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 November 5, 2014, relating to its results for the third quarter ended September 30, 2014. |
AIR TRANSPORT SERVICES GROUP, INC. | |
By: | /S/ W. JOSEPH PAYNE |
W. Joseph Payne | |
Sr. Vice President | |
Corporate General Counsel & Secretary | |
Date: | November 5, 2014 |
• | Pre-tax earnings from continuing operations increased 25 percent to $15.6 million driven by a $7.0 million improvement in airline profitability compared with a year ago. |
• | Net earnings from continuing operations increased 23 percent to $9.6 million, or 15 cents per share, from $7.8 million, or 12 cents per share in the third quarter of 2013. Operating loss carryforwards for U.S. federal income tax purposes offset much of the company’s federal tax liabilities. ATSG does not expect to pay significant federal income taxes until 2016 or later. |
• | Revenues were $138.4 million, 2 percent lower than a year ago. Excluding revenues from reimbursable expenses, revenues decreased $4.8 million, or 4 percent. Loss of revenues from Mideast operations offset additional revenues from aircraft dry leases. |
• | Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization, also adjusted for the effect of derivative transactions) increased by 11 percent to $44.6 million. Adjusted EBITDA is a non-GAAP financial measure, defined and reconciled to comparable GAAP results in separate tables at the end of this release. |
CAM | Third Quarter | ||||||||
($ in thousands) | 2014 | 2013 | |||||||
Revenues | $ | 40,226 | $ | 40,089 | |||||
Pre-Tax Earnings | 13,574 | 15,893 |
• | CAM’s third-quarter revenues from external customers increased $2.9 million versus a year ago. Pre-tax earnings reflect the benefit of those additional revenues, offset by a $3.0 million increase in depreciation from additional and newer aircraft placed in service since the end of the third quarter last year and by costs to prepare aircraft for redeployment to lessees. |
• | At September 30, 2014, CAM owned 53 Boeing cargo aircraft in serviceable condition, including two 767-300 freighters purchased at the end of the quarter. One CAM-owned 757 combi and one other 767-300 freighter were added in the first quarter. A table reflecting cargo aircraft in service is included at the end of this release. |
• | CAM delivered three 767 freighters to dry-lease customers Amerijet and Cargojet during the third quarter under agreements signed with each company in May. The three are in addition to one 767 freighter delivered to Cargojet in June. One other 767 freighter now operating in Europe is expected to be converted to a dry lease in 2015. |
ACMI Services | Third Quarter | ||||||||
($ in thousands) | 2014 | 2013 | |||||||
Revenues | |||||||||
Airline services | $ | 84,172 | $ | 93,116 | |||||
Reimbursables | 18,681 | 16,313 | |||||||
Total ACMI Services Revenues | 102,853 | 109,429 | |||||||
Pre-Tax Earnings (Loss) | (126 | ) | (7,113 | ) |
• | 2013 revenues from airline services included revenues for operating three 767 aircraft and related crews in DHL’s network in the Mideast. That assignment ended in February 2014. Third-quarter revenues from combi operations for the U.S. Military exceeded year-ago levels. |
• | Pre-tax profitability improved sharply because third-quarter airline operating expenses, excluding reimbursable expense, declined $15.9 million. Principal factors were reductions in employee wages and benefit costs due to workforce reductions and lower pension expense, lower employee travel costs and aircraft landing fees, and lower costs for newer 757 combi aircraft, plus lower unreimbursed maintenance expense. |
• | Since May, DHL has ended short-term lease agreements with ABX Air for three CAM-owned 767s that ABX Air had been operating in DHL’s U.S. market. Two other DHL-owned 767s that ABX Air has leased and operated for DHL in the U.S. will be returned to DHL near the end of the year. An additional two DHL-owned 767s will be returned during the first quarter of 2015. |
