 Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

(Former name, former address and former fiscal year, if changed since last report)

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 Regulations 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.

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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No 

As of November ~~5, 2021,~~3, 2022, ~~60,111,000~~59.9 million shares of the Registrant’s $0.10 par value per share common stock were outstanding.

(1) Basis for Preparation of the Condensed Financial Statements

The condensed financial statements included herein have been prepared by Kirby Corporation and its consolidated subsidiaries (the “Company”), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Although the Company believes that the disclosures are adequate to make the information presented not misleading, certain information and footnote disclosures, including significant accounting policies normally included in annual financial statements, have been condensed or omitted pursuant to such rules and regulations. It is suggested that these condensed financial statements be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021. Certain reclassifications have been made to reflect the current presentation of financial information.

~~Accounting Standard Adoption~~

In December 2019, the Financial Accounting Standards Board issued Accounting Standards Update 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.

(2) ~~Acquisition~~Acquisitions

On March 31, 2022, the Company paid $

3.9 million in cash to purchase assets of a gearbox repair company in the distribution and services segment. Assets acquired consisted primarily of property and equipment. During the nine months ended September 30, 2021, the Company purchased four inland tank barges from a leasing company for $~~7,470,000~~7.5 million in cash. The Company had been leasing the barges prior to the purchase.

(3) Revenues

The following table sets forth the Company’s revenues by major source (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020		2022		2021		2022		2021
Marine transportation segment:
Inland transportation	$	255,791	$	247,647	$	733,830	$	869,224	$	345,052	$	255,791	$	939,910	$	733,830
Coastal transportation		82,723		72,955		238,522		235,622		87,988		82,723		254,321		238,522
	$	338,514	$	320,602	$	972,352	$	1,104,846	$	433,040	$	338,514	$	1,194,231	$	972,352
Distribution and services segment:
Commercial and industrial	$	153,056	$	127,224	$	426,930	$	418,763	$	165,361	$	153,056	$	474,515	$	426,930
Oil and gas		107,350		48,741		256,112		158,043		147,442		107,350		385,843		256,112
	$	260,406	$	175,965	$	683,042	$	576,806	$	312,803	$	260,406	$	860,358	$	683,042

Contract liabilities represent advance consideration received from customers, and are recognized as revenue over time as the related performance obligation is satisfied. Revenues recognized during the nine months ended September 30, ~~2021~~2022 and ~~2020~~2021 that were included in the opening contract liability balances were $~~40,315,000~~54.6 million and $~~37,153,000~~40.3, million, respectively. The Company presents all contract liabilities within the deferred revenues financial statement caption on the balance sheets. The Company did ~~not~~not have any contract assets at September 30, ~~2021~~2022 or December 31, ~~2020.~~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 2two reportable business segments as follows:

Marine Transportation Segment (“KMT”) — 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, ~~in Alaska and Hawaii~~ 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 Segment (“KDS”) — Provides after-market services and genuine replacement parts for engines, transmissions, reduction gears, and related equipment used in oilfield ~~service,~~services, marine, power generation, on-highway, and other industrial applications. The Company also rents equipment including generators, industrial compressors, ~~railcar movers, 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, electric power generation equipment, specialized electrical distribution and control equipment, and high capacity energy storage/battery systems for ~~land-based~~ oilfield service and railroad customers.

The Company’s 2two reportable business segments are managed separately based on fundamental differences in their operations. The Company evaluates the performance of its segments based on the contributions to operating income of the respective segments, 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 ~~the distribution and services segment~~KDS from ~~the marine transportation segment~~KMT of $~~5,436,000~~8.0 million and $~~17,593,000~~21.9 million for the three months and nine months ended September 30, 2022, respectively, and $5.4 million and $17.6 million for the three months and nine months ended September 30, 2021, respectively, as well as the related intersegment profit of $0.8 million and $~~6,768,000~~2.2 ~~and $23,115,000~~million for the three months and nine months ended September 30, ~~2020, respectively, as well as the related intersegment profit of $543,000~~2022 and $~~1,759,000~~0.5 million and $1.8 million for the three months and nine months ended September 30, 2021, respectively, ~~and $676,000~~ ~~and $2,311,000~~ ~~for the three months and nine months ended September 30, 2020, respectively,~~ have been eliminated from the tables below.

The following tables set forth the Company’s revenues and profit or loss by reportable segment and total assets (in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020			2022			2021			2022			2021
Revenues:
Marine transportation	$	338,514		$	320,602		$	972,352		$	1,104,846		$	433,040		$	338,514		$	1,194,231		$	972,352
Distribution and services		260,406			175,965			683,042			576,806			312,803			260,406			860,358			683,042
	$	598,920		$	496,567		$	1,655,394		$	1,681,652		$	745,843		$	598,920		$	2,054,589		$	1,655,394
Segment profit (loss):
Segment profit:
Marine transportation	$	16,915		$	32,391		$	37,333		$	134,482		$	41,713		$	16,915		$	89,465		$	37,333
Distribution and services		11,039			1,104			20,106			(9,325	)		22,268			11,039			49,976			20,106
Other		(353,548	)		(14,221	)		(371,199	)		(601,821	)		(13,024	)		(353,548	)		(25,049	)		(371,199	)
	$	(325,594	)	$	19,274		$	(313,760	)	$	(476,664	)	$	50,957		$	(325,594	)	$	114,392		$	(313,760	)


	September 30, 2021		December 31, 2020		September 30, 2022		December 31, 2021
Total assets:
Marine transportation	$	4,320,452	$	4,760,449	$	4,279,784	$	4,319,080
Distribution and services		857,132		805,831		992,136		892,603
Other		212,298		357,894		184,378		187,380
	$	5,389,882	$	5,924,174	$	5,456,298	$	5,399,063

The following table presents the details of “Other” segment loss (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

2021

2020

2021

2020

General corporate expenses

$
(4,997
)

$
(3,268
)

$
(11,542
)

$
(9,403
)
Gain (loss) on disposition of assets

830

(316
)

5,082

(13
)
Impairments and other charges

(340,713
)

0

(340,713
)

(561,274
)
Interest expense

(10,500
)

(11,809
)

(32,172
)

(37,316
)
Other income

1,832

1,172

8,146

6,185

$
(353,548
)

$
(14,221
)

$
(371,199
)

$
(601,821
)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
General corporate expenses	$	(5,451	)	$	(4,997	)	$	(12,275	)	$	(11,542	)
Gain on disposition of assets		377			830			7,971			5,082
Impairments		—			(340,713	)		—			(340,713	)
Interest expense		(11,755	)		(10,500	)		(32,598	)		(32,172	)
Other income		3,805			1,832			11,853			8,146
	$	(13,024	)	$	(353,548	)	$	(25,049	)	$	(371,199	)

The following table presents the details of “Other” total assets (in thousands):


	September 30, 2021		December 31, 2020		September 30, 2022		December 31, 2021
General corporate assets	$	210,311	$	355,205	$	182,443	$	185,246
Investment in affiliates		1,987		2,689		1,935		2,134
	$	212,298	$	357,894	$	184,378	$	187,380

(5) Long-Term Debt

The following table presents the carrying value and fair value (determined using inputs characteristic of a Level 2 fair value measurement) of debt outstanding (in thousands):

September 30, 2021

December 31, 2020

Carrying Value

Fair Value

Carrying Value

Fair Value

Revolving Credit Facility due March 27, 2024 (a)

$
0

$
0

$
250,000

$
250,000

Term Loan due March 27, 2024 (a)

360,000

360,000

375,000

375,000

3.29% senior notes due February 27, 2023

350,000

357,848

350,000

364,538

4.2% senior notes due March 1, 2028

500,000

548,893

500,000

581,115

Credit line due June 30, 2022

0

0

0

0

Bank notes payable

1,983

1,983

40

40

1,211,983

1,268,724

1,475,040

1,570,693

Unamortized debt discounts and issuance costs (b)

(3,807
)

—

(6,454
)

—

$
1,208,176

$
1,268,724

$
1,468,586

$
1,570,693


	September 30, 2022					December 31, 2021
	Carrying Value			Fair Value		Carrying Value			Fair Value
Revolving Credit Facility due July 29, 2027 (a)	$	20,000		$	20,000	$	—		$	—
Term Loan due July 29, 2027 (a)		250,000			250,000		—			—
Term Loan due March 27, 2024 (b)		—			—		315,000			315,000
3.29% senior notes due February 27, 2023		350,000			348,431		350,000			358,390
4.2% senior notes due March 1, 2028		500,000			470,370		500,000			549,239
Credit line due June 30, 2024		—			—		—			—
Bank notes payable		3,599			3,599		1,934			1,934
		1,123,599			1,092,400		1,166,934			1,224,563
Unamortized debt discounts and issuance costs (c)		(5,140	)		—		(3,567	)		—
	$	1,118,459		$	1,092,400	$	1,163,367		$	1,224,563

(a)

Variable interest rate of 4.5% at September 30, 2022.

(b)

Variable interest rate of 1.5% at ~~both September 30, 2021 and~~ December 31, ~~2020.~~2021.

~~(b)~~(c)

Excludes $~~1,559,000~~1.4 million attributable to the 2024 Revolving Credit Facility included in other assets at ~~September 30,~~December 31, 2021.

The following table presents borrowings and payments under the bank credit facilities (in thousands):

Nine Months Ended September 30,

2021

2020

Borrowings on bank credit facilities

$
4,795

$
582,212

Payments on bank credit facilities

(252,852
)

(222,073
)

$
(248,057
)

$
360,139


	Nine Months Ended September 30,
	2022			2021
Borrowings on bank credit facilities	$	171,884		$	4,795
Payments on bank credit facilities		(150,220	)		(252,852	)
	$	21,664		$	(248,057	)

~~The~~At the beginning of the third quarter of 2022, the Company ~~has~~had an amended and restated credit agreement (the ~~“Credit~~“2024 Credit Agreement”) with a group of commercial banks, with JPMorgan Chase Bank, N.A. as the administrative agent bank, ~~allowing~~that allowed for an $~~850,000,000~~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 October 2022, the Company repaid $20.0 million under the 2027 Term Loan prior to scheduled maturities. As a result, no repayments are required until September 30, 2023. The 2027 Term Loan quarterly installments are excluded from short term liabilities because the Company has the ability and intent to refinance these quarterly installments under the 2027 Revolving Credit Facility. Outstanding letters of credit under the 2027 Revolving Credit Facility were $5.1 million and available borrowing capacity was $474.9 million as of September 30, 2022. Outstanding letters of credit under the $10 million credit line were $1.4 million and available borrowing capacity was $8.6 million as of September 30, 2022.

The 2027 Term Loan is ~~due on~~ repayable in quarterly installments, scheduled to commence September 30, 2023, in increasing percentages of the original principal amount of the loan, with the remaining unpaid balance of approximately $~~March 27, 2024~~43.8 ~~and~~million payable upon maturity, assuming no prepayment. The 2027 Term Loan is prepayable, in whole or in part, without penalty. ~~During~~The 2027 Credit Agreement provides for a variable interest rate based on the ~~nine months ended September 30, 2021,~~Secured Overnight Financing Rate (“SOFR”) or a base rate calculated with reference to the ~~Company repaid $~~prime rate quoted by The Wall Street Journal, the Federal Reserve Bank of New York Rate plus ~~15,000,000~~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 ~~Term Loan. During October 2021, the Company repaid $20,000,000~~ ~~under the Term Loan. Outstanding letters of credit under the~~2027 Credit Agreement may be used for general corporate purposes including acquisitions. The 2027 Revolving Credit Facility ~~were~~includes a $~~5,063,000~~25 ~~and available borrowing capacity was $844,937,000~~ ~~as of September 30, 2021. Outstanding~~million commitment which may be used for standby letters of ~~credit~~credit.

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 are scheduled to be issued on January 19, 2023. No principal payments will be required until maturity. Beginning in 2023, interest payments of $5.3 million will be due semi-annually on January 19 and July 19 of each year, with the exception of the first payment on January 19, 2023, which will be $0.5 million. The 2033 Notes will be 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 $~~10,000,000~~ ~~credit line were $1,299,000~~ ~~and available borrowing capacity was $8,701,000~~ ~~as of September 30, 2021.~~2027 Revolving Credit Facility to repay the 2023 Notes upon maturity.

(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 related lease expense is recognized on a straight-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):


	September 30, 2021			December 31, 2020			September 30, 2022			December 31, 2021
2021	$	10,258		$	40,224
2022		37,765			33,543		$	13,751		$	41,685
2023		32,566			28,012			38,170			35,833
2024		25,804			23,578			31,067			28,837
2025		22,394			21,261			25,941			23,794
2026								19,963			18,361
Thereafter		100,946			96,491			91,784			91,237
Total lease payments		229,733			243,109			220,676			239,747
Less: imputed interest		(44,305	)		(46,863	)		(42,980	)		(46,173	)
Operating lease liabilities	$	185,428		$	196,246		$	177,696		$	193,574

The following table summarizes lease costs (in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020			2022			2021			2022			2021
Operating lease cost	$	10,361		$	11,553		$	31,433		$	32,467		$	10,058		$	10,361		$	31,512		$	31,433
Variable lease cost		467			485			1,382			1,081			462			467			1,327			1,382
Short-term lease cost		3,534			4,645			10,602			17,998			7,567			3,534			18,296			10,602
Sublease income		(217	)		(418	)		(797	)		(792	)		(69	)		(217	)		(206	)		(797	)
	$	14,145		$	16,265		$	42,620		$	50,754		$	18,018		$	14,145		$	50,929		$	42,620

The following table summarizes other supplemental information about the Company’s operating leases:


	September 30, 2021			December 31, 2020			September 30, 2022			December 31, 2021
Weighted average discount rate		4.0	%		4.1	%		3.9	%		3.8	%
Weighted average remaining lease term	9 years			10 years			9 years			9 years

(7) Impairments ~~and Other Charges~~

During the ~~three months ended September 30,~~third quarter of 2021, the Company decided to exit the Hawaii market, selling marine transportation equipment including four coastal tank barges, seven coastal tugboats, and certain other assets for aggregate cash proceeds of $~~17,200,000~~17.2. million. In addition, as of September 30, 2021, the Company ~~has~~ 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 $~~97,508,000~~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 the marine transportation segment'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 the marine transportation segment, 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 $~~24,152,000~~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 1one reporting unit in the marine transportation segment exceeded its estimated fair value. The carrying value of the reporting unit, including goodwill, and after recording impairments of long-lived assets identified above, exceeded its estimated fair value, resulting in a non-cash goodwill impairment charge of $~~219,052,000~~219.1 million for the three months ended September 30, 2021.

