Q2 2025 Kirby Corp Earnings Call

July 31, 2025

Good day and thank you for standing by welcome to the Kirby Corporation 2025 second quarter earnings call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During the session you will need to press star.

Our one one on your telephone you will then hear an automated message advising our hand is raised to withdraw your question. Please press star one one again.

Please be advised that today's conference call is being recorded. Please note to mute all your lines. While the call is going on I would now like to hand, the conference over to your first speaker today, Kurt minutes, Vice President of Investor Relations and Treasurer.

Please go ahead.

Good morning, and thank you for joining the Kirby Corporation 2025 second quarter earnings call with me today are David Demski, Kirby's, Chief Executive Officer, Raj Kumar Kirby's Executive Vice President and Chief Financial Officer, and Christian O'neil, Kirby's, President and Chief operating Officer.

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 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.

Well, we're 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.

Now I'll turn the call over to David.

Thank you Kurt and good morning, everyone.

Earlier today, we announced second quarter earnings per share of $1 67.

A 17% increase year over year from $1 43 in the second quarter of 'twenty 'twenty four.

Our second quarter performance reflected solid execution across both of our business segments and continued strength in our core markets supported by healthy customer demand and disciplined pricing and solid operational performance.

Our teams continue to adapt and deliver strong results. Despite some navigational challenges in marine and supply delays in distribution and services.

Overall, our combined businesses did deliver another solid quarter.

In inland Marine transportation market conditions remained favorable during the second quarter customer activity was steady with barge utilization rates consistently in the low to mid 90% range, reflecting healthy demand across our core markets compared.

Compared to the first quarter weather conditions improved, but navigational and lock delays caused a modest headwind the challenged operational efficiency.

Despite these headwinds our teams executed well.

On the pricing front, we saw continued gains in pricing spot market rates increased in the low single digit sequentially and in the mid single digits year over year supported by limited barge availability and firm customer demands.

Term contract renewals also tended trended higher with low to mid single digit increases compared to prior year.

The combination of improved pricing disciplined execution and resilient demand helped drive operating margins into the low 20% range. Despite the operational challenges.

This performance underscores the strength of our inland marine business and our ability to deliver solid results in a dynamic environment.

And coastal Marine transportation market fundamentals remained strong throughout the second quarter barge utilization was consistently in the mid to high 90% range and was supported by steady customer demand and limited supply of large capacity vessels.

This supply demand dynamic continued to drive meaningful pricing gains with term contract renewals increasing in the mid 20% range year over year.

Which is a clear indication of the market strength and our leading position in the market.

Operationally the quarter benefited from a reduction in planned.

Planned shipyard maintenance, which had been a headwind in the prior periods.

Well some maintenance activity continued its impact was less pronounced allowing for improved asset availability and improved revenue generation. The combination of strong pricing high utilization and fewer planned shipyard contributed to solid financial performance with opera.

<unk> margins, reaching the high teens.

Turning to distribution and services our teams delivered a strong second quarter achieving year over year growth in both revenue and operating income with solid contributions across most of our end markets and power generation revenues were up 31% year over year driven.

By robust demand from data centers.

And industrial customers.

The pace of inbound orders remain strong further building, our backlog and positioning us well for the second half of this year.

We also secured additional project wins for backup and critical power applications.

Forcing our leadership in this space.

In commercial and industrial markets.

Revenues rose, 5% year over year supported by steady marine repair activity and a modest recovery in on highway services.

These gains reflected both the resilience of our customer base and the effectiveness of our service network.

Operating income increased 24% year over year, driven by favorable product mix and ongoing cost control initiatives.

And oil and gas, we delivered a 180% plus year over year increase in operating income even while revenues declined due to continued softness in conventional activity.

This performance was driven by strong execution.

Disciplined cost management and continued growth in E frac equipment, which remains the lone bright spot in this challenged market.

Overall, the segment performed well and demonstrated our ability to adapt to shifting demand dynamics and to capitalize on growth opportunities.

