Raises 2024 Adjusted EBITDA Outlook Generates
Strong Free Cash Flow Leases Four Boeing 767 Freighters to
Customers since June 30
Air Transport Services Group, Inc. (Nasdaq: ATSG), the leading
provider of medium wide-body freighter aircraft leasing, contracted
air transportation, and related services, today reported
consolidated financial results for the second quarter ended June
30, 2024. Those results, as compared with the same period in 2023,
were as follows:
Second Quarter Results
- Revenues of $488 million, versus $529 million
- GAAP Earnings per Share (diluted) from Continuing Operations of
$0.11, versus $0.49
- GAAP Pretax Earnings from Continuing Operations of $10.7
million, versus $49.7 million
- Adjusted Pretax* Earnings of $17.3 million, versus $57.9
million
- Adjusted EPS* of $0.19, versus $0.57
- Adjusted EBITDA* of $130.4 million, versus $157.1 million
- Free Cash Flow was $91.8 million, versus negative $1.3
million
Mike Berger, chief executive officer of ATSG, said, "Our second
quarter results were affected by fewer block hours by our airlines
and the scheduled return of Boeing 767-200 freighters since a year
ago. We beat our internal expectations for the quarter, however,
and are positioned for further improvement in the second half of
the year, particularly in the fourth quarter. We're encouraged by
the free cash flow we're generating and have again raised our full
year guidance for Adjusted EBITDA. We have leased four aircraft to
customers since the end of June and are encouraged by the momentum
we're seeing in the global markets we serve. We remain proud of the
service levels we deliver every day and are particularly pleased
that we met commitments to our customer Amazon during this year's
Prime Week."
* Adjusted EPS (Earnings per Share), Adjusted Pretax Earnings,
Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and
Amortization), Free Cash Flow, and Adjusted Free Cash Flow are
non-GAAP financial measures used in this release, which are defined
and reconciled to the most directly comparable financial measures
calculated and presented in accordance with GAAP at the end of this
release.
Segment Results
Cargo Aircraft Management (CAM)
- Aircraft leasing and related revenues decreased 7% for the
second quarter, including the benefit of revenues from fourteen
additional freighter leases, including eleven additional 767-300s
and three Airbus A321-200s since the end of June 2023. These lease
revenues were more than offset by the scheduled returns of nine
767-200 freighters and four 767-300 freighters over that same
period. Revenue reductions associated with the 767-200 fleet
include the effect of fewer cycles operated by lessees under our
767-200 engine power program.
- CAM’s second quarter pretax earnings decreased $16 million, or
51%, to $15 million versus the prior-year quarter. The biggest
driver of the year-over-year decrease was the previously mentioned
reduction in 767-200 freighter lease and engine power program
revenues. Segment interest expense increased by $4 million and
depreciation increased by $9 million versus the prior-year
quarter.
- CAM leased three 767s and sold five others to external
customers in the second quarter. Six 767-200 freighters were
returned by external customers upon lease expiration. At the end of
the second quarter, eighty-seven CAM-owned freighter aircraft were
leased to external customers, one more than a year ago.
- Twenty-three CAM-owned aircraft were in or awaiting conversion
to freighters at the end of the second quarter, six fewer than at
the end of the prior-year quarter. This included twelve 767s, six
A321s, and five A330s. Two of the A330s are expected to complete
conversion and be leased to an external customer in the fourth
quarter 2024.
ACMI Services
- Pretax loss was $7 million in the second quarter, versus
earnings of $24 million in the second quarter of 2023. Revenue
block hours for ATSG's airlines decreased 10% versus the prior-year
quarter. Cargo block hours decreased 11% for the second quarter,
reflecting the removal of certain 767-200 freighter aircraft from
service and less international flying versus the prior year.
Passenger block hours decreased 4% in the quarter. In addition to
the reduced flying hours and reduced revenues, ACMI Services
experienced increased expenses for crew training, maintenance,
travel and ground service rates. Of the decrease in pretax
earnings, $3 million was attributable to an increase in non-cash
amortization for Amazon warrants.
