KIRBY CORP 10-Q

Item 1. Financial Statements KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES CONDENSED BALANCE SHEETS (Unaudited) September 30, 2024 December 31, 2023 ($ in thousands) ASSETS Current assets: Cash and cash equivalents $ 67,073 $ 32,577 Accounts receivable: Trade – less allowance for doubtful accounts 542,527 526,691 Other 47,965 52,025 Inventories – net 434,151 454,389 Prepaid expenses and other current assets 72,617 69,479 Total current assets 1,164,333 1,135,161 Property and equipment 6,045,965 5,824,038 Accumulated depreciation ( 2,060,572 ) ( 1,962,933 ) Property and equipment – net 3,985,393 3,861,105 Operating lease right-of-use assets 163,455 152,216 Goodwill 438,748 438,748 Other intangibles, net 36,536 42,927 Other assets 82,258 92,040 Total assets $ 5,870,723 $ 5,722,197 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Bank notes payable $ 8,174 $ 8,068 Income taxes payable 21,648 1,486 Accounts payable 248,899 269,378 Accrued liabilities 217,208 228,946 Current portion of operating lease liabilities 33,827 33,340 Deferred revenues 168,222 134,577 Total current liabilities 697,978 675,795 Long-term debt, net – less current portion 970,419 1,008,527 Deferred income taxes 735,290 696,557 Operating lease liabilities – less current portion 148,839 138,811 Other long-term liabilities 14,587 15,830 Total long-term liabilities 1,869,135 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 865,973 863,963 Accumulated other comprehensive income – net 34,618 35,006 Retained earnings 2,935,555 2,691,665 Treasury stock – at cost, 7.9 million shares at September 30, 2024 and 6.8 million at December 31, 2023 ( 540,367 ) ( 411,750 ) Total Kirby stockholders’ equity 3,302,326 3,185,431 Noncontrolling interests 1,284 1,246 Total equity 3,303,610 3,186,677 Total liabilities and equity $ 5,870,723 $ 5,722,197 See accompanying notes to condensed financial statements. 2 KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES CONDENSED STATEMENTS OF EARNINGS (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 ($ in thousands, except per share amounts) Revenues: Marine transportation $ 486,054 $ 429,885 $ 1,446,274 $ 1,269,342 Distribution and services 345,095 334,887 1,017,287 1,023,122 Total revenues 831,149 764,772 2,463,561 2,292,464 Costs and expenses: Costs of sales and operating expenses 552,091 530,541 1,657,004 1,618,690 Selling, general and administrative 84,119 79,125 254,708 250,870 Taxes, other than on income 8,973 9,666 27,327 28,610 Depreciation and amortization 60,653 53,445 177,777 156,251 Gain on disposition of assets ( 1,617 ) ( 1,528 ) ( 2,206 ) ( 4,230 ) Total costs and expenses 704,219 671,249 2,114,610 2,050,191 Operating income 126,930 93,523 348,951 242,273 Other income 2,949 1,589 9,306 9,296 Interest expense ( 12,498 ) ( 13,386 ) ( 38,468 ) ( 38,893 ) Earnings before taxes on income 117,381 81,726 319,789 212,676 Provision for taxes on income ( 27,350 ) ( 18,722 ) ( 75,861 ) ( 51,733 ) Net earnings 90,031 63,004 243,928 160,943 Net (earnings) loss attributable to noncontrolling interests ( 63 ) ( 40 ) ( 38 ) 86 Net earnings attributable to Kirby $ 89,968 $ 62,964 $ 243,890 $ 161,029 Net earnings per share attributable to Kirby common stockholders: Basic $ 1.56 $ 1.06 $ 4.20 $ 2.70 Diluted $ 1.55 $ 1.05 $ 4.17 $ 2.68 See accompanying notes to condensed financial statements. 3 KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 ($ in thousands) Net earnings $ 90,031 $ 63,004 $ 243,928 $ 160,943 Other comprehensive income (loss), net of taxes: Pension and postretirement benefits ( 484 ) ( 61 ) 107 1,152 Foreign currency translation adjustments ( 22 ) 143 ( 495 ) 1,073 Total other comprehensive income (loss), net of taxes ( 506 ) 82 ( 388 ) 2,225 Total comprehensive income, net of taxes 89,525 63,086 243,540 163,168 Net (earnings) loss attributable to noncontrolling interests ( 63 ) ( 40 ) ( 38 ) 86 Comprehensive income attributable to Kirby $ 89,462 $ 63,046 $ 243,502 $ 163,254 See accompanying notes to condensed financial statements. 