Attached files
| file | filename |
|---|---|
| 8-K - CURRENT REPORT - Air Transport Services Group, Inc. | d8k.htm |
 0
Investor Meetings
August 2010
Exhibit 99.1 |
  1
Safe Harbor, Non-GAAP Reconciliations
Except for historical information contained herein, the matters discussed in this
presentation contain forward-looking statements that involve risks and
uncertainties.
There
are
a
number
of
important
factors
that
could
cause
Air
Transport
Services
Group's
("ATSG's")
actual
results
to
differ
materially
from
those indicated by such forward-looking statements. These factors include, but
are not limited to, changes in market demand for our assets and services,
the timely completion of 767 freighter modifications as anticipated under ABX
Air’s new operating agreement with DHL, ABX Air’s ability to maintain on-
time
service
and
control
costs
under
its
new
operating
agreement
with
DHL,
and
other
factors
that
are
contained
from
time
to
time
in
ATSG's
filings
with
the U.S. Securities and Exchange Commission, including its 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 ATSG's
forward-looking statements. These forward-looking statements were based on
information,
plans
and
estimates
as
of
the
date
of
this
release.
ATSG
undertakes
no
obligation
to
update
any
forward-looking
statements
to
reflect
changes in underlying assumptions or factors, new information, future events or
other changes. ATSG, Inc. Non-GAAP Reconciliation
EBITDA, Adjusted EBITDA and Net Debt are
non-GAAP financial measures and should not
be considered alternatives to net income
(loss) or any other performance measure
derived in accordance with GAAP.
EBITDA
is
defined
as
income
(loss)
from
operations plus net interest expense,
provision for income taxes, depreciation and
amortization.
Net Debt
is defined as Long-term debt
obligations plus Current portion of debt
obligations minus Cash and cash equivalents.
The Company’s management uses these
adjusted financial measures in conjunction
with GAAP finance measures to monitor and
evaluate its performance, including as a
measure of liquidity. EBITDA, Adjusted
EBITDA and Net Debt should not be
considered in isolation or as a substitute for
analysis of the Company’s results as reported
under GAAP, or as alternative measures of
liquidity.
2008
2009
6Mo.10
2Q09
2Q10
(56,619)
45,358
26,682
9,872
15,898
Impairment of goodwill & intangibles
91,241
0
0
0
0
34,622
45,358
26,682
9,872
15,898
Interest Income
(2,335)
(449)
(158)
(129)
(85)
Interest Expense
37,002
26,881
9,783
7,166
4,594
Depreciation and amortization
93,752
83,964
42,552
20,927
21,752
163,041
155,754
78,859
37,836
42,159
GAAP Pre-tax Earnings (Loss)
Reconciliation Statement ($ in 000s)
Adjusted EBITDA from Cont. Oper.
from Continuing Operations
Adjusted Pre-Tax
Earnings
from Continuing Operations
Earnings from Continuing Operations Before Interest, Taxes, Depreciation
& Amortization (Adjusted EBITDA) Net Debt
12/31/07
12/31/08
12/31/09
6/30/10
Long term obligations
567,987
450,628
325,690
287,269
Current portion of debt obligations
22,815
61,858
51,737
36,788
Cash and cash equivalents
(59,271)
(116,114)
(83,229)
(63,660)
Net Debt
531,531
396,372
294,198
260,397
Reconciliation Statement ($ in 000s) |
 2
The Restructured ATSG:
Cash Generation With Less Risk, More Growth
Differentiated Business Model
Lessor
and operator of world’s largest fleet of converted medium
widebody Boeing 767 freighters Accretive, lower-risk
conversion plan will expand highly efficient 767 freighter fleet by 50% by 2012
Long-term leases and operating agreements with global leader DHL,
long-term relationships with Bax Schenker, U.S. Military,
USPS, TNT and Qantas Provide full spectrum of air transport
services throughout the world: Dry leasing, ACMI (wet leasing),
maintenance, technical, fuel management, logistic support
