Thank you for standing by. Welcome to the Kirby Corporation 2026 Third 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'll need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Donny Chia, Vice President of Finance and Investor Relations. Please go ahead.

Good morning and thank you for joining the Kirby Corporation 2026 third 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 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 judgments 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 Donnie and good morning everyone. Earlier today we announced record third quarter earnings per share of $2.09, up 27% year over year. Our results reflected strong continued momentum across both businesses and solid execution throughout the organization. In marine transportation, strong barge utilization and favorable pricing trends supported performance during the quarter. In distribution and services, results benefited from robust demand in power generation and strong growth on behind-the-meter power solutions. Overall, the company executed well during the quarter and delivered solid financial and operating results, reflecting our continued focus on safety and operational excellence. In inland marine, market fundamentals remained constructive during the quarter. Strong refinery operating rates healthy petrochemical activity, and limited new industry capacity supported barge utilization in the low 90% range. Spot market rates improved sequentially in the low to mid single digit range, while term contract renewals increased in the low single digit range compared with the prior year. Increased levels of Venezuelan crude imports resulted in heavier refinery feed slate and more byproduct moves. However, rising fuel costs remained a near-term headwind as higher costs were only partially mitigated by cost escalators and rate recovery mechanisms during the quarter. The inland business delivered margins in the 20% range, driven by a combination of steady demand, disciplined execution and limited industry capacity additions. In Coastal Marine, customer demand remained stable with barge utilization in the high 90% range and third quarter coastal revenues increased 3% year-over-year while operating margins were in the mid-teens range. There was only one contract renewal in the third quarter, which increased in the low double-digit range. Turning to distribution and services, Our performance reflected favorable market conditions for power generation and strong execution by our commercial and operations team. Segment revenues increased 6% year over year driven by strong demand for behind the meter and backup power solutions in a healthy environment for commercial and industrial. For the quarter, operating margins were in the low double digits. and up 200 basis points sequentially, reflecting the growing share of behind the meter power solutions in our power generation business, as well as operational improvements throughout the segment. Overall, the segment delivered solid results across the portfolio, demonstrating the strength of the company's positions across multiple end markets. In summary, Kirby delivered a strong quarter, underscoring the strength of our portfolio and the disciplined approach that we bring to our operations every day. In marine transportation, inland delivered strong revenue growth year over year, and coastal utilization remained high. In distribution and services, power generation remained a key growth driver, commercial industrial activity performed well, and oil and gas remained stable. 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'll turn it over to Raj to walk through the segment results, balance sheet, and capital allocation.

