Continued Double-Digit Percentage Growth in Revenues, Adjusted Earnings and Adjusted EBITDA
WILMINGTON, Ohio--(BUSINESS WIRE)-- Air Transport Services Group, Inc. (Nasdaq: ATSG), the leading provider of medium wide-body aircraft leasing, contracted air transportation and related services, today reported consolidated financial results for the quarter and nine months ended September 30, 2019. Results as compared with the third quarter of 2018 include:
- Customer revenues were $366.1 million, up $161.2 million, or 79 percent.
Both of ATSG's principal business segments, aircraft leasing and air transport, reported higher revenues for the third quarter. Revenues from Omni Air International, which ATSG acquired in November 2018, were the largest contributor to the year-over-year revenue gain.
- GAAP Earnings from Continuing Operations were $105.1 million, up $72.2 million, or 219 percent. GAAP Earnings per Share basic were $1.78, versus $0.56 a year ago.
The unrealized effect of re-measurement of financial instrument values increased ATSG's third quarter 2019 after-tax earnings by $90.8 million, and third-quarter 2018 after-tax earnings by $17.2 million. The majority of the earnings gain related to a non-cash change in the value of warrants issued to Amazon.com, Inc. related to a decrease in ATSG's share price during the third quarter 2019. Increases in interest expense, depreciation and amortization expense, and in retiree benefit costs were also significant factors.
- Adjusted Earnings from Continuing Operations (non-GAAP) increased by $2.0 million, or 10 percent, to $21.4 million. Adjusted Earnings Per Share (non-GAAP) were $0.31 diluted, up $0.03.
Adjusted Earnings from Continuing Operations and Adjusted EPS exclude elements from GAAP results that in management's opinion differ distinctly in predictability among periods or are not closely related to operations. Adjustments from GAAP include financial instrument revaluations, amortization of aircraft lease incentives, retiree benefit costs, and losses of non-consolidated ATSG affiliates.
- Adjusted EBITDA from Continuing Operations (non-GAAP) were $109.2 million, up $35.0 million, or 47 percent.
Contributions from Omni Air, and from the increase in externally leased 767 freighters since September 2018, drove the majority of the increase in Adjusted EBITDA.
Adjusted Earnings per Share, Adjusted Earnings from Continuing Operations and Adjusted EBITDA from Continuing Operations are non-GAAP financial measures and are defined in the non-GAAP reconciliation tables at the end of this release. (See the paragraph entitled "Non-GAAP Financial Measures")
- Capital spending for the first nine months was $336.9 million, up 57 percent.
Capital expenditures in the first nine months of 2019 included $247.9 million for the purchase of nine Boeing 767 aircraft, including two in the third quarter, and for freighter modification costs.
Joe Hete, Chief Executive Officer of ATSG, said, "Demand for our aircraft and flight operations continued to accelerate in the third quarter, pointing toward a strong peak period of non-payload-sensitive flying for our air express network customers as we deploy more 767 freighters. Flight operations for the U.S. Department of Defense and passenger charter customers were also strong."
Segment Results
Cargo Aircraft Management (CAM)
|
CAM |
|
Third Quarter |
|
Nine Months |
|
|||||||||||||
|
($ in thousands) |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
|||||||||
|
Aircraft leasing and related revenues |
|
$ |
75,160 |
|
|
$ |
63,012 |
|
|
$ |
223,017 |
|
|
$ |
178,217 |
|
|
|
|
Lease incentive amortization |
|
(4,156 |
) |
|
(4,226 |
) |
|
(12,407 |
) |
|
(12,678 |
) |
|
|||||
|
Total CAM revenues |
|
71,004 |
|
|
58,786 |
|
|
210,610 |
|
|
165,539 |
|
|
|||||
|
Allocated interest expense |
|
9,494 |
|
|
4,681 |
|
|
28,838 |
|
|
13,675 |
|
|
|||||
|
Segment earnings, pretax |
|
17,428 |
|
|
19,034 |
|
|
50,285 |
|
|
49,892 |
|
|
|||||
Significant Developments:
- CAM's third quarter revenues, net of warrant-related lease incentives, increased 21 percent versus the prior year. Third quarter revenues benefited from seventeen more aircraft in service at September 30, 2019, versus the same date a year ago, and a full nine months of revenues from eleven Omni Air passenger aircraft that CAM acquired and leased back to Omni Air in November 2018. CAM's external customer revenues increased two percent to $42.0 million during the third quarter.
- At September 30, 2019, ATSG's in-service fleet of CAM-owned aircraft included ninety aircraft, comprising seventy-eight cargo and twelve passenger aircraft. Fifty-eight cargo aircraft were leased to external customers, four more than were leased as of the same date last year, and two more than on June 30, 2019.
- CAM leased three 767-300 freighters to Amazon during the third quarter, including two newly converted aircraft and one previously leased to ATI. Six additional 767 freighters are scheduled for deployment during the fourth quarter, two to Amazon and four to United Parcel Service ("UPS"). The first of those UPS placements occurred in October.
