Kirby Corporation · NYSE:KEX
Kirby — Non-Deal Roadshow (November 2017)
50 slides from Kirby's roadshow presentation, November 2017
Slide 1: Putting America's Waterways to Work
Putting America’s Waterways to Work NYSE: KEX November 2017
Slide 2: Forward Looking Statements; Non-GAAP Financial Measures
Forward Looking Statements Non-GAAP Financial Measures Statements contained in this presentation 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 uncertain
Slide 3: Business Segments
Business Segments Marine Transportation Distribution and Services The largest inland and coastwise tank Nationwide service provider and distributor barge fleets in the United States of engines, transmissions, parts, industrial equipment and oilfield service equipment 66% of 2017YTD1 Revenue 34% of 2
Slide 4: Public Market Information
Public Market Information Share Price NYSE: KEX on November 13, 2017 $62.80 Shares Outstanding 59.7MM (as of November 8, 2017) Market Capitalization $3,749MM Net Debt $1,031MM (as of November 2, 2017) Enterprise Value $4,780MM 4
Slide 5: Company Overview
Company Overview Marine Transportation • Largest combined inland and coastal tank barge operator – 848 inland tank barges and 215 towboats – 67 coastal tank barges and 69 tugboats – 75% of inland revenues under term contracts, of which approximately 48% are under time charters – 80% of coastal reven
Slide 6: Marine Transportation Acquisitions
Marine Transportation Acquisitions Shipper Owned (Red) Independent (Green) * Towboats Only Tank Tank Date Barges Description Date Barges Description 1986 5 Alliance Marine 2003 64 SeaRiver Maritime (ExxonMobil) 1989 35 Alamo Inland Marine Co. 2005 10 American Commercial Lines (black oil fleet) 2006
Slide 7: Distribution and Services Expansions
Distribution and Services Expansions Acquisitions Internal Growth 1987 National Marine 1989 Midwest 1991 Ewing Diesel 1992 Seattle 1995 Percle Enterprises 2000 Cooper Nuclear 1996 MKW Power Systems 1997 Crowley (Power Assembly Shop) 2000 West Kentucky Machine Shop 2000 Powerway 2004 Walker Paducah C
Slide 8: Historical Revenue Growth
Historical Revenue Growth Marine Transportation and Distribution and Services Revenue From Continuing Operations 2,600 $2,566 2,400 $2,242 $2,148 2,200 8.9% compound $2,113 2,000 annual growth $1,850 In Millions 1,800 1996-2016 $1,771 1,600 $1,360 1,400 $1,173 1,200 $984 1,000 $796 $1,082 $1,110 800
Slide 9: Historical EPS Growth
Historical EPS Growth Earnings Per Share From Continuing Operations Excluding Non-Recurring Items $6.00 9.6% compound $4.93 $5.00 annual growth $4.44 $4.11 $4.00 1996 - 2016 $3.73 $3.35 $2.91 $3.00 $2.62 $2.29 $2.34 1 $2.15 $2.05 $2.00 $1.79 $1.33 $1.90 1 $0.98 $1.00 $0.82 $0.94 $0.82 $0.83 $0.42 $0
Slide 10: Marine Transportation
oo 4 a MARINE TRANSPORTATION 10
Slide 11: U.S. Inland and Coastal Waterway Systems
U.S. Inland and Coastal Waterway Systems 12,000 miles of navigable waterways link America’s heartland to the world Texas and Louisiana account for 80% of the total U.S. production of chemicals and petrochemicals 11
Slide 12: Barge Industry Facts
Barge Industry Facts The U.S. barge industry serves the inland waterways, U.S. coastal ports, Alaska and Hawaii – The inland barge fleet is comprised of approximately 18,000 dry cargo barges and 3,850 liquid tank barges – The coastal market, including Alaska and Hawaii, encompasses approximately 295
Slide 13: Marine Transportation Demand Drivers
Marine Transportation Demand Drivers Revenue by Product1 3% Petrochemicals and Chemicals 18% Black Oil 24% 55% Refined Petroleum Products Agricultural Chemicals Markets and Products Moved Products Drivers Benzene, Styrene, Methanol, Naphtha, 30% Consumer Durables Acrylonitrile, Xylene, Caustic Soda,
