2 0 22 Annual Report
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Financial Highlights
In thousands, except per share amounts
2022
2021
2020
2019
2018
As or for the Year Ended December 31,
Revenues:
Marine transportation
Distribution and services
$ 1,616,967
$ 1,322,918
$ 1,404,265
$ 1,587,082
$ 1,483,143
1,167,787
923,742
767,143
1,251,317
1,487,554
$ 2,784,754
$ 2,246,660
$ 2,171,408
$ 2,838,399
$ 2,970,697
Net earnings (loss) attributable to Kirby
$ 122,291
$
(246,954)
$
(272,546)
$ 142,347
$
78,452
Net earnings attributable to Kirby,
excluding one-time items*
$ 126,6521
$
33,7702
$ 109,9713
$ 174,0724
$ 171,4085
Net earnings (loss) per share attributable
to Kirby (diluted)
Net earnings per share attributable to Kirby,
excluding one-time items* (diluted)
$
$
2.03
$
(4.11)
$
(4.55)
$
2.37
$
1.31
2.101
$
0.562
$
1.843
$
2.904
$
2.865
Adjusted EBITDA:**
Net earnings (loss) attributable to Kirby
$ 122,291
$
Interest expense
Provision (benefit) for taxes on income
Impairment of long-lived assets
Impairment of goodwill
Depreciation and amortization
44,588
42,214
—
—
201,443
(246,954)
42,469
(43,830)
121,661
219,052
213,718
$
(272,546)
48,739
(189,759)
165,304
387,970
219,921
$ 142,347
$
78,452
55,994
46,801
—
—
46,856
35,081
82,705
2,702
219,632
224,972
Adjusted EBITDA**
$ 410,536
$ 306,116
$ 359,629
$ 464,774
$ 470,768
Property and equipment, net
$ 3,633,462
$ 3,678,515
$ 3,917,070
$ 3,777,110
$ 3,539,802
Total assets
$ 5,554,924
$ 5,399,063
$ 5,924,174
$ 6,079,097
$ 5,871,594
Long-term debt, including current portion
$ 1,079,618
$ 1,163,367
$ 1,468,586
$ 1,369,767
$ 1,410,188
Total equity
$ 3,045,168
$ 2,888,782
$ 3,087,553
$ 3,371,592
$ 3,216,301
*
Net earnings attributable to Kirby, excluding one-time items and net earnings per share attributable to Kirby, excluding one-time items are non-GAAP financial measures which exclude
certain one-time items as defined in footnotes 1, 2, 3, 4 and 5. Management believes that the exclusion of certain one-time items from these financial measures enables it and investors
to assess and understand operating performance, especially when comparing those results with previous and subsequent periods or forecasting performance for future periods,
primarily because management views the excluded items to be outside of Kirby’s normal operating results.
** Adjusted EBITDA, defined as net earnings (loss) attributable to Kirby before interest expense, taxes on income, depreciation and amortization, impairment of long-lived assets, and
impairment of goodwill is a non-GAAP financial measure used by Kirby because of its wide acceptance as a measure of operating profitability before nonoperating expenses (interest
and taxes) and noncash charges (impairment of long-lived assets, impairment of goodwill, depreciation and amortization).
1
2
3
4
5
The 2022 year included the following one-time items (after tax): $3.7 million, or $0.06 per share, severance and early retirement expense; and $0.6 million, or $0.01 per share,
of professional fees related to the Company’s strategic alternatives review.
The 2021 year included the following one-time items (after tax): $275.0 million, or $4.58 per share, non-cash charges related to impairment of long-lived assets in coastal marine trans-
portation equipment and impairment of goodwill in the marine transportation segment; and $5.7 million, or $0.09 per share, one-time deferred tax provision related to a change
in Louisiana tax law.
The 2020 year included the following one-time items (after tax): $433.3 million, or $7.24 per share, non-cash charges related to inventory write-downs, impairment of long-lived assets,
including intangible assets and property and equipment, and impairment of goodwill in the distribution and services segment; and $50.8 million, or $0.85 per share income tax benefit
related to 2018 and 2019 net operating loss carrybacks under the U.S. Coronavirus Aid, Relief, and Economic Security Act.
The 2019 year included the following one-time items (after tax): $28.0 million, or $0.47 per share, non-cash inventory write-downs; and $3.7 million, or $0.06 per share, severance and
early retirement expense.
The 2018 year included the following one-time items (after tax): $67.2 million, or $1.12 per share, non-cash impairment of long-lived assets and lease cancellation costs; $2.1 million, or
$0.04 per share, non-cash impairment of goodwill; $18.1 million, or $0.30 per share, expenses related to the retirement of Kirby’s Executive Chairman; $3.0 million, or $0.05 per share,
of non-cash expenses related to an amendment to the employee stock plan; and $2.5 million, or $0.04 per share, transaction costs associated with the Higman Marine acquisition.
Cover photo: M/V Miss Rolanette - Photo by Michael Halliburton, Kirby Canal Operations
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To Our Shareholders
A YEAR OF TRANSITION
At Kirby Corporation (“Kirby” or the “Company”) we began the year with all our businesses
continuing to feel the impact of COVID-19 and its variants which effected our employees and
the demand for our products and services. However, as the year progressed, we began to see
a robust recovery in demand which gained momentum throughout the year and enabled us to
end the year in a strong position across both our business segments. Although the marine
transportation group was significantly impacted by the waves of new COVID-19 variants early
in the year, high levels of inflation throughout the year, and a period of unprecedented low water
conditions on the Mississippi River, underlying demand strengthened. In distribution and services
(“D&S”), global supply chain constraints delayed product sales and manufacturing deliveries
throughout the year, but we saw increasing activity levels across the segment. Even though we had
these headwinds in 2022, we successfully navigated the challenges and exited the year stronger.
Throughout the year, we continued to remain focused on safety and our Zero Harm culture.
We are proud to report that our overall safety rate improved during the year, which benefited
our employees and customers. Within marine transportation, our recordable injury rate declined
14% compared to 2021, and both our marine business recorded their lowest recordable injury
rates in five years. Additionally, our coastal marine business recorded no cargo or fuel spills to
water for the fifth year in a row. In D&S, nearly 60% of our locations achieved our goal of Zero
Harm. These results are encouraging considering the many challenges our operations faced
during 2022, and we commend our team for their focus and attention to safety.
FINANCIAL PERFORMANCE
Looking at our 2022 financial performance, overall, revenues increased 24% to $2.78 billion,
and adjusted earnings per share increased 275% year over year to $2.10.
DECLINE IN
RECORDABLE
INJURY RATE
During the year, we generated cash flow from operations totaling $294.1 million which was used to
fund investments in the business, pay down debt, and buy back Company stock. Free cash flow of
$121.5 million marked our 31st consecutive year of free cash flow generation. Kirby’s liquidity
position remained strong with total liquidity of $584.9 million, including cash on hand of $80.6
million. Overall, we reduced debt by $83.7 million and our debt-to-capitalization ratio improved to
26.2%. At the end of the year, we had a debt balance of $1.08 billion.
MARINE
In inland marine, as stated above, the year began with significant headwinds from the COVID-19
Omicron variant which disrupted crew schedules, increased operating costs, and lowered
utilization rates. By March, cases began to dwindle and the general economy continued to recover,
which drove an increase in refinery and petrochemical plant utilization. With strong market
conditions Kirby’s barge utilization increased and spot market and term contract rates began to
move higher. This strength continued into the second and third quarters, as demand for the
products we move improved significantly and led to further increases in both volumes and spot
and term contract pricing. Barge utilization continued to improve and was in the low 90% range.
By the end of the third quarter inland’s operating margin improved into the low double digits as
gains in pricing began to take effect despite inflationary cost pressures. During the fourth quarter,
we battled historic low water on the Mississippi River which created unfavorable operating
conditions and caused a 33% year over year increase in delay days. While these headwinds
did slow down our momentum, the strong underlying fundamentals continued to bolster our
performance. Compared to the fourth quarter 2021, term contract rates increased by 10-15%
and operating margins improved to the highest levels since 2020.
CONSECUTIVE
YEARS OF FREE CASH
FLOW GENERATION
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Kirby Corporation | 2022 Annual Report
1
To Our Shareholders continued
The beginning of the year was also impacted negatively by the COVID-19 Omicron variant for the
Coastal marine business. These headwinds began to subside by the end of the second quarter.
Coastal marine experienced gradual improvement with support from increased demand for refined
products and higher coal shipments, continued improvement in spot market dynamics, and a
positive pricing environment. During the third quarter, market conditions continued to improve and
pricing in the spot market increased in the high-single digits sequentially and term contract
renewals increased in the 20% range year over year. The fourth quarter did see unfavorable
weather conditions and planned maintenance which both offset positive market fundamentals.
Nonetheless, by year end pricing in the spot market continued to increase and term contract
renewals also increased. Overall, the coastal marine business ended the year with a positive
operating margin in the low single digits.
DISTRIBUTION AND SERVICES
In D&S, while supply chain issues created significant headwinds throughout the year,
we experienced improving activity across the segment in 2022 which contributed to a
26% year-over-year increase in revenue.
In the oil and gas market, rig counts increased over ~30% in 2022 compared to the end of
2021 and drilled but uncompleted wells decreased. This significant increase in activity led to
increased demand for new transmissions and parts for our distribution and services business. In
manufacturing, a continued focus on reducing emissions in the energy sector contributed to new
orders for our environmentally friendly products including pressure pumping equipment and power
generation solutions for electric fracturing. Deliveries of new oilfield equipment ramped up through
the year. Global supply chain issues created significant delays throughout the year, however, our
customers continued to place orders and strong demand provided further increases in backlog.
By end of the fourth quarter, oil and gas operating margins were in the low single digits.
The D&S commercial and industrial market also experienced increased activity levels during
the year as the U.S. economy continued to grow. This resulted in increased demand for products
and services in marine repair, power generation and on-highway. Our Thermo King business also
did well with increased product sales throughout the year but was impacted by supply chain
constraints and delays. Compared to 2021 fourth quarter, commercial and industrial revenues
had increased by nearly 20% with operating margins in the high single digits.
OUTLOOK & SUMMARY
Moving forward to 2023, we are optimistic that we are entering an extended period of constructive
market conditions and our outlook is positive. Favorable conditions are anticipated in all of our
markets and are expected to drive increased demand for the Company’s products and services.
Overall, we expect both marine transportation and D&S to deliver improved financial results in
2023. While our outlook is favorable, there are some challenges that we are staying mindful of
including the impact from supply chain delays, higher interest rates, and a potential recession.
In summary, 2022 was a challenging yet successful year that has put Kirby in a great position
for continued improvement in earnings in 2023 and the next several years. Inland volumes are
growing, and barge utilization is strong. From a supply perspective, new barge prices are still
significantly high, and new barge construction is expected to remain extremely limited. All of this
is positive for our inland business and is setting up what we believe to be a multi-year period of
Revenues
IN MILLIONS
$2,838
$2,171
$2,247
$2,785
2019
2020
2021
2022
Adjusted EBITDA1
IN MILLIONS
$465
$360
$306
$411
2019
2020
2021
2022
1
2
See Financial Highlights for Adjusted
EBITDA reconciliation.
See Financial Highlights for Adjusted
Earnings Per Share reconciliation.
2
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Earnings Per Share2
EXCLUDING ONE-TIME ITEMS
$2.90
$1.84
$0.56
$2.10
favorable fundamentals. In coastal, although the market still needs time to recover, we expect strong
utilization levels with our barge fleet will continue. In distribution and services, a favorable economy
and increasing demand throughout the commercial and industrial markets will drive continued
growth. Oilfield fundamentals are strong, and activity is expected to continue to grow with the current
commodity price environment. As oilfield companies continue to advance their sustainability
programs, our manufacturing business should benefit from increased orders and a growing backlog
of environmentally friendly equipment. And finally, our balance sheet is strong, and we continue to
generate free cash flow. We expect 2023 will be another strong cash flow year which will be used to
further invest in the business and create positive returns for the Company. Although 2023 capital
spending will be higher than 2022 as we invest for the long-term health of the business, we expect to
continue to generate free cash flow. With no debt maturities for several years, we expect to be in
position to return a significant portion of free cash flow to shareholders going forward.
THANK YOU
In closing, we want to extend our sincere appreciation to our Board of Directors for their hard
work and wise counsel during the year. We would also like to extend a warm welcome to our newly
appointed board members Susan W. Dio and Rocky Dewbre. Their extensive background, expertise,
skills set, and leadership will be invaluable to the Company.
2019
2020
2021
2022
Total Debt
IN MILLIONS
$1,370
$1,469
$1,163
$1,080
To our customers, thank you for your business and continued confidence in Kirby’s products and
services, and to our shareholders, we thank you for your continued support despite the many
challenges 2022 brought to our businesses. We look forward to a much brighter future with
improved earnings and returns in the years to come.
Lastly, we would like to thank Kirby’s employees for the contributions they made in 2022.
The year certainly had its challenges ranging from the pandemic, to supply chain, to low water
weather events. Despite these obstacles, you remained committed to safety, customer service,
and ultimately, the Company’s success. Thank you for your dedication and focus.
Kirby is well-positioned to succeed in the year ahead.
Respectfully submitted,
2019
2020
2021
2022
Joseph H. Pyne
Chairman of the Board
David W. Grzebinski
President and Chief
Executive Officer
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Marine Transportation
In the marine transportation segment, Kirby Corporation (“Kirby” or the “Company”) operates through its wholly
owned subsidiaries Kirby Inland Marine and Kirby Offshore Marine, and is the United States’ largest tank barge
company. Kirby operates a fleet of approximately 1,066 tank barges and 304 boats, transporting petrochemicals,
refined petroleum products, black oil, agricultural chemicals, and dry-bulk products for major petrochemical
and refining customers in the Unites States. The Company operates its fleet throughout an extensive 12,000-
mile inland waterway system of commercially navigable and interconnected rivers and canals, as well as along
all of the U.S. coastlines. All of Kirby’s tank barges and towing vessels operate under the United States flag and
are qualified to trade under the Jones Act. At the end of 2022, Kirby’s marine transportation businesses had
approximately 3,115 employees of which approximately 2,400 were vessel crew members.
Barge transportation is the most environmentally friendly and energy-efficient means of transporting bulk liquid cargoes in the United States compared
with rail and trucking. From an emissions perspective, railroad and tractor trailer trucks respectively emit approximately 30% and 900% more CO2 per
million ton-miles of cargo transported than marine transportation. The cargo capacity of one inland unit tow, consisting of two 27,500-barrel tank barges,
is the equivalent of 92 railroad tank cars or 288 tractor-trailer tank trucks. Similarly, the cargo capacity of a 100,000-barrel coastal tank barge is the
equivalent of approximately 165 railroad tank cars and 525 tractor-trailer tank trucks.
INLAND MARINE
Kirby Inland Marine is the largest inland tank barge company in the
nation, operating a fleet of 1,037 tank barges with a combined
capacity of 23.1 million barrels throughout the Mississippi River
System, Gulf Intracoastal Waterway, and Houston Ship Channel. The
Company transports petrochemicals, black oil, refined petroleum
products, and agricultural chemicals. The inland tank barge industry,
which is a combination of approximately 30 large integrated
transportation companies, small operators, and captive fleets owned
by refining and petrochemical companies, consists of approximately
4,028 inland tank barges, of which Kirby represents approximately
26% of the market. During 2022, the Kirby Inland Marine moved over
55 million tons of liquid cargos on the inland waterway system, and
contributed approximately 79% of marine transportation revenues.
Inland Tank Barge Fleet
Inland Towboat Fleet
Petrochemicals/refined products
Black oil
Pressure
Anhydrous ammonia
Total
800
152
75
10
800 - 1300 HP
1400 - 1900 HP
2000 - 2400 HP
2500 - 3200 HP
1,037
3300 - 4800 HP
Total Barrel Capacity
23.1 MM
5000 HP and greater
Total
31
29
163
40
9
5
277
4
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KIRBY OPER ATING
Waterways
Mississippi river system
Gulf intracoastal waterway
REVENUES BY
Products
49% Petrochemicals
28% Black oil
20% Refined products
3% Agricultural chemicals
REVENUES BY
Market
79% Inland
21% Coastal
12k
Miles of
Waterway
Kirby operates on 12,000 miles
of navigable U.S. waterways
OFFSHORE MARINE
Kirby Offshore Marine is a key participant in the nation’s coastal tank barge industry, which consists of
approximately 20 integrated marine transportation companies and small operators which transport
refined petroleum products, black oil, and petrochemicals along all three U.S. coasts. The nation’s
coastal tank barge fleet in the 195,000 barrels or less category consists of approximately 270 barges
with 19.4 million barrels of capacity. At the end of 2022, Kirby’s fleet comprised 29 coastal tank barges
with 3.0 million barrels of capacity and 27 tugboats, representing approximately 16% market share on
a barrel capacity basis.
Coastal Tank Barge Fleet
Petrochemicals/refined products
Black oil
Total
21
8
29
Total Barrel Capacity
3.0 MM
Kirby Offshore Marine’s fleet also includes two offshore dry-bulk barge
and tugboat units which transport raw sugar from Florida to the East Coast.
Additionally, Kirby Ocean Transport carries coal across the Gulf of Mexico
to a power generation facility in Florida with two offshore dry-bulk barge
and tugboat units.
In 2022, Kirby Offshore Marine contributed approximately 21%
of marine transportation revenues.
Coastal Tugboat Fleet
2000 - 2900 HP
3000 - 3900 HP
4000 - 4900 HP
5000 - 6900 HP
7000 HP and greater
Total
1
2
7
11
6
27
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Distribution and Services
In the Distribution and Services segment, Kirby Corporation operates
through its wholly owned subsidiaries—Stewart & Stevenson, United
Holdings, and Diesel Dash, as well as through Kirby Engine Systems’
wholly owned subsidiaries—Marine Systems and Engine Systems.
Kirby is a nationwide service provider and distributor of engines,
transmissions, parts, industrial equipment, oilfield services equipment,
and electric power generation equipment. Kirby’s distribution and
services businesses operate in two distinct and diversified markets:
commercial and industrial and oil and gas. At the end of 2022, Kirby’s
Distribution and Services segment had approximately 1,975 employees.
REVENUES BY
Industry
44% Oil and gas
56% Commercial
and industrial
650
Service and
Assembly Bays
2.5MM
Square feet of
shop capacity
1,000
Qualified
Technicians
160
Sales
Professionals
KIRBY BRANDS
COMMERCIAL AND INDUSTRIAL
In commercial and industrial (“C&I”), which represented approximately 56% of 2022 segment revenues,
Kirby supports domestic and international customers through the distribution and service of medium-speed
and high-speed diesel engines and ancillary equipment used primarily in marine, power generation, and
on-highway applications. Kirby also sells equipment and parts in the off-highway market, manufactures and
sells railcar movers, and rents high capacity lift trucks, industrial compressors, and refrigeration trailers.
Marine
• In marine, Kirby is a major OEM distributor and service provider for diesel engines, ancillary products, and
parts with locations across the United States. Kirby’s marine engine businesses participate in many sectors of
the marine vessel industry, including inland towboats and offshore tugboats, oilfield supply vessels, U.S. Coast
Guard vessels, fishing vessels, harbor docking equipment, ferries, and luxury yachts. Marine distributorships
include EMD throughout the United States, as well as MTU, Volvo Penta, and Alfa Laval in various geographies.
Kirby also operates factory-authorized dealerships for Caterpillar, Cummins, and John Deere commercial
marine diesel engines.
• OEM Brand Logos: EMD, MTU, Volvo Penta, Alpha Laval, CAT, Cummins, John Deere
Power Generation
• In power generation, Kirby primarily sells pre-packaged and fabricated back-up power systems for
emergency, standby, and auxiliary power for nuclear, commercial, and industrial applications. Kirby
also rents mobile generator systems. Power generation customers include the worldwide nuclear power
industry, domestic utilities, municipalities, universities, medical facilities, data centers, petrochemical
plants, manufacturing facilities, retail stores, and office complexes.
• OEM Brand Logos: EMD, Norberg, Woodward, Cooper Machinery, MTU, Kawasaki
On-Highway
• In on-highway, Kirby distributes, sells parts, and services diesel engines and transmissions for trucking
companies, commercial truck fleets, municipalities, and oil and gas operators in the United States.
Kirby also sells parts via the DieselDash.com online marketplace. Additionally, Kirby is the distributor
and service provider for Thermo-King refrigeration systems in major markets in Texas and Colorado.
• OEM Brand Logos: Allison Transmission, MTU, Detroit Diesel, Volvo Penta, Isuzu, DEUTZ
6
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Seattle 3
Seattle 3
Introduction to Distribution and Services
1 United Holdings
2 Stewart & Stevenson
3 Kirby Engine System
Little Rock1
Little Rock1
Tulsa1
Tulsa1
Oklahoma City1
Oklahoma City1
Wichita Falls2
Wichita Falls2
62
Locations across
North and South America
COLOMBIA
UAE
CHINA
Casper 2
Casper 2
Denver1,2
Denver1,2
Grand Junction2
Grand Junction2
Albuquerque2
Albuquerque2
Lubbock2
Lubbock2
Dallas/ Ft Worth1,2
Dallas/ Ft Worth1,2
El Paso2
El Paso2
Odessa2
Odessa2
Austin1,2
Austin1,2
San Antonio1,2
San Antonio1,2
Laredo1
Laredo1
Pharr1,2
Pharr1,2
5
Locations in
Colombia
3
International countries
sales presence
Albany 2
Albany 2
Marlborough 2
Marlborough 2
Middletown 2
Middletown 2
Lodi 2
Lodi 2
Piscataway 2
Piscataway 2
Thorofare 3
Thorofare 3
Paducah3
Paducah3
Chesapeake3
Chesapeake3
Rocky Mount3
Rocky Mount3
Baton Rouge3
Baton Rouge3
New Orleans3
New Orleans3
Mobile 3
Mobile 3
Panama City 2
Panama City 2
Tampa2,3
Tampa2,3
Fort
Fort
Meyers 2
Meyers 2
Houma3
Houma3
Belle Chasse3
Belle Chasse3
New Iberia3
New Iberia3
Shreveport1
Shreveport1
Longview2
Longview2
Houston1,2,3
Houston1,2,3
Jacksonville2
Jacksonville2
Ocala2
Ocala2
Orlando2
Orlando2
Fort Pierce2
Fort Pierce2
West Palm Beach2
West Palm Beach2
Fort Lauderdale2
Fort Lauderdale2
Miami 2
Miami 2
OEM BRANDS
OIL AND GAS
In oil and gas (“O&G”), which represented approximately 44% of 2022 segment revenues, Kirby is a distributor and
service provider for diesel engines, transmissions, and pumps, as well as a supplier of OEM replacement parts.
Through its manufacturing groups, Kirby is an industry leader in the construction of new oilfield equipment, including
pressure pumping equipment, electric power generation equipment, specialized electrical distribution and control
equipment, intervention equipment, and seismic equipment. Kirby’s manufacturing group also specializes in the
remanufacture and service of existing pressure pumping equipment. Kirby’s customers include large and mid-cap
oilfield service companies, operators, and producers in the United States and international markets.
• O&G Brand Logos: Allison Transmission, MTU, DEUTZ, Volvo Penta, Kawasaki
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7
2022 Sustainability Highlights
2022 was a successful year in achieving Kirby’s sustainability objectives. Our teams
worked hard to improve our impact on the environment, the communities in which we
operate and serving our customers. Our continued focus on our employees resulted in
better safety performance, increased training and more diversity across management
and Board leadership. Below are just some of the highlights we achieved.
To see more on our sustainability goals and objectives,
please visit our website at www.kirbycorp.com/sustainability.
THE KIRBY WAY
“The Kirby Way” defines our core values of Safety, People, Excellence,
Community, and Integrity. These core values are the foundation of our
sustainability initiatives and strategies.
Safety
Our guiding principle is No Harm to
people, the environment or equipment.
Safety is at the core of everything we do
and always drives our decision making.
Integrity
Do the right thing by having the
highest ethical standards while
always being transparent and
accountable for our actions.
People
Our people make the difference.
We invest in the tools and resources
to empower our employees and we
promote a workplace that values mutual
respect, knowledge, and teamwork.
Excellence
Creating value for our customers and
shareholders by providing the highest
quality service and products.
Community
Sharing our success with each other
and the communities we live and work
in by protecting the environment and
encouraging volunteerism.
99.95%
SAFE WATCHES
ESG Disclosures Update:
TCFD
Task Force on Climate-related Financial Disclosures
Marine Transportation
Scenario Analysis Adoption
KIRBY INLAND MARINE
14%
Y-o-Y Decrease
In Total Recordable Injury Rates
40%
REDUCTION TARGET OF
CO2e EMISSIONS
per Barrel of Capacity by 2040
472.1 MILLION
barrels of cargo transported
WITH ONLY
12 gallons spilled to water
7,500+
Marine Training Certificates
ISSUED
In the last 5 years
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SUSTAINABILITY SPOTLIGHT ON “E” IN ESG
Kirby has a strong and long-standing commitment to
environmental, social and governance (“ESG”) ideals which serve
as the foundation to its culture and core values. Kirby’s core
values are embedded in its “No Harm” objectives- “No Harm to
People, No Harm to Equipment and No Harm to the Environment.”
Treating our employees well, supporting the communities in
which we operate and respecting the environment are not just
good for business, but they are the right thing to do. Despite
the disruptions caused by COVID-19 variants and abnormal
operating conditions on the Mississippi River, given historic
low water conditions, the Company continued focusing on its
ESG initiatives.
In 2022, the Company continued to advance its ESG objectives. With executive
management and board level oversight, Kirby developed its first short term
carbon emissions reduction goal in 2020. The 2020 emission reduction goal was
met early principally due to the decline in business activity. In 2022, the Company
raised the bar by aiming to have a 40% reduction of carbon emissions per barrel
of capacity by 2040.
At the moment, the Company is developing many approaches to achieve this
new target. Testing out alternative fuels, finding operational efficiencies, and investing in new
technologies are a few initiatives the Company is exploring to accomplish its objectives. Kirby
will be one of the first, if not the first, inland marine transportation companies to own and
operate a diesel-electric hybrid towboat in the United States moving bulk liquid crude oil or
refined petroleum products. This design was created in house with partnership between
Stewart & Stevenson and San Jac Marine. The Company anticipates that the vessel will be ready
for service in 2023. It will operate in the Houston Ship Channel using shoreside recharging stations
at the Company’s marine facilities. In addition, all of Kirby’s marine transportation facilities in Texas
are powered by renewable energy. Thus, when the hybrid electric towboat is recharging, the source
will be green energy and the anticipated emissions savings could be up to 80% when compared to
comparable towboats with conventional engines. Kirby is proud of this project and is encouraged
by the customer feedback and support.
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website at KirbyCorp.com to
view more of our ESG objectives
on our Sustainability pages.
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36%
DIVERSE DIRECTORS
ON THE BOARD
EMPLOYEE
DIVERSITY
67% White 12% African American
16% Hispanic 5% Other
COMPANY PRIDE / ENGAGEMENT
85%
of employees indicated they are
PROUD to work for Kirby
Company Culture Survey Results
ONE OF THE 1ST INLAND
MARINE TRANSPORTATION
COMPANIES
to own and operate a
Diesel-electric hybrid towboat
in the United States
EMISSIONS
DATA DASHBOARD
PROJECT ADOPTION
KIRBY DISASTER RELIEF FUND RAISED:
~$870,000
~300 employees received
assistance during the last 2 years
63111herD1R2.indd 9
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Kirby Corporation | 2022 Annual Report
9
Corporate Leadership
BOARD OF DIRECTORS
CORPORATE OFFICERS
Anne-Marie N. Ainsworth 1,3
David W. Grzebinski
David W. Grzebinski
Retired President and Chief Executive
Officer of the general partner of Oiltanking
Partners, L.P. and of Oiltanking Holding
Americas, Inc.
Director since 2015
Richard J. Alario 2,3
Chairman of the Board of NOW Inc.
Retired Chief Executive Officer of Key Energy
Services, Inc.
Director since 2011
Tanya S. Beder 1,3
Chairman and Chief Executive Officer of
SBCC Group, Inc.
Director since 2019
Barry E. Davis 1,2
Retired Chairman and Chief Executive
Officer of EnLink Midstream GP, LLC
and EnLink Midstream Manager, LLC
Director since 2015
Rocky B. Dewbre
President and Chief Operating Officer
of Mansfield Service Partners
Director since 2023
Susan W. Dio
Retired Chairman and President
of BP America, Inc.
Director since 2023
President and Chief Executive
Officer of Kirby
Director since 2014
Joseph H. Pyne
Chairman of the Board of Kirby
Director since 1988
Richard R. Stewart 1
Retired President and
Chief Executive Officer
of GE Aero Energy
Director since 2008
William M. Waterman 2,3
Retired President and
Chief Executive Officer
of Penn Maritime Inc.
Director since 2012
Shawn D. Williams 3
Executive Chairman of the
Board of Covia Holdings LLC
Director since 2021
1 Audit Committee
2 Compensation Committee
3 ESG and Nominating Committee
President and Chief Executive Officer
Raj Kumar
Executive Vice President
and Chief Financial Officer
Christian G. O’Neil
President of Marine Transportation
Dorman Lynn Strahan
President of Kirby Engine Systems
Ronald A. Dragg
Vice President, Controller and Assistant
Secretary
Amy D. Husted
Vice President, General Counsel and
Secretary
Julie M. Kruger
Vice President, Human Resources
Scott P. Miller
Vice President and Chief
Information Officer
Kurt A. Niemietz
Vice President, Investor Relations
and Treasurer
William Matthew Woodruff
Vice President of Public
and Government Affairs
10
Kirby Corporation | 2022 Annual Report
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark One)
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2022
or
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File no. 1-07615
Kirby Corporation
(Exact name of registrant as specified in its charter)
Nevada
(State or other jurisdiction of incorporation or organization)
55 Waugh Drive, Suite 1000
Houston, Texas
(Address of principal executive offices)
74-1884980
(I.R.S. Employer Identification No.)
77007
(Zip Code)
Registrant’s telephone number, including area code:
713-435-1000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock
Trading Symbol(s)
KEX
Name of each exchange on which registered
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit
and post such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company,
or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging
growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
Non-accelerated filer
☒
☐
Accelerated filer
Smaller reporting company
Emerging growth company
☐
☐
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with
any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its
internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm
that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included
in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
The aggregate market value of common stock held by non-affiliates of the registrant as of June 30, 2022, based on the closing sales price of such
stock on the New York Stock Exchange on June 30, 2022, was $3.6 billion. For purposes of this computation, all executive officers, directors and 10%
beneficial owners of the registrant are deemed to be affiliates. Such determination should not be deemed an admission that such executive officers,
directors and 10% beneficial owners are affiliates.
As of February 17, 2023, 60,015,000 shares of common stock were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Company’s definitive proxy statement in connection with the Annual Meeting of Stockholders to be held April 25, 2023, to be
filed with the Commission pursuant to Regulation 14A, and the related annual report to be provided to the Company's stockholders pursuant to Rule
14a-3(b) are incorporated by reference into Parts II and III of this report.
KIRBY CORPORATION
2022 FORM 10-K
TABLE OF CONTENTS
PART I
Item 1. Business
THE COMPANY
Documents and Information Available on Website
BUSINESS AND PROPERTY
MARINE TRANSPORTATION
Marine Transportation Industry Fundamentals
Inland Tank Barge Industry
Coastal Tank Barge Industry
Competition in the Tank Barge Industry
Products Transported
Demand Drivers in the Tank Barge Industry
Marine Transportation Operations
Contracts and Customers
Properties
Governmental Regulations
Environmental Regulations
DISTRIBUTION AND SERVICES
Commercial and Industrial Operations
Commercial and Industrial Customers
Commercial and Industrial Competitive Conditions
Oil and Gas Operations
Oil and Gas Customers
Oil and Gas Competitive Conditions
Properties
Human Capital
Information about the Company’s Executive Officers
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Mine Safety Disclosures
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Item 6. Reserved
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Item 8. Financial Statements and Supplementary Data
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
PART III
Items 10 Through 14
PART IV
Item 15. Exhibits and Financial Statement Schedules
Item 16. Form 10-K Summary
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Item 1. Business
PART I
THE COMPANY
Kirby Corporation (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. Through its
distribution and services segment (“KDS”), the Company sells after-market service and genuine replacement parts for engines,
transmissions, reduction gears, and power generation equipment used in oil and gas and commercial and industrial applications. The
Company also rents a variety of power generation and industrial equipment, manufactures and remanufactures oilfield service
equipment, including pressure pumping units, and manufactures electric power generation equipment for oilfield service customers.
Unless the context otherwise requires, all references herein to the Company include the Company and its subsidiaries. The
Company’s principal executive office is located at 55 Waugh Drive, Suite 1000, Houston, Texas 77007, and its telephone number is
713-435-1000. The Company’s mailing address is P.O. Box 1745, Houston, Texas 77251-1745. Kirby Corporation is a Nevada
corporation and was incorporated in 1969 although the history of the Company goes back to 1921.
Documents and Information Available on Website
The Internet address of the Company’s website is http://www.kirbycorp.com. The Company makes available free of charge through
its website, all of its filings with the Securities and Exchange Commission (“SEC”), including its Annual Report on Form 10-K,
Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports, as soon as reasonably practicable
after they are electronically filed with or furnished to the SEC. The SEC maintains an internet site at http://www.sec.gov that contains
reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.
The following documents are available on the Company’s website in the Investor Relations section under Corporate Governance:
•
•
•
•
•
Audit Committee Charter
Compensation Committee Charter
ESG and Nominating Committee Charter
Business Ethics Guidelines
Corporate Governance Guidelines
The Company is required to make prompt disclosure of any amendment to or waiver of any provision of its Business Ethics
Guidelines that applies to any director or executive officer or to its chief executive officer, chief financial officer, chief accounting
officer or controller or persons performing similar functions. The Company will make any such disclosure that may be necessary by
posting the disclosure on its website in the Investor Relations section under Corporate Governance.
BUSINESS AND PROPERTY
The Company, through its subsidiaries, conducts operations in two reportable business segments: marine transportation and
distribution and services.
The Company, through its marine transportation segment (“KMT”), is a provider of marine transportation services, operating tank
barges and towing vessels 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. The Company operates offshore dry-bulk barge and tugboat units engaged in the offshore
transportation of dry-bulk cargoes in the United States coastal trade. The segment is a provider of transportation services for its customers
and, in almost all cases, does not assume ownership of the products that it transports. All of the Company’s vessels operate under the
United States flag and are qualified for domestic trade under the Jones Act.
The Company, through KDS, sells after-market service and genuine replacement parts for engines, transmissions, reduction gears,
electric motors, drives, and controls, specialized electrical distribution and control systems, energy storage battery systems, and related
oilfield services equipment, rebuilds component parts or entire diesel engines, transmissions and reduction gears, and related equipment
used in oilfield services, marine, power generation, on-highway and other industrial applications. The Company also rents equipment
including generators, industrial compressors, high capacity lift trucks, and refrigeration trailers for use in a variety of industrial markets,
and manufactures and remanufactures oilfield service equipment, including pressure pumping units, and manufacturers cementing and
pumping equipment as well as coil tubing and well intervention equipment, electric power generation equipment, specialized electrical
distribution and control equipment, and high capacity energy storage/battery systems for oilfield service and railroad customers.
