Good morning, welcome to the Kirby Corporation 2022 fourth quarter earnings conference call. All participants will be in a 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 during the session, you will need to press star one one on your telephone. You will hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please note this event is being recorded. I would now like to turn the conference over to Mr. Kurt 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 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 31st, 2021, and in our other filings made with the SEC from time to time. I will now turn the call over to David. Thank you, Kurt. Good morning, everyone. Before we get into the details of our fourth quarter and full year results, I'd like to take a moment to touch on a press release we issued earlier this month. The board initiated a process in early 2022 with the support of our independent financial and legal advisors to review a range of alternatives, including a potential sale or spin-off of the Distribution and Services business. The board is keenly focused on maximizing value for shareholders and regularly reviews and actively manages Kirby's portfolio. Following a thorough exploration of potential options, including discussions with a number of potential strategic and financial counterparties, the board concluded that under current financial market conditions, the best way to enhance shareholder value is to continue to execute on our strategic plan for both the Marine Transportation and Distribution and Services business. As always, we remain committed to maximizing value for shareholders and will continue to evaluate all opportunities to do so. As you know, the difficult financing environment is impacting the ability of both sponsors and strategics to pursue and consummate transactions. We have deep operational experience, expertise and unique capabilities that position both of our businesses to deliver long-term growth and enhanced performance. This is underscored by our strong financial results and operating performance in 2022. We are encouraged by the bright prospects of the company's two segments and look forward to continuing to operate these businesses from a position of strength. Now turning to our financial results. Earlier today, we announced fourth quarter revenue of $730 million and adjusted earnings of $0.67 per share. This compares to 2021 fourth quarter revenue of $591 million and adjusted earnings of $0.27 per share. Both of our segments performed well during the quarter, delivering significantly higher revenue and operating income year-over-year. The fourth quarter's results reflected steady market fundamentals in both Marine Transportation and Distribution and Services, partially offset by unfavorable weather and low water conditions, normal seasonal slowness, as well as ongoing supply chain challenges that delayed deliveries in Distribution and Services. In inland Marine Transportation, strong refinery utilization led to steady demand with our overall barge utilization running in the 90% range. Tight market conditions due to strong demand and limited supply of barges, coupled with continued inflationary pressures, put upward pressure on prices with spot prices up in the low single digits sequentially and in the 20%-25% range year-over-year. Term contracts also renewed up in the 10%-15% range versus a year ago. Overall, fourth quarter inland revenues increased 24% year-over-year. Margins improved into the low teens range. Low water conditions on the Mississippi River, as well as the onset of winter weather, made for difficult operating conditions in the quarter with a significant increase in delay days. While we continued to face headwinds with inflationary pressure in the quarter, we started to witness some moderation and operating margins continued to improve, reaching their highest level since 2020. In coastal, market conditions steadily improved with our barge utilization in the low to mid 90% range and some incremental pricing gains, with spot prices up in the low to mid-single digits sequentially. Better coal shipments in our dry cargo business also contributed to improved revenues and increased operating margins. Overall, fourth quarter coastal revenues increased 8% year-over-year, and operating margins were in the low single digits. In Distribution and Services, demand remained strong across our markets, with continued growth in new orders and backlog. In manufacturing, revenues were up sequentially and year-over-year, driven by healthy demand for our environmentally friendly pressure pumping equipment and power generation equipment for EFRAC. However, as expected, significant supply chain issues delayed many new equipment deliveries during the quarter. We continue to work diligently to manage continued supply chain challenges. In our commercial and industrial market, overall demand remained solid across our different businesses, with growth coming from the marine repair, power generation, and on-highway sectors. In summary, our fourth quarter results reflected continued strength in market fundamentals for both segments, despite meaningful weather and supply chain challenges. The inland market is inflecting nicely, demand is strong, and rates are moving higher. While the coastal market remains challenged near term by industry-wide supply dynamics, our barge utilization is good, and we've realized modest rate improvements. Strong demand in Distribution and Services is contributing to further growth in our backlog. While supply chain issues are expected to persist for the foreseeable future, the outlook for the market is strong. We continue to focus on working safely, efficiently, and responsibly to meet and exceed our customer needs and expect to drive incremental earnings growth into 2023 and into 2024. I'll talk more about our outlook later, but first I'll turn the call over to Raj to discuss the fourth quarter segment results and the balance sheet. Thank you, David, and good morning, everyone. In the fourth quarter of 