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 3, 2016, relating to its results for the third quarter ended September 30, 2016. |
AIR TRANSPORT SERVICES GROUP, INC. | |
By: | /S/ W. JOSEPH PAYNE |
W. Joseph Payne | |
Chief Legal Officer & Secretary | |
Date: | November 3, 2016 |
• | Revenues increased 36 percent, or $51.0 million, to $193.3 million for the quarter. Excluding revenues from reimbursements, revenues increased 25 percent, or $34.3 million. All of ATSG's principal businesses recorded significant growth for the quarter. |
• | Warrants issued in March to Amazon Fulfillment Services, Inc. in connection with operating and lease agreements continued to have a significant impact on ATSG's GAAP financial results in the third quarter. Including these non-cash effects, Net Earnings from Continuing Operations decreased to $2.1 million, or $0.12 per diluted share, from $6.3 million, or $0.10 cents in the prior year period. Diluted Earnings per Share excludes the mark-to-market loss, net of tax, associated with the stock warrants. |
• | Excluding the effects of non-cash lease incentive amortization and mark-to-market effects from the warrants, ATSG's Adjusted Earnings from Continuing Operations for the third quarter increased to $8.7 million. |
• | Adjusted Earnings per Share from Continuing Operations for the third quarter of 2016 were $0.14 per share diluted, and exclude the lease incentive amortization as well as a mark-to-market adjustment for the stock warrants, net of tax. |
• | Adjusted Pre-tax Earnings from Continuing Operations increased 52 percent to $15.2 million. Adjusted EBITDA from Continuing Operations was $52.0 million for the quarter, up 20 percent. |
• | Adjusted Pre-tax Earnings and Adjusted EBITDA exclude the non-cash effects of warrant issuances, pension expense, and unrealized derivatives gains or losses. ATSG's Adjusted Earnings, Adjusted Earnings Per Share, Adjusted EBITDA and Adjusted Pre-tax Earnings from continuing operations are non-GAAP financial measures, defined and reconciled to comparable GAAP results in separate tables at the end of this release. |
CAM | Third Quarter | Nine Months | |||||||||||||
($ in thousands) | 2016 | 2015 | 2016 | 2015 | |||||||||||
Aircraft leasing and related revenues | $ | 47,778 | $ | 42,574 | $ | 147,877 | $ | 131,060 | |||||||
Lease incentive amortization | (1,432 | ) | — | (2,366 | ) | — | |||||||||
Total CAM revenues | $ | 46,346 | $ | 42,574 | $ | 145,511 | $ | 131,060 | |||||||
Pre-Tax Earnings | $ | 16,110 | $ | 13,482 | $ | 51,849 | $ | 42,361 |
• | CAM’s pre-tax earnings reflect the benefits, less associated depreciation and transitioning costs, of three more 767-300 freighters placed in service in 2016, including one eight-year lease to DHL that started in February, another leased to Amerijet for eight years in July, and a third deployed in September. |
• | In the fourth quarter, CAM will lease three 767-300s freighters to Amazon, for a total of fifteen 767s leased to them by year-end. Five more 767s will be converted and leased to Amazon in the first half of 2017. |
• | At September 30, 2016, CAM owned 58 Boeing cargo aircraft in serviceable condition. Seven 767-300s were either in or awaiting freighter modification for lease deployments as of September 30. Two other Boeing 767-300s were purchased in October. A table reflecting cargo aircraft in service is included at the end of this release. |
ACMI Services | Third Quarter | Nine Months | ||||||||||||||
($ in thousands) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
Revenues | ||||||||||||||||
