25 Annual Aerospace Technology Conference

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Nov 18, 2013 (3 years and 11 months ago)

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1



SG Cowen

25
th

Annual Aerospace Technology Conference

February 10, 2004

2

Forward Looking Statements

Except for statements of historical fact, the statements contained in this document
are “forward
-
looking statements” as such term is defined in the Private Securities
Litigation Reform Act of 1995.

These forward
-
looking statements include statements regarding intent, belief or
current expectations of the Company and its management. Such forward
-
looking
statements are not guarantees of future performance and involve a number of risks
and uncertainties that may cause the Company’s actual results to differ materially
from those indicated by such forward
-
looking statements.

The factors that could cause actual results to differ materially from those indicated
by such forward
-
looking statements include loss of key suppliers or significant
customers, termination or curtailment of material contracts, changes in demand or
prevailing market prices for products and services, changes in economic
conditions, increased competition, failure to execute or realize anticipated benefits
from agreements, changes in our business strategy or development plans,
changes in government regulations and policies, limited operational flexibility due
to leverage and changes in the aviation industry due to terrorist attacks.

3

Aviall Today


Leading independent
electronic aviation material
marketplace


Strong brand name

Information
business

24 years of Profitable market
leadership and expertise

Independent product
-
neutral market


Inventory Locator Service (ILS)

Aviall Services

Largest independent global

aftermarket provider of new

aviation parts and supplies



Global market coverage


DFW central warehouse


35+ stocking locations







4

Aviall Services



Industry’s Most Extensive New Product Basket that “fits in a
box” from a single source

• Antennas

• Batteries and chargers

• Brakes

• Cleaning/coating/degreasers/
corrosion protection products

• Communication equipment

• Deicing/Anti
-
icing products (ground)

• Emergency and survival equipment

• Fuel tanks, adapters and other
equipment

• Generators/alternators/ignitions

• Ground power units/towing
equipment

• Hardware/fasteners

• Headsets and microphones

• Heaters and preheaters

• Hoses (fuel, hydraulic, pneumatic)

• Intercoms and inverters

• Ladders/platforms/lifts

• Lighting components

• NDT equipment/supplies

• Oil and lubricant

• Oxygen equipment

• Paint/paint strippers

• Personal restraint systems

• Piston engines/engine components

• Pressure and temperature sensors

• Starters

• Tires and tubes

• Turbine engine components

• Turbine fuel controls

• Wheels

• Windshield and side windows

5

Inventory Risk

Excess and Obsolescence as % of Inventory

3.1%
2.0%
1.0%
0.8%
0.8%
0.0%
2.0%
4.0%
1999
2000
2001
2002
2003
6

Operational Volumes and Value/Shipment

Line Items Shipped per Month

Average Revenue per Shipment

$209
$246
$234
$331
$364
$0
$100
$200
$300
$400
$500
1999
2000
2001
2002
2003
Note : Excludes impact of Australia shipments

78,773
82,550
85,959
96,913
108,417
0
20,000
40,000
60,000
80,000
100,000
120,000
1999
2000
2001
2002
2003
7

Aviall Services Top Ten Suppliers

8

Dallas Warehouse

9

Wide Geographic Reach

The Americas

Dallas Headquarters

27 Stocking Locations

55 outside salespeople

130 inside salespeople

202 sales professionals

Europe

Amsterdam

Stocking Location

6 outside salespeople

7 inside salespeople

14 sales professionals

Asia

Hong Kong & Singapore

Stocking Location

9 outside salespeople

12 inside salespeople

25 sales professionals

Australia/New Zealand

7 Stocking Locations

11 outside salespeople

14 inside salespeople

32 sales professionals

10


Military / Government


General Aviation / Corporate


Commercial Airlines


Regional Airlines


Brokers


Broadest Product Offering in the Industry


From Engine Parts to Sealants


Over 215 OEM suppliers


More than 440,000 Unique Line Items


Customers Include:


Fixed Base Operators


Airlines


Repair and Overhaul Shops

Revenue by Market Segment
(1)

Diversified Revenue Base

Diversified Revenue Base
-

Broad
Product Offering

(1) Based on 2003 Aviall Services net sales

General Aviation /


Corporate

26%

Commercial Airline

22%

Government /

Military



52%

11

100%
117%
124%
138%
75%
85%
95%
105%
115%
125%
135%
145%
1999
2000
2001
2002
(Indexed to 100%)
Aviall’s Strategy:

Superior Value Proposition

Aviall increases sales

Aviall’s superior demand
forecasting enhances production
planning and inventory
efficiencies

Aviall’s systems significantly
enhance supplier marketplace
intelligence gathering and assists
end customers with reducing
working capital requirements

Aviall’s parts availability replaces
third
-
party non
-
OEM marginal
repairs and non
-
OEM (PMA)
parts

Aviall provides entire aftermarket
package for lower cost

Aviall takes over

Service Level <60% 99%

Backlog 15+%


<2%

Example of Recent Contract Results

12

T56 Product Line


Installed base of over 8,000 active
engines with military and commercial
aircraft in over 70 countries


T56 part revenues (80% govt/military)


