Kirby Corporation · NYSE:KEX
Kirby — Non-Deal Roadshow (November 2014)
46 slides from Kirby's roadshow presentation, November 2014
Slide 1: Putting America's Waterways to Work
Putting America’s Waterways to Work NYSE: KEX November 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: Business Segments
Business Segments Marine Transportation Diesel Engine Services 71% 29% of 2014 YTD revenue of 2014 YTD revenue Largest U.S. Inland and Coastal Tank Barge Operator Nationwide Diesel Engine Services Provider 3
Slide 4: Public Market Information
Public Market Information NYSE: KEX Current Price (November 6, 2014) $105.83 Number of Shares O/S (November 4, 2014) 57.1M Market Capitalization $6,039M Debt (September 30, 2014) $649M Enterprise Value $6,688M Employees 4,639 4
Slide 5: Company Overview
Company Overview Marine Transportation • Largest inland and coastal tank barge operator – 870 inland tank barges and 248 towboats – 70 coastal tank barges and 76 tugboats – 80% of inland revenues under term contracts, of which approximately 56% are under time charters – 85% of coastal revenues under
Slide 6: Marine Transportation Acquisitions
Marine Transportation Acquisitions 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 flee
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 1996 MKW Power Systems 2000 Cooper Nuclear 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 2400 $2,242 $2,113 2200 16.0% compound $1,850 2000 1800 annual growth 1988-2013 In Millions 1600 $1,360 1400 $1,173 1200 $984 $1,082 $1,110 1000 $796 800 $613 $675 $513 $567 $535 600 $335 $3
Slide 9: Historical EPS Growth
Historical EPS Growth Earnings Per Share From Continuing Operations Excluding Non-Recurring Items $6.00 $5.14 $5.00 15.0% compound $4.44 $5.04 annual growth $4.00 $3.73 1994 - 2013 $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
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 tank barge fleet is comprised of approximately 18,000 dry cargo barges and 3,500 liquid tank barges – The coastal market, including Alaska and Hawaii, encompasses approximatel
Slide 13: Marine Transportation Demand Drivers
Marine Transportation Demand Drivers Product End Uses Revenue Markets and Distribution * Products Moved Products Drivers 47% Petrochemicals and Benzene, Styrene, Methanol, Acrylonitrile, Consumer non-durables – 70% Chemicals Xylene, Caustic Soda, Butadiene, Propylene Consumer durables – 30% 25% Blac
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 Wellsville San Francisco Bay Delaware Bay St. Louis Weirton Kenova / Natrium Los Angeles Cushing Permian Haynesville New Crude Barge Baton Rouge Originations Pt. Arthur St. James N
Slide 15: Strong Emphasis on Safety
Strong Emphasis on Safety • Safety is the first and foremost concern in everything we do, safety comes before profit • Safe operations are good for morale and benefit financial performance in the long run • Our customers place a high value on our safety track record, that is a big reason why they us
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 3,500 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 Age Profile
Inland Tank Barge Fleet Age Profile Inland Tank Barge Age Distribution (Number of barges by age in 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 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 248 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 870 - Devall Barge Line 29 - American Commercial Lines LLC 349 1,582 SCF Marine/Waxler 27 - Canal Barge Co
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 70 tank barges with 6.0 million barrels of capaci
Slide 23: Coastal Tank Barge Age Profile
Coastal Tank Barge Age Profile Coastal Tank Barge Age Distribution 110 110 (Number of barges by age in years) 100 90 80 Number of Barges 70 60 The average age of the nation’s coastal tank 50 barge fleet is ~16 years 40 40 32 30 18 22 20 15 4 12 10 5 0 0 to 5 5 to 10 10 to 15 15 to 20 20 to 25 25 to
Slide 24: Coastal Tank Barge Owners
