DENVER, N.C., Nov. 13, 2018 /PRNewswire/ -- Air T, Inc.
(NASDAQ: AIRT) is organized as a portfolio of powerful businesses
and financial assets, each of which is independent yet
interrelated. Today the Company announced results for its fiscal
quarter ended September 30, 2018.
Fiscal Q2 2019 Overview
- Revenues totaled $49.3 million
for the fiscal quarter ended September 30,
2018, a 1% increase over the prior year comparable
quarter
- Operating loss was $1.6 million,
a decline of $2.1 million from the
prior quarter's operating income of $0.5
million
- Net loss attributable to Air T stockholders was $1.3 million as compared to net income of
$0.4 million in Q2 2018
- Diluted loss per share was $0.65
compared to prior comparable quarter's diluted income per share of
$0.21
"Air T's results for the quarter were primarily driven by
independent, yet negative, results at several of our operating
businesses. We believe that the negative results at three of our
operating businesses are due to timing and isolated to the quarter,
one was the result of planned expenditure/investment, and one is
more disruptive in nature and currently subject to focused
management," stated Nick Swenson,
President & CEO of Air T.
A brief summary of the quarter by segment is as follows:
- Aviation ground support equipment manufacturing - lower
operating results in this segment were driven by product mix during
the quarter, as well as production delays caused by
slower-than-anticipated deliveries from critical parts suppliers.
Order backlog in this segment was over $30
million as of September 30,
2018 compared to $20 million a
year ago.
- Commercial aircraft asset management and logistics - results
for this segment in the second quarter reflect the significant
fluctuations that are expected quarter-to-quarter in the business
of leasing and trading commercial jet engines and parts. We firmly
believe that "a single quarter does not a year make" within this
segment, and we assess this segment on an annualized basis.
- Overnight air cargo – this segment, like most other airlines,
is currently facing an increasing pilot shortage. To maintain its
scheduled flights, this segment is having to pay incentives and
other ancillary fees to attract and retain its pilots. These types
of fees are having a negative impact on operational costs and
margins as the majority of these costs have not been passed through
to the sole customer of this segment.
- Corporate - our corporate-level spending rose as we continue to
invest in people, processes and technology to position the Company
for growth and investment opportunities in the future.
- Aviation ground support maintenance services - most
significantly from a financial perspective, operating margins at
this segment were negative in the second quarter. Four airport
locations within this segment drove the quarterly operating loss,
and we are implementing improvement plans at these locations which
will ultimately determine their viability. Higher employee costs -
including higher wages as well as higher health insurance costs -
also impacted second quarter results. Our many customers value the
specialized skills that our mechanics bring to their day-to-day
operational challenges, and we believe that our customers value our
specialized mechanics even more in a tight labor market that
threatens to disrupt their operations. We have paid a premium for
skilled labor, thus temporarily depressing margins, in order to
keep our customers from being disappointed.
The operating dynamic at Air T is not easy to discern on a
90-day horizon and we make no excuses for a decidedly disappointing
quarter on the face of the income statement. Shareholders can rest
assured that management thinks unsentimentally about generating
shareholder value and consequently seeks to invest shareholder
capital in businesses that grow, and which build defensible
operational edges in time. The Company has many excellent managers
and teams, going after compelling opportunities, in their
respective domains.
ABOUT AIR T, INC.
Established in 1980, Air T Inc. is a
powerful portfolio of businesses and financial assets, each of
which is independent yet interrelated. Its four core segments are:
overnight air cargo, aviation ground support equipment
manufacturing, aviation ground support maintenance services, and
commercial aircraft asset management and logistics. Our ownership
interests are designed to expand, strengthen and diversify Air T's
cash earnings power. Our goal is to build on Air T's core
businesses, and when appropriate, to expand into adjacent and other
industries that we believe fit into the Air T portfolio. For
more information, visit www.airt.net.
