Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

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

Statements contained in this Form 10-Q 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 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-Q 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 Part II, Item 1A-Risk Factors of this Form 10-Q and the Form 10-Q for the quarters ended March 31 and June 30, 2026, and Item 1A-Risk Factors found in the Company's Annual Report on Form 10-K for the year ended December 31, 2025. 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."

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):

Cash provided by operating activities for the 2026 first nine months decreased in comparison to the 2025 first nine months primarily due to the timing of accounts receivable collections, partially offset by the timing of accounts payable payments and increased customer deposits in 2026 as compared to 2025. For the 2026 first nine months, capital expenditures of $189.3 million included $140.2 million in KMT and $49.1 million in KDS and corporate, each more fully described under Cash Flow and Capital Expenditures below.

The Company projects that capital expenditures for 2026 will be in the $220 million to $260 million range. Approximately $170 million to $210 million is associated with marine maintenance capital and improvements to existing inland and coastal marine equipment, and facility improvements. Up to approximately $65 million is associated with growth capital spending in both segments.

The Company's debt-to-capitalization ratio increased to 23.7% at September 30, 2026 compared to 21.4% at December 31, 2025, primarily due to an increase in debt outstanding. Total equity at September 30, 2026 increased as compared to December 31, 2025 primarily from net earnings attributable to Kirby of $281.7 million, partially offset by treasury stock purchases of $224.2 million in the 2026 first nine months. The Company's debt outstanding as of September 30, 2026 and December 31, 2025 is detailed in Long-Term Financing below.

Marine Transportation

For both the 2026 third quarter and first nine months, KMT generated 58% of the Company's revenues. For the 2025 third quarter and first nine months, KMT generated 56% and 58%, respectively, of the Company's revenues. 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, fiber, 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, KMT is directly affected by the volumes produced by the Company's petroleum, petrochemical, and refining customer base.

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., which transports project cargoes and cargo containers by barge on the United States inland waterway system.

During the 2026 first nine months, the Company purchased 28 inland tank barges, chartered 14 inland tank barges, brought back into service eight inland tank barges, and retired seven inland tank barges, increasing its capacity by approximately 1.2 million barrels.

KMT revenues for the 2026 third quarter and first nine months increased 17% and 10%, respectively, compared to the 2025 third quarter and first nine months, primarily due to higher term and spot pricing in the inland market and increased fuel rebills in the inland and coastal markets as compared to the 2025 third quarter and first nine months. KMT operating income for the 2026 third quarter and first nine months increased 26% and 6%, respectively, compared to the 2025 third quarter and first nine months, primarily due to higher term and spot pricing in the inland market, partially offset by higher fuel costs. During the second quarter of 2026, rapidly rising fuel prices temporarily compressed operating income and operating margins in the inland market due to the inherent lag in the Company's contractual fuel escalation mechanisms. Depending on contract terms, fuel related pricing adjustments under term contracts generally become effective 30 to 120 days after fuel cost increases occur. Due to this, the Company experienced a lag in the second quarter in recovering the impact of higher fuel costs. Rising fuel costs continued in the 2026 third quarter as higher costs were only partially offset by cost escalators and rate recovery mechanisms. The Company expects these costs to be substantially recovered in subsequent quarters as contractual fuel escalation provisions take effect. The 2026 and 2025 first quarters were impacted by poor operating conditions including seasonal wind and fog along the Gulf Coast, ice on the Illinois and Upper Mississippi Rivers and various lock closures. For

the 2026 third quarter and first nine months, the inland tank barge fleet contributed 81% and 80%, respectively, and the coastal fleet contributed 19% and 20%, respectively, of KMT revenues. For the 2025 third quarter and first nine months, the inland tank barge fleet contributed 78% and 80%, respectively, and the coastal fleet contributed 22% and 20%, respectively, of KMT revenues.

Inland tank barge utilization levels averaged in the low-90% range during the 2026 first, second, and third quarters, the low-to-mid-90% range during both the 2025 first and second quarters, and the mid-80% range during the 2025 third quarter. The 2025 third quarter experienced seasonally favorable weather and improved navigational conditions. In addition, the 2025 third quarter was also impacted by a lighter feedstock mix for refinery and chemical customers and fewer barges undergoing maintenance across the industry. The 2026 and 2025 first quarters were impacted by high winds and heavy fog along the Gulf Coast, ice on the Illinois and Upper Mississippi Rivers and various lock delays. Coastal tank barge utilization levels averaged in the mid-to-high-90% range during the 2026 first quarter and the high-90% range during both the 2026 second and third quarters. Coastal tank barge utilization levels averaged in the mid-to-high-90% range during the 2025 first, second, and third quarters.

