Demand for medium-size cargo aircraft remains strong

2023 Outlook revised to reflect macro effects on ATSG airlines

Air Transport Services Group, Inc. (Nasdaq: ATSG), the leading provider of medium wide-body aircraft leasing, contracted air transportation, and related services, today reported consolidated financial results for the quarter ended March 31, 2023. Those results, as compared with the same quarter in 2022 were as follows:

First Quarter 2023 Results

  • Revenues $501 million, up 3%
  • GAAP EPS (basic) from Continuing Operations $0.28, down $0.39
  • GAAP Pretax Earnings from Continuing Operations of $27 million, versus $65 million
  • Adjusted Pretax* Earnings $38 million, down from $64 million
  • Adjusted EPS* $0.36, versus $0.56
  • Adjusted EBITDA* $138 million, down $20 million

Rich Corrado, president and chief executive officer of ATSG, said, "These results, while disappointing, do reflect the operating headwinds we talked about in February, including lower 2023 results at our airlines. The first quarter Adjusted EBITDA reflected lower than expected passenger airline revenues, and the continued impact of inflation at our airlines. Our aircraft leasing business, CAM, has seen no reduction in demand for its desirable leased freighters, and continues to invest with the expectation of delivering attractive returns for the midsize freighter aircraft we expect to lease during the rest of 2023 and into 2024."

*Adjusted EPS (Earnings per Share), Adjusted Pretax Earnings, Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) and Adjusted Free Cash Flow are non-GAAP financial measures and are defined and reconciled to GAAP measures at the end of this release.

Segment Results

Cargo Aircraft Management (CAM)

  • Aircraft leasing and related revenues from external customers in the first quarter were up 8% compared to the first quarter of 2022, primarily reflecting the benefit of eight newly converted Boeing 767-300 freighters leased since the beginning of the first quarter of 2022, offset by lower revenues from engine pooling arrangements for customers leasing 767-200 freighters.
  • CAM’s first-quarter pretax earnings decreased 2% to $34 million versus the prior-year quarter. Those earnings were impacted by $2.3 million more interest expense allocated to CAM, driven by more aircraft assets, including feedstock in or awaiting freighter modification.
  • CAM deployed two 767-300 freighters to an external customer during the quarter. One 767-200 freighter was returned upon lease expiration. Ninety-two CAM-owned 767 freighter aircraft were leased to external customers at the end of the quarter, six more than a year ago.
  • CAM intends to deploy eighteen more freighters in 2023, including twelve 767s and six A321s. Twenty-seven CAM-owned aircraft were in or awaiting conversion to freighters, twelve more than a year ago. That quarter-end total includes nine A321 aircraft and eighteen 767s.

ACMI Services

  • Pretax earnings were a loss of $2 million in the first quarter, versus earnings of $22 million in the first quarter of 2022. Nearly all the decrease compared to the prior year is attributable to our ACMI and charter airline, Omni Air. Segment results overall were affected by inflation, including increases in line maintenance personnel and flight crew travel and training costs.
  • Revenue block hours for ATSG's airlines were essentially flat for the first quarter compared to the prior-year period despite operating six more aircraft in 2023. Cargo block hours increased 4%. Hours flown by the four Boeing 757 combination freighter-passenger aircraft were up significantly due to the resumption of a Pacific route in late 2022. Passenger block hours flown by Omni Air decreased by 25%. The prior year quarter included passenger hours flown for additional routes to Europe.

2023 Outlook

ATSG now expects its Adjusted EBITDA for 2023 to be in a range of $610 million to $620 million, and full year Adjusted EPS in a range of $1.55 to $1.70, based on lower ACMI Services passenger flying than was projected and inflationary effects associated with ACMI airline operations since initial 2023 guidance in February. CAM is projected to deliver results consistent with February guidance.

