Kirby Corporation · NYSE:KEX
Kirby — Investor Presentation (January 2007)
51 slides from Kirby's investor presentation, Jan 17, 2007
Slide 1: Kirby Corporation: Putting America's Waterways to Work
Kirby Corporation Putting America’s Waterways to Work NYSE: KEX January
Slide 2: Forward Looking Statement and Non-GAAP Financial Measures
Statements contained in this presentation with respect to the future are forward-looking statements. These statements reflect management’s reasonable judgement with respect to future events. Forward-looking statements involve risks and uncertainties. Actual results could differ materially from those
Slide 3: Kirby... Business Operations
Marine Transportation 86% of 2005 Revenue - $686.0 million Largest U.S. Inland Tank Barge Operator Diesel Engine Services 14% of 2005 Revenue - $109.7 million Largest U.S. EMD Diesel Services Company Kirby... Business Operations
Slide 4: Kirby... Public Market Facts
NYSE: K E X $35.25 52.9M $1,866M $327M $2,193M 2,950 Current Price (January 12, 2007) Number of Shares O/S Market Capitalization Debt (September 30, 2006) Enterprise Value Employees Kirby…Public Market Facts
Slide 5: Kirby Facts
– Lowest cost due to economies of scale – Best positioned for growth opportunities – “One Stop Shop” for customers Kirby Facts • Largest inland tank barge operator • Operates 903 barges and 242 towing vessels • Sustainable competitive advantages: • 70% of Kirby’s business is under contract and 30% i
Slide 6: Acquisitions in Core Business
* Towboats Only Date No. of Tank Barges Description Alliance Marine Alamo Inland Marine Co. Brent Towing Company International Barge Lines, Inc. Sabine Towing & Transportation Co. Ole Man River Towing, Inc. Scott Chotin, Inc. * South Texas Towing TPT, Division of Ashland * Guidry Enterprises Chotin
Slide 7: Revenue... Business Operations
17% growth rate from 1988-2005 Revenue... Business Operations
Slide 8: Earnings Per Share
1994-2001 adjusted to exclude goodwill amortization expense 2002 adjusted to exclude impairment charges of $12.5 million, net of taxes, or $.51 per share See Appendix for reconciliation of GAAP to Non-GAAP earnings per share Earnings per share have been revised to reflect 2-for-1 stock split effecti
Slide 9: Inland Waterway System
Corpus Christi New Orleans Mobile Brownsville 12,000 miles of navigable waterways linking America's heartland to the world Kirby is one of the few operators offering distribution throughout the Mississippi River System and Gulf Intracoastal Waterway St. Paul Sioux City Chicago Pittsburgh Charleston
Slide 10: Industry Facts
Industry Facts • Approximately 17,800 dry cargo barges, 2,800 liquid tank barges. Kirby is principally in the liquid cargo business. • No competition from foreign companies due to a U.S. law known as the Jones Act • Always a market to move product by barge on inland waterways • Equipment not subject
Slide 11: Differences Between Liquid Tank Barges and Dry Cargo Barges
Liquid Dry Cargo Cargoes Value of Cargo Pricing Drivers Volatility of Volumes Crews Cost of Barges Regulatory Requirements 2,800 Barges 17,800 Barges Petrochemicals, Black oil products, Refined products Grain, Coal, Aggregate, Steel High Generally much lower Added value-safety, service and availabil
Slide 12: Number of Inland Tank Barges
For the years 1993 through 2005 single hull tank barges industry wide, 15 operated by Kirby Number of Inland Tank Barges
Slide 13: Inland Tank Barge Fleet
Source: Informa Economics, Barge Fleet Profile, March 2006 Inland Tank Barge Fleet
Slide 14: Inland Tank Barge Fleet
Artificial Demand Steady Demand Old Fleet New Fleet Inland Tank Barge Fleet
Slide 15: Refinery Operable Capacity
17,397 on Jan. 7, 2007 1/5/07 Refinery Operable Capacity
Slide 16: Compete Successfully With Rails and Trucks
Kirby’s fleet capacity of 17.0 million bbls. equates to 85,000 trucks, or 22,600 rail cars 90,000 bbl. three-barge tow is equivalent to: Rail Cars Trucks Barges Compete Successfully With Rails and Trucks
