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, 2015, relating to its results for the third quarter ended September 30, 2015. |
AIR TRANSPORT SERVICES GROUP, INC. | |
By: | /S/ W. JOSEPH PAYNE |
W. Joseph Payne | |
Sr. Vice President | |
Corporate General Counsel & Secretary | |
Date: | November 5, 2015 |
• | Revenues increased three percent to $142.3 million, including a six percent increase in freighter aircraft leasing revenues. Excluding revenues from reimbursements, third-quarter 2015 revenues increased 6 percent. |
• | Both pre-tax and net earnings from continuing operations decreased 34 percent, reflecting the revenue and expense effects of aircraft transitioning between contracts and scheduled maintenance activities during the third quarter. Net earnings from continuing operations were $6.3 million, or $0.10 per share for the quarter, down from $9.6 million, or $0.15 per share in the third quarter of 2014. |
• | 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 2017 or later. |
• | Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization, also adjusted for the effect of derivative transactions) was $43.7 million, down two percent from a year ago. Adjusted EBITDA is a non-GAAP financial measure, defined and reconciled to comparable GAAP results in separate tables at the end of this release. |
CAM | Third Quarter | Nine Months | |||||||||||||
($ in thousands) | 2015 | 2014 | 2015 | 2014 | |||||||||||
Revenues | $ | 42,574 | $ | 40,226 | $ | 131,060 | $ | 121,451 | |||||||
Pre-Tax Earnings | $ | 13,482 | $ | 13,574 | $ | 42,361 | $ | 38,681 |
• | CAM’s third-quarter revenues from external customers increased $3.4 million versus a year ago. Pre-tax earnings reflect the benefit of those additional revenues, offset by higher depreciation for aircraft placed in service since September 2014, and by costs for aircraft transitioning between customer arrangements. |
• | In the fourth quarter, CAM expects to deploy three 767 freighters under new leases to DHL: two 767-300s under eight-year leases, and one 767-200 leased through March 2019. Two 767-200s are expected to go to West Atlantic in Europe under multi-year dry leases. |
• | At September 30, 2015, CAM owned 54 Boeing cargo aircraft in serviceable condition, and two 767-300 aircraft undergoing freighter modification for fourth-quarter lease deployments to DHL. A table reflecting cargo aircraft in service is included at the end of this release. |
ACMI Services | Third Quarter | Nine Months | ||||||||||||||
($ in thousands) | 2015 | 2014 | 2015 | 2014 | ||||||||||||
Revenues | ||||||||||||||||
Airline services | $ | 93,632 | $ | 92,237 | $ | 289,224 | $ | 292,042 | ||||||||
Reimbursables | $ | 6,286 | $ | 10,616 | $ | 20,054 | $ | 30,711 | ||||||||
Total ACMI Services Revenues | $ | 99,918 | $ | 102,853 | $ | 309,278 | $ | 322,753 | ||||||||
Pre-Tax Earnings (Loss) | $ | (4,914 | ) | $ | (126 | ) | $ | (6,359 | ) | $ | (6,863 | ) |
• | Third-quarter revenues from airline services increased two percent, even as our airlines operated five fewer aircraft than the prior-year quarter as we allocated more aircraft to external leasing customers. Aircraft utilization improved for non-DHL customers as CMI operations for DHL declined. |
• | Pre-tax profitability for the airlines declined for the quarter because of increased scheduled maintenance services, expenses to prepare express-network services for new customers, and a reduction in military flying due to an out-of-service runway in Greenland. |
• | One CAM-owned freighter leased to ATSG’s airlines was underutilized during the quarter. All are expected to be serving customers during the fourth-quarter peak holiday season. |
Other Activities | Third Quarter | Nine Months | ||||||||||||||
($ in thousands) | 2015 | 2014 | 2015 | 2014 | ||||||||||||
