Kirby Corp (KEX) 2003 Q2 法說會逐字稿

Welcome to the Kirby Corporation 2003 second quarter earnings conference call. All lines will be in listen only mode until the question and answer session. At that time, instructions will be given. At the request of Kirby Corporation, this call is being recorded for replay purposes. If there are any objections, you may disconnect at this time. I would like to introduce Mr. Steve Holcomb, sir, you may begin.

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, our Executive Vice President and Chief Financial Officer. During this conference call, we may refer to certain non-GAAP or adjusted financial measures. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures is available on our Website at kirbycorp.com in the investor relations' section, under non-GAAP financial data.

Statements contained in this conference call, 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. Our actual results could differ materially from those anticipated, as a result of various factors. We have listed these risk factors in Kirby's annual report on Form 10-K for the year ended December 31 2002, which we filed with the Securities and Exchange Commission. I will now turn the call over to Joe.

Thank you, Steve. Good morning. In our release this morning, we reported our 2003 second quarter results of 48 cents per share, earning $11.8m on revenues of $158.7m is significant improvement over our 2003 first quarter earnings of 28 cents a share, and the 2002 second quarter earnings of 36 cents per share.

Our second quarter 2003 petrochemical volumes were above the second quarter of the year before, principally due to the new Exxon Mobil lines added when we purchased their SeaRiver inland tank barge fleet this January, and a strong demand for gasoline/petrochemical blending components. Black oil volumes also improved this quarter, helped by a movement of residual oil used as a substitute for natural gas for boiler fuel, and cat cracker feed stock, for the production of mostly refined products.

Up river refined products volumes were strong this quarter compared to the first quarter, low Midwest gasoline inventory levels, and Gulf Coast versus Chicago gasoline price differentials encouraged the movement of Gulf Coast sourced refined products into the Midwest.

Our fertilizer volumes were particularly weak the entire quarter, as the U.S. fertilizer industry suffered from high natural gas prices, and in some cases, shut down their plants.

Operating conditions improved over the quarter, which improved our trip times, required fewer boats in the system, and lowered our cost to deliver cargos to our customers. Weather and lock delays were a significant factor in our first quarter.

During the 2003 second quarter, contract rates remained essentially flat. Spot rates improved modestly as volumes improved. Our second quarter earnings were helped by falling fuel prices, because of the way fuel is escalated in our contracts. Fuel escalation clauses in our term contracts allow for an adjustment in contract rates within 30 to 90 days, depending on the contract. Our average fuel cost for the second quarter was 81 cents compared to $1.03 in the first quarter. We estimate the declining fuel costs added approximately 2 to 3 cents per share to our second quarter results.

Our diesel engine service market continues to be affected by a weak oil service market on the Gulf Coast, and a very poor Midwest dry cargo market up in the Midwest. I'll comment later on the outlook for the third quarter, and for this year, and Burton will address the financial statement additions and the performance measurements we added to this press release format, which we intend to make as a regular addition. But first, let me turn the call over to Norman, who will discuss the financial highlights for the quarter.

Thanks, Joe. Capital spending, before acquisitions, for the first six months of 2003 were $37.7m, $8.1m of which was for new barge construction. Kirby also spent $35.6m for the acquisition of 48 tank barges and seven tow boats from Exxon's SeaRiver, $1.3m for two tanker service companies, and $900,000 for two existing tank barges, all in the first half of 2003.

On May 6, Kirby announced the signing of a contract for the construction of 16 double haul 30,000-barrel inland black oil tank barges, at a cost of $29m. We anticipate taking delivery of seven of the barges in 2003, and nine in 2004, at a cost of $12.6m in 2003 and $16.4m in 2004. These 16 black oil barges will replace older barges that will be retired from service. Under the barge management agreement between Kirby and Coastal Towing, which was signed last October, Coastal has the right to purchase a portion of the 16 new barges, but they've elected not to replace their barges that are out of service, and will not participate in the barge construction contract. In addition to the current order for 16 barges, the construction contract also gives Kirby an option to build a further 16 black oil barges.

With the addition of the seven black oil barges to be delivered this year, we've increased our 2003 capital expenditure guidance from a range of $55-60m to approximately $69 to $74m. The revised number for 2003 includes a total of about $24 to $25m for new barge construction.