services Favorable Industry Dynamics
Booming air cargo recovery fueled by restocking, alternate mode issues,
better logistics management 767 is most-favored replacement
for 150-200 less efficient mid-sized freighters flying now
767 is ideal regional ‘spoke’
freighter complement to inter-continental 747 and 777 hub
locations Strong Financial Characteristics and Performance
Minimal leverage, and no off-balance sheet liabilities or large
capital commitments Strong cash flow generation, not projected to
be Federal Income Tax cash-payer until 2013 or later
Disciplined capital allocation with established ROIC hurdles
|
 3
Unique Blend of Complementary Businesses
Equipment leasing, and equipment and facility maintenance
services Customers include: DHL, Allegiant Air, Branson Airport,
Tampa International Jet Center Contracted sort management
services for USPS Logistic support services
Heavy & line maintenance, component overhaul, engineering and
manufacturing Customers include major airlines, private
operators Provides 727, 757 ACMI services
Customers include BAX Schenker and DHL
Provides 767, DC-8, DC-8 Combi ACMI services
Customers include BAX Schenker, U.S. Military and Qantas
Provides 767 ACMI services
Customers include DHL and TNT
Dry leases 767, 757, 727 and DC-8 freighters to ATSG airlines and
external customers Access to engine maintenance and component
services External customers include DHL, Amerijet, CargoJet,
First Air Description
Business |
 4
ACMI:
ACMI:
Dedicated Aircraft,
Dedicated Aircraft,
Crew, Maintenance
Crew, Maintenance
& Insurance
& Insurance
(excludes fuel)
(excludes fuel)
Charter:
Charter:
Unscheduled & military
Unscheduled & military
Dry Lease Plus
Dry Lease Plus
Crew
Crew
Airframe Maintenance
Airframe Maintenance
Engine Maintenance
Engine Maintenance
Pilot Training
Pilot Training
Cert. Support
Cert. Support
Standard
Standard
Dry Lease
Dry Lease
ATSG Business Model:
Cargo Aircraft
Dry or ACMI, With Complementary Services
Leased Externally
Leased to ATSG Airline |
 5
Recent DHL Agreements:
Growth with
Secure Cash Flows, Minimal Risk
Aircraft Lease Terms
DHL to lease thirteen 767Fs from CAM under 7 year terms; DHL
responsible for airframe and engine maintenance costs
Airborne Maintenance and Engineering Services (“AMES”) will
provide airframe heavy maintenance DHL provides fuel at its own
expense Crew, Maintenance, Insurance (CMI) Agreement Terms
ABX
operates
13
aircraft
for
DHL
for
5
years,
with
2-year
extension
right
to
DHL,
2
5
years
mutual
Defined-fee
scaled
for
the
number
of
aircraft;
logical
choice
to
support
domestic
network
expansion
ABX operates with monthly performance incentive bonuses
Subject to $70mm amortizing break-up fee if DHL prematurely
terminates $29.5mm
balance
of
the
DHL
Note
(at
June
30,
2010)
amortizes
to
zero
over
the
CMI’s
term;
no
cash,
interest fully reimbursable
Thirteen seven-year 767SF leases,
Aircraft operating agreement for five to ten years
nd |
 6
Global Air Cargo Market:
Rebounding in Multiple Regions
June 2010 vs.
June 2009
Volume Growth
(FTK)
Capacity Growth
(AFTK)
Africa
54.0%
23.3%
Asia/Pacific
29.8%
20.5%
Europe
15.3%
2.1%
Latin America
44.9%
25.3%
Middle East
39.6%
17.9%
North America
24.2%
5.9%
Industry
26.5%
12.2%
YTD 2010 vs. YTD 2009
Africa
46.3%
14.8%
Asia/Pacific
35.1%
14.8%
Europe
12.6%
-4.6%
Latin America
48.2%
24.9%
Middle East
34.1%
15.8%
North America
29.4%
0.6%
Industry
28.3%
6.8%
International Air Cargo Growth –
June 2010
Lufthansa Cargo
‘Booming’
Lufthansa CFO Stephan
Gemkow: "The cargo
business is currently
absolutely
booming.”
June Sets Air Cargo
Record in HK
Hong Kong Air Cargo
Terminals, which
handles close to 80%
of the cargo at Hong
Kong International
Airport, said its record
June volume in Hong
Kong was up 30.5%
over June 2009, and
also up over a strong
2008.
