Exhibit 99
 |
 |
|
2000 Westchester Avenue, Purchase, New York 10577 • (914) 701-8000
FOR IMMEDIATE RELEASE
Contacts: Investors – InvestorRelations@atlasair.com Media – CorpCommunications@atlasair.com |
Atlas Air Worldwide
Reports Third-Quarter 2020 Results
| · | Business Growth Driven by Strong Airfreight Demand |
| · | Reported Net Income of $74.1 Million |
| · | Adjusted EBITDA of $196.3 Million and Adjusted Net Income of $82.7 Million |
| · | Raising Outlook |
PURCHASE, NY, November 5, 2020 – Atlas Air Worldwide Holdings, Inc. (Nasdaq: AAWW) today announced third-quarter 2020 net income of $74.1 million, or $2.78 per diluted share, compared with net income of $60.0 million, or $2.32 per diluted share, in the third quarter of 2019.
On an adjusted basis, EBITDA totaled $196.3 million in the third quarter this year compared with $95.6 million in the third quarter of 2019. Adjusted net income in the third quarter of 2020 totaled $82.7 million, or $2.84 per diluted share, compared with $9.5 million, or $0.37 per diluted share, in the third quarter of 2019.
“The positive momentum of our business continued in the third quarter, despite a more complex, costly and challenging operating environment caused by the COVID-19 pandemic.” said Chief Executive Officer John W. Dietrich. “Our performance is the result of our entire team pulling together to increase utilization of our aircraft and execute on strong market demand and higher yields.
“We continue to broaden our customer base and grow with existing customers to maximize market opportunities. We further increased our roster of long-term charter customers, including the addition of Cainiao, the logistics arm of Alibaba, as well as expanding with HP Inc. and several large global freight forwarders.
“We also expanded operations for Amazon, where we began CMI flying three additional 737 freighters since September. We are now operating eight 737s for Amazon, complementing the large fleet of 767s that we have with them.
| 1 |
“Importantly, these long-term customer agreements provide secure and attractive earnings streams and deepen our strategic position in the fast-growing e-commerce sector, as well as in important global markets like China and South America.
“We are seeing substantial demand for our long-haul widebody services, both near- and long-term, at attractive yields. We are leveraging the agility of our business model and the scale of our fleet and global operations to serve this increased customer demand.
“We are also excited to announce that Titan Aircraft Investments, the joint venture between our Titan subsidiary and Bain Capital Credit, has arranged $500 million in financing facilities. The funds are available for the acquisition of freighter aircraft on lease and passenger aircraft for conversion to freighters. This important step will enable the joint venture to serve the strong market demand for leasing freighters.
“I am proud of the important role Atlas is playing in responding to this pandemic globally, and thank our crew and ground staff for their dedication in delivering safe and reliable service. We are taking wide-ranging precautions to safeguard our employees, while navigating through this complex operating backdrop.
“Air cargo has always been a vital component in the global supply chain as it provides speed, security and reliability that are unmatched by other modes of transportation. We remain committed to moving goods the world needs most, including medical equipment, pharmaceuticals, personal protective equipment, e-commerce, and other manufacturing and consumer products. We are also actively preparing for our expected role in the timely distribution of vaccines.”
Mr. Dietrich continued: “Looking to the fourth quarter, and subject to any material COVID-19 developments, we anticipate solid volumes and yields driven by continued e-commerce growth and end-of-the-year airfreight demand, coupled with the reduction of available cargo capacity in the market. To meet customer demand, we are reactivating our fourth 747 freighter that had been previously parked. This will add to the three 747 freighters and the 777 we placed back into service during the second quarter of 2020.
“As a result, we anticipate fourth-quarter revenue of about $850 million and adjusted EBITDA of approximately $215 million.*
“We also expect fourth-quarter 2020 adjusted net income to grow approximately 25% compared with adjusted net income of $82.7 million in the third quarter of this year.
“On a full-year basis, we now anticipate revenue of approximately $3.1 billion and adjusted EBITDA of about $780 million in 2020.”
He concluded: “Atlas is continuing to adapt and navigate through the challenges of 2020. With our talented team, world-class fleet, strong balance sheet and agile business model, we will continue to serve the demand for airfreight and deliver high-quality service for our customers – in these uncertain times and beyond.”
| 2 |
Third-Quarter Results
Volumes in the third quarter of 2020 increased to 90,528 block hours compared with 79,310 in the third quarter of 2019, with revenue rising to $809.9 million compared with $648.5 million in the prior-year quarter.
Higher ACMI segment revenue during the period primarily reflected an increase in the average revenue per block hour and increased flying, partially offset by the redeployment of 747-400 aircraft to the Charter segment. ACMI segment contribution during the quarter was primarily driven by increased aircraft utilization, reflecting strong demand from our customers, and a reduction in aircraft rent and depreciation. Partially offsetting these improvements were higher pilot costs related to premium pay for pilots operating in certain areas significantly impacted by COVID-19 and increased pay rates resulting from our recent interim agreement with our pilots. In addition, ACMI segment contribution reflected higher heavy maintenance, including additional engine overhauls to take advantage of slot availability and opportunities for vendor pricing discounts, and the redeployment of 747-400 aircraft to the Charter segment to support long-term charter programs.
Higher Charter segment revenue during the quarter was primarily due to an increase in flying, partially offset by a decrease in the average revenue per block hour due to lower fuel costs. Charter segment contribution was primarily driven by the increase in commercial cargo yields (excluding fuel) and demand for freighter aircraft, reflecting a reduction of available capacity in the market, the disruption of global supply chains due to the pandemic and our ability to increase utilization. In addition, segment contribution benefited from a reduction in aircraft rent and depreciation, and the redeployment of 747-400 aircraft from ACMI and the operation of a 777-200 freighter from Dry Leasing. These improvements were partially offset by: higher heavy maintenance expense, including additional engine overhauls to take advantage of slot availability and opportunities for vendor pricing discounts; higher pilot costs related to premium pay for pilots operating in certain areas significantly impacted by COVID-19; and increased pay rates resulting from our recent interim agreement with our pilots.
