Kirby Corporation · NYSE:KEX
Kirby — Investor Presentation (November 2010)
45 slides from Kirby's investor presentation, November 2010
Slide 1: Kirby Corporation: Putting America's Waterways to Work
KIRBY CORPORATION Putting America’s Waterways to Work NYSE: KEX November 2010
Slide 2: Forward Looking Statement; Non-GAAP Financial Measures
Forward Looking Statement 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 uncertainti
Slide 3: Kirby…Business Operations
Kirby…Business Operations Marine Transportation Diesel Engine Services 81% 19% of 2009 Revenue of 2009 Revenue $881.3 million $200.9 million Largest U.S. Inland Tank Barge Operator Largest U.S. EMD Diesel Services Company 3
Slide 4: Kirby…Public Market Facts
Kirby…Public Market Facts NYSE: K E X Current Price (November 29, 2010) $44.54 Number of Shares O/S (September 30, 2010) 53.5M Market Capitalization $2,384M Debt (September 30, 2010) $200M Enterprise Value $2,584M Employees 2,625 4
Slide 5: Kirby Facts
Kirby Facts • Largest inland tank barge operator • Operating 850 barges and 217 towing vessels • Sustainable competitive advantages: – Lowest cost due to economies of scale – Best positioned for growth opportunities – “One Stop Shop” for customers • 75% of inland marine transportation revenues under
Slide 6: Acquisitions in Core Business
Acquisitions in Core Business No. of No. of Tank Tank Date Barges Description Date Barges Description 1986 5 Alliance Marine 1999 270 Hollywood Marine, Inc. – Stellman, Alamo Barge Lines, Ellis Towing, Arthur Smith, Koch 1989 35 Alamo Inland Marine Co. Ellis, Mapco 2002 15 Cargo Carriers 1989 53 Bre
Slide 7: Revenue... Business Operations
Revenue... Business Operations Marine Transportation and Diesel Engine Services Revenue From Continuing Operations 1500 $1,360 1400 1300 $1,173 1200 15.2% growth rate 1100 from 1988-2009 $984 1000 $1,082 900 $796 In Millions 800 $675 700 $613 $567 $535 600 $513 500 $366 $318 $320 $335 $327 400 $265
Slide 8: Earnings Per Share
Earnings Per Share Earnings Per Share From Continuing Operations Excluding Non-Recurring Items $3.50 $3.00 14.4% growth rate $2.91 from 1994 - 2009 $2.50 $2.29 $2.34 $2.13 $2.00 $1.79 $2.08 $1.50 $1.33 $0.94 $0.98 $1.00 $0.82 $0.82 $0.83 $0.63 $0.52 $0.42 $0.48 $0.50 $0.31 $0.37 $0.00 1994 1995 1996
Slide 9: Inland Waterway System
Inland Waterway System Kirby is one of the few operators offering distribution throughout the St. Paul Mississippi River System and Gulf Intracoastal Sioux City Waterway Pittsburgh Chicago 12,000 miles of navigable Cincinnati waterways link America’s heartland to St. Charleston the world. Louis Tuls
Slide 10: Barge Industry Facts
Barge Industry Facts • Approximately 18,000 dry cargo barges and 3,100 liquid tank barges. Kirby is principally in the liquid cargo business • No competition from foreign companies due to a U.S. law known as the Jones Act • Always a market to move product by barge on inland waterways • Equipment not
Slide 11: Number of Inland Tank Barges
Number of Inland Tank Barges For the years 1993 through October 2010 3,300 3,100 3,100 2,900 2,700 121 single hull tank barges industry wide, 9 operated by Kirby 2,500 2,300 2,100 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: Informa Economics, Bar
Slide 12: Inland Tank Barge Fleet
Inland Tank Barge Fleet Age of Tank Barges (Years) 800 700 704 600 500 400 398 382 382 357 300 287 268 200 214 100 17 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 Source: Informa Economics, Barge Fleet Profile, March 2010 12
Slide 13: Kirby Inland Marine
KIRBY INLAND MARINE <= 13
Slide 14: Largest Inland Tank Barge Operator
Largest Inland Tank Barge Operator • Benzene • Gasoline • Styrene • No. 2 oil • Methanol • Jet fuel • Acrylonitrile • Heating oil • Xylene • Diesel fuel • Caustic soda • Naphtha • Butadiene • Propylene Petrochemicals–69% * Refined Petroleum Products – 8%* • Residual fuel oil • Anhydrous • Coker feed
Slide 15: Fleet Size and Flexibility
Fleet Size and Flexibility… Better Asset Utilization Towboat Fleet • Operating an average of 217 towboats vs 215 in 3rd Qtr. of 2009 and 212 in 4th Qtr. of 2009 • Chartered towboats used to balance horsepower with demand Tank Barge Fleet • Large fleet facilitates better asset utilization • More back
Slide 16: Kirby Outpaces the Competition