FORWARD-LOOKING STATEMENTS
Statements in this press
release, which contain more than historical information, may be
considered forward-looking statements (as such term is defined in
the Private Securities Litigation Reform Act of 1995), which are
subject to risks and uncertainties. Actual results may differ
materially from those expressed in the forward-looking statements
because of important potential risks and uncertainties, including,
but not limited to, the risk that contracts with major customers
will be terminated or not extended, future economic conditions and
their impact on the Company's customers, the Company's ability to
recover on its investments, including its investments in Delphax
and other recently acquired companies, the timing and amounts of
future orders under the Company's Global Ground Support
subsidiary's contract with the United States Air Force, and risks
and uncertainties related to business acquisitions, including the
ability to successfully achieve the anticipated benefits of the
acquisitions, inflation rates, competition, changes in technology
or government regulation, information technology disruptions, and
the impact of future terrorist activities in the United States and abroad. 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. The Company is under no obligation,
and it expressly disclaims any obligation, to update or alter any
forward-looking statements, whether as a result of new information,
future events or otherwise.
|
AIR T, INC. AND
SUBSIDIARIES
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME (LOSS) (UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Six Months Ended
September 30,
|
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
Operating
Revenues:
|
|
|
|
|
|
|
|
|
|
Overnight air
cargo
|
|
$
17,064,600
|
|
$
18,081,073
|
|
$
34,705,258
|
|
$
34,823,248
|
|
Ground equipment
sales
|
|
12,838,796
|
|
15,516,109
|
|
19,223,577
|
|
21,465,765
|
|
Ground support
services
|
|
8,474,037
|
|
8,801,326
|
|
17,521,677
|
|
17,914,399
|
|
Printing equipment
and maintenance
|
|
139,945
|
|
1,302,922
|
|
438,768
|
|
4,434,303
|
|
Commercial jet
engines and parts
|
|
10,642,791
|
|
5,125,244
|
|
37,962,966
|
|
17,850,585
|
|
Corporate
|
|
180,608
|
|
34,816
|
|
356,000
|
|
70,563
|
|
|
|
|
49,340,777
|
|
48,861,490
|
|
110,208,246
|
|
96,558,863
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Expenses:
|
|
|
|
|
|
|
|
|
|
Overnight air
cargo
|
|
15,349,754
|
|
15,919,557
|
|
30,524,150
|
|
30,481,700
|
|
Ground equipment
sales
|
|
10,979,913
|
|
13,273,845
|
|
15,917,225
|
|
18,028,060
|
|
Ground support
services
|
|
8,022,462
|
|
6,982,270
|
|
15,827,671
|
|
14,400,663
|
|
Printing equipment
and maintenance
|
|
48,903
|
|
1,082,751
|
|
194,431
|
|
2,583,807
|
|
Commercial jet
engines and parts
|
|
5,662,788
|
|
3,321,385
|
|
25,783,906
|
|
13,391,235
|
|
Research and
development
|
|
-
|
|
-
|
|
-
|
|
195,653
|
|
General and
administrative
|
|
9,070,053
|
|
7,276,486
|
|
17,654,856
|
|
13,861,154
|
|
Depreciation,
amortization and impairment
|
|
1,826,905
|
|
529,538
|
|
3,322,306
|
|
928,365
|
|
|
|
|
50,960,778
|
|
48,385,832
|
|
109,224,545
|
|
93,870,637
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
(Loss)
|
|
(1,620,001)
