Good day, and thank you for standing by. Welcome to the Kirby Corporation 2024 Q2 earnings conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a Q&A session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Mr. Kurt Niemietz, Kirby's Vice President of Investor Relations and Treasurer. Please go ahead. Good morning, and thank you for joining the Kirby Corporation 2024 Q2 earnings call. With me today are David Grzebinski, Kirby's Chief Executive Officer; Christian O'Neil, Kirby's President and Chief Operating 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. 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. A list of these factors can be found in Kirby's latest Form 10-K and in our other filings made with the SEC from time to time. I will now turn the call over to David Grzebinski. Thank you, Kurt Niemietz, and good morning, everyone. Before we begin, I'd like to recognize our employees, especially our Texas-based team members, that were recently impacted by Hurricane Beryl. Their lives were disrupted, and many were left without power for several days, and actually up to a week or two, but they remained focused on and continued to meet the needs of our customers and business, as well as support each other during this event. I want to thank them for their exceptional efforts and resilience during this challenge. Now, turning to the Q2 earnings. Today, we announced earnings per share of $1.43, which compares to 2023 Q2 earnings of $0.95 per share. Our Q2 results reflected steady market fundamentals in both marine transportation and distribution and services, even though we experienced some modest weather and navigation challenges for marine and continued supply challenges in distribution and services. These headwinds were mostly offset by good execution. Solid demand in both marine and distribution and services continued during the quarter and led to strong financial performance. In inland marine transportation, our Q2 results reflected continued pricing momentum with a modest impact from poor navigational conditions due to weather and lock delays. From a demand standpoint, customer activity was steady, with barge utilization rates running in the low- to mid-90% range throughout the quarter. Spot prices increased in the low- to mid-single- digits sequentially and in the mid-teens range year-over-year. Term contract prices also renewed up higher, with mid-single-digit increases year versus a year ago. Overall, Q2 inland revenues increased 11% year-over-year, and margins were in the low-20% range. In coastal, market fundamentals remained steady, with our barge utilization levels running in the mid- to high-90% range. During the quarter, we saw strong customer demand and limited availability of large capacity vessels, which resulted in high-teens% increases on term contract renewals year-over-year. Average spot market rates increased in the high- single- digits sequentially and in the mid-20% range year-over-year. These increases helped to soften continued inflationary pressures, particularly with shipyards, and helped partially offset the capital expense from the addition of ballast water treatment systems. Overall, Q2 coastal revenues increased 24% year-over-year and had an operating margin in the low-teens% range. Turning to distribution and services, in total, demand was stable across our end markets, with sequential growth in revenue and operating income. In power generation, revenue grew 9% year-over-year, and the pace of orders was strong, with several large project wins from backup power and other industrial customers as power continues to become more critical. In oil and gas, revenues were down year-over-year, but up 22% sequentially, driven by some growth in our e-frac business. In our commercial and industrial market, revenues were up 9% year-over-year and 16% sequentially, driven by steady demand across our different businesses, with growth coming from the Thermo King product deliveries. In summary, our Q2 results reflected ongoing strength in market fundamentals for both segments. The inland market is strong, and we see continued pricing momentum.... In coastal, industry-wide supply-demand dynamics remain very favorable, our barge utilization is strong, and we are realizing real rate increases. Increased demand for power generation and distribution and services is mostly offsetting softness in oil and gas areas. I'll talk more about our outlook later, but first, I'll turn the call over to Raj Kumar to discuss the Q2 segment results and balance sheet in more detail. Thank you, David Grzebinski, and good morning, everyone. In the Q2 of 2024, marine transportation segment revenues were $485 million, and operating income was $95 million, with an operating margin around 20%. Compared to the Q2 of 2023, total marine revenues increased $58 million, or 14%, and operating income increased $31 million, or 48%. Compared to the Q1 of 2024, total marine revenues, inland and coastal combined, increased 2% and operating income increased 14%. As David Grzebinski mentioned, weather and lock delays modestly impacted operations as heavy rains in the Houston area briefly closed the ship channel and two major locks on the lower Mississippi River were closed for repairs. This led to a 44% increase in delay days year-over-year, but these headwinds were offset by solid underlying customer demand, improved pricing, and most importantly, execution. Looking at the inland business in more detail. The inland business contributed approximately 81% of segment revenue. Average barge utilization was in the low- to mid-90% range for the quarter, which is similar to the Q1 of 2024 and the Q2 of 2023. Long-term inland marine transportation contracts, or those contracts with a term of one year or longer, contributed approximately 65% of revenue, with 59% from time charters and 41% from contracts of affreightment. As David Grzebinski mentioned, improved market conditions contributed to spot market rates increasing sequentially in the low- to mid-single- digits and in the mid-teens range