EX-99.1 2 dex991.htm PRESENTATION DATED JUNE 5, 2006 Presentation dated June 5, 2006
®
2006 Annual Meeting
June 5, 2006
Exhibit 99.1

2
2005 –
The Year in Review
Strong year for Horizon Lines
Record operating revenue and earnings
Successfully conducted an IPO
Significant vessel and container fleet investments
Senior management team further strengthened
Company again recognized for service excellence

3
980.3
1,096.2
900.0
950.0
1,000.0
1,050.0
1,100.0
2004
2005
Year
Operating Revenue and Adjusted EPS
Operating Revenue
0.17
0.65
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
2004
2005
Year
Adjusted EPS

4
17 quarters of continuous earnings growth
Expanded market share through volume and rate growth in a competitive environment
Minimal service disruptions with 99.3% ready-to-sail status
Performed consistently during recent recessions, hurricanes and West Coast port lockout
Have increased management depth over the years
$5
$9
$11
$18
$28
$32
$13
$17
$21
$30
$34
$23
$31
$35
$41
$46
$18
$21
$22
$29
$36
$59
$78
$89
$118
$144
$0
$50
$100
$150
EBITDA
(1)
Growth ($ millions)
Q1
Q2
Q3
Q4
FY
11.3% revenue CAGR and 24.9% EBITDA CAGR from 2001 to 2005
(1) Adjusted EBITDA equal to EBITDA plus non-recurring items, management fees, and restricted stock compensation charges

5
2005 Puerto Rico Tradelane
Highlights
Stable competitive environment and stable market share
Continued solid rate recovery program
Offset escalating fuel costs with appropriate recovery surcharges
Local fiscal deficit concerns dampen economic growth
Incremental gains in targeted high margin segments
Ongoing investment in terminal development

6
2005 Alaska Tradelane
Highlights
Stable competitive environment with growth in market share
Continued offset of cost increases with rate increases
Offset escalating fuel costs with appropriate recovery surcharges
Deployment of a third sailing in the heavy summer season
Strong economy driven by oil revenues

7
2005 Hawaii/Guam Tradelane
Highlights
Construction and Military spending fuel market growth
New Refrigerated Equipment supports increase in Reefer share
Automobile volume replaced with higher margin cargo
Service Reliability recognized by most demanding customers
Terminal Efficiency yields “Best in Class”
service levels

8
First Quarter 2006 Highlights
2006 off to a great start
Strong operating revenue and earnings
New vessel initiative commenced
Container fleet investments continue
Company again recognized for service excellence

9
Fleet enhancement value proposition
Lease five new non-Jones Act vessels through prudent use of capital
Employ new non-Jones Act vessels in Guam/Asia trade
Redeploy existing Jones Act vessels to Hawaii and Puerto Rico
Optimize fleet
deployment
Pursue future growth opportunities in Hawaii/Guam and Puerto Rico
Reduce operating costs through improved vessel network efficiency
Extend Maersk relationship until 2010
Lower overall active fleet age by 11 years from 31 years to 20 years
Improve
operating
platform
Generate increased pro-forma EBITDA and operating cash flow
after initial phase-in costs
Create revenue upside potential from surplus Jones Act vessels
Increase future
profitability

10
Proforma
EBITDA impact of fleet enhancement strategy
Proforma
EBITDA expansion
Upside potential for surplus Jones Act vessels
Coastwise service or additional Jones Act service
Charter possibilities
Relief vessels during existing vessel drydock
periods
Spare vessel capacity for peak volume surges
Increased revenue from Maersk, Hawaii/Guam & Puerto Rico
Operating cost savings from four idled vessels
Operating costs of five new container vessels
Lease expense on five new container vessels
+
+
-
-
+
+
+
+

11
2006 Significant Events
Now have “first call”
into Guam creating new opportunities
Flexed capacity to Puerto Rico to match current demand scenario
Focus on Operating Efficiencies (“The Edge”)
Continuation of seasonal sailing to Alaska protects market position
Honolulu Terminal expansion prepares for new vessel arrival in 2007

Reconciliation of net income to EBITDA

(in thousands)

 

    Q1   Q2     Q3
    2001     2002     2003     2004     2005     2006   2001     2002   2003   2004   2005     2001     2002   2003   2004   2005

