Presentation on theme: "Watco Companies Overview January 25, 2013 Southwestern Rail Conference"— Presentation transcript:
1Watco Companies Overview January 25, 2013 Southwestern Rail Conference
2Watco Customer First Foundation Principles Improve Customer SatisfactionRight ServiceRight TimeIn the Right Condition – Delivered SAFELYAt the Right PriceImprove ProfitabilityRevenue Growth RateEBITDA GrowthReturn on Assets > WACC%Free Cash FlowsEconomic Value Add (EVA)Do Both Over the Long-TermBuilding Relationships with:CustomersWatco TeamCommunitiesVendorsInvestorsRoll Tide Roll
3Watco Customer First Foundation Principles When Successfully Applied Customer SatisfactionCustomer Confidence, Trust and LoyaltyVolume GrowthService GrowthExpand RelationshipProfitabilityOperating LeverageIncrease Volumes and Lower Unit CostCapital ManagementCash Flow Return On Invested CapitalLong Term RelationshipCustomer GrowthTeam PerformancePublic-Private PartnershipCapital Access
4Watco Performance System - Goals Safety – 0 injuries / accidents every dayService – Deliver accurate & timely service every dayPeople – Find, keep & develop the best Team possible every dayProfitability – Generate the most sustainable, long-term value every dayCapital – Maintain & use the right type & least amount of assets every dayGrowth – Earn the right to grow by small improvements every day4
5Watco 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.ListenGrow 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.GrowUnderstand
6Watco – 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 operatorsInternational service in Canada and Western Australia4,500 track miles3,200 Team Members400 locomotives3,900 railcars26 states served750,000+ annualcarloads
7Watco Customer Diversity Proudly serve more than 1,500 Customers DailyAverage Length of Customer RelationshipSwitching 22 yearsMechanical 20 yearsRailroad 10 yearsTransload/Intermodal 2 years7
8Watco’s Service Diversity ServicesTransportation (63% revenue)Mechanical (25% revenue)Terminals/Port (12% revenue)29 Short Line RailroadOperations – 59%400 Locomotives4,500 Track Miles3,900 Railcars27 Switching Operations – 4%16 Rail Car Repair Facilities – 24%23 Railcar Car Repair Operations – 1%5 Private Railcar Repair Facilities20 Terminal Operations – 6%2 Port Facilities - 5%10 Warehouse Operations – 1%
11Kinder Morgan & WatcoOn December 15, 2010, Watco Companies and Kinder Morgan Energy Partners announced a new partnership. The advantages of this partnership are:Significant Growth OpportunitiesTransaction provides an avenue for significant investment into high growth areasProven track record of successful investments with recent acquisitions and expansionsEntrepreneurial mindset towards growthSignificant SynergiesOver 1,500,000 carloads handled at KM & Watco facilities annuallyOver 100 Class I railroad connections and 50 short-line railroad connections in the U.S.The Terminaling and Railroad Industry are integral to each otherExceptional OperatorsRespected reputation among peers in the industryLeaders in crude by rail terminals and operations
12Watco’s 10-Year Revenue Growth 10 Year CAGR = 21.8%2012 P = preliminary 2012 actual results.
13Watco’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.
14Watco’s Future Keys to understanding our future Understand our past successes – courage to change for success today & tomorrowUnderstand the future of our industry is very brightUnderstand we must continue to improve, earning the right to grow with our CustomersUnderstand the importance of living by our Watco Customer First Foundation PrinciplesUnderstand & implement the Watco Performance SystemWell positioned for future growth14