Raj Kumar
Thank you, David, and good morning, everyone.
In the first quarter of 2025, marine transportation segment revenues were $476 million and operating income was $87 million with an operating margin of 18.2%. Total marine revenues inland and coastal together was steady as compared to the first quarter of 2024, and operating income increased $3.6 million or 4%. Compared to the fourth quarter of 2024, total marine revenues increased 2% and operating income increased 1%.
As David mentioned, fog and high winds along the Gulf Coast produced a 50% sequential increase in delay days that impacted operations and efficiency in inland, while planned shipyard activity impacted the coastal marine business. This was 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 82% of segment revenue. Average barge utilization was in the low to mid 90% range for the quarter, which was better than the utilization scene in the fourth quarter of 2024.
Long-term inland marine transportation contracts, or those contracts with a term of one year or longer, contributed approximately 70% of revenue, with 61% from time charters and 39% from contracts of a freight man.
Improved market conditions contributed to spot market rates increasing sequentially in the low single digits and in the high single digit range year over year. Term contracts that renewed during the first quarter were up on average in the mid-single digits compared to the prior year.
Compared to the first quarter of 2024, inland revenues increased 2%, primarily due to higher utilization and pricing, offsetting the negative impacts of higher delay days. Inland revenues increased 3% compared to the fourth quarter of 2024, despite unfavorable weather-related conditions. Even with the difficult weather conditions, inland operating margins improved year by year driven by the impact of higher pricing and continued cost management, which helped stave off lingering inflationary pressures.
Now I'll move on to the coastal business. Coastal revenues decreased 6% year-over-year due to the higher number of shipyards in the quarter. The impact from these higher shipyards was felt throughout the quarter, but is beginning to wind down in the second quarter.
Overall, coastal had an operating margin right around 10% as shipyards were partially offset by higher pricing and cost leverage. The coastal business represented 18% 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 first quarter of 2024.
During the quarter, the percentage of coastal revenue on the term contracts was approximately 100%, of which approximately 100% were time charters. Renewal of term contracts were on average approximately 25% higher year over year. And we also noted that average spot market rates were up in the mid-single digit sequentially and around 20% 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 first quarter, as well as projections for 2025. This is included in our earnings call presentation posted on our website.
At the end of the first quarter, the inland fleet had just over 1,100 barges representing 24.6 million barrels of capacity. And includes the newly acquired badges we announced today. We expect to end 2025 with a total of 1,117 inland barges representing 24.8 million barrels of capacity. Coastal marine is expected to remain unchanged for the year.
Now, I'll review the performance of the distribution and services segment. Revenues for the first quarter of 2025 were $310 million with operating income of $23 million and an operating margin of 7.3%. Compared to the first quarter of 2024, the distribution and services segments of revenue decrease by 7%, while operating income increased by approximately 3%. When compared to the fourth quarter of 2024, revenue decreased by $26 million and operating income decreased by $4 million.
In power generation, revenues decreased 23% year over year as supply delays pushed some projects out of the quarter. Despite power generation revenues being down, we saw continued orders from data centers and other industrial customers for power generation and backup power installations. This contributed to a very healthy backlog of power generation projects. Power generation operating income was down 39% year by year, given the supply delays and had an operating margin in the mid to high single digits. Power generation represented 34% of total segment revenues.
On the commercial and industrial side, growth in marine repair offset lower activity levels in our on-highway and thermal king business driven by the ongoing trucking recession. As a result, commercial and industrial revenues were up 12% year-over-year and operating income increased 23% year over year driven by favorable product mix and ongoing cost savings initiatives. Commercial and industrial made up 52% of segment revenues with operating margins in the high single digits.
Compared to the fourth quarter of 2024, commercial and industrial revenues increased 6% as increased activity in marine repair was partially offset by softness in trucking -- in the trucking-related businesses. Operating income was up 13% 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 low recounts and tampered demand for new engines, transmissions, and parts throughout the quarter. This softness is being partially offset by execution and backlog for orders of e-frac equipment. This dynamic caused revenue to drop 17% sequentially and 18% year over year.
