Air Transport Services Group, Inc.

$ATSG - Nasdaq - Air Freight
0 LAST
0 CHANGE $
0 CHANGE %
loader
ON 0
WATCHLISTS

COMMUNIQUÉ DETAILS

Up 0 0 Down
ATSG Reports Results for Fourth Quarter 2012

Projects Improving Adjusted EBITDA Trend for 2013

WILMINGTON, Ohio--(BUSINESS WIRE)-- Air Transport Services Group, Inc. (NASDAQ:ATSG), a leading provider of air cargo transportation and related services to air carriers and other companies, today reported financial results as follows:

  • Per-share net earnings from continuing operations of 19 cents in fourth quarter, 65 cents in 2012;
  • Adjusted EBITDA* of $42.6 million in fourth quarter 2012 exceeded our November 2012 guidance by 6 percent;
  • Adjusted EBITDA* Outlook: Baseline of $175 million to $180 million for 2013, with improving trend after first quarter, and an 8-10 percent incremental growth opportunity above 2013 baseline under aircraft deployment goals.

Fourth-quarter and full-year financial results for 2012, as compared with 2011, are summarized below:

Summary GAAP Results
  Quarter Ended   Twelve Months Ended
December 31, December 31,
(in millions, except per share amounts)   2012   2011   Chg. 2012   2011   Chg.
Revenues $ 154.6   $ 166.5   $ (11.9 ) $ 607.4   $ 730.1   $ (122.7 )
Pre-tax Earnings from Continuing Operations $ 18.4 $ 23.3 $ (4.9 ) $ 66.3 $ 40.9 $ 25.4
Net Earnings (Loss) from Continuing Operations $ 12.2 $ 13.5 $ (1.3 ) $ 41.6 $ 23.9 $ 17.7
Earnings (Loss) Per Share from Continuing Operations   $ 0.19   $ 0.21   $ (0.02 ) $ 0.65   $ 0.37   $ 0.28  
Adjusted (non-GAAP) Results *                      
Revenues excluding Reimbursed Expenses $ 137.3 $ 143.8 $ (6.5 ) $ 532.5 $ 569.5 $ (37.0 )
Adjusted Pre-tax Earnings from Continuing Operations $ 17.5 $ 22.7 $ (5.2 ) $ 64.4 $ 75.8 $ (11.4 )
Adjusted EBITDA from Continuing Operations   $ 42.6   $ 48.1   $ (5.5 )   $ 163.2   $ 180.8   $ (17.6 )
 

* More detailed financial results and changes in our aircraft fleet, including a table defining and reconciling adjusted results to comparable GAAP measures, are provided at the end of this release.

Joe Hete, President and CEO of ATSG, said, "We exceeded our target for Adjusted EBITDA in the fourth quarter of 2012, and began 2013 with the best aircraft fleet in our history, fewer capital commitments for our cash flow, and a strong balance sheet. I am optimistic that we can grow Adjusted EBITDA significantly this year from our current base of business alone, and will do even better if we achieve our aircraft deployment targets.”

In 2011, ATSG's results included revenues and earnings from D.B. Schenker, a global logistics provider that ATSG had supported via a dedicated air-cargo network. Pre-tax 2011 earnings included $27.1 million in third-quarter impairment charges stemming from the termination of that network. ATSG had no Schenker-related revenues or earnings in 2012.

Operating Results

Aircraft Leasing

Pre-tax fourth-quarter earnings for Cargo Aircraft Management (CAM) were $17.7 million, up 6 percent from the year-earlier period. Revenues increased 2 percent to $39.5 million.

At the end of 2012, CAM owned 48 aircraft in serviceable condition, including 20 leased to external customers and 28 leased to its ATSG airline affiliates. In the fourth quarter, CAM retired all of its DC-8 and Boeing 727 freighters, and completed modification of one 767-300 freighter.

In 2013, CAM expects to complete modification of one 757 freighter and two 767-300 freighters. A previously modified 757 combi (combination passenger/freighter) is completing certification testing. In December, CAM agreed to purchase three additional 757 combis. The four 757 combis will replace CAM's four DC-8 combi aircraft by mid-year, yielding an ATSG fleet that will consist entirely of Boeing 757 and 767 aircraft.

