Q1 2013 Form 8K Cover - Earnings Release

0000894081-13-000073.txt : 20130508 0000894081-13-000073.hdr.sgml : 20130508 20130508161817 ACCESSION NUMBER: 0000894081-13-000073 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20130508 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20130508 DATE AS OF CHANGE: 20130508 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Air Transport Services Group, Inc. CENTRAL INDEX KEY: 0000894081 STANDARD INDUSTRIAL CLASSIFICATION: AIR COURIER SERVICES [4513] IRS NUMBER: 261631624 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-50368 FILM NUMBER: 13824779 BUSINESS ADDRESS: STREET 1: 145 HUNTER DR CITY: WILMINGTON STATE: OH ZIP: 45177 BUSINESS PHONE: 937-382-5591 MAIL ADDRESS: STREET 1: 145 HUNTER DR CITY: WILMINGTON STATE: OH ZIP: 45177 FORMER COMPANY: FORMER CONFORMED NAME: ABX Holdings, Inc. DATE OF NAME CHANGE: 20080102 FORMER COMPANY: FORMER CONFORMED NAME: ABX AIR INC DATE OF NAME CHANGE: 19950728 8-K 1 q12013form8kcover-earnings.htm 8-K Q1 2013 Form 8K Cover - Earnings Release

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________

Form 8-K

_____________________

Current Report

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 8, 2013

_____________________

(Exact name of registrant as specified in its charter)

_____________________




DE	000-50368	26-1631624
(State or other jurisdiction of incorporation)	Commission File Number:	(IRS Employer Identification No.)

145 Hunter Drive, Wilmington, OH 45177

(Address of principal executive offices, including zip code)

(937) 382-5591

(Registrant's telephone number, including area code)

_____________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:



o	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)



o	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)



o	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))



o	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

On May 8, 2013, Air Transport Services Group, Inc. issued a press release relating to its results for the first quarter ended March 31, 2013. A copy of the press release is furnished herewith as Exhibit 99.1 and incorporated herein by reference.

The information in this Item 2.02 is "furnished" and not "filed" for purposes of Section 18 of the Securities and Exchange Act of 1934, or otherwise subject to the liabilities of that section.

Item 9.01 Financial Statements and Exhibits.



Exhibit No.	Description
99.1	Press release issued by Air Transport Services Group, Inc. on May 8, 2013, relating to its results for the first quarter ended March 31, 2013.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



AIR TRANSPORT SERVICES GROUP, INC.

By:	/S/ W. JOSEPH PAYNE
	W. Joseph Payne
	Sr. Vice President
	Corporate General Counsel & Secretary

Date:	May 8, 2013

EX-99.1 2 a2013q1earningsrelease.htm EXHIBIT 2013 Q1 Earnings Release



		Page 1

Air Transport Services Group's First-Quarter Net Up 28 Percent

WILMINGTON, OH, May 8, 2013 - Air Transport Services Group, Inc. (Nasdaq: ATSG), a leading provider of aircraft leasing and air cargo transportation and related services, today reported consolidated financial results for the quarter ended March 31, 2013.

"We made a major investment in our combi business with the U.S. military, placed more of our Boeing 767 and 757 freighters with DHL, and completed the merger of two of our airlines during the first quarter,” said Joe Hete, President and Chief Executive Officer of ATSG. “The results were significant increases in our net income and in our Adjusted EBITDA, compared with the year-earlier quarter. Our baseline business remains solid, and we are moving quickly to capture the rest of the $5 to $6 million in merger synergies we projected a few months ago.”

For the first quarter of 2013, compared with first quarter 2012:


▪	Revenues were $143.3 million, a decrease of 1.5%.


▪	Total operating expenses were $126.9 million, down 3.7%, including a $3.8 million reduction in salaries, wages and benefits expense due in large part to reductions in airline related costs prior to the merger of Air Transport International and Capital Cargo International Airlines in March 2013.


▪	Pre-tax income was $13.6 million, an increase of 26.5%.


▪	Net earnings from continuing operations increased 27.6% to $8.5 million, or $0.13 per fully diluted share. Net earnings include a non-cash federal income tax provision. The company does not expect to pay significant federal income taxes until 2015.