Raj Kumar Thank you, David, and good morning, everyone. In the third quarter of 2026, marine transportation segment revenues were $569 million and operating income was $112 million with an operating margin of 20%. Compared to the third quarter of 2025, total and many others. In the first quarter of 2020, marine transportation revenues increased 84 million or 17% while operating income increased 23 million or 26%. The operating margin improvement came from strong utilization and improved pricing despite continuing inflationary pressures. Compared to the second quarter of 2026, total marine revenues increased 6% while operating income increased 27%. Inland contributed 81% of marine transportation segment revenue with average barge utilization in the low 90% range for the quarter. Long-term contracts, or those with a term of one year or longer, contributed approximately 65% of inland revenue with 56% from time charters and 44% from contracts of a freightman. Improved market conditions resulted in average spot market rates increasing in the low to mid single-digit range sequentially and increasing in the mid single-digit range year-over-year. Term contracts that renewed during the third quarter increased in the low single-digit range year-over-year. Compared to the third quarter of 2025, inland revenues increased 21% while operating margins were in the 20% range. Moving to the coastal business. Coastal represented 19% of revenues for the marine transportation segment with average barge utilization in the high 90% range in line with the second quarter of 2026 and the third quarter of 2025. For the quarter, the percentage of coastal revenue under term contracts was approximately 95% of which approximately 100% were time charters. Coastal had one term contract renewal during the third quarter which increased in the low double-digit range year over year. Coastal revenues increased 3% year over year with operating margins in the mid-teens range driven by fewer shipyard days compared to the second quarter of 2026. With respect to our tank barge fleet for both the inland and coastal businesses, we have provided a reconciliation of the changes during the quarter as well as projections for the full year. This is included in our earnings call presentation posted on our website. At the end of the third quarter, the inland fleet had 1,148 barges representing 25.7 million barrels of capacity and is expected to be flat in the fourth quarter of 2026. Coastal Marine is expected to remain unchanged from the third quarter of 2026. Now I will review the performance of the distribution and services segment. Revenue for the third quarter of 2026 was $408 million. with operating income of $48 million and operating margin of 12%. Compared to the third quarter of 2025, the KDS segment revenues increased by $22 million or 6% with operating income increasing by $6 million or 13%. This growth was driven primarily by continued strength in the power generation business, especially in our behind-the-meter applications and higher marine repair activity. Compared to the second quarter of 2026, revenue increased by 23 million or 6% and operating income increased by 10 million or 27%, reflecting improved activity levels, favorable mix and stronger performance across several end markets. Moving through the segment in more detail, in power generation, we continue to see strong demand for behind the meter and backup power solutions. Our backlog increasingly reflects a greater share of behind-the-meter power solutions, which will be a tailwind for margins going forward. However, OEM engine availability remains constrained and limits the rate at which we can convert backlog into revenue. Overall, power generation revenues increased 8% year-over-year with operating margins in the low double-digit range. Our generation represented approximately 46% of total segment revenues. In commercial and industrial, strong marine repair activity contributed to an 8% year-over-year increase in revenues and a 23% increase in operating income. The business represented approximately 44% of segment revenues and generated operating margins in the low double digit range. In oil and gas, activity remained stable during the quarter. Revenues were flat sequentially and operating income increased by 54% sequentially, driven by higher margin parts and service activity and ongoing cost management efforts. Oil and gas represented approximately 10% of segment revenues and generated operating margins in the low double-digit range. Now I'll move on to the balance sheet. As of quarter end, we had $38 million of cash and a total debt of $1.07 billion with a debt to capitalization ratio of 23.7%. We ended the third quarter with $530 million of available liquidity. During the quarter, net cash provided by operating activities was $143.5 million and capital expenditures was $69.5 million, resulting in free cash flow of $74 million. Working capital remained elevated during the quarter, reflecting higher revenues in both segments, timing of collections, and higher fuel-related receivables in marine transportation. We expect these working capital requirements to normalize during the remainder of the year, supporting meaningful improvement in free cash flow in Q4. In the third quarter, Kirby entered into an agreement to acquire certain inland marine assets from undisclosed sellers for approximately $115 million. The acquisition includes nine inland towboats, 14 inland tank barges, nine bile thrusters, and the Rockport, Texas, fleeting operation. The acquired assets are expected to enhance Kirby's inland marine network in South Texas and further highlight our focus and discipline acquisition strategy. With respect to capital expenditures, we continue to expect full year capital spending to range between $220 to $260 million. Approximately $170 to $210 million is associated with marine maintenance capital, including improvements to existing inland and coastal marine equipment and facilities. Approximately $65 million is associated with growth capital spending across both businesses. for the full year, we remain on track to generate cash flow from operations of 575 million to 675 million. Our capital allocation strategy remains focused on maximizing long-term shareholder value, balancing discipline investment in our businesses with consistent return of capital to shareholders. In the third quarter of 2026, we returned 112 million to shareholders through share repurchases at an average price of $137. These repurchases reflect our confidence in the long-term earnings power of the business and our view that, at recent levels, share repurchases represent an attractive use of free cash flow. Having said that, we continue to prioritize and evaluate acquisition opportunities within our core businesses, particularly in marine. Thank you, Raj.

