DE | 000-50368 | 26-1631624 | ||
(State or other jurisdiction of incorporation) | Commission File Number: | (IRS Employer Identification No.) |
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)) |
Exhibit No. | Description |
99.1 | Press release issued by Air Transport Services Group, Inc. on March 5, 2014, relating to its results for the fourth quarter and year ended December 31, 2013. |
AIR TRANSPORT SERVICES GROUP, INC. | |
By: | /S/ W. JOSEPH PAYNE |
W. Joseph Payne | |
Sr. Vice President | |
Corporate General Counsel & Secretary | |
Date: | March 5, 2014 |
• | Revenues increased 2 percent to $157.0 million, compared with the fourth quarter of 2012, attributable mainly to increased airline operations for DHL in the U.S., and greater aircraft leasing revenues than a year ago. |
• | Results for the fourth quarter included a non-cash impairment charge of $52.6 million, related to the write-off of goodwill associated with ATSG’s 2007 purchase of Air Transport International. |
• | Excluding the impairment charge, fourth-quarter adjusted earnings from continuing operations were $9.7 million, or $0.15 per fully diluted share, down from fourth-quarter 2012 earnings of $12.2 million, or $0.19 per share. Including the impairment charge, ATSG’s loss from continuing operations for the fourth quarter of 2013 was $42.8 million, or $0.67 per share. |
• | Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization, also adjusted for the impairment charges and derivative gains) was $44.2 million, up 4 percent from the prior-year quarter. Adjusted EBITDA increased in each of the last two quarters of 2013, and totaled $157.5 million for the year, within the company’s previously announced targeted range. |
• | Higher interest rates and positive returns on pension assets resulted in a reduction of $135.3 million in post-retirement pension liabilities in 2013. |
• | Stockholder's equity increased to $369.0 million, or 23 percent from December 31, 2012. |
• | Adjusted earnings from continuing operations and adjusted EBITDA are non-GAAP financial measures. Both are defined and reconciled to comparable GAAP results in separate tables at the end of this release. |
CAM | Fourth Quarter Year | ||||||||||||||
($ in thousands) | 2013 | 2012 | 2013 | 2012 | |||||||||||
Revenues | $ | 41,922 | $ | 39,492 | $ | 160,342 | $ | 154,565 | |||||||
Pre-Tax Earnings | 16,228 | 17,680 | 66,208 | 68,499 |
• | Higher revenues for the fourth quarter and year were the result of five more CAM-owned Boeing 757 and 767 aircraft in service in the fourth quarter of 2013 than a year earlier. Lower pre-tax earnings from leasing operations reflect higher depreciation on the aircraft added, and fewer gains on sales of aircraft and engines than in the fourth quarter of 2012. |
• | At year-end 2013, ATSG owned 49 cargo aircraft in serviceable condition - 20 leased to external customers and 29 leased to CAM’s airline affiliates. A table reflecting cargo aircraft in service is included at the end of this release. |
• | The in-service fleet consisted of forty-two Boeing 767 freighters, four Boeing 757 freighters, and three 757 combis (combined passenger and main-deck cargo aircraft). |
• | CAM’s sixth 767-300 freighter entered service during the fourth quarter, and its two remaining DC-8 combis were retired at year-end. |
• | One 767-300 freighter and one 757 combi were completing inspections prior to deployment at year-end. The fourth 757 combi entered service for the U.S. military in February, and a seventh 767-300 freighter will enter service later this month. This marks the completion of the company’s fleet upgrade to an all-Boeing 767 and 757 fleet. |
