Atlas Air Worldwide Holdings has just reported its first-quarter 2022 net income was $81.5 million, compared with $89.9 million in 2021 (which included $40.9 million, $31.9 million after-tax, of CARES Act grant income).
First-Quarter Results
Share Repurchases
Fleet
Cash
2022 Outlook
Atlas Air Worldwide Holdings, Inc.
Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)
For the Three Months Ended | ||||||||
March 31, 2022 | March 31, 2021 | |||||||
Operating Revenue | $ | 1,037,156 | $ | 861,300 | ||||
Operating Expenses | ||||||||
Salaries, wages and benefits | 298,019 | 202,614 | ||||||
Aircraft fuel | 244,337 | 163,551 | ||||||
Maintenance, materials and repairs | 118,899 | 121,133 | ||||||
Depreciation and amortization | 72,202 | 67,789 | ||||||
Travel | 42,768 | 37,672 | ||||||
Navigation fees, landing fees and other rent | 39,354 | 44,887 | ||||||
Passenger and ground handling services | 34,936 | 40,065 | ||||||
Aircraft rent | 12,995 | 20,756 | ||||||
Loss (gain) on disposal of flight equipment | (6,240 | ) | 16 | |||||
Special charge | 2,633 | - | ||||||
Transaction-related expenses | - | 201 | ||||||
Other | 55,857 | 58,412 | ||||||
Total Operating Expenses | 915,760 | 757,096 | ||||||
Operating Income | 121,396 | 104,204 | ||||||
Non-operating Expenses (Income) | ||||||||
Interest income | (240 | ) | (211 | ) | ||||
Interest expense | 20,423 | 27,180 | ||||||
Capitalized interest | (3,764 | ) | (1,271 | ) | ||||
Unrealized loss on financial instruments | - | 113 | ||||||
Other (income) expense, net | (618 | ) | (39,456 | ) | ||||
Total Non-operating Expenses (Income) | 15,801 | (13,645 | ) | |||||
Income before income taxes | 105,595 | 117,849 | ||||||
Income tax expense | 24,084 | 27,916 | ||||||
Net Income | $ | 81,511 | $ | 89,933 | ||||
Earnings per share: | ||||||||
Basic | $ | 2.82 | $ | 3.16 | ||||
Diluted | $ | 2.38 | $ | 3.05 | ||||
Weighted average shares: | ||||||||
Basic | 28,854 | 28,491 | ||||||
Diluted | 34,690 | 29,478 |
Atlas Air Worldwide Holdings, Inc.
Consolidated Balance Sheets
(in thousands, except share data)
(Unaudited)
March 31, 2022 | December 31, 2021 | |||||||
Assets | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 730,349 | $ | 910,965 | ||||
Restricted cash | 10,554 | 10,052 | ||||||
Accounts receivable, net of allowance of $4,178 and $4,003, respectively | 297,264 | 305,905 | ||||||
Prepaid expenses, assets held for sale and other current assets | 93,910 | 99,100 | ||||||
Total current assets | 1,132,077 | 1,326,022 | ||||||
Property and Equipment | ||||||||
Flight equipment | 5,507,628 | 5,449,100 | ||||||
Ground equipment | 103,498 | 101,824 | ||||||
Less: accumulated depreciation | (1,360,736 | ) | (1,319,636 | ) | ||||
Flight equipment purchase deposits and modifications in progress | 438,308 | 352,422 | ||||||
Property and equipment, net | 4,688,698 | 4,583,710 | ||||||
Other Assets | ||||||||
Operating lease right-of-use assets | 130,748 | 138,744 | ||||||
Deferred costs and other assets | 317,993 | 329,971 | ||||||
Intangible assets, net and goodwill | 63,289 | 64,796 | ||||||
Total Assets | $ | 6,332,805 | $ | 6,443,243 | ||||
Liabilities and Equity | ||||||||
Current Liabilities | ||||||||
Accounts payable | $ | 122,751 | $ | 82,885 | ||||
Accrued liabilities | 615,134 | 641,978 | ||||||
Current portion of long-term debt and finance leases | 607,999 | 639,811 | ||||||
Current portion of long-term operating leases | 55,587 | 55,383 | ||||||
Total current liabilities | 1,401,471 | 1,420,057 | ||||||
Other Liabilities | ||||||||
Long-term debt and finance leases | 1,615,305 | 1,655,075 | ||||||
Long-term operating leases | 152,150 | 166,022 | ||||||
Deferred taxes | 371,518 | 354,798 | ||||||
Financial instruments and other liabilities | 31,031 | 37,954 | ||||||
Total other liabilities | 2,170,004 | 2,213,849 | ||||||
Commitments and contingencies | ||||||||
Equity | ||||||||
Stockholders’ Equity | ||||||||
