Kirby Corporation · NYSE:KEX
Kirby — Non-Deal Roadshow (September 2015)
48 slides from Kirby's roadshow presentation, September 2015
Slide 1: Putting America's Waterways to Work
Putting America’s Waterways to Work NYSE: KEX September 2015
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 offshore tank Nationwide provider of the service and barge fleets in the United States distribution of diesel engines, transmissions, parts, and oilfield service equipment 75% of 2014YTD1 Revenue 25% of 2014YTD1 Re
Slide 4: Public Market Information
Public Market Information Share Price NYSE: KEX on September 3, 2015 $69.32 Shares Outstanding 54.8MM (as of August 6, 2015) $3,797MM Market Capitalization Debt $808MM (as of June 30, 2015) $4,605MM Enterprise Value 4
Slide 5: Company Overview
Company Overview Marine Transportation • Largest inland and coastal tank barge operator – 912 inland tank barges and 251 towboats – 69 coastal tank barges and 73 tugboats – 80% of inland revenues under term contracts, of which approximately 55% are under time charters – 85% of coastal revenues under
Slide 6: Marine Transportation Acquisitions
Marine Transportation Acquisitions No./Tank No./Tank Date Barges Description Date Barges Description 1986 5 Alliance Marine 2003 64 SeaRiver Maritime (ExxonMobil) 1989 35 Alamo Inland Marine Co. 2005 10 American Commercial Lines (black oil fleet) 2006 * Capital Towing 1989 53 Brent Towing Company 20
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 11.3% compound $2,113 2000 annual growth 1994-2014 $1,850 1800 In Millions 1600 $1,360 1400 $1,173 1200 $984 $1,110 1000 $796 $1,082 800 $675 $567 $613 $513 $535
Slide 9: Historical EPS Growth
Historical EPS Growth Earnings Per Share From Continuing Operations Excluding Non-Recurring Items $6.00 $4.93 $5.00 15.0% compound $4.351 annual growth $4.44 $4.101 $4.00 1994 - 2014 $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 $0.48 $0.52 $0.63 $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 3,750 liquid tank barges – The coastal market, including Alaska and Hawaii, encompasses approximately 269
Slide 13: Marine Transportation Demand Drivers
Marine Transportation Demand Drivers Revenue Markets and Distribution * Products Moved Products Drivers 46% Petrochemicals and Benzene, Styrene, Methanol, Acrylonitrile, Consumer non-durables – 70% Chemicals Xylene, Caustic Soda, Butadiene, Propylene Consumer durables – 30% 32% Black Oil Residual Fu
Slide 14: Shale Liquids Production Creates New Transport Needs
Shale Liquids Production Creates New Transport Needs Puget Sound Vancouver Bakken Albany New York Utica MarcellusHarbor Niobrara Wellsville San Francisco Bay Delaware Bay Weirton Kenova / Natrium Los Angeles Cushing Permian Haynesville New Crude Barge Baton Rouge Originations Pt. Arthur St. James Ho
Slide 15: 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 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 1994 through June 30, 2015 3,900 3,750 3,700 The inland tank barge market has grown at 1.2% over the last 20 years 3,500 and 2.7% over the last 10 years 3,300 3,100 121 single hull tank 2,900 barges industry wide, 9 operated by Kirby 2,700 2,500 2,300 2,100
Slide 18: Inland Tank Barge Fleet Age Profile
Inland Tank Barge Fleet Age Profile Inland Tank Barge Age Distribution (Number of barges by age in years) 1200 1000 974 828 800 600 400 366 372 279 256 215 189 200 16 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 201
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 • Diversity of barge products and spot opportunities • Less cleaning Towboat Fleet • Operated an average of 251 towb
Slide 20: Inland Tank Barge Owners
Inland Tank Barge Owners Kirby Outpaces the Competition Tank Dry Cargo Tank Barges Dry Cargo Shipper Owned Independent Barges Barges Operated Barges Operated Operated Operated Kirby Corporation 912 - Chem Carriers, Inc. 40 - American Commercial Lines LLC 353 1,567 Accu Trans Marine 33 - Canal Barge
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 products, and distribution of petrochemicals between PADDs Fleet consists of 69 tank barges with 6.0 million barrels of capaci
Slide 23: Coastal Tank Barge Age Profile
Coastal Tank Barge Age Profile Coastal Barge Market Age Profile Number of barges by age 120 113 The average age of the nation’s 100 coastal tank barge fleet is ~16 years 80 Number of Barges 60 56 40 37 20 18 18 14 10 2 0 0-5 Years 5-10 Years 10-15 Years 15-20 Years 20-25 Years 25-30 Years 30-35 Year
Slide 24: Coastal Tank Barge Owners
Coastal Tank Barge Owners Coastal Tank Kirby is Well- Barges Operated * Positioned in U.S. Kirby Corporation 69 Coastal Markets Vane Brothers 63 Olympic Tug & Barge (Harley Marine) 27 Reinauer Transportation 24 Bouchard Transportation 17 Crowley Marine 14 Moran Towing 11 Saltchuk Resources (Foss Mar
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 64% Land-Based Distributes and services high-speed diesel • Oil & Gas Services engines and transmissions, and manufactures, • Power Generation remanufactures and services oilfield service • Transporta
Slide 27: Diesel Engine Services: Engines, Transmissions and Reduction Gears
