2000 Westchester Avenue, Purchase, New York 10577 •?(914) 701-8400
FOR IMMEDIATE RELEASE
Contacts: Dan Loh (Investors) –?(914) 701-8200
Bonnie Rodney (Media) – (914) 701-8580
Atlas Air Worldwide Reports Third-Quarter 2015 Results
•
Adjusted Net Income of $30.7 Million, $1.23 per Share
•
Reported Net Loss of $12.8 Million, $0.51 per Share, Reflects Refinancing of Higher-Cost Debt
•
Repurchased 1.7% of Shares Outstanding in the Third Quarter
•
Reiterating Strong Fourth-Quarter and Full-Year Outlooks
PURCHASE, N.Y.,November 5, 2015 –Atlas Air Worldwide Holdings, Inc. (Nasdaq: AAWW) today announced adjusted net income attributable to common stockholders of $30.7 million, or $1.23 per diluted share, for the three months ended September 30, 2015, compared with $27.5 million, or $1.10 per diluted share, for the three months ended September 30, 2014.
On a reported basis, results reflected a net loss attributable to common stockholders of $12.8 million, or $0.51 per diluted share, in the third quarter of 2015 compared with net income attributable to common stockholders of $27.6 million, or $1.10 per diluted share, in the year-ago period. Reported results in the third quarter of 2015 were primarily due to a charge on the early extinguishment of debt following the refinancing of higher-cost debt with proceeds from lower-cost debt. In addition to reducing the company’s cost of debt, the refinancing delivers significant increases in cash flows, is immediately accretive to adjusted earnings per share, and unencumbers five of our 747-400F aircraft, which adds flexibility to our fleet.
Free cash flow of $82.5 million in the third quarter of 2015 compared favorably with $54.5 million in the third quarter of 2014.
“Both our third-quarter results and our outlook highlight the positive impact of the initiatives we have undertaken to enhance our business mix and our ability to leverage the scale and efficiencies in our operations,” said William J. Flynn, President and Chief Executive Officer.
“Earnings in ACMI during the quarter were complemented by a sharp improvement in Charter contribution and the underlying strength of our Dry Leasing business. Charter results were driven by an improvement in yields excluding fuel and higher aircraft utilization, both of which are a product of our diversified global network, quality of service, and capability to meet the needs of a wide variety of commercial customers.
“With a superior fleet and global network, we are prepared for a solid peak season and pick up in market yields as year-end airfreight demand and e-commerce growth unfold. We also anticipate a typical sequential increase in earnings in the fourth quarter. Consistent with our prior outlook, we expect adjusted fully diluted earnings per share of slightly over $1.50 in the period.”
Mr. Flynn added: “Reflecting our commitment to shareholder value, we acquired 1.7% of our outstanding common stock through our share repurchase program during the third quarter and have bought back more than 10% of our outstanding shares over the past three years. Our capital allocation strategy is dedicated to creating, enhancing and returning value to our shareholders, both through business growth and returns of capital.”
Adjusted earnings in the third quarter of 2015 excluded a loss of $1.77 per diluted share on the early extinguishment of debt and a gain on investments of $0.34 per diluted share, both in connection with the refinancing of higher-cost debt with lower-cost debt; a special charge of $0.20 per diluted share in connection with the early termination of high-rate operating leases for two engines; and net expenses of $0.12 per share related to other matters.
Third-Quarter Results
ACMI revenues and volumes during the third quarter benefited from an increase in the number of segment aircraft compared with the third quarter of 2014. Revenue growth during the quarter, however, was partially offset by a lower blended average rate per block hour reflecting the mix impact of increases in 747-400F and CMI flying. Lower segment contribution was primarily due to higher crew training costs associated with our fleet growth initiatives and higher maintenance expense. These were partially offset by a reduction in aircraft ownership costs following the refinancing of higher-cost debt related to several of our 747-400F aircraft.
In Charter, lower revenues were primarily driven by the impact of lower fuel prices partially offset by an improvement in yields excluding fuel. Lower volumes were primarily due to the redeployment of aircraft to ACMI service. Segment contribution benefited from the improvement in yields excluding fuel; higher aircraft utilization; a reduction in heavy maintenance expense; and a reduction in aircraft ownership costs following the refinancing of higher-cost debt related to our 747-400F aircraft.
