watco companies, l.l - railtrends · freight revenue by commodity ytd september 2016 service ♦...

Rail Trends November 18, 2016

Watco Companies, L.L.C.

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Watco’s Customer First Foundation Principles

Customer First – Safety Always!

Value our Customers ü Earn their business every day by providing Safe, Accurate, and Timely Service ü Create solutions that deliver value for our Customers and Watco over the long-term Value our People ü SAFE Service, ALWAYS ü Be Honest and Fair Safely Improve Everyday ü Always do the right thing and always try to find a better way ü Build a tremendous future by making decisions that protect our Customer, Team, Community, and Environment

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Watco’s Safety Journey Safety Vision

All injuries can be prevented

We are commi5ed to provide a safe work environment for all Team Members

Team Members of all levels are accountable for their own safety and the safety of their co-‐workers, preven?ng injuries and accidents, and displaying safe work behavior

No job is so important, no service so urgent that we cannot take ?me to perform all work safely.

Safe service always!

Transportation Safety Record

Terminals & Ports Safety Record

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6% of 2016 Forecasted Revenue

2% of 2015 Revenue Opportunity to solve Customer supply chain needs

10 WSCS opera?ng loca?ons

End to End solu?ons

Watco’s Unique Services Offering

52% of 2016 Forecast Revenue 54% of 2015 Revenue

Second largest short line operator (largest private operator) in North America with 36 short line railroads in the U.S. and Australia Over 400 locomo?ves Over 5,100 track miles +1MM car loads transported or switched 32 switching opera?ons Opera?ons in 24 states and Australia

23% of 2016 Forecasted Revenue

25% of 2015 Revenue

Formed joint venture with The Greenbrier Companies effec?ve July 18, 2014

Provides repair and maintenance services

32 mechanical facili?es 13 Tank Shops

19% of 2016 Forecast Revenue

19% of 2015 Revenue Two port opera?ons: Greens Port Industrial Park in Houston, TX and Watco Alabama Port Services in Birmingham, AL

53 terminal facili?es Leader in Crude by Rail Bulk Terminals Water served loca?ons

Revenue % based on proforma numbers.

Service ♦ Customer ♦ Commodity ♦ Geography

Transportation Services (“WTS”) Terminal / Port Services (“WTPS”)

Mechanical Services (“GBW”) Supply Chain Services (“WSCS”)

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Watco’s Service Diversity Watco’s Service Diversity has helped protect from losses in a tough Energy Market

Energy Related EBITDA $2.5MM favorable for period September 2016 TTM vs FY 2014 Pre-‐Downturn


REVENUE EBITDA

$ in millions 12/31/2015 12/31/2014 Variance 12/31/2015 12/31/2014 VarianceCrude Terminals 49.5$ 60.0$ (10.6)$ 12.6$ 18.6$ (6.0)$ Freight -‐ Industrial Sand 11.7 18.7 (7.0) 2.9 4.7 (1.7) Freight -‐ Crude 11.9 12.2 (0.2) 2.4 2.4 (0.0) Fuel surcharge 10.2 23.4 (13.3) 10.2 23.4 (13.3) Railcar Storage 16.0 8.1 7.9 14.4 7.3 7.1 Fuel expense -‐ rate related -‐ -‐ -‐ 14.8 -‐ 14.8 Tank Car Repair 76.1 68.8 7.2 8.4 5.2 3.3 Energy Price Volatility Impact 175.3$ 191.2$ (15.9)$ 65.6$ 61.5$ 4.1$

Q1 2016 to Q1 2015 (0.5) Q2 2016 to Q2 2015 0.2 Q3 2016 to Q3 2015 (1.3) September 2016 TTM vs FY 2014 2.5$

Twelve Months Ended Twelve Months Ended

ENERGY PRICE VOLATILITY IMPACT TO WATCO -‐ EXISTING PROFIT CENTERS

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Watco’s Customer Diversity Customer Industry TTM Growth % Of Revenue M T TP

ü ü 4.5%

3.0%

1.9%

1.6%

1.6%

1.5%

1.5%

1.5%

1.4%

1.3%


Total revenue excludes 50% of GBW’s revenue.

ü Agriculture

Automotive

Aggregates

Coal

Energy

Pulp & Paper

Energy

Metals

Retail

Metals

SCS

↑ ↑ ↑ ↑ ↑ ↑

ü ü ü ü ü ü ü ü

ü ü ü ü

ü ü ü ü ü

ü ü ü ü

ü

ü ü

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Watco’s Customer Diversity

•  Watco formed our Supply Chain Services Division in 2014 to be5er serve our customers. •  In two years of growth WSCS has become one of the top performers in the Domes?c

Transporta?on Managers/Freight Brokers market. •  Recently ranked 74th by Armstrong & Associates


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Watco’s Commodity Diversity Freight Revenue by Commodity YTD September 2016


“Heat and Eat” commodi?es are less affected by consumer discre?onary spending and make

up 75% of freight revenue

Competitor Q3 2016 vs. Q3 2015 Carload Comparison

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Watco’s Commodity Diversity


Watco Commodity Mix Compliments Class I’s

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Watco’s Commodity Diversity


Watco Commodity Mix focuses on commodi?es with strong Class 1 Profitability

Watco Commodity Mix has limited exposure to Intermodal & Coal

Watco Commodity Mix

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Watco’s Geographic Diversity We operate 36 railroads, 32 mechanical shops, 53 terminals, 2 ports, and 32 switching loca8ons

in 38 States, 2 Canadian Provinces, and Western Australia.


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Watco’s Growing Terminal & Port Footprint

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Mexico Opportunities for Watco

Mexico Rail Network

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Watco/GBW – Martin Marietta Opportunity

Mar>n Marie@a & Watco Map System

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Australia – Full of Opportunity for Watco

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Watco’s 10-Year Revenue/Adj. EBITDA Growth

EBITDA and Revenue CAGR calculated before proforma credit and compliance adjustments. See appendix for Revenue assump@ons and Adjusted EBITDA calcula@on.

10 Year Fcst CAGR = 19.8%

Revenue Adjusted EBITDA

10 Year Fcst CAGR = 17.1%

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Strategic Partnerships with Proven Leaders

Norfolk Southern Crowley Mari>me /SkyKnight Capital Kinder Morgan

Largest Pipeline Company and 3rd largest Energy Company in North America. §  7.5% Common Equity

Largest Railroad in Eastern Half of the U.S. and 3rd largest in North America. §  2.1% Common Equity

Second Largest Private Mari?me Business in North America. Marine Solu?ons, Transporta?on, and Logis?cs Company. Over 200 Vessels in fleet Opera?ons in the U.S. and mul?ple loca?ons worldwide

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Thank you for listening! Ques?ons?

Kanawha River Railroad

watco companies, l.l - railtrends · freight revenue by commodity ytd september 2016 service ♦...

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