~~The following table summarizes the changes in goodwill during 2021 (in thousands):~~

Marine Transportation

Distribution and Services

Total

Balance at December 31, 2020 (gross)

$
505,784

$
560,155

$
1,065,939

Accumulated impairment and amortization

(18,574
)

(389,565
)

(408,139
)
Balance at December 31, 2020

487,210

170,590

657,800

Impairment

(219,052
)

—

(219,052
)
Balance at September 30, 2021

505,784

560,155

1,065,939

Accumulated impairment and amortization

(237,626
)

(389,565
)

(627,191
)
Balance at September 30, 2021

$
268,158

$
170,590

$
438,748

During the first quarter of 2020, Kirby’s market capitalization declined significantly compared to the 2019 fourth quarter. 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 the distribution and services segment. 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 the distribution and services segment’s long-lived assets and goodwill.

In performing the impairment test of long-lived assets within the distribution and services segment, 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 $~~165,304,000~~ ~~(including $148,909,000~~ ~~impairment of intangible assets other than goodwill and $16,395,000~~ ~~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 the distribution and services segment exceeded its estimated fair value. For the three months ended March 31, 2020, the goodwill impairment charge of $~~387,970,000~~ 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 $8,000,000~~ ~~non-cash write-down during the three months ended March 31, 2020.~~

(8) Stock Award Plans

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):


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020		2022		2021		2022		2021
Compensation cost	$	3,645	$	3,414	$	12,793	$	12,066	$	2,893	$	3,645	$	11,448	$	12,793
Income tax benefit	$	1,068	$	1,181	$	3,660	$	3,332	$	581	$	1,068	$	2,881	$	3,660

~~On March 1, 2021, subject to stockholder approval, the Board of Directors approved amendments to the Company’s 2005 Stock and Incentive Plan (the “Plan”) to, among other things, add~~ ~~1,400,000~~ ~~shares of availability. The amendment to the Plan was subsequently approved at the Annual Meeting of Stockholders on April 27, 2021. At September 30, 2021, there were~~ ~~2,228,857~~ ~~shares available for future grants under the Plan.~~

During the nine months ended September 30, ~~2021,~~2022, the Company granted ~~311,016~~208,706 restricted stock units (“RSUs”) to selected officers and other key employees under the ~~Plan, the majority of~~employee stock award plan which vest ratably over five years.

~~During the nine months ended September 30, 2021, the Company granted~~ and ~~29,773~~27,696 shares of restricted stock to nonemployee directors of the Company under the director stock ~~award plan. The restricted stock vests~~ plan, the majority of which vest six months after the date of ~~grant except that restricted stock granted in lieu of cash director fees vests in equal quarterly increments through March 31, 2022.~~grant.

(9) Taxes on Income

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 allowed 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 nine months ended September 30, 2020 due to carrying back net operating losses 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~~ ~~were applied at a federal tax rate of~~ 35~~% applicable to those tax years, compared to a~~ 21~~% tax rate effective at September 30, 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 $58,746,000~~.

At September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company had a federal income tax receivable of $~~70,959,000~~70.5 million and $~~188,177,000~~71.0, million, respectively, included in Accounts Receivable – Other on the balance sheets. During the three months ended March 31, 2021, the Company received a tax refund of $~~119,493,000~~119.5, million, including accrued interest, for its 2019 federal tax return related to net operating losses being carried back to offset taxable income generated between 2014 and 2017.

Earnings (loss) before taxes on income and details of the provision (benefit) for taxes on income were as follows (in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020			2022			2021			2022		2021
Earnings (loss) before taxes on income:
United States	$	(325,369	)	$	19,246		$	(313,177	)	$	(476,382	)	$	50,906		$	(325,369	)	$	114,167	$	(313,177	)
Foreign		(225	)		28			(583	)		(282	)		51			(225	)		225		(583	)
	$	(325,594	)	$	19,274		$	(313,760	)	$	(476,664	)	$	50,957		$	(325,594	)	$	114,392	$	(313,760	)
Provision (benefit) for taxes on income:
Federal:
Current	$	(446	)	$	(33,690	)	$	(446	)	$	(189,994	)	$	(6	)	$	(446	)	$	513	$	(446	)
Deferred		(55,772	)		23,350			(52,968	)		16,056			10,043			(55,772	)		23,764		(52,968	)
State and local:
Current		832			1,257			1,047			1,875			1,015			832			2,313		1,047
Deferred		(5,056	)		620			(3,480	)		(10,674	)		608			(5,056	)		2,222		(3,480	)
Foreign - current		0			44			7			80			53			—			144		7
	$	(60,442	)	$	(8,419	)	$	(55,840	)	$	(182,657	)	$	11,713		$	(60,442	)	$	28,956	$	(55,840	)

(10) Earnings Per Share

The following table presents the components of basic and diluted earnings (loss) per share (in thousands, except per share amounts):

Three Months Ended September 30,

Nine Months Ended September 30,

2021

2020

2021

2020

Net earnings (loss) attributable to Kirby

$
(264,730
)

$
27,489

$
(257,915
)

$
(294,750
)
Undistributed earnings allocated to restricted shares

0

(57
)

0

0

Earnings (loss) available to Kirby common stockholders – basic

(264,730
)

27,432

(257,915
)

(294,750
)
Undistributed earnings allocated to restricted shares

0

57

0

0

Undistributed earnings reallocated to restricted shares

0

(57
)

0

0

Earnings (loss) available to Kirby common stockholders – diluted

$
(264,730
)

$
27,432

$
(257,915
)

$
(294,750
)

Shares outstanding:

Weighted average common stock issued and outstanding

60,109

60,038

60,095

60,015

Weighted average unvested restricted stock

(47
)

(123
)

(51
)

(112
)
Weighted average common stock outstanding – basic

60,062

59,915

60,044

59,903

Dilutive effect of stock options and restricted stock units

0

16

0

0

Weighted average common stock outstanding – diluted

60,062

59,931

60,044

59,903

Net earnings (loss) per share attributable to Kirby common stockholders:

Basic

$
(4.41
)

$
0.46

$
(4.30
)

$
(4.92
)
Diluted

$
(4.41
)

$
0.46

$
(4.30
)

$
(4.92
)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
Net earnings (loss) attributable to Kirby	$	39,091		$	(264,730	)	$	84,982		$	(257,915	)
Undistributed earnings allocated to restricted shares		(18	)		—			(27	)		—
Earnings (loss) available to Kirby common stockholders – basic		39,073			(264,730	)		84,955			(257,915	)
Undistributed earnings allocated to restricted shares		18			—			27			—
Undistributed earnings reallocated to restricted shares		(18	)		—			(27	)		—
Earnings (loss) available to Kirby common stockholders – diluted	$	39,073		$	(264,730	)	$	84,955		$	(257,915	)

Shares outstanding:
Weighted average common stock issued and outstanding		59,923			60,109			60,107			60,095
Weighted average unvested restricted stock		(27	)		(47	)		(19	)		(51	)
Weighted average common stock outstanding – basic		59,896			60,062			60,088			60,044
Dilutive effect of stock options and restricted stock units		286			—			281			—
Weighted average common stock outstanding – diluted		60,182			60,062			60,369			60,044

Net earnings (loss) per share attributable to Kirby common stockholders:
Basic	$	0.65		$	(4.41	)	$	1.41		$	(4.30	)
Diluted	$	0.65		$	(4.41	)	$	1.41		$	(4.30	)

Certain outstanding options to purchase approximately ~~627,000~~0.4 million and ~~681,000~~0.6 million shares of common stock were excluded in the computation of diluted earnings per share as of September 30, ~~2021~~2022 and ~~2020,~~2021, respectively, as such stock options would have been antidilutive. Certain outstanding RSUs to convert to ~~565,000~~11,000 and ~~162,000~~565,000 shares of common stock were also excluded in the computation of diluted earnings per share as of September 30, ~~2021~~2022 and ~~2020,~~2021, respectively, as such RSUs would have been antidilutive.

(11) Inventories

The following table presents the details of inventories – net (in thousands):


	September 30, 2021		December 31, 2020		September 30, 2022		December 31, 2021
Finished goods	$	253,963	$	255,491	$	306,394	$	260,707
Work in process		54,857		54,184		86,076		70,643
	$	308,820	$	309,675	$	392,470	$	331,350

(12) Retirement Plans

The Company sponsors a defined benefit plan for certain of 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 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.

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 prediction of the pension plan contribution difficult. Based on current pension plan assets and market conditions, the Company does not expect to make a contribution to the Kirby pension plan during ~~2021.~~

2022.

On February 14, 2018, with the acquisition of Higman Marine, Inc. and its affiliated companies (“Higman”), the Company assumed Higman’s 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 a contribution of $~~479,000~~0.7 million to the Higman pension plan during the nine months ended September 30, ~~2021.~~2022 and a contribution of $0.2 million during October 2022. The Company does not expect to make any additional contributions ~~during 2021.~~

for the remainder of 2022.

The Company sponsors an unfunded defined benefit health care plan that provides limited postretirement medical benefits to employees who meet 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 components of net periodic benefit cost for the Company’s defined benefit plans were as follows (in thousands):


	Pension Benefits										Pension Benefits
	Pension Plans						SERP				Pension Plans						SERP
	Three Months Ended September 30,						Three Months Ended September 30,				Three Months Ended September 30,						Three Months Ended September 30,
	2021			2020			2021		2020		2022			2021			2022		2021
Components of net periodic benefit cost:
Service cost	$	1,991		$	1,917		$	0	$	0	$	1,634		$	1,991		$	—	$	—
Interest cost		3,560			3,919			8		10		3,694			3,560			7		8
Expected return on plan assets		(6,566	)		(5,960	)		0		0		(7,099	)		(6,566	)		—		—
Amortization of actuarial loss		1,412			994			10		8		6			1,412			7		10
Net periodic benefit cost	$	397		$	870		$	18	$	18	$	(1,765	)	$	397		$	14	$	18

Pension Benefits

Pension Plans

SERP

Nine Months Ended September 30,

Nine Months Ended September 30,

2021

2020

2021

2020

Components of net periodic benefit cost:

Service cost

$
5,971

$
5,753

$
0

$
0

Interest cost

10,679

11,758

23

30

Expected return on plan assets

(19,699
)

(17,883
)

0

0

Amortization of actuarial loss

3,300

1,651

30

26

Net periodic benefit cost

$
251

$
1,279

$
53

$
56


	Pension Benefits
	Pension Plans						SERP
	Nine Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022		2021
Components of net periodic benefit cost:
Service cost	$	4,903		$	5,971		$	—	$	—
Interest cost		11,056			10,679			22		23
Expected return on plan assets		(21,395	)		(19,699	)		—		—
Amortization of actuarial loss		248			3,300			22		30
Net periodic benefit cost	$	(5,188	)	$	251		$	44	$	53

The components of net periodic benefit cost for the Company’s postretirement benefit plan were as follows (in thousands):


	Other Postretirement Benefits												Other Postretirement Benefits
	Postretirement Welfare Plan												Postretirement Welfare Plan
	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020			2022			2021			2022			2021
Components of net periodic benefit cost:
Service cost	$	0		$	0		$	0		$	0
Interest cost		5			6			13			17		$	5		$	5		$	13		$	13
Amortization of actuarial gain		(113	)		(131	)		(338	)		(392	)		(98	)		(113	)		(295	)		(338	)
Net periodic benefit cost	$	(108	)	$	(125	)	$	(325	)	$	(375	)	$	(93	)	$	(108	)	$	(282	)	$	(325	)

(13) Other Comprehensive Income

The Company’s changes in other comprehensive income ~~(loss)~~ were as follows (in thousands):


	Three Months Ended September 30,																		Three Months Ended September 30,
	2021									2020									2022									2021
	Gross Amount			Income Tax Provision			Net Amount			Gross Amount			Income Tax (Provision) Benefit			Net Amount			Gross Amount			Income Tax (Provision) Benefit			Net Amount			Gross Amount			Income Tax Provision			Net Amount
Pension and postretirement benefits (a):
Amortization of net actuarial loss	$	1,309		$	(329	)	$	980		$	871		$	(219	)	$	652
Actuarial gains (losses)		2,891			(729	)		2,162			(6,592	)		1,661			(4,931	)
Amortization of net actuarial (gain) loss																			$	(85	)	$	21		$	(64	)	$	1,309		$	(329	)	$	980
Actuarial gains																				12,265			(3,091	)		9,174			2,891			(729	)		2,162
Foreign currency translation		(122	)		0			(122	)		(239	)		0			(239	)		(608	)		—			(608	)		(122	)		—			(122	)
Total	$	4,078		$	(1,058	)	$	3,020		$	(5,960	)	$	1,442		$	(4,518	)	$	11,572		$	(3,070	)	$	8,502		$	4,078		$	(1,058	)	$	3,020

Nine Months Ended September 30,

2021

2020

Gross
Amount

Income Tax Provision

Net Amount

Gross
Amount

Income Tax (Provision) Benefit

Net
Amount

Pension and postretirement benefits (a):

Amortization of net actuarial loss

$
2,992

$
(753
)

$
2,239

$
1,285

$
(324
)

$
961

Actuarial gains (losses)

7,019

(1,764
)

5,255

(10,201
)

2,566

(7,635
)
Foreign currency translation

(705
)

0

(705
)

(1,162
)

0

(1,162
)
Total

$
9,306

$
(2,517
)

$
6,789

$
(10,078
)

$
2,242

$
(7,836
)


	Nine Months Ended September 30,
	2022									2021
	Gross Amount			Income Tax (Provision) Benefit			Net Amount			Gross Amount			Income Tax Provision			Net Amount
Pension and postretirement benefits (a):
Amortization of net actuarial (gain) loss	$	(25	)	$	4		$	(21	)	$	2,992		$	(753	)	$	2,239
Actuarial gains		17,737			(4,462	)		13,275			7,019			(1,764	)		5,255
Foreign currency translation		(743	)		—			(743	)		(705	)		—			(705	)
Total	$	16,969		$	(4,458	)	$	12,511		$	9,306		$	(2,517	)	$	6,789

(a) Actuarial gains ~~(losses)~~ are amortized into other income (expense). (See Note 12, Retirement Plans)

(14) Contingencies and Commitments

On May 10, 2019, two tank barges and a towboat, the M/V Voyager, owned and operated by Kirby Inland Marine, LP (“Kirby Inland Marine”), a wholly owned subsidiary of the Company, were struck by the LPG tanker, the Genesis River, in the Houston Ship Channel. The bow of the Genesis River penetrated the Kirby 30015T and capsized the MMI 3014. The collision penetrated the hull of the Kirby 30015T causing its cargo, reformate, to be discharged into the water. The United States Coast Guard (“USCG”) and the National Transportation Safety Board (“NTSB”) designated the owner and pilot of the Genesis River as well as the subsidiary of the Company as parties of interest in their investigation into the cause of the incident. On June 19, 2019, the Company filed a limitation action in the U.S. District Court of the Southern District of Texas ‑ Galveston Division seeking limitation of liability and asserting that the Genesis River and her owner/manager are at fault for damages including removal costs and claims under the Oil Pollution Act of 1990 and maritime law. Multiple claimants have filed claims in the limitation seeking damages under the Oil Pollution Act of 1990. The court bifurcated the matter into two trials, the first to determine liability amongst the parties and the second to assess damages. The Company entered into a settlement agreement resolving claims of natural resource damage arising out of the spill. Under the agreement, the Company agreed to pay state and federal natural resource trustees $~~2,102,000~~. The liability trial was conducted during the week of February 2, 2021. The Court issued its decision on July 8, 2021, finding that the Genesis River was solely at fault and no liability on the part of Kirby Inland Marine. No appeal was filed by the Genesis River. The Company and its insurance carriers are collecting the $~~20,206,000~~ ~~judgment from the Genesis River and its interests.~~

On October 13, 2016, the tug Nathan E. Stewart and barge DBL 55, an articulated tank barge and tugboat unit (“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~~United States Coast Guard and the ~~NTSB~~National Transportation Safety Board 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.