We did deliver approximately 10% operating margins in the quarter.

In summary, our second quarter results reflected continued strength and market fundamentals across both segments. Despite some navigational challenges and some supply delays.

In inland marine favorable market conditions supported higher rates and steady barge utilization and.

In coastal industry wide supply and demand dynamics remain constructive enabling us to maintain high utilization.

And the ability to secure meaningful rate increases on term contract renewals.

In distribution and services robust demand for power generation, particularly from data centers and industrial customers, largely offset softness in oil and gas, allowing the segment to deliver solid financial performance and a mixed demand environment.

We expect positive trends to remain as we move through the back half of this year.

I'll talk more about our outlook later, but first I'll turn the call over to Raj to discuss the second quarter segment results and balance sheet in more detail.

Thank you David and good morning, everyone.

In the second quarter of 2025.

Marine Transportation segment revenues were 493 million and operating income was $99 million with an operating margin of 21%.

Total marine revenues inland and coastal together increased $7 8 million or 2% compared to the second quarter of 2024, and operating income increased $4 2 million or 4%.

Sequentially compared to the first quarter of 2025 total marine revenues increased 3% and operating income increased 14% as David mentioned, some navigational and lock delays impacted operations and efficiency in England.

This was offset by solid underlying customer demand improved pricing and most importantly execution.

Looking at the inland business in more detail.

The inland business contributed approximately 81% of segment revenue average barge utilization was in the low to mid 90% range for the quarter, which was in line with the utilization as seen in the first quarter of 2025.

Long term inland marine transportation contracts or those contracts with a term of one year or longer contributed approximately 70% of revenue with 60% from time charters.

And 40% from contracts of affreightment.

Proved market conditions contributed to spot market rates, increasing sequentially in the low single digits and in the mid single digit range year over year.

Term contracts that renewed during the second quarter were up on average in the low to mid single digits compared to the prior year.

Compared to the second quarter of 2024 inland revenues increased 1%, primarily due to pricing offsetting the negative impacts of navigational challenges.

Sequentially inland revenues increased 1% compared to the first quarter of 2025 due to better weather conditions.

Operating margins were in the low 20% range.

Now I'll move to the coastal business.

<unk> revenues increased 3% year over year and increased 14% sequentially due to the combined impact of pricing and fewer planned shipyard in the quarter.

Overall still had an operating margins of high teens due to improved pricing and continued cost leverage.

The coastal business represented 19% of revenues for the Marine Transportation segment.

Average coastal barge utilization was in the mid to high 90% range, which is in line with the second quarter of 2024.

During the quarter the percentage of coastal revenue under term contracts was approximately 100% of which approximately 100% of our time charters renewals of term contracts, while on average higher year over year in the mid 20% range.

With respect to our tank barge fleet for both the inland and coastal businesses.

We have provided a reconciliation of the changes in the second quarter as well as projections for 2025.

It is included in our earnings call presentation posted on our website.

At the end of the second quarter.

Inland fleet had just over 1100 barges, representing $24 5 million barrels of capacity.

We expect to end 2025, with a total of 1110 inland barges, representing $24 6 million barrels of capacity.

Coastal marine is expected to remain unchanged for the year.

Now I'll review the performance of the distribution and services segment.

Revenues for the second quarter of 2025, or 363 million with operating income of 35 million and operating margin of nine 8%.

Compared to the second quarter of 2020 for the distribution and services segment saw revenue increase by $23 million or 7%, while operating income increased by $6 million or 20%.

When compared to the first quarter of 2025 revenue increased by $53 million or 17% and operating income increased by $13 million or 57%.

In power generation.

Revenue increased 31% year over year, driven by robust sales our orders from data centers and other industrial customers for power generation and backup power installation continues to grow.

This contributed to a very healthy backlog of power generation projects.

Compared to the first quarter of 2025 power generation revenues increased by 35% and operating income increased by 88%.