Preferred stock, $1 par value; 10,000,000 shares authorized; no shares issued | - | - | ||||||
Common stock, $0.01 par value; 100,000,000 shares authorized; 35,071,410 and 34,707,860 shares issued, 28,363,266 and 29,215,702 shares outstanding (net of treasury stock), as of March 31, 2022 and December 31, 2021, respectively | 351 | 347 | ||||||
Additional paid-in capital | 828,391 | 934,516 | ||||||
Treasury stock, at cost; 6,708,144 and 5,492,158 shares, respectively | (317,480 | ) | (225,461 | ) | ||||
Accumulated other comprehensive loss | (433 | ) | (511 | ) | ||||
Retained earnings | 2,250,501 | 2,100,446 | ||||||
Total stockholders’ equity | 2,761,330 | 2,809,337 | ||||||
Total Liabilities and Equity | $ | 6,332,805 | $ | 6,443,243 |
1 Balance sheet debt at March 31, 2022 totaled $2,223.3 million, including the impact of debt issuance costs of $20.7 million, compared with $2,294.9 million, including the impact of $31.5 million of unamortized discount and debt issuance costs of $22.7 million at December 31, 2021.
2 The face value of our debt and finance leases at March 31, 2022 totaled $2,244.0 million, compared with $2,349.1 million on December 31, 2021.
Atlas Air Worldwide Holdings, Inc.
Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
For the Three Months Ended | ||||||||
March 31, 2022 | March 31, 2021 | |||||||
Operating Activities: | ||||||||
Net Income | $ | 81,511 | $ | 89,933 | ||||
Adjustments to reconcile Net Income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 85,257 | 86,172 | ||||||
Provision for (reversal of) expected credit losses | (15 | ) | (397 | ) | ||||
Special charge | 2,633 | - | ||||||
Unrealized loss on financial instruments | - | 113 | ||||||
Loss (gain) on disposal of flight equipment | (6,240 | ) | 16 | |||||
Deferred taxes | 23,682 | 27,839 | ||||||
Stock-based compensation | 2,195 | 4,060 | ||||||
Changes in: | ||||||||
Accounts receivable | 9,960 | (22,745 | ) | |||||
Prepaid expenses, current assets and other assets | (3,619 | ) | (7,500 | ) | ||||
Accounts payable, accrued liabilities and other liabilities | 12,475 | (89,366 | ) | |||||
Net cash provided by operating activities | 207,839 | 88,125 | ||||||
Investing Activities: | ||||||||
Capital expenditures | (29,895 | ) | (26,662 | ) | ||||
Purchase deposits and payments for flight equipment and modifications | (154,420 | ) | (126,807 | ) | ||||
Investment in joint ventures | (783 | ) | (1,608 | ) | ||||
Proceeds from disposal of flight equipment | 13,500 | 1,850 | ||||||
Net cash used for investing activities | (171,598 | ) | (153,227 | ) | ||||
Financing Activities: | ||||||||
Proceeds from debt issuance | - | 16,161 | ||||||
Payment of debt issuance costs | (81 | ) | (900 | ) | ||||
Payments of debt and finance lease obligations | (108,466 | ) | (77,953 | ) | ||||
Prepayment of accelerated share repurchase | (20,034 | ) | - | |||||
Purchase of treasury stock | (79,966 | ) | - | |||||
Customer maintenance reserves and deposits received | 4,245 | 5,152 | ||||||
Customer maintenance reserves paid | - | (12,265 | ) | |||||
Treasury shares withheld for payment of taxes | (12,053 | ) | (7,350 | ) | ||||
Net cash used for financing activities | (216,355 | ) | (77,155 | ) | ||||
Net decrease in cash, cash equivalents and restricted cash | (180,114 | ) | (142,257 | ) | ||||
Cash, cash equivalents and restricted cash at the beginning of period | 921,017 | 856,281 | ||||||
Cash, cash equivalents and restricted cash at the end of period | $ | 740,903 | $ | 714,024 | ||||
Noncash Investing and Financing Activities: | ||||||||
Acquisition of property and equipment included in Accounts payable and accrued liabilities | $ | 3,146 | $ | 24,938 | ||||
Acquisition of property and equipment acquired under operating leases | $ | 104 | $ | 4,015 | ||||
Acquisition of flight equipment under finance leases | $ | 3,108 | $ | 20,171 | ||||
Issuance of shares related to settlement of warrant liability | $ | - | $ | 31,582 |
Atlas Air Worldwide Holdings, Inc.
