Earnings Recap — Q2 FY2026
CY Q3 2026 · Reported July 29, 2026 · Beat 6 of last 7 quarters
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Kirby's Power Generation backlog grew to $1.0-1.5 billion, driven by behind-the-meter solutions for data centers, reinforcing the AI infrastructure buildout demand. The company's ability to convert this backlog is constrained by OEM engine availability, but the multiyear outlook remains strong. The launch of Kirby Integrated Power Systems signals a strategic pivot to capture the aftermarket service opportunity as the installed base grows.
Kirby reported Q2 EPS of $1.67, in line with prior year, with total revenue of $922.4 million (derived from segment revenues of $537 million in Marine Transportation and $385 million in Distribution & Services). Marine Transportation revenue rose 9% YoY to $537 million, but operating income fell 11% due to higher fuel costs and elevated coastal shipyard activity. Distribution & Services revenue rose 6% YoY to $385 million, with Power Generation up 8% and Commercial & Industrial up 12%. The company repurchased $59.7 million of shares in Q2 and an additional $25-29 million in Q3-to-date. Full-year CapEx guidance remains $220-260 million, with operating cash flow of $575-675 million.
Management reaffirmed full-year EPS growth guidance of 5% to 15%, now expecting results toward the upper end of that range. Inland revenues are expected to grow high-teens to 20% for the full year, though the Q2 fuel headwind may make the upper end difficult. Coastal revenues are expected to increase mid-single digits with operating margins in the mid-to-high teens. Distribution & Services revenues are expected to increase mid-single digits with operating margins in the mid-to-high single digits. Management expects fuel cost timing impacts to reverse in Q3, and highlighted a constructive Q4 renewal season for inland contracts.
“We are pursuing and getting slow, steady increases. You heard low to mid-single-digit increases. It is going to take a while to get up to the past peak in margins, which was about 28%. I absolutely believe we will get there.”
on Inland margin trajectory
“We think we have line of sight of about 60 barges getting built this year. That represents pretty much replacement capacity for us and our competitors that are retiring equipment. Construction remains very much in balance with current capacity.”
on Industry supply
“We believe that the CapEx cycle is amazing. We are enjoying it now, but we think we can generate value exceeding the original product value in the aftermarket and the out years.”
on Power Generation aftermarket
Last quarter you spoke to the potential for inland margins to exceed the last peak. Given the rate of change on spot and term, is that still holds? What's the path and timing?
David said it's a slow, steady march up, not a 12-18 month return. Supply/demand is tight, nobody's building, and newbuild economics are still 40% away. He expects a multiyear, five-year march up to peak margins of ~28%.
Can you discern the drivers behind your raise towards the upper end? What's the impact from Venezuela heavy crude imports, Calcasieu Lock, crack spreads, petchem exports, and trucking capacity exits?
David cited strong refinery utilization, Venezuelan crude up over 600k bpd, Calcasieu Lock work, record crack spreads, and improving petchem. Christian added that PADD 3 is winning globally, and the Calcasieu Lock closure is creating traffic jams but should wrap up September 18. On D&S, trucking has bottomed and marine repair is solid.
What are your thoughts on high-level value creation for shareholders from D&S including Power Generation? How do you balance near-term vs aftermarket opportunity?
David said they always evaluate portfolio and capital deployment, but are happy with the portfolio. He highlighted the Power Gen installed base doubling in 18 months and the emerging service annuity. Christian announced a new operation called Kirby Integrated Power Systems to go after the aftermarket, which they believe can generate value exceeding the original product value.