The 757s and 767s are more fuel efficient and reliable than competing freighter aircraft, share a common pilot type rating, and require only a two-person flight crew. Standardization of the fleet, most of which has been modified and modernized within the last five years, will reduce ATSG's aggregate operating expenses and increase service reliability, crew assignment flexibility, and maintenance efficiency. ATSG's aircraft fleet at year-end 2011 and 2012, and its current outlook for aircraft in service at the end of 2013, are summarized in the final table at the end of this release.

ACMI Services

Fourth quarter revenues for ATSG's airline operations were $103.6 million, excluding fuel and other reimbursed expenses, down from $108.3 million in the fourth quarter of 2011. A fourth-quarter pre-tax loss of $3.0 million was down from a $1.8 million pre-tax profit in the fourth quarter of 2011.

As previously reported, D.B. Schenker's North American air freight network agreements with ATSG ended in December 2011. The ACMI Services segment results for the fourth quarter and all of 2012 primarily reflect the loss of the Schenker business. Schenker's contribution to fourth-quarter 2011 airline services revenues was $11.9 million excluding reimbursed amounts, and $85.7 million for all of 2011.

As throughout 2012, delayed aircraft deployments affected fourth-quarter operating results for ACMI Services. Significant new-business operations did not commence when anticipated, leading to lower than expected revenues.

By the end of the first quarter of 2013, ATSG expects to complete the merger of Air Transport International (ATI) and Capital Cargo International Airlines (CCIA), the airlines that had served Schenker. In anticipation of that merger, some of their operations have moved to Wilmington, Ohio, and their staffing levels have been reduced. The most significant operating savings from the merger will occur in the second half of 2013.

In the fourth quarter of 2012, a new two-year service award for combi service for the U.S. military took effect. In December, ATSG agreed to purchase three Boeing 757 combis, one in the fourth quarter and two in the first quarter of 2013. All four 757 combis, including one 757 combi acquired earlier and undergoing certification, are expected to enter service at mid-year.

Significantly, ATSG announced last month the deployment of four Boeing freighters, including one 757 and three 767s, into DHL's domestic network. Those aircraft replace Boeing 727 freighters that were retired at year-end. ATI also extended agreements for three 767s operating in DHL's network in the Mideast.

Fourth-quarter ACMI block hours were down 5 percent overall from a year ago, but increased 2 percent excluding block hours operated for Schenker in the fourth quarter of 2011.

Other Activities

Fourth-quarter revenues from ATSG's other businesses increased 9 percent, to $30.5 million, before the elimination of inter-company results. Pre-tax profit from other activities was $3.0 million, down 30 percent from the year-earlier quarter.

During the fourth quarter, ATSG announced an agreement with the Clinton County (Ohio) Port Authority for the lease of a new 100,000-square-foot hangar facility the port authority will construct at the Wilmington Air Park. Airborne Maintenance & Engineering Services will lease the new hangar on a long-term basis, expanding its ability to provide maintenance, repair and overhaul services to both ATSG and third-party aircraft, beginning in early 2014.

Outlook for 2013

ATSG projects that under current customer agreements and operating levels, and with synergies from the merger of ATI and CCIA, it will generate between $175 and $180 million in Adjusted EBITDA in 2013, compared with $163 million in 2012. First-quarter 2013 EBITDA year-over-year gains are expected to be consistent with the percentage gain for 2013 as a whole. ATSG also projects that its Adjusted EBITDA could increase an additional 8 to 10 percent from the 2013 baseline range, assuming achievement of its aircraft deployment goals.

ATSG has no current plans to acquire aircraft in 2013 other than the previously announced purchase of two Boeing 757 combis. As a result, we expect capital spending to decline approximately $45 million from 2012, to approximately $110 million in 2013.

Hete concluded, “The current market continues to complicate forecasting the timing of aircraft deployments we are discussing with our customers. However, if those programs move forward as current discussions would indicate, 2013 could turn out to be a very good year for our shareholders.”

Conference Call

ATSG will host a conference call on Thursday, February 28, 2013, at 10:00 a.m. Eastern time to review its financial results for the fourth quarter of 2012. Participants should dial 888-895-5271 and international participants should dial 847-619-6547 ten minutes before the scheduled start of the call and ask for conference pass code 34302564. The call will also be webcast live (listen-only mode) via www.atsginc.com and www.earnings.com for individual investors, and via www.streetevents.com for institutional investors.

