![](https://capedge.com/proxy/8-K/0001140361-06-009094/ex99_11.jpg)
Kirby Corporation
Putting America’s Waterways to Work
NYSE: KEX
June 2006
1
![](https://capedge.com/proxy/8-K/0001140361-06-009094/ex99_12.jpg)
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 anticipated as a result of various factors, including cyclical or other downturns in demand, significant pricing competition, unanticipated additions to industry capacity, changes in the Jones Act or in U.S. maritime policy and practice, fuel costs, interest rates, weather conditions and the timing, magnitude and the number of acquisitions made by Kirby. Forward-looking statements are based on currently available information and Kirby assumes no obligation to update such statements. A list of additional risk factors can be found in Kirby’s annual report on Form 10-K for the year ended December 31, 2005, filed with the Securities and Exchange Commission.
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. This presentation contains two Non-GAAP financial measures, adjusted net earnings and EBITDA. Please see the Appendix for a reconciliation of GAAP to Non-GAAP financial measures.
Forward Looking Statement
Non-GAAP Financial Measures
2
![](https://capedge.com/proxy/8-K/0001140361-06-009094/ex99_13.jpg)
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
3
![](https://capedge.com/proxy/8-K/0001140361-06-009094/ex99_14.jpg)
NYSE: K E X
Current Price (June 12, 2006) | $33.95 |
Number of Shares O/S | 52.7M |
Market Capitalization | $1,789M |
Debt (March 31, 2006) | $200M |
Enterprise Value | $1,989M |
Employees | 2,450 |
Kirby…Public Market Facts
4
![](https://capedge.com/proxy/8-K/0001140361-06-009094/ex99_15.jpg)
Kirby Facts
•
Largest inland tank barge operator
•
Operates 893 barges and 239 towing vessels
•
Sustainable competitive advantages:
–
Lowest cost due to economies of scale
–
Best positioned for growth opportunities
–
“One Stop Shop” for customers
•
70% of Kirby’s business is under contract and 30% in the spot market
•
Successful integration of 24 acquisitions
5
![](https://capedge.com/proxy/8-K/0001140361-06-009094/ex99_16.jpg)
* Towboats Only
Date | No. of Tank Barges | Description |
1999 | 270 | Hollywood Marine, Inc. - Stellman - Alamo Barge Lines - Ellis Towing - Arthur Smith - Koch Ellis - Mapco |
2002 | 15 | Cargo Carriers |
2002 | 64 | Coastal Towing, Inc. (barge management agreement for 54 barges) |
2002 | 94 | Dow/Union Carbide (transportation assets) |
2003 | 64 | SeaRiver Maritime (ExxonMobil) |
2005 | 10 | American Commercial Lines (black oil fleet) |
Date | No. of Tank Barges | Description |
1986 | 5 | Alliance Marine |
1989 | 35 | Alamo Inland Marine Co. |
1989 | 53 | Brent Towing Company |
1991 | 3 | International Barge Lines, Inc. |
1992 | 38 | Sabine Towing & Transportation Co. |
1992 | 26 | Ole Man River Towing, Inc. |
1992 | 29 | Scott Chotin, Inc. |
1992 | * | South Texas Towing |
1993 | 72 | TPT, Division of Ashland |
1993 | * | Guidry Enterprises |
1993 | 53 | Chotin Transportation Company |
1994 | 96 | Dow Chemical (transportation assets) |
Shipper Owned (Blue)
Independent (Red)
Acquisitions in Core Business
6
![](https://capedge.com/proxy/8-K/0001140361-06-009094/ex99_17.jpg)
17% growth rate from 1988-2005
Revenue... Business Operations
7
![](https://capedge.com/proxy/8-K/0001140361-06-009094/ex99_18.jpg)
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 effective May 31, 2006
14.2% growth rate from
1994 - 2005
Earnings Per Share From Continuing Operations Before Adjustments
Guidance
Earnings Per Share
8
![](https://capedge.com/proxy/8-K/0001140361-06-009094/ex99_19.jpg)
St. Paul
Sioux City
Chicago
Pittsburgh
Charleston
St. Marks
Tulsa
Corpus Christi
New Orleans
St. Louis
Cincinnati
Mobile
Brownsville
Houston
Texas and Louisiana account for 80% of the total U.S. production of
chemicals and
petrochemicals
chemicals and
petrochemicals
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
Inland Waterway System
9
![](https://capedge.com/proxy/8-K/0001140361-06-009094/ex99_110.jpg)
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 to economic obsolescence because draft and lock restrictions limit the size of barges
•
Barges are mobile, carry wide range of cargoes, and service different geographic markets
•
Inland waterway system plays a vital role in the U.S. economy
•
Inland waterway system is an environmentally friendly mode of transportation
10
![](https://capedge.com/proxy/8-K/0001140361-06-009094/ex99_111.jpg)
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 | Availability | |
Volatility of Volumes | Low | High | |
Crews | Licensed Pilothouse, Licensed Tankerman | Pilot house only | |
Cost of Barges | 195x35/1500 tons barge - $1,300,000 | 195x35/1500 tons barge -$450,000 | |
Regulatory Requirements | U.S. Coast Guard Inspected | Not Inspected |
2,800 Barges
17,800 Barges
Differences Between Liquid Tank Barges and Dry Cargo Barges
11
![](https://capedge.com/proxy/8-K/0001140361-06-009094/ex99_112.jpg)
For the years 1993 through 2005
188 single hull tank barges industry wide, 20 operated by Kirby
Number of Inland Tank Barges
12
![](https://capedge.com/proxy/8-K/0001140361-06-009094/ex99_113.jpg)
Source: Informa Economics, Barge Fleet Profile, March 2006
Inland Tank Barge Fleet
13
![](https://capedge.com/proxy/8-K/0001140361-06-009094/ex99_114.jpg)
90,000 bbl. three-barge tow is equivalent to:
Kirby’s fleet capacity of 16.7 million bbls.
