WATCO COMPANIES Making the Right Connections

Customer First – Safety Always! Q1 2018 Customer First Foundation Principles Customer First - Safety Always! Value Our Customers • Earn their business every day by providing Safe, Accurate, and Timely Service • Create solutions that deliver value for our Customers and Watco over the long term

Value Our People • SAFE Service, ALWAYS • Be Honest and Fair

Safely Improve Every Day • Always do the right thing and always try to find a better way • Build a tremendous future by making decisions that protect our Customer, Team, Community, and Environment

Customer First – Safety Always! 2 Watco Overview Timeline

Customer First – Safety Always! Watco Overview Long Term Growth

Revenue 2007-2018 EBITDA 2007-2018

Customer First – Safety Always! Watco Overview Our Team Approach

More than 4,900 Team Members

Watco Companies, LLC Retention Rates 90% 78% 78% 80% 80% 72% Turnover down YOY 1.6% 70% 65% 60% 50% 40% Watco U 2014 2015 2016 2017 2018 • Award winning Leadership and Development Program • Awarded Training Staff dedicated to Improving Team Member Skills

STAT Center • Equipping Team Members for today’s technology and regulations • Centralized training location for Engineers and Conductors • Expansion of offerings to Maintenance of Way and Mechanical • Specialized course giving Team Members access to instructors, equipment, and technology including locomotive simulators

Customer First – Safety Always! 5 Watco Overview Safety Always – Our Safety Vision

• All injuries can be prevented

• We are committed 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, preventing injuries and accidents, and displaying safe work behavior Watco Team Members in Jeffersonville, IN to be recognized for an award • No job is so important, no service so urgent that by the American Equity Underwriters for safety in stevedoring we cannot take time to perform all work safely

• Our primary goal is to get our team members home safely to their families every night

• Our safety journey is on-going, with focus to improve each and every day

The BRS received a Presidents Award from the ASLRRA for best safety • 154 locations RPI free in 2018 performance in the Central region for roads with less than 50,000 man hours

Customer First – Safety Always! 6 Watco Overview Commodity Diversity

2018 Transportation Freight Revenue 2018 Terminal and Revenue

Customer First – Safety Always! 7 Watco Overview Geographic Diversity

We operate 41 railroads, 19 mechanical shops, 83 terminal and operations, and 33 switching locations in 38 states, Western Australia, Mexico, and Canada

Customer First – Safety Always! 8 Watco Overview Service Diversity

Transportation Services Terminal and Port Services 50% of 2018 2018 Revenue 24% of 2018 Revenue

• Second largest short line operator (largest private • 86 Terminal and Port Operations operator) in North America with 41 short line railroads • 49 Transload Terminals in the U.S., Canada, and Australia • 35 Marine Terminals • +440 locomotives • 2 Specialty Terminals • +4,600 railcars • +5,100 track miles • Service Offerings • +1MM car loads transported or switched • 30 Dedicated Contract Facilities • 33 switching and other operations • 56 Merchant Terminals • Operations in 29 states and Australia

Mechanical Services Supply Chain Services 12% of 2018 Revenue 14% of 2018 Revenue

• Provides repair and maintenance services at shops or • Opportunity to solve Customer supply chain and through mobile locations for all car types logistics needs

• 19 mechanical facilities • 21 Supply Chain Service Centers • 8 certified tank car repair • 7 general car repair • End to End solutions • 4 dedicated mobile operations • +25,000 Licensed Motor Carriers Under Contract

Customer First – Safety Always! 9 Watco Overview Organic Revenue Growth

• Average Organic Revenue Growth: 2010 - 2018

– Freight Revenue 4.3% – Non Freight Revenue 7.4% – Combined Organic Revenue Growth 5.8%

• Organic defined as the first twelve months a location is under Watco ownership • Revenues exclude the Mechanical Segment and Fuel Surcharge • Photos show recently acquired stevedoring equipment at Greens Port Industrial Terminals

Customer First – Safety Always! 10 Creating Sustainable and Reliable Growth Watco’s Approach

• Follow our Customer First Foundation Principles – Value our Customers – Value our People – Safely Improve Everyday

• Create an environment that focuses on Team Member Safety

• Develop and Retain talent

• Listen to our Customers and be innovative

Customer First – Safety Always! 11 Creating Sustainable and Reliable Growth Safety Focus • Opened May 22, 2017 in Fairfield, AL on the Birmingham Terminal Railroad.

