KIRBY CORP (KEX)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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

Overview

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

The following table summarizes key operating results of the Company (in thousands, except per share amounts):

Cash provided by operating activities for the 2026 first six months increased in comparison to the 2025 first six months primarily due to favorable working capital changes. The favorable working capital changes were driven by the timing of accounts payable and income tax payments, partially offset by the timing of accounts receivable collections. The 2025 first six months included $73.4 million of estimated federal income tax payments as compared to $35.0 million in the 2026 first six months. For the 2026 first six months, capital expenditures of $119.8 million included $80.6 million in KMT and $39.2 million in KDS and corporate, each more fully described under Cash Flow and Capital Expenditures below.

The Company projects that capital expenditures for 2026 will be in the $220 million to $260 million range. Approximately $170 million to $210 million is associated with marine maintenance capital and improvements to existing inland and coastal marine equipment, and facility improvements. Up to approximately $65 million is associated with growth capital spending in both segments.

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

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Marine Transportation

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

The following table summarizes the Company’s marine transportation fleet:

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

During the 2026 first six months, the Company purchased 28 inland tank barges, brought back into service six inland tank barges, and retired five inland tank barges, increasing its capacity by approximately 0.7 million barrels.

KMT revenues for the 2026 second quarter and first six months increased 9% and 7%, respectively, compared to the 2025 second quarter and first six months, primarily due to higher term pricing in the inland market and increased fuel rebills in the inland and coastal markets, partially offset by lower spot pricing in the inland market as compared to the 2025 second quarter and first six months. KMT operating income for the 2026 second quarter and first six months decreased 11% and 4%, respectively, compared to the 2025 second quarter and first six months, primarily due to higher fuel costs as a result of the Iran conflict. During the second quarter of 2026, rapidly rising fuel prices temporarily compressed operating income and operating margins in the inland market due to the inherent lag in the Company's contractual fuel escalation mechanisms. Because fuel-related pricing adjustments under term contracts generally become effective 30 to 120 days after fuel cost increases are incurred, the Company was unable to fully recover the impact of higher fuel costs during the quarter. The Company expects these costs to be substantially recovered in subsequent quarters as contractual fuel escalation provisions take effect. The 2026 and 2025 first quarters were impacted by poor operating conditions including seasonal wind and fog along the Gulf Coast, ice on the Illinois and Upper Mississippi Rivers and various lock closures. For both the 2026 second quarter and first six months, the inland tank barge fleet contributed 80% and the coastal fleet contributed 20% of KMT revenues. For the 2025

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second quarter and first six months, the inland tank barge fleet contributed 81% and 82%, respectively, and the coastal fleet contributed 19% and 18%, respectively, of KMT revenues.

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

During both the 2026 second quarter and first six months, approximately 65% of KMT inland revenues were under term contracts and 35% were spot contract revenues. During both the 2025 second quarter and first six months, approximately 70% of KMT inland revenues were under term contracts and 30% were spot contract revenues. Inland time charters during both the 2026 second quarter and first six months represented approximately 57% of inland revenues under term contracts compared with 60% in the 2025 second quarter and first six months. During the 2026 second quarter and first six months, approximately 93% and 92%, respectively, of KMT coastal revenues were under term contracts and 7% and 8%, respectively, were under spot contracts. 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. Coastal time charters represented approximately 100% of coastal revenues under term contracts during both the 2026 and 2025 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.

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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

For purposes of Management’s Discussion, all net earnings per share attributable to Kirby common stockholders are “diluted earnings per share.” The weighted average number of common shares outstanding applicable to diluted earnings per share for 2025, 2024, and 2023 were 56,045,000, 58,355,000, and 59,857,000, respectively. Refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 for management's discussion and analysis of financial condition and results of operations for 2024 compared to 2023.

Overview

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

The following table summarizes key operating results of the Company (in thousands, except per share amounts):

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

The 2023 first quarter included $3.0 million before taxes, $2.4 million after taxes, or $0.04 per share of costs related to the strategic review and shareholder engagement and $2.7 million before taxes, $2.2 million after taxes, or $0.04 per share of other income associated with the interest on a refund from the Internal Revenue Service (“IRS”).

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

The Company projects net cash flow from operations in 2026 of between $575 million and $675 million and expects capital expenditures to range between $220 million and $260 million.

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

Marine Transportation

The following table summarizes the Company’s marine transportation fleet:

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

For 2025, 58% 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.

KMT’s revenues for 2025 increased 1% compared to 2024 and operating income increased 3%, compared to 2024. The increase in revenues for 2025 was primarily due to higher term pricing in the coastal market and higher term and spot pricing in the inland market during the 2025 first half, partially offset by lower fuel rebills in both the inland and coastal markets. The increase in operating income for 2025 as compared to 2024 was primarily due to higher term pricing in the coastal market and higher term and spot pricing in the inland market over the 2025 first half, partially offset by lower barge utilization and moderating prices in the inland market in the 2025

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second half. For 2025 and 2024, the inland tank barge fleet contributed 80% and 81%, respectively, and the coastal fleet contributed 20% and 19%, respectively, of marine transportation revenues.

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

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

The following table summarizes the average range of pricing changes in term and spot contracts renewed during

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