What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-11-04 compared with 2022-08-08 · 294 added, 246 removed, 570 unchanged (49% of the section changed)

2 unchanged sentences

CONDENSED BALANCE SHEETS

September 30,

($ in thousands)

35 unchanged sentences

Treasury stock –

at cost, 5.5 million shares at June 30, 2022 and 5.4 million at December 31, 2021

at cost, 5.6 million shares at September 30, 2022 and 5.4 million at December 31, 2021

Total Kirby stockholders’

4 unchanged sentences

CONDENSED STATEMENTS OF EARNINGS

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

($ in thousands, except per share amounts)

9 unchanged sentences

Total costs and expenses

Operating income

Operating income (loss)

Interest expense

Earnings before taxes on income

Provision for taxes on income

Net earnings attributable to noncontrolling interests

Net earnings attributable to Kirby

Net earnings per share attributable to Kirby common stockholders:

Earnings (loss) before taxes on income

(Provision) benefit for taxes on income

Net earnings (loss)

Net (earnings) loss attributable to noncontrolling interests

Net earnings (loss) attributable to Kirby

Net earnings (loss) per share attributable to Kirby common stockholders:

See accompanying notes to condensed financial statements.

1 unchanged sentence

CONDENSED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

($ in thousands)

Net earnings (loss)

Other comprehensive income, net of taxes:

2 unchanged sentences

Total other comprehensive income, net of taxes

Total comprehensive income, net of taxes

Net earnings attributable to noncontrolling interests

Comprehensive income attributable to Kirby

Total comprehensive income (loss), net of taxes

Net (earnings) loss attributable to noncontrolling interests

Comprehensive income (loss) attributable to Kirby

See accompanying notes to condensed financial statements.

1 unchanged sentence

CONDENSED STATEMENTS OF CASH FLOWS

Six Months Ended June 30,

Nine Months Ended September 30,

($ in thousands)

Cash flows from operating activities:

Adjustments to reconcile net earnings to net cash provided by operations:

Net earnings (loss)

Adjustments to reconcile net earnings (loss) to net cash provided by operations:

Depreciation and amortization

Provision for deferred income taxes

Provision (benefit) for deferred income taxes

Amortization of share-based compensation

9 unchanged sentences

Borrowings (payments) on bank credit facilities, net

Borrowings on long-term debt

Payments on long-term debt

Payment of debt issuance costs

Proceeds from exercise of stock options

3 unchanged sentences

Net cash used in financing activities

Decrease in cash and cash equivalents

Increase (decrease) in cash and cash equivalents

Cash and cash equivalents, beginning of year

15 unchanged sentences

(in thousands)

Balance at March 31, 2022

Balance at June 30, 2022

Stock option exercises

5 unchanged sentences

Return of investment to noncontrolling interests

Balance at June 30, 2022

Balance at September 30, 2022

Comprehensive

2 unchanged sentences

(in thousands)

Balance at March 31, 2021

Balance at June 30, 2021

Stock option exercises

2 unchanged sentences

Amortization of unearned share-based compensation

Total comprehensive income, net of taxes

Balance at June 30, 2021

Total comprehensive loss, net of taxes

Return of investment to noncontrolling interests

Balance at September 30, 2021

See accompanying notes to condensed financial statements.

13 unchanged sentences

Return of investment to noncontrolling interests

Balance at June 30, 2022

Balance at September 30, 2022

Comprehensive

7 unchanged sentences

Amortization of share-based compensation

Total comprehensive income, net of taxes

Total comprehensive loss, net of taxes

Return of investment to noncontrolling interests

Balance at June 30, 2021

Balance at September 30, 2021

See accompanying notes to condensed financial statements.

9 unchanged sentences

Assets acquired consisted primarily of property and equipment.

During the six months ended June 30, 2021, the Company purchased four inland tank barges from a leasing company for $ 7.5 million in cash.

During the nine months ended September 30, 2021, the Company purchased four inland tank barges from a leasing company for $ 7.5 million in cash.

The Company had been leasing the barges prior to the purchase.

The following table sets forth the Company’s revenues by major source (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Marine transportation segment:

4 unchanged sentences

Contract liabilities represent advance consideration received from customers, and are recognized as revenue over time as the related performance obligation is satisfied.

Revenues recognized during the six months ended June 30, 2022 and 2021 that were included in the opening contract liability balances were $ 46.7 million and $ 39.2 million , respectively.

Revenues recognized during the nine months ended September 30, 2022 and 2021 that were included in the opening contract liability balances were $ 54.6 million and $ 40.3 million , respectively.

The Company presents all contract liabilities within the deferred revenues financial statement caption on the balance sheets.

The Company did no t have any contract assets at June 30, 2022 or December 31, 2021 .

The Company did no t have any contract assets at September 30, 2022 or December 31, 2021 .

The Company applies the practical expedient that allows non-disclosure of information about remaining performance obligations that have original expected durations of one year or less.

9 unchanged sentences

The Company evaluates the performance of its segments based on the contributions to operating income of the respective segments, before income taxes, interest, gains or losses on disposition of assets, other nonoperating income, noncontrolling interests, accounting changes, and nonrecurring items.

Intersegment revenues, based on market-based pricing, of KDS from KMT of $ 6.3 million and $ 13.9 million for the three months and six months ended June 30, 2022, respectively, and $ 7.3 million and $ 12.2 million for the three months and six months ended June 30, 2021, respectively, as well as the related intersegment profit of $ 0.6 million and $ 1.4 million for the three months and six months ended June 30, 2022 and $ 0.7 million and $ 1.2 million for the three months and six months ended June 30, 2021, respectively, have been eliminated from the tables below.

Intersegment revenues, based on market-based pricing, of KDS from KMT of $ 8.0 million and $ 21.9 million for the three months and nine months ended September 30, 2022, respectively, and $ 5.4 million and $ 17.6 million for the three months and nine months ended September 30, 2021, respectively, as well as the related intersegment profit of $ 0.8 million and $ 2.2 million for the three months and nine months ended September 30, 2022 and $ 0.5 million and $ 1.8 million for the three months and nine months ended September 30, 2021, respectively, have been eliminated from the tables below.

The following tables set forth the Company’s revenues and profit or loss by reportable segment and total assets (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Marine transportation

3 unchanged sentences

Distribution and services

September 30,

Total assets:

3 unchanged sentences

segment loss (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

General corporate expenses

3 unchanged sentences

total assets (in thousands):

September 30,

General corporate assets

2 unchanged sentences

The following table presents the carrying value and fair value (determined using inputs characteristic of a Level 2 fair value measurement) of debt outstanding (in thousands):

June 30, 2022

September 30, 2022

December 31, 2021

1 unchanged sentence

Carrying Value

Revolving Credit Facility due March 27, 2024 (a)

Term Loan due March 27, 2024 (a)

Revolving Credit Facility due July 29, 2027 (a)

Term Loan due July 29, 2027 (a)

Term Loan due March 27, 2024 (b)

3.29 % senior notes due February 27, 2023

2 unchanged sentences

Bank notes payable

Unamortized debt discounts and issuance costs (b)

(a) Variable interest rate o f 3.0 % and 1.5 % at June 30, 2022 and December 31, 2021, respectively.

(b) Excludes $ 1.1 million and $ 1.4 million attributable to the 2024 Revolving Credit Facility included in other assets at June 30, 2022 and December 31, 2021 , respectively.

Unamortized debt discounts and issuance costs (c)

(a) Variable interest rate o f 4.5 % at September 30, 2022.

(b) Variable interest rate of 1.5 % at December 31, 2021.

(c) Excludes $ 1.4 million attributable to the 2024 Revolving Credit Facility included in other assets at December 31, 2021 .

The following table presents borrowings and payments under the bank credit facilities (in thousands):

Six Months Ended June 30,

Nine Months Ended September 30,

Borrowings on bank credit facilities

Payments on bank credit facilities

At June 30, 2022, the Company had an amended and restated credit agreement (the “2024 Credit Agreement”) with a group of commercial banks, with JPMorgan Chase Bank, N.A.

At the beginning of the third quarter of 2022, the Company had an amended and restated credit agreement (the “2024 Credit Agreement”) with a group of commercial banks, with JPMorgan Chase Bank, N.A.

as the administrative agent bank, that allowed for an $ 850 million unsecured revolving credit facility (the “2024 Revolving Credit Facility”) and an unsecured term loan (the “2024 Term Loan”) with a maturity date of March 27, 2024 .

The 2024 Term Loan was prepayable, in whole or in part, without penalty.

During the six months ended June 30, 2022 , the Company repaid $ 30.0 million under the 2024 Term Loan.

Outstanding letters of credit under the 2024 Revolving Credit Facility were $ 5.1 million and available borrowing capacity was $ 844.9 million as of June 30, 2022.

Outstanding letters of credit under the $ 10 million credit line were $ 1.3 million and available borrowing capacity was $ 8.7 million as of June 30, 2022.

On July 29, 2022, the 2024 Credit Agreement was replaced with a new credit agreement (the “2027 Credit Agreement”) with a group of commercial banks, with JPMorgan Chase Bank, N.A.