The Adjusted EBITDA and Adjusted EPS forecasts for 2023 continue to assume:

  • ACMI Services pretax results will be slightly positive in the first half, and improving in the second half.
  • Dry leases this year for up to six Airbus A321-200 freighters currently awaiting approval by the foreign regulatory agencies, and fourteen newly converted 767-300s. CAM's results will also be affected by the re-lease or sale of five Boeing 767-200 freighters currently leased to Amazon.

ATSG continues to project 2023 capital spending of $850 million, including $260 million in sustaining capex and $590 million for growth.

Corrado said that demand for ATSG’s freighter aircraft remains very strong, including its Boeing 767s, the narrow-body A321s, and the Airbus A330 freighters the company will begin to deploy next year. CAM is expected to generate more than $70 million in 2024 revenues from freighters it expects to lease this year.

“Our customers remain eager to lease the freighter aircraft we intend to deliver,” he said. “The persistent growth in online commerce throughout the world, and the need to replace older, less efficient aircraft types, means that midsize freighters will remain essential to global economic growth."

Corrado added that "If future market conditions were to affect projected returns on our fleet investments, we have the flexibility to significantly reduce our planned growth investments in 2024 and beyond, in favor of other options, such as debt reduction and additional share repurchases. Our decisions about capital allocation will always be driven by what creates the most value for shareholders.”

Non-GAAP Financial Measures

This release, including the attached non-GAAP Reconciliation tables, contains financial measures that are not calculated and presented in accordance with generally accepted accounting principles in the United States ("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 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 because it is unable to predict with reasonable accuracy the value of certain adjustments. 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 the future prices of ATSG stock, interest rates, and other assumptions which are highly uncertain.

Conference Call

ATSG will host an investor conference call on Friday, May 5, 2023, at 10 a.m. Eastern Time to review its financial results for the first quarter of 2023, and its outlook for remainder of the year. Live call participants must register via this link that 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 fourth-quarter results also may be downloaded there shortly before the start of the call at 10 a.m.

Annual Meeting of Stockholders

ATSG's 2023 Annual Meeting of Stockholders will be held virtually on May 24, 2023, at 11 a.m. Eastern Time. Stockholders of record as of March 27, 2023, may participate by phone or online at www.virtualshareholdermeeting.com/ATSG2023 to consider and vote on, among other items, the election of directors to the Board, ratification of the selection of auditors for 2023, and an advisory vote on executive compensation. ATSG's 2023 Proxy Statement, its 2022 Annual Report, and its 2022 Sustainability Report issued in April are also on the Company's website, www.atsginc.com, and include important information you should consider before casting your vote.

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.

Except for historical information contained herein, the matters discussed in this release contain forward-looking statements that involve risks and uncertainties. A number of important factors could cause Air Transport Services Group, Inc.'s ("ATSG's") actual results to differ materially from those indicated by such forward-looking statements. These factors include, but are not limited to: (i) unplanned changes in the market demand for our assets and services, including the loss of customers or a reduction in the level of services we perform for customers; (ii) our operating airlines' ability to maintain on-time service and control costs; (iii) the cost and timing with respect to which we are 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 our aircraft deployments to customers; (vi) our ability to remain in compliance with key agreements with customers, lenders and government agencies; (vii) the impact of current supply chain constraints both within and outside the United States, which may be more severe or persist longer than we currently expect; (viii) the impact of a competitive labor market, which could restrict our ability to fill key positions; (ix) changes in general economic and/or industry-specific conditions, including inflation; and (x) the impact of geographical events or health epidemics such as the COVID-19 pandemic. Other factors that could cause ATSG’s actual results to differ materially from those indicated by such forward-looking statements 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. 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.