ACMI Services | Fourth Quarter | Year | |||||||||||||||
($ in thousands) | 2013 | 2012 | 2013 | 2012 | |||||||||||||
Revenues | |||||||||||||||||
Airline services | $ | 100,399 | $ | 103,587 | $ | 376,592 | $ | 404,053 | |||||||||
Reimbursables | 16,756 | 17,264 | 67,912 | 74,940 | |||||||||||||
Total ACMI Services Revenues | 117,155 | 120,851 | 444,504 | 478,993 | |||||||||||||
Pre-Tax Loss | (56,576 | ) | (2,960 | ) | (78,186 | ) | (14,503 | ) | |||||||||
Impairment Charge | 52,585 | — | 52,585 | — | |||||||||||||
Pre-Tax Loss Excluding Impairment Charge | (3,991 | ) | (2,960 | ) | (25,601 | ) | (14,503 | ) |
• | Fourth-quarter airline services revenues decreased $3 million to $100 million, compared with the fourth quarter last year. The segment’s quarterly pre-tax loss excluding impairment charges increased to $4 million, from $3 million in 2012. International operations for major air network operators, and results from ad hoc holiday season operations in North America, were lower in 2013. |
• | ATI’s fourth quarter operating loss, while larger than a year ago, was smaller than in the third quarter of 2013 as its revenues increased nearly 9 percent. Newer 757 combis served all of ATI’s combi routes to remote U.S. military bases during the quarter, and ATI’s two remaining DC-8 combis were retired. A fourth 757 combi entered service early this year. |
• | During the first quarter of 2014, DHL ended ACMI agreements for three 767 freighters that had supported its Mideast networks. |
• | Since the third quarter of 2013, three 767 freighters have been deployed on ACMI routes offsetting the loss of the Mideast business. One for DHL connects Panama to DHL’s U.S. network, another operates for a European airline on a transatlantic route, and the third serves Caribbean routes for a Miami-based airline. |
• | ABX Air’s ACMI and CMI support for DHL in the U.S. continued to provide consistent revenues and earnings in the fourth quarter and 2013. |
• | Overall, ACMI block hours decreased 6 percent during the fourth quarter compared to the prior-year period, but increased 10 percent from the third quarter. |
Other Activities | Fourth Quarter Year | ||||||||||||||||
($ in thousands) | 2013 | 2012 | 2013 | 2012 | |||||||||||||
Revenues | $ | 34,050 | $ | 30,467 | $ | 117,292 | $ | 112,343 | |||||||||
Pre-Tax Earnings | 3,012 | 3,048 | 12,200 | 11,650 |
• | Revenues and earnings in the fourth quarter continued the positive trend of the third quarter. Aircraft maintenance operations, and good results from management of U.S. Postal Service sorting facilities, were improved from the fourth quarter of 2012. Aircraft maintenance capacity available to serve third-party customers is expected to expand beginning in the second quarter of 2014 with completion of a new hangar in Wilmington. |
Three Months Ended | Year Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
REVENUES | $ | 156,963 | $ | 154,552 | $ | 580,023 | $ | 607,438 | |||||||
OPERATING EXPENSES | |||||||||||||||
Salaries, wages and benefits | 48,612 | 48,817 | 175,383 | 184,644 | |||||||||||
Fuel | 11,219 | 13,966 | 49,376 | 53,928 | |||||||||||
Maintenance, materials and repairs | 25,270 | 22,405 | 97,053 | 97,540 | |||||||||||
Depreciation and amortization | 25,672 | 21,606 | 91,749 | 84,477 | |||||||||||
Rent | 6,940 | 7,251 | 27,468 | 25,970 | |||||||||||
Travel | 4,785 | 5,521 | 18,693 | 22,683 | |||||||||||
Landing and ramp | 2,940 | 4,150 | 11,204 | 15,973 | |||||||||||
Insurance | 1,750 | 1,936 | 6,216 | 7,716 | |||||||||||
Impairment of goodwill | 52,585 | — | 52,585 | — | |||||||||||
Other operating expenses | 11,197 | 7,911 | 37,111 | 35,819 | |||||||||||
190,970 | 133,563 | 566,838 | 528,750 | ||||||||||||
