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 August 5, 2014, relating to its results for the second quarter ended June 30, 2014. |
99.2 | Press release issued by Air Transport Services Group, Inc. on August 5, 2014, relating to the purchase of two Boeing 767-300ER freighter aircraft. |
99.3 | Press release issued by Air Transport Services Group, Inc. on August 5, 2014, relating to Board authorization to repurchase up to $50 million of its common shares. |
AIR TRANSPORT SERVICES GROUP, INC. | |
By: | /S/ W. JOSEPH PAYNE |
W. Joseph Payne | |
Sr. Vice President | |
Corporate General Counsel & Secretary | |
Date: | August 5, 2014 |
• | Revenues were $149.6 million, up $10.7 million, or 8 percent from a year ago. Excluding revenues from reimbursable expenses, revenues increased $4.8 million, or 4 percent. The year-over-year gain stemmed from an improvement in combi revenue from the U.S. military and more aircraft maintenance services performed for external customers. |
• | Pre-tax earnings from continuing operations increased 33 percent to $14.7 million. Sharp improvement in the profitability of ATSG's airline operations more than offset margin reductions in ATSG's aircraft leasing business, which incurred greater costs without compensating revenues while preparing 767 freighters for redeployment to external lease customers. |
• | Net earnings from continuing operations of $9.3 million, or $0.14 per share, were up 34 percent from $6.9 million, or $0.11 per share a year ago. The Company has operating loss carryforwards for U.S. federal income tax purposes that offset its federal income tax liabilities. As a result, ATSG does not expect to pay significant federal income taxes until 2016 or later. |
• | Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization, also adjusted for the effect of derivative transactions) was $45.3 million, up 26 percent from $35.9 million in the prior-year quarter, and up 17 percent from $38.8 million in the first quarter of 2014. Adjusted EBITDA is a non-GAAP financial measure, defined and reconciled to comparable GAAP results in separate tables at the end of this release. |
CAM | Second Quarter | ||||||||
($ in thousands) | 2014 | 2013 | |||||||
Revenues | $ | 40,590 | $ | 39,362 | |||||
Pre-Tax Earnings | 10,667 | 17,214 |
• | Lower pre-tax earnings from leasing operations reflect a $5.5 million increase in depreciation from additional and newer aircraft, including four Boeing 757 combis (combined passenger and main-deck cargo aircraft) that offer significant operating cost savings compared with the DC-8s they replaced. At the same time, CAM's costs to prepare aircraft for redeployment to lessees, and the associated loss of lease revenues from CAM's airline affiliates for those aircraft, reduced its second-quarter earnings by about $1.5 million. |
• | At June 30, CAM owned 51 Boeing cargo aircraft in serviceable condition. Four CAM-owned 757 combis have entered service since the first one was deployed in June 2013, and three DC-8 combis were retired, including one that was removed at the end of the second quarter last year. One more 767-300 freighter was added earlier this year. A table reflecting cargo aircraft in service is included at the end of this release. |
• | CAM delivered the first of two 767-200 freighters to Cargojet in June under a dry-lease agreement. It expects to deliver four more 767 freighters this year, including two 767-300s to Amerijet and another 767-200 to Cargojet this summer. Amerijet also extended for 18 months the dry-lease agreements for two of the three 767-200s that it currently leases from CAM. Finally, West Atlantic of Sweden is expected to lease a 767 freighter from CAM later this quarter. |
• | When fully implemented, the new arrangements with Amerijet, Cargojet and West Atlantic are expected to expand the number of CAM aircraft leased to external customers from 21 to 25. |
ACMI Services | Second Quarter | ||||||||
($ in thousands) | 2014 | 2013 | |||||||
Revenues | |||||||||
Airline services | $ | 88,657 | $ | 89,920 | |||||
Reimbursables | 22,647 | 16,684 | |||||||
