Kirby Corporation · NYSE:KEX
Kirby — Investor Presentation (February 2023)
59 slides from Kirby's investor presentation, February 2023
Slide 1: Investor Presentation
Investor Presentation NYSE: KEX February 2023
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: Company Overview
Company Overview Marine Transportation Distribution and Services The largest inland and coastwise tank barge fleets Nationwide service provider and distributor of in the United States engines, transmissions, parts, industrial equipment, oilfield service equipment and electrical power • 40 successful
Slide 4: Why Invest in Kirby?
Why Invest in Kirby? ▪ Proven track record of success over the long-term ▪ Two strong franchises – Marine Transportation – Distribution and Services ▪ Purpose-built management team with decades of relevant experience in both core businesses ▪ Disciplined financial management – Investment-grade balan
Slide 5: Public Market Information
Public Market Information NYSE: KEX Share Price on January 31, 2022 $70.74 Shares Outstanding 59.9 MM as of December 31, 2022 Market Capitalization $4,237 MM Net Debt* $999 MM as of December 31, 2022 Enterprise Value $5,236 MM * Net debt = Total debt less cash and cash equivalents 4
Slide 6: Marine Transportation Acquisitions
Marine Transportation Acquisitions Through consolidating acquisitions, Kirby is the nation’s premier tank barge company with a young and efficient fleet Tank Tank Date Barges Description Date Barges Description 1986 5 Alliance Marine 2006 * Capital Towing 1989 35 Alamo Inland Marine Co. 2007 37 Coas
Slide 7: Distribution and Services Expansions
Distribution and Services Expansions Kirby’s distribution and services business is one of the nation’s leading service providers and distributors of engines, transmissions, parts, industrial equipment, oilfield service equipment, and electrical power generation equipment Acquisitions Internal Growth
Slide 8: Historical Revenue Growth
Historical Revenue Growth Marine Transportation and Distribution and Services Revenue from Continuing Operations $2,971 3,000 $2,838 $2,785 $2,566 2,500 $2,242 $2,247 $2,113 $2,148 $2,214 2,000 $1,850 $2,171 In Millions $1,771 1,500 $1,360 $1,173 $1,082 $984 1,000 $1,110 $796 $675 $613 Tank barge $5
Slide 9: Historical EPS Growth
Historical EPS Growth Earnings Per Share, Excluding One-Time Items $6.00 Economic Financial Tank barge COVID-19 downturn crisis industry overbuilding pandemic 2011 – 2015 $4.93 ------------------------ $5.00 Oil and gas $4.44 industry downturn $4.11 $4.00 $3.73 $3.35 1 1 $2.91 $2.86 $2.90 $3.00 $2.6
Slide 10: Marine transportation is the cleanest, safest, and most efficient mode of surface transportation
Marine transportation is the cleanest, safest, and most efficient mode of surface transportation Marine Transportation has far fewer impacts on the population than truck or rail Barges are more fuel efficient Barges are better for the environment Barges are safer Source: National Waterways Foundatio
Slide 11: Strong Emphasis on Safety
Strong Emphasis on Safety ▪ 99.95% Safe Watches* in 2021 ▪ Safety is the first and foremost concern in everything we do ▪ All employees have safe work responsibility ▪ The Board of Directors regularly reviews the safety performance of the organization “Being safe is not a decision; it is a series of
Slide 12: ESG Highlights
ESG HIGHLIGHTS COMPLETE: 99.95% ESG Disclosures aligned with – 410.6 million ~6,000 barrels of cargo SAFE WATCHES SASB Marine Training transported (Sustainability Accounting Standards Board) & Certificates WITH ONLY TCFD (Taskforce on Climate-related Financial Disclosures) 60 gallons spilled to ISSU
Slide 13: Marine Transportation
Marine Transportation
Slide 14: Waterways are a Crucial Link between U.S & Global Trade
Waterways are a Crucial Link between U.S & Global Trade Kirby operates on 12,000 miles of navigable US waterways Texas and Louisiana account for 80% of the total U.S. production of chemicals and petrochemicals 13
Slide 15: Industry Leader Well Positioned for Continued Growth
Industry Leader Well Positioned for Continued Growth ▪ The U.S. barge industry serves the inland waterways and U.S. coastal ports ▪ Kirby is principally in the liquid cargo transportation business - Inland share (barge count): 26%* - Coastal share (capacity): 16%** ▪ No competition from foreign comp
Slide 16: Marine Transportation Demand Drivers
