Atlas Air Worldwide Holdings, Inc. (Nasdaq: AAWW) today announced
first-quarter 2020 net income of $23.4 million, or $0.90 per
diluted share, compared with a reported loss of $29.7 million, or
$1.15 per diluted share, in the first quarter of 2019.
Reported results in the first quarter of 2020
included an unrealized gain on outstanding warrants of $0.9
million, compared with an unrealized loss on outstanding warrants
of $46.6 million in the year-ago period.
On an adjusted basis, EBITDA totaled $121.2
million in the first quarter this year compared with $120.4 million
in the first quarter of 2019. Adjusted net income in the first
quarter of 2020 totaled $29.9 million, or $1.15 per diluted share,
compared with $27.3 million, or $0.98 per diluted share, in the
prior-year period.
“Our thoughts are with everyone who has been
affected by the COVID-19 pandemic. I would like to thank all of our
employees and the frontline responders around the world for their
tremendous efforts to combat this crisis,” said Atlas Air Worldwide
President and Chief Executive Officer John W. Dietrich.
“As always, safety is our top priority, and we
are focused on supporting our pilots and ground staff through this
challenging time. We are very fortunate to be able to continue to
carry the goods that the world needs.
“We are taking extensive precautions to
safeguard all of our employees and working in close partnership
with our pilots and their union leadership to ensure that our
operations continue safely.
“We are deep cleaning our aircraft and
facilities on a frequent basis, providing safety kits for our
ground staff and crewmembers, and implementing many other safety
procedures to protect our team, customers and service providers. We
are also adjusting routes and schedules to limit exposure to
regions that have been more significantly impacted by the pandemic.
We have also put in place significant social distancing and other
precautionary measures in our offices, including having all
employees who can work remotely from home do so.
“We are also pleased to have announced earlier
today that, at the company’s offering, we reached an agreement with
our pilot unions at Atlas Air and Southern Air for an interim pay
increase of 10%, effective May 1. This recognizes the outstanding
efforts that our pilots provide every day, and especially in this
challenging operating environment. We also remain focused on
completing the joint collective bargaining agreement we have been
pursuing in connection with our merger between Atlas Air and
Southern Air.”
Mr. Dietrich added: “After a slow start, and
despite the continual and varying operational challenges and
uncertainties related to COVID-19, we ended the quarter with
results that exceeded our expectations.
“Our results reflected increased charter cargo
demand and higher airfreight yields in March. They also reflect the
vital role that Atlas plays in supporting the global economy and
our customers by keeping goods moving.
“From parts and components used in manufacturing
processes to finished products, food, pharmaceuticals, supplies and
other cargo, businesses and individuals count on Atlas.
“And we are grateful to be able to provide
relief to businesses and communities in the fight against COVID-19.
In addition to our commercial operations, we donated services to
transport critical personal protective equipment and other
necessary supplies to affected areas. We have also made several
charitable contributions to organizations that help those in
need.
“The strong demand for airfreight has carried
into the second quarter. To meet that demand, we reactivated three
of our 747 converted freighters that had been parked, and began
operating a 777F that was previously in our dry-leasing
business.
“At the same time, we are mindful of the
evolving and uncertain environment and the importance of prudent
financial management. We are taking actions to reduce costs and
enhance liquidity, including significantly reducing discretionary
spending, limiting our hiring for certain positions and selling
nonessential assets.”
Mr. Dietrich continued: “With an exceptionally
talented team of employees, a strong balance sheet, and a
diversified portfolio of assets and services, Atlas continues to
be well-positioned to adjust to market conditions,
navigate through the current pandemic, and leverage the scale
of our operations to further capitalize on business
opportunities.
“We expect the positive trends that we are
currently experiencing to continue throughout the remainder of the
year, and we expect a majority of our earnings to occur in the
second half of this year. The evolving and uncertain environment
related to COVID-19 makes it difficult to accurately predict the
future impact on our results. As such, we are providing an outlook
for the second quarter of 2020, but our full-year 2020 guidance
provided on February 20 of this year no longer applies, and we will
provide updates as the year progresses.
“We expect to fly approximately 80,000 block
hours in the second quarter of 2020, with revenue of approximately
$770 million, and adjusted EBITDA of about $165 million. Excluding
the benefit from a refund of excess aircraft rent paid in previous
years of approximately $25.0 million, after tax, we anticipate
adjusted net income to grow approximately 40% to 50% compared with
adjusted net income of $29.9 million in the first quarter of
2020.
“Including the benefit from a refund of excess
aircraft rent paid in previous years, we anticipate adjusted net
income to more than double compared with the first quarter of this
year.”*
First-Quarter Results
Volumes in the first quarter of 2020 totaled
73,247 block hours compared with 77,061 in the first quarter of
2019, with revenue of $643.5 million compared with $679.7 million
in the prior-year period.
Lower ACMI segment revenue in the first quarter
of 2020 reflected a decrease in flying, primarily driven by the
redeployment of 747-400 aircraft to the Charter segment as well as
customer flight cancellations caused by the COVID-19 pandemic,
partially offset by an increase in 777, 737 and 747-400 CMI
flying.
Higher ACMI segment contribution was primarily
due to an increase in CMI flying and a reduction in aircraft rent
and depreciation, partially offset by the redeployment of 747-400
aircraft to the Charter segment. In addition, segment contribution
was negatively impacted by the COVID-19 pandemic, which resulted in
customers canceling flights and increased operating costs for us,
including premium pay for crews operating in certain areas
significantly impacted by the virus.
Higher Charter segment revenue during the period
was primarily driven by increased flying, partially offset by a
decrease in the average rate per block hour. Block-hour volume
growth primarily reflected the strong demand for commercial cargo,
driven by a reduction of available capacity in the market and the
disruption of global supply chains due to the COVID-19 pandemic,
and the redeployment of 747-400 aircraft from the ACMI segment.
