- Filing of certain prospectuses and communications in connection with business combination transactions (425)
March 25 2011 - 2:49PM
Edgar (US Regulatory)
Filed by Kirby Corporation pursuant to Rule 425 of the
Securities Act of 1933 and deemed filed pursuant to
Rule 14a-12 of the Securities Exchange Act of 1934
Subject Company: K-Sea Transportation Partners L.P.
Commission File No.: 1-31920
The following is a transcript of a presentation by senior executives of Kirby Corporation at a
conference sponsored by J.P. Morgan on March 24, 2011.
Kirby Corporation
March 24, 2011
10:25 AM ET
Speakers
:
Joseph H. Pyne
Chairman of the Board, President
and Chief Executive Officer,
Kirby Corporation
David W. Grzebinski
Executive Vice President
and Chief Financial Officer,
Kirby Corporation
Presentation
:
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Disclaimer:
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The statements contained in this presentation with
respect to the future are forward-looking statements.
These statements reflect managements reasonable
judgment 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 addition to industry
capacity, changes in the Jones Act or in US maritime
policy and practice, fuel cost, interest rates, weather
conditions, and the timing and 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 Kirbys annual report on Form 10-K for the year
ended December 31, 2010, filed with the SEC.
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Kirby reports its financial results in accordance with
Generally Accepted Accounting Principles. However,
Kirby believes that certain non-GAAP financial measures
are useful in managing Kirbys businesses and evaluating
Kirbys performance. This presentation contains two
non-GAAP financial measuresadjusted net earnings and
EBITDA. Please see the appendix for reconciliation of
GAAP to non-GAAP financial measures.
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The following is important information about the
proposed merger transaction involving Kirby Corporation
and K-Sea Transportation Partners L.P., as well as
additional information. This communication does not
constitute an offer to sell, or the solicitation of an
offer to buy any securities, or a solicitation of any
vote or approval.
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The proposed merger transaction involving Kirby
Corporation and K-Sea Transportation Partners, L.P.,
will be submitted to the unit holders of K-Sea for their
consideration. In connection with the proposed merger,
Kirby will file with the Securities and Exchange
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Commission a registration statement on Form S-4
that will include a proxy statement of K-Sea and a
prospectus of Kirby.
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The definitive proxy statement and prospectus will be
mailed to the unit holders of K-Sea.
INVESTORS AND
SECURITY HOLDERS OF K-SEA ARE URGED TO READ THIS
REGISTRATION STATEMENT AND THE PROXY STATEMENT,
PROSPECTUS, AND OTHER MATERIALS REGARDING THE PROPOSED
MERGER CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME
AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT KIRBY, K-SEA, AND THE PROPOSED MERGER.
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Investors and security holders may obtain a free copy of
the registration statement and proxy
statement/prospectus when they become available, and
other documents filed with the SEC by Kirby and K-Sea
through the SEC website at www.sec.gov. Free copies of
the registration statement and proxy
statement/prospectus, when available, and other
documents filed with the SEC, can also be obtained from
Kirbys website at kirbycorp.com.
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Kirby and its directors and executive officers and
certain other persons may be deemed to be participants
in the solicitation of proxies with respect to the
proposed merger.
Information regarding Kirbys
directors and executive officers is available in its
annual report on Form 10-K for the year ending December
31, 2010, which was filed with the SEC on February the
25th, 2011, and its proxy statement for its 2011 annual
meeting of stockholders, which was filed with the SEC on
March 18, 2011.
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Other information regarding the participants and the
process of solicitation and a description of their
direct and indirect interests will be contained in the
proxy statement, prospectus, and other relative
materials to be filed with the SEC when they become
available.
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Nick Worthington:
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Thanks, everyone, for joining us this morning. My name
is Nick Worthington. I work in credit research here at
JPMorgan, and I wanted to introduce Kirby, which is a
shipping company, a little bit different than most of
the dry bulk container companies out there. Obviously,
it has a very different story. I wanted to start by
introducing Joe Pyne, the CEO, and David Grzebinski, the
CFO, who are both here to present this morning. And we
look forward to hearing what you have to say.
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Joe Pyne:
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Good morning. Appreciate your joining us this morning.
Were going to talk about Kirby. Kirbys in two
businesses. Were in the marine transportation business
and the diesel engine business. About 82% of our
revenue is in marine transportation and 18% in diesel
engine services.
