KIRBY CORP 10-Q

Item 1. Financial Statements KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES CONDENSED BALANCE SHEETS (Unaudited) June 30, 2024 December 31, 2023 ($ in thousands) ASSETS Current assets: Cash and cash equivalents $ 53,540 $ 32,577 Accounts receivable: Trade – less allowance for doubtful accounts 550,159 526,691 Other 47,666 52,025 Inventories – net 445,304 454,389 Prepaid expenses and other current assets 69,946 69,479 Total current assets 1,166,615 1,135,161 Property and equipment 5,990,523 5,824,038 Accumulated depreciation ( 2,015,776 ) ( 1,962,933 ) Property and equipment – net 3,974,747 3,861,105 Operating lease right-of-use assets 157,950 152,216 Goodwill 438,748 438,748 Other intangibles, net 38,667 42,927 Other assets 89,171 92,040 Total assets $ 5,865,898 $ 5,722,197 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Bank notes payable $ 8,970 $ 8,068 Income taxes payable 10,194 1,486 Accounts payable 266,820 269,378 Accrued liabilities 211,276 228,946 Current portion of operating lease liabilities 33,399 33,340 Deferred revenues 153,964 134,577 Total current liabilities 684,623 675,795 Long-term debt, net – less current portion 1,039,120 1,008,527 Deferred income taxes 720,679 696,557 Operating lease liabilities – less current portion 144,250 138,811 Other long-term liabilities 14,548 15,830 Total long-term liabilities 1,918,597 1,859,725 Contingencies and commitments — — Equity: Kirby stockholders’ equity: Common stock, $ 0.10 par value per share. Authorized 120 million shares, issued 65.5 million shares 6,547 6,547 Additional paid-in capital 862,258 863,963 Accumulated other comprehensive income – net 35,124 35,006 Retained earnings 2,845,587 2,691,665 Treasury stock – at cost, 7.5 million shares at June 30, 2024 and 6.8 million at December 31, 2023 ( 488,059 ) ( 411,750 ) Total Kirby stockholders’ equity 3,261,457 3,185,431 Noncontrolling interests 1,221 1,246 Total equity 3,262,678 3,186,677 Total liabilities and equity $ 5,865,898 $ 5,722,197 See accompanying notes to condensed financial statements. 2 KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES CONDENSED STATEMENTS OF EARNINGS (Unaudited) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 ($ in thousands, except per share amounts) Revenues: Marine transportation $ 484,808 $ 426,962 $ 960,220 $ 839,457 Distribution and services 339,582 350,286 672,192 688,235 Total revenues 824,390 777,248 1,632,412 1,527,692 Costs and expenses: Costs of sales and operating expenses 554,232 546,069 1,104,913 1,088,149 Selling, general and administrative 80,383 82,896 170,589 171,745 Taxes, other than on income 10,310 9,758 18,354 18,944 Depreciation and amortization 59,482 51,697 117,124 102,806 Gain on disposition of assets ( 515 ) ( 472 ) ( 589 ) ( 2,702 ) Total costs and expenses 703,892 689,948 1,410,391 1,378,942 Operating income 120,498 87,300 222,021 148,750 Other income 3,088 1,264 6,357 7,707 Interest expense ( 12,819 ) ( 12,286 ) ( 25,970 ) ( 25,507 ) Earnings before taxes on income 110,767 76,278 202,408 130,950 Provision for taxes on income ( 26,785 ) ( 18,960 ) ( 48,511 ) ( 33,011 ) Net earnings 83,982 57,318 153,897 97,939 Net (earnings) loss attributable to noncontrolling interests ( 128 ) 49 25 126 Net earnings attributable to Kirby $ 83,854 $ 57,367 $ 153,922 $ 98,065 Net earnings per share attributable to Kirby common stockholders: Basic $ 1.44 $ 0.96 $ 2.64 $ 1.64 Diluted $ 1.43 $ 0.95 $ 2.62 $ 1.63 See accompanying notes to condensed financial statements. 3 KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 ($ in thousands) Net earnings $ 83,982 $ 57,318 $ 153,897 $ 97,939 Other comprehensive income, net of taxes: Pension and postretirement benefits 986 1,274 591 1,213 Foreign currency translation adjustments ( 473 ) 705 ( 473 ) 930 Total other comprehensive income, net of taxes 513 1,979 118 2,143 Total comprehensive income, net of taxes 84,495 59,297 154,015 100,082 Net (earnings) loss attributable to noncontrolling interests ( 128 ) 49 25 126 Comprehensive income attributable to Kirby $ 84,367 $ 59,346 $ 154,040 $ 100,208 See accompanying notes to condensed financial statements. 