This was partially offset by lower AMC passenger flying as the
military took precautionary measures to limit the movement of
personnel. The lower average rate per block hour was primarily
related to a reduction in Charter capacity purchased from ACMI
customers that had no associated Charter block hours and lower fuel
prices, partially offset by an increase in commercial cargo yields
(excluding fuel).
Higher Charter segment contribution was
primarily driven by an increase in commercial cargo yields
(excluding fuel), reflecting a reduction of available capacity in
the market and the disruption of global supply chains due to the
COVID-19 pandemic. Segment contribution also benefited from lower
aircraft rent and depreciation, and the redeployment of 747-400
aircraft from the ACMI segment. These improvements were partially
offset by lower AMC passenger demand and increased operating costs,
including premium pay for crews operating in certain areas impacted
by COVID-19.
In Dry Leasing, lower segment revenue and
contribution in the first quarter of 2020 primarily reflected that
the prior-year quarter included $22.3 million ($17.9 million after
tax) of revenue from maintenance payments related to the scheduled
return of a 777 freighter.
Higher unallocated income and expenses, net,
during the quarter primarily reflected an insurance recovery in the
first quarter of 2019 and increased amortization of a customer
incentive asset.
Reported earnings in the first quarter of 2020
also included an effective income tax expense rate of 27.4%, due
mainly to tax expense from the vesting of share-based compensation.
On an adjusted basis, our results reflected an effective income tax
rate of 24.2%.
Cash and Short-Term
Investments
At March 31, 2020, our cash and cash
equivalents, short-term investments and restricted cash totaled
$235.6 million, compared with $114.3 million at December 31,
2019.
The change in position resulted from cash
provided by operating, investing and financing activities.
Net cash provided by investing activities during
the first quarter of 2020 primarily related to proceeds from the
disposal of aircraft, partially offset by capital expenditures and
payments for flight equipment and modifications, including spare
engines and GEnx engine performance upgrade kits.
Net cash provided by financing activities during
the period primarily related to proceeds from debt refinancing and
from our revolving credit facility, partially offset by payments on
debt obligations. In March 2020, as a precautionary measure due to
the uncertainty from the COVID-19 pandemic, we drew $75.0 million
under our revolving credit facility and had $19.8 million of unused
availability as of March 31, 2020.
Our ability to continue to service our debt and
meet our lease and other obligations as they come due is dependent
on our continued ability to generate earnings and cash flows. To
mitigate the impact of any continuation or worsening of the
COVID-19 pandemic disruptions, we have significantly reduced
nonessential employee travel, reduced the use of contractors,
limited ground staff hiring, implemented a number of other
cost-reduction initiatives and taken other actions, such as the
sale of certain nonessential assets. We believe we will generate
sufficient liquidity to satisfy our obligations over at least the
next twelve months.
Updating Outlook*
We expect the positive trends that we are
currently experiencing to continue throughout the remainder of the
year, and expect a majority of our earnings to occur in the second
half of this year. The evolving and uncertain environment related
to COVID-19 makes it difficult to accurately predict the future
impact on our results. As such, we are providing an outlook for the
second quarter of 2020, but our full-year 2020 guidance provided on
February 20 of this year no longer applies, and we will provide
updates as the year progresses.
We expect to fly approximately 80,000 block
hours in the second quarter of 2020, with revenue of approximately
$770 million, and adjusted EBITDA of about $165 million. Excluding
the benefit from a refund of excess aircraft rent paid in previous
years of approximately $25.0 million (after tax), we anticipate
adjusted net income to grow approximately 40% to 50% compared with
adjusted net income of $29.9 million in the first quarter of 2020.
Including the benefit from a refund of excess aircraft rent paid in
previous years, we anticipate adjusted net income to more than
double compared with the first quarter of 2020.*
We expect that earnings in the second quarter
will benefit from continued charter demand, including several
long-term charter programs at higher yields, driven by a reduction
of airfreight capacity, increased demand for transporting goods and
the disruption of global supply chains related to COVID-19; a
refund of excess aircraft rent paid in previous years; flying the
incremental CMI aircraft added to our fleet during 2019; and
improved operating efficiencies and cost savings.
We also expect these benefits to be partially
offset by higher heavy maintenance expense; lower AMC demand driven
by the military’s stop-movement order related to COVID-19;
additional costs driven by COVID-19, including crew premium pay;
other operational costs, including costs for continuing to provide
a safe working environment for our employees; and higher crew costs
related to increased pay rates resulting from our recent interim
agreement with the pilots.
In addition, the availability of hotels and
restaurants, evolving COVID-19-related travel restrictions and
health screenings, and cancellations of passenger flights by other
airlines or airport closures could further impact our ability to
position pilots to operate our aircraft.
The second-quarter outlook also reflects the
reactivation of three of our 747 converted freighters that had been
previously parked, and our operation of a 777F that was previously
in our dry-leasing business driven by the continued strong
airfreight demand.
While we are not providing an earnings outlook
for the full year of 2020 at this time, we expect a majority of our
earnings to occur in the second half of the year. Aircraft
maintenance expense in 2020 is expected to total approximately $390
million. Depreciation and amortization is expected to total about
$250 million. In addition, core capital expenditures, which exclude
aircraft and engine purchases, are projected to total approximately
$85 to $95 million, mainly for parts and components for our
fleet.
We also expect our full-year 2020 adjusted effective income tax
rate to be approximately 22.0%.
We provide guidance on an adjusted basis because
we are unable to predict, with reasonable certainty, the effects of
our outstanding warrant liability and other items that could be
material to our reported results.*
Conference Call
Management will host a conference call to
discuss Atlas Air Worldwide’s first-quarter 2020 financial and
operating results at 11:00 a.m. Eastern Time on Thursday, May 7,
2020.
Interested parties may listen to the call live
at Atlas Air Worldwide’s Investor site or at
https://edge.media-server.com/mmc/p/erawj6pw.
