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 8, 2016, relating to its results for the fourth quarter and year ended December 31, 2015. |
AIR TRANSPORT SERVICES GROUP, INC. | |
By: | /S/ W. JOSEPH PAYNE |
W. Joseph Payne | |
Sr. Vice President | |
Corporate General Counsel & Secretary | |
Date: | March 8, 2016 |
• | Revenues increased 15 percent to $181.6 million for the quarter, and were up 5 percent to $619.3 million for the year. Excluding revenues from reimbursable airline expenses, revenues increased 11 percent for the quarter and 6 percent for the year. Revenues for Cargo Aircraft Management, ATSG's aircraft leasing business, grew 7 percent year-over-year. |
• | Pre-tax earnings from continuing operations increased $9.4 million to $20.5 million for the quarter and to $62.6 million for 2015. Excluding the effect of 2014 pension settlement charges, and derivative transactions in each year, Adjusted Pre-tax Earnings increased 13 percent for the quarter and 7 percent for 2015. This and other adjusted amounts referenced below are non-GAAP financial measures. They are defined and reconciled to comparable GAAP results in tables at the end of this release. |
• | Net earnings from continuing operations were 21 cents per share diluted, or $13.3 million, for the fourth quarter, and $0.60 per share, or $39.2 million for the year. Those earnings increased 23 percent for the quarter and 8 percent for the year, excluding the 2014 pension settlement charges. Operating loss carryforwards for U.S. federal income tax purposes offset much of the company’s federal tax liabilities. Because of increasing tax depreciation on its aircraft growth investments, ATSG now does not expect to pay significant federal income taxes until 2019 at the earliest. |
• | Record Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) for the fourth quarter and year. Fourth-quarter Adjusted EBITDA increased by 12 percent to $56.8 million. 2015 Adjusted EBITDA grew by 10 percent to $198.2 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. |
• | Record operating cash flow for 2015 at $173.7 million. The 17 percent increase from 2014 stemmed largely from higher income and faster payments from customers. 2015 capital expenditures were $159 million, cash debt repayments in excess of borrowings were $24 million, and share repurchases were $10 million. |
• | DHL relationship amendments effective in April that led to a doubling of our forward lease-months with DHL, and extend operating terms through March 2019. Our DHL-leased fleet has expanded from 13 in March 2015 to 17 in February 2016, including five 767-300 freighters, and we have more opportunities to deliver ATSG solutions for DHL’s global network, including two 767s now operating in DHL's Mideast network. |
• | New customer relationships including 767 deployments with Raya Airways in Asia, and deployments with West Atlantic in Europe, in which we are an investor and where three of our 767s now operate. |
• | Fleet expansion through four more Boeing 767-300s purchased in 2015. Three of them are already deployed with dry-lease customers and the fourth is due in April. Three will have eight-year lease terms. |
• | Pathway into the China market formed through a joint venture for a Tianjin-based regional air cargo network due to launch in the second half this year. We expect to benefit from the venture's reliance on our midsize freighter expertise as it pursues network opportunities throughout southeast Asia. |
• | U.S. trial air operation launched in September 2015, now with five dedicated 767 freighters and logistical support, achieved its performance objectives through the holiday season. Under automatic extension provisions, it now runs at least to mid-May this year. |