However, despite the drop in revenues, operating income was up 7% sequentially and 123% year over year, driven by our e-frac business and cost management initiatives. Oil and gas represented 14% of segment revenue in the first quarter and had operating margins in the high single digits.
Now I move on to the balance sheet. As of March 31, we had $51 million of cash with total debt of around $1.1 billion, and our net debt to EBITDA was just under 1.5 times. During the quarter, we had net cash flow from operating activities of $36.5 million.
First quarter cash flow from operations was impacted by a working capital build of approximately $122 million. Driven by the underlying growth in in the business in advance of projects, especially in the power generation space. We expect to unwind some of this working capital as the year progresses.
We use cash flow and cash on hand to fund $79 million of capital expenditures or CapEx, primarily related to maintenance of equipment. Additionally, as announced, we used $97.3 million to acquire some equipment from an undisclosed seller that comprised 14 barges, including 4 specialty barges and 4 high horsepower river boats.
During the quarter, we also used $101.5 million to repurchase stock at an average price just over $101. Our repurchases have continued in the second quarter with another $23 million at an average price of $91.18 as of April 30. As of March 31, we had total available liquidity of approximately $334 million.
We are on track to generate cash flow from operations of $620 million to $720 million on higher revenues than EBITDA for 2025. We still see some supply constraints, posing some headwinds to managing working capital in the near term. Having said that, we expect to unwind this working capital as orders shift in 2025 and beyond.
With respect to CapEx, we continue to expect capital spending to range between $280 million and $320 million for the year. Approximately $180 million to $220 million is associated with marine maintenance capital and improvements to existing inland and coastal marine equipment and facility improvements.
Approximately $100 million is associated with growth capital spending in both of our businesses and could be deferred depending on economic conditions. As always, we are committed to a balanced capital allocation approach and we'll use this cash flow to opportunistically return capital to shareholders and continue to pursue long term value creating value creating investment and acquisition opportunities.
I will now turn the call back over to David to discuss the remainder of our outlook for 2025.
David Grzebinski
Thank you, Raj. We're off to a solid start in 2025. While recent macro events have created some near-term uncertainty in places, we continue to see favorable fundamentals as the year progresses.
Our current outlook in the marine market remains strong for the full year. Refinery activity is at high levels. Our barge utilization is strong in both inland and coastal. And rates continue to increase. And distribution and services, we are seeing strong 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 decline in our oil and gas markets. Overall, we expect our businesses to deliver improving financial results as we move through the remainder of 2025.
In Inland Marine, we anticipate positive market dynamics due to limited new barge construction in the industry combined with steady customer demand. With these strong market conditions, we expect our barge utilization rates to be in the low to mid 90% range throughout the year. Overall, inland revenues are expected to grow in the mid to high single digit range on a full year basis.
However, I need to give the normal cautionary points. A potential tariff-induced recession or unforeseen changes in trade flows could cause a drop in demand, which would impact expected growth. That said, for now, we see revenues growing as planned and expect operating margins will gradually improve during the year from the first quarters levels and average around 200 to 300 basis points higher on a full year basis.
In coastal, market conditions remain solid, and the supply of vessels is favorable across the industry. Strong customer demand is expected throughout the remainder of the year with our barge utilization in the mid 90% range.
With the number of shipyard days declining and essentially 100% of the coastal fleet on term contracts, we expect a significant step up in revenues and margins through the remainder of the year. For all of 2025, we expect revenues to increase in the high single to low double digit range compared to 2024. Coastal operating margins are expected to improve to the mid-teens range on a full year basis.
In the distribution and services segment, we still see mixed results as dear term volatility driven by supply issues, customers deferring maintenance, and lower overall levels of activity in oil, gas partially being offset by orders for power gen.
In commercial and industrial, the demand outlook and marine repair remains steady while on highway service and repair remains weak. In oil and gas, we expect revenues to be down in the high single to low double digit range as the shift away from conventional frac to e-frac continues to take place and customers continue to maintain considerable capital discipline.
And power generation, we anticipate continued strong growth in orders as data center demand and the need for backup power is very strong. We expect extended lead times for certain OEM products to continue and it will contribute to volatility in the delivery schedule of new products throughout 2025.
