Kirby Corp Q3 FY2025 Earnings Call

Good day, and thank you for standing by. Welcome to the Kirby Corporation 2025 Third Quarter Earnings Conference Call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Kurt Niemietz, Vice President of Investor Relations and Treasurer. Please go ahead.

Good morning, and thank you for joining the Kirby Corporation 2025 Third Quarter Earnings Call. With me today are David Grzebinski, Kirby's Chief Executive Officer; Raj Kumar, Kirby's Executive Vice President and Chief Financial Officer; and Christian O'Neil, Kirby's President and Chief Operating Officer. A slide presentation for today's conference call as well as the earnings release, which was issued earlier today can be found on our website. During this call, we may refer to certain non-GAAP or adjusted financial measures. Reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures are included in our earnings press release and they're also available on our website in the Investor Relations section under Financials. As a reminder, statements contained in this conference call with respect to the future are forward-looking statements. These statements reflect management's reasonable judgment with respect to future events. Forward-looking statements involve risks and uncertainties, and our actual results could differ materially from those anticipated as a result of various factors. A list of these risk factors can be found in Kirby's latest Form 10-K and in our other filings made with the SEC from time to time. I will now turn the call over to David.

Thank you, Kurt, and good morning, everyone. Earlier today, we announced third quarter earnings per share of $1.65, a 6% increase year-over-year. In the third quarter, we delivered steady results overall, driven by robust customer demand in power generation and disciplined operational execution across all our businesses. With near-term headwinds in the inland market and softness in some parts of distribution and services, our teams demonstrated adaptability, ensuring service continuity and performance. These efforts underscore our ability to navigate challenging conditions while maintaining momentum. Overall, our combined businesses achieved another solid quarter, reinforcing the strength of our core businesses and positioning us well for sustained growth as the market conditions improve and normalize. In our inland Marine Transportation business, market conditions experienced near-term softness during the third quarter, primarily due to favorable seasonal weather, improved navigational conditions, a lighter feedstock mix for our refinery and chemical customers, and fewer barges due to ongoing maintenance across the industry. At the same time, petrochemical customer activity remained muted. These factors contributed to our barge utilization averaging in the mid-80% range. On the pricing front, we observed temporary weakness in the spot market. Spot market rates declined in the low to mid-single digits, both sequentially and year-over-year due to the previously mentioned headwinds. Term contract renewals were flat when compared to the prior year. The combination of pricing softness and lower demand conditions led to operating margins in the high teens. In the fourth quarter, we are already seeing market conditions improve and expect this trend to continue. We also continue to see constraints in long-term barge construction, keeping new supply in check. Coastal marine transportation fundamentals remained strong throughout the third quarter with barge utilization consistently in the mid- to high 90% range, which is supported by steady customer demand and a limited supply of large capacity vessels. This favorable supply/demand dynamic continued to drive meaningful pricing gains with term contract renewals increasing in the mid-teens year-over-year, underscoring both market strength and our leadership position. Our operations team executed exceptionally well, ensuring high service reliability. The combination of strong pricing, high utilization, and operational excellence was reflected in the financial performance, with operating margins for coastal around 20%. Turning to Distribution and Services. Our teams delivered another outstanding quarter, achieving solid year-over-year growth in both revenue and operating income with strong contributions across nearly all end markets. In power generation, revenues were up 56% year-over-year, driven by robust demand for data centers and prime power customers. Inbound order momentum continued, further expanding our backlog and positioning us well for continued growth into 2026. We secured additional project wins for backup and behind-the-meter power applications, reinforcing our leadership in this space. Power generation has emerged as the leading contributor to growth in both revenue and operating income within the Distribution and Services segment. In our commercial and industrial market, revenues increased 4% year-over-year, reflecting steady marine repair activity and an ongoing recovery in on-highway service. This performance highlights both the durability of our customer relationships and the effectiveness of our service platform. In oil and gas, operating income grew 5% year-over-year despite revenue declines driven by continued softness in conventional activity. This performance reflects strong execution, disciplined cost management, and sustained execution in e-frac equipment, which remains the bright spot in an otherwise challenging oil and gas market. Overall, the segment continued to perform well, showcasing strength in power generation and our agility in responding to changing demand patterns with total segment operating income advancing 40% year-over-year. In addition, we remain focused on cost management, thereby enhancing operating margins, which reached 11% for the quarter. In summary, our third quarter results reflected fair performance for inland and continued strength in coastal and power generation. In inland marine, we encountered some near-term headwinds due to demand and supply chains, while long-term supply remained constrained. In coastal, market conditions remain favorable, enabling us to maintain strong utilization levels and secure significant rate improvements on term contract renewals. In Distribution and Services, robust demand for power generation, particularly from data centers and industrial customers, allowed the segment to deliver solid financial performance. We expect positive trends to continue into the fourth quarter, partially offsetting the normal seasonal slowdown. I'll talk more about our outlook later, but now I'll turn the call over to Raj to discuss the third quarter segment results and the balance sheet in more detail.

