Air T, Inc. Reports Unaudited Third Quarter Earnings

Feb 05, 2016, 08:00 ET from Air T, Inc.

MAIDEN, N.C., Feb. 5, 2016 /PRNewswire/ -- Air T, Inc. (Air T) (NASDAQ: AIRT) today reported consolidated net income of $2,971,000 ($1.24 per diluted share) for the fiscal 2016 third quarter ended December 31, 2015 as compared to consolidated net income of $1,448,000 ($0.61 per diluted share) for the similar fiscal 2015 comparable period.  As discussed below, Air T's consolidated financial results include the results of Delphax Technologies, Inc. ("Delphax") since November 24, 2015.

Consolidated revenue increased $15,726,000 (51%) to $46,619,000 for the quarter ended December 31, 2015 compared to the comparable quarter in the prior fiscal year. Consolidated operating income increased $1,749,000 (82%) to $3,890,000 for the quarter ended December 31, 2015 compared to the comparable quarter in the prior fiscal year.

Overnight air cargo revenues increased $5,701,000 (44%) to $18,674,000 compared to the prior year comparable quarter. Administrative fee revenues increased to reflect the greater administrative fee amount paid under the new dry-lease agreements which became effective on June 1, 2015. In addition, maintenance revenues increased to reflect the higher hourly maintenance labor rate under these agreements during fiscal 2016. The segment's operating income increased by $811,000 (135%) to $1,414,000 as a result of the same factors discussed above. Operating income for the air cargo segment for the prior year quarter included a $374,000 gain from the sale of company-owned aircraft used primarily to support the air cargo segment's operations.

Ground equipment sales revenue increased $7,705,000 (61%) to $20,344,000 this quarter compared to the prior year comparable quarter.  Ground equipment sales operating income increased by $2,170,000 (127%) to $3,875,000 from the prior year comparable quarter, principally attributable to increased commercial domestic deicer sales this quarter and an improved gross margin. Gross margin percentage for this segment was 26.2% for this quarter compared to 22.8% for the prior year quarter as the segment benefited from production efficiencies due in part to the large number of identical units manufactured to fill the significant order placed by a major U.S. airline in June 2015. Operating income for the ground equipment sales segment for the prior year quarter included a $412,000 gain from the sale of eight leased de-icing units to the leasing customers. At December 31, 2015, ground equipment sales backlog was $10.8 million, compared to $7.2 million at December 31, 2014 and $2.8 million at March 31, 2015.

Ground support services segment revenue increased  $1,279,000 (24%) to $6,559,000, as a result of the company's growth in new markets and in services offered to new and existing customers. Operating income for this segment for the same period decreased by $236,000 (90%), to $26,000 as a result of the significant increase in operating costs to position the segment for anticipated growth with new customers and in new markets, as well as increased maintenance and parts expense in select markets.

Consolidated revenue increased by $1,035,000 due to the inclusion of Delphax in consolidated results since November 24, 2015. Operating income was adversely affected by Delphax's $883,000 operating loss for the period in which Delphax's financial results are consolidated in Air T's financial statements.

FINANCIAL HIGHLIGHTS

(In thousands, except per share data)










 

 Three Months Ended


 

Nine Months Ended


12/31/2015


12/31/2014


12/31/2015


12/31/2014

Operating Revenues

$    46,619


$    30,893


$113,631


$87,296









Net Income

$      2,446


$      1,448


$5,504


$3,340









Net Income Attributable to Air T, Inc. Stockholders

$      2,971


$      1,448


$6,029


$3,340









Earnings Per Share- Diluted

$1.24


$0.61


$2.52


$1.41









Average Common Shares Outstanding

2,397


2,381


2,397


2,374

On November 24, 2015, Air T purchased from Delphax shares of its Series B Preferred Stock then convertible into approximately 38% of the shares of Delphax common stock outstanding after conversion, a warrant to purchase additional shares of Delphax Series B Preferred Stock and a $2.5 million five-year senior subordinated promissory note.  Air T has concluded that as a result of its acquisition of these interests, Delphax is required to be consolidated with Air T for financial reporting purposes since the November 24, 2015 acquisition date.  The operating loss attributable to Delphax included in consolidated net income for the three and nine-months ended December 31, 2015 was approximately $883,000.  Net income attributable to Air T, Inc. stockholders reflects a GAAP adjustment to net income to eliminate the Delphax net loss attributable to the interests in Delphax not held by Air T.

Air T has several business segments.  Air T is one of the largest, small-aircraft air cargo operators in the United States.  Its Mountain Air Cargo and CSA Air subsidiaries currently operate a fleet of single and twin-engine turbo-prop aircraft daily in the eastern half of the United States, Puerto Rico and the Caribbean Islands.  Air T's Global Ground Support subsidiary manufactures deicing and other specialized military and industrial equipment and is one of the largest providers of deicers in the world.  The Global Aviation Services subsidiary provides ground support equipment and facilities maintenance to domestic airline customers.  During the quarter ended December 31, 2015, Air T completed an investment in Delphax, which designs, manufactures and sells advanced digital print production systems, and organized Air T Global Leasing, LLC, a subsidiary which provides funding for equipment leasing transactions, including transactions for the leasing of equipment manufactured by Global Ground Support and transactions initiated by third parties unrelated to equipment manufactured by Air T or any of its subsidiaries.

For a more detailed presentation and discussion of the Company's results of operations and financial condition, please read the Company's Quarterly Report on Form 10-Q for the quarter ended December 31, 2015 filed today with the Securities and Exchange Commission.  Copies of the Form 10-Q may be accessed on the Internet at the SEC's website: http://www.sec.gov.

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, uncertainty regarding legal actions against the Company, future economic conditions and their impact on the Company's customers, the timing and amounts of future orders under our contract with the United States Air Force, inflation rates, competition, changes in technology or government regulation, 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.  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.

SOURCE Air T, Inc.



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