Air Transport Services Group (ATSG) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue was $488 million, down 8% year-over-year, with GAAP EPS from continuing operations at $0.11 versus $0.49; adjusted EBITDA was $130 million, down $27 million, and free cash flow improved to $91.8 million from negative $1.3 million.

• Net income from continuing operations was $7.4 million for Q2, down from $38.0 million in the prior year.

• Major new agreement with Amazon in May 2024 to operate 10 additional Boeing 767-300 freighters, with potential for 10 more, and issuance of new and modified warrants to Amazon.

• Eight newly converted freighters delivered so far in 2024, with more expected by year-end; four Boeing 767 freighters leased to customers since June 30.

Financial highlights

• Q2 2024 revenues were $488 million, down from $529 million year-over-year; operating income was $31.3 million, down from $69.7 million.

• GAAP pretax earnings were $10.7 million, down from $49.7 million in Q2 2023; adjusted pretax earnings were $17.3 million, compared to $57.9 million in Q2 2023.

• Adjusted EBITDA for Q2 was $130 million, down from $157 million in Q2 2023.

• Adjusted free cash flow for Q2 was $91.8 million, a significant improvement from negative $1.3 million in Q2 2023; year-to-date free cash flow reached $107 million.

• CapEx spending for Q2 was $70 million, down 64% year-over-year; capital expenditures for the first half were $172.8 million.

Outlook and guidance

• 2024 Adjusted EBITDA guidance raised to approximately $526 million, up $10 million from prior outlook; full-year adjusted EPS expected between $0.60 and $0.80.

• CapEx target for 2024 reduced to $390 million, with $165 million for sustaining and $225 million for growth.

• Q3 Adjusted EBITDA expected to be similar to Q2, with significant improvement in Q4 due to peak season and new aircraft entering service.

• Management expects sufficient liquidity from cash, operations, and $489 million in available credit to fund obligations and growth for at least the next 12 months.

• Continued improvement in free cash flow expected for the remainder of 2024.