Kirby Corporation · NYSE:KEX
Kirby — Investor Day (May 2018)
36 slides from Kirby's investor day presentation, May 2018
Slide 1: Distribution & Services Analyst Day 2018
Distribution & Services Analyst Day 2018 Joe Reniers – President, Distribution & Services
Slide 2: Cautionary Statement
Cautionary Statement 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 uncertainties. Actual results could differ
Slide 3: Distribution & Services
Distribution & Services Legacy Diesel business has meaningfully grown with the addition of Stewart & Stevenson Expanded Distribution platform provides a stable basis for growth Marine Transportation Distribution & Services Segment Financial Overview The largest inland and Distribution & Services ($
Slide 4: Distribution & Services has a strong track record of accretive acquisitions
Distribution & Services has a strong track record of accretive acquisitions Revenue $MMs $1,700 1,700 1,600 1,500 $1,400 1,400 1,300 1,200 1,100 UE Compression S&S 1,000 Divest $756 MM 900 Flag Services United 800 $5 MM UE Bucks Holdings $271 MM Divest Saunders 700 Engine $13 MM 600 P&S Diesel 500 G
Slide 5: Introduction to Distribution & Services
Introduction to Distribution & Services Who we are… 65 Seattle LOCATIONS ACROSS NORTH AND SOUTH AMERICA Albany Marlborough Casper Middletown Lodi Piscataway 224 Grand Junction Denver Paducah Chesapeake Tulsa Albuquerque Rocky Mount Phoenix Oklahoma City Stuttgart SUB-DEALER LOCATIONS Lubbock Wichita
Slide 6: Distribution & Services has diversified sources of revenue across multiple industries
Distribution & Services has diversified sources of revenue across multiple industries Customer Industry Base Commercial & Industrial - Distribution, Oil & Gas - Distribution, services services and packaged equipment and manufactured equipment ~40% of D&S Segment Revenues ~60% of D&S Segment Revenues
Slide 7: Distribution platform provides stability, while Manufacturing provides leverage for growth
Distribution platform provides stability, while Manufacturing provides leverage for growth Product and Service Line Manufacturing Distribution of OEM Products ~1/3 of D&S Revenues ~2/3 of D&S Revenues • Hydraulic fracturing • OEM Finished Product (e.g., equipment and other ancillary engines, transmi
Slide 8: Distribution & Services brands are well respected in the market
Distribution & Services brands are well respected in the market How we go to market… DISTRIBUTION MANUFACTURING MANUFACTURING TECHNOLOGIES Analyst Day 2018 7
Slide 9: Substantial Distribution geographic footprint provides breadth and depth
Substantial Distribution geographic footprint provides breadth and depth, while Manufacturing leverages scale What our network represents… Kirby’s geographic DISTRIBUTION Kirby’s MANUFACTURING network territory represents… leverages scale to achieve… 80% of U.S. Oil & Gas drilling and Leading ma
Slide 10: Kirby is a leader in industrial distribution
Kirby is a leader in industrial distribution What we represent… Kirby D&S is the largest single distributor in the world for our Dealerships OEM partners provide rights to service customers Distributorships provide unique and exclusive OEM in specific markets representation rights in assigned areas
Slide 11: Distribution
DISTRIBUTION Analyst Day 2018 10
Slide 12: Distribution Business – Breadth and depth, with scale for long term growth
Distribution Business – Breadth and depth, with scale for long term growth ~2/3 of Distribution & Services revenues Distribution Revenue Makeup PERSONNEL Finished Product 835 technicians and shop personnel operating nationwide throughout Kirby network 25% 40 engineers dedicated to equipment appl
Slide 13: Distribution: Oil & Gas has the most near term upside
Distribution: Oil & Gas has the most near term upside ~40% of Distribution Revenues Service offering – Allison new and rebuilt transmission sales – MTU new and rebuilt engine sales – Proprietary parts – Field service with 24x7 response – Engineering support Growth opportunities – Reactivation of
Slide 14: Distribution: Commercial Marine is a stable core business
Distribution: Commercial Marine is a stable core business ~15% of Distribution Revenues Service offering – New and remanufactured product and parts sales Engines and gears Generators Barge pumps – Field service support, 24x7 response, global coverage – Engineering support Growth opportunit
Slide 15: Distribution: Pleasure and Light Commercial Marine is a stable core business
Distribution: Pleasure and Light Commercial Marine is a stable core business ~5% of Distribution Revenues Service offering – Component rebuild, vessel repowering, new product sales Main engines Reduction gears Generators – Proprietary parts – Engineering support Growth opportunities – Prod
Slide 16: Distribution: Power Generation is an underpenetrated market
Distribution: Power Generation is an underpenetrated market, largest market share growth opportunity ~10% of Distribution Revenues Service offering – Product sales: complete generator packages supported with application engineering resources – Field service with 24x7 response Growth opportunitie
Slide 17: Distribution: Nuclear Power Generation is a stable, highly specialized niche market
Distribution: Nuclear Power Generation is a stable, highly specialized niche market ~5% of Distribution Revenues Service offering – Product sales: engine and generator package sales with engineering support – Parts sales for OEM proprietary items Supplied under ESI’s nuclear QA program Parts i