For those unable to listen to the live call, a
replay will be archived on the Investor site following the call. A
replay will also be available through May 14 by dialing (855)
859-2056 (U.S. Toll Free) or (404) 537-3406 (from outside the U.S.)
and using Access Code 9238139#.
About Non-GAAP Financial
Measures
To supplement our financial statements presented
in accordance with U.S. GAAP, we present certain non-GAAP financial
measures to assist in the evaluation of our business performance.
These non-GAAP measures include Adjusted EBITDA; Adjusted net
income; Adjusted Diluted EPS; Adjusted effective tax rate; and Free
Cash Flow, which exclude certain noncash income and expenses, and
items impacting year-over-year comparisons of our results. These
non-GAAP measures may not be comparable to similarly titled
measures used by other companies and should not be considered in
isolation or as a substitute for Net income (loss); Diluted EPS;
Effective tax rate; and Net Cash Provided by Operating Activities,
which are the most directly comparable measures of performance
prepared in accordance with U.S. GAAP. Effective during the three
months ended September 30, 2019, we changed our method of
calculating Adjusted EBITDA to include Other Non-operating expenses
(income) to enhance the usefulness for investors and analysts, and
the comparability of the calculation to that of other companies.
Prior period amounts have been adjusted for comparability.
Our management uses these non-GAAP financial
measures in assessing the performance of the company’s ongoing
operations and in planning and forecasting future periods. We
believe that these adjusted measures, when considered together with
the corresponding U.S. GAAP financial measures and the
reconciliations to those measures, provide meaningful supplemental
information to assist investors and analysts in understanding our
financial results and assessing our prospects for future
performance. For example:
- Adjusted EBITDA; Adjusted net
income; and Adjusted Diluted EPS provide a more comparable basis to
analyze operating results and earnings and are measures commonly
used by shareholders to measure our performance. In addition,
management’s incentive compensation is determined, in part, by
using Adjusted EBITDA and Adjusted net income.
- Adjusted effective tax rate
provides improved insight into the tax effects of our ongoing
business operations.
- Free Cash Flow helps investors
assess our ability, over the long term, to create value for our
shareholders as it represents cash available to execute our capital
allocation strategy.
*We provide guidance on an adjusted basis and
are unable to provide forward-looking guidance on a U.S. GAAP basis
or a reconciliation to the most directly comparable U.S. GAAP
measures because we are unable to predict with reasonable certainty
the ultimate outcome of certain significant items. The principal
item is the impact on our results of our outstanding warrant
liability, which are highly dependent on the change in our stock
price during the period reported. These items are uncertain, depend
on various factors, and could have a material impact on our U.S.
GAAP results.
About Atlas Air Worldwide:
Atlas Air Worldwide is a leading global provider
of outsourced aircraft and aviation operating services. It is the
parent company of Atlas Air, Inc., Southern Air Holdings, Inc. and
Titan Aviation Holdings, Inc., and is the majority shareholder of
Polar Air Cargo Worldwide, Inc. Our companies operate the world’s
largest fleet of 747 freighter aircraft and provide customers the
broadest array of Boeing 747, 777, 767 and 737 aircraft for
domestic, regional and international cargo and passenger
operations.
Atlas Air Worldwide’s press releases, SEC
filings and other information may be accessed through the company’s
home page, www.atlasairworldwide.com.
This release contains “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995 that reflect Atlas Air Worldwide’s current views
with respect to certain current and future events and financial
performance. Those statements are based on management’s beliefs,
plans, expectations and assumptions, and on information currently
available to management. Generally, the words “will,” “may,”
“should,” “expect,” “anticipate,” “intend,” “plan,” “continue,”
“believe,” “seek,” “project,” “estimate,” and similar expressions
used in this release that do not relate to historical facts are
intended to identify forward-looking statements.
Such forward-looking statements speak only as of
the date of this release. They are and will be, as the case may be,
subject to many risks, uncertainties and factors relating to the
operations and business environments of Atlas Air Worldwide and its
subsidiaries (collectively, the “companies”) that may cause the
actual results of the companies to be materially different from any
future results, express or implied, in such forward-looking
statements.
Factors that could cause actual results to
differ materially from these forward-looking statements include,
but are not limited to, the following: our ability to effectively
operate the network service contemplated by our agreements with
Amazon; our ability to coordinate with Amazon to accept newly
converted aircraft; the possibility that Amazon may terminate its
agreements with the companies; the ability of the companies to
operate pursuant to the terms of their financing facilities; the
ability of the companies to obtain and maintain normal terms with
vendors and service providers; the companies’ ability to maintain
contracts that are critical to their operations; the ability of the
companies to fund and execute their business plan; the ability of
the companies to attract, motivate and/or retain key executives,
pilots and associates; the ability of the companies to attract and
retain customers; the continued availability of our wide-body
aircraft; demand for cargo services in the markets in which the
companies operate; changes in U.S. and foreign government trade
policies; economic conditions; the impact of geographical events or
health epidemics such as the COVID-19 pandemic; the effects of any
hostilities or act of war (in the Middle East or elsewhere) or any
terrorist attack; significant data breach or disruption of our
information technology systems; labor costs and relations, work
stoppages and service slowdowns; the outcome of pending
negotiations with our pilots’ union; financing costs; the cost and
availability of war risk insurance; aviation fuel costs;
security-related costs; competitive pressures on pricing
(especially from lower-cost competitors); volatility in the
international currency markets; weather conditions; government
legislation and regulation; consumer perceptions of the companies’
products and services; anticipated and future litigation; and other
risks and uncertainties set forth from time to time in Atlas Air
Worldwide’s reports to the United States Securities and Exchange
Commission.
For additional information, we refer you to the
risk factors set forth under the heading “Risk Factors” in the most
recent Annual Report on Form 10-K and subsequent reports on Form
10-Q filed by Atlas Air Worldwide with the Securities and Exchange
Commission. Other factors and assumptions not identified above may
also affect the forward-looking statements, and these other factors
and assumptions may also cause actual results to differ materially
from those discussed.
