KIRBY CORP

Previous wording

Cash provided by operating activities for the 2025 first quarter decreased in comparison to the 2024 first quarter primarily due to unfavorable working capital changes. This was related to an increase in inventories in the first quarter of 2025 due to the impact of supply delays in KDS resulting in the buildup of inventory for projects, mainly due to power generation orders, that are scheduled to be delivered later in 2025, partially offset by increased net earnings. For the 2025 first quarter, capital expenditures of $78.7 million included $61.8 million in KMT and $16.9 million in KDS and corporate, each more fully described under Cash Flow and Capital Expenditures below.

Current wording

Cash provided by operating activities for the 2025 first six months decreased in comparison to the 2024 first six months primarily due to unfavorable working capital changes driven by the timing of accounts receivable collections, accounts payable payments and federal income tax payments, as well as an increase in inventories in the first half of 2025, partially offset by increased net earnings. The increase in inventories was due to the impact of higher business activity levels and supply delays in KDS resulting in the buildup of inventory for projects, mainly due to power generation orders, which are scheduled to be delivered later in 2025 and into 2026. For the 2025 first six months, capital expenditures of $150.2 million included $126.3 million in KMT and $23.9 million in KDS and corporate, each more fully described under Cash Flow and Capital Expenditures below.

Previous wording

The Company projects that capital expenditures for 2025 will be in the $280 million to $320 million range. Approximately $180 million to $220 million is associated with marine maintenance capital and improvements to existing inland and coastal marine equipment, and facility improvements. Approximately $100 million is associated with growth capital spending in both segments.

Current wording

The Company projects that capital expenditures for 2025 will be in the $260 million to $290 million range. Approximately $180 million to $210 million is associated with marine maintenance capital and improvements to existing inland and coastal marine equipment, and facility improvements. Approximately $80 million is associated with growth capital spending in both segments.

Previous wording

The Company’s debt-to-capitalization ratio increased to 24.8% at March 31, 2025 compared to 20.7% at December 31, 2024, primarily due to an increase in debt outstanding. Total equity at March 31, 2025 decreased as compared to December 31, 2024 primarily from treasury stock purchases of $101.5 million, partially offset by net earnings attributable to Kirby of $76.0 million. The Company’s debt outstanding as of March 31, 2025 and December 31, 2024 is detailed in Long-Term Financing below.

Current wording

The Company’s debt-to-capitalization ratio increased to 24.8% at June 30, 2025 compared to 20.7% at December 31, 2024, primarily due to an increase in debt outstanding. Total equity at June 30, 2025 increased as compared to December 31, 2024 primarily from net earnings attributable to Kirby of $170.3 million, partially offset by treasury stock purchases of $132.7 million. The Company’s debt outstanding as of June 30, 2025 and December 31, 2024 is detailed in Long-Term Financing below.

Previous wording

For the 2025 first quarter, KMT generated 61% of the Company’s revenues compared to 59% for the 2024 first quarter. 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.

Current wording

For the 2025 second quarter and first six months, KMT generated 58% and 59%, respectively, of the Company’s revenues compared to 59% for both the 2024 second quarter and first six months. 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.

Previous wording

During the 2025 first quarter, the Company purchased 14 inland tank barges, chartered five inland tank barges, and retired two inland tank barges, increasing its capacity by approximately 0.4 million barrels.

Current wording

During the 2025 first six months, the Company purchased 14 inland tank barges, chartered four inland tank barges, and retired three inland tank barges, increasing its capacity by approximately 0.3 million barrels.

Previous wording

KMT revenues for the 2025 first quarter were flat and operating income increased 4% compared to the 2024 first quarter. Revenues were flat in the 2025 first quarter as compared to the 2024 first quarter as higher term and spot market pricing in the inland and coastal markets was offset by lower fuel rebills in both markets and increased shipyards in the coastal market as compared to the 2024 first quarter. The increase in operating income for the 2025 first quarter was primarily due to higher term and spot pricing in the inland and coastal markets, partially offset by higher levels of planned coastal shipyards and increased inland delay days in the 2025 first quarter. The 2025 and 2024 first quarters were impacted by poor operating conditions including seasonal wind and fog along the Gulf Coast and various lock closures. For the 2025 first quarter, the inland tank barge fleet contributed 82% and the coastal fleet contributed 18% of KMT revenues. For the 2024 first quarter, the inland tank barge fleet contributed 81% and the coastal fleet contributed 19% of KMT revenues.