Dry Leasing revenue and contribution reflected a reduction in the number of segment aircraft following the sale of a 737-800 passenger aircraft in the first quarter of 2015.
Reported results for the third quarter of 2015 included an effective income tax rate benefit of 49.3%, reflecting the favorable resolution of an IRS exam and our continued reinvestment of the net earnings of certain foreign subsidiaries outside of the U.S.
Nine-Month Results
For the nine months ended September 30, 2015, adjusted net income attributable to common stockholders of $85.9 million, or $3.44 per diluted share, compared favorably with $54.6 million, or $2.17 per diluted share, for the nine months ended September 30, 2014.
On a reported basis, nine-month 2015 net income attributable to common stockholders totaled $44.9 million, or $1.80 per diluted share, compared with $65.1 million, or $2.59 per diluted share, in the first nine months of 2014.
Free cash flow totaled $231.3 million in the first nine months of 2015 compared with $150.6 million in the first nine months of 2014.
Liquidity and Capital Resources
At September 30, 2015, our cash, cash equivalents, restricted cash and short-term investments totaled $389.6 million, compared with $330.7 million at December 31, 2014.
The change in position reflected net cash of $265.8 million provided by operating activities; net cash of $6.2 million used for investing activities; and net cash of $181.5 million used for financing activities, which included $334.5 million of debt payments.
Also during the third quarter, we repurchased 425,154 shares of our common stock for $20.0 million, or 1.7% of our outstanding common stock at June 30, 2015.
Future repurchases under our remaining $25.0 million authority may be made at our discretion, and the actual timing, form and amount will depend on company and market conditions.
Refinancing of Higher-Cost Debt
During the third quarter of 2015, we used approximately $113 million of the net proceeds from our June 2015 issuance of $224.5 million of convertible senior notes at 2.25% to retire higher-rate Enhanced Equipment Trust Certificates (EETCs) related to five of our 747-400F aircraft. The EETCs had a weighted average cash coupon of 8.1%.
Subsequent to the close of the third quarter, we refinanced the loans for two of the original 747-8Fs delivered to us in 2011 and reduced the interest rate from 6.37% to 3.53%.
Outlook
We are encouraged by our strong performance in the first nine months of 2015, expect significant growth in adjusted diluted earnings per share this year, and are confident about our business as we look to 2016.
We expect airfreight to grow at a reasonable rate in 2015 despite tougher year-over-year monthly industry data comparisons in recent months. We anticipate solid peak-season volumes and yields driven by end-of-the-year airfreight demand, supported by continued e-commerce growth. And we expect the demand we are seeing for our aircraft and services to continue next year.
As a result, we anticipate adjusted fully diluted earnings per share of slightly more than $1.50 in the fourth quarter, which excludes the cost of refinancing debt and noncash expenses and income.
For the full year, we continue to expect that block-hour volumes will increase approximately 10% compared with 2014, including the impact of the 747-8 freighter scheduled to be delivered to us this month. More than 70% of our total block hours should be in ACMI and the balance in Charter. Our outlook reflects our market leadership in ACMI, our strong presence in the global charter market, and military demand that has stabilized at higher levels compared with 2014.
In Dry Leasing, our portfolio is expected to include two 767 passenger aircraft being converted to freighter configuration. Following their conversion, which is expected to be completed during the fourth quarter of this year and the first quarter of 2016, the aircraft will be leased to DHL Express on a long-term basis. Similar to the dry leases, we expect to begin CMI flying of the two aircraft during the fourth quarter of 2015 and first quarter of 2016.
Given the flying levels that we anticipate, we continue to expect that aircraft maintenance expense in 2015 should total approximately $190 million. In addition, depreciation should be approximately $130 million. Core capital expenditures, excluding aircraft and engine purchases, are expected to total approximately $45 million, mainly for spare parts for our fleet. Expenditures for additional aircraft and engines, including our new 747-8F, should total approximately $225 million.
Mr. Flynn concluded: “We are looking forward to a strong finish to a strong year in 2015. We are confident about 2016. We are going into next year with a stronger fleet, stronger balance sheet, and a great portfolio of customers.”
