Atlas Air Worldwide Reports Fourth-Quarter and Full-Year 2020 Results
Fourth-Quarter 2020 Results
Reported Net Income Increased to $184.0 Million
Adjusted Net Income Grew to $143.2 Million
Adjusted EBITDA Totaled $279.7 Million
Full-Year 2020 Results
Reported Net Income Improved to $360.3 Million
Adjusted Net Income Rose to $379.0 Million
Adjusted EBITDA Totaled $844.2 Million
PURCHASE, N.Y., Feb. 18, 2021 (GLOBE NEWSWIRE) -- Atlas Air Worldwide Holdings, Inc. (Nasdaq: AAWW) today announced strong increases in volumes, revenue and earnings for the fourth quarter and full year of 2020. These results were driven by ongoing demand for our assets and services and our operational execution. The company also provided an outlook for first-quarter 2021 earnings growth.
On a reported basis, net income totaled $184.0 million, or $6.15 per diluted share, for the three months ended December 31, 2020. Results compare with a reported loss of $410.2 million, or $15.86 per diluted share, for the three months ended December 31, 2019, which was primarily due to a noncash special charge of $616.2 million ($485.2 million after tax).
On an adjusted basis, EBITDA rose to $279.7 million in the fourth quarter of 2020 compared with $204.7 million in the prior-year period. Adjusted net income increased to $143.2 million, or $4.83 per diluted share, in the fourth quarter of 2020 compared with $98.2 million, or $3.80 per diluted share, in the prior-year period.
“We finished this unprecedented year on a strong note, with financial and operating results that exceeded our expectations. I’d like to thank everyone at Atlas for stepping up to deliver an extraordinary peak season and full year for our business and our customers,” said President and Chief Executive Officer John Dietrich.
“In the face of unrelenting operational complexities driven by the COVID-19 pandemic, we added widebody capacity, increased aircraft utilization and grew block hours to carry historic volumes, including essential goods that businesses, communities and individuals require as well as holiday e-commerce packages.
“We are leveraging our unrivaled portfolio of assets and the scale of our global network. We are also continuing to diversify our customer base and have entered into numerous long-term charter agreements with strategic customers, such as Cainiao, Flexport and HP Inc. These agreements will provide reliable and attractive revenue streams for the years ahead.
“Providing our customers with modern, fuel-efficient aircraft has been a longstanding priority at Atlas, and we were excited to announce that we ordered four new 747-8Fs from Boeing. This acquisition underscores that commitment and also demonstrates our focus on environmental stewardship through the reduction of aircraft noise, emissions and fuel consumption. The 747-8F provides 20% higher payload capacity and 16% lower fuel consumption than the very capable 747-400F, and has 25% higher capacity than the new-technology 777-200LRF. In addition, the advanced engines on the 747-8F reduce noise by approximately 30% compared to the previous generation of aircraft.
“As the world’s largest 747 freighter operator, the -8F is core to our business, and complements our diverse fleet of 747-400s, 777s, 767s and 737s. We are expecting delivery of these new aircraft from May through October 2022, and they will play a key role in advancing Atlas’ strategic growth plans for decades to come.”
He concluded: “The strong demand for our aircraft and services has continued into this quarter. We expect to fly approximately 85,000 block hours in the first quarter of 2021, with revenue of approximately $820 million, and adjusted EBITDA of about $150 million. In addition, we expect first-quarter 2021 adjusted net income to grow approximately 60% to 65% compared with adjusted net income of $29.9 million in the first quarter of 2020.*
“Due to ongoing uncertainty related to the pandemic and associated market dynamics, including ever-changing border restrictions, new variants of COVID-19 and surges in cases globally, we are not providing a full-year 2021 earnings outlook at this time.”
Fourth-Quarter Results
Volumes in the fourth quarter of 2020 increased to 96,079 block hours compared with 84,488 in the fourth quarter of 2019, with revenue growing to $932.5 million versus $747.0 million in 2019.
ACMI segment revenue during the period primarily reflected lower levels of flying driven by the redeployment of 747-400 aircraft to the Charter segment to support long-term charter programs with customers seeking to secure committed cargo capacity. This was partially offset by an increase in aircraft utilization and higher CMI flying.
ACMI segment contribution included higher pilot costs related to premium pay for pilots operating in certain areas significantly impacted by COVID-19 and increased pay rates we provided to our pilots in May 2020. In addition, ACMI segment contribution reflected higher heavy maintenance expense, including additional engine overhauls performed to take advantage of slot availability and vendor pricing discounts, and the redeployment of 747-400 aircraft to the Charter segment. These items were partially offset by increased aircraft utilization and an increase in CMI flying.
Higher Charter segment revenue during the quarter was primarily due to an increase in flying, partially offset by a slight decrease in the average revenue per block hour due to lower fuel costs.
