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ATSG's Fourth Quarter Pretax Earnings from Continuing Operations Increases 17 Percent

Dépèche transmise le 5 mars 2012 par Business Wire

WILMINGTON, Ohio--(BUSINESS WIRE)--Air Transport Services Group, Inc. (NASDAQ:ATSG) today reported improved financial results for the fourth quarter of 2011. Highlights of the fourth quarter, compared to the prior-year period include:

“Results from nine additional 767 freighters in service in the fourth quarter of 2011, compared to the fourth quarter 2010, helped to offset the effect of the wind-down of our business with DB Schenker through the quarter”

  • Pretax earnings from continuing operations were $23.3 million, up 17 percent. The total includes $0.6 million in 2011 unrealized gains on derivative instruments.
  • Net earnings from continuing operations were $13.5 million, or $0.21 per share diluted, up 14 percent.
  • EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) totaled $48.7 million, up five percent. For more information, see the table included in this release describing and reconciling EBITDA and other non-GAAP measures to GAAP results.
  • Revenues of $166.5 million, down 7 percent. Excluding reimbursable expenses, primarily fuel, revenues increased 5 percent.

"Results from nine additional 767 freighters in service in the fourth quarter of 2011, compared to the fourth quarter 2010, helped to offset the effect of the wind-down of our business with DB Schenker through the quarter," Joe Hete, President and CEO of ATSG, said. “Some of that cargo volume shifted to the freighters we operate for DHL, allowing us to retire the majority of our older 727 and DC-8 aircraft and to start to restructure our airline operations. We purchased two more 767-300 aircraft in February 2012 for deployment later this year, recognizing their advantages and appeal to major air cargo network operators. This aircraft type continues to offer lower capital risk and attractive after-tax cash returns due to our passenger-to-freighter conversion strategy.”

Operating Results

CAM Leasing

Cargo Aircraft Management (CAM) recorded pretax earnings of $16.7 million, up 26 percent for the fourth quarter, and $60.0 million, up 44 percent, for the year. Revenues increased 28 percent to $38.5 million for the fourth quarter and grew by 39 percent for the year to $140.5 million.

At the end of 2011, CAM owned 52 aircraft that were available for service, of which 21 were in service under long term dry leases with external customers. A table showing ATSG's aircraft in service at year-end and a fleet projection for the end of 2012 is included at the end this release.

In February 2012, CAM and its customer First Air agreed to a three-year extension of First Air's lease of a CAM-owned Boeing 767-200 freighter that had been due to expire in 2012. None of CAM's 21 externally leased 767 freighters has a lease expiration date before June 2015, and the average remaining lease term exceeds five years.

ACMI Services

Fourth-quarter revenues were $108.3 million, excluding fuel and other reimbursed expenses, down one percent from the fourth quarter of 2010. Fourth-quarter pretax earnings from ACMI Services were $1.8 million, compared with $6.0 million in the fourth quarter of 2010.

Excluding results from Schenker for 2010 and 2011, fourth-quarter ACMI revenues excluding reimbursables were $96.5 million, up 14 percent from a year earlier. Fourth-quarter block hours excluding Schenker increased eight percent to 20,245. Revenues per block hour excluding Schenker increased primarily because of the addition of higher lease-rate 767-300 aircraft to the ACMI fleet mix and due to operating an increased number of shorter air routes.

Fourth-quarter ACMI earnings comparisons to 2010 were substantially affected by the reduction in the Company's operations for DB Schenker, by rate reductions for services to the U.S. Military, and by the cost of training and transitioning eligible DC-8 and 727 flight crew members to other aircraft types. The majority of these transitioning and related reorganization costs continue into 2012 and, combined with seasonality factors and an increase in expenses related to ABX Air's frozen pension plans, will result in a pretax loss for this segment in the first quarter.

Other Activities

Revenues from ATSG's other businesses rose 15 percent to $28.0 million before elimination of inter-company results. Pre-tax profit from other activities totaled $4.3 million in the fourth quarter of 2011, compared with $2.4 million a year earlier. Additional revenues from the Company's aircraft maintenance and postal businesses drove the improved results.

2011 Full Year Results

Revenues in 2011 increased nine percent to $730.1 million, including $160.7 million in reimbursements for fuel and related expenses, compared to $667.4 million in 2010. Schenker-related revenues were 15 percent of total revenues excluding reimbursables in 2011. ATSG's 2011 net earnings from continuing operations were $23.9 million, or 37 cents per share, down from $39.9 million, or 62 cents per share in 2010.

Pretax earnings for 2011 included $27.1 million in impairment charges related to aircraft asset values, goodwill and customer intangibles as a result of DB Schenker's network phase-out, $2.9 million in write-offs of unamortized debt issuance costs, and an aggregate $4.9 million in unrealized losses on derivative instruments. In 2010, pretax earnings included $3.5 million in gains from reimbursements for severance and retention benefits. Pretax earnings from continuing operations, adjusted for these items, increased 27 percent to $75.8 million in 2011. Adjusted EBITDA increased nine percent to $180.8 million in 2011.

