ATSG Reports Strong Second Quarter 2022 Results
08/04/2022 - 04:15 PM
Delivers 24% Top-line Growth, Driven by Continued Strength in Freighter Leasing
Reaffirms 2022 Adjusted EBITDA Guidance
WILMINGTON, Ohio --(BUSINESS WIRE)--
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 second quarter and six months ended June 30, 2022 .
ATSG's second quarter 2022 results, as compared with the second quarter 2021, include:
Second Quarter 2022 Results
Revenues of $510 million , up 24%
GAAP Earnings of $54 million , or $0.73 per share basic, down from $80 million , or $1.17 . Second quarter 2021 results included $38 million pretax in government grants representing pandemic relief for ATSG’s passenger airline, $30 million in incremental pretax gains primarily related to warrant revaluations.
Adjusted Earnings Per Share* of $0.59 , versus $0.35 a year ago. Amounts exclude, among other items, government grant and warrant revaluation gains. Results for each year reflect additional shares for a change in GAAP presentation related to convertible notes
Adjusted Pretax Earnings* of $67 million , up 80%
Adjusted EBITDA* of $158 million , up 23%
Operating Cash Flow of $125 million , versus $183 million for the year ago quarter ended June 30 . Also, Adjusted Free Cash Flow* of $72 million , versus $123 million for the year ago quarter, reflecting higher customer receivables.
Rich Corrado , president and chief executive officer of ATSG, said, "Leasing converted midsize freighter aircraft and flying them in express-package networks remained a powerful and resilient driver of our strong cash flow in the second quarter. CAM, our aircraft lessor, again fueled our adjusted earnings momentum, with nine more Boeing 767 freighters leased to third-party customers than a year ago. Our cargo airlines continue to fly more hours, using both freighters that CAM owns plus others that customers have assigned to them. Inflation-driven increases in employee costs, contracted labor, crew travel and other costs are affecting our ACMI Services results and we are taking steps to mitigate the impact where we can."
* Adjusted Earnings Per Share, Adjusted Pretax Earnings, Adjusted EBITDA 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
CAM
External leases of nine more Boeing 767s since June 2021 contributed to CAM’s 24 percent second-quarter revenue gain. CAM also realized more 2022 revenues from new pay-by-cycle engine support services with several lessees of its 767-200 freighters. Aircraft leasing and related revenues from external customers were up 21 percent.
CAM’s second-quarter pretax earnings increased 76 percent to $39.6 million versus the prior-year quarter. Allocated interest decreased $3 million and depreciation increased $6 million .
Eighty-nine CAM-owned 767 freighter aircraft were leased to external customers as of June 30, 2022 . CAM expects to lease six more freighters in the second half, including four 767s and two Airbus A321-200s.
CAM purchased five 767-300 and four A321-200 passenger aircraft during the first half for conversion to freighters. One CAM-owned 767-300 passenger aircraft was removed from service with Omni Air and scheduled for freighter conversion. Nineteen CAM-owned aircraft were in or awaiting conversion to freighters as of June 30, 2022 , consisting of fourteen 767-300s and five A321s.
ACMI Services
Second-quarter revenues increased 27 percent to $347 million . Block hours for ATSG's airlines reflected sharply higher passenger flying and the benefit of four more CAM-leased freighters in CMI service than a year ago, plus four more 767 freighters provided by customers for our airlines to operate.
Second-quarter flight schedules were up from a year ago, particularly for passenger charter operations. Revenue block hours increased nine percent overall, including a 13 percent increase for passenger and combi flying and a 7 percent increase for cargo aircraft.
Pretax segment earnings decreased $23 million to $22 million for the quarter. Prior-year results included $38 million from government grants awarded to offset pandemic effects on Omni Air’s passenger operations.
Excluding the government grants, segment earnings more than tripled from a year ago.
Second-quarter results were affected by additional costs for crew coverage and inflation-driven increases in operating costs, including crew travel, fuel costs for positioning aircraft, and labor costs, including contracted worker costs.
2022 Outlook
ATSG continues to project a record $640 million in Adjusted EBITDA for 2022, up nearly $100 million from 2021. Our 2022 Adjusted EBITDA forecast assumes:
The addition of ten dry leases of converted freighters for the year, including eight 767-300s and two A321-200 aircraft.
Seven more 767 freighters that our airlines will operate under CMI arrangements that the aircraft’s owners or lessees have assigned to our airlines.
Mitigation of some inflation-driven cost increases in ACMI Services and rate increases for military passenger operations beginning in the fourth quarter.
Full restoration of ATI’s global combi service to all remote U.S. military facilities it served before the pandemic, including a major route scheduled to resume in the fourth quarter.