Operating margins for power generation power generation, we're in the mid to high single digits power generation represented.

39% of total segment revenues.

On the commercial and industrial site activity levels and marine repair remains strong while there was a modest.

Recovery in our on highway business as a result, commercial and industrial revenues were up 5% year over year and operating income increased 24% year over year, driven by favorable product mix and ongoing cost savings initiatives.

Moshe industrial made up 48% of segment revenues with operating margins in the low double digits.

Compared to the first quarter of 2025 commercial and industrial revenues increased by 8% on increased activity in marine repair and on highway and on highway businesses.

Operating income was up 46% over the same period driven by favorable product mix.

In the oil and gas market, we continued to experience softness in convention and conventional frac related equipment.

As lower rig counts tempered demand for new engines transmission and transmission and parts throughout the quarter.

This decline in conventional activity was partially offset by ongoing deliveries of E. Frac equipment, which remains a bright spot in the segment as a result of this mixed demand environment revenues did decline, 27% year over year, though they were up 8% sequentially importantly.

Despite the revenue decline.

We achieved strong profitability gains with operating income, increasing 43% sequentially and 182% year over year.

These results were driven by continued growth in our <unk> business and the and the benefit of disciplined cost management initiatives.

During the quarter oil and gas represented 13% of total segment revenue and the business delivered operating margins in the low double digits.

Now moving to the balance sheet.

As of June 32025, we had $68 million of cash and total debt of around $1 2 billion and our debt to cap ratio remained at 24, 8% with our net debt to EBITDA being just under one four times.

During the quarter, we had net cash from operating activities of $94 million second quarter cash flow from operations was impacted by a working capital build of approximately $83 million driven by underlying growth in the business in advance of projects, especially in the power generation space with <unk>.

Expect to unwind some of this working capital as the year progresses, we use cash flow and cash on hand to fund 71 million of capital expenditures, our capex primarily related to maintenance of equipment.

During the second quarter, we also used $31 2 million to repurchase stock at an average price of $94.

As of June 32025, we have total available liquidity of approximately $331 5 million.

We remain on track to generate cash flow from operations of $620 million to $720 million on higher revenues and EBITDA for 2025.

We still see some supply constraints, forcing some headwinds to managing working capital in the near term, having said that we expect to unwind as working capital as other ship in 2025 and beyond.

With respect to Capex, we now expect capital spending to range between 260 and $290 million for the year.

Proximately $180 million to $210 million of Capex is associated with marine maintenance and capital improvements to existing inland and coastal marine equipment and facility improvements.

Approximately $80 million is associated with growth capital spending in both of our businesses.

This is a slight decrease from previous expectations as the timing of certain growth initiatives has shifted a bit allowing us to defer some capex into 2026.

As always we are committed to a balanced capital allocation approach. We will use this cash flow to opportunistically return capital to shareholders and continue to pursue long term value, creating investment and acquisition opportunities.

I will now turn the call back over to David to discuss the remainder of our outlook for 2025.

Thanks Raj.

We had a good first half of 2025.

That said the macro environment has become more complex.

Recent shifts in trade policy have introduced additional uncertainty influenced customer purchasing behavior and contributed to softness in select end markets.

These dynamics are beginning to affect trade flows in areas like chemicals and are also creating sourcing challenges.

Our power generation supply chain.

We are closely monitoring the evolving macroeconomic and geopolitical landscape.

And their potential to impact our volumes.

With that said, we still expect 15% to 25% year over year growth and earnings for all of 2025.

However, if these trends persist we could finish the year closer to the lower end of our guidance range with any movement towards the higher end of that range dependent on improvement in macroeconomic conditions in the second half of this year.

While we are taking prudent a prudent view given the current environment. Our core businesses remain strong and we are well positioned to outperform if demand continues.

Our structural advantages in marine and a growing backlog in power generation provide meaningful upside potential over time, although the external environment has become less predictable we remain confident in our ability to adapt execute and deliver results.