Interest expense for the second quarter was $3.9m, 15% above the second quarter of 2002. Long-term debt, at $295m increased $47m over June 30 2002. Increase in both debt and interest expense reflects the acquisition of barges and tow boats from Coastal Towing, Union Carbide and SeaRiver over the last 12 months, at a cost of over $77m, and a $17.5m contribution to our pension plan in the fourth quarter of 2002. Our all in average interest rate was 5.2% for the second quarter, and 5.1% for the first half of 2003.

$250m of our outstanding floating rate debt is currently hedged with interest rate swap agreements. Kirby's debt to capitalization ratio was 46.2% at June 30, compared to 45.1% at year-end 2002. I will now turn the call over to Burton.

Thank you, Norman. In the press release we issued this morning, we expanded our financial information disclosure and added additional performance measures to the release. We expanded the financial section to include condensed, consolidated statements of earnings. We also included separate marine transportation and diesel engine services statements of earnings.

In previous years we disclosed segment information in our annual report, and starting in 2002 we began disclosing segment statements of earnings in our quarterly Form 10-Q, filed with the SEC. We felt disclosing this information earlier would allow our individual and institutional shareholders, analysts, and prospective shareholders, and earlier opportunity to review this information, and not be required to wait until the SEC reports were filed, which is normally a couple of weeks later. Additionally, we will begin to disclose certain key performance measurements.

Ton-miles are a key performance measure that we track and use in forecasting our business. Revenues per ton-mile, are marine transportation revenues divided by ton-miles. Historically we have disclosed the number of towboats we operated at a point in time. The average towboats operated during the period that we disclosed this morning is a more meaningful measure for evaluating our performance. Delay days are the number of days that we lost during the period due to navigational factors, including weather and lock delays.

These performance measures for the four quarters of 2002 and the first two quarters of 2003 are available on Kirby's Website under the caption 'performance measure' in the investor relations' section. We hope you will find this additional information helpful. I will now return the call back to Joe, who will talk about Kirby's 2003 third quarter and full year outlook.

Thank you, Burton. This morning we announced our 2003 third quarter earnings guidance of 42 to 46 cents per share. This compares to the 2002 third quarter earnings of 49 cents per share, which included a 6-cent per share favorable adjustment to our crude insurance liabilities. For the 2003 year, we are maintaining our earnings guidance of $1.65 to $1.75 per share, compared with the 2002 earnings, excluding the impairment charge, of $1.64 per share.

We expect some deterioration in our overall volumes this quarter. We typically see a decline in Midwest bound gasoline volumes in mid summer, and some pressure on spot rates. This decline should be offset by better operating conditions and a modest improvement in basic petrochemical volumes. We also expect to see improvements in our fertilizer volumes toward the end of the quarter.

Hurricane Claudette, which made landfall earlier this month between Houston and Corpus Christi, shut down our operations along the Texas Gulf Coast for a couple of days. We are forecasting normal weather conditions for this quarter, and our 42-46 cents earning guidance includes the impact on our earnings from Claudette. Tropical storms and hurricanes shut down operations in the path of the storm, and depending on where they make landfall, can have a major effect on our operations.

Perhaps the most encouraging sign to us is the general optimism from our chemical customers that their business should start to see some improvement late this year. Petrochemical volumes have been sharply depressed since 2000, and any improvement in this business would be welcome.

In closing, I want to add to Burton's comments on performance measures. There are many moving parts to our business, which make it difficult to forecast. We are committed to working with our shareholders and analysts to provide meaningful measurements that will help you understand our business and the business trends. Unfortunately, in any one quarter weather can have a significant effect on earnings. Kirby is best understood looking at our performance on an annual basis versus a quarterly basis.

I mentioned earlier it appears that the U.S. chemical business is positioned to see some improvement later this year, or early next year. Petrochemicals drive 65% of our volumes, so any improvement is important to us. While we wait for this to occur, we continue to work on the basics of our business, safety, superior service, and controlling our costs. Kirby is in great shape financially, and positioned where we need to be positioned for a recovery in our core chemical business. Operator, we're now ready to open the conference call up to questions.

Thank you. If you would like to ask a question, you may do so by pressing star, one, on your telephone touch pad. Once again, that is star, one, to ask a question. One moment while the questions register. We have a question from David Yuschak.