LAN: S. America
Volumes Growing
LAN Airlines' chief
executive officer
Enrique Cueto
said
cargo traffic will grow
30% this year.
“Traffic growth for
the (South America)
region is very strong,
especially in Brazil.”
Aerologic Boosts Europe-Asia Service
The Aerologic joint venture between Lufthansa Cargo
and DHL Express, will increase capacity between
Europe and Asia due to high demand.
DHL Express
and Lufthansa Cargo plan to increase frequency of their
flights to Shanghai and Seoul over the rest of 2010.
DHL Projects 10-15%
Growth in U.S.
Ian Clough, chief
executive of the U.S.
division of DHL
Express: DHL Express
aims to achieve a 10% to
15% growth rate for
international shipments
in and out of the U.S. by
early 2011. "The U.S. is
absolutely critical to our
global network,“
he said.
"The [U.S.] business is
strongly on the road to
recovery.
“
Source: IATA |
 7
ATSG Global Presence:
Positioned With Growth-Market Customers
1.0%
2.1%
2.2%
2.4%
3.2%
3.8%
4.0%
4.6%
6.3%
7.4%
8.6%
8.7%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
Japan-N. America
Europe-N. America
Japan-Europe
Europe-Other Asia
India-N. America
Africa-Europe
Other Asia-N. America
S. America-Europe
Europe-India
China-Europe
Other Asia-China
China-North America
Growth Trends By Region, 2009-2018
ATSG markets |
 8
Global Freighter Fleets:
Big Opportunity in Medium-Size Market
Source: ACMG
1,680
99,200 / 11,445
3
1,900
A300-B4
2,650
104,900 / 14,654
2
1,850
A300-600F
3,360
88,420/ 10,922
2
1,390
A310-300F
3,200
124,900 / 16,034
2
1,775
767-300SF
Aircraft
Fuel
(gallon/
block hr)*
Crew
Payload (lbs.)/
Capacity (cu. ft.)
Range
(NM)
767-200SF
1,380
2
100,000 / 11,138
2,800
DC-8 63
1,760
3
96,800 / 10,060
2,150
DC-8 73
1,600
3
111,800 / 10,060
2,470
Medium Freighter Comparisons
Narrow-body
213 Units
65 A310-200/300s
47
A300B4s
150 A300-600s
55 B767-200s
(36)
59 B767-300s (3)
Wide-body
436 Units
12 B707-320s
146
B757-200s
(2)
28
DC-8-50/60
(1*)
29
DC-8-70s
(15*)
* includes 4 combis
ATSG fleet (2012)
Prime candidates for
Replacement with 767s
Medium Freighters-
2010
Source: Boeing, Airbus |
 9
767 Covers Asia, Americas, Europe
767s provide 45-60 ton payload
potential between the world’s principal
inter-continental cargo airports and
major cities in each region. Smooth
interline pallet transfers between
medium 767s and large 747/ 777s.
Miami-based 767s reach principal
perishable food and floral markets
in Columbia, Brazil, Mexico,
Venezuela, Puerto Rico, etc.
All of China, Japan, SE Asia,
Australia & India within range of
767 from Hong Kong, world’s
largest air freight airport. With
ETOPS, can cover principal trans-
Atlantic routes.