- Ten 767s were undergoing conversion or awaiting deployment as freighters at September 30, including two 767s acquired during the third quarter. CAM purchased nine 767s during 2019.
- CAM’s pretax earnings for the quarter were $17.4 million, down $1.6 million from the prior-year's third quarter but up $0.7 million from this year's second quarter. Earnings reflected $4.8 million more in quarterly allocated interest expense and $7.7 million more for depreciation expense, due to both organic and acquired fleet growth, versus the year-ago quarter. Also impacting CAM’s results was the timing of new aircraft lease deliveries and transitioning of aircraft between lessees during the quarter.
ACMI Services
|
ACMI Services |
|
Third Quarter |
|
Nine Months |
|
|||||||||||||
|
($ in thousands) |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
|||||||||
|
Revenues |
|
$ |
272,188 |
|
|
$ |
116,224 |
|
|
$ |
785,082 |
|
|
$ |
355,204 |
|
|
|
|
Allocated interest expense |
|
6,530 |
|
|
402 |
|
|
19,520 |
|
|
1,419 |
|
|
|||||
|
Segment earnings, pretax |
|
4,375 |
|
|
(341 |
) |
|
17,658 |
|
|
3,574 |
|
|
|||||
Significant Developments:
- Revenues for ACMI Services again more than doubled from the prior-year period, stemming mainly from Omni Air's operations for the Department of Defense since ATSG acquired Omni in November 2018. Also contributing to the increase were higher operations for Amazon and ACMI flights for UPS.
- Pretax earnings for the quarter were $4.4 million versus a year-earlier loss of $0.3 million, and more than four times the amount earned in the second quarter this year, primarily due to contributions from Omni Air. Earnings were adversely affected by previously forecast ramp-up costs for expanded flight operations in the second half. Interest expense allocated to ACMI Services for the third quarter increased $6.1 million, primarily related to debt associated with the Omni Air acquisition.
- Total block hours increased 56 percent for the quarter and 37 percent through the first nine months of 2019, principally due to the contribution from Omni Air's ACMI and charter operations and growth in flight operations for Amazon.
Other Activities
|
Other |
|
Third Quarter |
|
Nine Months |
|
|||||||||||||
|
($ in thousands) |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
|||||||||
|
Total Revenues |
|
$ |
87,762 |
|
|
$ |
69,477 |
|
|
$ |
226,228 |
|
|
$ |
206,736 |
|
|
|
|
Revenues from external customers |
|
$ |
51,895 |
|
|
$ |
47,344 |
|
|
$ |
140,270 |
|
|
$ |
141,124 |
|
|
|
|
Pretax Earnings |
|
2,939 |
|
|
3,051 |
|
|
8,848 |
|
|
9,808 |
|
|
|||||
Significant Developments:
- Total third-quarter revenues from other activities of $87.8 million increased by $18.3 million, or 26 percent, due to growth in maintenance services for ATSG affiliate airlines and ground services for external customers. Revenues from external customers increased $4.6 million versus the prior-year period, driven by additional revenue for ground services and fuel sales offset by the termination of sort-facility management services for the U.S. Postal Service in the third quarter of 2018.
- Pretax earnings were flat for the third quarter. The loss of business with the U.S. Postal Service offset higher earnings from gateway services from other customers.
Outlook
ATSG continues to project that its Adjusted EBITDA will increase to $450 million in 2019 from $312 million in 2018.
Peak-season flight schedules for ATSG's scheduled express-package services will be higher in the fourth quarter than previously forecast, largely due to strong e-commerce demand. As a result, costs to prepare for and support that demand will be greater than previously anticipated. Additionally, fourth-quarter aircraft lease revenues may be impacted by the timing of lease start-ups and transitioning delays.
2019 capital expenditures, principally to purchase and modify Boeing 767 aircraft for freighter deployment, are now projected to be approximately $460 million, down from $475 million previously projected. Five 767-300s are expected to be in or awaiting cargo conversion at year-end 2019.
We anticipate ten lease deployments in 2020, including commitments of four to Amazon and one to UPS. The demand for Boeing 767 freighters remains very strong and ATSG is negotiating with multiple customers seeking to lease the remaining aircraft. Goals for 2020 also include mid-year approval of our application for a Supplemental Type Certificate for our Airbus A321 passenger-to-freighter conversion program.
Hete noted that ATSG expects to continue investing in 767 aircraft in the near term, based on known and anticipated requirements of customers relying even more on air express networks to speed fulfillment, and those customers' preference for ATSG's customized turnkey solutions and superior service performance.
"While trade and tariff issues have impacted the general cargo market," he said, "demand for our mid-size freighters remains very strong, driven by the expansion of regional air express networks and growth in e-commerce. Looking forward, the aircraft and other investments we are making will drive even higher cash flows into an already strong cash-generating business. We expect lower capital expenditures in the next few years with decreasing debt leverage and full availability of capital allocation options to increase shareholder returns."