On March 22, 2014, two tank barges and a towboat, the M/V Miss Susan, owned by Kirby Inland Marine, were involved in a collision with the M/S Summer Wind on the Houston Ship Channel near Texas City, Texas. The lead tank barge was damaged in the collision resulting in a discharge of intermediate fuel oil from one of its cargo tanks. The Company is participating in the natural resource damage assessment and restoration process with federal and state government natural resource trustees. The Company believes it has adequate insurance coverage for pollution, marine and 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.

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.

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 $~~21,199,000~~20.1 million at September 30, ~~2021,~~2022, including $~~13,847,000~~12.1 million in letters of credit and $~~7,352,000~~8.0 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 regarding these instruments.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Statements contained in this Form 10-Q that are not historical facts, including, but not limited to, any projections contained herein, are forward-looking statements and involve a number of risks and uncertainties. Such statements 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-Q could differ materially from those stated in such forward-looking statements. Among the factors that could cause actual results to differ materially are: adverse economic conditions, industry competition and other competitive factors, adverse weather conditions such as high water, low water, tropical storms, hurricanes, tsunamis, fog and ice, tornados, 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 found in the Company’s Annual Report on Form 10‑K for the year ended December 31, ~~2020.~~2021. 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 (loss) per share attributable to Kirby common stockholders are “diluted earnings (loss) per share.” ~~The weighted average number of common shares applicable to diluted earnings (loss) per share were as follows (in thousands):~~

Three Months Ended September 30,

Nine Months Ended September 30,

2021

2020

2021

2020

Weighted average number of common stock - diluted

60,062

59,931

60,044

59,903

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, and in Alaska and Hawaii.~~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 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, ~~railcar movers, 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 ~~land-based~~ oilfield service and railroad customers.

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


	Three Months Ended September 30,					Nine Months Ended September 30,						Three Months Ended September 30,					Nine Months Ended September 30,
	2021			2020		2021			2020			2022		2021			2022		2021
Total revenues	$	598,920		$	496,567	$	1,655,394		$	1,681,652		$	745,843	$	598,920		$	2,054,589	$	1,655,394
Net earnings (loss) attributable to Kirby	$	(264,730	)	$	27,489	$	(257,915	)	$	(294,750	)	$	39,091	$	(264,730	)	$	84,982	$	(257,915	)
Net earnings (loss) per share attributable to Kirby common stockholders – diluted	$	(4.41	)	$	0.46	$	(4.30	)	$	(4.92	)	$	0.65	$	(4.41	)	$	1.41	$	(4.30	)
Net cash provided by operating activities						$	280,362		$	359,763							$	161,185	$	280,362
Capital expenditures						$	71,968		$	129,371		��					$	120,263	$	71,968

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 ~~$340,713,000~~$340.7 million before taxes, ~~$275,068,000~~$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 the marine transportation segment. See Note 7, Impairments ~~and Other Charges~~ in the financial statements for additional information.

The 2020 first quarter included $561,274,000 before taxes, $433,341,000 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 the distribution and services segment. See Note 7, Impairments and Other Charges in the financial statements for additional information. In addition, the 2020 first quarter was favorably impacted by an income tax benefit of $50,824,000, 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 in the financial statements for additional information.

Cash provided by operating activities for the 2022 first nine months decreased in comparison to the 2021 first nine months ~~decreased~~ primarily due to ~~lower revenues and operating income in the marine transportation segment, partially offset by~~ the receipt of a tax refund of ~~$119,493,000,~~$119.5 million, including accrued interest, for the Company’s 2019 federal tax ~~return.~~return during the 2021 first quarter. For the ~~2021~~2022 first nine months, capital expenditures of ~~$71,968,000~~$120.3 million included ~~$61,565,000~~$102.8 million in ~~the marine transportation segment~~KMT and ~~$10,403,000~~$17.5 million in ~~the distribution~~KDS and ~~services segment and~~ corporate, each more fully described under ~~cash flow~~Cash Flow and ~~capital expenditures~~Capital Expenditures below.

The Company projects that capital expenditures for ~~2021~~2022 will be in the ~~$120,000,000~~$170 million to ~~$130,000,000~~$190 million range. The ~~2021~~2022 construction program will consist of approximately ~~$10,000,000~~$5 million for the construction of new inland towboats, ~~$95,000,000~~$145 million to ~~$100,000,000~~$155 million primarily for maintenance capital ~~upgrades~~ and improvements to existing marine equipment and facilities, and ~~$15,000,000~~$20 million to ~~$20,000,000~~$30 million for new machinery and equipment, facilities improvements, and information technology projects in ~~the distribution~~KDS and ~~services segment and~~ corporate.

The Company’s debt-to-capitalization ratio decreased to ~~29.8%~~27.3% at September 30, ~~2021~~2022 from ~~32.2%~~28.7% at December 31, ~~2020,~~2021, primarily due to repayments under the ~~Revolving Credit Facility and~~2024 Term Loan in the ~~2021~~ first nine months ~~partially offset by a decrease~~of 2022, and an increase in total equity, primarily due to the net ~~loss~~earnings attributable to Kirby of ~~$257,915,000.~~$85.0 million, partially offset by treasury stock purchases of $22.9 million. The Company’s debt outstanding as of September 30, ~~2021~~2022 and December 31, ~~2020~~2021 is detailed in Long-Term Financing below.

Marine Transportation

For both the ~~2021~~2022 third quarter and first nine months, ~~the Company’s marine transportation segment~~KMT generated ~~57% and 59%, respectively,~~58% of the Company’s revenues. The segment’s customers include many of the major petrochemical and refining companies that operate in the United States. Products transported include intermediate materials used to produce many of the end products used widely by businesses and consumers — plastics, fiber, paints, detergents, oil additives and paper, among others, as well as residual fuel oil, ship bunkers, asphalt, gasoline, diesel fuel, heating oil, crude oil, natural gas condensate, and agricultural chemicals. Consequently, ~~the Company’s marine transportation business~~KMT is directly affected by the volumes produced by the Company’s petroleum, petrochemical, and refining customer base.

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

September 30,

2021

2020

Inland tank barges:

Owned

993

1,032

Leased

43

52

Total

1,036

1,084

Barrel capacity (in millions)

23.2

24.5

Active inland towboats (quarter average):

Owned

213

229

Chartered

30

36

Total

243

265

Coastal tank barges:

Owned

30

45

Leased

5

2

Total

35

47

Barrel capacity (in millions)

3.4

4.3

Coastal tugboats:

Owned

26

40

Chartered

9

4

Total

35

44

Offshore dry-bulk cargo barges (owned)

4

4

Offshore tugboats and docking tugboat (owned and chartered)

5

5


	September 30,
	2022		2021
Inland tank barges:
Owned		997		993
Leased		38		43
Total		1,035		1,036
Barrel capacity (in millions)		23.0		23.2

Active inland towboats (quarter average):
Owned		215		213
Chartered		59		30
Total		274		243

Coastal tank barges:
Owned		28		30
Leased		1		5
Total		29		35
Barrel capacity (in millions)		3.0		3.4

Coastal tugboats:
Owned		24		26
Chartered		3		9
Total		27		35

Offshore dry-bulk cargo barges (owned)		4		4
Offshore tugboats and docking tugboat (owned and chartered)		5		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.

During the ~~2021~~2022 first nine months, the Company ~~retired 26~~brought back into service 14 inland tank barges and returned four leased tank barges. The net result was ~~a decrease~~an increase of 30ten inland tank barges and approximately ~~907,000~~0.2 million barrels of capacity.

~~The Company’s marine transportation segment’s~~KMT revenues for the 2022 third quarter and first nine months increased 28% and 23%, respectively, and operating income increased 147% and 140%, respectively, compared to the 2021 third quarter and first nine ~~months increased 6% and decreased 12%, respectively, and operating income decreased 48% and 72%, respectively, compared with~~months. The increases for the ~~2020~~2022 third quarter and first nine months ~~revenues and operating income. The increase in revenues for the 2021 third quarter was~~were primarily due to increased tank barge utilization, higher term and spot pricing, and higher fuel rebills in the inland and coastal ~~markets~~markets. 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 tank barge utilization in the inland market. The decreases for the 2021 first nine months were primarily due to reduced barge utilization in the inland and coastal markets as well as reduced term and spot pricing in the inland market when compared to 2020. The decreases were partially offset by the addition of the Savage Inland Marine, LLC (“Savage”) fleet acquired on April 1, 2020. The 2021 third quarter benefited from improving business activity and inland market barge utilization which were largely offset by reduced term pricing when compared to the 2020 third quarter. 2021 third quarter revenues and operating ~~income were also impacted by Hurricane Ida which shuttered almost the entire Southeast Louisiana refinery and chemical complex and key waterways for an extended period of time.~~costs. The 2021 first nine months was also heavily impacted by Winter Storm Uri ~~during the first quarter~~ which shut down 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. The 2021 first nine months revenues and ~~2020~~operating income were also impacted by Hurricane Ida in the 2021 third quarter which shuttered almost the entire Southeast Louisiana refinery and chemical complex and key waterways for an extended period of time. The 2022 and 2021 first quarters were ~~also~~ impacted by poor operating conditions including seasonal wind and fog along the Gulf Coast, flooding on the Mississippi River, and various lock closures along the Gulf Intracoastal Waterway, in addition to ice on the Illinois ~~River during~~River. For the ~~2021 first~~2022 third quarter and ~~increased shipyard days on large capacity~~first nine months, the inland tank barge fleet contributed 80% and 79%, respectively, and the coastal ~~vessels during the 2020 first quarter.~~fleet contributed 20% and 21%, respectively, of KMT

revenues. For the 2021 third quarter and first nine months, the inland tank barge fleet contributed 76% and 75%, respectively, and the coastal fleet contributed 24% and 25%, respectively, of ~~marine transportation~~KMT revenues. For the 2020 third quarter and first nine months, the inland tank barge fleet contributed 77% and 79%, respectively, and the coastal fleet contributed 23% and 21%, respectively, of marine transportation revenues.

Inland tank barge utilization levels averaged in the mid-80% range during the 2022 first quarter, the low 90% range during the 2022 second and third quarters compared to the mid-70% range during the 2021 first quarter, the low to mid-80% range during the 2021 second quarter, and the low 80% range during the 2021 third quarter. ~~In 2020, inland~~The 2022 first nine months reflected increasing activity levels as a result of higher refinery and petrochemical plant utilization while the 2021 first nine months was impacted by reduced demand resulting from the effects of the COVID-19 pandemic causing an economic slowdown as well as reduced volumes due to Winter Storm Uri during the 2021 first quarter and Hurricane Ida during the 2021 third quarter, partially offset by the Colonial Pipeline outage which increased barge transportation activity in the 2021 second quarter.

Coastal tank barge utilization levels averaged in the low 90% range during the 2022 first and second quarters and the low to mid-90% range during the ~~2020 first~~2022 third quarter the mid-80% range during the 2020 second quarter, and the low 70% range during the 2020 third quarter. The 2021 first nine months and the 2020 second and third quarters were impacted by reduced demand as a result of the COVID-19 pandemic and the resulting economic slowdown. The 2021 second quarter was favorably impacted by the Colonial Pipeline outage in May. The 2021 first nine months was also impacted by reduced volumes as a result of Winter Storm Uri during the first quarter. The 2020 first quarter experienced strong demand from petrochemicals, black oil, and refined petroleum products customers. In addition, extensive delay days duecompared to ~~poor operating conditions and lock maintenance projects in the 2020 first quarter slowed the transport of customer cargoes and contributed to strong utilization.~~

During both the ~~mid-70% range during the 2020 second~~2022 third quarter and ~~third quarters. The 2021~~ first nine months, approximately 60% of KMT inland revenues were under term contracts and ~~the 2020 second and third quarters~~40% were impacted by reduced demand as a result of the COVID-19 pandemic and the resulting economic slowdown. Barge utilization in the coastal marine fleet continued to be impacted by the oversupply of tank barges in the coastal industry in 2021 and 2020.

spot contract revenues. During both the 2021 third quarter and first nine months, approximately 65% of ~~marine transportation’s~~KMT inland revenues were under term contracts and 35% were spot contract revenues. During the 2020 third quarter and first nine months, approximately 70% and 65%, respectively, of marine transportation’s inland revenues were under term contracts and 30% and 35%, respectively, were spot contract revenues. Inland time charters during the ~~2021~~2022 third quarter and first nine months represented 56% and ~~58%~~57%, respectively, of the inland revenues under term contracts compared with ~~67%~~56% and 58% in ~~both~~ the ~~2020~~2021 third quarter and first nine ~~months.~~months, respectively. During the 2022 third quarter and first nine months, approximately 65% and 75%, respectively, of KMT coastal inland revenues were under term contracts and 35% and 25%, respectively, were spot contracts. During both the 2021 third quarter and first nine months, approximately 80% of the coastal revenues were under term contracts and 20% were spot contract revenues. ~~During both the 2020 third quarter and first nine months, approximately 85% of coastal revenues were under term contracts, and 15% were under spot contract revenues.~~ Coastal time charters represented approximately ~~85%~~90% of coastal revenues under term contracts during both the ~~2021~~2022 third quarter and first nine months compared with approximately ~~90%~~85% during both the ~~2020~~2021 third quarter and first nine months. Term contracts have contract terms of 12 months or longer, while spot contracts have contract terms of less than 12 months.