Kirby Outpaces the Competition Tank Barge Owners By Number of Tank Barges Tank Dry Cargo Tank Barges Dry Cargo Barges Barges Operated Barges Operated Operated Operated Kirby Corporation 850 - River City Towing Services 20 - American Commercial Lines LLC 337 2,135 Genesis Energy, L.P. 20 - Florida Ma
Slide 17: End Uses of Products
End Uses of Products… Demand Drivers Revenue Distribution * Products Moved Products Drivers 69% Petrochemicals and Benzene, Styrene, Methanol, Acrylonitrile, Consumer non-durables – 70% Chemicals Xylene, Caustic Soda, Butadiene, Propylene Consumer durables – 30% 18% Black Oil Products Residual Fuel
Slide 18: Strong Emphasis on Safety
Strong Emphasis on Safety… • Committed to dedicating adequate resources to achieve safety objectives – Extensive company-owned and operated training facility (Towboat Simulator) • Industry leader – First winner of Benkert Award, highest award given by Department of Transportation for “Safety Is Our
Slide 19: Kirby Engine Systems
KIRBY ENGINE SYSTEMS 19
Slide 20: Diesel Engine Services
Diesel Engine Services Medium-Speed and High-Speed Diesel Engines Markets – Inland Waterway Carriers – Dry and Liquid – Offshore Towing – Dry and Liquid Marine – Offshore Drilling Rigs & Supply Boats – Harbor Towing – Dredging – Great Lakes Ore Carriers – Standby Power Generation Power Generation, –
Slide 21: Diesel Engine Services
Diesel Engine Services Engines and Transmissions/Reduction Gears – Electro-Motive Diesel (EMD) – Alco Medium-Speed – Cooper-Bessemer – Nordberg – Caterpillar – Cummins High-Speed – Detroit Diesel – John Deere – Allison Transmissions/ – Falk Reduction Gears – Twin Disc 21
Slide 22: Acquisitions and Internal Growth
Acquisitions and Internal Growth Acquisitions Internal Growth 1987 National Marine 1989 Midwest 1991 Ewing Diesel 1992 Seattle 1995 Percle Enterprises 1993 Shortline & Industrial Rails 1996 MKW Power Systems 2000 Cooper Nuclear 1997 Crowley (Power Assembly Shop) 2001 Transit & Class II Rails 2000 We
Slide 23: Market Conditions
MARKET CONDITIONS 23
Slide 24: 2010 Third Quarter Summary
2010 Third Quarter Summary Marine Transportation • Higher U.S petrochemical production led to higher demand and equipment utilization in the petrochemical market • Heavy U.S. refinery maintenance schedules and exports of heavy fuels led to higher demand and equipment utilization in the black oil mar
Slide 25: 2010 Third Quarter Summary, continued
2010 Third Quarter Summary, continued Diesel Engine Services • Continued weak marine service levels and direct parts sales, with some pricing pressure, particularly high-speed • Gulf Coast oil services market particularly weak, as customers continue to defer major maintenance projects • Drilling mor
Slide 26: 2010 Fourth Quarter and Year Outlook
2010 Fourth Quarter and Year Outlook Marine Transportation Markets Petrochemical and refinery volumes expected to be stable; similar with Q3 Severity of winter weather conditions and delays associated with scheduled lock repairs will influence Q4 Excess industry-wide tank barge capacity places
Slide 27: 2010 Fourth Quarter and Year Outlook
2010 Fourth Quarter and Year Outlook Diesel Engine Services Markets Majority of medium and high-speed marine market expected to remain weak for Q4 as customers continue to defer major maintenance projects While the moratorium on Gulf Coast drilling has been lifted, impact of new regulations on d
Slide 28: 2010 Fourth Quarter and Year Outlook, Continued
2010 Fourth Quarter and Year Outlook, Continued Guidance: Fourth Quarter: $.52 to $.57 per share Year: $2.08 – $2.13 per share • Marine transportation volumes and equipment utilization will remain stable with pricing relatively flat • Severity of winter weather conditions and delay days associated w
Slide 29: Kirby Well Positioned for Growth Opportunities
Kirby Well Positioned for Growth Opportunities Strong balance sheet, low debt levels and positive cash flow allows for internal growth, share repurchases and the pursuit of acquisition opportunities Purchased 618,000 shares of Kirby common stock from June through October 2010 at an average price
Slide 30: Financial Highlights
FINANCIAL HIGHLIGHTS 30
Slide 31: For Quarter Ended September 30, 2010
