Good day and thank you for standing by. Welcome to the Kirby Corporation 2025 fourth quarter earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to turn the conference over to your first speaker today, Kurt Nimitz, Vice President of Investor Relations and Treasurer. Please go ahead.

Good morning, and thank you for joining the Kirby Corporation 2025 Fourth Quarter Earnings With me today are David Grzbinski, Kirby's Chief Executive Officer, Christian O'Neill, Kirby's President and Chief Operating Officer, and Raj Kumar, Kirby's Executive Vice President and Chief Financial Officer. Slide presentation for today's conference call, as well as the earnings release, which was issued earlier today can be found on our website. During this conference call, we may refer to certain non-GAAP or adjusted financial measures. Reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures are included in our earnings press release and are also available on our website in the investor relations section. As a reminder, statements contained in this conference call with respect to the future are forward-looking statements. These statements reflect management's reasonable judgment with respect to future events. 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 factors can be found in Kirby's latest Form 10-K and in other filings made with the SEC from time to time. I will now turn the call over to David.

Thank you, Curt, and good morning, everyone. 2025 was a record year for Kirby, capped off by a solid final quarter. During the fourth quarter, we navigated typical seasonal weather and year-end softness with exceptional execution by both our marine transportation and our distribution and services teams. We also continued to return capital to shareholders with over $100 million in share repurchases, and we further strengthened our balance sheet by paying down $130 million in debt. 2025's record year of earnings supported another consecutive year of generating more than $400 million in free cash flow. We closed the year with strong operational and financial momentum, combined with improving market conditions. And, as we look ahead, we expect steady growth and solid performance in 2026. In inland marine, early quarter market softness from muted demand and high barge availability gave way to improving conditions as the quarter progressed. Barge utilization strengthened during the quarter, averaging in the mid to high 80% range, and overall market activity became increasingly constructive, with utilization exiting the year close to 90%. Pricing was mixed with early quarter softness, giving way to firmer prices as utilization improved. Term renewals were down in the low single digits and spot prices declined in the low single digits sequentially. At the end of the quarter and thus far in January, we've seen spot prices rebound in the low to mid single digits sequentially. With these market conditions, our teams worked hard on controlling costs, operating safely and protecting margins. With this disciplined execution, the inland business delivered solid operating margins in the low 20% range for the quarter. In coastal, market fundamentals remain solid, with our barge utilization levels running in the mid to high 90% range. Throughout the quarter, customer demand was stable, supported by limited availability of large capacity vessels. Our teams delivered strong operational execution and maintained a disciplined focus on cost, efficiency, and this resulted in an operating margin of approximately 20%. Turning to distribution and services, overall demand tracked in line with the prior quarter. We continued to see strong activity in power generation, stable marine repair demand, a slowly recovering off-highway market, and persistent softness in the conventional frack market. In PowerGen, total revenues grew 10% sequentially and 47% year-over-year, driven by execution on existing backlog, which was further supported by strong order flow and multiple large project wins as customers continued to prioritize reliable power solutions. In our commercial and industrial market, revenues were down sequentially, driven by seasonal slowness in marine activity and ongoing slow recovery in the off-highway market. In oil and gas, revenues continued to be pressured by a very soft conventional oil and gas business, yet we continue to maintain profitability in this part of the segment. In total, we exceeded our expectations as the segment grew operating income 20% for the full year. In summary, Kirby closed the fourth quarter and year on solid footing despite the usual seasonal challenges in both segments. So far in the first quarter, we've seen stable refinery activity, improving inland utilization, and spot rates that have early signs of an upward trend. In coastal, market conditions remain stable, our barge utilization is strong, and pricing continues to move in the right direction. In distribution and services, even though demand is expected to remain mixed across our product lines, power generation continues to be a standout performer, helping to offset softness in the other areas. Overall, we expect to deliver steady financial performance in 2026, with earnings projected to strengthen year over year. I'll talk more about our outlook later, but first I'll let Raj discuss the fourth quarter segment results and the balance sheet in more details.