Overall, we expect total segment revenues to be flat to slightly down on a full year basis with operating margins in the high single digits, but very slightly lower than they were a year ago.
To conclude, we're off to a solid start in 2025 and have a favorable outlook for the remainder of the year. Our balance sheet is strong, and we expect to generate significant free cash flow despite high levels of CapEx this year.
Absent acquisitions, we would expect to use the majority of free cash flow for share repurchases. We see favorable markets continuing and expect our businesses will produce improving financial results as we move through the year.
And as we look long term, we are confident in the strength of our core businesses and 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.
Operator
(Operator Instructions) Jonathan Chappell, Evercore ISI.
Jonathan Chappell
David, I want to ask about, not so much the acquisition that you announced this morning, but more of the path forward. It seems like we're in this interesting spot in inland where you're well off the bottom. The outlook is still pretty bright, but there's a lot of uncertainty in the broader market, and the macro, I imagine input costs and maintenance costs continue to go up. Are you seeing more opportunities coming from (technical difficulty) now? Where your balance sheet can provide you with a little bit more optionality on the M&A front?
David Grzebinski
Yeah, the short answer is yes. I would say, the environment's more constructive in terms of acquisition opportunities, but as John, it's really hard to predict those, but the environment's better than we've seen in the last three or four years for sure.
And obviously, from a capital deployment standpoint, that's our first priority. We'd love to do a consolidating marine acquisition. And as you would expect, we're always on the outlook -- looking out for those type of opportunities.
That said, as you've seen, absent that we're going to deploy our free cash and buy back stock, and that's -- it's pretty easy for us to buy the barge company we know the most about, but that said, our first priority would be trying to get a consolidating acquisition if possible, and the environment feels a lot better for that right now.
Jonathan Chappell
Just for my follow up, pivot to DNS, and then a two-parter here, you mentioned the cost controls and your margins were better than we expected, I think than probably you expected in the first quarter, you have to fill your guides about the same. So one, is there some stickiness of those cost controls that can maybe even in a protracted soft oil and gas market help fulfill your margin.
And secondly, it just it feels like there's always building backlog and delays. Are we getting close to the point where this backlog really starts to translate into some revenue acceleration across any of the different segments within that category?
David Grzebinski
Yeah. Let me take that in pieces and Christian can chime in here as well. On the margin improvement, look, we've taken some strong, lean processes and throughout our whole distribution and services business.
So the margin should continue to improve. There is a mix issue, e-frac will be very high margins where -- whereas data center backup power is -- thinner margins and they -- and that's because the engine is such a big portion of that and it's hard to mark up the engine. So we get paid for our service and our engineering and our packaging really on those data center things but the margin is thinner. So there's always a mixed issue.
That said, I would be disappointed if we -- if we're not able to continue to improve our margin outlook for the full year, but we're just not ready to declare that yet.
The second part of your question really is, where's the pig in the python, right? And it's really been very difficult, with natural gas receipts more than the standby. We had a pretty good shipment period in the first quarter for data centers, which is diesel standby. The natural gas receipts have been a little slower, but your -- our second half, you should start to see the revenue start flowing through.
We had one of our engine OEMs push out deliveries that were supposed to be in the first quarter to the third quarter. That sounds really negative, but what it is, is demand's pretty high. We just need to be higher in the pecking order with our OEM, which we're working on. I don't know, Christian, do you want to add anything?
Christian O'Neil
No, I think you summarized that very well. Power gen continues to grow. Demand is still really good. There are some challenges on the OEM supply side, particularly around engines, we're managing that as well as we can, but what you don't see is certainly any cancellations or change in behavior. What we see is, just some of this moving out to the right, as David said, revenue.
Operator
Daniel Imbro, Stephens Inc.
Daniel Imbro
David, maybe on the inland side we start there, it's good to see barge utilization and spot pricing continue to pick up, I guess, can you talk about maybe where we exited 1Q on both utilization and spot and then related contract pricing was up mid singles. How did that exit the first quarter and how should we expect that to trend just given the strength we've seen in all the pricing and utilization.