Conference Call
Management will host a conference call to discuss Atlas Air Worldwide’s third-quarter 2015 financial and operating results at 11:00 a.m. Eastern Time on Thursday, November 5, 2015.
Interested parties are invited to listen to the call live over the Internet at www.atlasair.com (click on “Investor Information,” click on “Presentations” and on the link to the third-quarter call) or at the following Web address:
http://edge.media-server.com/m/p/p8bomaq9
For those unable to listen to the live call, a replay will be available on the above Web sites following the call. A replay will also be available through November 12 by dialing (855) 859-2056 (domestic) and (404) 537-3406 (international) and using Access Code 63978999#.
About Non-GAAP Financial Measures
To supplement our financial statements presented in accordance with U.S. GAAP, we present certain non-GAAP financial measures to assist in the evaluation of our business performance. These non-GAAP measures include EBITDAR, as adjusted; EBITDA, as adjusted; Direct Contribution; Adjusted Net Income Attributable to Common Stockholders; Adjusted Diluted EPS; and Free Cash Flow, which exclude certain items. These non-GAAP measures may not be comparable to similarly titled measures used by other companies and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with U.S. GAAP.
Our management uses these non-GAAP financial measures in assessing the performance of the Company’s ongoing operations and in planning and forecasting future periods. We believe that these adjusted measures provide meaningful information to assist investors and analysts in understanding our financial results and assessing our prospects for future performance.
About Atlas Air Worldwide:
Atlas Air Worldwide is a leading global provider of outsourced aircraft and aviation operating services. It is the parent company of Atlas Air, Inc. (Atlas) and Titan Aviation Holdings, Inc. (Titan), and is the majority shareholder of Polar Air Cargo Worldwide, Inc. (Polar). Through Atlas and Polar, Atlas Air Worldwide operates the world’s largest fleet of Boeing 747 freighter aircraft.
Atlas, Titan and Polar offer a range of outsourced aircraft and aviation operating services that include ACMI service – in which customers receive an aircraft, crew, maintenance and insurance on a long-term basis; CMI service, for customers that provide their own aircraft; express network and airport-to-airport cargo service; cargo and passenger charters; and dry leasing of aircraft and engines.
Atlas Air Worldwide’s press releases, SEC filings and other information can be accessed through the Company’s home page, www.atlasair.com.
This release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect Atlas Air Worldwide’s current views with respect to certain current and future events and financial performance. Such forward-looking statements are and will be, as the case may be, subject to many risks, uncertainties and factors relating to the operations and business environments of Atlas Air Worldwide and its subsidiaries (collectively, the “companies”) that may cause the actual results of the companies to be materially different from any future results, express or implied, in such forward-looking statements.
Factors that could cause actual results to differ materially from these forward-looking statements include, but are not limited to, the following: the ability of the companies to operate pursuant to the terms of their financing facilities; the ability of the companies to obtain and maintain normal terms with vendors and service providers; the companies’ ability to maintain contracts that are critical to their operations; the ability of the companies to fund and execute their business plan; the ability of the companies to attract, motivate and/or retain key executives and associates; the ability of the companies to attract and retain customers; the continued availability of our wide-body aircraft; demand for cargo services in the markets in which the companies operate; economic conditions; the effects of any hostilities or act of war (in the Middle East or elsewhere) or any terrorist attack; labor costs and relations; financing costs; the cost and availability of war risk insurance; our ability to maintain adequate internal controls over financial reporting; aviation fuel costs; security-related costs; competitive pressures on pricing (especially from lower-cost competitors); volatility in the international currency markets; weather conditions; government legislation and regulation; consumer perceptions of the companies’ products and services; anticipated and future litigation; and other risks and uncertainties set forth from time to time in Atlas Air Worldwide’s reports to the United States Securities and Exchange Commission.
For additional information, we refer you to the risk factors set forth under the heading “Risk Factors” in the most recent Annual Report on Form 10-K and subsequent reports on Form 10-Q filed by Atlas Air Worldwide with the Securities and Exchange Commission. Other factors and assumptions not identified above may also affect the forward-looking statements, and these other factors and assumptions may also cause actual results to differ materially from those discussed.
Except as stated in this release, Atlas Air Worldwide is not providing guidance or estimates regarding its anticipated business and financial performance for 2015 or thereafter.