Airline services | $ | 105,747 | $ | 93,632 | $ | 305,587 | $ | 289,224 | ||||||||
Reimbursables | 22,955 | 6,286 | 52,216 | 20,054 | ||||||||||||
Total ACMI Services Revenues | $ | 128,702 | $ | 99,918 | $ | 357,803 | $ | 309,278 | ||||||||
Pre-Tax Earnings (Loss) | $ | (9,686 | ) | $ | (4,914 | ) | $ | (27,172 | ) | $ | (6,359 | ) |
• | Third-quarter revenues from airline services increased nine percent, principally reflecting more CAM-leased aircraft operated by ATSG airlines and a significant increase in block hours, driven primarily by aircraft operating in the Amazon network. |
• | Pre-tax profitability for the airlines declined in the third quarter. Premium pay and training negatively impacted the segments pre-tax results by approximately $6.5 million during the third quarter, and will continue through the fourth quarter. |
• | Third-quarter results for 2016 included non-cash pension expense of $2.4 million above last year's level. |
• | All available cargo aircraft operated by ATSG airlines are expected to be serving customers during the fourth-quarter peak holiday season. |
Other Activities | Third Quarter | Nine Months | ||||||||||||||
($ in thousands) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
Revenues | $ | 65,328 | $ | 38,398 | $ | 177,592 | $ | 106,183 | ||||||||
Pre-Tax Earnings | $ | 5,089 | $ | 2,077 | $ | 13,087 | $ | 6,993 |
• | Mail and cargo handling services, sales of aviation fuel and aircraft maintenance services, all contributed significantly toward the $27 million revenue gain from other businesses, reflecting increases from U.S. Postal Service facilities the company operates, and from cargo handling and logistics support for Amazon. |
• | Pre-tax earnings from other activities increased by $3.0 million, due primarily to increased aircraft maintenance services, and aircraft mail and cargo handling services. |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
REVENUES | $ | 193,261 | $ | 142,305 | $ | 547,195 | $ | 437,683 | |||||||
OPERATING EXPENSES | |||||||||||||||
Salaries, wages and benefits | 59,405 | 41,624 | 165,471 | 127,339 | |||||||||||
Depreciation and amortization | 33,939 | 30,754 | 99,605 | 91,147 | |||||||||||
Maintenance, materials and repairs | 27,356 | 24,655 | 81,089 | 71,341 | |||||||||||
Fuel | 24,372 | 12,029 | 58,171 | 35,082 | |||||||||||
Contracted ground and aviation services | 12,865 | 3,640 | 32,664 | 10,177 | |||||||||||
Travel | 5,440 | 3,989 | 14,926 | 12,754 | |||||||||||
Rent | 3,309 | 2,246 | 8,515 | 8,900 | |||||||||||
Landing and ramp | 3,220 | 2,108 | 9,523 | 6,982 | |||||||||||
Insurance | 1,099 | 832 | 3,335 | 2,636 | |||||||||||
Other operating expenses | 7,800 | 7,511 | 28,288 | 21,085 | |||||||||||
178,805 | 129,388 | 501,587 | 387,443 | ||||||||||||
OPERATING INCOME | 14,456 | 12,917 | 45,608 | 50,240 | |||||||||||
OTHER INCOME (EXPENSE) | |||||||||||||||
Interest income | 37 | 18 | 98 | 64 | |||||||||||
Interest expense | (2,897 | ) | (2,684 | ) | (8,229 | ) | (8,588 | ) | |||||||
Net gain (loss) on financial instruments | (8,473 | ) | 96 | (3,443 | ) | 347 | |||||||||
(11,333 | ) | (2,570 | ) | (11,574 | ) | (8,177 | ) | ||||||||
EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | 3,123 | 10,347 | 34,034 | 42,063 | |||||||||||
INCOME TAX EXPENSE | (1,007 | ) | (4,000 | ) | (12,219 | ) | (16,251 | ) | |||||||
EARNINGS FROM CONTINUING OPERATIONS | 2,116 | 6,347 | 21,815 | 25,812 | |||||||||||
EARNINGS FROM DISCONTINUED OPERATIONS, NET OF TAX | 47 | 214 | 141 | 642 | |||||||||||
NET EARNINGS | $ | 2,163 | $ | 6,561 | $ | 21,956 | $ | 26,454 | |||||||
EARNINGS PER SHARE - Basic | |||||||||||||||