4
The Company has approximately 5,200 employees, the large majority of whom are in the United States.
MARINE TRANSPORTATION
KMT is primarily a provider of transportation services by tank barge for the inland and coastal markets. As of December 31, 2022,
the equipment owned or operated by KMT consisted of 1,037 inland tank barges with 23.1 million barrels of capacity, and an average
of 277 inland towboats during the fourth quarter of 2022, as well as 29 coastal tank barges with 3.0 million barrels of capacity, 27 coastal
tugboats, four offshore dry-bulk cargo barges, four offshore tugboats and one docking tugboat with the following specifications and
capacities:
Class of equipment
Inland tank barges (owned and leased):
Regular double hull:
20,000 barrels and under
Over 20,000 barrels
Specialty double hull
Total inland tank barges
Inland towboats (owned and chartered):
800 to 1300 horsepower
1400 to 1900 horsepower
2000 to 2400 horsepower
2500 to 3200 horsepower
3300 to 4800 horsepower
Greater than 5000 horsepower
Total inland towboats
Coastal tank barges (owned and leased):
30,000 barrels and under
50,000 to 70,000 barrels
80,000 to 90,000 barrels
100,000 to 110,000 barrels
120,000 to 150,000 barrels
Over 150,000 barrels
Total coastal tank barges
Coastal tugboats (owned and chartered):
2000 to 2900 horsepower
3000 to 3900 horsepower
4000 to 4900 horsepower
5000 to 6900 horsepower
Greater than 7000 horsepower
Total coastal tugboats
Offshore dry-bulk cargo barges (owned)
Offshore tugboats and docking tugboat (owned and chartered)
Number in
class
Average age
(in years)
Barrel
capacities
356
629
52
1,037
31
29
163
40
9
5
277
2
3
9
6
3
6
29
1
2
7
11
6
27
4
5
4,154,000
18,064,000
885,000
23,103,000
37,000
111,000
759,000
630,000
416,000
1,046,000
2,999,000
Deadweight
Tonnage
67,000
15.4
13.8
37.0
15.5
33.9
24.0
11.9
11.4
23.1
23.1
16.3
28.1
17.3
19.1
16.5
21.0
7.1
16.7
47.1
20.0
12.9
6.7
12.5
11.8
24.1
31.5
The 277 inland towboats, 27 coastal tugboats, four offshore tugboats and one docking tugboat provide the power source and the
1,037 inland tank barges, 29 coastal tank barges and four offshore dry-bulk cargo barges provide the freight capacity for KMT. When
the power source and freight capacity are combined, the unit is called a tow. The Company’s inland tows generally consist of one
towboat and from one to up to 25 tank barges, depending upon the horsepower of the towboat, the waterway infrastructure capacity and
conditions, and customer requirements. The Company’s coastal and offshore tows primarily consist of one tugboat and one tank barge
or dry-bulk cargo barge.
5
Marine Transportation Industry Fundamentals
The United States inland waterway system, composed of a network of interconnected rivers and canals that serve the nation as water
highways, is one of the world’s most efficient transportation systems. The nation’s inland waterways are vital to the United States
distribution system, with over 1.1 billion short tons of cargo moved annually on United States shallow draft waterways. The inland
waterway system extends approximately 26,000 miles, 12,000 miles of which are generally considered significant for domestic
commerce, through 38 states, with 635 shallow draft ports. These navigable inland waterways link the United States heartland to the
world.
The United States coastal waterway system consists of ports along the Atlantic, Gulf and Pacific coasts, as well as ports in Alaska,
Hawaii and on the Great Lakes. Like the inland waterways, the coastal trade is vital to the United States distribution system, particularly
the regional distribution of refined petroleum products from refineries and storage facilities to a variety of destinations, including other
refineries, distribution terminals, power plants and ships. In addition to distribution directly from refineries and storage facilities, coastal
tank barges are used frequently to distribute products from pipelines. Many coastal markets receive refined petroleum products
principally from coastal tank barges. Smaller volumes of petrochemicals are distributed from Gulf Coast plants to end users whereas
black oil, including crude oil and natural gas condensate, is distributed regionally from refineries and terminals along the United States
coast to refineries, power plants and distribution terminals.
Based on cost, safety, and level of emissions, barge transportation is often the most efficient and safest means of surface
transportation of bulk commodities when compared to railroads and trucks. The cargo capacity of a 27,500 barrel inland tank barge is
the equivalent of 46 railroad tank cars or 144 tractor-trailer tank trucks. A typical Company lower Mississippi River linehaul tow of 15
barges has the carrying capacity of approximately 216 railroad tank cars plus six locomotives, or approximately 1,050 tractor-trailer
tank trucks. The Company’s inland tank barge fleet capacity of 23.1 million barrels equates to approximately 38,600 railroad tank cars
or approximately 121,000 tractor-trailer tank trucks. Furthermore, barging is much more energy efficient. One ton of bulk product can
be carried 675 miles by inland barge on one gallon of fuel, compared to 472 miles by railcar or 151 miles by truck. From an emissions
perspective, transport by rail and tractor-trailer tank trucks emit approximately 40% and 800%, respectively, more CO2 per ton mile of
cargo transported than by inland tank barge. In the coastal trade, the carrying capacity of a 100,000 barrel tank barge is the equivalent
of approximately 165 railroad tank cars or approximately 525 tractor-trailer tank trucks. The Company’s coastal tank barge fleet capacity
of 3.0 million barrels equates to approximately 5,000 railroad tank cars or approximately 15,700 tractor-trailer tank trucks. Marine
transportation generally involves less urban exposure than railroad or truck transportation and operates on a system with few crossing
junctures and often in areas relatively remote from population centers. These factors generally help to reduce the number of waterway
incidents.
Inland Tank Barge Industry
The Company operates within the United States inland tank barge industry, a diverse and independent mixture of approximately 30
large integrated transportation companies and small operators, as well as captive fleets owned by refining and petrochemical companies.
The inland tank barge industry provides marine transportation of bulk liquid cargoes for customers and, in the case of captives, for their
own account, throughout the Mississippi River and its tributaries and on the Gulf Intracoastal Waterway. The most significant markets
in this industry include the transportation of petrochemicals, black oil, refined petroleum products, and agricultural chemicals. The
Company operates in each of these markets. The use of marine transportation by the petroleum and petrochemical industry is a major
reason for the location of United States refineries and petrochemical facilities on navigable inland waterways. Texas and Louisiana
currently account for approximately 80% of the United States production of petrochemicals. Much of the United States farm belt is
likewise situated with access to the inland waterway system, relying on marine transportation of farm products, including agricultural
chemicals. The Company’s principal distribution system encompasses the Gulf Intracoastal Waterway from Brownsville, Texas, to Port
St. Joe, Florida, the Mississippi River System and the Houston Ship Channel. The Mississippi River System includes the Arkansas,
Illinois, Missouri, Ohio, Red, Tennessee, Yazoo, Ouachita and Black Warrior Rivers and the Tennessee-Tombigbee Waterway.
The number of tank barges that operate on the inland waterways of the United States increased from 2,750 in 2006 to approximately
4,000 by the end of 2019. The increase from 2,750 tank barges in 2006 to approximately 4,000 by the end of 2019 primarily resulted
from increased barge construction and deferred retirements due to strong demand and resulting capacity shortages. The number of
industry tank barges has remained relatively constant from 2019 through the end of 2022. The Company’s 1,037 inland tank barges
represent approximately 26% of the industry’s approximately 4,028 inland tank barges.
For 2020, the Company estimated that industry-wide approximately 150 new tank barges were placed in service and 150 tank barges
were retired. For 2021, the Company estimated that industry-wide 70 new tank barges were placed in service and between 40 to 50 tank
barges were retired. For 2022, the Company estimates that industry-wide 22 new tank barges were placed in service and retirements,
net of reactivations, were flat. During 2020, the Company’s tank barge utilization decreased from the low to mid-90% range in the 2020
first quarter to the high 60% range during the 2020 fourth quarter as a result of a reduction in demand due to the COVID-19 pandemic.
During 2021, the Company’s inland barge utilization improved to the mid-to high 80% range by the fourth quarter as the economy began
6
to recover from the COVID-19 pandemic. During 2022, the Company’s inland barge utilization improved to the low 90% range
reflecting increased activity levels as a result of higher refinery and petrochemical plant utilization. The Company estimates that
approximately 5 to 10 new tank barges have currently been ordered for delivery in 2023. Generally, the risk of an oversupply of tank
barges may be mitigated by increased petrochemical, black oil and refined petroleum products volumes from increased production from
current facilities, plant expansions, the opening of new facilities, and the fact that the inland tank barge industry has approximately 600
tank barges that are 30 years old or older and approximately 400 of those are 40 years old or older, which could lead to retirement of
these older tank barges. The average age of the nation’s inland tank barge fleet is approximately 17 years.
The Company’s inland division of KMT also owns a shifting operation and fleeting facility for dry cargo barges and tank barges on
the Houston Ship Channel, in Freeport and Port Arthur, Texas, and Lake Charles, Louisiana, and a shipyard for building inland towboats
and providing routine maintenance on marine vessels. The Company also owns a two-thirds interest in Osprey Line, L.L.C. (“Osprey”),
a transporter of project cargoes and cargo containers by barge on the United States inland waterway system.
Coastal Tank Barge Industry
The Company also operates in the United States coastal tank barge industry, operating tank barges in the 195,000 barrels or less
category. This market is composed of approximately 20 large integrated transportation companies and small operators. The 195,000
barrels or less category coastal tank barge industry primarily provides regional marine transportation distribution of bulk liquid cargoes
along the United States’ Atlantic, Gulf and Pacific coasts, in Alaska and Hawaii, and to a lesser extent, on the Great Lakes. Products
transported are primarily refined petroleum products and black oil from refineries and storage facilities to a variety of destinations,
including other refineries, distribution terminals, power plants and ships, the regional movement of crude oil and natural gas condensate
to Gulf Coast, Northeast and West Coast refineries, and the movement of petrochemicals primarily from Gulf Coast petrochemical
facilities to end users.
The number of coastal tank barges that operate in the 195,000 barrels or less category is approximately 270, of which the Company
operates 29 or approximately 11%. The average age of the nation’s coastal tank barge fleet is approximately 16 years. The Company is
aware of no specialized coastal articulated tank barge and tugboat units (“ATB”) that were delivered in 2022 with no further coastal
tank barges currently under construction. The coastal tank barge fleet has approximately 21 tank barges that are over 25 years old. The
number of older tank barges, coupled with low industry-wide barge utilization levels and ballast water treatment regulations, could lead
to further retirements of these older tank barges in the next few years.
Competition in the Tank Barge Industry
The tank barge industry is very competitive. Competition in this business is based on price and reliability, with many of the
industry’s customers emphasizing enhanced vetting requirements, an increased emphasis on safety, the environment, and high-quality
service consistent with the customer’s operational standards. Customers also require that their supplier of tank barge services have the
ability to handle a variety of requirements, including distribution capabilities throughout the inland waterway system and coastal
markets, high levels of flexibility, and an emphasis on safety, environmental and financial responsibility, as well as appropriate insurance
coverage.
In the inland markets, the Company’s direct competitors are primarily noncaptive inland tank barge operators. “Captive” fleets are
owned by refining and petrochemical companies which occasionally compete in the inland tank barge market, but primarily transport
cargoes for their own account. The Company is the largest inland tank barge carrier, both in terms of number of barges and total fleet
barrel capacity. The Company’s inland tank barge fleet has grown from 71 tank barges in 1988 to 1,037 tank barges as of December 31,
2022, or approximately 26% of the estimated total number of domestic inland tank barges.
In the coastal markets, the Company’s direct competitors are the operators of United States tank barges in the 195,000 barrels or
less category. Coastal tank barges in the 195,000 barrels or less category have the ability to enter the majority of coastal ports. Ocean-
going tank barges and United States product tankers in the 300,000 barrels plus category, excluding the fleet of large tankers dedicated
to Alaska crude oil transportation, occasionally compete in the 195,000 barrels or less market to move large volumes of refined petroleum
products within the Gulf of Mexico with occasional movements from the Gulf Coast to the East Coast, along the West Coast and from
Texas and Louisiana to Florida. However, access to United States ports of approximately 45 such product tankers is limited by terminal
size and draft restrictions.
While the Company competes primarily with other tank barge companies, it also competes with companies who operate refined
product and petrochemical pipelines, railroad tank cars, and tractor-trailer tank trucks. As noted above, the Company believes that both
inland and coastal marine transportation of bulk liquid products enjoy a substantial cost advantage over railroad and truck transportation.
The Company believes that refined product and crude oil pipelines, although often a less expensive form of transportation than inland
and coastal tank barges, are not as adaptable to diverse products and are generally limited to fixed point-to-point distribution of
commodities in high volumes over extended periods of time.
7
Products Transported
The Company transports petrochemicals, black oil, refined petroleum products, and agricultural chemicals by tank barge throughout
the Mississippi River System, on the Gulf Intracoastal Waterway, and coastwise along all three United States coasts. During 2022, the
Company’s inland marine transportation operation moved over 55 million tons of liquid cargo on the United States inland waterway
system.
Petrochemicals. Bulk liquid petrochemicals transported include such products as benzene, styrene, methanol, acrylonitrile, xylene,
naphtha and caustic soda. These products are consumed in the production of paper, fiber and plastics. Pressurized products, including
butadiene, isobutane, propylene, butane and propane, all requiring pressurized conditions to remain in stable liquid form, are transported
in pressure barges. The transportation of petrochemical products represented 49% of the segment’s 2022 revenues. Customers shipping
these products are petrochemical and refining companies.
Black Oil. Black oil transported includes such products as residual fuel oil, No. 6 fuel oil, coker feedstock, vacuum gas oil, asphalt,
carbon black feedstock, crude oil, natural gas condensate and ship bunkers (engine fuel). Such products represented 28% of the
segment’s 2022 revenues. Black oil customers are refining companies, marketers, and end users that require the transportation of black
oil between refineries and storage terminals, to other refineries and to power plants. Ship bunker customers are oil companies and oil
traders in the bunkering business.
Refined Petroleum Products. Refined petroleum products transported include the various blends of finished gasoline, gasoline
blendstocks, jet fuel, No. 2 oil, heating oil and diesel fuel, and represented 20% of the segment’s 2022 revenues. The Company also
classifies ethanol in the refined petroleum products category. Customers are oil and refining companies, marketers and ethanol
producers.
Agricultural Chemicals. Agricultural chemicals transported represented 3% of the segment’s 2022 revenues. Agricultural chemicals
include anhydrous ammonia and nitrogen-based liquid fertilizer, as well as industrial ammonia. Agricultural chemical customers consist
mainly of domestic and foreign producers of such products.
Demand Drivers in the Tank Barge Industry
Demand for tank barge transportation services is driven by the production volumes of the bulk liquid commodities. Marine
transportation demand for the segment’s four primary commodity groups, petrochemicals, black oil, refined petroleum products and
agricultural chemicals, is based on differing circumstances. While the demand drivers of each commodity are different, the Company
has the flexibility, in certain cases, of reallocating inland equipment and coastal equipment among the petrochemical, refined petroleum
products and black oil markets as needed.
Petrochemical products are used in both consumer non-durable and durable goods. Bulk petrochemical volumes have historically
tracked the general domestic economy and correlate to the United States Gross Domestic Product. During 2020, Gulf Coast
petrochemical plants saw reduced production levels as a result of lower demand due to the COVID-19 pandemic thereby decreasing
marine transportation volumes of basic petrochemicals to both domestic consumers and terminals for export destinations. In addition,
during the 2020 third quarter, the petrochemical complex along the Gulf Coast was impacted by hurricanes and tropical storms, further
reducing barge volumes and closing critical waterways for extended periods of time. As a result, barge utilization decreased from the
low to mid-90% range during the 2020 first quarter to the high 60% range in the 2020 fourth quarter and then recovered to the mid-to
high 80% range in the 2021 fourth quarter as the economy improved. During 2022, utilization improved to the low 90% range by the
end of the 2022 fourth quarter reflecting increased activity levels as a result of higher refinery and petrochemical plant utilization.
Coastal tank barge utilization for the transportation of petrochemicals increased from the mid-to-high 80% range in 2019 to the low 90%
range during 2022 due to a higher percentage of term contracts.
The demand for black oil, including ship bunkers, varies by type of product transported. Demand for transportation of residual oil,
a heavy by-product of refining operations, varies with refinery utilization and usage of feedstocks. During 2020 through 2022, the
Company continued to transport crude oil and natural gas condensate produced from the Eagle Ford and Permian Basin shale formations
in Texas, both along the Gulf Intracoastal Waterway with inland vessels and in the Gulf of Mexico with coastal equipment, and continued
to transport Utica crude oil and natural gas condensate downriver from the Mid-Atlantic to the Gulf Coast, albeit, at reduced levels as
some of the product was transported by newly constructed pipelines. During 2020, the Company experienced a decrease in volumes
being transported along these routes as a result of reduced demand due to the COVID-19 pandemic and oil price volatility during the
year. During 2021, volumes recovered from the lows seen in 2020 as economic activity improved. During 2020, the COVID-19
pandemic resulted in reduced demand for crude oil and natural gas condensate movements and resulted in a decrease in black oil tank
barge utilization from the low to mid-90% range during the 2020 first half to the mid-60% to low 70% range during the 2020 second
half. During 2021, as economic activity improved, black oil tank barge utilization averaged in the mid 70% range during the first nine
months of 2021 and recovered to the high 80% range in the 2021 fourth quarter. During 2022, black oil tank barge utilization further
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improved to the high 90% range in the 2022 fourth quarter. Coastal black oil tank barge utilization averaged in the high 90% range in
2019 due to the retirement of coastal tank barges throughout the industry and declined slightly to the mid 90% range in 2020 through
2022 despite the reduced demand as a result of the COVID-19 pandemic as utilization was supported by a high percentage of term
contracts. Inland and coastal asphalt shipments are generally seasonal, with higher volumes shipped during April through November,
months when weather allows for efficient road construction.
Refined petroleum product volumes are driven by United States gasoline and diesel fuel consumption, principally vehicle usage,
air travel, and weather conditions. Volumes can also be affected by gasoline inventory imbalances within the United States. Generally,
gasoline and No. 2 oil are exported from the Gulf Coast where refining capacity exceeds demand. The Midwest is a net importer of such
products. Volumes were also driven by diesel fuel transported to terminals along the Gulf Coast for export to South America. Ethanol,
produced in the Midwest, is moved from the Midwest to the Gulf Coast. In the coastal trade, tank barges are frequently used regionally
to transport refined petroleum products from a coastal refinery or terminals served by pipelines to the end markets. Many coastal areas
rely upon access to refined petroleum products by using marine transportation in the distribution chain. In 2020, coastal refined
petroleum products tank barge utilization averaged in the low 60% range due to the COVID-19 pandemic and the resulting reduction in
demand and recovered into the low 70% range in the 2021 fourth quarter due to increased business activity and the retirement of
underutilized equipment in the 2021 third quarter. During 2022, coastal refined petroleum products tank barge utilization averaged in
the low 90% range as activity levels continued to improve.
Demand for marine transportation of domestic and imported agricultural fertilizer is seasonal and directly related to domestic
nitrogen-based liquid fertilizer consumption, driven by the production of corn, cotton and wheat. During periods of high natural gas
prices, the manufacturing of nitrogen-based liquid fertilizer in the United States is curtailed. During these periods, imported products,
which normally involve longer barge trips, replace the domestic products to meet Midwest and South Texas demands. Such products
are delivered to the numerous small terminals and distributors throughout the United States farm belt.
Marine Transportation Operations
KMT operated a fleet of 1,037 inland tank barges and an average of 277 inland towboats during the 2022 fourth quarter, as well as
29 coastal tank barges and 27 coastal tugboats. The segment also operated four offshore dry-bulk cargo barges, four offshore tugboats
and one docking tugboat transporting dry-bulk commodities in United States coastal trade.
Inland Operations. The segment’s inland operations are conducted through a wholly owned subsidiary, Kirby Inland Marine, LP
(“Kirby Inland Marine”). Kirby Inland Marine’s operations consist of the Canal, Linehaul and River fleets, as well as barge fleeting
services.
The Canal fleet transports petrochemical feedstocks, processed chemicals, pressurized products, black oil, and refined petroleum
products along the Gulf Intracoastal Waterway, the Mississippi River below Baton Rouge, Louisiana, and the Houston Ship Channel.
Petrochemical feedstocks and certain pressurized products are transported from one plant to another plant for further processing.
Processed chemicals and certain pressurized products are moved to waterfront terminals and chemical plants. Black oil is transported to
waterfront terminals and products such as No. 6 fuel oil are transported directly to the end users. Refined petroleum products are
transported to waterfront terminals along the Gulf Intracoastal Waterway for distribution.
The Linehaul fleet transports petrochemical feedstocks, chemicals, agricultural chemicals and lube oils along the Gulf Intracoastal
Waterway, Mississippi River and the Illinois and Ohio Rivers. Loaded tank barges are staged in the Baton Rouge area from Gulf Coast
refineries and petrochemical plants, and are transported from Baton Rouge, Louisiana to waterfront terminals and plants on the
Mississippi, Illinois and Ohio Rivers, and along the Gulf Intracoastal Waterway, on regularly scheduled linehaul tows. Tank barges are
dropped off and picked up going up and down river.
The River fleet transports petrochemical feedstocks, chemicals, refined petroleum products, agricultural chemicals and black oil
along the Mississippi River System above Baton Rouge. The River fleet operates unit tows, where a towboat and generally a dedicated
group of barges operate on consecutive voyages between loading and discharge points. Petrochemical feedstocks and processed
chemicals are transported to waterfront petrochemical and chemical plants, while black oil, refined petroleum products and agricultural
chemicals are transported to waterfront terminals.
The inland transportation of petrochemical feedstocks, chemicals and pressurized products is generally consistent throughout the
year. Transportation of refined petroleum products, certain black oil and agricultural chemicals is generally more seasonal. Movements
of black oil, such as asphalt, generally increase in the spring through fall months. Movements of refined petroleum products, such as
gasoline blends, generally increase during the summer driving season, while heating oil movements generally increase during the winter
months. Movements of agricultural chemicals generally increase during the spring and fall planting seasons.
The marine transportation inland operation moves and handles a broad range of sophisticated cargoes. To meet the specific
requirements of the cargoes transported, the inland tank barges may be equipped with self-contained heating systems, high-capacity
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pumps, pressurized tanks, refrigeration units, stainless steel tanks, aluminum tanks or specialty coated tanks. Of the 1,037 inland tank
barges currently operated, 800 are petrochemical and refined petroleum products barges, 152 are black oil barges, 75 are pressure barges
and 10 are refrigerated anhydrous ammonia barges. Of the 1,037 inland tank barges, 999 are owned by the Company and 38 are leased.
The fleet of 277 inland towboats for the 2022 fourth quarter ranges from 800 to 6,100 horsepower. Of the 277 inland towboats, 216
are owned by the Company and 61 are chartered. Towboats in the 800 to 2,100 horsepower classes provide power for barges used by
the Canal and Linehaul fleets on the Gulf Intracoastal Waterway and the Houston Ship Channel. Towboats in the 1,400 to 3,200
horsepower classes provide power for both the River and Linehaul fleets on the Gulf Intracoastal Waterway and the Mississippi River
System. Towboats above 3,600 horsepower are typically used on the Mississippi River System to move River fleet unit tows and provide
Linehaul fleet towing. Based on the capabilities of the individual towboats used in the Mississippi River System, the tows range in size
from 10,000 to 30,000 tons.
Marine transportation services for inland movements are conducted under term contracts, which have contract terms of 12 months
or longer, or spot contracts, which have contract terms of less than 12 months, with customers with whom the Company has traditionally
had long-standing relationships. Typically, term contracts range from one to three years, some of which have renewal options. During
2020 and 2021 approximately 65% of inland marine transportation revenues were under term contracts and 35% were spot contract
revenues. During 2022, approximately 60% of inland marine transportation revenues were under term contracts and 40% were spot
contract revenues.
All of the Company’s inland tank barges used in the transportation of bulk liquid products are of double hull construction and are
capable of controlling vapor emissions during loading and discharging operations in compliance with occupational safety and health
regulations and air quality regulations.
The Company has the ability to offer its customers optimized distribution capabilities throughout the Mississippi River System and
the Gulf Intracoastal Waterway. Such capabilities offer economies of scale from matching tank barges, towboats, products, and
destinations efficiently to meet its customers’ requirements.
Through the Company’s proprietary vessel management computer system, the Company’s barge and towboat fleet is dispatched
from a centralized dispatch group. The towboats are equipped with cellular and satellite positioning and communication systems that
automatically transmit the location of the towboat to the Company’s customer service department. Electronic orders are communicated
to vessel personnel with reports of towing activities fed back electronically to the customer service department. The electronic interface
between the customer service department and the vessel enables matching of customer needs to barge capabilities, thereby promoting
efficient utilization of the tank barge and towboat fleet. The Company’s customers are able to access information concerning the
movement of their cargoes, including barge locations, through the Company’s proprietary electronic customer service portal.
Kirby Inland Marine operates the largest commercial tank barge fleeting service (barge storage facilities) in numerous ports,
including Houston, Corpus Christi, Freeport and Orange, Texas, Baton Rouge, Lake Charles and New Orleans, Louisiana, Mobile,
Alabama, and Greenville, Mississippi. Included in the fleeting service is a shifting operation and fleeting service for dry cargo barges
and tank barges on the Houston Ship Channel, in Freeport and Port Arthur, Texas, and Lake Charles, Louisiana. Kirby Inland Marine
provides shifting and fleeting service for its own barges, as well as for customers and third party carriers, transferring barges within the
areas noted.
Kirby Inland Marine also provides shore-based barge tankermen to the Company and third parties. Services to the Company and
third parties cover the Gulf Coast, mid-Mississippi Valley, and the Ohio River Valley.
San Jac Marine, LLC (“San Jac”), a subsidiary of Kirby Inland Marine, owns and operates a shipyard in Channelview, Texas which
builds marine vessels for both inland and coastal applications, and provide maintenance and repair services. Kirby Inland Marine also
builds inland towboats and performs routine maintenance and repairs at the shipyard.
The Company owns a two-thirds interest in Osprey, which transports project cargoes and cargo containers by barge on the United
States inland waterway system.
Coastal Operations. The segment’s coastal operations are conducted through wholly owned subsidiaries, Kirby Offshore Marine,
LLC (“Kirby Offshore Marine”) and Kirby Ocean Transport Company (“Kirby Ocean Transport”).
Kirby Offshore Marine provides marine transportation of refined petroleum products, petrochemicals and black oil in coastal regions
of the United States. The coastal operations are conducted along the eastern seaboard, western seaboard and the Gulf Coast. The
Company also operates equipment, to a lesser extent, in the Eastern and Western Canadian Provinces. The tank barges operating are in
the 10,000 to 195,000 barrel capacity range and coastal tugboats in the 2,400 to 10,000 horsepower range. Kirby Offshore Marine’s
vessels call on various coastal ports from Maine to Texas, servicing refineries, storage terminals and power plants. The Company also
services refineries and storage terminals from Southern California to Washington State.
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The coastal transportation of refined petroleum products and black oil is impacted by seasonality and is partially dependent on the
area of operations. Operations along the West Coast of the United States have been subject to more seasonal variations in demand than
the operations along the East Coast and Gulf Coast regions of the United States. Movements of refined petroleum products such as
various blends of gasoline are strongest during the summer driving season while heating oil generally increases during the winter months.
The coastal fleet consists of 29 tank barges with 3.0 million barrels of capacity, primarily transporting refined petroleum products,
black oil and petrochemicals. The Company owns 28 of the coastal tank barges and leases one barge. Of the 29 coastal tank barges, 21
are refined petroleum products and petrochemical barges and 8 are black oil barges. The Company operates 27 coastal tugboats ranging
from 2,400 to 11,000 horsepower, of which 24 are owned by the Company and three are chartered.
Coastal marine transportation services are typically conducted under long-term contracts, primarily one year or longer, some of
which have renewal options, for customers with which the Company has traditionally had long-standing relationships. During 2022,
approximately 75% of the coastal marine transportation revenues were under term contracts and 25% were spot contract revenues.
During 2021, approximately 80% of the coastal marine transportation revenues were under term contracts and 20% were spot contract
revenues. During 2020, approximately 85% of the coastal marine transportation revenues were under term contracts and 15% were spot
contract revenues.
Kirby Offshore Marine also operates a fleet of two offshore dry-bulk barge and tugboat units involved in the transportation of sugar
and other dry products between Florida and East Coast ports. These vessels primarily operate under long-term contracts of affreightment.
Kirby Ocean Transport owns and operates a fleet of two offshore dry-bulk barges, two offshore tugboats and one docking tugboat.
Kirby Ocean Transport operates primarily under term contracts of affreightment.
Kirby Ocean Transport is also engaged in the transportation of coal, fertilizer, sugar and other bulk cargoes on a short-term basis
between domestic ports and occasionally the transportation of grain from domestic ports to ports primarily in the Caribbean Basin.
Contracts and Customers
Marine transportation inland and coastal services are conducted under term or spot contracts for customers with whom the Company
has traditionally had long-standing relationships. Typically, term contracts range from one to three years, some of which have renewal
options. The majority of the marine transportation contracts with its customers by revenue are for terms of one year. Most have been
customers of KMT for many years and management anticipates continued relationships; however, there is no assurance that any
individual contract will be renewed.
A term contract is an agreement with a specific customer to transport cargo from a designated origin to a designated destination at
a set rate (affreightment) or at a daily rate (time charter). The rate may or may not include escalation provisions to recover changes in
specific costs such as fuel. Time charters, which insulate the Company from revenue fluctuations caused by weather and navigational
delays and temporary market declines, represented approximately 58% of the marine transportation’s inland revenues under term
contracts during 2022 and 2021, and 66% of the revenue under term contracts during 2020. A spot contract is an agreement with a
customer to move cargo from a specific origin to a designated destination for a rate negotiated at the time the cargo movement takes
place. Spot contract rates are at the current “market” rate and are subject to market volatility. The Company typically maintains a higher
mix of term contracts to spot contracts to provide the Company with a reasonably predictable revenue stream while maintaining spot
market exposure to take advantage of new business opportunities and customers’ peak demands. During 2021 and 2020, approximately
65% of inland marine transportation revenues were under term contracts and 35% were spot contract revenues. During 2022,
approximately 60% of inland marine transportation revenues were under term contracts and 40% were spot contract revenues. Coastal
time charters represented approximately 85% of the marine transportation’s coastal revenues under term contracts in 2021 and
approximately 90% of coastal revenues under term contracts in 2022 and 2020.
No single customer of KMT accounted for 10% or more of the Company’s revenues in 2022, 2021, or 2020.
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Properties
The principal offices of Kirby Inland Marine, Kirby Offshore Marine, Kirby Ocean Transport and Osprey are located in Houston,
Texas, in two facilities under leases that expire in December 2027 and December 2035. Kirby Inland Marine’s operating locations are
on the Mississippi River at Baton Rouge and New Orleans, Louisiana, and Greenville, Mississippi, three locations in Houston, Texas,
on or near the Houston Ship Channel, one in Port Arthur, Texas, one in Freeport, Texas, one in Miami, Florida, one in Gibson, Louisiana,
one in Lake Charles, Louisiana, several properties in Westwego, Louisiana, one in Corpus Christi, Texas, and one in Orange, Texas.
The New Orleans, Gibson, Westwego, Houston, and Orange operating facilities are owned by the Company, and the Baton Rouge,
Corpus Christi, Lake Charles, Port Arthur, Freeport, Greenville, and Miami facilities are leased. Kirby Offshore Marine’s operating
facilities are located in Staten Island, New York, and Seattle, Washington. All of Kirby Offshore Marine’s operating facilities are leased,
including piers and wharf facilities and office and warehouse space. San Jac’s operating location is near the Houston Ship Channel and
is owned by the Company.
Governmental Regulations
General. The Company’s marine transportation operations are subject to regulation by the United States Coast Guard (“USCG”),
federal laws, state laws, the laws of other countries when operating in their waters, and certain international conventions. The agencies
establish safety requirements and standards and are authorized to investigate incidents.
Most of the Company’s tank barges are inspected by the USCG and carry certificates of inspection. The Company’s inland and
coastal towing vessels and coastal dry-bulk barges are also subject to USCG regulations. The USCG has enacted safety regulations
governing the inspection, standards, and safety management systems of towing vessels. The regulations also create many new
requirements for design, construction, equipment, and operation of towing vessels. The USCG regulations supersede the jurisdiction of
the United States Occupational Safety and Health Administration (“OSHA”) and any state regulations on vessel design, construction,
alteration, repair, maintenance, operation, equipping, personnel qualifications and manning. The regulations requiring towing vessels to
obtain a certificate of inspection became effective for existing towing vessels on July 20, 2018. Other portions of the regulations were
phased in following the July 20, 2018 effective date through July 19, 2022, by which time the Company was in full compliance.
All of the Company’s coastal tugboats and coastal tank and dry-bulk barges are built to American Bureau of Shipping (“ABS”)
classification standards and/or statutory requirements issued by the USCG, and are inspected periodically by ABS and/or the USCG to
maintain the vessels in class and compliant with all U.S. statutory requirements, as applicable to the vessel. The crews employed by the
Company aboard inland and coastal vessels, including captains, pilots, engineers, tankermen and ordinary seamen, are licensed by the
USCG.
The Company is required by various governmental agencies to obtain licenses, certificates and permits for its vessels depending
upon such factors as the cargo transported, the waters in which the vessels operate and other factors. The Company believes that its
vessels have obtained and can maintain all required licenses, certificates and permits required by such governmental agencies for the
foreseeable future. The Company’s failure to maintain these authorizations could adversely impact its operations.
The Company believes that additional security and environmental related regulations relating to contingency planning requirements
could be imposed on the marine industry. Generally, the Company endorses the anticipated additional regulations and believes it is
currently operating to standards at least equal to anticipated additional regulations.
Jones Act. The Jones Act is a federal cabotage law that restricts domestic marine transportation in the United States to vessels built
and registered in the United States and manned, owned and operated by United States citizens. For a corporation to qualify as a United
States citizen for the purpose of domestic trade, it has to be 75% owned and controlled by United States citizens within the meaning of
the Jones Act. The Company monitors its citizenship status and meets the requirements of the Jones Act for its owned and operated
vessels.
Compliance with United States ownership requirements of the Jones Act is important to the operations of the Company, and a
violation of the Jones Act could have a material negative effect on the Company and its vessels’ ability to operate. The Company
monitors the citizenship of its employees and stockholders and complies with United States build requirements.