Separately today, the company announced an amendment to its senior secured credit facility which, among other changes, lengthened the term of the agreement and lowered pricing of its term loan and revolver debt. A news release describing the facility changes is available on our website, atsginc.com.
Non-GAAP Financial Measures
This release, including the attached tables, contains non-GAAP financial measures that management uses to evaluate historical results and project future results. Management believes that these non-GAAP measures assist in highlighting operational trends, facilitate period-over-period comparisons, and provide additional clarity about events and trends affecting core operating performance. Disclosing these non-GAAP measures provides insight to investors about additional metrics that management uses to evaluate past performance and prospects for future performance. Non-GAAP measures are not a substitute for GAAP. The historical non-GAAP financial measures included in this release are reconciled to GAAP earnings in tables included later in this release. The Company does not provide a reconciliation of projected Adjusted EBITDA because it is unable to predict with reasonable accuracy the value of certain adjustments. Certain adjustments can be significantly impacted by the re-measurements of financial instruments including stock warrants issued to customers. The Company’s earnings on a GAAP basis and the non-GAAP adjustments for gain and losses resulting from the re-measurement of stock warrants, will depend on the future prices of ATSG stock, interest rates and other assumptions which are highly uncertain.
Conference Call
ATSG will host a conference call on November 7, 2019, at 10 a.m. Eastern time to review its financial results for the third quarter of 2019. Participants should dial (800) 708-4539 and international participants should dial (847) 619-6397 ten minutes before the scheduled start of the call and ask for conference pass code 49148053. The call will also be webcast live (in listen-only mode) via a link at www.atsginc.com. A replay of the conference call will be available by phone on November 7, 2019, beginning at 2 p.m. and continuing through November 14, 2019, at (888) 843-7419 (international callers (630) 652-3042; use pass code 49148053#). The webcast replay will remain available via www.atsginc.com for 30 days.
About ATSG
ATSG is a leading provider of aircraft leasing and air cargo transportation and related services to domestic and foreign air carriers and other companies that outsource their air cargo lift requirements. ATSG, through its leasing and airline subsidiaries, is the world's largest owner and operator of converted Boeing 767 freighter aircraft. Through its principal subsidiaries, including three airlines with separate and distinct U.S. FAA Part 121 Air Carrier certificates, ATSG provides aircraft leasing, air cargo lift, passenger ACMI and charter services, aircraft maintenance services and airport ground services. ATSG's subsidiaries include ABX Air, Inc.; Airborne Global Solutions, Inc.; Airborne Maintenance and Engineering Services, Inc., including its subsidiary, Pemco World Air Services, Inc.; Air Transport International, Inc.; Cargo Aircraft Management, Inc.; and Omni Air International, LLC. For more information, please see www.atsginc.com.
Except for historical information contained herein, the matters discussed in this release contain forward-looking statements that involve risks and uncertainties. A number of important factors could cause Air Transport Services Group's (ATSG's) actual results to differ materially from those indicated by such forward-looking statements. These factors include, but are not limited to, changes in market demand for our assets and services; our operating airlines' ability to maintain on-time service and control costs; the cost and timing with respect to which we are able to purchase and modify aircraft to a cargo configuration; fluctuations in ATSG's traded share price, which may result in mark-to-market charges on certain financial instruments; the number, timing and scheduled routes of our aircraft deployments to customers; our ability to remain in compliance with our agreements with key customers and lenders; changes in general economic and/or industry specific conditions; changes in our capital expenditure plans and requirements; and other factors that are contained from time to time in ATSG's filings with the U.S. Securities and Exchange Commission, including its Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Readers should carefully review this release and should not place undue reliance on ATSG's forward-looking statements. These forward-looking statements were based on information, plans and estimates as of the date of this release. ATSG undertakes no obligation to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes.
