1 ABX Holdings, Inc. BB&T Transportation Conference February 2008 Exhibit 99.2 |
2 2 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 Holdings’ actual results may differ materially from the results discussed in the forward-looking statements. There are a number of important factors that 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, ABX Holdings’ ability to leverage synergies arising from the acquisition of Cargo Holdings International, ABX Air’s ability to maintain cost and service level performance under its commercial agreements with DHL, significant reductions in the scope of services under ABX Air’s commercial agreements with DHL, ABX Holdings’ ability to generate revenues and earnings from sources other than DHL and other factors that are contained from time to time in ABX Holdings’ filings with the U.S. Securities and Exchange Commission, including ABX Holdings’ 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 Holdings undertakes no obligation to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes. This presentation includes certain non-GAAP financial information. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures is also described in conjunction with the applicable non-GAAP measure. Management believes that the presentation of such non-GAAP financial information is helpful to show the financial impact of the December 31, 2007 acquisition of Cargo Holdings International, Inc. |
3 Overview - ABX Holdings, Inc. ABX Holdings, Inc. • ACMI charters • 3 rd party maintenance and technical services • Sort facility operations • ACMI and Hub Services support to principal customer • Cost-plus agreements • Additional ACMI support ABX Air, Inc. Non-DHL DHL • Aircraft leasing • Manage cargo modifications • BAX/ Schenker contract • Military charters • 767 expansion • Fleet services • Charter brokerage Cargo Holdings International, Inc. ATI LGSTX CAM • BAX/ Schenker contract • 757 expansion CCIA Acquired 12/31/07 |
4 Strategy for Profitable Growth Organic Strategy • Grow ACMI business using 767-200 fleet as the platform • Grow maintenance & technical services for higher margin returns • Leverage capabilities and resources in sort management and support services • Provide principal customers with superior, cost-effective service Business Development • Complementary service offerings • Scale advantages • Capture cost savings from synergies |
5 Complementary Capabilities • Solidifies ABX Holdings’ position as largest provider of 767F lift worldwide • Broadens service offerings 2 Dry leasing 2 Charter brokerage 2 Fleet services 2 Military passenger flying • Significantly increases customer diversification • Establishes lower cost platform for growth initiatives • Increases market presence • Synergies 2 Aircraft engineering and maintenance 2 Purchasing 2 Risk Management Cargo Holdings International, Inc. ABX Air, Inc. |
6 $34 $48 ABX Air Financial Performance 2004-2007 Results $s in millions Non-DHL DHL $27 $83 $1,176 $1,430 $1,212 $1,079 2004 2005 2006 TTM 9/2007 Pre-tax Earnings 2004 2005 2006 $37 $36 $34 $30 TTM 9/2007 Revenues $1,203 $1,464 $1,260 $1,162 $9 $14 $7 $13 Non-DHL DHL |
7 $34 $48 ABX Air Financial Performance 2004-2007 Results $s in millions $27 $83 $1,176 $1,430 $1,212 $1,079 2004 2005 2006 TTM 9/2007 Pre-tax Earnings As % of Revenues 2004 2005 2006 TTM 9/2007 Revenues 3.1% 2.1% 2.9% 2.9% $1,203 $1,464 $1,260 $1,162 Excludes revenue not subject to mark-up. 3.9% 2.7% 3.9% 3.9% Non-DHL DHL |
8 ABX Air Capital Expenditure Trends $s in millions $65 $49 $75 $124 $14 $12 $9 2004 2005 2006 TTM 9/2007 Maintenance Growth $74 $61 $100 $140 $16 |
