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Good morning, and welcome to the Kirby Corporation 2024 Fourth Quarter Earnings Conference Call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Mr. Kurt Niemietz, Kirby's Vice President of Investor Relations and Treasurer. Please go ahead.

Good morning, and thank you for joining the Kirby Corporation 2024 fourth quarter earnings call. With me today are David Grzebinski, Kirby's Chief Executive Officer; Christian O'Neil, Kirby's President and Chief Operating Officer; and Raj Kumar, Kirby's Executive Vice President and Chief Financial 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 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 risk factors can be found in Kirby's latest Form 10-K filing 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 fourth quarter GAAP earnings per share of $0.74, which included a one-time charge of $0.74 related to a non-cash write-down of inventory in our distribution businesses, which was partially offset by a one-time credit for a change in Louisiana Tax Law of $0.19. Excluding these one-time items, which Raj will provide more detail on later, adjusted earnings for the quarter were $1.29 per share. Our fourth quarter results reflected some seasonal softness in both marine transportation and in distribution and services. As we experienced weather and navigation challenges for marine and typical seasonal slowness in activity in distribution and services. These headwinds were offset by good execution from our teams in both segments during the quarter and that drove strong year-over-year financial performance with adjusted earnings per share up 24% year-over-year. We also generated over $151 million of free cash flow in the quarter, which was used to further strengthen our balance sheet by paying down $105 million in debt and to buy back $33 million of stock. We ended the year on a good note and we anticipate strong growth in 2025. In inland marine transportation, we experienced normal headwinds from poor operating conditions and a slight slowdown in some trade lanes during the quarter. From a demand standpoint, refinery activity dipped in the early part of the quarter. However, activity began to pick up and tighten utility as we exited the quarter. Overall, our barge utilization rates averaged in the 90% range for the quarter. Spot prices were flat to slightly down sequentially, but were up in the high single-digit range year-over-year. More importantly, our term contract renewals were in line with our expectations with high single-digit increases versus a year ago. Fourth quarter inland operating margins were approximately 20%. In coastal, market fundamentals remained steady with our barge utilization levels running in the mid-to-high 90% range. During the quarter, stable customer demand combined with a continued limited availability of large capacity vessels resulted in mid to high 20% year-over-year increases on term contract renewals and average spot market rates that increased in the low-teens range year-over-year. Planned shipyards impacted the quarter with fourth quarter coastal revenues increasing only 6% year-over-year with an operating margin in the low-teens. Turning to distribution and services, demand was mixed across our end-markets with growth in some areas offset by slowness or delays in others. In power generation, total revenues grew 16% sequentially and 36% year-over-year. The pace of orders was strong, adding to our backlog with several large project wins from major backup power and industrial customers as the need for power remains critical. In oil and gas, revenues were down 38% year-over-year and 24% sequentially, driven by a very soft conventional oil and gas business. This was partially offset by some growth in our e-frac business. In our commercial and industrial market, even though revenues were down 7% year-over-year, driven by softness in on-highway truck service and repair, operating income was up 28% year-over-year due to favorable product mix and ongoing cost control initiatives. In summary, while our fourth quarter results were challenged by temporary seasonal issues, the underlying market fundamentals for both segments remained positive. So far in the first quarter, we have seen inland utility improve, which is helping firm up spot prices overall, with rates in some trade lanes starting to push higher. In coastal, industry wide supply demand dynamics look very favorable for the years to come. Our barge utilization is strong and we are realizing strong rate increases. In distribution and services, demand continues to grow through power generation and is mostly offsetting softness in the legacy oil and gas arena. All-in-all, we have a very favorable outlook for our business as we look into the coming year. I'll talk more about our outlook later, but first, I'll turn the call over to Raj to discuss the fourth quarter segment results and the balance sheet.