|
AIR TRANSPORT SERVICES GROUP, INC. AND SUBSIDIARIES |
||||||||||||||||
|
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS |
||||||||||||||||
|
(In thousands, except per share data) |
||||||||||||||||
|
|
Three Months Ended |
|
Nine Months Ended |
|||||||||||||
|
|
September 30, |
|
September 30, |
|||||||||||||
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|||||||||
|
REVENUES |
$ |
366,073 |
|
|
$ |
204,919 |
|
|
$ |
1,048,832 |
|
|
$ |
611,566 |
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
OPERATING EXPENSES |
|
|
|
|
|
|
|
|||||||||
|
Salaries, wages and benefits |
110,706 |
|
|
71,341 |
|
|
307,897 |
|
|
216,173 |
|
|||||
|
Depreciation and amortization |
64,149 |
|
|
43,201 |
|
|
190,052 |
|
|
124,825 |
|
|||||
|
Maintenance, materials and repairs |
41,496 |
|
|
33,469 |
|
|
125,501 |
|
|
107,152 |
|
|||||
|
Fuel |
41,193 |
|
|
5,981 |
|
|
110,311 |
|
|
17,682 |
|
|||||
|
Contracted ground and aviation services |
17,190 |
|
|
2,636 |
|
|
47,319 |
|
|
7,464 |
|
|||||
|
Travel |
25,366 |
|
|
6,903 |
|
|
66,401 |
|
|
20,823 |
|
|||||
|
Landing and ramp |
2,539 |
|
|
1,211 |
|
|
7,978 |
|
|
3,670 |
|
|||||
|
Rent |
4,123 |
|
|
3,274 |
|
|
11,860 |
|
|
10,264 |
|
|||||
|
Insurance |
1,833 |
|
|
1,696 |
|
|
5,601 |
|
|
4,473 |
|
|||||
|
Transaction fees |
— |
|
|
— |
|
|
373 |
|
|
— |
|
|||||
|
Other operating expenses |
16,712 |
|
|
8,380 |
|
|
50,763 |
|
|
20,672 |
|
|||||
|
|
325,307 |
|
|
178,092 |
|
|
924,056 |
|
|
533,198 |
|
|||||
|
|
|
|
|
|
|
|
|
|||||||||
|
OPERATING INCOME |
40,766 |
|
|
26,827 |
|
|
124,776 |
|
|
78,368 |
|
|||||
|
OTHER INCOME (EXPENSE) |
|
|
|
|
|
|
|
|||||||||
|
Net gain on financial instruments |
91,952 |
|
|
17,895 |
|
|
60,566 |
|
|
28,707 |
|
|||||
|
Interest expense |
(16,712 |
) |
|
(5,608 |
) |
|
(50,906 |
) |
|
(16,336 |
) |
|||||
|
Non-service component of retiree benefit (costs) credits |
(2,351 |
) |
|
2,045 |
|
|
(7,053 |
) |
|
6,135 |
|
|||||
|
Loss from non-consolidated affiliates |
(2,645 |
) |
|
(2,647 |
) |
|
(12,459 |
) |
|
(7,600 |
) |
|||||
|
Interest income |
78 |
|
|
67 |
|
|
255 |
|
|
144 |
|
|||||
|
|
70,322 |
|
|
11,752 |
|
|
(9,597 |
) |
|
11,050 |
|
|||||
|
|
|
|
|
|
|
|
|
|||||||||
|
EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES |
111,088 |
|
|
38,579 |
|
|
115,179 |
|
|
89,418 |
|
|||||
|
INCOME TAX EXPENSE |
(6,003 |
) |
|
(5,646 |
) |
|
(14,092 |
) |
|
(16,339 |
) |
|||||
|
|
|
|
|
|
|
|
|
|||||||||
|
EARNINGS FROM CONTINUING OPERATIONS |
105,085 |
|
|
32,933 |
|
|
101,087 |
|
|
73,079 |
|
|||||
|
|
|
|
|
|
|
|
|
|||||||||
|
EARNINGS FROM DISCONTINUED OPERATIONS, NET OF TAX |
243 |
|
|
170 |
|
|
305 |
|
|
536 |
|
|||||
|
NET EARNINGS |
$ |
105,328 |
|
|
$ |
33,103 |
|
|
$ |
101,392 |
|
|
$ |
73,615 |
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
EARNINGS PER SHARE - CONTINUING OPERATIONS |
|
|
|
|
|
|
|
|||||||||
|
Basic |
$ |
1.78 |
|
|
$ |
0.56 |
|
|
$ |
1.72 |
|
|
$ |
1.24 |
|
|
|
Diluted |
$ |
0.19 |
|
|
$ |
0.24 |
|
|
$ |
0.43 |
|
|
$ |
0.71 |
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
WEIGHTED AVERAGE SHARES - CONTINUING OPERATIONS |
|
|
|
|
|
|
|
|||||||||
|
Basic |
58,919 |
|
|
58,739 |
|
|
58,889 |
|
|
58,773 |
|
|||||
|
Diluted |
68,718 |
|
|
68,323 |
|
|
69,382 |
|
|
68,629 |
|
|||||
|
Certain historical expenses have been reclassified to conform to the presentation above. |
|
AIR TRANSPORT SERVICES GROUP, INC. AND SUBSIDIARIES |
||||||||
|
CONDENSED CONSOLIDATED BALANCE SHEETS |
||||||||
|
(In thousands, except share data) |
||||||||
|
|
September 30, |
|
December 31, |
|||||
|
|
2019 |
|
2018 |
|||||
|
ASSETS |
|
|
|
|||||
|
CURRENT ASSETS: |
|
|
|
|||||
|
Cash and cash equivalents |
$ |
46,833 |
|
|
$ |
59,322 |
|
|
|
Accounts receivable, net of allowance of $2,793 in 2019 and $1,444 in 2018 |
135,907 |
|
|
147,755 |
|
|||
|
Inventory |
32,776 |
|
|
33,536 |
|
|||
|
Prepaid supplies and other |
18,018 |
