Good morning, and welcome to the Kirby Corporation 2022 second quarter earnings conference call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. We ask that you limit your questions to one question and one follow-up. To ask a question, you may press star one one on your touchtone phone. Please note this event is being recorded. I would now like to turn the conference over to Mr. Kurt A. Niemietz, Kirby's VP of Investor Relations and Treasurer. Please go ahead. Good morning, and thank you for joining us. With me today are David Grzebinski, Kirby's President and Chief Executive Officer, and Raj Kumar, Kirby's Executive Vice President and Chief Financial Officer. A slide presentation for today's conference call, as well as the earnings release, which was issued earlier today, can be found on our website at www.kirbycorp.com. During this conference call, we may refer to certain Non-GAAP or adjusted financial measures. Reconciliations of the Non-GAAP financial measures to the most directly comparable GAAP financial measures are included in our earnings press release and are also available on our website in the investor relations section under financials. As a reminder, statements contained in this conference call with respect to the future are forward-looking statements. These statements reflect management's reasonable judgment with respect to future events. Forward-looking statements involve risks and uncertainties, and our actual results could differ materially from those anticipated as a result of various factors, including the impact of the COVID-19 pandemic on the company's business. A list of these risk factors can be found in Kirby's Form 10-K for the year ended December 31, 2021. I will now turn the call over to David. Thank you, Kurt, and good morning, everyone. Earlier today, we announced second quarter revenue of $698 million and earnings of $0.47 per share or $0.49 per share, excluding one-time non-recurring items that occurred in the second quarter. This compares to 2021 second quarter revenue of $560 million and earnings of $0.17 per share. Both of our segments continued to steadily improve during the quarter, delivering higher revenue and operating income sequentially and year-over-year. The quarter's results reflected improved market fundamentals in both marine transportation and distribution and services, and were partially offset by higher fuel costs and inflationary pressures, as well as continued supply chain challenges that delayed sales in distribution and services. Before turning to the second quarter results, I would like to take a moment to comment on recent developments in one of our newest business lines, Kirby Offshore Wind. Following our first quarter announcement, we are pleased to congratulate our partner, Maersk, on signing a preferred supplier agreement with Equinor and BP for the 1.2-gigawatt Beacon Wind offshore project. This is in addition to the awards for Empire Wind one and two. We are very excited about the outlook for this new business and look forward to building on our strong relationship with Maersk and its customers. Now, turning to the second quarter, looking at our segments. In inland marine transportation, high refinery utilization led to a steady improvement in demand with our overall barge utilization increasing into the low 90% range. Tight market conditions, in part due to limited supply of barges, continued to put upward pressure on prices with spot prices up approximately 10% sequentially and mid-teens% year-over-year. Pricing on term contracts moved higher as well, with term contracts renewing up in the mid-teens%. Overall, second quarter inland revenues increased 14% sequentially, and margins improved into the high single-digit range. The results were impacted by increases in fuel costs coupled with inflationary pressures in the quarter. We expect margins will improve as fuel and other cost escalation contract clauses reset as the year progresses and into 2023. In coastal, market conditions further improved with our barge utilization in the low 90% range and some incremental pricing gains with spot prices up in the low double digits. Improved coal shipments in our dry cargo business also contributed to better revenues and increased operating margins. Overall, second quarter revenues increased 14% sequentially, and operating margins were in the low single digits. In Distribution and Services, our markets remained very active across the segment and contributed to meaningful sequential and year-on-year improvement in revenue and operating margins. In oil and gas, high commodity prices and increased oilfield activity contributed to improved demand for new transmission parts and services. In Manufacturing, our backlog remained healthy with the addition of new orders for our environmentally friendly pressure pumping equipment and power generation equipment for e-frac. However, as expected, significant supply chain issues delayed many new equipment deliveries during the quarter. We continue to work diligently to manage the current supply chain environment. In Commercial and Industrial market, overall demand remained solid across our different businesses, with growth coming from the marine repair and on-highway sectors. Demand was also strong in our Thermo King refrigeration business, with double-digit growth sequentially and year-on-year despite ongoing supply chain delays. In summary, despite significant inflationary and supply chain challenges in the quarter, our second quarter results reflected continued improvement in market fundamentals for both segments. The inland market is improving nicely, demand is strengthening, and rates are moving higher. While the coastal market remains challenged by industry supply dynamics, our barge utilization is good, and we realized modest rate improvements. Demand in distribution and services is strong, and our backlog is healthy. While supply chain issues are expected to persist for the foreseeable future, we see continued