PURCHASE, NY., Thursday, May 3, 2018 — Atlas Air Worldwide Holdings, Inc. (Nasdaq: AAWW) today announced the ACMI placement of a second 747-400 freighter with DHL Global Forwarding, the world’s largest airfreight forwarding company and a division of the Deutsche Post DHL Group.
Atlas Air will operate the additional freighter on behalf of DHL Global Forwarding through an aircraft, crew, maintenance and insurance agreement that will commence this month and serve routes between the United States, Europe, and Asia.
“DHL Global Forwarding is a leading global service provider, and we are delighted that they have chosen to expand their partnership with Atlas Air as they continue to innovate and develop new solutions for their customers,” said William J. Flynn, President and Chief Executive Officer, Atlas Air Worldwide. “This agreement is a further testament to our strong focus on service quality and value-added solutions for our customers.”
“Demand is currently exceeding supply mainly due to the large economies performing strongly,” explained Tim Scharwath, CEO, DHL Global Forwarding. “On major trade lanes, volumes are high but capacities are low – a trend that will continue. To increase our operational efficiency and to offer our customers the best possible solution, we decided to create further capacity that we control.”
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 a broad array of Boeing 747, 777, 767, 757 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.atlasair.com.
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PURCHASE, NY, Tuesday, March 6, 2018 — Atlas Air Worldwide Holdings, Inc. (Nasdaq: AAWW) today announced the acquisition of two Boeing 777 Freighters from LATAM Airlines.
Both 777 aircraft will operate in ACMI (aircraft, crew, maintenance and insurance) service for DHL Express through Atlas’ Southern Air subsidiary, with the first starting service this month and the second expected to begin service at the end of the second quarter of 2018.
The first of the two aircraft was previously operated on a CMI (crew, maintenance and insurance) basis for DHL Express by Southern Air. The second aircraft will increase the number of 777 freighters owned or operated by the company to 12.
“These 777 freighters enhance our position in this attractive aircraft type and are consistent with our strategy of growing the operations that we acquired as part of Southern Air,” said Atlas Air Worldwide President and Chief Executive Officer William J. Flynn.
Atlas is currently engaged in discussions with a bank syndicate to finance the two 2012-vintage aircraft and expects to close the financing transaction during the second quarter of 2018.
The expected financial and operating impacts of the two 777 freighters in 2018 were incorporated in the company’s earnings growth framework announced on February 22, 2018. As indicated, the company anticipates that its full-year 2018 adjusted net income will grow by a mid-twenty-percent level compared with 2017.
The company provides guidance on an adjusted basis because we are unable to predict, with reasonable certainty, the effects of outstanding warrants and other items that could be material to our reported 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 a broad array of Boeing 747, 777, 767, 757 and 737 aircraft for domestic, regional and international applications.
Atlas Air Worldwide’s press releases, SEC filings and other information may be accessed through the company’s home page, www.atlasair.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, including the cost and timing of securing any aircraft necessary to fulfill our agreements; the risk that the anticipated benefits of our agreements with Amazon will not be realized when expected, or at all; 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; economic conditions; the effects of any hostilities or act of war (in the Middle East or elsewhere) or any terrorist attack; labor costs and relations, work stoppages and service slowdowns; the outcome of pending negotiations with our pilots’ union; financing costs; the cost and availability of war risk insurance; our ability to maintain adequate internal controls over financial reporting; 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; changes to our provisional estimates of the impact of the U.S. Tax Cuts and Jobs Act of 2017; 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 2018 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 publically any forward-looking statement to reflect future events or circumstances.
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PURCHASE, NY, Thursday, February 22, 2018 — Atlas Air Worldwide Holdings, Inc. (Nasdaq: AAWW) today announced record fourth-quarter and full-year 2017 revenue, record fourth-quarter earnings and robust full-year earnings growth, and a continued strong outlook in 2018.
“2017 was an exciting year for Atlas and we expect that to continue in 2018,” said President and Chief Executive Officer William J. Flynn.
“The strategic initiatives that we have put in place over many years have transformed our company. Our focus on express, e-commerce and fast-growing Asian markets has broadened our customer base and fleet. As a result, we were well-positioned to capitalize on market dynamics and deliver fourth-quarter and full-year volumes, revenues, EBITDA and net income that grew sharply compared to the prior-year.
“In addition, our fourth-quarter and full-year results benefited from the passage of the U.S. Tax Cuts and Jobs Act in late December, which generated a significant gain related to the revaluation of our net deferred tax liabilities.
“We expect the new tax legislation to have a positive impact on economic activity and corporate growth. On passage of the law, we were pleased to provide a one-time bonus of $1,000 to our global personnel in recognition of their hard work and commitment to the company’s growth.”
Turning to 2018 and beyond, Mr. Flynn stated: “We are operating in a strong airfreight environment, underpinned by global economic growth.
“We see tremendous opportunity for continued growth in the express and e-commerce markets, fueled by a bourgeoning middle class with higher levels of disposable income. Further globalization will require expansive and time-definite air networks to facilitate the international flow of goods.
“From a regional perspective, we believe Asia is key. It is an important geography to global trade, the source of 40% of global airfreight demand, and the main contributor to the expanding global middle class.
“In addition to the demand we are seeing for our aircraft and services, we are capitalizing on the quality, scale and scope of our operations to drive our revenues and earnings to greater levels. As a result, we expect our adjusted net income to grow by a mid-twenty-percent level in 2018 compared with 2017, including the benefit of a lower corporate income tax rate.
“By comparison, even without any benefit from tax reform, we would have expected our 2018 adjusted net income to grow by a teens percentage.”
Fourth-Quarter Results
Volumes in the fourth quarter of 2017 increased 18% to 71,563 block hours, with revenue growing 19% to a record $628.0 million.
Reported income from continuing operations, net of taxes, during the period totaled $209.5 million, or $6.71 per diluted share, compared with $28.7 million, or $1.12 per diluted share, in the fourth quarter of 2016. Reported results for the latest quarter included a $130.0 million benefit related to the revaluation of our deferred tax liabilities as well as an unrealized gain on outstanding warrants of $23.7 million. Results in the year-ago period included an unrealized loss of $27.9 million on outstanding warrants.
On an adjusted basis, income from continuing operations, net of taxes, in the fourth quarter of 2017 increased 13% to a record $66.6 million, or $2.43 per diluted share, from adjusted income of $59.0 million, or $2.24 per diluted share, in the year-ago quarter. EBITDA, as adjusted, increased 14% to $162.7 million.
Record ACMI segment revenues and contribution in the fourth quarter of 2017 were primarily driven by significant growth in block-hour volumes, partially offset by higher line maintenance and labor-related operational disruptions. Block-hour growth during the period reflected 747-400 flying for several new customers, 747-8 flying for Cathay Pacific Cargo, additional seasonal flying for express operators, and the ramp-up of 767-300 operations for Amazon. Five new 767-300s were placed in service for Amazon during the quarter, raising the current number to 12, in line with our expectations when we began ramping up this new service in 2016 and in line with our expectations for a total of 20 aircraft by the end of 2018.
