Image source: The Motley Fool.
Date
Wednesday, Oct. 29, 2025, at 8:30 a.m. ET
Call participants
- President and Chief Executive Officer — David W. Grzebinski
- Executive Vice President and Chief Financial Officer — Kurt A. Niemietz
- President, Marine Transportation — Christian G. O'Neil
Need a quote from a Motley Fool analyst? Email [email protected]
Takeaways
- Total Available Liquidity -- Total available liquidity was approximately $380 million as of Sept. 30, 2025.
- Cash Flow from Operations Guidance -- Management projects cash flow from operations of $620 million to $720 million for 2025, supported by higher revenues and EBITDA.
- Capital Expenditures -- Annual spending guidance reiterated at $260 million to $290 million for 2025. Marine maintenance and facility upgrades account for $180 million to $210 million of capital expenditures in 2025. Up to $80 million is allocated to growth CapEx across businesses in 2025.
- Share Repurchases -- $120 million in buybacks were executed at an average price of $91 per share in Q3 2025, An additional $40 million in repurchases was completed after Q3 2025.
- Record Backlog in Power Generation -- David W. Grzebinski said, "the backlog is, well, frankly, it's a record backlog right now. I think it's up in mid-teens year over year and sequentially." Power generation backlog was reported at a record level between $500 million and $1 billion as of the Q3 2025 earnings call.
- Inland Barge Utilization -- Inland fleet utilization rose from a Q3 2025 low of 80% to 87.6% at the time of the call.
- Spot Pricing for Inland Barges -- Spot rates declined 4%–5% during Q3 2025, while term contract rates remained flat; Spot rates have since risen entering Q4 2025.
- Barge Order and Retirement Trends -- Expected deliveries were 50 new barges in the current year and 30 next year, with retirements exceeding newbuilds, according to management.
- Distribution and Services (D&S) Segment Revenues -- Management expects full-year 2025 D&S segment revenue growth in the mid-single-digit range, with operating margins in the high single digits.
- D&S Power Generation Backlog Growth -- Backlog has increased by a mid-teens percentage sequentially and year over year, with management citing a robust order pace as discussed on the Q3 2025 earnings call.
- Oil and Gas Revenue within D&S -- Segment revenue is anticipated to decline in the low to mid double-digit range in 2025, according to David W. Grzebinski, due to industry technology transition and customer capital discipline.
- Free Cash Flow Deployment -- Management confirmed intent to allocate the majority of free cash flow to share repurchases absent acquisitions in the near term.
Summary
Kirby Corp. (KEX +4.92%) confirmed 2025 will be a record earnings year, led by growth in marine and power generation and supported by strong free cash flow and a robust balance sheet. Internal expectations for the fourth quarter of 2025 indicate improving inland barge utilization and firming spot market pricing, aided by limited newbuild activity and an elevated level of vessel retirements. Coastal fleet barge utilization remains in the mid- to high-90% range for the fourth quarter. Term contract pricing momentum is sustained by industrywide vessel scarcity and steady customer demand. Management highlighted D&S segment strength in power generation, driven by data center and industrial orders for 2025, while commercial marine repair demand remained steady and on-highway repair showed modest recovery and oil and gas markets continued to contract due to industry transition. Investor capital returns remain a focus, with nearly $160 million in share repurchases executed during and after Q3 2025 and the bulk of forthcoming free cash flow earmarked for additional buybacks absent acquisitions.
- David W. Grzebinski stated, "2025 will be a record earnings year for Kirby Corporation," emphasizing the outlook for long-term growth and capital allocation flexibility.
- Christian G. O'Neil reported inland barge utilization of 87.6% as of the call, up from a Q3 2025 trough of 80%, and highlighted full utilization in select specialty fleets.
- Spot pricing for inland barges has rebounded following a Q3 2025 decline, and management asserts that "spot pricing is still above term pricing."
- Power generation backlog in D&S has reached a record level between $500 million and $1 billion as of Q3 2025, driven by broadening customer demand, including data center and industrial clients.
- No update was issued to full-year guidance, with management reaffirming their expectation to finish at the low end of the previous range for 2025, due to Q3 softness in spot rates.
Industry glossary
- Behind the Meter: Power generation equipment or assets installed on the customer's side of the utility service meter, often serving on-site or data center loads.
- Frac/E-Frac Technologies: Conventional 'frac' refers to hydraulic fracturing in oil and gas, while 'e-frac' denotes the use of electric-powered fracturing equipment, reflecting an industry shift.
- OEM: Original Equipment Manufacturer, the company that produces engines or components for power generation and marine applications.
- Term Contract: Multi-month or multi-year transportation or service agreement, as opposed to short-term 'spot' contracts negotiated on an as-needed basis.