David Grzebinski
Yeah, well, Christian and I will tag team this a little bit. I'll start. Look, our utility exited the quarter in the mid-90s. I mean, essentially sold out. We really can't run much more than 95%, 96% and we've been even through April we've been running in that 95% to 96%. So demand is really strong. We are pushing pricing up, that -- the fourth quarter we had a very tiny pullback. We've made that back up.
Spot pricing was up, sequentially 1% to 3%. In some cases a little higher than that. Term contracts were up, 3% to 5% on a year over year basis. But just remember on the first quarter the term contracts, there's not a lot of them being repriced. Those are typically second half loaded, and particularly the fourth quarter.
But I'll let Christian give you some more color on what we're seeing.
Christian O'Neil
Yeah. I think David summarized that well. First quarter is a rather smaller sample set for our contract renewals, as he referenced, it's a back half of the year loaded when you get a better sample set. However, the market conditions as we emerge out of Q1, you look at the things that we think about and watch every week here at Kerby, crack spreads, refinery utilization, chem activity barometers, all of those indicators are in really good shape. Crack spreads have spread and expanded back into the mid-20% range, which is great. Refinery utilization has gone up from the high-80s to the low-90s and pad 3, which is particularly important to us.
And the chemical barometers that we look at, even though you see some pain in the earnings, and some of the major chemical manufacturers, their domestic operations remain very busy and quite strong. And we on the marine transportation side, haven't seen a pullback in volumes. So when you look at that in combination with the supply side, again, subjective view but we think there's probably 50 some odd barges on the older book.
Shipyard capacity is extremely tight. If you wanted to build a new 30,000 barrel tank barge, you're probably not going to get it delivered until late 2026. So if you take those demand and supply dynamics that we see, it's all very positive. Limited barge construction, good fundamentals and the measurables that have always been highly correlated to our success and barge pricing has gone to new all-time high levels, steels back up with some of the macro and in tariff activity.
It will cost you $4.7 million to go build a plain vanilla 30,000 barrel tank barge. Now we've never seen that. $6.7 million for a black old barge. I mean, you can almost build a tow boat for what would cost you to build a single black old barge at this point, and tens are at $2.5 million.
So steel has spiked back up. That should keep a lid on new construction and I think the actual shipyard capacity that's out there. It really is reduced, compared to the era when we were building hundreds of barges a year, a subjective opinion that, if you go to the high quality shipyards that you build a good tank barge, you're still at about 50, 60 a year is the capacity for the US Jones Act in the tank barge construction. So that's a long answer to your question, but as we exit Q1.
Coming out of the winter months, which is the most challenging time to be a tow boater or managed tow boats, and we emerge at 20%-ish margins, headed into a good supply demand dynamic. These, I think I was feeling pretty good about the outlook.
I'll stop there.
Daniel Imbro
And maybe from a follow up related to that on the inland margin, if I put all those pieces together, it sounds supportive. I think 1Q margins are actually flat from 4Q despite the big increase in delay days. So if utilization and pricing are improving, hopefully delay days don't get sequentially worse. How should we expect inland margins to progress off this 20% level on 1Q as you move through the year to get to that full year guide of 200 to 300 basis points?
David Grzebinski
Yeah, Daniel, in our prepared remarks, we basically reaffirmed guidance. We think inland margins will be up on average for the full year 200 to 300 basis points. We feel pretty good about that, and even with all the tariff noises, we're basically reaffirming our guidance on margin expansion.
Our quarterly cadence, usually the third quarter is the best. The second quarter is always pretty good, and the first and the fourth quarters where they pulled back a little bit largely because of weather. So, yeah, rather not get into quarterly guidance here on margins. I just say again we like to look at it on a full year basis. We think the full average will be up as we reaffirmed in our guidance.
Is there some upside to that? Maybe, it is really tight right now, but there are some macro headwinds out there that we're all watching, with the tariffs and does that impact the economy. Right now we're very confident in where we're at though.
Christian O'Neil
And I would just add one small piece of that and the fact that spot prices continue to be above term prices and that's where we like to be and where we like to see it this week as we continue to try to grow the margin.
Operator
Scott Group, Wolfe Research.