Higher Charter segment contribution during the period was primarily driven by an increase in commercial yields, partially offset by higher maintenance costs, the redeployment of 747-8 and 747-400 aircraft to the ACMI segment, and labor-related operational disruptions. Higher average rates during the quarter primarily reflected the impact of strong commercial yields.
In Dry Leasing, higher segment contribution primarily reflected a reduction in interest expense due to the scheduled repayment of debt related to dry leased 777 aircraft and the placement of additional 767-300 converted aircraft.
Reported earnings in the fourth quarter of 2017 also included an effective income tax benefit rate of 95.7%, due mainly to the revaluation of our deferred tax liabilities as a result of the Tax Cuts and Jobs Act. On an adjusted basis, our results reflected an effective income tax rate of 31.4%.
Full-Year Results
Volumes in 2017 increased 20% to 252,802 block hours, with revenue growing 17% to a record $2.16 billion.
For the twelve months ended December 31, 2017, our continuing operations generated income of $224.3 million, or $8.68 per diluted share, which included the $130.0 million benefit related to the revaluation of our deferred tax liabilities, partially offset by an unrealized loss on financial instruments of $12.5 million related to outstanding warrants. For the twelve months ended December 31, 2016, our income from continuing operations totaled $42.6 million, or $1.70 per diluted share, including the negative impacts of transaction-related expenses and warrant accounting totaling $25.0 million.
On an adjusted basis, income from continuing operations in 2017 increased 17% to $133.7 million, or $4.93 per diluted share, compared with $114.3 million, or $4.50 per diluted share, in 2016. EBITDA, as adjusted, rose 12% to $428.6 million.
Reported earnings in 2017 also included an effective income tax benefit rate of 56.5%, due mainly to the revaluation of our deferred tax liabilities as a result of the Tax Cuts and Jobs Act. On an adjusted basis, our results reflected an effective income tax rate of 28.4%.
Cash and Short-Term Investments
At December 31, 2017, our cash, cash equivalents, short-term investments and restricted cash totaled $305.5 million, compared with $142.6 million at December 31, 2016.
The change in position resulted from cash provided by operating and financing activities, partially offset by cash used for investing activities.
Net cash provided by financing activities during 2017 primarily reflected proceeds from our issuance of convertible notes and our financings of 767-300 aircraft, partially offset by payments on debt obligations. During the fourth quarter of 2017, we completed the financings of six additional 767-300 aircraft, which generated cash of $145.8 million.
Net cash used for investing activities during 2017 primarily related to capital expenditures and payments for flight equipment and modifications, including the acquisition of 767-300 aircraft to be converted to freighter configuration, spare engines and GEnx engine performance upgrade kits.
2018 Outlook
We expect to report strong earnings growth in 2018.
We begin 2018 with solid demand from our customers for our aircraft and services. With the essential building blocks we have set in place, we see opportunities to grow with existing customers and to add new ones.
Globally, economic activity is expanding. The airfreight market is strong, and airfreight tonnage continues to grow from record levels.
As a result, we expect significant growth in our volumes, revenue and adjusted EBITDA in 2018. We see volumes rising to around 300,000 block hours, revenue growing to approximately $2.5 billion, and adjusted EBITDA of about $500 million.
We anticipate that our full-year 2018 adjusted net income will grow by a mid-twenty-percent level compared with 2017, including the benefit of tax reform. Without tax reform, we would have expected our adjusted net income to grow by a teens percentage this year. We expect our full-year 2018 adjusted income tax rate to be approximately 17%.
Given the inherent seasonality of airfreight demand, we anticipate that results in 2018 will reflect historical patterns, with more than 70% of our adjusted net income occurring in the second half. In addition, we expect adjusted EBITDA of approximately $90 million in the first quarter of 2018, and adjusted net income to be approximately double adjusted net income of $8.3 million in the first quarter of 2017.
For the full year, we anticipate total block hours will increase approximately 19% compared with 2017, with about 75% of our hours in ACMI and the balance in Charter. To meet the anticipated increase in ACMI and Charter demand, we have entered into operating leases for six 747-400 freighter aircraft. Two of these aircraft entered service in the third quarter and fourth quarter of 2017; four will enter service throughout 2018.
Aircraft maintenance expense in 2018 is expected to total approximately $315 million, mainly reflecting an increase in daily line maintenance due to the anticipated growth in block hours. Depreciation and amortization is expected to total approximately $220 million. In addition, core capital expenditures, which exclude aircraft and engine purchases, are expected to total approximately $100 to $110 million, mainly for parts and components for our fleet.
We provide guidance on an adjusted basis because we are unable to predict, with reasonable certainty, the effects of outstanding warrants and other 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 2017 financial and operating results at 11:00 a.m. Eastern Time on Thursday, February 22, 2018.
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 fourth-quarter call) or at the following Web address:
https://edge.media-server.com/m6/p/3u7eztjr
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 February 28 by dialing (855) 859-2056 (U.S. Toll Free) or (404) 537-3406 (from outside the U.S.) and using Access Code 8276523#.
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 EBITDA, as adjusted; Direct Contribution; Adjusted income from continuing operations, net of taxes; Adjusted Diluted EPS from continuing operations, net of taxes; 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 Income from continuing operations, net of taxes; Diluted EPS from continuing operations, net of taxes; 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. In addition, management’s incentive compensation is determined, in part, by using Adjusted Income from continuing operations, net of taxes. 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.
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 a broad array of Boeing 747, 777, 767, 757 and 737 aircraft for domestic, regional and international applications.
Atlas Air Worldwide’s press releases, SEC filings and other information may be accessed through the company’s home page, www.atlasair.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, including the cost and timing of securing any aircraft necessary to fulfill our agreements; the risk that the anticipated benefits of our agreements with Amazon will not be realized when expected, or at all; 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; economic conditions; the effects of any hostilities or act of war (in the Middle East or elsewhere) or any terrorist attack; labor costs and relations, work stoppages and service slowdowns; the outcome of pending negotiations with our pilots’ union; financing costs; the cost and availability of war risk insurance; our ability to maintain adequate internal controls over financial reporting; 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; changes to our provisional estimates of the impact of the U.S. Tax Cuts and Jobs Act of 2017; 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 2018 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 publically any forward-looking statement to reflect future events or circumstances.
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International Brotherhood of Teamsters Ordered to Stop Illegal Work Slowdown
Thursday, November 30, 2017 — Atlas Air, Inc. and Polar Air Cargo Worldwide, Inc., subsidiaries of Atlas Air Worldwide Holdings (Nasdaq: AAWW), today learned that their (collectively, “Atlas” or the “Company”) request for a preliminary injunction against the International Brotherhood of Teamsters, the International Brotherhood of Teamsters, Airline Division, and Local Union No. 1224 (collectively, the “IBT”) has been granted.