During both the 2026 third quarter and first nine months, approximately 65% of KMT inland revenues were under term contracts and 35% were spot contract revenues. During both the 2025 third quarter and first nine months, approximately 70% of KMT inland revenues were under term contracts and 30% were spot contract revenues. Inland time charters during both the 2026 third quarter and first nine months represented approximately 56% of inland revenues under term contracts compared with approximately 57% and 59% in the 2025 third quarter and first nine months, respectively. During the 2026 third quarter and first nine months, approximately 95% and 93%, respectively, of KMT coastal revenues were under term contracts and 5% and 7%, respectively, were under spot contracts. During both the 2025 third quarter and first nine months, approximately 100% of KMT coastal revenues were under term contracts and none were under spot contracts. Coastal time charters represented approximately 100% of coastal revenues under term contracts during both the 2026 and 2025 third quarter and first nine months. 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 2026 compared to contracts renewed during the corresponding quarter of 2025:

Effective January 1, 2026, annual escalators for labor and the producer price index on a number of inland multi-year contracts resulted in rate increases on those contracts of approximately 3%, excluding fuel.

KMT operating margin was 19.7% and 18.1% for the 2026 third quarter and first nine months, respectively, compared to 18.3% and 18.9% for the 2025 third quarter and first nine months, respectively.

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.

For both the 2026 third quarter and first nine months, KDS generated 42% of the Company's revenues. For the 2025 third quarter and first nine months, KDS generated 44% and 42%, respectively, of the Company's revenues. 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.

KDS revenues for the 2026 third quarter and first nine months increased 6% and 8%, respectively, compared with the 2025 third quarter and first nine months. KDS operating income for the 2026 third quarter and first nine months increased 13% and 9%, respectively, compared with the 2025 third quarter and first nine months. In the commercial and industrial market, revenues and operating income increased compared to the 2025 third quarter and first nine months due to higher business levels in marine repair. For the 2026 third quarter and first nine months, the commercial and industrial market contributed 44% and 47%, respectively, of KDS revenues.

In the power generation market, revenues and operating income increased compared to the 2025 third quarter and first nine months due to increased demand for backup, prime power and critical power applications. For the 2026 third quarter and first nine months, the power generation market contributed 46% and 43%, respectively, of KDS revenues.

In the oil and gas market, revenues and operating income decreased compared to the 2025 third quarter and first nine months, impacted by 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 both the 2026 third quarter and first nine months, the oil and gas market contributed 10% of KDS revenues.

KDS operating margin was 11.9% and 9.6% for the 2026 third quarter and first nine months, respectively, compared to 11.0% and 9.5% for the 2025 third quarter and first nine months, respectively.

Outlook

Overall, the Company expects to deliver improved financial results in 2026. In KMT, barge utilization and customer demand remain favorable. In KDS, growth in the power generation market and strength in marine repair is expected to offset softness in oil and gas markets. The Company remains mindful of the ever-changing economic landscape related to the possible impact of high interest rates, tariffs, geopolitical tensions and possible recessionary headwinds as it moves through 2026 and into 2027.

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 a 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 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 did experience some near-term cost headwinds in its inland marine transportation operations during the 2026 second and third quarters from rising fuel costs. Term and affreightment contracts contain fuel escalation clauses or provides for the customer to pay for fuel. Cost escalators and rate recovery mechanisms in the Company's term contracts, while effective over time in allowing the Company to recover changes in fuel costs, create a delay that will lag near-term fuel cost increases. As a result, periods of rapidly rising fuel prices may temporarily compress margins and operating income until escalation adjustments are fully realized. The Company did experience that lag during the 2026 second quarter. Rising fuel costs continued in the 2026 third quarter as higher costs were only partially offset by cost escalators and rate recovery mechanisms. The Company expects these costs to be ultimately recovered in subsequent quarters as there is generally a 30 to 120 day delay before term contracts are adjusted for fuel costs. Fuel escalation clauses in term contracts and their effectiveness are discussed in more detail in Liquidity below and Item 1A - Risk Factors found in the Company's Annual Report on Form 10-K for the year ended December 31, 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 strong 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 increasing need for prime behind the meter and 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 ("OEM") products, especially in the power generation market, to continue in the 2026 fourth quarter and into 2027.

