Management's Discussion and Analysis of Financial Condition and Results of Operations

Statements contained in this Form 10-K that are not historical facts, including, but not limited to, any projections contained herein, are forward-looking statements and involve a number of risks and uncertainties. Such statements involve risks and uncertainties. Such statements can be identified by the use of forward-looking terminology such as "may," "will," "expect," "anticipate," "estimate," or "continue," or the negative thereof or other variations thereon or comparable terminology. The actual results of the future events described in such forward-looking statements in this Form 10-K could differ materially from those stated in such forward-looking statements. Among the factors that could cause actual results to differ materially are: adverse economic conditions, industry competition and other competitive factors, adverse weather conditions such as high water, low water, tropical storms, hurricanes, tsunamis, fog and ice, tornados, pandemics, marine accidents, lock delays or closures, fuel costs, interest rates, construction of new equipment by competitors, government and environmental laws and regulations, and the timing, magnitude and number of acquisitions made by the Company. For a more detailed discussion of factors that could cause actual results to differ from those presented in forward-looking statements, see Item 1A-Risk Factors. Forward-looking statements are based on currently available information and the Company assumes no obligation to update any such statements.

For purposes of Management's Discussion, all net earnings per share attributable to Kirby common stockholders are "diluted earnings per share." The weighted average number of common shares outstanding applicable to diluted earnings per share for 2025, 2024, and 2023 were 56,045,000, 58,355,000, and 59,857,000, respectively. Refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2024 for management's discussion and analysis of financial condition and results of operations for 2024 compared to 2023.

Overview

The Company is the nation's largest domestic tank barge operator transporting bulk liquid products throughout the Mississippi River System, on the Gulf Intracoastal Waterway, and coastwise along all three United States coasts. The Company transports petrochemicals, black oil, refined petroleum products and agricultural chemicals by tank barge. In addition, the Company participates in the transportation of dry-bulk commodities in United States coastwise trade. Through KDS, the Company provides equipment, after-market parts and services for power generation systems in applications that include behind the meter power systems and emergency backup systems, after-market and genuine replacement parts and services for engines, transmissions, reduction gears, electric motors, drives, and controls, specialized electrical distribution and controls systems, and related equipment used in power generation, marine, on-highway, oilfield services, and other industrial applications. The Company also rents equipment including generators, industrial compressors, high-capacity lift trucks, construction equipment and refrigeration trailers for use in a variety of industrial markets. The Company also manufactures and remanufactures specialized equipment, including pressure pumping units and electric fracturing systems, electric power generation equipment, and specialized electrical distribution and control equipment for data centers, oilfield service, railroad and other industrial customers.

The following table summarizes key operating results of the Company (in thousands, except per share amounts):

The 2024 fourth quarter included a $56.3 million before taxes, $43.0 million after taxes, or $0.74 per share non-cash impairment charge in the KDS segment primarily associated with conventional diesel fracturing equipment inventory. Based on market conditions at that time and its view on the industry outlook, including decreased customer demand for conventional diesel fracturing equipment driven by an industry-wide shift to electric fracturing equipment, the Company determined that certain inventory had limited commercial opportunity, and the cost of these inventories exceeded its net realizable value. The Company's 2024 fourth quarter results also included a $10.9 million, or $0.19 per share one-time deferred tax credit related to a change in Louisiana tax law. Tax reform legislation in Louisiana was signed in December 2024 that included lowering the corporate income tax rate from 7.5% to 5.5% effective January 1, 2025. As a result of the new legislation, the Company recognized a one-time deferred tax credit of $10.9 million in the 2024 fourth quarter due to the remeasurement of the Company's Louisiana and U.S. deferred tax assets and liabilities based on the new effective Louisiana state income tax rate.

The 2023 first quarter included $3.0 million before taxes, $2.4 million after taxes, or $0.04 per share of costs related to the strategic review and shareholder engagement and $2.7 million before taxes, $2.2 million after taxes, or $0.04 per share of other income associated with the interest on a refund from the Internal Revenue Service ("IRS").

Cash provided by operating activities in 2025 decreased compared to 2024 primarily due to unfavorable working capital changes, partially offset by higher business activity levels. During 2025, capital expenditures of $264.5 million included $229.1 million in KMT and $35.4 million in KDS and corporate, more fully described under cash flow and capital expenditures below.

The Company projects net cash flow from operations in 2026 of between $575 million and $675 million and expects capital expenditures to range between $220 million and $260 million.

The Company's debt-to-capitalization ratio increased to 21.4% at December 31, 2025 from 20.7% at December 31, 2024, primarily due to an increase in debt outstanding of $44.3 million, partially offset by an increase in total equity, primarily from net earnings attributable to Kirby of $354.6 million during 2025 partially offset by treasury stock purchases of $354.2 million. The Company's debt outstanding as of December 31, 2025 and December 31, 2024 is detailed in Long-Term Financing below.

Marine Transportation

The following table summarizes the Company's marine transportation fleet:

The Company also operates shifting and fleeting facilities for dry cargo barges and tank barges on the Houston Ship Channel, in Freeport and Port Arthur, Texas, and Lake Charles, Louisiana, and its San Jac shipyard for building inland towboats and performing routine maintenance on marine vessels near the Houston Ship Channel. The Company also owns a two-thirds interest in Osprey Line, L.L.C., a transporter of project cargoes and cargo containers by barge on the United States inland waterway system.

For 2025, 58% of the Company's revenues were generated by KMT. The segment's customers include many of the major petrochemical and refining companies that operate in the United States. Products transported include intermediate materials used to produce many of the end products used widely by businesses and consumers - plastics, fibers, paints, detergents, oil additives and paper, among others, as well as residual fuel oil, ship bunkers, asphalt, gasoline, diesel fuel, heating oil, crude oil, natural gas condensate and agricultural chemicals. Consequently, the Company's marine transportation business is directly affected by the volumes produced by the Company's petroleum, petrochemical and refining customer base.