The decision by the U.S. District Court for the District of Columbia requires the IBT to meet its obligations under the Railway Labor Act (“RLA”) and stop its illegal and intentional work slowdown.
In granting the Company’s request, the Court further ordered the IBT to take affirmative action to prevent and to refrain from continuing any form of interference with the Company’s operations or any other concerted refusal to perform normal pilot operations consistent with the status quo, in violation of the RLA.
The Company continues to negotiate with the IBT for a joint contract for Atlas and Southern Air crewmembers in connection with the pending merger. The Company remains committed to completing the bargaining process in a timely manner and in the best interests of all parties.
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 a broad array of Boeing 747, 777, 767, 757 and 737 aircraft for domestic, regional and international applications.
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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Tuesday, November 7, 2017 — Atlas Air Worldwide Holdings, Inc. (Nasdaq: AAWW) today announced a loss from continuing operations, net of taxes, of $24.2 million, or $0.96 per diluted share, including an unrealized loss on warrants of $44.8 million, for the three months ended September 30, 2017. Results compared with a loss from continuing operations, net of taxes, of $7.5 million, or $0.30 per diluted share, for the three months ended September 30, 2016, which was primarily due to the tax impact of nondeductible expenses.
On an adjusted basis, income from continuing operations, net of taxes, in the third quarter of 2017 totaled $29.7 million, or $1.08 per diluted share, which included a negative impact of $1.7 million, or $0.06 per diluted share, related to hurricanes. Results for the period compared with adjusted income of $27.4 million, or $1.09 per diluted share, in the year-ago quarter.
“We are encouraged by our performance in the third quarter, with 20% increases in both revenue and block hours, and higher direct contribution in all of our segments,” said President and Chief Executive Officer William J. Flynn. “Reflecting the strong demand for our services, yields rose and the utilization of our aircraft increased.
“We also placed and began operating our seventh 767-300 aircraft for Amazon in August, and introduced aircraft eight, nine and 10 in October. We remain on track to ramp up to a full 20 aircraft for Amazon by the end of 2018.
“In addition, we commenced flying for two new customers during the quarter – DHL Global Forwarding and Hong Kong Air Cargo, and we started operating our second 747-400 freighter for Nippon Cargo Airlines.
“While demand, volumes, yields and utilization increased during the third quarter, some of that performance was offset by higher maintenance expenses, labor-related operational disruptions and Hurricanes Irma and Harvey.”
Mr. Flynn added: “We were pleased to provide support and assistance for communities affected by the recent hurricanes. In September, we provided relief to affected pilots, other employees, and their families in the Miami and Houston areas as well as charitable donations for local recovery efforts. In October, we donated to the relief efforts in Puerto Rico following Hurricane Maria, and we partnered with JetBlue to deliver 117 tonnes of humanitarian aid to the island on our aircraft. We also operated multiple hurricane-relief charters on behalf of Atlas Air and our customers, with the speed that only airfreight can provide.
“We are looking forward to a strong fourth quarter, and anticipate solid peak-season yields and volumes. Reflecting our year-to-date results and our fourth-quarter expectations, we anticipate that our full-year 2017 adjusted income from continuing operations, net of taxes, will grow by a high-single-digit to low-double-digit percentage compared with our 2016 adjusted income of $114.3 million.”
Mr. Flynn concluded: “The future for Atlas and for airfreight is bright. Growth in Asia and an expansion of the global middle class are transforming the global economy. Increased disposable income will support a strong future for global trade and the consumption of goods. And our strategic focus on express and e-commerce service and the faster-growing Asian markets positions us for further business growth as we carry through the balance of 2017, into 2018 and beyond.”
Third-Quarter Results
ACMI segment contribution in the third quarter of 2017 was slightly higher compared with the prior-year period, as an increase in flying was largely offset by higher maintenance costs and labor-related operational disruptions. Segment revenue growth benefited from an increase in block-hour volumes as well as higher aircraft utilization.
Higher Charter segment contribution during the period was primarily driven by an increase in commercial yields, partially offset by higher maintenance costs, the redeployment of a 747-8F aircraft to the ACMI segment, hurricane-related impacts and labor-related operational disruptions. Higher average rates during the quarter primarily reflected the impact of Charter capacity we purchased from our ACMI customers on flights that had no associated Charter block hours, higher fuel prices and higher commercial yields.
In Dry Leasing, higher segment contribution primarily reflected a reduction in interest expense due to the scheduled repayment of debt related to dry leased 777 aircraft and the placement of 767-300 converted aircraft.
Reported earnings in the third quarter also included an effective income tax expense rate of 72.7%, due mainly to nontaxable changes in the value of outstanding warrants. On an adjusted basis, our results reflected an effective income tax rate of 24.3%.
Nine-Month Results
For the nine months ended September 30, 2017, our continuing operations generated income of $14.9 million, or $0.58 per diluted share, which included the impact of an unrealized loss on financial instruments of $36.2 million related to outstanding warrants. For the nine months ended September 30, 2016, our income from continuing operations totaled $13.9 million, or a loss of $0.49 per diluted share, after the impact of warrant accounting and transaction-related expenses.
On an adjusted basis, income from continuing operations in the first nine months of 2017 totaled $67.1 million, or $2.48 per diluted share, compared with $55.3 million, or $2.20 per diluted share, in the first nine months of 2016.
Cash and Short-Term Investments
At September 30, 2017, our cash, cash equivalents, short-term investments and restricted cash totaled $187.0 million, compared with $142.6 million at December 31, 2016.
The change in position resulted from cash provided by operating and financing activities, partially offset by cash used for investing activities.
Net cash provided by financing activities during the first nine months of 2017 primarily reflected proceeds from our issuance of convertible notes and our financings of 767-300 aircraft, partially offset by payments on debt obligations. In October, we completed the financings of three additional 767-300 aircraft, which generated cash of $72.6 million.
Net cash used for investing activities during the first nine months primarily related to capital expenditures and payments for flight equipment and modifications, including the acquisition of 767-300 aircraft to be converted to freighter configuration, spare engines and GEnx engine performance upgrade kits.
Labor Update
In September 2017, the company requested the U.S. District Court for the District of Columbia to issue a preliminary injunction to require the International Brotherhood of Teamsters to meet its obligations under the Railway Labor Act and stop its illegal, intentional work slowdowns and service interruptions, which are intended to gain leverage in pilot contract negotiations with the company.
The hearing was completed in early November and a ruling on the request for a preliminary injunction is expected later this month.
Outlook
Looking to the fourth quarter and full year, we anticipate increased peak-season yields and volumes, including our additional seasonal flying for express and e-commerce operators.
Consistent with our year-to-date performance and our fourth-quarter expectations, we anticipate that our full-year 2017 adjusted income from continuing operations, net of taxes, will grow by a high-single-digit to low-double-digit percentage compared with our 2016 adjusted income of $114.3 million.