Current wording

KMT revenues for the 2025 second quarter and first six months increased 2% and 1%, respectively, and operating income increased 4% compared to the 2024 second quarter and first six months. The increase in revenues in the 2025 second quarter and first six months as compared to the 2024 second quarter and first six months were due to higher term and spot market pricing in the inland and coastal markets, partially offset by lower fuel rebills in both markets. The increase in operating income for the 2025 second quarter and first six months was primarily due to higher term and spot pricing in the inland and coastal markets. The 2025 and 2024 first quarters were impacted by poor operating conditions including seasonal wind and fog along the Gulf Coast and various lock closures. For the 2025 second quarter and first six months, the inland tank barge fleet contributed 81% and 82%, respectively, and the coastal fleet contributed 19% and 18% of KMT revenues, respectively. For both the 2024 second quarter and first six months, the inland tank barge fleet contributed 81% and the coastal fleet contributed 19% of KMT revenues.

Previous wording

Inland tank barge utilization levels averaged in the low to mid-90% range during both the 2025 and 2024 first quarters. The 2025 and 2024 first quarters were impacted by high winds and heavy fog along the Gulf Coast and lock delays. Coastal tank barge utilization levels averaged in the mid to high 90% range during both the 2025 and 2024 first quarters.

Current wording

Inland tank barge utilization levels averaged in the low to mid-90% range during the 2025 and 2024 first and second quarters. The 2025 and 2024 first quarters were impacted by high winds and heavy fog along the Gulf Coast and lock delays. Coastal tank barge utilization levels averaged in the mid to high 90% range during the 2025 and 2024 first and second quarters.

Previous wording

During the 2025 first quarter, approximately 70% of KMT inland revenues were under term contracts and 30% were spot contract revenues. During the 2024 first quarter, approximately 65% of KMT inland revenues were under term contracts and 35% were spot contract revenues. Inland time charters during the 2025 first quarter represented approximately 61% of inland revenues under term contracts compared with 62% in the 2024 first quarter. During the 2025 first quarter, approximately 100% of KMT coastal revenues were under term contracts and none were under spot contracts. During the 2024 first quarter, approximately 96% of KMT coastal revenues were under term contracts and 4% were under spot contracts. Coastal time charters represented approximately 100% of coastal revenues under term contracts during the 2025 first quarter compared to 98% during the 2024 first quarter. Term contracts have contract terms of 12 months or longer, while spot contracts have contract terms of less than 12 months.

Current wording

During both the 2025 second quarter and first six months, approximately 70% of KMT inland revenues were under term contracts and 30% were spot contract revenues. During both the 2024 second quarter and first six months, approximately 65% of KMT inland revenues were under term contracts and 35% were spot contract revenues. Inland time charters during both the 2025 second quarter and first six months represented approximately 60% of inland revenues under term contracts compared with 59% and 60% in the 2024 second quarter and first six months, respectively. During both the 2025 second quarter and first six months, approximately 100% of KMT coastal revenues were under term contracts and none were under spot contracts. During the 2024 second quarter and first six months, approximately 100% and 98%, respectively, of KMT coastal revenues were under term contracts and none and 2%, respectively, were under spot contracts. Coastal time charters represented approximately 100% of coastal revenues under term contracts during both the 2025 second quarter and first six months compared to 97% during both the 2024 second quarter and first six months. Term contracts have contract terms of 12 months or longer, while spot contracts have contract terms of less than 12 months.

Previous wording

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

Current wording

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

Previous wording

For the 2025 first quarter, KDS generated 39% of the Company’s revenues, of which 88% were generated from service and parts and 12% from manufacturing. The results of KDS are largely influenced by the economic cycles of the oil and gas, marine, power generation, on-highway, and other related industrial markets.