Except as stated in this release, Atlas Air
Worldwide is not providing guidance or estimates regarding its
anticipated business and financial performance for 2020 or
thereafter.
Atlas Air Worldwide assumes no obligation to
update such statements contained in this release to reflect actual
results, changes in assumptions or changes in other factors
affecting such estimates other than as required by law and
expressly disclaims any obligation to revise or update publically
any forward-looking statement to reflect future events or
circumstances.
Atlas Air Worldwide Holdings,
Inc. Consolidated Statements of
Operations(in thousands, except per share
data)(Unaudited)
|
|
For the Three Months Ended |
|
|
|
March 31, 2020 |
|
|
March 31, 2019 |
|
|
|
|
|
|
|
|
|
|
Operating
Revenue |
|
$ |
643,502 |
|
|
$ |
679,683 |
|
|
|
|
|
|
|
|
|
|
Operating
Expenses |
|
|
|
|
|
|
|
|
Salaries, wages and benefits |
|
|
147,744 |
|
|
|
145,474 |
|
Aircraft fuel |
|
|
108,318 |
|
|
|
106,321 |
|
Maintenance, materials and repairs |
|
|
94,152 |
|
|
|
103,620 |
|
Depreciation and amortization |
|
|
57,584 |
|
|
|
64,481 |
|
Travel |
|
|
42,391 |
|
|
|
45,029 |
|
Passenger and ground handling services |
|
|
31,959 |
|
|
|
32,160 |
|
Navigation fees, landing fees and other rent |
|
|
31,401 |
|
|
|
40,216 |
|
Aircraft rent |
|
|
23,967 |
|
|
|
41,888 |
|
Gain on disposal of aircraft |
|
|
(6,717 |
) |
|
|
- |
|
Transaction-related expenses |
|
|
521 |
|
|
|
2,527 |
|
Other |
|
|
51,112 |
|
|
|
51,093 |
|
Total Operating Expenses |
|
|
582,432 |
|
|
|
632,809 |
|
Operating Income |
|
|
61,070 |
|
|
|
46,874 |
|
Non-operating Expenses
(Income) |
|
|
|
|
|
|
|
|
Interest income |
|
|
(480 |
) |
|
|
(2,044 |
) |
Interest expense |
|
|
29,275 |
|
|
|
30,353 |
|
Capitalized interest |
|
|
(193 |
) |
|
|
(463 |
) |
Loss on early extinguishment of debt |
|
|
- |
|
|
|
245 |
|
Unrealized (gain) loss on financial instruments |
|
|
(924 |
) |
|
|
46,575 |
|
Other (income) expense, net |
|
|
1,206 |
|
|
|
(2,975 |
) |
Total Non-operating Expenses |
|
|
28,884 |
|
|
|
71,691 |
|
Income (loss) before income taxes |
|
|
32,186 |
|
|
|
(24,817 |
) |
Income tax expense |
|
|
8,833 |
|
|
|
4,893 |
|
|
|
|
|
|
|
|
|
|
Net Income
(Loss) |
|
$ |
23,353 |
|
|
$ |
(29,710 |
) |
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.90 |
|
|
$ |
(1.15 |
) |
Diluted |
|
$ |
0.90 |
|
|
$ |
(1.15 |
) |
|
|
|
|
|
|
|
|
|
Weighted average
shares: |
|
|
|
|
|
|
|
|
Basic |
|
|
25,966 |
|
|
|
25,735 |
|
Diluted |
|
|
25,966 |
|
|
|
25,735 |
|
|
|
|
|
|
|
|
|
|
Atlas Air Worldwide Holdings,
Inc. Consolidated Balance Sheets (in
thousands, except share data)(Unaudited)
|
|
March 31, 2020 |
|
|
December 31, 2019 |
|
Assets |
|
|
|
|
|
|
|
|
Current
Assets |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
225,160 |
|
|
$ |
103,029 |
|
Short-term investments |
|
|
- |
|
|
|
879 |
|
Restricted cash |
|
|
10,459 |
|
|
|
10,401 |
|
Accounts receivable, net of allowance of $1,182 and $1,822,
respectively |
|
|
274,202 |
|
|
|
290,119 |
|
Prepaid expenses, assets held for sale and other current
assets |
|
|
187,739 |
|
|
|
228,103 |
|
Total current assets |
|
|
697,560 |
|
|
|
632,531 |
|
Property and
Equipment |
|
|
|
|
|
|
|
|
Flight equipment |
|
|
4,911,265 |
|
|
|
4,880,424 |
|
Ground equipment |
|
|
85,163 |
|
|
|
83,584 |
|
Less: accumulated depreciation |
|
|
(1,026,946 |
) |
|
|
(977,883 |
) |
Flight equipment modifications in progress |
|
|
62,953 |
|
|
|
67,101 |
|
Property and equipment, net |
|
|
4,032,435 |
|
|
|
4,053,226 |
|
Other
Assets |
|
|
|
|
|
|
|
|
Operating lease right-of-use assets |
|
|
215,099 |
|
|
|
231,133 |
|
Deferred costs and other assets |
|
|
385,170 |
|
|
|
391,895 |
|
Intangible assets, net and goodwill |
|
|
75,348 |
|
|
|
76,856 |
|
Total
Assets |
|
$ |
5,405,612 |
|
|
$ |
5,385,641 |
|
|
|
|
|
|
|
|
|
|
Liabilities and
Equity |
|
|
|
|
|
|
|
|
Current
Liabilities |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
91,092 |
|
|
$ |
79,683 |
|
Accrued liabilities |
|
|
447,379 |
|
|
|
481,725 |
|
Current portion of long-term debt and finance leases |
|
|
283,066 |
|
|
|
395,781 |
|
Current portion of long-term operating leases |
|
|
142,668 |
|
|
|
141,973 |
|
Total current liabilities |
|
|
964,205 |
|
|
|
1,099,162 |
|
Other
Liabilities |
|
|
|
|
|
|
|
|
Long-term debt and finance leases |
|
|
2,148,200 |
|
|
|
1,984,902 |
|
Long-term operating leases |
|
|
357,533 |
|
|
|
392,832 |
|
Deferred taxes |