Charter segment contribution was primarily driven by an increase in commercial cargo yields (excluding fuel) and demand for our services, reflecting a reduction of available cargo capacity in the market, the disruption of global supply chains due to the pandemic and our ability to increase aircraft utilization. In addition, segment contribution benefited from a reduction in aircraft rent and depreciation, the redeployment of 747-400 aircraft from the ACMI segment and the operation of a 777-200 freighter previously in our Dry Leasing business. These improvements were partially offset by: higher heavy maintenance expense, including additional engine overhauls performed to take advantage of slot availability and vendor pricing discounts; fewer charters for sports teams and fans as sports leagues cancelled games; higher pilot costs related to premium pay for pilots operating in certain areas significantly impacted by COVID-19; and increased pay rates we provided to our pilots in May 2020.
In Dry Leasing, lower segment revenue and contribution in the fourth 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 $67.2 million.
Reported results in the fourth quarter of 2020 included an effective income tax rate of 24.1%. On an adjusted basis, our results reflected an effective income tax rate of 23.9%.
Full-Year Results
Volumes in 2020 grew to 344,821 block hours compared with 321,140 in 2019, with revenue increasing to $3.21 billion in 2020 from $2.74 billion in 2019.
For the twelve months ended December 31, 2020, our reported net income totaled $360.3 million, or $13.50 per diluted share, which included a $71.1 million unrealized loss on financial instruments. Reported results for the twelve months ended December 31, 2019, reflected a net loss of $293.1 million, or $11.35 per diluted share, which included a noncash special charge of $638.4 million ($503.1 million after tax), partially offset by an unrealized gain on financial instruments of $75.1 million.
On an adjusted basis, EBITDA grew to $844.2 million in 2020 compared with $504.8 million in 2019. For the twelve months ended December 31, 2020, adjusted net income increased to $379.0 million, or $13.67 per diluted share, compared with $139.6 million, or $5.24 per diluted share, in 2019.
Reported results in 2020 included an effective income tax rate of 27.5%. On an adjusted basis, our results reflected an effective income tax rate of 22.9%.
Cash
At December 31, 2020, our cash and cash equivalents, short-term investments and restricted cash totaled $856.3 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 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 nonessential aircraft. Net cash used for financing activities during the year primarily related to payments on debt obligations, including our revolving credit facility, partially offset by debt issuances.
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.
On January 27, 2021, Amazon elected a cashless exercise with respect to 4,150,529 shares vested under Warrants issued in 2016. As a result, Amazon acquired 1,280,450 shares of AAWW common stock.
Labor
Our work continues to complete a new joint collective bargaining agreement with our pilots in connection with the merger between Atlas Air and Southern Air. Formal negotiations with the pilots’ union have recently concluded, and we are moving on to binding interest arbitration on the remaining open issues. This arbitration is scheduled to begin in mid-March 2021.
Outlook*
We expect to fly approximately 85,000 block hours in the first quarter of 2021, with revenue of approximately $820 million, and adjusted EBITDA of about $150 million. In addition, we expect first-quarter 2021 adjusted net income to grow approximately 60% to 65% compared with adjusted net income of $29.9 million in the first quarter of 2020.*
We anticipate first-quarter results to continue to be impacted by ongoing pandemic-related expenses, including pilot premium pay and operational costs for providing a safe working environment for our employees. We also expect higher pilot costs related to increased pay rates we provided to our pilots in May 2020 and higher scheduled heavy maintenance expense.
For the full year in 2021, we expect aircraft maintenance expense to be lower than 2020, and depreciation and amortization to total about $270 million. In addition, core capital expenditures, which exclude aircraft and engine purchases, are projected to total approximately $110 to $120 million, mainly for parts and components for our fleet.
Committed expenditures to acquire aircraft and spare engines are expected to be $264.7 million in 2021. These expenditures include 747-400 passenger aircraft (to be used for replacement of older passenger aircraft as well as engines and spare parts), spare engines, and our January 2021 agreement to purchase four 747-8F aircraft from Boeing that are expected to be delivered from May 2022 through October 2022.
Due to ongoing uncertainty related to the pandemic and associated market dynamics, including ever-changing border restrictions, new variants of COVID-19 and surges in cases globally, we are not providing a full-year 2021 earnings outlook at this time. We will provide updates as the year progresses.
We provide guidance on an adjusted basis because we are unable to predict, with reasonable certainty, the effects of future gains and losses on asset sales, special charges and other unanticipated items that could be material to our reported results.*
Conference Call
Management will host a conference call to discuss Atlas Air Worldwide’s fourth-quarter and full-year 2020 financial and operating results at 11:00 a.m. Eastern Time on Thursday, February 18, 2021.
Interested parties may listen to the call live at Atlas Air Worldwide’s Investor site or at https://edge.media-server.com/mmc/p/kdnn77fd.
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 February 25 by dialing (855) 859-2056 (U.S. Toll Free) or (404) 537-3406 (from outside the U.S.) and using Access Code 2969689#.
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 expense (benefit) 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.
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, including future gains and losses on asset sales, special charges and other unanticipated items. 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.
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 and arbitration 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 2021 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 publicly any forward-looking statement to reflect future events or circumstances.
Contacts: | Investors – InvestorRelations@atlasair.com |
Media – CorpCommunications@atlasair.com |
Atlas Air Worldwide Holdings, Inc.
Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)
For the Three Months Ended | For the Twelve Months Ended | ||||||||||||||
December 31, | December 31, | December 31, | December 31, | ||||||||||||
Operating Revenue | $ | 932,475 | $ | 747,049 | $ | 3,211,116 | $ | 2,739,189 | |||||||
Operating Expenses | |||||||||||||||
Salaries, wages and benefits | 203,363 | 166,900 | 737,963 | 599,811 | |||||||||||
Maintenance, materials and repairs | 127,211 | 76,370 | 506,297 | 381,701 | |||||||||||
Aircraft fuel | 130,976 | 132,216 | 440,649 | 483,827 | |||||||||||
Depreciation and amortization | 68,667 | 60,428 | 257,672 | 251,097 | |||||||||||
Navigation fees, landing fees and other rent | 45,198 | 34,341 | 155,107 | 144,809 | |||||||||||
Travel | 40,043 | 48,698 | 154,792 | 189,211 | |||||||||||
Passenger and ground handling services | 40,467 | 33,560 | 138,822 | 130,698 | |||||||||||
Aircraft rent | 24,343 | 33,368 | 96,865 | 155,639 | |||||||||||
Loss (gain) on disposal of aircraft | (370 | ) | 5,309 | (7,248 | ) | 5,309 | |||||||||
Special charge, net | (216 | ) | 616,243 | 16,265 | 638,373 | ||||||||||
Transaction-related expenses | 494 | 579 | 2,780 | 4,164 | |||||||||||
Other | 58,455 | 54,973 | 216,384 | 215,521 | |||||||||||
Total Operating Expenses | 738,631 | 1,262,985 | 2,716,348 | 3,200,160 | |||||||||||
Operating Income (Loss) | 193,844 | (515,936 | ) | 494,768 | (460,971 | ) | |||||||||
Non-operating Expenses (Income) | |||||||||||||||
Interest income | (147 | ) | (321 | ) | (1,076 | ) | (4,296 | ) | |||||||
Interest expense | 27,886 | 29,815 | 114,635 | 120,330 | |||||||||||
Capitalized interest | (397 | ) | (331 | ) | (925 | ) | (2,274 | ) | |||||||
Loss on early extinguishment of debt | - | - | 81 | 804 | |||||||||||
Unrealized (gain) loss on financial instruments | (2,298 | ) | 3,791 | 71,053 | (75,109 | ) | |||||||||
Other income, net | (73,661 | ) | (27,072 | ) | (185,742 | ) | (27,668 | ) | |||||||
Total Non-operating Expenses (Income) | (48,617 | ) | 5,882 | (1,974 | ) | 11,787 | |||||||||
Income (loss) before income taxes | 242,461 | (521,818 | ) | 496,742 | (472,758 | ) | |||||||||
Income tax expense (benefit) | 58,494 | (111,573 | ) | 136,456 | (179,645 | ) | |||||||||
Net Income (Loss) | $ | 183,967 | $ | (410,245 | ) | $ | 360,286 | $ | (293,113 | ) | |||||
Earnings (Loss) per share: | |||||||||||||||
Basic | $ | 6.72 | $ | (15.86 | ) | $ | 13.64 | $ | (11.35 | ) | |||||
Diluted | $ | 6.15 | $ | (15.86 | ) | $ | 13.50 | $ | (11.35 | ) | |||||
Weighted average shares: | |||||||||||||||
Basic | 27,395 | 25,869 | 26,408 | 25,828 | |||||||||||
Diluted | 29,666 | 25,869 | 26,690 | 25,828 | |||||||||||
Atlas Air Worldwide Holdings, Inc.
