Kirby Corp (KEX) 2006 Q4 法說會逐字稿

Good morning. My name is Ashley and I will be your conference operator today. At this time I would like to welcome everyone to the Kirby Corporation 2006 fourth-quarter end year conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question-and-answer session. (OPERATOR INSTRUCTIONS). Mr. Holcomb, you may begin your conference.

Thank you for joining us this morning. 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 in 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. A list of these risk factors can be found in Kirby's annual report on Form 10-K for the year ended December 31, 2005 filed with the SEC. I will now turn the call over to Joe.

Thank you, Steve, and good morning. 2006 was another remarkable year for Kirby with record results reported for the year. During 2006 marine transportation demand was very strong and barge capacity was tight. This created a favorable environment for pricing our services. In our diesel engine service segment, as with our barge segment, we experienced strong demand for the services that we provide.

We also made the strategic decision in the diesel engine group to expand into the high-speed engine business and purchased Global Power Holdings and Marine Engine Specialists. Both acquisitions were accretive. The high-speed business is a great complement to our medium speed engine franchise.

Our marine transportation demand remained strong throughout the fourth quarter. Weather was an issue last quarter. December saw a sharp deterioration in weather conditions due to a significant number of fog days and some frontal systems along the Gulf Coast. Fourth-quarter delays in total increased 31% when compared to the fourth quarter of 2005, and December weather days were the highest we've experienced in a number of years.

Pricing continued to improve during the quarter. Contracts during the fourth quarter continued to be renewed at higher rates in the 6 to 8% range. Spot rates remain firm and spot rates remain above contract rates. Labor and power continue to be a challenge. We have worked very hard in both these areas and we've made some progress.

In July of 2006 we signed an agreement to purchase the assets of Capital Towing which consisted of 11 towboats. To date we've actually bought nine of these boats; the remaining two boats are under charters to other carriers and as those charters expire we'll purchase them. We anticipate that occurring in the second quarter. We've also taken delivery of one of our new 2100 horsepower towboats and we're going to take delivery of another one within the next couple of weeks. Last year we also purchased seven towboats under separate transactions.

We do anticipate the cost of crewing our fleet and charter power to continue to increase in 2007 at rates that will be above the cost of inflation, but we don't think that they'll increase at 2006 levels. We feel that during 2007 term contract renewals and the labor escalators in multiyear term contracts will recover most of our increased labor costs.

With respect to the diesel engine part of our business, fourth-quarter results reflected the accretive acquisitions that we made earlier, the acquisition of Global and Marine Engine Specialists. Service activity and parts sales during the fourth quarter for the medium speed part of that business remains strong. The high-speed market was not as strong as it was in the third quarter, but this was anticipated for some seasonal softness and this is typical for that business. It's going to have a lower contribution in the fourth quarter than it's going to have in the middle of the year. Higher service rates and parts pricing coupled with better utilization positively impacted this part of our business.

Earlier this year we purchased -- announced the purchase of and purchased 58 tank barges, 37 of those came from the coastal fleet and 21 from Cypress Barge Leasing, for a combined total cost of $34.3 million. As I think most of you know, we've been operating the coastal barges since 2002 under a barge management agreement and we have been leasing the Cypress barges since 1994 as part of our acquisition of Dow Chemical's barge fleet. So all this equipment had been in our fleet.

We anticipate the purchase will be slightly accretive to 2007 earnings because of the higher than normal depreciation for this equipment due to its age. However, EBITDA for the purchases will be approximately $11 million, so there's a much higher EBITDA contribution than an earnings contribution. I'm going to turn the call over to Norman and then I'll come back after Norman and Burton have spoken and talk about our forecast through 2007.

Thanks, Joe. As Joe said, fourth-quarter earnings reflected continued strong marine transportation and diesel engine service markets along with typical fourth-quarter weather conditions. In spite of the strong demand ton miles were down 12% compared to the fourth quarter of 2005 mainly due to weather conditions along the Gulf intercoastal waterway during the winter.

Although the ton mile metric is the best measure of volume that we have for our business, ton miles often don't give much insight into market dynamics. For the year ton miles were down 3% from 2005 and reflected changing trends and conditions during the year. In the first half of 2006 we moved equipment from the river to the intercoastal waterway because of strong demand in that sector. This caused a reduction of ton miles due to the shorter trips in the canal. During the last half of 2006 we moved equipment back into the river tows with larger trips due to the shortage of boats in the canal market. The increase in ton miles due to this shift was offset by the increased delay days in the fourth quarter.