year-over-year. Term contracts that renewed during the Q2 were up on average in the mid-single- digits compared to the prior year. Compared to the Q2 of 2023, inland revenues increased 11%, primarily due to higher term and spot contract pricing. Inland revenues increased low to mid-single- digits compared to the Q1 of 2024. Inland operating margins improved by around 300 basis points year-over-year, driven by the impact of higher pricing and continued cost management, which helped stave off lingering inflationary pressures. Now moving to the coastal business. Coastal revenues increased 24% year-over-year due to higher contract pricing and fewer shipyards. We had one large vessel conclude its planned shipyard and reenter service during the quarter. Overall, Coastal had an operating margin in the low- teens range, resulting from higher pricing and shipyard timings, which will temporarily reverse in the Q4. The Coastal business represented 19% of revenues for the marine transportation segment. Average Coastal barge utilization was in the mid- to high 90% range, which is in line with the Q2 of 2023 and the Q1 of 2024. During the quarter, the percentage of Coastal revenue under term contracts was approximately 100%, of which approximately 97% were time charters. Average spot market rates were up in the high- single- digits sequentially and in the mid-20% range year-over-year. Renewals of term contracts were higher in the high teens range on average year-over-year. With respect to our tank barge fleet for both the inland and coastal businesses, we have provided a reconciliation of the changes in the Q2, as well as projections for 2024. This is included in our earnings call presentation posted on our website. At the end of the Q2, the inland fleet had 1,093 barges, representing 24.2 million barrels of capacity. On a net basis, we expect to end 2024 with a total of 1,096 inland barges, representing 24.3 million barrels of capacity. Coastal marine is expected to remain unchanged for the year. Now I'll move on to review the performance of the distribution and services segment. Revenues for the Q2 of 2024 were $340 million, with operating income of $29 million and an operating margin of 8.7%. Compared to the Q2 of 2023, the Distribution and Services segment revenue decreased by $11 million or 3%, while operating income was flat year-over-year. When compared to the Q1 of 2024, segment revenues increased by $7 million or 2%, and operating income increased by $7 million or 34%. In power generation, our revenues tied to non-oil and gas end markets were up 16% sequentially and 87% year-over-year, driven by strong demand as we continue to see significant orders from backup power, data centers, and other industrial customers for power generation equipment and backup power availability. Our power generation revenues tied to the oil and gas space were down sequentially and year-over-year, as product delays continued to contribute to lumpiness. Altogether, power generation revenues were up 9% year-over-year, while operating income was up 16% year-over-year, with operating margins in the low- double- digits. Power generation represented 32% of total segment revenues. On the commercial and industrial side, steady activity in the marine repair and growth in Thermo King product sales offset lower activity in other areas, particularly on-highway truck service. As a result, commercial and industrial revenues were up 9% year-over-year. Operating income increased 38% year-over-year, driven by favorable product mix and ongoing cost savings initiatives. C&I made up 49% of segment revenues, with operating margins in the high-single-digits. Compared to the Q1 of 2024, commercial and industrial revenues increased by 16% as a result of stable demand in most areas and higher Thermo King product shipments. Operating income was up 45% over the same period, driven by favorable product mix. In the oil and gas market, we continue to see softness in conventional frac-related equipment as lower rig counts and lower fracking demand tempered demand for new engines, transmissions, and parts throughout the quarter. This softness is being partially offset by solid execution on backlog and new orders of e-frac equipment. Revenues in oil and gas were down 33% year-over-year, but increased 22% sequentially. Oil and gas represented 19% of segment revenues in the Q2 and had operating margins in the low- to mid-single- digits. Now I'll turn to the balance sheet. As of June 30th, we had $54 million of cash with a total debt of around $1.05 billion, and our debt-to-cap ratio was 24.3%. During the quarter, we had net cash flow from operating activities of close to $180 million. Q2 cash flow from operations saw a working capital reduction of approximately $10 million. We continue to target unwinding more working capital as the year progresses and into 2025. We used cash flow and cash on hand to fund $89 million of capital expenditures, or CapEx, primarily related to maintenance of marine equipment. During the quarter, we also used $43.7 million to repurchase stock at an average price of $117. As of June 30th, we had total available liquidity of approximately $488 million. For 2024, we remain on track to generate cash flow from operations of $600 million-$700 million, driven by higher revenues and EBITDA. We still see some supply chain constraints posing some headwinds to managing working capital in the near- term. Having said that, we are targeting to unwind this working capital as orders ship in 2024 and beyond. With respect to CapEx, we expect capital spending to range between $300 million and $330 million for the year. Approximately $200 million-$240 million is associated with marine maintenance, capital, and improvements to existing inland and coastal marine equipment and facility improvements. Approximately $90 million is associated with growth capital spending in both of our businesses. The net result should provide approximately $300 million-$350 million of free cash flow for the year. As always, we are committed to a