Acquisitions

On November 4, 2026, the Company completed the acquisition of 14 inland tank barges with a total capacity of 392,000 barrels, nine inland towboats, nine bow thrusters and a fleeting operation in Rockport, Texas from undisclosed sellers for approximately $115 million, subject to post-closing adjustments. The fourteen inland tank barges transport petrochemicals and refined products on the Mississippi River System and Gulf Intracoastal Waterway. The average age of the 14 inland tank barges is 10 years. The fleeting

operations are located on a 65-acre facility servicing Corpus Christi Bay and the port of Corpus Christi and will enhance the Company's inland marine network in South Texas with expanded fleeting and fueling capabilities.

On March 17, 2026, the Company purchased 23 inland tank barges with a total capacity of 653,000 barrels, including five specialty barges, and three high horsepower towboats from an undisclosed seller for $95.8 million. The Company paid $81.4 million in cash in March 2026 with the remaining $14.4 million paid in the 2026 second quarter upon delivery of remaining vessels. The 23 tank barges, including five specialty barges, transport petrochemicals and refined products on the Mississippi River System and Gulf Intracoastal Waterway. The average age of the 23 barges was 19 years.

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.

Financing of these purchases 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 KMT and KDS revenues and the percentage of each to total revenues (dollars in thousands):

Marine Transportation

The following table sets forth KMT revenues, costs and expenses, operating income, and operating margin (dollars in thousands):

Marine Transportation Revenues

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

KMT revenues for the 2026 third quarter and first nine months increased 17% and 10%, respectively, compared to the 2025 third quarter and first nine months, primarily due to higher term and spot pricing in the inland market and increased fuel rebills in the inland and coastal markets as compared to the 2025 third quarter and first nine months. KMT operating income for the 2026 third quarter and first nine months increased 26% and 6%, respectively, compared to the 2025 third quarter and first nine months, primarily due to higher term and spot pricing in the inland market, partially offset by higher fuel costs. During the second quarter of 2026, rapidly rising fuel prices temporarily compressed operating income and operating margins in the inland market due to the inherent lag in the Company's contractual fuel escalation mechanisms. Because fuel-related pricing adjustments under term contracts generally become effective 30 to 120 days after fuel cost increases are incurred, the Company was unable to fully recover the impact of higher fuel costs during the second quarter. Rising fuel costs continued in the 2026 third quarter as higher costs were mitigated but not fully offset by cost escalators and rate recovery mechanisms. The Company expects these costs to be substantially recovered in subsequent quarters as contractual fuel escalation provisions take effect. The 2026 and 2025 first quarters were impacted by poor operating conditions including seasonal wind and fog along the Gulf Coast, ice on the Illinois and Upper Mississippi Rivers and various lock closures. For the 2026 third quarter and first nine months, the inland tank barge fleet contributed 81% and 80%, respectively, and the coastal fleet contributed 19% and 20%, respectively, of KMT revenues. For the 2025 third quarter and first nine months, the inland tank barge fleet contributed 78% and 80%, respectively, and the coastal fleet contributed 22% and 20%, respectively, of KMT revenues.

Inland tank barge utilization levels averaged in the low-90% range during the 2026 first, second, and third quarters, the low-to-mid-90% range during both the 2025 first and second quarters, and the mid-80% range during the 2025 third quarter. The 2025 third quarter experienced seasonally favorable weather and improved navigational conditions. In addition, the 2025 third quarter was also impacted by a lighter feedstock mix for refinery and chemical customers and fewer barges undergoing maintenance across the industry. The 2026 and 2025 first quarters were impacted by high winds and heavy fog along the Gulf Coast, ice on the Illinois and Upper Mississippi Rivers and various lock delays. Coastal tank barge utilization levels averaged in the mid-to-high-90% range during the 2026 first quarter and the high-90% range during both the 2026 second and third quarters. Coastal tank barge utilization levels averaged in the mid-to-high-90% range during the 2025 first, second, and third quarters.