• Direct reflection of commitment Watco is making to safety for; – Our Team Members – Communities – Customers – The short line industry as a whole

• Equipping Team Members for today’s technology and regulations.

• Centralized training location for Engineers and Conductors. – Expansion of offerings to Maintenance of Way and Mechanical

• Standardized course giving Team Members access to instructors, equipment, and technology such as locomotive simulators.

• Course Completion Apr 2017 – Dec 2017 – 175 ground – 42 engineer – 45 maintenance

• Over 500 TM Course Completion in 2018

Customer First – Safety Always! 12 Creating Sustainable and Reliable Growth Develop and Retain Talent

• Create a structure that mirrors the reality of our business

• Focus on the fundamentals – Take care of our people – Find the best, know their story, them better than anyone in the industry – Culture beats strategy every time

• Empower Team Members to fix what they find that is wrong, and an avenue to voice their thoughts and opinions on the business

• Develop the next round of leaders. – Leadership Development Program – Align core values with those we place in Leadership Roles; Integrity, Communication, Flexibility, Initiative, Personal Accountability – 2012 – 2017 Watco promoted 82 internally developed Team Members to Leadership roles

• Don’t be afraid of adapting – Watco University – Learning! 100 Award (top 100 learning organization) – BizLibrary Learnings Management Systems Award (1st place out of 700 clients for online learning content) – 10,000+ course completions annually

Customer First – Safety Always! 13 Creating Sustainable and Reliable Growth Listen to our Customers

• Placing customers needs at the top

• Utilize our existing business relationships as a primary source of growth

• Provide integrated customer solutions across our operating groups

• Leverage our capital for growth with customers

Customer First – Safety Always! 14 Creating Sustainable and Reliable Growth Listen to our Customers – Capital Spend by Year

$315.6 $296.8 $300.0 $283.6 $187.2 $86.3 $210.7 $250.0

$188.6 $200.0 $175.5 $132.0 $161.2 $158.8 $52.7 $61.0 $150.0 $95.8 $85.3

$71.4 $75.8 $100.0 $55.8

$36.5 $78.5 $50.0 $32.4 $17.4 $57.1 $60.1 $58.7 $48.0 $40.4 $37.0 $- 2012 2013 2014 2015 2016 2017 2018 Maintenance Growth Acquisition

Top Growth Projects: Western Australia WATTS replacing RMI GSHP Docks GSHP Docks GSHP Docks APF Stevedoring Dore Startup CVR Storage Yard Dore Pioneer Warehouse ABS Track Rehab Locomotive Purchase Waste Management APF WSOR Prairie Sub SACR Track WSOR Oregon Spur SLWC Cushing KNWA Giddings Extension Wink Crude Terminal Raceway Park

Acquisitions: WSOR AARR Sooner Sub Permian KMBT2 KMBT2 DREI BHRR BBLU (Common) Aspen Logistics IMG Tuloma MRT Port Brimingham KMBT1 (Common) Louisville River Road Transload MidShip Cargill Phoenix

Customer First – Safety Always! 15 Creating Sustainable and Reliable Growth Listen to our Customers – Strategic Partners

Oaktree Transportation Investment Fund Kinder Morgan Norfolk Southern Crowley Maritime “TIF”

• Largest Pipeline • Largest Railroad in • Second Largest Private • Oaktree has over $120B of Company and 3rd largest Eastern Half of the U.S. Maritime Business in North assets under management Energy Company in and 3rd largest in North America and $2.5B investments in North America America infrastructure • Investment through SkyKnight Capital with 6 • TIF is exclusively focused on other Family Offices long term North American transportation infrastructure

• TIF partners have deep transportation experience

Customer First – Safety Always! 16 Creating Sustainable and Reliable Growth Listen to our Customers – Greens Port Expansion

Cement • 735 acre Industrial Park on the Houston Channel Material Handling • Largest private industrial park on the Channel

• 6,725 linear ft of waterfront space Material Handling – 4,800 ft of deep water docks – Deep water depth 40 ft, only 2 others in the channel – 2,250 ft of barge dock

Ethanol – Capable of handling Panamax vessels (750 ft LOA) Terminal • 33 miles of rail infrastructure with dockside and warehouse access – 1,500 railcar storage capacity – Capable of receiving unit • 3,200,000 sq ft of indoor warehousing – Large bay widths, crane availability, heavy floor loading • 94 acres located in Free Trade Zone • Liquid pipeline connectivity to every major refinery in the region and the Colonial Explorer Pipeline • Easy truck access via I-10, I-610, Beltway 8 • Rail connectivity through the PTRA with access to the BNSF, KCS, and UP. • End to end service offerings including warehousing and storage, material handling, stevedoring, dock services, liquid transloading and measurement, railcar repair, etc.

