Kirby's PowerGen Aftermarket Play and the Slow March of Inland Pricing
Q2 2026: Steady execution, a raised backlog, and a new service venture that could extend the growth runway well beyond the equipment cycle.
KEX · Earnings Call · 2026-07-29
The new growth engine: Power Generation aftermarket
Kirby's second quarter results were solid—EPS of $1.67, up 11% sequentially—but the most important development was strategic: management raised the Power Generation backlog range to $1.0–1.5 billion and announced the formation of Kirby Integrated Power Systems to capture the aftermarket service opportunity. The decision to build a dedicated service platform around the installed base of behind-the-meter power systems reflects a conviction that the equipment sale is only the first layer of value creation. “The good news is most of the inbound has been behind-the-meter power,” — David W. Grzebinski, Chief Executive Officer · 2026-07-29 said CEO David Grzebinski, adding that the growth in power generation continues to surprise to the upside. He noted the backlog is now $1.0–1.5B, up from the prior $500M–1B range. The shift toward behind-the-meter, prime-power applications—rather than simple standby diesel—is meaningful because those systems run continuously and will need maintenance, parts, and upgrades. Christian O'Neil described the venture as one that will "generate value exceeding the original product value in the aftermarket and the out years." The constraint remains OEM engine availability, but management pointed to strong order intake and a multiyear outlook. “We have good visibility through '27.” — David W. Grzebinski, Chief Executive Officer · 2026-04-30 This is not just a cyclical spike; it's a structural shift in how data centers and industrial customers secure power.Marine transportation: a slow, steady climb
In the marine segment, the tone was constructive but measured. Inland barge utilization stayed in the low-90% range, and term contract renewals increased in the low-single digits year-over-year, while spot rates improved sequentially. The company remains committed to a inland pricing discipline that lets rates recover gradually. Grzebinski said the market is set up for a good long five-year march, citing the 40% gap to newbuild economics and the upcoming maintenance bubble that will tighten supply in 2027–28. “It should be a good, long five-year march up.” — David W. Grzebinski, Chief Executive Officer · 2026-07-29 “We spoiled everybody with four years of continuous rate increases at coastal.” — Christian G. O'Neil, President and Chief Operating Officer · 2026-07-29 Coastal margins were tempered by elevated shipyard activity and some pricing softness in the 80–100k barrel ATB segment, but management attributed that to niche market dynamics rather than a downturn. Fuel costs created a temporary Q2 headwind, with the company expecting recovery in Q3 as contractual pass-through mechanisms reset. The money on fuel process remains a key element of margin stability. The crack spread environment has been a tailwind, with record levels supporting refinery utilization and volumes. Add in the Calcasieu Lock work and Venezuela heavy crude import recovery, and the demand picture appears well supported.The Jones Act debate
Management was candid about the Jones Act waiver, arguing it has not benefited consumers and is hurting mariner morale. While Kirby has seen minimal direct impact due to its contract coverage, the company advocates for a targeted waiver rather than a blanket one. This is a policy overhang that could matter if extended indefinitely.There has probably been 150 non-Jones Act moves... The vast majority, 85% plus of those have been really nothing to do with national security or homeland resilience.