Atlas Air Worldwide assumes no obligation to update such statements contained in this release to reflect actual results, changes in assumptions or changes in other factors affecting such estimates other than as required by law.
* * *
1
Atlas Air Worldwide Holdings, Inc. Consolidated Statements of Operations (in thousands, except per share data) (Unaudited)
For the Three Months Ended
For the Nine Months Ended
September 30, 2015
September 30, 2014
September 30, 2015
September 30, 2014
Operating Revenue
ACMI
$
197,020
$
184,068
$
575,322
$
568,929
Charter
225,068
252,855
680,642
655,462
Dry Leasing
23,915
25,411
83,235
75,611
Other
3,901
3,467
11,383
10,331
Total Operating Revenue
$
449,904
$
465,801
$
1,350,582
$
1,310,333
Operating Expenses
Aircraft fuel
87,330
115,690
262,156
301,276
Salaries, wages and benefits
86,434
78,834
262,069
229,637
Maintenance, materials and repairs
41,899
35,084
142,169
144,516
Aircraft rent
36,811
34,183
107,883
104,419
Depreciation and amortization
32,787
29,865
96,753
88,401
Travel
27,555
21,642
72,198
57,698
Navigation fees, landing fees and other
rent
25,413
35,336
71,582
93,368
Passenger and ground handling services
20,504
24,876
61,820
66,106
Loss on disposal of aircraft
208
-
1,531
14,679
Special charge
7,674
90
7,605
9,567
Other
34,294
29,212
97,567
84,890
Total Operating Expenses
400,909
404,812
1,183,333
1,194,557
Operating Income
48,995
60,989
167,249
115,776
Non-operating Expenses (Income)
Interest income
(2,040
)
(4,588
)
(10,953
)
(14,034
)
Interest expense
22,110
25,960
71,691
78,777
Capitalized interest
(556
)
(44
)
(759
)
(423
)
Loss on early extinguishment of debt
66,729
-
66,729
-
Gain on investments
(13,439
)
-
(13,439
)
—
Other expense (income), net
1,364
767
1,755
831
Total Non-operating Expenses
74,168
22,095
115,024
65,151
767
Income (loss) before income taxes
(25,173
)
38,894
52,225
50,625
Income tax expense (benefit)
(12,419
)
11,318
7,357
(9,958
)
Net Income (Loss)
(12,754
)
27,576
44,868
60,583
Less: Net income (loss) attributable
to noncontrolling interests
-
-
-
(4,530
)
Net Income (Loss) Attributable to
Common Stockholders
$
(12,754)
$
27,576
$
44,868
$
65,113
Earnings per share:
Basic
$
(0.51)
$
1.10
$
1.81
$
2.59
Diluted
$
(0.51)
$
1.10
$
1.80
$
2.59
Weighted average shares:
Basic
24,798
24,983
24,771
25,106
Diluted
24,798
25,064
24,947
25,164
2
Atlas Air Worldwide Holdings, Inc. Consolidated Balance Sheets (in thousands, except share data) (Unaudited)
September 30,
2015
December 31, 2014
Assets
Current Assets
Cash and cash equivalents
$
376,695
$
298,601
Short-term investments
1,866
17,802
Restricted cash
11,085
14,281
Accounts receivable, net of allowance of $1,163 and $1,658, respectively
169,676
162,092
Prepaid maintenance
6,398
20,806
Deferred taxes
41,669
40,923
Prepaid expenses and other current assets
29,017
51,599
Total current assets
636,406
606,104
Property and Equipment
Flight equipment
3,520,413
3,448,791
Ground equipment
57,522
51,418
Less: accumulated depreciation
(425,504
)
(348,036
)
Purchase deposits for flight equipment
54,548
20,054
Property and equipment, net
3,206,979
3,172,227
Other Assets
Long-term investments and accrued interest
44,052
120,478
Deposits and other assets
80,208
80,258
Intangible assets, net
60,694
67,410
Total Assets
$
4,028,339
$
4,046,477
Liabilities and Equity
Current Liabilities
Accounts payable
$
60,338
$
42,864
Accrued liabilities
257,954
251,594
Current portion of long-term debt1,2
152,421
181,202
Total current liabilities
470,713
475,660
Other Liabilities
Long-term debt1,2
1,642,424
1,736,739
Deferred taxes
358,259
350,868
Other liabilities
69,402
65,415
Total other liabilities
2,070,085
2,153,022
Commitments and contingencies
Equity
Stockholders’ Equity
Preferred stock, $1 par value; 10,000,000 shares authorized; no shares issued
¯
¯
Common stock, $0.01 par value; 50,000,000 shares authorized; 28,946,645 and
28,561,160 shares issued, 24,631,001 and 24,807,718, shares outstanding
(net of treasury stock), as of September 30, 2015 and December 31,
2014, respectively
290
286
Additional paid-in-capital
623,554
573,133
Treasury stock, at cost; 4,315,644 and 3,753,442 shares, respectively
(171,715
)
(145,322
)
Accumulated other comprehensive loss
(8,726
)
(9,572
)
Retained earnings
1,044,138
999,270
Total equity
1,487,541
1,417,795
Total Liabilities and Equity
$
4,028,339
$
4,046,477
1
Balance sheet debt at September 30, 2015 totaled $1,794.8 million, including the impact of $51.0 million of unamortized discount
and debt issuance costs of $53.1 million.