• | Third-quarter ACMI block hours were flat with a year ago, excluding those from Mideast operations in the prior-year period. |
• | Two CAM freighters leased to ATSG’s airlines are underutilized, compared with four a year ago and five at the end of the first quarter this year. All available aircraft are expected to be in operation for customers during the fourth-quarter peak holiday season, which is expected to yield a pre-tax profit for the segment for the 2014 fourth quarter and second half. |
Other Activities | Third Quarter | ||||||||
($ in thousands) | 2014 | 2013 | |||||||
Revenues | $ | 42,055 | $ | 30,037 | |||||
Pre-Tax Earnings | 2,010 | 4,400 |
• | Revenues from external customers were $15.4 million, up 9 percent. Pre-tax earnings declined primarily because of higher personnel costs, including more ramp-up costs for the expanded Wilmington hangar facilities and higher post-retirement benefits. |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
REVENUES | $ | 138,443 | $ | 140,877 | $ | 431,654 | $ | 423,060 | |||||||
OPERATING EXPENSES | |||||||||||||||
Salaries, wages and benefits | 39,096 | 41,498 | 123,056 | 126,771 | |||||||||||
Maintenance, materials and repairs | 17,082 | 24,644 | 65,129 | 71,783 | |||||||||||
Depreciation and amortization | 26,307 | 23,392 | 78,428 | 66,077 | |||||||||||
Fuel | 14,059 | 11,356 | 40,333 | 38,157 | |||||||||||
Rent | 6,689 | 6,958 | 20,923 | 20,528 | |||||||||||
Travel | 4,189 | 4,409 | 13,181 | 13,908 | |||||||||||
Landing and ramp | 2,450 | 2,227 | 7,764 | 8,264 | |||||||||||
Insurance | 1,109 | 1,559 | 3,887 | 4,466 | |||||||||||
Other operating expenses | 9,175 | 8,224 | 28,713 | 25,914 | |||||||||||
120,156 | 124,267 | 381,414 | 375,868 | ||||||||||||
OPERATING INCOME | 18,287 | 16,610 | 50,240 | 47,192 | |||||||||||
OTHER INCOME (EXPENSE) | |||||||||||||||
Interest income | 23 | 17 | 66 | 56 | |||||||||||
Interest expense | (3,309 | ) | (3,814 | ) | (10,613 | ) | (10,500 | ) | |||||||
Net gain on derivative instruments | 639 | (317 | ) | 969 | 425 | ||||||||||
(2,647 | ) | (4,114 | ) | (9,578 | ) | (10,019 | ) | ||||||||
EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | 15,640 | 12,496 | 40,662 | 37,173 | |||||||||||
INCOME TAX EXPENSE | (6,045 | ) | (4,697 | ) | (15,247 | ) | (13,958 | ) | |||||||
EARNINGS FROM CONTINUING OPERATIONS | 9,595 | 7,799 | 25,415 | 23,215 | |||||||||||
EARNINGS (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAX | 312 | — | 734 | (2 | ) | ||||||||||
NET EARNINGS | $ | 9,907 | $ | 7,799 | $ | 26,149 | $ | 23,213 | |||||||
EARNINGS PER SHARE - Basic | |||||||||||||||
Continuing operations | $ | 0.15 | $ | 0.12 | $ | 0.40 | $ | 0.36 | |||||||
Discontinued operations | — | — | 0.01 | — | |||||||||||
NET EARNINGS PER SHARE | $ | 0.15 | $ | 0.12 | $ | 0.41 | $ | 0.36 | |||||||
EARNINGS PER SHARE - Diluted | |||||||||||||||
Continuing operations | $ | 0.15 | $ | 0.12 | $ | 0.39 | $ | 0.36 | |||||||
Discontinued operations | — | — | 0.01 | — | |||||||||||
NET EARNINGS PER SHARE | $ | 0.15 | $ | 0.12 | $ | 0.40 | $ | 0.36 | |||||||
WEIGHTED AVERAGE SHARES | |||||||||||||||
Basic | 64,286 | 64,052 | 64,240 | 63,972 | |||||||||||
Diluted | 65,271 | 65,036 | 65,207 | 64,807 |
September 30, | December 31, | ||||||
2014 | 2013 | ||||||
ASSETS | |||||||
CURRENT ASSETS: | |||||||
Cash and cash equivalents | $ | 33,442 | $ | 31,699 | |||
Accounts receivable, net of allowance of $843 in 2014 and $717 in 2013 | 36,392 | 52,247 | |||||
Inventory | 11,936 | 9,050 | |||||
Prepaid supplies and other | 12,023 | 9,730 | |||||
Deferred income taxes | 13,957 | 13,957 | |||||
Aircraft and engines held for sale | 923 | 2,995 | |||||
TOTAL CURRENT ASSETS | 108,673 | 119,678 | |||||
Property and equipment, net | 850,715 | 838,172 | |||||
Other assets | 29,288 | 21,143 | |||||
Pension assets, net of obligations | 20,895 | 14,855 | |||||
Intangibles | 4,685 | 4,896 | |||||