2022, Marine Transportation revenues was $423 million, and operating income was $47 million, with an operating margin of 11.1%. Compared to the fourth quarter of 2021, Marine revenues increased $72 million, or 21%, and operating income increased $21 million of 82%. Compared to the third quarter of 2022, Marine revenues were down 2% and operating income increased by 12%. As David mentioned, the historic low water conditions on the Mississippi River, as well as freezing weather along the Gulf Coast that curtailed refinery and plant utility late in the quarter, negatively impacted operations. These negative factors were partially offset by solid underlying customer demand and improved pricing. The inland business contributed approximately 80% of segment revenue. Average barge utilization was in the 90% range for the quarter, which is similar to the utilization seen in the third quarter of 2022 and compares to the mid-to-high 80% range in the fourth quarter of 2021. Long-term inland marine transportation contracts for those contracts with a term of one year or longer contributed approximately 55% of revenue, with 60% from time charters and 40% from contracts of affreightment. Improved market conditions contributed to spot market rates increasing sequentially in the low single digits and in the low-to-mid 20% range year-over-year. Term contracts that renewed during the fourth quarter were up on average in the 10%-15% range compared to the prior year. Compared to the fourth quarter of 2021, inland revenues increased 24%, primarily due to increased barge utilization, higher term and spot contract pricing, and increased fuel rebuilds as the average cost of diesel was up 60% year-over-year. Compared to the third quarter of 2022, inland revenues were down 2%, driven by unfavorable operating conditions due to low water on the Mississippi River and winter weather. Inland operating margins were negatively impacted by a 147% sequential increase in delay days. However, the margins were in the low teens and improved both sequentially and year-over-year as delay days and inflationary cost headwinds were more than offset by gains in pricing. The coastal business represented 20% of revenues for the Marine Transportation segment. Average coastal barge utilization was in the low to mid 90% range, which compares to the 90% range in the fourth quarter of 2021. During the quarter, the percentage of coastal revenue under term contracts was approximately 65%, of which approximately 90% were time charters. Average spot market rates were up in the low to mid-single digits sequentially, and renewals of term contracts were higher in the low teen range year-over-year. During the quarter, coastal revenues increased 8% year-over-year, with improved barge utilization, higher contract prices, and higher fuel rebills. Overall, coastal had a positive operating margin in the low single digits. With respect to our tank barge fleet for both the inland and coastal businesses, we have provided a reconciliation of the changes in the fourth quarter, as well as projections for 2023. This is included in our earnings call presentation posted on our website. I'll review the performance of the Distribution and Services segment. Revenues for the fourth quarter of 2022 were $307 million, with operating income of $17 million. Compared to the fourth quarter of 2021, the Distribution and Services segment saw revenue increase by $67 million or 28%, with operating income increasing by $10 million or 127%. Compared to the third quarter of 2022, revenues decreased by $5.4 million or 2%, and operating income decreased by $5.2 million. The sequential decrease in revenue and operating income was attributed to ongoing supply chain delays, as well as some seasonal slowness in activity. In the oil and gas market, favorable commodity prices and increased rig and completions activity contributed to a 44% year-on-year increase in revenues. We experienced strong demand for new engines and parts throughout the quarter. As David mentioned, we continued to navigate a tough supply chain environment, especially in our manufacturing business. Despite the supply chain headwinds, the manufacturing business experienced continued favorable trends in new orders and backlog. Overall, oil and gas represented approximately 42% of segment revenue in the fourth quarter and had operating margins in the low single digits. On the commercial and industrial side, strong activity contributed to an 18% year-over-year increase in revenues with improved demand for equipment, parts, and service in our marine repair and on-highway businesses. Power generation was also up year-over-year. Compared to the third quarter of 2022, commercial and industrial revenues increased by 8%. Our Thermo King business continued to experience delays due to supply chain constraints that impacted revenue growth. This headwind was offset by increased activity in marine, power generation, and on-highway repair. The commercial and industrial business represented approximately 58% of segment revenue and had an operating margin in the high single digits during the fourth quarter. I'll turn to the balance sheet. As of December 31st, we had $81 million of cash with total debt at $1.1 billion, and our debt-to-cash ratio improved to 26.2%. During the quarter, we had cash flow from operations of $132.9 million, and we generated cash proceeds from asset sales of retired marine equipment of $4 million. We used cash flow and cash on hand to fund $52.3 million of capital expenditures or CapEx, primarily related to maintenance of equipment. During the quarter, we decreased debt by $39 million. There were no repurchases of company stock during the quarter, given the blackout associated with the company's strategic review. As of December 31st, we have total available liquidity of approximately $585 million. For 2023, we expect to generate cash flow from operations of $480 million-$580 million. We continue to work through supply chain constraints that are challenging working capital in the near term. We