As we look at the balance of the year, we remain encouraged by the direction of the businesses. Across our portfolio, we are seeing the continuation of many of the same tailwinds that supported our third quarter results, including healthy demand, solid asset utilization, and continued inland pricing improvement. While the broader operating environment remains dynamic, we believe our market-leading businesses and disciplined approach position us well in the fourth quarter of 26 and for a good 2027. As a result, we have narrowed our 2026 full year earnings growth guidance to 10 to 15% and currently expect results toward the upper end of that range. Our confidence is supported by continued inland pricing momentum, the expected recovery of fuel cost timing impacts, Thank you. Thank you. Thank you. We believe the setup remains constructive as additional contracts renew in the seasonally heavy fourth quarter renewal period. Overall, inland revenues are expected to grow in the low double-digit range with operating margins in the high teens to low 20% range for the full year. In coastal marine, underlying market conditions remain supportive with healthy customer demand and strong barge utilization. Overall, revenues are expected to increase in the mid to high single-digit range for the full year, with operating margins in the mid-teens range. The margin is reflective of elevated shipyard activity in the fourth quarter and the market-specific pricing dynamics we mentioned last quarter, as well as ongoing cost pressures. In distribution and services, strengthened power generation and marine repair is expected to continue driving segment results. In PowerGen, customer demand remains exceptionally strong, particularly for behind-the-meter power solutions, serving data centers and other industrial applications. While OEM engine availability continues to affect the timing of customer deliveries, our backlog and customer conversations continue to support a strong multi-year outlook. Importantly, Growth in the behind-the-meter power application that operate continuously creates longer-term aftermarket parts and service opportunities as our growing installed base continues to expand. Within commercial and industrial, marine repair demand is expected to remain healthy while on-highway activity remains constrained. In oil and gas, activity is expected to remain stable, subject to changes in the market environment. Overall, we expect segment revenues to increase in the high single digit range for the full year with operating margins in the high single digit range. To conclude, we delivered solid third quarter results and remain well positioned for the remainder of the year. Marine transportation fundamentals remain favorable, supported by strong utilization, improving inland pricing, and limited new capacity. In distribution and services, power generation continues to be a key growth driver while commercial and industrial activity remains healthy. Supported by our market-leading positions, enhanced service capabilities, fleet efficiency and disciplined approach, we remain confident in our outlook and our ability to deliver our narrowed EPS growth guidance range. Operator, this concludes our prepared remarks. Christian, Raj, and I are now ready to take questions.

As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. In the interest of time, we ask that you please lend yourself to one question and one follow-up. Please stand by while we compile the Q&A roster. Our first question comes from Tomo Sato with JP Morgan. Your line is open.

Good morning, everyone.

Hey, good morning.

Good morning, Tomo.

Hey, morning, Tomo.

Thanks for having us and congrats on a strong quarter. Maybe starting with Maureen, how are you thinking about pricing over the next 12 months and how sustainable is that pricing power over the medium term, please?

Yeah, sure, Tomo. This is David. I'll start and turn it over to Christian for some more details. Look, in the third quarter, we had low single to mid single digit spot pricing increases, but it was a small portfolio that repriced in the third quarter. Term pricing was up low single digits, but importantly, momentum's building into the fourth quarter here, and we think the pricing should be north of what we saw in the third quarter, which is really important because it sets up... for a good 2027. And longer term, we still see supply and demand in really good balance right now. Nobody's really building new equipment, and the retirements continue. So we don't see much in terms of net new ads to the industry fleet over the next several years. Let me turn it over to Christian, who's got a lot more color on particularly the fourth quarter renewal season that's ongoing right now.

Yeah, thank you, David. I think you characterized it well as we have a lot of momentum going into the fourth quarter and going into next year. It was a very small sample set in Q3, single-digit term contracts that actually renewed. We will definitely see stronger momentum, you know, improvement in everything, all things inland. Supply remains tight. There's only 65-ish barges being delivered this year. It feels like most of that's replacement capacity. Our utilization remains high, low 90% range to exit the quarter. We actually touched 95-plus percent utility a couple times in the last few weeks. Refinery utilization is near record levels. The spread between spot and term pricing when you bake all this together remains about 10 to 15 percent, and I will tell you it's on the higher end of that, on the 15 percent range. And when spot is outpacing term at those levels, we really get the opportunity to get some good bites at the term pricing. Chemical volumes are also improving, supported by global rationalization. The Gulf Coast Pad 3 chemical plants are busy. Middle East infrastructure is taking a lot of damage. A lot of capital of discipline out there from our competitors. New build econs remain a challenge. We don't see supply growing in the near term, as David said. And again, to restate it, contract pricing continues to improve. And I'll stop there.

Thank you, David and Christian. Follow-up on KDS. As power generation scales, how quickly can service and parts become a more meaningful part of the mix? And how much margin upside could that create over time, please?