Thank you, David, and good morning, everyone. In the fourth quarter of 2025, marine transportation segment revenues were $482 million and operating income was $100 million with an operating margin in the low 20% range. Compared to the fourth quarter of 2024, total marine revenues inland and coastal together increased $14.9 million, or 3%, and operating income increased $14 million, or 17%. When compared to the third quarter of 2025, total marine revenues decreased 1%, and operating income increased 13%. As David mentioned, typical seasonal winter weather along the Gulf Coast produced an 82 percent sequential increase in delay days and negatively impacted operations and efficiency in the fourth quarter. Looking at the inland business in more detail, the inland business contributed approximately 79 percent of segment revenue. Average barge utilization was in the mid to high 80% range for the quarter, which was an improvement over the third quarter of 2025, but down from the fourth quarter of 2024. Long-term inland marine transportation contracts, or those contracts with a term of one year or longer, contributed approximately 70% of revenue, with 59% from time charters and 41% from contracts of a fragment. Lower market conditions contributed to spot market rates that were down in the low single-digit sequentially and in the mid-single-digit range year-over-year. Our term contracts that renewed during the fourth quarter were down in the low single-digit range due to the short-term softness in the market. Compared to the fourth quarter of 2024, inland revenues decreased 1%, primarily due to lower utilization. Inland revenues increased 3% compared to the third quarter of 2025 due to higher utilization from improved market conditions. Inland operating margins were in the low 20% range. Margins improved sequentially, driven by aggressive cost management, which helped offset softer pricing, lingering inflationary pressures, and challenging operating conditions caused mainly by weather delays. Now moving to the coastal business, coastal revenues increased 22% year-over-year, driven by steady demand, higher contract prices, and limited availability of large capacity equipment. Overall, coastal had an operating margin around 20%, benefiting from higher pricing and effective cost management. We do expect to see some margin headwinds going into the first quarter of 2026, given the higher number of planned shipyards. The coastal business represented 21% of revenues for the marine transportation segment. Average coastal barge utilization was in the mid to high 90% range, which was in line with both the fourth quarter of 2024 and the third quarter of 2025. During the quarter, the percentage of coastal revenue under term contracts was approximately 100%, all of which were time charters. There were no term contracts scheduled for renewal in the fourth quarter. With respect to our tank barge fleet, for both the inland and coastal businesses, we have provided a reconciliation of the changes in the fourth quarter, as well as an outlook for the full year 2026. This is included in our earnings call presentation posted on our website. At the end of the fourth quarter, the inland fleet had 1,105 barges representing 24.5 million barrels of capacity and is expected to be flat in 2026. 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 fourth quarter of 2025 were $370 million with operating income of $30 million and an operating margin of 8.1%. Compared to the fourth quarter of 2024, the distribution and services segment revenue increased by $35 million or 10% with operating income increasing by $3 million or 12%. This growth was driven by the power generation business. When compared to the third quarter of 2025, revenues decreased by $16 million or 4% and operating income decreased by $13 million or 30% due to the year-end softness in marine repair and off-highwear activity and continued weakness in the conventional frat market. Moving through the segment in more detail, in power generation, we continue to see significant power generation orders from backup and prime power data centers and other industrial applications resulting in higher backlog. Overall, total power generation revenues were up 47% year-over-year with operating margins in the high single digits. Power generation represented 52% of total segment revenues. This is the second quarter in a row that power generation increased its contribution to the overall segment. We anticipate this trend to continue given the strength we are seeing in the data center and backup power markets. On the commercial and industrial side, activity remains steady in marine repair and on highway. As a result, commercial and industrial revenues were almost in line with the prior year. However, revenues were down 11% sequentially due to seasonal softness in marine repair and on-highway activity. Commercial and industrial made up 40% of segment revenues and had operating margins in the high single digits. In the oil and gas market, we continue to see softness in legacy conventional frack-related equipment as low rig counts and lower fracking activity tempered demand for new engines, transmissions, service, and parts throughout the quarter. Revenies in oil and gas were down 45% year-over-year and 33% sequentially, and operating income was down 30% year-over-year and 54% sequentially. Even with the declines in revenue, oil and gas was able to aggressively manage costs and maintain profitability. Oil and gas had operating margins in a high single digits in the fourth quarter and represented 8% of segment revenue. I would like to take a moment to call out a few other items that have had an impact on the income statement in the quarter. We have seen an increasing trend in our medical costs and expect this to continue in 2026. This impacted fourth quarter operating margins in both of our segments. Conversely, moving down the income statement, our general corporate expenses declined in the quarter as we experienced lower claims losses driven by our strong focus on safety and execution. The medical cost increases were largely offset by the lower claims losses. We will continue our relentless focus on strong safety and operational excellence, but we expect continued higher medical costs going forward. and we expect general corporate expenses to normalize in 2026 at a similar level to the first three quarters of 2025. I'll now turn to the balance sheet. As of December 31st, 2025, we had $79 million of cash with total debt around $920 million, and our debt-to-cap ratio was 21.4%. During the quarter, we had net cash from operating activities of around $312 million, Fourth quarter, cash flow from operations benefited from working capital reduction of approximately $127 million. We used cash flow and cash on hand to fund $47 million of capital expenditures, primarily related to maintenance of marine equipment. Pre-cash flow generation during the quarter was just over $265 million. We used $102 million to repurchase stock at an average price just under $99 and reduced our debt by around $130 million, further strengthening our balance sheet. As of December 31st, we had total available liquidity of approximately $542 million. For all of 2025, we generated cash flow from operations of $670 million, driven by higher revenues and earnings, and our continued focus on working capital. Having said that, we still see some supply constraints posing some headwinds to managing working capital in the near term, especially to support the growth in the power generation space and expect to build in working capital at least in the first half of 2026. With respect to CapEx, our total capital spending was $264 million for 2025. Approximately $220 million was associated with marine maintenance capital and improvements to existing inland and coastal marine equipment and facility improvements. Approximately $45 million was associated with growth capital spending in both of our businesses. For 2026, we expect CapEx to fall into the $220 to $260 million range. We generated $406 million of free cash flow in 2025, which exceeded the high end of our guidance, driven in part by a favorable working capital release in the fourth quarter. We expect 2026 to be another good year for free cash flow generation, with operating cash flow expected to be ranging from $575 million to $675 million. As always, we are committed to a balanced capital allocation approach and will use this cash flow to return capital to shareholders and continue to pursue long-term value-creating investment and acquisition opportunities. I will now turn the call back to David to discuss a full 2026 outlook.

