Good morning, and welcome to the Kirby Corporation 2024 Fourth Quarter Earnings Conference Call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Mr. Kurt Niemietz, Kirby's Vice President of Investor Relations and Treasurer. Please go ahead.

Good morning, and thank you for joining the Kirby Corporation 2024 fourth quarter earnings call. With me today are David Grzebinski, Kirby's Chief Executive Officer; Christian O'Neil, Kirby's President and Chief Operating Officer; and Raj Kumar, Kirby's Executive Vice President and Chief Financial Officer. A slide presentation for today's conference call as well as the earnings release, which was issued earlier today can be found on our website. During this conference call, we may refer to certain non-GAAP or adjusted financial measures. Reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures are included in our earnings press release and are also available on our website in the Investor Relations section. As a reminder, statements contained in this conference call with respect to the future are forward-looking statements. These statements reflect management's reasonable judgment with respect to future events. Forward-looking statements involve risks and uncertainties and our actual results could differ materially from those anticipated as a result of various factors. A list of these risk factors can be found in Kirby's latest Form 10-K filing and in our other filings made with the SEC from time-to-time. I will now turn the call over to David.

Thank you Kurt, and good morning everyone. Earlier today we announced fourth quarter GAAP earnings per share of $0.74, which included a one-time charge of $0.74 related to a non-cash write-down of inventory in our distribution businesses, which was partially offset by a one-time credit for a change in Louisiana Tax Law of $0.19. Excluding these one-time items, which Raj will provide more detail on later, adjusted earnings for the quarter were $1.29 per share. Our fourth quarter results reflected some seasonal softness in both marine transportation and in distribution and services. As we experienced weather and navigation challenges for marine and typical seasonal slowness in activity in distribution and services. These headwinds were offset by good execution from our teams in both segments during the quarter and that drove strong year-over-year financial performance with adjusted earnings per share up 24% year-over-year. We also generated over $151 million of free cash flow in the quarter, which was used to further strengthen our balance sheet by paying down $105 million in debt and to buy back $33 million of stock. We ended the year on a good note and we anticipate strong growth in 2025. In inland marine transportation, we experienced normal headwinds from poor operating conditions and a slight slowdown in some trade lanes during the quarter. From a demand standpoint, refinery activity dipped in the early part of the quarter. However, activity began to pick up and tighten utility as we exited the quarter. Overall, our barge utilization rates averaged in the 90% range for the quarter. Spot prices were flat to slightly down sequentially, but were up in the high single-digit range year-over-year. More importantly, our term contract renewals were in line with our expectations with high single-digit increases versus a year ago. Fourth quarter inland operating margins…

Thank you David, and good morning everyone. In the fourth quarter of 2024, Marine Transportation segment revenues were $467 million and operating income was $86 million, with an operating margin around 18%. Compared to the fourth quarter of 2023, total marine revenues, inland and coastal combined, increased 3% and operating income increased 26%. Total marine revenues decreased by 4% compared to the third quarter of 2024. The weather and lock delays meaningfully impacted our operations as the beginning of winter weather combined with lock maintenance of a few high traffic trade routes drove a 30% sequential increase in delay days during the fourth quarter. Looking at the inland business in more detail. The inland business contributed approximately 82% of segment revenue. Average barge utilization was in the 90% range for the quarter, which was in line with the fourth quarter of 2023, as well as the third quarter of 2024. Long-term inland marine transportation contracts or those contracts with a term of one year or longer contributed approximately 65% of revenue with 63% from time-charters and 37% from contracts of affreightment. Slower market conditions early in the quarter contributed to spot market rates that were flat to slightly down sequentially, but increased in the high single-digit range year-over-year. In contrast, our term contracts that renewed during the fourth quarter were up on average in the high-single digit range compared to the prior year. Compared to the fourth quarter of 2023, inland revenues increased 3%, primarily due to higher term and spot contract pricing. Inland revenues decreased 3% compared to the third quarter of 2024. Inland operating margins were right around 20%, driven by the benefit of higher pricing and ongoing cost management, which helped blunt lingering inflationary pressures. Margins fell sequentially as expected, given the challenging operating conditions caused mainly…

