KEX 10-K & 10-Q changes, risk factors and insider trading

The Secretary of Homeland Security is vested with the authority and discretion to waive the Jones Act to such extent and upon such terms as the Secretary may prescribe whenever the Secretary deems that such action is necessary in the interest of national defense. On September 8, 2017, following Hurricanes Harvey and Irma, the Department of Homeland Security issued a waiver of the Jones Act for a 7-day period for shipments from New York, Pennsylvania, Texas and Louisiana to South Carolina, Georgia, Florida and Puerto Rico. The waiver was specifically tailored to address the transportation of refined petroleum products due to disruptions in hurricane-affected areas. On September 11, 2017, the waiver was extended for 11 days and expanded to include additional states. Following Hurricane Maria, on September 28, 2017, the Department of Homeland Security issued a waiver of the Jones Act for movement of products shipped from United States coastwise points to Puerto Rico through October 18, 2017. Two limited waivers of the Jones Act were granted in connection with the shutdown of the Colonial Pipeline in May 2021. In connection with recovery from Hurricane Fiona, in September and October 2022, two limited waivers of the Jones Act were granted to allow diesel and liquefied natural gas deliveries to Puerto Rico. An additional limited waiver was granted in connection with another shutdown of the Colonial Pipeline in April 2025. Waivers of the Jones Act, whether in response to natural disasters or otherwise, could result in increased competition from foreign tank vessel operators, which could negatively impact KMT.

KMT is subject to natural gas and crude oil prices as well as the volatility of their prices as well as the volatility in production of refined products and petrochemicals in the United States. For 2024,2025, 51%48% of KMT’s revenues were from the movement of petrochemicals, including the movement of raw materials and feedstocks from one refinery or petrochemical plant to another, as well as the movement of more finished products to end users and terminals for export. The United States petrochemical industry continues to benefit from a low-cost domestically produced natural gas feedstock advantage, producing strong volumes of raw materials and intermediate products for transportation between Gulf Coast petrochemical plants and the transportation of more finished products to terminals for both domestic consumers and for export destinations. In addition, five new United States petrochemical projects, including expansion of existing plants, were completed during 2023, with an additional four projects completed during 2024. These projects should provide additional movements for KMT. Higher natural gas and crude oil prices are generally better for the Company’s businesses; however, higher natural gas prices and other factors could negatively impact the United States petrochemical industry and its production volumes, which could negatively impact the Company.

KMT could be adversely impacted by the construction of tank barges. At the present time, there are an estimated 4,0034,004 inland tank barges in the United States, of which the Company operates 1,094,1,105, or 27%. For 2022, the Company estimates that industry-wide 22 new tank barges were placed in service and retirements, net of reactivations, were flat.28%. For 2023, the Company estimates that industry-wide 27 new tank barges were placed in service and 48 tank barges were retired. For 2024, the Company estimates that industry-wide 34 new tank barges were placed in service and 38 tank barges were retired. For 2025, the Company estimates that industry-wide 66 new tank barges were placed in service and 65 tank barges were retired. The Company estimates that approximately 4560 to 5070 new tank barges have currently been ordered for delivery in 20252026 and expects a number of older tank barges will be retired, dependent on 20252026 market conditions.

Significant increases in the construction cost of tank barges and towing vessels may limit the Company’s ability to earn an adequate return on its investment in new tank barges and towing vessels. The price of steel, economic conditions, and supply and demand dynamics can significantly impact the construction cost of new tank barges and towing vessels. Over the last 20 years, the Company’s average construction price for a new 30,000 barrel capacity inland tank barge has fluctuated up or down significantly. For example, the average construction price for a new 30,000 barrel capacity tank barge in 2009 was approximately 90% higher than in 2000, with increases primarily related to higher steel costs. During 2009, the United States and global recession negatively impacted demand levels for inland tank barges and as a result, the construction price of inland tank barges fell significantly in 2010, primarily due to a significant decrease in steel prices, as well as a decrease in the number of tank barges ordered. The cost of steel, a key material in barge construction, was relatively stable from 2010 through 2019. During 2020, at the onset of the COVID-19 pandemic, steel costs dropped, however, during 2021 and 2022, steel prices rose above 2019 levels due to supply chain disruptions before decreasing in 2023. Although steel prices have remained stable in 2024,2024 and 2025, they still remain near historical highs. These increases in steel costs and alterations in supply and demand dynamics, as well as higher labor costs, resulted in construction prices for a new 30,000 barrel tank barge increasing compared to prices in 2017 when there was an industry-wide over-capacity of inland tank barges in the market.

KDS could be adversely impacted by future legislation, executive or other governmental orders, or additional regulation of oil and gas extraction, including hydraulic fracturing practices. The Company, through its United and S&S subsidiaries, is a distributor and service provider of engine and transmission related products for the oil and gas services, power generation and transportation industries, and a manufacturer of oilfield service equipment, including pressure pumping units. VariousIn the past, various legislative and regulatory initiatives have been proposed that, if passed, could limit or discourage future production of oil and gas. Further, legislation may be enacted by Congress that would authorize the EPA to impose additional regulations on hydraulic fracturing. In addition, a number of states have adopted or are evaluating the adoption of legislation or regulations governing hydraulic fracturing or byproducts of the fracturing process. Related actions may also be taken via executive order. Federal or state legislation, executive or governmental orders, and/or regulations could materially impact customers’ operations and greatly reduce or eliminate demand for the Company’s pressure pumping fracturing equipment and related products. The Company is unable to predict whether future legislation or any other regulations will ultimately be enacted or repealed and, if so, the impact on KDS.

The Company is subject to competition in KDS. The distribution and services industry is very competitive. The segment’s oil and gas market’s principal competitors are independent distribution and service and oilfield manufacturing companies and other factory-authorized distributors and service centers. In addition, certain oilfield service companies that are customers of the Company also manufacture and service a portion of their own oilfield equipment. Increased competition in the distribution and services industry and continued low price or alternative sourcing of natural gas, crude oil or natural gas condensate, and resulting decline in drilling for such natural resources in North American shale formations, could result in less oilfield equipment being manufactured and remanufactured, lower rates for service and parts pricing and result in less manufacturing, remanufacturing, service and repair opportunities and parts sales for the Company. Further, the oil and gas industry is characterized by rapid and significant technological advancements and introductions of new products using new technologies. As competitors and others use or develop new technologies, the Company may lose market share or be placed at a competitive disadvantage. The Company may face competitive pressure to implement or acquire certain new technologies at a substantial cost. Additionally, the Company may be unable to implement new technologies on a timely basis or at an acceptable cost. For the commercial and industrial market, the segment’s primary marine diesel competitors are independent diesel services companies and other factory-authorized distributors, authorized service centers and authorized marine dealers. Certain operators of diesel powered marine equipment also elect to maintain in-house service capabilities. For power generation, the primary competitors are other independent service companies.

The United States Congress has considered, but has not passed, various bills that would create an economy-wide “cap-and-trade” system that would establish a limit (or cap) on overall greenhouse gas emissions and create a market for the purchase and sale of emissions permits or “allowances.” Any proposed cap-and-trade legislation would likely affect the chemical industry due to anticipated increases in energy costs as fuel providers pass on the cost of the emissions allowances, which they would be required to obtain under cap-and-trade to cover the emissions from fuel production and the eventual use of fuel by the Company or its energy suppliers. In addition, cap-and-trade proposals would likely increase the cost of energy, including purchases of diesel fuel, steam and electricity, and certain raw materials used or transported by the Company. Proposed domestic and international cap-and-trade systems could materially increase raw material and operating costs of the Company’s customer base. Future environmental regulatory developments related to climate change in the United States thatrelating restrictto emissions of greenhouse gases could result in financial impacts on the Company’s operations that cannot be predicted with certainty at this time.

Loss of a large customer or changes in customer demand could adversely affect the Company. Five KMT customers accounted for approximately 18%17% of the Company’s 2025 revenue, 18% of 2024 revenue, and 16% of 2023 revenue, and 17% of 2022 revenue. The Company has contracts with these customers expiring in 20252026 through 2031. Three KDS customers accounted for approximately 10%9% of the Company’s 2025 revenue, 10% of 2024 revenue, and 12% of 2023 revenue, and 9% of 2022 revenue. Although the Company considers its relationships with these companies to be strong, the loss of any of these customers, or their inability to meet financial obligations, could have an adverse effect on the Company. Recent growth in prime power (“behind the meter”) and data center demand has contributed to increased revenue in the power generation market in the KDS segment, and changes in customer demand in this area or other areas of business could have an adverse effect on the Company.

