Kirby Corporation · NYSE:KEX
Kirby — Non-Deal Roadshow (November 2016)
49 slides from Kirby's roadshow presentation, November 2016
Slide 1: Putting America's Waterways to Work
Putting America’s Waterways to Work NYSE: KEX November 2016
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 84% of 2016YTD1 Revenue 16% of 2016YTD1 Revenue 1
Slide 4: Public Market Information
Public Market Information Share Price NYSE: KEX on November 2, 2016 $60.25 Shares Outstanding 53.9MM (as of November 2, 2016) $3,247MM Market Capitalization Net Debt $740MM (as of October 27, 2016) $3,987MM Enterprise Value 4
Slide 5: Company Overview
Company Overview Marine Transportation • Largest combined inland and coastal tank barge operator – 881 inland tank barges and 227 towboats – 68 coastal tank barges and 80 tugboats – 80% of inland revenues under term contracts, of which approximately 52% 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 $2,566 2600 2400 $2,242 2200 10% compound $2,113 annual growth $2,148 2000 1800 1995-2015 $1,850 In Millions 1600 $1,360 1400 $1,173 1200 $1,082 $984 1000 $1,110 $796 800 $675 $567 $613 $513
Slide 9: Historical EPS Growth
Historical EPS Growth Earnings Per Share From Continuing Operations Excluding Non-Recurring Items $6.00 $4.93 $5.00 13% compound annual growth $3.73 $4.11 $4.00 1995 - 2015 $3.33 $3.35 $2.91 $3.00 $2.621 $2.29 $2.34 $2.15 $2.00 $1.79 $2.471 $1.33 $0.98 $1.00 $0.82 $0.94 $0.82 $0.83 $0.52 $0.63 $0.37
Slide 10: Marine Transportation
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 3,900 liquid tank barges – The coastal market, including Alaska and Hawaii, encompasses approximately 290
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 March 31, 2016 4,100 3,900 The inland tank barge market has 3,900 grown at 1.4% over the last 20 years 3,700 and 3.1% 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
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 227 towb
Slide 19: Kirby Inland Fleet by Barge Type
Kirby Inland Fleet by Barge Type * Petrochemicals / Refined Products 689 -High capacity pumps -Specialty coated tanks Black Oil & Bunkering 121 -Self-contained heating systems Pressure 56 -Pressurized tanks Anhydrous Ammonia 10 -Refrigeration tanks Specialty 5 -Stainless steel tanks * As of Septembe
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. 34 Kirby Corporation 881 - 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 68 tank barges with 6.0 million barrels of capacity and 80 tug
Slide 23: Coastal Tank Barge Age Profile
Coastal Tank Barge Age Profile Coastal Barge Market Age Profile Number of barges by age 120 107 The average age of the nation’s 100 coastal tank barge fleet is ~15 years 79 80 Number of Barges 60 40 31 27 18 19 20 4 4 0 0-5 Years 5-10 Years 10-15 Years 15-20 Years 20-25 Years 25-30 Years 30-35 Years
Slide 24: Coastal Tank Barge Owners
Coastal Tank Barge Owners Coastal Tank Estimated Barrel Capacity* Barges Operated * (MM) Kirby is Well- Vane Brothers 74 2.7 Positioned in U.S. Kirby Corporation 68 6.0 Coastal Markets Harley Marine 33 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 43% 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: 2016 Guidance
2016 Guidance Published 2016 fourth quarter guidance of $0.45 to $0.60 per share, versus $0.94 for the 2015 fourth quarter (1) Published 2016 full year guidance of $2.47 to $2.62 per share, versus $4.11 for 2015 (1) Marine Transportation: Inland utilization in the low-80% to high-80% range Coa
Slide 32: Financial Highlights
FINANCIAL HIGHLIGHTS 32
Slide 33: Nine Months Ended September 30, 2016
For the nine months ended September 30, 2016 Change from 2015 Income Statement 2016 2015 $ % Revenues: Marine Transportation $ 1,116M $ 1,263M $ (147)M (12)% Diesel Engine Services 219 400 (181) ( 45) Total $ 1,335M $ 1,663M $ (328)M (20)% Operating Income: Marine Transportation $ 198M $ 287M $ (89)
Slide 34: Operating Margins
Operating Margins 30% 25% 23.6% 23.8% 24.3% 22.4% 22.5% 21.9% 22.1% 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% 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% 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Slide 35: EBITDA Per Share Growth
EBITDA Per Share Growth $12.00 $11.23 11% compound $10.49 $10.38 annual growth $10.00 1995 - 2015 $9.03 $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 2007
Slide 36: Cash Flows
Cash Flows $700 CashExpansion Barges from Operations $601 $600 Capital Expenditures $521 $500 $439 In Millions $400 $30 $355 $345 $319 $326 $312 $312 $300 $246 $245 $253 $250 $236 $226 $193 $230 $200 $164 $173 $142 $150 $127 $139 $137 $112 $122 $97 $100 $83 $73 $94 $72 $48 $59 $48 $0 2000 2001 2002
Slide 37: Capital Structure
Capital Structure 70% Debt-to-Total Capital 60% 55.8% 2000 – 2016 Third Quarter 50% 40% 30% 20% 23.3% 10% 0% Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
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% – Proceeds used for Penn Maritime acquisition and to repl
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 80% 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 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 Net earnings attributable to Kirby, $ 226.7 $ 282.0 $ 253.1 $ 209.4 $ 183.0 $ 116.2 $ 125.9 $ 157.2 $ 123.3 $ 95.5 $ 68.8 GAAP Interest expense 18.8 2
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 30 $24.69 25 $21.94 $20.97 $21.10 $20.07 $20.04 20 $19.04 US $ cents/lb 15 $12.11 $10.97 10 $7.62 5 0 2015A 2016E U.S. Ethane U.S. Propane U.S. Naphtha W. Europe Naphtha Asia Naphtha Source: Macquarie Capital Inc. (with permission
Slide 47: $100+ Billion of Planned U.S. Petrochemical Investments
$100+ Billion of Planned U.S. Petrochemical Investments* Ohio Cost ($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 Feedslate 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 VAM, 1% 4,000 Ethylbenzene 3,500 0% Alpha EDC, 4% Olefins, 15% 3,000 2,500 2,000 EO, 19% PE,