Consolidated Balance Sheets
(in thousands, except share data)
(Unaudited)
December 31, | December 31, | ||||||
Assets | |||||||
Current Assets | |||||||
Cash and cash equivalents | $ | 845,589 | $ | 103,029 | |||
Restricted cash | 10,692 | 10,401 | |||||
Short-term investments | - | 879 | |||||
Accounts receivable, net of allowance of $1,233 and $1,822, respectively | 265,521 | 290,119 | |||||
Prepaid expenses, assets held for sale and other current assets | 95,919 | 228,103 | |||||
Total current assets | 1,217,721 | 632,531 | |||||
Property and Equipment | |||||||
Flight equipment | 5,061,387 | 4,880,424 | |||||
Ground equipment | 86,670 | 83,584 | |||||
Less: accumulated depreciation | (1,147,613 | ) | (977,883 | ) | |||
Flight equipment modifications in progress | 110,150 | 67,101 | |||||
Property and equipment, net | 4,110,594 | 4,053,226 | |||||
Other Assets | |||||||
Operating lease right-of-use assets | 255,805 | 231,133 | |||||
Deferred costs and other assets | 374,242 | 391,895 | |||||
Intangible assets, net and goodwill | 70,826 | 76,856 | |||||
Total Assets | $ | 6,029,188 | $ | 5,385,641 | |||
Liabilities and Equity | |||||||
Current Liabilities | |||||||
Accounts payable | $ | 107,604 | $ | 79,683 | |||
Accrued liabilities | 583,160 | 481,725 | |||||
Current portion of long-term debt and finance leases | 298,690 | 395,781 | |||||
Current portion of long-term operating leases | 157,732 | 141,973 | |||||
Total current liabilities | 1,147,186 | 1,099,162 | |||||
Other Liabilities | |||||||
Long-term debt and finance leases | 2,020,451 | 1,984,902 | |||||
Long-term operating leases | 318,850 | 392,832 | |||||
Deferred taxes | 203,586 | 74,040 | |||||
Financial instruments and other liabilities | 77,576 | 42,526 | |||||
Total other liabilities | 2,620,463 | 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; | 329 | 310 | |||||
Additional paid-in-capital | 873,874 | 761,715 | |||||
Treasury stock, at cost; 5,360,236 and 5,177,966 shares, respectively | (217,889 | ) | (213,871 | ) | |||
Accumulated other comprehensive loss | (1,904 | ) | (2,818 | ) | |||
Retained earnings | 1,607,129 | 1,246,843 | |||||
Total stockholders’ equity | 2,261,539 | 1,792,179 | |||||
Total Liabilities and Equity | $ | 6,029,188 | $ | 5,385,641 | |||
1 | Balance sheet debt at December 31, 2020 totaled $2,319.1 million, including the impact of $50.6 million of unamortized discount and debt issuance costs of $29.3 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 and finance leases at December 31, 2020 totaled $2,399.0 million, compared with $2,484.4 million on December 31, 2019. |
Atlas Air Worldwide Holdings, Inc.
Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
For the Twelve Months Ended | |||||||
December 31, | December 31, | ||||||
Operating Activities: | |||||||
Net Income (Loss) | $ | 360,286 | $ | (293,113 | ) | ||
Adjustments to reconcile Net Income (Loss) to net cash provided by operating activities: | |||||||
Depreciation and amortization | 328,101 | 316,821 | |||||
Accretion of debt securities discount | (2 | ) | (244 | ) | |||
Provision for expected credit losses | 463 | 41 | |||||
Loss on early extinguishment of debt | 81 | 804 | |||||
Special charge, net of cash payments | 16,265 | 638,373 | |||||
Unrealized loss (gain) on financial instruments | 71,053 | (75,109 | ) | ||||
Loss (gain) on disposal of aircraft | (7,248 | ) | 5,309 | ||||
Deferred taxes | 133,598 | (180,553 | ) | ||||
Stock-based compensation | 21,997 | 25,189 | |||||
Changes in: | |||||||
Accounts receivable | 26,132 | (22,524 | ) | ||||
Prepaid expenses, current assets and other assets | (56,716 | ) | (66,843 | ) | |||
Accounts payable, accrued liabilities and other liabilities | 115,532 | (47,807 | ) | ||||
Net cash provided by operating activities | 1,009,542 | 300,344 | |||||
Investing Activities: | |||||||
Capital expenditures | (78,933 | ) | (133,554 | ) | |||
Payments for flight equipment and modifications | (184,273 | ) | (214,236 | ) | |||
Investment in joint ventures | (9,298 | ) | (2,028 | ) | |||
Proceeds from insurance | - | 38,133 | |||||
Proceeds from investments | 881 | 15,624 | |||||
Proceeds from disposal of aircraft | 126,335 | 10,300 | |||||
Net cash used for investing activities | (145,288 | ) | (285,761 | ) | |||
Financing Activities: | |||||||
Proceeds from debt issuance | 417,733 | 115,992 | |||||
Payment of debt issuance costs | (6,100 | ) | (2,404 | ) | |||
Payments of debt and finance lease obligations | (429,749 | ) | (344,674 | ) | |||
Proceeds from revolving credit facility | 75,000 | 100,000 | |||||
Payment of revolving credit facility | (175,000 | ) | - | ||||
Customer maintenance reserves and deposits received | 15,168 | 14,736 | |||||
Customer maintenance reserves paid | (14,437 | ) | (8,174 | ) | |||
Treasury shares withheld for payment of taxes | (4,018 | ) | (9,370 | ) | |||
Net cash used for financing activities | (121,403 | ) | (133,894 | ) | |||
Net increase (decrease) in cash, cash equivalents and restricted cash | 742,851 | (119,311 | ) | ||||
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 | $ | 856,281 | $ | 113,430 | |||
Noncash Investing and Financing Activities: | |||||||
Acquisition of property and equipment included in Accounts payable and accrued liabilities | $ | 36,619 | $ | 37,390 | |||
Acquisition of property and equipment acquired under operating leases | $ | 91,538 | $ | 28,827 | |||
Acquisition of flight equipment under finance lease | $ | 18,476 | $ | 10,825 | |||
Customer maintenance reserves settled with sale of aircraft | $ | 6,497 | $ | - | |||
Issuance of shares related to settlement of warrant liability | $ | 49,545 | $ | - | |||
Atlas Air Worldwide Holdings, Inc.