OPERATING INCOME (LOSS) | (34,007 | ) | 20,989 | 13,185 | 78,688 | ||||||||||
OTHER INCOME (EXPENSE) | |||||||||||||||
Interest income | 18 | 32 | 74 | 136 | |||||||||||
Interest expense | (3,749 | ) | (3,497 | ) | (14,249 | ) | (14,383 | ) | |||||||
Net gain on derivative instruments | 206 | 923 | 631 | 1,879 | |||||||||||
(3,525 | ) | (2,542 | ) | (13,544 | ) | (12,368 | ) | ||||||||
EARNINGS (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | (37,532 | ) | 18,447 | (359 | ) | 66,320 | |||||||||
INCOME TAX EXPENSE | (5,308 | ) | (6,236 | ) | (19,266 | ) | (24,672 | ) | |||||||
EARNINGS (LOSS) FROM CONTINUING OPERATIONS | (42,840 | ) | 12,211 | (19,625 | ) | 41,648 | |||||||||
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX | (1 | ) | (198 | ) | (3 | ) | (774 | ) | |||||||
NET EARNINGS (LOSS) | $ | (42,841 | ) | $ | 12,013 | $ | (19,628 | ) | $ | 40,874 | |||||
EARNINGS (LOSS) PER SHARE - Basic | |||||||||||||||
Continuing operations | $ | (0.67 | ) | $ | 0.19 | $ | (0.31 | ) | $ | 0.66 | |||||
Discontinued operations | — | — | — | (0.02 | ) | ||||||||||
NET EARNINGS (LOSS) PER SHARE | $ | (0.67 | ) | $ | 0.19 | $ | (0.31 | ) | $ | 0.64 | |||||
EARNINGS (LOSS) PER SHARE - Diluted | |||||||||||||||
Continuing operations | $ | (0.67 | ) | $ | 0.19 | $ | (0.31 | ) | $ | 0.65 | |||||
Discontinued operations | — | — | — | (0.02 | ) | ||||||||||
NET EARNINGS (LOSS) PER SHARE | $ | (0.67 | ) | $ | 0.19 | $ | (0.31 | ) | $ | 0.63 | |||||
WEIGHTED AVERAGE SHARES | |||||||||||||||
Basic | 64,054 | 63,525 | 63,992 | 63,461 | |||||||||||
Diluted | 64,054 | 64,244 | 63,992 | 64,420 |
December 31, | December 31, | ||||||
2013 | 2012 | ||||||
ASSETS | |||||||
CURRENT ASSETS: | |||||||
Cash and cash equivalents | $ | 31,699 | $ | 15,442 | |||
Accounts receivable, net of allowance of $717 in 2013 and $749 in 2012 | 52,247 | 47,858 | |||||
Inventory | 9,050 | 9,430 | |||||
Prepaid supplies and other | 9,730 | 8,855 | |||||
Deferred income taxes | 13,957 | 19,154 | |||||
Aircraft and engines held for sale | 2,995 | 3,360 | |||||
TOTAL CURRENT ASSETS | 119,678 | 104,099 | |||||
Property and equipment, net | 838,172 | 818,924 | |||||
Other assets | 21,143 | 20,462 | |||||
Pension assets, net of obligations | 14,855 | — | |||||
Intangibles | 4,896 | 5,146 | |||||
Goodwill | 34,395 | 86,980 | |||||
TOTAL ASSETS | $ | 1,033,139 | $ | 1,035,611 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
CURRENT LIABILITIES: | |||||||
Accounts payable | $ | 34,818 | $ | 36,521 | |||
Accrued salaries, wages and benefits | 23,163 | 22,917 | |||||
Accrued expenses | 9,695 | 8,502 | |||||
Current portion of debt obligations | 23,721 | 21,265 | |||||
Unearned revenue | 8,733 | 10,311 | |||||
TOTAL CURRENT LIABILITIES | 100,130 | 99,516 | |||||
Long term debt | 360,794 | 343,216 | |||||
Post-retirement obligations | 30,638 | 185,097 | |||||
Other liabilities | 62,740 | 62,104 | |||||
Deferred income taxes | 109,869 | 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; 64,618,305 and 64,130,056 shares issued and outstanding in 2013 and 2012, respectively | 646 | 641 | |||||
Additional paid-in capital | 524,953 | 523,087 | |||||
Accumulated deficit | (126,813 | ) | (107,185 | ) | |||
Accumulated other comprehensive loss | (29,818 | ) | (117,287 | ) | |||
TOTAL STOCKHOLDERS’ EQUITY | 368,968 | 299,256 | |||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 1,033,139 | $ | 1,035,611 |
Three Months Ended | Year Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Revenues | |||||||||||||||
CAM | $ | 41,922 | $ | 39,492 | $ | 160,342 | $ | 154,565 | |||||||
ACMI Services | |||||||||||||||
Airline services | 100,399 | 103,587 | 376,592 | 404,053 | |||||||||||