For Quarter Ended September 30, 2010 Change from 2009 Income Statement 2010 2009 $ % Revenues: Marine Transportation $ 232.8M $ 227.5M $ 5.3 M 2% Diesel Engine Services 48.5 44.7 3.8 9 Total $ 281.3 $ 272.2 $ 9.1 3.% Operating Income: Marine Transportation $ 51.4M $ 57.6M $ (6.2)M (11)% Diesel Engin
Slide 32: Operating Margins
Operating Margins 25% 23.6% 22.4% 21.1% 20% 18.9% 19.0% 18.4% 17.4% 16.6% 15.7% 15.6% 14.6% 14.9% 15.0% 15% 11.7% 10.1% 10.1% 10.5% 10.0% 9.7% 9.5% 10% 5% 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Marine Transportation Diesel Engine Services 32
Slide 33: EBITDA Per Share Growth
EBITDA Per Share Growth $7.00 $6.66 12.2% growth rate $6.00 $5.73 from 1994 - 2009 $5.60 $5.00 $4.39 $4.00 $3.52 $2.81 $2.95 $3.00 $2.65 $2.73 $2.53 $2.00 $2.00 $1.59 $1.70 $1.47 $1.26 $1.02 $1.00 $0.00 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 See Appendix for
Slide 34: Cash Flows
Cash Flows $350 $319 Cash from Operations Expansion Barges $300 Capital Expenditures Expansion barges $246 $250 $236 In Millions $200 $193 $173 $164 $150 $44 $145 $150 $142 $139 $30 $30 $127 $122 $112 $97 $94 $135 $100 $83 $73 $72 $59 $48 $48 $50 $0 * Unaudited 34
Slide 35: Debt/Capitalization
Debt/Capitalization 0.7 57.3% 0.6 0.5 0.4 0.3 0.2 0.1 15.1% 0 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q3 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2010 35
Slide 36: Balance Sheet
Balance Sheet 09/30/10 12/31/09 Change Assets Cash $ 149M $ 98M $ 51M Other Current Assets 242 202 40 Property & Equipment 1,118 1,085 33 Goodwill 229 229 ─ Other Assets 20 22 (2) Total Assets $ 1,758M $ 1,636M $ 122M Liabilities & Equity Current Liabilities $ 152M $ 137M $ 15M Total Debt 200 200 ─
Slide 37: Financial Strength
Financial Strength • $149 million of cash and cash equivalents at September 30, 2010 • Investment grade debt – Standard & Poor’s: A- – Moody’s: Baa3 – Fitch: BBB • $250 million bank revolving credit – None outstanding at September 30, 2010 – Renewed in November 2010, 5 year renewal • 8-year unsecure
Slide 38: Why Invest in Kirby?
WHY INVEST IN KIRBY? oS 38
Slide 39: Why Invest in Kirby?
Why Invest in Kirby? • Consistent long-term record of success • Experienced Management teams in both core businesses • Marine Transportation – 75% of business under contracts and approximately 50% under time charters – Approximately 70% of petrochemicals moved produce consumer non-durable goods, 30%
Slide 40: Thank You For Listening to Our Story
Kirby Corporation Putting America’s Waterways to Work Thank You For Listening to Our Story
Slide 41: Reconciliation of GAAP to Non-GAAP Financial Measures
KIRBY CORPORATION Reconciliation of GAAP to Non-GAAP Financial Measures Kirby reports its financial results in accordance with generally accepted accounting principles (GAAP). However, Kirby believes that certain non-GAAP financial measures are useful in managing Kirby’s businesses and evaluating Ki
Slide 42: Reconciliation of GAAP Net Earnings and EPS to Adjusted Non-GAAP
KIRBY CORPORATION Reconciliation of GAAP Net Earnings Attributable to Kirby and Earnings Per Share Attributable to Kirby Common Shareholders to Adjusted Non-GAAP Net Earnings and Adjusted Earnings Per Share 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 ($ in millions) Net earnings attributa
Slide 43: Reconciliation of GAAP Net Earnings to Non-GAAP EBITDA
KIRBY CORPORATION Reconciliation of GAAP Net Earnings Attributable to Kirby to Non-GAAP EBITDA 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 ($ in millions) Net earnings attributable to Kirby, GAAP $ 125.9 $ 157.2 $ 123.3 $ 95.5 $ 68.8 $ 49.5 $ 40.9 $ 27.4 $ 39.6 $ 34.1 $ 21.4 Interest expe
Slide 44: Reconciliation of GAAP Net Earnings to Non-GAAP EBITDA, Quarterly
KIRBY CORPORATION Reconciliation of GAAP Net Earnings Attributable to Kirby to Non-GAAP EBITDA Three Months Ended Three Months Ended Three Months Ended Nine Months Ended March 31, June 30, September 30, September 30, 2010 2009 2010 2009 2010 2009 2010 2009 ($ in Millions) Net earnings attributable t
Slide 45: Marine Transportation Performance Measurements
KIRBY CORPORATION MARINE TRANSPORTATION PERFORMANCE MEASUREMENTS 2002 2003 2004 2005 2006 2007 2008 2009 2010 st nd rd th st nd Year Year Year Year Year Year Year 1 Q 2 Q 3 Q 4 Q Year 1 Q 2 Q 3rd Q 9 Mon. Ton miles (in millions) (1) 13,377 15,582 16,232 16,141 15,649 16,716 14,267 2,780 2,995 3,257