In Dry Leasing, lower segment revenue and contribution in the third quarter of 2020 primarily related to changes in leases and the disposition of certain nonessential Dry Leased aircraft during the first quarter of 2020.
Lower unallocated income and expenses, net, during the quarter primarily reflected CARES Act grant income of $64.2 million.
Reported earnings in the third quarter of 2020 included an unrealized loss on outstanding warrants of $43.6 million, compared with an unrealized gain on outstanding warrants of $83.2 million in the year-ago period.
Reported earnings in the third quarter of 2020 also included an effective income tax rate of 32.8%, due mainly to nondeductible changes in the value of outstanding warrants. On an adjusted basis, our results reflected an effective income tax rate of 22.8%.
| 3 |
Nine-Month Results
Reported results for the nine months ended September 30, 2020 reflected net income of $176.3 million, or $6.72 per diluted share, which included a $73.4 million unrealized loss on financial instruments. Results compared with net income of $117.1 million, or $1.34 per diluted share, which included an unrealized gain on financial instruments of $78.9 million, for the nine months ended September 30, 2019.
On an adjusted basis, EBITDA totaled $564.5 million in the first nine months of 2020 compared with $300.1 million in the first nine months of 2019. For the nine months ended September 30, 2020, adjusted net income totaled $235.8 million, or $8.71 per diluted share, compared with $41.4 million, or $1.54 per diluted share, in the first nine months of 2019.
Cash
At September 30, 2020, our cash and cash equivalents, restricted cash and short-term investments totaled $729.3 million, compared with $114.3 million at December 31, 2019.
Our improved cash balance primarily reflected cash provided by operating activities, and also included the funds we received through the Payroll Support Program available to air cargo carriers under the CARES Act, partially offset by cash used for investing and financing activities.
Net cash used for investing activities during the first nine months of 2020 primarily related to capital expenditures and payments for flight equipment and modifications, including spare engines and GEnx engine performance upgrade kits, partially offset by proceeds from the disposal of aircraft.
Net cash used for financing activities during the first nine months of 2020 primarily related to payments on debt obligations, including our revolving credit facility, partially offset by debt issuances.
To mitigate the impact of any continuation or worsening of the pandemic, we have implemented a number of cost-reduction initiatives, including a significant reduction in nonessential employee travel and the use of contractors. We have also taken actions to increase liquidity and strengthen our financial position, such as the sale of certain nonessential assets and our participation in the Payroll Support Program under the CARES Act.
Amazon Warrants
On October 9, 2020, Amazon elected a cashless exercise with respect to 3,607,477 shares vested under a Warrant issued in 2016. As a result, Amazon acquired 1,375,421 shares of AAWW common stock, representing approximately 4.99% (after the exercise) of our outstanding common shares.
2020 Outlook*
Looking to the fourth quarter, and subject to any material COVID-19 developments, we anticipate solid volumes and yields driven by continued e-commerce growth and end-of-the-year airfreight demand, coupled with the reduction of available cargo capacity in the market.
| 4 |
To meet customer demand, we are reactivating our fourth 747 freighter that had been previously parked. This will add to the three 747 freighters and the 777 we placed back into service during the second quarter of 2020.
As a result, we expect to fly approximately 95,000 block hours in the fourth quarter of 2020, with about 65% of the hours in ACMI and the remainder in Charter.
We also anticipate revenue of about $850 million and adjusted EBITDA of approximately $215 million. In addition, we expect fourth-quarter 2020 adjusted net income to grow approximately 25% compared with adjusted net income of $82.7 million in the third quarter of this year.*
Aircraft maintenance expense in the fourth quarter of 2020 is expected to total about $116 million, with depreciation and amortization totaling around $65 million. Core capital expenditures, which exclude aircraft and engine purchases, are projected to total approximately $25 to $35 million, mainly for parts and components for our fleet.
We also now anticipate full-year 2020 revenue of approximately $3.1 billion and adjusted EBITDA of about $780 million.
We estimate our full-year 2020 adjusted effective income tax rate will be approximately 23%.
We provide guidance on an adjusted basis because we are unable to predict, with reasonable certainty, the effects of outstanding warrants and other items that could be material to our reported results.*
Conference Call
Management will host a conference call to discuss Atlas Air Worldwide’s third-quarter 2020 financial and operating results at 11:00 a.m. Eastern Time on Thursday, November 5, 2020.
Interested parties may listen to the call live at Atlas Air Worldwide’s Investor site or at https://edge.media-server.com/mmc/p/ps7u7bvv.
For those unable to listen to the live call, a replay will be archived on the Investor site following the call. A replay will also be available through November 12 by dialing (855) 859-2056 (U.S. Toll Free) or (404) 537-3406 (from outside the U.S.) and using Access Code 1347526#.
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 Adjusted EBITDA; Adjusted net income; Adjusted Diluted EPS; Adjusted effective tax rate; and Free Cash Flow, which exclude certain noncash income and expenses, and items impacting year-over-year comparisons of our results. 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 Net income (loss); Diluted EPS; Effective tax rate; and Net Cash Provided by Operating Activities, which are the most directly comparable measures of performance prepared in accordance with U.S. GAAP.
| 5 |
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, when considered together with the corresponding U.S. GAAP financial measures and the reconciliations to those measures, provide meaningful supplemental information to assist investors and analysts in understanding our financial results and assessing our prospects for future performance. For example:
| · | Adjusted EBITDA; Adjusted net income; and Adjusted Diluted EPS provide a more comparable basis to analyze operating results and earnings and are measures commonly used by shareholders to measure our performance. In addition, management’s incentive compensation is determined, in part, by using Adjusted EBITDA and Adjusted net income. |
| · | Adjusted effective tax rate provides improved insight into the tax effects of our ongoing business operations. |
| · | Free Cash Flow helps investors assess our ability, over the long term, to create value for our shareholders as it represents cash available to execute our capital allocation strategy. |
*We provide guidance on an adjusted basis and are unable to provide forward-looking guidance on a U.S. GAAP basis or a reconciliation to the most directly comparable U.S. GAAP measures because we are unable to predict with reasonable certainty the ultimate outcome of certain significant items. The principal item is the impact on our results of our outstanding warrant liability, which is highly dependent on the change in our stock price during the period reported. These items are uncertain, depend on various factors, and could have a material impact on our U.S. GAAP results.