For the full year, we expect total block hours to increase approximately 20% compared with 2016, with about 75% of our hours in ACMI and the balance in Charter.
Aircraft maintenance expense in 2017 should total approximately $275 million, and depreciation and amortization are expected to total approximately $165 million. In addition, core capital expenditures, which exclude aircraft and engine purchases, are expected to total approximately $75 to $80 million, mainly for parts and components for our fleet.
We provide guidance on an adjusted basis because we are unable to predict, with reasonable certainty, the effects of outstanding warrants and other items that could be material to our reported results.
Conference Call
Management will host a conference call to discuss Atlas Air Worldwide’s third-quarter 2017 financial and operating results at 11:00 a.m. Eastern Time on Tuesday, November 7, 2017.
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 third-quarter call) or at the following Web address:
https://edge.media-server.com/m6/p/8vmmjqw2
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 November 13 by dialing (855) 859-2056 (U.S. Toll Free) or (404) 537-3406 (from outside the U.S.) and using Access Code 97404926#.
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 EBITDA, as adjusted; Direct Contribution; Adjusted income from continuing operations, net of taxes; Adjusted Diluted EPS from continuing operations, net of taxes; 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 Income from continuing operations, net of taxes; Diluted EPS from continuing operations, net of taxes; 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. In addition, management’s incentive compensation will be determined, in part, by using Adjusted Income from continuing operations, net of taxes. 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.
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 a broad array of Boeing 747, 777, 767, 757 and 737 aircraft for domestic, regional and international applications.
Atlas Air Worldwide’s press releases, SEC filings and other information may be accessed through the company’s home page, www.atlasair.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 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, including the cost and timing of securing any aircraft necessary to fulfill our agreements; the risk that the anticipated benefits of our agreements with Amazon will not be realized when expected, or at all; the possibility that Amazon may terminate its agreements with the companies; the effect of the announcement or pendency of the transactions contemplated by the agreements with Amazon; failure to successfully integrate the Southern Air business; 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 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; economic conditions; the effects of any hostilities or act of war (in the Middle East or elsewhere) or any terrorist attack; labor costs and relations; financing costs; the cost and availability of war risk insurance; our ability to maintain adequate internal controls over financial reporting; 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 2017 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.
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Live Webcast 2:00 P.M. Eastern, Wednesday, November 8
Thursday, November 2, 2017 — Atlas Air Worldwide Holdings, Inc. (Nasdaq: AAWW) said today that President and Chief Executive Officer William J. Flynn will speak on behalf of the company at the Stephens Inc. Fall Investment Conference on Wednesday, November 8, 2017, at 2:00 p.m. Eastern Time.
A live audio Webcast of Mr. Flynn’s comments will be broadcast simultaneously on the Internet and can be accessed via:
http://wsw.com/webcast/stph29/aaww
An archived broadcast of the presentation will be available following the live presentation.
Slides supplementing Mr. Flynn’s comments will be available for downloading from Atlas Air Worldwide’s website on Wednesday morning, November 8, at www.atlasair.com.
Interested parties should click on “Investor Information,” click on “Presentations,” and then on the link to “Slides – Stephens Inc. Fall Investment Conference.”
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, 757 and 737 aircraft for domestic, regional and international applications.
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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Company Committed to Protecting Its Customers
Monday, September 25, 2017 — Atlas Air, Inc. and Polar Air Cargo Worldwide, Inc., subsidiaries of Atlas Air Worldwide Holdings (Nasdaq: AAWW), today announced they (collectively, “Atlas” or the “Company”) are seeking a preliminary injunction to require the International Brotherhood of Teamsters, the International Brotherhood of Teamsters, Airline Division, and Local Union No. 1224 (collectively, the “IBT”) to meet their obligations under the Railway Labor Act (“RLA”) and stop the illegal and intentional work slowdown and service interruptions they are causing.
In its filing, the Company states the IBT is engaging in an unlawful, concerted work slowdown to gain advantage in pilot contract negotiations currently underway with the IBT.
The illegal work slowdown and service interruptions are causing significant flight delays and harm to the Company and its valued customers. Atlas plays a major role in the global supply chain on a daily basis by transporting tons of time-sensitive cargo for customers.
“As the largest air cargo outsourcer in the world and the largest provider of commercial airlift for the U.S. military, businesses across the globe and millions of people depend on the stability, reliability, and viability of Atlas’ day-to-day operations,” said William J. Flynn, President and Chief Executive Officer of Atlas Air Worldwide.
“We value our commitment to our customers and the passengers and cargo entrusted to us. We must protect the service quality we provide to our customers.”
The Company’s request for a preliminary injunction was filed in U.S. District Court for the District of Columbia. In its filing, the Company states that the IBT has violated its status quo obligations under the RLA by encouraging the slowdown and failing to prevent and discourage it. The Company is asking the Court to compel the IBT to stop the illegal work action and return to normal operations.
Atlas’ customers have been notified of the steps the Company is taking to address the work slowdown.
Atlas values the contributions of its pilots. The Company will continue to negotiate with the IBT for a joint contract for Atlas and Southern Air crewmembers in connection with the pending merger. The Company remains committed to completing the bargaining process in a timely manner and in the best interests of all parties.
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 a broad array of Boeing 747, 777, 767, 757 and 737 aircraft for domestic, regional and international applications.
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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Thursday, September 14, 2017 — Atlas Air Worldwide Holdings, Inc. (Nasdaq: AAWW) today announced the ACMI placement of a 747-400 freighter with DHL Global Forwarding, the world’s largest airfreight forwarding company and a division of the Deutsche Post DHL Group.
The 747-400F will be operated by Atlas Air, Inc. and will fly on behalf of DHL Global Forwarding through an aircraft, crew, maintenance and insurance agreement. The new service will commence this month and will serve routes between the United States, Europe, and Asia.
“DHL Global Forwarding is a leading service provider in the global airfreight industry, and we are delighted that they have chosen to partner with Atlas Air as they continue to innovate and develop new solutions for their customers,” said William J. Flynn, President and Chief Executive Officer, Atlas Air Worldwide. “This agreement is a further testament to our strong focus on service quality and value-added solutions for our customers.”
“We are excited to enter into this agreement with Atlas Air to provide our customers with a unique dedicated aircraft solution,” said Ingo-Alexander Rahn, Executive VP Global Airfreight, DHL Global Forwarding. “We are looking forward to a long and successful partnership.”
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 a broad array of Boeing 747, 777, 767, 757 and 737 aircraft for domestic, regional and international applications.
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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Tuesday, August 22, 2017 — Atlas Air Worldwide Holdings, Inc. (Nasdaq: AAWW) today announced that its Atlas Air, Inc. unit has entered into an agreement to operate a second Boeing 747-400 Freighter for Nippon Cargo Airlines (NCA), with an opportunity for additional aircraft in the future.