9 Core Customer Relationships • Cargo Holdings International acquired ATI from BAX Global in February 2006. • Exclusive provider of main deck freighter lift in the BAX US domestic system through 2011. • Relationship with Deutsche Bahn’s Schenker-BAX Global remains strong. BAX’s core operations are fully dependent on the services of ATI and CCIA. • ABX Air, DHL’s primary U.S. business partner, generates approximately $1.1 billion in DHL revenues (ASTAR, our next closest competitor, generates approximately $300 - $400 million in DHL revenues). • Two agreements: 7-year ACMI agreement that matures in August 2010 with 3-year renewal, Hub Services Agreement that matures in August 2008 with evergreen 1-year renewals. • ABX Air currently provides two 767-200 freighter aircraft to DHL under separate ACMI arrangements. |
10 Revenues Pre-tax Earnings (Cash Flow) Pre-tax Earnings+D&A ABX Air’s Diversification Progress DHL Charter Operations Interest & Other 92.6% 18.0% 55.0% 4.4% 73.0% 17.1% 27.0% 9 Months FY 2007 9.9% 97.8% 6.8% 81.7% 2.2% 90.8% 3.4% 11.5% FY 2004 5.8% New Businesses Bring Strong Returns 2.9% |
11 Founded in 1972 Purchased from BAX in 2006 Provides multiple mission capability Operates a fleet of 18 DC-8s: 13 freighters, 5 combis Expected to add 3 B767s throughout 2008 Primary customers include BAX and U.S. military Founded in 1995 Provides airport-to-airport transportation services to domestic and foreign air carriers Operates a fleet of 14 Boeing 727s Expected to add up to 2 757s throughout 2008 (currently have an ACMI contract with DHL for 1 aircraft starting in the first quarter of 2008 and an LOI for 1 ACMI contract) Primary customers include BAX, DHL, USPS, and UPS Founded in 2004 Owns all the fleet operated by ATI and CCIA Provides efficient and personalized service to air carriers and aircraft owners Expected to add up to 4 757s during 2008/2009 (LOI with DHL to dry lease up to 4 aircraft in 2008/2009) Contract with Cargojet Airways to dry lease 2 B767aircraft Founded in 2005 Purchased in 2006 Provides specialized airfreight transportation logistics services Also provides charter and fuel management services About Cargo Holdings International |
12 2004-2007 Results 2004 2005 2006 2007E Pre-tax Earnings 2004 2005 2006 $4 $39 $32* $6 2007E Revenues $47 $49 $296 $305 CHI Financial Performance Acquired ATI in 2006 Depreciation & Amortization $9 $10 $17 $37 * Pre-tax earnings including deal costs are estimated to be $15m for 2007. Excluding non-recurring deal costs of approx. $17m pre-tax earnings would have been $32m. $s in millions |
13 Excludes revenue not subject to mark-up. 2004 2005 2006 2007E Revenues $47 $49 $296 $305 CHI Financial Performance 2004-2007 Results Acquired ATI in 2006 Pre-tax Earnings As % of Revenues 2004 2005 2006 8.6% 11.4% 13.2% 10.5% 8.6% 11.4% 18.5% 16.2% 2007E $s in millions |
14 • Air freight traffic expected to grow 6%/year, next 20 years • Current shortage of converted planes • Significant air freight industry consolidation • Long-term relationships with major express carriers and freight forwarders (BAX Global, U.S. Military, and DHL) • Fiscal year 2007 projected EBITDA of $73 million, excluding non- recurring expenses related to the transaction with ABX Air of approximately $17 million. (Pre-tax earnings of $15m (page 12) + $17m of non-recurring expenses (page 12) plus $37m depreciation/amortization + $4m net interest expense results in EBITDA of $73m). • Average “On-Time” delivery rates of ~98% - ~99% (excluding military) • All management employees, including crew members, earn incentive based compensation • Significant industry and strategic growth experience Strong Industry Growth Prospects High Quality Customer Base Significant Cash Flow Reliable Service Offering Experienced Management Team CHI Advantages |
