Diversified Holding Company Air T, Inc. FY 2018 Revenue Rose 31% to $194.5M and FY 2018 EPS Improved to $1.11

Diversified Holding Company Air T, Inc. FY 2018 Revenue Rose 31% to $194.5M and FY 2018 EPS Improved to $1.11

PR Newswire

DENVER, N.C., June 29, 2018

DENVER, N.C., June 29, 2018 /PRNewswire/ -- Air T, Inc. (NASDAQ: AIRT) is organized as a powerful portfolio of businesses and financial assets, each of which is independent yet interrelated. These include overnight air cargo operations, ground support equipment manufacturing and local maintenance services, and commercial aircraft asset management and logistics.  Today the Company is reporting improved financial performance for its fiscal year-ended March 31, 2018.

FY 2018 Overview

  • Revenues rose to $194.5 million for the fiscal year ended March 31, 2018, a 31% increase over the prior year
  • Operating income rose to $4.2 million, as compared to prior-year operating loss of $3.1 million
  • Net income attributable to Air T stockholders rose to $2.3 million versus a net loss of $3.2 million in fiscal 2017
  • Diluted earnings per share increased to $1.11 compared to last year's loss per share of $1.51

Air T, Inc. Chairman and CEO Nick Swenson, said: "Our fiscal 2018 operating results reflect the outstanding performance of our business leaders and employees, as well as new acquisitions. Together they delivered top line growth coupled with improvements to bottom line performance, particularly after adjusting for audit expenses and investments in our corporate infrastructure. We are looking forward to steady growth in fiscal 2019. We continuously evaluate acquisitions and investments that will add to our portfolio of powerful businesses. Our investments must represent claims on growing free cash flows or discounts to intrinsic value. Yet people understand that enterprising and dynamic individuals and teams are at the heart of our corporate strategy. A large part of our job is making room for excellent leaders and applying resources as they move their organizations forward. The more we make sound decisions at the relevant level, the more we will continue to do better."

Business Segment Results

Aviation Ground Support Equipment

  • Revenues for this segment, which is comprised of Global Ground Support Services, the world's largest manufacturer of aircraft de-icing equipment, totaled $50.0 million for the fiscal year ended March 31, 2018. This represents an increase of 59% over the revenue of $31.4 million in the prior year. The revenue increase reflected higher sales of de-icing and catering trucks to large and long-standing customers.
  • The segment entered fiscal 2019 on a strong footing with a sales backlog of $13.3 million compared to $2.8 million a year-ago.

Overnight Air Cargo

  • Revenues for this segment, comprised of Mountain Air Cargo and CSA Air, rose 5% to $72.8 million in fiscal 2018 compared to $69.6 million in the prior fiscal year.
  • The revenue increase was primarily due to higher administrative fees from FedEx as a result of an incremental aircraft lease arrangement and to cover certain operational costs, principally flight crew costs.
  • Segment maintenance revenues also increased due to increased scheduled aircraft maintenance in fiscal 2018 compared to the prior year.

Aviation Ground Support Maintenance Services

  • Revenue from this segment, comprised of Global Aviation Services, one of the fastest growing ground support maintenance providers in the U.S., offering maintenance services at 88 airports, totaled $35.7 million in fiscal 2018, a 17% over fiscal 2017.
  • The revenue increase is due to growth in services to existing customers as well as an increase in new customer contracts.

Commercial Jet Engines and Parts

  • This segment provides surplus and aftermarket commercial jet engine parts, airframes, avionics, other aircraft parts and logistics to the aviation industry. The three companies in this segment are Contrail, Jet Yard and AirCo. Contrail and Jet Yard were acquired in July 2016 and October 2016, respectively, while AirCo was acquired in May 2017.
  • Revenues from this segment totaled $29.5 million in fiscal 2018, an increase of 296% over fiscal 2017 revenue of $7.5 million. This increase is due to higher volume sales at Contrail as well as full year ownership of Contrail and Jet Yard in fiscal 2018, and the acquisition of AirCo in the current year.
  • The assets of Worthington Aviation, an aftermarket airframe parts and logistics company focused on the turbo prop and regional jet markets, were acquired in May 2018 and will be included in the commercial jet engine and parts segment starting in the first quarter of fiscal 2019.

Other Investments and Financial Liquidity

  • Air T owned approximately 3.4 million shares of common stock of Insignia Systems, Inc. (NASDAQ: ISIG) with a market value of $5.3 million as of March 31, 2018
  • Air T owned approximately 0.5 million shares of common stock of Oxbridge Re Holdings Limited (NASDAQ: OXBR) with a market value of $1.0 million as of March 31, 2018
  • Working capital as of March 31, 2018 totaled $30.5 million and there were zero borrowings under the Company's $10 million revolving credit facility.