Continuing operations | $ | 0.04 | $ | 0.10 | $ | 0.35 | $ | 0.40 | |||||||
Discontinued operations | — | — | — | 0.01 | |||||||||||
NET EARNINGS PER SHARE | $ | 0.04 | $ | 0.10 | $ | 0.35 | $ | 0.41 | |||||||
EARNINGS PER SHARE - Diluted | |||||||||||||||
Continuing operations | $ | 0.12 | $ | 0.10 | $ | 0.37 | $ | 0.40 | |||||||
Discontinued operations | — | — | — | — | |||||||||||
NET EARNINGS PER SHARE | $ | 0.12 | $ | 0.10 | $ | 0.37 | $ | 0.40 | |||||||
WEIGHTED AVERAGE SHARES | |||||||||||||||
Basic | 59,379 | 64,239 | 62,084 | 64,411 | |||||||||||
Diluted | 63,625 | 65,171 | 65,138 | 65,341 |
September 30, | December 31, | ||||||
2016 | 2015 | ||||||
ASSETS | |||||||
CURRENT ASSETS: | |||||||
Cash and cash equivalents | $ | 47,186 | $ | 17,697 | |||
Accounts receivable, net of allowance of $289 in 2016 and $415 in 2015 | 66,285 | 57,986 | |||||
Inventory | 14,054 | 12,963 | |||||
Prepaid supplies and other | 15,571 | 12,660 | |||||
TOTAL CURRENT ASSETS | 143,096 | 101,306 | |||||
Property and equipment, net | 960,998 | 875,401 | |||||
Other assets | 72,720 | 26,285 | |||||
Goodwill and intangibles | 38,518 | 38,729 | |||||
TOTAL ASSETS | $ | 1,215,332 | $ | 1,041,721 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
CURRENT LIABILITIES: | |||||||
Accounts payable | $ | 57,831 | $ | 44,417 | |||
Accrued salaries, wages and benefits | 27,338 | 27,454 | |||||
Accrued expenses | 8,959 | 8,107 | |||||
Current portion of debt obligations | 35,268 | 33,740 | |||||
Unearned revenue | 13,151 | 12,963 | |||||
TOTAL CURRENT LIABILITIES | 142,547 | 126,681 | |||||
Long term debt | 413,865 | 283,918 | |||||
Post-retirement obligations | 97,646 | 108,194 | |||||
Other liabilities | 62,309 | 61,913 | |||||
Stock warrants | 65,977 | — | |||||
Deferred income taxes | 109,827 | 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; 85,000,000 shares authorized; 59,598,299 and 64,077,140 shares issued and outstanding in 2016 and 2015, respectively | 596 | 641 | |||||
Additional paid-in capital | 448,833 | 518,259 | |||||
Accumulated deficit | (33,775 | ) | (55,731 | ) | |||
Accumulated other comprehensive loss | (92,493 | ) | (99,012 | ) | |||
TOTAL STOCKHOLDERS’ EQUITY | 323,161 | 364,157 | |||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 1,215,332 | $ | 1,041,721 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Revenues | |||||||||||||||
CAM | |||||||||||||||
Aircraft leasing | $ | 47,778 | $ | 42,574 | $ | 147,877 | $ | 131,060 | |||||||
Lease incentive amortization | (1,432 | ) | — | (2,366 | ) | — | |||||||||
Total CAM | 46,346 | 42,574 | 145,511 | 131,060 | |||||||||||
ACMI Services | |||||||||||||||
Airline services | 105,747 | 93,632 | 305,587 | 289,224 | |||||||||||
Reimbursables | 22,955 | 6,286 | 52,216 | 20,054 | |||||||||||
Total ACMI Services | 128,702 | 99,918 | 357,803 | 309,278 | |||||||||||
Other Activities | 65,328 | 38,398 | 177,592 | 106,183 | |||||||||||
Total Revenues | 240,376 | 180,890 | 680,906 | 546,521 | |||||||||||
Eliminate internal revenues | (47,115 | ) | (38,585 | ) | (133,711 | ) | (108,838 | ) | |||||||
Customer Revenues | $ | 193,261 | $ | 142,305 | $ | 547,195 | $ | 437,683 | |||||||
Pre-tax Earnings from Continuing Operations | |||||||||||||||
CAM, inclusive of interest expense | 16,110 | 13,482 | 51,849 | 42,361 | |||||||||||
ACMI Services | (9,686 | ) | (4,914 | ) | (27,172 | ) | (6,359 | ) | |||||||
Other Activities | 5,089 | 2,077 | 13,087 | 6,993 | |||||||||||
Net, unallocated interest expense | 83 | (394 | ) | (287 | ) | (1,279 | ) | ||||||||
Net gain (loss) on financial instruments | (8,473 | ) | 96 | (3,443 | ) | 347 | |||||||||