equates to 83,500 trucks, or 22,200 rail cars
Rail Cars
120
Trucks
450
Barges Compete Successfully
With Rails and Trucks
14
![](https://capedge.com/proxy/8-K/0001140361-06-009094/ex99_115.jpg)
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
15
![](https://capedge.com/proxy/8-K/0001140361-06-009094/ex99_116.jpg)
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
16
![](https://capedge.com/proxy/8-K/0001140361-06-009094/ex99_117.jpg)
KIRBY INLAND MARINE
17
![](https://capedge.com/proxy/8-K/0001140361-06-009094/ex99_118.jpg)
•
Benzene
•
Styrene
•
Methanol
•
Acrylonitrile
•
Xylene
•
Caustic soda
•
Butadiene
•
Propylene
Petrochemicals – 67%
•
Residual fuel
•
No. 6 fuel oil
•
Coker feed
•
Vacuum gas
•
Asphalt
Black Oil Products – 20%
•
Anhydrous ammonia
•
Nitrogen-based
liquid fertilizer
liquid fertilizer
•
Industrial ammonia
Agricultural Chemicals – 4%
•
Gasoline
•
Jet fuel
•
Diesel fuel
•
Naphtha
Refined Products – 9%
Largest Inland Tank Barge Operator
18
![](https://capedge.com/proxy/8-K/0001140361-06-009094/ex99_119.jpg)
Petrochemicals
/Refined Products High Capacity pumps – Specialty
coated tanks
coated tanks
698
61
117
12
5
Pressure Pressurized tanks
Black Oil Self-contained heating
systems
systems
Anhydrous Ammonia Refrigeration tanks
Specialty Stainless steel tanks
High Tech and Diverse Fleet
893 Active Tank Barges
19
![](https://capedge.com/proxy/8-K/0001140361-06-009094/ex99_120.jpg)
Fleet Size and Diversity…
Better Asset Utilization
•
Better Asset Utilization
–
More backhaul opportunities
–
Faster barge turnarounds
–
More efficient use of horsepower
–
Barges positioned closer to cargos
•
Lower Incremental Costs
–
Enhanced purchasing power
–
Minimal incremental G&A from fleet additions
–
Less cleaning due to more barges with compatible prior cargos
20
![](https://capedge.com/proxy/8-K/0001140361-06-009094/ex99_121.jpg)
Shipper Owned Independent | Tank Barges Operated | Dry Cargo Barges Operated |
Kirby Corporation | 893 | - |
American Commercial Lines LLC | 371 | 2,803 |
Marathon Oil Corporation | 170 | - |
Canal Barge Company, Inc. | 169 | 273 |
Ingram Barge Company | 165 | 3,716 |
Florida Marine | 91 | - |
Blessey Enterprises | 86 | - |
American River Transportation Co | 82 | 2,076 |
Higman Barge Lines, Inc. | 80 | - |
Cenac Towing Company, Inc. | 72 | - |
PPG Industries, Inc. | 59 | - |
Southern Towing Company | 53 | - |
Martin Midstream Partners | 52 | - |
Settoon Towing, LLC | 49 | - |
Magnolia Marine Transport Co | 45 | - |
LeBeouf Brothers Towing Co | 44 | - |
Olin Corporation | 29 | - |
John W. Stone Oil | 28 | - |
Buffalo Marine Service, Inc. | 24 | - |
Rhodia, Inc. | 20 | - |
ConocoPhillips Company | 20 | - |
River City Towing Services | 19 | - |
Houston Marine Services, Inc. | 18 | - |
Lyondell Chemical Company | 17 | - |
Shipper Owned Independent | Tank Barges Operated | Dry Cargo Barges Operated |
Dynegy Midstream Services | 16 | - |
Dupont | 16 | - |
Waxler Towing Company, Inc. | 15 | - |
Horizon Maritime | 15 | - |
Highland Towing | 13 | - |
Devall Towing | 12 | - |
Chem Carriers, Inc. | 12 | - |
Plaquemine Towing Corp. | 11 | - |
Golding Barge Lines, Inc. | 9 | - |
Grifco | 8 | - |
Westlake/GA&O Corporation | 8 | - |
Merichem Company | 7 | - |
Apex Towing | 7 | - |
Republic of Texas | 6 | - |
Hines Barge Line | 6 | - |
American Milling | 5 | 11 |
Mon River Towing, Inc. | 4 | 142 |
Reilly Industries | 4 | - |
Memphis Barge Lines | 4 | - |
Barge Management, Inc. | 3 | - |
Cytec Industries | 2 | - |
Jantran, Inc. | 1 | - |
Other dry cargo carriers | - | 8,768 |
TOTAL | 2,840 | 17,789 |
Informa Economics, Barge Fleet Profile, March 2006 - Adjusted
Kirby Outpaces the Competition