Net income (loss)

   $ (3,191 )   $ 954     $ (162 )   $ (536 )   $ (8,173 )   $ 2,366   $ 4,140     $ 5,227   $ 3,021   $ 7,981   $ (2,494 )   $ 10,085     $ 13,666   $ 11,319   $ 11,333   $ 3,239

Interest expense,net

     2,316       453       1,529       3,528       12,852       11,720     170       434     3,981     3,462     13,386       1,035       634     3,827     8,443     12,933

Income tax expense (benefit)

     (1,785 )     (1,242 )     202       (338 )     (841 )     1,771     2,348       2,834     1,862     4,901     1,067       5,625       8,398     6,976     7,605     2,205

Depreciation and amortization

     9,293       8,616       9,176       14,712       16,691       15,917     7,649       8,021     10,987     13,286     17,294       8,032       8,540     10,612     10,933     16,900
                                                                                                               

EBITDA

     6,633       8,781       10,744       17,366       20,528       31,774     14,307       16,516     19,851     29,630     29,253       24,777       31,238     32,735     38,313     35,278

Merger related expenses

         634                 1,129     425     189           1,592     2,076  

Management fees

           123       750               123     750           125     635     8,199

ILWU Lockout

                                

Equipment lease-Maersk

     (1,600 )               (1,600 )             (1,600 )        

Compensation charges

             6,411                 4,000               1,627

Initial Public Offering related expenses

                                   1,743

Loss on extinguishment of debt

                                
                                                                                                               

Adjusted EBITDA

   $ 5,033     $ 8,781     $ 11,378     $ 17,489     $ 27,689     $ 31,774   $ 12,707     $ 16,516   $ 20,980   $ 30,178   $ 34,192     $ 23,177     $ 31,238   $ 34,452   $ 41,024   $ 46,847

 

    Q4     Full Year  
    2001     2002   2003   2004     2005     2001     2002   2003   2004   2005  

Net income (loss)

   $ 7,393     $ 2,596   $ 935   $ (5,217 )   $ (10,894 )   $ 18,428     $ 22,443   $ 15,113   $ 13,561   $ (18,321 )

Interest expense,net

     253       387     4,080     14,134       12,186       3,774       1,908     13,417     29,567     51,357  

Income tax expense (benefit)

     3,629       1,943     575     (3,729 )     (1,992 )     9,816       11,933     9,615     8,439     439  

Depreciation and amortization

     8,709       8,885     15,677     22,500       16,022       33,682       34,062     46,452     61,431     66,907  
                                                                     

EBITDA

     19,984       13,811     21,267     27,689       15,322       65,701       70,346     84,597     112,998     100,381  

Merger related expenses

         932     433       268       —         —       4,287     2,934     457  

Management fees

         125     1,323         —         —       250     2,204     9,699  

ILWU Lockout

       7,200           —         7,200     —       —       —    

Equipment lease-Maersk

     (1,600 )             (6,400 )     —       —       —       —    

Compensation charges

             6,914       —         —       —       —       18,952  

Initial Public Offering related expenses

               —         —       —       —       1,743  

Loss on extinguishment of debt

             13,154       —         —       —       —       13,154  
                                                                     

Adjusted EBITDA

   $ 18,384     $ 21,011   $ 22,324   $ 29,445     $ 35,658     $ 59,301     $ 77,546   $ 89,134   $ 118,136   $ 144,386  

Reconciliation of Net Income (Loss) to Adjusted Net Income Per Share

(in thousands, except share amounts and earnings per share)

 

     Twelve Months ended
December 26, 2004		     Year ended
December 25, 2005		  

Net Income (loss)

    $ 13,561     $ (18,321 )

Purchase price accounting depreciation and amortization

      (7,255 )  

Stock compensation expense

      1,765       19,291  

Management fees

      2,204       9,698  

Transaction related expenses

      1,079       2,100  

Loss on extinguishment of debt

      —         13,154  

Interest expense reduction (increase)

      (10,687 )     8,780  

Tax impact

      4,906       (13,000 )
                

Total adjustments

      (7,988 )     40,023  

Adjusted Net income

    $ 5,573     $ 21,702  

Proforma Shares outstanding

      33,544,170       33,544,170  

Adjusted Net income per share

    $ 0.17     $ 0.65