expect to unwind most of this working capital as orders ship in 2023 and into 2024. With respect to CapEx, we plan to provide further guidance on 2023 expected CapEx later this year as we gain more clarity on projects, including planned shipyards and the impact of supply chain delays. We are committed to a balanced capital allocation approach and will use this cash flow to opportunistically return capital to shareholders and continue to pursue long-term, value-creating niche investment and acquisition opportunities. I will now turn the call back to David to discuss the remainder of our outlook for 2023. Thank you, Raj. As discussed, we achieved strong fourth quarter results in both our segments, and we expect that to continue into the first quarter. In marine, steady demand, driven in large part by high refinery utilization and chemical plant utilization, should continue to support high barge utilization. Limited new barge construction combined with inflationary pressures are expected to further support inland rate increases. While all of this is very encouraging, we are mindful of the ever-changing economic landscape and the potential recession. We continue to expect refinery and petrochemical plant activity to remain high with an increase in customer volumes. Barge availability is constrained as there is minimal new barge construction expected in 2023. These positive factors are expected to contribute to our barge utilization running in the low to mid 90% range for the foreseeable future. These favorable supply and demand dynamics are expected to drive further improvements in the spot market, which currently represents approximately 40% of our inland revenues. We also expect continued improvement in term contract pricing as renewals occur throughout the year. Overall, we expect inland revenues will grow approximately low double digits year-over-year and expect near-term inland operating margins to average in the mid-teens and to continue to gradually improve throughout 2023 and into the year close to, if not 20%. In coastal, market conditions are expected to remain steady, but will remain somewhat challenged near term by underutilized barge capacity across the industry. Even with some market softness, Kirby's coastal barge utilization is expected to remain in the low to mid 90% range. Full year 2023 coastal revenues are expected to be flat year-over-year, driven primarily by continued good fundamentals in our core liquid cargo business and higher coal shipments in our dry cargo business, offset by the company's planned maintenance and ballast water treatment installations, which are driving an almost doubling of maintenance days compared to 2022. Operating margins for coastal are expected to be near breakeven to low single digits on a full year basis. Looking at Distribution and Services, we have a favorable outlook with anticipated strong demand for equipment parts and service and distribution and a growing backlog in manufacturing. In the oil and gas market, high commodity prices, increased rig counts, and growing well completions activity are expected to yield strong demand for manufacturing and OEM products, parts, and service in the distribution business. We expect the current commodity price environment will contribute to further increases in rig count and frac activity in 2023. U.S. land rig counts have grown to over 770 rigs, which represented a full year average increase in 2022 of approximately 28%. We expect that growth to continue into 2023. Similarly, the active frac spread count is approaching 295. With this growth, we expect to see increasing demand for engines, parts, and service in distribution. In manufacturing, we have a growing backlog position. We added new incremental orders in the fourth quarter, and we expect this trend will continue. As I mentioned earlier, we expect that supply chain issues and long lead times for OEM equipment, which in some cases are extending beyond one year, to remain a challenge. These issues are likely to contribute to some choppiness with new product deliveries, which could potentially shift between quarters in 2023 and perhaps even into 2024. In commercial and industrial, we are forecasting steady demand in on-highway, with increased on-highway and municipal repair work, continued improvement in bus ridership, and increased demand for Thermo King refrigeration products, 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 activity in the Gulf of Mexico and improved commercial markets on the East and West Coasts. For the 2023 full year, we expect revenue growth in the low double digits range for commercial and industrial. While supply chain issues are expected to continue impacting new product and equipment deliveries in Distribution and Services, we expect 2023 segment revenues will increase by 10%-20% compared to 2022, with commercial and industrial representing approximately 60% of segment revenues and oil and gas representing the remainder. We expect segment operating margins will be in the mid to high single digits for 2023. To conclude, Kirby's 2022 results showed steady improvement in the face of ongoing challenges. Both our segments performed well during the year, delivering improved revenue and operating income. Our team executed well on near-term objectives as well as our long-term strategy. We exited the year with healthy long-term fundamentals for both our businesses, and they're both very well positioned to continue delivering value. Although we see favorable markets continuing and expect our businesses will provide improved financial results, we are closely monitoring the potential for a re-recession. Having said that, as we look long term, we are confident in the strength of our core businesses, and we are confident with our long-term strategy. We intend to continue capitalizing on strong market fundamentals and 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. As a reminder, press star one one on your telephone, and to withdraw your question, press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from