Kirby Corp (KEX) 2005 Q1 法說會逐字稿

Good morning. My name is Kimberly and I will be your conference facilitator today. At this time I would like to welcome everyone to the Kirby Corporation first-quarter earnings conference call. After these speakers' remarks, there will be a question-and-answer period. [OPERATOR INSTRUCTIONS] I would now like to turn the conference over to Mr. Steve Holcomb, Vice President of Investor Relations. Sir, you may proceed.

Thank you for joining us. With me today is Berdon Lawrence, Kirby's Chairman; Joe Pyne, 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 nonGAAP financial measures to the most directly comparable GAAP financial measures is available on our Web site at www.kirbycorp.com in the Investor Relations section under nonGAAP financial data today. 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 results of various factors. A list of these risk factors can be found in Kirby's annual report on Form 10-K. for the year ended December 31, 2004, filed with the SEC. I will now turn the call over to Joseph.

Thank you, Steve.

In our press release yesterday, we reported record 2005 first-quarter results of $0.52 per share, earning a record of $13.3 million on record revenues of $184.4 million. The results were in line with our recent April 14 announcement that earnings would exceed $0.50 cents per share and be significantly above our original published guidance range, which was $0.42 to $0.48 cents per share. The $0.52 cents per share compares to net earnings of $0.36 cents per share for the same period last year, the first quarter of '04. Our first-quarter transportation volumes were strong during the quarter -- no real weakness anywhere, just difficult operating conditions, which, in effect, caused us to move these volumes. Navigational delays were at record levels during the quarter, principally in January and February.

We saw high-water conditions on the Ohio and Illinois rivers during January, which made their way down river, causing the same conditions on the lower Mississippi by late January, early February. The upper Ohio River was actually closed for two weeks in January due to an accident at Belleville Lock, a lock below Pittsburgh. And, of course, the Gulf Coast was affected by fog. These conditions caused longer transit times, creating operating inefficiencies such as requiring more boats and barges to move the cargo that needs to be moved. But they also created some pent-up demand. During March, the weather and operating conditions improved significantly, allowing us to be much more efficient.

Pricing continued to improve during the first quarter. Contracts, which were renewed during the quarter, increased in the range of 4 to 5%. Effective January 1 this year, escalators for labor and the PPI on contracts over a year in duration also increased in a range of 3 to 4%. During the 2005 first quarter, spot market rates also rose in the neighborhood of 4 to 5% as you compare the first quarter to the fourth quarter of '04. With respect to our diesel-engine business, this segment's first-quarter results benefited from improved service activity and direct parts sales in the majority of the markets they served, and of course, as well as the earnings from the acquisition of Walker's Paducah corporation, which occurred in April 2004.

We have also been able to improve our service rates and increase our pricing, which is encouraging. The market is more willing to pay for better service and reliability.

In early April, Electric Motor Division, which is a division of General Motors, sold the EMD Division, which is the engine that we service, to GreenBRIER Equity Group and Berkshire Partners. They retain the name EMD. EMD is the manufacturer of large, medium-speed diesel engines used in the Marine, the power generation and railroad applications, and it's the principal engine that we maintain in our business. We've had a 39-year relationship with EMD and we look forward to a continued relationship with the new EMD and its new owners. We do believe that this sale is positive. The new owner wants EMD to be successful, and we believe that they will be more focused on this engine than General Motors was able to be.

Equity and earnings at Marine Affiliates was a loss in the first quarter 2005, reflecting a heavy shipyard schedule for our offshore coal and rock partnership, which is Dixie Fields Limited, where we have a 35% ownership position. There was also some startup costs for Osprey's new coastal service along the Gulf of Mexico.

Osprey is our barge feeder service operation for cargo containers, and we own a 33% ownership position in Osprey. Late last year, we chartered an offshore vessel for the movement of containers along the Gulf Coast -- U.S. Gulf Coast. First-quarter results reflected some startup costs, as well as weak utilization, as we attempt to build the volumes for this vessel. Osprey is a liner service with regularly scheduled departure and arrival times. Customers choose Osprey service based on its reliability in meeting the schedules we set. Until we can build enough volume, part of the operation will continue to under-perform. We are also evaluating other ports of call, which may be a better fit to this offshore vessel.

Osprey represents a new transportation service for America. It will take some time to attract the volume on some routes, given the competitiveness of other modes of transportation and the reluctance of some shippers to change modes of transportation. As we build Osprey, we will continue to assess the receptiveness of the market to move containers by water, and adjust our routes accordingly. As we have said before, this is not a short-term play. Long term, we are convinced that this will be an integral part of the overall movement of containers in the United States.