Coastal Tank Barge Owners Coastal Tank Barges Operated * Kirby is Well- Kirby Corporation 70 Positioned in U.S. Vane Brothers 56 Coastal Markets Olympic Tug & Barge (Harley Marine) 27 Bouchard Transportation 24 Reinauer Transportation 24 Crowley Marine 14 Moran Towing 10 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 71% 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, 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) 2003-2014E 19.5 18.4 17.6 Each pressure pumping unit is ~2,250 hp and must be replaced or 14.6 remanufactured every 3-5 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
Slide 30: Outlook
OUTLOOK 30
Slide 31: 2014 Guidance
2014 Guidance Last published 2014 fourth quarter guidance of $1.30 to $1.40 per share, versus $1.13 for the 2013 fourth quarter Last published 2014 full year guidance of $5.04 to $5.14 per share, versus $4.44 for 2013 that included a $0.20 per share benefit to the United earnout liability Mari
Slide 32: Financial Highlights
FINANCIAL HIGHLIGHTS 32
Slide 33: Third Quarter Ended September 30, 2014
Third Quarter Ended September 30, 2014 Change from 2013 Income Statement 2014 2013 $ % Revenues: Marine Transportation $ 449M $ 436M $ 13M 3% Diesel Engine Services 232 115 117 102 Total $ 681M $ 551M $ 130M 24% Operating Income: Marine Transportation $ 112M $ 114M $ (2)M (2)% Diesel Engine Services
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% compound $10.00 annual growth $9.03 1994 - 2013 $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
Slide 36: Cash Flows
Cash Flows $700 $601 $600 CashExpansion Barges from Operations $500 Capital Expenditures In Millions $400 $380 $319 $312 $326 $370 $312 $300 $253 $236 $246 $30 $245 $226 $193 $200 $164 $173 $142 $150 $137 $127 $139 $97 $112 $122 $83 $73 $94 $100 $59 $72 $48 $48 $0 * Unaudited 36
Slide 37: Capital Structure
Capital Structure 70% Debt-to-Total Capital 1999-3Q14 60% 57.3% 50% 40% 30% 20% 22.4% 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 Q3 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 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% – $350 million 10-year maturity at 3.34% – Proceeds used for Penn Marit
Slide 39: Why Invest in Kirby?
WHY INVEST IN KIRBY? 39
Slide 40: Why Invest in Kirby?
Why Invest in Kirby? • Consistent long-term record of success • Experienced management teams in both core businesses • Marine Transportation – U.S. feedstock position puts our refinery, chemical, and integrated major customers in a globally competitive position and is driving volume growth – 80% of
Slide 41: Thank You For Listening to Our Story
Kirby Corporation Putting America’s Waterways to Work Thank You For Listening to Our Story
Slide 42: Reconciliation of GAAP to Non-GAAP Financial Measure
KIRBY CORPORATION Reconciliation of GAAP to Non-GAAP Financial Measure Kirby reports its financial results in accordance with generally accepted accounting principles (GAAP). However, Kirby believes that the non-GAAP financial measure EBITDA is useful in managing Kirby’s businesses and evaluating Ki
Slide 43: Reconciliation of GAAP Net Earnings to Non-GAAP EBITDA
KIRBY CORPORATION Reconciliation of GAAP Net Earnings Attributable to Kirby to Non-GAAP EBITDA 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 ($ 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 Nine Months Ended Three Months Ended June 30, September 30, September 30, March 31, ($ in millions) 2014 2013 2014 2013 2014 2013 2014 2013 Net earnings attributable t
Slide 45: Marine Transportation Performance Measurements
KIRBY CORPORATION MARINE TRANSPORTATION PERFORMANCE MEASUREMENTS 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Year Year Year Year Year Year Year Year 1st Q 2nd Q 3rd Q 4th Q Year 1st Q 2nd Q 3rd Q 9 Months Inland Performance Measurements: Ton miles (in millions) (1) 16,141 15,649 16,716 14,267
Slide 46: $100+ Billion of Planned U.S. Petrochemical Investments
$100+ Billion of Planned U.S. Petrochemical Investments* Pacific Northwest Cost ($MM) • Northwest Innovation 2018 New Methanol unk (2 locations) • Tesoro 2017 New Xylene 400 Iowa Cost ($MM) Houston Ship Channel and surrounding, TX • LyondellBasell 2014 Ammonia expansion unk Cost ($MM) • Orascom (OCI