Thank you, Raj. While we managed through challenging operating conditions in the fourth quarter, we ended in a very strong position in our businesses. Refinery activity is starting to increase, our barge utilization is improving in inland and spot rates are beginning to pick back up. While we expect typical seasonal weather conditions to propose some near-term headwinds in the first quarter and high levels of shipyard activity to linger near-term and coastal, our outlook in the marine market remains strong for the full year. In distribution and services, demand is expected to remain mixed across our products and services and our actions taken over the past few years to limit volatility of this segment are paying off. For D&S, we expect flat to slightly lower results for the segment, despite a very tough oil and gas market. For Kirby overall, we expect our businesses combined will deliver another strong year of financial growth in 2025 with a 15% to 25% increase year-over-year in earnings per share. Moving to specific detail on the segments. In inland marine, we anticipate positive market dynamics due to limited new barge construction. The demand softening we saw in the refinery sector in the fourth quarter has improved and barge utilization rates are firming up. We expect our barge utilization rates to be in the low-to-mid 90% range for the year with continued improvement in term contract pricing as renewals occur throughout the year. However, we continue 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 contract pricing. Overall, inland revenues are expected to grow in the mid to high-single digit range for the full…

Thank you. [Operator Instructions] And our first question will come from the line of Daniel Imbro with Stephens. Your line is open.

Hey. Good morning, guys. This is Reed on for Daniel. I just want to first look at pricing. When we look at the puts and takes here so far in the first quarter, we have a difficult weather, some better refinery activity. Can you talk about all the puts and takes and kind of what is driving that improved pricing? And once we move past this difficult weather, what gives you the confidence that we can continue to get strong pricing through the year, along with maybe some update on the competitive trends you're expecting in 2025?

Sure. Good morning, Reed. Thanks for the question. Christian and I'll tag team this a bit. But look, we did see a little, as Christian will tell you, a speed bump in the fourth quarter, we saw utility pull-back a little bit as refineries cut back. I think utility got down into the 90%, right around 90% range. We saw spot pricing weaken a little bit for us, it was down 0% to 2%, that has all abated now. We're -- our utility is up, Christian can share some recent utility numbers. The refineries are back that speed bump went away. So we are very tight in terms of supply and demand right now. And that, as you know, drives pricing. Christian will give you a little more color on that. Why don't you go ahead and do that, Christian, I'll circle back on the other part of the question. Christian O’Neil: Yes. Sure. Thanks, David. Good morning, Reed. Yes, you saw the typical winter weather patterns that tend to affect Q4 and Q1. Frontal passages fog, maybe a little ice forming on the Illinois River. And around the election, I think David characterized it well, we saw -- what -- we began to talk about in-house here as a speed bump. However, as the election kind of played out and people got back to work, the holiday season was a bit long with the way the holidays fell. We saw some trading activity slow down. I can tell you today as a snapshot in time standing here, we have seen utility recover. We have seen spot pricing recover very nicely. And so that's why we characterize it as a speed bump. We did see a bit of a softness in refining activity in some of our core refiners, however, I can tell you today, looking at the numbers, we're seeing it rebound back nicely in Q1.

Yeah. And Reed, the second part is weather. Look, weather does help tighten up utility. Usually we get a couple percent extra utility with weather. We don't always get paid-for that extra utility, then that's why it impacts the margin. But look, first quarter is always our lowest in terms of margin on the inland side. I think the big picture is, don't focus on the first quarter, focus on what we're telling you for the full year in terms of in the margins and we've said there'll be up to 200 basis points to 300 basis points. We're pretty excited about where we are. And Christian is being modest. I mean we were, I think the last week or so, we've been at 95% 96%. I think we even bumped 97% utility, which is for us sold out. So even if weather starts to get better and we -- that comes down a couple percent from better weather, we'll still be really tight in terms of utility. That's why we're so constructive about the kind of the pricing environment and that's all driven by supply and demand. I mean, there's not a lot of new supply and demands back after that little speed bump we had in the first quarter -- the fourth quarter.