4 KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) Nine Months Ended September 30, 2024 2023 ($ in thousands) Cash flows from operating activities: Net earnings $ 243,928 $ 160,943 Adjustments to reconcile net earnings to net cash provided by operations: Depreciation and amortization 177,777 156,251 Provision for deferred income taxes 38,698 46,441 Amortization of share-based compensation 12,837 12,310 Amortization of major maintenance costs 24,965 21,050 Other ( 126 ) ( 8,001 ) Increase (decrease) in cash flows resulting from changes in operating assets and liabilities, net 11,031 ( 64,767 ) Net cash provided by operating activities 509,110 324,227 Cash flows from investing activities: Capital expenditures ( 245,990 ) ( 274,963 ) Acquisitions of businesses and marine equipment ( 65,232 ) ( 37,500 ) Proceeds from disposition of assets 13,832 21,846 Net cash used in investing activities ( 297,390 ) ( 290,617 ) Cash flows from financing activities: Borrowings (payments) on bank credit facilities, net ( 38,893 ) 100,316 Borrowings on long-term debt — 240,000 Payments on long-term debt — ( 350,000 ) Payment of debt issuance costs ( 3 ) ( 1,237 ) Proceeds from exercise of stock options 8,375 3,431 Payments related to tax withholding for share-based compensation ( 5,356 ) ( 3,598 ) Treasury stock purchases ( 141,272 ) ( 60,910 ) Other ( 75 ) ( 73 ) Net cash used in financing activities ( 177,224 ) ( 72,071 ) Increase (decrease) in cash and cash equivalents 34,496 ( 38,461 ) Cash and cash equivalents, beginning of year 32,577 80,577 Cash and cash equivalents, end of period $ 67,073 $ 42,116 Supplemental disclosures of cash flow information: Cash paid (received) during the period: Interest paid $ 46,600 $ 45,276 Income taxes paid (refunded), net $ 15,476 $ ( 67,118 ) Operating cash outflow from operating leases $ 34,898 $ 33,266 Non-cash investing activity: Capital expenditures included in accounts payable $ 1,729 $ ( 2,305 ) Right-of-use assets obtained in exchange for lease obligations $ 38,730 $ 32,652 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 June 30, 2024 65,472 $ 6,547 $ 862,258 $ 35,124 $ 2,845,587 ( 7,520 ) $ ( 488,059 ) $ 1,221 $ 3,262,678 Stock option exercises — — 316 — — 59 3,964 — 4,280 Issuance of stock for equity awards, net of forfeitures — — ( 39 ) — — 1 39 — — Tax withholdings on equity award vesting — — — — — ( 1 ) ( 17 ) — ( 17 ) Amortization of share-based compensation — — 3,438 — — — — — 3,438 Treasury stock purchases — — — — — ( 483 ) ( 55,806 ) — ( 55,806 ) Excise taxes on treasury stock purchases — — — — — — ( 488 ) — ( 488 ) Total comprehensive income, net of taxes — — — ( 506 ) 89,968 — — 63 89,525 Balance at September 30, 2024 65,472 $ 6,547 $ 865,973 $ 34,618 $ 2,935,555 ( 7,944 ) $ ( 540,367 ) $ 1,284 $ 3,303,610 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 June 30, 2023 65,472 $ 6,547 $ 857,965 $ 18,996 $ 2,566,795 ( 5,946 ) $ ( 339,659 ) $ 2,165 $ 3,112,809 Stock option exercises — — 574 — — 48 2,739 — 3,313 Issuance of stock for equity awards, net of forfeitures — — ( 9 ) — — — 9 — — Tax withholdings on equity award vesting — — — — — — ( 2 ) — ( 2 ) Amortization of share-based compensation — — 3,398 — — — — — 3,398 Treasury stock purchases — — — — — ( 291 ) ( 23,310 ) — ( 23,310 ) Excise taxes on treasury stock purchases — — — — — — ( 197 ) — ( 197 ) Total comprehensive income, net of taxes — — — 82 62,964 — — 40 63,086 Return of investment to