Marine Transportation Demand Drivers Inland & Offshore Drivers Revenue by Product1 3% 20% 49% Petrochemicals and Chemicals Black Oil 28% Refined Petroleum Products Agricultural Chemicals Markets and Products Moved Products Drivers 30% Benzene, Styrene, Methanol, Naphtha, Acrylonitrile, Consumer Dura
Slide 17: $150+ Billion of U.S. Petrochemical Investments
$150+ Billion of U.S. Petrochemical Investments* Ohio Cost ($MM) PTT On hold New ethylene 10,000 PBF 2015 Aromatics exp unk Indiana Monaca, PA Iowa Cost ($MM) Cost ($MM) Cost ($MM) Midwest Fert. TBD New ammonia 2,800 Shell 2022 New polyethylene 6,000 Orascom (OCI) 2017 New fertilizer 3,000 CF Indust
Slide 18: Common Products Moved on the Waterways
Common Products Moved on the Waterways Black Oil Pressurized Petrochemicals Refined Products Agriculture Product List: Product List: Product List: Product List: Product List: ▪ Crude Oil ▪ LPG ▪ Methanol ▪ Kerosene/Jet Fuel ▪ Ammonia ▪ Asphalt ▪ Propane ▪ Ethanol ▪ Gasoline ▪ Ammonium ▪ Fuel Oil ▪ B
Slide 19: Inland Market
Inland Market 18
Slide 20: Number of Inland Tank Barges
Number of Inland Tank Barges Inland barge market: Estimated for the years 2002 through 2022 4,300 The inland tank barge market has grown 4,100 4,038* annually at 1.9% over the last 20 years and 3,900 1.1% over the last 5 years --------------------------------------------- 3,700 Kirby expects no mate
Slide 21: Flexible Fleet Size Keeps Utilization High
Flexible Fleet Size Keeps Utilization High Better asset utilization through scale advantages 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
Slide 22: Kirby Inland Fleet by Barge Type
Kirby Inland Fleet by Barge Type* * Barge counts as of December 31, 2022 21
Slide 23: Inland Barge Fleet by Operator
Inland Barge Fleet by Operator Tank Dry Cargo Tank Dry Cargo Shipper Owned Independent Barges Barges Shipper Owned Independent Barges Barges Operated Operated Operated Operated Campbell Transportation Company 40 110 Kirby Corporation* 1,037 - John W. Stone Oil 39 - American Commercial Lines LLC. 389
Slide 24: Kirby Growth and Asset Replacement Strategy Based on Counter Cyclical Acquisitions
Kirby Growth and Asset Replacement Strategy Based on Counter Cyclical Acquisitions Kirby is focused on growth while replenishing and reducing the age of its inland barge fleet through asset acquisitions vs. newbuilds Number Kirby’s Inland Barge Fleet Over Time vs. Industry of Barges Kirby Count Inde
Slide 25: Kirby Inland Marine – Increase in Earnings Potential
Kirby Inland Marine – Increase in Earnings Potential 2017 2022* Change Number of Inland Barges 841 1,037 +23% Inland Bbl Capacity (MM Bbls) 17.3 23.1 +34% Inland Average Barge Age 14.4 15.5 1.1 years ▪ Significant growth while improving asset quality ▪ Increase in operational scale * Barge count as
Slide 26: Inland Barge Utilization Recovering from COVID Lows
Inland Barge Utilization Recovering from COVID Lows Margins historically lag barge utilization through the cycle, but have started to improve Utilization % Inland EBITDA and operating income have started to inflect and are Margin % expected to continue to improve throughout FY 20231 96 36 94 92 32 9
Slide 27: Kirby Inland Marine Differentiators
Kirby Inland Marine Differentiators ▪ Safety culture ▪ High quality customer portfolio ▪ Heavily engrained in the supply chain of many blue chip companies – Acquired Lyondell, Dow, and SeaRiver’s captive fleets ▪ Horsepower management ▪ Largest tank barge fleet – scale matters – Facilitates better a
Slide 28: Coastal Market
Coastal Market Coastal Division 27
Slide 29: Coastal Tank Barge Fleet by Operator
Coastal Tank Barge Fleet by Operator Kirby is the second largest Coastal tank barge operator by barrel capacity Tank barge count as of December 31, 2022 Source: Kirby, company websites and public filings 28
Slide 30: Coastal Tank Barge Age Profile
Coastal Tank Barge Age Profile Coastal Barge Market Age Distribution Number of barges by age and category 92 86 There are no coastal barges under construction The average age of the nation’s coastal tank barge fleet is ~15 years, but 20 barges are 25+ 44 years old and candidates for retirement in th
Slide 31: Differentiators for Kirby's Coastal Business
Differentiators for Kirby’s Coastal Business ▪ Inland company key relationships ▪ Kirby Ocean Transport – Working for blue chip refiners – Long term contracts with 40 year relationship ▪ Younger, more efficient fleet ▪ Counter cyclical investments ▪ Focus on transporting black oil and chemicals 30
