DENVER, N.C., Oct. 13, 2017 /PRNewswire/ -- Air T, Inc. (Air T)
(NASDAQ: AIRT) today reported a consolidated net loss attributable
to Air T, Inc. stockholders of $3,214,000 ($1.51
per diluted share) for fiscal 2017, which ended March 31, 2017, compared to restated consolidated
net income attributable to Air T, Inc. stockholders of $4,414,000 ($1.84
per diluted share) for fiscal 2016.
Consolidated revenues increased by $260,000 to $148,472,000 for the fiscal year ended
March 31, 2017 compared to $148,212,000 in the prior fiscal year. Air
T is reporting an operating loss of $3,101,000 for the fiscal year ended
March 31, 2017, as compared to the $6,032,000 operating income generated in the
prior fiscal year.
Ground equipment sales segment revenue decreased by $19,728,000 (39%) for fiscal 2017 compared to the
prior fiscal year. The decrease in the segment's revenue is
attributable primarily to the large order of deicers from a major
airline in the prior year that did not reoccur in the 2017 fiscal
year. Operating income for the ground equipment sales segment,
pre-intercompany eliminations, decreased by $4,108,000 (63%) to $2,379,000 for the 2017 fiscal year as a result
of the decrease in revenue compared to the prior fiscal year. At
March 31, 2017, ground equipment sales' backlog was
$2.8 million, as compared to
$10.0 million at March 31, 2016.
Revenues in the overnight air cargo segment increased by
$1,331,000 (2%) for fiscal 2017
compared to the prior fiscal year. This increase in the segment's
revenue is attributable to increased administrative fees paid under
dry-lease agreements which became effective on June 1, 2015 and impacted the segment's revenue
for the full fiscal year 2017 compared to only ten months in the
prior fiscal year. Somewhat offsetting the increased administrative
fees, the segment's maintenance revenues decreased as a result of
lower pass-through maintenance revenues. Operating income for the
air cargo segment decreased by $560,000 from the prior fiscal year due to higher
operating costs not passed through to the customer, principally
attributable to increased flight crew costs.
Revenues in the ground support services segment increased
$5,619,000 (23%) primarily as a
result of growth in new markets and services offered to new and
existing customers. Operating results for the ground support
services segment improved by $535,000
from the prior year to an operating loss of $501,000 for fiscal 2017 as increased revenues
began to offset the costs of infrastructure improvements made in
prior periods to position the segment for growth.
On November 24, 2015, Air T
acquired from Delphax Technologies Inc. ("Delphax") shares of its
Series B Preferred Stock then convertible into approximately 38% of
the shares of Delphax common stock outstanding after conversion and
other equity and debt interests in Delphax and its Canadian
subsidiary. 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
and reports these results in its printing equipment and maintenance
segment. Delphax's net income or loss is attributed to Air T
and the holders of non-controlling interests in Delphax. As
described in greater detail below and in the Company's Form 8-K
dated October 5, 2017, Air T
concluded it was not appropriate to base attribution of Delphax's
net income or loss to non-controlling interests solely on the
Company's ownership of the Series B Preferred Stock and that the
attribution methodology should be based on consideration of all of
Air T's investments in Delphax. As a result of the
application of the above-described attribution methodology
reflecting consideration of all of Air T's investments in Delphax,
for the 2017 fiscal year Delphax's net loss was attributed 30% to
non-controlling interests and 70% to Air T, Inc. stockholders. For
the 2016 fiscal year (as restated) Delphax's net loss was
attributed 33% to non-controlling interests and 67% attributable to
Air T, Inc. stockholders. The net loss of Delphax
included in consolidated net loss attributable to Air T, Inc.
stockholders for the fiscal year ended March 31, 2017,
pre-intercompany eliminations, was approximately $4,437,000 compared to a Delphax loss
attributable to Air T, Inc. stockholders for the fiscal year ended
March 31, 2016, pre-intercompany
eliminations, of $1,332,000.
This increased loss at Delphax was principally associated with
asset impairments and severance charges related to a previously
reported significant decline in Delphax's business outlook during
the first quarter of fiscal year 2017. Further, Delphax was
consolidated in the Company's results for only a portion of the
prior fiscal year.
On July 18, 2016, Contrail
Aviation Support, LLC ("Contrail Aviation"), a subsidiary of the
Company, completed the purchase of substantially all of the assets
of Contrail Aviation Support, Inc. The acquisition consideration
included equity membership units in Contrail Aviation representing
21% of the total equity membership units in Contrail Aviation.
Additionally, Air T, through a subsidiary, acquired 100% of the
outstanding equity interests of Jet Yard, LLC ("Jet Yard") on
October 3, 2016. Contrail Aviation
and Jet Yard comprised the commercial jet engines and parts segment
of the Company's operations during the 2017 fiscal year, which
contributed revenues of $7,456,000 in
the fiscal year. The operating income of the segment attributable
to Air T, Inc. stockholders for the fiscal year ended
March 31, 2017, pre-intercompany eliminations, was
approximately $535,000.