767-200ER,
767-300 Ranges
w/ max. payload
Frankfurt
Miami
Hong
Kong |
 10
ATSG Investment Strategy:
Value-Creating Freighter Conversions
11-14
12-19*
April 2011
Jan. 2012
DHL-CAM Dry Leased
Other Customers-CAM Dry Leased
11-14
11
Jan. 2011
4
* Includes freighter conversion by 2012 of ten owned Boeing
767-200s, three Boeing 767-300s pending
purchase. Modification schedule of 767-200s subject to DHL
options. Deployment as leased vs. ACMI operated aircraft
subject to market conditions, customer preference. 7
11
April 2010
DHL-
Interim Leased
ACMI Services –
ACMI/Charter
13
13
4
5-8
5-8
7-14*
26
30
32
39*
Dry Lease Investment
Return Illustration*
$23.4 MM
Projected EBIT
11.7%
Unlevered ROIC
$200 MM
Capex Required
(13)
767-Series
Freighters
(in millions)
* Margin from ACMI or other
complementary services would
be incremental. |
 11
Emerging Go-to-Market Strategy
Drive higher return on capital by optimally
positioning opportunities and bundling
additional services
CAM a neutral, non-airline, lead sales
organization that can drive a bundled marketing
strategy
Develop packaged programs cross-selling
entities
Amerijet International program (ACMI
migration to CAM-leased 767s, with full ATSG
support) symbolizes this approach
Market Approach
Market Opportunities
Airline Operators
Key drivers
Replacement
Capacity growth
New markets
Non-Operators
Examples
Forwarders/Brokers
Integrators
Shippers |
 12
Flexible
Global
Solutions
Premier Source of Medium Freighter Solutions
767-200 with
GE CF6-80A
engines
Low fuel cost
Low
maintenance
cost
Flexible
configuration
Power By Hour
engine services
The Global Leader of Medium Wide Body Operating and Leasing Solutions
Efficient Medium
Wide-Body
Aircraft
Dry leasing
ACMI/ wet
leasing
CMI
Combi
Full service
charter
Flight
operations
Heavy
maintenance
Line
maintenance
Maintenance
programs
Engineering
Technical
support
Manual services
Parts,
components
sales & service
Aircraft
conversion
services
Global
aircraft
deployment
Logistics
support
DHL
BAX
Schenker
TNT
UPS
Qantas
Amerijet
Air
Mobility
Command
CargoJet
Bundled
Maintenance
Solutions
Program
Management
Meeting Diverse
Customer Needs |
 13
Balance Sheet Improves as Earnings Grow
EBITDA* (from continuing operations)
Pre-tax Earnings (from continuing operations)
Net Debt*
Stockholders’
Equity
$531.5
$396.4
$294.2
$260.4
$200.0
$80.4
$246.0
$276.3
$155.8
$78.9
2008
2009
1H 2010
$37.8
$42.2
2009
2010
Year
Second Quarter
Year
Second Quarter
$34.6**
$9.9
$15.9
2009
2010
12/31/07
12/31/08
12/31/09
6/30/10
12/31/07
12/31/08
12/31/09
6/30/10
$163.0**
-$56.6
$45.4
$26.7
2008
2009
1H 2010
EBITDA is defined as income (loss) from operations
plus net interest expense, provision for income taxes, depreciation and amortization. Net Debt is defined as Long-Term Obligations plus
Current Portion of Debt Obligations minus Cash and Cash Equivalents. EBITDA, and Net Debt are non-GAAP financial measures and should not be considered alternatives to net income (loss)
2008 EBITDA and 2008
Pre-tax Earnings adjusted to exclude impairment charges of $91.2 million.
or any other performance measure derived in accordance with
GAAP. See Reconciliation Tables. *
** |
 14
Employer
Employer
contributions
contributions
DHL Promissory
DHL Promissory
Note Extinguishment
Note Extinguishment
De-levering Continues:
Cash Flow Available for Current Capex Commits
Transfer of Aircraft
Transfer of Aircraft
Capital Leases to DHL
Capital Leases to DHL
Principal
Principal
payments
payments
$324.1
$512.5
12/31/2008
6/30/2010
Total Debt Reduced 42%
Credit Facility Covenant Compliance
Required *
2008
2009
2Q10 **
First Lien Debt / EBITDA
< 2.75
2.58
2.17
2.03
Total Debt / EBITDA
< 3.25
3.10
2.44
2.22
Fixed Charge Coverage
> 1.50
2.55
1.99
2.05
Capital Expenditures
> 1.05
1.58
1.65
1.24
$106.3
$297.3
Actuarial costs
Actuarial costs
& adjustments
& adjustments
$113.7
$84.7
$86.7
Workforce
Workforce
contraction
contraction
& plan freeze
& plan freeze
$79.3
$ in millions
Gains on
Gains on
assets
assets
12/31/2008
6/30/2010
Post-Retirement Liabilities Reduced 64%
$ in millions
$22
$31
$32
$142
$90
$70
$82
$18
Maintenance
Growth
2007
2008
2009
2010 est.
