December 12, 2011 - Kirby Corporation (KEX-NYSE), has two subsidiaries, Marine Transportation and Diesel Engine Services operating in the United States.

Diesel Engine Services is in the overhaul and repair of medium-speed and high-speed diesel engines and reduction gears, and related parts sales in the marine, power generation, and railroad markets. This division provides aftermarket services for vessels powered by diesel engines utilized in various inland and offshore marine industries; aftermarket services for diesel engines that provide standby, peak, and base load power generation for users of industrial reduction gears and for standby generation components of the nuclear industry; and aftermarket services and parts for shortline, industrial, Class II, and certain transit railroads. Kirby also distributes and provides engine and transmission related products for the oil and gas services, power generation, and transportation industries; manufactures oilfield service equipment; and engages in fleeting facility and shifting operation for dry cargo barges and tank barges.

The company was formerly known as Kirby Exploration Company, Inc. and changed its name to Kirby Corporation in 1990 because of the changing emphasis of its business. Kirby Corporation was founded in 1969 and is based in Houston, Texas.

Here's the headline: earnings will jump from $2.15 last year to $3.32 this year, if the 15 analysts have their consensus right. That's an improvement of 54.4%. Next year, those same analysts predict $3.91. Impressive gains in an economy that's struggling. Fourth quarter earnings are forecast at 99 cents compared to 59 cents in the fourth period last year. First quarter should show 87 cents vs 60 cents in this year's first.

Revenues tell the same story. They should be $1.85 billion this year, up 66.8% from last year. Next year should finish with $2.22 billion, a gain of 20.1%. Fourth quarter sales should total $553.09 million. That's 93.2% better than last year's fourth period of $286.32 million.

Orders keep coming in. Kirby's inland barge fleet is busy hauling petrochemical products thanks to low natural gas prices. Its oil tankers are busy as well because refinery production is stable. With low relative costs in the U.S., heavy fuel oil is shipped overseas where demand is high. Crude oil also needs to be transported. There's lots of that from new shale production in south Texas. Combined, the demand puts Kirby's fleets at almost full capacity. That means higher prices for contracts and spot markets. The Diesel Engine group is also busy with more engine services orders and parts sales.

This company has grown internally and externally, adding Hollywood Marine in October of 1999, Coastal Towing in January of 2007, and recently United Holding in April of this year as well as K-Sea in July. United Holding is a land-based distributor and service provider of engine and transmission products and manufactures oilfield equipment. It put $159 million onto revenues in the third quarter, and its margins were better than Kirby's existing diesel operations. Furthermore, it offers hydraulic fracturing products, a new market for KEX. The other acquisition, K-Sea, a coastal vessel operator, contributed $70 million of sales. Profit per share, while higher in the quarter to 94 cents vs 57 cents last year in the third, was hampered by higher interest costs, transaction fees and more shares issued to pay for K-Sea. Management expects K-Sea to be accretive to earnings in 2012.

KEX has been upwardly bound since early in 2009, going from $19.50 to a recent all-time high of $65.50. Since January, it's higher by 40%. Investors know and love the story here. But there may be more upside to the stock if management continues to acquire companies and reaps the benefits from more exploration.

- Essential numbers:
- Market Cap: $3.56 billion
- Forward P/E: 16.38
- Price to book: 2.55
- Operating margin: 17.76%
- Profit margin: 9.99%
- Return on assets: 7.61%
- Total cash: $8.36 million
- Total cash per share: 15 cents
- Total debt: $808.44 million
- Current ratio: 1.49
- Book value per share: $25.27
- Beta: 1.17
- 52 week change: 43.07%
- Shares Outstanding: 55.67 million
- Float: 46.79 million
- Held by insiders: 8.19%
- Held by institutions: 90%
- There is no dividend

The only concern most investors will have with KEX is its valuation. It's starting to reach levels that make one pause. But with a strong growth in earnings this year and anticipated improvement next year, KEX has earned investors' enthusiasm.

- Company Web site: www.kirbycorp.com

     Ted Allrich