Air Transport Services Group Announces 2013 Results

WILMINGTON, OH – March 5, 2014 – Air Transport Services Group, Inc. (Nasdaq: ATSG), a leading provider of aircraft leasing, and air cargo transportation and related services, today reported consolidated financial results for the quarter and year ended December 31, 2013.

For the fourth quarter of 2013:
Revenues increased 2 percent to $157.0 million, compared with the fourth quarter of 2012, attributable mainly to increased airline operations for DHL in the U.S., and greater aircraft leasing revenues than a year ago.
Results for the fourth quarter included a non-cash impairment charge of $52.6 million, related to the write-off of goodwill associated with ATSG’s 2007 purchase of Air Transport International.
Excluding the impairment charge, fourth-quarter adjusted earnings from continuing operations were $9.7 million, or $0.15 per fully diluted share, down from fourth-quarter 2012 earnings of $12.2 million, or $0.19 per share. Including the impairment charge, ATSG’s loss from continuing operations for the fourth quarter of 2013 was $42.8 million, or $0.67 per share.
Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization, also adjusted for the impairment charges and derivative gains) was $44.2 million, up 4 percent from the prior-year quarter. Adjusted EBITDA increased in each of the last two quarters of 2013, and totaled $157.5 million for the year, within the company’s previously announced targeted range.
Higher interest rates and positive returns on pension assets resulted in a reduction of $135.3 million in post-retirement pension liabilities in 2013.
Stockholder’s equity increased to $369.0 million, or 23 percent from December 31, 2012.
Adjusted earnings from continuing operations and adjusted EBITDA are non-GAAP financial measures. Both are defined and reconciled to comparable GAAP results in separate tables at the end of this release.
Joe Hete, President and Chief Executive Officer of ATSG, said, "Our results for the fourth quarter demonstrate continued sequential progress against our goals to improve our margins, allowing us to deliver the EBITDA we projected for 2013 and increasing our free cash flow outlook for 2014. We remain very focused on strengthening our airline businesses and capitalizing on the emerging demand we are beginning to see by placing more of our freighters into revenue service around the world. Our strategic investment in West Atlantic, one of Europe’s largest independent air cargo operators, is an important step toward that goal.”

ATSG’s cargo airline Air Transport International (ATI), completed its military combi fleet upgrade, retired its remaining legacy DC-8 aircraft, and increased its operating block hours on a sequential-quarter basis throughout 2013, but remained unprofitable throughout the year. The recent termination of ATI’s support for DHL’s Mideast network, and a continuing flat air cargo environment in commercial markets here and abroad, resulted in a $52.6 million non-cash charge against ATSG’s remaining ATI-related goodwill. ATSG continues to work toward making ATI a lower-cost competitor for opportunities with the major air cargo networks worldwide.

2013 revenues decreased 5 percent to $580 million compared with 2012, due primarily to reduced international operations. A loss from continuing operations of $19.6 million for the year, equal to $0.31 per share, compares with earnings from continuing operations of $41.6 million, or $0.65 per share in 2012. Excluding the effects of the impairment charge, ATSG’s adjusted earnings from continuing operations for 2013 were $33.0 million, or $0.51 per share. Adjusted EBITDA decreased 3 percent to $157.5 million.