Thank you David, and good morning everyone. In the fourth quarter of 2024, Marine Transportation segment revenues were $467 million and operating income was $86 million, with an operating margin around 18%. Compared to the fourth quarter of 2023, total marine revenues, inland and coastal combined, increased 3% and operating income increased 26%. Total marine revenues decreased by 4% compared to the third quarter of 2024. The weather and lock delays meaningfully impacted our operations as the beginning of winter weather combined with lock maintenance of a few high traffic trade routes drove a 30% sequential increase in delay days during the fourth quarter. Looking at the inland business in more detail. The inland business contributed approximately 82% of segment revenue. Average barge utilization was in the 90% range for the quarter, which was in line with the fourth quarter of 2023, as well as the third quarter of 2024. Long-term inland marine transportation contracts or those contracts with a term of one year or longer contributed approximately 65% of revenue with 63% from time-charters and 37% from contracts of affreightment. Slower market conditions early in the quarter contributed to spot market rates that were flat to slightly down sequentially, but increased in the high single-digit range year-over-year. In contrast, our term contracts that renewed during the fourth quarter were up on average in the high-single digit range compared to the prior year. Compared to the fourth quarter of 2023, inland revenues increased 3%, primarily due to higher term and spot contract pricing. Inland revenues decreased 3% compared to the third quarter of 2024. Inland operating margins were right around 20%, driven by the benefit of higher pricing and ongoing cost management, which helped blunt lingering inflationary pressures. Margins fell sequentially as expected, given the challenging operating conditions caused mainly by weather and lock delays and seasonal softness in refinery activity we experienced in the early part of the quarter. Now moving to the coastal business. Coastal revenues increased 6% year-over-year, driven by higher contract prices that were partially offset by an increase in shipyards. Overall, coastal had an operating margin in the low-teens range, benefiting from higher pricing and partially offset by shipyard timing. Given the high number of planned shipyards on the schedule, the margin headwind from shipyards is expected to linger into the first quarter of 2025, before improving as we move through the balance of 2025. The coastal business represented 18% of revenues for the Marine Transportation segment. Average coastal barge utilization was in the mid-to-high 90% range, which improved from both the fourth quarter of 2023 and the third quarter of 2024. During the quarter, the percentage of coastal revenue under term contracts was approximately 100%, of which 99% were time charters. Average spot market rates were up in the low-teens range year-over-year and renewals of term contract prices were higher in the mid to-high 20% range on average year-over-year. 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 outlook for the full year of 2025. This is included in our earnings call presentation posted on our website. At the end of the fourth quarter, the inland fleet had 1,094 barges, representing 24.2 million barrels of capacity and is expected to increase slightly in 2025. Coastal marine is expected to remain unchanged for the year. Now I'll review the performance of the distribution and services segment. Total segment revenues for the fourth quarter of 2024 were $336 million with an operating income of $27 million and an operating margin of 8%. During the fourth quarter of 2024, the company recorded a $56.3 million non-cash inventory impairment charge in the distribution and services segment, primarily related to weak market conditions for conventional diesel fracturing equipment. This was based on current market conditions and our view on the industry outlook, which includes decreased customer demand for conventional diesel fracturing equipment driven by an industry wide shift to electric fracturing equipment. As such, the company determined that certain inventory had limited commercial opportunity and the carrying value of these inventories were accordingly adjusted. Compared to the fourth quarter of 2023, the distribution and services segment revenue decreased 3%, while operating income decreased 7% due to lower revenues and mix. When compared to the third quarter of 2024, segment revenues decreased by 3% and operating income decreased by 12%. Moving to the segment in more detail. In power generation, our revenues tied to industrial end markets were up 38% year-over-year. We continue to see significant power generation orders resulting in higher backlog from backup power, data centers and other industrial applications. Our power generation revenues tied to the energy space were up 160% sequentially and 34% year-over-year as some shipments caught up from previously delayed product orders. Altogether, total power generation revenues were up 36% year-over-year and operating -- with operating margins in the high-single-digits. Power generation represented 39% of total segment revenues. On the commercial and industrial side, steady activity in marine repair partially offset lower activity in other areas, particularly on highway truck service. As a result, commercial and industrial revenues were down 7% year-over-year. Even though revenues in C&I were down year-over-year, favorable product mix and ongoing cost savings initiatives drove a 28% year-over-year increase in operating income. C&I made up 45% of segment revenues and had operating margins in the high single-digits. In the oil and gas market, we continued to see softness in legacy conventional frac-related equipment as lower rig counts and lower fracking activity tampered demand for new engines, transmissions, service and parts throughout the quarter. This softness is being partially offset by solid execution on backlog and new orders of e-frac related equipment. Revenues in oil and gas were down 38% year-over-year and 24% sequentially, while operating income was down 58% year-over-year and 31% sequentially. Oil and gas represented 16% of segment revenue in the fourth quarter and had operating margins in the mid-to-high single-digits. Now, I'll turn to the balance sheet. As of December 31, we had $74 million of cash with total debt of around $875 million and our debt to cap ratio improved to 20.7%. During the quarter, we had net cash-flow from operating activities of around $247 million. Fourth quarter cash-flow from operations benefited from a working capital reduction of approximately $82 million. We used cash flow and cash on hand to fund $97 million of capital expenditures or CapEx, primarily related to maintenance of marine equipment. Free cash flow generation during the quarter was just over $150 million. We used $33 million to repurchase stock at an average price of $116 and reduced our debt by around $105 million, further strengthening our balance sheet. As of December 31, we had total available liquidity of approximately $583 million. For all of 2024, we generated cash flow from operations of $756 million, driven by higher revenue and earnings. We still see some supply constraints, especially in the power generation space, posing some headwinds to managing working capital in the near-term. Having said that, our teams executed well throughout 2024 and we unwound $93 million of working capital for the year. With respect to CapEx, our total capital spending was $343 million for 2024. Approximately $230 million was associated with marine maintenance capital and improvements to existing inland and coastal marine equipment and facility improvements. Approximately $110 million was associated with growth capital spending in both of our businesses. For 2025, we expect CapEx to fall into the $280 million to $320 million range. Altogether, we generated $414 million of free cash flow for the year, which exceeded the high-end of our guidance, driven in part by favorable working capital release. We expect 2025 to be another good year for free cash flow generation. As always, we are committed to a balanced capital allocation approach and we'll 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 our 2025 outlook.