This aircraft will be flown on key routes across the transpacific connecting Asia and the U.S. Service is scheduled to begin in September 2017.
“We are very pleased that NCA has chosen to expand its partnership with Atlas Air,” said William J. Flynn, President and Chief Executive Officer, Atlas Air Worldwide. “This follows the successful start of the first aircraft for NCA earlier this year and underscores our focus on the fast-growing Asia Pacific market.”
Fukashi Sakamoto, President and Chief Executive Officer, NCA, said, “We are delighted to expand this strategic arrangement with Atlas Air by adding the second aircraft, and we look forward to having a long, mutually beneficial relationship.”
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 a broad array of Boeing 747, 777, 767, 757 and 737 aircraft for domestic, regional and international applications.
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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Wednesday, August 2, 2017 — Atlas Air Worldwide Holdings, Inc. (Nasdaq: AAWW) today announced the ACMI placement of three 747-400 freighters with Hong Kong Air Cargo Carrier Limited, a subsidiary of Hong Kong Airlines.
The aircraft will be operated by Atlas Air, Inc. and will fly on behalf of Hong Kong Air Cargo through an aircraft, crew, maintenance and insurance agreement. The first aircraft will enter service in September 2017 and will serve routes between Asia and the United States. The second and third aircraft are expected to commence operation during 2018.
“We are delighted that Hong Kong Air Cargo has chosen Atlas Air as its ACMI provider as it continues to build its global freighter network,” said William J. Flynn, President and Chief Executive Officer of Atlas Air Worldwide. “This is a further testament to our strong focus on serving customers in the fast-growing Asia Pacific market.”
“We are pleased to work with Atlas Air as our ACMI provider,” said Guo Song Zhong, Chairman and Chief Executive Officer of Hong Kong Air Cargo. “After strengthening our regional network in recent years, it is now time to expand our Trans-Pacific network and look into other markets such as Europe, Australia, Africa and Latin America as we move forward.”
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 a
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broad array of Boeing 747, 777, 767, 757 and 737 aircraft for domestic, regional and international applications.
Atlas Air Worldwide’s press releases, SEC filings, and other information may be accessed through the company’s home page, www.atlasair.com.
About Hong Kong Air Cargo Carrier Limited:
Hong Kong Air Cargo, a subsidiary of Hong Kong Airlines, is an all-cargo airline based in Hong Kong, providing international public airfreight transportation.
The business of Hong Kong Air Cargo, in particular, has experienced consistent year-on-year growth since the airline introduced its first A330-200F aircraft in 2010. As of 2016, Hong Kong Air Cargo’s freighters covered over 11 freight routes and 13 destinations, and its cargo volume exceeded 327,500 tons, accounting for 7% of Hong Kong International Airport’s overall throughput.
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Wednesday, August 2, 2017 — Atlas Air Worldwide Holdings, Inc. (Nasdaq: AAWW) today announced income from continuing operations, net of taxes, of $39.0 million, which included an unrealized gain on financial instruments of $13.8 million related to outstanding warrants, for the three months ended June 30, 2017. Results compared with income from continuing operations, net of taxes, of $20.9 million, which included an unrealized gain on financial instruments of $26.5 million related to outstanding warrants, for the three months ended June 30, 2016.
On an adjusted basis, income from continuing operations, net of taxes, in the second quarter of 2017 totaled $29.1 million compared with $20.2 million in the year-ago quarter.
Diluted earnings per share from continuing operations, net of taxes, were $0.92 for the three months ended June 30, 2017 and a loss of $0.26 for the three months ended June 30, 2016, reflecting the impact of warrant accounting and transaction-related expenses. Adjusted diluted EPS from continuing operations, net of taxes, totaled $1.09 in the second quarter of 2017 and $0.80 in the second quarter of 2016.
“Earnings growth in the second quarter reflected a 17% increase in revenue, 15% increase in block hours, and higher direct contribution in all of our segments,” said President and Chief Executive Officer William J. Flynn. “Our growth also reflected an increase in aircraft utilization and a rise in commercial charter yields. During the quarter, we started flying for Cathay Pacific and Yangtze River Airlines and added four 767-300 freighters for Amazon, including our fifth and sixth aircraft in June.
“We are experiencing good momentum in our business, and we expect that to carry through 2017, into 2018 and beyond. As a result, we are increasing our full-year 2017 outlook.
“We anticipate that our adjusted income from continuing operations, net of taxes, will grow by a percentage in the mid-teens this year, approximately double the midpoint of our previous outlook.
“As announced today, we have entered into an ACMI agreement to operate three 747-400s for Hong Kong Air Cargo, the first of which will start flying in September. We have a strategic focus on the fast-growing Chinese and Asian markets, and we have added five new customers there this year.
“We also continue to move more deeply into the faster-growing express and e-commerce markets. More than 70% of our current freighters operate for customers in these markets, and that percentage will increase as we ramp up from six aircraft for Amazon currently to an expected 20 by the end of 2018.
“The evolution of e-commerce is transforming the global supply chain and creating significant new opportunities for Atlas. Freighter aircraft in scaled route networks, such as those that we operate, provide the just-in-time service that enables consumers to receive their orders as quickly as possible.”
Second-Quarter Results
Higher ACMI contribution in the second quarter of 2017 was primarily driven by an increase in flying, partially offset by higher heavy maintenance costs. Segment revenue growth benefited from an increase in block-hour volumes, reflecting greater 767 and 747-400 CMI flying as well as higher aircraft utilization. Average rates reflected the growth in 767 and 747-400 CMI flying.
Higher Charter segment contribution during the period was primarily due to improved commercial cargo yields, lower costs related to crew training, and an increase in commercial and military demand. These impacts were partially offset by higher heavy maintenance costs and lower rates paid by the military. Segment revenue growth was driven by an increase in block-hour volumes and average rates.
In Dry Leasing, higher revenue and segment contribution were primarily driven by the placement of six 767-300 converted freighter aircraft with Amazon between August 2016 and June 2017. Segment contribution also benefited from a reduction in interest expense due to the scheduled repayment of debt related to dry leased 777 aircraft in our portfolio.
Higher unallocated income and expenses in the second quarter of 2017 primarily reflected an increase in unallocated interest expense, growth initiatives, and amortization of a customer incentive asset, partially offset by an accrual for legal matters in the year-ago period.
Both reported and adjusted income from continuing operations in the second quarter of 2017 included a $2.7 million, or $0.10 per diluted share, benefit related to the timing of heavy maintenance that has moved to the third quarter of 2017 from the second quarter.
Reported earnings in the second quarter also included an effective income tax rate of 21.6%, due mainly to nontaxable changes in the value of outstanding warrants and our assertion to indefinitely reinvest the net earnings of foreign subsidiaries outside the U.S. On an adjusted basis, our results reflected an effective income tax rate of 29.4%.