Tank Barge Owners By Number of Tank Barges
21
![](https://capedge.com/proxy/8-K/0001140361-06-009094/ex99_122.jpg)
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 Oil, Coker Feedstock, Vacuum Gas Oil, Asphalt | Road Construction, Feed Stock for Refineries and Fuel for Power Plants and Ships |
9% | Refined Products | Gasoline, Jet Fuel, Diesel Fuel, Naphtha | Vehicle Usage, Air Travel, Weather |
4% | Agricultural Chemicals | Anhydrous Ammonia, Nitrogen-based Liquid Fertilizer, Industrial Ammonia | Corn, Cotton and Wheat Production |
End Uses of Products…
Demand Drivers
22
![](https://capedge.com/proxy/8-K/0001140361-06-009094/ex99_123.jpg)
•
Committed to dedicating adequate resources to achieve safety objectives
–
Extensive company-owned and operated training facility
–
Seamen’s Church Institute
(Towboat Simulator)
•
Industry leader
–
First winner of Benkert Award, highest award given by Department of Transportation for safety and environmental protection
Strong Emphasis on Safety…
Safety Is Our Franchise To Operate
23
![](https://capedge.com/proxy/8-K/0001140361-06-009094/ex99_124.jpg)
Blue Chip Customers
24
![](https://capedge.com/proxy/8-K/0001140361-06-009094/ex99_125.jpg)
Kirby Engine Systems
25
![](https://capedge.com/proxy/8-K/0001140361-06-009094/ex99_126.jpg)
Diesel Engine Services Markets
•
Marine (61%)
–
Inland River Carriers – Dry and Liquid
–
Offshore Towing – Dry and Liquid
–
Offshore Oilfield Services – Drilling Rigs & Supply Boats
–
Harbor Towing
–
Dredging
–
Great Lakes Ore Carriers
•
Power Generation, Nuclear and Industrial (22%)
–
Standby Power Generation
–
Pumping Stations
–
Industrial Reduction Gears
•
Railroad (17%)
–
Passenger (Transit Systems)
–
Class II
–
Shortline and Industrial
26
![](https://capedge.com/proxy/8-K/0001140361-06-009094/ex99_127.jpg)
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 Repair
Services
27
![](https://capedge.com/proxy/8-K/0001140361-06-009094/ex99_128.jpg)
Acquisitions | |
1987 | National Marine |
1991 | Ewing Diesel |
1995 | Percle Enterprises |
1996 | MKW Power Systems |
1997 | Crowley (Power Assembly Shop) |
2000 | West Kentucky Machine Shop |
2000 | Powerway |
2004 | Walker Paducah Corp. |
2005 | TECO (Diesel Services Division) |
2006 | Global Power Systems |
Internal Growth | |
1989 | Midwest |
1992 | Seattle |
1993 | Shortline & Industrial Rails |
2000 | Cooper Nuclear |
2001 | Transit & Class II Rails |
Acquisitions and Internal Growth
28
![](https://capedge.com/proxy/8-K/0001140361-06-009094/ex99_129.jpg)
Key Customers
29
![](https://capedge.com/proxy/8-K/0001140361-06-009094/ex99_130.jpg)
Market Conditions
30
![](https://capedge.com/proxy/8-K/0001140361-06-009094/ex99_131.jpg)
•
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 third quarter by an estimated $.05 per share
•
Contract rates up 4% to 6%. Spot market rates higher than contract and up 20% to 25% over 2004
•
Diesel engine services – strong service and direct parts sales, coupled with increased prices for both service and parts
Market Conditions
2005 Year
31
![](https://capedge.com/proxy/8-K/0001140361-06-009094/ex99_132.jpg)
•
Record revenues, net earnings, earnings per share and EBITDA
•
Petrochemical and black oil products markets remained strong
•
Favorable winter weather conditions positively impacted financial results, with delay days down 25% when compared with 2005 first quarter
•
Contract rates up 4% to 6%. Spot market rates higher than contract and up 5% to 10% over 2005 fourth quarter
•
Diesel engine services – strong service and direct parts sales in the majority of its markets
Market Conditions
2006 First Quarter
32
![](https://capedge.com/proxy/8-K/0001140361-06-009094/ex99_133.jpg)