Yeah, no, great question. Again, Christian, I'll tag team this here a bit. Look, the pace of orders has been great, and particularly for behind the meter or bring your own power, which is what everybody's talking about now, because, you know, with the NIMBY or not in my backyard and the concerns that a lot of the data center pushback is talking about is about power. So they're... This bring your own power move is real. As we look at our order inbound and even our backlog right now, which is probably two-thirds behind the meter of power, bring your own power. That's really good for us because those are natural gas systems. They're complex. They have a lot of what we call balance of plant equipment, which we're the OEM for. We don't make the engine, but we put everything around the engine. whether it's a cooling system, an air intake system, sound attenuation system, as well as power distribution systems that link it all together. All that's our equipment, and we're the OEM, and importantly as the OEM, we end up getting the service and parts there. Now, Christian will describe a little more on how long that takes to start converting services.

Yeah, thank you, David. And Tomo, thanks for the question. We are highly focused on the aftermarket opportunities here. Our data center customers, our powers of service customers, they demand uptime. They demand turnkey solutions. The aftermarket opportunity will provide a nice stability for us after this capex cycle starts to fade a little bit or slow down a little bit. We think the aftermarket opportunity can exceed the original product value. and so we are aggressively going after that. We've built a new part of our team led by Chad Jost who leads our power service team to chase this aftermarket opportunity vigorously. As David said, we have the right to win on a lot of the behind the meter equipment that we're producing and we're highly focused on it, highly excited about it. We think in three to four years you'll begin to see the maintenance cycle. We describe it internally as the new car effect you know you buy a new car it works great it smells great it operates smoothly in about year four mechanic down the streets licking his chops you know we see that big ramp up in aftermarket about you know three four years out you know it'll be a hundred million plus dollar business for us you know again don't hold me to that but that's what we're scoping it out and budgeting it out to be today as we build the team and build techs very excited about the aftermarket opportunity.

Thank you very much.

I would just add, you asked about margins. Obviously, aftermarket has higher margins. I think everybody realizes that. Behind the meter, bring your own power equipment has higher margin than just backup diesel. The margin profile should continue to improve. Just a little caution on quarterly progression. We do have lumpiness in our in both manufacturing and shipments, and that swings around the margin a bit quarter to quarter. So really the focus on margin should be on an annual basis. What's the average annual? Our view is that's going to improve and continue. We'll be in the double-digit margin range in a year or two, if not before.

Thanks again.

Thanks, Tom. Thanks, Tom.

Thank you. Our next question comes from Bascom Majors with Stevens. Your line is open.

Hey, guys. This is Reed C on for Bascom. Hey, Reed. If we could start on the marine side, just some wording in the release around coastal and kind of on the call as well. If we look at the margins, I understand there's some heightened shipyards and there's some pricing dynamics. One, if you could give us an update on the pricing dynamics. with those specific size ships that you called out last quarter. And then you also called out some, I believe it was ongoing cost pressures. Is that just the shipyards or are there some other dynamics that we should be aware of?

Yeah, we'll handle this together again, Reid. Look, the fourth quarter, we've got some larger units coming into the shipyard and As you've heard us describe before, these large units, they have high day rates, and when they're out of service, we still have all the cost that goes with it, and we just don't have the revenue. But that's just part of the business. You saw our margin in the second quarter was lower than what we saw in the third quarter. The fourth quarter will be more like the second quarter in terms of margin. you know, principally because of the shipyard cadence. That's just a normal part of the business. I'll let Christian talk about the rest of the cost structure and the contracts.

Thank you, David. Thank you, Baskin. Yeah, you asked about, you know, the market dynamic piece of that that we alluded to and spoke about last quarter. You do see a bit of that flow through of the net effect of what was European barrels that import into the Northeast and are smaller barges, our 80s and 100s, get the opportunity to move those European barrels and redistribute them on the East Coast. With the low amounts of European imported refined products, we have seen that impact those margins on those contracts that service that piece. And so what you see now is just a little bit of that flow through that we talked about last quarter as those 80s and 100s felt a little bit of the pricing pressure The good news is the bigger units, the thermal oil units, the chemical units, you know, those other pieces of the business we are very, very bullish about. There is a high demand for them. The rates are very good. And we do see improving rates as you saw the single contract that renewed this quarter in the, I think it was in the double-digit range. You also asked about, you know, cost pressures. You know, inflation is real. We see it across various buckets in the marine companies. In general, skilled labor, not just for us, but even in the DNS companies when it comes to engineers and others, there's a lot of pressure on skilled labor, particularly around the mariner and the inflation there. And the other piece is the price of steel. A lot of the other inputs that go into a major yard period or shipyard period, you see inflationary pressures around those, and maybe those are eating into the margin a little bit here.