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A little later in the presentation, Im going to talk
about some acquisitions that were making, and this mix
is going to change a little bit. Marine transportation
is going to be around 65% of our 2012 projected revenue,
and diesel engine services moves up to about 35%. We
have a market cap of around $3 billion, enterprise value
of about $3.2 billion.
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Kirbys the largest inland tank barge operator in the
United States. This is a business that size matters, so
there are some economies of scale that we enjoy that
smaller operators do not. Im going to come back and
drill down into that in a little bit.
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Seventy-five percent of our marine transportation is
under contract a year or longer. About 50% of that
contract revenue is in time charters. Time charters
where the shipper takes the tow on a daily basis, and a
lot of the operating risk is attached to the shipper and
not us.
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With respect to our diesel engine business, its a
national footprint. It is principally, the current
business is principally a service company, and it is
marine engine focused.
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Kirby has been the consolidator in both its businesses.
Were the aggregation of 27 separate marine acquisitions
and 15 diesel engine acquisitions. This looks at the
acquisitions. The newest one on the list is K-Sea
Transportation. Ill come back and talk about K-Sea.
That transaction is not closed.
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The two other 2011 acquisitionsKinder Morgan, which
really was relatively small and just extended our
fleeting footprint in the Houston Harbor, is closed; and
Enterprise, which extended our bunkering operation,
principally into Florida, is also closed.
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These are the diesel engine acquisitions. And again,
the acquisition of 2011, United Holdings, which Ill
come back and talk to, is not closed, but we expect that
to close either in April or May.
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Looking at revenueand this excludes, of course,
revenue that is going to be attached to the
acquisitionsour revenue has grown on an annualized
basis since 1988 at a little less than 15% a year. And
earnings per share, a little less than 13% a year. That
included, of course, 2009 and 10, where earnings
dipped.
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Drilling into the inland tank barge business, this is
our highway system. Its the Inland Waterway System of
the United States, 12,000 miles of navigable waterways.
It connects, really, the center of our country to itself
and the Gulf Coast markets, but also to the export
markets. No system like it in the world.
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Now, in a minute youll see that Kirby is principally a
chemical carrier. Almost 70% of our revenue comes from
chemical-related products. Eighty percent of the US
petrochemical capacity is located in two states; its
Texas and Louisiana. Those plants are interconnected,
really, through the Inland Waterway System. So about
two-thirds of our fleet resides on the Gulf Coast, and
about one-third of it is engaged up on the Mississippi
River and its tributaries.
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Just some facts about the barge business. Were an
inland tank barge operator. Theres a larger dry cargo
sector, very difficult in our view to add a lot of value
if youre in the dry cargo business. It really competes
on availability and price. On the liquid sector, on the
other hand, because of what we carry, who we work for,
and what its used for, we think that we can add value
based on reliability, flexibility, safety, and squeeze
maybe a little more value out of the proposition.
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This is a protected business. We come under the Jones
Act. Very little obsolescence here because of the
dimensions of the waterway itself and the locks that
these barges have to go through. So its not a business
that you wake up and discover that somebody has created
some new container that makes you obsolete.
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A very important part of the US transportation system,
and an environmentally friendly way of moving cargos
around. Its statistically probably the safest mode of
transportation. It also has the lowest carbon footprint
of any surface mode of transportation.
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The supply of tank barges leveled out the last couple of
years to around 3,100. The age of the tank barge fleet
is mature. About one-third of it is 30 years or older.
Theres going to be a lot of replacement that has to
occur in this business, so were comforted that supply
is not going to get out of hand going forward.
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Looking at the cargos that we carry, I mentioned that
almost 70% is in the petrochemical area. Thats
followed by black oil, a little less than 20%; refined
products, a little less than 10%; and then agricultural
chemicals make up the rest. You can see the kind of
product that makes up those markets listed on the right.
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Size matters. Part of, we think, our competitive
advantage is how we manage power. These are unmanned
barges that are pushed by tow boats. We charter about
one-third of our power, somewhere between 25% and 35%,
depending on market levels. The chartered power allows
us to downsize and reduce our costs rapidly in a
downturn. It also allows us the flexibility of
increasing power in an upturn. I think that part of our
success, and youll see from Davids part of the
presentation, of keeping margins where they currently
are is our ability to control the power side of the
costs in our business.