Since the purchases of the remaining interest in Dixie Fuels in March and a controlling interest in Osprey in January we've been consolidating the results of both entities in our marine transportation segment. Previously we reported the results for both entities under the equity and earnings of marine affiliate's line in our P&L. In 2006 these two entities contributed revenues of $9.1 million to the marine transportation segment for the fourth quarter and $34.9 million for the year.

Revenues generated from the acquisitions of Global Power Systems in June and Marine Engine Specialists in July, both high-speed diesel engine service providers, totaled $19.7 million for the fourth quarter and $45.1 million for the year. General corporate expenses for the fourth quarter were lower than 2005 fourth quarter primarily due to lower incentive compensation expense in 2006. For the year general corporate expenses increased due to wage increases and the expensing of stock options which began in 2006.

We adopted the fair value method of accounting for stock-based compensation and began expensing stock options at the start of 2006 which had a $0.01 per share negative earnings impact for the fourth quarter and $0.04 for the year.

Kirby generated $61 million of EBITDA in the fourth quarter, a 20% increase over the fourth quarter of 2005, and for the year EBITDA was $234 million, a 29% increase over 2005. Our EBITDA margin for the fourth quarter increased to 24.1% compared to 23.6% for the 2005 fourth quarter and was 23.8% for 2006 compared to 22.8% for the entire 2005.

Capital spending totaled $139 million for 2006 and included $59 million for new tank barges and towboats and $80 million primarily for upgrading our existing fleet. And the total spending was in line with our guidance of 138 to $143 million. During 2006 we also spent $144 million on acquisitions which included Global, Marine Engine Specialists and the remaining 65% interest in Dixie Fuels and the purchase of 18 towboats, nine of which were from Capital Towing. Berd will update you on our ongoing fleet capital construction programs.

Our debt to capitalization ratio increased from 27.1% at December 31, 2005 to 32.9% at December 31, 2006. The increase resulted primarily from our 2006 acquisitions. Our average cost of debt for the 2006 fourth quarter and year was 6% and about 64% of our $310 million of outstanding debt at the end of the year was hedged against interest rate fluctuations with an interest rate collar and interest rate swaps. During 2006 Kirby purchased 163,000 shares of Kirby common stock at an average price of $29.40 per share. I will now turn the call over Berdon.

Thank you, Norman. I want to briefly update you on our new tank barge and towboat construction programs. Under our 2006 program we have taken delivery of nineteen 30,000 barrel barges, one 10,000 barrel barge and one 2100 horsepower towboat. To be delivered throughout the 2007 first half will be four 30,000 barrel barges, one 10,000 barrel barge and three 2100 horsepower towboats. Under the 2006 program we are adding 470,000 barrels of capacity to our overall capacity.

Under our current 2007 program we are building twenty 30,000 barrel barges, six 10,000 barrel barges and four 1800 horsepower towboats. Delivery will be throughout 2007 and early 2008. Fourteen of the 30,000 barrel barges and all six of the 10,000 barrel barges are new capacity adding another 480,000 barrels of capacity. I'll now turn the call back to Joe.

Thank you, Berdon. Yesterday afternoon we announced our 2007 first-quarter guidance of $0.40 to $0.45 per share which compares to 2006 first-quarter earnings of $0.43 per share. The 2006 first quarter, as you will remember, had unusually favorable winter weather conditions increasing our first-quarter 2006 results as delay days were down significantly from historic delay days in the first quarter.

The first quarter is almost always our worst quarter has weather delays really make us significantly less efficient than in the middle part of the year. Just commenting on delay days, in January weather conditions have been difficult. We'll just have to see what the weather does for the rest of the quarter, but we factored of coarse weather into the guidance that we're giving you.

We have experienced some high water conditions also on the Ohio and lower Mississippi River which is maybe a little early to see that this year, but we've had a lot of rain -- experienced a lot of rain up there and that water is working its way down the Gulf through the Mississippi River system. This is certainly -- I think we can say this -- this is certainly going to be a more difficult winter than we had last year.

Talking about the year, our earnings per share guidance is in the range of $1.95 to $2.10 per share and that's a 9 to 17% improvement when you look at our $1.79 earnings last year. Bottom-line, I think we can say the business continues to look good in both our businesses, the barge business and diesel engine business, and we continue to be very enthusiastic about the long-term prospects of this business. Frankly, I think if the economy holds together we're in great shape.