Thank you, Raj. 2026 is off to a strong start. While macro factors, including Venezuelan oil flows and ongoing tariff developments, may create some near-term noise that could also present upside for demand. We exited the year with solid momentum. Refinery activity is steady, inland barge utilization is improving, and spot rates are showing early signs of firming. Coastal market conditions remain constructive, with pricing continuing to move in the right direction. In distribution and services, even though demand will vary across product lines, our power generation business remains a standout. Our expanding backlog, continued strength in customer demand, and the rising importance of reliable 24-7 power are driving sustained performance in this segment. These tailwinds are helping to balance softness in other parts of the business, but they do position us for continued growth. Overall, we expect to deliver consistent year-over-year earnings growth in 2026, supported by stable operations, improving market fundamentals, and strong execution across the country. Moving to specific detail on the segments, in Inland Marine, limited new-build activity continues to keep equipment supply in balance and supports constructive market fundamentals. We expect refinery utilization to remain healthy and see early signs of strengthening petrochemical demand, which together should support higher fleet activity. For the full year, we anticipate barge utilization to average in the low 90% range, with pricing improving steadily as demand improves. In addition, 2026 is expected to be a lower maintenance year for the fleet, providing more barges available for service. Overall, inland revenues are expected to increase in the low to mid-single digits year over As is typical, seasonal winter weather has set in, and that will weigh heavily on both revenues and margins in the first quarter. However, as we move through the year, we expect operating performance to strengthen. Margins should gradually improve with better utilization, Burma pricing, and lower maintenance, ultimately averaging in the high teens or low 20s for the full year. In coastal, market conditions remain favorable and supply and demand remain balanced across the industry fleet. Steady customer demand is expected to keep our barge utilization in the mid-90% range. While we expect elevated shipyard activity to persist throughout the year, we still anticipate mid-single-digit revenue growth versus 2025, which has been helped by gradual pricing improvement as new contracts renewed. Coastal operating margins are expected to be in the high teens range on a full year basis with some pressure in the first part of the year due to heavy shipyards. In the distribution and services segment we expect stable growth supported by rising customer demand in several areas offsetting weakness in others. We We anticipate that deliveries will continue to be somewhat uneven due to persistent availability constraints and long OEM lead times, which are affecting the timing of equipment and parts flows, but fundamental demand trends continue to show strength. Power generation will continue to be a core engine of growth for the segment, driven by a robust order pipeline, expanding backlog, and rising customer focus on reliable prime power and backup power solutions across industrial and energy applications. In commercial and industrial, the outlook remains stable with solid marine repair activity and ongoing improvement in on-highway service and repair activity. In oil and gas, we expect revenues to be down in the double-digit range as demand continues to be soft. But more importantly, we expect to continue to maintain profitability in oil and gas driven by strong cost control. Overall, the company expects total segment revenues to be flat to slightly higher year over year with strength in power generation helping to offset lower oil and gas activity. Operating margins are projected to be in the mid- to high single-digit range on average for the full year, with continued discipline on cost management. To conclude, overall, 2025 was another record year of earnings, and we remain encouraged as we look to this year and beyond. Despite the softness we saw in the inland market in the second half of 2025, limited new build activity in the marine market continues to keep industry supply in check and our customer demand remains solid. The demand for our power generation equipment is strong and growing as we continue to receive new orders and build backlog. Our balance sheet is in excellent condition and we expect to generate significant free cash flow again in 2026. Overall, we anticipate solid financial performance for this year with solid earnings growth and supportive fundamentals extending into the coming years. Operator, this concludes our prepared remarks. Christian, Raj, and I are ready to take questions.

Certainly. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand by while we compile our Q&A roster. And our first question will be coming from Reed Fay of Stevens, Inc. Reed, your line is open. Hey, guys. Thanks for taking the question.

I just had a question on 4Q term contract pricing. It was down slightly, but I would assume that these have some type of forward-looking conversation when you get into the room with these customers. Is this somehow a read into maybe their demand outlook into 2026, or is this solely a function of near-term pressures? And then if you can give any color on how these conversations are going so far in 1Q, as you say, you've seen a bottoming in spot rate. That would be very helpful.

Yeah, good morning, Reid. Thanks for the question. Chris and I will tag-team this a bit. Yeah, the fourth quarter, you know, we had a pretty weak demand early in fourth quarter. It was carrying over from the third quarter being a little weaker on demand. So we had a little more barge availability than we would have liked. That put some short-term pressure on term pricing. As you heard, it was down low single digits. You know, that's just part of the normal renewal cycle. The good news is that we've already seen spot prices retrace and are probably up more so far in January than they were down in the fourth quarter. So that bodes well for the renewal cycle going into this year. I think it is really demand softness in the latter half of last year kind of set the tone for the term renewals.

But so far the tone is much, much improved this year.

Part of that is weather, for sure. we're tighter because of weather, but we are seeing more volumes. You know, I don't know, Christian, what was our utility this morning? We were 94% this morning, so utility's tight.

Anything you want to add on pricing? Yeah, no, thank you, Reed, for the question. I think your observation that near-term pressure was probably more of what we saw in Q4. I don't think it It reflects an outlook of our customers on 2026. You know, we definitely feel some momentum as we enter this year and we exited last year. We were just in a window there where, you know, we were fighting for, you know, rate increases. And we ended up, you know, kind of slightly below that single digits. In light of where the refining industry was with running the light crude slates, where the chemical markets are with some of the distress and the malaise that you hear about in the headlines, you know, we feel, you know, okay about those Q4 renewals. But we definitely are optimistic that as we enter Q1, you know, pricing stabilized, teams execute very well. Utilization, as David just had us mentioned, is 94%. So feeling okay as we enter Q1. Your question is about Q4, but short answer is about the near-term pressure in the market.