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 • 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) 2003-2015E Each pressure pumping unit is 20.0 20.6 ~2,250 hp and must be replaced or 17.6 18.4 remanufactured every 3-5 years 14.6 9.6 7.2 7.7 5.7 3.9 2.3 2.9 2.1 2003 2004 2005 2006 2007 2008 2009 2010 2011
Slide 30: Outlook
~ QUTLOOK oo 30
Slide 31: 2015 Guidance
2015 Guidance Last published 2015 third quarter guidance of $0.95 to $1.10 per share, versus $1.34 for the 2014 third quarter (1) Last published 2015 full year guidance of $4.10 to $4.35 per share, versus $4.93 for 2014 (1) Marine Transportation: High water conditions in July followed by nor
Slide 32: Financial Highlights
FINANCIAL HIGHLIGHTS 32
Slide 33: Second Quarter Ended June 30, 2015
Second Quarter Ended June 30, 2015 Change from 2014 Income Statement 2015 2014 $ % Revenues: Marine Transportation $ 425M $ 457M $ (32)M (7)% Diesel Engine Services 118 171 (53) (31) Total $ 543M $ 628M $ (85)M (14)% Operating Income: Marine Transportation $ 97M $ 116M $ (19)M (16)% Diesel Engine Se
Slide 34: Operating Margins
Operating Margins 30% 23.8% 24.3% 25% 23.6% 22.4% 21.9% 22.1% 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% 10.1% 10.1% 10.5% 10.6% 10.4% 10.0% 9.5% 9.7% 9.4% 10% 8.1% 7.5% 5% 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Marine
Slide 35: EBITDA Per Share Growth
EBITDA Per Share Growth $12.00 $11.23 12.7% compound $10.49 annual growth $10.00 1994 - 2014 $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 200
Slide 36: Cash Flows
Cash Flows $700 CashExpansion Barges from Operations $601 $600 Capital Expenditures $500 $439 In Millions $400 $30 $355 $319 $326 $325 $312 $312 $300 $253 $315 $236 $246 $245 $226 $193 $200 $164 $173 $142 $150 $127 $139 $137 $112 $122 $97 $100 $83 $73 $94 $72 $48 $59 $48 $0 2000 2001 2002 2003 2004
Slide 37: Capital Structure
Capital Structure 70% Debt-to-Total Capital 60% 55.8% 2000 - 2015 50% 40% 30% 26.4% 20% 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 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 37
Slide 38: Financial Strength
Financial Strength • Investment grade rating – Standard & Poor’s: A-, stable outlook – Moody’s: Baa3, stable outlook • $500 million unsecured Private Placement – $150 million 7-year maturity at 2.72% – $350 million 10-year maturity at 3.29% – Proceeds used for Penn Maritime acquisition and to replac
Slide 39: Why Invest in Kirby?
WHY INVESTINKIRBY? “= 39
Slide 40: Why Invest in Kirby?
Why Invest in Kirby? • Consistent long-term record of success • Experienced management teams in both core businesses • Marine Transportation – U.S. feedstock position puts our refinery, chemical, and integrated major customers in a globally competitive position and is driving volume growth – 80% of
Slide 41: Thank You For Listening to Our Story
Kirby Corporation Putting America’s Waterways to Work Thank You For Listening to Our Story
Slide 42: Reconciliation of GAAP to Non-GAAP Financial Measure
KIRBY CORPORATION Reconciliation of GAAP to Non-GAAP Financial Measure Kirby reports its financial results in accordance with generally accepted accounting principles (GAAP). However, Kirby believes that the non-GAAP financial measure EBITDA is useful in managing Kirby’s businesses and evaluating Ki
Slide 43: Reconciliation of GAAP Net Earnings to Non-GAAP EBITDA
KIRBY CORPORATION Reconciliation of GAAP Net Earnings Attributable to Kirby to Non-GAAP EBITDA 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 ($ in millions) Net earnings attributable to Kirby, GAAP $ 282.0 $ 253.1 $ 209.4 $ 183.0 $ 116.2 $ 125.9 $ 157.2 $ 123.3 $ 95.5 $ 68.8 $ 49.5 Interest
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 Three Months Ended Three Months Ended Six Months Ended March 31, June 30, June 30, ($ millions) 2015 2014 2015 2014 2015 2014 Net earnings attributable to Kirby $ 61.1 $ 62.3 $ 58.1 $ 74.9 $ 119.2 $ 137.2
Slide 45: Marine Transportation Performance Measurements
KIRBY CORPORATION MARINE TRANSPORTATION PERFORMANCE MEASUREMENTS 2014 2015 2009 2010 2011 2012 2013 Year Year Year Year 1st Q 2nd Q 3rd Q 4th Q Year 1st Q 2nd Q 3rd Q 4th Q Year 1st Q 2nd Q 1st H Inland Performance Measurements: Ton miles (in millions) (1) 11,977 12,957 13,414 12,224 3,012 2,969 2,9
Slide 46: US Global Ethylene Cost Advantage
US Global Ethylene Cost Advantage Global Ethylene Production Cost 1,400 1,200 US $ / metric ton 1,000 800 600 400 200 0 Middle U.S. W. U.S. N. Asia N. Asia China SE Asia U.S. China East Ethane Canada Average LPG Naphtha CTO MTO MTO Data as of January 27, 2015 Note: Assumes $50/bbl Brent price Source
Slide 47: $100+ Billion of Planned U.S. Petrochemical Investments
$100+ Billion of Planned U.S. Petrochemical Investments* Pacific Northwest Ohio Cost ($MM) Iowa Cost ($MM) NW Innovation 2018 New methanol unk Cost ($MM) PTT Global Chem TBD New ethylene 5,700 (2 locations) Orascom (OCI) 2015 New fertilizer unk PBF 2015 Aromatics exp unk Tesoro 2017 New xylene 400 I
Slide 48: Timing of Announced US Ethylene Expansion
Timing of Announced US Ethylene Expansion 8000 7000 Additional Capacity, ‘000s tons/year 6000 5000 4000 3000 2000 1000 0 2014 2015 2016 2017 2018 2019 2020 Source: ICIS 48