Revenues | $ | 38,398 | $ | 42,055 | $ | 106,183 | $ | 105,356 | ||||||||
Pre-Tax Earnings | $ | 2,077 | $ | 2,010 | $ | 6,993 | $ | 9,135 |
• | While aggregate revenues declined, revenues from external customers for our other businesses increased 29 percent, with increases in revenues from both aircraft maintenance and postal-center management services. Pre-tax earnings were up slightly, as maintenance-service margins were affected by preparations to support a new contract with Delta Air Lines. |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
REVENUES | $ | 142,305 | $ | 138,443 | $ | 437,683 | $ | 431,654 | |||||||
OPERATING EXPENSES | |||||||||||||||
Salaries, wages and benefits | 41,624 | 39,096 | 127,339 | 123,056 | |||||||||||
Depreciation and amortization | 30,754 | 26,307 | 91,147 | 78,428 | |||||||||||
Maintenance, materials and repairs | 24,655 | 17,082 | 71,341 | 65,129 | |||||||||||
Fuel | 12,029 | 14,059 | 35,082 | 40,333 | |||||||||||
Rent | 2,246 | 6,689 | 8,900 | 20,923 | |||||||||||
Travel | 3,989 | 4,189 | 12,754 | 13,181 | |||||||||||
Landing and ramp | 2,108 | 2,450 | 6,982 | 7,764 | |||||||||||
Insurance | 832 | 1,109 | 2,636 | 3,887 | |||||||||||
Other operating expenses | 11,151 | 9,175 | 31,262 | 28,713 | |||||||||||
129,388 | 120,156 | 387,443 | 381,414 | ||||||||||||
OPERATING INCOME | 12,917 | 18,287 | 50,240 | 50,240 | |||||||||||
OTHER INCOME (EXPENSE) | |||||||||||||||
Interest income | 18 | 23 | 64 | 66 | |||||||||||
Interest expense | (2,684 | ) | (3,309 | ) | (8,588 | ) | (10,613 | ) | |||||||
Net gain on derivative instruments | 96 | 639 | 347 | 969 | |||||||||||
(2,570 | ) | (2,647 | ) | (8,177 | ) | (9,578 | ) | ||||||||
EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | 10,347 | 15,640 | 42,063 | 40,662 | |||||||||||
INCOME TAX EXPENSE | (4,000 | ) | (6,045 | ) | (16,251 | ) | (15,247 | ) | |||||||
EARNINGS FROM CONTINUING OPERATIONS | 6,347 | 9,595 | 25,812 | 25,415 | |||||||||||
EARNINGS FROM DISCONTINUED OPERATIONS, NET OF TAX | 214 | 312 | 642 | 734 | |||||||||||
NET EARNINGS | $ | 6,561 | $ | 9,907 | $ | 26,454 | $ | 26,149 | |||||||
EARNINGS PER SHARE - Basic | |||||||||||||||
Continuing operations | $ | 0.10 | $ | 0.15 | $ | 0.40 | $ | 0.40 | |||||||
Discontinued operations | — | — | 0.01 | 0.01 | |||||||||||
NET EARNINGS PER SHARE | $ | 0.10 | $ | 0.15 | $ | 0.41 | $ | 0.41 | |||||||
EARNINGS PER SHARE - Diluted | |||||||||||||||
Continuing operations | $ | 0.10 | $ | 0.15 | $ | 0.40 | $ | 0.39 | |||||||
Discontinued operations | — | — | — | 0.01 | |||||||||||
NET EARNINGS PER SHARE | $ | 0.10 | $ | 0.15 | $ | 0.40 | $ | 0.40 | |||||||
WEIGHTED AVERAGE SHARES | |||||||||||||||
Basic | 64,239 | 64,286 | 64,411 | 64,240 | |||||||||||
Diluted | 65,171 | 65,271 | 65,341 | 65,207 |
September 30, | December 31, | ||||||
2015 | 2014 | ||||||
ASSETS | |||||||
CURRENT ASSETS: | |||||||
Cash and cash equivalents | $ | 14,861 | $ | 30,560 | |||
Accounts receivable, net of allowance of $360 in 2015 and $812 in 2014 | 39,160 | 43,513 | |||||
Inventory | 11,901 | 10,665 | |||||
Prepaid supplies and other | 13,552 | 12,613 | |||||
Deferred income taxes | 19,770 | 19,770 | |||||
TOTAL CURRENT ASSETS | 99,244 | 117,121 | |||||
Property and equipment, net | 868,897 | 847,268 | |||||
Other assets | 26,810 | 28,230 | |||||
Goodwill and acquired intangibles | 38,799 | 39,010 | |||||
TOTAL ASSETS | $ | 1,033,750 | $ | 1,031,629 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
CURRENT LIABILITIES: | |||||||
Accounts payable | $ | 50,018 | $ | 40,608 | |||
Accrued salaries, wages and benefits | 25,229 | 25,633 | |||||
Accrued expenses | 7,872 | 8,201 | |||||
Current portion of debt obligations | 29,565 | 24,344 | |||||
Unearned revenue | 14,051 | 12,914 | |||||
TOTAL CURRENT LIABILITIES | 126,735 | 111,700 | |||||
Long term debt | 279,782 | 319,750 | |||||