Just a couple of questions here real quick, then I'll go back into the queue. On the marine transportation business, on the Coastal side of it, as you transition from owning some of the barges from the management agreement, how much of an impact is that having on the operating margin, as far as diluting the actual number, as a percentage of the total, 16% or whatever the operating margin was. What would be the dilution from that effect?

We haven't calculated it for this call, David, but it is diluting, because we report their total revenues. The way the partnership works, we pay them their share of the cash. Our margins are going to be slightly depressed because we're reporting their total revenues, and not getting the earnings off those revenues. Now as we transition to more of a Kirby owned fleet, which seems to be the trend, of the 16 barges that we're building, we're going to end up owning the majority of them. In fact, I think we'll end up owning all. Most of those are barges that replaced Coastal equipment leaving service, so over time that's going to become a de minimus dilution.

OK. Dow Chemical reported numbers better than they expected, and they're speaking optimistically about the third quarter doing well too. Dow's an important customer of yours, and everybody's been concerned about feedstocks and what's going to happen on the Gulf Coast chemical business. Dow's a major player down there. Could you give us some perspective as to how that relationship has developed here, as far as revenue tons, product shipped, and so forth? Just to give us a sense as to whether you're seeing that kind of impact from Dow, as far as some concerns about the Gulf Coast chemical business?

This is in reference to higher raw material costs?

Right. Everybody's commenting on the chemical business is going nowhere on the Gulf Coast, it's going to be an imported business long-term, and it's because of the feed stock issue.

We'll give you our view on that. Firstly, Dow Chemical certainly isn't counting themselves out. Their solution to principally the natural gas issue is to import large quantities of L&G and they recently announced a significant L&G project for Freeport, which will, I think, satisfy about two thirds of their gas needs. In terms of their volumes, their volumes are actually up year-over-year. I don't want to talk specifically about what kind of increase it is with a particular customer, but volumes and revenues from the Dow business is up. Their relative optimism for the third quarter is, I think, very positive, and depending on who you talk to, the optimism is either beginning the third quarter or late in the fourth. But overall I think there's a general consensus within the chemical business that business is going to get better. It's going to be led first by volumes, followed by margins, and all of that's positive.

Speaking to the macro question of the Gulf Coast chemical business as it relates to other chemical complexes in other parts of the world, I think the thing to remember about this concentration of chemical manufacturing, is that it's very much interconnected. It is, for the most part, paid for. It is efficient, they continue to upgrade it. The inland waterway system and pipeline systems make it very efficient to move chemicals between plants and to the market. The United States continues to be the largest market for these kinds of chemicals. Certainly if gas stayed at $5-$6 forever, there would be a disadvantage. It's not going to go away, but they'd certainly be disadvantaged.

Having said that, there's a normal commercial incentive to get gas that has no value in many places of the world, to markets that it does have value. The technology for doing that is improving all the time. It's our belief, as well as I think most people's belief, that over time we're going to get gas into the U.S. gulf at prices that are conducive to favorable business climates here.

Yeah. From what you're saying about the Dow Chemical business being up, year-over-year, and I don't expect you to give us any numbers, Joe, but other than the fact that the trends there, despite all the concerns for a company as big as Dow is and everybody's concerned, the business is actually up. So it's not like, you know, it's going away and you're kind of feeling the pinch of some of that too. Is that a correct observation then, just from a micro point of view, that ties in kind of nicely about what you said about the macro?

No, that's right.

No, that's right.

So, this chemical business at Dow is doing well then, you know? I mean at least up year-over-year, it does suggest that that concern should be mitigated.

Yeah. I'm really speaking to volumes, and not their margins. Our concern is more volumes than margins, so their long-term margins become our concern too.

I've got a couple of other questions, but I'll get back in the queue, thanks.

OK.

And once again, if you would like to ask a question, you may do so by pressing star-one on your telephone touch pad.

We have a question from Tom Spiro [ph].

Tom Spiro, Spiro Capital, good morning. I have just two questions. One, Spot First is contracted. Is Spot now above or below contract?

About the same.

About the same? And secondly, the coastal transaction, we've now been managing, I guess, a lot of the equipment for a period of time. Has any of the old coastal business shifted to other carriers? Or, have we kept the great majority of it?

We've kept the vast majority of it, as frankly, we've kept the vast majority of all the business we've acquired with any acquisition we've made.

Who is the number two player in that, in the black oil business?

