Kirby Corporation

Good day and thank you for standing by. Welcome to the Kirby Corporation 2026 Second Quarter Earnings 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 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Matt Kerin, VP of Investor Relations. Please go ahead.

Good morning, and thank you for joining the Kirby Corporation 2026 Second Quarter Earnings Call. With me today are David Grzebinski, Kirby's Chief Executive Officer, Christian O'Neil, Kirby's President and Chief Operating Officer, and Raj Kumar, Kirby's executive vice president and chief financial 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 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 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 filing and in our other filings made with the SEC from time to time. I will now turn the call over to David.

Thank you, Matt, and good morning, everyone. Earlier today, we announced second quarter earnings per share of $1.67, up 11% sequentially and in line with the prior year quarter. Our results reflected solid execution across both our businesses, supported by constructive marine transportation fundamentals, high asset utilization, and ongoing momentum in key distribution services and markets. In marine transportation, customer demand remained healthy, utilization levels were strong, and inland marine pricing continued to improve. In distribution and services, results benefited from continued demand growth in power generation and strong marine repair activity. Overall, our businesses performed well during the quarter, supported by healthy end market conditions disciplined execution, and our continued focus on operating safely and efficiently. In inland marine, market fundamentals strengthened during the quarter, supported by strong refinery utilization, increased refined product and crude related movements, and healthy petrochemical activity. These factors combined with limited industry capacity additions supported barge utilization in the low 90% range. We continued to see positive pricing momentum during the quarter with spot market rates improving sequentially and term contract renewals increasing year over year. Notably, current spot market pricing has improved from recent lows in the fourth quarter of last year and has returned to levels last seen a year ago. You will recall that in mid 2025, a sharp reduction in heavy crude imports into the Gulf Coast, primarily from Venezuela, weighed on refining activity in related byproduct movements. Those conditions have since improved with Venezuelan imports now well above first half 25 levels. However, as previously communicated, rising fuel costs created a temporary margin headwind during the quarter. Although we expect this impact to reverse in the third quarter as contractual recovery mechanisms take effect. Overall, the inland business delivered operating margins in the high teen range, reflecting healthy demand, strong utilization, and improving pricing. In coastal marine, customer demand remained healthy during the quarter with barge utilization in the high 90% range. Market-specific dynamics affecting certain small capacity ATBs in the 80,000 to 100,000 barrel range resulted in low single-digit declines in term contract renewal rates. However, overall market conditions remained favorable, supported by strong refinery utilization, strong customer demand, and limited availability of large capacity vessels. Our coastal business delivered operating margins in the low to mid-teen range, reflecting the impact of elevated shipyard activity as previously disclosed. Turning to distribution and services, our performance reflected the strength of our positioning across a diverse set of end markets. Segment revenues increased 6% year-over-year, supported by sustained growth in power generation and continued strength in our commercial and industrial business. Operating margins improved more than 300 basis points sequentially, reflecting a favorable mix, including greater activity on behind-the-meter power solutions in our power generation business. In power generation, revenues increased 8% year over year, with demand for behind-the-meter and backup power solutions continuing to be driven by durable, secular trends. While demand remains robust, the timing of OEM engine deliveries continues to govern how quickly we can fulfill orders. In commercial and industrial, revenues increased 12% year over year, supported by healthy marine repair activity and continued growth across several end markets. In oil and gas, revenues improved sequentially from the first quarter, but were still down year over year. as the activity remained subdued despite modest improvement in market conditions from recent lows. Overall, the segment delivered solid results across the portfolio, demonstrating the strength of the company's market positions and the momentum in several key growth areas. In summary, Kirby delivered a solid quarter, underscoring the strength of our operating model and the momentum we are seeing across both businesses. In marine transportation, inland performance continued to improve driven by pricing gains and healthy barge utilization, while coastal demand and utilization remained strong despite market-specific pricing pressure in certain areas of the fleet. In distribution and services, power generation remained a key growth driver. Commercial and industrial activity performed well, and oil and gas showed sequential improvement from recent lows. Taken together, these trends reinforce our confidence in the outlook for the remainder of the year, which I will discuss in more detail later in the call. But first, I will turn it over to Raj to walk through the segment results, balance sheet and capital allocation.