Total Pre-tax Earnings from Continuing Operations | $ | 3,123 | $ | 10,347 | $ | 34,034 | $ | 42,063 | |||||||
Adjustments to Pre-tax Earnings from Continuing Operations | |||||||||||||||
Add non-service components of retiree benefit costs, net | 2,203 | (260 | ) | 6,609 | (780 | ) | |||||||||
Add debt issuance charge from non-consolidating affiliate | — | — | 1,229 | — | |||||||||||
Add lease incentive amortization | 1,432 | — | 2,366 | — | |||||||||||
Add (subtract) net loss (gain) on financial instruments | 8,473 | (96 | ) | 3,443 | (347 | ) | |||||||||
Adjusted Pre-tax Earnings from Continuing Operations | $ | 15,231 | $ | 9,991 | $ | 47,681 | $ | 40,936 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Earnings from Continuing Operations Before Income Taxes | $ | 3,123 | $ | 10,347 | $ | 34,034 | $ | 42,063 | |||||||
Interest Income | (37 | ) | (18 | ) | (98 | ) | (64 | ) | |||||||
Interest Expense | 2,897 | 2,684 | 8,229 | 8,588 | |||||||||||
Depreciation and Amortization | 33,939 | 30,754 | 99,605 | 91,147 | |||||||||||
EBITDA from Continuing Operations | $ | 39,922 | $ | 43,767 | $ | 141,770 | $ | 141,734 | |||||||
Add non-service components of retiree benefit costs, net | 2,203 | (260 | ) | 6,609 | (780 | ) | |||||||||
Add debt issuance costs from non-consolidating affiliate | — | — | 1,229 | — | |||||||||||
Add lease incentive amortization | 1,432 | — | 2,366 | — | |||||||||||
Add (subtract) net loss (gain) on financial instruments | 8,473 | (96 | ) | 3,443 | (347 | ) | |||||||||
Adjusted EBITDA from Continuing Operations | $ | 52,030 | $ | 43,411 | $ | 155,417 | $ | 140,607 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Earnings from Continuing Operations (GAAP) | $ | 2,116 | $ | 6,347 | $ | 21,815 | $ | 25,812 | |||||||
Loss from stock warrant revaluation, net of tax | 5,637 | — | 2,232 | — | |||||||||||
Earnings from Continuing Operations - diluted (GAAP) | 7,753 | 6,347 | 24,047 | 25,812 | |||||||||||
Lease incentive amortization, net of tax | 912 | — | 1,507 | — | |||||||||||
Adjusted Earnings from Continuing Operations (non-GAAP) | $ | 8,665 | $ | 6,347 | $ | 25,554 | $ | 25,812 | |||||||
Weighted Average Shares - diluted (GAAP) | 63,625 | 65,171 | 65,138 | 65,341 | |||||||||||
Earnings per Share from Continuing Operations - diluted (GAAP) | $ | 0.12 | $ | 0.10 | $ | 0.37 | $ | 0.40 | |||||||
Effect of lease incentive amortization, net of tax | 0.02 | — | 0.02 | — | |||||||||||
Adjusted Earnings per Share from Continuing Operations (non-GAAP) | $ | 0.14 | $ | 0.10 | $ | 0.39 | $ | 0.40 | |||||||
Serviceable Aircraft By Type | ||||||||||||||||||
December 31, | September 30, | 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 | — | 14 | 14 | — | 16 | 16 | — | |||||||||
B757-200 | 5 | 4 | 1 | 4 | 4 | — | 4 | 4 | — | |||||||||
B757 Combi | 4 | 4 | — | 4 | 4 | — | 4 | 4 | — | |||||||||
Total Aircraft | 56 | 55 | 1 | 58 | 58 | — | 60 | 60 | — | |||||||||
Serviceable Owned Aircraft By Contracted Deployment | ||||||||||||||||||
December 31, | September 30, | December 31, | ||||||||||||||||
2015 | 2016 | 2016 Projected | ||||||||||||||||
Dry leased without CMI | 15 | 13 | 13 | |||||||||||||||
Dry leased with CMI | 15 | 25 | 29 | |||||||||||||||
ACMI/Charter | 25 | 19 | 17 | |||||||||||||||
Staging/Unassigned | — | 1 | 1 | |||||||||||||||
55 | 58 | 60 | ||||||||||||||||
Owned Aircraft In or Awaiting Cargo Conversion | ||||||||||||||||||
December 31, | September 30, | December 31, | ||||||||||||||||
2015 | 2016 | 2016 Projected | ||||||||||||||||
B767-300 | 2 | 7 | 7 | |||||||||||||||
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