CHARLOTTE, NC / ACCESSWIRE / August 11, 2023 / Air T, Inc. (NASDAQ:AIRT) is an industrious American company with a portfolio of businesses, each of which is independent yet interrelated. We seek dynamic individuals and teams to operate companies using processes that increase value over time. We believe we can apply corporate resources to help activate growth and overcome challenges.

Our core segments are overnight air cargo; aviation ground equipment manufacturing and sales; commercial jet engines and parts; and corporate and other.

Today the Company is announcing results for the fiscal first quarter ended June 30, 2023:

Revenues totaled $71.4 million for the quarter ended June 30, 2023, an increase of $20.6 million, or 40% from the prior year's comparable quarter.
Operating income was $0.7 million for the quarter ended June 30, 2023, compared to the prior year's operating income of $0.8 million.
Adjusted EBITDA* profit of $1.4 million for the quarter ended June 30, 2023, compared to an Adjusted EBITDA* profit of $1.5 million in the prior year's comparable quarter.
Loss per share of $0.19 for the quarter ended June 30, 2023, compared to the loss per share of $0.50 for the prior year's comparable quarter.
Total Equity decreased from $13.0 million as of March 31, 2023, to $12.4 million as of June 30, 2023, a decrease of $0.6 million, or 5%.

*Adjusted EBITDA is a non-GAAP financial measure; see below for further explanation and reconciliation to GAAP measure.

Company Chairman and CEO Nick Swenson commented:

"We remain focused on seeking to create value for shareholders in the here and now. Developments in the aviation market can be important influences on our business. At this time, global passenger traffic has reached 95% of 2019 levels while cargo demand is softening off of the COVID-related peak back down to levels in line with 2019. The OEM supply chain for aviation equipment is pressured, with Airbus warning of delivery delays well into 2024. This pushes the price for existing aircraft, however, it might cause overproduction and lower aircraft values at the next cyclical low. MRO capacity was removed during COVID. Now the cycle has turned and MROs are experiencing material and labor shortages. Generally speaking, used serviceable material is more sought after as a result. Cyclical tailwinds continue to sustain the global airline industry for the time being, and always-valuable operational excellence continues to pay dividends."

Business Segment Results

Overnight Air Cargo

This segment provides repair services and air express delivery services, substantially all for FedEx.
Revenues for this segment increased 35% to $27.7 million in the quarter ended June 30, 2023, compared to $20.6 million in the prior year quarter. The increase was principally attributable to higher administrative fees due to increased fleet, higher pass-through revenues from FedEx, and the acquisition of Worldwide Aircraft Services, Inc. ("WASI") which occurred on January 31, 2023.
Adjusted EBITDA* for this segment was $2.0 million for the quarter ended June 30, 2023, an increase of $0.9 million when compared to the prior year quarter, primarily due to the revenue increase noted above.

Aviation Ground Equipment Manufacturing and Sales ("GGS")

This segment, which includes the world's largest manufacturer of aircraft deicing equipment, manufactures, and provides mobile deicers and other specialized equipment products to passenger and cargo airlines, airports, and military and industrial customers.
Revenues for this segment totaled $11.8 million for the quarter ended June 30, 2023, up 103% when compared to revenue of $5.8 million in the same quarter in 2022. The increase was primarily driven by the higher number of deicing trucks sold this quarter compared to prior year's comparable quarter.
Adjusted EBITDA* loss for this segment was $51.0 thousand in the quarter ended June 30, 2023, a decrease of $0.2 million compared to the prior year quarter. This decrease was primarily attributable to the increased costs for material, labor, and overhead required to get truck units scheduled and built.
As of June 30, 2023, this segment's order backlog was $13.7 million versus $17.2 million as of June 30, 2022.

Commercial Jet Engines and Parts

This segment leases commercial jet engines and aircraft; buys, sells and trades in surplus and aftermarket commercial jet engines, engine parts, airframes, and airframe parts, avionics, and other; then delivers the related documents and logistics.
Revenues for this segment totaled $29.8 million for the quarter ended June 30, 2023, an increase of $7.0 million versus revenues of $22.9 million in the previous year's first fiscal quarter. The increase was primarily driven by higher component part sales at Contrail in the current quarter compared to the prior year comparable quarter.
Adjusted EBITDA* for this segment was $1.7 million for the quarter ended June 30, 2023, compared to an Adjusted EBITDA* of $3.3 million in the prior year comparable quarter. The decrease was primarily due to lower gross profit margins on components sales mentioned above due to parts coming from tear down of higher priced aircraft.

Corporate and Other

This segment acts as the capital allocator and resource for other consolidated businesses. Further, Corporate and other also comprises smaller businesses and business interests.
This segment's Adjusted EBITDA* for the quarter ended June 30, 2023 represented a loss of $2.2 million in the quarter, compared to an Adjusted EBITDA* loss of $3.1 million in the same quarter a year ago.

*Adjusted EBITDA is a non-GAAP financial measure; see below for further explanation and reconciliation to GAAP measures.