Half-Year Results
For the six months ended June 30, 2017, income from continuing operations totaled $39.1 million, which included an unrealized gain on financial instruments of $8.6 million related to outstanding warrants. Results compared with income from continuing operations of $21.4 million, which included an unrealized gain on financial instruments of $26.5 million, for the six months ended June 30, 2016.
On an adjusted basis, first-half 2017 income from continuing operations totaled $37.4 million compared with $27.9 million in the first half of 2016.
Diluted earnings per share from continuing operations were $1.13 for the first six months of 2017 and a loss of $0.24 per share for the first half of 2016, reflecting the impact of warrant accounting and transaction-related expenses.
Adjusted diluted EPS from continuing operations totaled $1.39 in the first six months of 2017 and $1.11 in the first half of 2016.
Cash and Short-Term Investments
At June 30, 2017, our cash, cash equivalents, short-term investments and restricted cash totaled $290.7 million, compared with $142.6 million at December 31, 2016.
The change in position resulted from cash provided by operating and financing activities, partially offset by cash used for investing activities.
Net cash provided by financing activities during the first half of 2017 primarily reflected proceeds from our issuance of convertible notes and our financings of 767-300 aircraft, partially offset by payments on debt obligations.
Net cash used for investing activities primarily related to capital expenditures and payments for flight equipment and modifications, including the acquisition of 767-300 aircraft to be converted to freighter configuration.
Outlook
We are increasing our outlook for the full year.
We expect our adjusted income from continuing operations, net of taxes, in 2017 to grow by a percentage in the mid-teens compared with 2016 adjusted income of $114.3 million, approximately double the midpoint of our prior view of mid-single-digit to low-double-digit percentage growth.
In addition, we expect adjusted income from continuing operations, net of taxes, in the third quarter of 2017 to increase by a percentage in the low- to mid-teens compared with our third-quarter 2016 adjusted income of $27.4 million.
Our view reflects solid demand from our customers, the benefits we expect from our growth initiatives, and the steps we have taken to align our business with the faster-growing express and e-commerce markets.
We believe the current demand, including our new services for Asiana Cargo, Cathay Pacific Cargo, FedEx, Hong Kong Air Cargo, Nippon Cargo Airlines and Yangtze River Airlines, the initial accretion from our Amazon operations, and the first full year of contribution from Southern Air provide a strong foundation for earnings growth.
Given the inherent seasonality of airfreight demand, we anticipate that results in 2017 will reflect historical patterns, with more than 70% of our adjusted income occurring in the second half.
For the full year, we expect total block hours to increase approximately 20% compared with 2016, with more than 75% of our hours in ACMI and the balance in Charter.
Aircraft maintenance expense in 2017 should total approximately $255 million, and depreciation and amortization is expected to total approximately $170 million. In addition, core capital expenditures, which exclude aircraft and engine purchases, are expected to total approximately $65 to $75 million, mainly for parts and components for our fleet.
We provide guidance on an adjusted basis because we are unable to predict, with reasonable certainty, the effects of outstanding warrants and other items that could be material to our reported results.
Conference Call
Management will host a conference call to discuss Atlas Air Worldwide’s second-quarter 2017 financial and operating results at 11:00 a.m. Eastern Time on Wednesday, August 2, 2017.
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 second-quarter call) or at the following Web address:
http://edge.media-server.com/m/p/chhvexim
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 August 8 by dialing (855) 859-2056 (U.S. Toll Free) or (404) 537-3406 (from outside the U.S.) and using Access Code 52437591#.
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 EBITDA, as adjusted; Direct Contribution; Adjusted income from continuing operations, net of taxes; Adjusted Diluted EPS from continuing operations, net of taxes; 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 Income from continuing operations, net of taxes; Diluted EPS from continuing operations, net of taxes; 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. In addition, management’s incentive compensation will be determined, in part, by using Adjusted Income from continuing operations, net of taxes. 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.
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 a broad array of Boeing 747, 777, 767, 757 and 737 aircraft for domestic, regional and international applications.
Atlas Air Worldwide’s press releases, SEC filings and other information may be accessed through the company’s home page, www.atlasair.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 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, including the cost and timing of securing any aircraft necessary to fulfill our agreements; the risk that the anticipated benefits of our agreements with Amazon will not be realized when expected, or at all; the possibility that Amazon may terminate its agreements with the companies; the effect of the announcement or pendency of the transactions contemplated by the agreements with Amazon; failure to successfully integrate the Southern Air business; 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 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; economic conditions; the effects of any hostilities or act of war (in the Middle East or elsewhere) or any terrorist attack; labor costs and relations; financing costs; the cost and availability of war risk insurance; our ability to maintain adequate internal controls over financial reporting; 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 2017 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.
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Monday, June 5, 2017 — Atlas Air Worldwide Holdings, Inc. (Nasdaq: AAWW) today announced the ACMI placement of a 747-400 freighter with Yangtze River Airlines, a subsidiary of the HNA Group, based in Shanghai, China.
The 747-400F will be operated by Atlas Air, Inc. and will fly on behalf of Yangtze River Airlines through an aircraft, crew, maintenance and insurance agreement. The new service will commence this month and will serve routes between China and the United States.
“Yangtze River Airlines is a leading Chinese carrier with a strong ambition to expand its operation,” said William J. Flynn, President and Chief Executive Officer, Atlas Air Worldwide. “We are delighted to work with Yangtze River Airlines to support its growth plans. This agreement is a further testament to our keen focus and continued expansion in the fast-growing Chinese and Asian markets.”
“Atlas Air is a strong and professional air transport capacity provider,” said Jevey Zhang, President of Cargo Business Units, Yangtze River Airlines. “It’s our pleasure to build a long-term cooperation between Yangtze River Airlines and Atlas Air, and it’s a great beginning of HNA Modern Logistics Group launching its global strategy.”
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 a broad array of Boeing 747, 777, 767, 757 and 737 aircraft for domestic, regional and international applications.
Atlas Air Worldwide’s press releases, SEC filings and other information may be accessed through the company’s home page, www.atlasair.com.
About Yangtze River Airlines:
Yangtze River Airlines, founded in 2002, is a Shanghai-based airline member of HNA Modern Logistics Group. With a fleet consisting of B737 and B747 freighter aircraft, Yangtze River Airlines is engaged in providing professional air transport solutions for customers. Through Suparna Airline, Yangtze River Airlines also provides passenger transport service.
Yangtze River Airlines’s press releases and other information may be accessed through the company’s home page, http://cargo.yzr.com.cn.
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Tuesday, May 30, 2017 — Atlas Air Worldwide Holdings, Inc. (Nasdaq: AAWW) today announced the election of Robert F. Agnew as chairman of the company’s board of directors. Mr. Agnew is president and chief executive officer of Morten Beyer & Agnew, an international aviation consulting firm experienced in the financial modeling and technical due diligence of airlines and aircraft funding. He succeeds retired Marine Corps Lt. Gen. Frederick McCorkle, who served as chairman since 2014 and will continue as a director.
