution would be. This year it was 17-and-a-half million. I don't expect it to be that next year. It would - the only thing that would cause that to increase is if the, you know, your interest rate, discount rate went further down or your investment return deteriorated. But that's the only significant issue that could rise. Otherwise, we shouldn't see a big use of capital - or a source of capital from working capital.

OK. And then, I'm sorry, the interest build should be around 15 million? Is that about right? Or I guess the question is what's the weighted average cost of the debt today?

Well, we're paying - we pay on our debt, oh, about half our - half of our debt is at live or plus one and the other part we fix with hedges - is going to be around - in the five to six percent range.

I guess, something I'm just trying to boil down here just to kind of get a sense of what, you know, free cash flows look like over the course of fiscal '03, assuming kind of the lower end of your range here and it looks like, you know, a number, maybe, you know, a little - you know, depending upon where deferred taxes shake out, it could be - you know, a number that could be in excess of, you know, in excess of 50 million? Does that sound ...

Well, let's say - I would say 45 to 50 million, but that's certainly in the ballpark.

So, in lieu of acquisitions, priority for the use of free cash flow would be to pay down debt? Is that a fair characterization?

Yes.

And, I guess, just as you look out to the first quarter here, I guess, just to understand your guidance. You know, I understand that the refining - you know, there's going to be a very heavy amount of turnaround activity in the refining sector in the first quarter. Is that going to - do you think that's going to help you or hurt you as we look to the first quarter or do you think it's a neutral event?

Well, it depends on where it is.

Understandable, right?

Yes. Yes. I mean, if it's in the Gulf Coast - well, it generally helps us. And let me - let me - let me explain why. Because it disrupts the normal distribution system. And when you have disruptions, you tend to have to transport product longer distances and therefore more ton miles and higher utilization. If it - if it's up in the Midwest during the first quarter, it - we're - it's probably not going to hurt us or help us because the Midwest trade, you know, other than the basic chemical trade is a - is more seasonal. Seasonality, with respect to refined products and fertilizer.

OK, thanks a lot.

Your next question comes from , representing .

Good morning.

Good morning.

You gave us a view on the assumptions for '03 in terms of the overall barge business. How about on the diesel side? Can you talk about the sales forecast there, and what, if anything, you're going to be doing in the way of expansion in the business, this year?

Yes, with respect to 2003 performance, we expect that the diesel's going to be up slightly, driven by what we anticipate will be a continued slow recover in the oil service business, which drives the Gulf Coast part of that business. With respect to further expansion, we believe that there are opportunities in this business that we are well positioned to take advantage of those opportunities, and will do so going forward. What we have been careful to do though, as we look at expanding the diesel engine service part of our business, is to do it in such a way that it's not disruptive to other efforts that our management team is focused on, so what we--what we've been looking for are more the opportunities that are easy to integrate, that are additive, and that you know, provide a new revenue source for the business. I don't--I don't think that we're going to change that strategy this year. I think we'll look for a relatively, you know, small to medium sized opportunities. Now the last time that we added to this business was in--in 2000. We have not expanded the business in 2001, 2002, but we do hope that we'll be able to do something this year.

So, the amount of business that's related to the energy business oil service, can we pretty much kind of track the rig count to determine if in fact you are seeing some of that improvement, and of the 85 million that you're generating currently, how much might be related to that?

Yeah, that's a--that's a good indicator, the rig count, because it also drives the floating side of that business, which is the side that we service, as well as engines on rigs. With respect to how much of the business is driven by that, I would say it's--let's see here, about 70 percent of our business in that--that group is marine related, and about 40 percent of that is--is driven by the oil service business, I'd say, 40 to 50 percent driven by the oil service business.

So 40 to 50 of the 70?

Yeah.

OK, in regards to the petrochemical business, you have talked in the past about--in regards to last--over the last year, about how far volumes were off the second quarter LLP comp. Where are they about now?

That is a good question. We got about half those lines back last year, and we got a half to go.

OK. And you've talked in the past - one of the reasons why you were looking to expand the fleet from a operating and efficiency standpoint was that the larger fleet size would provide you with better opportunities to utilize your assets more effectively as well as lower some of your incremental costs in a number of areas including purchasing, power, and cleaning, and G&A. Can you point to whether you are actually realizing those benefits this time, or is that some leverage opportunities that we ought to see later this year or beyond this year?

We have beat or are getting those synergies in cost savings. Most of this is already come through, but having said that, we have teams working on efficiency projects and cost initiatives on an every day basis here, so we continue to go after those costs. Most of the low hanging though, we've gotten is we are pretty good at integrating equipment. We can do it quickly. The big opportunity in the future continues to be horse power. Horse power represents a large amount of our costs, and if we can manage our horse power better, we can drop a lot of costs out. If you kind of reflect on last year, last year was a difficult year for us. Declining revenues, declining volumes, yet we were able to still put forward a pretty good year. We attribute a lot of that, and, Berdon, you might want to weigh in on this, but we attribute a lot of that to just continuing to squeeze out costs and take advantage of the efficiencies that frankly, a larger company has an ability to deal with.

