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Cargo Airport Services

Cargo Airport Services. Prepared for Mr. Craig Smyth & Phil Harnden. Partnering with Menzies for Cargo Handling Services. Table of Content. About CAS Our Value Proposition Partnership with Menzies. ABOUT CAS. Services Company History Our People Facilities Customers Growth.

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Cargo Airport Services

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  1. Cargo Airport Services Prepared for Mr. Craig Smyth & Phil Harnden Partnering with Menzies for Cargo Handling Services 1

  2. Table of Content • About CAS • Our Value Proposition • Partnership with Menzies 2

  3. ABOUT CAS • Services • Company History • Our People • Facilities • Customers • Growth 3

  4. About CASServices • CAS is the premier full service ground handling company in North America, offering the following cargo handling services: • Cargo Warehousing & Handling • Document Handling and Customs Control • Ramp Handling • International Mail Handling at US Postal Service • Aircraft Servicing • Cargospot IT Management System • Load Control • Other Cargo Handling Services • Property Management • Facility Maintenance Largest North American-based Cargo Handler 4

  5. About CAS Company History • CAS founded with awarding of five year outsourcing contract with KLM Cargo at JFK & IAH • Asiana Airlines awards CAS five year contract • CAS takes on equity partner to grow business • CAS acquires the 3rd largest JFK based cargo handling company, resulting in 14 total customers at 3 cargo facility locations in JFK • Customer portfolio increased to 17 contracts and added 3 more facilities to 7 total facilities • CAS acquires Genesis with operations in IAH and SAT • CAS acquires Cargo Zone with operations in Montreal and Toronto • CAS takes over Air General EWR operations • Awarded 10 new carrier contracts including Korean Air, Air France, Cargolux and Singapore • Entrance to DFW market with China Air startup • Added new facility in EWR to handle SAS, SQ and several small carriers and forwarders • Added over 10 new contracts 1998: 2001: 2005: 2006: 2007: 2008: 2009: 5

  6. About CASOur People • Founded Servair, aircraft cleaning and ramp handling business • Grew revenue to $10M then sold to DynAir • Operations at 5 cities, including the West coast • EVP at DynAir, aircraft cleaning, ramp handling, fueling, passenger handling • Grew from $10M to $100M, became Swissport • Operations in 12 cities including West Coast • President of Triangle, ramp & passenger handling, building maintenance, security • Grew from $10M to $40M • Operations in 12+ cities Carl Smitelli CEO • SVP at WFS running all of North America • Revenue of over $118M • Over 30 city, including West Coast • Over 3,000 employees • Senior positions at Saudi Arabian Airlines & Air France Cargo Division Mike Duffy President 6

  7. About CASOur People Tom Choi CFO • CPA with 25 years experience in financial management, project mgmt, M&A, business consulting - over 10 years in aviation and transportation • Previous Employers: Hutchison, Deloitte Consulting, SK Group Steve Crescenti Dir. of Ops. • 12 years at Swissport, overseeing New York operation. Experienced in UA startup across US • Responsible for 50+ successful start ups at CAS Ray Jetha Western Region Dir. of Ops. • 5 years at WFS as VP of Western region • Experience in multiple startup and operation cost control 7

  8. About CASFacilities Before Partnership Present Sites 8

  9. About CASFacilities 9

  10. About CASCustomers Year 2005 HOU JFK/EWR KLM Bldg Bldg 263 Bldg 261 Bldg 77 • KLM • Asiana • Air Canada • Air China • KLM • Varig • Cargojet • Turkish • PIA • Iceland • Uzbekistan • New Zealand • N American • Mail 10 10

  11. About CASCustomers Year 2009 Eastern JFK/EWR Bldg 261 Bldg 77 Bldg 151 Bldg 73 Bldg 9 EWR 340 EWR SAS IAD Bldg 06 Bldg 06 11 11