A replay of the conference call will be available by phone on Thursday, February 28, 2013, beginning at 2:00 p.m. and continuing through Thursday, March 7, 2013, at 888-843-7419 (international callers 630-652-3042); use pass code 34302564#. The webcast replay will remain available via www.atsginc.com and www.earnings.com for 30 days.

About ATSG

ATSG is a leading provider of aircraft leasing and air cargo transportation and related services to domestic and foreign air carriers and other companies that outsource their air cargo lift requirements. ATSG, through its leasing and airline subsidiaries, is the world's largest owner and operator of converted Boeing 767 freighter aircraft. Through its principal subsidiaries, including three airlines with separate and distinct U.S. FAA Part 121 Air Carrier certificates, ATSG provides aircraft leasing, air cargo lift, aircraft maintenance services and airport ground services. ATSG's subsidiaries include ABX Air, Inc.; Airborne Global Solutions, Inc.; Air Transport International, Inc; Cargo Aircraft Management, Inc.; Capital Cargo International Airlines, Inc.; and Airborne Maintenance and Engineering Services, Inc. For more information, please see www.atsginc.com.

Except for historical information contained herein, the matters discussed in this release contain forward-looking statements that involve risks and uncertainties. There are a number of important factors that could cause Air Transport Services Group's ("ATSG's") actual results to differ materially from those indicated by such forward-looking statements. These factors include, but are not limited to, changes in market demand for our assets and services, the costs and timing associated with the modification and certification testing of Boeing 767 and Boeing 757 aircraft, the timing associated with the deployment of aircraft among customers, ATSG's effectiveness in restructuring its airline operations affected by D.B. Schenker's restructuring of its U.S. air cargo operations, and other factors that are contained from time to time in ATSG's filings with the U.S. Securities and Exchange Commission, including its Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Readers should carefully review this release and should not place undue reliance on ATSG's forward-looking statements. These forward-looking statements were based on information, plans and estimates as of the date of this release. ATSG undertakes no obligation to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes.

AIR TRANSPORT SERVICES GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share data)

   
Three Months Ended Year Ended
December 31,   December 31,
2012   2011 2012   2011
REVENUES $ 154,552 $ 166,465 $ 607,438 $ 730,133
 
OPERATING EXPENSES
Salaries, wages and benefits 48,817 48,338 184,644 188,884
Fuel 13,966 19,858 53,928 150,003
Maintenance, materials and repairs 22,405 19,503 97,540 86,929
Depreciation and amortization 21,606 22,198 84,477 91,063
Landing, ramp, rent and insurance 13,337 14,602 49,659 57,140
Travel 5,521 7,532 22,683 28,335
Other operating expenses 7,911 8,525 35,819 38,006
Impairment of aircraft, goodwill and acquired intangibles       27,144  
133,563 140,556 528,750 667,504
       
OPERATING INCOME 20,989 25,909 78,688 62,629
OTHER INCOME (EXPENSE)
Interest income 32 51 136 179
Interest expense (3,497 ) (3,237 ) (14,383 ) (14,181 )
Unrealized gain/(loss) on derivative instruments 923 556 1,879 (4,881 )
Write off of unamortized debt issuance costs       (2,886 )
(2,542 ) (2,630 ) (12,368 ) (21,769 )
       
EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 18,447 23,279 66,320 40,860
INCOME TAX EXPENSE (6,236 ) (9,749 ) (24,672 ) (16,995 )
       
EARNINGS FROM CONTINUING OPERATIONS 12,211 13,530 41,648 23,865
 
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX (198 ) (599 ) (774 ) (673 )
NET EARNINGS $ 12,013   $ 12,931   $ 40,874   $ 23,192  
 
EARNINGS PER SHARE - Basic
Continuing operations $ 0.19   $ 0.21   $ 0.66   $ 0.38  
Discontinued operations   (0.01 ) (0.02 ) (0.01 )
NET EARNINGS PER SHARE $ 0.19   $ 0.20   $ 0.64   $ 0.37  
 