growth going forward. All of this is a positive for Kirby, and as we continue to work safely, efficiently, and responsibly to meet and exceed our customers' needs, we expect to drive incremental earnings growth in the second half. In a few moments, I'll talk more about our outlook, but first I'll turn the call over to Raj to discuss the second quarter segment results and the balance sheet. Thank you, David, and good morning, everyone. In the second quarter of 2022, marine transportation revenues were $405.7 million with operating income of $30.8 million and an operating margin of 7.6%. Compared to the second quarter of 2021, marine revenues increased $72.8 million or 22%, and operating income increased $12.3 million or 66%. Compared to the first quarter of 2022, marine revenues increased $50.2 million or 14%, and operating income increased $13.9 million or 82%. These increases were driven by strong customer demand and improved pricing. As expected, second quarter operating margins were impacted by increased fuel costs that increased revenues through rebuilds but are dilutive to margins. We also continued to face inflationary cost pressures and expect to recover these increases in costs as contract escalators reprice throughout the remainder of the year and going into 2023. The inland business contributed approximately 78% of segment revenue. Average barge utilization was in the low 90% range for the quarter, which compares to the mid-80% range in the first quarter of 2022 and the low-to-mid 80% range in the second quarter of 2021. Long-term inland transportation contracts or those contracts with a term of one year or longer contributed approximately 60% of revenue, with 57% from time charters and 43% from contracts of affreightment. Improved market conditions contributed to spot market rates increasing sequentially in the low double digits and in the mid-teens year-on-year. Term contracts that renewed during the second quarter were up on average in the mid-teens compared to the prior year. However, only a handful of smaller term contracts renewed during the quarter. Compared to the second quarter of 2021, inland revenues increased by 25%, primarily due to increased barge utilization, higher term and spot contract pricing, and increased fuel rebuilds as we saw the average cost of diesel increase more than 93% year-over-year. Compared to the first quarter of 2022, inland revenues were up 14%, driven by increased term and spot market pricing, higher average barge utilization, and higher fuel rebuilds. Inland operating margin approached double digits and was mainly impacted by rapidly rising fuel prices. We expect margins to improve into the low double digits as fuel escalators begin to kick in throughout the balance of the year. The coastal business represented 22% of revenues for the marine transportation segment. Average coastal barge utilization was in the low 90% range, which compares to the low-to-mid 70% range in the second quarter of 2021. During the quarter, the percentage of coastal revenue under term contracts was approximately 80%, of which approximately 90% were time charters. Average spot market rates and renewals of term contracts were higher in the low double digits. During the quarter, coastal revenues increased 12% year-on-year with improved barge utilization, higher contract pricing, and higher fuel rebuilds. Overall, coastal had a positive operating margin in the low single digits, marking the return to profitability for the business. With respect to our tank barge fleet for both the inland and coastal businesses, we have provided a reconciliation of the changes in the second quarter, as well as projections for the remainder of 2022. This is included in our earnings call presentation posted on our website. Now I'll review the performance of the distribution and services segment. Revenue for the second quarter of 2022 were $292.3 million with operating income of $16.7 million. Compared to the second quarter of 2021, the distribution and services segment saw revenue increase by $65.6 million or 29% with operating income improving by $10.5 million or 169%. When compared to the first quarter of 2022, revenues increased by $37.1 million, or 15%, and operating income increased by $5.7 million, or 52%. In the oil and gas market, favorable commodity prices and increased rig and completions activity contributed to a 52% year-on-year increase and a 21% sequential increase in revenues. We experienced increased demand for new transmissions and parts throughout the quarter. As David mentioned, we continued to see supply chain challenges, especially in our manufacturing business. Despite these supply chain headwinds, the manufacturing business experienced continued favorable trends in new orders and deliveries. Overall, oil and gas represented approximately 45% of segment revenue in the second quarter and had operating margins in the low to mid-single digits. On the commercial and industrial side, strong activity contributed to a 15% year-on-year increase in revenues, with improved demand for equipment, parts, and service in our marine repair and on-highway businesses. Power generation was up modestly year-on-year due to timing of major projects. Compared to the first quarter of 2022, commercial and industrial revenues increased by 10%. Our Thermo King business achieved strong sequential and year-on-year growth, but continued to experience delays due to supply chain constraints. This headwind was offset by increased activity in marine and on-highway repair. Overall, the commercial and industrial business represented approximately 55% of segment revenue and had an operating margin in the high single digits during the second quarter. Now turning to the balance sheet. As of June thirtieth, we had $25.1 million of cash, with total debt at $1.14 billion, and our debt-to-cap ratio improved to 27.9%. During the quarter, we had cash flow from operations of $63.4 million and generated cash from proceeds from