noncontrolling interests — — — — — — — ( 1,015 ) ( 1,015 ) Balance at September 30, 2023 65,472 $ 6,547 $ 861,928 $ 19,078 $ 2,629,759 ( 6,189 ) $ ( 360,420 ) $ 1,190 $ 3,158,082 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 — — 1,750 — — 113 6,625 — 8,375 Issuance of stock for equity awards, net of forfeitures — — ( 12,577 ) — — 208 12,577 — — Tax withholdings on equity award vesting — — — — — ( 68 ) ( 5,356 ) — ( 5,356 ) Amortization of share-based compensation — — 12,837 — — — — — 12,837 Treasury stock purchases — — — — — ( 1,354 ) ( 141,272 ) — ( 141,272 ) Excise taxes on treasury stock purchases — — — — — — ( 1,191 ) — ( 1,191 ) Total comprehensive income, net of taxes — — — ( 388 ) 243,890 — — 38 243,540 Balance at September 30, 2024 65,472 $ 6,547 $ 865,973 $ 34,618 $ 2,935,555 ( 7,944 ) $ ( 540,367 ) $ 1,284 $ 3,303,610 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 — — 357 — — 61 3,074 — 3,431 Issuance of stock for equity awards, net of forfeitures — — ( 10,084 ) — — 182 10,084 — — Tax withholdings on equity award vesting — — — — — ( 55 ) ( 3,598 ) — ( 3,598 ) Amortization of share-based compensation — — 12,310 — — — — — 12,310 Treasury stock purchases — — — — — ( 812 ) ( 60,910 ) — ( 60,910 ) Excise taxes on treasury stock purchases — — — — — — ( 472 ) — ( 472 ) Total comprehensive income, net of taxes — — — 2,225 161,029 — — ( 86 ) 163,168 Return of investment to noncontrolling interests — — — — — — — ( 1,015 ) ( 1,015 ) Balance at September 30, 2023 65,472 $ 6,547 $ 861,928 $ 19,078 $ 2,629,759 ( 6,189 ) $ ( 360,420 ) $ 1,190 $ 3,158,082 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 $ 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 September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Marine transportation segment: Inland transportation $ 392,617 $ 353,635 $ 1,170,459 $ 1,043,330 Coastal transportation 93,437 76,250 275,815 226,012 $ 486,054 $ 429,885 $ 1,446,274 $ 1,269,342 Distribution and services segment: Commercial and industrial $ 162,285 $ 156,060 $ 470,567 $ 461,159 Power generation 111,573 119,004 355,025 308,319 Oil and gas 71,237 59,823 191,695 253,644 $ 345,095 $ 334,887 $ 1,017,287 $ 1,023,122 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 nine months ended September 30, 2024 and 2023 that were included in the opening contract liability balances were $ 101.8 million and $ 76.8 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 September 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 $ 5.0 million and $ 19.1 million for the three months and nine months ended September 30, 2024, respectively, and $ 9.9 million and $ 29.6 million for the three months and nine months ended September 30, 2023, respectively, as well as the related intersegment profit of $ 0.5 million and $ 1.9 million for the three months and nine months ended September 30, 2024, respectively, and $ 1.0 million and $ 3.0 million for the three months and nine months ended September 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 September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Revenues: Marine transportation $ 486,054 $ 429,885 $ 1,446,274 $ 1,269,342 Distribution and services 345,095 334,887 1,017,287 1,023,122 $ 831,149 $ 764,772 $ 2,463,561 $ 2,292,464 Segment profit: Marine transportation $ 99,476 $ 63,467 $ 277,335 $ 170,754 Distribution and services 30,378 33,194 81,828 85,828 Other ( 12,473 ) ( 14,935 ) ( 39,374 ) ( 43,906 ) $ 117,381 $ 81,726 $ 319,789 $ 212,676 September 30, 2024 December 31, 2023 Total assets: Marine transportation $ 4,547,989 $ 4,454,931 Distribution and services 1,176,845 1,156,384 Other 145,889 110,882 $ 5,870,723 $ 5,722,197 The following table presents the details of “Other” segment loss (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 General corporate expenses $ ( 4,541 ) $ ( 4,666 ) $ ( 12,418 ) $ ( 18,539 ) Gain on disposition of assets 1,617 1,528 2,206 4,230 Interest expense ( 12,498 ) ( 13,386 ) ( 38,468 ) ( 38,893 ) Other income 2,949 1,589 9,306 9,296 $ ( 12,473 ) $ ( 14,935 ) $ ( 39,374 ) $ ( 43,906 ) 9 The following table presents the details of “Other” total assets (in thousands): September 30, 2024 December 31, 2023 General corporate assets $ 143,276 $ 108,306 Investment in affiliates 2,613 2,576 $ 145,889 $ 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): September 30, 2024 December 31, 2023 Carrying Value Fair Value Carrying Value Fair Value Revolving Credit Facility due July 29, 2027 (a) $ 5,000 $ 5,000 $ 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 500,000 495,295 500,000 475,920 3.46 % senior notes due January 19, 2033 60,000 54,562 60,000 49,955 3.51 % senior notes due January 19, 2033 240,000 219,082 240,000 200,698 Credit line due June 30, 2026 — — — — Bank notes payable 8,174 8,174 8,068 8,068 983,174 952,113 1,022,068 948,641 Unamortized debt discounts and issuance costs ( 4,581 ) — ( 5,473 ) — $ 978,593 $ 952,113 $ 1,016,595 $ 948,641 (a) Variable interest rate o f 6.1 % at September 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 . In October 2024, the Company repaid $ 10.0 million under the 2027 Term Loan prior to scheduled maturities. As a result, no repayments are required until September 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 $ 495.0 million as of September 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 September 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): September 30, 2024 December 31, 2023 2024 $ 10,497 $ 38,943 2025 38,144 27,638 2026 34,644 24,945 2027 28,510 22,842 2028 22,631 18,318 Thereafter 88,353 79,755 Total lease payments 222,779 212,441 Less: imputed interest ( 40,113 ) ( 40,290 ) Operating lease liabilities $ 182,666 $ 172,151 The following table summarizes lease costs (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Operating lease cost $ 11,728 $ 10,481 $ 34,608 $ 31,711 Variable lease cost 371 388 1,442 1,836 Short-term lease cost 9,515 8,167 28,503 23,597 Sublease income ( 836 ) ( 791 ) ( 2,520 ) ( 2,432 ) $ 20,778 $ 18,245 $ 62,033 $ 54,712 The following table summarizes other supplemental information about the Company’s operating leases: September 30, 2024 December 31, 2023 Weighted average discount rate 4.6 % 4.4 % Weighted average remaining lease term 8 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 September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Compensation cost $ 3,438 $ 3,398 $ 12,837 $ 12,310 Income tax benefit $ 786 $ 747 $ 3,042 $ 2,994 During the nine months ended September 30, 2024, the Company grant ed 166,708 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 September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Earnings (loss) before taxes on income: United States $ 117,520 $ 81,989 $ 320,265 $ 212,014 Foreign ( 139 ) ( 263 ) ( 476 ) 662 $ 117,381 $ 81,726 $ 319,789 $ 212,676 Provision (benefit) for taxes on income: Federal: Current $ 10,031 $ ( 3 ) $ 29,987 $ ( 3 ) Deferred 13,547 16,083 35,825 44,282 State and local: Current 2,546 2,479 7,103 5,056 Deferred 1,225 121 2,873 2,159 Foreign - current 1 42 73 239 $ 27,350 $ 18,722 $ 75,861 $ 51,733 (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 September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Net earnings attributable to Kirby $ 89,968 $ 62,964 $ 243,890 $ 161,029 Undistributed earnings allocated to restricted shares ( 24 ) ( 31 ) ( 36 ) ( 50 ) Earnings available to Kirby common stockholders – basic 89,944 62,933 243,854 160,979 Undistributed earnings allocated