Investor Meetings June 5-7, 2007 NASDAQ: ABXA Exhibit 99 |
Safe Harbor Statement Except for historical information contained herein, the matters discussed in this presentation contain forward-looking statements that involve risks and uncertainties. ABX Air, Inc.'s actual results may differ materially from the results discussed in the forward-looking statements. A number of important factors could cause the Company's actual results to differ materially from those indicated by such forward- looking statements. These factors include, but are not limited to, reductions in the scope of services under the commercial agreements with DHL, maintaining cost and service level performance, the ability to generate revenues from sources other than DHL and other factors that are contained from time to time in ABX Air's filings with the U.S. Securities and Exchange Commission, including ABX Air's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Readers should carefully review this presentation and should not place undue reliance on the Company's forward- looking statements. These forward-looking statements were based on information, plans and estimates as of the date of this presentation. ABX Air undertakes no obligation to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes. |
Overview - What is ABX Air • U.S. certificated part 121 air carrier • 27-year operating history • 9,700+ employees in more than 100 locations • DHL’s primary U.S. business partner • ACMI operator of 767-200 cargo aircraft throughout Americas, Asia, Europe and Middle East • U.S. sort center operator for DHL, regional for USPS • Extensive aircraft maintenance & engineering capabilities, 145 certification |
Overview – Management • Joe Hete – President & CEO – Joined ABX Air in 1980. VP & SVP Administration 1986-97, SVP & COO 1997-2000, President since Jan. 2000, CEO since Aug. 2003 • Dennis Manibusan – Sr. VP Maint. & Engineering – Joined ABX Air in 1993. Succession of executive positions at Alaska Airlines, Continental & Ozark before joining ABX. • Bob Morgenfeld – Sr. VP Flight Operations – Joined ABX Air in 1985. Held various Operations/Chief Pilot positions 1985-92. VP-Flight Operations, 2002-04. • Tom Poynter – Sr. VP Ground Operations – Joined ABX in 1985. Various ground operations positions 1987-93. Became Sr.VP-Ground in 1993. • Quint Turner – CFO – Joined ABX Air in 1988. Directed Fin. Planning & Accounting, 1997-2002, VP-Admin. 2002-04, CFO since Dec. 04. |
Pre-Separation Shareholders Shareholders Post-Separation DHL Holdings DHL Holdings (USA), Inc. (USA), Inc. Airborne, Inc. Airborne, Inc. ACMI Agreement ACMI Agreement Hub Services Agreement Hub Services Agreement Airborne, Inc. Airborne, Inc. ABX Air, Inc. ABX Air, Inc. Shareholders Shareholders August 2003 |
DHL’s Largest U.S. Provider of Airlift and Sort Services |
Strategy for profitable growth • Maintain role as DHL’s principal U.S. business partner by providing superior, cost-effective service. • Leverage world’s largest 767-200 freighter fleet & worldwide logistics network to grow ACMI business. • Leverage capabilities and resources in sort management, maintenance & technical services for high-margin returns. • Pursue acquisitions of complementary air operators. |
ACMI Agreement Hub Services Agreement • Term: thru Aug. 2010, 3-yr. renewal option • Services: Air transport on designated routes & schedules using ABX-owned aircraft • Mark-ups on expenses: • Base 1.75% (excludes fuel) • Incentive, up to 1.6% • 0.54% quarterly cost • 0.81% annual cost • 0.25% annual service • Rolling 1-yr. renewals, currently through Aug. 2008 • Services: Package handling, sorting, warehousing, facilities & equipment maintenance • Mark-ups on expenses: • Base 1.75% • Incentive, up to 2.1% • 0.54% quarterly cost • 0.81% annual cost • 0.75% annual service Agreements With DHL |
$30.3 $36.0 Pre-Tax Earnings* +19% $1,464 2005 2006 Revenues (includes reimbursables) $1,260 -14% Excluding linehaul, ’05 &’06 +1% +32% 2006 Earnings Up 19% $ in Millions DHL $21.3 DHL $22.5 Non-DHL $9.0 Non-DHL $13.5 2005 2006 * Net earnings of $90 million in 2006 included $54.0 million of income tax benefit from reversal of valuation allowance. |