On July 29, 2022, the Company entered into a new credit agreement (the “2027 Credit Agreement”) with a group of commercial banks, with JPMorgan Chase Bank, N.A.

as the administrative agent bank that allows for a $ 500 million unsecured revolving credit facility (the “2027 Revolving Credit Facility”) and a $ 250 million unsecured term loan (the “2027 Term Loan”) with a maturity date of July 29, 2027 .

The 2027 Credit Agreement replaced the 2024 Credit Agreement.

In conjunction with entering into the 2027 Credit Agreement, on July 29, 2022, the Company borrowed $ 35 million under the 2027 Revolving Credit Facility and $ 250 million under the 2027 Term Loan to repay borrowings under the 2024 Term Loan.

The 2027 Term Loan is repayable in quarterly installments, scheduled to commence December 31, 2022, in increasing percentages of the original principal amount of the loan, with the remaining unpaid balance of approximately $ 43.8 million payable upon maturity, assuming no prepayment.

In October 2022, the Company repaid $ 20.0 million under the 2027 Term Loan prior to scheduled maturities.

As a result, no repayments are required until September 30, 2023.

The 2027 Term Loan quarterly installments are excluded from short term liabilities because the Company has the ability and intent to refinance these quarterly installments under the 2027 Revolving Credit Facility.

Outstanding letters of credit under the 2027 Revolving Credit Facility were $ 5.1 million and available borrowing capacity was $ 474.9 million as of September 30, 2022.

Outstanding letters of credit under the $ 10 million credit line were $ 1.4 million and available borrowing capacity was $ 8.6 million as of September 30, 2022.

The 2027 Term Loan is repayable in quarterly installments, scheduled to commence September 30, 2023, in increasing percentages of the original principal amount of the loan, with the remaining unpaid balance of approximately $ 43.8 million payable upon maturity, assuming no prepayment.

The 2027 Term Loan is prepayable, in whole or in part, without penalty.

7 unchanged sentences

On February 3, 2022, the Company entered into a note purchase agreement for the issuance of $ 300 million of unsecured senior notes with a group of institutional investors, consisting of $ 60 million of 3.46 % series A notes (“Series A Notes”) and $ 240 million of 3.51 % series B notes (“Series B Notes ”), each due January 19, 2033 (collectively, the “2033 Notes”).

The Series A Notes are scheduled to be issued on October 20, 2022, and the Series B Notes are scheduled to be issued on January 19, 2023.

No principal payments will

be required until maturity.

The Series A Notes were issued on October 20, 2022, and the Series B Notes are scheduled to be issued on January 19, 2023.

No principal payments will be required until maturity.

Beginning in 2023, interest payments of $ 5.3 million will be due semi-annually on January 19 and July 19 of each year, with the exception of the first payment on January 19, 2023, which will be $ 0.5 million.

10 unchanged sentences

Future minimum lease payments under operating leases that have initial noncancelable lease terms in excess of one year were as follows (in thousands):

September 30,

Total lease payments

2 unchanged sentences

The following table summarizes lease costs (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Operating lease cost

3 unchanged sentences

The following table summarizes other supplemental information about the Company’s operating leases:

September 30,

Weighted average discount rate

Weighted average remaining lease term

(7) Impairments

During the third quarter of 2021, the Company decided to exit the Hawaii market, selling marine transportation equipment including four coastal tank barges, seven coastal tugboats, and certain other assets for aggregate cash proceeds of $ 17.2 million.

In addition, as of September 30, 2021, the Company retired and classified as held for sale, an additional 12 coastal tank barges and four coastal tugboats which were underutilized.

The sales and retirements of coastal marine transportation equipment resulted in an aggregate non‑cash impairment charge of $ 97.5 million to reduce the carrying value of these assets to their estimated sales prices, net of costs to sell.

As a result of the sale of the Hawaii marine transportation equipment, and the decision to retire certain additional underutilized coastal tank barges and tugboats, the Company concluded that a triggering event had occurred and performed interim quantitative impairment tests as of September 30, 2021 for certain of the marine transportation segment's long-lived assets and goodwill within the coastal marine market.

The Company determined the estimated fair value of such long-lived assets using a combination of a cost approach, a discounted cash flow analysis, and a market approach.

The Company determined the estimated fair value of the reporting unit using a combination of a discounted cash flow analysis and a market approach for comparable companies.

These analyses included management’s judgment regarding short-term and long-term internal forecasts, updated for recent events, appropriate discount rates, and capital expenditures using inputs characteristic of a Level 3 fair value measurement.

In performing the impairment test of certain long-lived assets within the marine transportation segment, the Company determined that the carrying value of certain long-lived assets, including certain coastal marine transportation equipment and operating lease right-of-use assets, were no longer recoverable, resulting in a non-cash impairment charge of $ 24.2 million during the three months ended September 30, 2021 to reduce such long-lived assets to fair value.

Based upon the results of the goodwill impairment test, the Company concluded that the carrying value of one reporting unit in the marine transportation segment exceeded its estimated fair value.

The carrying value of the reporting unit, including goodwill, and after recording impairments of long-lived assets identified above, exceeded its estimated fair value, resulting in a non-cash goodwill impairment charge of $ 219.1 million for the three months ended September 30, 2021.

(8) Stock Award Plans

The compensation cost that has been charged against earnings for the Company’s stock award plans and the income tax benefit recognized in the statement of earnings for stock awards were as follows (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Compensation cost

Income tax benefit

During the six months ended June 30, 2022, the Company grant ed 207,916 restricted stock units (“RSUs”) to selected officers and other key employees under the employee stock award plan which vest ratably over five years and 27,696 shares of restricted stock to nonemployee directors of the Company under the director stock plan, the majority of which vest six months after the date of grant.

During the nine months ended September 30, 2022, the Company grant ed 208,706 restricted stock units (“RSUs”) to selected officers and other key employees under the employee stock award plan which vest ratably over five years and 27,696 shares of restricted stock to nonemployee directors of the Company under the director stock plan, the majority of which vest six months after the date of grant.

(9) Taxes on Income

At June 30, 2022 and December 31, 2021, the Company had a federal income tax receivable of $ 70.5 million and $ 71.0 million , respectively, included in Accounts Receivable –

At September 30, 2022 and December 31, 2021, the Company had a federal income tax receivable of $ 70.5 million and $ 71.0 million , respectively, included in Accounts Receivable –

Other on the balance sheets.

1 unchanged sentence

Earnings (loss) before taxes on income and details of the provision (benefit) for taxes on income were as follows (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Earnings (loss) before taxes on income:

4 unchanged sentences

(10) Earnings Per Share

The following table presents the components of basic and diluted earnings per share (in thousands, except per share amounts):

Three Months Ended June 30,

Six Months Ended June 30,

Net earnings attributable to Kirby

The following table presents the components of basic and diluted earnings (loss) per share (in thousands, except per share amounts):

Three Months Ended September 30,

Nine Months Ended September 30,

Net earnings (loss) attributable to Kirby

Undistributed earnings allocated to restricted shares

Earnings available to Kirby common stockholders –

Earnings (loss) available to Kirby common stockholders –

Undistributed earnings allocated to restricted shares

Undistributed earnings reallocated to restricted shares

Earnings available to Kirby common stockholders –

Earnings (loss) available to Kirby common stockholders –

Shares outstanding:

4 unchanged sentences

Weighted average common stock outstanding –

Net earnings per share attributable to Kirby common stockholders:

Certain outstanding options to purchase approximately 0.4 million and 0.6 million shares of common stock were excluded in the computation of diluted earnings per share as of June 30, 2022 and 2021, respectively, as such stock options would have been antidilutive.

Certain outstanding RSUs to convert to 12,000 and 5,000 shares of common stock were also excluded in the computation of diluted earnings per share as of June 30, 2022 and 2021 , respectively, as such RSUs would have been antidilutive.

Net earnings (loss) per share attributable to Kirby common stockholders:

Certain outstanding options to purchase approximately 0.4 million and 0.6 million shares of common stock were excluded in the computation of diluted earnings per share as of September 30, 2022 and 2021, respectively, as such stock options would have been antidilutive.

Certain outstanding RSUs to convert to 11,000 and 565,000 shares of common stock were also excluded in the computation of diluted earnings per share as of September 30, 2022 and 2021 , respectively, as such RSUs would have been antidilutive.

(11) Inventories

1 unchanged sentence

net (in thousands):

September 30,

Finished goods

14 unchanged sentences

On March 27, 2018, the Company amended the Higman pension plan to close it to all new entrants and cease all benefit accruals for periods after May 15, 2018 for all participants.

The Company made a contribution of $ 0.5 million to the Higman pension plan during the six months ended June 30, 2022 and a contribution of $ 0.2 million during July 2022 .

The Company expects to make additional contributions of $ 0.2 million during the remainder of 2022.

The Company made a contribution of $ 0.7 million to the Higman pension plan during the nine months ended September 30, 2022 and a contribution of $ 0.2 million during October 2022.

The Company does not expect to make any additional contributions for the remainder of 2022.

The Company sponsors an unfunded defined benefit health care plan that provides limited postretirement medical benefits to employees who meet minimum age and service requirements, and to eligible dependents.