asset sales of $9 million from the retirement of marine vessels. We used cash flow and cash on hand to fund $44 million of capital expenditure of CapEx. During the quarter, we decreased debt by $18.7 million and repurchased slightly more than 310,000 shares at an average price of $58.33 per share for a total consideration of $18.1 million. As of June thirtieth, we had total available liquidity of approximately $879 million. With respect to CapEx, we continue to expect full-year CapEx of approximately $170 million-$190 million, primarily for required maintenance on our marine fleet. We also expect to generate strong cash flow from operations of $390 million-$450 million, with free cash flow defined as cash flow from operations minus CapEx of $200 million-$280 million, reflecting a slight decrease from prior expectations as supply chain constraints challenge working capital in the near term. We expect to unwind this working capital as orders ship later this year and into the first half of 2023. We are committed to a balanced capital allocation approach and will use this cash flow to repay debt and continue to pursue long-term, value-creating niche investment and acquisition opportunities, as well as opportunistically return capital to shareholders. I will now turn the call back to David to discuss our outlook for the remainder of 2022. Thank you, Raj. While our second quarter was not without challenges, we delivered incremental improvements in both our segments, and we expect this trend to continue. In marine, strong demand, driven in part by high refinery and chemical plant utilization, should continue to increase our barge utilization. Combined with a limited barge supply, we expect this to contribute to further increases in inland rates. In distribution and services, demand is healthy across the segment, and we continue to receive new manufacturing orders. While all of this is very encouraging, we are mindful of near-term macroeconomic headwinds, including slowing economic growth, prolonged inflationary pressures, and potential new COVID subvariants. As always, we will manage the factors we have control over, and we will continue our focus on cost containment and working capital management. Looking at a more detailed outlook for our businesses, we expect favorable conditions to continue in inland marine. Refinery and petrochemical plant utilization is at near record levels, resulting in increased customer volumes. Barge supply is constrained as there is minimal new barge construction. These factors are expected to contribute to our barge utilization running in the low- to mid-90% range. These favorable supply and demand dynamics are expected to drive further improvements in the spot market, which currently represents approximately 40% of inland revenues, as well as continued improvement in term contract repricing as renewals occur. The negative impacts of rapid increases in fuel costs and material inflation to costs are expected to be continued headwinds, but will be mitigated when escalations in contracts occur during the second half of the year and into 2023. Overall, for the full year, we expect inland revenues will grow approximately 20%-25% with progressive growth throughout the year as the business improves and term contracts renew later in the year. Barring further inflationary or fuel cost pressures, we expect near-term inland operating margins to be in the low double digits and to continue to gradually improve for the remainder of the year. In coastal, market conditions are expected to steadily improve through the remainder of the year, but will remain somewhat challenged by underutilized barge capacity across the industry. Even with some market softness, Kirby's coastal barge utilization is expected to be in the low- to mid-90% range. Full-year coastal revenues are expected to be flat to up in the low-single-digits%, driven primarily by improving fundamentals in our core liquid cargo business and higher coal shipments in our offshore dry cargo business, offset by the company's exit from Hawaii. Revenues and operating margins are also expected to be impacted by ongoing planned shipyard maintenance and ballast water treatment installations on certain vessels. Overall, coastal operating margins are expected to be in the range of near breakeven to low-single-digits% for the remainder of the year. Looking at distribution and services, we expect a favorable outlook with strong demand for equipment parts and service in distribution and a healthy backlog in manufacturing. In the oil and gas market, high commodity prices, increasing rig counts, and growing well completions activity are expected to yield strong demand for OEM products, parts, and services in the distribution business. In oil and gas, we expect the current commodity price environment will continue to further increase rig counts and frac activity throughout 2022 and into 2023. U.S. land rig counts have surpassed 750 rigs, which represents a full year average increase of approximately 56% with steady growth expected for the remainder of the year. Similarly, the average frac spread count is now approaching 290, representing a 20% increase over 2021. With this growth, we expect to see increasing demand for transmissions, engines, parts, and service in distribution. In manufacturing, we have a healthy backlog position. We added new incremental orders in the second quarter, and we expect this trend will continue. Offsetting this, we expect that supply chain issues and long lead time OEM equipment, which in some cases are extending beyond a year to remain a challenge. These issues are likely to contribute to some choppiness with new product deliveries shifting between quarters and potentially into 2023. In commercial and industrial, we are forecasting strong demand and on highway with increased trucking and municipal repair work, continued improvement in bus ridership, and increased demand for Thermo King refrigeration parts, offset by lingering