• | Multi-year heavy maintenance agreement with Delta Air Lines for its fleet of more than 80 Boeing 717 passenger aircraft began in October, validating both the 2014 expansion of our hangar capacity in Wilmington and our decades of experience servicing similar DC-9 airframes. |
CAM | Fourth Quarter | Year | ||||||||||||||
($ in thousands) | 2015 | 2014 | 2015 | 2014 | ||||||||||||
Revenues | $ | 46,729 | $ | 44,852 | $ | 177,789 | $ | 166,303 | ||||||||
Pre-Tax Earnings | 15,096 | 14,478 | 57,457 | 53,159 |
• | CAM’s $1.9 million increase in fourth-quarter revenue came via growth with external customers. External revenues were $25.2 million for the quarter and $93.4 million for the year. Externally leased freighters increased to 30 from 24 during 2015. |
• | Pre-tax earnings increased $0.6 million for the quarter and $4.3 million for 2015. Increased lease revenues offset increases in depreciation and fleet transition costs. |
• | At December 31, 2015, CAM owned 57 Boeing cargo aircraft, 55 of which were in serviceable condition, including 47 767s, four 757-200 freighters and four 757-200 combi aircraft. CAM purchased four 767-300 aircraft in 2015, one in each quarter. Two were in service by year-end, and two were being modified from passenger to freighter configuration. |
• | One of the two 767s in mod at year-end was placed in service with DHL in February. The other is due to enter service with an existing customer in April. Both will be leased for eight-year terms. |
ACMI Services | Fourth Quarter | Year | |||||||||||||||
($ in thousands) | 2015 | 2014 | 2015 | 2014 | |||||||||||||
Revenues | |||||||||||||||||
Airline services | $ | 106,262 | $ | 107,334 | $ | 395,486 | $ | 399,376 | |||||||||
Reimbursables | 17,569 | 9,832 | 37,623 | 40,543 | |||||||||||||
Total ACMI Services Revenues | 123,831 | 117,166 | 433,109 | 439,919 | |||||||||||||
Pre-Tax Earnings (Loss) Excluding Charges | 3,705 | 1,482 | (2,654 | ) | (5,381 | ) | |||||||||||
Less Pension Settlement Charge | — | (6,700 | ) | — | (6,700 | ) | |||||||||||
Pre-Tax Earnings (Loss) | 3,705 | (5,218 | ) | (2,654 | ) | (12,081 | ) |
• | Airline services revenues were down slightly in the fourth quarter, compared to the prior year period. Expanded ACMI operations in the fourth quarter of 2015 did not entirely offset reductions in revenues from fewer aircraft in ACMI service than a year ago, and from changes in revenues under new operating agreements with DHL effective in April 2015. Airline services revenues grew on a consecutive-quarter basis from the third quarter, as all available aircraft were fully deployed in the fourth quarter. |
• | Pre-tax profitability improved sharply for the quarter and year. Principal factors were better utilization rates for a smaller ACMI fleet in 2015, including a 7 percent increase in block hours for the fourth quarter. Expenses increased for heavy and line maintenance, and flight crews, due to higher fleet utilization rates. |
Other Activities | Fourth Quarter | Year | |||||||||||||||
($ in thousands) | 2015 | 2014 | 2015 | 2014 | |||||||||||||
Revenues | $ | 55,812 | $ | 36,938 | $ | 161,995 | $ | 142,294 | |||||||||
Pre-Tax Earnings | 1,568 | 2,228 | 8,561 | 11,363 |
• | External customer revenues from all other activities in the fourth quarter were $32.6 million, up 66 percent in the fourth quarter, and $93.9 million, up 30 percent for the year. Revenues increased from aircraft maintenance services, including a new agreement for airframe heavy maintenance with Delta Air Lines, and from postal center management and logistics services. Pre-tax earnings for 2015 reflects improved earnings from maintenance operations and logistics services, offset by a smaller actuarial credit in 2015 from prior-year changes in employee benefit plans. |
Three Months Ended | Year Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
REVENUES | $ | 181,581 | $ | 157,938 | $ | 619,264 | $ | 589,592 | |||||||
OPERATING EXPENSES | |||||||||||||||
Salaries, wages and benefits | 54,446 | 43,470 | 181,785 | 166,526 | |||||||||||