7 unchanged sentences

Pension Plans

Three Months Ended June 30,

Three Months Ended September 30,

Components of net periodic benefit cost:

5 unchanged sentences

Pension Plans

Six Months Ended June 30,

Nine Months Ended September 30,

Components of net periodic benefit cost:

6 unchanged sentences

Postretirement Welfare Plan

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Components of net periodic benefit cost:

4 unchanged sentences

The Company’s changes in other comprehensive income were as follows (in thousands):

Three Months Ended June 30,

Income Tax Provision

Three Months Ended September 30,

Income Tax (Provision) Benefit

Income Tax Provision

Pension and postretirement benefits (a):

Amortization of net actuarial loss

Amortization of net actuarial (gain) loss

Actuarial gains

Foreign currency translation

Six Months Ended June 30,

Income Tax Provision

Nine Months Ended September 30,

Income Tax (Provision) Benefit

Income Tax Provision

Pension and postretirement benefits (a):

Amortization of net actuarial loss

Amortization of net actuarial (gain) loss

Actuarial gains

7 unchanged sentences

Stewart’s fuel tanks causing a discharge of diesel fuel into the water.

The USCG and the NTSB designated the Company as a party of interest in their investigation as to the cause of the incident.

The United States Coast Guard and the National Transportation Safety Board designated the Company as a party of interest in their investigation as to the cause of the incident.

The Canadian authorities including Transport Canada and the Canadian Transportation Safety Board investigated the cause of the incident.

8 unchanged sentences

The Company has issued guaranties or obtained standby letters of credit and performance bonds supporting performance by the Company and its subsidiaries of contractual or contingent legal obligations of the Company and its subsidiaries incurred in the ordinary course of business.

The aggregate notional value of these instruments is $ 20.2 million at June 30, 2022, including $ 12.1 million in letters of credit and $ 8.1 million in performance bonds.

The aggregate notional value of these instruments is $ 20.1 million at September 30, 2022, including $ 12.1 million in letters of credit and $ 8.0 million in performance bonds.

All of these instruments have an expiration date within two years .

15 unchanged sentences

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.”

For purposes of Management’s Discussion, all net earnings (loss) per share attributable to Kirby common stockholders are “diluted earnings (loss) per share.”

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.

3 unchanged sentences

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

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Total revenues

Net earnings attributable to Kirby

Net earnings per share attributable to Kirby common stockholders –

Net earnings (loss) attributable to Kirby

Net earnings (loss) per share attributable to Kirby common stockholders –

Net cash provided by operating activities

1 unchanged sentence

The 2022 second quarter included $1.5 million before taxes, $1.3 million after taxes, or $0.02 per share of severance expense.

Cash provided by operating activities for the 2022 first six months decreased primarily due to the receipt of a tax refund of $119.5 million, including accrued interest, for the Company’s 2019 federal tax return during the 2021 first quarter.

For the 2022 first six months, capital expenditures of $79.1 million included $66.3 million in KMT and $12.8 million in KDS and corporate, more fully described under cash flow and capital expenditures below.

The 2021 third quarter included $340.7 million before taxes, $275.1 million after taxes, or $4.58 per share, non-cash charges related to impairment of long-lived assets related to coastal marine transportation equipment and impairment of goodwill in the marine transportation segment.

See Note 7, Impairments in the financial statements for additional information.

Cash provided by operating activities for the 2022 first nine months decreased in comparison to the 2021 first nine months primarily due to the receipt of a tax refund of $119.5 million, including accrued interest, for the Company’s 2019 federal tax return during the 2021 first quarter.

For the 2022 first nine months, capital expenditures of $120.3 million included $102.8 million in KMT and $17.5 million in KDS and corporate, each more fully described under Cash Flow and Capital Expenditures below.

The Company projects that capital expenditures for 2022 will be in the $170 million to $190 million range.

The 2022 construction program will consist of approximately $5 million for the construction of new inland towboats, $145 million to $155 million primarily for maintenance capital and improvements to existing marine equipment and facilities, and $20 million to $30 million for new machinery and equipment, facilities improvements, and information technology projects in KDS and corporate.

The Company’s debt-to-capitalization ratio decreased to 27.9% at June 30, 2022 from 28.7% at December 31, 2021, primarily due to repayments under the 2024 Term Loan in the 2022 first six months, and an increase in total equity, primarily due to the net earnings attributable to Kirby of $45.9 million, partially offset by treasury stock purchases of $18.1 million.

The Company’s debt outstanding as of June 30, 2022 and December 31, 2021 is detailed in Long-Term Financing below.

The Company’s debt-to-capitalization ratio decreased to 27.3% at September 30, 2022 from 28.7% at December 31, 2021, primarily due to repayments under the 2024 Term Loan in the first nine months of 2022, and an increase in total equity, primarily due to the net earnings attributable to Kirby of $85.0 million, partially offset by treasury stock purchases of $22.9 million.

The Company’s debt outstanding as of September 30, 2022 and December 31, 2021 is detailed in Long-Term Financing below.

Marine Transportation

For both the 2022 second quarter and first six months, KMT generated 58% of the Company’s revenues.

For both the 2022 third quarter and first nine months, KMT generated 58% of the Company’s revenues.

The segment’s customers include many of the major petrochemical and refining companies that operate in the United States.

3 unchanged sentences

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

September 30,

Inland tank barges:

7 unchanged sentences

The Company also owns shifting operations and fleeting facilities for dry cargo barges and tank barges on the Houston Ship Channel and in Freeport and Port Arthur, Texas, and Lake Charles, Louisiana, and a shipyard for building towboats and performing routine maintenance near the Houston Ship Channel, as well as a two-thirds interest in Osprey Line, L.L.C., which transports project cargoes and cargo containers by barge.

During the 2022 first six months, the Company brought back into service seven inland tank barges and leased two tank barges.

The net result was an increase of nine inland tank barges and approximately 0.1 million barrels of capacity.

KMT revenues for the 2022 second quarter and first six months increased 22% and 20%, respectively, and operating income increased 67% and 134%, respectively, compared to the 2021 second quarter and first six months.

The increases for the 2022 second quarter and first six months were primarily due to increased tank barge utilization, higher term and spot pricing, and increased fuel rebills in the inland and coastal markets.

The 2021 first six months was also heavily impacted by Winter Storm Uri which shut down many Gulf Coast refineries and chemical plants for an extended period of time starting in mid-February.

During the 2022 first nine months, the Company brought back into service 14 inland tank barges and returned four leased tank barges.

The net result was an increase of ten inland tank barges and approximately 0.2 million barrels of capacity.

KMT revenues for the 2022 third quarter and first nine months increased 28% and 23%, respectively, and operating income increased 147% and 140%, respectively, compared to the 2021 third quarter and first nine months.

The increases for the 2022 third quarter and first nine months were primarily due to increased tank barge utilization, higher term and spot pricing, and higher fuel rebills in the inland and coastal markets.

Also, the 2022 first quarter was impacted by the COVID-19 Omicron variant as increased cases of the virus among the Company’s mariners led to crewing challenges, lost revenue and increased operating costs.

The 2021 first nine months was also heavily impacted by Winter Storm Uri which shut down many Gulf Coast refineries and chemical plants for an extended period of time starting in mid-February.

These emergency shutdowns resulted in significantly reduced liquids production and lower volumes for the Company’s inland marine transportation market during the 2021 first quarter.

The 2021 first nine months revenues and operating income were also impacted by Hurricane Ida in the 2021 third quarter which shuttered almost the entire Southeast Louisiana refinery and chemical complex and key waterways for an extended period of time.

The 2022 and 2021 first quarters were impacted by poor operating conditions including seasonal wind and fog along the Gulf Coast, flooding on the Mississippi River, and various lock closures along the Gulf Intracoastal Waterway, in addition to ice on the Illinois River.

For both the 2022 second quarter and first six months, the inland tank barge fleet contributed 78% and the coastal fleet contributed 22% of KMT revenues.

For the 2021 second quarter and first six months, the inland tank barge fleet contributed 76% and 75%, respectively, and the coastal fleet contributed 24% and 25%, respectively, of KMT revenues.

Inland tank barge utilization levels averaged in the mid-80% range during the 2022 first quarter and the low 90% range during the 2022 second quarter compared to the mid-70% range during the 2021 first quarter and the low to mid-80% range during the 2021 second quarter.

The 2022 first six months reflected increasing activity levels as a result of higher refinery and petrochemical plant utilization while the 2021 first six months was impacted by reduced demand resulting from the effects of the COVID-19 pandemic causing an economic slowdown as well as reduced volumes due to Winter Storm Uri during the 2021 first quarter partially offset by the Colonial Pipeline outage which increased barge transportation activity in the 2021 second quarter.

Coastal tank barge utilization levels averaged in the low 90% range during both the 2022 first and second quarters compared to the mid-70% range during the 2021 first quarter and the low to mid-70% range during the 2021 second quarter.

For the 2022 third quarter and first nine months, the inland tank barge fleet contributed 80% and 79%, respectively, and the coastal fleet contributed 20% and 21%, respectively, of KMT

For the 2021 third quarter and first nine months, the inland tank barge fleet contributed 76% and 75%, respectively, and the coastal fleet contributed 24% and 25%, respectively, of KMT revenues.