Any damage or compromise of its critical assets or data security or its inability to use or access these critical assets and information systems could adversely impact the efficient and safe operation of its businesses, or result in the failure to safely operate its equipment, and maintain the confidentiality of data of its customers or its employees and could subject the Company to increased operating expenses or legal action, which could have an adverse effect on the Company. Although to date the Company is unaware of any materialno data breach or system disruption, including a cyber-attack, has resulted in a material cybersecurity incident for the Company, the Company cannot provide any assurances that such events and impacts will not be material in the future. The Company’s efforts to deter, identify, mitigate and/or eliminate future breaches may require significant additional effort and expense and may not be successful. For more information regarding the mitigation of cybersecurity risk, see Item 1C-Cybersecurity.

Corporate responsibility, specifically related to ESG matters, may impose additional costs and expose the Company to new risks. There is an increasing focus from regulators, certain investors, and other stakeholders concerning environmental, social, and governance (“ESG”) matters, both in the United States and internationally. The Company communicates certain ESG-related initiatives, goals, and/or aspirations regarding environmental matters, diversity, responsible sourcing and social investments, and other matters in its annual Sustainability Report, on its website, in its filings with the SEC, and elsewhere. These initiatives, goals, or aspirations reflect the Company’s current plans and are not guarantees that the Company will be able to achieve them. The standards for tracking and reporting on ESG matters are relatively new, have not been harmonized and continue to evolve. Further, the statutory and regulatory requirements continue to evolve as well. In 2023, the State of California enacted climate related legislationlegislation, and in 2024 the SEC was expected to issue its ownadopted climate disclosure rulesrules, in 2024, botheach of which willare orexpected couldto impose additional reporting requirements on the Company resulting in additional compliance cost and expense. The California legislation is subject to ongoing litigation and regulatory rulemaking and enforcement of certain provisions have been stayed. Similarly, the SEC’s climate-related disclosure rules are subject to pending litigation, have been stayed and the SEC has withdrawn its defense of those rules. The Company’s selection of disclosure frameworks that seek to align with various reporting standards may change from time to time and may result in a lack of comparative data from period to period. The ESG-relatedCompany’s sustainability-related initiatives, goals and/or aspirations couldmay be difficult to achieve and costly to implement, and the Company may be unable to economically develop or deploy technologies to achieve itssuch initiatives, goals or aspirations, if at all. In addition, the Company could be criticized for the timing, scope or nature of these initiatives, goals, or aspirations, or for any revisions to them. As mandatory and voluntary disclosures about ESGsustainability matters continues to evolve and increase, the Company couldmay be penalized or criticized for the accuracy, adequacy, or completeness of such disclosures. The Company’s actual or perceived failure to report accurately or achieve its ESG-relatedsustainability-related initiatives, goals, or aspirations could result in government enforcement action, negatively impact its reputation, result in ESG-focusedsustainability-focused investors not purchasing and holding Company stock, or otherwise materially harm the Company’s business.

Tariffs and other trade measures could adversely affect the Company’s business, financial condition and results of operations. Additional or new tariffstariffs, trade restrictions, or other trade measures could adversely impact the Company’s input costs and supply chain, which could reduce availability or increase the cost of goods sold to its customers, especially in KDS. Supply chain disruptions can adversely impact the Company’s operations, particularly where supply chain delays adversely impact availability of materials, components, and equipment necessary for construction, maintenance or repair, including with regard to KMT vessels or in KDS manufacturing. In KMT, Company also transports customer cargoes that are imported into the U.S. or which are destined for export from the U.S. Trade discussions and arrangements between the U.S. and various of its trading partners are fluid, and existing and future trade agreements are, and are expected to continue to be, subject to a number of uncertainties, including the imposition of new tariffs or adjustments and changes to the products or materials covered by existing tariffs. Any decision by the U.S. government to adopt actions such as an increase in customs duties or tariffs, or the renegotiation of U.S. trade agreements, or any other action that could have a negative impact on international trade, including corresponding actions taken by other countries in response to U.S. governmental actions, could cause an increase to the cost of goods sold to KDS customers, adversely impact operations in KMT through interruptions in customer trade patterns or volumes, and adversely impact input costs and supply chain in both segments. To the extent possible, the Company seeks to include contractual language to address recovery of increased costs related to tariffs in the KDS segment.segment although there can be no assurance that such provisions will fully offset the impact of changes in trade policies. Any changes in trade policies in the U.S. and corresponding actions by other countries could adversely impact Company’s financial performance.

Statements contained in this Form 10-K that are not historical facts, including, but not limited to, any projections contained herein, are forward-looking statements and involve a number of risks and uncertainties. Such statements involve risks and uncertainties. Such statements can be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “anticipate,” “estimate,” or “continue,” or the negative thereof or other variations thereon or comparable terminology. The actual results of the future events described in such forward-looking statements in this Form 10-K could differ materially from those stated in such forward-looking statements. Among the factors that could cause actual results to differ materially are: adverse economic conditions, industry competition and other competitive factors, adverse weather conditions such as high water, low water, tropical storms, hurricanes, tsunamis, fog and ice, tornados, COVID-19 or other pandemics, marine accidents, lock delays,delays or closures, fuel costs, interest rates, construction of new equipment,equipment by competitors, government and environmental laws and regulations, and the timing, magnitude and number of acquisitions made by the Company. For a more detailed discussion of factors that could cause actual results to differ from those presented in forward-looking statements, see Item 1A-Risk Factors. Forward-looking statements are based on currently available information and the Company assumes no obligation to update any such statements.

The Company is the nation’s largest domestic tank barge operator transporting bulk liquid products throughout the Mississippi River System, on the Gulf Intracoastal Waterway, and coastwise along all three United States coasts. The Company transports petrochemicals, black oil, refined petroleum products and agricultural chemicals by tank barge. In addition, the Company participates in the transportation of dry-bulk commodities in United States coastwise trade. Through KDS, the Company provides equipment, after-market parts and services for power generation systems in applications that include behind the meter power systems and emergency backup systems, after-market and genuine replacement parts and services for engines, transmissions, reduction gearsgears, electric motors, drives, and controls, specialized electrical distribution and controls systems, and related equipment used in oilfield services, marine, power generation, marine, on-highway, oilfield services, and other industrial applications. The Company also rents equipment including generators, industrial compressors, high capacityhigh-capacity lift trucks, construction equipment and refrigeration trailers for use in a variety of industrial markets. The Company also manufactures and remanufactures specialized equipment, including pressure pumping units,units and electric fracturing systems, electric power generation equipment, and specialized electrical distribution and control equipment for data centers, oilfield service, railroad and other industrial customers.

The 2024 fourth quarter included a $56.3 million before taxes, $43.0 million after taxes, or $0.74 per share non-cash impairment charge in the KDS segment primarily associated with conventional diesel fracturing equipment inventory. Based on the current market conditions at that time and its view on the industry outlook, including decreased customer demand for conventional diesel fracturing equipment driven by an industry-wide shift to electric fracturing equipment, the Company determined that certain inventory had limited commercial opportunity, and the cost of these inventories exceeded its net realizable value. The Company’s 2024 fourth quarter results also included a $10.9 million, or $0.19 per share one-time deferred tax credit related to a change in Louisiana tax law. Tax reform legislation in Louisiana was signed in December 2024 that included lowering the corporate income tax rate from 7.5% to 5.5% effective January 1, 2025. As a result of the new legislation, the Company recognized a one-time deferred tax credit of $10.9 million in the 2024 fourth quarter due to the remeasurement of the Company’s Louisiana and U.S. deferred tax assets and liabilities based on the new effective Louisiana state income tax rate.

Cash provided by operating activities in 20242025 increaseddecreased compared to 20232024 primarily due to unfavorable working capital changes, partially offset by higher business activity levels. During 2024,2025, capital expenditures of $342.7$264.5 million included $247.8$229.1 million in KMT and $94.9$35.4 million in KDS and corporate, more fully described under cash flow and capital expenditures below.