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., Southern Air Holdings, Inc. and Titan Aviation Holdings, Inc., and is the majority shareholder of Polar Air Cargo Worldwide, Inc. Our companies operate the world’s largest fleet of 747 freighter aircraft and provide customers the broadest array of Boeing 747, 777, 767 and 737 aircraft for domestic, regional and international cargo and passenger operations.
Atlas Air Worldwide’s press releases, SEC filings and other information may be accessed through the company’s home page, www.atlasairworldwide.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. Those statements are based on management’s beliefs, plans, expectations and assumptions, and on information currently available to management. Generally, the words “will,” “may,” “should,” “expect,” “anticipate,” “intend,” “plan,” “continue,” “believe,” “seek,” “project,” “estimate,” and similar expressions used in this release that do not relate to historical facts are intended to identify forward-looking statements.
Such forward-looking statements speak only as of the date of this release. They 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.
| 6 |
Factors that could cause actual results to differ materially from these forward-looking statements include, but are not limited to, the following: our ability to effectively operate the network service contemplated by our agreements with Amazon; our ability to coordinate with Amazon to accept newly converted aircraft; the possibility that Amazon may terminate its agreements with the companies; 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, pilots 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; changes in U.S. and foreign government trade policies; economic conditions; the impact of geographical events or health epidemics such as the COVID-19 pandemic; our compliance with the requirements and restrictions under the Payroll Support Program; the effects of any hostilities or act of war (in the Middle East or elsewhere) or any terrorist attack; significant data breach or disruption of our information technology systems; labor costs and relations, work stoppages and service slowdowns; the outcome of pending negotiations with our pilots’ union; financing costs; the cost and availability of war risk insurance; 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 2020 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 and expressly disclaims any obligation to revise or update publically any forward-looking statement to reflect future events or circumstances.
* * *
| 7 |
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, 2020 | September 30, 2019 | September 30, 2020 | September 30, 2019 | |||||||||||||
| Operating Revenue | $ | 809,886 | $ | 648,539 | $ | 2,278,641 | $ | 1,992,140 | ||||||||
| Operating Expenses | ||||||||||||||||
| Salaries, wages and benefits | 194,265 | 145,987 | 534,600 | 432,911 | ||||||||||||
| Maintenance, materials and repairs | 116,634 | 88,240 | 379,086 | 305,331 | ||||||||||||
| Aircraft fuel | 118,113 | 123,132 | 309,673 | 351,611 | ||||||||||||
| Depreciation and amortization | 65,595 | 62,499 | 189,005 | 190,669 | ||||||||||||
| Travel | 37,731 | 49,110 | 114,749 | 140,513 | ||||||||||||
| Navigation fees, landing fees and other rent | 42,870 | 32,270 | 109,909 | 110,468 | ||||||||||||
| Passenger and ground handling services | 36,266 | 34,453 | 98,355 | 97,138 | ||||||||||||
| Aircraft rent | 24,239 | 40,048 | 72,522 | 122,271 | ||||||||||||
| Gain on disposal of aircraft | (163 | ) | - | (6,878 | ) | - | ||||||||||
| Special charge | 547 | 18,861 | 16,481 | 22,130 | ||||||||||||
| Transaction-related expenses | 490 | 324 | 2,286 | 3,585 | ||||||||||||
| Other | 54,107 | 54,494 | 157,929 | 160,548 | ||||||||||||
| Total Operating Expenses | 690,694 | 649,418 | 1,977,717 | 1,937,175 | ||||||||||||
| Operating Income (Loss) | 119,192 | (879 | ) | 300,924 | 54,965 | |||||||||||
| Non-operating Expenses (Income) | ||||||||||||||||
| Interest income | (225 | ) | (653 | ) | (929 | ) | (3,975 | ) | ||||||||
| Interest expense | 28,524 | 30,117 | 86,749 | 90,515 | ||||||||||||
| Capitalized interest | (203 | ) | (853 | ) | (528 | ) | (1,943 | ) | ||||||||
| Loss on early extinguishment of debt | 7 | 559 | 81 | 804 | ||||||||||||
| Unrealized loss (gain) on financial instruments | 43,604 | (83,175 | ) | 73,351 | (78,900 | ) | ||||||||||
| Other (income) expense, net | (62,689 | ) | 1,434 | (112,081 | ) | (596 | ) | |||||||||
| Total Non-operating Expenses (Income) | 9,018 | (52,571 | ) | 46,643 | 5,905 | |||||||||||
| Income before income taxes | 110,174 | 51,692 | 254,281 | 49,060 | ||||||||||||
| Income tax expense (benefit) | 36,120 | (8,282 | ) | 77,962 | (68,072 | ) | ||||||||||
| Net Income | $ | 74,054 | $ | 59,974 | $ | 176,319 | $ | 117,132 | ||||||||
| Earnings per share: | ||||||||||||||||
| Basic | $ | 2.83 | $ | 2.32 | $ | 6.76 | $ | 4.54 | ||||||||
| Diluted | $ | 2.78 | $ | 2.32 | $ | 6.72 | $ | 1.34 | ||||||||
| Weighted average shares: | ||||||||||||||||
| Basic | 26,135 | 25,854 | 26,077 | 25,814 | ||||||||||||
| Diluted | 26,619 | 25,854 | 26,256 | 26,909 | ||||||||||||
| 8 |
Atlas
Air Worldwide Holdings, Inc.