Direct Contribution
(in thousands)
(Unaudited)
For the Three Months Ended | For the Twelve Months Ended | ||||||||||||||
December 31, | December 31, | December 31, | December 31, | ||||||||||||
Operating Revenue: | |||||||||||||||
ACMI | $ | 337,718 | $ | 344,901 | $ | 1,211,169 | $ | 1,247,770 | |||||||
Charter | 559,218 | 361,021 | 1,855,230 | 1,305,860 | |||||||||||
Dry Leasing | 41,609 | 43,453 | 165,181 | 200,781 | |||||||||||
Customer incentive asset amortization | (10,676 | ) | (7,117 | ) | (39,090 | ) | (33,135 | ) | |||||||
Other | 4,606 | 4,791 | 18,626 | 17,913 | |||||||||||
Total Operating Revenue | $ | 932,475 | $ | 747,049 | $ | 3,211,116 | $ | 2,739,189 | |||||||
Direct Contribution: | |||||||||||||||
ACMI | $ | 70,321 | $ | 104,412 | $ | 179,946 | $ | 218,459 | |||||||
Charter | 186,303 | 69,817 | 559,673 | 149,372 | |||||||||||
Dry Leasing | 11,023 | 11,740 | 41,070 | 70,386 | |||||||||||
Total Direct Contribution for Reportable Segments | 267,647 | 185,969 | 780,689 | 438,217 | |||||||||||
Unallocated expenses and (income), net | (27,576 | ) | (81,865 | ) | (201,016 | ) | (337,434 | ) | |||||||
Loss on early extinguishment of debt | - | - | (81 | ) | (804 | ) | |||||||||
Unrealized gain (loss) on financial instruments | 2,298 | (3,791 | ) | (71,053 | ) | 75,109 | |||||||||
Special charge, net | 216 | (616,243 | ) | (16,265 | ) | (638,373 | ) | ||||||||
Transaction-related expenses | (494 | ) | (579 | ) | (2,780 | ) | (4,164 | ) | |||||||
Gain (loss) on disposal of aircraft | 370 | (5,309 | ) | 7,248 | (5,309 | ) | |||||||||
Income (loss) before income taxes | 242,461 | (521,818 | ) | 496,742 | (472,758 | ) | |||||||||
Add back (subtract): | |||||||||||||||
Interest income | (147 | ) | (321 | ) | (1,076 | ) | (4,296 | ) | |||||||
Interest expense | 27,886 | 29,815 | 114,635 | 120,330 | |||||||||||
Capitalized interest | (397 | ) | (331 | ) | (925 | ) | (2,274 | ) | |||||||
Loss on early extinguishment of debt | - | - | 81 | 804 | |||||||||||
Unrealized (gain) loss on financial instruments | (2,298 | ) | 3,791 | 71,053 | (75,109 | ) | |||||||||
Other income, net | (73,661 | ) | (27,072 | ) | (185,742 | ) | (27,668 | ) | |||||||
Operating Income (Loss) | $ | 193,844 | $ | (515,936 | ) | $ | 494,768 | $ | (460,971 | ) | |||||
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.
Direct Contribution consists of net income (loss) before income taxes, excluding loss on early extinguishment of debt, unrealized (loss) gain on financial instruments, special charge, net, transaction-related expenses, gain (loss) on disposal of aircraft, and unallocated income and expenses, 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.
Atlas Air Worldwide Holdings, Inc.
Reconciliation to Non-GAAP Measures
(in thousands, except per share data)
(Unaudited)
For the Three Months Ended | |||||||||||
December 31, | December 31, | Percent Change | |||||||||
Net Income (Loss) | $ | 183,967 | $ | (410,245 | ) | 144.8 | % | ||||
Impact from: | |||||||||||
CARES Act grant income1 | (67,212 | ) | - | ||||||||
Customer incentive asset amortization | 10,676 | 7,117 | |||||||||
Special charge, net | (216 | ) | 616,243 | ||||||||
Leadership transition costs | 128 | 3,343 | |||||||||
Noncash expenses and income, net2 | 4,599 | 4,524 | |||||||||
Unrealized (gain) loss on financial instruments | (2,298 | ) | 3,791 | ||||||||
Other, net3 | 166 | 6,177 | |||||||||
Income tax effect of reconciling items | 13,410 | (132,754 | ) | ||||||||
Special tax item4 | - | (3 | ) | ||||||||
Adjusted Net Income | $ | 143,220 | $ | 98,193 | 45.9 | % | |||||
Adjusted weighted average diluted shares outstanding | 29,666 | 25,869 | |||||||||
Adjusted Diluted EPS | $ | 4.83 | $ | 3.80 | 27.1 | % | |||||
For the Twelve Months Ended | |||||||||||
December 31, | December 31, | Percent Change | |||||||||
Net Income (Loss) | $ | 360,286 | $ | (293,113 | ) | 222.9 | % | ||||
Impact from: | |||||||||||
CARES Act grant income1 | (151,590 | ) | - | ||||||||
Customer incentive asset amortization | 39,090 | 33,135 | |||||||||
Special charge | 16,265 | 638,373 | |||||||||
Leadership transition costs | 6,061 | 6,736 | |||||||||
Noncash expenses and income, net2 | 17,971 | 18,267 | |||||||||
Unrealized loss (gain) on financial instruments | 71,053 | (75,109 | ) | ||||||||
Other, net3 | (3,679 | ) | 10,830 | ||||||||
Income tax effect of reconciling items | 23,580 | (145,295 | ) | ||||||||
Special tax item4 | - | (54,272 | ) | ||||||||
Adjusted Net Income | $ | 379,037 | $ | 139,552 | 171.6 | % | |||||
26,690 | 25,828 | ||||||||||
Add: dilutive warrant5 | 1,040 | 758 | |||||||||
dilutive restricted stock | - | 64 | |||||||||
Adjusted weighted average diluted shares outstanding | 27,730 | 26,650 | |||||||||
Adjusted Diluted EPS | $ | 13.67 | $ | 5.24 | 160.9 | % | |||||
Atlas Air Worldwide Holdings, Inc.