The Company projects net cash flow from operations in 20252026 of between $620$575 million and $720$675 million and expects capital expenditures to range between $280$220 million and $320$260 million. The Company has applied for and been awarded grants related to certain emission reduction projects totaling approximately $4 million which it expects to receive reimbursements for in 2025.

The Company’s debt-to-capitalization ratio decreasedincreased to 21.4% at December 31, 2025 from 20.7% at December 31, 2024 from 24.2% at December 31, 2023,2024, primarily due to an increase in debt outstanding of $44.3 million, partially offset by an increase in total equity, primarily from net earnings attributable to Kirby of $286.7$354.6 million during 2024 and a reduction of debt outstanding of $141.6 million,2025 partially offset by treasury stock purchases of $174.6$354.2 million. The Company’s debt outstanding as of December 31, 20242025 and December 31, 20232024 is detailed in Long-Term Financing below.

The Company also ownsoperates shifting operations and fleeting facilities for dry cargo barges and tank barges on the Houston Ship Channel andChannel, in Freeport and Port Arthur, Texas, and Lake Charles, Louisiana, and its San Jac shipyard for building inland towboats and performing routine maintenance on marine vessels near the Houston Ship Channel,Channel. asThe wellCompany asalso owns a two-thirds interest in Osprey Line, L.L.C., whicha transportstransporter of project cargoes and cargo containers by barge.barge on the United States inland waterway system.

KMT’s revenues for 20242025 increased 11%1% compared to 20232024 and operating income increased 52%,3%, compared to 2023.2024. The increasesincrease in revenues for 20242025 werewas primarily due to improvedhigher term pricing in the coastal market and higher term and spot pricing in the inland market during the 2025 first half, partially offset by lower fuel rebills in both the inland and coastal marketsmarkets. whenThe increase in operating income for 2025 as compared to 2023. Results for 2024 werewas modestlyprimarily impacteddue to higher term pricing in the coastal market and higher term and spot pricing in the inland market over the 2025 first half, partially offset by weatherlower barge utilization and lockmoderating delays,prices while 2023 results were impacted by various lock closures alongin the Gulfinland Intracoastalmarket Waterwayin the 2025 second half. For 2025 and Illinois River. In addition, several refinery outages also impacted utilization in 2023. For 2024 and 2023,2024, the inland tank barge fleet contributed 81%80% and 82%,81%, respectively, and the coastal fleet contributed 19%20% and 18%,19%, respectively, of marine transportation revenues.

OverallInland tank barge utilization levels in 2025 were flat as compared to 2024, ranging from the low to mid-90% range during both the 2025 first and second quarters, and mid-80% range during the 2025 third quarter, and the mid to high 80% range during the 2025 fourth quarter. Lighter feedstock mix for refinery and chemical customers and fewer barges undergoing maintenance across the industry impacted utilization in the 2025 second half. During 2024, inland tank barge utilization levels in 2024 were flat as compared to 2023, rangingranged from the low to mid-90% range during both the 2024 first and second quarters,quarters and the 90% range during both the 2024 third and fourth quarters. During 2023, inlandCoastal tank barge utilization levels ranged from the low to mid-90% range during theboth 2023 first quarter, the low 90% range during the 2023 second quarter, the high 80% range during the 2023 third quarter,2025 and the2024 low 90% rangeaveraged in the 2023mid fourthto quarter.high 90% range.

Approximately 70% of the inland marine transportation revenues were under term contracts and 30% were under spot contracts in 2025. Approximately 65% of the inland marine transportation revenues were under term contracts and 35% were under spot contracts in 2024. Approximately 60% of the inland marine transportation revenues were under term contracts and 40% were under spot contracts in 2023. Term contracts provide the operations with a reasonably predictable revenue stream. Inland time charters, which help insulate the Company from revenue fluctuations caused by weather and navigational delays and temporary market declines, represented 61%59% of the inland revenues under term contracts during 20242025 and 63%61% in 2023.2024. During 20242025 and 2023,2024, approximately 99%100% and 85%,99%, respectively, of coastal revenues were under term contracts and 1%none and 15%,1%, respectively, were under spot contracts. Coastal time charters represented approximately 98%100% and 90%98% of coastal revenues under term contracts during 20242025 and 2023,2024, respectively. Term contracts have contract terms of 12 months or longer, while spot contracts have contract terms of less than 12 months.

Spot and termTerm contract pricing in the coastal market are contingent on various factors including geographic location, vessel capacity, vessel type, and product serviced.

Effective January 1, 2024,2025, annual escalators for labor and the producer price index on a number of inland multi-year contracts resulted in rate increases on those contracts ofin approximatelythe 9.5%,3% to 5% range, excluding fuel.

The Company, through KDS, provides equipment, after-market parts and services for power generation systems in applications that include behind the meter power systems and emergency backup systems, after-market and genuine replacement parts and services for engines, transmissions, reduction gearsgears, electric motors, drives, and controls, specialized electrical distribution and controls systems, and related equipment used in oilfield services, marine, power generation, marine, on-highway, oilfield services, and other industrial applications. The Company also rents equipment including generators, industrial compressors, high capacityhigh-capacity lift trucks, construction equipment and refrigeration trailers for use in a variety of industrial markets. The Company also manufactures and remanufactures specialized equipment, including pressure pumping units,units and electric fracturing systems, electric power generation equipment, and specialized electrical distribution and control equipment for data centers, oilfield service, railroad and other industrial customers. The Company sells and manufactures various products used in oil and gas and industrial applications, including those used in hydraulic fracturing and refrigeration systems that, as compared to conventional offerings, reduce emissions. These products made up approximately 18%20% of KDS’s revenues in 2024.2025.

During 2024,2025, KDS generated 41%42% of the Company’s revenues, of which 80%83% was generated from service and parts and 20%17% from manufacturing. The results of KDS are largely influenced by cycles of the power generation, marine, on-highway, oilfield service industry and oil and gas operator and producer markets, marine, power generation, on-highway and other industrial markets.

Distribution and services revenues for 20242025 decreasedincreased 1%6% compared to 20232024 and operating income decreasedincreased 5%20% compared to 2023.2024. In the commercial and industrial market, revenues decreasedincreased 1%5% in 20242025 compared to 20232024 primarily due to lower business levels in Thermo King and on-highway businesses due to the ongoing trucking recession, partially offset by higher business levels in marine repair. For both 20242025 and 2023,2024, the commercial and industrial market contributed 46% of the distribution and services revenues.

In the power generation market, revenues increased 20%26% compared to 20232024 due to severalincreased largedemand projectfor awardsbackup, from data center customers as well as other backupprime power industrialand customers.critical power applications. For 20242025 and 2023,2024, the power generation market contributed 36%43% and 29%,36%, respectively, of the distribution and services revenues.

In the oil and gas market, revenues declined 28%32% compared to 20232024 due to lower levels of conventional oilfield activity,activity which resulted in decreased demand for new transmissions and parts, partially offset by deliveries of electric fracturing equipment. For 20242025 and 2023,2024, the oil and gas market contributed 18%11% and 25%,18%, respectively, of the distribution and services revenues.

Overall, the Company expects to deliver improved financial results in 2025.2026. In KMT, barge utilization and customer demand remain stable and term rates continue to increase.stable. In KDS, growth in the power generation market is expected to mostly offset softness in oil and gas markets, and the continuing trucking recession impacting the on-highway service and repair business due to the ongoing trucking recession.business. The Company remains mindful of the ever-changing economic landscape related to the possible impact of high interest ratesrates, tariffs, and possible recessionary headwinds as it moves through 2025.2026.

In 2026, the inland marine transportation market inis 2025,expected theto Company anticipatesexperience positive market dynamics due to limited new barge construction. The Company expects barge utilization rates to remain steady for the year with continued improvement in term contract pricing as renewals occur throughout the year.year However,progresses. theThe Company also continues to see inflationary pressures and there remains an acute mariner shortage in the industry which continues to drive up labor costs. These pressures, along with the increasing cost of equipment, should continue to put upward pressure on spot and term contract prices. In theThe coastal marine transportation market inis 2025,also expected to see very favorable market conditions remainin very2026. favorableThe withcoastal marine transportation market should experience steady customer demand expected to keepkeeping barge utilization at high levels with improvedimproving rates as the availability of equipment isremains limited across the industryindustry. dueThere toare no furthercoastal ATBsbarges currently under constructionconstruction. andThe favorableCompany economicdoes conditions.expect more shipyard days in the coastal marine transportation market as compared to 2025.