Direct Contribution
(in thousands)
(Unaudited)
For the Three Months Ended | ||||||||
March 31, 2022 | March 31, 2021 | |||||||
Operating Revenue: | ||||||||
Airline Operations | $ | 995,355 | $ | 826,240 | ||||
Dry Leasing | 46,170 | 40,364 | ||||||
Customer incentive asset amortization | (10,051 | ) | (10,481 | ) | ||||
Other | 5,682 | 5,177 | ||||||
Total Operating Revenue | $ | 1,037,156 | $ | 861,300 | ||||
Direct Contribution: | ||||||||
Airline Operations | $ | 185,818 | $ | 169,150 | ||||
Dry Leasing | 16,909 | 10,564 | ||||||
Total Direct Contribution for Reportable Segments | 202,727 | 179,714 | ||||||
Unallocated income and (expenses), net | (100,739 | ) | (61,535 | ) | ||||
Unrealized (loss) on financial instruments | - | (113 | ) | |||||
Special charge | (2,633 | ) | - | |||||
Transaction-related expenses | - | (201 | ) | |||||
Loss (gain) on disposal of flight equipment | 6,240 | (16 | ) | |||||
Income before income taxes | 105,595 | 117,849 | ||||||
Add back (subtract): | ||||||||
Interest income | (240 | ) | (211 | ) | ||||
Interest expense | 20,423 | 27,180 | ||||||
Capitalized interest | (3,764 | ) | (1,271 | ) | ||||
Unrealized loss on financial instruments | - | 113 | ||||||
Other (income) expense, net | (618 | ) | (39,456 | ) | ||||
Operating Income | $ | 121,396 | $ | 104,204 |
Atlas Air Worldwide uses an economic performance metric, Direct Contribution, to show the profitability of each of its segments after allocation of direct operating and ownership costs. Atlas Air Worldwide currently has the following reportable segments: Airline Operations and Dry Leasing.
Direct Contribution consists of income (loss) before taxes, excluding loss on early extinguishment of debt, unrealized loss on financial instruments, special charge, transaction-related expenses, loss (gain) on disposal of flight equipment, nonrecurring items, and unallocated expenses and (income), net.
Direct operating and ownership costs include crew costs, maintenance, fuel, ground operations, sales costs, aircraft rent, interest expense on the portion of debt used for financing aircraft, interest income on debt securities, and aircraft depreciation.
Unallocated expenses and (income), net include corporate overhead, nonaircraft depreciation, noncash expenses and income, interest expense on the portion of debt used for general corporate purposes, interest income on nondebt securities, capitalized interest, foreign exchange gains and losses, other revenue, other nonoperating costs and CARES Act grant income.
Atlas Air Worldwide Holdings, Inc.
