1. Watco Companies Overview January 25, 2013 Southwestern Rail Conference

2. Watco Customer First Foundation Principles
Improve Customer Satisfaction
Right Service
Right Time
In the Right Condition – Delivered SAFELY
At the Right Price
Improve Profitability
Revenue Growth Rate
EBITDA Growth
Return on Assets > WACC%
Free Cash Flows
Economic Value Add (EVA)
Do Both Over the Long-Term
Building Relationships with:
Customers
Watco Team
Communities
Vendors
Investors
Roll Tide Roll

3. Watco Customer First Foundation Principles When Successfully Applied
Customer Satisfaction
Customer Confidence, Trust and Loyalty
Volume Growth
Service Growth
Expand Relationship
Profitability
Operating Leverage
Increase Volumes and Lower Unit Cost
Capital Management
Cash Flow Return On Invested Capital
Long Term Relationship
Customer Growth
Team Performance
Public-Private Partnership
Capital Access

4. Watco Performance System - Goals
Safety – 0 injuries / accidents every day
Service – Deliver accurate & timely service every day
People – Find, keep & develop the best Team possible every day
Profitability – Generate the most sustainable, long-term value every day
Capital – Maintain & use the right type & least amount of assets every day
Growth – Earn the right to grow by small improvements every day 4

5. Watco Growth Performance Listen-Understand-Grow
Listen to our Customers – Listen and learn our Customers needs, then work with our operations teams to meet and exceed those needs with Watco Services.
Listen
Grow organically with each Customer. What can we do differently to capture more of their transportation dollar?
Understand Customers logistics supply chains “beginning to end”. Raw material in… to finished product out.
Grow
Understand

6. Watco – What We Do!
One of the largest car repair service providers in U.S.
Largest privately owned short line railroad operator in U.S.
One of the fastest growing terminal operators
International service in Canada and Western Australia
4,500 track miles
3,200 Team Members
400 locomotives
3,900 railcars
26 states served
750,000+ annual
carloads

7. Watco Customer Diversity
Proudly serve more than 1,500 Customers Daily
Average Length of Customer Relationship
Switching 22 years
Mechanical 20 years
Railroad 10 years
Transload/Intermodal 2 years 7

8. Watco’s Service Diversity
Services
Transportation (63% revenue)
Mechanical (25% revenue)
Terminals/Port (12% revenue)
29 Short Line Railroad
Operations – 59%
400 Locomotives
4,500 Track Miles
3,900 Railcars
27 Switching Operations – 4%
16 Rail Car Repair Facilities – 24%
23 Railcar Car Repair Operations – 1%
5 Private Railcar Repair Facilities
20 Terminal Operations – 6%
2 Port Facilities - 5%
10 Warehouse Operations – 1%

9. Watco Geographic Diversity

10. Watco Commodity Diversity
Infrastructure Metals & Minerals 26% (Frac Sand, Drilling Pipe, Road Rock)
Agriculture 33%
Other 5%
Lumber & Forest Products 6%
Energy & Chemicals 22% (Coal, Crude Oil, Petro-Chemicals)
Pulp & Paper 8%

11. Kinder Morgan & Watco
On December 15, 2010, Watco Companies and Kinder Morgan Energy Partners announced a new partnership. The advantages of this partnership are:
Significant Growth Opportunities
Transaction provides an avenue for significant investment into high growth areas
Proven track record of successful investments with recent acquisitions and expansions
Entrepreneurial mindset towards growth
Significant Synergies
Over 1,500,000 carloads handled at KM & Watco facilities annually
Over 100 Class I railroad connections and 50 short-line railroad connections in the U.S.
The Terminaling and Railroad Industry are integral to each other
Exceptional Operators
Respected reputation among peers in the industry
Leaders in crude by rail terminals and operations

12. Watco’s 10-Year Revenue Growth
10 Year CAGR = 21.8%
2012 P = preliminary 2012 actual results.

13. Watco’s 10-Year Adj. EBITDA Growth
10 Year CAGR = 21.7%
Adj. EBITDA figures are per the Company’s historical compliance certificates through 2011 and preliminary actual results for 2012, adjusted to exclude pro forma EBITDA from acquisitions to provide an accurate portrayal of the margin trends in Watco’s base business.

14. Watco’s Future Keys to understanding our future
Understand our past successes – courage to change for success today & tomorrow
Understand the future of our industry is very bright
Understand we must continue to improve, earning the right to grow with our Customers
Understand the importance of living by our Watco Customer First Foundation Principles
Understand & implement the Watco Performance System
Well positioned for future growth 14

15. Thank You for Listening!
Questions?