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 May 10, 2016, relating to its results for the first quarter ended March 31, 2016. |
AIR TRANSPORT SERVICES GROUP, INC. | |
By: | /S/ W. JOSEPH PAYNE |
W. Joseph Payne | |
Sr. Vice President | |
Corporate General Counsel & Secretary | |
Date: | May 10, 2016 |
• | Revenues increased 21 percent to $177.4 million. Excluding revenues from reimbursed expenses, revenues increased 18 percent. This increase included contributions from five more dry leases of Boeing 767 cargo aircraft with external customers, and expanded air network operations for ATSG's newest customer, Amazon Fulfillment Services Inc. (AFS), a subsidiary of Amazon.com, Inc. (Amazon). |
• | Pre-tax Earnings from Continuing Operations were $12.1 million, versus $14.5 million in the prior-year period. Adjusted Pre-Tax Earnings, as defined in our Earnings Summary later in this release, increased 13 percent to $16.1 million. That metric excludes non-cash charges associated with pension costs, debt issuance costs at our European affiliate, and the effects of financial instrument transactions. Factors affecting our pre-tax results this year included higher expenses for scheduled heavy maintenance checks and costs to prepare flight crews and other personnel for expanding airline operations. Additionally, the prior-year quarter benefited by $1.6 million from the completion of the non-cash amortization of a note payable to DHL. |
• | Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) from Continuing Operations increased 11 percent to $51.3 million, a first-quarter record. Adjustments to EBITDA in 2016 are the same items excluded from Adjusted Pre-Tax Earnings. |
• | Net earnings from Continuing Operations were $8.2 million, or $0.13 per diluted share, versus $8.9 million, or $0.14 per diluted share. Operating loss carryforwards for U.S. federal income tax purposes offset much of the company’s federal tax liabilities. ATSG does not expect to pay significant federal income taxes until 2019 at the earliest. |
CAM | First Quarter | |||||||
($ in thousands) | 2016 | 2015 | ||||||
Revenues | $ | 51,726 | $ | 42,854 | ||||
Pre-Tax Earnings | 19,510 | 14,438 |
• | CAM’s revenues increased 21 percent to $51.7 million for the first quarter of 2016. Lease revenues from externally leased freighters and aircraft engines increased 29 percent, driven by revenues from five more external dry leases of Boeing 767s than were leased in the first quarter of 2015. Externally leased freighters increased to 29 as of March 31, from 24 a year earlier. |
• | Pre-tax earnings for the quarter increased 35 percent. Revenue gains and lower interest expense offset increased fleet-related depreciation and transitioning expenses. |
• | At March 31, 2016, CAM owned 56 Boeing cargo aircraft in serviceable condition, two more than at the same period last year. Five more CAM-owned 767-300 aircraft were awaiting or in passenger-to-freighter modification, and one 767-200 freighter was being prepared for re-lease to an external customer. |
