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TheStreet Open House

ATSG's Fourth Quarter Pretax Earnings From Continuing Operations Increases 17 Percent

Stocks in this article: ATSG

Conference Call

ATSG will host a conference call on Tuesday, March 6, 2012, at 10:00 a.m. Eastern time to review its financial results for the fourth quarter of 2011. Participants should dial 800-706-7748 and international participants should dial 617-614-3473 ten minutes before the scheduled start of the call and ask for conference pass code 38617936. The call also will be webcast live (listen-only mode) via www.atsginc.com and www.earnings.com for individual investors, and via www.streetevents.com for institutional investors. A replay of the conference call will be available by phone the same day beginning at 1:00 p.m. and continuing through Tuesday, March 13, 2012, by dialing 888-286-8010 (international callers 617-801-6888); use pass code 18575315. The webcast replay will remain available via www.atsginc.com and www.earnings.com 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, aircraft maintenance services and airport ground services. ATSG's subsidiaries include ABX Air, Inc.; Airborne Global Solutions, Inc.; Air Transport International, LLC; Cargo Aircraft Management, Inc.; Capital Cargo International Airlines, Inc.; and Airborne Maintenance and Engineering Services, Inc. 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. There are a number of important factors that could cause Air Transport Services Group's ("ATSG's") actual results to differ materially from those indicated by such forward-looking statements. These factors include, but are not limited to, changes in market demand for our assets and services, the cost and timing associated with the modification and deployment of Boeing 767 and Boeing 757 aircraft, the availability and cost to acquire used passenger aircraft for freighter modification, ATSG's continuing ability to place modified aircraft into commercial service, ABX Air's ability to maintain on-time service and control costs under its operating agreement with DHL, ATSG's effectiveness in restructuring its airline operations affected by DB Schenker's restructuring of its U.S. air cargo operations, and 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. 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   Year Ended
December 31,   December 31,
2011   2010 2011   2010
REVENUES $ 166,465 $ 178,601 $ 730,133 $ 667,382
 
OPERATING EXPENSES
Salaries, wages and benefits 48,338 47,158 188,884 176,988
Fuel 19,858 35,573 150,003 133,776
Depreciation and amortization 22,198 22,284 91,063 87,594
Maintenance, materials and repairs 19,503 21,788 86,929 79,143
Landing, ramp, rent and insurance 14,602 11,083 57,140 48,292
Travel 7,532 6,326 28,335 22,709
Other operating expenses 8,525 10,248 38,006 37,204
Impairment of aircraft, goodwill and acquired intangibles     27,144    
140,556 154,460 667,504 585,706
       
OPERATING INCOME 25,909 24,141 62,629 81,676
OTHER INCOME (EXPENSE)
Interest income 51 75 179 316
Interest expense (3,237 ) (4,251 ) (14,181 ) (18,675 )
Write off of unamortized debt issuance costs (2,886 )
Unrealized gain/(loss) on derivative instruments 556     (4,881 )  
(2,630 ) (4,176 ) (21,769 ) (18,359 )
       
EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 23,279 19,965 40,860 63,317
 
INCOME TAX EXPENSE (9,749 ) (8,114 ) (16,995 ) (23,413 )
       
EARNINGS FROM CONTINUING OPERATIONS 13,530 11,851 23,865 39,904
 
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX (599 ) (12 ) (673 ) (70 )
       
NET EARNINGS $ 12,931   $ 11,839   $ 23,192   $ 39,834  
 
EARNINGS (LOSS) PER SHARE - Basic
Continuing operations $ 0.21   $ 0.19   $ 0.38   $ 0.64  
Discontinued operations (0.01 )   (0.01 ) (0.01 )
NET EARNINGS PER SHARE $ 0.20   $ 0.19   $ 0.37   $ 0.63  
 
EARNINGS (LOSS) PER SHARE - Diluted
Continuing operations $ 0.21   $ 0.19   $ 0.37   $ 0.62  
Discontinued operations (0.01 )   (0.01 )  
NET EARNINGS PER SHARE $ 0.20   $ 0.19   $ 0.36   $ 0.62  
 
WEIGHTED AVERAGE SHARES
Basic 63,336   62,814   63,284   62,807  
Diluted 64,109   63,809   64,085   64,009  
 