Goodwill | 34,395 | 34,395 | |||||
TOTAL ASSETS | $ | 1,048,651 | $ | 1,033,139 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
CURRENT LIABILITIES: | |||||||
Accounts payable | $ | 29,803 | $ | 34,818 | |||
Accrued salaries, wages and benefits | 26,219 | 23,163 | |||||
Accrued expenses | 9,390 | 9,695 | |||||
Current portion of debt obligations | 24,184 | 23,721 | |||||
Unearned revenue | 11,692 | 8,733 | |||||
TOTAL CURRENT LIABILITIES | 101,288 | 100,130 | |||||
Long term debt | 347,447 | 360,794 | |||||
Post-retirement obligations | 24,833 | 30,638 | |||||
Other liabilities | 56,653 | 62,740 | |||||
Deferred income taxes | 123,890 | 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 | 526,845 | 524,953 | |||||
Accumulated deficit | (100,664 | ) | (126,813 | ) | |||
Accumulated other comprehensive loss | (32,290 | ) | (29,818 | ) | |||
TOTAL STOCKHOLDERS’ EQUITY | 394,540 | 368,968 | |||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 1,048,651 | $ | 1,033,139 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Revenues | |||||||||||||||
CAM | $ | 40,226 | $ | 40,089 | $ | 121,451 | $ | 118,420 | |||||||
ACMI Services | |||||||||||||||
Airline services | 84,172 | 93,116 | 260,336 | 276,193 | |||||||||||
Reimbursables | 18,681 | 16,313 | 62,417 | 51,156 | |||||||||||
Total ACMI Services | 102,853 | 109,429 | 322,753 | 327,349 | |||||||||||
Other Activities | 42,055 | 30,037 | 105,356 | 83,242 | |||||||||||
Total Revenues | 185,134 | 179,555 | 549,560 | 529,011 | |||||||||||
Eliminate internal revenues | (46,691 | ) | (38,678 | ) | (117,906 | ) | (105,951 | ) | |||||||
Customer Revenues | $ | 138,443 | $ | 140,877 | $ | 431,654 | $ | 423,060 | |||||||
Pre-tax Earnings from Continuing Operations | |||||||||||||||
CAM, inclusive of interest expense | 13,574 | 15,893 | 38,681 | 49,980 | |||||||||||
ACMI Services | (126 | ) | (7,113 | ) | (6,863 | ) | (21,610 | ) | |||||||
Other Activities | 2,010 | 4,400 | 9,135 | 9,188 | |||||||||||
Net, unallocated interest expense | (457 | ) | (367 | ) | (1,260 | ) | (810 | ) | |||||||
Net gain (loss) on derivative instruments | 639 | (317 | ) | 969 | 425 | ||||||||||
Total Pre-tax Earnings | $ | 15,640 | $ | 12,496 | $ | 40,662 | $ | 37,173 | |||||||
Adjustments to Pre-tax Earnings | |||||||||||||||
Less net (gain) loss on derivative instruments | (639 | ) | 317 | (969 | ) | (425 | ) | ||||||||
Adjusted Pre-tax Earnings | $ | 15,001 | $ | 12,813 | $ | 39,693 | $ | 36,748 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Earnings from Continuing Operations Before Income Taxes | $ | 15,640 | $ | 12,496 | $ | 40,662 | $ | 37,173 | |||||||
Interest Income | (23 | ) | (17 | ) | (66 | ) | (56 | ) | |||||||
Interest Expense | 3,309 | 3,814 | 10,613 | 10,500 | |||||||||||
Depreciation and Amortization | 26,307 | 23,392 | 78,428 | 66,077 | |||||||||||
EBITDA from Continuing Operations | $ | 45,233 | $ | 39,685 | $ | 129,637 | $ | 113,694 | |||||||
Less net (gain) loss on derivative instruments | (639 | ) | 317 | (969 | ) | (425 | ) | ||||||||
Adjusted EBITDA from Continuing Operations | $ | 44,594 | $ | 40,002 | $ | 128,668 | $ | 113,269 |
Aircraft Types | ||||||||||||||||||
December 31, | September 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 | 38 | 36 | 2 | |||||||||
B767-300 | 8 | 6 | 2 | 9 | 9 | — | 10 | 9 | 1 | |||||||||
B757-200 | 4 | 4 | — | 4 | 4 | — | 4 | 4 | — | |||||||||
B757 Combi | 3 | 3 | — | 4 | 4 | — | 4 | 4 | — | |||||||||
Total Aircraft In-Service | 55 | 49 | 6 | 57 | 53 | 4 | 56 | 53 | 3 | |||||||||
Owned Aircraft In Serviceable Condition | ||||||||||||||||||
December 31, | September 30, | December 31, | ||||||||||||||||
2013 | 2014 | 2014 Projected | ||||||||||||||||
ATSG airlines | 29 | 28 | 27-28 | |||||||||||||||
External customers | 20 | 24 | 24-25 | |||||||||||||||
Staging/Unassigned | — | 1 | 1 | |||||||||||||||
49 | 53 | 53 | ||||||||||||||||
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