“This transition demonstrates Atlas Air’s commitment to refreshing board positions, continuous improvement of board practices and sound corporate governance,” said Mr. McCorkle.
“Bob’s service on the board, most recently as chair of the Audit Committee, and his more than 30 years in aviation and marketing consulting bring an ideal combination of finance, commercial and international business expertise and considerable knowledge of Atlas Air to this role.”
“Fred’s impact on Atlas Air has been evident in the years that he served as chairman of the board,” said Mr. Agnew. “Atlas Air has diversified and grown significantly during this time.
“My fellow board members and I are deeply grateful to Fred for his leadership and his strong personal commitment to the company. I am honored to follow in his footsteps as Atlas Air continues to capitalize on the strong foundation we have built, and as we continue to grow our business and drive value and benefits for our customers and shareholders.”
Mr. Agnew has served on the board since 2004. He began his commercial aviation career at Northwest Airlines where he concentrated on government and contract sales, schedule planning and corporate operations research. After his years at Northwest, he served as Senior Vice President of Marketing and Sales at World Airways. Early in his career, he served in the U.S. Air Force as an officer and instructor navigator with the Strategic Air Command.
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 a broad array of Boeing 747, 777, 767, 757 and 737 aircraft for domestic, regional and international applications.
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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Thursday, May 18, 2017 — Atlas Air Worldwide Holdings, Inc. (NASDAQ: AAWW) today announced the pricing of $260.0 million aggregate principal amount of its 1.875% convertible senior notes due 2024 in an underwritten public offering. The size of the transaction was increased from the previously announced aggregate principal amount of $250.0 million. Atlas Air Worldwide has granted the underwriters an option to purchase, within a 13-day period beginning on and including the date the notes are first issued, up to an additional $39.0 million aggregate principal amount of the notes from the company, solely to cover over-allotments. The offering is expected to close on May 23, 2017, subject to the satisfaction of customary closing conditions.
The company estimates that the net proceeds of this offering will be approximately $253.1 million (or $291.2 million if the underwriters’ over-allotment option is exercised in full), after deducting the underwriters’ discounts and commissions and estimated offering expenses.
Atlas Air Worldwide currently intends to use the net proceeds of the offering to repay higher-cost revolving credit facility borrowings; enhance business and financial flexibility; support long-term growth; fund the cost of convertible note hedge transactions (after such cost is partially offset by proceeds to the company from the sale of warrants); and for general corporate purposes.
The notes will be senior unsecured obligations of Atlas Air Worldwide. The notes will mature on June 1, 2024, unless repurchased or converted in accordance with their terms prior to such date, and will bear interest at a rate of 1.875% per year, payable semiannually in arrears on June 1 and December 1 of each year, beginning on December 1, 2017. The holders of the notes may require the company to repurchase all or any portion of their notes for cash in the event of a fundamental change, as defined in the indenture governing the terms of the notes. In such case, the repurchase price would be 100% of the principal amount of the notes being repurchased, plus any accrued and unpaid interest. The company will not have the right to redeem the notes prior to maturity.
Prior to the close of business on the business day immediately preceding September 1, 2023, the notes will be convertible only under certain circumstances. Thereafter, until the close of business on the second scheduled trading day preceding the maturity date, the notes will be convertible at the option of the noteholders at any time regardless of these conditions. The notes will be convertible into cash, shares of the company’s common stock, or a combination of both cash and shares of the company’s common stock at the company’s election.
The initial conversion rate for the notes is 16.3713 shares of the company’s common stock per $1,000 principal amount of notes, which is equivalent to an initial conversion price of approximately $61.08 per share of the company’s common stock. The initial conversion price represents an approximately 32.5% conversion premium to the closing price of $46.10 per share of the company’s common stock on the NASDAQ Global Select Market on May 17, 2017, such closing price being the last reported sale price. In addition, following certain corporate transactions that occur prior to the maturity date, the company may be required, in certain circumstances, to increase the conversion rate for a holder that elects to convert its notes in connection with such a corporate transaction.
In connection with the pricing of the notes, Atlas Air Worldwide also entered into privately negotiated convertible note hedge transactions as well as separate privately negotiated warrant transactions with certain financial institutions, collectively referred to as the option counterparties.
The convertible note hedge transactions are intended to reduce the potential dilution to the company’s common stock upon conversion of the notes and/or offset potential cash payments the company is required to make in excess of the principal amount of converted notes in the event that the market price of the company’s common stock is greater than the strike price of the convertible note hedge transactions, which initially corresponds to the initial conversion price of the notes. However, the warrant transactions could separately have a dilutive effect on the company’s earnings per share to the extent that the market value per share of the company’s common stock exceeds the strike price of the warrants under the terms of warrant transactions.
Accordingly, when the convertible note hedge transactions and the warrant transactions are taken together, the extent to which the convertible note hedge transactions reduce the potential dilution to the company’s common stock (or the cash payments in excess of the principal amount of the notes) upon conversion of the notes is effectively capped by the warrant transactions at the strike price of the warrants. The strike price of the warrants will initially be $92.20 per share, which represents a premium of 100% over the last reported sale price, and is subject to certain adjustments under the terms of the warrant transactions.
If the underwriters exercise their over-allotment option, the company expects to enter into additional convertible note hedge and warrant transactions with the option counterparties.
In connection with establishing their initial hedge of the convertible note hedge and warrant transactions, the option counterparties or their respective affiliates have entered into and/or expect to enter into various hedging transactions, including (without limitation) derivative transactions, with respect to the company’s common stock concurrently with or shortly after the pricing of the notes. This activity could impact the market price of the company’s common stock or the notes at that time.
In addition, the option counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various hedging transactions, including (without limitation) derivatives, with respect to the company’s common stock and/or purchasing or selling the company’s common stock or other securities of the company in secondary market transactions following the pricing of the notes and prior to the maturity of the notes. This activity could also cause or avoid an increase or a decrease in the market price of the company’s common stock or the notes, which could affect the ability of noteholders to convert their notes and, to the extent the activity occurs during any observation period related to a conversion of the notes, could affect the amount and value of the consideration that noteholders will receive upon conversion of their notes.
If the underwriters exercise their over-allotment option, Atlas Air Worldwide expects to sell additional warrants and use a portion of the net proceeds from the sale of the additional notes, together with the proceeds from the additional warrants, to enter into additional convertible note hedge transactions and for general corporate purposes.
This press release shall not constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any sale of or any solicitation of an offer to buy, these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
Morgan Stanley & Co. LLC, BNP Paribas Securities Corp. and Citigroup will act as joint bookrunners for the offering. Credit Agricole Securities (USA) Inc. and J.P. Morgan Securities LLC will act as co-lead managers, with CJS Securities, Inc., Cowen and Company, LLC, Seaport Global Securities LLC, and Sidoti & Company, LLC acting as co-managers.
