Customer First Foundation Principles

Transcription

1 Watco Companies

2 Watco Companies Watco Companies was started in 1983 by Charles R. Dick Webb with a switching operation in DeRidder, LA that is still in existence today Coffeyville, KS was our next expansion in 1985 with a car repair facility. This expanded into what is now the SKOL railroad which was the first shortline purchase completed with the Union Pacific Watco s focus on Customer satisfaction has grown the company into an all encompassing industry serving rail, mechanical, switching, storage, trucking, warehousing and intermodal needs of Customers throughout twenty-six states

3 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 Customers Watco Team Communities Vendors Investors 3

4 Watco Statistics Largest car repair shop service provider in U.S. One of the largest short line railroad operators in the U.S. 3rd largest industrial contract switching provider 610,000+ annual carloads 4,500 track miles 3,390 Watco team members 400+ locomotives 3,900 railcars 6 states served 7 switching operations 30 short line railroads 16 mechanical shops, 3 railroad repair shops, 8 locomotive shops and 5 private railcar shops 1 terminal locations 10 warehouses & port locations International service in Canada and Western Australia 4

5 5 Watco System Map

6 Strategic Business Model Watco Services Class I s Transportation Short Lines Customer Mechanical Other Customers Terminal and Ports Gov.- Eco. Development Watco s goal is to improve profitability and customer satisfaction over the longterm by providing services to fill all customer needs 6

7 Watco s Service Diversity Services Transportation (61% revenue) Mechanical (9% revenue) Terminals/Port (10% revenue) 7 Short Line Railroad Operations 58% 400 Locomotives 4,500 Track Miles 3,900 Railcars 6 Switching Operations 5% 15 Rail Car Repair Facilities 8% 3 Railcar Car Repair Operations 1% 5 Private Railcar Repair Facilities 18 Terminal Operations 6% Port Facilities - 3% 10 Warehouse Operations 1% 7

8 Kinder Morgan and Watco 8 $100 million preferred equity investment(s), JV (KW Express, LLC). Introduce mutual opportunities e.g. Greens Port Crude by rail partnership Purpose is to lever strengths Watco Largest private short line rail operator efficient and low cost KMT Brings rail expertise JV Coverage will be broad Favorable crude oil rail operating experience Presence in key market areas Understand markets, terminals and logistics Brings capital and discipline Brings significant North American terminal presence Knows market and players Crude and proppants (sand) North American scope DBOOM, operations, financing, consulting working on formalizing structure and principles Formalized JV January,

9 KM & Watco Terminals Map () (3) () (4) 3 5 Netherlands KM Legend Dry and/or Break Bulk Locations Liquid Locations Watco Legend Mechanical Services Switching Services Product Pipelines Locations Transload/Intermodal Services 9 Transload Operations Port Operations

10 KM and Watco will look to widen the scope of services traditionally offered Focus on turn-key service, single point of contact Significant Rail Geographic Footprint Watco Rail Network is comprised of 30 shortlines, 7 switching operations, and 3,500miles of track Access to developmental sites on many of its properties and rail carrier partners Able to leverage short line access for a more reliable service offering Railcar leasing Railcar repair Watco is the largest railcar repair company in the U.S. Relationships with the top car leasing and mfg. companies allows for a variety of leasing options Mobile and full service car repair reduces fleet down time and overall fleet size of our customers Real Estate In-house Real Estate expertise is available Class I relationships Watco is a true rail logistics company that owns assets and provides capital financing Strong credibility with all Class I carriers Watco has ISA s, locomotive, trackage rights, and operational agreements with all US Class I RRs Western Australia 10 10

11 KM/Watco Crude by Rail Service Offerings Crude Transloading experience Staffing, Training, Switching, Track, Mechanical, DBOOM, Environmental, and Logistics services provides for a turn-key package that puts KM/Watco at the forefront of crude by rail transportation Complete turn-key service provides for single point of contact for customers No other company offers complete in-house services that KM/Watco does. Single point of contact eliminates tracking down numerous responsible parties or waiting on subcontractors to schedule on site work. Transload experience across the spectrum Carload, Dry bulk, Wet bulk, lay down materials, storage, warehousing Cross training All crews/staff cross trained (engineers, switchman, laborers, track repair, pumpers, locomotive repair, railcar repair, etc) Design, Build, Own, Operate, Maintain Rail design integrated with Transloading experience to maximize infrastructure capital is spent in the most efficient way possible while avoiding design bottlenecks 11 11

12 Watco Crude loading Bienfait SK 1

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14 Unit Train Unloading Facility 14 14

15 Why move crude by rail? Moving a barrel by rail can cost $8 to $14, compared with $3 to $6 by pipe, depending on destination. So why move crude by rail if it is more expensive? Speed to market Rail transit to destination 5-7 days vs. 30+ days via pipeline Rail offers flexibility/optionality to reach multiple markets simultaneously typically without long term take or pay commitments Isolation of commodity to provide a pure barrel to the destination Rail serves nearly every refinery in the U.S. and Canada Fewer permitting/regulatory hurdles 15

16 16 Watco Companies

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18 WATCO CONTACTS Rick Webb Allan Roach