The petrochemical market, which is the Company's largest market, contributed 49% and 48% of KMT revenues for the 2026 third quarter and first nine months, respectively, reflecting steady rates, volumes and utilization from Gulf Coast petrochemical plants as compared to the 2025 third quarter and first nine months.

The black oil market, which contributed 27% of KMT revenues for both the 2026 third quarter and first nine months reflected stable demand as refinery utilization and production levels of refined petroleum products and fuel oils increased. During the 2026 first nine months, 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 21% and 22% of KMT revenues for the 2026 third quarter and first nine months, respectively, reflected stable volumes in the inland market with steady refinery utilization and product levels as compared to the 2025 third quarter and first nine months.

The agricultural chemical market, which contributed 3% of KMT revenues for both the 2026 third quarter and first nine months reflected stable demand for transportation of both domestically produced and imported products as compared to the 2025 third quarter and first nine months.

For the 2026 third quarter, inland operations incurred 1,809 delay days, 25% more than the 1,442 delay days that occurred during the 2025 third quarter. For the 2026 first nine months, inland operations incurred 7,640 delay days, 13% fewer than the 8,791 delay days that occurred during the 2025 first nine months. 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 poor operating conditions due to heavy wind and fog along the Gulf Coast and lock delays during the 2026 and 2025 first quarters.

During both the 2026 third quarter and first nine months, approximately 65% of KMT inland revenues were under term contracts and 35% were spot contract revenues. During both the 2025 third quarter and first nine months, approximately 70% of KMT inland revenues were under term contracts and 30% were spot contract revenues. Inland time charters during both the 2026 third quarter and first nine months represented approximately 56% of inland revenues under term contracts compared with approximately 57% and 59% in the 2025 third quarter and first nine months, respectively. During the 2026 third quarter and first nine months, approximately 95% and 93%, respectively, of KMT coastal revenues were under term contracts and 5% and 7%, respectively, were under spot contracts. During both the 2025 third quarter and first nine months, approximately 100% of KMT coastal revenues were under term contracts and none were under spot contracts. Coastal time charters represented approximately 100% of coastal revenues under term contracts during both the 2026 and 2025 third quarter and first nine months. 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 2026 compared to contracts renewed during the corresponding quarter of 2025:

Effective January 1, 2026, annual escalators for labor and the producer price index on a number of inland multi-year contracts resulted in rate increases on those contracts of approximately 3%, excluding fuel.

Marine Transportation Costs and Expenses

Costs and expenses for the 2026 third quarter and first nine months increased 15% and 11%, respectively, compared to the 2025 third quarter and first nine months. Costs of sales and operating expenses for the 2026 third quarter and first nine months increased 18% and 13%, respectively, compared with the 2025 third quarter and first nine months. The increase for the 2026 third quarter and first nine months was driven by higher fuel costs and inflationary cost pressures including wage increases that went into effect on July 1, 2026.

The inland marine transportation fleet operated an average of 294 towboats during the 2026 third quarter, of which an average of 86 were chartered, compared to 270 during the 2025 third quarter, of which an average of 61 were chartered. The Company charters in or releases chartered towboats in an effort to balance horsepower needs with current requirements, taking into account variability in demand or anticipated demand, addition or removal of tank barges from the fleet, chartered towboat availability, and weather or water conditions. The Company has historically used chartered towboats for approximately one-fourth of its horsepower requirements.

During the 2026 third quarter, inland operations consumed 13.8 million gallons of diesel fuel compared to 12.5 million gallons consumed during the 2025 third quarter. The average price per gallon of diesel fuel consumed during the 2026 third quarter was $3.91 per gallon compared with $2.46 per gallon for the 2025 third quarter. During the 2026 first nine months, inland operations consumed 39.3 million gallons of diesel fuel compared to 37.0 million gallons consumed during the 2025 first nine months. The average price per gallon of diesel fuel consumed during the 2026 first nine months was $3.49 per gallon compared with $2.46 per gallon for the 2025 first nine months. 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 the 2026 third quarter and first nine months increased 5% and 6%, respectively, compared to the 2025 third quarter and first nine months. The increase in selling, general and administrative expenses for the 2026 third

quarter and first nine months as compared to the 2025 third quarter and first nine months was primarily due to continued inflationary cost pressures, including higher medical costs, and salary and wage increases that went into effect on July 1, 2026.

