Air T, Inc. Reports Third Quarter Fiscal 2024 Results
- Revenue increased by 4% to $63.8 million in Q3 compared to the prior year.
- Operating loss was $1.6 million, a decrease from the prior year's operating income of $0.1 million.
- Adjusted EBITDA showed a loss of $0.4 million, down from a profit of $1.3 million in the prior year.
- Loss per share was $1.06 in Q3 compared to $0.21 in the prior year.
- Total Equity decreased by 39% from $13.0 million to $8.0 million.
- Overnight Air Cargo segment saw a 33% increase in revenues to $29.0 million.
- Aviation Ground Equipment Manufacturing and Sales segment experienced a 48% revenue decrease to $8.4 million.
- Commercial Jet Engines and Parts segment had revenues of $24.1 million, an increase of $2.4 million.
- Corporate and Other segment reported an Adjusted EBITDA loss of $1.5 million.
- Adjusted EBITDA is a non-GAAP financial measure used by the company to evaluate performance.
- Operating loss and Adjusted EBITDA loss in Q3.
- Significant decrease in total equity by $5.0 million.
- Ground Equipment Sales segment faced an unexpected 48% revenue decline.
- Aviation Ground Equipment segment reported a $0.5 million Adjusted EBITDA loss.
- Order backlog for Aviation Ground Equipment segment decreased from $12.5 million to $6.2 million.
Insights
Reviewing Air T, Inc.'s fiscal third-quarter results reveals a nuanced financial landscape. The 4% revenue increase to $63.8 million suggests moderate top-line growth. However, this is overshadowed by a significant operating loss of $1.6 million and a loss per share of $1.06, which marks a notable deterioration from the prior year. The decline in Total Equity by 39% is a red flag, indicating potential solvency issues and a weakened financial position. The sharp 48% revenue drop in the Ground Equipment Sales segment, attributed to weather and unusual circumstances, is concerning, though management's expectation of resolving these issues could imply a temporary setback.
Investors should be alert to the segment-specific performance, particularly the Overnight Air Cargo segment, which showed robust growth and could be a key driver for future earnings. Conversely, the Commercial Jet Engines and Parts segment's slight revenue increase did not translate to profitability, suggesting margin compression or increased costs. The Aviation Ground Equipment Manufacturing and Sales segment's backlog reduction from $12.5 million to $6.2 million year-over-year could signal a worrying trend in future revenues. Overall, the mixed results present a complex picture for stakeholders, with potential for both recovery and further challenges.
From a market perspective, Air T, Inc.'s performance must be contextualized within the broader aviation industry. The company's diversified portfolio insulates it somewhat from sector-specific downturns, yet the air cargo sector's growth, which aligns with global e-commerce trends, is a positive indicator. The decrease in Ground Equipment Sales could be tied to cyclical demands and macroeconomic factors affecting airline capital expenditures. The backlog shrinkage in this segment suggests a potential decrease in future market demand or competitive pressures.
Furthermore, the Commercial Jet Engines and Parts segment's performance may reflect the aftermarket dynamics, where variability in sales of parts and engines can be influenced by airlines' fleet management strategies and maintenance cycles. The financial health of airlines and air cargo operators directly impacts this segment. The company's ability to navigate these market forces while managing its cost structure will be critical for its long-term success.
It's important to note that Air T, Inc.'s use of Adjusted EBITDA as a non-GAAP measure to assess financial performance is common practice, allowing for a tailored view of operational efficiency by excluding certain expenses. However, stakeholders should be aware that non-GAAP measures can vary in calculation and may not be directly comparable across different companies. The SEC defines guidelines for the reconciliation of these measures to GAAP to ensure transparency. Investors should review both GAAP and non-GAAP measures to gain a full understanding of the company's financial health.
Moreover, the company's forward-looking statements regarding the resolution of issues in the Ground Equipment Sales segment and the expectation of maintaining manufacturing disciplines are subject to legal disclaimers. These statements are based on management's current expectations and are inherently uncertain, so stakeholders should consider the potential legal and financial risks associated with such forward-looking information.
CHARLOTTE, NC / ACCESSWIRE / February 12, 2024 / Air T, Inc. (NASDAQ:AIRT) is an industrious American company with a portfolio of businesses, each of which is independent yet interrelated. We seek dynamic individuals and teams to operate companies using processes that increase value over time. We believe we can apply corporate resources to help activate growth and overcome challenges.
Our core segments are overnight air cargo; aviation ground equipment manufacturing and sales; commercial jet engines and parts; and corporate and other.
Today the Company is announcing results for the fiscal third quarter ended December 31, 2023:
- Revenues totaled
$63.8 million for the quarter ended December 31, 2023, an increase of$2.4 million , or4% from the prior year's comparable quarter. - Operating loss was
$1.6 million for the quarter ended December 31, 2023, a decrease of$1.7 million from the prior year's operating income of$0.1 million . - Adjusted EBITDA* loss of
$0.4 million for the quarter ended December 31, 2023, compared to an Adjusted EBITDA* profit of$1.3 million in the prior year's comparable quarter. - Loss per share of
$1.06 for the quarter ended December 31, 2023, compared to the loss per share of$0.21 for the prior year's comparable quarter. - Total Equity decreased from
$13.0 million as of March 31, 2023, to$8.0 million as of December 31, 2023, a decrease of$5.0 million , or39% .