2024 Outlook
Taking into account the four aircraft leases that commenced
since the end of June, ATSG expects Adjusted EBITDA of
approximately $526 million in 2024. That is an increase,
concentrated in the fourth quarter, of $10 million from the outlook
provided in May 2024. This forecast excludes any contribution from
additional aircraft leases not currently under contractual
commitment. The Company continues to see the potential for
additional Adjusted EBITDA from new lease commitments for available
aircraft and opportunities for additional flying.
ATSG expects capital spending for 2024 to be $390 million, down
from the $410 million estimated in May 2024, and down $400 million
from 2023 actual spending. ATSG's total projected capital spend
includes growth capital of $225 million. ATSG expects third quarter
Adjusted EBITDA to be similar to the second quarter as ramp-up
costs for adding ten Amazon supplied 767 freighters continue, but
higher in the fourth quarter when the last few enter service and
other peak-season operations occur.
Berger added, “We are on track to achieve our improved 2024
outlook. We expect contracted pricing increases and seasonal
charter opportunities in the fourth quarter, which should drive
improved sequential results in our ACMI Services segment. This
expected improvement, combined with momentum in our core leasing
business, positions us well to drive earnings growth in 2025. We
are ahead of our target for positive free cash flow for the year,
with $107 million generated in the first half and an expectation to
add to that total in the second half."
Non-GAAP Financial Measures This release, including the
attached tables, contains financial measures that are calculated
and presented in accordance with Generally Accepted Accounting
Principles ("GAAP") in the United States, and financial measures
that are not calculated and presented in accordance with GAAP
("non-GAAP financial measures"). Management uses these non-GAAP
financial measures to evaluate historical results and project
future results. Management believes that these non-GAAP financial
measures assist in highlighting operational trends, facilitating
period-over-period comparisons, and providing additional clarity
about events and trends affecting core operating performance.
Disclosing these non-GAAP financial measures provides insight to
investors about additional metrics that management uses to evaluate
past performance and prospects for future performance. Non-GAAP
financial measures should not be considered in isolation or as a
substitute for analysis of the Company's results as reported under
GAAP and may be calculated differently by other companies.
The historical non-GAAP financial measures included in this
release are reconciled to the most directly comparable financial
measure calculated and presented in accordance with GAAP in the
non-GAAP reconciliation tables included later in this release. The
Company does not provide a reconciliation of projected Adjusted
EBITDA or Adjusted EPS, as permitted by Item 10(e)(1)(i)(B) of
Regulation S-K, because it is unable to predict with reasonable
accuracy the value of certain adjustments and as a result, the
comparable GAAP measures are unavailable without unreasonable
efforts. For example, certain adjustments can be significantly
impacted by the re-measurements of financial instruments including
stock warrants issued to a customer. The Company’s earnings on a
GAAP basis, including its earnings per share on a GAAP basis, and
the non-GAAP adjustments for gains and losses resulting from the
re-measurement of stock warrants, will depend on, among other
things, the future prices of ATSG stock, interest rates, and other
assumptions which are highly uncertain. As a result, the Company
believes such reconciliations of forward-looking information would
imply a degree of precision and certainty that could be confusing
to investors.
Conference Call ATSG will host an investor conference
call on Friday, August 9, 2024, at 10 a.m. Eastern Time to review
its results for the second quarter of 2024, and its outlook for the
remainder of the year. Live call participants must register via
this link, which is also available at ATSG’s website
(www.atsginc.com) under “Investors” and “Presentations.” Once
registered, call participants will receive dial-in numbers and a
unique Personal Identification Number (PIN) that must be entered to
join the live call. Listen-only access to live and replay versions
of the call, including slides, will be available via a webcast link
at the same ATSG website location. Slides that accompany
management’s discussion of first-quarter results may be downloaded
from there starting shortly before the start of the call at 10
a.m.