2001 (prior to Aviall) ~$200 million


2002 forecast $250+ million


2002 Actual >$345 million


2003 Actual >$450 million


U.S. Military currently projects T56
operations through 2040

C130 image courtesy of Aviation Week & Space Technology

13

Latest New Contract Award


Honeywell (Grimes)



Approximately

$50 million per
annum




10
-
year agreement




Contract began October 1, 2003




Revenues split expected to be
60% airline/40% GA



14

Barrier to Entry: Technology

Completed $40 million investment, not easy to replicate, possibly
unique integration of best
-
of
-
breed suite of technologies focused on
managing distribution
-

supplied by


BroadVision


Web enablement


Siebel CRM


Customer management


New Era of Networks (Sybase/NEON)


Xelus
-

Inventory management


Catalyst


Warehouse


Lawson
-

ERP

Recognized as technology leader in industry


ILS electronic marketplace awarded “Best of the Web” by Forbes for
fourth consecutive year


“Info World 100” list, and a ComputerWorld Honors Program Laureate

Competitive advantage which provides flexibility without giving up
standard procedures (ISO 9001
-
2000)

15

ILS Business Unit

helps customers

efficiently buy &

sell parts,
equipment &
services

16

Aviall Services and ILS ……Clear
Market Leaders

Reputation for service, reliability
and useable technology

ILS
-

Universally recognized
standard for aftermarket parts
search and availability

Aerospace industry’s largest
independent product
-
neutral
market
-
maker and information
service


Market Ranking


Parts Revenue

Leading Market Position

($millions)




LTM ESTIMATED
NEW PART SALES


AVIALL


$900+


Satair


~$125



First
Aviation


~$12
0



AAR


~$60
-
70




74374 v1

17

Financial Overview

18

$485.9

$506.2

$877.3

$1013.3

$0.0

$500.0

$1,000.0

2000

2001

2002

2003

(US$ in Millions)

Historical Financials

Revenue
(1)

Gross Profit

Selling & Administrative Expense

EBITDA
(2)

CAGR


28%

(1) 2002 and LTM pro forma for $74 million in direct sales by Rolls
-
Royce in H1 2002

$35.1

$37.2

$75.3

$84.0

7.2%

7.4%

8.3%

8.6%

$0.0

$30.0

$60.0

$90.0

2000

2001

2002

2003

(US$ in Millions)

0.0%

5.0%

10.0%

15.0%

$108.5

$107.3

$156.8

$169.6

16.7%

17.9%

21.2%

22.3%

$0.0

$30.0

$60.0

$90.0

$120.0

$150.0

$180.0

2000

2001

2002

2003

(US$ in Millions)

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

$82.0

$87.7

$95.4

$100.2

16.9%

17.3%

9.9%

10.9%

$0.0

$30.0

$60.0

$90.0

$120.0

2000

2001

2002

2003

(US$ in Millions)

0.0%

5.0%

10.0%

15.0%

20.0%

(2) EBITDA is earnings from continuing operations before depreciation, amortization,
interest and related expense, and tax expense

19

($ millions)

Sales

$1,013.3

$803.3

$ 210.0

26.1%

Sales include Direct RR

1,013.3

877.6

135.8

15.5%

EBIT 1/

69.5

62.4

7.0

11.3%

EBITDA 1/

84.0

75.3

8.6

11.5%

S&A% (w/ RR Direct) 1/

9.9%

10.9%


(1.0) pts.

EBIT% (w/ RR Direct) 1/

6.9%

7.1%

(0.2) pts.

EBITDA% (w/ RR Direct)
1/

8.3%

8.6%

(0.3) pts.

Actual
2003

Actual
2002


Increase /
(Decrease)

%

GAAP Reconciliation for 2002

1/ 2003 numbers exclude $1.7 million impairment loss

20

Receivables

$ 139.3

$95.2

Inventory

327.9

348.0

Debt

207.2

221.4

Equity

300.1

272.7

Tangible Equity

202.9

176.3

Debt / EBITDA

2.5 :1

2.9:1

Debt / Total Capital

41%

45%

Availability

$182 million

at 12/31/2003

Cash

23.4

5.0

12 / 31 / 03

12 / 31 / 02

Strong Balance Sheet

21

Positioned for Growth

New Products and Services


Aviall Services actively and deliberately seeking major new contracts
with major airframe and engine OEMs


ILS continuing to implement new services, seeking new markets


No “Roll
-
Up”
-

……..


Distribution industry roll
-
up not practicable


Expansion of product/service offerings complementary to current
businesses


Buy working capital opportunities


$200 million of eight year bonds issued on June 30
th

at 7 5/8%


A portion discharged the outstanding $81 million of 14% Senior Notes
due 2007


The Company has approximately $182 million of availability on its
outstanding line of credit and $20+ million of cash




22

Investment Profile


Strong Brand Names

Recognized products

Very small product risk and product
-
value
-
added business

Process management orientation

Limited operating process diversity

Strong management team and controls

Solvent, stable

Large military product volume


23



SG Cowen

25
th

Annual Aerospace Technology Conference

February 10, 2004