Reconciliation to Non-GAAP Measures
(in thousands, except per share data)
(Unaudited)
For the Three Months Ended | |||||||||||||
March 31, 2022 | March 31, 2021 | Percent Change | |||||||||||
Net Income | $ | 81,511 | $ | 89,933 | (9.4 | )% | |||||||
Impact from: | |||||||||||||
CARES Act grant income1 | - | (40,944 | ) | ||||||||||
Customer incentive asset amortization | 10,051 | 10,481 | |||||||||||
Adjustments to CBA paid time-off benefits2 | 2,154 | - | |||||||||||
Special charge3 | 2,633 | - | |||||||||||
Noncash expenses and income, net4 | - | 4,672 | |||||||||||
Unrealized loss on financial instruments | - | 113 | |||||||||||
Other, net5 | (6,240 | ) | 329 | ||||||||||
Income tax effect of reconciling items | (1,329 | ) | 7,631 | ||||||||||
Adjusted Net Income | $ | 88,780 | $ | 72,215 | 22.9 | % | |||||||
Weighted average diluted shares outstanding | 34,690 | 29,478 | |||||||||||
Less: effect of convertible notes hedges6 | (5,031 | ) | - | ||||||||||
Adjusted weighted average diluted shares outstanding | 29,659 | 29,478 | |||||||||||
Adjusted Diluted EPS | $ | 2.99 | $ | 2.45 | 22.0 | % |
For the Three Months Ended | |||||||||||
March 31, 2022 | March 31, 2021 | Percent Change | |||||||||
Income before income taxes | $ | 105,595 | $ | 117,849 | (10.4 | )% | |||||
Impact from: | |||||||||||
CARES Act grant income1 | - | (40,944 | ) | ||||||||
Customer incentive asset amortization | 10,051 | 10,481 | |||||||||
Adjustments to CBA paid time-off benefits2 | 2,154 | - | |||||||||
Special charge3 | 2,633 | - | |||||||||
Noncash expenses and income, net4 | - | 4,672 | |||||||||
Unrealized loss on financial instruments | - | 113 | |||||||||
Other, net5 | (6,240 | ) | 329 | ||||||||
Adjusted income before income taxes | 114,193 | 92,500 | 23.5 | % | |||||||
Interest (income) expense, net | 16,419 | 21,026 | |||||||||
Other (income) expense, net | (618 | ) | 1,488 | ||||||||
Adjusted operating income | $ | 129,994 | $ | 115,014 | 13.0 | % | |||||
Income tax expense | $ | 24,084 | $ | 27,916 | |||||||
Income tax effect of reconciling items | (1,329 | ) | 7,631 | ||||||||
Adjusted income tax expense | 25,413 | 20,285 | |||||||||
Adjusted income before income taxes | $ | 114,193 | $ | 92,500 | |||||||
Effective tax expense rate | 22.8 | % | 23.7 | % | |||||||
Adjusted effective tax expense rate | 22.3 | % | 21.9 | % |
Atlas Air Worldwide Holdings, Inc.
Reconciliation to Non-GAAP Measures
(in thousands, except per share data)
(Unaudited)
For the Three Months Ended | |||||||||||||
March 31, 2022 | March 31, 2021 | Percent Change | |||||||||||
Net Income | $ | 81,511 | $ | 89,933 | (9.4 | )% | |||||||
Interest expense, net | 16,419 | 25,698 | |||||||||||
Depreciation and amortization | 72,202 | 67,789 | |||||||||||
Income tax expense | 24,084 | 27,916 | |||||||||||
EBITDA | 194,216 | 211,336 | |||||||||||
CARES Act grant income1 | - | (40,944 | ) | ||||||||||
Customer incentive asset amortization | 10,051 | 10,481 | |||||||||||
Adjustments to CBA paid time-off benefits2 | 2,154 | - | |||||||||||
Special charge3 | 2,633 | - | |||||||||||
Unrealized loss on financial instruments | - | 113 | |||||||||||
Other, net5 | (6,240 | ) | 329 | ||||||||||
Adjusted EBITDA | $ | 202,814 | $ | 181,315 | 11.9 | % |
1 CARES Act grant income in 2021 related to income associated with the Payroll Support Program.
2 Adjustments to CBA paid time-off benefits in 2022 are related to our new CBA.
3 Special charge in 2022 represented a charge related to two CF6-80 engines Dry Leased to a customer.
4 Noncash expenses and income, net in 2021 primarily related to amortization of debt discount on the convertible notes.
5 Other, net in 2022 primarily related to a gain on the sale of six spare CF6-80 engines previously held for sale. Other, net in 2021 primarily related to costs associated with our acquisition of an airline and leadership transition costs.
6 Represents the economic benefit from our convertible notes hedges in offsetting dilution from our convertible notes as we concluded in no event would economic dilution result from conversion of each of the convertible notes when our stock price is below the exercise price of the respective convertible note warrants.