Thank you, David, and good morning, everyone. In the third quarter of 2025, Marine Transportation segment revenues were $485 million and operating income was $89 million with an operating margin of 18.3%. Total marine revenues, inland and coastal together decreased $1.2 million compared to the third quarter of 2024 and operating income decreased $11 million or 11%. Sequentially, compared to the second quarter of 2025, total marine revenues decreased 1.5% and operating income decreased 11%. As David mentioned, light feedstocks, good weather, fewer lock delays, and less barge maintenance in the industry exerted some downward pressure on utilization and spot market pricing. These effects were partially mitigated by strong execution and continued effective cost management. Looking at the inland business in more detail, the inland business contributed approximately 80% of segment revenue. Average barge utilization was in the mid-80% range for the quarter, which was down from the utilization seen in the second quarter of 2025. Long-term inland Marine Transportation contracts, or those contracts with a term of 1 year or longer contributed approximately 70% of revenue, with 57% from time charters and 43% from contracts of affreightment. Spot market rates experienced sequential and year-over-year declines in the low to mid-single-digit range, reflecting the impact of market conditions. Term contracts renewed in the third quarter at rates consistent with prior year levels. Inland revenues declined 3% compared to the third quarter of 2024, primarily reflecting lower utilization and moderating spot pricing, which offset the benefits of improved weather conditions. Sequentially, revenues decreased 4% versus the second quarter of 2025. Now moving to the coastal business. Coastal revenues increased 13% year-over-year and increased 11% sequentially due to the combined impact of pricing and fewer planned shipyards in the quarter. Overall, coastal had an operating margin around 20% due to improved pricing and continuing efforts to leverage costs. The coastal business represented approximately 20% of revenues for the Marine Transportation segment. Average coastal barge utilization was in the mid- to high 90% range, which is in line with the third quarter of 2024. During the quarter, the percentage of coastal revenue under term contracts was approximately 100%, of which approximately 100% were time charters. Renewals of term contracts were on average higher year-over-year in the mid-teens range. With respect to our tank barge fleet for both the inland and coastal businesses, we have provided a reconciliation of the changes in the third quarter as well as projections for 2025. This is included in our earnings call presentation posted on our website. At the end of the third quarter, the inland fleet had 1,105 barges, representing 24.5 million barrels of capacity. We expect to close 2025 with a similar fleet size and capacity at 1,105 inland barges, representing 24.5 million barrels of capacity. Coastal marine is expected to remain unchanged for the year. Now I'll review the performance of the Distribution and Services segment. Revenues for the third quarter of 2025 were $386 million with operating income of $43 million and an operating margin of 11%. Compared to the third quarter of 2024, the Distribution and Services segment revenue increased by $41 million or 12% with operating income increasing by $12 million or 40%. When compared to the second quarter of 2025, revenues increased by $23 million or 6% and operating income increased by $7 million or 21%. In power generation, revenues increased 56% year-over-year, while operating income increased 96% year-over-year, driven by demand for backup and prime power as well as behind-the-meter power applications. Our orders from data centers and other industrial customers for power generation and backup power installation continues to show strong growth. This has contributed to a very healthy backlog of power generation projects. Compared to the second quarter of 2025, power generation revenues increased by 24% and operating income increased by 87%. Operating margins for power generation were in the low double digits. Power generation represented 45% of total segment revenues. On the commercial and industrial side, activity levels in marine repair remained consistent while we saw a modest recovery in our on-highway business. As a result, commercial and industrial revenues were up 4% year-over-year and operating income increased 12% year-over-year, driven by favorable product mix and ongoing cost savings initiatives. Commercial and industrial made up 44% of segment revenues with operating margins in the high single-digit range. Compared to the second quarter of 2025, commercial and industrial revenues decreased by 3% with steady activity in marine repair and some improvement in our on-highway business. Operating income was down 13% over the same period, driven by unfavorable product mix. In the oil and gas market, we continue to experience softness in conventional frac-related equipment as lower rig counts tempered demand for new engines, transmissions, and parts throughout the quarter. This decline in conventional activity was partially offset by revenue from e-frac equipment, which remains a bright spot in the segment. As a result of this mixed demand environment, revenues declined 38% year-over-year and were down 9% sequentially. Importantly, despite the revenue decline, we achieved strong profitability gains with operating income increasing 5% year-over-year and flat sequentially. These results were driven by revenue in our e-frac business and the benefits of disciplined cost management initiatives. During the quarter, oil and gas represented 11% of total segment revenue, and the business delivered operating margins in the low double digits. Now I'll turn to the balance sheet. As of September 30, 2025, we had $47 million of cash with total debt of around $1.05 billion, and our debt-to-cap ratio improved to 23.8%, and our net debt-to-EBITDA was at 1.3x. During the quarter, we had net cash flow from operating activities of $227 million. While year-to-date, we had a working capital build of approximately $200 million, driven by underlying growth in the business in advance of projects, especially in the power generation space. We started to see some of this unwind in the third quarter as free cash flow improved to $160 million for the quarter. We expect to unwind more of this working capital during the fourth quarter and into next year. We used cash flow and cash on hand to fund $67 million of capital expenditure, primarily related to maintenance of equipment. During the third quarter, we also used $120 million to repurchase stock at an average price of $91 with an additional $40 million in repurchases since the end of the quarter. As of September 30, 2025, we had total available liquidity of approximately $380 million. We remain on track to generate cash flow from operations of $620 million to $720 million on higher revenues and EBITDA for 2025. We still see some supply constraints posing some headwinds to managing working capital in the near term. Having said that, we expect to unwind this working capital as orders ship in the fourth quarter and into 2026. With respect to CapEx, we expect capital spending to range between $260 million and $290 million for the year. Approximately $180 million to $210 million of CapEx is associated with marine maintenance capital and improvements to existing inland and coastal marine equipment and facility improvements. Up to approximately $80 million is associated with growth capital spending in both of our businesses. As always, we are committed to a balanced capital allocation approach. We will use this cash flow to opportunistically return capital to shareholders and continue to pursue long-term value-creating investment and acquisition opportunities. I will now turn the call over to David to discuss the remainder of our outlook for the fourth quarter.