We have forecasted our business, as we noted, assuming worst weather in the first quarter which is appropriate. We have also assumed rate increases for contracts that are renewing in the mid single-digit area and spot rates to continue to increase in the low double-digit range. If we've been too conservative our performance certainly will be toward the top of the range or better. Operator, I think now we'll go ahead and open the call up for questions.

(OPERATOR INSTRUCTIONS). Jonathan Chappell, JPMorgan.

Joe, I want to ask you a pretty general question. You spoke a lot in the press release and in your prepared remarks about pricing and Norman kind of talked about the impact of volumes on your ton miles which you report. But from a broader economic standpoint, have you seen any slowing in volumes? What do you see as you look to 2007 and I guess particularly the second half of 2007 from some of your bigger customers?

I'm going to give you a very general answer.

That's fair.

In the fourth quarter I think that we did see some fringes of inventory adjustments as shippers did a number of plant turnarounds. And although we didn't see it directly in our volumes, there a lot of moving parts and a lot of things that appeared to us that there were some inventory adjustments occurring.

As we talk to our customers they're pretty enthusiastic about 2007. None of them are saying that 2007 is going to be worse than 2006. I don't know if any of them are going to comment on the latter part of the year. You may hear that as they announce earnings, but if you see in the second half of 2007, for example, the bottoming out and an upturn in the housing business which some are projecting, it's certainly going to affect chemical volumes and it's going to help us. We haven't factored that in; we've kind of factored in a year that in terms of volumes looks a lot like 2006.

Okay. That's fair. I'm going to adhere to the rules and get back in the queue. Thanks, Joe.

Jeff Fidacaro, Merrill Lynch.

Good morning. Just a quick question, Joe, when you talk about the spot market outlook, just staying on the rates here, I know you have roughly -- I think about 35% of your contract business is a one-year contract. Have you seen some narrowing of the contract prices versus the spot market and what was the spot market in the fourth quarter?

I said it was firm, meaning that it was essentially flat. But remember that fuel was down. We saw a $0.29 fuel reduction. So we didn't give any of that back. In fact, if all things are equal you would have had a continued rising spot market. But because it was flat and you continued to get contract rate increases, the GAAP narrowed a little bit. But you're still at least 10% above contract rates in the spot market.

And Joe, just a quick follow up. Remind us just on the fuel surcharge, you recover roughly 100% on those contracts?

Yes, that's the plan. It's embedded in the contract and it assumes that fuel represents ex percent of the contract so you adjust revenue up and down. Some of the revenue adjustment that you saw third to fourth quarter had to do with fuel also because fuel was going down so we were reducing revenue to reflect that. The percent that you're trying to recover is going to vary contract to contract because you have different consumption models depending on whether you're in the river or in the canal and what you're doing specifically with the tow.

Great, thank you.

Natasha Boyden, Cantor Fitzgerald.

Just wanted to touch base on your new build schedule and your rebuild schedule. Berdon, you gave us a lot of detail there, but I think it's fairly common knowledge now that the shipyards are pretty full and there are -- there do seem to be delays in terms of getting vessels out into fleet. Have you been experiencing any of that and do you think that your new builds and rebuilds are still on schedule to be delivered at the time you expect through '07?

Do you want me to handle that? We actually have not seen delays. Trinity is, where we're building part of our barges, is I think slightly ahead. And West Gulf is about where they should be. So we're not experiencing that many delays.

Okay. So that doesn't really concern you (multiple speakers)?

It really isn't actually.

Okay, great. And then you had said your costs were down. I think you said in the third quarter that you expected that to be down through '07. Given I guess there is a fair amount of shortage of labor and you've talked about wages going up, do you think you'll be able to achieve that?

I don't think we've said that they'd be down; I think what we've said is that the increase is going to be less than 2006. You're still going to -- we're in a very tight labor situation on a national basis and along the Gulf Coast my guess is it's even a little tighter. So we've had to make adjustments in wages that were significant in 2006 and we think that we're going to have to make adjustments in 2007. We're saying it's going to be above the cost of inflation but it's not going to be at 2006 levels.

All right, great. Thank you very much.

Chaz Jones, Morgan Keegan.

I wanted to ask a question about the agricultural chemicals fleet -- something that doesn't get discussed a whole lot. I realize it's a small piece of the business and probably hasn't performed as strongly as the petrochemical and black oil side of your business, but I guess my question is if we see the ethanol phenomenon play out in the coming years, how would that impact that fleet in terms of I guess what I'm thinking of? Would that translate into more northbound fertilizer movement and sort of how that would play into that business?