Jack Atkins with Stephens. Your line is now open. Okay, great. Good morning. Guys, congratulations on being able to really capitalize on the pricing opportunity in the fourth quarter. Nice work there. Thanks. I guess, you know, I would love to kind of get your thoughts as we kind of think about the 2023 outlook, David and Raj. You may want to tag team this one, but, you know, as you sort of think about sort of what's baked in there, you know, can you help us think about, you know, are you, are you factoring in any sort of mild recession, soft landing, hard landing? Kind of help us think about that. You know, to what degree do you feel like the market is gonna be able to support continued, you know, rate renewals in inland, above inflationary cost increases? Can you kind of walk us through both of those items in terms of, you know, what's baked into your outlook for 2023? Yeah, sure, Jack. Well, look, I mean, you know the market fundamentals, particularly with inland are really strong right now. Demand has continued to be strong. We're seeing refinery utilization as everybody knows, is strong. Did see a little pullback in chemicals in the fourth quarter, but that started to come back again in the first quarter, but not enough to impact kind of the demand picture. The demand picture is still very strong on inland. The supply picture is even better. You know, nobody's really building any new equipment of substance and, you know, because, well, prices are high, rates aren't anywhere close to justifying new construction. There's a big maintenance bubble that's hitting the entire inland industry for the next two years. It's really about, you know, there's a five-year shipyard major process, and it's about when most of the barges were built or a good portion of them were built a number of years ago. The industry's gonna hit a pretty heavy maintenance schedule in 2023 and 2024. That's actually gonna help barge availability remain really tight. When we look at the outlook for inland, you know, it's very strong. It's about as strong as we've ever seen it in terms of supply and demand balance. That's a long way of saying, yeah, I think the rate environment's gonna increase and continue. It needs to, by the way, if we're ever gonna get to rates that justify replacement capacity. That said, as we look through 2023, we didn't factor in a big recession at all. We think as we look at the demand for our products, most of it should continue even with a mild recession. That said, if we get a sharp down recession, that could impact us. We did not factor that into our guidance. We think we'll, you know, to use a phrase, power through this potential economic weakness. It's really all about our supply and demand position. It's about as strong as we've seen, Jack. Okay, David. That's really helpful. Thank you for that. I guess maybe kind of shifting gears, Raj, I'd like to kind of dig into the cash flow and the CapEx comment for a moment. Can you maybe walk us through why you all are not comfortable providing a CapEx outlook for 2023 at this time? You know, maybe if it's possible to kind of give a range. I think folks are trying to. You guys are generating very strong free cash flow. To me, that's a very important part of the valuation case around the stock. Any sort of help you can give us there in terms of what's going on from a CapEx perspective? Jack, good morning. Thank you. You know, you're absolutely right. We generate very strong free cash flows. You know, David mentioned the maintenance days that we're gonna have to deal with. It's an industry-wide phenomena, and we're seeing, you know, the shipyards that we're seeing, it's across the board. It's both for inland as well as offshore, right? Inland load is going up by 20%-25%. You know, we're dealing with this situation right now. We're dealing with also the supply chain issues, which also impact some of our CapEx spend as well as whatever other inflationary pressures that we're seeing. Right now there are a lot of puts and takes. The team is penciling it out. I think we should be in a position to give you a better CapEx number, more meaningful CapEx number, you know, very soon. We should be able to do that. Right now, we're not in a position to provide a real CapEx number. Yeah, I think Jack just add to that. The cash from operations is gonna be strong. Obviously, we've got a maintenance CapEx Cycle here that we're still working through. I would just tell you in terms of deployment of free cash flow, obviously, you saw the share repurchase authorization. We're pretty excited about that. You know, as you look at opportunities, kind of the best barge company go buy right now is Kirby. We're pretty excited about it. You know, we'll have updates as we progress through the first quarter. Just to follow up on that really briefly, though. I mean, you know, is there any reason why you still wouldn't be in a position to generate very healthy free cash flow in 2023, even though there's still a little bit of uncertainty around what the CapEx would be? There's not a scenario where you would not be a strong free cash flow generator this year. Is that correct? Correct. Yeah. We think we'll have good free cash flow. Yeah. Yeah. I think that's a fair statement, Jack. Okay. Thank you again for the time, guys. Really appreciate it. Please stand by for our next question. Our next question comes from Ken Hoexter with Bank of America. Your line is now open. Great. This is Nathan Ho dialing in for Ken Hoexter. Great quarter, guys. Just on David's comments on the inflationary pressures coming off a little bit on the inland side. We're just recalling back to your November update, where some of the cost items were up, 70% and above. Just wanting to see how the management team sees costs turning into 2023 and, you know, with this new backdrop of normalizing commodity costs, how does that affect the exit rates of 20% inland margins for 2023? Yeah. No, no. Inflation is still here, as is I think, most of us feel. What I would tell you on inflation is we