Reconciliation to Non-GAAP Measures
(in thousands, except per share data)
(Unaudited)
For the Three Months Ended | |||||||||||
December 31, | December 31, | Percent Change | |||||||||
Income (loss) before taxes | $ | 242,461 | $ | (521,818 | ) | 146.5 | % | ||||
Impact from: | |||||||||||
CARES Act grant income1 | (67,212 | ) | - | ||||||||
Customer incentive asset amortization | 10,676 | 7,117 | |||||||||
Special charge, net | (216 | ) | 616,243 | ||||||||
Leadership transition costs | 128 | 3,343 | |||||||||
Noncash expenses and income, net2 | 4,599 | 4,524 | |||||||||
Unrealized (gain) loss on financial instruments | (2,298 | ) | 3,791 | ||||||||
Other, net3 | 166 | 6,177 | |||||||||
Adjusted income before income taxes | 188,304 | 119,377 | 57.7 | % | |||||||
Interest expense, net | 22,743 | 24,849 | |||||||||
Other income, net | (6,449 | ) | (27,072 | ) | |||||||
Adjusted operating income | $ | 204,598 | $ | 117,154 | 74.6 | % | |||||
Income tax expense (benefit) | $ | 58,494 | $ | (111,573 | ) | ||||||
Income tax effect of reconciling items | 13,410 | (132,754 | ) | ||||||||
Special tax4 | - | (3 | ) | ||||||||
Adjusted income tax expense (benefit) | 45,084 | 21,184 | |||||||||
Adjusted income before income taxes | $ | 188,304 | $ | 119,377 | |||||||
Effective tax expense (benefit) rate | 24.1 | % | (21.4 | )% | |||||||
Adjusted effective tax expense rate | 23.9 | % | 17.7 | % | |||||||
For the Twelve Months Ended | |||||||||||
December 31, | December 31, | Percent Change | |||||||||
Income (loss) before taxes | $ | 496,742 | $ | (472,758 | ) | 205.1 | % | ||||
Impact from: | |||||||||||
CARES Act grant income1 | (151,590 | ) | - | ||||||||
Customer incentive asset amortization | 39,090 | 33,135 | |||||||||
Special charge | 16,265 | 638,373 | |||||||||
Leadership transition costs | 6,061 | 6,736 | |||||||||
Noncash expenses and income, net2 | 17,971 | 18,267 | |||||||||
Unrealized loss (gain) on financial instruments | 71,053 | (75,109 | ) | ||||||||
Other, net3 | (3,679 | ) | 10,830 | ||||||||
Adjusted income before income taxes | 491,913 | 159,474 | 208.5 | % | |||||||
Interest expense, net | 94,663 | 97,122 | |||||||||
Other income, net | (34,071 | ) | (24,013 | ) | |||||||
Adjusted operating income | $ | 552,505 | $ | 232,583 | 137.6 | % | |||||
Income tax expense (benefit) | $ | 136,456 | $ | (179,645 | ) | ||||||
Income tax effect of reconciling items | 23,580 | (145,295 | ) | ||||||||
Special tax4 | - | (54,272 | ) | ||||||||
Adjusted income tax expense | 112,876 | 19,922 | |||||||||
Adjusted income before income taxes | $ | 491,913 | $ | 159,474 | |||||||
Effective tax expense (benefit) rate | 27.5 | % | (38.0 | )% | |||||||
Adjusted effective tax expense rate | 22.9 | % | 12.5 | % | |||||||
Atlas Air Worldwide Holdings, Inc.