Inland tank barge utilization levels averaged in the mid-80% range during the 2022 first quarter, the low 90% range during the 2022 second and third quarters compared to the mid-70% range during the 2021 first quarter, the low to mid-80% range during the 2021 second quarter, and the low 80% range during the 2021 third quarter.

The 2022 first nine months reflected increasing activity levels as a result of higher refinery and petrochemical plant utilization while the 2021 first nine months was impacted by reduced demand resulting from the effects of the COVID-19 pandemic causing an economic slowdown as well as reduced volumes due to Winter Storm Uri during the 2021 first quarter and Hurricane Ida during the 2021 third quarter, partially offset by the Colonial Pipeline outage which increased barge transportation activity in the 2021 second quarter.

Coastal tank barge utilization levels averaged in the low 90% range during the 2022 first and second quarters and the low to mid-90% range during the 2022 third quarter compared to the mid-70% range during the 2021 first and third quarters and the low to mid-70% range during the 2021 second quarter.

The increase in coastal tank barge utilization during 2022 was primarily due to the retirement of underutilized barges in the 2021 third quarter and some modest improvements in customer demand.

During both the 2022 second quarter and first six months, approximately 60% of KMT inland revenues were under term contracts and 40% were spot contract revenues.

During both the 2021 second quarter and first six months, approximately 65% of KMT inland revenues were under term contracts and 35% were spot contract revenues.

Inland time charters during both the 2022 second quarter and first six months represented 57% of the inland revenues under term contracts compared with 57% and 59% in the 2021 second quarter and first six months, respectively.

During each of the 2022 and 2021 second quarters and first six months, approximately 80% of the coastal revenues were under term contracts and 20% were spot contract revenues.

Coastal time charters represented approximately 90% of coastal revenues under term contracts during both the 2022 second quarter and first six months compared to approximately 85% during both the 2021 second quarter and first six months.

During both the 2022 third quarter and first nine months, approximately 60% of KMT inland revenues were under term contracts and 40% were spot contract revenues.

During both the 2021 third quarter and first nine months, approximately 65% of KMT inland revenues were under term contracts and 35% were spot contract revenues.

Inland time charters during the 2022 third quarter and first nine months represented 56% and 57%, respectively, of the inland revenues under term contracts compared with 56% and 58% in the 2021 third quarter and first nine months, respectively.

During the 2022 third quarter and first nine months, approximately 65% and 75%, respectively, of KMT coastal inland revenues were under term contracts and 35% and 25%, respectively, were spot contracts.

During both the 2021 third quarter and first nine months, approximately 80% of the coastal revenues were under term contracts and 20% were spot contract revenues.

Coastal time charters represented approximately 90% of coastal revenues under term contracts during both the 2022 third quarter and first nine months compared with approximately 85% during both the 2021 third quarter and first nine months.

Term contracts have contract terms of 12 months or longer, while spot contracts have contract terms of less than 12 months.

3 unchanged sentences

June 30, 2022

September 30, 2022

Inland market:

7 unchanged sentences

Effective January 1, 2022, annual escalators for labor and the producer price index on a number of inland multi-year contracts resulted in rate increases on those contracts of approximately 5%, excluding fuel.

KMT operating margin was 7.6% and 6.3% for the 2022 second quarter and first six months, respectively, compared to 5.6% and 3.2% for the 2021 second quarter and first six months, respectively.

KMT operating margin was 9.6% and 7.5% for the 2022 third quarter and first nine months, respectively, compared to 5.0% and 3.8% for the 2021 third quarter and first nine months, respectively.

Distribution and Services

1 unchanged sentence

The Company also rents equipment including generators, industrial compressors, high capacity lift trucks, and refrigeration trailers for use in a variety of industrial markets, manufactures and remanufactures oilfield service equipment, including pressure pumping units, and manufactures cementing and pumping equipment as well as coil tubing and well intervention equipment, electric power generation equipment, specialized electric distribution and control equipment, and high capacity energy storage/battery systems for oilfield service and railroad customers.

For both the 2022 second quarter and first six months, KDS generated 42% of the Company’s revenues, of which 82% and 85%, respectively, were generated from service and parts and 18% and 15%, respectively, from manufacturing.

For both the 2022 third quarter and first nine months, KDS generated 42% of the Company’s revenues, of which 83% and 80%, respectively, were generated from service and parts and 17% and 20%, respectively, from manufacturing.

The results of KDS are largely influenced by the economic cycles of the oil and gas, marine, power generation, on-highway, and other related industrial markets.

KDS revenues for the 2022 second quarter and first six months increased 29% and 30%, respectively, and operating income increased 172% and 206%, respectively, compared with the 2021 second quarter and first six months.

In the commercial and industrial market, the increases for the 2022 second quarter and first six months were primarily attributable to strong economic activity across the United States which resulted in higher business levels in the marine and on-highway businesses.

Increased product sales in Thermo King also contributed favorably to the 2022 second quarter and first six months results.

KDS revenues for the 2022 third quarter and first nine months increased 20% and 26%, respectively, and operating income increased 102% and 149%, respectively, compared with the 2021 third quarter and first nine months.

In the commercial and industrial market, the increases for the 2022 third quarter and first nine months were primarily attributable to strong economic activity across the United States which resulted in higher business levels in the marine and on-highway businesses.

Increased product sales in Thermo King also contributed favorably to the 2022 third quarter and first nine months results.

These increases were partially offset by continuing supply chain constraints and delays.

The 2021 first six months was impacted by Winter Storm Uri which caused reduced activity, especially in the Southern United States, in the commercial and industrial market.

For the 2022 second quarter and first six months, the commercial and industrial market contributed 55% and 56%, respectively, of KDS revenues.

In the oil and gas market, revenues and operating income improved compared to the 2021 second quarter and first six months due to higher oilfield activity which resulted in increased demand for new transmissions and parts in the distribution business.

The 2021 first nine months was impacted by Winter Storm Uri which caused reduced activity, especially in the Southern United States, in the commercial and industrial market.

For the 2022 third quarter and first nine months, the commercial and industrial market contributed 53% and 55%, respectively, of KDS revenues.

In the oil and gas market, revenues and operating income improved compared to the 2021 third quarter and first nine months due to higher oilfield activity which resulted in increased demand for new transmissions and parts in the distribution business.

Although the manufacturing business was heavily impacted by supply chain delays, the business continued to experience increased orders and deliveries of new environmentally friendly pressure pumping equipment and power generation equipment for electric fracturing.

For the 2022 second quarter and first six months, the oil and gas market contributed 45% and 44%, respectively, of KDS revenues.

KDS operating margin was 5.7% and 5.1% for the 2022 second quarter and first six months, respectively, compared to 2.7% and 2.1% for the 2021 second quarter and first six months, respectively.

Refinery and petrochemical utilization levels are near historic highs.

This is favorable for the Company's barge utilization which is strong in both inland and coastal markets with steadily increasing rates.

In KDS, despite persistent supply chain constraints and delays, demand for the Company's products and services continues to grow.

Overall, the Company expects both KMT and KDS to deliver improved financial results in 2022.

The inland marine transportation market, revenues and operating income are expected to continue to improve, driven by increased barge utilization, improvements in the spot market, and renewals of expiring term contracts at higher rates.

The impacts of rising costs from inflationary pressures, including significantly higher fuel prices, are expected to be recovered as term contracts renew and contract escalators reprice over the coming quarters and into 2023.

In coastal marine, modest improvements in demand and pricing are anticipated in 2022, but revenues and operating income are expected to be impacted by planned shipyard maintenance and ballast water treatment installations on certain vessels for the duration of the year.

For the 2022 third quarter and first nine months, the oil and gas market contributed 47% and 45%, respectively, of KDS revenues.

KDS operating margin was 7.1% and 5.8% for the 2022 third quarter and first nine months, respectively, compared to 4.2% and 2.9% for the 2021 third quarter and first nine months, respectively.

Refinery and petrochemical utilization levels remain at high levels.

This is favorable for the Company's barge utilization, which is strong in both inland and coastal markets, and pricing, which continues to increase.

In KDS, despite ongoing supply chain constraints and delays, demand for the Company's products and services continues to grow.

Overall, the Company expects both KMT and KDS to deliver improved financial results in 2022 and going into 2023.

The Company continues to closely monitor the ever-changing economic landscape related to the impact of higher interest rates and possible recessionary headwinds as it moves into 2023.

In the inland marine transportation market, conditions are expected to continue to improve driven by increased barge utilization, improvements in the spot market, and renewals of expiring term contracts at higher rates.

An increase in delay days due to normal seasonal conditions and the impact of record low water on the Mississippi River is expected in the fourth quarter.

In coastal marine, modest improvements in demand and pricing are anticipated in the 2022 fourth quarter, but revenues and operating income are expected to be impacted by planned shipyard maintenance and ballast water treatment installations on certain vessels for the remainder of the year.

KDS results are largely influenced by the cycles of the oil and gas, marine, power generation, on-highway and other related industrial markets.

1 unchanged sentence

In commercial and industrial, favorable economic activity is expected to result in increased demand in power generation, marine repair, and on-highway.

Overall, despite ongoing supply chain issues and long lead times, favorable oilfield fundamentals and increased demand in commercial and industrial are expected to result in improved financial results in 2022.

However, ongoing supply chain issues and long lead times are expected in the near term, contributing to some volatility as deliveries of products possibly shift into future quarters.