Depreciation and amortization for both the 2026 third quarter and first nine months increased 8% compared to the 2025 third quarter and first nine months. The increase was primarily due to capital additions during 2025 and the first nine months of 2026, as well as equipment acquisitions.

Marine Transportation Operating Income and Operating Margin

KMT operating income for the 2026 third quarter and first nine months increased 26% and 6%, respectively, compared with the 2025 third quarter and first nine months. The 2026 third quarter operating margin was 19.7% compared with 18.3% for the 2025 third quarter. The 2026 first nine months operating margin was 18.1% compared with 18.9% for the 2025 first nine months. The increase in operating income as compared to the 2025 third quarter and first nine months was primarily due to higher spot and term pricing in the inland market, partially offset by higher fuel costs. During the second quarter of 2026, rapidly rising fuel prices temporarily compressed operating income and operating margins in the inland market due to the inherent lag in the Company's contractual fuel escalation mechanisms. Because fuel-related pricing adjustments under term contracts generally become effective 30 to 120 days after fuel cost increases are incurred, the Company was unable to fully recover the impact of higher fuel costs during the second quarter. Rising fuel costs continued in the 2026 third quarter as higher costs were mitigated but not fully offset by cost escalators and rate recovery mechanisms. The Company expects these costs to be substantially recovered in subsequent quarters as contractual fuel escalation provisions take effect.

Distribution and Services

The following table sets forth KDS revenues, costs and expenses, operating income, and operating margin (dollars in thousands):

Distribution and Services Revenues

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

KDS revenues for the 2026 third quarter and first nine months increased 6% and 8%, respectively, compared with the 2025 third quarter and first nine months. KDS operating income for the 2026 third quarter and first nine months increased 13% and 9%, respectively, compared with the 2025 third quarter and first nine months.

In the commercial and industrial market, revenues and operating income increased compared to the 2025 third quarter and first nine months due to higher business levels in marine repair. In the power generation market, revenues and operating income increased compared to the 2025 third quarter and first nine months due to increased demand for backup, prime power and critical power applications. In the oil and gas market, revenues and operating income decreased compared to the 2025 third quarter and first nine months, impacted by lower levels of conventional oilfield activity which resulted in decreased demand for new transmissions and parts, partially offset by deliveries of electric fracturing equipment.

Distribution and Services Costs and Expenses

Costs and expenses for the 2026 third quarter and first nine months increased 5% and 8%, respectively, compared with the 2025 third quarter and first nine months. Costs of sales and operating expenses for the 2026 third quarter and first nine months increased 6% and 9%, respectively, compared with the 2025 third quarter and first nine months. The increase for the 2026 third quarter and first nine months reflected higher deliveries of power generation equipment, partially offset by lower on-highway and conventional oilfield activity.

Selling, general and administrative expenses for the 2026 third quarter and first nine months was flat and up 2%, respectively, compared to the 2025 third quarter and first nine months. The first nine months increase reflects higher business activity levels and inflationary cost pressures.

Distribution and Services Operating Income and Operating Margin

KDS operating income for the 2026 third quarter and first nine months increased 13% and 9%, respectively, compared with the 2025 third quarter and first nine months. The 2026 third quarter operating margin was 11.9% compared to 11.0% for the 2025 third quarter. The 2026 first nine months operating margin was 9.6% compared to 9.5% for the 2025 first nine months. The results reflect increased demand in power generation from data centers and prime power customers and higher marine repair activity and deliveries of electric fracturing equipment, partially offset by lower conventional oilfield activity.

General Corporate Expenses

General corporate expenses for the 2026 third quarter and first nine months increased compared to the 2025 third quarter and first nine months, driven primarily by increases in professional fees and incentive compensation. The 2026 first nine months was also impacted by higher insurance costs.

(Gain) Loss on Disposition of Assets

The Company reported a net loss on disposition of assets of $0.8 million and a net gain of $3.0 million for the 2026 and 2025 third quarters, respectively. The Company reported a net gain on disposition of assets of $1.3 million and $4.8 million for the 2026 and 2025 first nine months, respectively. The dispositions were primarily from sales of marine transportation equipment and the sale of a KDS facility in the 2026 first quarter.