The company has filed a registration statement (including a prospectus) and a preliminary prospectus supplement describing the terms of the offering with the Securities and Exchange Commission (SEC) for the offering to which this communication relates. Before you invest, you should read the prospectus and the preliminary prospectus supplement related to that registration statement and other documents that the company has filed with the SEC for more complete information about the company and this offering.
You may get these documents for free by visiting EDGAR on the SEC Web site at www.sec.gov. Alternatively, copies may be obtained from Morgan Stanley & Co. LLC, Attention: Prospectus Department, 180 Varick Street, Second Floor, New York, NY 10014, by calling (866) 718-1649, or by emailing prospectus@morganstanley.com; from BNP Paribas Securities Corp., Attention: Equity Syndicate Desk, 787 Seventh Avenue, New York, NY 10019, by calling (888) 860-5378, or by emailing dl.nyk_elo@us.bnpparibas.com; or from Citigroup Global Markets Inc., c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, NY 11717, by calling 800-831-9146.
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 a broad array of Boeing 747, 777, 767, 757 and 737 aircraft for domestic, regional and international applications.
Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 regarding our planned offer and sale of notes and the use of the net proceeds from any such sale. We cannot be sure that we will complete the offering or, if we do, on what terms we will complete the offering. Forward-looking statements are based on current beliefs and expectations and are subject to inherent risks and uncertainties, including those discussed under the caption “Risk Factors” in the prospectus and prospectus supplement. In addition, management retains broad discretion with respect to the allocation of the net proceeds of this offering. The forward-looking statements speak only as of the date of this release, and Atlas Air Worldwide Holdings, Inc. is under no obligation to, and expressly disclaims any such obligation to, update or alter its forward-looking statements, whether as a result of new information, future events, or otherwise.
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Tuesday, May 16, 2017 — Atlas Air Worldwide Holdings, Inc. (NASDAQ: AAWW) today announced plans to offer up to $250 million aggregate principal amount of its convertible senior notes due 2024 in an underwritten public offering. In addition, Atlas Air Worldwide expects to grant the underwriters an option to purchase, within a 13-day period beginning on and including the date the notes are first issued, up to an additional $37.5 million aggregate principal amount of notes from the company, solely to cover over-allotments. The offering is subject to market and other conditions.
Atlas Air Worldwide currently intends to use the net proceeds of the offering to repay higher-cost revolving credit facility borrowings; enhance business and financial flexibility; support long-term growth; fund the cost of convertible note hedge transactions (after such cost is partially offset by proceeds to the company from the sale of warrants); and for general corporate purposes.
The notes will be senior unsecured obligations of Atlas Air Worldwide and will be convertible, under certain circumstances, into cash, shares of the company’s common stock, or a combination of both cash and shares of the company’s common stock at the company’s election. The notes will mature on June 1, 2024, unless repurchased or converted in accordance with their terms prior to such date. Atlas Air Worldwide will not have the right to redeem the notes prior to maturity. The interest rate and terms of the notes, including the conversion rate of the notes, will be determined by negotiations among the company and the underwriters.
In connection with the offering, Atlas Air Worldwide intends to enter into one or more privately negotiated convertible note hedge transactions as well as separate privately negotiated warrant transactions with certain financial institutions, collectively referred to as the option counterparties.
The convertible note hedge transactions are intended to reduce the potential dilution to the company’s common stock upon conversion of the notes and/or offset potential cash payments the company may be required to make in excess of the principal amount of converted notes. However, the warrant transactions could separately have a dilutive effect on the company’s earnings per share to the extent that the market value per share of the company’s common stock exceeds the strike price of the warrants under the terms of warrant transactions.
Accordingly, when the convertible note hedge transactions and the warrant transactions are taken together, the extent to which the convertible note hedge transactions reduce the potential dilution to the company’s common stock (or the cash payments in excess of the principal amount of the notes) upon conversion of the notes is effectively capped by the warrant transactions at the strike price of the warrants.
If the underwriters exercise their over-allotment option, the company expects to enter into additional convertible note hedge and warrant transactions with the option counterparties.
In connection with establishing their initial hedge of the convertible note hedge and warrant transactions, the option counterparties or their respective affiliates expect to enter into various hedging transactions, including (without limitation) derivative transactions, with respect to the company’s common stock concurrently with or shortly after the pricing of the notes. This activity could impact the market price of the company’s common stock or the notes at that time.
In addition, the option counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various hedging transactions, including (without limitation) derivatives, with respect to the company’s common stock and/or purchasing or selling the company’s common stock or other securities of the company in secondary market transactions following the pricing of the notes and prior to the maturity of the notes. This activity could also cause or avoid an increase or a decrease in the market price of the company’s common stock or the notes, which could affect the ability of noteholders to convert their notes and, to the extent the activity occurs during any observation period related to a conversion of the notes, could affect the amount and value of the consideration that noteholders will receive upon conversion of their notes.
If the underwriters exercise their over-allotment option, Atlas Air Worldwide expects to sell additional warrants and use a portion of the net proceeds from the sale of the additional notes, together with the proceeds from the additional warrants, to enter into additional convertible note hedge transactions and for general corporate purposes.
This press release shall not constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any sale of or any solicitation of an offer to buy, these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
The company has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (SEC) for the offering to which this communication relates. A preliminary prospectus supplement describing the terms of the offering will be filed with the SEC and will form a part of the registration statement. Before you invest, you should read the prospectus and the preliminary prospectus supplement related to that registration statement and other documents that the company has filed with the SEC for more complete information about the company and this offering.
You may get these documents for free by visiting EDGAR on the SEC Web site at www.sec.gov. Alternatively, copies may be obtained from Morgan Stanley & Co. LLC, Attention: Prospectus Department, 180 Varick Street, Second Floor, New York, NY 10014, by calling (866) 718-1649, or by emailing prospectus@morganstanley.com; from BNP Paribas Securities Corp., Attention: Equity Syndicate Desk, 787 Seventh Avenue, New York, NY 10019, by calling (888) 860-5378, or by emailing dl.nyk_elo@us.bnpparibas.com; or from Citigroup Global Markets Inc., c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, NY 11717, by calling 800-831-9146.
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 a broad array of Boeing 747, 777, 767, 757 and 737 aircraft for domestic, regional and international applications.
Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 regarding our planned offer and sale of notes and the use of the net proceeds from any such sale. We cannot be sure that we will complete the offering or, if we do, on what terms we will complete the offering. Forward-looking statements are based on current beliefs and expectations and are subject to inherent risks and uncertainties, including those discussed under the caption “Risk Factors” in the prospectus and prospectus supplement. In addition, management retains broad discretion with respect to the allocation of the net proceeds of this offering. The forward-looking statements speak only as of the date of this release, and Atlas Air Worldwide Holdings, Inc. is under no obligation to, and expressly disclaims any such obligation to, update or alter its forward-looking statements, whether as a result of new information, future events, or otherwise.
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