Current wording

For the 2025 second quarter and first six months, KDS generated 42% and 41% of the Company’s revenues, respectively, of which 86% and 87%, respectively, were generated from service and parts and 14% and 13%, respectively, from manufacturing. The results of KDS are largely influenced by the economic cycles of the oil and gas, marine, power generation, on-highway, and other related industrial markets.

Previous wording

KDS revenues for the 2025 first quarter decreased 7% and operating income increased 3% compared with the 2024 first quarter. In the commercial and industrial market, revenues and operating income increased compared to the 2024 first quarter as higher business levels in marine repair were partially offset by lower on-highway activity. For the 2025 first quarter, the commercial and industrial market contributed 52% of KDS revenues.

Current wording

KDS revenues for the 2025 second quarter increased 7% compared with the 2024 second quarter. KDS revenues for the 2025 first six months were flat compared with the 2024 first six months. KDS operating income for the 2025 second quarter and first six months increased 20% and 13%, respectively, compared with the 2024 second quarter and first six months. In the commercial and industrial market, revenues and operating income increased compared to the 2024 second quarter and first six months due to higher business levels in marine repair. For the 2025 second quarter and first six months, the commercial and industrial market contributed 48% and 50% of KDS revenues, respectively.

Previous wording

In the oil and gas market, revenues decreased and operating income increased compared to the 2024 first quarter with revenues 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. Operating income increased in the 2025 first quarter as compared to the 2024 first quarter due to product mix and ongoing cost management initiatives. For the 2025 first quarter, the oil and gas market contributed 14% of KDS revenues.

Current wording

In the oil and gas market, revenues decreased compared to the 2024 second quarter and first 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. Operating income in the oil and gas market increased compared to the 2024 second quarter and first six months due to product mix and ongoing cost management initiatives. For the 2025 second quarter and first six months, the oil and gas market contributed 13% and 14% of KDS revenues, respectively.

Previous wording

Overall, the Company expects to deliver improved financial results in 2025. In KMT, barge utilization and customer demand remain favorable and 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, tariffs and possible recessionary headwinds as it moves through 2025.

Current wording

Overall, the Company expects to deliver improved financial results in 2025. In KMT, barge utilization and customer demand remain favorable and rates continue to increase. In KDS, growth in the power generation market is expected to 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, tariffs and possible recessionary headwinds as it moves through 2025.

Previous wording

In the inland marine transportation market in 2025, the Company anticipates 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. However, the Company 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 the coastal marine transportation market in 2025, market conditions remain very favorable with steady customer demand. This is expected to keep barge utilization at high levels with improved rates as the availability of equipment is limited across the industry given there are currently no new ATBs under construction.

Current wording

In the inland marine transportation market in 2025, the Company anticipates positive market dynamics due to limited new barge construction. The Company expects barge utilization rates to remain steady for the remainder of the year. Also, the Company 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 term contract prices. In the near term, however, spot market pricing could be pressured due to short-term demand softness. In the coastal marine transportation market in 2025, market conditions remain very favorable with steady customer demand. This is expected to keep barge utilization at high levels with improved rates as the availability of equipment is limited across the industry given there are currently no new ATBs under construction.

Previous wording

The Company expects mixed results in KDS in 2025 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. 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 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 products to continue throughout 2025.

Current wording

The Company expects mixed results in KDS in 2025 as near-term volatility from supply issues, customers deferring maintenance, and lower overall levels of activity in the oil and gas market to be 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 need for 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 products to continue throughout 2025.

Previous wording

KMT revenues for the 2025 first quarter were flat and operating income increased 4% compared to the 2024 first quarter. Revenues were flat in the 2025 first quarter as compared to the 2024 first quarter as higher term and spot market pricing in the inland and coastal markets was offset by lower fuel rebills in both markets and increased shipyards in the coastal market as compared to the 2024 first quarter. The increase in operating income for the 2025 first quarter was primarily due to higher term and spot pricing in the inland and coastal markets, partially offset by higher levels of planned coastal shipyards and increased inland delay days in the 2025 first quarter. The 2025 and 2024 first quarters were impacted by poor operating conditions including seasonal wind and fog along the Gulf Coast and various lock closures. For the 2025 first quarter, the inland tank barge fleet contributed 82% and the coastal fleet contributed 18% of KMT revenues. For the 2024 first quarter, the inland tank barge fleet contributed 81% and the coastal fleet contributed 19% of KMT revenues.

