Air T, Inc. Reports Unaudited Third Quarter Earnings
MAIDEN, N.C., Feb. 13, 2017 /PRNewswire/ -- Air T, Inc. (Air T) (NASDAQ: AIRT) today reported consolidated net earnings of $856,000 ($0.42 per diluted share) for fiscal 2017's third quarter ended December 31, 2016 compared to consolidated net earnings of $2,971,000 ($1.24 per diluted share) for the similar fiscal 2016 period.
Consolidated revenues net of intercompany eliminations decreased by $10,849,000 (23%) to $35,769,000 for the quarter ended December 31, 2016 compared to $46,619,000 in the same quarter in the prior fiscal year. Consolidated operating income net of intercompany eliminations decreased by $2,251,000 (58%) to $1,639,000 for the quarter ended December 31, 2016, as compared to $3,890,000 for the same quarter in the prior fiscal year.
Ground equipment sales segment revenue decreased by $17,698,000 (87%) this quarter compared to the prior year comparable quarter. The decrease in the segment's revenue is attributable primarily to the large order of deicers from a major airline in the prior year quarter that did not reoccur this fiscal year. Operating income for the ground equipment sales segment decreased by $4,754,000 to an operating loss of $913,000 in the current year quarter as a result of the decrease in sales volumes compared to the prior-year quarter. At December 31, 2016, ground equipment sales' backlog was $11.2 million, as compared to $10.8 million at December 31, 2015.
Revenues in the overnight air cargo segment decreased by $1,575,000 (8%) attributable to decreased maintenance cost passed through to the customer as well as decreased administrative fee revenues reflecting the lower administrative fee amount paid under an amendment to the dry-lease agreements that became effective on June 1, 2016. In addition, the segment's maintenance revenue was reduced as a result of lower maintenance billable hours in response to a customer directive. Operating income for the air cargo segment decreased by $383,000 from the prior-year quarter resulting from the decreased administrative fee, lower billable maintenance hours and higher operating costs not passed through to the customer, principally increased flight crew costs.
Revenues in the ground support services segment increased $1,021,000 (16%) primarily as a result of the company's growth in new markets and services offered to new and existing customers. Operating results for the ground support services segment improved by $28,000 from the prior year quarter to an operating loss of $41,000 primarily 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 segments. The operating income attributable to Delphax included in consolidated net income for the three months ended December 31, 2016 was approximately $388,000 attributable to Air T, Inc. stockholders compared to an operating loss of $336,000 in the prior-year period. A number of factors led to this improvement at Delphax. Delphax has significantly reduced operating expenses during the last two quarters, as Delphax significantly curtailed its production activities during this period. At the same time, the segment had more sales of legacy consumable products in the quarter than anticipated. Such sales included certain products against which a lower-of-cost-or-market reserve had previously been established and, as such, the related gross margin upon sale was higher than normal.
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. 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 comprise the commercial jet engines segment of the Company's operations. The operating income attributable to Contrail Aviation and Jet Yard included in consolidated net income for the three months ended December 31, 2016 was approximately $491,000 attributable to Air T, Inc. stockholders.
(In thousands, except per share data)
Three Months Ended December 31,
Nine Months Ended December 31,
Operating Income (Loss)
Net Income (Loss)
Net Income (Loss) Attributable to Air T, Inc. Stockholders
Net Earnings (Loss) Per Share - Diluted
Weighted Average Shares Outstanding - Diluted
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, 2016 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 commercial jet engines. 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.
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, 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.
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