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With respect to the size of our tank barge fleet, the
more cargos that you control, the more back-haul
opportunities you have, the more flexibility you have
with respect to moving barges, just because of the
number of barges you have, the likelihood of them being
closer to the cargos that you move is higher.
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And theres less cleaning. Cleaning is an expensive
part of the business. You have to position the barge,
incur the time lost to cleaning, and then the cost of
disposing the product that youre removing from the
barge. So if you have a number of barges that have the
right cargo bottoms, which a larger fleet avails itself
to, you can reduce that part of the cost to the
business.
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This looks at the competition. Kirby, of course, is the
largest. Then it drops down to some medium-sized
companies, and then off to the right, you have some
relatively small companies. The shipper fleets are in
red. They have tended to outsource their fleets over
the last number of years. We, for example, bought Dow
Chemicals fleet. We bought Exxons fleet. We also
bought Union Carbides fleet when it was available.
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We think that this is a business thats going to
continue to consolidate. Kirby, as I mentioned earlier,
is one of the consolidatorsprobably the principal
consolidatorand we intend to continue to look for
opportunities to consolidate here.
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This looks at the demand drivers. Now, almost 70% of
what we do is in the chemical area. Seventy percent of
the chemicals used in this country go to consumer
durable goods, 30% non-durables. This creates less
volatility with respect to the volumes that we move. In
a typical recession, you see chemical volumes decline 6%
to 8% versus some of the other things that you can carry
that see much more dramatic declines. Thats not to say
that the chemical companies dont become instantly
unprofitable, but were a transporter, so volumes is
what drives our business, not necessarily their
profitability.
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The other drivers are, in terms of the markets that
were in, are listed to the right. Im not going to go
through them, but theyre there.
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Because of what we carry and who we work for, safety
does matter. We think that we have probably the best
record in the industry, and we think that that is part
of the value quotient that we offer to our customers.
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Going through the diesel engine business, the markets
that we service are marine, power generation, and rail.
About 65% of this business is marine, a little over 25%
power generation, and the balance is rail.
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The type of engines that we service, medium-speed
engines, high-speed engines. The high-speed engines are
more household names than the medium-speed business. We
also work on the gears and transmissions that are part
of the propulsion chain.
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Im going to move on and talk about acquisitions. The
first one is the Enterprise acquisition, which is the
bunkering operation, principally in Florida. It came
with 21 tank barges, 15 boats, a little over $53 million
with respect to the purchase price. It is accretive to
Kirbys earnings. We estimate the revenue somewhere in
the $30 million to $35 million range, and the accretion
with respect to a full-year contribution, $0.05 to
$0.07. And that acquisition, as I mentioned, is closed.
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The second one is not closed. Its United Holdings.
This is a diesel engine acquisition, kind of an
extension of our marine business to the land, onshore
oil service business. United is a manufacturer,
distributor and service provider of engine parts21
locations, 13 states, really positioned to take
advantage of the shale gas opportunity. Its a $270
million acquisition. It does have an earn-out based on
a cumulative EBITDA, 2011 to 2013.
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But this is really an interesting market, because an
enormous amount of horsepower has been added to the
onshore oil and gas business as part of the fracking
technology to fracture these shale deposits. The
horsepower has literally doubled since 2007; we think
its going to double again. We think that this is a
great service opportunity for us. Part of this still
manufactures these units, but we think that the real
sweet spot is when they come in for service.
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This is immediately accretive to our earnings. Estimate
that the revenue in 2011, based on an April close, is
somewhere between $285 million to $335 million, and that
net earnings, again, for 2011, based on the April close,
somewhere between $0.15 and $0.20.
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The final acquisition Im going to talk about is the
newest. Thats K-Sea Transportation. K-Sea
Transportation is a coastal tank barge operator. Again,
an extension of the service that we offer our customers
on the inland side of the business. The customers often
are the same. The individual that, frankly, we talk to
is often the same. This fleet consists of 58 tank
barges, 3.8 million barrels of capacity. Fifty-four of
them are double-hulled. Average age of about nine
years.
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The operating footprint is the most extensive in their
business. They operate on all three coasts and also in
Alaska and Hawaii. A $600 million acquisition. It does
have a stock component. There are two classes of unit
holders. Theres a preferred unit holder and a common
unit holder. The preferred unit holders are required to
take 50% of their units in Kirby stock and 50% in cash.
The common unit holders have the choice of taking up to
50% in stock.