And I would just add to that, David, we had a nice term renewal cycle in Q4. You'll begin to see that pay dividends in 2025 as we referenced on the conference call. Those term contracts that renew in the fourth quarter, high-single digits year-over-year and you'll have that momentum going into 2025 as well.

Very helpful. Thank you. Just kind of shifting to the cost side, you talked about mariner wage inflation and equipment inflation. Do you have an expectation for 2025 and where you see that going?

Yeah. I'm glad you brought that up, Reed. That's another reason spot pricing is going to go up this year. We have inflation. Inflation gets a -- excuse me, a lot of discussion in the economy these days and we see it. The industry, not just Kirby, it's very tight on mariners. We have a slight advantage because we have our own school and we produce our own mariners, but it is very tight and so that's obviously putting wage inflation into the picture. But the inflation is more broad based than just that -- and I'm not talking about the price of eggs, which seems to get a lot of attention these days. It's the shipyards, the shipyards that we use day-in and day-out, they're busy, one, two, they have the same labor constraints. They used to run three shifts, 24/7 and they're having problems filling out that last shift. So they've got some labor pressure. Things like radars and anything electronic, we've seen inflation. So that -- we said all that last year, so I'm not giving you anything new. But what I would tell you is it hasn't abated. It's still there. And frankly, that's why we need some -- the pricing to continue to march up to offset some of that inflation, which is real. Frankly, our competitors and our customers understand it. They get it because they're dealing with it too. So it's there -- in terms of quantifying it, it's hard for us to give you a precise number on inflation. But again, if you look at that 200 basis point to 300 basis point improvement in inland margins, that kind of incorporates both price increases plus the inflationary increases.

Perfect. Thank you guys.

Thanks, Reed. Christian O’Neil: Thank you, Reed.

Thank you. One moment for our next question. And that will come from the line of Ben Nolan with Stifel. Your line is open.

Thank you, and good morning, guys.

Hi, Ben.

Hi. So if I could pick up on the barge side real quick. As we as we look forward, there's a couple of unique things that are going on a little or somewhat unique and I was going to hope to get your comments on it. First of all, do you have any perspective on if there are tariffs on Canada and Mexico, what that -- are there any implications for the barge industry? And then also, I saw yesterday Lyondell said they were closing a refinery in Houston. Is that a needle mover at all for you guys? Just any color on some of those things that are just happening in the market on your business?

Sure. Look, I'll let Christian handle the Lyondell question, but let me just talk broadly on tariffs. It's an interesting thing with tariffs. So far, it looks like the administration is using it as a negotiation tool rather than anything broad-based. Our view from a marine side is, tariffs, although we're very pro-business and don't like a lot of tariffs. But if they happen, it's generally good for Kirby in that we're essentially 100% domestic. That would drive more onshoring and more activity in the U.S. So we'd probably benefit from that. Again, it would also, could be inflationary to certain -- depending on how robust the tariffs would be, inflation is not necessarily bad for us. We work hard to offset it, but we have a huge installed base of equipment and inflation would make replacing that equipment more expensive, which would in my view, extend the cycle even further than we think it would be because it would be that much more expensive to replace or add new equipment. Christian, why don't you tell them about what's going on? It's delicate for us to talk about a specific customer, but Christian can give you some color on that. Christian O’Neil: Yeah. Hey, good morning, Ben. In regards to the refinery in Houston, while we do service it and it is part of our demand. What you tend to see, and I've seen this over the years when other refinery or chemical plants shut down or may exit the service is you begin to see the logistical feedstock or finished product supply that that refinery serviced start to come from other places. The end customers who needed that chemical or those refined products or the feedstock come from other places in the market. At times, I've seen that be a benefit to the barge business as logistics change and the ton miles that you have to travel to service the same customers with refined products, it can actually be a positive. In terms of barge days that it takes to service the markets that, that refinery used to market. That said, we never like to see refining capacity exit the market, but I think, I'm not a refiner, but I will tell you, I think the rationalization of some of this older refining capacity in the United States is probably a good thing for many of our customers that operate, global world scale refineries that they will pick-up this demand that -- from the exit of this older refinery. So I think while we don't like to see the volumes go away day to day, I'm not sure it has any dramatic impact to what we do in the Houston Harbor and you may actually see opportunities that arise out of new trade lanes.