|
|
475,658
|
|
983,701
|
|
2,688,226
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-operating Income
(Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency gain
(loss), net
|
|
50
|
|
(60,482)
|
|
(2,132)
|
|
(249,106)
|
|
Other-than-temporary
impairment loss on investments
|
|
-
|
|
-
|
|
-
|
|
(771,173)
|
|
Other investment
income (loss), net
|
|
277,923
|
|
42,150
|
|
(37,584)
|
|
72,801
|
|
Interest
expense
|
|
(714,091)
|
|
(322,199)
|
|
(1,421,290)
|
|
(471,718)
|
|
Gain on asset
retirement obligation
|
|
-
|
|
562,500
|
|
-
|
|
562,500
|
|
Unrealized gain on
interest rate swap
|
|
47,885
|
|
-
|
|
145,222
|
|
-
|
|
Bargain purchase
acquisition gain
|
|
-
|
|
-
|
|
1,983,777
|
|
501,880
|
|
Income from equity
method investments
|
|
160,558
|
|
61,840
|
|
169,741
|
|
29,937
|
|
Other income,
net
|
|
27,686
|
|
-
|
|
27,686
|
|
-
|
|
|
|
|
(199,989)
|
|
283,809
|
|
865,420
|
|
(324,879)
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) Before
Income Taxes
|
|
(1,819,990)
|
|
759,467
|
|
1,849,121
|
|
2,363,347
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Taxes
(Benefit)
|
|
(393,000)
|
|
281,000
|
|
(6,000)
|
|
655,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
(Loss)
|
|
(1,426,990)
|
|
478,467
|
|
1,855,121
|
|
1,708,347
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (Income) Loss
Attributable to Non-controlling
|
|
|
|
|
|
|
|
|
|
Interests
|
|
$
105,805
|
|
$
(56,766)
|
|
$
(347,612)
|
|
$
(318,257)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss)
Attributable to Air T, Inc. Stockholders
|
|
$
(1,321,185)
|
|
$
421,701
|
|
$
1,507,509
|
|
$
1,390,090
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) Per
Share:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
(0.65)
|
|
$
0.21
|
|
$
0.74
|
|
$
0.68
|
|
|
Diluted
|
|
$
(0.65)
|
|
$
0.21
|
|
$
0.74
|
|
$
0.68
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average
Shares Outstanding:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
2,043,823
|
|
2,042,789
|
|
2,043,716
|
|
2,042,789
|
|
|
Diluted
|
|
2,043,823
|
|
2,046,945
|
|
2,049,393
|
|
2,047,305
|
|
AIR T, INC. AND
SUBSIDIARIES
|
|
CONSOLIDATED BALANCE
SHEETS (UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
September 30,
2018
|
|
March 31,
2018
|
|
ASSETS
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
Cash and cash
equivalents (Delphax $314,481 and $241,430)**
|
|
$
5,612,472
|
|
$
4,803,238
|
|
Marketable
securities
|
|
2,341,786
|
|
290,449
|
|
Restricted
cash
|
|
18,865
|
|
269,659
|
|
Restricted
investments
|
|
1,062,239
|
|
1,235,405
|
|
Accounts receivable,
less allowance for doubtful accounts
|
|
|
|
|
|
of $727,169
and $801,000 (Delphax $298,199 and $317,000)**
|
|
18,634,629
|
|
15,157,855
|
|
Costs and estimated
earnings in excess of billings on uncompleted projects
|
|
-
|
|
2,012,121
|
|
Income tax
receivable
|
|
2,109,543
|
|
1,557,180
|
|
Inventories,
net
|
|
29,450,138
|
|
34,231,005
|
|
Other current
assets
|
|
3,393,812
|
|
658,630
|
|
Prepaid expenses
(Delphax $58,754 and $72,269)**
|
|
1,919,611
|
|
1,455,566
|
|
Total Current
Assets
|
|
64,543,095
|
|
61,671,108
|
|
|
|
|
|
|
|
Investments in
securities
|
|
3,045,435
|
|
1,026,920
|
|
Property and