The number two player would be Magnolia Marine, which is a subsidiary of Ergon. It's a shipper. They're in the refining business. And, that would be followed by, I guess, Blessy Towing. But, we have a nice position in that business.

Thanks a lot, and good luck.

We have a question from Bill Baldwin.

Hi and good morning, gentlemen. Norm, would you care to kind of indicate where you think long-term debt will be at the end of this year, just based on your outlook for cash flow and Cap Ex and so forth?

Yeah. Let me just give you a couple of general comments, Bill. Over the last two or three years we have been generating about $40m to $50m in excess of our normal capital spending. And that's before acquisitions, so if we spend $25m in acquisition-oriented--I'm sorry. We're going to spend $25m new equipment, and we spent $35m for SeaRiver in the first quarter. That's going to take an awful lot out of that $40m to $50m.

There's one other wild card that we're not sure about yet. It depends upon what the market does, and what interest rates do. We contributed $17m to our pension plan last year, and we will, you know, we have to figure that at the end of November each year. So, depending at the levels we are right now, we do not anticipate a contribution anywhere close to the $17m. Again, it depends on what interest rates do.

OK, so [inaudible] modest reductions [inaudible].

We could end up net up on the year, vs. paying down. But again, that is driven, really, much more by the acquisitions than...[inaudible].

Right.

And Bill, the debt's lower than when we--after SeaRiver, the debt has declined.

Yeah. We are always in a positive, on a kind of annualized basis, before acquisitions or things like pension fund, about $40m to $50m a year. So, when you disrupt that trend, you would subtract from that $40m to $50m surplus.

Well let me ask it another way, then. For the second half of the year, what do you project for your Cap Ex?

Bill, we'll come back on that. We'll come back with that number while we're on this call. We understand what you're trying to get at.

Thank you.

Once again, if you have a question, please press star-one on your telephone touch pad.

You have a question from Mark Haywheel [ph].

I have just a question about new construction of the boats. Has that begun to pick up yet, in the industry?

Boats or barges?

Barges.

Barges. There is some new construction occurring but there always is. I think where you're going is, is the fleet capacity growing, or declining and the general trend still trends towards decline. Last year it declined. This year, it's probably too early to tell. But, I can tell you in the case of Kirby that Kirby will retire more barges than they'll build.

OK, thanks a lot.

Just to further expand on that, there does seem to be some rationality business with respect to capacity.

That sounds good. Thanks.

We have another question from David Yuschak.

Just to follow up on that question too, guys, it's likely that the single-skin barges go out the gun in another five years or so, which would really strengthen industry capacity quite a bit, which does put pressure on until I replace that with new building of equipment.

Is that a possibility, that we could get that surge in building, just because in that particular case, it would require a lot more capital? But it would also give you a lot more capacity, because you'd be bringing on more barrels of capacity?

Let's see, David, let me just make sure I understand what you're asking. You're suggesting that most single-skin barges will be out of service by 2007?

Probably, something like that.

Yeah, we agree with that. And, you're suggesting that some of this building is to replace that capacity, which we also agree with. But I wasn't sure where else you were going.

To replace that capacity you may not bring on as many barges, but you could be bringing on more barrels than you're taking out.

Well actually, you know the larger single-skin barges have more barrels than a double-skin barge.

OK.

They're generally larger, because you're loading them wall-to-wall. Where, in a double-skin barge, there's a void created by the double skin, which reduces capacity.

But you're thinking, though, that even with that amount of barges being replaced the capital out there is still not available to replace the entire shrinkage.

No, I'm not saying that. I would never speculate on the availability of capital.

But the return on capital certainly drives that assumption?

Yes, I would tell you that the return on capital does not certainly justify new capacity in this business. Now, that's not to say that there won't be some people that actually will build, even given that fact. But generally, the fleet has been declining. And, it's been declining we believe because the returns are not adequate to justify current fleet levels.

Now, at some point, that's going to change. The fleet will be in balance. Volumes are going to exceed the fleet's ability to handle them. Rates will rise, as they should, and capacity will be added. We believe that will happen. I'm not going to predict when, but we believe that will happen.

I will tell you that I think we're closer to that than we've probably been in a very long time.

