Air Transport Services Group (ATSG) Q3 2024 earnings summary

Executive summary

• Revenue declined 10% year-over-year to $471.3M for Q3 2024, with a net loss of $3.3M and diluted EPS of $(0.05); nine-month net income was $12.7M, down from $75.3M.

• Adjusted pre-tax earnings from continuing operations were $10.7M for Q3 2024, down from $31.1M in 2023; adjusted EBITDA was $129.5M, down from $136.6M.

• Free cash flow for Q3 improved to $86.4M from negative $51.6M year-over-year.

• ATSG entered a definitive merger agreement to be acquired by Stonepeak for $22.50 per share in cash, valuing the deal at $3.1B, pending shareholder and regulatory approval.

• The company canceled its Q3 earnings call and will not provide future guidance due to the pending acquisition.

Financial highlights

• Operating income for Q3 2024 was $21.7M, down from $46.0M in Q3 2023; nine-month operating income was $86.0M, down from $163.2M.

• GAAP pretax loss from continuing operations was $5.2M for Q3 2024, versus $23.5M pretax earnings a year ago.

• Cash from operations was $399.1M for the nine months, down from $526.1M in 2023; Q3 net cash from operating activities was $135.6M, up from $117.5M in Q3 2023.

• Capital expenditures were $221.0M for the nine months, mainly for aircraft purchases and modifications.

• Interest expense increased $11.7M year-over-year for the nine months, reflecting higher rates and new convertible notes.

Outlook and guidance

• Management expects ACMI Services revenue to increase in Q4 2024 as 10 additional Amazon aircraft are added, with customer rate increases beginning in Q4.

• 2024 capital expenditures are projected at $350M, with $220M for fleet expansion and $130M for maintenance and sustaining capex.

• Management believes current cash, forecasted cash flows, and credit facilities are sufficient to fund operations and fleet expansion for at least the next 12 months.