  12. About CASCustomers Year 2009 Western IAH DFW SAT SEA Bldg East Bldg East CgoCntr Bldg 02 12 12

  13. About CASCustomers Year 2009 Canada YYZ YUL YMX Bldg 05 Bldg 01 Bldg C BAX Charters 13 13

  14. About CASCustomer Growth # of Customer Growth 05-06 06-07 07-08 08-09 • Added more than 104 new accounts since March 2005, and more than tripled the volume handled and revenue generated on a run rate basis • Expanded to 16 operating units in 9 cities from 4 operating units in 2 cities, and plans to continue aggressive expansion over next five years • Terminations : US Air (EWR/IAH), UA (EWR), OZ/TAM (JFK) SAS (IAH/SEA) 14 14 Q3 2009 14

  15. About CASCustomer Growth 05-06 06-07 07-08 08-09 15

  16. OUR VALUE PROPOSITION • Value Proposition to Customers • What makes CAS Unique 16

  17. Our Value PropositionWhat Makes CAS Unique • Management team • Focus on productivity • Market dominance at airports served • Customer relationship and contracts • Assurance of service quality • Customer startup experience • Discipline in pricing new business • Ability to make, integrate and grow acquisitions • Focus on process improvement • IT infrastructure support 17

  18. Our Value PropositionWhat Makes CAS Unique • Best team in the industry • Reward with salary, commissions, performance bonuses and options for senior team • Tight cooperation and communication among business disciplines and across function areas • Strong corporate support team with a variety of skill sets and proven solution methodologies MANAGEMENT TEAM • A real-time tracking of operational productivity and detailed metrics • Focus of entire organization • Incentive for hourly workers, supervisors, and MODs • Flexible unions PRODUCTIVITY FOCUSED www.casnet.casusa.com 18

  19. Our Value PropositionWhat Makes CAS Unique MARKET DOMINANCE AT AIRPORTS SERVED • #1 market share in 6 of 9 airports served • Pricing power • Local knowledge of customers, facilities, competitors, etc. • Flexibility of facility Market Share 19

  20. Our Value PropositionWhat Makes CAS Unique CUSTOMER RELATIONSHIPS & CONTRACTS • Strong relationship with North American decision makers • Customer issues communicated to all levels of management for immediate corrective actions • No-out contracts 75% of top 20 customers • Monthly minimum – tonnages & amount 20

  21. Our Value PropositionWhat Makes CAS Unique CUSTOMER RELATIONSHIPS & CONTRACTS 21

  22. Our Value Proposition Service Quality Assurance • Never lost a customer over service issue • Disciplined and structured training program • Customer SLA and internal KPI are strictly observed and measured • Created Quality and Risk Management team • Conduct a quarterly customer satisfaction survey • Conduct a semi-annual facility audit on quality assurance • Corrective actions to customer issues are immediate and swift Customer Start up Experience • Every single one of over 50 customer startup and transitions in the past 4 years was successful • We deploy most experienced startup task force team • We follow the in-house designed startup / transition methodology 22

  23. Our Value PropositionWhat Makes CAS Unique • Detailed knowledge of costs • Thorough pro-forma P&L, including analysis of CapEx. and working capital, for all new business before quoting • Revenue above $2M, strategic accounts, and margin below 20% require BOARD approval • All potential downside and exposures are fully analyzed and the best possible remedy is incorporated into pricing model and contractual terms • Maximizing the capacity of existing facilities • Minimize the fixed costs - the facility rent, etc. DISCIPLINE IN PRICING NEW BUSINESS 23

  24. Our Value PropositionWhat Makes CAS Unique ABILITY TO SUCCESSFULLY MAKE, INTEGRATE AND GROW ACQUISITIONS • CAS has made 4 acquisitions • No customers lost during acquisitions • EBITDA growth since acquisitions: • DJ 127% • Genesis 143% • Cargo Zone 40% • Air General 1,066% • Re-engineered and automated manual processes to improve productivity and establish internal controls: • Cash collection & storage billing • Application processing and tracking • Recurrent training – CBT being developed • ePIC on-line payment and clearance being developed • Delta Force (mobile labor) project in progress FOCUS ON PROCESS IMPROVEMENT 24