 

AIR TRANSPORT SERVICES GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)

(In thousands, except per share data)

 

 

 

Three Months Ended

 

March 31,

 

2023

 

2022

REVENUES

$

501,095

 

 

$

485,860

 

 

 

 

 

OPERATING EXPENSES

 

 

 

Salaries, wages and benefits

 

176,715

 

 

 

161,762

 

Depreciation and amortization

 

84,728

 

 

 

82,071

 

Maintenance, materials and repairs

 

43,833

 

 

 

35,709

 

Fuel

 

66,755

 

 

 

60,358

 

Contracted ground and aviation services

 

17,788

 

 

 

18,331

 

Travel

 

29,553

 

 

 

24,199

 

Landing and ramp

 

4,124

 

 

 

4,578

 

Rent

 

8,112

 

 

 

6,663

 

Insurance

 

2,548

 

 

 

2,552

 

Other operating expenses

 

19,516

 

 

 

19,843

 

 

 

453,672

 

 

 

416,066

 

 

 

 

 

OPERATING INCOME

 

47,423

 

 

 

69,794

 

OTHER INCOME (EXPENSE)

 

 

 

Interest income

 

215

 

 

 

9

 

Non-service component of retiree benefit credits

 

(3,218

)

 

 

5,388

 

Net (loss) gain on financial instruments

 

(1,740

)

 

 

2,696

 

Gain (loss) from non-consolidated affiliates

 

(406

)

 

 

(1,403

)

Interest expense

 

(15,705

)

 

 

(11,399

)

 

 

(20,854

)

 

 

(4,709

)

 

 

 

 

EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

 

26,569

 

 

 

65,085

 

INCOME TAX EXPENSE

 

(6,428

)

 

 

(15,289

)

 

 

 

 

EARNINGS FROM CONTINUING OPERATIONS

 

20,141

 

 

 

49,796

 

 

 

 

 

NET EARNINGS

$

20,141

 

 

$

49,796

 

 

 

 

 

EARNINGS PER SHARE - CONTINUING OPERATIONS

 

 

 

Basic

$

0.28

 

 

$

0.67

 

Diluted

$

0.25

 

 

$

0.57

 

 

 

 

 

WEIGHTED AVERAGE SHARES - CONTINUING OPERATIONS

 

 

 

Basic

 

71,802

 

 

 

73,888

 

Diluted

 

83,057

 

 

 

88,744

 

   

AIR TRANSPORT SERVICES GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(In thousands, except share data)

 

 

 

 

 

March 31, 2023

 

December 31, 2022

ASSETS

 

 

 

CURRENT ASSETS:

 

 

 

Cash and cash equivalents

$

89,602

 

 

$

27,134

 

Accounts receivable, net of allowance of $1,053 in 2023 and $939 in 2022

 

227,122

 

 

 

301,622

 

Inventory

 

57,727

 

 

 

57,764

 

Prepaid supplies and other

 

33,555

 

 

 

31,956

 

TOTAL CURRENT ASSETS

 

408,006

 

 

 

418,476

 

 

 

 

 

Property and equipment, net

 

2,553,674

 

 

 

2,402,408

 

Customer incentive

 

73,828

 

 

 

79,650

 

Goodwill and acquired intangibles

 

490,088

 

 

 

492,642

 

Operating lease assets

 

66,329

 

 

 

74,070

 

Other assets

 

110,354

 

 

 

122,647

 

TOTAL ASSETS

$

3,702,279

 

 

$

3,589,893

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

CURRENT LIABILITIES:

 

 

 

Accounts payable

$

218,218

 

 

$

192,992

 

Accrued salaries, wages and benefits

 

60,272

 

 

 

56,498

 

Accrued expenses

 

11,371

 

 

 

12,466

 

Current portion of debt obligations

 

642

 

 

 

639

 

Current portion of lease obligations

 

22,524

 

 

 

23,316

 

Unearned revenue

 

33,784

 

 

 

21,546

 

TOTAL CURRENT LIABILITIES

 

346,811

 

 

 

307,457

 

 

Long term debt

 

1,544,454

 

 

 

1,464,285

 

Stock obligations

 

1,509

 

 

 

695

 

Post-retirement obligations

 

33,702

 

 

 

35,334

 

Long term lease obligations

 

44,727

 

 

 

51,575

 

Other liabilities

 

56,020

 

 

 