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

CONSOLIDATED STATEMENTS OF INCOME (LOSS)



Year Ended March 31,



2018

2017

Operating Revenues:





Overnight air cargo

$             72,845,353

$            69,558,334

Ground equipment sales

50,004,507

31,447,408

Ground support services

35,698,171

30,453,246

Commercial jet engines and parts

29,506,873

7,455,797

Printing equipment and maintenance

6,144,403

9,019,155

Corporate

182,722

-

Leasing

137,316

537,719



194,519,345

148,471,659






Operating Expenses:





Overnight air cargo

63,049,619

61,661,072

Ground equipment sales

41,567,109

24,350,264

Ground support services

30,135,613

25,089,412

Printing equipment and maintenance

2,975,999

9,490,906

Commercial jet engines and parts

20,502,205

4,501,030

Leasing

-

49,460

Research and development

195,653

1,042,496

General and administrative

29,168,766

22,205,947

Depreciation, amortization and impairment

2,678,858

3,181,845



190,273,822

151,572,432






Operating Income (Loss)

4,245,523

(3,100,773)






Non-operating Income (Loss):





Gain on sale of marketable securities

93,066

576,162

Foreign currency gain (loss)

(228,714)

286,596

Other-than-temporary impairment losses on investments

(1,559,972)

(2,755,318)

Other investment income, net

121,860

1,345,798

Interest expense and other

(1,724,771)

(571,651)

Gain on asset retirement obligation

562,500

-

Bargain purchase acquisition gain, net of tax

501,880

-

Unrealized loss on interest rate swap

(66,706)

-

Unrealized gain on transition to equity method

721,585

-

Equity in income of associated company

(14,644)

-



(1,593,916)

(1,118,413)






Income (Loss) Before Income Taxes

2,651,607

(4,219,186)






Income Taxes

195,000

725,000














Net Income (Loss)

2,456,607

(4,944,186)






Net (Income) Loss Attributable to Non-controlling




Interests

(179,498)

1,730,647














Net Income (Loss) Attributable to Air T, Inc. Stockholders

$               2,277,109

$            (3,213,539)














Earnings (Loss) Per Share:






Basic

$                        1.11

$                     (1.51)








Diluted

$                        1.11

$                     (1.51)






Weighted Average Shares Outstanding:






Basic

2,042,806

2,125,224

Diluted

2,047,685

2,125,224

 

 

AIR T, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

March 31, 2018

March 31, 2017

ASSETS



Current Assets:




Cash and cash equivalents (Delphax $241,430 and $328,327)*

$                4,803,238

$             2,763,365

Marketable securities

290,449

2,130,544

Restricted cash 

269,659

890,369

Restricted investments

1,235,405

-

Accounts receivable, less allowance for doubtful accounts




  of $801,000 and $979,000 (Delphax $317,000 and $1,728,411)*

15,157,855

18,923,787

Costs and estimated earnings in excess of billings on uncompleted projects

2,012,121

-

Notes and other receivables-current

658,630

2,297,007

Income tax receivable

1,557,180

402,688

Inventories, net (Delphax $0 and $1,941,729)*

34,231,005

19,778,843

Prepaid expenses and other (Delphax $72,269 and $932,794)*

1,455,566

1,672,475

  Total Current Assets

61,671,108

48,859,078




Investments in available-for-sale securities

1,026,920

2,463,123




Property and equipment, net (Delphax $0 and $8,007)*

20,273,171

5,324,488

Cash surrender value of life insurance policies

2,356,507

2,251,450

Notes and other tax receivables-long-term

311,000

66,771

Deferred income taxes

-

204,000

Investments in funds

324,854

-

Equity method investments

5,032,268

-

Other assets 

420,981

371,975

Intangible assets, net 

1,312,472

1,376,699

Goodwill 

4,417,605

4,417,605

  Total Assets

$              97,146,886

$           65,335,189




LIABILITIES AND STOCKHOLDERS' EQUITY



Current Liabilities:




Accounts payable (Delphax $2,145,847 and $2,482,578)*

$              10,181,143

$           11,571,156

Income tax payable (Delphax $11,312 and $11,312)*

23,000

-

Accrued expenses (Delphax $3,244,514 and $3,602,162)*

11,743,973

8,672,815

Short-term debt 

9,229,690

25,000

 Total Current Liabilities   

31,177,806

20,268,971




Long-term debt (Delphax $0 and $0)*

38,855,260

18,412,521

Deferred income taxes

92,000

8,000

Other non-current liabilities 

785,797

3,039,402





 Total Liabilities   

70,910,863

41,728,894




Redeemable non-controlling interest

1,992,939

1,443,901




Commitments and contingencies (Notes 8, 11, and 22)