Consolidated Balance Sheets
(in thousands, except share data)
(Unaudited)
| September 30, 2020 | December 31, 2019 | |||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | 717,867 | $ | 103,029 | ||||
| Restricted cash | 11,466 | 10,401 | ||||||
| Short-term investments | - | 879 | ||||||
| Accounts receivable, net of allowance of $776 and $1,822, respectively | 268,376 | 290,119 | ||||||
| Prepaid expenses, assets held for sale and other current assets | 171,780 | 228,103 | ||||||
| Total current assets | 1,169,489 | 632,531 | ||||||
| Property and Equipment | ||||||||
| Flight equipment | 5,001,481 | 4,880,424 | ||||||
| Ground equipment | 88,327 | 83,584 | ||||||
| Less: accumulated depreciation | (1,113,964 | ) | (977,883 | ) | ||||
| Flight equipment modifications in progress | 49,246 | 67,101 | ||||||
| Property and equipment, net | 4,025,090 | 4,053,226 | ||||||
| Other Assets | ||||||||
| Operating lease right-of-use assets | 182,657 | 231,133 | ||||||
| Deferred costs and other assets | 373,074 | 391,895 | ||||||
| Intangible assets, net and goodwill | 72,334 | 76,856 | ||||||
| Total Assets | $ | 5,822,644 | $ | 5,385,641 | ||||
| Liabilities and Equity | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | 92,805 | $ | 79,683 | ||||
| Accrued liabilities | 645,094 | 481,725 | ||||||
| Current portion of long-term debt and finance leases | 296,112 | 395,781 | ||||||
| Current portion of long-term operating leases | 139,152 | 141,973 | ||||||
| Total current liabilities | 1,173,163 | 1,099,162 | ||||||
| Other Liabilities | ||||||||
| Long-term debt and finance leases | 2,073,855 | 1,984,902 | ||||||
| Long-term operating leases | 281,394 | 392,832 | ||||||
| Deferred taxes | 145,952 | 74,040 | ||||||
| Financial instruments and other liabilities | 130,857 | 42,526 | ||||||
| Total other liabilities | 2,632,058 | 2,494,300 | ||||||
| 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; 100,000,000 shares authorized; 31,497,228 and 31,048,842 shares issued, 26,138,539 and 25,870,876 shares outstanding (net of treasury stock), as of September 30, 2020 and December 31, 2019, respectively | 315 | 310 | ||||||
| Additional paid-in-capital | 813,858 | 761,715 | ||||||
| Treasury stock, at cost; 5,358,689 and 5,177,966 shares, respectively | (217,786 | ) | (213,871 | ) | ||||
| Accumulated other comprehensive loss | (2,126 | ) | (2,818 | ) | ||||
| Retained earnings | 1,423,162 | 1,246,843 | ||||||
| Total stockholders’ equity | 2,017,423 | 1,792,179 | ||||||
| Total Liabilities and Equity | $ | 5,822,644 | $ | 5,385,641 | ||||
| 1 | Balance sheet debt at September 30, 2020 totaled $2,370.0 million, including the impact of $55.2 million of unamortized discount and debt issuance costs of $31.3 million, compared with $2,380.7 million, including the impact of $68.6 million of unamortized discount and debt issuance costs of $35.1 million at December 31, 2019. |
| 2 | The face value of our debt at September 30, 2020 totaled $2,456.5 million, compared with $2,484.4 million on December 31, 2019. |
| 9 |
Atlas Air Worldwide Holdings, Inc.
Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
| For the Nine Months Ended | ||||||||
| September 30, 2020 | September 30, 2019 | |||||||
| Operating Activities: | ||||||||
| Net Income | $ | 176,319 | $ | 117,132 | ||||
| Adjustments to reconcile Net Income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 240,826 | 241,284 | ||||||
| Accretion of debt securities discount | (2 | ) | (237 | ) | ||||
| Provision for (reversal of) expected credit losses | 76 | (83 | ) | |||||
| Loss on early extinguishment of debt | 81 | 804 | ||||||
| Special charge, net of cash payments | 16,481 | 22,130 | ||||||
| Unrealized loss (gain) on financial instruments | 73,351 | (78,900 | ) | |||||
| Gain on disposal of aircraft | (6,878 | ) | - | |||||
| Deferred taxes | 75,331 | (68,552 | ) | |||||
| Stock-based compensation | 15,816 | 16,553 | ||||||
| Changes in: | ||||||||
| Accounts receivable | 23,072 | 1,397 | ||||||
| Prepaid expenses, current assets and other assets | (39,823 | ) | (69,254 | ) | ||||
| Accounts payable, accrued liabilities and other liabilities | 208,058 | 11,016 | ||||||
| Net cash provided by operating activities | 782,708 | 193,290 | ||||||
| Investing Activities: | ||||||||
| Capital expenditures | (45,134 | ) | (107,594 | ) | ||||
| Payments for flight equipment and modifications | (102,777 | ) | (153,706 | ) | ||||
| Proceeds from insurance | - | 38,133 | ||||||
| Proceeds from investments | 881 | 14,367 | ||||||
| Proceeds from disposal of aircraft | 45,660 | - | ||||||
| Net cash used for investing activities | (101,370 | ) | (208,800 | ) | ||||
| Financing Activities: | ||||||||
| Proceeds from debt issuance | 401,419 | 93,723 | ||||||
| Payment of debt issuance costs | (5,172 | ) | (1,316 | ) | ||||
| Payments of debt and finance lease obligations | (353,795 | ) | (273,142 | ) | ||||
| Proceeds from revolving credit facility | 75,000 | 50,000 | ||||||
| Payment of revolving credit facility | (175,000 | ) | - | |||||
| Customer maintenance reserves and deposits received | 10,465 | 11,717 | ||||||
| Customer maintenance reserves paid | (14,437 | ) | (8,174 | ) | ||||
| Treasury shares withheld for payment of taxes | (3,915 | ) | (9,336 | ) | ||||
| Net cash used for financing activities | (65,435 | ) | (136,528 | ) | ||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | 615,903 | (152,038 | ) | |||||
| Cash, cash equivalents and restricted cash at the beginning of period | 113,430 | 232,741 | ||||||
| Cash, cash equivalents and restricted cash at the end of period | $ | 729,333 | $ | 80,703 | ||||
| Noncash Investing and Financing Activities: | ||||||||
| Acquisition of property and equipment included in Accounts payable and accrued liabilities | $ | 11,357 | $ | 55,610 | ||||
| Acquisition of property and equipment acquired under finance and operating leases | $ | 19,521 | $ | 32,794 | ||||
| Customer maintenance reserves settled with sale of aircraft | $ | 6,497 | $ | - | ||||
| 10 |
Atlas
Air Worldwide Holdings, Inc.