• In March 2018, Watco entered into a long term lease for the use and operation of the adjacent Industrial Terminal facility. The transaction gives Watco access to three additional docks and 100 acres of lay down space.

• In May 2018, Watco began self performing stevedoring services for bulk, breakbulk, and project cargo Customers

• $320M+ of Invested Capital

Customer First – Safety Always! 17 Creating Sustainable and Reliable Growth Listen to our Customers – APF Solutions

• Project Summary – Watco is working with American Plant Food (APF) to provide a new warehouse storage solution (Bldg 32A) at Greensport Industrial Park (GSHP). APF will fund Bldg 32A which will be connected to Berth 3 via inbound conveyor system. Watco expects APF to move 450,000 NTPY on average over the term of the 20 year agreement. • Previous Investment: Watco previously invested in solutions to allow for APF, product re-claiming, and truck loading/scaling out of Bldg 42. Watco made and additional investment alongside APF to bring their bagging line to GSHP Bldg 6 in a rail served facility. • American Plant Food: APF is an ammonium sulfate (AS) based blended fertilizer producer that was founded in 1964. APF recently signed a 15 year supply contract, commencing January 1, 2019, with BASF to provide critical inputs to their product. BASF has been the major supplier of AS to APF for over 50 years. APF operates 11 dry blending facilities in . Following completion of Bldg. 32A, GSHP will become APF’s major receiving terminal for N-P-K inputs for their Texas distribution system.

• Total Capital Invested ~$40M including Phase I – Capital will be used to engineer and construct a conveyor connected warehouse storage solution for APF. Watco’s investment will include civil work, an inbound transfer conveyor system, and track access around APFs new Warehouse. APF is investing alongside Watco with capital going towards a 100,000 sqft wooden A frame warehouse.

Customer First – Safety Always! 18 Creating Sustainable and Reliable Growth Listen to our Customers – Exxon Solutions

• Baton Rouge – 2008: Watco engineered, designed and operates a 1350 car Storage in Transit Yard served by our Baton Rouge Southern Railroad. – Watco handles 800 plastic cars and 550 tank cars for ExxonMobil. • San Luis Potosi (TFCM Terminal) – 2016: Refined Products Terminal: Unit train capable terminal, engineered, designed and operated by Watco – JV w/ City Southern and Valoran (WTC) WTC Industrial Park in San Luis Potosi, Mexico – ExxonMobil first to ship unit trains into Mexico @ TFCM and considers it the standard for Refined Products Terminals in Mexico. • Greensport Commodities By Rail (GCBR) – 2018 refined product origination in Houston at Greensport (GCBR) – Loading Product out for SLP and for Permian Basin • Permian Basin Crude Terminal – 2018 unit train crude oil loading terminal upgrade and loading operations – Full management of Unit train operations in loop from Wink, TX Baton Rouge SIT Expansion to Greensport

Customer First – Safety Always! 19 Creating Sustainable and Reliable Growth Listen to our Customers – Exxon Solutions

Project Summary • Exxon Mobil Pipeline Company (Exxon) owns a crude gathering terminal in Wink, TX and wanted to ship Permian Crude by unit trains from Wink Terminal to St. James, Houston, and other Gulf Coast destinations via Union Pacific. Exxon has contracted Watco to provide unit train loading and transportation services for an initial term of 12 months, with a possible extension to 18 months, while there are pipeline takeaway constraints.

• The Wink Terminal is directly served by Watco’s Texas and New Mexico Railroad (TXNR) and interchanges with the Union Pacific at Monahans, TX.

• British Petroleum (BP) will also be shipping crude unit trains out of CIG at Jal for on the TXNR.

Total Capital Required ~$8.0M • Watco is investing $1M to upgrade the Wink Terminal rail loading and crude measurement infrastructure required for loading unit trains.

• Watco is investing $7M through the construction of 14,000 feet of rail infrastructure required to increase unit train capacity on the TXNR.

• Union Pacific is spending ~$2M in upgraded rail at the Monahans interchange for supporting Crude by Rail.

Customer First – Safety Always! 20 Creating Sustainable and Reliable Growth Listen to our Customers – Waste Management Solutions B Feb 2015 - Watco acquires Terminals from Kinder Morgan and begins service to Waste Management B at Bronx (switching) and Brooklyn (switching & container handling) location. B

Q April 2015 - Watco earns the right to serve Waste Management at Queens (switching & Q container handling) location.