On March 31, 2022, the Company paid $3.9 million in cash to purchase assets of a gearbox repair company in KDS.

During the six months ended June 30, 2021, the Company purchased four inland tank barges from a leasing company for $7.5 million in cash.

During the nine months ended September 30, 2021, the Company purchased four inland tank barges from a leasing company for $7.5 million in cash.

The Company had been leasing the barges prior to the purchase.

2 unchanged sentences

The following table sets forth the Company’s KMT and KDS revenues and the percentage of each to total revenues (dollars in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Marine transportation

2 unchanged sentences

The following table sets forth KMT revenues, costs and expenses, operating income, and operating margin (dollars in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Marine transportation revenues

8 unchanged sentences

The following table shows the marine transportation markets serviced by the Company, KMT revenue distribution, products moved and the drivers of the demand for the products the Company transports:

2022 Second Quarter

2022 Six Months

2022 Third Quarter

2022 Nine Months

Products Moved

13 unchanged sentences

Corn, Cotton and Wheat Production, Chemical Feedstock Usage

KMT revenues for the 2022 second quarter and first six months increased 22% and 20%, respectively, compared to the 2021 second quarter and first six months revenues.

The increase for the 2022 second quarter and first six months was primarily due to increased tank barge utilization, higher term and spot pricing, and increased fuel rebills in the inland and coastal markets.

The 2021 first six months was also heavily impacted by Winter Storm Uri which shut down many Gulf Coast refineries and chemical plants for an extended period of time starting in mid-February.

KMT revenues for the 2022 third quarter and first nine months increased 28% and 23%, respectively, compared to the 2021 third quarter and first nine months revenues.

The increase for the 2022 third quarter and first nine months was primarily due to increased tank barge utilization, higher term and spot pricing, and higher fuel rebills in the inland and coastal markets.

The 2021 first nine months was also heavily impacted by Winter Storm Uri which shut down many Gulf Coast refineries and chemical plants for an extended period of time starting in mid-February.

These emergency shutdowns resulted in significantly reduced liquids production and lower volumes for the Company’s inland marine transportation market during the 2021 first quarter.

For both the 2022 second quarter and first six months, the inland tank barge fleet contributed 78% and the coastal fleet contributed 22% of KMT revenues.

For the 2021 second quarter and first six months, the inland tank barge fleet contributed 76% and 75%, respectively, and the coastal fleet contributed 24% and 25%, respectively, of KMT revenues.

For the 2022 third quarter and first nine months, the inland tank barge fleet contributed 80% and 79%, respectively, and the coastal fleet contributed 20% and 21%, respectively, of KMT revenues.

For the 2021 third quarter and first nine months, the inland tank barge fleet contributed 76% and 75%, respectively, and the coastal fleet contributed 24% and 25%, respectively, of KMT revenues.

The increase in coastal tank barge utilization during 2022 was primarily due to the retirement of underutilized barges in the 2021 third quarter and some modest improvements in customer demand.

The petrochemical market, which is the Company’s largest market, contributed 49% of KMT revenues for both the 2022 second quarter and first six months, reflecting increased volumes and utilization from Gulf Coast petrochemical plants as a result of improved economic conditions following the height of the COVID-19 pandemic.

The black oil market, which contributed 28% of KMT revenues for both the 2022 second quarter and first six months, reflected improved demand as refinery utilization and production levels of refined petroleum products and fuel oils increased following the height of the COVID-19 pandemic.

During the 2022 first six months, the Company transported crude oil and natural gas condensate produced from the Permian Basin and the Eagle Ford shale formation in Texas, both along the Gulf Intracoastal Waterway with inland vessels and in the Gulf of Mexico with coastal equipment.

The petrochemical market, which is the Company’s largest market, contributed 50% and 49% of KMT revenues for the 2022 third quarter and first nine months, respectively, reflecting increased volumes and utilization from Gulf Coast petrochemical plants as a result of improved economic conditions following the height of the COVID-19 pandemic.

The black oil market, which contributed 28% of KMT revenues for both the 2022 third quarter and first nine months, reflected improved demand as refinery utilization and production levels of refined petroleum products and fuel oils increased following the height of the COVID-19 pandemic.

During the 2022 first nine months, the Company transported crude oil and natural gas condensate produced from the Permian Basin and the Eagle Ford shale formation in Texas, both along the Gulf Intracoastal Waterway with inland vessels and in the Gulf of Mexico with coastal equipment.

Additionally, the Company transported volumes of Utica natural gas condensate downriver from the Mid-Atlantic to the Gulf Coast and Canadian and Bakken crude downriver from the Midwest to the Gulf Coast.

The refined petroleum products market, which contributed 20% of KMT revenues for both the 2022 second quarter and first six months, reflected increased volumes in the inland market as refinery utilization and product levels improved following the height of the COVID-19 pandemic.

The agricultural chemical market, which contributed 3% of KMT revenues for both the 2022 second quarter and first six months, reflected improved demand for transportation of both domestically produced and imported products, primarily due to improved economic conditions following the height of the COVID-19 pandemic.

For the 2022 second quarter, the inland operations incurred 2,762 delay days, 5% fewer than the 2,922 delay days that occurred during the 2021 second quarter.

For the 2022 first six months, the inland operations incurred 5,899 delay days, 2% more than the 5,776 delay days that occurred during the 2021 first six months.

The refined petroleum products market, which contributed 19% and 20% of KMT revenues for the 2022 third quarter and first nine months, respectively, reflected increased volumes in the inland market as refinery utilization and product levels improved following the height of the COVID-19 pandemic.

The agricultural chemical market, which contributed 3% of KMT revenues for both the 2022 third quarter and first nine months, reflected improved demand for transportation of both domestically produced and imported products, primarily due to improved economic conditions following the height of the COVID-19 pandemic.

For the 2022 third quarter, the inland operations incurred 1,253 delay days, 16% fewer than the 1,499 delay days that occurred during the 2021 third quarter.

For the 2022 first nine months, the inland operations incurred 7,152 delay days, 2% fewer than the 7,275 delay days that occurred during the 2021 first nine months.

Delay days measure the lost time incurred by a tow (towboat and one or more tank barges) during transit when the tow is stopped due to weather, lock conditions, or other navigational factors.

1 unchanged sentence

The 2022 first quarter was also impacted by ice on the Illinois River while the 2021 first quarter was impacted by closures of key waterways as a result of lock maintenance projects.

During both the 2022 second quarter and first six months, approximately 60% of KMT inland revenues were under term contracts and 40% were spot contract revenues.

During both the 2021 second quarter and first six months, approximately 65% of KMT inland revenues were under term contracts and 35% were spot contract revenues.

During each of the 2022 and 2021 second quarters and first six months, approximately 80% of the coastal revenues were under term contracts and 20% were spot contract revenues.

During both the 2022 third quarter and first nine months, approximately 60% of KMT inland revenues were under term contracts and 40% were spot contract revenues.

During both the 2021 third quarter and first nine months, approximately 65% of KMT inland revenues were under term contracts and 35% were spot contract revenues.

During both the 2021 third quarter and first nine months, approximately 80% of the coastal revenues were under term contracts and 20% were spot contract revenues.

Term contracts have contract terms of 12 months or longer, while spot contracts have contract terms of less than 12 months.

3 unchanged sentences

June 30, 2022

September 30, 2022

Inland market:

8 unchanged sentences

Marine Transportation Costs and Expenses

Costs and expenses for the 2022 second quarter and first six months increased 19% and 16%, respectively, compared to the 2021 second quarter and first six months.

Costs of sales and operating expenses for the 2022 second quarter and first six months increased 28% and 24%, respectively, compared with the 2021 second quarter and first six months.

The increases during the 2022 second quarter and first six months primarily reflect improved business activity levels and increased fuel costs as well as incremental costs associated with the COVID-19 Omicron variant during the first quarter.

The inland marine transportation fleet operated an average of 270 towboats during the 2022 second quarter, of which an average of 59 were chartered, compared to 260 during the 2021 second quarter, of which an average of 42 were chartered.

The increase was primarily due to increasing business activity levels during the 2022 second quarter.

Generally, variability in demand or anticipated demand, as tank barges are added or removed from the fleet, as chartered towboat availability changes, or as weather or water conditions dictate, the Company charters in or releases chartered towboats in an effort to balance horsepower needs with current requirements.

Costs and expenses for the 2022 third quarter and first nine months increased 22% and 18%, respectively, compared to the 2021 third quarter and first nine months.

Costs of sales and operating expenses for the 2022 third quarter and first nine months increased 29% and 26%, respectively, compared with the 2021 third quarter and first nine months.

The increases during the 2022 third quarter and first nine months primarily reflect improved business activity levels and increased fuel costs as well as incremental costs associated with the COVID-19 Omicron variant during the 2022 first quarter.

The inland marine transportation fleet operated an average of 274 towboats during the 2022 third quarter, of which an average of 59 were chartered, compared to 243 during the 2021 third quarter, of which an average of 30 were chartered.

The increase was primarily due to increasing business activity levels during the 2022 third quarter.

The Company charters in or releases chartered towboats in an effort to balance horsepower needs with current requirements, taking into account variability in demand or anticipated demand, addition or removal of tank barges from the fleet, chartered towboat availability, and weather or water conditions.