|
|
18,608 |
|
|||
|
TOTAL CURRENT ASSETS |
233,534 |
|
|
259,221 |
|
|||
|
|
|
|
|
|||||
|
Property and equipment, net |
1,707,332 |
|
|
1,555,005 |
|
|||
|
Customer incentive |
151,271 |
|
|
63,780 |
|
|||
|
Goodwill and acquired intangibles |
530,512 |
|
|
535,359 |
|
|||
|
Operating lease assets |
54,473 |
|
|
— |
|
|||
|
Other assets |
67,711 |
|
|
57,220 |
|
|||
|
TOTAL ASSETS |
$ |
2,744,833 |
|
|
$ |
2,470,585 |
|
|
|
|
|
|
|
|||||
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|||||
|
CURRENT LIABILITIES: |
|
|
|
|||||
|
Accounts payable |
$ |
132,508 |
|
|
$ |
109,843 |
|
|
|
Accrued salaries, wages and benefits |
50,080 |
|
|
50,932 |
|
|||
|
Accrued expenses |
15,656 |
|
|
19,623 |
|
|||
|
Current portion of debt obligations |
43,451 |
|
|
29,654 |
|
|||
|
Current portion of lease obligations |
14,794 |
|
|
— |
|
|||
|
Unearned revenue |
20,153 |
|
|
19,082 |
|
|||
|
TOTAL CURRENT LIABILITIES |
276,642 |
|
|
229,134 |
|
|||
|
Long term debt |
1,408,086 |
|
|
1,371,598 |
|
|||
|
Stock warrant obligations |
308,074 |
|
|
203,782 |
|
|||
|
Post-retirement obligations |
54,066 |
|
|
64,485 |
|
|||
|
Long term lease obligations |
38,541 |
|
|
— |
|
|||
|
Other liabilities |
53,410 |
|
|
51,905 |
|
|||
|
Deferred income taxes |
125,018 |
|
|
113,243 |
|
|||
|
|
|
|
|
|||||
|
STOCKHOLDERS’ EQUITY: |
|
|
|
|||||
|
Preferred stock, 20,000,000 shares authorized, including 75,000 Series A Junior Participating Preferred Stock |
— |
|
|
— |
|
|||
|
Common stock, par value $0.01 per share; 150,000,000 shares authorized; 59,368,570 and 59,134,173 shares issued and outstanding in 2019 and 2018, respectively |
594 |
|
|
591 |
|
|||
|
Additional paid-in capital |
474,915 |
|
|
471,158 |
|
|||
|
Retained earnings |
86,085 |
|
|
56,051 |
|
|||
|
Accumulated other comprehensive loss |
(80,598 |
) |
|
(91,362 |
) |
|||
|
TOTAL STOCKHOLDERS’ EQUITY |
480,996 |
|
|
436,438 |
|
|||
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
$ |
2,744,833 |
|
|
$ |
2,470,585 |
|
|
|
AIR TRANSPORT SERVICES GROUP, INC. AND SUBSIDIARIES |
||||||||||||||||
|
PRETAX EARNINGS AND ADJUSTED PRETAX EARNINGS SUMMARY |
||||||||||||||||
|
FROM CONTINUING OPERATIONS |
||||||||||||||||
|
NON-GAAP RECONCILIATION |
||||||||||||||||
|
(In thousands) |
||||||||||||||||
|
|
Three Months Ended |
|
Nine Months Ended |
|||||||||||||
|
|
September 30, |
|
September 30, |
|||||||||||||
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|||||||||
|
Revenues |
|
|
|
|
|
|
|
|||||||||
|
CAM |
|
|
|
|
|
|
|
|||||||||
|
Aircraft leasing and related revenues |
$ |
75,160 |
|
|
$ |
63,012 |
|
|
$ |
223,017 |
|
|
$ |
178,217 |
|
|
|
Lease incentive amortization |
(4,156 |
) |
|
(4,226 |
) |
|
(12,407 |
) |
|
(12,678 |
) |
|||||
|
Total CAM |
71,004 |
|
|
58,786 |
|
|
210,610 |
|
|
165,539 |
|
|||||
|
ACMI Services |
272,188 |
|
|
116,224 |
|
|
785,082 |
|
|
355,204 |
|
|||||
|
Other Activities |
87,762 |
|
|
69,477 |
|
|
226,228 |
|
|
206,736 |
|
|||||
|
Total Revenues |
430,954 |
|
|
244,487 |
|
|
1,221,920 |
|
|
727,479 |
|
|||||
|
Eliminate internal revenues |
(64,881 |
) |
|
(39,568 |
) |
|
(173,088 |
) |
|
(115,913 |
) |
|||||
|
Customer Revenues |
$ |
366,073 |
|
|
$ |
204,919 |
|
|
$ |
1,048,832 |
|
|
$ |
611,566 |
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Pretax Earnings (Loss) from Continuing Operations |
|
|
|
|
|
|
||||||||||
|
CAM, inclusive of interest expense |
17,428 |
|
|
19,034 |
|
|
50,285 |
|
|
49,892 |
|
|||||
|
ACMI Services, inclusive of interest expense |
4,375 |
|
|
(341 |
) |
|
17,658 |
|
|
3,574 |
|
|||||
|
Other Activities |
2,939 |
|
|
3,051 |
|
|
8,848 |
|
|
9,808 |
|
|||||
|
Net, unallocated interest expense |
(610 |
) |
|
(458 |
) |
|
(2,293 |
) |
|
(1,098 |
) |
|||||
|
Net gain on financial instruments |
91,952 |
|
|
17,895 |
|
|
60,566 |
|
|
28,707 |
|
|||||
|
Other non-service components of retiree benefit (costs) credits, net |