Direct Contribution
(in thousands)
(Unaudited)
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
| September 30, 2020 | September 30, 2019 | September 30, 2020 | September 30, 2019 | |||||||||||||
| Operating Revenue: | ||||||||||||||||
| ACMI | $ | 302,756 | $ | 289,024 | $ | 873,451 | $ | 902,869 | ||||||||
| Charter | 470,835 | 324,046 | 1,296,011 | 944,839 | ||||||||||||
| Dry Leasing | 40,740 | 43,847 | 123,572 | 157,328 | ||||||||||||
| Customer incentive asset amortization | (9,858 | ) | (12,796 | ) | (28,414 | ) | (26,018 | ) | ||||||||
| Other | 5,413 | 4,418 | 14,021 | 13,122 | ||||||||||||
| Total Operating Revenue | $ | 809,886 | $ | 648,539 | $ | 2,278,641 | $ | 1,992,140 | ||||||||
| Direct Contribution: | ||||||||||||||||
| ACMI | $ | 42,822 | $ | 33,401 | $ | 109,624 | $ | 114,048 | ||||||||
| Charter | 136,619 | 36,339 | 373,371 | 79,554 | ||||||||||||
| Dry Leasing | 9,627 | 12,028 | 30,046 | 58,646 | ||||||||||||
| Total Direct Contribution for Reportable Segments | 189,068 | 81,768 | 513,041 | 252,248 | ||||||||||||
| Unallocated expenses and (income), net | (34,409 | ) | (93,507 | ) | (173,439 | ) | (255,569 | ) | ||||||||
| Loss on early extinguishment of debt | (7 | ) | (559 | ) | (81 | ) | (804 | ) | ||||||||
| Unrealized gain (loss) on financial instruments | (43,604 | ) | 83,175 | (73,351 | ) | 78,900 | ||||||||||
| Special charge | (547 | ) | (18,861 | ) | (16,481 | ) | (22,130 | ) | ||||||||
| Transaction-related expenses | (490 | ) | (324 | ) | (2,286 | ) | (3,585 | ) | ||||||||
| Gain on disposal of aircraft | 163 | - | 6,878 | - | ||||||||||||
| Income before income taxes | 110,174 | 51,692 | 254,281 | 49,060 | ||||||||||||
| Add back (subtract): | ||||||||||||||||
| Interest income | (225 | ) | (653 | ) | (929 | ) | (3,975 | ) | ||||||||
| Interest expense | 28,524 | 30,117 | 86,749 | 90,515 | ||||||||||||
| Capitalized interest | (203 | ) | (853 | ) | (528 | ) | (1,943 | ) | ||||||||
| Loss on early extinguishment of debt | 7 | 559 | 81 | 804 | ||||||||||||
| Unrealized (gain) loss on financial instruments | 43,604 | (83,175 | ) | 73,351 | (78,900 | ) | ||||||||||
| Other (income) expense, net | (62,689 | ) | 1,434 | (112,081 | ) | (596 | ) | |||||||||
| Operating Income (Loss) | $ | 119,192 | $ | (879 | ) | $ | 300,924 | $ | 54,965 | |||||||
Atlas Air Worldwide uses an economic performance metric, Direct Contribution, to show the profitability of each of its segments after allocation of direct operating and ownership costs. Atlas Air Worldwide currently has the following reportable segments: ACMI, Charter, and Dry Leasing. Each segment has different commercial and economic characteristics, which are separately reviewed by our chief operating decision maker.
Direct Contribution consists of income before taxes, excluding loss on early extinguishment of debt, unrealized gain (loss) on financial instruments, special charge, transaction-related expenses, gain (loss) on disposal of aircraft, nonrecurring items, and unallocated expenses and (income), net.
Direct operating and ownership costs include crew costs, maintenance, fuel, ground operations, sales costs, aircraft rent, interest expense on the portion of debt used for financing aircraft, interest income on debt securities, and aircraft depreciation.
Unallocated income and expenses, net include corporate overhead, nonaircraft depreciation, noncash expenses and income, interest expense on the portion of debt used for general corporate purposes, interest income on nondebt securities, capitalized interest, foreign exchange gains and losses, other revenue, other nonoperating costs and CARES Act grant income.
| 11 |
Atlas
Air Worldwide Holdings, Inc.