Now all in all, this was a great quarter for Kirby, and it's a good start for 2005. The industry tank barge capacity and volumes are in balance. I will come back and comment on the 2005 second quarter, as well as the year, and Berdon is going to talk about our capital expenditure program for 2005. First I am going to turn the call over to Norman, who will discuss the financial highlights for the quarter.

Thanks, Joe.

Although Kirby's marine transportation revenues increased 16% over the first quarter last year, our ton miles were essentially unchanged. Poor navigating conditions, a change in the mix of barges used in the intracoastal canal and river system, and the number of barges used for storage of customers' product, i.e., barges which generate revenues but no ton miles, were all factors in the level ton-mile performance. However, revenues increased because of rate increases, term contract, fuel, labor and PPI escalations and product mix.

In addition to record first-quarter revenue earnings and EPS, Kirby generated record first-quarter EBITDA of $39.5 million, a 25% increase over last year. Capital spending totaled $24 million for the first quarter, which included $9.9 million for new tank barges and $14.1 million primarily for upgrading our existing fleet. We still expect to spend about $65 million for new barges this year, and $28 million of the new barge cost will be for additional capacity. Spending for barge replacements, which fluctuates from year to year due to the age and condition of the barges, should peak at $37 million in 2005 and decline to around $20 to $25 million for several years after 2005. We haven't changed our total 2005 capital spending guidance of $110 to $120 million.

During the quarter, we reduced debt by $13.6 million, and ended the quarter with $205 million outstanding, with a debt-to-capitalization ratio of 31.1%, down from 33.4% at the end of last year. Our average cost of debt was 6% for the quarter. About three fourths of our outstanding debt is hedged against interest rate fluctuations with interest rate swaps. I will now turn the call over to Berdon.

Thank you, Norman.

To ensure Kirby has the tank barge capacity to meet our customer requirements and maintain capacity, our 2005 replacement construction program consists of ten 30,000- barrel-capacity tank barges for use in the petrochemical and refined-products markets and seven 30,000-barrel black-oil tank barges for use in the black-oil market. These 17 tank barges are replacement barges for barges scheduled to be removed from service. The total construction price is approximately $37 million, subject to the fluctuation of steel prices. We took delivery of four of the clean tank barges in late March and early April. Delivery of the remaining 13 will be throughout 2005.

Our 2005 tank-barge construction program also includes twenty 10,000-barrel-capacity tank barges and one 30,000-barrel specialty barge, adding an additional 230,000 barrels to our overall fleet capacity. The total construction price is approximately $28 million, subject to the adjustment based on steel prices. Delivery of the 21 barges is scheduled for June through October of 2005. This additional capacity positions Kirby to obtain petrochemical movement we currently do not have the capacity to handle.

We intend to continue to assess the market's needs for more capacity, and will gear our new construction program based on this assessment. We are very encouraged by the strong fundamentals in our business. I will now turn the call back to Joe.

Thank you, Berdon.

Yesterday we announced our 2005 second-quarter guidance of $0.65 to $0.70 per share. Our 2004 second-quarter earnings were $0.55 cents per share. Our guidance anticipates continued strong volume levels in the petrochemical and black-oil markets and the traditional refined products market that we see as we build inventory in the Midwest for refined products volumes, principally for the summer driving season. For the year, we've increased our earnings guidance per share to $2.45 to $2.55 a share, which is a 24 to 29% improvement, depending on which side of the range you pick, when compared to our record earnings of last year of $1.97 a share. The hike in our year guidance is based on our higher first-quarter results and frankly a more favorable outlook for the remainder of 2005. And additionally, the $0.04 per share from the deferral of the SEC decision with respect to the adoption of the fair-market or fair- value method of expensing stock-based compensation, which has been delayed at least until January of '06.

With a continued high price of crude oil and frankly, some talk of the slowing economy and the financial markets, I do want to comment on what we are seeing as it relates to the transportation of petrochemical black oil and refined products by barge. Despite the high cost of crude oil and natural gas, we continue to see strong volumes. Our customers remain optimistic with respect to these volumes. We will, of course, watch the domestic and global economies for signs of weakness, but to date we are not seeing any weakness in demand for the products that we transport.

Operator, we are now ready to open the conference call to questions.