4 KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) Six Months Ended June 30, 2024 2023 ($ in thousands) Cash flows from operating activities: Net earnings $ 153,897 $ 97,939 Adjustments to reconcile net earnings to net cash provided by operations: Depreciation and amortization 117,124 102,806 Provision for deferred income taxes 23,926 30,238 Amortization of share-based compensation 9,399 8,912 Amortization of major maintenance costs 16,755 14,043 Other 915 ( 3,111 ) Decrease in cash flows resulting from changes in operating assets and liabilities, net ( 19,409 ) ( 22,878 ) Net cash provided by operating activities 302,607 227,949 Cash flows from investing activities: Capital expenditures ( 169,607 ) ( 171,245 ) Acquisitions of businesses and marine equipment ( 65,232 ) — Proceeds from disposition of assets 9,054 20,529 Net cash used in investing activities ( 225,785 ) ( 150,716 ) Cash flows from financing activities: Borrowings on bank credit facilities, net 30,902 31,155 Borrowings on long-term debt — 240,000 Payments on long-term debt — ( 350,000 ) Payment of debt issuance costs ( 3 ) ( 1,236 ) Proceeds from exercise of stock options 4,096 118 Payments related to tax withholding for share-based compensation ( 5,339 ) ( 3,595 ) Treasury stock purchases ( 85,466 ) ( 37,600 ) Other ( 49 ) ( 49 ) Net cash used in financing activities ( 55,859 ) ( 121,207 ) Increase (decrease) in cash and cash equivalents 20,963 ( 43,974 ) Cash and cash equivalents, beginning of year 32,577 80,577 Cash and cash equivalents, end of period $ 53,540 $ 36,603 Supplemental disclosures of cash flow information: Cash paid (received) during the period: Interest paid $ 26,243 $ 24,553 Income taxes paid (refunded), net $ 14,391 $ ( 67,921 ) Operating cash outflow from operating leases $ 22,980 $ 22,769 Non-cash investing activity: Capital expenditures included in accounts payable $ ( 2,015 ) $ ( 5,064 ) Right-of-use assets obtained in exchange for lease obligations $ 21,045 $ 20,838 See accompanying notes to condensed financial statements. 5 KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited) Accumulated Additional Other Common Stock Paid-in- Comprehensive Retained Treasury Stock Noncontrolling Shares Amount Capital Income, Net Earnings Shares Amount Interests Total (in thousands) Balance at March 31, 2024 65,472 $ 6,547 $ 859,150 $ 34,611 $ 2,761,733 ( 7,199 ) $ ( 446,393 ) $ 1,093 $ 3,216,741 Stock option exercises — — 1,115 — — 35 1,470 — 2,585 Issuance of stock for equity awards, net of forfeitures — — ( 998 ) — — 17 998 — — Tax withholdings on equity award vesting — — — — — ( 1 ) ( 55 ) — ( 55 ) Amortization of share-based compensation — — 2,991 — — — — — 2,991 Treasury stock purchases — — — — — ( 372 ) ( 43,679 ) — ( 43,679 ) Excise taxes on treasury stock purchases — — — — — — ( 400 ) — ( 400 ) Total comprehensive income, net of taxes — — — 513 83,854 — — 128 84,495 Balance at June 30, 2024 65,472 $ 6,547 $ 862,258 $ 35,124 $ 2,845,587 ( 7,520 ) $ ( 488,059 ) $ 1,221 $ 3,262,678 Accumulated Additional Other Common Stock Paid-in- Comprehensive Retained Treasury Stock Noncontrolling Shares Amount Capital Income, Net Earnings Shares Amount Interests Total (in thousands) Balance at March 31, 2023 65,472 $ 6,547 $ 856,680 $ 17,017 $ 2,509,428 ( 5,504 ) $ ( 306,746 ) $ 2,214 $ 3,085,140 Issuance of stock for equity awards, net of forfeitures — — ( 1,819 ) — — 33 1,819 — — Tax withholdings on equity award vesting — — — — — — ( 40 ) — ( 40 ) Amortization of share-based compensation — — 3,104 — — — — — 3,104 Treasury stock purchases — — — — — ( 475 ) ( 34,416 ) — ( 34,416 ) Excise taxes on treasury stock purchases — — — — — — ( 276 ) — ( 276 ) Total comprehensive income, net of taxes — — — 1,979 57,367 — — ( 49 ) 59,297 Balance at June 30, 2023 65,472 $ 6,547 $ 857,965 $ 18,996 $ 2,566,795 ( 5,946 ) $ ( 339,659 ) $ 2,165 $ 3,112,809 See accompanying notes to condensed financial statements. 