Strong Outlook for 1Q22
All New 747-8F Deliveries Placed Under Long-Term Agreements
Announces $200 Million Share Repurchase Program
Including $100 Million Accelerated Share Repurchase
Full-Year 2021 Results
Fourth-Quarter 2021 Results
PURCHASE, N.Y., February 17, 2022 – Atlas Air Worldwide Holdings, Inc. (Nasdaq: AAWW) today announced record 2021 results, including revenue that rose to $4.0 billion, and net income that increased to $493.3 million, or $16.16 per diluted share, compared with $3.2 billion in revenue, and net income of $360.3 million, or $13.50 per diluted share, in 2020.
On an adjusted basis, EBITDA increased to a record $1.1 billion in 2021 compared with $844.2 million in 2020. For the twelve months ended December 31, 2021, adjusted net income rose to a record $551.0 million, or $18.51 per diluted share, compared with $379.0 million, or $13.67 per diluted share, in 2020.
“2021 was another outstanding year with excellent financial and operating performance. Our greatest strength is our people and I’d like to thank everyone at Atlas for working together to deliver these very strong results. We are also very pleased to have achieved a long-term labor agreement with our pilots that recognizes their significant contributions to Atlas. With the strength, flexibility and resiliency of our global business model, our experienced and dedicated team delivered high-quality service to our customers in an operating environment with persistent pandemic-related obstacles,” said Atlas Air Worldwide President and Chief Executive Officer John W. Dietrich.
“We are leveraging our world-class fleet and global operating capabilities to increase aircraft utilization and capitalize on strong demand for our services and dedicated freighters, as well as on higher airfreight yields.”
He continued: “We have now placed our new 747-8Fs under long-term agreements, enhanced numerous long-term contracts with strategic customers and further diversified our customer base. In 2021, we deepened relationships with valued customers, including Cainiao, CEVA Logistics, DB Schenker, DHL, DSV, FedEx, Flexport, Geodis, HP Inc., Icelandair, JAS, Kuehne+Nagel, SF Group and UPS.
“We take a disciplined and balanced approach to capital allocation. We have strengthened our balance sheet, made significant investments in our fleet, including new 747-8 and 777 freighter aircraft, and are returning capital to our shareholders. Consistent with our balanced capital allocation approach, our Board has authorized a new $200 million share repurchase program, and we are starting by implementing $100 million in accelerated repurchases.
“Atlas is very well positioned for the future. We have a dedicated and talented team of employees, a strong balance sheet, a formidable fleet of aircraft, an unparalleled network of customers and unrivaled global operating capabilities. We also have a strong position and look forward to growing our Titan dry leasing business. And our strategic focus on express, e-Commerce and fast-growing markets will continue to drive our business forward.”
Mr. Dietrich added: “We expect strong performance in the first quarter of 2022, with adjusted EBITDA and adjusted net income similar to the first quarter of 2021. We also anticipate revenue of about $1.0 billion from flying approximately 85,000 block hours.
“This outlook reflects higher yields, including the contribution from numerous new or enhanced long-term customer contracts, as well as higher pilot costs from our new joint collective bargaining agreement that went into effect in September 2021.
“Due to the uncertainty related to the pandemic, ongoing supply chain disruptions and other factors, we are not providing additional guidance at this time.”
Full-Year Results
Volumes in 2021 grew to 364,061 block hours compared with 344,821 in 2020, with revenue increasing to $4.0 billion in 2021 from $3.2 billion in 2020.
For the twelve months ended December 31, 2021, our reported net income rose to $493.3 million, or $16.16 per diluted share, compared with $360.3 million, or $13.50 per diluted share, in 2020.
On an adjusted basis, EBITDA grew to $1.1 billion in 2021 compared with $844.2 million in 2020. For the twelve months ended December 31, 2021, adjusted net income increased to $551.0 million, or $18.51 per diluted share, compared with $379.0 million, or $13.67 per diluted share, in 2020.
Reported results in 2021 included an effective income tax rate of 23.8%. On an adjusted basis, our results reflected an effective income tax rate of 22.0%.
Fourth-Quarter Results
Volumes in the fourth quarter of 2021 totaled 91,985 block hours compared with 96,079 in the fourth quarter of 2020, with revenue rising to $1.2 billion compared with $932.5 million in the prior-year quarter.
For the three months ended December 31, 2021, our reported net income totaled $176.7 million, or $5.55 per diluted share, compared with net income of $184.0 million, or $6.15 per diluted share, in the fourth quarter of 2020.
On an adjusted basis, EBITDA was $361.8 million in the fourth quarter this year compared with $279.7 million in the fourth quarter of 2020. Adjusted net income in the fourth quarter of 2021 totaled $211.6 million, or $7.05 per diluted share, compared with $143.2 million, or $4.83 per diluted share, in the prior-year period.
Reported earnings in the fourth quarter of 2021 also included an effective income tax rate of 24.3%. On an adjusted basis, our results reflected an effective income tax rate of 21.7%.
