KIRBY CORP

Previous wording

For purposes of Management’s Discussion, all net earnings per share attributable to Kirby common stockholders are “diluted earnings (loss) per share.” The weighted average number of common shares outstanding applicable to diluted earnings (loss) per share for 2023, 2022, and 2021 were 59,857,000, 60,329,000, and 60,053,000, respectively. Refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 for management's discussion and analysis of financial condition and results of operations for 2022 compared to 2021.

Current wording

For purposes of Management’s Discussion, all net earnings per share attributable to Kirby common stockholders are “diluted earnings per share.” The weighted average number of common shares outstanding applicable to diluted earnings per share for 2024, 2023, and 2022 were 58,355,000, 59,857,000, and 60,329,000, respectively. Refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 for management's discussion and analysis of financial condition and results of operations for 2023 compared to 2022.

Previous wording

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. Through KDS, the Company provides after-market service and parts for engines, transmissions, reduction gears, and related equipment used in oilfield services, marine, power generation, on-highway, and other industrial applications. The Company also rents equipment including generators, industrial compressors, and high capacity lift trucks, and refrigeration trailers for use in a variety of industrial markets, and manufactures and remanufactures oilfield service equipment, including pressure pumping units, manufactures cementing and pumping equipment as well as coil tubing and well intervention equipment, electric power generation equipment, specialized electrical distribution and control equipment, and high capacity energy storage/battery systems for oilfield service and railroad customers.

Current wording

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 after-market services and genuine replacement parts for engines, transmissions, reduction gears and related equipment used in oilfield services, marine, power generation, on-highway, and other industrial applications. The Company also rents equipment including generators, industrial compressors, high 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, electric power generation equipment, and specialized electrical distribution and control equipment for oilfield service, railroad and other industrial customers.

Previous wording

Cash provided by operating activities in 2023 increased compared to 2022 primarily due to higher business activity levels and the receipt of an IRS refund of $70.4 million plus accrued interest. During 2023, capital expenditures of $401.7 million included $255.4 million in KMT and $146.3 million in KDS and corporate, more fully described under cash flow and capital expenditures below.

Current wording

Cash provided by operating activities in 2024 increased compared to 2023 primarily due to higher business activity levels. During 2024, capital expenditures of $342.7 million included $247.8 million in KMT and $94.9 million in KDS and corporate, more fully described under cash flow and capital expenditures below.

Previous wording

The Company projects net cash flow from operations in 2024 of between $600 million and $700 million and expects capital expenditures to range between $290 million and $330 million. The Company received grants from various government entities totaling approximately $3.7 million in 2023 related to certain emission reduction projects and has applied for and been awarded grants totaling approximately $4 million which it expects to receive reimbursements for in late 2024 and 2025.

Current wording

The Company projects net cash flow from operations in 2025 of between $620 million and $720 million and expects capital expenditures to range between $280 million and $320 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.

Previous wording

The Company’s debt-to-capitalization ratio decreased to 24.2% at December 31, 2023 from 26.2% at December 31, 2022, primarily due an increase in total equity, primarily from net earnings attributable to Kirby of $222.9 million during 2023 and a reduction of debt outstanding of $63.0 million, partially offset by treasury stock purchases of $112.8 million. The Company’s debt outstanding as of December 31, 2023 and December 31, 2022 is detailed in Long-Term Financing below.

Current wording

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

Previous wording

For 2023, 56% of the Company’s revenues were generated by KMT. 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, fibers, 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, the Company’s marine transportation business is directly affected by the volumes produced by the Company’s petroleum, petrochemical and refining customer base.

Current wording

For 2024, 59% of the Company’s revenues were generated by KMT. 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, fibers, 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, the Company’s marine transportation business is directly affected by the volumes produced by the Company’s petroleum, petrochemical and refining customer base.

Previous wording

KMT’s revenues for 2023 increased 6% compared to 2022 and operating income increased 75%, compared to 2022. The increases for 2023 were primarily due to improved term and spot pricing and utilization in the inland market when compared to 2022. This was partially offset by various lock closures along the Gulf Intracoastal Waterway and Illinois River, resulting in higher delay days. In addition, several refinery outages also impacted utilization. Revenues and operating income in 2022 were impacted by record low water levels on the Mississippi River during the 2022 fourth quarter. Also, the 2022 first quarter was impacted by the COVID-19 Omicron variant as increased cases of the virus among the Company’s mariners led to crewing challenges, lost revenue and increased operating costs. For 2023 and 2022, the inland tank barge fleet contributed 82% and 79%, respectively, and the coastal fleet contributed 18% and 21%, respectively, of marine transportation revenues.