▪	First-quarter Adjusted EBITDAwas $37.3 million, a 9.5% increase from $34.1 million in the same period of the prior year. This non-GAAP financial measure is defined and reconciled to comparable GAAP results in a table at the end of this release.


▪	Capital expenditures totaled $59.4 million for the quarter, including the purchase of two 757-200 combi aircraft.



		Page 2

Segment Results

CAM (Aircraft Leasing)



CAM	First Quarter
($ in thousands)	2013		2012		% Chg.
Revenues	$	38,969	$	37,851	3.0
Pre-Tax Earnings	16,873		16,818		0.3

Fleet Developments:


▪	On March 31, 2013, ATSG owned 47 aircraft in serviceable condition - 20 leased to external customers and 27 leased to ATSG affiliate airlines.


◦	The in-service fleet consisted of forty-one 767 freighters, three 757 freighters and three DC-8 combis. A table reflecting aircraft in service is included at the end of this release.


▪	On March 31, 2012, CAM owned 51 in-service aircraft, including thirty-nine 767s, three 757s, six DC-8s (two freighters, four combis) and three 727 freighters. All of the 727 and DC-8 freighters, one DC-8 combi and one 767 passenger aircraft have since been removed from service.


▪	Three other aircraft - two 767-300s and one 757-200 - were undergoing passenger-to-freighter conversion as of March 31, 2013.


▪	Four 757-200 combi aircraft, including one modified in 2012, one purchased in December 2012 and two purchased in January 2013, are completing certification requirements. They will enter service for the U.S. military as replacements for the three remaining DC-8 combis starting later this quarter.

ACMI Services



ACMI Services	First Quarter
($ in thousands)	2013			2012			% Chg.
Revenues
Airline services	$	94,892		$	96,342		(1.5)
Reimbursables	18,159			16,853			7.7
Total ACMI Services Revenues	113,051			113,195			(0.1)

Pre-Tax Loss	(5,404		)	(8,215		)	34.2

Significant Developments:


▪	Signed agreements with DHL in January for four additional freighters, including one 757 and three 767s, to replace the 727 freighters the company operated in DHL's U.S. domestic network.


▪	Extended agreements for three 767s operating in DHL's network in the Mideast.


▪	Airline-related headcount in the first quarter decreased approximately 26% compared with the beginning of 2012, principally as a result of combining ATI and CCIA operations prior to their merger in March.


▪	Four 767 freighters leased from CAM were underutilized during the quarter.



		Page 3

Other Activities



Other Activities	First Quarter
($ in thousands)	2013		2012		% Chg.
Revenues	$	26,254	$	28,421	(7.6)
Pre-Tax Earnings	2,181		2,001		9.0


▪	Improved first quarter pre-tax earnings were driven by greater efficiencies and higher volumes at the U.S. Postal Service facilities we operate.

Outlook

For 2013, Adjusted EBITDA from continuing operations is expected to be in the range of $175 to $180 million, reflecting the deployment of ATSG's current fleet and related ACMI services and other activities. Capital expenditures for 2013, including two 757-200 combis purchased in January, are currently projected at $110 million, of which approximately $20 million is maintenance-related. Any remaining free cash flow will be invested opportunistically in new aircraft at acceptable returns, or will be used to retire debt or return capital to shareholders to the extent permissible in the context of the company's credit agreements.

Commenting on the outlook for the rest of the year, Hete stated, “While the air cargo marketplace continues to be challenged, the unique characteristics of our fleet, the quality of our customers, our operating efficiencies and the long-term nature of our leases differentiate our business model. We expect to continue to grow our Adjusted EBITDA returns in 2013 as we replace our DC-8 combis with 757 combis, and deploy two newly converted 767-300s and one 757-200. Even under current conditions, our business remains strong.”

Conference Call

ATSG will host a conference call on Thursday, May 9, 2013, at 10:00 a.m. Eastern time to review its financial results for the first quarter of 2013. Participants should dial 888-895-5479 and international participants should dial 847-619-6250 ten minutes before the scheduled start of the call and ask for conference pass code 34725954. The call will also be webcast live (listen-only mode) via www.atsginc.com and www.earnings.com for individual investors, and via www.streetevents.com for institutional investors.