ATSG has raised its capital spending projection for 2022 by $35 million to $625 million , including $205 million in sustaining capex and $420 million for growth. The increase in growth capex reflects payments in the second half of 2022 to acquire feedstock aircraft previously scheduled to be purchased in 2023. 2022 growth capex will be funded primarily by the strong Adjusted Free Cash Flow ATSG will generate this year.
CAM has completed the first four of its projected eight 767-300 leases this year. ATSG’s cargo airlines continue to add customers’ aircraft to its freighter fleet. Those aircraft, along with expanded peak flying, are expected to boost air delivery revenues and earnings in the second half of the year.
Corrado said that Omni Air’s revenues and flights for the U.S. military remain at high levels and ATSG’s passenger business is expected to deliver solid results in the second half.
“Despite persistent inflation, we expect to reach our financial targets for 2022, as demand for our express-package network assets and flight operations remains high. E-commerce shopping habits, now well ingrained and reinforced by often lower online prices, will continue to drive express-package delivery networks that assure rapid, reliable delivery. That trend, in turn, will drive growth in ATSG’s cash flow through the current economic cycle and beyond," he said.
Corrado noted that ATSG expects to lease a record eighteen freighters in 2023, including fourteen 767s and four A321s.
“The majority of those orders are backed by customer deposits, and nearly all are from existing customers, giving us great confidence about growth in our core leasing returns over the next 18 months,” he said. “Beyond that, we have customer orders for twenty Airbus A330s we will start to acquire and convert next year, with deliveries beginning in 2024. Our existing lease portfolio and order book translate into a compelling growth story for ATSG in the coming years."
Non-GAAP Financial Measures
This release, including the attached tables, contains non-GAAP financial measures that management uses to evaluate historical results and project future results. Management believes that these non-GAAP 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 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. The historical non-GAAP financial measures included in this release are reconciled to GAAP earnings in tables included later in this release. The Company does not provide a reconciliation of projected Adjusted EBITDA 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 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, August 5, 2022 , at 10 a.m. Eastern time to review its financial results for the second quarter of 2022. Participants must register in advance to receive a number and PIN to connect by phone, using a link provided on our website, atsginc.com/investors . A separate link will offer access to a live, listen-only webcast of the call. The webcast will remain available for replay via the same site 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, 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. Such factors include, but are not limited to: (i) the extent to which changes in market conditions impact the number, timing, and scheduled routes of aircraft deployments to new and existing customers; (ii) the cost and timing with respect to which we are able to purchase and modify aircraft to a cargo configuration, which may be impacted by global supply chain disruptions; (iii) our operating airlines' ability to maintain on-time service and control costs; (iv) our ability to remain in compliance with key agreements with customers, lenders and government agencies; (v) persistent elevated rates of inflation and changes in general economic and/or industry-specific conditions such as higher labor costs, increases in interest rates, an economic recession, and downturns in customer business cycles; (vi) the impact arising from COVID-19 outbreaks, including the emergence of COVID-19 variants; (vii) mark-to-market changes on certain financial instruments; and (viii) 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. 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
(In thousands, except per share data)
Three Months Ended
Six Months Ended
June 30 ,
June 30 ,
2022
2021
2022
2021
REVENUES
$
509,668
$
409,872
$
995,528
$