Current wording

KMT’s revenues for 2024 increased 11% compared to 2023 and operating income increased 52%, compared to 2023. The increases for 2024 were primarily due to improved term and spot pricing in the inland and coastal markets when compared to 2023. Results for 2024 were modestly impacted by weather and lock delays, while 2023 results were impacted by various lock closures along the Gulf Intracoastal Waterway and Illinois River. In addition, several refinery outages also impacted utilization in 2023. For 2024 and 2023, the inland tank barge fleet contributed 81% and 82%, respectively, and the coastal fleet contributed 19% and 18%, respectively, of marine transportation revenues.

Previous wording

Overall inland tank barge utilization levels improved in 2023 as compared to 2022, ranging from the low to mid-90% range during the 2023 first quarter, the low 90% range during the 2023 second quarter, the high 80% range during the 2023 third quarter, and the low 90% range in the 2023 fourth quarter. During 2022, inland tank barge utilization levels ranged from the mid-80% range during the 2022 first quarter, the low 90% range during both the 2022 second and third quarters, and the low 90% range in the 2022 fourth quarter. Utilization in the 2023 fourth quarter improved from the 2023 third quarter, which was negatively impacted by Illinois River lock closures and several refinery outages.

Current wording

Overall inland tank barge utilization levels in 2024 were flat as compared to 2023, ranging from the low to mid-90% range during both the 2024 first and second quarters, and the 90% range during both the 2024 third and fourth quarters. During 2023, inland tank barge utilization levels ranged from the low to mid-90% range during the 2023 first quarter, the low 90% range during the 2023 second quarter, the high 80% range during the 2023 third quarter, and the low 90% range in the 2023 fourth quarter.

Previous wording

Coastal tank barge utilization levels during 2023 averaged in the mid to high 90% range during both the 2023 first and second quarters, the mid-90% range during the 2023 third quarter and the low to mid-90% range during the 2023 fourth quarter. For 2022, coastal tank barge utilization levels averaged in the low 90% range during both the 2022 first and second quarters and low to mid-90% range during both the 2022 third and fourth quarters.

Current wording

Coastal tank barge utilization levels during 2024 averaged in the mid to high 90% range throughout the year. For 2023, coastal tank barge utilization levels averaged in the mid to high 90% range during both the 2023 first and second quarters, the mid-90% range during the 2023 third quarter and the low to mid-90% range during the 2023 fourth quarter.

Previous wording

Approximately 60% of the inland marine transportation revenues were under term contracts and 40% were under spot contracts in 2023 and 2022. Term contracts provide the operations with a reasonably predictable revenue stream. Inland time charters, which insulate the Company from revenue fluctuations caused by weather and navigational delays and temporary market declines, represented 63% of the inland revenues under term contracts during 2023 and 58% in 2022. During 2023 and 2022, approximately 85% and 75%, respectively, of coastal revenues were under term contracts and 15% and 25%, respectively, were under spot contracts. Coastal time charters represented approximately 90% of coastal revenues under term contracts during both 2023 and 2022. Term contracts have contract terms of 12 months or longer, while spot contracts have contract terms of less than 12 months.

Current wording

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 insulate the Company from revenue fluctuations caused by weather and navigational delays and temporary market declines, represented 61% of the inland revenues under term contracts during 2024 and 63% in 2023. During 2024 and 2023, approximately 99% and 85%, respectively, of coastal revenues were under term contracts and 1% and 15%, respectively, were under spot contracts. Coastal time charters represented approximately 98% and 90% of coastal revenues under term contracts during 2024 and 2023, respectively. Term contracts have contract terms of 12 months or longer, while spot contracts have contract terms of less than 12 months.

Previous wording

Effective January 1, 2023, annual escalators for labor and the producer price index on a number of inland multi-year contracts resulted in rate increases on those contracts of approximately 9%, excluding fuel.