Also commit to maintaining capital discipline.

With a strong balance sheet and solid free cash flow generation, we are well positioned to invest strategically whether through selective capital projects acquisitions or returning capital to our shareholders. This financial strength gives us some flexibility to navigate near term uncertainty.

While staying focused on long term value creation.

Diving into the segments a bit in inland marine we anticipate constructive market dynamics due to limited new barge construction in the industry.

But we are seeing some signs of price moderation at least for now.

Term contract rates are expected to continue improving over the long term driven by the slow pace of newbuild activity and tight vessel availability. However.

However spot marking pricing may come under pressure in the near term if demand softness persists.

Barge utilization, while still healthy has moderated slightly entering the third quarter and is now expected to be in the low 90% range for the third quarter.

Inflation remains a factor, particularly in labor and the industry wide Mariner shortage continues to constrained capacity growth overall inland revenues are expected to grow in the low to mid single digit range on a full year basis and operating margins are expected to remain in the low.

20% range, assuming no major disruptions from tariffs or order economic conditions.

In coastal market conditions remain robust underpinned by limited large capacity vessels available across the industry. This constrained supply side environment is driving pricing momentum and supporting high higher term contract prices.

Steady customer demand is expected to continue through the second half of the year with our barge utilization in the mid to 90% range.

We are seeing improved operating leverage as shipyard activity winds down.

With essentially 100% of the coastal fleet on term contracts, we expect a meaningful step up in both revenues and margins for the remainder of the year.

That said, we remain mindful of ongoing inflationary pressures and labor constraints.

For all of 2025, we expect revenues and coastal to increase in the high single to low double digit range compared to 2024. We also expect coastal operating margins to improve to the mid to high teens range on a full year basis.

In the distribution and services segment results remain mixed across end markets as power generation continues to be a bright spot fueled by strong sales and orders from data centers and industrial customers, which is helping to offset weakness in other areas.

In commercial and industrial the demand outlook in marine repair remains steady the on highway service and repair market, while still soft is showing signs of bottoming them out with modest recovery expected in the second half of this year and.

In oil and gas, we expect revenues to be down in the high single to low double digit range as the shift away from conventional frac to E. Frac continues to take place and customers continue to remain maintain considerable capital discipline.

Despite the revenue decline profitability profitability as improved driven by disciplined cost management and an increase in E frac deliveries.

Overall the company now expects total segment revenues to be flat to slightly up for the full year.

With operating margins in the high single digits.

To conclude we had a solid first half of 2025, and we have a favorable outlook for the remainder of the year. Our balance sheet is strong and we expect to generate significant free cash flow. This year and the absence of any acquisitions, we would expect to use the majority of this free cash flow.

For share repurchases.

With favorable market fundamentals, continuing we expect our businesses to deliver solid and improving financial results as we move forward through the remainder of this year.

And as we look long term, we are confident in the strength of our core businesses and our long term strategy. We intend to continue capitalizing on strong market fundamentals and driving shareholder value creation.

Operator. This concludes our prepared remarks, and we are now ready to take questions.

Thank you at this time, we will conduct a question and answer session. As a reminder to ask a question you will need to press star one one.

On your telephone and wait for your name to be announced to withdraw. Your question. Please press star one one again, please standby, while we compile the Q&A roster.

Our first question comes from Danielle Enbrel of Stephens incorporated your line is now open.

Hey, guys. This is <unk> on for Daniel Thanks for taking our questions.

Goodbye.

I'd like to start on.

On the inland side of the business, obviously capacity continues to be in a great spot.

That's been the case for a little here.

But now you are talking about softness in the spot market I was just hoping you could delve a little bit more into the demand side of that business.

Obviously, we know the macro headlines and everything but just wanted to get more of your thoughts and if you can.

Update us on spot price in July as it compares to June.

Sure Yes.