$160
$112
$101
$114
$ in millions
* Requirements at year-end 2008 were 3.00 / 3.50 / 1.50 / 1.25
** Based upon twelve months trailing EBITDA
Minimal Future Capex Commitments
Capital Spending Trends
$94.8
$47.9
$45.7 |
 15
Fog Has Lifted –
ATSG Value Cleared for Takeoff
Limited risk, strong cash and asset-value returns from converted 767
freighters Expanding
767
freighter
fleet
will
yield
attractive,
annuity-like
cash
ROIs
via
long-term
leases
ACMI/CMI flexibility offers options, low-risk transition to
widebody 767s from older narrowbodys 767 platform flexible as
trans-continental leader, compatible feeder to inter-continental 747s/777s
Significant market-value gains on P-2-F aircraft
conversion investments Long-term agreements with key
customers Lease/CMI approach unlocks value of aircraft from
ACMI, creates more options for customers 17 767/757s now under
fixed 5-7 year leases with DHL, CargoJet, Amerijet, etc.
5-year CMI with DHL, with performance factor plus $31m amortized
note forgiveness, DPW backing Integrated,
value-added services Increase return on invested
capital Comprehensive mix allows for turnkey customer
solutions Competitive terms and service packages for third party
maintenance business Attractive balance sheet and liquidity, growth
capital capacity No off-balance sheet obligations; current
low-rate term & revolver facility run through 2012
Manageable 2010-2011 capital commitments: maintenance plus convert
767-200s, and acquire and convert three
767-300s using existing cash and credit resources, yielding
significant asset-value gains Secure long-term cash flow
enhances access to growth capital if needed Expanding opportunities
around the globe Expanding presence in large, fast-growing
air cargo regions: Asia, South America, Europe & Africa
Unique provider of combi airlift to military in South Pacific
region Uniquely
positioned
as
largest
independent
source
of
premier
medium
widebody
freighter
–
the
767 |
 16
Appendix |
  17
Balance Sheet Trend
June 30,
Dec. 31,
June 30,
Dec. 31
2010
2009
2009
2008
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
63,660
83,229
112,064
116,114
Marketable securities - available-for-sale
-
-
-
26
Accounts receivable, net of allowances
35,684
87,708
77,329
87,857
Inventory
5,740
5,226
7,611
11,259
Prepaid supplies and other
8,845
7,093
8,122
11,151
Deferred income taxes
31,597
31,597
20,171
20,172
Aircraft and engines held for sale
-
30,634
32,901
2,353
TOTAL CURRENT ASSETS
145,526
245,487
258,198
248,932
Property and equipment, net
650,408
636,089
627,768
671,552
Other assets
29,948
21,307
23,265
25,281
Deferred income taxes
-
-
14,973
54,807
Intangibles
9,686
10,113
10,557
11,000
Goodwill
89,777
89,777
89,777
89,777
TOTAL ASSETS
$925,345
$1,002,773
$1,024,538
$1,101,349
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable
31,912
38,174
30,625
36,618
Accrued salaries, wages and benefits
24,956
44,077
40,259
63,500
Accrued severance and retention
7,171
18,959
45,301
67,846
Accrued expenses
15,146
16,429
15,161
13,772
Current portion of debt obligations
36,788
51,737
62,774
61,858
Unearned revenue
16,775
15,340
9,232
14,813
TOTAL CURRENT LIABILITIES
132,748
184,716
203,352
258,407
Long-term obligations
287,269
325,690
380,225
450,628
Post-retirement liabilities
102,765
152,297
269,886
294,881
Other liabilities
59,311
44,044
17,163
17,041
Deferred income taxes
66,988
50,044
-
-
STOCKHOLDERS' EQUITY:
Preferred stock, 20,000,000 shares authorized, including 75,000 Series
A Junior Participating Preferred Stock
-
-
-
-
Common stock, par value $0.01 per share;
638
634
635
632
Additional paid-in capital
503,441
502,822
490,349
460,155
Accumulated deficit
(194,248)
(211,085)
(226,330)
(245,534)
Accumulated other comprehensive loss
(33,567)
(46,389)
(110,742)
(134,861)
TOTAL STOCKHOLDERS' EQUITY
276,264
245,982
153,912
80,392
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$925,345
$1,002,773
$1,024,538
$1,101,349 |