DENVER, N.C., Oct. 26, 2017 /PRNewswire/ -- Air T, Inc. (Air T)
(NASDAQ: AIRT) today reported consolidated net income attributable
to Air T, Inc. stockholders of $968,000 ($0.47 per
diluted share) for the fiscal 2018 first quarter ended June 30, 2017 as compared to consolidated net
loss attributable to Air T, Inc. stockholders of $5,751,000 ($2.42
per diluted share) for the fiscal 2017 comparable period.
Consolidated revenue increased $17,204,000 (56%) from $30,493,000 to $47,697,000 for the quarter ended June 30, 2017 compared to the comparable quarter
in the prior fiscal year. Consolidated operating income increased
$9,286,000 (131%) from an operating
loss of $7,073,000 to operating
income of $2,213,000 for the quarter
ended June 30, 2017 compared to the
comparable quarter in the prior fiscal year principally due to
significant negative operating results of Delphax Technologies Inc.
("Delphax"), including related asset impairments, in the prior-year
period that did not recur in the quarter ended June 30, 2017.
Overnight air cargo revenues increased $105,000 (1%) from $16,637,000 to $16,742,000 compared to the prior-year comparable
quarter. The segment's operating income decreased by $163,000 to $817,000 due to higher operating costs not passed
through to the customer, principally increased flight crew
costs.
Ground equipment sales revenue, net of intercompany
eliminations, increased $1,695,000
(40%) from $4,254,000 to $5,950,000 this quarter compared to the
prior-year comparable quarter due to increased deicing truck sales.
Ground equipment sales operating income, net of intercompany
eliminations, increased by $307,000
(218%) from a net operating loss of $141,000 in the prior year comparable quarter.
The segment's order backlog was $16.4
million at June 30, 2017, as
compared to $2.8 million at
March 31, 2017 and $12.1 million at June 30,
2016.
Ground support services revenue increased $2,313,000 (34%) from $6,800,000 to $9,113,000, as a result of the segment's growth
in new markets and in services offered to new and existing
customers and strong parts sales. Operating income for this
segment for the same period increased by $467,000 (424%) from a net operating loss of
$110,000 in the prior-year comparable
quarter primarily due to the impact of increased revenues.
On November 24, 2015, Air T
acquired from 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 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, for the quarter ended June 30, 2017, the attribution of Delphax net
income to non-controlling interests was 3.4% and, for the quarter
ended June 30, 2016, the attribution
of Delphax net loss to non-controlling interests was 33%. Revenues
from Delphax, net of intercompany eliminations, increased by
$571,000 (22%) compared to the
comparable quarter of the prior fiscal year, while operating
income, net of intercompany eliminations, increased by $7,915,000 (113%) to $924,000 due to significant negative operating
results of Delphax in the prior-year comparable quarter, including
related asset impairments described above, that did not recur in
the quarter ended June 30, 2017.
Results for the quarter ended June 30,
2017 include a non-operating charge of approximately
$771,000 related to the Company's
investment in marketable securities of Insignia Systems, Inc.
("Insignia"). While the Company does not intend to liquidate its
securities holdings in Insignia within twelve months, the Company
recognized an impairment loss on the investment during the quarter
ended June 30, 2017 due in part to
the magnitude of the loss position in the investment, which
increased sharply during the quarter.
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 cash and 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. In May 2017, the Company's newly formed
subsidiaries, AirCo, LLC and AirCo Services, LLC (collectively,
"AirCo") acquired the inventory and principal business assets, and
assumed specified liabilities, of Aircraft Instrument and Radio
Company, Incorporated, and Aircraft Instrument and Radio Services,
Inc. The acquired business, which is based in Wichita, Kansas, distributes and sells
airplane and aviation parts and maintains a license under Part 145
of the regulations of the Federal Aviation Administration. Contrail
Aviation, Jet Yard and AirCo comprised the commercial jet engines
and parts segment of the Company's operations during the quarter
ended June 30, 2017, which
contributed revenues of $12,725,000,
net of intercompany eliminations, while segment operating income,
net of intercompany eliminations, was $811,000.
On June 7, 2017, the Company's
subsidiary, Space Age Insurance Company ("SAIC"), invested
$500,000 for a 40% interest in TFS
Partners LLC ("TFS Partners"), a single-purpose investment entity
organized by SAIC and other investors for the purpose of making an
investment in a limited liability company, The Fence Store LLC
("Fence Store LLC"), organized for the purpose of acquiring
substantially all of the assets of The Fence Store, Inc. ("Fence
Store Inc."). TFS Partners acquired a 60% interest in Fence
Store LLC, which has completed the purchase of substantially all of
the assets of Fence Store Inc. Prior to this transaction,
Fence Store Inc. operated a business under the tradename "Town and
Country Fence" selling and installing residential and commercial
fencing in the greater Twin
Cities, Minnesota
area. Fence Store LLC has continued this business. The
Company accounts for its investment in TFS Partners using the
equity method of accounting.
FINANCIAL
HIGHLIGHTS
(In thousands, except per share data)
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
2017
|
|
2016
|
Operating
Revenues
|
$
47,697
|
|
$
30,493
|
|
|
|
|
Operating Income
(Loss)
|
$
2,213
|
|
$
(7,073)
|
|
|
|
|
Net Income
(Loss)
|
$
1,230
|
|
$
(7,989)
|
|
|
|
|
Net Income (Loss)
Attributable to Air T, Inc. Stockholders
|
$
968
|
|
$
(5,751)
|
|
|
|
|
Earnings (Loss) Per
Share - Diluted
|
$
0.47
|
|
$
(2.42)
|
|
|
|
|
Weighted Average
Shares Outstanding - Diluted
|
2,048
|
|
2,373
|
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
June 30, 2017 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.
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 aircraft engine aftermarket 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, 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, 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, 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.
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SOURCE Air T, Inc.