Current wording

KMT revenues for the 2025 second quarter and first six months increased 2% and 1%, respectively, and operating income increased 4% compared to the 2024 second quarter and first six months. The increase in revenues in the 2025 second quarter and first six months as compared to the 2024 second quarter and first six months were due to higher term and spot market pricing in the inland and coastal markets, partially offset by lower fuel rebills in both markets. The increase in operating income for the 2025 second quarter and first six months was primarily due to higher term and spot pricing in the inland and coastal markets. The 2025 and 2024 first quarters were impacted by poor operating conditions including seasonal wind and fog along the Gulf Coast and various lock closures. For the 2025 second quarter and first six months, the inland tank barge fleet contributed 81% and 82%, respectively, and the coastal fleet contributed 19% and 18% of KMT revenues, respectively. For both the 2024 second quarter and first six months, the inland tank barge fleet contributed 81% and the coastal fleet contributed 19% of KMT revenues.

Previous wording

Inland tank barge utilization levels averaged in the low to mid-90% range during both the 2025 and 2024 first quarters. The 2025 and 2024 first quarters were impacted by high winds and heavy fog along the Gulf Coast and lock delays. Coastal tank barge utilization levels averaged in the mid to high 90% range during both the 2025 and 2024 first quarters.

Current wording

Inland tank barge utilization levels averaged in the low to mid-90% range during the 2025 and 2024 first and second quarters. The 2025 and 2024 first quarters were impacted by high winds and heavy fog along the Gulf Coast and lock delays. Coastal tank barge utilization levels averaged in the mid to high 90% range during the 2025 and 2024 first and second quarters.

Previous wording

The petrochemical market, which is the Company’s largest market, contributed 50% of KMT revenues for the 2025 first quarter reflecting steady rates, volumes and utilization from Gulf Coast petrochemical plants as compared to the 2024 first quarter.

Current wording

The petrochemical market, which is the Company’s largest market, contributed 49% of KMT revenues for both the 2025 second quarter and first six months reflecting steady rates, volumes and utilization from Gulf Coast petrochemical plants as compared to the 2024 second quarter and first six months.

Previous wording

The black oil market, which contributed 25% of KMT revenues for the 2025 first quarter reflected stable demand as refinery utilization and production levels of refined petroleum products and fuel oils increased. During the 2025 first quarter, 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.

Current wording

The black oil market, which contributed 26% of KMT revenues for both the 2025 second quarter and first six months reflected stable demand as refinery utilization and production levels of refined petroleum products and fuel oils increased. During the 2025 first 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.

Previous wording

The refined petroleum products market, which contributed 22% of KMT revenues for the 2025 first quarter, reflected stable volumes in the inland market with steady refinery utilization and product levels as compared to the 2024 first quarter.

Current wording

The refined petroleum products market, which contributed 21% of KMT revenues for both the 2025 second quarter and first six months, reflected stable volumes in the inland market with steady refinery utilization and product levels as compared to the 2024 second quarter and first six months.

Previous wording

The agricultural chemical market, which contributed 3% of KMT revenues for the 2025 first quarter reflected stable demand for transportation of both domestically produced and imported products as compared to the 2024 first quarter.

Current wording

The agricultural chemical market, which contributed 4% of KMT revenues for both the 2025 second quarter and first six months reflected stable demand for transportation of both domestically produced and imported products as compared to the 2024 second quarter and first six months.

Previous wording

For the 2025 first quarter, inland operations incurred 4,029 delay days, 15% more than the 3,507 delay days that occurred during the 2024 first quarter. 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 2025 and 2024 first quarters.

Current wording

For the 2025 second quarter, inland operations incurred 3,320 delay days compared to 3,334 delay days that occurred during the 2024 second quarter. For the 2025 first six months, inland operations incurred 7,349 delay days, 7% more than the 6,841 delay days that occurred during the 2024 first 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 2025 and 2024 first quarters.