KMT's revenues for 2025 increased 1% compared to 2024 and operating income increased 3%, compared to 2024. The increase in revenues for 2025 was primarily due to higher term pricing in the coastal market and higher term and spot pricing in the inland market during the 2025 first half, partially offset by lower fuel rebills in both the inland and coastal markets. The increase in operating income for 2025 as compared to 2024 was primarily due to higher term pricing in the coastal market and higher term and spot pricing in the inland market over the 2025 first half, partially offset by lower barge utilization and moderating prices in the inland market in the 2025

second half. For 2025 and 2024, the inland tank barge fleet contributed 80% and 81%, respectively, and the coastal fleet contributed 20% and 19%, respectively, of marine transportation revenues.

Inland tank barge utilization levels in 2025 were flat as compared to 2024, ranging from the low to mid-90% range during both the 2025 first and second quarters, and mid-80% range during the 2025 third quarter, and the mid to high 80% range during the 2025 fourth quarter. Lighter feedstock mix for refinery and chemical customers and fewer barges undergoing maintenance across the industry impacted utilization in the 2025 second half. During 2024, inland tank barge utilization levels ranged from the low to mid-90% range during both the 2024 first and second quarters and the 90% range during both the 2024 third and fourth quarters. Coastal tank barge utilization levels during both 2025 and 2024 averaged in the mid to high 90% range.

Approximately 70% of the inland marine transportation revenues were under term contracts and 30% were under spot contracts in 2025. Approximately 65% of the inland marine transportation revenues were under term contracts and 35% were under spot contracts in 2024. Term contracts provide the operations with a reasonably predictable revenue stream. Inland time charters, which help insulate the Company from revenue fluctuations caused by weather and navigational delays and temporary market declines, represented 59% of the inland revenues under term contracts during 2025 and 61% in 2024. During 2025 and 2024, approximately 100% and 99%, respectively, of coastal revenues were under term contracts and none and 1%, respectively, were under spot contracts. Coastal time charters represented approximately 100% and 98% of coastal revenues under term contracts during 2025 and 2024, respectively. Term contracts have contract terms of 12 months or longer, while spot contracts have contract terms of less than 12 months.

The following table summarizes the average range of pricing changes in term and spot contracts renewed during 2025 compared to contracts renewed during the corresponding quarter of 2024:

There were no coastal marine transportation contracts scheduled for renewal in the 2025 fourth quarter.

Effective January 1, 2025, annual escalators for labor and the producer price index on a number of inland multi-year contracts resulted in rate increases on those contracts in the 3% to 5% range, excluding fuel.

The 2025 marine transportation operating margin was 19.3% compared to 19.0% for 2024.

Distribution and Services

The Company, through KDS, provides equipment, after-market parts and services for power generation systems in applications that include behind the meter power systems and emergency backup systems, after-market and genuine replacement parts and services for engines, transmissions, reduction gears, electric motors, drives, and controls, specialized electrical distribution and controls systems, and related equipment used in power generation, marine, on-highway, oilfield services, and other industrial applications. The Company also rents equipment including generators, industrial compressors, high-capacity lift trucks, construction equipment and refrigeration trailers for use in a variety of industrial markets. The Company also manufactures and remanufactures specialized equipment, including pressure pumping units and electric fracturing systems, electric power generation equipment, and specialized electrical distribution and control equipment for data centers, oilfield service, railroad and other industrial customers. The Company sells and manufactures various products used in oil and gas and industrial applications, including those used in hydraulic fracturing and refrigeration systems that, as compared to conventional offerings, reduce emissions. These products made up approximately 20% of KDS's revenues in 2025.

During 2025, KDS generated 42% of the Company's revenues, of which 83% was generated from service and parts and 17% from manufacturing. The results of KDS are largely influenced by cycles of the power generation, marine, on-highway, oilfield service industry and oil and gas operator and producer markets, and other industrial markets.

Distribution and services revenues for 2025 increased 6% compared to 2024 and operating income increased 20% compared to 2024. In the commercial and industrial market, revenues increased 5% in 2025 compared to 2024 primarily due to higher business levels in marine repair. For both 2025 and 2024, the commercial and industrial market contributed 46% of the distribution and services revenues.

In the power generation market, revenues increased 26% compared to 2024 due to increased demand for backup, prime power and critical power applications. For 2025 and 2024, the power generation market contributed 43% and 36%, respectively, of the distribution and services revenues.

In the oil and gas market, revenues declined 32% compared to 2024 due to lower levels of conventional oilfield activity which resulted in decreased demand for new transmissions and parts, partially offset by deliveries of electric fracturing equipment. For 2025 and 2024, the oil and gas market contributed 11% and 18%, respectively, of the distribution and services revenues.

The distribution and services operating margin for 2025 was 9.2% compared to 8.0% for 2024.

Outlook

Overall, the Company expects to deliver improved financial results in 2026. In KMT, barge utilization and customer demand remain stable. In KDS, growth in the power generation market is expected to offset softness in oil and gas markets, and the continuing trucking recession impacting the on-highway service and repair business. The Company remains mindful of the ever-changing economic landscape related to the possible impact of high interest rates, tariffs, and possible recessionary headwinds as it moves through 2026.

In 2026, the inland marine transportation market is expected to experience positive market dynamics due to limited new barge construction. The Company expects barge utilization rates to remain steady for the year with continued improvement in pricing as the year progresses. The Company also continues 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 term contract prices. The coastal marine transportation market is also expected to see very favorable market conditions in 2026. The coastal marine transportation market should experience steady customer demand keeping barge utilization at high levels with improving rates as the availability of equipment remains limited across the industry. There are no coastal barges currently under construction. The Company does expect more shipyard days in the coastal marine transportation market as compared to 2025.