Thank you, Raj. We've delivered strong performance through the first 3 quarters of 2025, and 2025 will be a record earnings year for Kirby. As global economic and geopolitical conditions continue to evolve, we remain vigilant in assessing potential volume impacts and are committed to proactive strategies that mitigate risks, safeguard performance, and position us for long-term growth. Importantly, despite near-term challenges in the inland market, we remain confident that the inland barge cycle still has years to go given the supply constraints. Our structural advantages in marine and growing backlog in power generation provide meaningful upside potential. With our strong balance sheet and robust free cash flow, we are well positioned to pursue strategic investments, whether through targeted capital projects, selective acquisitions, or returning capital to shareholders. This financial strength provides us with the flexibility to manage near-term uncertainty while remaining focused on creating long-term value. In inland marine, we anticipate market conditions to remain stable with some early signs of improvement evident so far in the fourth quarter. Barge utilization has improved entering the fourth quarter and is now running in the high 80% range. Seasonal weather factors could work to further reduce barge availability across the industry, which should support higher barge utilization for the full quarter. Our team is closely monitoring for any softness in demand for refined products and chemicals, and we will continue to adapt to shifting market dynamics. But for now, markets appear stable. While term contract rates are expected to continue improving over the long term, driven by the slow pace of new build activity and tight vessel availability, spot market pricing could continue to face modest pressure in the near term if demand softness reemerges. However, thus far in the fourth quarter, we have seen a meaningful improvement in demand. Our team continues to exercise cost discipline in response to shifting market conditions, which has helped us preserve operating margins despite volatility. At the same time, we are selectively holding certain costs steady in anticipation of a robust market recovery, ensuring we remain well positioned to scale efficiently as demand improves. Overall, inland revenues and margins are expected to improve modestly from the third quarter levels, and that is assuming tighter barge availability holds in the fourth quarter. In coastal, market conditions remain robust, underpinned by limited large capacity vessel availability across the industry. This constrained supply side environment continues to drive pricing momentum and supports higher term contract prices. Steady customer demand is expected to continue through the rest of the year with our barge utilization in the mid- to high 90% range. With our coastal fleet fully committed under term contracts, we expect to offset any seasonal weather-related impacts and maintain both revenues and margin in line with the third quarter levels. In our Distribution and Services segment, our outlook reflects strength in expanding markets, supported by our team's disciplined execution and focus on growth opportunities. Power generation continues to be a key driver, fueled by strong sales and order activity from data centers and industrial customers. In commercial and industrial, demand for marine repair remains steady. The on-highway service and repair market has shown a modest recovery and is expected to continue its gradual improvement into 2026. In oil and gas, we anticipate revenues to decline in the low to mid-single-digit range, driven by the ongoing transition from conventional frac to e-frac technologies and continued capital discipline among the oil and gas customers. Despite the revenue headwinds, profitability has improved, supported by disciplined cost management and increased e-frac deliveries. Overall, we now expect total Distribution and Services segment revenues to grow in the mid-single-digit range for the full year, with operating margins in the high single digits. To conclude, we delivered solid performance through the first 3 quarters of 2025, and we maintain a steady outlook for the remainder of the year. Our balance sheet remains strong, and we expect to generate significant free cash flow in the fourth quarter. In the absence of acquisitions, we plan to continue allocating the majority of that free cash flow towards share repurchases. With favorable market fundamentals in place, we expect our businesses to deliver solid and improving financial results for the next several years. We remain confident in the strength of our core businesses and the effectiveness of our long-term strategy. We are committed to capitalizing on growth opportunities and driving sustainable shareholder value. Operator, this concludes our prepared remarks. We are now ready to take questions.

