Kirby Corporation

Good day and thank you for standing by. Welcome to the Kirby Corporation 2025 Third Quarter Ordinance Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I'd now like to hand the conference over to your first speaker today, Kurt Nimitz, Vice President of Investor Relations and Treasurer. Please go ahead.

Good morning, and thank you for joining the Kirby Corporation 2025 Third Quarter Earnings Call. With me today are David Grzybinski, Kirby's Chief Executive Officer, Raj Kumar, Kirby's Executive Vice President and Chief Financial Officer, and Christian O'Neill, Kirby's President and Chief Operating Officer. A slide presentation for today's conference call, as well as the earnings release, which was issued earlier today, can be found on our website. During this call, we may refer to certain non-GAAP or adjusted financial measures. Reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures are included in our earnings press release and are also available on our website in the investor relations section under financials. As a reminder, statements contained in this conference call with respect to the future are forward-looking statements. These statements reflect management's reasonable judgment with respect to future events. Forward-looking statements involve risks and uncertainties, and our actual results could differ materially from those anticipated as a result of various factors. A list of these risk factors can be found in Kirby's latest Form 10-K and in our other filings made with the SEC from time to time. I will now turn the call over to David.

Thank you, Kurt, and good morning, everyone. Earlier today, we announced third quarter earnings per share of $1.65, a 6% increase year over year. In the third quarter, we delivered steady results in total, driven by robust customer demand and power generation and disciplined operational execution across all of our businesses. With near-term headwinds in the inland market and softness in some parts of distribution and services, our teams demonstrated adaptability, ensuring service continuity and performance. These efforts underscore our ability to navigate challenging conditions while maintaining momentum. Overall, our combined businesses achieved another solid quarter, reinforcing the strength of our core businesses and positioning us well for sustained growth as the market conditions improve and normalize. In our inland marine transportation business, market conditions experienced near-term softness during the third quarter, primarily due to favorable seasonal weather, improved navigational conditions, a lighter feedstock mix for our refinery and chemical customers, and fewer barges ongoing maintenance. maintenance across the industry. At the same time, petrochemical customer activity remained muted. These factors contributed to our barge utilization averaging in the mid 80% range. On the pricing front, we observed temporary weakness in the spot market. Spot market rates declined in the low to mid single digits, both sequentially and year over year, due to previously mentioned headwinds. Term contract renewals were flat when compared to the prior year. A combination of pricing softness and lower demand conditions led to operating margins in the high teens. In the fourth quarter, we are already seeing market conditions improve and expect this trend to continue. We also continue to see constraints in long-term barge construction, keeping new supply in check. Coastal marine transportation fundamentals remain strong throughout the third quarter, with barge utilization consistently in the mid to high 90% range, which is supported by steady customer demand and a limited supply of large capacity vessels. This favorable supply-demand dynamic continued to drive meaningful pricing gains, with term contract renewals increasing in the mid-teens year over year, underscoring both market strength and our leadership position. Our operations team executed exceptionally well, ensuring high service reliability. The combination of strong pricing, high utilization, and operational excellence was reflected in the financial performance, with operating margins for Coastal around 20%. Turning to distribution and services, our teams delivered another outstanding quarter, achieving solid year-over-year growth in both revenue and operating income with strong contributions across nearly all end markets. In power generation, revenues were up 56% year-over-year, driven by robust demand for data centers and prime power customers. Inbound order momentum continued, further expanding our backlog and positioning us well for continued growth into 2026. We secured additional project wins for backup and behind the meter power applications, reinforcing our leadership in this space. Power generation has emerged as the leading contributor to growth in both revenue and operating income within the distribution and services segment. In our commercial and industrial market, revenues increased 4% year-over-year, reflecting steady marine repair activity and an ongoing recovery in on-highway service. This performance highlights both the durability of our customer relationships and the effectiveness of our service platform. In oil and gas, operating income grew 5% year-over-year, despite revenue declines driven by continued softness in conventional activity. This performance reflects strong execution, disciplined cost management, and sustained execution in EFRAC equipment, which remains the bright spot in an otherwise challenging oil and gas market. Overall, the segment continued to perform well, showcasing strength in power generation and our agility in responding to changing demand patterns, with total segment operating income advancing 40% year-over-year. In addition, we remain focused on cost management, thereby enhancing operating margins, which reached 11% for the quarter. In summary, our third quarter results reflected fair performance for inland and continued strength in coastal and power generation. In inland marines, we encountered some near-term headwinds due to demand and supply chains, while long-term supply remained constrained. In coastal, market conditions remained favorable, enabling us to maintain strong utilization levels and secure significant rate improvements on term contract renewals. In distribution and services, robust demand for power generation, particularly from data centers and industrial customers, allowed the segment to deliver solid financial performance. We expect positive trends to continue into the fourth quarter, partially offsetting the normal seasonal slowdown. I'll talk more about our outlook later, but now I'll turn the call over to Raj to discuss the third quarter segment results and the balance sheet in more detail.