Atlas Air Worldwide Holdings, Inc. (Nasdaq: AAWW) today announced adjusted net income attributable to common stockholders of $25.7 million, or $1.03 per diluted share, for the three months ended March 31, 2015, compared with $11.3 million, or $0.45 per diluted share, for the three months ended March 31, 2014. On a reported basis, net income attributable to common stockholders in the first quarter of 2015 totaled $29.2 million, or $1.17 per diluted share, compared with $7.9 million, or $0.32 per diluted share, in the year-ago quarter.
Free cash flow of $80.2 million in the first quarter compared with $36.9 million in the first quarter of 2014.
“We are off to a very good start in 2015 and look forward to a strong year,” said William J. Flynn, President and Chief Executive Officer. “As a result, we now expect our full-year results to increase significantly compared with 2014.
“Earnings in the first quarter reflected our diverse business mix, the ongoing demand for our industry-leading aircraft and aviation operating services, and the continuing, broad-based improvement of the global airfreight market. Results in the quarter were also driven by the scale and scope of our Charter segment, which was well-positioned to capitalize on demand for airfreight in the transpacific region and other trade lanes as well as better-than-expected military cargo and passenger demand.”
ACMI segment results benefited from an increase in block hours in the first quarter, driven by the start-up of three additional 767 CMI aircraft and improvements in ACMI aircraft utilization. These were offset by a reduction in revenue per block hour, reflecting the impact of higher revenue per block hour in 2014 resulting from customers that flew below their contractual minimums as well as an increase in CMI flying in 2015.
In Charter, significantly higher segment revenues and contribution reflected improvements in commercial and military air cargo and passenger demand, increased aircraft utilization, and a reduction in heavy-maintenance expense. Commercial air cargo demand during the quarter was enhanced by congestion issues at ports on the U.S. west coast.
In Dry Leasing, revenue and profitability grew as we realized revenue from maintenance payments related to the scheduled return of a 737-800 passenger aircraft in February 2015. Reported earnings for the first quarter of 2015 included an effective income tax rate of 19.4%, which reflected an income tax benefit of $4.0 million related to beneficial tax planning regarding the treatment of extraterritorial income from the leasing of certain of our aircraft. Reported results also included a pretax loss of $1.2 million on the disposal of aircraft and engine parts, partly offset by pretax adjustments of $0.6 million to special charges.
At March 31, 2015, our cash, cash equivalents, short-term investments and restricted cash totaled $374.7 million, compared with $330.7 million at December 31, 2014.
The change in position reflected cash provided by operating activities partially offset by cash used for investing and financing activities.
Net cash used for investing activities during the first quarter of 2015 primarily related to capital expenditures and purchase deposits and delivery payments for flight equipment, partially offset by proceeds from disposal of aircraft.
Net cash used for financing activities primarily reflected payments on debt obligations.
We anticipate significant growth in adjusted fully diluted earnings per share in 2015. As the commercial airfreight market has grown, our business initiatives and investments have positioned Atlas to be a prime beneficiary.
We are encouraged by our strong first-quarter performance, and we continue to have a favorable view about the prospects for the overall airfreight environment and the demand for our aircraft and services.
Industry forecasts indicate that global airfreight demand will grow approximately 4% to 5% in 2015, outpacing projected growth in global trade. In addition, we expect that our block-hour volumes this year will increase 5% to 10% compared with 2014, with more than 70% of the total in ACMI and the balance in Charter. At the same time, recent military demand is holding up well compared with 2014 levels.
We are seeing good airfreight demand in the second quarter of 2015. On a sequential basis, we expect earnings per share in the second quarter of 2015 to be slightly better than our first-quarter 2015 adjusted earnings.
We also anticipate sequential increases in our third- and fourth-quarter earnings per share. Visibility into second-half airfreight market demand and yields remains limited at this point, so we will update our expectations about the second half as the year progresses. Taking our current framework and expected first-half 2015 earnings strength into account, we expect approximately 55% of our earnings to occur in the second half.
Given the higher flying levels that we anticipate, we now expect that aircraft maintenance expense in 2015 should total approximately $190 million. In addition, depreciation should be approximately $125 million. We also anticipate an effective income tax rate of approximately 28% to 30%. Core capital expenditures, excluding aircraft and engine purchases, are expected to total approximately $40 to $45 million, mainly for spare parts for our fleet. Mr. Flynn added: “We are confident about the outlook for 2015, and we are well-prepared to leverage our competencies and market leadership this year and beyond.
“Our fleet is modern and efficient. We provide innovative, value-added services. We operate a diversified, resilient business model. Our financial structure is solid. And we are focused on seizing strategic opportunities, executing on initiatives, and shaping a powerful future.”
Management will host a conference call to discuss Atlas Air Worldwide’s first-quarter 2015 financial and operating results at 11:00 a.m. Eastern Time on Thursday, April 30, 2015. Interested parties are invited to listen to the call live over the Internet at www.atlasair.com (click on “Investor Information,” click on “Presentations” and on the link to the first-quarter call) or at the following Web address: http://edge.media-server.com/m/p/d6kjfyqg For those unable to listen to the live call, a replay will be archived on the above websites following the call. A replay will also be available through May 6 by dialing (855) 859-2056 (U.S. Toll Free) or (404) 537-3406 (from outside the U.S.) and using Access Code 23719054#.
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 EBITDAR, as adjusted; EBITDA, as adjusted; Direct Contribution; Adjusted Net Income Attributable to Common Stockholders; Adjusted Diluted
EPS; and Free Cash Flow, which exclude certain items. 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 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 provide meaningful information to assist investors and analysts in understanding our financial results and assessing our prospects for future performance.
Atlas Air Worldwide is a leading global provider of outsourced aircraft and aviation operating services. It is the parent company of Atlas Air, Inc. (Atlas), Southern Air Holdings, Inc. (Southern Air) and Titan Aviation Holdings, Inc. (Titan), and is the majority shareholder of Polar Air Cargo Worldwide, Inc. (Polar). Atlas Air Worldwide’s companies operate the world’s largest fleet of Boeing 747 freighter aircraft and provide customers the broadest array of 747, 777, 767, 757 and 737 aircraft for domestic, regional, and international applications.
Atlas, Southern Air, Titan and Polar offer a range of outsourced aircraft and aviation operating services that include ACMI service – in which customers receive an aircraft, crew, maintenance and insurance on a long-term basis; CMI service – in which customers receive crew, maintenance and insurance but not an aircraft; express network and airport-to-airport cargo service; cargo and passenger charters; and dry leasing of aircraft and engines.
Atlas Air Worldwide’s press releases, SEC filings and other information may be accessed through the company’s home page, www.atlasair.com.
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