Slide 32: Offshore Wind
Offshore Wind Photo courtesy of Maersk Supply Service 31
Slide 33: Kirby Offshore Wind
Kirby Offshore Wind Kirby announces a new 20-year offshore wind partnership with Maersk ▪ Under the 20-year framework agreement: ‒ Kirby will provide barge transportation services for offshore wind towers and turbines to Maersk Supply Service ‒ First project is Empire Offshore Wind, a joint venture
Slide 34: U.S. Offshore Wind Development Pipeline
U.S. Offshore Wind Development Pipeline The U.S. offshore wind ‘pipeline’ has ~35 GW of potential projects Current Project Pipeline Status ▪ Operating – 42 MW ▪ Approved – 1,221 MW ▪ Permitting – 13,729 MW ▪ Site Control – 7,434 MW ▪ Planning – 12,051 MW Offshore Wind Commitments by State Total Amou
Slide 35: Distribution & Services
Distribution & Services
Slide 36: Introduction to Distribution & Services
Introduction to Distribution & Services Who we are… 62 Seattle LOCATIONS ACROSS NORTH AND SOUTH AMERICA Albany Marlborough Casper Middletown Lodi Piscataway Thorofare 5 Grand Junction Denver Paducah Chesapeake Tulsa Albuquerque Rocky Mount Oklahoma City BRANCH LOCATIONS IN Lubbock Wichita Falls Litt
Slide 37: Kirby is a leader in industrial distribution
Kirby is a leader in industrial distribution Who we represent… Kirby D&S is the largest single distributor in the world for our Dealerships OEM partners provide rights to Distributorships provide unique and exclusive OEM service customers representation rights in assigned areas of responsibility in
Slide 38: 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 ~56% of D&S segment revenues ~44% of D&S segment revenues
Slide 39: Commercial and Industrial
Commercial and Industrial Kirby is a leading distribution and services provider to key markets MARINE POWER GENERATION ON-HIGHWAY ▪ Major service and OEM new product ▪ Sells pre-packaged and fabricated ▪ Distributes, sells parts, and services and replacement parts provider for back-up power systems
Slide 40: Oil and Gas
Oil and Gas Kirby is one of the largest providers of equipment, service and parts to the oilfield MANUFACTURING DISTRIBUTION ▪ Leading provider of non-captive manufacturing and ▪ Heavy duty cycle associated with fracturing leads to the need for remanufacturing of well servicing equipment regular equ
Slide 41: Power Generation Technology
Power Generation Technology Kirby manufactures environmentally friendly power generation equipment that is creating new opportunities in oil and gas and commercial and industrial markets NATURAL GAS RECIPROCATING GENERATORS MOBILE ENERGY STORAGE SYSTEMS (ESS) ▪ High Power Output: 2.5 MW ▪ High Power
Slide 42: Distribution & Services is Recovering
Distribution & Services is Recovering The acquisition of S&S in 2017 generated a significant increase in earnings, but the 2019 industry downturn and COVID-19 adversely impacted profitability in recent years Business activity started to inflect in FY 2021 and is expected to continue to improve in FY
Slide 43: Financial Highlights
Financial Highlights
Slide 44: 4Q 2022 Overview
4Q 2022 Overview Financial Summary $ millions except earnings (loss) per share 4Q 2022 4Q 2021 Variance % 3Q 2022 Variance % Revenues $ 730.2 $ 591.3 $ 138.9 23% $ 745.8 $ (15.6) -2% Operating income (loss) 57.7 31.6 26.1 83% 58.9 (1.2) -2% Net earnings (loss) attributable to Kirby 37.3 11.0 26.3 23
Slide 45: Marine Transportation – FY 2023 Outlook
Marine Transportation – FY 2023 Outlook A strong inland barge market is expected to significantly improve financial results ▪ Inland – Expecting a strong market driven by economic growth, increased volumes, and minimal new barge construction – Barge utilization expected to be low to mid-90% range –
Slide 46: Distribution & Services – FY 2023 Outlook
Distribution & Services – FY 2023 Outlook Anticipate strong markets will lead to material growth in revenue and operating income ▪ Commercial and industrial – Expect strong markets will drive revenue growth for on-highway, power generation, and marine repair – Full year revenue growth in the low dou
Slide 47: Adjusted EBITDA Per Share
Adjusted EBITDA Per Share Tank barge industry overbuilding Economic Financial 2011 – 2015 COVID-19 downturn crisis ------------------------- pandemic $12.00 Oil and gas industry $11.23 downturn $10.49 $10.38 $10.00 $9.03 $8.32 $8.35 $7.95 $7.89 $8.00 $7.27 1 $6.66 $6.80 1 $6.14 $6.00 $5.60 $5.73 $5.