2012 Outlook

"We will devote significant resources in the first quarter toward realigning our ACMI Services businesses for growth. As a result, our first quarter 2012 financial results are expected to be below first-quarter 2011 levels. After the first quarter, we expect to grow toward a range of $190 to $200 million in adjusted EBITDA for the year, including the effect of increased pension expense and increases in engine maintenance costs," Hete said.

“Our 2012 results will benefit from a full year of gains from the owned and leased aircraft which entered service during 2011, as well as owned and leased aircraft which we plan to add during 2012. Aircraft added during 2011 included nine 767 freighters and one 757 freighter. Additions planned for 2012 include seven more 767s, and two 757 combis. We also intend to leverage the more flexible credit facility we negotiated last spring to help fund future fleet expansion. More important, our fleet is substantially more modern, more fuel efficient, and more reliable than ever before, at a time when those efficiencies and performance levels are vital to both our existing and potential customers. We remain confident about the continued customer interest and strong yield potential from our investments in converted freighter assets, and about the service commitment of those who support them," Hete said.

Conference Call

ATSG will host a conference call on Tuesday, March 6, 2012, at 10:00 a.m. Eastern time to review its financial results for the fourth quarter of 2011. Participants should dial 800-706-7748 and international participants should dial 617-614-3473 ten minutes before the scheduled start of the call and ask for conference pass code 38617936. The call also will be webcast live (listen-only mode) via www.atsginc.com and www.earnings.com for individual investors, and via www.streetevents.com for institutional investors. A replay of the conference call will be available by phone the same day beginning at 1:00 p.m. and continuing through Tuesday, March 13, 2012, by dialing 888-286-8010 (international callers 617-801-6888); use pass code 18575315. The webcast replay will remain available via www.atsginc.com and www.earnings.com for 30 days.

About ATSG

ATSG is a leading provider of aircraft leasing and air cargo transportation and related services to domestic and foreign air carriers and other companies that outsource their air cargo lift requirements. ATSG, through its leasing and airline subsidiaries, is the world's largest owner and operator of converted Boeing 767 freighter aircraft. Through its principal subsidiaries, including three airlines with separate and distinct U.S. FAA Part 121 Air Carrier certificates, ATSG provides aircraft leasing, air cargo lift, aircraft maintenance services and airport ground services. ATSG's subsidiaries include ABX Air, Inc.; Airborne Global Solutions, Inc.; Air Transport International, 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 and deployment of Boeing 767 and Boeing 757 aircraft, the availability and cost to acquire used passenger aircraft for freighter modification, ATSG's continuing ability to place modified aircraft into commercial service, ABX Air's ability to maintain on-time service and control costs under its operating agreement with DHL, ATSG's effectiveness in restructuring its airline operations affected by DB Schenker's restructuring of its U.S. air cargo operations, and other factors that are contained from time to time in ATSG's filings with the U.S. Securities and Exchange Commission, including its Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Readers should carefully review this release and should not place undue reliance on ATSG's forward-looking statements. These forward-looking statements were based on information, plans and estimates as of the date of this release. ATSG undertakes no obligation to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes.

 
AIR TRANSPORT SERVICES GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except per share data)

 
  Three Months Ended   Year Ended
December 31,   December 31,
2011   2010 2011   2010
REVENUES $ 166,465 $ 178,601 $ 730,133 $ 667,382
 
OPERATING EXPENSES
Salaries, wages and benefits 48,338 47,158 188,884 176,988
Fuel 19,858 35,573 150,003 133,776
Depreciation and amortization 22,198 22,284 91,063 87,594
Maintenance, materials and repairs 19,503 21,788 86,929 79,143
Landing, ramp, rent and insurance 14,602 11,083 57,140 48,292
Travel 7,532 6,326 28,335 22,709
Other operating expenses 8,525 10,248 38,006 37,204
Impairment of aircraft, goodwill and acquired intangibles     27,144    
140,556 154,460 667,504 585,706
       
OPERATING INCOME 25,909 24,141 62,629 81,676
OTHER INCOME (EXPENSE)
Interest income 51 75 179 316
Interest expense (3,237 ) (4,251 ) (14,181 ) (18,675 )
Write off of unamortized debt issuance costs (2,886 )
Unrealized gain/(loss) on derivative instruments 556     (4,881 )  
(2,630 ) (4,176 ) (21,769 ) (18,359 )
       
EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 23,279 19,965 40,860 63,317
 
INCOME TAX EXPENSE (9,749 ) (8,114 ) (16,995 ) (23,413 )
       