balanced capital allocation approach, and we'll use this cash flow to return capital to shareholders and continue to pursue long-term, value-creating investment and acquisition opportunities. I will now turn the call back to David Grzebinski to discuss the remainder of our 2024 outlook. Thank you, Raj Kumar. While we exited the quarter with continued momentum in our businesses, the beginning of the Q3 was challenged by Hurricane Beryl. The hurricane impacted our marine operations and temporarily shut down some of our D&S locations due to power outages. Our teams worked hard despite the challenging environment, and we're pleased to have quickly returned to normal operating conditions. Despite these challenges, pricing in the marine market continues to improve and demand is strong, and our D&S businesses continue to hold steady. With favorable fundamentals in the second- half of the year, we expect year-over-year earnings growth to be at the high end of our original guidance of 30%-40% growth. For some more detail on marine, our outlook remains strong for the remainder of the year, driven in large part by limited availability of equipment and continued high refinery activity and improving chemical plant utilization. Specifically, in inland marine, we anticipate positive market dynamics due to strong customer demand and limited new barge construction. With these strong market fundamentals, we expect our barge utilization rates in inland to be in the low- to mid-90% range throughout the remainder of the year. These favorable supply and demand dynamics are expected to drive further improvements in the spot market, which currently represents approximately 35% of inland revenues. We also expect continued improvement in term contract pricing as renewals occur throughout the remainder of the year. These increases are necessary as we continue to see inflationary pressures, and there is an acute mariner shortage in the industry, driving up labor costs. Also, for the Q3, although we expect an increase in required regulatory maintenance activity to be a headwind to margins, this should be offset by pricing gains. That said, we expect operating margins will gradually improve during the remainder of the year from the Q2 levels and average just over 20% for the full year. Overall, inland revenues are expected to grow in the high- single-digit to low- double-digit range on a full year basis. In coastal, market conditions remain very strong, and supply and demand is favorable across the industry fleet. Strong customer demand is expected throughout the year, with our barge utilization in the low- to mid-90% range. With major shipyards and ballast water treatment installations behind us, revenues for the full year are expected to increase in the low double-digit to mid-teens range compared to full year 2023. We expect stable margins in the Q3, with a number of planned shipyards in the Q4, adding together to have coastal operating margins to average in the low- double-digit range for the full year. In Distribution and Services, we continue to see an uptick in demand for our power generation products and services, and we continue to receive new orders in manufacturing, both of which are helping to soften the inherent volatility in our oil and gas markets. On the demand side, despite the uncertainty from volatile commodity prices, we expect incremental demand for parts, products, and services in the segment. In commercial and industrial, the demand outlook in marine repair is strong, while on- highway, impacted by a rather large trucking downturn, is somewhat weak, with the exception of refrigeration products and services. In power generation, we anticipate continued growth as data center demand and the need for backup power is very strong. In oil and gas, activity levels are lower but seem to be bottoming. We do anticipate extended lead times for certain OEM products to continue, and that will contribute to a volatile delivery schedule for new products in 2024 and into 2025. Overall, the company expects segment revenues to be flat to slightly down on a full year basis when compared to 2023, and operating margins to be in the mid to high-single-digits, maybe slightly lower year-over-year due to mix. To conclude, overall, solid execution and favorable market conditions led to a strong first- half of the year for us, and we have a favorable outlook for the remainder of the year. We see growth coming in at the higher end of our previously guided range, and as Raj Kumar mentioned, our balance sheet is strong, and we expect to generate significant free cash flow this year. We see favorable markets continuing and expect our businesses will produce strong financial results as we move through the remainder of this year. As we look long- term, we're confident in the strength of our core businesses and with our long-term strategy. We intend to continue capitalizing on these fundamentals and will drive shareholder value creation. Operator, that concludes our prepared remarks. Christian O'Neil, Raj Kumar, and I are now ready to take your questions. Thank you. At this time, we will conduct the Q&A session. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. As a reminder, we ask that you please limit your question to one question and one follow-up. Please stand by as we compile the Q&A roster. Our first question comes from the line of Greg Lewis at BTIG. The line is yours. Yes, thank you, and good morning, everybody, and thanks for taking my questions. You know- Good morning, Greg Lewis. Yeah, good morning. I was hoping if you could talk a little bit more about coastal. I mean, you know, this has been a long time coming. It feels like, you know, coming out of a really long, extended, multiyear down cycle. You know, as you see what's happening in that market and, you know, I can appreciate, you know, no one's really ordering new equipment, you know, how much of this, you know, strength in coastal is really being driven by, you know, just increasing demand? And if it is that, could you talk a little bit