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, passenger ACMI and charter services,
aircraft maintenance services and airport ground services. ATSG's
subsidiaries include ABX Air, Inc.; Airborne Global Solutions,
Inc.; Airborne Maintenance and Engineering Services, Inc.,
including its subsidiary, Pemco World Air Services, Inc.; Air
Transport International, Inc.; Cargo Aircraft Management, Inc.; and
Omni Air International, LLC. For more information, please see
www.atsginc.com.
Cautionary Note Regarding Forward-Looking Statements
Throughout this release, Air Transport Services Group, Inc.
(“ATSG") makes “forward-looking statements” within the meaning of
the U.S. Private Securities Litigation Reform Act of 1995, as
amended (the “Act”). Except for historical information contained
herein, the matters discussed in this release contain
forward-looking statements that involve inherent risks and
uncertainties. Such statements are provided under the “safe harbor”
protection of the Act. Forward-looking statements include, but are
not limited to, statements regarding anticipated operating results,
prospects and aircraft in service, technological developments,
economic trends, expected transactions and similar matters. The
words “may,” “believe,” “expect,” “anticipate,” “target,” “goal,”
“project,” “estimate,” “guidance,” “forecast,” “outlook,” “will,”
“continue,” “likely,” “should,” “hope,” “seek,” “plan,” “intend”
and variations of such words and similar expressions identify
forward-looking statements. Similarly, descriptions of ATSG’s
objectives, strategies, plans, goals or targets are also
forward-looking statements. Forward-looking statements are
susceptible to a number of risks, uncertainties and other factors.
While ATSG believes that the assumptions underlying its
forward-looking statements are reasonable, investors are cautioned
that any of the assumptions could prove to be inaccurate and,
accordingly, ATSG’s actual results and experiences could differ
materially from the anticipated results or other expectations
expressed in its forward-looking statements. A number of important
factors could cause ATSG's actual results to differ materially from
those indicated by such forward-looking statements. These factors
include, but are not limited to: (i) changes in the market demand
for ATSG's assets and services, including the loss of customers or
a reduction in the level of services it performs for customers;
(ii) its operating airlines' ability to maintain on-time service
and control costs; (iii) the cost and timing with respect to which
it is able to purchase and modify aircraft to a cargo
configuration; (iv) fluctuations in ATSG's traded share price and
in interest rates, which may result in mark-to-market charges on
certain financial instruments; (v) the number, timing, and
scheduled routes of its aircraft deployments to customers; (vi)
ATSG's ability to remain in compliance with key agreements with
customers, lenders and government agencies; (vii) the impact of
current supply chain constraints, which may be more severe or
persist longer than it currently expects; (viii) the impact of the
current competitive labor market; (ix) changes in general economic
and/or industry-specific conditions, including inflation and
regulatory changes; and (x) the impact of geopolitical tensions or
conflicts and human health crises, and other factors that could
cause ATSG’s actual results to differ materially from those
indicated by such forward-looking statements, which are discussed
in “Risk Factors” in Item 1A of ATSG's 2023 Form 10-K and may be
contained from time to time in its other filings with the U.S.
Securities and Exchange Commission, including its annual reports on
Form 10-K, quarterly reports on Form 10-Q and current reports on
Form 8-K. Readers should carefully review this release and should
not place undue reliance on ATSG's forward-looking statements.
These forward-looking statements were based only on information,
plans and estimates as of the date of this release. New risks and
uncertainties arise from time to time, and factors that ATSG
currently deems immaterial may become material, and it is
impossible for ATSG to predict these events or how they may affect
it. Except as may be required by applicable law, 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. ATSG does not endorse any
projections regarding future performance that may be made by third
parties.