supply chain delays. In power generation, new backup power installations, parts, and service activity are expected to remain solid as demand for electrification and 24/7 power grows. Marine repair is also expected to be strong with increasing oil and gas activity in the Gulf of Mexico and improved commercial markets on the East and West Coasts. For the full year, we expect revenue growth in commercial and industrial in the low double-digit percentage range. While supply chain issues are expected to continue impacting new product and equipment deliveries in distribution and services, we continue to expect 2022 segment revenues will increase 25%-30% year-over-year, with commercial and industrial representing approximately half of segment revenues and oil and gas representing the other half. We expect segment operating margins will be in the mid- to high-single digits for the duration of 2022. To conclude, overall, Kirby's second quarter results showed steady improvement. Despite inflationary headwinds, both of our segments performed well during the quarter, delivering improved revenue and operating income sequentially and year over year. We exited the quarter with strong fundamentals in our businesses. We see favorable markets continuing, and we expect our businesses will produce gradually improving financial results in the coming quarters. We're keeping a watchful eye on growing economic headwinds and are focused on managing the areas we can control. In inland, market conditions are tight with strong customer demand and high barge utilization working to push rates higher. The price of a new barge remains near historical highs. We believe these factors will lead to continued improvement in market conditions and contribute to healthy earnings improvement as the year progresses and we enter 2023. In coastal, although overall market conditions still need more time to recover, we saw modest improvements in demand with our barge utilization above 90%. We also realized some modest rate gains in both spot and term contracts. These factors, combined with our previous efforts to rightsize the fleet and exit unprofitable markets, led to a return to profitability in this business. We believe our coastal business is well-positioned for continued and improved profitability. In distribution and services, we saw a healthy demand in commercial and industrial, and oil field fundamentals remained very favorable with the current commodity price environment. This is expected to lead to incremental activity for new OEM parts and equipment and services across our distribution businesses. In manufacturing, although supply chain issues continue to pose an ongoing headwind, our backlog remains very strong. Demand for our environmentally friendly pressure pumping equipment continues to grow, and we see high activity levels with improved revenue and returns expected through the remainder of the year and into 2023. As we look ahead, we are attentive to growing uncertainty in the economy, but are confident in the strength of our core businesses. We intend to continue capitalizing on strong market fundamentals and to driving shareholder value creation. Operator, this concludes our prepared remarks. We are now ready to take questions. We will now begin the question-and-answer session. To ask a question, you may press star one one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. As a reminder, we ask that you please limit yourselves to one question and one follow-up. Our first question comes from the line of Jack Atkins from Stephens. Questions. Jack, you there? Yeah. David, can you hear me? Yeah. Thank you. Okay, great. Yeah, good morning. Thanks for taking my questions. Sorry about that. I guess maybe to start, it's encouraging to hear the commentary about, you know, it feels like increasing momentum across the business. Maybe to start with inland, you know, as you kind of think about your outlook for the pricing environment, you know, as we kind of go into the back half of the year and maybe into early 2023, can you maybe frame that up with sort of how you're thinking about it today versus maybe how you were thinking about it three months ago, six months ago? It feels like momentum is maybe accelerating a bit there, so would just be curious about that. I guess, from a bigger picture perspective, where would you say we are from, like, a pricing perspective today relative to 2019 levels? Just to kind of level set that. I would also be curious if you have a view on, you know, costs today versus 2019 levels. Yeah. Sure. Yeah. Well, good morning, Jack. Inland feels pretty strong right now. You've heard our comments on supply and demand. Demand's up. We've got, you know, refineries running flat out, chemical plants are running pretty heavy, crude's moving. So, you know, on the demand side, it's pretty strong. As you know, there's not much in the way of new construction. The supply and demand dynamic is better than we've seen in a long time. I would say that is adding to an increase in momentum here. We've seen a very strong spot market, and I would say, if anything, it is getting stronger. That's important as we head into, you know, contract renewals. As you know, contract renewals are back half loaded, typically late fourth quarter. You know, we're excited about heading into those renewals, given the market. Now, you did bring up inflation and costs. We are seeing it. You know, the headline in PPI is 9%, but you know, I can tell you steel, you know, we repair a lot of barges. Steel is up over 200%. We're seeing inflationary pressures, and that's frankly why the industry's able to get some of this pricing. We need it to absorb some of the inflationary costs. Crew transportation, for example, is up considerably. It's double digit. Food, everybody knows about food costs being up. We are seeing inflation, but I would tell you we're getting real price increases, but we do need healthy increases to offset this inflation. I'd also tell you that, you