Scott Group
I just want to follow up with that last comment you made about spot being above term. I know it sounds like there's not a lot of repricing activity in Q1, but why only 3% to 5% increase in contract rate given everything that you're talking about.
David Grzebinski
Yeah, it's -- just a small set of contracts that renewed and every customer has a little different angle, but look, we're very positive with where we're at right now. And who we would always like higher contract pricing, but we do have sophisticated customers and they do tend to play us off each other, but we're very constructive about continued pricing improvements.
Scott Group
And you mentioned trade flows and tariffs. I'm just curious how you see this playing out and where you see the risks. Are there any opportunities? And then just more broadly on everything going on, like the administration seems to be trying to incentivize US shipbuilding. I don't know how you think about that impacting you.
David Grzebinski
Well, let me break down the tariff -- potential tariff impacts, really not seeing much impact other than steel prices up right now. I would say, there's three buckets short term, medium term, and long term for us. Short term tariffs, pricing on engines could go up. We're seeing -- most of our engine suppliers have domestic plants, but they're still buying parts and pieces from abroad. And so there is a little impact from that. That would be a negative. The positive in the short run is steel prices have really popped, which just makes the cost of new barges go up, which is really good for us.
Medium term obviously would be more the economy. Do we see a pullback in the economy, as Christian referenced, our customers are not pulling back. We're not seeing it, part of that may just be from a competitive standpoint, particularly in the chemical standpoint, from the chemical side. These US plants have a great feedstock position and they're very efficient and there's a lot of new capacity there that's been built in the last five to six years. And so, they're the best assets in the chemical company's portfolio.
So when we think about the economy, there could be a little pullback. Again, we haven't seen signs of it. And then in the very long term, I think onshoring is really good for Kirby. We're essentially 100% domestic.
On our DNS side, our manufacturing facilities are all here, and then of course on the Jones Act side, the more things that come on shore, that's better for our Jones Act fleet. Now, you asked specifically about the administration's effort on shipbuilding. That is really all about international shipbuilding, not really Jones Act at all.
I think the administration is looking at China and China in the international ship supply area of -- they're about 70% market share on new construction, I think. The administration is trying to address that and stimulate maybe some more international shipbuilding capabilities here in the US. That's really not addressed for the Jones Act.
It may actually help us, we may have more maintenance options from shipyards stimulation, but we'll see. When we put all the tariff stuff together, it's probably a modest positive for us. There's all kinds of pluses and minuses and some unknowns, but, when you run through everything I just did, it's probably a small net positive for us.
Christian O'Neil
And I might add one positive that we see in the executive order is an investment in marine training for the mariner, and I think that's I applaud the administration for addressing that and wanting to help US labor and US jobs and anything we can do to help grow the merchant marine and improve the opportunities for our merchant mariners is positive for Kirby, and there's some of that in the executive order.
Operator
Ken Hoexter, Bank of America.
Ken Hoexter
So you did not directly I guess, address your EPS growth target in '25 in the release that you set in the fourth quarter. I just wondering if there was any reason for that. Are you pulling it or are you changing it to 15% to 25% growth target?
And then secondly, I guess on rates. I understand the delay days and it absorbs capacity. So when that capacity gets freed up and you don't have the delayed days. Will we see additional pressure on yields? Is that something that you see as the capacity gets freed up? Maybe just -- yeah, I think express that. And then I have a follow up.
David Grzebinski
Yeah, we are reaffirming our EPS guidance. We should have probably been more explicit about that. But when you add up everything we said about it's the exact same guidance. So we are reaffirming that that percentage. I'll let Christian talk about the weather, and freeing up capacity.
Christian O'Neil
No, I mean, you really honed in on something here, Ken, Q1 winter weather conditions artificially tightens the market. You're waiting to cross an open bay because the wind's blowing really hard, your trips a little longer, you chew up available capacity, and utility does tend to go up during the winter months. However, we are more profitable and there's more margin on every voyage when you're able to accomplish those voyages.
Again, a large contract of a affreightment piece of our portfolio becomes highly profitable when the trip times accelerate. And we're able to make more ton miles. The other thing we do when we come out of the winter months is we actually gain net capacity. What I mean by that is those days spent, waiting to cross the bay, or to get through a lock or for whatever weather delay it is, you're actually gaining barge days to sell as the weather gets better and you accelerate all of your voyages. So your fleet grows just because there's more available barge days to book in better weather months plus the margin on the affreightment trips.
