ABX Air, Inc. Reports Third Quarter Revenues and Earnings.WILMINGTON, Ohio For other places with the same name, see Wilmington (disambiguation). Wilmington is a city in Clinton County, Ohio, United States. The population was 11,921 at the 2000 census. It is the county seat of Clinton County. -- ABX Air ABX Air (NASDAQ: ABXA) is a cargo airline based in Wilmington, Ohio, USA. It operates scheduled, ad hoc charter and ACMI freight services, including overnight express small-package services and freight in the USA, Canada and Puerto Rico. , Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :ABXA) reported today improved revenues and earnings for the quarter ended September September: see month. 30, 2005. Highlights of those results as compared with the third quarter of 2004 include: --Revenues up 27.6% to $369.9 million; --Net earnings up 4.1% to $7.4 million, or $0.13 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share; --Revenues from customers other than DHL DHL abbr. 1. Doctor of Hebrew Letters 2. Doctor of Hebrew Literature Express (USA), Inc. ("DHL") grew 31.9% to $9.0 million; --Earnings from non-DHL customers decreased by 36.9% to $1.5 million, and were negatively impacted by the recent bankruptcy bankruptcy, in law, settlement of the liabilities of a person or organization wholly or partially unable to meet financial obligations. The purposes are to distribute, through a court-appointed receiver, the bankrupt's assets equitably among creditors and, in most filings of two customers; and --Packages handled increased by 17.3% to 155.3 million. "We are encouraged to report improvement in our revenues and net earnings, and continued growth in our non-DHL revenues," said President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. Joe Hete. "It was an eventful e·vent·ful adj. 1. Full of events: an eventful week. 2. Important; momentous: an eventful decision. quarter, which included the completion of the DHL hub consolidation in Wilmington Wilmington. 1 City (1990 pop. 71,529), seat of New Castle co., NE Del., on the Delaware River and tributary streams, the Christina and the Brandywine; settled 1638, inc. as a city 1832. and the integration of the scheduled aircraft we operate on behalf of our largest customer, as well as the relocation RELOCATION, Scotch law, contracts. To let again to renew a lease, is called a relocation. 2. When a tenant holds over after the expiration of his lease, with the consent of his landlord, this will amount to a relocation. of two of the regional hubs utilized in the DHL network to new facilities in Kansas City, Missouri Kansas City is the largest city in the state of Missouri. It encompasses parts of Jackson, Clay, Cass, and Platte counties and is the anchor city of the Kansas City Metropolitan Area, the second largest in Missouri, which includes counties in both Missouri and Kansas. and Riverside, California Riverside is the county seat of Riverside County, California, United States and is also a focus city of the Greater Los Angeles Area. The city is named for the nearby Santa Ana River. As of 2006, Riverside had an estimated population of 293,741. , " stated Hete. For the first nine months of 2005, ABX ABX Antibiotics ABX Airborne Express ABX Abstracting ABX Albury, New South Wales, Australia - Albury (Airport Code) ABX Automatic Branch Exchange ABx Non-Antibiotics ABX Asset Backed Securities Index ABX Acoustic Bass Extension Air's net earnings were $21.2 million, or $0.36 per diluted share, on revenues of $1.07 billion. Net earnings improved from the first nine months of 2004, when ABX Air earned $18.9 million, or $0.32 per diluted share, on revenues of $841.1 million. ABX Air's net earnings from its two commercial agreements with DHL were $15.4 million during the first nine months of 2005 and $14.2 million in the first nine months of 2004. Fuel expenses under the two commercial agreements with DHL are included in revenues without mark-up mark-up Noun an amount added to the cost of something to provide the seller with a profit Verb mark up to increase the cost of something by an amount or percentage in order to make a profit , and therefore do not impact net earnings. Primarily as a result of higher petroleum prices, fuel expenses included in revenues during the first nine months of 2005 increased by $55.3 million as compared to the prior year. Results Associated with the DHL Agreements ABX Air has two commercial agreements with DHL: the aircraft, crew, maintenance and insurance agreement ("ACMI ACMI Aircraft, Crew, Maintenance and Insurance (wet lease) ACMI Art & Creative Materials Institute ACMI Air Combat Maneuvering Instrumentation ACMI American College of Medical Informatics ACMI Australian Center for the Moving Image agreement") and a hub and line-haul services agreement ("Hub Services agreement"). Under the ACMI agreement, ABX Air earns a base mark-up of 1.75% on eligible costs and under the Hub Services agreement, ABX Air earns a base mark-up of 1.25% on eligible costs. Under both agreements, ABX Air can earn incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. mark-ups for meeting certain quarterly cost-related goals as well as annual cost-related and service goals. Any mark-up earned from attainment of the annual cost-related and service goals is recognized in the fourth quarter. ABX Air's third quarter 2005 net earnings of $5.2 million from the two contracts included $4.0 million from the base mark-up and $1.2 million, or 58.6% of the maximum, cost-related incremental mark-up under the two agreements. Incremental mark-up from the ACMI agreement totaled $0.7 million, or 100% of the maximum quarterly mark-up. Incremental mark-up from the Hub Services agreement totaled $0.5 million, or 37.6% of the maximum quarterly mark-up. The $4.7 million earned during the third quarter of 2004 from the two DHL agreements included $3.8 million from the base mark-up and $0.9 million, or 74.1% of the maximum, from attainment of cost-related incremental mark-up. Incremental mark-up from the ACMI agreement totaled $0.6 million, or 97.6% of the maximum quarterly mark-up. Incremental mark-up from the Hub Services agreement totaled $0.3 million, or 47.6% of the maximum quarterly mark-up. The increase in incremental mark-up associated with the Hub Services agreement for the third quarter of 2005 as compared to the third quarter of 2004 is due primarily to having a larger potential mark-up from the quarterly cost incentive than in the prior year. As disclosed by the Company on August 9, ABX Air and DHL agreed to amend the Hub Services agreement to extend the initial term of the agreement by one year and to temporarily place more of the Company's revenue potential under a cost-related incentive. The amendment temporarily reduces the base mark-up under the agreement from 1.75% to 1.25% during the last six months of 2005. The maximum incremental mark-up that ABX Air can earn from costs incurred during the third and fourth quarters of 2005 from its quarterly cost-related incentive under the agreement was temporarily increased from approximately 0.54% to 1.04%. In consideration, the initial term of the agreement was extended for an additional year and will not be subject to annual renewals until August 15, 2007. In 2006, the base mark-up will revert re·vert v. 1. To return to a former condition, practice, subject, or belief. 2. To undergo genetic reversion. to the previous level of 1.75% and the maximum incremental mark-up from the quarterly cost-related incentive will revert to the previous level of approximately 0.54%. Results Associated with Sources other than DHL Non-DHL revenues grew 31.9% to $9.0 million in the third quarter of 2005, compared with $6.8 million in the third quarter of 2004. Earnings from non-DHL sources decreased to $1.5 million, down 36.9% as compared to the third quarter of 2004 non-DHL earnings of $2.4 million. The increase in non-DHL revenues was primarily the result of an increase in the level of aircraft charter services, airport-to-airport space available cargo space, as well as revenues associated with ABX Air's operation of a U.S. postal hub. Revenues from these sources increased by $2.1 million as compared to the third quarter of 2004. The decrease in non-DHL earnings as compared to the third quarter of 2004 is due primarily to a decrease in net earnings from parts sales of $0.4 million, and to establishing reserves against third quarter 2005 revenue recorded for (pre-bankruptcy) maintenance services provided to Northwest Airlines and Delta Airlines totaling $0.6 million. Both airlines filed for bankruptcy protection under Chapter 11 on September 14, 2005. "This was the first full quarter in which we had two 767 freighter aircraft available for non-DHL charter operations," stated Hete. "These aircraft are extremely reliable and fuel efficient for our ACMI customers, requiring between 400 and 600 gallons per hour less fuel than a DC-8 aircraft, and our customers are pleased with their performance in the (non-DHL) ACMI environment to date." Aircraft block hours In aviation, block hours is the time between an aircraft leaving from the departure gate and ariving at the destination gate. operated during the quarter for customers other than DHL grew by 31.0% as compared to the third quarter of 2004, and by 11.5% as compared to the second quarter of 2005. Outlook/Other Items Annual Mark-up Potential Under the DHL Agreements: The two commercial agreements with DHL allow ABX Air to earn in the fourth quarter additional cost-related and service mark-up revenues based on its performance against annual goals, in addition to quarterly cost-related mark-up. While nine month results are not necessarily indicative of its full year performance, through September 30, 2005, ABX Air was on pace to achieve 75.8% of its ACMI agreement maximum and zero percent of its Hub Services agreement maximum in annual cost-related mark-ups. On the same projected basis, ABX Air was on pace to achieve annual mark-up from service performance equal to 60.0% of the maximum available under the ACMI agreement and 36.7% of the maximum available under the Hub Services agreement. In the fourth quarter of 2004, ABX Air attained at·tain v. at·tained, at·tain·ing, at·tains v.tr. 1. To gain as an objective; achieve: attain a diploma by hard work. 2. annual cost-related mark-up equal to 100% of the maximum for ACMI, and 75.9% of the maximum for Hub Services, and annual mark-up for service performance equal to 80.0% of the maximum for ACMI, and 100% of the maximum for Hub services. ABX Air's results during the last three months of 2005 may differ sharply from its nine-month results, however, and affect its attainment of annual goals. Aircraft Fleet Consolidation: As previously reported by the Company, DHL indicated in November November: see month. of 2004 that it intended to remove twenty-six aircraft that ABX Air operates on its behalf by the end of 2005. While a reduction in scheduled routes flown by ABX Air was implemented in September at the time of the main hub consolidation in Wilmington, ABX Air has received no further notification from DHL of the release of specific aircraft from the ACMI agreement. Since November of 2004, seven aircraft have been removed by DHL. The timing and number of additional aircraft reductions are at the discretion of DHL. Alleged Violations of Immigration Laws immigration laws npl → leyes fpl de inmigración immigration laws npl → lois fpl sur l'immigration immigration laws npl : The Company reported in January January: see month. of this year that it was cooperating fully with an investigation by the U.S. Department of Justice ("DOJ (Department Of Justice) The legal arm of the U.S. government that represents the public interest of the United States. It is headed by the Attorney General. ") with respect to Garcia Gar·ci·a , Jerome John Known as "Jerry." 