User Taxes. Federal legislation requires that inland marine transportation companies pay a user tax based on propulsion fuel used
by vessels engaged in trade along the inland waterways that are maintained by the United States Army Corps of Engineers. Such user
taxes are designed to help defray the costs associated with replacing major components of the inland waterway system, such as locks
and dams. A significant portion of the inland waterways on which the Company’s vessels operate is maintained by the Army Corps of
Engineers.
The Company presently pays a federal fuel user tax of 29.1 cents per gallon consisting of a 0.1 cent per gallon leaking underground
storage tank tax and 29 cents per gallon waterways user tax.
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Security Requirements. The Maritime Transportation Security Act of 2002 requires, among other things, submission to and approval
by the USCG of vessel and waterfront facility security plans (“VSP” and “FSP”, respectively). The Company maintains approved VSP
and FSP and is operating in compliance with the plans for all of its vessels and facilities that are subject to the requirements.
Environmental Regulations
The Company’s operations are affected by various regulations and legislation enacted for protection of the environment by the
United States government, as well as many coastal and inland waterway states and international jurisdictions to the extent that the
Company’s vessels transit in international waters. Government regulations require the Company to obtain permits, licenses and
certificates for the operation of its vessels. Failure to maintain necessary permits or approvals could require the Company to incur costs
or temporarily suspend operation of one or more of its vessels. Violations of these laws may result in civil and criminal penalties, fines,
or other sanctions.
Water Pollution Regulations. The Federal Water Pollution Control Act of 1972, as amended by the Clean Water Act of 1977 (“Clean
Water Act”), the Comprehensive Environmental Response, Compensation and Liability Act of 1981 (“CERCLA”) and the Oil Pollution
Act of 1990 (“OPA”) impose strict prohibitions against the discharge of oil and its derivatives or hazardous substances into the navigable
waters of the United States. These acts impose civil and criminal penalties for any prohibited discharges and impose substantial strict
liability for cleanup of these discharges and any associated damages. Certain states also have water pollution laws that prohibit
discharges into waters that traverse the state or adjoin the state, and impose civil and criminal penalties and liabilities similar in nature
to those imposed under federal laws.
The OPA and various state laws of similar intent substantially increased over historic levels the statutory liability of owners and
operators of vessels for oil spills, both in terms of limit of liability and scope of damages.
The Company manages its exposure to losses from potential discharges of pollutants through the use of well-maintained and
equipped vessels, through safety, training and environmental programs, and through the Company’s insurance program. There can be
no assurance, however, that any new regulations or requirements or any discharge of pollutants by the Company will not have an adverse
effect on the Company.
Clean Water Act. The Clean Water Act establishes the National Pollutant Discharge Elimination System (“NPDES”) permitting
program which regulates discharges into navigable waters of the United States. The United States Environmental Protection Agency
(“EPA”) regulates the discharge of ballast water and other substances in United States waters under the Clean Water Act. Pursuant to
the NPDES program, effective February 6, 2009, the EPA issued regulations requiring vessels 79 feet in length or longer to comply with
a Vessel General Permit authorizing ballast water discharges and other discharges incidental to the operation of the vessels. The EPA
regulations also imposed technology and water quality based effluent limits for certain types of discharges and established specific
inspection, monitoring, recordkeeping and reporting requirements for vessels to ensure effluent limitations are met. The Vessel
Incidental Discharge Act (“VIDA”), signed into law on December 4, 2018, established a new framework for the regulation of vessel
incidental discharges under the Clean Water Act. VIDA requires the EPA to develop national performance standards for those discharges
within two years of enactment and requires the USCG to develop implementation, compliance, and enforcement regulations within two
years of the EPA’s promulgation of standards. Under VIDA, all provisions of the Vessel General Permit which became effective
December 19, 2013, remain in force and effect until the USCG regulations are finalized. The Company maintains Vessel General Permits
and has established recordkeeping and reporting procedures in compliance with the EPA’s interim requirements.
The USCG adopted regulations on ballast water management treatment systems establishing a standard for the allowable
concentration of living organisms in certain vessel ballast water discharged in waters of the United States under the National Invasive
Species Act. The regulations include requirements for the installation of engineering equipment to treat ballast water by establishing an
approval process for ballast water management systems (“BWMS”). The BWMS implementation was suspended until December 2016
at which time the USCG approved manufacturers’ systems that met the regulatory discharge standard equivalent to the International
Maritime Organization’s D-2 standard. The phase-in schedule for those existing vessels requiring a system to install a BWMS is
dependent on vessel build date, ballast water capacity, and drydock schedule. Compliance with the ballast water treatment regulations
requires the installation of equipment on some of the Company’s vessels to treat ballast water before it is discharged. The installation
of BWMS equipment will require significant capital expenditures in accordance with the compliance schedule established by the USCG
in 33 CFR 151 to complete the installation of the approved system on those existing vessels that require a system in order to comply
with the BWMS regulations.
Financial Responsibility Requirement. Commencing with the Federal Water Pollution Control Act of 1972, as amended, vessels
over 300 gross tons operating in the Exclusive Economic Zone of the United States have been required to maintain evidence of financial
ability to satisfy statutory liabilities for oil and hazardous substance water pollution. This evidence is in the form of a Certificate of
Financial Responsibility (“COFR”) issued by the USCG. The majority of the Company’s tank barges are subject to this COFR
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requirement, and the Company has fully complied with this requirement since its inception. The Company does not foresee any current
or future difficulty in maintaining the COFR certificates under current rules.
Clean Air Regulations. The Federal Clean Air Act of 1979 (“CAA”) requires states to draft State Implementation Plans (“SIPs”)
under the National Ambient Air Quality Standards designed to reduce atmospheric pollution for six common air pollutants to levels
mandated by this act. The EPA designates areas in the United States as meeting or not meeting the standards. Several SIPs implement
the regulation of barge loading and discharging emissions at waterfront facilities as a measure to meet the CAA standard. The
implementation of these regulations requires a reduction of hydrocarbon emissions released into the atmosphere during the loading of
most petroleum products and the degassing and cleaning of barges for maintenance or change of cargo. These regulations require vessel
operators that operate in states with areas of nonattainment of air quality standards under the CAA to install vapor control equipment on
their barges. The Company expects that future emission regulations will be developed and will apply this same technology to many
chemicals that are handled by barge. Most of the Company’s barges engaged in the transportation of petrochemicals, chemicals and
refined petroleum products are already equipped with vapor control systems. Although a risk exists that new regulations could require
significant capital expenditures by the Company and otherwise increase the Company’s costs, the Company believes that, based upon
the regulations that have been proposed thus far, no material capital expenditures beyond those currently contemplated by the Company
and no material increase in costs are likely to be required.
Contingency Plan Requirement. The OPA and several state statutes of similar intent require the majority of the vessels and terminals
operated by the Company to maintain approved oil spill contingency plans as a condition of operation. The Company has approved
plans that comply with these requirements. The OPA also requires development of regulations for hazardous substance spill contingency
plans. The USCG has not yet promulgated these regulations; however, the Company anticipates that they will not be more difficult to
comply with than the oil spill plans.
Occupational Health Regulations. The Company’s inspected vessel operations are primarily regulated by the USCG for
occupational health standards. Uninspected vessel operations and the Company’s shore-based personnel are subject to OSHA
regulations. The Company believes that it is in compliance with the provisions of the regulations that have been adopted and does not
believe that the adoption of any further regulations will impose additional material requirements on the Company. There can be no
assurance, however, that claims will not be made against the Company for work related illness or injury, or that the further adoption of
health regulations will not adversely affect the Company.
Insurance. The Company’s marine transportation operations are subject to the hazards associated with operating vessels carrying
large volumes of bulk cargo in a marine environment. These hazards include the risk of loss of or damage to the Company’s vessels,
damage to third parties as a result of collision, fire or explosion, adverse weather conditions, loss or contamination of cargo, personal
injury of employees and third parties, and pollution and other environmental damages. The Company maintains hull, liability, general
liability, workers compensation and pollution liability insurance coverage against these hazards. For shipyard operations, the Company
has ship repairer’s liability and builder’s risk insurance. The Company uses a Texas domiciled wholly owned insurance subsidiary,
Adaptive KRM, LLC, to provide cost effective risk transfer options to insure certain exposures of the Company and certain of its
subsidiaries in KMT and KDS. The Company also maintains insurance to address liabilities arising in connection with KDS.
Environmental Protection. The Company utilizes several programs to further its commitment to environmental responsibility in its
operations. Environmental compliance audits, performed with internal and external resources, are performed regularly on the Company's
operations. Additionally, the Company employs third party expertise to conduct safety performance, safety management system, and
environmental audits on its barge cleaning and shipyard vendors. The Company participates in the American Waterways Operators
Responsible Carrier program, which drives continuous improvement towards reducing the barge industry’s impact on the environment.
It is also a member of the Blue Sky Maritime Coalition and other organizations focused on reducing greenhouse gas emissions.
Safety. The Company manages its exposure to the hazards associated with its business through safety, training and preventive
maintenance efforts. The Company emphasizes its safety commitment through programs oriented toward extensive monitoring of safety
performance for the purpose of identifying trends and initiating corrective action, and for continuously improving employee safety
behavior and performance.
Training. The Company believes that among the major elements of a successful and productive work force are effective training
programs. The Company also believes that training in the proper performance of a job enhances both the safety and quality of the service
provided. New technology, regulatory compliance, personnel safety, quality and environmental concerns create additional demands for
training. Refer to Human Capital below for further discussion regarding training programs the Company has developed and instituted.
Quality. Kirby Inland Marine has made a substantial commitment to the implementation, maintenance, and improvement of quality
assurance systems. Kirby Offshore Marine is certified under ABS ISM standards. These Quality Assurance Systems and certification
have enabled both shore and vessel personnel to effectively manage the changes which occur in the working environment, as well as
enhancing the Company’s safety and environmental performance.
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DISTRIBUTION AND SERVICES
The Company, through its wholly owned subsidiary Kirby Distribution & Services, Inc. and its wholly owned subsidiaries Kirby
Engine Systems LLC, (“Kirby Engine Systems”), Stewart & Stevenson LLC (“S&S”), United Holdings LLC (“United”), and Diesel
Dash LLC and through Kirby Engine Systems’ wholly owned subsidiaries Marine Systems, Inc. (“Marine Systems”) and Engine
Systems, Inc. (“Engine Systems”), serves two markets, commercial and industrial, and oil and gas. The Company sells genuine
replacement parts, provides service mechanics to overhaul and repair engines, transmissions, reduction gears and related oilfield service
equipment, rebuilds component parts or entire diesel engines, transmissions and reduction gears, electrical motors, drives, and controls,
specialized electrical distribution and control systems, energy storage battery systems, and related equipment used in oilfield services,
marine, power generation, on-highway, and other commercial and industrial applications. Customers are served through a network of
65 branch locations across 17 states and Colombia, South America, as well as a proprietary on-line marketplace, www.dieseldash.com.
The Company manufactures and remanufactures oilfield service equipment, including pressure pumping units, for North American as
well as for international oilfield service companies, and oil and gas operator and producer markets. The Company also sells engines,
transmissions, power generation systems, and rents equipment including generators, industrial compressors, high capacity lift trucks,
and refrigeration trailers for use in a variety of commercial and industrial applications, including for oilfield service and railroad
customers.
For the commercial and industrial market, the Company sells Original Equipment Manufacturers (“OEM”) replacement parts and
new diesel engines, provides service mechanics and maintains facilities to overhaul and repair diesel engines and ancillary products for
marine and on-highway transportation companies, and industrial companies. The Company provides engineering and field services,
OEM replacement parts and safety-related products to power generation operators and to the nuclear industry, manufactures engine
generator and pump packages for power generation operators and municipalities, offers power generation systems customized for
specific commercial and industrial applications, and rents equipment including generators, industrial compressors, high capacity lift
trucks, and refrigeration trailers for use in a variety of industrial markets.
For the oil and gas market, the Company sells OEM replacement parts, sells and services diesel engines, pumps and transmissions,
manufactures and remanufactures pressure pumping units, manufactures cementing and pumping equipment, as well as coil tubing and
well intervention equipment, electric power generation equipment, specialized electrical distribution and control equipment, and high
capacity energy storage/battery systems. Customers include oilfield service companies, and oil and gas operators and producers.
No single customer of KDS accounted for 10% or more of the Company’s revenues in 2022, 2021, or 2020. KDS also provides
service to KMT, which accounted for approximately 3% of KDS’s 2022 revenues, 2% of the segment’s 2021 revenue, and 3% of the
segment's 2020 revenues. Such revenues are eliminated in consolidation and not included in the table below.
The following table sets forth the revenues for KDS (dollars in thousands):
Service and parts
Manufacturing
$
2022
962,187
205,600
$ 1,167,787
%
82% $
18
100% $
Commercial and Industrial Operations
%
Year Ended December 31,
2021
813,875
109,867
923,742
88% $
12
100% $
2020
711,051
56,092
767,143
%
93%
7
100%
The Company serves the marine, on-highway, power generation, and other commercial and industrial markets primarily in the
United States. The commercial and industrial operations represented approximately 56% of the segment’s 2022 revenues.
The Company is engaged in the overhaul and repair of medium-speed and high-speed marine diesel engines and reduction gears,
line boring, block welding services and related parts sales for customers in the marine industry. Medium-speed diesel engines have an
engine speed of 400 to 1,000 revolutions per minute (“RPM”) with a horsepower range of 800 to 32,000. High-speed diesel engines
have an engine speed of over 1,000 RPM and a horsepower range of 50 to 8,375. The Company services medium-speed and high-speed
diesel engines utilized in the inland and offshore barge industries. It also services marine equipment and offshore drilling equipment
used in the offshore petroleum exploration and oilfield service industry, marine equipment used in the offshore commercial fishing
industry, harbor docking vessels, commercial ferries, vessels owned by the United States government and large pleasure crafts.
The Company has marine repair operations throughout the United States providing in-house and in-field repair capabilities and
related parts sales. The Company’s emphasis is on service to its customers, and it sends its crews from any of its locations to service
customers’ equipment anywhere in the world. The medium-speed operations are located in Houma, Louisiana, Houston, Texas,
Chesapeake, Virginia, Paducah, Kentucky, Seattle, Washington, and Tampa, Florida, serving as the authorized distributor for EMD
Power Products (“EMD”) throughout the United States. The Company is also a distributor and representative for certain Alfa Laval
15
products in the Midwest and on the East Coast, Gulf Coast, and West Coast. All of the marine locations are authorized distributors for
Falk Corporation reduction gears and Oil States Industries, Inc. clutches. The Chesapeake, Virginia operation concentrates on East Coast
inland and offshore dry-bulk, tank barge and harbor docking operators, and the United States government. The Houma, Louisiana
operation concentrates on the inland and offshore barge and oilfield services industries. The Tampa, Florida operation concentrates on
Gulf of Mexico offshore dry-bulk, tank barge and harbor docking operators. The Paducah, Kentucky operation concentrates on the
inland river towboat and barge operators and the Great Lakes carriers. The Seattle, Washington operation concentrates on the offshore
commercial fishing industry, the offshore barge industry, the United States government, and other customers in Alaska, Hawaii and the
Pacific Rim.
The high-speed marine operations are located in Houston, Texas, Houma, Baton Rouge, Belle Chasse and New Iberia, Louisiana,
Paducah, Kentucky, Mobile, Alabama, Lodi and Thorofare, New Jersey, and several locations in Florida. The Company serves as a
factory-authorized marine dealer for Caterpillar diesel engines in multiple states. The Company also operates factory-authorized full
service marine distributorships/dealerships for Cummins, Detroit Diesel, John Deere, MTU, and Volvo Penta, and Kohler diesel engines,
as well as Falk, Lufkin and Twin Disc marine gears. High-speed diesel engines provide the main propulsion for a significant amount of
the United States flagged commercial vessels and large pleasure craft vessels, other marine applications, including engines for power
generators and barge pumps.
The Company distributes, sells parts for and services diesel engines and transmissions for on-highway use and provides in-house
and in-field service capabilities. The Company is the largest on-highway distributor for Allison Transmission and Detroit Diesel/Daimler
Truck North America, providing parts, service and warranty on engines, transmissions and related equipment in Arkansas, Colorado,
Florida, Louisiana, New Mexico, New York, Oklahoma, Texas, Wyoming, and the country of Colombia. The Company also provides
similar service for off-highway use and additionally has distributor rights for Deutz and Isuzu diesel engines. Off-highway applications
are primarily surface and underground mining equipment, including loaders, crawlers, crushers, power screens, pumps, cranes,
generators, and haul trucks, as well as equipment rental.
The Company is engaged in the overhaul and repair of diesel engines and generators, and related parts sales for power generation
customers. The Company is also engaged in the sale and distribution of diesel engine parts, engine modifications, generator
modifications, controls, governors and diesel generator packages to the nuclear industry. The Company services users of diesel engines
that provide emergency standby, peak and base load power generation. The Company also sells power generation systems that are
customized for specific applications and the rental of power generation systems.
The Company has power generation operations throughout the United States providing in-house and in-field repair capabilities and
products for power generation applications. Through its Rocky Mount, North Carolina operation, the Company serves as the exclusive
worldwide distributor of EMD products to the nuclear industry, the worldwide distributor for Woodward, Inc. products to the nuclear
industry, the worldwide distributor of Cooper Machinery Services (“Cooper”) products to the nuclear industry, and owns the assets and
technology necessary to support the Nordberg medium-speed diesel engines used in nuclear applications. In addition, the Rocky Mount
operation is an exclusive distributor for Norlake Manufacturing Company transformer products to the nuclear industry, an exclusive
distributor of Hannon Company generator and motor products to the nuclear industry, and a non-exclusive distributor of analog Weschler
Instruments metering products and an exclusive distributor of digital Weschler metering products to the nuclear industry. The Company
is also a non-exclusive distributor of Ingersoll Rand air start equipment to the nuclear industry worldwide.
The Company sells pre-packaged and fabricated power generation systems for emergency, standby and auxiliary power for
commercial and industrial applications. The Company also offers rental generator systems from 50 to 2,000 kilowatts of power to a
broad range of customers. The Company also is engaged in the rental of industrial compressors, high capacity lift trucks, and refrigeration
trailers. In addition, the Company provides accessory products such as cables, hoses, fuel cells, air dryers, air compressor boosters and
ground heaters. Lastly, the Company is a dealer for Thermo King refrigeration systems for trucks, railroad cars and other land
transportation markets in Texas and Colorado.
Commercial and Industrial Customers
The results of the distribution and services industry are largely tied to the industries it serves and, therefore, are influenced by the
cycles of such industries. The Company’s major marine customers include inland and offshore barge operators, oilfield service
companies, offshore fishing companies, other marine transportation entities, the United States government and large pleasure crafts.
Since the marine business is linked to the relative health of the inland towboat, offshore and coastal tugboat, harbor docking tugboat,
offshore oilfield service, oil and gas drilling, offshore commercial fishing industries, Great Lakes ore vessels, dredging vessels, coastal
ferries, United States government vessels and the pleasure craft industry, there is no assurance that its present gross revenues can be
maintained in the future.
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The Company’s on-highway customers are long-haul and short-haul trucking companies, commercial and industrial companies with
truck fleets, buses owned by municipalities and private companies. Off-highway companies include surface and underground mining
operations with a large variety of equipment.
The Company’s power generation customers are domestic utilities and the worldwide nuclear power industry, municipalities,
universities, medical facilities, data centers, petrochemical plants, manufacturing facilities, shopping malls, office complexes, residential
and other industrial users.
The Company’s rental customers are primarily commercial and industrial companies, and residential customers with short-term
rental requirements.
Commercial and Industrial Competitive Conditions
The Company’s primary marine competitors are independent distribution and services companies and other factory-authorized
distributors, authorized service centers and authorized marine dealers. Certain operators of diesel powered marine equipment also elect
to maintain in-house service capabilities. While price is a major determinant in the competitive process, reputation, consistent quality,
expeditious service, experienced personnel, access to parts inventories and market presence are also significant factors. A substantial
portion of the Company’s business is obtained by competitive bids. However, the Company has entered into service agreements with
certain operators of diesel powered marine equipment, providing such operators with one source of support and service for all of their
requirements at pre-negotiated prices.
The Company is one of a limited number of authorized resellers of EMD, Caterpillar, Cummins, Detroit Diesel, John Deere, MTU
and Volvo Penta parts. The Company is also the marine distributor for Falk, Lufkin and Twin Disc reduction gears throughout the United
States.
The Company’s primary power generation competitors are other independent diesel service companies and manufacturers. While
price is a major determinant in the competitive process, reputation, consistent quality, expeditious service, experienced personnel, access
to parts inventories and market presence are also significant factors. A substantial portion of the Company’s business is obtained by
competitive bids.
As noted above, the Company is the exclusive worldwide distributor of EMD, Cooper, Woodward, Nordberg, Norlake and Hannon
parts for the nuclear industry, and non-exclusive distributor of Weschler parts and Ingersoll Rand air start equipment for the nuclear
industry. Specific regulations relating to equipment used in nuclear power generation require extensive testing and certification of
replacement parts. OEM parts need to be properly tested and certified for nuclear applications.
Oil and Gas Operations
The Company is engaged in the distribution and service of high-speed diesel engines, pumps and transmissions, and the manufacture
and remanufacture of oilfield service equipment. The oil and gas operations represented approximately 44% of the segment’s 2022
revenues. The Company offers custom fabricated oilfield service equipment that is fully tested and field ready. The Company
manufactures and remanufactures oilfield service equipment, including pressure pumping units, nitrogen pumping units, cementers,
hydration equipment, mud pumps and blenders, coil tubing, well intervention equipment, electric power generation equipment,
specialized electrical distribution and control equipment, and high capacity energy storage/battery systems. The Company sells OEM
replacement parts, and sells and services diesel engines, electric drives, motors and controls, pumps and transmissions, and offers in-
house and in-field service capabilities. The Company is the largest off-highway distributor for Allison Transmission and a major
distributor for MTU in North America.
The Company’s manufacturing and remanufacturing facilities and service facilities are based in Houston, Texas and Oklahoma
City, Oklahoma, both key oil and gas producing regions.
Oil and Gas Customers
The Company’s major oil and gas customers include large and mid-cap oilfield service providers, oil and gas operators and
producers. The Company has long standing relationships with most of its customers. Since the oil and gas business is linked to the
oilfield services industry, and oil and gas operators and producers, there is no assurance that its present gross revenues can be maintained
in the future. The results of the Company’s oil and gas distribution and services operations are largely tied to the industries it serves and,
therefore, are influenced by the cycles of such industries.
17
Oil and Gas Competitive Conditions
The Company’s primary competitors are other oilfield equipment manufacturers and remanufacturers, and equipment service
companies. While price is a major determinant in the competitive process, equipment availability, reputation, consistent quality,
expeditious service, experienced personnel, access to parts inventories and market presence are also significant factors. A substantial
portion of the Company’s business is obtained by competitive bids.
Properties
The principal office of KDS is located in Houston, Texas. There are 65 active facilities in KDS, of which 27 facilities are owned
and 38 facilities are leased.
The oil and gas operation’s principal manufacturing facilities are located in Houston and Austin, Texas and Oklahoma City,
Oklahoma, with one location leased and the other two facilities owned by the Company. The oil and gas focused operations have 19
parts and service facilities, with one in Arkansas, two in Colorado, three in Louisiana, one in New Mexico, two in Oklahoma, nine in
Texas and one in Wyoming, with many of these facilities shared with the commercial and industrial operations.
The commercial and industrial businesses operate 46 parts and service facilities, with one facility in Alabama, one in Connecticut,
one in Colorado, 11 in Florida, two in Kentucky, two in Louisiana, one in Massachusetts, three in New Jersey, one in New York, one in
North Carolina, one in Oklahoma, 14 in Texas, one in Virginia, one in Washington and five facilities located in Colombia, South
America.
Human Capital
Employment. The Company has approximately 5,200 employees, the large majority of whom are in the United States. The large
majority of non-vessel employees work full-time. Vessel employees work varying schedules according to their assignments. The
Company has approximately 110 general corporate employees. The Company supports its employees by providing competitive pay and
benefits, training, and a respectful and inclusive culture.
KMT has approximately 3,115 employees, of which approximately 2,400 are vessel crew members. None of the segment’s inland
operations are subject to collective bargaining agreements. The segment’s coastal operations include approximately 432 vessel
employees, some of which are subject to collective bargaining agreements in certain geographic areas. Approximately 206 Kirby
Offshore Marine vessel crew members are subject to a collective bargaining agreement with the Richmond Terrace Bargaining Unit in
effect through August 31, 2025. In addition, approximately 107 vessel crew members of Penn Maritime Inc., a wholly owned subsidiary
of Kirby Offshore Marine, are represented by the Seafarers International Union under a collective bargaining agreement in effect through
May 1, 2025.
KDS has approximately 1,975 employees. None of the United Holdings and Kirby Engine Systems operations are subject to
collective bargaining agreements. Approximately 54 S&S employees in New Jersey are subject to a collective bargaining agreement
with the Local 15C, International Union of Operating Engineers, AFL-CIO that expires in October 2023. The remaining S&S employees
are not subject to collective bargaining agreements.
Training and Development. The Company strives to provide its employees with a rewarding work environment, including the
opportunity for success and an opportunity for personal and professional development. The development of its people is a key factor in
the Company’s employee retention and satisfaction. Its technical and skill training has always been a differentiator and has facilitated
the recruitment of new trainees.
For the marine business, the Company’s training facility includes state-of-the-art equipment and instruction aids, including a full
bridge wheelhouse simulator, a working towboat, two tank barges, and a tank barge simulator for tankermen training. During 2022,
approximately 1,673 certificates were issued for the completion of courses at the training facility, of which approximately 1,068 were
USCG approved classes and the balance were employee development and Company required classes, including leadership,
communication, and navigation courses. The Company uses the Seaman’s Church Institute as an additional training resource for its
wheelhouse crewmembers. The marine segment provides a clear career progression for vessel personnel from entry level deckhand to
captain and regularly reviews promotions from one level to another.
In distribution and services, the Company facilitates training courses via online courses and instructor-led classes that cover a range
of skill related topics such as generator knowledge, introduction to hydraulic systems, introduction to electrical diagrams, introduction
to transformers, and Electrical Generation Systems Association journeyman study, as well as numerous courses led by its OEM partners.
KDS has multiple career progressions within its numerous job groups.
18
The Company's leadership and managerial training includes an online training curriculum that is available to both supervisory
employees and those employees that aspire to move into such roles in the future. It includes a series of classes focused on management
essentials which provide in-depth education in specific subjects such as leadership, strategic thinking, coaching and people development,
decision making, problem solving, and communication.
In addition, the Company facilitates many training courses that cover a range of topics that enhance specific skill sets, increase
productivity, and educate employees about safety and team morale across both business segments. Training classes include
environmental, health, and safety classes, compliance, leadership, and general business skills related courses. Environmental, health,
and safety topics include defensive and distracted driving, first aid basic and medical emergencies, global safety principles, oil
management, and hazardous substances training. Compliance topics include anti-corruption training, cybersecurity awareness, business
ethics, compliance, and promoting diversity. Skill related topics include business writing, risk-based thinking, initiating and planning a
project, and transitioning into a project management role.
Diversity, Equity, and Inclusion. The Company believes that its culture of inclusion and diversity contributes to a strong workforce
that meets its customer’s expectations and business objectives. The Company works diligently to attract the best talent from a diverse
range of sources in order to meet the current and future demands of its business. The Company has established relationships with trade
schools, world-class universities, professional associations and industry groups to proactively attract talent.
The Company has also implemented several measures and development programs that include training to help increase awareness
and drive inclusive behaviors, identifying areas for improvement and providing oversight for hiring, promotions, and mentoring. In
2021, the Company instituted an organization-wide training initiative that expanded the understanding and awareness of diversity and
inclusion. Over 5,000 employees successfully completed this training. In 2022, the Company tied diversity objectives as a factor in its
safety, operations and ESG components of its short-term performance goals under the Annual Incentive Plan.
Succession Planning. Succession planning is a key responsibility of the CEO and the Chief Human Resources Officer and is a
critical annual process for the Company’s senior management and its Board. Senior management reviews their succession plans regularly
throughout the year and on an annual basis provides the Board an in-depth review of the top three levels of management. This process
looks at qualifications, time in role, readiness to advance, diversity, and required development. The Board engages with many of these
individuals through presentations on a variety of projects and subjects. The development initiatives undertaken with those in the
succession plan may comprise of 360-degree feedback, high level post graduate work, targeted development work around strengthening
a needed competency, or additional industry exposure.
Culture, Engagement, and Social Responsibility. The Company recognizes the importance of employee engagement and has
implemented a regular process of surveying its employees to obtain their feedback on both what is working well and areas of
improvement. One of the main take-aways from the 2021 survey was 90% of employees surveyed agree that Kirby is committed to
Employee Safety, this was a 6% increase over the last survey. Approximately 85% of the Company’s employees believe its culture is
responsible for high retention and low turnover. In addition, the survey reflected that employees are engaged and have pride in Kirby
and have provided positive feedback on their relationships with their managers.
The Company provides its employees with a rewarding work environment, which includes access to resources for personal and
professional development. The Company often participates in community organizations, service projects and matches employee
charitable contributions. Through the Kirby Disaster Relief Fund, the Company supports employees in need following natural disasters
and other qualified hardships. The Company provides employees with tuition reimbursement and college scholarships for the children
of non-executive employees. In addition to standard health and welfare benefits, the Company offers wellness incentives and initiatives
that encourages employees to receive an annual wellness checkup.
COVID-19 Pandemic Response. The Company responded to the COVID-19 pandemic in a manner consistent with its Core Values
of Safety and People. The Company’s response involved real time decision making needed to continue operations with the least amount
of disruption for its customers. The Company implemented measures which included the use of protective equipment, health checks,
temperature checks, travel restrictions, protocols for employees whose duties could not be accomplished through remote working
arrangements, and implementing technology required for those that could work remotely.
19
Information about the Company’s Executive Officers
The executive officers of the Company are as follows:
Name
David W. Grzebinski
Raj Kumar
Christian G. O’Neil
Dorman L. Strahan
Kim B. Clarke
Ronald A. Dragg
Amy D. Husted
Scott P. Miller
Kurt A. Niemietz
William M. Woodruff
Age
61
50
50
66
67
59
54
44
50
62
Positions and Offices
President and Chief Executive Officer
Executive Vice President and Chief Financial Officer
President – Kirby Inland Marine, Kirby Offshore Marine, San Jac Marine, LLC, and
Kirby Offshore Wind, LLC
President – Kirby Engine Systems
Vice President and Chief Human Resources Officer
Vice President, Controller and Assistant Secretary
Vice President, General Counsel and Secretary
Vice President and Chief Information Officer
Vice President – Investor Relations and Treasurer
Vice President – Public and Governmental Affairs
No family relationship exists among the executive officers or among the executive officers and the directors. Officers are elected
to hold office until the annual meeting of directors, which immediately follows the annual meeting of stockholders, or until their
respective successors are elected and have qualified.
David W. Grzebinski is a Chartered Financial Analyst and holds a Master of Business Administration degree from Tulane University
and a degree in chemical engineering from the University of South Florida. He has served as President and Chief Executive Officer
since April 2014. He served as President and Chief Operating Officer from January 2014 to April 2014 and as Chief Financial Officer
from March 2010 to April 2014. He served as Chairman of Kirby Offshore Marine from February 2012 to April 2013 and served as
Executive Vice President from March 2010 to January 2014. Prior to joining the Company in February 2010, he served in various
operational and financial positions since 1988 with FMC Technologies Inc. (“FMC”), including Controller, Energy Services, Treasurer,
and Director of Global SAP and Industry Relations. Prior to joining FMC, he was employed by Dow Chemical Company in
manufacturing, engineering and financial roles.
Raj Kumar is a member of CPA Australia and holds a Master of Business Administration degree from Columbia University in New
York City and a Bachelor of Business in Accounting from Deakin University in Australia. He has served as Executive Vice President
and Chief Financial Officer since November 2021. Prior to joining the Company, Mr. Kumar served as Vice President and Chief
Financial Officer of Dril-Quip, Inc. from 2020 to 2021, Vice President and Chief Accounting Officer from 2019 to 2020, and Vice
President and Treasurer from 2017 to 2019. Prior to joining Dril-Quip, he served as Vice President Finance at Frank’s International from
2015 to 2017. Prior to that, he served as a segment controller at LyondellBasell and in Division CFO, treasury, strategic planning and
corporate development positions at FMC and Dell Technologies.
Christian G. O’Neil holds a Master of Business Administration degree from Rice University, a doctorate of jurisprudence from
Tulane University and a bachelor of arts degree from Southern Methodist University. He has served as President of Kirby Inland Marine
and Kirby Offshore Marine since January 2018, as President of San Jac Marine, LLC since October 2018, and President of Kirby
Offshore Wind, LLC since March 2021. He served as Executive Vice President and Chief Operating Officer of Kirby Inland Marine
and Kirby Offshore Marine from May 2016 to January 2018. He also served as Executive Vice President – Commercial Operations of
Kirby Inland Marine and Kirby Offshore Marine from April 2014 to May 2016, Vice President – Human Resources of the Company
from May 2012 to April 2014, Vice President – Sales for Kirby Inland Marine from 2009 to 2012 and President of Osprey from 2006
through 2008. He has also served in various sales and business development roles at the Company and Osprey. Prior to joining the
Company, he served as Sales Manager and Fleet Manager at Hollywood Marine, Inc. (“Hollywood Marine”) after joining Hollywood
Marine in 1997 which was subsequently merged into the predecessor of Kirby Inland Marine.
Dorman L. Strahan attended Nicholls State University and has served the Company as President of Kirby Engine Systems since
May 1999, President of Marine Systems since 1986 and President of Engine Systems since 1996. After joining the Company in 1982 in
connection with the acquisition of Marine Systems, he served as Vice President of Marine Systems until 1985.
Kim B. Clarke holds a Bachelor of Science degree from the University of Houston. She has served as Vice President and Chief
Human Resources Officer since October 2017. She served as Vice President – Human Resources from December 2016 to October 2017.
Prior to joining the Company, she served in senior leadership roles in human resources, safety, information technology and business
development as Senior Vice President and Chief Administration Officer for Key Energy Services, Inc. from 2004 to March 2016.
Ronald A. Dragg is a Certified Public Accountant and holds a Master of Science in Accountancy degree from the University of
Houston and a degree in finance from Texas A&M University. He has served the Company as Vice President, Controller and Assistant
20
Secretary since April 2014. He also served as Vice President and Controller from January 2007 to April 2014, as Controller from
November 2002 to January 2007, Controller – Financial Reporting from January 1999 to October 2002, and Assistant Controller –
Financial Reporting from October 1996 to December 1998. Prior to joining the Company, he was employed by Baker Hughes
Incorporated.