A replay of the conference call will be available by phone on Thursday, May 9, 2013, beginning at 2:00 p.m. and continuing through noon on Thursday, May 16, 2013, at 888-843-7419 (international callers 630-652-3042); use pass code 34725954#. The webcast replay will remain available via www.atsginc.com and www.earnings.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 two airlines with separate and distinct U.S. FAA Part 121 Air Carrier certificates, ATSG provides aircraft leasing, air cargo lift, aircraft maintenance services and airport ground services. ATSG's subsidiaries include ABX Air, Inc.; Airborne Global Solutions, Inc.; Air Transport International, Inc.; Cargo Aircraft Management, Inc.; and Airborne Maintenance and Engineering Services, Inc. For more information, please see www.atsginc.com.



		Page 4

Except for historical information contained herein, the matters discussed in this release contain forward-looking statements that involve risks and uncertainties. There are a number of important factors that 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, the costs and timing associated with the modification and certification testing of Boeing 767 and Boeing 757 aircraft, the timing associated with the deployment of aircraft among customers, 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.

Contact:

Quint O. Turner, ATSG Inc. Chief Financial Officer

937-382-5591

AIR TRANSPORT SERVICES GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except per share data)



	Three Months Ended
	March 31,
	2013			2012
REVENUES	$	143,279		$	145,506

OPERATING EXPENSES
Salaries, wages and benefits	43,309			47,104
Fuel	14,361			13,840
Maintenance, materials and repairs	22,134			23,114
Depreciation and amortization	20,920			20,300
Rent	6,779			5,730
Travel	4,727			5,978
Landing and ramp	4,065			4,066
Insurance	1,511			2,010
Other operating expenses	9,060			9,562
	126,866			131,704

OPERATING INCOME	16,413			13,802
OTHER INCOME (EXPENSE)
Interest income	21			28
Interest expense	(3,132		)	(3,547		)
Unrealized gain on derivative instruments	290			460
	(2,821		)	(3,059		)

EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	13,592			10,743
INCOME TAX EXPENSE	(5,091		)	(4,081		)

EARNINGS FROM CONTINUING OPERATIONS	8,501			6,662

LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX	(1		)	(230		)
NET EARNINGS	$	8,500		$	6,432

EARNINGS PER SHARE - Basic
Continuing operations	$	0.13		$	0.11
Discontinued operations	—			(0.01		)
NET EARNINGS PER SHARE	$	0.13		$	0.10

EARNINGS PER SHARE - Diluted
Continuing operations	$	0.13		$	0.10
Discontinued operations	—			—
NET EARNINGS PER SHARE	$	0.13		$	0.10

WEIGHTED AVERAGE SHARES
Basic	63,810			63,431
Diluted	64,524			64,374

AIR TRANSPORT SERVICES GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)



	March 31,			December 31,
	2013			2012
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	35,142		$	15,442
Accounts receivable, net of allowance of $702 in 2013 and $749 in 2012	43,153			47,858
Inventory	9,446			9,430
Prepaid supplies and other	7,306			8,855
Deferred income taxes	19,154			19,154
Aircraft and engines held for sale	2,952			3,360
TOTAL CURRENT ASSETS	117,153			104,099

Property and equipment, net	860,144			818,924
Other assets	19,794			20,462
Intangibles	5,083			5,146
Goodwill	86,980			86,980
TOTAL ASSETS	$	1,089,154		$	1,035,611

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	35,752		$	36,521
Accrued salaries, wages and benefits	21,524			22,917
Accrued expenses	9,183			8,502
Current portion of debt obligations	23,282			21,265
Unearned revenue	10,580			10,311
TOTAL CURRENT LIABILITIES	100,321			99,516
Long term debt obligations	386,791			343,216
Post-retirement liabilities	179,487			185,097
Other liabilities	61,634			62,104
Deferred income taxes	52,062			46,422