about that, or has it really been, you know, a little bit of that and some fleet rationalization? As you think about where we are, I know you always talk about, you know, inland in terms of, you know, economics around new builds. You know, as you think about where we are in coastal, you know, how far away are we from that also, those kind of new build economics that make sense? Yeah, sure. Look, it's really tight on a supply and demand standpoint. To take the demand first, you know, the demand's strong. It's up from where it used to be. You know, I think part of that's just coming back out of COVID. You're seeing more refined products moving around the U.S. Yeah, diesel, gasoline, jet fuel demand's up. You can look at, you know, some of the international flights now have picked up. And, you know, all that's helping the ecosystem from demand standpoint. So we're, you know, we're moving around a lot of refined products. There's a little bit of renewable diesel moves that are emerging as well. So demand's good. On the supply side, that's where it's been really helpful. There's been a lot of rationalization, you know, as we and other industry participants looked at putting in ballast water treatment and we—you know, the capital costs. There was a lot of equipment that got retired, which was good. It brought the market back into balance, and actually, it's a very tight balance right now. You know, so that's just on the existing supply. I think the most encouraging thing is nobody's really contemplating building now. Even if somebody would, you know, the cost of building's gone up considerably. To just give you a reference point, we built a 185,000 barrel unit, ATB unit, which is a tug and a barge, oh, back five years ago, and it was $80-$85 million. I think to build that unit today would be $130 million-$ 135, million maybe. So, you know, the rates to build new equipment required are very high, so probably another 40% above where we're at right now, maybe even higher than 40%. So, you know, rates are going up. That's a good thing. I mean, you saw in the quarter, commercial's term pricing was up, our offshore coastal pricing was up in the high teens. Spot pricing was up in the mid-20%, year-over-year. So it's good. And part of that is we've, we as an industry, have to recover the cost of all the capital that went into ballast water treatment. So that's part of it. There's inflation out there, as we've talked about, you know, crew costs. There is an acute mariner shortage. We're seeing it both inland and offshore. So, you know, labor costs are going up a lot. But the bottom line is, supply and demand is very tight, and we're getting real rate increases in coastal. And that looks like it'll go for another three to five years at least, because nobody's contemplating building anything right now. Building a new barge in the coastal space, Greg Lewis, it's gonna take at least three years from where we are sitting right now. Yeah, no, no doubt. It's good to see, you know, looks like coastal definitely has a long runway. You know, I did have one more question around the inland side. You know, clearly, that market, you know, is kind of playing out the way, you know, the company really expected, maybe even a little bit ahead of that. You know, just, I guess one of the questions, you know, we're hearing about now, you know, there's some talk now of expectations of, you know, the natural gas market maybe, you know, tightening here, you know, in the medium term. As I think about the inland side, you know, pricing has been great. Any way to kind of parcel out how much of that strength has been driven by refined products versus pet chems, or is it kind of... Yeah, I'm just kind of curious. You know, we're seeing great- Yeah ... pricing everywhere, but is it more? Yeah, well, what's the real drive? What, what's driving it? Yeah, no, yeah, Christian O'Neil and I will tag team that here. You know, big picture, you know, coming out of COVID is like that refined products, that's been strong. You know, they—the, the refineries are running pretty much flat out. Their crack spreads have narrowed a little bit, but they, you know, it's been pretty good, and it's really about demand. I, you know, chemicals has been a little weak. Let me turn it over to Christian O'Neil. He's in the trenches every day with our product demand. Sure. Thanks. Good morning, Greg Lewis. You know, I think on the refined product side, you really see the strength of the U.S. Gulf refining infrastructure. You know, we've got world-class refineries, and you've seen trade patterns evolve a little bit post-COVID and with the conflict in the Ukraine, where our Gulf Coast refiners are supplying more refined products to markets in Europe, South America, Latin America. And so they've had a nice, strong run here. Our chemical customers are very steady, with maybe some upside here going in the back- half of the year. Super helpful. Thank you very much. Thanks, Greg Lewis. Take care. Thank you for your question. One moment for the next question. Our next question comes from the line of Ben Nolan with Stifel. The line is yours. Thank you, operator. Appreciate it. Hey, guys, good quarter. So I've got two questions. The first one it relates a little bit to the power side or power generation side. You talked to margins kind of now in the low- double- digits. But I remember last quarter, David Grzebinski, you'd said that you thought it was gonna be hard to really push margins there. Has that changed, or are the bottlenecks enabling you to get a little bit better pricing, or you've found ways to be more efficient? Or, what's the cause for the uplift in how you're thinking about margins? Yeah, part of it's mix. It depends on what segment we're doing in terms of power gen. But it, look, you know, Christian O'Neil's got the team focused on kind of lean manufacturing, so we're getting a little run through on that. But it, it'll vary depending on the end market a little bit. But power, the big picture is power gen's strong. You know, you saw our growth