For the Three Months Ended | ||||||||
March 31, 2022 | March 31, 2021 | |||||||
Net Cash Provided by Operating Activities | $ | 207,839 | $ | 88,125 | ||||
Less: | ||||||||
Capital expenditures | 29,895 | 26,662 | ||||||
Capitalized interest | 3,764 | 1,271 | ||||||
Free Cash Flow1 | $ | 174,180 | $ | 60,192 | ||||
1 Free Cash Flow = Net Cash from Operations minus Core Capital Expenditures and Capitalized Interest.
Core Capital Expenditures excludes purchases of aircraft.
Atlas Air Worldwide Holdings, Inc.
Operating Statistics and Traffic Results
(Unaudited)
For the Three Months Ended | Increase/ | ||||||||||||
March 31, 2022 | March 31, 2021 | (Decrease) | |||||||||||
Block Hours | |||||||||||||
Airline Operations | |||||||||||||
Cargo | 78,425 | 83,110 | (4,685 | ) | |||||||||
Passenger | 3,306 | 3,648 | (342 | ) | |||||||||
Other | 895 | 1,765 | (870 | ) | |||||||||
Total Block Hours | 82,626 | 88,523 | (5,897 | ) | |||||||||
Revenue Per Block Hour | |||||||||||||
Airline Operations | $ | 12,178 | $ | 9,524 | $ | 2,654 | |||||||
Cargo | $ | 11,891 | $ | 9,127 | $ | 2,764 | |||||||
Passenger | $ | 18,991 | $ | 18,563 | $ | 428 | |||||||
Average Utilization (block hours per day) | |||||||||||||
Airline Operations | |||||||||||||
Cargo | 10.2 | 10.1 | 0.1 | ||||||||||
Passenger | 3.6 | 3.9 | (0.3 | ) | |||||||||
All Operating Aircraft1 | 9.6 | 9.7 | (0.1 | ) | |||||||||
Fuel | |||||||||||||
Charter | |||||||||||||
Average fuel cost per gallon | $ | 2.74 | $ | 1.71 | $ | 1.03 | |||||||
Fuel gallons consumed (000s) | 89,199 | 95,586 | (6,387 | ) |
1 Average of All Operating Aircraft excludes Dry Leasing aircraft, which do not contribute to block-hour volumes.
Atlas Air Worldwide Holdings, Inc.
Operating Statistics and Traffic Results
(Unaudited)
For the Three Months Ended | Increase/ | |||||||||||
March 31, 2022 | March 31, 2021 | (Decrease) | ||||||||||
Segment Operating Fleet (average aircraft equivalents during the period) | ||||||||||||
Airline Operations1 | ||||||||||||
747-8F Cargo | 10.0 | 10.0 | - | |||||||||
747-400 Cargo | 34.5 | 33.6 | 0.9 | |||||||||
747-400 Dreamlifter | 0.3 | 1.2 | (0.9 | ) | ||||||||
747-400 Passenger | 4.9 | 4.9 | - | |||||||||
777-200 Cargo | 9.0 | 9.0 | - | |||||||||
767-300 Cargo | 24.0 | 24.0 | - | |||||||||
767-300 Passenger | 5.3 | 5.0 | 0.3 | |||||||||
767-200 Cargo | - | 5.6 | (5.6 | ) | ||||||||
767-200 Passenger | - | 0.6 | (0.6 | ) | ||||||||
737-800 Cargo | 8.0 | 8.0 | - | |||||||||
Total | 96.0 | 101.9 | (5.9 | ) | ||||||||
Dry Leasing | ||||||||||||
777-200 Cargo | 7.0 | 7.0 | - | |||||||||
767-300 Cargo | 21.0 | 21.0 | - | |||||||||
737-300 Cargo | - | 1.0 | (1.0 | ) | ||||||||
Total | 28.0 | 29.0 | (1.0 | ) | ||||||||
Less: Aircraft Dry Leased to CMI customers | (21.0 | ) | (21.0 | ) | - | |||||||
Total Operating Average Aircraft Equivalents | 103.0 | 109.9 | (6.9 | ) |
1 Airline Operations average fleet excludes spare aircraft provided by CMI customers.
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