Amy D. Husted holds a doctorate of jurisprudence from South Texas College of Law and a Bachelor of Science degree in political
science from the University of Houston. She has served the Company as Vice President, General Counsel and Secretary since April
2019. She also served as Vice President and General Counsel from January 2017 to April 2019, Vice President – Legal from January
2008 to January 2017 and Corporate Counsel from November 1999 through December 2007. Prior to joining the Company, she served
as Corporate Counsel of Hollywood Marine from 1996 to 1999 after joining Hollywood Marine in 1994.
Scott P. Miller holds a Bachelor of Science in Management of Information Systems from Louisiana State University and a Master
of Business Administration degree from the University of Houston. He has served as Vice President and Chief Information Officer since
April 2019. Prior to joining the Company, he was employed by Key Energy Services, Inc. from May 2006 to March 2019, serving in
various senior leadership roles including Managing Director of Strategy, Vice President and Chief Information Officer from March 2013
to December 2015 and as Senior Vice President, Operations Services and Chief Administrative Officer from January 2016 to March
2019.
Kurt A. Niemietz holds a Master of Business Administration degree from St. Mary’s University and a degree in accounting from
the University of Texas at San Antonio. He has served the Company as Vice President - Investor Relations and Treasurer since July
2022. He also served as Vice President and Treasurer from April 2019 to July 2022. Prior to joining the Company, he was employed by
Pacific Drilling from 2013 to 2019, serving in various roles of increasing responsibility, including Treasurer from 2017 to 2019, and in
various financial positions with FMC, from 2006 to 2013. Prior to joining FMC, he was employed by Austin, Calvert & Flavin as a buy-
side equity analyst.
William M. Woodruff holds a doctorate of jurisprudence from the University of Houston Law Center and a bachelor of science
degree from Texas A&M University. He has served as Vice President – Public and Governmental Affairs since October 2017. He served
as Director – Public & Government Affairs from 2014 to October 2017 after joining the Company as Director – Government Affairs in
2004. Prior to joining the Company, he was a maritime lawyer in private practice and Vice President and General Counsel of Coastal
Towing, Inc.
Item 1A. Risk Factors
In addition to the other information set forth elsewhere in this annual report, the following risk factors should be considered carefully
when evaluating the Company, as its businesses, results of operations, or financial condition could be materially adversely affected by
any of these risks. The following discussion does not attempt to cover factors, such as trends in the United States and global economies
or the level of interest rates, among others, that are likely to affect most businesses.
Marine Transportation Segment Risk Factors
The Inland Waterway infrastructure is aging and may result in increased costs and disruptions to KMT. Maintenance of the United
States inland waterway system is vital to the Company’s operations. The system is composed of over 12,000 miles of commercially
navigable waterway, supported by over 240 locks and dams designed to provide flood control, maintain pool levels of water in certain
areas of the country and facilitate navigation on the inland river system. The United States inland waterway infrastructure is aging, with
more than half of the locks over 50 years old. As a result, due to the age of the locks, scheduled and unscheduled maintenance outages
may be more frequent in nature, resulting in delays and additional operating expenses. Currently, 35% of the cost of new construction
and major rehabilitation of locks and dams is paid by marine transportation companies through a 29 cent per gallon diesel fuel tax and
the remaining 65% of waterway infrastructure and improvement is paid from general federal tax revenues. Failure of the federal
government to adequately fund infrastructure maintenance and improvements in the future would have a negative impact on the
Company’s ability to deliver products for its customers on a timely basis. In addition, any additional user taxes that may be imposed in
the future to fund infrastructure improvements would increase the Company’s operating expenses.
The Company could be adversely impacted by a marine accident or spill event. A marine accident or spill event could close a
portion of the inland waterway system or a coastal area of the United States for an extended period of time. Although statistically marine
transportation is the safest means of surface transportation of bulk commodities, accidents do occur, both involving Company equipment
and equipment owned by other marine operators.
The Company transports a wide variety of petrochemicals, black oil, refined petroleum products and agricultural chemicals
throughout the Mississippi River System, on the Gulf Intracoastal Waterway, and coastwise along all three United States coasts. The
Company manages its exposure to losses from potential unauthorized discharges of pollutants through the use of well-maintained and
equipped tank barges and towing vessels, through safety, training and environmental programs, and through the Company’s insurance
21
program, but a discharge of pollutants by the Company could have an adverse effect on the Company. Risks may arise for which the
Company may not be insured. Claims covered by insurance are subject to deductibles, the aggregate amount of which could be material,
and certain policies impose limitations on coverage. Existing insurance coverage may not be able to be renewed at commercially
reasonable rates or coverage capacity for certain risks may not be available or adequate to cover future claims. If a loss occurs that is
partially or completely uninsured, or the carrier is unable or unwilling to cover the claim, the Company could be exposed to liability.
KMT is dependent on its ability to adequately crew its towing vessels. The Company’s vessels are crewed with employees who are
licensed or certified by the USCG, including its captains, pilots, engineers and tankermen. The success of KMT is dependent on the
Company’s ability to adequately crew its vessels. As a result, the Company invests significant resources in training its crews and
providing crew members an opportunity to advance from a deckhand to the captain of a Company towboat or tugboat. Inland crew
members generally work rotations such as 20 days on, 10 days off rotation, or a 30 days on, 15 days off rotation. For the coastal fleet,
crew members are generally required to work rotations such as 14 days on, 14 days off rotation, a 21 days on, 21 days off rotation or a
30 days on, 30 days off rotation, dependent upon the location. The nature of crewmember work schedules and assignments away from
home for extended periods require special recruiting and at times it can be difficult to find candidates. With ongoing retirements and
competitive labor pressure in KMT, the Company continues to monitor and implement market competitive pay practices. The Company
also utilizes an internal development program to train Maritime Academy graduates for vessel leadership positions.
KMT has approximately 3,115 employees, of which approximately 2,400 are vessel crew members. None of the segment’s inland
operations are subject to collective bargaining agreements. The segment’s coastal operations include approximately 432 vessel
employees, of whom approximately 313 are subject to collective bargaining agreements in certain geographic areas. Any work stoppages
or labor disputes could adversely affect coastal operations in those areas. While the COVID-19 pandemic has caused some crewing
issues, to date, the Company has been able to manage its operations with limited vessel delays and disruption of services, including
some loss of revenue and incremental costs in the Company’s inland and coastal businesses. The Company continues to update its
protocols relating to management of COVID-19 variants and provide related employee education as new information and guidance
becomes available.
KMT is subject to the Jones Act. KMT competes principally in markets subject to the Jones Act, a federal cabotage law that restricts
domestic marine transportation in the United States to vessels built and registered in the United States, and manned, owned and operated
by United States citizens. The Company presently meets all of the requirements of the Jones Act for its owned and operated vessels.
The loss of Jones Act status could have a significant negative effect on the Company. The requirements that the Company’s vessels be
United States built and manned by United States citizens, the crewing requirements and material requirements of the USCG, and the
application of United States labor and tax laws increases the cost of United States flagged vessels compared to comparable foreign
flagged vessels. The Company’s business could be adversely affected if the Jones Act or international trade agreements or laws were to
be modified or waived as to permit foreign flagged vessels to operate in the United States as these vessels are not subject to the same
United States government imposed regulations, laws, and restrictions. Since the events of September 11, 2001, the United States
government has taken steps to increase security of United States ports, coastal waters and inland waterways. The Company believes that
it is unlikely that the current cabotage provisions of the Jones Act would be eliminated or significantly modified in a way that has a
material adverse impact on the Company in the foreseeable future.
The Secretary of Homeland Security is vested with the authority and discretion to waive the Jones Act to such extent and upon such
terms as the Secretary may prescribe whenever the Secretary deems that such action is necessary in the interest of national defense. On
September 8, 2017, following Hurricanes Harvey and Irma, the Department of Homeland Security issued a waiver of the Jones Act for
a 7-day period for shipments from New York, Pennsylvania, Texas and Louisiana to South Carolina, Georgia, Florida and Puerto Rico.
The waiver was specifically tailored to address the transportation of refined petroleum products due to disruptions in hurricane-affected
areas. On September 11, 2017, the waiver was extended for 11 days and expanded to include additional states. Following Hurricane
Maria, on September 28, 2017, the Department of Homeland Security issued a waiver of the Jones Act for movement of products shipped
from United States coastwise points to Puerto Rico through October 18, 2017. Two limited waivers of the Jones Act were granted in
connection with the shutdown of the Colonial Pipeline in May 2021. In connection with recovery from Hurricane Fiona, in September
and October 2022, two limited waivers of the Jones Act were granted to allow diesel and liquefied natural gas deliveries to Puerto Rico.
Waivers of the Jones Act, whether in response to natural disasters or otherwise, could result in increased competition from foreign tank
vessel operators, which could negatively impact KMT.
KMT is subject to extensive regulation by the USCG, federal laws, other federal agencies, various state laws, the laws of other
countries when operating in their waters, and certain international conventions, as well as numerous environmental regulations. The
majority of the Company’s vessels are subject to inspection by the USCG and carry certificates of inspection. The crews employed by
the Company aboard vessels are licensed or certified by the USCG. The Company’s marine transportation operations are subject to laws
of other countries when operating in their waters. The Company is required by various governmental agencies to obtain licenses,
certificates and permits for its owned and operated vessels. The Company’s operations are also affected by various United States and
state regulations and legislation enacted for protection of the environment. The Company incurs significant expenses and capital
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expenditures to comply with applicable laws and regulations and any significant new regulation or legislation, including climate change
laws or regulations, could have an adverse effect on the Company.
KMT is subject to natural gas and crude oil prices as well as the volatility of their prices as well as the volatility in production of
refined products and petrochemicals in the United States. For 2022, 49% of KMT’s revenues were from the movement of
petrochemicals, including the movement of raw materials and feedstocks from one refinery or petrochemical plant to another, as well
as the movement of more finished products to end users and terminals for export. As a result of the COVID-19 pandemic and
petrochemical and refinery plant shutdowns, 2020 and 2021 petrochemical and refined products volumes decreased relative to 2019.
Volumes began to recover in 2021 and have continued to increase in 2022 as economic activity improved. The United States
petrochemical industry continues to benefit from a low-cost domestically produced natural gas feedstock advantage, producing strong
volumes of raw materials and intermediate products for transportation between Gulf Coast petrochemical plants and the transportation
of more finished products to terminals for both domestic consumers and for export destinations. In addition, eight new United States
petrochemical projects, including expansion of existing plants, were completed during 2022, with an additional six projects scheduled
to be completed during 2023. These projects should provide additional movements for KMT. Higher natural gas and crude oil prices are
generally better for the Company’s businesses; however, higher natural gas prices and other factors could negatively impact the United
States petrochemical industry and its production volumes, which could negatively impact the Company.
Demand for tank barge transportation services is driven by the production of volumes of the bulk liquid commodities such as
petrochemicals, black oil and refined petroleum products that the Company transports by tank barge. This production can depend on the
prevailing level of natural gas and crude oil prices, as well as the volatility of their prices. In general, lower energy prices are good for
the United States economy and typically translate into increased petrochemical and refined product demand and therefore increased
demand for tank barge transportation services. However, during 2016 and 2017 lower crude oil prices resulted in a decline in domestic
crude oil and natural gas condensate production and reduced volumes to be transported by tank barge. The Company estimates that at
the beginning of 2015 there were approximately 550 inland tank barges and 35 coastal tank barges in the 195,000 barrels or less category
transporting crude oil and natural gas condensate. By the end of 2019, the Company estimates that number of tank barges had declined
to 335 inland tank barges and approximately five coastal tank barges transporting crude and natural gas condensate. During 2020, the
COVID-19 pandemic and oil price volatility resulted in a sharp decrease in volumes of crude and natural gas condensate being
transported. As of the end of 2020, the Company estimates that approximately 100 to 150 inland tank barges and one coastal tank barge
were transporting crude and natural gas condensate and at the end of 2021, approximately 160 to 170 inland tank barges and one coastal
tank barge were transporting crude and natural gas condensate. As of the end of 2022, the Company estimates that approximately 170
to 200 inland tank barges were transporting crude and natural gas condensate. Volatility in the price of natural gas and crude oil can also
result in heightened uncertainty which may lead to decreased production and delays in new petrochemical and refinery plant
construction. Increased competition for available black oil and petrochemical barge moves caused by reduced crude oil and natural gas
condensate production could have an adverse impact on KMT including as a result of lower spot and term contract rates and/or reluctance
to enter into or extend term contracts.
KMT could be adversely impacted by the construction of tank barges by its competitors. At the present time, there are an estimated
4,028 inland tank barges in the United States, of which the Company operates 1,037, or 26%. For 2020, the Company estimated that
industry-wide approximately 150 new tank barges were placed in service, six of which were purchased by the Company from another
operator, and approximately 150 tank barges were retired, 95 of which were by the Company. For 2021, the Company estimated that
industry-wide 70 new tank barges were placed in service, of which none were by the Company, and 90 tank barges were retired, 36 of
which were by the Company. For 2022, the Company estimates that industry-wide 22 new tank barges were placed in service and
retirements, net of reactivations, were flat. The Company estimates that approximately 5 to 10 new tank barges have currently been
ordered for delivery in 2023 and expects a number of older tank barges will be retired, dependent on 2023 market conditions.
The long-term risk of an oversupply of inland tank barges may be mitigated by the fact that the inland tank barge industry has
approximately 600 tank barges that are 30 years old or older and approximately 400 of those are 40 years old or older. Given the age
profile of the industry inland tank barge fleet and extensive customer vetting standards, the expectation is that these older tank barges
will continue to be removed from service and replaced by new tank barges as needed, with the extent of both retirements and new builds
dependent on petrochemical and refinery production levels and crude oil and natural gas condensate movements, both of which can have
a direct effect on industry-wide tank barge utilization, as well as term and spot contract rates.
Beginning in 2019, a decline in industry-wide demand for the movement of crude oil and natural gas condensate transportation
volumes increased available capacity and resulted in some reluctance among certain customers to extend term contracts, which led to
an increase in the number of coastal vessels operating in the spot market. In addition, the Company and the industry added new coastal
tank barge capacity during 2019, 2020, and 2021. Much of this new capacity was replacement capacity for older vessels anticipated to
be retired.
The Company estimates there are approximately 270 tank barges operating in the 195,000 barrels or less coastal industry fleet, the
sector of the market in which the Company operates, and approximately 21 of those are over 25 years old. The Company is aware of
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one coastal ATB placed in service in 2020, one small specialized coastal ATB in 2021 and no ATBs placed in 2022 by competitors with
no further coastal tank barges currently under construction.
Higher fuel prices could increase operating expenses and fuel price volatility could reduce profitability. The cost of fuel during
2022 was approximately 16% of marine transportation revenue. The Company’s marine transportation term contracts typically include
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
adjust to 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.
Significant increases in the construction cost of tank barges and towing vessels may limit the Company’s ability to earn an adequate
return on its investment in new tank barges and towing vessels. The price of steel, economic conditions, and supply and demand
dynamics can significantly impact the construction cost of new tank barges and towing vessels. Over the last 20 years, the Company’s
average construction price for a new 30,000 barrel capacity inland tank barge has fluctuated up or down significantly. For example, the
average construction price for a new 30,000 barrel capacity tank barge in 2009 was approximately 90% higher than in 2000, with
increases primarily related to higher steel costs. During 2009, the United States and global recession negatively impacted demand levels
for inland tank barges and as a result, the construction price of inland tank barges fell significantly in 2010, primarily due to a significant
decrease in steel prices, as well as a decrease in the number of tank barges ordered. The cost of steel, a key material in barge construction,
was relatively stable from 2010 through 2019. During 2020, at the onset of the COVID-19 pandemic, steel costs dropped, however,
during 2021 and 2022, steel prices rose above 2019 levels due to supply chain disruptions. These increases in steel costs and alterations
in supply and demand dynamics, as well as higher labor costs, resulted in construction prices for a new 30,000 barrel tank barge
increasing compared to prices in 2017 when there was an industry-wide over-capacity of inland tank barges in the market.
KMT could be adversely impacted by the failure of the Company’s shipyard vendors to deliver new vessels according to
contractually agreed delivery schedules and terms. The Company contracts with shipyards to build new vessels and currently has vessels
under construction. Construction projects are subject to risks of delay and cost overruns, resulting from shortages of equipment, materials
and skilled labor; lack of shipyard availability; unforeseen design and engineering problems; work stoppages; weather interference;
unanticipated cost increases; unscheduled delays in the delivery of material and equipment; and financial and other difficulties at
shipyards including labor disputes, shipyard insolvency and inability to obtain necessary certifications and approvals. A significant delay
in the construction of new vessels or a shipyard’s inability to perform under the construction contract could negatively impact the
Company’s ability to fulfill contract commitments and to realize timely revenues with respect to vessels under construction. Significant
cost overruns or delays for vessels under construction could also adversely affect the Company’s financial condition, results of operations
and cash flows. To date, the Company has not experienced significant shipyard delays associated with the COVID-19 pandemic,
including at its subsidiary, San Jac.
The Company is subject to competition in KMT. The inland and coastal tank barge industry remains very fragmented and
competitive. The Company’s primary competitors are noncaptive inland tank barge operators and coastal operators. The Company also
competes with companies who operate refined product and petrochemical pipelines, railroad tank cars and tractor-trailer tank trucks.
Increased competition from any significant expansion of or additions to facilities or equipment by the Company’s competitors could
have a negative impact on the Company’s results of operations. In addition, the Company’s failure to adhere to its safety, reliability and
performance standards may impact its ability to retain current customers or attract new customers.
Distribution and Services Segment Risk Factors
KDS could be adversely impacted by future legislation, executive or other governmental orders, or additional regulation of oil and
gas extraction, including hydraulic fracturing practices. The Company, through its United and S&S subsidiaries, is a distributor and
service provider of engine and transmission related products for the oil and gas services, power generation and transportation industries,
and a manufacturer of oilfield service equipment, including pressure pumping units. Various legislative and regulatory initiatives have
been proposed that, if passed, could limit or discourage future production of oil and gas. Further, legislation may be enacted by Congress
that would authorize the EPA to impose additional regulations on hydraulic fracturing. In addition, a number of states have adopted or
are evaluating the adoption of legislation or regulations governing hydraulic fracturing or byproducts of the fracturing process. Related
actions may also be taken via executive order. Federal or state legislation, executive or governmental orders, and/or regulations could
materially impact customers’ operations and greatly reduce or eliminate demand for the Company’s pressure pumping fracturing
equipment and related products. The Company is unable to predict whether future legislation or any other regulations will ultimately be
enacted and, if so, the impact on KDS.
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KDS could be adversely impacted by the construction of pressure pumping units by its competitors. During 2020, a significant
reduction in oilfield activity as a result of oil price volatility and the COVID-19 pandemic resulted in a decrease to an estimated 6 million
horsepower of pressure pumping units working in North America, with an estimated 1.5 million horsepower available to work, and 12
million horsepower stacked and in need of major repair. At the end of 2021, strong commodity prices resulted in an increase in
horsepower demand with an estimated 12 million horsepower of pressure pumping units working in North America, with an estimated
8 million horsepower idled and in need of major repair. Supported by stronger commodity prices, surplus horsepower capacity declined
as activity levels in North America improved during 2022 resulting in an increase to an estimated 15 million horsepower of pressure
pumping units working in North America at the end of 2022, with an estimated 5 million horsepower idled and in need of major repair.
Increased expansion of, or additions to, facilities or equipment by the Company’s competitors could have a negative impact on the
Company’s results of operations.
Prevailing natural gas and crude oil prices, as well as the volatility of their prices, could have an adverse effect on KDS business.
Lower energy prices generally result in a decrease in the number of oil and gas wells being drilled. Oilfield service companies reduce
their capital spending, resulting in decreased demand for new parts and equipment, including pressure pumping units, provided by KDS.
This may also lead to order cancellations from customers or customers requesting to delay delivery of new equipment. The Company
also services offshore supply vessels and offshore drillings rigs operating in the Gulf of Mexico, as well as internationally. Low energy
prices may negatively impact the number of wells drilled in the Gulf of Mexico and international waters. Prolonged downturns in oil
and gas prices may cause substantial declines in oilfield service and exploration expenditures and could adversely impact oil and gas
manufacturing, remanufacturing, parts and distribution business. In addition, energy price volatility may also result in difficulties in the
Company’s ability to address variations in production on a timely basis and, therefore, could result in an adverse impact on KDS.
The Company is subject to competition in KDS. The distribution and services industry is very competitive. The segment’s oil and
gas market’s principal competitors are independent distribution and service and oilfield manufacturing companies and other factory-
authorized distributors and service centers. In addition, certain oilfield service companies that are customers of the Company also
manufacture and service a portion of their own oilfield equipment. Increased competition in the distribution and services industry and
continued low price of natural gas, crude oil or natural gas condensate, and resulting decline in drilling for such natural resources in
North American shale formations, could result in less oilfield equipment being manufactured and remanufactured, lower rates for service
and parts pricing and result in less manufacturing, remanufacturing, service and repair opportunities and parts sales for the Company.
For the commercial and industrial market, the segment’s primary marine diesel competitors are independent diesel services companies
and other factory-authorized distributors, authorized service centers and authorized marine dealers. Certain operators of diesel powered
marine equipment also elect to maintain in-house service capabilities. For power generation, the primary competitors are other
independent service companies.
Loss of a distributorship or other significant business relationship or disruptions of supply could adversely affect KDS. KDS has
had a relationship with EMD, the largest manufacturer of medium-speed diesel engines, for 57 years. The Company, through Kirby
Engine Systems, serves as both an EMD distributor and service center for select markets and locations for both service and parts. With
the acquisition of S&S in September 2017, the Company added additional EMD exclusive distributorship rights in key states, primarily
through the Central, South and Eastern areas of the United States. With the S&S acquisition, the Company became the United States
distributor for EMD marine and power generation applications. Sales and service of EMD products account for approximately 3% of
the Company’s revenues for 2022. Although the Company considers its relationship with EMD to be strong, the loss of the EMD
distributorship and service rights, or a disruption of the supply of EMD parts, could have a negative impact on the Company’s ability to
service its customers. In 2020, with the acquisition of Convoy Servicing Company and Agility Fleet Services, LLC, the Company
expanded its dealership network of Thermo King refrigeration systems for trucks, railroad cars, and other land transportation markets
in Texas and Colorado. In 2022, sales and service of Thermo King products comprised approximately 5% of the Company’s revenues.
United and S&S have maintained continuous exclusive distribution rights for MTU and Allison since the 1940s. United and S&S
are two of MTU’s top five distributors of off-highway engines in North America, with exclusive distribution rights in multiple states.
In addition, as distributors of Allison products, United and S&S have exclusive distribution rights in multiple key growth states. United
and S&S are also the distributors for parts, service and warranty on Daimler truck engines and related equipment in multiple states.
Sales and service of MTU, Allison, and Daimler products accounted for approximately 14% of the Company’s revenues during 2022.
Although the Company considers its relationships with MTU, Allison, and Daimler to be strong, the loss of MTU, Allison, or Daimler
distributorships and service rights, or a disruption of the supply of MTU or Allison parts, could have a negative impact on the Company’s
ability to service its customers.
In addition to its relationships with MTU, Allison, and Daimler, the Company also has relationships with many other distributors
and parts suppliers and the loss of a distributorship and service rights, or a disruption of the supply of parts from any of these other
distributors or part suppliers could also have a negative impact on the Company’s ability to service its customers.
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General Corporate Risk Factors
The Company is subject to adverse weather conditions in KMT and KDS. KMT is subject to weather condition volatility. Physical
impacts of climate change could have a material adverse effect on the Company's costs and operations. There has been public discussion
that climate change may be associated with rising sea levels as well as extreme weather conditions such as more intense hurricanes,
thunderstorms, tornadoes, drought, and snow or ice storms. Extreme weather conditions may increase the Company’s costs or cause
damage to its facilities, and any damage resulting from extreme weather may not be fully insured. Many of the Company’s facilities are
located near coastal areas or waterways where rising sea levels or flooding could disrupt the Company’s operations or adversely impact
its facilities. Adverse weather conditions such as high or low water on the inland waterway systems, fog and ice, tropical storms,
hurricanes, and tsunamis on both the inland waterway systems and throughout the United States coastal waters can impair the operating
efficiencies of the marine fleet. Such adverse weather conditions can cause a delay, diversion or postponement of shipments of products
and are totally beyond the control of the Company. Tropical storms and hurricanes may also impact the Company’s customers resulting
in reduced demand for the Company’s services. In addition, adverse water and weather conditions can negatively affect a towing vessel’s
performance, tow size, loading drafts, fleet efficiency, limit navigation periods and dictate horsepower requirements. KDS is also subject
to tropical storms and hurricanes impacting its coastal locations and those of its customers as well as tornados impacting its Oklahoma
facilities. The risk of flooding as a result of hurricanes and tropical storms as well as other weather events may impede travel via
roadways, suspend service work, and impact deliveries and the Company’s ability to fulfill orders or provide services in KDS.
The Company may be unable to make attractive acquisitions or successfully integrate acquired businesses, and any inability to do
so may adversely affect the Company’s business and hinder its ability to grow. The Company has made asset and business acquisitions
in the past and may continue to make acquisitions of assets or businesses in the future that complement or expand the Company’s current
business. The Company may not be able to identify attractive acquisition opportunities. Even if attractive acquisition opportunities are
identified, the Company may not be able to complete the acquisition or do so on commercially acceptable terms. The success of any
completed acquisition depends on the Company’s ability to integrate the acquired assets or business effectively into the Company’s
existing operations. The process of integrating acquired assets or businesses may involve difficulties that require a disproportionate
amount of the Company’s managerial and financial resources to resolve. The value of acquired assets or businesses may be negatively
impacted by a variety of circumstances unknown to the Company prior to the acquisition. In addition, possible future acquisitions may
be larger and for purchase prices significantly higher than those paid for earlier acquisitions. No assurance can be given that the Company
will be able to identify additional suitable acquisition opportunities, negotiate acceptable terms, obtain financing for acquisitions on
acceptable terms or successfully acquire identified targets. The Company’s failure to achieve synergies, to successfully integrate the
acquired businesses and assets into the Company’s existing operations, or to minimize any unforeseen operational difficulties could
have a material adverse effect on the Company’s business, financial condition, and results of operations. In addition, agreements
governing the Company’s indebtedness from time to time may impose certain limitations on the Company’s ability to undertake
acquisitions or make investments or may limit the Company’s ability to incur certain indebtedness and liens, which could limit the
Company’s ability to make acquisitions.
The Company’s failure to comply with the Foreign Corrupt Practices Act (“FCPA”), or similar local applicable anti-bribery laws,
could have a negative impact on its ongoing operations. The Company’s operations outside the United States require the Company to
comply with both United States and international regulations. For example, in addition to any similar applicable local anti-bribery laws,
the Company's operations in countries outside the United States are subject to the FCPA, which prohibits United States companies or
their employees and third party representatives from providing anything of value to a foreign official for the purposes of influencing
any act or decision of these individuals in their official capacity to help obtain or retain business, direct business to any person or
corporate entity, or obtain any unfair advantage. The Company has internal control policies and procedures and has implemented training
and compliance programs for its employees and third party representatives with respect to the FCPA. However, the Company’s policies,
procedures and programs may not always protect it from reckless or criminal acts committed by its employees or third party
representatives, and severe criminal or civil sanctions could be the result of violations of the FCPA or any other applicable anti-bribery
law in countries where the Company does business. The Company is also subject to the risks that its employees, joint venture partners,
and third party representatives outside of the United States may fail to comply with other applicable laws.
The Company is subject to risks associated with possible climate change legislation, regulation and international accords.
Greenhouse gas emissions, including carbon emissions or energy use, have increasingly become the subject of a large amount of
international, national, regional, state and local attention. International agreements and national, regional, and state legislation and
regulatory measures that aim to directly or indirectly limit or reduce greenhouse gas emissions are in various stages of implementation.
The United States Congress has considered, but has not passed, various bills that would create an economy-wide “cap-and-trade”
system that would establish a limit (or cap) on overall greenhouse gas emissions and create a market for the purchase and sale of
emissions permits or “allowances.” Any proposed cap-and-trade legislation would likely affect the chemical industry due to anticipated
increases in energy costs as fuel providers pass on the cost of the emissions allowances, which they would be required to obtain under
cap-and-trade to cover the emissions from fuel production and the eventual use of fuel by the Company or its energy suppliers. In
addition, cap-and-trade proposals would likely increase the cost of energy, including purchases of diesel fuel, steam and electricity, and
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certain raw materials used or transported by the Company. Proposed domestic and international cap-and-trade systems could materially
increase raw material and operating costs of the Company’s customer base. Future environmental regulatory developments related to
climate change in the United States that restrict emissions of greenhouse gases could result in financial impacts on the Company’s
operations that cannot be predicted with certainty at this time.
In addition, current global trends incorporating carbon neutral policies and reduction in greenhouse gas emissions are driving
decarbonization initiatives across all industries to mitigate the impact on climate change and may result in a decline in global and U.S.
hydrocarbon usage. Such a decline in hydrocarbon usage (for example, as a result of an increase in electric vehicles) could result in a
reduction in demand for (a) the Company’s services in KMT to the extent there is reduced demand for crude oil and other feedstocks
used and the products produced by the Company’s major refining customers and (b) for the Company’s products and services in KDS
to the extent there is reduced demand in the exploration and production of hydrocarbons by the Company’s oil and gas customers.
Loss of a large customer could adversely affect the Company. Five KMT customers accounted for approximately 17% of the
Company’s 2022 and 2021 revenue, and 18% of 2020 revenue. The Company has contracts with these customers expiring in 2023
through 2026. Three KDS customers accounted for approximately 9% of the Company’s 2022 revenue, 6% of 2021 revenue, and 3% of
2020 revenue. Although the Company considers its relationships with these companies to be strong, the loss of any of these customers,
or their inability to meet financial obligations, could have an adverse effect on the Company.
The Company relies on critical operating assets including information systems for the operation of its businesses, and the failure
of such assets or any critical information system, including as a result of natural disasters, terrorist acts, a cybersecurity attack, or
other extraordinary events, may adversely impact its businesses. The Company is dependent on its critical operating assets and
technology infrastructure and must maintain and rely upon critical information systems and security of its assets for the effective and
safe operation of its businesses. These assets include vessels, vessel equipment, property and facilities, as well as information systems,
such as software applications, hardware equipment, and data networks and telecommunications.
The Company’s critical assets and information systems, including the Company’s proprietary vessel management computer system,
are subject to damage or interruption from a number of potential sources, including but not limited to, natural disasters, terrorist acts,
cybersecurity attacks, software viruses, and power failures. In addition to standard safety operating procedures, the Company has
implemented measures such as business continuity plans, hurricane preparedness plans, emergency recovery processes, and security
preparedness plans to protect physical assets and to recover from damage to such assets. The Company has also implemented virus
protection software, intrusion detection systems and annual attack and penetration audits to protect information systems to mitigate these
risks. However, the Company cannot guarantee that its critical assets or information systems cannot be damaged or compromised.
Any damage or compromise of its critical assets or data security or its inability to use or access these critical assets and information
systems could adversely impact the efficient and safe operation of its businesses, or result in the failure to safely operate its equipment,
and maintain the confidentiality of data of its customers or its employees and could subject the Company to increased operating expenses
or legal action, which could have an adverse effect on the Company. Although to date the Company is unaware of any material data
breach or system disruption, including a cyber-attack, the Company cannot provide any assurances that such events and impacts will
not be material in the future. The Company’s efforts to deter, identify, mitigate and/or eliminate future breaches may require significant
additional effort and expense and may not be successful.
Limitations on the Company’s ability to obtain, maintain, protect, or enforce its proprietary information and any successful
intellectual property challenges or infringement proceedings, including its trade secrets could affect the Company's competitive position.
The Company’s distribution and services businesses rely on a variety of intellectual property rights for its product and services. The
Company’s intellectual property could be adversely affected by successful intellectual property challenges or infringement proceedings
against it which could materially and adversely affect its competitive position. The Company may also be adversely affected when its
patents are unenforceable, where claims allowed are not sufficient to protect its technology or its trade secrets are not adequately
protected. The Company's failure to protect its proprietary information and any successful challenges to the Company's intellectual
property rights could have an adverse effect on the Company.
A deterioration of the Company’s credit profile, disruptions of the credit markets or higher interest rates could restrict its ability
to access the debt capital markets or increase the cost of debt. Deterioration in the Company’s credit profile may have an adverse effect
on the Company’s ability to access the private or public debt markets and also may increase its borrowing costs. If the Company’s credit
profile deteriorates significantly its access to the debt capital markets or its ability to renew its committed lines of credit may become
restricted, its cost of debt may increase, or the Company may not be able to refinance debt at the same levels or on the same terms.
Because the Company relies on its ability to draw on its Revolving Credit Facility to support its operations as needed, any volatility in
the credit and financial markets that prevents the Company from accessing funds on acceptable terms could have an adverse effect on
the Company’s financial condition and cash flows. Additionally, the pricing grids on Company’s Revolving Credit Facility and Term
Loan contain a ratings grid that includes a possible increase in borrowing rates if the Company’s rating declines. Furthermore, the
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Company incurs interest under its Revolving Credit Facility based on floating rates. Floating rate debt creates higher debt service
requirements if market interest rates increase, which would adversely affect the Company’s cash flow and results of operations.
Corporate responsibility, specifically related to ESG matters, may impose additional costs and expose the Company to new risks.
There is an increasing focus from regulators, certain investors, and other stakeholders concerning environmental, social, and governance
(“ESG”) matters, both in the United States and internationally. The Company communicates certain ESG-related initiatives, goals,
and/or aspirations regarding environmental matters, diversity, responsible sourcing and social investments, and other matters in its
annual Sustainability Report, on its website, in its filings with the SEC, and elsewhere. These initiatives, goals, or aspirations reflect the
Company’s current plans and are not guarantees that the Company will be able to achieve them. The standards for tracking and reporting
on ESG matters are relatively new, have not been harmonized and continue to evolve. The Company’s selection of disclosure
frameworks that seek to align with various voluntary reporting standards may change from time to time and may result in a lack of
comparative data from period to period. The ESG-related initiatives, goals and/or aspirations could be difficult to achieve and costly to
implement, and the Company may be unable to economically develop or deploy technologies to achieve its goals or aspirations, if at all.
In addition, the Company could be criticized for the timing, scope or nature of these initiatives, goals, or aspirations, or for any revisions
to them. To the extent that the required and voluntary disclosures about ESG matters increase, the Company could be criticized for the
accuracy, adequacy, or completeness of such disclosures. The Company’s actual or perceived failure to report accurately or achieve its
ESG-related initiatives, goals, or aspirations could negatively impact its reputation, result in ESG-focused investors not purchasing and
holding Company stock, or otherwise materially harm the Company’s business.