62,861

 

Deferred income taxes

 

260,989

 

 

 

255,180

 

 

 

 

 

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; 71,451,610 and 72,327,758 shares issued and outstanding in 2023 and 2022, respectively

 

715

 

 

 

723

 

Additional paid-in capital

 

964,026

 

 

 

986,303

 

Retained earnings

 

549,023

 

 

 

528,882

 

Accumulated other comprehensive loss

 

(99,697

)

 

 

(103,402

)

TOTAL STOCKHOLDERS’ EQUITY

 

1,414,067

 

 

 

1,412,506

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$

3,702,279

 

 

$

3,589,893

 

   

AIR TRANSPORT SERVICES GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED SUMMARY OF CASH FLOWS (UNAUDITED)

(In thousands)

 

 

 

Three Months Ended

 

March 31,

 

2023

 

2022

 

 

 

 

OPERATING CASH FLOWS

$

216,378

 

 

$

125,668

 

 

 

 

 

INVESTING ACTIVITIES:

 

 

 

Aircraft acquisitions and freighter conversions

 

(164,608

)

 

 

(71,915

)

Planned aircraft maintenance, engine overhauls and other non-aircraft additions to property and equipment

 

(54,193

)

 

 

(36,337

)

Proceeds from sales of property and equipment

 

9,860

 

 

 

76

 

Acquisitions and investments in businesses

 

(800

)

 

 

 

TOTAL INVESTING CASH FLOWS

 

(209,741

)

 

 

(108,176

)

 

 

 

 

FINANCING ACTIVITIES:

 

 

 

Principal payments on debt

 

(25,214

)

 

 

(90,100

)

Proceeds from borrowings

 

105,000

 

 

 

40,000

 

Payments for financing costs

 

(484

)

 

 

 

Purchase of common stock

 

(21,918

)

 

 

 

Taxes paid for conversion of employee awards

 

(1,553

)

 

 

(1,350

)

TOTAL FINANCING CASH FLOWS

 

55,831

 

 

 

(51,450

)

 

 

 

 

NET INCREASE (DECREASE) IN CASH

$

62,468

 

 

$

(33,958

)

 

 

 

 

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

$

27,134

 

 

$

69,496

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

$

89,602

 

 

$

35,538

 

 

 

 

 

 

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

 

March 31,

 

2023

 

2022

Revenues

 

 

 

CAM

 

 

 

Aircraft leasing and related revenues

$

117,074

 

 

$

111,935

 

Lease incentive amortization

 

(5,030

)

 

 

(5,030

)

Total CAM

 

112,044

 

 

 

106,905

 

ACMI Services

 

334,127

 

 

 

330,090

 

Other Activities

 

110,588

 

 

 

102,535

 

Total Revenues

 

556,759

 

 

 

539,530

 

Eliminate internal revenues

 

(55,664

)

 

 

(53,670

)

Customer Revenues

$

501,095

 

 

$

485,860

 

 

 

 

 

Pretax Earnings (Loss) from Continuing Operations

 

 

 

CAM, inclusive of interest expense

 

34,200

 

 

 

34,995

 

ACMI Services, interest expense

 

(2,411

)

 

 

22,165

 

Other Activities

 

654

 

 

 

1,551

 

Net, unallocated interest expense

 

(510

)

 

 

(307

)

Non-service components of retiree benefit credit

 

(3,218

)

 

 

5,388

 

Net gain (loss) on financial instruments

 

(1,740

)

 

 

2,696

 

Loss from non-consolidated affiliates

 

(406

)

 

 

(1,403

)

Earnings from Continuing Operations before Income Taxes (GAAP)

$

26,569

 

 

$

65,085

 

 

 

 

 

Adjustments to Pretax Earnings from Continuing Operations

 

 

 

Add customer incentive amortization

 

5,822

 

 

 

5,798

 

Add loss from non-consolidated affiliates

 

406

 

 

 

1,403

 

Less net (gain) loss on financial instruments

 