The Company expects stable growth in KDS in 2026 as near-term volatility from supply issues, customers deferring maintenance, and lower overall levels of activity in the oil and gas market are offset by increased orders in the power generation market. In commercial and industrial, the demand outlook in marine repair remains steady while on-highway service and repair remains soft but has shown some recent modest improvement. In power generation, the Company anticipates continued strong growth in orders as data center demand and the need for backup power continues to be strong. In oil and gas, the Company expects revenues to be down as the transition from conventional diesel hydraulic fracturing to electric hydraulic fracturing continues to take place. The Company anticipates extended lead times and supply delays for certain original equipment manufacturer products to continue throughout 2026.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company evaluates its estimates and assumptions on an ongoing basis based on a combination of historical information and various other assumptions that are believed to be reasonable under the particular circumstances. Actual results may differ from these estimates based on different assumptions or conditions. The Company believes the critical accounting policies that most impact the consolidated financial statements are described below. It is also suggested that the Company's significant accounting policies, as described in the Company's financial statements in Note 1, Summary of Significant Accounting Policies, be read in conjunction with this Management's Discussion and Analysis of Financial Condition and Results of Operations.

Property, Maintenance and Repairs.Property is recorded at cost; improvements and betterments are capitalized as incurred. Depreciation is recorded using the straight-line method over the estimated useful lives of the individual assets. When property items are retired, sold, or otherwise disposed of, the related cost and accumulated depreciation are removed from the accounts with any gain or loss on the disposition included in the statement of earnings. Maintenance and repairs on vessels built for use on the inland waterways are charged to operating expense as incurred and includes the costs incurred in USCG inspections unless the shipyard extends the life, improves the operating capacity of the vessel, or replaces significant components of the vessel which results in the costs being capitalized. The Company's ocean-going vessels are subject to regulatory drydocking requirements after certain periods of time to be inspected, have planned major maintenance performed and be recertified by the ABS. These recertifications generally occur twice in a five-year period. The Company defers the drydocking expenditures incurred on its ocean-going vessels due to regulatory marine inspections by the ABS and amortizes the costs of the shipyard over the period between drydockings, generally 30 or 60 months, depending on the type of major maintenance performed. Drydocking expenditures that extend the life, improve the operating capability of the vessel, or replace significant components of the vessel result in the costs being capitalized. Routine repairs and maintenance on ocean-going vessels are expensed as incurred. Interest is capitalized on the construction of new vessels.

The Company performs an impairment assessment whenever events or changes in circumstances indicate that the carrying amount of long-lived assets may not be recoverable. If a triggering event is identified, the Company compares the carrying amount of the asset group to the estimated undiscounted future cash flows expected to result from the use of the asset group. If the carrying amount of the asset group exceeds the estimated undiscounted future cash flows, the Company measures the amount of the impairment by comparing the carrying amount of the asset group to its estimated fair value. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. There are many assumptions and estimates underlying the determination of an impairment event or loss, if any. The assumptions and estimates include, but are not limited to, estimated fair market value of the assets and estimated future cash flows expected to be generated by these assets, which are based on additional assumptions such as asset utilization, length of service the asset will be used, and estimated salvage values. Although the Company believes its assumptions and estimates are reasonable, deviations from the assumptions and estimates could produce a materially different result.

Goodwill.The excess of the purchase price over the fair value of identifiable net assets acquired in transactions accounted for as a purchase is included in goodwill. Management monitors the recoverability of goodwill on an annual basis, or whenever events or circumstances indicate that interim impairment testing is necessary. The amount of goodwill impairment, if any, is typically measured based on projected discounted future operating cash flows using an appropriate discount rate and valued based on the excess of a reporting unit's carrying amount over its fair value, incorporating all tax impacts caused by the recognition of the impairment loss. The assessment of the recoverability of goodwill will be impacted if estimated future operating cash flows are not achieved. There are many assumptions and estimates underlying the determination of an impairment event or loss, if any. Although the Company believes its assumptions and estimates are reasonable, deviations from the assumptions and estimates could produce a materially different result.

Acquisitions

On October 14, 2025, the Company purchased certain assets from an undisclosed seller in support of the KDS segment for $9.3 million in cash. The assets consisted of inventory and an authorized distributorship for EMD Power Products ("EMD") for certain geographic regions including Mexico, Central America, the northern part of South America and the Caribbean islands.

On August 7, 2025, the Company purchased two inland tank barges and one towboat from an undisclosed seller for $9.2 million in cash.

On March 27, 2025, the Company purchased 14 inland tank barges with a total capacity of 364,000 barrels, including four specialty barges, and four high horsepower towboats from an undisclosed seller for $97.3 million in cash. The 14 tank barges, including four specialty barges, transport petrochemicals and refined products on the Mississippi River System and Gulf Intracoastal Waterway. The average age of the 14 barges was 16 years.

On December 31, 2024, the Company purchased an inland tank barge from a leasing company for $2.7 million in cash. The Company had been leasing the barge prior to purchase.

On December 30, 2024, the Company purchased three inland tank barges from an undisclosed seller for $9.9 million in cash.

On May 15, 2024, the Company completed the purchase of 13 inland tank barges, with a total capacity of 347,000 barrels, and two high horsepower towboats from an undisclosed seller for $65.2 million in cash. The 13 tank barges, including three specialty barges, transport petrochemicals and refined products on the Mississippi River System and Gulf Intracoastal Waterway. The average age of the 13 barges was 15 years.

On July 14, 2023, the Company purchased 23 inland tank barges with a total capacity of 265,000 barrels from an undisclosed seller for $37 million in cash. The 23 tank barges transport petrochemicals and refined products on the Mississippi River System and the Gulf Intracoastal Waterway. The average age of the 23 barges was 14 years.

The Company purchased four inland tank barges from a leasing company for $0.5 million in cash during the 2023 third quarter. The Company had been leasing the barges prior to the purchase.

Financing of these purchases and acquisitions was through borrowings under the Company's Revolving Credit Facility and cash provided by operating activities.

