Kirby Corporation · NYSE:KEX
Kirby — Non-Deal Roadshow (June 2014)
46 slides from Kirby's roadshow presentation, June 2014
Slide 1: Putting America's Waterways to Work
Putting America’s Waterways to Work NYSE: KEX June 2014
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: Kirby Business Operations
Kirby Business Operations Marine Transportation Diesel Engine Services 76% 24% of 2013 revenue of 2013 revenue Largest U.S. Inland and Coastal Tank Barge Operator Nationwide Diesel Engine Services Provider 3
Slide 4: Kirby Public Market Facts
Kirby Public Market Facts NYSE: K E X Current Price (June 5, 2014) $114.06 Number of Shares O/S (May 6, 2014) 57.0M Market Capitalization $6,501M Debt (April 30, 2014) $695M Enterprise Value $7,196M Employees 4,575 4
Slide 5: Kirby Facts
Kirby Facts Marine Transportation • Largest inland and coastal tank barge operator – 878 inland tank barges and 255 towboats – 72 coastal tank barges and 76 tugboats – 80% of inland revenues under term contracts, of which approximately 57% are under time charters – 80% of coastal revenues under term
Slide 6: Acquisitions in Marine Transportation
Acquisitions in Marine Transportation No. of No. of Tank Tank Date Barges Description Date Barges Description 1986 5 Alliance Marine 2002 94 Dow/Union Carbide (transportation assets) 1989 35 Alamo Inland Marine Co. 2003 64 SeaRiver Maritime (ExxonMobil) 2005 10 American Commercial Lines (black oil f
Slide 7: Acquisitions in Diesel Engine Services
Acquisitions in Diesel Engine Services Acquisitions Internal Growth 1987 National Marine 1989 Midwest 1991 Ewing Diesel 1992 Seattle 1995 Percle Enterprises 1996 MKW Power Systems 2000 Cooper Nuclear 1997 Crowley (Power Assembly Shop) 2000 West Kentucky Machine Shop 2000 Powerway 2004 Walker Paducah
Slide 8: Historical Revenue Growth
Historical Revenue Growth Marine Transportation and Diesel Engine Services Revenue From Continuing Operations 2400 $2,242 $2,113 2200 16.0% growth rate $1,850 2000 from 1988-2013 1800 In Millions 1600 $1,360 1400 $1,173 1200 $984 $1,082 $1,110 1000 $796 800 $613 $675 $513 $567 $535 600 $335 $327 $36
Slide 9: Earnings Per Share
Earnings Per Share Earnings Per Share From Continuing Operations Excluding Non-Recurring Items $6.00 $5.00 $5.00 15.0% growth rate $4.44 $4.80 from 1994 - 2013 $4.00 $3.73 $3.33 $2.91 $3.00 $2.29 $2.34 $2.15 $2.00 $1.79 $1.33 $0.98 $1.00 $0.82 $0.94 $0.82 $0.83 $0.63 $0.48 $0.52 $0.31 $0.37 $0.42 $0
Slide 10: Marine Transportation
MARINE TRANSPORTATION <= 10
Slide 11: U.S. Inland and Coastal Waterway Systems
U.S. Inland and Coastal Waterway Systems Kirby is one of the few operators offering distribution throughout the St. Paul Mississippi River System, Gulf Intracoastal Waterway, Sioux Pittsburgh along U.S. coasts, plus City Chicago Alaska and Hawaii Cincinnati 12,000 miles of navigable St. Charleston L
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 based business is comprised of approximately 18,000 dry cargo barges and 3,450 liquid tank barges – The U.S. coastal business, including Alaska and Hawaii, that operate in t
Slide 13: Marine Transportation Demand Drivers
Marine Transportation Demand Drivers End Uses of Products Revenue Markets and Distribution * Products Moved Products Drivers 48% Petrochemicals and Benzene, Styrene, Methanol, Acrylonitrile, Consumer non-durables – 70% Chemicals Xylene, Caustic Soda, Butadiene, Propylene Consumer durables – 30% 26%
Slide 14: Shale Oil Production Creates New Transportation Opportunities
Shale Oil Production Creates New Transportation Opportunities Sources: American Petroleum Institute, Company announcements, Kirby Corp. 14
Slide 15: Strong Emphasis on Safety