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,




  2,043,607 shares issued and outstanding at March 31, 2018,




  2,042,789 shares issued and outstanding at March 31, 2017

510,901

510,696

Additional paid-in capital

4,171,869

4,205,536

Retained earnings

20,695,981

18,461,347

Accumulated other comprehensive loss

(260,900)

(212,047)

     Total Air T, Inc. Stockholders' Equity

25,117,851

22,965,532

  Non-controlling Interests

(874,767)

(803,138)

  Total Equity

24,243,084

22,162,394

  Total Liabilities and Equity  

$              97,146,886

$           65,335,189










* Amounts related to Delphax as of March 31, 2018 and 2017, respectively.



 

 

AIR T, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS



Year Ended March 31,



2018

2017

CASH FLOWS FROM OPERATING ACTIVITIES:



Net income (loss)

$          2,456,607

$         (4,944,186)

Adjustments to reconcile net income (loss) to net




  cash used in operating activities:





Gain on sale of marketable securities

(93,066)

(576,162)

Loss on sale of property and equipment

30,232

25,470

Change in inventory reserves

(1,851,036)

2,188,192

Change in accounts receivable reserves

(177,394)

194,286

Depreciation, amortization and impairment

2,678,857

3,181,845

Change in cash surrender value of life insurance

(105,057)

(151,393)

Deferred income taxes

(10,566)

(659,000)

Gain on asset retirement obligation

(562,500)

-

Gain on bargain purchase, net of tax

(501,880)

-

Warranty reserve

122,686

(15,173)

Other-than-temporary impairment loss on investments

1,559,972

2,755,318

Unrealized loss on interest rate swap

66,706

-

Unrealized gain on transition to equity method

(721,585)

-

Change in operating assets and liabilities:





  Accounts receivable

4,744,262

(5,524,446)

  Costs and estimated earnings in excess of billings on uncompleted projects

(2,012,121)

-

  Notes receivable and other non-trade receivables

1,640,461

(1,600,290)

  Inventories

(6,757,766)

(7,845,801)

  Prepaid expenses and other assets

331,466

(129,532)

  Accounts payable

(1,689,030)

4,146,921

  Accrued expenses

1,664,200

1,618,100

  Income taxes payable/ receivable

(1,442,493)

306,900

  Non-current liabilities

351,208

(525,143)

Total adjustments  

(2,734,444)

(2,609,908)

 Net cash used in operating activities

(277,837)

(7,554,094)






CASH FLOWS FROM INVESTING ACTIVITIES:




Purchases of marketable securities

(2,519,045)

(2,719,369)

Proceeds from sale of marketable securities

720,452

6,002,601

Net cash used for business combinations 

(2,400,000)

(4,573,700)

Net cash used for equity method investments

(2,301,026)

-

Investment in funds

(324,854)

-

Capital expenditures

(20,215,594)

(2,346,431)

Proceeds from sale of property and equipment

3,859

6,281

Increase (Decrease) in restricted cash

620,710

(69,718)

 Net cash used in investing activities

(26,415,498)

(3,700,336)






CASH FLOWS FROM FINANCING ACTIVITIES:




Proceeds from line of credit

115,533,307

68,275,140

Payments on line of credit

(119,176,727)

(49,805,658)

Proceeds from line of credit - Delphax

-

5,387,338

Payments of debts - Delphax

-

(7,251,473)

Proceeds from term loan

38,441,000

-

Payments on term loan

(4,816,825)

-

Debt issuance costs

(404,845)

-

Earnout payments

(1,100,000)

-

Contribution from non-controlling member

252,000

-

Proceeds from exercise of stock options

8,638

-

Stock repurchase

-

(7,917,009)

 Net cash provided by financing activities

28,736,548

8,688,338








Effect of foreign currency exchange rates on cash and cash equivalents

(3,340)

(15,998)






NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

2,039,873

(2,582,090)

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR

2,763,365

5,345,455

CASH AND CASH EQUIVALENTS AT END OF YEAR

$          4,803,238

$          2,763,365






SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING ACTIVITIES:


Finished goods inventory transferred to equipment leased to customers

$             251,643

$             272,622

Equipment leased to customers transferred to inventory

2,057,417

-

Non-controlling interests in acquired business 

-

1,312,501

Acquired business earnout contracts and payable

-

3,016,667






SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:



Cash paid during the year for:




Interest

$          1,065,785

$             298,150

Income taxes

1,659,064

1,092,679

 

 

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SOURCE Air T, Inc.

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