I'm interested too on your comment in the press release about rail car loadings, relative to what you experienced in the way of chemicals [inaudible]. In looking at some of the industrial production data by the Federal Reserve Board, there have been some up-ticks in the chemical production in recent months. And if rail car [loadings] [inaudible] are relatively flat to down, would that suggest that the marine transportation industry is maybe increasing its penetration of what's being shipped, because of low-cost factors? There's not as much of an emergency to get the product, so to speak, to market as the rails would give you?

Yeah, I just don't know. We watch the rail car loadings. We get them from a number of places and we've watched them decline over the quarter. Although, I think the last couple of weeks they reversed that and began to improve.

I think a part of what drove the second quarter and helped our volumes was the gasoline blending stocks, petrochemical gasoline blending stocks, which really aren't efficient to transport by rail. I think rail is going to move more the finished chemical, vs. more of the base chemicals and even the intermediates. We're going to move more of those. That probably would explain our volume's improving while theirs declined, more than anything.

I wouldn't read too much into that. I put that in the release just to really make the point that we're doing OK, the volumes are holding up. And, if people follow rail car loadings, we're really not seeing the same trend.

And then, so the real chemical recovery on the gulf coast, as far as other movements, is yet to come?

I actually think it turned a corner, probably during the second quarter of last year. That's where we began to see river chemical volumes improve. Part of that, of course, is Dow Chemical, because they're our largest river customer. And they continued to improve throughout the year. Now, there are periods where they flatten out. But that improvement really has continued. It's been very modest, but it's been enough so that we have noticed it.

What we're encouraged by is when we go out and talk to our customers, which we obviously do frequently, they're feeling a lot better about their business. Now, certainly some of it has to be the number of things that have occurred to stimulate the economy. Low interest rates, tax cuts, large government spending, I mean we really have primed this economy to do better. They look at that and say, as they should, that their business, which tracks the economy, should improve as the economy improves.

Now, what's been happening the last couple of years is, it's going to be better next year. Well, the beginning of this year, they said the latter half was going to be better. What's encouraging is they're sticking to that. They're not sliding it out another six months or another year.

So, we feel pretty good about it. When you couple that with the kind of modest increases that we've been seeing over time, I think that it's encouraging, that we may begin to see some of those volumes come back that we lost kind of mid-part of 2000.

How much of your guidance, Joe, reflects that optimism in the chemical companies?

Well, in the third quarter very little of it. What we're saying is the latter part of the year. [Inaudible].

I just want to make sure of sort of your view of the third quarter [inaudible], the customers are.

Yeah, David the third quarter is reflecting what we think will be a much slower gasoline business. That's a typical phenomena of most years, and how that bleeds back into spot rates. So, we think that the third quarter is going to be a little sloppier.

Now, the weather's better. Our tows are a lot more efficient, so we maximize the profitability or the tows that we're operating. But there will be some excess capacity, we believe, that will bleed back because the refined products business is going to be weaker.

So, we're saying 42 to 46 cents. We had Claudette there, which was a little of that, not a lot. And, we'll just have to see what happens towards the end of the year.

David, this is Burton. One thing, a year ago, if you would've talked to our customers, you'd hear, "We don't see any turnaround in sight." And now, we're hearing fourth quarter, first quarter, we're starting to see optimism that we didn't see at all, say a year ago.

OK, it certainly sounds like them, and that's certainly key to you guys, as far as getting those margins up nicely too.

As far as, I mean with the delayed days that you cannot calculate, and I think that's going to be very helpful for us too, but have you got a delay day that you've calculated on the Claudette right now?

Not that we're willing to put out there.

OK, thanks.

Once again, if you have a question, please press star-zero.

Operator, let's just use this opportunity, while you gather the next question, to answer Bill Baldwin's question.

Bill, we spent $37m, this is Norman, in capital in the first half, and our revised guidance, let's say, the middle, around $70m plus for the year as a whole. So, that would mean about $33m, give or take a couple of million, in the second half.

Once again, that is star-one to ask a question. We have a question from James Finley.

Good morning.

Good afternoon, James.

Thank you. As the fleet gets older, are you going to have to spend more on maintenance capital expenditures each year?

Well, we're certainly going to have to reinvest in the fleet. And, you know, what that reinvestment is, is going to depend on a number of factors, James. It's going to depend on what we buy, going forward and the age of that fleet. It's going to depend on the individual market that we're building for. But, yes, I think that you can expect us to build more barges, going forward, than we have traditionally built. We're building eight to 10 a year.