Current wording

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

Previous wording

The 2023 marine transportation operating margin was 13.9% compared to 8.4% for 2022.

Current wording

The 2024 marine transportation operating margin was 19.0% compared to 13.9% for 2023.

Previous wording

The Company, through KDS, sells genuine replacement parts, provides service mechanics to overhaul and repair engines, transmissions, reduction gears and related oilfield services equipment, rebuilds component parts or entire diesel engines, transmissions and reduction gears, and related equipment used in oilfield services, marine, power generation, on-highway and other industrial applications. The Company also rents equipment including generators, industrial compressors, high capacity lift trucks, and refrigeration trailers for use in a variety of industrial markets, and manufactures and remanufactures oilfield service equipment, including pressure pumping units, manufactures cementing and pumping equipment as well as coil tubing and well intervention equipment, electric power generation equipment, specialized electrical distribution and control equipment, and high capacity energy storage/battery systems for oilfield service and railroad 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 24% of KDS’s revenues in 2023.

Current wording

The Company, through KDS, provides after-market services and genuine replacement parts for engines, transmissions, reduction gears and related equipment used in oilfield services, marine, power generation, on-highway, and other industrial applications. The Company also rents equipment including generators, industrial compressors, high 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, electric power generation equipment, and specialized electrical distribution and control equipment for 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% of KDS’s revenues in 2024.

Previous wording

During 2023, KDS generated 44% of the Company’s revenues, of which 78% was generated from service and parts and 22% from manufacturing. The results of KDS are largely influenced by cycles of the oilfield service industry and oil and gas operator and producer markets, marine, power generation, on-highway and other industrial markets.

Current wording

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

Previous wording

Distribution and services revenues for 2023 increased 17% compared to 2022 and operating income increased 71% compared to 2022. In the commercial and industrial market, the increases in 2023 compared to 2022 were primarily attributable to strong economic activity across the U.S. which resulted in higher business levels in the marine and on-highway businesses. Increased product sales in Thermo King also contributed favorably to 2023 results. These results were partially offset by continuing supply chain constraints and delays. For 2023 and 2022, the commercial and industrial market contributed 59% and 56%, respectively, of the distribution and services revenues.

Current wording

Distribution and services revenues for 2024 decreased 1% compared to 2023 and operating income decreased 5% compared to 2023. In the commercial and industrial market, revenues decreased 1% in 2024 compared to 2023 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 2024 and 2023, the commercial and industrial market contributed 46% of the distribution and services revenues.

Previous wording

The distribution and services operating margin for 2023 was 8.4% compared to 5.7% for 2022.

Current wording

The distribution and services operating margin for 2024 was 8.0% compared to 8.4% for 2023.

Previous wording

Overall, the Company expects to deliver improved financial results in 2024. In KMT, barge utilization and customer demand remain strong, and rates continue to increase. In KDS, demand for products and services remains steady, and the Company continues to receive new orders in manufacturing. The Company remains mindful of the ever-changing economic landscape related to the impact of higher interest rates, and possible recessionary headwinds as it moves through 2024.

Current wording

Overall, the Company expects to deliver improved financial results in 2025. In KMT, barge utilization and customer demand remain stable and term rates continue to increase. In KDS, growth in the power generation market is expected to mostly offset softness in oil and gas markets, and the on-highway service and repair business due to the ongoing trucking recession. The Company remains mindful of the ever-changing economic landscape related to the possible impact of high interest rates and possible recessionary headwinds as it moves through 2025.

Previous wording

During 2021, the Company purchased four inland tank barges from a leasing company for $7.5 million in cash. The Company had been leasing the barges prior to the purchase.

Current wording

On December 31, 2024, the Company purchased an inland tank barge from a leasing company for $2.7 million in cash. The Company had been leasing the barge prior to purchase.

Previous wording

KMT’s revenues for 2023 increased 6% compared to 2022 and operating income increased 75%, compared to 2022. The increases for 2023 were primarily due to improved term and spot pricing and utilization in the inland market when compared to 2022. This was partially offset by various lock closures along the Gulf Intracoastal Waterway and Illinois River, resulting in higher delay days. In addition, several refinery outages also impacted utilization. Revenues and operating income in 2022 were impacted by record low water levels on the Mississippi River during the 2022 fourth quarter. Also, the 2022 first quarter was impacted by the COVID-19 Omicron variant as increased cases of the virus among the Company’s mariners led to crewing challenges, lost revenue and increased operating costs. For 2023 and 2022, the inland tank barge fleet contributed 82% and 79%, respectively, and the coastal fleet contributed 18% and 21%, respectively, of marine transportation revenues.