know, the crewing situation across the industry is. As you know, the horsepower side of the equation is critical, and I think the industry is having problems crewing boats. Certainly COVID hasn't helped that. So that is helping the pricing dynamic. I would tell you that it's, you know, whether you call it momentum or not, it certainly contributed more in recent months. We just can't find mariners. Now, fortunately, Kirby, as you know, has its own school, and we opened that school up last year in January and have been hiring and training, you know, deckhands and tankermen and captains. So, we're in pretty good shape. We've been able to crew our vessels, but it is tight. It is an industry phenomenon that we're experiencing now and is helping rates because you gotta pay up to get the crews and to get the horsepower to move barges. So I would say momentum is better, is the short answer. We're excited about where we're at and looking forward to rolling term contracts into 2023. Well, that's great. That's great to hear. Then I guess for my follow-up question, I'd like to maybe touch on the share repurchases. I think it's been quite some time since you all repurchased some stock. I guess could you maybe talk about what that may signal in terms of, you know, the opportunities for capital allocation? You know, I know you guys would probably prefer to do strategic M&A if it's available. I guess, you know, kind of what if you kind of walk us through, you know, the turning the buybacks back on and sort of how you're thinking about repurchasing stock versus M&A moving forward. Yeah, Jack, good morning. It's Raj here. You know, we did $18 million of share repurchase in Q2. Now, the way we approach capital allocations is in a very balanced manner. You know, our three main priorities are, you know, debt repayment, you know, returning capital to shareholders and, you know, to your point, having dry powder to execute on value-creating investments. The goal, you know, the near-term goal is on the debt side to get the debt to EBITDA of 2.5 x or sub 2.5 x. You know, you've seen us pay down debt over the last 12 months, and you know, we will continue to execute on that. I think opportunistically, we'll be also looking to do share repo. You would have noted that we saw some slight headwind in terms of free cash flow for the remaining part of this year. That's actually a good dynamic because we are building working capital for the growth that we are seeing, especially in the KDS business. Even after that, with the cash flow that we're generating, I think we're going to be in a good position to pay down debt, do a bit of share repurchases as the year progresses, as well as you know, have some dry powder for investments that are value creating. You know, we will continue to have this balanced approach, and that's gonna be our main focus. Okay, great. Thank you, Raj, for that. Really appreciate it, guys. I'll turn it over. Thanks, Jack. Thank you. Our next question comes from the line of Ken Hoexter from BofA. Hey, good morning, Ken. Thank you for taking my question. Maybe just switching over to the coastal side. You mentioned some momentum in this business, but that, you know, supply, demand dynamics still remain a bit challenged. How are you thinking about this kind of into 2023? Maybe just talk about some of the moving parts on, you know, what it will take to turn some of these things back into your favor from a pricing standpoint. Thank you. Thanks for the question. Yeah, the coastal business is much longer cycle than the inland business, and it's really about the increments of capacity, right? On the inland side, it's 10,000 and 30,000 barrel barges. On the coastwise, you know, they range anywhere from 100,000 or 80,000 barrels all the way up to just under 200,000 barrels. The increments in capacity are bigger, and the cost of the equipment is much more expensive. It's a much longer cycle business in the coastwise business. That business got overbuilt when there was crude by barge and before crude was allowed to be exported. The industry's been overbuilt. We've been taking out old capacity. Others are as well. The market is finally just getting back into balance. We got some price increases in this quarter on the handful of contracts that renewed. I would expect that momentum to gain. We got back into profitability. I think you know, going into 2023 and 2024, I would expect the market to be very strong for the coastwise business. As you're aware, it takes two to three years to build new capacity in the coastwise business. You know, to build a new 185,000-barrel barge and towboat probably cost you, oh gosh, $80 million or so, maybe $90 or $100 with steel prices. Nobody's gonna build new capacity in the interim, and I think that's gonna continue to allow that supply and demand dynamic to tighten. We're certainly starting to see price increases, and push those. Another dynamic in the coastwise business is ballast water treatment. We've been putting ballast water treatment systems in all of our barges, and we're almost complete that process. That's adding some cost to the industry, which needs to be recovered. I would tell you we're ahead of most of our competitors in terms of installing ballast water treatment systems, and that sets it up nicely for Kirby, 'cause we've got the bulk of that capital behind us. Now, we still have some shipyards to do, and you'll see that bobble around in our quarters as certain shipyards go through. We're really excited about where we are in the coastal business. It should be a nice dynamic for the next three-five years. You know, again, just to reiterate, because it takes so long for new capacity to come in, and there's no new capacity even being considered right now. We're excited about where coastal can go in the coming year. Thanks for that. Just following up on inland margins in 2023, you know, with fuel recapture and that pricing accelerating, do you think that 20%+ margins is attainable? Yeah. The