785,960
OPERATING EXPENSES
Salaries, wages and benefits
162,797
141,524
324,559
283,540
Depreciation and amortization
81,372
75,633
163,443
146,684
Maintenance, materials and repairs
39,407
45,913
75,116
87,920
Fuel
73,102
36,592
133,460
67,034
Contracted ground and aviation services
20,153
18,794
38,484
33,597
Travel
28,480
18,501
52,679
36,905
Landing and ramp
4,085
3,026
8,663
6,135
Rent
7,068
5,726
13,731
11,594
Insurance
2,326
3,068
4,878
6,204
Other operating expenses
20,361
14,750
40,204
31,173
Government grants
—
(38,274
)
—
(66,304
)
439,151
325,253
855,217
644,482
OPERATING INCOME
70,517
84,619
140,311
141,478
OTHER INCOME (EXPENSE)
Interest income
15
9
24
28
Non-service component of retiree benefit credits
5,388
4,456
10,776
8,913
Debt issuance costs
—
(6,505
)
—
(6,505
)
Net gain on financial instruments
6,011
35,703
8,707
45,175
Losses from non-consolidated affiliates
(3,220
)
965
(4,623
)
(218
)
Interest expense
(9,461
)
(15,021
)
(20,860
)
(29,543
)
(1,267
)
19,607
(5,976
)
17,850
EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
69,250
104,226
134,335
159,328
INCOME TAX EXPENSE
(15,040
)
(24,357
)
(30,329
)
(37,169
)
EARNINGS FROM CONTINUING OPERATIONS
54,210
79,869
104,006
122,159
EARNINGS FROM DISCONTINUED OPERATIONS, NET OF TAX
882
65
882
65
NET EARNINGS
$
55,092
$
79,934
$
104,888
$
122,224
EARNINGS PER SHARE - CONTINUING OPERATIONS
Basic
$
0.73
$
1.17
$
1.41
$
1.91
Diluted
$
0.61
$
0.74
$
1.18
$
1.23
WEIGHTED AVERAGE SHARES - CONTINUING OPERATIONS
Basic
73,980
68,206
73,934
63,851
Diluted
89,449
72,964
89,098
73,849
AIR TRANSPORT SERVICES GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
June 30 ,
December 31 ,
2022
2021
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$
47,151
$
69,496
Accounts receivable, net of allowance of $902 in 2022 and $742 in 2021
260,260
205,399
Inventory
54,005
49,204
Prepaid supplies and other
28,157
28,742
TOTAL CURRENT ASSETS
389,573
352,841
Property and equipment, net
2,270,656
2,129,934
Customer incentive
91,293
102,913
Goodwill and acquired intangibles
498,073
505,125
Operating lease assets
64,155
62,644
Other assets
145,800
113,878
TOTAL ASSETS
$
3,459,550
$
3,267,335
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable
$
194,951
$
174,237
Accrued salaries, wages and benefits
62,538
56,652
Accrued expenses
11,423
14,950
Current portion of debt obligations
634
628
Current portion of lease obligations
20,497
18,783
Unearned revenue and grants
38,293
47,381
TOTAL CURRENT LIABILITIES
328,336
312,631
Long term debt
1,358,842
1,298,735
Stock warrant obligations
851
915
Post-retirement obligations
20,375
21,337
Long term lease obligations
44,305
44,387
Other liabilities
53,596
49,662
Deferred income taxes
241,752
217,291
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; 74,369,138 and 74,142,183 shares issued and outstanding in 2022 and 2021, respectively
744
741
Additional paid-in capital
1,037,139
1,074,286
Retained earnings
435,189
309,430
Accumulated other comprehensive loss
(61,579
)
(62,080
)
TOTAL STOCKHOLDERS’ EQUITY
1,411,493
1,322,377
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
$
3,459,550
$
3,267,335
AIR TRANSPORT SERVICES GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED SUMMARY OF CASH FLOWS
(In thousands)
Three Months Ended
Six Months Ended
June 30 ,
June 30 ,
2022
2021
2022
2021
OPERATING CASH FLOWS
$
124,541
$
182,744
$
250,209
$
307,191
INVESTING ACTIVITIES:
Aircraft acquisitions and freighter conversions
(133,378
)
(115,402
)
(205,293
)
(200,104
)
Planned aircraft maintenance, engine overhauls and other non-aircraft additions to property and equipment
(52,580
)
(59,406
)
(88,917
)
(100,145
)
Proceeds from property and equipment
78
680
154
724
Investments in businesses
(16,545
)
(785
)
(16,545
)
(2,482
)
TOTAL INVESTING CASH FLOWS
(202,425
)
(174,913
)
(310,601
)
(302,007
)
FINANCING ACTIVITIES:
Principal payments on debt
(205,210
)
(1,601,854
)
(295,310
)
(1,725,919
)
Proceeds from borrowings
410,000
1,290,600
450,000
1,430,600
Repurchase of senior unsecured notes
(115,204
)
—
(115,204
)
—
Proceeds from senior unsecured bond issuance
—
207,400
—
207,400
Payments for financing costs
—
(2,655
)
—
(2,806
)
Proceeds from issuance of warrants
—
131,967
—
131,967
Taxes paid for conversion of employee awards
(89
)
(39
)
(1,439
)
(1,236
)
TOTAL FINANCING CASH FLOWS
89,497
25,419
38,047
40,006