Full Conference Call Transcript
Kurt A. Niemietz: We used cash flow and cash on hand to fund GBP 67,000,000 of capital expenditure primarily related to maintenance of equipment. During the third quarter, we also used $120,000,000 to repurchase stock at an average price of $91 with an additional $40,000,000 in repurchases since the end of the quarter. As of 09/30/2025, we had total available liquidity of approximately $380,000,000. We remain on track to generate cash flow from operations of $620,000,000 to $720,000,000 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 shift in the fourth quarter and into 2026.
With respect to CapEx, expect capital spending to range between $260 and $290,000,000 for the year. Approximately $180,000,000 to $210,000,000 of CapEx is associated with marine maintenance capital, and improvements to existing inland and coastal marine equipment and facility improvements. Up to approximately $80,000,000 is associated with growth capital spending in both of our business. 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.
David W. Grzebinski: Thank you, Raj. We've delivered strong performance through 2025, and 2025 will be a record earnings year for Kirby Corporation. 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 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'll 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 newbuild 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, assuming tighter barge availability holds in the fourth quarter. In coastal, market conditions remain robust, underpinned by limited large vessel availability across the industry. This constrains supply-side environment continues to drive pricing momentum and is supporting 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 Service 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 double-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 D&S 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 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.
Operator: Thank you. At this time, we will conduct a question and answer session. As a reminder, to ask a question, you will need to press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. The first question comes from the line of John Chappell of Evercore ISI. Your line is now open.
John Chappell: Thank you. Good morning, everybody.
David W. Grzebinski: Hey, good morning, John.
John Chappell: David, I wanna start with PowerGen. You know, 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 gonna be quarters where there's big lumpiness associated with contract wins?
Or are we 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 from the top line and the EBIT contribution?
David W. Grzebinski: Yeah. There will be some lumpiness, but it won't be as bad as it has been. You know this, John. We get different delivery schedules from different OEMs in terms of engine supply, and so that can make deliveries a little bit lumpy. But to your point, the backlog is, well, frankly, it's a record backlog right now. I think it's up in mid-teens year over year and sequentially, by the way. So it will be smoother, but there will still be some quarter-to-quarter fluctuation. Keep looking at the, you know, the full year versus the full year last year, and you'll see it continue to grow. The pace of orders we're seeing is really robust.
We're getting orders from all of our customers, whether they're behind the meter or power modules. It's been very encouraging. We like what we're seeing.
John Chappell: Okay. Great. And then to turn to inland, I know we don't like this 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. Looks like Venezuelan imports are really kind of spiking, and I think the crude slate was part of the reason that you got down to the mid-eighties.
But just any other comments from the chemical customers, line of sight, on how we could potentially, you know, either maintain high eighties utilizations or even get to the nineties as you, you know, maybe get a little bit of help from mother nature.
David W. Grzebinski: Yeah. No. Look. You've heard us say the third quarter was kind of a confluence of a number of things. One, great weather as you pointed out. Very few lock delays. The refiners, although very busy, are cracking a very light feedstock. And then there's a RIN arbitrage that gets them to directly export a lot of refined products. And then the chemicals, as you know, have been a bit weak. So all of that plus less maintenance in the industry kind of put a damper on the third quarter. I would tell you right now, look, we got our first cold front here today in Houston. The refiners are definitely trying to get more heavy feedstocks.
So that's very positive. We are seeing a little strength in chemicals come back. Strength is probably too strong of a word. You know, if things go well in China, it could actually get robust, which would be very meaningful for us. But you probably saw one of the major customers announced earnings today, and they had a pretty good chemical result. So that could come back. We are seeing utility come up. Do you know, Christian, what's happening with utility? Give them a little more color.
Christian G. O'Neil: 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 branch's negotiations. There's some positive vibes on the horizon, feeling certainly better than we did in Q3.
John Chappell: Alright. Thanks, Christian. Thanks, David.
David W. Grzebinski: Hey. Thanks, John.
Operator: Our next question comes from the line of Reed Seay of Stephens. Your line is now open.
Reed Seay: Hey, guys. Thanks for taking the question. Good morning.
David W. Grzebinski: Good morning.
Reed Seay: It's certainly encouraging to hear some positivity on the horizon. Also, kind of focusing 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, you also 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.
David W. Grzebinski: Yeah, for sure. You heard in our prepared remarks, spot pricing was down 4% to 5% in the third quarter. Term contracts were flat. As Christian said, we bottomed in terms of utility; things are firming up now. You know, we may see a little spot price pressure in the fourth quarter, but it's starting to firm up. Of course, we have the fourth-quarter renewals, which are important on the term side. We're pretty constructive. Christian could give you some numbers on new builds, but you know, the market is very constructive right now, and we feel pretty good about the direction that pricing should take in the next few quarters.
So, Christian, you want to add anything on the new builds and the other comments?
