Air T : Reports First Quarter Fiscal 2023 Results

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, 2022:

● Revenues totaled $50.9 million for the quarter ended June 30, 2022, an increase of $13.9 million, or 38% from the prior year's comparable quarter.
● Operating income was $0.8 million for the quarter ended June 30, 2022, an increase of $0.8 million from the prior year's operating loss of $4 thousand.
● Adjusted EBITDA* profit of $1.5 million for the quarter ended June 30, 2022, compared to an Adjusted EBITDA* profit of $0.3 million in the prior year's comparable quarter.
● Loss per share of $0.50 for the quarter ended June 30, 2022, compared to the income per share of $0.10 for the prior year's comparable quarter.
● Total Equity decreased from $25.7 million as of March 31, 2022, to $25.1 million as of June 30, 2022, a decrease of $0.6 million, or 2%.

*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:

"The quarter's operational highlights included continued investment by the aircraft JV, and the spin-out of Crestone Air Partners as a separate entity to manage the JV. In addition, Contrail continued to perform at a very high level operationally and financially. Financially, the quarter was negatively impacted by a difficult comp at GGS and a significant increase in accrued healthcare costs.

GGS is very excited to demonstrate its Remotely Controlled Aircraft Deicer this September at the GSE Expo in Paris. This revolutionary technology will allow our customers to use their most qualified personnel to operate GGS deicers from anywhere in the world. While sitting in Paris, GSE Expo attendees will be able to drive and operate a Global RAD deicer located at Denver International Airport in Colorado."

Business Segment Results

Overnight Air Cargo
● This segment provides air express delivery services, substantially all for FedEx.
● Revenues for this segment increased 9% to $20.6 million in the quarter ended June 30, 2022, compared to $18.9 million in the prior year quarter. The increase was principally attributable to higher administrative fees and maintenance labor revenue from FedEx.
● Adjusted EBITDA* for this segment was $1.1 million for the quarter ended June 30, 2022, an increase of $0.3 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 de-icing 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 $5.8 million for the quarter ended June 30, 2022, down 29% versus $8.2 million in the same quarter in 2021. The decrease was primarily driven by a lower sales volume of military deicing trucks in the current quarter compared to prior year comparable quarter.
● Adjusted EBITDA* for this segment was $0.2 million in the quarter ended June 30, 2022, a decrease of $1.3 million compared to the prior year quarter, due primarily to the revenue decrease noted above.
● As of June 30, 2022, this segment's order backlog was $17.2 million versus $7.1 million on June 30, 2021.

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 $22.9 million for the quarter ended June 30, 2022, an increase of $13.3 million versus the previous year's first fiscal quarter. The increase was primarily driven by higher component part sales across all companies within the segment and engine sales at AirCo1 that did not occur in the same quarter in the prior fiscal year.
● Adjusted EBITDA* for this segment was $3.3 million for the quarter ended June 30, 2022, compared to an Adjusted EBITDA* loss of $74 thousand in the prior year comparable quarter.

Corporate and Other
• This segment includes expenses attributable to core Corporate functions, investment research, and specialized resources that are available to business units.
• The corporate and other segment Adjusted EBITDA for the quarter ended June 30, 2022, represented a loss of $3.1 million in the quarter, compared to an Adjusted EBITDA loss of $1.8 million in the same quarter a year ago, due to higher employee benefit costs.

*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. Depreciation expense for leased engines totaled $0.3 million and $0.1 million for the three months ended June 30, 2022, and 2021, respectively.

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, 2022, and 2021 (in thousands):