Thanks for the question Reed.

Yes.

The second quarter.

Was good it was strong we were in.

Low to mid <unk> in terms of utility we saw margins on the inland side up sequentially.

But as we entered July.

This chemical malaise is finally, starting to catch up with us.

Our chemical customers have been fighting fighting a negative taped or at least the last year or so.

But their volumes have held up but <unk>.

Starting in this in July we've started to see that that volume pulled back I'm sure.

You can listen to the major public chemical companies their outlook and their results were.

Pretty sanguine are almost dismal in some respects.

So we've seen a little bit of that.

I would caution and just say it is just a little.

Our guidance for the third quarter is still 90 around 90% utility so.

It's not a huge pull back but it's enough that.

We had to be a little more cautious.

Kirby, we're going to stay very disciplined on pricing, but with a little softness out there.

You could see some some pressure or moderation on spot pricing.

That said, we did increase spot pricing in the second quarter and term pricing both sequentially.

Sequentially and year over year.

But to give you a little more color I'm going to turn it over to Christian on some of the details on some of the commodity moves and he can give you a little more color. Yes. Thank you David Hey, good morning Reed.

I'm trying to unpack I guess, a little bit of what we're seeing in the windshield in July keep in mind that as we get into July typically we see a little bit of a seasonal slowdown in utility this is dirk.

Direct result of usually improving weather conditions. It creates a little more availability. So there is a seasonal piece to July being a little bit softer we've seen that for a very long time.

David David talked about our chemical customers well theyre in a challenging market.

They are trying to navigate the geopolitical and macro and tariffs and some of those uncertainties and it's created a lot of complexity for them.

But the thesis that there Gulf coast assets assets of U S assets are the strongest in our portfolio continues you saw some closures in Europe.

Some pain for them.

They're just in a complex world right now in the macro chemical chemical world in the exploitation of some of the resin out of the Gulf.

Keep in mind, the chemical business hasn't been that great for a while now <unk> been in a downturn.

For at least a year.

We've had good solid results despite that kind of global chemical market, So and the way I look at it is they are challenged by the macro any improvement in GDP. The macro housing starts auto any of that stuff kind of stabilizes I think it represents probably an opportunity for us.

Pivot now to the refining side.

I am pleased to see that refinery utilization was strong run rates are strong, particularly in pad. Three however, once again, the sort of geopolitical environment. The tariff environment has impacted our other refiners in pad three talking to our friends in the refining industry. They will tell you that their crude slate has lightened up quite a bit in the last few quarter.

That means some of that waterborne heavier crude oil the Mayan Mexican barrel the Venezuelan barrel the Canadian heavy barrel. Some of that has been displaced for abundant lighter tighter U S Permian or domestic crude.

Naturally what we do in the barge business as we move a lot of the heavy and medium feedstocks into the refinery, we help balance and optimize the refining complex. That's a big part of our business when the crude slates lightening up it takes some of those some of those barrels out of the barge and into the pipeline.

Pad three refineries typically like that heavy barrel and.

We'll watch that very closely but I think you see some things like chevron being able to.

Hopefully important for Venezuela again, some of the some of the macro geopolitical stuff, enabling the heavier Mexican barrel in some of the Canadian barrels to come back in and that'll be a good thing for us in the barge business.

But despite what you might call a little bit of headwinds in July I mean, you hit it read when you referenced the supply side picture is still very good and David restaurants status Plaza picture is still very good and we can go into more detail about that later on in the call.

Got it that's that's great color.

And I just wanted to touch on the power generation side, obviously, a great quarter for that segment.

You talked about stronger demand and business wins, when we look at the revenue from for the second quarter or is that a lot of down payments or did you have some deliveries come through this quarter.

Helped out those results.

Yes, no it was deliveries.

We have.

As you've heard we've we've had delays in prior quarters.

Some of our supply chain, particularly some some larger engines and we've started to get that we've started to.

