Kirby Corporation · NYSE:KEX
Kirby — Investor Day (November 2006)
75 slides from Kirby's investor day presentation, Nov 8, 2006
Slide 1: Analyst/Investor Meeting
Analyst/Investor Meeting Kirby Corporation Houston, Texas November 8,
Slide 2: Agenda
Kirby Overview Kirby Inland Marine Tour Dispatch Operations Kirby Engine Systems Bus ride to Seamen’s Church Institute Simulator Observation Bus ride to Peterkin building Lunch on M/V Observer and tour of fleets and Ship Channel Tour of Training Center CMAI presentation, Petrochemicals Purvin & Gert
Slide 3: Financial Highlights
Norman Nolen CFO, Exec. Vice President Kirby Corporation Presented by • Financial Highlights
Slide 4: Financial Highlights
For First Nine Months Ended September 30, 2006 Financial Highlights
Slide 5: EBITDA and Operating Margins: Marine Transportation
EBITDA and Operating Margins Marine Transportation
Slide 6: EBITDA and Operating Margins: Diesel Engine Services
EBITDA and Operating Margins Diesel Engine Services
Slide 7: Marine Transportation Margins
Marine Transportation Margins
Slide 8: Barge Capacity Retirement Schedule
Thousands of Barrels Barge Capacity Retirement Schedule
Slide 9: Replacement Barges New Construction Costs
Replacement Barges New Construction Costs
Slide 10: Replacement and Expansion Barges
200320042005. 2006. 2007 2008) 200) 2010 2001 Replacement Barges BExpansion Barges
Slide 11: Barge Capacity
Millions of Barrels Barge Capacity
Slide 12: Replacement, Expansion Barges and Boats
‘Thousands a i | rid s28 525 ids 2 oo om 2003 ©2004 «2005S 2006 «2007. «2008. «Ss 2009S 210201 mReplacement Barges BIExpansion Barges MBoats
Slide 13: Capitalized Maintenance
Capitalized Maintenance
Slide 14: Capital Spending by Category
Thousands 2003 © 2004 «=« 2005-2006 -«= 2007 «2008-2009 2010S 2011 ™Capitalized Maintenance & Other MiReplacement Barges MSExpansion Barges mBoats
Slide 15: Cash Flows
Cash Flows * Capex excludes acquisitions
Slide 16: Debt to Capitalization
Debt to Capitalization Kirby Corporation
Slide 17: Kirby Inland Marine
Kirby Inland Marine
Slide 18: Steve Valerius: Boat and Barge Supply, Manning, Charter Strategy
Steve Valerius President Kirby Inland Marine, LP Presented by • U.S. Inland Boat and Barge Supply • Manning/Crewing Issues • Charter Boat Strategy
Slide 19: Inland Tank Barge Industry
2,850 Total Tank Barges Inland Tank Barge Industry
Slide 20: Inland Tank Barge Fleet
Source: Informa Economics, Barge Fleet Profile, March 2006 Inland Tank Barge Fleet
Slide 21: Industry Fleet Hull Profile
2,850 Total 1,254 Double Skin 30K barges 1,320 Double Skin 10K barges Double Skin < 10K barges Single Skin barges Industry Fleet Hull Profile
Slide 22: Industry Retirement History
Barges Barrels (MM) 2000 2001 2002 2003 2004 2005 BBL estimated from Informa Economics 2.6 2.3 2.0 2.8 2.4 2.5 Industry Retirement History
Slide 23: High Tech and Diverse Fleet
High Capacitypumps – Specialty coated tanks Pressurized Self-contained Refrigeration Stainless steel Active Tank Barges Petrochemical Refined Products Pressure tanks Black Oil heating systems Anhydrous Ammonia tanks Specialty tanks High Tech and Diverse Fleet
Slide 24: Tank Barge Owners By Number of Tank Barges
Tank Barges Operated Dry Cargo Barges Operated Informa Economics, Barge Fleet Profile, March 2006-Adjusted Tank Barges Operated Dry Cargo Barges Operated Shipper Owned Independent Kirby Corporation - American Commercial Lines LLC 2,803 Marathon Ashland Petroleum - Canal Barge Company, Inc. Ingram Ba
Slide 25: Kirby New Construction Plan
2006 2007 2008 2 10K Clean 30K Clean 23 6 10K Clean 20 30K Clean 20 10K Clean 12 30K Clean Total Total Total Kirby New Construction Plan
Slide 26: Industry New Construction on Order
111 2.9 MM BBL 133 3.3 MM BBL 62 1.1 MM BBL Total Industry New Construction on Order
Slide 27: New Construction Prices
10,000 bbl - Clean $1.25M* 30,000 bbl - Clean $2.30M 30,000 bbl - Heated Black Oil $3.50M *Specialty New Construction Prices
Slide 28: New Construction Cost Components
Construction labor Steel, steel products Components Engineering 38% 37% 17% 8% 100% New Construction Cost Components
Slide 29: Steel Sheet Prices
Mill Price + Scrap Surcharge Source: American Metal Market/CRU Monitor Steel Sheet Prices
Slide 30: Kirby Fleet Status
New Construction 23 42 25 26 32 Number of Barges Barrel Capacity (mm) Kirby Fleet Status
Slide 31: Kirby Towboat Construction 2006/07
4 – 2100 HP – 90’x34’x10’ Oct 30, Jan 17, March 29, May 11 4 – 1800 HP – 76’x35’x10’ June 10, July 25, Sept 5, Oct 17 4 – 1800 HP – 76’x35’x10’ March, April, May, June Kirby Towboat Construction 2006/07
Slide 32: Robert G. Stone, Jr.