Yeah, I would add, Reid, that, you know, the refinery complex is doing better. You know, we have seen the lighter crude slate get a little heavier. We remain hopeful on Venezuelan crude. It's still early days to see what impact that has. But I would just add that chemicals have been really tough for the last couple of years, almost the last several years. Boy, if we got a little upturn in chemicals, we could be extremely tight very quickly. So we're feeling that tightness, and I think our customers are starting to feel the tightness. So we're very constructive about how this year looks. And the good news is nobody's building equipment as well. So it's a really constructive market as we head into full year 26.

Got it. That's helpful. Thank you. And then on the coastal side, revenue is expected to be up in the mid-single-digit range. You don't have a lot more room on your ships to increase volumes. it seems like it could be almost a proxy for price increases in 2026, but is there some impact in there from maybe your increased shipyards that you talked about? And then I guess what cost impact should we expect from increased shipyards in the first part of this year?

Yeah, no, this will be a heavier shipyard year for sure. The number of shipyard days are up at least 10% plus. So as you know, with shipyards, we don't get the revenue, but we still have the cost so that there is a margin impact. So when you hear we're up in terms of revenue, that's all price. It's all price. And because, you know, obviously when you're in the shipyards, you're not moving the volume. So it's a very constructive market in the coastal business. Nobody's building any new capacity. Pricing to justify new builds is still 40% plus away. So nobody's thinking about building. Even if they were to build, it would take three years from kind of deciding to build. So we're very constructive on the CoastWise business. I will say that we've had several years now of double-digit price increases. So, you know, the law of large numbers is coming into play. So, you know, seeing double-digit 20% type price increases, probably won't see those going forward. But we are still getting price increases. The market's really tight in the large capacity vessels. So we're very optimistic about...

Appreciate the color, guys.

Thanks, Reed.

And our next question will be coming from Ken Hoekster of Bank of America. Your line is open, Ken.

Hey, Greg. Good morning, Dave, Christian, Raj. So you guys had a pretty big range for EPS, right, 0 to 12. You know, maybe drive a barge through there. So maybe just talk a little bit about top and bottom, you know, expectations or thoughts. And I don't know, is that more on the deliveries for PowerGen and the timing of that? Is it, you know, unknown about the, I mean, I guess most of your contracts I thought were done in the fourth quarter for Inland. Is there still a lot of debate given the flux of what's going on with rates? So maybe just walk through your thoughts on the range, why so large, and then where the opportunities lie.

Yeah, no, I think you hit the key reason. And, you know, there's a couple of reasons for the breadth of the range. And PowerGen deliveries are a big part of it. As you know, the OEMs still are supply chain constrained. You know, we get lumpy deliveries from them, and then we've got to process them through our manufacturing facility. So, you know, the cadence of PowerGen deliveries is a big part of it. And then a lesser extent is the inland market and how much pricing improves throughout the year. We're very optimistic, but we don't want to be too optimistic given we saw a little demand pullback last year when the crude slate went a little lighter. So far, you know, we're seeing a heavier feedstock slate come in, and that's certainly helping. You know, our refining customers are having really good years, and I think they like cracking the heavier crude. And, you know, this Venezuelan is just part of it, but given Venezuelan coming back in is also making Mayan and Mexican crude slates a little cheaper. So there's some good dynamics coming, but we're a little cautious given what we saw in the third quarter in terms of demand. So that's part of our guidance range, Ken.

Yeah. So maybe clarify just the inland part of that, right, because that caution, right? So your inland turned the corner and seems to be accelerating into the start of the year, but the high teens to low 20s may be a little bit lighter than, I don't know, are you thinking some capacity coming back just given the lack of yard work, or is it a slower start to rates? I'm just wondering why, because you seem so bullish on getting at least that 20s level before.

Yeah, let me take a shot at that, Ken. So on the inland side, you know, I think supply and demand remain in excellent condition. You know, I want to just tighten up one thing that you mentioned. The percentage of contracts at Reunion Q4 was probably 30 percent-ish of the portfolio that just repriced that single digits down. So that, you know, that bakes through the forecast. But I think we're feeling pretty good today about where spot markets can go. You know, we'll see. and, you know, maybe that puts you at the higher end of that range if all that continues. As David referenced, the Venezuelan crude dynamic, you know, that could be significant. You know, not sure how much that is, you know, really priced into the forecast. It's hard to do that. I was joking with David and Raj. I wish we'd have gone a day or two after all these big refiners calls today. We would sound a lot wiser about all that. But, you know, I don't know if that answers your question, But, you know, Inland's got some positive optionality upside with spot rates as we go through.

Yeah, I guess a caution on the margin. You know, we fully would expect to be in that 20 percent range, but we are seeing some inflation. One of the things that's actually helping the marine dynamic market here is mariners are still very tight. And so, you know, we are seeing wage pressure and, you know, there's still some inflation that's impacting. So, yeah, maybe we're being a little conservative, but, you know, we thought it's better to be prudent given the inflationary environment and knowing that it's going to take a little more spot market improvement.