Depreciation and amortization | 34,296 | 29,826 | 125,443 | 108,254 | |||||||||||
Maintenance, materials and repairs | 24,703 | 26,399 | 96,044 | 91,528 | |||||||||||
Fuel | 17,533 | 13,188 | 52,615 | 53,521 | |||||||||||
Rent | 2,777 | 5,727 | 11,677 | 26,650 | |||||||||||
Travel | 5,253 | 4,481 | 18,007 | 17,662 | |||||||||||
Landing and ramp | 2,745 | 2,541 | 9,727 | 10,305 | |||||||||||
Insurance | 1,009 | 1,417 | 3,645 | 5,304 | |||||||||||
Pension settlement | — | 6,700 | — | 6,700 | |||||||||||
Other operating expenses | 16,269 | 9,904 | 47,531 | 38,617 | |||||||||||
159,031 | 143,653 | 546,474 | 525,067 | ||||||||||||
OPERATING INCOME | 22,550 | 14,285 | 72,790 | 64,525 | |||||||||||
OTHER INCOME (EXPENSE) | |||||||||||||||
Interest income | 21 | 26 | 85 | 92 | |||||||||||
Interest expense | (2,644 | ) | (3,324 | ) | (11,232 | ) | (13,937 | ) | |||||||
Net gain on derivative instruments | 573 | 127 | 920 | 1,096 | |||||||||||
(2,050 | ) | (3,171 | ) | (10,227 | ) | (12,749 | ) | ||||||||
EARNINGS (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | 20,500 | 11,114 | 62,563 | 51,776 | |||||||||||
INCOME TAX EXPENSE | (7,157 | ) | (4,455 | ) | (23,408 | ) | (19,702 | ) | |||||||
EARNINGS (LOSS) FROM CONTINUING OPERATIONS | 13,343 | 6,659 | 39,155 | 32,074 | |||||||||||
EARNINGS (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAX | 1,425 | (2,948 | ) | 2,067 | (2,214 | ) | |||||||||
NET EARNINGS (LOSS) | $ | 14,768 | $ | 3,711 | $ | 41,222 | $ | 29,860 | |||||||
EARNINGS (LOSS) PER SHARE - Basic | |||||||||||||||
Continuing operations | $ | 0.21 | $ | 0.10 | $ | 0.61 | $ | 0.50 | |||||||
Discontinued operations | 0.02 | (0.04 | ) | 0.03 | (0.04 | ) | |||||||||
NET EARNINGS (LOSS) PER SHARE | $ | 0.23 | $ | 0.06 | $ | 0.64 | $ | 0.46 | |||||||
EARNINGS (LOSS) PER SHARE - Diluted | |||||||||||||||
Continuing operations | $ | 0.21 | $ | 0.10 | $ | 0.60 | $ | 0.49 | |||||||
Discontinued operations | 0.02 | (0.04 | ) | 0.03 | (0.03 | ) | |||||||||
NET EARNINGS (LOSS) PER SHARE | $ | 0.23 | $ | 0.06 | $ | 0.63 | $ | 0.46 | |||||||
WEIGHTED AVERAGE SHARES | |||||||||||||||
Basic | 63,742 | 64,289 | 64,242 | 64,253 | |||||||||||
Diluted | 64,536 | 65,222 | 65,127 | 65,211 |
December 31, | December 31, | ||||||
2015 | 2014 | ||||||
ASSETS | |||||||
CURRENT ASSETS: | |||||||
Cash and cash equivalents | $ | 17,697 | $ | 30,560 | |||
Accounts receivable, net of allowance of $415 in 2015 and $812 in 2014 | 57,986 | 43,513 | |||||
Inventory | 12,963 | 10,665 | |||||
Prepaid supplies and other | 12,660 | 12,613 | |||||
TOTAL CURRENT ASSETS | 101,306 | 97,351 | |||||
Property and equipment, net | 875,401 | 847,268 | |||||
Other assets | 26,827 | 28,230 | |||||
Goodwill and acquired intangibles | 38,729 | 39,010 | |||||
TOTAL ASSETS | $ | 1,042,263 | $ | 1,011,859 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
CURRENT LIABILITIES: | |||||||
Accounts payable | $ | 44,417 | $ | 40,608 | |||
Accrued salaries, wages and benefits | 27,454 | 25,633 | |||||
Accrued expenses | 8,107 | 8,201 | |||||
Current portion of debt obligations | 33,865 | 24,344 | |||||
Unearned revenue | 12,963 | 12,914 | |||||
TOTAL CURRENT LIABILITIES | 126,806 | 111,700 | |||||
Long term debt | 284,335 | 319,750 | |||||
Post-retirement obligations | 108,194 | 92,050 | |||||
Other liabilities | 61,913 | 57,647 | |||||
Deferred income taxes | 96,858 | 83,223 | |||||
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; 64,077,140 and 64,854,950 shares issued and outstanding in 2015 and 2014, respectively | 641 | 649 | |||||
Additional paid-in capital | 518,259 | 526,669 | |||||
Accumulated deficit | (55,731 | ) | (96,953 | ) | |||
Accumulated other comprehensive loss | (99,012 | ) | (82,876 | ) | |||
TOTAL STOCKHOLDERS’ EQUITY | 364,157 | 347,489 | |||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 1,042,263 | $ | 1,011,859 |