Christian G. O'Neil: Thanks, David. And thanks for each of the question. Yes, I think we do see some positive momentum in spot pricing as we get into the fourth quarter here. The first cold front's here. We feel like we're gonna get some momentum. We had a bellwether major term contract renew recently at a slightly positive increase, 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.
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. So I think the industry is still in a really good spot for the long run and a good cycle.
David W. Grzebinski: Yeah, and just to cap it off, Reid, spot pricing is still above term pricing.
Reed Seay: Got it. Alright. Thank you, guys. I wanted to ask about the guidance you talked about 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 a continuation into March, 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. Just wanted to get your thoughts there.
David W. Grzebinski: We'll be around the low end. Yeah. No real change. We didn't update it because there was no real change. With spot pricing coming down, we'll be in that low end of the range.
Reed Seay: Got it. Perfect. Thanks, guys.
David W. Grzebinski: Thank you.
Operator: Our next question comes from the line of Scott Group of Wolfe Research. Your line is now open.
Scott H. Group: Hey. Thanks. Good morning. So you said that utilization today is 87.6%. Do you have some sense of or can you say where it troughed in Q3? And then just bigger picture, I'm a little confused, right? You mentioned in the press release conditions are stable, but you also said demand is improving meaningfully. And then just on the last question, you said about spot pricing, we're very constructive, but you're also saying it could be down sequentially. So I'm just a little confused at the messaging. Are things stable? Are they getting better? Are they getting worse? Just I'm hearing a little bit of both, so I'm just not really sure what's going on.
Christian G. O'Neil: Yeah. Scott, let me take a shot at sort of framing that for you. So to answer your initial question, the market troughed at 80% in Q3. And we are at 87.6% today. So we are seeing an improvement in utilization. Certain of our specialty fleets are fully utilized today. So there is positive momentum, you know, month over month, quarter over quarter when it comes to utility. And we're starting to see that, you know, get some of that pricing power. But we're very cautious about how optimistic we are about that. It is in a positive direction. Utility is moving in a positive direction.
But there's things beyond our control, like the macro, the chemical market, and some other things that we're trying to navigate.
Scott H. Group: So is spot price moving higher or lower? Because I guess I've heard both.
David W. Grzebinski: Spot pricing has moved higher since it dropped out in the eighties in Q3. Spot pricing has moved higher as I sit here today.
Scott H. Group: Okay. I understand. And then, you know, I guess we got some directional color on the power gen backlog. I know most companies that have this are sort of disclosing a backlog. I think it would be helpful. Can you give us some sense of how big that backlog is in power gen and maybe where it was last quarter, just so we have some sense of it?
David W. Grzebinski: Sequentially, we're up mid-teens year over year, up kind of mid-teens as well. Look, it's at a record. We just don't want to get into the quarterly backlog game, but it's between $500,000,000 and $1,000,000,000 kind of range. And yeah, it continues to grow. We're pretty constructive and excited about what's going on in the power gen space. The behind the meter growth is becoming more meaningful. The power nodes that are being desired out there continue to grow.
Scott H. Group: Okay. Thank you, guys. Appreciate the time.
David W. Grzebinski: Thanks, Scott.
Operator: Thank you. Our next question comes from the line of Kenneth Scott Hoexter of BofA. Your line is now open.
Kenneth Scott Hoexter: Hey, good morning. So if I look at results, right, you got $77,000,000, or give or take, I guess, maybe it's my forecast for next quarter on inland. 20 coast-wise, 40 D&S. I mean, you're almost half the business is now away from inland. So maybe a little more outlook on that power gen stability. I know you were talking about the fluctuations before. Is there less concern about the ability to get equipment? Are you now a major supplier? Is this one customer driving, as you mentioned, a couple of different customers, but is it? You know, we've heard of one large customer that's been sizably ordering from you.
David W. Grzebinski: Yeah. Well, first, let me address your first comment. You know, inland is still a powerhouse in terms of earnings, and you'll see that, yeah, it's not going away, and it's gonna grow. And as I said in my prepared remarks, we see years left on the inland cycle. If anything, this little third quarter malaise, if you will, is gonna extend the inland cycle. And we're generating huge free cash flow from the inland cycle, which is very beneficial to the company. But to your other part of your question, the pipeline is huge regarding power gen. We used to have just a handful of customers, and the customer portfolio continues to grow.
We're doing more with colocator data centers. Unfortunately, NDAs on many of these prevent us from mentioning customer names, and then you've got some of the hyperscales where the hyperscales like to go direct with engine suppliers, but they still need some of our help. The portfolio is growing robustly. We are continuing to invest in it. We have some capabilities around service which many people do not have. The engine suppliers can go direct, but they do not have the service offerings that we do. That's a big plus. Power gen is lumpy due to engine supply from OEMs. They're trying to balance their load.
I do not want to say they're sold out, but they're producing as fast as they can. That's the situation.