The following table summarizes the average range of pricing changes in term and spot contracts renewed during ~~2021~~2022 compared to contracts renewed during the corresponding quarter of ~~2020:~~2021:


	Three Months Ended
	March 31, ~~2021~~2022		June 30, ~~2021~~2022	September 30, ~~2021~~2022
Inland market:
Term ~~decrease~~increase	7% – 9%	~~(7)%~~	14% – ~~(9)%~~16%	~~(6)%~~13% – ~~(8)%~~	~~(2)% – (4)%~~15%
Spot ~~decrease~~increase	15% – 20%	~~(25)%~~	15% – ~~(30)%~~18%	~~(10)%~~23% – ~~(15)%~~	~~No change~~27%
Coastal market (a):
Term increase ~~(decrease)~~	4% – 6%	~~No change~~	10% – 12%	~~No change~~	~~No change~~19% – 21%
Spot increase ~~(decrease)~~	4% – 6%	~~No change~~	10% – 12%	~~No change~~	~~No change~~18% – 22%

(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. Contract pricing in the coastal marine market continued to be impacted by the oversupply of tank barges in the coastal industry in 2022 and 2021.

Effective January 1, ~~2021,~~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 3%5%, excluding fuel.

~~The marine transportation segment~~KMT operating margin was 9.6% and 7.5% for the 2022 third quarter and first nine months, respectively, compared to 5.0% and 3.8% for the 2021 third quarter ~~compared with 10.1% for the 2020 third quarter~~ and ~~3.8% for the 2021~~ first nine months, ~~compared to 12.2% for the 2020 first nine months.~~

respectively.

Distribution and Services

~~The Company, through its distribution and services segment,~~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, ~~railcar movers, 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, and manufactures cementing and pumping equipment as well as coil tubing and well intervention equipment, electric power generation equipment, specialized electric distribution and control equipment, and high capacity energy storage/battery systems for ~~land-based~~ oilfield service and railroad customers.

For both the ~~2021~~2022 third quarter and first nine months, ~~the distribution and services segment~~KDS generated ~~43% and 41%, respectively,~~42% of the Company’s revenues, of which ~~87%~~83% and ~~86%~~80%, respectively, ~~was~~were generated from service and parts and ~~13%~~17% and ~~14%~~20%, respectively, from manufacturing. The results of ~~the distribution and services segment~~KDS are largely influenced by the economic cycles of the ~~oilfield service and~~ oil and gas, ~~operator and producer markets,~~ marine, power generation, on-highway, and other related industrial markets.

~~Distribution~~KDS revenues for the 2022 third quarter and ~~services revenues for~~first nine months increased 20% and 26%, respectively, and operating income increased 102% and 149%, respectively, compared with the 2021 third quarter and first nine ~~months increased 48% and 18%, respectively, and operating income increased 900% and 316%, respectively, compared with the 2020 third quarter and first nine months revenues and operating income.~~months. In the commercial and industrial market, the increases infor the ~~2021 third quarter and first nine months compared to the 2020~~2022 third quarter and first nine months were primarily attributable to ~~improved~~strong economic activity across the ~~U.S.~~United States which resulted in higher business levels in the ~~power generation~~marine and on-highway businesses. Increased product sales in Thermo King also contributed favorably to the ~~2021~~2022 third quarter and first nine months results. ~~The marine repair business was down slightly compared to the 2020 third quarter~~These increases were partially offset by continuing supply chain constraints and ~~first nine months due to reduced service activity.~~delays. The ~~commercial and industrial market~~ 2021 first nine months was impacted by Winter Storm Uri ~~with~~which caused reduced activity, ~~levels at many locations across~~especially in the Southern ~~U.S. during~~United States, in the ~~first quarter.~~commercial and industrial market. For the ~~2021~~2022 third quarter and first nine months, the commercial and industrial market contributed ~~59%~~53% and ~~63%~~55%, respectively, of ~~the distribution and services~~KDS revenues.

In the oil and gas market, revenues and operating income improved compared to the ~~2020~~2021 third quarter and first nine months due to higher oilfield activity which resulted in increased demand for new transmissions and ~~overhauled engines, transmissions,~~ parts ~~and service. The~~in the distribution business. Although the manufacturing business ~~also experienced increases in~~was heavily impacted by supply chain delays, the business continued to experience increased orders and deliveries of new ~~and remanufactured~~environmentally friendly pressure pumping equipment ~~as well as~~and power generation equipment for electric fracturing. For the ~~2021~~2022 third quarter and first nine months, the oil and gas market contributed ~~41%~~47% and ~~37%~~45%, respectively, of ~~the distribution and services~~KDS revenues.

~~The distribution~~KDS operating margin was 7.1% and ~~services segment operating margin~~5.8% for the 2022 third quarter and first nine months, respectively, compared to 4.2% and 2.9% for the 2021 third quarter ~~was 4.2% compared with 0.6% for the 2020 third quarter~~ and ~~2.9% for the 2021~~ first nine months, compared to (1.6)% for the 2020 first nine months. The 2020 first nine months results were adversely impacted by the bankruptcy of a large oil and gas customer, resulting in a $3,339,000 bad debt expense charge and severance expenses of $1,354,000 as a result of workforce reductions.

respectively.

Outlook

~~Although~~Refinery and petrochemical utilization levels remain at high levels. This is favorable for the ~~COVID-19 delta variant~~Company's barge utilization, which is strong in both inland and coastal markets, and pricing, which continues to increase. In KDS, despite ongoing supply chain constraints and delays, demand for the ~~U.S.~~Company's products and ~~around the world has created some uncertainty which has slowed the pace of the economic recovery,~~services continues to grow. Overall, the Company expects ~~further growth~~both KMT and KDS to deliver improved financial results in ~~marine transportation during~~2022 and going into 2023. The Company continues to closely monitor the ~~2021 fourth quarter. Supply chain~~ever-changing economic landscape related to the impact of higher interest rates and ~~labor constraints and delays of key components, particularly in distribution and services, could defer some product sales and manufacturing deliveries~~possible recessionary headwinds as it moves into ~~2022 resulting in modest declines in revenue in distribution and services during the 2021 fourth quarter.~~

2023.

In the inland marine transportation market, ~~barge utilization in October improved into the high 80% range and is~~conditions are expected to ~~remain strong for the duration of the fourth quarter as Louisiana refinery and petrochemical plants restart and customers boost production levels~~continue to ~~meet pend-up demand. While ongoing navigational issues in the wake of Hurricane Ida, which have resulted in extended closures of key waterways and contributed to some increases in~~improve driven by increased barge utilization, ~~should subside, the onset of seasonal winter weather and continued economic growth should result in improved barge utilization. Overall, increased inland activity levels should yield further~~ improvements in the spot market, ~~which currently represents approximately 35%~~and renewals of ~~inland revenue,~~expiring term contracts at higher rates. The impacts of rising costs from inflationary pressures, including significantly higher fuel prices, are expected to be recovered as term contracts renew and ~~contribute to improved revenues and operating margins. During~~contract escalators reprice in the fourth quarter and into ~~2022, term contracts that renewed lower over the past year should reset to reflect the improved market conditions. Overall, inland revenues are expected to~~2023. An increase in ~~the 2021 fourth quarter with operating margins around 10%.~~

As of September 30, 2021, the Company estimated there were approximately 4,000 inland tank barges in the industry fleet, of which approximately 350 were over 30 years old and approximately 285 of those over 40 years old. The Company estimates that approximately 60delay days due to 75 new tank barges have been ordered for delivery in 2021 and many older tank barges, including an expected 28 by the Company, will be retired, dependent on 2021 market conditions. Historically, 75 to 150 older inland tank barges are retired from service each year industry-wide. The extent of the retirements is 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.

~~In the coastal marine transportation market, market~~normal seasonal conditions ~~are expected to modestly improve in the 2021 fourth quarter. Combined with the recent sale of the Hawaiian marine equipment~~ and the ~~retirement~~impact of ~~underutilized barges, coastal barge utilization~~record low water on the Mississippi River is expected ~~to be near 90%~~ in the fourth quarter. ~~Although the Hawaii equipment has been sold, the Company has chartered~~In coastal marine, modest improvements in demand and ~~will continue to operate the assets until existing customer contracts expire at the end of 2021. Elsewhere~~pricing are anticipated in the ~~coastal market,~~2022 fourth quarter, but revenues and operating income are expected to be impacted by planned shipyard ~~activity~~maintenance and ballast water treatment installations on ~~several large capacity barges will likely result in an overall sequential revenue reduction in~~certain vessels for the ~~mid-single digits during~~remainder of the ~~fourth quarter with operating margins at or slightly below breakeven.~~year.

As of September 30, 2021, the Company estimated there were 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 20 of those were over 25 years old. The Company is aware of one announced small specialized coastal ATB in the 195,000 barrels or less category that was delivered in the 2021 first quarter with no further coastal barges currently under construction.

~~The~~KDS results ~~of the distribution and services segment~~ are largely influenced by the cycles of the ~~land-based oilfield service and~~ oil and gas, ~~operator and producer markets,~~ marine, power generation, on-highway and other related industrial markets. Seasonality in the commercial and industrial market, including reduced marine repair activity, lower demand for Thermo King refrigeration parts and service, and reduced utilization of the power generation rental fleet, are all expected to contribute to sequential reductions in revenue and operating income in the 2021 fourth quarter.

In the ~~distribution and services~~ oil and gas market, ~~strong~~high commodity prices, increasing rig counts, and ~~oilfield~~growing well completions activity ~~levels~~ are expected to ~~yield robust~~result in increased demand for ~~new transmissions, service,~~original equipment manufacturer products, parts, and ~~parts~~services as well as for ~~the duration of the year. In manufacturing, activity is also expected to remain strong driven by an increasing backlog of~~new environmentally friendly pressure pumping equipment ~~frac related~~and power generation equipment for electric fracturing. In commercial and ~~remanufacturing of existing conventional equipment.~~industrial, favorable economic activity is expected to result in increased demand in power generation, marine repair, and on-highway. However, ~~increasing original equipment manufacturer~~ongoing supply chain issues and long lead times are expected to delay some sales into 2022 and result in a sequential reduction in oil and gas revenues and operating margins. Overall, compared to the 2021 third quarter, distribution and services revenues are expected to decline modestly with operating margins in the ~~low~~near term, contributing to ~~mid-single digits.~~some volatility as deliveries of products possibly shift into future quarters.

Acquisitions

~~While the Company's outlook is dependent on developments regarding the COVID-19 pandemic and related supply chain constraints,~~On March 31, 2022, the Company ~~has maintained business continuity and expects~~paid $3.9 million in cash to ~~continue to do so.~~

~~Acquisition~~

purchase assets of a gearbox repair company in KDS. During the nine months ended September 30, 2021, the Company purchased four inland tank barges from a leasing company for ~~$7,470,000~~$7.5 million in cash. The Company had been leasing the barges prior to the purchase. Financing of the ~~purchase~~purchases was through cash provided by operating activities.

2120

Results of Operations

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


	Three Months Ended September 30,										Nine Months Ended September 30,										Three Months Ended September 30,										Nine Months Ended September 30,
	2021		%			2020		%			2021		%			2020		%			2022		%			2021		%			2022		%			2021		%
Marine transportation	$	338,514		57	%	$	320,602		65	%	$	972,352		59	%	$	1,104,846		66	%	$	433,040		58	%	$	338,514		57	%	$	1,194,231		58	%	$	972,352		59	%
Distribution and services		260,406		43			175,965		35			683,042		41			576,806		34			312,803		42			260,406		43			860,358		42			683,042		41
	$	598,920		100	%	$	496,567		100	%	$	1,655,394		100	%	$	1,681,652		100	%	$	745,843		100	%	$	598,920		100	%	$	2,054,589		100	%	$	1,655,394		100	%

Marine Transportation

The following table sets forth ~~the Company’s marine transportation segment’s~~KMT revenues, costs and expenses, operating income, and operating margin (dollars in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

2021

2020

% Change

2021

2020

% Change

Marine transportation revenues

$
338,514

$
320,602

6
%

$
972,352

$
1,104,846

(12
)%

Costs and expenses:

Costs of sales and operating expenses

237,233

207,038

15

681,317

717,923

(5
)
Selling, general and administrative

29,464

26,554

11

88,314

85,294

4

Taxes, other than on income

8,422

7,307

15

23,828

27,852

(14
)
Depreciation and amortization

46,480

47,312

(2
)

141,560

139,295

2

321,599

288,211

12

935,019

970,364

(4
)
Operating income

$
16,915

$
32,391

(48
)%

$
37,333

$
134,482

(72
)%
Operating margins

5.0
%

10.1
%

3.8
%

12.2
%


	Three Months Ended September 30,									Nine Months Ended September 30,
	2022			2021			% Change			2022			2021			% Change
Marine transportation revenues	$	433,040		$	338,514			28	%	$	1,194,231		$	972,352			23	%

Costs and expenses:
Costs of sales and operating expenses		306,817			237,233			29			855,519			681,317			26
Selling, general and administrative		32,794			29,464			11			93,424			88,314			6
Taxes, other than on income		7,346			8,422			(13	)		23,156			23,828			(3	)
Depreciation and amortization		44,370			46,480			(5	)		132,667			141,560			(6	)
		391,327			321,599			22			1,104,766			935,019			18
Operating income	$	41,713		$	16,915			147	%	$	89,465		$	37,333			140	%
Operating margins		9.6	%		5.0	%					7.5	%		3.8	%

Marine Transportation Revenues

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

Markets
Serviced

2021 Third Quarter
Revenue
Distribution

2021 Nine Months
Revenue
Distribution

Products Moved

Drivers

2022 Third Quarter
Revenue
Distribution

2022 Nine Months
Revenue
Distribution

Products Moved

Drivers

Petrochemicals

51%

50%

Benzene, Styrene, Methanol, Acrylonitrile, Xylene, Naphtha, Caustic Soda, Butadiene, Propylene