AIR TRANSPORT SERVICES GROUP,
INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS
OF EARNINGS (UNAUDITED)
(In thousands, except per share
data)
Three Months Ended
Six Months Ended
June 30,
June 30,
2024
2023
2024
2023
REVENUES
$
488,410
$
529,339
$
973,927
$
1,030,434
OPERATING EXPENSES
Salaries, wages and benefits
164,079
170,458
335,561
347,173
Depreciation and amortization
91,879
82,691
182,259
167,419
Maintenance, materials and repairs
46,727
50,436
96,610
94,269
Fuel
65,577
67,271
129,122
134,026
Contracted ground and aviation
services
21,726
19,682
37,432
37,470
Travel
32,180
31,222
62,626
60,775
Landing and ramp
4,505
4,744
8,535
8,868
Rent
7,698
8,274
15,230
16,386
Insurance
2,557
2,684
5,293
5,232
Other operating expenses
20,161
22,136
36,934
41,652
457,089
459,598
909,602
913,270
OPERATING INCOME
31,321
69,741
64,325
117,164
OTHER INCOME (EXPENSE)
Interest income
218
180
457
395
Non-service component of retiree benefit
costs
(1,086
)
(3,218
)
(2,171
)
(6,436
)
Net gain on financial instruments
2,946
1,818
5,301
78
Loss from non-consolidated affiliate
(1,254
)
(2,107
)
(1,333
)
(2,513
)
Interest expense
(21,403
)
(16,672
)
(43,391
)
(32,377
)
(20,579
)
(19,999
)
(41,137
)
(40,853
)
EARNINGS FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES
10,742
49,742
23,188
76,311
INCOME TAX EXPENSE
(3,314
)
(11,720
)
(7,141
)
(18,148
)
EARNINGS FROM CONTINUING OPERATIONS
7,428
38,022
16,047
58,163
EARNINGS FROM DISCONTINUED OPERATIONS, NET
OF TAXES
—
—
—
—
NET EARNINGS
$
7,428
$
38,022
$
16,047
$
58,163
EARNINGS PER SHARE - CONTINUING
OPERATIONS
Basic
$
0.11
$
0.54
$
0.25
$
0.82
Diluted
$
0.11
$
0.49
$
0.24
$
0.73
WEIGHTED AVERAGE SHARES - CONTINUING
OPERATIONS
Basic
65,028
70,722
65,000
71,259
Diluted
67,301
79,515
67,268
81,276
AIR TRANSPORT SERVICES GROUP,
INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS (UNAUDITED)
(In thousands, except share
data)
June 30, 2024
December 31, 2023
ASSETS
CURRENT ASSETS:
Cash, cash equivalents and restricted
cash
$
28,714
$
53,555
Accounts receivable, net of allowance of
$1,151 in 2024 and $1,065 in 2023
205,740
215,581
Inventory
50,548
49,939
Prepaid supplies and other
30,476
26,626
TOTAL CURRENT ASSETS
315,478
345,701
Property and equipment, net
2,819,077
2,820,769
Customer incentive
140,764
60,961
Goodwill and acquired intangibles
477,320
482,427
Operating lease assets
65,399
54,060
Other assets
121,447
118,172
TOTAL ASSETS
$
3,939,485
$
3,882,090
LIABILITIES AND STOCKHOLDERS’
EQUITY
CURRENT LIABILITIES:
Accounts payable
$
255,386
$
227,652
Accrued salaries, wages and benefits
47,677
56,650
Accrued expenses
11,119
10,784
Current portion of debt obligations
54,825
54,710
Current portion of lease obligations
21,465
20,167
Unearned revenue
38,310
30,226
TOTAL CURRENT LIABILITIES
428,782
400,189
Long term debt
1,577,328
1,707,572
Stock warrant obligations
17,079
1,729
Post-retirement obligations
16,195
19,368
Long term lease obligations
45,591
34,990
Other liabilities
97,357
64,292
Deferred income taxes
291,767
285,248
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;
150,000,000 shares authorized; 65,761,436 and 65,240,961 shares
issued and outstanding in 2024 and 2023, respectively
658
652
Additional paid-in capital
912,968
836,270
Retained earnings
605,256
589,209