to restricted shares 24 31 36 50 Undistributed earnings reallocated to restricted shares ( 23 ) ( 31 ) ( 35 ) ( 50 ) Earnings available to Kirby common stockholders – diluted $ 89,945 $ 62,933 $ 243,855 $ 160,979 Shares outstanding: Weighted average common stock issued and outstanding 57,767 59,413 58,138 59,739 Weighted average unvested restricted stock ( 14 ) ( 30 ) ( 9 ) ( 18 ) Weighted average common stock outstanding – basic 57,753 59,383 58,129 59,721 Dilutive effect of stock options and restricted stock units 433 363 397 312 Weighted average common stock outstanding – diluted 58,186 59,746 58,526 60,033 Net earnings per share attributable to Kirby common stockholders: Basic $ 1.56 $ 1.06 $ 4.20 $ 2.70 Diluted $ 1.55 $ 1.05 $ 4.17 $ 2.68 Certain outstanding options to purchase approximately 33,000 shares of common stock were excluded in the computation of diluted earnings per share as of September 30, 2023 , as such stock options would have been antidilutive. There were no antidilutive stock options as of September 30, 2024 . There were no antidilutive RSUs as of September 30, 2024 and 2023 . 12 (10) Inventories The following table presents the details of inventories – net (in thousands): September 30, 2024 December 31, 2023 Finished goods $ 366,877 $ 351,050 Work in process 67,274 103,339 $ 434,151 $ 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 $ 1.4 million to the Higman pension plan during the nine months ended September 30, 2024 . The Company expects to make additional contributions of $ 0.3 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 September 30, Three Months Ended September 30, 2024 2023 2024 2023 Components of net periodic benefit cost: Service cost $ 850 $ 924 $ — $ — Interest cost 4,294 4,589 10 11 Expected return on plan assets ( 6,221 ) ( 5,727 ) — — Amortization of actuarial (gain) loss ( 584 ) — 8 6 Net periodic benefit cost $ ( 1,661 ) $ ( 214 ) $ 18 $ 17 13 Pension Benefits Pension Plans SERP Nine Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Components of net periodic benefit cost: Service cost $ 2,547 $ 2,772 $ — $ — Interest cost 12,884 13,767 29 32 Expected return on plan assets ( 18,663 ) ( 17,182 ) — — Amortization of actuarial (gain) loss ( 1,748 ) — 24 18 Net periodic benefit cost $ ( 4,980 ) $ ( 643 ) $ 53 $ 50 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 September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Components of net periodic benefit cost: Interest cost $ 5 $ 6 $ 15 $ 17 Amortization of actuarial gain ( 70 ) ( 86 ) ( 210 ) ( 258 ) Net periodic benefit cost $ ( 65 ) $ ( 80 ) $ ( 195 ) $ ( 241 ) (12) Other Comprehensive Income The Company’s changes in other comprehensive income (loss) were as follows (in thousands): Three Months Ended September 30, 2024 2023 Gross Amount Income Tax Benefit Net Amount Gross Amount Income Tax Benefit Net Amount Pension and postretirement benefits (a): Amortization of net actuarial gain $ ( 646 ) $ 162 $ ( 484 ) $ ( 80 ) $ 18 $ ( 62 ) Actuarial gains — — — 1 — 1 Foreign currency translation ( 22 ) — ( 22 ) 143 — 143 Total $ ( 668 ) $ 162 $ ( 506 ) $ 64 $ 18 $ 82 Nine Months Ended September 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 $ ( 1,934 ) $ 491 $ ( 1,443 ) $ ( 240 ) $ 58 $ ( 182 ) Actuarial gains 2,069 ( 519 ) 1,550 1,778 ( 444 ) 1,334 Foreign currency translation ( 495 ) — ( 495 ) 1,073 — 1,073 Total $ ( 360 ) $ ( 28 ) $ ( 388 ) $ 2,611 $ ( 386 ) $ 2,225 (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, 2019 and it is expected that the Federal Court of Canada will decide all claims against the Company. The Company is unable to estimate 14 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 September 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