Reconciliation to Non-GAAP Measures
(in thousands)
(Unaudited)
For the Three Months Ended | |||||||||||
December 31, | December 31, | Percent Change | |||||||||
Net Income (Loss) | $ | 183,967 | $ | (410,245 | ) | 144.8 | % | ||||
Interest expense, net | 27,342 | 29,163 | |||||||||
Depreciation and amortization | 68,667 | 60,428 | |||||||||
Income tax expense (benefit) | 58,494 | (111,573 | ) | ||||||||
EBITDA | 338,470 | (432,227 | ) | ||||||||
CARES Act grant income1 | (67,212 | ) | - | ||||||||
Customer incentive asset amortization | 10,676 | 7,117 | |||||||||
Special charge, net | (216 | ) | 616,243 | ||||||||
Leadership transition costs | 128 | 3,343 | |||||||||
Unrealized (gain) loss on financial instruments | (2,298 | ) | 3,791 | ||||||||
Other, net3 | 166 | 6,387 | |||||||||
Adjusted EBITDA | $ | 279,714 | $ | 204,654 | 36.7 | % | |||||
For the Twelve Months Ended | |||||||||||
December 31, | December 31, | Percent Change | |||||||||
Net Income (Loss) | $ | 360,286 | $ | (293,113 | ) | 222.9 | % | ||||
Interest expense, net | 112,634 | 113,760 | |||||||||
Depreciation and amortization | 257,672 | 251,097 | |||||||||
Income tax expense (benefit) | 136,456 | (179,645 | ) | ||||||||
EBITDA | 867,048 | (107,901 | ) | ||||||||
CARES Act grant income1 | (151,590 | ) | - | ||||||||
Customer incentive asset amortization | 39,090 | 33,135 | |||||||||
Special charge | 16,265 | 638,373 | |||||||||
Leadership transition costs | 6,061 | 6,736 | |||||||||
Unrealized loss (gain) on financial instruments | 71,053 | (75,109 | ) | ||||||||
Other, net3 | (3,679 | ) | 9,542 | ||||||||
Adjusted EBITDA | $ | 844,248 | $ | 504,776 | 67.3 | % | |||||
1 | CARES Act grant income in 2020 related to income associated with the Payroll Support Program. |
2 | Noncash expenses and income, net in 2020 and 2019 primarily related to amortization of debt discount on the convertible notes. |
3 | Other, net in 2020 primarily related to a $7.2 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 primarily related to a loss on the sale of a GEnx engine, 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 | Special tax item in 2019 represents the income tax benefit from the completion of the 2015 IRS examination that is not related to ongoing operations. |
5 | Dilutive warrants represent potentially dilutive common shares related to warrants issued to a customer. These warrants are excluded from Diluted EPS, net of taxes prepared in accordance with GAAP when they would have been antidilutive. |
Atlas Air Worldwide Holdings, Inc.
Reconciliation to Non-GAAP Measures
(in thousands, except per share data)
(Unaudited)
For the Three Months Ended | |||||||
December 31, 2020 | December 31, 2019 | ||||||
Net Cash Provided by Operating Activities | $ | 226,834 | $ | 107,054 | |||
Less: | |||||||
Capital expenditures | 33,799 | 25,960 | |||||
Capitalized interest | $ | 397 | $ | 331 | |||
Free Cash Flow1 | $ | 192,638 | $ | 80,763 | |||
For the Twelve Months Ended | |||||||
December 31, 2020 | December 31, 2019 | ||||||
Net Cash Provided by Operating Activities | $ | 1,009,542 | $ | 300,344 | |||
Less: | |||||||
Capital expenditures | 78,933 | 133,554 | |||||
Capitalized interest | $ | 925 | $ | 2,274 | |||
Free Cash Flow1 | $ | 929,684 | $ | 164,516 | |||
1 | Free Cash Flow = Cash Flows from Operations minus Core Capital Expenditures and Capitalized Interest. |
Core Capital Expenditures excludes purchases of aircraft. |
Atlas Air Worldwide Holdings, Inc.
Operating Statistics and Traffic Results
(Unaudited)
For the Three Months Ended | Increase/ | For the Twelve Months Ended | Increase/ | ||||||||||||||||||||
December 31, | December 31, | (Decrease) | December 31, | December 31, | (Decrease) | ||||||||||||||||||
Block Hours | |||||||||||||||||||||||
ACMI | 63,992 | 63,647 | 345 | 239,056 | 245,706 | (6,650 | ) | ||||||||||||||||
Charter | 31,169 | 20,084 | 11,085 | 101,238 | 72,547 | 28,691 | |||||||||||||||||
Cargo | 26,712 | 14,898 | 11,814 | 84,461 | 51,982 | 32,479 | |||||||||||||||||
Passenger | 4,457 | 5,186 | (729 | ) | 16,777 | 20,565 | (3,788 | ) | |||||||||||||||
Other | 918 | 757 | 161 | 4,527 | 2,887 | 1,640 | |||||||||||||||||
Total Block Hours | 96,079 | 84,488 | 11,591 | 344,821 | 321,140 | 23,681 | |||||||||||||||||
Revenue Per Block Hour | |||||||||||||||||||||||
ACMI | $ | 5,278 | $ | 5,419 | $ | (141 | ) | $ | 5,066 | $ | 5,078 | $ | (12 | ) | |||||||||
Charter | $ | 17,941 | $ | 17,976 | $ | (35 | ) | $ | 18,325 | $ | 18,000 | $ | 325 | ||||||||||
Cargo | $ | 17,747 | $ | 16,630 | $ | 1,117 | $ | 18,303 | $ | 17,164 | $ | 1,139 | |||||||||||
Passenger | $ | 19,109 | $ | 21,841 | $ | (2,732 | ) | $ | 18,440 | $ | 20,113 | $ | (1,673 | ) | |||||||||
Average Utilization (block hours per day) | |||||||||||||||||||||||
ACMI1 | 9.6 | 8.6 | 1.0 | 8.9 | 8.5 | 0.4 | |||||||||||||||||
Charter | |||||||||||||||||||||||
Cargo | 12.6 | 8.5 | 4.1 | 10.5 | 8.1 | 2.4 | |||||||||||||||||
Passenger | 4.9 | 5.7 | (0.8 | ) | 4.7 | 6.1 | (1.4 | ) | |||||||||||||||
All Operating Aircraft1,2 | 9.9 | 8.4 | 1.5 | 8.9 | 8.3 | 0.6 | |||||||||||||||||
Fuel | |||||||||||||||||||||||
Charter | |||||||||||||||||||||||
Average fuel cost per gallon | $ | 1.37 | $ | 2.22 | $ | (0.85 | ) | $ | 1.41 | $ | 2.27 | $ | (0.86 | ) | |||||||||
Fuel gallons consumed (000s) | 95,921 | 59,487 | 36,434 | 313,428 | 213,253 | 100,175 | |||||||||||||||||
1 | ACMI and All Operating Aircraft averages in the fourth quarter and 12 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. |
Atlas Air Worldwide Holdings, Inc.
