Kirby Corp. acquires fellow tank barge operator Higman Marine

The $419 million deal will see Kirby Corp. absorb Higman Marine’s transportation fleet of 159 inland tank barges with 4.8 million barrels of capacity, and 75 inland towboats, according to a statement from Kirby Corp.    Kirby Corp. will acquire fellow liquid bulk transport specialist Higman Marine for $419 million, Kirby said in a statement Sunday.
   The deal will see Houston-based Kirby Corp. absorb Higman Marine’s transportation fleet of 159 inland tank barges with 4.8 million barrels of capacity, and 75 inland towboats.
   Higman specializes in the transport of petrochemicals, refined petroleum products, crude oil, natural gas condensate, and black oil on the Mississippi River System and Gulf Intracoastal Waterway for large midstream and global integrated oil companies.
   The acquisition, which will still be subject to customary closing conditions and regulatory approvals, is expected to close in the first quarter, Kirby said.
   “The acquisition of Higman and its young fleet of well-maintained inland tank barges and towboats is an excellent fit with Kirby’s operations,” said David Grzebinski, Kirby’s president and chief executive officer. “Higman’s inland fleet of 30,000 barrel tank barges, approximately 80 percent of which are clean and 20 percent heated black oil vessels, has an average age of seven years, and is one of the younger fleets in the industry. With an average age of seven years, the addition of Higman’s towboats to Kirby’s horsepower profile will allow us to avoid significant future capital outlays for new towboats.”
   Grzebinski said Kirby expects the purchase to be earnings neutral in 2018 as the company integrates Higman’s fleet, and because tank barge rates still have yet to improve from “historically low levels.”
   “Additionally, while debt levels will increase in the near term, Kirby’s financial policies remain unchanged, and we expect to rapidly deleverage post-acquisition, which is consistent with our history,” he said.
   “Overall, as the inland market begins its recovery, the timing of the Higman acquisition is ideal as it will further upgrade our fleet and ultimately allow Kirby to emerge from the downturn larger, more efficient, and better able to serve our customers. As the cycle improves, and we realize the benefits of integration efficiencies and synergies, this acquisition will improve the earnings potential for Kirby in the future.”
   The latest news comes just a few weeks after Kirby reported full year 2017 earnings that were more than double 2016 levels thanks in large part to recent tax reform legislation passed in the United States.
   Kirby posted a net income of $231.3 million for the fourth quarter of 2017 and $313,187 for the calendar year, increases of 614.9 percent and 121.5 percent, respectively, from the same 2016 periods.
   Revenues, on the other hand, slid 7.3 percent year-over-year to $330.4 million for the quarter and 10 percent to $1.32 billion for the year.
   “During the fourth quarter, our earnings were impacted by a sizeable one-time benefit related to U.S. tax reform, as well as impairment, severance and workforce early retirement charges,” Grzebinski said of the result.
   “Earnings from operations were stronger than anticipated primarily as a result of a significant increase in product and service demand across our entire distribution and services segment, particularly in our land-based market,” he added. “In our marine transportation segment, continued high utilization and demand in our inland market were partially offset by ongoing weakness in our coastal business.”
   Passed in December 2017, the U.S. Tax and Jobs Acts has reduced the effective federal tax rate for corporations from 35 percent to 21 percent.