Air Transport Services Group, Inc. (Nasdaq: ATSG), a leader in medium wide-body freighter leasing, contracted air transport, and related services, has announced its financial results for Q3 ending September 30, 2024. Key comparisons to Q3 2023 include:
Third Quarter Financial Highlights
- Revenue: $471 million (down from $523 million)
- GAAP Loss per Share: ($0.05) compared to EPS of $0.24 in Q3 2023
- GAAP Pretax Loss: ($5.2 million) versus $23.5 million in pretax earnings
- Adjusted Pretax Earnings: $10.7 million, down from $31.1 million
- Adjusted EPS: $0.13, down from $0.32
- Adjusted EBITDA: $129.5 million, down from $136.6 million
- Free Cash Flow: $86.4 million, a significant improvement from negative $51.6 million
Acquisition by Stonepeak
On November 4, 2024, ATSG announced its acquisition by Stonepeak, a prominent infrastructure and real assets investment firm, in an all-cash deal valued at approximately $3.1 billion. ATSG shareholders will receive $22.50 per share in cash. Following the acquisition, ATSG will become a private company, and its shares will cease trading on Nasdaq. The company has canceled its Q3 2024 earnings call and will not issue further financial guidance.
CEO’s Remarks
Mike Berger, CEO of ATSG, expressed optimism about ATSG’s future with Stonepeak, noting that strong demand for freighter leases continued, with four new Boeing 767-300 leases added in Q3. He highlighted that fewer block hours and increased start-up costs, including expenses for ten new Amazon-provided aircraft, impacted results. Berger noted that ATSG achieved robust free cash flow, totaling $193 million for 2024 to date. He anticipates improved ACMI Services performance in Q4 due to contractual price adjustments and expects three additional leases by year-end.
Segment Performance
Cargo Aircraft Management (CAM)
- Revenue: Increased 3% year-over-year, driven by 11 new freighter leases, including ten additional 767-300s and one Airbus A321-200.
- Pretax Earnings: $18 million, down 22% from $23 million last year, affected by increased depreciation and interest expenses. The retirement of nine 767-200 and six 767-300 freighters also impacted lease revenues.
- Leasing Activity: CAM leased four 767s and sold four to external customers, with 89 CAM-owned aircraft leased out, two fewer than a year ago.
- Fleet Development: Nineteen CAM-owned aircraft were in conversion to freighters by the end of Q3, including eight 767s, six A321s, and five A330s.
ACMI Services
- Pretax Loss: $14 million, compared to $12 million in pretax earnings last year.
- Operational Hours: Cargo block hours decreased by 7%, with passenger block hours down 34%.
- Increased Expenses: Pretax loss included $4.9 million for customer incentives related to Amazon agreements. ACMI Services faced higher costs for maintenance, travel, and ground services.
- Amazon Operations: ACMI Services began operating seven Amazon-provided Boeing 767-300s, with three additional aircraft following.