(2,351 |
) |
|
2,045 |
|
|
(7,053 |
) |
|
6,135 |
|
|||||
|
Transaction fees |
— |
|
|
— |
|
|
(373 |
) |
|
— |
|
|||||
|
Non-consolidated affiliates |
(2,645 |
) |
|
(2,647 |
) |
|
(12,459 |
) |
|
(7,600 |
) |
|||||
|
Earnings from Continuing Operations before Income Taxes (GAAP) |
$ |
111,088 |
|
|
$ |
38,579 |
|
|
$ |
115,179 |
|
|
$ |
89,418 |
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Adjustments to Pretax Earnings |
|
|
|
|
|
|
||||||||||
|
Add non-service components of retiree benefit costs (credits), net |
2,351 |
|
|
(2,045 |
) |
|
7,053 |
|
|
(6,135 |
) |
|||||
|
Add loss from non-consolidated affiliates |
2,645 |
|
|
2,647 |
|
|
12,459 |
|
|
7,600 |
|
|||||
|
Add transaction fees |
— |
|
|
— |
|
|
373 |
|
|
— |
|
|||||
|
Add customer incentive amortization |
4,334 |
|
|
4,226 |
|
|
12,585 |
|
|
12,678 |
|
|||||
|
Add net gain on financial instruments |
(91,952 |
) |
|
(17,895 |
) |
|
(60,566 |
) |
|
(28,707 |
) |
|||||
|
Adjusted Pretax Earnings (non-GAAP) |
$ |
28,466 |
|
|
$ |
25,512 |
|
|
$ |
87,083 |
|
|
$ |
74,854 |
|
|
Adjusted Pretax Earnings excludes certain items included in GAAP based pretax earnings (loss) from continuing operations because they are distinctly different in their predictability among periods or not closely related to our operations. Presenting this measure provides investors with a comparative metric of fundamental operations, while highlighting changes to certain items among periods. Adjusted Pretax Earnings should not be considered an alternative to Earnings from Continuing Operations Before Income Taxes or any other performance measure derived in accordance with GAAP.
|
AIR TRANSPORT SERVICES GROUP, INC. AND SUBSIDIARIES |
||||||||||||||||
|
ADJUSTED EARNINGS FROM CONTINUING OPERATIONS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION |
||||||||||||||||
|
NON-GAAP RECONCILIATION |
||||||||||||||||
|
(In thousands) |
||||||||||||||||
|
|
Three Months Ended |
|
Nine Months Ended |
|||||||||||||
|
|
September 30, |
|
September 30, |
|||||||||||||
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Earnings (loss) from Continuing Operations Before Income Taxes |
$ |
111,088 |
|
|
$ |
38,579 |
|
|
$ |
115,179 |
|
|
$ |
89,418 |
|
|
|
Interest Income |
(78 |
) |
|
(67 |
) |
|
(255 |
) |
|
(144 |
) |
|||||
|
Interest Expense |
16,712 |
|
|
5,608 |
|
|
50,906 |
|
|
16,336 |
|
|||||
|
Depreciation and Amortization |
64,149 |
|
|
43,201 |
|
|
190,052 |
|
|
124,825 |
|
|||||
|
EBITDA from Continuing Operations (non-GAAP) |
$ |
191,871 |
|
|
$ |
87,321 |
|
|
$ |
355,882 |
|
|
$ |
230,435 |
|
|
|
Add non-service components of retiree benefit costs (credits), net |
2,351 |
|
|
(2,045 |
) |
|
7,053 |
|
|
(6,135 |
) |
|||||
|
Add losses for non-consolidated affiliates |
2,645 |
|
|
2,647 |
|
|
12,459 |
|
|
7,600 |
|
|||||
|
Add acquisition related transaction fees |
— |
|
|
— |
|
|
373 |
|
|
— |
|
|||||
|
Add customer incentive amortization |
4,334 |
|
|
4,226 |
|
|
12,585 |
|
|
12,678 |
|
|||||
|
Add net (gain) loss on financial instruments |
(91,952 |
) |
|
(17,895 |
) |
|
(60,566 |
) |
|
(28,707 |
) |
|||||
|
Adjusted EBITDA (non-GAAP) |
$ |
109,249 |
|
|
$ |
74,254 |
|
|
$ |
327,786 |
|
|
$ |
215,871 |
|
|
Management uses Adjusted EBITDA to assess the performance of its operating results among periods. It is a metric that facilitates the comparison of financial results of underlying operations. Additionally, these non-GAAP adjustments are similar to the adjustments used by lenders in the Company’s senior secured credit facility to assess financial performance and determine the cost of borrowed funds. The adjustments also exclude the non-service cost components of retiree benefit plans because they are not closely related to ongoing operating activities. Management presents EBITDA from Continuing Operations, a commonly referenced metric, as a subtotal toward computing Adjusted EBITDA.