Yeah, David, we saw the medical costs this quarter inching up. You know, it's trending higher. So inflation is real there.

Yeah. Last one, if I can, just make one more in. Your capital allocation rate, Dave, you mentioned all the time, like when you never want to sell at the bottom. Now that DNS or at least the power gen market is really taking off and establishing itself, is that now part of core? Do you view it as core? Is that something you still look at, at opportunities, is maybe just your big-picture thoughts on the business.

Yeah, well, we're really excited about PowerGen. It's been a lot of fun. With that said, we're always looking for ways to enhance shareholder value, and if there's a transaction that really adds to shareholder value, we would go after it. That said, we're very excited about PowerGen. And we're, you know, we're starting to get into higher power nodes. The percentage of behind the meter equipment that we're providing is going up. You know, just standby backup power has got a little lower margin. But when you get behind the meter, it's natural gas driven, a lot more engineering involved. And so we're excited about that. And then as you look out, all this equipment that's going in is going to provide some service annuities for us. So, you know, we're pretty excited about where PowerGen is going. So, you know, it's hard to say, but we've always been focused on how can we maximize shareholder value.

Appreciate the time and thoughts. Good luck in 2016. Appreciate it, Ken.

And our next question will be coming from John Chappell of Evercore ISI.

Your line is open. Thank you. Good morning. David, when we hear you talk about all three core businesses, kind of getting to that guidance range seems ultra conservative. I mean, you spoke to being conservative on inland margin, and that makes sense with the inflation and the medical side. You know, Venezuela, you noted as being a big air pocket driver back in June, July, August maybe. Now you mentioned the potential for that to be upside. PowerGen's obviously driving the bus on DNS. That was a high single-digit margin business in 4Q. And DNS overall, margin guides mid to high single digits, and you bought back 100 million of stock in 25. So just trying to flesh out in this flat to 12% guide, is there any buyback? Is there any Venezuela upside? Why wouldn't DNS be better than mid-single-digit margins if PowerGen, which is a high single-digit margin business, is doing so much better than oil and gas and CNI? You just help out with that.

Yeah, yeah. We'll tag-team that a little bit. Let me break that down into a couple things. On the DNS margin, let me break that down a little bit. I alluded to it a little bit here with behind the meter versus just backup. One of the things with PowerGen, if it's just a backup engine, now there's some, a backup diesel engine for a data center, for example, there is some engineering component tree there, or input there, but it's a pretty basic piece of equipment. We add bells and whistles to it and cooling and fuel tanks and software to control it and stuff like that. But, you know, the big piece of that is the engine. And unfortunately, the whole market knows what every engine costs. So our ability to mark up the price on engines is constrained. So when we're, you know, shipping a lot of data center backup power, you know, it's going to be lower margin. Conversely, when we start shipping behind the meter type stuff, that's all natural gas re-sip engines, very highly engineered, a lot more sophisticated, higher margins. So part of our margin progression for 26 is lower margins in the first half when we're shipping a lot of kind of backup power. And then the second half is when some of our behind-the-meter backlog will start to shift. So we're melding that together and giving you our best thought on margins. The good news is revenue is growing. Yeah, the margins are a little lower, but this is still a really good growth market. And then when you look out 27-28 as service and parts start to grow, I mean, there's a lot of equipment going out there right now. You know, we'll see margins improve in the outer years. You know, we provide service and parts to not just the equipment we've deployed, but the equipment that some of our competitors have deployed. We've got a very large technician base. And frankly, we'll continue to grow our service capabilities. And that gets to kind of the acquisition and the capital allocation, if you will. And I know Christian is going to add some more color here in a minute on PowerGen, but on capital allocation and share repurchases, you know, the conversations we're having in M&A are more frequent. You know, as we look at our free cash flow, it'll be like it was in 25. I think we did over 400 million in free cash flow. And in 25, we put 360 million of that free cash flow to share repurchases. So, you know, we definitely like buying back our stock. So absent, you know, some acquisitions, you should see us deploy free cash flow. So we've got a little bit of share buyback in that guidance, not a lot, because we're constructive on where we think M&A might go. But as you know, and you've seen, John, over the years, It's really hard to predict that M&A. We remain very disciplined on our capital returns. And so that bid offer spread is what comes into play. But I think Christian wanted to add a few more thoughts on PowerGen.

I appreciate the question, John, and thank you, David. Just a little more information on the behind-the-meter power system and the DNS profitability. It's obviously a mixed piece, as David referenced, between the standard backup diesel power generation for a data center and our behind-the-meter power system. And the key there is that it's an entire system. It's got more value. Integrated power. It's not just a generator. It's a highly engineered product. We include our own advanced power distribution units that go with the system. Our power management and control systems add value. It requires a lot more extensive, you know, ballast of plant. And as David referenced, the service opportunity on behind-the-meter power, where the gens are running 24-7 and not just firing up on a standby basis, represents a significant long-term service opportunity. And so I think David touched on all this, but I just wanted to give a little more color on that behind-the-meter power system. And then I think you asked about Venezuela and its impacts. I'll touch on that, Dave. So, you know, Venezuelan crude in large volumes in the Gulf of Mexico has historically been a really good story for us barge guys. Heavy crude in general for pad three, you know, creates bottom-of-the-barrel residuals that have to move by barge, produces intermediates and mediums that are better moved by barge and move between refineries to balance them. Also, you're starting to see the evidence that this Venezuelan crude is going to be discounted to other crudes, so the price is cheaper. If our refiners are happy and crack spreads are better and they're more profitable, as they go, we go. And we have seen a small sample set already of some refiners taking positions on equipment, particularly our thermal, fluid, hot oil pieces of equipment. We own and operate the largest black oil heater fleet in the industry. And we've seen some small, you know, just a small sample set today of people taking positions in advance of Venezuelan crude. So, you know, again, I'm not sure, you know, we really, you know.