[OPERATOR INSTRUCTIONS]. Your first question comes from Jefferies and Co.

Congratulations to a great quarter. A question on the guidance going forward and also on the pricing that you are seeing out there. It looks like, compared to the price quarter, that the pricing is accelerating. I think the contract pricing was about 2 to 3% in the fourth quarter and now 4 to 5%. Do you see that accelerating further going into the year? And what kind of other guidance that you've been given us what kind of pricing increases do you expect in the guidance number?

We are assuming contract pricing in the 4 to 5% range going forward as contracts roll out, with respect to stock pricing may be necessary, I don't think that, well certainly our guidance doesn't assume but on a year-to-year basis, that spot pricing is going to continue 15 to 20% year-over-year pace. We anticipate that that's going to taper off as weather improves and as the tightness in the market loosens up a little.

And on the equity earning loss, you had about $700,000 in the first quarter. What should we expect for the second quarter on that segment?

That should turn positive.

Very good. Thank you.

Thank you.

Your next question comes from Chaz Jones with Morgan, Keegan. Good morning, guys.

Good morning, Chaz.

One question here. I had -- was just trying to get a sense for April versus March, Joe. You alluded to do fact that March was very strong and I think your comments are very encouraging regarding the economy and what your customers are saying. But we are almost through with April here, and I am kind of curious, from a volume standpoint, kind of, compared to March, how we are stacking up.

We are still very busy.

Okay. And then maybe if I can take that a little bit further and ask about your fleet utilization -- given where demand is, do you have much room to improve your fleet utilization at this point? Or is it really more of a function of adding capacity now.

It's hard to see how you could squeeze much more out of the fleet. As you know, the first quarter is very deceptive with respect to fleet utilization. Only until the weather gets better do you really get a sense for the actual strength of the market as it applies to utilization. As I said earlier, we expect that some of that tightness is going to come on, because we, frankly, haven't had much capacity to book in March or April. In April the utilization remains very high. As we go into-- as we project that into the summer, we think it's probably going to come off maybe a little. If it doesn't, then we clearly need more capacity to service the requirements out there.

Now are we talking , have we moved from that low 90% to?

You are there. There is not much more you can practically squeeze out, given the fact that you do have to position some barges. And, of course, you have to maintain them, too.

Sure. And then maybe looks at the diesel-engine services, certainly a very encouraging quarter there for that division. Just curious if we should expect that type of momentum from them moving forward. I know that you guys have stated in the past that your goal is to get that division to kind of a mid-teens operating margin. And certainly the results are encouraging. So maybe if you can comment on the momentum in that division.

Well, that's our objective. And the way to get there is to, is principally pricing and utilization. There is some utilization. When we talk about utilization and in that business, we are talking about service a time that you can sell. So there is opportunity there. but pricing is the key to get the margins to that mid-teen level, which we think that we will be able to do. We think it should be this year, but it's too early to say.

Last thing here, Joe.

It's been two years -- or over two years -- since Kirby executed an acquisition -- I believe SeaRiver in January of through the last acquisition. I'm talking specifically on inland tank barge side. I'm wondering if maybe you can comment on the acquisition environment now and are there opportunities out there? Because I know you guys continue to kind of state that as your priority for cash use. We still would, we still have by revenue-producing assets in our core business, which meat our investment objectives. As you know, the acquisitions are opportunistic. If you wanted to make an acquisition every year, you would probably end up paying too much for it. If there were periods in the market wherefore a number of reasons the market is going to be maybe a little slower, or maybe the price expectations are higher, and that then are comfortable paying, and just a number of factors.

Yes, I will ask Berdon to weigh in on this. I would characterize the opportunity to be still favorable. We want to be careful that we don't make a capital mistake. We think that the business is going to continue to consolidate for a number of reasons. And that we are going to be a -- a participant in that consolidation. The other thing I would add is our history with respect to acquisitions is patience. We take advantage of opportunities as they come forward, but we are also very patient. There was a period, wherever -- 94 to 99 -- where we didn't make an acquisition just because we didn't think that the price was right or something didn't fit or for some other reason.

You want to? What I would add to that, Chaz, is you see some people designed to sell when the barge business is really slow and then you see some people willing to sell when the barge business is real good because they feel they can get a better price. The main thing we are going to do is stay disciplined and make sure that we don't make a stupid deal. We are always looking, and there's a number of opportunities out there, and I think over time several will come our way.

Well, I appreciate the feedback, as always, guys, and congratulations on your nice perform here in the first quarter.