2 The face value of our debt at September 30, 2015 totaled $1,898.9 million, compared with $2,009.0 million on December 31,
2014.
Atlas Air Worldwide Holdings, Inc. Consolidated Statements of Cash Flows (in thousands) (Unaudited)
For the Nine Months Ended
September 30, 2015
September 30, 2014
Operating Activities:
Net Income
44,868
60,583
Adjustments to reconcile Net Income to net cash provided by operating activities:
Depreciation and amortization
110,872
101,493
Accretion of debt securities discount
(4,316
)
(6,022
)
Provision for allowance for doubtful accounts
61
420
Special charge, net of cash payment
6,589
6,484
Loss on early extinguishment of debt
66,729
¯
Loss on disposal of aircraft
1,531
14,679
Deferred taxes
6,417
(10,282
)
Stock-based compensation expense
14,481
9,769
Changes in:
Accounts receivable
(4,920
)
(27,147
)
Prepaid expenses and other current assets
24,311
36,931
Deposits and other assets
666
(5,978
)
Accounts payable and accrued liabilities
(1,440
)
(12,402
)
Net cash provided by operating activities
265,849
168,528
Investing Activities:
Capital expenditures
(33,835
)
(17,509
)
Purchase deposits and payments for flight equipment
(77,502
)
(502,782
)
Changes in restricted cash
3,196
(7,072
)
Proceeds from investments
76,752
2,886
Proceeds from disposal of aircraft
25,166
¯
Net cash used for investing activities
(6,223
)
(524,477
)
Financing Activities:
Proceeds from debt issuance
224,500
572,552
Customer maintenance reserves received
12,250
12,950
Customer maintenance reserves paid
(1,752
)
¯
Proceeds from sale of warrants
36,290
¯
Payments for convertible note hedges
(52,903
)
¯
Proceeds from stock option exercises
1,193
¯
Excess tax benefit from stock-based compensation expense
588
¯
Payment of debt issuance costs
(6,804
)
(17,117
)
Purchase of treasury stock
(26,393
)
(19,479
)
Payment of debt extinguishment costs
(34,014
)
¯
Payments of debt
(334,487
)
(252,549
)
Net cash (used for) provided by financing activities
(181,532
)
296,357
Net increase (decrease) in cash and cash equivalents
78,094
(59,592
)
Cash and cash equivalents at the beginning of period
298,601
321,816
Cash and cash equivalents at the end of period
$
376,695
$
262,224
Non-cash Investing and Financing Activities:
Acquisition of flight and ground equipment included in Accounts payable
and Accrued liabilities
$
18,321
$
29,087
Disposition of aircraft included in Accounts receivable
$
¯
$
5,072
Atlas Air Worldwide Holdings, Inc. Direct Contribution (in thousands) (Unaudited)
For the Three Months Ended
For the Nine Months Ended
September 30, 2015
September 30, 2014
September 30, 2015
September 30, 2014
Operating Revenue:
ACMI
$
197,020
$
184,068
$
575,322
$
568,929
Charter
225,068
252,855
680,642
655,462
Dry Leasing
23,915
25,411
83,235
75,611
Other
3,901
3,467
11,383
10,331
Total Operating Revenue
$
449,904
$
465,801
$
1,350,582
$
1,310,333
Direct Contribution:
ACMI
$
46,991
$
54,974
$
138,051
$
145,107
Charter
29,496
16,299
84,974
20,306
Dry Leasing
7,673
8,721
34,092
25,630
Total Direct Contribution
$
84,160
$
79,994
$
257,117
$
191,043
Add back (subtract):
Unallocated income and expenses, net1
(48,161)
(41,010)
(142,466)
(116,172)
Loss on early extinguishment of debt
(66,729)
-
(66,729)
-
Gain on investments
13,439
-
13,439
-
Special charge
(7,674)
(90)
(7,605)
(9,567)
Loss on disposal of aircraft
(208)
-
(1,531)
(14,679)
Income (loss) before Income Taxes
(25,173)
38,894
52,225
50,625
Add back (subtract):
Interest income
(2,040
)
(4,588
)
(10,953
)
(14,034
)
Interest expense
22,110
25,960
71,691
78,777