Slide 48: Cash Flow Generation
Cash Flow Generation Kirby consistently generates free cash flow* Operating cash flow Capital expenditures $ in Millions (ex-acquisitions) $700 $480 to $601 $600 $580 $524 $512 $500 $439 $445 $416 $400 $355 $345 $353 $347 $326 $322 $312 $302 $294 $300 $253 $248 $231 $200 $177 $173 $148 $98 $100 $0 2
Slide 49: Capital Structure
Capital Structure 2012 to 2022 Debt-to-Total Capital Savage 92 Barges Allied Cenac $279MM Transp. 63 Barges 39.9% $244MM 10 units Targa 40% $109MM 16 Barges $69MM 35.3% Undisclosed 6 Pressure Barges 13 Barges 33.8% Penn Seacor $68MM Maritime $41MM 27 Barges 18 units 31.3% $89MM 32.5% $301MM 30% 26.9
Slide 50: Financial Strength
Financial Strength ▪ Investment grade rating ▪ On February 3, 2022, Kirby entered into a note – Standard & Poor’s: BBB-, stable purchase agreement for the issuance of 10-year $300 million Senior Notes intended to repay the – Moody’s: Baa3, stable $350 million Senior Notes due February 27, 2023 ▪ $35
Slide 51: Why Invest in Kirby?
Why Invest in Kirby? ▪ Proven track record of success over the long-term ▪ Two strong franchises – Marine Transportation – Distribution and Services ▪ Purpose-built management team with decades of relevant experience in both core businesses ▪ Disciplined financial management – Investment-grade balan
Slide 52: Appendix
Appendix 51
Slide 53: Reconciliation of GAAP to Non-GAAP Financial Measures
Reconciliation of GAAP to Non-GAAP Financial Measures Kirby reports its financial results in accordance with generally accepted accounting principles (GAAP). However, Kirby believes that certain non-GAAP financial measures are useful in managing Kirby’s businesses and evaluating Kirby’s performance.
Slide 54: Reconciliation of GAAP Net Earnings to Non-GAAP Adjusted EBITDA - Annually
Reconciliation of GAAP Net Earnings to Non-GAAP Adjusted EBITDA - Annually KIRBY CORPORATION Reconciliation of GAAP Net Earnings Attributable to Kirby to Non-GAAP Adjusted EBITDA 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 ($ in millions) Net earnings (loss) attributable to Kirby $ 122.3 $ (24
Slide 55: Reconciliation of GAAP to Non-GAAP Financial Measures Excluding One-Time Items
Reconciliation of GAAP to Non-GAAP Financial Measures Excluding One-Time Items KIRBY CORPORATION Reconciliation of GAAP to Non-GAAP Financial Measures Excluding One-Time Items (unaudited, $ in millions except per share amounts) Full Year 2021 Q4 2022 Full Year 2022 Net Diluted Earnings Net Diluted N
Slide 56: Reconciliation of GAAP Net Cash Provided by Operating Activities to Free Cash Flow
Reconciliation of GAAP Net Cash Provided by Operating Activities to Free Cash Flow Kirby Corporation Reconciliation of GAAP Net Cash Provided by Operating Activities to Free Cash Flow Third Quarter Year (2) 2022 2021 2022 2021(2) (unaudited, $ in m illions) Net cash provided by operating activities
Slide 57: Marine Transportation Performance Measures
Marine Transportation Performance Measures KIRBY CORPORATION MARINE TRANSPORTATION PERFORMANCE MEASUREMENTS 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 1Q 2Q 3Q 4Q Total 1Q 2Q 3Q 4Q Total Year Year Year Year Year Year Year Year Year Inland Performance Measurements: Ton miles (in millions)
Slide 58: Distribution and Services Revenue by Market Sector
Distribution and Services Revenue by Market Sector Rail 10% Other Marine 20% 20% Manufacturing Manufacturing 30% Distribution On-Hwy 20% Oil & Gas Oil & Gas Distribution 30% 90% 70% Power Gen 10% Oil & Gas Frac New Product 50% Frac Reman 10% Note: Revenue percentages estimated for 2022 57
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