Reconciliation to Non-GAAP Measures
(in thousands, except per share data)
(Unaudited)
| For the Three Months Ended | ||||||||||||
| September 30, 2020 | September 30, 2019 | Percent Change | ||||||||||
| Net Income | $ | 74,054 | $ | 59,974 | 23.5 | % | ||||||
| Impact from: | ||||||||||||
| CARES Act grant income1 | (64,211 | ) | - | |||||||||
| Customer incentive asset amortization | 9,858 | 12,796 | ||||||||||
| Special charge | 547 | 18,861 | ||||||||||
| Leadership transition costs | 2,176 | 2,852 | ||||||||||
| Noncash expenses and income, net2 | 4,527 | 4,696 | ||||||||||
| Unrealized loss (gain) on financial instruments | 43,604 | (83,175 | ) | |||||||||
| Other, net3 | 462 | 2,371 | ||||||||||
| Income tax effect of reconciling items | 11,731 | (8,859 | ) | |||||||||
| Adjusted Net Income | $ | 82,748 | $ | 9,516 | NM | |||||||
| Weighted average diluted shares outstanding | 26,619 | 25,854 | ||||||||||
| Add: dilutive warrant4 | 2,478 | - | ||||||||||
| Adjusted weighted average diluted shares outstanding | 29,097 | 25,854 | ||||||||||
| Adjusted Diluted EPS | $ | 2.84 | $ | 0.37 | NM | |||||||
| For the Nine Months Ended | ||||||||||||
| September 30, 2020 | September 30, 2019 | Percent Change | ||||||||||
| Net Income | $ | 176,319 | $ | 117,132 | 50.5 | % | ||||||
| Impact from: | ||||||||||||
| CARES Act grant income1 | (84,378 | ) | - | |||||||||
| Customer incentive asset amortization | 28,414 | 26,018 | ||||||||||
| Special charge | 16,481 | 22,130 | ||||||||||
| Leadership transition costs | 5,933 | 3,393 | ||||||||||
| Noncash expenses and income, net2 | 13,372 | 13,743 | ||||||||||
| Unrealized loss (gain) on financial instruments | 73,351 | (78,900 | ) | |||||||||
| Other, net3 | (3,845 | ) | 4,653 | |||||||||
| Income tax effect of reconciling items | 10,170 | (12,540 | ) | |||||||||
| Special tax item5 | - | (54,272 | ) | |||||||||
| Adjusted Net Income | $ | 235,817 | $ | 41,357 | NM | |||||||
| Weighted average diluted shares outstanding | 26,256 | 26,909 | ||||||||||
| Add: dilutive warrant4 | 826 | - | ||||||||||
| Adjusted weighted average diluted shares outstanding | 27,082 | 26,909 | ||||||||||
| Adjusted Diluted EPS | $ | 8.71 | $ | 1.54 | NM | |||||||
| 12 |
Atlas
Air Worldwide Holdings, Inc.
Reconciliation to Non-GAAP Measures
(in thousands, except per share data)
(Unaudited)
| For the Three Months Ended | ||||||||||
| September 30, 2020 | September 30, 2019 | Percent Change | ||||||||
| Income before taxes | $ | 110,174 | $ | 51,692 | NM | |||||
| Impact from: | ||||||||||
| CARES Act grant income1 | (64,211 | ) | - | |||||||
| Customer incentive asset amortization | 9,858 | 12,796 | ||||||||
| Special charge | 547 | 18,861 | ||||||||
| Leadership transition costs | 2,176 | 2,852 | ||||||||
| Noncash expenses and income, net2 | 4,527 | 4,696 | ||||||||
| Unrealized loss (gain) on financial instruments | 43,604 | (83,175 | ) | |||||||
| Other, net3 | 462 | 2,371 | ||||||||
| Adjusted income before income taxes | 107,137 | 10,093 | NM | |||||||
| Interest expense, net | 23,568 | 24,388 | ||||||||
| Other (income) expense, net | (62,689 | ) | 1,640 | |||||||
| Adjusted operating income | $ | 68,016 | $ | 36,121 | NM | |||||
| Income tax expense (benefit) | $ | 36,120 | $ | (8,282 | ) | |||||
| Income tax effect of reconciling items | 11,731 | (8,859 | ) | |||||||
| Adjusted income tax expense (benefit) | 24,389 | 577 | ||||||||
| Adjusted income before income taxes | $ | 107,137 | $ | 10,093 | ||||||
| Effective tax expense (benefit) rate | 32.8 | % | (16.0 | )% | ||||||
| Adjusted effective tax expense rate | 22.8 | % | 5.7 | % | ||||||
| For the Nine Months Ended | ||||||||||
| September 30, 2020 | September 30, 2019 | Percent Change | ||||||||
| Income before taxes | $ | 254,281 | $ | 49,060 | NM | |||||
| Impact from: | ||||||||||
| CARES Act grant income1 | (84,378 | ) | - | |||||||
| Customer incentive asset amortization | 28,414 | 26,018 | ||||||||
| Special charge | 16,481 | 22,130 | ||||||||
| Leadership transition costs | 5,933 | 3,393 | ||||||||
| Noncash expenses and income, net2 | 13,372 | 13,743 | ||||||||
| Unrealized loss (gain) on financial instruments | 73,351 | (78,900 | ) | |||||||
| Other, net3 | (3,845 | ) | 4,653 | |||||||
| Adjusted income before income taxes | 303,609 | 40,097 | NM | |||||||
| Interest expense, net | 71,922 | 72,273 | ||||||||
| Other (income) expense, net | (112,081 | ) | 3,059 | |||||||
| Adjusted operating income | $ | 263,450 | $ | 115,429 | NM | |||||
| Income tax expense (benefit) | $ | 77,962 | $ | (68,072 | ) | |||||
| Income tax effect of reconciling items | 10,170 | (12,540 | ) | |||||||
| Special tax item5 | - | (54,272 | ) | |||||||
| Adjusted income tax expense (benefit) | 67,792 | (1,260 | ) | |||||||
| Adjusted income before income taxes | $ | 303,609 | $ | 40,097 | ||||||
| Effective tax expense (benefit) rate | 30.7 | % | (138.8 | )% | ||||||
| Adjusted effective tax expense (benefit) rate | 22.3 | % | (3.1 | )% | ||||||
| 13 |
Atlas
Air Worldwide Holdings, Inc.