Post-retirement obligations | 78,323 | 92,050 | |||||
Other liabilities | 56,950 | 57,647 | |||||
Deferred income taxes | 120,632 | 102,993 | |||||
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; 64,519,363 and 64,854,950 shares issued and outstanding in 2015 and 2014, respectively | 645 | 649 | |||||
Additional paid-in capital | 521,107 | 526,669 | |||||
Accumulated deficit | (70,499 | ) | (96,953 | ) | |||
Accumulated other comprehensive loss | (79,925 | ) | (82,876 | ) | |||
TOTAL STOCKHOLDERS’ EQUITY | 371,328 | 347,489 | |||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 1,033,750 | $ | 1,031,629 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Revenues | |||||||||||||||
CAM | $ | 42,574 | $ | 40,226 | $ | 131,060 | $ | 121,451 | |||||||
ACMI Services | |||||||||||||||
Airline services | 93,632 | 92,237 | 289,224 | 292,042 | |||||||||||
Reimbursables | 6,286 | 10,616 | 20,054 | 30,711 | |||||||||||
Total ACMI Services | 99,918 | 102,853 | 309,278 | 322,753 | |||||||||||
Other Activities | 38,398 | 42,055 | 106,183 | 105,356 | |||||||||||
Total Revenues | 180,890 | 185,134 | 546,521 | 549,560 | |||||||||||
Eliminate internal revenues | (38,585 | ) | (46,691 | ) | (108,838 | ) | (117,906 | ) | |||||||
Customer Revenues | $ | 142,305 | $ | 138,443 | $ | 437,683 | $ | 431,654 | |||||||
Pre-tax Earnings from Continuing Operations | |||||||||||||||
CAM, inclusive of interest expense | 13,482 | 13,574 | 42,361 | 38,681 | |||||||||||
ACMI Services | (4,914 | ) | (126 | ) | (6,359 | ) | (6,863 | ) | |||||||
Other Activities | 2,077 | 2,010 | 6,993 | 9,135 | |||||||||||
Net, unallocated interest expense | (394 | ) | (457 | ) | (1,279 | ) | (1,260 | ) | |||||||
Net gain on derivative instruments | 96 | 639 | 347 | 969 | |||||||||||
Total Pre-tax Earnings | $ | 10,347 | $ | 15,640 | $ | 42,063 | $ | 40,662 | |||||||
Adjustments to Pre-tax Earnings | |||||||||||||||
Less net gain on derivative instruments | (96 | ) | (639 | ) | (347 | ) | (969 | ) | |||||||
Adjusted Pre-tax Earnings | $ | 10,251 | $ | 15,001 | $ | 41,716 | $ | 39,693 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Earnings from Continuing Operations Before Income Taxes | $ | 10,347 | $ | 15,640 | $ | 42,063 | $ | 40,662 | |||||||
Interest Income | (18 | ) | (23 | ) | (64 | ) | (66 | ) | |||||||
Interest Expense | 2,684 | 3,309 | 8,588 | 10,613 | |||||||||||
Depreciation and Amortization | 30,754 | 26,307 | 91,147 | 78,428 | |||||||||||
EBITDA from Continuing Operations | $ | 43,767 | $ | 45,233 | $ | 141,734 | $ | 129,637 | |||||||
Less net gain on derivative instruments | (96 | ) | (639 | ) | (347 | ) | (969 | ) | |||||||
Adjusted EBITDA from Continuing Operations | $ | 43,671 | $ | 44,594 | $ | 141,387 | $ | 128,668 |
Aircraft Types | ||||||||||||||||||
December 31, | September 30, | December 31, | ||||||||||||||||
2014 | 2015 | 2015 Projected | ||||||||||||||||
Operating | Operating | Operating | ||||||||||||||||
Total | Owned | Lease | Total | Owned | Lease | Total | Owned | Lease | ||||||||||
B767-200 | 38 | 36 | 2 | 36 | 36 | — | 36 | 36 | — | |||||||||
B767-300 | 10 | 9 | 1 | 10 | 10 | — | 12 | 12 | — | |||||||||
B757-200 | 4 | 4 | — | 5 | 4 | 1 | 5 | 4 | 1 | |||||||||
B757 Combi | 4 | 4 | — | 4 | 4 | — | 4 | 4 | — | |||||||||
Total Aircraft | 56 | 53 | 3 | 55 | 54 | 1 | 57 | 56 | 1 | |||||||||
Owned Aircraft In Serviceable Condition | ||||||||||||||||||
December 31, | September 30, | December 31, | ||||||||||||||||
2014 | 2015 | 2015 Projected | ||||||||||||||||
Dry leased without CMI | 11 | 11 | 14 | |||||||||||||||
Dry leased with CMI | 13 | 16 | 18 | |||||||||||||||
ACMI/Charter | 28 | 23 | 24 | |||||||||||||||
Staging/Unassigned | 1 | 4 | — | |||||||||||||||
53 | 54 | |||||||||||||||||
Undergoing freighter modification | 2 | 1 | ||||||||||||||||
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