Thank you, Raj. While we managed through challenging operating conditions in the fourth quarter, we ended in a very strong position in our businesses. Refinery activity is starting to increase, our barge utilization is improving in inland and spot rates are beginning to pick back up. While we expect typical seasonal weather conditions to propose some near-term headwinds in the first quarter and high levels of shipyard activity to linger near-term and coastal, our outlook in the marine market remains strong for the full year. In distribution and services, demand is expected to remain mixed across our products and services and our actions taken over the past few years to limit volatility of this segment are paying off. For D&S, we expect flat to slightly lower results for the segment, despite a very tough oil and gas market. For Kirby overall, we expect our businesses combined will deliver another strong year of financial growth in 2025 with a 15% to 25% increase year-over-year in earnings per share. Moving to specific detail on the segments. In inland marine, we anticipate positive market dynamics due to limited new barge construction. The demand softening we saw in the refinery sector in the fourth quarter has improved and barge utilization rates are firming up. We expect our barge utilization rates to be in the low-to-mid 90% range for the year with continued improvement in term contract pricing as renewals occur throughout the year. However, we continue to see inflationary pressures and there remains an acute mariner shortage in the industry, which continues to drive up labor costs. These pressures, along with the increasing cost of equipment should continue to put upward pressure on spot and contract pricing. Overall, inland revenues are expected to grow in the mid to high-single digit range for the full year. As we usually see, normal seasonal winter weather has started and is expected to be a headwind in -- to revenues and margins in the first quarter. However, we expect operating margins will gradually improve during the year with the first quarter being the lowest and the average for the full year up 200 basis points to 300 basis points. 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. Revenues for the full year are expected to increase in the high single to low double-digit range compared to 2024, driven by higher pricing on contracts. Coastal operating margins are expected to be in the mid-teens range on a full year basis with the first quarter the lowest due to weather and a high number of planned shipyards. In the distribution and services segment, we see mixed results as near-term volatility driven by supply issues, customers deferring maintenance and lower overall levels of activity in oil and gas is partially offset by orders for power generation. In commercial and industrial, the demand outlook in marine repair remains steady, while on highway service and repair remains weak in the current environment, although the on highway market feels close to bottoming from the trucking recession. In oil and gas, we expect revenues to be down in the high single to low double-digit range as the shift away from conventional frac to e-frac continues to take place and customers continue to maintain considerable capital discipline. In power generation, we anticipate continued strong growth in orders as data center demand and the need for backup power is very strong. We expect extended lead times for certain OEM products to continue contributing to a volatile delivery schedule of new products throughout 2025. Overall, the company expects total segment revenues to be flat to slightly down for the full year with operating margins in the high-single-digits, but slightly lower year-over-year. To conclude, overall, 2024 was a record year for earnings and we have a favorable outlook as we look to this year and beyond. A lack of meaningful newbuild of equipment in marine has supply in check and we continue to receive new orders for power generation equipment as we manage through supply issues. Our balance sheet is strong and we expect to generate significant free cash flow in 2025. We expect our businesses will produce solid financial results in 2025 with higher margins and strong earnings growth for the year, and we see good fundamentals continuing as we look out to the next few years. Operator, this concludes our prepared remarks. Christian, Raj and I are ready now to take questions.