We plant every available acre that we can with corn to meet the new ethanol demand. Well, corn is a heavy user of nitrogen solution fertilizer as well as anhydrous ammonia. Although we really didn't see any increase in fertilizer movements -- or at least if we did they were very moderate -- in 2006. We do anticipate that there will be more movements in 2007. The issue for us with that business is it's a very seasonal business so you don't have demand throughout the year.

And depending on where the fertilizer is being made, if it's -- gas prices come down more if it's made domestically, they go up more if it's imported. You can have two seasons or you can only have one season and we're not sure how 2007 is going to play. But we do think that that's going to be a stronger part of the business than in 2006.

As for ethanol, and you really didn't ask about that, but ethanol is going to be carried in barges that carry refined products and chemicals, and not in the barges that carry the nitrogen based fertilizers because that's really a different fleet with different bottoms and more difficult bottoms to clean to backhaul ethanol.

I guess what I was getting at more so, Joe, was just has there been any type of changes in the outlook there? And in terms of if the business kind of stays where it is would Kirby ever look to divest those assets and maybe redeploy that capital in another area of the fleet?

We look at those things all the time. So that wouldn't be certainly off the table. I don't want to create the impression though that that's kind of a high priority for us. We don't dislike the business. We wish it was a little less seasonal. That's really the one part of our business that has a lot of seasonality in it and also, frankly, some cyclicality in it.

The agricultural business in the U.S. is both seasonal and cyclical, but it's such a small part of what we do. We can use barges that don't have Coast Guard certificates to carry it, at least the solutions part of that business. So it still fits in what we do. We would just prefer to have it a little less volatile.

Great. Thanks for the feedback, Joe.

David Yuschak, Sanders Morris Harris.

As far as even with an aggressive capital spending program that you've got this year, it still looks like you guys could probably -- all things being equal in the acquisition -- still pay down about $50 million of your year-end debt. Is that a reasonable target for you this year?

David, kind of based on the range of earnings that we're projecting and the capital spending it's probably going to be -- top end probably around $20 million.

Okay.

I'd just say, that includes about over $40 million of capital spending for expansion barges and boats -- sorry, $55 million in 2007.

Could you maybe update too on your -- any options you have for 2008 construction, where that may be to now versus where it was in the last quarter's conference call on options for new construction (multiple speakers)?

What it was -- we haven't announced anything further than what we announced in the third quarter.

Okay. That's it for me and I'll get back in queue.

Kevin Maczka, BB&T Capital Markets.

Gentlemen, good morning. Just a question and, Joe, I may have missed it, but did you quantify at all what you think your ton mile growth would have been if the weather-related disruptions were not as severe?

No, no, we didn't. We didn't, Kevin. It's going to be more like the third quarter; you're looking for a number. There's always going to be a little more weather in the fourth quarter than in the third quarter.

So in the third quarter I think ton miles were relatively flat, so that may be in that ballpark is where --?

Or slightly down, but not materially down.

Okay. And then as a follow-up, it sounds like you're still very confident in your pricing and your volumes. And as I look at rail car loadings, they decelerated pretty noticeably in the fourth quarter and January hasn't started out very strong either. I'm just wondering if the things that are economically sensitive there are decelerating why you wouldn't see some of that same pressure as well.

Frankly rail car loadings were down on a year-over-year basis almost all of last year and we saw our volumes pretty stable. You typically see -- and you know this better than I do, but you typically see them down at the end of the year, but we're not seeing it in our volumes. I don't know how to explain it because that's something that we kind of struggled with all last year.

I guess maybe the explanation is that our volumes aren't particularly correlated with what the rails carry. Now, remember, I think that in the rail chemical volume numbers they also include dry materials. There are some plastic pallets and that kind of stuff. And how much of that is imported versus used domestically I don't have a good feel for.

Okay, that's all I had. Thanks for the time.

Gregory Macosko, Lord Abbett.

You've talked -- we've talked a bit about the ton miles and the flatness down a little bit, one of the things that I sense is affecting that is something of a change from what you've done in the past and how you've been offsetting that has been the moving of equipment from the river to the canal and back and forth. Could you talk about that part of how you manage the fleet and is this a permanent change and what does it look like going forward as to how it affects your rate per ton mile?