The Company expects tostable yield mixed resultsgrowth in KDS in 20252026 as near-term volatility from supply issues, customers deferring maintenance, and lower overall levels of activity in the oil and gas market are partially offset by increased orders in the power generation market. In commercial and industrial, the demand outlook in marine repair remains steady while on-highway service and repair remains soft inbut thehas currentshown environment.some recent modest improvement. In power generation, the Company anticipates continued strong growth in orders as data center demand and the need for backup power continues to be strong. In oil and gas, the Company expects revenues to be down as the shift awaytransition from conventional diesel hydraulic fracturing to electric hydraulic fracturing continues to take place. The Company anticipates extended lead times and supply delays for certain OEMoriginal equipment manufacturer products to continue contributing to a volatile delivery schedule of new products throughout 2025.2026.

Property, Maintenance and Repairs. Property is recorded at cost; improvements and betterments are capitalized as incurred. Depreciation is recorded using the straight-line method over the estimated useful lives of the individual assets. When property items are retired, sold, or otherwise disposed of, the related cost and accumulated depreciation are removed from the accounts with any gain or loss on the disposition included in the statement of earnings. Maintenance and repairs on vessels built for use on the inland waterways are charged to operating expense as incurred and includes the costs incurred in USCG inspections unless the shipyard extends the life, improves the operating capacity of the vessel, or replaces significant components of the vessel which results in the costs being capitalized. The Company’s ocean-going vessels are subject to regulatory drydocking requirements after certain periods of time to be inspected, have planned major maintenance performed and be recertified by the ABS. These recertifications generally occur twice in a five-year period. The Company defers the drydocking expenditures incurred on its ocean-going vessels due to regulatory marine inspections by the ABS and amortizes the costs of the shipyard over the period between drydockings, generally 30 or 60 months, depending on the type of major maintenance performed. Drydocking expenditures that extend the life, improve the operating capability of the vessel, or replace significant components of the vessel result in the costs being capitalized. Routine repairs and maintenance on ocean-going vessels are expensed as incurred. Interest is capitalized on the construction of new ocean-going vessels.

KMT’s revenues for 20242025 increased 11%1% compared to 20232024 and operating income increased 52%,3%, compared to 2023.2024. The increasesincrease in revenues for 20242025 werewas primarily due to improvedhigher term pricing in the coastal market and higher term and spot pricing in the inland market during the 2025 first half, partially offset by lower fuel rebills in both the inland and coastal marketsmarkets. whenThe increase in operating income for 2025 as compared to 2023. Results for 2024 werewas modestlyprimarily impacteddue to higher term pricing in the coastal market and higher term and spot pricing in the inland market over the 2025 first half, partially offset by weatherlower barge utilization and lockmoderating delays,prices while 2023 results were impacted by various lock closures alongin the Gulfinland Intracoastalmarket Waterwayin the 2025 second half. For 2025 and Illinois River. In addition, several refinery outages also impacted utilization in 2023. For 2024 and 2023,2024, the inland tank barge fleet contributed 81%80% and 82%,81%, respectively, and the coastal fleet contributed 19%20% and 18%,19%, respectively, of marine transportation revenues.

OverallInland tank barge utilization levels in 2025 were flat as compared to 2024, ranging from the low to mid-90% range during both the 2025 first and second quarters, and mid-80% range during the 2025 third quarter, and the mid to high 80% range during the 2025 fourth quarter. Lighter feedstock mix for refinery and chemical customers and fewer barges undergoing maintenance across the industry impacted utilization in the 2025 third quarter. During 2024, inland tank barge utilization levels in 2024 were flat as compared to 2023, rangingranged from the low to mid-90% range during both the 2024 first and second quarters,quarters and the 90% range during both the 2024 third and fourth quarters. During 2023, inlandCoastal tank barge utilization levels ranged from the low to mid-90% range during theboth 2023 first quarter, the low 90% range during the 2023 second quarter, the high 80% range during the 2023 third quarter,2025 and the2024 low 90% rangeaveraged in the 2023mid fourthto quarter.high 90% range.

The petrochemical market, the Company’s largest market, contributed 51%48% of marine transportation revenues for 2024,2025, reflecting increasedsteady rates, volumes and utilization from Gulf Coast petrochemical plants as a result of improved economic conditions and a reduced supply of barges across the industry due to a heavier than normal maintenance cycle as compared to 2023.plants.

The black oil market, which contributed 25%26% of marine transportation revenues for 2024,2025, reflecting improvedstable demand as refinery utilization and production levels of refined petroleum products and fuel oils increased. During 2024,2025, the Company transported crude oil and natural gas condensate produced from themajor Permian Basin and the Eagle FordU.S. shale formation in Texas, bothbasins along the Gulf Intracoastal Waterway with inland vessels and in the Gulf of America with coastal equipment. Additionally, the Company transported volumes of Utica natural gas condensate downriver from the Mid-Atlantic to the Gulf Coast and Canadian and Bakken crude downriver from the Midwest to the Gulf Coast.

The refined petroleum products market, which contributed 21%23% of marine transportation revenues for 2024,2025, sawreflected increasedstable volumes in the inland market with improvedsteady refinery utilization and product levels.

The agricultural chemical market, which contributed 3% of marine transportation revenues for 2024,2025, alsoreflected experienced improvedstable demand for transportation of both domestically produced and imported products.

Inland operations incurred 11,58311,410 delay days in 2024,2025, 7%1% morefewer than the 10,86311,583 delay days that occurred during 2023.2024. Delay days measure the lost time incurred by a tow (towboat and one or more tank barges) during transit when the tow is stopped due to weather, lock conditions, or other navigational factors. Delay days forreflected 2024very favorable seasonal weather and 2023improved werenavigational impactedconditions byin hurricanesthe 2025 third quarter, and tropical storms, poor operating conditions due to heavy wind and fog along the Gulf Coast, lowCoast and highlock waterdelays conditions onduring the Mississippi River System,2025 and various2024 lockfirst closures, due in part to lock maintenance projects. The 2023 third quarter was also impacted by lock closures on the Illinois River.quarters.

Approximately 70% of the inland marine transportation revenues were under term contracts and 30% were under spot contracts in 2025. Approximately 65% of the inland marine transportation revenues were under term contracts and 35% were under spot contracts in 2024. Approximately 60% of the inland marine transportation revenues were under term contracts and 40% were under spot contracts in 2023. Term contracts provide the operations with a reasonably predictable revenue stream. Inland time charters, which help insulate the Company from revenue fluctuations caused by weather and navigational delays and temporary market declines, represented 61%59% of the inland revenues under term contracts during 20242025 and 63%61% in 2023.2024. During 20242025 and 2023,2024, approximately 99%100% and 85%,99%, respectively, of coastal revenues were under term contracts and 1%none and 15%,1%, respectively, were under spot contracts. Coastal time charters represented approximately 98%100% and 90%98% of coastal revenues under term contracts during 20242025 and 2023,2024, respectively. Term contracts have contract terms of 12 months or longer, while spot contracts have contract terms of less than 12 months.

Spot and termTerm contract pricing in the coastal market are contingent on various factors including geographic location, vessel capacity, vessel type, and product serviced.

Effective January 1, 2024,2025, annual escalators for labor and the producer price index on a number of inland multi-year contracts resulted in rate increases on those contracts ofin approximatelythe 9.5%,3% to 5% range, excluding fuel.

Total costs and expenses for 20242025 increased 4%1% compared to 2023.2024. Costs of sales and operating expenses for 20242025 increaseddecreased 5%1% compared to 20232024 primarily reflecting higherlower businessfuel activity levels and inflationary cost pressurescosts which was partially offset by lowerinflationary fuelcost costs.pressures including salary and wage increases that went into effect on July 1, 2025.

