Air T, Inc. Reports Unaudited Third Quarter Earnings

DENVER, N.C., Feb. 14, 2018 /PRNewswire/ -- Air T, Inc. ("Air T" or the "Company") (NASDAQ: AIRT) today reported consolidated net loss attributable to Air T, Inc. stockholders of $672,000 ($0.33 per diluted share) for the fiscal 2018 third quarter ended December 31, 2017 as compared to consolidated net income attributable to Air T, Inc. stockholders of $1,220,000 ($0.60 per diluted share) for the fiscal 2017 comparable period.

Consolidated revenues increased $8,732,000 (24%) from $35,769,000 to $44,501,000 for the quarter ended December 31, 2017 compared to the comparable quarter in the prior fiscal year. Consolidated operating income decreased $1,088,000 (66%) from operating income of $1,639,000 to operating income of $552,000 for the quarter ended December 31, 2017 compared to the comparable quarter in the prior fiscal year. The reduction was principally due to higher general and administrative expenses and depreciation charges in the current quarter compared to the prior year comparable quarter.

Overnight air cargo revenues increased $930,000 (5%) from $17,100,000 in the quarter ended December 31, 2017 to $18,029,000 during the prior-year comparable quarter. This segment's operating income increased by $280,000 (39%) from $717,000 to $997,000 due principally to the impact of the June 1, 2017 amendment to the aircraft dry-lease agreements with the segment's air cargo customer that increased the administrative fees payable under these agreements and due to an increase in billable maintenance hours.

Ground equipment sales revenue, net of intercompany eliminations, increased $7,511,000 (139%) from $5,400,000 to $12,911,000 during the quarter ended December 31, 2017 compared to the prior-year comparable quarter due to increased deicing truck sales.  Ground equipment sales operating income, net of intercompany eliminations, increased by $1,237,000 (803%) from an operating loss of $154,000 to $1,083,000 due to the volume of deicer units sold during the quarter. The segment's order backlog was $17,900,000 million at December 31, 2017, as compared to $2,800,000 million at March 31, 2017 and $11,200,000 million at December 31, 2016.

Ground support services revenue increased $1,064,000 (14%) from $7,580,000 to $8,643,000, as a result of the segment's growth in new markets and services offered to new and existing customers and strong parts sales.  Operating loss for this segment for the same period increased by $74,000 (180%) from an operating loss of $41,000 to $115,000 primarily as a result of an increase in labor and related expenses associated with increased headcount for new business.

The printing equipment and maintenance segment revenue, net of intercompany eliminations, decreased by $1,748,000 (66%) from $2,654,000 to $906,000 compared to the comparable quarter of the prior fiscal year, while operating income, net of intercompany eliminations, decreased by $881,000 from operating income of $1,021,000 in the prior-year comparable quarter to operating income of $140,000 for the quarter ended December 31, 2017.

On July 18, 2016, Contrail Aviation Support, LLC ("Contrail Aviation"), a subsidiary of the Company, completed the purchase of substantially all of the assets of Contrail Aviation Support, Inc. The acquisition consideration included cash and equity membership units in Contrail Aviation representing 21% of the total equity membership units in Contrail Aviation. Additionally, Air T, through a subsidiary, Stratus Aero Partners ("Stratus"), acquired 100% of the outstanding equity interests of Jet Yard, LLC ("Jet Yard") on October 3, 2016. In May 2017, the Company's newly formed subsidiaries, AirCo, LLC and AirCo Services, LLC (collectively, "AirCo") acquired the inventory and principal business assets, and assumed specified liabilities, of Aircraft Instrument and Radio Company, Inc., and Aircraft Instrument and Radio Services, Inc.  The acquired business, which is based in Wichita, Kansas, distributes and sells airplane and aviation parts and maintains a license under Part 145 of the regulations of the Federal Aviation Administration. Stratus, Contrail Aviation, Jet Yard and AirCo comprised the commercial jet engines and parts segment of the Company's operations during the quarter ended December 31, 2017, which contributed revenues of $3,931,000, net of intercompany eliminations, while generating a segment operating loss, net of intercompany eliminations, of $292,000.

On December 21, 2017, the Company refinanced its previously existing financing arrangement with Branch Banking and Trust Company ("BB&T) by entering into a Credit Agreement ("MBT Credit Agreement") with Minnesota Bank & Trust ("MBT"), pursuant to which MBT extended to the Company an aggregate of $26,900,000 in financing in the form of a floating-rate, $10,000,000 revolving credit facility, and three, fixed-rate amortizing term loans in the amounts of $10,000,000 ("Term Loan A"), $5,000,000 ("Term Loan B") and $1,900,000 ("Term Loan C"), respectively. The interest rate on the $10,000,000 revolving note floats at a rate equal to the prime rate plus one percent (1%); the interest rate on Term Note A floats at the month LIBOR rate plus two percent (2%); the interest rate on Term Note B is fixed at four and one-half percent (4.50%); and, the interest on Term Note C floats at a rate equal to prime minus one percent (1%), subject to a floor of three and one quarter percent (3.25%). In connection with the financing, the Company entered into a swap agreement to fix the interest rate on Term Note A at four and 56/100ths percent (4.56%). The revolving note is due on November 30, 2019, Term Loan A and Term Loan B mature in ten years from the date of issuance, and Term Loan C matures on January 1, 2019. Amounts outstanding under this financing arrangement was $22,248,489. The loans are guaranteed by certain subsidiaries of the Company, secured by a first lien on all personal property of the Company and the guaranteeing subsidiaries. The Company applied a portion of the proceeds from the financing to refinance the obligations of the Company and certain of its subsidiaries under its prior revolving credit facility with BB&T.

For a more detailed presentation and discussion of the Company's results of operations and financial condition, please read the Company's Quarterly Report on Form 10-Q for the quarter ended December 31, 2017 filed today with the Securities and Exchange Commission.  Copies of the Form 10-Q may be accessed on the Internet at the SEC's website: http://www.sec.gov.

About Air T, Inc.

Established in 1980, Air T, Inc. is a diversified holding company with four core industry segments: overnight air cargo, aviation ground support equipment manufacturing, aviation ground support maintenance services, and aircraft engine aftermarket and parts.  Our ownership interests consist of a broad set of operating and financial assets that are designed to expand, strengthen and diversify Air T's cash earnings power.  Our goal is to build on Air T's core businesses, to expand into adjacent industries, and when appropriate, to acquire companies that we believe fit into the Air T family.  For more information, visit www.airt.net.

Forward-looking Statements

Statements in this press release, which contain more than historical information, may be considered forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995), which are subject to risks and uncertainties.  Actual results may differ materially from those expressed in the forward-looking statements because of important potential risks and uncertainties, including, but not limited to, the risk that contracts with major customers will be terminated or not extended, future economic conditions and their impact on the Company's customers, the Company's ability to recover on its investments, including its investments in Delphax, the timing and amounts of future orders under the Company's Global Ground Support subsidiary's contract with the United States Air Force, and risks and uncertainties related to business acquisitions, including the ability to successfully achieve the anticipated benefits of the acquisitions, inflation rates, competition, changes in technology or government regulation, information technology disruptions, and the impact of future terrorist activities in the United States and abroad. A forward-looking statement is neither a prediction nor a guarantee of future events or circumstances, and those future events or circumstances may not occur. The Company is under no obligation, and it expressly disclaims any obligation, to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise.

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SOURCE Air T, Inc.