Previous wording

During the 2025 first quarter, approximately 70% of KMT inland revenues were under term contracts and 30% were spot contract revenues. During the 2024 first quarter, approximately 65% of KMT inland revenues were under term contracts and 35% were spot contract revenues. Inland time charters during the 2025 first quarter represented approximately 61% of inland revenues under term contracts compared with 62% in the 2024 first quarter. During the 2025 first quarter, approximately 100% of KMT coastal revenues were under term contracts and none were under spot contracts. During the 2024 first quarter, approximately 96% of KMT coastal revenues were under term contracts and 4% were under spot contracts. Coastal time charters represented approximately 100% of coastal revenues under term contracts during the 2025 first quarter compared to 98% during the 2024 first quarter. Term contracts have contract terms of 12 months or longer, while spot contracts have contract terms of less than 12 months.

Current wording

During both the 2025 second quarter and first six months, approximately 70% of KMT inland revenues were under term contracts and 30% were spot contract revenues. During both the 2024 second quarter and first six months, approximately 65% of KMT inland revenues were under term contracts and 35% were spot contract revenues. Inland time charters during both the 2025 second quarter and first six months represented approximately 60% of inland revenues under term contracts compared with 59% and 60% in the 2024 second quarter and first six months, respectively. During both the 2025 second quarter and first six months, approximately 100% of KMT coastal revenues were under term contracts and none were under spot contracts. During the 2024 second quarter and first six months, approximately 100% and 98%, respectively, of KMT coastal revenues were under term contracts and none and 2%, respectively, were under spot contracts. Coastal time charters represented approximately 100% of coastal revenues under term contracts during both the 2025 second quarter and first six months compared to 97% during both the 2024 second quarter and first six months. Term contracts have contract terms of 12 months or longer, while spot contracts have contract terms of less than 12 months.

Previous wording

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

Current wording

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

Previous wording

Costs and expenses for both the 2025 first quarter decreased 1% compared to the 2024 first quarter. Costs of sales and operating expenses for the 2025 first quarter decreased 3% compared with the 2024 first quarter. The decrease during the 2025 first quarter was driven by lower fuel costs, partially offset by inflationary cost pressures including wage increases that went into effect in 2024.

Current wording

Costs and expenses for both the 2025 second quarter and first six months were flat compared to the 2024 second quarter and first six months. Costs of sales and operating expenses for the 2025 second quarter and first six months were flat and decreased 2%, respectively, compared with the 2024 second quarter and first six months. The results for the 2025 second quarter and first six months were driven by lower fuel costs, offset by inflationary cost pressures including wage increases that went into effect in 2024.

Previous wording

The inland marine transportation fleet operated an average of 291 towboats during the 2025 first quarter, of which an average of 76 were chartered, compared to 286 during the 2024 first quarter, of which an average of 72 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.

Current wording

The inland marine transportation fleet operated an average of 290 towboats during the 2025 second quarter, of which an average of 75 were chartered, compared to 287 during the 2024 second quarter, of which an average of 74 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.

Previous wording

During the 2025 first quarter, inland operations consumed 11.7 million gallons of diesel fuel compared to 11.9 million gallons consumed during the 2024 first quarter. The average price per gallon of diesel fuel consumed during the 2025 first quarter was $2.57 per gallon compared with $2.82 per gallon for the 2024 first quarter. 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

During the 2025 second quarter, inland operations consumed 12.8 million gallons of diesel fuel compared to 12.1 million gallons consumed during the 2024 second quarter. The average price per gallon of diesel fuel consumed during the 2025 second quarter was $2.35 per gallon compared with $2.83 per gallon for the 2024 second quarter. During the 2025 first six months, inland operations consumed 24.5 million gallons of diesel fuel compared to 24.0 million gallons consumed during the 2024 first six months. The average price per gallon of diesel fuel consumed during the 2025 first six months was $2.45 per gallon compared with $2.83 per gallon for the 2024 first 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.

Previous wording

Selling, general and administrative expenses for the 2025 first quarter increased 9% compared to the 2024 first quarter. The increase in selling, general and administrative expenses for the 2025 first quarter as compared to the 2024 first quarter was primarily due to salary and wage increases that went into effect on July 1, 2024, continued inflationary cost pressures, and an increase in the provision for credit losses related to a certain customer.