Non-GAAP Financial Measures

The Company uses adjusted earnings before taxes, interest, and depreciation and amortization ("Adjusted EBITDA"), a non-GAAP financial measure as defined by the SEC, to evaluate the Company's financial performance. This performance measure is not defined by accounting principles generally accepted in the United States and should be considered in addition to, and not in lieu of, GAAP financial measures.

Adjusted EBITDA is defined as earnings before taxes, interest, and depreciation and amortization, adjusted for specified items. The Company calculates Adjusted EBITDA by removing the impact of specific items and adding back the amounts of interest expense and depreciation and amortization to earnings before income taxes. When calculating Adjusted EBITDA, the Company does not add back depreciation expense for aircraft engines that are on lease, as the Company believes this expense matches with the corresponding revenue earned on engine leases. There was no depreciation expense for leased engines for the three months ended June 30, 2023 and $0.3 million for the three months ended June 30, 2022.

Management believes that Adjusted EBITDA is a useful measure of the Company's performance because it provides investors additional information about the Company's operations allowing better evaluation of underlying business performance and better period-to-period comparability. Adjusted EBITDA is not intended to replace or be an alternative to operating income, the most directly comparable amounts reported under GAAP.

The table below provides a reconciliation of operating income to Adjusted EBITDA for the periods ended June 30, 2023, and 2022 (in thousands):

	Three months ended
	6/30/2023			6/30/2022
Operating income	$	658		$	834
Depreciation and amortization (excluding leased engines depreciation)		690			605
Gain on sale of property and equipment		(6	)		(2	)
Securities expenses		45			15
Adjusted EBITDA	$	1,387		$	1,452

The following table shows the Company's Adjusted EBITDA by segment for the periods ended June 30, 2023, and 2022 (in thousands):

	Three months ended
	6/30/2023			6/30/2022
Overnight Air Cargo	$	2,014		$	1,096
Ground Equipment Sales		(51	)		191
Commercial Jet Engines and Parts		1,668			3,251
Corporate and Other		(2,244	)		(3,086	)
Adjusted EBITDA	$	1,387		$	1,452

NOTE REGARDING STAKEHOLDER QUESTIONS

If you have questions related to this release or other Air T matters, please use our interactive Q&A capability, through Slido.com, accessible from our website, to submit your questions. We intend to keep that link open and available for shareholder questions. Questions submitted through Slido will be answered "live" and in writing at our Annual Meeting, and via a written response on a quarterly basis. Note that legal and pragmatic requirements restrict us from answering every question posted, yet we intend to address all reasonable and relevant questions with a written answer.

ABOUT AIR T, INC.

Established in 1980, Air T Inc. is a portfolio of powerful businesses and financial assets, each of which is independent yet interrelated. Its core segments are overnight air cargo, aviation ground support equipment manufacturing and sales, commercial jet engines and parts, and corporate and other. We seek to expand, strengthen and diversify Air T's after-tax cash flow per share. Our goal is to build Air T's core businesses, and when appropriate, to expand into adjacent and other industries. We seek to activate growth and overcome challenges while delivering meaningful value for all stakeholders. For more information, visit www.airt.net.

FORWARD-LOOKING STATEMENTS

Certain statements in this press release, including those contained in "Overview," are "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the Company's financial condition, results of operations, plans, objectives, future performance and business. Forward-looking statements include those preceded by, followed by or that include the words "believes", "pending", "future", "expects," "anticipates," "estimates," "depends" or similar expressions. These forward-looking statements involve risks and uncertainties. Actual results may differ materially from those contemplated by such forward-looking statements, because of, among other things, potential risks and uncertainties, such as:

Economic and industry conditions in the Company's markets;
The risk that contracts with FedEx could be terminated or adversely modified;
The risk that the number of aircraft operated for FedEx will be reduced;
The risk that GGS customers will defer or reduce significant orders for deicing equipment;
The impact of any terrorist activities on United States soil or abroad;
The Company's ability to manage its cost structure for operating expenses, or unanticipated capital requirements, and match them to shifting customer service requirements and production volume levels;
The Company's ability to meet debt service covenants and to refinance existing debt obligations;
The risk of injury or other damage arising from accidents involving the Company's overnight air cargo operations, equipment or parts sold and/or services provided;
Market acceptance of the Company's commercial and military equipment and services;
Competition from other providers of similar equipment and services;
Changes in government regulation and technology;
Changes in the value of marketable securities held as investments;
Mild winter weather conditions reducing the demand for deicing equipment;
Market acceptance and operational success of the Company's relatively new aircraft asset management business and related aircraft capital joint venture; and
Despite our current indebtedness levels, we and our subsidiaries may still be able to incur substantially more debt, which could further exacerbate the risks associated with our substantial leverage.

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. We are under no obligation, and we expressly disclaim any obligation, to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise.

CONTACT

Air T, Inc. Brian Ochocki, CFO
bochocki@airt.net
612-843-4302

SOURCE: Air T, Inc.

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Air T, Inc. Reports First Quarter Fiscal 2024 Results