Thank you. [Operator Instructions] And our first question will come from the line of Daniel Imbro with Stephens. Your line is open.

Hey. Good morning, guys. This is Reed on for Daniel. I just want to first look at pricing. When we look at the puts and takes here so far in the first quarter, we have a difficult weather, some better refinery activity. Can you talk about all the puts and takes and kind of what is driving that improved pricing? And once we move past this difficult weather, what gives you the confidence that we can continue to get strong pricing through the year, along with maybe some update on the competitive trends you're expecting in 2025?

Yeah. And Reed, the second part is weather. Look, weather does help tighten up utility. Usually we get a couple percent extra utility with weather. We don't always get paid-for that extra utility, then that's why it impacts the margin. But look, first quarter is always our lowest in terms of margin on the inland side. I think the big picture is, don't focus on the first quarter, focus on what we're telling you for the full year in terms of in the margins and we've said there'll be up to 200 basis points to 300 basis points. We're pretty excited about where we are. And Christian is being modest. I mean we were, I think the last week or so, we've been at 95% 96%. I think we even bumped 97% utility, which is for us sold out. So even if weather starts to get better and we -- that comes down a couple percent from better weather, we'll still be really tight in terms of utility. That's why we're so constructive about the kind of the pricing environment and that's all driven by supply and demand. I mean, there's not a lot of new supply and demands back after that little speed bump we had in the first quarter -- the fourth quarter.

And I would just add to that, David, we had a nice term renewal cycle in Q4. You'll begin to see that pay dividends in 2025 as we referenced on the conference call. Those term contracts that renew in the fourth quarter, high-single digits year-over-year and you'll have that momentum going into 2025 as well.

Very helpful. Thank you. Just kind of shifting to the cost side, you talked about mariner wage inflation and equipment inflation. Do you have an expectation for 2025 and where you see that going?

Yeah. I'm glad you brought that up, Reed. That's another reason spot pricing is going to go up this year. We have inflation. Inflation gets a -- excuse me, a lot of discussion in the economy these days and we see it. The industry, not just Kirby, it's very tight on mariners. We have a slight advantage because we have our own school and we produce our own mariners, but it is very tight and so that's obviously putting wage inflation into the picture. But the inflation is more broad based than just that -- and I'm not talking about the price of eggs, which seems to get a lot of attention these days. It's the shipyards, the shipyards that we use day-in and day-out, they're busy, one, two, they have the same labor constraints. They used to run three shifts, 24/7 and they're having problems filling out that last shift. So they've got some labor pressure. Things like radars and anything electronic, we've seen inflation. So that -- we said all that last year, so I'm not giving you anything new. But what I would tell you is it hasn't abated. It's still there. And frankly, that's why we need some -- the pricing to continue to march up to offset some of that inflation, which is real. Frankly, our competitors and our customers understand it. They get it because they're dealing with it too. So it's there -- in terms of quantifying it, it's hard for us to give you a precise number on inflation. But again, if you look at that 200 basis point to 300 basis point improvement in inland margins, that kind of incorporates both price increases plus the inflationary increases.

Perfect. Thank you guys.

Thank you. One moment for our next question. And that will come from the line of Ben Nolan with Stifel. Your line is open.

Thank you, and good morning, guys.

Hi, Ben.

Hi. So if I could pick up on the barge side real quick. As we as we look forward, there's a couple of unique things that are going on a little or somewhat unique and I was going to hope to get your comments on it. First of all, do you have any perspective on if there are tariffs on Canada and Mexico, what that -- are there any implications for the barge industry? And then also, I saw yesterday Lyondell said they were closing a refinery in Houston. Is that a needle mover at all for you guys? Just any color on some of those things that are just happening in the market on your business?