equipment, net of accumulated depreciation of $8,749,057 and
$6,347,253
|
37,071,213
|
|
20,273,171
|
|
Cash surrender value
of life insurance policies, net of policy loans
|
|
481,764
|
|
2,356,507
|
|
Other tax
receivables-long-term (Delphax $311,000 and $311,000)**
|
|
311,000
|
|
311,000
|
|
Investments in
funds
|
|
342,619
|
|
324,854
|
|
Equity method
investments
|
|
5,465,501
|
|
5,032,268
|
|
Other
assets
|
|
687,973
|
|
420,981
|
|
Intangible assets,
net of accumulated amortization of $1,960,734 and
$1,788,598
|
|
1,347,606
|
|
1,312,472
|
|
Goodwill
|
|
4,417,605
|
|
4,417,605
|
|
Total
Assets
|
|
$
117,713,811
|
|
$
97,146,886
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
Accounts payable
(Delphax $2,146,938 and $2,145,847)**
|
|
$
14,730,946
|
|
$
10,181,143
|
|
Income tax payable
(Delphax $11,312 and $11,312)**
|
|
34,312
|
|
23,000
|
|
Accrued expenses
(Delphax $3,234,808 and $3,244,514)**
|
|
13,769,010
|
|
11,743,973
|
|
Deferred tax
liabilities
|
|
-
|
|
-
|
|
Current portion of
long-term debt
|
|
15,242,526
|
|
9,229,690
|
|
Total Current
Liabilities
|
|
43,776,794
|
|
31,177,806
|
|
|
|
|
|
|
|
Long-term debt
(Delphax $0 and $0)*
|
|
44,123,009
|
|
38,855,260
|
|
Deferred tax
liabilities
|
|
689,655
|
|
92,000
|
|
Other non-current
liabilities
|
|
775,046
|
|
785,797
|
|
Total
Liabilities
|
|
89,364,504
|
|
70,910,863
|
|
|
|
|
|
|
|
Redeemable
non-controlling interest
|
|
2,583,162
|
|
1,992,939
|
|
|
|
|
|
|
|
Commitments and
contingencies (Note 15)
|
|
|
|
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
Air T, Inc.
Stockholders' Equity:
|
|
|
|
|
|
Preferred stock,
$1.00 par value, 50,000 shares authorized
|
|
-
|
|
-
|
|
Common stock, $.25
par value; 4,000,000 shares authorized,
|
|
|
|
|
|
2,044,614 and
2,043,607 shares issued and outstanding
|
|
511,152
|
|
510,901
|
|
Additional paid-in
capital
|
|
4,187,833
|
|
4,171,869
|
|
Retained
earnings
|
|
22,075,937
|
|
20,695,981
|
|
Accumulated other
comprehensive loss
|
|
(70,677)
|
|
(260,900)
|
|
Total Air T, Inc.
Stockholders' Equity
|
|
26,704,245
|
|
25,117,851
|
|
Non-controlling Interests
|
|
(938,100)
|
|
(874,767)
|
|
Total
Equity
|
|
25,766,145
|
|
24,243,084
|
|
Total
Liabilities and Equity
|
|
$
117,713,811
|
|
$
97,146,886
|
|
|
|
|
|
|
|
** Amounts related to
Delphax as of September 30, 2018 and March 31, 2018,
respectively.
|
|
AIR T, INC. AND
SUBSIDIARIES
|
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS (UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
September 30,
|
|
|
|
|
|
2018
|
|
2017
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
Net income
|
|
$
1,855,121
|
|
$
1,708,347
|
|
|
Adjustments to
reconcile net income to net
|
|
|
|
|
|
cash provided
by operating activities:
|
|
|
|
|
|
|
Gain (Loss) on sale
of property and equipment
|
1,661
|
|
(1,091)
|
|
|
|
Change in inventory
reserves
|
(276,494)
|
|
24,946
|
|
|
|
Change in accounts
receivable reserves
|
(74,261)
|
|
(23,849)
|
|
|
|
Depreciation,
amortization and impairment
|
3,322,306
|
|
928,365
|
|
|
|
Change in cash
surrender value of life insurance
|
(22,045)
|
|
(20,599)
|
|
|
|
Gain on asset
retirement obligation
|
-
|
|
(562,500)
|
|
|
|
Bargain purchase
acquisition gain
|
(1,983,777)
|
|
(501,880)
|
|
|
|
Change in warranty