 
AIR TRANSPORT SERVICES GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

  December 31,       December 31,
2011 2010
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 30,503 $ 46,543
Accounts receivable, net of allowance of $434 in 2011 and $1,090 in 2010 42,278 40,876
Inventory 8,906 7,205
Prepaid supplies and other 9,785 10,132
Deferred income taxes 31,548 12,879
Aircraft and engines held for sales 9,831    
TOTAL CURRENT ASSETS 132,851 117,635
 
Property and equipment, net 748,913 658,756
Other assets 18,579 25,227
Intangibles 6,396 9,259
Goodwill 86,980   89,777  
TOTAL ASSETS $ 993,719   $ 900,654  
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable $ 48,360 $ 40,558
Accrued salaries, wages and benefits 23,226 24,145
Accrued expenses 10,291 12,144
Current portion of debt obligations 13,223 36,591
Unearned revenue 12,487   10,794  
TOTAL CURRENT LIABILITIES 107,587 124,232
 
Long term debt obligations 333,681 265,937
Post-retirement liabilities 185,562 116,614
Other liabilities 54,212 52,048
Deferred income taxes 42,530 39,746
 
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; 75,000,000 shares authorized; 64,015,789 and 63,652,228 shares issued and outstanding in 2011 and 2010, respectively 640 637
Additional paid-in capital 520,613 518,925
Accumulated deficit (148,059 ) (171,251 )
Accumulated other comprehensive loss (103,047 ) (46,234 )
TOTAL STOCKHOLDERS’ EQUITY 270,147   302,077  
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 993,719   $ 900,654  
 
 
AIR TRANSPORT SERVICES GROUP, INC. AND SUBSIDIARIES

PRE-TAX EARNINGS AND ADJUSTED PRE-TAX EARNINGS SUMMARY

FROM CONTINUING OPERATIONS

NON-GAAP RECONCILIATION

(In thousands)

 
  Three Months Ended   Year Ended
December 31, December 31,
2011   2010 2011   2010
Revenues
CAM Leasing $ 38,534 $ 30,199 $ 140,469 $ 101,375
ACMI Services
Airline services 108,342 109,805 444,778 432,082
Other Reimbursables 22,669 41,363 160,683 143,330
DHL Severance and Retention activities       4,000  
Total ACMI Services 131,011 151,168 605,461 579,412
Other Activities 28,042   24,472   105,284   87,660  
Total Revenues 197,587 205,839 851,214 768,447
Eliminate internal revenues (31,122 ) (27,238 ) (121,081 ) (101,065 )
Customer Revenues $ 166,465   $ 178,601   $ 730,133   $ 667,382  
 
Pre-tax Earnings from Continuing Operations
CAM, inclusive of interest expense 16,726 13,304 59,982 41,586
ACMI Services
Airline services 1,768 5,970 6,576 17,339
DHL Severance and Retention activities       3,549  
1,768 5,970 6,576 20,888
Asset impairments (27,144 )
Other Activities 4,330 2,417 11,331 8,017
Net, unallocated interest expense (101 ) (1,726 ) (2,118 ) (7,174 )
Write off of unamortized debt issuance costs (2,886 )
Net gain (loss) on derivative instruments 556     (4,881 )  
Total Pre-tax Earnings $ 23,279 $ 19,965 $ 40,860 $ 63,317
 
Adjustments to Pre-tax Earnings
Add Asset impairment charges 27,144
Less Net (Gain) Loss on derivative instruments (556 ) 4,881
Add Write-off of unamortized debt issuance costs 2,886
Less DHL Severance and Retention activities       (3,549 )
Adjusted Pre-tax Earnings $ 22,723   $ 19,965   $ 75,771   $ 59,768  
 

Notes: During the first half of 2011, the Company refinanced its long-term debt, recorded charges to write-off unamortized debt origination costs associated with terminated credit agreements and recognized losses for certain interest rate swaps which had been designated as hedges of the previous debt. Severance and Retention activities reflect compensation from DHL for ABX's costs and efforts to support DHL's U. S. network restructuring in 2008 through March 2010. Other Reimbursable revenues include certain operating costs that are reimbursed to the airlines by their customers. Such costs include fuel used, landing fees and certain aircraft maintenance expenses.

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