Non-DHL Earnings Up 50% $ in Millions $48.5 Non-DHL Revenues $34.1 2006 2005 Charter $24.4 Charter $13.9 Other $24.1 Other $20.2 $13.5 Non-DHL Pre-tax Earnings $9.0 2006 2005 Charter $3.7 Other $9.8 Charter $1.1 Other $7.9 |
Revenues for Charter & Other Operations 2003 2004 2005 2006 Other Aircraft Maintenance and Parts Sort and Cargo Services Air Charters $48.5 $34.0 $26.7 $11.6 Full Year, $ in Millions |
Revenues Revenues DHL 96% Pre-tax Earnings Pre-tax Earnings Other Other Operations Operations 23% 23% DHL 63% Other Other Operations Operations 4% 4% Cash Flow* Cash Flow* DHL 79% 15% 15% *(Pre-tax Earnings+D&A) *(Pre-tax Earnings+D&A) Diversified Earnings Interest Income Interest Income 14% Full Year 2006 Other Other Operations Operations 6% 6% |
$8.1 $6.9 Pre-tax Earnings -15% $369.2 1Q 2006 1Q 2007 Revenues $288.1 -22% Excluding linehaul ‘06 -5% +1% First Quarter Results $ in Millions Non-DHL $3.1 Non-DHL $2.8 DHL $3.8 DHL $5.3 1Q 2006 1Q 2007 |
Financial Notes • Tax loss carry-forwards likely sufficient to offset federal tax liability through 2008. • Out of thirteen 767s committed for the charter segment, six to eight are projected to be financed. • Projecting 2007 capex of $150 million based on current commitments. 767 financings completed during 2007 are projected to generate between $65 and $90 million. |
ACMI Industry Overview • ACMI – Carrier provides the Aircraft, Crew, Maintenance and Insurance; Customer responsible for all other costs, including fuel. Customer is billed based on a specified rate per block hour flown and is subject to a minimum monthly fee for the aircraft and all other costs. • The cargo freighter portion of the ACMI industry is estimated at $9 billion in annual sales. (per Air Cargo Management Group analysis from Feb. 2007) • Customers for ACMI services avoid ownership and other fixed costs, can rapidly initiate service in new markets, and can adjust to demand spikes with greater options for equipment type. Contracts are typically at least one year in duration. • While the U.S. has been the largest market for ACMI services, the international market is growing more rapidly than the U.S. ABX‘s charter/ACMI business is primarily international. |
The Boeing 767-200SF |
ABX “Global” in service schedule: – 4Q 2006 4 – 1Q 2007 5 – 2Q 2007 8 – 3Q 2007 9 – 4Q 2007 12 – 2008 13 World’s largest operator of 767-200s (42) Expanding 767 Fleet |
ACMI Charter Potential 767 Projected Operating Targets Average Annual Results per Plane (in millions) $1.1 $4.6 $7.0 Operating Margin Other Operating Cost Revenue Depreciation $1.3 ~ 15% Contribution Before Interest and Taxes |
Latin America and North America Operations • Four 767SFs currently operating; Three in Latin America & One in U.S. • General Cargo moves South; Perishables North • Long-term relationship with flag carriers |
Pacific Operations • Two 767SFs, wet-leases • Two-year agreement • 22 flights per week • First foreign carrier Japan has certified for ACMI service |
Asia Market Potential Source: Boeing World Cargo Forecast 2006-2007 Domestic China Intra-Asia Asia-North America Europe-Asia Europe-Southwest Asia Latin America-North America Latin America-Europe Europe-North America Europe-Africa Intra-Europe Europe-Middle East North America Asia’s Cargo Markets Will Continue to Lead Industry Growth … Growth, percentage World Average 6.1% 0 2 4 6 8 10 12 |
USPS Sort Management ABX Operated - Dallas, TX - Memphis, TN - Indianapolis, IN Facilities Up for bid - Omaha, Nebraska - Kansas City, Missouri - Denver, Colorado |
• Airframe maintenance checks • Line maintenance support • Component repairs • Flat panel upgrades Maintenance & Technical Services |
Why Invest in ABX Air • Strong, predictable cash flow from DHL and size of airline provides platform for future growth • Strong balance sheet, minimal debt risk • ACMI model results in no fuel-cost exposure • Expanding fleet of efficient, reliable 767s • Contracts with ANA, USPS, other carriers and forwarders • Global presence, including fast-growing Asia market |
Thank you |