That makes a lot of sense. And then if I could just ask on PowerGen as well, could you provide an update on what that backlog looks like in terms of on a quarter-over-quarter basis, what it looks like versus 1Q? And when we should start to see some backlog harvesting or how much that is going on right now? Just any color there would be helpful.

Sure. I think in the first quarter I said our backlog was... Thank you very much. up and down in the daily news, but I would just tell you the demand is still there. It's robust. Everybody needs power. If you're going to build a data center, particularly with the political pressure nowadays that you're seeing across the United States, they're calling it bring your own power. If you're going to build a data center, you better bring your own power, which is There's music to our ears, frankly. With the low cost of natural gas, that's perfect for our natural gas recept systems that we build. We're excited about it, Reid. We don't want to really get into telling our backlog every quarter because you guys know what that game's like, but we're trying to give you direction.

Makes sense. We appreciate that. If I could sneak in a bigger picture one just on inland, you've had some demand headwinds in the past year or more. Can you talk about some of what you expect on the come in terms of demand, like particularly on the chem side, which we saw struggle a little more last year?

Yeah, again, Christian and I, Christian can give you a lot more detail than I can, but you know, that's That third quarter of last year, the feedstock slate got really light. There was not a lot of heavy coming in. Part of that was tariff-driven. Part of it was just some of the global political dynamics. But now that Venezuelan crude is coming back in, the feedstock slate is heavy. Other heavy feedstocks are getting discounted because of the competition from Venezuelan. which is really good for our refinery customers. Similarly, in the chemical side, we've seen some strength. I don't know if Christian can give you a lot more detail.

Yeah, no, I think when you compound record refinery utilization with what's finally for us, we're beginning to see some strengthening chemical markets, particularly in the Gulf of America that we service, in part driven by global rationalization I think you're finally seeing the European less efficient, you know, PE and chemical producers, they're closing the doors on some of those less efficient plants. You've seen the Middle East infrastructure taking a lot of damage, frankly, in the conflict over there. And then you just have the natural competitiveness of Pad 3 with its proximity to cheap natural gas and its feedstock advantage. I think when you compound all those together, we're beginning to see our chemical customers more optimistic. We're beginning to see the opportunity to move some pricing on the chemical side. And in general, chemical volumes are improving. We definitely see that. And so when you compound that with record refinery utilization, hey, that's a great cake to bake over here at Kirby.

Great to hear. Thanks for taking my questions, guys.

Thanks, Reed.

Thank you. Our next question comes from Scott Group with Wolf Research. Your line is open.

Hey, good morning, guys. This is Ivan Yee on for Scott. Thanks for taking my questions. First on margins, both inland and coastal margins seem to be down this year. Can margins in both segments start growing again in 2027? Thank you.

Yeah, the short answer is absolutely. We just talked about the weakness we saw in 2025. That had set up the fourth quarter when that heavy term contract renewals came in, and that put some headwind on margins. We are definitely crawling out of that hole and making real progress now. Inland margins were in the 20% range this quarter. As you heard Christian describe the fourth quarter renewal cycle, it is going to be really strong. So margins should definitely improve from here.

Great, thank you. And then you seem bullish on pricing next year, but what about the cadence of costs? Can the price-cost spread accelerate from 26 to 27, especially if fuel prices start moderating next year? Just want to get an update on the cost side as well. Thank you.

