AMB Property Corporation (AMB)
Q1 2010 Earnings Call
April 21, 2010 1:00 pm ET
Tracy Ward – Vice President Investor Relations & Corporate Communication
Hamid R. Moghadamn – Chairman of the Board & Chief Executive Officer
Thomas S. Olinger – Chief Financial Officer
Eugene F. Reilly – President North America
Guy F. Jaquier – President Europe and Asia & President Private Capital
Dave Rodgers – RBC Capital Markets
Michael Bilerman – Citi
Ross Nussbaum – UBS
Sloan Bohlen – Goldman Sachs
Steve Sakwa – ISI Group
Mitchell Germain – JMP Securities
Michael Mueller – JP Morgan
Steven Frankel – Green Street Advisors
Ki Kim – Macquarie Research Equities
George Auerbach – ISI Group
David Harris – Broadpoint
Previous Statements by AMB
» AMB Property Corporation Q4 2009 Earnings Call Transcript
» AMB Property Corporation Q3 2009 Earnings Call Transcript
» AMB Property Corporation Q2 2009 Earnings Call Transcript
At this time I would like to welcome everyone to the AMB first quarter earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks there will be a question and answer session. (Operator Instructions) I would now like to turn the conference over to Ms. Tracy Ward.
Before we begin formal remarks I’d like to remind you that this call is the property of AMB Property Corporation and is being recorded. The speakers’ on today’s call will make various remarks regarding future expectations, plans and prospects for the company such as those related to our leasing activities, our private capital business, our capital deployment activities, our planned dispositions, our development business, our expected earnings and our future business plan. These remarks constitute forward-looking statements for the purposes of the Safe Harbor provision of the Private Security Litigation Reform Act of 1995.
AMB assumes no obligation to update or supplement these forward-looking statements. Such forward-looking statements involve important factors that could cause actual result to differ materially from those in the forward-looking statements including those risks discussed in AMB’s December 31, 2009 10K which is on file with the SEC. Reconciliations of GAAP financial measures to non-GAAP financial measures are provided in the supplemental analyst package which is posted on the company’s website at AMB.com.
This morning I will turn the call over to Hamid Moghadamn, Chairman and CEO who will comment on the macroeconomic environment and customer sentiment and Tom Olinger, our Chief Financial Officer who will comment on our financial position, review our financial results and provide an update on guidance before we open the call to your questions. Also in attendance with us here today are Gene Reilly, President of the Americas and Guy Jaquier, President Europe, Asia & Private Capital.
Hamid R. Moghadamn
Welcome to our first quarter and my 50
earnings call. As you will see our financial and operating results were in line with our expectations and point to the excellent progress we are making on our business priorities. 2010 is shaping up to be a very good year for us. Before we review the quarter’s highlights I would like to share with you our thoughts on the economy, our markets, what we are seeing from our customers and the outlook for our business.
First, the momentum in the global economic recovery is strong and it appears to have legs which is consistent with what we have been seeing and saying over the past few quarters. Going back to the first quarter of ’09, you may recall that we talked a lot about the key drivers of our business namely global trade and inventory and our expectations of how they would play out even in a scenario when economic recovery was modest.
In the interest of time I won’t go over this territory again, suffice it to say that the downturn and the subsequent recovery have been consistent with our expectations which at that time were viewed as overly optimistic. In our view the global recovery is very much on track. For example, since bottoming in early 2009, global trade has been improving at a healthy pace in both the ocean and the air sectors. Specifically, container volumes through the major global ports are up about 24% from the trough although still 7% to 10% below comparable periods in 2007 and 2008.
International air cargo is up 28% year-to-date from its January 2009 trough. This growth was an unexpected and positive surprise and the result of customers who continue to manage their lean inventories. Air cargo volumes are only now 5% to 10% below peak levels. As we look to inventories, we’re at the early stages of inventory rebuilding. Monthly numbers indicate that inventories are finally expanding and should continue to make a meaningful contribution to GDP growth in the coming quarters. However, we expect the inventory to sales ratio to remain low as sales continue to grow faster than inventories.
Turning now to our customers, you may recall from last quarter that we highlighted a notable improvement in customer sentiment, that many of our large global customers were optimistic for the first time in many months and had even started talking about growth. This confidence continues to improve and is confirmed by the positive news about increases in manufacturing, industrial production and consumer spending not to mention the improvements in air cargo and container freight volumes.
In addition, the transportation based logistic providers are reporting better than expected financial results for the first quarter with meaningful revenue bumps in many cases since the first time since the downturn began. While customer sentiment is a good story and bodes well for the future, it will take some additional time before it translates in to demand. As a matter of fact, the pace of new demand continues to be moderate while customers work through back filling their existing capacity. This is consistent with our expectations and understandable as customers need more time to kick their tires.