[OPERATOR INSTRUCTIONS].

Next question is David Yushak [ph] with Fender Morris. We finally got our chemical recovery showing, and it's showing up nicely in your margins.

Thank you.

As far as the first quarter is concerned and the operating challenges you had to experience with the weather and a little boom in March because of some pent up demands -- can you give an idea from the income statement, how much -- those thing kind of give you an inefficient environment to operate on so your cost had to be impacted? But I'm wondering how much cost did impact it from that point of view. Because certainly your contract prices and spot markets helped somewhat recover that. But I am curious, because of the inefficiency, just how much that may have added to the cost.

David, to be honest with you, we haven't sat down and tried to figure all that out. I can say that weather-navigating delays were almost worse first quarter '05 versus '04. And you are right, your contract escalation, rate increases both in the contract and spot market. All helped to offset that. What happens is that you put more boats in the system, which add cost to the service that you are providing. I think that as the market has tightened, we've been able to pass some of those costs on to our customers, not all of them. But some of them. And, of course, there is always a tug of war between how -- how one assigns the cost of the operating risk and the business on a contract which is a barrels or delivered and you get paid when you deliver barrels or tons. Most of the operating risk historically has been on the operator. And what we've tried to do is allocate that risk more appropriately to both shipper and operator through lock causes and high water clauses and ice clauses, thing like that. And as markets tighten we've been successful in doing some of that. Now that's a long-winded explanation for some of the thing we are doing. But we really just don't have the -- you can guess at it but it would be very difficult to actually come up with a finite number that gifts you kind of the cost of all that stuff. But you are saying because you are getting contract renewals at 4 and 5% right now -- and you are also putting into these contracts renewals effect later on cost -- that you weren't able to do two years ago with chemicals. It's not -- it's not every contract, but the objective is to more fairly allocate the true cost of the business.

That's an encouraging sign that supply demands and matrixes are moving in your direction, where you had to shoulder a lot of that risk in the past.

That's really the point we are making.

As far as your assumptions for this year on tonnage, what kind of real growth are you expecting in your guidance for the year? I recollect the growth is in the forecast. I think is in the 1 to 2% range, in terms of volumes. I think it's in the 1 to 2% range. Last year we actually saw growth more being more than that. It was in the four to 5% range. There is -- there are some scenarios that suggest that petrochemical volumes could grow faster than that but in the forecast it's a little more modest than that. So the growth is much faster it really put a lot of capacity constraints on you guys and the industry itself?

Well, we will see. That would get you back to needing maybe boost capital spending for new capacity. That was the point that Berdon was making that we are going to -- there are a lot of moving parts out there. We found a little bit about watching the domestic and global economy, we don't really see any, any impact from any of the thing that have been talked about in the financial press in our volumes but we are going to watch that and make judgments as the year progresses with respect to our capacity needs going forward.

On that marine equity line you indicated that the second quarter ought to be positive. Is that primarily because of the coal operation?

Coal and we hope to see some improvement, too; with respect to that offshore vessel we have in Osprey.

So Osprey could help a lot in reducing that loss?

I didn't say a lot but it will help.

So we are heading in the right direction on Osprey.

We hope so.

And the one related question to Osprey, with Wal-Mart and Home Depot bringing on those new facilities along the Gulf channel and we are hearing a lot in Texas here about the congestion in the rail system, probably even worse than some other parts of the country how much does that influence these guys as they look at what they may need to do in moving these barges? I mean moving these cargo containers to places where they need to be logically from their point of view? Does that make Osprey a more viable option for them if in fact you've got an infrastructure in place to account for that.

Well, certainly, it certainly does. How much of that is going to happen is, remains to be seen but there's going to be a tremendous growth in containers imported into the port of Houston and the water option is a very viable option. I caution you that this isn't short term. This is more a long-term play. But certainly the ground work is being laid far number of reasons, congestion, clean air, driver shortages, safety, all of that, the continued increase in price of other posed transportation, the problems that rail lines are having, all of that lays the grounds work to encourage shippers to consider the water options. We don't think that's going to happen overnight. We think it's going to be a much, much longer term play.

But certainly Wal-Mart and Home Depot would certainly warrant to put their toes in the water?

They really haven't, they are just beginning to open those facilities.

Yeah, right, putting the tow in the water.

Could be.

Maybe a barge.

Right.

I'll get back in the queue. Thanks.