Results of Operations

The following table sets forth the Company's marine transportation and distribution and services revenues and the percentage of each to total revenues for the comparable periods (dollars in thousands):

Marine Transportation

The following table sets forth a year over year comparison of KMT's revenues, costs and expenses, operating income and operating margins (dollars in thousands):

The following table shows the marine transportation markets serviced by the Company, the marine transportation revenue distribution, products moved and the drivers of the demand for the products the Company transports:

2025 Compared to 2024

Marine Transportation Revenues

KMT's revenues for 2025 increased 1% compared to 2024 and operating income increased 3%, compared to 2024. The increase in revenues for 2025 was primarily due to higher term pricing in the coastal market and higher term and spot pricing in the inland market during the 2025 first half, partially offset by lower fuel rebills in both the inland and coastal markets. The increase in operating income for 2025 as compared to 2024 was primarily due to higher term pricing in the coastal market and higher term and spot pricing in the inland market over the 2025 first half, partially offset by lower barge utilization and moderating prices in the inland market in the 2025 second half. For 2025 and 2024, the inland tank barge fleet contributed 80% and 81%, respectively, and the coastal fleet contributed 20% and 19%, respectively, of marine transportation revenues.

Inland tank barge utilization levels in 2025 were flat as compared to 2024, ranging from the low to mid-90% range during both the 2025 first and second quarters, and mid-80% range during the 2025 third quarter, and the mid to high 80% range during the 2025 fourth quarter. Lighter feedstock mix for refinery and chemical customers and fewer barges undergoing maintenance across the industry impacted utilization in the 2025 third quarter. During 2024, inland tank barge utilization levels ranged from the low to mid-90% range during both the 2024 first and second quarters and the 90% range during both the 2024 third and fourth quarters. Coastal tank barge utilization levels during both 2025 and 2024 averaged in the mid to high 90% range.

The petrochemical market, the Company's largest market, contributed 48% of marine transportation revenues for 2025, reflecting steady rates, volumes and utilization from Gulf Coast petrochemical plants.

The black oil market, which contributed 26% of marine transportation revenues for 2025, reflecting stable demand as refinery utilization and production levels of refined petroleum products and fuel oils increased. During 2025, the Company transported crude oil and natural gas condensate produced from major U.S. shale basins along the Gulf Intracoastal Waterway with inland vessels and in the Gulf of America with coastal equipment. Additionally, the Company transported volumes of Utica natural gas condensate downriver from the Mid-Atlantic to the Gulf Coast.

The refined petroleum products market, which contributed 23% of marine transportation revenues for 2025, reflected stable volumes in the inland market with steady refinery utilization and product levels.

The agricultural chemical market, which contributed 3% of marine transportation revenues for 2025, reflected stable demand for transportation of both domestically produced and imported products.

Inland operations incurred 11,410 delay days in 2025, 1% fewer than the 11,583 delay days that occurred during 2024. Delay days measure the lost time incurred by a tow (towboat and one or more tank barges) during transit when the tow is stopped due to weather, lock conditions, or other navigational factors. Delay days reflected very favorable seasonal weather and improved navigational conditions in the 2025 third quarter, and poor operating conditions due to heavy wind and fog along the Gulf Coast and lock delays during the 2025 and 2024 first quarters.

Approximately 70% of the inland marine transportation revenues were under term contracts and 30% were under spot contracts in 2025. Approximately 65% of the inland marine transportation revenues were under term contracts and 35% were under spot contracts in 2024. Term contracts provide the operations with a reasonably predictable revenue stream. Inland time charters, which help insulate the Company from revenue fluctuations caused by weather and navigational delays and temporary market declines, represented 59% of the inland revenues under term contracts during 2025 and 61% in 2024. During 2025 and 2024, approximately 100% and 99%, respectively, of coastal revenues were under term contracts and none and 1%, respectively, were under spot contracts. Coastal time charters represented approximately 100% and 98% of coastal revenues under term contracts during 2025 and 2024, respectively. Term contracts have contract terms of 12 months or longer, while spot contracts have contract terms of less than 12 months.

The following table summarizes the average range of pricing changes in term and spot contracts renewed during 2025 compared to contracts renewed during the corresponding quarter of 2024:

There were no coastal marine transportation contracts scheduled for renewal in the 2025 fourth quarter.

Effective January 1, 2025, annual escalators for labor and the producer price index on a number of inland multi-year contracts resulted in rate increases on those contracts in the 3% to 5% range, excluding fuel.

Marine Transportation Costs and Expenses

Total costs and expenses for 2025 increased 1% compared to 2024. Costs of sales and operating expenses for 2025 decreased 1% compared to 2024 primarily reflecting lower fuel costs which was partially offset by inflationary cost pressures including salary and wage increases that went into effect on July 1, 2025.

The inland marine transportation fleet operated an average of 279 towboats during 2025, of which an average of 69 were chartered, compared to 285 during 2024, of which an average of 70 were chartered. The decrease was primarily due to lower business activity levels in the second half of 2025. Generally, variability in demand or anticipated demand, as tank barges are added to or removed from the fleet, as chartered towboat availability changes, or as weather or water conditions dictate, the Company charters in or releases chartered towboats in an effort to balance horsepower needs with current requirements. The Company has historically used chartered towboats for approximately one-fourth of its horsepower requirements.

Inland operations consumed 49.3 million gallons of diesel fuel in 2025 compared to 46.8 million gallons consumed during 2024. The average price per gallon of diesel fuel consumed during 2025 was $2.47 per gallon compared to $2.66 per gallon for 2024. Fuel escalation and de-escalation clauses are typically included in term contracts and are designed to rebate fuel costs when prices decline and recover additional fuel costs when fuel prices rise; however, there is generally a 30 to 120 day delay before contracts are adjusted. Spot contracts do not have escalators for fuel.