Thank you, Greg, for that question. That's one of the I think advantages that Kirby has is that we have a strong river and canal presence and we can move barges from geographic -- from one geographic area to another geographic area to take advantage and to meet customers' demand. And as you look at that on a ton mile basis, because cargoes on the river stay in barges moving a lot longer than cargoes on the canal, you can see reduced ton miles. But in terms of the revenue and earnings production the cargoes that are on the canal that are moving less distances and more of their voyage is -- total voyage time is associated with loading and discharging that it could be revenue neutral but ton miles deficient. Does that make sense to you, Greg?

Yes, it does and that's what I understand. And what I'm asking you is this -- why wasn't it done earlier or is there something in terms of the structure of the Company and how you're working it and doing it? And is it going to be more in the future?

Chemical has been very strongly last couple of years and that kind of plays to our strength. So we have preferred to work more on the canal than the river. Now having said that, there are some limits to that really that are driven by horsepower. As your boats [shore] -- the average canal tow is one or two barges; a river tow is four to 12 barges. So you can put more barges out and use less on the river -- use less horsepower. So we balance it based on that kind of constraint. But I think I can say that given the strength of the chemical business we would prefer in some cases to have a little more equipment on the canal which is going to affect river ton miles. So you can see (multiple speakers)

And that's why you're adding the power?

Yes, that's right.

Okay, good. And then with regard to the orders, you mentioned Trinity being slightly ahead. Is that a change? Are things looking like there's more opportunity there to get deliveries on time, maybe even early?

When we're talking about slightly ahead we're talking about a week or two, so it's not significant. I think that we're going to see barges come out about as projected and sometimes they're going to come out a couple weeks early and sometimes they're going to come out a couple weeks late and a lot of it's going to have to do with weather.

And you mentioned -- did I hear spot rates you expect to rise for the year low double-digits -- is that what I heard?

Yes, that's what we said. That's what's in the forecast; we wanted to give you what was in kind of our earnings forecast.

Okay. And then -- I promise, my last question, sorry. You hedged 63% of your debt last year and then is that going to be down this year?

We had $150 million hedged, Greg, and we did another $50 million. We did a $50 million collar. The rates were really attractive; we were able to have no upside risk and 100 basis points downside risk for no cost, so we hedged another $50 million, so we have $200 million hedged now.

And that will be for the year?

Yes.

Okay, thank you.

Jeff Fidacaro, Merrill Lynch.

I was wondering if we could just talk a little bit about the diesel engine services. It looks like when I break out the Global Power and MES revenues, it looks like the -- on a same-store sales basis the medium speed business was off roughly only 6% in the quarter. How should we think about that going forward? What's the run rate on the medium speed and the high speed business?

You separated high speed from medium speed?

Yes, I think Norman gave us that 19.7 million for Global Power and MES in the quarter, so I was just looking -- if I strip that out and look at the number year-over-year --

What are the growth rates going forward? We haven't given -- we didn't break that out, but I think I can tell you generally that the medium speed business, its best quarter is going to be the first quarter. And then typically it trails down -- the fourth-quarter can be -- it sometimes is the worst quarter, sometimes it's not, but it's typically lower than the first half of the year. People tend to frontload their maintenance.

In the Midwest, most of the maintenance occurs when the Great Lakes and the upper Mississippi River is frozen, so that's why the medium speed business is pushed up. High speed business, it's the middle part of the year, the better weather months that are their peak revenue months. But the growth rate in 2006 for the medium speed business was better than 6% and I'm not sure that I'm in a position to kind of break out what we think the growth rate is going to be in 2007, but it's still a positive growth rate.

And just if you look at the high-speed business, I think you talked about some just typical seasonal slowdown this last quarter, will that smooth out as you integrate some of that high speed business into the inland waterways?

Yes, it should. And the other thing that should happen is that the -- some of the seasonality out of -- that should be taken out of the diesel engine segment because in the diesel engine segment mid speed engines are stronger in the first half of the year and the high speed engine is stronger in the middle of the year. So I think we'll have maybe a little steadier revenues from a quarter to quarter basis in that group than we've had before. And the inland business, as you've alluded to, is a little more ratable than the oil service business, a little steadier.

Thank you for your time.

David Yuschak, Sanders Morris Harris.

Joe, could you help us out on your assumptions for 2007? Could you give us a sense as to where you think from a productline point of view where the potential pluses to that forecast or risks may be in what have been some of your stronger categories in 2006? Just want to get a sense from you guys where that could be a surprise to the upside as well as maybe some disappointments if you encounter an economy that's a little sloppier than you may think.