haven't seen it grow any further. Look, you know, when we look at food for our marine crews, you know, those prices are up 10%, but they haven't gone further up. It's still a lot higher than we've traditionally had. You look at crew transportation, whether it's rental cars or airline flights, those costs are up significantly from kind of the norms. Anything electronic related, for example, radars or things on our boats are still up. What I would say, you know, if maybe we didn't state this right in our prepared remarks, inflation hasn't come down, but it hasn't grown any further. We'd like to say that's abating, but we haven't really seen prices contract. We've just seen them not go up as much as they were. They're kind of flattish from where they were last quarter. You know, that helps. Obviously, we've needed price increases just to keep up with inflation. You know, if inflation stays in check and doesn't grow any more, you know, that obviously would help our margin profile and kind of get to where we talked about in our prepared remarks in terms of the end of the year. Now, if inflation goes up further, that's gonna obviously have an adverse effect to margins. Right now we feel pretty good that things are kind of flattening out. Obviously, the Fed, we'll see what they do today, is being very aggressive to tame inflation. You know, that's good and bad. Obviously, we hope it doesn't trip us into a recession. I see. Just to clarify, on the margin targets set for 2023 across the segments, that's baking in sort of a flattish cost structure into this year. Would that be correct? Yeah. Flattish in terms of general inflationary things. Obviously, we're gonna have, you know, crew labor costs go up. I think everybody's seeing labor costs continue to rise. That obviously is gonna happen. You know, we factored a little bit of that in. You know, if it gets acute, we'd have some headwinds. Right now, we factored in a little labor inflation. The rest of the inflationary pressures we think will just kind of stay where they are at. We don't anticipate any sharp price increases across most of our supply chain. Great. Just as a follow-up on the capital strategy into 2023, I'm aware that the CapEx plan is still in the works. In terms of capital deployments, are there any updates on how the company's seeing M&A into 2023? How are you viewing, say, the availability of opportunities here? You know, there are opportunities out there. You know, it's best for us not to comment on any of those. Look, there are opportunities out there. I would tell you, look, we've had a history, and we always like to consolidate, particularly our inland tank barge market. That said, you know, I feel strongly, and the, and the board does too, that, you know, the best barge company to buy right now is Kirby. When we look at our prospects, in marine and in our distribution business, it's about as good as we've seen in a long while. We're, we're quite excited and we believe that it's gonna be multi-years. It's not just one year kind of phenomena. When we look at capital deployment for acquisitions, you know, we're factoring in, you know, Kirby looks pretty good right now. Got it. Thanks again for the time. Please stand by for our next question. Our next question comes from Gregory Lewis with BTIG. Your line is now open. Yeah. Hi, thank you, good morning, everybody, and thanks for taking my question. Hey. It's definitely good to see inland starting to find its groove. I did wanna touch a little bit on kind of the, you know, I guess, ongoing dynamics in that market. You know, a lot of us that follow, you know, the refinery products industry are looking at that Russian oil embargo on products that's coming out in February and some of the challenges that kinda, you know, the refining industry might, you know, have to face or, you know, actually more of an opportunity than challenges, I guess. As we think about that coming next month, is there any way we can think about or, how are you thinking about potential changes in activity, feedstocks? You know, we're hearing a lot about, you know, obviously there's gonna be problems with VGO. You know, what type of setup should we think about that creating, you know, in the first part of this year? Yeah. Well, let's, let's break it into a few of our trade lanes. I don't wanna get too specific for obvious reasons with competitors and customers. Look, the refinery complex is really strong right now. Demand for refinery type refined product moves is very, very strong right now. It's probably the strongest we've ever seen it. Yeah, I think a lot of that is kind of reopening. You know, we're also seeing export volumes look pretty good. You know, look, the refiners had great crack spreads, and they're pulling back a little bit, but they're still, you know, in terms of traditional crack spreads, are still pretty strong. You know, the refinery complex in the U.S. is probably the most efficient in the world. You know, I think, you know, refineries in Europe, that's a whole another situation. If you pivot to chemicals, it's really more of the same, right? The chemical complex in Europe, obviously with natural gas prices high and energy prices high, it's really suffering. The U.S. position in chemicals, one, you've got brand new plants or very efficient plants that were recently built in the last four or five years. You know, good feedstock position. Chemicals though, did pull off a little bit in the fourth quarter. They've been coming back slowly here so far in the first quarter. It's a little early to say, you know, how far that's gonna go. Obviously, when you listen to the chemical companies' earnings calls, Europe is hurting them a little bit on housing. Housing starts hurting them a little bit as well. So far it feels pretty good and things are the volumes haven't pulled off enough to really impact our demand and supply picture. When you look at black oil and other things, that's pretty strong. I will tell you know, we talked about the maintenance bubble that's hitting the industry. I