Slide 17: Barges... Efficient
One gallon of fuel in a barge can move one ton of freight 522 miles, compared to 403 miles by rail and only 80 miles for a truck. Barge Rail Truck Barges… Efficient
Slide 18: Barges... Environmentally Friendly
While moving one ton of freight 1,000 miles: • Smog is a major problem in most major cities • Oxides of nitrogen are the chemicals that produce smog Trains produce 3.5 times more nitrogen oxides as barges Trucks produce 19 times more nitrogen oxides as barges Barges… Environmentally Friendly
Slide 19: Kirby Inland Marine
KIRBY INLAND MARINE
Slide 20: Largest Inland Tank Barge Operator
Petrochemicals – 67% Black Oil Products – 20% Agricultural Chemicals – 3% Refined Products – 10% • Benzene • Styrene • Methanol • Acrylonitrile • Xylene • Caustic soda • Butadiene • Propylene • Residual fuel • No. 6 fuel oil • Coker feed • Vacuum gas • Asphalt • Anhydrous ammonia • Nitrogen-based li
Slide 21: High Tech and Diverse Fleet
Petrochemicals /Refined Products High Capacity pumps - Specialty coated tanks Pressure Pressurized tanks Black Oil Self-Contained heating systems Anhydrous Ammonia Refrigeration tanks Specialty Stainless steel tanks High Tech and Diverse Fleet Active Tank Barges
Slide 22: Fleet Size and Diversity... Better Asset Utilization
– More backhaul opportunities – Faster barge turnarounds – More efficient use of horsepower – Barges positioned closer to cargos – Enhanced purchasing power – Minimal incremental G&A from fleet additions – Less cleaning due to more barges with compatible prior cargos Fleet Size and Diversity… Better
Slide 23: Tank Barge Owners By Number of Tank Barges
Tank Barge Owners By Number of Tank Barges Informa Economics, Barge Fleet Profile, March 2006 - Adjusted Shipper Owned Independent Tank Barges Operated Dry Cargo Barges Operated Kirby Corporation - American Commercial Lines LLC 2,803 Marathon Oil Corporation - Canal Barge Company, Inc. Ingram Barge
Slide 24: End Uses of Products... Demand Drivers
End Uses of Products… Demand Drivers Revenue Distribution Products Moved Products Drivers 67% Petrochemicals and Chemicals Benzene, Styrene, Methanol, Acrylonitrile, Xylene, Caustic Soda, Butadiene, Propylene Housing, Consumer Goods, Autos, Clothing 20% Black Oil Products Residual Fuel, No. 6 Fuel O
Slide 25: Safety Is Our Franchise To Operate
– Extensive company-owned and operated training facility – Seamen’s Church Institute (Towboat Simulator) – First winner of Benkert Award, highest award given by Department of transportation for safety and environmental protection • Committed to dedicating adequate resources to achieve safety objecti
Slide 26: ; Chevro
a <a ; Chevro fy CT crt Phillips Bayer ¢3 |B cePestics | GE Plastics sll. VLERO ENERGY pi ExenMobil oe
Slide 27: Kirby Engine Systems
Kirby Engine Systems
Slide 28: Diesel Engine Services
Markets – Electro-Motive Diesel (EMD) – Alco – Ingersoll-Rand – Caterpillar – Cummins – Detroit Diesel – John Deere – Allison – Falk – Twin-Disc Engines and Transmissions / Reduction Gears – Inland Waterway Carriers – Dry and Liquid – Offshore Towing – Dry and Liquid – Offshore Drilling Rigs & Suppl
Slide 29: Services
Bearing and element replacement Case Welding and machining Line boring Allignment Overhauls Component repair Block welding Line boring Remanufacture engines Troubleshooting Genuine OEM new parts Kirby remanufactured parts Nuclear dedication services Replacement Parts Engine Repair Reduction Gear Rep
Slide 30: Acquisitions and Internal Growth
Acquisitions 1987 1991 1995 1996 1997 2000 2000 2004 2005 2006 2006 Internal Growth 1989 1992 1993 2000 2001 National Marine Ewing Diesel Percle Enterprises MKW Power Systems Crowley (Power Assembly Shop) West Kentucky Machine Shop Powerway Walker Paducah Corp. TECO (Diesel Services Division) Global
Slide 31: Key Customers
Medium – Speed Engines High-Speed Engines AMTRAK AEP/Memco Diamond Offshore Moran Towing NJ Transit TECO Transport Tidewater TODCO Cal Dive International Halliburton Horizon Offshore Nabors Offshore Pride Offshore Schlumberger Seacor Holdings Superior Energy Services Tidewater Key Customers