reserve
|
(980)
|
|
906
|
|
|
|
Other-than-temporary
impairment loss on investments
|
-
|
|
771,173
|
|
|
|
Unrealized loss on
marketable securities
|
99,471
|
|
-
|
|
|
|
Unrealized gain on
interest rate swap
|
(145,222)
|
|
-
|
|
|
|
Change in operating
assets and liabilities:
|
|
|
|
|
|
|
Accounts
receivable
|
(1,462,724)
|
|
(236,911)
|
|
|
|
Costs and
estimated earnings in excess of billings and uncompleted
projects
|
2,012,121
|
|
-
|
|
|
|
Notes
receivable and other non-trade receivables
|
(2,735,178)
|
|
155,049
|
|
|
|
Inventories
|
9,969,314
|
|
4,899,652
|
|
|
|
Prepaid
expense and other assets
|
(559,682)
|
|
488,537
|
|
|
|
Accounts
payable
|
3,262,959
|
|
129,166
|
|
|
|
Accrued
expenses
|
1,908,945
|
|
(196,594)
|
|
|
|
Income taxes
payable/receivable
|
(541,051)
|
|
(651,923)
|
|
|
|
Non-current
liabilities
|
240,745
|
|
125,278
|
|
|
|
Total
adjustments
|
13,016,108
|
|
5,327,725
|
|
|
Net cash
provided by operating activities
|
14,871,229
|
|
7,036,072
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
|
Purchases of
marketable securities
|
(2,013,921)
|
|
(734,600)
|
|
|
Acquisition of
businesses, net of cash acquired
|
(3,375,700)
|
|
(2,900,000)
|
|
|
Cash used for equity
method investments
|
(263,492)
|
|
-
|
|
|
Investment in
reinsurance entity
|
(2,000,000)
|
|
-
|
|
|
Capital
expenditures
|
(19,973,209)
|
|
(8,259,215)
|
|
|
Proceeds from sale of
property and equipment
|
50,602
|
|
1,861
|
|
|
Net cash used
in investing activities
|
(27,575,720)
|
|
(11,891,954)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
|
Proceeds from lines
of credit
|
51,151,570
|
|
48,450,994
|
|
|
Payments on lines of
credit
|
(58,355,499)
|
|
(46,617,448)
|
|
|
Proceeds from term
loan
|
21,714,000
|
|
2,400,000
|
|
|
Payments on term
loan
|
(3,190,136)
|
|
(800,000)
|
|
|
Debt issuance
costs
|
(107,844)
|
|
-
|
|
|
Proceeds from loan
against cash surrender value of life insurance policies
|
1,896,788
|
|
-
|
|
|
Distribution to
non-controlling member
|
(55,837)
|
|
-
|
|
|
Contribution from
non-controlling member
|
210,000
|
|
-
|
|
|
Payments for
repurchase of stock
|
(22,759)
|
|
-
|
|
|
Proceeds from
exercise of stock options
|
17,762
|
|
-
|
|
|
Net cash
provided by financing activities
|
13,258,045
|
|
3,433,546
|
|
|
|
|
|
|
|
|
|
|
Effect of foreign
currency exchange rates on cash and cash equivalents
|
4,886
|
|
17,890
|
|
|
|
|
|
|
|
|
|
NET INCREASE/
(DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED
CASH
|
558,440
|
|
(1,404,446)
|
|
CASH AND CASH
EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD
|
5,072,897
|
|
3,653,734
|
|
CASH AND CASH
EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD
|
$
5,631,337
|
|
$
2,249,288
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL SCHEDULE
OF NON-CASH INVESTING ACTIVITIES:
|
|
|
|
|
Equipment leased to
customers transferred to inventory
|
$
234,151
|
|
-
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION:
|
|
|
|
|
Cash paid during the
year for:
|
|
|
|
|
|
Interest
|
|
$
1,149,603
|
|
$
382,535
|
|
|
Income
taxes
|
358,051
|
|
1,312,980
|
View original
content:http://www.prnewswire.com/news-releases/air-t-inc-reports-second-quarter-fiscal-2019-results-300749699.html
SOURCE Air T, Inc.