Great. That's very helpful. I appreciate both of those answers. And then for my second question, I was hoping, it sounds like the power business is humming along, particularly in the fourth quarter. As you -- well, first of all, can you give any context on how the backlog is built and maybe any color on how you would maybe anticipate that growing over the course of the year or at very least sort of maybe contextualize the conversations you're having with customers and how you think that power business might fare over the course of the year?

Excellent. Again, I appreciate answers from both of you guys. Good color. Appreciate it.

Thank you. One moment for our next question. And that will come from the line of Ken Hoexter with Bank of America. Your line is open.

Hey, guys. It's Adam Roszkowski on for Ken Hoexter. Thanks for taking the questions. Maybe to look a little -- you noted despite seasonal pressure, still strong inland supply and demand dynamics. You've spoken about a 200 basis point to 300 basis point long-term margin improvement opportunity. If you could just provide some color on where rates are and what -- where rates would need to go to justify significant newbuilds or capacity additions and how you're looking at that over the next couple of years?

Yeah. You bet. I can't really give you specific market pricing because the attorney in the room will kill me. So, that said, look we had the little speed bump that Christian and I've described in the fourth quarter. We saw spot pricing decline 0% to 2%, which is barely negligible. We're seeing that it's -- we've already regained traction there here so far in January. But it's early days. You got to let it play out for the year. That said, spot pricing is well above term. It's probably in the order of 10% above term right now. We like that. That's a healthy market. When it gets really spotty, it could be 15% above of term. It may be on that way now, but right now it's kind of 10% above term. And then if you look at where pricing needs to go to justify building new equipment. For a two-barge tow it's got to increase probably 40% from where we are now. In that zip code, a two-barge tow would need to be, I'm saying in the $14,000 a day rate kind of thing. Look, our competitors understand that. And as Christian mentioned, there's a lot of discipline in terms of new construction right now. It just doesn't make sense to build new equipment. What little building is happening is entirely for replacement right now. So that -- that's our estimation. We don't know exactly what our competitors are doing, but our estimation is, it's all for replacement that, to do -- build new capacity, we need significant rates improvement.

Got it. That's helpful. And then maybe just a little bit more on this year. You noted you expect 1Q to be the trough given some of these temporary seasonal pressures. Is it -- any color on just how much of a trough that is? And really I'm thinking about seasonality for the rest of the year. Typically, you have a little bit of a bump in the second and third quarters, but maybe fall back down in the fourth. Is there anything unique happening on first quarter to impact any of that seasonality or just any thoughts?

Thanks. And one just, one clarifying. You noted the gap, I believe on the inland side is about 10% spot to term. Is that the same across coastal? I mean with spot up low teens and term up high 20%. Is that the same dynamic as well?

But Adam, just like on the inland side, we need it, right? There's been inflation, the cost of new equipment has gone up substantially. Just to give you a benchmark number, 185,000 barrel ATB, we built one about five, six, seven years ago in the $80 million range. To build that today, it's $130 million to $135 million. So that's inflation, it's cost of steel, it's cost of construction, it's -- so the rates do need to go up like that to get anywhere close to replacement economics. And everything we've said about supply and demand on the inland side is the same on the coastal side, even worse because if you wanted to build a new 185,000 barrel unit today, you wouldn't get it until probably the end of '27, maybe in the first part of '28. So we're -- again, we're seeing a long runway here for ourselves and we're pretty, pretty constructive and excited about what's in front of us.

I appreciate the thoughts. Thank you.

Thank you. One moment for our next question. And that will come from the line of Sherif Elmaghrabi with BTIG. Your line is open.

Hey, good morning. Thanks for taking my questions. First, thinking about the supply of inland barges, you mentioned retirements could keep growth flattish. So given the overall inland fleet is aging, is it realistic to see barges keep working past that 35-year mark? Or is that viewed as something of a hard cutoff in the industry?

That's a great question. Historically, the age of a barge is driven by the major oil company or the major chemicals vetting rules, as well as the economic decision, does it make sense to keep investing in a, 30, 35 year old asset. I'll give you a little color. It's an inexact science, but we saw 75 barges retire in 2024, excuse me. And we don't know exactly if they retired, but we do know that their certificate of inspections were removed. So that was an average age of 42 years, the barges that retired in that bucket. I think you'll see perhaps one way to adjust to the lack of new construction is for carriers to try to stretch the age of their fleets. Now you will still run up against the vetting rules of the major oil companies and the major chemical companies, how they decide to flex or interpret that is still in play. We don't know. But typically rule of thumb, a barge gets to 30 years. I mean that's its useful life. So great question. I will tell you that the carriers like us are still waiting to see how that plays out.