Reconciliation to Non-GAAP Measures
(in thousands, except per share data)
(Unaudited)
| For the Three Months Ended | ||||||||||||
| September 30, 2020 | September 30, 2019 | Percent Change | ||||||||||
| Net Income | $ | 74,054 | $ | 59,974 | 23.5 | % | ||||||
| Interest expense, net | 28,096 | 28,611 | ||||||||||
| Depreciation and amortization | 65,595 | 62,499 | ||||||||||
| Income tax expense (benefit) | 36,120 | (8,282 | ) | |||||||||
| EBITDA | 203,865 | 142,802 | ||||||||||
| CARES Act grant income1 | (64,211 | ) | - | |||||||||
| Customer incentive asset amortization | 9,858 | 12,796 | ||||||||||
| Special charge | 547 | 18,861 | ||||||||||
| Leadership transition costs | 2,176 | 2,852 | ||||||||||
| Unrealized loss (gain) on financial instruments | 43,604 | (83,175 | ) | |||||||||
| Other, net3 | 462 | 1,474 | ||||||||||
| Adjusted EBITDA | $ | 196,301 | $ | 95,610 | 105.3 | % | ||||||
| For the Nine Months Ended | ||||||||||||
| September 30, 2020 | September 30, 2019 | Percent Change | ||||||||||
| Net Income | $ | 176,319 | $ | 117,132 | 50.5 | % | ||||||
| Interest expense, net | 85,292 | 84,597 | ||||||||||
| Depreciation and amortization | 189,005 | 190,669 | ||||||||||
| Income tax expense (benefit) | 77,962 | (68,072 | ) | |||||||||
| EBITDA | 528,578 | 324,326 | ||||||||||
| CARES Act grant income1 | (84,378 | ) | - | |||||||||
| Customer incentive asset amortization | 28,414 | 26,018 | ||||||||||
| Special charge | 16,481 | 22,130 | ||||||||||
| Leadership transition costs | 5,933 | 3,393 | ||||||||||
| Unrealized loss (gain) on financial instruments | 73,351 | (78,900 | ) | |||||||||
| Other, net3 | (3,845 | ) | 3,156 | |||||||||
| Adjusted EBITDA | $ | 564,534 | $ | 300,123 | 88.1 | % | ||||||
| 1 | CARES Act grant income in 2020 is related to income associated with the Payroll Support Program. |
| 2 | Noncash expenses and income, net in 2020 and 2019 is primarily related to amortization of debt discount on the convertible notes. |
| 3 | Other, net in 2020 is primarily related to a $6.9 million net gain on the sale of aircraft, costs associated with the Payroll Support Program, costs associated with the refinancing of debt, costs associated with our acquisition of Southern Air and accrual for legal matters and professional fees. Other, net in 2019 is primarily related to a net insurance recovery, loss on early extinguishment of debt, unique training aircraft costs required for a customer contract and costs associated with a customer transaction with warrants, costs associated with our acquisition of Southern Air and accrual for legal matters and professional fees. |
| 4 | Dilutive warrants in 2020 represented potentially dilutive common shares related to vested warrants issued to a customer. These warrants are excluded from Diluted EPS prepared in accordance with GAAP when they would have been antidilutive. |
| 5 | Special tax item in 2019 represented income tax benefits from the completion of the 2015 IRS examination that are not related to ongoing operations. |
| 14 |
Atlas
Air Worldwide Holdings, Inc.
Reconciliation to Non-GAAP Measures
(in thousands, except per share data)
(Unaudited)
| For the Three Months Ended | ||||||||
| September 30, 2020 | September 30, 2019 | |||||||
| Net Cash Provided by Operating Activities | $ | 222,318 | $ | 84,293 | ||||
| Less: | ||||||||
| Capital expenditures | 20,039 | 30,840 | ||||||
| Capitalized interest | 203 | 853 | ||||||
| Free Cash Flow1 | $ | 202,076 | $ | 52,600 | ||||
| For the Nine Months Ended | ||||||||
| September 30, 2020 | September 30, 2019 | |||||||
| Net Cash Provided by Operating Activities | $ | 782,708 | $ | 193,290 | ||||
| Less: | ||||||||
| Capital expenditures | 45,134 | 107,594 | ||||||
| Capitalized interest | 528 | 1,943 | ||||||
| Free Cash Flow1 | $ | 737,046 | $ | 83,753 | ||||
| 1 | Free Cash Flow = Net Cash from Operations minus Base Capital Expenditures and Capitalized Interest. |
| Base Capital Expenditures excludes purchases of aircraft. |
| 15 |
Atlas
Air Worldwide Holdings, Inc.
Operating Statistics and Traffic Results
(Unaudited)
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||||||||||
| September 30, 2020 | September 30, 2019 | Increase/ (Decrease) | September 30, 2020 | September 30, 2019 | Increase/ (Decrease) | |||||||||||||||||||
| Block Hours | ||||||||||||||||||||||||
| ACMI | 61,154 | 60,337 | 817 | 175,064 | 182,060 | (6,996 | ) | |||||||||||||||||
| Charter | 27,819 | 18,142 | 9,677 | 70,069 | 52,463 | 17,606 | ||||||||||||||||||
| Cargo | 23,333 | 12,717 | 10,616 | 57,749 | 37,084 | 20,665 | ||||||||||||||||||
| Passenger | 4,486 | 5,425 | (939 | ) | 12,320 | 15,379 | (3,059 | ) | ||||||||||||||||
| Other | 1,555 | 831 | 724 | 3,609 | 2,128 | 1,481 | ||||||||||||||||||
| Total Block Hours | 90,528 | 79,310 | 11,218 | 248,742 | 236,651 | 12,091 | ||||||||||||||||||
| Revenue Per Block Hour | ||||||||||||||||||||||||
| ACMI | $ | 4,951 | $ | 4,790 | $ | 161 | $ | 4,989 | $ | 4,959 | $ | 30 | ||||||||||||
| Charter | $ | 16,925 | $ | 17,862 | $ | (937 | ) | $ | 18,496 | $ | 18,010 | $ | 486 | |||||||||||
| Cargo | $ | 16,758 | $ | 16,745 | $ | 13 | $ | 18,560 | $ | 17,379 | $ | 1,181 | ||||||||||||
| Passenger | $ | 17,792 | $ | 20,480 | $ | (2,688 | ) | $ | 18,199 | $ | 19,530 | $ | (1,331 | ) | ||||||||||
| Average Utilization (block hours per day) | ||||||||||||||||||||||||
| ACMI1 | 9.3 | 8.1 | 1.2 | 8.6 | 8.5 | 0.1 | ||||||||||||||||||
| Charter | ||||||||||||||||||||||||
| Cargo | 10.7 | 7.7 | 3.0 | 9.8 | 8.0 | 1.8 | ||||||||||||||||||
| Passenger | 5.0 | 6.6 | (1.6 | ) | 4.6 | 6.3 | (1.7 | ) | ||||||||||||||||
| All Operating Aircraft1,2 | 9.4 | 8.0 | 1.4 | 8.6 | 8.3 | 0.3 | ||||||||||||||||||
| Fuel | ||||||||||||||||||||||||
| Charter | ||||||||||||||||||||||||
| Average fuel cost per gallon | $ | 1.35 | $ | 2.27 | $ | (0.92 | ) | $ | 1.42 | $ | 2.29 | $ | (0.87 | ) | ||||||||||
| Fuel gallons consumed (000s) | 87,460 | 54,296 | 33,164 | 217,507 | 153,764 | 63,743 | ||||||||||||||||||
| 1 | ACMI and All Operating Aircraft averages in the third quarter and first nine months of 2020 reflect the impact of increases in the number of CMI aircraft and amount of CMI flying compared with the same periods of 2019. |
| 2 | Average of All Operating Aircraft excludes Dry Leasing aircraft, which do not contribute to block-hour volumes. |
| 16 |
Atlas
Air Worldwide Holdings, Inc.