Selling, general and administrative expenses for 2025 increased 5% compared to 2024 due to inflationary cost pressures, including higher medical costs, and salary and wage increases that went into effect on July 1, 2025.

Depreciation and amortization for 2025 increased 8% compared to 2024. The increase was primarily due to capital additions and equipment acquisitions during 2025 and 2024.

Marine Transportation Operating Income and Operating Margins

KMT operating income for 2025 increased 3% compared to 2024. The operating margin was 19.3% for 2025 compared to 19.0% for 2024. The increase in operating income and operating margin were primarily due to higher term pricing in the coastal market and higher spot and term pricing in the inland market over the 2025 first half, partially offset by lower barge utilization and moderating prices in the inland market in the 2025 second half.

Distribution and Services

The following table sets forth a year over year comparison of KDS's revenues, costs and expenses, operating income and operating margins (dollars in thousands):

The following table shows the markets serviced by the Company, the revenue distribution, and the customers for each market:

2025 Compared to 2024

Distribution and Services Revenues

KDS revenues for 2025 increased 6% compared to 2024. In the commercial and industrial market, revenues increased 5% in 2025 compared to 2024 primarily due to higher business levels in marine repair. For both 2025 and 2024, the commercial and industrial market contributed 46% of the distribution and services revenues.

In the power generation market, revenues increased 26% compared to 2024 due to increased demand for backup, prime power and critical power applications. For 2025 and 2024, the power generation market contributed 43% and 36%, respectively, of the distribution and services revenues.

In the oil and gas market, revenues declined 32% compared to 2024 due to lower levels of conventional oilfield activity which resulted in decreased demand for new transmissions and parts, partially offset by deliveries of electric fracturing equipment. For 2025 and 2024, the oil and gas market contributed 11% and 18%, respectively, of the distribution and services revenues.

Distribution and Services Costs and Expenses

Total costs and expenses for 2025 increased 4% compared to 2024 reflecting higher deliveries of power generation equipment and higher business activity levels in marine repair and salary and wage increases that went into effect July 1, 2025, partially offset by lower on-highway and conventional oilfield activity.

Selling, general and administrative expenses for 2025 increased 4% compared to 2024. The increase reflected higher business activity levels, inflationary cost pressures, including higher medical costs, and salary and wage increases that went into effect July 1, 2025.

Depreciation and amortization for 2025 increased 21% compared to 2024. The increase was primarily due to capital additions during 2025 and 2024 including additions to the equipment rental fleet.

Distribution and Services Operating Income and Operating Margins

Operating income for KDS for 2025 increased 20% compared to 2024. The operating margin was 9.2% for 2025 compared to 8.0% for 2024. The results reflect increased demand in power generation from data centers and prime power customers, higher marine repair activity, and deliveries of electric fracturing equipment, partially offset by lower conventional oilfield activity.

General Corporate Expenses

General corporate expenses for 2025, 2024, and 2023 were $13.7 million, $18.8 million and $23.3 million, respectively. General corporate expenses were lower in 2025 compared to 2024 primarily due to lower insurance costs.

Gain on Disposition of Assets

The Company reported net gains on disposition of assets of $4.8 million, $2.2 million, and $5.0 million in 2025, 2024, and 2023, respectively. The net gains were predominantly from the sales or retirements of marine equipment.

Other Income and Expenses

The following table sets forth a year over year comparison of impairments and other charges, other income, noncontrolling interests, and interest expense (dollars in thousands):

Impairments

For 2024, impairments included a $56.3 million before taxes, $43.0 million after taxes, or $0.74 per share non-cash impairment charge in the KDS segment primarily associated with conventional diesel fracturing equipment inventory.

Other Income

Other income for 2025, 2024, and 2023 includes income of $18.2 million, $10.2 million and $4.8 million, respectively, for all components of net benefit costs except the service cost component related to the Company's defined benefit plans.

Interest Expense

The following table sets forth average debt and average interest rate (dollars in thousands):

Interest expense for 2025 decreased 6% compared to 2024, primarily due to a lower average interest rate, partially offset by higher average debt outstanding during 2025. Interest expense for 2025 excludes capitalized interest of $1.0 million. There was no capitalized interest excluded from interest expense during 2024 and 2023.

Provision for Taxes on Income

Provision for taxes on income for 2025 increased 53% compared to 2024, primarily due to improved earnings before taxes on income as a result of increased business activity levels. The Company's 2024 results also included a $10.9 million one-time deferred tax credit related to a change in Louisiana tax law and a deferred tax credit of $13.3 million related to the KDS impairment charge.

Financial Condition, Capital Resources and Liquidity

Balance Sheet

The following table sets forth a year over year comparison of the significant components of the balance sheets (dollars in thousands):

2025 Compared to 2024

Current assets as of December 31, 2025 increased 1% compared to December 31, 2024. Trade accounts receivable decreased 3% primarily due to strong collections activity during 2025. Accounts receivable - other increased 48% due to a federal income tax

receivable associated with the One Big Beautiful Bill Act ("OBBBA"). Inventories - net increased by 1% primarily due to the impact of higher business activity levels in KDS. Prepaid expenses and other current assets decreased 9% primarily due to lower prepaid fuel due to a decrease in the price of diesel fuel.

Property and equipment, net of accumulated depreciation, at December 31, 2025 increased 2% compared to December 31, 2024. The increase reflected $250.3 million of capital additions (including accrued capital expenditures) and $106.5 million of equipment acquisitions, partially offset by $255.4 million of depreciation expense and $26.3 million of property disposals, more fully described under Cash Flows and Capital Expenditures below.

Operating lease right-of-use assets as of December 31, 2025 increased 22% compared to December 31, 2024, primarily due to new leases acquired, partially offset by lease amortization expense.

Other intangibles, net, as of December 31, 2025 decreased 12% compared to December 31, 2024, primarily due to amortization, partially offset by intangible assets acquired during 2025.