Increased prices and inflation could negatively impact the Company’s margin performance and financial results. Increased
inflation, including rising prices for items, such as raw materials, fuel, parts and components, freight, packaging, supplies, labor and
energy increases the Company’s costs to provide services and manufacture and distribute the Company’s products. The Company does
not currently use financial derivatives to hedge against volatility in commodity prices. The Company uses market prices for materials,
fuel, parts and components. The Company may be unable to pass these rising costs on to its customers. To mitigate this exposure, the
Company attempts to include cost escalation clauses in its longer-term marine transportation contracts whereby certain costs, including
fuel, can largely be passed through to its customers. In KDS, the cost of major components for large manufacturing orders is secured
with suppliers at the time a customer order is finalized, which limits exposure to cost escalations. Results of operations and margin
performance can be negatively affected if the Company is unable to mitigate the impact of these cost increases through contractual
means and is unable to increase prices to sufficiently offset the effect of these cost increases.
The Company could be adversely impacted by materials shortages, delays, and disruptions in supply chain. Materials, components,
and equipment essential to the Company’s operations, such as original equipment manufacturer engines, transmissions, generators,
electrical components and steel, are normally readily available, but shortages as a result of supply chain disruptions can adversely impact
the Company’s operations, particularly where the Company has a relationship with a single supplier for a particular resource. Many of
the items essential to the Company’s business require the use of shipping services to transport them to the Company’s facilities. Shipping
delays or disruptions may result in operational slowdowns, especially where materials, components, or equipment are necessary to
complete a project or order for the Company’s customers, particularly in the manufacturing business of our distribution and services
segment. These constraints could have a material adverse effect on the Company and contribute to increased buildup of inventories. In
addition, price increases imposed by the Company’s vendors for materials and shipping services used in its business, and the inability
to pass these increases through to its customers, could have a material adverse effect on the Company.
Continuing impacts resulting from actual or threatened health epidemics, and pandemics or other major health crisis could
materially and adversely affect our business, financial condition and results of operations. The Company’s business could be impacted
adversely by the effects of public health epidemics, pandemics or other major heath crises (which we refer to collectively as public
health crises). Actual or threatened public health crises may have a number of adverse impacts, including volatility in the global
economy, impacts to our customers’ business operations, or significant disruptions in waterborne transportation of cargoes, and supply
chain activity, caused by a variety of factors such as quarantines, supplier factory and office closures, or other government-imposed
restrictions, any of which could adversely impact our business, financial condition, and results of operations. In response to the COVID-
19 pandemic, various countries, including the United States, either mandated or recommended business closures, travel restrictions or
limitations, social distancing, and/or self-quarantine, among other restrictions. Additionally, various state and local governments in
locations where the Company operates took similar actions. Governments have removed, eased, reinstated, or implemented new
protocols or restrictions in response to reassessment of the risk of COVID-19, based in part on, changing levels of infection and
hospitalization rates. There has been and continues to be a negative impact on the global and United States economies and supply chains,
including the oil and gas industry, which has created delays and reduced demand for the Company’s products and services and in some
cases, resulted in delays in performance of its contracts with customers.
The Company is unable to predict the extent to which major health crisis or other public health threats that may arise in the
future may affect the global and United States economies and supply chain, which could have a material impact on its business. The
degree to which any future disease outbreaks or public health threats may impact the Company’s revenues, results of operations and
28
financial condition is uncertain and will depend on future developments. The impact of the COVID-19 pandemic or other epidemics or
pandemics may also exacerbate other risks discussed above, any of which could have a material effect on the Company.
Item 1B. Unresolved Staff Comments
Not applicable.
Item 2. Properties
The information appearing in Item 1 under “Marine Transportation– Properties” and “Distribution and Services– Properties” is
incorporated herein by reference. The Company believes that its facilities are adequate for its needs and additional facilities would be
available if required.
Item 3. Legal Proceedings
See Note 14, Contingencies and Commitments to the Company’s financial statements.
Item 4. Mine Safety Disclosures
Not applicable.
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
The Company’s common stock is traded on the New York Stock Exchange under the symbol KEX. Additional market information
for this item is incorporated by refence to the annual report to be provided to the Company’s stockholders pursuant to Rule 14a-3(b).
As of February 17, 2023, the Company had 60,015,000 outstanding shares held by approximately 410 stockholders of record;
however, the Company believes the number of beneficial owners of common stock exceeds this number. Information for this item
relating to equity compensation plans is incorporated by reference to the definitive proxy statement to be filed by the Company with the
Commission pursuant to Regulation 14A within 120 days of the close of the fiscal year ended December 31, 2022. See also Note 8,
Stock Award Plans to the Company’s financial statements for additional information.
The Company does not have an established dividend policy. Decisions regarding the payment of future dividends will be made by
the Board of Directors based on the facts and circumstances that exist at that time. Since 1989, the Company has not paid any dividends
on its common stock. The Company’s credit agreements contain covenants restricting the payment of dividends by the Company at any
time when there is a default under the agreements.
Item 6. Reserved
29
Item 7. 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, COVID-19 or other pandemics, marine accidents, lock delays, 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 (loss) per share.” The weighted average number of common shares outstanding applicable to diluted earnings (loss) per share
for 2022, 2021, and 2020 were 60,329,000, 60,053,000, and 59,912,000, respectively. Refer to the Company’s Annual Report on Form
10-K for the year ended December 31, 2021 for management's discussion and analysis of financial condition and results of operations
for 2021 compared to 2020.
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. Through KDS, the Company provides
after-market service and parts for engines, transmissions, reduction gears, and related equipment used in oilfield services, marine, power
generation, on-highway, and other industrial applications. The Company also rents equipment including generators, industrial
compressors, and high capacity lift trucks, and refrigeration trailers for use in a variety of industrial markets, and manufactures and
remanufactures oilfield service equipment, including pressure pumping units, manufactures cementing and pumping equipment as well
as coil tubing and well intervention equipment, electric power generation equipment, specialized electrical distribution and control
equipment, and high capacity energy storage/battery systems for oilfield service and railroad customers.
The following table summarizes key operating results of the Company (in thousands, except per share amounts):
Total revenues
Net earnings (loss) attributable to Kirby
Net earnings (loss) per share attributable to Kirby common stockholders –
diluted
Net cash provided by operating activities
Capital expenditures
$
$
$
$
$
2022
2,784,754
122,291
Year Ended December 31,
2021
2,246,660
$
(246,954) $
$
$
2.03
294,128
172,606
$
$
$
(4.11) $
$
$
321,576
98,015
2020
2,171,408
(272,546)
(4.55)
444,940
148,185
The 2022 fourth quarter included $3.3 million before taxes, $2.4 million after taxes, or $0.04 per share of severance expense. The
2022 fourth quarter also included $0.9 million before taxes, $0.6 million after taxes, or $0.01 per share of professional fees related to
the Company’s strategic alternatives review. The 2022 second quarter included $1.5 million before taxes, $1.3 million after taxes, or
$0.02 per share of severance expense.
The 2021 third quarter included $340.7 million before taxes, $275.1 million after taxes, or $4.58 per share, non-cash charges related
to impairment of long-lived assets related to coastal marine transportation equipment and impairment of goodwill in KMT. See Note 7,
Impairments and Other Charges in the financial statements for additional information. The 2021 fourth quarter was also impacted by a
one-time deferred tax provision of $5.7 million or $0.09 per share related to a change in Louisiana tax law. See Note 9, Taxes on Income
for additional information.
The 2020 first quarter included $561.3 million before taxes, $433.3 million after taxes, or $7.24 per share, non-cash charges related
to inventory write-downs, impairment of long-lived assets, including intangible assets and property and equipment, and impairment of
goodwill in KDS. See Note 7, Impairments and Other Charges for additional information. In addition, the 2020 first quarter was
favorably impacted by an income tax benefit of $50.8 million or $0.85 per share related to net operating losses generated in 2018 and
2019 used to offset taxable income generated between 2013 and 2017. See Note 9, Taxes on Income for additional information.
30
Cash provided by operating activities in 2022 decreased compared to 2021 primarily due to the receipt of a tax refund of $119.5
million, including accrued interest, for the Company’s 2019 federal tax return during the 2021 first quarter, partially offset by higher
revenues and operating income in both KMT and KDS in 2022 from improved business activity levels. During 2022, capital expenditures
of $172.6 million included $147.2 million in KMT and $25.4 million in KDS and corporate, more fully described under cash flow and
capital expenditures below.
The Company projects net cash flow from operations in 2023 of between $480 million and $580 million. The Company has applied
for and been awarded grants from various government entities totaling approximately $3.5 million related to certain emission reduction
projects which it expects to receive reimbursements for in 2023.
The Company’s debt-to-capitalization ratio decreased to 26.2% at December 31, 2022 from 28.7% at December 31, 2021, primarily
due to repayments in 2022 under the 2024 Term Loan and an increase in total equity, which improved as a result of net earnings
attributable to Kirby of $122.3 million during 2022, partially offset by treasury stock purchases of $22.9 million. The Company’s debt
outstanding as of December 31, 2022 and December 31, 2021 is detailed in Long-Term Financing below.
Marine Transportation
The following table summarizes the Company’s marine transportation fleet:
December 31,
2022
2021
Inland tank barges:
Owned
Leased
Total
Barrel capacity (in millions)
Active inland towboats (quarter average):
Owned
Chartered
Total
Coastal tank barges:
Owned
Leased
Total
Barrel capacity (in millions)
Coastal tugboats:
Owned
Chartered
Total
Offshore dry-bulk cargo barges (owned)
Offshore tugboats and docking tugboat (owned and chartered)
999
38
1,037
23.1
216
61
277
28
1
29
3.0
24
3
27
4
5
983
42
1,025
22.9
211
44
255
30
1
31
3.1
26
3
29
4
5
The Company also owns shifting operations and fleeting facilities for dry cargo barges and tank barges on the Houston Ship Channel
and in Freeport and Port Arthur, Texas, and Lake Charles, Louisiana, and a shipyard for building towboats and performing routine
maintenance near the Houston Ship Channel, as well as a two-thirds interest in Osprey Line, L.L.C., which transports project cargoes
and cargo containers by barge.
For 2022, 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 2022 increased 22% compared to 2021 and operating income increased 116%, compared to 2021. The increases
for 2022 were primarily due to improved term and spot pricing and utilization in the inland market when compared to 2021, as well as
31
higher fuel rebills in the inland and coastal markets. Revenues and operating income in 2022 were impacted by record low water levels
on the Mississippi River during the 2022 fourth quarter, which increased delay days compared to 2021. Also, the 2022 first quarter was
impacted by the COVID-19 Omicron variant as increased cases of the virus among the Company’s mariners led to crewing challenges,
lost revenue and increased operating costs. Revenues and operating income in 2021 were impacted by Hurricane Ida which shut down
almost the entire Southeast Louisiana refinery and chemical complex and key waterways for an extended period of time during the third
quarter. Winter Storm Uri also heavily impacted the 2021 first quarter with the shutdown of many Gulf Coast refineries and chemical
plants for an extended period of time starting in mid-February. These emergency shutdowns resulted in significantly reduced liquids
production and lower volumes for the Company’s inland marine transportation market during the 2021 first quarter. For 2022 and 2021,
the inland tank barge fleet contributed 79% and 76%, respectively, and the coastal fleet contributed 21% and 24%, respectively, of
marine transportation revenues.
Overall inland tank barge utilization levels improved in 2022 as compared to 2021, ranging from the mid-80% range during the
2022 first quarter, the low-90% range during the 2022 second and third quarters and the 90% range in the 2022 fourth quarter. The 2022
fourth quarter utilization held steady from the 2022 third quarter despite headwinds as a result of record low water levels on the
Mississippi River. During 2021, reduced demand as a result of the COVID-19 pandemic and the resulting economic slowdown
contributed to lower barge utilization. Inland tank barge utilization levels ranged from the mid-70% range during the 2021 first quarter,
the low to mid-80% range during the 2021 second quarter, the low-80% range during the 2021 third quarter and the mid-to high 80%
range during the 2021 fourth quarter. The 2021 first quarter was impacted by reduced volumes as a result of Winter Storm Uri, whereas
the 2021 second quarter was favorably impacted by the Colonial Pipeline outage in May. The 2021 third quarter was negatively impacted
by Hurricane Ida.
Coastal tank barge utilization levels during 2022 averaged in the low-90% range in the 2022 first and second quarters and low to
mid-90% range during the 2022 third and fourth quarters as there was modest improvement in customer demand. For 2021, coastal tank
barge utilization levels averaged in the mid-70% range during the 2021 first quarter, the low to mid-70% range during the 2021 second
quarter, the mid-70% range during the 2021 third quarter and the 90% range during the 2021 fourth quarter. The increase in coastal tank
barge utilization during the 2021 fourth quarter was primarily due to the retirement of underutilized barges in the 2021 third quarter.
Barge utilization in the coastal marine fleet continued to be impacted by the oversupply of tank barges in the coastal industry during
2022 and 2021.
Approximately 60% of the inland marine transportation revenues were under term contracts and 40% were spot contract revenues
in 2022. Approximately 65% of the inland marine transportation revenues were under term contracts and 35% were spot contract
revenues in 2021. Term contracts provide the operations with a reasonably predictable revenue stream. Inland time charters, which
insulate the Company from revenue fluctuations caused by weather and navigational delays and temporary market declines, represented
58% of the inland revenues under term contracts during both 2022 and 2021. During 2022 and 2021, approximately 75% and 80%,
respectively, of coastal revenues were under term contracts and 25% and 20%, respectively, were spot contract revenues. Coastal time
charters represented approximately 90% of coastal revenues under term contracts during 2022 compared to 85% during 2021. Term
contracts have contract terms of 12 months or longer, while spot contracts have contract terms of less than 12 months.
32
The following table summarizes the average range of pricing changes in term and spot contracts renewed during 2022 compared to
contracts renewed during the corresponding quarter of 2021:
Inland market:
Term increase
Spot increase
Coastal market (a):
Term increase
Spot increase
March 31, 2022
June 30, 2022
September 30, 2022
December 31, 2022
Three Months Ended
7% – 9%
15% – 20%
4% – 6%
4% – 6%
14% – 16%
15% – 18%
10% – 12%
10% – 12%
13% – 15%
23% – 27%
19% – 21%
18% – 22%
10% – 15%
20% – 25%
10% – 12%
15% – 20%
(a) Spot and term contract pricing in the coastal market are contingent on various factors including geographic location, vessel
capacity, vessel type, and product serviced.
Effective January 1, 2022, 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 5%, excluding fuel.
The 2022 marine transportation operating margin was 8.4% compared to 4.8% for 2021.
Distribution and Services
The Company, through KDS, sells genuine replacement parts, provides service mechanics to overhaul and repair engines,
transmissions, reduction gears and related oilfield services equipment, rebuilds component parts or entire diesel engines, transmissions
and reduction gears, and related equipment used in oilfield services, marine, power generation, on-highway and other industrial
applications. The Company also rents equipment including generators, industrial compressors, high capacity lift trucks, and refrigeration
trailers for use in a variety of industrial markets, and manufactures and remanufactures oilfield service equipment, including pressure
pumping units, manufactures cementing and pumping equipment as well as coil tubing and well intervention equipment, electric power
generation equipment, specialized electrical distribution and control equipment, and high capacity energy storage/battery systems for
oilfield service and railroad 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 16% of KDS’s revenues in 2022.
During 2022, KDS generated 42% of the Company’s revenues, of which 82% was generated from service and parts and 18% from
manufacturing. The results of KDS are largely influenced by cycles of the oilfield service industry and oil and gas operator and producer
markets, marine, power generation, on-highway and other industrial markets.
Distribution and services revenues for 2022 increased 26% compared to 2021 and operating income increased 143% compared to
2021. In the commercial and industrial market, the increases in 2022 compared to 2021 were primarily attributable to strong economic
activity across the U.S. which resulted in higher business levels in the marine and on-highway businesses. Increased product sales in
Thermo King also contributed favorably to 2022 results. These results were partially offset by continuing supply chain constraints and
delays. Results for the commercial and industrial market in 2021 were impacted by Winter Storm Uri with reduced activity levels at
many locations across the southern U.S. during the 2021 first quarter. For 2022 and 2021, the commercial and industrial market
contributed 56% and 63%, respectively, of the distribution and services revenues.
In the oil and gas market, revenues improved compared to 2021 due to higher oilfield activity which resulted in increased demand
for new transmissions and parts in the distribution business. Although the manufacturing business was heavily impacted by supply chain
delays, the business continues to experience increased orders and deliveries of new environmentally friendly pressure pumping
equipment and power generation equipment for electric fracturing. For 2022 and 2021, the oil and gas market contributed 44% and 37%,
respectively, of the distribution and services revenues.
The distribution and services operating margin for 2022 was 5.7% compared to 3.0% for 2021.
Outlook
Refinery and petrochemical utilization levels remain at high levels. This is favorable for the Company’s barge utilization, which is
strong in both inland and coastal markets, and for pricing, which continues to increase. In KDS, despite ongoing supply chain constraints
and delays, demand for the Company’s products and services continues to grow. Overall, the Company expects both KMT and KDS to
deliver improved financial results in 2023. The Company continues to closely monitor the ever-changing economic landscape related to
the impact of higher interest rates and possible recessionary headwinds as it moves through 2023.
33
In the inland marine transportation market, conditions are expected to continue to remain favorable in 2023 driven by continued
strong barge utilization, improvements in the spot market, renewals of expiring term contracts at higher rates and modest net new barge
construction in the industry. The impacts of rising costs from inflationary pressures, including significantly higher fuel prices, are
expected to be recovered as term contracts renew and contract escalators reprice in 2023. In coastal marine, improvements in demand
and pricing are anticipated in 2023, but revenues and operating income are expected to be impacted by higher planned shipyard
maintenance days and ballast water treatment installations on certain vessels during 2023.
KDS results are largely influenced by the cycles of the oil and gas, marine, power generation, on-highway and other related
industrial markets. In the oil and gas market, high commodity prices, increasing rig counts, and growing well completions activity are
expected to result in increased demand for original equipment manufacturer products, parts, and services as well as for new
environmentally friendly pressure pumping equipment and power generation equipment for electric fracturing. In commercial and
industrial, favorable economic activity is expected to result in increased demand in power generation, marine repair, and on-highway.
However, ongoing supply chain issues and long lead times are expected in the near term, contributing to some volatility as deliveries of
products possibly shifting between quarters in 2023 and into 2024.
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.
Accounts Receivable. The Company extends credit to its customers in the normal course of business. The Company regularly
reviews its accounts and estimates the amount of uncollectible receivables each period and establishes an allowance for uncollectible
amounts. The amount of the allowance is based on the age of unpaid amounts, information about the current financial strength of
customers, and other relevant information. Estimates of uncollectible amounts are revised each period, and changes are recorded in the
period they become known. Historically, credit risk with respect to these trade receivables has generally been considered minimal
because of the financial strength of the Company’s customers; however, a United States or global recession or other adverse economic
condition could impact the collectability of certain customers’ trade receivables which could have a material effect on the Company’s
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 ocean-going 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.
34
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.
Accrued Insurance. The Company is subject to property damage and casualty risks associated with operating vessels carrying large
volumes of bulk liquid and dry cargo in a marine environment. The Company maintains insurance coverage against these risks subject
to a deductible, below which the Company is liable. In addition to expensing claims below the deductible amount as incurred, the
Company also maintains a reserve for losses that may have occurred but have not been reported to the Company, or are not yet fully
developed. The Company uses historic experience and actuarial analysis by outside consultants to estimate an appropriate level of
accrued liabilities. If the actual number of claims and magnitude were substantially greater than assumed, the required level of accrued
liabilities for claims incurred but not reported or fully developed could be materially understated. The Company records receivables
from its insurers for incurred claims above the Company’s deductible. If the solvency of the insurers became impaired, there could be
an adverse impact on the accrued receivables and the availability of insurance.
Acquisitions
On March 31, 2022, the Company paid $3.9 million in cash to purchase assets of a gearbox repair company in KDS.
During 2021, the Company purchased four inland tank barges from a leasing company for $7.5 million in cash. The Company had
been leasing the barges prior to the purchase.
On October 4, 2021, the Company paid $1.6 million in cash to purchase assets of an energy storage systems manufacturer based in
Texas which have been key to the development of new power generation solutions for electric fracturing equipment.
During 2020, the Company purchased six newly constructed inland pressure barges for $39.4 million in cash.
On April 1, 2020, the Company completed the acquisition of the inland tank barge fleet of Savage Inland Marine, LLC (“Savage”)
for $279 million in cash. Savage’s tank barge fleet consisted of 92 inland tank barges with approximately 2.5 million barrels of capacity
and 45 inland towboats. The Savage assets that were acquired primarily move petrochemicals, refined products, and crude oil on the
Mississippi River, its tributaries, and the Gulf Intracoastal Waterway. The Company also acquired Savage’s ship bunkering business
and barge fleeting business along the Gulf Coast.
On January 3, 2020, the Company completed the acquisition of substantially all the assets of Convoy for $37.2 million in cash.
Convoy is an authorized dealer for Thermo King refrigeration systems for trucks, railroad cars and other land transportation markets for
North and East Texas and Colorado.
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
Distribution and services
2022
$ 1,616,967
1,167,787
$ 2,784,754
%
Year Ended December 31,
2021
%
2020
%
58% $ 1,322,918
923,742
42
100% $ 2,246,660
59% $ 1,404,265
767,143
41
100% $ 2,171,408
65%
35
100%
35
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):
Marine transportation revenues
Costs and expenses:
Costs of sales and operating expenses
Selling, general and administrative
Taxes, other than on income
Depreciation and amortization
Operating income
Operating margins
2022
$ 1,616,967
2021
$ 1,322,918
2020
% Change
22% $ 1,404,265
(6)%
Year Ended December 31,
% Change
1,146,657
128,340
28,235
177,551
1,480,783
136,184
$
924,380
119,017
30,527
185,979
1,259,903
63,015
$
24
8
(8)
(5)
18
116% $
907,119
111,182
35,528
186,798
1,240,627
163,638
8.4%
4.8%
11.7%
2
7
(14)
—
2
(61)%
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:
Markets Serviced
Petrochemicals
2022 Revenue
Distribution
49%
Black Oil
Refined Petroleum Products
Agricultural Chemicals
28%
20%
3%
2022 Compared to 2021
Marine Transportation Revenues
Products Moved
Benzene, Styrene, Methanol, Acrylonitrile,
Xylene, Naphtha, Caustic Soda, Butadiene,
Propylene
Residual Fuel Oil, Coker Feedstock,
Vacuum Gas Oil, Asphalt, Carbon Black
Feedstock, Crude Oil, Natural Gas
Condensate, Ship Bunkers
Gasoline, No. 2 Oil, Jet Fuel, Heating Oil,
Diesel Fuel, Ethanol
Anhydrous Ammonia, Nitrogen-Based
Liquid Fertilizer, Industrial Ammonia
Drivers
Consumer non-durables — 70%
Consumer durables — 30%
Fuel for Power Plants and Ships,
Feedstock for Refineries, Road
Construction
Vehicle Usage, Air Travel, Weather
Conditions, Refinery Utilization
Corn, Cotton and Wheat Production,
Chemical Feedstock Usage
KMT’s revenues for 2022 increased 22% compared to 2021 and operating income increased 116%, compared to 2021. The increases
for 2022 were primarily due to improved term and spot pricing and utilization in the inland market when compared to 2021 as well as
higher fuel rebills in the inland and coastal markets. Revenues and operating income in 2022 were impacted by record low water levels
on the Mississippi River during the 2022 fourth quarter, which increased delay days compared to 2021. Also, the 2022 first quarter was
impacted by the COVID-19 Omicron variant as increased cases of the virus among the Company’s mariners led to crewing challenges,
lost revenue and increased operating costs. Revenues and operating income in 2021 were impacted by Hurricane Ida which shut down
almost the entire Southeast Louisiana refinery and chemical complex and key waterways for an extended period of time during the third
quarter. Winter Storm Uri also heavily impacted the 2021 first quarter with the shutdown of many Gulf Coast refineries and chemical
plants for an extended period of time starting in mid-February. These emergency shutdowns resulted in significantly reduced liquids
production and lower volumes for the Company’s inland marine transportation market during the 2021 first quarter. For 2022 and 2021,
the inland tank barge fleet contributed 79% and 76%, respectively, and the coastal fleet contributed 21% and 24%, respectively, of
marine transportation revenues.
Overall inland tank barge utilization levels improved in 2022 compared to 2021, ranging from the mid-80% range during the 2022
first quarter, the low-90% range during the 2022 second and third quarters and the 90% range in the 2022 fourth quarter. The 2022
fourth quarter utilization held steady from the 2022 third quarter despite headwinds as a result of record low water levels on the
Mississippi River. During 2021, reduced demand as a result of the COVID-19 pandemic and the resulting economic slowdown
contributed to lower barge utilization. Inland tank barge utilization levels ranged from the mid-70% range during the 2021 first quarter,
the low to mid-80% range during the 2021 second quarter, the low 80% range during the 2021 third quarter and the mid-to high 80%
range during the 2021 fourth quarter. The 2021 first quarter was impacted by reduced volumes as a result of Winter Storm Uri, whereas
36
the 2021 second quarter was favorably impacted by the Colonial Pipeline outage in May. The 2021 third quarter was negatively impacted
by Hurricane Ida.
Coastal tank barge utilization levels during 2022 averaged in the low-90% range in the 2022 first and second quarters and low to
mid-90% range during the 2022 third and fourth quarters as there was some modest improvement in customer demand. For 2021, coastal
tank barge utilization levels averaged in the mid-70% range during the 2021 first quarter, the low to mid-70% range during the 2021
second quarter, the mid-70% range during the 2021 third quarter and the 90% range during the 2021 fourth quarter. The increase in
coastal tank barge utilization during the 2021 fourth quarter was primarily due to the retirement of underutilized barges in the 2021 third
quarter. Barge utilization in the coastal marine fleet continued to be impacted by the oversupply of tank barges in the coastal industry
during 2022 and 2021.
The petrochemical market, the Company’s largest market, contributed 49% of marine transportation revenues for 2022, reflecting
increased volumes and utilization from Gulf Coast petrochemical plants for both domestic consumption and to terminals for export
destinations as a result of improved economic conditions following the height of the COVID-19 pandemic. During the 2021 first quarter,
as much as 80% of U.S. chemical plant capacity was offline at the peak of Winter Storm Uri, contributing to significantly reduced
volumes and revenues; however, volumes and revenues sequentially improved in the 2021 second quarter as chemical plants resumed
full operations by May. During the 2021 third quarter, volumes declined again as numerous Louisiana chemical plants were shut down
for an extended period of time as a result of Hurricane Ida.
The black oil market, which contributed 28% of marine transportation revenues for 2022, reflected improved demand as refinery
utilization and production levels of refined petroleum products and fuel oils increased following the height of the COVID-19 pandemic.
During 2022, the Company transported crude oil and natural gas condensate produced from the Permian Basin and the Eagle Ford shale
formation in Texas, both along the Gulf Intracoastal Waterway with inland vessels and in the Gulf of Mexico with coastal equipment.
Additionally, the Company transported volumes of Utica natural gas condensate downriver from the Mid-Atlantic to the Gulf Coast and
Canadian and Bakken crude downriver from the Midwest to the Gulf Coast. During the 2021 first quarter, U.S. refinery utilization
dropped to near 40% during the peak of Winter Storm Uri, contributing to significantly reduced volumes and revenues. Although refinery
utilization increased back to near 90% in the 2021 second quarter contributing to sequentially increased volumes and revenues, volumes
declined again during the 2021 third quarter as Louisiana refineries were shut down for an extended period of time as a result of
Hurricane Ida.
The refined petroleum products market, which contributed 20% of marine transportation revenues for 2022, reflected increased
volumes in the inland market as refinery utilization and product levels improved following the height of the COVID-19 pandemic.
During the 2021 first quarter, U.S. refinery utilization dropped to near 40% during the peak of Winter Storm Uri, contributing to
significantly reduced volumes and revenues. Although refinery utilization increased back to near 90% in the 2021 second quarter
contributing to sequentially increased volumes and revenues, volumes declined again during the 2021 third quarter as Louisiana
refineries were shut down for an extended period of time as a result of Hurricane Ida.
The agricultural chemical market, which contributed 3% of marine transportation revenues for 2022, reflected improved demand
for transportation of both domestically produced and imported products, primarily due to improved economic conditions following the
height of the COVID-19 pandemic.
Inland operations incurred 10,244 delay days in 2022, 7% more than the 9,605 delay days that occurred during 2021. 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 for 2022 and 2021 were impacted by hurricanes and tropical storms, poor
operating conditions due to heavy wind and fog along the Gulf Coast, water conditions on the Mississippi River System, and closures
of key waterways, including the Gulf Intracoastal Waterway, due in part to lock maintenance projects.
Approximately 60% of the inland marine transportation revenues were under term contracts and 40% were spot contract revenues
in 2022. Approximately 65% of the inland marine transportation revenues were under term contracts and 35% were spot contract
revenues in 2021. Term contracts provide operations with a reasonably predictable revenue stream. Inland time charters, which insulate
the Company from revenue fluctuations caused by weather and navigational delays and temporary market declines, represented 58% of
the inland revenues under term contracts during both 2022 and 2021. During 2022 and 2021, approximately 80% and 85%, respectively,
of coastal revenues were under term contracts and 20% and 15%, respectively, were spot contract revenues. Coastal time charters
represented approximately 90% of coastal revenues under term contracts during 2022 compared to 85% during 2021. 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 2022 compared to
contracts renewed during the corresponding quarter of 2021:
37
Inland market:
Term increase
Spot increase
Coastal market (a):
Term increase
Spot increase
March 31, 2022
June 30, 2022
September 30, 2022
December 31, 2022
Three Months Ended
7% – 9%
15% – 20%
4% – 6%
4% – 6%
14% – 16%
15% – 18%
10% – 12%
10% – 12%
13% – 15%
23% – 27%
19% – 21%
18% – 22%
10% – 15%
20% – 25%
10% – 12%
15% – 20%
(a) Spot and term contract pricing in the coastal market are contingent on various factors including geographic location, vessel
capacity, vessel type, and product serviced.
Effective January 1, 2022, 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 5%, excluding fuel.
Marine Transportation Costs and Expenses
Total costs and expenses for 2022 increased 18% compared to 2021. Costs of sales and operating expenses for 2022 increased 24%
compared to 2021 primarily reflecting improved business activity levels, inflationary cost pressures and increased fuel costs as well as
incremental costs associated with the COVID-19 Omicron variant during the 2022 first quarter.
The inland marine transportation fleet operated an average of 271 towboats during 2022, of which an average of 59 were chartered,
compared to 250 during 2021, of which an average of 35 were chartered. The increase was primarily due to increasing business activity
levels. 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 48.4 million gallons of diesel fuel in 2022 compared to 46.8 million gallons consumed during 2021.
The average price per gallon of diesel fuel consumed during 2022 was $3.70 per gallon compared to $2.13 per gallon for 2021. 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 2022 increased 8% compared to 2021 as the Company was confronted with
inflationary cost pressures. The increase is primarily due to higher salary and wage increases effective July 1, 2022, increased incentive
compensation accruals and severance expense. Business activity levels in 2021 were impacted by COVID-19 and the resulting economic
slowdown as well as Winter Storm Uri during the 2021 first quarter and Hurricane Ida during the 2021 third quarter.
Depreciation and amortization for 2022 decreased slightly compared to 2021. The decrease was primarily due to retirements, sales
and impairment of marine equipment during 2022 and 2021.
Marine Transportation Operating Income and Operating Margins
KMT operating income for 2022 increased 116% compared to 2021. The operating margin was 8.4% for 2022 compared to 4.8%
for 2021. The increase in operating income and operating margin were primarily due to increased barge utilization and higher term and
spot contract pricing in the inland and coastal markets, partially offset by increased fuel prices as well as the impact of the COVID-19
Omicron variant during the 2022 first quarter. The 2021 results were impacted by a reduction in demand due to the COVID-19 pandemic
and reduced volumes as a result of Hurricane Ida and Winter Storm Uri.
38
Distribution and Services
The following table sets forth a year over year comparison of KDS’s revenues, costs and expenses, operating income (loss) and
operating margins (dollars in thousands):
2022
$ 1,167,787
$
2021
923,742
Year Ended December 31,
% Change
Distribution and services revenues
Costs and expenses:
Costs of sales and operating expenses
Selling, general and administrative
Taxes, other than on income
Depreciation and amortization
Operating income (loss)
Operating margins
913,624
163,642
6,708
16,776
1,100,750
67,037
$
$
728,855
141,100
5,607
20,573
896,135
27,607
5.7%
3.0%
26% $
25
16
20
(18)
23
143% $
2020
767,143
% Change
20%
604,238
140,449
6,392
28,255
779,334
(12,191)
(1.6)%
21
—
(12)
(27)
15
326%
The following table shows the markets serviced by the Company, the revenue distribution, and the customers for each market:
Markets Serviced
Commercial and Industrial
2022 Revenue
Distribution
56%
Oil and Gas
44%
2022 Compared to 2021
Distribution and Services Revenues
Customers
Inland River Carriers — Dry and Liquid, Offshore Towing — Dry and
Liquid, Offshore Oilfield Services — Drilling Rigs & Supply Boats, Harbor
Towing, Dredging, Great Lakes Ore Carriers, Pleasure Crafts, On and Off-
Highway Transportation, Power Generation, Standby Power Generation,
Pumping Stations, Mining
Oilfield Services, Oil and Gas Operators and Producers
KDS revenues for 2022 increased 26% compared to 2021. In the commercial and industrial market, the increase was primarily
attributable to strong economic activity across the U.S. which resulted in higher business levels in the marine and on-highway businesses.
The commercial and industrial market’s 2021 results were impacted by Winter Storm Uri with reduced activity levels at many locations
across the southern U.S. during the first quarter. For 2022 and 2021, the commercial and industrial market contributed 56% and 63%,
respectively, of KDS revenues.
The oil and gas market revenues increase compared to 2021 primarily due to higher oilfield activity which resulted in increased
demand for new transmissions and parts in the distribution business. Although the manufacturing business was heavily impacted by
supply chain delays, the business continued to experience increased orders and deliveries of new environmentally friendly pressure
pumping equipment and power generation equipment for electric fracturing. For 2022 and 2021, the oil and gas market contributed 44%
and 37%, respectively, of KDS revenues.
Distribution and Services Costs and Expenses
Total costs and expenses for 2022 increased 23% compared to 2021 reflecting higher costs of sales and operating expenses as a
result of inflationary cost pressures and higher demand in the marine and on-highway businesses in commercial and industrial markets,
as well as increased demand in the oil and gas market due to higher oilfield activity levels.
Selling, general and administrative expenses for 2022 increased 16% compared to 2021. The increase was primarily due to salaries
and costs related to the acquisition of assets of an energy storage systems manufacturer in the 2021 fourth quarter which included
engineering talent required to further the Company’s electrification efforts, continued inflationary cost pressures, annual salary raises,
higher incentive compensation accruals and severance expense.
Depreciation and amortization for 2022 decreased 18% compared to 2021. The decrease was primarily due to sales of property and
equipment and reduced capital spending during 2021.