in power gen year-over-year revenue is only 9%. That seems weak, but the oil and gas part of power gen was down a little bit this quarter. And it'll vacillate, you know, quarter- to- quarter. A lot of it's based on deliveries and when it comes out of our manufacturing facilities. But the bottom line is kind of like we said in our prepared remarks, the need for backup power and to have power in any business 24/7 is just necessary. Yeah, obviously, it becomes acute during hurricanes. And that's actually where we do pretty well, is in the rental fleet of backup power. That's some of the higher margin pieces. You know, when that's needed, you know, the margins are pretty good in rental. Hopefully, that answers your question, Ben Nolan. Yeah, that's helpful. Appreciate it, David Grzebinski. And then, I guess, for my second one, you guys are just talking about labor availability among mariners, and, boy, it must be nice to be in a business that has wage inflation. But, is that creating - is it simply inflationary, or are there bottleneck issues where, you know, maybe you're not able to deliver as much as you thought you could simply because you don't have the people to do it, or are we not sort of at that level? Yeah, Christian O'Neil and I will tag team this one because we've got lots of pieces to this story. Look, it's really tight. You know, we've talked about barge supply and demand, but frankly, if we had more barges, it would be very difficult to move them because there's just not enough mariners in the boat community, and the horsepower situation is really tight. And I'm gonna get Christian O'Neil to talk about it. I mean, we're doing fine. We have our own school, and we produce our own mariners, which is good, but it is tight across the entire ecosystem, whether it's coastal or inland. I'll let Christian O'Neil add some more there, but obviously, we've had to give some really nice increases, and it's well deserved by our mariners, no doubt. But it is an acute tight market. Go ahead and add some color, Christian O'Neil. Yeah. Thanks, David Grzebinski. Hey, good morning, Ben Nolan. There's significant pressure around crewing across the industry as a whole, inland and offshore. We're competing against some pretty good paying shoreside jobs that are a challenge to kind of recruit some people back to the marine industry. I think we've been successful with our training center, and that's kind of one of our leverage points versus, you know, versus the industry. But it is a challenge. Our merit cycle for the mariners occurs in July. We just went through that and, you know, gave some healthy increases to our mariners. Happy to do that, but it's a challenge. It's just sort of the nature of attracting people to the marine life again, and we're having success, but no doubt it's a challenge for Kirby and the industry. Mm-hmm. And but, but it, it's not yet at the point where you're like, "Man, we just, we can't, we can't do, you know, whatever, XYZ business." It, it, it's not quite that level? No, it is not quite to that level, but it is a bit of a dance to every day keep everything fully crewed and moving. You know, challenges around, you know, holidays sometimes and different, you know, graduations, but we keep it going. We've got people that'll trip over. They can earn a premium to trip, and there's some leverage we pull like that to keep everything moving. We have not seen, you know, an instance where we've had to, you know, shut down any, you know, major operation. Yeah, Ben Nolan, I'd add to that, that you know, the industry is taking care of the customer base, but you know, we're having to ask a lot of people to ride longer watches and longer tours of duty, so to speak. Right. All right. Well, that does it for my two. Appreciate it. Thanks, guys. Thanks, Ben Nolan. Thank you for your question. One moment, please. Our next question comes from the line of Daniel Imbro with Stephens. The line is yours. Yeah, thanks, guys. This is Joe Enderlin on for Daniel Imbro. Thanks for taking the questions. Morning, Joe Enderlin. Morning. Morning. Just given the move higher in spot pricing on the inland side, do you have any changes in expectations on the shipbuilding side for the industry? And then, if spot prices continue to increase on the inland side, does this maybe change your thinking around the math for new builds? And how do you think this will change how competitors are thinking about shipbuilding or adding capacity? Yeah, sure. Yeah, the cost of new builds is still very high. You know, I think a new build 30,000 barrel is twice what it was five... A new build, 30,000 barrel barge is probably twice what it was five years ago. So the cost is up a lot, and the pricing needed to justify, you know, a new build is still, you know, 40% above where we are now. So that said, you know, there's not a lot of new building. I think for the year, we're hearing around 40% new barges. I think 11 have been delivered year- to- date. Yeah, that's—Christian O'Neil can talk about shipyard capacity, but, you know, it gets around to, you know, rates don't justify new builds. People are still dealing with a big maintenance bubble, which we are. So that's chewing up a lot of companies' free cash flow just to go through the maintenance bubble. And then, as we've been talking about, the marine side of things is pretty tight. So, you put all that together and nobody's really anxious to go build. I, Christian O'Neil, you want to add some color to that? Yeah. Thanks, David Grzebinski. Hey, Joe Enderlin. Yeah, so plate steel remains stubbornly high, the cost of plate steel. That certainly has created an environment where we're seeing tank barge construction being at all-time highs, as David Grzebinski outlined the numbers. You know, I think you're also seeing capacity constrained. A lot of the shipyards reduced their workforces during COVID, and, you know, by my unofficial count, I think if you looked at the inland tank barge construction shipyard market and said, "Hey, what's the capacity today?" I would tell