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We think that this is a good time to enter this market.
This is a business that has gone through some turmoil
with over-capacity, principally caused by the
replacement of single-hulled vessels and the timing of
double hulls coming on. So you had excess capacity, the
market collapsed, and the business declined. Were now
seeing improvements in volumes. We think that the
supply-and-demand balance is improving. About 10% of
the barges still in this business are single-hulled
vessels. All single hulls need to be removed by the end
of 2014. Most of them will actually come out, we think,
a little earlier.
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Were seeing rates and utilization in this business to
continue to move in the right direction. Anticipate
closing this June or July, late second quarter or early
third quarter.
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Looking at what Kirby would look like, at the beginning
I showed you Kirbys revenue makeup, $1.1 billion,
roughly 20% diesel engine services, 80% marine
transportation. The run rate in 2012 would be somewhere
in the $1.8 billion to $2 billion in revenue. Diesel
engine services moves up a little bit, and marine
transportation moves down. With
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respect to future opportunities, what I would expect is that the
acquisitions that we make are going to be principally marine related, and
that medium term, you would see the percent of revenue in the diesel engine
business move down a little bit, and the percent of revenue in the marine
transportation business move up.
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Ill briefly go through our 2011 outlook. Our first quarter guidance range
is $0.56 to $0.61 per share versus $0.46 the same period the year before.
We reconfirmed this guidance several weeks ago when we announced the K-Sea
acquisition.
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For the year, we actually moved guidance up based on these acquisitions.
The guidance was $2.35 to $2.55, and weve moved it up to $2.55 to $2.80.
And it includes the components that are listed below$0.05 for the ship
bunkering operation, $0.15 to $0.20 for United Holdings. And with respect
to the K-Sea acquisition, because of when it closes and the fees that have
to be now expensed this year, its going to be neutral this year. The
expectation in 2012 is of low-single-digit to double-digitexcuse me,
high-single-digit to low-double-digit accretion.
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With respect to our range this year, the high end is really driven by the
inland tank barge business. If we see rates improve earlier than the middle
part of the year, we would think that that range would be closer to the high
end of the range. If rates do not improve until the latter part of the
year, then were going to be closer to the low end of the range. And were
estimating the diesel engine business, really to be about flat, with little
improvement in the Gulf of Mexico.
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Now, there have been some positive announcements down there, where permits
are beginning to be issued, so thats encouraging. But I think its still
too early to fully understand the implications of what the permits are going
to do.
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Just, I guess, some quick comments on the first quarter. We have
experienced some, maybe a little worse-than-normal weather this year, with
ice, high water, and storms on the Gulf of Mexico. But we still think that
well be within the range.
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And quickly, with respect to our construction program, in 2010 we took
delivery of 57 tank barges, three new tow boats. Our construction schedule
this year is 40 barges, again, three boats. And our CapEx guidance for the
year is $185 million to $195 million, $100 million of which is for new
equipment, and $15 million of that number is for projects that we anticipate
through the United acquisition.
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Now Im going to turn it over to David to go through the financial
highlights.
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David Grzebinski:
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Thank you, Joe. Ill run through some quick slides here
on the financial condition of the company and talk to
you about how were going to finance these acquisitions.
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This is just a quick review on 2010 versus 2009. Ill
just point you to the revenue, or percent change on the
right. Marine transportation revenues were up 4% year
over year. Thats due to higher utilization and higher
volumes than we expected and were incurred in 09. Part
of that revenue increase was also related to fuel. Fuel
prices were up 29% year over year, and fuel for us is a
pass-through.
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Contrast the operating income to the revenue increase
for marine transportation, operating income was down 7%.
And thats really term contract pricing rolling through
as the economic weakness and the lower volumes worked
through. Thats largely behind us. Ill talk about
that on the next slide when we talk about margins.
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In the diesel engine services side, you can see revenue
was down 3%, operating income down 2%, roughly in line.
And as Joe mentioned, thats in large part related to
the Gulf
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Coast activity, or lack thereof, related to the oil spill. And we think
thats, hopefully, largely behind us now.
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Now well spend a few minutes on operating margins. This has both segments.
The gold line, or the yellow line at the top, is the marine transportation
segment margins. The red lines the engine systems margin. A couple of key
takeaways. On the marine side, the last economic downturn, which began in
2000, took a while to play out, kind of troughed for us in 2003, with
margins around the 15% range. And then we peaked this last up cycle in 2009
at just under 24% margins.