NET INCREASE (DECREASE) IN CASH
$
11,613
$
33,250
$
(22,345
)
$
45,190
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
$
35,538
$
51,659
$
69,496
$
39,719
CASH AND CASH EQUIVALENTS AT END OF PERIOD
$
47,151
$
84,909
$
47,151
$
84,909
AIR TRANSPORT SERVICES GROUP, INC. AND SUBSIDIARIES
PRETAX EARNINGS AND ADJUSTED PRETAX EARNINGS SUMMARY
FROM CONTINUING OPERATIONS
NON-GAAP RECONCILIATION
(In thousands)
Three Months Ended
Six Months Ended
June 30 ,
June 30 ,
2022
2021
2022
2021
Revenues
CAM
Aircraft leasing and related revenues
$
114,703
$
93,624
$
226,638
$
181,853
Lease incentive amortization
(5,029
)
(5,030
)
(10,059
)
(9,982
)
Total CAM
109,674
88,594
216,579
171,871
ACMI Services
347,498
273,301
677,588
520,432
Other Activities
107,879
97,236
210,414
190,934
Total Revenues
565,051
459,131
1,104,581
883,237
Eliminate internal revenues
(55,383
)
(49,259
)
(109,053
)
(97,277
)
Customer Revenues
$
509,668
$
409,872
$
995,528
$
785,960
Pretax Earnings (Loss) from Continuing Operations
CAM, inclusive of interest expense
39,617
22,554
74,612
44,016
ACMI Services, inclusive of government grants and interest expense
21,837
44,762
44,002
66,021
Other Activities
191
3,161
1,742
3,550
Net, unallocated interest expense
(574
)
(870
)
(881
)
(1,624
)
Non-service components of retiree benefit credit
5,388
4,456
10,776
8,913
Debt issuance costs
—
(6,505
)
—
(6,505
)
Net gain on financial instruments
6,011
35,703
8,707
45,175
Loss from non-consolidated affiliates
(3,220
)
965
(4,623
)
(218
)
Earnings from Continuing Operations before Income Taxes (GAAP)
$
69,250
$
104,226
$
134,335
$
159,328
Adjustments to Pretax Earnings
Add customer incentive amortization
5,822
5,798
11,620
11,497
Less government grants
—
(38,274
)
—
(66,304
)
Less non-service components of retiree benefit credit
(5,388
)
(4,456
)
(10,776
)
(8,913
)
Add debt issuance costs
—
6,505
—
6,505
Less net gain on financial instruments
(6,011
)
(35,703
)
(8,707
)
(45,175
)
Add loss from non-consolidated affiliates
3,220
(965
)
4,623
218
Adjusted Pretax Earnings (non-GAAP)
$
66,893
$
37,131
$
131,095
$
57,156
Adjusted Pretax Earnings excludes certain items included in GAAP based pretax earnings (loss) from continuing operations because they 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.
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
Six Months Ended
June 30 ,
June 30 ,
2022
2021
2022
2021
Earnings from Continuing Operations Before Income Taxes
$
69,250
$
104,226
$
134,335
$
159,328
Interest Income
(15
)
(9
)
(24
)
(28
)
Interest Expense
9,461
15,021
20,860
29,543
Depreciation and Amortization
81,372
75,633
163,443
146,684
EBITDA from Continuing Operations (non-GAAP)
$
160,068
$
194,871
$
318,614
$
335,527
Add customer incentive amortization
5,822
5,798
11,620
11,497
Less government grants
—
(38,274
)
—
(66,304
)
Add non-service components of retiree benefit credits
(5,388
)
(4,456
)
(10,776
)
(8,913
)
Less debt issuance costs
—
6,505
—
6,505
Less net gain on financial instruments
(6,011
)
(35,703
)
(8,707
)
(45,175
)
Add loss from non-consolidated affiliates
3,220
(965
)
4,623
218
Adjusted EBITDA (non-GAAP)
$
157,711
$
127,776
$
315,374
$
233,355
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. The adjustments also excluded the recognition of government grants from adjusted earnings to improve comparability between periods. 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, recognition of government grants, charge off of debt issuance costs upon debt restructuring and costs from non-consolidated affiliates.
AIR TRANSPORT SERVICES GROUP, INC. AND SUBSIDIARIES
ADJUSTED FREE CASH FLOW
NON-GAAP RECONCILIATION
(In thousands)
Three Months Ended
Six Months Ended
Twelve Months Ended
June 30 ,
June 30 ,
June 30 ,
2022
2021
2022
2021
2022
OPERATING CASH FLOWS (GAAP)
$
124,541
$
182,744
$
250,209
$
307,191
$
526,575
Sustaining capital expenditures
(52,580
)
(59,406
)
(88,917
)
(100,145
)
(171,876
)
ADJUSTED FREE CASH FLOW (Non-GAAP)
$
71,961
$
123,338
$
161,292
$
207,046
$
354,699
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.
Cash receipts from government payroll support programs, which are included in operating cash flows, were $0 and $83.0 million for the six month periods ended June 30, 2022 and 2021, respectively. Cash receipts from government payroll support programs were $0 for the twelve months ended June 30, 2022 .