6 KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited) Additional Accumulated Other Common Stock Paid-in- Comprehensive Retained Treasury Stock Noncontrolling Shares Amount Capital Income, Net Earnings Shares Amount Interests Total (in thousands) Balance at December 31, 2023 65,472 $ 6,547 $ 863,963 $ 35,006 $ 2,691,665 ( 6,843 ) $ ( 411,750 ) $ 1,246 $ 3,186,677 Stock option exercises — — 1,434 — — 54 2,662 — 4,096 Issuance of stock for equity awards, net of forfeitures — — ( 12,538 ) — — 207 12,538 — — Tax withholdings on equity award vesting — — — — — ( 67 ) ( 5,339 ) — ( 5,339 ) Amortization of share-based compensation — — 9,399 — — — — — 9,399 Treasury stock purchases — — — — — ( 871 ) ( 85,466 ) — ( 85,466 ) Excise taxes on treasury stock purchases — — — — — — ( 704 ) — ( 704 ) Total comprehensive income, net of taxes — — — 118 153,922 — — ( 25 ) 154,015 Balance at June 30, 2024 65,472 $ 6,547 $ 862,258 $ 35,124 $ 2,845,587 ( 7,520 ) $ ( 488,059 ) $ 1,221 $ 3,262,678 Additional Accumulated Other Common Stock Paid-in- Comprehensive Retained Treasury Stock Noncontrolling Shares Amount Capital Income, Net Earnings Shares Amount Interests Total (in thousands) Balance at December 31, 2022 65,472 $ 6,547 $ 859,345 $ 16,853 $ 2,468,730 ( 5,565 ) $ ( 308,598 ) $ 2,291 $ 3,045,168 Stock option exercises — — ( 217 ) — — 13 335 — 118 Issuance of stock for equity awards, net of forfeitures — — ( 10,075 ) — — 182 10,075 — — Tax withholdings on equity award vesting — — — — — ( 54 ) ( 3,595 ) — ( 3,595 ) Amortization of share-based compensation — — 8,912 — — — — — 8,912 Treasury stock purchases — — — — — ( 522 ) ( 37,600 ) — ( 37,600 ) Excise taxes on treasury stock purchases — — — — — — ( 276 ) — ( 276 ) Total comprehensive income, net of taxes — — — 2,143 98,065 — — ( 126 ) 100,082 Balance at June 30, 2023 65,472 $ 6,547 $ 857,965 $ 18,996 $ 2,566,795 ( 5,946 ) $ ( 339,659 ) $ 2,165 $ 3,112,809 See accompanying notes to condensed financial statements. 7 KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) (1) Basis for Preparation of the Condensed Financial Statements The condensed financial statements included herein have been prepared by Kirby Corporation and its consolidated subsidiaries (“Kirby” or the “Company”), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Although the Company believes that the disclosures are adequate to make the information presented not misleading, certain information and footnote disclosures, including significant accounting policies normally included in annual financial statements, have been condensed or omitted pursuant to such rules and regulations. It is suggested that these condensed financial statements be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. Certain reclassifications have been made to reflect the current presentation of financial information. Effective January 1, 2024, the power generation revenue source within the distribution and services segment has been broken out from the commercial and industrial and oil and gas revenue sources due to the significance of the power generation market to the Company’s growth. This change had no net impact on overall Company or segment revenues and has been reflected retrospectively for all periods presented. (2) Acquisitions On May 15, 2024, the Company completed the purchase of 13 inland tank barges, with a total capacity of 347,000 barrels, and two high horsepower towboats from an undisclosed seller for approximately $ 65.2 million in cash. The 13 tank barges, including three specialty barges, transport petrochemicals and refined products on the Mississippi River System and Gulf Intracoastal Waterway. The average age of the 13 barges was 15 years. On July 14, 2023, the Company purchased 23 inland tank barges with a total capacity of 265,000 barrels from an undisclosed seller for $ 37 million in cash. The 23 tank barges transport petrochemicals and refined products on the Mississippi River System and the Gulf Intracoastal Waterway. The average age of the 23 barges was 14 years. The Company purchased four inland tank barges from a leasing company for $ 0.5 million in cash during the 2023 third quarter. The Company had been leasing the barges prior to the purchase. (3) Revenues The following table sets forth the Company’s revenues by major source (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Marine transportation segment: Inland transportation $ 391,835 $ 351,807 $ 777,842 $ 689,695 Coastal transportation 92,973 75,155 182,378 149,762 $ 484,808 $ 426,962 $ 960,220 $ 839,457 Distribution and services segment: Commercial and industrial $ 165,658 $ 152,045 $ 308,282 $ 305,099 Power generation 107,783 99,006 243,452 189,315 Oil and gas 66,141 99,235 120,458 193,821 $ 339,582 $ 350,286 $ 672,192 $ 688,235 Contract liabilities represent advance consideration received from customers, and are recognized as revenue over time or at a point in time as the related performance obligation is satisfied. Revenues recognized during the six months ended June 30, 2024 and 2023 that were included in the opening contract liability balances were $ 81.5 million and $ 60.3 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, 2024 or December 31, 2023 . 