Consumer non-durables – 70%, Consumer durables – 30%

50%

49%

Benzene, Styrene, Methanol, Acrylonitrile, Xylene, Naphtha, Caustic Soda, Butadiene, Propylene

Consumer non-durables – 70%, Consumer durables – 30%

Black Oil

25%

26%

Residual Fuel Oil, Coker Feedstock, Vacuum Gas Oil, Asphalt, Carbon Black Feedstock, Crude Oil, Natural Gas Condensate, Ship Bunkers

Fuel for Power Plants and Ships, Feedstock for Refineries, Road Construction

28%

Residual Fuel Oil, Coker Feedstock, Vacuum Gas Oil, Asphalt, Carbon Black Feedstock, Crude Oil, Natural Gas Condensate, Ship Bunkers

Fuel for Power Plants and Ships, Feedstock for Refineries, Road Construction

Refined Petroleum Products

20%

Gasoline, No. 2 Oil, Jet Fuel, Heating Oil, Diesel Fuel, Ethanol

Vehicle Usage, Air Travel, Weather Conditions, Refinery Utilization

19%

20%

Gasoline, No. 2 Oil, Jet Fuel, Heating Oil, Diesel Fuel, Ethanol

Vehicle Usage, Air Travel, Weather Conditions, Refinery Utilization

Agricultural Chemicals

Anhydrous Ammonia, Nitrogen – Based Liquid Fertilizer, Industrial Ammonia

Corn, Cotton and Wheat Production, Chemical Feedstock Usage

Anhydrous Ammonia, Nitrogen – Based Liquid Fertilizer, Industrial Ammonia

Corn, Cotton and Wheat Production, Chemical Feedstock Usage

2221

~~The Company’s marine transportation segment’s~~KMT revenues for the ~~2021~~2022 third quarter and first nine months increased 6%28% and ~~decreased 12%~~23%, respectively, compared ~~with~~to the ~~2020~~2021 third quarter and first nine months revenues. The increase for the ~~2021~~2022 third quarter and first nine months was primarily due to increased tank barge utilization, higher term and spot pricing, and higher fuel rebills in the inland and coastal markets and increased tank barge utilization in the inland market. The decrease for the 2021 first nine months was primarily due to reduced barge utilization in the inland and coastal markets as well as reduced term and spot pricing in the inland market when compared to 2020. The decrease was partially offset by the addition of the Savage fleet acquired on April 1, 2020. The 2021 third quarter benefited from improving business activity and inland market barge utilization which were largely offset by reduced term pricing when compared to the 2020 third quarter. 2021 third quarter revenues and operating income were also impacted by Hurricane Ida which shuttered almost the entire Southeast Louisiana refinery and chemical complex and key waterways for an extended period of time.markets. The 2021 first nine months was also heavily impacted by Winter Storm Uri ~~during the first quarter~~ which shut down 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. The 2021 first nine months revenues and ~~2020~~operating income were also impacted by Hurricane Ida in the 2021 third quarter which shuttered almost the entire Southeast Louisiana refinery and chemical complex and key waterways for an extended period of time. The 2022 and 2021 first quarters were ~~also~~ impacted by poor operating conditions including seasonal wind and fog along the Gulf Coast, flooding on the Mississippi River, and various lock closures along the Gulf Intracoastal Waterway, in addition to ice on the Illinois ~~River during~~River. For the ~~2021 first~~2022 third quarter and ~~increased shipyard days on large capacity~~first nine months, the inland tank barge fleet contributed 80% and 79%, respectively, and the coastal ~~vessels during the 2020 first quarter.~~fleet contributed 20% and 21%, respectively, of KMT revenues. For the 2021 third quarter and first nine months, the inland tank barge fleet contributed 76% and 75%, respectively, and the coastal fleet contributed 24% and 25%, respectively, of ~~marine transportation~~KMT revenues. For the 2020 third quarter and first nine months, the inland tank barge fleet contributed 77% and 79%, respectively, and the coastal fleet contributed 23% and 21%, respectively, of marine transportation revenues.

~~Coastal tank barge utilization levels averaged in~~ the mid-70% range during the 2021 first and third quarters and the low to ~~mid‑70%~~mid-70% range during the 2021 second quarter. ~~Coastal~~The increase in coastal tank barge utilization ~~levels averaged in~~during 2022 was primarily due to the low to mid-80% range during the 2020 first quarter and the mid-70% range during the 2020 second and third quarters. The 2021 first nine months and the 2020 second and third quarters were impacted by reduced demand as a resultretirement of ~~the COVID-19 pandemic and the resulting economic slowdown. Barge utilization in the coastal marine fleet continued to be impacted by the oversupply of tank~~underutilized barges in the ~~coastal industry~~2021 third quarter and some modest improvements in ~~2021 and 2020.~~

customer demand.

The petrochemical market, which is the Company’s largest market, contributed ~~51%~~50% and ~~50%~~49% of ~~marine transportation~~KMT revenues for the ~~2021~~2022 third quarter and first nine months, respectively, reflecting ~~reduced~~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 ~~25% and 26%~~28% of ~~marine transportation~~KMT revenues for both the ~~2021~~2022 third quarter and first nine months, ~~respectively,~~ reflected ~~reduced~~improved demand as refinery utilization and production levels ~~and the export~~ of refined petroleum products and fuel oils ~~declined as a result~~increased 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. During the 2021 third quarter and2022 first nine months, the Company ~~continued to transport~~transported crude oil and natural gas condensate produced from the Permian Basin ~~as well as reduced volumes from~~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.

The refined petroleum products market, which contributed 19% and 20% of ~~marine transportation~~KMT revenues for ~~both~~ the ~~2021~~2022 third quarter and first nine months, respectively, reflected ~~lower~~increased volumes in ~~both~~ the inland market as refinery utilization and ~~coastal markets as a result~~product levels improved following the height of ~~reduced demand related to~~ the COVID-19 pandemic. In addition, 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 4%3% of ~~marine transportation~~KMT revenues for both the ~~2021~~2022 third quarter and first nine months, ~~saw modest reductions in~~reflected improved demand for transportation of both domestically produced and imported products, primarily due to ~~reduced demand associated with~~improved economic conditions following the height of the COVID-19 pandemic.

For the ~~2021~~2022 third quarter, the inland operations incurred ~~1,499~~1,253 delay days, ~~12% more~~16% fewer than the ~~1,335~~1,499 delay days that occurred during the ~~2020~~2021 third quarter. For the ~~2021~~2022 first nine months, the inland operations incurred ~~7,275~~7,152 delay days, ~~16%~~2% fewer than the ~~8,640~~7,275 delay days that occurred during the ~~2020~~2021 first nine months. Delay days measure the lost time incurred by a tow (towboat and one or more tank barges) during transit when the tow is stopped due to weather, lock conditions, or other navigational factors. Delay days ~~for the 2021 and 2020 first nine months~~ reflected poor operating conditions due to heavy wind and fog along the Gulf Coast and high water conditions on the Mississippi River System during the 2022 and 2021 first quarters. The 2022 first quarter was also impacted by ice on the Illinois River while the 2021 first quarter was impacted by closures of key waterways as a result of lock maintenance ~~projects during~~projects.

During both the ~~2021~~2022 third quarter and ~~2020 first quarters. The decrease in delay days in the 2021~~ first nine months, ~~reflects reduced volumes~~approximately 60% of KMT inland revenues were under term contracts and barge utilization compared to the 2020 first nine months while the increase in delay days in the 2021 third quarter reflects the impacts of Hurricane Ida as well as significant lock closures along the Gulf Intracoastal Waterway compared to the 2020 third quarter.

40% were spot contract revenues. During both the 2021 third quarter and first nine months, approximately 65% of ~~marine transportation’s~~KMT inland revenues were under term contracts and 35% were spot contract revenues. During the 2020 third quarter and first nine months, approximately 70% and 65%, respectively, of marine transportation’s inland revenues were under term contracts and 30% and 35%, respectively, were spot contract revenues. Inland time charters during the ~~2021~~2022 third quarter and first nine months represented 56% and ~~58%~~57%, respectively, of the inland revenues under term contracts compared with ~~67%~~56% and 58% in ~~both~~ the ~~2020~~2021 third quarter and first nine ~~months.~~ months, respectively. During the 2022 third quarter and first nine months, approximately 65% and 75%, respectively, of KMT coastal inland revenues were under term contracts and 35% and 25%, respectively, were spot contracts.

During both the 2021 third quarter and first nine months, approximately 80% of the coastal revenues were under term contracts and 20% were spot contract revenues. ~~During both the 2020 third quarter and first nine months, approximately 85% of coastal revenues were under term contracts, and 15% were under spot contract revenues.~~ Coastal time charters represented approximately ~~85%~~90% of coastal revenues under term contracts during both the ~~2021~~2022 third quarter and first nine months compared with approximately ~~90%~~85% during both the ~~2020~~2021 third quarter and first nine months.

Term contracts have contract terms of 12 months or longer, while spot contracts have contract terms of less than 12 months.


	Three Months Ended
	March 31, ~~2021~~2022		June 30, ~~2021~~2022	September 30, ~~2021~~2022
Inland market:
Term ~~decrease~~increase	7% – 9%	~~(7)%~~	14% – ~~(9)%~~16%	~~(6)%~~13% – ~~(8)%~~	~~(2)% – (4)%~~15%
Spot ~~decrease~~increase	15% – 20%	~~(25)%~~	15% – ~~(30)%~~18%	~~(10)%~~23% – ~~(15)%~~	~~No change~~27%
Coastal market (a):
Term increase ~~(decrease)~~	4% – 6%	~~No change~~	10% – 12%	~~No change~~	~~No change~~19% – 21%
Spot increase ~~(decrease)~~	4% – 6%	~~No change~~	10% – 12%	~~No change~~	~~No change~~18% – 22%

(a)

Marine Transportation Costs and Expenses

Costs and expenses for the ~~2021~~2022 third quarter and first nine months increased ~~12%~~22% and ~~decreased 4%~~18%, respectively, compared ~~with~~to the ~~2020~~2021 third quarter and first nine months. Costs of sales and operating expenses for the ~~2021~~2022 third quarter and first nine months increased ~~15%~~29% and ~~decreased 5%~~26%, respectively, compared with the ~~2020~~2021 third quarter and first nine months. The increases during the 2022 third quarter and first nine months ~~respectively. The decreases during the 2021 first nine months~~ primarily reflect ~~to cost reductions across the segment, including a reduction in towboats during the 2020 last nine months~~improved business activity levels and the 2021 first quarter and a reduction in maintenance expenses during the first half of the year, partially offset by the addition of the Savage fleet in April 2020. The increases during the 2021 third quarter primarily reflect increased fuel costs ~~and maintenance expenses~~ as ~~business activity levels improved.~~

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 274 towboats during the 2022 third quarter, of which an average of 59 were chartered, compared to 243 ~~towboats~~ during the 2021 third quarter, of which an average of 30 were ~~chartered, compared with 265 during the 2020 third quarter, of which an average of 36 were~~ chartered. The ~~decrease~~increase was primarily due to ~~reduced horsepower requirements as a result of a smaller barge fleet, crewing issues associated with~~increasing business activity levels during the COVID-19 delta variant, and reduced activity as a result of the impacts of Hurricane Ida. Generally, as demand or anticipated demand increases or decreases, as new tank barges are added to or removed from the fleet, as chartered towboat availability changes, or as weather or water conditions dictate, the2022 third quarter. The Company charters in or releases chartered towboats in an effort to balance horsepower needs with current ~~requirements.~~requirements, taking into account variability in demand or anticipated demand, addition or removal of tank barges from the fleet, chartered towboat availability, and weather or water conditions. The Company has historically used chartered towboats for approximately one-fourth of its horsepower requirements.

During the ~~2021~~2022 third quarter, the inland operations consumed ~~11.8~~12.5 million gallons of diesel fuel compared to ~~10.2~~11.8 million gallons consumed during the ~~2020~~2021 third quarter. The average price per gallon of diesel fuel consumed during the ~~2021~~2022 third quarter was ~~$2.24~~$4.24 per gallon compared with ~~$1.27~~$2.24 per gallon for the ~~2020~~2021 third quarter. During the ~~2021~~2022 first nine months, the inland operations consumed ~~34.4~~36.7 million gallons of diesel fuel compared to ~~36.3~~34.4 million gallons consumed during the ~~2020~~2021 first nine months. The average price per gallon of diesel fuel consumed during the ~~2021~~2022 first nine months was ~~$1.99~~$3.60 per gallon compared with ~~$1.47~~$1.99 per gallon for the ~~2020~~2021 first nine months. Fuel escalation and de-escalation clauses onare 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 90120 day delay before contracts are adjusted. Spot contracts do not have escalators for fuel.

Selling, general and administrative expenses for the ~~2021~~2022 third quarter and first nine months increased 11% and 4%6%, respectively, compared ~~with the 2020 third quarter and first nine months. The increase in the 2021 third quarter was primarily due~~ to ~~higher incentive compensation accruals, medical costs, and professional fees.~~

~~Taxes, other than on income, for~~ the 2021 third quarter and first nine months as the Company manages inflationary cost pressures. The increase for the 2022 third quarter was primarily due to salary and wage increases effective July 1, 2022 and increased ~~15%~~incentive compensation accruals as a result of higher business activity levels. Business activity levels in the 2021 first nine months were impacted by COVID-19 and ~~decreased 14%, respectively, compared with~~ the ~~2020~~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 the 2022 third quarter and first nine ~~months. The increase during the 2021 third quarter primarily reflected higher property taxes on marine transportation equipment due~~months decreased 5% and 6%, respectively, compared to a favorable adjustment in the 2020 third quarter and higher waterway use taxes, while the decrease for the first nine months reflected lower property taxes on marine transportation equipment during the first half of the year.

~~Depreciation and amortization for~~ the 2021 third quarter and first nine months, ~~decreased 2%~~primarily reflecting retirements, sales, and ~~increased 2%, respectively, compared to the 2020 third quarter and first nine months. The decrease in the 2021 third quarter primarily reflects retirements~~impairment of marine equipment during ~~the 2020 fourth quarter~~2021 and ~~the 2021 first nine months while the increase in the first nine months reflects the acquisition of the Savage fleet in April 2020.~~2022.