Robert G. Stone, Jr.
Slide 33: Towboat Fleet
157 90 5 252 Total Operated Boats Towboat Fleet Kirby-owned boats Full-time charter boats Short-term use boats
Slide 34: Charter Boat Strategy
27 different charter boat service providers Average tenure with Kirby is 12 years No capital cost Variable cost vs. fixed cost • • n Kirby operates 94 chartered towboats • • n Charter Boat Strategy Charter Boats
Slide 35: Marine Workforce
Marine Workforce
Slide 36: Vessel Personnel Profile
Captains / Pilots Tankermen Deckhands/Tankermen Trainees Engineers 495 394 341 93 1,323 Marine Employees Vessel Personnel Profile
Slide 37: Vessel Personnel Profile: Average Years of Service
Captains Tankermen Engineers 16 5 12 Average Years of Service Vessel Personnel Profile
Slide 38: Recruit, Train and Retain
Develop a large diverse applicant pool Promote career path/competitive pay Conduct comprehensive screening Company-owned and operated Training Safety and job skill training Classroom, simulation and hands-on Nine USCG-certified courses Include Tankermen DL, Radar and • Recruit – – – • Training and D
Slide 39: Recruit, Train and Retain: Career Path
Training Path culminates with industry’s only Retention rate of 90% for employees completing • Career Path is Critical to Retention – USCG Approved Mate (Pilot) Program – (Steersmen) – the program Recruit, Train and Retain
Slide 40: Kirby Offers Excellent Benefits
Starting salary $30,500 As soon as 6 mos. $32,000 to $53,500 In 2-3 years $53,500 In 3-5 years $80,375 In 5-10 years $87,250 In 10 years $94,625 Up to $107,000 plus bonus • Highly competitive wages • 401(k) • Insurance • Disability coverage • Pension plan • Annual incentive bonus • Free training • L
Slide 41: Jim Farley: Shipyards, River Conditions, Regulatory Issues
Jim Farley Exec. Vice President, Operations Kirby Inland Marine, LP Presented by • Shipyards • River Conditions • Regulatory Issues
Slide 42: Tank Barge New Construction Shipyards
Jeffboat Trinity – Ashland City Trinity – Madisonville Southwest West Gulf West Gulf - Palacios Tank Barge New Construction Shipyards
Slide 43: Dry Cargo New Construction Shipyards
Jeffboat Tell City Trinity – Port Allen Trinity – Caruthersville Dry Cargo New Construction Shipyards
Slide 44: Inland Tank Barge Repair Yards
Inland Tank Barge Repair Yards
Slide 45: Canal and River Constraints
Illinois River Upper Mississippi River Ohio River Lower Mississippi River Intracoastal Waterway Canal and River Constraints
Slide 46: Navigation Delays
Navigation Delays
Slide 47: Regulatory Issues
• TWIC • Inspected Towing Vessel Regulatory Issues
Slide 48: Bill Ivey: Pricing and Contracts
Bill Ivey Exec. Vice President, Sales Kirby Inland Marine, LP Presented by • Pricing and Contracts
Slide 49: Term vs. Spot
• 70% Contract – 12 months or longer – Formula driven escalators • Renewable – 25% long term – 35% annually – 10% every two-three years • 30% Spot – Market driven rates Term vs. Spot
Slide 50: Contract Escalators
• Fuel – Quarterly – Monthly • Labor – Semi-annually – Annually • Inflation – Semi-annually – Annually Contract Escalators
Slide 51: Contract Pricing
• Third Quarter Spot Pricing 25% higher • Currently Spot Pricing 10-15% above • Strong volumes expected to continue • Pricing environment favorable for 2007 Pricing year over year Contract Pricing
Slide 52: Kirby Engine Systems: The Diesel Engine Services Market
Kirby Engine Systems The Diesel Engine Services Market
Slide 53: Kirby Engine Systems Agenda
Kirby Engine Systems Agenda • Diesel Engine Market – Overview • KES Operations • High Speed Market • High Speed Acquisition Synergies Acquisition of Global Power Holding • • Growth Opportunities Company, Inc.