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. 8 (4) Segment Data The Company’s operations are aggregated into two reportable business segments as follows: Marine Transportation Segment (“KMT”) — Provides marine transportation by United States flagged vessels principally of liquid cargoes throughout the United States inland waterway system, along all three United States coasts, and, to a lesser extent, in United States coastal transportation of dry-bulk cargoes. The principal products transported include petrochemicals, black oil, refined petroleum products, and agricultural chemicals. Distribution and Services Segment (“KDS”) — Provides after-market services and genuine replacement parts for engines, transmissions, reduction gears, and related equipment used in oilfield services, marine, power generation, on-highway, backup power and other industrial applications. The Company also rents equipment including generators, industrial compressors, high capacity lift trucks, and refrigeration trailers for use in a variety of industrial markets, and manufactures and remanufactures oilfield service equipment, including pressure pumping units, electric power generation equipment, and specialized electrical distribution and control equipment. The Company’s two reportable business segments are managed separately based on fundamental differences in their operations. 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 $ 7.5 million and $ 14.1 million for the three months and six months ended June 30, 2024, respectively, and $ 10.3 million and $ 19.7 million for the three months and six months ended June 30, 2023, respectively, as well as the related intersegment profit of $ 0.7 million and $ 1.4 million for the three months and six months ended June 30, 2024, respectively, and $ 1.0 million and $ 2.0 million for the three months and six months ended June 30, 2023, 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, 2024 2023 2024 2023 Revenues: Marine transportation $ 484,808 $ 426,962 $ 960,220 $ 839,457 Distribution and services 339,582 350,286 672,192 688,235 $ 824,390 $ 777,248 $ 1,632,412 $ 1,527,692 Segment profit: Marine transportation $ 94,876 $ 64,251 $ 177,859 $ 107,287 Distribution and services 29,436 29,842 51,450 52,634 Other ( 13,545 ) ( 17,815 ) ( 26,901 ) ( 28,971 ) $ 110,767 $ 76,278 $ 202,408 $ 130,950 June 30, 2024 December 31, 2023 Total assets: Marine transportation $ 4,557,755 $ 4,454,931 Distribution and services 1,178,801 1,156,384 Other 129,342 110,882 $ 5,865,898 $ 5,722,197 The following table presents the details of “Other” segment loss (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 General corporate expenses $ ( 4,329 ) $ ( 7,265 ) $ ( 7,877 ) $ ( 13,873 ) Gain on disposition of assets 515 472 589 2,702 Interest expense ( 12,819 ) ( 12,286 ) ( 25,970 ) ( 25,507 ) Other income 3,088 1,264 6,357 7,707 $ ( 13,545 ) $ ( 17,815 ) $ ( 26,901 ) $ ( 28,971 ) 9 The following table presents the details of “Other” total assets (in thousands): June 30, 2024 December 31, 2023 General corporate assets $ 126,949 $ 108,306 Investment in affiliates 2,393 2,576 $ 129,342 $ 110,882 (5) Long-Term Debt 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, 2024 December 31, 2023 Carrying Value Fair Value Carrying Value Fair Value Revolving Credit Facility due July 29, 2027 (a) $ 74,000 $ 74,000 $ 44,000 $ 44,000 Term Loan due July 29, 2027 (a) 170,000 170,000 170,000 170,000 4.2 % senior notes due March 1, 2028 500,000 483,222 500,000 475,920 3.46 % senior notes due January 19, 2033 60,000 51,681 60,000 49,955 3.51 % senior notes due January 19, 2033 240,000 207,577 240,000 200,698 Credit line due June 30, 2026 — — — — Bank notes payable 8,970 8,970 8,068 8,068 1,052,970 995,450 1,022,068 948,641 Unamortized debt discounts and issuance costs ( 4,880 ) — ( 5,473 ) — $ 1,048,090 $ 995,450 $ 1,016,595 $ 948,641 (a) Variable interest rate o f 6.6 % at June 30, 2024 and 6.8 % at December 31, 2023 . On July 29, 2022, the Company entered into a 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 . No repayments are required until June 30, 2025. Future repayments under the 2027 Term Loan are excluded from short term liabilities because the Company intends to use availability under the 2027 Revolving Credit Facility to repay these amounts upon maturity. Outstanding letters of credit under the 2027 Revolving Credit Facility were $ 6,000 and available borrowing capacity was $ 426.0 million as of June 30, 2024. 