Part of the problem, John, is we haven't seen the volume yet. I mean, there's a lot of talk of the Venezuelan volumes coming. You know, the refinery complex is pretty big, and, you know, they process a lot of crude. And so, you know, so far it's just been a drop in the bucket. But, you know, there's a lot of good discussion out there, but we haven't really seen the barrels come in yet.

Yeah, I imagine we'll all be a little wiser after the refiners do their calls today.

Yeah, that all makes sense. That's a super helpful context, and just a two-part follow-up to, my apologies, so many questions. One, you talked about a potential kind of price holiday, so to speak, for some of your biggest customers. They struggled a little bit in mid-25 that I think you were supposed to get back in 26. So just wanted to see if that's going to shake out as you had expected and baked into the guide. And then two, it seems like there's a lot of surging demand in gas turbine production. and some of maybe your biggest customers in the U.S. So I don't know if that's a 26 event or a 27 or beyond event, but anyway, you can kind of, you know, talk to that potential as well.

Let me touch on the rates, on what we had. You know, there were some opportunities for us to help some very large long-term customers who were going through austerity measures, and we did the right thing and took a haircut on some rates in 25, those rates will come back in 26, and, you know, we continue to just be good partners where we can. We're in it for the long run. So I guess the rate holiday, as you refer to it, I don't, you know, see any of that today that we need to

talk about. Yeah, on the larger power nodes, you heard us talk about it. Part of that is is larger re-sips coming from the OEMs, but there is a portion of gas turbines. We are working actively right now packaging some larger gas turbines, but those are revenue in 27, and then assuming that goes well, it could become very meaningful in 28 and 29.

Got it. Incredibly helpful. Thanks, Christian and David.

Thanks, Sean.

Our next question will be coming from Sharif Elmagrabi of BTIG. Your line is open.

Hey, good morning. Just one for me. Spending some time on the CapEx guidance, $65 million is earmarks for growth, but we're not baking any acquisitions into our estimates for the size of the Inland Fleet on the Inland So I'm wondering if you have any lines of sight on opportunities in inland, and if you could please give us an update on how new build pricing is trending this year versus a year ago. Thank you.

Yeah, we'll jump into that. Yeah, Raj outlined the CapEx, but we don't bake in on to our CapEx guidance any acquisitions. You know, the acquisition pipeline is probably more bolt-on than transformative in what we're looking at. You know, on the Inland side, you know, they could be in the order of $100 million type dollar deals, but they're probably not billion dollar deals this year. We always remain hopeful, but, you know, we're being a little more pragmatic there about what the bid-offer spread could narrow to and what opportunities that gives us. On the DNS side, you know, those would be very small, bite-sized, you know, kind of under $50 million type dollar deals that get us more service capabilities, you know, more longevity in terms of recurring revenues in DNS. But to your direct CapEx, that growth CapEx is really just helping us expand some internal capabilities. You know, for example, in our PowerGen, we're building a new building that handles these higher power nodes. You know, it's not a big CapEx. You know, it's under $20 million kind of expenditure. But it, you know, it's a bigger, taller building with bigger cranes that can handle some of this bigger equipment. Those are the kind of growth capex that we're talking about. And I can talk about new build pricing.

So, Sharif, new build pricing is consistent with where it's been in prior quarters. You know, steel really hasn't moved much. And the cost input for labor at the shipyards, I continue to hear from our good friends that operate the major shipyards. they still, you know, have some challenges around labor, and the labor costs are still running pretty hot. You're looking at about $4.5 million to build a, you know, 30,000-barrel, you know, cookie-cutter clean barge, and that's consistent with where it's been. So, and on the new construction, you know, windshield, and looking in the rears, you know, we saw about, we think, 50 to 60 barges get built last year. probably somewhere in that same realm 50 to 60 barges in 2026 and we do we do follow you know retirements as closely as we can it's not an exact science but we do think retirements did outpace new construction in 2025 and so you know I think the shipyard dynamic pricing supply the ability of shipyards to supply you know a larger volume of barges is still constrained and so I think the you know, all that's pretty consistent with what we've said in the prior quarters.

Okay. Yeah, very helpful. Thank you both. Yes, thanks for your help.

Thank you. And our next question will be coming from Ben Moore of Citi. Your line is open.

Hey, great. Good morning. Thanks all for your great insights. Maybe just on the storm impact in 1Q, could you share your views on that on your inland and coastal volumes and pricing. And you mentioned utilization at 94%. Can you kind of parse out how things are looking so far into the quarter and how that might progress the rest of the

quarter stepping up? Yeah, good morning, Ben. Yeah, thanks for the question. I'll let Christian answer that on the weather impacts of the marine. But just anecdotally, the winter storm here helps our power gen business, believe it or not. We rent large trailers that have, say, a megawatt's worth of power, and they go out to customers like Walmart, Target, Costco. So that's a little hedge against some of the negativity that comes with a winter storm, but I just want to add that little tidbit before Christian talks about how it impacts the marine business. Yeah, thank you, David.