Slide 54: Basic Diesel Engine Types
Kirby Engine Systems Engine Speed Horsepower Range Applications Manufacturers Basic Diesel Engine Types Slow Speed Less than 400 RPM 7,000 - 108,000 hp • Large ocean going vessels • Power generation • Man B&W • Sulzer • Wartsila Medium Speed - 1,000 RPM - 32,000 hp • Inland vessels • Offshore vessel
Slide 55: Slow Speed Diesel Engine
Kirby Engine Systems Slow Speed Diesel Engine
Slide 56: Medium Speed Diesel Engine
Kirby Engine Systems Medium Speed Diesel Engine
Slide 57: High Speed Diesel Engine
Kirby Engine Systems High Speed Diesel Engine
Slide 58: US Marine Propulsion Engines
Kirby Engine Systems 25% 35% 13% 24% 3% US Marine Propulsion Engines
Slide 59: KES Services: Replacement Parts, Engine and Gear Repair
Kirby Engine Systems KES Services • OEM new parts • OEM remanufactured parts • Kirby remanufactured parts • Overhauls • Bearing and element replacement • Remanufacture engines • Machining and Welding • Troubleshooting • Alignment Replacement Parts Engine and Gear Repair
Slide 60: Manufacturer Affiliations
Kirby Engine Systems Manufacturer Affiliations
Slide 61: KES Locations
Kirby Engine Systems Galveston Tampa Miami High Speed Medium Speed KES Locations Seattle Paducah Chesapeake Rocky Mount
Slide 62: Kirby Engine Systems Revenue Growth
Kirby Engine Systems Revenue Growth
Slide 63: Kirby Engine Systems Operating Income
Kirby Engine Systems Operating Income
Slide 64: High Speed Market
Kirby Engine Systems High Speed Market Engine population High speed engines provide main propulsion power for over 73% of U.S. flagged commercial vessels Markets: Oil Services Inland Waterways Offshore Towing Consolidation • Overview – • – • • • –
Slide 65: High Speed Acquisition Synergies
Kirby Engine Systems High Speed Acquisition Synergies Opportunity to provide multiple products and services to individual customers Diversifies customer base • Synergies – –
Slide 66: Global Acquisition
Kirby Engine Systems Global Acquisition Premier high speed diesel engine service provider on the Gulf Coast 296 employees; 175 service technicians Projected revenue of $68 - $70 million in 2006 Six operating locations Gulf Coast authorized marine dealer: Caterpillar Cummins Detroit Diesel John Deere
Slide 67: KES Opportunities
Kirby Engine Systems KES Opportunities – Engine rebuild capacity – Inland waterway business – Land drilling – Consolidation in customer base • High Speed Market Expansion Opportunities • Market Consolidation • Acquisitions
Slide 68: Joe Pyne: Closing Remarks
Joe Pyne CEO, President Kirby Corporation Presented by • Closing Remarks
Slide 69: Revenue Growth
17% growth rate from 1988-2005 Revenue – Business Operations
Slide 70: Earnings Per Share
1994-2001 adjusted to exclude goodwill amortization expense 2002 adjusted to exclude impairment charges of $12.5 million, net of taxes, or $.51 per share See Appendix for reconciliation of GAAP to Non-GAAP earnings per share Earnings per share have been revised to reflect 2-for-1 stock split effecti
Slide 71: After Tax Return on Capital
*(Net income + after-tax interest)/(debt + equity) After Tax Return on Capital* Kirby Corporation
Slide 72: Marine Transportation Acquisitions
* Towboats Only Date No. of Tank Barges Description Date No. of Tank Barges Description Date No. of Tank Barges Description Alliance Marine Alamo Inland Marine Co. Brent Towing Company International Barge Lines, Inc. Sabine Towing & Transportation Co. Ole Man River Towing, Inc. Scott Chotin, Inc. *
Slide 73: Diesel Services Acquisitions
Acquisitions 1987 1991 1995 1996 1997 2000 2000 2004 2005 2006 2006 National Marine Ewing Diesel Percle Enterprises MKW Power Systems Crowley (Power Assembly Shop) West Kentucky Machine Shop Powerway Walker Paducah Corp. TECO (Diesel Services Division) Global Power Holding Company Marine Engine Spec
Slide 74: Financial Strength
– Standard & Poor’s – BBB+ – Moody’s – Baa3 – $200 million outstanding – Floating rate of LIBOR +0.5% – No required principal payments until maturity – Accordion feature allows maximum amount to increase to $325 million without amendment – $216 million available, including $75 accordion • Investment
Slide 75: 1970 1975 1980 1985 1990 1995 2000 2005 2010
1970 1975 1980 1985 1990 1995 2000 2005 2010