Kirby Corporation · NYSE:KEX
Kirby — Investor Presentation (February 2007)
49 slides from Kirby's investor presentation, Feb 15, 2007
Slide 1: Kirby Corporation: Putting America's Waterways to Work
Kirby Corporation Putting America’s Waterways to Work NYSE: KEX February
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 82% of 2006 Revenue - $807.2 million Largest U.S. Inland Tank Barge Operator Diesel Engine Services 18% of 2006 Revenue - $177.0 million Largest U.S. EMD Diesel Services Company Kirby... Business Operations
Slide 4: Kirby Public Market Facts
NYSE: K E X $35.85 53.0M $1,899M $310M $2,209M 3,000 Kirby…Public Market Facts Current Price (February 13, 2007) Number of Shares O/S Market Capitalization Debt (December 31, 2006) Enterprise Value Employees
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 904 barges and 241 towing vessels • Sustainable competitive advantages: • 70% of Kirby’s business is under contract and 30% i
Slide 6: Acquisitions in Core Business
* Towboats Only Shipper Owned (Blue) Independent (Red) Acquisitions in Core Business 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 Tower, Inc. Scott Chotin, Inc. * Sout
Slide 7: Revenue Growth
17.4% growth rate from 1988-2006 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, 2,850 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
2,850 Barges 17,800 Barges Differences Between Liquid Tank Barges and Dry Cargo Barges Liquid Dry Cargo Cargoes Petrochemicals, Black oil products, Refined products Grain, Coal, Aggregate, Steel Value of Cargo High Generally much lower Pricing Drivers Added value-safety, service and availability Ava
Slide 12: Number of Inland Tank Barges
single hull tank barges industry wide, 13 operated by Kirby Number of Inland Tank Barges For the years 1993 through 2006
Slide 13: Inland Tank Barge Fleet
Source: Informa Economics, Barge Fleet Profile, March 2006 Inland Tank Barge Fleet
Slide 14: Inland Tank Barge Fleet
Artificially High 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, 00 0 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 l
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: Kirby Outpaces the Competition
Informa Economics, Barge Fleet Profile, March 2006 - Adjusted Tank Barge Owners By Number of Tank Barges Kirby Outpaces the Competition Shipper Owned Independent Tank Barges Operated Dry Cargo Barges Operated Kirby Corporation - American Commercial Lines LLC 2,803 Marathon Oil Corporation - Canal Ba
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 o perated 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 object
Slide 26: Blue Chip Customers
Blue Chip Customers
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 & Supply
Slide 29: Services
Bearing and element replacement Case welding and machining Line boring Alignment 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 Repa
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 Acquisitions and Internal Growth National Marine Ewing Diesel Percle Enterprises MKW Power Systems Crowley (Power Assembly Shop) West Kentucky Machine Shop Powerway Walker Paducah Corp. TECO
Slide 31: Key Customers
Medium – Speed Engines High-Speed Engines AMTRAK AEP/Memco Diamond Offshore Florida Power & Light 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
Slide 32: Market Conditions
Market Conditions
Slide 33: Market Conditions: Year 2006
• 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 17% when compared with 2005 year • Contract rates up 6% to 8%. Spot market
Slide 34: First Quarter and Year Outlook
• 2007 first quarter earnings per share guidance of $.40 to $.45, compared with $.43 for 2006 first quarter • Guidance based on: • Marine transportation operating fundamentals remain strong • Diesel engine services operating fundamentals remain strong • 2007 year earnings per share guidance of $1.95
Slide 35: 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 36: 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 37: Financial Highlights
Financial Highlights
Slide 38: For Year Ended December 31, 2006
For Year Ended December 31, 2006
Slide 39: Marine Transportation and Diesel Engine Services
~*-Marine Transportation —*Diesel Engine Services 10.1% Fa 10.0% 10.1% 95% = . 5% wm? “URRY, SINNIN1T j & sheets
Slide 40: EBITDA Per Share Growth
See Appendix for reconciliation of GAAP net earnings to Non-GAAP EBITDA 12.9% growth rate from 1994 - 2006 EBITDA Per Share Growth
Slide 41: Cash Flows and Capital Expenditure Guidance
* Excluding acquisitions Expansion Barges Cap. Ex. Guidance $135 $30 $40 Cash Flows
Slide 42: Debt/Capitalization
32.9% 57.3% Debt/Capitalization
Slide 43: Balance Sheet
12/31/06 Assets Current Assets Property & Equipment Goodwill Other Assets Total Assets Liabilities & Equity Qurrent Liabilities Total Debt Other Liabilities Stockholders’ Equity Total Liabilities & Equity Debt to Capitalization 12/31/05 Change
Slide 44: 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 – $200 million of interest rate swaps and a collar • Investmen
Slide 45: Why Invest In Kirby?
Why Invest In Kirby?
Slide 46: 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 $.0
Slide 47: Thank You For Listening to Our Story
Thank You For Listening to Our Story Kirby Corporation Putting America’s Waterways to Work
Slide 48: Appendix
Appendix
Slide 49: Petrochemical Plant Inputs and Products
Natural Gas è Ethylene 80% Source: Petrochemicals by Burdick & Leffer è Ethylene 23% Petrochemical Plant Inputs and Products Naptha 20% 77% Feedstock Feedstock Products Products è Propylene 3% è Butylene 2% è Others 15% è Propylene 13% Butylene 15% è è Others 49%