Diversified Holding Company Air T, Inc. FY 2018 Revenue Rose 31% to $194.5M and FY 2018 EPS Improved to $1.11

DENVER, N.C., June 29, 2018 /PRNewswire/ — Air T, Inc. (NASDAQ: AIRT) is organized as a powerful portfolio of businesses and financial assets, each of which is independent yet interrelated. These include overnight air cargo operations, ground support equipment manufacturing and local maintenance services, and commercial aircraft asset management and logistics. Today the Company is reporting improved financial performance for its fiscal year-ended March 31, 2018.

FY 2018 Overview

Revenues rose to $194.5 million for the fiscal year ended March 31, 2018, a 31% increase over the prior year
Operating income rose to $4.2 million, as compared to prior-year operating loss of $3.1 million
Net income attributable to Air T stockholders rose to $2.3 million versus a net loss of $3.2 million in fiscal 2017
Diluted earnings per share increased to $1.11 compared to last year’s loss per share of $1.51

Air T, Inc. Chairman and CEO Nick Swenson, said: “Our fiscal 2018 operating results reflect the outstanding performance of our business leaders and employees, as well as new acquisitions. Together they delivered top line growth coupled with improvements to bottom line performance, particularly after adjusting for audit expenses and investments in our corporate infrastructure. We are looking forward to steady growth in fiscal 2019. We continuously evaluate acquisitions and investments that will add to our portfolio of powerful businesses. Our investments must represent claims on growing free cash flows or discounts to intrinsic value. Yet people understand that enterprising and dynamic individuals and teams are at the heart of our corporate strategy. A large part of our job is making room for excellent leaders and applying resources as they move their organizations forward. The more we make sound decisions at the relevant level, the more we will continue to do better.”

Business Segment Results

Aviation Ground Support Equipment

Revenues for this segment, which is comprised of Global Ground Support Services, the world’s largest manufacturer of aircraft de-icing equipment, totaled $50.0 million for the fiscal year ended March 31, 2018. This represents an increase of 59% over the revenue of $31.4 million in the prior year. The revenue increase reflected higher sales of de-icing and catering trucks to large and long-standing customers.
The segment entered fiscal 2019 on a strong footing with a sales backlog of $13.3 million compared to $2.8 million a year-ago.

Overnight Air Cargo

Revenues for this segment, comprised of Mountain Air Cargo and CSA Air, rose 5% to $72.8 million in fiscal 2018 compared to $69.6 million in the prior fiscal year.
The revenue increase was primarily due to higher administrative fees from FedEx as a result of an incremental aircraft lease arrangement and to cover certain operational costs, principally flight crew costs.
Segment maintenance revenues also increased due to increased scheduled aircraft maintenance in fiscal 2018 compared to the prior year.

Aviation Ground Support Maintenance Services

Revenue from this segment, comprised of Global Aviation Services, one of the fastest growing ground support maintenance providers in the U.S., offering maintenance services at 88 airports, totaled $35.7 million in fiscal 2018, a 17% over fiscal 2017.
The revenue increase is due to growth in services to existing customers as well as an increase in new customer contracts.

Commercial Jet Engines and Parts

This segment provides surplus and aftermarket commercial jet engine parts, airframes, avionics, other aircraft parts and logistics to the aviation industry. The three companies in this segment are Contrail, Jet Yard and AirCo. Contrail and Jet Yard were acquired in July 2016 and October 2016, respectively, while AirCo was acquired in May 2017.
Revenues from this segment totaled $29.5 million in fiscal 2018, an increase of 296% over fiscal 2017 revenue of $7.5 million. This increase is due to higher volume sales at Contrail as well as full year ownership of Contrail and Jet Yard in fiscal 2018, and the acquisition of AirCo in the current year.
The assets of Worthington Aviation, an aftermarket airframe parts and logistics company focused on the turbo prop and regional jet markets, were acquired in May 2018 and will be included in the commercial jet engine and parts segment starting in the first quarter of fiscal 2019.

Other Investments and Financial Liquidity

Air T owned approximately 3.4 million shares of common stock of Insignia Systems, Inc. (NASDAQ: ISIG) with a market value of $5.3 million as of March 31, 2018
Air T owned approximately 0.5 million shares of common stock of Oxbridge Re Holdings Limited (NASDAQ: OXBR) with a market value of $1.0 million as of March 31, 2018
Working capital as of March 31, 2018 totaled $30.5 million and there were zero borrowings under the Company’s $10 million revolving credit facility.

ABOUT AIR T, INC.
Established in 1980, Air T Inc. is a powerful portfolio of businesses and financial assets, each of which is independent yet interrelated. Its four core segments are: overnight air cargo, aviation ground support equipment manufacturing, aviation ground support maintenance services, and commercial aircraft asset management and logistics. Our ownership interests are designed to expand, strengthen and diversify Air T’s cash earnings power. Our goal is to build on Air T’s core businesses, and when appropriate, to expand into adjacent and other industries that we believe fit into the Air T portfolio. 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 and other recently acquired companies, 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.