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 were issued on October 20, 2022, and the Series B Notes were issued on January 19, 2023. No principal payments will be required until maturity. The Company has a $ 15 million line of credit (“Credit Line”) with Bank of America, N.A. (“Bank of America”) for short-term liquidity needs and letters of credit, with a maturity date of June 30, 2026 . Outstanding letters of credit under the Credit Line were $ 6.8 million and available borrowing capacity was $ 8.2 million as of June 30, 2024 . 10 (6) Leases The Company currently leases various facilities and equipment under cancelable and noncancelable operating leases. The accounting for the Company’s leases may require judgments, which include determining whether a contract contains a lease, allocating the consideration between lease and non-lease components, and determining the incremental borrowing rates. Leases with an initial noncancelable term of 12 months or less are not recorded on the balance sheet and related lease expense is recognized on a straight-line basis over the lease term. The Company has also elected to combine lease and non-lease components on all classes of leased assets, except for leased towing vessels, for which the Company estimates approximately 70 % of the costs relate to service costs and other non-lease components. Variable lease costs relate primarily to real estate executory costs (i.e. taxes, insurance and maintenance). Future minimum lease payments under operating leases that have initial noncancelable lease terms in excess of one year were as follows (in thousands): June 30, 2024 December 31, 2023 2024 $ 20,448 $ 38,943 2025 35,387 27,638 2026 31,865 24,945 2027 25,643 22,842 2028 19,683 18,318 Thereafter 84,490 79,755 Total lease payments 217,516 212,441 Less: imputed interest ( 39,867 ) ( 40,290 ) Operating lease liabilities $ 177,649 $ 172,151 The following table summarizes lease costs (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Operating lease cost $ 11,599 $ 10,653 $ 22,880 $ 21,230 Variable lease cost 578 690 1,071 1,448 Short-term lease cost 8,809 9,211 18,988 15,430 Sublease income ( 830 ) ( 798 ) ( 1,684 ) ( 1,641 ) $ 20,156 $ 19,756 $ 41,255 $ 36,467 The following table summarizes other supplemental information about the Company’s operating leases: June 30, 2024 December 31, 2023 Weighted average discount rate 4.6 % 4.4 % Weighted average remaining lease term 9 years 9 years (7) 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, 2024 2023 2024 2023 Compensation cost $ 2,991 $ 3,104 $ 9,399 $ 8,912 Income tax benefit $ 737 $ 754 $ 2,256 $ 2,247 During the six months ended June 30, 2024, the Company grant ed 164,848 restricted stock units (“RSUs”) to selected officers and other key employees under the employee stock award plan, the majority of which vest ratably over five years . During April 2024, the Company granted 14,624 shares of restricted stock to nonemployee directors of the Company under the director stock plan which vest six months after the date of grant. 11 (8) Taxes on Income 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, 2024 2023 2024 2023 Earnings (loss) before taxes on income: United States $ 111,091 $ 76,162 $ 202,745 $ 130,025 Foreign ( 324 ) 116 ( 337 ) 925 $ 110,767 $ 76,278 $ 202,408 $ 130,950 Provision (benefit) for taxes on income: Federal: Current $ 9,337 $ — $ 19,956 $ — Deferred 14,196 16,466 22,278 28,199 State and local: Current 2,935 1,310 4,557 2,577 Deferred 319 1,199 1,648 2,039 Foreign - current ( 2 ) ( 15 ) 72 196 $ 26,785 $ 18,960 $ 48,511 $ 33,011 (9) 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, 2024 2023 2024 2023 Net earnings attributable to Kirby $ 83,854 $ 57,367 $ 153,922 $ 98,065 Undistributed earnings allocated to restricted shares ( 13 ) ( 22 ) ( 13 ) ( 21 ) Earnings available