Strong Emphasis on Safety • Committed to dedicating 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 and environmental
Slide 16: Inland Tank Barge Markets
Inland Tank Barge Markets 16
Slide 17: Number of Inland Tank Barges
Number of Inland Tank Barges For the years 1993 through 2013 3,700 3,450 3,500 The inland tank barge market has 3,300 grown at 0.9% annually since 1993 3,100 2,900 121 single hull tank barges industry wide, 2,700 9 operated by Kirby 2,500 2,300 2,100 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Slide 18: Inland Tank Barge Fleet
Inland Tank Barge Fleet Age of Tank Barges (Years) 1200 1000 967 800 699 600 400 408 322 200 264 278 254 209 12 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 2014 - Adjusted 18
Slide 19: 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 • Barges positioned closer to cargoes • Less cleaning Towboat Fleet • Operated an average of 255 towboats during the
Slide 20: Inland Tank Barge Owners By Number of Tank Barges
Inland Tank Barge Owners By Number of Tank Barges Kirby Outpaces the Competition Tank Dry Cargo Tank Barges Dry Cargo Shipper Owned Independent Barges Barges Operated Barges Operated Operated Operated Kirby Corporation 878 - Devall Barge Line 29 - American Commercial Lines LLC 349 1,582 SCF Marine/W
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 crude oil, and distribution of petrochemicals between PADDs Fleet consists of 72 tank barges with 6.0 million barrels of c
Slide 23: Coastal Tank Barge Fleet Age
Coastal Tank Barge Fleet Age of Tank Barges (Years) 110 100 89 90 80 Number of Barges 72 70 60 The average age of the nation’s coastal tank 50 barge fleet is ~16 years 40 29 30 21 17 20 18 4 5 9 10 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 Tank Barges Less than 195K
Slide 24: Coastal Tank Barge Owners By Number of Tank Barges
Coastal Tank Barge Owners By Number of Tank Barges Coastal Tank Barges Operated * Kirby Well- Kirby Corporation 72 Positioned in U.S. Vane Brothers 56 Coastal Markets Olympic Tug & Barge (Harley Marine) 27 Bouchard Transportation 23 Reinauer Transportation 23 Crowley Marine 14 Moran Towing 10 Saltch
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 62% Land-Based Distributes and services high-speed diesel • Oil & Gas Services engines and transmissions, and manufactures • Power Generation and remanufactures oilfield service equipment, • Transport
Slide 27: Diesel Engine Services
Diesel Engine Services Engines and Transmissions/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 • Shale oil and gas is an energy “game changer” • Hydraulic fracturing technology has significantly expanded and reduced the cost of producing U.S. natural gas and oil reserves •
Slide 29: Pressure Pumping Market Size
Pressure Pumping Market Size Estimated North American Pressure Pumping Horsepower (millions) 2003-2013E 18.4 17.6 Each pressure pumping unit is ~2,250 hp and must be replaced or 14.6 remanufactured every 3-4 years 9.6 7.2 7.7 5.7 3.9 2.9 2.1 2.3 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Slide 30: Outlook
~ QUTLOOK oo 30
Slide 31: 2014 Second Quarter and Year Guidance
2014 Second Quarter and Year Guidance Second quarter 2014 guidance of $1.25 to $1.35 per share, versus $1.11 for 2013 second quarter that included a $.07 per share benefit to the United earnout liability 2014 year guidance of $4.80 to $5.00 per share, versus $4.44 for 2013 that included a $.20 p
Slide 32: Financial Highlights
FINANCIAL HIGHLIGHTS 32
Slide 33: First Quarter Ended March 31, 2014
First Quarter Ended March 31, 2014 Change from 2013 Income Statement 2014 2013 $ % Revenues: Marine Transportation $ 436M $ 419M $ 17M 4% Diesel Engine Services 153 140 13 9 Total $ 589M $ 559M $ 30M 5% Operating Income: Marine Transportation $ 98M $ 89M $ 9M 10% Diesel Engine Services 13 14 (1) (7)