|
|
80,933 |
|
|
|
74,040 |
|
Financial instruments and other liabilities |
|
|
21,991 |
|
|
|
42,526 |
|
Total other liabilities |
|
|
2,608,657 |
|
|
|
2,494,300 |
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
Stockholders’ Equity |
|
|
|
|
|
|
|
|
Preferred stock, $1 par value; 10,000,000 shares authorized; no
shares issued |
|
|
- |
|
|
|
- |
|
Common stock, $0.01 par value; 100,000,000 shares authorized;
31,483,409 and 31,048,842 shares issued, 26,126,232 and
25,870,876 shares outstanding (net of treasury stock), as of
March 31, 2020 and December 31, 2019,
respectively |
|
|
315 |
|
|
|
310 |
|
Additional paid-in-capital |
|
|
782,517 |
|
|
|
761,715 |
|
Treasury stock, at cost; 5,357,177 and 5,177,966 shares,
respectively |
|
|
(217,705 |
) |
|
|
(213,871 |
) |
Accumulated other comprehensive loss |
|
|
(2,573 |
) |
|
|
(2,818 |
) |
Retained earnings |
|
|
1,270,196 |
|
|
|
1,246,843 |
|
Total stockholders’ equity |
|
|
1,832,750 |
|
|
|
1,792,179 |
|
Total Liabilities and
Equity |
|
$ |
5,405,612 |
|
|
$ |
5,385,641 |
|
1 Balance sheet debt at
March 31, 2020 totaled $2,431.3 million, including the impact
of $64.2 million of unamortized discount and debt issuance costs of
$34.5 million, compared with $2,380.7 million, including the impact
of $68.6 million of unamortized discount and debt issuance costs of
$35.1 million at December 31, 2019.2 The face value of
our debt at March 31, 2020 totaled $2,530.0 million, compared with
$2,484.4 million on December 31, 2019.
Atlas Air Worldwide Holdings,
Inc. Consolidated Statements of Cash
Flows (in thousands) (Unaudited)
|
|
For the Three Months Ended |
|
|
|
March 31, 2020 |
|
|
March 31, 2019 |
|
|
|
|
|
|
|
|
|
|
Operating
Activities: |
|
|
|
|
|
|
|
|
Net Income (Loss) |
|
$ |
23,353 |
|
|
$ |
(29,710 |
) |
|
|
|
|
|
|
|
|
|
Adjustments to reconcile Net
Income (Loss) to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
74,352 |
|
|
|
78,988 |
|
Accretion of debt securities discount |
|
|
(2 |
) |
|
|
(127 |
) |
Provision for expected credit losses |
|
|
(73 |
) |
|
|
34 |
|
Loss on early extinguishment of debt |
|
|
- |
|
|
|
245 |
|
Unrealized (gain) loss on financial instruments |
|
|
(924 |
) |
|
|
46,575 |
|
Gain on disposal of aircraft |
|
|
(6,717 |
) |
|
|
- |
|
Deferred taxes |
|
|
7,352 |
|
|
|
4,751 |
|
Stock-based compensation |
|
|
3,860 |
|
|
|
5,621 |
|
Changes
in: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
16,515 |
|
|
|
9,686 |
|
Prepaid expenses, current assets and other assets |
|
|
(5,476 |
) |
|
|
(42,309 |
) |
Accounts payable and accrued liabilities |
|
|
(40,393 |
) |
|
|
(19,985 |
) |
Net cash provided by operating
activities |
|
|
71,847 |
|
|
|
53,769 |
|
Investing
Activities: |
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
(8,291 |
) |
|
|
(30,584 |
) |
Payments for flight equipment and modifications |
|
|
(26,000 |
) |
|
|
(57,332 |
) |
Proceeds from insurance |
|
|
- |
|
|
|
38,133 |
|
Proceeds from investments |
|
|
881 |
|
|
|
4,961 |
|
Proceeds from disposal of aircraft |
|
|
44,110 |
|
|
|
- |
|
Net cash provided by (used
for) investing activities |
|
|
10,700 |
|
|
|
(44,822 |
) |
Financing
Activities: |
|
|
|
|
|
|
|
|
Proceeds from debt issuance |
|
|
164,000 |
|
|
|
19,723 |
|
Payment of debt issuance costs |
|
|
(2,386 |
) |
|
|
(955 |
) |
Payments of debt and finance lease obligations |
|
|
(193,644 |
) |
|
|
(90,907 |
) |
Proceeds from revolving credit facility |
|
|
75,000 |
|
|
|
- |
|
Customer maintenance reserves and deposits received |
|
|
2,586 |
|
|
|
4,144 |
|
Customer maintenance reserves paid |
|
|
(2,080 |
) |
|
|
- |
|
Purchase of treasury stock |
|
|
(3,834 |
) |
|
|
(9,189 |
) |
Net cash provided by (used
for) financing activities |
|
|
39,642 |
|
|
|
(77,184 |
) |
Net increase (decrease) in
cash, cash equivalents and restricted cash |
|
|
122,189 |
|
|
|
(68,237 |
) |
Cash, cash equivalents and
restricted cash at the beginning of period |
|
|
113,430 |
|
|
|
232,741 |
|
Cash, cash equivalents and
restricted cash at the end of period |
|
$ |
235,619 |
|
|
$ |
164,504 |
|
|
|
|
|
|
|
|
|
|
Noncash Investing and
Financing Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of flight equipment included in Accounts payable and
accrued liabilities |
|
$ |
16,368 |
|
|
$ |
7,752 |
|
Acquisition of property and equipment acquired under operating
leases |
|
$ |
670 |
|
|
$ |
- |
|
Customer maintenance reserves settled with sale of aircraft |
|
$ |