Other assets as of December 31, 2025 increased 33% compared to December 31, 2024, primarily due to an increase in pension assets as a result of an improved funded status and additional deferred major drydock expenditures incurred during 2025, partially offset by amortization of drydock expenditures.

Current liabilities as of December 31, 2025 decreased 4% compared to December 31, 2024. Accounts payable decreased 13%, primarily due to timing of shipyard payments. Income taxes payable decreased 100% due to the timing of federal income tax payments. Deferred revenues increased 14%, primarily due to deposits on equipment expected to be shipped in 2026 in KDS.

Long-term debt, net - less current portion, as of December 31, 2025, increased 5% compared to December 31, 2024, primarily reflecting net borrowings on the 2027 Revolving Credit Facility.

Deferred income taxes as of December 31, 2025 increased 12% compared to December 31, 2024, primarily reflecting the 2025 deferred tax provision of $82.5 million.

Operating lease liabilities - less current portion, as of December 31, 2025 increased 15% compared to December 31, 2024, primarily due to new leases acquired and liability accretion, partially offset by lease payments made.

Other long-term liabilities as of December 31, 2025 increased 10% compared to December 31, 2024, primarily due to an increase in deferred compensation accruals.

Total equity as of December 31, 2025 increased 1% compared to December 31, 2024, primarily due to net earnings attributable to Kirby of $354.6 million and other comprehensive income of $15.2 million for 2025, partially offset by treasury stock purchases of $354.2 million.

Retirement Plans

The Company sponsors a defined benefit plan (the "Kirby Pension Plan") for its inland vessel personnel and shore based tankermen. The plan benefits are based on an employee's years of service and compensation. The plan assets consist primarily of equity and fixed income securities. The Company's pension plan funding strategy is to make annual contributions in amounts equal to or greater than amounts necessary to meet minimum government funding requirements. No pension contributions to that plan were made in 2025, 2024 or 2023.

On April 12, 2017, the Company amended the Kirby Pension Plan to cease all benefit accruals for periods after May 31, 2017 for certain participants. Participants grandfathered and not impacted were those, as of the close of business on May 31, 2017, who either (a) had completed 15 years of pension service or (b) had attained age 50 and completed 10 years of pension service. Participants non-grandfathered are eligible to receive discretionary 401(k) plan contributions.

On February 14, 2018, with the acquisition of Higman Marine, Inc. ("Higman"), the Company assumed Higman's pension plan (the "Higman Pension Plan") for its inland vessel personnel and office staff. On March 27, 2018, the Company amended the Higman Pension Plan to close it to all new entrants and cease all benefit accruals for periods after May 15, 2018 for all participants. The Company made contributions to the Higman Pension Plan of $1.2 million, $1.7 million and $8.2 million for the years ended December 31, 2025, 2024 and 2023, respectively.

The aggregate fair value of plan assets of the Company's pension plans was $461.2 million and $411.4 million at December 31, 2025, and 2024, respectively.

The Company's investment strategy focuses on total return on invested assets (capital appreciation plus dividend and interest income). The primary objective in the investment management of assets is to achieve long-term growth of principal while avoiding excessive risk. Risk is managed through diversification of investments within and among asset classes, as well as by investing in asset classes offering sufficient liquidity and trading history.

The Company makes various assumptions when determining defined benefit plan costs including, but not limited to, the current discount rate and the expected long-term return on plan assets. Discount rates are determined annually and are based on a yield curve that consists of a hypothetical portfolio of high quality corporate bonds with maturities matching the projected benefit cash flows. The Company used discount rates of 5.5% for the Kirby Pension Plan and 5.7% for the Higman Pension Plan in 2025 and 5.7% for both the Kirby Pension Plan and Higman Pension Plan in 2024. The Company estimates that every 0.1% decrease in the discount rate results in an increase in the accumulated benefit obligation ("ABO") of approximately $4.1 million. The Company assumed that plan assets would generate a long-term rate of return of 6.75% in both 2025 and 2024. The Company developed its expected long-term rate of return assumption by evaluating input from investment consultants and comparing historical returns for various asset classes with its actual and targeted plan investments. The Company believes that long-term asset allocation, on average, will approximate the targeted allocation.

Long-Term Financing

The following table summarizes the Company's outstanding debt (in thousands):

At the beginning of 2022, the Company had an amended and restated credit agreement (the "2024 Credit Agreement") with a group of commercial banks, with JPMorgan Chase Bank, N.A. as the administrative agent bank, that allowed for an $850 million unsecured revolving credit facility (the "2024 Revolving Credit Facility") and an unsecured term loan (the "2024 Term Loan") with a maturity date of March 27, 2024. The 2024 Term Loan was prepayable, in whole or in part, without penalty.

On July 29, 2022, the Company entered into a new credit agreement (the "2027 Credit Agreement") with a group of commercial banks, with JPMorgan Chase Bank, N.A. as the administrative agent bank that allows for a $500 million unsecured revolving credit facility (the "2027 Revolving Credit Facility") and a $250 million unsecured term loan (the "2027 Term Loan") with a maturity date of July 29, 2027. The 2027 Credit Agreement replaced the 2024 Credit Agreement. In conjunction with entering into the 2027 Credit Agreement, on July 29, 2022, the Company borrowed $35 million under the 2027 Revolving Credit Facility and $250 million under the 2027 Term Loan to repay borrowings under the 2024 Term Loan. In the fourth quarter of 2022, the Company repaid $80 million under the 2027 Term Loan prior to scheduled maturities. In the fourth quarter of 2024, the Company repaid $100 million under the 2027 Term Loan prior to scheduled maturities. As a result, no repayments are required until March 31, 2027. Outstanding letters of credit under the 2027 Revolving Credit Facility were $6,000 and available borrowing capacity was $455 million as of December 31, 2025.