short answer is yes. You know, margins have to progress. We, as you know, we have this big contract portfolio, and it takes a while for that thing to, you know, all those contracts to roll over. And frankly, it takes, I think, several years to really get them humming. You know, the good news is spot pricing is probably a good 20% above contract pricing. So, you know, the contract renewal should kick in and start to show up in 2023. You know, I would hope by the end of the fourth quarter, we're into the mid-teens in terms of margins for the inland business. And with contract renewals, it should get us into starting to touch the 20% margins sometime in 2023. We haven't put pencil to paper on that. You know, a lot of depends on how this contract renewal cycle goes. It's setting up nicely, and we're very excited about where we are. Again, just to reiterate, inflationary pressures are there. You know, a lot of this pricing is needed to offset inflation. Thank you. Our next question comes through the line of Ben Nolan from Stifel. Good morning, Ben. Hey. Good morning, Raj. I wanted to jump over to the D&S side of the business a little bit. I think you took down your revenue growth guidance a little bit. I assume that's all just being shifted to the right because of supply chain constraints. First of all, I guess, just to validate that. Then secondly, given that it seems like demand is substantially greater than your ability to, or anybody's ability to deliver, are you beginning to see some pricing power there? And as a function of that, where do you think it's realistic maybe next year or when, you know, as we look forward, what do you think is a realistic margin for that business in a healthy environment? Ben, good morning. I'll talk about the outlook for this business. The slightly lower outlook that we provided was due to supply chain. I'm gonna say that's probably on the conservative end of the spectrum. I mean, the bottlenecks that we're seeing right now, you know, it's fits and starts, right? We didn't wanna come out and be a—we didn't wanna be too sporty with that number given, you know, what our recent experience has been with supply chain. It's not for lack of demand. That's the point I wanna make, you know, for you. The demand's still strong. The order book's still strong. You know, backlog over the past 12 months has grown about 5 x. You know, we're very encouraged. This business is, you know, we're seeing a lot of activity. I think I spoke earlier about the working capital growth. You know, I look at that as a very positive sign because we are building working capital for the anticipated demand that we're gonna have going into later part of this year and into early next year. Yeah. On the pricing, let me comment on that, Ben. We are getting some pricing increases, for sure. You know, I think about it in terms of margins. You know, we think KDS absolute margins should be able to get into the high single digits. You know, we're pushing pricing where we can. Certainly, the demand picture helps that. You know, we're being judicious about it. I'm pretty excited about the way that's going. As Raj says, it's really a shift to the right because of the supply chain. You know, the demand is there, the backlog's there, and we're working through the supply chain issues as everybody is. You know, it's all starting to feel like supply chain is a worn out excuse across the Corporate America today, but it is real. We're seeing it in some small parts and actually some of the bigger OEM pieces as well. It's just a fact I think everybody's dealing with. The good news is that the demand hasn't gone away. It's just fulfilling that demand has shifted a little bit. Okay, that's helpful. If I could go back a little bit to Jack's question, appreciating that you guys haven't given any guidance for next year or whatever. As you look forward, it seems like everything is going in the right direction. Cash flows are getting better, leverage is coming down. As we think about free cash flow going forward, I'm just trying to get a sense of if there's any substantial CapEx that we need to be thinking about here or alternatively, are you sort of at a point here where you kind of outside maybe of the offshore wind, you've kind of spent what you needed to spend, and incrementally as the cash flows improve more and more that should be dropping to free cash flow? Yeah. I think the latter is correct. We have no big CapEx spending outside of the wind, and even the wind is, you know, that's probably less than $100 million spread over the next two and a half years. It's not gonna be a big headwind on CapEx. Really, we've just got maintenance CapEx. I would tell you that our fleet's in about the best shape I've seen it. We've got a young, healthy barge and boat fleet. We've been maintaining it very well. You know, so it's really just maintenance CapEx. We don't have any big capital expenditures on the horizon. You know, free cash flow should accelerate. You know, that's why you heard Raj talk about kind of our priorities here in terms of you know pay down a little more debt and then look at opportunistic share repurchases and you know maybe there's an acquisition out there, but I would say the first two are a higher priority right now. All right. I appreciate it. Well, actually just to tack on to that, dividends at all. I know it's never been part of the Kirby theme, but how do you weigh that versus buyback? Yeah, I think we'd prefer a buyback over dividends. It's certainly something we discuss at the board level. You know, I would say we'd prefer a share buyback before a dividend. All right. I appreciate it. Thank you. Yeah. Thanks. Thank you. Again, if you have a question, please press star one one. Our next question comes from the line of Greg Wasikowski from Webber Research. Good day, Raj. Good morning. Can you guys hear me all right? Yeah. Yeah. Good morning, Greg. Morning. Yeah. Sorry, I had some connection issues and missed a few