Current wording

Selling, general and administrative expenses for the 2025 second quarter and first six months increased 3% and 6%, respectively, compared to the 2024 second quarter and first six months. The increase in selling, general and administrative expenses for the 2025 second quarter and first six months as compared to the 2024 second quarter and first six months was primarily due to salary and wage increases that went into effect on July 1, 2024 and continued inflationary cost pressures. The 2025 first six months was also impacted by an increase in the provision for credit losses related to a certain customer during the 2025 first quarter.

Previous wording

KMT operating income for the 2025 first quarter increased 4% compared with the 2024 first quarter. The 2025 first quarter operating margin was 18.2% compared with 17.5% for the 2024 first quarter. The increases in operating income and operating margin were primarily due to higher term and spot contract pricing in the inland and coastal markets, partially offset by higher levels of planned coastal shipyards and increased inland delay days in the 2025 first quarter.

Current wording

KMT operating income for both the 2025 second quarter and first six months increased 4% compared with the 2024 second quarter and first six months. The 2025 second quarter operating margin was 20.1% compared with 19.6% for the 2024 second quarter. The 2025 first six months operating margin was 19.2% compared with 18.5% for the 2024 first six months. The increases 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 the 2025 first quarter decreased 7% compared to the 2024 first quarter. In the commercial and industrial market, revenues and operating income increased compared to the 2024 first quarter as higher business levels in marine repair were partially offset by lower on-highway activity. In the power generation market, revenues and operating income decreased compared to the 2024 first quarter as deferred deliveries of equipment due to supply delays impacted 2025 first quarter results. In the oil and gas market, revenues decreased compared to the 2024 first quarter due to lower levels of conventional oilfield activity which resulted in decreased demand for new transmissions and parts, partially offset by deliveries of electric fracturing equipment. Oil and gas operating income increased compared to the 2024 first quarter due to product mix and ongoing cost management initiatives.

Current wording

In the commercial and industrial market, revenues and operating income increased compared to the 2024 second quarter and first six months due to higher business levels in marine repair. In the power generation market, revenues increased compared to the 2024 second quarter and first six months due to increased demand for backup and critical power applications, while operating income decreased due to sales mix. In the oil and gas market, revenues decreased compared to the 2024 second quarter and first 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. Operating income in the oil and gas market increased compared to the 2024 second quarter and first six months due to product mix and ongoing cost management initiatives.

Previous wording

Costs and expenses for the 2025 first quarter decreased 8% compared with the 2024 first quarter. Costs of sales and operating expenses for the 2025 first quarter decreased 11% compared with the 2024 first quarter, reflecting lower on-highway and conventional oilfield activity as well as deferred power generation equipment shipments due to supply delays.

Current wording

Costs and expenses for the 2025 second quarter and first six months increased 6% and decreased 1%, respectively, compared with the 2024 second quarter and first six months. Costs of sales and operating expenses for the 2025 second quarter and first six months increased 4% and decreased 3%, respectively, compared with the 2024 second quarter and first six months. The increase for the 2025 second quarter reflected higher deliveries of power generation equipment, while the decrease for the 2025 first six months reflected lower on-highway and conventional oilfield activity as well as fewer power generation equipment shipments in the 2025 first quarter due to supply delays.

Previous wording

Selling, general and administrative expenses for the 2025 first quarter increased 1% compared to the 2024 first quarter, reflecting salary and wage increases that went into effect July 1, 2024, partially offset by ongoing cost management initiatives.

Current wording

Selling, general and administrative expenses for the 2025 second quarter and first six months increased 9% and 5% compared to the 2024 second quarter and first six months, reflecting salary and wage increases that went into effect July 1, 2024 and higher business activity levels.

Previous wording

Depreciation and amortization for the 2025 first quarter increased 32% compared to the 2024 first quarter. The increase was primarily due to capital additions during 2024 and the first quarter of 2025 including additions to the equipment rental fleet.

Current wording

Depreciation and amortization for the 2025 second quarter and first six months increased 24% and 28%, respectively, compared to the 2024 second quarter and first six months. The increase was primarily due to capital additions during 2024 and the first six months of 2025 including additions to the equipment rental fleet.