Slide 18: Distribution: On-Highway, underpenetrated today, is a scale business
Distribution: On-Highway, underpenetrated today, is a scale business that leverages our geographic footprint ~10% of Distribution Revenues Service offering – Truck shop service and proprietary parts sales – 24x7 Field & roadside service Growth opportunities – Fleet maintenance programs – Breadth
Slide 19: Distribution: Mining is a consistent business with a strong incumbent position
Distribution: Mining is a consistent business with a strong incumbent position ~5% of Distribution Revenues Service offering – MTU new and rebuilt engine sales – Proprietary parts sales – Field service with 24x7 response – Onsite personnel working at mines – Engineering support Growth opportunit
Slide 20: Distribution: Industrial Equipment business benefits from our portfolio of OEM relationships
Distribution: Industrial Equipment business benefits from our portfolio of OEM relationships ~5% of Distribution Revenues Service offering – Component rebuild: engines and transmissions – Product sales: engine and transmission package sales with application engineering support – 24x7 service suppo
Slide 21: Distribution: Specialty Equipment Rental is a niche market
Distribution: Specialty Equipment Rental is a niche market that leverages our broad customer relationships ~5% of Distribution Revenues Service offering – Specialized equipment rental for large scale power generation – High capacity air compressors and material handling equipment – Large capacity
Slide 22: Distribution & Services Market Matrix
Distribution & Services Market Matrix Distribution ~2/3 of Revenues Appx % of Market Industry Vertical Growth opportunity Industry growth factor Dist Rev penetration Oil & Gas 40 % Medium High – market cycle Oil & Gas: U.S. drilling and completion activity Commercial marine 15 % High Market executio
Slide 23: Manufacturing
MANUFACTURING Analyst Day 2018 22
Slide 24: Manufacturing Business – Leverage Oil & Gas expertise for earnings growth
Manufacturing Business – Leverage Oil & Gas expertise for earnings growth ~1/3 of Distribution & Services Revenues Manufacturing Revenue Makeup Parts UEM 5% Remanufacturing focus Service New product offerings tend to be customized 26% O&G product offering focused on pressure pumping equipment
Slide 25: Scalable World Class Production and service capacity
Scalable World Class Production and service capacity 4 active facilities with ~600,000 sq ft make us the largest dedicated well service equipment manufacturing service provider in North America UEM OKC: ~220,000 sq ft UEM Odessa: ~150,000 sq ft UEM Edmond: ~30,000 sq ft S&S Telge Rd: ~200,000 sq ft
Slide 26: Frac Unit Manufacturing Time-lapse
Frac Unit Manufacturing Time-lapse Analyst Day 2018 25
Slide 27: Hydraulic Fracturing Equipment represents significant long term growth opportunity
Hydraulic Fracturing Equipment represents significant long term growth opportunity Engineered Product Remanufacturing services Scale of Kirby UE Manufacturing’s manufacturing “Zero Hour Rebuild” operations provide a provides an effectively quick and cost new unit at approximately competitive pro
Slide 28: Remanufacturing expertise a competitive advantage in an Oilfield Services space
Remanufacturing expertise a competitive advantage in an Oilfield Services space focused on Return on Capital Before… After… Analyst Day 2018 27
Slide 29: Remanufacturing is a good economic decision for our customers
Remanufacturing is a good economic decision for our customers Relative Pricing of Frac Units Impact of regulatory changes • Tier 4 Frac units increase new unit price by up +25% ~50% to 25% – Increased sophistication of engines and after treatment (e.g., SCR) – High heat loads from engines require up
Slide 30: S&S “AccuFrac” controls unique among manufacturers
S&S “AccuFrac” controls unique among manufacturers Upgrade underway to improve equipment performance and open new revenue streams CONTROLS E-COMMERCE Advanced controls suite that enables Integrate asset health information to digital execution of “frac factory” approach store to drive parts order pro
Slide 31: Distribution & Services Market Matrix
Distribution & Services Market Matrix Manufacturing ~1/3 of Revenues Appx % of Market Industry Vertical Growth opportunity Industry growth factor Mfg Rev penetration New Product – Domestic 55 % High Medium – market cycle Oil & Gas: U.S. drilling and completion activity Reman Services - Domestic 25 %
Slide 32: Distribution & Services – The Path Forward
Distribution & Services – The Path Forward Analyst Day 2018 31
Slide 33: Distribution & Services Differentiators: expertise, scale, and partners
Distribution & Services Differentiators: expertise, scale, and partners Core Differentiators Platform for Earnings Growth Distribution Manufacturing Technical Solutions: Breadth and depth of u Rationalize cost & asset v Extend data enabled Service Engineered Product Service Offering base services Pr
Slide 34: Questions
Questions Analyst Day 2018 33
Slide 35: Appendix
Appendix Analyst Day 2018 34
Slide 36: Pressure Pumping Market Size
Pressure Pumping Market Size Estimated North American Pressure Pumping Horsepower (millions) 2003-2018E Each pressure pumping unit is 25.0 ~2,250 HP and must be replaced 22.8 22.3 or remanufactured every 3-5 years 21.0 20.7 6 18.9 17.8 6 6 9 4 14.6 6 Out of Service 6 13 4 Idle/Repair 4 4 Working 9.9