would tell you it's more acute in black oil than it is in anything else. There's a huge number of black oil barges that are gonna have to be maintained across the industry in 2023 and 2024. Demand seems to be holding up in black oil. If you look at ag products, that's been pretty strong as well. Yeah, we look at each of those trade lanes and have been very encouraged by the demand picture. That said, and you heard it in my cautionary comments about a potential recession, I mean, it could come, it could pull back a little bit. Right now, when we look at the demand side of things and the supply, it's still really positive for us, Greg. Okay. That's great, that's great to hear. You know, you did touch a little bit on pet chem plant. You know, I guess, you know, Q1 is seasonally, you know, the weak quarter for you. You know, I guess maybe, you know, given the fact that we've seen, I guess, what, natural gas prices down 30% year-to-date, could that collapse in natural gas prices maybe help Q1 be a little less weak, just given the fact that, you know, as a pet chem plant, you know, that's gotta be, you know, much more profitable environment than we were, say, six to eight weeks ago. Yeah. Look, you're right. Our first quarter is almost always our weakest quarter of any year, and that's really weather related, you know? You know, it's one thing with low water, but fog just really shuts us down on the Gulf Coast through the first quarter a lot. I mean, we get impacted. That's part of the weakness. To your point, I think, you know, natural gas prices being a little lower certainly is gonna help the chemical complex be a little more profitable, which should help volumes a bit. Then I think at some point we're gonna see China open back up and, you know, China's a big consumer of chemicals, as you know. The other interesting thing that, you know, Venezuelan crude, for example, imports. That's positive. It gets a heavier crude slate into the Gulf Coast, that has more byproducts, as you know, that really help the entire barge complex, just all the different derivatives that can come from a heavy crude slate. You know, maybe that helps a little bit in the first quarter. Look, first quarter, as you know, it's been our weaker quarter of the year. Again, the overall supply-demand picture for us in 2023 is very robust and we're pretty excited about what we see in front of us, Gregory. Okay, great. Thank you very much and nice job on the quarter, guys. Thanks. Have a great day. Thanks, Gregory. Please stand by for our next question. Our next question comes from Gregory Waszkowski with Webber Research. Your line is now open. Yeah. Hey, David and Raj. How you doing? Good. Good morning, Gregory. Good morning, Gregory. Yeah, thanks. Thanks for taking the questions. First one, David, curious if you can you just talk about what you've seen with rate movement so far, or through Q4 and so far into Q1? I know it's a smaller sample size, but from what we've seen, there's been maybe a little bit of a plateau in that period. Could you comment on that? Then maybe revisit your thoughts around, you know, the pace of the, of the recovery versus the overall sustainability of the recovery, that relationship, where we were towards the back end of 2022 versus how 2023 is shaping up from a sustainability perspective would be great. Sure. Sure, Gregory. Look, if you, in our prepared remarks, you probably heard some of this, but, you know, sequentially, we saw spot rates up mid-single digits. You know, that was off of a very strong third quarter. You know, fourth quarter sequentially was still up mid-single digits on spot. You know, contract. Then if you look at spot year-over-year, it was still up 20%+ from a year-over-year on spot. Term contracts were up double digits, which, you know, that's on a year-over-year basis, which is pretty strong. I would tell you, we're still seeing a good pricing environment. It's still very tight and prices are still rising. Really haven't felt a plateauing. You know, maybe some of the market checks are seeing that, but we're not. It's still very, very strong. It needs to be. I mean, it's, you know, we've talked about inflationary pressures, but, you know, we've got a situation where we're still a long way away from having rates to build replacement capacity. You know, we need to continue with a good price momentum. Given as tight as we're seeing it in terms of supply and demand, you know, we're not seeing a pullback in rates at all. Again, like, you know, I talked a little bit about the maintenance cycle that the industry's gonna see. It's gonna have a profound impact, too. Profound is probably too strong a word, but it's certainly gonna add some momentum to this. That's a long way of saying, again, we're pretty optimistic. You know, you can get noise in the winter months. I'll just say that. Maybe I don't know what your market checks are telling you, but sometimes you hear some noise in the winter months. Again, we're very positive, Gregory. Okay, great. That's helpful. Thanks, David. Somebody's gotta ask about DNS, so I guess I'll do it. Are you expecting to... I'm just trying to see like kind of where that stands heading into 2023 now that the, you know, strategic review is closed. You know, are you still expecting to kind of market that business for sale into 2023? You know, are you only entertaining unsolicited offers at this point? Obviously, you know, under the caveat that you're always evaluating all options for shareholder value, yada, yada, you know. Just trying to see how front of mind this is for going into 2023, or, you know, is it more of, in the rearview mirror at this point? Yeah, it's more in the rearview mirror. But look, I mean, you said it well. We're always open, always open to ways to add shareholder value. Should the market change or something happen that makes, you know, makes a spin-off make sense, we'd absolutely look at it. That said, the business is really strong right now. We've had good inbound. Our electrification kind of product offerings are