Our first question comes from John Chappell of Evercore ISI.

David, I want to start with power generation. It's still relatively new to the business and to see the type of growth that you put up in the third quarter is pretty eye-catching. So just kind of help us understand, is this going to be a lumpy business going forward? I mean, obviously, I'm not asking you to underwrite 56% revenue or 96% operating income rate of change going forward. But are there going to be quarters where there's big lumpiness associated with contract wins? Or are you at the point now where the backlog starts to transition to revenue and you're going to see at least directionally, a continued ramp in this business, both from the top line and the EBIT contribution?

Yes, there may be some variability, but it won't be as significant as before. As you know, we receive different delivery schedules from various OEMs, which can lead to some inconsistencies in deliveries. However, regarding the backlog, it is currently at a record level, showing an increase in the mid-teens compared to last year and also sequentially. While we expect smoother operations, there will still be some fluctuations from quarter to quarter. If you compare the full year to last year, you will see continued growth. The order pace is very strong, with orders coming in from all our customers, both behind the meter and power modules, which is very encouraging. We are pleased with the current situation.

Okay. Great. And then to turn to inland, I know we don't like to focus too much on the short term, especially given your commentary that there are several years to go in the cycle. But can you help us just understand what's gotten a little bit better in the fourth quarter? I mean, the weather is not there yet, but it should be coming. It looks like Venezuelan imports are really kind of spiking. I think crude slate was part of the reason that you got down to the mid-80s. But just any other comments from the chemical customers, line of sight on how we could potentially either maintain these high 80s utilization rates or even get to the 90s as you maybe get a little bit of help from mother nature.

Yes, the third quarter experienced a mix of factors. We had favorable weather and minimal lock delays. Although the refiners are busy, they are processing a very light feedstock. Additionally, there is a RIN arbitrage that allows them to export a significant amount of refined products. However, the chemical sector has been somewhat weak, and less maintenance in the industry dampened the quarter's performance. Currently, we are experiencing our first cold front in Houston, and refiners are actively seeking more heavy feedstocks, which is encouraging. There are signs of slight improvement in the chemicals sector, although "strength" may be too strong of a term. If the situation in China improves, it could become more substantial and beneficial for us. One of our major customers reported good results in their chemicals department today, suggesting potential for recovery. We are also seeing utility rates increasing. Christian, could you provide additional details on the utility aspect?

So we definitely bottomed out in Q3. But today, we sit comfortably at 87.6% utility in the inland fleet. So we definitely see positive momentum, positive activity in the markets. The crude slate, the heavy crude is on the way. Our chemical customers, although still in austerity mode and under duress, sound a little more optimistic. And I think we're all waiting with bated breath to see what happens this week with the executive branches negotiation. So some positive vibes on the horizon, feeling certainly better than we did in Q3.