The Company has historically used chartered towboats for approximately one-fourth of its horsepower requirements.

During the 2022 second quarter, the inland operations consumed 12.6 million gallons of diesel fuel compared to 11.8 million gallons consumed during the 2021 second quarter.

The average price per gallon of diesel fuel consumed during the 2022 second quarter was $3.98 per gallon compared with $2.06 per gallon for the 2021 second quarter.

During the 2022 first six months, the inland operations consumed 24.2 million gallons of diesel fuel compared to 22.6 million gallons consumed during the 2021 first six months.

The average price per gallon of diesel fuel consumed during the 2022 first six months was $3.27 per gallon compared with $1.86 per gallon for the 2021 first six months.

During the 2022 third quarter, the inland operations consumed 12.5 million gallons of diesel fuel compared to 11.8 million gallons consumed during the 2021 third quarter.

The average price per gallon of diesel fuel consumed during the 2022 third quarter was $4.24 per gallon compared with $2.24 per gallon for the 2021 third quarter.

During the 2022 first nine months, the inland operations consumed 36.7 million gallons of diesel fuel compared to 34.4 million gallons consumed during the 2021 first nine months.

The average price per gallon of diesel fuel consumed during the 2022 first nine months was $3.60 per gallon compared with $1.99 per gallon for the 2021 first nine months.

Fuel escalation and de-escalation clauses are typically included in term contracts and are designed to rebate fuel costs when prices decline and recover additional fuel costs when fuel prices rise;

1 unchanged sentence

Spot contracts do not have escalators for fuel.

Selling, general and administrative expenses for the 2022 second quarter were flat compared to the 2021 second quarter and increased 3% for the 2022 first six months compared to the 2021 first six months.

The increase for the 2022 first six months was primarily due to increased incentive compensation accruals and higher business activity levels.

Business activity levels in the 2021 first six months were impacted by COVID-19 and the resulting economic slowdown as well as Winter Storm Uri during the 2021 first quarter.

Depreciation and amortization for the both the 2022 second quarter and first six months decreased 7% compared to the 2021 second quarter and first six months, primarily reflecting retirements, sales, and impairment of marine equipment during 2021 and 2022.

Selling, general and administrative expenses for the 2022 third quarter and first nine months increased 11% and 6%, respectively, compared to the 2021 third quarter and first nine months as the Company manages inflationary cost pressures.

The increase for the 2022 third quarter was primarily due to salary and wage increases effective July 1, 2022 and increased incentive compensation accruals as a result of higher business activity levels.

Business activity levels in the 2021 first nine months were impacted by COVID-19 and the resulting economic slowdown as well as Winter Storm Uri during the 2021 first quarter and Hurricane Ida during the 2021 third quarter.

Depreciation and amortization for the 2022 third quarter and first nine months decreased 5% and 6%, respectively, compared to the 2021 third quarter and first nine months, primarily reflecting retirements, sales, and impairment of marine equipment during 2021 and 2022.

Marine Transportation Operating Income and Operating Margin

KMT operating income for the 2022 second quarter and first six months increased 67% and 134%, respectively, compared with the 2021 second quarter and first six months.

The 2022 second quarter operating margin was 7.6% compared with 5.6% for the 2021 second quarter.

The 2022 first six months operating margin was 6.3% compared with 3.2% for the 2021 first six months.

KMT operating income for the 2022 third quarter and first nine months increased 147% and 140%, respectively, compared with the 2021 third quarter and first nine months.

The 2022 third quarter operating margin was 9.6% compared with 5.0% for the 2021 third quarter.

The 2022 first nine months operating margin was 7.5% compared with 3.8% for the 2021 first nine months.

The increases in operating income and operating margin were primarily due to increased barge utilization and higher term and spot contract pricing in the inland and coastal markets, each as a result of improving business activity levels, partially offset by increasing fuel prices as well as the impacts of the COVID-19 Omicron variant during the 2022 first quarter.

The 2021 first six months activity levels were also impacted by Winter Storm Uri.

The 2021 first nine months activity levels were also impacted by Winter Storm Uri and Hurricane Ida.

Distribution and Services

The following table sets forth KDS revenues, costs and expenses, operating income, and operating margin (dollars in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Distribution and services revenues

9 unchanged sentences

Markets Serviced

2022 Second Quarter

2022 Six Months

2022 Third Quarter

2022 Nine Months

Commercial and Industrial

4 unchanged sentences

Oilfield Services, Oil and Gas Operators and Producers

KDS revenues for the 2022 second quarter and first six months increased 29% and 30%, respectively, compared to the 2021 second quarter and first six months.

In the commercial and industrial market, the increase for the 2022 second quarter and first six months was primarily attributable to strong economic activity across the United States which resulted in higher business levels in the marine and on-highway businesses.

Increased product sales in Thermo King also contributed favorably to the 2022 second quarter and first six months results.

KDS revenues for the 2022 third quarter and first nine months increased 20% and 26%, respectively, compared to the 2021 third quarter and first nine months.

In the commercial and industrial market, the increase for the 2022 third quarter and first nine months was primarily attributable to strong economic activity across the United States which resulted in higher business levels in the marine and on-highway businesses.

Increased product sales in Thermo King also contributed favorably to the 2022 third quarter and first nine months results.

These increases were partially offset by continuing supply chain constraints and delays.

The 2021 first six months was impacted by Winter Storm Uri which caused reduced activity, especially in the Southern United States, in the commercial and industrial market.

For the 2022 second quarter and first six months, the commercial and industrial market contributed 55% and 56%, respectively, of KDS revenues.

In the oil and gas market, revenues improved compared to the 2021 second quarter and first six months due to higher oilfield activity which resulted in increased demand for new transmissions and parts in the distribution business.

The 2021 first nine months was impacted by Winter Storm Uri which caused reduced activity, especially in the Southern United States, in the commercial and industrial market.

For the 2022 third quarter and first nine months, the commercial and industrial market contributed 53% and 55%, respectively, of KDS revenues.

In the oil and gas market, revenues improved compared to the 2021 third quarter and first nine months due to higher oilfield activity which resulted in increased demand for new transmissions and parts in the distribution business.

For the 2022 second quarter and first six months, the oil and gas market contributed 45% and 44%, respectively, of KDS revenues.

For the 2022 third quarter and first nine months, the oil and gas market contributed 47% and 45%, respectively, of KDS revenues.

Distribution and Services Costs and Expenses

Costs and expenses for the 2022 second quarter and first six months increased 25% and 26%, respectively, compared with the 2021 second quarter and first six months.

Costs of sales and operating expenses for the 2022 second quarter and first six months increased 27% and 29%, respectively, compared with the 2021 second quarter and first six months, reflecting higher demand in the marine and on-highway businesses in commercial and industrial markets as well as increased demand in the oil and gas market as a result of higher oilfield activity levels.

Selling, general and administrative expenses for the 2022 second quarter and first six months increased 23% and 19%, respectively, compared to the 2021 second quarter and first six months, primarily due to salaries and costs related to the acquisition of assets of an energy storage systems manufacturer in the 2021 fourth quarter, annual salary raises, severance expense, and higher warranty accruals associated with increased activity levels.

Depreciation and amortization for the 2022 second quarter and first six months decreased 29% and 30%, respectively, compared to the 2021 second quarter and first six months, primarily due to sales of property and equipment and reduced capital spending during 2021.

Costs and expenses for the 2022 third quarter and first nine months increased 17% and 22%, respectively, compared with the 2021 third quarter and first nine months.

Costs of sales and operating expenses for the 2022 third quarter and first nine months increased 18% and 25%, respectively, compared with the 2021 third quarter and first nine months, reflecting higher demand in the marine and on-highway businesses in commercial and industrial markets as well as increased demand in the oil and gas market as a result of higher oilfield activity levels.

Selling, general and administrative expenses for the 2022 third quarter and first nine months increased 12% and 17%, respectively, compared to the 2021 third quarter and first nine months, primarily due to salaries and costs related to the acquisition of assets of an energy storage systems manufacturer in the 2021 fourth quarter which included engineering talent required to further the Company’s electrification efforts, continued inflationary cost pressures, annual salary raises and severance expense.

Depreciation and amortization for the 2022 third quarter and first nine months decreased 15% and 25%, respectively, compared to the 2021 third quarter and first nine months, primarily due to sales of property and equipment and reduced capital spending during 2021.

Distribution and Services Operating Income and Operating Margin

KDS operating income for the 2022 second quarter and first six months increased 172% and 206%, respectively, compared with the 2021 second quarter and first six months.

The 2022 second quarter operating margin was 5.7% compared with 2.7% for the 2021 second quarter.

The 2022 first six months operating margin was 5.1% compared to 2.1% for the 2021 first six months.

KDS operating income for the 2022 third quarter and first nine months increased 102% and 149%, respectively, compared with the 2021 third quarter and first nine months.

The 2022 third quarter operating margin was 7.1% compared with 4.2% for the 2021 third quarter.

The 2022 first nine months operating margin was 5.8% compared to 2.9% for the 2021 first nine months.

The results reflect increased business levels in both the commercial and industrial and oil and gas markets.