to Kirby common stockholders – basic 83,841 57,345 153,909 98,044 Undistributed earnings allocated to restricted shares 13 22 13 21 Undistributed earnings reallocated to restricted shares ( 13 ) ( 22 ) ( 13 ) ( 21 ) Earnings available to Kirby common stockholders – diluted $ 83,841 $ 57,345 $ 153,909 $ 98,044 Shares outstanding: Weighted average common stock issued and outstanding 58,190 59,829 58,329 59,905 Weighted average unvested restricted stock ( 9 ) ( 23 ) ( 5 ) ( 13 ) Weighted average common stock outstanding – basic 58,181 59,806 58,324 59,892 Dilutive effect of stock options and restricted stock units 411 279 379 287 Weighted average common stock outstanding – diluted 58,592 60,085 58,703 60,179 Net earnings per share attributable to Kirby common stockholders: Basic $ 1.44 $ 0.96 $ 2.64 $ 1.64 Diluted $ 1.43 $ 0.95 $ 2.62 $ 1.63 Certain outstanding options to purchase approximately 279,000 shares of common stock were excluded in the computation of diluted earnings per share as of June 30, 2023 , as such stock options would have been antidilutive. There were no antidilutive stock options as of June 30, 2024 . There were no antidilutive RSUs as of June 30, 2024 and 2023 . 12 (10) Inventories The following table presents the details of inventories – net (in thousands): June 30, 2024 December 31, 2023 Finished goods $ 373,438 $ 351,050 Work in process 71,866 103,339 $ 445,304 $ 454,389 (11) Retirement Plans The Company sponsors a defined benefit plan for certain of its inland vessel personnel and shore based tankermen. The plan benefits are based on an employee’s years of service and compensation. The plan assets consist primarily of equity and fixed income securities. On April 12, 2017, the Company amended its pension plan to cease all benefit accruals for periods after May 31, 2017 for certain participants. Participants grandfathered and not impacted were those, as of the close of business on May 31, 2017, who either (a) had completed 15 years of pension service or (b) had attained age 50 and completed 10 years of pension service. Participants non-grandfathered are eligible to receive discretionary 401(k) plan contributions. The Company’s pension plan funding strategy is to make annual contributions in amounts equal to or greater than amounts necessary to meet minimum government funding requirements. The plan’s benefit obligations are based on a variety of demographic and economic assumptions, and the pension plan assets’ returns are subject to various risks, including market and interest rate risk, making an accurate prediction of the pension plan contribution difficult. Based on current pension plan assets and market conditions, the Company does not expect to make a contribution to the Kirby pension plan during 2024. On February 14, 2018, with the acquisition of Higman Marine, Inc. and its affiliated companies (“Higman”), the Company assumed Higman’s pension plan for its inland vessel personnel and office staff. 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 contributions of $ 0.6 million to the Higman pension plan during the six months ended June 30, 2024 . The Company expects to make additional contributions of $ 1.1 million during the remainder of 2024. 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. The plan is contributory, with retiree contributions adjusted annually. The plan eliminated coverage for future retirees as of December 31, 2011. The Company also has an unfunded defined benefit supplemental executive retirement plan (“SERP”) that was assumed in an acquisition in 1999. That plan ceased to accrue additional benefits effective January 1, 2000. The components of net periodic benefit cost for the Company’s defined benefit plans were as follows (in thousands): Pension Benefits Pension Plans SERP Three Months Ended June 30, Three Months Ended June 30, 2024 2023 2024 2023 Components of net periodic benefit cost: Service cost $ 823 $ 956 $ — $ — Interest cost 4,267 4,572 9 10 Expected return on plan assets ( 6,224 ) ( 5,732 ) — — Amortization of actuarial (gain) loss ( 692 ) — 8 6 Net periodic benefit cost $ ( 1,826 ) $ ( 204 ) $ 17 $ 16 13 Pension Benefits Pension Plans SERP Six Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Components of net periodic benefit cost: Service cost $ 1,697 $ 1,848 $ — $ — Interest cost 8,590 