David Grzebinski
Yeah. I mean the question would be do the competitors get more aggressive? I look, I -- Christian and his ops team are the preferred supplier out there, and people tend to want to work with us, reputationally and because we do a lot to save our customers money.
So there could be a small competitive impact, but, I think having more barge days to sell right now and our outlook, we're not worried at all, Ken.
Ken Hoexter
And I guess that comes through in your contract pricing. The revenue per ton mile was down $11.08, so it's up 11% after upper-teens last year. That's all just a factor of exactly what you're talking about in terms of mileage and getting jammed at the ports. It's just some investors, I think don't understand that they're looking at those numbers and seeing the concern on pricing. So I don't know if you want to just maybe extrapolate on that and how that turns into maybe accelerating pricing opportunities.
Christian O'Neil
No, that is exactly right. Great point. That is weather-driven, efficiency driven, that gets better as the weather improves and you make more to miles, and more marginal and so you will see that improve. I'm confident of that. You've seen that if you followed Kirby for a very long time, you understand that there's a seasonality to that just exists.
Ken Hoexter
And then can you relay that, I guess to the number of delay, not delay days -- ship shipyard days at coast wise and what we could see is in the acceleration into the second quarter and beyond.
David Grzebinski
Yeah. I mean, we're -- we had a very heavy first quarter. We're starting to get that equipment back in. You will see the coastal margins progress up each quarter going forward. I don't want to give you specific margin guidance, but our coastal business is about to really start to generate margins.
Christian and I joke with our team that we got to get coastal margins above inland margins. So there's a little healthy competition internally here, but it's -- once we get these big shipyards done, you can imagine having a big ATB unit that's earning $40,000 to $50,000 a day in a 120 year -- 120 day shipyard. That's a lot of revenue. That's not there, but the cost is still there. So that's about to reverse and each quarter, second quarter will be a lot better than the first quarter. Third quarter will be even better than second quarter. So the progressions there can --
Ken Hoexter
Yeah, that'll be the day I guess when we see coastal -- inland. Last one for me just M&A. Maybe can you just talk about the process? How long was this 14 barge discussion in working through and are there other opportunities? I would imagine that given some of the financial constraints we've seen of some of the smaller carriers that would have been maybe more opportunities, are you seeing that increase?
Christian O'Neil
I think in general, Kirby is the logical strategic acquirer for companies that want to sell particularly liquid marine assets. Those conversations, those relationships, exist and If something, is going to market, we almost -- always tend to get a look at it. Those relationships exist and those communication lines stay open and so, I don't want to comment too much on the deal that we did, but in general, we are the logical choice to at least have a conversation with if you're going to sell a liquid marine asset. We tend to see a lot of that, if that activity.
David Grzebinski
Yeah, and can't just add on that. I mean, it is a much more constructive environment for acquisitions right now, but yeah, predicting one is a tough thing to do.
Operator
(Operator Instructions) Sherif Elmaghrabi, BTIG.
Sherif Elmaghrabi
First, quick follow up on Scott's question. I believe it was Scott. I believe that in the past Q4 has historically been a big quarter for inland fleet repricing. Can you just give us an update on -- that's the case this year or should we expect a different cadence?
David Grzebinski
No, I mean, our -- as you might imagine, most companies contract portfolios are a year-end calendar, and for us, the fourth quarter is always a big quarter for term contract renewals. Sometimes they slip, somebody will say, hey, give us another month, and we need to go get some more approvals, but no, it hasn't changed, Sherif. You should expect our fourth quarter renewal portfolio to -- that's the largest renewals. Probably 40% of the contract renewals occur in that fourth quarter. The first quarter is usually one of the lighter ones.
Sherif Elmaghrabi
That's helpful. And then, you mentioned crack spreads are pretty constructive at the moment. Last year, towards the end of last year, I remember pet chem activity was an area of support while crack spreads came in. So I'm curious about the dynamics of trading one versus the other. Is it possible to switch some of your punish from product focused capacity to carrying pet cams, or is the equipment more complicated than that?
