Kirby Corporation (KEX) | The Buildout — AI Infrastructure
The Verdict
Kirby is two businesses under one roof. The first is the largest domestic tank barge operator in the U.S., moving crude, refined products and petrochemicals on the inland river system and along the coasts. The second, Distribution and Services, packages and services engines, power-generation equipment and aftermarket parts, and manufactures specialized equipment for data centers. The AI buildout touches only that second arm: Kirby sells behind-the-meter prime power systems — natural-gas engines that run around the clock — plus backup generation into data centers, and is now standing up an aftermarket service unit aimed at that installed base.
| Market Cap | — |
| Revenue (TTM) | $3.5B |
| Revenue Growth | +6.6% |
| EBITDA Margin (TTM) | 21.6% |
| Net Debt | $1.2B |
| Earnings Beats | 6 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- Power Gen backlog was raised to $1B–$1.5B from $500M–$1B, with most inbound described as behind-the-meter power.
- Management expects the Power Gen installed base to double in the next 18 months, and some behind-the-meter contracts run up to 15 years.
- Marine supply is disciplined: about 60 industry newbuilds this year, described as replacement-only, with spot rates sitting 10%–15% above term contracts.
- Capital returns continued — $59.7M of buybacks in Q2 2026 plus $25M–$29M quarter-to-date in Q3, with the credit facility's maturity extended to March 2031.
- Trailing free cash flow of $426.4M was about 120% of net income.
What We’re Watching
- OEM engine availability gates Power Gen conversion — revenue growth slowed to +8% YoY in Q2 from +45% in Q1, and the prior $0.10–$0.15 Q2 EPS impact was not re-quantified.
- The Jones Act waiver runs to around August 16, 2026; management reports no inland impact and 'a tiny bit' on the coastal side.
- The inland margin recovery was reset to a stated 'multiyear, slow march up,' against a prior peak of about 28%.
- About 40% of the inland term book reprices in Q4 2026, setting up the 2027 contracted base.
Directionally the setup is positive, but the timeline is longer. Backlog and installed base — the two metrics that carry the AI piece — both moved up, and management reaffirmed EPS growth tilted toward the upper end of 5%–15%. At the same time, the inland margin recovery was explicitly stretched to a multiyear path, the coastal margin guide was trimmed, and reported Power Gen revenue decelerated. The open question is whether that slowdown is purely OEM engine supply, as management says, or a demand signal.
Earnings Beat
Kirby reported Q2 2026 revenue of $922.4M, up 8% from $855.5M a year earlier, with gross margin of 23.9%. Marine Transportation revenue was $537M (+9% YoY) at a 16.4% operating margin; Distribution and Services revenue was $385M (+6% YoY) at a 10% margin. Diluted EPS was $1.67, up 11% sequentially and in line with the prior-year quarter.
| Metric | Q2 FY2026 | Q1 FY2026 | Q2 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $922M | $844M | $856M | +7.8% |
| Gross margin | 23.9% | 25.7% | 26.5% | -260bps |
| EBITDA | $192M | $174M | $198M | −2.8% |
| EPS | $1.67 | $1.50 | $1.67 | −0.1% |
| Power Gen backlog | $1B–$1.5B | $500M–$1B | n/a | — |
| D&S operating margin | 10% | 6.7% | n/a | — |
our new backlog guidance is a $1 billion to $1.5 billion. And the good news is most of the inbound has been behind-the-meter power.— CEO, 2026-07-29
Management tone: Management's tone shifted from constructive to constructive-but-more-conservative across the two calls. The CEO acknowledged prior over-optimism on inland pricing and reset the margin timeline to a multiyear path. At the same time, the company raised its Power Gen backlog range and tilted EPS guidance toward the upper end. Management generally answered analyst questions directly and declined to give detailed quarterly cadence.
Management Guidance
Management guided FY2026 EPS growth of 5%–15% and said it expects results to trend toward the upper end, holding the low end on geopolitical uncertainty. Inland revenue growth was guided to high-teens to 20%, with a caveat that the Q2 fuel headwind may make the top end difficult; coastal revenue mid-single digits at mid-to-high-teens margins; D&S revenue mid-single-digit growth at mid-to-high-single-digit margins. Capex is guided to $220M–$260M and operating cash flow to $575M–$675M. Management assumes fuel costs are recovered mostly in Q3 and is targeting a fuel-neutral year, with working capital normalizing in the second half.
Trajectory
Revenue accelerated into the latest quarter, with Q2 2026 at $922.4M, up 9.3% sequentially after a stretch of roughly flat quarters ($871M, $852M, $844M). Margins moved the other way: the code-computed signals show gross margin compressing about 180 basis points, operating margin about 130, and EBITDA margin about 140. Management attributes the Q2 margin pressure to higher fuel costs ahead of contractual recovery and elevated coastal shipyard activity. Free cash flow was $0.9M in the quarter, versus trailing-twelve-month free cash flow of $426.4M.
The Model
The model projects FY+1 revenue of $3,585M and EBITDA of $785M (21.9% margin), and FY+2 revenue of $3,890M and EBITDA of $871M (22.4% margin). The near-term anchor is second-half conversion of the Power Gen backlog and recovery of the Q2 fuel headwind; the FY+2 step-up depends on OEM engine deliveries easing and the marine renewal cycle carrying spot pricing into the contracted book.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $3.4B | $3.6B | $3.9B |
| YoY Growth | — | +6.6% | +8.5% |
| EBITDA | $756M | $785M | $871M |
| EBITDA Margin | 22.5% | 21.9% | 22.4% |
Projections are the median of 5 independent model runs. The model’s revenue sits 2.1% above analyst consensus.