Other Income and Expenses

The following table sets forth other income, noncontrolling interests, and interest expense (dollars in thousands):

Other Income

Other income for the 2026 and 2025 third quarters includes income of $6.1 million and $4.6 million, respectively, for all components of net benefit costs except the service cost component related to the Company's defined benefit plans. Other income for the 2026 and 2025 first nine months includes income of $18.3 million and $13.7 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 the 2026 third quarter and first nine months decreased 5% and 7%, respectively, compared with the 2025 third quarter and first nine months, primarily due to lower average interest rate in the 2026 third quarter and first nine months. Interest expense excludes capitalized interest for the 2026 third quarter and first nine months of $0.3 million and $0.8 million, respectively. Interest expense excludes capitalized interest for the 2025 third quarter and first nine months of $0.3 million and $0.8 million, respectively.

Financial Condition, Capital Resources and Liquidity

Balance Sheets

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

Current assets as of September 30, 2026 increased 23% compared with December 31, 2025. Trade accounts receivable increased 50% primarily due to higher business activity levels in both KMT and KDS. Inventories - net increased 7% primarily due to the impact of higher business activity levels and supply delays in KDS resulting in the buildup of inventory for mainly power generation projects that are scheduled to be delivered in 2026 fourth quarter and into 2027. Prepaid expenses and other current assets increased 35% primarily due to higher prepaid fuel as a result of an increase in the price of diesel fuel.

Property and equipment, net of accumulated depreciation, at September 30, 2026 increased 2% compared with December 31, 2025. The increase reflected $191.4 million of capital additions (including an increase in accrued capital expenditures of $2.1 million) and $95.8 million of equipment acquisitions in the 2026 first nine months, partially offset by $204.9 million of depreciation expense and $12.4 million of property disposals more fully described under Cash Flow and Capital Expenditures below.

Operating lease right-of-use assets as of September 30, 2026 decreased 17% compared with December 31, 2025, primarily due to lease amortization expense, partially offset by new leases acquired in the 2026 first nine months.

Other intangibles, net, as of September 30, 2026 decreased 17% compared with December 31, 2025, due to amortization during the 2026 first nine months.

Current liabilities as of September 30, 2026 increased 10% compared with December 31, 2025. Accounts payable increased 20% primarily due to higher business activity levels and the timing of inventory purchases and shipyard payments. Deferred revenues increased 20%, primarily due to deposits on equipment expected to be shipped in 2026 fourth quarter and into 2027 in KDS.

Long-term debt, net - less current portion, as of September 30, 2026 increased 17% compared with December 31, 2025, primarily reflecting increased borrowings under the 2031 Revolving Credit Facility.

Operating lease liabilities - less current portion, as of September 30, 2026 decreased 16% compared with December 31, 2025, primarily due to lease payments made, partially offset by new leases acquired and liability accretion.

Total equity as of September 30, 2026 increased 2% compared with December 31, 2025. Net earnings attributable to Kirby of $281.7 million, amortization of share-based compensation of $14.9 million, and stock option exercises of $4.3 million were partially offset by treasury stock purchases of $224.2 million and tax withholdings of $6.7 million on RSU vestings.

Long-Term Financing

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

On March 26, 2026, the Company entered into the 2031 Credit Agreement with JPMorgan, as administrative agent, and certain lenders and issuing banks party thereto. The 2031 Credit Agreement amends and restates in its entirety the 2027 Credit Agreement, extending the Maturity Date, increasing the revolving credit facility commitments to $750 million, and removing the term loan credit facility. Under the 2031 Credit Agreement, the Company has the option, subject to customary conditions and consent of the participating lenders, to increase the size of the revolving credit facility commitments and to add term loan commitments up to an aggregate additional $500 million.