6,497 |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
Atlas Air Worldwide Holdings, Inc. Direct
Contribution (in thousands) (Unaudited)
|
For the Three Months Ended |
|
|
March 31, 2020 |
|
|
March 31, 2019 |
|
Operating Revenue: |
|
|
|
|
|
|
|
ACMI |
$ |
278,744 |
|
|
$ |
306,567 |
|
Charter |
|
327,629 |
|
|
|
305,114 |
|
Dry Leasing |
|
41,926 |
|
|
|
69,946 |
|
Customer incentive asset
amortization |
|
(9,022 |
) |
|
|
(6,286 |
) |
Other |
|
4,225 |
|
|
|
4,342 |
|
Total Operating
Revenue |
$ |
643,502 |
|
|
$ |
679,683 |
|
Direct
Contribution: |
|
|
|
|
|
|
|
ACMI |
$ |
52,306 |
|
|
$ |
40,006 |
|
Charter |
|
50,781 |
|
|
|
29,133 |
|
Dry Leasing |
|
10,698 |
|
|
|
35,527 |
|
Total Direct
Contribution for Reportable Segments |
|
113,785 |
|
|
|
104,666 |
|
|
|
|
|
|
|
|
|
Unallocated expenses and
(income), net |
|
(88,719 |
) |
|
|
(80,136 |
) |
Loss on early extinguishment
of debt |
|
- |
|
|
|
(245 |
) |
Unrealized gain (loss) on
financial instruments |
|
924 |
|
|
|
(46,575 |
) |
Transaction-related
expenses |
|
(521 |
) |
|
|
(2,527 |
) |
Gain on disposal of
aircraft |
|
6,717 |
|
|
|
- |
|
Income (loss) before
income taxes |
|
32,186 |
|
|
|
(24,817 |
) |
|
|
|
|
|
|
|
|
Add back (subtract): |
|
|
|
|
|
|
|
Interest income |
|
(480 |
) |
|
|
(2,044 |
) |
Interest expense |
|
29,275 |
|
|
|
30,353 |
|
Capitalized interest |
|
(193 |
) |
|
|
(463 |
) |
Loss on early extinguishment
of debt |
|
- |
|
|
|
245 |
|
Unrealized (gain) loss on
financial instruments |
|
(924 |
) |
|
|
46,575 |
|
Other (income) expense,
net |
|
1,206 |
|
|
|
(2,975 |
) |
Operating
Income |
$ |
61,070 |
|
|
$ |
46,874 |
|
Atlas Air Worldwide uses an economic performance
metric, Direct Contribution, to show the profitability of each of
its segments after allocation of direct operating and ownership
costs. Atlas Air Worldwide currently has the following reportable
segments: ACMI, Charter, and Dry Leasing. Each segment has
different commercial and economic characteristics, which are
separately reviewed by our chief operating decision maker.
Direct Contribution consists of income (loss)
before income taxes, excluding special charge, transaction-related
expenses, nonrecurring items, loss (gain) on disposal of aircraft,
loss on early extinguishment of debt, unrealized loss (gain) on
financial instruments, gain on investment, and unallocated income
and expenses, net.
Direct operating and ownership costs include
crew costs, maintenance, fuel, ground operations, sales costs,
aircraft rent, interest expense on the portion of debt used for
financing aircraft, interest income on debt securities, and
aircraft depreciation.
Unallocated income and expenses, net include corporate overhead,
nonaircraft depreciation, noncash expenses and income, interest
expense on the portion of debt used for general corporate purposes,
interest income on nondebt securities, capitalized interest,
foreign exchange gains and losses, other revenue and other
nonoperating costs.
Atlas Air Worldwide Holdings, Inc.
Reconciliation to Non-GAAP Measures (in thousands, except
per share data) (Unaudited)
|
|
For the Three Months Ended |
|
|
|
March 31,2020 |
|
|
March 31,2019 |
|
|
PercentChange |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
(Loss) |
|
$ |
23,353 |
|
|
$ |
(29,710 |
) |
|
NM |
|
Impact from: |
|
|
|
|
|
|
|
|
|
|
|
Customer incentive asset amortization |
|
|
9,022 |
|
|
|
6,286 |
|
|
|
|
Costs associated with transactions1 |
|
|
521 |
|
|
|
2,527 |
|
|
|
|
Leadership transition costs |
|
|
601 |
|
|
|
- |
|
|
|
|
Certain contract start-up costs2 |
|
|
- |
|
|
|
369 |
|
|
|
|
Noncash expenses and income, net3 |
|
|
4,386 |
|
|
|
4,468 |
|
|
|
|
Unrealized (gain) loss on financial instruments |
|
|
(924 |
) |
|
|
46,575 |
|
|
|
|
Other, net4 |
|
|
(6,382 |
) |
|
|
(3,163 |
) |
|
|
|
Income tax effect of reconciling items |
|
|
(697 |
) |
|
|
(30 |
) |
|
|
|
Adjusted Net
Income |
|
$ |
29,880 |
|
|
$ |
27,322 |
|
|
9.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average diluted
shares outstanding |
|
|
25,966 |
|
|
|
25,735 |
|
|
|
|
Add: dilutive warrant5 |
|
|
- |
|
|
|
1,943 |
|
|
|
|
dilutive restricted stock |
|
|
- |
|
|
|
242 |
|
|
|
|
Adjusted weighted average diluted shares outstanding |
|
|
25,966 |
|
|
|
27,920 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Diluted
EPS |
|
$ |
1.15 |
|
|
$ |
0.98 |
|
|
17.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Atlas Air Worldwide Holdings, Inc.