39
Distribution and Services Operating Income (Loss) and Operating Margins
Operating income for KDS for 2022 increased 143% compared to 2021. The operating margin was 5.7% for 2022 compared to
3.0% for 2021. The results reflect increased business levels in both the commercial and industrial and oil and gas markets, partially
offset by higher costs and expenses due to increased activity levels.
General Corporate Expenses
General corporate expenses for 2022, 2021, and 2020 were $18.6 million, $13.8 million and $11.1 million, respectively. General
corporate expenses were higher in 2022 than 2021 primarily due to increased salaries and wages, higher incentive compensation accruals,
higher legal and professional fees, and severance expense.
Gain on Disposition of Assets
The Company reported net gains on disposition of assets of $8.3 million, $5.8 million, and $0.1 million in 2022, 2021, and 2020,
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 and other charges
Other income
Noncontrolling interests
Interest expense
Impairments and Other Charges
Year Ended December 31,
2022
16,677
— $
$
(470) $
(44,588) $
2021
(340,713)
10,001
(183)
(42,469)
$
$
$
$
% Change
(100)% $
67% $
157% $
5% $
2020
(561,274)
8,147
(954)
(48,739)
% Change
(39)%
23%
(81)%
(13)%
No impairments were recognized during 2022. For 2021, impairments and other charges includes $340.7 million before taxes,
$275.1 million after taxes, or $4.58 per share, non-cash charges related to impairment of long-lived assets related to coastal marine
transportation equipment and impairment of goodwill in KMT.
See Note 7, Impairments and Other Charges for additional information.
Other Income
Other income for 2022, 2021, and 2020 includes income of $13.9 million, $8.2 million and $6.2 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, average interest rate, and capitalized interest excluded from interest expense (dollars in
thousands):
Average debt
Average interest rate
2022
1,171,317
$
Year Ended December 31,
2021
1,293,446
$
$
3.8%
3.2%
2020
1,567,523
3.1%
Interest expense for 2022 increased 5% compared to 2021, primarily due to a higher average interest rate, partially offset by a lower
average debt outstanding as a result of debt repayments.
(Provision) Benefit for Taxes on Income
On November 13, 2021, the voters of the state of Louisiana approved a constitutional amendment that removed the corporate tax
deduction for federal income taxes paid and lowered the corporate income tax rate from 8% to 7.5% effective January 1, 2022. The
result of the amendment was an increase in the effective Louisiana state income tax rate, net of deduction for federal income tax, from
6.3% to 7.5%. As a result of the amendment, the Company recognized a one-time deferred tax provision of $5.7 million during the
40
fourth quarter of 2021 due to remeasuring the Company’s Louisiana and U.S. deferred tax assets and liabilities based on the new effective
Louisiana state income tax rate.
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):
2022
2021
December 31,
% Change
2020
% Change
Assets:
Current assets
Property and equipment, net
Operating lease right-of-use assets
Investment in affiliates
Goodwill
Other intangibles, net
Other assets
Liabilities and stockholders’ equity:
Current liabilities
Long-term debt, net — less current portion
Deferred income taxes
Operating lease liabilities — less current
portion
Other long-term liabilities
Total equity
2022 Compared to 2021
$
$
$
$
1,211,759
3,633,462
154,507
2,171
438,748
51,463
62,814
5,554,924
$ 1,003,865
3,678,515
167,730
2,134
438,748
60,070
48,001
$ 5,399,063
642,197
1,076,326
625,884
$
543,772
1,161,433
574,152
142,140
23,209
3,045,168
5,554,924
159,672
71,252
2,888,782
$ 5,399,063
21% $ 1,047,971
3,917,070
(1)
174,317
(8)
2,689
2
657,800
—
68,979
(14)
31
55,348
3% $ 5,924,174
18% $
(7)
9
466,032
1,468,546
606,844
163,496
(11)
131,703
(67)
3,087,553
5
3% $ 5,924,174
(4)%
(6)
(4)
(21)
(33)
(13)
(13)
(9)%
17%
(21)
(5)
(2)
(46)
(6)
(9)%
Current assets as of December 31, 2022 increased 21% compared to December 31, 2021. Trade accounts receivable increased 16%
primarily due to increased business activity in both KMT and KDS. Other accounts receivable decreased 24%, primarily due to
recoveries on the settlement of insurance claims. Inventories increased by 39% primarily due to higher activity and the impact of supply
chain delays in KDS resulting in buildup for projects that are expected to be delivered in 2023.
Property and equipment, net of accumulated depreciation, at December 31, 2022 decreased 1% compared to December 31, 2021.
The decrease reflected $193.9 million of depreciation expense and $31.0 million of property disposals, partially offset by $175.6 million
of capital additions (including accrued capital expenditures) and $3.9 million primarily related to the acquisition of assets during 2022,
more fully described under Cash Flows and Capital Expenditures below.
Operating lease right-of-use assets as of December 31, 2022 decreased 8% compared to December 31, 2021, primarily due to lease
amortization expense, partially offset by new leases acquired.
Other intangibles, net, as of December 31, 2022 decreased 14% compared to December 31, 2021, primarily due to amortization.
Other assets as of December 31, 2022 increased 31% compared to December 31, 2021, primarily due to an increase in pension
assets.
Current liabilities as of December 31, 2022 increased 18% compared to December 31, 2021. Accounts payable increased 40%,
primarily due to higher business activity levels in KMT and KDS. Accrued liabilities decreased 13%, primarily due to the settlement of
insurance claims. Deferred revenues increased 64%, primarily due to deposits on equipment expected to be shipped in 2023 in KDS.
Long-term debt, net – less current portion, as of December 31, 2022, decreased 7% compared to December 31, 2021, primarily
reflecting repayments of $145.0 million under the Term Loans, partially offset by the issuance of $60 million of debt under the 3.46%
series A notes on October 20, 2022. Net debt discounts and deferred issuance costs were $3.7 million (excluding $1.8 million attributable
to the Revolving Credit Facility included in other assets on the balance sheet) at December 31, 2022 and $3.6 million at December 31,
2021.
41
Deferred income taxes as of December 31, 2022 increased 9% compared to December 31, 2021, primarily reflecting the 2022
deferred tax provision of $37.8 million.
Operating lease liabilities – less current portion, as of December 31, 2022 decreased 11% compared to December 31, 2021,
primarily due to lease payments made, partially offset by new leases acquired and liability accretion.
Other long-term liabilities as of December 31, 2022 decreased 67% compared to December 31, 2021, primarily due to a decrease
in pension liabilities and amortization of intangible liabilities.
Total equity as of December 31, 2022 increased 5% compared to December 31, 2021, primarily due to net earnings attributable to
Kirby of $122.3 million and other comprehensive income of $42.8 million for 2022, partially offset by treasury stock purchases of $22.9
million.
Retirement Plans
The Company sponsors a defined benefit 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 2022, 2021 or 2020.
On April 12, 2017, the Company amended its 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 $0.9 million, $0.5 million and $2.2 million for the years ended December 31, 2022,
2021 and 2020, respectively.
The aggregate fair value of plan assets of the Company’s pension plans was $341.1 million and $430.8 million at December 31,
2022, and December 31, 2021, 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 both the Kirby pension plan and the Higman pension plan in 2022 and 3.0% for the Kirby
pension plan and 3.1% for the Higman pension plan in 2021. The Company estimates that every 0.1% decrease in the discount rate
results in an increase in the accumulated benefit obligation (“ABO”) of approximately $3.7 million. The Company assumed that plan
assets would generate a long-term rate of return of 6.75% in both 2022 and 2021. 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.
42
Long-Term Financing
The following table summarizes the Company’s outstanding debt (in thousands):
Long-term debt, including current portion:
Revolving Credit Facility due July 29, 2027 (a)
Term Loan due July 29, 2027 (a)
Term Loan due March 27, 2024 (b)
3.29% senior notes due February 27, 2023
4.2% senior notes due March 1, 2028
3.46% senior notes due January 19, 2033
Credit line due June 30, 2024
Bank notes payable
Unamortized debt discount and issuance costs (c)
December 31,
2022
2021
$
$
— $
170,000
—
350,000
500,000
60,000
—
3,292
1,083,292
(3,674)
1,079,618
$
—
—
315,000
350,000
500,000
—
—
1,934
1,166,934
(3,567)
1,163,367
(a) Variable interest rate of 5.8% at December 31, 2022.
(b) Variable interest rate of 1.5% at December 31, 2021.
(c) Excludes $1.8 million attributable to the 2027 Revolving Credit Facility included in other assets at December 31, 2022 and
$1.4 million attributable to the 2024 Revolving Credit Facility included in other assets at December 31, 2021.
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 $80.0 million under
the 2027 Term Loan prior to scheduled maturities. As a result, no repayments are required until June 30, 2025. Outstanding letters of
credit under the 2027 Revolving Credit Facility were $5.1 million and available borrowing capacity was $494.9 million as of December
31, 2022.
The 2027 Term Loan is repayable in quarterly installments with no repayments required until June 30, 2025, 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 prepayment. 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 $350 million of 3.29% senior unsecured notes due February 27, 2023 (the “2023 Notes”). No principal payments
are required until maturity.
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 are 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 Company has a $10.0 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, 2024. Outstanding letters of credit under the $10.0 million credit
line were $0.6 million and available borrowing capacity was $9.4 million as of December 31, 2022.
43
As of December 31, 2022, 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 $294.1 million, $321.6 million, and $444.9 million for the
years ended December 31, 2022, 2021, and 2020, respectively. The 9% decrease in 2022 as compared to 2021 was primarily due to a
tax refund of $119.5 million, including accrued interest, for the Company’s 2019 federal tax return which was received in the 2021 first
quarter. As activity levels increased in 2022, KMT and KDS saw increased revenues and operating income. However, inventory levels
increased approximately 39% in 2022 as a result of higher activity and having to manage supply chain constraints seen especially in
KDS during 2022. Accounts receivable increased during 2022 because of increased revenues which was offset by higher levels of
accounts payable due to the increased business activity levels. Increases in KMT revenues and operating income were driven by
increased barge utilization and higher term and spot contract pricing in the inland and coastal markets during 2022. KMT revenues and
operating income during 2021 were negatively impacted by Winter Storm Uri in the 2021 first quarter and Hurricane Ida in the 2021
third quarter.
During 2022, 2021, and 2020, the Company generated cash of $36.9 million, $51.3 million, and $17.3 million, respectively, from
proceeds from the disposition of assets, and $3.9 million, $0.6 million, and $0.4 million, respectively, from proceeds from the exercise
of stock options.
For 2022, cash generated was used for capital expenditures of $172.6 million (net of an increase in accrued capital expenditures of
$3.0 million), including $8.3 million for inland towboat construction and $164.3 million primarily for upgrading existing marine
equipment and marine transportation and distribution and services facilities. The Company also used $3.9 million for acquisitions of
businesses and marine equipment, more fully described under Acquisitions above.
For 2021, cash generated was used for capital expenditures of $98.0 million (net of an increase in accrued capital expenditures of
$18.6 million), including $6.2 million for inland towboat construction and $91.8 million primarily for upgrading existing marine
equipment and marine transportation and distribution and services facilities. The Company also used $9.1 million for acquisitions of
businesses and marine equipment, more fully described under Acquisitions above.
Treasury Stock Purchases
During 2022, the Company purchased 0.4 million shares of its common stock for $22.9 million, at an average price of $59.32 per
share. The Company did not purchase any treasury stock during 2021 or 2020. On January 30, 2023, the Board approved a five million
share increase in the Company’s repurchase authorization. As of February 17, 2023, the Company had approximately 6.0 million shares
available under its existing repurchase 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.
Liquidity and Capital Resources
Funds generated from operations are available for acquisitions, capital expenditure projects, common stock repurchases, repayments
of borrowings and for other corporate and operating requirements. In addition to net cash flow provided by operating activities, as of
February 17, 2023, the Company had cash equivalents of $316.5 million, availability of $494.9 million under its Revolving Credit
Facility and $9.4 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
repurchases, 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 and expires July 29, 2027. The 2023 Notes do
not mature until February 27, 2023 and require no prepayments. The Company intends to use a combination of the proceeds from the
issuance of the 2033 Notes in October 2022 and January 2023 and availability under the 2027 Revolving Credit Facility to repay the
2023 Notes upon maturity. The 4.2% senior unsecured notes do not mature until March 1, 2028 and require no prepayments. The 2027
Term Loan in the amount of $250 million is subject to quarterly installments, beginning June 30, 2025, in increasing percentages of the
44
original principal amount of the loan, with the remaining unpaid balance of approximately $43.8 million payable on July 29, 2027,
assuming no 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 2023. 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 $19.3 million at December 31, 2022, including $12.2 million in
letters of credit and $7.1 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, 2022, the Company’s pension plan funding was 105% of the pension plans’ ABO, including the Higman
pension plan. The Company expects to make additional pension contributions of $8.4 million in 2023.
While inflationary pressures have increased in the second half of 2021 and into 2022, 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 limits exposure to inflation. 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.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
The Company is exposed to risk from changes in interest rates on certain of its outstanding debt. The outstanding loan balances
under the Company’s bank credit facilities bear interest at variable rates based on prevailing short-term interest rates in the United States
and Europe. A 1% increase in variable interest rates would impact the 2022 interest expense by $1.7 million based on balances
outstanding at December 31, 2022, and would change the fair value of the Company’s debt by approximately 1%.
Item 8. Financial Statements and Supplementary Data
The response to this item is submitted as a separate section of this report (see Item 15, page 77 and pages 47 to 76 of this report).
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Not applicable.
45
Item 9A. Controls and Procedures
Disclosure Controls and Procedures. The Company’s management, with the participation of the Chief Executive Officer and the
Chief Financial Officer, has evaluated the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the
Securities Exchange Act of 1934 (“Exchange Act”)), as of December 31, 2022, as required by Rule 13a-15(b) under the Exchange Act.
Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that, as of December 31, 2022, the
disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in the reports that
it files or submits under the Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in the
Securities and Exchange Commission’s rules and forms and (ii) is accumulated and communicated to the Company’s management,
including the Chief Executive Officer and the Chief Financial Officer, as appropriate to allow timely decisions regarding required
disclosure.
Management’s Annual Report on Internal Control Over Financial Reporting. Management of the Company is responsible for
establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act).
The Company’s management, with the participation of the Chief Executive Officer and the Chief Financial Officer, evaluated the
effectiveness of the Company’s internal control over financial reporting as of December 31, 2022 using the framework in Internal
Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based
on that evaluation, management concluded that the Company’s internal control over financial reporting was effective as of December 31,
2022. KPMG LLP, the Company’s independent registered public accounting firm, has audited the Company’s internal control over
financial reporting, as stated in their report which is included herein.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of
changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Changes in Internal Control Over Financial Reporting. There were no changes in the Company’s internal control over financial
reporting during the quarter ended December 31, 2022 that have materially affected, or are reasonably likely to materially affect, the
Company’s internal control over financial reporting.
Item 9B. Other Information
Not applicable
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable
Items 10 Through 14.
PART III
The information for these items is incorporated by reference to the definitive proxy statement to be filed by the Company with the
Commission pursuant to Regulation 14A within 120 days of the close of the fiscal year ended December 31, 2022, except for the
information regarding executive officers which is provided under Item 1.
46
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
Kirby Corporation:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Kirby Corporation and subsidiaries (the Company) as of December
31, 2022 and 2021, the related consolidated statements of earnings, comprehensive income, stockholders’ equity, and cash flows for
each of the years in the three-year period ended December 31, 2022, and the related notes (collectively, the consolidated financial
statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the
Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the years in the three-year
period ended December 31, 2022, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB),
the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control –
Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated
February 20, 2023 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion
on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to
error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining,
on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation
of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements
that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are
material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The
communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole,
and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the
accounts or disclosures to which it relates.
Evaluation of potential impairment indicators for coastal marine transportation equipment
As discussed in Note 1 to the consolidated financial statements, the Company performs an impairment assessment when
circumstances indicate that the carrying amount of its 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.
Recoverability of marine transportation equipment is assessed based on vessel classes. Marine Transportation equipment as of
December 31, 2022, was $4,837,379,000, a portion of which related to coastal marine transportation equipment.
We identified the evaluation of potential impairment indicators for coastal marine transportation equipment as a critical audit matter.
Evaluating the Company’s judgments in determining whether there was a triggering event required a high degree of subjective
auditor judgment.
47
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the
operating effectiveness of certain internal controls related to the Company’s process to identify and assess triggering events that
indicate that the carrying amount of coastal marine transportation equipment may not be recoverable. This included controls related
to the consideration of contract pricing by vessel class and market conditions in the determination of a triggering event. We assessed
the Company’s identification of triggering events, including consideration of executed contract pricing and break-even costs by
vessel class in addition to other certain qualitative considerations. We compared certain data used by the Company to relevant
executed contracts, historical results, and analyst and industry reports. We evaluated the Company’s responses related to the
elements considered and whether the Company omitted any significant internal or external elements in its evaluation.
/s/ KPMG LLP
We have served as the Company’s auditor since 1992.
Houston, Texas
February 21, 2023
48
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
Kirby Corporation:
Opinion on Internal Control Over Financial Reporting
We have audited Kirby Corporation and subsidiaries’ (the Company) internal control over financial reporting as of December 31, 2022,
based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations
of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial
reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB),
the consolidated balance sheets of the Company as of December 31, 2022 and 2021, the related consolidated statements of earnings,
comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2022,
and the related notes (collectively, the consolidated financial statements), and our report dated February 20, 2023 expressed an
unqualified opinion on those consolidated financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of
the effectiveness of internal control over financial reporting, included in the accompanying Management's Annual Report on Internal
Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting
based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting,
assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control
based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances.
We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention
or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ KPMG LLP
Houston, Texas
February 21, 2023
49
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
Current assets:
Cash and cash equivalents
Accounts receivable:
ASSETS
Trade — less allowance for doubtful accounts of $7,684 ($8,177 in 2021)
Other
Inventories — net
Prepaid expenses and other current assets
Total current assets
Property and equipment:
Marine transportation equipment
Land, buildings and equipment
Accumulated depreciation
Property and equipment — net
Operating lease right-of-use assets
Investment in affiliates
Goodwill
Other intangibles, net
Other assets
Total assets
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Bank notes payable
Income taxes payable
Accounts payable
Accrued liabilities:
Interest
Insurance premiums and claims
Employee compensation
Taxes — other than on income
Other
Current portion of operating lease liabilities
Deferred revenues
Total current liabilities
Long-term debt, net — less current portion
Deferred income taxes
Operating lease liabilities — less current portion
Other long-term liabilities
Total long-term liabilities
Contingencies and commitments
Equity:
Kirby stockholders’ equity:
Common stock, $0.10 par value per share. Authorized 120,000,000 shares, issued 65,472,000
Additional paid-in capital
Accumulated other comprehensive income — net
Retained earnings
Treasury stock — at cost, 5,565,000 shares in 2022 and 5,361,000 shares in 2021
Total Kirby stockholders’ equity
Noncontrolling interests
Total equity
Total liabilities and equity
See accompanying notes to consolidated financial statements.
50
December 31,
2022
2021
($ in thousands)
$
80,577
$
34,813
483,406
114,556
461,848
71,372
1,211,759
4,837,379
614,764
5,452,143
(1,818,681)
3,633,462
154,507
2,171
438,748
51,463
62,814
5,554,924
3,292
323
278,081
11,630
65,088
55,851
30,169
42,014
36,444
119,305
642,197
1,076,326
625,884
142,140
23,209
1,867,559
$
$
417,958
149,964
331,350
69,780
1,003,865
4,789,994
602,857
5,392,851
(1,714,336)
3,678,515
167,730
2,134
438,748
60,070
48,001
5,399,063
1,934
—
199,088
11,379
111,117
39,331
44,740
29,511
33,902
72,770
543,772
1,161,433
574,152
159,672
71,252
1,966,509
—
—
6,547
859,345
16,853
2,468,730
(308,598)
3,042,877
2,291
3,045,168
5,554,924
$
6,547
854,512
(25,966)
2,346,439
(295,208)
2,886,324
2,458
2,888,782
5,399,063
$
$
$
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
2022
Year Ended December 31,
2021
($ in thousands, except per share amounts)
2020
Revenues:
Marine transportation
Distribution and services
Total revenues
Costs and expenses:
Costs of sales and operating expenses
Selling, general and administrative
Taxes, other than on income
Depreciation and amortization
Impairments and other charges
Gain on disposition of assets
Total costs and expenses
Operating income (loss)
Other income
Interest expense
Earnings (loss) before taxes on income
(Provision) benefit for taxes on income
Net earnings (loss)
Less: Net earnings attributable to noncontrolling interests
Net earnings (loss) attributable to Kirby
Net earnings (loss) per share attributable to Kirby common stockholders:
Basic
Diluted
$
$
1,616,967
1,167,787
2,784,754
$
1,322,918
923,742
2,246,660
1,404,265
767,143
2,171,408
2,060,941
302,692
35,071
201,443
—
(8,279)
2,591,868
192,886
16,677
(44,588)
164,975
(42,214)
122,761
(470)
122,291
2.04
2.03
$
$
$
1,652,961
266,911
36,251
213,718
340,713
(5,761)
2,504,793
(258,133)
10,001
(42,469)
(290,601)
43,830
(246,771)
(183)
(246,954) $
1,510,818
258,272
42,000
219,921
561,274
(118)
2,592,167
(420,759)
8,147
(48,739)
(461,351)
189,759
(271,592)
(954)
(272,546)
(4.11) $
(4.11) $
(4.55)
(4.55)
$
$
$
See accompanying notes to consolidated financial statements.
51
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net earnings (loss)
Other comprehensive income (loss), net of taxes:
Pension and postretirement benefits
Foreign currency translation adjustments
Total other comprehensive income (loss), net of taxes
Total comprehensive income (loss), net of taxes
Net earnings attributable to noncontrolling interests
Comprehensive income (loss) attributable to Kirby
$
$
2022
122,761
Year Ended December 31,
2021
($ in thousands)
$
(246,771) $
43,868
(1,049)
42,819
36,547
(1,061)
35,486
165,580
(470)
165,110
$
(211,285)
(183)
(211,468) $
2020
(271,592)
(23,320)
(333)
(23,653)
(295,245)
(954)
(296,199)
See accompanying notes to consolidated financial statements.
52
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Cash flows from operating activities:
Net earnings (loss)
Adjustments to reconcile net earnings (loss) to net cash provided by operations:
2022
Year Ended December 31,
2021
($ in thousands)
2020
$
122,761
$
(246,771)
$
(271,592)
Depreciation and amortization
Provision (credit) for doubtful accounts
Provision (benefit) for deferred income taxes
Gain on disposition of assets
Impairments and other charges
Amortization of share-based compensation
Amortization of major maintenance costs
Other
Increase (decrease) in cash flows resulting from changes in:
Accounts receivable
Inventory
Other assets
Income taxes payable
Accounts payable
Accrued and other liabilities
Net cash provided by operating activities
Cash flows from investing activities:
Capital expenditures
Acquisitions of businesses and marine equipment, net of cash acquired
Proceeds from disposition of assets and other
Net cash used in investing activities
Cash flows from financing activities:
Borrowings (payments) on bank credit facilities, net
Borrowings on long-term debt
Payments on long-term debt
Payment of debt issue costs
Proceeds from exercise of stock options
Payments related to tax withholding for share-based compensation
Treasury stock purchases
Return of investment to noncontrolling interests and other
Net cash provided by (used in) financing activities
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
Supplemental disclosures of cash flow information:
Cash paid (received) during the period:
Interest paid
Income taxes paid (refunded), net
Operating cash outflow from operating leases
Non-cash investing activity:
Capital expenditures included in accounts payable
Right-of-use assets obtained in exchange for lease obligations
201,443
1,183
37,782
(8,279)
—
13,865
29,031
(283)
(31,550)
(127,095)
(27,801)
1,975
75,996
5,100
294,128
(172,606)
(3,900)
36,905
(139,601)
1,358
310,000
(395,000)
(1,977)
3,887
(3,408)
(22,901)
(722)
(108,763)
45,764
34,813
80,577
42,816
2,553
44,229
2,996
22,799
$
$
$
$
$
$
213,718
(138)
(44,419)
(5,761)
340,713
15,713
33,213
(640)
29,126
(19,248)
(38,335)
480
15,951
27,974
321,576
(98,015)
(9,115)
51,342
(55,788)
(248,105)
—
(60,000)
—
629
(2,856)
—
(981)
(311,313)
(45,525)
80,338
34,813
40,878
(116,648)
44,089
18,633
33,842
$
$
$
$
$
$
219,921
3,716
25,163
(118)
561,274
14,722
30,214
(90)
(124,941)
47,076
(29,994)
8,826
(39,795)
558
444,940
(148,185)
(354,972)
17,310
(485,847)
250,024
—
(150,000)
—
353
(3,193)
—
(676)
96,508
55,601
24,737
80,338
48,721
(35,571)
43,639
(13,280)
46,511
$
$
$
$
$
$
See accompanying notes to consolidated financial statements.
53
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
Common
Stock
Shares
Amount
Additional
Paid-in-
Capital
Accumulated
Other
Comprehensive
Income
Retained
Earnings
(in thousands)
Treasury Stock
Shares
Amount
Noncontrolling
Interests
Total
65,472
—
$
6,547
—
$
835,899
26
$
(37,799)
—
$ 2,865,939
—
(5,513)
15
$ (301,963)
327
$
2,969
—
$ 3,371,592
353
—
—
—
—
—
—
—
—
—
—
(5,668)
—
14,722
—
—
—
—
—
—
—
—
(23,653)
(272,546)
—
—
103
(39)
—
—
—
5,668
(3,193)
—
—
—
—
—
—
—
(3,193)
14,722
954
(295,245)
(676)
(676)
65,472
—
$
6,547
—
$
844,979
21
$
(61,452)
—
$ 2,593,393
—
(5,434)
12
$ (299,161)
608
$
3,247
—
$ 3,087,553
629
—
—
—
—
—
—
—
—
—
—
(6,201)
—
15,713
—
—
—
—
—
—
—
—
35,486
(246,954)
—
—
113
(52)
—
—
—
6,201
(2,856)
—
—
—
—
—
—
—
(2,856)
15,713
183
(211,285)
(972)
(972)
65,472
—
$
6,547
—
$
854,512
757
$
(25,966)
—
$ 2,346,439
—
(5,361)
58
$ (295,208)
3,130
$
2,458
—
$ 2,888,782
3,887
—
—
—
—
—
—
—
—
—
—
—
—
(9,789)
—
13,865
—
—
—
—
—
—
—
—
—
—
—
42,819
122,291
—
—
178
(54)
—
(386)
—
—
9,789
(3,408)
—
(22,901)
—
—
—
—
—
—
—
(3,408)
13,865
(22,901)
470
165,580
(637)
(637)
65,472
$
6,547
$
859,345
$
16,853
$ 2,468,730
(5,565)
$ (308,598)
$
2,291
$ 3,045,168
Balance at December 31,
2019
Stock option exercises
Issuance of stock for
equity awards, net of
forfeitures
Tax withholdings on
equity award vesting
Amortization of share-
based compensation
Total comprehensive loss,
net of taxes
Return of investment to
noncontrolling interests
Balance at December 31,
2020
Stock option exercises
Issuance of stock for
equity awards, net of
forfeitures
Tax withholdings on
equity award vesting
Amortization of share-
based compensation
Total comprehensive loss,
net of taxes
Return of investment to
noncontrolling interests
Balance at December 31,
2021
Stock option exercises
Issuance of stock for
equity awards, net of
forfeitures
Tax withholdings on
equity award vesting
Amortization of share-
based compensation
Treasury stock purchases
Total comprehensive
income, net of taxes
Return of investment to
noncontrolling interests
Balance at December 31,
2022
See accompanying notes to consolidated financial statements.
54
KIRBY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Summary of Significant Accounting Policies
Principles of Consolidation. The consolidated financial statements include the accounts of Kirby Corporation and all majority-
owned subsidiaries (the “Company”). All investments in which the Company owns 20% to 50% and exercises significant influence over
operating and financial policies are accounted for using the equity method. All material intercompany accounts and transactions have
been eliminated in consolidation. Certain reclassifications have been made to reflect the current presentation of financial information.
Such reclassifications have no impact on previously reported net earnings (loss), stockholders’ equity, or cash flows.
Accounting Policies
Cash Equivalents. Cash equivalents consist of all short-term, highly liquid investments with maturities of three months or less at
date of purchase.
Accounts Receivable. In the normal course of business, the Company extends credit to its customers. The Company regularly
reviews the accounts and makes adequate provisions for probable uncollectible balances. It is the Company’s opinion that the accounts
have no impairment, other than that for which provisions have been made. Included in accounts receivable-trade as of December 31,
2022 and 2021 were $139.5 million and $92.7 million, respectively, of accruals for revenues earned which have not been invoiced as of
the end of each year.
The Company’s marine transportation and distribution and services operations are subject to hazards associated with such
businesses. The Company maintains insurance coverage against these hazards with insurance companies. Included in accounts
receivable-other as of December 31, 2022 and 2021 were $27.7 million and $69.6 million, respectively, of receivables from insurance
companies to cover claims in excess of the Company’s deductible.
Concentrations of Credit Risk. Financial instruments which potentially subject the Company to concentrations of credit risk are
primarily trade accounts receivables. The Company’s marine transportation customers include the major oil refining and petrochemical
companies. The distribution and services customers are oilfield service companies, oil and gas operators and producers, on-highway
transportation companies, marine transportation companies, commercial fishing companies, construction companies, power generation
companies, and the United States government. The Company regularly reviews its accounts and estimates the amount of uncollectible
receivables each period and establishes an allowance for uncollectible amounts. The amount of the allowance is based on the age of
unpaid amounts, information about the current financial strength of customers, and other relevant information. Estimates of uncollectible
amounts are revised each period, and changes are recorded in the period they become known.
Property, Maintenance and Repairs. Property is recorded at cost or acquisition date fair value; improvements and betterments are
capitalized as incurred. Depreciation is recorded using the straight-line method over the estimated useful lives of the individual assets
as follows: marine transportation equipment, 5-40 years; buildings, 10-40 years; other equipment, 2-10 years; and leasehold
improvements, term of lease. 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 United States Coast Guard (“USCG”) inspections unless the shipyard extends the life, improves the operating capacity, or replaces
significant components of the vessel, which results in the costs being capitalized.
Drydocking on Ocean-Going Vessels. 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 American Bureau of
Shipping (“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, or replace significant components of the vessel are capitalized. The
Company recognized amortization of major maintenance costs of $29.0 million, $33.2 million, and $30.2 million for the years ended
December 31, 2022, 2021, and 2020, respectively, in costs of sales and operating expenses. Routine repairs and maintenance on ocean-
going vessels are expensed as incurred. Interest is capitalized on the construction of new ocean-going vessels. For the years ended
December 31, 2022, 2021 and 2020, no interest was capitalized.
Environmental Liabilities. The Company expenses costs related to environmental events as they are incurred or when a loss is
considered probable and reasonably estimable.
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. The Company conducted its annual goodwill impairment tests at November 30, 2022, 2021, and 2020.
55
The Company also conducted interim goodwill impairment tests at September 30, 2021 and March 31, 2020. Refer to Note 7,
Impairments and other charges for more information. The Company will continue to conduct goodwill impairment tests as of November
30 of subsequent years, or whenever events or circumstances indicate that interim impairment testing is necessary. The amount of
goodwill impairment, if any, is typically measured based on a combination of projected discounted future operating cash flows using an
appropriate discount rate and a market approach for comparable companies. The following table summarizes the changes in goodwill
(in thousands):
Balance at December 31, 2020 (gross)
Accumulated impairment and amortization
Balance at December 31, 2020
Impairment
Balance at December 31, 2021 (gross)
Accumulated impairment and amortization
Balance at December 31, 2021 and 2022
Marine
Transportation
Distribution and
Services
$
$
505,784
(18,574)
487,210
(219,052)
505,784
(237,626)
268,158
$
$
560,155
(389,565)
170,590
—
560,155
(389,565)
170,590
$
$
Total
1,065,939
(408,139)
657,800
(219,052)
1,065,939
(627,191)
438,748
Other Intangibles. Other intangibles include assets for favorable contracts and customer relationships, distributorship and dealership
agreements, trade names and non-compete agreements and liabilities for unfavorable leases and contracts. The following table
summarizes the balances of other intangible assets and other intangible liabilities (in thousands):
Other intangible assets – gross
Accumulated amortization
Other intangible assets – net
Other intangible liabilities – gross
Accumulated amortization
Other intangible liabilities – net
December 31,
2022
203,242
(151,779)
51,463
13,860
(13,280)
580
$
$
$
$
2021
203,217
(143,147)
60,070
13,860
(12,120)
1,740
$
$
$
$
The costs of intangible assets and liabilities are amortized to expense in a systematic and rational manner over their estimated useful
lives. For the years ended December 31, 2022, 2021, and 2020, the amortization expense for intangibles was $7.6 million, $7.8 million,
and $9.2 million, respectively. Estimated net amortization expense for amortizable intangible assets and liabilities for the next five years
(2023 – 2027) is approximately $8.0 million, $8.5 million, $8.5 million, $6.3 million, and $5.0 million, respectively, and $14.6 million
thereafter. As of December 31, 2022, the weighted average amortization period for intangible assets and liabilities was approximately 7
years.
Revenue Recognition. The majority of marine transportation revenue is derived from term contracts, ranging from one to three
years, some of which have renewal options, and the remainder is from spot contracts. The majority of the term contracts by revenue are
for terms of one year. The Company provides marine transportation services for its customers and, in almost all cases, does not assume
ownership of the products it transports. A term contract is an agreement with a specific customer to transport cargo from a designated
origin to a designated destination at a set rate or at a daily rate. The rate may or may not escalate during the term of the contract, however,
the base rate generally remains constant and contracts often include escalation provisions to recover changes in specific costs such as
fuel. A spot contract is an agreement with a customer to move cargo from a specific origin to a designated destination for a rate negotiated
at the time the cargo movement takes place. Spot contract rates are at the current “market” rate, including fuel, and are subject to market
volatility. The Company uses a voyage accounting method of revenue recognition for its marine transportation revenues which allocates
voyage revenue based on the percent of the voyage completed during the period. The performance of the service is invoiced as the
transaction occurs and payment is required depending on each specific customer’s credit.
Distribution products and services are generally sold based upon purchase orders or preferential service agreements with the
customer that include fixed or determinable prices. Parts sales are recognized when control transfers to the customer, generally when
title passes upon shipment to customers. Service revenue is recognized over time as the service is provided using measures of progress
utilizing hours worked or costs incurred as a percentage of estimated hours or expected costs. Revenue from rental agreements is
recognized on a straight-line basis over the rental period. The Company recognizes the revenues on manufacturing activities upon
shipment and transfer of control to the customer. The transactions in the distribution and services segment (“KDS”) are typically invoiced
as parts are shipped or upon the completion of the service job. Contract manufacturing activities are generally invoiced upon shipment
and the Company will often get deposits from its customers prior to starting work, or progress payments during the project depending
on the credit worthiness of the customer and the size of the project.