• | CAM will lease twenty 767s to Amazon by mid-2017; twelve 767-200s and eight 767-300s. Three of those 767-300s will be leased during 2016, and the last five in 2017. Seven of the 767-200s are currently in operation and leased to Amazon. Five other 767-200s will be leased to Amazon by year-end. CAM has agreements to purchase and has reserved conversion slots for all of the aircraft it will deploy under the Amazon agreements. |
• | More information about CAM's current and projected in-service fleet is provided at the end of this release. |
ACMI Services | First Quarter | ||||||||
($ in thousands) | 2016 | 2015 | |||||||
Revenues | |||||||||
Airline services | $ | 101,653 | $ | 97,695 | |||||
Reimbursables | 13,303 | 7,773 | |||||||
Total ACMI Services Revenues | 114,956 | 105,468 | |||||||
Pre-Tax Earnings (Loss) | (10,356 | ) | (2,571 | ) |
• | Revenues increased nine percent to $115.0 million, including a four percent increase to $101.7 million in airline services revenues. Block-hour utilization increased 11 percent from an expanding ATSG-operated freighter fleet. Pricing changes that took effect since the first quarter of 2015 affected revenue growth from airline services. 2015 revenue and pre-tax results benefited from the $1.6 million non-cash item associated with completion of the amortization of a note payable to DHL. |
• | Lower pre-tax margins are attributable to $4.5 million in higher expenses for scheduled heavy maintenance events, $2.4 million in higher non-cash pension expense, and other costs to prepare flight crews and other personnel for expanding CMI operations. |
• | As of March 31, 2016, ATSG's airlines leased from CAM and operated on an ACMI basis eight Boeing 757 aircraft and eighteen 767 freighters, two fewer 767s than a year ago. Aircraft returned to CAM were deployed to external dry lease customers. |
Other Activities | First Quarter | ||||||||
($ in thousands) | 2016 | 2015 | |||||||
Revenues | $ | 55,011 | $ | 35,606 | |||||
Pre-Tax Earnings | 3,868 | 3,076 |
• | External customer revenues from all other activities in the first quarter increased 54 percent, and pre-tax earnings increased 26 percent, as returns from mail sorting and package handling services increased significantly. |
Three Months Ended | |||||||
March 31, | |||||||
2016 | 2015 | ||||||
REVENUES | $ | 177,385 | $ | 147,025 | |||
OPERATING EXPENSES | |||||||
Salaries, wages and benefits | 52,419 | 43,679 | |||||
Depreciation and amortization | 32,534 | 28,993 | |||||
Maintenance, materials and repairs | 27,343 | 22,693 | |||||
Fuel | 16,631 | 10,778 | |||||
Contracted ground and aviation services | 10,868 | 2,938 | |||||
Travel | 4,808 | 4,423 | |||||
Rent | 2,627 | 4,207 | |||||
Landing and ramp | 3,651 | 2,708 | |||||
Insurance | 1,149 | 1,258 | |||||
Other operating expenses | 10,004 | 7,819 | |||||
162,034 | 129,496 | ||||||
OPERATING INCOME | 15,351 | 17,529 | |||||
OTHER INCOME (EXPENSE) | |||||||
Interest income | 24 | 22 | |||||
Interest expense | (2,699 | ) | (3,065 | ) | |||
Net loss on financial instruments | (528 | ) | (13 | ) | |||
(3,203 | ) | (3,056 | ) | ||||
EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | 12,148 | 14,473 | |||||
INCOME TAX EXPENSE | (3,977 | ) | (5,578 | ) | |||
EARNINGS FROM CONTINUING OPERATIONS | 8,171 | 8,895 | |||||
EARNINGS FROM DISCONTINUED OPERATIONS, NET OF TAX | 47 | 214 | |||||
NET EARNINGS | $ | 8,218 | $ | 9,109 | |||
EARNINGS PER SHARE - Basic | |||||||
Continuing operations | $ | 0.13 | $ | 0.14 | |||
Discontinued operations | — | — | |||||
NET EARNINGS PER SHARE | $ | 0.13 | $ | 0.14 | |||
EARNINGS PER SHARE - Diluted | |||||||
Continuing operations | $ | 0.13 | $ | 0.14 | |||
Discontinued operations | — | — | |||||
NET EARNINGS PER SHARE | $ | 0.13 | $ | 0.14 | |||
WEIGHTED AVERAGE SHARES | |||||||
Basic | 63,636 | 64,454 | |||||
Diluted | 65,057 | 65,337 |
March 31, | December 31, | ||||||
2016 | 2015 | ||||||
ASSETS | |||||||
CURRENT ASSETS: | |||||||
Cash and cash equivalents | $ | 39,834 | $ | 17,697 | |||
Accounts receivable, net of allowance of $414 in 2016 and $415 in 2015 | 57,865 | 57,986 | |||||
Inventory | 13,513 | 12,963 | |||||
Prepaid supplies and other | 10,477 | 12,660 | |||||
TOTAL CURRENT ASSETS | 121,689 | 101,306 | |||||
Property and equipment, net | 914,838 | 875,401 | |||||
Other assets | 25,294 | 26,285 | |||||
Goodwill and acquired intangibles | 76,245 | 38,729 | |||||
TOTAL ASSETS | $ | 1,138,066 | $ | 1,041,721 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
CURRENT LIABILITIES: | |||||||
Accounts payable | $ | 42,473 | $ | 44,417 | |||
Accrued salaries, wages and benefits | 24,461 | 27,454 | |||||
Accrued expenses | 8,298 | 8,107 | |||||
Current portion of debt obligations | 37,734 | 33,740 | |||||
Unearned revenue | 11,991 | 12,963 | |||||
TOTAL CURRENT LIABILITIES | 124,957 | 126,681 | |||||
Long term debt | 333,766 | 283,918 | |||||
Post-retirement obligations | 106,001 | 108,194 | |||||
Other liabilities | 63,935 | 61,913 | |||||
Deferred income taxes | 100,965 | 96,858 | |||||
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; 64,068,782 and 64,077,140 shares issued and outstanding in 2016 and 2015, respectively | 641 | 641 | |||||
Additional paid-in capital | 551,914 | 518,259 | |||||
Accumulated deficit | (47,513 | ) | (55,731 | ) | |||
Accumulated other comprehensive loss | (96,600 | ) | (99,012 | ) | |||
TOTAL STOCKHOLDERS’ EQUITY | 408,442 | 364,157 | |||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 1,138,066 | $ | 1,041,721 |
Three Months Ended | |||||||
March 31, | |||||||
2016 | 2015 | ||||||
Revenues | |||||||
CAM | $ | 51,726 | $ | 42,854 | |||
ACMI Services | |||||||
Airline services | 101,653 | 97,695 | |||||
Reimbursables | 13,303 | 7,773 | |||||
Total ACMI Services | 114,956 | 105,468 | |||||
Other Activities | 55,011 | 35,606 | |||||
Total Revenues | 221,693 | 183,928 | |||||
Eliminate internal revenues | (44,308 | ) | (36,903 | ) | |||
Customer Revenues | $ | 177,385 | $ | 147,025 | |||
Pre-tax Earnings from Continuing Operations | |||||||
CAM, inclusive of interest expense | 19,510 | 14,438 | |||||
ACMI Services | (10,356 | ) | (2,571 | ) | |||
Other Activities | 3,868 | 3,076 | |||||