EARNINGS FROM CONTINUING OPERATIONS 13,530 11,851 23,865 39,904
 
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX (599 ) (12 ) (673 ) (70 )
       
NET EARNINGS $ 12,931   $ 11,839   $ 23,192   $ 39,834  
 
EARNINGS (LOSS) PER SHARE - Basic
Continuing operations $ 0.21   $ 0.19   $ 0.38   $ 0.64  
Discontinued operations (0.01 )   (0.01 ) (0.01 )
NET EARNINGS PER SHARE $ 0.20   $ 0.19   $ 0.37   $ 0.63  
 
EARNINGS (LOSS) PER SHARE - Diluted
Continuing operations $ 0.21   $ 0.19   $ 0.37   $ 0.62  
Discontinued operations (0.01 )   (0.01 )  
NET EARNINGS PER SHARE $ 0.20   $ 0.19   $ 0.36   $ 0.62  
 
WEIGHTED AVERAGE SHARES
Basic 63,336   62,814   63,284   62,807  
Diluted 64,109   63,809   64,085   64,009  
 
 
AIR TRANSPORT SERVICES GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

  December 31,       December 31,
2011 2010
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 30,503 $ 46,543
Accounts receivable, net of allowance of $434 in 2011 and $1,090 in 2010 42,278 40,876
Inventory 8,906 7,205
Prepaid supplies and other 9,785 10,132
Deferred income taxes 31,548 12,879
Aircraft and engines held for sales 9,831    
TOTAL CURRENT ASSETS 132,851 117,635
 
Property and equipment, net 748,913 658,756
Other assets 18,579 25,227
Intangibles 6,396 9,259
Goodwill 86,980   89,777  
TOTAL ASSETS $ 993,719   $ 900,654  
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable $ 48,360 $ 40,558
Accrued salaries, wages and benefits 23,226 24,145
Accrued expenses 10,291 12,144
Current portion of debt obligations 13,223 36,591
Unearned revenue 12,487   10,794  
TOTAL CURRENT LIABILITIES 107,587 124,232
 
Long term debt obligations 333,681 265,937
Post-retirement liabilities 185,562 116,614
Other liabilities 54,212 52,048
Deferred income taxes 42,530 39,746
 
STOCKHOLDERS’ EQUITY:
Preferred stock, 20,000,000 shares authorized, including 75,000 Series A Junior Participating Preferred Stock
Common stock, par value $0.01 per share; 75,000,000 shares authorized; 64,015,789 and 63,652,228 shares issued and outstanding in 2011 and 2010, respectively 640 637
Additional paid-in capital 520,613 518,925
Accumulated deficit (148,059 ) (171,251 )
Accumulated other comprehensive loss (103,047 ) (46,234 )
TOTAL STOCKHOLDERS’ EQUITY 270,147   302,077  
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 993,719   $ 900,654  
 
 
AIR TRANSPORT SERVICES GROUP, INC. AND SUBSIDIARIES

PRE-TAX EARNINGS AND ADJUSTED PRE-TAX EARNINGS SUMMARY

FROM CONTINUING OPERATIONS

NON-GAAP RECONCILIATION

(In thousands)

 
  Three Months Ended   Year Ended
December 31, December 31,
2011   2010 2011   2010
Revenues
CAM Leasing $ 38,534 $ 30,199 $ 140,469 $ 101,375
ACMI Services
Airline services 108,342 109,805 444,778 432,082
Other Reimbursables 22,669 41,363 160,683 143,330
DHL Severance and Retention activities       4,000  
Total ACMI Services 131,011 151,168 605,461 579,412
Other Activities 28,042   24,472   105,284   87,660  
Total Revenues 197,587 205,839 851,214 768,447
Eliminate internal revenues (31,122 ) (27,238 ) (121,081 ) (101,065 )
Customer Revenues $ 166,465   $ 178,601   $ 730,133   $ 667,382  
 
Pre-tax Earnings from Continuing Operations
CAM, inclusive of interest expense 16,726 13,304 59,982 41,586
ACMI Services
Airline services 1,768 5,970 6,576 17,339
DHL Severance and Retention activities       3,549  
1,768 5,970 6,576 20,888
Asset impairments (27,144 )
Other Activities 4,330 2,417 11,331 8,017
Net, unallocated interest expense (101 ) (1,726 ) (2,118 ) (7,174 )
Write off of unamortized debt issuance costs (2,886 )
Net gain (loss) on derivative instruments 556     (4,881 )  
Total Pre-tax Earnings $ 23,279 $ 19,965 $ 40,860 $ 63,317
 
Adjustments to Pre-tax Earnings
Add Asset impairment charges 27,144
Less Net (Gain) Loss on derivative instruments (556 ) 4,881
Add Write-off of unamortized debt issuance costs 2,886
Less DHL Severance and Retention activities  

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