*Adjusted EBITDA is a non-GAAP financial measure; see below for further explanation and reconciliation to GAAP measure.
Company Chairman and CEO Nick Swenson commented:
"Management believes the people of Air T are building value for stakeholders over time, inclusive of the December 2023 quarter. During the quarter, both our balance sheet and income statements were impacted by the unexpected revenue decrease of
Business Segment Results
Overnight Air Cargo
- This segment provides repair services and air express delivery services, primarily for FedEx.
- Revenues for this segment increased
33% to$29.0 million in the quarter ended December 31, 2023, compared to$21.8 million in the prior year quarter. The increase was principally attributable to higher administrative fees due to increased fleet, higher pass-through revenues from FedEx, higher maintenance and outside customer revenue, and the WASI acquisition, which contributed revenues for a full quarter in 2023 but none in the prior-year comparable period. - Adjusted EBITDA* for this segment was
$1.7 million for the quarter ended December 31, 2023, an increase of$0.7 million when compared to the prior year quarter, primarily due to the revenue increase noted above.
Aviation Ground Equipment Manufacturing and Sales
- Global Ground Support, one of the world's largest manufacturer of aircraft deicing equipment, manufactures, and provides mobile deicers and other specialized equipment products to passenger and cargo airlines, airports, and military and industrial customers.
- Revenues for this segment totaled
$8.4 million for the quarter ended December 31, 2023, down48% when compared to revenue of$16.1 million in the previous year's third fiscal quarter. The decrease was primarily driven by the lower number of deicing trucks sold in the current year quarter compared to the prior year's comparable quarter. - Adjusted EBITDA* loss for this segment was
$0.5 million in the quarter ended December 31, 2023, a decrease of$1.6 million compared to the prior year quarter, due primarily to the revenue decrease noted above. - As of December 31, 2023, this segment's order backlog was
$6.2 million versus$12.5 million as of December 31, 2022.
Commercial Jet Engines and Parts
- This segment leases commercial jet engines and aircraft; buys, sells and trades in surplus and aftermarket commercial jet engines, engine parts, airframes, and airframe parts, avionics, and other; then delivers the related documents and logistics.
- Revenues for this segment totaled
$24.1 million for the quarter ended December 31, 2023, an increase of$2.4 million versus the previous year's third fiscal quarter. The increase was primarily driven by higher pass-through consignment revenue at Worthington Aviation, LLC ("Worthington"), a wholly-owned subsidiary of the Company, in the current quarter compared to the prior year's comparable quarter. - Adjusted EBITDA* loss for this segment was
$0.1 million for the quarter ended December 31, 2023, a decrease of$1.7 million when compared to the prior year quarter primarily attributable to lower component sales at Contrail in the current quarter, partially offset by higher revenue driven by pass-through consignment revenue at Worthington compared to the prior year's comparable quarter.
Corporate and Other
- This segment acts as the capital allocator and resource for other consolidated businesses. Further, Corporate and other also comprises smaller businesses and business interests.
- This segment's Adjusted EBITDA* for the quarter ended December 31, 2023, represented a loss of
$1.5 million in the quarter, a decrease of$0.9 million when compared to the prior year's quarter loss of$2.4 million , due primarily to increased software subscriptions at Shanwick.
*Adjusted EBITDA is a non-GAAP financial measure; see below for further explanation and reconciliation to GAAP measures.
Non-GAAP Financial Measures
The Company uses adjusted earnings before taxes, interest, and depreciation and amortization ("Adjusted EBITDA"), a non-GAAP financial measure as defined by the SEC, to evaluate the Company's financial performance. This performance measure is not defined by accounting principles generally accepted in the United States and should be considered in addition to, and not in lieu of, GAAP financial measures.
Adjusted EBITDA is defined as earnings before taxes, interest, and depreciation and amortization, adjusted for specified items. The Company calculates Adjusted EBITDA by removing the impact of specific items and adding back the amounts of interest expense and depreciation and amortization to earnings before income taxes. When calculating Adjusted EBITDA, the Company does not add back depreciation expense for aircraft engines that are on lease, as the Company believes this expense matches with the corresponding revenue earned on engine leases. There was no depreciation expense for leased engines for the three months ended December 31, 2023 and
Management believes that Adjusted EBITDA is a useful measure of the Company's performance because it provides investors additional information about the Company's operations allowing better evaluation of underlying business performance and better period-to-period comparability. Adjusted EBITDA is not intended to replace or be an alternative to operating income, the most directly comparable amounts reported under GAAP.