AIR T, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS)

			Year Ended March 31,
			2018	2017
Operating Revenues:
	Overnight air cargo		$ 72,845,353	$ 69,558,334
	Ground equipment sales		50,004,507	31,447,408
	Ground support services		35,698,171	30,453,246
	Commercial jet engines and parts		29,506,873	7,455,797
	Printing equipment and maintenance		6,144,403	9,019,155
	Corporate		182,722	–
	Leasing		137,316	537,719
			194,519,345	148,471,659

Operating Expenses:
	Overnight air cargo		63,049,619	61,661,072
	Ground equipment sales		41,567,109	24,350,264
	Ground support services		30,135,613	25,089,412
	Printing equipment and maintenance		2,975,999	9,490,906
	Commercial jet engines and parts		20,502,205	4,501,030
	Leasing		–	49,460
	Research and development		195,653	1,042,496
	General and administrative		29,168,766	22,205,947
	Depreciation, amortization and impairment		2,678,858	3,181,845
			190,273,822	151,572,432

Operating Income (Loss)			4,245,523	(3,100,773)

Non-operating Income (Loss):
	Gain on sale of marketable securities		93,066	576,162
	Foreign currency gain (loss)		(228,714)	286,596
	Other-than-temporary impairment losses on investments		(1,559,972)	(2,755,318)
	Other investment income, net		121,860	1,345,798
	Interest expense and other		(1,724,771)	(571,651)
	Gain on asset retirement obligation		562,500	–
	Bargain purchase acquisition gain, net of tax		501,880	–
	Unrealized loss on interest rate swap		(66,706)	–
	Unrealized gain on transition to equity method		721,585	–
	Equity in income of associated company		(14,644)	–
			(1,593,916)	(1,118,413)

Income (Loss) Before Income Taxes			2,651,607	(4,219,186)

Income Taxes			195,000	725,000


Net Income (Loss)			2,456,607	(4,944,186)

Net (Income) Loss Attributable to Non-controlling
	Interests		(179,498)	1,730,647


Net Income (Loss) Attributable to Air T, Inc. Stockholders			$ 2,277,109	$ (3,213,539)


Earnings (Loss) Per Share:
		Basic	$ 1.11	$ (1.51)

		Diluted	$ 1.11	$ (1.51)

Weighted Average Shares Outstanding:
		Basic	2,042,806	2,125,224
		Diluted	2,047,685	2,125,224

AIR T, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET

		March 31, 2018	March 31, 2017
ASSETS
Current Assets:
	Cash and cash equivalents (Delphax $241,430 and $328,327)*	$ 4,803,238	$ 2,763,365
	Marketable securities	290,449	2,130,544
	Restricted cash	269,659	890,369
	Restricted investments	1,235,405	–
	Accounts receivable, less allowance for doubtful accounts
	of $801,000 and $979,000 (Delphax $317,000 and $1,728,411)*	15,157,855	18,923,787
	Costs and estimated earnings in excess of billings on uncompleted projects	2,012,121	–
	Notes and other receivables-current	658,630	2,297,007
	Income tax receivable	1,557,180	402,688
	Inventories, net (Delphax $0 and $1,941,729)*	34,231,005	19,778,843
	Prepaid expenses and other (Delphax $72,269 and $932,794)*	1,455,566	1,672,475
	Total Current Assets	61,671,108	48,859,078

Investments in available-for-sale securities		1,026,920	2,463,123

Property and equipment, net (Delphax $0 and $8,007)*		20,273,171	5,324,488
Cash surrender value of life insurance policies		2,356,507	2,251,450
Notes and other tax receivables-long-term		311,000	66,771
Deferred income taxes		–	204,000
Investments in funds		324,854	–
Equity method investments		5,032,268	–
Other assets		420,981	371,975
Intangible assets, net		1,312,472	1,376,699
Goodwill		4,417,605	4,417,605
	Total Assets	$ 97,146,886	$ 65,335,189

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
	Accounts payable (Delphax $2,145,847 and $2,482,578)*	$ 10,181,143	$ 11,571,156
	Income tax payable (Delphax $11,312 and $11,312)*	23,000	–
	Accrued expenses (Delphax $3,244,514 and $3,602,162)*	11,743,973	8,672,815
	Short-term debt	9,229,690	25,000
	Total Current Liabilities	31,177,806	20,268,971

Long-term debt (Delphax $0 and $0)*		38,855,260	18,412,521
Deferred income taxes		92,000	8,000
Other non-current liabilities		785,797	3,039,402