56
Stock-Based Compensation. The Company has share-based compensation plans covering selected officers and other key employees
as well as the Company’s Board of Directors. Stock-based grants made under the Company’s stock plans are recorded at fair value on
the date of the grant and the cost for all grants made under the director plan and for grants made under the employee plan is generally
recognized ratably over the vesting period of the restricted stock unit (“RSU”), stock option, or restricted stock, however, the employee
plan includes a provision for the continued vesting of unvested stock options and RSUs for employees who meet certain years of service
and age requirements at the time of their retirement. The provision results in shorter expense accrual periods on stock options and RSUs
granted to employees who are nearing retirement and meet the service and age requirements. Stock option grants are valued at the date
of grant as calculated under the Black-Scholes option pricing model. The Company accounts for forfeitures as they occur. The
Company’s stock-based compensation plans are more fully described in Note 8, Stock Award Plans.
Taxes on Income. The Company follows the asset and liability method of accounting for income taxes. Under the asset and liability
method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their respective tax basis and operating loss and tax credit carryforwards.
Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date.
Accrued Insurance. Accrued insurance liabilities include estimates based on individual incurred claims outstanding and an estimated
amount for losses incurred but not reported (“IBNR”) or fully developed based on past experience. Insurance premiums, IBNR losses
and incurred claim losses, in excess of the Company’s deductible for the years ended December 31, 2022, 2021, and 2020, were $39.1
million, $37.8 million, and $30.6 million, respectively.
Treasury Stock. The Company follows the average cost method of accounting for treasury stock transactions.
Impairment of Long-lived Assets and for Long-lived Assets to Be Disposed Of. 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.
Recoverability on marine transportation assets is assessed based on vessel classes, not on individual assets, because identifiable
cash flows for individual marine transportation assets are not available. Projecting customer contract volumes allows estimation of future
cash flows by projecting pricing and utilization by vessel class but it is not practical to project which individual marine transportation
asset will be utilized for any given contract. Because customers generally do not specify which particular vessel is used, prices are
quoted based on vessel classes not individual assets. Nominations of vessels for specific jobs are determined on a day by day basis and
are a function of the equipment class required and the geographic position of vessels within that class at that particular time as vessels
within a class are interchangeable and provide the same service. The Company’s vessels are mobile assets and equipped to operate in
geographic regions throughout the United States and the Company has in the past and expects to continue to move vessels from one
region to another when it is necessary due to changing markets and it is economical to do so. Barge vessel classes are based on similar
capacities, hull type, and type of product and towing vessels are based on similar hull type and horsepower.
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.
Fair Value Measurements. The accounting guidance for using fair value to measure certain assets and liabilities establishes a three
tier value hierarchy, which prioritizes the inputs to valuation techniques used in measuring fair value. These tiers include: Level 1,
defined as observable inputs such as quoted prices in active markets for identical assets or liabilities; Level 2, defined as inputs other
than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in
which little, if any, market data exists, therefore requiring an entity to develop its own assumptions about the assumptions that market
participants would use in pricing the asset or liability. The fair value of the Company’s debt instruments is described in Note 5, Long-
Term Debt.
Accounting Standards
In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12,
“Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” (“ASU 2019-12”) which simplifies the accounting for
income taxes by removing certain exceptions to the general principles in Topic 740, Income Taxes. The Company adopted ASU 2019-
12 on January 1, 2021. There was no material impact on the Company’s financial statements or disclosures upon adoption of ASU 2019-
12.
57
(2) Acquisitions
On March 31, 2022, the Company paid $3.9 million in cash to purchase assets of a gearbox repair company in KDS. Assets acquired
consisted primarily of property and equipment.
The Company purchased four inland tank barges from a leasing company for $7.5 million in cash during 2021. The Company had
been leasing the barges prior to the purchase.
On October 4, 2021, the Company paid $1.6 million in cash to purchase assets of an energy storage systems manufacturer based in
Texas which have been key to the development of new power generation solutions for electric fracturing equipment. Assets acquired
and liabilities assumed consisted primarily of a right of use lease asset and lease liability for an operating lease assumed as part of the
acquisition.
During 2020, the Company purchased six newly constructed inland pressure barges for $39.4 million in cash.
On April 1, 2020, the Company completed the acquisition of the inland tank barge fleet of Savage Inland Marine, LLC (“Savage”)
for $279 million in cash. Savage’s tank barge fleet consisted of 92 inland tank barges with approximately 2.5 million barrels of capacity
and 45 inland towboats. The Savage assets that were acquired primarily move petrochemicals, refined products, and crude oil on the
Mississippi River, its tributaries, and the Gulf Intracoastal Waterway. The Company also acquired Savage’s ship bunkering business
and barge fleeting business along the Gulf Coast. The Company considers Savage to be a natural extension of the current marine
transportation segment (“KMT”), expanding the capabilities of the Company’s inland based marine transportation business and lowering
the average age of its fleet.
On January 3, 2020, the Company completed the acquisition of substantially all the assets of Convoy Servicing Company and
Agility Fleet Services, LLC (collectively “Convoy”) for $37.2 million in cash. Convoy is an authorized dealer for Thermo King
refrigeration systems for trucks, railroad cars and other land transportation markets for North and East Texas and Colorado.
The fair values of the assets acquired and liabilities assumed from the Savage and Convoy acquisitions recorded at the respective
acquisition dates were as follows (in thousands):
Accounts receivable
Inventories
Prepaid expenses
Property and equipment
Operating lease right-of-use assets
Goodwill
Other intangibles
Total assets
Accounts payable and accrued liabilities
Operating lease liabilities, including current portion
Total liabilities
Net assets acquired
Savage
Convoy
$
$
$
$
$
— $
—
1,067
210,065
27,085
81,635
2,300
322,152
$
68
43,085
43,153
278,999
$
$
$
5,677
11,771
177
415
3,713
10,309
17,170
49,232
8,339
3,713
12,052
37,180
The Company acquired customer relationships with an estimated value of $2.3 million from Savage with an amortization period of
10 years. Acquisition related costs of $0.4 million, consisting primarily of legal and other professional fees, were expensed as incurred
to selling, general and administrative expense. All goodwill recorded for the Savage acquisition will be deductible for tax purposes.
The Company acquired intangible assets from Convoy with a weighted average amortization period of 11 years, consisting of $9
million for customer relationships with an amortization period of 10 years, $8 million for distributorships with an amortization period
of 12 years and $0.2 million for non-compete agreements with an amortization period of three years. All goodwill recorded for the
Convoy acquisition will be deductible for tax purposes.
58
(3) Revenues
The following table sets forth the Company’s revenues by major source (in thousands):
Marine transportation segment:
Inland transportation
Coastal transportation
Distribution and services segment:
Commercial and industrial
Oil and gas
2022
Year Ended December 31,
2021
2020
$
$
$
$
1,277,010
339,957
1,616,967
651,566
516,221
1,167,787
$
$
$
$
1,005,145
317,773
1,322,918
578,011
345,731
923,742
$
$
$
$
1,094,630
309,635
1,404,265
566,326
200,817
767,143
The Company’s revenue is measured based on consideration specified in its contracts with its customers. The Company recognizes
revenue over time as it provides services to its customers, or at the point in time that control over a part or product transfers to its
customer.
Contract Assets and Liabilities. Contract liabilities represent advance consideration received from customers, and are recognized
as revenue over time or at a point in time as the related performance obligation is satisfied. Revenues recognized during the years ended
December 31, 2022, 2021, and 2020, that were included in the opening contract liability balances were $61.7 million, $40.9 million and
$38.5 million, respectively. The Company has recognized all contract liabilities within the deferred revenues financial statement caption
on the balance sheet. The Company did not have any contract assets at December 31, 2022 or December 31, 2021. The Company applies
the practical expedient that allows non-disclosure of information about remaining performance obligations that have original expected
durations of one year or less.
(4) Segment Data
The Company’s operations are aggregated into two reportable business segments as follows:
Marine Transportation — Provides marine transportation by United States flagged vessels principally of liquid cargoes throughout
the United States inland waterway system, along all three United States coasts, and to a lesser extent, in United States coastal
transportation of dry-bulk cargoes. The principal products transported include petrochemicals, black oil, refined petroleum products and
agricultural chemicals.
Distribution and Services — Provides after-market service and genuine replacement parts for engines, transmissions, reduction
gears and related equipment used in oilfield services, marine, power generation, on-highway, and other industrial applications. The
Company also rents equipment including generators, industrial compressors, high capacity lift trucks, and refrigeration trailers for use
in a variety of industrial markets, and manufactures and remanufactures oilfield service equipment, including pressure pumping units,
electric power generation equipment, specialized electrical distribution and control equipment, and high capacity energy storage/battery
systems for oilfield service and railroad customers.
The Company’s two reportable business segments are managed separately based on fundamental differences in their operations.
The Company’s accounting policies for the business segments are the same as those described in Note 1, Summary of Significant
Accounting Policies. The Company evaluates the performance of its segments based on the contributions to operating income of the
respective segments, and before income taxes, interest, gains or losses on disposition of assets, other nonoperating income,
noncontrolling interests, accounting changes, and nonrecurring items. Intersegment revenues, based on market-based pricing, of KDS
from KMT of $31.9 million, $23.6 million, and $27.8 million in 2022, 2021, and 2020, respectively, as well as the related intersegment
profit of $3.2 million, $2.4 million, and $2.8 million in 2022, 2021, and 2020, respectively, have been eliminated from the tables below.
59
The following tables set forth by reportable segment the revenues, profit or loss, total assets, depreciation and amortization, and
capital expenditures attributable to the principal activities of the Company (in thousands):
Revenues:
Marine transportation
Distribution and services
Segment profit (loss):
Marine transportation
Distribution and services
Other
Depreciation and amortization:
Marine transportation
Distribution and services
Other
Capital expenditures:
Marine transportation
Distribution and services
Other
Total assets:
Marine transportation
Distribution and services
Other
2022
Year Ended December 31,
2021
2020
$
$
$
$
$
$
$
$
1,616,967
1,167,787
2,784,754
136,184
67,037
(38,246)
164,975
177,551
16,776
7,116
201,443
147,170
21,713
3,723
172,606
$
$
$
$
$
$
$
$
$
$
1,322,918
923,742
2,246,660
$
$
1,404,265
767,143
2,171,408
$
63,015
27,607
(381,223)
(290,601) $
163,638
(12,191)
(612,798)
(461,351)
185,979
20,573
7,166
213,718
84,353
8,104
5,558
98,015
$
$
$
$
186,798
28,255
4,868
219,921
133,990
4,854
9,341
148,185
December 31,
2022
2021
4,285,647
1,041,841
227,436
5,554,924
$
$
4,319,080
892,603
187,380
5,399,063
The following table presents the details of “Other” segment profit (loss) (in thousands):
General corporate expenses
Gain on disposition of assets
Impairments and other charges
Interest expense
Other income
2022
Year Ended December 31,
2021
2020
(18,614) $
8,279
—
(44,588)
16,677
(38,246) $
(13,803) $
5,761
(340,713)
(42,469)
10,001
(381,223) $
(11,050)
118
(561,274)
(48,739)
8,147
(612,798)
$
$
The following table presents the details of “Other” total assets (in thousands):
General corporate assets
Investment in affiliates
December 31,
2022
2021
$
$
225,265
2,171
227,436
$
$
185,246
2,134
187,380
60
(5) Long-Term Debt
The following table presents the carrying value and fair value of debt outstanding (in thousands):
Revolving Credit Facility due July 29, 2027 (a)
Term Loan due July 29, 2027 (a)
Term Loan due March 27, 2024 (b)
3.29% senior notes due February 27, 2023
4.2% senior notes due March 1, 2028
3.46% senior notes due January 19, 2033
Credit Line due June 30, 2024
Bank notes payable
Unamortized debt discounts and issuance costs (c)
2022
2021
December 31,
Carrying Value
Fair Value
Carrying Value
Fair Value
$
— $
— $
170,000
—
350,000
500,000
60,000
—
3,292
1,083,292
(3,674)
1,079,618
$
170,000
—
352,275
477,660
42,647
—
3,292
1,045,874
—
1,045,874
$
$
— $
—
315,000
350,000
500,000
—
—
1,934
1,166,934
(3,567)
1,163,367
$
—
—
315,000
358,390
549,239
—
—
1,934
1,224,563
—
1,224,563
(a) Variable interest rate of 5.8% at December 31, 2022.
(b) Variable interest rate of 1.5% at December 31, 2021.
(c) Excludes $1.8 million attributable to the 2027 Revolving Credit Facility included in other assets at December 31, 2022 and
$1.4 million attributable to the 2024 Revolving Credit Facility included in other assets at December 31, 2021.
The fair value of debt outstanding was determined using inputs characteristic of a Level 2 fair value measurement.
The following table presents borrowings and payments under the bank credit facilities (in thousands):
Borrowings on bank credit facilities
Payments on bank credit facilities
2022
Year Ended December 31,
2021
$
$
175,545
(174,187)
1,358
$
$
$
6,162
(254,267)
(248,105) $
2020
582,277
(332,253)
250,024
The aggregate payments due on the long-term debt in each of the next five years were as follows (in thousands):
2023
2024
2025
2026
2027
Thereafter
353,292
—
—
—
170,000
560,000
1,083,292
$
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 $80.0 million under
the 2027 Term Loan prior to scheduled maturities. As a result, no repayments are required until June 30, 2025. Outstanding letters of
credit under the 2027 Revolving Credit Facility were $5.1 million and available borrowing capacity was $494.9 million as of December
31, 2022.
61
The 2027 Term Loan is repayable in quarterly installments, with no repayments until June 30, 2025, 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 prepayment. 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 $350 million of 3.29% senior unsecured notes due February 27, 2023 (the “2023 Notes”). No principal payments
are required until maturity. The 2023 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 2023 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 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 are 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”) are excluded from short term liabilities because the Company
intends to use a combination of the proceeds from the issuance of the 2033 Notes and availability under the 2027 Revolving Credit
Facility to repay the 2023 Notes upon maturity.
The Company has a $10.0 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, 2024. 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. The Company had no borrowings
outstanding under the Credit Line as of December 31, 2022. Outstanding letters of credit under the Credit Line were $0.6 million and
available borrowing capacity was $9.4 million as of December 31, 2022.
The Company also had $3.3 million and $1.9 million of short-term unsecured loans outstanding, as of December 31, 2022 and 2021,
respectively, related to its South American operations.
As of December 31, 2022, the Company was in compliance with all covenants under its debt instruments.
(6) Leases
The Company currently leases various facilities and equipment under cancelable and noncancelable operating leases. The
accounting for the Company’s leases may require judgments, which include determining whether a contract contains a lease, allocating
the consideration between lease and non-lease components, and determining the incremental borrowing rates. Leases with an initial
noncancelable term of 12 months or less are not recorded on the balance sheet and the related lease expense is recognized on a straight-
62
line basis over the lease term. The Company has also elected to combine lease and non-lease components on all classes of leased assets,
except for leased towing vessels for which the Company estimates approximately 70% of the costs relate to service costs and other non-
lease components. Variable lease costs relate primarily to real estate executory costs (i.e. taxes, insurance and maintenance).
Future minimum lease payments under operating leases that have initial noncancelable lease terms in excess of one year were as
follows (in thousands):
2023
2024
2025
2026
2027
Thereafter
Total lease payments
Less: imputed interest
Operating lease liabilities
$
$
41,227
32,716
24,807
21,467
19,253
95,582
235,052
(56,468)
178,584
The following table summarizes lease costs (in thousands):
Operating lease cost
Variable lease cost
Short-term lease cost
Sublease income
Total lease cost
2022
Year Ended December 31,
2021
2020
$
$
42,319
1,780
25,365
(305)
69,159
$
$
40,786
1,793
17,914
(1,032)
59,461
$
$
43,810
1,550
25,387
(1,143)
69,604
The following table summarizes other supplemental information about the Company’s operating leases:
Weighted average discount rate
Weighted average remaining lease term
(7) Impairments and Other Charges
2022
4.1%
9 years
December 31,
2021
3.8%
9 years
2020
4.1%
10 years
During the third quarter of 2021, the Company decided to exit the Hawaii marine transportation market, selling marine transportation
equipment including four coastal tank barges, seven coastal tugboats, and certain other assets for aggregate cash proceeds of $17.2
million. In addition, as of September 30, 2021, the Company retired and classified as held for sale, an additional 12 coastal tank barges
and four coastal tugboats which were underutilized. The sales and retirements of coastal marine transportation equipment resulted in an
aggregate non-cash impairment charge of $97.5 million to reduce the carrying value of these assets to their estimated sales prices, net
of costs to sell.
As a result of the sale of the Hawaii marine transportation equipment, and the decision to retire certain additional underutilized
coastal tank barges and tugboats, the Company concluded that a triggering event had occurred and performed interim quantitative
impairment tests as of September 30, 2021 for certain of KMT’s long-lived assets and goodwill within the coastal marine market.
The Company determined the estimated fair value of such long-lived assets using a combination of a cost approach, a discounted
cash flow analysis, and a market approach. The Company determined the estimated fair value of the reporting unit using a combination
of a discounted cash flow analysis and a market approach for comparable companies. These analyses included management’s judgment
regarding short-term and long-term internal forecasts, updated for recent events, appropriate discount rates, and capital expenditures
using inputs characteristic of a Level 3 fair value measurement.
In performing the impairment test of certain long-lived assets within KMT, the Company determined that the carrying value of
certain long-lived assets, including certain coastal marine transportation equipment and operating lease right-of-use assets, were no
longer recoverable, resulting in a non-cash impairment charge of $24.2 million during the three months ended September 30, 2021 to
reduce such long-lived assets to fair value.
Based upon the results of the goodwill impairment test, the Company concluded that the carrying value of one reporting unit in
KMT exceeded its estimated fair value. The carrying value of the reporting unit, including goodwill, and after recording impairments of
63
long-lived assets identified above, exceeded its estimated fair value, resulting in a non-cash goodwill impairment charge of $219.1
million for the three months ended September 30, 2021.
During the first quarter of 2020, Kirby’s market capitalization declined significantly compared to the fourth quarter of 2019. Over
the same period, the overall United States stock market also declined significantly amid market volatility. In addition, as a result of
uncertainty surrounding the outbreak of COVID-19 and a sharp decline in oil prices during the 2020 first quarter, many of the Company’s
oil and gas customers responded by quickly cutting 2020 capital spending budgets and activity levels quickly declined. Lower activity
levels resulted in a decline in drilling activity, resulting in lower demand for new and remanufactured oilfield equipment and related
parts and service in KDS. As a result, the Company concluded that a triggering event had occurred and performed interim quantitative
impairment tests as of March 31, 2020 for certain of KDS’s long-lived assets and goodwill.
The Company determined the estimated fair value of such long-lived assets and reporting units using a discounted cash flow analysis
and a market approach for comparable companies. This analysis included management’s judgment regarding short-term and long-term
internal forecasts, updated for recent events, appropriate discount rates, and capital expenditures using inputs characteristic of a Level 3
fair value measurement.
In performing the impairment test of long-lived assets within KDS, the Company determined that the carrying value of certain long-
lived assets, including property and equipment as well as intangible assets associated with customer relationships, tradenames, and
distributorships, were no longer recoverable, resulting in an impairment charge of $165.3 million (including $148.9 million impairment
of intangible assets other than goodwill and $16.4 million impairment of property and equipment) to reduce such long-lived assets to
fair value during the three months ended March 31, 2020.
Based upon the results of the goodwill impairment test, the Company concluded that the carrying value of one reporting unit in
KDS exceeded its estimated fair value. For the three months ended March 31, 2020, the goodwill impairment charge of $388.0 million
was calculated as the amount that the carrying value of the reporting unit, including goodwill, and after recording impairments of long-
lived assets identified above, exceeded its estimated fair value, incorporating all tax impacts caused by the recognition of the impairment
loss.
In addition, the Company determined cost exceeded net realizable value for certain oilfield and pressure pumping related inventory,
resulting in an $8.0 million non-cash write-down during the three months ended March 31, 2020.
(8) Stock Award Plans
The Company has share-based compensation plans which are described below. The compensation cost that has been charged against
earnings for the Company’s stock award plans and the income tax benefit recognized in the statement of earnings for stock awards were
as follows (in thousands):
Compensation cost
Income tax benefit
2022
Year Ended December 31,
2021
13,865
3,533
$
$
15,713
4,410
$
$
$
$
2020
14,722
4,143
The Company has an employee stock award plan for selected officers and other key employees which provides for the issuance of
RSUs, stock options, restricted stock awards, and performance awards. Restricted stock and RSUs generally vest ratably over five years,
however, the plan includes a provision for the continued vesting of unvested stock options and RSUs for employees who meet certain
years of service and age requirements at the time of their retirement. The provision results in shorter expense accrual periods on stock
options and RSUs granted to employees who are nearing retirement and meet the service and age requirements. At December 31, 2022,
there were 2,180,005 shares available for future grants under the Plan.
The exercise price for each option equals the fair market value per share of the Company’s common stock on the date of grant.
Substantially all stock options outstanding under the plan have terms of seven years and vest ratably over three years. No performance
awards payable in stock have been awarded under the plan and no outstanding stock options under the employee plan were issued with
stock appreciation rights.
64
The following is a summary of the stock option activity under the employee plan described above:
Outstanding at December 31, 2021
Exercised
Forfeited or expired
Outstanding at December 31, 2022
Outstanding
Non-Qualified or
Nonincentive
Stock Option
Awards
Weighted
Average
Exercise
Price
$
537,767
(47,436) $
(94,166) $
$
396,165
70.66
68.09
74.50
70.06
The following table summarizes information about the Company’s outstanding and exercisable stock options under the employee
plan at December 31, 2022:
Range of Exercise
Prices
$51.23
$64.89 – $68.50
$73.29 – $75.50
$84.90
$51.23 – $84.90
Number
Outstanding
56,207
66,097
267,156
6,705
396,165
Options Outstanding
Options Exercisable
Weighted
Average
Remaining
Contractual
Life in
Years
Weighted
Average
Exercise
Price
Aggregated
Intrinsic
Value
(in thousands)
0.1
1.4
3.1
3.3
2.4
$
$
$
$
$
51.23
67.65
74.25
84.90
70.06
$
737
Number
Exercisable
56,207
66,097
237,050
6,705
366,059
$
$
$
$
$
Weighted
Average
Exercise
Price
Aggregated
Intrinsic
Value
(in thousands)
51.23
67.65
74.37
84.90
69.80
$
737
The following is a summary of the restricted stock award activity under the employee plan described above:
Nonvested balance at December 31, 2021
Vested
Forfeited
Nonvested balance at December 31, 2022
Unvested
Restricted
Stock Award
Shares
Weighted
Average
Grant Date
Fair Value
Per Share
18,424
(17,769)
(655)
$
$
$
— $
68.72
68.75
67.70
—
No restricted stock awards were granted under the employee plan during 2022, 2021, and 2020.
The following is a summary of RSU activity under the employee plan described above:
Nonvested balance at December 31, 2021
Granted
Vested
Forfeited
Nonvested balance at December 31, 2022
Unvested RSUs
590,979
208,766
(149,565)
(91,361)
558,819
$
$
$
$
$
Weighted
Average Grant
Date Fair Value
Per Unit
61.07
66.13
64.43
60.69
62.13
The weighted average grant date fair value of RSUs granted for the years ended December 31, 2022, 2021, and 2020 was $66.13,
$51.36, and $73.04, respectively.
During February 2023, the Company granted 180,425 RSUs to selected officers and other key employees under its employee stock
award plan, which vest ratably over five years.
The Company has a stock award plan for nonemployee directors of the Company which provides for the issuance of stock options
and restricted stock. The director plan provides for automatic grants of restricted stock to nonemployee directors after each annual
meeting of stockholders. In addition, the director plan allows for the issuance of stock options or restricted stock in lieu of cash for all
65
or part of the annual director fee at the option of the director. The exercise prices for all options granted under the plan are equal to the
fair market value per share of the Company’s common stock on the date of grant. The terms of the options are ten years. The restricted
stock issued after each annual meeting of stockholders vests six months after the date of grant. Options granted and restricted stock
issued in lieu of cash director fees vest in equal quarterly increments during the year to which they relate. At December 31, 2022,
374,751 shares were available for future grants under the director plan. The director stock award plan is intended as an incentive to
attract and retain qualified independent directors.
The following is a summary of the stock option activity under the director plan described above:
Outstanding at December 31, 2021
Exercised
Expired
Outstanding at December 31, 2022
Outstanding
Non-Qualified or
Nonincentive
Stock Option
Awards
Weighted
Average
Exercise
Price
88,980
$
(20,500) $
(12,000) $
$
56,480
80.82
62.19
87.35
86.19
The following table summarizes information about the Company’s outstanding and exercisable stock options under the director
plan at December 31, 2022:
Range of Exercise
Prices
$70.65 – $85.30
$99.52
$70.65 – $99.52
Number
Outstanding
32,480
24,000
56,480
Options Outstanding
Options Exercisable
Weighted
Average
Remaining
Contractual
Life in
Years
Weighted
Average
Exercise
Price
Aggregate
Intrinsic
Value
Number
Exercisable
Weighted
Average
Exercise
Price
Aggregate
Intrinsic
Value
1.6
1.1
1.4
$
$
$
76.34
99.52
86.19
$
—
32,480
24,000
56,480
$
$
$
76.34
99.52
86.19
$
—
The following is a summary of the restricted stock award activity under the director plan described above:
Nonvested balance at December 31, 2021
Granted
Vested
Nonvested balance at December 31, 2022
Unvested
Restricted
Stock Award
Shares
Weighted
Average
Grant Date
Fair Value
Per Share
3,337
28,696
(30,335)
1,698
$
$
$
$
58.70
64.61
63.92
65.36
The weighted average grant date fair value of restricted stock awards granted under the director plan for the years ended
December 31, 2022, 2021, and 2020 were $64.61, $65.13, and $49.84, respectively.
The total intrinsic value of all stock options exercised under all of the Company’s plans was $0.4 million, $0.1 million, and $0.7
million for the years ended December 31, 2022, 2021, and 2020, respectively.
The total fair value of all the restricted stock vestings under all of the Company’s plans was $3.2 million, $5.3 million, and $5.6
million for the years ended December 31, 2022, 2021, and 2020, respectively. The actual tax benefit realized for tax deductions from
restricted stock vestings was $0.8 million, $1.5 million, and $1.6 million for the years ended December 31, 2022, 2021, and 2020,
respectively.
The total fair value of all the RSU vestings under the Company’s employee plan was $9.5 million, $4.4 million and $5.2 million
for the years ended December 31, 2022, 2021, and 2020 respectively. The actual tax benefit realized for tax deductions from RSU
vestings was $2.4 million, $1.2 million and $1.5 million for the years ended December 31, 2022, 2021, and 2020, respectively.
66
As of December 31, 2022, there was $0.1 million of unrecognized compensation cost related to restricted stock and $16.2 million
related to nonvested RSUs. The restricted stock is expected to be recognized over a weighted average period of approximately 0.4 years
and RSUs over approximately 2.9 years.
The weighted average per share fair value of stock options granted during the year ended December 31, 2020 was $20.19. The fair
value of the stock options granted during the year ended December 31, 2020 was $2.3 million. There were no stock options granted
under the employee plan during the years ended December 31, 2022 and 2021 and no stock options granted under the director plan
during the years ended December 31, 2022, 2021 and 2020. The Company currently uses treasury stock shares for restricted stock grants,
RSU vestings, and stock option exercises. The fair value of each stock option was determined using the Black-Scholes option pricing
model.
The key input variables used in valuing the stock options granted were as follows:
Dividend yield
Average risk-free interest rate
Stock price volatility
Estimated option term
(9) Taxes on Income
Year Ended December 31,
2020
None
1.3%
28%
5.3 years
Earnings (loss) before taxes on income and details of the provision (benefit) for taxes on income were as follows (in thousands):
Earnings (loss) before taxes on income:
United States
Foreign
Provision (benefit) for taxes on income:
U.S. Federal:
Current
Deferred
U.S. State:
Current
Deferred
Foreign:
Current
Consolidated:
Current
Deferred
2022
Year Ended December 31,
2021
2020
164,590
385
164,975
513
34,980
35,493
3,793
2,802
6,595
126
126
4,432
37,782
42,214
$
$
$
$
$
$
$
$
$
$
(290,181) $
(420)
(290,601) $
(461,569)
218
(461,351)
(460) $
(48,843)
(49,303) $
(218,613)
37,436
(181,177)
1,560
4,424
5,984
$
$
(511) $
(511) $
3,421
(12,273)
(8,852)
270
270
$
589
(44,419)
(43,830) $
(214,922)
25,163
(189,759)
$
$
$
$
$
$
$
$
$
$
On November 13, 2021, the voters of the state of Louisiana approved a constitutional amendment that removed the corporate tax
deduction for federal income taxes paid and lowered the corporate income tax rate from 8% to 7.5% effective January 1, 2022. The
result of the amendment was an increase in the effective Louisiana state income tax rate, net of deduction for federal income tax, from
6.3% to 7.5%. As a result of the amendment, the Company recognized a one-time deferred tax provision of $5.7 million during the
fourth quarter of 2021 due to remeasuring the Company’s Louisiana and U.S. deferred tax assets and liabilities based on the new effective
Louisiana state income tax rate.
On March 27, 2020, the United States Congress passed and the President signed the Coronavirus Aid, Relief, and Economic Security
Act (“CARES Act”) into law to address the COVID-19 pandemic. One provision of the CARES Act allows net operating losses
generated in 2018 through 2020 to be carried back up to five years. Pursuant to this provision of the CARES Act, the Company recorded
a net federal current benefit for taxes on income for the year ended December 31, 2020 due to carrying back net operating losses
67
generated between 2018 and 2020 used to offset taxable income generated between 2013 and 2017. Net operating losses carried back to
tax years 2013 through 2017 are applied at a federal tax rate of 35% applicable to those tax years, compared to a 21% tax rate effective
at December 31, 2020. Net operating losses generated in 2018 and 2019 were used to offset taxable income generated between 2013
and 2017 taxed at 35% resulting in a tax benefit of $59.7 million and a decrease in the Company’s deferred tax asset related to federal
net operating losses of $88.3 million.
At December 31, 2022 and 2021, the Company had a federal income tax receivable of $70.4 million and $71.0 million, respectively,
included in Accounts Receivable – Other on the balance sheet. During 2021, the Company received a tax refund of $119.5 million,
including accrued interest, for its 2019 tax return related to net operating losses being carried back to offset taxable income generated
between 2014 and 2017. During 2020, the Company received a tax refund of $30.6 million for its 2018 tax return related to net operating
losses being carried back to offset taxable income generated during 2013.
The Company’s provision (benefit) for taxes on income varied from the statutory federal income tax rate due to the following:
United States income tax statutory rate
State and local taxes, net of federal benefit
CARES Act – net operating loss carryback
Other – net
2022
Year Ended December 31,
2021
2020
21.0%
3.1
—
1.5
25.6%
21.0%
(1.7)
—
(4.2)
15.1%
21.0%
1.2
21.3
(2.4)
41.1%
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities were as follows
(in thousands):
Deferred tax assets:
Allowance for doubtful accounts
Inventory
Insurance accruals
Deferred compensation
Unrealized (gain) loss on defined benefit plans
Goodwill and other intangibles
Operating loss carryforwards
Retirement benefits
Other
Valuation allowances
Deferred tax liabilities:
Property
Deferred state taxes
Other
December 31,
2022
2021
$
1,556
11,679
4,856
7,703
(5,532)
52,847
79,699
5,472
9,962
168,242
(19,960)
148,282
(671,830)
(87,445)
(14,891)
(774,166)
(625,884) $
1,657
13,180
4,052
6,081
6,126
65,852
89,966
7,194
6,247
200,355
(20,095)
180,260
(655,550)
(83,491)
(15,371)
(754,412)
(574,152)
$
$
During 2022, the Company generated federal taxable income which was completely offset by federal net operating loss
carryforwards. The Company had federal operating loss deferred tax assets of $47.9 million and $57.2 million at December 31, 2022
and 2021, respectively.
The Company had state operating loss deferred tax assets of $26.6 million and $27.6 million at December 31, 2022 and 2021,
respectively. The valuation allowance for state deferred tax assets as of December 31, 2022 and 2021 was $14.8 million and $14.9
million, respectively, related to the Company’s state net operating loss carryforwards based on the Company’s determination that it is
more likely than not that the deferred tax assets will not be realized. Expiration of these state net operating loss carryforwards vary by
state through 2029 and none will expire in fiscal 2023.
As of December 31, 2022 and 2021, the Company had a Canadian net operating loss carryforward of $5.2 million which expires
between 2037 and 2042. A full valuation allowance has been provided for this asset.
68
The Company or one of its subsidiaries files income tax returns in the United States federal jurisdiction and various state
jurisdictions. The Company’s federal income tax returns for the 2017 through 2020 tax years are currently under examination. With few
exceptions, the Company and its subsidiaries’ state income tax returns are open to audit under the statute of limitations for the 2016
through 2021 tax years.
As of December 31, 2022, the Company has provided a liability of $0.8 million for unrecognized tax benefits related to various
income tax issues which includes interest and penalties. The amount that would impact the Company’s effective tax rate, if recognized,
is $0.6 million, with the difference between the total amount of unrecognized tax benefits and the amount that would impact the effective
tax rate being primarily related to the federal tax benefit of state income tax items. It is not reasonably possible to determine if the
liability for unrecognized tax benefits will significantly change prior to December 31, 2023 due to the uncertainty of possible
examination results.
A reconciliation of the beginning and ending amount of the liability for unrecognized tax benefits is as follows (in thousands):
Balance at beginning of year
Additions based on tax positions related to the current year
Additions for tax positions of prior years
Reductions for tax positions of prior years
Settlements
Balance at end of year
2022
Year Ended December 31,
2021
2020
737
13
66
(154)
—
662
$
$
783
13
281
(340)
—
737
$
$
883
262
114
(266)
(210)
783
$
$
The Company accounts for interest and penalties related to uncertain tax positions as part of its provision for federal and state
income taxes. The Company had $0.1 million of accrued liabilities for the payment of interest and penalties at both December 31, 2022
and 2021.
