Kirby Corporation

press star 1-1 on your telephone. You will then hear an automated message advising that 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 would now like to turn 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 Fourth Quarter Earnings Call. With me today are David Grzybinski, Kirby's Chief Executive Officer, Christian O'Neill, Kirby's President and Chief Operating Officer, and Raj Kumar, Kirby's Executive Vice President and Chief Financial Officer. 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 conference 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. 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 factors can be found in Kirby's latest Form 10-K and in 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.

2025 was a record year for Kirby, capped off by a solid final quarter. During the fourth quarter, we navigated typical seasonal weather and year-end softness with exceptional execution by both our marine transportation and our distribution and services teams. We also continued to return capital to shareholders with over $100 million in share repurchases, and we further strengthened our balance sheet by paying down $130 million in debt. 2025's record year of earnings supported another consecutive year of generating more than $400 million in free cash flow. We close the year with strong operational and financial momentum combined with improving market conditions. And as we look ahead, we expect steady growth and solid performance in 2026. In inland marine, early quarter market softness from muted demand and high barge availability gave way to improving conditions as the quarter progressed. Barge utilization strengthened during the quarter, averaging in the mid to high 80% range, and overall market activity became increasingly constructive, with utilization exiting the year close to 90%. Pricing was mixed with early quarter softness, giving way to firmer prices as utilization improved. Term renewals were down in the low single digits, and spot prices declined in the low single digits sequentially. At the end of the quarter and thus far in January, we've seen spot prices rebound in the low to mid single digits sequentially. With these market conditions, our teams worked hard on controlling costs, operating safely, and protecting margins. With this disciplined execution, the inland business delivered solid operating margins in the low 20% range for the quarter. In coastal, market fundamentals remained solid, with our barge utilization levels running in the mid to high 90% range. Throughout the quarter, customer demand was stable, supported by limited availability of large capacity vessels. Our teams delivered strong operational execution and maintained a disciplined focus on cost efficiency, and this resulted in an operating margin of approximately 20%. Turning to distribution and services, overall demand tracked in line with the prior quarter. We continue to see strong activity in power generation, stable marine repair demand, a slowly recovering off-highway market, and persistent softness in the conventional frac market. In PowerGen, total revenues grew 10% sequentially and 47% year over year, driven by execution on existing backlog, which was further supported by strong order flow and multiple large project wins as customers continue to prioritize reliable power solutions. In our commercial and industrial market, Revenues were down sequentially, driven by seasonal slowness in marine activity and ongoing slow recovery in the off-highway market. In oil and gas, revenues continued to be pressured by a very soft conventional oil and gas business, yet we continued to maintain profitability in this part of the segment. We exceeded our expectations as the segment grew operating income 20% for the full year. In summary, Kirby closed the fourth quarter and year on solid footing despite the usual seasonal challenges in both segments. So far in the first quarter, we've seen stable refinery activity, improving inland utilization, and spot rates that have early signs of an upward trend. In coastal, market conditions remain stable, our barge utilization is strong, and pricing continues to move in the right direction. In distribution and services, even though demand is expected to remain mixed across our product lines, power generation continues to be a standout performer, helping to offset softness in the other areas. Overall, we expect to deliver steady financial performance in 2026, with earnings projected to strengthen year over year. I'll talk more about our outlook later, but first I'll let Raj discuss the fourth quarter segment results in the balance sheet in more details.