Accumulated other comprehensive loss
(53,496
)
(57,429
)
TOTAL STOCKHOLDERS’ EQUITY
1,465,386
1,368,702
TOTAL LIABILITIES AND STOCKHOLDERS’
EQUITY
$
3,939,485
$
3,882,090
AIR TRANSPORT SERVICES GROUP,
INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED SUMMARY OF
CASH FLOWS (UNAUDITED)
(In thousands)
Three Months Ended
Six Months Ended
June 30,
June 30,
2024
2023
2024
2023
OPERATING CASH FLOWS
$
137,101
$
192,198
$
263,521
$
408,576
INVESTING ACTIVITIES:
Aircraft acquisitions and freighter
conversions
(43,153
)
(138,556
)
(115,048
)
(303,164
)
Planned aircraft maintenance, engine
overhauls and other non-aircraft additions to property and
equipment
(27,344
)
(55,568
)
(57,770
)
(109,761
)
Proceeds from property and equipment
25,219
585
26,114
10,445
Acquisitions and investments in
businesses
—
—
(9,800
)
(800
)
TOTAL INVESTING CASH FLOWS
(45,278
)
(193,539
)
(156,504
)
(403,280
)
FINANCING ACTIVITIES:
Principal payments on secured debt
(331,218
)
(65,103
)
(471,323
)
(90,317
)
Proceeds from revolver borrowings
245,000
35,000
340,000
140,000
Payments for financing costs
—
(27
)
—
(511
)
Purchase of common stock
—
(14,956
)
—
(36,874
)
Taxes paid for conversion of employee
awards
(72
)
(25
)
(535
)
(1,578
)
TOTAL FINANCING CASH FLOWS
(86,290
)
(45,111
)
(131,858
)
10,720
NET INCREASE (DECREASE) IN CASH
$
5,533
$
(46,452
)
$
(24,841
)
$
16,016
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD
$
23,181
$
89,602
$
53,555
$
27,134
CASH AND CASH EQUIVALENTS AT END OF
PERIOD
$
28,714
$
43,150
$
28,714
$
43,150
AIR TRANSPORT SERVICES GROUP,
INC. AND SUBSIDIARIES
PRETAX EARNINGS FROM CONTINUING
OPERATIONS AND ADJUSTED PRETAX EARNINGS SUMMARY
NON-GAAP RECONCILIATION
(In thousands)
Three Months Ended
Six Months Ended
June 30,
June 30,
2024
2023
2024
2023
Revenues
CAM
Aircraft leasing and related revenues
$
107,566
$
115,281
$
216,211
$
232,355
Customer incentive
(3,097
)
(3,903
)
(6,193
)
(8,933
)
Total CAM
104,469
111,378
210,018
223,422
ACMI Services
ACMI services revenue
342,255
367,003
666,895
701,922
Customer incentive
(4,076
)
(816
)
(4,892
)
(1,608
)
Total ACMI Services
338,179
366,187
662,003
700,314
Other Activities
97,640
110,789
206,680
221,377
Total Revenues
540,288
588,354
1,078,701
1,145,113
Eliminate internal revenues
(51,878
)
(59,015
)
(104,774
)
(114,679
)
Customer Revenues
$
488,410
$
529,339
$
973,927
$
1,030,434
Pretax Earnings (Loss) from Continuing
Operations
CAM, inclusive of interest
expense
15,247
31,020
28,656
65,220
ACMI Services, inclusive of interest
expense
(7,076
)
24,054
(10,561
)
21,643
Other Activities
2,973
(1,299
)
5,280
(645
)
Net, unallocated interest
expense
(1,008
)
(526
)
(1,984
)
(1,036
)
Non-service components of retiree
benefit costs
(1,086
)
(3,218
)
(2,171
)
(6,436
)
Net gain on financial
instruments
2,946
1,818
5,301
78
Loss from non-consolidated
affiliates
(1,254
)
(2,107
)
(1,333
)
(2,513
)
Earnings from Continuing Operations
before Income Taxes (GAAP)
$
10,742
$
49,742
$
23,188
$
76,311
Adjustments to Pretax Earnings from
Continuing Operations
Add contra-revenue from customer
incentive
7,173
4,719
11,085
10,541
Add loss from non-consolidated
affiliates
1,254
2,107
1,333
2,513
Less net gain on financial instruments
(2,946
)
(1,818
)
(5,301
)
(78
)
Less non-service components of retiree