Management guided FY2026 EPS growth of 5%–15% and said it expects results to trend toward the upper end, holding the low end on geopolitical uncertainty. Inland revenue growth was guided to high-teens to 20%, with a caveat that the Q2 fuel headwind may make the top end difficult; coastal revenue mid-single digits at mid-to-high-teens margins; D&S revenue mid-single-digit growth at mid-to-high-single-digit margins. Capex is guided to $220M–$260M and operating cash flow to $575M–$675M. Management assumes fuel costs are recovered mostly in Q3 and is targeting a fuel-neutral year, with working capital normalizing in the second half.
What Could Go Right — and Wrong
- OEM engine deliveries accelerate, converting the $1B–$1.5B Power Gen backlog into revenue and lifting D&S margins.
- The Power Gen installed base doubles in 18 months as management expects, seeding the aftermarket service annuity.
- Marine spot stays 10%–15% above term, carrying positive pricing through the Q4 renewal season into 2027.
- Kirby Integrated Power Systems turns into disclosed, recurring service revenue.
- No newbuild supply keeps inland utilization near the low 90% range and supports pricing.
- OEM engine supply keeps gating Power Gen conversion, aging the backlog and delaying the installed-base doubling.
- A broadened or repeated Jones Act waiver pressures the coastwise book.
- Inland pricing stalls again, pushing the multiyear margin recovery further out.
- Marine cost inflation — labor, steel, paint, electronics — absorbs the price increases.
- A working-capital build and volatile fuel costs keep near-term free cash flow thin.
Looking Ahead
Over the next 12 months the story turns on three things: whether fuel costs are recovered in Q3 as guided, whether OEM engine deliveries ease enough to convert the $1B–$1.5B Power Gen backlog into revenue, and what the Q4 renewal season does for the 2027 contracted book. Management also expects working capital to normalize in the second half, supporting a meaningful improvement in free cash flow.
- Aug 16, 2026Jones Act waiver decision — Tests whether the 90-day waiver is extended or broadened.
- ~Sep 18, 2026Calcasieu Lock completes — Restores inland transit times on a high-traffic lock.
- Q3 2026Fuel cost recovery — Tests whether the Q2 fuel headwind is recovered as guided.
- Q4 2026Inland term renewals — About 40% of the term book reprices, setting up 2027.
- ~Q1 2028Installed-base doubling — Tests the stated 18-month doubling of the Power Gen installed base.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $3.3B | $3.4B | $3.5B | +3.0% |
| Gross Margin | 25.3% | 26.3% | 25.3% | +100bps |
| EBITDA | $640M | $756M | $755M | +18.2% |
| EBITDA Margin | 19.6% | 22.5% | 21.6% | +288bps |
| Net Income | $287M | $355M | $355M | +23.6% |
| Free Cash Flow | $414M | $406M | $426M | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)25.3%
- EBITDA Margin (TTM)21.6%
- Net Margin (TTM)10.2%
- ROIC8.2%
- FCF Conversion56.5%
- SBC / Revenue0.5%
The Company
Kirby Corporation is the largest domestic tank barge operator in the United States, moving bulk liquid products — crude, refined products and petrochemicals — on the Mississippi River System, the Gulf Intracoastal Waterway and coastwise along all three U.S. coasts. Its second reporting segment, Distribution and Services, provides equipment, aftermarket parts and services for power generation systems, engines and transmissions, and manufactures specialized equipment for data centers and other industrial customers. The AI buildout touches only this second segment, through behind-the-meter prime power and backup power systems sold into data centers.
The company is asset-heavy and contract-driven. Inland makes up about 80% of Marine Transportation revenue and runs at low-90% utilization; coastal is about 20% and runs at high-90%. About 65% of inland revenue sits in long-term contracts (57% time charters, 43% contracts of affreightment), and about 93% of coastal revenue is under term contracts. Kirby owns a shipyard in Channelview, Texas (San Jac Marine) and manufacturing and remanufacturing facilities in Houston and Oklahoma City, with a Rocky Mount, North Carolina operation serving as exclusive worldwide distributor of EMD products to the nuclear industry.
Business Segments
Competitive Landscape
Kirby describes its inland marine competitors as primarily noncaptive inland tank barge operators, with captive refining and petrochemical fleets occasionally competing. Coastal competition comes from operators of U.S. tank barges in the 195,000-barrel-or-less category, plus cross-modal competition from pipelines, railroad tank cars and tank trucks. In Distribution and Services it competes with independent distributors, other factory-authorized dealers and authorized service centers, and in power generation with other independent power generation and prime power service companies and manufacturers.
- Inferred competitor (spider-sourced); also a Kirby supplier. Not identified by the company as a competitor.
- Inferred competitor (spider-sourced); generator enclosure manufacturing. Not discussed by the company.
- Boyd CATInferred competitor (spider-sourced); CAT engine packaging and data-center deployment. Not discussed.
- Wheeler MachineryInferred competitor (spider-sourced); CAT engine packaging and data-center deployment. Not discussed.
- RehlkoInferred competitor (spider-sourced); data-center generator sets. Not discussed.
Supply Chain
Kirby is a distributor, servicer and system integrator rather than an OEM, sitting between engine and equipment makers and end customers. No neighbor mentions Kirby by name, so its position is read from its own filings and from the demand signals those neighbors report.
More on KEX: Earnings recap