Current wording

KMT’s revenues for 2024 increased 11% compared to 2023 and operating income increased 52%, compared to 2023. The increases for 2024 were primarily due to improved term and spot pricing in the inland and coastal markets when compared to 2023. Results for 2024 were modestly impacted by weather and lock delays, while 2023 results were impacted by various lock closures along the Gulf Intracoastal Waterway and Illinois River. In addition, several refinery outages also impacted utilization in 2023. For 2024 and 2023, the inland tank barge fleet contributed 81% and 82%, respectively, and the coastal fleet contributed 19% and 18%, respectively, of marine transportation revenues.

Previous wording

Overall inland tank barge utilization levels improved in 2023 as compared to 2022, ranging from the low to mid-90% range during the 2023 first quarter, the low 90% range during the 2023 second quarter, the high 80% range during the 2023 third quarter, and the low 90% range in the 2023 fourth quarter. During 2022, inland tank barge utilization levels ranged from the mid-80% range during the 2022 first quarter, the low 90% range during both the 2022 second and third quarters, and the low 90% range in the 2022 fourth quarter. Utilization in the 2023 fourth quarter improved from the 2023 third quarter, which was negatively impacted by Illinois River lock closures and several refinery outages.

Current wording

Overall inland tank barge utilization levels in 2024 were flat as compared to 2023, ranging from the low to mid-90% range during both the 2024 first and second quarters, and the 90% range during both the 2024 third and fourth quarters. During 2023, inland tank barge utilization levels ranged from the low to mid-90% range during the 2023 first quarter, the low 90% range during the 2023 second quarter, the high 80% range during the 2023 third quarter, and the low 90% range in the 2023 fourth quarter.

Previous wording

Coastal tank barge utilization levels during 2023 averaged in the mid to high 90% range during both the 2023 first and second quarters, the mid-90% range during the 2023 third quarter, and the low to mid-90% range during the 2023 fourth quarter. For 2022, coastal tank barge utilization levels averaged in the low 90% range during both the 2022 first and second quarters and low to mid-90% range during both the 2022 third and fourth quarters.

Current wording

Coastal tank barge utilization levels during 2024 averaged in the mid to high 90% range throughout the year. For 2023, coastal tank barge utilization levels averaged in the mid to high 90% range during both the 2023 first and second quarters, the mid-90% range during the 2023 third quarter and the low to mid-90% range during the 2023 fourth quarter.

Previous wording

The black oil market, which contributed 26% of marine transportation revenues for 2023, reflecting improved demand as refinery utilization and production levels of refined petroleum products and fuel oils increased. During 2023, the Company transported crude oil and natural gas condensate produced from the Permian Basin and the Eagle Ford shale formation in Texas, both along the Gulf Intracoastal Waterway with inland vessels and in the Gulf of Mexico 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.

Current wording

The black oil market, which contributed 25% of marine transportation revenues for 2024, reflecting improved demand as refinery utilization and production levels of refined petroleum products and fuel oils increased. During 2024, the Company transported crude oil and natural gas condensate produced from the Permian Basin and the Eagle Ford shale formation in Texas, both 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.

Previous wording

The refined petroleum products market, which contributed 20% of marine transportation revenues for 2023, saw increased volumes in the inland market with improved refinery utilization and product levels.

Current wording

The refined petroleum products market, which contributed 21% of marine transportation revenues for 2024, saw increased volumes in the inland market with improved refinery utilization and product levels.

Previous wording

Inland operations incurred 10,863 delay days in 2023, 6% more than the 10,244 delay days that occurred during 2022. 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 for 2023 and 2022 were impacted by hurricanes and tropical storms, poor operating conditions due to heavy wind and fog along the Gulf Coast, low and high water conditions on the Mississippi River System, and various lock closures along the Gulf Intracoastal Waterway, due in part to lock maintenance projects. The 2023 third quarter was also impacted by lock closures on the Illinois River.