Reimbursables | 16,756 | 17,264 | 67,912 | 74,940 | |||||||||||
Total ACMI Services | 117,155 | 120,851 | 444,504 | 478,993 | |||||||||||
Other Activities | 34,050 | 30,467 | 117,292 | 112,343 | |||||||||||
Total Revenues | 193,127 | 190,810 | 722,138 | 745,901 | |||||||||||
Eliminate internal revenues | (36,164 | ) | (36,258 | ) | (142,115 | ) | (138,463 | ) | |||||||
Customer Revenues | $ | 156,963 | $ | 154,552 | $ | 580,023 | $ | 607,438 | |||||||
Pre-tax Earnings (Loss) from Continuing Operations | |||||||||||||||
CAM, inclusive of interest expense | 16,228 | 17,680 | 66,208 | 68,499 | |||||||||||
ACMI Services | (3,991 | ) | (2,960 | ) | (25,601 | ) | (14,503 | ) | |||||||
Other Activities | 3,012 | 3,048 | 12,200 | 11,650 | |||||||||||
Goodwill impairment charge | (52,585 | ) | — | (52,585 | ) | — | |||||||||
Net, unallocated interest expense | (402 | ) | (244 | ) | (1,212 | ) | (1,205 | ) | |||||||
Net gain on derivative instruments | 206 | 923 | 631 | 1,879 | |||||||||||
Total Pre-tax Earnings (loss) | $ | (37,532 | ) | $ | 18,447 | $ | (359 | ) | $ | 66,320 | |||||
Adjustments to Pre-tax Earnings | |||||||||||||||
Add goodwill impairment charge | 52,585 | — | 52,585 | — | |||||||||||
Less net gain on derivative instruments | (206 | ) | (923 | ) | (631 | ) | (1,879 | ) | |||||||
Adjusted Pre-tax Earnings | $ | 14,847 | $ | 17,524 | $ | 51,595 | $ | 64,441 |
Three Months Ended | Year Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Earnings (Loss) from Continuing Operations Before Income Taxes | $ | (37,532 | ) | $ | 18,447 | $ | (359 | ) | $ | 66,320 | |||||
Interest Income | (18 | ) | (32 | ) | (74 | ) | (136 | ) | |||||||
Interest Expense | 3,749 | 3,497 | 14,249 | 14,383 | |||||||||||
Depreciation and Amortization | 25,672 | 21,606 | 91,749 | 84,477 | |||||||||||
EBITDA from Continuing Operations | $ | (8,129 | ) | $ | 43,518 | $ | 105,565 | $ | 165,044 | ||||||
Add goodwill impairment charge | 52,585 | — | 52,585 | — | |||||||||||
Less net gain on derivative instruments | (206 | ) | (923 | ) | (631 | ) | (1,879 | ) | |||||||
Adjusted EBITDA from Continuing Operations | $ | 44,250 | $ | 42,595 | $ | 157,519 | $ | 163,165 |
Three Months Ended | Year Ended | ||||||||||||||||||||
December 31, 2013 | December 31, 2013 | ||||||||||||||||||||
Per Share | Per Share | ||||||||||||||||||||
Earnings | Basic | Diluted | Earnings | Basic | Diluted | ||||||||||||||||
Earnings (loss) from continuing operations | (42,840 | ) | $ | (0.67 | ) | $ | (0.67 | ) | (19,625 | ) | $ | (0.31 | ) | $ | (0.31 | ) | |||||
Effect of goodwill impairment charge | 52,585 | 0.82 | 0.82 | 52,585 | 0.83 | 0.82 | |||||||||||||||
Adjusted earnings from continuing operations | 9,745 | $ | 0.15 | $ | 0.15 | 32,960 | $ | 0.52 | $ | 0.51 | |||||||||||
Weighted Average Shares | 64,054 | 65,004 | 63,992 | 64,857 |
Aircraft Types | ||||||||||||||||||
December 31, | December 31, | December 31, | ||||||||||||||||
2012 | 2013 | 2014 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 | 8 | 6 | 2 | 9 | 7 | 2 | |||||||||
B757-200 | 3 | 3 | — | 4 | 4 | — | 4 | 4 | — | |||||||||
B757 Combi | — | — | — | 3 | 3 | — | 4 | 4 | — | |||||||||
DC-8 Combi | 4 | 4 | — | — | — | — | — | — | — | |||||||||
Total Aircraft In-Service | 54 | 48 | 6 | 55 | 49 | 6 | 57 | 51 | 6 | |||||||||
Owned Aircraft In Serviceable Condition | ||||||||||||||||||
December 31, | December 31, | December 31, | ||||||||||||||||
2012 | 2013 | 2014 Projected | ||||||||||||||||
ATSG airlines | 28 | 29 | 24-30 | |||||||||||||||
External customers | 20 | 20 | 21-27 | |||||||||||||||
48 | 49 | |||||||||||||||||
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