Slide 14: Strong Emphasis on Safety
Strong Emphasis on Safety • Safety is the first and foremost concern in everything we do • Our customers place a high value on safety • Safe operations are good for morale and benefit financial performance in the long run • Extensive company-owned and Pictured above is our towboat simulator where op
Slide 15: Inland Tank Barge Markets
Inland Tank Barge Markets oo 15
Slide 16: Number of Inland Tank Barges
Number of Inland Tank Barges Estimated for the years 1995 through 2016 4,100 3,900 The inland tank barge market has grown at 1.4% over the last 20 years 3,850 3,700 and 3.0% over the last 10 years 3,500 3,300 3,100 121 single hull tank barges industry wide, 2,900 9 operated by Kirby 2,700 2,500 2,30
Slide 17: Inland Tank Barge Fleet Age Profile
Inland Tank Barge Fleet Age Profile Inland Tank Barge Age Distribution1 (Number of barges by age in years) 1200 1071 1000 785 800 600 516 400 354 305 255 217 200 140 40 0 0 to 5 5 to 10 10 to 15 15 to 20 20 to 25 25 to 30 30 to 35 35 to 40 > 40 (1) The total of 3,683 barges in this chart is unadjust
Slide 18: Inland Fleet Size and Flexibility
Inland Fleet Size and Flexibility Better Asset Utilization Tank Barge Fleet • Large fleet facilitates better asset utilization • More backhaul opportunities • Faster barge turnarounds • Diversity of barge products and spot opportunities • Less cleaning Towboat Fleet • Operated an average of 215 towb
Slide 19: Kirby Inland Fleet by Barge Type
Kirby Inland Fleet by Barge Type * * As of September 30, 2017 19
Slide 20: Inland Barge Fleet by Operator
Inland Barge Fleet by Operator Tank Dry Cargo Tank Barges Dry Cargo Barges Barges Barges Operated Operated Shipper Owned Independent Operated Operated Chem Carriers, Inc. 42 Kirby Corporation 848 - John W. Stone Oil 37 - American Commercial Lines LLC 445 3,346 Martin Midstream Partners 37 - Canal Ba
Slide 21: Coastal Tank Barge Markets
Coastal Tank Barge Markets 21
Slide 22: Coastal Tank Barge Markets
Coastal Tank Barge Markets Largest operator of coastal tank barges and towing vessels participating in the regional distribution of refined petroleum products, black oil, and distribution of petrochemicals between PADDs Fleet consists of 67 tank barges with 6.2 million barrels of capacity and 69 tug
Slide 23: Coastal Tank Barge Age Profile
Coastal Tank Barge Age Profile Coastal Barge Market Age Profile Number of barges by age 100 95 90 85 The average age of the nation’s coastal tank barge fleet is ~14 years 80 70 Number of Barges 60 50 40 33 30 30 26 19 20 10 4 2 0 0-5 Years 5-10 Years 10-15 Years 15-20 Years 20-25 Years 25-30 Years 3
Slide 24: Coastal Tank Barge Owners
Coastal Tank Barge Owners Coastal Tank Estimated Barrel Capacity* Barges Operated * (MM) Kirby is Well- Vane Brothers 75 2.7 Positioned in U.S. Kirby Corporation 67 6.2 Coastal Markets Harley Marine 36 1.7 Reinauer Transportation 26 2.1 Bouchard Transportation1 23 2.4 Crowley Marine2 14 2.4 Moran To
Slide 25: Distribution and Services
Kirby Engine Systems United Holdings Stewart & Stevenson DISTRIBUTION AND SERVICES 25
Slide 26: Distribution and Services
Distribution and Services Revenue Distribution * Markets Services Offered Customers and Market Drivers 76% Land-Based Distributes and services high-speed diesel • Oilfield Services engines and transmissions, and manufactures, • Oil & Gas Operators and Producers remanufactures and services oilfield s
Slide 27: Distribution and Services