Total ACMI Services Revenues | 111,304 | 106,604 | |||||||
Pre-Tax Earnings (Loss) | 309 | (9,093 | ) |
• | A pre-tax profit in the second quarter contrasts with losses of $9 million a year ago and $7 million in the first quarter of this year. Principal factors were reductions in personnel costs including pension expense, fewer heavy maintenance checks than in the prior periods, stronger results from combi operations for the U.S. Military, and lower lease costs compared with the second quarter last year. |
• | ACMI block hours decreased 6 percent compared with the prior-year quarter, principally reflecting reduced operations for DHL in the Mideast that ended early this year. |
Other Activities | Second Quarter | ||||||||
($ in thousands) | 2014 | 2013 | |||||||
Revenues | $ | 36,493 | $ | 26,951 | |||||
Pre-Tax Earnings | 4,108 | 2,607 |
• | A $1.5 million increase in pre-tax earnings was driven largely by a $5.8 million gain in revenues from external customers at AMES. They also supported CAM's efforts to prepare its freighters during the second quarter for new dry lease assignments. A new two-bay, 105,000 square foot hangar opened in Wilmington in June, which will support AMES's growth. |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
REVENUES | $ | 149,618 | $ | 138,904 | $ | 293,211 | $ | 282,183 | |||||||
OPERATING EXPENSES | |||||||||||||||
Salaries, wages and benefits | 40,895 | 41,964 | 83,960 | 85,273 | |||||||||||
Maintenance, materials and repairs | 23,168 | 25,005 | 48,047 | 47,139 | |||||||||||
Depreciation and amortization | 27,142 | 21,765 | 52,121 | 42,685 | |||||||||||
Fuel | 14,014 | 12,440 | 26,274 | 26,801 | |||||||||||
Rent | 6,924 | 6,791 | 14,234 | 13,570 | |||||||||||
Travel | 4,419 | 4,772 | 8,992 | 9,499 | |||||||||||
Landing and ramp | 2,576 | 1,972 | 5,314 | 6,037 | |||||||||||
Insurance | 1,573 | 1,396 | 2,778 | 2,907 | |||||||||||
Other operating expenses | 10,790 | 8,630 | 19,538 | 17,690 | |||||||||||
131,501 | 124,735 | 261,258 | 251,601 | ||||||||||||
OPERATING INCOME | 18,117 | 14,169 | 31,953 | 30,582 | |||||||||||
OTHER INCOME (EXPENSE) | |||||||||||||||
Interest income | 24 | 18 | 43 | 39 | |||||||||||
Interest expense | (3,481 | ) | (3,554 | ) | (7,304 | ) | (6,686 | ) | |||||||
Net gain on derivative instruments | 31 | 452 | 330 | 742 | |||||||||||
(3,426 | ) | (3,084 | ) | (6,931 | ) | (5,905 | ) | ||||||||
EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | 14,691 | 11,085 | 25,022 | 24,677 | |||||||||||
INCOME TAX EXPENSE | (5,393 | ) | (4,170 | ) | (9,202 | ) | (9,261 | ) | |||||||
EARNINGS FROM CONTINUING OPERATIONS | 9,298 | 6,915 | 15,820 | 15,416 | |||||||||||
EARNINGS (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAX | 211 | (1 | ) | 422 | (2 | ) | |||||||||
NET EARNINGS | $ | 9,509 | $ | 6,914 | $ | 16,242 | $ | 15,414 | |||||||
EARNINGS PER SHARE - Basic | |||||||||||||||
Continuing operations | $ | 0.14 | $ | 0.11 | $ | 0.25 | $ | 0.24 | |||||||
Discontinued operations | 0.01 | — | — | — | |||||||||||
NET EARNINGS PER SHARE | $ | 0.15 | $ | 0.11 | $ | 0.25 | $ | 0.24 | |||||||
EARNINGS PER SHARE - Diluted | |||||||||||||||
Continuing operations | $ | 0.14 | $ | 0.11 | $ | 0.24 | $ | 0.24 | |||||||
Discontinued operations | 0.01 | — | 0.01 | — | |||||||||||
NET EARNINGS PER SHARE | $ | 0.15 | $ | 0.11 | $ | 0.25 | $ | 0.24 | |||||||
WEIGHTED AVERAGE SHARES | |||||||||||||||
Basic | 64,285 | 64,050 | 64,217 | 63,931 | |||||||||||
Diluted | 65,207 | 64,859 | 65,174 | 64,692 |
June 30, | December 31, | ||||||
2014 | 2013 | ||||||
ASSETS | |||||||
CURRENT ASSETS: | |||||||
Cash and cash equivalents | $ | 23,763 | $ | 31,699 | |||
Accounts receivable, net of allowance of $863 in 2014 and $717 in 2013 | 57,126 | 52,247 | |||||
Inventory | 9,777 | 9,050 | |||||
Prepaid supplies and other | 12,810 | 9,730 | |||||
Deferred income taxes | 13,957 | 13,957 | |||||
Aircraft and engines held for sale | 1,015 | 2,995 | |||||
TOTAL CURRENT ASSETS | 118,448 | 119,678 | |||||
Property and equipment, net | 809,810 | 838,172 | |||||
Other assets | 38,214 | 21,143 | |||||
Pension assets, net of obligations | 18,862 | 14,855 | |||||