	Total Liabilities	70,910,863	41,728,894

Redeemable non-controlling interest		1,992,939	1,443,901

Commitments and contingencies (Notes 8, 11, and 22)

Equity:
Air T, Inc. Stockholders’ Equity:
	Preferred stock, $1.00 par value, 50,000 shares authorized	–	–
	Common stock, $.25 par value; 4,000,000 shares authorized,
	2,043,607 shares issued and outstanding at March 31, 2018,
	2,042,789 shares issued and outstanding at March 31, 2017	510,901	510,696
	Additional paid-in capital	4,171,869	4,205,536
	Retained earnings	20,695,981	18,461,347
	Accumulated other comprehensive loss	(260,900)	(212,047)
	Total Air T, Inc. Stockholders’ Equity	25,117,851	22,965,532
Non-controlling Interests		(874,767)	(803,138)
	Total Equity	24,243,084	22,162,394
	Total Liabilities and Equity	$ 97,146,886	$ 65,335,189


* Amounts related to Delphax as of March 31, 2018 and 2017, respectively.

AIR T, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

				Year Ended March 31,
				2018	2017
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net income (loss)			$ 2,456,607	$ (4,944,186)
		Adjustments to reconcile net income (loss) to net
		cash used in operating activities:
			Gain on sale of marketable securities	(93,066)	(576,162)
			Loss on sale of property and equipment	30,232	25,470
			Change in inventory reserves	(1,851,036)	2,188,192
			Change in accounts receivable reserves	(177,394)	194,286
			Depreciation, amortization and impairment	2,678,857	3,181,845
			Change in cash surrender value of life insurance	(105,057)	(151,393)
			Deferred income taxes	(10,566)	(659,000)
			Gain on asset retirement obligation	(562,500)	–
			Gain on bargain purchase, net of tax	(501,880)	–
			Warranty reserve	122,686	(15,173)
			Other-than-temporary impairment loss on investments	1,559,972	2,755,318
			Unrealized loss on interest rate swap	66,706	–
			Unrealized gain on transition to equity method	(721,585)	–
			Change in operating assets and liabilities:
			Accounts receivable	4,744,262	(5,524,446)
			Costs and estimated earnings in excess of billings on uncompleted projects	(2,012,121)	–
			Notes receivable and other non-trade receivables	1,640,461	(1,600,290)
			Inventories	(6,757,766)	(7,845,801)
			Prepaid expenses and other assets	331,466	(129,532)
			Accounts payable	(1,689,030)	4,146,921
			Accrued expenses	1,664,200	1,618,100
			Income taxes payable/ receivable	(1,442,493)	306,900
			Non-current liabilities	351,208	(525,143)
			Total adjustments	(2,734,444)	(2,609,908)
		Net cash used in operating activities		(277,837)	(7,554,094)

CASH FLOWS FROM INVESTING ACTIVITIES:
		Purchases of marketable securities		(2,519,045)	(2,719,369)
		Proceeds from sale of marketable securities		720,452	6,002,601
		Net cash used for business combinations		(2,400,000)	(4,573,700)
		Net cash used for equity method investments		(2,301,026)	–
		Investment in funds		(324,854)	–
		Capital expenditures		(20,215,594)	(2,346,431)
		Proceeds from sale of property and equipment		3,859	6,281
		Increase (Decrease) in restricted cash		620,710	(69,718)
		Net cash used in investing activities		(26,415,498)	(3,700,336)

CASH FLOWS FROM FINANCING ACTIVITIES:
		Proceeds from line of credit		115,533,307	68,275,140
		Payments on line of credit		(119,176,727)	(49,805,658)
		Proceeds from line of credit – Delphax		–	5,387,338
		Payments of debts – Delphax		–	(7,251,473)
		Proceeds from term loan		38,441,000	–
		Payments on term loan		(4,816,825)	–
		Debt issuance costs		(404,845)	–
		Earnout payments		(1,100,000)	–
		Contribution from non-controlling member		252,000	–
		Proceeds from exercise of stock options		8,638	–
		Stock repurchase		–	(7,917,009)
		Net cash provided by financing activities		28,736,548	8,688,338

		Effect of foreign currency exchange rates on cash and cash equivalents		(3,340)	(15,998)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS				2,039,873	(2,582,090)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR				2,763,365	5,345,455
CASH AND CASH EQUIVALENTS AT END OF YEAR				$ 4,803,238	$ 2,763,365

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING ACTIVITIES:
	Finished goods inventory transferred to equipment leased to customers			$ 251,643	$ 272,622
	Equipment leased to customers transferred to inventory			2,057,417	–
	Non-controlling interests in acquired business			–	1,312,501
	Acquired business earnout contracts and payable			–	3,016,667

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
	Cash paid during the year for:
		Interest		$ 1,065,785	$ 298,150
		Income taxes		1,659,064	1,092,679