Operating Statistics and Traffic Results
(Unaudited)
For the Three Months Ended | Increase/ | For the Twelve Months Ended | Increase/ | ||||||||||||||||||||
December 31, | December 31, | (Decrease) | December 31, | December 31, | (Decrease) | ||||||||||||||||||
Segment Operating Fleet | |||||||||||||||||||||||
ACMI1 | |||||||||||||||||||||||
747-8F Cargo | 7.9 | 8.9 | (1.0 | ) | 8.5 | 8.5 | - | ||||||||||||||||
747-400 Cargo | 14.8 | 17.2 | (2.4 | ) | 13.4 | 17.9 | (4.5 | ) | |||||||||||||||
747-400 Dreamlifter | 1.7 | 3.4 | (1.7 | ) | 2.4 | 3.5 | (1.1 | ) | |||||||||||||||
777-200 Cargo | 8.0 | 8.0 | - | 8.0 | 7.1 | 0.9 | |||||||||||||||||
767-300 Cargo | 23.0 | 24.0 | (1.0 | ) | 23.4 | 24.9 | (1.5 | ) | |||||||||||||||
767-200 Cargo | 7.9 | 9.0 | (1.1 | ) | 8.7 | 9.0 | (0.3 | ) | |||||||||||||||
767-200 Passenger | 1.0 | 1.0 | - | 1.0 | 1.0 | - | |||||||||||||||||
737-800 Cargo | 7.8 | 4.2 | 3.6 | 5.8 | 2.4 | 3.4 | |||||||||||||||||
737-400 Cargo | - | 5.0 | (5.0 | ) | 2.6 | 5.0 | (2.4 | ) | |||||||||||||||
Total | 72.1 | 80.7 | (8.6 | ) | 73.8 | 79.3 | (5.5 | ) | |||||||||||||||
Charter | |||||||||||||||||||||||
747-8F Cargo | 2.0 | 1.0 | 1.0 | 1.5 | 1.5 | - | |||||||||||||||||
747-400 Cargo | 19.1 | 18.0 | 1.1 | 19.2 | 16.0 | 3.2 | |||||||||||||||||
747-400 Passenger | 5.0 | 5.0 | - | 5.0 | 4.3 | 0.7 | |||||||||||||||||
777-200 Cargo | 1.0 | - | 1.0 | 0.7 | - | 0.7 | |||||||||||||||||
767-300 Cargo | 1.0 | - | 1.0 | 0.6 | - | 0.6 | |||||||||||||||||
767-300 Passenger | 4.8 | 4.9 | (0.1 | ) | 4.8 | 4.9 | (0.1 | ) | |||||||||||||||
Total | 32.9 | 28.9 | 4.0 | 31.8 | 26.7 | 5.1 | |||||||||||||||||
Dry Leasing | |||||||||||||||||||||||
777-200 Cargo | 7.0 | 7.0 | - | 7.0 | 7.3 | (0.3 | ) | ||||||||||||||||
767-300 Cargo | 21.0 | 21.0 | - | 21.0 | 21.1 | (0.1 | ) | ||||||||||||||||
757-200 Cargo | - | 1.0 | (1.0 | ) | 0.1 | 1.0 | (0.9 | ) | |||||||||||||||
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 | ) | 29.3 | 31.4 | (2.1 | ) | |||||||||||||||
Less: Aircraft Dry Leased to CMI | (21.0 | ) |
| ) | - | (21.0 | ) |
| ) | (1.6 | ) | ||||||||||||
Total Operating Average Aircraft Equivalents | 113.0 | 119.6 | (6.6 | ) | 113.9 | 114.8 | (0.9 | ) | |||||||||||||||
Out-of-Service2 | 0.7 | 1.0 | (0.3 | ) | 2.2 | 0.8 | 1.4 | ||||||||||||||||
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.