Your next question comes from John with JP Morgan. Good morning, guys. I had one question from the macro level. You've already spoken a couple times now about what you are seeing with the volumes and all the talk up there with the economy flowing but with your experience in the industry and this is for Joe and Berdon I would like to a here from both of you where do you see the petrochemical cycle right now, I was interested in some data weather we reach the peak and reached the down or are ramping up in the up cycle from what you are seeing and out there talking o customers where do you view that?

I will take the first whack at it and Berdon will follow me. Firstly remember that cycles in the chemical business are both price and volume. And when people talk about where you are in the cycle it's as much about price as it is about volume. Volume is what drives our business. So you can be maybe at the, towards the top of the pricing cycle but not the top of the volume cycle. Now what our customers are saying and almost all of them are saying it, is that the they think they have at least a couple of good years ahead of them. And they are talking about 2006 and some are talking even beyond 2006. So at least from a customer perspective it's all positive.

Are those customers talking about when they say a couple of good years are they talking about volume or are they talking about pricing.

I think they are talking about both.

The only thing I will add to that is they are talking about the next couple of years looking good but they always hasten to say that they can see 2005 at this point more clearly than 2006.

Okay. Thanks Joe and Berndon.

Your next question comes from Bill Baldwin with Baldwin Securities.

Good morning. A couple of questions here. What's the demands as strong as it is, Joe, how much equipment are you having really available right now for the spot market. I know you are aiming for 30% or.

Well, in the first quarter it's almost lower because your contract volumes tends to eat into your spot availability.

But as we, as we go forward into the year I don't think there's going to be a significant change in that 30, 70 mix. Can you give us a lesser on the EPI, what percent of your contracts are affected by those everything laters?

It's, let's talk about revenue transportation revenue, about third of it.

About a third of it. Okay. Lastly could you give us some indication as to what kind of fleet dispositions took place in 2004 by the inland tank barge industry and what's your best guess is right now as far as what you think you will see those Ed additions might look like in 2005.

Well, we are, the industry report just came out and there were a number of 2004 but the net increase was marginal because there were a number of barges that went out. In 2005 again I think there's maybe 120 barges on the books, is that about right? Of those 120 I think we had 38 of them. They come out throughout the year. How many barges go out of service? We really can't determine other than with respect to Kirby. And with respect to Kirby, 38 were building we will retire seventeen or eighteen I think this year. So we know what our retirement schedule is, but we don't know what other retirement schedules are. Let me make this point because I think and this is going to make a lot of sense, I think that when the market is tight people hang on to barges. They don't like to push them out unless they have to push them out. It is interesting that there are a lot of barges pushed out last year because an operator wouldn't want to do that unless he had to. Again if you look at the fleet profile build about a third of the inlands tank barge capacity is 30 years or older. So you have a third of it that some decision is going to have to be made on an annual basis. One of the things that I think is positive about that is that if there is any dive modest adjustment to demand I think the fleet is going to size to that pretty quickly just because of the age of it.

Your next question comes from Forest Temple with FlyLine Partners.

How are you?

A couple of questions. On the pricing-competition side, I know ACBL. has been always been operating, even while in bankruptcy. But now, having exited, do you find them -- and with the new managers and those guys around -- do you find them to be a more rational competitor? Or is everything pretty much status quo there? Let me just talk about what they are saying. They are saying that they are getting price increases and their objective is to improve their business.

Are we seeing it? Probably too early to really tell. We haven't seen that many contracts that have come up for renewal in that area. And frankly, we are all pretty busy. So one of the reasons we are building some additional 10,000- barrel capacity is that we can't -- we can't bid on business that's out there that we would like to bid on. Can you explain to me or walk me through, Joe, at least there's a rule of them on the scrap prices and what you guys get for scrap, versus the inflexion point in putting that barge and keeping it in use, or the average daily price it gets? In truth our business scrap really doesn't mean much as you make those decisions. We would rather take a tank barge and sell it into another service. And that probably drives getting rid of barges as much as anything. When you say goes into another service, where does it go? You can sell to it Latin America. We just sold, I think, a barge or two to Latin America. You can sell it.

Sometimes they become floating docks in an oil patch or they can become docks for fleeting areas. And that's generally a higher and better use, and you get more money, than scrap.

Most of the casinos that are floating are sitting on tank barges I hear Charles talking about it every once in awhile, that he's seeing scrapping whenever things seems to slow down, and it sounds like he's even scrapping a few.