  25. Our Value PropositionWhat Makes CAS Unique IT INFRASTRUCTURE SUPPORT • Cargospot operating system • Fully integrated Financial System • CASnet (intranet) tools for Knowledge Mgmt, operational KPI Mgmt, Application Tracking, Labor tracking, CBT,Customer Survey, Market Survey, ePIC and Dashboard • Customers can use CAS communication infrastructure at a much lower costs • Disaster recovery plan 25

  26. PARTNERSHIP WITH MENZIES • Menzies Possible Concerns • CAS Concerns • Valuation 26

  27. About CASFacilities After Partnership 27

  28. Partnership with MenziesMenzies Possible Concerns • JFK Concentration • Margins are too high / unsustainable • Management’s ability to handle combined business 28

  29. Partnership with MenziesMenzies Possible Concerns “JFK Concentration” • CAS has 31 customers in JFK, including 15 customers over $1M in revenues • CAS has #1 market share in EWR and ample excess capacity – so if business shifts out of JFK, we would capture a most of it in EWR 29

  30. Partnership with MenziesMenzies Possible Concerns “JFK Concentration” • Menzies is highly concentrated in California while CAS is heavily concentrated in New York. The major difference in these two markets are the pricing components and profitability structure, where JFK market are far greater in both pricing and profitability than LAX or SFO markets • 105% of Menzies’ profit from California vs. 63% of CAS from New York 30

  31. Partnership with MenziesMenzies Possible Concerns “Margins are too high / unsustainable” • 38% of total revenues and 54% of profits are protected under the monthly minimum billing • High margins are a function of the following factors • Labor productivity • cCntrol of variable costs • Leading market share at most airports • Customer relationship • Strong negotiations abilities with customers and landlords • Cculture of profitability 31

  32. Partnership with MenziesMenzies Possible Concerns • The contracts won in 2008 contributed $3.8M in EBITDA in 2009 at a margin of 25%, while EBITDA contribution from the contracts won in 2009 is estimated at $1.7M on a run rate basis at a margin of 14% (19% if 1 strategic customer is excluded) 2009 Contracts won to-date Tonnages – 89M 2008 Contracts won Tonnages – 143M * 19% excluding 1 contract taken for strategic purpose 32

  33. Partnership with MenziesMenzies Concern “Management’s ability to handle combined business” CAS Board Carl, Simon, Dan, Ron, Doug and Wayne • Carl with over 40 years in aviation, ran much larger businesses in the past, were involved in multiple merger integrations • MidMark Capital and Weinberg Bell Group have been involved in 100+ acquisitions and have owned businesses with global operations Mike, Steve, and Tom CAS Senior Management Team • 60+ years of aviation industry experience • Each ran much larger businesses, were involved in multiple merger integrations, and have managed West Coast operations. • Involved with numerous multi-city startup transitions with WFS and Swissport, and over 50 startups at CAS • Tom, with his prior CFO responsibilities with Hutchison and Senior Manager at Deloitte Consulting, brings an expertise in business integration, system integration and M&A 33

  34. Partnership with MenziesMenzies Concern “Management’s ability to handle combined business” CAS Regional Management Team Ray, Phil, Sylvain, and Mike • 100+ years of aviation experience combined – many with large companies • Ran large multi-city operation with large companies • Involved in multi-city startup and integration of operations • Highly capable regional managers to oversee the overall startup transitions in most cost effective manner 34

  35. Partnership with MenziesCAS Concerns • Tony Benino re-entering market • Asiana relationship with the 3rd party consultant • Chicago customers • If not willing to move to a new facility, customers may deem national contract to be broken • Legal exposure for leaving Chicago behind • Low EBITDA margin • Potential to drag down value of CAS because combined margins will be lower • Exposure on long-term facility leases • Customer contracts • Possibility of cancellation or going out for bid • Customers may request concessions 35

  36. Partnership with MenziesValuation Discussion • EBITDA • Multiple • Relative Valuation 36

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