benefit costs
1,086
3,218
2,171
6,436
Add net charges for hangar foam
incident
—
(28
)
—
13
Adjusted Pretax Earnings
(non-GAAP)
$
17,309
$
57,940
$
32,476
$
95,736
Adjusted Pretax Earnings (non-GAAP) excludes certain items
included in GAAP-based Pretax Earnings (Loss) from Continuing
Operations before Income Taxes because these items are distinctly
different in their predictability among periods, or not closely
related to our operations. Presenting this measure provides
investors with a comparative metric of fundamental operations,
while highlighting changes to certain items among periods. Adjusted
Pretax Earnings 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
ADJUSTED EARNINGS FROM CONTINUING
OPERATIONS BEFORE INTEREST, TAXES, DEPRECIATION AND
AMORTIZATION
NON-GAAP RECONCILIATION
(In thousands)
Three Months Ended
Six Months Ended
June 30,
June 30,
2024
2023
2024
2023
Earnings (Loss) from Continuing
Operations Before Income Taxes
$
10,742
$
49,742
$
23,188
$
76,311
Interest Income
(218
)
(180
)
(457
)
(395
)
Interest Expense
21,403
16,672
43,391
32,377
Depreciation and Amortization
91,879
82,691
182,259
167,419
EBITDA from Continuing Operations
(non-GAAP)
$
123,806
$
148,925
$
248,381
$
275,712
Add contra-revenue from customer
incentive
7,173
4,719
11,085
10,541
Add start-up loss from non-consolidated
affiliates
1,254
2,107
1,333
2,513
Less net gain on financial instruments
(2,946
)
(1,818
)
(5,301
)
(78
)
Less non-service components of retiree
benefit costs
1,086
3,218
2,171
6,436
Add net charges for hangar foam fire
suppression system discharge
—
(28
)
—
13
Adjusted EBITDA (non-GAAP)
$
130,373
$
157,123
$
257,669
$
295,137
Management uses Adjusted EBITDA (non-GAAP, defined below) to
assess the performance of the Company's operating results among
periods. It is a metric that facilitates the comparison of
financial results of underlying operations. Additionally, these
non-GAAP adjustments are similar to the adjustments used by lenders
in the Company’s senior secured credit facility to assess financial
performance and determine the cost of borrowed funds. The
adjustments also remove the non-service cost components of retiree
benefit plans because they are not closely related to ongoing
operating activities. To improve comparability between periods, the
adjustments also exclude from EBITDA from Continuing Operations the
recognition of charges related to the discharge of a foam fire
suppression system in a Company aircraft hangar, net of related
insurance recoveries. Management presents EBITDA from Continuing
Operations (defined below), as a subtotal toward calculating
Adjusted EBITDA.
EBITDA from Continuing Operations (non-GAAP) is defined as
Earnings (Loss) from Continuing Operations Before Income Taxes plus
net interest expense, depreciation, and amortization expense.
Adjusted EBITDA is defined as EBITDA from Continuing Operations
less financial instrument revaluation gains or losses, non-service
components of retiree benefit costs, amortization of warrant-based
customer incentive costs recorded in revenue, charge off of debt
issuance costs upon refinancing, costs from non-consolidated
affiliates and charges related to the discharge of a foam fire
suppression system, net of insurance recoveries.