Capitalized interest
(556
)
(44
)
(759
)
(423
)
Loss on early extinguishment of debt
66,729
-
66,729
-
Gain on investments
(13,439
)
-
(13,439
)
-
Other expense (income), net
1,364
767
1,755
831
Operating Income
$
48,995
$
60,989
$
167,249
$
115,776
Atlas Air Worldwide uses an economic performance metric, Direct Contribution, to show the profitability of each of its segments after allocation of direct ownership costs. Atlas Air Worldwide currently has the following reportable segments: ACMI, Charter, and Dry Leasing. Each segment has different operating and economic characteristics, which are separately reviewed by our chief operating decision maker.
Direct Contribution consists of income (loss) before taxes, excluding special charges, nonrecurring items, gains (losses) on the sale of aircraft, and unallocated fixed costs.
Direct costs include crew costs, maintenance costs, fuel, ground operations, sales costs, aircraft rent, interest expense related to aircraft debt and aircraft depreciation.
Unallocated income and expenses include corporate overhead, non-aircraft depreciation, unallocated interest expense and income, foreign exchange gains and losses, other revenue and other non-operating costs, including unusual items and certain noncash income and expenses.
1
During the first quarter of 2015, we revised the methodology for allocating certain unallocated expenses to our segments. Prior period information has been adjusted consistently to reflect this change.
3
Atlas Air Worldwide Holdings, Inc. Reconciliation to Non-GAAP Measures (in thousands, except per share data) (Unaudited)
For the Three Months Ended
September 30, 2015
September 30, 2014
Percent Change
Net Income (Loss) Attributable to Common Stockholders
$(12,754)
$ 27,576
(146.3%)
After-tax impact from:
Noncash expenses and income, net1
1,720
26
Gain on investments
(8,596
)
—
Loss on early extinguishment of debt
44,297
—
Loss on disposal of aircraft
133
—
Special charge2
4,908
(135
)
Accrual for legal matters and U.S. class action professional fees
984
—
Adjusted Net Income Attributable to Common Stockholders
$ 30,692
$ 27,467
11.7%
Diluted EPS
$
(0.51)
$
1.10
(146.4
%)
After-tax impact from:
Noncash expenses and income, net1
0.07
—
Gain on investments
(0.34
)
—
Loss on early extinguishment of debt
1.77
—
Loss on disposal of aircraft
0.01
—
Special charge2
0.20
(0.01
)
Accrual for legal matters and U.S. class action professional fees
0.04
—
Adjusted Diluted EPS
$1.233
$1.103
11.8
%
For the Nine Months Ended
September 30, 2015
September 30, 2014
Percent Change
Net Income Attributable to Common Stockholders
$
44,868
$
65,113
(31.1
%)
After-tax impact from:
Noncash expenses and income, net1
2,418
(144
)
ETI tax benefit
(4,008
)
(24,013
)
Gain on investments
(8,596
)
—
Loss on early extinguishment of debt
44,297
—
Loss on disposal of aircraft
1,090
9,389
Special charge2
4,817
3,905
Accrual for legal matters and U.S. class action professional fees
984
300
Adjusted Net Income Attributable to Common Stockholders
$ 85,870
$ 54,550
57.4%
Diluted EPS
$
1.80
$
2.59
(30.5
%)
After-tax impact from:
Noncash expenses and income, net1
0.10
(0.01
)
ETI tax benefit
(0.16
)
(0.95
)
Gain on investments
(0.34
)
—
Loss on early extinguishment of debt
1.78
—
Loss on disposal of aircraft
0.04
0.37
Special charge2
0.19
0.16
Accrual for legal matters and U.S. class action professional fees
0.04
0.01
Adjusted Diluted EPS
$ 3.443
$
2.17
58.5
%
1 Noncash expenses and income, net in 2015 primarily relates to amortization of the debt discount on the Convertible Notes.