Christian O'Neil
So yes, the answer is yes, there's a large piece of our portfolio that is homogeneous. You can wash a barge out and move it from one service to another, clean it and ship services. So your typical 30,000 barrel, 10,000 barrel clean barges are homogeneous assets that can chase gasoline as well as they can chase benzene, toluene, [tailene]. So yeah, they're flexible, the assets themselves.
There are certain assets that are more products specific, black old barges that have thermal fluid heating systems, pressurized gas, barges, specific uses, but for the most part, the homogeneous pool of 30s and 10s are flexible to go in and out of the services.
Operator
Greg Wasikowski, Webber Research & Advisory.
Greg Wasikowski
Yeah, I wanted to follow up on Ken and John's questions from earlier on the M&A environment. David, what exactly has made it a more construction -- more constructive environment now versus the past few years? I would have thought that given that there hasn't been a ton of struggle in the past few years relative to pass down cycles and prices seem to have gone nowhere but up. I just would have thought it'd be harder to find the right opportunity at the right price. So you just tell me how I'm wrong there.
David Grzebinski
No, it's so willing sellers, they don't want to sell at the bottom, right? And right now they're thinking, hey, look, things are better. If I do sell, I'm not selling at the bottom. I may be selling, mid-cycle and that's okay. They know, look, that with the financing market and whatnot. Just life is more difficult. So they might think that now is a better time to sell.
But the conversations are up for sure, but there's still a bit off for spread. There's always a bit off for spread and we just need it to narrow, but at least the conversations are happening. I think, post COVID, everybody wanted to get their feet back on the ground, maybe pay down some debt. And now, it just feels like the conversations are just a little more constructive.
But again, it's so hard to predict the acquisitions. It's a price discovery type process and a lot of people have a lifestyle too that they -- they're thinking about whether they want to give it up or cash out. So it's, you just never know. I am not trying to be cagey or avoid the question. It's, yeah, everybody's got a little different angle on what they're looking for and why they might look for it.
Greg Wasikowski
Is it fair to characterize that market as being, maybe two ends of the spectrum, one, being distressed sellers, which is, I guess probably what we're more familiar with your more impactful acquisitions of the past versus the other end of the spectrum, which would be more like opportunistic exits, and the past few years has maybe been somewhere in the middle where it's been a little bit more muddy and now it's getting more towards that more positive end of opportunistic exit. Is that fair to think about it that way?
David Grzebinski
It could be, yeah, I don't think that's an unfair characterization at all.
Greg Wasikowski
And then one more if you don't mind, it just seems -- it seems like there's been a few more large orders since the last call, mostly appeared to be mostly replacement tonnage, but just always good to get your viewpoint on it.
Christian O'Neil
Yes, so I again, we subjectively look at the order book. We understand -- we know who's building what shipyard, and I can verify that in our opinion much of this appears to be replacement tonnage. You can look at the age of the expiring assets and in those portfolios for those that are building and can tell you with some level of confidence that it looks and feels like replacement tonnage not new growth.
David Grzebinski
Greg, I actually think we'll see a reduction in the overall barge count this year.
Christian O'Neil
And I would add it's difficult even today to expand your fleet with the pressure and the acute, shortage of mariners. So even if you wanted to grow your fleet, even if you're willing to invest at these, halcyon numbers, which doesn't make sense to invest at it $4.7 million for a clean 30, but say you wanted to do that and you wanted to get a boat and crew it up, it's still a challenge to grow your crew complement to effectively significantly grow your fleet. So again, most of this looks and feels like replacement tonnage.
And the financing is still an issue for a lot of the -- a lot of the owners, again, one of the benefits of being a publicly traded company or access to capital, but I think what you see out there is the financial difficulty, and the cost associated with that -- with the mariner shortage most of this is replacement.
Operator
This concludes the question and answer session. I will now turn it back to Kurt Niemietz for closing remarks.
Kurt Niemietz
Thank you, operator, and thanks again for everyone for joining us today. As always, feel free to reach out to me throughout the day and next week if there's any follow-up questions.
Operator
Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.