So, you know, Ben, starting north to south, you know, you're seeing ice build on the Illinois River, which does affect navigation, slows down navigation. We do have contractual protection against risks like that, ice clauses and whatnot. So it shouldn't be a real factor other than that. It might chew up some more barge days and, you know, maybe some trips get a little less efficient. in the Gulf of Mexico, I was pleasantly, I was pleased to see the refiners and the chemical plants that have had some real issues in freezing weather and ice storms below and their continuity. I don't think we saw any really major interruptions to production of chemicals, refineries that were, you know, can be attributed to the cold weather. There was one unit in sea drift that I know shut down. But, you know, beyond that, we didn't see a sort of anomalistic industry demand effect from the cold weather. If anything, you could argue it might be a net positive as, you know, really there wasn't much traffic moving for a couple of days, which really, you know, tightens up the market from the utility perspective. So, you know, not a non-event, but nothing that would significantly move the needle in Q1 as I sit here today.

Great. Really appreciate that. And maybe going back to you shared some great insights on the overall Venezuelan oil complex. Can you share, you know, you've got possible crude inbound, northbound into the U.S. that you could be a part of, and then the refined product from that that you can be a part of. Can you also discuss going outbound down south, being part of the supply chain of dilutants like C5 and NAFTA into Venezuela to lower their viscosity coming out of this force? maybe discuss each of these sort of up, down, and all-around type movements that could drive potentially, you know, kind of offsetting the Ken's recession and drive growth in marine over the next couple of years?

No, that's a great question. The international pieces of what you described, the diluent, you know, going down to Venezuela and the heavies coming up, Probably we'll leave that to some of the larger ships that are kind of, that's their business, is moving crude internationally. We will, I think, for, you know, benefit from the refining portion of, you know, if you input one barrel of Venezuelan crude versus one barrel of light sweet, you know, what does that mean to a barge line? It means there's going to be more opportunities for us to move the heavies and the intermediates. History just proves that out. And I do think the constructive, you know, pricing discounts for the major refiners and other refiners, they'll take advantage of that. And, you know, that means they'll heavy up, you know, even more. There's maybe some knock-on effects that are, you know, we'll have to watch a while to understand. But as Canadian crude gets backed out of Pad 3, if Venezuela, you know, starts coming in significant volumes, then maybe you'll see some Canadian move into pad one and some other places and maybe produce some similar opportunities in those refining complexes where they're running, heavying up their slate a little more. So, you know, it's definitely going to have some kind of ripple effect. It's very early innings, very hard to tell. But short answer, yeah, we like the prospects of what happens in the golf. We probably won't be participating in the international moves.

Great, appreciate that. And maybe just one last one for me. Sorry for the three questions. Back to Ken's question on the step-up in PowerGen growth and 4Q. Can you, maybe as best as you can, kind of parse out what portion of that is just lumpiness and what portion is sustained acceleration and growth? And would you adjust your previous outlook of up 10% to 20% year-over-year in PowerGen revenue higher?

Yeah, let me try a couple things to answer that. You know, part of our constraint is the OEM supply. You know, I'd love to, you know, adjust up our revenue growth. The problem is just getting the engines, you know. But the growth is there for the longer term, you know, into 27 and 28, and particularly if we add some service components and, you know, perhaps some higher power nodes should add revenue as well because they're just more expensive pieces of equipment. And certainly with the gas turbine side, we're already doing some service on gas turbines. So that growth should happen over time, but to accelerate it, it would take a bigger supply chain. Now, that said, some of our OEMs have announced capacity expansions, but those capacity expansions are going to take a couple years to come to the fro,

come forward. And the second part of your question was? Yes, the 4Q strength, maybe parsing out what you think is lumpiness versus sustained acceleration. Yeah, we did have some,

We're going to have lumpiness throughout the year, and it'll depend whether we're shipping backup power or behind-the-meter power. I would focus on just kind of the full year and not worry about the quarter-to-quarter lumpiness. I know that's not a very satisfying answer, but that's the way we look at it. We're expecting that 10% to 20% kind of growth in power gen. You know, when we look at our backlog, you know, we haven't given backlog, but, you know, sequentially backlog was up 11%. And then year over year, our backlog was up about 30%. You know, so that's the way we look at it. You know, the market continues to grow. We continue to participate in it. It will be lumpy just because of the way the supply chain works. You know, we get a batch of engines, and then we've got to build out our kit on them and then get the shipments out, and it's just going to be lumpy quarter to quarter.

Great. Thanks very much. So 10% to 20% for the next one, two years until the OEMs add capacity, and then that could step up from there.

Yeah, I believe that's true. Great. Thank you so much. You know, everybody does wonder about is this an AI bubble, But I would say, you know, this power need is real. All these AI and data center guys are actually generating real cash flow. It's a lot different than the dot-com era when they didn't have cash flow. These guys have real cash flow. And what we're hearing is, you know, our customers are talking about their customers and saying it's real demand. So our customers' customers are really talking about real demand. So, yeah, we're very constructive on this.