you, it's probably down to about a build of about 50 barges a year if it was running full flat out. And I don't think you could get a new tank barge delivered right now until 2026. So that kind of gives you some context around new builds and what we're seeing. That's helpful. Thanks, guys. Just as a follow-up, within marine transportation, I guess, what are the biggest factors as far as weather, maybe navigational delays, that can maybe throw you off course for your revenue guidance? And then what steps operationally can you take to execute against any of those factors? So weather and nav delays are the two things we contend with. It tends to be a mix as to which can be more impactful in any given quarter. I'll give you an example. You know, we're coming out of Q2, a quarter where we had some lock outages due to maintenance that were pretty significant. And then really something as basic as flooding in the Houston and Texas area, you know, caused a two and 1/2 day closure of the Houston Ship Channel. You know, that's something we haven't really seen, and that, you know, as the water goes down the watershed in Texas, we get the Brazos River floodgates experienced, you know, record delays, again, something I haven't seen in 25 years. You know, there were 80 barge-90 barge tows in the queue trying to get through the Brazos River floodgates. So weather is a significant factor. Obviously, we're getting into that part of the year where you have hurricanes to worry about, and with a La Niña effect, we'll see what it looks like. But you've already had three named storms. So weather plays a big role, and then it's really the lock delays, lock outages, bridge repairs can impact navigation, and then obviously, the high water, low water issues on the Mississippi River, which we've been pretty fortunate this year. There's been, you know, a short period of high water, where we went into our high water action phase on the lower Mississippi River, but for the most part, the river's behaved itself well this year. But you do see the maintenance in the locks and the bridges and, you know, other weather events, if that helps give you some context. Got it. That's all for us. Thank you, guys. Thanks, Joe Enderlin. Thank you for your question. One moment, please. Our next question comes from the line of Greg Wasikowski from Webber Research & Advisory. The line is yours. Hey, good morning, guys. How are you doing? Good morning. Morning. Thanks for taking the questions. First one is just around higher costs and your customers. Just curious, do you think there's more of an understanding across the industry now versus this time last year or maybe even two years ago, and overall, there's just a little bit less pushback nowadays around higher prices and things like cost escalators in your contracts? Yeah, look, we have a very sophisticated customer base. They're well aware of all the levers around cost. You know, these are some of the biggest, most sophisticated companies in the world. They do understand the labor inflation piece, for sure. Obviously, they're aware of steel prices being up. You know, I think they deal with some of the same price inflation that we do. You know, that's a good thing. They understand it. They understand the capital costs have gone up. Things like ballast water treatment, which are regulatory-driven, they fully understand that. You know, they're like any other company. When business is good, they're a little less sensitive about price. When business is bad, they get hyper sensitive about it. You know, fortunately, you know, their businesses have been pretty good. What we care about, though, is their volumes. You know, they can have bad pricing, but still have the same amount of volume, or good pricing. Now, obviously, we're all in favor of them doing really well. It's good to have healthy, viable, strong earnings in our customer base. But you know, the short answer to your question, Greg Wasikowski, is they do understand the cost structure, and they acknowledge it. ... Got it. Okay, understood. And then I, I want to go back to new builds and rates in inland. And David Grzebinski, we've talked about this before. If we can just try to boil it down to talking about like a headline rate for 30,000-barrel, two-unit tow spot rates, and what that number needs to be to make the return, you know, make economic sense for people to start building again, less on spec and more for making absolute economic sense. And I feel like, you know, it used to be, we, we were talking about is probably like $10 or $11, excuse me, and then that number is inching up to maybe $12. I think I've heard as high as $14 nowadays. If you could, if you could estimate where it boils down to a, just a number to watch that headline rate of where, you know, not that there'd be any cause for worry, given industry capacity, but, where you might, might see some orders start to trickle in, just purely based off of the economics, where would you put that now? And then do you think there's risk that that continues to slide higher as, costs continue to rise with rates? Yeah, well, you're spot on. You know, that break even rate, it's not even break even. We call it to get a double-digit capital return on capital, like a 10% return on capital. Yeah, it's just it's gone up. It keeps sliding up. It's probably close to $14 now, $14,000 a day. If you look at the capital cost of a two-barge tow, it's probably $15 million, depending on the horsepower, towboat that you build for it. So that cost continues to rise. But, you know, the operating costs have gone up. We've talked about labor costs, but just regulatory compliance cost keeps going up as well. All the little things that you expect do have an impact. You know, if you think about our mariners, and we're moving around, call it 2,500 mariners every day, you know, that's a lot of airline flights, that's a lot of rental cars. It's, there's a lot of costs just in that. Sure, inflation is coming down, but it's, there's still, those costs continue to go up. So when you factor