Slide 34: Operating Margins
Operating Margins 25% 23.6% 23.8% 22.4% 22.1% 21.9% 21.1% 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% 10.5% 10.6% 10.4% 10.0% 10.1% 10.1% 9.7% 9.5% 9.4% 10% 8.1% 5% 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Marine Transportation Dies
Slide 35: EBITDA Per Share Growth
EBITDA Per Share Growth $12.00 $10.49 13.1% growth rate $10.00 from 1994 - 2013 $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 $1.02 $0.00 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2
Slide 36: Cash Flows
Cash Flows $700 CashExpansion Barges from Operations $601 $600 Capital Expenditures $500 In Millions $400 $319 $30 $312 $326 $330 $312 $300 $320 $246 $245 $253 $236 $226 $193 $200 $164 $173 $142 $150 $137 $127 $139 $112 $122 $97 $100 $83 $73 $94 $72 $48 $59 $48 $0 * Unaudited 36
Slide 37: Debt/Capitalization
Debt/Capitalization 0.7 57.3% 0.6 0.5 0.4 0.3 25.3% 0.2 0.1 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 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 37
Slide 38: Financial Strength
Financial Strength • Investment grade rating – Standard & Poor’s: A-, stable outlook – Moody’s: Baa3, stable outlook – Fitch: BBB, stable outlook • $500 million unsecured Private Placement – $150 million 7-year maturity at 2.79% – $350 million 10-year maturity at 3.34% – Proceeds used for Penn Marit
Slide 39: Why Invest in Kirby?
WHY INVESTINKIRBY? <= 39
Slide 40: Why Invest in Kirby?
Why Invest in Kirby? • Consistent long-term record of success • Experienced Management teams in both core businesses • Marine Transportation – 80% of inland business under term contracts, of which approximately 57% are under time charters – 80% of coastal business under term contracts, of which appr
Slide 41: Thank You For Listening to Our Story
Kirby Corporation Putting America’s Waterways to Work Thank You For Listening to Our Story
Slide 42: Reconciliation of GAAP to Non-GAAP Financial Measure
KIRBY CORPORATION Reconciliation of GAAP to Non-GAAP Financial Measure Kirby reports its financial results in accordance with generally accepted accounting principles (GAAP). However, Kirby believes that the non-GAAP financial measure EBITDA is useful in managing Kirby’s businesses and evaluating Ki
Slide 43: Reconciliation of GAAP Net Earnings to Non-GAAP EBITDA
KIRBY CORPORATION Reconciliation of GAAP Net Earnings Attributable to Kirby to Non-GAAP EBITDA 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 ($ in millions) Net earnings attributable to Kirby, GAAP $ 253.1 $ 209.4 $ 183.0 $ 116.2 $ 125.9 $ 157.2 $ 123.3 $ 95.5 $ 68.8 $ 49.5 Interest expense 27.9
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 Year Ended Three Months Ended June 30, September 30, December 31, December 31, March 31, ($ in millions) 2013 2012 2013 2012 2013 2012 2013 2012 201
Slide 45: Marine Transportation Performance Measurements
KIRBY CORPORATION MARINE TRANSPORTATION PERFORMANCE MEASUREMENTS 2006 2007 2008 2009 2010 2011 2012 2013 2014 Year Year Year Year Year Year 1st Q 2nd Q 3rd Q 4th Q Year 1st Q 2nd Q 3rd Q 4th Q Year 1st Q Inland Performance Measurements: Ton miles (in millions) (1) 15,649 16,716 14,267 11,977 12,957
Slide 46: $100+ Billion of Planned U.S. Petrochemical Investments
$100+ Billion of Planned U.S. Petrochemical Investments Columbia River, WA/OR • Northwest Innovation 2018 New Methanol (2 locations) Iowa • LyondellBasell 2014 Ammonia expansion Houston Ship Channel and surrounding, TX • Orascom (OCI) 2015 New fertilizer • Ascend 2015 New propane PDH • Iowa Fertiliz