That's interesting. And then for my second question, I want to circle back on what Ben was mentioning with PowerGen. The color on the backlog is very helpful. And well, just in the last couple of weeks, we've seen a handful of big nat gas partnerships announced, but that's all long lead time stuff, which I imagine lends itself to backup PowerGen that runs on the same fuel. So I'm wondering what kind of opportunity you see over the next sort of three-plus years longer-term and what you're hearing from customers there?

Yeah. Look, our PowerGen portfolio is multifaceted. So, for example, most data centers are diesel backup gens, stationary, they're installed. We do stationary backup for New York Stock Exchange, some of the major money center banks in New York, etc. So that's one bucket, stationary diesel. Then we have mobile diesel where we'll provide mobile backup power, generally around storms or ice storms or utility disruptions, think about a 1 megawatt or 2 megawatt trailer full of backup power that's diesel run, that can come to the back of a Walmart or a Target or a Costco and plug-in and run the store in a storm type situation. So that bucket for us is growing. You saw our CapEx go up a little bit last year because of that. We just need more rental assets. The demand for backup power just continues to grow and having mobile backup power is good. And then you get into natural gas generation, which is, it can be mobile or stationary and that's growing as well. And as you might imagine, natural gas is a lot cheaper than diesel. So there's a lot of excitement around that. We do that as well. A lot of mobile, some stationary. Some of it is that goes to customers that sell power by the hour. Some of it is prime power, some of its backup power. So all of those buckets are growing. It's hard to get too specific without getting into the customers on each one of those buckets. But we're excited about the whole portfolio. I think -- what we can do with natural gas generation is really exciting because the cost per kilowatt-hour is -- it's not as competitive as, say, a big utility could do, but it is, it's cost effective and being able to sub in there for needs is important and useful to many of the industrial customers that we have.

Thanks very much for taking my question.

Thank you. [Operator Instructions] One moment for our next question and that will come from the line of Greg Wasikowski with Webber Research. Your line is open.

Hey. Good morning, everyone. How are you doing?

I want to go back to the order book. I know you guys have talked about it a lot, but it's a point worth hammering home. And David, I think I heard you say this, but worth confirming, if we see deliveries in 2025 start to outpace 2024, it's worth kind of hammering home that point that it is expected to be mostly replacement tonnage. That's the first question. And the second is just off that 40% number for rates to justify building new. We've been at that point for some time now, I want to say probably a couple of years. It's a question that gets asked every quarter. It's a question that we get all the time and it's -- the answer is 30%, 40% all the time. What needs to change in order for that to not be the answer anymore? And really that's getting at, what do we and investors and people who are following the stock need to need to look for in order to start getting nervous or better pose what do they not need to look for in order to remain calm? It's really what I'm getting at. So yeah, I'll stop there.

Got it. Thanks, guys. That's really helpful. A question we've gotten, I'm curious to hear your answer is, kind of a follow-up to that. Still thinking about that 40% number that rates need to go up and the answer to that being the same is that costs have increased along with rates. Yet Kirby has been able to improve margins rapidly in the last couple of years while that 40% number has stayed the same, which is a bit of a disconnect, I guess. So -- and the answer might be that yard availability, but what -- can you connect the dots for how you guys have been able to improve your margins even though the costs have been rising and generally from an industry standpoint, that 40% number has still remained constant?

Yeah. Christian makes a really good point. We really try and work to save our customers' money. Because of the size of our fleet, we often are able to pull horsepower off to save them money and redeploy that horsepower somewhere else in our system. So they're only just paying for the barge. We work really hard to save them money. So that's all part of the calculus. When you come to rates, they know we work hard to save them money, so they'll pay a little more. So, don't -- we shouldn't get any more specific than that. But the real answer is, we need some real rate increase to get our returns where you as shareholders want to see.

Thanks, Greg.

This concludes our question and answer session. I would now like to turn the conference back over to Mr. Kurt Niemietz for any closing remarks.

Thank you Sherry, and thank you everyone for joining the call today. As always, please feel free to reach-out to me afterward.