EBITDA from Continuing Operations is defined as Earnings (Loss) from Continuing Operations Before Income Taxes plus net interest expense, depreciation, and amortization expense. Adjusted EBITDA is defined as EBITDA from Continuing Operations less financial instrument revaluation gains or losses, non-service components of retiree benefit costs including pension plan settlements, amortization of warrant-based customer incentive costs recorded in revenue, and costs from non-consolidated affiliates.
Adjusted EBITDA and EBITDA from Continuing Operations are non-GAAP financial measures and should not be considered as alternatives to Earnings from Continuing Operations Before Income Taxes or any other performance measure derived in accordance with GAAP. Adjusted EBITDA and EBITDA from Continuing Operations should not be considered in isolation or as substitutes for analysis of the Company's results as reported under GAAP, or as alternative measures of liquidity.
AIR TRANSPORT SERVICES GROUP, INC. AND SUBSIDIARIES
ADJUSTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS
NON-GAAP RECONCILIATION
(In thousands)
Management presents Adjusted Earnings and Adjusted Earnings Per Share from Continuing Operations, both non-GAAP measures, to provide additional information regarding earnings per share without the volatility otherwise caused by the items below. Management uses Adjusted Earnings and Adjusted Earnings Per Share from Continuing Operations to compare the performance of its operating results among periods.
|
|
Three Months Ended |
|
Nine Months Ended |
|||||||||||||||||||||||||||||
|
|
September 30, |
|
September 30, |
|
September 30, |
|
September 30, |
|||||||||||||||||||||||||
|
|
$ |
|
$ Per |
|
$ |
|
$ Per |
|
$ |
|
$ Per |
|
$ |
|
$ Per |
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
Earnings (loss) from Continuing Operations - basic (GAAP) |
$ |
105,085 |
|
|
|
|
$ |
32,933 |
|
|
|
|
$ |
101,087 |
|
|
|
|
$ |
73,079 |
|
|
|
|||||||||
|
Gain from warrant revaluation, net tax1 |
(91,849 |
) |
|
|
|
(16,801 |
) |
|
|
|
(71,319 |
) |
|
|
|
(24,274 |
) |
|
|
|||||||||||||
|
Earnings (loss) from Continuing Operations - diluted (GAAP) |
13,236 |
|
|
$ |
0.19 |
|
|
16,132 |
|
|
$ |
0.24 |
|
|
29,768 |
|
|
$ |
0.43 |
|
|
48,805 |
|
|
$ |
0.71 |
|
|||||
|
Adjustments, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
Customer incentive amortization2 |
3,310 |
|
|
0.05 |
|
|
3,272 |
|
|
0.05 |
|
|
9,611 |
|
|
0.14 |
|
|
9,816 |
|
|
0.14 |
|
|||||||||
|
Non-service component of retiree benefits 3 |
1,795 |
|
|
0.02 |
|
|
(1,562 |
) |
|
(0.02 |
) |
|
5,385 |
|
|
0.08 |
|
|
(4,686 |
) |
|
(0.07 |
) |
|||||||||
|
Loss from affiliates4 |
2,020 |
|
|
0.03 |
|
|
2,049 |
|
|
0.02 |
|
|
11,771 |
|
|
0.17 |
|
|
5,883 |
|
|
0.09 |
|
|||||||||
|
Omni acquisition fees5 |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
285 |
|
|
— |
|
|
— |
|
|
— |
|
|||||||||
|
Derivative revaluation6 |
1,081 |
|
|
0.02 |
|
|
(435 |
) |
|
(0.01 |
) |
|
9,234 |
|
|
0.13 |
|
|
(2,875 |
) |
|
(0.04 |
) |
|||||||||
|
Adjusted Earnings from Continuing Operations (non-GAAP) |
$ |
21,442 |
|
|
$ |
0.31 |
|
|
$ |
19,456 |
|
|
$ |
0.28 |
|
|
$ |
66,054 |
|
|
$ |
0.95 |
|
|
$ |
56,943 |
|
|
$ |
0.83 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
|
Shares |
|
|
|
Shares |
|
|
|
Shares |
|
|
|
Shares |
|
|
|||||||||||||||||
|
Weighted Average Shares - diluted |
68,718 |
|
|
|
|
68,323 |
|
|
|
|
69,382 |
|
|
|
|
68,629 |
|
|
|
|||||||||||||
|
Additional weighted average shares1 |
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|||||||||||||
|
Adjusted Shares (non-GAAP) |
68,718 |
|
|
|
|
68,323 |
|
|
|
|
69,382 |
|
|
|
|
68,629 |
|
|
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Adjusted Earnings from Continuing Operations and Adjusted Earnings Per Share from Continuing Operations are non-GAAP financial measures and should not be considered as alternatives to Earnings from Continuing Operations, Weighted Average Shares - diluted or Earnings Per Share from Continuing Operations or any other performance measure derived in accordance with GAAP. Adjusted Earnings and Adjusted Earnings Per Share from Continuing Operations should not be considered in isolation or as a substitute for analysis of the company's results as reported under GAAP.