Operating Statistics and Traffic Results
(Unaudited)
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||||||||||
| September 30, 2020 | September 30, 2019 | Increase/ (Decrease) | September 30, 2020 | September 30, 2019 | Increase/ (Decrease) | |||||||||||||||||||
Segment Operating Fleet (average aircraft equivalents during the period) | ||||||||||||||||||||||||
| ACMI1 | ||||||||||||||||||||||||
| 747-8F Cargo | 8.1 | 7.7 | 0.4 | 8.6 | 8.3 | 0.3 | ||||||||||||||||||
| 747-400 Cargo | 13.0 | 18.3 | (5.3 | ) | 13.0 | 18.1 | (5.1 | ) | ||||||||||||||||
| 747-400 Dreamlifter | 2.7 | 3.5 | (0.8 | ) | 2.7 | 3.6 | (0.9 | ) | ||||||||||||||||
| 777-200 Cargo | 8.0 | 8.0 | - | 8.0 | 6.8 | 1.2 | ||||||||||||||||||
| 767-300 Cargo | 23.0 | 25.0 | (2.0 | ) | 23.6 | 25.2 | (1.6 | ) | ||||||||||||||||
| 767-200 Cargo | 9.0 | 9.0 | - | 9.0 | 9.0 | - | ||||||||||||||||||
| 767-200 Passenger | 1.0 | 1.0 | - | 1.0 | 1.0 | - | ||||||||||||||||||
| 737-800 Cargo | 5.5 | 3.7 | 1.8 | 5.2 | 1.8 | 3.4 | ||||||||||||||||||
| 737-400 Cargo | 0.8 | 5.0 | (4.2 | ) | 3.5 | 5.0 | (1.5 | ) | ||||||||||||||||
| Total | 71.1 | 81.2 | (10.1 | ) | 74.6 | 78.8 | (4.2 | ) | ||||||||||||||||
| Charter | ||||||||||||||||||||||||
| 747-8F Cargo | 1.9 | 2.2 | (0.3 | ) | 1.3 | 1.6 | (0.3 | ) | ||||||||||||||||
| 747-400 Cargo | 19.9 | 15.7 | 4.2 | 19.2 | 15.3 | 3.9 | ||||||||||||||||||
| 747-400 Passenger | 5.0 | 4.1 | 0.9 | 5.0 | 4.0 | 1.0 | ||||||||||||||||||
| 777-200 Cargo | 1.0 | - | 1.0 | 0.5 | - | 0.5 | ||||||||||||||||||
| 767-300 Cargo | 1.0 | - | 1.0 | 0.4 | - | 0.4 | ||||||||||||||||||
| 767-300 Passenger | 4.8 | 4.8 | - | 4.8 | 4.9 | (0.1 | ) | |||||||||||||||||
| Total | 33.6 | 26.8 | 6.8 | 31.2 | 25.8 | 5.4 | ||||||||||||||||||
| Dry Leasing | ||||||||||||||||||||||||
| 777-200 Cargo | 7.0 | 7.0 | - | 7.0 | 7.3 | (0.3 | ) | |||||||||||||||||
| 767-300 Cargo | 21.0 | 21.0 | - | 21.0 | 21.2 | (0.2 | ) | |||||||||||||||||
| 757-200 Cargo | - | 1.0 | (1.0 | ) | 0.2 | 1.0 | (0.8 | ) | ||||||||||||||||
| 737-300 Cargo | 1.0 | 1.0 | - | 1.0 | 1.0 | - | ||||||||||||||||||
| 737-800 Passenger | - | 1.0 | (1.0 | ) | 0.2 | 1.0 | (0.8 | ) | ||||||||||||||||
| Total | 29.0 | 31.0 | (2.0 | ) | 29.4 | 31.5 | (2.1 | ) | ||||||||||||||||
| Less: Aircraft Dry Leased to CMI customers | (21.0 | ) | (22.7 | ) | (1.7 | ) | (21.0 | ) | (23.1 | ) | (2.1 | ) | ||||||||||||
| Total Operating Average Aircraft Equivalents | 112.7 | 116.3 | (3.6 | ) | 114.2 | 113.0 | 1.2 | |||||||||||||||||
| Out-of-Service2 | 1.0 | 1.0 | - | 2.7 | 0.7 | 2.0 | ||||||||||||||||||
| 1 | ACMI average fleet excludes spare aircraft provided by CMI customers. |
| 2 | Out-of-service includes aircraft that are either temporarily parked or held for sale. |
| 17 |