questions. If I'm repeating anything, feel free to give me the stiff arm. I'll start with inland. How does the health of the 10K market compare to the 30K market right now? If you're seeing any sort of lag, can you kind of talk about why that may be the case? Yeah. This is just on the margin. I'd say the 10K market's just a little stronger than the 30K market. They're both very strong, to be honest. They're both very strong. You know, 10K a little because tends to be more small lot chemicals, and that, you know, that's been pretty strong. A lot of that is upriver. It goes upriver, so 10Ks tend to be more in a line haul service that goes up and down the river. But they're both very strong right now, and I would say it's pretty balanced, you know, at the margin, maybe 10K is a little tighter. But yeah, the good news is, they're both very tight. Gotcha. Thanks. Then on D&S, how would you characterize D&S right now compared to sort of the heyday in 2018? If we remove the effects of supply chain constraints, you know, do you think you'd be back on your way to, you know, $1.4 billion-$1.5 billion in revenue with high single digits%, maybe even touching 10% operating margins? Or are there other factors at play? It's just a different ballgame here, or is supply chain really the only thing holding it back at this point? Yeah. I'd say it's pretty much just supply chain holding it back. There are some inflationary pressures, but, you know, it's really the supply chain that's holding it back. You know, would we be at the 2018 levels? Yeah. I would say yes. Our backlog's up 5x what it was 12 months ago. The backlog's there. We are getting quite a bit of electric frac type orders, you know, based on either e-frac or power generation. The equipment to generate power on a well site, it's basically a natural gas recip that we put together with some distribution equipment, electric distribution equipment, and that's been very strong. We're seeing a lot of demand for that. Yeah, electric frac is I would tell you the preferred frac equipment choice right now, and so that's been increasing. The demand's there. You know, is it like 2018? Yeah, it sure feels like it. The only caveat is our customers, the pressure pumping companies, are being very disciplined. They're not spending capriciously. They're being very disciplined, and I actually think that's healthier for the business. At the root of your question, if we didn't have the supply chain, would we be close to what we were doing in 2018? I would say yes. Gotcha. Thanks, David. I think I'm last in line here, so maybe I'll squeeze in one more, if you don't mind. Do you guys still have sideline capacity in inland? I f so, is that just a function of labor at this point? You know, if so, when do you expect to be able to potentially get that capacity back to work? Yeah. We have just a very small bit of capacity on the bank, is what we would call it. You saw we brought in about 9 barges off the bank. That's equipment we deferred maintenance on and put on the bank during COVID, and we're bringing it back. It's a small amount that, you know, I don't think it's material. You know, we may have another 20 or so or maybe even more to pull back. It's not material in terms of the industry. It will help us. Obviously, that's more capacity. I think the gating factor is, as you mentioned, the horsepower, getting the towboats to run that equipment. That's across the industry. Everybody's facing that. There's just a shortage of horsepower. Frankly, that's a good thing, right? It makes the pricing environment good. It really tightens up the market nicely. We do have, to your point, some equipment we can pull off the bench, but it's not material, Greg. Thanks for that question. Gotcha. Okay. Thanks, David. Thank you. Our next question comes from the line of Greg Lewis from BTIG. Hey, good morning, Greg. Morning, everybody. Greg, you there? Greg? Hello? Do you not hear me? We hear you. Yeah, we can hear you now. I don't know. Okay. It seems like there was a pause for a second. Yeah. Okay, great. Well, hey, thank you and good morning, everybody. David, you know, I had a question, and I've been having some technical difficulties this morning. So, I may have. Someone may have already asked this. I mean, clearly, you know, you highlighted inflation, you know, being, you know, a headwind to margins, et cetera. As we think about where we are in terms of inland pricing in spot and time charters, if we were to try to inflation adjust where the market is right now, where are we? Are we kind of in a, you know, as I think about where margins are and where they're going, are we kind of in, like, a mid-cycle pricing environment on an adjusted inflation, or are we at, you know, any kind of color around that in terms of how we should be thinking about spot and time charters? Yeah. No, I think one, that's a great question. You know, I think mid-cycle's about right. We're probably. I was thinking as you were asking the question of the baseball analogy, what inning are we in? It's probably the third or fourth inning. I mean, it's really just tightening up, and we've got ways to go. Again, you look at the cost of building a new barge, you know, a new 30,000-barrel barge is over $4 million, well over $4 million. So, you know, this is early innings, is the way I think about it. We do have to have the price increases to offset inflation. That is real. You know, I talked about steel, but, you know, labor costs are going up. You know, just things like paint. Paint's up 25%, right? You know, hotels. You know, we do crew changes, and hotels are up 25%. Rental cars are up 25%. That inflation is real. That's part of the price increases that we're getting. That's why I say it's very early innings. We've got a long way to go to get to a reasonable return on capital, and we're gonna get there. The good news is the demand's there and the supply is in check. It's, I guess, just to reiterate, I think we're early innings, probably