Gain on Disposition of Assets

The Company reported a net gain on disposition of assets of $2.7 million for the 2022 second quarter and $2.1 million for the 2021 second quarter.

The Company reported a net gain on disposition of assets of $7.6 million for the 2022 first six months and $4.3 million for the 2021 first six months.

The Company reported a net gain on disposition of assets of $0.4 million for the 2022 third quarter and $0.8 million for the 2021 third quarter.

The Company reported a net gain on disposition of assets of $8.0 million for the 2022 first nine months and $5.1 million for the 2021 first nine months.

The net gains were primarily from sales of marine transportation equipment.

Other Income and Expenses

The following table sets forth other income, noncontrolling interests, and interest expense (dollars in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

The following table sets forth impairments, other income, noncontrolling interests, and interest expense (dollars in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

Noncontrolling interests

Interest expense

Other income for the 2022 and 2021 second quarters include income of $3.5 million and $2.3 million, respectively, and the 2022 and 2021 first six months include income of $6.9 million and $4.3 million, respectively, for all components of net benefit costs except the service cost component related to the Company’s defined benefit plans.

Other income for the 2022 first six months also reflects lower interest income related to the Company's federal income tax refunds as compared to the 2021 first six months.

For 2021, impairments includes $340.7 million before taxes, $275.1 million after taxes, or $4.58 per share, non-cash charges related to impairment of long-lived assets related to coastal marine transportation equipment and impairment of goodwill in the marine transportation segment.

Other income for the 2022 and 2021 third quarters include income of $3.5 million and $1.7 million, respectively, and the 2022 and 2021 first nine months include income of $10.3 million and $6.0 million, respectively, for all components of net benefit costs except the service cost component related to the Company’s defined benefit plans.

Other income for the 2022 first nine months also reflects lower interest income compared to the 2021 first nine months related to the Company's federal income tax refunds.

Interest Expense

The following table sets forth average debt and average interest rate (dollars in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Average interest rate

Interest expense for the 2022 second quarter and first six months decreased 1% and 4%, respectively, compared with the 2021 second quarter and first six months, primarily due to lower average debt outstanding as a result of debt repayments during 2021 and 2022, partially offset by a higher average interest rate.

There was no capitalized interest excluded from interest expense during the 2022 or 2021 first six months.

Interest expense for the 2022 third quarter and first nine months increased 12% and 1%, respectively, compared with the 2021 third quarter and first nine months, primarily due to a higher average interest rate, partially offset by a lower average debt outstanding as a result of debt repayments during 2021 and 2022.

There was no capitalized interest excluded from interest expense during the 2022 or 2021 first nine months.

Financial Condition, Capital Resources and Liquidity

1 unchanged sentence

The following table sets forth the significant components of the balance sheets (dollars in thousands):

September 30,

Current assets

10 unchanged sentences

Other long-term liabilities

Current assets as of June 30, 2022 increased 5% compared with December 31, 2021.

Trade accounts receivable increased 7%, primarily due to increased business activity levels in KMT.

Current assets as of September 30, 2022 increased 12% compared with December 31, 2021.

Trade accounts receivable increased 16%, primarily due to increased business activity levels in both KMT and KDS.

Other accounts receivable decreased 11%, primarily due to recoveries on the settlement of insurance claims.

Inventories increased by 12% due to higher activity and the impact of supply chain delays in KDS

resulting in buildup for projects that will be delivered later in 2022 and into 2023.

Prepaid expenses and other current assets increased 21% primarily due to the increase in the price of diesel fuel purchased in June 2022.

Property and equipment, net of accumulated depreciation, at June 30, 2022 decreased 1% compared with December 31, 2021.

The decrease reflected $96.3 million of depreciation expense and $16.1 million of property disposals, partially offset by $82.7 million of capital additions (including an increase in accrued capital expenditures of $3.7 million) and an acquisition for $3.9 million during the 2022 first six months, more fully described under Cash Flows and Capital Expenditures below.

Operating lease right-of-use assets as of June 30, 2022 decreased 5% compared to December 31, 2021, primarily due to lease amortization expense, partially offset by new leases acquired during the 2022 first six months.

Other intangibles, net, as of June 30, 2022 decreased 7% compared with December 31, 2021, primarily due to amortization during the 2022 first six months.

Other assets as of June 30, 2022 decreased 9% compared with December 31, 2021, primarily due to amortization of drydock expenditures, partially offset by additional deferred major maintenance drydock expenditures incurred during the 2022 first six months.

Current liabilities as of June 30, 2022 was flat compared with December 31, 2021.

Accrued liabilities decreased 16% primarily due to the payment of employee incentive compensation bonuses as well as the settlement of insurance claims, offset by an increase in accounts payable of 18%, primarily due to increased activity levels in KMT and KDS.

Inventories increased by 18% due to higher activity and the impact of supply chain delays in KDS resulting in buildup for projects that will be delivered later in 2022 and into 2023.

Prepaid expenses and other current assets increased 16% primarily due to the increase in the price of diesel fuel purchased in September 2022.

Property and equipment, net of accumulated depreciation, at September 30, 2022 decreased 1% compared with December 31, 2021.

The decrease reflected $144.8 million of depreciation expense and $26.0 million of property disposals, partially offset by $129.1 million of capital additions (including an increase in accrued capital expenditures of $8.5 million) and an acquisition for $3.9 million during the 2022 first nine months, more fully described under Cash Flows and Capital Expenditures below.

Operating lease right-of-use assets as of September 30, 2022 decreased 8% compared to December 31, 2021, primarily due to lease amortization expense, partially offset by new leases acquired during the 2022 first nine months.

Other intangibles, net, as of September 30, 2022 decreased 11% compared with December 31, 2021, primarily due to amortization during the 2022 first nine months.

Other assets as of September 30, 2022 decreased 14% compared with December 31, 2021, primarily due to amortization of drydock expenditures, partially offset by additional deferred major maintenance drydock expenditures incurred during the 2022 first nine months.

Current liabilities as of September 30, 2022 increased 5% compared with December 31, 2021.

Accounts payable increased 21% primarily due to increased activity levels in KMT and KDS.

Deferred revenue increased 13% primarily due to deposits on equipment expected to be shipped in the 2022 fourth quarter and into 2023 in KDS.

Accrued liabilities decreased 11% primarily due to the settlement of insurance claims.

Long-term debt, net –

less current portion, as of June 30, 2022 decreased 3% compared with December 31, 2021, primarily reflecting repayments of $30.0 million under the 2024 Term Loan.

Deferred income taxes as of June 30, 2022 increased 3% compared with December 31, 2021, primarily reflecting the deferred tax provision of $15.3 million.

less current portion, as of September 30, 2022 decreased 4% compared with December 31, 2021, primarily reflecting repayments under the term loan partially offset by borrowings under the 2027 Revolving Credit Facility.

Deferred income taxes as of September 30, 2022 increased 5% compared with December 31, 2021, primarily reflecting the deferred tax provision of $26.0 million.

Operating lease liabilities –

less current portion, as of June 30, 2022 decreased 6% compared to December 31, 2021, primarily due to lease payments made, partially offset by new leases acquired and liability accretion during the 2022 first six months.

Other long-term liabilities as of June 30, 2022 decreased 14% compared with December 31, 2021, primarily due to amortization of intangible liabilities and a decrease in pension liabilities.

Total equity as of June 30, 2022 increased 1% compared with December 31, 2021.

less current portion, as of September 30, 2022 decreased 10% compared to December 31, 2021, primarily due to lease payments made, partially offset by new leases acquired and liability accretion during the 2022 first nine months.

Other long-term liabilities as of September 30, 2022 decreased 34% compared with December 31, 2021, primarily due to amortization of intangible liabilities and a decrease in pension liabilities.

Total equity as of September 30, 2022 increased 3% compared with December 31, 2021.

The increase was primarily due to the net earnings attributable to Kirby of $85.0 million, amortization of share-based compensation of $11.4 million, and stock option exercises of $3.9 million, partially offset by treasury stock purchases of $22.9 million and tax withholdings of $3.2 million on restricted stock and RSU vestings.

1 unchanged sentence

The following table summarizes the Company’s outstanding debt (in thousands):

September 30,

Long-term debt, including current portion:

Revolving Credit Facility due March 27, 2024 (a)

Term Loan due March 27, 2024 (a)

Revolving Credit Facility due July 29, 2027 (a)

Term Loan due July 29, 2027 (a)

Term Loan due March 27, 2024 (b)

3.29% senior notes due February 27, 2023

2 unchanged sentences

Bank notes payable

Unamortized debt discounts and issuance costs (b)

(a) Variable interest rate of 3.0% and 1.5% at June 30, 2022 and December 31, 2021, respectively.

(b) Excludes $1.1 million and $1.4 million attributable to the 2024 Revolving Credit Facility included in other assets at June 30, 2022 and December 31, 2021, respectively.

At June 30, 2022, the Company had in place the 2024 Credit Agreement with a group of commercial banks, with JPMorgan Chase Bank, N.A.

as the administrative agent bank, that allowed for the $850 million unsecured 2024 Revolving Credit Facility and the 2024 Term Loan with a maturity date of March 27, 2024.

Unamortized debt discounts and issuance costs (c)

(a) Variable interest rate of 4.5% at September 30, 2022.