Great. That's very helpful. I appreciate both of those answers. And then for my second question, I was hoping, it sounds like the power business is humming along, particularly in the fourth quarter. As you -- well, first of all, can you give any context on how the backlog is built and maybe any color on how you would maybe anticipate that growing over the course of the year or at very least sort of maybe contextualize the conversations you're having with customers and how you think that power business might fare over the course of the year?

Sure. Yeah, Christian. I'll split this question a little bit here. Look, PowerGen is a real thing. The data center demand is real, even our e-frac side is real. We are seeing orders continue. I'll let Christian give you some color on the backlog, although we don't like to give a specific backlog number. But it's lumpy, Ben. Obviously, it's growing. You can see that in our numbers, it's offsetting the weakness in conventional oilfield, but it's lumpy. Picture this, a data center order could be, call it, $30 million to $50 million worth of equipment. They want it all at once. The supply chain takes a few quarters to get that going and then it's a lumpy delivery. So when you look at our quarterly progression this year, it could be lumpy because of that. First quarter, we don't really have many big data center deliveries, but second quarter, we should have some big deliveries. So it will be lumpy. But the overall trend is growing and I'll let Christian give you some color on backlog. Christian O’Neil: Thanks for the question, Ben, and thank you, David. If you frame up our PowerGen journey, four years ago, you had a backlog of numbers in the tens to millions of dollars. While we don't discuss backlog to the dollar here, I will tell you that going into 2025, 80% of our backlog is PowerGen, it's in the hundreds of millions of dollars in backlog. My good friend, Chad Joost, who manages our PowerGen business and does a great job, told me something interesting the other day. This year, we will deliver our -- we will hit the milestone of delivering 1 gigawatt of natural gas power generation products into the market. So that's a significant milestone for D&S. I think it shows you the momentum and the market penetration that we're enjoying as a player in this market. It is dynamic. It is lumpy as the revenue flows through, as David mentioned. But we do see the backlog. We're excited about it and we're building out a very good team to capitalize on it.

Excellent. Again, I appreciate answers from both of you guys. Good color. Appreciate it.

Thanks, Ben. Christian O’Neil: Good, Ben, Thank you.

Thank you. One moment for our next question. And that will come from the line of Ken Hoexter with Bank of America. Your line is open.

Hey, guys. It's Adam Roszkowski on for Ken Hoexter. Thanks for taking the questions. Maybe to look a little -- you noted despite seasonal pressure, still strong inland supply and demand dynamics. You've spoken about a 200 basis point to 300 basis point long-term margin improvement opportunity. If you could just provide some color on where rates are and what -- where rates would need to go to justify significant newbuilds or capacity additions and how you're looking at that over the next couple of years?