Yeah, we should have real price increases over inflation here. Fuel has been a headwind, as I'm sure everybody's aware of. Anybody that's using diesel nowadays is probably talking about that headwind. We work really hard, Christian and his team, make sure we have fuel adjustment clauses in all our contracts. But there's a lag. Some of them have a 120-day lag. Others are very short. We saw a pretty big headwind in the second quarter on fuel. We thought we'd recover it all in the third, but fuel did another tick up. I think we got north of $4 a gallon. There's a little bit of a headwind in our margins on fuel this quarter as well. Assuming fuel doesn't take another leg up, that should start to roll through here as we as all our contract clauses adjust here in the fourth quarter. Some of that will roll into the first, but that fuel headwind should mitigate. But fuel moves around. Our goal, again, with our customers is to not take any risk on fuel or make any money on fuel. They're best able to bear that. In terms of other inflation, you heard Christian talk about the mariners and mariner inflation. Wage inflation for any skilled worker these days is real. And then steel is definitely a headwind. We use a lot of steel. All our boats and barges use steel. And even on the DNS side, there's a heavy steel component. That said, again, we think pricing will definitely be north of The good news is some of the other inflationary items that we had seen over the years has mitigated some, but it's still real, but the upshot will be over inflation in terms of rate adjustments.

Thank you, guys.

Thanks.

Thank you. Our next question comes from Ken Hexter with Bank of America. Your line is now open.

Hey, Dave, Raj, and team, good morning. This is Adam Roszkowski on for Ken Hexter. Maybe just into the 4Q repricing season, could you just remind us what percentage of the book reprices in 4Q? And maybe just clarifying, you had noted inland term renewals were up low single digits in 3Q. Is that above the inflationary pressures you are seeing? Was that behind? It sounds like you expect the price cost to get better into next year. So just thoughts there.

Usually the fourth quarter is probably 35% to 40% of the portfolio. Third quarter was, as you heard Christian mention, a handful of contracts, so it was low. But it was in line with inflation, maybe a little better than inflation. But I would tell you, Thank you for joining us. you know as demand continues to grow and you know demand generally grows with GDP right now obviously with what's going on in the refinery world in terms of refined products globally you know we're very busy but if new equipment is going to get built prices have to go up in a meaningful way so it's a good backdrop for the next three to five years for sure and We're pretty excited about it. I know Ken has asked in the past about peak margins. We're going to, in my view, with this cycle, we'll be setting new peak margin records. It may take a little bit, but this is set up for a good long run.

Thanks for the call out there. And then just last one, following the recent or upcoming Inland Asset Acquisition. Are you seeing more opportunities like this from smaller operators or private fleets?

Yeah, and it's not just the smaller operators as well. I mean, we're probably in more active discussions than we've been in a long time. But look, we are very disciplined. We don't overpay. We stay disciplined. We always look at everything on a DCF point, and acquisitions are hard to predict. There's a bid-off or spread process, but we stay disciplined. The good news is there's enough conversations happening that we're excited about, and this is just another little tuck-in that Christian was able to get done. We don't talk about it, but this had a big fleeting operation, which is really important for our customer service. These fleets, we don't talk about them much, but they had tremendous customer service value, and that was the key with this one acquisition. We got some great equipment, but it's also that fleet that really can

can make a big difference. I don't know if you want to add anything, Christian. No, that was well said. The acquisition is great. Modern fleet, good mariners, well-run company. As David mentioned, the infrastructure in Corpus Christi area is very strategic, 65 acres of fleeting, ability to fuel our vessels, ability to get potable water. We've got craneage to do topside repairs. It checks a lot of boxes. Additionally, this was unique in that it's a fleet that operated with bow thrusters, which adds to the efficiency of unit tows operating on the west end, particularly in the high winds that you see down there. All in all, a great acquisition that we're very excited about. If any of that new team is listening, welcome to Kirby.

Thanks for the time.

Thanks, Evan.

Thank you. Our next question comes from Ben Moore with Citi. Your line is open.

Hi, good morning. Thanks, David, Christian, Raj, and Donnie for taking the question. Congrats on the beat and raise. I wanted to ask a question maybe to get your thoughts on timing. I see that you raise your inland revenue growth to low double digits from the mid on some of the key drivers. Great to see. It looks like there's a pretty good long tail if you combine each of these drivers that I think we've talked about in the past. The Venezuela imports, Chevron this past quarter in a public forum estimates lasting around 10 to 15 years for the Venezuela heavy coming in. You've got Iran where even if the war ends, We could be another several quarters or a couple of years of benefit for you in crack spread widening beyond the eventual end of the war. You've got Calcasieu that benefited 3Q and 4Q, maintenance bump late 27, early 28, and then kind of beyond all this, the risk of returning to the chems recession. Just wanted to get your thoughts on sort of what I've laid out there in timing. Would you agree? Would you adjust some of these numbers? It does seem like the long tail is very supportive.