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And this economic downturns been rather sharp, but its been more V-like.
Its come down quickly and come back fairly strongly. Were, in 2010, were
at 21.1% margins. We feel like the term pricing rollovers behind us now,
and pricing is firming a little bit. Our utilization has been up. Its in
the 85% to 90% range towards the end of the year. And currently, in the
first quarter, weve been running in the very low 90% range, and thats in
part due to weather, but some of it may be related to volumes. Were going
to have to see how that sorts out. But weve been very active.
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So the point here is that if this is the trough of the economic cycle, this
trough is higher than the last cycles trough. And thats because weve
taken a lot of costs out of the business and gotten more efficient in
operating it.
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Now, just to comment on the acquisitions, we will roll K-Sea into the marine
transportation segment. K-Sea will have, it does have a little bit lower
margins, so as you go forward, youll see this, all things being equal, the
margins will come down a little bit as we blend that in and may come down
once we have full-year in 2012, by about 1%. Now, again, thats if all
things are equal. But if were at the trough and we get some pricing, the
inland marine side could pick up.
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On the engine services margins, you see we ran in the mid-teens for a while.
Weve been running in the 10% to 10.5% range with the economic downturn and
the oilfield service and offshore downturn. Our labor utilizations come
down a little, and were about 10.5%. That should come back up. We do
believe that our operating margins should run in the mid-teen range, and we
would expect to get back there as things pick up in the oil service sector.
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Now, with the United acquisition, they do have a good portion in
manufacturing and assembling frac spreads. Those run at a little lower
margins, so when we blend that in, you could see our overall segment margins
drop a little bit. But again, we think over the long run, as the service
component on the frac side picks up, they will be normal Kirby-type margins.
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Ill spend a little bit talking about cash flow and our capital spending.
This just gives you a feel for cash flow, a proxy for cash flow, EBITDA per
share. Weve been over $5.00 per share, and we certainly believe well be
above that in 2011.
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Just to get straight to free cash flow, this is a chart that will show you
that. If you look at the green bar, thats our cash flow from operations.
And then our capital spending are the gold bars or the yellow bars. I think
the key takeaway here is that the green bar is always greater than the gold
bar. Were a consistent generator of free cash flow, which we, over the
years, weve used to delever our balance sheet.
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The last set of transformative transactions, if you will, were back in 1999,
when we purchased Hollywood Marine. We took the leverage up to, actually at
a point in time, about 60% debt to total cap, and we delevered rather
quickly. You can see over time, theres some blip-ups on this chart. Those
relate to acquisitions.
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We got to pretty much a low for us, below 15% debt to total cap, and with
these transactions, well take that back up. We should be in the range of
30% to 40% now. With these transactions, probably 38% at the peak. Well
probably have $840 million in debt at the peak. But by year end, it should
be down close in the $700 million range, $715 million.
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We expect to use the cash flow to delever, and we could be back to almost a
debt-free position in about three to four years, based on the cash flow
generation of all the combined businesses.
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Just a couple more comments on the debt. We are investment grade-rated. We
think thats important, because as you can tell, we do acquisitions, and we
need to have some balance sheet flexibility to get funds to pay for the
acquisitions when theyre available. And sometimes that happens
counter-cyclically. We need to make investments counter-cyclically as well,
when shipyard pricings cheap or steel price is cheap. So we like to have a
pretty strong balance sheet.
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We do have a revolver, which is currently undrawn, a $250 million revolving
credit facility thats expandable to $325 million. We will use some of that
to pay for some of these transactions. We have some debt thats been in
place for a while. 2013 it comes due. Its a $200 million private
placement.
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And then finally, were putting in place, to fund the acquisition, a $540
million underwritten bank term loan. It will be floating rate. It will
allow us to prepay it very quickly. Rather than term something out in the
bond market, we felt it was important to have the bank debt so we could
prepay it and delever quickly. Well be putting that in place just prior to
closing the transaction, as Joe mentioned, at the end of the second quarter,
first part of the third quarter. Thats all I have. Thank you.
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Joe Pyne:
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Just some things to leave you with. Kirbys had a consistent, long-term success record, consolidating the
businesses that weve been in. Experienced management team. Average tenure for operating management is 25,
probably 30 years, for the company. We run the business conservatively. The diesel engine business has a
national footprint. The United acquisitions going to add, I think, the onshore equivalent of our marine
diesel business.