Intangibles | 4,755 | 4,896 | |||||
Goodwill | 34,395 | 34,395 | |||||
TOTAL ASSETS | $ | 1,024,484 | $ | 1,033,139 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
CURRENT LIABILITIES: | |||||||
Accounts payable | $ | 33,971 | $ | 34,818 | |||
Accrued salaries, wages and benefits | 21,061 | 23,163 | |||||
Accrued expenses | 10,121 | 9,695 | |||||
Current portion of debt obligations | 24,027 | 23,721 | |||||
Unearned revenue | 9,487 | 8,733 | |||||
TOTAL CURRENT LIABILITIES | 98,667 | 100,130 | |||||
Long term debt | 328,103 | 360,794 | |||||
Post-retirement obligations | 29,985 | 30,638 | |||||
Other liabilities | 64,134 | 62,740 | |||||
Deferred income taxes | 118,335 | 109,869 | |||||
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; 64,939,895 and 64,618,305 shares issued and outstanding in 2014 and 2013, respectively | 649 | 646 | |||||
Additional paid-in capital | 526,023 | 524,953 | |||||
Accumulated deficit | (110,571 | ) | (126,813 | ) | |||
Accumulated other comprehensive loss | (30,841 | ) | (29,818 | ) | |||
TOTAL STOCKHOLDERS’ EQUITY | 385,260 | 368,968 | |||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 1,024,484 | $ | 1,033,139 |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Revenues | |||||||||||||||
CAM | $ | 40,590 | $ | 39,362 | $ | 81,225 | $ | 78,331 | |||||||
ACMI Services | |||||||||||||||
Airline services | 88,657 | 89,920 | 176,164 | 183,077 | |||||||||||
Reimbursables | 22,647 | 16,684 | 43,736 | 34,843 | |||||||||||
Total ACMI Services | 111,304 | 106,604 | 219,900 | 217,920 | |||||||||||
Other Activities | 36,493 | 26,951 | 63,301 | 53,205 | |||||||||||
Total Revenues | 188,387 | 172,917 | 364,426 | 349,456 | |||||||||||
Eliminate internal revenues | (38,769 | ) | (34,013 | ) | (71,215 | ) | (67,273 | ) | |||||||
Customer Revenues | $ | 149,618 | $ | 138,904 | $ | 293,211 | $ | 282,183 | |||||||
Pre-tax Earnings from Continuing Operations | |||||||||||||||
CAM, inclusive of interest expense | 10,667 | 17,214 | 25,107 | 34,087 | |||||||||||
ACMI Services | 309 | (9,093 | ) | (6,737 | ) | (14,497 | ) | ||||||||
Other Activities | 4,108 | 2,607 | 7,125 | 4,788 | |||||||||||
Net, unallocated interest expense | (424 | ) | (95 | ) | (803 | ) | (443 | ) | |||||||
Net gain on derivative instruments | 31 | 452 | 330 | 742 | |||||||||||
Total Pre-tax Earnings | $ | 14,691 | $ | 11,085 | $ | 25,022 | $ | 24,677 | |||||||
Adjustments to Pre-tax Earnings | |||||||||||||||
Less net gain on derivative instruments | (31 | ) | (452 | ) | (330 | ) | (742 | ) | |||||||
Adjusted Pre-tax Earnings | $ | 14,660 | $ | 10,633 | $ | 24,692 | $ | 23,935 |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Earnings from Continuing Operations Before Income Taxes | $ | 14,691 | $ | 11,085 | $ | 25,022 | $ | 24,677 | |||||||
Interest Income | (24 | ) | (18 | ) | (43 | ) | (39 | ) | |||||||
Interest Expense | 3,481 | 3,554 | 7,304 | 6,686 | |||||||||||
Depreciation and Amortization | 27,142 | 21,765 | 52,121 | 42,685 | |||||||||||
EBITDA from Continuing Operations | $ | 45,290 | $ | 36,386 | $ | 84,404 | $ | 74,009 | |||||||
Less net gain on derivative instruments | (31 | ) | (452 | ) | (330 | ) | (742 | ) | |||||||
Adjusted EBITDA from Continuing Operations | $ | 45,259 | $ | 35,934 | $ | 84,074 | $ | 73,267 |
Aircraft Types | ||||||||||||||||||
December 31, | June 30, | December 31, | ||||||||||||||||
2013 | 2014 | 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 | 8 | 6 | 2 | 9 | 7 | 2 | 9 | 9 | — | |||||||||
B757-200 | 4 | 4 | — | 4 | 4 | — | 4 | 4 | — | |||||||||
B757 Combi | 3 | 3 | — | 4 | 4 | — | 4 | 4 | — | |||||||||
Total Aircraft In-Service | 55 | 49 | 6 | 57 | 51 | 6 | 57 | 53 | 4 | |||||||||
Owned Aircraft In Serviceable Condition | ||||||||||||||||||
December 31, | June 30, | December 31, | ||||||||||||||||
2013 | 2014 | 2014 Projected | ||||||||||||||||
ATSG airlines | 29 | 26 | 27-28 | |||||||||||||||
External customers | 20 | 21 | 25-26 | |||||||||||||||
Staging/Unassigned | — | 4 | — | |||||||||||||||
49 | 51 | 53 | ||||||||||||||||
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