Yeah. You bet. I can't really give you specific market pricing because the attorney in the room will kill me. So, that said, look we had the little speed bump that Christian and I've described in the fourth quarter. We saw spot pricing decline 0% to 2%, which is barely negligible. We're seeing that it's -- we've already regained traction there here so far in January. But it's early days. You got to let it play out for the year. That said, spot pricing is well above term. It's probably in the order of 10% above term right now. We like that. That's a healthy market. When it gets really spotty, it could be 15% above of term. It may be on that way now, but right now it's kind of 10% above term. And then if you look at where pricing needs to go to justify building new equipment. For a two-barge tow it's got to increase probably 40% from where we are now. In that zip code, a two-barge tow would need to be, I'm saying in the $14,000 a day rate kind of thing. Look, our competitors understand that. And as Christian mentioned, there's a lot of discipline in terms of new construction right now. It just doesn't make sense to build new equipment. What little building is happening is entirely for replacement right now. So that -- that's our estimation. We don't know exactly what our competitors are doing, but our estimation is, it's all for replacement that, to do -- build new capacity, we need significant rates improvement.

Got it. That's helpful. And then maybe just a little bit more on this year. You noted you expect 1Q to be the trough given some of these temporary seasonal pressures. Is it -- any color on just how much of a trough that is? And really I'm thinking about seasonality for the rest of the year. Typically, you have a little bit of a bump in the second and third quarters, but maybe fall back down in the fourth. Is there anything unique happening on first quarter to impact any of that seasonality or just any thoughts?

Sure. No, you've got the seasonality right. I mean, the first quarter is usually the lowest. Second and third quarter pick-up nicely. Third quarter is usually the highest. Fourth quarter dips back down a little bit, but not as low as first quarter. I think that's the normal seasonality. We expect that this year. I think the only other caveat would be for our coastal business. We have a very heavy first quarter shipyard cycle. They'll start unwinding in the second quarter. So that will impact it. But coastal is rocking right now, I say rocking, that's probably too strong of a term, but it's doing really well. We're essentially sold-out and the fleet is performing well. We just have that normal required shipyard maintenance and we're going to go through it. So that will help the out quarters. It will help second, third and fourth quarter for coastal once we get some of these big shipyards behind us. So that would be the only other seasonal factor that I can add. Anything else, Christian? Christian O’Neil: No, David, that was well said. We're seeing the normal seasonality in Q1. You've got a little bit of ice forming on the Illinois River. You've got some lock outages, you've got some bridge construction going on, but it's really nothing in Q1 that is beyond our typical normal winter weather battle. It will be the trough, but we see things recovering very nicely out of the quarter, and we're actually very optimistic about the rest of the year.

Thanks. And one just, one clarifying. You noted the gap, I believe on the inland side is about 10% spot to term. Is that the same across coastal? I mean with spot up low teens and term up high 20%. Is that the same dynamic as well?

Really we're 100% termed up. So there is really no spot market in coastal right now. So as -- typically the term contracts are a year in nature, we do have several that are multi-year. So it's really as those term contracts renew, pricing will go up. There's really not a lot of spot market at all. I mean, that I'm seeing. And I think that's pretty consistent for most of the industry right now. It is very tight. Christian O’Neil: Yeah. The only spot market that really exists is maybe the reletting of a term piece of equipment and you will see that at a premium to the term rates because they're shorter duration trips. However, I think David summarized it very well. I mean, the market is all but sold out. And if you look at the percentage increases that we're getting on our offshore renewals, we're getting rate at a clip that we've never seen before. I mean it's pretty big chunks when you're moving rates 20% in a renewal cycle.

But Adam, just like on the inland side, we need it, right? There's been inflation, the cost of new equipment has gone up substantially. Just to give you a benchmark number, 185,000 barrel ATB, we built one about five, six, seven years ago in the $80 million range. To build that today, it's $130 million to $135 million. So that's inflation, it's cost of steel, it's cost of construction, it's -- so the rates do need to go up like that to get anywhere close to replacement economics. And everything we've said about supply and demand on the inland side is the same on the coastal side, even worse because if you wanted to build a new 185,000 barrel unit today, you wouldn't get it until probably the end of '27, maybe in the first part of '28. So we're -- again, we're seeing a long runway here for ourselves and we're pretty, pretty constructive and excited about what's in front of us.

I appreciate the thoughts. Thank you.