Distribution and Services Engines, Transmissions and Reduction Gears – Electro-Motive Diesel (EMD) Medium-Speed – Cooper-Bessemer – Nordberg – Caterpillar – Cummins – MTU – Detroit Diesel High-Speed – John Deere – Isuzu – Deutz – Volvo Penta – Allison Transmissions/ – Falk Reduction Gears – Twin Dis
Slide 28: Land-Based Oil Services Market
Land-Based Oil Services Market One of the largest distribution and services providers to the land-based oil services market Hydraulic fracturing technology has significantly expanded and reduced the cost of producing U.S. natural gas and oil reserves Manufacturer and remanufacturer of oilfield equip
Slide 29: Kirby Distribution and Services Locations
Kirby Distribution and Services Locations Locations / Branches United Holdings Kirby Engine Systems Stewart & Stevenson Seattle Allison / MTU / DTNA Territories United Holdings Stewart & Stevenson EMD Territories Kirby Engine Systems Stewart & Stevenson Albany Marlborough Casper NYC Middletown Pisca
Slide 30: Pressure Pumping Market Size
Pressure Pumping Market Size Estimated North American Pressure Pumping Horsepower (millions) 2003-2016E Each pressure pumping unit is 19.8 ~2,250 hp and must be replaced or 17.9 18.9 1 19.0 remanufactured every 3-5 years 3 14.9 3 4 14.6 1 3 9 Stacked 3 3 4 9.9 Repaired 7.9 1 2 7.2 2 2 Working 5.7 15
Slide 31: Outlook
~ QUTLOOK oo 31
Slide 32: 2017 Guidance
2017 Guidance Published 2017 fourth quarter guidance of $0.40 to $0.55 per share, versus $0.60 for the 2016 fourth quarter(1) Published 2017 full year guidance of $1.90 to $2.05 per share, updated from prior guidance of $1.80 to $2.10, and compared to $2.62 for 2016(1) Marine Transportation: I
Slide 33: Financial Highlights
FINANCIAL HIGHLIGHTS 33
Slide 34: For the nine months ended September 30, 2017
For the nine months ended September 30, 2017 Change from 2016 First 9 Months Income Statement 2017 2016 $ % Revenues: Marine Transportation $ 993.7M $ 1,115.7M $ (122.0)M (11)% Distribution and Services 512.6 219.3 293.3 134 Total $ 1,506.3M $ 1,335.0M $ 171.3M 13% Operating Income: Marine Transport
Slide 35: Operating Margins
Operating Margins 30% 25% 23.6% 23.8% 24.3% 22.4% 21.9% 22.1% 22.5% 21.1% 21.1% 20% 18.9% 18.4% 19.0% 17.4% 16.6% 15.7% 15.6% 14.6% 14.9% 15.0% 17.5% 15% 11.7% 10.0% 10.1% 10.1% 10.5% 10.6% 10.4% 9.5% 9.7% 9.4% 10% 8.1% 7.5% 5% 3.9% 1.1% 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Slide 36: EBITDA Per Share Growth
EBITDA Per Share Growth $12.00 $11.23 9% compound $10.49 $10.38 annual growth $10.00 1996 - 2016 $9.03 $8.32 $7.95 $8.00 $6.66 $6.00 $5.60 $5.73 $5.46 $4.39 $4.00 $3.52 $2.95 $2.65 $2.81 $2.53 $2.73 $2.00 $2.00 $1.70 $1.47 $1.59 $1.26 $0.00 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Slide 37: Cash Flows
Cash Flows $700 Expansion Barges $601 $600 Operating cash flow Capital expenditures (ex-acquisitions) $521 $500 $439 $414 In Millions $400 $30 $355 $345 $319 $326 $312 $312 $300 $246 $245 $253 $236 $226 $231 $193 $185 $200 $173 $164 $142 $150$139 $137 $127 $175 $112 $122 $97 $100 $83 $94 $73 $72 $48
Slide 38: Capital Structure
Capital Structure 60% 50.4% Debt-to-Total Capital 2001 – 2017Q3 50% 40% 30% 26.4% 20% 10% 0% Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 38
Slide 39: Financial Strength
Financial Strength • Investment grade rating – Standard & Poor’s: BBB+, stable outlook – Moody’s: Baa2, stable outlook • $500 million unsecured Private Placement – $150 million 7-year maturity at 2.72% – $350 million 10-year maturity at 3.29% • $850 million Bank Revolving Credit Facility – $520MM ou
Slide 40: Why Invest in Kirby?
