DENVER, NC / June 28, 2019 / Air T, Inc. (NASDAQ: AIRT) is a holding company with a portfolio of operating businesses and financial assets. These operating businesses include overnight air cargo operations, ground support equipment manufacturing and maintenance services, and commercial aircraft leasing, trading, and parts sales. Our goal is to prudently and strategically grow Air T’s earnings and compound its free cash flow per share over time.
Fiscal 2019 Overview
- Revenues rose to $249.8 million for the fiscal year ended March 31, 2019, a 28% increase over fiscal 2018
- Operating income increased to $8.1 million compared to prior-year operating income of $4.2 million, an increase of approximately 90%
- EBITDA increased 136% in fiscal 2019 to $15.8 million compared to $6.7 million in fiscal 2018
- Net income attributable to Air T stockholders declined to $1.3 million this year compared to net income of $2.3 million in fiscal 2018 as a result of higher interest expense and non-operating expenses
- Diluted earnings per share declined to $0.66 compared to last year’s earnings per share of $1.11
Air T, Inc. Chairman and CEO Nick Swenson, said: “The significant growth in operating income this fiscal year reflects the successful acquisitions that have been made over the past few years to build a strong aircraft leasing, trading, and parts sales platform across a variety of different aircraft classes. We believe this platform will be a key driver of profitability and growth for Air T over the coming years. Contrail Aviation Support had a fantastic fiscal year, and we also welcomed Worthington Aviation into the Air T family in May 2018. Global Ground Support, our GSE manufacturing business, was also a solid performer in fiscal 2019 with excellent balance sheet efficiency and a strong backlog entering fiscal 2020. Some operating businesses underperformed our expectations this year, but we’re working hard to get the right people in the right seats, reduce costs, and make sure that each business is serving its customers with excellence and achieving its cost of capital. We’re excited about the future of Air T and appreciate the hard work of our valued employees as well as the continued support of our shareholders.”
Business Segment Results
Aviation Ground Support Equipment
- Revenue for this segment, which is comprised of Global Ground Support, the world’s largest manufacturer of aircraft de-icing equipment, totaled $47.2 million for the fiscal year ended March 31, 2019 compared to $50.0 million in fiscal 2018. This represents a decrease of 6% year-over-year. While revenue for this business segment was down year-over-year, we believe it was a timing issue and are very optimistic about Global Ground Support’s prospects in fiscal 2020.
- The segment entered fiscal 2020 on a strong footing with a sales backlog of $26.1 million compared to $13.3 million a year ago.
Overnight Air Cargo
- Revenues for this segment, comprised of Mountain Air Cargo and CSA Air were $73.0 million in fiscal 2019 compared to $72.8 million in the prior fiscal year.
- FedEx remains an important and valued customer of Mountain Air Cargo and CSA Air, and we look forward to working together over the coming year to strengthen the relationship and solidify our service offerings to exceed FedEx’s expectations.
Aviation Ground Support Maintenance Services
- Revenue from this segment, which is comprised of Global Aviation Services (provider of repairs and maintenance solutions at 85 airports in the U.S., totaled $34.3 million in fiscal 2019 compared to $35.7 million in fiscal 2018, a decline of 4%.
- The revenue decrease is due to the closure of certain underperforming locations. With a new focus on geographic footprint rationalization and free cash flow, Air T has high expectations for the GAS team in the coming year as it transitions from its top-line growth centered strategy to bottom line financial performance.
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 four companies in this segment are Contrail Aviation Support, Jet Yard, AirCo, and Worthington Aviation. Contrail Aviation Support and Jet Yard were acquired in July 2016 and October 2016, respectively, while AirCo was acquired in May 2017 and Worthington Aviation was acquired in May 2018.
- Revenues from this segment totaled $94.0 million in fiscal 2019, an increase of 218% over fiscal 2018 revenue of $29.5 million. This increase is due to higher volume sales at Contrail Aviation Support and AirCo as well as the acquisition of Worthington Aviation in fiscal 2019.
Other Investments and Financial Liquidity
- Air T owned approximately 3.5 million shares of common stock of Insignia Systems, Inc. (NASDAQ: ISIG) or approximately 30% of the company with a market value of $4.7 million as of March 31, 2019
- Cash and marketable securities as of March 31, 2019 totaled approximately $14.3 million and there were $12.4 million of borrowings under Air T’s $17.0 million revolving credit facility. Air T also had approximately $14.7 million of term debt outstanding at fiscal year-end. At March 31, 2019 Air T’s wholly-owned subsidiary, AirCo, had a wholly-owned subsidiary, AirCo 1, with $6.8 million of total debt outstanding (all of which was non-recourse to AirCo and Air T at fiscal year-end). Contrail Aviation Support, a majority-owned subsidiary of Air T, had $24.1 million of debt outstanding at fiscal year-end, all of which was non-recourse to Air T except for a $1.6 million guaranty.
ABOUT AIR T, INC.
Established in 1980, Air T Inc. is a holding company with a portfolio of operating businesses and financial assets. 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 compound 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 attractive industries that we believe fit into the Air T portfolio. For more information, visit www.airt.net.
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.