You know, I think you summarized it really well. We've got some really good tailwinds here. We're very excited about where we are in this cycle. It almost feels like a super cycle here. Everything you mentioned is true. did help a little bit, but I will tell you on Calcasieu in particular, the Corps of Engineers managed that very well. We didn't see the industry backup that we normally see. So with our utilization, as sporty as it is, it could have been even tighter with Calcasieu, but they managed it well. Those short-term lock disruptions and weather disruptions are going to happen but systemically the stuff you outlined is pretty bullish for us. We know a maintenance cycle is coming in 28. It'll start, you know, we'll see it with our fleet and then the whole industry fleet and it'll be significant again. We see our refinery customers, look, the U.S. refinery complex is the best in the world. It is the most efficient. They are running flat out too and Given what's in Iran, and we didn't, I don't know if you mentioned Russia, but Russia-Ukraine situation is not good either. So that doesn't look like it's going to change in the near term for sure. There's some talk of peace with Russia and Ukraine, but that could be midterm election driven. So we'll see. We're very excited about the outlook here for the marine companies. Not even to mention the distribution services, PowerGen stuff as well. But it's a good time for Kirby. We're very excited about the outlook for the next several years.

Yeah, I think you described all those macro items very, very well, Ben. I think when you compound that with the industry capital discipline that we see now post-COVID, you know, really what could derail all those great things you mentioned. You know, it would be the undisciplined overbuilding of the market, and we don't see that type of behavior at all. And the pricing of inland tank barges prevent that. You know, you're looking at $4.6, $4.7 million for a clean 30, $5.86 million for black oil, $2.5 million for a 10,000. So you just don't see that undisciplined overbuilding risk in the short run, longer run. So combined with your macro description, things look really good. Thanks, Ben.

Great, really, really appreciate that, Dave and Christian. My next question, I wanted to get a sense of sort of maybe discerning between benefiting from mix versus core rate. You've mentioned the low single digits, low mid single digits contracting spot gains in inland this quarter from some of the small contracts renewed in the quarter. and so when we look back at 2022 when Russia invaded Ukraine, we saw some very, very strong contract and spot rates for you guys during that time. as we calculate our model looking at your implied inland revenue per utilized barge per day that we estimate looks like it was up 7.5% 2Q and it's accelerated to up 8% here in 3Q even though your contract spot rate kind of mixes low single digits or so. Would you say you're seeing good strength and mix as well as some rate gain, maybe more in mix versus rate gain, kind of versus what you experienced in 2022?

It's a complicated question. The interesting thing is these are portfolio of contracts. We have literally hundreds of contracts and a lot depend on when they were last renewed. So it's Difficult to answer your question. I think in terms of revenue per ton mile maybe is what you're looking at. I would just be careful because ton miles move around a lot depending on what moves we're doing. So just to give you an example, if it's crude oil from West Virginia goes all the way down the Ohio to the Mississippi down to the Gulf Coast refineries, those are a lot of ton miles. May not be as much revenue as, say, A chemical cross-channel move here in the Houston Ship Channel, which would be very low revenue, or excuse me, high revenue but low ton miles. So I'm not sure what you're looking at. You know, I think maybe Donnie and Raj can follow up with you and make sure we understand fully what you're looking at.

I think, Ben, I know I'll just add and just say that, you know, as we look into Q4, you Everything is set up really nicely for the marine companies. You know, inland marine, you know, as you know, and we've talked about this, you know, 35 to 40% of our term book gets renewed in Q4. And given the dynamics that we're seeing with, you know, the supply situation being in such a favorable position, we're set up to have a really good renewal cycle. I'll let Christian add some color to that because I think it's important for that message to come across.

No, we're very bullish in finishing our Q4 renewals. John Hallmark and the commercial team are doing a great job. We've already had some nice wins as we sit here today at the end of October, and we look forward to continuing that momentum. I mean, momentum is the word I would use. It's a mix of high utility, and you combine that with the winter weather that always helps tighten things up. That'll add to the ability to, you know, push rates here in the fourth quarter. But we feel very positive about it, very encouraged. We're in a great spot, and momentum is the word.