1,740

 

 

 

(2,696

)

Less non-service components of retiree benefit credit

 

3,218

 

 

 

(5,388

)

Add net charges for hangar foam incident

 

41

 

 

 

 

Adjusted Pretax Earnings (non-GAAP)

$

37,796

 

 

$

64,202

 

Adjusted Pretax Earnings 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

 

March 31,

 

2023

 

2022

 

 

 

 

Earnings (Loss) from Continuing Operations Before Income Taxes

$

26,569

 

 

$

65,085

 

Interest Income

 

(215

)

 

 

(9

)

Interest Expense

 

15,705

 

 

 

11,399

 

Depreciation and Amortization

 

84,728

 

 

 

82,071

 

EBITDA from Continuing Operations (non-GAAP)

$

126,787

 

 

$

158,546

 

Add customer incentive amortization

 

5,822

 

 

 

5,798

 

Add start-up loss from non-consolidated affiliates

 

406

 

 

 

1,403

 

Less net (gain) loss on financial instruments

 

1,740

 

 

 

(2,696

)

Add non-service components of retiree benefit credits

 

3,218

 

 

 

(5,388

)

Add net charges for hangar foam incident

 

41

 

 

 

 

Adjusted EBITDA (non-GAAP)

$

138,014

 

 

$

157,663

 

Management uses Adjusted EBITDA to assess the performance of its 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 charges related to the discharge of a fire suppression system in the Company's aircraft hangar, net of related insurance recoveries. Management presents EBITDA from Continuing Operations, a commonly referenced metric, as a subtotal toward computing Adjusted EBITDA.

EBITDA from Continuing Operations 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 including pension plan settlements, amortization of warrant-based customer incentive costs recorded in revenue, costs from non-consolidated affiliates and charges related to the discharge of a fire suppression system, net of insurance recoveries.

   

AIR TRANSPORT SERVICES GROUP, INC. AND SUBSIDIARIES

ADJUSTED FREE CASH FLOW

NON-GAAP RECONCILIATION

(In thousands)

 

 

 

 

 

Three Months Ended

 

Trailing 12

Months

Ended

 

March 31,

 

March 31,

 

2023

 

2022

 

2023

 

 

 

 

 

 

OPERATING CASH FLOWS (GAAP)

$

216,378

 

 

$

125,668

 

 

$

562,830

 

Sustaining capital expenditures

 

(54,193

)

 

 

(36,337

)

 

 

(204,692

)

ADJUSTED FREE CASH FLOW (non-GAAP)

$

162,185

 

 

$

89,331

 

 

$

358,138

 

 

 

 

 

 

 

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 operations net of expenditures for planned aircraft maintenance, engine overhauls and other non-aircraft additions to property and equipment. 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, cash returns for shareholders 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 measures, to provide additional information regarding earnings per share without the volatility otherwise caused by the items below among periods.

 

Three Months Ended

 

March 31, 2023

 

March 31, 2022

 

$

 

$ Per

Share

 

$

 

$ Per

Share

 

 

 

 

 

 

 

 

Earnings from Continuing Operations - basic (GAAP)

$

20,141

 

 

 

 

$

49,796

 

 

 

Gain from warrant revaluation, net tax1

 

(108

)

 

 

 

 

 

 

 

Convertible notes interest charges, net of tax2

 

776

 

 

 

 

 

760

 

 

 

Earnings from Continuing Operations - diluted (GAAP)

 

20,809

 

 

$

0.25

 

 

50,556

 

 

$

0.57

 

Adjustments, net of tax

 

 

 

 

 

 

 

Customer incentive amortization3

 

4,546

 

 

 

0.06

 

 

4,475

 

 

 

0.05

 

Non-service component of retiree benefits4

 

2,513

 

 

 

0.03

 

 

(4,158

)

 

 

(0.05

)

Financial instrument revaluations5

 

1,466

 

 

 

0.02

 

 

(2,081

)

 

 

(0.02

)

Loss from affiliates6

 

317

 

 

 

 

 

1,083

 

 

 

0.01

 

Hangar foam incident7

 

32

 

 

 

 

 

 

 

 

 

Adjusted Earnings and Adjusted Earnings Per Share (non-GAAP)

$

29,683

 

 

$

0.36

 

$

49,875

 

 

$

0.56

 

 

 

 

 

 

 

 

 

 

Shares

 

 

 

Shares

 

 

Weighted Average Shares - diluted

 

83,057

 

 

 

 

 

88,744

 

 

 

Additional shares - warrants 1

 

 

 

 

 

 

 

 

 

Adjusted Shares (non-GAAP)

 

83,057

 

 

 

 

 

88,744

 

 

 

This presentation does not give effect to convertible note hedges the Company purchased having the same number of the Company's common shares, 8.1 million shares, and the same strike price of $31.90, that underlie the Convertible Notes. The convertible note hedges are expected to reduce the potential equity dilution with respect to the Company's common stock upon conversion of the Convertible Notes.

Adjusted Earnings and Adjusted Earnings Per Share should not be considered as alternatives to Earnings from Continuing Operations, Weighted Average Shares - diluted or Earnings 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.

  1. 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 all periods presented, additional shares assumes that Amazon net settled its remaining warrants during each period.
  2. Application of accounting standard ASU No. 2020-06, "Accounting for Convertible Instruments and Contracts in an Entity's Own Equity" was adopted prospectively for EPS calculations on January 1, 2022 using the modified retrospective approach. The updated GAAP requires convertible debt to be treated under the "if-convert method" for EPS.
  3. 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.
  4. Removes the non-service component of post-retirement costs and credits.
  5. Removes gains and losses from period end financial instruments revaluations, including derivative interest rate instruments, customer warrant and sale option.
  6. Removes losses for the Company's non-consolidated affiliates.
  7. Removes charges related to the discharge of a fire suppression system in the Company's aircraft hangar, net of related insurance recoveries.
 

AIR TRANSPORT SERVICES GROUP, INC. AND SUBSIDIARIES

AIRCRAFT FLEET

 

Aircraft Types

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2022

 

December 31, 2022

 

March 31, 2023

 

December 31, 2023

Projected

 

 

Freighter

 

Passenger

 

Freighter

 

Passenger

 

Freighter

 

Passenger

 

Freighter

 

Passenger

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

B767-200

 

33

 

3

 

32

 

3

 

31

 

3

 

24

 

3

B767-300

 

67

 

9

 

78

 

8

 

80

 

8

 

94

 

8

B777-200

 

 

3

 

 

3

 

 

3

 

 

3

B757 Combi

 

 

4

 

 

4

 

 

4

 

 

4

A321-200

 

 

 

 

 

 

 

6

 

Total Aircraft in Service

 

100

 

19

 

110

 

18

 

111

 

18

 

124

 

18

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

B767-300 in or awaiting cargo conversion

 

12

 

 

15

 

 

18

 

 

14

 

A321 in cargo conversion

 

3

 

 

7

 

 

9

 

 

5

 

A330 in cargo conversion

 

 

 

 

 

 

 

3

 

B767-200 staging for lease

 

1

 

 

 

 

 

 

1

 

Total Aircraft

 

116

 

19

 

132

 

18

 

138

 

18

 

147

 

18

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aircraft in Service Deployments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31,

 

December 31,

 

March 31,

 

December 31,

 

 

2022

 

2022

 

2023

 

2023 Projected

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dry leased without CMI

 

36

 

39

 

40

 

55

Dry leased with CMI

 

50

 

52

 

52

 

47

Customer provided for CMI

 

7

 

13

 

13

 

16

ACMI/Charter1

 

26

 

24

 

24

 

24

  1. ACMI/Charter includes four Boeing 767 passenger aircraft leased from external companies.

 

Quint Turner, ATSG Inc. Chief Financial Officer 937-366-2303

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