AIR TRANSPORT SERVICES GROUP,
INC. AND SUBSIDIARIES
CASH FLOWS
NON-GAAP RECONCILIATION
(In thousands)
Three Months Ended
Six Months Ended
June 30,
June 30,
2024
2023
2024
2023
NET CASH FLOWS FROM OPERATING
ACTIVITIES (GAAP)
$
137,101
$
192,198
$
263,521
$
408,576
Sustaining capital expenditures
(27,344
)
(55,568
)
(57,770
)
(109,761
)
ADJUSTED FREE CASH FLOW
(non-GAAP)
$
109,757
$
136,630
$
205,751
$
298,815
Aircraft acquisitions and freighter
conversions
(43,153
)
(138,556
)
(115,048
)
(303,164
)
Proceeds from property and equipment
25,219
585
26,114
10,445
Acquisitions and investments in
businesses
—
—
(9,800
)
(800
)
FREE CASH FLOW (non-GAAP)
$
91,823
$
(1,341
)
$
107,017
$
5,296
Sustaining capital expenditures includes cash outflows for
planned aircraft maintenance, engine overhauls, information systems
and other non-aircraft additions to property and equipment. It does
not include expenditures for aircraft acquisitions and related
passenger-to-freighter conversion costs.
Adjusted Free Cash Flow (non-GAAP) includes cash flow from
operating activities net of expenditures for planned aircraft
maintenance, engine overhauls and other non-aircraft additions to
property and equipment. Free Cash Flow (non-GAAP) is net cash from
operating activities reduced for net cash flows from investing
activities. Management believes that adjusting GAAP operating cash
flows is useful for investors to evaluate the company's ability to
generate adjusted free cash flow for growth initiatives, debt
service, stock buybacks or other discretionary allocations of
capital.
AIR TRANSPORT SERVICES GROUP, INC. AND
SUBSIDIARIES ADJUSTED EARNINGS AND ADJUSTED EARNINGS PER SHARE
NON-GAAP RECONCILIATION (In thousands)
Management presents Adjusted Earnings and Adjusted Earnings Per
Share, both non-GAAP financial measures, to provide additional
information regarding earnings per share without the volatility
otherwise caused by the items below among periods.
Three Months Ended
Six Months Ended
June 30, 2024
June 30, 2023
June 30, 2024
June 30, 2023
$
$ Per Share
$
$ Per Share
$
$ Per Share
$
$ Per Share
Earnings from Continuing Operations -
basic (GAAP)
$
7,428
$
38,022
$
16,047
$
58,163
Gain from warrant revaluation, net
tax1
—
—
—
(148
)
Convertible notes interest charges, net of
tax 2
158
780
317
1,556
Earnings from Continuing Operations -
diluted (GAAP)
7,586
0.11
38,802
$
0.49
16,364
$
0.24
59,571
$
0.73
Adjustments, net of tax
Customer incentive 3
5,434
0.08
3,665
0.05
8,427
0.13
8,211
0.11
Non-service component of retiree
benefits4
823
0.01
2,499
0.03
1,653
0.02
5,012
0.06
Derivative and warrant revaluation5
(2,232
)
(0.02
)
(1,411
)
(0.02
)
(4,034
)
(0.06
)
95
0.00
Loss from affiliates6
950
0.01
1,636
0.02
1,010
0.02
1,953
0.02
Hangar foam incident7
—
—
(22
)
—
—
—
10
0.00
Adjusted Earnings and Adjusted Earnings
Per Share (non-GAAP)
$
12,561
$
0.19
$
45,169
$
0.57
$
23,420
$
0.35
$
74,852
$
0.92
Shares
Shares
Shares
Shares
Weighted Average Shares -
diluted1
67,301
79,515
67,268
81,276
Adjusted Earnings and Adjusted Earnings Per Share should not be
considered as alternatives to Earnings (Loss) from Continuing
Operations, Weighted Average Shares - diluted or Earnings (Loss)
Per Share from Continuing Operations or any other performance
measure derived in accordance with GAAP. Adjusted Earnings and
Adjusted Earnings Per Share should not be considered in isolation
or as a substitute for analysis of the Company's results as
reported under GAAP.