Previous wording

KDS operating income for the 2025 first quarter increased 3% compared with the 2024 first quarter. The 2025 first quarter operating margin was 7.3% compared to 6.6% for the 2024 first quarter. The results reflect increased marine repair activity and deliveries of electric fracturing equipment, partially offset by lower on-highway and conventional oilfield activity.

Current wording

KDS operating income for the 2025 second quarter and first six months increased 20% and 13%, respectively, compared with the 2024 second quarter and first six months. The 2025 second quarter operating margin was 9.8% compared to 8.7% for the 2024 second quarter. The 2025 first six months operating margin was 8.6% compared to 7.7% for the 2024 first six months. The results reflect increased marine repair activity and deliveries of electric fracturing equipment, partially offset by lower conventional oilfield activity.

Previous wording

The Company reported a net gain on disposition of assets of $0.1 million for both the 2025 and 2024 first quarters. The net gains were primarily from sales of marine transportation equipment.

Current wording

The Company reported a net gain on disposition of assets of $1.7 million and $0.5 million for the 2025 and 2024 second quarters, respectively. The Company reported a net gain on disposition of assets of $1.8 million and $0.6 million for the 2025 and 2024 first six months, respectively. The net gains were primarily from sales of marine transportation equipment.

Previous wording

Other income for the 2025 and 2024 first quarters includes income of $4.8 million and $2.4 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 the 2025 and 2024 second quarters includes income of $4.3 million and $2.7 million, respectively, and the 2025 and 2024 first six months includes income of $9.1 million and $5.1 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 the 2025 first quarter decreased 20% compared with the 2024 first quarter, primarily due to a lower average interest rate in the 2025 first quarter, as well as lower debt levels in the 2025 first quarter. There was no capitalized interest excluded from interest expense during the 2025 or 2024 first quarter.

Current wording

Interest expense for the 2025 second quarter and first six months decreased 1% and 10%, respectively, compared with the 2024 second quarter and first six months, primarily due to a lower average interest rate in the 2025 second quarter and first six months. Interest expense excludes capitalized interest for the 2025 first six months of $0.5 million. There was no capitalized interest excluded from interest expense during the 2024 first six months.

Previous wording

Current assets as of March 31, 2025 increased 3% compared with December 31, 2024. Trade accounts receivable increased 3% primarily due to higher business activity levels in KMT. Inventories – net increased 10% primarily due to 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 2025.

Current wording

Current assets as of June 30, 2025 increased 11% compared with December 31, 2024. Trade accounts receivable increased 15% primarily due to higher business activity levels in both KMT and KDS. Inventories – net increased 8% primarily due to the impact of higher business activity levels and supply delays in KDS resulting in the buildup of inventory for mainly power generation projects that are scheduled to be delivered later in 2025 and into 2026.

Previous wording

Property and equipment, net of accumulated depreciation, at March 31, 2025 increased 3% compared with December 31, 2024. The increase reflected $90.7 million of capital additions (including an increase in accrued capital expenditures of $12.0 million) and a $97.3 million equipment acquisition in the 2025 first quarter, partially offset by $61.6 million of depreciation expense and $0.1 million of property disposals more fully described under Cash Flow and Capital Expenditures below.

Current wording

Property and equipment, net of accumulated depreciation, at June 30, 2025 increased 3% compared with December 31, 2024. The increase reflected $150.6 million of capital additions (including an increase in accrued capital expenditures of $0.4 million) and a $97.3 million equipment acquisition in the 2025 first quarter, partially offset by $125.1 million of depreciation expense and $10.7 million of property disposals more fully described under Cash Flow and Capital Expenditures below.

Previous wording

Operating lease right-of-use assets as of March 31, 2025 decreased 1% compared with December 31, 2024, primarily due to lease amortization expense, partially offset by new leases acquired in the 2025 first quarter.

Current wording

Operating lease right-of-use assets as of June 30, 2025 decreased 1% compared with December 31, 2024, primarily due to lease amortization expense, partially offset by new leases acquired in the 2025 first six months.