The inland marine transportation fleet operated an average of 285279 towboats during 2025, of which an average of 69 were chartered, compared to 285 during 2024, of which an average of 70 were chartered, compared to 280 during 2023, of which an average of 64 were chartered. The increasedecrease was primarily due to higherlower business activity levels.levels in the second half of 2025. Generally, variability in demand or anticipated demand, as tank barges are added to or removed from the fleet, as chartered towboat availability changes, or as weather or water conditions dictate, the Company charters in or releases chartered towboats in an effort to balance horsepower needs with current requirements. The Company has historically used chartered towboats for approximately one-fourth of its horsepower requirements.

Selling, general and administrative expenses for 20242025 increased 2%5% compared to 20232024 due to higher business activity levels and inflationary cost pressures.pressures, The increase is primarily due toincluding higher medical costs, and salary and wage increases,increases partiallythat offsetwent byinto lowereffect legalon costs.July 1, 2025.

Depreciation and amortization for 20242025 increased 7%8% compared to 2023.2024. The increase was primarily due to capital additions and equipment acquisitions during 20242025 and 2023.2024.

KMT operating income for 20242025 increased 52%3% compared to 2023.2024. The operating margin was 19.0%19.3% for 20242025 compared to 13.9%19.0% for 2023.2024. The increase in operating income and operating margin were primarily due to higher term pricing in the coastal market and higher spot contractand term pricing in the inland market over the 2025 first half, partially offset by lower barge utilization and coastalmoderating markets.prices in the inland market in the 2025 second half.

KDS revenues for 20242025 decreasedincreased 1%6% compared to 2023.2024. In the commercial and industrial market, revenues decreasedincreased 1%5% in 20242025 compared to 20232024 primarily due to lower business levels in Thermo King and on-highway businesses due to the ongoing trucking recession, partially offset by higher business levels in marine repair. For both 20242025 and 2023,2024, the commercial and industrial market contributed 46% of the distribution and services revenues.

In the power generation market, revenues increased 20%26% compared to 20232024 due to severalincreased largedemand projectfor awardsbackup, from data center customers as well as other backupprime power industrialand customers.critical power applications. For 20242025 and 2023,2024, the power generation market contributed 36%43% and 29%,36%, respectively, of the distribution and services revenues.

In the oil and gas market, revenues declined 28%32% compared to 20232024 due to lower levels of conventional oilfield activity,activity which resulted in decreased demand for new transmissions and parts, partially offset by deliveries of electric fracturing equipment. For 20242025 and 2023,2024, the oil and gas market contributed 18%11% and 25%,18%, respectively, of the distribution and services revenues.

Selling, general and administrative expenses for 20242025 increased 3%4% compared to 2023.2024. The increase wasreflected primarilyhigher duebusiness toactivity continuedlevels, inflationary cost pressurespressures, including higher medical costs, and annualsalary compensationand increases.wage increases that went into effect July 1, 2025.

Depreciation and amortization for 20242025 increased 79%21% compared to 2023.2024. The increase was primarily due to increased capital spendingadditions during 20232025 and 2024.2024 including additions to the equipment rental fleet.

Operating income for KDS for 20242025 decreasedincreased 5%20% compared to 2023.2024. The operating margin was 8.0%9.2% for 20242025 compared to 8.4%8.0% for 2023.2024. The results reflect lowerincreased on-highwaydemand in power generation from data centers and conventionalprime oilfieldpower activitycustomers, higher marine repair activity, and deliveries of electric fracturing equipment, partially offset by increasedlower powerconventional generation demand in industrial end markets and marine repairoilfield activity.

General corporate expenses for 2025, 2024, 2023, and 20222023 were $18.8$13.7 million, $23.3$18.8 million and $18.6$23.3 million, respectively. General corporate expenses were lower in 20242025 compared to 20232024 primarily due to lower legal and insurance costs. The 2023 first quarter also included costs related to the strategic review and shareholder engagement.

Interest expense for 20242025 decreased 6% compared to 2023,2024, primarily due to a lower average interest rate, partially offset by higher average debt outstanding asduring a2025. resultInterest expense for 2025 excludes capitalized interest of debt$1.0 repayments.million. There was no capitalized interest excluded from interest expense during 2024 and 2023.

Current assets as of December 31, 20242025 decreasedincreased 6%1% compared to December 31, 2023.2024. Trade accounts receivable decreased 7%3% primarily due to strong collections activity during 2024.2025. Accounts receivable – other increased 48% due to a federal income tax receivable associated with the One Big Beautiful Bill Act (“OBBBA”). Inventories – net decreasedincreased by 13%1% primarily due to the impairmentimpact of conventionalhigher dieselbusiness fracturingactivity equipmentlevels inventoryin and deliveries of power generation units and oilfield service equipment during 2024.KDS. Prepaid expenses and other current assets decreased 9% primarily due to lower prepaid fuel due to a decrease in the price of diesel fuel and lower assets held for sale due to sales in 2024.fuel.

Property and equipment, net of accumulated depreciation, at December 31, 20242025 increased 4%2% compared to December 31, 2023.2024. The increase reflected $335.8$250.3 million of capital additions (including accrued capital expenditures) and $77.9$106.5 million of acquisitionsequipment of barge equipment,acquisitions, partially offset by $231.7$255.4 million of depreciation expense and $20.1$26.3 million of property disposals, more fully described under Cash Flows and Capital Expenditures below.

Other intangibles, net, as of December 31, 20242025 decreased 20%12% compared to December 31, 2023,2024, primarily due to amortization.amortization, partially offset by intangible assets acquired during 2025.

Current liabilities as of December 31, 20242025 increaseddecreased 9%4% compared to December 31, 2023.2024. Accounts payable decreased 13%, primarily due to timing of shipyard payments. Income taxes payable increaseddecreased by $23.9 million primarily100% due to the timing of federal income tax payments. Deferred revenues increased 32%,14%, primarily due to deposits on equipment expected to be shipped in 20252026 in KDS. Accounts payable decreased 7%, primarily due to timing of shipyard payments.

Long-term debt, net – less current portion, as of December 31, 2024,2025, decreasedincreased 14%5% compared to December 31, 2023,2024, primarily reflecting repaymentsnet borrowings on the Term Loan and 2027 Revolving Credit Facility.

Other long-term liabilities as of December 31, 20242025 decreasedincreased 39%10% compared to December 31, 2023,2024, primarily due to aan decreaseincrease in pensiondeferred liabilitiescompensation due to pension contributions of $1.7 million and an improved funded status.accruals.

The Company continues to be subject to the risk factors previously disclosed in its “Risk Factors” in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.2025 and in Part II, Item 1A, “Risk Factors,” of its Quarterly Report on Form 10-Q for the quarter ended March 31, 2026. Since the Companyfiling filedof its Form 10-K for the year ended December 31, 2025,10‑K, the U.S. government issued a 60-day60‑day waiver of the Jones Act on March 17, 2026, and hassubsequently announcedextended a 90-day extension of thatthe waiver startingfor an additional 90 days beginning May 18, 20262026, thatand couldending August 16, 2026. The waiver may increase competition from non-U.S.non‑U.S. vessels.vessels Toin date,certain markets served by the Company. Although the Company has not experienced a material adverse impact from thisthe waiver,waiver butto ifdate, extended,any broadenedfurther extension, expansion, or repeated,future reinstatement of the waiver could adversely affect the Company’s operations, financial condition, and results of operations, and there can be no assurance that itsuch willimpacts would not inbe the future.material.

Statements contained in this Form 10-Q that are not historical facts, including, but not limited to, any projections contained herein, are forward-looking statements and involve a number of risks and uncertainties. Such statements involve risks and uncertainties. Such statements can be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “anticipate,” “estimate,” or “continue,” or the negative thereof or other variations thereon or comparable terminology. The actual results of the future events described in such forward-looking statements in this Form 10-Q could differ materially from those stated in such forward-looking statements. Among the factors that could cause actual results to differ materially are: adverse economic conditions, industry competition and other competitive factors, adverse weather conditions such as high water, low water, tropical storms, hurricanes, tsunamis, fog and ice, tornados, pandemics, marine accidents, lock delays or closures, fuel costs, interest rates, construction of new equipment by competitors, government and environmental laws and regulations, and the timing, magnitude and number of acquisitions made by the Company. For a more detailed discussion of factors that could cause actual results to differ from those presented in forward-looking statements, see Part II, Item 1A-Risk Factors of this Form 10-Q and the Form 10-Q for the quarter ended March 31, 2026, and Item 1A-Risk Factors found in the Company’s Annual Report on Form 10‑K for the year ended December 31, 2025. Forward-looking statements are based on currently available information and the Company assumes no obligation to update any such statements. For purposes of Management’s Discussion, all net earnings per share attributable to Kirby common stockholders are “diluted earnings per share.”