third and fourth inning. Okay, great. You know, I mean, I know we've been talking about D&S and the drop in revenue and I guess the more of the pushing of the rates. Is there any way to kind of parcel out you know on the supply chain side? I mean, clearly, e-frac is gaining momentum and is the future. Is there any kind of way to parcel out, and maybe there is no difference between the supply chain for the conventional frac equipment versus the e-frac equipment, and around that, did that have anything to do with the change in the guidance? No. You know, it's funny. It's not any one particular thing in the supply chain. You know, it could be, like I say, a pressure regulator that we need, you know, to regulate gas flow into a natural gas recip, or it could be, you know, an engine from one of the major OEMs there or a printed circuit board. It's pretty much across the entire supply chain. It's weird things that you wouldn't expect, you know, like a pressure regulator. A $450 pressure regulator just seems like you know, is that holding up a shipment? Yes, it can. It's not any one particular thing. It's more broad-based than that. The ones that, you know, the bigger items from the OEM, you know, whether they're engine packages or not, those are the ones that are more impactful just because of the size of the revenue associated with them. You know, it's hard to say it's just any one thing, Greg. We're managing through it. I think the customers and the suppliers are all trying to get everything lined out, and it's just a grind every day. You know, the good news is nobody's canceling orders. Demand is still growing, and we just gotta manage through it. Okay, perfect. Jason, thank you for the time, everybody. Have a great rest of the day. All right. Thanks, Greg. All right. Thanks. Thank you. Our next question comes from the line of Ben Nolan from Stifel. Hey, Ben. Appreciate you letting me in again. I didn't wanna overstay my welcome the first time, but I wasn't quite done. I do have two more, if you don't mind. The first is, one of the things, and we've talked a little bit about labor, but one of the things we've heard out of the rails in particular is that in addition to just having shortages and challenges hiring, retention's been a big problem. T hey've lost people because people, you know, don't like the lifestyle or whatever. I'm curious if that spills over at all into what you guys are doing. Yeah, a little bit. You know, it is a different lifestyle living on a vessel for a good portion of your working year. We have seen a little of that. You know, I would tell you, we raised wages earlier than anybody else, and it was, you know, it's a healthy increase, 7% to our mariners. We felt that was necessary, and we haven't seen our turnover go up. It's kind of at historical levels. You hear anecdotes. You know, you'll get an occasional, you'll hear somebody say, "Hey, look, I just, I'm just gonna work from home and pivot to a different job." We have seen some of it, but is it a material impact to us? No, it's certainly impacting the industry. You know, there's enough out there that we know are exiting or don't wanna work anymore. You know, I think our package in terms of benefits and wages and the stability of working for somebody like Kirby is an attraction, and it probably keeps our turnover a little lower than some others. You know, that's on the marine side. I would tell you on the technician side for KDS, it has been a challenge. You know, it's tough to find mechanics, it's tough to find assemblers, but we're grinding through it. I don't think we're any different than most industries right now. The labor market is tight. You know, as you think about recession, that's probably one of the caveats. You don't see the unemployment that you would normally see within a recession. There are jobs out there if people wanna work. Maybe that's what keeps us out of a recession, is there's enough employment demand out there to keep this economy going. But yeah, I'm kind of bouncing around here, but that's the long and the short of it is our turnover's about normal in marine, a little higher in our KDS side, but we're managing through it. Okay, that's helpful. Then last, and honestly, this is the last one for me. I think 40% of the inland market you'd said is spot. You know, contract renewals are coming up around at the end of the year. But it's a tightening market. It's already a little tight. It's tightening. Do you think at all about sort of shifting the mix a little bit and saying, you know, we think the market's gonna be tight, so maybe we're comfortable letting a little bit more ride in the spot market and trying to improve margins that way? Or inverse of that, you know, you go ahead and the business is good, so you lock it in. Yeah, no, a very intuitive question. You may have noticed that we've gone from about 35% spot to 40% spot. In a rising market, we prefer being in the spot market, so we've kind of intentionally done that. I will tell you another sign of the strength of the market is now customers are starting to worry about availability, so they're trying to term up more. So that's an interesting dynamic that's happening now. In a very tight market, that's usually what happens. The customers get a little worried about availability, so they're like, "Well, man, we better term up." But conversely, we like being in the spot market in a rising rate environment. That dynamic will shift here and, of course, we're gonna take care of our customers first and foremost, but it's nice to see them start worrying about barge availability. All right. I appreciate it. Thank you, guys. Yeah. Thanks, Ben. Thank you. This concludes our question and answer session. I would like to turn the conference back over to Mr. Kurt Niemietz for any closing remarks. Thank you, everyone, for participating on the call today. If you have any follow-up questions, please call me at 713-435-1077. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.