it all in, it's been creeping up that breakeven cost to build new construction. Now, you know, the larger point is, when do people start building? You know, that's always something we worry about. Some people try and, you know, do things on spec and build in advance of what they think is necessary. But I'd go back to some earlier comments that both Christian O'Neil and I made, that, one, the shipyards are tight. There's not a lot of capacity out there to build new. There's a maintenance bubble, so that's chewing up a lot of people's cash flow in the industry, including ours. I mean, we've got a big Q3 maintenance bubble here that's going to hit us, and everybody's in the industry is experiencing that. So then you roll in just the cost of borrowing money has changed considerably. Now, we'll see if the Fed reduces rates later this year. But you put it all together, and it just is keeping building in check, and it... We're still just, you know, for capital discipline, we're a ways away from that, that new build price. Yeah, I think David Grzebinski described that very well. And I would tell you, what you are seeing being built is replacement capacity for the most part. There's very little speculative building. There's capital discipline, I think, in the industry, you know, coming out of COVID and the price of money, and you're seeing some of that. And you know, there's just not much construction going on right now. Got it. Okay. Appreciate the color, guys. And David Grzebinski, appreciate you swinging in an actual number there. It's really helpful. All right. Thanks. Thanks, Greg Wasikowski. Thank you for your question. One moment, please. Our next question comes from the line of Ken Hoexter of BofA. The line is yours. Hey, Greg, good morning. Just to follow up on that, I know you gave the break-even number, but where are rates trending now? Then ton miles were down about 5%. It seemed a little extreme. Is that, Christian O'Neil, because of the lock shutdowns that you're talking about, or is there something shifting within the business? Thanks. No, exactly. I think what you saw in the ton miles in the quarter is we were impacted heavily by some repairs and some locks and some of the weather events I referenced. It was definitely the lay days were lock and weather, weather can be explained by those two factors. Yeah, and given the hurricane. Just, let me just wrap that up. Given the hurricane at the start of the quarter, should we expect kind of flow-through into 3Q? Yeah, I mean, that was a Q3 event for us in Beryl. So, you know, there'll be some impact, you know, from Beryl. We weathered it pretty well as a whole, both companies, but it did have, you know, an impact and closed Houston down for a few days in the month of July. Ken Hoexter, I'd just add, you know, ton miles are also about the length of some trips, too. You know, we used to do a lot of, like, moving crude and condensate out of the Upper Midwest, and those are long voyages. So you know, looking at ton miles, you got to be a little careful because it ebbs and flows. I think revenue per ton mile is also a thing you got to factor in as you look at things. So that's good. And in terms of your question about you know, where our current rates at. Our general counsel would probably shoot me if I gave you a current rate on a call. So it's you can do some channel checks and get it. Sorry, I wish we could be more specific, but we, it's probably not advisable. All right. Understood on that. I guess, well, let's go... Can you tell, I guess, can we talk about magnitude of increase sequentially? Can I presume that they continued to decline sequentially? To decline sequentially? I'm talking about ton miles. Ton miles? Oh, rate. No, no, they will, they will not decline sequentially. Yeah, they'll, they'll go up. Increase. Yeah, yeah. I, I said, can we presume they've increased sequentially? Oh, I heard decline. Okay, good. No, they'll increase sequentially. You know, we're—I'll talk, and it really gets back to margins, you know. I'll talk big picture, and then let Christian O'Neil give you some more quarterly type color. You know, big picture, because of the seasonality we get, you know this, Ken Hoexter, you know, the winter quarters are lower margin than the summer quarters. And, you know, so that's why early last year or early this year, we gave guidance that said, "You know, look at full year margin 2023 to 2024," and we said margins would be up around 300 basis points. I think we're on track to be 400 basis points or better. You know, I think big picture, we'll see something similar, you know, barring a recession or something unforeseen, we'll see that level of increase in margins next year. And, you know, that comes from, you know, basically rate increases, both real and nominal. And I'll let Christian O'Neil talk about the quarterly progression a bit. Yeah, we're still seeing strong pricing momentum. We'll have an opportunity to continue to reset the portfolio, you know, as the year goes on. You know, Q4 is, you know, one of our larger opportunities to reset the portfolio, but you're still seeing spot rates outpace term by 10%-15%. So we still got room to go, and things feel pretty good, Ken Hoexter. Great. Great. And then just a follow-up on the D&S segment, and I know, I think Greg Lewis was asking about it before, but I might have missed some of that. Your power generation fell from 41% of revenues to 32%. Is that a seasonal impact? I mean, I see margins went up, you know, from maybe about 7%- 11%, so a gain in margin. Maybe you could just talk through that a little bit more. Yeah, it's just, it's really nothing more than timing of shipments. When certain power generation packaging gets shipped, it's nothing more than that. Again, it's almost like what we talked about with margins. You kinda gotta look at year-over-year for the full year. The good news is the demand is growing, not even shrinking right now. And you'll see that revenue number move around based on shipments, particularly out of our larger manufacturing