2 Included in Special charge in 2015 were costs related to the early termination of high-rate operating leases for two engines. Included in
Special charge in 2014 were employee termination benefits, a loan reserve and tax adjustments related to GSS, and adjustments to
lease termination costs for two 747-400BCFs.
3 Items may not sum due to rounding.
Atlas Air Worldwide Holdings, Inc. Reconciliation to Non-GAAP Measures (in thousands, except per share data) (Unaudited)
For the Three Months Ended
September 30, 2015
September 30, 2014
Net Cash Provided by Operating Activities
$
94,752
$
61,402
Less:
Capital expenditures
11,718
6,856
Capitalized interest
556
44
Free Cash Flow1
$
82,478
$
54,502
For the Nine Months Ended
September 30, 2015
September 30, 2014
Net Cash Provided by Operating Activities
$
265,849
$
168,528
Less:
Capital expenditures
33,835
17,509
Capitalized interest
759
423
Free Cash Flow1
$
231,255
$
150,596
1
Free Cash Flow = Cash Flows from Operations minus Base Capital Expenditures and Capitalized Interest.
Base Capital Expenditures excludes purchases of aircraft.
4
Atlas Air Worldwide Holdings, Inc. Reconciliation to Non-GAAP Measures (in thousands) (Unaudited)
For the Three Months Ended
For the Nine Months Ended
September 30, 2015
September 30, 2014
September 30, 2015
September 30, 2014
Income (loss) before income taxes
$ (25,173)
$ 38,894
$ 52,225
$ 50,625
Noncash interest expenses and income, net
1,835
39
2,662
(225)
Loss on disposal of aircraft
208
-
1,531
14,679
Special charge1
7,674
90
7,605
9,567
Accrual for legal matters and U.S. class action professional fees
1,539
-
1,539
469
Loss on early extinguishment of debt
66,729
-
66,729
-
Gain on investments
(13,439)
-
(13,439)
-
Adjusted pretax income
39,373
39,023
118,852
75,115
Interest (income) expense, net2
18,276
21,886
59,106
66,335
Other non-operating expenses (income)
1,364
767
1,755
831
Adjusted operating income
59,013
61,676
179,713
142,281
Depreciation and amortization
32,787
29,865
96,753
88,401
EBITDA, as adjusted3
91,800
91,541
276,466
230,682
Aircraft rent
36,214
33,586
106,094
102,629
EBITDAR, as adjusted4
$128,014
$125,127
$382,560
$333,311
1
Included in Special charge in 2015 were costs related to the early termination of high-rate operating leases for two engines. Included in Special charge in 2014 were employee termination benefits, a loan reserve and tax adjustments related to GSS, and adjustments to lease termination costs for two 747-400BCFs.
2
Reflects impact of noncash expenses and income related convertible notes, debt and investments.
3
Adjusted EBITDA: Earnings before interest, taxes, depreciation, amortization, noncash interest expenses and income, net, loss on disposal of aircraft, special charge, accrual for legal matters, loss on early extinguishment of debt, and gain on investments, as applicable.
4
Adjusted EBITDAR: Earnings before interest, taxes, depreciation, amortization, aircraft rent expense, noncash interest expenses and income, net, loss on disposal of aircraft, special charge, accrual for legal matters, loss on early extinguishment of debt, and gain on investments, as applicable.