Our next question comes from the line of Reed Seay of Stephens.

Certainly encouraging to hear some positivity coming on the horizon. Also to kind of focus on the near term. Can you give us an update on how spot rates are trending in October maybe sequentially from September and on a year-over-year basis? I think last quarter also, you had noted that the spread between spot and contract was still maybe in like a 10% range. If you could give an update on what the gap between spot and contract is on the inland side as well?

Yes, definitely. In our prepared remarks, we mentioned that spot pricing decreased by 4% to 5% in the third quarter, while term contracts remained stable. As Christian noted, we have reached a low point in terms of utility, and things are starting to improve. There might be slight pressure on spot prices in the fourth quarter, but the overall trend is becoming more positive. The upcoming renewals in the fourth quarter are also significant for term contracts. We are optimistic about the situation. Christian can share some additional information regarding new builds, but the market outlook is quite encouraging right now, and we feel positive about the pricing direction in the upcoming quarters. Christian, would you like to add anything about the new builds or any other comments?

Yes. Thanks, David. Thanks, Reed, for the question. Yes, I think we do see some positive momentum in the spot pricing as we get into the fourth quarter here. The first cold fronts are here, and we feel like we're going to get some momentum. We had a bellwether major term contract renewed recently at a slightly positive increase. And so we're feeling good. It might be a mixed bag as we go into the fourth quarter. But the really important thing is that the total construct for the industry is extremely positive still. In our numbers, we think there's 50 barges delivered this year, and an order book of only about 30 next year. And it's a little subjective and hard to get to the exact numbers, but we think more than 50 barges have retired. So the supply-demand balance remains very positive, very constructive. The long-term outlook, very positive, very constructive. And so I think the industry is still in a really, really good spot for the long run and a good cycle.

Yes. Just to cap it off, Reed, spot pricing is still above term pricing.

Got it. All right. I want to ask about the guidance that you all talked to last quarter with earnings. I think you said the low end was still achievable if you had the softness that you were seeing in July continue through the rest of the year. We have definitely seen it continue in Q3, and maybe some improvement here in Q4 would be great. Apologies if I missed it, but I didn't see any update on your guidance or your ability to hit the low end of that? I just wanted to get...

Yes, we will be around the low end. There is no real change. We didn't update it because there was no real change. With the spot pricing coming down, we will be in that low end of the range.

Our next question comes from the line of Scott Group of Wolfe Research.

You mentioned that utilization is at 87.6%. Can you share where it reached its lowest point in Q3? Additionally, I'm a bit unclear about your overall message. You stated in the press release that conditions are stable, yet you also indicated that demand is improving significantly. Regarding spot pricing, you mentioned being optimistic, but also suggested it might decline sequentially. This has left me a bit confused about whether conditions are stable, improving, or deteriorating. I'm hearing mixed signals and would like some clarity on the situation.

Yes, Scott, let me try to clarify that for you. To respond to your initial question, the market hit a low of 80% in Q3, and we are currently at 87.6%. We are witnessing an improvement in utilization. Some of our specialty fleets are fully utilized now. There is positive momentum month-over-month and quarter-over-quarter regarding utilization. We are beginning to regain some pricing power, but we remain cautious about being too optimistic about it. The trend is positive. Utilization is improving. However, there are external factors we still need to consider, such as the macroeconomic environment, the chemical market, and other challenges we are trying to address.

And so is spot price moving higher or lower? Because I guess I've heard both.

Spot pricing has moved higher since it troughed out in the 80s in Q3. Spot pricing has moved higher as I sit here today.

We don't generally use POC. It's pretty much as shipped. And that's why it contributes to the lumpiness. Don't get me going on why I don't like accountants, but...

Our next question comes from the line of Ken Hoexter of BofA.

David, looking at the results, you have around $77 million, with a projection of about $20 million from coast-wise and $40 million from D&S for the next quarter. It seems nearly half of the business is now coming from sources other than inland. Can you provide more insight into the stability of the power generation segment? You've mentioned fluctuations in the past. Is there still concern about sourcing equipment? Have you become a major supplier now? Is one particular customer driving this? You have talked about several customers, but we've heard about one large customer placing significant orders with you. Please elaborate on the power generation aspect, considering its growing importance to the company and the speed of its development.