Higher Airline Operations revenue primarily reflected an increase in the average rate per block hour. The higher average rate per block hour was primarily due to an increased proportion of higher-yielding flying, including the impact of new and extended long-term contracts, the ongoing reduction of available cargo capacity in the market, the continued disruption of global supply chains, as well as higher fuel costs. Block-hour volumes during the period reflected a reduction in less profitable smaller gauge CMI service flying, partially offset by our ability to increase the utilization of our current fleet to meet strong customer demand. Block-hour volumes benefited from the operation of a 747-400 freighter we reactivated during the fourth quarter of 2020.
Higher Airline Operations segment contribution in the fourth quarter of 2021 was primarily driven by the positive factors benefiting segment revenue mentioned above as well as lower heavy maintenance expense. These improvements were partially offset by higher pilot costs related to our new joint collective bargaining agreement (JCBA).
In Dry Leasing, segment revenue and contribution in the fourth quarter of 2021 were relatively unchanged compared with the prior-year period.
Unallocated income and expenses, net, increased during the quarter, primarily due to $67.2 million in CARES Act grant income in 2020 and a $14.1 million increase related to adjustments to paid time-off benefits in our new JCBA in 2021 (both of which were excluded from our adjusted results), as well as a $6.6 million reduction in refunds of aircraft rent paid in previous years.
Fleet Management
We have now placed all four of our new and incoming 747-8Fs under long-term agreements. We expect delivery of these aircraft between May and October this year.
In addition, we look forward to the deliveries and placements of the four new 777-200LRFs we recently announced, for which there is very strong demand. We expect one to be delivered late in the fourth quarter of this year and three more throughout 2023.
As previously disclosed, we purchased six of our existing 747-400Fs during 2021 that were formerly on lease to us. We are also purchasing another five of our other 747-400Fs at the end of their leases during the course of this year, which range from February to December.
Acquiring these widebody freighters underscores our confidence in the demand for dedicated international airfreight capacity, particularly in express, e-Commerce and fast-growing global markets. These investments are consistent with our long-term strategic growth plan and will provide customers with modern and environmentally-efficient aircraft, which will drive strong returns for Atlas in the years ahead.
Cash
At December 31, 2021, our cash, including cash equivalents and restricted cash, totaled $921.0 million compared with $856.3 million at December 31, 2020.
The increase resulted from cash provided by operating activities, partially offset by cash used for investing and financing activities.
Net cash used for investing activities during 2021 primarily related to payments for flight equipment and modifications, including all pre-delivery payments for 747-8F aircraft, as well as capital expenditures, spare engines and GEnx performance upgrade kits.
Net cash used for financing activities during the period primarily related to payments on debt obligations, partially offset by proceeds from debt issuance.
Share Repurchases
In February 2022, our Board of Directors approved the establishment of a new share repurchase program authorizing up to $200.0 million of our common stock. Purchases may be made at our discretion in the form of accelerated share repurchase programs, open market repurchase programs, privately negotiated transactions, or a combination of these methods.
As part of the share repurchase program, the company will enter into a $100.0 million accelerated share repurchase program (ASR). Purchases under the ASR are expected to be completed by the end of the second quarter.
Outlook*
We expect strong performance in the first quarter of 2022, with adjusted EBITDA and adjusted net income similar to the first quarter of 2021. We anticipate revenue of about $1.0 billion from flying approximately 85,000 block hours.
This outlook reflects higher yields, including the contribution from numerous new or enhanced long-term customer contracts, as well as higher pilot costs from our new JCBA.
We expect first-quarter results to continue to be impacted by ongoing pandemic-related expenses, including premium pay for employees flying into locations significantly impacted by COVID-19 and other operational costs, including for regulatory compliance and providing a safe working environment for our employees.
For the full year in 2022, we expect aircraft maintenance expense to be similar to 2021, and depreciation and amortization to total about $300 million. In addition, core capital expenditures, which exclude aircraft and engine purchases, are projected to total approximately $135 to $145 million, mainly for parts and components for our fleet.
Due to the uncertainty related to the pandemic, ongoing supply chain disruptions and other factors, we are not providing additional guidance at this time.
Other than with regard to revenue, we provide guidance on an adjusted basis because we are unable to predict with reasonable certainty and without unreasonable effort the effects on future gains and losses on asset sales, special charges and other unanticipated items that could be material to our reported results.*
Conference Call
As previously announced, management will host a conference call to discuss Atlas Air Worldwide’s fourth-quarter and full-year 2021 financial and operating results at 11:00 a.m. Eastern Time on Thursday, February 17, 2022.
Interested parties may listen to the call live at Atlas Air Worldwide’s Investor site or at https://edge.media-server.com/mmc/p/whtitre6.
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 24 by dialing (855) 859-2056 (U.S. Toll Free) or (404) 537-3406 (from outside the U.S.) and using Access Code 9953709#.
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 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; 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, respectively.
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:
*Other than with regard to revenue, we provide guidance only 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 and without unreasonable effort, 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. 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,” “could,” “would,” “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; 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 non-U.S. government trade and tax policies; economic conditions; the impact of geographical events or health epidemics such as the COVID-19 pandemic; the impact of COVID-19 vaccine mandates; 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; 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; geopolitical events; weather conditions; natural disasters; government legislation and regulation; border restrictions; 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 2022 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.
* * *