(b) Variable interest rate of 1.5% at December 31, 2021.

(c) Excludes $1.4 million attributable to the 2024 Revolving Credit Facility included in other assets at December 31, 2021.

At the beginning of the third quarter of 2022, the Company had in place its 2024 Credit Agreement with a group of commercial banks, with JPMorgan Chase Bank, N.A.

as the administrative agent bank, that allowed for an $850 million 2024 Revolving Credit Facility and a 2024 Term Loan with a maturity date of March 27, 2024.

The 2024 Term Loan was prepayable, in whole or in part, without penalty.

During the six months ended June 30, 2022, the Company repaid $30.0 million under the 2024 Term Loan.

Outstanding letters of credit under the 2024 Revolving Credit Facility were $5.1 million and available borrowing capacity was $844.9 million as of June 30, 2022.

Outstanding letters of credit under the $10 million credit line were $1.3 million and available borrowing capacity was $8.7 million as of June 30, 2022.

On July 29, 2022, the 2024 Credit Agreement was replaced with the 2027 Credit Agreement with a group of commercial banks, with JPMorgan Chase Bank, N.A.

1 unchanged sentence

In conjunction with entering into the 2027 Credit Agreement, on July 29, 2022, the Company borrowed $35 million under the 2027 Revolving Credit Facility and $250 million under the 2027 Term Loan to repay borrowings under the 2024 Term Loan.

The 2027 Term Loan is repayable in quarterly installments, scheduled to commence December 31, 2022, in increasing percentages of the original principal amount of the loan, with the remaining unpaid balance of approximately $43.8 million payable upon maturity, assuming no prepayment.

In October 2022, the Company repaid $20.0 million under the 2027 Term Loan prior to scheduled maturities.

As a result, no repayments are required until September 30, 2023.

The 2027 Term Loan is repayable in quarterly installments, scheduled to commence September 30, 2023, in increasing percentages of the original principal amount of the loan, with the remaining unpaid balance of approximately $43.8 million payable upon maturity, assuming no prepayment.

The 2027 Term Loan is prepayable, in whole or in part, without penalty.

The 2027 Revolving Credit Facility includes a $25 million commitment which may be used for standby letters of credit.

Outstanding letters of credit under the 2027 Revolving Credit Facility were $5.1 million and available borrowing capacity was $474.9 million as of September 30, 2022.

Outstanding letters of credit under the $10 million credit line were $1.4 million and available borrowing capacity was $8.6 million as of September 30, 2022.

On February 3, 2022, the Company entered into a note purchase agreement for the issuance of $300 million of 2033 Notes with a group of institutional investors, consisting of $60 million of 3.46% Series A Notes and $240 million of 3.51% Series B Notes, each due January 19, 2033.

The Series A Notes are scheduled to be issued on October 20, 2022, and the Series B Notes are scheduled to be issued on January 19, 2023.

The Series A Notes were issued on October 20, 2022, and the Series B Notes are scheduled to be issued on January 19, 2023.

No principal payments will be required until maturity.

Beginning in 2023, interest payments of $5.3 million will be due semi-annually on January 19 and July 19 of each year, with the exception of the first payment on January 19, 2023, which will be $0.5 million.

Beginning in 2023, interest payments of $5.3 million will be due semi-annually on January 19 and July 19 of each year, with the exception of the first payment on January 19, 2023, which will be

$0.5 million.

The 2023 Notes are excluded from short term liabilities because the Company intends to use a combination of the proceeds from the issuance of the 2033 Notes and availability under the 2027 Revolving Credit Facility to repay the 2023 Notes upon maturity.

As of June 30, 2022, the Company was in compliance with all covenants under its debt instruments.

As of September 30, 2022, the Company was in compliance with all covenants under its debt instruments.

For additional information about the Company’s debt instruments, see Note 5, Long-Term Debt, in the financial statements as well as Note 5, Long-Term Debt, in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

Cash Flow and Capital Expenditures

The Company generated positive operating cash flows during the 2022 first six months with net cash provided by operating activities of $95.6 million compared with $197.8 million for the 2021 first six months, a 52% decrease.

The Company generated positive operating cash flows during the 2022 first nine months with net cash provided by operating activities of $161.2 million compared with $280.4 million for the 2021 first nine months, a 43% decrease.

The decrease was primarily due to a tax refund of $119.5 million, including accrued interest, for the Company’s 2019 federal tax return which was received in the 2021 first quarter.

In addition, increased revenues and operating income in KMT and KDS during the 2022 first six months were offset by increased inventory purchases from higher activity levels and increased employee incentive compensation bonuses paid during the 2022 first six months.

Increases in KMT revenues and operating income were driven by increased barge utilization and higher term and spot contract pricing in the inland and coastal markets during the 2022 first six months.

The 2021 first six months KMT revenues and operating income were also negatively impacted by the impacts of Winter Storm Uri in February 2021.

During the 2022 and 2021 second quarters and first six months, the Company generated cash of $23.3 million and $16.7 million, respectively, from proceeds from the disposition of assets, and $3.9 million and $0.5 million, respectively, from proceeds from the exercise of stock options.

For the 2022 first six months, cash generated was used for capital expenditures of $79.1 million, including $4.5 million for inland towboat construction and $74.6 million primarily for upgrading existing marine equipment and KMT and KDS facilities.

In addition, increased revenues and operating income in KMT and KDS during the 2022 first nine months were offset by increased inventory levels due to higher activity and managing supply chain challenges seen especially in KDS during the 2022 first nine months.

Increases in KMT revenues and operating income were driven by increased barge utilization and higher term and spot contract pricing in the inland and coastal markets during the 2022 first nine months.

The 2021 first nine months KMT revenues and operating income were also negatively impacted by the impacts of Winter Storm Uri in February 2021 and Hurricane Ida in the 2021 third quarter.

During the 2022 and 2021 third quarters and first nine months, the Company generated cash of $32.9 million and $39.2 million, respectively, from proceeds from the disposition of assets, and $3.9 million and $0.6 million, respectively, from proceeds from the exercise of stock options.

For the 2022 first nine months, cash generated was used for capital expenditures of $120.3 million, including $6.8 million for inland towboat construction and $113.5 million primarily for upgrading existing marine equipment and KMT and KDS facilities.

Treasury Stock Purchases

During the 2022 first six months, the Company purchased 0.3 million shares of its common stock for $18.1 million, at an average price of $58.33 per share.

During August 2022, the Company has purchased an additional 0.1 million shares of its common stock for $4.6 million, at an average price of $63.33 per share.

As of August 5, 2022, the Company had approximately 1.0 million shares available under its existing repurchase authorization.

During the 2022 first nine months, the Company purchased 0.4 million shares of its common stock for $22.9 million, at an average price of $59.32 per share.

As of November 3, 2022, the Company had approximately 1.0 million shares available under its existing repurchase authorization.

Historically, treasury stock purchases have been financed through operating cash flows and borrowings under the Company’s then current revolving credit facility.

3 unchanged sentences

Funds generated from operations are available for acquisitions, capital expenditure projects, common stock repurchases, repayments of borrowings, and for other corporate and operating requirements.

In addition to net cash flows provided by operating activities, as of August 5, 2022 the Company also had cash equivalents of $18.0 million, availability of $459.9 million under its 2027 Revolving Credit Facility, and $8.7 million available under its credit line.

In addition to net cash flows provided by operating activities, as of November 3, 2022 the Company also had cash equivalents of $114 million, availability of $494.9 million under its 2027 Revolving Credit Facility, and $8.6 million available under its credit line.

Neither the Company, nor any of its subsidiaries, is obligated on any debt instrument, swap agreement, or any other financial instrument or commercial contract which has a rating trigger, except for the pricing grid on its 2027 Credit Agreement.

4 unchanged sentences

The 4.2% senior unsecured notes do not mature until March 1, 2028 and require no prepayments.

The 2027 Term Loan in the amount of $250 million is subject to quarterly installments, beginning December 31, 2022, in increasing percentages of the original principal amount of the loan, with the remaining unpaid balance of approximately $43.8 million payable on July 29, 2027, assuming no prepayments.

The 2027 Term Loan in the amount of $250 million is subject to quarterly installments, beginning September 30, 2023, in increasing percentages of the original principal amount of the loan, with the remaining unpaid balance of approximately $43.8 million payable on July 29, 2027, assuming no prepayments.

The 2027 Term Loan is prepayable, in whole or in part, without penalty.

2 unchanged sentences

Risk Factors and Note 14, Contingencies and Commitments, in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

Amounts available under the Company’s existing financial arrangements are subject to the Company continuing to meet the covenants of the credit facilities as described in Note 5, Long-Term Debt in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

Amounts available under the Company’s existing financial arrangements are subject to the Company continuing to

meet the covenants of the credit facilities as described in Note 5, Long-Term Debt, in the financial statements as well as Note 5, Long-Term Debt, in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

The aggregate notional value of these instruments is $20.2 million at June 30, 2022, including $12.1 million in letters of credit and $8.1 million in performance bonds.

The aggregate notional value of these instruments is $20.1 million at September 30, 2022, including $12.1 million in letters of credit and $8.0 million in performance bonds.

All of these instruments have an expiration date within two years.

11 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements