HOME

 
    BOARD OF DIRECTORS  
    CORPORATE GOVERNANCE  
    MANAGEMENT TEAM  
    PRESS RELEASES  
    STOCK AND FILINGS  
 


AIRCRAFT LEASING DRIVES IMPROVED ATSG RESULTS
CAM Leasing Earnings Nearly Double Year-Earlier Levels, Up 23% from 2Q 2010

WILMINGTON, Ohio - November 3, 2010 - Air Transport Services Group, Inc. (NASDAQ:ATSG) today reported financial results for its third quarter ended September 30, 2010.

Results include:

  • Pre-tax earnings from continuing operations of $16.7 million, up 259 percent from the third quarter of 2009, and up 5 percent from the second quarter of 2010. Net earnings from continuing operations were $11.4 million, or $0.18 per share diluted, up 299 percent from the third quarter of 2009 and 15 percent from the second quarter of 2010. Net losses from discontinued operations were $0.2 million, down from net earnings of $0.9 million in the third quarter of 2009.

  • EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) from continuing operations of $44.0 million, up 43 percent compared with the third quarter of 2009 and up 4 percent from the second quarter of 2010. (EBITDA is a non-GAAP measure of financial performance. A reconciliation of ATSG’s third-quarter EBITDA to GAAP Earnings from Continuing Operations appears at the end of this release).

  • Cash flow provided by operating activities during the first nine months of 2010 was $81.7 million, up 65 percent from a year ago.

  • Revenues from continuing operations were $167.7 million, down 4 percent from $174.2 million in the third quarter of 2009 but up 5 percent from $160.1 million for the second quarter of 2010.

ATSG has completed two fiscal quarters operating under new aircraft leasing and operating agreements with DHL that took effect on March 31, 2010. The agreements provide for new seven-year leases eventually covering 13 Boeing 767-200 freighters and a separate five-year Crew, Maintenance and Insurance (CMI) Agreement for operating those aircraft within DHL’s U.S. network.

“Our second and third-quarter results demonstrate the cash-generating power of our new business model, which emphasizes long-term dry leases of medium-size widebody freighter aircraft, augmented by solid returns from an extensive array of operating and support services,” President and CEO Joe Hete said. “The strong gains in our CAM Leasing segment, and new business we have signed recently, continue to illustrate our ability to profitably deploy our growing fleet of converted 767 freighters, and our competitive advantages for customers seeking turnkey solutions based on the 767’s flexibility and efficiency.”

Segment Results

CAM Leasing

CAM’s pre-tax earnings were $12.0 million for the third quarter of 2010, up 96 percent from $6.1 million a year ago, and up 23 percent from $9.8 million in the second quarter of 2010.

CAM had 56 aircraft under lease at the end of the quarter, 16 of which were to a non-ATSG affiliate. CAM has contracted to place two additional 767-200s under lease to DHL by July 2011.

CAM expects to complete the modification of six additional Boeing 767-200 freighters and place them into service during 2011. CAM has purchased three Boeing 767-300 extended range aircraft from Qantas, and will modify them from passenger to freighter configuration for service by the end of 2011.

ACMI Services

Third-quarter pre-tax segment earnings were $3.4 million, up from $1.0 million for the same period a year ago. Segment earnings were $4.1 million in the second quarter of 2010. Earnings results were affected by an increase in maintenance expense, principally at Capital Cargo International Airlines (CCIA), and by increased costs to train new flight crews for expanded service in the fourth quarter and in 2011. Those factors were partially offset by improved results at ABX Air under its CMI agreement with DHL and its transatlantic service for TNT. Of the $5.3 million increase in ATSG’s total third quarter maintenance expense versus the second quarter of 2010, approximately $1.2 million was attributable to a fleet improvement campaign at CCIA that is expected to strengthen operating reliability of its 727 and 757 Boeing aircraft. The majority of the remaining increase in maintenance expense did not impact earnings as it was related to Boeing 767 airframe maintenance reimbursed under ABX Air’s agreements with DHL.

Other Activities

Pre-tax earnings for the third quarter increased to $3.1 million from $0.1 million a year earlier, and declined from $3.8 million in the second quarter of 2010. Results for 2010 were driven by increased revenues from aircraft maintenance services for external customers, gains from the reduction to employee post–retirement obligations, and lower overhead costs.

Outlook

New and Renewal Agreements for ATSG Services

In a separate news release, ATSG reported today the start of new air cargo services, and renewal agreements for existing services, spanning three continents and with new and existing customers. Summarizing that announcement:

  • On November 1, ABX Air began operating one Boeing 767-200 freighter for Japan Airlines in ACMI service in support of DHL in Asia.

  • Also on November 1, ATI added one DC-8 freighter and CCIA added one 727 freighter to BAX Global’s North American network.

  • Next week, ABX Air will begin daily transatlantic ACMI service for DHL between England and Cincinnati, Ohio, via a 767-300 that ABX Air has leased from a third party.

  • In October, DHL selected ABX Air to operate the first of what is anticipated to be four of DHL’s own Boeing 767 freighters in its U.S. network, under terms of the CMI agreement. The four are in addition to 13 Boeing 767s that CAM will lease and ABX Air operates in the U.S. for DHL.

  • Amerijet today exercised the first of three options for a 767-200 for a seven-year dry lease, to be effective in January 2011. Amerijet currently leases two 767-200 aircraft from CAM.

  • ATI received a commitment from the U.S. military’s Air Mobility Command to extend its role as exclusive provider of flexible DC-8 combi aircraft to the AMC through September 2011.

  • The company completed two-year renewal contracts for the management of three U.S. Postal Service regional sort centers, and for management of an expanded holiday-season sort center in 2010.

“The demand for our cargo aircraft, and especially for our services and support as 767 freighter operators, is even greater than we forecast when we committed to convert 14 of our 767-200s to standard freighters, and when we committed to purchase more advanced 767-300s earlier this year,” Hete said. “We are already working toward firm commitments for our 767-300s, the first of which is expected to enter service toward the end of the first quarter 2011.”

Conference Call

ATSG will host a conference call to review its financial results for the third quarter of 2010 on Thursday, November 4, 2010, at 10:00 a.m. Eastern Daylight Time. Participants should dial 888-713-4199 and international participants should dial 617-213-4861 ten minutes before the scheduled start of the call and ask for conference pass-code 75167240.

The call will also be webcast live (listen-only mode) via the link below and www.earnings.com for individual investors, and via www.streetevents.com for institutional investors. A replay of the conference call will be available on November 4, 2010, beginning at 1:00 p.m. and continuing through Thursday, November 11, 2010, at 888-286-8010 (international callers 617-801-6888); use pass-code 86332999. The webcast replay will remain available via the link below or www.earnings.com for 30 days.
 

 
 

Live Webcast
November 4, 2010 at 10:00 a.m. Eastern daylight time
Third Quarter 2010 Conference Call
Windows Media Player required
 
 


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. Through its principal subsidiaries, including three airlines with separate and distinct U.S. FAA Part 121 Air Carrier certificates, ATSG provides aircraft leasing, air cargo lift, aircraft maintenance services, airport ground services, fuel management, specialized transportation management, and air charter brokerage services. ATSG’s subsidiaries include ABX Air, Inc.; Air Transport International, LLC; Cargo Aircraft Management, Inc.; Capital Cargo International Airlines, Inc.; and Airborne Maintenance and Engineering Services, Inc. For more information, please see www.atsginc.com.

Except for historical information contained herein, the matters discussed in this release contain forward-looking statements that involve risks and uncertainties. There are a number of important factors that could cause Air Transport Services Group's ("ATSG's") actual results to differ materially from those indicated by such forward-looking statements. These factors include, but are not limited to, changes in market demand for our assets and services, the cost and timing associated with the modification of Boeing 767-200 and 767-300 aircraft, ABX Air’s ability to maintain on-time service and control costs under its new operating agreement with DHL, and other factors that are contained from time to time in ATSG's filings with the U.S. Securities and Exchange Commission, including its Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Readers should carefully review this release and should not place undue reliance on ATSG's forward-looking statements. These forward-looking statements were based on information, plans and estimates as of the date of this release. ATSG undertakes no obligation to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes.

ATTACHMENTS:
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
CONDENSED CONSOLIDATED BALANCE SHEETS
PRE-TAX EARNINGS SUMMARY
NON-GAAP RECONCILIATION

RETURN TO PRESS RELEASES


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

      Three Months Ended   Nine Months Ended
      September 30,   September 30,
      2010   2009   2010   2009
                   
REVENUES   $ 167,726     $ 174,202     $ 488,781     $ 572,973  
                   
OPERATING EXPENSES                
Salaries, wages and benefits     41,074       74,127       129,830       257,191  
Fuel     33,745       27,068       98,203       75,560  
Depreciation and amortization     22,758       19,954       65,310       62,354  
Maintenance, materials and repairs     22,446       15,217       57,355       48,513  
Landing and ramp     5,419       5,828       17,830       22,790  
Travel     5,667       5,524       16,383       15,888  
Rent     4,881       2,629       12,257       7,025  
Insurance     2,130       2,731       7,122       8,306  
Other operating expenses     8,378       10,315       26,956       26,967  
        146,498       163,393       431,246       524,594  
                   
INTEREST EXPENSE     (4,641 )     (6,236 )     (14,424 )     (21,048 )
INTEREST INCOME     83       74       241       381  
EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
    16,670       4,647       43,352       27,712  
                   
INCOME TAX EXPENSE     (5,282 )     (1,792 )     (15,299 )     (9,822 )
                   
EARNINGS FROM CONTINUING OPERATIONS
    11,388       2,855       28,053       17,890  
                   
EARNINGS (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAX
    (230 )     882       (58 )     5,051  
                   
NET EARNINGS   $ 11,158     $ 3,737     $ 27,995     $ 22,941  
                   
EARNINGS PER SHARE - Basic                
Continuing operations   $ 0.18     $ 0.05     $ 0.45     $ 0.29  
Discontinued operations     -       0.01       -       0.08  
NET EARNINGS PER SHARE   $ 0.18     $ 0.06     $ 0.45     $ 0.37  
                   
EARNINGS PER SHARE - Diluted                
Continuing operations   $ 0.18     $ 0.05     $ 0.44     $ 0.28  
Discontinued operations     (0.01 )     0.01       -       0.08  
NET EARNINGS PER SHARE   $ 0.17     $ 0.06     $ 0.44     $ 0.36  
                   
WEIGHTED AVERAGE SHARES                
Basic     62,811       62,685       62,805       62,670  
Diluted
    64,202       63,731       64,076       63,181  
                                 
 

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

 
         
    September 30,   December 31,
    2010   2009
ASSETS        
CURRENT ASSETS:        
Cash and cash equivalents   $ 44,465     $ 83,229  
Accounts receivable, net of allowance of $1,378 in 2010 and $1,288 in 2009     37,331       87,708  
Inventory     5,769       5,226  
Prepaid supplies and other     10,480       7,093  
Deferred income taxes     31,597       31,597  
Aircraft and engines held for sale     -       30,634  
TOTAL CURRENT ASSETS     129,642       245,487  
         
Property and equipment, net     660,988       636,089  
Other assets     28,463       21,307  
Intangibles     9,472       10,113  
Goodwill     89,777       89,777  
TOTAL ASSETS   $ 918,342     $ 1,002,773  
         
LIABILITIES AND STOCKHOLDERS' EQUITY        
CURRENT LIABILITIES:        
Accounts payable   $ 37,329     $ 38,174  
Accrued salaries, wages and benefits     23,651       44,077  
Accrued severance and retention     1,039       18,959  
Accrued expenses     15,367       16,429  
Current portion of debt obligations     36,112       51,737  
Unearned revenue     14,335       15,340  
TOTAL CURRENT LIABILITIES     127,833       184,716  
Long-term obligations     277,031       325,690  
Post-retirement liabilities     97,292       152,297  
Other liabilities     54,863       44,044  
Deferred income taxes     64,172       50,044  
         
STOCKHOLDERS' EQUITY:        
Preferred stock, 20,000,000 shares authorized, including 75,000 Series A        
Junior Participating Preferred Stock     -       -  
Common stock, par value $0.01 per share; 75,000,000 shares authorized; 63,775,766 and 63,416,564 shares issued and outstanding in 2010 and 2009, respectively
    638       634  
Additional paid-in capital     513,898       502,822  
Accumulated deficit     (183,090 )     (211,085 )
Accumulated other comprehensive loss     (34,295 )     (46,389 )
TOTAL STOCKHOLDERS' EQUITY     297,151       245,982  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
  $ 918,342     $ 1,002,773  
                 
 

AIR TRANSPORT SERVICES GROUP, INC. AND SUBSIDIARIES
UNAUDITED PRE-TAX EARNINGS SUMMARY
FROM CONTINUING OPERATIONS

(in thousands)

 
           
 
    Three Months Ended September 30,   Nine Months Ended September 30,
      2010   2009   2010   2009
Revenues:                
CAM Leasing     28,559       16,046       71,176       43,715  
ACMI Services                
Airline services     102,366       127,349       325,826       425,205  
Reimbursable expenses     40,351       32,943       102,418       109,649  
Total ACMI Services     142,717       160,292       428,244       534,854  
Other Activities     23,040       17,838       63,188       42,829  
Total Revenues     194,316       194,176       562,608       621,398  
Eliminate internal revenues     (26,590 )     (19,974 )     (73,827 )     (48,425 )
Customer Revenues   $ 167,726     $ 174,202     $ 488,781     $ 572,973  
                   
                   
Pre-tax Earnings from Continuing Operations:            
CAM, inclusive of interest expense     11,991       6,115       28,282       16,696  
ACMI Services     3,448       1,003       14,918       15,278  
Other Activities     3,124       140       5,600       2,939  
Net, unallocated interest expense     (1,893 )     (2,611 )     (5,448 )     (7,201 )
Total Pre-tax Earnings   $ 16,670     $ 4,647     $ 43,352     $ 27,712  
                                 
   

AIR TRANSPORT SERVICES GROUP, INC. AND SUBSIDIARIES
NON-GAAP RECONCILIATION
Unaudited Earnings from Continuing Operations to Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)
(in thousands)

 
     
     
Three Months Ended
September 30
 
Nine Months Ended
September 30
2010   2009 2010   2009
 
GAAP Earnings from Continuing
Operations $ 11,388 $ 2,855 $ 28,053 $ 17,890
Income Tax Expense 5,282 1,792 15,299 9,822
Interest Income (83 ) (74 ) (241 ) (381 )
Interest Expense 4,641 6,236 14,424 21,048
Depreciation and Amortization   22,758     19,954     65,310     62,354  
 
EBITDA from Continuing Operations $ 43,986 $ 30,763 $ 122,845 $ 110,733

EBITDA is a non-GAAP financial measure and should not be considered an alternative to net earnings or any other performance measure derived in accordance with GAAP. EBITDA is defined as net earnings from operations plus net interest expense, provision for income taxes, depreciation and amortization. The Company’s management uses this adjusted financial measure in conjunction with GAAP finance measures to monitor and evaluate the performance of the Company, including as a measure of liquidity. EBITDA should not be considered in isolation or as a substitute for analysis of the Company’s results as reported under GAAP, or as an alternative measure of liquidity.
 

 
 

RETURN TO PRESS RELEASES
 

 
             
 


Air Transport Services Group, Inc.
Quint Turner, Chief Financial Officer
937-382-5591

 
             
             

HOME   |   BOARD OF DIRECTORS   |   CORPORATE GOVERNANCE   |   MANAGEMENT TEAM   |   PRESS RELEASES   |   STOCK AND FILINGS

 

COPYRIGHT © 2010 ATSG, INC. ALL RIGHTS RESERVED.