•
2006 second quarter earnings per share guidance of $.42 to $.45, compared with $.36 for 2005 second quarter
•
Guidance based on:
•
Marine transportation operating fundamentals remain strong
•
Diesel engine services operating fundamentals are strong; however, will not include seasonal work for Midwest and Great Lakes customers
•
2006 year earnings per share guidance of $1.69 to $1.79, compared with $1.33 for 2005. Guidance includes $.02 to $.04 per share from Global acquisition
2006 Second Quarter and Year Outlook
33
![](https://capedge.com/proxy/8-K/0001140361-06-009094/ex99_134.jpg)
Future Growth Opportunities
•
Acquire inland tank barge operations
–
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
•
Expand services related to marine operations
–
Purchased two-thirds interest in Osprey Line, a provider of container on barge feeder service
–
Purchased remaining 65% interest in four offshore dry-bulk barge/tug units in March 2006
–
Manage or acquire marine facilities
•
Expand diesel engine service operations
–
Signed agreement to purchase Global Power Systems, a Gulf Coast high-speed diesel engine services company
–
Existing geographic foot print presents opportunities for expansion
–
Continue to develop exclusive parts distribution relationships
34
![](https://capedge.com/proxy/8-K/0001140361-06-009094/ex99_135.jpg)
35
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 and Gulf of Mexico
•
Future growth opportunity as U.S. contends with congestion problems
•
Provides attractive alternative to rail and truck
•
Very complementary to Kirby’s existing distribution system and customer base
35
![](https://capedge.com/proxy/8-K/0001140361-06-009094/ex99_136.jpg)
Financial Highlights
36
![](https://capedge.com/proxy/8-K/0001140361-06-009094/ex99_137.jpg)
For Year Ended December 31, 2005
37
![](https://capedge.com/proxy/8-K/0001140361-06-009094/ex99_138.jpg)
For First Quarter Ended March 31, 2006
38
![](https://capedge.com/proxy/8-K/0001140361-06-009094/ex99_139.jpg)
Operating Margins
39
![](https://capedge.com/proxy/8-K/0001140361-06-009094/ex99_140.jpg)
11.9% growth rate from
1994 - 2005
See Appendix for reconciliation of GAAP net earnings to Non-GAAP EBITDA
EBITDA Per Share Growth
40
![](https://capedge.com/proxy/8-K/0001140361-06-009094/ex99_141.jpg)
* Excluding acquisitions
Cash Flows
41
![](https://capedge.com/proxy/8-K/0001140361-06-009094/ex99_142.jpg)
25.9%
57.3%
Debt / Capitalization
42
![](https://capedge.com/proxy/8-K/0001140361-06-009094/ex99_143.jpg)
Balance Sheet
43
![](https://capedge.com/proxy/8-K/0001140361-06-009094/ex99_144.jpg)
•
Investment grade public debt
–
Standard & Poor’s – BBB+
–
Moody’s – Baa3
•
8-year unsecured Private Placement due 2013
–
$200 million outstanding
–
Floating rate of LIBOR +0.5%
–
No required principal payments until maturity
•
$150 Million Revolving Credit Facility
–
Accordion feature added to allow maximum amount to increase to $225 million without amendment
•
Protection against interest rate increases
–
$150 million of interest rate swaps
Financial Strength
44
![](https://capedge.com/proxy/8-K/0001140361-06-009094/ex99_145.jpg)
Why Invest In Kirby?
45
![](https://capedge.com/proxy/8-K/0001140361-06-009094/ex99_146.jpg)
•
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 per share to earnings; for diesel segment, adds $.02 per share to earnings
•
Fleet expansions will improve asset utilization, operating efficiencies and reduce costs
Why Invest in Kirby?
46
![](https://capedge.com/proxy/8-K/0001140361-06-009094/ex99_147.jpg)
Thank You For Listening to Our Story
Kirby Corporation
Putting America’s Waterways to Work
47