Current wording

Inland operations incurred 11,583 delay days in 2024, 7% more than the 10,863 delay days that occurred during 2023. 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 for 2024 and 2023 were impacted by hurricanes and tropical storms, poor operating conditions due to heavy wind and fog along the Gulf Coast, low and high water conditions on the Mississippi River System, and various lock closures, due in part to lock maintenance projects. The 2023 third quarter was also impacted by lock closures on the Illinois River.

Previous wording

Approximately 60% of the inland marine transportation revenues were under term contracts and 40% were under spot contracts in 2023 and 2022. Term contracts provide the operations with a reasonably predictable revenue stream. Inland time charters, which insulate the Company from revenue fluctuations caused by weather and navigational delays and temporary market declines, represented 63% of the inland revenues under term contracts during 2023 and 58% during 2022. During 2023 and 2022, approximately 85% and 75%, respectively, of coastal revenues were under term contracts and 15% and 25%, respectively, were under spot contracts. Coastal time charters represented approximately 90% of coastal revenues under term contracts during both 2023 and 2022. Term contracts have contract terms of 12 months or longer, while spot contracts have contract terms of less than 12 months.

Current wording

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 insulate the Company from revenue fluctuations caused by weather and navigational delays and temporary market declines, represented 61% of the inland revenues under term contracts during 2024 and 63% in 2023. During 2024 and 2023, approximately 99% and 85%, respectively, of coastal revenues were under term contracts and 1% and 15%, respectively, were under spot contracts. Coastal time charters represented approximately 98% and 90% of coastal revenues under term contracts during 2024 and 2023, respectively. Term contracts have contract terms of 12 months or longer, while spot contracts have contract terms of less than 12 months.

Previous wording

Effective January 1, 2023, annual escalators for labor and the producer price index on a number of inland multi-year contracts resulted in rate increases on those contracts of approximately 9%, excluding fuel.

Current wording

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

Previous wording

Total costs and expenses for 2023 were flat compared to 2022. Costs of sales and operating expenses for 2023 decreased 1% compared to 2022 primarily reflecting lower fuel costs which was partially offset by higher business activity levels and inflationary cost pressures.

Current wording

Total costs and expenses for 2024 increased 4% compared to 2023. Costs of sales and operating expenses for 2024 increased 5% compared to 2023 primarily reflecting higher business activity levels and inflationary cost pressures which was partially offset by lower fuel costs.

Previous wording

The inland marine transportation fleet operated an average of 280 towboats during 2023, of which an average of 64 were chartered, compared to 271 during 2022, of which an average of 59 were chartered. The increase was primarily due to higher business activity levels. 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.

Current wording

The inland marine transportation fleet operated an average of 285 towboats during 2024, of which an average of 70 were chartered, compared to 280 during 2023, of which an average of 64 were chartered. The increase was primarily due to higher business activity levels. 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.

Previous wording

Inland operations consumed 48.1 million gallons of diesel fuel in 2023 compared to 48.4 million gallons consumed during 2022. The average price per gallon of diesel fuel consumed during 2023 was $3.08 per gallon compared to $3.70 per gallon for 2022. 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.

Current wording

Inland operations consumed 46.8 million gallons of diesel fuel in 2024 compared to 48.1 million gallons consumed during 2023. The average price per gallon of diesel fuel consumed during 2024 was $2.66 per gallon compared to $3.08 per gallon for 2023. 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.

Previous wording

Selling, general and administrative expenses for 2023 increased 5% compared to 2022 due to higher business activity levels and inflationary cost pressures. The increase is primarily due to higher salary and wage increases effective July 1, 2023 and increased incentive compensation, partially offset by lower legal costs. Selling, general and administrative expenses for 2022 were negatively impacted by severance expense in the 2022 second and fourth quarters.

Current wording

Selling, general and administrative expenses for 2024 increased 2% compared to 2023 due to higher business activity levels and inflationary cost pressures. The increase is primarily due to higher salary and wage increases, partially offset by lower legal costs.

Previous wording

Depreciation and amortization for 2023 increased slightly compared to 2022. The increase was primarily due to capital additions during 2023 and 2022.

Current wording

Depreciation and amortization for 2024 increased 7% compared to 2023. The increase was primarily due to capital additions during 2024 and 2023.