The 2027 Term Loan is repayable in quarterly installments, with no repayments until March 31, 2027, in increasing percentages of the original principal amount of the loan, with the remaining unpaid balance of approximately $43.8 million payable upon maturity, assuming no further prepayments. The 2027 Term Loan is prepayable, in whole or in part, without penalty. The 2027 Credit Agreement provides for a variable interest rate based on the Secured Overnight Financing Rate ("SOFR") or a base rate calculated with reference to the prime rate quoted by The Wall Street Journal, the Federal Reserve Bank of New York Rate plus 0.5%, or the adjusted SOFR rate for a one month interest period plus 1.0%, among other factors (the "Alternate Base Rate"). The interest rate varies with the Company's credit rating and is currently 137.5 basis points over SOFR or 37.5 basis points over the Alternate Base Rate. The 2027 Credit Agreement contains certain financial covenants including an interest coverage ratio and debt-to-capitalization ratio. In addition to financial

covenants, the 2027 Credit Agreement contains covenants that, subject to exceptions, restrict debt incurrence, mergers and acquisitions, sales of assets, dividends and investments, liquidations and dissolutions, capital leases, transactions with affiliates, and changes in lines of business. The 2027 Credit Agreement specifies certain events of default, upon the occurrence of which the maturity of the outstanding loans may be accelerated, including the failure to pay principal or interest, violation of covenants and default on other indebtedness, among other events. Borrowings under the 2027 Credit Agreement may be used for general corporate purposes including acquisitions. The 2027 Revolving Credit Facility includes a $25 million commitment which may be used for standby letters of credit.

The Company has $500 million of 4.2% senior unsecured notes due March 1, 2028 (the "2028 Notes") with U.S. Bank National Association, as trustee. No principal payments are required until maturity. Interest payments of $10.5 million are due semi-annually on March 1 and September 1 of each year. The 2028 Notes are unsecured and rank equally in right of payment with the Company's other unsecured senior indebtedness. The 2028 Notes contain certain covenants on the part of the Company, including covenants relating to liens, sale-leasebacks, asset sales and mergers, among others. The 2028 Notes also specify certain events of default, upon the occurrence of which the maturity of the notes may be accelerated, including failure to pay principal and interest, violation of covenants or default on other indebtedness, among others.

On February 3, 2022, the Company entered into a note purchase agreement for the issuance of $300 million of unsecured senior notes with a group of institutional investors, consisting of $60 million of 3.46% series A notes ("Series A Notes") and $240 million of 3.51% series B notes ("Series B Notes"), each due January 19, 2033 (collectively, the "2033 Notes"). The Series A Notes were issued on October 20, 2022, and the Series B Notes were issued on January 19, 2023. No principal payments will be required until maturity. Beginning in 2023, interest payments of $5.3 million will be due semi-annually on January 19 and July 19 of each year, with the exception of the first payment on January 19, 2023, which was $0.5 million. The 2033 Notes are unsecured and rank equally in right of payment with the Company's other unsecured senior indebtedness. The 2033 Notes contain certain covenants on the part of the Company, including an interest coverage covenant, a debt-to-capitalization covenant, and covenants relating to liens, asset sales and mergers, among others. The 2033 Notes also specify certain events of default, upon the occurrence of which the maturity of the notes may be accelerated, including failure to pay principal and interest, violation of covenants or default on other indebtedness, among others. The 3.29% unsecured senior notes due February 27, 2023 (the "2023 Notes") were repaid using a combination of the proceeds from the issuance of the 2033 Notes and availability under the 2027 Revolving Credit Facility.

The Company has a $15.0 million line of credit ("Credit Line") with Bank of America, N.A. ("Bank of America") for short-term liquidity needs and letters of credit, with a maturity date of June 30, 2026. The Credit Line allows the Company to borrow at an interest rate agreed to by Bank of America and the Company at the time each borrowing is made or continued. Outstanding letters of credit under the $15.0 million credit line were $6.8 million and available borrowing capacity was $8.2 million as of December 31, 2025.

The Company also had $7.4 million and $8.2 million of short-term unsecured loans outstanding, as of December 31, 2025 and 2024, respectively, related to its Colombia operations.

As of December 31, 2025, the Company was in compliance with all covenants under its debt instruments. For additional information about the Company's debt instruments, see Note 5, Long-Term Debt.

Cash Flow and Capital Expenditures

The Company generated net cash provided by operating activities of $670.2 million, $756.5 million, and $540.2 million for the years ended December 31, 2025, 2024, and 2023, respectively. The 11% decrease in 2025 as compared to 2024 was primarily due to the timing of accounts receivable collections, accounts payable payments and federal income tax payments, as well as an increase in inventories in 2025, partially offset by increased net earnings. The increase in inventories was due to the impact of higher business activity levels and efforts to manage supply in KDS resulting in the buildup of inventory for projects, mainly due to power generation orders, which are scheduled to be delivered in 2026. The increase in net earnings was driven by higher term contract pricing in the KMT coastal market and improved KDS business activity levels in the commercial and industrial and power generation markets.

During 2025, 2024, and 2023, the Company generated cash of $31.0 million, $20.4 million, and $26.1 million, respectively, from proceeds from the disposition of assets, and $4.9 million, $9.4 million, and $4.2 million, respectively, from proceeds from the exercise of stock options.

For 2025, cash generated was used for capital expenditures of $264.5 million, including $226.6 million associated with marine maintenance capital and improvements to existing inland and coastal marine equipment and facility improvements, as well as $37.9 million for growth spending in both segments. The Company also used $115.7 million for acquisitions of businesses and marine equipment, more fully described under Acquisitions above.

For 2024, cash generated was used for capital expenditures of $342.7 million, including $232.5 million associated with marine maintenance capital and improvements to existing inland and coastal marine equipment and facility improvements, as well as $110.2

million for growth spending in both segments. The Company also used $77.9 million for acquisitions of businesses and marine equipment, more fully described under Acquisitions above.

