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Air T Inc. Message Board

  • tesiman tesiman Nov 5, 2010 4:29 PM Flag

    USAF contract

    AIRT did extremely well when you factor in that the USAF did not put in any new orders for deicing equipment. Given the already positive forecast, just think of the additional impact of a new USAF order? I believe that we should see something decent materialize this quarter.

    It is unfortunate that we see so little institutional interest in this micro cap. Maybe Fidelity's big stake (20%) will attract a suitor since there would be nothing thwarting a takeover.

    I would not worry about the dividend being cut. The company will earn well over $1/share this year, with no debt and $8M in the bank.

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    • If you are referring to my comment about a dividend cut, I did say that I thought the company would be not have to do it, but that it isn't a sure thing. Cash is around $4.8 million with another $1.2 in short term investment not $8 million as you say. The company used $5 million in the quarter in inventory and receivables increases, plus payables were up $2 million (actually a source of cash which will not continue). I figure that this will work its way lower as the orders are fulfilled but if they need to do a further inventory build there could be a cash crunch (they do have a credit facility which should cover a shortfall if needed).

      Remember that around 2-300K a quarter of profit is related to GSS which is not going to continue past the end of the year at this level without the company getting a new contract. Will the division operate at any profit or may it even fall into the negative? I think the other divisions will make up for it but it does make things more difficult.

      By the way they pay out 1.32 a year so earnings need to be well over a dollar for the dividend to be sustainable. That being said I still believe in the value of the company even if they are forced to cut the dividend for a period of time.

      • 2 Replies to valueguy26
      • 1. there are always fluctuations in the "cash" based on the level of raw materials, inventory,timing of collection of a/r and work in progress but year end cash level was in the $8m range
        2. the 2-300K quarterly profit for GSS is not all Delta related- I think about 1/2 of the GSS revenues were Delta- it hurts but the jury is still out as to where GSS ends up especially when you factor in that GSS's cost should do down
        The stock has already built in the loss of the contract having retreated from the $13+ range back down to $9- it was quite a haircut
        3. After payment of the dividend, AIRT should still make .75- $1 for the year- not too shabby
        4. AIRT has not generated any significant revenue from FedEX over the last 1 1/2 year for heavy maintenance or ATR 42/72 freighter conversions. The conversion for the 4 ART-42 aircraft should make up the GSS loss on a short term basis. My research revealed that the average conversion labor cost per aircraft is around $300,000-$500,000
        5. the tow motor contract is not factored in yet since only $100,000 was allocated by the AF. It should also not be figured into the backlog. If it hits it could add a few million more to the backlog- the contract value is $3.7m
        6. it is about time for the AF to make a major deicer order- the money has already been allocated by DOD and the last major order was in 7/2009

      • valueguy26:

        I think AIRT's dividend is $.33 per year, not quarterly. If so, your statement that the dividend is $1.32 per year is incorrect.

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