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Strong financial discipline, strong free cash flow. And the acquisitions that weve made will all be
accretive, and great opportunities for Kirby.
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I think we have a little time for questions. Can we do that? Okay. Dan?
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Unidentified Audience Member:
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I know youre not necessarily prepared to comment on earnings and that sort of thing formally, but as you
think about the weather, can you put some color around how meaningful weather was, either in terms of days,
year over year, something that?
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Joe Pyne:
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Yes. This is, weather in the first quarter, can I put some color around it, quantify it? I think that a good
way to describe it is the delay days in February this year were twice what they were last year. So February
was a particularly difficult month. And as we go into March, we have some high water on the Mississippi
River. What I dont want to do is try to translate that into cents per share.
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Unidentified
Audience Member:
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Thank you. I wondered if you could comment a bit on Kirbys opportunity to take advantage of some of the
global oil spread differentials, and what does that, if anything, mean for Kirby this year?
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Joe Pyne:
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Yes, Kirbys opportunity to take care of transportation opportunities with respect to oil shale plays and
maybe the Cushing issue, where you have a bifurcation of West Texas crude and Brent. With respect to Cushing,
they havent figured out how to get it to water yet. If they get it to water, we certainly could carry it.
Cushing is a little over 50 miles from the nearest river, and theres no pipeline system that connects it, so
theyre going to have to figure that out before it will get to water.
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Now, there may be some opportunities to get it to water on the upper Mississippi River, which is a river that
closes during the winter. But nobody has really approached us with that opportunity yet.
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The opportunities that they have approached us with are some of the liquids that are coming out of the Eagle
Ford shale play in south Texas. And we do think that were going to move some of that.
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Thats an interesting problem down there, because the refineries that are closest to that resource are geared
to handle a much heavier crude oil. So to get the best value for it, they need to transport it to Houston or
to New Orleans/Baton Rouge.
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Unidentified
Audience Member:
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If all of this were to come into place, could that move the needle?
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Joe Pyne:
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Yes, if it happened, would it move the needle? Certainly. Its more capacity thats being consumed. We
think the industry utilization rates, frankly, are pretty high currently. So it wouldnt take much to make it
a very tight market.
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Unidentified
Audience Member:
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Two questions. One, I just want to make sure that I heard this right. The marine operating margin, youre
expecting potentially about 100 basis points decline this year, to a trough in the marine operating margin?
Is that right?
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Joe Pyne:
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Its based on K-Sea having lower operating margins, given the fundamentals in that business, which we think
will improve. But as you layer it in, its going to be slightly dilutive.
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Unidentified
Audience Member:
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So the existing business, you feel like has basically troughed?
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Joe Pyne:
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Yes.
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Unidentified
Audience Member:
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And everything, cycled through and back. And then the other question is, United, you talked about the frac
spread, manufacturing, which is obviously in a very high-speed expansion right now. So can you talk about how
you value that piece of the business? How big of United is it, and how do you gracefully go through the?
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Joe Pyne:
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In 2011, its about 40% of the revenue. Theres an enormous demand for building this equipment, and were
happy to do it. But what excites us about United is the service opportunity. Youve doubled it since 2007.
Youre going to double it again. And we dont think that anybody has really carefully thought through how
youre going to maintain it. And the operating cycle is much more intense than the marine cycle. The
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overhaul cycle for an engine in a frac unit is more than twice what it would
be in a marine propulsion unit, so we think its a great opportunity for us.
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Unidentified
Audience Member:
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Maybe you could talk about low natural gas prices. Has
that helped your petrochemical customers and helped
yourself?
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Joe Pyne:
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Yes. The effect of low natural gas prices on the
petrochemical business. Its a real game-changer,
because it took a business that was mature, not growing,
competitive regionally but not really competitive
globally, and made it competitive globally. The
petrochemical business really enjoys a cost structure
thats equal, probably, to none. The Mideast does have
abundant natural gas supplies, but theyve got also
abundant problems. What youre seeing, I think, for the
first time in 20 years, is actual talk of bringing
multiple facilities back online and expansions in the
business.
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What does that mean to us? Thats just more volumes
that we can carry. So were actually pretty bullish on
it.
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Nick Worthington:
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Were out of time.
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Joe Pyne:
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Okay. Well, thank you.
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