To move the pig through the Python so to speak are starting to ship some of these big power Gen orders.

And that said I think third quarter will be a strong quarter for shipments for us, but I would caution you remembered that power Gen is going to be lumpy. These these are big orders and they come in lumpy and the deliveries can be lumpy that said the growth we're seeing is tremendous.

Even with a heavy shipment quarter here in the second quarter and one anticipated in the third quarter.

Our backlog has grown our backlog in the second quarter, probably jumped 15% to 20% we're still taking orders.

This power Gen thing is real.

We're not an AI play for sure, but we are benefiting in our power Gen side of our DNS business.

It's been nice.

We've been working on our cost structure to you probably saw our margins are creeping up.

Christian Christian has really got the team laser focused on cost.

And throughput performance. So thats stern is starting to pay off so we're pretty excited about where DNS is and where they're positioned right now, yes, David I might add one thing just to give a shout out at the DNS team right now you see a steady drumbeat and pattern of improvement.

<unk> embraced the hard work of changing.

Tenuous improvement lean manufacturing.

Hard working team who are humble enough to know that we can continue to do it better and they had a great quarter in Q2, and I predict that truly the best is yet to come teams execute at very high level right now very proud to be working with them.

Got it thank you for the color guys. Thanks.

Thanks.

Thank you.

Our next question comes from Kenn Hoekstra of Bank of America. Your line is now open.

Hey, great good morning.

Dave and team.

Sorry.

Calls going on at the same time, a lot of things out. So I just want to understand kind of the messaging here you move to the lower end of the 15% to 25% growth target.

Christian I hear you on kind of the shifting demand on the last answer.

For spot price weakness that you saw maybe toward the June but I guess I'm getting conflicting reports on what's going on here lately in the second half of July and I know its recency, but.

Some customers are saying it continues to deteriorate, it's getting softer some are saying seeing some sort of a rebound.

If you could just gave.

An update a little bit more detail on that and then thoughts on the margin impact right, what's driving the move to the bottom end of the range is it just the demand because it's got great coastwise and <unk>.

So Ken let me be very clear on the low end and I'll let.

Christian talk more about kind of what we're seeing in July and Youre right. There is some.

Some bright spots in some some weak spots but.

Just on the guidance if demand stays muted like it is in chemicals, we're probably closer to the end.

The lower end that said.

It doesn't take much to get that demand back up a little more in housing starts a little more auto and then our domestic chemical.

Routes will increase.

And we can also see this heavier feedstock.

Slate come back into the refineries, which would would tighten up demand a little so.

It's not a foregone conclusion, we're at the low end.

Just if demand stays kind of where it is right now we're probably likely to be there.

It does it's not going to take much to get us back.

Blowing and going again because.

The supply side is so tight but let me give it back to Christian on some of the nuances around the products.

Products and whatnot, yes, Thank you David Hey, good morning, Ken.

Our subscribed to your channel checks that are more optimistic in the latter half of July. So I think in early July you usually see.

A lot of the traders.

And other folks are on vacation around the fourth of July you typically see a slowdown just based around that and the trading activity.

Coupled with good summer conditions, where we're making a lot of miles you create a lot of barge availability.

We'll tell you.

Feel better about where we are I can't speak to the other bars lines.

Late July versus where we were in early July if that answers your question.

It does.

Yes, I guess conflicting reports on such an important part of the business for what's going on now and then on coastwise, you've kind of broken a real barrier, Dave you kind of were talking for a while about the potential.

For margins to be in my bed, and now with where low twenty's with enlighten in upper teens at coastwise, you're you're almost there.

If this weakness or I guess this is.

Status quo persist on the inland and it just holds what does that mean, we're not going to see that second half ramp in margins that we expected.

Fair chance than that coastwise catches up and surpasses it.

Yes, let me break it down a little bit on the inland side about 60% of what we move is petrochemicals on the coastwise side, it's more like 10%. So coastwise has.