FINANCIAL
HIGHLIGHTS
(In thousands, except
per share data)
|
|
|
Year Ended March
31,
|
|
2017
|
|
2016
|
|
|
|
(As
Restated)*
|
Operating
Revenues
|
$
148,472
|
|
$
148,212
|
|
|
|
|
Operating Income
(Loss)
|
$
(3,101)
|
|
$
6,032
|
|
|
|
|
Net Income
(Loss)
|
$
(4,944)
|
|
$
3,758
|
|
|
|
|
Net Income (Loss)
Attributable to Air T, Inc. Stockholders
|
$
(3,214)
|
|
$
4,414
|
|
|
|
|
Earnings (Loss) Per
Share - Diluted
|
$
(1.51)
|
|
$
1.84
|
|
|
|
|
Weighted Average
Shares Outstanding - Diluted
|
2,125
|
|
2,397
|
__________________
*
|
As described below,
the Company's financial statements at and for the fiscal year ended
March 31, 2016 have been restated.
|
For a more detailed presentation and discussion of the Company's
results of operations and financial condition, please read the
Company's Annual Report on Form 10-K for the year ended
March 31, 2017 filed today with the
Securities and Exchange Commission. Copies of the Form 10-K
may be accessed on the Internet at the SEC's website:
http://www.sec.gov.
Restatement of Prior Period Financial Statements
As reported in Air T's Form 8-K dated October 5, 2017, the Company had concluded that
the Company's consolidated financial statements previously issued
for periods ending after the Company's acquisition of debt and
equity investments in Delphax in November
2015 could no longer be relied upon due to an error in the
attribution of Delphax net income or loss to non-controlling
interests. Such consolidated financial statements reflected
an attribution for relevant periods of 62% of Delphax's net income
or loss to non-controlling interests in the determination of
consolidated net income attributable to Air T, Inc.
stockholders. Such attribution was based on the Company's
ownership of the Series B Preferred Stock, which represented
approximately 38% of the shares of Delphax common stock that would
be outstanding assuming conversion of Series B Preferred Stock held
by the Company. Air T has concluded that it was not
appropriate to base attribution of Delphax's net income or loss to
non-controlling interests solely on the Company's ownership of the
Series B Preferred Stock and that the attribution methodology
should be based on consideration of all of Air T's investments in
Delphax. As a result of the application of an attribution
methodology based on such a consideration of all of Air T's
investments in Delphax, for the relevant periods of the financial
statements listed below the attribution of Delphax net income or
losses to non-controlling interests should have been 33%, except
that for the three months ended June 30,
2016, the attribution of Delphax losses to non-controlling
interests should have been 32%. As a result, Air T has today
filed amendments to its periodic reports listed below to restate
its financial statements at and for the periods listed below and to
otherwise amend and expand related disclosures:
- at and for the three and nine months ended December 31, 2015 included in the Company's
Quarterly Report on Form 10-Q for the period ended December 31, 2015 (the "Q3 2016 Form 10-Q"),
- at and for the fiscal year ended March
31, 2016 included in the Company's Annual Report on Form
10-K for the fiscal year ended March 31,
2016 (the "2016 Form 10-K"),
- at June 30, 2016 and March 31, 2016 and for the three months ended
June 30, 2016 included in the Company's Quarterly report on
Form 10-Q for the period ended June 30,
2016 (the "Q1 2017 Form 10-Q"),
- at September 30, 2016 and
March 31, 2016 and for the three and
six months ended September 30, 2016 included in the Company's
Quarterly Report on Form 10-Q for the period ended September 30, 2016 (the "Q2 2017 Form 10-Q"),
and
- at December 31, 2016 and
March 31, 2016 and for the three and
nine months ended December 31, 2016
and 2015 included in the Company's Form 10-Q for the period ended
December 31, 2016 (together with the
Q1 2017 Form 10-Q and the Q2 2017 Form 10-Q, the "2017 Form 10-Qs,"
and such financial statements in the Q3 2016 Form 10-Q, the 2016
Form 10-K and the 2017 Form 10-Qs being collectively referred to as
the "Subject Financial Statements").
The amount of the Company's consolidated net income (loss)
(which is presented prior to attribution of net loss (income)
attributable to non-controlling interests in the Company's
consolidated statements of income) presented in such restated
financial statements does not differ from the consolidated net
income (loss) previously reported in the respective Subject
Financial Statements. Similarly, the correction of the
attribution of Delphax's net income or loss for the relevant
periods reflected in such restated financial statements did not
affect the Company's assets, liabilities or cash flows at and for
each of these periods from the amounts previously reported in the
respective Subject Financial Statements.
For a more detailed presentation and discussion of the
restatement of the Subject Financial Statements, please read the
Company's Amendment No. 1 on Form 10-Q/A for the period ended
December 31, 2015, the Company's
Amendment No. 1 on Form 10-K/A for the fiscal year ended
March 31, 2016, the Company's
Amendment No. 1 on Form 10-Q/A for the period ended
June 30, 2016, the Company's
Amendment No. 1 on Form 10-Q/A for the period ended
September 30, 2016, and the Company's
Amendment No. 1 on Form 10‑Q/A for the period ended
December 31, 2016, each filed today
with the Securities and Exchange Commission. These filings
may be accessed on the Internet at the SEC's website:
http://www.sec.gov.
About Air T, Inc.
Established in 1980, Air T, Inc. is a diversified holding
company with four core industry segments: overnight air cargo,
aviation ground support equipment manufacturing, aviation ground
support maintenance services, and commercial jet engines and parts.
Our ownership interests consist of a broad set of operating and
financial assets that are designed to expand, strengthen and
diversify Air T's cash earnings power. Our goal is to build
on Air T's core businesses, to expand into adjacent industries, and
when appropriate, to acquire companies that we believe fit into the
Air T family. For more information, visit
www.airt.net.
Forward-looking Statements
Statements in this press release that 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, the
timing and amounts of future orders under the Company's Global
Ground Support subsidiary's contract with the United States Air
Force, inflation rates, competition, changes in technology or
government regulation, information technology disruptions, the
impact of future terrorist activities in the United States and abroad and other risks
and uncertainties described in the Company's Annual Report on Form
10-K for the fiscal year ended March 31,
2017. 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.
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SOURCE Air T, Inc.