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; 75,000,000 shares authorized; 64,585,208 and 64,130,056 shares issued and outstanding in 2013 and 2012, respectively	646			641
Additional paid-in capital	523,069			523,087
Accumulated deficit	(98,685		)	(107,185		)
Accumulated other comprehensive loss	(116,171		)	(117,287		)
TOTAL STOCKHOLDERS’ EQUITY	308,859			299,256
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,089,154		$	1,035,611

AIR TRANSPORT SERVICES GROUP, INC. AND SUBSIDIARIES

PRE-TAX EARNINGS AND ADJUSTED PRE-TAX EARNINGS SUMMARY

FROM CONTINUING OPERATIONS

NON-GAAP RECONCILIATION

(In thousands)



	Three Months Ended
	March 31,
	2013			2012
Revenues
CAM Leasing	$	38,969		$	37,851
ACMI Services
Airline services	94,892			96,342
Reimbursables	18,159			16,853
Total ACMI Services	113,051			113,195
Other Activities	26,254			28,421
Total Revenues	178,274			179,467
Eliminate internal revenues	(34,995		)	(33,961		)
Customer Revenues	$	143,279		$	145,506

Pre-tax Earnings (Loss) from Continuing Operations
CAM, inclusive of interest expense	16,873			16,818
ACMI Services	(5,404		)	(8,215		)
Other Activities	2,181			2,001
Net, unallocated interest expense	(348		)	(321		)
Net gain on derivative instruments	290			460
Total Pre-tax Earnings	$	13,592		$	10,743

Adjustments to Pre-tax Earnings
Less Net Gain on derivative instruments	(290		)	(460		)
Adjusted Pre-tax Earnings	$	13,302		$	10,283

Adjusted Pre-tax Earnings is defined as Earnings from Continuing Operations Before Income Taxes less derivative gains. Management uses Adjusted Pre-tax Earnings from Continuing Operations to assess the performance of its operating results among periods. Adjusted Pre-tax earnings from Continuing Operations is a non-GAAP financial measure and 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

UNAUDITED ADJUSTED EARNINGS FROM CONTINUING OPERATIONS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION

NON-GAAP RECONCILIATION

(In thousands)



	Three Months Ended
	March 31,
	2013			2012

Earnings from Continuing Operations Before Income Taxes	$	13,592		$	10,743
Interest Income	(21		)	(28		)
Interest Expense	3,132			3,547
Depreciation and Amortization	20,920			20,300
EBITDA from Continuing Operations	$	37,623		$	34,562
Less Net Gain on derivative instruments	(290		)	(460		)

Adjusted EBITDA from Continuing Operations	$	37,333		$	34,102

EBITDA and Adjusted 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.

EBITDA from Continuing Operations is defined as Earnings from Continuing Operations Before Income Taxes plus net interest expense, depreciation, and amortization expense. Adjusted EBITDA from Continuing Operations is defined as EBITDA from Continuing Operations less derivative gains.

Management uses EBITDA from Continuing Operations as an indicator of the cash-generating performance of the operations of the Company. Management uses Adjusted EBITDA and Adjusted Pre-tax Earnings from Continuing Operations to assess the performance of its operating results among periods. EBITDA and Adjusted EBITDA from Continuing Operations, and Adjusted Pre-tax Earnings should not be considered in isolation or as a substitute for analysis of the Company's results as reported under GAAP, or as an alternative measure of liquidity.

AIR TRANSPORT SERVICES GROUP, INC. AND SUBSIDIARIES

IN-SERVICE AIRCRAFT FLEET



Aircraft Types
	December 31,			March 31,			December 31,
	2012			2013			2013 Projected
			Operating			Operating			Operating
	Total	Owned	Lease	Total	Owned	Lease	Total	Owned	Lease
B767-200	40	36	4	40	36	4	40	36	4
B767-300	7	5	2	7	5	2	9	7	2
B757-200	3	3	—	3	3	—	4	4	—
B757 Combi	—	—	—	—	—	—	4	4	—
DC-8 Combi	4	4	—	3	3	—	—	—	—
Total Aircraft In-Service	54	48	6	53	47	6	57	51	6

Owned Aircraft In Serviceable Condition
	December 31,			March 31,			December 31,
	2012			2013			2013 Projected

ATSG airlines		28			27			30-32
External customers		20			20			19-21
		48			47