very strong. EFRAC is doing really well. You know, whether it's backup power generation, that's always also doing well. If you think about it, everybody wants power 24/7. When you start worrying about the fragility of the grid, that makes even more sense. You know, on highway, our commercial industrial business is strong. Our marine repair business is strong. As we look at KDS, going into 2023 and into 2024, it feels pretty good. Kind of reiterating some of our thoughts about Kirby. You know, both our marine business and our KDS business are in good solid upswings that we feel will last for several more years. KDS is strong. That said, you know, I'll go back to the way you phrased it. We're always open to ideas. You know, we ran a very thorough process on this, and, you know, we're focused on executing our strategy right now. If something changes, I absolutely look at it. Okay. Got it. Thanks a lot, guys. Thanks. Please stand by for our next question. Our next question comes from Benjamin Nolan with Stifel. Your line is now open. Hey, David, can you hear me okay? Yeah. How are you doing, Benjamin? Oh, great. I'm doing well. How are you guys? Good. Good. I wanted to, if I could, just circle back to where we were just left off on the DNS side, and then also mix it in there a little bit with what you were talking about with respect to pricing for inflation. The margins were a little bit lower than I thought, given sort of everything that's going on in tracking equipment and the pricing power that seems like it should be there. Should we think of that as just a function of there's been a lot of inflation in that market, and so you've had a lot of pricing power, but it's basically kept up with inflation now to the extent that maybe inflation is beginning to moderate? That's really where you should see margins. Is there some sort of economies of scale dynamic where now you get to a certain point where, you know, margins just inflect because you're able to do a little more volume? How should we think about the margin profile on that side of the business? No, I think you characterized it very well. I think, you know, inflation, we've been raising prices in DNS, you know, it's basically kept pace with inflation. The other thing we have is a little bit of a supply chain kind of margin erosion. Let me give some context around that. You know, talk about a million-dollar piece of equipment with, you know, 400 to 1,000 parts, all of a sudden you can't get some parts, certain parts. You re-engineer a replacement part. You know, this is pretty sophisticated equipment, and we like to make sure we've, you know, nailed the engineering down. Every time you shift a source or shift a part design or something to meet a supply chain headache, it adds a little cost. There's that dynamic as well. It's an inflation and a supply chain dynamic that's impacting margin. That said, you know, our guys are pushing price and they need to, right? I mean, we've got to offset these costs. But I would just say on particularly on our KDS manufacturing, the supply chain has been really, really tough. It's, I think it's not new. I mean, everybody's saying it. But, you know, some of our OEMs, for some engine deliveries, we can't get engines for until 2025, you know, even ordering now. The supply chain issues are still real. But it's something we're working through. You know, the good news is demand from our customers is there. And it's really us in hand-to-hand combat, you know, dealing with delays that come inevitably, you know, when you've got a parts list that runs in the hundreds and, you know, you're short one or two parts that are key to finishing the equipment. That said, you know, we're keenly focused on getting KDS margins up into the high single digits, and got the whole organization working hard towards that. Okay. That's a helpful color. I appreciate it. I wanted to talk a little bit about just barge supply. You mentioned it with respect to supply and demand pricing and everything else. You know, we've seen that, what, I think there were 22 tank barges delivered last year, some ridiculously small number. It would seem to me that there's probably likely to be a shrinking of the barge fleet this year, and that would lend itself to substantially higher secondhand prices. I was wondering if you could maybe characterize that. To that end, sort of how do you feel about buying equipment or, you know, other companies if there is a little bit of, you know, price escalation for secondhand equipment? Yeah, I think you hit on one of the reasons we actually think Kirby is a great barge company to buy. No, you're right. I mean, with the maintenance cycle that we've talked about here on the inland side, you know, a lot of companies are gonna be taking their barges in for their five-year maintenance cycle and look at it, and they'll just say, "Man, it doesn't make sense to continue it." We will see retirements over the next two years because of this maintenance cycle. With little building, and a pretty heavy maintenance cycle, you should see some pretty healthy retirements over the next few years, which to your point, is going to help the supply demand situation get even tighter, but it's gonna make people look for equipment. You know, as you know, we're pretty disciplined about that. You know, we're certainly not gonna chase a consolidating move, particularly when we feel as strong as we do about Kirby's outlook. Okay. That's helpful color. Appreciate it. Thanks, David. Thanks, Benjamin. As a reminder, to ask a question, please press star one one on your telephone. Please stand by for our next question. Our next question comes from William Baldwin with Crescent Securities. Your line is now open. Hey, good morning, William. Thank you very much, good morning, David, Raj, Kurt. Good morning. Raj, could you comment a little bit on the cash from operations here in the fourth quarter? Looked like that, at least based on what you were talking about at the end of the third quarter, that didn't come quite at the level that