Thanks, Adam. Christian O’Neil: Thanks, Adam.

Thank you. One moment for our next question. And that will come from the line of Sherif Elmaghrabi with BTIG. Your line is open.

Hey, good morning. Thanks for taking my questions. First, thinking about the supply of inland barges, you mentioned retirements could keep growth flattish. So given the overall inland fleet is aging, is it realistic to see barges keep working past that 35-year mark? Or is that viewed as something of a hard cutoff in the industry?

That's a great question. Historically, the age of a barge is driven by the major oil company or the major chemicals vetting rules, as well as the economic decision, does it make sense to keep investing in a, 30, 35 year old asset. I'll give you a little color. It's an inexact science, but we saw 75 barges retire in 2024, excuse me. And we don't know exactly if they retired, but we do know that their certificate of inspections were removed. So that was an average age of 42 years, the barges that retired in that bucket. I think you'll see perhaps one way to adjust to the lack of new construction is for carriers to try to stretch the age of their fleets. Now you will still run up against the vetting rules of the major oil companies and the major chemical companies, how they decide to flex or interpret that is still in play. We don't know. But typically rule of thumb, a barge gets to 30 years. I mean that's its useful life. So great question. I will tell you that the carriers like us are still waiting to see how that plays out.

That's interesting. And then for my second question, I want to circle back on what Ben was mentioning with PowerGen. The color on the backlog is very helpful. And well, just in the last couple of weeks, we've seen a handful of big nat gas partnerships announced, but that's all long lead time stuff, which I imagine lends itself to backup PowerGen that runs on the same fuel. So I'm wondering what kind of opportunity you see over the next sort of three-plus years longer-term and what you're hearing from customers there?

Yeah. Look, our PowerGen portfolio is multifaceted. So, for example, most data centers are diesel backup gens, stationary, they're installed. We do stationary backup for New York Stock Exchange, some of the major money center banks in New York, etc. So that's one bucket, stationary diesel. Then we have mobile diesel where we'll provide mobile backup power, generally around storms or ice storms or utility disruptions, think about a 1 megawatt or 2 megawatt trailer full of backup power that's diesel run, that can come to the back of a Walmart or a Target or a Costco and plug-in and run the store in a storm type situation. So that bucket for us is growing. You saw our CapEx go up a little bit last year because of that. We just need more rental assets. The demand for backup power just continues to grow and having mobile backup power is good. And then you get into natural gas generation, which is, it can be mobile or stationary and that's growing as well. And as you might imagine, natural gas is a lot cheaper than diesel. So there's a lot of excitement around that. We do that as well. A lot of mobile, some stationary. Some of it is that goes to customers that sell power by the hour. Some of it is prime power, some of its backup power. So all of those buckets are growing. It's hard to get too specific without getting into the customers on each one of those buckets. But we're excited about the whole portfolio. I think -- what we can do with natural gas generation is really exciting because the cost per kilowatt-hour is -- it's not as competitive as, say, a big utility could do, but it is, it's cost effective and being able to sub in there for needs is important and useful to many of the industrial customers that we have.

Thanks very much for taking my question.

All right. Take care. Christian O’Neil: Thank you.

Thank you. [Operator Instructions] One moment for our next question and that will come from the line of Greg Wasikowski with Webber Research. Your line is open.

Hey. Good morning, everyone. How are you doing?

Hey. Good morning, Greg. Christian O’Neil: Hi, Greg.

I want to go back to the order book. I know you guys have talked about it a lot, but it's a point worth hammering home. And David, I think I heard you say this, but worth confirming, if we see deliveries in 2025 start to outpace 2024, it's worth kind of hammering home that point that it is expected to be mostly replacement tonnage. That's the first question. And the second is just off that 40% number for rates to justify building new. We've been at that point for some time now, I want to say probably a couple of years. It's a question that gets asked every quarter. It's a question that we get all the time and it's -- the answer is 30%, 40% all the time. What needs to change in order for that to not be the answer anymore? And really that's getting at, what do we and investors and people who are following the stock need to need to look for in order to start getting nervous or better pose what do they not need to look for in order to remain calm? It's really what I'm getting at. So yeah, I'll stop there.