Marine Transportation Operating Income and Operating Margin

~~Marine transportation~~KMT operating income for the 2022 third quarter and first nine months increased 147% and 140%, respectively, compared with the 2021 third quarter and first nine ~~months decreased 48% and 72%, respectively, compared with the 2020 third quarter and first nine~~ months. The ~~2021~~2022 third quarter operating margin was ~~5.0%~~9.6% compared with ~~10.1%~~5.0% for the ~~2020~~2021 third quarter. The ~~2021~~2022 first nine months operating margin was ~~3.8%~~7.5% compared with ~~12.2%~~3.8% for the ~~2020~~2021 first nine months. The ~~decreases~~increases in operating income and operating margin were primarily due to ~~reduced~~increased barge utilization ~~in the inland~~ and ~~coastal markets as well as decreased~~higher term and spot contract pricing in the inland ~~market,~~and coastal markets, each as a result of ~~a reduction in demand due to~~improving business activity levels, partially offset by increasing fuel prices as well as the impacts of the COVID-19 ~~pandemic and reduced volumes as a result of Hurricane Ida and Winter Storm Uri along with increased maintenance costs~~Omicron variant during the ~~2021 third~~2022 first quarter. ~~Operating margins for the~~The 2021 ~~third quarter and~~ first nine months activity levels were also impacted by ~~the increased cost of diesel fuel.~~

Winter Storm Uri and Hurricane Ida.

Distribution and Services

The following table sets forth ~~the Company’s distribution and services segment’s~~KDS revenues, costs and expenses, operating income, ~~(loss),~~ and operating margin (dollars in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

2021

2020

% Change

2021

2020

% Change

Distribution and services revenues

$
260,406

$
175,965

48
%

$
683,042

$
576,806

18
%

Costs and expenses:

Costs of sales and operating expenses

207,877

133,726

55

537,100

449,948

19

Selling, general and administrative

35,002

33,098

6

104,477

108,295

(4
)
Taxes, other than on income

1,470

1,754

(16
)

4,620

5,636

(18
)
Depreciation and amortization

5,018

6,283

(20
)

16,739

22,252

(25
)

249,367

174,861

43

662,936

586,131

13

Operating income (loss)

$
11,039

$
1,104

900
%

$
20,106

$
(9,325
)

316
%
Operating margins

4.2
%

0.6
%

2.9
%

(1.6
)%


	Three Months Ended September 30,									Nine Months Ended September 30,
	2022			2021			% Change			2022			2021			% Change
Distribution and services revenues	$	312,803		$	260,406			20	%	$	860,358		$	683,042			26	%

Costs and expenses:
Costs of sales and operating expenses		245,223			207,877			18			670,938			537,100			25
Selling, general and administrative		39,289			35,002			12			121,864			104,477			17
Taxes, other than on income		1,749			1,470			19			5,067			4,620			10
Depreciation and amortization		4,274			5,018			(15	)		12,513			16,739			(25	)
		290,535			249,367			17			810,382			662,936			22
Operating income	$	22,268		$	11,039			102	%	$	49,976		$	20,106			149	%
Operating margins		7.1	%		4.2	%					5.8	%		2.9	%

Distribution and Services Revenues

The following table shows the markets serviced by ~~the Company’s distribution and services segment,~~KDS, the revenue distribution, and the customers for each market:

Markets Serviced

2021 Third Quarter
Revenue
Distribution

2021 Nine Months
Revenue
Distribution

Customers

2022 Third Quarter
Revenue
Distribution

2022 Nine Months
Revenue
Distribution

Customers

Commercial and Industrial

59%

63%

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

53%

55%

Oil and Gas

41%

37%

Oilfield Services, Oil and Gas Operators and Producers

47%

45%

Oilfield Services, Oil and Gas Operators and Producers

~~Distribution and services~~KDS revenues for the 2022 third quarter and first nine months increased 20% and 26%, respectively, compared to the 2021 third quarter and first nine ~~months increased 48% and 18%, respectively, compared with the 2020 third quarter and first nine months revenues.~~months. In the commercial and industrial market, the increase infor the ~~2021 third quarter and first nine months compared to the 2020~~2022 third quarter and first nine months was primarily attributable to ~~improved~~strong economic activity across the ~~U.S.~~United States which resulted in higher business levels in the ~~power generation~~marine and on-highway businesses. Increased product sales in Thermo King also contributed favorably to the ~~2021~~2022 third quarter and first nine months results. ~~The marine repair business was down slightly compared to the 2020 third quarter~~These increases were partially offset by continuing supply chain constraints and ~~first nine months due to reduced service activity.~~delays. The ~~commercial and industrial market~~ 2021 first nine months was impacted by Winter Storm Uri ~~with~~which caused reduced activity, ~~levels at many locations across~~especially in the Southern ~~U.S. during~~United States, in the ~~first quarter.~~commercial and industrial market. For the ~~2021~~2022 third quarter and first nine months, the commercial and industrial market contributed ~~59%~~53% and ~~63%~~55%, respectively, of ~~the distribution and services~~KDS revenues.

In the oil and gas market, revenues improved compared to the ~~2020~~2021 third quarter and first nine months due to higher oilfield activity which resulted in increased demand for new transmissions and ~~overhauled engines, transmissions,~~ parts ~~and service. The~~in the distribution business. Although the manufacturing business ~~also experienced increases in~~was heavily impacted by supply chain delays, the business continued to experience increased orders and deliveries of new ~~and remanufactured~~environmentally friendly pressure pumping equipment ~~as well as~~and power generation equipment for electric fracturing. For the ~~2021~~2022 third quarter and first nine months, the oil and gas market contributed ~~41%~~47% and ~~37%~~45%, respectively, of ~~the distribution and services~~KDS revenues.

2624

Distribution and Services Costs and Expenses

Costs and expenses for the ~~2021~~2022 third quarter and first nine months increased ~~43%~~17% and ~~13%~~22%, respectively, compared with the ~~2020~~2021 third quarter and first nine months. Costs of sales and operating expenses for the ~~2021~~2022 third quarter and first nine months increased ~~55%~~18% and ~~19%~~25%, respectively, compared with the ~~2020~~2021 third quarter and first nine months, reflecting higher demand in the ~~on-highway~~marine and ~~power generation~~on-highway businesses in commercial and industrial markets ~~in the 2021 third quarter. The increase also reflects higher demand for new and overhauled transmissions and related parts and service and~~as well as increased demand ~~for new pressure pumping equipment~~ in the oil and gas ~~market.~~

market as a result of higher oilfield activity levels.

Selling, general and administrative expenses for the ~~2021~~2022 third quarter and first nine months increased 6%12% and ~~decreased 4%~~17%, respectively, compared to the 2020 third quarter and first nine months. The increase for the 2021 third quarter is primarily due to increased incentive compensation accruals, medical costs, and warranty accruals, while the decrease for the first nine months was primarily due to a bad debt expense charge of $3,339,000 as a result of the bankruptcy of a large oil and gas customer and $1,354,000 of severance expense as a result of workforce reductions each during the 2020 second quarter.

~~Depreciation and amortization for~~ the 2021 third quarter and first nine months, 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 and severance expense.

Depreciation and amortization for the 2022 third quarter and first nine months decreased ~~20%~~15% and 25%, respectively, compared to the 2020 third quarter and first nine months. The decrease during the 2021 first nine months was primarily due to lower amortization of intangible assets other than goodwill, which were impaired during the 2020 first quarter. The decrease during the 2021 third quarter also reflected certain equipment and leasehold improvements acquired from Stewart & Stevenson LLC becoming fully depreciated during 2020.

~~Distribution and Services Operating Income (Loss) and Operating Margin~~

~~Operating income for the distribution and services segment for~~ the 2021 third quarter and first nine months, primarily due to sales of property and equipment and reduced capital spending during 2021.

Distribution and Services Operating Income and Operating Margin

KDS operating income for the 2022 third quarter and first nine months increased ~~900%~~102% and ~~316%~~149%, respectively, compared with the ~~2020~~2021 third quarter and first nine months. The 2022 third quarter operating margin was 7.1% compared with 4.2% for the 2021 third ~~quarter~~quarter. The 2022 first nine months operating margin was ~~4.2%~~5.8% compared ~~with 0.6% for the 2020 third quarter and~~to 2.9% for the 2021 ~~first nine months compared to (1.6)% for the 2020~~ first nine months. The results reflect increased business levels in both the commercial and industrial and oil and gas ~~markets and a return to profitability, partially offset by higher costs and expenses.~~markets.

~~General Corporate Expenses~~

~~General corporate expenses for the 2021 third quarter and first nine months increased compared to the 2020 third quarter and first nine months primarily due to costs related to Hurricane Ida.~~

~~(Gain) Loss~~Gain on Disposition of Assets

The Company reported a net gain on disposition of assets of ~~$830,000~~$0.4 million for the ~~2021~~2022 third quarter ~~compared with a net loss of $316,000~~and $0.8 million for the ~~2020~~2021 third quarter. The Company reported a net gain on disposition of assets of ~~$5,082,000~~$8.0 million for the ~~2021~~2022 first nine months ~~compared with a net loss of $13,000~~and $5.1 million for the ~~2020~~2021 first nine months. The net gains ~~and losses~~were primarily from sales of marine transportation equipment.

Other Income and Expenses

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


	Three Months Ended September 30,									Nine Months Ended September 30,									Three Months Ended September 30,									Nine Months Ended September 30,
	2021			2020			% Change			2021			2020			% Change			2022			2021			% Change			2022			2021			% Change
Impairments and other charges	$	(340,713	)	$	—		N/A			$	(340,713	)	$	(561,274	)		(39	)%
Impairments																			$	—		$	(340,713	)	N/A			$	—		$	(340,713	)	N/A
Other income	$	1,832		$	1,172			56	%	$	8,146		$	6,185			32	%	$	3,805		$	1,832			108	%	$	11,853		$	8,146			46	%
Noncontrolling interests	$	422		$	(204	)		307	%	$	5		$	(743	)		101	%	$	(153	)	$	422			136	%	$	(454	)	$	5			9180	%
Interest expense	$	(10,500	)	$	(11,809	)		(11	)%	$	(32,172	)	$	(37,316	)		(14	)%	$	(11,755	)	$	(10,500	)		12	%	$	(32,598	)	$	(32,172	)		1	%

Impairments

~~Impairments and Other Charges~~

~~Impairments and other charges in the~~For 2021, ~~third quarter and first nine months~~impairments includes ~~$340,713,000~~$340.7 million before taxes, ~~$275,068,000~~$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 the marine transportation segment. ~~See Note 7, Impairments and Other Charges in the financial statements for additional information.~~

Impairments and other charges in the 2020 first nine months includes $561,274,000 before taxes, $433,341,000 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 the distribution and services segment. See Note 7, Impairments and Other Charges in the financial statements for additional information.

Other Income

Other income for the ~~2021~~2022 and ~~2020~~2021 third quarters include income of ~~$1,684,000~~$3.5 million and ~~$1,154,000,~~$1.7 million, respectively, and the ~~2021~~2022 and ~~2020~~2021 first nine months include income of ~~$5,992,000~~$10.3 million and ~~$4,793,000,~~$6.0 million, respectively, for all components of net benefit costs except the service cost component related to the Company’s defined benefit plans. Other income for the 2022 first nine months also reflects lower interest income compared to the 2021 first nine months ~~also includes interest income from~~related to the ~~Company’s 2019~~Company's federal income tax ~~refund received in February 2021.~~

~~Noncontrolling Interests~~

~~Noncontrolling interests for the 2021 third quarter and first nine months includes an allocation of the non-cash impairment charge of $844,000.~~

refunds.

Interest Expense

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


	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
Average debt	$	1,228,759		$	1,238,263		$	1,185,426		$	1,328,830
Average interest rate		3.7	%		3.3	%		3.6	%		3.2	%

Three Months Ended September 30,

Nine Months Ended September 30,

2021

2020

2021

2020

Average debt

$
1,238,263

$
1,609,367

$
1,328,830

$
1,583,846

Average interest rate

3.3
%

2.9
%

3.2
%

3.1
%

Interest expense for the 2022 third quarter and first nine months increased 12% and 1%, respectively, compared with the 2021 third quarter and first nine months, ~~decreased 11% and 14%, respectively, compared with the 2020 third quarter and first nine months,~~ primarily due to a higher average interest rate, partially offset by a lower average debt outstanding as a result of debt repayments ~~since the 2020 first quarter.~~during 2021 and 2022. There was no capitalized interest excluded from interest expense during the ~~2021~~2022 or ~~2020~~2021 first nine months.

~~Benefit for Taxes on Income~~

During the 2020 third quarter and first nine months, pursuant to provisions of the CARES Act, net operating losses generated during 2018 through 2020 were used to offset taxable income generated between 2013 through 2017. Net operating losses carried back to tax years 2013 through 2017 were applied at the higher federal statutory tax rate of 35% compared to the statutory rate of 21% in effect at September 30, 2020. The Company generated an effective tax rate benefit in the 2020 third quarter and first nine months as a result of such carrybacks.

Financial Condition, Capital Resources and Liquidity

Balance Sheets

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

September 30,
2021

December 31,
2020

% Change

Assets:

Current assets

$
978,591

$
1,047,971

(7
)%
Property and equipment, net

3,705,247

3,917,070

(5
)
Operating lease right-of-use assets

159,627

174,317

(8
)
Goodwill

438,748

657,800

(33
)
Other intangibles, net

62,233

68,979

(10
)
Other assets

45,436

58,037

(22
)

$
5,389,882

$
5,924,174

(9
)%

Liabilities and stockholders’ equity:

Current liabilities

$
512,197

$
466,032

10
%
Long-term debt, net – less current portion

1,206,193

1,468,546

(18
)
Deferred income taxes

552,913

606,844

(9
)
Operating lease liabilities – less current portion

152,615

163,496

(7
)
Other long-term liabilities

119,740

131,703

(9
)
Total equity

2,846,224

3,087,553

(8
)

$
5,389,882

$
5,924,174

(9
)%


	September 30, 2022		December 31, 2021		% Change
Assets:
Current assets	$	1,126,382	$	1,003,865		12	%
Property and equipment, net		3,640,690		3,678,515		(1	)
Operating lease right-of-use assets		153,723		167,730		(8	)
Goodwill		438,748		438,748		—
Other intangibles, net		53,615		60,070		(11	)
Other assets		43,140		50,135		(14	)
	$	5,456,298	$	5,399,063		1	%

Liabilities and stockholders’ equity:
Current liabilities	$	570,561	$	543,772		5	%
Long-term debt, net – less current portion		1,114,860		1,161,433		(4	)
Deferred income taxes		604,596		574,152		5
Operating lease liabilities – less current portion		144,201		159,672		(10	)
Other long-term liabilities		46,717		71,252		(34	)
Total equity		2,975,363		2,888,782		3
	$	5,456,298	$	5,399,063		1	%

Current assets as of September 30, ~~2021 decreased 7%~~2022 increased 12% compared with December 31, ~~2020.~~2021. Trade accounts receivable increased ~~24%~~16%, primarily due to increased business activity levels in both ~~the marine transportation~~KMT and ~~distribution and services segments, during the 2021 third quarter, compared to the 2020 fourth quarter.~~KDS. Other accounts receivable decreased ~~47%~~11%, primarily due to recoveries on the ~~receipt~~settlement of ~~a tax refund~~insurance claims. Inventories increased by 18% due to higher activity and the impact of ~~$119,493,000, including accrued interest,~~supply chain delays in KDS resulting in buildup for ~~the Company’s 2019 federal tax return.~~projects that will be delivered later in 2022 and into 2023. Prepaid expenses and other current assets increased ~~30%~~16% primarily due to the increase in the price of diesel fuel ~~and the reclassification of certain coastal marine transportation equipment to held for sale.~~

purchased in September 2022.