(10) Earnings Per Share
The following table presents the components of basic and diluted earnings (loss) per share (in thousands, except per share amounts):
Net earnings (loss) attributable to Kirby
Undistributed earnings allocated to restricted shares
Earnings (loss) available to Kirby common stockholders — basic
Undistributed earnings allocated to restricted shares
Undistributed earnings reallocated to restricted shares
Earnings (loss) available to Kirby common stockholders — diluted
Shares outstanding:
Weighted average common stock issued and outstanding
Weighted average unvested restricted stock
Weighted average common stock outstanding — basic
Dilutive effect of stock options and restricted stock units
Weighted average common stock outstanding — diluted
Net earnings (loss) per share attributable to Kirby common stockholders:
Basic
Diluted
$
$
$
$
2022
$
Year Ended December 31,
2021
(246,954) $
—
(246,954)
—
—
(246,954) $
$
122,291
(33)
122,258
33
(33)
122,258
60,055
(17)
60,038
291
60,329
60,099
(46)
60,053
—
60,053
2020
(272,546)
—
(272,546)
—
—
(272,546)
60,021
(109)
59,912
—
59,912
2.04
2.03
$
$
(4.11) $
(4.11) $
(4.55)
(4.55)
Certain outstanding options to purchase approximately 0.4 million, 0.6 million, and 0.7 million shares of common stock were
excluded in the computation of diluted earnings per share as of December 31, 2022, 2021, and 2020, respectively, as such stock options
would have been antidilutive. Certain outstanding RSUs to convert to 7,000 and 11,000 shares of common stock were also excluded in
the computation of diluted earnings per share as of December 31, 2021 and 2020, respectively, as such RSUs would have been
antidilutive. No RSUs were antidilutive at December 31, 2022.
69
(11) Inventories
The following table presents the details of inventories (in thousands):
Finished goods
Work in process
(12) Retirement Plans
December 31,
2022
2021
$
$
358,702
103,146
461,848
$
$
260,707
70,643
331,350
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.
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 $0.9 million, $0.5 million and $2.2 million for the years ended December 31, 2022,
2021 and 2020, respectively.
The aggregate fair value of plan assets of the Company’s pension plans was $341.1 million and $430.8 million at December 31, 2022
and 2021, respectively. Pension assets were allocated among asset categories as follows:
Asset Category
U.S. equity securities
International equity securities
Debt securities
Cash and cash equivalents
December 31,
2022
2021
50%
20
30
—
100%
51%
20
29
—
100%
Current
Minimum, Target
and Maximum
Allocation Policy
45% — 50% — 55%
12% — 20% — 28%
20% — 30% — 40%
0% — 0% — 0%
At December 31, 2022 and 2021, $4.8 million and $5.4 million, respectively, was held in cash as well as debt and equity securities
classified within Level 1 of the valuation hierarchy. There were no investments within Level 3 of the valuation hierarchy at December
31, 2022 and 2021. All other plan assets are invested in common collective trusts and valued using the net asset value per share practical
expedient and therefore not valued within the valuation hierarchy.
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 assumed that plan assets would generate a long-term rate of return of 6.75% in both 2022 and 2021. The Company developed
its expected long-term rate of return assumption by evaluating input from investment consultants comparing historical returns for various
asset classes with its actual and targeted plan investments. The Company believes that its long-term asset allocation, on average, will
approximate the targeted allocation.
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 plan’s benefit obligations are 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
70
prediction of the pension plan contribution difficult. The Company’s pension plan funding was 105% of the pension plans’ accumulated
benefit obligation at December 31, 2022, including both the Kirby Pension Plan and the Higman Pension Plan.
The Company sponsors an unfunded defined benefit health care plan that provides limited postretirement medical benefits to
employees who met minimum age and service requirements, and to eligible dependents. The plan limits cost increases in the Company’s
contribution to 4% per year. The plan is contributory, with retiree contributions adjusted annually. The plan eliminated coverage for
future retirees as of December 31, 2011. The Company also has an unfunded defined benefit supplemental executive retirement plan
(“SERP”) that was assumed in an acquisition in 1999. That plan ceased to accrue additional benefits effective January 1, 2000.
The following table presents the change in benefit obligation and plan assets for the Company’s defined benefit plans and
postretirement benefit plan (in thousands):
Pension Benefits
Pension Plans
SERP
Other Postretirement Benefits
Postretirement Welfare Plan
2022
2021
2022
2021
2022
2021
Change in benefit obligation
Benefit obligation at beginning of year
Service cost
Interest cost
Actuarial (gain) loss
Gross benefits paid
Settlements
Benefit obligation at end of year
$
$
495,272
6,538
14,779
(158,816)
(12,665)
(5,599)
339,509
Accumulated benefit obligation at end of year $
325,274
$
$
$
508,694
7,961
14,239
(20,208)
(11,967)
(3,447)
495,272
469,508
$
$
$
1,033
—
29
(74)
(155)
—
833
833
$
$
$
1,174
—
31
(12)
(160)
—
1,033
1,033
$
$
$
Weighted-average assumption used to
determine benefit obligation at end of year
Discount rate (a)
Rate of compensation increase
Health care cost trend rate
Initial rate
Ultimate rate
Years to ultimate
5.5% 3.0% / 3.1%
Service-
based table
Service-
based table
—
—
—
—
—
—
5.5%
3.0%
—
—
—
—
—
—
—
—
Change in plan assets
Fair value of plan assets at beginning of year
Actual return on plan assets
Employer contribution
Gross benefits paid
Settlements
Fair value of plan assets at end of year
$
$
430,821
(72,402)
906
(12,665)
(5,599)
341,061
$
$
395,137
50,619
479
(11,967)
(3,447)
430,821
$
$
— $
—
155
(155)
—
— $
— $
—
160
(160)
—
— $
582
—
17
(58)
(109)
—
432
432
$
$
$
5.5%
—
6.50%
5.0%
2029
— $
—
109
(109)
—
— $
629
—
17
104
(168)
—
582
582
3.0%
—
6.25%
5.0%
2027
—
—
168
(168)
—
—
(a) The 2022 discount rate was 5.5% for both the Kirby Pension Plan and the Higman Pension Plan. The 2021 discount rate was
3.0% for the Kirby Pension Plan and 3.1% for the Higman Pension Plan.
During the year ending December 31, 2022, actual returns on plan assets performed less than expected which deteriorated the
funding position but the overall funded position at December 31, 2022 was improved due to a decrease in the benefit obligation primarily
due to an increase in the discount rate.
During the year ended December 31, 2021, the funded position improved due to a decrease in the benefit obligation primarily due
to an increase in the discount rate and actual returns on plan assets performing better than expected.
71
The following table presents the funded status and amounts recognized in the Company’s consolidated balance sheet for the
Company’s defined benefit plans and postretirement benefit plan (in thousands):
Funded status at end of year
Fair value of plan assets
Benefit obligations
Funded status and amount recognized at end of
year
Amounts recognized in the consolidated
balance sheets
Noncurrent asset
Current liability
Long-term liability
Amounts recognized in accumulated other
comprehensive income
Net actuarial (gain) loss
Prior service cost (credit)
Accumulated other compensation income
$
$
$
$
Pension Benefits
Pension Plans
SERP
Other Postretirement Benefits
Postretirement Welfare Plan
2022
2021
2022
2021
2022
2021
341,061
(339,509)
$
430,821
(495,272)
$
— $
(833)
— $
(1,033)
— $
(432)
1,552
$
(64,451) $
(833) $
(1,033) $
(432) $
18,695
—
(17,143)
—
—
(64,451)
—
(106)
(727)
—
(128)
(905)
—
(49)
(383)
—
(582)
(582)
—
(49)
(533)
(25,449) $
—
(25,449) $
32,600
—
32,600
$
$
324
—
324
$
$
428
—
428
$
$
(2,299) $
—
(2,299) $
(2,634)
—
(2,634)
The following table presents the expected cash flows for the Company’s defined benefit plans and postretirement benefit plan (in
thousands):
Expected employer contributions
First year
Expected benefit payments (gross)
Year one
Year two
Year three
Year four
Year five
Next five years
$
$
Pension Benefits
Pension Plans
SERP
Other Postretirement Benefits
Postretirement Welfare Plan
2022
2021
2022
2021
2022
2021
8,374
$
145
$
— $
— $
— $
—
$
$
16,312
16,899
17,808
18,650
19,707
110,417
15,480
16,678
17,598
18,382
19,127
109,845
$
108
104
99
94
90
359
$
130
104
100
96
91
381
$
50
49
47
45
43
176
50
49
48
47
45
194
72
The components of net periodic benefit cost and other changes in plan assets and benefit obligations recognized in other
comprehensive income for the Company’s defined benefit plans were as follows (in thousands):
Components of net periodic benefit cost
Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial loss
Net periodic benefit cost
Other changes in plan assets and benefit
obligations recognized in other
comprehensive income
Current year actuarial (gain) loss
Recognition of actuarial loss
Total recognized in other comprehensive
income
Total recognized in net periodic benefit cost
and other comprehensive income
Weighted average assumptions used to
determine net periodic benefit cost
Discount rate (a)
Expected long-term rate of return on plan assets
Rate of compensation increase
2022
Pension Plans
2021
Pension Benefits
2020
2022
SERP
2021
2020
$
$
6,538
14,779
(28,399)
34
(7,048)
$
7,961
14,239
(26,244)
4,193
149
$
7,671
15,630
(23,790)
2,399
1,910
— $
29
—
30
59
— $
31
—
40
71
(58,015)
(34)
(44,583)
(4,193)
31,616
(2,399)
(58,049)
(48,776)
29,217
(74)
(30)
(104)
(12)
(40)
(52)
$
(65,097)
$
(48,627)
$
31,127
$
(45)
$
19
$
3.0% / 3.1%
2.8% / 2.9%
3.5% / 3.1%
6.75%
6.75%
6.75%
Service-
based table
Service-
based table
Service-
based table
3.0%
—
—
2.8%
—
—
—
40
—
35
75
55
(35)
20
95
3.5%
—
—
(a) The 2022 discount rate for benefit cost is 3.0% for the Kirby Pension Plan and 3.1% for the Higman Pension Plan. The 2021
discount rate for benefit cost is 2.8% for the Kirby Pension Plan and 2.9% for the Higman Pension Plan.
The components of net periodic benefit cost and other changes in benefit obligations recognized in other comprehensive income
for the Company’s postretirement benefit plan were as follows (in thousands):
Components of net periodic benefit cost
Interest cost
Amortization of actuarial gain
Net periodic benefit cost
Other Postretirement Benefits
Postretirement Welfare Plan
2021
2020
2022
$
$
17
(394)
(377)
$
17
(451)
(434)
Other changes in benefit obligations recognized in other comprehensive
income
Current year actuarial loss (gain)
Recognition of actuarial gain
Total recognized in other comprehensive income
(58)
394
336
104
451
555
Total recognized in net periodic benefit cost and other
comprehensive income
$
(41)
$
121
$
Weighted average assumptions used to determine net periodic benefit
cost
Discount rate
Health care cost trend rate:
Initial rate
Ultimate rate
Years to ultimate
3.0%
6.25%
5.0%
2027
2.8%
6.50%
5.0%
2025
22
(522)
(500)
84
522
606
106
3.5%
6.75%
5.0%
2025
73
The Company also contributes to a multiemployer pension plan pursuant to a collective bargaining agreement which covers certain
vessel crew members of its coastal operations and expires on April 30, 2025. The Company began participation in the Seafarers Pension
Trust (“SPT”) with the Penn Maritime, Inc. acquisition on December 14, 2012.
Contributions to the SPT are made currently based on a per day worked basis and charged to expense as incurred and included in
costs of sales and operating expenses in the consolidated statement of earnings. During 2022 and 2021, the Company made contributions
of $0.5 million in each year to the SPT. The Company’s contributions to the SPT did not exceed 5% of total contributions to the SPT in
2021. Total contributions for 2022 are not yet available. The Company did not pay any material surcharges in 2022 and 2021.
The federal identification number of the SPT is 13-6100329 and the Certified Zone Status is Green at December 31, 2021. The
Company’s future minimum contribution requirements under the SPT are unavailable because actuarial reports for the 2022 plan year
are not yet complete and such contributions are subject to negotiations between the employers and the unions. The SPT was not in
endangered or critical status for the 2021 plan year, the latest period for which a report is available, as the funded status was in excess
of 100%. Based on the most recent communication from the SPT, there would be no withdrawal liability if the Company chose to
withdraw from the SPT although the Company currently has no intention of terminating its participation in the SPT.
The Company also contributes to a multiemployer pension plan pursuant to a collective bargaining agreement which covers certain
employees of KDS in New Jersey and expires on October 8, 2023. The Company began participation in the Central Pension Fund of the
International Union of Operating Engineers and Participating Employers (“CPF”) with the Stewart & Stevenson LLC acquisition on
September 13, 2017.
Contributions to the CPF are made currently based on a fixed hourly rate for each hour worked or paid basis (in some cases
contributions are made as a percentage of gross pay) and charged to expense as incurred and included in costs of sales and operating
expenses in the consolidated statement of earnings. During 2022 and 2021, the Company made contributions of $0.7 million in each
year to the CPF. Total contributions for the 2022 plan year are not yet available. The Company did not pay any material surcharges in
2022 and 2021.
The federal identification number of the CPF is 36-6052390 and the Certified Zone Status is Green at January 31, 2023. The
Company’s future minimum contribution requirements under the CPF are unavailable because actuarial reports for the 2022 plan year,
which ended January 31, 2023, are not yet complete and such contributions are subject to negotiations between the employers and the
unions. The CPF was not in endangered or critical status for the 2021 plan year, ending January 31, 2022, the latest period for which a
report is available, as the funded status was 103%. There would be no withdrawal liability if the Company chose to withdraw from the
CPF although the Company currently has no intention of terminating its participation in the CPF.
In addition to the defined benefit plans, the Company sponsors various defined contribution plans for substantially all employees.
The aggregate contributions to the plans were $27.9 million, $25.9 million, and $25.5 million in 2022, 2021, and 2020, respectively.
(13) Other Comprehensive Income (Loss)
The Company’s changes in other comprehensive income (loss) were as follows (in thousands):
2022
Income
Tax
(Provision)
Benefit
Gross
Amount
Year Ended December 31,
2021
Net
Amount
Gross
Amount
Income
Tax
Provision
Net
Amount
Gross
Amount
2020
Income
Tax
(Provision)
Benefit
Net
Amount
Pension and postretirement
benefits (a):
Amortization of net actuarial
(gain) loss
Actuarial gains (losses)
Foreign currency translation
adjustments
Total
$
$
(330)
58,147
81
(14,030)
$
$
(249)
44,117
3,782
44,491
$
(952)
(10,774)
$
2,830
33,717
$
1,912
(31,755)
$
(483)
7,006
$
1,429
(24,749)
(1,049)
—
(1,049)
(1,061)
—
(1,061)
(333)
—
(333)
$
56,768
$
(13,949)
$
42,819
$
47,212
$
(11,726)
$
35,486
$ (30,176)
$
6,523
$ (23,653)
(a) Actuarial gains (losses) are amortized into other income (expense). (See Note 12 – Retirement Plans)
74
(14) Contingencies and Commitments
In 2009, the Company was named by the Environmental Protection Agency (the “EPA”) as a Potentially Responsible Party (“PRP”)
in addition to a group of approximately 250 named PRPs under the Comprehensive Environmental Response, Compensation and
Liability Act of 1981 (“CERCLA”) with respect to a Superfund site, the Portland Harbor Superfund site (“Portland Harbor”) in Portland,
Oregon. The site was declared a Superfund site in December 2000 as a result of historical heavily industrialized use due to
manufacturing, shipbuilding, petroleum storage and distribution, metals salvaging, and electrical power generation activities which led
to contamination of Portland Harbor, an urban and industrial reach of the lower Willamette River located immediately downstream of
downtown Portland. The Company’s involvement arises from four spills at the site after it was declared a Superfund site, as a result of
predecessor entities’ actions in the area. To date, there is no information suggesting the extent of the costs or damages to be claimed
from the 250 notified PRPs. Based on the nature of the involvement at the Portland Harbor site, the Company believes its potential
contribution is de minimis; however, to date neither the EPA nor the named PRPs have performed an allocation of potential liability in
connection with the site nor have they provided costs and expenses in connection with the site.
On February 20, 2015, the Company was served as a defendant in a Complaint originally filed on August 14, 2014, in the U.S.
District Court of the Southern District of Texas - Houston Division, USOR Site PRP Group vs. A&M Contractors, USES, Inc. et al. This
is a civil action pursuant to the provisions of CERCLA and the Texas Solid Waste Disposal Act for recovery of past and future response
costs incurred and to be incurred by the USOR Site PRP Group for response activities at the U.S. Oil Recovery Superfund Site. The
property was a former sewage treatment plant owned by defendant City of Pasadena, Texas from approximately 1945 until it was
acquired by U.S. Oil Recovery in January 2009. Throughout its operating life, the U.S. Oil Recovery facility portion of the USOR Site
received and performed wastewater pretreatment of municipal and Industrial Class I and Class II wastewater, characteristically
hazardous waste, used oil and oily sludges, and municipal solid waste. Associated operations were conducted at the MCC Recycling
facility portion of the USOR Site after it was acquired by U.S. Oil Recovery from the City of Pasadena in January 2009. The EPA and
the PRP Group entered into an Administrative Settlement Agreement and Order for Remedial Investigation Study (“Study”) in May
2015. The Study has not been completed by EPA to date. The Company joined as a member of the PRP Group companies at its pro-rata
allocated share.
On October 13, 2016, the Company, as a successor to Hollywood Marine, Inc. (“Hollywood Marine”), was issued a General Notice
under CERCLA by the EPA in which it was named as a PRP for liabilities associated with the SBA Shipyard Site located near Jennings,
Louisiana (the “Site”). The Site was added to the EPA’s National Priorities List of sites under CERCLA in September 2016. SBA used
the facility for construction, repair, retrofitting, sandblasting, and cleaning and painting of barges beginning in 1965. Three barge slips
and a dry dock are located off the Mermentau River. The slips were used to dock barges during cleaning or repair. In 2001, a group of
PRPs that had been former customers of the SBA Shipyard facility formed an organization called the SSIC Remediation, LLC
(hereinafter, “the PRP Group Companies”) to address removal actions at the Site. In 2002, EPA approved an Interim Measures/Removal
Action of Hazardous/Principal Threat Wastes at SBA Shipyards, Inc. (pursuant to RCRA Section 3008(h)) that was proposed by SBA
Shipyard and the PRP Group Companies. Interim removal activities were conducted from March 2001 through January 2005 under an
EPA 2002 Order and Agreement. In September 2012, the Louisiana Department of Environmental Quality requested EPA address the
Site under CERCLA authority. The Company, as a successor to Hollywood Marine, joined the PRP Group Companies. The PRP Group
Companies have submitted a draft Study work plan to EPA for their review and comment. Higman was named as a PRP in connection
with its activities at the Site. Higman is not a participant in the PRP Group Companies.
With respect to the above sites, the Company has accrued a liability, if applicable, for its estimated potential liability for its portion
of the EPA’s past costs claim based on information developed to date including various factors such as the Company’s liability in
proportion to other PRPs and the extent to which such costs are recoverable from third parties.
On October 13, 2016, the tug Nathan E. Stewart and barge DBL 55, an ATB owned and operated by Kirby Offshore Marine, LLC,
a wholly owned subsidiary of the Company, ran aground at the entrance to Seaforth Channel on Atholone Island, British Columbia. The
grounding resulted in a breach of a portion of the Nathan E. Stewart’s fuel tanks causing a discharge of diesel fuel into the water. The
USCG and the NTSB designated the Company as a party of interest in their investigation as to the cause of the incident. The Canadian
authorities including Transport Canada and the Canadian Transportation Safety Board investigated the cause of the incident. On October
10, 2018, the Heiltsuk First Nation filed a civil action in the British Columbia Supreme Court against a subsidiary of the Company, the
master and pilot of the tug, the vessels and the Canadian government seeking unquantified damages as a result of the incident. On May
1, 2019, the Company filed a limitation action in the Federal Court of Canada seeking limitation of liability relating to the incident as
provided under admiralty law. The Heiltsuk First Nation’s civil claim has been consolidated into the Federal Court limitation action as
of July 26, 2019 and it is expected that the Federal Court of Canada will decide all claims against the Company. The Company is unable
to estimate the potential exposure in the civil proceeding. The Company has various insurance policies covering liabilities including
pollution, property, marine and general liability and believes that it has satisfactory insurance coverage for the cost of cleanup and
salvage operations as well as other potential liabilities arising from the incident. The Company believes its accrual of such estimated
liability is adequate for the incident and does not expect the incident to have a material adverse effect on its business or financial
condition.
75
In addition, the Company is involved in various legal and other proceedings which are incidental to the conduct of its business,
none of which in the opinion of management will have a material effect on the Company’s financial condition, results of operations or
cash flows. Management believes its accrual of such estimated liability is adequate and believes that it has adequate insurance coverage
or has meritorious defenses for these other claims and contingencies.
Certain Significant Risks and Uncertainties. 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 and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from those estimates. However, in the opinion of management, the
amounts would be immaterial.
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 $19.3 million at December 31, 2022, including $12.2 million in
letters of credit and $7.1 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.
(15) Related Party Transactions
David W. Grzebinski, President and Chief Executive Officer of the Company, is a member of the board of directors for ABS, a not-
for-profit that provides global classification services to the marine, offshore and gas industries. The Company paid ABS $1.3 million in
2022, $1.6 million in 2021, and $2.4 million in 2020 to perform audits and surveys of the Company’s vessels in the ordinary course of
business.
Mr. Grzebinski is a member of the board of directors of UK Protection & Indemnity Association ("UK P&I"), a mutual marine
protection and indemnity organization that provides protection and indemnity insurance for third party liabilities and expenses arising
from vessel operations. The Company’s marine fleet is insured on a pro rata share basis through UK P&I and Standard Mutual. The
Company paid $3.4 million during 2022 in premiums for coverage in the 2022-2023 policy period, $3.2 million during 2021 in premiums
for coverage in the 2021-2022 policy period, and $3.0 million in 2020 in premiums for coverage in the 2020-2021 policy period in the
ordinary course of business.
Amy D. Husted, Vice President, General Counsel and Secretary of the Company, is a member of the board of directors of Signal
Mutual Indemnity Association Ltd (“Signal”), a group self-insurance not-for-profit organization authorized by the U.S. Department of
Labor as a longshore worker’s compensation insurance provider. The Company has been a member of Signal since it was established in
1986. The Company paid Signal $0.8 million in 2022, $0.6 million in 2021 and $0.7 million in 2020 in the ordinary course of business.
The husband of Ms. Husted is a partner in the law firm of Clark Hill PLC. The Company paid the law firm $1.0 million in 2022,
$2.9 million in 2021, and $1.6 million in 2020 for legal services in connection with matters in the ordinary course of business.
The brother of Christian G. O’Neil, President of Kirby Inland Marine, LP, Kirby Offshore Marine, LLC, San Jac Marine, LLC and
Kirby Offshore Wind, LLC, is a partner in the law firm of W. Sean O’Neil Attorney at Law. The Company paid the law firm $135,000
in 2022 for legal services in the ordinary course of business.
76
PART IV
Item 15. Exhibits and Financial Statement Schedules
1. Financial Statements
Included in Part III of this report on pages 47 to 76:
Report of Independent Registered Public Accounting Firm (KPMG LLP, Houston, TX, PCAOB ID 185).
Report of Independent Registered Public Accounting Firm.
Consolidated Balance Sheets, December 31, 2022 and 2021.
Consolidated Statements of Earnings, for the years ended December 31, 2022, 2021, and 2020.
Consolidated Statements of Comprehensive Income, for the years ended December 31, 2022, 2021, and 2020.
Consolidated Statements of Cash Flows, for the years ended December 31, 2022, 2021, and 2020.
Consolidated Statements of Stockholders’ Equity, for the years ended December 31, 2022, 2021, and 2020.
Notes to Consolidated Financial Statements, for the years ended December 31, 2022, 2021, and 2020.
2. Financial Statement Schedules
All schedules are omitted as the required information is inapplicable or the information is presented in the consolidated financial
statements or related notes.
3. Exhibits
Exhibit
Number
3.1
3.2
4.1
4.2
10.1
10.2
10.3†
10.4†
10.5†
EXHIBIT INDEX
Description of Exhibit
— Restated Articles of Incorporation of the Company with all amendments to date (incorporated by reference to Exhibit
3.1 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2014).
— Bylaws of the Company with all amendments to date (incorporated by reference to Exhibit 3.1 to the Registrant’s
Current Report on Form 8-K filed with the Commission on October 28, 2022).
— See Exhibits 3.1 and 3.2 hereof for provisions of our Restated Articles of Incorporation of the Company with all
amendments to date and the Bylaws of the Company with all amendments to date (incorporated, respectively, by
reference to Exhibit 3.1 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2014 and
Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on October 28, 2022).
— Long-term debt instruments are omitted pursuant to Item 601(b)(4) of Regulation S-K. The Registrant will furnish
copies of such instruments to the Commission upon request.
— Note Purchase Agreement dated February 3, 2022 (incorporated by reference to Exhibit 10.1 to the Registrant’s Form
8-K filed with the Commission on February 8, 2022).
— Credit Agreement dated July 29, 2022 among Kirby Corporation, JPMorgan Chase Bank, N.A., as Administrative
Agent, and the banks named therein (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on
Form 8-K filed with the Commission on July 29, 2022).
— Incentive and Retention Award Agreement of David W. Grzebinski dated February 25, 2021 (incorporated by reference
to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on February 26, 2021).
— Incentive and Retention Award Agreement of Christian G. O’Neil dated February 25, 2021 (incorporated by reference
to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the Commission on February 26, 2021).
— Annual Incentive Plan Guidelines for 2022 (incorporated by reference to Exhibit 10.11 to the Registrant’s Annual Report
on Form 10-K for the year ended December 31, 2021).
10.6†*
10.7†
— Annual Incentive Plan Guidelines for 2023.
— 2005 Stock and Incentive Plan (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form
8-K filed with the Commission on April 29, 2021).
77
Exhibit
Number
10.8†
— 2000 Nonemployee Director Stock Plan (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report
on Form 8-K filed with the Commission on April 29, 2021).
Description of Exhibit
10.9†
— Nonemployee Director Compensation Program (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly
Report on Form 10-Q for the quarter ended March 31, 2018).
10.10†
— Deferred Compensation Plan for Key Employees (As Amended and Restated Effective April 1, 2022 and incorporated
by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on May 9,
2022).
10.11†
— Change of Control Agreement by and between Kirby Corporation and David W. Grzebinski dated May 16, 2022
10.12†
(incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Commission
on May 20, 2022).
— Change of Control Agreement by and between Kirby Corporation and Raj Kumar dated May 16, 2022 (incorporated
by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the Commission on May 20,
2022).
10.13†
— Change of Control Agreement by and between Kirby Corporation and Christian G. O’Neil dated May 16, 2022
(incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed with the Commission
on May 20, 2022).
10.14†
— Change of Control Agreement by and between Kirby Corporation and Amy D. Husted dated May 16, 2022
(incorporated by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K filed with the Commission
on May 20, 2022).
10.15†
10.16†
— Letter Agreement dated June 5, 2022 between the Company and Joseph H. Reniers (incorporated by reference to
Exhibit 10.1 to the Registrant’s Current Report on Form 8-K/A filed with the Commission on June 9, 2022).
— Enhanced Transition Assistance Agreement dated June 5, 2022 between the Company and Joseph H. Reniers
(incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K/A filed with the
Commission on June 9, 2022).
10.17
— Cooperation Agreement dated February 3, 2023 by and among the Company and JCP Investment Management, LLC
and certain of its affiliates and associates (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report
on Form 8-K filed with the Commission on February 3, 2023).
— Consolidated Subsidiaries of the Registrant.
— Consent of Independent Registered Public Accounting Firm.
— Certification of Chief Executive Officer Pursuant to Rule 13a-14(a).
— Certification of Chief Financial Officer Pursuant to Rule 13a-14(a).
— Certification Pursuant to 18 U.S.C. Section 1350 (As adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
21.1*
23.1*
31.1*
31.2*
32*
2002).
101.INS* — Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL
tags are embedded within the Inline XBRL document
101.SCH* — Inline XBRL Taxonomy Extension Schema Document
101.CAL* — Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF* — Inline XBRL Taxonomy Extension Definitions Linkbase Document
101.LAB* — Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE* — Inline XBRL Taxonomy Extension Presentation Linkbase Document
104*
— Cover Page Interactive Data File (embedded within the Inline XBRL document)
* Filed herewith.
† Management contract, compensatory plan or arrangement.
Item 16. Form 10-K Summary
Not applicable
78
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
KIRBY CORPORATION
(REGISTRANT)
By:
/s/ RAJ KUMAR
Raj Kumar
Executive Vice President and
Chief Financial Officer
Dated: February 21, 2023
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the dates indicated.
Signature
Capacity
Date
/s/ JOSEPH H. PYNE
Joseph H. Pyne
/s/ DAVID W. GRZEBINSKI
David W. Grzebinski
/s/ RAJ KUMAR
Raj Kumar
/s/ RONALD A. DRAGG
Ronald A. Dragg
/s/ ANNE-MARIE N. AINSWORTH
Anne-Marie N. Ainsworth
/s/ RICHARD J. ALARIO
Richard J. Alario
/s/ TANYA S. BEDER
Tanya S. Beder
/s/ BARRY E. DAVIS
Barry E. Davis
/s/ ROCKY B. DEWBRE
Rocky B. Dewbre
/s/ SUSAN W. DIO
Susan W. Dio
/s/ RICHARD R. STEWART
Richard R. Stewart
/s/ WILLIAM M. WATERMAN
William M. Waterman
/s/ SHAWN D. WILLIAMS
Shawn D. Williams
Chairman of the Board and Director
February 21, 2023
President, Chief Executive Officer,
and Director
(Principal Executive Officer)
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
Vice President, Controller and
Assistant Secretary
(Principal Accounting Officer)
Director
Director
Director
Director
Director
Director
Director
Director
Director
79
February 21, 2023
February 21, 2023
February 21, 2023
February 21, 2023
February 21, 2023
February 21, 2023
February 21, 2023
February 21, 2023
February 21, 2023
February 21, 2023
February 21, 2023
February 21, 2023
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
EXHIBIT 31.1
In connection with the filing of the report on Form 10-K for the year ended December 31, 2022 by Kirby Corporation, David W.
Grzebinski certifies that:
1. I have reviewed this report on Form 10-K of Kirby Corporation (the “registrant”);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with
respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in
this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act
Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report
based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the
equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information;
and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
Dated: February 21, 2023
/s/ DAVID W. GRZEBINSKI
David W. Grzebinski
President and Chief Executive Officer
CERTIFICATION OF CHIEF FINANCIAL OFFICER
EXHIBIT 31.2
In connection with the filing of the report on Form 10-K for the year ended December 31, 2022 by Kirby Corporation, Raj Kumar
certifies that:
1. I have reviewed this report on Form 10-K of Kirby Corporation (the “registrant”);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with
respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in
this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act
Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report
based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the
equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information;
and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
Dated: February 21, 2023
/s/ RAJ KUMAR
Raj Kumar
Executive Vice President and
Chief Financial Officer
Certification Pursuant to Section 18 U.S.C. Section 1350
(As adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)
EXHIBIT 32
In connection with the filing of the Annual Report on Form 10-K for the year ended December 31, 2022 (the “Report”) by Kirby
Corporation (the “Company”), each of the undersigned hereby certifies that:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended;
and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations
of the Company.
/s/ DAVID W. GRZEBINSKI
David W. Grzebinski
President and Chief Executive Officer
/s/ RAJ KUMAR
Raj Kumar
Executive Vice President and
Chief Financial Officer
Dated: February 21, 2023
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Shareholder Information
ANNUAL MEETING
WEBSITE
COMMON STOCK MARKET PRICE
The 2023 Annual Meeting of
Stockholders will be held at Kirby’s
Houston office located at 55 Waugh Drive,
Suite 1100, Houston, Texas, 77007 at
10:00am (CDT) on Tuesday, April 25, 2023.
Stockholders of record as of March 1, 2023
will be able to attend the meeting.
CORPORATE HEADQUARTERS
Executive Office:
55 Waugh Drive, Suite 1000
Houston, Texas 77007
Telephone: 713-435-1000
Fax: 713-435-1010
Website: www.kirbycorp.com
Mailing Address:
P.O. Box 1745
Houston, Texas 77251-1745
INQUIRIES REGARDING STOCK HOLDINGS
Registered shareholders (shares held
in owner’s name) should address
communications concerning address
changes, lost certificates, and stock
transfers to:
Proxy Services
C/O Computershare Investor Services
P.O. Box 505008
Louisville, Kentucky 40233-9814
Toll-Free Telephone: 877-373-6374
Website: www.computershare.com
Beneficial shareholders (shares held in
the name of banks or brokers) should
address communications to their banks
or stockbrokers.
All other inquiries should be addressed
to Kurt Niemietz, VP - Investor Relations
& Treasurer, at Kirby’s corporate
headquarters.
For more investor information, as well
as information about Kirby, visit Kirby’s
website at www.kirbycorp.com.
INDEPENDENT REGISTERED ACCOUNTANTS
KPMG LLP
BG Group Place
811 Main Street, Suite 4500
Houston, Texas 77002
2023
First Quarter
(through March 1, 2023)
2022
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
2021
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Sales Price
High
Low
$ 74.63 $ 60.14
$ 75.08 $ 58.84
$ 73.79 $ 56.62
$ 71.47 $ 55.03
$ 72.14 $ 61.28
$ 70.00 $ 48.05
$ 70.60 $ 58.00
$ 62.15 $ 47.91
$ 60.67 $ 47.58
COMMON STOCK INFORMATION
FINANCIAL AND INVESTOR RELATIONS
Stock trading symbol—KEX
The New York Stock Exchange is the
principal market for Kirby’s common
stock. As of March 1, 2023, there were
60,015,000 common shares outstanding
held by approximately 410 registered
shareholders. The number of registered
shareholders does not reflect the number
of beneficial owners of common stock.
Copies of Kirby’s Form 10-K (which is
incorporated in this Annual Report) are
available free of charge. Either contact
Kurt Niemietz, VP - Investor Relations
& Treasurer at Kirby’s corporate
headquarters, e-mail investor.relations@
kirbycorp.com, or visit Kirby’s website at
www.kirbycorp.com.
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
The graph below compares Kirby Corporation’s cumulative 5-Year total shareholder return
on common stock with the cumulative total returns of the Russell 2000 index and the
Dow Jones US Transportation Average index. The graph tracks the performance of a $100
investment in our common stock and in each index (with the reinvestment of all dividends)
from 12/31/2017 to 12/31/2022.
$200
$150
$100
$50
0
12/17
12/18
12/19
12/20
12/21
12/22
Kirby Corporation
100.00
100.84
134.03
77.59
88.95
96.33
Russell 2000
100.00
88.99
111.70
134.00
153.85
122.41
Dow Jones
US Transportation
Average
100.00
87.67
105.94
123.44
164.44
135.56
(cid:81) Kirby Corporation (cid:81)(cid:3)Russell 2000 (cid:81)(cid:3)Dow Jones US Transportation Average
The stock price performance included in this graph is not necessarily indicative of
future stock price performance.
63111herD1R2.indd 4-6
Kirby Corporation | 2022 Annual Report
3/3/23 7:17 PM
Corporation Headquarters:
55 Waugh Drive, Suite 1000
Houston, Texas 77007
Corporation Headquarters:
P.O. Box 1745
Houston, Texas 77251-1745
713-435-1000
Fax: 713-435-1010
www.kirbycorp.com
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