Kirby Corporation
Putting America’s Waterways to Work
NYSE: KEX
November 2006
Statements contained in this presentation with respect to the future areforward-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 acceptedaccounting 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
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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
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Kirby Facts
•
Largest inland tank barge operator
•
Operates 903 barges and 242 towing vessels
•
Sustainable competitive advantages:
–
Lowest cost due to economies of scale
–
Best positioned for growth opportunities
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“One Stop Shop” for customers
•
70% of Kirby’s business is under contract and 30% in the spot market
•
Successful integration of 25 marineacquisitions
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17% growth
rate from
1988-2005
1988-2005
Revenue... Business Operations
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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
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Industry Facts
•
Approximately 17,800 dry cargo barges, 2,800 liquid tankbarges. Kirby is principally in the liquid cargo business.
•
No competition from foreign companies due to a U.S. lawknown as the Jones Act
•
Always a market to move product by barge on inlandwaterways
•
Equipment not subject to economic obsolescence becausedraft 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
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For the years 1993 through 2005
185 single hull tankbarges industry wide,
15 operated by Kirby
Number of Inland Tank Barges
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Source: Informa Economics, Barge Fleet Profile, March 2006
Inland Tank Barge Fleet
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17,395 on Sep 8, 2006
Refinery Operable Capacity
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KIRBY INLAND MARINE
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•
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 – 3%
•
Gasoline
•
Jet fuel
•
Diesel fuel
•
Naphtha
Refined Products – 10%
Largest Inland Tank Barge
Operator
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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
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Tank Barge Owners By Number of Tank Barges
Shipper Owned Independent | Tank Barges Operated | Dry Cargo Barges Operated |
Kirby Corporation | 903 | - |
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 | 2,850 | 17,789 |
Informa Economics, Barge Fleet Profile, March 2006 - Adjusted
Kirby Outpaces the Competition
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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 |
10% | Refined Products | Gasoline, Jet Fuel, Diesel Fuel, Naphtha | Vehicle Usage, Air Travel, Weather |
3% | Agricultural Chemicals | Anhydrous Ammonia, Nitrogen- based Liquid Fertilizer, Industrial Ammonia | Corn, Cotton and Wheat Production |
End Uses of Products…
Demand Drivers
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Kirby Engine Systems
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Markets
•
Medium-Speed
–
Electro-Motive Diesel (EMD)
–
Alco
–
Ingersoll-Rand
•
High-Speed
–
Caterpillar
–
Cummins
–
Detroit Diesel
–
John Deere
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Transmissions/Reduction Gears
–
Allison
–
Falk
–
Twin-Disc
Engines and
Transmissions/Reduction Gears
Diesel Engine Services
Medium-Speed and High-Speed Diesel Engines
•
Marine
–
Inland Waterway Carriers – Dry and Liquid
–
Offshore Towing – Dry and Liquid
–
Offshore Drilling Rigs & Supply Boats
–
Harbor Towing
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Dredging
–
Great Lakes Ore Carriers
•
Power Generation, Nuclear and Industrial
–
Standby Power Generation
–
Pumping Stations
–
Industrial Reduction Gears
–
Land Drilling Rigs – Expansion Opportunity
•
Railroad
–
Passenger (Transit Systems)
–
Class II
–
Shortline and Industrial
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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 Holding Company |
2006 | Marine Engine Specialists |
Internal Growth | |
1989 | Midwest |
1992 | Seattle |
1993 | Shortline & Industrial Rails |
2000 | Cooper Nuclear |
2001 | Transit & Class II Rails |
Acquisitions and Internal
Growth
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Market Conditions
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•
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%. Spot market rates higher than contract and up over 25% compared with 2005 first nine months
•
Diesel engine services – accretive earnings from Global and Marine Engine Specialist acquisitions, as well as continued strong service and direct parts sales in the majority of its markets
Market Conditions
2006 First Nine Months
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•
2006 fourth quarter earnings per share guidance of $.40 to $.45, compared with $.38 for 2005 fourth quarter
•
Guidance based on:
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Marine transportation operating fundamentals remain strong
•
Diesel engine services operating fundamentals remain strong
•
2006 year earnings per share guidance of $1.74 to $1.79, compared with $1.33 for 2005
2006 Fourth Quarter and Year
Outlook
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Financial Highlights
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For First Nine Months Ended
September 30, 2006
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Operating Margins
24
* Excluding acquisitions
$28
Expansion Barges
$138
Cash Flows
25
34.3%
57.3%
Debt / Capitalization
26
Balance Sheet
27
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Investment grade public debt
–
Standard & Poor’s – BBB+
–
Moody’s – Baa3
•
8-year unsecured Private Placement due 2013
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$200 million outstanding
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Floating rate of LIBOR +0.5%
–
No required principal payments until maturity
•
$250 Million Revolving Credit Facility
–
Accordion feature allows maximum amount to increase to $325
million without amendment
•
Protection against interest rate increases
–
$150 million of interest rate swaps
Financial Strength
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Why Invest In Kirby?
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Consistent long-term record of success in our two core businesses
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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?
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Thank You For Listening to Our Story
Kirby Corporation
Putting America’s
Waterways to Work
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