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 to evaluate the company's ability to generate cash for growth initiatives, debt service, cash returns for shareholders or other discretionary allocations of capital.
AIR TRANSPORT SERVICES GROUP, INC. AND SUBSIDIARIES
ADJUSTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS
NON-GAAP RECONCILIATION
(In thousands)
Three Months Ended
Six Months Ended
June 30, 2022
June 30, 2021
June 30, 2022
June 30, 2021
$
$ Per
Share
$
$ Per
Share
$
$ Per
Share
$
$ Per
Share
Earnings from Continuing Operations - basic (GAAP)
$
54,210
$
79,869
$
104,006
$
122,159
Gain from warrant revaluation, net of tax1
(107
)
(25,816
)
(50
)
(31,171
)
Convertible notes interest charges, net of tax2
762
—
1,522
—
Earnings from Continuing Operations - diluted (GAAP)
54,865
0.61
54,053
0.74
105,478
1.18
90,988
1.23
Adjustments to remove the following, net of tax
Customer incentive amortization3
4,493
0.05
4,475
0.06
8,968
0.10
8,873
0.12
Government grants4
—
—
(29,539
)
(0.40
)
—
—
(51,172
)
(0.69
)
Non-service component of retiree benefits5
(4,158
)
(0.05
)
(3,439
)
(0.05
)
(8,316
)
(0.09
)
(6,879
)
(0.09
)
Derivative and warrant revaluation6
(4,533
)
(0.05
)
(1,738
)
(0.05
)
(6,671
)
(0.07
)
(3,694
)
(0.15
)
Loss from affiliates7
2,485
0.03
(745
)
(0.01
)
3,568
0.04
168
—
Debt issuance costs 8
—
—
5,020
0.07
—
—
5,020
0.07
Convertible debt interest charges (prior period), net of tax2
—
—
2,339
(0.01
)
—
—
4,663
0.06
Adjusted Earnings from Continuing Operations (non-GAAP)
$
53,152
$
0.59
$
30,426
$
0.35
$
103,027
$
1.16
$
47,967
$
0.55
Shares
Shares
Shares
Shares
Weighted Average Shares - diluted (GAAP)
89,449
72,964
89,098
73,849
Additional shares - warrants1
—
6,380
—
5,839
Additional shares - convertible notes2
—
8,111
—
8,111
Adjusted Shares (non-GAAP)
89,449
87,455
89,098
87,799
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 from Continuing Operations and Adjusted Earnings Per Share from Continuing Operations are non-GAAP financial measures and 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 from Continuing Operations 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 new GAAP requires convertible debt to be treated under the "if-convert method" for EPS. Periods prior to adoption include adjustments to reflect EPS as if the new standard had been applied historically for comparability purposes.
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 effects of government grants received under federal payroll support programs.
5.
Removes the non-service component of post-retirement costs and credits.
6.
Removes gains and losses from financial instruments, including derivative interest rate instruments and warrant revaluations.
7.
Removes losses for the Company's non-consolidated affiliates.
8.
Removes the charge off of debt issuance costs when the Company modified its debt structure.
AIR TRANSPORT SERVICES GROUP, INC. AND SUBSIDIARIES
AIRCRAFT FLEET
Aircraft Types
June 30, 2021
December 31, 2021
June 30, 2022
December 31, 2022
Projected
Freighter
Passenger
Freighter
Passenger
Freighter
Passenger
Freighter
Passenger
B767-200
32
3
33
3
33
3
32
3
B767-300
59
9
65
9
70
8
80
8
B777-200
—
3
—
3
—
3
—
3
B757 Combi
—
4
—
4
—
4
—
4
A321-200
—
—
—
—
—
—
2
—
Total Aircraft in Service
91
19
98
19
103
18
114
18
B767-300 in or awaiting cargo conversion
15
—
12
—
14
—
11
—
A321 in cargo conversion
—
—
1
—
5
—
8
—
B767-200 staging for lease
1
—
1
—
1
—
2
—
Total Aircraft
107
19
112
19
123
18
135
18
Aircraft in Service
June 30 ,
December 31 ,
June 30 ,
December 31 ,
2021
2021
2022
2022 Projected
Dry leased without CMI
34
35
37
43
Dry leased with CMI
46
50
52
52
Customer provided for CMI
3
6
7
13
ACMI/Charter1
27
26
25
24
1.
ACMI/Charter includes four Boeing 767 passenger aircraft leased from external companies.
View source version on businesswire.com : https://www.businesswire.com/news/home/20220804005963/en/
Quint Turner , ATSG Inc. Chief Financial Officer
937-366-2303
Source: Air Transport Services Group, Inc.