I think the driver is going to be the chemical business, David, because two-thirds of what we do is in that area. And the upside is going to be the economy gets stronger the latter part of the year. The downside of course is the reverse. I think the refined products business is going to continue to be strong. I don't know if you noted that some of the inventory data is very high. I think we're at -- and the national inventory levels are 220 million barrels which is pretty high, but you've got to dissect that to understand our business.

The Midwest has still got inventories that are actually slightly lower than the same period the year before. And that's what's going to drive our business. So I think refined products will be okay. Agricultural chemicals should be a little better and black oil should be kind of similar to where it was in 2006.

So your thinking from the energy side of it comparable to this year but the swing factor will be chemicals?

Yes, I think that's going to be the real upside. And it's going to be economy driven pretty much.

And do you think it's going to be more consumer on the chemical side of it than industrial processing?

I'd say it's both. We haul a lot of chemicals used in the industrial (indiscernible).

Help me out on the fourth quarter, on the operating margin from marine transportation; it was comparable to what you did in the third quarter. When you talk about the decline in diesel prices affecting the revenue, how would the lower fuel prices affect the operating margin?

It helped, clearly helped. Fuel was sharply lower and we spent -- most of what you'd see in reduced cost are on the fuel line.

Okay. A combination of adjusting your revenues for the lower fuel plus the lower operating costs had kind of a double affect on the operating margin.

Yes. Well, I don't know if it's double, but it was a positive affect.

Because when you take a look at your numbers versus the third quarter and see the seasonality that you had and the weather conditions you had, that kind of jumped out as saying how could that happen?

That's right; it was a pretty good quarter. And I also think that that's -- you continue to see the affect the repricing business, the affect of recovering the cost of labor, kind of all of that.

Okay, that's all I've got right now. Thanks.

Alan Mitrani, Sylvan Lake Asset.

Thanks a lot, guys. You talked about pricing this coming year being up I guess mid single-digits on what your renewals and then spots low double-digits plus the roll through of pricing from this year. What I'm wondering though is your earnings guidance, like you said, seems like you've taken in a lot of conservatism and it's only up somewhere on the order of 13%, yet your pricing, at least on the top line, is probably up closer to probably 8 to 10 if I factor it all maybe. Do you expect any -- I'm just looking for revenues -- do you expect any volume growth this year? How much of your forecast this coming year assumes volume growth, like what's your volume growth assumptions for tonnage?

The volume growth would be the additional capacity we're adding, but remember that only about two-thirds of our revenue is going to see direct pricing. So we have -- about a third of our business is in multiyear contracts that aren't up for renewal. And I don't know how you factored that in your calculation. And you're going to continue to have some cost pressures above the cost of inflation in the labor and charter vessel area.

Okay. And given that the environment is still relatively positive and we're still in an up trend and you're taking capacity and you will pay down some debt, how active do you think you'll be in acquisitions this coming year?

We're always active, always looking for opportunities. Our balance sheet remains very strong. We have -- how much do we have on our revolver right now?

Close to $100 million unused.

Then it's expandable. What is used?

Close to 150 right now.

And it's expandable to 325, so you have about 175 million of dry powder just sitting there. So we're in good shape to pursue an acquisition if we have the opportunity to do so. And we think the environment still is favorable. If you look at the last 12 months, we made almost $180 million worth of acquisition.

Thank you.

You're welcome.

(OPERATOR INSTRUCTIONS). Jonathan Chappell, JPMorgan.

One more quick one, guys. On the heels of the Coastal and the Cypress acquisition earlier this year, are there any other significant fleets whether they be barges or power that you're operating under management agreements or under leases that you could foresee acquiring?

There aren't any significant ones. There is -- and actually I guess we can talk about it. There is one other 11 barge fleet that we're in the process of buying. I think -- is it 11, 11 barges? Yes, 11 barges that -- we'll complete that in February.

And not of the same type of financial impact you think, modestly accretive?

It's going to be about neutral.

About neutral.

Yes.

Okay. Thanks a lot, Joe.

(OPERATOR INSTRUCTIONS). At this time there are no further questions.

We appreciate your interest in Kirby Corporation and for participating in our call. If you have any additional questions or comments, please give me a call. My name is Steve Holcomb and my direct dial number is 713-435-1135 and we wish you a good day.

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