- Under U.S. GAAP, certain warrants are reflected as a liability
and unrealized warrant gains are typically removed from diluted
earnings per share (“EPS”) calculations, while unrealized warrant
losses are not removed because they are dilutive to EPS. For each
quarter, additional shares assumes that Amazon net settled its
remaining warrants that were above the strike price. Each year
reflects an average of the quarterly shares.
- Under U.S. GAAP, certain types of convertible debt are treated
under the "if-convert method" if dilutive for EPS. Stock-based
compensation awards are treated under the "treasury stock method"
if dilutive for EPS. The non-GAAP presentation adds the dilutive
effects that were excluded under GAAP.
- Removes the amortization of the warrant-based customer
incentives which are recorded against revenue over the term of the
related aircraft leases and customer contracts.
- Removes the non-service component effects of employee
post-retirement plans.
- Removes gains and losses from financial instruments, including
derivative interest rate instruments and warrant revaluations.
- Removes losses for the Company's non-consolidated
affiliates.
- Removes charges related to the discharge of a foam fire
suppression system in a Company aircraft hangar, net of related
insurance recoveries.
AIR TRANSPORT SERVICES GROUP,
INC. AND SUBSIDIARIES
AIRCRAFT FLEET
Aircraft Types
June 30, 2023
December 31, 2023
June 30, 2024
December 31, 2024
Projected1
Freighter
Passenger
Freighter
Passenger
Freighter
Passenger
Freighter
Passenger
Aircraft in service
B767-200 2
24
3
22
3
18
3
17
3
B767-300
83
8
87
8
93
10
106
10
B777-200
—
3
—
3
—
3
—
3
B757-200
—
—
—
—
—
—
—
—
B757 Combi
—
4
—
4
—
4
—
4
A321-200
—
—
3
—
3
—
4
—
A330
—
—
—
—
—
—
2
—
Total Aircraft in Service
107
18
112
18
114
20
129
20
Aircraft available for lease
B767-200
2
—
1
—
—
—
—
—
B767-300
—
—
3
—
2
—
3
—
A321
—
—
—
—
—
—
5
—
A330
—
—
—
—
—
—
—
—
Total Aircraft Available for
Lease
2
—
4
—
2
—
8
—
Aircraft in Cargo Modification
B767-300
20
—
9
—
5
—
2
—
A321
9
—
6
—
6
—
—
—
A330
—
—
2
—
4
—
3
—
Feedstock
B767
—
—
5
—
7
—
5
—
A321
—
—
—
—
—
—
—
—
A330
—
—
1
1
1
Total Aircraft
138
18
139
18
139
20
148
20
Aircraft in Service
June 30,
December 31,
June 30,
December 31,
2023
2023
2024
2024 Projected 1
Dry leased without CMI
38
42
47
52
Dry leased with CMI
48
48
40
40
Customer provided for CMI
15
16
17
27
ACMI/Charter3
24
24
30
30
- Projected aircraft levels for December 31, 2024 include
customer commitments for new leases, management's estimates of
existing lease renewals, aircraft expected to complete the
freighter modification process and scheduled aircraft acquisitions
during 2024.
- As Boeing 767-200 aircraft are retired from service, management
plans to use the engines and related parts to support the remaining
Boeing 767 fleet and part sales.
- ACMI/Charter includes four Boeing 767 passenger aircraft leased
from external companies through December 31, 2023 and six Boeing
767 passenger aircraft leased from external companies after
December 31, 2023.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240808710366/en/
Quint Turner, ATSG Inc. Chief Financial Officer 937-366-2303
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