Cash provided by operating activities for the 2026 first quartersix months increased in comparison to the 2025 first quartersix months primarily due to increased net earnings and favorable working capital changes. The favorable working capital changes were driven by the timing of accounts payable and income tax payments, partially offset by the timing of accounts receivable collections. The 2025 first quartersix months included a $24.4$73.4 million of estimated federal income tax paymentpayments as compared to none$35.0 million in the 2026 first quarter.six months. For the 2026 first quarter,six months, capital expenditures of $48.3$119.8 million included $34.6$80.6 million in KMT and $13.7$39.2 million in KDS and corporate, each more fully described under Cash Flow and Capital Expenditures below.

The Company’s debt-to-capitalization ratio increased slightly to 22.3%23.1% at MarchJune 31,30, 2026 compared to 21.4% at December 31, 2025, primarily due to an increase in debt outstanding. Total equity at MarchJune 31,30, 2026 increased as compared to December 31, 2025 primarily from net earnings attributable to Kirby of $81.2$170.9 million, partially offset by treasury stock purchases of $52.7$112.4 million. The Company’s debt outstanding as of MarchJune 31,30, 2026 and December 31, 2025 is detailed in Long-Term Financing below.

For the 2026 and 2025 second quarter and first quarter,six months, KMT generated 59%58% and 59%, respectively, of the Company’s revenues compared to 61% for the 2025 first quarter.revenues. The segment’s customers include many of the major petrochemical and refining companies that operate in the United States. Products transported include intermediate materials used to produce many of the end products used widely by businesses and consumers — plastics, fiber, paints, detergents, oil additives and paper, among others, as well as residual fuel oil, ship bunkers, asphalt, gasoline, diesel fuel, heating oil, crude oil, natural gas condensate, and agricultural chemicals. Consequently, KMT is directly affected by the volumes produced by the Company’s petroleum, petrochemical, and refining customer base.

During the 2026 first quarter,six months, the Company purchased 2228 inland tank bargesbarges, brought back into service six inland tank barges, and retired threefive inland tank barges, increasing its capacity by approximately 0.50.7 million barrels.

Inland tank barge utilization levels averaged in the low-90% range during both the 2026 first quarterand second quarters and the low-to-mid-90% range during both the 2025 first quarter.and second quarters. The 2026 and 2025 first quarters were impacted by high winds and heavy fog along the Gulf Coast, ice on the Illinois and Upper Mississippi Rivers and various lock delays. Coastal tank barge utilization levels averaged in the mid-to-high-90% range during the 2026 first quarter and the high-90% range during the 2026 second quarter. Coastal tank barge utilization levels averaged in the mid-to-high-90% range during both the 2025 first and second quarters.

During both the 2026 second quarter and first quarter,six months, approximately 65% of KMT inland revenues were under term contracts and 35% were spot contract revenues. During both the 2025 second quarter and first quarter,six months, approximately 70% of KMT inland revenues were under term contracts and 30% were spot contract revenues. Inland time charters during both the 2026 second quarter and first quartersix months represented approximately 56%57% of inland revenues under term contracts compared with 61%60% in the 2025 second quarter and first quarter.six months. During the 2026 second quarter and first quarter,six months, approximately 92%93% and 92%, respectively, of KMT coastal revenues were under term contracts and 8%7% and 8%, respectively, were under spot contracts. During both the 2025 second quarter and first quarter,six months, approximately 100% of KMT coastal revenues were under term contracts and none were under spot contracts. Coastal time charters represented approximately 100% of coastal revenues under term contracts during both the 2026 and 2025 second quarter and first quarters.six months. Term contracts have contract terms of 12 months or longer, while spot contracts have contract terms of less than 12 months.

KMT operating margin was 18.0%16.4% and 17.2% for the 2026 second quarter and first quartersix months, respectively, compared to 18.2%20.1% and 19.2% for the 2025 second quarter and first quarter.six months, respectively.

For the 2026 second quarter and first quarter,six months, KDS generated 41%42% and 41%, respectively, of the Company’s revenues. The results of KDS are largely influenced by cycles of the power generation, marine, on-highway, oilfield service industry and oil and gas operator and producer markets, and other industrial markets.

KDS revenues for the 2026 firstsecond quarter and first six months increased 12%6% and 9%, respectively, compared with the 2025 second quarter and first quarter.six months. KDS operating income for the 2026 firstsecond quarter and first six months increased 3%8% and 6%, respectively, compared with the 2025 second quarter and first quarter.six months. In the commercial and industrial market, revenues and operating income increased compared to the 2025 second quarter and first quartersix months due to higher business levels in marine repair. For the 2026 second quarter and first quarter,six months, the commercial and industrial market contributed 46%50% and 49%, respectively, of KDS revenues.

In the power generation market, revenues and operating income increased compared to the 2025 second quarter and first quartersix months due to increased demand for backup, prime power and critical power applications. For the 2026 second quarter and first quarter,six months, the power generation market contributed 44%40% and 41%, respectively, of KDS revenues.

In the oil and gas market, revenues and operating income decreased compared to the 2025 second quarter and first quarter,six months, impacted by lower levels of conventional oilfield activity which resulted in decreased demand for new transmissions and parts, partially offset by deliveries of electric fracturing equipment. For both the 2026 second quarter and first quarter,six months, the oil and gas market contributed 10% of KDS revenues.

KDS operating margin was 6.7%9.9% and 8.4% for the 2026 second quarter and first quartersix months, respectively, compared to 7.3%9.8% and 8.6% for the 2025 second quarter and first quarter.six months, respectively.

Overall, the Company expects to deliver improved financial results in 2026. In KMT, barge utilization and customer demand remain stable.favorable. In KDS, growth in the power generation market is expected to offset softness in oil and gas markets, and the continuing trucking recession impacting the on-highway service and repair business. The Company remains mindful of the ever-changing economic landscape related to the possible impact of high interest rates, tariffs, current geopolitical tensions and possible recessionary headwinds as it moves through 2026.

In 2026, the inland marine transportation market is expected to experience positive market dynamics due to limited new barge construction. The Company expects barge utilization rates to remain steady for the year with continued improvement in pricing as the year progresses. The Company also continues to see inflationary pressures and there remains an acute mariner shortage in the industry which continues to drive up labor costs. These pressures, along with the increasing cost of equipment, should continue to put upward pressure on spot and term contract prices. The coastal marine transportation market is also expected to see very favorable market conditions in 2026. The coastal marine transportation market should experience steady customer demand, keeping barge utilization at high levels with improving rates as the availability of equipment remains limited across the industry. There are no coastal barges currently under construction. The Company does expect more shipyard days in the coastal marine transportation market as compared to 2025.

The Company doesdid expectexperience some near-term cost headwinds in its inland marine transportation operations during the 2026 second quarter from rising fuel costs. Term and affreightment contracts contain fuel escalation clauses or provides for the customer to pay for fuel. Cost escalators and rate recovery mechanisms in the Company’s term contracts, while effective over time in allowing the Company to recover changes in fuel costs, create a delay that will lag near-term fuel cost increases. As a result, periods of rapidly rising fuel prices may temporarily compress margins and operating income until escalation adjustments are fully realized. The Company expectsdid experience that lag to occur during the 2026 second quarter but this should be ultimately realized in subsequent quarters as there is generally a 30 to 120 day delay before term contracts are adjusted for fuel costs. Fuel escalation clauses in term contracts and their effectiveness are discussed in more detail in Liquidity below and Item 1A – Risk Factors found in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

The Company expects stable growth in KDS in 2026 as near-term volatility from supply issues, customers deferring maintenance, and lower overall levels of activity in the oil and gas market are offset by increased orders in the power generation market. In commercial and industrial, the demand outlook in marine repair remains steady while on-highway service and repair remains soft but has shown some recent modest improvement. In power generation, the Company anticipates continued strong growth in orders as data center demand and the increasing need for prime behind the meter and backup power continues to be strong. In oil and gas, the Company expects revenues to be down as the transition from conventional diesel hydraulic fracturing to electric hydraulic fracturing continues to take place. The Company anticipates extended lead times and supply delays for certain original equipment manufacturer (“OEM”) products, especially in the power generation market, to continue throughout 2026. The Company does expect to bewas impacted in the 2026 second quarter by delayed OEM engine deliveries as certain impacted projects will shiftshifted from the 2026 second quarter into the 2026 second half.