1942-1995. American musician who gained fame as the cofounder and lead guitarist of the folk-rock group the Grateful Dead (1965-1995). Labor Co., Inc., a temporary employment agency based in Morristown, Tennessee Morristown is a city in Tennessee, United States. The population was 24,965 at the 2000 census. It is the principal city of the Morristown, Tennessee Metropolitan Statistical Area, which encompasses all of Grainger, Hamblen and Jefferson counties. , and ABX Air's use of contract employees that were being supplied to it by Garcia Labor. The investigation concerns the immigration immigration, entrance of a person (an alien) into a new country for the purpose of establishing permanent residence. Motives for immigration, like those for migration generally, are often economic, although religious or political factors may be very important. status of the Garcia employees assigned as·sign tr.v. as·signed, as·sign·ing, as·signs 1. To set apart for a particular purpose; designate: assigned a day for the inspection. 2. to the Company. Since that time, the Company has been continuing to cooperate with the investigation. The Company terminated ter·mi·nate v. ter·mi·nat·ed, ter·mi·nat·ing, ter·mi·nates v.tr. 1. To bring to an end or halt: its contract with Garcia Labor in early February February: see month. of this year and replaced the Garcia employees. The DOJ has notified the Company that the Company and several Company employees in its human resources The fancy word for "people." The human resources department within an organization, years ago known as the "personnel department," manages the administrative aspects of the employees. department are now targets of the investigation by the DOJ relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc Garcia and its employees. Representatives of the Company are scheduled to meet with the DOJ at the end of November to discuss the investigation and to communicate the Company's position that neither it nor its employees engaged in any wrongdoing wrong·do·er n. One who does wrong, especially morally or ethically. wrong  do with respect to Garcia and its employees.Conference Call: ABX Air will host a conference call to review its financial results for the third quarter of 2005 on Thursday Thursday: see week. , November 10, 2005, at 10 AM Eastern Time. Participants should dial (866) 831-6162 and international participants should dial (617) 213-8852 ten minutes before the scheduled start of the call and ask for conference ID #47726972. The call will also be webcast live (listen-only mode) via either www.abxair.com, or via www.earnings.com for individual investors and www.streetevents.com for institutional investors Institutional Investor A non-bank person or organization that trades securities in large enough share quantities or dollar amounts that they qualify for preferential treatment and lower commissions. . A replay of the conference call will be available an hour after the conclusion of the call. It will be available by phone for five days after the call at (888) 286-8010 (international callers (617) 801-6888); use pass code ID #13602776. The webcast replay will remain available via www.abxair.com or www.earnings.com for 30 days. ABX Air, Inc. is a cargo airline This article is about the general type of air carrier. For the Israeli cargo airline, see CAL Cargo Air Lines. Cargo airlines (or airfreight carriers, and derivatives of these names) are airlines dedicated to the transport of cargo. with a fleet of 111 in-service in-service In-service training adjective Referring to any form of on-the-job training noun In-service training of an employee aircraft that operates out of Wilmington, Ohio, and 18 hubs throughout the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . ABX Air became an independent public company effective August 16, 2003, as a result of the separation from its former parent company, Airborne airborne /air·borne/ (ar´born) suspended in, transported by, or spread by air. airborne, adj carried through the air. In health care settings, viruses or bacteria may become airborne, e.g. , Inc., which was acquired by DHL Worldwide Express B. V. In addition to providing airlift capacity and sort center staffing to DHL Express (USA), Inc., ABX Air provides charter and maintenance services to a diverse group of customers. With over 10,000 employees, ABX Air is the largest employer in a several county area in southwestern Ohio. Except for historical information contained herein, the matters discussed in this release contain forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that involve risks and uncertainties. ABX Air's actual results may differ materially from the results discussed in the forward-looking statements. There are a number of important factors that could cause ABX Air's actual results to differ materially from those indicated by such forward-looking statements. These factors include but are not limited to a significant reduction 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 Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. and Quarterly Reports on Form 10-Q Form 10-Q See 10-Q. . Readers should carefully review this release and should not place undue reliance on ABX Air's forward-looking statements. These forward-looking statements were based on information, plans and estimates as of the date of this release. 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.