Inland remains a strong player in terms of earnings, and its growth trajectory is set to continue. There's still plenty of time left in the inland cycle, and the recent slowdown in the third quarter might even prolong it. We're generating significant free cash flow from it, which is advantageous for the company. Regarding power generation, our pipeline is extensive. We previously had only a few customers, but our customer base is now expanding rapidly, especially with co-locator data centers. Due to NDAs, we're unable to disclose many of their names. While hyperscalers typically engage directly with engine suppliers, they still require our support. Our portfolio is strengthening, and we're continuing to invest in it. We have unique service capabilities that many engine suppliers lack, which enhances our position. Although there may be some volatility related to engine supply from OEMs who are maximizing production, we are actively managing our supply chain with them.

So should we look for like sequential growth in that mid-teens, if that's the order book growth? Or is it lumpy still?

It's still lumpy. I would say you're going to see that mid-teens on average for the full year kind of grow. Maybe it could get up into the 20%. But it will be between 10% and 20% on a full year basis kind of growth. It will be quarterly lumpy based on deliveries. I mean, take a 60-megawatt type order, that's a lot of engines. We've got to get all those engines in delivered from one of the OEMs and then kind of package it and get it out. So it can be lumpy based on when we receive the engines. Ken, just remember that power gen is not just generators. One of the great things is in our e-frac business, we did a bunch of microgrids, and that included what we call PDUs, power distribution units. When these customers need to gather all of that power that's being generated, they have to handle the power. We have a very robust offering in power distribution and the software that controls it. And so that is really helping us in our offering. Managing the harmonics, for example, of a bunch of natural gas recips running together and load balancing, that takes some sophisticated software and equipment. So it's not just the engines and the generation, the engine power, if you will. It's the whole ecosystem. And fortunately, we've developed that over the last decade with e-frac, and it's a natural extension into this power gen ecosystem.

It’s helpful to understand the breakdown. Looking at inland, it seems contract rates are flat, which I believe is the first instance of this since around 2021. There may be growing concerns as we enter the fourth quarter, especially since you renewed so many contracts during this time. I want to follow up on Scott's question regarding the status of the petrochemical market. What factors will influence this? If the weather has been good, as you mentioned to John, does that mean we are seeing increased flows and demand from the chemicals sector? Can you provide more insight into what drives this situation? Also, what is the current status of your fleet? Is it stable, or do you anticipate an increase?

Yes, thanks, Ken. The main point is that the market has stabilized as we approach the fourth quarter. We have several renewals coming up. If utility remains in the high 80% to 90% range, we will see how things progress, but there is a positive opportunity and some momentum. The chemical market is a significant factor for us. Our customers in that sector have faced challenging conditions. We need improvements in the macro markets surrounding chemicals, and there is some optimism that these conditions are starting to improve. Additionally, as the crude slate changes and we receive heavier feeds, that should lead to positive outcomes. While we are currently in negotiations and in the early stages of the fourth quarter with some early wins, it is difficult to predict the exact outcomes. The overall health of the chemical market is a key factor. Refiners are very active, which is a positive sign, but they have primarily been using a lighter crude slate, which results in fewer byproducts that we utilize. There is cautious optimism for us, and we will see how things develop. I wish I could provide a clear answer, but we closely monitor the macro factors we don't control. However, there is positive momentum around utility as we enter these negotiations, and the market has stabilized. Our fleet is in great shape, the best shape it has been in.

Our next question comes from the line of Greg Wasikowski of Webber Research & Advisory.

So David, you mentioned the term book renewals on the inland side a couple of times. I think this is something that you've given us in the past. So I was wondering if you could remind us of the general percentage of your inland term book that does roll over in Q4 maybe versus Q3 or the rest of the year, if you're able to?

Yes. Generally, it's around 40% of the term contract portfolio, right? So remember, we've got 30% of our book is spot, which means it's under a year. The 70% is over a year or a year or longer. Most of it is a year. Of that 70%, about 40% kind of renews in the fourth quarter towards the tail end of the fourth quarter, actually. And then sometimes what happens is those renewals will get pushed a week or 2 and may end up in the first quarter. But it is very fourth quarter heavy. And I would say a good number is around 40%.

Thank you, operator, and thank you, everyone, for joining us today. As always, feel free to reach out to me throughout the day for any follow-up questions. All right. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.