Property and equipment, net of accumulated depreciation, at September 30, ~~2021~~2022 decreased 5%1% compared with December 31, ~~2020.~~2021. The decrease reflected ~~$157,607,000~~$144.8 million of depreciation expense ~~$131,773,000~~and $26.0 million of property disposals, including the sale of the Hawaii marine transportation equipment, and retirement of underutilized equipment that was reclassified to held for sale, and $15,430,000 of non-cash impairment charges related to coastal marine transportation equipment held and used during the 2021 first nine months, partially offset by ~~$85,517,000~~$129.1 million of capital additions (including an increase in accrued capital expenditures of ~~$13,549,000)~~$8.5 million) and ~~$7,470,000 related to the~~an acquisition ~~of four inland tank barges~~for $3.9 million during the ~~2021~~2022 first nine months, more fully described under Cash Flows and Capital Expenditures below.

Operating lease right-of-use assets as of September 30, ~~2021~~2022 decreased 8% compared to December 31, ~~2020,~~2021, primarily due to lease amortization expense, ~~and impairment charges,~~ partially offset by new leases acquired during the ~~2021~~2022 first nine months.

~~Goodwill, as of September 30, 2021 decreased 33% compared with December 31, 2020, due to a goodwill impairment in the marine transportation segment.~~

Other intangibles, net, as of September 30, ~~2021~~2022 decreased ~~10%~~11% compared with December 31, ~~2020,~~2021, primarily due to amortization during the ~~2021~~2022 first nine months.

Other assets as of September 30, ~~2021~~2022 decreased ~~22%~~14% compared with December 31, ~~2020,~~2021, primarily due to amortization of drydock expenditures, partially offset by additional deferred major maintenance drydock expenditures incurred during the ~~2021~~2022 first nine months.

Current liabilities as of September 30, ~~2021~~2022 increased ~~10%~~5% compared with December 31, ~~2020.~~2021. Accounts payable increased ~~12%,~~21% primarily due to ~~an increase~~increased activity levels in ~~accrued capital expenditures. Accrued liabilities~~KMT and KDS. Deferred revenue increased ~~2% primarily due to higher accrued property and sales taxes and higher insurance claims, partially offset by the payment of accrued interest. Deferred revenues increased 48%,~~13% primarily due to deposits on equipment expected to be shipped in the ~~2021~~2022 fourth quarter and into ~~2022~~2023 in KDS. Accrued liabilities decreased 11% primarily due to the ~~distribution and services segment.~~

settlement of insurance claims.

Long-term debt, net – less current portion, as of September 30, ~~2021~~2022 decreased ~~18%~~4% compared with December 31, ~~2020,~~2021, primarily reflecting repayments ~~of $250,000,000 and $15,000,000~~ under the term loan partially offset by borrowings under the 2027 Revolving Credit Facility and Term Loan, respectively. Net debt discount and deferred issuance costs were $3,807,000 (excluding $1,559,000 attributable to the Revolving Credit Facility included in other assets on the balance sheet) atFacility.

Deferred income taxes as of September 30, ~~2021 and $6,454,000 at~~2022 increased 5% compared with December 31, ~~2020.~~

2021, primarily reflecting the deferred tax provision of $26.0 million.

Operating lease liabilities – less current portion, as of September 30, ~~2021~~2022 decreased 7%10% compared to December 31, ~~2020,~~2021, primarily due to lease payments made, partially offset by new leases acquired and liability accretion during the ~~2021~~2022 first nine months.

Other long-term liabilities as of September 30, ~~2021~~2022 decreased 9%34% compared with December 31, ~~2020,~~2021, primarily due to amortization of intangible liabilities and a decrease in pension liabilities.

Total equity as of September 30, ~~2021 decreased 8%~~2022 increased 3% compared with December 31, ~~2020.~~2021. The ~~decrease~~increase was primarily due to the net ~~loss~~earnings attributable to Kirby of ~~$257,915,000~~$85.0 million, amortization of share-based compensation of $11.4 million, and stock option exercises of $3.9 million, partially offset by treasury stock purchases of $22.9 million and tax withholdings of ~~$2,856,000~~$3.2 million on restricted stock and RSU ~~vestings, partially offset by amortization of unearned share-based compensation of $12,793,000, each during the 2021 first nine months.~~

vestings.

Long-Term Financing

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

September 30,
2021

December 31,
2020

Long-term debt, including current portion:

Revolving Credit Facility due March 27, 2024 (a)

$
—

$
250,000

Term Loan due March 27, 2024 (a)

360,000

375,000

3.29% senior notes due February 27, 2023

350,000

350,000

4.2% senior notes due March 1, 2028

500,000

500,000

Credit line due June 30, 2022

—

—

Bank notes payable

1,983

40

1,211,983

1,475,040

Unamortized debt discounts and issuance costs (b)

(3,807
)

(6,454
)

$
1,208,176

$
1,468,586


	September 30, 2022			December 31, 2021
Long-term debt, including current portion:
Revolving Credit Facility due July 29, 2027 (a)	$	20,000		$	—
Term Loan due July 29, 2027 (a)		250,000			—
Term Loan due March 27, 2024 (b)		—			315,000
3.29% senior notes due February 27, 2023		350,000			350,000
4.2% senior notes due March 1, 2028		500,000			500,000
Credit line due June 30, 2024		—			—
Bank notes payable		3,599			1,934
		1,123,599			1,166,934
Unamortized debt discounts and issuance costs (c)		(5,140	)		(3,567	)
	$	1,118,459		$	1,163,367

(a)

Variable interest rate of 4.5% at September 30, 2022.

(b)

Variable interest rate of 1.5% at ~~both September 30, 2021 and~~ December 31, ~~2020.~~2021.

~~(b)~~(c)

Excludes ~~$1,559,000~~$1.4 million attributable to the 2024 Revolving Credit Facility included in other assets at ~~September 30,~~December 31, 2021.

~~The~~At the beginning of the third quarter of 2022, the Company ~~has a~~had in place its 2024 Credit Agreement with a group of commercial banks, with JPMorgan Chase Bank, N.A. as the administrative agent bank, ~~allowing~~that allowed for an ~~$850,000,000~~$850 million 2024 Revolving Credit Facility and a 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 2024 Credit Agreement was replaced with the 2027 Credit Agreement with a group of commercial banks, with JPMorgan Chase Bank, N.A. as the administrative agent bank that allows for the $500 million 2027 Revolving Credit Facility and the 2027 Term Loan with a maturity date of July 29, 2027. 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 October 2022, the Company repaid $20.0 million under the 2027 Term Loan prior to scheduled maturities. As a result, no repayments are required until September 30, 2023. The 2027 Term Loan is ~~due on March 27, 2024~~repayable in quarterly installments, scheduled to commence September 30, 2023, 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 quarterly installments are excluded from short term liabilities because the Company has the ability and intent to refinance these quarterly installments under the 2027 Revolving Credit Facility. The 2027 Term Loan is prepayable, in whole or in part, without penalty. ~~During the nine months ended September 30, 2021, the Company repaid $15,000,000 under the Term Loan. During October 2021, the Company repaid $20,000,000 under the Term Loan.~~The 2027 Revolving Credit Facility includes a $25 million commitment which may be used for standby letters of credit. Outstanding letters of credit under the 2027 Revolving Credit Facility were ~~$5,063,000~~$5.1 million and available borrowing capacity was ~~$844,937,000~~$474.9 million as of September 30, ~~2021.~~2022. Outstanding letters of credit under the ~~$10,000,000~~$10 million credit line were ~~$1,299,000~~$1.4 million and available borrowing capacity was ~~$8,701,000~~$8.6 million as of September 30, ~~2021.~~2022.

On February 3, 2022, the Company entered into a note purchase agreement for the issuance of $300 million of 2033 Notes with a group of institutional investors, consisting of $60 million of 3.46% Series A Notes and $240 million of 3.51% Series B Notes, each due January 19, 2033. The Series A Notes were issued on October 20, 2022, and the Series B Notes are scheduled to be issued on January 19, 2023. No principal payments will be required until maturity. Beginning in 2023, interest payments of $5.3 million will be due semi-annually on January 19 and July 19 of each year, with the exception of the first payment on January 19, 2023, which will be

$0.5 million. 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.

As of September 30, ~~2021,~~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, in the financial statements as well as Note 5, Long-Term Debt, in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2020.~~

2021.

Cash Flow and Capital Expenditures

The Company generated ~~favorable~~positive operating cash flows during the ~~2021~~2022 first nine months with net cash provided by operating activities of ~~$280,362,000~~$161.2 million compared with ~~$359,763,000~~$280.4 million for the ~~2020~~2021 first nine months, a ~~22%~~43% decrease. The decrease was primarily due to ~~decreased revenues and operating income in the marine transportation segment, partially offset by the receipt of~~ a tax refund of ~~$119,493,000,~~$119.5 million, including accrued interest, for the Company’s 2019 federal tax return which was received in the 2021 first quarter. In addition, increased revenues and operating income in KMT and KDS during the ~~distribution~~2022 first nine months were offset by increased inventory levels due to higher activity and ~~services segment, reduced incentive compensation payouts~~managing supply chain challenges seen especially in KDS during the ~~2021~~2022 first ~~quarter compared to the 2020 first quarter, and the Savage acquisition~~nine months. Increases in ~~April 2020. Decreases in marine transportation~~KMT revenues and operating income were driven by ~~reduced~~increased barge utilization and higher term and spot contract pricing in the inland and coastal markets during the 2022 first ~~half of 2021 and decreased term and spot contract pricing in the inland market, each as a result of a reduction in demand due to the COVID-19 pandemic.~~nine months. The 2021 ~~third quarter marine transportation~~first nine months KMT revenues and operating income were also negatively impacted by the impacts of Winter Storm Uri in February 2021 and Hurricane ~~Ida. The decrease in cash flows was also partially due to a smaller decrease in inventories~~Ida in the 2021 ~~first nine months than in the 2020 first nine months.~~ third quarter.During the 2022 and 2021 third quarters and ~~2020~~ first nine months, the Company generated cash of ~~$39,163,000~~$32.9 million and ~~$6,538,000,~~$39.2 million, respectively, from proceeds from the disposition of assets, ~~including the sale of the Hawaii marine transportation equipment in the 2021 third quarter,~~ and ~~$629,000~~$3.9 million and ~~$353,000,~~$0.6 million, respectively, from proceeds from the exercise of stock options.

For the ~~2021~~2022 first nine months, cash generated was used for capital expenditures of ~~$71,968,000 (net of an increase in accrued capital expenditures of $13,549,000),~~$120.3 million, including ~~$5,151,000~~$6.8 million for inland towboat construction and ~~$66,817,000~~$113.5 million primarily for upgrading existing marine equipment and ~~marine transportation~~KMT and ~~distribution and services~~KDS facilities.

Treasury Stock Purchases

~~The Company did not purchase any treasury stock during~~During the ~~2021~~2022 first nine ~~months.~~months, the Company purchased 0.4 million shares of its common stock for $22.9 million, at an average price of $59.32 per share. As of November ~~5, 2021,~~3, 2022, the Company had approximately ~~1,400,000~~1.0 million shares available under its existing repurchase authorization. Historically, treasury stock purchases have been financed through operating cash flows and borrowings under the Company’s ~~Revolving Credit Facility.~~then current 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

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 flows provided by operating activities, as of November ~~5, 2021~~3, 2022 the Company also had cash equivalents of ~~$39,277,000,~~$114 million, availability of ~~$844,937,000~~$494.9 million under its 2027 Revolving Credit Facility, and ~~$8,701,000~~$8.6 million available under its credit line.

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

The Company expects to continue to fund expenditures for acquisitions, capital construction projects, common stock repurchases, repayment of borrowings, and for other operating requirements from a combination of available cash and cash equivalents, funds generated from operating activities, and available financing arrangements.

The 2027 Revolving Credit ~~Facility’s~~Facility's commitment is in the amount of ~~$850,000,000~~$500 million and ~~expires March 27, 2024. As of September 30, 2021, the Company had $844,937,000 available under the Revolving Credit Facility.~~matures July 29, 2027. The ~~3.29% senior unsecured notes~~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 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 ~~due~~subject to quarterly installments, beginning September 30, 2023, in increasing percentages of the original principal amount of the loan, with the remaining unpaid balance of approximately $43.8 million payable on ~~March 27, 2024 and~~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 flows in ~~2021.~~2022. 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 and Note 14, Contingencies and Commitments, in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021. Amounts available under the Company’s existing financial arrangements are subject to the Company continuing to

meet the covenants of the credit facilities as described in Note 5, Long-Term Debt, in the financial statements as well as Note 5, Long-Term Debt, in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2020.~~

2021.

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 ~~$21,199,000~~$20.1 million at September 30, ~~2021,~~2022, including ~~$13,847,000~~$12.1 million in letters of credit and ~~$7,352,000~~$8.0 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.