5
Atlas Air Worldwide Holdings, Inc. Operating Statistics and Traffic Results (Unaudited)
For the Three Months Ended
For the Nine Months Ended
September 30,
Increase/
September 30,
Increase/
2015
2014
(Decrease)
2015
2014
(Decrease)
Block Hours
ACMI
32,072
28,096
3,976
92,490
83,770
8,720
Charter
Cargo
8,564
8,675
(111
)
26,047
22,145
3,902
Passenger
3,767
4,007
(240
)
11,247
10,210
1,037
Other
506
261
245
1,140
796
344
Total Block Hours
44,909
41,039
3,870
130,924
116,921
14,003
Revenue Per Block Hour
ACMI
$
6,143
$
6,551
$
(408
)
$
6,220
$
6,792
$
(572
)
Charter
18,252
19,938
(1,686
)
18,251
20,258
(2,007
)
Cargo
17,762
19,860
(2,098
)
17,736
20,036
(2,300
)
Passenger
19,366
20,107
(741
)
19,443
20,741
(1,298
)
Average Utilization (block
hours per day)
ACMI1
9.1
9.6
(0.5
)
9.3
9.4
(0.1
)
Charter
Cargo
9.5
9.2
0.3
9.6
8.4
1.2
Passenger
9.5
9.5
-
8.8
8.0
0.8
All Operating Aircraft1,2
9.3
9.5
(0.2
)
9.4
9.1
0.3
Charter
Fuel
Average fuel cost per
gallon
$
2.38
$
3.17
$
(0.79
)
$
2.40
$
3.19
$
(0.79
)
Fuel gallons consumed
36,649
36,483
166
109,344
94,342
15,002
(000s
)
1 ACMI and All Operating Aircraft averages in the third quarter and first nine months of 2015 reflect the impact of increases in the number of CMI
aircraft and amount of CMI flying compared with the same periods of 2014.
2 Average of All Operating Aircraft excludes Dry Leasing aircraft, which do not contribute to block-hour volumes.
Atlas Air Worldwide Holdings, Inc. Operating Statistics and Traffic Results (Unaudited)
For the Three Months Ended
For the Nine Months Ended
September 30,
Increase/
September 30,
Increase/
2015
2014
(Decrease)
2015
2014
(Decrease)
Segment Operating Fleet (average
aircraft equivalents during the
period)
ACMI1
747-8F Cargo
9.0
8.4
0.6
8.9
8.5
0.4
747-400 Cargo
12.8
11.1
1.7
12.1
11.8
0.3
747-400 Dreamlifter
2.9
3.0
(0.1
)
3.0
3.1
(0.1
)
767-300 Cargo
2.0
2.0
—
2.0
2.0
—
767-200 Cargo
9.0
5.0
4.0
8.1
5.0
3.1
747-400 Passenger
1.5
1.3
0.2
1.2
1.1
0.1
767-200 Passenger
1.0
1.0
—
1.0
1.0
—
767-300 Passenger
—
0.1
(0.1
)
—
—
—
Total
38.2
31.9
6.3
36.3
32.5
3.8
Charter
747-8F Cargo
—
0.5
(0.5
)
0.1
0.5
(0.4
)
747-400 Cargo
9.8
9.8
—
9.8
9.2
0.6
747-400 Passenger
1.4
1.6
(0.2
)
1.8
1.8
—
767-300 Passenger
2.9
3.0
(0.1
)
2.9
2.9
—
Total
14.1
14.9
(0.8
)
14.6
14.4
0.2
Dry Leasing
777-200 Cargo
6.0
6.0
—
6.0
5.9
0.1
757-200 Cargo
1.0
1.0
—
1.0
1.0
—
737-300 Cargo
1.0
1.0
—
1.0
1.0
—
737-800 Passenger
1.0
2.0
(1.0
)
1.2
2.0
(0.8
)
Total
9.0
10.0
(1.0
)
9.2
9.9
(0.7
)
Total Operating Aircraft
61.3
56.8
4.5
60.1
56.8
3.3
Out of Service2
-
1.0
(1.0
)
0.6
1.0
(0.4
)
1
ACMI average fleet excludes spare aircraft provided by CMI customers.
2
Out-of-service aircraft were temporarily parked during the period and are completely unencumbered.
6
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