Reconciliation to Non-GAAP Measures (in thousands, except
per share data) (Unaudited)
|
|
For the Three Months Ended |
|
|
|
March 31,2020 |
|
|
March 31,2019 |
|
|
PercentChange |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before
income taxes |
|
$ |
32,186 |
|
|
$ |
(24,817 |
) |
|
NM |
|
Impact from: |
|
|
|
|
|
|
|
|
|
|
|
Customer incentive asset amortization |
|
|
9,022 |
|
|
|
6,286 |
|
|
|
|
Costs associated with transactions1 |
|
|
521 |
|
|
|
2,527 |
|
|
|
|
Leadership transition costs |
|
|
601 |
|
|
|
- |
|
|
|
|
Certain contract start-up costs2 |
|
|
- |
|
|
|
369 |
|
|
|
|
Noncash expenses and income, net3 |
|
|
4,386 |
|
|
|
4,468 |
|
|
|
|
Unrealized (gain) loss on financial instruments |
|
|
(924 |
) |
|
|
46,575 |
|
|
|
|
Other, net4 |
|
|
(6,382 |
) |
|
|
(3,163 |
) |
|
|
|
Adjusted income before
income taxes |
|
$ |
39,410 |
|
|
$ |
32,245 |
|
|
22.2 |
% |
Interest expense, net |
|
|
24,216 |
|
|
|
23,851 |
|
|
|
|
Other expense, net |
|
|
1,206 |
|
|
|
474 |
|
|
|
|
Adjusted operating
income |
|
$ |
64,832 |
|
|
$ |
56,570 |
|
|
14.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
|
$ |
8,833 |
|
|
$ |
4,893 |
|
|
|
|
Income tax effect of reconciling items |
|
|
(697 |
) |
|
|
(30 |
) |
|
|
|
Adjusted income tax expense |
|
|
9,530 |
|
|
|
4,923 |
|
|
|
|
Adjusted income before income taxes |
|
$ |
39,410 |
|
|
$ |
32,245 |
|
|
|
|
Adjusted effective tax expense rate |
|
|
24.2 |
% |
|
|
15.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Atlas Air Worldwide Holdings, Inc.
Reconciliation to Non-GAAP Measures (in thousands)
(Unaudited)
|
|
For the Three Months Ended |
|
|
|
March 31,2020 |
|
|
March 31,2019 |
|
|
PercentChange |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
(Loss) |
|
$ |
23,353 |
|
|
$ |
(29,710 |
) |
|
NM |
|
Interest expense, net |
|
|
28,602 |
|
|
|
27,846 |
|
|
|
|
Depreciation and
amortization |
|
|
57,584 |
|
|
|
64,481 |
|
|
|
|
Income tax expense |
|
|
8,833 |
|
|
|
4,893 |
|
|
|
|
EBITDA |
|
|
118,372 |
|
|
|
67,510 |
|
|
|
|
Customer incentive asset
amortization |
|
|
9,022 |
|
|
|
6,286 |
|
|
|
|
Costs associated with
transactions1 |
|
|
521 |
|
|
|
2,527 |
|
|
|
|
Leadership transition
costs |
|
|
601 |
|
|
|
- |
|
|
|
|
Unrealized (gain) loss on
financial instruments |
|
|
(924 |
) |
|
|
46,575 |
|
|
|
|
Other, net4 |
|
|
(6,382 |
) |
|
|
(2,534 |
) |
|
|
|
Adjusted
EBITDA |
|
$ |
121,210 |
|
|
$ |
120,364 |
|
|
0.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
1 Costs associated with transactions
in 2020 primarily related to costs associated with our acquisition
of Southern Air. Costs associated with transactions in 2019
primarily related to a customer transaction with warrants and other
costs associated with our acquisition of Southern Air.
2 Certain contract start-up costs in
2019 represented unique training-aircraft costs required for a new
customer contract.
3 Noncash expenses and income, net,
in 2020 and 2019 primarily related to amortization of debt discount
on convertible notes.
4 Other, net in 2020 primarily
related to a $6.7 million net gain on the sale of aircraft, costs
associated with the refinancing of debt and accrual for legal
matters and professional fees. Other, net in 2019 primarily
related to a net insurance recovery, loss on early extinguishment
of debt and accrual for legal matters and professional fees
5 Dilutive warrants in 2019
represent potentially dilutive common shares related to warrants
issued to a customer. These warrants are excluded from Diluted
EPS prepared in accordance with GAAP when they would have been
antidilutive.
Atlas Air Worldwide Holdings, Inc.
Reconciliation to Non-GAAP Measures (in thousands, except
per share data) (Unaudited)
|
|
For the Three Months Ended |
|
|
March 31, 2020 |
|
March 31, 2019 |
|
|
|
|
|
|
Net Cash Provided by Operating Activities |
|
$ |
71,847 |
|
$ |
53,769 |
Less: |
|
|
|
|
|
Capital expenditures |
|
|
8,291 |
|
|
30,584 |
Capitalized interest |
|
|
193 |
|
|
463 |
Free Cash
Flow1 |
|
$ |
63,363 |
|
$ |
22,722 |
1 Free Cash Flow = Cash Flows from
Operations minus Base Capital Expenditures and Capitalized
Interest.
Base Capital Expenditures
excludes purchases of aircraft.
Atlas Air Worldwide Holdings, Inc.