|
1. |
Under U.S. GAAP, certain warrants are reflected as a liability and unrealized warrant gains are typically removed from diluted earnings per share (“EPS”) calculations while unrealized warrant losses are not removed because they are dilutive to EPS. As a result, the Company’s EPS, as calculated under U.S. GAAP, can vary significantly among periods due to unrealized mark-to-market losses created by an increased trading value for the Company's shares. Adjustment removes the unrealized gains for a large grant of stock warrants granted to a customer as a lease incentive. |
|
|
2. |
Adjustment removes the amortization of the warrant-based customer incentives which are recorded against revenue over the term of the related aircraft leases and customer contracts. |
|
|
3. |
Removes the non-service component of post-retirement costs and credits. |
|
|
4. |
Adjustment removes losses for the Company's non-consolidated affiliates. |
|
|
5. |
Adjustment removes the fees incurred for the acquisition of Omni Air International. |
|
|
6. |
Adjustment removes gains and losses from derivative interest rate instruments revaluations. |
|
AIR TRANSPORT SERVICES GROUP, INC. AND SUBSIDIARIES |
||||||||||||||||||||||||
|
AIRCRAFT FLEET |
||||||||||||||||||||||||
|
Aircraft Types |
||||||||||||||||||||||||
|
|
|
September 30, |
|
December 31, |
|
September 30, |
|
December 31, |
||||||||||||||||
|
|
|
2018 |
|
2018 |
|
2019 |
|
2019 Projected |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B767-200 Freighter |
|
|
|
34 |
|
|
|
|
|
34 |
|
|
|
|
|
33 |
|
|
|
|
|
33 |
|
|
|
B767-200 Passenger1 |
|
|
|
— |
|
|
|
|
|
3 |
|
|
|
|
|
3 |
|
|
|
|
|
3 |
|
|
|
B767-300 Freighter2 |
|
|
|
29 |
|
|
|
|
|
33 |
|
|
|
|
|
36 |
|
|
|
|
|
44 |
|
|
|
B767-300 Passenger1 |
|
|
|
— |
|
|
|
|
|
7 |
|
|
|
|
|
8 |
|
|
|
|
|
8 |
|
|
|
B777-200 Passenger |
|
|
|
— |
|
|
|
|
|
3 |
|
|
|
|
|
3 |
|
|
|
|
|
3 |
|
|
|
B757-200 Freighter |
|
|
|
4 |
|
|
|
|
|
4 |
|
|
|
|
|
4 |
|
|
|
|
|
4 |
|
|
|
B757 Combi |
|
|
|
4 |
|
|
|
|
|
4 |
|
|
|
|
|
4 |
|
|
|
|
|
4 |
|
|
|
B737-400 Freighter |
|
|
|
2 |
|
|
|
|
|
2 |
|
|
|
|
|
1 |
|
|
|
|
|
1 |
|
|
|
Total Aircraft in Service |
|
|
|
73 |
|
|
|
|
|
90 |
|
|
|
|
|
92 |
|
|
|
|
|
100 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B767-300 in or awaiting cargo conversion |
|
|
|
6 |
|
|
|
|
|
5 |
|
|
|
|
|
10 |
|
|
|
|
|
5 |
|
|
|
B767-200 staging for lease |
|
|
|
2 |
|
|
|
|
|
1 |
|
|
|
|
|
2 |
|
|
|
|
|
2 |
|
|
|
Total Aircraft |
|
|
|
81 |
|
|
|
|
|
96 |
|
|
|
|
|
104 |
|
|
|
|
|
107 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aircraft in Service Deployments |
||||||||||||||||||||||||
|
|
|
September 30, |
|
December 31, |
|
September 30, |
|
December 31, |
||||||||||||||||
|
|
|
2018 |
|
2018 |
|
2019 |
|
2019 Projected |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dry leased without CMI |
|
|
|
22 |
|
|
|
|
|
28 |
|
|
|
|
|
25 |
|
|
|
|
|
29 |
|
|
|
Dry leased with CMI |
|
|
|
32 |
|
|
|
|
|
31 |
|
|
|
|
|
33 |
|
|
|
|
|
35 |
|
|
|
Customer provided for CMI2 |
|
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
2 |
|
|
|
ACMI/Charter1 |
|
|
|
19 |
|
|
|
|
|
31 |
|
|
|
|
|
34 |
|
|
|
|
|
34 |
|
|
|
1. |
Includes one Boeing 767-300ER passenger aircraft and one 767-200ER passenger aircraft that are leased from external companies. |
|
|
2. |
The fourth quarter of 2019 includes two aircraft provided by a customer and operated under a CMI agreement by a Company airline. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20191106006029/en/
Quint Turner, ATSG Inc. Chief Financial Officer
937-366-2303
Source: Air Transport Services Group, Inc.