The table below provides a reconciliation of operating income to Adjusted EBITDA for the periods ended December 31, 2023, and 2022 (in thousands):
| Three months ended | Nine months ended | |||||||||||||||
| 12/31/2023 | 12/31/2022 | 12/31/2023 | 12/31/2022 | |||||||||||||
Operating (loss) income | $ | (1,608 | ) | $ | 135 | $ | (189 | ) | $ | 1,147 | ||||||
Depreciation and amortization (excluding leased engines depreciation) | 699 | 560 | 2,088 | 1,810 | ||||||||||||
Asset impairment, restructuring or impairment charges | 321 | 638 | 326 | 2,174 | ||||||||||||
Loss (gain) on sale of property and equipment | 1 | - | (7 | ) | (2 | ) | ||||||||||
Trust Preferred Securities issuance expenses | 185 | 4 | 277 | 38 | ||||||||||||
Adjusted EBITDA | $ | (402 | ) | $ | 1,337 | $ | 2,495 | $ | 5,167 | |||||||
The following table shows the Company's Adjusted EBITDA by segment for the periods ended December 31, 2023, and 2022 (in thousands):
| Three months ended | Nine months ended | |||||||||||||||
| 12/31/2023 | 12/31/2022 | 12/31/2023 | 12/31/2022 | |||||||||||||
Overnight Air Cargo | $ | 1,690 | $ | 1,031 | $ | 5,830 | $ | 3,331 | ||||||||
Ground Equipment Sales | (485 | ) | 1,128 | (512 | ) | 3,252 | ||||||||||
Commercial Jet Engines and Parts | (121 | ) | 1,555 | 2,888 | 5,802 | |||||||||||
Corporate and Other | (1,486 | ) | (2,377 | ) | (5,711 | ) | (7,218 | ) | ||||||||
Adjusted EBITDA | $ | (402 | ) | $ | 1,337 | $ | 2,495 | $ | 5,167 | |||||||
NOTE REGARDING STAKEHOLDER QUESTIONS
If you have questions related to this release or other Air T matters, please use our interactive Q&A capability, through Slido.com, accessible from our website, to submit your questions. We intend to keep that link open and available for shareholder questions. Questions submitted through Slido will be answered "live" and in writing at our Annual Meeting, and via a written response on a quarterly basis. Note that legal and pragmatic requirements restrict us from answering every question posted, yet we intend to address all reasonable and relevant questions with a written answer.
ABOUT AIR T, INC.
Established in 1980, Air T Inc. is a portfolio of powerful businesses and financial assets, each of which is independent yet interrelated. Its core segments are overnight air cargo, aviation ground support equipment manufacturing and sales, commercial jet engines and parts, and corporate and other. We seek to expand, strengthen and diversify Air T's after-tax cash flow per share. Our goal is to build Air T's core businesses, and when appropriate, to expand into adjacent and other industries. We seek to activate growth and overcome challenges while delivering meaningful value for all stakeholders. For more information, visit www.airt.net. The information on our website is available for information purposes only and is not incorporated by reference into this press release.
FORWARD-LOOKING STATEMENTS
Certain statements in this press release, including those contained in "Overview," are "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the Company's financial condition, results of operations, plans, objectives, future performance and business. Forward-looking statements include those preceded by, followed by or that include the words "believes", "pending", "future", "expects," "anticipates," "estimates," "depends" or similar expressions. These forward-looking statements involve risks and uncertainties. Actual results may differ materially from those contemplated by such forward-looking statements, because of, among other things, potential risks and uncertainties, such as:
- An inability to finance our operations through bank or other financing or through the sale of issuance of debt or equity securities;
- Economic and industry conditions in the Company's markets;
- The risk that contracts with FedEx could be terminated or adversely modified;
- The risk that the number of aircraft operated for FedEx will be reduced;
- The risk that GGS customers will defer or reduce significant orders for deicing equipment;
- The impact of any terrorist activities on United States soil or abroad;
- The Company's ability to manage its cost structure for operating expenses, or unanticipated capital requirements, and match them to shifting customer service requirements and production volume levels;
- The Company's ability to meet debt service covenants and to refinance existing debt obligations;
- The risk of injury or other damage arising from accidents involving the Company's overnight air cargo operations, equipment or parts sold and/or services provided;
- Market acceptance of the Company's commercial and military equipment and services;
- Competition from other providers of similar equipment and services;
- Changes in government regulation and technology;
- Changes in the value of marketable securities held as investments;
- Mild winter weather conditions reducing the demand for deicing equipment;
- Market acceptance and operational success of the Company's commercial jet engines and parts segment or its aircraft asset management business and related aircraft capital joint venture; and
- Despite our current indebtedness levels, we and our subsidiaries may still be able to incur substantially more debt, which could further exacerbate the risks associated with our substantial leverage.
A forward-looking statement is neither a prediction nor a guarantee of future events or circumstances, and those future events or circumstances may not occur. We are under no obligation, and we expressly disclaim any obligation, to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise.
CONTACT
Air T, Inc. Brian Ochocki, CFO
bochocki@airt.net
612-843-4302
SOURCE: Air T, Inc.
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