Previous wording

KMT operating income for 2023 increased 75% compared to 2022. The operating margin was 13.9% for 2023 compared to 8.4% for 2022. The increase in operating income and operating margin were primarily due to increased barge utilization and higher term and spot contract pricing in the inland and coastal markets. The 2022 results were impacted by increased fuel prices as well as the impact of the COVID-19 Omicron variant during the 2022 first quarter.

Current wording

KMT operating income for 2024 increased 52% compared to 2023. The operating margin was 19.0% for 2024 compared to 13.9% for 2023. The increase in operating income and operating margin were primarily due to higher term and spot contract pricing in the inland and coastal markets.

Previous wording

KDS revenues for 2023 increased 17% compared to 2022. In the commercial and industrial market, the increase was primarily attributable to strong economic activity across the U.S. which resulted in higher business levels in the marine and on-highway businesses. For 2023 and 2022, the commercial and industrial market contributed 59% and 56%, respectively, of KDS revenues.

Current wording

KDS revenues for 2024 decreased 1% compared to 2023. In the commercial and industrial market, revenues decreased 1% in 2024 compared to 2023 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 2024 and 2023, the commercial and industrial market contributed 46% of the distribution and services revenues.

Previous wording

Selling, general and administrative expenses for 2023 increased 15% compared to 2022. The increase was primarily due to continued inflationary cost pressures, higher business activity and annual compensation increases.

Current wording

Selling, general and administrative expenses for 2024 increased 3% compared to 2023. The increase was primarily due to continued inflationary cost pressures and annual compensation increases.

Previous wording

Depreciation and amortization for 2023 increased 18% compared to 2022. The increase was primarily due to increased capital spending during 2022 and 2023.

Current wording

Depreciation and amortization for 2024 increased 79% compared to 2023. The increase was primarily due to increased capital spending during 2023 and 2024.

Previous wording

Operating income for KDS for 2023 increased 71% compared to 2022. The operating margin was 8.4% for 2023 compared to 5.7% for 2022. The results reflect increased business levels in both the commercial and industrial and oil and gas markets and ongoing cost management initiatives, which were partially offset by higher costs and expenses due to higher business activity.

Current wording

Operating income for KDS for 2024 decreased 5% compared to 2023. The operating margin was 8.0% for 2024 compared to 8.4% for 2023. The results reflect lower on-highway and conventional oilfield activity partially offset by increased power generation demand in industrial end markets and marine repair activity.

Previous wording

General corporate expenses for 2023, 2022, and 2021 were $23.3 million, $18.6 million and $13.8 million, respectively. General corporate expenses were higher in 2023 compared to 2022 primarily due to higher legal and insurance costs. The 2023 first quarter also included costs related to the strategic review and shareholder engagement.

Current wording

General corporate expenses for 2024, 2023, and 2022 were $18.8 million, $23.3 million and $18.6 million, respectively. General corporate expenses were lower in 2024 compared to 2023 primarily due to lower legal and insurance costs. The 2023 first quarter also included costs related to the strategic review and shareholder engagement.

Previous wording

The Company reported net gains on disposition of assets of $5.0 million, $8.3 million, and $5.8 million in 2023, 2022, and 2021, respectively. The net gains were predominantly from the sales or retirements of marine equipment.

Current wording

The Company reported net gains on disposition of assets of $2.2 million, $5.0 million, and $8.3 million in 2024, 2023, and 2022, respectively. The net gains were predominantly from the sales or retirements of marine equipment.

Previous wording

Other income for 2023, 2022, and 2021 includes income of $4.8 million, $13.9 million and $8.2 million, respectively, for all components of net benefit costs except the service cost component related to the Company’s defined benefit plans.

Current wording

Other income for 2024, 2023, and 2022 includes income of $10.2 million, $4.8 million and $13.9 million, respectively, for all components of net benefit costs except the service cost component related to the Company’s defined benefit plans.

Previous wording

Interest expense for 2023 increased 17% compared to 2022, primarily due to a higher average interest rate, partially offset by a lower average debt outstanding as a result of debt repayments.

Current wording

Interest expense for 2024 decreased 6% compared to 2023, primarily due to lower average debt outstanding as a result of debt repayments.