Borrowings under the 2031 Credit Agreement bear interest at a rate per annum equal to, at the Company's option, either a SOFR or a base rate, plus an interest rate margin which ranges from 87.5 to 150 basis points for SOFR loans and 0 to 50 basis points for base rate loans based on the Company's credit rating. The commitment fee on the unused available credit ranges from 7 to 20 basis points based on the Company's credit rating. The Maturity Date may be extended for up to two additional one-year periods with the consent of the Company and lenders holding at least 50 percent of the commitments under the 2031 Credit Agreement. The 2031 Credit Agreement contains customary provisions regarding permitted uses, events of default, and covenants substantively similar to those in the 2027 Credit Agreement, including the maintenance of an interest coverage ratio of no less than 2.5 to 1.0 and a debt to capitalization of no more than or equal to 60 percent (with all calculations based on definitions contained in the 2031 Credit Agreement). Outstanding letters of credit under the 2031 Revolving Credit Facility were $6,000 and available borrowing capacity was $480.0 million as of September 30, 2026.

The Company has a $20 million Credit Line with Bank of America for short-term liquidity needs and letters of credit, with a maturity date of June 30, 2028. Outstanding letters of credit under the Credit Line were $8.0 million and available borrowing capacity was $12.0 million as of September 30, 2026.

As of September 30, 2026, 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, of the Notes to Condensed Financial Statements (Unaudited) as well as Note 5, Long-Term Debt, in the Company's Annual Report on Form 10-K for the year ended December 31, 2025.

Cash Flow and Capital Expenditures

The Company generated positive operating cash flows during the 2026 first nine months with net cash provided by operating activities of $313.4 million compared with $358.0 million for the 2025 first nine months, a 12% decrease. The decrease in operating

cash flows was mainly due to the timing of accounts receivable collections, partially offset by the timing of accounts payable payments and increased customer deposits in 2026 as compared to 2025. During the 2026 and 2025 first nine months, the Company generated cash of $9.8 million and $28.3 million, respectively, from proceeds from the disposition of assets, and $4.3 million and $0.3 million, respectively, from proceeds from the exercise of stock options.

For the 2026 first nine months, cash generated was used for capital expenditures of $189.3 million, including $158.4 million associated with marine maintenance capital and improvements to existing inland and coastal marine equipment and facility improvements, as well as $30.9 million for growth spending in both segments. The growth spending is related to inland equipment construction and equipment for use in a variety of KDS markets including power generation, electric fracturing operations, and other industrial applications. In addition, the Company used cash of $95.8 million for marine equipment acquisitions in the 2026 first nine months.

Treasury Stock Purchases

During the 2026 first nine months, the Company purchased 1.7 million shares of its common stock for $224.2 million, at an average price of $134.82 per share. Subsequent to September 30, 2026 and through November 5, 2026, the Company purchased an additional 0.3 million shares of its common stock for $41.5 million, at an average price of $136.67 per share. As of November 5, 2026, the Company had approximately 5.2 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 2026 third quarter, see Part II, Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Liquidity

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 flows provided by operating activities, as of November 5, 2026 the Company also had cash and cash equivalents of $48.1 million, availability of $385.0 million under its 2031 Revolving Credit Facility, and $12.0 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 the pricing grid on its 2031 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 2031 Revolving Credit Facility's commitment is in the amount of $750 million and matures March 26, 2031, with $270.0 million outstanding at September 30, 2026. The $500 million 4.2% senior unsecured notes do not mature until March 1, 2028 and require no prepayments. The $60 million of 3.46% series A notes and $240 million of 3.51% series B notes do not mature until January 19, 2033 and require no prepayments.

There are numerous factors that may negatively impact the Company's cash flows in 2026. For a list of significant risks and uncertainties that could impact cash flows, see Note 13, Contingencies and Commitments, of the Notes to Condensed Financial Statements (Unaudited), Part II, Item 1A-Risk Factors of this Form 10-Q, Item 1A-Risk Factors and Note 14, Contingencies and Commitments, in the Company's Annual Report on Form 10-K for the year ended December 31, 2025, and Part II, Item 1A-Risk Factors of its Quarterly Reports on Form 10-Q for the quarters ended March 31 and June 30, 2026. Amounts available under the Company's existing financial arrangements are subject to the Company continuing to meet the covenants of the credit facilities as described in Note 5, Long-Term Debt, of the Notes to Condensed Financial Statements (Unaudited) as well as Note 5, Long-Term Debt, in the Company's Annual Report on Form 10-K for the year ended December 31, 2025.

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 $29.4 million at September 30, 2026, including $12.6 million in letters of credit and $16.8 million in performance bonds. All of these instruments have an expiration date within approximately 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.

KMT 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 terms of the 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 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.