They are not feeling that chemical pension demand.

We are in the inland side, but that said, we still think margins are going to be.

Slow March upward on the inland side.

Just.

Just not as bullish given the chemical demand that we're seeing right now.

We are very bullish on on coastal.

And it's just so supply constrained right, even if somebody wanted to build new new equipment on the coastal side. It's.

Three years before you'd see anything right now that said it's.

Pretty constructive on the supply side for inland as well just to give you. Some numbers. The planned build this year was about 52 inland barges, we think 'twenty seven inland barges have been delivered so far this year and our estimate is about 35 have been retired so we actually have.

Net decline and inland barges so.

We're very constructive on the supply side is just this little demand pullback that we're seeing and again its little we're still talking about an average around 90% utility for the third quarter.

Yeah.

Very disciplined on pricing.

But we're also cognizant that.

There are others may feel a little different than that.

I don't know I rambled, a bit there I hope that answered your question Ken.

It does I'm just trying to figure out if we're going to see that reality of coastwise, surpassing it might on the margin side right I get what's going on in mainland Saddam scale.

That's up on coastwise has been tremendous.

Yeah, Yeah, we'd be happy.

Happy to get coastal margins very high but yet you know the big earnings power is and on the inland side as you know, it's just it's just that much larger than the coastal side.

And Im sorry, if I can just one last follow up did I missed what did you say what inland revenues would grow at year over year for going forward for third quarter or was that.

Just part of the earnings range.

Go ahead Kurt.

Yes, Ken we didn't give a specific for the third quarter, but we gave you the full year.

We'll be in the low to mid single digits there for the full year.

Okay, great. Thank you very much guys I appreciate the time thanks.

Ken.

Thank you.

Our next question comes from Greg Lewis of <unk>.

LLC. Please go ahead.

Yes, thanks, and good morning, everybody and thanks for taking my questions.

Raj I guess.

Hey, Raj I guess my first question is.

I think I heard in the prepared remarks that you guys made some decisions to defer some capex.

Could you talk a little bit about that decision.

Any kind of what maybe what was driving that that youre seeing in the market.

So this is just related to some of our growth related capex and some of these projects push out right. So it's not some of it why we brought down the capex numbers because some of it probably get deferred into 2026 and so we just wanted to highlight that.

Important thing Greg Yes.

Our free cash flow number is going up.

In terms of capital allocation, you should see us continue to pursue buying.

Buying back our stock we like last August.

Of course, it's a balancing act because I've always said.

Always looking at acquisition so.

We'll have to manage through that but absent any acquisitions, you should see us continue to buyback our stock, yes, Greg let me pile in here.

Raj has took up free cash flow guidance by $50 million.

<unk>.

Part of Thats deferral part of it's just.

We're just generating more cash as business improves and as the power Gen stuff starts to starts to deliver we have a lot of working capital there.

So look you know what we prefer with our free cash flow, we'd love to buy other companies, particularly marine companies.

But as you know those are hard to predict.

And then the absence of that as Raj was saying, we like where our stock is.

You could see issues the majority of our free cash flow absent an acquisition.

To buy back stock.

Okay, Yes, yes, no that's been pretty consistent messaging around that and then my other question was you mentioned that.

It looks like.

On the inland barge Newbuild side.

There is nil or very few barges under construction, but but.

Like you said that maybe pricing was maybe coming down in.

I realize deal is not coming down so.

Kind of curious whats the whats, maybe putting some of that downward pressure on new build.

<unk> pricing.

I don't know that we said that new barge build pricing is coming down.

Yes, we're not hearing that.

You'll see it still seeing.

Clean barges four and a half heaters five seven 10-K's to ballpark ish give or take a couple of hundred depending on the bells and whistles that you put on them, but I would I would tell you that steel is still stubbornly high and really the labor component in shipyards has not changed.

My conversations with the Shipyard's recent recent times.

I see.

Any significant decrease in the price of the tank barge.

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