Slide 32: Market Conditions
Market Conditions
Slide 33: Market Conditions: Year
• Record revenues, net earnings, earnings per share and EBITDA • Petrochemical and black oil products markets remained strong • Winter weather conditions in January and February. Favorable conditions in March, second quarter and fourth quarter • Hurricanes Katrina and Rita negatively impacted the th
Slide 34: Market Conditions: First Nine Months
• Record revenues, net earnings, earnings per share and EBITDA • Petrochemical, black oil and refined products markets remained strong • Favorable weather conditions positively impacted financial results, with delay days down 29% when compared with 2005 first nine months • Contract rates up 6% to 8%
Slide 35: Fourth Quarter and Year Outlook
• 2006 fourth quarter earnings per share guidance of $.40 to $.45, compared with $38 for 2005 fourth quarter • Guidance based on: • Marine transportation operating fundamentals remain strong • Diesel engine services operating fundamentals remain strong • 2006 year earnings per share guidance of $1.7
Slide 36: Future Growth Opportunities
– Kirby operates more efficiently due to size and distribution system – Competitors face fleet replacement decisions – Outsourcing by shippers provides growth opportunities – Customers seek to single source their requirements – Purchased two-thirds interest in Osprey Line, a provider of container on
Slide 37: Osprey Line, LLC
Osprey Line, LLC • Purchased one-third interest in April 2004 • Increased ownership to two-thirds in January 2006 • Transports containers on barge on U.S. inland waterway system • Future growth opportunity as U.S. contends with congestion problems • Provides attractive alternative to rail and truck
Slide 38: Financial Highlights
Financial Highlights
Slide 39: For Year Ended December 31, 2005
For Year Ended December 31, 2005
Slide 40: For First Nine Months Ended September 30, 2006
For First Nine Months Ended September 30, 2006
Slide 41: Operating margins by segment
25% —©-Marine Transportation _Diesel Engine Services, ae 189% 18.87 15.5' 11.7% 100% 10.1% 10.1% 95%, 9.7% 5% ‘2000 2001 ‘2002 ‘2003 ‘2008 2005 2006 & iS panama
Slide 42: EBITDA Per Share Growth
11.9% growth rate from - 2005 EBITDA Per Share Growth
Slide 43: Cash Flows
* Excluding acquisitions Cash Flows
Slide 44: Debt / Capitalization
34.3% 57.3% Debt / Capitalization
Slide 45: Assets and Liabilities
Assets Current Assets Property & Equipment Goodwill Other Assets Total Assets Liabilities & Equity Current Liabilities Total Debt Other Liabilities Stockholders’ Equity Total Liabilities & Equity Debt to Capitalization 09/30/06 $ 249M 749 223 12/31/05
Slide 46: Financial Strength
– Standard & Poor’s – BBB+ – Moody’s – Baa3 – $200 million outstanding – Floating rate of LIBOR +0.5% – No required principal payments until maturity – Accordion feature allows maximum amount to increase to $325 million without amendment – $150 million of interest rate swaps • Investment grade publi
Slide 47: Why Invest In Kirby?
Why Invest In Kirby?
Slide 48: Why Invest in Kirby?
Consistent long-term record of success in our two core businesses • • Excellent business fundamentals • Strong free cash flow for growth • Internal and external growth opportunities in core businesses Strong operating leverage with every 1%increase in marine transportation segment margin adds $.08 p
Slide 49: Thank You For Listening to Our Story
Thank You For Listening to Our Story Kirby Corporation Putting America’s Waterways to Work
Slide 50: Appendix
Appendix
Slide 51: Petrochemical Plant Inputs and Products
Natural Gas Ethylene 80% Source: Petrochemicals by Burdick & Leffer Ethylene 23% Petrochemical Plant Inputs and Products è Naptha 20% 77% Feedstock Feedstock Products Products è Propylene 3% è Butylene 2% è Others 15% è è Propylene 13% è Butylene 15% è Others 49%