WHY INVEST IN KIRBY? <“@&= 40
Slide 41: Why Invest in Kirby?
Why Invest in Kirby? Long-term record of success Experienced management teams in both core businesses Marine Transportation U.S. feedstock position puts our refinery, chemical, and integrated major customers in a globally competitive position and is driving volume growth 75% of inland revenue under
Slide 42: Thank You For Listening to Our Story
Kirby Corporation Putting America’s Waterways to Work Thank You For Listening to Our Story
Slide 43: Reconciliation of GAAP to Non-GAAP Financial Measure
KIRBY CORPORATION Reconciliation of GAAP to Non-GAAP Financial Measure Kirby reports its financial results in accordance with generally accepted accounting principles (GAAP). However, Kirby believes that the non-GAAP financial measure EBITDA is useful in managing Kirby’s businesses and evaluating Ki
Slide 44: Reconciliation of GAAP Net Earnings to Non-GAAP EBITDA
KIRBY CORPORATION Reconciliation of GAAP Net Earnings Attributable to Kirby to Non-GAAP EBITDA 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 Net earnings attributable to Kirby, $ 141.4 $ 226.7 $ 282.0 $ 253.1 $ 209.4 $ 183.0 $ 116.2 $ 125.9 $ 157.2 $ 123.3 $ 95.5 GAAP Interest expense 17.7
Slide 45: Reconciliation of GAAP Net Earnings to Non-GAAP EBITDA
KIRBY CORPORATION Reconciliation of GAAP Net Earnings Attributable to Kirby to Non-GAAP EBITDA 45
Slide 46: Marine Transportation Performance Measurements
KIRBY CORPORATION MARINE TRANSPORTATION PERFORMANCE MEASUREMENTS (1) Ton miles indicate fleet productivity by measuring the distance (in miles) a loaded inland tank barge is moved. Example: A typical 30,000 barrel inland tank barge loaded with 3,300 tons of liquid cargo is moved 100 miles, thus gene
Slide 47: US Global Ethylene Margin Advantage
US Global Ethylene Margin Advantage Global Ethylene Production Margin (Annual Average) 30 $24.69 25 $22.89 $21.94 $20.63 $20.97 $20.11 $19.65 $19.35 $19.91 $19.83 20 US $ cents/lb $19.19 15 $12.11 $11.64 10 $7.62 $8.86 5 0 2015 2016 2017E U.S. Ethane U.S. Propane U.S. Naphtha W. Europe Naphtha Asia
Slide 48: ~$170 Billion of Planned U.S. Petrochemical Investments
~$170 Billion of Planned U.S. Petrochemical Investments* Ohio Cost ($MM) Pacific Northwest PTT Global Chem 2021 New ethylene 5,700 Cost ($MM) Iowa Cost ($MM) PBF 2015 Aromatics exp unk NW Innovation 2018 New methanol unk Tesoro 2017 New xylene 400 Orascom (OCI) 2017 New fertilizer 1,900 Iowa fertili
Slide 49: U.S. Ethylene Feedstock Forecast
U.S. Ethylene Feedslate Forecast 2,500 Ethylene Feedstock Volume Product, 2017-2022 Thousands of Barrels per Day Growth and CAGR: Ethane, 29% 2,000 5-Year CAGR 5% 1,500 73% of current Other, 0% ethylene production is from 1,000 ethane Naphtha, 3% 5-Year CAGR 1% 500 Propane, -14% 5-Year CAGR -3% 0 20
Slide 50: Near-Term U.S. Ethylene and Derivative Capacity Additions
Near-Term U.S. Ethylene and Derivative Capacity Additions U.S. ethylene derivative capacity is ~40% of new derivatives are products expected to expand ~30% over the that are moved by water next 5 years 4,500 Vinyl Acetate Ethylbenzene Monomer 4,000 1% 0% Alpha Olefins 3,500 Ethylene 15% Dichloride 3