9,178 19 21 Expected return on plan assets ( 12,442 ) ( 11,455 ) — — Amortization of actuarial (gain) loss ( 1,165 ) — 16 12 Net periodic benefit cost $ ( 3,320 ) $ ( 429 ) $ 35 $ 33 The components of net periodic benefit cost for the Company’s postretirement benefit plan were as follows (in thousands): Other Postretirement Benefits Postretirement Welfare Plan Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Components of net periodic benefit cost: Interest cost $ 5 $ 5 $ 10 $ 11 Amortization of actuarial gain ( 70 ) ( 86 ) ( 140 ) ( 172 ) Net periodic benefit cost $ ( 65 ) $ ( 81 ) $ ( 130 ) $ ( 161 ) (12) Other Comprehensive Income The Company’s changes in other comprehensive income were as follows (in thousands): Three Months Ended June 30, 2024 2023 Gross Amount Income Tax (Provision) Benefit Net Amount Gross Amount Income Tax (Provision) Benefit Net Amount Pension and postretirement benefits (a): Amortization of net actuarial gain $ ( 754 ) $ 189 $ ( 565 ) $ ( 80 ) $ 21 $ ( 59 ) Actuarial gains 2,069 ( 518 ) 1,551 1,779 ( 446 ) 1,333 Foreign currency translation ( 473 ) — ( 473 ) 705 — 705 Total $ 842 $ ( 329 ) $ 513 $ 2,404 $ ( 425 ) $ 1,979 Six Months Ended June 30, 2024 2023 Gross Amount Income Tax (Provision) Benefit Net Amount Gross Amount Income Tax (Provision) Benefit Net Amount Pension and postretirement benefits (a): Amortization of net actuarial gain $ ( 1,289 ) $ 329 $ ( 960 ) $ ( 160 ) $ 40 $ ( 120 ) Actuarial gains 2,069 ( 518 ) 1,551 1,779 ( 446 ) 1,333 Foreign currency translation ( 473 ) — ( 473 ) 930 — 930 Total $ 307 $ ( 189 ) $ 118 $ 2,549 $ ( 406 ) $ 2,143 (a) Actuarial gains are amortized into other income (expense). ( See Note 11, Retirement Plans) (13) Contingencies and Commitments On October 13, 2016, the tug Nathan E. Stewart and barge DBL 55, an articulated tank barge and tugboat unit (“ATB”) owned and operated by Kirby Offshore Marine, LLC, a wholly owned subsidiary of the Company, ran aground at the entrance to Seaforth Channel on Atholone Island, British Columbia. The grounding resulted in a breach of a portion of the Nathan E. Stewart’s fuel tanks causing a discharge of diesel fuel into the water. 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. On October 10, 2018, the Heiltsuk First Nation filed a civil action in the British Columbia Supreme Court against a subsidiary of the Company, the master and pilot of the tug, the vessels and the Canadian government seeking unquantified damages as a result of the incident. On May 1, 2019, the Company filed a limitation action in the Federal Court of Canada seeking limitation of liability relating to the incident as provided under admiralty law. The Heiltsuk First Nation’s civil claim has been consolidated into the Federal Court limitation action as of July 26, 14 2019 and it is expected that the Federal Court of Canada will decide all claims against the Company. The Company is unable to estimate the potential exposure in the civil proceeding. The Company has various insurance policies covering liabilities including pollution, property, marine and general liability and believes that it has satisfactory insurance coverage for the cost of cleanup and salvage operations as well as other potential liabilities arising from the incident. The Company believes its accrual of such estimated liability is adequate for the incident and does not expect the incident to have a material adverse effect on its business or financial condition. In addition, the Company is involved in various legal and other proceedings which are incidental to the conduct of its business, none of which in the opinion of management will have a material effect on the Company’s financial condition, results of operations, or cash flows. Management believes its accrual of such estimated liability is adequate and believes that it has adequate insurance coverage or has meritorious defenses for these other claims and contingencies. 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 $ 31.5 million at June 30, 2024, including $ 11.6 million in letters of credit and $ 19.9 million in performance bonds. All of these instruments have an expiration date within two years . The Company does not believe demand for payment under these instruments is likely and expects no material cash outlays to occur regarding these instruments. 15