Three Months Ended | Year Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Revenues | |||||||||||||||
CAM | $ | 46,729 | $ | 44,852 | $ | 177,789 | $ | 166,303 | |||||||
ACMI Services | |||||||||||||||
Airline services | 106,262 | 107,334 | 395,486 | 399,376 | |||||||||||
Reimbursables | 17,569 | 9,832 | 37,623 | 40,543 | |||||||||||
Total ACMI Services | 123,831 | 117,166 | 433,109 | 439,919 | |||||||||||
Other Activities | 55,812 | 36,938 | 161,995 | 142,294 | |||||||||||
Total Revenues | 226,372 | 198,956 | 772,893 | 748,516 | |||||||||||
Eliminate internal revenues | (44,791 | ) | (41,018 | ) | (153,629 | ) | (158,924 | ) | |||||||
Customer Revenues | $ | 181,581 | $ | 157,938 | $ | 619,264 | $ | 589,592 | |||||||
Pre-tax Earnings from Continuing Operations | |||||||||||||||
CAM, inclusive of interest expense | 15,096 | 14,478 | 57,457 | 53,159 | |||||||||||
ACMI Services | 3,705 | 1,482 | (2,654 | ) | (5,381 | ) | |||||||||
Other Activities | 1,568 | 2,228 | 8,561 | 11,363 | |||||||||||
Pension settlement charge | — | (6,700 | ) | — | (6,700 | ) | |||||||||
Net, unallocated interest expense | (442 | ) | (501 | ) | (1,721 | ) | (1,761 | ) | |||||||
Net gain (loss) on derivative instruments | 573 | 127 | 920 | 1,096 | |||||||||||
Total Pre-tax Earnings | $ | 20,500 | $ | 11,114 | $ | 62,563 | $ | 51,776 | |||||||
Adjustments to Pre-tax Earnings | |||||||||||||||
Add pension settlement cost | — | 6,700 | — | 6,700 | |||||||||||
Less net (gain) loss on derivative instruments | (573 | ) | (127 | ) | (920 | ) | (1,096 | ) | |||||||
Adjusted Pre-tax Earnings | $ | 19,927 | $ | 17,687 | $ | 61,643 | $ | 57,380 |
Three Months Ended | Year Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Earnings from Continuing Operations Before Income Taxes | $ | 20,500 | $ | 11,114 | $ | 62,563 | $ | 51,776 | |||||||
Interest Income | (21 | ) | (26 | ) | (85 | ) | (92 | ) | |||||||
Interest Expense | 2,644 | 3,324 | 11,232 | 13,937 | |||||||||||
Depreciation and Amortization | 34,296 | 29,826 | 125,443 | 108,254 | |||||||||||
EBITDA from Continuing Operations | $ | 57,419 | $ | 44,238 | $ | 199,153 | $ | 173,875 | |||||||
Add pension settlement charge | — | 6,700 | — | 6,700 | |||||||||||
Less net (gain) loss on derivative instruments | (573 | ) | (127 | ) | (920 | ) | (1,096 | ) | |||||||
Adjusted EBITDA from Continuing Operations | $ | 56,846 | $ | 50,811 | $ | 198,233 | $ | 179,479 |
Three Months Ended | Year Ended | ||||||||||||||||||||
December 31, 2014 | December 31, 2014 | ||||||||||||||||||||
Per Share | Per Share | ||||||||||||||||||||
Earnings | Basic | Diluted | Earnings | Basic | Diluted | ||||||||||||||||
Earnings (loss) from continuing operations | 6,659 | $ | 0.10 | $ | 0.10 | 32,074 | $ | 0.50 | $ | 0.49 | |||||||||||
Effect of pension settlement charge, net of tax | 4,147 | 0.07 | 0.07 | 4,147 | 0.06 | 0.07 | |||||||||||||||
Adjusted earnings from continuing operations | 10,806 | $ | 0.17 | $ | 0.17 | 36,221 | $ | 0.56 | $ | 0.56 | |||||||||||
Weighted Average Shares | 64,289 | 65,222 | 64,253 | 65,211 | |||||||||||||||||
Aircraft Types | ||||||||||||||||||
December 31, | December 31, | December 31, | ||||||||||||||||
2014 | 2015 | 2016 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 | 11 | 11 | — | 17 | 17 | — | |||||||||
B757-200 | 4 | 4 | — | 5 | 4 | 1 | 5 | 4 | 1 | |||||||||
B757 Combi | 4 | 4 | — | 4 | 4 | — | 4 | 4 | — | |||||||||
Total Aircraft | 56 | 53 | 3 | 56 | 55 | 1 | 62 | 61 | 1 | |||||||||
Owned Aircraft In Serviceable Condition | ||||||||||||||||||
December 31, | December 31, | |||||||||||||||||
2014 | 2015 | |||||||||||||||||
Dry leased without CMI | 11 | 15 | ||||||||||||||||
Dry leased with CMI | 13 | 15 | ||||||||||||||||
ACMI/Charter | 28 | 25 | ||||||||||||||||
Staging/Unassigned | 1 | — | ||||||||||||||||
53 | 55 | |||||||||||||||||
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