I'm not prepared to say specifically how many barges that's going to be because of the number of factors that are going to influence that decision. But, it isn't going to consume all our cash flow. I think that for the most part it's going to be more modest increases than what I would call significant increases.

And, if you look at the money you're spending on these black oil barges, what sort of rate of return are you going to get off that?

Well, the hope is a 12% return.

Even at the moment, with current pricing?

Yeah. The objective is a 12% return.

OK. Just--does your insurance run out in July this year? Didn't you have a long-term insurance agreement?

We did. We renewed it.

And has that gone up significantly?

Let me answer it this way. The answer is it went up significantly when you look at it as a percentage increase. But because of our safety efforts, we're able to absorb a significant part of our exposure to losses. And, our premiums, because of that, are low. So, where we would've been paying, let's say in general terms for our Holland P&I exposure, maybe $1.5m, the new costs are going to be less than double that, which really isn't a material number.

OK. On the acquisition front, can you say anything about the potential prospects out there?

We think the environment remains good. We continue to talk to a number of different companies. Really other than that I don't want to comment on any particular opportunity. But we do think that the environment as it was last year, is good for the continued consolidation of the business.

One last thing. On the pension fund, I was hoping you were going to say you were not going to have to add anything this year. But you said somewhat less than the $17m last year. Can you give us a little bit more detail on that?

I'll let Norman kind of fill in what I miss here. If you can tell us where the market's going to be in November, it would help answer that question. Some of that's going to be driven by that. The other driver is the interest rate assumption, that's clearly lower this year than it was last year. The calculation we'll do in November, but if the market continues its upward trend, then it's going to be positive and reduce, or perhaps even eliminate any contribution we'll need to make. If it is flat, or declines, then we expect that we'll have to make a contribution. In terms of the range of contributions, I would say it could be nothing to $10m, something like that.

Your return assumption is still about 9%, is it?

9.25%, but we intend to lower that assumption. Also our policy is to fund 100% of our accumulated benefit obligation, so when we talk about needing to contribute, it's not that we're, from a regulatory point, anywhere close to that. We maintain 100% funding on our plan.

OK, thank you very much.

Your following question comes from Bill Baldwin.

Joe, do you have the barge delivery numbers, the new barges that you took delivery of in the second quarter, and how many were retired? Then kind of projections for the third and fourth quarter on that.

Delivery, Bill we're going to have to get that for you. The first half of the year we had two asphalt barges delivered, and two of the six clean barges that we ordered. With respect to the 16-barge order, we don't anticipate getting barges from that order until the latter part of the year. In terms of retirement, I don't have that number. What we'll do is, we can put that number in the queue for you.

Now you take delivery of these other six clean barges, I guess there's four left, pretty evenly throughout the rest of the year, do you not, Joe?

Yes.

So probably two in the third, and two in the fourth.

Bill, I think they may be compressed slightly; it's possible we'll get three in the third and one in the fourth.

Then most of the additional asphalt or black oil will be in the fourth quarter?

I think we're saying that we're going to get seven barges this year and nine next year. Those deliveries will begin either late in the third or early in the fourth.

In the performance measurements that you issued, you had the barges for six months. Is that a six-month average, is that what that is? You have 397 active barges for the six months of 2003.

No, it's a point in time number.

OK, so that's the number of barges that you had operating at the end of June then?

Yes.

OK, that's fine.

Would you prefer an average?

I guess only if you're going to be in same sync with your towboats, the towboats are averages. Maybe both a point in time and an average, if we could be greedy.

Let us think that through. As both Burt and I said, we're trying to help you fine-tune your understanding.

Anything would obviously be welcome along those lines, to improve our fine-tuning. Are you inclined at all to release capacity along with the number?

Let us think about that too.

OK. Thank you much.

Once again, if you have a question, please press star, zero on your phone. We have a question from James Finley.

Just a follow up to the black oil barges you're building. Presuming they've given you a low cost of debt to finance those, they'll be added to EPS?

Yes.

Reasonably significantly?

I don't know how you define reasonably significantly, but there clearly is.

OK, thanks.

At this time I show no further questions.

Thank you for joining us today. If you have any additional questions or comments, please give me a call. My direct dial number is 713-435-1135. Have a good day.

That concludes today's conference call. Have a great day.