OK, and in regards to a couple of the end market factors that would likely effect your business. Where would you say, because they did effect you in the early part of the year last year, liquid fertilizer inventories, maybe as well as refined products inventories?

The liquid fertilizer inventories, we believe, are modestly down. The refined products inventories are easier to get a handle on because they are actually published by pad on a weekly basis. And I frankly didn't look at it last week, but they go up and down. But generally they were - they have been lower this year than last year. At the end of 2002 versus the end of 2001, and then the beginning of January, I think they were a little lower. The issue, though, with refined products inventories is that the - they can go up or down a couple of million barrels in the midwest on a weekly basis. You are going to have draw downs and additions based on consumption and based on deliveries that move those numbers around pretty rapidly.

And to what degree has the weather affected your business at all over the last month or two?

Yeah, weather is always affecting our business. It, you know, this is a--this is--this is a business that they--you know, kind of think of it as a five-mile-an-hour business. Again, this is an oversimplification. When it's going 5 ½ miles an hour, that's terrific, because most of that's all incremental.When it's going 4 ½ miles an hour, that's a difficult period, because it, again, it's more cost but not more revenue.

Weather will affect your ability to move cargos, and will affect the overall speed of your fleet. So when you look at Kirby's performance, you'll--you know, you'll always see that the fourth quarter and the first quarter, at least with respect to the first quarter, sometimes the fourth quarter will have anomalies in it, so it's not as absolutely predictable as the first quarter, but you'll see our lowest margins and our lowest revenue and our lowest earnings occur in the first quarter, and it--and most of it is just the efficiency of the fleet, compounded a little bit by the seasonality of the fertilizer and refined products business.

So is it--is it an indirect way of saying your turner--your turnarounds are fewer?

Yeah, yeah you're--that's right. I mean, there are some days where you can be fully utilized and not moving.

Some days, it's really foggy, very, very foggy, and you can't move very much, and then right behind the fog comes a strong cold front with 25, 35 mile-an-hour winds, and your empty tows can't move then, and then if you're not careful, you--it blows the water out along the Gulf Coast, and so you--you know, January, February and early March is--is a tough time. So it--but that--every year it happens like that.

Thank you.

You have a follow-up question from David Yuschak, representing Sanders Morris Harris.

Yeah, was there any impact on diesel--on fuel cost in the quarter versus the third quarter guys?

I'm sorry, David, we didn't hear you.

The fuel cost, was there any impact on fuel costs in the quarter?

Yes, there was. The fuel--fuel moved up sharply in December.

Yeah.

If you--if you look at it in a year-to-year basis, your fuel, I think in the fourth quarter of 2001 was .62, average fuel was .82 this--this last quarter, and most of that occurred in December.

Also, what was the impact the fourth quarter versus the third quarter?

The fuel price in the third quarter?

As far as earnings per share, do you have any idea of what that earnings per share figure might be on the impact of fuel?

Well, it happened in December, so it--it didn't have two months to bleed through.

OK.

But it--you know, it certainly did have an impact. I don't--we don't have that number on the tip of our tongues.

Just a couple other quick ones too. On the chemical business, you know, with Danielson having the problems it has, are you finding that you're taking market--you're getting some market share from them because of their financial ...

Yeah, hard to--hard to say, David.

OK. And then one other thing, as far as prices of acquisitions going forward here, you know, with Danielson having the problems with its American commercial lines, I even noticed the other day, I guess, when Moody's put Ashland's oil's credit on a negative watch from stable because of concerns from the ability to sell non-core assets.

And I don't know whether Ashland's interested in selling barges or not, but whether it's Danielson's business having some problems or Ashland's interested or not interested, does this - is this having an effect on dampening or at least lessening prices of your acquisitions? Because you remember 18 months ago, nobody wanted to sell assets because the refined product movement were great and everybody was interested in living off of the - off of the wind that was in the sales today.

And it just looks like because of Danielson's problems and some of the other issues that may be surfacing here, that prices could, in fact, becoming down as far as your acquisition targets as well as maybe even some more people willing to sell - even after, though, you made a nice couple acquisitions here recently. I just wanted to get a feel for that.

Yes. Yes, I'm not sure we can answer that. I mean, that's an interesting scenario, but, you know, it'd be very difficult to comment on it and, you know, we'll see.

Yes. That's all I've got. Thanks.

Thank you. Can we - can we put that ...

Sir, I'm showing no further questions.

We wanted to come back to the tax question because we're not prepared to answer that. But what we'll do is we'll put it in our next public filing so that you have the book - the book of taxes as well as the actual taxes. OK. Anything else?

No further questions? Thank you for your interest in Kirby Corporation and for participating in our call. If you do have any additional questions or comments, please give me a call. My name is Steve Holcomb and my telephone number is 713-435-1135 and we wish you a good day.

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