facilities. It's helpful just because it's newly broken out. Appreciate the time, guys. Thanks for the thoughts. Thanks, Ken Hoexter. Thank you for the question. Again, as a reminder, to ask a question, you will need to press star one one on your telephone. I'll go ahead and promote the next question. Our next question comes from the line of Scott Group with Wolfe Research. The line is yours. Hey, thanks. Morning, guys. So I just wanna make sure I'm hearing right. Inland margins should improve sequentially Q2 to Q3, and then with the pricing opportunity, sounds like Q4 is a heavier pricing opportunity. Should we expect another sort of uptick in margin in Q4? And then did I hear right that you're saying that inland could improve maybe another 400 basis points next year? Just wanna make sure. That would be the high. Yeah, that would be the higher... good morning, Scott Group. That would be the higher end of what we would expect next year. It's kind of the 300 basis points, maybe we get to 400. But in terms of sequential, yeah, I think Q3 will be up versus Q2. Q4 starts to get dicey, and we don't like to, I guess, guide to a higher margin in Q4. It's just, that's when weather starts, Scott Group, and we, you know, we can get fog. Fog is actually, believe it or not, worse than a hurricane, not in terms of personal impact, but in terms of being able to move our equipment around. You know, we just basically stop moving in fog, and we can have weeks of fog that just shut down our moves in the Q4. So we're very cautious about Q4 margins. They usually dip down a little bit, versus Q3. I don't know, Christian O'Neil, anything you... Yeah, no, I think you covered that well. And then maybe can we do the same discussion around coastal? Right, obviously, there's some really good pricing there. Sounds like we're gonna get, like, 1,000 basis points of margin improvement this year. Like, where does a low- double-digit margin go to, assuming that, you know, there's continued pricing momentum there? Yeah, we haven't put pencil to paper, but, you know, it won't be, well, we were in 2023, to your point, we were bouncing around break even. We had a lot of shipyards in 2023. A lot of, a lot of it was driven by ballast water treatment. We've come out of that. We got through that through the Q1, with Q1, I think we finished our last ballast water treatment in the Q2. And, you know, so we've had a lot more uptime. The margins have, have popped. You will see the margin in the Q4 probably get cut in half just because we've, as Christian O'Neil alluded to, we've got six or seven big shipyards on some of the bigger units. But big picture, year-over-year, and going into 2025, we're not really giving guidance to 2025 yet, but you should see, you know, a nice pickup. You know, it won't be 1,000 basis points, but it could be 300 basis points-500 basis points next year. We haven't put pencil to paper, but given the price rises we're getting, and we need you should see a very nice uptick in margins in coastal next year. I- Yeah, we're feeling really good about coastal. You know, the rate environment, operating, executing at a very high level. Our uptime, you know, is about as good as it's ever been, and fleet's in great shape, and it's in high demand with our customers. Okay. And then, just last thing, just quickly, like, I totally hear you, like, all the questions about build activity. Do you have visibility? Are the orders starting to pick up, though, either inland or coastal, like, just to start the clock? But I don't know that I've got visibility, but any color you guys have. You know, I think in the context of, you know, the last three years, you're talking about 20-some-odd barges built in 2022, 20-some-odd barges built in 2023. And so, you know, at 40 this year in 2024, you know, year-over-year, it is an increase. But I will tell you, those three years represent the lowest construction in decades in this business. So even at 40 barges or even 50 barges a year, you're still not gonna outpace the retirements. You still have, you know, 500-some-odd barges that are, you know, 30-40 years old and are candidates for retirement. So I think what you see is, you know, some of the construction now is being done out of necessity to replace barges that are retiring. And so I think contextually, you know, these three years back to back to back, you know, represent, you know, by every measure, the least amount of inland tank barge construction we've seen in decades. Yeah, I would just say- No, no, I- ...offshore is, is even more acute, right? It, as Christian O'Neil said earlier, or Raj Kumar said it, that, you know, if you wanted to build an offshore unit right now, an offshore ATB, you wouldn't see it until the end of 2027. But nobody's even contemplating building right now. So go ahead, I cut you off, Scott Group. No, no, I totally get it. I just, I'm wondering, like, do you see orders so, like, picking up, so, like, the 40 barges this year could become a hundred or whatever, or more next year? I don't know if you can see orders. Yeah, I mean, we don't have, you know, clear visibility into every, you know, exact order book, but it's actually the capacity of the yards themselves, the space that they're available to sell and market, that is constrained by the reduction in some of the shipyards that historically were in existence pre-COVID, compounded with the labor issues that the shipyards are facing themselves. And so, you know, as of today, you know, we don't, we may not have exact visibility into the order book, but I can tell you with some, some level of confidence that the actual ability to build barges is diminished. Helpful. Thank you, guys. Thanks, Scott Group. Thanks, Scott Group. Thank you for your question. This concludes the Q&A session. I would now like to turn it back to Mr. Kurt Niemietz for closing remarks. Thank you, Gerald, and thank you everyone for joining our call today. If there's any follow-ups, please feel free to reach out to me. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.