W Dec 2015 - Watco solves a potential shutdown situation for WM at their Atlantic Landfill in W Waverly, VA by implementing a solution for the disposal of Leachate waste water. Watco provided door-to-door, last mile service including rail, railcar leases, transload, and trucking logistic services. A A EMT Feb 2017- WM’s problem solved, Watco sold the same concept to Waste Connections, in EMT Seneca Meadows, NY MTS MTS 1 Sept 2017 - WM selects Watco to load containers to barge at two Marine Transfer Stations in MTS 1 Brooklyn and unload barges in Elizabeth. Watco secures 20-year guaranteed operating MTS2 contract. 2

N M Oct 2017 - Watco begins operations at Nitro, WV and Middleport, OH handling fly ash for WM. M Springfield, IL and, Monahans, TX future terminals Total logistic package one rate for truck, T transload, rail, and destination transload and trucking. S T

• Green Circle denotes Waste Management profit center, blue circle denotes Waste Connections profit center

Customer First – Safety Always! 21 Creating Sustainable and Reliable Growth Listen to our Customers – Waste Management Solutions

▪ Project Summary ▪ New York City Department of Sanitation contracted Waste Management (WM) to provide a marine based solution for transferring the City’s waste to landfills. Watco will operate two new Marine Transfer Stations (MTS, Hamilton and Southwest Brooklyn) and will also operate the destination terminal in Elizabeth, NJ (EMT). Services are contracted to 20 years with two 5 year extensions to be mutually agreed upon by both parties. ▪ MTS operations: Unload empty containers from barge to NYC trolley, deliver to MTS loading spot, lift loaded containers to barge, secure barge and facilitate operationally accessible deck and dock space, and perform preventative maintenance. ▪ EMT Operation: Lift/unload loaded or empty containers from barge to WM trucks and from WM trucks to barge. Load and unload containers to/from dock pier, load from ground to truck, and perform all maintenance on Watco Equipment.

▪ Total Capital Required ~$11.5MM ▪ Investment in specialized cranes to facilitate marine transloading needs for Waste Management containers.

▪ Additional Investments and Partnership ▪ Partnered with WM to move flyash on our Kanwaha River Railroad by providing freight transportation, a transloading site, and fleet support by procuring leased railcars.

Customer First – Safety Always! 22 Creating Sustainable and Reliable Growth Listen to our Customers – Waste Management Solutions

Origin: Nitro, WV Destination: Various Commodity: Fly ash Beneficial Reuse Product

Watco Service Watco Team

Leases rail cars Fleet Team

Negotiate Rail Rates Pricing Team

Truck & Transload to WTPS - Nitro Rail

Origin rail haul WTS - KNWA

Customer First – Safety Always! 23 Creating Sustainable and Reliable Growth Listen to our Customers – Be Innovative

• Building an Integrated Offering – Develop relationship with growers and shippers. – Provide a total supply chain solution. – Commit to a consistent service at or better than the alternative trucking rates.

• Delivering the service with Watco coordinating the full Supply Chain 1. Shippers truck to a Watco Warehouse in Burley, ID.

2. Watco aggregates product at our Warehouse by unloading trucks and into temporary storage or cross- docks into railcar with a uniquely developed technology solution.

3. Move products on Watco’s .

4. Interchange with the Union Pacific. Watco Watco 5. Product furtherance on UP or another Class 1 to the destination city.

6. Provide service for coordinating last mile drayage to final destination.

• Continue working with customers and stakeholders to improve service and find new opportunities to further integrate

Customer First – Safety Always! 24 Creating Sustainable and Reliable Growth Listen to our Customers – Be Innovative

Origin: Mississippi Destination: San Antonio, TX

Commodity: Steel Coil Steel Coil Service Delivered Watco Team to Customer

Truck to Terminal WTPS - Vicksburg

Transload to Barge WTPS - Vicksburg

Barge Rates for WSCS/Mid-Ship Deliver

Transload from Barge to WTPS - Houston Warehouse

Transload to WTPS - Houston Customer Trucks

Single WSCS Price/Invoice

Customer First – Safety Always! 25 Relevant Industry Topics

• Precision Scheduled Railroading (“PSR”)

• Autonomous Operations

• Regulatory and Environmental

• Demand Economy (Netflix, Amazon, etc)

Customer First – Safety Always! 26 Questions?

Decatur & Eastern Illinois RR

Customer First – Safety Always! 27