Great. Thanks for that. From what we're seeing, it does look like it's still very nascent, very early innings. Thanks again.

Thank you, Ben. Appreciate it, Ben.

And our next question will be coming from Greg Wasikowski of Weber Research and Advisory LLC. Your line is open, Greg.

Hey, good morning, guys. I just wanted to keep going off that last question. You just talked about the OEMs capacities. But can you give us an idea of your capacity just there and the power generation as a whole? If we look ahead to 26, 7, and 8, we model in X megawatts of growth or X percentage of growth. Is there a natural ceiling there for you guys that you're able to physically handle? Or is there then a call for reinvestment on your end in order to grow the segment's capacities?

Yeah. No, great question, really. We have two major manufacturing facilities. We do a lot of – our branches do a lot of support work and service work, but we have two major manufacturing facilities, one in Oklahoma, one in Houston. We're not running 24-7, so we do have a lot of capacity left. That said, they're very busy, and that's good. Our constraint really is adding service techs. We just continue to need to add service techs. You know, electric equipment has got a little more sophistication and a little more need for specialized technicians. And, you know, so that's what we're working on growing. I did mention earlier in the call that, you know, part of Raj's description of growth CapEx included expanding a larger building to handle this bigger equipment. We're doing that in the Houston plant. You know, it's not large CapEx, you know, like I said, it's less than $20 million, but we need to do it, not because we couldn't get more throughput through the existing facility, but because we needed the higher crane heights to handle the bigger power node pieces of equipment. And, you know, we've got the capability to go 24-7, add shifts. You know, sometimes we run evening shifts, but we're not running a night shift now. We do occasionally work. A lot of times we work through the weekend. So we're not 24-7, so we do have more capacity is the short answer.

And also, the bigger the installed base gets, the bigger our parts and service operations.

Yeah, makes sense. Okay, thanks, guys. One more follow-up on inland. David, you mentioned chemicals being a little bit of a weaker spot. It's something that we tend to hear every quarter as well. I'm just curious to hear your thoughts on why it's been a little softer and then what you're looking at for it to potentially turn around either this year or just eventually in the future.

Yeah, I think the chemical customers are global customers, And they've got plants, you know, all over the world. And if you, I don't want to specifically name some customers, but multiple numbers of customers have been shutting down European chemical facilities. They're just feedstock disadvantaged. And over the years, they, you know, they keep those plants open because it's so expensive because of labor situations to shut those plants down. You know, they would cut back a little bit in the U.S. just so they could keep their European plants running. And now that they're shutting those down, we're getting more constructive. That said, we haven't seen a big pop or anything yet. I do believe they're taking the right moves. You know, we heard some Asian plants getting shut down as well. So we're optimistic, but you're right. You know, we do talk almost every quarter about how tough it is in the chemical space. They've really had a tough several years. Now, part of that is, as you know, in the U.S. is new home construction and auto construction is a big part of their intermediates. You know, that's picking up a little bit. So, yeah, a lot of good things are happening, right? We're seeing more home building in the U.S., auto production is still kind of flat, but that may be coming back. They're shutting down their European and cost-disadvantaged plants around the world. The U.S. chemical plants are the most efficient ones, and they're most efficient because they're newer and then also because the feedstock situation is so good in the United States. So we're pretty optimistic that, you know, they're closer to a bottom than anything else. It doesn't feel like there's much more downside in terms of chemicals.

Awesome. Great to hear. All right. Thanks, guys. Take care.

And our next question will be coming from Scott Group of Wolf Research. Your line is open.

Hey, thanks, guys. I know we're past the hour, so I'll just ask one, just a quick one. Can you just share with us, where are we now, both for inland and coastal, on just spot price versus contract price? Like, what's the spread? What's normal? Where do we want the spread to be?

Yeah, no, we're in a constructive area. There's not much spot, and we're essentially termed up in coastal, so there's no spot work that we're doing there. On the inland side, spot prices are a good 10% above term, which is a very healthy market. We're happy there. You know, the bigger picture is we need 40% higher pricing to justify new builds. So, you know, there's still some room here, and nobody's really building new equipment. So, you know, the construct, as both Christian and I have talked about, is pretty positive for 2026.

So I guess, ultimately, do you think that Q4 renewal is an anomaly, or is that a new trend?

No, I think the Q4 renewals, you know, I mean, this is a big basket of 30% of our portfolio. Some of it was up. Some of it was down. The net of it is just we bake it all together, and we're down low single digits. I think that was a reflection of the market at the time, you know, the snapshot in time that we were negotiating those deals. It was coming out of the backside of when the crude slate lightened up and there were barges excess in the market. And, you know, just unluckily happened to be the time we were negotiating those contracts. You know, that said, Q1, you know, renewals looking favorable, spot market looking favorable. But I wouldn't read too much into low single digit renewals at the end of Q4, honestly, as far as trying to, you know, use that as a proxy for where we're headed. I don't think that reflects where the market's headed right now. I like the optimism and I like the momentum we have going into Q1 here.

Thank you.

Thanks, Scott.

And I would now like to hand the conference back to Curt for closing remarks.

Thank you, Operator, and thank you, everyone, for joining us. As always, feel free to reach out to me throughout the day and next week for any questions. Thank you.

And this concludes today's conference call. Thank you for participating. You may now disconnect.