you had anticipated. Could you talk about the factors that number one, am I interpreting that correctly? Secondly, if so, what contributed to a little bit of a shortfall there? Yeah, William. You are right. You know, cash from operations in the fourth quarter missed our expectations, and that was driven actually by on the DNS side. We had inventory build and, you know, I think between David and I, we've used the word supply chain quite a fair bit on this call, but it's a true phenomena. We've had issues in terms of getting product shipped out. What's happened is that's resulted in a build of working capital in the fourth quarter. My expectation is as we get into the 2023 time frame, you know, we will ship those products. Whatever that's in work in progress right now will get, you know, will go into finished goods over in 2023 and get shipped out. Yes, you know, we put ourselves out there. We set ourselves a higher expectation. We tried to execute to it, but supply chain challenges, you know, just got the better of us. Yeah, just to put a little color on that, Bill. You know, we probably had $50 million worth of sales at KDS that didn't materialize, that we would have expected in normal supply chain environments to have materialized in the fourth quarter. If you think about, you know, construction in progress or WIP, work in progress, you know, those inventories are higher. Our working capital certainly is a lot higher than we like, and the bulk of that is from supply chain issues. There's also a phenomenon on receivables. I think with higher interest rates, we've seen customers, you know, push out their payables, which are our receivables. We've seen a little build in working capital. You know, we've got to go after that, but it, you know, it's something that's perhaps the economy related and supply chain related. That's very helpful. Thank you. Secondly, I was going, you know, on the supply chain issues. You mentioned engines, being a very critical product that's not being delivered. Are there any other important components or parts that you could highlight that are giving you a real issue on supply chain, you know, on shortages? Yeah. There's an electric componentry on the EFRAC side and kind of the natural gas reciprocating power generation side. For example, things like electric panels. You know, you would think that would be a pretty easy thing, but there's a lot of pieces and parts related to electrification that are jammed up in the supply chain. Is there any visibility there, David, as you look out in 2023? I mean, do you have any, you know, line of sight on meaningful improvements? Yeah, we do. I mean, you know, each component, we put our supply chain team on it and they get a path forward. Then, you know, something else, they, you know, Raj calls it Whac-A-Mole. It's kind of like the game Whac-A-Mole. You pound down on one, then, you know, some other supply chain piece pops up. It is component by component. We, you know, we get in a pinch on a component, we work with the supplier, work with alternative sources, re-engineer some things, and get it back lined out. Then, frankly, something else pops up. Yeah. It's a bit frustrating. Look, we're managing through it. We still had a pretty good revenue, quarter in KDS. You know, it's just, we're still taking inbound and delivering. It's just the deliveries are taking longer. Yeah. William, if I could add, you know, our book-to-bill is above one. That's, you know, it's a very healthy, you know, order rate that we're looking at. It's not for lack of demand, to David's point. No, I know. It's gotta be very frustrating. For sure. Also, it seems like, I mean, a number of your product lines obviously have applications far beyond the oil and gas business. You got opportunities that you could be out there going after that are just right now you're limited on doing. No, we're look, the just the electrification, you know, whether it's a microgrid or whatnot. It is amazing. I am. You know, when we look at our, for example, our backup power rental fleets, our utilization last year, even with a light hurricane storm season, our utilization was probably the best it's been. It's just every company needs and wants to have power 24/7. The electrification of the U.S. and the world for that matter seems to be a real phenomenon. It's actually driving many opportunities from design and new product standpoint for KDS. Just one last really clarification, David, If I read correctly in the release, you indicated that in the inland barge business, you were looking for a small net increase in net new barges in 2023. What I hear on the call would not lead me to think that's gonna be the case. Yeah, maybe- Did I read that correctly in the release that there'd be a net increase? Maybe for us. You know, we had some barges on the bank that we brought back, maybe, but it was only a handful. Yeah, it was two. Kurt's giving me the peace sign here. That relates to Kirby and not the industry then, is what you're saying. Correct. Yeah. I, you know- Okay. We don't see any, you know, as I think one of, maybe Benjamin said it, that, there was 22 barges built last year. Right. In the industry. Yeah, that's about right. You know, the order book from what we hear is anemic. Yeah, we don't see anybody building. Now, there could be some people that, you know, tied up some barges during the pandemic, there may be some of those coming back. Again, I think you see a net decline in barges- Right. In 2023. Right. Well, I knew that had been your expectation for, you know, for quite a while. I just misinterpreted what was said in the release there. That comment pertained to Kirby, not the industry. That clarifies it. I appreciate it. Thank you very much. All right. Thanks. All right. Have a good day. 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, operator, and thank you everyone for joining on the call today. If you have any follow-up questions, please feel free to reach out at me at 713-435-1077. Thank you. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.