15 ABX Holdings’ Customers |
16 16 Outlook: Expanded Revenue Sources 2007E Revenues* ABX Air 2007E Combined Revenues* DHL 74% Charter ACMI/Leasing – 5% UPS/USPS – 1% Maint. & Other – 1% Military – 5% BAX 14% Military 25% DHL 3% Charter ACMI/ Leasing – 2% * Percentages based on CHI & ABX Air estimated 2007 revenues, by customer. Includes revenues for expenses reimbursed by customer without markup. DHL 92% 3 rd Party Mtc./ Other - 1% Charter/ ACMI - 5% USPS/ Hub - 2% CHI BAX 67% UPS/USPS/ Other – 2% |
17 CHI Acquisition Financing 12/31/07 ($ in millions) Sources Cash (ABX + CHI) $ 46.5 Equity Purchase Price $ 258.2 Revolving Credit Facility (up to $75 mill) 26.5 Refinanced Target Debt 101.5 Term Loan (5 yr. at L + 300) 270.0 Debt Origination Cost 9.3 New Equity (4 million shares) 26.0 TOTAL SOURCES $ 369.0 TOTAL USES $ 369.0 Uses |
18 ABX Holdings Debt & Cash $ 590.8 Total Debt 92.3 DHL Note Payable $ 498.5 Total Secured Debt 1.0 Other 26.5 Revolving Credit Facility 87.5 Capitalized Leases 113.5 Financed Aircraft $ 270.0 Term Loan 12/31/07E ($ in millions, unaudited) Cash $ 97.0 |
19 Asia’s Cargo Markets Will Continue to Lead Industry Growth … Global Market Outlook Source: Boeing World Cargo Forecast 2006 - 2007 0 2 4 6 8 10 12 North America Europe - Middle East Intra - Europe Europe - Africa Europe - North America Latin America - Europe Latin America - North America Europe - Southwest Asia Europe - Asia Asia - North America Intra - Asia Domestic China World Average 6.1% |
20 Latin America, North America Routes • Seven 767SFs currently operating: – 5 in Latin America – 2 in the U.S. • General cargo moves south, perishables north • Long-term relationships with flag carriers DHL routes Non-DHL routes ATI Routes CCIA Routes |
21 21 Current Pacific Operations • Two wet-leased (with fuel) 767SFs • Contract recently extended through Jan. 2010 under more favorable terms • 22 flights per week, high utilization • First foreign carrier Japan has certified for ACMI service |
22 ACMI Freighter Fleets – U.S. Source: 2006 Freighters Guide & individual company filings. Excludes U.S. Express Carriers * ABX Air and CHI are the only operators of 767s B-727 / 737 B-767 / A-300 * U.S. ACMI Freighter Industry Fleet Overview DC-8 DC-9 ABX Air/CHI 59% Arrow 12% Murray Air 7% ASTAR 22% Ameristar 4% USA Jet 12% ABX Air/CHI 84% ABX Air/CHI 79% Tradewinds 10% ASTAR 11% ABX Air/CHI 26% Air Tahoma 4% ASTAR 50% Amerijet 14% Kalitta 6% |
23 23 Total projected in service fleet of Boeing 767s: DHL Network ACMI* YE 2006 29 4 YE 2007 29 11 YE 2008 29 18 * Includes CHI 767s in conversion & 767s in service to DHL under separate ACMI agreements. ABX Holdings’ Expanding 767 Fleet |
24 24 Co-Loading Opportunities Leverage Customer Relationships Savings on Aircraft Maintenance Potential Synergies Operational Efficiencies Economies of Scale |
25 Investment Value • Strong cash flow from high-profile customers, including DHL, BAX/Schenker, All Nippon Airways, U.S. Military, U.S. Postal Service, and UPS. • Cash flow not projected to be reduced by federal income taxes until 2010 or later due to utilization of deferred tax assets. • Nominal fuel-cost exposure via ACMI business model. • World’s largest combined fleet of efficient, reliable 767s. • Exceptional service quality record with in excess of 98% on-time performance for major ACMI customers. • Opportunities to leverage broad product suite of CHI companies to ABX Air. • Opportunities to leverage fleet and service capabilities of ABX Air to CHI companies. • Global presence, including fast-growing Asian market. |
26 Questions? |