Kirby Corporation · NYSE:KEX
Kirby — Non-Deal Roadshow (February 2017)
49 slides from Kirby's roadshow presentation, February 2017
Slide 1: Putting America's Waterways to Work
Putting America’s Waterways to Work NYSE: KEX February 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 Diesel Engine Services The largest inland and coastwise tank Nationwide service provider and distributor barge fleets in the United States of diesel engines, transmissions, parts, and oilfield service equipment 83% of 2016 Revenue 17% of 2016 Revenue 3
Slide 4: Public Market Information
Public Market Information Share Price NYSE: KEX on February 8, 2017 $69.25 Shares Outstanding 53.5MM (as of December 31, 2016) Market Capitalization $3,708MM Net Debt $708MM (as of February 1, 2017) Enterprise Value $4,415MM 4
Slide 5: Company Overview
Company Overview Marine Transportation • Largest combined inland and coastal tank barge operator – 876 inland tank barges and 230 towboats – 69 coastal tank barges and 75 tugboats – 75% of inland revenues under term contracts, of which approximately 51% are under time charters – 78% 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) 2005 10 American Commercial Lines (black oil fleet) 1989 35 Alamo Inland Marine Co. 2006
Slide 7: Diesel Engine Services Expansions
Diesel Engine 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 Corp
Slide 8: Historical Revenue Growth
Historical Revenue Growth Marine Transportation and Diesel Engine 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 1,800 In Millions 1996-2016 $1,771 1,600 $1,360 1,400 $1,173 1,200 $984 1,000 $796 $1,082 $1,110 800 $6
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 $2.20 1 $2.15 $2.00 $1.79 $1.33 $1.70 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 Product 3% Petrochemicals and Chemicals 23% 49% Black Oil Refined Petroleum Products 25% 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 2016E (estimate to be refined in March) 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
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 1089 1000 800 731 600 485 400 346 346 270 219 200 101 50 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 3,637 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 230 towb
Slide 19: Kirby Inland Fleet by Barge Type
Kirby Inland Fleet by Barge Type * * As of December 31, 2016 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 Buffalo Marine Service, Inc. 38 Kirby Corporation 876 - Accu Trans Marine 33 - American Commercial Lines LLC 432 3,823 Harley Marine Gulf 23 - Canal
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 69 tank barges with 6.2 million barrels of capacity and 75 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 69 6.2 Coastal Markets Harley Marine 34 1.6 Reinauer Transportation 26 2.1 Bouchard Transportation1 23 2.4 Crowley Marine2 14 2.4 Moran To
Slide 25: Diesel Engine Services
Kirby Engine Systems United Holdings DIESEL ENGINE SERVICES 25
Slide 26: Diesel Engine Services
Diesel Engine Services Revenue Distribution * Markets Services Offered Customers and Market Drivers 48% Land-Based Distributes and services high-speed diesel • Oilfield Services engines and transmissions, and manufactures, • Oil & Gas Operators and Producers remanufactures and services oilfield serv
Slide 27: Diesel Engine Services
Diesel Engine Services Engines, Transmissions and Reduction Gears – Electro-Motive Diesel (EMD) Medium-Speed – Cooper-Bessemer – Nordberg – Caterpillar – Cummins – MTU High-Speed – Detroit Diesel – John Deere – Isuzu – Allison Transmissions/ – Falk Reduction Gears – Twin Disc 27
Slide 28: Land-Based Oil Services Market
Land-Based Oil Services Market One of the largest diesel engine service 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 equipment
Slide 29: 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 30: Outlook
~ QUTLOOK oo 30
Slide 31: 2017 Guidance
2017 Guidance Published 2017 first quarter guidance of $0.40 to $0.55 per share, versus $0.71 for the 2016 first quarter(1) Published 2017 full year guidance of $1.70 to $2.20 per share, versus $2.62 for 2016(1) Marine Transportation: Inland utilization in the mid-80% to low 90% range Coastal
Slide 32: Financial Highlights
FINANCIAL HIGHLIGHTS 32
Slide 33: For the twelve months ended December 31, 2016
For the twelve months ended December 31, 2016 Change from 2015 Income Statement 2016 2015 $ % Revenues: Marine Transportation $ 1,472M $ 1,663M $ (191)M (11)% Diesel Engine Services 299 485 (186) (38) Total $ 1,771M $ 2,148M $ (377)M (18)% Operating Income: Marine Transportation $ 257M $ 375M $ (118
Slide 34: 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 35: 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 36: 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 $165 $112 $122 $97 $100 $83 $94 $73 $72 $48
Slide 37: Capital Structure
Capital Structure 60% 55.8% Debt-to-Total Capital 2000 - 2016 50% 40% 30% 20% 23.1% 10% 0% Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 37
Slide 38: 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% • $550 million Bank Revolving Credit Facility – $208MM ou
Slide 39: Why Invest in Kirby?
WHY INVESTINKIRBY? “= 39
Slide 40: 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 41: Thank You For Listening to Our Story
Kirby Corporation Putting America’s Waterways to Work Thank You For Listening to Our Story
Slide 42: 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 43: 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 44: Reconciliation of GAAP Net Earnings to Non-GAAP EBITDA
KIRBY CORPORATION Reconciliation of GAAP Net Earnings Attributable to Kirby to Non-GAAP EBITDA 44
Slide 45: 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 46: 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 47: ~$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 48: 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 49: 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 4,000 Ethylbenzene Monomer 0% 1% 3,500 Alpha Olefins Ethylene 15% 3,000 Dichlo