On March 17, 2026, the Company purchased 23 inland tank barges with a total capacity of 653,000 barrels, including five specialty barges, and three high horsepower towboats from an undisclosed seller for $95.8 million. The Company paid $81.4 million in cash in March 2026 with the remaining $14.4 million to be paid in the 2026 second quarter whenupon delivery of allremaining vessels has been completed.vessels. The 23 tank barges, including five specialty barges, transport petrochemicals and refined products on the Mississippi River System and Gulf Intracoastal Waterway. The average age of the 23 barges was 19 years.

Inland tank barge utilization levels averaged in the low-90% range during both the 2026 first quarterand second quarters and the low-to-mid-90% range during both the 2025 first quarter.and second quarters. The 2026 and 2025 first quarters were impacted by high winds and heavy fog along the Gulf Coast, ice on the Illinois and Upper Mississippi Rivers and various lock delays. Coastal tank barge utilization levels averaged in the mid-to-high-90% range during the 2026 first quarter and the high-90% range during the 2026 second quarter. Coastal tank barge utilization levels averaged in the mid-to-high-90% range during both the 2025 first and second quarters.

The petrochemical market, which is the Company’s largest market, contributed 47%49% and 48% of KMT revenues for the 2026 second quarter and first quartersix months, respectively, reflecting steady rates, volumes and utilization from Gulf Coast petrochemical plants as compared to the 2025 second quarter and first quarter.six months.

The black oil market, which contributed 27% of KMT revenues for both the 2026 second quarter and first quartersix months reflected stable demand as refinery utilization and production levels of refined petroleum products and fuel oils increased. During the 2026 first quarter,six months, the Company transported crude oil and natural gas condensate produced from major U.S. shale basins along the Gulf Intracoastal Waterway with inland vessels and in the Gulf of America with coastal equipment. Additionally, the Company transported volumes of Utica natural gas condensate downriver from the Mid-Atlantic to the Gulf Coast.

The refined petroleum products market, which contributed 21% and 22% of KMT revenues for the 2026 second quarter and first quartersix months, respectively, reflected stable volumes in the inland market with steady refinery utilization and product levels as compared to the 2025 second quarter and first quarter.six months.

The agricultural chemical market, which contributed 4%3% of KMT revenues for both the 2026 second quarter and first quartersix months reflected stable demand for transportation of both domestically produced and imported products as compared to the 2025 second quarter and first quarter.six months.

For the 2026 firstsecond quarter, inland operations incurred 3,2642,567 delay days, 19%23% fewer than the 4,0293,320 delay days that occurred during the 2025 second quarter. For the 2026 first six months, inland operations incurred 5,831 delay days, 21% fewer than the 7,349 delay days that occurred during the 2025 first quarter.six months. Delay days measure the lost time incurred by a tow (towboat and one or more tank barges) during transit when the tow is stopped due to weather, lock conditions, or other navigational factors. Delay days reflected poor operating conditions due to heavy wind and fog along the Gulf Coast and lock delays during the 2026 and 2025 first quarters.

During both the 2026 second quarter and first quarter,six months, approximately 65% of KMT inland revenues were under term contracts and 35% were spot contract revenues. During both the 2025 second quarter and first quarter,six months, approximately 70% of KMT inland revenues were under term contracts and 30% were spot contract revenues. Inland time charters during both the 2026 second quarter and first quartersix months represented approximately 56%57% of inland revenues under term contracts compared with 61%60% in the 2025 second quarter and first quarter.six months. During the 2026 second quarter and first quarter,six months, approximately 92%93% and 92%, respectively, of KMT coastal revenues were under term contracts and 8%7% and 8%, respectively, were under spot contracts. During both the 2025 second quarter and first quarter,six months, approximately 100% of KMT coastal revenues were under term contracts and none were under spot contracts. Coastal time charters represented approximately 100% of coastal revenues under term contracts during both the 2026 and 2025 second quarter and first quarters.six months. Term contracts have contract terms of 12 months or longer, while spot contracts have contract terms of less than 12 months.

Costs and expenses for the 2026 firstsecond quarter and first six months increased 5%14% and 9%, respectively, compared to the 2025 second quarter and first quarter.six months. Costs of sales and operating expenses for the 2026 firstsecond quarter and first six months increased 3%17% and 10%, respectively, compared with the 2025 second quarter and first quarter.six months. The results for the 2026 second quarter and first quartersix months were driven by higher fuel costs and inflationary cost pressures including wage increases that went into effect on July 1, 2025. Fuel costs were slightly lower in the 2026 first quarter as compared to the 2025 first quarter.

The inland marine transportation fleet operated an average of 284291 towboats during the 2026 firstsecond quarter, of which an average of 7986 were chartered, compared to 291290 during the 2025 firstsecond quarter, of which an average of 7675 were chartered. The Company charters in or releases chartered towboats in an effort to balance horsepower needs with current requirements, taking into account variability in demand or anticipated demand, addition or removal of tank barges from the fleet, chartered towboat availability, and weather or water conditions. The Company has historically used chartered towboats for approximately one-fourth of its horsepower requirements.

During the 2026 firstsecond quarter, inland operations consumed 12.513.0 million gallons of diesel fuel compared to 11.712.8 million gallons consumed during the 2025 firstsecond quarter. The average price per gallon of diesel fuel consumed during the 2026 firstsecond quarter was $2.26$4.23 per gallon compared with $2.57$2.35 per gallon for the 2025 second quarter. During the 2026 first six months, inland operations consumed 25.5 million gallons of diesel fuel compared to 24.5 million gallons consumed during the 2025 first six months. The average price per gallon of diesel fuel consumed during the 2026 first six months was $3.26 per gallon compared with $2.45 per gallon for the 2025 first quarter.six months. Fuel escalation and de-escalation clauses are typically included in term contracts and are designed to rebate fuel costs when prices decline and recover additional fuel costs when fuel prices rise; however, there is generally a 30 to 120 day delay before contracts are adjusted. Spot contracts do not have escalators for fuel.

Selling, general and administrative expenses for the 2026 firstsecond quarter and first six months increased 8%6% and 7%, respectively, compared to the 2025 second quarter and first quarter.six months. The increase in selling, general and administrative expenses for the 2026 second quarter and first quartersix months as compared to the 2025 second quarter and first quartersix months was primarily due to continued inflationary cost pressures, including salary and wage increases that went into effect on July 1, 2025. The 2025 first quarter was impacted by an increase in the provision for credit losses related to a certain customer.

Depreciation and amortization for the 2026 firstsecond quarter and first six months increased 7%8% compared to the 2025 second quarter and first quarter.six months. The increase was primarily due to capital additions during 2025 and the first threesix months of 2026, as well as equipment acquisitions.

KDS revenues for the 2026 firstsecond quarter and first six months increased 12%6% and 9%, respectively, compared with the 2025 second quarter and first quarter.six months. KDS operating income for the 2026 firstsecond quarter and first six months increased 3%8% and 6%, respectively, compared with the 2025 second quarter and first quarter.six months.

In the commercial and industrial market, revenues and operating income increased compared to the 2025 second quarter and first quartersix months due to higher business levels in marine repair. In the power generation market, revenues and operating income increased compared to the 2025 second quarter and first quartersix months due to increased demand for backup, prime power and critical power applications. In the oil and gas market, revenues and operating income decreased compared to the 2025 second quarter and first quarter,six months, impacted by lower levels of conventional oilfield activity which resulted in decreased demand for new transmissions and parts, partially offset by deliveries of electric fracturing equipment.