Treasury Stock Purchases

During 2025, the Company purchased 3.7 million shares of its common stock for $354.2 million, at an average price of $96.27 per share. Subsequent to December 31, 2025 and through February 13, 2026, the Company purchased an additional 0.2 million shares of its common stock for $28.5 million, at an average price of $120.22 per share. During 2024, the Company purchased 1.6 million shares of its common stock for $174.6 million, at an average price of $106.40 per share. During 2023, the Company purchased 1.5 million shares of its common stock for $112.8 million, at an average price of $75.95 per share. On September 8, 2025, the Board approved an eight million share increase in the Company's purchase authorization. As of February 13, 2026, the Company had approximately 7.0 million shares available under its existing purchase authorizations. Historically, treasury stock purchases have been financed through operating cash flows and borrowings under the Company's Revolving Credit Facility. The Company is authorized to purchase its common stock on the New York Stock Exchange and in privately negotiated transactions. When purchasing its common stock, the Company is subject to price, trading volume and other market considerations. Shares purchased may be used for reissuance upon the exercise of stock options or the granting of other forms of incentive compensation, in future acquisitions for stock or for other appropriate corporate purposes. For more information about stock purchases in the 2025 fourth quarter, see Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Liquidity and Capital Resources

Funds generated from operations are available for acquisitions, capital expenditure projects, common stock purchases, repayments of borrowings and for other corporate and operating requirements. In addition to net cash flow provided by operating activities, as of February 13, 2026, the Company had cash and cash equivalents of $50.6 million, availability of $435 million under its Revolving Credit Facility and $8.2 million available under its Credit Line.

Neither the Company, nor any of its subsidiaries, is obligated on any debt instrument, swap agreement, or any other financial instrument or commercial contract which has a rating trigger, except for pricing grids on its 2027 Credit Agreement.

The Company expects to continue to be able to fund expenditures for acquisitions, capital construction projects, common stock purchases, repayment of borrowings, and for other operating requirements both in the short term and in the long term from a combination of available cash and cash equivalents, funds generated from operating activities, and available financing arrangements.

The 2027 Revolving Credit Facility's commitment is in the amount of $500 million, with $45 million currently outstanding at December 31, 2025, and expires July 29, 2027. The $500 million 4.2% senior unsecured notes do not mature until March 1, 2028 and require no prepayments. The 2033 Notes in the amount of $300 million do not mature until January 19, 2033 and require no prepayment. The 2027 Term Loan in the amount of $70 million is subject to quarterly installments, beginning March 31, 2027, in increasing percentages of the original principal amount of the loan, with the remaining unpaid balance of approximately $43.8 million payable on July 29, 2027, assuming no further prepayments. The 2027 Term Loan is prepayable, in whole or in part, without penalty.

There are numerous factors that may negatively impact the Company's cash flow in 2026. For a list of significant risks and uncertainties that could impact cash flows, see Note 14, Contingencies and Commitments in the financial statements, and Item 1A - Risk Factors. Amounts available under the Company's existing financing arrangements are subject to the Company continuing to meet the covenants of the credit facilities as described in Note 5, Long-Term Debt in the financial statements.

The Company has issued guaranties or obtained standby letters of credit and performance bonds supporting performance by the Company and its subsidiaries of contractual or contingent legal obligations of the Company and its subsidiaries incurred in the ordinary course of business. The aggregate notional value of these instruments is $30.2 million at December 31, 2025, including $11.3 million in letters of credit and $18.9 million in performance bonds. All of these instruments have an expiration date within two years. The Company does not believe demand for payment under these instruments is likely and expects no material cash outlays to occur in connection with these instruments.

The Company's marine transportation term contracts typically contain fuel escalation clauses, or the customer pays for the fuel. However, there is generally a 30 to 120 day delay before contracts are adjusted depending on the specific contract. In general, the fuel escalation clauses are effective over the long-term in allowing the Company to recover changes in fuel costs due to fuel price changes. However, the short-term effectiveness of the fuel escalation clauses can be affected by a number of factors including, but not limited to, specific terms of the fuel escalation formulas, fuel price volatility, navigating conditions, tow sizes, trip routing, and the location of loading and discharge ports that may result in the Company over or under recovering its fuel costs. The Company's spot contract rates generally reflect current fuel prices at the time the contract is signed but do not have escalators for fuel.

The Company currently leases various facilities and equipment under cancelable and noncancelable operating leases. Future minimum lease payments under operating leases that have initial noncancelable lease terms in excess of one year are detailed in Note 6, Leases. Lease payments for towing vessels exclude non-lease components. The Company estimates that non-lease components comprise approximately 70% of charter rental costs, related to towboat crew costs, maintenance and insurance.

The Company's pension plan funding strategy is to make annual contributions in amounts equal to or greater than amounts necessary to meet minimum government funding requirements. The ABO is based on a variety of demographic and economic assumptions, and the pension plan assets' returns are subject to various risks, including market and interest rate risk, making an accurate prediction of the pension plan contribution difficult resulting in the Company electing to only make an expected pension contribution forecast of one year. As of December 31, 2025, the Company's pension plan funding was 142% of the pension plans' ABO, including the Higman pension plan. The Company expects to make additional pension contributions of $1.2 million in 2026.

The Company has certain mechanisms designed to help mitigate the impacts of rising costs. For example, KMT has long-term contracts which generally contain cost escalation clauses whereby certain costs, including fuel as noted above, can be largely passed through to its customers. Spot contract rates include the cost of fuel and are subject to market volatility. In KDS, the cost of major components for large manufacturing orders is secured with suppliers at the time a customer order is finalized, which somewhat limits exposure to inflation. To the extent possible, the Company also seeks to include contractual language to address recovery of increased costs related to tariffs in KDS. The repair portion of KDS is based on prevailing current market rates.

Accounting Standards

For a discussion of recently issued accounting standards, see Note 1, Summary of Significant Accounting Policies.