~~All marine transportation~~KMT term contracts typically contain fuel escalation clauses, or the customer pays for the fuel. However, there is generally a 30 to 90120 day delay before contracts are adjusted depending on the specific terms of the contract. In general, the fuel escalation clauses are effective over the long-term in allowing the Company to recover changes in fuel costs due to fuel price changes. However, the short-term effectiveness of the fuel escalation clauses can be affected by a number of factors including, but not limited to, specific terms of the fuel escalation formulas, fuel price volatility, navigating conditions, tow sizes, trip routing, and the location of loading and discharge ports that may result in the Company over or under recovering its fuel costs. Spot contract rates generally reflect current fuel prices at the time the contract is signed but do not have escalators for fuel.

While inflationary pressures have increased in the second half of 2021 ~~during~~and into 2022, the ~~last three years, inflation~~Company has ~~had a relatively minor effect on~~certain mechanisms designed to help mitigate the ~~financial results~~impacts of ~~the Company. The marine transportation segment~~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 ~~the distribution and services segment,~~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 ~~the distribution and services segment~~KDS is based on prevailing current market rates.

Item 3. 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 current bank credit facilities bear interest at variable rates based on prevailing short-term interest rates in the United States, ~~and~~while the previous bank credit facilities also included Europe. A 1% increase in variable interest rates would impact the ~~2021~~2022 interest expense by ~~$6,250,000~~$3.2 million based on balances outstanding at December 31, ~~2020,~~2021, and would change the fair value of the Company’s debt by approximately 3%.

Item 4. 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 September 30, ~~2021,~~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 September 30, ~~2021,~~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.

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. ~~During the third quarter of 2021, the Company completed the preparation and implementation of changes to its financial reporting software.~~ There were no ~~other~~ changes in the Company’s internal control over financial reporting during the quarter ended September 30, ~~2021~~2022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

See Note 14, Contingencies and Commitments, of the Notes to Condensed Financial Statements (Unaudited).

Item 1A. Risk Factors

The Company continues to be subject to the risk factors previously disclosed in its “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

32Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities


Period	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans		Maximum Number of Shares that May Yet be Purchased Under the Plans
July 1 — July 31, 2022		—	$	—		—		—
August 1 — August 31, 2022		76,044	$	63.33		—		—
September 1 — September 30, 2022		—	$	—		—		—
Total		76,044	$	63.33		—		—

Purchases of the Company's common stock in August 2022 were made in the open market pursuant to a discretionary authorization by the Board of Directors.

Item 6. Exhibits

EXHIBIT INDEX

Exhibit Number

Description of Exhibits
3.1
–
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).
3.2
–
Bylaws of the Company, as amended to March 17, 2020 (incorporated by reference to Exhibit 3.2 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2014).
3.3
–
Amendment to Bylaws of Kirby Corporation dated March 18, 2020 (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on March 19, 2020).
4.1
–
See Exhibits 3.1, 3.2, and 3.3 hereof for provisions of our Restated Articles of Incorporation of the Company with all amendments to date, the Bylaws of the Company, as amended to March 17, 2020, and Amendment to Bylaws of the Company dated March 18, 2020 (incorporated by reference to Exhibit 3.1 and 3.2, respectively, 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 March 19, 2020).
31.1
–
Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)
31.2
–
Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)
32
–
Certification Pursuant to 18 U.S.C. Section 1350
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 Definition 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)


Exhibit Number		Description of Exhibits
3.1	–	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).
3.2	–	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).
4.1	–	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).
10.1	–	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).
31.1*	–	Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)
31.2*	–	Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)
32*	–	Certification Pursuant to 18 U.S.C. Section 1350
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 Definition 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.

3330

SIGNATURES

Pursuant to the requirements 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.


	KIRBY CORPORATION
	(Registrant)

	By:	/s/ ~~William G. Harvey~~Raj Kumar
		~~William G. Harvey~~Raj Kumar
		Executive Vice President and
		Chief Financial Officer

Dated: November ~~8, 2021~~4, 2022

3431


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	KEX	New York Stock Exchange


	September 30, 2021			December 31, 2020			September 30, 2022			December 31, 2021
	($ in thousands)						($ in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	54,377		$	80,338		$	36,991		$	34,813
Accounts receivable:
Trade – less allowance for doubtful accounts		389,579			315,283			482,744			417,958
Other		150,811			284,899			133,278			149,964
Inventories – net		308,820			309,675			392,470			331,350
Prepaid expenses and other current assets		75,004			57,776			80,899			69,780
Total current assets		978,591			1,047,971			1,126,382			1,003,865

Property and equipment		5,385,478			5,615,400			5,434,740			5,392,851
Accumulated depreciation		(1,680,231	)		(1,698,330	)		(1,794,050	)		(1,714,336	)
Property and equipment – net		3,705,247			3,917,070			3,640,690			3,678,515

Operating lease right-of-use assets		159,627			174,317			153,723			167,730
Goodwill		438,748			657,800			438,748			438,748
Other intangibles, net		62,233			68,979			53,615			60,070
Other assets		45,436			58,037			43,140			50,135
Total assets	$	5,389,882		$	5,924,174		$	5,456,298		$	5,399,063

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Bank notes payable	$	1,983		$	40		$	3,599		$	1,934
Income taxes payable		499			474
Accounts payable		181,313			162,507			241,623			199,088
Accrued liabilities		228,375			224,855			209,724			236,078
Current portion of operating lease liabilities		32,813			32,750			33,495			33,902
Deferred revenues		67,214			45,406			82,120			72,770
Total current liabilities		512,197			466,032			570,561			543,772

Long-term debt, net – less current portion		1,206,193			1,468,546			1,114,860			1,161,433
Deferred income taxes		552,913			606,844			604,596			574,152
Operating lease liabilities – less current portion		152,615			163,496			144,201			159,672
Other long-term liabilities		119,740			131,703			46,717			71,252
Total long-term liabilities		2,031,461			2,370,589			1,910,374			1,966,509

Contingencies and commitments		—			—			—			—

Equity:
Kirby stockholders’ equity:
Common stock, $0.10 par value per share. Authorized 120,000,000 shares, issued 65,472,000 shares		6,547			6,547
Common stock, $0.10 par value per share. Authorized 120 million shares, issued 65.5 million shares								6,547			6,547
Additional paid-in capital		851,587			844,979			857,674			854,512
Accumulated other comprehensive income – net		(54,663	)		(61,452	)		(13,455	)		(25,966	)
Retained earnings		2,335,478			2,593,393			2,431,421			2,346,439
Treasury stock – at cost, 5,361,000 shares at September 30, 2021 and 5,434,000 at December 31, 2020		(295,203	)		(299,161	)
Treasury stock – at cost, 5.6 million shares at September 30, 2022 and 5.4 million at December 31, 2021								(309,130	)		(295,208	)
Total Kirby stockholders’ equity		2,843,746			3,084,306			2,973,057			2,886,324
Noncontrolling interests		2,478			3,247			2,306			2,458
Total equity		2,846,224			3,087,553			2,975,363			2,888,782
Total liabilities and equity	$	5,389,882		$	5,924,174		$	5,456,298		$	5,399,063


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020			2022			2021			2022			2021
	($ in thousands)												($ in thousands)
Net earnings (loss)	$	(265,152	)	$	27,693		$	(257,920	)	$	(294,007	)	$	39,244		$	(265,152	)	$	85,436		$	(257,920	)

Other comprehensive income (loss), net of taxes:
Other comprehensive income, net of taxes:
Pension and postretirement benefits		3,142			(4,279	)		7,494			(6,674	)		9,110			3,142			13,254			7,494
Foreign currency translation adjustments		(122	)		(239	)		(705	)		(1,162	)		(608	)		(122	)		(743	)		(705	)
Total other comprehensive income (loss), net of taxes		3,020			(4,518	)		6,789			(7,836	)
Total other comprehensive income, net of taxes														8,502			3,020			12,511			6,789

Total comprehensive income (loss), net of taxes		(262,132	)		23,175			(251,131	)		(301,843	)		47,746			(262,132	)		97,947			(251,131	)
Net (earnings) loss attributable to noncontrolling interests		422			(204	)		5			(743	)		(153	)		422			(454	)		5

Comprehensive income (loss) attributable to Kirby	$	(261,710	)	$	22,971		$	(251,126	)	$	(302,586	)	$	47,593		$	(261,710	)	$	97,493		$	(251,126	)


	Nine Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2022			2021
	($ in thousands)						($ in thousands)
Cash flows from operating activities:
Net loss	$	(257,920	)	$	(294,007	)
Adjustments to reconcile net loss to net cash provided by operations:
Net earnings (loss)							$	85,436		$	(257,920	)
Adjustments to reconcile net earnings (loss) to net cash provided by operations:
Depreciation and amortization		163,484			165,067			150,498			163,484
Provision (benefit) for deferred income taxes		(56,448	)		5,382			25,986			(56,448	)
Impairments and other charges		340,713			561,274
Amortization of unearned share-based compensation		12,793			12,066
Impairments								—			340,713
Amortization of share-based compensation								11,448			12,793
Amortization of major maintenance costs		26,189			21,857			21,677			26,189
Other		(6,290	)		3,523			(7,608	)		(6,290	)
Increase (decrease) in cash flows resulting from changes in operating assets and liabilities, net		57,841			(115,399	)		(126,252	)		57,841
Net cash provided by operating activities		280,362			359,763			161,185			280,362

Cash flows from investing activities:
Capital expenditures		(71,968	)		(129,371	)		(120,263	)		(71,968	)
Acquisitions of businesses and marine equipment		(7,470	)		(348,772	)		(3,900	)		(7,470	)
Proceeds from disposition of assets		39,163			6,538			32,904			39,163
Net cash used in investing activities		(40,275	)		(471,605	)		(91,259	)		(40,275	)

Cash flows from financing activities:
Borrowings (payments) on bank credit facilities, net		(248,057	)		360,139			21,664			(248,057	)
Borrowings on long-term debt								250,000			—
Payments on long-term debt		(15,000	)		(150,000	)		(315,000	)		(15,000	)
Payment of debt issuance costs								(1,538	)		—
Proceeds from exercise of stock options		629			353			3,885			629
Payments related to tax withholding for share-based compensation		(2,856	)		(3,193	)		(3,193	)		(2,856	)
Return of investment to noncontrolling interest		(764	)		(608	)
Net cash provided by (used in) financing activities		(266,048	)		206,691
Treasury stock purchases								(22,901	)		—
Return of investment to noncontrolling interest and other								(665	)		(764	)
Net cash used in financing activities								(67,748	)		(266,048	)
Increase (decrease) in cash and cash equivalents		(25,961	)		94,849			2,178			(25,961	)

Cash and cash equivalents, beginning of year		80,338			24,737			34,813			80,338
Cash and cash equivalents, end of period	$	54,377		$	119,586		$	36,991		$	54,377

Supplemental disclosures of cash flow information:
Cash paid (received) during the period:
Interest paid	$	39,134		$	45,776		$	39,754		$	39,134
Income taxes refunded, net	$	(116,010	)	$	(36,499	)
Income taxes paid (refunded), net							$	2,097		$	(116,010	)
Operating cash outflow from operating leases	$	33,575		$	32,507		$	33,412		$	33,575
Non-cash investing activity:
Capital expenditures included in accounts payable	$	(13,549	)	$	11,441		$	(8,508	)	$	(13,549	)
Right-of-use assets obtained in exchange for lease obligations	$	18,117		$	42,470		$	14,329		$	18,117


Large accelerated filer		Accelerated filer	
Non-accelerated filer		Smaller reporting company	
		Emerging growth company	


								Accumulated																								Accumulated
					Additional			Other																						Additional		Other
	Common Stock				Paid-in-			Comprehensive			Retained			Treasury Stock						Noncontrolling						Common Stock				Paid-in-		Comprehensive			Retained		Treasury Stock						Noncontrolling
	Shares		Amount		Capital			Income, Net			Earnings			Shares			Amount			Interests			Total			Shares		Amount		Capital		Income, Net			Earnings		Shares			Amount			Interests			Total
	(in thousands)																									(in thousands)
Balance at June 30, 2021		65,472	$	6,547	$	848,081		$	(57,683	)	$	2,600,208			(5,366	)	$	(295,463	)	$	3,639		$	3,105,329
Balance at June 30, 2022																											65,472	$	6,547	$	854,781	$	(21,957	)	$	2,392,330		(5,501	)	$	(304,314	)	$	2,357		$	2,929,744
Stock option exercises		—		—		(9	)		0			0			2			133			0			124			—		—		—		—			—		—			—			—			—
Issuance of stock for equity awards, net of forfeitures		—		—		(130	)		0			0			3			130			0			—			—		—		—		—			—		—			—			—			—
Tax withholdings on equity award vesting		—		—		—			—			—			0			(3	)		0			(3	)		—		—		—		—			—		—			—			—			—
Amortization of unearned share-based compensation		—		—		3,645			0			0			—			—			—			3,645			—		—		2,893		—			—		—			—			—			2,893
Total comprehensive loss, net of taxes		—		—		—			3,020			(264,730	)		—			—			(422	)		(262,132	)
Treasury stock purchases																											—		—		—		—			—		(76	)		(4,816	)		—			(4,816	)
Total comprehensive income, net of taxes																											—		—		—		8,502			39,091		—			—			153			47,746
Return of investment to noncontrolling interests		—		—		—			—			—			—			—			(739	)		(739	)		—		—		—		—			—		—			—			(204	)		(204	)
Balance at September 30, 2021		65,472	$	6,547	$	851,587		$	(54,663	)	$	2,335,478			(5,361	)	$	(295,203	)	$	2,478		$	2,846,224
Balance at September 30, 2022																											65,472	$	6,547	$	857,674	$	(13,455	)	$	2,431,421		(5,577	)	$	(309,130	)	$	2,306		$	2,975,363


	September 30, 2021					December 31, 2020
	Carrying Value			Fair Value		Carrying Value			Fair Value
Revolving Credit Facility due March 27, 2024 (a)	$	0		$	0	$	250,000		$	250,000
Term Loan due March 27, 2024 (a)		360,000			360,000		375,000			375,000
3.29% senior notes due February 27, 2023		350,000			357,848		350,000			364,538
4.2% senior notes due March 1, 2028		500,000			548,893		500,000			581,115
Credit line due June 30, 2022		0			0		0			0
Bank notes payable		1,983			1,983		40			40
		1,211,983			1,268,724		1,475,040			1,570,693
Unamortized debt discounts and issuance costs (b)		(3,807	)		—		(6,454	)		—
	$	1,208,176		$	1,268,724	$	1,468,586		$	1,570,693