EARNINGS PER SHARE - Diluted
Continuing operations $ 0.19   $ 0.21   $ 0.65   $ 0.37  
Discontinued operations   (0.01 ) (0.02 ) (0.01 )
NET EARNINGS PER SHARE $ 0.19   $ 0.20   $ 0.63   $ 0.36  
 
WEIGHTED AVERAGE SHARES
Basic 63,525   63,336   63,461   63,284  
Diluted 64,244   64,109   64,420   64,085  
 

AIR TRANSPORT SERVICES GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)

   
December 31, December 31,
2012 2011
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 15,442 $ 30,503
Accounts receivable, net of allowance of $749 in 2012 and $434 in 2011 47,858 42,278
Inventory 9,430 8,906
Prepaid supplies and other 8,855 9,785
Deferred income taxes 19,154 31,548
Aircraft and engines held for sale 3,360   9,831  
TOTAL CURRENT ASSETS 104,099 132,851
 
Property and equipment, net 818,924 748,913
Other assets 20,462 18,579
Intangibles 5,146 6,396
Goodwill 86,980   86,980  
TOTAL ASSETS $ 1,035,611   $ 993,719  
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable $ 36,521 $ 48,360
Accrued salaries, wages and benefits 22,917 23,226
Accrued expenses 8,502 10,291
Current portion of debt obligations 21,265 13,223
Unearned revenue 10,311   12,487  
TOTAL CURRENT LIABILITIES 99,516 107,587
 
Long term debt obligations 343,216 333,681
Post-retirement liabilities 185,097 185,562
Other liabilities 62,104 54,212
Deferred income taxes 46,422 42,530
 
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; 64,130,056 and 64,015,789 shares issued and outstanding in 2012 and 2011, respectively 641 640
Additional paid-in capital 523,087 520,613
Accumulated deficit (107,185 ) (148,059 )
Accumulated other comprehensive loss (117,287 ) (103,047 )
TOTAL STOCKHOLDERS’ EQUITY 299,256   270,147  
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 1,035,611   $ 993,719  
 

AIR TRANSPORT SERVICES GROUP, INC. AND SUBSIDIARIES
PRE-TAX EARNINGS AND ADJUSTED PRE-TAX EARNINGS SUMMARY
FROM CONTINUING OPERATIONS
NON-GAAP RECONCILIATION
(In thousands)

   
Three Months Ended Year Ended
December 31, December 31,
2012   2011 2012   2011
Revenues
CAM Leasing $ 39,492 $ 38,534 $ 154,565 $ 140,469
ACMI Services
Airline services 103,587 108,342 404,053 444,778
Reimbursables 17,264   22,669   74,940   160,683  
Total ACMI Services 120,851 131,011 478,993 605,461
Other Activities 30,467   28,042   112,343   105,284  
Total Revenues 190,810 197,587 745,901 851,214
Eliminate internal revenues (36,258 ) (31,122 ) (138,463 ) (121,081 )
Customer Revenues $ 154,552   $ 166,465   $ 607,438   $ 730,133  
 
Pre-tax Earnings (Loss) from Continuing Operations
CAM, inclusive of interest expense 17,680 16,726 68,499 59,982
ACMI Services (2,960 ) 1,768 (14,503 ) 6,576
Asset impairments (27,144 )
Other Activities 3,048 4,330 11,650 11,331
Net, unallocated interest expense (244 ) (101 ) (1,205 ) (2,118 )
Net gain (loss) on derivative instruments 923 556 1,879 (4,881 )
Write off of unamortized debt issuance costs       (2,886 )
Total Pre-tax Earnings $ 18,447 $ 23,279 $ 66,320 $ 40,860
 
Adjustments to Pre-tax Earnings
Add Asset impairment charges 27,144
Less Net (Gain) Loss on derivative instruments (923 ) (556 ) (1,879 ) 4,881
Add Write-off of unamortized debt issuance costs       2,886  
Adjusted Pre-tax Earnings $ 17,524   $ 22,723   $ 64,441   $ 75,771  
 

Notes: During the first half of 2011, the Company refinanced its long-term debt, recorded charges to write-off unamortized debt origination costs associated with terminated credit agreements and recognized losses for certain interest rate swaps which had been designated as hedges of the previous debt. Reimbursable revenues include certain operating costs that are reimbursed to the airlines by their customers. Such costs include fuel used, landing fees and certain aircraft maintenance expenses. The decline in reimbursable revenues during 2012 compared to 2011 reflects the discontinuation of D.B. Schenker's air network in the fourth quarter of 2011.