Costs and expenses for the 2026 firstsecond quarter and first six months increased 13%6% and 9%, respectively, compared with the 2025 second quarter and first quarter.six months. Costs of sales and operating expenses for the 2026 firstsecond quarter and first six months increased 16%7% and 11%, respectively, compared with the 2025 second quarter and first quarter.six months. The increase for the 2026 second quarter and first quartersix months reflected higher deliveries of power generation equipment, partially offset by lower on-highway and conventional oilfield activity.

Selling, general and administrative expenses for the 2026 firstsecond quarter and first six months increased 2%3% and 2%, respectively, compared to the 2025 second quarter and first quarter,six months, reflecting higher business activity levels,levels and inflationary cost pressures, including salary and wage increases that went into effect July 1, 2025.

Depreciation and amortization for the 2026 first quartersix months increased 6%3% compared to the 2025 first quarter.six months. The increase was primarily due to capital additions during 2025 and the first threesix months of 2026, including additions to the equipment rental fleet.

KDS operating income for the 2026 firstsecond quarter and first six months increased 3%8% and 6%, respectively, compared with the 2025 second quarter and first six months. The 2026 second quarter operating margin was 9.9% compared to 9.8% for the 2025 second quarter. The 2026 first quartersix months operating margin was 6.7%8.4% compared to 7.3%8.6% for the 2025 first quarter.six months. The results reflect increased demand in power generation from data centers and prime power customers and higher marine repair activity and deliveries of electric fracturing equipment, partially offset by lower conventional oilfield activity.

General corporate expenses for the 2026 first quartersix months increased compared to the 2025 first quartersix months, driven primarily dueby toincreases higherin insurance costs, higher professional feesfees, and higher incentive compensation.

The Company reported a net gain on disposition of assets of $1.5$0.7 million and $0.1$1.7 million for the 2026 and 2025 second quarter, respectively. The Company reported a net gain on disposition of assets of $2.2 million and $1.8 million for the 2026 and 2025 first quarter,six months, respectively. The net gains were primarily from sales of marine transportation equipment and the sale of a KDS facility in the 2026 first quarter.

Other income for the 2026 and 2025 firstsecond quarters includes income of $6.2$6.0 million and $4.8$4.3 million, respectively, for all components of net benefit costs except the service cost component related to the Company’s defined benefit plans. Other income for the 2026 and 2025 first six months includes income of $12.2 million and $9.1 million, respectively, for all components of net benefit costs except the service cost component related to the Company’s defined benefit plans.

Interest expense for the 2026 firstsecond quarter and first six months decreased 3%14% and 9%, respectively, compared with the 2025 second quarter and first quarter,six months, primarily due to lower average debt outstanding and a lower average interest rate in the 2026 second quarter and first quarter.six months. Interest expense excludes capitalized interest for the 2026 second quarter and first quartersix months of $0.2 million.million Thereand was$0.4 nomillion, respectively. Interest expense excludes capitalized interest excludedfor from interest expense duringboth the 2025 second quarter and first quarter.six months of $0.5 million.

Current assets as of MarchJune 31,30, 2026 increased 6%15% compared with December 31, 2025. Trade accounts receivable increased 13%36% primarily due to higher business activity levels in both KMT and KDS. Inventories – net increased 5% primarily due to the impact of higher business activity levels and the impact of supply delays in KDS resulting in the buildup of inventory for mainly power generation projects that are scheduled to be delivered later in 2026.2026 and into 2027. Prepaid expenses and other current assets increased 8%4% primarily due to higher prepaid fuel as a result of an increase in the price of diesel fuel.

Property and equipment, net of accumulated depreciation, at MarchJune 31,30, 2026 increased 2% compared with December 31, 2025. The increase reflected $50.5$123.4 million of capital additions (including an increase in accrued capital expenditures of $2.3$3.6 million) and $81.4$95.8 million of equipment acquisitions in the 2026 first threesix months, partially offset by $66.0$134.7 million of depreciation expense and $1.1$5.1 million of property disposals more fully described under Cash Flow and Capital Expenditures below.

Operating lease right-of-use assets as of MarchJune 31,30, 2026 decreased 7%13% compared with December 31, 2025, primarily due to lease amortization expense, partially offset by new leases acquired in the 2026 first threesix months.

Other intangibles, net, as of MarchJune 31,30, 2026 decreased 7%13% compared with December 31, 2025, due to amortization during the 2026 first quarter.six months.

Current liabilities as of MarchJune 31,30, 2026 increased 2%4% compared with December 31, 2025. Accounts payable increased 20%14% primarily due to higher business activity levels and the timing of inventory purchases and shipyard payments. Accrued liabilities decreased 14%9% primarily from payment during the 2026 first threesix months of employee incentive compensation accrued during 2025. Deferred revenues increased 14%, primarily due to deposits on equipment expected to be shipped later in 2026 and into 2027 in KDS.

Long-term debt, net – less current portion, as of MarchJune 31,30, 2026 increased 7%13% compared with December 31, 2025, primarily reflecting increased borrowings under the 2031 Revolving Credit Facility.

Operating lease liabilities – less current portion, as of MarchJune 31,30, 2026 decreased 6%11% compared with December 31, 2025, primarily due to lease payments made, partially offset by new leases acquired and liability accretion.

Total equity as of MarchJune 31,30, 2026 increased 1%2% compared with December 31, 2025. Net earnings attributable to Kirby of $81.2$170.9 million, amortization of share-based compensation of $10.1$12.4 million, and stock option exercises of $4.3 million were partially offset by treasury stock purchases of $52.7$112.4 million and tax withholdings of $6.7 million on RSU vestings.

Variable interest rate of 4.7%4.6% at MarchJune 31,30, 2026 and 5.0% at December 31, 2025.

Borrowings under the 2031 Credit Agreement bear interest at a rate per annum equal to, at the Company’s option, either a SOFR or a base rate, plus an interest rate margin which ranges from 87.5 to 150 basis points for SOFR loans and 0 to 50 basis points for base rate loans based on the Company’s credit rating. The commitment fee on the unused available credit ranges from 7 to 20 basis points based on the Company’s credit rating. The Maturity Date may be extended for up to two additional one-year periods with the consent of the Company and lenders holding at least 50 percent of the commitments under the 2031 Credit Agreement. The 2031 Credit Agreement contains customary provisions regarding permitted uses, events of default, and covenants substantively similar to those in the 2027 Credit Agreement, including the maintenance of an interest coverage ratio of no less than 2.5 to 1.0 and a debt to capitalization of no more than or equal to 60 percent (with all calculations based on definitions contained in the 2031 Credit Agreement). Outstanding letters of credit under the 2031 Revolving Credit Facility were $6,000 and available borrowing capacity was $570.0$515.0 million as of MarchJune 31,30, 2026.

The Company has a $15$20 million Credit Line with Bank of America for short-term liquidity needs and letters of credit, with a maturity date of June 30, 2026.2028. Outstanding letters of credit under the Credit Line were $7.6$8.0 million and available borrowing capacity was $7.4$12.0 million as of MarchJune 31,30, 2026.

As of MarchJune 31,30, 2026, the Company was in compliance with all covenants under its debt instruments. For additional information about the Company’s debt instruments, see Note 5, Long-Term Debt, of the Notes to Condensed Financial Statements (Unaudited) as well as Note 5, Long-Term Debt, in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

The Company generated positive operating cash flows during the 2026 first quartersix months with net cash provided by operating activities of $97.7$169.9 million compared with $36.5$130.5 million for the 2025 first quarter,six months, a 167%30% increase. The increase in operating cash flows was mainly due to increased net earnings and the timing of accounts payable payments and aincome decreasetax in inventories in 2026,payments, partially offset by the timing of accounts receivable collections. The increase in net earnings was driven by higher term contract pricing in the KMT coastal market and improved KDS business activity levels in the commercial and industrial and power generation markets. During the 2026 and 2025 first quarter,six months, the Company generated cash of $2.7$6.7 million and $0.1$11.6 million, respectively, from proceeds from the disposition of assets, and $4.3 million and $0.3 million, respectively, from proceeds from the exercise of stock options.