And, you know, I'll just add on Q3. As we entered Q3, I mean, we saw fuel was actually quite favorable. And as Q3 progressed, fuel started to be a headwind for us, right? and even in that situation, given the few contracts that we renewed and these were not a large number of contracts that we renewed from a term perspective in Q3, we still got that price increase and it helped mitigate a lot of that fuel impact as you can see in the results.

Really appreciate the insights as always. Thank you.

Thanks, Ben.

Thank you. As a reminder, to ask a question, please press star 1-1 on your telephone. Again, that is star 1-1 to ask a question. Our next question comes from Greg Wasikowski with Weber Research. Your line is open.

Hey, good morning, everyone. How are you doing? Hey, Greg. Good, yeah. Thanks. I'm just going to combine mine into one, so a two-parter here, going back to chemicals. Firstly, what's driving some of that strength that you're seeing? Last year, you talked about some European plants starting to shut down. Are we starting to see some of the effects of that now? And then secondly, can we extend some of that optimism to the 10K market? Or any other notable differences that you're seeing between the 10K and 30K market, either on the demand or supply side?

Yeah, thank you, Greg. Yes, you are seeing the rationalization of the chemical capacity in Europe closing and shutting down combined with the U.S. Gulf chemical manufacturers filling that gap globally. And so when we talk to our chemical customers, their pricing has improved, their exports have improved, and they're exporting to markets, you know, by Middle East Chemical Manufacturing Capacity. So the combination of the damage from the war in the Middle East, Gulf Coast being super competitive with cheap natural gas and being the highest tech best assets in the manufacturing space and the global rationalization of capacity have all compounded to strengthen our chemical book probably some room to go still to get back to sort of peak chemical demand, but we feel really good about it. It's definitely stronger than it was a year ago, and I'm very glad you asked about the 10K market. In recent weeks, we have seen our 10,000-barrel barge utility reach, I'm going to say, near record levels. We're very busy. The 10Ks are nearly fully deployed. The team is doing a great job of marketing those barges. We've won some new contracts and grown our book. All in all, we've just got a lot of momentum there. It's nice to see the chemical volumes back. Again, when you combine that with record refinery utilization, you begin to have the perfect storm for Kirby.

Yeah, that's great to hear. I appreciate the color, guys. I'll turn it over.

Thanks, Greg. Thank you. Our next question comes from Ben Moore with Citi. Your line is open.

Hey, guys. Thanks for bringing me back in. Just one last question on PowerGen. Revenue is up 8% this quarter, and you mentioned OEM availability being constrained still, but your backlog growth is still very strong. You mentioned in the past up 10% to 20% is sort of your longer-term outlook for PowerGen revenue growth. How do you see that trending into that? Do you maintain that outlook? Or are we maybe kind of looking at a lower end of that outlook given sort of OEM capacity build constraints? So why don't I just get your thoughts on that, please?

No, I would say we're going to maintain that outlook. You know, 10% to 20% growth, I mean, that's a big range. So, yeah, we'll maintain that. I would say the OEM stretching out is okay. That just kind of means that there's more time to absorb and produce this equipment. And for us to ramp up our capabilities, good news is Christian started an expansion at one of our plants a year and a half ago. and we've got a new what we call generator assembly building which has increased our capacity and right now we're hiring probably 200 to 300 people. So you can imagine the OEMs are doing that at even a greater scale to get their stuff ramped up. So it's an interesting dynamic. The OEMs are struggling. It's unprecedented demand. But they're all very quality conscious, too. So as you ramp up these new plants, they're making sure it works. The last thing they want is a bad reputation. So it's an interesting dynamic. We like where it is right now. It's a strong ramp. So having it Slow down a little bit is not really bothering us. It's actually allowing us to execute a little better. But it's still within that range. Still within that range you gave Ben.

Yeah, wonderful. Thanks so much.

Thank you. I'm showing no further questions at this time. I would now like to turn it back to Donny Chia for closing remarks.

Thank you, operator, and thanks to everyone for participating on our third quarter 2026 earnings call. If you have any additional questions or comments, please feel free to contact me directly. Thank you, and have a good day.

This concludes today's conference call. Thank you for participating. You may now disconnect.