Adjusted Pre-tax Earnings is defined as Earnings from Continuing Operations Before Income Taxes plus derivative losses, less derivative gains, plus the write-off related to the termination of certain credit agreements in conjunction with the refinancing of the Company's debt. Management uses Adjusted Pre-tax Earnings from Continuing Operations to assess the performance of its operating results among periods. Adjusted Pre-tax earnings from Continuing Operations is a non-GAAP financial measure and should not be considered an alternative to Earnings from Continuing Operations Before Income Taxes or any other performance measure derived in accordance with GAAP.

AIR TRANSPORT SERVICES GROUP, INC. AND SUBSIDIARIES
UNAUDITED ADJUSTED EARNINGS FROM CONTINUING OPERATIONS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION
NON-GAAP RECONCILIATION
(In thousands)

   
Three Months Ended Year Ended
December 31,   December 31,
2012   2011 2012   2011
 
Earnings from Continuing Operations Before Income Taxes $ 18,447 $ 23,279 $ 66,320 $ 40,860
Interest Income (32 ) (51 ) (136 ) (179 )
Interest Expense 3,497 3,237 14,383 14,181
Depreciation and Amortization 21,606   22,198   84,477   91,063  
EBITDA from Continuing Operations $ 43,518 $ 48,663 $ 165,044 $ 145,925
Add Asset impairment charges 27,144
Less Net (Gain) Loss on derivative instruments (923 ) (556 ) (1,879 ) 4,881
Add Write-off of unamortized debt issuance costs 2,886
       
Adjusted EBITDA from Continuing Operations $ 42,595   $ 48,107   $ 163,165   $ 180,836  
 

EBITDA and Adjusted EBITDA from Continuing Operations are non-GAAP financial measures and should not be considered as alternatives to Earnings from Continuing Operations Before Income Taxes or any other performance measure derived in accordance with GAAP.

EBITDA from Continuing Operations is defined as Earnings from Continuing Operations Before Income Taxes plus net interest expense, depreciation, and amortization expense. Adjusted EBITDA from Continuing Operations is defined as EBITDA from Continuing Operations plus asset impairment charges, plus net derivative losses, less derivative gains, plus the write-off related to the termination of certain credit agreements in conjunction with the refinancing of the Company's debt.

Management uses EBITDA from Continuing Operations as an indicator of the cash-generating performance of the operations of the Company. Management uses Adjusted EBITDA and Adjusted Pre-tax Earnings from Continuing Operations to assess the performance of its operating results among periods. EBITDA and Adjusted EBITDA from Continuing Operations, and Adjusted Pre-tax Earnings should not be considered in isolation or as a substitute for analysis of the Company's results as reported under GAAP, or as an alternative measure of liquidity.

Note: A reconciliation of the forward-looking Adjusted EBITDA projections presented in the text of this release is not provided, because of the number of variables in our projected GAAP financial components.

AIR TRANSPORT SERVICES GROUP, INC. AND SUBSIDIARIES
IN-SERVICE AIRCRAFT FLEET

 
Aircraft Types
  December 31,   December 31,   December 31,
2011 2012 2013 Projected
    Operating     Operating     Operating
Total Owned Lease Total Owned Lease Total Owned Lease
B767-200 40 36 4 40 36 4 40 36 4
B767-300 3 2 1 7 5 2 9 7 2
B757-200 3 3 3 3 4 4
B757 Combi 4 4
DC-8 3 3
DC-8 Combi 4 4 4 4
B727-200 4 4
Total Aircraft In-Service 57 52 5 54 48 6 57 51 6
 
Owned Aircraft In Serviceable Condition
December 31, December 31, December 31,
2011 2012 2013 Projected
 
ATSG airlines 31 28 30-32
External customers 21 20 19-21
52 48
 

ATSG Inc.
Quint O. Turner, Chief Financial Officer, 937-382-5591

Source: Air Transport Services Group, Inc.

SHARE THIS: Twitter StockTwits LinkedIn Google Plus SHORT URL: http://bdvt.co/ba3M

SIGN IN TO BOARDVOTE

FORGOT PASSWORD?