Net, unallocated interest expense | (346 | ) | (457 | ) | |||
Net loss on financial instruments | (528 | ) | (13 | ) | |||
Total Pre-tax Earnings | $ | 12,148 | $ | 14,473 | |||
Adjustments to Pre-tax Earnings | |||||||
Add non-service components of retiree benefit costs, net | 2,203 | (260 | ) | ||||
Add debt issuance charge from non-consolidating affiliate | 1,229 | — | |||||
Add net loss on financial instruments | 528 | 13 | |||||
Adjusted Pre-tax Earnings | $ | 16,108 | $ | 14,226 |
Three Months Ended | |||||||
March 31, | |||||||
2016 | 2015 | ||||||
Earnings from Continuing Operations Before Income Taxes | $ | 12,148 | $ | 14,473 | |||
Interest Income | (24 | ) | (22 | ) | |||
Interest Expense | 2,699 | 3,065 | |||||
Depreciation and Amortization | 32,534 | 28,993 | |||||
EBITDA from Continuing Operations | $ | 47,357 | $ | 46,509 | |||
Add non-service components of retiree benefit costs, net | 2,203 | (260 | ) | ||||
Add debt issuance costs from non-consolidating affiliate | 1,229 | — | |||||
Add net loss on financial instruments | 528 | 13 | |||||
Adjusted EBITDA from Continuing Operations | $ | 51,317 | $ | 46,262 |
Aircraft Types | ||||||||||||||||||
December 31, | March 31, | December 31, | ||||||||||||||||
2015 | 2016 | 2016 Projected | ||||||||||||||||
Operating | Operating | Operating | ||||||||||||||||
Total | Owned | Lease | Total | Owned | Lease | Total | Owned | Lease | ||||||||||
B767-200 | 36 | 36 | — | 36 | 36 | — | 36 | 36 | — | |||||||||
B767-300 | 11 | 11 | — | 12 | 12 | — | 17 | 17 | — | |||||||||
B757-200 | 5 | 4 | 1 | 5 | 4 | 1 | 5 | 4 | 1 | |||||||||
B757 Combi | 4 | 4 | — | 4 | 4 | — | 4 | 4 | — | |||||||||
Total Aircraft | 56 | 55 | 1 | 57 | 56 | 1 | 62 | 61 | 1 | |||||||||
Owned Aircraft In Serviceable Condition | ||||||||||||||||||
December 31, | March 31, | December 31, | ||||||||||||||||
2015 | 2016 | 2016 Projected | ||||||||||||||||
Dry leased without CMI | 15 | 15 | 14 | |||||||||||||||
Dry leased with CMI | 15 | 14 | 29 | |||||||||||||||
ACMI/Charter | 25 | 26 | 18 | |||||||||||||||
Staging/Unassigned | — | 1 | — | |||||||||||||||
55 | 56 | 61 | ||||||||||||||||
WN[
MFU;=;7$L+>L;E?Y5!10!T-GXTURT(_TOSU'\,RAOUZ_K70V'Q(0X74+%E/=X
M&S_XZ?\ &O/:* /:M-\1:3JA"VM[&9#TC<[6_(]:UJ^?ZW=*\6ZOI9"QW!FB
M'_+*;YA^'<4 >QT5RNB^.=-U$K%=?Z'.?^>ARA^C?XUU ((R#D&@!U%%% !1
M110 4444 %%%% !1110 4444 %%%% !1165J^OZ;HR'[9< 28R(D^9S^'^-
M&K5:[O;6QB\R[N(X$]9& S7G.K_$&_NLQZZ-^N:OT %%%% !1110 4444 %%%% !1110 44
M44 %%%% !1110 4444 %%%% !1110 4444 %%%% !1110 4444 %%%% !111
M0 4444 %%%% !1110 4444 %%%% !1110 4444 %%%% !1110 4444 %%%%
M!1110 4444 %%)2T %%)10 M)110!@:OK%Y$6AL+*X=AP9#$VT?3CFN3N+;4
M[F4RSVUU(Y[M&U>E8'I1@>@K*5/FW9VT,9[!>[%7/,ETR_8\64_XQD4[^R=0
M_P"?.;_O@UZ7@48%1]7B=?\ :]7^5'FG]DZA_P ^
K/R]JYK0=..I:BB,,Q)\TA]O2O154* %X KJH0^T>!FN)_Y=1^8Z
MBBEKJ/""BBB@ HHHH **** *.L:C%I.F3WLWW8ER%SC4Z;X,UR/4[5[BQ
MV0K*ID;S4.%SST:O5J .3\>:'+JFG)<6J%[BUR=@ZLAZX]^/YUY77T!7-ZWX
M,TS5F:55-K<-R9(APQ]UZ']* /(ZFMKJ>UD\RVGDA?\ O1L5/Z5T.J>!M7L=
MSPQB\B'\4/WO^^>OY9KFY(WBD*2HR.O!5A@B@#J-,\>ZM9D+=;+R/N'&UL?[
MP_J#7<:'XJTW6R(XI##\\9."?H>]>.4]'9'#HQ5E.00>0: /?:*Y_P;K3Z
MSHP>