Operating Statistics and Traffic Results (Unaudited)
|
|
For the Three Months Ended |
|
|
|
|
|
|
March 31,2020 |
|
|
March 31,2019 |
|
|
Increase/(Decrease) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Block
Hours |
|
|
|
|
|
|
|
|
|
|
|
|
ACMI |
|
|
54,379 |
|
|
|
59,780 |
|
|
|
(5,401 |
) |
Charter |
|
|
18,265 |
|
|
|
16,660 |
|
|
|
1,605 |
|
Cargo |
|
|
13,539 |
|
|
|
11,479 |
|
|
|
2,060 |
|
Passenger |
|
|
4,726 |
|
|
|
5,181 |
|
|
|
(455 |
) |
Other |
|
|
603 |
|
|
|
621 |
|
|
|
(18 |
) |
Total Block Hours |
|
|
73,247 |
|
|
|
77,061 |
|
|
|
(3,814 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue Per Block
Hour |
|
|
|
|
|
|
|
|
|
|
|
|
ACMI |
|
$ |
5,126 |
|
|
$ |
5,128 |
|
|
$ |
(2 |
) |
Charter |
|
$ |
17,938 |
|
|
$ |
18,314 |
|
|
$ |
(376 |
) |
Cargo |
|
$ |
17,502 |
|
|
$ |
17,976 |
|
|
$ |
(474 |
) |
Passenger |
|
$ |
19,184 |
|
|
$ |
19,063 |
|
|
$ |
121 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Utilization
(block hours per day) |
|
|
|
|
|
|
|
|
|
|
|
|
ACMI1 |
|
|
7.7 |
|
|
|
8.6 |
|
|
|
(0.9 |
) |
Charter |
|
|
|
|
|
|
|
|
|
|
|
|
Cargo |
|
|
7.7 |
|
|
|
8.0 |
|
|
|
(0.3 |
) |
Passenger |
|
|
5.3 |
|
|
|
6.5 |
|
|
|
(1.2 |
) |
All Operating Aircraft1,2 |
|
|
7.6 |
|
|
|
8.4 |
|
|
|
(0.8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fuel |
|
|
|
|
|
|
|
|
|
|
|
|
Charter |
|
|
|
|
|
|
|
|
|
|
|
|
Average fuel cost per gallon |
|
$ |
2.00 |
|
|
$ |
2.22 |
|
|
$ |
(0.22 |
) |
Fuel gallons consumed (000s) |
|
|
54,279 |
|
|
|
47,872 |
|
|
|
6,407 |
|
1 ACMI and All Operating Aircraft averages in the first
quarter of 2020 reflect the impact of increases in the number of
CMI aircraft and amount of CMI flying compared with the same period
of 2019.
2 Average of All Operating Aircraft excludes Dry Leasing
aircraft, which do not contribute to block-hour volumes.
Atlas Air Worldwide Holdings, Inc.
Operating Statistics and Traffic Results (Unaudited)
|
|
For the Three Months Ended |
|
|
|
|
|
|
March 31,2020 |
|
|
March 31,2019 |
|
|
Increase/(Decrease) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Operating
Fleet(average aircraft
equivalentsduring the period) |
|
|
|
|
|
|
|
|
|
|
|
|
ACMI1 |
|
|
|
|
|
|
|
|
|
|
|
|
747-8F Cargo |
|
|
9.0 |
|
|
|
9.0 |
|
|
|
- |
|
747-400 Cargo |
|
|
12.9 |
|
|
|
17.6 |
|
|
|
(4.7 |
) |
747-400 Dreamlifter |
|
|
3.6 |
|
|
|
3.6 |
|
|
|
- |
|
777-200 Cargo |
|
|
8.0 |
|
|
|
6.0 |
|
|
|
2.0 |
|
767-300 Cargo |
|
|
24.0 |
|
|
|
25.6 |
|
|
|
(1.6 |
) |
767-200 Cargo |
|
|
9.0 |
|
|
|
9.0 |
|
|
|
- |
|
737-800 Cargo |
|
|
5.0 |
|
|
|
- |
|
|
|
5.0 |
|
737-400 Cargo |
|
|
5.0 |
|
|
|
5.0 |
|
|
|
- |
|
767-200 Passenger |
|
|
1.0 |
|
|
|
1.0 |
|
|
|
- |
|
Total |
|
|
77.5 |
|
|
|
76.8 |
|
|
|
0.7 |
|
Charter |
|
|
|
|
|
|
|
|
|
|
|
|
747-8F Cargo |
|
|
1.0 |
|
|
|
1.0 |
|
|
|
- |
|
747-400 Cargo |
|
|
18.3 |
|
|
|
15.0 |
|
|
|
3.3 |
|
747-400 Passenger |
|
|
5.0 |
|
|
|
4.0 |
|
|
|
1.0 |
|
767-300 Passenger |
|
|
4.8 |
|
|
|
4.9 |
|
|
|
(0.1 |
) |
Total |
|
|
29.1 |
|
|
|
24.9 |
|
|
|
4.2 |
|
Dry Leasing |
|
|
|
|
|
|
|
|
|
|
|
|
777-200 Cargo |
|
|
7.0 |
|
|
|
8.0 |
|
|
|
(1.0 |
) |
767-300 Cargo |
|
|
21.0 |
|
|
|
21.6 |
|
|
|
(0.6 |
) |
757-200 Cargo |
|
|
0.5 |
|
|
|
1.0 |
|
|
|
(0.5 |
) |
737-300 Cargo |
|
|
1.0 |
|
|
|
1.0 |
|
|
|
- |
|
737-800 Passenger |
|
|
0.6 |
|
|
|
1.0 |
|
|
|
(0.4 |
) |
Total |
|
|
30.1 |
|
|
|
32.6 |
|
|
|
(2.5 |
) |
Less: Aircraft Dry Leased to CMI customers |
|
|
(21.0 |
) |
|
|
(23.6 |
) |
|
|
2.6 |
|
Total Operating Average Aircraft Equivalents |
|
|
115.7 |
|
|
|
110.7 |
|
|
|
5.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Out of Service2 |
|
5.4 |
|
|
- |
|
|
5.4 |
|
1 ACMI average fleet excludes spare aircraft provided by CMI
customers.
2 Out-of-service includes aircraft that are either temporarily
parked or held for sale.
Contacts: Investors – InvestorRelations@atlasair.com Media
– CorpCommunications@atlasair.com
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