ABX AIR, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three Months Ended Nine Months Ended
September 30 September 30
------------------- ---------------------
2005 2004 2005 2004
--------- --------- ----------- ---------
REVENUES $369,921 $289,808 $1,067,752 $841,148
OPERATING EXPENSES:
Salaries, wages and benefits 155,302 122,133 441,579 362,153
Purchased line-haul 78,911 55,302 230,019 154,525
Fuel 67,131 48,627 189,397 134,054
Maintenance, materials and
repairs 25,629 27,700 79,645 82,095
Depreciation and amortization 10,467 8,954 30,351 27,312
Landing and ramp 5,030 4,282 19,286 16,265
Rent 2,135 1,424 6,099 4,607
Other operating expenses 15,854 12,262 43,668 35,043
------------------- ---------------------
360,459 280,684 1,040,044 816,054
------------------- ---------------------
EARNINGS FROM OPERATIONS 9,462 9,124 27,708 25,094
INTEREST EXPENSE, NET OF
INTEREST INCOME (2,071) (2,025) (6,479) (6,189)
------------------- ---------------------
EARNINGS BEFORE INCOME TAXES 7,391 7,099 21,229 18,905
INCOME TAX EXPENSE - - - -
------------------- ---------------------
NET EARNINGS $7,391 $7,099 $21,229 $18,905
=================== =====================
EARNINGS PER SHARE:
Basic earnings per share $0.13 $0.12 $0.36 $0.32
=================== =====================
Diluted earnings per share $0.13 $0.12 $0.36 $0.32
=================== =====================
WEIGHTED AVERAGE SHARES:
Basic 58,270 58,270 58,270 58,270
=================== =====================
Diluted 58,322 58,270 58,388 58,270
=================== =====================
ABX AIR, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands)
September 30, December 31,
2005 2004
------------- ------------
ASSETS:
Cash $44,395 $38,749
Accounts receivable, net 20,540 54,677
Other current assets 34,931 17,595
------------- ------------
Total Current Assets 99,866 111,021
Property and equipment, net 371,136 351,646
Other assets 13,692 10,256
------------- ------------
Total Assets $484,694 $472,923
============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities $134,908 $142,569
Long-term Obligations 240,248 242,405
Stockholders' Equity 109,538 87,949
------------- ------------
Total Liabilities and Stockholders'
Equity $484,694 $472,923
============= ============
ABX AIR, INC.
EARNINGS SUMMARY
(In thousands)
Three Months Ended Nine Months Ended
September 30 September 30
------------------- ---------------------
2005 2004 2005 2004
--------- --------- ----------- ---------
REVENUES
DHL Contracts
ACMI
Base mark-up $119,926 $118,709 $364,119 $357,241
Incremental mark-up 682 615 1,678 1,618
------------------- ---------------------
Total ACMI 120,608 119,324 365,797 358,859
Hub Services
Base mark-up 153,998 105,197 433,116 300,880
Incremental mark-up 557 266 753 1,255
------------------- ---------------------
Total Hub Services 154,555 105,463 433,869 302,135
Other Reimbursable 85,804 58,230 245,692 166,125
------------------- ---------------------
Total DHL 360,967 283,017 1,045,358 827,119
Non-DHL 8,954 6,791 22,394 14,029
------------------- ---------------------
Total Revenues $369,921 $289,808 $1,067,752 $841,148
EXPENSES
DHL Contracts
ACMI $117,864 $116,667 $357,857 $351,097
Hub services 152,096 103,389 426,414 295,706
Other Reimbursable 85,804 58,230 245,692 166,125
------------------- ---------------------
Total DHL 355,764 278,286 1,029,963 812,928
Non-DHL 7,460 4,423 18,109 9,315
------------------- ---------------------
Total Expenses $363,224 $282,709 $1,048,072 $822,243
EARNINGS
DHL Contracts $5,203 $4,731 $15,395 $14,191
Non-DHL 1,494 2,368 4,285 4,714
Interest Income 694 - 1,549 -
------------------- ---------------------
Total Earnings $7,391 $7,099 $21,229 $18,905
=================== =====================
Note: The results above for customers other than DHL do not reflect
an allocation of overhead costs. The provisions of the commercial
agreements with DHL do not require an allocation of overhead until
such time as ABX derives more than 10% of its total revenue from
non-DHL sources.
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