But he's talking about dry cargo business. He's talking on tubs, not on double hulls. He's a very minor player in the tank-barge business, but a significant player in the dry-cargo business. And there's been much more scrapping in that business than there has in the tank-barge business.

Those barges have less alternate uses.

Tell me about the comps to Osprey. Are there guys out there doing this already?

No, not really. There are some people that are nibbling around the edges, but it's such a new service. And there really isn't any company equivalent to Osprey out there.

[OPERATOR INSTRUCTIONS] Next question, follow up from David Yushak [ph] with Fender Morris.

Back on the diesel service, I have to be pleased with what we saw there in the first quarter, because the last two years, basically it's been like a fixed annuity. You had indicated in your prepared comments that the business was pretty busy across all fronts, which has been different from the past. And that you've always had one, two, three markets that have been kind of out of sync. Did the offshore business really come in very strongly here? What were some of the real strengths in that, because you did have to be impressed because you had that break-out volume. That might be better pricing versus stronger demands And are you doing anything? How much different is it from the thing you alluded to in your prepared comments that are beginning to show that this can be more than just a fixed annuity?

Well, we are certainly pleased with the trend. With respect to the offshore business, that's as much global demands as it is Gulf of Mexico demand. We spent -- that sector was busier, but it was busier because it was preparing equipment to go overseas. One of the things that we are kind of thinking through is how can we position ourselves to a better following? We rarely do send teams all over the world. But if more -- more of that equipment is going to be outside the Gulf of Mexico, how do you service it? So that's one of the issues we are thinking through. With respect to the other markets, I mean, frankly, the marine business is very strong. It's strong offshore. It's strong inland. Some of that business is seasonal. The business -- some of the business -- out of the Midwest that services the Great Lakes -- they do their maintenance when the lakes are frozen, so the first quarter is typically more brisk than the rest of the year. On the West Coast, part of that business services the fishing industry, so it's going to be busier when the fishing industry is in port and not out fishing. Overall, we are pleased with the trends and we will just see if it continues.

Now on the Osprey, that one ship you got offshore that's running, that's basically kind of idea would be to try to expand that kind of from port to port to port. It's basically one of the things you are investigating there -- to just begin to expand what that particular ship can do in moving from port to port to port? And that to be that, you can begin to expand what it can do in the way of covering its costs?

Well, that offshore assets are extensive assets, and that's a volume business. You are looking for volume to fill the ship and the ship is on a schedule and has to meet the schedule. It just takes time to fill in the volume. Having said that, we are also trying to understand as you use that ship what is the best route, given the cargo that's available. We may change the routing slightly going forward to take advantage of where we see better cargo opportunities. In the grand scheme of things, that's what short-see shipping is about. Short-see shipping -- you read a lot about it. But it's more talk than action at this point. And what we are doing is playing a little bit in the short-see shipping area. And we are discovering what we expected -- that's a new market, and when you enter a new market, there is an initial reluctance of a shift to change the mode of transportation. And it just takes time to build volume.

Some of it is the logistics.

It's kind of a combination of both of those issues that really gets you some traction in the space. And this is a new way of moving things. It makes perfect sense to anybody that sits down and thinks about it. It makes perfect sense. But having said that -- I mean we've said this before -- you are taking a concept that makes sense and you are putting it out there. And then the reality of getting shippers to recognize that it works, that it services their needs, it's competitive -- is there and it is going to take time. But as we, as we talked about earlier, we are laying the groundwork, the groundwork to encourage water as an alternative to land-based transportation. And the movement of containers is being laid all the the time. But this isn't something that's going to happen overnight. It's going to be a more long-term opportunity. Maybe it's one of the those things where people are used to pulling their problems out and other modes of transportation. They get used to pulling their hair out and can't see the opportunity is there. So. Our challenge will be to convince them otherwise.

One last thing. On your debt-to-capital ratio, that's going to be about the lowest in your history as a marine transportation company, I would think. If you don't watch yourself, you are going to be out of debt -- if you don't start putting it back to work. I congratulate you on having such a fine balance sheet.

Thank you. It's not our objective.

I know. But if your balance sheet is ready, as you said, being patient with opportunities, to be in the balance sheet to be able to take care of it. You are to be congratulated on managing the business well. Thanks.

Thank you.

There are no further questions at this time.

We appreciate your interest in Kirby Corp. and participating in our call. If you do have any additional question or comments, you can give me a call. My direct dial number is (713) 435-1135. And we wish you a good day.

This concludes today's conference. You may now disconnect.