No, it's a fair question because that 30%, 40% need is something I've said for, to your point, the last two, three, four years. But I've said around $14,000 a day for a two barged tow right now to justify it. I think probably three years ago, I would have said $12,000. So why does it go up? The cost of a barge has gone from well, five years ago, it was probably $2.5 million for a 30,000 barrel barge. Now it's -- it's probably, as Christian just mentioned, I think $4.5 million for a 30,000 barrel clean barge. And then that's the barge side. What's driven the cost up there, steel prices for sure, but that's only about 30% of the input. But it's labor cost, it's welding, it's all the paint costs, all that has gone up. And then you go to the boat side and we've gone from Tier-2, Tier-3 boats to now Tier-4. So Tier-4 one cost more to operate, you have all kinds of considerations for it. The engines are more expensive. The operation of the boats are more expensive, it's at least on just a regular tow boat that added about $1 million in cost. So -- and then just financing equipment has also gone up. So we usually talk when we talk about pricing unlevered returns, but for many of our competitors, they've got leverage and the cost of borrowing has gone up. So you put all that together and that's why the break-even cost continues to rise. So even though we're getting some price increases, that delta really hasn't closed. Now I'm going to turn it back to Christian. He has very specific numbers on '24 build and retirement and then '25 kind of what our crystal ball is hearing. Christian O’Neil:…

Got it. Thanks, guys. That's really helpful. A question we've gotten, I'm curious to hear your answer is, kind of a follow-up to that. Still thinking about that 40% number that rates need to go up and the answer to that being the same is that costs have increased along with rates. Yet Kirby has been able to improve margins rapidly in the last couple of years while that 40% number has stayed the same, which is a bit of a disconnect, I guess. So -- and the answer might be that yard availability, but what -- can you connect the dots for how you guys have been able to improve your margins even though the costs have been rising and generally from an industry standpoint, that 40% number has still remained constant?

Yeah. No, I mean, basically our price increases have had real price, not just nominal price. We needed to get there. Look, we're still a long way from rates that get a reasonable return on invested capital. And yeah, we work hard. Our job, we believe for our shareholders is to get a good return on invested capital. So we've -- we're trying to outpace the inflation and we've been making some headway, but we still have ways to go. Anything you want to add, Christian? Christian O’Neil: I'd attribute it to the management team. We've done a good job of executing through the inflationary environment. I think David summarized it. We're an extremely capitally disciplined company. That that flows through the DNA of the teams, both marine and D&S and we enjoy some really good customer relationships. We have really, really good dialogue around what inflation looks like to Kirby. They listen and we've been able to stay above inflation and get real rate. And honestly, our service justifies a lot of that. And I would say that's probably part of why you see us performing on the margin despite the cost environment we're in. And the team is doing a great job.

Yeah. Christian makes a really good point. We really try and work to save our customers' money. Because of the size of our fleet, we often are able to pull horsepower off to save them money and redeploy that horsepower somewhere else in our system. So they're only just paying for the barge. We work really hard to save them money. So that's all part of the calculus. When you come to rates, they know we work hard to save them money, so they'll pay a little more. So, don't -- we shouldn't get any more specific than that. But the real answer is, we need some real rate increase to get our returns where you as shareholders want to see.

Got it. Okay. Thanks again, guys. Appreciate you swing at that one. Christian O’Neil: Thanks a lot.

Thanks, Greg.

This concludes our question and answer session. I would now like to turn the conference back over to Mr. Kurt Niemietz for any closing remarks.

Thank you Sherry, and thank you everyone for joining the call today. As always, please feel free to reach-out to me afterward.

This conference has now concluded. Thank you for attending today's presentation. You may now disconnect.